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Keep Confidence of Public
Throughout Period of
High Tensf l ^ , f .
New Homes Are Planned for
Financial Institu
tions Here.
J i j t i f c e « n » u J # '^ * h 4 vy**«ea
19 14 ■Bill be m em o rab le fo r Its te s t
of the a ttitu d e of th a c itiz e n s of th e
c o u n try to w a rd th e ir fin an cial in s ti
tu tio n s.
N e v e r before in m odern
tim es have com e to sud d en a n d so
com plete a tr ia l of confidence. In
th e te s t th e s tr e n g th of th e b a n k in g
situ a tio n w a s m ade m a n ife s t; th e
b a n k s k e p t fa ith w ith th e people.
W a r w as declared. T h ro u g h o u t th e
w orld th e re w as c la m o rin g for gold.
N ineteen c o u n trie s legalized d elay in
d e b t p ay m en t. F o reig n g o v e rn m e n ts
found it a d v isab le to lend th e ir c red it
a n d cash to th e ir b an k s. T h e crisis
began w ith th e first shock a t th e b e
g in n in g of A u g u st.
A t t h a t tim e th e A m e ric an b a n k
ing situ a tio n m ad e m ild re sp o n se to
th e w orld fu ro re in a tig h te n in g of
th e whole m oney m a rk e t. T h e A m eri
c a n strin g en c y contin u ed fo r a b o u t
th re e m onths, being a c c e n tu a te d by
th e fa c t t h a t m an y m illions owed our
e x p o rte rs a n d b a n k e rs by E u ro p e a n s
w ere tem p o rarily u n c o lle ctab le be
cause of m o rato ria. N o tw ith sta n d in g
the postponem ent of s e ttle m e n t of ob
lig atio n s to us, we paid o u r d e b ts to
fo reig n ers a s th e y fell due.
T his w as a h e rcu lea n ta sk , done
th ro u g h m assin g of gold by the
banks. T hey financed N ew Y ork c ity ’s
$80,000,000 n o tes m a tu rin g a broad,
a n d In p a y m e n t of o th e r d e b it b a l
ances shipped m illions of gold to O t
taw a. th ere to be m ad e a v ailab le for
the B a n k o£ E n g lan d .
In add itio n
they fu rn ish e d w h a t w as needed to
aonserve th e w e alth of th e c o tto n In
te re sts of th e so u th a n d s ta n d read y
to m ak e th e c o tto n loan a g g reg a te
$135,000,000.
B y th e b e g in n in g of N ovem ber th e
A m erican m oney situ a tio n had r e
axed, a n d th e p ro cess h a s continued
jv er since. T h ro u g h o u t i t a ll th e a titu d e of th is c o u n try h a s been one
>C c au tio n a n d w aitin g , n o t of h y s» ria . T h ere h a s been no b a n k in g
n o rta lity of im p o rta n ce , a n d little
veil of m in o r significance.
We
hipped in th e y e a r $225,000,000 gold
broad. A s a suprem e tria l o f th e
itu a tio n , w e p u t in to effect a new
lanking sy ste m . T he tra n s itio n w as
m ooth. a n d fro m th e b eg in n in g of
November on th e p ro cess h a s been
me of u p b u ild in g in th e e n tire fitancial a n d b u sin e ss s tru c tu r e of th e
nation.
A t a ll tim e s since th e fo reig n conjict b eg an th e A m erican b a n k ers
ii ith e r ask e d n o r needed g o v e rn m e n t
"'n p o rt.
T he to ta l of em ergency
n e asu re s ad o p te d h e re c o n sisted of
he issue o f a d d itio n a l cu rren cy ,
, nicli a lw a y s is needed in tim e s of
ro s p e rity a n d d ep ressio n — th e closing
th e sto c k e x ch a n g e a f te r th e re st
if th e w orld h a d m ad e th is th e one
telling m a rk e t— th e ex ercise of exrem e c o n se rv a tism in m a k in g loans
;nr o th e r th a n n e c e ssa ry b u sin e ss u ses
.-a n d th e a p p lic a tio n of th e six ty -d a y
ule a s to s a v in g s d e p o sits fo r p re
caution sak e, b u t fo r rig id enforcen e n t only a g a in s t p ro sp e c tiv e specuito rs .
■ r m w® m n r i H 'W t r tte .t p*ct of th e itld —
Cur r ency o u ts ta n d in g
s being r e tire d w eek b y w eek; th e
took e x c h a n g e s a r e open a n d th e
■
v “w Y ork e x ch a n g e alone p re s e n ts
a problem fo r th e fu tu re in th e m a ln 1 nance of m a rk e t v a lu e of in v ee t■ient holdings, a n d of Invested s u r
pluses.
C leveland
sa v in g s
banks
have
gained in th e y e a r m ore th a n $6,000,OO0 in deposits. On Oct. 21. 1913,
th e ir deposits to ta led $229,875,000.
On Oct. 31, 1914, th e n e a re st d a te as
of w hich com parison can be m ade,
the sum w as $236,563,000. T h e gain
t;t due to in cre ases in all d e p o sits—
those su b je c t to check ro se $2,836,
, S avings a n d tr u s t d e p o sits g ained
>3,t!88,300. I n these tw o figures ,are
reflected m ore d irectly th a n in a n y
jth e r th e a ffa irs of th e people of
DOC'l'M E3NTS S IIU W U ItO W M'H.
F u ll
year.
1914 to
1013.
Dec. 28.
Doeds . . ..
23.947
20.124
Mortgagee .................... . . 21.291
35.647
Chattel m ortgages . . .
17,373
1,038
Liens .. ..
781
• 137
Power of a ttorneys .. . .
141
3,547
Releases ......................
4.467
Insurance papers . . . . ..
4.448
91
222
130
Certified copies .......... ..
Mlscel laneous papers . .
2.382
1,405
Totfll .......................... .. 225,558
113,396
t&oderate raeaoa.
W h en th e s t a t i
b an k su p e rin te n d en t sh o rtly calls for
sta te m e n ts of condition a g a in th ere
will be m in o r changes in these fig
ures. b u t th e econom y g en erally p ra c
ticed a n d th e in d u stria l u p tre n d p ro
duced by good crops, fa m ilia rity w ith
.'VjjV effects, com m odity e x p o rts and
i£®%Jtreight ra te decision m ak e it c e r
ta in th a t th e figrures w ill be s ta tio n
ary -or will show f u r th e r increase.
N a tio n a l b a n k d ep o sits on O ct. 21
1913, w ere $84,893,500 a n d on Oct. 31,
1934, $76,625,500, a d ecrease of $&
268,000. Of th is $1,650,000 is due
tra n s f e r of re se rv e s of out-o f-to w u
n a tio n a l b a n k s from C leveland n a
tional b a n k s to the fe d era l re serv e
system a s provided b y law , a n d $",
513.700 re p re se n ts de cre ase in the
a m o u n t due s ta te b a n k s, w hich is
a g ain in creasin g .
I t is th u s th e n a tio n a l b a n k s
w hich h a v e been b e a rin g th e b ru n t
of the b u rd e n , b u t it is theee b a n k s
too w hich a re now afforded u n d e r
th e ndw b a n k in g sy ste m fa cilitie s for
o b tain in g c u rre n c y on sh o rt ord er a n d
which, on th e s tre n g th of m e rc h a n t
p a p er in th e ir portfolios, c a n d ra w on
the m asse d gold o f th e e n tire fed eral
re serv e sy ste m and, if need be, of th e
governm ent.
T hese, in brief, a re th e re aso n s for
th<j p re se n t im p ro v e m en t In financial
conditions— th e t r u s t of th e people,
h e w isdom of th e b a n k e rs a s por:rayed in th e la te su m m er a n d a u iupin, a n d th e m assin g a n d genera!
a v ailab ility a s n e v e r b efore of th e
la tio n ’s m oney resources.
D evelopm ents of th e y e a r in Clevea n d included th e e sta b lish m e n t here
jf th e F e d e ra l R eserv e B ank of
Cleveland, w ith th e likelihood th a t
io tw ith sta n d in g P itts b u r g 's ex cu sa
ble a tte m p t to ta k e i t aw ay , i t will
e m ain w h e re it is.
A nn o u n cem en t w ill be m ade e a rly
n th e y e a r t h a t a n u m b er of dow no w n t r u s t com panies h ave joined
he C leveland c le a rin g house a n d
vill m ake use of its check in:erchange a n d s e ttle m e n t m ach in ery
lire c t in stea d of th ro u g h th e n a donals a s a t present.
A new s ta te b a n k w a s established
le re In 1914, th e D e tro it A venue
Savings & B a n k in g Co. Opened in
A ugust its d e p o sits a re a lre a d y w ell
j n th e w ay to $200,(XX) a n d W est Side
th r if t keeps th e m m oving.
I n th e y e a r also th e G u a rd ia n S a v
ings & T r u s t Co. com pleted n e g o tia
tions for m u ch needed la rg e r space
In th e N ew E n g la n d b uilding a n d
e a rly n e x t y e a r will begin rrm o d eltag
I . 11* P re p a ra tio n ' fo r
c j.
pleted for its s k y s c r a p e r ® sta n d
Present F*ic'id-av s iw T
■ I n th e course o f 1015 th e G arfield
K«-vIlXgrs bank will com plete a n o th e r
K ast E n d b ran ch b u ild in g to be
e rected exclusively fo r its use,
W
the coming: year also th e B t* m B an k <
I?8
T ru s t Co. w ill rem odei its
i.u c iia -a v hom e in to a se v e n -sto ry
n o dem stru c tu re .
ANNUAL FROUC
AT CHAMBER
A bell tolled the first stro k e of
twelve. T he ligh{ died, leaving thcIgures in th e huge "1914" b ia tln g
n e r th e ro stru m . T he 4 faded. W ith
he dying sound of rnidn g h t 3 bu rn ed
n Its place. T h ere Was a shouted
treating; a call of “ H appy New
( e ar!"
It w as th e clim ax of Now Year
estiv ities a t th e “a n n u a l fro lic " oi
he C ham ber of Com m erce. Tw o h u rIred m em bers Joined h a n d s a t the
'ifinal a n d sa n g “ A uld L ang S yne'“
T he fe a tu re of th ? big a n n u a l ene rta ln m e n t th is y e ar was th e m u
sical comedy num ber, when m em bers
tripped the “T histledow n" in Im ita
tion of Pavlown and Adeline Gence,
in d sa n g near-P«>tch *electiSn» a In
H a rry Lauder.*'
*•
A nother s tu n t w as the p re sen ta tio n
of a Reserve B an k to C leveland
U ncle Sam. P . J. S aw yer sim u la ted
V nole Sam ; W. W. Sm ith, a Scnv;t’
av en u e conductor, said to look Hi.
M ayor B aker, re p re se n tin g C leve
la n d ; E. 8. B arkw lU , representin'.P itts b u rg , and G ilb ert N orw alk, re;,
re sen tin g C incinnati.
A n inform al bu ffet luncheon r. a.served, w ith p unch ta k in g the pin ■
of th e usual w ine to a s ts to the N o"
Y "ar.
The e n te rta in m e n t com m ittee w ns
TTcnry R. Cool, c h a irm a n ; George A.
Schneider. A rth u r B radley, P . 13.
B u rro w s, Jr., S am C. C utler, R. C.
E n w rig h t. A. H. F iebach, R. G.
Floyd, W. I. K n ig h t, H e rb e rt M a
thew s, p . W B yers. W- G. Rose.
F ra n k lin Schneider a n d H . 1L. W il-
h tU tH A L BANKS MAKE
FIR ST IN VESTM EN TS
1 b a rk s, the federal reserve board made tne loi
1 iuwing com m ent:
,
, M
1 “ The statem ent Indicate a loss
I to to tal cash resources and ot
! as compared with the pr-vlous week »
I The loss of cash in the hands of the bank* I*
more than ottset by an w e re M e o f U M . M or
gold In the hands of the fodM-U
^ " L o a n s and
over 12.000,000. Richmond. M lnneapoils.T’bUa
delphla and D allas showing the largest gains
In discount operations during the w m K. l-m
cago and New York for the first “ me J ' ' ? 0"
investm ents In public securities. The (»ini-ct
${,500,000 In all other resources Is due chleny
to the Increase In the am ounts ot national
bank notes and federal reserve notes in the
hands of the banks
_ ^
"D eposits show an increase of Skaw .w .
rrainly a t those banks w h ich report a g a i n 1
discount operations. F ederal reserve
report additional issues to the banks of W. wo,
000 oi’ federal reserve note*
still larger am ounts of gold and law fal mon.y
in th e ir hands and of federal
in the handa of ihe banks Ihem selret, the n
liability of the banks upon their 1
circulation was a t the end of the yea-r
'lig h tly above IS.T50.00a.*'
« Ka.t the
No statem ents were made ae to
t&e
• lnve«tinant»" rrfered to loehtasg. b a t j t W
surrniaed th a t th»y represent purchase* »
II. S. RESERVE M I
—H . M. G B I U E lf
Canton Investment Dealer
Says Federal System Must
Extend Facilities.
Believes It Must Loan Capi
tal as Well as Se a
sonal Funds.
\K -------
BY
• —
.
a y the tim e this dl*
crim ination I* transm itted to the borrowei
th ro a s h tho medium of the hanks, It wil
bo m agnlfed to an extent which will pro
duce an era of very low money rate* foi
stric tly commercial loans, coupled w ith a r
era o f very high rates for Investment loans.
In simple terms thl* mean* th a t the few
a d v a n t a ^ i whfch used to lead m anufactur
e rs to take a chance and borrow their p e r
m anent capital from banka will be wltln
draw n »It will cost Just as m uch to jptt
perm anent loan* from banka a s It would
cost to sell permanent securities to perm a
nent lovsstora
Simple, economic consideration*, therefore,
will drive every class of Industry into tho
Investment m arket.
N aturally. It will be Impossible suddenly
to reverse our existing practice In this re
» i i 'A U *
it* practice ha* brwi one of th e most
tho cause* o f Industrial failure* tn thnll«*l oiatee. Dun'* and B radstroot's re
mmm for many year* show th a t 90 per
„ t. o t all failure* a re dua to lack of
ostottal
In very m any Instances. oaoellent
SnUrprlaee were undertaken a t period* wIim
■ easy to secur* loan* from banki.
fall In th e midst of th e ir develop
because *ome contingency forced tti__ to w ithdraw it* support and demand
the paym ent of It* loan*
T h a t the new banking system will tend
10 correct the** a d m itted evil* 1* f*nen»:ly
conceded. B-L !t
fa ir to conclude that
no arreat jprocrea* wtU be made until a prop
e r 7'„'we*pbUiion o f the discount ra te has
Sefrmn-strated some fairly exact ftguie the:
ra n he taken to represent the hi a h oat anti
lowest point in th e an n u al demand for com
mercial fund*
W hen th is flaure has beer,
ascertained. U wilt be fairly safe ^ e^nrlu d e that tho rem aining funds In th e cus
j i l s i l eppNf^OWI aaUena
a re available foi perm anent tave»t
i z out com m ercial paper for m lin
>e ff-deral bank* e lf ’ b« forced t.
__
K for rate# low enough to mAh
tra .section profitable for the meant*
■ a w M M M f w m m m M w ki
*h*n tr y in g to make sim ila r i-roSte on p a p n
c f ar. .^vostmerit riiar* cte r. th e bank* wil
K '"' £
hl* b dJiosunt r a l s s W F W i i i
he officers of th e F e d e ra l R eserve
of Cleveland w il! be se ttle d to oi^ow in th e ir new q u a rte rs . ?26-231
illi&nson building.
The bank will
cate xhe first floor of th e b u ild in g
tem p o rarily to m ake w ay fo r the
U l[o n N ational, w hich w ill occupy
e q u a rte rs w hile Its s tru c tu r e Is
g u p ; the Union w ill m ove in to Its
o ra ry home ab o u t Ja n . 16.
•
,e regional b an k ’s tr a n s it d e p a rtm c ri w ill
on the fo u rth floor of the
W lllam tson building and its m oney
d e p v tin e n t in the b asem ent.
T he
tem p o rary Inconvenience o f h a v in g its
d e p f tm e n t s se p a ra ted m u st be u n d e r
gone by the reserve bank In accordance
witM Its a g ree m e n t w h e n It moved^,
moved
i n t # t h e building. - . ^
necessary tor STL
w u m n wa
i» rrow from banks, and for banks, in a sense,
vo en ter bualneee a* silent partner* of good
t^iterprises—hut from this tim e on it should
Ascome Increasingly oasy to put the perm a- I
nent financing or business on a sound basis, 1
*
Tent of mtm tmm *».— — "
H . M. C K l l i R R .
Of Q c l f f r , J o u p i A Co., r » n l o n . '
T here a re sev eral p h ases of ttip
new federal re serv e banking system
t h a t have n o t y e t received adequate
a tte n tio n a t th e hands of those who
h a v e been sp eak in g and w ritin g on
th e subject.
To m y m ind, one f»wt ab o u t th€
m ir b anks sta n d s out above all
others. I t is th a t, a fte r th irty dayi
o f a c tu a l operation, during a period
o f ti^ h t m oney., th e n«w b anks had
m ad e n r a d ic a lly no loans. Issued
p ra c tic a lly no c u rre n c y and had found
It ne ce ssa ry to m ak e special conces
sions In th e r a te of discount, in order
to brin g o u t s tric tly com m ercial p a
p e r th a t w ould be paid w ithin thirt}
d a y s a fte r th e disco u n tin g tra n s a c
tion.
o th e r word*, though Ameri.-an
business needs m oney, th e reported
fa c ts about th e o p eratio n of th e re
serv e bankB w ould seem to Indicate
th a t w h at bu sin ess needed w as not
com m ercial funds, b u t m ore or less
p e rm a n e n t c ap ital.
T h e dally p ra ctic e of business con
s titu te s sufficient proof In itself th a t
th e com bined to ta l " f all “ Investm ent
fu n d s ” a s re p re se n ted by th e resources
Of savings, tr u s t
and
Insurance
com panies, p riv a te in v esto rs a n d in
v e stm e n t banks, a re not sufficient to
m eet th e d em an d s created by o u r In
d u s tria l expansion.
S ta te d b luntly, a m ajo rity of the
reso u rces of n a tio n a l banks a re tied
0l> w ith loans of a m ore or less p e r
m a n e n t c h a ra c te r. Truly, the notes
a re
ualiy m ade fo r periods o t four
or six m o n th s , b u t i t is the u n d e r «t&ndln* b e tw e e n t h e banker and t h e
bo rro w er in m an y instances th a t
th ese notes ahall be re n e w e d in d e fl
nitel>\ p r o v id e d c e r t a i n p e r io d ic a l r e
d u ctio n s a r e m ade and t h e i n t e r e s t
discounted in a d v a n c e . M o re o v e r . th»*
c o u n try is fille d w ith m a n u f a c t u r e r s
w ho expect b a n k e r s not o n ly t o fi
nan ce tb e lr t e m p o r a r y n e e d s , b u t w h o
h a v e also b u ilt t h e i r p l a n t s on c a p i t a l
owed a n d r e b o r r o w e d , a g a in and
[ain, fr o m banks,
I
gj.
p . f r v f l o a t i t n t l o . M a . t Si e. p a. m t e
I t * D e p a r t m e n t a T e m p o r ia r ll y j A
BANK STATEM EN TS
RESERVE BA K CLEVELAND.
RE5 JfJRCES.
Gold and gold certificate*.................. fl7. €74.00'*
I .'‘gal*, other note? and coin............ 1.017.00C
Rediscounts and loans .......................
StM.oOC
319.000
All other resources .............................
Total resources ................................fl>,516.000
LIABILITIES.
Capital paid In .................................... 12.031.000
Net deposits . . / ..................................... 17.345,0'0
Fodera^rMMrve notes tn circulation
140.000
Wt l « L e i |J i r « . .
....... SIUIS iOJJ
Oola “ serve against all llabllltlee, 101.07
per cent; cash reserve against all liabilities.
100JO per cent: cash reserve against all liabil
i t y after setting aside 40 per cent gold re
serve against federal reserve notes In circu
lation, 107.42 pei cent.
ATX RESERVE BANKS.
RESOURCES.
Dec. 31. 1*14
Oold ''oin and certificates ............... $229,069,000
Legal*. other notes and coin.......... 2«,578.00*
Total ..................................................... »S,*t7,00v
M aturities within 30 days..................
4.632.000
4,215/00
M aturities within 60 day* ...............
Other m aturities ................................
1.746.Opt)
Total discounts .................................. 10,o93.00u
Investm ents' ..................................... . ^
2oo.OOj
All other re. mrces ................ a f l l K 11,349,00'
Total resources . . . . . . . . . A........IjJ4\fc77,S44.006
A a ttL W lE S .
Capital paid In .................................. tli.051.000
Reoerv**’deposits ................................ 286.018,000
Federal reserve notee .......................
3.775.000
Total liabilities .................................. 277.944/00
Oold reserve against ail liabilities. 88.2 per
cen t; cash reserve against all liabilities 99. i
per cent.
NEW YORK CLEARING HOUSE BANKS.
Increase.
Loans, etc.........................12.191.508.000 812.411.000
Reserve in own Taults
330.177.000
1,761,000
Reserve in federal re
serve bank .................. 100.387.000
1,798.000
Reserve In other depos
JLST.OOO
818.000
itaries ...........................
.Vet demand deposit* ... 2,022.165.000 41.988.OP*
MS8 tim e deposit* ........
91.936.000 *1,544.000
Circulation .....................
43,569.000 *4.007.000
Aggregate rew rv e ...... 462.464.000 .............
Excess reserve ............... 114.084.920 *3,638.280
OTHER NEW YORK BANKS.
Loans, etc......................... IS61.9I1J.00
844.400
Specie ..............................
43.263,TO#
574.900
l.'-gal tender* ................
12.895.100
827.S00
Total deposits ................ 845.S79.cOO
125,300
B anks’ cash reserve In
vault .............................
11.808.900 ...............
T ru st companies* cash
reserve In value ........
44,382.500 ..............
•Decrease.
CLEVEI AND CLEARING HOUSE BANKS.
Tx>ans decrease ........................................ t 2eo 971
D a p t t f c s I w w .................
C a k and dua from nm. a n . . In c .... 1,291 4U
C H IC A G O STI O C K S (CL O S E
v<
Ito c k
'
Bid. Asked
w e n can Can .............................. . »V4
. sft
JFnie.ican Shipbuilding ..............
77 .
12f»
do pref...................................... . . 130
125
C hioaso R ailw ays l s t s ..............
. 27
26
««;
•
Commonwealth Edison .............. . 136
136 ^
Diamond Match ............................ . 92
OS
H art, Shaffttor A- Mark pref. . . 105% 106
. 118
122
. 120
122
117%
p n e u m a tic Tool ........................... ■
52
^ a k e r O ats .................................. . 230
230
108U
S e a ^ R o e b u c k Co. .................. . 184
184^
\2 l\
,121
Swift & C oW ”
Vi
MONEY TRUST
CHARGE FAILS
^EXO O ERE
.Officials o f th e C'l
S M p ra l
re serv e b a n k re fu s e d T h u rs d a y to
g e t excited o v e r th e p o litic a l fight
b e in g w aged in C hicag o w h e re It Is
c h a rg e d th e g o v e rn m e n t In stitu tio n
is bein g d o rtln a te d by tw o p ro m in e n t
b a n k e rs, J a m f if t d k . F o rg a n a n d
O eorge M. K eyn M if f y
jQ J I j
G o v e rn o r JC. R. K ttncller w S fflfl^ o t
diHcuss th e m a tte r b e yond sa y in g
t h a t th e C h icag o a ctu atio n c o u ld in
no w ay be c o n n e c te d w ith t h a t h e re .
Tf th e a ffa irs o f th o C h ica g o fe d e ra l
b a n k a re in v e stig a te d by c o n g re ss
th e probe will in c lu d e th e C lev elan d
in s titu tio n as a m a tte r o f form .
T h e c h a rg e bein g m a d e in C h ica g o
is t h a t R ey n o ld s a n d F o rg a n , w h o se
b a n k s c o n tro l 25 p e r c e n t o f th e c a p
ita l sto c k , a n d 40 p e r c e n t o f th e d e )H>sits o f th e g o v e rn m e n t b a n k , a n d
w h o a re d ire c to rs of It. h a v e h e ld
th e d isc o u n t r a te s o f th e g o v e rn m e n t
in s titu tio n above th o se c h a rg e d by
th e ir ow n banka.
T o d o o th e rw ise ,
u n d e r p re s e n t b a n k in g c o n d itio n s.
C leveland b a n k e rs say , w o u ld b e to
■»ppo*e th e u n d e rly in g p rin cip les of
tl»e new c u rre n c y law .
C h arg es th a t th e "m oney t r u s t" is
In control' of th e fe d e ra l re serv e
ii*Tiks, and th a t Just now it is s e rv
ing fh" p u rp o se <>f th e " t r u s t ” to
keep tlie re d isco u n t ra re high, a re
c*ntfcine4 in re so lu tio n s by H epre
-em ativ-e L indbergh o f M innesota
whi£l» w ere before tb e rule* com m it b o u e t In t ta * b ip s tp |i
j
■ ! s.H u tliU is ar': fo r ■ n inve.i
a I ' O t S K l a ! C D m nilU .'t'ajfl
i
LAYS DOWN RULES
F
Federal
Regional Bank Purchase of
Municipal Securities.
London Exchange Has More
Active Session— Day’s
S'
B lM tg I
T he fe d era l re serv e b o a rd y e ste rJa y in W asn in g to n m ad e p u b lic "te n
ta tiv e re g u la tio n s to go v ern th e p u r
chase b y reg io n al b a n k s of m un icip al
w a r ra n ts issued in a n tic ip a tio n
of
collection of tax e s. T he re g u la tio n i r e broad- enough to m ak e it possible
for th e re g io n a l b a n k s to b u y su ch
se c u rities d ire c tly o r in d ire ctly from
'-any -city o f sta n d in g , la rg e or sm all,
' fii th e U n ited S ta te s. T his will give
th e b a n k s o p p o rtu n ity to m ak e m ore
u se of th e re serv e fu n d s on deposit
w ith th e m b y m em ber b a n k s.
D efining acc ep ta b le w a rra n ts , t h e m
b o a rd sa y s th a t o b lig a tio n s p a y ab le
from “ local benefit” a n d “ special a s
se ss m e n ts” tax-is shall n o t b« ta k e n
u n less th e m u n ic ip ality a t la rg e Is
d ire c tly or u ltim a te ly liable. W a r
r a n ts m ust bt- th o se o f m u n ic ip alities
in ex iste n ce fo r te u y e a rs, a n d m u n ic
ip a litie s w h ich fo r a te n -y e a r period
p re v io u s to p u rc h a se h av e n o t d e
fa u lte d fo r m o re t h a n fifteen d a y s in
th e p a y m e n t o f a n y p a r t e ith e r ol
p rin cip al o r in le r e s t of a n y funded
d eb t. W a r r a n ts of a m unicipality
w ith n e t fu n d ed in d e b te d n e ss exceed,
ing 10 per cent, of th e v a lu a tio n ol
its ta x a b le p ro p e rty
w ill n o t Vx
ta k e n .
N o re se rv e b a n k is p e rm itte d tt
in v e s t in w a r r a n ts to exceed 10 pei
c en t, of th e d e p o sits of Its m em bei
ba n k s, e x c e p t w ith
tjie r e s e r v i
b o a rd ’s a p p ro v a l, a n d o th e r r e s tr ic
tio n s a r e placed upon th e am ount!
to be in v este d .
Special a p p ro v a
m u s t be received to a u th o riz e p u r
ch ase of w a r r a n ts Of m unicipalitle:
of 10,000 p o p u latio n o r less.
L o n d o n M o r e A e ttv e .
.
LONDON, J a n . 5.—The stoci: m a i- k e te l
perlenced a more active seeelon today. D w
ers w ere able to n egotiate the comjHlcatei
forma n ecesary to record deals b e tte r am
th e tone generally * a i f te* ^ y ' .
mtu
B usiness w as b risk er In the American sec
tlon. especially In U nited S tates Steel share
which changed hands between 81% an d 51%
C anadian Pacific sold from
0om t
159%;, b u t rallied and closed a t 1J0V4The g ilt edged scction w as th e m ost active
A largo business wan done in
consols w hile th e official board recorded sev
e ral m ark in g s In colonial »*«*»■
and some American ra ils and ^ n d s . Anion,
the m iscellaneous secu rities oils. Marv.mil
and B razilian tractio n s changed^. hands fre
quently a t hardening prices.
B a n k C a ll*
The controller p f th e currency and th.
s ta te b an k superintendent have issued call*
fo r statem e n t of condition of banks a s o
Deo. 81. P riv ate banks m a lt respond t<
th is call.
.
U n io n S a v iH g N & L o a n .
The e x tra 3 p er cent, dividend, on Unior
Savings & Loan is payable
15 to hoiden
r-w .r-.l
FEDERAL W
l
MOVES
and v aS n frlT T W M tes
flOor
^ ^ ^ K M j j m M i n i f - buiWlng
tu * j
t business >e»te: Ja y afternoon,
LP.fi*r w in be fo’inil sp re n t over
V.a H.' irs o{ ilia, Sami' b.illd-
• 1
elle-’s office, have been prdvlded for fen
:hft second floor in a suite occupying tf>e
'orm er location o f the Cleveland Bto- k
FCxchango. Xhe tellers’ cages have been I
noved Vp the basement, which h a s been |
ltted up w ith a commodious lobbv. ex- ;
tending unde'.' the Euclid avenue "pave-1
ment. New vaults have eJeo been Initailod. capable of storing some 174,000,» In federal reserve money In such
proportion as the denom inations usually
run.
. .£ .
i<
1
The! new vaults Include a M r!**'of
•teel iafes, cach w ith Its own com bina
tion, providing sep arate accommodation
lor toe federal notes under control of
Pedefal Agent T). C. W ill., ,n d others
■or t»o banking departm ent, containing
:he reneral resources paid in by t ie
member banks and the federal notes reeasod for circulation purposes.
Out the fourth floor of t h e 'building o*
.ces are being provided for the tran sit
Jepartm ent of the bank.
The Union N’ational, which will move
n to tho f ir s t floor offices shortly, will
)«e tue vaults form erly owned by the
-leveland T rust Company and which
"ere utilised by the Federal B ack prior
:o
t!;e receipt of Its own new vault
•
i • n m artf
^
jan
-
LSEB B l
P res 1
J
Isltia
A ienion, a C hicago rall1^ 8a n°m in a ted today by
W ilso n to sucoeed F re d e ric
. ?
a m em ber of th e induscom m isslon. Mr. De“ t0 th o
r«-
0DD SH A PED GOLD COINS
AW AITED AS S OUVENIRS
O c t a g o n a l |RO P a n a m a E x p o s it i o n
P ie c e s W i l l N o t H a v e G e n
A m e a su re w hich h a s passed b oth
houses of c o n g ress p ro v id es fo r a
special issu e of gold a n d silv er coins
to co m m e m o ra te th e P a n a m a -P a c ific
exposition. T h e m ea su re , if a p
pro v ed b y th e p re sid en t, w ill a u th o rise
coinage of a p p r o p ria te ly designed
|5 0 , $X50 a n d $1 gold pieces ar.d 60c«nt silv er pieces. T he $1 gold piece
Is scarce, none h a v in g b e en coined
for a n u m b e r of y e ars.
A m ong th e $50 gold pieces Is to tx>
an issue of o c ta g o n a l coin*, sim ila r tt
th o se issued in C a lifo rn ia in 1851.
“T h ere d o u b tle ss will be few oi
th ese o c ta g o n al coins,” said a Cletteland b a n k e r y e ste rd a y . “ B ecause ol
th e ir shape, th e y w ill re q u ire special
m ea n s of p a ck in g .
T hey p ro bably
will n o t c irc u la te like o th e r coins,
a s m o st of th o se th e b a n k s do n o t
keep in th e ir v a u lts w ill find th e ir
w a y Into s tro n g boxes a n d m em ento
c a b in e ts to re m a in a s so u v e n irs.
H ound C h ristm a s tim e th e y ’ll be In
‘^ W e S A IM fc rv J a i& lc
of
C leveland h a s its d e p a rtm e n ts in its
new hom e in th e W illiam so n b u ild in g
to d ay . T h e officers h a v e m oved to
th e second floor, th e tr a n s it d e p a r t
m en t to th e fo u rth floor a n d th*
m oney d e p a rtm e n t Is e sta b lish e d In
the b a sem en t. T h is te m p o ra ry se p a
ra tio n is n e ce ssa ry to m ak e w a y for
th e U nion N a tio n a l, w hich J a n . 15
ta k e s te m p o ra ry q u a rte rs on th e first
floor, to re m a in w h ile Its n e w h e m s
. ‘jt bein g erected .
' T h e new sa fe s of th e reg io n al
,ave been In sta lle d .
Floodproof,
b u rg la r proof, fl-eproof, th e y wit'
hold w ith o u t c ro w d in g m o re th *
$50,000,000. E ig h t in nu m b er,
ntand In tw o tia ra .
'•
Thrwe m en m u s t b e p re se n t befo
‘ th e s a fe s c a n b* o w n e d .
i a u j u r x .UlaJIK XU FOST.
W HUEnNitedIt wSatas tedse creidseedr‘tv eh a tb athn ke
o f th e F o u r th d i s t r ic t sh o u ld be
located In C lev e lan d thfere w a s a l
least som e ta lk o f th e p r o p r ie ty <jf
city a ctio n to w a rd p ro v id in g th e
in s titu tio n w ith s u ita b le p e rm a
n e n t q u a rte rs .
On Its e s ta b lis h m e n t t h e bank
occupied t e m p o r a r y a cc o m m o d a
tio n s in th e W illia m so n building.
T h a t w as o n ly a few weeks ago,
but
a lr e a d y
th e
g o v e rn m e n t's
b a n k e rs h a v e h a d to m a k e w ay
fo r a n e w t e n a n t by s h iftin g th e ir
offices to th e second floor o f th e
sam e b u ild in g , w ith detached
p a r tm e n ts on o th e r floors whi
-.pace is a v a ila b le . T h is so m ew h at
in c o n v e n ie n t a r ra n g e m e n t Is to
c o n tin u e in d q fia its jy .
T h e geneT al g o v e rn m e n t w ill,
>f c o u rse , h o u se Its re g io n a l re<erve b a n k s v e ry sumptuously,
’'h a t 16 i ts c u sto m as to its other
b u re a u s a n d its o b v io u s duty to
Its b a n k s . T h e F o u r th district In
s titu tio n w ill n o doubt be provid
ed w ith Impressive q u a r te r s In,
C lev elan d o r elsewhere 1ft d u e
tim e.
B u t governmental b u ild in g
o p e ra tio n s ta k e a lo t o f tim e .
M ean w h ile C le v e la n d ’s s a tis fa c tio n
in b e in g a w a rd e d th e bank Is ■pure
ly s p ir itu a l. I t s s o u rc e c a n a o t be
p o in te d o u t w ith p rid e to visitors.
A n d P i t ts b u r g is fiUUvttrijKng. f & f a t
th e d e c isio n revCTseit.
I t w o u ld b e p le a s a n t, a n d sur
p risin g , i t p u b lic s p i r i t o n the part
o t In d iv id u a l C le v e la n d e rs were to
p ro m p t t h e p r e s e n ta tio n of a eultab.e s ite for t h e permanent b a n k .
In r e a l e s t a t e dealings with t b f
g o '-e m m e n t th e custom is rfcther tq
a»k a n d e x a c t a good round price.
T h a t th e Institution should
firm ly anchored in C lev elan d
*ucli n a c t on th e part of the
a k u m l i 'j w ould be jentlrely fittin g ,
a n d p e rh a p s h ig h ly d e sira b le , b u t
a lto g e th e r o u t o f th e q u e s tio n by
re a s " of th e c ity g o v e rn m e n t’s
fiaa.. '
.Jia u s tio n .
So fa r fro m d o in g anything to
menf! dauers, Cleveland must see
the. very welcome n ew in s titu tio n
uuun’-.dily and unworthily housed;
o r e-VTi re m o v e d to another f i ty .
I n a b ili’y to afford the d o in g of-an
act o f generous hospitality in th e
premises is only one more c o n se q uer.ee of spendthrift m u n ic ip a l
finance — and that by no means
hurtful one.
.
th t m o st
IS THE ORDER OF THE DAI
ngffvania Railroad to;P?ft4jfr5D,000,000 Bond Issues
Up to Shareholders, St. Paul Will Offer Deben
tures, Banfcgf France Borrows.
I
Jgional Bank of New York Takos $5,000,000 Municipal
Securities—Railroad Buying On in Earnest
—Sterling at Gold Point.
BY H . S. R O SEN TH A L.
F in a n c in g is th e order of th e day. T he P e nnsylvania ra ilro ad p re p a re s
0,000,000 bond issue. The St. P a u l w ill offer its shareholders $29,000,000
e rtib le debentures. The B a n k of F ra n c s has $2,000,000 in gojd b a rs se t
is c red it in th e east. The F e d e ra l R eserve B ank o f N ew Y ork in v e sts
,0 0 0 ,0 0 0 in m unicipal securities.
Such a m ass o f pro jects recalls days b e fo re th e w ar, and long b e fo re the
~ a t th a t. T he tw o ra ilro ad s seize th e oppo rtu n ity , w hile th e public evinces
e n ew in te re s t in securities, to c a te r to t h a t sentim ent. D om estic raiload s h av e as m uch rig h t to th e common A m eiican money fu n d as h a v e fo r
e ig n ers, a n d th e ra ilro a d s w a n t to be e arly on the ground. In tw o w eeks
M o n tre a l ra ises $6,900,000 in th e east, A rg e n tin a g a rn ers $15,000,000 a n d th e
1* re ac h b a n k $2,000,000. B efore th e calls becom e too num erous on th e c a p ita l
o f in v esto rs, p riv a te and in stitu tio n a l,
ar«
*n T h e P e n n sy lv a n ia ’s bonds c an n o t bo i v ery
,
anE?
de"
e m itte d before th e m iddle of M arch n V o ^ in ^ ^
L ^ n d l ^ « ^ ffht
ftt th e e arlie st, a s sh a re h o ld e rs will j l 7 5 0 o<X)- th e
t 1,
vote o n th e p ro p o sitio n a t th e a n - ’r t o n T n 'o ™
*«*«>■/?»
n u a l m eeting, M arch 9. T h e bonds S m lrin g f o T ^ i OOO to n . i ° na.. an. l ‘s
will b e based o n th e n e w g e n era l ?ere M a rn u e « e l ^
7 he
m o rtg a g e ap p ro v ed la s t y e ar, a n d pro - n C a n ad a iust
tv. ’ ? P i ? u s
ceeds will go f o r re fu n d in g of bonds These show tho
J1 ,
eI>
a n d p a y m e n t o f c a r t r u s t a n d o th e r n th e steel i n d u . t r ^
w ind blow s
o b lig a tio n s m a tu rin g in 1015. T he St. eej t h f sU r f w L ^ d e p a rtm e n ts
P a u l d e b e n tu re s w ill be 5s a n d w ill .tiHa on
d E gain
be offered sh a reh o ld e rs a t p a r to th e L — .
p
Q uotations,
e x te n t of 121-£J p e r cent, of th e ir |
Clo»e» U n d e r T op.
h o ld in g s.
I W h e a t m ade m ore h ig h m a rk s
B a r M ym tery C le a re d .
Pu t closed well below th e top. The
- T h e F re n c h b a n k ’s lo an d e a r s u p f e " ^ Y *8 * 1t™ 5 u V ^ ° 5 1* h ° cean
u w groiu
mym.ery w m cn utxa e*
1 a te s a n d lack of bottom s,
s tir r e d W all S tre e t all week. A n i n - 3ut 1
e a s m uch to profit ta k te rn a tio n a l b a n k in g house h a d th e n *»*
son^e ap p lies to th e b re a k
b a r s s e t aside fo r lt In th e a ssa y , of- *1 cotton, w hich occu rred in th e face
flee a n d y e ste rd a y deposited tn e m 31
new s t h a t th e se a so n 's first
w ith a N ew Y ork b ank. O redit f o r - ^ J S 0 or A m erican c o tto n h a d landed
«$gn m erc h an d ise sales w ith th is 3?;*®*,^ *n G erm an y a n d a n o th e r
jjfeiount. B e n e a th th e loans one rea.ds3hort‘y w ould a rriv e . T he ste a d y ext h a t ste rlin g exchange will go m a-P o rt m ovem ent co n tin u es; y e s te rd a y
te ria lly low er th a n th e norm al goldaIf P ? r t s seT*t out 53,303 bales.
Im p o rt point, a t w hich it closed •yes- P rices w en t in tw o d irec tio n s on
te rd a y (sig h t d r a f ts 4.84 1-2) before*110
Y ork sto c k exchange. T hey
E u ro p e will sh ip u s m eta l.
p*n he expected to receive su p p o rt
T h o fo u rth 'm o n e y e v en t of th e d a ^ i u r g e n t ' o f
th e c u rre n t
yr&s o f w holly d ifferen t n a tu re f r o n t h . j? v ] ™ ® ° u t °* th e w a-y, b u t in
b u t r a n k a w ith th em in Rip- JJw? - . i / ?
su p p o rt w ill c o n te n t itin m o a n c e. T h e N ew x o rk re g io n tse lf w ith m o d era tio n — w ould m an i! b a n k w ith its
000,000 ta k in g t Jestl7 d e*eat its ow n e n d " if it , a tN e w Y o rk c ity v. *-4mts goes in to t l t r a °ted sto ck s from oversea. E?uroin v e s tm e n t m a rk e t fo r th e firs t tin
s.* i n *|Lw aa b lam e d for th e ease
on a big scale. T he re se rv e b a n l J r
S ta te s Steel, w hose high
w ill n o t w a it fo r re d isc o u n ts to w-aj S )r.. . ? d a y w as a h a lf point u n d e r
4%or* in. n o r will th u v fdajih r a te s i ije th ie h em s new ly a tta in e d a ltitu d e .
p e rsu ad a them in—tn e y w m , now evel I n terb o ro u g h issu es responded to th e
b u y m unicipal se c u ritie s h a v in g n< 8Uh w ay d isa ste r.
m o re th a n six m o n th s t o '\ i i n apj ^ B a n k s in th is te rrito ry now find
g o v ern m en t bonds. U p tc* v ^ t ^ r d a J?*e m oney tren d in th e rig h t direc$225,000 h a d been in v este fMr i thesfJJJJ}* C o u n try b a n k s a re p a y in g off.
c h an n e ls: th e a m o u n t in trr*1TtfO M Individual deposits a re g aining, colb llity w ill grow b y .leaps from -^o w
h a v a m o d e ra te ly im proved
fo r m ore th a n $255,000,000 cafch lid 2 n d . in th e hom e a re a ta x m oney is
In th e sy ste m 's v a u lts. In e id e n ta llJ flow,nfi: in *
the g o v e rn m e n t b o n d s bougrht b e a r the
Circulation privilege a n d c a n be used
l*y th e regional b a n k s a s se c u rity for
>*
iOte issues; th e p re se n t u se o f course
0 a s incom e producers.
So m oney prom ises soon to m ove ir
•olum e, responding: tc u rg e n t dem am
n som e q u a rte r s a n d w h a t m a y hi
(r& fed u rg e n t su p p ly in an o th er^
In th e steel tra d e sig n s of a c tiv ity
n u ltip ly .
T he P e n n s y lv a n ia has
uwted bids on 150,000 to n s o f ra ils,
t w ill b u y 170,000 to n s th is y e ar,
lom parfng w ith o n ly 132,432 to n s in
914.
CLEVEIAND BANK
<*
U,ni$n Actional Begins Opert?
ation Under New Power
| Granted by Reserve Act.
facilities Afforded by Law
i Further Foreign Trade
— Financial Notes.
The fe d era l re serv e a c t is so
fra m e d a s to en la rg e fa cilitie s of n a
tio n a l b a n k s to accom m odate foreign
tra d e . A c tin g on this, th e U nion N a
tio n a l is th e first C leveland b a n k to
“a c c e p t” d r a fts executed in th e course
of fo reig n tra d e . I n its sta te m e n t of
condition a i of Dec. 31, issued on th e
c o n tro lle r’s
call,
th e U nion lists
i J g j g f ” its ^ s o u r c e s “accep tan ces,
T h is is th e h is to ry of th e d e al: T he
b a n k issued a co m m ercial le tte r of
c re d it to a c u sto m er, a C levelander
w h o b u y s r a w m a te ria l in South
A m erica. A rm ed w ith th e le tte r he
w e n t to S outh A m erica, b o u g h t his
goods, a n d h a d th e seller d ra w a
n in e ty d a y s’ sig h t d r a f t on th e
U nion. T he seller h a d th e d r a f t d is
c o u n te d a t h is S outh A m e ric an bank.
T h a t bank, th ro u g h its corresp o n d en t
in th is c o u n try , h a d th e d r a ft p re
se n te d to th e U nion, w hich “a cc ep te d ”
it, p a y ab le n in e ty d a y s a f te r sig h t of
th e in s tru n \fc |.M W itfi
.U nion's
s ig n a tu r e tH B T W hft w
g ircu latin g in th e e a s t a s a p rim e in v estm en t.
T h ere is a trip le p o te n tia l lia b ility —
th e S o u th A m erican , his b a n k a n d the
U nion a re a ll b ehind th e paper.
T h e pow er of a cc e p tin g p a p e r based
o n fo reig n tra d e , first g ra n te d b y th e
re se rv e a c t, p e rm its a m em b er b an k
b e lo n g in g to th e re serv e sy ste m to
a c c e p t d r a fts g ro w in g o u t of th e im
p o rta tio n o r e x p o rta tio n o f goods h a v
in g n o t m ore th a n six m o n th s sig h t to
ru n , to a m o u n t in th e a g g re g a te n o t
to exceed h a lf of its c a p ita l a n d s u r
plus. T he b a n k is th u s p e rm itte d to
p ro je c t its n a m e in to th e in v estm e n t
m a r k e t t o r th<J fa c ilita tio n of fo reig n
tra d e . T h e bill o f lad in g , In su ra n ce
policy a n d o th e r sh ip p in g docum ents
a c c o m p a n y th e d r a f t u n til it reac h es
th e a c c e p tin g b a n k w hich rem oves
th e m upon a c c e p ta n c e of th e d ra ft
a n d th u s h a s c o n tro l o f th e goods u n
til i t sees fit to re le ase th em to its
c lien t.
T h e N a tio n a l C ity b a n k o f N ew
Y jrkT is en g ag e d in th ese o p eratio n s
r-'^ ^ su b s ta n tia l scale. T he p a p e r a p
p eals a s in v e s tm e n ts to p riv a te in d i
v id u a ls a n d to b a n k s.
r>i. y In I r o n a n d S teel.
T rade says B altim ore &
Ohio railroad has placed 2,000 ears w ith
arobria steel & M ount Vernon C ar com
panles, while Illinois C entral orders fiftv
locomotives from Baldwin and Lim a loconjotlve companies. All mills hold flrmlv to
fl.1 0 on finished steel lines and one fn.i..
pendent advanced hoops *1 ton. No ferro
m anganese shipm ents from England are
probable In Jan u a ry .
Connellsvllle coke
m arket .reflects softness In prom pt fuel ouota
tlons, b u t shipm ents a re m aintained.
T h e D a y in D r y G o o d s
y m rr YORK, Jan .
stro n g today. Pine
Cotton goods w ere
f active. T a rn s w ere
S.—Wool m arkets were
wools w ere rlsln c here
steady and m oderat.H
aulet.
e a tel)
O P E R A T IO N S OF T H E F E D E R A L B A N K S .
U n u s u a l in te re s t c e n te rs in t h e p ro b a b le o p e ra tio n s of th e reserv e
b a n k s. I n b a n k in g o u a r te r s it h a s b e en p e rs is te n tly re p o rte d t h a t th e
fe d e ra l in s titu tio n s p ro p o se d e n te r in g th e open m a r k e t fo r p a p e r, ow ing
to t h e f a c t t h a t m e m b e r b a n k s a r e sh o w in g no d e s ire to re d isc o u n t.
F ro m th e b e s t o f in fo rm a tio n a v a ila b le no su c h m ove Is re a lly c o n te m
p la te d . T h e g o v e rn m e n t’s a tt i tu d e is t h a t tt h a s n o d e sire t h a t re se rv e
b a n k s c o m p e te w ith t h e m e m b e r b a n k s, e ith e r hy lo w e rin g d isc o u n t r a te
o r by fa v o rin g th e e n tr y o f t h e re se rv e b a n k s in to open m a r k e t
o p e ratio n s.
T h e first m o v e m a d e w ill p ro b a b ly be th e e n try o f t h e re se rv e b a n k s
in to th e m a r k e t . f o r s h o r t lim e m u n ic ip a l in v e stm e n ts. T h e N e w - T o r k
in s titu tio n th is w eek p u rc h a s e d $50,000 o f m u n ic ip a l w a r ra n ts . T he
su p p ly of th is c la ss of p a p e r, h o w e v e r, is e x tre m e ly lim ite d . O n e w ay
o u t o f th e difficulty m a y b e h a d in t h e fo rm of a ru lin g fro m th e
fe d e ra l re se rv e b o a rd t h a t w ill e n a b le th e re se rv e b a n k s to b u y long
te rm m u n ic ip a l b o n d s t h a t a r e n e a r in g re d e m p tio n , b rin g in g th e m w ith in
six m o n th s ’ m a tu r ity class. P ro v id e d th e s e a r e n o t to be re fu n d e d , b u t
h a v e fu n d s p ro v id e d fro m re v e n u e s, s in k in g fu n d s o r o th e rw is e , m a k in g
t h e i r p a y m e n t a t m a tu r ity a b so lu te , th e y w o u ld c o n s titu te good m a te ria l
fo r th e fe d e ra l b a n k s.
j
,
M ost in v e s to rs h o ld in g s u c h issu e s w o u ld he w illin g to p a r t w ith
th e m a h e a d o f m a tu r ity fo r t h e a d v a n ta g e given th e m in m a k in g r e in
v e stm e n ts a t t h e i r le isu re in s te a d o f on a fixed d a te . B o n d h o u se s w ould
e a g e rly a ssist in fu rn is h in g th e s u p p ly fo r th e o p p o rtu n ity o f g e ttin g to
th e In v e sto r first In re p la c in g th© fu n d s re le ased .
I f t h e re s e rv e b a n k s e n te r t h e open m a r k e t a t all. It is lik e ly t h a t It
w ill be in th e fo rm o f p u rc h a s e s o f b a n k e rs a c c e p ta n c e s o f bills o f fo reig n
»T fh«tiee. No d efin ite a c tio n in th is re g a rd h a s b e en ta k e n .
WHtflI SOARS IB HIGHEST
PRICE IN FIFTEEN YEARS
May Goes to $1.38% as Italy and Roumania Hover on
Brink of War—Reaches Record Altitude Since .
Lei ter Attempted World Corner.
.
’
.
-----
N '‘
fQ l !
Drop in Sterling Proves This Country’s Quarter Billiot
Dollar Debt to Europe Erased—Reserve
£:
.System Tempest—Stocks Strong.
jj ,
v
~rr~B Y H . S. R O S E N T H A L ..
In th e jr.a rb o fe of th e w o rld th e d a y ’s o u ts ta n d in g fe a tu re w as th e rise
o f w h e a t in C h ica g o to th e h ig h e s t p o in t in fifte e n years. ~
M ay w h e a t a t |l . 3 8 % is th e a ltitu d e re c o rd unless one goes b a c k to
1 898, w h en Joseph. .L eiter a tte m p te d a w o rld w ide corner a n d drove th e
• w e a l to $1.85. T w o m illion bush els w ere b o u g h t fo r e x p o rt in th e tw e n ty l o u r h o u rs end ed l a s t e v e n in g . A t th is r a te o u r e x p o rta b le su rp lu s w ill be
e x h au ste d in six weefcs. A f t e r t h a t we w ill b e d ig g in g in to w h e a t t h a t th is
tountT y n eed s fo r b r e e d .
T he d a y ’s e x tre m e n e t rise w a s 2% cents. P ra n c e b o u g h t so did I ta lv
and B oum am a, h o v e n n g o n th e b rin k o f w a r d e c la ra tio n s
a ,™
•
sh o rt o f ships. M a n ito b a is sold out a n d C a n a d a ’s supply i's ru n S n f^ d n w n
an d th e f u ry o f th e butying c e n te rs h e re . D om estic m illers Z r l J l j
. fo r th e cash a rtic le t h i i t th e R o c k e fe lle r F o u n d a tio n w o rk in g
re lie f, could not g e t s a tis f a c to r y term s, a n d b etook its e lf in to the
’P *"
m^ ng« - f ^ e ,0f„ a ™ p p ly s ta n d th e expense of re fra in in g : f r o m '
r n e $1.99 1-2 p a id fo r d u r u m wa« m e ta l sh ip m e n t b ey o n d th e p re s e n t
a special tra n s a c tio n in. w h ic h th e p o in t: i t is now u n e c o n o m ic a l fo r
p rice
inclu d ed c o st of d e liv e ry to iver to p a y in e x c h a n g e , b u t n o t y e t
Ita ly ; th e U n ite d S t a te s su p p ly of burdensom e.
th is h a r d v a rie ty w h ic h , produce*
T he p rim e fe a tu re o f tlie s te rlin g
m a c a ro n i is v ir tu a lly e x h a u s te d .
. ' m o v em e n t is t h a t i t provies th e v irF ro s p e c t of tw o m o re n a ti o n s ’ e n 4 tu a l e ra s u re o f th is c o u n try 's d e b t to
ar "
o
....... ■' .
■'
Hmmm
e a rlie r peace, b u t th e gT ain m a r k e t i^ (jeorge _____ . - _______, .. _
d e a lin g in d a y -to -d a y n e c e ssitie s.
J w ouldn’t sh ip gold. W e sh ip p e d gold,
C o rn a n d o a ts s tr e n g th e n e d w ltti ns m u ch a s w a s re q u is ite , a n d m e rth e c h ie f c e re a l. I n th e cottoin m a r l cha-ndise h a s been doin g th e re s t,
k e t It w a s re aliz e d t h a t e x t e n s i o n o l
a few m o re m o n th s of 3tim>endous
i h e w a r a r e a w o u ld m e a n m o re s h u t i e x p o rt excesses lik e t h a t o f $ 1 1 0 ,0 0 0 ,■il/rn n s a n d m o re w a tc h e rs o n t h a o00 for D ecem ber a n d w e w ill h a v e
sees, a n d In th e f a c e o f th e s e e o n r e stab--*■ •*-*-lish~e d' b' a "-------la n c e s t h a ‘t ' —■
w ill
ta k e
la rg e s t d a y ’s e x p o rts otJfib»M*e«w»on c a re of a n y selling o f fo re ig n -h e ld
S4,467 b a le s, p ric e s w e n t dow n.
A m e ric an se c u ritie s s h o r t o f a deluge.
N ew ,Y ork.__ _s to
# I » M M D e b t P a i d Off.
, ---. . ,
S ig h t d r a f t s o n Ixw idon V e r e o f
to D d s ^
a
ly g o S l
>y
feced In t h e east, a t 4.84, th e l o w e s t ^ ''! ® th o u g h It 1
_
b le ™
th a t
n
rlam ond oineft 1907.
thOUg
<
c a p ita l will
fo rn isn y ields!on new
so high
J1S to m ilita te a g a in st th e p ro g ress of
th e old.
'
.
_
,
Steel comm on gained m ore th a n a
Point to 5 1 1 -2 . while B e th le h em com
' mon, which h a s never paid dividends,
rose to 52 3-8 and closed a t 52. Mis
souri Pacific- declined to th e new low
of 6 5-8; th is m akes in te re stin g com
parison w ith w h a t it b ro u g h t in o ther
y e a rs— 1T3-4 in 1912, 63 in 1911 a n d
1251-2i top, in 1902. A m erican Can
h a d a good advance. St. P a u l took its
com ing debenture issue w ith a h a lf
point gain. In these days w hen there
Is financing to do, th e stock m ark et
will b est serve the s tre e t w ith a
h appy m edium of stre n g th .
L ondon for the first tim e since r e
opening registered a few gains. L oans
of th e B ank of E ngland increased
$13,000,000 in the la te s t w eek and
gold decreased $3,000,000; th e reserve
ra tio w ent down 1.69 per cent, tor
32.71 p e r cent.
K M C T rt
T e m p e a t,
T h e . tem p e st stirred u p over the
fed eral re se rv e system* is p re tty
m uch local to Chicago. I t is charged
tw o n a tio n a l b a n k directors dom inate
th e C hicago regional bank's board,
give frie n d s positions a n d keep in te r
e st r a te s above th e open m ark et fig
ures, th u s keeping rediscount opera
tions in th e h a n d s of b anks other
th a n th e regional institution.
T he b a n k s of w hich J . B. F o rg an
a n d G eorge M. R eynolds a re directors
ow n 25 p e r cent, of the stock of th e
Chicago re serv e in stitu tio n a n d h ave
in it 40 p e r cent, of its to ta l deposits.
A s d ire c to rs of th e regional bank,
M essrs. F o rg a n a n d R eynolds ad m it
th e dom in atio n so fa r a s th e ir long
experience leads o th e r directors to
heed th e ir suggestions.
They deny
d ic ta tin g th e conduct c f th e in stitu
tio n a n d filling its jobs w ith th e ir
follow ers. T he red isco u n t policy is
fixed b y th e federal re serv e board in
W ash in g to n , w hich h a s openly sta te d
t h a t i t does n o t p u rp o se a t th is tim e
to c u t ra te s a n d com pete w ith m em
b e r banks.
T h e regional in s titu tio n s a re em er
gency reservoirs, i n o t riv ers from
w hich th e c o u n try c a n scoop u p
cre d it a n d c u rre n c y to the po in t o f
inflation. In th is e x perim ental sta g e
of th e sy stem th e policy w ill b e to
re d isco u n t w h en m ore accom m odation
Is needed, n o t to produce cheaper]
m oney in easy tim es.
T he in v e stig a tio n will disclose a
w eak n ess in th e sy stem in th e dual
tru ste e sh ip im posed on regional bank
j d ire c to rs who a re on th e boards of
ijiem ber In stitu tio n s. T h e financial
w orld know s t h a t i t w ill reveal no
d e trim e n ta l a c tiv itie s on th e p a r t 6f
the m en nam ed.
< n p l ( n l o r N<*HHonnI F n n d l l
The tim e s a r e e a s y fo r sh o rt term
Ion ns. b u t n o t for th o se ru n n in g say
a year, w ith indefinite ren ew al pi
bilitles.
“W h y does n o t th e re serv e system
step in a n d looosen Up th e long term
m a rk e t? ” Is a q u e stio n often asked.
The sy stem m a y fu rn ish cap ital loans
a s tim e goes on; It lo an s only for
seasonal n eed s now because th a t is
tlie purpose w ith w hich it w as sta rte d
- - t o p re v e n t th e perio d ical tig h te n in g
due to crop m oving, dep ressio n a n d
pro sp erity . I f s ta te a n d n ational
b a n k s a r e n o t lo a n in g c a p ita l, th e y
a re a c tin g p ro p erly . I f th e y a re re
fu sin g to in v e st a d e q u a te ly In
a n d m o rtg a g es, th e re se rv e 's
will n o t ta k e th e b u rd e n oft th e ir
shoulders. T he I n s titu tio n a l or p riin v esto r
-V ju s t *5.000,000
com m unity, a n d m u st
:her im p o rta n t C an ad ian
New Y ork to relieve
?Kionart>iwii<'
m o re room fo r th e g e n e ra l financial a n d J
b e a fa cto r in th e e asin g o f m oney ra te s.
lo an s a re sa id to be !n pl'ogrre** of ncg o tia- ■
th e tension ex istin g a c ro ss th e n o rth e rn i
-
/< /M -
Kuies *or ir’urcnase Ur
City Warrants
tys D ow n
T he Federal Reserve B o a rd T uesday in W ash.e fed eral re serv e b o a rd y e sterd a y ap p ro v ed a lowering: o f ‘ he dig j o '^ n m ade public tentative regulations to govte of th e San F ra n c is c o re s e rv e ,b a n k to 4 p e r c e n t fo r m a t u r l - j rn the purchase by regional banks of municipal
to th jr ty days. T h is is the lo w e s t'r a te yet n a m e d by a n y o f th e j arran ts issued in anticipation of collection oi
1 oank.«. M inneapolis h a s been g ra n te d a 4H P e r cen t r a te up lxes' .J*le regulations are broad enough to maki
•y days.
'
5
possible for the regional banks to buy sue!
I'ernor H a m lin 's co m m e n ts th is w eek upon th e w eakness o f ste rlin g scurities directly o r indirectly from any city o
e vident p assin g of all a p p re h e n sio n s re la tiv e to o u r recent- fo reig n Sanding, large or small, in the U nited States
on* a re finding expression in lo w er re d isc o u n t rate$t fo f th e re se rv e
his will give the banks opportunity to m ake m o r
T he bo ard m an ifestly now sees no reason w hy' dom estic co n d i- se o f the reserve funds on deposit w ith them bshopld not d ic ta te th e m a k in g of re d isc o u n t ra te s, p a rtic u la rly 'em ber banks.
‘ In te rio r institutions,
Defining acceptable w arrants, the board say
e cotton loi>n c o m m itte e a n n o u n ce d Its first loan yesterday, i t n a tjpbligations payable from “'local benefit” an
ade t h ~ A labam a su b c o m m itte e, b u t th e a m o u n t w as no* 'pw-ial assessm ents” taxes shall not be taken u r
ess the m unicipality at large is directly o r ult
nately liable. W arran ts m ust be those o f m unii
in existence fo r ten vears, and muni,
r e p o r t 'J i K 6e . .
_ .OKS
Reserve deposits in the twelve federal reserv
hanks showed an increase of more than $6,000,
000 at (he close of business December :il. accord
ing to the. weekly condition statem ent, which foi*
lo w s :
v'
RESOURCES.
Ciold coin and certificates .. •• •• ..$229,069,0 ^
l egal tender notes, silver certificates
.
and subsidiary c o i n ........................... 26,
T o t a l ........................................................ $233,647,000
Bills discounted and loans—
M aturities w ithin .'10 d a y s ................$ 4,032,000
M aturities w ithin 60 d a y s ................
4,215,00j£
O t h e r ...........................................................
1& * /* * *
T o t a l ...................................................... * 10,
I n v e s tm e n ts ................................................
£'>5.000
All other r e s o u r c e s ................................. 11.1)40,000
T otal resource
Capital paid in
Reserve deposit*
F ederal reserve notes in
(n et am ount)
. $277,844,000
.$ 18,051.000
.'56.018.000
circulation
3,775.000
T o tal lia b ilitie s ...................................... $277,844,000
(iold reserve against all liabilities. .88.2 per cent
Cash reserve against all liabilities. .98.4 per cent
Sum m ing up the week's show ing the board
said:
.
"T he statem ent indicates a loss o t 2.7 million
lollars in total cash resources and 3.5 m illion dol
lars in gold, as com pared with the previous week s
figures. T he loss o f cash in the hands o f the
banks is m ore than offset by :m increase o f 3.7
million (lollars of gold, in the hands o f the fed
eral reserve agents.
"Loans and discounts.” continues the sum m ary,
"show an increase of over #2 .00 H,0 0 0 . Richmond.
M inneapolis. Philadelphia and Dallas show ing the
U re rs ’ gains in discount operations during the
week Chicago and Xew Y ork fo r the first tim e
scport investm ents in public securities. T he gain I
ot 6.5 million dollars in all other resources is
due chiefly to the increase in the am ounts of
national bank notes and federal reserve notes in
the hands o f the banks.
"D eposits show an increase of ti.2 m illion dol
lars, m ainly :;t those banks which report a gain
in discount operations. F ederal reserve agents
report ad ditional issues to the banks of 3.6 m il
lion dollars o f federal reserve notes, but because
of the still larger am ounts o f gold ami law ful
money in th e ir hands and o f federal reserve notes
in the hands o f thy Iwpks them selves the net lia
bility iif |
TfTTil upon th rfr outstanding circulatiya-'tTas at the end o f the y ear «uly slightly
iWive 3.75 million dollars."
*
f
Perm anem
V < i|
ot
, 7
f
t
^
"
Commercial
Loans Needed
T he federal reserve hanking system as a m eans
if seen rirrp-B--rettmr rrf- frlW fiW lV'tn th is country
has been very g reatly over-estim ated- T he p ri
m ary object o f the establishm ent of these twelve
banks is to secure to .th e country, an elastic c u r
rency system and to m ake impossible" money
) 'l ie s in this country, sim ilar to the money panic
’ch came upon us in ^907.
- T he old banking system answ ered very well
. -nost of the tim e and only was found w anting
When too m uch prosperity to gether with a su d
den w ave of fear sent m oney scurrying to hiding
p lac es; then the system w as u tterly inadequate.
So fa r as the ability o f o u r g re at m erchants and
com m ercial houses to obtain money to carry on
business, the old system w as not found w anting,
except fo r a few weeks du rin g each fall during the
crop m oving period.
M erchants w ith proper
credit had no difficulty in getting w hat money
was needed.
T he federal reserve banking system as present
ly organized, is organized prim arily for putting
out m ore m oney when business is prosperous, and
retiring m oney when business lets up. assu rin g the
borrow er th a t so long as his credit is good, he
will be able to obtain reasonable loans and a ssu r
ing the banks and the people th at there is no oc
casion fo r th e hiding o f money even if th ere is
a big bank failu re o r a big m ercantile failure.
T he new federal reserve bank system has n o th
ing to do w ith the re tu rn o f prosperity to th is
countrv. M 'hat this c o untry needs at the present
time, is not the m eans fo r obtaining m ore com
mercial loans, but m eans o f securing m ore p e r
m anent capital fo r the g re at industries o f th f
country. T he steam railro ad s, the interu rb an ra il
roads and m anv o f o u r larg e industrial plant;
fiffif& fl'W stferai w m w tW f tr M ,n e o n s '- - - m
investm ent of funds in long term obligations has
practically stopped in this c o u n try ; ra ilro ad s for
several years past have been unable to fund their
floating obligations o r provide new funds w ith
long term bonds, but have been com pelled to re
sort to the sh o rt term note plan. As these notes
fall due they are replaced w ith o th er issues in
the fond expectation th at som e day we will have a
good ra ilro ad bond m arket, and these sh o rt term
obligations m ay be put into perm anent form .
T he financial need o f this country, therefo re, if
we are to re tu rn to the prosperous days o f old.
is a good m arket fo r bonds and p re fe rre d stocks,
and before we can have this we m ust have a re
tu rn o f confidence in the ra 'lro a d s and in the big
industries which desire to sell bonds and p re
ferred stocks.
T his c o untry has never needed m uch im prove
m ent on its m ethods o f supplying m erchants anil
dealers w ith money to c a rry over th e ir season's
business. P ractically everybody th a t has needed
rred it and has been entitled to it in th e past has
ieen able to get credit, and those "*io w ant
redit’ a n d a re entitled to it now a re able to get it.
'
/
/
ind yet the federal reserve hanks have practically
lone nothing in extending credit to the business
,vorld. T hey have done nothing, n o t because
hey have not w anted to do anything, b u t because
here has been no dem and th a t they do anything.
The federal reserve system comes into plav when
in em ergency exists.
T h e cam paign o f abuse which has been carried
m against the big corporations o f th is country,
ig ain st the railroads, against the public utility
;om panies and against all kinds o f big business,
hereby disturbing the confidence o f the people
ind the investors in these institutions has done
more to in ju re the country and delay a re tu rn of
prosperous conditions, than th e federal reserve
banking system can m ake up in a hu n d red years.
T he g reat param ount need of this c o u ntry today
is m ore perm anent capital. O u r people deposit
th eir m osey in the savings banks and the savings
banks loan it out to people upon good collateral.
T his is all right so fa r as it goes, but it does
r o t increase the investm ent o f the people ’n the
country’s industries, thereby increasing our p e r
m anent capital.
O u r people should be educated to buy pood
bonds, first-class investm ents, and in m aking these
investm ents they should look to th eir banker for
1advice
(
.
Directors’ Liability un Keserve\
Bank Paper ~
I
'- I h e question o f the personal liability of direc
to rs o f national banks in case paper offered t J a
federal reserve bank fo r rediscount and c e r ty td
as eligible for r e d i s c o u ,v
’-.-raid prove in fact
not to be so eligible h a s been raised by bank di
rectors. Bank a ttorneys have the m atter under
consideration.
T h e question a r if j - ut of the fact that circular
No. 13 o f the F ederal Reserve Board, governing
conditions o f the m is c o u n tin g o f paper w ith
the reserve institutions, provides th at the affixing
o f the stam p o f the m em ber bank to the paper so
offered stating th a t the bill is eligible for redis
count “ will be considered a solem n and binding
d eclaration by the m em ber bank” th at the finan
cial statem ent o f the party liable on such bill has
been exam ined and th at the paper complies with
all the requirem ents o f the board.
Louis F. Doyle, legal au th o rity on banking law s,
said that in his opinion, no personal liability
would be imposed upon a d irec to r of a m em ber
bank in consequence o f an e rro n e o u s certification.
T he act o f certifying a bill u n d e r c ircular No.
LI and the act of offering a bill so certified for
rediscount, he said, a re corporate a c 's o f the m em
ber hank. T he d irectors o f a corporation a re not
personally liable fo r corporate acts, added M r.
Hoyle, except when m ade so liable bv some speci
fic provision o f sta tu to rv law, and no such pro
vision. which could apply to the case of c e rtify
ing a bill for rediscount under the term s o f c ir
cular No. 13 is contained in the federal reserve
mf
- act. the n a tio n a l bank act, o r any o th er sta tu te
o f the U nited States.
It is im possible to say th a t no suit m ight be
bro u g h t against a d irec to r on these grounds, said
M r. Doyle, but in his judgm ent the bringing of
such suit w ould be extrem ely unlikely. T he lia
bility o f the m em ber bank for erron eous certifica
t io n , in M r D oyle's opinion, is not m ore th a n th a t
assum ed by its endorsem ent o f the paper and a
possible requirem ent to su rre n d e r its federal re
serve bank stock.
I he provision o f the reserve act that in case
of non-com pliance o r violation o f its-p ro v isio n s
e v e n d irecto r w ho participated in his personal or
individual capacity shall be held liable for all dam
ages suffered by the bank o r its shareholders
it j s held, does not apply directly in the case of
>fTte "nW iscounting o f paper, w here, in m ost cases
the d irec to rs do not personally participate am
w here th ere is no intention o f violation.— Th,
^ ,r. .
..
G o v e rn o rs o f •e rp n rew ' t a k e * to
in a s ta te m e n t ili*t n tfK ? * ”•
* upon i re t
fleet th e opinion of financial A.
and the out
e n t conditions in tlw & isicess
look for th e new year.
' ‘T he p re sen t business condition is n n f l ntt*
proved over th e l is t tk-ee or fo u r m o n th s,” 4 *
d a r e s th e governor of*4trfjjttU nta. ban k .
“ T he outlook fo r business
ensuijig year
is unusually good, aside from u r n / p ^ n t i e s c*us«d
by the E u ro p ean f i s , 1-1 says tlm governor o f tho
K a n sa s C ity b ank.
g
“ In m y opinion, the injjteov^rti.wli'm R ia n e ia l
conditions ta S f be expected to continue through
out 1915,” th e governor of tne Richm ond bank
believes.
T he governor or the B oston bank is looking fo r
w ard to “ g re a t com m ercial a c tiv ity .”
“ In view o f all th e conditions prevailing
th ro u g h o u t th e ’w orld, business is goo d ,” is the
w ay th e go v ern o r of the M inneapolis b a n k put* i^.
“ As to tho fu tu ro , we can look fo rw a rd w ith
confidence, g e n era lly sp e a k in g .” is th e conserva
tiv e w ay th e g o vernor of th e San F rancisco bank
expresses it.
*T he g o vernor of th e D allas b a n k corrects the
“ e x ag g e rate d conception of conditions obtaining
in tho s o u th ,” w hich he finds not e sse n tia lly d if
fe re n t from those elsew here. IB s m essage, too, ig
one of hopefulness.
From New E n g lan d to T exas and th e Pacific
coast the su rv e y extends, The o bservation v aries
onlv as to te rn ’s.'
O tfc V fe A ftfc 'f u j # D i A S I S .
_______ I^M
' 1Q?g
D l.c -o n riV f M « e «tf 4 * 1 * ' C en t.
T he S a n F ra n c isco regional bank,
beginning: today, m akes th e lowest
r a te of a n y o f th e tw elve—-4 p e r cent,
on p a p e r n o t exceeding th ir ty days.
N in e o f th e in stitu tio n s now have
4 1-2 p e r c en t, figures, Cleveland, D a l
la s u n d K a n s a s C ity still m a in ta in in g
th e m in im u m a t 5.
I n th e C leveland d is tric t a low er
r a te w ould n o t ap p rec ia b ly ii/crease
th e volum e of re d isco u n tin g . I f b u si
n e ss im p ro v e m en t co n tih u es in J a n u
a r y re d is c o u n ts w ill grow . A fte r Feb.
1 th e y w ill in c re a se if th e m inim um
r a te is low ered to 4 1-2 p e r cen t., as
th e ta x on e m e rg en c y c u rre n c y goes
up to 5 p e r c en t. F eb. 1, m a k in g r e
tire m e n t a n d re c .a c o u n t of th e p a p e r
se c u rity a ttr a c tiv e .
WSCOUNT RATE CUT;
SHOWS MONEY EASIER
D ire c to rs 4 f tfce C leveland fe d e ra l
re s e rv e b a n k W ed n e sd a y o rd e re d a
sw e e p in g re d u c tio n in d isc o u n t ra te s.
T h e . r a te on 30-day p a p e r wra s re
d u c e d fro m 5 to 4 1-2 p e r c e n t; 60
d ay s, 5 1-2 to 5 p e r c en t; 90 days, 6
to 5 p e r cent.
T h e re d isc o u n t ra te
on a ll p a p e r of m o re th a n 90 d a y s’
m a tu r ity re m a in s u n c h an g e d a t 6
p e r c e n t.
T h e re d u c tio n su g g e sts t h a g re a t
ease o f m oni-y.' . B e 4 a i e ] # £ j ) e lack
o f re q u ire m e n ts fo r leg itim a te e n te r
p rise , lo a n a b le f u n d s a re in ‘ a b u n
d a n c e a ll o v e r t h e co u n try .
The
fe d e ra l b a n k s, c o n seq u en tly , h ave
n o t v e t dorm m u c h rprikf.m .n tin „
Due from F ed eral R eserve banka:
Item s in tran sit ............ 6,249,000
All o th er resources .......................... 14.169,000
T o tal reeources ............... .............$287,801,000
LIA B IL IT IE S .
\
C ap ital paid in ........................ ... .$ 18,058.000
R eserve deposits ............................... 267,389,000
Fed eral reserve notes In c ircula
tion (net am ount) ........................
1,864,000
Reserve System’s Total Ac
commodation to Members
Declines in<
1
Bond and Municipal WaTrant
Purchases; Dawes Urges
Amendment.
....
T otal liabilities ............................$287,801,000
Gold reserve a g ain st n et liabilities 88.5 per
cent.
.
C ash reserve a g ain st n et liabilities, 95.3 per
cent.
.
F e d e r a l R en erv e B a n k o f C le v e la n d
The federal reserve bank of Cleveland
th is week reports a decrease of $51,000 in
rediscounts and an ap p arent decrease or
$1,383,000 in holdings of gold and gold cer
tificates. The la tte r change is due to the
/a c t th a t $1,383,000 gold certificates is in
tra n sit in th e process of being exchanged
fdr m etal a t th e United States treasu ry .
R E SOURCES.
V15. Dec. 31, ’M
cates ...........................$16,291,000 $17,674,0(fc
Legal tender notes, sil
ver certificates and
subsidiary coin ___ 1,093,000 1,017,000
R ediscounts and loans.
455,000 ’ 506,000
All other re s o u rc e s .... 1,728,000
319,000
TOO MUCH POWER TO
ONE MAN, SAYS OAWES
Former Comptroller Says Danger
Lurks in New Federal Bank
ing System.
CHICAGO, J a n u a r y 9.—T h a t the fed
eral reserve b a n k la w in v e s t s to o v a st
a power in th e h a n d s o f o iie m an, th e
S e c r e ta r y o f th e T r e a s u r y , and thus
presents an e le m e n t o f d an g er w hich
should be d ealt w ith b y Congress, w as
the assertion m ade h e r e • today by
C harles G. Dawes, f o r m e r com ptroller
of the currency, a t a special m eeting of
Chicago financiers and business men.
The s p e a k e r s a id t h a t th e u t ilit y of
the reserve b a n k s y s te m in a n em er
gency r e s te d u ltim a te ly w i t h th e Sec**
re ta ry of th e T r e a s u r y a lo n e .
“The .federal reserve banks.” said
Dawes, "are g re a t credit-creating de
vices, using a s a foundation money be
longing to other banks a n d already in
use by them as a foundation for exist
ing credits. T hey have not as yet to
any extent expanded th eir credits, but
if they did and then fo r some reason
were compelled suddenly to contract
them , business disaster m ust ensue.
The liquidation of the second Bank of
tlie United S tates, which resulted in th e
panic of 1837, is a historical illu stra
tion of this fact.
“ The federal reserve law, a s it stands
a t present, contains such provisions as
a re certain to Involve t in political a t
tack sim ilar to th a t w aged by Andrew
Jackson a g ain st the second B ank of the
United States. Now is the time, before
the reserve banks have issued lange
i credits, upon whose existence the pros
perity of the country w ill. become de
p e n d en t, to criticize and am end the
law .”
The speaker declared th a t develop
m ents m ight arise by which “ an A n
drew Jackson will again lay p rostrate
the comm ercial edifice of a g re at n a
tion.”
In v e stm e n ts of th e federal reserve
sy ste m in cre ased $6 ,2 1 2 ,0 0 0 from
Total resources ........$19,567,000 $19,516,000
K55,oOU 1U I i ll !!LW«!""«M.
LIA BILITIES.
ue to p u rc h ase of $5,000,000 New
Capital paid in ............$ 2,031,000 $ 2,081,000
o rk c ity re v en u e w a rra n ts b y the
Net deposits ................ 17,394,000 17,345,000
Federal reserve notes
io n al b a n k o f th a t city, a n d purIn circulation ............
142,000
140,000
h a se of g o v e rn m e n t bonds b y sev- Total
liabilities
.
.
.
.
$19,587,000
|1
9
,518,000
:ral of th e re se rv e in stitu tio n s. How
Gold reserve ag ain st
all liabilities ...........
92.91%
101.07%
m u ch th is e x te n sio n of incom e p ro
Cash reserve ag ain st
du c in g fa c ilitie s is desirable is in
9 all liabilities ............
99.14%
106.90%
d ic a te d by th e w eek’s decline of
j
N ew Y o r k C l e a r i n g H o u s e .
$717,000 in rediscounts, w hich are
NEW YORK, J a n . 9.—The s tatem e n t of
now $9,870,000. Gold in th e v a u lts
the actual conditions of clearing
house
Increased by a b o u t $3,500,000.
banks and tru s t companies for th e week
shows th at they hold $120,579,810 reserve in
• T h e S an F ra n c isco b an k now has
excess of legal requirem ents. T his Is an
a r a te of 4 p e r c en t for th irty -d a y
increase of $6,494,890 over la st w eek. The
p a p e r, a n d e ig h t of th e tw elve have
statem en t fo llo w s:
•
m in im u m 4 1-2 p e r c en t ra te s. Spring
ACTUAL CONDITION.
m e rc a n tile business, calling a s it does
4 Increase.
fo r p u re ly se a so n al funds, a n d the
e tc ...................$2,188,899,000 *$2,609,000
re tire m e n t of em ergency c u rren cy
ve
in
own
v a u lts .................... 837,582,000 7,405,000
w hose ta x becom es 5 p e r c e n t Feb.
R eserve in federal
•
1, should b o o st th e volum e of re
reserve bank ---100,738,000
441,000
g io n al b a n k accom m odations.
in
o th er
Reserve
C h a rle s .G. D aw es, fo rm er c o n tro l
depositaries ........
32.234.000
244,000
le r of the cu rren cy , y e sterd a y m ade
N et demand deposit* 2,031,280,000 9,115,000
Net time d e p o s its ..,.
89,654,00 *2,282,000
a p le a fo r a m e n d m en t of th e sy s
Circulation ..............
46,216,000 *2,363,000
tem to lodge less pow er in tha- aec A ggregate re se rv e ., 470,554,000
r e ta r y of th e tre a su ry , a t a special
Excess reserve . . . .
120,579,820 0.494.S
m e e tin g of C hicago b a n k e rs a n d b u s
tO f which $264,032,000 is specie.
in ess m en.
T h e se c re tary of the
O th e r N ew Y o rk B a n k a .
tr e a s u r y cati d e p o sit th e general fund
Loans, e tc .................. $561,408,300
p t th e tr e a s u r y a n d in g e n era l to
Specie .......................
43,602,000
in a k e th e re g io n a l b an k s fiscal a g e n ts
Legal tenders ..........
12,220,000
Total deposits ........ 645,095,400
th e g o v e rn m e n t in h is d iscretion,
B anks' cash reserve
is ex-offlcio c h a irm a n o f th e fed
in vault ................ 11,563,800
. re se rv e board. T he sp e a k er said
Cleveland Bankers Will Fight
T r u s t companies*
x th e u tility o f th e re serv e b a n k
cash
reserve
in
ii,
a n em ergency re ste d u lti- fcvault ................. . .
44,268,200
Pittsburg Protest.
7 Decrease.
•
;y -vifh th e s e c re ta ry of th e
5
L o cal N a tio n a l B a ^ b s .
y atone.
“T h e f-.deral reserv e b a n k s.” said
1 A group of.-Clevelanders left lastV veCleveland n ational banks re p o rt for the
. D aw es, “a re g re a t c re d it-c re a tin g
w tek ended w ith th e close f it business F r i
n in s for W ashington to present to the
day last Increase
In
ces u sin g a s a fou n d atio n m oney
federal reserve board. Cleveland's re a
crease in depos i t
inglng to o th e r b anks a n d a lre ad y
In cash an d ^M R r' from reserve ag en ts
sons w hy -the regional banjf ohould re
use by th em a s a fo u n d a tio n for
$660,140.
m ain here. In the p a rty are M ayor
__I t t i n g credits. .They h a v e n o t as
C le v e la n d C le a r in g * .
Newton D. S ak er, A ttorneys S. H.
y e t to a n y e x te n t expanded th e ir
................................................... $ 3,881,488
"its, b u t If th ey did a n d th e n for OaiT last y ear .................................... 4,420,644
Tolies and M. B. Johnson, and the fol
I re a so n w ere com pelled suddenly
t
week ........................................ 28,798,440,
lowing bankers: Col. J. J. Sullivan of
Vlek
liuit
-vtmr
ibT*~_
.
.
29
on®
c o n tra c t th em , b u sin ess d isa ste r
the Central N ational and the Superior,
ensue.
L iq u id atio n o f th e
T. H. W ilson of the F irst N ational, F .
u an k o f th e U nited S ta te s,
W. W axdwell of the Cleveland N ational
t resulted In th e p an ic o f 1837
H istorical illu s tra tio n of th is
r - t U t t t A L B A N K , I U D IU
and president of th^olealTrig house, A.
* “ T h e federal re serv e law a s i t
president of the Cleveland
in d s c o n ta in s such provisions as
FOR D E FIC IE N C Y NOTES |G. iSame,L.vice
A. MfUrfely of tlie N ational
c e rta in to involve It in political
F
in
a
n
c
e
D
ire
c
to
r
C
o
ughlin
sa
id
Commercial, Georg* 3 , Russel J, of jBe
,_ack sim ila r to t h a t w a g ed by
W ed n e sd a y t h e c ity w ould n o t o b je c t j Ba.nk. of Commerce, W. E. Rifid a t Hie
■drew Ja c k so n a g a in st th e second
to
selling
th
e
$1,055,000
deficiency
Union
N ational, :Cl A. P a in e 1,of' the
bk of th e U nited S ta te s. Now is
tim e, before th e re se rv e b anks
notes, to be issued a b o u t'M a y 1 to
N ational City. «e#rae f
**><>
&vp issued larg e c re d its u p o n w hose
■m eet th e c ity ’s 1915 o p e ra tin g de- G uardian and 4 |.^ frJo fc a g * V p 3 . Su
jste n c e th e p ro sp e rity o f th e coun
perior.
! licit, to th e new fe d e ra l re se rv e ^ a n k
will becom e dependent, to c rititiiis m orning in the board room
j provided the low est in te re s t r a te w as of Atthe11 trea
su ry departm ent tfte Cleve
_i f nd a m e n d th e la w .”
'
! offere i.
landers will tell why P itts b u rg h pro
T hi: sy s te m 's S ta te tn e n t a s of Ja n .
D.
c . W tltis, c h a irm a n o f th e fe d test a t beint; In this district and her1
for th e Institution should be over
“ WJ,:
,
e ra l b a n k b o a rd , W ed n esd ay w a s plea
.*
RESO U R C ES
__
ruled.
fltfurio? on e n te rin g a bid.
N ew
W. W. Sm ith will be spokesnum for
ui co il »n4 certificates.............>2*2,553,000
Y o rk city la s t w eek disposed of $5. the P ittsb u rg division. B ach side will
one hour to present oral a n b tm e n t
000,000 re v e n u e w a r r a n ts to th e .New have
and w ritten briefs will be flleo. The
^ . . . . S w * * 50’000
Y o rk fe d e ra l b a n k .
..
Clevelanders will re tu rn
tom orrow
morning.
'4.41Q.0C0
3.886.000
The
fa
c
t
th
a
t
so
m
an
y
representatives
z t& i1.780.000
of s ta te banks accom pany the p a rty i*
due not ofely to the interest in the city 's
jeneral yr*’. r re , but to the interest state
V
into
A h $ 2
HU III fit I AIN U, S. HANK
, FROM U. S. BANK
Officials Will ConfeF With Ffe-*'
gional Institution on
Warrant Sale.
Reserve System Could Take
Whole $1,055,000
Issue.
City officiate had w ord y e ste rd a y
th a t officers o f th e F ed eral R eserve
B ank of Cleveland w o u ld ^jo n fer w ith
them sh o rtly re g a rd in g th e $1,055,000
revenue w a rra n ts th e c ity is em pow
ered to issue for 1015 ex p en d itu res.
The federal re se rv e b a n k s h a v e per
mission u n d e r th e re serv e a c t to p u r
chase m unicipal w a r r a n ts issued in
an tic ip a tio n of tax e s, h a v in g n o t m ore
th an six: m o n th s to ru n anil com ply
ing- w ith c e rta in o th e r conditions
w hich will be m e t b y th e c ity of
Cleveland w a rra n ts . T he N ew T o rk
regional b a n k tw o w eeks ago b o u g h t
$5,000,000 N ew Y ork c ity w a r r a n ts of
th is sort. Bond houses a n d ban k s
a re eag er b id d ers fo r m a te ria l of this
kind, and th e e n try o f th e regional
ban k s in to th e rin g w ill p e rm it the
cities to finance s h o rt te rm needs or
extrem ely fa v o ra b le b a ses.
.
One re serv e b a n k c a n n o t ta k e mor*
th a n 25 p e r cent, of a n issue, bu<
th ere is n o th in g to p re v e n t th e elever
o th er in stitu tio n s o r a n y of th e n
from a b so rb in g a n y p o rtio n o r a ll Oi
a n issue.
(a y a lio g B
S a v ln x i A
trysail rer.
Thirteen Financiers and Business
Men Go to Washington to
Combat Pittsburg’s Plea for
Federal Institution,
A p a rty of th irte e n b a n k e rs a n d
business m ^n le ft fo r W ash in g to n a t
R:15 o’clock la s t ev en in g to a tte n d
the h e a rin g before th e fe d era l re
serve board on P itts b u r g 's plea for
th e rem oval of th e fe d era l re serv e
h an k of th e F o u rth d is tric t to t h a t
Cit y.
In th e p a r ty w ere M ayor N ew ton
P . B aker. Colonel J. J S ullivan, F .
W . W ardw ell. A. G. T am e, A. M.
C orcoran, T h o m as H . W ilson, L . A.
M urfey, F . H . Tolies. W . E. W a rd ,
M. E. Jo h n so n . G eorge P. Russell..
C harles E- P a in e a n d G eorge F .
H a rt.
H o t F ig h t K jp e c te d .
Short Terra Loans Eligible for Reserve institutions Ur
der New Bank Act—Stock Market Uplift Comes t
a Halt.
B Y F . F. D U N C A N ,
'
•
F in a n cia l E d itor o f The Leader.
F ederal re se rv e b a n k s w ill probablj* be a ctiv e b id d ers for the reventj
notes to be issued by th e c ity o f C leveland a b o u t M ay 1. D. C. Willi
c h airm a n of th e b o a rd o f th e C lev elan d fe d e ra l b a n k , will c o n fer wit
city officials on th e m a tte r to d ay .
I f t h e n o tes com e w ith in th e lim ita tio n s of elig ib ility fo r fe d era l ban!
in v estm e n ts— it is th e g e n e ra l o p in io n t h a t th e y w ill— th e y w ill be re
g a rd ed a s a ch o ice fo rm s h o r t tim e p a p e r fo r th o se In stitu tio n s.
N ew T o rk c ity la s t w eek p la c e d $6,000,000 o f its re v e n u e w a rra n t
w ith th e fe d e ra l b a n k o f t h a t city. T h e sale o f re v e n u e w a r ra n ts is i
new th in g in C leveland, a lth o u g h a p o p u la r fo rm of s h o r t tim e financial
In o th e r la r g e cities.
.
A c co rd in g to th e new b a n k in g a c t th e re g io n a l b a n k s m ay p u rc b asi
su c h m u n ic ip a l p a p e r of m a tu r ity d a te n o t e x ceed in g six m o n th s anc
issued In a n tic ip a tio n of c o lle ctio n o f ta x e s o r th e re c e ip t o f assurec
rev en u es.
Tt is believ ed t h a t th e n ew c ity lo a n s w ill com e w ith in th e scope ol
th e b a n k in g a c t in th is re sp e c t. C ity A u d ito r C o u g h lin sta te d la s t night
t h a t th e lo an s p la c e d in M ay w ill be p a id w ith th e ta x e s com in g in during
J u ly a n d th a t l a t e r in th e y e a r, p ro b a b ly In O c to b er a n d N ovem ber* th«
c ity w ill a g a in b e a b o rro w e r a g a in s t t h e ta x e s to be c o llected in Ja n u a ry .
T h e m a tu r itie s w ill r u n o n ly fro m tw o to fo u r m o n th s a n d in th at
re sp e c t a re w e ll w ith in th e re q u ire m e n ts fo r fe d e ra l b a n k in v estm e n t* . " v
Loan.
Stockholders of the Cuyahoga Savings 4
Loan Co. a t th eir annual m eeting held yea
t*rday re-elected for' three years th e vfou;
directors whose term s expired—Davis Haw
ley, president; George H. Ganaon. vice preal
dent: J. C. M urphy and L. J . Camaron
J
CIU REVENUE
T he C leveland lu ie f a g a in st the
P itts b u rg m ove will be su b m itte d by
Colonel J. J. S u lliv an w ith. S. H.
To’les a s counsel.
The fight fo r th e federal b a n k is
expected to develop th e h o tte s t c o n
te st of a n y of th e m o v em en ts se t
a fo o t b y d issatisfied c ities over th e
selection of th e fed eral re serv e cities.
P itts b u r g
b a n k e rs h a v e obtain ed
sig n a tu re s to th e ir a p p ea l e m b ra cin g
n early e v e ry b a n k in w e ste rn P e n n
sy lv an ia. T hey w ill b a se th e ir a p
peal on figures show ing t h a t a b o u t
h alf of th e stock of th e F e d e ral R e
serve B a n k o f C leveland is paid in
by w e ste rn P e n n sy lv a n ia banker*.
C lev e lan d ’s C laim s.
T he p re sen ta tio n of C lev elan d ’s
side of th e case w ill sta n d larg e ly on
th e original a rg u m e n t that, b ro u g h t
th e b an k to C lev e lan d —its m ore
re a d y accessib ility to th e te rr ito ry
em braced in th e F o u rth d istric t, th e
high s ta n d a rd of b a n k in g m a in
tained in th is city, its la rg e r popu
lation a n d th e h u sk y grow th t h a t h a s
m arked C leveland a s th e fu tu re city
of d e stin y a n d left all o th e r in te rio r
co m p etito rs w ith exception o f C h i
t go f a r behind.
T he C leveland a rg u m e n t too. ac~ o rd irs to b a n k ers, w ill Include som e
new a n d im p o rta n t phases n o t h e re
* »fore p re sen te d t h a t m ay com e a s a
PMrprise to P itts b u rg . B a r k e rs also
expressed the opinion la«t n ig h t th a t
1 ossession w ill pro v e tb e u su a l nine
Tvrfnt* fn ripfprmirilTio*
*------
13 FROM HERE FIGHT IU
KEEP RESERVE BANK
T h irte en Cleveland banker* artd
business m en W ednesday w ere in
W ash in g to n before th e fed eral reserve
b oard to p re se n t b riefs a n d a rg u m e n ts
to p re v e n t th e rem o v al of th e F o u rth
d istric t re serv e b a n k from C ^^'gland
to P itts b u rg .
7
A fight to h ave th e b a n k raovfcd to
P itts b u rg w a s b eg u n by P itts b u rg
b a n k e rs im m ed iately follow ing the
a n n o u n cem en t th a t th e re serv e bank
would be located here.
BEStKVt BANK
TO STAY HERE
T h e fe d e r a l r e s e r v e b a n k fo r
th e f o u r th d i s t r ic t w ill r e m a in In
C le v e la n d , d e s p ite t h e p e titio n o f
P i t ts b u r g b a n k e r s to
h a v e th e
b a n k s h if te d thjejfv,
I
A lth o u g h
fairinal a c tio n h a s
n o t b e e n ta k e n by th e r e s e rv e
b o a r d in W a s h in g to n , i t is k n o w n
th a t
a r g u m e n ts
p r e s e n te d
by
P i t t s b u r g f a ile d to w in a m a jo r
ity o f t h e b o a rd to P i t t s b u r g ’s
view s.
M e m b e rs o f t h e b o a r d b e lie v e
i t w o u ld b e d is a s tr o u s to th e r e
s e rv e s y s te m to b e g in to s h if t
J>anks
fro m
p la c e s
a lre a d y
c b o ae n .
RESERVE SAVFD,
BANKERS BELIEVE
Clevelanders °resent Argu
ments Against Claim
of Pittsburg,
B Y R Q g E R T F. WILSO.X.
ILeader Bureau. 30i Higgs Building.
I WASHINGTON', J a n u a ry 13.— T he
s tru g g le o f P itts b u rg to w re st th e
fe d e ra l re serv e b a n k of th e fo u rth
d is tric t from C leveland is all over
b u t fo r th e decision of th e fe d era l
re serv e board.'
j A fte r m o n th s
a g ita tio n , th e
P itts b u rg bankcM rJ> «bm i’. t<>d th e ir
case to th e bo ard today. T h e ir a r
g u m e n t w as an sw ered by M ayor
N ew ton D. B a k e r a n d A tto rn ey S. H.
T olies so a b ly and com pletely as to
leave little d o u b t in th e m in d s of
D isinterested liste n e rs th a t th e eff o r t 'o f th e P itts b u rg e rs h a s Jjeen in
) [vain.
In fa ct, m em b e rs of th e large
P itts b u r g d ele g atio n in a tte n d a n c e
a t th e h e a rin g , a f te r liste n in g to the
a rg u m e n ts , conceded th a t th e re is
little c h an c o th a t th e b o a rd w ill ups*t th e w ork of th e org an izatio n
c o m m itte e, w hich placed th e bank
in C leveland. T he bo ard a nnounced
th a t it w ould ta k e th e case u nder
a d v ise m e n t and re n d e r its opinion
in d u e tim e.
* *
T h e P itts b u rg e rs . th ro u g h A tto r
ney W! W. Sm ith, a tte m p te d to m ak e
th e p o in t t h a t th e ir a p p e a ra n c e to
day w as in fu rth e ra n c e o f w h a t in
a c o u rt w ould co rresp o n d to a m o
tio n fo r a new tria l, a rg u in g th a t
In th e h u rry of organizing th e b ank,
th e .o rg an izatio n c o m m itte e did not
twiT- to ta k e a ll th e
fa c ts in to c o n s id e ra tio n .-'
T h e C leveland response w as th a t
th e p roceedings todny w ere r a th e r
*n a ctio n a f te r ju d g m e n t h a d been
re n d ere d .
“T he b an k is a c tu a lly in C leve
lan d d o in g business^’’ said T olies, in
h is re p ly to Sm ith.
" I t Is e s ta b
lish ed , am i. unless th e re is a sh o w
Ing -of fra u d , of a m istak e, or if e x
p e rie n c e h a s show n th a t th e lo c a
tion i» p re ju d ic ia l to th e b e st in te r
ests Of th e b a n k in g in te re s t, th e n
th e decision o f th e o rg a n iz atio n
c o m m itte e sh o u ld n o t be d istu rb ed .
T h e re h a s been no such show ing."
“W o u ld S h a k e C onfidence.”
' In a sh o rt speech, in w hich he
h o u n d u p the C leveland side. M ayor
f a l t e r contended tju it to m ove the
f i n k ro w w ould Hr Vo ’sh a k e public
e-.nfldetice in th e sta b ility of the new
ta n k in g system .
“I t would defer., th o hope of t h ?
P 'ib lij t h a t th is in s titu tio n will ram i i i T som e
tb« financial lim ita tio n s
i u d e r w hich «this c o u n try h a s laV ired " he said.
A larfie d elegation cam e from
C i f e la n d to th e h e arin g . I t Was
b c j.U d by B aker, T olies. Colonel J.
J rfi . Ill v a n a n d M B. Jo h n so n , a n d lt
^■ lulled also F . W .W a r d w e ll, p re si
de tit o f the .-lev-ilund C le a rin g H ouse
jg g > W ll* o n .
R ussell,
W. E. W ard, A. G. T am e, C. A. P ain e,
G eorge F . ^Hart a n d A. M. C orcoran.
M ayor B a k e r a n d m ost of th e
p a rty re tu rn e d to C leveland to n ig h t.
T l.e m ay o r escorted th e d elegation
to th o W h ite H ouse a fte r th e h e a r
ing, b u t a few m in u te s too late to
see th ^ P re sid e n t. T hey a lso called
on S e n a to r F o m eren e in tlie a fte r
noon.
A tto rn ey S m ith succeeded, o ver
th e p ro te st of A tto rn ey Tolies, in
g e ttin g be fo re th e b o a rd p e titio n s
fro m 4 76 o u t of th e 7 66 m em b e r
b a n k s of th e F o u rth d istric t a sk in g
th a t the b a n k be tr a n s fe rre d to
P itts b u rg . In his co m m en t on th e se
p e titio n s T olies said:
“ You o u g h t to co n sid er ho w th ese
petitio n s w ere obtain ed b efo re g iv
in g w e ig h t to th em . C leveland h a s
n o t th o u g h t it becom ing to c an v ass
th is d istric t o r solicit v o tes fo r th e
re te n tio n of th e b a n k in C leveland.
We have th o u g h t to rely u p o n th e
m e rit of th a decision a w a rd in g th e
b a n k to C leveland, r a th e r th a n upon
#ny d ru m m in g of th e d istric t. How
th ese p e titio n s w ere o b tain e d , by
w l-at d ru m m in g o r so lic ita tio n , I
have no m e a n s o f know in g ."
C om pares T w o Cities.
“In th e m a tte r of financial suprem acj', In d u strial and com m ercial
suprem acy, a n d convenience of a c
cess Cleveland is com pletely o utshadpw ed by P itts b u rg in every .p ar
tic u la r,” said Sm ith, He th en w en t
on to give s ta tis tic s bearin g o u t his.
sta te m en t.
“The c ap ital and su rp lu s of th e
n a tio n a l b an k s o f t h i six la rg e st c it
ies in Ohio fa ll $2,000,000 sh o rt of th e
a g g reg a te c a p ita l and su rp lu s of
P itts b u rg b a n k s,” said Sm ith. “Of
th e seven c ities w ith bank c a p ita l of
over $25,000,000, P itts b u rg w as th e
only one in w hich a reserv e b an k
w as n o t lo ca ted .”
“ We h ave h e a rd no reaso n s given
for locating th e bank a t P itts b u rg ,”
w a s th e w ay Tolies beg an his a rg u
m ent.
"N othing, except th a t su
prem acy, w hich a n y P itts g u rg e r is
re a d y to a d m it a t a n y h e a rin g .”
H e denied S m ith ’s a sse rtio n th a t
C leveland business Is localized, while
P itts b u rg ’s m a rk e t Is world-w ide.
"N o A m erican city h a s a tra d e w ider
sp read th a n C leveland’s,” he said.
C leveland’s A tm o sp h e re B e tte r.
"B efore th is ban k in g law w as p ro
posed, th e feeling had com e to be th a t
the flow of m oney did n o t foliow
n a tu ra l courses—lt had. been m ad e to
flow uphill by special Inducem ents,
because th e control o f • m oney had
fallen Into v e ry few h an d s. T his
fact, no doubt, w as In th e m ind of
the o rg an izatio n com m ittee, w hen it
m ade its decision.”
Tolies declared th a t th e "a tm o s
phere” of Cleveland is b e tte r for* th e
regional bank th a n th a t of P itts b u rg .
"There is n a tu . 1 feeling a g a in st
P itts b u rg for th e reaso n t h a t her
political a n d b a n k in g h isto ry in the
public records does n o t c re a te the a t
m osphere In w hich one w ould place
a bank o f th is im portance. T his is
P itts b u rg 's m isfo rtu n e r a th e r th a n
h e r fau lt. C leveland’s g ro w th and
conservatism of b an k in g h a s been
absolutely fre e from th e slig h te st
scandal o r fa ilu re, a n d th e s e w ere
fa cto rs in influencing th e com m it-
MAY LOSE BATTLE
FOR RESERVE BANK
Pittsburg Fails to Impress
Federal Board by Its
Array of Figures.
Mayor Baker Pleases by Us
ing New Civic Angle in
Argument.
f 1: .«■
Plain D e a l S ’u reaff
>
38 Pos
W ASHING1! '
C o n tra s ts b etw een th e civic c o n
sciousness o f C leveland a n d P i t t s
b u rg a n d referen ces to th e w ide dif
ference in th e political a tm o s p h e r e ^ f
th e tw o m u n ic ip alities p lay ed — larg e
p a r t in th e h e a rin g to d a y before th e
federal re se rv e bo ard on th e p ro te s t
of P itts b u r g b a n k e rs a g a in s t th e se
lection of .C leveland a s th e re :.’onai
b a n k cen ter, foi* the fo u rth re serv e
d istric t.
T he re p re se n ta tiv e s ui 7" .burg,
a sk in g t h a t th e reg io n al b an k be
tra n s fe rre d from C leveland to P i t t s
b u rg , w ere a rm e d w ith a long lin e of
s ta tis tic s
cov erin g
m a n u fa c tu re s,
m iles of tr u n k line ra ilw a y , to n n ag e
in v a rio u s com m odities, b a n k c le a r
a n ce s a n d ra te s of in te rest.
T he re p re se n ta tiv e s of C leveland
h a d s ta tis tic s , too, b u t w ith th ese fig
u re s th e y p re sen te d re aso n s w h y th e
m etropolis of Ohio, m o rally a s well
a s fo r th e g e n era l p ublic in te re s t
should re ta in th e c e n tra l b a n k in th e
fo u rth re se rv e ^ j t r i c t .
B reak s R o a tliA J ^ o u o to n r,
I t w a s som em iflg^'hey-^ t'riiA M aking
of th e q u e stio n o f civic a w n Jw h e re
Into a n o th erw ise n e ce ssa rily du ll r e
h e a rsa l of fig u res p e rta in in g to th e
m ovem ent of tra d e . A nd it w a s not
alone in te re s tin g b u t re fre s h in g to th e
m em bers o f th e re se rv e b o a rd . T hey
th em selv es sa id so in c o n g ra tu la tin g
M ayor N e w to n D. B a k er, w ho led in
th is line o f a rg u m e n t a n d w ho told
th e bo ard P J tts b u rg w a s suffering
w ith “s ta tis tic a l im a g in a tio n .”
I t w a s c o n ten d ed t h a t C leveland
from th e s t a r t ^ n th 'j
etice.llv joined
— >—» ■ ' ~ i
ntVi
4th CnV.njn.
in th e m ovenjent ^,5
Jgr- ■'.itude
o f,P itts b u rg if. n o t o penly i r
a w as
indifferent. -.The- uat»»^al .b u -.c fa il
u re s of eac h p ity also w ere n .- 't i o n - d .
T he h e a rin g to d a y w as o ral to
sup p lem en t th e w ritte n b rie fs ’filed
w ith the fe d era l re se rv e ’bo ard on b e
h a lf of th e r tw o pities. A t th e c o n
clusion o t t i e a rg u m e n t a n n o u n c e
m e n t w as declsloYi w ould 'be reserved.
All su rfa c e in d ic a tio n s rinii.t t h a t
th e fe d era l re se rv e boai*5I will s u s ta in
th e a ctio n of th e o rg a n is a tio n , com
m itte e in se lec tin g Clove.Und a n d Will
n o t d istu rb th e n e v b a n k e r sy stem
in o p e ra tio n tout a 1tyttie m o re y i^ n
tw o m o n th s.
?.
Ur.e re p re se n ta tiv e ^ -To f P itu tb m g
tjjiia s e lv e s atdLaitted. fcft#r t^ e b e o rsa w . little cb
-fo r
a. ch an g e in th e a ttitu d e o f the
board. Irrespective of th e a rg u m e n ts
th e a ttitu d e of th e b o a rd seem s to
be t h a t if th ere a re a n y d e fec ts e x
perience will d e m o n stra te th em a n d
th e o nly logical course to ' p u rsu e is
to observe the w orkings o f th e s y s
te m a s organized.
A rg u m e n ts for C lev elan d ' w ere
p re so n ted b y A tto rn ey S. H . Tolies
a n d M ayor B aker. in a d d itio n to
th e tw o spokesm en C leveland w as
re p re se n ted a t th e h e a rin g b y J. J.
S ullivan, JT. W . W ard w e ll,. T hom as
H . W ilson. George S. Russell* C. A.
P a in e . JL. A. M urfey, M. B. Johnson,
G eorge F. H a rt, A. G. T im e , W . E.
W ard , A. >1. C orcoran. «
A rg u m e n t for P itts b u rg w a s p re
se n ted by A tto rn e y W illiam 'Sm ith.
O th e r re p re se n ta tiv e s o f P itts b u rg a t
th e h e a rin g w ere T. H a r t G iven, p re s
id en t of th e F a rm e rs D eposit N a tio n a l
b a n k : R . B. M ellen, p re sid en t of th e
M ellen N a tio n a l ban k , a n d Jo h n R .
M cCune, financier a n d re p re se n ta tiv e
of th e P itts b u rg c h a m b e r of com
m erce.
A tto rn e y S m ith vigorously- denied
th e re w as a n y c riticism of th e federal
re serv e board. H e declared th e m a p
pin g o u t of th e new sy ste m l*y th e
b oard to be a “ w onderful p ite e of
c o n stru c tiv e w o rk .” a n d th e n insisted
t lla t in th e case o f t h e fo u rth d is tric t
a m ista k e had been made*
He
sum m ed u p w ith th e s ta te m e n t th e
c a p ita l a n d su rp lu s o f th e six Iargwst
c ities of Ohio, C leveland i n c i t e d , w as
I £e 52,000,000 s h o rt o f t h a t 'i n P itt*
'
alone.
.
A tto rn e y T olies c h ara cte riz ed some
of th e s ta te m e n ts of A tto rn e y Srtiith
i s . ridiculous, as, fo r in stan ce, th e
P itts b u rg m a n 's a sse rtio n the C leve,
I'ian d m a rk e t is localized.
“ W /th th e possible ex ception of
l\*ew T o rk a n d C hicago th e C leveland
m a r k e t js
m o st diversified in the
L n ite d S ta te s , re a c h in g n e a rly e v ery
po in t on th e globe,” said M r. Tollfes.
M r. T olies d iscu ssed th e pu rp o ses of
th e new banking: a c t to provide a
m ore e q u ita b le d istrib u tio n of th e
banking: re so u rc e s o f th e c o u n try a n d
co ntended t h a t b y th is te s t C leveland
w a s in e v e ry w a y to be p re fe rre d over
P ltts b u re .
\n
A c c e p ta n c e P ro b le m .
In prep arin g ' ru le s g o v e rn in g a c
c ep tan c e s a v a ila b le fo r re d isco u n t, th e
federal re se rv e b o a rd is being: con
fronted w ith c e rta in difficulties. T he
'ederal re se rv e a c t lim its th e accep tm ces re d isc o u n ta b le to th o se based
>n im p o rt o r e x p o rt tra d e , a n d th e
tuestion a ris e s how a c c e p ta n c e s m ay
>e m ark e d so a s to m a k e it c ertain
o holders in th e co u rse of c irc u la tio n
h a t th e p a p e r is based on foreign
ra d e . B efo re th e w a r a n A m erican
m ipper of com m odities d re w on a
-iondon bankk no m a tte r w h a t or to
v h a t c o u n try ' ne shipped.
th®
lew plan he frenii^jtL v IQ raS fs on
•reditu se t u p A A d iJ f .M g if f lW c h a s e r
u a n A m e ric a W R nro. U n d er th e old
)lan th e n a tu re of acc ep ta n ce , being:
lra w n on L ondon, w a s in d icated on
;he face. U n d e r th e new' plan th is
£ n 9 t th e case, a n d a n a cc ep ta n ce in
d ie ,c o u rse o f tr a n s f e r fuom #h a n d to
ia n d when used a s a n in v e s tm e n t will
la v e n o th in g on its face to tell a p u r
chaser t h a t th e leiral re q u ire m e n ts for
redi v o u n ta b ility h a v e been m et. The
shipping d o c u m e n ts t h a t w e n t w ith
fhe p a p e r w ere d e ta c h e d b y th e ac^eptinc: b a n k fo r se c u rity w hen it acbuy b,llf* b.
.'■] ■- for fe a r th a t
th e m a r k s m ad e th e
f\ less n**gotfable a n d
if n o ta tio n s a re
to be ,>f
th e d r a ft -ms
d ra w n i:
p orted or im
p o rted r,
My H iust no so
m ad1 a ’
e d r a f t on th e
goods ii
is to m ak e th e
p a p e r c o n d itio
o r less negotiable.
R e g u la tio n s will be issued in th e near!,
POTENTIAL FACTORS N O T E X H A U ST K D .
B u t th e m a rk e ts a re n o t y e t In full possession e ith e r o f th e a c c ru in g
lenefUs from e asin g m oney, n o r th e o rd e rs th a t h in g e d o n ^ h e ra te de•Ision. T h e a v era g e in te rio r b a n k Is Just now c o m m e n c i n g to feel th e
■ffects of a lessening d e m a n d fo r m o n ey a n d a g ro w in g deposit account,
n te rio r b an k s a re only now c o m m e n cin g to red u ce th e ir bills p ay ab le and
■etire th e ir em ergency c u rre n c y in !• co m p re h en siv e w ay. It is also p . v nt
h at th e in v estm e n t m a rk e ts did n o t beg in to c o n trib u te to th e g e n era l u n
buckling of a ta u t situ a tio n u n til th e first w eek in J a n u a ry .
T ra d in g in th e New Y o rk bond lis t c o n tin u ed on a lib e ra l sca le rv.th
prices firm. The. local in v e s tm e n t d e m a n d w as stro n g e r th a n on T uesday
m d th e total tu rn o v e r on th e e x c h a n g e u p to th e b e s t since th e first of
1
year
*
^■
G overnors o f ’Vhe New Y o rk e x c h a n g e a p p ro v ed p lan s fo r th e re sto ra tio n
of a rb itra g e d e a lin g s w ith E u ro p e a n m a rk e ts u n d e r re s tric tio n s to be
defined la te r.
\ /
. ,.
.
T he fe d e ra l re se rv e b a n k of C leveland re d u ce d its ra te of d iscount
fo r th irty -d a y p a p e r to 4 ^ p e r -c e n t In a c c o rd a n c e w ith la st w e e k 's e x
pectatio n s. T h e r a te fo r six ty days w a s re d u ce d to 5 p e r c e n t a n d n in ety
riavs to 5 p e r cent. A 6 p e r c e n t r a te p re v a ils f o r 'lo n g e r periods.
Investments
706,000
Nearly
Increase $2,
and Rediscounts
Merchant Paper Held is Half
Thirty-Day Variety—
Directors’ Fees. ,
iH W S .A T -f flh m w W A S *
In the w eek j u s t end ed th e fed eral
reserv e sy ste m Increased its in v e st
m en ts $2.7<H>,tKX), a n d re d isco u n ts a n d
loans ?2,5(1(1,000. In o th e r *words th e
system m a te ria lly e n la rg ed its com
m itm e n ts a n d Is ra p id ly ta k in g on
new d ig n ity a s a fa c to r In th e c o u n
tr y ’s d a y -to -d a y financial o p e ratio n s.
T he to ta l of $9,173,000 in v e s tm e n ts
includes m u n icip al w a rra n ts a n d g o v
e rn m e n t bonds, chiefly w a rra n ts . T he
to ta l o f re d isco u n ts, $12,442,000, is
a b o u t 50 p e r cent, in p a p e r o f m a tu r
ity n o t exceed in g t h ir ty d a y s, a n d
a b o u t So 1 -II jier c en t, in m a tu ritie s
n o t exceed in g six ty d a y s, m a k in g
c le a r th e sy s te m 's liquid position.
F e d e ra l re se rv e n o tes in c irc u la tio n
decreased $10,000. T h e o u ts ta n d in g
$1,S3S,(XX) is n e t a f t e r d e d u ctio n of
th e n o tes in th e h a n d s of regional
b a n k s, a n d th e
gold a n d law fu l
m oney p u t Into th e h a n d s of fe d era l
re serv e a g e n ts to c an cel lia b ility of
th e b a n k s. A t th e y e a r e n d th e n e t
circ u la tio n w as only a b o u t $3,750,(KK)
a n d d e cre ase h a s o c cu rre d e v e r since.’
T he le tte r of H e n ry B. Jo y , d ire c to r
of th e fe d era l re se rv e b a n k o f C hi
cago, to Gov. H a m lin p ro te s tin g
a g a in s t m u c k ra k in g a s to t h a t in s ti
tu tio n h a s a .o u s e d w ide in te re s t.
In th e course of his le tte r Mr. Joy
sta te d t h a t he considered th e tim e
and effo rt sp e n t on the b a n d ’s
a ffa irs b y
th e
d ire c to rs
com
p e n sa te d in ridlcu lo u sl; in a d e q u a te
fashion. H e fav o red $100 a m e e tin g
a s a fee to each d ire c to r a n d $ 1 0 0 a
m o n th fo r in cid e n ta l expenses, c o rre
spondence a n d tim e devoted to keep
e d u ca te d on th e c u rre n t a ffa irs of th e
in stitu tio n .
T he d ire c to rs of th e fe d era l re se rv e
b a n k of C leveland re ce iv e a fee o f $20
each fo r each m ee tin g , held once a
m o n th . F iv e of th e d ire c to rs m ak e
u p th e e x ec u tiv e c o m m ittee, w hich
m ee ts once a w eek a n d each m em ber
of th e co m m ittee re ce iv e s a fee of $10
a m eeting, th e re b e in g n o d u p lic a tio n ,
p tr e c to r s a re paiil ex p en ses tn. a d d i
tion to fees. A n u m b er of them live
a t such d istan c es, in C incin n ati. W est
V irginia a n d K en tu ck y , t h a t the
jo u rn ey to a n d from C leveland and
the m eeting re q u ire a full day from
th e ir o th e r a ffa irs. T hese fees have
been sfet by th e feders* re serv e board.
M inim um re d isc o u n t r a te s a re now
4 1-2 per c en t, in a ll c ities b u t two in
th e so u th . T he sy ste m ’s sta te m e n t
a s of th e close of b u sin ess J a n . l o
follow s:
'
RESOURCES.
Gold coin and certificate a . . . . . . . . |230,m .Q 00
Legal tender notes, silver certlflcates and subsidiary coin........ . 1P,2W,000
T otal ...............................................*252.744.™
31118 discounted and loans:
.faturitles w ithin 30 d a y s ..............$ J,049,0*
M aturities w ithin 60 d a y s ..............
Jiolo’.ooo
T otal ............................................
nvestm ents ........................,..........; * S.
)ue from P . R. banks: item s in
tra n s it ........................................
•
VII other resources .......................... w . w . w
Total resources ................ ........... $207,098,000
L IA B ILIT IES.
Capital paid in .............................. * 4 ?'? h s Soo
teserve deposits .......................... • 277.185,000
.'ederal" reserve notes in clrculatlon (n e t)................ ..1.888,000
Total liabilities . . . . ------ •. • •
Gold reserve a g ain st n et liabilities 87.1
)€Casb reserve a g a in st n e t liabilities 08.1
>er cent.
,
.
Federal R e s e r v e B a n k o f C lev elan d
RESOURCES.
J a n . 15.
Jan . 8.
Gol«l and jrold c ertifi
c ates . . . ....................$17,005,000 $18,291,000
Legal tendor notes, sil
ver certificates and
016,000 1,098.000
subsidiary coin ..........
Rediscounts and lo a n s ..
414.000
455.000
All other resources---742.000 1,728,000
Total ............................$19,077,000 $10,567,000
L IA B IL IT IE S .
v
C apital paid In .............. t 2.0S4.000 S 2,0*1.000
N ot deposits .................. 16,001,000 1T.3M.000
Federal reserve notes
In circulation ..............
142,000
14J2,060
Total ............................ $19,077,000 $19,66T,000
Gold reserve a g a in st all
liabilities, p er c e n t..
99.7
92.91
Cash reserve a g ain st a ll
liabilities, per c e n t ..
105.2
99.14
L o c a l N a tio n a l R a n lc a .
Cleveland n ational banks report for the
week ended w ith the close of business F r i
day la st decrease in loans of $429,211; nom
inal Increase in deposits of $88; and decrease
In cash and due from reserve agents of
$253,995.
C LEV ELA N D CLEARINGS.
L ast w eek.................................... .......... 26.377,019
W eek lost y e a r .... ............................. 28,649,500
U IN U IjHi
i in
quite
o u ic
i u c u iu e u
n ils
q u e s t io n
m ii^ c .
/J iX X , 2 r c
N E W C A S H IE R O F D IA M O N D
N A T IO N A L
BANK
ctitnatloa l n c h « a g « d In C levela;
*1'
p . C. Wills, Federal Reserve Ai
(JowAaQ^j, reports th a t “ changes reyectliig fiT isln ess and ag ricultural con
ditions a re few compared w ith thirty
l a y ago. The financial situation and
money ra te s a re unchanged. A large
I ’olume of business is being handled by
th e banks. In one or two centres of
jh e district there has been a ra th e r
jbrfak demand for funds. As a rule,
(however, money is reported easy Till
lover the district. Dealers in securities
re p o rt no let up in the m arket, but
(observe a strong tendency tow ard the
h ig h e r grade investm ents. The g reatest
problem of all the m anufacturers in the
-district Is the labor problem. Some are
■experimenting w ith negro lab o re rsA ^ h
• re being JtMUgtvr rtere ift consiaoj
J0hu*ntnffs from the South.”
New York ^imes
\ \ ill t e r . .. P h i l l i p s .
Mr. P h illip s, w ho w as fo rm e r a s
s is ta n t c a sh ie r of the D iam ond N a
tio n a l Rank, w as
nam ed
c a s h ie r
W ed n esd ay to succeed
w ho is now re se rv e
F e d e ra l R eserve B an k
lan d , O.
Pittsburgh
a z . Times
January 14, 1915
September 1916
BANK STATEMENTS
4
The statem ents of th e federal banks and
or the Cleveland and New York banks fol
low:
CLEVELAND FE D E R A L BANK.
Resources.
Gold and prold certificates ............. 117,005,000 00
Le#al tender not#«, silver c er
tificates and subsidiary 'dttlJi*,*,,
&6.000 Oo
Rediscounts and loans .................. ~ -414,000 00
All other resources ...........................
74_’.000 00
Total resources .............................. 119,077,000 00
Liabilities.
C apital paid in ................................. S2.034.000 Oo
Net deposits ...................................... 16,901,000 00
Federal reserve notes In circula
tion ...................................................
142.000 00
Total liabilities ............................ 819,07^,000 00
Ciold re s e r\e against all liabilities. 99.7 per
cent. Tash reserve ag ain st all liabilities,
10T..L* per cecit. Cash reserve ag ain st ail
liabilities a fte r settin g aside 40 per cent gol<t
reserve against Federal reserve notes in c ir
culation, 105.7 per cent.
ALL F E D E R A L BANKS.
Resources.
Gold coin and certificates............. 1236,516,000 00
Legal tender notes, sliver cer
tificates and subsidiary c o in .., 16,288.000 ^
T o u t ....................... 1 I f l l n : , 714,000 w
Bills discounted a n d j l a p n s : v i w
M aturities wfthin 30 d a y s ............. % 6.049,000 00
M aturities w ithin 60 d ay s............... 4.344.000 fni
)th e r ...................................................
2.019.000 00
Total ................................................ $
nvestm ent* ...................................... $
Due from F. R. banks:
terns in tran sit ..............................I
U1 other resources .........................
12,442.000 0O
9,173,000 00
7.CJ93.000 00
15.144,000^00
Total resources . •...........................|297,098,0W) OJ .
L iabilities.
i
ap ital paid in ............................... f 18.073.000 00
Reserve deposits ............................ 277,185,000 00
federal teserve notes In clrcu la- *
tion inet am ount) ........................ 1.S3S.OOO 00
Total liabiiitiee ........ «•..................$297,09*.000 OO
Gold reserve a g ain st n e t liabilities. *7.1 per
ent. (’ash reserve a g ain st net liabilities,
3.1 per cent. Cash reserve a g ain st liabilities
fter getting aside 40 per cent gold reserve
gainst net am ount of Federal R eserve notes
n circulation, 93.5 per cent.
JEW YORK CLEARING HOUSE BANKS.
in crease
woans. etc ....................$2.197.r.408.000 $8,509,000 00
teserve In own v au lts
vB) .............................. 351,.592.000 34.010.000 00
Ieserve in federal re
serve bank . . . . . . . . . 108,,103,000 7,365,000 00
teserve in other de
positaries
...............
31,<697.000 *537,000 00
;e t dem and deposits. 2,059. 263.000 27,983,000 00
199,000 00
Cec tim e deposits.......
89, 858.000
•ireulatlon ..................
42, 946.000 *3.270,000 00
<B>—Of which *£73.698,000 is specie.
i ggregate reserve ... 8491. 392.000
Cxcess reserve .......... 135, 971,010 15,391,200 00
O TH ER N EW YORK BANKS.
,oans, etc. .................. $555,130,900 *16,277.400 00
*383,100 00
-peoie .........•.................. 43.218.900
•978,600 00
egal tenders ............... 11.241.400
*792,700 00
Total deposits ............ 614,802,700
Banks cash reserve In
xm l t ........................... .11,149,300
r - st com panies' cash
r-serve in v a u lt......... 43.311,000
CLEVELAND CLEARING HOUSE BANKS.
lx>ans decrease ...................................... $429,211 00
Deposits Increase
................................
83 00
Cash and due Xroiu res. agis. d ec.. 253,995 00
\ i i i V* -K
v r «fr »«.
n jra teiu
In Transition Stage Frem-Debtor to Creditor Class—
Uses Two Billion-Dollar Trade Credit to Good Ad
vantage With Federal Banks Helping.
ft 1 <
BY F. F. DUNCAN,
F in a n cia l E d ito r o f The Leader.
I t Is r.ow tim e to re c a ll th e in te rv iew p rin te d in T he L e a d e r a t th e o u t
b re a k of th e E u ro p e a n w a r, in w hich a C leveland financier, E. G. T illotson
p red icted w o rld -w id e su p re m ac y fo r th e U n ite d S ta te s a s one of the u ltim a n
effects of th e c a ta c ly sm inv o lv in g th e old w orld.
T his p a ssin g w eek h a s seen ta n g ib le ev id en ces t h a t th e prophecy is abey
to be m ad e good. H e re a re som e o f th e w o n d e rfu l h ap p en in g s th a t th e ne
y e ar, now o n ly tw o w e ek s along, h a s b ro u g h t fo rth .
E x p o rts exceeding im p o rts b y th e h u g e to ta l of J,'.,000.000 a day, sustained
(for a fu ll w eek, or a t th e ra te , if su s ta in e d , o f $l,S2o,000,000 a year.
J a p a n a n d C h in a se n d in g gold to th e U n ited S ta te s in p a y m e n t for su p
plies p u rc h ase d .
C a n a d a r e tu rn in g gold to th e U n ite d S ta te s in p a y m e n ts a g a in st a n ex
cess of p u rc h a se s o v e r sh ip m en ts w h 'c h h a s n o t even been fu lly covered by
C a ra d la n b o rro w in g s in th is c o u n try to ta llin g m a n y m illions of dollars.
N ew Y ork b a n k s fu rn is h in g th e R u ss ia n g o v e rn m e n t w ith a J25.000.000
c re d it to b e d ra w n agrainst fo r goods to be shipped, th e p a y m e n ts to ta k e th e
form o f ‘'a c c e p ta n c e s” g iv en b y th e R u s s ia n g o v e rn m e n t to th e N ew Y ork
b a n k s a n d h en ce a v a ila b le fo r re d isc o u n t b y th e fe d e ra l re serv e b an k s in th is
c o u n try .
,
I t w a s officially a n n o u n ce d y e s te rd a y a fte rn o o n t h a t th e d e ta ils of th is
tra n s a c tio n h a d been concluded. T h e a c c e p ta n c e s a re to ru n fo r n in e ty days.
T hey a re re n ew a b le a f te r t h a t tim e fo r a n o th e r n in e ty d a y s a n d w ill draw
in te re s t a t th e r a te of 5 p e r cent, p lu s a b a n k e rs ' com m ission o f h a lf of l
p e r c e n t fo r eac h -p erio d .
-
T R A N SIT IO N OF D EBTO R TO C R ED ITO R
of
th e
:kh o f* iT m v « « *5tX 000 * "
N A TIO N .
H e re th e n is a s itu a tio n fu ll o f w o n d e rfu l possibilities. T h is c o u n try is
g e ttin g som e gold on th e d ire c t m ov em en t, a lth o u g h y e ste rd a y ’s N ew York
b a n k s ta te m e n t c le arly show s t h a t th e gold is n o t a t a ll needed. F o r the
balan ce, th is c o u n try is d isp e n sin g th re e a n d six m o n th s c re d its in >25.000.000
b locks o n th e se c u rity o f th e n a m e o f one of th e stro n g e s t of E uropean
pow ers. T h e re is no occasion to q u e stio n R u ss ia ’s a b ility to finance its obli
g a tio n s on long te rm lo a n s a t th e end o f t h a t period w hen th is co u n try w ill
■•gain be In co m m an d o f th e e x c h a n g e to th e fu ll a m o u n t of th e m a tu r ity
th e n due.
. I t is possible t h a t if R u s s ia h a s d iffic u lty in p la c in g its p e rm a n e n t lo an
p a r t of l t m a y com e to th is c o u n try . T h e u ltim a te fin an c in g m ay ta k e th e
fo rm o f a n a d v a n c e to R u ss ia fro m E n g la n d w ith som e disp lacem en t ot
A m e ric an se c u ritie s held th ere . B u t w h a te v e r fo rm i t ta k e s, one c an n o t
e v ad e th e c o nviction t h a t th e u ltim a te effect a t *he w o rst view of it possible
is th e c an c ellatio n o f a d e b t by th is c o u n try in th e form o f th e hom e-com
in g o f se c u ritie s, to bo paid fo r in A m e ric a n goods.
T h is c o u n try realized its w e a k n e ss a n d G re a t B rita in its s tre n g th when
in th e c ris is of th e o u tb re a k of w a r L o n d o n a tte m p te d to liq u id a te a huge
p a r t o f th e $6,000,000,000 of A m e ric a n se c u ritie s held th e re . T oday the
U n ited S u ite s is e ith e r i e ducing t h a t econom ic w eak n e ss o r o ffse ttin g it by
p la c in g c re d its b ro a d c a s t th ro u g h o u t th o w orld on a. p u re ly com m ercial
t>n sis .
•
$100,000,001
gold pool is th e la te st trib u te to thf
rig h tin g of th e foreign e x c h a n g e s i t
uation, a n d re tu r n of th e fu n d s will
eas< conditions a t i n t e r i o r points.
M em bers of th e fe d era l reserve b a n k ?
will we a n o th e r 1 p e r cent, of t h e i r
c ap ita l totock a n d su rp lu s on su b scrip ttbn t o th e re g io n a l b a n k s ’ c a p i t a l
Feb. X. T h is will b rin g a n o th e r
000,000 gold a n d gold c ertific ates to
th e local in stitu tio n a n d $18,000,000
to th e system . W hile th e influx will
a d d in a degree to th e in v estm e n t
problem , th e problem Is not b o th erin g
th e b o a rd s a s m uch a s m ig h t be
guessed. T he fe d e ra l re serv e sy ste m
ia b e in g cond u cted w ith the id ea of
fu rn ish in g a b u lw a rk o t s tre n g th for
th e b a n k in g co m m u n ity a n d profit ffl
a fe c o n d a ry c o n sid eratio n .
‘
T he G ra fto n b a n k o f G ra fto n . W .
V a.. w hich fa iled to open y esterd ay ,
A bandonm ent
0. S. IN A NEW ROLt AS
K fifr v e
A ct
A c c r ,» .u . , „
A s th e fe d e ra l re serv e b o a rd s h o r t
ly w ill lay dow n ru le s g o v e rn in g
m em b e r b a n k s d ealin g in acc ep ta n ce s,
th e re Is new In te re st In th e p ro rislo n s
of th e re se rv e m.at r e la tin g th e re to .
M em ber b a n k s m ay accept, a n d r e
serve b o n k s d isco u n t, bills of ex-
% S a£ £ U flB S fi
9
m estlc tr a d e n o t likew ise fa v o re d , is a
q u e stio n m a n y a re a sk in g . T he r e a
son in a ll likelihood Is th is. P a p e r
based on fo reig n tra d e Is founded on
a c tu a l co m m ercial tra n s a c tio n s . M uch
o f th e p a p e r c u rre n t In dom estic a f
f a ir s is acco m m o d atio n p a p e r. W han
a m em b er b a n k ex erc ises i ts p rivilege
n i
to accept, It sig n s its n am t
d ra ft, m a k m g itself a s well
I d ra w e r a n a prev io u s indorser, t t any:
I liable— th e b a n k 's nam * th e re a fte r
c irc u la tes on th e d r a f t w hich m py be
used for -in v e sLmem.
tm e n t.. or m ay pas?
paa*
th ro u g h fo rty ha* ' I
'
tu res.
" p ____
r t r ii m
T he fra m e rs of
if th e reserv e a ct, desirin g to be a s co n se rv a tiv e a s fe asiH
ble in th e m a tte r of p e rm ittin g 1
to Increase liabilities, confined
n ew a cc ep ta n ce pow er to im port
■export p a p er tth ic h Is based on
com m ercial tra n s a c tio n s anU is
liq u id a tin g . W hen th e tim e comt t
t h a t dom estic p a p er sh a ll be based on
a c tu a l m erc h an t d eals to g re a te r e x
te n t th a n Is now the case, th e a c t can
b e a m en d ed to b ro ad en th e a c c e p t
an ce privilege. Good b a n k a c c e p t
a n ce s a re In brisk dem an d : th e y cir■ntlate in th e e a s t a t th e low est com
rnercial p a p e r ra te . If n o t low er. U n
iter th e new V a n Tuyl law N ew T o rt
sta te tognks cjtn accept dom es
IV'lUt
_. _
, pi’bSJC d e b t in fia tlo u a n d v h i^
m oderate fra c tio n of th e reserve’
■tern's cash, no w a o o u t $295,000,•, will a t a n y tim e .bj c o n c e n tra te d
!•>
New York City Warrant*? .pcmstitute First Purchase—
Market^i^aifi Strong with Big Volume of Busi
ness in Bonds.
iA \
BY F. F. DUNCAN,
F inancial Editor o f Tbe Leader.
m
_
'■ '/'lie F ed eral K esen 'e B ank, of Cleveland, has m ade Us first im p o rta n t in
vestm ent purchase. I t has ta k e n on $500,000 New York c ity w a rra n ts m a
tu rin g n e x t J uhh O ther i m p y t a n t m unicipal purchases a re understood to
be pending. I t is probable th a t the larg e r of these o riginating In the fo u rth
d istric t will be negotiated by th e local federal bank and p articip a te d in by
o th er e a ste rn regional b anks who will in tu rn give the Cleveland in stitu tio n
p a rtic ip a tio n s iry the offerings of short tim e m unicipal p a p er orig in atin g In
jthelr d istric ts. 'Cleveland a n d o th er of the la rg e r cities in th e fo u rth d istric t
e expected to furnish the credits.
« Tho call has been issued for the pay m en t by m em ber b an k s of the sec
ond in sta llm e n t of Uieir pro r a ta of c ap ital stock of the federal institu tio n .
P a y m e n ts a re d u e F e b ru a ry 1. T his will double the p re se n t c ap ital of
fc.034,000, m aking it <4,068,000 or a n a m o u n t closely e pproxim ating th a t
ure. T he p ay m en ts will increase the. to ta l resources of th e reserve bank
excess of $21,000,000.
a * T he fe a tu re of the d a y 's financial happenings in the east cam e a f te r the
close of th e New York stock m ark e t in the form of m ore specific in fo rm a
tio n concerning plans for M issouri Pacific. It becam e know n th a t in te re sts
^ p r e s e n t in g the G u a ra n ty T ru st Oo„ B an k ers T ru st, C e n tra l T ru st, K uhn,
L oeb & Co., a n d K idder, Peabody & Co.. had sent le tte rs to shareholders of
ih e lea d in g Gould pro p erty asking for proxies and s ta tin g th eir w illingness
K a rt
o
-nm m ntpe a t the an n u al m eeting to be held M arch 9.
P
M U D RESERVE BANK
. - - -_ _j
WW'
' /?
: i.: ■.<.} jLV,
,V
Regional Institution Enteis Investment Field, Pur
chases $820,000 New York City and Troy (N. Y.)
Notes—New Facilities Afforded Cities.
-------------------------- W \i 2 } t 9 l^
Orders to Build Ten Steamers Placed With Atlantic
Coast Yards, Ten More Pending—American
.*
Merchant Marine Takes On New Dignity.
BY H. S. ROSEN TH AL.
T h e F e d e ral K eserve B ank of Cleveland h a s purchased $8"0,00U m unicipal
v a rra n ts. I h e local iu stitu tio n th u s launches its investm ent a ctiv itie s, as
listin g u ish ed from discounting fo r m em ber banks, and m aterially sw ells th e
ly stem 's ta k in g s of public loans, which stood a t $9,173,000 in th e la te s t
weekly sta te m e n t m ade S atu rd ay .
T he C leveland bank has bought $800,000 New Y ork c ity sind $-0,000
TVoy (N . Y .) w a rra n ts fo r v a ry in g m a tu ritie s not exceeding six m onths.
While th e ra te s o f in te re s t a re not giv en out, i t is known t h a t th e borrow ing
s done a t Jess cost to th e c ities th a n i f open b an k loans w ere carried. The
w arrant* fu rn ish , of course, a h ig h e r y ield th a n would I'n ite d S ta te s bonds.
E n try o f th e system in to th e m unicipal field p ro ' ides a com petitor fo r
other b id d ers desirour i f
; '?;ing sh o rt tim e m unicipal funds, and th e r e
su lt w ill be cheaper e rr
fo r c ities.
M u nicipalities in higV c red it
sta n d in g can borrow to d a j
th is m ethod a t a ra te on a level w ith th e best
m erchant paper.
■
The assistance th a t can be fu rn ish e d c ities by th e reserve system is
lim ite d by th e f a c t th a t only p a p e r e m itte d 'in a n tic ip a tio n o f collection of
ta x e s or other assu red revenue can be bought, ami th is p ra ctic e of ra is in g
funds fo r c u rre n t public needs is not un iv ersal. The te rm “ m u n ic ip a l” is
fcere used in its b ro a d sense a s a p p ly in g tc paper o f c ity , sta te , county,
Digitized
FRASER
whool dfor
istric
ts and th e o ther p o litic a l subdivisions.
L i'
W h y dd n o t tn e te a e ra i re se rv t
b a n k s p re v en t th e fa ilu re s is being
asked. The re serv e sy ste m is no
designed to p a tc h u p bad spots, but
to prevent th em . T he k ind o- ne p
w hich it chiefly affords is n o t th a
of b olstering u p lam e p ro jec ts, but
of helping bolt u p rig h t e n te rp ris e s tc
m ak e progress. T he p a p e r w hicn it
red isco u n ts is n o t accom m odation
p a p e r b u t p a p e r based on a c tu a l
com m ercial tra n s a c tio n s.
M em ber b a n k s th rough o'.
Lhf
country 'vill be a d d in g to th e u
p iles th is w eek a n d n e x t p re p a ra t
to p ay in g the- second in sta llm e n t o
th e subscription on re se rv e systen
ntnrk.
.
DMIVtV S I A T t M t W l S
|
C leveland F e d e ra l B ank.
RESOURCES.
Gold and gold certificates............. 117,388,000 00
Legals, other notes and co la .......
H8.000 00
Rediscounts a n a loans....................
518.000 00
Investm ents .....................................
820,000 00
All other resources .........................
247,000 00
T otal resoi
.,#18,108,000 00
Capital paid in ................................... 13,144.000 0u
Net deposits .................................... 17,620,000 00
Federal reserve notes in circula
tion ...................................................
144,000 00 |
T otal liabilities ............................$19,808,000 00
Gold reserve ag ain st all liabilities. 97.8 per :
cent; cash reserve a gainst all liabilities, 103.8
per cent; cash reserve a gainst all liabilities
a fte r setting aside 40 per cent gold reserve
a g ain st federal reserve notes in circulation,
103.7 per cent.
A ll F e d e ra l B a n k s.
RESOURCES.
Gold coin and certificates............... $^39,662,000
Legals. other notes and coin........
18.747.000 i
Total cash .....................
258,409,000 ;
B ills discounted^ fl.n<f)
M aturities -w k Iw TN
6.833.000 1
M aturities w ilain 80 days
4.089.000 ;
Other ......................................
2.140.000 ;
Total discounts and loans.
13.062.000 !
Investm ents .......................... .
10.434.000 ;
Due from F . R- banks:
Items in tran sit .................. .
9.142.000
.111 other resources.............
13.491.000
Total resources .............................. 1304.538.000
LIA BILITIES.
Capital paid in .................................... $18,432,000
Reserve deposits ................................ 284,193.000
Federa! reserve n o te s.......................
1.923.000
Total liabilities ............................ $304,538,000
Gold reserve a g ain st net liabilities, 86.5 per ;
cent: cash reserve a g ain st n st liabilities, 93.3 ,
per cent; cash reserve a g a in st liabilities a f t
er setting aside 40 per cent gold reserve i
against net am ount of federal rsserve notes j
In circulation, 93.4 per cent.
N ew Y o rk
B a n k s.
CLEARING HOUSE ACTUAL.
Increase.
Loans, etc...................... $2,212,213,000 $15,805,000
Reserve In own v a u lts 360,636,000
0,034,000
Reserve in fed res.
bank ............................ 113,039,000
4,938.000 !
R eserve in other de
positories ...................
31.073.000
6.000
Net demand deposits.. 2.098.038.000
38.775.000
88.926,000
♦927.000
N et time deposits.......
C irculation ...................
42.524.000
•404,000
As*?regate reserve......
506.368.000
Excess reserve............. 143,022,799
7,051,780
OTHER N EW YORK BANKS.
Loans, etc...................... $555,101,200
*$28,000
Specie ............................
43.342.700
128,800
Legal tenders .............
10,891.800
349.600
Total deposits ............. 850.102,900
5,860,200
•Decrease.
C leveland C le a rin g H o u se B a n k s.
Loans, deciease ...................................... $308,964
Deposits, increase ............................... 1,927.068
Cash and duo from res. agents, in c .. 550.79*
official c o m m e n t fro m
re se rv e b o a r ^ * t
m ad e th U sig n ific a n t s ta te m e n t!.
I t Is e x p ected t h a t a s a re s u lt o f th e lo w er d is c o u n t' r a te ^ a u R o r iz e d
fo r A tla n ta , C hicago a n d San F ra n c is c o rese.*vc
p a rtic u la rly In th e
S o u th e rn d istric t, d isc o u n t oj>eri
p ro p o rtio n s.”
T h is m e a n s t h a t th e S outllpW W fina it a d v a n ta g e o u s to re tire Its em er.
gency c u rre n c y on w h ic h th e ta x w ill be raised to 5 p e r c e n t in F e b r u a ry '
a n d utili*e th e lo w e r cost re se rv e b a n k d isc o u n tin g fa c ilitie s instead.
F in a n c ia l L o n d o n la st w eek d isp lay e d no a p p re h e n s io n oner th e s in k
in g o f a m e rc h a n tm a n in th e N o rth Sea by a G e rm a n s u b m a rin e , n o r
o ver th e a ir ra id s on th e ceaet, b u t som e w o rrlm e n t a p p e a rs to h a v e been
aro u sed in th a t q u a r te r over th e v a rie d differences w ith th is c o u n try In
th e m a tte r of th e difficult q u e stio n s a sso c iated w ith c o n tra b a n d of w a r a n d
Ainorlcnn re»lR trv o f v essels n u rc h a s e d from I n r m w fjn rm fln ow ners.
RETIRE $500111
nVUII¥ILNI5l]KUW
AS CASH PiLES UP
Reserve System Puts $1,
881,000
More Into RedisTotal in
? counts and Public Loans.
to $1,500,000—Pay
ments on Federal Bank Stock Already Coming in—
Markets Are Dull.
New York CleS
Bank Deposits Up Near
ly $38,000,000.
BY F. P. DUNOON, 2 6 1911
Financial Editor of The Leader.
D eposits of th e fe d era l re serv e sy s
tem in creased $7,008,000 in th e w eel
an d $14,804,000 in th e la s t tw o w eek 3
th e g a in being d u e in g re a t p a r t t<
in crease in d ep o sits of m em ber bank;
re q u irin g t h a t la rg e r re serv e s be kep
w ith th e ir regional In stitu tio n s.
In v e stm e n ts of th e sy ste m w e n t U]
$1,261,000 in th e la te s t w eek, thi
C leveland b a n k fu rn ish in g 2-3 of thi
increase.
T he sy s te m ’s rediscount;
a n d lo an s in creased $0 2 0 ,0 0 0 in th<
week.
T h a t th e ease of m oney is now
m ore th a n s iy fa c e ease is definite! 5
show n by th e $7,000,000 in crease ir
su rp lu s re serv e s of th e N ew York
c le a rin g h ouse b a n k s a n d th e reserve
sy s te m 's re p o rt. W ith th o u sa n d s ol
m em ber b a n k s a s w ith th e reserve
sy stem th e p roblem now is to find
good lo an s a n d to g e t good yield sh o rt
term in v estm e n ts.
T he fe d era l re serv e bo ard y e sterd a y
a p proved tho follow ing re d isco u n t
•ates for th e C hicago, reserv e b a n k :
j'our p e r cent, on m a tu ritie s u p to
rixty d a y s; 4 1 -2 p e r cent, on m a tu rt!es six ty to n in e ty d a y s a n d 5 per
;e n t. fo r longer m a tu ritie s.
R e s e r v e S y ste m
c fjUjC.aA.ij KJUBiiiKVJS B O A R D A N N U A L .
S ta te m e n t.
RESOURCES.
Gold coin an d c er
tificates ..................$239
Lefral ten d er notes,
silver certificates
an d
subsidiary
coin ........................ 18,747.000—$258 409,000
Bills discounted and loans:
M aturities w ithin 30
days ............................ 8,833,000
M aturities w ithin 60
days ........................
4.089.000
O ther ..........................
2,140,000— 13,062,000
Investm ents ...................................... 10,434,000
Due from federal re&i
Item s In tra n sit .......... J
..........
9,142,000
All o th er resources . i .......... .
13,491.000
m
Total resources
$304,538,000
L IA B Ir
C apital paid In ........ I f
18.432,000
R eserve deposits ........ ..
184,193,000
Federal reserve notes iu ^circu jatlon (net a m o u n t)........................
1,923,000
T otal liabilities ....................
..........
Gold reserve a g a in st n et lia b iliti e s .^
Cash reserve a g a in st n e t liability
T h e c o m m itte e o f th e N a tio n a l C u rre n c y A sso c ia tio n o f C leveland re red $500,000 o f e m e rg e n c y c u rre n c y y e ste rd a y , le a v in g a p p ro x im a te ly $1,
00,000 still o u ts ta n d in g in th is d is tric t. T h e re w a s no f u r t h e r re tire len ts b y lo cal b a n k s. T h e se still h a v e $270,000 e m e rg e n c y m o n ey outa n d tn g . I t is p ro b a b le , h o w e v er, t h a t th e b u lk o f it w ill be re tire d “ ext
to n d a y a* m T fe tru a ry t h e tax: on t h is k in d o f c irc u la tio n la s te p p e d up
> 5 p e r c e n t a n d a t t h a t e x p en se t h e r e is n o lo n g e r p ro fit In It to th e
an k s.
r
T h e F e d e ra l R e se rv e B a n k o f C lev elan d y e s te rd a y re ce iv e d paym ent*
t $140,000 in re sp o n se to th e se c o n d c all fo r s u b s c rip tio n s to th e c a p ita l
tock o f t h e b a n k , a lth o u g h th e s u b s c rip tio n s a r e n o t d u e u n til F e b r u a ry
. T h is p r o m p t re s p o n s e b y m e m b e r b a n k s Is a n o th e r In d ica tio n of grow lg ease o f fu n d s.
■
T h e b e s t n e w s o f t h e d a y w a s c o n ta in e d in d is p a tc h e s fro m C hicago
ta tln g t h a t s te e l m ills a t G a ry , w o u ld sp e e d u p th e ir o p e ra tin g schedule*
n F e b r u a ry 8, a n d t h a t t h e Illin o is S te el C o m p an y w ill Inc re a se Its a c tiv e
a p a c ity m a te ria lly o n F e b r u a ry 1.
.
F ro m th e E a s t m o re a c tiv ity w a s re p o rte d in s h ip b u ild in g circle* a n d
h ere w e re a d d itio n a l In q u irie s In t h e m a r k e t fo r ste e l fo r a n o th e r b o a t to
e b u ilt a t c o a s t sh ip y a rd s . A n y o n e in t h e ste el tra d e , h ow ever, w ill te ll
o u t h a t I t Is a “L o n g , L o n g W a y to T ip p e ra ry ” v ia t h e s te a m s h ip ro u te ,
o r t h e re a s o n t h a t i t ta k e s a lo n g tim e to b u ild th e m a n d t h a t t h e to ta l
f ste e l c o n su m ed in t h a t w ay, e v en in t h e m o st a c tiv e s h ip b u ild in g y e ars,
i b u t sm a ll p ic k in g i n th e g e n e ra l ftru clb le o f ste e l a ffa irs.
000
T h e m a tte r o f c h ie f in te r e s t in th e r e T
a s t h e d iscussion of th e
e x te n t to w h ic h th e n e w fe d e ra l b a n k s m.
. e n te r activ ely in to th e
h a n k in g a ffa irs o f th e n a tio n a n d to w h a t e x te n t th e y sh o u ld p u rsu e a
c a u tio u s c o u rse in o rd e r t o p re s e rv e th e re se rv e s o f b a n k s a g a in st seasonal
d e m a n d s a n d th o se p e rio d s o f g r e a te r u rge-icy t h a t a lw a y s com e along
o nce in a w hile. F ro m t h e te n o r o f th e r e p o rt i t is e v id e n t t h a t th e board
c o n sid e rs a m id d le c o u rse th e b e tte r"
T ..e r e p o rt gives fo r th e f lis t tim e fro m a n official so u rc e th e to ta l
e stim a te d d e b t o f th is c o u n try to E u r o p e d u rin g th e p e rio d of t h e w ai
c risis p iio r to th e fo rm in g o f t h e g old pool.
T h e figure is p u t at
$500,000,000. b u t th is e v id e n tly in c lu d e s m a tu ritie s e x te n d in g several
m o n th s ah< a d a n d w h ic h I t f is n o w a p p a r e n t w ill
t j ^ q j m e t In
c a sh a t m a tu rity .
T h e b o a rd su m m a riz e s its view o f its s p h e re o f u se fu ln e s s a s follow s:
"T h e re a d y a v a ila b ility o f ltd re s o u rc e s is of su p re m e im p o rta n c e ir
th e c o n d u ct o f a re se rv e b a n k . O n ly th e n w ill it c o n sta n tly c a r r y th«
p ro m ise o f b e in g a b le to p r o te c t b u sin e ss a g a in s t th e h a rm fu l stim ulu!
a n d c o n se q u e n c e s o f ill-a d v is e d e x p a n s io n s o f c r e d it on th e o n e h a n d oi
a g a in s t th e m e n a c e o f u n n a tu r a l r e s tric tio n s a n d u n n e c e ssa ry co n tractio n ;
on th e o th e r, w ith e x o rb ita n t r a t e s of in te r e s t a n d a rtific ia l strin g e n c ie s
I t sh o u ld a t a ll tim e s b e a s te a d y in g influence, le a d in g -when a n d w h e n
le a d e rs h ip Is re q u is ite b u t n e v e r a llo w in g Itse lf to b eco m e a n in * tru m « n ’
fo r t h e p ro m o tio n , o f t h e selfish In te r e s ts o f a n y p r iv a te o r se c tio n a
gro u p , b e t h e i r a lm s a n d m e th o d s o r sn o r d isguised.
,
MB
IS’ EXCESS OF CUSH
IS LARGEST
| V . J flA i'ff l- f ’LAM P fX U # ---------
Total Surplus Reserve of New York Clearing House In
stitutions is $143,000,000, Despite Increase of
Loans—Rise in Stocks Made Clear.
East’s Abundance Now Duplicates Interior Conditions
in All Sections but South—Good Bor
rowers Welcome.
City, However, Will be Given
One of Branch Institu
tions Under System.
■LV
I'LAtli litA iX i,
Secondary Headquarters Will
Serve Near-by Commer•
cial.Zones.
-MX-
BY. H. S. R O SEN TH A L.
*
In c re a se in surplus reserv e of th e N ew Y ork clearing house banks to
th o la rg e st i t has ever* been, increase in deposits of the fe d era l reserve
sy stem a n d . such in d ic a tio n s as come from the g ra in regions and direct from
in te rio r b a n k s dispel a ll doubt as to th e real ease of money. Two m onths
b a n k e rs w ere c u ttin g dow n loans— today th ey are h u n tin g loans o f th e
h t so rt. T hey a re speedily re tirin g em ergency currency and are ta k in g
rc h a s t p a p e r and sh o rt term notes a t low yield. T heir problem is to keep
;he m oney w orking.
’
*?r8Pttg'e reserv es au g u r well fo r th e oiling o f business m achinery w hen it
begins to need it. T h ey tell w hy we welcome foreign borrow ers. T hey
m ake c je a r w hy th e N ew York stock m ark e t has w ithstood th e w e e k 's fo r
eign selling, fo r th e re has been a good deal of such selling.
E ven th e long term bond m ark e t g o t up steam , developed a $20,000 000
rrade, p a r value, and a t th a t fu rn ish e d b u t a fra c tio n of the real business
wiiich w as over th e counter.
*
B a rrin g su rp rise s, new se c u rities
vill b e cum inp o u t In th e very n e a r
u tu re . e s ta b lis h m e n t o f d istrib u tin g
lu a r te r s In v a rio u s c ities by th e bond
' w rtm erit o f one of the c o u n try ’s
ding banka d enotes th e longer exitio n b a lo n g th is line,
f f e s r H is rh
M u rk .
T h e su rp lu s re serv e s of th e N ew
fo rk c le a rin g house b a n k s, a s of F r i la y evening, a g g re g a te d $143,000,000,
showing: in c re a s e o f $7,000,000 In th e
veek a n d ex ceeding th e previous high
•ecord, m ad e in th e w eek ended Nov.
21, 1814, b y $5,200,000. Such lavish
ib u n d an ce o f c ash m ad e lt easy for
.tie tra d e r, a n d fo r th e business con-.em w a n tin g to la y u p m a te ria l, to
sorrow . L o a n s Increased $14,800,000
n th e w eek to $2,212,200,000, w ith
w o exceptions th e h ig h est in h isto ry .
The exceptions w ere for th e w eeks
»nded S ept. 19 a n d 26, 1914, th e to ta l
.» t* e fo rm e r period, $2,230,000,000.
m aking th e record.
p te th o rji in th e e a s t d u p lic a te s th o
■or.tfltloD* ir- th e Interior, except th e
•ifh.
T h e federal re serv e sy ste m
n o t p re v e n te d in te rio r n a tio n a l
s ta te B anks from d e v o tin g idle
Is to '■ astern balance b oosting. I
Bral b u sin e ss h a s n o t pro g ressed |
• enough to need th e m oney.
, ■ FOR HEAD
IF JE M BANK
Shows Salaries of Offi
cials of New Federal
■
Institution
>rt
F a n c h e r, g o v e rn o r
il R eserve B a n k o f Cl«.
and D avid C. Wills, fe d era l reservi
a gent. $10,000.
These figures were giv en o u t in a i
appendix to the a n n u a l re p o rt o
the federal reserve b o a rd subm ittec
to C ongress yesterday.
The g o vernor of th e N ew York
federal b an k gets *30,000; those ol
P hiladelphia, Chicago a n d St. Louis
*20,000.
Cleveland com es n e x t a t
*16,000, follow ed b y B oston. M inne
a polis and S an F ra n c isc o *15,000
each. D allas, *12,000,
Richm ond,
*10,000, A tla n ta , *9,000, a n d K a n sa s
C ity. *7,500.
T he federal re serv e a g e n t a t New
Y ork g e ts *16,000, a t San F ra n c isco
*12,000. a t Cleveland, B oston, P h ila
delphia, R ichm ond, C hicago a n d St.
L ouis *10,000; A tla n ta a n d D allas
*6.000; M inneapolis a n d K a n s a s C ity
*7,500 each.
The fed eral reserv e board h a s also
ru led th a t d irec to rs of th e regional
b a n k s sh all g e t a fee o f *20 f o r a t
tending bo ard m eetings a n d *10 for
those a tte n d in g executive com m ittee
m eetings.
D ire cto rs living
m ore
th a n fifty m iles from re serv e b anks
a re allow ed a n a d d itio n al p e r diem
fee of *10 plus a c tu a l n e ce ssa ry tr a v
e lin g expense*.
B an k s In T yler a n d W etzel coun
ties. W est V irginia, a p p ea red before
th e fe d era l re serv e b o a rd a t W a s h
in g to n y e ste rd a y a n d a sk e d to be
re m o v e d fro m th e R ichm ond to t ’i«
C le v e la n d d is tr i c t,
'
H
K
i
BY BEN P . ALLEN.
Plain D ealer Bureau,
38 Post Bldg.,
WASHINGTON, Jan. 25.
P itts b u r g in th e n e a r fu tu re is to
l>e given th e first o r second b ra n ch
b a n k to be c re a te d u n d e r the federal
re serv e Bystem. I f P itts b u rg g e ts the
lirs t b ran ch b a n k B altim ore w ill gel
th e second, o r vice versa.
P itts b u rg , how ever, has lo st al
chance to g e t th e c e n tra l reserve baril
fo r the fo u rth d istric t, located ii
Cleveland, a n d B altim o re will n o t ge
th e c en tral reserv e b an k for th e flftl
d istric t, located In Richm ond, Va.
A lthough no, form al official an
n o u n c em en t h a s been m ade w ith re
sp ect to th ese m a tte rs it can be statei
upon th e h ig h est a u th o rity th a t Auol
a ctio n will be tak e n .
T he P itts b u rg p.nd B altim o re p ro
te s ts w ith th e evidence ta k e n a t th<
h e a rin g s before th e federal reserv*
board, coupled w ith th e b o a rd 's deci
sion, a r e in th e h a n d s of C hairm an
H am lin T rue, w hose public a n n o u n ce
m e n t of th e decision Is to be m ade.
A ccording to in fo rm a tio n obtained
to d a y board m em bers do n o t look with
fa v o r upon e ith e r th e P itts b u rg ot
B a ltim o re p ro test, w hichw ould n eces
s ita te a g e n era l ch an g e in th e a lig n
m en t in th e federal re serv e d istric ts
in w hich th e tw o c ities a re located.
T he a d v is a b ility o f e sta b lish in g a
b ra n ch b a n k in P itts b u r g w as consid
ered by t h e b o ard som e tim e ago, b u t
a ctio n w as postponed u n til the form al
p ro te s t of P itts b u rg a g a in s t th e lo ca
tio n of th e m ain b a n k a t Cleveland
had been disposed of.
C reation of b ra n c h b a n k s in a n y
c ity w h ere such a course is consid
ered n e ce ssa ry o r a d v isa b le is p ro
vided fo r in th e fe d era l re serv e a ct,
such b ra n c h b a n k s to serv e th e im
m ediate te r rito ry o r com m ercial c en
te r in w hich th e y a re located.
W h e th e r th is w ould perm it all P e n n
sy lv a n ia b a n k s included in th e fo u rth
d istric t to o p e rate w ith th e P itts b u rg
bran ch h a s not been determ ined.
I t is probable, how ever, t h a t th e
a c tiv itie s of th e b ra n c h b a n k will be
confined to P itts b u r g a n d lta e n
virons.
T he law provides th a t In th e c re a
tion of b r a n c h b a n k s fo u r of th e to ta l
of seven d ire c to rs shall be chosen by
th e d istric t b a n k a n d th re e b v th e fed
eral re serv e board. T he b ra n ch b a n k
con d u cts all of its fu n ctio n s th ro u g h
th e d istric t bank.
T h e fed eral re serv e board h a s been
slo w to ta k e up th e qu estio n 'of e s
ta b lish m e n t of b ra n c h b a n k s u n til th e
r e s e r v e system w as in full sw ing,
f e a r in g a n a v a la n c h e o f r e q u e s ts from
t h e b ig c itie s t h a t f e lt a lig h te d w h e n
t h e tw « w «
‘ ‘
-
H ondn.
—F E D E R A L R E S E R V E B O A R D .
Washington Board Makes It
First Report on Work
ings
Declares Effect on Merchan
Paper Market Was
Immediate.
m
p tjm
a m
r e p o r t o f t h e f e d e r a l r e f ie r v ” W £fw
c o v e r in g t h e d e v e l o p m e n t s w h ic h p r e
ceded t h e o p e n i n g o f t h e t w e l v e r e
g io n a l r e s e r v e b a n k s l a s t N o v e m b e
a n d t h e tw o m o n t h s i n w h ic h th e ;
h a v e b e e n in a c t u a l o p e ra tio n , w a,
s e n t to c o n g r e s s to d a y . I t a n n o u n c e :
t h a t n o t e w o r t h y r e s u l t s a l r e a d y hav<
b e e n a c c o m p lis h e d a n d t h a t t h e sy s
te m n o w " c a n n o t b e r e g a r d e d a s e x
p e r i m e n t a l in t h e s e n s e t h a t t h e r e ii
a n y u n c e r t a i n t y a s t o t h e o u tc o m e .’
T h e b o a r d m a k e s t h e f o l l o w i n g p o in ts
in th e c o u r s e o f i t s e x t e n d e d r e p o r t :
T h e h u r r ie d o p e n in g o f th e fe d e ra l
r e s e r v e b a n k s h a s f u l l y j u s t i f i e d its e lf .
T ho n ew s y s te m c a u s e d su ch a r e
le a s e o f b a n k r e s e r v e s a n d in c r e a s e
in c o n fid e n c e t h a t in N e w Y o f k c o m
m e r c ia l p a p e r in tw o w e e k s d r o p p e d
fr o m a b o v e 6 p e r c e n t , t o 3 1 -2 a n d 4
per cent.
.
,
.
,
F o r m a t i o n o f t h e g o ld e x c h a n g e a n d
c o tto n f u n d s r e n d e r e d m a t e r i a l s e r v
Ice b y r e s t o r i n g c o n f id e n c e a n d s t a b i
lizing value.
H a d th e fe d e ra l re s e r v e b a n k s b e e n
in o p e ra tio n at th e b e g in n in g of
A u g u s t th e y , i n s t e a d o f t h e c l e a r i n g
h o u s e iT a n d t h e U n ite d S t a t e s t r e a s u r y ,
w o u ld h a v e s u p p lie d t h e g r e a t v o lu m e
o f c u r r e n c y w h ic h w a s c a l l e d f o r .
Tlie r e s e r v e b a n k ’s d u t y i s n o t to
a w a it e m e rg e n c ie s , b u t b y a n tic ip a
t i o n d o w h a t i t c a n to p r e v e n t th e m .
T h e r e is n o r e a s o n w h y t h e f e d e r a l
r e s e r v e b a n k s s h o u ld n o t e a r n t h e i r
e x p e n s e s a n d a f a i r p r o f it b e s id e s .
I m p a t i e n c e t o s h o w r e s u l t s s h o u ld
n o t t e m p t t h o s e in c h a r g e o f t h e r e
s e r v e b a n k s to p r e c ip ita te a n y u n w is e
a Tne*T>oard re fe rs to open m ark et opera
tions of th e reserve banks and ia n n J J nJ J B
th a t regulations g o v ^ l n g purchase or a
ceptancps will soon be m ade Publ*®«
th e Issue of th e s e r e g u l a t i o n s a n d o th e rs
g o v ern in g open m a rk e t o p e ra tio n s , th e re
not* s a y s , th e r e w ill be am p le
fo r a ll fu n d s o f these- b a n k s , w ^ c h « x p erle n ce d e m o n s tra te s th e y m ay s ^ e l y a
p ro p erly In v e s t a t tim e s w h en a u c h fu n d s
a r e n o t a b so rb e d in re s p o n d in g to th e d e
m a n d s of co m m erce , - in d u s try a n d a g rlc u l
tUT h e b o ard p o in ts o u t t h a t a n o th e r p r e s s
ing p ro b le m , t h a t of ad m lsslo n c f
b a n k s a n d t n i - ‘ co m p a n ie s to th e sy ste m ,
in rpoelvln k consideration an d th a t a t least
a te n ta tiv e solution of th e problem ^ a t Issue
5 . . ; l i arriv ed a t in th e n e ar fu tu re .”
The report shows th a t nin ety -th ree state
hanks and tru s t com panies, w ith
c a p ita 1 a n d s u rp lu s o f *9.151,300. h a v e been
co n v e rted in to n a tio n a l b a n k s e n d e m e re d
th e sy ste m s in c e th e p a s s a g e o f t h . M t
j x i n e s ta t e b a n k s a n d f o u r t r u . t c o m p a n le .
1 w ith c a p i t a l a n d s u r p lu s o f 1T.884•“V” J.?__
h e m a d m itte d u n d e r t h e ir ow n c h a r te r s ,
w ith th e u n d e rs ta n d in g t h a t th e y w ill a c
c e p t re g u la tio n s fo r th e c o n d u c t o f b u s in e w
V.V. th « hoard
A p p l i c a t i o n s fro m f l f t j -
^ . o t h e r a u c T ln s titu U o n s w hich p re fe r to
w a it for th e lsuance o f regiilatlons ,Koyertiing th e ir adm ission a re p e n d ln r h
boari' -
.
TUb fed eral re serv e board maria
public th e a n n u a l sa la rie s being paid
federal re se rv e a g e n ts a n d governors
of tlie tw elve b a n k s. . T he cost of the
system: is a m a tte r on w hich m em ber
banks u p to nqw h av e h a d only p a r
tia l light. W hen th e d e ta ils of yeste r d a j/s re p o rt to congress have been
given out th e expense of organization
a n d conduct so fa r will be easily a s
certained. S a la rie s of federal r e
serve a g e n ts a re :
Boston, P h ilad e lp h ia , C leveland,
R ichm ond, Chicago. S t. Louis, $10,
000; New Y ork. $16,000; San F ra n c is
co. $12,000; A tla n ta a n d .D allas, .?(>,000; M inneapolis a n d . K a n sa s City,
$7,000. G overnors— N ew Y ork. $30.
000; P h ilad e lp h ia . C hicago a n d St.
Loyis. $20,000; C leveland, $16,000;
Boston, M inneapolis a n d San F r a n
cisco, $15,000; D allas. $12,000; R ich
m ond. $10,000; A tla n ta , $9,000, and
K a n sa s C ity, $7,500.
T he b o a rd ap p ro v ed a d ire c to rs' fee
of $20 a n d of $10 fo r thoso a tte n d in g ,
m eetings of th e ex ecu tiv e com m ittee.
D irectors living m ore th a n fifty m iles
from re serv e b a n k s w ill be allow ed a
per diem fee of $10 fo r every d a y ’s
absence from hom e involved in a t
tendance^ plus
a c tu a l
n e ce ssa ry
trav elin g expenses.
.\.< £
■A
r
\ -
-
—
R e s e rv e S y s te m * c ;« ^ e n s e i.
An extract from th e report of the federal
reserve board to congrepa regarding expendi
tures Incurred by tho rej&hrve system follows:
“An assessm ent of fbur*tenth8 of 1 per
cent, was levied on the capital of the re
serve banks *to meet the estim ated expendi
tures of v the board d uring the six m onths
beginning Nov. 1, H>14, on w hiea date the
total capital w as $1O7TI0Q»1O9. The motley
derived from this Iw rtssm ent is deposited
with the tre a su rer or tlie U nite# State-,
subjeet to check by v the governor of the
board, countersigned by the secretary.
“In preparing the e stim ates for the first
six m onths, it w as dllQcult to foretell th e
expenses of every kind Incident to the d e
velopment of the system , bu t it is believed
th a t the levy made w ill be sufflciert to
cover all expenses fo r th e period named.
It should be observed In connection w ith
this statem ent of expenses th a t nearly 50
per cent, or the to ta l assessm ent upon the
federal reserve banks h a s been for the prep
aration of a large supply of federal reserve
notes. This expense w ill probably h o t need
to be repeated In the r e a r future. The fol
lowing statem en t w ill show the receipts and
expenses of the board to date:
E stim ated expenses lo r six
m onths beginning N ov. 1.
1814, Including $208,500 2*'
for purchasing paper, m ak
ing die*, and p rin tin g and
engraving
federal seeervnotes; also sala ries of the
mem bers of the board from
Aug. 10 and o f Its secretary
and a ssistan t secretary from
Sept. 14 to Oct. 51, 1914,
and for liabilities incurred
Incident to organization of
the board and of th e federal
451,040.00
reserve banks .................... . .$
Total capital of reserve Panics
’
Nov. 1, 1014 ..............................107, 700, 100.00
Assessm ent, four-tenths o f 1
per c e n t......................................
4^ 1, 040.00
Am ount received on, account
of above assessm ent u p to
Dec. *1, 1814........................ ..
2BM1B.W
D isbursem ents to D ec. 81,
1914 ...............................................
08 , 8*8 .8 *
B alance w ith th e tre a su rer of
the U nited S tates to th e
credit of th e board Dec* 81,
1914 ................ . . . . . . . . . . . . .
a0«,7T8.M
Expense* of th s b o a rt to,D ec.
81
• 1914; ............... . *• ■• • y
Salaries
E quipm ent (including fu rn i
tu re .
adding
m achines,
t>'pewiiters. etc.) . . . . . . . .
M iscellaneous ..........
P rin tin g ................ ...................
Stationery .......... .....................
P ostage ......................................
T o ta l
..................
.................................
iK U IU
45,868.14
8,084-W
A88#.4n
f l S 'S
*J
OLOO
* M ,3 3 » .* 7
‘ Tho reserve banks a ro in t h . * re t «U *e
of aro w th and both t h . volum e of fc tu h i« s
w hloh they can dev.ta> an d th * expenw a
w hich th e ir operation J » 5 j en tail a n m atter*
of m tlm a te . Much o f .th e « p e m t h u . fa r
Incurred bv the banks RAS baen fo r th e ir
in itia l w j i l i l a t K l M f f l W W *uc* Item s aa
equipm ent, note ' s s tli.1 th e
banka w ere neceM ariW opwied before comolete re g u la tio n . Kov»roln» th e ft operation
a
of- th e’ m a in o t n c .
...
t.-cn (lied w tth om rrm ’
L o e .f i,
Ip
S H B S |.
,
. .
The fedefal reserve board y e ster
day gave ■out new re g u la tio n s goyerning rediscounts. T hey lessen
stringency of the rules first is
at- to the inform ation req u ire d cerning financial a ffa irs o f people i
The new regulaTlons p W t
regional b an k s shall n o t requli
sta te m en ts of financial conditio
ith en m em ber banks p re se n t depos
to rs' pap er for rediscount In the *“
lowing cases: W here bills bear
sig n atu res of pu rch aser a n d seller
goods a n d presen t p rim a facie e*
dence th a t th ey were issued for gOO
actu ally purchased or sold: •wjfit
th e a g g reg a te am ount of obligation
a depositor a c tu a lly rediscounted a t
offered for rediscount do n o t excel
Su,000, or w here bills a re specificS.il'
secured by approved w arehouse r"
ceipts covering readily m&rketah
istaples. M em ber b a n k s shall certif
to th ese conditions in m anner^ to I
desig n ated
13 r a d s tre e t s P(riTif>iHRWll®.
. ,
fa ilu re s for the latest, w eek is
com pared w ith 453 in th e correspon_
m g period la s t year. ' T his tuercan
tile ag en cy declares th e pendulum o
tra d e still sw inging in tho directioi
of im provem ent, tho u g h th e m ove
m en t is co n servatively steadyI I
JOIN CLEARING HOUSE
F iv e t r u s t c o m p a n ie s M onday
w e re a d m itte d to m e m b e rs h ip In
C le v e la n d ’s c le a r in g h o u se a n d th e
F e d e ra l R e se rv e b a n k a ls o w as
ta k e n in a s an. h p M r a ^ - jn e ja h « r.
been com posed
of
th e n a tio n a l
^ h e t r u s t e o m p & n ls - a frfljfte d
a r e : C itiz en s S a v in g s & T ru s t C o C lev elan d T r u s t Co.. G u a rd ia n
S a v in g s & T r u s t C o ., S u p e rio r
S a v in g s & T r u s t Co., U n ited
B a n k in g & S a v in g s Co.
T e lle r s ’ w in d o w s In n a tio n a l
b a n k s w ill re m a in o p en fantH K
p m ., b e g in n in g M onday, T n stead
of c lo sin g a t 2 :3 0 p. m . T h is con
fo rm s w ith th e t r u s t com pany
h o u r.
»G ON DISCO U N TS.
T h e fe d e ra l re serv e b o a rd y e ste rd a y issued a new ru lin g governing a c
c ep tan c e o f re d is c o u n ts fro m m e m b e r b an k s. T h e new ru lin g m odifies a
fo rm e r one c a rry in g s tr in g e n t p rovisions fo r in fo rm a tio n re g a rd in g th e
financial s t a tu s of b o rro w e rs w h o se p a p e r is o ffere d fo r rediscount. T h e
n sw re g u la tio n s do not r e q u ire su c h _st%tep»*pta
co ndition In
*he follow ing cases:
'
^"y AOiifc**Li **■*-*■
a W h e re b ills b e a r th e s ig n a tu re s of p u ro h a s e r a n d se lle r of goods a n d
p re s e n t p rim a fa cie evidence t h a t th e y w ere issued fo r goods a ctu ally
Jiiirch ased o r so ld ; w h e r e th e a g g re g a te a m o u n t o f obligations o f a d e
p o sito r a c tu a lly re d is c o u n te d a n d o ffere d f o r re d isc o u n t do n o t exceed
1S.000, o r w h e re b ills a re sp e c ifica lly se c u re d b y a p p ro v ed w a r e h o u s e re■:#tpts c o v erin g re a d ily m a rk e ta b le stap les. M em ber b a n k s s h a l l c e r t i f y
th e s e c o n d itio n s in m a n n e r to b e d e sig n ated by th e fed eral r e s e r v e b a n k s .
*-■ T h e b o a rd a n n o u n ce d t h a t i t h a d n o t m odified j t s v i e i f s u p o n t h e
g e n e ra l principle o f th e d e sira b ility o f c r e d to liiK M ^ tio n . T he p r e s e n t
#4ep is ta k e n , i t w as p o in ted o u t, to f*tfilittit^*bperjnions " p a r t i c u l a r l y d u r th e in itial p e rio d .”
T h e fe d e ra l b o a rd also a u th o riie d a lo w e rin g of th e d is c o u n t r a t e s b j
th e K a n sa s C ity re se rv e b a n k to 4 p e r c e n t on m a tu ritie s u p to sixty days
4 *4 p e r cen t fo r s iK ty to n in e ty d a y s a n d 8% p e r c e n t fo r longer d a te s .
r
■ A
/ '3 o
C IN C IN N A TI
/
m p r "ct
. if general business is slow but
^y, and prospects seem more encouraging; than
. som e months, justifying a feeling o f optimism,
rain and hay w ere active during the week, w ith
n advance in prices, while higher quotations fo r
our do not appear to be an obstacle to purchases,
s dem and is reported active. N o particular
finnge is noted in the coal m arket, dom estic trad e ;
eing fairly satisfactory and values fully m ain- ]
lined. Receipts o f cattle w ere som ewhat lighter I
lan the previous week, and quality fa ir to good. I
'h e dem and was only m oderate and prices were
lightly low er. T here was practically no trading
,1 stock cattle, as quarantine restrictions are still
n force to some extent. W holesale dealers in
Irugs rep o rt business m oving along fairly well,
nd. w hile no particular im provem ent was noticed
hirin g the week, prospects fo r spring are considred encouraging. T he dom estic demand fo r
vhiskcy is only m oderate, although mail order
louses report a fa ir trade. T here has heen no
hange in prices fo r some time.
A nalyzing the federal reserve banking system
rom the view point o f the governm ent’s renreentative. D. C. W ills, chairm an of the board of
he Cleveland Federal Reserve Bank, explained
n an address th^-m cxius. operandi of the new
inaneial system T uesday niVTtt at the m eeting of
be C incinnati Chapter. Am erican Instifflfr
ianking, in the Sinton H otel parlors.
E x cerp ts from his address follow :
“U n d er the new act national banks will b e .
lined and required to become strictly commeg
■anks. T h e bulk o f the assets will consij
iquid com m ercial paper, based on the biy
f the country. T h is com m ercial paper th c l
e r banks can rediscount at the federal reserve
ank when the business dem ands of the fo u n trv
equire it. and th e business of the c o untry
vill h e rea fte r regulate the ebb and flow of funds.
Vhen business is active and requires la tte sums
o r its operation, these sum s will be .-wailable.
hough thev be fa r in excess o f the loaning pou
r s o f the banks them selves. I t is then lhat the
eservoir o f the federal reserve bank V ill lie
ised. T h ese facilities to the m e m 'e r hanVs are
tot subject to the w him s o r necessities of another
lank, but co nstitute a rig h t th a t belongs to the
nem ber bank.
"A n o th e r advance th a t the establishm ent o P
his svstem will b rin g about is th e im nrovenent o f credits. W hile the elasticity o f the curencv. o f w hich I shall speak later, is im nortant.
t seems to m e th e question o f the im provem ent
if credits leads. By th e im provem ent o f credits
T do n o t m ean onlv th a t th ere will be no tighienng o f cred its h e re a fte r m erclv becai-se o f th*
shortage o f the circu latin g m edium
T here will
»• u n d e r th e new system . lA o p e . a tightening o f
:redits to th e m an o r the frstitu tio n th a t is now
(jelling a larger line o t credit th an T!tek«,r it de
serves.
“H ow ever, it need not be felt by a n v /fif you
th at the federal reserve banks are going t o ’ a t
tem pt to revolutionize the m ethods o f doing busi
ness in this c o untry all at once. In N ovem ber
the Federal Reserve Board set the date o f Ja n u
ary 13 as the tim e that m em ber banks w ould be
required to c e rtify to the fed eral reserve bank
th-it they carried in their files a statem en t o f the
borrow er w hose paper was being offered fo r re
discount,
Recently, however, the F ed eral R e
serve B oard has indefinitely d e ferre d th a t date
so th a t tile banks would be given sufficient tim e
to adopt a general policy o f obtaining statem ents
from all th eir com m ercial bo rro w ers.”
A fte r his address, M r. W ills spent m ore than
an h o u r answ ering questions put to him by the
bankers present and succeeded in clearing up m any
points. T he m eeting proved one o f th e m ost in
terestin g helps by the chapter.
J. E. Bohn. Jr., president o f the chanter, opened
the session and appointed R obert M cEvilley, cash
ier o f the F irst N ational Bank, chairm an. W il
liam Reiser, chairm an o f the educational com
m ittee, announced the follow ing fu tu re lecturesF e b ru a ry 9. “T he Federal R eserve A ct,” bv
C harles \\ . Dupuis, vice president o f the Second
R atio n al B ank: F e b ru a ry 24. “ Inv estm en ts,” bv
c ■r A - J S|Ssn.n- secretary o f the C entral T ru s t &
S a fe Deposit C o.; M arch 9. “A P h a se o f C or
poration Finance.” , by H ow ard W arre n , profesi
°,
e r , " c ln n a t' '*&Jlil££e o f Com m erce :
i n ’r
T rTber ,\ nJ s h t ^ % t e Sm ile an Asset
o f BjUmiess, by W L. T h e d X s e c re ta rv o f the
Uivirfn Savings B ank & T ru st c V “An" Tmnor- '
ffth
I'yl - ^ n|n l n’J ’y C' E '
F ifth - 1
en th 11s ia s t~ 'c h a n fl
e President o f the ^ i t ts b u r ^ P
of?l .? nc tim
rgrani7atinn
A
n
.
Annual "Report Of Federal Reserve
Board
A W ashington dispatch s a y s :
.T h e first rep o rt o f the F ed eral R eserve Board,
covering the developm ents which preceded the
opening o f the twelve regional reserve banks
last N ovem ber and the tw o m onths in w hich thev
have been in actual operation, was sent to C on
gress W ednesday. Tt announces th at n o tew orthv
results already have been accom plished and that
the svstem now “cannot be retrarded as e x p e ri
m ental in the sense th at th ere is any u n c ertain ty
as to the outcom e.” T he board m akes the fo l
low ing points in the course of its extended re
port :
T he h u rried opening o f the federal reserve
hanks has fulK- instilled itself.
5Ucu * i c i c t s c o i n a n .
reserves ifffd incre.'^P^tri confidence th a t in New
i ork com m ercial paper in tw o weeks dropped
from above G per cent, to 3^4 and 4 per cent.
fo rm a tio n o f the gold exchange and cotton
funds rendered m aterial service by re sto rin g c o n
fidence and stabilizing value.
H a d the federal reserve banks been in o p e ra
tion at the beginning o f A ugust they, instead ot
the clearing houses and the U nited S tates T re a s
ury, w ould have supplied the g re at volum e o f
currency which was called for.
T he reserve bank s duty is n o t to aw ait em e r
gencies, but by anticipation do w hat it can to p re
vent them.
T here is no reason why the federal reserve
banks should not earn their expenses and a fa ir
profit besides.
Im patience to show results should not tem pt
those in charge >>f the reserve banks to precipitate
any unw ise action.
T he board re fe rs to open m ark et o perations of
the reserve banks and announces th a t regulations
governing purchase of acceptances will soon be
made public. W ith the issue o f these re g u la
tions and o th ers governing open m arket o p e ra
tions, the report says, there will be ample em ploy
. m ent fo r all funds o f these banks, which ex-
perience dem onstrates they may safely and prop
erly invest at times w hen such funds a re not ab
sorbed in responding to th e demands o f com
m erce. industry and agriculture.
T h e board points out th a t another pressing
problem , that of adm ission o f state banks ant
tru st companies to the system , is receiving con
sideration and “th a t a t least a tentative solutioi
o f the problem s at issue m ay be arrived at in th,
n e ar future.”
T he report show s th a t ninety-three state bank:
and tru st companies, w ith aggregate capital ant
surplus of $9,151,306, have been converted intr
national banks and entered the system since th<
Passage of the act. X ine state banks and fom
tru s t com panies w ith capital and surplus of $17,SS-I.OOO have been adm itted under their own char
ters. with the u n derstanding that they will ac
cept regulations for the conduct of business made
by the board. A pplications from fifty-one other
such institutions which p re fe r to w ait fn r the
issuance o f regulations governing th eir admision are pending before the board.
Reserve System’s Expenses
A n ex tract from the rep o rt of the Federal R e
serve B oard to C ongress regarding expenditures
'" ‘ " rre d by tile reserve system as follow s:
" • “A w .-assessment of fou r-ten th s of 1 per cent
was lev ie< l^fr*the capital of the reserve banks
to m eet the estim ated expenditures of the boar ,
d uring the six m onths beginning N ovem ber 1.
1914. on w hich date the total capital was $107.
760.100. T he money derived from this asse=*m ent is deposited w ith the T re a su re r o f the
U nited States, subject to check by the governor
o f the board, countersigned by the secretarv.
“ In p reparing the estim ates fo r th e first six
m onths, it w as difficult to foretell the expen^eo f every kind incident to the developm ent of the
svstem but it is believed th a t the levy m ade will
be sufficient to cover al' expenses for the period
named. It should he ol.served in connection with
this statem ent o f expenses th a t nearlv 50 per cent
o f the total assessm ent upon the federal resgew
banks has been fo r the preparation of ajflaree
-upplv of federal reserve notes. T his
vill probably not need to be repeated in the near
future. T h e follow ing statem ent will show the
receipts and expenses of the board to d a te :
H stim ated exnenses fo r six m onths
beginning N ov. 1, 1914, including
$209 560.25 fo r purchasing paper,
m aking dies, and p rinting and e n
graving federal reserve n o te s :
also salaries of the m em bers of
the b oard from Aug. 10 and of its
secretary and assistant secre
ta ry from Sept. 14 to Oct. 31.
1914. and fo r liabilities incurred
incident to organization of the
board and o f the federal reserve
b a n k s ....................................................$
431.040.00
T o ta l c a u to 'f f 'f e s e r v e T ltm k s Nov.
jt. 1(if4 .................................... . . . . 107.760,100.00
A ssessm ent, fo u r-ten th s o f 1 ner
nn
c e n t ............... S ’ ............................. ..
431,040.01)
Am ount receivj^ d K account of
above a s s e s r a j ^ u p to Dec. 31,
1914 . . . j f r ...................................
259.613.9D isbursem ents to Dec. 31, 1914 • 52,833.93
Balance w ith the T re a su re r o f the
U nited S tates to the cred it of the
board Dec. 31, 1914 .........................
206,779.94
E xpenses o f th e board to Dec. 31.
S alaries . . . . . . ................ «,256.14
E quipm ent
(including
fu rn itu re ,
adding m achines, typew riters.
etc 1 "
......................................
6.034.59
M is c e lla n e o u s ....................................
q' 1 7 1 ’3^
.................................. 2,027 36
S ta tio n e r y .............................................................
M
P o s t a g e ................................................ ............................
T o t a l ................................................. *
59,229.87
"T h e reserve banks a re in the first stage: o f
grow th and both the volum e o f busm ess wn'C
*hev can develop and th e expenses which tne r
operation will entail are m atters o f estim ate.
M uch of the expense th u s far in cu rre d by tne
‘ banks h a s been fo r th e ir initial organization, m -
eluding such items as equmim-nt. fiote issues, etc..
in d as the banks w ere necessarily opened before
complete regulations governing their operation
cr.uld be fram ed and before their functions coul 1
be fully developed, their staffs had to be
organized on the basis of prospective rather
'b a n imm ediate needs. The board is. therefore,
not able at this tim e to m ake a definite renort
on the norm al exnenses of the reserve b an k ' "
, A complete schedule of salaries of eovem ors.
ffile ral reserve agents and salaries o f the m ail
office staff at W ashington has been filed with
( ”*O t l r r r r < c 5
m
TEDERAL BANK STOCK SUBSCRIPTIONS.
G o v e rn o r F a n c h e r, o f th e K ederal R eserv e bank, a n n o u n ce d las
lig h t t h a t u p to th o close of b u sin e ss clone to $1,600,000 of th e second eal
o r su b s c rip tio n s to fe d e ra l b a n k sto c k h a d been paid in. T h is am ount)
o SO p e r c e n t, b o th in th e n u m b e r o f su b scrib in g b a n k s a n d th e am oum
■aid in.
A s su b s c rip tio n s w e re m ade p a y ab le a s of y e ste rd a y 's d a ti
he biilan.ee is p ro b a b ly in tra n s it a n d will be nakl J i t ij f e to n l g h t .. T ht
u b s c rip tio n s rece iv e d on th o r
banks ou1
>f a to ta l of 763 b a n k s in th e fllSVnA.
An e a s ie r te n d e n c y in s te r lin g ex ch an g e a p p ea red to conflict w ith
h* im p o rta n c e of th e fo re ig n B e llin g of A m erican securities, b u t it
i r o b a b l y a c c o u n te d fo r in th e g r e a t outg o of c o tto n a n d th e ru sh to
l f?w itjprc c arg o e s of g ra in . D u rin g th e p a s t th re e business day* exp.
>f c o tto n reagfced th e re c o rd to ta l o f 284,000 bales, w o rth approxim ate
P. 2,000.000. T h is is m a k in g e x c h a n g e infinitely fa s te r th a n th e outgo
foodstuffs.
'
T h e D aily Iro n T ra d e re p o rts th a t # * 1 g > is ft‘n d t $ f tRrin g to buy 50,0
►o 100,000 to n s of p ig iro n in th is e o u n f r.U tf d ^m at Ame'r
Cm erican m a k e rs will
p ro b ab ly g e t th e b u sin e ss.
In th e w ay of d o m estic b u sin e ss th e B u rlin g to n h a s e n te re d th e m aN
ket fo r 1.400 c ars. T his, a lo n g w ith th e 27,000 to n s of ra ils o rd e re d on the
previous d a y by th e N o rth w e ste rn , m a k e s a r a th e r good show ing o f new
b usiness c o n trib u te d b y g r a n g e r lines.. P itts b u r g now r e p o rts th a t steel
m ills In t h a t d is tric t a r e w o rk in g a t clo se to 60 n e r c en t of oanacftv
WILL CLEAR FOR
C entral
Fund
of
I • >ak9.
; It has
been estim ated t h a t th e
h a n d lin g of the c e n tr a l fu n d h e re «1U
I n e t e n ta il any g r e a t b u rd e n o n th e force
i o f th e fe d e ra l re s e r v e b o a rd . I t w ill be
d e v o te d e x c lu siv e ly to ta k in g c a r e o t
i ite m s betw e en fe d e ra l r e s e r v e b a nk*
I th e m s e lv e s o.nd w ill h a v e th e p ractice
> r e s u lt o f s e t t i n g up a c le a r in g agency
in W a s h in g to n fo r th e tw e lv e banks,
i B a la n c e s p ro b a b ly w ill b e a d ju s te d only
i o n e e a w e e k o r once a m o n th , and *11
$ 2 5 ,0 0 0 ,0 0 0 1
a
Basis of C learing House for
t h r o u g h t h e i r r e s e r v e banks, but which
i t is h o ped Will p ro v e attractive to
Reserve Institutions.
b a n k e r s a n d shc.w th e advantages d.
irc n e ra l In tr a d is tr ic t c le a rin g s. At. fir
W A S H IN G T O N . F e b . 6.- C o n f e r e n c e s j * ^ e ™a n s c o n te m p la te d clearances on!;
b e tw e e n m e m b e rs o f tile f e d e r a l re s e r v e {or
__ _________
euoh b a n k s a s a c c e p t it. b u t -rventn
11b o a rd , g o v e r n o r s o f s e v e r a l o f th e re - ^ aUy~Tt is believed th a t aU banfcg wi!
c
o
m
e
in.
•
se rv e b a n k s a n d som e r e s e r v e a g e n ts ,
h a v e d e v e lo p e d d e fin ite p la n s fo r t!i<e x te n sio n o f c le a r in g h o u s e o p e ra tio n s
b y th e tw e lv e re g io n a l r e s e r v e b a n k s
O ne f e a t u r e o f t h e p la n p ro v id e s Cor th e
c re a tio n o f a c e n tr a l f u n d o f p o ssib ly
J25.000.000, to b e h e ld in W a s h in g to n to
th e credit of th e r e s e r v e b a n k s , to ta k
c a r e o f c le a r in g o p e r a tio n s b e tw e e n
s
REDISCOUNT RATES OF
U. S. BANK ARI
T h e rc - s a R r <g tjfc d e lih e n & o n s , w h ic h
la s te d s e v c n t l B a ) £ . w f lf T je ^ a id b e fo re
th e e n tir e fe d e ra l r e s e r v e b o a r d n e x t
M o n d ay . S in c e t h e p la n s h a v e .th e a p
p ro v a l o f W . P . G. H a r d in g a n d P a u l
M. \Varb'>rg, tw o m e m b e rs e x p e r ie n c e d
In l . a c t l c a l b a n k in g . It w a s b e lie v e d to
n ig h t t h a t li-e y w o u ld b e in d o rs e d .
N o a tte m p t i s to b e m ade to w a rd
h a s ty a c tio n , b u t i t w a s understood to
have been u n a n im o u s ly agreed In th e
conference t h a t the tim e has arrived
wlten th e clearing functions of the
twelve banks should be exercised as
fully as possible. Actual developm ent
o f the clearing system through th e re
serve banks will be gradual, but mem
b e rs of the reserve board believe these
b an k s will In time ta k e the place con
tem p lated In th e reserv e a c t an d
do
practically a ll th e clearin g fo r m em ber
The ^Cl€veWd<
laO k T h u rsd a y ordered a general
Suction of It* red isco u n t rates,
feqtive S a tu rd a y . T he low er ra te s a
se st th e e a s » of m oney In th is
trite*.
t. f
4
The r a te o n a lr r e a
to sixty d a y s' m a tu rity
lo 4 per cent, a U ty to nil
I 1-2 per cent, and .more
flays 5 per cent. H ereto fo re
t>n -all m a tu ritie s u p to th irty
haB been 4 1-2 p e r cent,
ninety d a y s 5 per cen t
pinety d a y s 6 per cent.
B anks in th e d istric t cq
the C leveland F e d e ral
fa /tb e e n slo w in ta k in g
ih** r« ii ■) ".V
lte v t-i.
h o w e v w r,
*:K h« e s ten
to ■*%««•*» i t t n s .
r
j
......... " ’« 7 , 588,090
r not***,
cwrtlflorttea a n a
s u b sid ia ry coin . .. «
998,000
R e d isc o u n ts a n d lo ans
425,000
In v e stm e n ts ........................820,000A ll o th e r re s o u rc e s ...
202,000
itest Week Sees $2,008,
000 Paid on Subscrip
tion installments.
tice tor Funds Read on or
Before Feb. 2— State-
|r
j!9i5
system In the
w e e k i n c r e a s e d its rediscounts
a n d i t s Investments $2,746,m a k i n g t h e total committed to
branches of its operation $27,
,000. Capital p a i d I n rose $2,008,I n the week, due to p a y m e n t s on
e s e c o n d installment of stock s u b x i p t l o n s ; (he payments w i l l make
greater showing: in next w e e k ’s rert.
Reserve deposits decreased
,000, reflecting' outside flnanc_
in
whjch member b a n k s were
c o n c e r n e d , a n d payments for reserve
s y s te m s to c k .
T h e C le v e la n d
regional bank re
p o r t s i n c r e a s e s in gold holdings and
capital p a i d in, both due t o stock
la y m e n ts .
There w a s a decrease
jv-rsdiscoimts; enlargement o f thi*
ite m
is likely os February g o e s on
i d the higher emirg*najr ^nency
x begins to be felt. ’-'Ti-f
f I
J u s t a s a matter <rf comment,’HV-At
i n t e r e s t i n g to note lhat federal re
serve n o t e s when they are taken out I
-jy m e m b e r banks as result of i ■
established with the regionald b a n k
Ewerve.
The
oennot be countod as reserve
fed e ra l rese rv e
a -e d its i n t h o r e g i o n a l b anJ* a r e r e
se rv e , b u t w h e n c o n v e r te d i n t o t h e
te w m o n e y c e a s e t o b e so .
Th« fedtar&l re serv e board has ex p lain ed
18 loosening of th e rule*, reg ard in g Inform a‘
required of m e m b e r banks concerning
tople whose r.ot&s thev seek to h a v e
u n to d a t th e re g io n al in stitu tio n . The
jR igfeats th a t th e ru les not req u irin g
U s ta te m e n ts be n o t applied to “ p u rp a p e r" b o u g h t th ro u g h brokers o r
with, whom th e p u rch asin g banka
. . T.0 dire c t re la tio n s. In cases of tlile
t w here b o rro w ers’ sta te m e n ts in th e re_irea form » o not a v ailab le u n til a fte r
i\e close of the b u sin ess year, statem e n ts
tfte previous y e ar m ay be accepted u n til
i condition is rem edied. M em ber bonks
urged to accustom borrow ers to fu rn ish tftaW pen ts even in case of lim ited b or
in g s .
. .
he board Issued a c irc u la r gov ern in g th e
chaae of tax w a rra n ts by reserv e banks,
m a t t it c le ar th a t th e In te re sts of the
oka an d n o t of the m u n icip alities ehould
considered In m ak in g such in v e stm en ts
.nd pointed o u t th a t in v e stm en ts of th is
>ture should be re la tiv e ly sm all in protlo n to th e a g g reg ate reso u rces o f th e
ik«.
F 'e d e r a l R e s e r v e 8 y »t e m .
4
J u . 28.
R ESO U R C ES.
Gold coin an d c e rtific a te s .............. $235,906,000
I-egal tender .notes, silv e r c e rtif
ic a tes and su b sid iary c o in.......... 20,882,000 ^
T otal ...................................................1256,787.000
B ills discounted a n d loans:
M aturities w ithin th ir ty d a y s . . . . $6,881,000
H a tu ritie s w ith in s ix ty d a y s . . . .
4,903.000
O ther
...............................................
2,721,000
Total ........................ ........................ $13,955,000
In vestm en ts;
*
__ ■
R ue from federal re e e rv s b a n k s $13,180,000
" ns in tra n s it ...............................
7,421,000
o th e r reso u rces ............................ 10,891,000
T otal resource*
•
I .......................$802,234,000
L IA B IL IT IE S .
pltal pMd in ................................. $20 ,440,000
deposits ....................... .
279,518,000
_ reserv e note* In c lrc u la (not a m o u n t) .......................
2,278,000
-------------------- -
T otal L iab ilities ........................... $302,284,000
te se rv e a g a in s t n e t lia b ilitie s 88 pot
C ash reesrve a g a in s t n e t lla'qllltl— 88.8
« . a
*17,468,000
'L
988,000
515,000
8*0.000
247.000
le n e y > u k
N e w Y o r k h& s a d d e d to i t s h o l d
in g s o f c a s h
fro m
th e in te rio r th is
w eek.
H ere a t
hom e
$ 1 2 5 ,0 0 0
of
e m e rg e n c y c u rr e n c y w a s re tire d y e s
t e r d a y , l e a v i n g b u t $ 8 0 ,0 0 0 o f C l e v e
l a n d n o t e s o u t a n d a b o u t $ 1 ,1 0 0 ,0 0 0 in
th e w h o le C le v e la n d c u r r e n c y d ia tr i.* ,
o u t o f a m a x im u m
a t o n e tim e o f
$ 8 ,2 8 7 ,0 0 0 .
•
O f t h e 7 0 1 m e m b e r s 'o f th e C le v e
la n d
fed e ra l rese rv e b a n k
728 h a d
p a id
in
fu ll th e ir s e c o n d
s to c k in
s t a l l m e n t s b y l a s t e v e n i n g . O f $ 2 ,0 1 7 ,
0 0 0 c a lle d
th e r e h a d b e e n d e liv e re d
$ 1 ,9 0 5 ,0 0 0 .
T h e re s p o n s e , p ra c tic a lly
a ll in g o ld a n d g o ld c e r tif ic a te s , h a
been
q u ic k , te s tif y in g
to th e
a b u n d a n c e o f t h o »»♦««.-------
Total resources ....$20,080,000 $19,808,000
- LIABILITIES.
2,480,000
,000
In . . .
C ap ital
F e d e ra l re se rv e n o tes
in circulation ........
118,000
144,000
T o tal lia b ilitie s . . .920,080,000 (19,808.000
Gold reserv e a g a in st
a ll lia b ilitie s . . . . . .
#9.#%
88.8%
C ash reserv e a g a in st
a ll lia b ilitie s .............
105.8%
108.8%
N ew Y o rk C le a rin g llo m c .
ACTUAL. CO ND ITIO N .
In c re a se .
L oans, e tc ...................12,388,224,000 $21,011,000
R eserv e
in
own
v a u lts ..................... 870,582,000
8,986,000
R eserv e in federal
108,288,000 *4,708,000
re serv e b an k ........
R eserv e o tb e r depos
ita rie s ......................
82,075,000
872,000
N et d em and deposits 2,122.581,000 24,483,000
N et tim e d e p o sits..
90.377,000
1,481,000
41,439,000 •1,108,000
C ircu latio n
A g g reg ate re s e r v e ...
510,923,000
144,259,930
E x cess re serv e . . . .
1,287,140
‘ D ecrease.
O th er N ew T o rk c ity b a n k s end th e w eek
w ith $554,327,800 loan to ta l, a $850,007,100
deposit to ta l an d reserves tn v a u lt $54,085,
000, a ll ite m s sh o w in g Insignificant changes
L o cal C learing *.
L ast w eek .......................................
$28,289,7
W eek la s t y e a r ............................. .
25,534,8
L a st m o n th ......................................... 108,481,795
M onth la s t y e a r ........ ........................ 122,871,821
L o c a l N a t io n a l * .
C leveland n a tio n a l b a n k s re p o rt fo r Uit
; w eek ended w ith the close of busin ess Fri
day la st In crease In loans $488,085: lncreaa,
' in deposits $2,087,138, a n d Increase In casl
; and d u e from i n
*
-----'
w c ie is n s
n e u iK c o u n t u a t e s
c u t.
R e d is c o u n t,
r a te s o f th e F e d e ra l
R e s e r v e B a n k o f C le v e la n d w e r e r e
d u c e d to 4 p e r c e n t, o n m a t u r it ie s
n o t e x c e e d in g s ix ty d a y s , 4 1 -2 o n
p a p e r n o t e x c e e d in g n in e ty d a y s a n d
5 o n lo n g e r m a tu ritie s .
K ig h t o f th e b a n k s n o w h a v e th e
4 p e r c e n t, m in im u m r a ts , a n d f o u r
h a v e th is r a te fo r m a tu r itie s n o t e x
c e e d in g
s ix ty
days.
T h e p rese n t
r e a s o n f o r r e d u c tio n is o f c o u r s e n o t
to
e n c o u ra g e
g e n e ra l
r e d is c o u n tin g
so m u c h a s to b r in g in th e s e c u r ity
b e h in d
em erg en cy
c u rre n c y .
T he
s o u th h a s b ig b lo c k s o f th e c u rr e n c y
s till
o u ts ta n d in g .
but
re d is c o u n t
r a te s a r e g o in g d o w n a n d t a x u p , so
t h a t r e tir e m e n t s h o u ld g o o n r a p i d
ly .
T h e f e d e r a l r e s e r v e b o a r d 's e v i
d e n t in te n tio n is to h a v e th e e m e r
gency
m oney
re tire d
and
re p la c e d
b y t h e c h e a p e r a n d m o r e s c ie n tif ic
fe d e ra l r e s e r v e n o te s ,
i
W h ile th e s o u th e r n re g io n a l b a n k s
1w i l l n o t c a r e t o l o a d u p t o e x t r e m e s
o n c o tto n p a p e r, f o r p la n tin g o f th e
n e w c ro p a n d m o re b o rro w in g is b u t
a fe w m o n th s a w a y , th e y p ro b a b ly
w ill t a k e a ll t h e y r e a s o n a b ly c a n a n d
th e n w ill s h if t th e e x c e s s to o th e r
p a r ts o f th e c o u n try th ro u g h th e in
te rre g io n a l b a n k re d is c o u n t p ro ce ss.
R e d is c o u n tin g a m o n g fe d e ra l re s e rv e
banks h as n o t y et been done. W hen
it is d o n e t h e n o r th e r n r e g io n a l b a n k s
w ill fin d p r o f ita b le e m p lo y m e n t f o r
p le th o ric fu n d s .
'
N ew - W « r k l o t H H e n e S y s te m .
T h e f e d e ra l f is e r v e b o a rd c o n s id
e r s t h e s y s t e m 's p r o g r e s s s o f a r u p
to e x p e c ta tio n s t h a t i t w iil t a k e o n
n e w w o rk .
D e f in i t e p la n s h a v e b e e n
iniMb. f o r g r a d u a l e x t e n s i o n o f c l e a r
i n g o p e r a 'i o n # A c e n t r a l g o l d f u n d ,
w h l e h m a y ru n t o * 2 5 ,0 6 0 ,0 0 0 , w i l l b e
m a d e u p o f d e p o s its fro m e a c h o f t h e
tw e lv e
re g io n a l
banks
an d
w ill
be
h e ld in W a s h in g to n to t h e c r e d it o f
th e s e b a n k s to ta k e c a re o f c le a r in g
o p e r a tio n s b e tw e e n th e m .
T h is fu n d
w ill b e d e v o te d e x c lu s iv e ly t o h a n d
lin g
ite m s
b e tw e e n
re g io n a l b a n k s ,
b a la n c e s to b e a d ju s te d o n ly o n c e a
w eek
o r once a
m o n th
and
to
bo
la r g e ly m a t t e r s o f b o o k k e e p in g . T h e r e
is a ls o o u tlin e d f o r s lo w d e v e lo p m e n t
a p la n
f o r c l e a r i n g w i t h i n d i s t r i c t 's ,
w h ic h o n ly th o s e m e m b e r b a n k s d e
s ir in g to d o so w ill a d o p t.
A nnounce
m e n ts w ill f o llo w o n b o th m a t t e r s .
'
- a _______ .
H
i V
a
M
*7
A M U fk jh fe l A f j y r ~
U
™ 2 2 !2 “ r
tio n T n L
ta
t
.
n e w
*o*>.
5 5 0 .O 0 0 - e m e r g e n c y
,t h ?
C le v e la n d a s s o c ia b r i l y>® t h e a m o u n t o u t -
s w fn riir ?
S 1 ’0 5 0 *0 0 ^
o t w h ic h
is fro m
C le v e la n d in s ti, A n o th e r o u tc r o p p in g o f g o ld
of
in th e d e c is io n o f m o s t
o r th e C le v e la n d b a n k s w h ic h w p ™
m t h e $ 1 0 0 ,0 0 0 ,0 0 0 g o l d p o o l t o S
It , h ® 'r s h a r e o f t h e $ 1 9 , 0 0 0 , 0 0 0 d i s t r i b
u te d w h e n th e p o o l w a s e n d e d
la s t
w e e k in th e h a n d s o f N e w Y o rk c o r r e
A s u b s ta n tia l p a r t o f th e
5 1 ,8 5 0 ,0 0 0 c o n t r i b u t e d f r o m h e r e w a s
®e n t i n m e t a l a n d c e r t i f i c a t e s .
T iie c o m m itte e in c h a r g e
of
th e
p o o l h a s tu rn e d th e m o n e y in to th e
F e d e ra l R e se rv e b a n k o f N e w Y o rk
a n d it c a n bo c h e ck e d o u t fro m th e re .
N e w Y o rk c o rr e s p o n d e n ts o f in te r io r
in s titu tio n s a re le a v in g th e b u lk o f
th e m o n e y in t h e r e g io n a l b a n k , a n d
m ost i n t e r i o r r e g i o n a l b a n k s t h a t h a v e
c h e c k s d e p o s ite d o n th e m
w ill le a v e th e g o ld w h e r e i t is. T h u s
th e N e w Y o rk re g io n a l
b an k
g a in s
j
N ew
Y °rk
c le a rin g h o u se
a n d th e s u b tr e a s u r y w h e re th e fu n d
w a s d e p o s ite d
an
a m o u n t in
m e ta l
a n d c e rtif ic a te s e q u a l to m o re th a n
h a lf o f th e p a id - in c a p ita l s to c k o f
th e e n tir e r e s e r v e s v s te m .
R e g u la tio n s d e fin in g th e e x te n t to
w h ic h
n a tio n a l
banks
m ay
becom e
e x e c u to rs
"n d
a d m in istra to rs
have
b e e n c o m p le te d a n d w ill b e g iv e n o u t
In th e n e a r fu tu re .
T h e p o w e r s w ill
b e f a irly b ro a d .
T h e y m u s t b e, fo r
th e n a tio n a l b a n k s m u s t b e g r a n te d
c o m p e n s a tin g p r iv ile g e s to m a k e u p
r o r c o n te m p la te d a d m is s io n o f s ta te
b a n k s a f te r th o
n a tio n a ls
h av e set
th e b a ll r o llin g w ith th e ir f u n d s .
but
DPEfATIONS OF THE BESERVB BAM&8.
F e d e r a l r e s e r v e b a n k a d u r i n g t h e w e e k i n c r e a s e d " t h e i r lo a n s anc
n v e s tm e n ts b y $ * , 9 9 1 , 0 0 0 . T h e t o t a l o f t h e s e t w o i t e m s i s n o w $ 3 1 , 1 2 6 , 0 0 0
o m p a re d w ith J 2 7 ,1 J 5 ,0 0 0 a w e e k a g o .
D i s c o u n t s i n c r e a s e d $ 2 ,4 0 5 ,0 0 1
m d i n v e s tm e n t s $ 1 , 6 2 6 , 0 0 0 .
The increased operations
J
the
of
rese rv e
v e s tm c n ts w a s le s s , h o w e v e r , t h a n t h e g a in
b y m o re th a n
$ 2 0 ,0 0 0 ,0 0 0 , o f w h i c h
s e c o n d in s ta llm e n t fro m m e m b
leased
receipt of the
and
b a n k s in d isc o u n ts
in c a sh .
G o ld h o ld in g s
$ 1 4 ,6 0 0 ,0 0 0 w a s d u e
er banks
s to c k s u b s c
to
on
in in
tlif
rip
tio n * .
.
T h e fed e ra l b a n k
o f C l e v e l a n d m a d e n o * t * r \ p i » j r c s t M |l l f i j a n d its
d is c o u n t o p e ra tio n s s h o w n o m a rk e d c h a n g e . ' ’ '
1
T h e r e p o r t a s a w h o le c o n tin u e s to r e f le c t n o m a te r ia l d e v ia tio n fro m
t h e o r ig in a l p o lic y o f t h e f e d e r a l r e s e r v e b o a r d to a p p r o a c h th e m a tte r
o f a c tiv e p a r tic ip a tio n in b a n k in g a ffa irs in a m o a t d e lib e ra te a n d p a in s
ta k in g w ay .
T h e $ 3 1 ,1 2 6 ,0 0 0 o f l o a n s a n d i n v e s t m e n t s r e p o r t e d b y a l l
f e d e r a l b a n k s i s a b o u t $ 4 ,0 0 0 ,0 0 0 le s a t h a n t h e i r p a i d
in c a p ita l.
T h e N e w Y o r k b a n k s t a t e m e n t w a s c o n s p i c u o u s o n l y f o r i t s $ 2 9 ,0 0 0 ,0 0 0
lo a n in c re a s e , a r e fle c tio n o f t h e n u m e r o u s fin a n c in g e v e n ts o f th e w e e k .
T h e c a sh g a in w a s s m a lle r th a n
a n tic ip a te d a n d th e s u rp lu s s h o w e d a
n o m in a l d e c re a s e .
C le v e la n d c le a r i n g h o u s e o f fic ia ls o m it te d i s s u i n g t h e u s u a l w e e k ly
c o m p a r is o n s a s t h e fig u r e s a r e th o s e o f tw e lv e b a n k s .
T h e c o m p a ris o n
a g a in s t t h e s e v e n b a n k s in t a e c le a r in g h o u s e a w e e k a g o w o u ld b e v a lu e
le s s .
I t m a y b e s a i d , h o w e v e r , t h a t t h e n a t i o n a l b a n k s J o s t a b o u t $2,000,
000 i n d e p o s i t s , w i p i n g o u t a n i n c r e a s e o f t h a t a m o u n t o f t h e p r e v i o u s
LOWER DISCOUNT RATES An ATTRACTION.
ciUiiAAXi J5AJMJ&. jtliURE REDISCOUNTING.
T h e r e s e r v e b a n k o f C le v e la n d y e s te r d a y a n n o u n c e d a c c e p ta n c e s o f
p p l i c a t i o n s f o r r e d i s c o u n t s t o t h e a m o u n t o f $ 3 0 0 ,0 0 0 , i n c o n n e c t i o n w i t h
v h ip h $ 1 0 0 ,0 0 0 o f fed e » -» l r e s e r v e n o t e s w e r e is s u e d .
T he
d is c o u n tin g
ia n k s a r e lo c a te d in th e e a s te r n a n d s o u th e r n s e c tio n s o f t h e 7 o u r th r e s ta te d
th a t
—____
th e C liZ ^ g ^ 4 ^ < %
^row ded p o sitio n on th e p a r t of th e
j 8V £ s e n t
(Tie OTlTVCYf!g*«
r e p r e s e n t e d p u r e l y t h e r e d i s c o u n t i n g : o f- v e r y p r i m e p a p>er
e r In
o n o t h e r e q u a l l y g o o d a c c o u n t s , t h e lo ^ * r a t e s o f d i s c o u n t
su ch
in
an y w ay a
tra n s a c tio n s
o r d e r to ta k e
i
now
o f th e
C le v e la n d
bank u p
$ 3 0 4 ,0 0 0 a n d t h e r c d i * d L i l *
O v e r in E n g la n d th e L o m b a r d s tr e e t b a n k s u s e th e B a n k o f K n g la n d
w h e n e v e r th e y
f in d t h e y c a n t u r n
a. le g itim a te
p e n n y th e re b y .
T hey
le a v e it to t h e b a n k to c a ll th e t u r n o n th e m a n d r a is e th e d is c o u n t r a te
w h e n th in g s g e t g o in g to o fa s t.
N o d o u b t in tim e th is w ill b e t h e m e n ta l
a ttitu d e o f. m e m b e r b a n k s to th e n e w R e se rv e b a n k s .
\ e s te rd a y s o p e ra
tio n s in d ic a te a h o p e f u l s ta r t in t h a t d ire c tio n .
I f t h e r e Is a n y g e n e m is ig n lf ic a n c e I n t h e o n e r a tio n i t is t h a t b u s in e s s is b e g in n in g to lo o k u p
b it.
mmt
Feb. 5.
$19,102,000
1,001.000
■ 435,000
520.000
123.000
T o tal resources ........ *21*505"000
LTABILITTRS.
C apita! w>.1d in ............... U. 027,000
N et Deposits ................. 17.269,000
C irculation .....................
209,000
$21,481,000
Total liabilities ........ $21,505,000
A ll F e d e ra l B a n k s .
r e s o u :RCES.
Feb. 12.
Gold ............................... .$259,256,000
Legal*. etc..................... . 22.117.000
T otal cash .................... . 281,373.000
Discounts, 80 d ays....... . 7.SS4.000
Discounts, 60 d a y s....... . 6.126,000
O ther discounts .......... . 3.080.000
Total discounts .......... . 17.090.000
Investm ents ................ . 15.546,000
Item s In tra n s it.......... . 4,462.000
All other resources__ . 6.551.000
$21,481,000
Total resources ........ *325.023,000
LIA B ILIT IES.
C apital paid In ............. $35,M1.000
R eserve deposits ..........2S4,9<<6.0QO
Circulation ............. ...... 4.1S5.000
$3,997,00®
37,863,000
118,008
Feb—*.
$256,217,000
22.641.000
27ti.85S.000
7.714.000
G,945,000
2.761.000
16.420.000
34.708.000
5.419.000
6.823.000
$322,224,000,
$35,328,000
2S4.101,000
3.000,00*
Total liabilities ........ $325,022,000 $322,224,000
N ew Y o rk B an k s.
CLEA R IN G HOUSE ACTUAL.
_
.
Increase.
Loans, eto........................ $2 2S7.397.000 $24,716,000
Reservo in own vaults. 368.151.000 *1,448,000
Reserve in federal re
serve bank .................. 113,293.000
•48,0M
Reserve In other depos
itaries .........................
32.773.000
128.000
Net demand deposits. 2.1R6.R61.00O 22.$83.000
Net tim e deposits........
......
93.122.000
839.000
Circulation ......................
39.464.000 •l.WO.Ortf
A ggregate reserve ....... 514,217,000
Excess reserve ............. 139.87a, 250 *4 US 231
r
O TH ER N E W YORK B A N K S.’
Corns. *tc. ....................
£6,100
I27MM
l r £ ! 5 ? r Y " v ...................... ' «.*re.w®
T v S ?t‘ni3er’ ............. lO.WO.ROO
fl.MO
?**’''*'*'> ............... *42,600.600
*92«,5O0
642.500.600
I y 2 m ca9h rftaerve ln
10,931,200
T ru st conipan 1es* cash
_• I
■‘ *
Vault*; .......
42.332.300
> ‘i
tra n s a c tio n s
a w a y f r o m t h a t f e e lin g .
Y e s te r d a y s o p e ra tio n jr # ^ * 1 ? i l | |
a
|
a u &F ^ •
RESOURCES. ■
Feb. 12.
Gold ..................................... $19,134,000
Legal*, e tc ................... ’
66:1.00*1
Rediscounts and loans
•661.000
Investm ents
922.
All o th e r resXuXtei^ .,
m a k in g
p ro fita b le to b a n k s .
M em ber b an k s h a v e - h e r e t o f o r e s h o w n a n in d is p o s itio n to u tiliz e th e
re d is c o u n t p r i v i l e g e s a s i t m i g h t b e c o n s i d e r e d a s i g n o f w e a k n e s s upon
th e p a r t o f t h e d is c o u n t in g b a n k s .
E v id e n tly th e y a r e b e g in n in g to g e t
to
BANK STATEM ENTS
CL c
T h o -1 p e r c e n t m i n i m u m
fe d e ra l b a n k r a te o ffe rs a n
o p p o rtu n ity
to b a n k s t h a t s till h a v e e m e r g e n c y o u t to r e t i r e s u c h c u r r e n c y a t a p r o fit
o f 1 p e r c e n t u s t h e t a x o n e m e r g e n c y c ir c u la tio n is n o w 5 p e r c e n t.
I n f a c t, t h e r e a r e e v id e n c e s t h a t t h e 4 p e r c e n t d is c o u n t r a t e o f tlie
>e s e rv e b a n k m a y a t t r a c t s o m e b u s in e s s o n its m e r it.
X e w f in a n c in g o f
a p r o fita b le n a tu r e is j u s t c o m m e n c in g to a p p e a r o n w h ic h b a n k s c a n sc
c u re a r e t u r n o f 0 p e r c e n t.
I t i s a p r o f i t a b l e o p e r a t i o n t o t u r n o v e r s o n ic o f t h e i r b e s t s h o r t- tim e c o m m e rc ia l p a p e r to th e f e d e r a l in s titu tio n in
o r d e r to m a k e ro o m f o r m o re p r o fita b le o p e r a tio n s in t h e u n d e r w r itin g
o r o t h e r f ie ld s a n d i t is i m p o s s i b l e t o c o n c fc iy e .
m in d e d b a n k e r s
w ill c o n t i n u e t o l e t t h e o p p o r t u n i t y S lip .
fa t
r c s f ir a n ," i f f o r n o o t h e r ,
it m a y b e t a k e n f o r g r a n t e d fM a t in T h e n e a r f u tu r e t h e r e s e r v e b a n k s a r e
b e c o m e m o r e o f a f a c t o r in c u r r e n t d a y f in a n c ia l h is to r y .
T h e p l a n s f o r a $ 2 5 ,0 0 0 ,0 0 0 c e n t r a l c l e a r i n g h o u s e f u n d t o f a c i l i t a t e
o p e r a t i o n s b e t w e e n r e s e r v e b a n k s i s a J i i o v y ,o £ t h e f i r s t I m p o r t a n c e t o
th e n e w s y s te m .
■
F E P 0 __
I t i s q u i t e c o n c e i v a b l e t h a t t h i s f u n d w i l l J r o w M i’ W i e t i m e t o $ 5 0 , 0 0 0 , OoO o r e v e n m o r e .
I t is t h e m is s in g lin k in t h e s y s te m t h a t w ill p e r
m it th e f e d e r a l b a n k s to c o m m e n c e in te r - b a n k d is c o u n tin g o r o th e r i n te r
d is tr ic t b u s in e s s a s p r o v id e d f o r in t h e n e w b a n k in g a c t.
" T h e p l a n ,” s a id G o v e r n o r F a n c h e r y e s te r d a y , “ w ill s a v e s e ttle m e n ts
b e tw e e n f e d e r a l b a n k s w i th o u t a c tu a l s h ip m e n ts o f g o ld o r c u r r e n c y .
F or
in s ta n c e if th e C le v e la n d b a n k h a s a c r e d it b a la n c e in t h e c le a r in g h o u s e
f u n d o f a c o n t i n u i n g n a t u r e u n t i l i t r e a c h e s , s a y $ 1 ,0 0 0 ,0 0 0 o r $ 2 ,0 0 0 ,0 0 0 .
t h a t w o u ld m e a n t h a t s o m e o t h e r f e d e r a l b a n k o r b a n k s h a d a n o f fs e ttin g
■ li-b it.
P r o v id e d w e d id n o t n e e d t h e f u n d s , i t w o u ld b e lo g ic a l f o r m e to
lo o k a r o u n d to s e e w h e r e t h is c r e d i t c o u ld b e t u r n e d t o a c c o u n t.
"W e w i l l
p r e s u m e t h a t I s h o u ld
f in d t h a t t h e s o u t h e r n b a n k s a r e t h e p r in c i p a l
d e b to r s .
T h a t w o u ld
rfa e a n t h a t a n
o p p o rtu n ity
had
opened
fo r tin
C le v e la n d b a n k to r e d is c o u n t f o r t h e s o u th e r n r e s e r v e b a n k s a g a in s t th e
m a tu r ity a n d m a r k e tin g o f th e c o tto n c ro p ."
le rv e d is tr ic t.
It can be
h an k s.
I
___
w eek.
D e m a n d s t e r l i n g w e n t t o 4 .8 8 c e n ts ,
i n e w lo w fo r e ig h t y e a rs .
N c tw ith i t a o u n g th e s e llin g o f G e r m a n s to c k s
tie re , B e r li n e x c h a n g e a g a i n d e c lin e d
tci 8 5
c e n ts fo r fo u r m a rk s , a
fig u re w h ic h , a t l e a s t in th e m in d s o f
th e a n tis c a s ts d o u b t o n th e s ta tu s
o f G e rm a n ^ cu rre n cy .
In th e a b se n c e
o f s e c u r itie s liq u id a tio n
on a
new
sc a le , th e e x c h a n g e s a r *
lik e ly
to
n io v e s till m o re in o u r f a v o r in th e
n e x t few d a y s, a s p a y m e n t is m a d e
fo r g o o d s h a s tily e x p o rte d fro m h e re
b e fo re m a rin e , w a r z o n e c o m p lic a tio n s
s h a ll s e t in o n F e b . 18.
»
T h e n e w re d is c o u n t r a te s a re in
c re a s in g th e v o lu m e o f a c c o n y jio d a tio n a s k e d o f r e g io n a l b a n k s .
The
lo c a l i n s t it u t io n * y e s te r d a y i n c r e a s e d
i t s r e d i s c o u n t s b y $ 2 6 9 , 0 0 0 t o $ ( 5 9 0 .
000, m o st o f it to f u r th e r e m e rg e n c y
c u rre n c y
re tire m e n t.
T lie
re g io n a l
b a n k i s s u e d $ 1 0 0 ,0 0 0 n e w f e d e r a l r e
s e r v e n o t e s i n t h e c o u r s e o f t h e Q P*
e ra tio n ,
fu rn is h in g
a
m & te ria ll y
cheaper
c u rre n c y
fo r th e
m em ber
h im
re d e r« l
U M n .
.
The
F e d e ra l
R e a e rv *
B ank
ot
C le v e la n d a n n o u n c e d t h e p u r c h a s e s o t
it? f ir s t lo t o f g o v e rn m e n t b o n d s . ™
In v e s tm e n ts
so
far
have
be»~
m u n ic ip a l
w a rra n ts ,
y ie ld in g
th a n
th e
g o v e rn m e n ts .
T he la „ —
p u r c h a s e c o n s is t s o f $ 1 0 0 ,0 0 0 t h r e e s
d u e A u g . 1. 1 8 1 8 .
O f t h is ta s u e ,
e m itte d w h ile t h e S p a n is h - *
1 “
w a r was on, $ 6 3 ,9 0 0 ,< X — ----------
in g .
th e
T h e ir s h o r t r e m a in in g
feet t h a t they oan *“
''
"
c ir c u la tio n
„ r r e g io n a l b
in s ti tu t io n s '
need '
* ft: 8
ANOTHER BESBRVE BAKU FUECHAB1
T h e F e d e r a l R M e r v e B a n k A n n o u n c e d t t A ' c u• jrro. _fhi *a »we o f 1$ 1 0 0 , 0 0 0 U tn i t e d S U t « * g o v e r n m e n t S P « r t ^ U i & o n f l y t & d J t B P S # 1} X H £ U le r
o f re d is
c o u n t* f r o m m e m b e r b » n C r I i £ Y E X J i T T ^ L E A D E R .
T h a t t h e a c t i v i t i e s o f t h e f e d e r a l b ? n k i » w i l l s h o r tl y b e f e l t In m o r e
i t * c t i 1 e d m e a s u r e i t r a a e v id e n c e d I n t h e i s s u e a t W a s h i n g t o n y e s t e r d a y o f
th e f e d e r a l r e s e r v e u o . r d ’s c i r c u l a r o n a c c e p ta n c e s .
I n I t s r u l i n g ; th e
b o t r d d o e s n o t s h u t t h e d o o r o n p u rc h a se s o f a c c e p t a n c e s in th e open
m a r k e t b u t l t I n d ic a te s t h a t t h e r e s e r v e b a n k s s h o u l d g i v e n t e n d e r s f r o m
m em ber b a n k s p r e f e r e n tia l tr e a tm e n t, e x te n d in g th is p r e f e r e n c e e v e n to
th * m a t t e r o f r a t e s - w h e n t h e a c c e p ta n c e s b e a r t h e e n d o r s e m e n t o f m e m M r
in s ti tu t i o n s T h e c i r c u l a r d e s c r i b e s t h e a c c e p t a n c e a s t h e w o r l d ’s s t a n d a r d
I n t h o d is c o u n t m a r k e t a n d a s s e r t s t h a t , w h i l e I n I t s i n f a n c y I n A m e r i c a n
b a n k i n g , i t w ill u ltim a te ly p r o v e a n e f f e c tiv e s u b s t i t u t e f o r t h e c a ll lo a n .
T h fc N e w Y o rk c o t t o n e x c h a n g e w a s c lo s e d b u t N e w O r l e a n s w a s o p e n
i a d b e a r p re ss u rs a t t h a t c e n t e r r e s u l t e d in a d e c lin e o f o v e r te n p o in ts .
R e c e n t la r g e e x p o r t s s e e m t o h a v e s a t i s f i e d t h e p r e s s u ^ t * f o r e i g n d e m a n d ,
b u t s p in n e r s ’ t a k i n g s h a v e e n l a r g e d i n t h e d o m e s t i c
'
T,
c
ver certificates and
subsidiary coin .. ..
Rediscounts and loans..
other resources __
T otal resources . .
■
.
998.000
425.000
820.000
435.000
820.000
123,000
I n v e s tm e n ts .....................
A ll
202,000
..$ 21,481,000
$ 20,030,000 .
l ia b il it ie s .
Capital paid i n ...............$ 3,997,000
N et d e p o s i t s ................... 17,363,000
re d e ra l reserve notes in
c ir c u la tio n .....................
118,000
$
T otal liabilities .. ..$ 21,481,000
u ° ;d, . , . r.eser''e
against
■ liabilities, per cent ..
109 3
,?h, . . r.eserve
against
-liahilitiVc r*»r r#»nt .
115
$ 20,030,000
2,436,000
17,475,000
119,000
99.9
105.6
f .
* e a e r a l K e s e r v e B a n k R eports
M ilw a u k e e
T h e > i ^ l e r % l , r e s e r v e s y s t e m reports for last
/eek an increase in capital stock paid in of $14,
83,000. T he full a m o u n t due as second installlent is nearly all in.
H o w rapidly this is being paid in is indicated
y the statem ent o f th e F ederal R eserve Bank o f
lcveland, which, a t the close o f business last
veek, had outstanding less than 1 per cent of the,
nstallm ent, all b u t 19 o f the 761 banks in the disrict having been heard from.
T he system ’s rediscounts rose m oderately, $2,
165,000, a fte r an increase o f $893,000 in the pre
vious w eek; rediscounting and consequent rctire-nent o f em ergency notes is expected to grow
Jiis week, as the various new m inim um rates a re
cast up against the increased tax. T he new rates
of the Cleveland institution and o f several others
announced last w eek became effective last S a tu r
day and will figure in the coming statem ent. E spe
cially in the south, federal reserve notes in c ir
culation are likely .to increase as em ergency c u r
rency is retired. ‘
Regional banks in o th er parts o f the country
will send their m oney into the south, if th a t is
needed, through rediscounting for southern re
gional banks. T h e statem ents fo llo w :
FED ER A L R E SE R V E SY STEM .
RESOURCES.
Feb. 5
Jan . 29
Gold coin and certifi
cates ............................... $256,217,000 $235,905,000
L egal tender notes, sil
ver
certificates and
20,882,000
subsidiary coin .. .. 22,641,000
T o t a l ..............................$278,858,000
Bills discounted and lo a n s :
M aturities
w ithin
30
d a y s ................................$ 7,714,000
M aturities
w ithin
60
5.943.000
d a y s ................ . ..
2.761.000
O t h e r .................................
$256,787,000
T o t a l ..............................$ 16,420,000
Investm ents . . . . . . . . 14,708,000
Due fro m federal re
serve banks, item s in
t r a n s i t .............................
5,419,000
All o th er resources . . .
6,823,000
$ 13,955,000
13,180,000
T o tal resources . .
1 , 001,000
..$322,224,000
$
6,331,000
4.903.000
2.721.000
7,421,000
10,891,000
$302,234,000
2,278,000
T o tal liabilities .. ..$322,224,000 $302,234,000
Gold
reserve
against
86
liabilities, per cent . .
91
Cash
reserve
against
93.6
liabilities, per cent . .
99
CLEV ELAN D FED ER A L R ESER V E BANK
Jan. 29
$ 17,585,000
Federal Reserve Board Tell;
How Banks May Deal
in New Paper.
Defines How Institutions
May Project Their Names
M o Money Market.
;u
, .
t M E M ’S
Yellow Metal and Certificate:
in Vaults Go Up
Iss u e d r e g u la tio n s g o v e rn in g d isc o u n t
or
p u rch a se
of
bank
a c c e p ta n c e s .
M e m b e r b a n k s m a y p u rc h a s e a c c e p t
a n c e s in t h e o p e n m a r k e t , b u t th e
b o a r d e x p r e s s e s a p r e f e r e n c e f o r d is *
c o u n t o f s u c h p a p e r o n ly w h e n p r e
s e n te d b y m e m b e r o r o th e r b a n k s .
A
m o v e to w a rd d o lla r e x c h a n g e is ta k e n
in th e r u le t h a t a c c e p ta n c e s m u s t b e
p a y a b le
“ i i^ d o lla r s , in th e
U n ite d
S ta te s ."
r j f n
- t
T h e f e d e r a . l M 't i e i w a r k a i Q J i f i h o r i z e s
n a tio n a l b a n k s to p u rc M M ^ ic c Q fp ta n c e s b a s e d o n th e im p o rta tio n o r e x
p o r t a t i o n o f g o o d s a n d t h e b o a r d ’s
r e g u la tio n s in d ic a te h o w b a n k s m a y
a v a il th e m s e lv e s o f th e a id o f th e fe d
e ra l r e s e rv e b a n k s in s e c u r in g r e d is
c o u n t o f s u c h p a p e r, a n d la y d o w n th e
lin e s b y w h ic h th e r e g io n a l b a n k s w ill
b e g u id e d in p u r c h a s e o f a c c e p ta n c e s
in th e o p e n m a r k e t.
B e fo re th e fe d
e r a l r e s e r v e a c t w a s p a s s e d d o m e s tic
d e a li n g s in a c c e p t a n c e s w e r e c o n fin e d
to s ta te b a n k s , tr u s t c o m p a n ie s a n d
p riv a te b a n k s.
H ow
f a r A m e ric a n
b a n k s n o w m a y p ro ceed
in ta k in g
a w a y fro m L o n d o n a s h a re o f th is
b u s in e s s , a c o n s id e r a b le p a r t o f w h ic h
Is d o n e w ith S o u th A m e r ic a , t h e b o a r d
d o e s n o t p r e te n d to k n o w .
T ube.
D a y In I r o n a n d S te e l.
i
of P itts
quarterl
preferre
of reoor
T h e fe d e r a l r e s e r v e b o a r a y e a m t& k i
The record for th e period Is believed U
be unsurpassed In th e country. The Jan u
ary tonnage of th e corporation exceeded that
of D ecember about 26 p er cent.
RESOURCES.
Feb. 5
Gold and gold certifi
cates ...............................$ 19,102,000
Legal tender notes, sil-
In d e p e n d e n t B r e w i n g .
YOUNGSTOWN,
Feb.
11.—(S o l)—'Th#
Y oungstown Sheet & Tube Oo. In the las!
six m onths of 1014 earned ita regular semi
annual dividend of 4 per cent, on *20 000 00(
common and SVt p er cent, on 15,000.000 p re
ferred.
Earnings provided for the usua
depreciation charges. T here -waa nald In
tereat on $1,800,000 bonds and a quantity
of sh o rt-term notes given In paym ent oi
coal land purchases. Im provem ents to th«
amount o f $300,000 w ere financed from e a rn
ings d uring t>te period, President CampbeL
$ 20.440,000
279,516,000
B r e w e r ie s .
The Independent B rew ing Oo.
th e re g u la r
livldend of 1 \ per oent. on th e
rtock.^jayable Feb. 27 to holders
Yonofrntorrn Sh eet A
LIABILITIES.
C apital paid i n ................$ 35,123.000
R eserve deposits . . . . 284,101,000
F ed eral reserve notes in
circulation (n e t a m t.l
3,000,000
LAYSIHIWNKULtS
C h ic a g o
A
M ilwaukee A Chicago B rew eries, L td ., hai
leclared a q u arterly dividend of 4% pe>
sent., lesa Income tax, payable M aroh 8
so stock of record Feb. 24. The la st divi
lend paid was on Oct. 80, a t th e ra te o
H i per cent.
.
The Dally Iron Trade say s: Advanced priee
of spelter has caused P ittsb u rg w rought pip«
m akers to advance galvanized pipe $4 a tor
in d sheet m ills to Increase galvanized quota
tion $6 a ton. E a ste rn blast furnaces have
•old 00,000 tons of Iron In th e p a st week. bu1
r«port of general buying movem ent Is de
precated.
E astern fa b ric a to rs continue tc
extract encouragem ent from Increasing num.
»er o f building projects u p for figures.
Acceptance Rules Laid Dowr
Open Way to Finance
nt ry£,
(« F# v> V
A
$ 3 ,0 3 9 ,0 0 0 i n c r e a s e i n
p o rte d
fo r
b y th e
th e
end
s to c k
of
th e
in s ta llm e n t o n
T h ere
w as
A n
p a id
in v e s tm e n ts .
an
and
(p u rc h a se
N ow
has
of
ol
th e
seconc
e x p a n sio n
th e
$ 6 7 0 ,
f o r m e r i n c r e a ;s<
in s titu tfo n
of
of
o f $ 8 3 8 ,0 0 0 ir
e o n tr ib u te c
la tte r
$ 1 0 2 , 00C
o f g o v e rn m e n t 3 s).
t h a t th e fe d e ra l re s e rv e b o a rd
la id
dow n
a c c e p ta n c e s
b an k s a re
o p e ra tio n s
tra d e .
In cre a se
in , m a r k s
paym ent
O f th e
C le v e la n d
$ 2 2 0 ,0 0 0
is r e
s y s te m
s u b s c r ip tio n s .
0 0 0 in r e d is c o u n ts a n d
th e
g o ld
f e d e r a l re .s e i v e
la te s t w eek .
$ 7 1 8 ,0 0 0 i n
fag
UifAi
:'JU
r u le s
m em ber
in
in
p o s itio n
lo r
d e a lin g
and
to
e x te n d
fu rth e ra n c e
in
re g io n a l
of
th e ii
fo re ig n
T h e e ff o r t w ill b e t o e s ta b lis h
d o lla r e x c h a n g e , a n d to fre e A m e ri
c a n b u s in e s s h o u s e s fro m
t h e tim e lo s s a n d
in c o n v e n ie n c e in v o lv e d
in
p r e s e n t fin a n c in g : o f f o r e i g n
tra d e ,
w h e n L o n d o n o r B e r lin is o f te n c a lle d
in to s e rv ic e f o r p u r e ly f in a n c ia l w o rk
in c o n n e c tio n w ith m e r c h a n d is e d e a ls
c o n c e rn in g 1 d ire c tly o n ly th is c o u n
t r y a n d B ra z il, fo r in s ta n c e .
E con
o m y s h o u ld r e s u lt, to o , f r o m t h e s a v
in g o f c o m m iss io n s p a id to L o n d o n
a n d to B e r lin b a n k e r s .
R e s e rv e d e p o s its o f th e s y s te m in
c r e a s e d $ 8 9 5 ,0 0 0 i n t h e w e e k .
T h is
*ro u l d i n d i c a t e t h a t t h e r e h a s b e e n l i t
tle
change
in
d e p o s its in
m em ber
banks.
B u t i t is n o te d o n th e o th e r
hand
th a t th e
N ew Y o rk
c le a rin g
h o u s e i n s t i t u t i o n s r e p o r t a $ 2 3 ,7 0 2 ,0 0 0
d e p o s it in c r e a s e f o r th e w e e k ; fro m
th is tw o d e d u c tio n s a r e p o s s ib le , o n e
t h a t d e c re a s e in d e p o s its in m e m b e r
h a n k s in o th e r c itie s h a v e n e u tra liz e d
tfte in cre ase in 'U se m e m b e r bM0tt>1n
Cleveland and Tokio Can Deal
th e N ew Y ork cle arin g house— th e
o th er th a t m em ber b a n k s a re sWw in
Directly and Cheaply Un
m ak in g a d ju s tm e n ts Jn th e ir reserv e
a cc o u n ts in reg io n al b a n k s to keep
der New Ruling.
pace w ith changes in th e ir own d e
posits.
T he re d isco u n t r a te fo r pap er not
B V H . « . R O S R S T H A l.
exceeding: th ir ty d a y s h a s now been
T 'r i? t n o V % K i f a t t o t h r o w o f f f r o m
reduced to 4 p e r c en t, in all b u t the
M inneapolis in stitu tio n , w here the
th is c o u n t r y 's f o r e i g n t r a d e t h e y o k e
w h e a t a n d flour s itu a tio n preVent
o f fo re ig n b a n k e r s w a s b e g u n I a s i
ease to th e d egree prevailing; in o th er
w e e k , w h e n th e f e d e r a l r e s e r v e b o a r d
sections of th e c o u n try .
T he C leveland re g io n a l b a n k ’s gold
la id d o w n r u le s u n d e r w h i c h b a n k s
rose $32,000, re s u ltin g a lm o st wholly
b e lo n g in g t o t h e f e d e r a l r e s e r v e s y s
from the $30,000 a d d itio n a l stock p a y
te m m a y e n te r t b e a c c e p t a n c e b u s lm ents. In c re a se in re d isco u n ts here
produced a like effect on federal re
serve notes in c irc u la tio n . T he item
“all o th e r reso u rce s” is m ade up of
expenses, c u rre n c y in tr a n s it for re I o f d o lla r s h a v e b e e n lo s t to U n ite c
dem ption, a n d a ll n a tio n a l b a n k notes ■ S tates b u s in e s s b e c a u s e th e p o u n d
held.
s t e r li n g a n d n o t th e d o lla r is th<
F e d e r a l R e n e rv c S y ste m .
w o rld 's s t a n d a r d o f e x c h a n g e . B r ltls l
RESOURCES.
c u r r e n c y b c c a m e t h e c le a r in g m e d lu n
Feb. 12.
Feb. 5.
o r ld f o r m a n y r e a s o n s , b u '
Htold, gold rertIflcates.$2B9,256,000 *23«,217,000 aofm ot hneg w th
em
th a t
U n ite d S ta te i
Lejcalfi, silver certifi
b
a
n
its
w
e
ra j n o t a d e q u a te l y ' equlppe<
cates, subsld. coin 22,117,000 22,641,000
Bills discounted and loans:
to c a r e f o r f o re ig n t r a d e . N o w o tt
7,884,000
7,714,000 b a n k s a r e so e q u ip p e d .
30 days .............. .
60 days .................. 6,126,000
6,945,000
I n t e r e s t e d a s n e v e r b e f o r e i n fo r
Other ........................
8,080,000
2,761,000
eig n
tra d e ,
b u s in e s s
m en
of
thi:
Total .....................$ 17.000.000 * 16,420.000
c o u n tr y , w i t h a ll t h e i r to u r s , tr a v e lln f
Investments ............ ... 15,546,000 . 14,708,000 sa le sm e n , c o m m is s io n h o u s e eo n n e c
Due from fed. res.
bunks In transit.. 4,462,000
5,419,000 t i o n s a n d p u b lic ity , w o u l d s till bi
All other resources.. 6.551,000
6,823,000 h a m p e r e d b y la c k o f p r o p e r f ln a n c ia
fa c ilitie s . T h is la c k t h e f e d e r a l re
Total resources .. .$325,022,000 $322,224,000 se rv e a c t i s re m e d y in g .
H e r e a f te r th e C le v e la n d m e d lc ln s
LIABILITIES.
ch e m ic a l h o u s e b u y i n g m e n th o l ir
Capital paid In.........$ 35,841.000 $ 35,123,000
Reserve deposits __ 284,996,000 284,101,000 J a p a n w ill dp b u s in e s s o n ly w i th th f
Federal reserve notes
J a p a n e s e s e lle r a n d w it h i t s o w n b a n k
in clrc. (net)......... 4,185,000
3,000,000 h e re in C l e v e la n d .- H e r e to f o r e th re e
c o u n tr ie s o f te n w o u ld b e in v o lv e d in
liabilities
*
such
a d e a l, b e c a u s e th e fin a n c in g
Gold res. against net
w ould b e d o n e
th r o u g h
I^ondon.
liabilities, per cent.
91.1
01
Cash res. against net
S o m e tim e s B e r lin w o u ld ^do I t .
In
liabilities, per cent.
98.8
99 e ith e r c a s e t h e r e w a s a c o m m iss io n
C le v e la n d F e d e r a l R e s e r v e B a n k .
f o r th e E n g lis h o r G e r m a n b a n k e r
a n d a r a k e - o ff i n t h e c u r r e n c y d if fe r
RESOURCES.
ences.
Feb. 12.
Feb. 5.
Gold, gold certiflates.$19,134,000 $19,102,000 f a cS tiumr ei lra r l yo f w ch oe nn v ea y oC rlse v seol ladn d o mn ea r n tio.
Legal*, silver certifi
cates, subsid. coin..
633,000
1,001,000 B r a z i l , t h e E n g l i s h o r G e r m a n b a n k e r
Rediscounts and loans
661,000
435.000 c a m s i n f o r v e l v e t a n d t h e b u s i n e s f
922.000
820,000 w a s s u b j e c t t o s c r u t i n y o f p e o p l e
Investments ..............
All other resources__
155,000
123,000 f r i e n d l y t o E n g l i s h i - r a r j t t e i t n i m 1 < l f |
u
I v lt
Total resources __ $21,505,000 *21,481,000 v e y o r m a k e r s .
LIABILITIES.
H o t,- T h e y W i |l A c c e p t.
.
Capital paid In.......... $ 4,027,000 $ 8.997,000
U
n
d
e
r
t
h
e
f
e
d
e
r
a
l
r
e
s
e
r
v
e
a
c
t as
Net deposits .............. 17,269,000 17,363,000
Fcd#al reserve notes
. n o w o p e r a tiv e , f in a n c in g th e s e t r a n s
in circulation .........
118,000 a c t i o n s c a n b e c o n v e n ie n tly a n d
d o n e t h r o u g h U n ite d S t a t e s
Total liabilities ....$21,505,000 $21,481,000 sh pp e. nekdsi.l y M
e m b e rs o f t h e r e s e r v e s y s
Gold reserve against
liabilities, per cent..
109.4
109.2 t e m a r e g r a n t e d a p o w e r n e v e r b e
Cash reserve against
fo re p e r m itte d th e m — th e y m a y ‘a c
liabilities, percen t..
113
115
c e p t ’— t h a t is a s s u m e r e s p o n s ib ility
N ew Y o r k C l e a r i n g H o u se.
f o r a tim e d r a f t b e f o re m a t u r i t y , b ;
s
ta m n in e ’
’’
Increase
:u r e a c r o s s i t s f a c e .
T h e d r a f t th e n
Loans, etc. ............ $2,287,897,000 $24,716,000
Res. in owrf vaults 368,151,000 *1,448,000
b e c o m e s a n e a s i l y n e g o t i a b l e i n s t m -1
Reserve In federal
m e n t. s a f e a n d d e s ir a b le a s a s h o r t
reserve bank ... 113,293,000
648,000
tim e in v e s tm e n t f o r o t h e r b a n k s .
In 1
Reserve In other
th e w o r k in g o u t. t h e a c c e p ta n c e p o w er-l
depositaries .......
82.773.000
528,000
Net demand depo.s 2,166.861.000 22,888,000
m e a n s t h a t a b a n k m a y p r o je c t its !
Net time deposits..
93,122,000
819,000
nam e and
c re d it
I n to
th e
g e n e ra l
Circulation ............
89,464,000 *1,230,000
m o n ey m a rk e t o h th e d ra ft.
Aggregate reserve.. 614,217,000 ................
Excess reserve.... 139.873.350 *4.118,230
H e re Is a n in s ta n c e o f a c c e p ta n c e |
OTHER NEW TORK BANKS.
b u s in e s s .
The
C le v e la n d
m e n th o l)
Loans, etc.............. $ 554,326.100 $ 279,400
b u y e r in s tr u c ts th e J a p a n e s e
s e lle r
Specie .....................
42.872.700
*718,400
t
o
d
r
a
w
a
d
r
a
f
t
f
o
r
t
h
e
m
o
n
e
y
on th e
Legal tenders .......
10,290.800
*9,800
S ix th C ity N a tio n a l b a n k of C le v e
Total deposits....... 642,500.500
*926,500
♦Decrease.
la n d , p a y a b le n in e ty d a y s a f te r s ig h t
o f th e d o c u m e n t. T h e J a p a n e s e w r ite s
CLEVELAND CLEARINGS.
o u t s u c h a d r a f t , a n d t u r u s I t In to h is
Feb. 13...............................................$ 4,084.821
Day last y e a r . .. .. .. ...................... 8.393,868
o w n b a n k w i t h b ill o f l a d i n g , i n s u r
Last week ....... .............................. 28,455,774
a n c e a n d o th e r n e c e s s a ry p a p e rs a t
Week last y e a r..:............................ ...
Total
...$325,022,000 322,224,000
209,000
FOR U. S. BUSINESS
New Power Granted Banks
Produces Economies in
Foreign Trade.
ta c h e d .
T h e 'J a p a n e s e
bank
tra n s
m its a ll o f th e p a p e rs d ir e c t to th e
S ix ? h C i ty N a t io n a l , w h ic h s ig n if ie s
i t* “ a c c e p ta n c e ” o n
th e d r a f t
and
k e e p s th e o th e r p a p e rs fo r s e c u rity .
T he d raft
b e lo n g s to
th e
m an
in
J a p a n , b u t t h r o u g h h i s b a n k ’s c o r
r e s p o n d e n t h e re h e c a n h a v e it ta k e n
to a n ?
r e g i o n a l b a n k a n d h a v e it
t u r n e d i n t o c a s h a t a v e r y s m a ll d is
c o u n t. T h e m e n t h o l s e lle r t h u s o b
t a i n s c a s h i n s h o r t o r d e r f o r u s e h e ro ,
o r f o r t r a n s m i t t a l b a c k to h im s e lf ir.
t h e f o rm o f y e n . H e n e e d n o t w a it
n in e ty d a y s f o r t h e m a t u r i t y o f th e
d ra ft.
.
U n d e r t h e s y s te m h e r e to f o r e p r e
v a ilin g h e c o u ld a c c o m p lis h t h e s a m e
ends, b u t
lik e ly a s n o t
th e d ra ft
w o u ld b e d r a w n f o r p o u n d s s t e r l l n f
i n s t e a d o f d o l l a r s , w o u l d sro t o E n s r .
la n d , bo a c c e p te d b y a n E n g lis h
a n d c o n v e rte d I n to c a s h o r J a p
e x c h a n g e In L o n d o n .
T h re o
_____
t r ie s w o u ld b e in th e d e a l, a n d th
E n g lis h b a n k e r w o u ld g e t c o m m iss io
an d e x c h a n g e p ro fit. M e a n w h ile th e r
h a s b een
a n o th e r
c h a p te r o f th
t r a n s a c t i o n , t h a t b e t w e e n t h e C ltf
la n d e r a n d t h e N e w Y o r k b a n k a c t
f o r h i m o n t h e o n e »lde a n d t h e 13
don b an k o n t h e o t h e r . T h e r e in
a n o th e r s o u r c e c f i n f l o m e f o r t h e E n *
L
lis h m a n .
U n d e r th e n e w
s y s te m
b u s ln e s
c a n be d o n e d ir e c t b e tw e e n jS le v e ta r.i
a n d T okio, p r o d u c in g a s a v i n g t h a
w ill m e a n m illio n s o f d o l l a r s a s t h
y e a r s go by.
A.lso u n d e r th e n g w m e t h o d , i
C le v e la n d e x p o r te r o f a u t o m o b i l e s ti
R u s s ia c a n d ra w d i r e c t o n t h e N e *
Y o rk b a n k e r w ith w h o m R u s s i a h a 3
s e t u p c r e d its in th is c o u n t r y . T h i s
b a n k e r 's a c c e p ta n c e , e v e n t h o u g h h<
b e n o t a m e m b e r of th e r e s e r v e S t
tern , w ill b e c o n v e rtib le In to
I m m e d ia te ly in a m e m b e r b a n k oi
r e g io n a l b a n k .
B e n e fit* S u m m e d Up.
S u m m e d u p , th e p o w e r to e n t e r a c
c e p ta n c e b u s in e s s n o w g r a n t e d b an k *
w h ic h a r e p a r t o f t h e r e s e r v e s y s t e m
w ill e n c o u r a g e foreigm t r a d e o n t h e
p a r t o f U n ite d S ta t e s c i t i z e n s b e c a u s e
fin a n c in g w ill b e d o n e c h e a p l y b e r
c a u s e w ith o u t I n te rv e n tio n o f a t h i r d
c o u n tr y — b e c a u s e lea!*® o f co n fid en
tia l in f o rm a tio n to fo re ig n c o m p e ti
t o r s w ill b e e lim in a te d — a n d l a s t l y b e
c a u s e h e r e a t h o m e w i l l be l a i d t h e
f o u n d a tio n f o r a “ d is c o u n t" m a r k e t
w h e re a c c e p te d d r a f ts w i l l b e b o u g h t ,
a n d sold, f u r n is h in g c a s h O n t h e one )
h a n d a n d a sa fe s h o r t t e r m i n v e s t - 1
u ie n t o n th e o th e r. B a n k s w i l l A n d
in th e d is c o u n t m a r k e t a s p l e n d i d
se c o n d a ry re se rv e , b r i n g i n g t h e m f a i r
In te re s t a n d n o t s u b je c t to s t o c k m a r
k e t c a la m itie s su c h a s a f f e c t e d t H e
c a ll lo a n la s t su m m e r.
S a f e ty o f t h e P a p e r .
H ow w ell sa feg u a rd ed th e p ap er w i l l
be ca n be gleaned from th e m e n t h o l
case. T he accepted d r a ft would h a v e
behind it th e liab ility ot th e m e n t h o l
seller, of h is bank, of th e m enthol b u y e r
and of h is bank.
R egional b anks w ill n o t ac c e p t paper,
b u t th e y w ill d isco u n t o r buy a c c e p t e d
paper. T h e process of disco u n tin g i s
the sa m e as buying, e ic e p t t h a t in t h e
d isco u n tin g tra n sa c tio n th e p ap er m u s t
be indorsed by a m em b er b a n k , its l i a
b ility th u s being added to t h a t b e f o r e
on th e paper. A few m em b er b an k s
have been d oing acce p ta n ce business
b efore la s t w eek, b u t only on a lim ited
scale, th e g en eral u n d e rsta n d in g h av in g
been to w a it fo r reserv e b o a rd re g u la
tio n s. S ta te b an k s of N ew Y ork s ta te
can , u n d er th e new V an T u y l law, d o
acce p ta n c e bu sin e ss based on foreign
an d on dom estic tra d a . I t is conceiv
ab le t h a t th e fed eral re se rv e act, as
y e a r s go by, m ay be am en d ed to in
clude p ap er based on d o m estic trad e,
b u t It w as deem ed w ise a t th* s t a r t to
lim it th e n a m e -p ro le ctdon facilitie s a f
forded m em b er banks. Befc-ause of th e
pressing need fo r in crease d faci
foreign tr a d e an d b e 'n u je
\lm o s t
u n iv ersal cu sto m b e tv ^ s * t«:?i< i t s of
different n a tio n s is to d§ lj
d r a ft, the acce p ta n ce bu
re r is
confined fo r th e p resen t
h
^reign
tr a d e field.
E sta b lis h m e n t of b ra n c h an k s ab ro ad
f u rth e r e x p o rt tra d e fin an cin g facilL-^
ties.
T h ere a re now tw o fo reig n
b ra n c h e s o f th e N a tio n a l C ity b a n k of
N ew Y ork, one in Rio Ja n e iro , one
in B uenos A ires.
c*bY
tiesla
\
^- - - - - - - - - - - - I
FE D E R A L
■■■M
I^ a v sn i « * « r.
M
t
/T h e
F e d e r a l j e s e r v a b o a r d < f h o rtl.
►ill d e f i n e t h e p o w e r s g r a n t e d n a
al b a n k s t o a c t a s e x e c u t o r s a m
u s te e s .
T h e d e ta ils o t tB e r u lin f
prill b e e s p e c i a l l y i n t e r e s t i h g h e r e
ecau o e th e r e
s e rio u s d o u b t th a
U
71I,U n a tio n a l I n s titu tio n s c a n do a n y
n ich w o rk u n d e r th e s t a t e ’s p r e s e n t
'
J,
» h e W a s h in g to n b o a r d p a v e d th e
w ay f o r a c t u a l b u s in e s s I n a c c e p
t a n c e s b y a p p ro v in g m a x i m u m a n d
- 'D ir a u m r a t e s o f 4 t o 2 p e r c e n t , f o r
Ite rs’ a c c e p ta n c e s
w hen
d isn te d b y th e re g io n a l b a n k s
of
, „ t o n , N e w Y o rk a n d C h i c a g o . T t t e
a r d a ls o a p p ro v e d a 4 p e r c e n t , r e
c o u n t r a te on m e rc h a n t p a p e r f o r
m e R ic h m o n d i n s t i t u t i o n o n m a t u r i
t i e s n o t e x c e e d in g n in e ty d a y s ; th is
la th e lo n g e s t tim e so f a r a llo w e d f o r
t h e 4 p e r c e n t, r a t e a n d r e f l e c t s t o
bacco needs.
BANK STATEMENTS
C LEV ELA N D FE D E R A L BANK.
Feb. 19.
Feb. 12.
$18,802,000 $19,134,00?
QoId ............< ■
703.000
632.000
L e f a lf , t i e . ,
740.000
eeuooc
Discounts •*•
822.000
922.000
Investm ents
122,000
155.000
21,605,000
I S S J S S : *. *»: «»
4,027,000
S g H ti ........................... 4.03l,c00
1,000
JfJt
■ d e p o sits ..................... 17.0W.000
;rouii(<W. r T , T - r V ' " .
C i A i t C F E D E R A L BA N
$351,808,000
l~L............................................................
r
..
SS, 8*7,000
L s g a ls , e t c . . .......................................
281.695,000
Total c a s h ....................................
7,721,000
aMtay loan* ........................
o,9oe,uoi>
I
f f t a * ™ : : . ; : . : : : : : : : : : : : .......
£ ..................................................................
In v e stm e n t* ......... ...................-...........
J t a m s In t r a n s i t ..........................
^
15.814,000
, 2,766,000
3.91/.OOO
2.6,464,000
SS.OcS.OOO
288,46*.000
S i s . . . ....................................
4,9*0,000
■ M O B ........................ . . » ............
NEW Y O RK B A N K S.
g l b Ar i k o h o u s e a c t u a l .
*4*1,000
2.975.000
1.097.000
•13,000
10.809,000
•4,*75,000
49,000
2,698,900
O TH BJH N E W Y O K K B A N K S .
etc.
1655,915,900 **1.688.800
4*. 960,800 *1,077,500
l'\0tf,400
*65,400
666,356,»00 *13,*66.100
10.36.v000
o o m p a s i* .’ o asb
T j i i m J~i m ii '- t ..............
•w m m
|
R e se rv e
REPO R T
I
..............
43.07*. H I
" tW m r 7 .& 9
The New Bank Notes
S y s te m .
A W ashington dispatch s a y s :
f
RESOURCES.
T he federal reserve bank system is now in full
Feb. 19.
Feb. 12.
swing. Tt w as put in operation N ovem ber 16 and
Gold coin and cer.
tIf!cates ..................$351,808,000 *259,250,000
all the kinks incident to a new system are g ra d u
Legal tender notes,
ally being ironed out. A requisition placed w ith
sliver certificates,
subsidiary coin---- 29,887,000
22,117,000
the B ureau of Engraving and P rin tin g fo r the
B ills discounted and
p rinting of $250,000,000 of federal reserve notes
loans—
Thirty days ..............
7.721,000
7,884,000
is being gradually filled, and so fa r $30,000,000
Sixty days ................
0,009,000
6,126,000
o f these notes have been placed in the vaults of
O ther .........................
3,182,000
3,080,000
Investm ents .............. 15,814,000
15,546,000
the F ederal Reserve Board in the T reasu ry D e
Due from federal
partm ent.
reserve bank£—
Ir. tra n s it ..................
2,706,000
4,462,000
T he cost of printing these notes, w hich includes
All o th er resources..
8,917,000
6,551,00^
the purchase of the paper, m aking and engraving
Total resources__*326,454,000 $325,022, (KM
the dies, etc., is in round figures $215,000. M uch
LIA BILITIES.
o f this expense will not have to be duplicated as
Capital paid In ........$ 36,056,000 * 85,841,0®
the plates can be used for several years before
Reserve deposits . . . . 285,468,000
284,996,0®)
Federal reserve notes
'
m
they will have to be replaced. T hese federal r e
in circulation (net
,
serve bank notes are being issued on dem and, but
am ount) .................
4,980,000
4,18^, MX)
the net am ount o f such notes no w in circula
Total liabilities. . .$326,454,000 . S3A^K!2m>0
tion is approxim ately $2,280,000.
Gold reserve ag ain st
— 1 lM \y m
E m ergency currency when prin ted cost a t the
average rate o f $50 per 1.000 sheets. O n each
Cash reserve a ^ a lls f *
M
sheet are fo u r notes running in denom inations
from $5 to $100. O f the $500,000,000 em ergency
currency printed as stated $385,000,000 was put
• Aeso u r c es.
into circulation th ro u g h the banks. T h is c u r
Feb. 19.
F ew 12.
rency was sent to the various sub-treasuries
Gold and gold oertm . . J mam
cates ........................... $18,802,000 *19®34,000
th ro u g h o u t the U nited States a t the expense of
Legal
tender notes.
S i l v e r certificates.
f
the T rea su ry D epartm ent, the average cost to
703.000
subsidiary coin ---the departm ent being 20 cents per $1,000.
kjlediscounts and loans.
740,000
Tfcvestm ents ..................
resources. . . •
922,000
122,000
V 922,000
_ 155,000
T otal re s o u rc e s ........ $21,289,000 J|l,506,000
LIA BILITIES.
X
'g l ' S S f^17,^e».uw
if S w 'o o O
C et
apital
In ............M17,095,000
N
d e p opaid
s its .................
Federal reserve notes
_
^
noo
In circulation ..........
163,000 y
209,OW
Total lia b ilitie s ........$21f289,«HX» $21,505,000
Gold reserve ag ain st
*% f
^ n t . ,“
e8: . . . por
Cash reserve ag ain st
S
W
!« -«
e L t . ^
113*
1180
K e w Y o r k C le a r in g " ,H o u s e .
a c t c a l c o n d i t i o n . DecreM0
L o an ., e tc ............... « . 28«,948,600 * ‘ 31.000
Res. in own vaults 365,176,000
2,975,000
R eserve in federal
1 *Q7 nno
reserve bank . . . .
111,696,000
l,597,OUU
D e c re ase .
t a * n t, ate. ................... 42,20 . *$.600
Ittw rv o In own vault#.. 868,176,000
MBtrve In federal re
serve bank . . . , ............. U2,6D6.0i)0
,#s#rva fn other depos
ita rie s ............................
32 791,000
® demand dep o sits.... 2,156,05-.000
tim « d e p o sits... . . . . .
97,997,000
•culatlon
.......•
39,415,000
(Kate reserve . . . . . . 509,66:5,000
re s e r v e ............... 137,174,450
F e d e ra l
R ESER V E
RC^ r , t a S e . 0ther..
S3.791.000
*18.000
N et demand deposits 2,1J6.^2,000
N et tim e deposits..
2J.»97,000 *4,875,000
C irculation .............. rX ’S&’S S
’
A ggregate reserv e.. 509,663,000 • • £ ^ 8 9 0 6
Excess reserve . . . .
137,174.450
J.OWM.aw
O th e r N ew Y o rk B a n k ..
T-rejis etc
* 555,015.900 **1.58»,800
sS Jflo
::
43950,200 *1,077,500
L « a l to n d iri
.
10 085,400
205,400
To*al aeiS sU .
««,855,800 *18,855,800
•Increases.
L o c a l B a n k C le a r in g * .
Check exchanges of Cleveland clearing
house banks for th a la test week show a gain
of nearly $2,000,000 ov<.r tile &,.Te3POndlng
week last year. W hile «ome of t l i s Increase
I* d'le to 1.115 en try of five staie In stitu
tions Into the clearing house, the gain
In
acord w ith the r t w ^ ^ ^ ^ ^ n u n i b e r of
In som e cases the banks p re fe rre d to have it
lent direct from the treasury here to the individlal banks, in which event the bank paid the re g u
ar express charge, which is considerably m ore
han the governm ent rate. In getting such cur
rency from the various sub-treasuries of the inteior banks, th a t is banks not located in the sam e
:ity w ith the sub-treasury, had to pay express
:harges from the sub-treasury to th e ir banks.
In addition to these charges the banks paid
o the governm ent a m onthly interest ra te w hich
ncreased each m onth th at the m oney w as used
,nd w hich is now running at the ra te of 5 per
ent a year. T his ra te was im posed fo r the purose o f retiring the currency, and th a t it has been
ffective is show n from the fact th a t the am ount
f em ergency currency outstanding has been reuced, O ctober 25 (th e high-w ater m a rk ), from
385.000;«00 to approxim ately $50,000,000.
By
la rc h 1 the em ergency currency is expected to
e alm ost entirely retired.
a
■
B «*e rv ( M o k
V inltor..
t
filers*- a t the fe d e ra l . Reserve ban k of
C ^ re la m J In the ,1a*; -week included II. A.
Sk*.ter. in sisten t e e c r tm r y and tre a ? u re r of
itye Farm ers Savings A T ru st Co. of M ansifeld: H arry P. Wolfe o f Columbus, d ire c
tor of the rerIona! institu tio n ; Geor*s H.
K*ftcers *f th ^ K *n0fac%orcra & T raders N a
tional oi. Duffrr
L. jfi-, K iesew ettcr, vice
jWMident f
Ohio N ational of Columbuai
w. n EJftlotv, casbier <fT the C ity N’Mtional
* r °nsvilU le d ., and W . F. H ock'nu. vlc«
>. !ea* v th a WMrd N atio n al of Buffslo. .,
-
■a^WJ B U l > I n n i i n o
A dispatch from B altim ore s a y s :
In an address before the B altim ore A ssocia
tion o f credit men, F red eric A. Delano, vice gov
ernor o f the F ederal R eserve B oard, explained
the fed eral reserve act “ from the point o f view
o \ the business m an.”
fee said th at it was evident th a t in som e par
ticuW s the true functions o f the federal reserve
hanks have been m isunderstood.
Im p o rta n t a;
they are as the central banks o f th eir district!
they "a re not in any sense w holesalers o f m one'
to their m em ber banks, who, in tu rn , dispense o
retail it at a profit to th eir custom ers.”
•‘T heir gross assets.” said M r. T elano, “ reallbca- only a small ra tio to th a t o f the aggregat
o f the stockholding banks, and, w hile th eir pow er
and influence are very great, th e ir actual currenc
’ssulr.c p o w e r will represent, a f te r all the reservf
have been paid in. only som e 1 3 to 1 5 per cei
o f total loanable funds o f banks in the c o u n tr
n a tio n n ] ortA
”
i, ‘iVaBaBBEW-
A
C
S C
l
V C
A
V
t
A 1 V W
CL
i n
c
u
a
t c
By CHAS. G. DAWES, of Chicago
2
d
9
“ T h e fe d e ra l re se rv e b a n k bill, a s it sta n d s to lay, in je c ts th e b a n y n ^ J ijto jfle s s in to politics.
“U n til it sh a !T "B era aic an y & to * * n d ed I re g a rd
th e bill a s o n e o f th e g re a te s t m en aces w hich
ever c o n fro n te d th e c o u n try . U n le ss it is am en d ed
I believe it w ill b rin g d o w n th e c o m m ercial in te r
e sts o f th e c o u n try in c h ao s a n d financial ruin.
A DANGEROUS POWER.
“ I h a v e th e g re a te s t confidence in S e c retary
M cA doo, b u t th e bill p u ts in to his h a n d s —in to th e
h a n d s o f th e S e c re ta ry o f th e T re a s u ry , a political
a p p o in te e —a g re a te r p o w e r th a n sh o u ld be given
to a n y m an.
“ A t h is w ill h e c an d e p o sit a n y o r all o f the
fu n d s o f th e U n ite d S ta te s g o v e rn m e n t in th e
fe d e ra l re se rv e b an k s. A t h is w ill h e can w ith
d ra w a n y o r all o f th e s e funds.
“ I t is in h is p o w e r to d e p o sit in th e fe d era l
re se rv e b an k s m o re m o n ey th a n all th e n a tio n a l
b a n k s in th e c o u n try h a v e d e p o site d in the fe d era l
re se rv e banks. I t is e q u ally in h is p o w er to w ith
d ra w all th is m oney.
“ T h e m o st im p o rta n t a n d th e le a st discussed
p ro v isio n o f th e b ill is th a t w hich p e rm its th e
fe d e ra l re se rv e b a n k s to co m p ete f o r lo a n s in
th e open m a rk e t w ith th e n a tio n a l banks.
“ P olitical c la m o r a n d th e p re ssu re o f public
opinion w ill fo rc e th e m to so com pete. T h en
w hen th e c red its o f th e c o u n try h a v e been g re a tly
e x p an d e d w il com e th e d a n g e r.
“T h e fe d e ra l re s e rv e bill m u st be a m e n d e d !”
POLITICS INJECTED.
“T h e U n ited S ta te s, fo r th e th ird tim e in its
h isto ry ,” M r. D a w e s sa id , “c o n fro n ts th e p ro b
lem o f a d ju s tin g th e c e n tra l b a n k in g id ea to th e
p olitics a n d th e b u sin e ss o f th e c o u n try . T w ice
b e fo re , in th e case o f th e F ir s t a n d Second b an k s
o f th e U n ite d S ta te s, it h a s trie d a n d failed, w ith
d isa stro u s c o n seq u en ces to th e b u sin e ss o f th e
natio n .
“S eek in g re lie f fro m th e in ela stic ity o f o u r
c u rre n c y a n d b a n k in g c re d its, We h a v e p assed a
fe d era l re se rv e law w hich, w hile in m o st p a rt
c o n fo rm a b le to so u n d econom ics, m ay, unless
am ended, a g a in p lu n g e us in to w id e sp re a d d isa s
ter. T h e fe d e ra l re s e rv e b an k s a re g r e a t c red it
c re a tin g devices, u sin g a s a f o u n d a tio n m oney b e
lo n g in g to o th e r b a n k s, a n d in u se by th em a l
ready as a fo u n d a tio n o f e x is tin g c red its. T h ey
h ave n o t as y e t to a n y e x te n t e x p a n d e d th e ir
c red its, b u t i f th ey did, a n d th e n f o r a n y reaso n
should be com pelled su d d e n ly to c o n tra c t them ,
bu sin ess d is a s te r m u st ensue.
#
NOT "B A N K S FOR BANKERS.”
#
“W h a te v e r m ay be th e ir p re se n t im p ressio n
eventually th e p eople w ill n e v e r c o n sid e r th e fe d
e ral re serv e b a n k s as ‘b a n k s f o r b a n k e rs,’ b u t as
-'b a n k s to be o p e ra te d p rim a rily , a s w ell as second
arily, in th e public in te re s t. T h is w ill re su lt la rg e
ly fro m tw o f a c ts — first, th a t to e x is t a n d still
p re se rv e a re a so n a b le cap a city fo r public u se
fu ln ess in tim e s o f e m e rg en c y th e fe d e ra l re serv e
ban k s m u st lo an chiefly in th e open m a rk e t in
co m p etitio n w ith o th e r b a n k s ; an d , secondly, b e
cause th e c o -o p e ra tio n o f th e U n ite d S ta te s g o v
e rn m e n t in th e m a tte r o f public d e p o sits is a b
so lu tely e sse n tia l to m ak e th e fe d e ra l re serv e
ban k s "effective fa c to rs in tim e o f em ergency.
“ A b o u t th e le a st d iscu ssed a n d yet o n e o f th f
m o st im p o rta n t p ro v isio n s o f th e fe d e ra l re se rv e
law is th a t a u th o riz in g open m a rk e t o p e ra tio n s
a n d a llo w in g th e fe d e ra l re se rv e b a n k s to p u r
chase dom estic bills o f e x c h a n g e w ith o u t th e
in d o rse m e n t a n d g u a ra n ty o f m em b er b an k s
N o th in g is e a s ie r th a n to c h an g e th e fo rm o f o r
d in a ry c o m m ercial p a p e r in to do m estic bills of
e x ch a n g e. U n d e r th is p ro v isio n , e ith e r in its
p re se n t o r a m e n d e d fo rm , th e fe d era l re serv e
b a n k s, in n o rm a l tim es, m u st chiefly em ploy th e ir
fu n d s .
NOTE ISSUES AND INTEREST RATES.
“ O v e r a y e a r a g o I p o in te d o u t th a t in n o rm a l
b u sin e ss tim e s, b a n k s w ill n o t p a y a h ig h e r ra te
to b o rro w n o te s f ro m fe d e ra l re se rv e b a n k s th a n
th ey n o w p a v in open c o m p e titio n f o r th e m onev
o f th e d e p o sitin g public— to - w it: a b o u t 3 p e r cent
f o r tim e m o n ey a n d 2 p e r c en t f o r d em an d m oney.
T h is is th e re a so n w h y so fe w fe d e ra l re se rv e
n o te s h a v e th u s f a r been issu ed . I f th e fe d e ra l
re se rv e b a r k s sh o u ld lo a n th e ir m oney to th e
m em b e r b a n k s a t th ese low ra te s in n o rm a l tim es,
th e y w ould em ploy so m uch o f th e ir re so u rc e s to
pay th e ir e x p en ses a n d div id en d s as g re a tly to
im p a ir th e ir u se fu ln e s in tim e s o f em ergency.
“ L et m e illu s tra te th is a n d th e v e ry g r e a t p a rt
w hich th e S e c re ta ry o f th e T re a s u ry m u st h e re
a f te r play in th e finances a n d com m erce o f th e
c o u n try , by r e fe r r in g to th e F e d e ra l R e se rv e B an k
o f C hicago. A f te r m a in ta in in g its 35 p e r cen t
re se rv e o n its d ep o sits, it h a s w ith o u t public d e
posits only a n o te issu in g capacity, based upon
its p re se n t b u sin ess, o f a b o u t $64,000,000, w h ile
m a in ta in in g behind th em a 40 p e r cen t g o ld r e
serve. A n incom e o f a b o u t $700,000 a y e a r will
soon be n e ce ssa ry to pay its expenses, p ro v id e
f o r d iv id en d s, a n d th e a cc u m u la tio n o f a p ro p e r
su rp lu s as a sa fe g u a rd a g a in st losses. I f it loans
$28,000,000 o f n o tes a t 2 14 p e r c en t to m em ber
b an k s to p ro d u c e th e $700,000, it w ill h ave a n o te
issu in g cap acity le f t f o r tim e s o f em ergency of
only $36,000,000, u n less th e S e c re ta ry o f th e
T r e a s u ry com es to its a ssista n c e w ith public de-.
posits.
IMPAIRED POWERS.
“ T h e in ad e q u ac y o f th is a m o u n t fo r a tim e
o f e m e rg en c y m ay be ju d g e d by th e fa c t th a t th e
d e p o sits o f th e m em b e r n a tio n a l b a n k s in th e
C h ica g o d istric t a lo n e to ta l th e g re a t a m o u n t o f
$1,005,234,535, a n d th a t d u rin g th e financial crisis
o f th is la s t fall th e b a n k s o f th e o n e city o f C h i
cago re q u ire d th e u se o f $43,000,000 in A ld ric h V re e la n d em ergency n o tes a n d c le a rin g h o u se
certificates, th e g re a te r p a r t o f w h ic h w e re used
by n a tio n a l banks.
“ If, h o w e v er, th e fe d era l re s e rv e b a n k w ould
em ploy in n o rm a l tim es its fu n d s in th e open
m a rk e t a t 4 l/ 2 p e r cent, it w ould re q u ire o nly $15,
500,000 in lo an s to p ro d u c e th e need ed $700,000,
a n d its n o te issu in g capacity in tim e s o f e m erg
ency th e n w o u ld be $48,500,000, w ith o u t g o v e rn
m ent deposits.
NOTE ISSUING CAPACITY.
"L et us now c o n sid er th e note issu in g capacity
o f th e com bined fe d e ra l re serv e b a n k s, based
u p o n th e ir s ta te m e n t o f D ecem ber 24. A fte r
m ain tain in g th e 35 p e r c en t re se rv e upon their
d e p o sits th ey w ould h a v e le ft $170,890,900 gold as
a basis f o r n o te issues, w hich u n d e r a 40 p e r cent
re se rv e w ould give th em a note issu in g capacity
o f $427,225,000.
A ro u g h estim a te o f th e a n
n ual expense, d iv id en d a n d su rp lu s req u irem en ts
o f th e tw elve fe d e ra l re se rv e banks is $4,500,000
and to p ro d u c e th is in n o rm a l tim e s $100,000,00(
o f its n o te issu in g cap acity m u st be u se d a t 4Y .
p e r c en t in th e open m a rk e t, o r $180,000,000 ir
lo an s to m em b e r b an k s a t 254 p e r cent. I f th(
first c o u rse is follow ed, $327,000,000 o f a not<
issu in g capacity rem ain s f o r a tim e o f em ergencj
a n d $247,000,000 if the la tte r c o u rse is follow ed
A n d y e t th e a g g re g a te n e t d e p o sits o f th e n a tio n a
b a n k s o f th e U n ite d S ta te s, to p ro te c t a b n o rm a
flu ctu atio n s in w hich th is sum is designed, a g g re
g a te th e im m ense sum o f $7,291,342,479, to saj
n o th in g o f th e deposits o f th e s ta te ban k s o f th<
c o u n try .
GOVERNMENT DEPOSITS.
"T h is b rin g s us to th e e n o rm o u s pow er ovei
th e business o f th e c o u n try giv en to th e Secretary
o f th e T re a s u ry by th e p ro v isio n s o f law , a u
th o riz in g him , in h is unqualified discretion, tc
dep o sit the g e n e ra l fu n d h o ld in g s o f th e U nitec
S ta te s T re a s u ry in th e fe d e ra l re serv e banks. Is
it g en era lly re aliz e d th a t if th e S e c re ta ry o f th<
T re a s u ry sh o u ld dep o sit all th e p re se n t general
fu n d h o ld in g s o f th e U n ite d S ta te s T re a s u ry ir,
th e fe d e ra l re se rv e b an k s h e w ould h av e a larger
a m o u n t to his c re d it th a n all th e n a tio n a l banks
o f th e U n ite d S ta te s p u t to g e th e r?
“T h e re se rv e deposits in th e tw elve fe d e ra l r e
serve b a n k s now to ta l $249,786,000, w hile th e S ec
re ta ry o f th e T r e a s u ry w ould h ave su b je c t to his
check $255,722,000. I f he m akes th is deposit, and
if th e fe d e ra l re serv e b a n k s u se it in th e ir b u si
ness, w h o w ill be th e re al p o w e r in th e s itu a
tion, th e F e d e ra l R eserv e B o a rd o r th e S e c re
ta ry o f the T re a s u ry ?
“ S u p p o se he sh o u ld deposit th is im m ense sum
$99,700,000 o f w hich is in g old a n d th e b u lk o:
th e balance in la w fu l m o n ey (w h ic h w ould re
lease g o ld h e ld by th e fed eral re serv e banks
a
l o i tneir 35 per cent reserve yn
•sits to be used as a basis fo r note issu es), ant1
ppose $400,000,000 of additional federal reserve
>tes would go into circulation upon the basis oi
le governm ent’s deposit, upon w hat would de
end the entire business and credit of th(
ountry?—certainly upon the discretion of the
Secretary o f the T reasury o r the political admin■stration of which he is a part.
“We have no need of additional circulation in
this country in norm al tim e s; it has only been in
crop moving period and tim es of financial crisis
that our present volume of currency has proved
insufficient. W e have been suffering from the
inelasticity, not the dearth o f currency. In the
m eantim e the public must be educated to the
dangers of the law in its present form and efforts
Tiade in Congress for its correction. It is the
Host im portant question today before the A m erian oeonle.”
/ith in such lim its and su b k e t to such modificaions as m ay be im posed by the board. F ed era
•eserve banks w5tl be allowed to establish the
rates a t w hich they will deal in acceptances.”
T he board says p referen tial tre a tm e n t should
be allow ed on acceptances b earing the in d o rse
m ent o f m em ber-banks, and will sanction such E
preferential, but points out th at fe d era l reserve
banks w hich desire to purchase such paper not sc
indorsed m ay do so, though they should restricl
operations to acceptances bearing som e othet
signature th an th a t o f the draw er a n d acceptor
preferably th a t o f a bank o r banker.
An acceptance, the regulations say. m u st beat
or be accom panied by evidence sa tisfac to ry to s
reserve bank th a t it originated in an actual bona
fide sale o r consignm ent involving im p o rta tio n oi
e x p o rta tio n o f g o o d s.
“ In fra m in g th eir policy with respect to ac
ceptances,” says the board, “ fed eral reserve
banks will have to consider not only local d e
mands to be expected from th eir ow n m em bers
but also requirem ents to be m et in o th e r d istricts
The plan to be follow ed m ust h i each case adap!
itself to the constantly 'V arying nee'ds "of the
r m in fr v ”
-•
Federal Reserve Board On
Acceptances
A W ashington dispatch s a y s :
A nother step in the development of Am erican
finance designed to bring it m ore in accord with
that of o ther nations was taken by the federal
reserve board last week w hen it issued regula
tions governing the discount of purchase of
bankers’ acceptances.
The federal reserve act authorized national
banks to purchase acceptances based on the im
portation and exportation of goods, and the
bo ard ’s regulations indicate how banks m ay avail
them selves of the aid of the federal reserve
banks in securing the rediscount of such paper,
and lay down the lines by which the reserve j
banks them selves will be guided in p u rc h a se s!
of acceptances in the open market.,
^Before the federal reserve act was passed do
mestic dealing., in acceptances were confined to
state banks, tru st com panies and private banks.
H ow far Am ercian banks now m ay proceed in
taking aw ay from L ondon a share o f this busi-.
ness, a considerable part of which is done with
South Am erica, officials here do not preten d to
know.
Although under the new regulations the re
serve banks are not barred from ou trig h t p u r
chases of acceptances, the board indicates a
present preference f o r discount o f such paper
presented by m em ber o r other banks. T he board
announces th at acceptances m ust be "payable in
dollars in the U nited States,” a step to w ard m ak
ing the do llar a t least one of the m edium s of
international exchange.
STILL IN INFANCY.
•
W eeks have been spent by the board in pre
paring the resolutions, and many conferences
have been held with the A dvisory Council, some
of t h e 'governors o f federal reserve banks and
the federal reserve agents.
“T he acceptance is still in its infancy in the
field of A m erican banking,” the board says in a
circular.
“ How rapid its developm ent will be c a n n o t1
be fo re to ld ; but the developm ent itself is certain.
O pportunity is given by the fed eral reserve act
to assist the m ovem ent in this new direction.”
T h e c ircular adds th a t p resen t regulations are
to he regarded as a first step to be extended as
circum stances w arran t.
“ T he acceptance is the standerd form o f paper
in the w orld discount m ark et,” it continues. “By
reason of its bein g readily m arketable it is widely
regarded as a m ost desirable paper in the second
ary reserve o f banks and will help to provide an
effective su b stitu te fo r the call loan.” Its grow th,
however, will depend upon the ability o f th e'
A m erican m ark e t to a d ju st its rates effectively
to those p revailing in o ther m arkets fo r paper of
this class.
MAY ESTABLISH RATES.
“F ederal re serv e banks m ay from tim e to
tim e subm it fo r the approval o f the bo ard m ax
im um and m inim um rates w ithin w hich they
hr a uthorized to deal in acceotances;
f e d e r a l iv e s e iv e u tu m o u tie m e n
<
T he weekly rep o rt o f the combined conditbn
of the tw elve federal reserve banks, announc.d 1
by the F e d e rr’ R eserve B oard, was as follow s: I
’
RESOURCES.
F eb ru ary 12
Cash on hand, gold coin
and certificates .. ..$259,256,000
Legal
tenders,
silver
certificates and subsidiary c o i n ......................... 22,117,000
F e b ru a ry 5
$256,217,00
22,641,00
T o t a l ................... .. ..$281,373,000
R ediscounts ...................... 17,090,000
I n v e s t m e n t s ...................... 15,546,000
Due fro m fed. reserve
banks ; in tra n sit . . . .
4,462,000
All o th er a s s e t s ..............
6,551,000
$278,858,0016,420,001
14,704,001
T o t a l ...............................$325,022,000
$322,224,00C
5,419,00(
6,823,00(
LIABILITIES.
C apital paid in .............. $ 35,841,000
R eserved deposits .. . . 284,996,000
Federal reserv e notes in
c ir c u la t io n ....................
4,185,000
$ 35,123,000
284,101,000
3,000,000
T o t a l .............................. $325,022,000 $322,224,000
Gold re serv e against lia
b i l i t i e s ............................
91.1%
91.0%
Cash reserve against all
l ia b i li t ie s .......................
'JH.S'/b
99.0%
*Casb reserv e against
all l i a b i l i t i e s ................
99.7%
99.6%
Federal reserve notes in
c ir c u la t io n ..................... 20,106,000
18,702^000
Gold in hand from fe d
eral reserve agents fo r
retirem ent of o u tstan d
ing notejs ........................ 15,921,000
15,702,000
Net liabilities o f reserve
banks upon o u tstan d
ing notes .......................
4,185,000
2,000,000
.Maturities within th irty
days .. ..
..............
7,884,000
7,714,000
M aturities w ithin sixty
„ /? a v s ............ ..................
6,126,000
5,945,000
U ther m a t u r i t i e s ...........
3,080,000
2,761,000
*A fter setting aside 40 per cent gold reserves
against federal reserve notes in circulation, and
a fte r deducting item s in tran sit betw een fed eral
reserve banks.
u o o m e t u n isanK A c cep ta n ces
^
T h e G uaranty T ru st Co. of New Y ork has
issued an interesting pam phlet on the subject of
bank acceptances. Com ing as it does ju st a t this
tim e when the Federal Reserve B oard has issued
regulations governing the discount paper of this
character, it is naturally unusually apropos. The
lam phlet treats the subject from the standpoint
j f the laym an and illustrations of sample acceptinces are included in its pages. A table also is
;iven which indicates the attitude of the banking
aw s of the various states w ith regard to bank
cceptances. W e understand th a t copies may be
ecured upon application to the G uaranty T rust
: 0 . o f New' Y ork
.
F E D E R A L B A N E S ' OPERATIONS.
,
C h a n g e s In t h e f e d e r a l b a n k
t o t a l s b u t t h e official a n a l y s i s p u
re p o rts w ere n e t
k t o th ®
t o u t y e s t e r d a y by t h e f e d e r a l r e s e r v e
h o a r d s t a t e d t h a t t h e s o u t h h a d b e e n d i s c o u n t i n g w ith e x c e p t i o n a l f r e e
d o m , th e m o v e m e n t h a v in g b e e n o ffse t b y d e c re a s e s in t h e n o r th .
The
s o u t h i 3 e v i d e n t l y u s i n g th e r e d i s c o u n t p r i v i l e g e to r e t i r e i t s e m e r g e n c y c u r
ren c y .
T h o J jo iy jJ J r t a te ^ tf c a tf
iM ^ J & S fe te s a f r e s h i m p e t u s t o t h e l o a n
a n d d is c o u i ^ J s S rtl S iU » ^ e i)ifili^ w e e k o w in g to th e lo w e r in g o f t h e r a t e
In N e w T o rk .
T h e 4 p e r c e n t r a te f o r n in e ty d a y p a p e r, it p o in ts o u t, is
l o w e r t h a n l i k e ra te s m a i n t a i n e d b y J b e E u r o p e a n c e n t r a l b a n k s .
L oans
a n d d i s c o u n t s f o r t h e w eek i n c r e a s e d $ 6 7 0 , 0 0 0 .
T h e N e w Y o r k b a n k sta te m e n t d i s c l o s e d a l o s s I n c a s h a n d & m o d e r a t e
d e c r e a s e I n su rp lu s.
T he outco m e w a s n o d o u b t d u e t o t h o s u s p e n s i o n
. i n m i d a i r of th e h u g e a m o u n t o f f i n a n c i n g p u l t h r o u g h in th e p e r i o d
p r i o r t o te n d a y s a g o .
A t t h a t tim a t h e p u b l i c w a s t a k i n g h o l d n i c e l y
i n d u n d e r w r i t e r s w e re e n co u rag ed t o t a k e o n a h u g e m a s s o f n e w s e c u r i ! e s t h a t h a d b e en a w a itin g th e a u sp ic io u s m o m e n t .
T h e I n te rn a tio n a l
•o m p lica tio n s in te rv e n in g cam e i n c o n v e n i e n t l y u p o n t h e h e e l s o f t h e s e
s re n ts a n d be fo re t h e public h a d h a d t i m e t o r e l i e v e th o s y n d i c a t e s . H e n c e
t t t l e lia s b e en h e a rd o f new issues s i n c e .
A t t h e c lo s e o f t h e w e e k P i tt s b u r g r e p o r te d t h a t t h e C a r n e g ie S te e l
C o m p a n y is o p e r a t i n g 6 5 p e r c e n t o f i n g o t c a p a c i ty , 9 0 p e r c e n t o f I ts
' P l a t e c a p a c i t y , a n d t h a t t h e S t e e l C o r p o r a t i o n m i l l s a s a. w h o l e a r e g o i n g
14 p e r c e n t o f i n g o t c a p a c i t y .
B u y e rs h a v e b e e n s p e c ify in g u n u s u a lly
-« » )v a r o in s t th e ir c o n tr a c ts w h ile n e w b u s in e s s h a g b e e n fa ir.
CITY 01MEW PIHNflCLE
Reserve Institution in Three Months of Practical Oper
ation Has Made Cleveland the Hub of
■■ ■■
.
Money Activities of Four States Revolve About Gold
Reservoir Here—Eastern Bond Houses
Establish Local Offices/}}
______________________
IQ
B Y H . S. E O SF JT H A L .
* * l$
A fte r six m onths o l th e fe d e ra l reSrvc system , w hat h a s i t done for
tho c o u n try ? W h at fo r Cleveland?,
1
The results a re re a l tV lay. T hey wil be a p p are n t more and m ore as the
m onths go by and new fields of work u re entered. T hey w ill be teste d
w henever a g rin th e n atio n passes th ro u p financial shock.
*
The reserve system has given th e Jnited S ta te s new confidence in its
banking stru c tu re . T he system and it tw elve reserv o irs o f gold, in e x is t;
ence th ree m onths, h ave m a d e .it imrSSible, it is confidently believed, th a t
acute m oney strin g en c y shall e v er ag/n rack the co u n try . T he re serv e a ct,
in th e o rd in a ry course of affairs,. gK« the business m an no new* fa c ilitie s
fo r borrow ing, b u t i t gives bi9 commtciai bank a n u n fa ilin g supply of cash
a i d c re d it; the b an k alw ays w i i r t a v fa cilitin s f o r m a k in g th e .„ a n s w hich
are th e foundation of 93 per cent, oftli larg e r c u rre n t business operation*
I f m e m b e r b a n k s r e f u s e to g ra n tp ro p e r c r e d it th e re g io n * ! in s titu tio n s
c a n g o in N .) t h e o p e n . m a r k e t a n a l o i d u e e t , b u t t h e y w i l l e x e r c i s e t W n o w e r o n l y i,n d e i e x t r a o r d i n a r y o irc u s ta m c e s .
•’ ^
T h e r e s e r v e s y s t e m t u . «lim lnate4f’"'
__ 'to o t s *
ft c a n
------___
____u g h
m i s m a n a g e _____
of
o r b a d h ic k o r
b u t n o b u s in e s s s h o u ld e v e r
la c k m o n e y fo r le g itim a te c u r en t n e e d s b e c a u s e o f c o n tra d ic tio n
i th e c ir c u la tin g m e d iu m a n d c o n ( U e .j t t i g h t e n i n g o f c r e d i t w h i c h
b ro u g h t ru in so o f te n in th e p a s t.
capital
all of
T b l i t t x t o t i p 'l l o n p .
T h e ' fe d e ra ! r e s e r v e b o a rd is w o rk > th e f o llo w in g n e w l in e s —
to p r o v id e c o n v e n ie n t f in a n c in g f o r
in fo re ig n tr a d e f r e e f ro m th e
ll& n c e
and
c o m m is s io n s
of
in k * o f r iv a l n a tio n s — to e s ta b lis h
d e g re e s
a
c o u n try w id e
check
c le a r in g s y s te m
w h ic h w ill e x p e d ite
th e
n a t i o n ’s b u s i n e s s a n d
p e rh a p s
m a k e th e p e rso n a l ch eck a c u rre n t
m e d iu m o f p a y m e n t in a n d b e tw e e n
a ll p la c e s fro m c o a s t to c o a s t.
T h e s e in r o u g h o u tlin e a r e s o m e o f
t h e b e n e f its a c c r u i n g a n d to a c c r u e
f r o m t h e l a r g e s t b a n k i n g s y s te m in
r e s o u r c e s a n d e x te n t th e w o rld h a s
e v e r s e e n . A ll o f t h e p u r p o s e s to w a r d
w h ic h e ffo rt is b e in g d ire c te d c a n n o t
b e a c c o m p lis h e d t o
th e
fu ll
u n til
m o re , s ta te
banks
a n d tru s t
com
p a n ie s jo in th e
s y s te m .
S te p s a re
b e i n g t a k e n w i t h t h e e n d t o \> rin g
a b o u t t h a t e n la rg e m e n t.
M e a n w h ile
th e
c o u n try
has
s te p p e d
fro m
an
o u tg ro w n
," n d
m is tru s te d
fin a n c ia l
fo u n d a tio n to
o n e in
w h ic h
b ro ad
c o n fid e n c e is im p o s e d .
W b u t f o r C l e v e la n d t
t is p e r t i n e n t t o i n q u ir e in p r o v in ’ fa s h io n w h a t h a s th e F e d e ra l R «B a n k 'o f C le v e la n d
done
fo r
C l e v e l a n d 1'
I t h a s a f f o r d e d t h i s c ity
11 k . a d v a n t a g e s f u r n i s h e d t h e r e s t o f
! h a c o u n try .
F u rth e r, it h a s m ad e
C le v e la n d th e h u b a r o u n d w h ic h r e
v o lv e s th e c o m m e rc ia l b a n k in g a c
t i v i t y o f a n a r e a c o n t a i n i n g 7 < il n a
tio n a l in s titu tio n s . T h e d is tr ic t w h ic h
in c l u d e s a l’ o f O h io , t h e w e s t e r n t h i r d
o f F e a n s v lV iin ia , th e p a n h a n d le o f
W e s t V irg in ia
and
n e a rly
h a lf
of
K e n t u c k y is 5 0 0 m ile s a c r o s s a t i ts
w id e s t.
I t e x t e n d s f r o m B e a r l a k e in
th e n o r th w e s t c o rn e r o f P e n n s y lv a n ia
a w a y d o w n to P in e K n o t a n d R e d a s h i
J n K f e n tu e k y o n tl« e b o r d e r o f T e n
n essee.
T h e o ffic e rs a n d d ir e c to r s o f
7 61 b a n k s in th is a r e a , in c lu d in g C in
c in n a ti, P itts b u r g , C o lu m b u s , L e x in g
to n , W h e e lin g , T o le d o , n o w lo o k to
C le v e la n d f o r th e r e g u la tio n s u n d e r
w h ic h th e y
conduct
th e ir
b u s in e s s .
T h e y h a v e s e n t t o C le v e la n d about
* 4 ,0 0 0 ,0 0 0 i n g o l d a n d g o l d c e r t i f i c a t e s
in p a y m e n t f o r s to c k .
T h e y h a v e oil
d e p o s i t h e r e a b o u t $ 1 7 ,0 0 0 ,0 0 0 b e s i d e s .
B e tw e e n th e m e m b e r b a n k s a n d th e
re g io n a l in s titu tio n
m oney an d
th e
p a t e r e v id e n c e s o f i t a r e c o n s ta n tly
p a s sin g b a c k a n d fo rth .
T o th e r e
g io n a l in s titu tio n th e m e m b e r b a n k s
w i l l l o o k f o r d i v i d e n d s o n t h e i r stock.
*O ne b y on e th e s e m e m b e r b a n k s
t a k e a t r i p to C le v e la n d to s e e th e
s te w a r d s o f th e ir fu n d s a n d in c id e n
t a l l y t o g e t a c q u a i n t e d w i t h t h e c ity .
T h o ? fo rm a c q u a in ta n c e w ith C le v e
la n d b a n k e rs a n d e s ta b lis h n e w r e la
tio n s .
T hey
b rin g
th e ir
fa m ilie s ,
sp e n d a few d a y s h e re , sh o p h e re ,
s p r e a d C le v e la n d p u b lic ity .
K ew B o n d O flleea.
W h e th e r o r n o t th is c o n c e n tra tin g
h e re, of o u t - o f - t o w n b a n k e rs is the
cause, one of t h e m o s t p o w e r f l i l n a
tional b a n k s i n t h e c o u n try h a s e s
tab lish e d a b r a n c h o f i t s bond d e
p a r t m e n t here, a n d a n o t h e r big e a s t
ern in v e s tm e n t h o u s e h a s set u p bond
d istrib u tin g q u a r t e r s here since th e
r a s e r v e i n s t i t u t i o n opened.
1 W e m ay
llttlo comment the fact
th s t the regional £ « n k has brought to the
city tvventy-two p erto an en t resident*, most
of them ta n k in g ex p erts an d moBt of them
w ith families. N or need stress bo laid on
the fact th a t th e in stitu tio n occuplos sub
stan tial p arts of th ree floors of a downtown
budding and soon w ill need more sp aceth a t it purchases here a m ass o f supplies
such a s typew riters, adding m achines, sta, tionery, printing, fu rn itu re, other supplies —
, th a t It keeps the naJneT of tli© cfUy>ami her,
a ctiv itie s constantly before the eyes of W ashi lngton and tho reader* of financial lite ra tu re
Hand dally c«w«pe.petv; also, w hich i f selfish
UKUJSKb S U P P L Y O F F E D E R A L N O TE S. -I
I
S e c r e t a r y M c A d o o y e s t e r d a y a n n o u n c e d h i s i n t e n t i o n t o p r i n t * r .,v
0 0 0 , 0 0 0 o f f e d e r a l r e s e r v e n o t e s , w h i c h w i l l b e s e n t t o f e d e r a l rc
b a n k s o n dem and.
T h i s is p ro b a b ly t h e a n s w e r to th e a d v o cates,
b a v e s p ru n g up of la te In so m e n u m b e rs, of* a p ro p o sa l to e x te n d jv>>
a n o th e r y e a r th e o p e ra tio n s of th e A ld ric h -V re e la n d
law. T h a t e x p e d ie n t h a s se rv ed its» p u rp o se a n d w ill
----- ---on p re se n t tim e lim ita tio n s.
r <*
N e w Y o r k e x c h a n g e a t I e a d i n g l < ’ia n a d l a i v ' ? f t T e P c m
e m e rg en c y c u rre n c y I
be allow ed t o e x p i n
— * ->-■«*
l^ n u e s In a b a d w a y .
W it h i n t h e p a s t f e w 'd a y s r a t e s h a v e a d v a n c e d t o % o f 1 p e r c e n t.
The
J is c r e p a n c v is m o s t m a r k e d w h e n t h e lo w c o s t o f s h ip p in g g o ld f ro m
M o n tr e a l t o N e w Y o r k is c o n s id e r e d .
T h e e x p e n s e o f t h e o p e r a t i o n is
l l m o s t p u r e l y n o m in a l, w h ile in t h e c a s e o f s t e r l i n g e x c h a n g o t h e c o s t,
ilw a y s a n ite m to b e c o n s id e re d , lia s e n h a n c e d
c o n s id e ra b ly fro m
th e
tiig h o c e a n f r e i g h t s a n d i n s u r a n c e a s w e ll a s f r o m
th e lo n g e r a v e ra g e
j e r i u d in t r a n s it .
r * C P r 'f \ l Q l S
*
I n th e s e d a y s o f s t r a n g e h a p p e n i n g s , ith i - l U r l f jf p i Wfcnifng u n u s u a l
h a t th e $ 1 0 , 0 0 0 , 0 0 0 g o l d e n g a g e d f o r s h i p m e n t f r o m O t t a w a t o N e w
f o r k h as n o t y e t b e e n r e f l e c t e d In t h e N e w Y o r k b a n k f ig u r e s . G o t h a m
>ankers, in f a c t , h a v e s e e n n o t h i n g o f t h e c o n s i g n m e n t . P u s s i b l y I t h a s
»een sh ip p ed a ro u n d b y w a y o f V a n c o u v e r i n o r d e r t o b e f o o l a n y p o s s i b l e
u r k l n g s u b m a rin e i n t h e S t . L a w r e n c e .
W h e r e v e r it m a y b e , it is s ti ll
i K u r e d i n 4 h e T ta ru k o f l ^ n v l i n r i w
•to contemplate, th a t it proviosg for Cleve
land banks quick facilities of ovory sort
they may require from the Institution; also
th a t It has appreciably increased the busln * « of Cleveland express offices #nd tran sit
insurance sgeuoies.
Follow th e publicity Idea a little fu rth er
and one S-es th a t th e drafl on Cleveland,
when the clearing system becomes effective,
can s u p p lsrt th e d ra ft on New York which
Is now used to settle a ll but purely local
rem ittances. The d ra ft on Cleveland will
servo especltvUy well wlthirt the entire
Cleveland reserve d istrict. It will appeal to
hankers and consequently to thoJr custom ers
because It Will elim in ate the deramble and
expense now so often resulting from the
scarcity o t New York credits in the Interior.
.The
system IS educfctlfjg the coun
try , and Cleveland aa one of the centers Is
g ettin g lta full sh are of this education, as
to the operations of rediscounting, accepting,
currency issuance an d the larger finance op
erations. which until recently w ere m ysteries
to all b u t a handful of experienced bankers
a n d economists.
• 1 *•
./ *
<2-
1-
)
w
ch the business w orld m ay h n d itself equipped.
T. .
,
expenses
sh o u ld
decrea se.
I t is stated th a t the expenses, n o t only o f the
Reserve B oard itself, but o f the various district
reserve banks, will be proportionately heavier the
first y e ar than during succeeding vears
The
papers a n d dyes, together w ith p rin tin g required
fo r-th e initial issue o f the f e d e n l r p » n ,
cost $208,500. T h is expense need not be incurred
again fo r several years.
incurred
T e profits to he m ade by the R eserve banks
wi
irobably be largely derived from the redisW
o f com m ercial paper. T h e last re p o rt of
, a.s o f F eb ru ary 19, show s bills discou ted and loans am ounting to *17,762.000. About
f n l , ? V h,Y a r
m atu r« i” 30 days, and thcre,Z i £ /
? '- eSt r -tes> w hich is 4 w cent
4- f Per ce" t m various districts. T he a v er
age re tu rn on al rediscounts u n d e r existing rates
is probably about 5 per cent. O n this basis r .
r discounts are producing re tu rn s a t reserve banks
a t the ra te o f $900,000 per year. M em bers of TFic
R eserve B oard expect ;he rediscount business to
grow rapidly, how ever. E arnings on the present
am o u n t o f rediscounts w ould adm ittedly leave
m ost o f the banks with a deficit on operations fo r
the year.
HEAVY DIVIDENDS TO PAY.
T h e ra te s of the reserve banks will probably
ilw ay s follow the private ra te s of discount and
quite reach them . T h is is the practice of
F ed era l iJan k s W ill F a y , xys H a m lin never
the B ank o f E ngland, and d irec to rs of regional
A W ashington dispatch s a y s :
banks have indicated that this policy will be fo l
“I believe th a t all o f the fe d er
re serv e A a n k s lowed in the A m erican reserve system . T his will
will m ore than m eet expenses luring the first rem ove th e reserv e banks fro m the com petitive
year of their operations.” said Gov. C harles S. field.
H am lin, of the F ederal R eserve B oard. "It w ould
T h e larg est item the reserve banks have to meet
m eet expenses the first year. P riv a te en terp rise is the dividend g uaranteed m em uer banks on the
is ordinarily posed as a sta n d a rd o f governm ental paid in capital. T h is is not properly chargeable,
success. Instead o f w aiting several vears, I think how ever, as expense o f operation. A t the p re s
the reserve banks in th e ir rttrst year will m eet ent tim e $36,056,000 has been paid in, and a 6
expenses.
oer cent dividend on this sum , which will be
Gov. H am lin s prediction affects a very practical largely augm ented before the close of the year,
question th at w as raised before the passage of w ould call fo r $2,160,000. I f the banks do not
the federal reserve act, and w hich has been the m ake enough m oney to pay this dividend the b u r
subject o f com m ent am ong priv ate bankers since den o r p a rt o f it will go over another year, the
the system w as inaugurated. It has been thought dividend on capital being cum ulative.
th at the reserve system m ight prove to be a
T w o m onths ago the R eserve B oard adm itted
huge and expensive burden fo r private banking that it could not estim ate accurately the expenses
business to carry . T he expenses, in the long run, o f the reserv e system . Gov. H am lin ’s prediction
are paid by custom ers, but it may be th a t this is taken to m ean th a t the reserve officials have
expense, to be reim bursed largely th ro u g h re d is learned m uch in the last sixty days about the
counts, will not be an actual burden 011 com m erce probable requirem ents of the regional in stitu
because of the additional credit facilities with tion^. ... —
— ,
.
O rtH A T iU IN S OF THE F E D E R A L B A N K S,
D is c o u n ts a n d I n v e s tm e n ts o f t h e f e d e r a l b a n k s in c re a s e d a b o
1 4 ,0 0 0 ,
000 f o r t h e w e e k . T h e se c o m b in e d ite m s n o w t o t a l $37,900,000. De:
its i n
c r e a s e d n e a r iv
« * i« *«j»»>i1iti p a t i o n o f t h e r e s e rv e
i n k s In
t h e fin a n c ia l ^<-»vkle»-9<-rw a
k e e p in g p a c e w i t h t h e i r a c
c u m u la tin g
reso u rc e s.
I t is e v id e n t t h a t e x tr e m e c o n s e r v a tis m
s till m a r k s
th e b a n k s a n d th e r e is to b e n o d e p a r t u r e f r o m t h a t
a n tic ip a te d , h o w e v e r, t h a t s in c e r e c e n t ru lin g s r e g a r d in g
a t i o n s i n a c c e p t a n c e a r e n o w m o r e t h a n a w e e k o ld t h e
v e r y s o o n t o e x p a n d t h e i r a c t i v i t i e s i n th js
rc
C t ' V •-
T he X ew
JJO.OfO.OOO i r.
ra te s show ed
m encem ent o
th e o p e r a tio n s of
policy . I t m a y b e
open m a rk e t o p e r
tu e r v e banks are
a s u b s ta n tia l
T o r k b a n k s t a t e m e n t a g a i n s h o w e d a s u b s t a n t i a l in c re a s e of
lo a n s , w ith n o m a te r ia l c h a n g e in th e
cash
a c c o u n t. M oney
a h a r d e n i n g t e n d e n c y d u r i n g t h e u n c e r t a i n p e rio d a t t h e c o m
f t h e w e e k , b u t t h e r e w a s a n e a s i e r t o n e ia t » r . ‘
/ 6 '
S I A I b M t N I S Uh B A N K S
F ed eral R e se r v e R e p o r ts
FEDERAL R E SE R V E SV STEM .
RESOURCES.
Feb. 10
Feb. 12
Gold coin and certifi
cates ..............................$251,808,000 $259,256,000
Legal tender notes, silver certificates, sub
22.117.000
sidiary c o i n ................ 29,887,000
Bills
discounted
and
loans—
7.884.000
7.721.000
T hirty d a y s .....................
6.126.000
6.909.000
Sixty days ......................
3.080.000
3.132.000
O t h e r ................................
15,546.000
I n v e s tm e n ts ..................... 15.314.000
Due from federal re
serve hanks—
4.462.000
2.766.000
In t r a n s i t ..........................
6.531.000
8.917.000
All o ther resources . . . .
______
T otal resources ..
..$326 454,000
$ 325,022,000
L IA B IL IT IE S .
' apital paid i n ...............$ 36,056.000 $ 35.841.000
Reserve deposits . . .. 285,468,000
284,996,000
federal reserve notes in
circulation (net am t.)
4.930,000
4,185,000
T otal liabilities . . ..$326,454,000
Sold reserve against net
liabilities, per cent . .
87.5
Cash reserve against net
liabilities, per cent . .
97.9
$325,022,000
91.1
98.8
LIA BILITIES.
Capital paid in .........$ 36.069,000 $ 89,006,000
Reserve deposits ---- 290,386.000 285.468,000
4,980.000
Rediscounts of the federal reserve sys- Fed. res. notes in clr. 5,828,000
:em Increased $2,700,000 and investm ent*
Total liabilities ...$331,783,000 $826,454,000
*2.100,000 In the la te st week. Gold resourcps Gold res. a g a in st net
liabilities, per cent,
86,6
87 5
Jecreased $2,900,000, following a decrease C ash
res. a g a in st n£E f“ P, f
.
In the sam© Item of $7,400,000 la st week,
Uabilltes, per c e J T t Q **6.7
^ 7,5
rh ls is due to the re tu rn to subscribers of
C le v e la n d R e g to n a l H n n k . '
the gold held by th e New York regional
RESOURCES.
i
bank for account of the gold pool; these
, ,_
,_
_
Feb. 26.
Feb. 19.
nmds w ere turned over to the Institution as ,Gold,
gold
certific
a
te
s.$18,481,000
$18,80*,000
fiscal ag en t and need for them to straighten Legal tenders, silver
aut the foreign exchange situation
has
certificates,
subeldoassed. The transactions a re outside the
la ry coin ..................
706.000
Tft.OOO
bank s norm al scope and the gold loss has R ediscounts
........ .
773.000
740,000
little significance.
Investm
ents
..................
922
000
922 000
The three southern regional banks, R ich
121,000
122.000
mond, A tlanta and D allas, report over 75 All other resource* . . .
per cent, of the total am ount of commercial
T
o
tal
resource*
........
$20,951,000
$21,289,000
pape- held by all. About $1,900,000 of acL IA BILITIES.
SSK*"®* were bought by the Xew York.
•Philadelphia and Boston banks during the C apital paid In ............$ 4.031,000 $ 4.081.000
week. As this paper m atures only within N et depoeiM .................. 16.743.000 17,095,000
sixty to ninety days, the proportion of short Federal rese-v* not**
term m aturities is sm aller than in previous
in circulation ..........
177,000
168,00*
weeks, the percentage of th irty -d a y paper
being now 3i.4 per cent, and th a t of slxtyTotal liabilities ........ $20,951,000 $21,289,000
d? y -« P«; cent. Of the to tal of $4,406,000 Gold reserve a g a in st a ll
or bnjted States bonds on hand (Investments)
liabilities, per c e n t..
108.9
108.9
Gash reserve a g a in st all
liabilities, per c e n t..
118.1
118
federal reserve
N EW YORK BA NK STATEM ENT.
RESOURCES.
CLEA R IN G HOUSE ACTUAL.
Feb. 26.
Feb. 19.
.
.
Increase.
G o ld ......................
$248,909,000 $251,808,000 Loans,
e tc ...................$2,297,504,000 fl0.556.0fo)
Legal tenders, s t i v e r
Res. in own v a u lts
369.494.000 *1.682,000
certificate*, subsid
Res.
In
fed.
r.
banka
113,066,000
1,370,000
iary coin ................ 29,085,000
29,887,000 Res. In Oilier depo*
.Bills discounted and
ltartes
....................
33,0OS.000
217,000
loans ........................ 20.469.000
17.762.000 Net demand deposits 2.160.702.000 13.660,000
Investm ents ............ [ 17.417.000
15.314.000 N et time d e p o sits..
98,746,000 749.000
Due from fed. res.
39.118,000 *297,000
Circulation ................
banks in tr a n s it..
8,088,000
2.766.000 Aggregate reserve . .
509,568,000
All other re so u rc es..
7,765,000
8.917.000 Excess reserve . . . .
134,761,000 *2,412,750
OTHER N E W YORK BANKS.
T otal lesourpes . . .$331,733,000 $326,454,000
Loans, etc.................... $560,642,700
$4,7»
Specie ........................
44,104,400
1547J
10,101.600
16,2
Legal tenders ..........
Total d e p o s it* ..........
661,858,800 *4,997,5
•Decrease.
br?v
C L E V E L A N D F E D E R A L R E S E R V E BA N K !
RESOURCES.
Feb. 19
frfild coin and certifi
c a t e s .............................$ 18,802,001)
I cgal tender notes, sil•r certificates, subidiarv c o i n ................
703,000
All other resources ■• •
T otal resources . .
Feb. 12
$ 19,134,000
F E D E R A L B A N K S TO CLEAR FOR M EM BERS.
(,3.1,000
ss
sr
122,000
..$ 21,289,000
la5,000
$ 21,505,000
LIABILITIES.
Canital paid i n ............... $ 4,031,000
K et d e p o s i t s .................... 17,095,000
Federal reserve notes in
^ ^
163,000
circulation
$
T otal liabilities ..
Gold reserve against
liabilities, per cent
Cash reserve against
liabilities, per cent
$ 21,505,000
. .$ 21,289,000
all
..
108.9
a ll
..
113.0
4,027,000
17,269,000
209i000
109.4
113.0
_
T lie -fe d e ra l re se rv e
b o a rd
a t W a s h in g to n
y e s te r d a y
d ir e c te d the
r e s e r v e tM ik s t o p r o c e e d w i t h p l a n s f o r t h e c l e a r a n c e o f c h e c k s of mem'h e r b a n F ;- a t o n c e .
*
.
EM Rr f Fan^ 1 W
^ f i MHUNKV*turned from a co n '
feren ce
W a s h i n g t o n , s t a t e d t f f & H f i e r e s e r v e b o a r d h a d g iv e n t h e banka
la titu d e to g o a h e a d a n d p e rfe c t p la n s a d a p te d
t o each d is tr ic t, but con
f o r m i n g t o g e n e r a l c o n d i t i o n s l a i d d o w n b y th e b o a r d .
In
g e n e ra l
th e
p la n
p ro v id e s
fo r
a
v o lu n ta ry
e n tr y
by
th e
m em ber
w i t h " t h e f . d e T ^ n h ^ y irW t
a s s e n t , n * m e m b e r s w ill keep a special d e p o s i t
w i t h t h e f e d e r a l b a n k s t o c o v e r c h e c k c o l l e c t i o n s b e tw e e n such i
b a n k s . T h e f e d e r a l b a n k s will m a k e a s e rv ic e c h a r g e to c o v e r
< a ile d t h e ' f l o a t
T h i s is the m a s s o f e x c h a n g e in transit and
utea a n Item o n w h ic h n a t i o n a l b a n k s i n r e s e r v e cities a r e often
t o g iv e c o r r e s p o n d e n t b a n k s a n I m m e d ia te c r e d it.
~Zihe PToposal ls e n ti r e l y v o l u n t a r y so f a r
e m e d . T h e y m a y c o m e i n t o the f e d e r a l b a n k
o r c o n t i n u e to u s e their reserve b a n k s f o r t h a t
as member b a n l i t are
scheme a n d use its fa '
purpose. Governor F:
In o p e r a tio n
**»
P r0 b a b 'r b e
**** 1
Foreign exchange was firmer in NeM
a w ea? Bhowln«
‘W
a r e p e rf*
The
s r S r a .o o o ^ S
; h o w e v e r was o n ly partly due to g o ld exports. The bank
m ark^ o^ w * M 00.°00 against the maturity ot treasury notes.
P a r t s furntohed a n interesting bit of new* In the aanonnce - a t
mttl farther notice. T_le suggests that France ls about to Import steal
ails upon a considerable scale.
- port steel
Acceptances and $200^WWhrrants.
------------------- :—
h
2
BY F. F. D U N C A N ,
Financial Editor o f The Leader.
T h e r e w e r e d o c id e d ly m ix e d t e n d e n c i e
m e n t d u rin g t h e f ir s t s e ss io n o f th e w e e k .
w i t h U n io n P a c if i c m a k i n g g o o d h e a d w a y
d iv id e n d , b u t it w a s in th e m o to r lis t a n d a
s
in t h e s to u lc m a r k e t
T h e o p e n in g w a s q u ite
in th e w a y o f re c o v e ry
fe w o f th e in d u s tria ls , n
m ove
s tro n g
o f its
o ta b ly
s te e l, t h a t t h e b e s t b u y in g w a s w itn e s s e d .
A s th e s e s s io n p ro g re s s e d tw o w id e ly s e p a r a te d r e s tr a in in g f a c to r s
t u r n e d t h e c lo s e i n to a m ix e d ' s i t u a t i o n o f f r a c t i o n a l g a i n s a n d lo s s e s .
T h e d is p o s itio n to a w a it th e d e ta il^ o f t h e B r itis h b lo c k a d e a n n o u n c e
m e n t a n d a n e n d e a v o r to r e a d tlie f u tu r e in th e lig h t o f n e w f a c to r s it
m ig h t d e v e lo p w a s p ro b a b ly t h e f a c t o r o f m o re g e n e r a l in flu e n c e .
B u t.
s u p p l e m e n t i n g t h is , s p e c if ic w e a k n e s s in N e w ' Y o r k C e n t r a l a n d a h e a v i e r
lo n e in P e n n s y lv a n ia o n th e a p p e a r a n c e o f a n in d if f e r e n t m o n th ly r e p o r t
o f e a r n in g s , b r o u g h t to t h e f r o n t t h e o ld , o ld s to r y o f t h e le a d in g f a c t o r
nt p u r e ly d o m e s tic o r ig in — t h e u n s a ti s f a c to r y s ta t e o f r a i l r o a d fin a n c e .
K q u ip m e n t s h a re s w e re in c lin e d to s y m p a th iz e w ith th o w e a k n e s s o f th e
ra ils .
L o u is v ille & N a s h v ille fe ll tw o p o in ts to 1 1 0 , L o c o m o tiv e p r e f e r r e d
th r e e p o in ts to 78, a n d A m e ric a n K x p r e s s s e v e n , to 83.
W H l y s - O v e r l a n d c o m m o n l e d ’. h e m o v e m e n t i n t h e m o t o r s w i t h a
s a in
o f o v e r tw o p o in ts , fla n k e d
b y f r a c ti o n a l g a in s in M a x w e lls a n d
P tu d e b a k e r.
V n ite d S ta te s R u b b e r w a s w e a k o n t h e a n n o u n c e m e n t o f a
c u t o f 6 to 7 p e r c e n t in th e p r ic e o f t ir e s , b u t its a g g r e s s iv e c o m p e tito r
G o o d ric h ro se a fra c tio n a n d t h e n c lo s e d a s h a d e o ff# 1 T h e r e a r e e v i
d e n c e s o f a k e e n s itu a tio n f o r b u s in e s s a m o n g th e lo a d in g lir e m a k e r s .
.T h a t, o f c o u rs e , is n o th in g n e w , b u t f o r t h e p r e s e n t s e a s o n i n c r e a s e s in
c a p a c ity a p p e a r to b e p u ttin g a n e w e d g e o n th e c o m p e titio n .
A LL IES BLOCKADE ORDER O P E N S N E W C H A P T E R .
O n th e b ig g e r Iss u e o f in te r n a tio n a l d ip lo m a c y a n d t h e f u tu r e o f o u r
ov e r s e a s t r a d e , i t i s r a t h e r a d i f f ic u l t m a t t e r t o d e t e r m i n e .iu s t w h a t n e w
p h a s e s a r e to d e v e lo p fro m t h e B r itis h b lo c k a d e o f G e r m a n y .
T h e a c tio n
is n o t a n a n s w e r to th o A m e ric a n p r o p o s a ls , b u t it s e e m s to o v e r la p th e
A m e ric a n te n ta tiv e n o te a n d to c o n ta i i a n a n s w e r.
W h e th e r G e rm a n y
w ill r e s p o n d w ith a n o th e r v o lle y o f to r p e d o e s a n d a f r e s h i n d is c r i m in a te
m a t t e r i n g o f m i n e s , a n d w h a t 1 1 re o u t l o o k f o r A m e r i c a n s h i p p i n g , a p p e a r
to b e fa c to rs a s h a z y a s e v e r.
T h e p o s itio n o f th e n e u tr a ls , to o , r e m a in s
to b e d e te r m in e d .
T h e o u tc o m e Is e v id e n tly j u s t in t h e m a k in g .
T a n g ib le c o n s e q u e n c e s o n v ie w y e s te r d a y w e re a w id e o p e n b r e a k o f
s ix c e n t s in w h e a t , t h e D a r d a n e ll e s f a c t o r j o in i n g in t h i s , a n d a b r e a k o f
s ix to te n p o in ts in c o tto n — t h e l a t t e r w h o lly o n a c c o u n t o f t h e p r o s p e c
tiv e s h u ttin g o ff o f c o tto n e x p o r ts to G e r m a n y a n d A u s tr ia , a lt h o u g h it
w a s b y n o m e a n s c e r ta in u p t o t h e c lo s e o f b u s in e s s h o u r s j u s t w h a t t h e
b lo c k a d e p o r te n d s .
’ •
T h a t a n e w a n d im p o r ta n t p h a s e o f th is tita n ic s tr u g g le is a b o u t to
d e v e lo p is t h e o n l y t h i n g t h a t is p e r f e c t l y c le a r .
G o l d i m p o r t s o f S 7 r > 0 ,0 0 0 d i r e c t f r o m L o n d o n w e r e a n n o u n c e d — t h i s
b e in g t h e f ir s t d i r e c t r e t u r n o f t h e y e llo w
m e ta l s in c e th e e x c h a n g e s
t u r n e d i n t h i s c o u n t r y ’s f a v o r .
F o re ig n e x c h a n g e w a s w e a k a n d u n s e t
tle d o n th e a p p e a r a n c e o f t h e b lo c k a d e a n n o u n c e m e n t.
A c u te w e a k n e s s
w a s in e v id e n c e in r a t e s o f r e m i t t t a n c e t o G e r m a n y , I t a l y , F r a n c e a n d
S w itz e r la n d .
T h e w e e k ly tra ffic r e p o r t s f r o m t h e w e s t i n d ic a te d s o m e c e s s a tio n o f
th e
g ro w in g
m o v em en t o f th e
few
w eeks
p re c e d in g .
P e n n s y l v a n i a ’s
m o n t h l y e a r n i n g s r e p o r t s h o w e d a n e t l o s s f o r J a n u a r y c f $ 2 2 7 ,0 0 0 o n t h e
lin c - s e a s t a n d $ 7 8 0 ,0 0 0 o n t h e l i n e s w e s t .
F E D E R A L BA N K B U Y S A C CEPTA NC ES.
.
O f f ic ia ls o f t h e C le v e la n d f e d e r a l b a n k y e s t e r d a y a n n o u n c e d t h e p u r
c h a s e o f $ 4 0 0 ,0 0 0 o f a c c e p t a n c e s t h r o u g h t h e f e d e r a l b a n k o f N e w Y o r k ,
in c lu d in g a p a r tic ip a tio n b y v a r io u s in s titu tio n s in ite m s o r ig in a lly a c
c e p te d b y th e G u a r a n ty T r u s t C o m p a n y o f N e w Y o rk .
T h e lo c a l In s ti
t u t i o n a l s o p u r c h a s e d $ 2 0 0 ,0 0 0 m o r e m u n i c i p a l w a r r a n t s o f t h e c i t y o f
N e w Y o r k , m a k i n g t o t a l n e w i n v e s t m e n t s o f $ 6 0 0 ,0 0 0 In a d d i t i o n t o s o m e
s m a ll ite m s in th e w a y o f r e d is c o u n ts w ith m e m b e r b a n k s in t h is d is tr ic t.
T h e a n n o u n c e m e n t o f th e p u r c h a s e o f a c c e p ta n c e s is o f u n u s u a l i n
te re s t.
I t is u n d e rs to o d t h a t s e v e r a l o f t h e r e s e r v e b a n k s h a v e p a r t i c i
p a te d w ith th e f e d e r a l b a n k o f N e w Y o r k , s o t h a t t h e t o ta l o p e r a tio n is o f
m e b i n s uiK fcu
iv w w iii,
de.
"V *
M E ^ T ir tB B f tr tn a V
U M (3 ® k "
h o u ses a r c by n o m e a n * & ■
p e n d a n t u p o n t l i e r e d i s c o u n t i n g o f t h e s e a c c e p t a n c e s a t t h o r e s e r x ft t>& r t !
• h e f & c i t h a t a p r e c e d e n t l i a s b e e n e s t a b l i s h e d a d d s j u s t t h a t m uch m o r e
o t h t S f-'.riM Iity a n d t h e liq u id n a t u r e v* t h e s e fo re ig n b i l l s o f u c c e p t -
CO-
■
l n C e T h<. o p e r a * ,-.n t a k e s o n a d d e d s i g n i f i c a n c e i n t h e l i g i i ’ o f . h e h u g e
fo re ig n
tra d e n o w
a c c ru in g
t o ' th ia c o u n try .
F o r J a n u a r y t h e f ig u r e s
s h o w e d * 2 * '.,0 0 0 ,0 0 0 o f e x p o r t s a n d a n - e x c e s s b a l a n c e o v e r i m p o r t s o f
U 4 5 O 0 0 000
T h e a c c e p ta n c e is b e c o m in g o n e o f tlie m » ! t p o w e r f u l in
s tr u m e n ts in th e m a c h in e r y o f t h is h u g e f o r e ig n b u s in e s s ,_ a n d t h e f a c t
t h a t tfie f e d e r a l b a n k s a r e t a k i n g t h e i r a llo tte d p a r t in th
f u r t h e r a n c e o f it
Is a m a t t e r o f K im re m
i m n o r t a . n n ti t a .. t h ^ n m i n t r y .
w- ,
3 -
|
a n a i f y o u r c rf e d it d e p a r t m e n t s w ill
e n t e r i n t o a «f
v o u w ill g r a d u a lly b r in g a b o u t a ll tn e
Jg ^ d t h e ^ d e r a l b a * k l a w i s c a p a b l e
' i R M f i - v * S y s t e m C l o u l n c O r t t r . <fl
T h e fe d e ra l r e s e r v e b o a rd h a s d lre c te d su ch b a n k s a s h a v e n o t b e
g u n c le a ra n c e o f c h e c k s
fo r
th e ir
m e m b e rs , to ta k e u p p la n s f o r su c h
c le a r a n c e Im m e d ia te ly .
The
b o a rd
h a s n o t p r e s c r ib e d d e ta ils o f th e p la n
b u t i t w ill b e in t h e n a tu r e o f a r e
c ip r o c a l a r r a n g e m e n t b y w h ic h m e m
b e r b a n k s a s s e n tin g w ill r e c e iv e th e
b e n e fits o f c le a r in g th r o u g h t h e ir f e d
e ra l r e s e rv e b a n k s a ll c h e c k s a g a in s t J
o th e r a s s e n tin g b a n k s in th e
sam e
d is tric t.
F o r th e p re s e n t n o a tte m p t
w ill b e m a d e t o c le a r b e tw e e n f e d e r a l
re s e rv e d is tric ts .
. '
0 f ‘C
d y o u Br e Jd i z e t h e s t r e n g t h o f a
m em b er b a n k tlia t c a n
£
se co n d a ry re se rv e n e a rly
f ils
c a s h f r o m 2 0 t o 2 5 p e r , c e n t - o f {“
to ta l lo a n s in th e fo rm
*t
p a p e r t h a t c o u ld b e
rB R e rv n
a n y m o m e n t w ith its
fo u n d
bank?
E v e n if it w e re n e v e r fo u M
n e c e s s a r y to r e d is c o u n t, i t
e n v ia b le p o s itio n , a n d i t Is a v e ry
■ fo r tu n a te i n s t i t u t i o n
th a t
th e ir
. t o m e r a f a r s i g h t e d e n 0 " « ht A d d i t i o n a l
s h a r e in e s ta b lis h in g t h a t a d d itio n a l
S t ^ f e h tre r n d eo t °then f
c
b o a rd
s h o w s t h a t t h e k l n d ° b e P e U g ib le f o r
u ltim a te ly w ill a lo n e b e e l i g W ^
r e d i s c o u n t Is t h a t w h .c h e x i s t s ^ n e n
th e
m em ber b an k
•1 .
can
c * rtU y it
A a t a t e t n » i i r- ° ^ m^
’i B„ t h e p r o flt
old from t h e bo,r f “ f t d s t l t e m . D t stow ing
an d loss account sal
evidence tl«Jt mhortJ
2.
Satlsiac
..Matiner and »■
%
term paper
jjie n t Investment*^
being Issued to r
tb e m axim um
“ •'»,
Ou»tomcr^» report w
m obllg» .
of s u c h i x j p e r t o b e
'am ount w ithout
hKANKNLSS
\ \ m
£ , X
rr
First National’s Credit Ex
pert Talks to Business Men
on Borrowing.
th e b a n k e rs
to your I n t e r e s t e
to recelvn It.
h
m an u factu rer ,
o r not. 1 " " “ “ J " *
Federal Reserve Act Ulti
mately to Require Close
Information.
■SrtLbuah T
c re d it
T onks,
d e p a rtm e n t
m anager
of
th e
tio n a l b a n k , a d d re s s e d
th e
A s s o c ia tio n
M en
of
C re d it
of
th e
F irs t
N a
C le v e la n d
In
H o te l
,t n , , for him
K m erchant or
borrowed money
the bank
of m y affair*, and
°f
,o r
^ T h c s e . am endm ents were first introdui
^ f i'n to r Owen on M arch 24 last, w ith
slight am endm ents in regard to disposition
serves. T he la tte r w ere passed by C ongr
• c a u s e th e y r o i i ^ » » o « n e ‘«PEaf en U B M M I
fP S f!% W n a T 3 rd fr
“ y
r
C le v e la n d
act
c o n c e rn in g
c o m m e rc ia l
tF R
pa
p e r a n d th e q u a litie s s u c h p a p e r m u s t
p o s s e s s in o r d e r t h a t b a n k s b e lo n g in g
to th e s y s t e m c a n r e c o n v e r t i t in to
cash o r c r e d i t a t th e r e g io n a l b a n k .
U r g i n g b u s i n e s s m e n to f u r n i s h s t a t e
m e n ts to th e ir b a n k a , t h e s p e a k e r
s a id :
“M em ber b a n k s m u s t g e t
w r i t t e n , n o t o r a l, c r e d i t i n f o r m
th a n h e re to fo re a n d y o ti, i n t u r n
b e j u s t i f i e d in r e q u i r i n g m o r e
your
c u s to m e rs ,
o s t a b 'i s h
c re d its
- I
RaUway Dividen
ers of record M arch 13.
A n a ly s is .”
A n a c k n o w le d g e d e x p e rt o n th e
s u b je c t, M r . T o n k s d i s c u s s e d i n d e t a i l
th e r e q u i r e m e n t s o f t h e f e d e r a l r e
se rv e
F ed eral R e se r v e A ct
nanded.* *
S t a tl e r l a s t e v e n in g o n “ B a n k C r e d its
and
C
j
w h ic h
on
a
Is
m o re
a tio n
, w ill
fro m
g o in g
h ig h e r
o
P W > I
K „ le r ,.l
H ank
O tre e to * .
M e e t.
. .
Federal J Jorve Bank of
I>irf CirirS -i? Yesterday’s
elected
Cleveland ®- •. n g Rowe ind p a r r y P.
D irectors W 1J
utlv0 , omu»Mteov taking
W olfe to th „ oh<>rt w a rd tro p and Stacy
- th e piat*s u
p-.ecutive committee conUy
e B. Fancher, C oalrm an or
sists of
WUls, D eputy Chairm an
tjie Board w. ■^
an d two other direcrotate.
t o r * whoae cer“
> 1
A W ashington disoatch s a y s :
A bill oassed bv the Senate has been ado
bv th A H o u s e , am ending section 13. parapr:
three, f t u r and five, nf the federal reserve
so th a t any reserve bank may discount act
ances based on im portation o r exportation
poods and which h ave m aturity at discoun
not m ore than three m onths, and indorsed t
least one m em ber bank. Acceptances discoj)
shall a t no time exceed stock and surplus oT
f o r which rediscounts are made, e x c e n ^ h y
th o rity of R eserve B oard.
S .
ARgrepate of such notes and bills oearw e
n ature or indorsem ent of any one person o r ■
panv. rediscounted fo r anv one bank shall 3
tim e exceed 10 ner cent o f capital and surplt
said bank, but this shall not apnlv to discoui
Dills o f exchange draw n in good faith agains
uallv e xisting v a l u e s , ^
.
Anv m em ber bank may accept d ra fts or bi
exchange draw n on it and grow ing out o t '
actions involving im portation or e xportation
ing not m ore than six m onths’ sight to rui
no bank shall accept such bills to am ount
at any tim e to m ore than half its capital am
plus, except bv authority of R eserve Board
According to paragraph three of section
the act, reserve banks w ere perm itted only t
count acceptances fo r a m ember bank
am ount did not exceed half the paid-up t
and surplus. T h e am endm ent raises this 1
tion to full am ount of capital and surplu
adds the w ords “ except by a uthority of K
Board under such general regulations a:
board may p re sc rib e ^ - .
T he fourth paragr&pn is unchanged iro n
inal text. T he fifth paragraph, w hich direct
fe rs authority of gran tin g acceptance on n
banks, is altered by adding the w ords exc
authority of the F ed eral Reserve B oard, '
y h leh have < i l r ^
^
federal rew rv e
•, <cU a s -be,
about enaetm ent of
■ -/I a re going to
l t a punlshi.■: . E nglish
n o t to keep a
r* « offense for■ a.
w he„ banking
f - o t book® _
It 1» universal
I regarded a s a pn>r
k whePe an acU. lie statem e n ts a t
here th e re a re
jov.it ta m al-ualned. ^ n n .
« iv .
^ e J U t r o n t l T w b o n one la - t u a U y de-
t m t - I9 U
W illia m
*
c i S & f accoim tant’s E l e m e n t *
^
_____ » law , and on
signed under oath.
• • R e g a r d l e s s of the P
&I1 th e abllth e basis th a t credit l s ^ ^
a bility to
lty to borrow hu1 1 >trM1|fthen your credit
pay. nothing will “
ail the earm arks of
aB a statem ent bearing^
M re m0deni In
having been made W
w hich evidence
m ethods and c o n s tn ic iiu .
will so cea good organization.
^
borrow er and
m ent th e 'm ' onf_ Jlk and open statem en t;
banker th a n a
to an honest bornothlng Is of leas harm
influrow er. I i vidX V » oplnlon of your oomence. T he banker
people lnm erclal ra n k wHl b®
inclined to buy.
cllned
to m■ercla
« : ,b;njgen
S
on
from com
^ w ho lean
lt hard
f>
i ~
, STATEMENTS OF BANKS I
O p e ra W m s o f th e
fed eral
b a n k s in t h e
d ifc o u n t a n d
investii
m a rk e t& J n e
a tta in in g
c u m u la tiv e v a lu e .
E ach
w e e k 's
p u rch a se s
m od esm fc b u t t h e r e h a s b e e n a c o n s t a n t e x p a n s i o n o v e r a p e r i o d o f sevw F eel f 'W i c U o t l nli
re p o rt an in c re a s e in d i s c o u n t s o f
a n d i n i n v e s t m e n t s o f $ 2 , 6 9 0 , 0 0 0 , a t o t a l In c re a se of $ 7 , 9 5 2 , 0 0 0 .
T o t a l d i s c o u n t s a n d i n v e s t m e n t s a g g r e g a t e n e arly $46,000,000.
T h e C l e v e l a n d f e d e r a l b a n k in c re a se d its d isc o u n ts b y $ 3 5 1 , 0 0 0 a n d
i t s i n v e s t m e n t s b y $ 2 5 0 , 0 0 0 , a to ta l o f $601,000.
P u rc h a s e s o f a c c e p ta n c e s
r e p r e s e n t i n g f o r e ig n ,,
t r a n m f h to ri.s w e re t h e c o n s p i c u o u s f e a t u r e o f
t h e w e e k 's o p e r a t i t f i r i 1
j
' J 13
,
T o t a l l o a n s , d i s c o u n t s a n d i n v e s t m e n t s o f t h e l o c a l i n s t i t u t i o n a r e now
$ 2 ,3 9 5 ,0 0 0 .
I t Is e v id e n t fro m t h e fig u res t h a t t h e r e s e r v e b a n k s .till
s h o r t l y b e c o m e s e lf-s u p p o rtin g a n d w i l l e a rn a d i v i d e n d fo r, t h e s h a r e
h o l d e r s — t h e m e m b e r b a n k s.
T h e N e w Y o rk b a n k s ta te m e n t show ed a n i n c r e a s e o f $32,000,000
l o a n s w l t l i p ra c tic a lly n o g a i n in cash.
S u r p l u s d e c r e a s e d $5,000,000.
s s i b l y t h e o n l y lucid c o m m e n t th a* can b e m a d e on t h e b a n k figures
h a t U t« G o t h a m
in s titu tio n s a re f e e l i n g p e r f e c t l y s a f e in i n d u l g i n g
t K P ' W J f p o r t u n i t i e s p re sen te d by t h e l o w e r i n g o f th e r e s e r v e r a t i o a n d a re
d o i n g it.
C u r re n t m oney r a t e s c o n tin u e v e r y e a s y , so th a t i t w ould sc a rc e
l y d o t o i n f e r a clo ser po sitio n f r o m t h e b a n k f i g u r e s .
O n e o f t h e s tr a y to k e n s o f s ig n ific a n t im p o r t t h a t a p p e a r e d d u r in g
t h e w * e k w a s t h e r e tu r n o f t h e b ig in s u r a n c e c o m p a n ie s to th e m a r k e t
f o r r e a l e s ta te lo a n s .
FV S . B a u d e r , o f t h i s c ity , w h o r e p r e s e n t s t h e E q u i t a b l e L i f e i n i ts
o p e r a t i o n s in n o r t h e r n O h io in r e a l t y lo a n s , a n n o u n c e d t h a t h is c o m p a n y
W a s a g a i n In t h e m a r k e t a f t e r h a v i n g d o n e n o t h i n g f o r a lm o s t a y e a r*
I n s u r a n c e f u n d s a r e m a n if e s tly a b o u t t o b e c o m e a f a c t o r in t h e m a r k e ts
o n ce m o re .
T h e i r p u r c h a s e s a r e . o f c o u r s e , t h e I a n "H t s i n g l e f a c t o r i n
th e r e a lty lo a n m a r k e t.
'T h e i r r e t d r n
to th e m a rk -* c a n n o t b u t h a v e
e ffe c t u p o n t h e s u p p ly o f f u n d s a v a ila b le f o r im p r o v r r r —
WS.262 , 0 0 0
E L S HOW CREDIT FABRIC
CM EE ID E STRONGEST
ftj '
I
William Tonks, m a n a g e r o f the credit d e p a r t m e n t o f t h e F i r s t N a t i o n a l
of Cleveland, in a t a l k to the Cleveland A s s o c i a t i o n of C r e d i t M e n
Thursday evening, discussed the business mao’s r e l a t i o n t o th» b a n k . H e
dwelt particularly on the trend of affairs under t h e federal r,- . e s e t s ^ d
the strict requirements of t h a t law concerning information
! r ls h A T
commercial banks by their borrowiftg customers.
*
i
“ The trend of thought of the federal reserve board shows,”
sa g
‘‘that the paper which ultimately will alone be eligible for redisc ant
*
which exists when the member hank can certify it h a s : .
“ 1. A statement not more than a year old from the borr- e r , ■>„
quick*1*
And loss account, said statement *howinjg proper piv irtiot*
bank
au*
3.
C u s t o>mer’s
m e r ' s report
r e n o r t oof
f the
t h e maximum
lu iim u m
of such ----------- -- _ ^ f i * u e i
an obligation aot to exceed that lamoint w.cao’
ank!p
p u tw p ^
VH-ciax sto>'
st us consider the advantages to *'ceptablf
\> .s a t.
It
b lls h
i customer v uo now complies com■ Hhe paper
cu-Urn
‘
With ; e spirit of the federal
ji»it credit prinpies.
i a t i o n s , e . n a e s t a b l i s h e s t h e eilg i^
I as
the
pa
i'fv.nency wfeOe he is
of tMt w
___ _ b l*
-ft'i t*
.iv
«j £
Tb< full success of the federal
of h is p a p e r fo r re d is c o u n t.
B e c a u se su c h p a p e r-Is n e w ly a s
cash ,
iUJy ae»k s u c h
s tr Q t
i M n . Mfet
<■
.eaoatK )
~ve aw rests with the borrower
'
no the b a n k e r . It w a s con'i tn th* Interest# of the for
" o n him rer‘s the r e s p o n d o- r a l e * a r *
w e ll
(>-
■ Quksk itasfets oni
a
c o m m e rc ia l
F ix e d
lia h e d :
*
F ire a b a s i s
b&aJ
An w n r tn y
m ana, bankers are satisfied th a t lhl« should
the situation for th® present, an d are
no *ut*lbl<' objection to regional bank
purchase of municipal w arrants and accept1* nk”- Tht» business Is
belpto* to bring (he system tow ard a payin*.
then to a dividend basis, especially a t the
new commitments have been tak en on
In recent weeks. The statem ents t £ E w :
F E D E R A L RRSERVE 8YSTEM
RESOURCE&
►
. M arch S.
Feb. *«.
S ^_I - ^tenders,
V . A - . nsilver
^ ; * * 47'231’000
certificates, subsid
iary coin ................ 23.292.000 39.906.000
B ills disco., lo a n s.. 2ft.781.000 20.449.000
Investm ents .............. 20.107.000 17.417.000
D ue from f. r. banks
In tra n s it ..............
7.1*2,000
W D
All other reso u rces..
6,814,000
^000
LIA BILITIES.
C apital paid In. * 1 .^ 0 ,0 6 2 ,0 0 0 t M 369,000
r o e.P?in8ltS«
"•
aK. ^ T
K.™notes
clrcu*
f ** n .>,336,000
-'
latlon (not liability)
fl,392,000 • 5/828,000
Gold r e s c u e against
net Ilab.-r'per cent.
861
M .«
Cash reserve a gainst
n et llab.a x»er cent.
94.2 ■'£
,
CLEVELAND FE D ER A L
ba^ k .
KESOUR i
‘
M arch
26.
• v*OlQ
............................
.. *17
iJO a.35 1,000
Legal inders, silver
'
«. -■
i certificates,
subsld-
99.7
.^ r y «««» •••.............
lo a n s.
Investm ents ................
«A11 o ther re s o u rc e * ....
• » .* }
^Red lscounts,
g
a g
F . R. notes
coQ ptdersdL
U ffe rt
to .
tob.ooo
772.000
l.afe.ooo
In c4rc.. .
labilities, per c e n t..
Recounts Matters to be T o u t e tfpoi9*gSuch Reports
of Condition—Extracts From
His Speech.
j
— •
federal reserve system tn tn e la te st
week enlarged lta loan and Investm ent oper
ation* by $7,95*,000, of w hich Increase $701,
000 w a by the Federal R eserve bank ot'
Cleveland.
The Cleveland bank purchased $400,000
bankers* acceptances baaed on Im ports and
exporta, $260,000 New York c ity and Roches
te r (N. Y.) municipal w arrants, and In
creased rediscounts. In o ther words, the lo
cal Institution a s well a s the system m a
terially increased facilities extended for In.em al business, for foreign business carried
? on by residents of this country and for city
K>rrowlng for short terms.
’ W hile the surplus reserves of basks
ally a re large and money Is la U#k* de-
S nld reserv e a g a in st a ll
lia b ilities, per c e n t ..
1b »h reserve a ^ i n s t all
Cleve:
Coming Bank'
Making Detailed Statements to Banks. *I f |
2. Satisfactory evidence that atari t'"-m papar is self-liquidat
D e m g issued for permanent ir^estm
U.
^The
lj^ .,1 0 0
922.000
239,000
—
177,000
loe.a-^
108.9
109.1
118.1
S06
.'203
........
WeeT iast year .
The £l#valand clearing hoilse’ 'it*
ended * llh the clow of b S S S S .
reports for its member bank* a irfor, * L
of »J i c , 3 t l - a deposit Inct^SL of ^ 91l eLr? f
'
« ia n y
th e
'
'
e x c e p tio n s b a se d o n th e c h a r
buslnexH, a n d t h a t In
d e b t U ix iit o f t h e b o r r o w e r
e x c e e d e d w h e n h is lia b ilitie s a re
his
O n ^ h « e v ,Cein t ' °.T h l s q u i c k a s s e t s . ”
'
.
o f th e s e r u le s th e m
» r e threeJ t e m s t h a t a b a n k ’s c r e d i t
.e. E 5 . .'n e m
c u ra te ly a s
m u8t
e s ta b lis h
p o s s ib le :
- ^ t S 1 0 ^ 8 ,U l£ k
^ la b ilitie s ,
as
ac
1183613 o r w o r k i n g
of
q u ic k
fet w’ctrth.
•*. «pei*er t h e n
. ^ ° f *atem ent
f U8,t o m e r s
a s s e ts
to
re fe rre d to th e
re q u ire d
fro m
by
th e
bank
with which he is c o n n e c t e d . E a c h o t
hta hearers was p r e s e n t e d w i t h o n e o f
these four-page f o r m s , a n d Mr
Tonks took up the items t h e r e o n o n e
v.
te llin g
it*
Kbat it should bo
• i d in part; ,
s ig n ific a n c e
c o m p o se d o f.
and
H e
0
to, *“ 1 “ l c k . m ust b e free
rhaS?
1 m
ithdraw
alsnraby
cnsck tm dem and.
W hen th iswsum
Is hi
sdln« obligations, also serv' yo u r banker, you establish
? ? ou
^ is gx>od policy
►with your banker
►should be,
COMBS ANDSTOLL ARE
BACKFROMCLEVELAND
Governor Fancher, of the
I Federal Rescue Bank, to
Be Invited to Lexington
S e n a to r
T hom as
A.
C om bs, w ho
Manufacturers’ Banking and
Currency Committee Makes
Recommendations.
is
a m e m b e r o f th e B o a rd o f D ire c to rs
o f t h e C le v e la n d R e s e r v e B a n k , a n d
•T. W . S t o l l , p r e s i d e n t o f t h e K e n t u c k y
S t a te B a n k e r s ' A s s o c ia tio n , w h o w e n t
to C le v e la n d T h u r s d a y to
a tte n d
a
banquet
g iv e n
by
th e
C le v e la n d
b o a rd F r id a y n ig h t, r e tu r n e d
to th e
c ity y e s te r d a y a fte rn o o n .
P resen t at
rh e m e e tin g w a s P r e s id e n t F . W . D e
la n o , o f th e
F e d e ra l
R e se rv e
B ank,
a n d th e p re s id e n ts o f th e S ta te B a n k
e rs’
A s s o c ia tio n s
of
P e n n s y lv a n ia ,
O h io , W e s t V ir g in ia a n d K e n tu c k y , in
a d d itio n
to th e m e m b e rs o f th e R e
g io n a l B o a rd of th e C le v e la n d b a n k ,
and
m e m b e rs
fro m
th e
R e se rv e
B o a rd a t W a s h in g to n .
M r. S to ll s a id
t h e m e e t w a s s im ip ly t o
d isc u s s th e o p e ra tio n
o f th e
F e d e r a l R e s e rv e B a n k in g L a w ; a n d to
g iv e th e b a n k e rs fro m
d iffe re n t se c
tio n s a n o p p o rtu n ity to e x c h a n g e in
f o r m a tio n a s to t h e g e n e r a l fin a n c ia l
c o n d itio n s in t h e i r t e r r it o r i e s .
I t is p r o b a b le t h a t o n e o r tw o m e m
b e rs o f th e
R e g io n a l B o a rd
w ill b e
p r e s e n t a t e a c h m e e tin g o f th e b a n k
in g g r o u p s in th e S ta te , a n d G o v e rn o r
F a n c h e r , o f th e C le v e la n d B a n k , is o n e
c f th e f ir s t w h o w ill b e in v ite d to c o m e
to
K e n tu c k y .
A
s tro n g
e fT o rt w ill
b e m a d e to h a v e s o m e o f th e d ire c
t o r s g o t o J e n k i n s J u n e JO t o a t t e n d
th e m e e tin g o f G ro u p T e n , th e b a n k
e r s ’ a s o s c ia tio n in th e T e n th C o n g re s
s io n a l D is tric t.
A
la rg e
num ber of
b a n k e rs fro m
th is p a r t o f th e S ta te
w ill p ro b a b ly g o to th e J e n k in s m e e t
i n g , a n d M r . S t o l l w .U l t r y t o m a k e
a rr a n g e m e n ts w ith th e L . & E . R a il
w a y C o m p a n y to ru n a s p e c ia l tra in
to M c R o b e rts , th e te r m in a l o f th e L .
& E . in E a s te r n K e n tu c k y , w h ic h is
o n ly s ix m ile s f r o m J e n k in s , to t r a n s
p o rt th e s e b a n k e rs .
I t is s a id th a t
m a n y r e s id e n ts o f th is s e c tio n , w h o
a r e i n te r e s te d in c o a l p r o p e r tie s in th e
L e t c h e r C o u n ty f ie ld s , a r e a n x io u s to
m a k e th e trip .
ADVISES UNIFYING
U. S. PAPER MONEY
Would Consolidate Note Is
sues Into One From
Regional Banks. \_______
V
n
T h e c o m m itte e o n
b a n k in g
and
c u r r e n c y o f th e N a tio n a l A s s o c ia tio n
| o f M a n u f a c tu r e r s m a k e s th e fo llo w lin g : r e c o m m e n d a tio n s
re g a r d in g :
th e
U n ite d S ta te s b a n k in g a n d c u rre n c y
s y s te m
in
c o n n e c tio n w ith
an
ex
te n s iv e re p o rt;
1. Abolition of the unlim ited legal tender
pow er given to silver dollars so th a t our
i m onetary Bystem be based absolutely on
gold.
2. Abolition of the useless term “ law ful
m oney." No money which is no t law ful is
supposed to circulate, and there is no use in
m ain tain in g a discrim ination in theory.
3. The consolidation of all note Issues
Into one only.«em anating directly from the
governm ent through a federal reserve bank
and guaran teein g it w ith tne sam e reserves
th a t a re guaranteeing today th e different
classes existing.
4. E stablishm ent of a central reserve
b ank owned and controlled by the govern
m ent. but operated by co-operation of all
batiks; th is b a n k 'to have one branch in each
s ta te Instead of the tw elve federal banks,
and a s subsidiaries of erfch th e clearing
houses now existing, of w hich a ll banks
couTd become m em bers w ithout discrim ina
tion.
R. U nification of all banking law s into one
only.
6. E xtension of the pow er of acceptance
given to banks for domestic purposes also.
7. To suppress the system o f cash dis
counts. except when based on th e regular
ra te s of Interest for advanced paym ents.
8. To su b stitu te accepted d ra fts or signed
notes for the present system of open accounts
in dom estic business.
ft. To fix th e ra te s o t rediscount a t tha
federal reserve banks in accordance w ith
the prevailing ra te of Interest tn each center.
10. To e stablish one or m ore American
b anks for foreign trade.
May 1915
Dftnaa c® t i e Im pil^: contmcrt itaU !t t» ft*
_ ____ Tfc r«*»eW H
iB8s
,
'
■arve cities, a reserve in th e fedsome lines yields from 10 to Sti% per annum ,
a n d does carry secondary re sc r
th is lt*m« If large, w arns ®f a lack M ~~m
,
.,
o t balances w ith b an k s Jn otl
capital unless It is tbe c h a ra c te r f*9
:les, which a re not local Reserves, to com
th a t usually gives notes foi r
•
those banks for cleftiing item s on p&u rc h a s e s , b u t then tho bank
territo ry . Even th e larg est banks canshould be sm all; anyw ay. th is ita
*“7>ly send every ont-of-tow n check
it ap p e a rs, should bear a norm al pe
th e bank o r place of paym ent; but
to p u rc h a s e s .
.
th e bank th e more n early item s are
N OTE8 PAYABLE
OWN
e N K S -It
Irectly. All of these reserves make up
ls frequently diff; l i t - .
.clear dlsa
<wr*r 99’000. T h a t, presumably,
• t i n c t i n betw een §. * r « i t :/ ants £ A
w ill leave a balance to loan o u t o f $9,000,
a re f i amd.uie”
bu t those
---e - —fo r capital
------- --w hich is f a r from a fact.
made a g a in st accounts a r
_ _ ,
F a l l a c y in r e B a n k . P r o fit .
and paid off a s these a re iUiectecta'vov^rl bo
Suppose you a re depositing d aily an av er
unquestionably cu rre n t
o**> » r<*onal
ag e o f $2,000 In Items on St. P a u l, Minne
advances, and from th e r lridpoi..v o t good 1
apolis, M emphis and N ashville, from which
banking should be liquidated once® or tw ice
it^Tequires five days to g et our money and
a year, th a t is, between e^afons.
.
’..NOTES PAYABLE FO F Sf’A PK R S O L P
there<uT|£do& in** -*1'-000’
“owa n18
tm!t
nrf*.
d ®
wv!dent
e MXB
a concern ls b o rro w in g ^ full line from
*.**•«
«muu»g
f 1,000 w ith o u tln te re e t, out 12
‘
A-~
iin K *1.0
3
.ankers, then it should- n b t use a note
fo r exch an ge cost, an d have no compensation
tUwr att*the same time- If it is doing
fo r adm inistrative expenses.
>ta a n d ^ L ttln g notes for m erchandise,' i t
Ohio has nearly 200 tow ns th a t cost
ejj6ys th e ^ r t of sk a tia g on th in ice.
three- days’ tra n sit, and from 50 cen ts to $1
p er $1,000 exchange.. A nother point, Item*
ACOOUlHtS 3?ATABLE—This Item should
contain bills n d t <1 p r no t subject to dis
on other Cleveland bank: , deposited a fte r
count, th a t ls, i f tfie t&siness lit being prop10:16 a . m ., which U ie clearan ce hour, are
credited to your a c a o tftt on day of deposit,
ferly conducted and is in good Credit
b u t we do not g et Our m oney u n til next
bank.
..
i <4
3
day ’s clearance.
DBJP08ITS OP MONET W JT 3l J p V J.
In th e face of these facta, how m any of
covers loans from w ife, «©n£ .
3
you a re draw ing on th e b an k er for un
fives, o r savings of e m p lo y e e •* -•£
realized funds? I t is co rrect business to auk
Concern, often repayable a t fc
, y our custom er to rem it in cu rren t funds,
th e parties depositing th e m or
J
y
otherw ise he is n o t paying th e face of his.
prove a m enace to th e b u sin g X
■ ~ 7
obligation, an d eith e r yoy o r your banker
cases the, concern^ is g e t t i n g
0*
m u st stand th e loss.
'
titled to in the ‘w ay of itTans f ^ > * a a
NOTES RECEIV A B LE ar** not quick if
sources.
j.
~
^
?
th e y represent p ast due notes, stockholders’;
R ESER V ES—I f all p artis*
le d ' o
notes, or stra w men for stock supposed to
these
statem
en
ts
w
ero
J
a
n
d
tr
be fully Issued, obligations of officers and
bookkeepers, th e y would
^rSe.u^rthU itt*
directors who have th e ir all. Invested in the
represented allocations o 'j’urpRw for \
corporation, k ited notes, notes taken for
•urpose of conserving the-i ^ icern 's financrr.,
p ast due and w orthless accounts.
n
terests
by
reducing
th£?
^arplus
aval l o t / ►
On account of the federal reserve law and
for dividends, and w hatever sucn reserve m » '
b oard’s preference fo r double-nam e paper
1 be called, it is In reality a p a rt of the ger
draw n on a p urchaser a g ain st an actu al
e ral surplus of the business; but If th e deb
sale of goods, w hich ls prim a facie evidence
or offsetting entries a re proper charg
of its self-liquidating n a tu re an d th e c h ar
1gain st income, then the so-called reserv.
a cter of th e tran sactio n , w e m ay see ac
ihouid be deducted from the assets to whi<r w
ceptance gradually tak e th e place of open
-hey relate, which we do w ith reserve fe
accounts. New York c ity a t present ls
oad debts, tak in g it from quick assets In r
rap id ly superseding th e European centers In
in aly sis, and reserve for depreciatioh
th e handling o f international acceptances,
plant from slow ’xs “ tir; W e are ra th e r
w h ic h has been brought about by th e fed
bar-assed w h e n - ^ . _ ^ 't one sum w h l c l f ,
e ra l reserve a c t an d th e w ar.
laaaled reserve
a ; d ebts and depre
ACCOUNTS R EC EIV A B LE. The banker
i .“on o f plants and £ ' F is why we ask *•
expects th is to be th e net am o u n t not yet
custom ers to item I*6" the reserves. If we^ *
due for m erchandise sold to custom ers; but
not g et th is correctly, the net w orth ia sup*,
It has been found to Include such slow a s
to
w rong.
r,
set a a s disputed freig h t claim s, overdrafts
Tho speaker then took up In detail 4he
o f officers, directors or salesm en; bill* long
roncl^ised profit and loss statem ent. Orte
over-due; or, no* in fact a “ receivable” but
quefc io n to w hich his bank asks an answ er
m erely “advances” or “deferred.”
Those
' . "What is the a ctu al expense of conductpledged for loans, if an asset a t all, are
« ib e business V ’ H e said in pfirt:
slow.
Such practice establishes a prior
A' m j A L E X P E N S E ?'lfe U S O sfW C T T N G
lien ag ain st th e best liquid asse ts on which
v -USINESS is m anufacturji j ^ isf- selling
th e banker, w holesaler or m an u factu rer has
4*ffictt general and ad m ln istraflv e r expenses'
based credit. The company holding these
Of ci-larse. under this very condensed-^orm of
assets should finance th e whole proposition
art* ng a t figures, th l'3 h e a d would include
th e borrower should then buy fo r cash and
fs, renew als a n d : replacem ents unless
not seek loans from ' a bank.
Oi : .ess is so poor th a t you a re capitalizing
M ERCH A N D ISE. Inventory ls the acid
r.ite m s and opening yourself to criticism .
te st of honesty. B ankers a re never pleased
: ■ >gTIN G EN T L IA B IL IT IE S (upon reto learn th a t an inventory h as been marked
di.*^r-Sited receivables, upon accommodation
up, an d nothing creato r so much suspicion
^ m e n ts , upon notes exchanged w ith
In my investigations of an> asset a s a profit
o'hL' *3 for guarantees, for bonds, etc.) T his
tak en which has n o t been realized.
Of
ls PC f abject th a t has been w orn threadbare
course, every increase In valuation set upon
s ir
.re c e n t big dry goods failvre, and we
m erchandise a t the end of th is y e a r means
a sm aller figure of profit next year. The
w i.l _t re p e at w h at all of y ok m ust know.
valuation of finished goods should be cost
o r m ark et, w hichever is th e lower, not sales
In no event w ill conservative m ethW e ^bavo advanced fa r enough in th is
!mlt of an y p a rt of adm inistration and
subject ?to m ake it plain w hy a banker or
_
expenses being added to th e cost of
His cr^
departm ent m ust a sk quite a few
goods.
“C ost” m ay Include all expenses
lu e stio t^ to determ ine a ccurately w h a t is
in cu rred in m anufacturing. I t Is conserva
VK.Cess iqti*.ckf proportion of quick and net
tlve to inventory unfinished a s raw m aterial
•.o^b, als« m eet federal regulations, and
an d th a t a t p resen t m ark et cost. Supplies,
lot
tl r -custom er Injustice. I t is impos
stoaes, etc.. w hile consumed in th e a ctiv i
tie s c a r r ie d on, do not them selves form an
in teg ral p a rt of th e products m anufactured;
tjieiiefore, are slow and not a p a rt of m er
sible to make up one rorm of questions th a t*
chandise.
will cover a ll classes of business and not?
leave som ething to be desired. W hen spe-,
STOCKS. BONDS AND INVESTM ENTS—
W hen th e b an k er is not given proper d a ta on
cial cases come up. we a sk th e necessary
th is Item th a t he m ay determ ine actu al
questions, and If we don’t g et replies, the"
w orth an d w h eth er quick or slow, his proper
very m anner , of the refusal w ill aJften te I'!
method of an aly sis is to tre a t it a ll as slow.
us a ll we w ant to know.
- 1
I f m ade up of Investm ents in subsidiaries or
I-have ,showni you the sim plest sicfe of a n s i
branches w here it m ust rem ain in order th a t
ysis, br* the credit men m ust go dee pci
those concerns can carry on th e ir business,
ind com .re With previous yearfl, and forT b ^
it li unquestionably p erm anent an d slow.
present iRTJtr w ith other good concerns In th»
T h a t the b an k er m ay give you a ll th e quick,
jfm e lly f o f business, from w-hich he esUtfj
therefore loans, you deserve, It is well to
ilshes a^i, elaborate a n d valuable volume
fu rn ish him th e necessary d ata, A banker
statisttcsMooverlng:
4
,
w ho profits from p a st experiences w ill re
q u ire a consolidated balance sheet m ade up
by a com petent certified public acco u n tan t
on a concern th a t ls extensively financing
>n hand, accounts receivable and m le s payible.
.
1
branches an d subsidiaries.
T his item should not include unissued
Percentage of fixe&^aasets, wo f^ i Abilities, of
le t w orth.
\ ,* ' c
\
t
stocks a n d bonds o f the corporation itself,
w hich are not an asset; an d even, issued
Percentage earned
‘ neH
ca: ita.1
stocks or bonds, tem porarily repurchased,
itock, on w orking
p r a l anu ?■ J tr u e * ie t
vorth.
‘1
require close an aly sis before listin g in quick.
eE stabllsJi liquidating values :
accounts
PE R M A N EN T OR SLOW ASSETS—T h e w
■eceivable. and m erchandise **« different
only consideration given by th e banker to
:lasse»- of business th a t he m a Judge the
th e several item s under th is head ls com
>roper proportions of quick for • a c h line
p a ra tiv e In n a tu re . He m ay search th e re
)usiness.
f
..
fo r symptoms If o th er p arts o f th e statem en t
A good bank prides itse lf on t* a|c a re w ith
have a sickly appearance, or If th e profit and
rhich
it
guards
th
e
inform
ation
*
ysted
to
loss looks too h ealthy, all conditions consid
ts steel files w ith good o<, 'i . o * ^ . l y ’to
ered. If a concern's cap ital ls n early all In
h e cre d it departmd>fi anLi -oglcm^
vested In perm anent, the b an k er feels it Is
poor business to furnish w orking cap ital. No
m a tte r how m uch money m ay b© a e tn a tty in
vested In perm anent, its sale Is alw ay s a
m a tte r o f w a itin g for a buyer, long n eg o tia
tion, an d then sell a t a sacrifice; or, it may
•mean additional money and th e b an k er en
te rin g into th e m an ufactu rin g o r re a l estate
* aslnees for a long period.
N O TES PA Y A B LE FO R M ERCHANDISE
FRASER
m m '
—
{
J
VrA for
Digitized
of
O p e ra tio n s
re se rv e
bank
p o in t w h e re
be
th e C le v ela n d
have
th e
fc ile ra ’
extended
in s titu tio n
s e lf-s u s ta in in g :.
to
so o n
C u rren t
a
w il1
in c o m c
I s c l o s e t o 50 p e r c e n t o f e x p e n d i t u r e s .
T h e w e e k ly « ta te m e n t, is s u e d S a t
u r d a y , s h o w s r e d is c o u n ts a n d lo a n s
a m o u n t i n g t o $ 1 ,2 2 3 ,0 0 0 , a n
in c re a se
o v e r t h e p r e c e d i n g w e e k o f $ 4 5 1 ,0 0 0 .
T h i s i n c l u d e s a b o u t $ 2 0 0 ,0 0 0 o f f o r e i g n
a c c e p ta n c e s , th e p riv ile g e to p u r c h a
w h ic h r e c e n t ly w a s g r a n t e d th
e ra l b an k s.
In v e s tm e n ts S a tu rd a y w e re re p o rt
e d a t $ 1 ,1 7 2 ,0 0 0 , a n i n c r e a s e o f $ 2 5 0,000,
th e g a i n r e p r e s e n t i n g p u r c h a s e s o f
e a s te r n m u n ic ip a l w a r r a n ts a n d g o v -
em m crrf honrfs.
t f t W S
-_ i £ y
1
j ^ j* / ^ p
Clevelana reaerai tsaxuc.
Statem ent of condition a t the close of busi
ness M arch 12:
-*
RESOURCES.
/
Gold coin and gold certific a te s— U f i.^ OOU (JK
lv"gal tender notes, silver certifi- , :
c ates and subsidiary coin............ ‘ 575,000 00
................................. . .. 517,503,000 00
B>lla aiijcounted and l o a n s . . 51,754,000 oO
1In v e s tm e n ls ., j ......... ....................... 1 ,17«. 000 <>0
D ue fro m o th e r fe d e ra l re se rv e
banks (bet) ...................................
All other resource®...........................
343,000 00
341\000 00
Total resources .................... : ........ $21,212,000 90
.
t jf^fA B ILITIE S.
Reserve deposits
........................ $17,010. 00© ^
Capital paid i n . . , ..............................
l.ofe.ooo Ou
T otal lia b ilitie s .............................. $21,112,000 M
< ash reserve ag aiu -t «ll lia b ilities....’.. i04.6t„
f; ,td ’
i
fic.-.........201
OF FEDERAL BANK!
Board at HealA&f Reserve
System Will Publish Income
and Outgo in Detail.
Decision on Pittsburg Request
for Cleveland Institu-
s m M iW W a
WASHrXGTON.
com e
and
tw e lv e
m ade
fed e ra l
p u b lic
announcem ent
rese rv e
w ill
b o a rd .
sh o w
of
reserv e
J u ly
16— I n
M a rc h
ex p en ses
each
banks
of
be
to
an
1, a c c o rd in g
to d a y
T he
e a rn in g s
by
th e
firs t
and
th e
w ill
fed e ra l
s ta te m e n t
o u tg o
fro m
th e o p e n in g o f th e
s y s te m .
It w as
s a id to d a y t h a t th e b a n k s a r e d o in g
u f a ir ly g o o d b u s in e s s , a n d t h a t th e
7.600 a n d m o r e s t o c k h o l d e r s o r m e m
b e r b a n k s w ill p r o b a b ly g e t r e tu r n s
o n th e ir in v e s tm e n ts .
N o tim e w a s
nam ed.
The
fed e ra l
rese rv e
b o a rd
an
nounced
th a t
it
had
d e fe rre d
fo r
t h i r t y d a y s c o n s i d e r a t i o n o f a p p e a ls *
fro m
th e w o rk o f th e re s e rv e b a n k
o rg a n is a tio n c o m m itte e in d is tr ic tin g
th e
C o u n try
and
m a k in g
rese rv e
c itie s .
S e v e ra l m e m b e rs o f th e b o a rd
a re e x p e c te d to b e a b s e n t fro m W a s h
in g to n d u r in g th e n e x t m o n th . _
EXCEPTION
REVIEW
AND
OUTLOOK
Taken ByLocal Bankers
COUNTRY
BANKS
AND
THE
FA RM ER
T h is is th e se a so n o f th e y e a r w h e n th e v a rio u s a sso
c ia tio n s o f s ta te b a n k e r s h old t h e i r c o n v en tio n s. R e a d e rs
o f th e a d d re s s e s d e liv e re d b e fo re th e s e e m in e n tly u se fu l
c o n v e n tio n s m u s t h a v e n o tic e d a n o u ts ta n d in g f e a tu r e .
It is the relationship between the farmer and th e b a n k e r.
It emphasizes, indeed, the extent to which the intelligent
banker can help the farmer, and can even protect him
against himself.
At the convention of the Virginia Bankers Associa
tion, Dr. Bradford Knapp, of the Department of Agri
culture, suggested a series of questions which the banker
should put to the farmer, for the farmer’s own sake, when
he applied for a loan.
.
What did he intend to do with the money .
were his prospects of repayment? What was his reason
for supposing that the new venture would be successful
Was his agriculture confined to one crop ? To v. at ex
tent was he diversifying his crops? W a sh is farm in
this respect selfsupporting ? How many people did «
support? What -mechanical appliances had h e. it
intended to switch to dairy farming, what did he now
about milch cows? What provision had he made
^
them, not merely in bams but for feeding the cattle .
What was his market, and how did he intend to reac^
it ? What had he done to develop his farm in the past .
There are plenty more questions suggested at these
conventions which might not only be usefully put by the
banker, but should be put by a farmer to himself. He is
in the greatest, the most elementary business in the won .
It is a business in which the successful man deserves the
rewards. As at present constituted, in all too many case.,
the business of farming is cluttered up with incompetents
gathering a bare existence, and always one season e in
in their obligations.
, ’ (
Here is something which the bankers can do that no
legislation can accomplish. If they can persuade the
fprmer to diversify his crops, raise his dairy return, stim
ulate his breeding of chickens and pork, so that he wi
not be receiving revenue once in the over-pledged *a ,
but throughout the year, the bankers will have done =ome
thing which Wall Street and Washington put together
cannot do for them. It is ot the last economic conse
quences that they now recognize the fact, and are facing
it with courage and understanding.
Wall Street J o u r n a l
June 22, 1915
To Statement That Cincinnati Banks
Are Asking For Large Redis
counts in Chicago.
C in c in n a ti b a n k e r s w e re v e r y m u c h
s u r p r is e d to re a d in y e s t e r d a y ’s iss u e
of th e W a ll S t r e e t J o u r n a l a n i n t e r
view a ttr ib u te d to G eorge M. R e y
no ld s, P r e s id e n t o f th e C o n tin e n ta l
C o m m e rc ia l N a tio n a l B a n k , o f C h ic a g o ,
in w h ic h h e is r e p o r te d a s s a y i n g : “ O ur
d e p o s its h a v e b e g u n to w o r k lo w e r.
C in c in n a ti a n d L o u is v ille b a n k s a s k f o r
a la r g e a m o u n t o f r e u .s c o u n ts . M in n e
a p o lis a n d K a n s a s C ity a r e a s k in g
c r e d it.”
F r o m th e s ta te m e n t, b a n k e r s s a y , a n
im p re s s io n is c r e a te d t h a t C in c in n a ti
b a n k s a r e s h o r t o f fu n d s a n d a r e u n
d e r th e n e c e s s ity o f a s k i n g C h ic a g o
fo r lo a n s b y r e d is c o u n tin g th e i r p a p e r
w ith th e W in d y C ity b a n k s . N o th in g
is f u r t h e r fro m th e f a c ts , lo c a l b a n k
e r s d e c la r e . A c a n v a s s o f th e n a tio n a l
b a n k s a n d th e la r g e r s t a t e b a n k s y e s
t e r d a y e lic ite d t h e in f o r m a tio n t h a t n o t
o n e o f th e m h a s a n y p a p e r r e d is c o u n te d
in C h ic a g o . On th e o th e r h a n d , s e v e r a l
o f th e m h a v e h a n d s o m e b a la n c e s to
t h e i r c r e d i t in C h ic a g o . N one o f th e
b a n k e r s in te r v ie w e d
b e lie v e d t h e r e
w a s th e s l i g h t e s t f o u n d a tio n f o r th e
s ta te m e n t.
T h e C in c in n a ti b a n k s h a v e a m p le
fu n d s to m e e t th e c u r r e n t d e m a n d s on
th e m .
S in ce t h e l a s t s t a te m e n t th e
lo an a c c o u n ts sh o w m a t e r i a l in c r e a s e s
a n d th e b a n k s a r e w o r k in g on a c lo s e r
m a r g in , b u t th e d e m a n d h a s n o t y e t
d e v e lo p e d to s u ffic ie n t e x t e n t to c a u s e
a h a r d e n in g o f m o n ey r a te s , w h ic h a r e
q u o te d lo c a lly a t 3 Vi a n d 4 p e r c e n t o n
ca ll, 4 a n d 4 1,* p e r c e n t on tim e a n d
and
p e r c e n t f o r c o m m e rc ia l lo a n s
a n d d is c o u n ts .
C in c in n a ti b a n k e r s s a y t h a t C in c in
n a t i r a r e l y r e d is c o u n ts a t C h ic a g o a n d
t h a t th e r e is n o th in g in th e p r e s e n t s i t
u a tio n to r e q u ir e it o r m a k e i t a d
v is a b le . L itt l e r e d is c o u n tin g h a s b e e n
d o n e e v e n w ith t h e C le v e la n d R e s e r v e
B a n k . L o c a l b a n k e r s y e s te r d a y p o i n t
ed o u t t h a t d u r in g th e s tr i n g e n c y f o l
lo w in g th e o p e n in g o f th e E u r o p e a n
w a r C in c in n a ti monfcy r a te c w e re lo w e r
th a n C h ic a g o r a t e s . I t w a s th e g e n j e r a l o p in io n a m o n g th e lec&l b a n k e r s
y e s te r d a y t h a t M r. R eynolds w a s e i t h e r
m is q u o te d o r m is in fo rm e d . T h e y w e re
u n a n im o iis in a s s e r t i n g t h a t th e s t a t e
m e n t a s c r e d ite d to h im w a s n o t in a c
c o rd w it h th*i tru * - s i tu a ti o n . *
•
4%
Cincinnati Enquirer
lloveyriber 9, 1915
CHECK COLLECTIONS
! WITHOUT EXCHANGE
j
•
_______________ ___
i
Clearing House Tomorrow Will
Consider Establishing of
Special Department.
W IDENING P R E S E N T M ETH O D
More O ut-of-Tow n B an ks to be
Asked to Jo in In Scheme with
Association Members.
T h e N e w Y o rk C le a r in g H o u s e A s
s o c ia tio n w ill h o ld a m e e tin g to m o r r o w
to c o n s id e r t h e e s t a b lis h m e n t o t a
s p e c ia l d e p a r t m e n t f o r c o lle c tin g c h e c k s
o f o u t- o f - to w n b a n k s a t p a r . F o r t h r e e
y e a r s in d iv id u a l b a n k s h a v e h a d w o r k | in g a g r e e m e n ts w ith th e b a n k s o f c e r1 t a i n " d is c r e t io n a r y p o i n t s " in M a s
s a c h u s e tt s , R h o d e I s la n d . C o n n e c tic u t,
N e w J e r s e y a n d N e w Y o rk , u n d e r w h ic h
th e in s titu tio n s h e r e c o lle c te d w ith o u t
c h a r g e c h e c k s d r a w n o n th e i n te r io r
b an k s.
W h ile th i s a r r a n g e m e n t w a s
s a t i s f a c t o r y a s f a r a s it w a s a p p lie d ,
m e m b e rs o f t h e C le a r in g H o u s e A s s o
c ia tio n b e lie v e d i t c o u ld b e e x te n d e d
g r e a t l y if t h e w o r k h e r e c o u ld b e p u t
u n d e r t h e d ir e c tio n o f t h e a s s o c ia tio n .
A c o m m itte e c o n s is tin g o f W a l t e r E .
F r e w P r e s id e n t of t h e C o rn E x c h a n g e
B a n k ; C h a r le s H . S a b in . P r e s i d e n t o f tn e
G u a r a n ty T . u s t C o m p a n y , a n d E d w a r d
T ow n sen d , p re s id e n t o f th e Im p o rte is
a n d T r a d e r s N a tio n a l B a n k , w a s a p
p o in te d l a s t N o v e m b e r b y A lb e r t H .
W ig g in , P r e s id e n t o f t h e C le a r in g H ouse
A s s o c ia tio n , to stu d y t h e f ie ld o f c h e c k
c o lle c tio n s .
T h i s c o m m itte e r e p o r te d
tw o m o n th s a g o t h a t a d e p a r t m e n t of
th e C le a r in g H o u s e to h a n d le e o l a
tio n s f o r a ll m e m b e r b a n k s j r f U w A s -
r r^ ^ in d rn g ^ m a t^ w lth
tn e
w o«
IS « f n ^ h f r ^ ; o f > w
S
a
r
i —
^ e c o -
Of col-
leT hen p ro p o sal w ill b e v o ted on in ‘h e
to r m o f th is re so lu tio n :
Resolved. T h a t th e C learing H ouse Com
m ittee be and hereby Is authorized to es
ta b lish in th e C learing H ouse fo r the bene
fit of ita m em bers a departm ent for tne
collection of out-of-tow n check*, and to
m ake such rules an d regulations for the
conduct thereof a s it m ay from tim e to
tim e determine.
U n d e r th e p r e s e n t lim ite d s y s te m i n
d iv id u a l b a n k s a n d t r u s t c o m p a n ie s
h e re , w h o a r e m e m b e rs o f t h e C le a r in g
1io u sc A s s o c ia tio n s , c a s h c h e c k s d r a w n
o n b a n k s in i n te r io r p o in ts , a n d re c e iv e
fr o m th e s e b a n k s r e m itta n c e s c o v e r in g
th e a m o u n t o f th e c h e c k s c a s h e d . N o
c h a r g e is m a d e b y th e lo c a l b a n k s fo r
th e s e r v ic e , w h e r e a s t h e b a n k s w h ic h
m a k e c o lle c tio n s f o r o u tiid e i n s titu tio n s
w ith w h o m th e y h a v e n o a g r e e m e n t
m a k e a c h a r g e w h ic h is ta k e n f r o m th e
fa c e v a lu e o f th e c h e c k s . I f t h e a s s o
c ia tio n d e c id e s to t a k e u p t h e w o rk , it
is p la n n e d to in v ite m a n y o th e r b a n k s
th a n th o s e a t th e d i s c r e t io n a r y p o in ts
to a c c e p t th e s e r v ic e , a n d th e in d iv id u a l
p h a s e o f th e b u s in e s s w ill b e s w a llo w e d
u p in th e J o in t la b o r o f t h e C le a r in g
H o u s e 's d e p a r tm e n t.
B y w a y o f i l l u s t r a t i n g th e m e th o d to
b e fo llo w e d , i t c a n b e a s s u m e d t h a t
c h e c k s d r a w n o n th e M e c h a n ic s N a
tio n a l B a n k o f P r o v id e n c e , R . I ., a r e
c a s h e d b y fiv e N e w Y o rk b a n k s o n th e
sam e day.
U n d e r th e p r e s e n t s y s te m
th e fiv e b a n k s s e n d th e c h e c k s to th e
P r o v id e n c e in s titu tio n a n d re c e iv e fiv e
c h e c k s c o v e rin g th e a m o u n ts p a id o u t.
T h e D e p a r tm e n t o f C o lle c tio n s o f th e
C le a r in g H o u se , u n d e r th e p la n , r e
c e iv e s th e c h e c k s f r o m t h e f iv e b a n k s ,
s e n d s th e m in a s in g le e n v e lo p e to th e
P r o v id e n c e b a n k a n d re c e iv e s in r e t u r n
a c h e c k c o v e r in g in a lu m p s u m t h e fa c e
v a lu e o f th e c h e c k s .
T h e d e p a r tm e n t
th e n d is tr ib u te s a m o n g th e b a n k s h e re
th e s u m d u e to e a c h , a n d m a k e s n o
c h a r g e f o r th e w o rk .
I f tlie p ro p o s a l g o e s th r o u g h , th r e e
s y s te m s f o r th e f r e e c o lle c tio n o f c h e c k s
o f i n te r io r b a n k s w ill be in o p e r a tio n
In th i s c ity . T h e F e d e r a l R e s e r v e B a n k
th r e e m o n th s a n o e s ta b lis h e d its s e rv ic e
f o r I n t r a d i s t r i c t c o lle c tio n a t p a r . a n d
s o o n a f t e r w a r d t h e G u a r a n t y T r ’j s t
C o m p a n y s e t a n o t h e r in o p e r a tio n fo r
t r u s t c o m p a n ie s .
A n o f f ic e r o f t h e F e d e r a l R e s e rv e
B a n k s a id y e s t e r d a y t h a t th e C le a r in g
H o u s e s y s te m w o u ld n o t c o n flic t in
a n y w a y w ith th e R e s e rv e B a n k 's m e th
od, b u t in f a c t w o u ld c o m p le m e n t it.
T h e R e s e rv e B a n k ’s c o l’e r tio n s a p p ly ,
o f c o u rs e , e x c lu s iv e ly to m e m b e r s o f th e
r e s e r v e s y s te m , w h ile a c a s u a l s u r v e y
t h e c o n te m p la te d p la n m a k e s i t a p
p e a r t h a t th e C le a r in g H o u s e w ill a c t
f o r b a tik s a c c e p tin g Its s e r v ic e s w h ic h
m a y b e e i t h e r w ith in o r w ith o u t th e
J u r is d ic tio n o f t h e R e s e rv e B a n k .
New York Times
July 20, 1915
CLASS C DIRECTORS
RECOMMENDS REDUCTION
W ill Not Be Appointed U ntil Late
in December.
Paid-In Capital of Federal Re
serve Banks By Two Third*.
Of
W a s h in g to n , N o v e m b e r IT.—T h e F e d
e r a l R e s e r v e B o a rd t o - d a y Iss u e d a
s t a t e m e n t o u t l in in g re c o m m e n d a tio n *
f o r a m e n d m e n ts to th e F e d e r a l r e s e r v e
a c t, m a d e b y th e F e d e r a l A d v is o ry
Council.
In a d d itio n t o th e s u g g e s tio n t h a t
th e w o r k o f th e oltlce o f th e C o m p tr o l
l e r o f t h e C u r r e n c y be a b s o rb e d a n d
a d m in is te r e d b y th e R e s e r v e B o a rd , th e
co uno'l recom m ended a red u ctio n by
tw o t h i r d s o f th e p r e s e n t p a id - in c a p i
t a l s to c k o f F e d e r a l R e s e r v e B a n k s ,
th e s u b s c r ib e d c a p it a l t o r e m a in a s u n
d e r e x i s ti n g law . l t s u g g e s te d t h a t th e
C la y to n a n t i t r u s t a c t b e a m e n d e d In
th e s e c tio n a f f e c tin g I n te r lo c k in g D i
r e c t o r a te s , so It w o u ld be l a w f u l f o r
a n o fficer o r D ir e c to r o f o n e b a n k to
h o ld office o r be a D i r e c t o r In a n o t h e r
bank.
T h e c o u n c il e x p r e s s e d t h e v ie w a t
th e r e q u e s t o f th e b o a r d , In r e s p e c t to
h ig h I n t e r e s t r a t e s b y b a n k s w h ic h a r e
m e m b e rs o f th e s y s te m , t h a t th e d e
m a n d f o r m o n e y Is r e g u la t e d b y Its
c u m u la tio n o r la c k o f c u m u la tio n In
b a n k in g c e n te r s . I t a d o p te d a r e s o lu
tio n d e c l a r in g u n a l t e r a b l e o p p o s itio n
to l e g is la tio n t h a t w o u ld m a k e f a r m
la n d b o n d s, s u c h a s h a v e b e e n p ro p o s e d
In c o n n e c tio n w ith r u r a l c r e d it b ills,
s e c u r i t y f o r lo a n s fro m F e d e r a l R e
s e r v e B a n k s o r to a n y m e a s u r e t h a t
w o u ld m a k e s u c h b o n d s th e b a s ts f o r
a c c e p ta n c e s b y m e m b e r b a n k s .
.
T h e E x e c u tiv e C o m m itte e o f th e
G o v ern o rs o f F e d e ra l R eserv e B a n k s
m e t h e r e to - d a y w ith th e E x e c u tiv e
C o m m itte e o f F e d e r a l R e s e r v e A g e n ts ,
to d is c u s s p o lic ie s In o o n n e c tlo n w ith
th e o p e r a tio n o f t h e r e s e r v e b a n k s .
■ r f t r l l l . BISI'ATI ■ T o THE r s u f l * « « .
W a sh in g to n . N ovem ber 5.—A lth o u g h th e
polls will be closed D ecem ber 1 fo r th e
election o f C lass A an d C lass B D ire c to rs
o f th e v a rio u s F e d eral re se rv e ban k a, th e
a p p o in tm e n t o f C lass C D ire c to rs will
pro b ab ly be re se rv e d u n til a b o u t C h r is t
m as.
4
A m em b er o f th e F e d e ra l R e serv e B oard
sa id th a t th e a p p o in tm e n t of C lass C D i
re c to rs , w hich is w holly In th e h an d s of
th e b o ard , will be delayed u n til th e la tt e r
p a r t o f D ecem ber, a lth o u g h a n n o u n c e
m e n ts will be m ad e In tim e to perm it, new
officers to m a k e a rra n g e m e n ts to a s su m e
th e ir duties.
H.
P. W olfe. o f C olum bus, Is th e C lass
C D ire c to r o f th e F o u rth D is tric t w hose
te rm ex p ire s D ecem ber SI.
(
I
Nominations Close.
SPRCt Al* m W A Tl'H TO THE 4tV4CI*KS.
C leveland. Ohio, N ovem ber 5.—N o m in a
tio n lis ts fo r th e electio n o f tw o D ire c to rs
o f th e F e d eral R e serv e B a n k of C leve
lan d . to re p re se n t th e s m a lle r b an k s, will
be se n t o ut M onday. T h e n o m in atio n s
closed to -4 ay . T h e list o f nom inees will
n ot be an n o u n ced u n til s» n t to m em ber
b a n k s M onday.
•
.
.
>
Cincinnati inquirer
ovenber 6, 1?15
Federal Reserve Bank.
T he
B ank
Cincinnati Snquirer
November 18, 1915
REYNOLDS SEES HIGH RATES
-?
----------------
O co rg e
M . R e y n o l d s , p re sid e n t o f th e
C o n t i n e n t a l n n d C o m m e r c i a l N a tio n a l B ank,
n o te s f a s t m o v e m e n t i n t o b u sin e ss o f I d l e
m o n - 'y a n d c o n s e q u e n t stiffe n in g o f m o n e y
rates<. l i e s a y s :
" O u r d e p o s its h a v e b e g u n to w o rk low er.
C in cin n ati a n d l - o u l s v M * b a n k s t o d a y a sk e d
f o r a l a r g e a m o u n t o f re d isc o u n ts. M inne
a p o lis a n d K a n s a s C i t y a r e b e g in n in g to
a s k fo r c red it. A s t h e m o n ey la d r a w n fro m
i i s f a r t h e r W e s t a n d N o r th w e s t wo tn tu r n
sh a ll red u c e o u r b a l a n c e s In N ew Y o rk a n <3
In co n seq u en ce th e re w i l l s h o r tly follow
Im p ro v e m e n ts I n r a t e s . A nd It a ll sh o w s
t h a t th e p re se n t t a l k , o f In c re a se in b u si
n e ss Is n o t m erely a n e x p re ssio n o f a w i s h ,
b u t a s ta te m e n t o f co n d itio n * .”
/ "
—
Ihicego Post
over.ber 6 ,1 9 1 5
A
te rm s
of
th re e
o f C le v e la n d
successor
nam ed
by
:h e
su ccesso rs
to
to
H arry
F e d e ra l
S ta c y
B
of th e F e d e ra l R e se rv e
31.
o l f e o f C o l u m b t i s w i l l be
d ire c to rs
w ill e x p ir e
P.
D ecem ber
W
R e se rv e
R a n k in
B o a rd
of
at
W a sh in g to n
S o u th
C h a rle s to n .
and
O ..
ian d A. B. P a tr ic k o t sSn^T svT lle, Ky., w ill be c h o se n by
m e m b e r b a n t s ^ M r . R a n k in is a C lass A d ir e c to r c h o se n
'by g ro u p th re e , c o n s is tin g of th e s m a lle r b a n k s of th e «lisItrict. M r. P a tr ic k is a C lass B, b u sin e ss m an , d ir e c to r
Ichosen by th e sa m e b a n k group. In a c c o rd a n c e w ith th e
'ro ta tio n p o licy o f th e R e se rv e A ct, th e s u c c e ss o rs to th e
th r e e m en w ill s e rv e fo r th re e -y e a r te rm s, th o u g h th e
p r e s e n t in c u m b e n ts h a v e o n e-y ear te rm s. N o tice c o n c e rn
in g m e th o d o f e le c tio n will be issu ed to m e m b e r b a n k s
in d u e c o u rse .
T h e F e d e ra l R e se rv e B oard th is w e ek a p p ro v ed re d is
c o u n t ra te s o f 3^4 p e r c e n t, for th e C lev e lan d b a n k on
t r a d e a c c e p ta n c e s w ith m a tu rity up to six ty d a y s a n d 4
p e r c en t, on th e s a m e k in d o f p a p e r ru n n in g six ty to n in e ty
d a y s. T h e tr a d e a c c e p ta n c e ta k e s p r e fe r e n tia l r a te s b e
c a u s e th e R e s e rv e B oard d e s ire s to in c re a s e its u s e ; it is
tw o -n a m e p a p e r, th e b u y e r of m e rc h a n d ise a c c e p tin g a
d r a f t d ra w n b y th e s e lle r r a th e r th a n re m a in d e b to r on
o p e n a c c o u n t on th e s e lle r 's books. T ra d e a c c e p ta n c e s
a p p ly to d o m e s tic b u sin e ss.
” ‘tt York "inancier
October 9, 1915
SUGGESTED AM ENDM ENTS
TO F E D E R A L R E SER V E ACT
T u r n C o m p tro ller's W o r k
O ver
to
the
B o a rd , A m e n d
C lause on F a r m L o a n s, R ed u c e C apital, B a r O fficials
F ro m M ore T h a n O ne B a n k
Washington—The Advisory Council has suggested sev
eral amendments to the Federal Reserve Act, the chief
among -which are:
That the work of the office of the Comptroller of the
Currency be absorbed and administered by the Federal
Reserve Board.
That Section 24 of the Federal Reserve Act relating
to loans on farm lands be amended to read as follows:
“Any national banking association not situated in a cen
tral reserve city may make loans secured by improved and
unencumbered farm lands situated within its Federal Re
serve district, or in an adjoining district, provided the
land on which the loan is made is within one hundred miles
of the office of the bank making the loan.”
A reduction by two-thirds of the present paid-in cap
ital of the Federal Reserve banks, leaving the subscribed
capital and double liability as now constituted.
That the Federal Anti-Trust Act be amended so that
the second paragraph of Section 8 will read as follows:
“No bank, banking association, or trust company, organ
ized or operating under the laws of the United States in
any city or incorporated town or 'village of more than
200,000 inhabitants as shown by the last census of the
United States shall have as a director or other officer or
employe any person who may ^e connected in either of
these official capacities with more than one other bank,
banking institution or trust company located in the same
place. Provided, that nothing in this section shall apply
1to mutual savings banks not having a capital stock repre
sented by shares. Provided further, that a director or
other official or employe of such bank may, besides being
an officer or director in one other bank, be a director, officer
or employe of not more than one additional bank or trust
company organized under the laws of the United States
or any state where the entire capital stock is owned by
stockholders in the other. And provided further, that
nothing contained in this section shall forbid a director of
Class A of a Federal Reserve bank, as defined in the Fed
eral Reserve Act from being an officer or director, or both,
in one member bank.
That the Anti-Trust A'ct be so amended as to permit
joint stock ownership by national banks of banks organ
ized to do business in foreign countries through branches
established therein.
That the National Bank Act be amended to permit
the establishment of branches by national banks having
an unimpaired capital of not less than $1,000,000, provided
that no branches are placed outside of the limits of the
city where the bank is itself located.
The Council also passed the following resolution:
“That this Council is unalterably opposed to any pro
vision whereby farm lands’ bonds described in the Hollis
bill may become security for loans from Federal Reserve
banks and to their being made a basis for acceptance by
member banks.
F E D E R A L R ESERVE B A N K ELECTION
In a cc o rd an ce w ith th e p ro v isio n s o f th e F e d e ra l R e
se rv e A ct, P ie r re J a y , c h a irm a n o f th e N ew Y o rk F e d e ra l
R e se rv e B a n k , h a s s e n t a c irc u la r le tte r to th e d is tr ic t
re se rv e e le c to rs o f G roup 3 in th is d is tr ic t a d v is in g th e m
o f th e c a n d id a te s w ho h a v e been n o m in a te d f o r th e tw o
C lass A a n d C lass B d ire c to rs w hose te r m s o f office e x
p ire s th is y e a r.
A p p a re n tly th e p re s e n t in cu m b e n ts,
F r a n k lin D. Locke, of C lass A , a n d L eslie R. P a lm e r, of
Class B, h a v e rece iv e d a n o v e rw h e lm in g p lu r a lity in th e
n o m in a tio n s.
co i F r a n ^ Kn
L ocl^e ’
B uffalo, h a s been n o m in a te d bv
82 b a n k s in th e d is tr ic t. T h e o th e r no m in ees in th is class
w e re B . H H ow ell, o f G arfield, X . J ., w ho receiv ed one
v ote J o s ia h W. P lace, o f New Y ork c ity , th r e e v o te s ; W
M. V a n D e u se n , o f N e w a rk , N. J ' f o u r v o tes a n d D D.
b an k
’ ° f G ra n v ille ’ N ' Y > w as n o m in a te d by one
L eslie R. P a lm e r, o f C ro to n -o n -H u d so n , N Y
re
ceived n o m in a tio n s fro m 88 b a n k s fo r C lass B a n d J a m e s
\\ . Jo h n s o n , of N ew B ru n sw ic k , N . J ., th r e e votes.
iall Street Journal
November 19,1915
Federal Reserve Banks
Have Helped Country
s e rv e b a n k o f th e d is tr ic t.
T h e e ffe c ts
o f th e F e d e r a l R e s e rv e s y s te m u p o n th e
la r g e b u s in e s s m a n , o r th e b u s in e s s
m a n ir r e s p e c tiv e o f s iz e , w h o k n o w s
h o w a n d is a b le to m a k e h is p a p e r c o
in c id e w ith th e r e q u ir e m e n ts o f th e
F e d e r a l R e s e rv e a c t, h a v e b e e n a lr e a d y
p e rc e p tib le a n d im p o r ta n t.
C urrency Function.
New System Has Yet to Take Up All Its Powers— Has
Improved Lending Conditions and Made
Money Rates More Stable.
By
HENRY
PA RK ER
W 'f L L I S ,
S e c re ta ry o f th e F e d e ra l R e se rv e B o ard .
W h ile
about
a
th e re
year
has
of
te c h n ic a lly
e x p e rie n c e
been
w ith
th e
j F e d e r a l R e s e rv e s y s te m , th e r e h a s b e e n
; c o n s id e r a b ly le s s t h a n a y e a r o f a c tiv e
o p e ra tio n
of
th e
b anks.
tio n s a s s ig n e d to th e m
yet been
u n d e rta k e n
h o w ev er,
has
been
Som e
b y la w
a t a ll.
s u ffic ie n t
fu n c
have net
T h e tim e ,
to
in d i
c a te m a n y th in g s t h a t m a y b e e x p e c te d
o f th e n ew
s y s te m , to
ta in
p r in c i p a l p r o b le m s w ill lie ,
o f its
sh ow w h e re c e r
a n d to s u g g e s t th e n a tu r e o f ’its f u r t h e r
d e v e lo p m e n t in s u n d r y d ir e c tio n s , b o th
in la w a n d in b u s in e s s p r a c tic e .
P r e d ic tio n s m a d e b y o p p o n e n ts o f th e
F e d e r a l R e s e rv e s y s te m w U h_ r e f e r e n c e
to th e p ro b a b le c h a ra c te r o i th e p e r
so n n e l o f th e n e w in s titu tio n s
have
b e e n w ith o u t fo u n d a tio n .
T h e F e d e ra l
R e se rv e B o a rd its e lf h a s n e v e r b een
g o v e rn e d b y p a r tis a n c o n s id e r a tio n s in I
i t s c h o ic e o f e m p lo y e s .
T h e p e rso n n e l
o f th e s e v e ra l b a n k s , so f a r a s its s e
le c tio n la y w ith in th e p o w e r o f th e
b o a r d , h a s a ls o b e e n c h o s e n u p o n ita
m e r its .
In th e b u s in e s s tra n s a c tio n s
o f th e b a n k s th e re h a s b e e n no o p p o r
t u n ity f o r th e e x h ib itio n o f p a rty p r e f
e re n c e ; an d , so f a r a s can now b e seen ,
n o s u c h o p p o r tu n ity is lik e ly to b e
a ffo rd e d .
^
.
.
T h is p o lic y h a s r e s u l t e d in t h e c h o ic e
b y th e
sev eral b an k s o f th e ir ow n
s ta ffB , w h o l l y f r e e o f i n t e r f e r e n c e o n |
th e p a r t o f th e F e d e ra l R e se rv e B o a r d ,!
a lth o u g h th e b o a rd h a s , in th e c a se o f
t h e h i g h e r o ffic e rs , f r e e ly g iv e n i t s a d
v ic e w h e n re q u e s te d .
T h e b o a rd h a s
n o t o n ly , a s a lr e a d y n o te d , c h o s e n its '
o w n s ta ff w ith o u t r e f e r e n c e to p o litic a l
c o n s id e r a t i o n s , b u t h a s m a d e t h e c h o ic e
u n d e r a s y s te m o f s e le c tio n a s r ig id
a n d c a r e f u l a s t h a t e m p lo y e d b y th e
C iv il S e r f l c e C o m m T ss io n .
S ta n d a rd iz in g P a p e r.
S tu d e n ts o f b a n k in g in its th e o r e tic a l
a s p e c ts , h o w e v e r, w ill b e o n ly s e c o n d a r
ily c o n c e rn e d w ith th e p r a c tic a l m e
c h a n ic s o f th e r e s e r v e s y s te m .
T hey
w ill n a tu r a lly a s k w h a t h a s b e e n d o n e
b y th e F e d e ra l R e se rv e B o a rd to w a rd
th e s ta n d a r d iz a tio n o f c o m m e rc ia l p a p e r
a n d th e im p ro v e m e n t o f le n d in g c o n d i
tio n s in th e U n ite d S ta te s .
T h is w as
o n e o f th e f ir s t p r o b le m s to b e a t
ta c k e d .
. . . .
T h e F e d e ra l R e s e rv e a c t p r o v id e d f o r
th e a c c e p ta n c e o f b ills o f e x c h a n g e b y
m e m b e r b a n k s a n d f o r th e d is c o u n tin g
o f t h e ir b ills b y F e d e ra l R e s e rv e b a n k a ,
th e r e b y in tr o d u c in g a p r a c tic e w h ic h
h a d b e e n im p o s s ib le u n d e r th e n a tio n a l
b a n k in g s y s te m . T h e e x a m p le th u s s e t
in th e n F e d e r a l R e s e rv e a c t h a s b e e n j
c o p ie d b y m a n y s ta t e s , a n d to -d a y s e v
e r a l o f th e m h a v e a lre a d y in tro d u c e d
s im ila r p r o v is io n s in to t h e i r la w s . U n
d e r C i r c u l a r s 1 1 a n d 1 8 ,.S e r i e s o f 1 9 1 5 ,:
th e b o a rd h a a p r a c tic a lly s ta n d a rd iz e d !
th e s e a c c e p ta n c e s b y p r o v id in g th e ir
c o n te n t, th e c h a ra c te r o f s e c u r ity b y
w h ic h th e y m u s t b e a c c o m p a n ie d , a n d
th e n a tu re a n d n u m b e r o f th e in d o rs e
m e n ts
re q u ire d
in
c o n n e c tio n
w ith
th e m .
,
.
,
In o th e r c ir c u la r s th e r e h a s b e e n a n
a tte m p t to d e s c rib e a n d p ro v id e f o r
d iff e re n t ty p e s o f c o m m e rc ia l p a p e r,
. w i t h a v ie w t o e n c o u r a g i n g t h e ii^ tro ; d u c tio n o f n e w b u s in e s s p r a c tic e s a n d
t h e im p r o v e m e n t o f o ld o n e s .
In th e
I c ir c u la r r e la tin g t j tr a d e a c c e p ta n c e s
I ( C i r c u l a r 1 6 , S e r i e s o f .1 9 1 5 ) t h e b o a r d
h a s p o in te d a w a y to f u r t h e r d e v e lo p
m e n t o f th e k in d o f tw o -n a m e p a p e r
w h ic h is m o s t w id e ly u s e d in E u r o p e ,
a n d h a s e n d e a v o re d to e n c o u ra g e th e
, u s e o f su c h d o u b le -n a m e d r a f ts b y a id
in g in t h e e s ta b l is h m e n t o f s p e c ia lly
fa v o ra b le r a te s f o r th e m a t F e d e ra l R e
se rv e b a n k s.
U n d e r th e p ro v is io n s o f th e F e d e ra l
R e s e rv e a c t i t is r e q u ir e d t h a t lo a n s
b e m a d e u p o n p a p e r p r o te c te d b y w a r e
h ouse
r e c e ip ts , a n d
such
p r o v is io n s
h a v e b e e n m a d e b y th e b o a rd in th e
c ir c u la r r e l a t i n g to c o m m o d ity p a p e r
{ C irc u la r 17, S e r ie s o f 1 9 1 5 ), w h e r e it
is s o u g h t to m e e t t h e r e q u i r e m e n t s o f
th e s e c tio n o f th e a c t r e f e r r e d to .
By
w a y o f re n d e r in g tlii^ c ir c u la r a n d t h e ,
p r o v is io n s o n w h ic h i t is b a s e d r e a l ly
e ff e c tiv e , i t h a s b e e n n e c e s s a r y to d o a
c o n s id e r a b le a m o u n t o f a c c o m p a n y in g
w o rk d e s ig n e d to p r o m o te th e a d o p tio n
o f u n ifo rm w a re h o u s e le g is la tio n , a n d
th e is s u e o f w a re h o u s e re c e ip ts a g a in s t
s ta p le p r o d u c ts in s a ti s f a c to r y fo rm .
E ffe c t
on
R a te s.
P e rh a p s no o n e fe a tu re o f th e F e d -;
e r a l R e s e rv e a c t h a d re c e iv e d so m u c h
a t t e n ti o n p r i o r to t h e o r g a n iz a tio n o f
th e n e w b a n k s a s its p r o v is io n s r e g a r d
in g th e r a te o f d isc o u n t.
D u rin g th e
a g ita tio n f o r th e A ld ric h , o r m o n e ta ry
c o m m is s io n , b ill m u c h w a s s a id o f t h e
s u p p o s e d n e c e s s ity o f d e v e lo p in g a u n i
f o rm r a t e o f d is c o u n t, a p p lic a b le to t h a
w h o le c o u n tr y .
T h e F e d e ra l R e se rv e
a c t w as fra m e d u p o n th e th e o ry th a t
su ch a u n ifo rm r a te o f d isc o u n t w a s
n e ith e r p r a c tic a l n o r d e s ira b le f o r a
c o u n try p o s s e s s e d o f so g r e a t a n e x
t e n t o f te r r ito r y a s th e U n ite d S ta te s
a n d c o n ta in in g w ith in its e lf so m a n y
d iff e re n t in d u s tr ia l c o n d itio n s a n d s u c h
!w i d e l y v a r y i n g d e m a n d f o r , a n d s u p p l y
o f c a p ita l?
T h e o rg a n iz a tio n o f th e F e d e ra l R e
s e r v e vs s te m h a s c h a n g e d th * s i t u a ti o n
j in t w o w a y s . I t h a s o f f e r e d t o t h e
b a n k s o f th e c o u n try th e o p p o r tu n ity
o f o b ta in in g re d is c o u n ts b y a c tu a lly
p r e s e n t in g s p e c ific ite m s o f p a p e r , n o t
a s c o lla te r a l, b u t f o r th e p u rp o s e o f
o b ta in in g a b o n a -fid e r e d is c o u n t in e a c h
a n d e v e ry c a se . F u rth e rm o re , i t h a s e s
ta b lis h e d th ro u g h o u t e a c h F e d e ra l R e
s e rv e d i s t r ic t a d e fin ite ly k n o w n r a t e
o f r e d is c o u n t, p u b lis h e d e a c h w e e k a n d
a v a ila b le to a ll m e m b e r b a n k s u p o n e x
a c tly t h e s a m e c o n d itio n s .
T h e e ffe c t o f th is c h a n g e h a s b e e n
im p o rta n t.
It
has
te n d e d to
b rin g
a b o u t th e s ta n d a r d iz a tio n o f r a te s b y
c ity b a n k a o n a le v e l s u b s ta n t ia l ly s im ito t h a t fix e d b y t h e F e d e r a l R e s e r v e
b a n k in th e d i s t r ic t in w h ic h th e r a te
w a s o ffe re d .
I t h a s th u s g iv e n to b o r
ro w in g b a n k s a s ta n d a r d o f c o m p a ris o n
w h ic h in th e p a s t t h e y H a v e n e v e r p o s
sessed .
T h e y n o w k n o w t h a t b y g o in g
to th e F e d e r a l R e s e rv e b a n k w ith a
i g iv e n c a re f u lly d e s c rib e d k in d o f p a p e r
j th e y c a n g e t a th ir ty - d a y a c co m m o d a
tio n a t , s a y , 4 p e r c e n t.
B u s in e ss m e n w h o a t p r e s e n t u n d e r
s ta n d t h a t t h e i r p a p e r f a lls w ith in t h e .
r e q u ire m e n ts o f th e F e d e ra l R e s e rv e
a re a b le ,to d e m a n d a n d do , in
•
e x a c t a r a te o n s u c h p a p e r c o rre sp o n d -1
in g r o u g h l y t o t h e r a t e fix e d b y t h e
F e d e ra l R e s e rv e b a n k , p lu s a m o d e ra te j
c o m m iss io n .
S o m e o f th e m h a v e b e e n
a b le t o d i s c o u n t t h e i r p a p e r b e lo w t h e j
R e se rV e B a n k r a t e b e c a u s e t h e i r o w n i
b a n k a w e re h o ld in g h ig h re s e rv e s a n d
w e re e a g e r to g e t b u s in e s s . H a d th e
c o n d itio n s b e e n r e v e r s e d a n d h a d s e - j
v e re s trin g e n c y
been
p re v a le n t th e y
w o u ld h a v e b e e n a b le t o d e m a n d a c c o m
m o d a tio n fro m t h e i r h a n k s b a s e d u p o n
I th e r a te c h a rg e d b y th e F e d e ra t R e
j
E x p e r ie n c e th u s f a r h a s u n q u e s tio n
a b ly sh o w n t h a t t h e c u r r e n c y f u n c tio n
o f th e F e d e ra l R e se rv e B a n k h a s b e e n
u n im p o rta n t.
I t is tr u e t h a t F e d e ra l
R e se rv e
banks
have
o b ta in e d
and
p l a c e d i n t h e h a n d s , o f t.h e . p u b l i c v e r y
n e a r l y $ 2 0 0 , 0 0 0 ,0 0 0 o f t h e i r o w n n o t e s ;
b u t th e b u lk o f th is su m h a s b e e n re p
re s e n te d
b y g o ld a n d la w f u l m o n e y
w h ic h h a s b e e n d e p o s ite d w ith F e d e r a l
R e s e rv e a g e n ts d o lla r f o r d o lla r.
In
a ll. th e a c tu a l lia b i li ty o f t h e F e d e ra l
R e s e rv e b a n k s f o r o u ts ta n d in g n o te s
(p ro te c te d
by
c o m m e rc ia l
p a p e r)
is
$20,000,000 o r
le s s .
The
f ig u r e s
j u s t g iv e n — a s w e ll a s a ll o th e r e v i
d e n c e o b ta in a b le — s h o w t h a t little e le
m e n t o f “ e la s t ic i ty ” in
th e
c o rre c t
s e n s e is to b e p e rc e iv e d in t h e F e d e r a l
R e s e rv e n o te s u p to d a te , n o tw ith s ta n d
in g th e f a c t t h a t th e F e d e ra l R e s e rv e
a c t c o n ta in s p r a c tic a lly e v e ry p ro v is io n
k n o w n to m o n e ta r y s c ie n c e f o r f o r c in g
th e n o te s b a c k to th e i r is s u e rs .
T h is s ta t e o f a f f a ir s w ith r e g a r d to
F e d e r a l R e s e rv e n o te s is p a r t l y d u e to
th e f a c t th a t, d u r in g m o s t o f th e ir
lif e , t h e c ir c u la tio n w a s c lo g g e d b v th e
A ld ric h -V re e la n d n o te s , w h ic h h a d b e e n
so p le n tifu lly iss u e d l a s t a u tu m n , a n d
p a r tly to th e f a c t t h a t th e n e w F e d
e ra l
R e se rv e
banks
w e re
o rg a n iz e d
u n d e r th e s o -c a lle d “ b a n k in g th e o r y ”
r a t h e r th a n u p o n t h e c u r r e n c y th e o r~ "
a n d t h a t c o n s e q u e n tly th e y
p e rf „ .l
t h e ir s e rv ic e w ith o u t n e c e s s a r ily in
v o lv in g th e is s u e o f n o te s .
F u rth e r
m o re , th u re is th e g e n e ra l f a c t t h a t
th e c ir c u la tio n o f th e U n ite d S ta te s
is a lr e a d y to o la r g e , a n d is d a ily b e I in g a d d e d to b y im p o r ts o f m o n e y fro m
a b ro a d .
In th e d o m a in o f n o te c ir c u la tio n ,
th e r e f o r e , a s in t h a t o f c o m m e rc ia l
p a p e r, i t m u s t b e s a id t h a t th e F e d e ra l
R e s e rv e s y s te m h a s b a r e ly m a d e a b e
g i n n i n g in t h e c u l t i v a t i o n o f t h e fie ld
o p e n e d to it.
I t h a s d e v e lo p e d t h e m a
c h in e r y p ro v id e d b y th e la w , a n d h a s
s h o w n t h a t s u c h m a c h in e r y is e ffe c
tiv e a n d a d a p te d to th e p u rp o s e .
E arnings of Banks.
O n e q u e s tio n in e v ita b ly a n d p r o p e r ly ,
a s k e d w ith r e f e r e n c e to e v e ry g o v e r n - j
m e n ta l e n te r p ris e o f a c o m m e rc ia l n a tu re
is :
H a s th e
u n d e rta k in g
p a id ?
W it h m o s t g o v e r n m e n ta l o p e r a t io n s it
is n o t p o s s ib le to a n s w e r c a te g o r ic a lly j
w h e th e r a g iv e n s e rv ic e h a s “ p a id ” o r
n o t. T h e F e d e ra l R e s e rv e b a n k in g s y s - !
t e m i s u n i q u e i n t h a t I t m a y b e bu’j - j
je c te d to e ith e r t h e g e n e ra l o r th e n a r - 1
ro w t e s t a p p lie d to g o v e rn m e n ta l e n - 1
te r p ris e s .
T h e F e d e ra l R e se rv e B o a rd h a s p u b
lis h e d
c o m p le te
ta b u la te d
re tu rn s
sh o w in g d e ta ile d s o u rc e s o f in c o m e a n d
e x p e n d itu re s f o r th e p e rio d fro m th e
o rg a n iz a tio n o f th e b a n k s , o n N o v e m
b e r 36 , 1 9 1 4 , u p t o a n d i n c l u d i n g O c to
b e r 81, 1915. T h e s e s ta tis tic s s h o w in
g e n e ra l th a t th e g ro ss e a rn in g s o f th e
s y s te m , h a d
been
about
$ 1 , 7 3 9 ,0 0 0 ,
w h ile th e g ro s s e x p e n se s o f th e s y s
te m
h a d , b e e n a b o u t $ 2 ,7 4 8 ,0 0 9 .
The
c u r r e n t e x p e n s e s h a v e a m o u n te d to a p
p r o x i m a t e l y $ 1 ,4 1 8 ,0 0 0 .
L a t e r m o n t h 's s h o w s t e a d y i m p r o v e
m e n t in e a rn in g s , b u t i t m a y b e r o u g h
ly s ta t e d t h a t u p to N o v e m b e r 1 th e
s y s te m h a s c o v e re d c u r r e n t e x p e n s e s ,
w i t h a s u r p l u s o f s o m e $ 3 2 0 ,0 0 0 , l e a v
in g its o rg a n iz a tio n c o s t a n d i ts e q u ip
m e n t o u tla y s till to b e w r itte n
o ff.
S o m e r e s t r i c ti o n e h o u ld b e m a d e u o o n
j
New york Tribune
January 4, 1916
President o f Trust
!
Company Here Resigns
----------------
«—
-—
——
—--------------------------------------
James I. Buchanan Gives
Up Office Because of Press
of Other Business.
DIRECTOR
ELECTIONS
a t a
tiie
b o a rd
of
d ire c to rs
of
m e e tin g
th o
of
P itts
}b u r g h T r u s t C o m p a n y y e s te r d a y , re-*
j s ig n e d a s p r e s id e n t o f th e in s titu tio n .
! H is a c tio n , h e e x p la in e d , w a s d u e to
t h e in c r e a s in g d e m a n d s u p o p < h is tim e
a s p re s id e n t o f th e P itts b u rg h T e rm in a l
W a re h o u se
and
T ra n sfe r
C om pany,
e s p e c ia lly s in c e th e d e a th o f G . W . C .
J o h n s t o n , itij s e c r e t a r y a n d t r e a s u r e r .
M r. B u c h a n a n w ill c o n tin u e h is c o n n e c
tio n w ith th e t r u s t c o m p a n y a s a d ire c
to r. N o s u c c e s s o r w a s c h o sc n .
O n e of C o n c e r n F o u n d e r a .
M r. B u c h a n a n w a s o n e o f th e fo u n d
e rs o f th e P itts b u rg h T ru s t C o m p a n y
i n 1895. l i e h a d s e r v e d a s i t s p r e s i d e n t
f o r 12 y e a r s a n d a y e a r p r i o r t o a s s u m
in g th e p re s id e n c y w a s firs t v ic e p re s i-.
d e n t. U n d e r h is g u id a n c e th e c o m p a n y
g r e w s te a d ily a n d e n jo y e d a n e x c e e d
in g ly p r o s p e r o u s c a re e r .
A t t i i e s a m e m e e t i n g o f t l i e b o a r d \V .
W . G o l d s b o r o u g h . m a n a g e r o f t h e T O ru l
d e p a r tm e n t, w a s e le c te d a v ic e p r e s i
d e n t.
M r. G o ld s b o ro u g h h a s b e e n m a n a g e r
o f th e b o n d d e p a rtm t-n t o f th e tru s t
com pany
f o r 12 y e a r s .
H e
is w e ll
k n o w ’l l i n K . i s t e r n f i n a n c i a l c i r c l e s a n d
it is u n d e rs to o d t h a t h is p r o m o tio n w a s
h a s te n e d b y k n o w le d g e o f th e f a c t th a t
tw o N e w
Y o rk tr u s t c o m p a n ie s h a d
e x p re s s e d a d e s ire to s e c u re h is s e rv
ic e s .
H a is th o ro u g h ly f a m ilia l- w ith
t h e in v e s tm e n t a n d g e n e r a l f in a n c ia l
s itu a tio n in P itts b u r g h .
T h e e x e c u tiv e s ta ff o f th e P itts b u rg h
T r u s t C o m p a n y n o w c o n s is ts o f C h a rle s
H . H a y s a n d W . W . G o ld s b o ro u g h , v ic e
p re s id e n ts : D . G re g g M cK ee, tre a s u re r ;
B . H . S m y e rs , s e c re ta ry , a n d W . D .
J o n e s, a s s is ta n t s e c re ta ry a n d a s s is ta n t
tre a s u re r.
J n m r H I. I l u r h a n n n .
W .
\V .
tio ld n b u ro iiK h .
Pittsburgh Gaz.- Times
January 19, 1916
Congress Likely to Be Asked to
Reduce Amount of Currency;
$3 75,00 0,000 Issue of
Reserve Notes Considered.
I /c a d o r B u r e a u ,
W A S H IN G T O N ,
102 R ig g s
Jan.
K id s .
2 0 .— T h e r e ' s
to o m u c h m o n e y c ir c u la tin g In th e
U n ite d S ta te s a n d to o m a n y v a r ie tie s '
o f it.
C u rre n c y h a s tre m e n d o u s ly e x
p a n d e d ; n o w i t ’s t i m e t o f o r e s t a l l a
c o lla p s e b y c o n tr a c tin g .
A t n jo in t m e e tin g o f th e g o v e rn o r s
o f th e tw e lv e fe d e r a l r e s e r v e b a n k s
w ith tw o c o m m itte e s o f th e A m e ric a n
B a n k e r s ' A s s o c ia tio n to d a y , a
p la n
w as
a d o p te d
w h e re b y ,
if
C o n g re ss
c o n s e n t s , * 3 4 6 ,0 0 0 ,0 0 0 o f t r e a s u r y n o t e s ,
p o p u la r ly c a lle d " g r e e n b a c k s ” w ill b e
w ith d r a w n fro m c ir c u la tio n .
E.
R . F a n c h e r,
g o v e rn o r
of
th e
C le v e la n d r e s e r v e b a n k , a n d C h a r le s
‘A . H i n c h , o f C i n c i n n a t i , m e m b e r o f
th e C le v e la n d d i s t r ic t b o a r d o f d ir e c
to rs , p a r tic ip a te d in th e c o n fe re n c e ,
w h ic h is r e g a r d e d a s h is to r y - m a k in g
i in n a ti o n a l f in a n c e .
T o a c c o m p lis h th e w ith d r a w a l, a n
i s s u e o f 5 2 0 ,0 0 0 ,0 0 0 U n i t e d S t a t e s b o n d s
w ill b e n e c e s s a r y .
T h e s e w o u ld b e
a b s o rb e d , a c c o rd in g to th e p la n , b y
th e n a tio n a l
banks of
th e c o u n try
th ro u g h th e
tw e lv e
re se rv e b an k s.
N o d e p le tio n in th e a m o u n t o f c u r
re n c y a c tu a lly n e e d e d fo r th e b u s i
n e s s o f th e ' la n d w o u ld b e in v o lv e d b y
a d o p tio n
of
th e
p la n ,
h o w ev er.
A g a i n s t t h e J 1 5 0 .0 0 0 .0 0 0
of
g o ld r e
le a s e d b y w ith d ra w a l o f th e g re e n
b a c k s , t h e r e w o u l d b e i s s u e d J 3 7 5 .0 0 0 ,000 o f f e d e r a l r e s e r v e n o t e s .
A n a c t o f C o n g re s s w o u ld b e n e c e s
s a r y t o p u t t h e p r o p o s a l in to e ffe c t.
A jo in t c o m m itte e r e p r e s e n tin g th e
b u n k in g in te r e s ts w a * n a m e d a t to
d a y ’s c o n f e r e n c e t o f r a m e a h i l l f o r
p re s e n ta tio n to C o n g re s s a t th is s e s
s io n .
i
Cleveland Leader
January 20, 1916
situ a tio n to r
The
STOCKS
th o u g h
A m e ric a n
ra ilro a d s ,
s o m e w h a t c o m p le x , is s lp w ly
p ro v in g .
im
E a r n in g s o n th e p rin c ip le r o a d s
f o r t h e s e c o n d w e e k o f M a r c h w e r e 11 p e r
c en t g re a te r th a n a y e a r a g <
Waiting on Congress
s u ffic ie n t c o n s h * e rin g th e
w h ic h
coal
th e
and
p re s s in g
\ n d Ihe Size'Uf the Proposed
*
Government Loan.
Clews Says It Could Be Put
at Thirty Billions
Without Equaling a Ratio To Wealth
Already Assumed By Great
Britain.
gPKriAI. r>lSFATrH TO TOTK.KXQUtBEK.
N ew
Y o rk , A p ril
0 0 0 , 0 0 0 ,0 0 0
c o u ld
1 .— A
be
debt
assu m ed
of
$ 3 0 ,
by
th is
c o u n tr y , H e n r y C le w s s a y s in h is f in a n
c ia l
le tte r,
ra tio
as
b e fo re
G re a t
t i o n ’s w e a l t h .
lie
o f c o n d itio n s a s
“ S to c k
m o re
ta n t
on
th e
rea d y
na
has
The
s e c u rity
th e
been
p e n d in g
s p e c ia l s e ss io n
m o st
a
th e
of Con
im p o r
m a rk e ts
p ro sp e c t o f
e rn m e n t lo a n .
sam e
th e
a c tiv ity
M onday.
is
th e
to
re s tric te d
f a c t o r in
m om ent
as
fo llo w s :
le s s
o p e n in g ; o f
reach ed
c o n c lu d e s h is re v ie w
E xchange
or
g ress
it
B rita in
at
b ig
th e
G ov
T h e G o v e rn m e n t h a s a l
announced
T re asu ry
n o te s
p oses
and
m ay
tio n ,
w h ile
g ress
w ill
an
i s s u e o f $ 5 0 , 0 0 0 ,0 0 0
fo r
te m p o ra ry
d u p lic a te
ru m o r
in tim a te s
a u th o riz e
o f $1,000,000,000, a s
th is
a
p u r
tra n s a c -.
th a t
C on
p e rm a n e n t
m e n tio n e d
above,
lo a n
pos
s ib ly o n a 3 p e r c e n t b a s is .
T h e r e is n o d o u b t a b o u t th e s u c c e s s o f
such
a
S ta te s
I
lo a n .
The
to -d a y
o th e r n a tio n a n d
ly
s tro n g
c re d it
of
1- h i g h e r t h a n
w e a rc
p o s itio n
fo r
th e
U n ite d
th a t of any
in a
m a r v e lo u s
b o r ro w in g .
O ur
n a t i o n a l d e b t i s o n l y a b o u t $1,000,000,000, o r
.o n e
th ir d
W a r,
and
of
$30,000,000,000
re a c h e d
w h a t it
th is
of
w as
c o u n try
bonds
th e s a m e r a tio
a fte r
c o u ld
t h e C iv il
iss u e
b e fo re
b e tw e e n
its
over
debt
debt and
w e a ltH
a s G re a t B rita in .
T h e l a t t e r ’s
d e b t b e f o r e t h e w a r w a s a b o u t $3,500,000,
000 a n d t o - d a y i s a b o u t $17,000,000,000 o r
o v e r.
O u r b a n k r e s o u r c e s a r e in s p le n d i d c o n
d itio n . b e in g r e p o r t e d b y t h e C o m p tr o lle r
of
th e
C u rren c y
at
$16,0C0,000.000.
an
a m o u n t $210,000,000 g r e a t e r i n t h * r e s e r v e
c itie s t h a n e v e r in t h e i r h is to r y .
•
F o r e ig n b o r ro w in g s a r e s till a f e a tu r e
In t h i s m a r k e t , a n d t h e c o n t i n u e d . h e a v y
d r a i n u p o n c a p it a l f p r w a r p u r p o s e s is
d e s t i n e d t o h a v e a r e s t r a i n i n g e f f e c t u p »*i
o r d in a r y in d u s tr ia l a n d c o m m e rc ia l e n
te r p r is e .
ro ad s
m u st
m a te ria ls
dem and
in
fo r
T h i s is n o t
h e a v y in c re a se s
m eet
fo r
g e n e ra l,
in c re a se d
w ages,
p lu s
th e
fa c ilitie s .
A p p lic a tio n s f o r a d v a n c e s in f r e ig h t r a te s
h a v e b e e n m a d e b y b o th th e E a s te r n a n d
W e ste rn
L in e s.
U ltim a te ly
p ro b a b ly
be
g ra n te d ,
tim e
be
a llo w e d
w ill
C b m m e rc e
C o m m is s io n
p ro te s ts fro m
th e s e
a lth o u g h
by
to
th e
w ill
a m p le
I n te r s ta te
c o n s id e r
th e
s h ip p e r s , w h ic h a r e s u r e to
a ris e .
The
r a i l r o a d s in th is in s ta n c e ,
h o w e v e r, h a v e s u c h s t r o n g c la im s , b a s e d
u p o n j u s t i c e a n d n e c e s s i t y , t h a t JKfcblic
o p in io n w ill s u p p o r t t h e i r r e q u e s ts .
T h e 'f u t u r e o f th o m a r k e t is u n a v o id
a b ly u n c e r ta in w h ile so m a n y c o n flic tin g
a n d s tr ik in g in flu e n c e s a r e a t w o rk . W h e n
th e E a s t e r h o lid a y s a r e o v e r a n d C o n g re s s
h a s r e v e a le d its in te n tio n s , w e m a y e x
p e c t g r e a t e r a c tiv ity .
I f it h a d n o t b e e n f o r o u r in v e n tio n s
o f th e s u b m a r in e a n d a e ro p la n e , w h ic h
G e r m a n y s e iz e d a n d im p r o v e d u p o n f o r
h e r o w n u se , w e w o u ld n o t n o w b e o n th e
v e rg e o f w a r . a s th e f o r m e r is h e r m o st
d e a d ly w e a p o n .
W h ile t h e E u r o p e a n n a ti o n s a r e f ig h tin g
in g to th e d e a th , ^ a ilin g f o r a ll th e i r r e
s o u r c e s in m e n , m u n itio n s a n d m o n e y ,
G e r m a n y m u s t c o n c e n tr a te a ll h e r f o rc e s
a g a i n g t t h e a ll i e d a r m i e s , t h e r e f o r e , c o u ld
n o t n o w in v a d e o u r c o u n tr y , b u t th is
d o e s n o t p r e v e n t h e r fro m a v ig o ro u s
u s e o f s u b m a r in e s in o u r w a te rs .
T h i s w e a p o n is, t h e r e f o r e , th e o n e t h a t
w e m u s t f ig h t a n d t h e o n ly w a y to d o
i t is t o l o s e n o t i m e in c o m m a n d e e r i n g
a l l t h e m a c h i n e r y in t h i$ c o u n t r y a d a p t e d
fo r m a k in g p a r ts o f s u b m a r in e s a n d a e ro
p la n e s a n d w o rk n ig h t a n d d a y u n til w e
h a v e a t l e a s t oOO t o
o f th e m o s t u p t o - d a t e m a c h i n e s —t h a t w o u l d d o t o c o m
m e n c e w ith , to g e th e r
w ith
a d d itio n a l
q u ic k -firin g , s m a ll f ig h tin g c r a f t.
I f w e a r e to b e in v o lv e d in th e w a r
o u r o b je c t S h o u ld b e to f ig h t t h e s u b m a
r in e s w ith a ll t h e f o rc e , s k ill a n d d e te r
m in a tio n t h a t t h e A m e r ic a n p e o p le a r e
c a p a b l e o f ; in o t h e r w o r d s , w ip e a ll t h e
e n e m y s u b m a r in e s o ff th e A tla n tic O c e a n .
W ith t h a t a c c o m p lis h e d th e w a r w o u ld
so o n e n d . a n d a fte r th a t n e ith e r G e r
m a n y n o r a n y o t h e r n a ti o n w ill h a v e
t h e a u d a c i t y o r m e a n s in m e n o r r e
s o u rc e s to m a k e a n y k in d o f w a r a g a in s l
th e U n ite d S ta te s fo r so m e y e a rs
to
com e.
G r e a t B r ita in ls r e a lly f ig h tin g
our
b a t t l e 'a g a i n s t G e r m a n y b y lo c k in g u p a il
h e r f ig h tin g s h ip s .
I s u g g e s t e d in m an y p u b l i c s p e e c h e s o v e r 18 m o n t h s a g o t h a t
w e o u g h t t o b u i l d - f r o m 5**0 t o 1,«KX> s u b
m a r in e s a n d a e ro p la n e s a s sp e e d ily a s
p o s s ib le ./ I f w e h a d d o n e t h a t o u r n a ti o n
w o u ld n o w b e f r e e f ro m a p p r e h e n s io n o f
a w a r w ith G e r m a n y , a n d th e y w o u ld n o t
h a v e d a r e d to t a k e t h e i r p r e s e n t a t t i t u d e
a g a in s t th is c o u n tr y , m a k in g it n e c e s s a iy
f o r u s to f ig h t o r b e h u m ilia te d .
l.noo
ncin::*
o r i l
nquirer
1„17
D e n ie s C i t y
W a s C h o ic e of
B a n k B o a rd
I
C le a rin g s
----------------
C incinnati
Y o u n f s to w n
T o ta l
__________
A p ril
1 7 .— A s s i s t a n t
S e c r e ta r y A lle n o f th e F e d e r a l R e s e rv e I
B o a rd
to n ig h t
th o rity
th e
b o a rd
i c id e d
fo r
la n d
fo r a
s a id
th e re
w as
no
had
v irtu a lly
to c h a n g e th e h e a d q u a rte rs
th e
to
F o u rth
d is tr ic t
P itts b u rg h ,
c h a n g e w a s h a lte d
and
o n ly
fro m
th a t
b y th e
9. 712 252.69
..................................................................WM.3M.9W.eJ
Cleveland’s Federal Reserve
Bank to Be Clearing House
W A S H IN G T O N ,
of
l a n d 's
de
bank
C le v e
such
a
o p in io n
o f th e A tto rn e y G e n e ra l w h o r u le d th a t
th e b o a rd h a d n o s u c h a u th o rity .
“ T h i s Is a r u m o r a n d n o t h i n g e ls e ."
s a id M r. A lle n .
“N o one know s w hat
th e
b o a rd
th in k s
o f th is
m a tte r o r
w h a t it w o u ld d o lt lt h a d th e a u th o r
ity to m a k e a c h a n g e a s th e b o a rd h a s
n e v e r t a k e n a c tio n o n th is p r o p o s itio n
n o r h a v e th e m e m b e rs d e c la re d th e m
s e lv e s in d is c u s s in g i t . ”
W h ile R e p r e s e n ta tiv e R o b e r t F . H o p w o o d o f U n io n to w n
s a id
to d a y
he
m ig h t c a ll a c o n fe r e n c e o f r e p r e s e n ta
tiv e s fro m
W e s te rn
P e n n s y lv a n ia to
d isc u s s th e a d v is a b ility o f a n a m e n d
m e n t to th e F e d e r a l R e s e rv e la w u n d e r
w h ic h s u c h a c h a n g e c o u ld b e m a d e ,
t h e im p r e s s io n is t h a t s u c h a n
am end
m e n t w o u ld h a v e a s lim c h a n c e o f g e t
tin g th ro u g h C o n g re ss.
S e c re ta ry M cA doo, fo rm e r A s s is ta n t
S e c re ta ry a n d n o w
G o v e rn o r o f th e
R e s e rv e B o a rd C h a rle s S. H a m lin a n d
C o n tr o lle r o f th e C u r r e n c y J o h n S k e l
to n
W illia m s a ll o p p o s e d P i tts b u r g h
w h e n th e r e s e r v e b a n k c itie s w e r e b e
in g s e le c te d .
Pitsburg Gazette Times
April 1 8 . 1316
...........................................................
1
act
fed e ra l
as
se rv e
hanks
d is tric t.
A p r!!
rese rv e
c le a r in g
m em ber
t
23, 183.SOO.OO
145. fitW.960.lt
1*. 840.915. 83
au
r u m o r th a t a m a jo rity
m em b e rs
s u p p lie d w ith lo a n a b le f u n d s .
C le a r
in g f ig u re s In t h e s a m e c itie s f o r th e
f ir s t fif te e n d a y s in A p r il a r e a s f o l
lo w s .
JH.JM .rO O.OO 14,1^.
73. IMS 6(* 00
«S.i09.921.(W
94 SS9 457.40
The
w heat
c ro p
in
th e
d is tric t
lo o k s g o o d .
A g re a t d e a l o f to b a c c o
p r o b a b l y w ill b e p u t in . T h e p r ic e o f
t h is c o m m o d ity Is a d v a n c i n g r a p id ly .
[S p e c ia l T elegram t o T h e G a z e tte T im e s .1
W A S H IN G T O N ,
....................................................................
Columbus .........................................................
P ittsb u rg ..........................................................
Toledo ...............................................................
BOARD NEVER DECLARED ITSELF
•'
R e c o rd .
............................... ........................t
C l e v e la n d
Shift from Cleveland Prevented
by More Than Attorney’s
Ruling Officer Asserts.
ii
M ake
R e c o r d f ig u r e s a r e b e in g m a d e in
c le a rin g s .
M o n ey ra te * re m a in u n
changed, and
b a n k s a re
p le n tifu lly
house
of
3 0 .— C l e v e
bank
th e
C h a r le s
fo r
w ill so o n
a ll
C le v e la n d
S.
th e
re
H a m lin ,
g o v e rn o r o f th e fe d e ra l re s e rv e b o a rd ,
to d a y a n n o u n c e d th a t th e b o a rd h a s
14.912.200 UO
113.489,«93.82
13.713.SW.00
3,359.294.49
W7J.469.86J 35
ft.27t.fi00.00 58.5%
:9.17S,2«G.29 25.7% i
«. 127.573.8.3 44.7%
6.312.958.20 189.1%
J90.»22.132.6J
W .« *
a d o p te d a p la n ,
e ff e c tiv e
Ju n e
IB,
w h e re b y
each
fed e ra l re se rv e b a n k
w ill c le a r a t p a r f r o m
Its m e m b e r
b a n k s a ll c h e c k s d r a w n o n a ll m e m
b e r b a n k s , w h e th e r in its o w n d is
tric t o r o th e r d is tric ts .
A ll c h e c k s
d r a w n o n n o n m e m b e r b a n k s w ilt a ls o
b e a c c e p te d a t p a r w h e n s u c h c h e c k s
c a n b e c o lle c te d b y t h e f e d e r a l r e
se rv e b a n k s a t p a r.
T h i s i n n o v a t i o n is e x p e c t e d t o i n
c re a s e th e im p o rta n c e a n d u tility o f
th e
C le v e la n d
and
o th e r
rese rv e
banks.
I t w ill p r o b a b ly n e c e s s i ta t e ,
m o re o v e r, a n e x p a n sio n o f th e v a rio u s
o ffic e f o r c e s .
Cleveland. Leader
!iay 1, 1916
NATIONAL BANKS OPERATE
UNDER ADVERSE CONDITIONS
NOW
G E T T IN G R ID O F T H E I R U . S . B O N D S A N D
R E D U C IN G C IR C U L A T IO N U N D E R
N E W SY STEM
H a ve S o ld $27,000,000 V . S . B onds Since M arch, 1915—
R educed C ircu la tio n $ 17,000,000 in T w o M onths—
R e se rv e Bfwtifes In v e ste d H ea v ily Because
of M o n ey C ondition s— D ecrease
,
in N u m b e r D u rin g Y e a r
\
■ ■■~
The great increase in the re so u rc e s o f th e n a tio n a l
banks, which the C o m p tro lle r o f th e C u rre n c y e m p h asizes
in connection with his r e c e n t r e p o r t h a s o c c u rre d , i t w ould
appear, not by reason of G o v e rn m e n ta l influence, b u t in
spite of It, After comparing fa v o ra b ly the a g g re g a te r e
sources of our national banks with th e la r g e s t c e n tr a l in
stitutions of the w o rld , and noting in c id e n ta l c h a n g e s in
the various items, the C o m p tro lle r re a c h e s th e c ru x of
the national bank situation when h e show s t h a t th e ir h old
ings of United States bonds, o n March 7 la s t, d e cre ased
$20,000,000 as compared with D e cem b er 81, 1915, a n d
$27,000,000 compared with M a rc h 4, 1915, a n d t h a t th e
circulation o f national banks, w h ic h s ta n d s now a t $695,
000,000, decreased $17,000,000 iij a lit t le o v e r tw o m o n th s.
The C o m p tro lle r seeks to e x p la in th is by p o in tin g o u t j
that the F e d e r a l R e se rv e b a n k s h a v e been in c re a s in g th e i r j
holdings of G o v e rn m e n t bon d s in th e m e a n tim e . T h a t is
just it. T h e F e d e r a l R e se rv e b a n k s , b y law , a r e forced
to take over a c e r t a i n a m o u n t o f th e U n ite d S ta te s bonds
each year, while th e n a tio n a l b a n k s a r e ta k in g a d v a n ta g e
very readily of the o p p o rtu n ity o f g e ttin g “ o u t fro m un- ;
der” their bond se c u re d c irc u la tio n . T o th e F e d e ra l R e
serve banks is g ra d u a lly b e in g s h if te d th e b u rd e n of p ro
tecting the G o v e rn m e n t issu e s, w h ic h th e n a tio n a l b a n k
ing law laid upon th e n a tio n a l b a n k s m o re th a n fifty
years ago.
It i s true the F e d e r a l R e se rv e b a n k s h a v e in v e s te d in
United States b o n d s c o n s id e ra b ly in ex ce ss o f th e s t a tu
tory $25,000,000 a y e a r c alled fo r , b u t th is is due la rg e ly
to th e f a c t t h a t th e y h a v e been forced to find a n o u tle t
f o r th e in v e s tm e n t o f th e ir fu n d s. A t th e p re s e n t tim e
th e y ow n $15,000,000 o f U n ite d S ta te s bonds, a n d h a v e
b o u g h t $35,000,000 o f m u n ic ip al w a r r a n t s .
B ills d is
c o u n te d a n d b o u g h t a m o u n t to $66,000,000, b u t o nly $22,
000,000 of th is re p re s e n ts bills d isc o u n te d fo r m em ber
b a n k s. In o th e r w o rd s, a t a m ore a c tiv e tim e in th e
m oney m a rk e t, th e re se rv e b an k s w ill n o t a b so rb th e
U n ite d S ta te s bonds to a g r e a t e r e x te n t th a n th e y h a v e to.
T h e re is no g e ttin g a w a y fro m th e f a c t t h a t th e n a
tio n a l b an k s h a v e been w o rk in g a g a in s t a d v e rs e c o n d itio n s,
a n d , i t w ould a p p e a r, p a r tic u la r ly w ith in th e l a s t few
y e a rs. G oing back a little f u r t h e r th a n th e C o m p tro lle r's
p r e s e n t re v ie w , w e find t h a t th e n a tio n a l b a n k s h a v e g o t
te n r id o f a b o u t $40,000,000 o f U n ite d S ta te s bonds since
O ctober 21, '1913, o r j u s t b e fo re th e p a ssa g e of th e F e d
e ra l R e se rv e a ct.
T h e to ta l c irc u la tio n o f n a tio n a l b a n k s on M a rch 7
in d ic a te d a c o n tin u a tio n o f th e ste a d y decline since th e
h ig h - w a te r m a r k o f th e ir c irc u la tio n on O cto b er 21, 1913
( i f th e te m p o ra r y issu e o f e m e rg e n c y c u rre n c y in 1914 be
o m itte d ) , th e a g g r e g a te d e c re a s e a m o u n tin g to $32,000,000.
In f a c t, in p o in t o f c irc u la tio n , th e s ta n d in g of n a tio n a l
b a n k s is c a rrie d b ack to S ep tem b er 1. 1911.
A n e x tr a o r d in a r y f e a t u r e o f th e M arch 7 r e p o r t is a
d e c re a s e o f 13 in th e n u m b e r o f n a tio n a l b a n k s w ith a n
in c re a s e o f o nly $700,000 in c a p ita liz a tio n in tw e lv e
m o n th s. T h e C o m p tro lle r a tte m p ts to e x p la in th is a s due
to th e liq u id a tio n o f a n u m b e r of n a tio n a l b a n k s fo r th «
p u rp o se o f c o n so lid a tin g w ith o th e r n a tio n a l b a n k s. T h e
f a c t re m a in s t h a t i t is n o th in g m o re th a n a c lim a x to the
d e c re a s in g n u m b e r o f n a tio n a l b a n k s o rg a n iz e d in re c e n t
y e a rs . F o r som e y e a r s a f t e r th e p a ssa g e o f’th e F in a n c ia l
act o f M a rc h 14, 1900, th e a v e ra g e in c re a s e In th e n u m b e r
o f n a tio n a l b a n k s w a s a t th e r a te o f a b o u t one a d a y , b u t
a f t e r 1907 th e m o v em e n t fe ll off and h a s been a c c e n tu a te d
la te ly .
T h e fo llo w in g ta b le sh o w s th e y e a r ly in c re a s e s in th e
n u m b e r o f n a tio n a l b a n k s a n d th e in c re a s e d c a p ita liz a tio n
on th e d a te s g iv e n :
N e w B anks In c re a s e d C a p ita l
*13
M arch 7, 1916
,.
$700,000
106
M a rch 4, 1915. . . .
10.100,000
53
M arch 4, 1 9 1 4 . . . .
4,200,000
A p ril
85
16,140,000
4,
A p ril 18, 1 9 1 2 . . . .
139
24,550,000
•D e c re a se .
)
Wall Street Journal
ipril 29, 1916
EXCHANGE
FED ER A L RESERVE
V 11ECK COLLECTION'S
! R e s e r v e B o a rd in C irc u la r to R e se rv e B a n k s L a y s D o w n
G eneral R u le s, b u t L e a v e s D e ta ils to B a n k s —
I n O p era tio n J u n e 15
W a s h in g to n — T he F e d e ra l R e se rv e B o a rd h a s m ailed
to th e F e d e ra l re s e rv e b a n k s fo r d is trib u tio n to a ll th e ir
m em b e r b an k s its c irc u la r a n n o u n cin g a p la n fo r c o u n tr y
w ide check c le a rin g a n d collection. T h e s a lie n t p o in ts of
th e c irc u la r a re a s follow s:
T h e F e d e ra l R e se rv e B oard, a c tin g u n d e r th e a u th o rity
! of th e F e d e ra l R e se rv e A ct, h a s d e s ig n a te d th e F e d e ra l
R e se rv e b a n k s to a c t a s c le a rin g h o u se s f o r th e c le a rin g
a n d collectio n of checks f o r th e ir m em b ers. In d o in g th is
th e F e d e ra l R e se rv e B oard h a s laid dow n c e rta in g e n
e ra l p rin c ip le s b u t h a s le ft it fo r th e e x e c u tiv e officers
o f th e F e d e ra l R e se rv e b an k s to w o rk o u t th e d e ta ils .
T h e b e a rd e v id e n tly re c o g n iz e s th e . im m e n se a m o u n t
of d e ta il w ork th a t m u st be done in o rd e r t o p u t su c h a
v a s t m a c h in e ry in to sm ooth o p e ra tio n , a n d h a s s e t th e
tim e f o r b e g in n in g th e o p e ra tio n o f th e sy s te m a s J u n e 15.
T h e im p o r ta n t f e a tu r e s of th e p la n a re :
(1 ) T h e F e d e ra l R eserv e b a n k s w ill a c c e p t a t p a r all
c h eck s fro m m em b e r b a n k s w h e th e r d ra w n a g a in s t o th e r
m e m b e r b an k s, n o n -m em b er b a n k s, o r p r iv a te b an k s. A n
e x ce p tio n , how ever, is m ade a t th e o u ts e t in th e c a se of
ch eck s d ra w n a g a in s t ntfn-m em ber b a n k s w hich c a n n o t
b e collected a t p a r.
(2 ) A ll checks th u s rece iv e d fro m m em b er b a n k s
w ill be given im m e d ia te c red it e n tr y , a lth o u g h a m o u n ts
th u s cred ited w ill n o t be counted a s re serv e s, n o r becom e
a v a ila b le u n til collected.
(3 )
In o rd e r to en ab le m em ber b a n k s to know how
soon checks s e n t in fo r collection will be a v a ila b le e ith e r
ias re s e rv e s o r f o r p a y m e n t of check? d ra w n a g a in s t th em ,
tim e schedules, g iv in g th e m in im u m tim e f o r collection,
w ill be fu rn is h e d by ejich F e d e ra l re se rv e b a n k to its m em
b e r b an k s.
(4) The actual cost, without profit, of the clearing
and collection of check? will be paid by the Federal reserve
banks and assessed against the member banks in proportion
to their sendings.
(5) The whole plan is based on generally accepted
principles under which clearin'? and collection plans have
long been operated.
A Federal reserve bank will not debit a member bank's
reserve account with items forwarded to it for collection
until the remittance of the member bank, in payment of
such items shall have had time to reach the Federal reserve
bank.
-
Wall Street Journal
May 1, 1916
th o s e y e a r s . P o in t o u t a b a n k e r In t h e
U n ite d S ta t e s to - d a y w h o w ill h a v e th e
t e q i e r i tj r to s u g g e s t, th e n p ro v e , t h a t h a d
It n o t b e e n f o r t h e c o u r a g e o u s m a n n e r in
w h ic h ' th e p r e s e n t S e c r e ta r y o f th e T r e a s
u r y m e t th e s i tu a tio n th is c o u n tr y w a s
c o n f ro n te d w ith c o m m e n c in g on th e f o u r th
d a y o f A u g u s t, 1914, a n d c o n tin u in g th e
b a la n c e o f t h a t y e a r , w h e n h e p e r m itte d
be iss u e d u n d e r t h e A ld ric li-V re e la n d
BUI m o re t h a n $375,000,000 o f A ld ric h -V re e la n d n o te s , th e r e w o u ld h a v e b e e n d is a s
te r . T o w h o m w e re th e s e n o te s iss u e d ?
T o th e b a n k e r s .
W hy?
B e c a u se th e y
u r g e n tly p le a d e d w ith h im t o do so, fro m
t h e M iddle W e s t, f ro m t h e P a c ific C o a st,
fro m t h e N o r th a n d S o u th a n d f ro m th e
B a s t; it w a s a u n iv e r s a l d e m a n d o f th e
b a n k e r s a ll o v e r t h e n a tio n .
W as th a t
p o litic s ?
" T h e C o m p tro lle r o f th e C u rre n c y Is t h e
t r e d i t m a n o f a ll m e m b e r b a n k s o f th e
F e d e r a l r e s e r v e b a n k in g s y s te m .
B y la w
h is o ffic e is e m p o w e re d to in v e s tig a te a n d
e x a m in e e v e r y m e m b e r b a n k in th e F e d
e r a l r e s e r v e s y s te m .
H e k n o w s, a s r e
fle c te d b y t h e s t a te m e n ts filed
b is office
t h r o u g h h is v a r io u s b a n k e x a m in e rs , th e
c o n d itio n o f e v e ry m e m b e r b a n k in t h e
F e d e r a l r e s e r v e s y s te m .
H e k n o w s fro m
th o s e s ta te m e n ts to w h o m c r e d it m a y j u s tly
be e x te n d e d .
H e k n o w s th e s tr o n g , clean
b a n k e r , th e w e a k b a n k e r , t h e re c k le s s
b a n k e r.
H o w c a n a n y o n e a s s u m e to h a v e
a p el-fect F e d e r a l r e s e r v e b a n k in g sy s te m
w h ic h sh o u ld n o t h a v e on th e F e d e r a l R e
s e rv e B o a rd th e C o m p tro lle r o f t h e C u r
re n c y ,. w h o h a s d i r e c t s u p e rv is io n of a ll
m em ber b anks?
W h e re f d o es th e p o litic s
co m e in ? P o in t i t o u t!
" A g a in it is s t a te d : ‘A b o lish t h e F e d e r a l
r e s e r v e a g e n t.’
T o do th is w o u ld b e a
s tu p e n d o u s m is ta k e .
T he F e d e ra l reserv e
a g e n t is th e r e p r e s e n ta tiv e o f th e F e d e r a l
R e s e r v e B o a rd .
H e is in a b s o lu te to u c h
w ith t h e F e d e r a l r e s e r v e b a n k o f w h ic h he
Is th e a g e n t, a n d th e F e d e r a l R e s e rv e
B o a rd a t W a s h in g to n o u g h t to a n d sh o u ld
h a v e , a u d I a m h a p p y to s a y now , h a s by
s ta tu te , a m a n w h ic h it a p p o in ts in e a c h o f j
t h e tw e lv e F e d e r a l re s e rv e b a n k s , to see I
t h a t th e F e d e r a l r e s e r v e la w is s t r ic tly
o b se rv e d . T h e a b o litio n o f h is office w ould
o n ly b e a w e a k n e s s o f th e F e d e r a l r e s e rv e
s y s te m .
" F o r m o re t h a n tw e n ty -fiv e y e a r s b o th
o f th e g r e a t p o litic a l p a r tie s h a v e e n d e a v
o red to f o r m u la te m o n e ta r y la w s t h a t
w ould m e e t th e n e e d s o f th e n a tio n . T h e
F e d e r a l r e s e r v e s y s te m is th e r e s u lt of
m o st e x h a u s tiv e r e s e a r c h b y C o n g re s s io n a l
c o m m itte e s a n d by c o m m itte e s o f t h e
A m e r ic a n B a n k e r s ’ A s so c ia tio n . I t is n o t
co m p le te In a ll Its ra m ific a tio n s a n d d e ta il,
b u t i t is th e b e s t m o n e ta r y la w , i t is th e
b e s t fin a n c ia l s y s te m p u t on t h e s t a tu t e
b o o k s In th e h is to r y o f t h is G o v e rn m e n t.
W h y c r itic is e i t? W h y t r y to t e a r it to
p ie c e s ? W h e r e is th e r e d ta p e ? I s th e re d
ta p e im a g in e d o r r e a l? I s th e w e a k n e s s of
th e s y s te m im a g in a r y o r r e a l? T h o se o f
u s w h o a r e m e m b e r b a n k s b e lie v e in its
p r a c tic a l -o p e ra tio n a g a in s t a n y th e o r y o r
c r itic is m a d v a n c e d a g a in s t ft.
“ I t is s ta te d : ‘T h e c o lle c tio n s y s te m o f
th e F e d e r a l R e s e r v e b a n k s is n o t a s u c
c e s s a n d c a n n o t b e a su c c e ss u n til m em be?
b a n k s a r e o b lig ed to r e m it a t p a r
c h e c k s u p o n th e m s e lv e s .' T h e a n s w e r to
t h a t c r itic is m is t h a t ‘R o m e w a s n o t b u ilt
In a d a y .’ T h e la w m a k e s a m p le p ro v isio n
f o r d e v e lo p m e n t o f th e c o lle c tio n s y s te m
o f t h e F e d e r a l r e s e r v e b a n k s , a n d 'th o s e
of us w ho a re m em b er b an k s a re a w a re
o f th e f a c t t h a t th e c o lle c tio n s y s te m is
b e in g g r e a t ly e x p a n d e d u n d e r t h e F e d e r a l
r e s e r v e la w , a n d t h a t th e s y s te m is even
n o w p ro fita b le to e v e r y m e m b e r b a n k in
th e F e d e r a l r e s e r v e s y s te m .”
SAYS STATE BANKS
SHOULD JOIN RESERVE
FESTUS J. W ADE, OF ST. LOUIS,
R EPLIES TO E. C. McDOUGAL.
Xo
President of M ercantile Trust Com
pany D eclares Buffalo Banker H as
N ot Cited One F undam ental R ea
son—D enies P o litica l Interference—
I s Opposed to E lim ination of Sec
retary and Comptroller from R e
serve Board.
in
F . J . W a d e , p r e s id e n t o f th e M e rc a n tile
T r u s t Co. o f S t. L o u is , h a s c o n tr ib u te d a n
a r t ic le to t h e M ay is s u e o f t h e " J o u r n a l ”
o f th e A m e r ic a n B a n k e r s ' A s s o c ia tio n
In w h ic h h e r e p lie s to th e s t a te m e n ts m a d e
In a p re v io u s n u m b e r o f th e p u b lic a tio n by
K lllo tt C. M c D o u g a l. p r e s id e n t o f th e B a n k
o f B u ffalo , w h o a d v a n c e d , r e a s o n s w h y
S ta te b a n k s do n o t jo in th e F e d e r a l r e
s e rv e s y s te m .
T h e c h ie f o b je c tio n \jited
b y M r. M c D o u g a l w a s " p o litic a l i n t e r f e r
e n c e ,” a n d h e u r g e d t h e e lim in a tio n o f th *
• S e c r e ta r y o f th e T r e a s u r y a n d t h e C o m p
t r o ll e r o f C u r r e n c y fro m th e F e d e r a l R e
se rv e B o a rd .
M r. W a d e ta k e s u p a l l tft h e p o in ts m ? d e
b y M r. M c D o u g a l and. c o n c lu d e s w ith (h e
a s s e r tio n t h a t t h e B u ffa lo b a n k e r ’s a r tic le
“ Is a b s o lu te ly d e v o id o f o n e f u n d a m e n ta l
r e a s o n w h y a n y S ta te b a n k o r t r u s t co m
p a n y s h o u ld fa il to jo in ."
‘T h e M e rc a n tile T r u s t C o m p a n y in St.
L o u is ,” says" M r. W a d e , " h a s b een a m e m
b e r o f t h e F e d e r a l R e s e r v e B a n k o f S t.
L o u is s in c e th e d a y o f it s e s ta b lis h m e n t.
I h a v e n e v e r s e e n th e s li g h te s t in d ic a tio n
o f p o litic s b e in g p la y e d by t h e F e d e r a l R e
se rv e B o a rd a t W a s h in g to n , a n d th e
c h a r g e is u n ju s t, u n - A m e ric a n a n d u n
m a n ly ; T o m y n o tio n , i t w o u ld b e e x
tr e m e ly u n f o r tu n a t e , u n w ise a n d u n m e r ite d
to e lim in a te b y a m e n d m e n t th e S e c r e ta r y
o f t h e T r e a s u r y a n d th e C o m p tr o lle r o f
th e C u r r e n c y f ro m office o n th e F e d e r a l
R e s e r v e B o a rd .
x
" T h e S e c r e ta r y o f th e T r e a s u r y Is n o w
a n d a lw a y s h a s b e e n in a b s o lu te to u c h
w ith th e fin a n c ia l r e q u ir e m e n ts o f t h e n a
tio n , a n d d u r in g t h e p a n ic s o f 1893, 1903,
1907 a n d 1911, h a d i t n o t b e e n f o r th e
p r o m p t a n d f o rc e fu l a c tio n o f t h e S e c re
ta r i e s o f t h e T r e a s u r y d u r in g t h e p e rio d s
n a m e d , d i s a s t e r w o u ld h a v e fo llo w e d in
Nev
for
York Journal of Commerce
May 5,
1316.
"A b a n k w ith $2,000,000 d e p o sits , u n d e r th e N a tio n a l
B an k A c t, w o u ld h a v e a re s e rv e o f $300,000 a n d th r e e
fifth s o f th e 15 % to b e k e p t w ith R e se rv e A g e n ts a m o u n t
in g to $180,000. T h e b a la n c e o f th e 1 5 % , th e tw o -fifth * ,
o r $120,000 to b e in b a n k — n o t locked u p in th e v a u lt,
b u t ‘in b a n k ’— a n d u se a b le a ll th e tim e , w ith a re d u c tio n
of o u r re d e m p tio n fu n d , w hich is on d e p o sit w ith th e
T r e a s u r e r o f th e U n ite d S ta te s , a n d a v a ila b le a t all tim e s
b y th e D e p a rtm e n t.
“ I t r e q u ire s $150,000 to $180,000 re s e rv e a c c o u n t to
h a n d le c o m fo rta b ly th e tr a n s a c tio n s a n d t r a n s f e r s o f a
b a n k o f $3,000,000 re s o u rc e s , a n d a n a c tiv e officer o f a n y
b a n k th e size a s in d ic a te d a b o v e w ould n o t fe e l c o m fo rta
b le u n le s s h is r e s e rv e s w o u ld to ta l a s ab o v e. B u t now
com es th e F e d e ra l R e se rv e S y ste m a n d s a y s : ‘Y ou m ay
keep w ith R e se rv e A g e n ts fo u r -tw e lfth s , o r $80,000.’ T he
b a n k above in d ic a te d c a n n o t d o b u s in e s s w ith so s m a ll a
re se rv e a cc o u n t a s $80,000. T h e F e d e ra l R e se rv e S y ste m
n o t a llo w in g th e c o u n try b a n k to c a r r y fu n d s w ith R e
se rv e A g e n ts, th e c o u n try b a n k n e c e s s a rily h a s to red u ce
its R e se rv e A g e n ts ’ a c c o u n t f o u r- tw e lf th s , o r $80,000 a f t
e r M ay 16, a n d p lac e i t w ith th e F e d e ra l R e se rv e B a n k ,
a n d w ith o u t in te r e s t.
“ In a d d itio n , a sto c k s u b s c rip tio n is re q u ire d a n d a j
cash o u tla y o f $12,750, a n d no re v e n u e u p to d a te .
“ T h e re fo re , a b a n k w ith $200^000 c a p ita l u n d e r th e
F e d e ra l R e se rv e S y s te m , a s c o m p a re d w ith th e N a tio n a l
B a n k A ct, m u s t d e p o sit w ith o u t in te r e s t, a n d o u t o f its
lo an a b le fu n d s f o r its c o m m u n ity :
W ith F e d e ra l R e se rv e B a n k .......................... $80,000
S to c k su b s c rip tio n ............................................. 12.750
COST OF RESERVE SYSTEM
TO THE COUNTRY BANKER
H IS L O SS O F IN T E R E S T ON R E S E R V E A N D C A P I
T A L S U B S C R IP T IO N , A S W E L L A S C O S T L IE R
E X A M IN A T IO N S
D iffic u lty o f D oing B u sin e s s C o m p a red W ith X a tio n a l B a n k
in g L a w — A B a n k H a v in g R eso u rces o f $3,000,000
C a n n o t Do B u sin e s s W ith O n ly $80,000
W ith, R e s e r v e A g e n t s — B a n k e r 's
Y e a r ly L o sses
B a n k e rs a ll o v e r th e c o u n try c o n tin u e to co m p la in of
th e h e a v ie r e x p e n s e s w h ic h th e y a r e b e in g su b je c te d
to u n d e r th e n ew sy s te m , a n d p a r tic u la r ly in r e
sp e c t o f th e g r e a t e r c o st o f b a n k e x a m in a tio n s . I t is im v o ssib le to r e f e r to th e specific c o m p la in ts in d e ta il, b u t
all b e a r th e sa m e ten o r.
F e w o f th e b a n k e rs n a tu r a lly w ish to h a v e th e ir
n a m e s m e n tio n e d in re c p e c t of t h e i r in d iv id u a l e x p erien c e ,
b u t h e re is a l e t t e r fro m a c o u n try b a n k e r in O hio w hich
a p p e a r s to e x p re s s th e g e n e ra l s e n tim e n t in r e g a r d 19
th e d ifficulties o f d o in g b u sin e ss u n d e r th e n ew re q u ire
m e n ts o f th e b a n k in g law . I t is a p o in t o f view \vh:cli
is c a u s in g som e d is s a tis f a c tio n in th e r a n k s o f th e sm a lle r
n a tio n a l b a n k s a n d , ta k e n in c o n ju n c tio n w ith th e a ttitu d e
o f th e C o m p tro ller, is o p e r a tin g to k e e p th e s t a le
in s titu tio n s f ro m c o m in g in to th e s y s te m . T h is b a n k e r
w r ite s in su b s ta n c e a s fo llo w s:
“ P e r m it m e to s t a te w ith o u t f e a r o f c o n tra d ic tio n that
th e F e d e ra l R e se rv e S y s te m , to a c o u n tr y b a n k , w ith
$200,000 capita]^ is a v e ry e x p e n s iv e p ro p o sitio n . U n d e r
th e N a tio n a l B a n k A c t, c o u n try h a n k s w e re re q u ire d to
c a r r y a r e s e rv e o f 159r o f t h e i r d e p o sits , th r e e - f if th s of
th e 159r w ith R e se rv e A g e n ts , a n d tw o - fifth s in th e b a n k
in c a sh a n d v a u lt.
T o ta l ................................................................
$92,750
“ A sid e fro m w ith d ra w in g th e fu n d s , th e r e is th e lo ss
of re v e n u e , a t le a s t a t 39c, o r $2,782.50 p e r y e a r.
“ T h e e x a m in e r’s f e e s f o r c o u n try b a n k s h a v e in c re a s e d
m o re th a n 2009c, w h ich sh o u ld b e a d d e d to th e lo ss o f
re v A u e.
“ P o s sib ly th e r e m a y com e a tim e w h e n a ll th e m a
c h in e ry o f tw e lv e re v e r s e b a n k s m a y b e n e ed e d , b u t a re
w e n o t p a y in g v e ry d e a r ly f o r th e p r o te c tio n ? W h y n o t
h a v e one c e n tr a l b a n k , a n d c u t o u t th e e n o rm o u s o v e rh e a d
o f so m a n y o r g a n iz a tio n s ? T h a t is w h a t th e h a rd -h e a d e d
b u sin e ss m a n w o u ld d o .”
’Sail Street Journal
’ray 16, 1916
K
FEDERAL ADVISORY COUNCIL
MEETS IN WASHINGTON
T H IS
BO D Y TO A C T A S A N IN T E R M E D IA R Y
T W E E N BANKS AND T H E
BE
FED ERA L
R E S E R V E BOARD
S u b m itte d S i x R ec o m m e n d a tio n s as a R e s u lt o f M e e tin g
H e ld L a s t N o v e m b e r — W o u ld A b o lish Office o f C o m p
tro lle r o f th e C u rren c y — R u m o re d T h a t
In flu e n c e s A r e E v e r te d to H a v e
T h is R ec o n sid ered
T h is w eek m em b e rs o f th e F e d e ra l A dvisory C ouncil
hold th e ir second m e e tin g o f th e y e a r a t W ash in g to n . T h e
m e m b e rs o f th is council a re selected by each F e d e ra l re
se rv e b a n k a n d m u s t m eet a t le a s t f o u r tim e s each y e a r a t
W a s h in g to n . T h e council is m e a n t Vo a c t a s a go-betw een,
b e tw e e n th e b a n k s a n d th e F e d e ra l R e se rv e B o a rd , a n d
c an c all fo r c e rta in in fo rm a tio n a n d m a k e re co m m e n d a
tio n s .
The m ee tin g o f th e a d v iso ry council in W a sh in g to n la s t
N o v e m b er w a s th e m o st im p o rta n t one held so f a r in re
s p e c t o f th e re co m m e n d a tio n s m ade. T h e council offered
six s e p a ra te re c o m m e n d a tio n s, som e o f w hich h a v e since
re c e iv e d se rio u s c o n sid e ra tio n a n d a r e in a few in sta n c e s th e
s u b je c t o f a m e n d m e n ts to e x is tin g s ta tu te s . T he f irs t rec
o m m e n d a tio n o f th e council on t h a t o ccasion w a s “ t h a t
the w o rk of th e office o f th e C o m p tro lle r o f th e C u rre n c y
be a b so rb ed a n d a d m in is tr a te d by the F e d e ra l R e se rv e
Board.”
I t is sa id a n e ffo rt m ay be m ad e a t the m e e tin g th is
w eek to h ave th e council re scin d its fo rm e r action recom
m en d in g th e a b o litio n o f th e office o f th e C o m p tro ller of
th e C u rre n cy . W h a te v e r influences m a y be b ro u g h t to b e ar
in th is re g a r d , i t is h a rd ly lik e ly t h a t th e council w ill
s tu ltify its e lf on th is p o in t since th e re :o m m e n d a tio n w as
c a rrie d by e ig h t to th re e a t the N o v em b er m eetin g . T ne
m a jo rity feel now , a s th e y fe lt ther., t h a t th e C o m p tro lle r’s
office is m ade su p e rflu o u s by th e F e d e ra l R e se rv e A ct,
which h a s b ro u g h t th e n a tio n a l b a n k s u n d e r th e co n tro l of
th e F e d e ra l R e se rv e B o ard .
T h a t th e a d v iso ry council is b y no m ea n s a u seless
body is ju d g e d by th e su b sta n c e o f its o th e r findings. At
th e N ovem ber m e e tin g , b esides th e a b olition o f th e com p
tr o lle r 's office, it recom m ended a n a m e n d m en t to th e F ed
e ra l R e se rv e A c t r e la tin g to loans on fa rm la n d s, to th e
effect t h a t such lo an s m ig h t be m ade w ith in one h u n d re d
m iles fro m th e office o f th e ban k . T h is, in effect, w a s one
of th e a m e n d m e n ts to th e F e d e ra l R e se rv e L aw recom
m ended by th e R e se rv e B o a rd a n d now b efore C o n g ress.
T he council recom m ended also a n a m e n d m e n t to th e
C lay to n , L aw , to p e rm it jo in t-s to c k o w n e rsh ip by n a tio n a l
b a n k s o f b a n k s o rg a n iz ed to do b u sin e ss in fo re ig n coun
tr ie s th ro u g h b ra n c h e s e stab lish e d th e re in . A nd it like
w ise su g g e ste d th e e s ta b lis h m e n t of local b ra n c h e s by n a
tio n a l b an k s w ith in th e c ity lim its. T hese a re also em
bodied in th e p roposed a m e n d m e n ts to th e F e d e ra l R eserv e
L aw in d o rse d by th e B oard.
T h a t th e paid -in c a p ita l of th e F e d e ra l R eserv e B a n k s
be reduced to tw o -th ird s o f th e p re s e n t a m o u n t, le a v in g th e
subscribed c a p ita l a n d double lia b ility u n c h a n g e d , w a s
a ls o recom m ended by th e co’incil in N ovem ber. At th e
F e b ru a ry m ee tin g , h ow ever, tn e council reco n sid e red th is
su g g e stio n o f th e re d u c tio n of stock a n d advised t h a t fo r
th e p re s e n t n o re d u c tio n should be u rg e d . B u t only a
m in o rity re p o rt w as p re se n te d . P e rh a p s it is now hoped
t h a t th e council m a y be induced to ta k e s im ila r corre c tiv e
a ctio n in re g a r d to the C o m p tro ller o f the Currency on
the dre s e n t occasion.
:.all Street Journal
May 17, 1316
RESERVE BANKS
/VITAL TO STATE
o s s u r e a d e o u a te s u p p lp o f a v a ila b le
fu n d s to m e e t le g itim a te b u s in e s s r e
q u ire m e n ts , a n d th e p ro c e s s e s fo r s e
c u r i n g t h e s e n o te s a r e in d a ily o p e r a
tio n ,
so
t h a t s h o u ld
o c c a s io n
a ris e
fo r e m e r g e n c y c u rr e n c y , t h e r e w o u ld
b e in s ta n ta n e o u s s u p p ly .
E v e ry ban k
h a v ln e d e m a n d d e p o s its is n e c e s s a r
ily i n t e r e s t e d
in th is c o n d itio n , a n d
s h o u ld
rI
o u n t i e s of
Ife iy u a K j^ o t Represent
/ e d in f i e System
REQUIREM ENTS GIVEN
Local Institutions Should
Become Members of
National Board
O f th e
of
se rv e d
of
fifty -s ix c o u n tie s
K e n tu c k y
by
in c lu d e d
th e
in
F e d e ra .1
C le v e la n d ,
th e re
c o u n tie s in w h ic h
in
th a t p a rt
th e
d is tr ic t
R e c e rv e
a re
th e re
a re
B ank j
tw e n ty -o n e
n o n a tio n
al b a n k s , m e m b e rs o f th e F e d e ra l R ele rv e
s y s te m .
W ith in
th is
p a rt of
K e n tu c k y th e r e a re e ig h ty
lo c a litie s
(c itie s
and
to w n s)
h a v in g
b a n k in g
f a c ilitie s n o t r e p r e s e n te d in th e F e d
e ra l R e se rv e B a n k by m e m b e rs, o u t
of 126 c o u n tie s in w h ic h b a n k s a re
s itu a te d .
T h u s it a p p e a rs th a t, fo r
th e e a s te r n h a lf o f K e n tu c k y , th e p r o
v is io n s o f t h e F e d e r a l R e s e r v e A c t, in
re g a r d to m e m b e rs h ip in th e s y s te m
o f s ta te b a n k s , a n d tr u s t c o m p a n ie s,
a r e m a tte r s o t v ita l c o n c e r n a n d w o r
th y o f m o s t s e rio u s a tte n tio n a n d c o n
s id e r a tio n b v th e b a n k e rs a n d
b u s i
ness
m en
o f th e
v a rio u s
c o u n tie s ,
p a rtic u la rly th o s e n o t h a v in g n a tio n a l
b a n k s , a t l e a s t s ix o f w h ic h a r e q u ite
im p o r ta n t c o u n tie s , a s f a r a s. a g ric u l
tu re
If
a n d c o m m e rc e a re c o n c ern e d .
t h e F e d e ra .1 R e s e r v e S y s t e m ,
as
h a s b e e n s ta t e d b y m a n y n o te d fin a n
c ie r s a n d e c o n o m is ts ,
is
th e
best
f in a n c ia l s tr u c tu r e
ever
o f f e r e d to
th is n a tio n , a n d 4f
r e l i e f f ro m t h e Ills
te n d e d b y th
th o s e p e rs o n
agem ent of
h o o v e s b o th
g iv e it th e
it a ffo rd s s u ita b le
o f th e p a s t, a s in
e
s
fra m e rs o fV h e a c t an d
c h a rg e d w ith th e m a n
th e
b a n k s, th e n
it b e
b a n k s a n d t h e p e o p le to
fu ll m e a s u r e o f s u p p o rt
a n d c o n fid e n c e w h ic h it m e r its .
If it
be
good
fo r n a tio n a l
banks
to
be
c o m e m e m b e r s , a s r e q u ir e d b y t h e A c t.
j s
it n o t e q u a lly b e n e fic ia l f o r s ta t e
banks
to
jo in
as
p e rm itte d
b y th e
A c t’
If b u s in e s s a n d a g ric u ltu r e a re
o ffe re d s e c u r ity a n d fa c ilitie s b y th e
F e d e ra l R e s e r v e S y s t e m n o t o t h e r
w is e a c c e s s ib le , a r e s ta t e b a n k s p r o p
e r l y p e r f o r m in g t h e i r p o w e r s in f a il
in g to
b eco m e m e m b e rs
o r in
fact
e v e n c o n s id e rin g s u c h a c tio n ?
E v e ry o n e i s a g r e e d t h a t t h e F e d e r
a l R e s e rv e s y s te m
a g a in s t m o n ey o r
a ffo rd s in su ra n c e
c u rre n c y
p a n ic s ,
such
a s a ll o f u s
o c c u rrin g
in
th e
can rem e m b e r as
n ear
p ast
1914,
1SV07. 1 8 9 3 T he
p ro v is io n s
o f th e
A c t c o n c e rn in g F e d e ra l R e s e rv e n o te s
be
in
of
it.
v a n ta g e
T he
m em ber
p o s itio n
B anks
R e se rv e
S y s te m
r ig h t o f re d is c o u
o f th e ir o w n re so
any
u n e x p e c te d
to
of
ta k e
th e
ad
F e d e ra l
have
th e
p o s itiv e
n tin g , b y w h ic h , o u t
u rc e s, th e y c a n m e e t
w ith d ra w a ls
or
un
u s u a l d e m a n d s fo r lo a n s .
T hey
do
n o t, a s fo rm e rly , h a v e to a rr a n g e a
lo a n o r a lin e o f d is c o u n ts w ith th e ir
c ity c o r r e s p o n d e n ts , e ith e r o f w h ic h
! m a y b e u p s e t b y th o s e
c o rre sp o n d
e n ts b e in g th e m s e lv e s c o n fro n te d b y
c o n d itio n s
c a u sin g
w ith h o ld in g
fu r
th e r
a d v a n c e m e n ts
or
c e a s in g
to
m a k e a d d itio n a l lo a n s .
T h e F e d e ra l
R e se rv e B o a rd a n d th e se v e ra l F e d
e ra l R e s e rv e B a n k s h a v e c o n s ta n tly
and
s tu d io u s ly
e n d e av o re d
to
m ake
d e a lin g s b e tw e e n m e m b e r b a n k s a n d
th e R e s e r v e B a n k s a s s im p le a n d e x
p e d itio u s a s is c o n s is te n t w ith g o o d
b a n k in g a n d s o u n d c re d its .
W h a te v e r
u n c e rta in tie s o r d e fe c ts
in
th e
A ct
h a v e b e c o m e a p p a re n t, p ro p e r re c o m
m e n d a tio n s h a v e b e e n
g ress
f o r a m e n d m e n t,
s ta n t e ffo rt o f th e
B a n k s is to m a k e
m a d e to
and
th e
c oncon
B o a rd
and
o u r fin a n c ia l
th e
sys
te m
th e
best and
s tr o n g e s t in
th e
w o rld , u s e fu l to th e s m a lle s t a s w e ll
a s th e la r g e s t b a n k , a n d
h e lp f u l to
th e b u s in e s s n e e d s o f o u r g r e a t c o u n
try .
F ro m
th e
p ra c tic a l
v ie w p o in ts , th e r e
s ib le r e a s o n
fo r
*
s c ie n tific
and
se e m s to b e n o p o s
a c o m m e rc ia l b a n k
fa ilin g o r h e s ita tin g
to
m e m b e r b an k , o r p e rh a p s
becom e
a
it m ay be
b e tte r
s ta te d
to
say
t h a t a ll
b a n k s s h o u ld b e m e m b e rs . E v e n
it q u e s tio n a b le th
s e r v e B a n k s w ill
d e n d s u p o n th e ir
th e y
s h o u ld
beco
m e m b e r s . It Is th e
su ch
^ ere
a t th e F e d e ra l R e
e a r n a n d p a y d iv i
p a id i n c a p ita l a n d
m e
an
ex p en se
to
d u ty o f fa ir -m in d e d
s ta t e b a n k e r s to h e lp c a r r y th e lo a d
fo r th e ' b e n e fits w h ic h w o u ld a c c r u e
fro m th e s y s te m
s h o u ld
s trin g e n c y ,
a ris e .
T h e r e d o e s n o t s e e m to b e a
d o u b t t h a t in
due
tim e
th e
B anks
w ill p a y
d iv id e n d s , e v e n
in
n o rm a l
tim e s , f o r th e o p e ra tio n s a u th o riz e d
b y la w in g o v e rn m e n t b o n d s , m u n ic i
p al w a rra n ts , a n d
d isc o u n ts
a ris in g
j q u t o f e x p o rts a n d im p o rts , a s s u r e c o n
s ta n tly
in c re a sin g
e a rn in g s , a n d
an
open
d is c o u n t m a r k e t
w o r ld -w id e
w h ic h is b e in g d e v e lo p e d , n j e s e n t s o p
p o r tu n itie s fo r w o n d e r f u l r e v e n u e s to
th e F e d e ra l R e se rv e
B a n k s — a ll n o t
ta k in g
in to
c o n s id e ra tio n
th e
use
m em ber
b
F e d e ra l
R
a b le fu n d s
fic ie n t to
anks
m ay
m ake
o r th e ir
e se rv e
B anks
w hen
lo a n
in th e c o u n tr y a r e n o t s u f
m e e t lo c a l r e q u ir e m e n ts .
A n o b je c tio n
S y s te m ,
w h ic h
to
to
v o ic e d
a p p e ars
m em ber
th e
F e d e ra l R e se rv e
by
to
ban k s,
som e
be
is
a
p e rso n s,
d isa d v a n ta g e
th e
fact
th a t
th e
F e d e ra l
R e se rv e
B anks
do
not
p a y a n y I n te r e s t o n r e s e r v e d e p o s its ,
th u s c a u s in g lo s s o f re v e n u e s to th e
m e m b e rs.
T h e a n s w e r to th is is th a t
a n in te r e s t b e a rin g d e p o s it is n o t r e
s e rv e fo r th e re a so n th a t it m u st b e
lo a n e d to e a r n t h e i n t e r e s t n a id . a n d
w h e n m o n e y is lo a n e d i t is n o t a v a il
a b le fo r im m e d ia te d e m a n d s .
O u t of
th is " r e s e r v e a t in te r e s t” h a v e a ris e n
p ra c tic a lly
a ll
of our
fin a n c ia l
d ls
tu r b a n c e s o f r e c e n t y e a rs , w h ic h h a v e
no
doubt
cost
our
b u s in e s s
in te r j
e s ts m a n y tim e s th e in c o m e fro m th e |
a c c o u n ts .
Sound
b a n k in g p rin c ip le s
r e q u ir e “ r e s e r v e ” to b e in a c tu a l c a s h
a v a ila b le
fo r u se
w ith o u t fo re w a rn
in g .
v
T h e F e d e r a l R e s e r v e A c t p r o v id e d
a r e d u c tio n in th e r e s e r v e o t c o u n tr y
b a n k s fro m
on dem and
ly m e e ts th
te re s t on re
15 p e r c e n t to 12 p e r c e n t
d e p o s its .
T h is a p p a re n t
e o b je c tio n to lo s s o f in
se rv e s.
U n d e r th e n a tio n
a l b a n k a c t a b a n k h a v in g
$ 1 0 0 ,0 0 0
d e p o s its m ig h t k e e p 9 p e r c e n t w ith
r e s e r v e a g e n ts , w h ic h a t 2 p e r c e n t
y ie ld e d $180.
U n d e r th e F e d e ra l R e
s e r v e A c t , t h e $ 3 ,0 0 0 r e l e a s e d f r o m r e
q u ire d r e s e r v e , w o u ld y ie ld a t 6 p e r
c e n t a n in c o m e o f th e s a m e a m o u n t.
T he
r e d u c tio n
of
re s e rv e re q u ire d
a g a in s t tim e d e p o s its to 5 p e r c e n t
a ls o is a d v a n ta g e o u s to m e m b e rs , a n d
r e le a s e s a d d itio n a l fu n d s fo r lo a n s o r
in v e s tm e n ts .
T he
F e d e ra l
R e se rv e
A c t e n a b 'e s
s ta t e b a n k s to b e c o m e m e m b e r b a n k s
o f th e F e d e ra l R e s e rv e B a n k o f th e
d i s t r ic t u p o n t h e fo llo w in g c o n d itio n s :
1.
T h e y m u s t h a v e p a id -in c a p ita l
in a m o u n t e q u a l to t h a t r e q u ir e d fo r
a
n a tio n a l
bank
in
th e ir
lo c a tio n s ,
v i z . , $ 2 5 ,0 0 0 i n t o w n s o t 3 ,0 0 0 o r l e s s ,
$ 5 0 ,0 0 0 f o r 6 ,0 0 0 o r l e s s
p o p u la tio n ,
$ 1 0 0 ,0 0 0 f o r c i t i e s
of le s s
th a n
5 0 ,
0 0 0 a n d $ 2 0 0 ,0 0 0 f o r c i t i e s e x c e e d i n g
5 0 ,0 0 0 p o p u l a t i o n .
T h e y m u s t c o m p ly w ith r e s e r v e
r e q u ir e m e n ts o f F e d e r a l R e s e r v e A c t,
a n d c o n fo rm
to la w s a s to n a tio n a l
b a n k s r e s p e c tin g lim ita tio n o f lia b il
ity to b e in c u r r e d b y a n y p e rs o n , th e
p ro h ib itio n
a g a in s t
p u rc h a s in g
or
lo a n in g o f t h e i r s to c k , im p a ir m e n t of
c a p ita l, p a y m e n t
of
u n e a rn e d
d iv i
d e n d s , e tc .
3.
T hey
m u st
s u b m it
to
e x a m in a -
!, t i o n s
and
r e g u la tio n s
p re s c rib e d
by
| th e F e d e ra l R e s e rv e B o ard . T h e re g
u la tio n s o f th e B o a rd c o n c e rn in g a d
m is s io n o f s t a t e b a n k s to m e m b e r s h ip
a u th o riz e d
s a tis fa c to ry
e x a m in a tio n s
by
s ta te
a u th o rity ,
w h e re
th e re
is
a s e p a r a te b a n k in g d e p a rtm e n t, to b e
a c c e p te d .
I t w o u ld
seem
s ta c le in th e
s ta te
banker
th a t
th e re
is
no
ob
w a y o f th e p ro g re s s iv e
o b ta in in g fo r h is in s ti
tu tio n a n d fo r h is c o m m u n ity th e s e
c u r i t y a to d b e n e f i t s o f t h i s g r e a t s y s
te m . th u s g iv in g h is d e p o s ito r s s a fe ty
a g a in s t c u rre n c y s h o rta g e , a n d a ffo rd
in g h U b o r r o w e r s t h e fu ll e x t e n t o f
th e ir le g itim a te d e m a n d s .
P a trio tis m
, as
w e ll a s
c o n s id e ra tio n
o f s a fe ty ,
w o u ld s u g g e s t t h a t It is t h e d u ty o f
e v e ry
sound
s e rio u s ly th e
s h ip
in
th e
bank
to c o n s id e r v e ry
d e s ira b ility o f m e m b e r
s y s te m .
RESERVE BANKS
' :VIJAL TO STATE
C o u n t i e s of
fcntucky Not Represent
ed in the Svstem
REQUIREM ENTS GIVEN
Local Institutions Should
Become Members of
National Board
A n u m b e r o f s o -c a lle d c o u n tr y b a n k
e r s h a v e v o ic e d m o re o r le s s c o m p la in t
a g a i n s t t h e c o n te m p la te d p a r c o lle c tio n
o f c h e c k s a s p r o v id e d in t h e c ir c u la r o f
th e F e d e ra l R e s e rv e B o a rd re c e n tly is
su e d . T h e c ritic ia m h a s b e e n m a in ly d u e
to th e
lo ss o f p r o fits
fro m
exchange
c h a rg e s , a n d th e c h a n g e o f m e th o d s a n d
p r a c tic e s w h ic h h a v e b e e n e x is tin g fo r
a b o u t tw e n ty -fiv e y e a rs .
T h e p r o s p e c tiv e lo s s o f t h e i r u s u a l e x
c h a n g e c h a r g e s h a s e lic ite d c o n s id e ra b le
p ro te s t fro m so m e o f th e c o u n try b a n k
e r s , p r o b a b ly w i t h o u t a n y t h o u g h t a s to
th e r e a s o n o r d e s ir a b ility fo r th e p a rr in g
cf c h e c k s . T h e y d o n o t s e e m to c o n s id e r
t h a t in c h a r g in g e x c h a n g e th e y a r e d is
c o u n tin g th o o b lig a tio n s o f t h e i r b a n k s
t o r e p a y d e p o s ito rs * f u n d s w i t h o u t d e
d u c tio n .
T h e b a n k e r In s o lic itin g b u s in e s s v i r
t u a lly s a y s to h is d e p o s ito r: " I o ffe r y o u
m y f a c ilitie s f o r th e s a fe k e e p in g o f y o u r
fu n d s w ith th e s e c u r ity w h ic h y o u m a y
fe e l b y v i r t u e o f y o u r c o n fid e n c e In th e
m a n a g e m e n t o f m y in s titu tio n , to g e th e r
w * th t h e a m o u n t o f i t s c a p i t a l s to c k .
I
a g r e e to m a in ta in a g a in s t y o u r d e p o s it
th o re s e r v e le g a lly r e q u ir e d , a n d to r e
p a y y o u r d e p o s it u p o n d e m a n d .
I ex
p e c t to m a k e u s e o f y o u r f u n d s b y lo a n
in g th e m
(e x c e p t th e re s e rv e ), th e in
c o m e t h u s d e riv e d b e in g m y c o m p e n s a
tio n fo r th e s e r v ic e s a n d f a c ilitie s o f th is
L a n k .* *
H e d o e s n o t u s u a ll y s a y , b u t h e s h o u ld
e a y : " I f y o u r d e p o s it w ith m e J u s tifie s
th e tra n s a c tio n b y r e a s o n o f th e e a rn I «iffs w h i c h I a m e n a b l e d t o m a k e . I w i l l
m a k e re m * tv a » ic e o f f u n d s f o r y o u a n y
w h e r e v itf c o u t c o s t, b u t u n l e s s y o u r a c
c o u n t is p r o f ita b le to m e I c a n n o t p e r
m it y o u m e re ly to u s e th is b a n k a s a
m e d iu m
o f s h ip m e n t o f f u n d s w ith o u t
e x p e n se to y o u , a n d if
you send your
c h e c k o n th is b a n k to a p o in t w h e re it
w ill m e a n c o s t to m e to e f f e c t s e t t l e
m e n t, th e n t h a t c o s t m u s t b e b o rn e b y
y o u . '*
T h e Id e a l b a n k in g c o n d itio n is o n e in
w h ic h r e m i tt a n c e o u ts id e o f a d e fin e d
r a d iu s f r o m a g iv e n lo c a lity s h o u ld b e j
by b a n k d r a f t r a th e r th a n p e rso n a l c h e ck , J
bo t h a t t h e t a n k w h i c h m a k e s t h e d r a f t j
c a n p ro v id e f u n d s a t th e p la c e o f s e ttle - J
rn e n t. a t le a s t b y th e tim e o f th e p r e s .illa tio n th e r e o f th e d r a f t, a n d n o t be
s u b je c te d to m e e tin g u n e x p e c te d ite m s
fro m v a r io u s p la c e s , a n d p ro v id in g s e t
tle m e n t
a fte rw a rd s .
T h is p ro m is c u o u s
use
ot
p e rso n a l
c h e c k s th ro u g h o u t th e c o u n tr y h a s c a u se d
e n o r m o u s " f lo a t* * o f c h e c k s I n t r a n s i t i n
th e m a ils a b o u t w h ic h so m u c h h a s b e e n
s a id a n d w r itte n .
C o m p e te n t a u th o r itie s
e s tim a te th e a m o u n t o f th e “ flo a t" a t
f r o m t h r e e h u n d r e d t o f iv e h u n d r e d m il-*
| lio n d o l l a r s p e r d a y .
T h is m e a n s a c tu a l
r e d a c tio n o f lo a n a b le f u n d s to t h a t e n o r
m o u s a m o u n t.
I f t h i s “ f lo a t* * c a n b e r e
d u c e d b y o n e - h a lf , a s i t s h o u ld b e u n d e r
th e d ire c t ro u tin g o f c h e c k s a n d th e ir
c h a rg e a n d c r e d it In c e n tr a liz e d c le a r
in g h o u s e s , t h e p o s s ib le e a r n in g s o n th e
a m o u n t r e le a s e d w ill b e la r g e ly in e x
c e ss o f th e m o st fla g ra n t p e rc e n ta g e o f
exchange.
T h e c o u n tr y b a n k e r w h o c h a rg e s e x
c h a n g e m u s t k n o w t h a t th is c h a rg e
is
b o rn e by so m e on e.
In so m e In s ta n c e s
th is ls r e f le c te d r ig h t to h is o w n d e
p o s ito r, w h o s u f f e r s in c r e a s e d p r ic e s b e
c a u s e h is c h e c k s a r e k n o w n to b e w o rth
le s s th a n p a r.
In a
la rg e
n u m b er ol
c a se s th e
b a n k e r b e a r s i t h im s e lf b y
m a in ta in in g la rg e b a la n c e s w ith c o rr e
s p o n d e n ts w h ic h s h o u ld b e e a r n in g m o re
in te re s t th a n th e y c o m m a n d .
In o th e r
c a s e s h e m e e t s I t b y p a y m e n t s o f lik e
c h a r g e s to o th e r b a n k s u p o n w h ic h h e
h a s f o rw a rd e d ite m s .
T h e r e c a n b e n o q u e s tio n o f th e u n i
v e rs a l d e s lro in t h is c o u n tr y , s tr o n g ly
e v id e n c e d p r io r to th e p a s s a g e o f th e
F e d e r a l R e s e rv e A c t. fo r t h e e lim in a tio n
o f e x c h a n g e a n d th e u n iv e rs a l p a rr in g o f
^ > eck s, o n a c c o u n t o f th e ir u s e in so
sre a r. a p o r tio n o f t h e b u s in e s s o f th e
c o u n try .
I t is e s tim a te d t h a t a p p ro x i
m a te ly 9l p e r c e n t o f s e ttle m e n ts is m a d e
b y c h e c k s , a n d t h a t th e s e s e ttle m e n ts
s h o u ld b e t v e n p a r t i a l l y s u b je c t t o ill e
g itim a te d e d u c tio n h a s lo n g b e e n a m a t
te r o f c o m p la in t i n t h e b u s in e s s w o rld .
T h e p r o c e s s f o r th e s e ttle m e n t o f b a lc e s a r i s in g th r o u g h c h e c k c o lle c tio n s ,
as c o n te m p la te d b y th e F e d e ra l R e s e rv e
B o a r d , w ill p r o b a b ly b e a s s im p le a s c a n
b e m a d e , lo o k in g to t h e c o n v e n ie n c e o f
th e b a n k e rs in te r e s te d ,
p r o v id e d
th e y
e n te r in to th e p la n w ith a d e s ire to its
s a tis f a c to r y w o rk in g .
I t m u s t b e c o n d i
tio n e d u p o n r e a lis e d s e ttle m e n t b e c a u s e
it is a b s u r d to a s k th e F e d e ra J R e s e rv e
B a n k to u s e i ts f u n d s , r e s e r v e fu n d s , to
c a r r y t h e e n o r m o u s flo a t, a n d t h u s a b
s o lu te ly w ip e o u t i t s p o w e r to m e e t e m e r
g e n c ie s , t h e f u n d a m e n ta l p u r p o s e o f th e s e
h anks.
T h e d e fe rrin g o f c h a rg e s , t h a t
is c h a r g in g th e b a n k s u p o n w h ic h d r a w n
a f t e r t h e I te m s a r e re c e iv e d b y i t a n d
s u ffic ie n t tim e h a s e la p s e d fo r it to r e
m it f u n d s , a n d th e c r e d it o f ite m s r e
m itte d to th e F e d e r a l R e s e rv e B a n k a f t
e r th e F e d e ra l R e se rv e B a n k h a s h ad
th e n e c e s s a r y tim e to c o lle c t th e ite m s
f o rw a rd e d s e e m to b e th e o n ly p r a c tic a b le
s o lu tio n .
The
r e a s o n a b le , c o n s c ie n tio u s b a n k e r
w h o h a s t h e p r o p e r i n t e r e s t in t h e p r o g
r e s s o f b u s in e s s a n d t h e s c ie n tific c o n
d u c t o f b u s in e s s r e l a ti o n s is g o in g to
u n d e rta k e
th e
new
o r d e r o f h a n d lin g
c h e c k s w ith th e id e a o f w o rk in g o u t th e
b e tt e r m e n t o f b a n k in g fa c ilitie s .
I t is
n o t s a fe o r g o o d a n y lo n g e r fo r th e
b a n k e r to s a y . “ I w ill n o t b e a p a r t y to
a s c h e m e w h ic h s e e m s to b e a g a in s t m y
i n t e r e s t s n o r d o a n y th i n g to f u r t h e r it,
n o m a t t e r h o w g r e a t th e g e n e ra l b e n e
f i t s . ’* B y a s s u m i n g a n a t t i t u d e o f h e a r t y
c o - o p e r a tio n , i t is g e n e r a lly b e lie v e d b y
t h o u g h t f u l p e r s o n s t h a t t h e b a n k e r w ill
w i t h i n a s h o r t s p a c e o f t im e f in d t h a t h e
is e n a b le d to m a k e m o re in e a r n in g s fo r
h is b a n k t h a n h e t h o u g h t w a s p o s s ib le
b e fo re a d o p tin g s u c h c o u rs e .
U. S. RESERVE BANK GIVES
CITY FINANCIAL PRESTIGE
Lending Power of Cleveland Institution is Now $15,000,
000 Greater Than Any Currency Emerg
ency Here Ever Demanded.
t
"I ’ h a t
* h ls
of
th s
Im p o rta n c e
la n d
as a
been
f ix e d b y
c ity
th e
as
th e
th e
tw e lv e
ol
C le v e
fu rn is h a n
f in a n c ia l c e n te r b a a
s e le c tio n
lo c a tio n
re g io n a l
of
banks
fo rd
one
la
th e
• p in io n o f c o n s e r v a tiv e fin a n c ie rs .
T h is ,
la rly
it
p o in te d
o u t,
is
R e se rv e
now
*nd
th ird
fo u rth
in
la
bank
s lie
of
In
bank;
Its
banka
h o ld in g
and
su ch
fed e ra l
s ta te
m ake
one
&
s ta te
I ts
of
b a n k e rs’
th e
In
re s e rv e ' d ls trle t
and
th o
Q u a lif ie d
la
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ib le
to
T ru st
to
760.
A ll
d is tric t a re
e lig
becom e m em ber b a n k s
rese rv e
T he
bank
o f th e
h e re .
fo u rth
o f w h ic h
c ia l
th is
th e
th e
b o rn e
In
C ity Is t h e
te r r ito ria lly
bank
has
s to c k
o f th e
th e
f in a n
In c lu d e s
bank
in
th e
tim e
00 0
th e
w e s te rn
o rg a n iz a tio n
h e re ,
th a t
It
m u st
each
s u b s c rib e d
to
s u rp lu s
q u e s tio n .
rese rv e
th e
o f th e
T he
bank
a lre a d y
been
F irs t,
c e n tra tio n
of
se rv e s
th e
of
re g io n a l b a n k
a ll
to
th i3
tim e
w ill
The
a re
f ig u r e
Is
ap
m ake
th e ir
d e p o s its
now
of
m o re
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th a n
526,000,000.
The
m a rv e lo u s
s tre n g th
and
po
te n tia l a s s is tin g p o w e r o f th e F e d e ra l
R e se rv e
tra te d
bank
by
of
th e
C le v e la n d
fact
th a t
is
th e
Illu s
p rese n t
to
c a p i
p resen t
$ 0 ,0 0 0 ,
In .
re q u ire d
p ro v id e
th e
is
con
f in a n c ia l
re
in
th e
lo c a te d ,
th is
m o re
in
any
th a n
$ 4 5 ,0 0 0 ,0 0 0 , o r
has
c u rre n c y
even
been
e m e rg e n cy
d is tric t.
“ B y rea so n
o f th e e s ta b lis h m e n t o f
F e d e ra l
R e se rv e
b a n k s ,”
s a id
w h ic h
r e c u rre n c e o f a c u rr e n c y p a n ic
a s t h i s c o u n t r y e x p e r i e n c e d in
1 8 9 3 a n d 1 9 0 7 .”
x n e e x e c u tiv e o tn c e s o r
R e se rv e
bank
c a te d
th e
on
lia m s o n
S eco n d , to i
ay 23, 1916
of
second
b u ild in g ;
in o
C le v e la n d
ire a e ra i
a re
f lo o r o f th e
th e
m oney
te lle rs ’ d e p a rtm e n ts s u rro u n d th e
lo
W il
and
en
t r a n c e t o t h e v a u l t s o n t h e lo w & r f lo o r
w h ile
th e
m e n ts a re
rese rv e b a n k
th e
$ 4 0 ,0 0 0 ,0 0 0 a n d
be a
such
m em ber
th e
p a id
d is tr ic t
is
a t
Fed
F e d e ra l
a g e n t h e re , re c e n tly , “ th e r e c a n n e v e r
c a p ita liz a tio n
a t
T h e p u rp o se o f th e
fo u rfo ld :
th e
of
c a p ita l
bank
I s $ 1 2 ,0 0 0 ,0 0 0 , o f w h i c h
has
and
be
m em ber
F e d e ra l R e se rv e
and
m u st
rese rv e .
D a v id C . W ills , F e d e r a l R e s e r v e b a n k
e x te n t o f 6 p e r c e n t, o f t h e
ta l s to c k
of
and
th e
m in d
bank
T h is
banks
banks
tw e e n
bank
h e re
d e p o s its .
$ 1 5 ,0 0 0 ,0 0 0
u n d e rs ta n d
fac e
paper
le n d in g p o w e r o f th e I n s titu tio n Is b e
o f P e n n s y lv a n ia .
rese rv e
agent
m em ber
th e
To
rese rv e
c e n t, g o ld
$ 3 2 ,0 0 o ,o 0 0 .
S ix th
V irg in ia
a t
re d is c o u n te d
bank
m em ber
next
of
th e
R e se rv e
R e se rv e
in
W est
th e
paper
to
re d is
T lie t o ta l g o ld h o ld in g s o f t h e
e ra l
th e w h o le s t a t e o f O h io , t h e e a s t e r n
p o rtio n o f K e n tu c k y , th e p a n h a n d le
p o rtio n
o ff,
40 p er
fe d e r a l r e s e r v e d is tric t,
m e tro p o lis ,
a g a in s t
p lie s u n til M a y 1 0 o f t h is y e a r , w h e n
fo r
m em b e r o f th e F e d e ra l
b a n k 3 In
s ta te
banks
c o m m e rc ia l
a
re fe rre d
q u a lify
G u a rd ia n
d e p o s ito rs
n o te s
th e re g io n a l b a n k
U n til th is
p a id
c a rry
R e s e rv e b a n k h e re , b r in g in g th e to ta l
num ber
th e !
about
S a v in g s b a n k o f T o le d o , w h ic h Is a
d u ly
of
In s titu tio n s
A t p re s e n t th e r e la Ju st
bank,
reserv e
m em ber
c o u n te d
759
c h a rte rs
b a n k in g
a p p lic a tio n
m e m b e rs h ip .
bank
a re
n a tio n a l
fed e ra l
v a lu e .
a
d e p o s ito rs
th e ” fo u rth
as
s u p e rv is io n
e ffe c tiv e
The
o f c a p ita liz a tio n
r e a lity
com
m o re
to a r e Iss u e d b y
C le v e la n d
to ta l a m o u n t o f m e m
la
r e d is c o u n tin g
F o u r th , to p r o v id e a
m em b er banks.
p a rtic u
b e r b a n k d e p o s its .
T he
F e d e ra l
R e se rv e
C le v e la n d
a m eans of
Is- j
T h ird , to a f - ;
m e rc ia l p a p e rs .
tr u e in v ie w o f th e fa o t th a t th e
F e d e ra l
la
la
e la s tlo c u rr e n c y b y th e
s u a n c e o f f e d e r a l n o te a .
of
b u ild in g .
tr a n s it a n d m a ilin g d e p a r t
on
th e
fo u rth
f lo o r o f t h a t
SYSTEM
For
Par
1
i
Collections
•
i
In Federal R eserve Districts
To Be Inaugurated July 15.
Local N atio n al B anks A re In s tru c te d
How To C lear Ite m s U n d er
New R egim e.
In stru c tio n s
by
th e
w ere
e rn o r
E.
R.
Fancher
A g e n t W illis , o f
B ank,
th a t
15,
th e
th e
a c t.
J u ly
th e
th e
R e se rv e
been
in a u g u ra tio n ,
c o lle c tio n
th e
c lo s e
p rese n t
s y s te m
G ov
R e se rv e
have
under
A t
14
c o lle c tio n
C le v e la n d
check
s y s te m
re se rv e
on
fo r
of
c le a r in g
th e
y e s te rd a y
fro m
and
a rra n g e m e n ts
c o m p le te d
J u ly
re c e iv e d
lo c a l n a tio n a l b a n k s
of
on
and
F e d e ra l
b u s in e s s
in tr a -d is tr ic t
w ill
becom e
in
checks
and
o p e ra tiv e .
U nder
th e
d ra fts
on
S ta te s
w ill
C le v e la n d
new
a ll
be
bank
s y s te m ,
p a rts
of
c o lle c tib le
at
p a r,
th e
U n ite d
th ro u g h
p ro v id e d
th e
th e y
a re d raw n on a m em b er b a n k o r upon
a n o nm em ber b an k w hose ch eck s can
b e c o lle c te d a t p a t
by
th e
F e d e ra l
R e se rv e B a n k .
H o w e v e r, n o m e m b e r
b a n k is o b l ig e d t o s e n d i t s i t e m s to
ith e
F e d e ra l
R e s e r v e B a n k f o r c o lle c tio n . \t h a v in g th e o p tio n o f u s in g
i th e s y s te m o r c o lle c tin g th e m th r o u g h
‘its p r e s e n t c o r r e s p o n d e n ts . '
I te m s d r a w n o n a m e m b e r b a n k w ill
b e f o r w a r d e d to it b y th e F e d e r a l R e
s e r v e B a n k o f th e d i s t r i c t a n d it w ill
be re q u ir e d to re m it a t p a r to c o v e r
th e a m o u n t o f s u c h ite m s , e ith e r w ith
ite m s o n o t h e r b a n k s w h ic h ^ r e c o l- '
le c tib le
a t p a r, d r s f ts
on
its c o r r e - i
s p o n d e n t s , o r In l a w f u l m o n e y o r F e d
e ra l r e s e f v e n o te s .
U n d e r th e s y s te m th e F e d e ra l R e s e rv e
B a n k a t C l e v e la n d w ill r e c e i v e f r o m i t s
m e m b e r b a n k s c h e c k s a n d d r a f t s , p a y a b le
on p r e s e n ta tio n , d ra w n e ith e r on m e m b e r
b a n k s o f th is c ity o r a n y o th e r F e d e ra l
re s e rv e d is tr ic t o r a n y F e d e ra l R e se rv e
B a n k ; o r o n n o n m e m b e r b a n k s lo c a te d
i n a n y o f t h e 12 F e d e r a l r e s e r v e c i t i e s
w h ic h c a n b e c o lle c te d th r o u g h th e c le a r
i n g h o u s e o f t h o s e c i t i e s , o r on a l l o t h e r
n o n m e m b e r b a n k s w h ic h c a n b e c o lle c te d
a t p a r. A lis t o f s u c h n o n m e m b e r b a n k s
is p r o v id e d .
T h e s y s te m
w ill d is c o u r a g e t h e in d i
r e c t r o u tin g o f ite m s . In o r d e r to re d u c e
tim e a n d e x p e n s e o f c o lle c tio n a r r a n g e
m e n ts f o r s e n d in g c h e c k s a n d d r a f t s d i
r e c t to th e b a n k on w h ic h d r a w n , if t h a t
{ b a n k i s l o c a t e d i n D i s t r i c t N o . 4, o r
d ire c t to th e F e d e ra l R e se rv e B a n k o f
a n y o t h e r d i s t r ic t in w h ic h ite m s m a y
b e p a y a b l e , w ill b e e n c o u r a g e d , w h e n e v e r
t h e v o lu m e o f s tic h I te m s w a r r a n t s t h ia
course a n d t i m e m a y b e s a v e d t h e r e b y .
A s e rv ic e c h a rg e o f
c e n t s p e r ite m ,
to b e m a d e b y th e d e p o s itin g b a n k , h a s
b e e n f i x e d f o r D i s t r i c t N o . 4. N o s e r v i c e
c h a r g e w ill b e m a d e o n i te m s p a y a b l e in
C le v e la n d .
P e n a lt i e s a r e to b e p r o v id e d i f a m e m
b e r b a n k p e rm its its a v e ra g e a v a ila b le
b a la n c e o n t h e C l e v e la n d b a n k 's b o o k - to
b e c o m e le s s t h a n th e r e q u ir e d m o n th ly
a v e ra g e rese rv e .
T h * n e w s y s te m h a s b e e n w o rk e d o u t
a f t e r a l o n e p e rio d o f s tu d y , b u t is s u b
j e c t to f u tu r e c h a r g e s a s e x p e rie n c e d ic
ta te s .
T h e m e m b e r b a n k s a r c i j r s e d to
g i\e th e n e w
s y s te m
t h e i r f u lle s t c o
o p e ra tio n
Cincinnati Znquirer
MONEY PANIC
IMPOSSIBLE,
SAYS HAMLIN
tio n ,"
h e c o n c lu d e d , a f t e r te llin g
o f th e
i w o rk a t th e A lle g h e n y O b s e rv a to ry a n d
in th e p u b lic s c h o o ls o f th e c ity ,
to
b rin g
s u n s h in e
in to
th e
"go
w o rld .
out
The ^
s titu tio n s .
b u s in e s s t h a t h a s n o t i t s h u m a n s id e , i t s j
s id e o f w a r m th
le s s .”
F . B . A tw o o d
and
Banking System
a ff e c tio n , is w o r m - ,
o f M in n e a p o lis .
I
M in n ., j
c h a i r m a n o f th © m e m b e r s h i p c o m m i t t e e , •
read
1
-------------------
s c h o o l c h ild re n
w ere
je o p a r d iz e d
by
th e in so lv e n c y o f th e in s titu tio n .
L a v ish w o rd s o f p ra is e w e re u se d to I
d e s c rib e th e g e n e ro s ity o f H . C . F ric k ,
w h r, it w a s s ta te d , h a d c o n s e rv e d th e
c o n fld e n c e o f th e y o u n g e r g e n e r a tio n
in th e g e n e r a l i n te g r it y o f f in a n c ia l i n
B r a s h e a r s te p p e d
fo rw a rd .
“ W h e n y o u g o o u t fro m th is c o n v e n
th e
r e p o r t o f t h a t c o m m itte e
and)
H . P . G a u n c e o f S e a ttle , W a s h ., d e liv ! e r e d a n a d d r e s s o n " C o m m e r c ia l M o r t a l
ity , I ts C a u s e a n d P r e v e n tio n ," fo llo w
in g a n o p e n fo ru m o n th e p re v io u s c o m
m itte e r e p o r t a n d r e s o lu tio n s .
*
Federal Reserve Board Gov-1
1 ernor Talks on Currency
; Bill Before Credit Men.
j
Trade
D . !•. S a
c o m m itte e
re a u a n d
te re d a b o u
p la n , w a s
COMMITTEES R E P O R T
Relations
Sum m arized.
!
w y e r re a d th e re p o rt o f th e '
on
c re d it
exchange
bu
th e d is c u s s io n , w h ic h c e n
t th e c e n tra l c re d it e x c h a n g e
le d b y J . W . C h ilto n o f S t.
L o u is , M o.
O n e o f th e f e a tu re s o f th e r e p o rts o f
i c o m m itte e s w a s t h a t o f b a n k in g a n d
“ I b e lie v e t h a t u n d e r o u r n e w c u r
! c u rre n c y re a d
b y H . H . M e rr ic k
of
I C h i c a g o , 111.
T h e r e p o rt s u m m a riz e d
r e n c y s y s te m
t h e r e w ill n e v e r b e a n
) th e tr a d e re la tio n s o f th e U n ite d S ta te s
o t h e r p a n ic In t h e U n ite d S t a te s ,” s a id
! a n d s ta te d t h a t th e b a la n c e o f tr a d e
u C h a rle s
S. H a m lin
o f W a s h in g to n ,
I fo r
th is
c o u n try
fo r
M a rc h
a lo n e
g o v e rn o r
of
th e
F e d e ra l
R e se rv e
a m o u n t e d t o $ 1 9 6 ,0 0 0 ,0 0 0 a n d t h a t f o r
B o a r d , in a n a d d r e s s d e liv e re d a t th e
t h e n i n e m o n t h s e n d i n g M a r c h 31 t o
I $ 1 ,4 9 1 ,0 0 0 ,0 0 0 . T h e r e p o r t s a i d :
m o r n in g s e s s io n o f t h e N a tio n a l- A s
O ur
h o ld in g s
of
g o ld
c o in
and
s o c ia tio n
o f C re d it M e n
In t h e b a l l ,
b u llio n a r e
o v e r $ 2 , 300 , 000 , 000 , t h i s
u p p ly h a v in g b e e n a u g m e n te d s in c e
ro o m o f th e W illia m P e n n H o te l y e s - |
1 3 a S w & y ‘ “ : “l f t C S ‘y o v e r ” $ 3 00 , 00 0 ,0 0 0
te rd a y .
•
fro m
fo re ig n
c o u n trie s
a .o n e , a n d
G o v . H a m lin r e c o u n te d b r ie f ly th e a c - . . w e h a v e lo a n e d a b r o a d to th e e x te n t
I o f a b o u t $ 1 ,2 5 0 ,0 0 0 ,0 0 0 .
c o m p lis h m e n ts o f th e n e w b a n k in g a n d
I
I t is e s ti m a t e d t h a t b y A u g u s t 1
n a tio n a l d e b t w ill b e
c u r r e n c y b ill.
H e d e c la re d t h a t u n d e r , I th e G e r m a n
' $ 12 250 , 000 , 000 , o r $ 1 8 8 .4 6 p e r c a p I t a
|
th a t a c t th e
c o u n t r y ’s b u s i n e s s w a s
i G re a t
B r i t a i n ’s n a t i o n a l
d e b t w ill
!
b
e
$
1
4
,
5
0
0
,0
0
0
,
0
0
0
o
r
$
3
1
4
p
e
r
c
a
P
‘
‘
a
g iv e n a s o u n d e r fo u n d a tio n a n d a n ew
a n d t h e F r e n c h d e b t w i l l b e $ 1 4 ,5 0 0 ,
im p e tu s , a n d t h a t th e In te g r ity o f c o m
000 000 o r $368 p e r c a p i t a ; m a k i n g a
>
g r a n d t o t a l o f $ 4 1 ,2 5 0 ,0 0 0 , 0 0 0 .
T hese
|
m e r c ia l r e la tio n s h a d b e e n m a te ria lly
f ig u re s p r e s a g e th e f o r e ig n e c o n o m ic
,
c o n d itio n s w e m a y e x p e c t to p r e v a il
s t r e n g t h e n e d . M o r e t h a n 1 ,5 0 0 d e l e g a t e s
a t th e c lo s e o f th e E u r o p e a n w a r .
a r e n o w ' in a tte n d a n c e a t th e c o n v e n tio n .
s h o u ld p e a c e b e in s ig h t a t a n .
o f o re d it m en .
C h a rle s D . J o y c e o f
Urge Revision of B a n k Laws.
P h ilad elp h ia, P a . ,
first v i c e p r e s i d e n t o f t h e a ssociation,
p r e s i d e d a t t h e m o r n i n g session.
T hein v o c a tio n w a s d e liv e re d b y R a b b i A . H .
S i lv e r o f W h e e lin g , W . V a .,
to
th e
w ith
a d e le g a tio n
w ho
cam e
y e sterd a y m o rn in g
c o n v e n tio n
fro m
j
W h e e lin g .
O vation for D r . Brashear.
D r. J o h n A . B r a s h e a r re c e iv e d a n o v a - ,
tio n
w hen
he
w as
in tr o d u c e d
as
" th e
m an
w hom
th e u n iv e r s itie s o f th e w o rld
d e lig h t to h o n o r, w h o h a s re c e iv e d m o re (
h o n o r s t h a n a n y o th e r m a n in th e U n ite d ,
S ta te s , a n d w h o w a s p ro p e rly d e s ig n a te d ^
I 'P e n n s y l v a n i a ’s f o r e m o s t c i t i z e n . ’ ”
i c o n v e n tio n
a ro se ,
ch e ere d
as
The
D r. I
P r e s id e n t H . G . M o o re p ro p o s e d t h a t
F . R . S a l is b u r y o f M in n e a p o lis , M in n .,
b e m a d e a m e m b e r of th e h o n o ra ry
a d v is o r y b o a r d in r e c o g n itio n o f h is
n in e y e a r s ’ s e rv ic e a s a n o ffic e r o f t h e
a s s o c ia tio n .
In
th a t
tim e ,
it
w as
s ta te d , M r. S a lis b u ry
had
se rv e d
a s
p r e s id e n t, v ic e p r e s id e n t a n d d ire c to r .
The
p r o p o s itio n
w as
u n a n im o u s ly
a d o p te d .
.
T h e c o n v e n tio n p a s s e d a r e s o lu tio n
u r g in g th e r e v is io n o f th e s a v in g s a n d
p r iv a t e b a n k la w s in t h e s t a t e s w h e r e
th e d e p o s ito rs a r e n o t p r o te c te d .
The
d is c u s s io n o n th e r e s o lu tio n w a s th e
c a se o f th e P itts b u rg h B a n k fo r S a v I in g s .
in
w h ic h
th e
s a v in g s
of 12,000
Pittsburg Gazette Times
June 1916
;
j
Praised.
G o v . H a m lin w a s th e la s t s p e a k e r a t
th e m o rn in g s e s s io n . In h is a d d r e s s o n |
b a n k in g a n d c u r r e n c y d e v e lo p m e n t in
th is c o u n tr y , G o v . H a m lin s a id :
I t p le a s e s m e to c o m e to th is w o n
d e r f u l c ity o f th is w o n d e r f u l c o m
m o n w e a lth .
I f I s h o u ld te ll y o u o f
th e g r e a t a s s is ta n c e th a t h a s b e e n
g iv e n to th e F e d e ra l R e s e rv e B o a rd
b y y o u r g r e a t o r g a n iz a tio n it w o u ld
re q u ire
tw o
or
th re e
h o u rs.
The
w o r k y o u h a v e d o n e a lo n g th e lin e
Ot t r a d e a c c e p t a n c e h a s b e e n o f i n
c a lc u l a b l e b e n e fit to t h e p e o p le o f th e
U nited S ta te s. T h i s a s s o c i a t i o n h a s
b e e n a lw ay s w i t h u s , r e a d y t o g i v e
t h e i r advice and help e v e r y s i n c e t h e
e s ta b lis h m e n t o f th e fe d e ra l re s e rv e
s y s te m .
R e c e n t l y i t gave m e g r e a t
d e l i g h t t o w a lk i n t h e p r e p a r e d n e s s
p a r a d e in W a s h i n g t o n , in w h i c h o v e r
60 000 p e r s o n s p a r t i c i p a te d a n d w h ic h
w as h e a d e d b y t h e P r e s i d e n t o f th e
U n ite d
S ta te s .
I t is m a r v e lo u s to
b e h o ld th e f e e lin g fo r m ilita r y p r e
p a re d n e s s fo r d e fe n se .
On D ecem ber
23, 18X3. C o n g r e s s g a v e u s c o m p l e t e
f in a n c ia l p r e p a r e d n e s s .
W e se e th e
fed eral
rese rv e
s y s te m
e s ta b lis h e d
to m e e t th e d e m a n d s o f e v e ry s itu a
tio n t h a t c a n p o s s ib ly a ris e .
T oday
w e h a v e a b a n k i n g s y s te m r e a d y to
m e e t a n y p o s s ib le s tr in g e n c y in o u r
b u s in e s s s itu a tio n .
I n th e tim e o f g r e a t p r o s p e r ity w e
m u s t b e c o m e c o n s e r v a tiv e a n d lo o k
in to th e p ro b le m s o f th e f u tu r e .
W e
m u s t ta k e c a re o f th o s e s itu a tio n s
w h ic h a r e lik e ly to a r is e f o llo w in g
a
g r e a t in d u s tria l a n d
c o m m e rc ia l
p e rio d
of
a c tiv ity .
W e
feel
th a t
w h a te v e r p ro b le m m a y a r is e w e w ill
b e a b le to a d ju s t o u r f in a n c ia l s y s
te m
th a t it w ill ta k e c a re o f th e
d e v io u s tr o u b le s t h a t m a y b e s e t u s
w h e n th e p r e s e n t p ro s p e rity h a s a
te n d e n c y to re la x .
D u r in g th e p e rio d
o f th e o p e ra tio n o f th e a c t w e h a v e
y e t to r e c o rd a s in g le c a s e in w h ic h
a re d e ra l re se rv e b a n k h a s a sk e d fo r
a re -d ls c o u n t fro m a n o th e r b a n k o t
• th e s y s te m .
’
Believes Panics
Impossible.
W e h a v e n o w a n e la s tic c u rre n c y
■ w h ic h c a n
ta k e
c a re of th e c a se s
p r e s e n te d to it w ith s u r e ty a n d c o n
f id e n c e .
W e h a v e s a tis fie d th e p e o
p le o f th e w o rld t h a t e v e ry o b lig a
tio n o f th e U n ite d S ta te s c a n b e f u l-
|
.
:
I
,
.
'
W h e n th e c o m m is s io n o f ,o r e lg n
b a n k e r s c a m e to u s fro m a b r o a d to
s e e w h e th e r o r n o t w e w e r e in a
r in a itin n to n& y to th e m o u r o b l lg a tio n s th e y h a d h a rd ly la n d e d b e fo re
th e y
d isc o v e re d
th a t th a t w a s not
{ h l f r p r o b le m , b u t t h a t t h e P r o b le m
w a s — h o w th e y w e re g o in g to m e t
th ^ ir
o b lig a tio n s
to
th e
U n ite d
S t a t e s '*
1 b e lie v e t h a t u n d e r o u r n e w
c u r r e n c y s y s te m w e c a n n e v e r h a v e
a o a n ic in th e U n ite d S ta te s .
I t is u n p a tr i o ti c f o r s ta t e
banks
n o t to c o m e In t h e s y s te m .
I t is M
u n p a tr i o ti c a s if th e m il it ia o f t h e
■ P .r .i . t i t f ! r e f u s e d t o r e s p o n d t o
th e m ilita ry n e c e s s itie s o f th e U n ite d
S ta te s .
__________ 1
A ccep tan ce D irectory
Broadway Trust Company
MKMBKR FKDKRAI. RESERVE SYSTEM
‘W o o l w o r t h D n i l d l a s
N e w Vork
MEMBER BANKS Or FEDERAL RE
SERVE SY8TEM WHICH ACCEPT DRAFTS
IN IMPORT AND EXPORT TRANSAC
TIONS AND BUY AND SELL ACCEPT.
, ANCES:
Columbia Trust Company
60 B ro a d w a y
N ew
Y 'o r k
Equitable Trust Company
American Exchange National Bank
' - N B .-o a d w a -
jv,. w
vo rk
37 W a l l S t r e e t
N err Y o r k
______________ ________________________________________
Guaranty Trust Company
1 IO n r o a d n a T
N ew
Y ork
Atlantic National Bank
SOT B r o i d n i j r
N ew
Y ork
PR IV ATE BANKING HOTTSES WHICH
ACCEPT DRAFTS IN IMPORT AND E X
PORT TRANSACTIONS:
Bank of New York
48
W a ll
S tre e t
N tir
Y ork
Citizens Central National Bank
3ao
B road w ay
N ew
Y ork
R a t ld ln ir
N ew
Y ork
((O
S treet
N ew
N ew
N ew
Corporation
N ew
Y ork
Bernhard, Scholle & Co
Y ork
14 W a l l S t r e e t
N ew
Y ork
N ew
Y ork
Curtis & Sander
N ational City Bank
55 W a l l S tr e e t
Banking
S treet
Y o rk
Y ork
National Bank of Commerce
31 N n im ar. St c e t
W a ll
N ew
S treet
DEALERS WHO BTTY AND SELL AC
CEPTANCES:
Mechanics & M>tals National Bank
2 0 N a jia n u
W a ll
International
Irvin? N ational Bank
W o o l w o rth
Brown Brothers & Co.
50
4«> W a l l
S treet
Y ork
Mann, B ill & Co.
7
Philadelphia Nartional Bank
P h ila d e lp h ia
N a t.
Rank
B id * .
W a ll
S tre e t
IMeW
Y ork
P h lla .
National City Co.
TRUST
COMPANIES
AND
STATE
BANKS WHICH BTTY AND SELL AC
CEPTANCES. AND ACCEPT IN DOMESTIC
AS W ELL AS IMPORT AND EXPORT
TRANSACTIONS.
Bankers Trust Company
10 W a l l
S treet
N ew
Y ork
July 1916
153 W a l l S t r e e t
N ew
Y ork
F. S. Smithers & Co.
l!>
N’ a « « » a
S tre e t
N ew
Y ork
KNOWLEDGE
Of Reserve Plan
Imperfect Among Bank
ers, Rich Declares.
Views of Financiers Are
Analyzed By Governor.
Result of Poll Show s Friends
of S ystem Are Increasing.
H olland S ays H ead o f M inneapolis
D istric t M ad e F ir s t C areful
S u rv ey of R eplies.
IPBCIAL mHPATClfc TO THI KfQGIVBX.
N ew Y ork, A u g u st 4.—C h a rles H. S abtn,
P re sid e n t of th e la rg e s t of A m erican
t r u s t in stitu tio n s an d one of th e y o u n g er
g e n eratio n of b an k e rs, is p e rh a p s a s well
in fo rm ed re sp e c tin g conditions in o th e r
la n d s a s is a n y o th e r A m erican b a n k er,
w ith th e ex cep tion, possibly, of J . P.
M organ.
T he a d d re ss re c e n tly delivered b y Mr.
S abin, in w hich he pred icted t h a t o th e r
n a tio n s w ould, a f te r the close of th e w ar,
be com pelled to tu r n to th e U n ited S ta te s
fo r commodities*, th e re b y a s s u rin g a co n
tin u ed h eav y e x p o r t tra d e , h a s been
w idely co m m en ted upon. T h e view h a s
n o t been accep ted by a ll o f th e lead ers,
for th e re h a s been ap p re h e n sio n th a t
A m erica w ould be m ade th e dum ping
g ro u n d fo r fo reig n com m odities a f t e r th e
w ar is ended. M r. S abin h a s in tim a te
kno w led g e of co n d itio n s in C hina, w hich
his in stitu tio n is p re p a rin g to aid, a n d
a ls o in R u ssia.
H e looks fo r a v ery
g re a t tra d e w ith th e U nited S ta te s by
R u ssia a f t e r th e close of th e E u ro p e a n
w ar.
Sought Views on Reserve.
a l i t t l e o v e r tw e n ty m illio n s o f a g r i
c u l t u r a l p a p e r, a n d e v e r y o n e o f th e
A n o th er service w hich Mr. S abin r e
b a n k s r e p o r te d t h a t th e s e tr a n s a c t i o n s
c e n tly h a s p erfo rm ed h a s p e rh a p s a t
w e re e n t ir e ly s a tis f a c to r y .
tra c te d less a tte n tio n th a n did h is speed*
M r. R ic h t h i n k s t h a t i t m a y b e
in th e N o rth w est. F o r it w a s he who,
r e a s o n a b ly p re s u m e d t h a t a ll th e b a n k s
P re s id e n t of a s ta te -c h a r te r e d b a n k in
t h a t a r e d is s a tis f ie d —so m e o f th e m b e
s titu tio n a s he is, u n d erto o k to g e t th e
c a u s e o f th e a d ju s tm e n t o f th e F e d e r a l
r e s e r v e d i s t r i c t, som e o n a c c o u n t o f
view of A m erican b a n k e rs re sp e c tin g th e
p a r c o lle c tio n o f c h e c k s — a r e to b e i n
F e d e ra l reserv e b an k in g sy stem .
c lu d e d in th e l i s t of th o s e w h o o b je c t
In reply to in q u iries w hich he s e n t th e
to th e s y s te m , b u t a s t h e o b je c tio n s '
b a n k e rs m a n y le tte r s w ere received by
th e y m a k e h a v e n o th in g to do w ith t h e
him , b u t th e re h a s been no c a re fu l a n a ly
r e s e r v e s y s te m a s a b a n k in g m e c h a n
sis of these replied u n til o n e w as m ade
ism , th e opinion ex p ressed by th ese ob
je c to r s h a s l i t t l e m o re sig n ific a n c e t h a n
th is m o rn in g by Jo h n H. R ich, C h a ir
c
a n be a tt a c h e d to a s t r a w v o te . •
m a n of th e F e d e ra l R eserve B a n k of th e
T h irty -th re e m em ber an d 243 no n -m em
*?lnthw D istrict, of w hich M inneapolis is
b e r b a n k s r e g a r d th e r e d is c o u n tin g
fthe center.
p r iv ile g e a s no v a lu e , a n d y e t th e F e d
T h e relatio n o f th e F e d e ra l reserv e
e r a l r e s e r v e s y s te m h a s f o r o n e o f itij
f u n d a m e n ta l p r in c ip le s th e e s ta b lis h in g
system to A m erican b usiness In te re sts
o f b a n k s o f r e d is c o u n t f o r th e p u rp o s e
a n d th e highly im p o rta n t relatio n w hich
of offering su p p o rt to th e b a n k in g ' fa b
th is sy stem w ill b e a r to th o se in te r e s ts
ric of th e c o u n try by prov id in g a
a f t e r th e w ar is ended m ak es M r. R ich ’s
m a r k e t f o r b a n k p a p e r in tim e s of
a n a ly s is all the m ore valuable.
e m e rg e n c y . T h e c a n v a s s m a d e j » y M r.
g a b in is, in M r. R ic h ’s v iew , v e r y s ig
I t a p p e a rs to Mr. R ich t h a t m ar.y h a s ty
n if ic a n t on a c c o u n t o f th e m isc o n c e p
conclusions h a v e follow ed th e c a n v a s ,
tio n w h ic h a t ill p r e v s i i s a m o n g somm ad e by M r. Sabin of th e s e n tim e n t of
b a n k e r s a n d th e im p e r f e c t u n d e r s ta n d
th e ban k s of th e c o u n try w ith re sp e c t to
Ing o f th e system .
th e F ed eral reserv e system . Som e who
Many Members Enthusiastic.
are , o r profefcs to be, of good a u th o rity ,
N e v e r th e le s s a la r g e p ro p o r tio n o f th*
h a v e discovered in th e c a n v a s s s t a t e
m e m b e rs b a n k s , a r e n o t o n ly fr ie n d ly ti
m ents w hich should give th e F e d e ra l R e
th e s y s te m , b u t m a n y o f th e m a r e be
se rv e B oard se rio u s concern b ecau se im
c o m in g e n th u s i a s tic o v e r it. S o m e o f th e
b a n k s w h ic h h a v e o b je c te d a r e m a n a g e d
p o rta n t d efects in th e law a n d in the
b y o ffice rs w h o h a v e g iv e n o n ly s u p e r
m ech an ism of th e F e d eral R e serv e B anks
fic ia l s tu d y to th e n e w la w a n d h a v e
a re discovered.
t a k e n l i t t l e p a in s t o fa m ilia r iz e
th e m
s e lv e s w ith th e o p e r a tio n o f th e F e d e r a l
M a n y R e s u l t s E s c a p e d V ie w .
R e s e rv e B a n k s .
N ev erth eless, in M r. R ich ’s view, som e
M r. R ic h s a y s t h a t b a n k e r s s h o u ld s e e k
of th e m o st c u rio u s and sig n ifican t re
c a r e f u lly to in f o r m
th e m s e lv e s o f th e
m
e c h a n is m o f th e F e d e r a l R e s e r v e B a n k s
su lts of th e c a n v a s s h a v s escaped th e
a n d th e o p e r a tio n o f th e s y s te m . B a n k
o b se rv a tio n of th e critics.
•
in g o p in io n is n e c e s s a r ily a n d ju s tif ia b ly
I n th e U n ite d S t a te s th e r e a r e 26,000
c o n s e r v a tiv e . M a n y b a n k e r s h a v e b e
b a n k s , b u t of t h i s n u m b e r o n ly 7,600
c
o m e a c c u s to m e d to th e old s y s te m , w h ic h
a r e n a tio n a l b an k s an d m em b ers of th e
w a s in o p e r a tio n f o r n e a r ly 50 y e a r n
r e s e r v e s y s te m .
T h e p u b lic h a s n o t
a n d f o r t h a t r e a s o n c e r ta in p r a c tic e s h a d
re a liz e d in w h a t a p r o p o r ti o n a te l y
b e c o m e so firm ly e s ta b lis h e d a s to b e r e
s m a ll p a r t o f th e t o ta l n u m b e r o f b a n k s
g a rd e d a s u n w r itt e n la w . T h e r e is to o
in th e U n ite d S ta te s th e F e d e r a l r e
m u c h te n d e n c y to c o m p a re th e n e w s y s
te m w ith th e o ld f o r th e s a k e o f c r i t i
s e r v e s y s te m h a s g a in e d a fo o th o ld .
c ism .
M r. R ic h ’s e x p e r ie n c e a s C h a i r
O f th e b a n k s t h a t re p lie d to M r. S am a n o f t h e r e s e r v e b a n k a t M in n e a p o lis ,
b in 's in q u iry , th e r e w ere in n u m b er
w h o se
in flu e n c e
r e a c h e s f a r in to t h e
5.344, o r only a b o u t one fifth- of th e e n
N o r th w e s t ,
le a d s
h im to b e lie v e t h a t
t i r e n u m b e r in th e c o u n tr y . T h e o p
s n e e d ily c r itic is m w ill e n d a n d t h a t th e
e r a tio n o f th e F e d e r a l r e s e r v e sy s te m
o
b
je
c
to
r
s
o
f
to
-d
a
y
w ill b e c o m e
th e
w a s f a v o r a b ly c o m m e n te d u p o n by
f r ie n d s o f to -m o rro w
1,760 o f th e b a n k s , b u t 1,811 e x p r e s s e d
T h e F e d e r a l R e s e rv e B a n k * a r e s till
n o o p in io n . N e a r ly 7 p e r c e n t o f th e
new
T h e y h a v e b e e n In o p e r a tio n f o r a
b a n k s of th e c o u n try m ade critic a l r e
y e a r a n d a h a lf , a n d fo r t h a t r e a s o n i t
plies to Mr. S a b ln 's in q u iries, an d of
s e e m s u n f a i r to c ritic iz e a s y s te m t h a t
th is n u m b er 1,080 b a n k s w ere m em b er
h a s s o f a r h a d n o good o p p o r t u n i t y to
banks
and
685 w e re
n o n -m em b er
s h o w w h a t i t c a n d o in a c ris is . T h e F e d
banks.
e r a l r e s e r v e s y s te m h a s b e en e s ta b lis h e d
Discounts Were Satisfactory.
D u r in g t h e 14 m o n th s o f th e o p e r a
tio n of th e F e d e ra l R e se rv e B a n k s a
little m ore th a n tw o th o u sa n d d is
c o u n te d n e a r ly a h u n d r e d a n d e ig h t t h r e e m illio n s o f c o m m e rc ia l p a p e r a n d
Cincinnalti inquirer
August 5, 1916
s0 t h a t i t m a y be m a d e p o s s ib le to fa c e
a n d o v e rc o m e c ris e s , f o r in s ta n c e , lik e th e
o n e of 1907. A n o th e r y e a r in o p e r a tio n
m a v c le a r lv d e m o n s t r a te to t h e b a n k s
Of t h e
u n ite d
w h ic h m a n y
S ta te ,
th e _ a d v a n ta g e "
of
b a n k e r s a r e n o w c o n v in c e d .
H o l l a n d .
BANKER INDORSES
I FEDERtl RESERVE
N ew
F in a n c ia l
S y s te m
W ork s
O u t to A d v a n ta g e o f B a n k e r s
n e w a c t , h j v . c ' e r , w a s l o w e r e d '.o I D
p e r c e n t.
A t th o tim e o f th o la s t c a ll
b y t h e c o m p tr o lle r o f th e c u r r e n c y th o
c o m b in e d
jbanks
i w h ic h
le g il
rese rv e
of
a ll
a c t, b u t
a
d e c re a se
th e a m o u n t th a t
c a rry
under
ih e
p er c e n t o f th e
of
8 per
cent
fro m
i t w a s n e c s s a . 'y
to
fo rm e r
la w
E ig h t
$ " 5 ,9 0 0 ,0 0 0
n a tio n a l
b a n k d e p o s its in th is c ity a m o u n ts to
S 2 ,S C O ,0 0 0 .
I t is s a fe to a s s u m e t h a t
th is e n tir e a m o u n t has. b e e n c o n v e rte d
in to
lo a n s
a t
5 p e r c e n t.
o h e - h a l f o f t h 'S a m o u n t , o r
a s W e ll a s P u b lic .
n a tio n a l
i n C o l u m b u s w a s IT p e r - .e n t ,
w as
above
th e
le g a l
reserv e
P ro b a b ly
$ 1 ,4 0 0 ,0 0 0 ,
has
been
lo a n e d
iro ra
th e
v a u lt re - !
s e rv e ; th e in c o m e o n s a m e a t 5 p e r
c e n t w o u l d b e $ " 0 ,0 0 0 .
T h e o t h e r $ 1 ,-
N e t In c r e a se o f B a n k P r o fits in
C o lu m b u s S h o w n to B e
$90,000 a Y ear.
[ 4 0 0 ,0 0 0 w a s p r o b a b l y c a r r i e d w i t h r e
! s e rv e n a tio n a l b a n k s o u ts id e o f C o lu m
b u s, o n w h ic h , th e b a n k s
re c e iv e d in te r e s t a t 2 p e r
■
o f th is c ity
c e n t, g iv in g
t h e m a p r o f i t o f 2 p e r c e n t , o r $ 4 2 ,0 0 0 ,
m a k i n g a t o t a l j . r o f i t o n t n e $2,s00,000
of
"A t
th e
se rv e
I
I n c e p tio n
a c t,
w as
p assed
of
som e
som ew hat
of
head
n a tio n a l
of
one
in s titu tio n s
y e s te rd a y .
th e
w as
in
th is
th e
jfre n te s t
la rg e
in
th o
to
se cu re
a b ility
la rg e s t
act
v a lu e
m o re
in
a Jt
of
m oney
ones,
th e
m o n e ta ry
th e
p ra c tic a l
its e lf a n d
;b ro u g h t
th e
to
th e
r e a liz e d
a
a g a in s t f u tu re
of
p u b lic
fo r
of
a t
m oney,
w ith
th e
fa c t
th a t
th e
c o u n try
p a n ic .
I n v ie w
of
h as
th e
act
it
h as
been
ac
. c e p tc d b y th e p e o p le a t la r g e a s a r e
m a r k a b le p ie c e o f c o n s tr u c tiv e le g is la
tio n .
“B a n k e rs, h o w ev er, h a v e
been
s lo w e r ,
to a c c e p t th e
new
c o n d itio n a s th e y
h a v e c o m e in to d a ily c o n ta c t w ith th e
d iffe re n t
j j r o v l 'i i o n s
of
th e
ie u e ra l
re
s e rv e a c t. a n d m a n y o f th e m h a v e r e
se rv e d
t h e i - c p 'n io n a s
to its d ire c t
e ffe c t
on
b a n ’.- i K p r o f i t s
u n til
c o u ld b e s h o w n .
Ir. v ie w o i t h is
th e y
i t 1f»
in te r e s t* n s j t o
c o n s id e r
th e
s itu a tio n
in C o lu m b u s ;is s h e w n b y t h i l a s t p u b
lic s ta t e m e n t s
o f th e
n a tio n a l b a n k s
h e re .
S h o w in g f o r C o l u m b u s S a n k * .
"U nder
ih j
fo rm e r
p a tio n /U
$ 1 1 2 .0 ° 0 .
“T h e b a n k s o f C o lu m b u s , h o w e v e r,
c a rr y a n a g g re g a te b a la n c e in th e f e d
e ra l r e s e r v e b a n k o f C le v e la n d o f a b o u t
$ 1 ,1 5 0 ,0 0 0 , o n w h i c h i t i s p r o p e r t o a l
l o w 2 p e r c e n t , o r $ 2 3 ,0 0 0 , w h i c h s h o u l d
b e d e d u c te d fro m
t h e $ 1 1 2 ,0 0 0 p r o f i t s
ab ove, m e n tio n e d .
T h e s e b a la n c e s w ith
th e fe d e ra l re s e rv e b a n k d o n o t d ra w
in te re s t, b u t w ith o u t th e
fed e ra l re
s e rv e s y s te m
th e y w o u ld
h a v e to b e
m a in ta in e d
e ls e w h e r e
and
w o u ld
be
b e a rin g in te r e s t o f n o t to e x c e e d 2 p e r
. c e n t, s o i t a p p e a r s t h a t th e n a tio n a l
[ h a n k s o f C o lu m b u s
a re
p ro fitin g
by
j t h e d i f f e r e n c e b e t w e e n $ 1 1 2 ,0 0 0 i n c o m e
a n d t h e $ 2 3 ,0 0 0 t h e y l o s e b y m a i n t a i n
in g th e s e b a la n c e s w ith o u t i n t e r e s t in
I th 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 ,
b o rro w e r
th e
it
th a t
p ro v e
a d v a n ta g e s
p u b lic
of
p ar
w o rk in g s
m any
m any
s m a ll
in su re d
th e
p a rt o f th e
th e
v irtu a lly
th e
e a rn
n a fo n a l
by
ra te s
on
and
th e
w o u ld
th o
age,
to
c a re fu l b a n k
to
s ta b le
re
re m a rk e d
T hey
reserv e
as
on
s h a '- e d
e v e ry w n e re .
fed e ra l
y e a rs
la rg e s t
m o st th o u g h tfu l a n d
e rs
th e
have
th e
c o u n try
v ie w
tw o
b a n k s ,”
of
b a n k in g
“ T h is
fed eral
co n cern ed
e ffe c t th is a c t w o u ld
in g s
th e
b a n k in g
a c t a l l n a t i o n a l i n s t i t u t i o n s *n t h i s c i t y
w e r e r e q u i r e d t o c a r r y a le j f .P l r e s e r v e
o f 25 p e r c c n t o f t h e i r d e p o f its .
T he
a m o u n t o f lt-s e rv e r e q u ir e d u n d e r th e j
B anks’
N et
P ro fit
$ 9 0 ,0 0 0 .
" T h is le a v e s a n e t in c r e a s e in p ro fit
to th e b a n k s o f th is c ity o f a p p r o x i
m a t e l y $ 9 0 ,0 0 0 a n n u a l l y o n a c c o u n t o f
th e g r e a te r fre e d o m
th e y h a v e In u s*
n g th e ir a s s e ts , a s p e rm itte d b y th e
fe d e ra l r e s e r v e s y s te m .
T h e c o m m e rc e
and
in d u stry
o f C o lu m b u s h a v e a ls o
n e a rly
$ 3 ,0 0 0 ,0 0 0 m o r e l o a n s a t t h e i r
d is p o s a l.
• 'B a n k e r s p r o p e r l y f e e l t h a t t h e y a r e
e n title d to a n in c o m e o f a t le a s t 5 p e r
c e n t o n th e a m o u n t o f th e ir c a p ita l in
v e s te d in th e s to c k o f th e f e d e r a l r e
s e rv e b a n k , b u t, in a s m u c h a s th e r e
s e rv e b a n k a t C le v e la n d is n o w e a r n
in g t h is d iv id e n d , a n d t h is is b e c o m in g
la r g e ly
tru e
th ro u g h o u t
th e c o u n try ,
th a t m a tte r
can
b e d is m is s e d .
O f
c o u rs e , it is n o w a n d w a s f o rm e rly n e c
e ssa ry
fo r b a n k s to
c a rry
b a la n c e s
w h ic h d o n o t c o u n t a s r e s e r v e , in o r
d e r to m a k e c o lle c tio n s , b u t t h e r e is
n o w n o n e c e s s ity fo r c a rr y in g la rg e r
b a la n c e s
th a n
w hen
th e
act w as
n assed .
In fa c t, th e c o n s ta n t b ro a d e n
in g o f th e c o lle c tio n s y s te m
re c e n tly
in a u g u ra te d
b y th e
fed e ra l
rese rv e
h a n k s w ill r e s u l t in a g r a d u a l d e c re a s e
in s u c h
b a la n c e s in
o th e r
n a tio n a l
b a n k s a n d m a te ria lly le sse n
th e c o s t
o f c h e c k c o lle c tio n s to b o th th e b a n k s
a n d p u b lic ."
. . .
I
Ohio State Journal - Columbus
August 1916
MONEY PLENTIFUL
TO MOVE THE CROPS
Officers of Federal Reserve
Banks Throughout Country
Tell of Prosperity.
SA Y
LABOR
IS
R ESTLESS
S in c e l a s t r e p o r j , a n d a r e n o w a b o u t
o n e -lia lf o f 1 p e r c e n t, lo w e r.
M oney
s e e m s to b e In g e n e r i s
s u p p ly , a n d
in
b u t few
lo c a liU e s is
th o
dem and
s u f f i c i e n t to m e e t t h e a p p r o v a l o f t.ie
banks.
L abor
c o n tin u e s
w e ll
em
p lo y e d .
F a ll b u s in e s s to a la r g e e x
te n t a e p e n d s u p o n th e r e s u lts o f th ^
c ro p s , a n d In th is d is tr ic t, w h e n * th e
p ric e s
a re
c o n s id e re d ,
th e
farm ers
s h o u ld re c e iv e a s a tis f a c to r y r e tu r n .
W illia m
M cC .
M a rtin ,
F e d e ra l
R e
s e r v e A g e n t, S t. L o u is , a s s e r t s
tn e dm tiib u tlo n
o f m e rc h a n d is e , b oU t w h o le
s a le a n d r e t a il , r e m a in s a t a h ig h le v e l
th ro u g h o u t
th e . e n tire
d is tr ic t,
and
adds’
11 S a l e s a n d c o l l e c t i o n s c o n t i n u e
s a tis fa c to ry
and
in c re a se s
a re
Ise v er
a lly
re p o rte d .
T he
o u tlo o k
fo r F a ll
b u s in e s s in a ll lin e s s e e m s to b e en
tlre ly
fa v o n a b le .
In
g e n e ra l It m ay
b e s a id t h a t t h e u s u a l s e a s o n a b l e lu ll
in
b u s in e s s
has
b e e n le s s
n o tic e a b le
th is y e a r th a n fo r a n u m b e r o f y e a rs
p a s t.
A
m o n th a g o
la b o r c o n d itio n s
in th is d i s t r ic t w e r e b e lie v e d to b e s a t
is f a c to r y .
S in c e t h a t tim e th e u n r e s t
s o n o tic e a b le - in th e E a s te r n s e c tio n s
o f th e c o u n try s e e m s to h a v e s p re a d
to
th is
d is tric t.
L ocal
s trik e s
have
b e c o m e m o re fre q u e n t, a n d th e s itu a
tio n c a n n o t o e s a id to b e w ith o u t its
p r o b le m ^ .* ’
to
n o tic e
any
p a rtic u la rly
m ark e d
c h a n g e in th e m o re im p o r ta n t in d u s tr ie s
o f th is s e c tio n .” B u ild in g a n d e n g in e e r
in g o p e ra tio n s In N e w E n g la n d c o n tin u e
t o s h o w a c o n s id e ra b le
in c re a se o v e r!
y e a rs « ^ ! ! ! ^ S n d f i S S ! f »
tfn u e s
” a re
u n s a tis fa c to ry
fro m
th e
s ta n d p o in t
of
th e
e m p lo y e r
L abor
of
p ra c tic a lly
S.U
k in d s
is
sc arc e
and
e s p e c ia lly
Is
t? r. r i f | B t e n t
s k ille d la b o r a n d f a r m h e lp , p e r s i s t e n t
re p o rts
of
th e
a r b itr a r y m a n n e r in
w h ic h
e m p lo y e s a r e m a k in g
dem ands
a n d re g u la tin g th e ir o w n h o u rs a re b ein e h e a rd o n e v e ry
hand.
T n ia n a a
m a d e m a n u f a c tu r e r s c a u tio u s
t e n d i n g t h e i r b u s in e s s u n d u l y l e s t tn e >
be
u n a b l e t o k e e p o r s e c u r e e n g J |{ {
h e lp to c a r r y o u t th e ir
H ig h
w ages
a re
c a u sin g
m uch
s h liu n g o t
e m p lo y e s f r o m o n e p la c e to a n o th e r .
R eport F ro m Philadelphia.
R e adju stm en t of Com m o d ity P rice s
H a s Resulted In More W h o le
some B u sin ess R e lation s.
O ffic e rs o f
F ed eral R e s e r v e b a n k s ,
e x p r e s s in g o p in io n s o n b u s in e s s c o n d i
tio n s , n o te w ith o u t e x c e p tio n t h a t th e
m o n e y s u p p ly is e n tir e ly a d e q u a te
to
fin a n c e th e c ro p m o v e m e n t a n d o th e r
b u s in e s s d e m a n d s o f th e F a ll.
Som e of
th e m b eliev e t h a t a r e a d j u s t m e n t o f
m any c o m m o d ity p r lS e s h a s r e s u l te d In
m o re w h o le s o m e b u s in e s s -r e la tio n s w ith
o u t im p a irin g p r o s p e r ity .
L a b o r ls a
s u b je c t u p p e rm o s t in th e m in d s o f m a n y
o f th e m , w ith o u t a n y p a r tic u la r r e f e r
e n c e to th e r a ilr o a d la b o r d is p u te .
In
s c o re s o f le g a litie s a n d
in
sc o re s o f
tr a d e s it a p p e a r s , fro m th e ir e x p e rie n c e ,
la b o r is r e s t le s s a n d i n s i s te n t o p a c o n
s ta n tly I n c r e a s in g p ro p o rU o n o f th e m a n
u f a c tu rin g p r o fits .
F ro m th e S o u th r e
p o r ts o f d a m a g e to c o tto n a r e e m p h a tic .
P ie rre J a y , f e d e r a l R e s e rv e
A g e n t,
N ew
Y o rk , s a y s
th a t
th e
c o u rse
of
b u s in e s s h a s b e e n s te a d ie r a n d le s s u n
c e r ta in s in c e t ^ e r e a c tio n in c o m m o d ity
p ric e s a fe w m o n th s a g o , a n d a d d s :
"
T h e g e n e ra l in d u s tr ia l s itu a tio n is
p r a c tic a lly u n c h a n g e d . T e x tile m ills, i n
p a r tic u la r , a r e w o rk in g to c a p a c ity .
S h o e f a c to rie s h a v e b een v e r y b u sy , d e
sp ite th e re c e n t in c r e a s e In th e c o s t of
fo o tw earJ e w e lry m a n u f a c tu r e r s a n
tic ip a te a b r is k F a ll t r a d e . W o o l a n d
w ool p ro d u c ts a r e in good d e m a n d .
P ro v is io n s c o m m a n d f ir m p ric e s. C o l
le c tio n s a r e b e tte r , a n d It is b eliev ed
w ill b e g e n e ra lly s a tis f a c to r y a s th e
s e a so n a d v a n c e s .”
F r e d e r ic H . C u r tis s , F e d e r a l R e se rv e
A g e n t, B o sto n , a s s e r t s t h a t " th e r e a r e
so m a n y d if f e r e n t a n d u n u s u a l f a c to r s
v h lch a l l ' lin e s o f b u s in e s s d u rln (
d a y s h a v e to coi
tic u la f tj* llUUi-^m milling lu la b o r a n d
th e h ig h c o s t o f r a w m a te r ia l, t h a t it
is r a t h e r d if f ic u lt f ro m m o n th to m o n th
R ic h a rd
L . A u sU n , F e d e ra l R e se rv e
A g e n t. P h ila d e lp h ia , s a y s t h a t " c o m
m e r c ia l a n d in d u s tr ia l c o n d itio n s h a v e
s h o w n no e s s e n tia l c h a n g e d u r in g r e
cent
w eeks,
o p e r a tio n s b e in g m a in
ta in e d a t a s 1 ig h a r a t e a s th e h o t
w e a th e r a n d s h o rta g e o f la b o r a n d m a
t e r ia ls w ill p e rm it.
R a w m a te ria ls a re
Pew
i n 6 h ° a r l e 0sr d M 8 i a w y e r
F e d lr^ ^ e^ e rv .
K m m s C ity , s t a t e s t h a t " c o n
tln u e d h ig h t e m p e r a tu r e s , w ith a lm o s
te rfe rie d
w ith *
C o lo ra d o , a n d
th e
p re v io u ^
W yom m g
som e
K fV o ?
d itio n
th e 6 se rio u s
o f th e c o n tr o v e rs y
ssar
fav o ra b k
iin p ro v
b e tw e e n
are*
ra il
E m p lo y m e n t b u r e a u s r e p o r t t h a t t n e r t
a r e m a n V p l a c e s o p e n , b u t t h a t l a b o r is
sc arc e
'R e t a i l b u s in e s s s h o w s a g a in
f o ^ J u l y o f 18 P e r c e n t o v e r t h e f a n *
m o n th la s t y e a r, a n d a .g a l n o r,
P
c e n t, f o r th e p e r io d f r o m J a n . l .
Situation I'aeh an ged In Cleveland.
D. C. W ills, F e d e r a l R e s e r v e A g e n t,
C le v e la n d , r e p o r t s t h a t “ ch an g es r e
s p e c t i n g b u s in e s s a n d a S rlc l^ ^ a
'
d ltlo n s a r c fe w
c o m p a re d w ith .th irty
B av ag o .
T he f in a n c ia l s ltu a U o n a n d
m oney ra te s a re u n ch an g ed .
A la r g e
v o lu m e
b e in g h a n d le d
by
o n e o r tw o c e n tr e s
of
o f b u s in e s s is
th e b a n k s ..
In
b r?sk d ld e m u n d h * o r
ST®
* 5^
W g g tssh ts
d is tr ic t is th e la b o r p i ^ l e m .
m bb ee rr ss
nn uu m
» a tn «
f ro m tl* _ Suutn._
a
K e » e rv <
C.
a
s '^
- n
^
o
n
^
a
r i e
r ^
m anuu n c e r ta in a n d th o s e
ra c iu rin s
c e n tr e s
q u ie tly
‘J°P ':‘ “ 'i
R a te s h a v e s h o w n a d o w n w a r d tr e n d
New York Times
September 1* 1916
Skip* on the P acific.
J o h n P e r r in , F e d e r a l R e s e rv e A * e n t,
S a n F r a n c is c o , r e p o r ts t h a t b u s in e s s o n
t h e P a c i f i c C o a s t is h a m p e r e d o n ly b y
s c a r c ity o f s h ip s . H e s a y s :
.
,
“ T t)c s t a t u s o f l u m b e r in g is u n s a t i s
f a c to r y a n d s h o w s little c h a n g e d u r in g
th e
la s t m o n th , th o u g h
r e p o r ts In d i
c a te so m e te n d e n c y
to w a rd In c re a se d
d e m a n d a n d s lig h tly f ir m e r p ric e s . D u e
to la c k o f b o tto m s , f o re ig n s h ip m e n ts ,
w h i c h a b s o r b e d a b o u t Ho p e r c e n t , o f
th e lu m b e r o u tp u t b e fo re th e w a r h a v e
l a r 't e l v
ceased.
T he
g rea t
a c tiv ity
p r e v io u s ly r e p o r te d in s h ip b u ild in g c o n
tin u e s w ith o u t a b a te m e n t.”
\V
F.
R am sey,
F e d e ra l
R e se rv e
A irc n t
D a lla s ,
s ta te s
th a t
" banks
th ro u g h o u t th e d is tr ic t a r e e x p e rie n c in g
a g o o d d e m a n d a n d a re g e ttin g re a d *
h a n d le th e c ro p m o v e m e n t. A t th is r e a
s o n , o f c o u rs e , d e p o s its a r e g r e a tly r e
duced.
L o a n s o f th is b a n k havQ in
c r e a s e d s o m e ¥ 0 0 0 .0 0 0 w i t h i n
th e In st
m o n th . T h e f i r s t e v id e n c e s o f th e F a ll
- r o p m o v e m e n t h a v e U e e il s h o w n th i3
a s t w e e k w h e n th is b a n k m a d e s h lp ■nente o f a p p r o x i m a t e l y a m i l l i o n d o l a r s to I n te rio r b a n k s .
B u s in e s s c o n d li o n g o n t h e b o r d e r a r e s a i d t o fa* e x
c e p tio n a lly
good
on
account
<Jf t h e
t r o o p s s t a t i o n e d a t t h o s e p o i n t s . L s tb o *
c o n d itio n s a r e s a tis f a c to r y a n d s ta tu -,
t ic s s h o w le s s u n e m p lo y m e n t in th e d ls
tr ic t a n d b e tte r w a g e s o b ta in in g th a n
any
U m e s in c e th e b e g in n in g o f th e
E E d °v a rd T ^ B r o w n . D e p u ty C h a irm a n
o f th e b o a rd , A tla n ta , a s s e r ts :
W h ile
th e r e i s \ a d is p o s itio n to ta k e a b e tte r
v ie w /o f th e c o tto n c ro p p ro s p e c ts , tn e
r a i n / f o llo w in g th e J u iy s t o i m s h a v e
p re v e n te d
th e
c ro p s
fro m
r e c o v e r . r .g
lo s t
fero u n d .
Som e
im p ro v e m e n t
ts
s h o w n in n o r th e r n A la b a m a , G e o r g ia ,
a n d M is s is s ip p i.
In th e s o u th e rn p a r t
o f t h e d i s t r i c t t h e b o ll w e e v il is c a u i In ? m a te r ia l d a m a g e . I n T e n n e s s e e th e
1 c r o p i s v e r y g o o d a n d f r u i t i n g we*1C a ld w e ll
H a rd y .
F e fle ra l
R e se rv e
A g e n t, R ic h m o n d , e x p re s s e s th e o p in io n
; t h a t “ g e n e r a l b u s in e s s is m u c h , above
t h e a v e r a g e , r e p o r t s o n c o n d i t i o n s o re
c h e e r f u l, a n d t h e o u tlo o k f o r t h e f u tu r e
I r e g a r d e d a t l e a s t w ith . c o m p la c e n c y .J jg
NEW SOUTH AKRO)
10 BE OPI
FOR BUSINESS SOON
First Meeting of Stockholders
of Rubber City Savings
Bank Held Saturday.
NEW BUILDING IS
NOW BEING PLANNED
Reported Option Has Been*
Secured on Good Site in
South Akron.
F a lls
-------------
T h e f i r s t m e e t in g -was h e ld Sat-*4
u r d a y o f s to c k h o ld e rs a n d d ir e c to r s
o f t h e R u b b e r C i t y S a v in g s h a n k
•w hich w ill o p e n f o r b u s i n e s s a b o u t .
S e p t e m b e r 3 0 , a t 1 1 3 3 S . M a in s t . i
T h i s b a n k h a s b e e n o r g a n iz e d b y
m a n u fa c tu r e rs a n d m e rc h a n ts
of
S o u t h A k r o n , h e a d e d b y M r. H . S .
F ire s to n e , p re s id e n t o f th e F ire
s to n e T ir e a n d R u b b e r c o m p a n y .
A ll o f t h e s t o c k h o l d e r s a n d
d i
r e c t o r s h a v e lo n g b e e n
a ffilia te d
w ith th e in d u s tr ia l g ro w tn o i t3 «
s o u t h s i d e , a n d t h i s i m p o r t a n t s-.ept
in i t s d e v e l o p m e n t h a s b e e n t a k c a
a f te r r e a liz in g th e n e e d s fo r a d d e d
b a n k in g f a c ilitie s in th is d is tr ic t.
P r o m in e n t a m o n g th e o r g a n iz e r s
a r e H . S. F i r e s t o n e . J a c o b P f e i f f e r ,
J . M . B e c k , B e n C a m p b e ll, H . G .
H a u n , H . B . S p e rry , W . H . S to n e r,
J o h n K n ^ p p , W . L . K ile , A .
J.
S a a lf ie ld a n d o t h e r s .
The
f o llo w in g
d ire c to rs
w e r»
e le c te d a t a m e e t i n g h e ld S a t u r d a y ,
S e p t. 2 3 :
H . S. F i r e s t o n e , J a c o o
P f e i f f e r , J . M . B e c k , J . G. R o b e rt- ,
so n , L . B . W a lte rs .
T h e o ffic e rs a re :
H.
S. F i r e
s to n e , p r e s i d e n t : J . G . R o b e r ts o n ,
v i c e - p r e s id e n t ; L . B . W a l t e r s , se c
re ta ry a n d tre a s u re r.
T h e a c tiv e m a n a g e m e n t o f
tu *
b a n k w ill h e i n c h a r g e o f M r. L .
B. W a l t e r s , f o r m e r l y o f t h e L n i o a
I N a t io n a l b a n k a n d t h e F e d e r a l R e 1s e r v e b a n k o f C le v e la n d . H e j o in a
t h e A k r o n b a n k i n g c ir c le s w i t h
a
la rg e
e x p e r ie n c e
of
c o m m e rc ia l
b a n k i n g in a l l i t s p h a s e s , a n d b a d
b r o u g h t w i t h h im M r. A l e x a n d e r C.
W a r a d y , w h o w ill t a k e
^
t h e F o r e i g n D e p a r t m e n t o f t h i s in 8 t it u t io n .
M r. W il l ia m
P.
C um *
m in s , f o r m e r l y o f
th e
C uy a h " 6 ^
S a v in g s
b an k ,
h as
a ls o
jo in e d
tU T e m p o r a r y q u a r t e r s o f t h e bank
h a v e b e en e s ta b lis h e d a t l l i o
M a in s t ., and i t is s a id a n op tic*
h a s b e e n s e c u r e d o n a g o o d sUe m
S o u th A k r o n w h ic h t h e y e x P e « ■
p u rc h a se fo r a
p e rm a n en t
ban*
b u i ld i n g .
W h e n c o m p le te d i t w ilt
be in h a r m o n y w ith t h e m ost upto - d a t e b a n k buildings in this se .
t io n o f O h io .
September 1916
$60,000,000 IN RESERVES
PAYABLE NOVEMBER 16
COUNTRY
BANKS
AND
RESERVE
C IT Y
.
BANKS
I
M U S T T H E N M A K E L A S T M IN IM U M P A Y
M E N T TO R E G IO N A L B A N K S
In te r io r to R a is e P o rtio n o f R e s e r v e K e p t W ith R e g io n a l
B a n k F r o m i-1 2 to 5-12ths, R e s e r v e C ity B a n k s
F r o m 5-15 to 6 -1 5 th s— N o F u r th e r C hange
U n til N o v e m b e r 10, 1917— W h a t
th°. A m e n d e d L a w P ro vid es
On N o v e m b er 16 a n o th e r p a y m e n t o f re s e rv e is due
fr o m m em b e r b a n k s, o u tsid e o f c e n tr a l re s e rv e c itie s , to
th e F e d e ra l R e se rv e B a n k s. In th e case o f th e c o u n try
b a n k s, th e a d d itio n a l re s e rv e b a n k p a y m e n t w ill b e onetw e lf th , r a is in g th e p o rtio n o f th e r e s e rv e to be h e ld in
th e F e d e r a l R e se rv e b a n k s fro m f o u r - tw e lf th s to fivetw e lfth s . In th e case o f th e re s e rv e c ity b a n k s, th e p o r
tio n o f re s e rv e to be held in th e F e d e ra l R e se rv e b a n k s .
w ill be r a is e d on N o v e m b er 16 fro m fiv e -fifte e n th s to sixfifle e n th s . A b o u t $60,000,000 w ill th u s b e p a id in . No
c h a n g e ta k e s p la c e in r e g a r d to th e m e m b e r b a n k s in c en
t r a l r e s e rv e c itie s w h o se re s e rv e re q u ir e m e n ts w e re a d
j u s t e d p e r m a n e n tly on th e i n a u g r a tio n o f th e sy s te m on
N o v e m b er 16, 1914.
W ith th e a d d itio n a l p a y m e n ts to h e m a d e b y th e c o u n
t r y b a n k s a n d th e re s e rv e c ity b a n k s n e x t m o n th i t sh o u ld
be n o te d t h a t n o m o re p a y m e n ts a r e re q u ire d to b e m a d e
in to th e F e d e r a l R e se rv e b a n k s b e fo re th e t h r e e y e a r s
p e rio d e x p ire s fro m th e d a te o f th e i n a u g u r a tio n o f th e
sy s te m . N o r w ill th e i r v a lu t r e s e rv e s b e c h a n g e d so t h a t
f o r tw e lv e m o n th s a f t e r N o v e m b er 16, n e x t, n o c h a n g e
w ill h a v e to be m ad e in th e d is tr ib u tio n o f m e m b e r b a n k
r e s e r v e s in v a u lts , r e s e rv e ’ b a n k s o r re s e rv e d e p o s its e ls e
w h e re .
A t p r e s e n t th e c o u n try b a n k s h old fiv e -tw e lth s o f
t h e i r re s e rv e in th e i r ow n v a u lts a n d th e re s e r v e c ity
b a n k s six -fifte e n th s in t h e i r ow n v a u lts . O n N o v em b er
16, 1917, th e m in im u m v a u lt re s e rv e in th e c a se o f th e
c o u n tr y b a n k s is red u ced to f o u r - tw e lf th s a n d th e re s e rv e
c ity b a n k s to fiv e -fifte e n th s. O n t h a t d a te th o s e i n s t it u
tio n s w ill no lo n g e r be a b le to c o u n t d e p o sits w ith re s e rv e '
a g e n ts in o th e r c itie s a s p a r t o f t h e i r re se rv e . T h a t p o r
tio n m u s t be d is tr ib u te d e ith e r in t h e i r v a lu ts o r in th e
re s e rv e b a n k . T h a t d a ta w ill m a r k th e c o n su m m a tio n of
one o f th e a im s o f th e F e d e r a R e se rv e la w , n a m e ly , to do
a w a y w ith th e p r e s e n t sy s te m w h e re b y re s e rv e s a r e m a in
ta in e d in d i s t a n t c itie s, a n d c o n c e n tra te r e s e rv e f u n d s in
th e d iffe re n t d is tr ic ts .
T h e a m e n d m e n t to th e F e d e ra l R e se rv e A ct o f S ep
te m b e r 7. l a s t, m ad e a n im p o r ta n t c h a n g e in re s p e c t o f th e
d isp o sitio n o f th e b a n k re s e rv e s w h e re b y m e m b e r b a n k s
m a y be p e r m itte d to c a r r y in th e F e d e ra l R e se rv e b a n k s
o f th e ir re s p e c tiv e d is t r ic t s a n y p o rtio n o f t h e i r re s e rv e s
now re q u ire d to be held in th e ir ow n v a u lts.
T h is a u th o r i t y c o n fe rre d u p o n th e F e d e r a l R eserv e
B o ard by th e a m e n d m e n t s o f v ita l im p o rta n c e a n d is r e
g a rd e d a s a n effe c tiv e m e a n s w h e re b y a p r o p e r c o n tro l
m ig h t be e x e rc ise d o v e r o u r gold s u p p ly in th e f u t u r e . I t
is a p ro v isio n w h ich th e F e d e ra l R e se rv e B o a rd is h o p e
fu lly c o u n tin g u p o n to th is end. T h e m a t t e r w a s to u ch e d
upon by b o th P a u l M. W a rb u rg a n d A . C. M ille r, m e m
b e rs o f th e F e d e r a l R e se rv e B o a rd , in re c e n t a d d re s s e s a t
b a n k e rs ’ c o n v en tio n s.
In th is c o n n ec tio n M r. M ille r s a id : “ I th e r e f o r e r e
g a r d th e re c e n t a m e n d m e n t to th e r e s e rv e a c t a llo w in g
th e m e m b e r banks to in c re a s e t h e i r r e s e rv e d e p o sits w ith
th e i r r e s e rv e b a n k s, w ith o u t lim ita tio n o r r e s tr ic tio n e x
c e p t su c h a s t h e i r ow n ju d g m e n t o f t h e i r i n te r e s ts a n d
n e c e ssitie s m a y im pose, as one o f th e m o st i m p o r ta n t s te p s
t h a t could h a v e been ta k e n in th e f u r t h e r d e v e lo p m e n t o f
th e F e d e r a l R e se rv e sy ste m . I t p ro v id e s a sim p le , d ire c t
ar>d n a tu r a l way o f s tr e n g th e n in g th e re s e rv e b a n k s a.:
t h a t becom es n e c e s s a ry , and fo r e s ta lls a n y o c casio n f o r
r e s o r t to a lte r n a tiv e m e th o d s o f d o u b tfu l e x p e d ie n c y .'’
M r. M ille r e s tim a te d t h a t , to fa c e a g old e x p o rt m ove
m e n t a f t e r the. w a r , i t w ould be n e c e s s a ry to b r i n g u p th e
fr e e gold h o ld in g s o f th e F e d e r a l R e se rv e b a n k s a t th e
■p r e s e n t tim e to $500,000,000 o r $600,000,000. I n o th e r
w o rd s th e y r e q u ire a n a d d itio n a l $400,000,000 to fill o u t.
T h e n a tio n a l b a n k s to d a y h a v e c a s h h o ld in g s o f o v e r
$750,000,000. I f th e w h o le b u rd e n ' o f s u p p ly in g th e r e
q u ire d $400,000,000 fe ll on th e p r e s e n t m e m b e rs h ip o f th e
s y s te m t h e b a n k s w o u ld s till h a v e o v e r $350,000,000 o f till
m oney.
,
.
“ I f th e s h if t in g o f C a sh ,’’ M r. M ille r s a id , ‘-w ould b e
p ro m o te d b y a c h a n g e in th e fo r m o f y o u r c o n d itio n s ta te m e n t w h ic h w o u ld sh o w y o u r c a s h in v a u lt a n d in th e F e d e r a l R e se rv e B a n k a s one ite m , I see no good re a s o n w h y
th is sh o u ld n o t b e done a n d co u ld n o t be do n e.” T h is is
th e s y s te m fo llo w ed b y th e E u ro p e a n b a n k s , e s p e c ia lly th e
E n g lis h j o in t sto c k b a n k s .
’Tall street Journal
October 27, 1913
j
■
t
!
i
j
T o d a y th e F e d e ra l R e se rv e b a n k s c e le b ra te th e i r sec
ond a n n iv e rs a r y . B orn d u rin g one of th e d a r k e s t p e rio d s
in th e w o rld ’s fin an c ia l h is to ry , th e F e d e ra l R e se rv e s y s
te m h a s n e v e rth e le s s been a ffo rd e d a w o n d e rfu l o p p o r
tu n ity f o r e s ta b lis h in g its e lf. I t h a s b e e n d eveloped u n d e r
s in g u la r ly a d v a n ta g e o u s m o n e ta ry c o n d itio n s, a n d th e re
h a s n e v e r been a tim e w h en th e re q u ire d p a y m e n ts b y th e
m e m b e r b a n k s h a v e o ccasioned th e le a s t sa c rifice o r d is
tu r b a n c e in th e m o n ey m a rk e t. O n th is occasion th e
b a n k s o u ts id e o f c e n tr a l re s e rv e c itie s w ill m a k e th e ir l a s t
c o m p u lso ry p a y m e n t o f re s e r v e in to th e re g io n a l i n s t i
tu tio n s , th u s a d d in g a b o u t .$60,000,000 to th e l a t t e r ’s
d e p o sits.
A s y e t th e r e s e rv e b a n k s h a v e n a tu r a ll y h a d lit t le
o p p o rtu n ity o f im p a r tin g a n y c o n sid e ra b le b e n efit to th e
in d iv id u a l b a n k s in th e w a y o f re d is c o u n tin g . T h e re h a s
b e en n o c a ll f o r s u c h o p e ra tio n s , e x c e p t in s c a tte r e d in
s ta n c e s a n d in th e r a th e r g r a tu ito u s so lic itu d e fo r th e c o t
ton i n t e r e s t s ' o f th e s o u th e rn r e s e rv e d is tric ts .
p r e s e n t tim e th e r e is th e in s ig n ific a n t a m o u n t
, 500,000 o f c o m m e rc ial p a p e r b e h in d th e F e d e r a l
n o te s , p u t u p b y o nly five o f th e re s e rv e b a n k s ,
A t th e
o f $16,
R e se rv e
n a m e ly ,
S3,620,000 a t R ichm ond, $3,521,000 a t A tla n ta , $5,346,000
a t S t. L o u is, $2,406,000 a t D a lla s a n d $1,640,000 a t K a n s a s
C ity . T h e re m a in d e r o f th e $247,873,000 o f o u ts ta n d in g
n o te s a r e se c u re d b y g old in th e p o sse ssio n o f th e tw e lv e
a g e n ts .
T h e in d iv id u al b a n k s m a y be said, h o w ev er, to h ave
d e riv e d a d ire c t ben efit fro m th e p a s t tw o y e a r s ’ o p e ra
tio n s in re s p e c t o f h a v in g fo u n d an o p p o rtu n ity to d iv e s t
th e m se lv e s o f so m e o f th e ir bond se c u re d c irc u la tio n . T he
re s e rv e in s titu tio n s h a v e in v e ste d $38,800,000 in U n ite d
S ta te s bonds a n d $11,300,000 in th e c o n v e rte d o n e -y ea r
T r e a s u ry n o te s. A ll of th is h a s im proved th e m a rk e t f o r
G o v e rn m en t bon d s sin ce th e h u m ilia tin g e x p erien c e of th e
su m m e r o f 1913.
A s r e g a r d s th e g e n e ra l pub lic, th e r e can be no q u e s
tio n of th e f a r- re a c h in g a d v a n ta g e s d e riv e d fro m th e n ew
b a n k in g m a c h in e ry . T h e c o u n try -w id e check collection
sy s te m , a lth o u g h s till in i ts in fa n c y , h a s overcom e th e
firs t g r e a t tr a d itio n a l o b sta c le s, and its d a ily p ro g re s s
lea v es i t m e re ly ' a q u e stio n o f 't im e w hen th e sy ste m w ill
be in g e n e ra l u se. T h ro u g h th e i n te r - d is tr ic t s e ttle m e n t
p ro c ess, to o , an e ffe c tiv e m e a n s h a s been affo rd ed of d is
tr ib u tin g fu n d s m o re e q u ita b ly th ro u g h o u t th e c o u n try ,
a lth o u g h th e r e tu r n o f m o re n o rm a l m oney co n d itio n s m a y
n o t in s u re th e sa m e success.
A sid e fro m b rin g in g th e s t a te b a n k in g in s titu tio n s
in to th e sy s te m , one im p o rta n t s te p s till re m a in s f o r th e
F e d e ra l R e se rv e a u th o r itie s to accom plish. T h is is, to
b rin g a b o u t a b e tt e r c o n c e n tra tio n o f g old in to th e r e
se rv e b a n k s, a n d th is sh o u ld be e ffected b e fo re p e ac e
com es. T h e R e se rv e B o a rd is fu lly a liv e to th e p e n d in g
u rg e n c y , a n d h a s reco m m e n d e d a n a m e n d m e n t to th e law
to th is end, th r o u g h th e issu a n c e o f n o te s d ire c tly a g a in s t
th e d e p o sit o f gold. B u t C o n g re ss h a s o b stru c te d th e p ro
posed p ro te c tiv e m e a s u re o n th e th e o ry t h a t it w ould e n
c o u ra g e in fla tio n . I t is to b e hoped t h a t th e la w m a k e rs
w ill ta k e a b ro a d e r v iew o f th is m a tte r.
November 16, 1916
T h e F i r s t N a tio n a l B a n k o f W oodlavvn h a s
been o rg a n iz e d , by e le c tin g th e fo llo w in g offi
c e rs a n d d ire c to rs : J o h n R. M o rro w , p re s i
d e n t o f th e C o n tin e n ta l T r u s t Co., th is c ity ,
p r e s id e n t; J a m e s A. L aw so n , f o r m e r ly c a s h ie r
o f T h e P e o p le ’s N a tio n a l B a n k , C lin to n v ille ,
P a ., c a s h ie r ; H . G. M ille r, v ic e -p re s id e n t;
W ho H e a d s iNew U a n k a t w o o d la w n
J o h n W r ig h t, J . C. C o llin s, C. A . T u r k is , J .
F . C a m p b e ll, F . A . H o rn s te in , J . T . T h o m a s,
J . H . F ig le y a n d D. W . M c C lu re , d ire c to r s ,
a ll o f W o o d law n .
T h e B a n k w ill h a v e a p a id -in c a p ita l o f
$100,000 a n d a p a id -in s u rp lu s o f $20,000, a ll
o f w h ic h h a s been su b sc rib e d p rin c ip a lly b y
th e p eo p le o f W o o d law n . T h e f ir s t in s ta llm e n t
o f 50 p e r c e n t, o f th e sto c k s u b s c rip tio n s h a s
been c a lle d a n d is now b e in g p a id . T h e b a n k
h a s p u r c h a s e d its ow n b u ild in g , w h ic h is now
b e in g re m o d e le d a n d w h e n c o m p le te d w ill be
one o f th e m o st u p -to -d a te b a n k in g p l a n t s in
B e a v e r C o u n ty .
T h e b a n k w ill o p en f o r b u s in e s s a b o u t
J a n u a r y 1st.
Money and Commaroe
November 1916
‘‘resent Position and Future Devel
opment of Reserve System
Finance
D e c . 2.
Vn in te llig e n t tre a tm e n t o f th is su b je c t seem s a n d $107,216,000 o f c o m m e rc ia l p a p er, in clu d in g
to re q u ire a b rie f re v ie w o f o u r b a n k in g h isto ry re d is c o u n ts f o r m em b e r b a n k s a n d p u rc h a se s o f
^ ^ u r i n g th e p a s t tw o y e a rs a n d an an aly sis o f p re s a cc ep ta n ce s o n th e open m a rk e t, n e a rly all o f
,
c o n d itio n s, o u t o f w hich re aso n a b le d e d u ctio n s w hich, u n d e r th e re c e n t a m e n d m e n t to th e fe d e ra l
^ ^ ^ t o th e fu tu re m ay be based. T h e fu n d a m e n ta l re se rv e act, a re a v ailab le fo r fe d e ra l re se rv e n o te
rinciple o f th e fe d e ra l re se rv e a ct is th e m obil- issues. T h e fre e g o ld , th a t is, th e a m o u n t in e x
:ation, in a scientific a n d effective m an n e r, o f th e cess o f re s e rv e s a g a in s t fe d e ra l re se rv e n o tes
ra n k in g re se rv e s o f th e c o u n try , n o t in o n e cen- o u ts ta n d in g a n d a g a in st d e p o sits h e ld by th e fe d
t r i l re s e rv o ir b u t in a n u m b e r o f th em , d istrib - e ra l re se rv e b a n k s, a m o u n ts t o $231,377,000, so
ti d th ro u g h o u t the v a rio u s sections. T h is p ro c ess th a t the p o te n tia l n o te -is s u in g p o w e r o f all the
1 a ; n o t y e t been fu lly acco m p lish ed , b u t is a p fe d e ra l re se rv e b a n k s, b a se d u p o n th e m in im u m
p ro a ch in g com pletion. T h e n e x t in sta llm e n t o f re serv e s o f 35 p e r c en t a n d 40 p e r cen t re sp e c
r erves, w hich is th e la s t th a t w ill be o b lig a to ry . tively, is to d a y a b o u t $578,442,000. T h is , of
1 w hich w ill a m o u n t to a b o u t $60,000,000, w ill c o u rse, p re su p p o se s a d e m a n d fo r th e n o te s w hich
paid in o n N o v e m b e r 16. A c c o rd in g to th e w o u ld first be ev id e n ce d by th e a c q u isitio n o f
st re ce n t sta te m e n t, O c to b e r 28, 1916, th e tw elve c o m m ercial p a p e r to a c o rre s p o n d in g d e g ree . O f
leral re se rv e b anks h e ld $407,955,000 in la w fu l th e fe d e ra l re se rv e n o te s so f a r issu e d , all but
ney, w hile th e n a tio n a l b an k s o f th e re se rv e $15,374,000 h av e a fu ll 100 p e r c en t g o ld c o v er in
1 c e n tra l re se rv e cities o n S e p te m b e r 12, 1916, th e h a n d s o f fe d e ra l re se rv e a g en ts, so th a t the
d $515 690,000. T h e se la s t-n a m e d in s titu tio n s c o m p a ra tiv e ly sm all a m o u n t a ctu ally o u ts ta n d in g
< d $671,768,000 a c c o rd in g to th e la st sta te m e n t as fe d e ra l re se rv e n o tes m ay p ro p e rly be re g a rd e d
led b e fo re th e o rg a n iz a tio n o f th e fe d e ra l re as m ere ly a n in d ic a tio n o f th e m e th o d th ro u g h
serve banks. T h e re is. o f c o u rse, n o basis fo r w hich c u rre n c y m ay be o b ta in e d w hen .desired
n p a riso n betw een th e se figures a n d th o se a p fro m fe d era l re s e rv e b a n k s a n d is n o t to be tak e n
is :able a t th e p re se n t tim e, o w in g to th e g re a t as a m e a su re o f th e re lie f th a t m ay be supplied
•ii u s tria l a n d financial ch an g e s w hich h a v e tak en th ro u g h th is m ea n s w hen th e m a c h in e ry o f the
1 ce d u rin g th e p ast tw o y e a r s ; a n d , as b a n k de- sy stem is fu lly called in to play. E x p e rie n c e th u s
" >its a re su b je ct to th e influence o f e x te rn a l fa r, lim ite d th o u g h it h a s been, h a s sh o w n th a t
1 tnges o f v a rio u s k in d s, it is o b v io u s th a t any th e m ac h in e ry f o r th e issu e o f th e n o te s p ro v id ed
t em pt to iso late th e effect o f th e e stab lish m en t fo r by th e fe d e ra l re s e rv e banks, can w o rk
• d o p e ra tio n o f the fe d e ra l re se rv e sy ste m upon p ro m p tly a n d effectively, a n d th e re is no re aso n
these h o ld in g s o f cash w o u ld be u seless. W e can, to d o u b t th a t w h e n e v e r it m ay be called upon to
how ever, say w ith c e rta in ty th a t th e re is to d ay re n d e r e x te n d e d se rv ice in tim e s o f s tre s s o r
a c o -o rd in a te d and efficient sy ste m o f re se rv e s difficulty it w'ill be able im m e d ia tely to m eet the
available fo r th e o rd in a ry re q u ire m e n ts o f m em re q u ire m e n ts o f th o se c allin g fo r a ssista n ce
ber banks, a s w ell as fo r th e ir n e ce ssities in th ro u g h th e m ed iu m o f n o te issues.
tim es o f stre ss. T h re e y e a rs a g o th e re w as a v e ry
A lth o u g h n o t y e t tw'O y e a rs old, th e fe d e ra l r e
g t:ie ra l fe a r on th e p a r t o f b a n k e rs th a t the
tr n s fe r o f re se rv e s w o u ld be a cc o m p a n ied w ith se rv e b a n k s h a v e d o n e m u ch to s ta n d a rd iz e com
■erious inconvenience a n d loss, a n d th e m a n ife s ta - m erc ia l p a p er in th is c o u n try . T h e c irc u la rs and
n o f th is a p p re h e n sio n is re sp o n sib le, n o do u b t, re g u la tio n s o f th e F e d e ra l R e se rv e B o a rd h ave
f th e g ra d u a l r a th e r th a n im m e d ia te tr a n s f e r o f sup p lied a n a u th o rita tiv e d e fin itio n o f com m ercial
erves th a t w as p ro v id ed fo r in th e fe d e ra l re p a p e r o f v a rio u s k in d s w hich h a s been lac k in g in
— 'e rv e act. T h e figures a lre a d y giv en show , h o w - o u r b a n k in g p ra c tic e h e re to fo re , w hile th e e ffo rts
:r, th a t no in co n v en ien ce o r h a rd sh ip h a s been o f th e fe d era l re se rv e b a n k s to b rin g a b o u t a
v u rre d . b u t th a t, on the c o n tra ry , th e stre n g th la rg e r use o f c re d it sta te m e n t fo rm s by th e m em
o f th e m em ber b a n k s a n d th e g ro w th o f th e ir ber b an k s, a n d to se c u re th e c o -o p e ra tio n o f b an k s
deposits a n d b a n k in g p o w e r h ave ad v an c ed step by a n d b o rro w e rs in p u ttin g th e ir p a p e r in to shape
•Up w ith the p ro g re s s a n d d e v elo p m en t o f the to c o n fo rm to th e re g u la tio n s o f th e b o a rd , c o n
e le ra l re se rv e system . Y ou w ill n o te th a t I have s titu te th e firs t o rg a n iz e d e ffo rt to b rin g a bout
t said b ecau se o f th e fe d e ra l re se rv e system , u n ifo rm ity o f a ctio n a n d p ra c tic e in th e d irec tio n
hough I m ig h t p e rh ap s p ro p e rly h a v e d o n e so. d e sired . T h a t th e ste p s a lre a d y ta k e n a re h a v in g
E en th e m o st p re ju d ic e d c ritic m u st a d m it the a n im p o rta n t influence in sta n d a rd iz in g m e th o d s
-o rd in ated g ro w th o f th e m e m b e r b an k s a n d o f o f a c c o u n tin g a n d in b rin g in g a b o u t a u n ifo rm
t i n fe d era l re se rv e hanks, a n d m u st concede th a t u n d e rs ta n d in g o f th e m e a n in g o f v a rio u s c o m
th e e sta b lish m e n t o f a g re a t sy stem o f m obilized m e rc ia l te rm s, is no t, I th in k , open to q u estio n .
re serv e s, a m o u n tin g a t p re se n t to $407,955,000, C re d it m u st th e r e f o r e be giv en to th e fe d e ra l
the actu al p o ten tial v alu e o f w hich is n o lo n g e r re se rv e sy ste m f o r h a v in g ta k e n th e first p ra c
en to d o u b t, has been effected w ith o u t even a tical step to w a rd b rin g in g a b o u t a re fo rm long
seem ing setback to th e m em b e r b an k s o u t o f d e sire d by fin an cial s tu d e n ts a n d by p ra c tic a l
w hose re so u rc e s th is g re a t re se rv e h a s been c o n b u sin ess m e n —th e s ta n d a rd iz in g o f c re d it m e th
stru c te d . T h e fo u n d a tio n o f th is re se rv e , w ith its o d s a n d c o m m e rc ial p a p e r th ro u g h o u t th e U n ite d
a ssu ra n c e o f sa fe ty t o t h e ban k s a n d to th e public, S ta te s. T h e fe d e ra l re se rv e sy stem has o p e ra te d
is the first a n d fu n d a m e n ta l a ch iev e m en t o f the a ls o to w a rd sta b ility a n d u n if o r m ity in ra te s of
i* d era l re se rv e system . It is th e p o in t o f t a n - in te re s t th ro u g h o u t all se c tio n s o f th e c o u n try , as
H'licy b etw een o u r new b a n k in g sy stem a n d t h e is e v id e n t a t a g lan ce a t a tab le sh o w in g th e offi
ll-tried system s o f o th e r c o u n trie s , w h e re it cial d isc o u n t ra te s in all fe d e ra l re se rv e d istric ts.
ba:i becom e p ossible f o r us to a tta in th e o b ject T o w h a t e x te n t th e re d u c tio n in d isc o u n t a n d in
g a g o fo u n d d e sira b le a n d n e ce ssa ry by ad- te re s t ra te s th a t has ta k e n place d u rin g th e p ast
ced m o d ern n a tio n s— th e e sta b lish m e n t o f an tw o y e a rs is d u e to th e e sta b lish m e n t o f th e fed
' C t i v e a n d p ro p e rly c o n tro lle d sy stem o f c re d it e ra l re se rv e b a n k s, it is, o f c o u rse, difficult to d e
o m m o d a t i o n , available f o r th e im m e d ia te con- term in e, fo r the n e t inflow o f g o ld d u rin g th a t
■ sion in to c a s h o r c re d it o f sh o rt-tim e p a n er tim e h a s a m o u n te d to betw een $600,000,000 and
a c o m m e r c i a l a n d liquid c h a ra c te r— in o th e r $700,000,000. a n d th is la rg e a d d itio n to the basic
.. -ds t h e c r e a t i o n i n th is c o u n try a f a b ro a d and m o n ey o f th e c o u n try has. o f c o u rse, h a d a p o w
e rfu l effect u p o n ra te s. W e have, h o w e v er, seen
e n d a b l e d i s c o u n t m ark e t.
low in te re s t ra te s in b y gone y e a rs in c e rta in sec
losely con n ected w ith th e fo re g o in g is the tio n s a n d on c e rta in c la sse s o f p a p e r a t tim es
_j v:s’’on fo r an e lastic n o te c u rre n c y . T h ro u g h w hen o th e r sectio n s a n d o th e r b o rro w e rs w e re
: fe d e ra l re se rv e b an k s th e re h a s been p ro v id ed not in clu d e d in th e scope o f th e in te re s t re d u ctio n .
ad eq u a te m eth o d fo r su p p ly in g a c irc u la tin g It m ay be claim ed w ith confidence th a t th e fe d era l
hum o f e x ch a n g e based upon c o m m ercial re se rv e sy stem h a s o p e ra te d to w a rd sta b iliz in g in
fa c tio n s in a n a m o u n t to be d e te rm in e d bv te re s t ra te s a n d to w a rd m a k in g th em m o re u n i
volum e o f b u sin e ss a n d bv th e ahil- fo rm . I t is p o in te d o u t by e co n o m ists th a t the
of the b an k s to supply th e
re q u isite ra te o f in te re s t is m ad e up o f th re e d istin c t ele
id reserv e.
T h e re a r e o u ts ta n d in g $234. m en ts : one p ro v id in g a re tu r n f o r th e lab o r and
, vn ooo o f fe d e ra l re se rv e n o tes, to se c u re w hich a m o u n t o f in v e stig a tio n in v o lv ed in a n a ly z in g and
t fe d e ra l re se rv e a g e n ts h o ld $219,502,000 in c o n su m m a tin g any p a rtic u la r o p e ra tio n , o r the
■ dforcertific
ates a n d coin, a n d $15,817,000 in com -o v e rh e a d c o s t: th e seco n d is c o n ce rn ed w ith th e
Digitized
FRASER
m et cial paner. T h e fe d e ra l re se rv e b a n k s th em - r e m u n e ra tio n n e c e ssa ry to in d u ce th e o w n e rs of
http://fraser.stlouisfed.org/
>.>es h old $407,955,000 in g o ld a n d la w fu l m oney c ap ital to p a r t w ith it, w hile th e th ir d is c o n n ected
»
Federal Reserve Bank of St. Louis
w ith th e ris k in v o lv ed a n d ' fflF"In su ra n c e a g a in st
th e risk . In g e n e ra l, re d u c tio n o f in te re s t ra te s
th ro u g h th e o p e ra tio n o f fe d e ra l re se rv e ban k s is
in p a r t a re d u c tio n o f th is la st elem en t o f cost— ;
a lo w e rin g o f th e ele m en t o f risk, a s th e f e d e r a l ,
re se rv e sy ste m h a s p ro v id ed a m e th o d fo r th e
re c o g n itio n o f u n q u e stio n a b ly g o o d p a p er a n d fo r
the a d ju s tm e n t o f th e ra te o f in te re s t o n such
p ap er, so th a t it w ill m o re n e a rly c o rre
spo n d w ith th e a c tu a l v alu e o f th e fu n d s
em ployed.
In
o th e r
w o rd s,
m eth o d s
h ave
been p ro v id e d wrh e re b y le g itim a te a n d c o n se rv a
tiv e b o rro w e rs all o v e r the c o u n try can obtain
acc o m m o d a tio n s a t ra te s a p p ro x im a tin g a s ta n d
a r d o n th e k in d o f p a p e r th a t th ey h ave to o ffer
a n d a re re liev e d o f the n e ce ssity o f p a y in g m ore
in th e p ro p o rtio n th a t th ey a re able to d em o n
s tr a te th e ir ow n re sp o n sib ility a n d solvency. T h e
a d v a n ta g e o f th is re d u c tio n h a s been m ost a p p re
c ia ted by th e sm all b u sin e ss m an, w h o in th e past
m ay h av e been u nable to o b tain th e ra te o f in te r
e st to w hich th e c h a ra c te r o f his p ap er, a n d his
ow n p e rso n a l sta n d in g , efficiency a n d g e n e ra l c o n
d itio n o f so lv en cy e n title d him . B esides m eetin g
the n eed s o f th e g e n e ra l public a n d o f th e busi
ness c o m m u n ity , th e fe d era l re se rv e system has
re n d e re d also a d ire c t a n d im p o rta n t se rv ice to the
ban k s th em se lv es, n o t only in m a k in g it s a fe r fo r
th em to do b u sin ess, b u t in a ctu ally e x te n d in g
th e ir field o f o p e ra tio n s a n d th e ir a v en u e s fo r
profit. T h r e e d is tin c t lines o f b u sin e ss a re now
open to n a tio n a l b an k s, fro m w hich, b e fo re the
p a ssa g e o f the fe d e ra l re se rv e act, th ey w ere a b
so lu tely b a rre d . A s y o u a re w ell a w a re , n a tio n a l
b an k s a re no w p e rm itte d to d o an acceptance
b u sin ess, m a k in g th e ir accep ta n ce s e ith e r a g a in st
tra n s a c tio n s in v o lv in g th e im p o rta tio n o r e x p o r
ta tio n o f g o o d s, o r a g a in st c e rta in dom estic
tra n s a c tio n s, as p ro v id e d by th e fe d e ra l re se rv e
act a n d defined by th e re g u la tio n s o f the board.
T h e n a g ain , w h e re v e r n o t c o n tra r y to sta te law,
n a tio n a l b an k s m ay, bv c o n fo rm in g to c ertain
re g u la tio n s , e x e rc ise fiduciary p o w ers, w liirhi
fu n c tio n s w e re fo rm e rly fo rb id d e n th em . F inally,
th e new law has e n a 1 led a la rg e p ro p o rtio n o f the
n a tio n a l b a n k s to m ak e lo an s u n d e r sa fe a n d c o n
se rv a tiv e c o n d itio n s, u p o n re a l e s ta te — n o t onlj
upon fa rm s, b u t also fo r p e rio d s n o t lo n g e r th an
tw elv e m o n th s, u p o n o th e r k in d s o f im proved
p ro p e rty .
W h ile th e re a re tw elve re se rv e banks, each g o v
e rn e d by its ow n b o a rd o f d ire c to rs , a n d each an
in d ep e n d en t u n it, they a re all c o -o rd in a te d th ro u g h
the F e d e ra l R eserv e B o a rd , to w hich body has
been given e x te n siv e p o w e rs o f su p e rv isio n . T h e
banks, th o u g h each is in d e p e n d e n t w ith in its ow n
d istric t, in th e g e n era l c o n d u c t o f its business, a re
th e co m p o n e n t p a rts o f a g re a t sy ste m a n d th e
law has p ro v id ed m ea n s f o r an effective m obiliza
tion o f the re so u rc e s o f all fo r th e re lie f o f a n y ;
and, w hile it h a s n e v e r yet been n e c e ssa ry fo r one
fe d e ra l re se rv e b a n k to call upon a n o th e r to re
d isc o u n t pap er fo r it, fa cilitie s h ave been p ro v id ed
a n d a re ready, so th a t th e s tre n g th o f the e n tire
sy stem is a v ailab le fo r th e su p p o rt o f a n y p a r
tic u la r d is tr ic t w hich m ay a t a n y tim e e x p erien c e
a d e m a n d th a t w ould ta x its ow n re so u rce s. T h e
fa c t th a t no such a ctio n has been ne ce ssa ry th u s
f a r is s tro n g te s tim o n y as to th e so u n d w o rk in g s
a n d beneficial influence o f th e sy ste m itself, but it
is w o rth w h ile to n o te th a t m a c h in e ry fo r this
k in d o f re lie f is alw ay s a v ailab le a n d in w o rk in g
o rd e r. W ith o u t a tte m p tin g any specific e n u m e ra
tion, I w ill a s k you to th in k o f som e o f th e sen
sa tio n a l a n d g ra v e e v en ts th a t h ave tra n s p ire d at
v a rio u s tim es d u rin g the p a st tw o years, w hich
have th re a te n e d crises, n o t only in o u r re la tio n s
w ith fo re ig n c o u n tries, b u t in o u r do m estic affa irs
CLEVELAND
TO
Toledo, Lima and Detroit
VTA
The Lake Shore Electric Ry.
LIMITEDS EVERY TWO HOURS
To Toledo, One Way, $ 2 .0 0 ; Round Trip, $4.00
To Lima,
•*
2.85;
“
S.45
To Detroit,
“
2.80;
“
5.60
Ticket Office, No. 25 Public Sq., Amer. Trust Blifg.
P
H . H A W L E Y , P res.
W . E. H A IN E S , S ec’ y
Ohio Farmers Insurance Company
LEROY. OHIO
L ia b ilit ie s
.
R es erve fo r E m e rg e n c y
N e t S u rp lu s S u rp lu s t o P o lic y h o ld e rs
A ssets
-
as well. T h ro u g h it all there has been no distu rb
ance w hatever in o u r m oney m a r k e ts ; n o ab n o r
m al fluctuations in discount rates, and no panicky
conditions. D o you th in k th at before the estab
lishm ent o f the federal reserve system it would
have been possible fo r our financial com m unity
to have rem ained unruffled and serene in the face
o f such trem endous shocks, o r to have undert' ken the vast credit operations th a t have been
engaged in so successfully?
T h e federal reserv e system is a lready an im
p o rtan t fa cto r in the developm ent o f o u r foreign
trade, and is destined to play a m uch larg e r p a n
in this particu lar field. I have already m ade a
brief reference to the acceptance pow ers o f n a
tional banks. T h e acceptance has long been recog
nized abroad as a m ost convenient as well as
essential piece of m achinery in carrying on in te r
national transactions, but until recent years its use
in this country was practically unknow n. T h e
national banks and state institu tions in som e of
the states now have the pow er to accept, so th at
when we contem plate the fu tu re developm ent o f
th e federal reserve system, th ere is h ardly any
banking function th a t will play a m ore im p o rtan t
p a rt th an the acceptance business.
F ig u res recently com piled by the board show
th at th ere are now o utstanding about $ 1 7 5 , 0 0 0 ,0 0 0
of d ra fts accepted by A m erican banks and b a n k
ers, o f w hich about $100,000,000 have been ac
cepted by New Y ork banks and bankers. T hese
acceptances have found a ready sale at low rates
in the open m ark et and about $86,000,000 o f them
lire now held by fe d era l reserve banks, having
been taken under regulations issued by the board,
but it m u st be rem em bered th a t the regulations
o f the board a re necessarily broad in th eir scope
and a re not intended to deal w ith specific cases.
They are intended to lie perm issive w ithin the
lim itations defined, but the e x te n t to w hich fed
eral reserve banks should invest in any class o f
"eligible" paper is a question to be determ ined as
a m a tte r o f policy, in accordance w ith the chan g
ing position and requirem ents of the fed eral re
serve system as a whole. W hile tlie federal re
serve banks have been and doubtless expect to
continue to be liberal p urchasers of acceptances,
the d irec to rs o f these banks are charged u n d e r the
law to “adm inister the affairs o f said banks fa irly
and im partially and w ithout discrim ination in
fav o r o f or against any m em ber bank o r banks,
and shall, subject to the provision o f law and the
o rd e rs o f the F ed eral R eserve B oard, ex ten d to
each m em ber bank such discounts, advancem ents
and accom m odations as m ay be sa fe r and re a so n
ably m ade, w ith due re g ard fo r the claim s a n d de
m ands o f o th er m em ber banks.” T h ey m ust,
th ere fo re , in view o f possible calls upon them ,
keep in m ind some lim itation o f th e ir investm ents
in pap er w hich is not in the highest sense selfliquidating or is not o f an intrinsically liquid c h a r
acter, how ever secure and how ever certain its u lti
m ate paym en^: and w hile the m em ber banks have
e n tire freedom o f discretion as to tran sac tio n s in
which thev m av law fully eniraee and as to invest
m ents w hich th ey m ay legally m ake, th ey should
not fo rg et th a t th ere are certain kin d s o f paper
which w ill alw ays be p re fe rre d by fed eral reserve
banks o ver o th er fo rm s o f credit, and w hich can
be negotiated at lo w er rates.
W c a re no longer a d ebtor nation. O u r c u rre n t
bligations to K urope w ere liquidated m any
m onths ago. W e have a lready absorbed the la r
ger p a rt o f the A m erican securities th a t w ere held
in F u ro p e w hen the w a r broke out. and o u r a d
vances to o th e r c ountries no w exceed $ 1 , 9 0 0 ,0 0 0 .
0 0 0 . F u rth e rm o re , o u r e x p o rts to fo reig n nations
are now ill so v a st a volum e as to re n d er fu ll and
im m ediate settlem ent in gold im possible. W e a re
a b so rb infor
g every
m onth m ore th an the w o rld 's total
Digitized
FRASER
new pro d u ctio n of gold and we a re receiving large
9
$2,206,674.14
125,000.00
1,087,641.50
- 1,212,641.50
13,419,315.64
sum s from the hoarded stocks o f nations now debt
o rs to us. But even w ith this, large credits are
necessary to sustain o u r exports. T h ro u g h force
o f circum stances the U nited S tates is now the
w orld’s b anker and m ust continue to act in that
capacity fo r a long tim e to come, and if we m ake
pro p er use o f o u r opportunities, we can rem ain
perm anently, a t least as one o f the bankers o f the
w orld. W e m ust expect to be called upon abroad
to re n d er m uch o f the service th at has h ith erto
been p erform ed very largely by E ngland in e x
tend in g those sh o rt term credits w hich the w orld
requires in the production and tran sp o rta tio n o f
all kinds o f goods. T h e n a tu re of the acceptance
business is such th a t it can best be carried on by
those countries th at have the low est discount rates
and have the fre e st and m ost reliable gold
m arkets. H ith e rto the c o u n try enjoying these
facilities to the g re a te s t degree has been E ngland,
and p a rtly fo r th at reason and p artly because o f
h e r com m and of the c arry in g trad e, she has been
able practically to m onopolize the sh o rt credits
w hich h e r bankers had handled th ro u g h the m e
dium o f acceptances. W hile we have an oppor
tu n ity now to extend our business w ith all nations,
including p a rticu la rly those n eutrals w hose ac
custom ed cred it facilities have been cut off o r c u r
tailed. the services w e re n d er m ust necessarily re
dound to o u r ow n benefit from a banking sta n d
point, n o t only because the extension o f proper
c redits is a sound and profitable business, but also
because the establishm ent o f an acceptance m arket,
m ade up o f tra d e rs and bankers from all over
the w orld, will brin g to us a new elem ent of g reat
strength.
T h e pro p er financing o f o u r foreign trad e ought
to prove a m ost efficient m eans o f protection for
us, w henever the golden tide now flowing so
stro n g ly tow ard o u r shores begins to ebb and
finally to tu rn the o th er way, ru n n in g out perhaps
so fa st as to reveal rocks and shoals w hose e x
istence we had fo rg o tte n . U n d er such circum
stances, by the sim ple process o f ra isin g o u r dis
count ra te we should be able to force foreign
debtors to finance them selves elsew here and to
pay us off. T he m ore the banks begin to p a rtici
pate in the developm ent o f the acceptance m arket,
the m ore they w ill u n d e rstan d it and the m ore
will grow th e ir h a b it o f pu rch asin g these ac
ceptances, recognizing in such paper the m ost
liquid investm ent fo r w hich a broad and depend
able m ark e t a t m inim um ra te s m ay alw ays be e x
pected, w h eth er th ey expect to sell in the open
m ark e t o r to the federal reserve banks. B ut the
m ost im p o rta n t fe a tu re in the successful develop
m ent o f an acceptance m arket, in fact, a vital p rin
ciple, m ust be the in trin sic liquidity o f the paper
dealt in. It should be plainly understood that an
acceptance transaction is essentially a loan o f
credit rather than o f money, and it is o f the es
sence o f an acceptance in its true sense that the
drawer shall place the fu n d s in the hands o f the
acceptor on or before the due date o f the ac
ceptance, so that the acceptor w ill not be called
upon to use his own fu n d in paying the maturing
obligation. T h a t is an eventuality w hich should
arise only in the case o f the d ra w e r’s bankruptcy,
and ag ain st w hich th e acceptor should be well p ro
tected by the security- tak en before the acceptance
is m ade. In the fre e and n a tu ra l developm ent of
a discount m ark e t th e d ra w er o r e n d o rser o f the
acceptance should be the one to re discount the
p ap er o r to offer it on the m arket, and it should
n o t be the acceptor even though possibly th ere
m ay be exceptional conditions u n d e r w hich the
acceptor w ould he justified in p urchasing his ow n
obligation in o rd e r to w ith d raw it from th e m a r
ket. It is n o t the custom ab ro ad fo r acceptance
houses in the usual course of business, to purchase
th e ir ow n acceptances and to offer them a f te r h a v
ing once acquired them . In the re g u la r course
it is distinctly u n d ersto o d that the accepting firm
(IMs n o L
o n the m arket for its own
its obligation created hy its acceptance, and the
practice is quite the contrary.
T he acceptor m ay reside in L ondon and the
holder by purchase m ay be in P aris, Berlin, L iv
erpool o r N ew Y ork, retaining the bill in his
possession un til it m atures. T his process up to
the present tim e has n o t been em phasized in this
country, but it is essential fo r the proper develop
m ent o f the discount m arket th a t the business^
should take this course. W e should be carefu l not
to confuse com m ercial banking with investm ent
banking, n o r should we p erm it our discount
m arket to become so sa tu rated w ith offerings in
trinsically o f an investm ent character, as to in
fluence discount rates and impede its free o p e ra
tion.
T h e F e d e ral Reserve A ct distinguishes
clearly betw een these tw o form s o f banking and
specifically excludes from purchase o r discount
"notes, d ra fts o r bills covering investm ents o r is
sued o r draw n fo r th e purpose o f carry in g o r
trading in stocks, bonds, o r other investm ent se
curities. except bonds o r notes o f the governm ent
o f the U nited States.” T he F ederal Reserve A ct
applies p articu larly to comm ercial transactions,
and lays stress upon the im portance o f liquidity by
stipulating th at federal reserve banks m ust not
buy bankers' acceptances having m ore than ninety
days to run. and in its original form it provided
th at acceptances should be given only in tra n sa c
tions involving the im portation o r exp o rtatio n of
goods. T he recent am endm ent to the A ct has e x
tended the acceptance pow er so as to apply to
tran sactio n s grow ing out of or involving "th e d o
m estic shipm ent of goods, provided shipping docu
m en ts conveying o r securing title are attached
at the tim e of acceptance, or which are secured
at the tim e o f acceptance by a w arehouse receipt
o r o th er such docum ent conveying o r securing
title covering readily m arketable staples.” I t is
clear th a t the intent o f the Act is to safeg u ard the
self-liquidating ch ara cte r o f acceptances, as se
curities o f an investm ent n atu re are barred, and
provision is m ade th at the transaction should be
based upon cither an actual sale of goods or upon
the conveyance o f legal title to goods w hich can
be readily m arketed so as to pro tect the acceptor.
Q uite naturally, u n d e r conditions now existing
th ro u g h o u t the world, the board was, soon a fte r
the establishm ent of the federal reserve banks,
called upon to consider the question of renew als
of acceptance credits. In E uropean countries th ere
arc p ractically no legal restrictio n s governing the
acceptance business, and in o rd e r to establish
do llar acceptances in com petition w ith sterlin g
bills, o r w ith those d raw n in fran c s o r m arks, the
board ruled th at certain renew als of acceptance
credits w hich clearly g re w out o f the shipm ent of
goods in the first instance, need not, as a m atter o f
principle, be excluded, and federal reserve banks
w ere advised th at they m ight consider as “eligible”
bills h aving not longer th an th ree m onths to ru n
and draw un d er such credit arrangem ents. T he
A m erican acceptance is now quite well established
in the w orld's m arket, being well know n in alm ost
all p a rts of the g lo b e ; and even in those countries
which th ree years ago had a m onopoly o f the a c
ceptance business. A m erican c red it facilities are
now being used. Speaking, not so m uch from the
standpoint of the federal reserve banks, but from
that o f the A m erican banker generally, it w ould
seem pro p er to ex ten d acceptance cred it in liberal
am o u n ts to facilitate com m ercial tran sac tio n s all
o ver the w orld, a n d w hile we m ay expect to see
this acceptance business grow- in to very large
figures, w e m u st n o t p erm it e ith e r o u r am bition,
o u r desire to assist others, o r consideration o f
profit, to ru n aw ay with us and to cause us to d is
reg ard long established and sou n d b anking p rin
ciples, the observance o f w hich is so necessary fo r
the sa fety o f o u r federal reserv e banking system .
T h ere a 'e tw o rules in this connection w hich it
m ay well be em phasized. One is that acceptances
should finance the drawer and not the accepting
bank. W hen a ban k er m akes a cash advance a t a
given ra te of interest fo r a certain length o f tim e
lie should n o t ask his debtor to d ra w upon bin
for the purpose of enabling the b a n k er to re im
burse him self by the sale o f his acceptance fo r
the advance w hich he has m ade to the debtor.
Such a process w ould m ake it possible fo r a long
term bo rro w in g to be financed by an accom m oda
tion bill d raw n for the benefit o f the banker. Such
a d ra ft w ould not be essentially self-liquidating.
T he real b o rro w e r m ay have secured the advance
by renew al agreem ents fo r eighteen m onths . >r tw o
vears, a t a f i x e d r a t e f u r t h e e n t i r e t e r m a n d l i n t
j.
) read ju stm en t £ i
• .. ,va. .... iod.
is not concerned in the ■i v . un iransai • on, and
when the first bill m att *-s the advance .'ill con
tinue to ru n and attem pts will ‘>o nvirti o re d is
count o r sell the d ra ft. A 1 ill o f this k in d is
known as a finance d ra ft, and o th e r bills, which
also m ay be called finance d ra fts, are d ra w n by
brokers o r individuals upon a banker and ac-tited against the deposits of investm ent credits.
^ M ^ a f t s o f the description last m entioned m ay be
^^ m tra ctiv e w here the tran sactio n s offer handsom e
profits because o f the g re at difference in interest
rates prev ailin g in tw o countries and by reason of
tem pting fluctuations in fo reig n exchange rates.
It is clear th a t banking prudence requires
abundant secu rity in tran sac tio n s of this k ind if
they a re to be engaged in a t all, and th at a bill so
created has no place in the p o rtfo lio of a federal
reserve bank.
A fo re ig n d ra ft bast'd originally upon im porta
tions o f goods fr o m this country and draw n upon
an A m erican b a n ker w ith a definite agreem ent on
the part o f the dom estic banker f o r several re
newals at an in te re st rate fix e d fo r the entire
period covered by the reneu'als, does not give the
chief advantage w hich should accrue to the banks
o f a country granting fo re ig n acceptance credits,
because, n o m a tte r to w hat point the fe d era l re
serve banks, if this c o u n try be concerned, o r the
central banks, in case of o th er nations, m ight raise
the discount rate, it w ould have no effect upon the
foreign debtor, for, h av in g provided at a given
rate fo r his req u irem en ts u n til the ex p iratio n of
the last renew al, no increase in rates w ould move
him to cover his acceptance and seek accom m oda
tion in his ow n country, because du rin g the term
of the e x ten d ed c red it he w ould have n o interest
in the discount ra te o f the c o untry upon w hich he
lias draw n. N o t the original debtor, but the ac
ceptor w ould be the b o rro w er in the discount
m arket, and as re g ard s the o rig in al b o rro w er, the
acceptance w ould become m erely an accom m oda
tion d ra ft fo r the benefit o f the acceptor, who
alone w ould be subject to the changing vicissitudes
of the discount m arket.
It is equally clear th at d ra fts d raw n in one counupon a n o th e r against long-term securities are
^ M n > t self-liquidating, no m a tte r how sh o rt a time
the d ra fts them selves m ay have to run. W here
acceptances are based upon actual com m ercial
transactions, the sum total o f acceptances bears a
definite relation to and is reg u lated by the volum e
o f in te rn atio n al trade, but if bills a re accepted
ag ain st securities this au tom atic regulation is lost,
and if finance d ra fts a re perm itted to be draw n
w ithout discrim ination they w ould continue to pile
up ju st as long as there is a substantial difference
in the interest ra te s o f the tw o c o u n tries involved.
It n entirely n a tu ra l and pro p er th at countries or
sections w here w ealth lias accum ulated and which
have large holdings of gold should afford credit
facilities to th e ir neighbors. As betw een nations
this can be done th ro u g h sh o rt com m ercial credits
by m eans o f b an k ers’ acceptances, w here the ac
ceptance is liquidated out o f funds com ing from
the b o rro w e r b efo re m a tu rity ; or, as an invest
m ent proposition, by tran sactio n s o u trig h t in se
curities issued o r held by citizens o f the b o rrow ing
country. T h e re is no reason w hy both m ethods
should not be p erfectly sound, but the lenders o f
cred it should distinguish clearly betw een the tw o
tran sactio n s.
T h e discount m arket, w hich is intended to deal
w ith sh o rt-te rm and com m ercial borrow ings,
should not be used or abused so as to serve as an
a d ju n c t o f the investm ent m arket. It m ay not be
possible, o f course, alw ays to apply these p rin
ciples w ith absolute rigidity. W e are living in ab
no rm al tim es a n d th ere m ay be ab norm al condi0
tions w hen tem p o rary exceptions to ru les go v ern
'
ing norm al tim es m ay be expected, but such e x
ceptions, w henever perm itted, should be kept
w ith in reasonable bounds, n o r should it be fo r^ ^ r o t t e n th a t th ey a re exceptions and do not conf c tu te the rule. H o w ev e r a nxious we m ay be to
^ W o n t in u e as a w orld fa cto r in trad e and finance,
" and how ever desirous we m ay be th a t the w onder
fu l pro sp erity w hich we a re now enjoying should
continue indefinitely, we should rem em ber still
th a t if the tim e should ever com e w hen our
d e b to rs can no longer offer us sa tisfa c to ry settle
m en ts o r when o u r ow n pow er o f ab so rp tio n m ay
h a v e reached its liiiins u ,a t w henever th a t m o
ment should arrive it would be more satisfactory
Digitized
FRASER
to for
contem
plate som e -Towing dow n o f o u r e n o r
m ous business th an to buy its continuance at the
tx p en se of undue hazard, a n d th a t th e loss o f !
in te rest on idle gold is b e tte r th an the loss of
principal
A
Good
Investment
In some im portant p a rticu la rs the F e d e ral R e
serve A ct has not th u s f a r been applied a t all.
T he law em pow ers the federal reserve banks, w ith
the consent of the F ederal Reserve B oard, to open 1
and m aintain banking accounts in foreign coun
tries and to appoint correspondents and establish
agencies in such countries fo r the purpose of p u r
chasing, selling a n d collecting bills of exchange,
and to buy and sell w ith o r w ithout their en d o rse
m ent, through such correspondents o r agencies,
bills o f exchange arisin g out o f actual com m er
cial tran sactio n s having not m ore th an ninety
days to run, and which bear the signature o f tw o
“ The Beer that Builds.
or m ore responsible parties. U nder conditions
th at have prevailed since the establishm ent o f the
fed eral reserve banks, it has been thought best to
15c the Bottle In Restaurants
d isre g ard any tem ptation of profit and to go
$ 1 .5 0 the Case of 2 4 Bottles
slow ly in entering the fo reig n field, so that, up to
Delivered to your home
this tim e the federal reserve banks have no f o r
eign accounts. U pon the close of the w ar, how
T
HE
P IL SE N E R BREW ING CO.
ever, w ith the U nited S tates playing an in creas
Edgewater 1716
L o r a in 68
ingly im p o rtan t p a rt in the fo reig n tra d e and
vested w ith the responsibility of d eterm ining the
relationship betw een A m erican and foreign in sti
tutions u nder new and difficult conditions, th ere abnorm ally low rates fo r m oney th a t have p re
will be a large field of im p o rta n t w ork to be vailed d uring the past eighteen m onths, w hich
covered by the federal reserve system in this con havo m ade it difficult fo r m em ber banks to m ake
nection before the fed eral reserv e banks can be sa tisfac to ry earnings, there has been a fee lin g in
re g ard e d as having fully discharged the duties som e quarters that the fed e ra l reserve banks are
and responsibilities im posed upon them by the Act. dangerous com petitors, actual o; potential, o f their
H ow g re at the im portance o f this phase o f their ow n m em ber banks, but w ith the developm ent o f
activity m ay be, can be judged only by those who our fo re ig n trade and w ith the constantly increas
have form ed an adequate conception of the p a rt ing activity o f our dom estic business, this feelin g
th at is to be played by this country in in tern atio n al is gradually passing. T h e m anagem ents o f the
trad e a fte r peace has been restored.
vario u s federal reserv e banks and the m em bers
T h e business o f the federal reserve banks as o f the F ed eral R eserve B oard, w ith an apprecia
fiscal agents for the U nited S ta te s governm ent is tio n o f '.he value o f th o ro u g h co-operation and
not yet fully developed. So fa r they are a cting in com plete u n derstanding, have k e p t in close touch,
a lim ited way only as fiscal agents, but in the both by correspondence and by freq u e n t personal
fu tu re financial operations o f the U nited States contact, so th at the bo ard has been kept inform ed
governm ent the fed eral reserve system w ill stand of local conditions a n d the fed eral reserve banks
ready to discharge the duty of pro v id in g fo r is are m ade fam iliar w ith the view point of the board
sues of bonds, a rra n g in g fo r th e re tirem e n t and on m a tte rs of policy. J u s t as this co-operatioi:
re fu n d in g o f ex istin g indebtedness, a n d such o th er and u n d erstan d in g betw een the board and the
financial operations as m ay be necessary fro m tim e banks is necessary fo r the best developm ent of
to tim e. Its functions in the hand lin g o f ro u tin e the fe d era l reserve system , so is it essential th at
business fo r the U nited S tates trea su ry and the th ere should be the sam e close relationship be
su b -treasu ry will no doubt be extended, as the tw een each federal reserve bank and its ow n m em
federal reserve banks become b e tte r able to re n d er ber bank. T h e scope o f the fe d era l reserve banks
and the activities in which they m ay p roperly en
this service.
gage, and the functions w hich they w ere created
T he clearing o f co u n try checks provided fo r u n to discharge, are all being better know n as tim e
der Section 10 of the F ed eral R eserve A ct, has passes. Some w ho, a t the beginning, w ere its
been a problem of peculiar difficulty and has been severest critics, are now am ong the strongest a d
com plicated by the desire of m any of the m em ber vocates o f the system . T h ere a re few today who
banks in the sm aller tow ns p articularly, to retain w ould w ish to wipe it out o r to re co n stru c t it
their accustom ed profits, and fu rth e r by the fact radically, and w hen again conditions th ro u g h o u t
th at a large volum e o f the checks th a t m ust be the w orld approach the norm al, it w ill be the
handled are draw n upon non-m em ber banks. T he m ost p ow erful agency in a ssu rin g to the U nited
clearing o f checks was u n d e rta k en in a very S tates a sound financial position a t hom e, and in
lim ited way im m ediately upon th e establishm ent securing fo r our c o u n try its pro p er place in the
of the federal reserve banks, a n d a fte r a g re at realm o f w orld finance.
deal o f study and som e ex perim entation, the
p resent clearing system w as p u t into effect on
Ju ly 15th last. Its operation has dem o n strated
th a t it is based upon correct principles, a n d the
Ja n u a ry 1, 1917, the population of O hio will be
constantly ex p an d in g volum e o f business handled
through it show s its efficiency. T h e u nderlying 5,181,220, according to the e stim a fe m ade by the
principle o f the clearing plan is the discontinuance B ureau o f Census, on a basis r f the norm al
o f the practice o f carry in g item s in tra n s it as re g ro w th o f the state in past y ears and the actual
serve. and the requirem ent th a t each bank c a rry its census figures o f 4.767,121 in 1910.
O th e r estim ates o f population as o f Ja n u a ry 1
own float. O ne im portant re su lt o f the clearing
system has been to bring the m em ber banks into a r e :
Indiana, 2,826,154; population in 1910, 2.700.
m ore freq u en t a n d intim ate contact w ith th e fe d
eral reserve banks, Sb th a t the reserve banks are 876.
now reg ard ed m ore and m ore as active and p o
K entucky, 2,386,860; population in 1010, 2 ,2S:i tential facto rs in the banking field and n o t so 905.
m uch as storage reserv o irs fo r use only in em e r
W est V irginia, 1,339,020; population in 1910.
gencies. V ery largely, no doubt, because o f the 1.221,119.
€>. C .
Ohio’s Population
E n j o y sound, h e a l t h - b u i l d i n g s i e e p— d r i n k
GOLD B O ND B E E R
b e f o r e r e t i r i n g - a t nigrht
— it s o o t h e s the n e r v e s
The Cleveland-Sandusky Brewing Co.
Harvard 1400
C e n t r a l 3933
Lack o f Coal Serious.
HIGH SPOTS
"C oal
e ffo rt
re g u la r
tre m e
In Business Situation
( J/yssA'*&.• " / s *4 ?
r* > £ ~ C
-
NU.
Are Transportation and Fuel,
S ays W ills in Review.
District Four Originates Most
Freight in the World.
/
Inefficient Equipment Is Problem of
Railroads — Loanable Funds
Are Abundant.
D.
fo r
C.
W ills ,
D is tr ic t
rep o rt on
d is tric t
N o.
.fe d e ra l
4
th e b u s in e s s
c o v e rin g
R e se rv e
(C le v e la n d ),
A gent
in
h is
s itu a tio n
i^ th e
O h io , W e s t e r n
Penn
s y lv a n ia , K e n tu c k y
and
W e s t V irg in ia ,
say s:
" T ra n s p o rta tio n
and
fn el
a re
th e
o v e r s h a d o w i n g s u b j e c t s i n t h i s m o n t h 's
su rv e y
tric t
o f b u s in e s s
w h ic h
th a n
any
o u tsid e
c o n d itio n s
o rig in a te s
o t h e r in
of
th e
th e s e
w o rld .
tw o
in a d is
m o re
fre ig h t
C hanges
in flu e n c e s
a re
s lig h t.
“ T i m e '. /
s itu a tio n ,
ra in s
and
have
w h e a t, o f w h ic h
la rg e
a t
a c re a g e ,
th is
season
h e lp e d
farm ers
th e re
has
now
is
an
th e
c ro p
say
th a t
u n u s u a lly
n e v e r lo o k e d
o f th e
y e a r.
B ig
b e tte r
p ric e s
a re o b ta in e d fo r a ll c ro p s e x c e p t h a y .
•T ric e s
of
p ig
iro n
c o n tin u e
v a n c e , w ith b e tt e r d e liv e rie s .
ber
fo r
dem and
In te r io r
has
im p ro v e d ,
p o in ts .
P ric e s
to
e s p e c ia lly
a re
f ir m e r ,
b u t a b o u t th e s a m e a s 30 d a y s a g o .
ad
T h e lu m
o p e ra to rs
to
m eet
tra d e ,
car
th e
but
s h o rta g e
a re
m a k in g
dem ands
on
account
and
e v e ry
of
la b o r
th e ir
of
ex- I
c o n d i
tio n s a r e o n ly p a r t i a l l y a n d in a n u n
s a tis fa c to r y m a n n e r s e rv in g th e ir p a
tro n s .
F r e e c o a l is s e l l i n g a s h i g h «
I I a t t h e m i n e a n d J 7 BO f o r c o k e a t t h e
oven.
T h e s e u n u s u a l p r ic e s h a v e n o t
b e n e fite d m a n y c o m p a n ie s w h o s e d e liv
e rie s a r e c o v e re d b y lo n g -tim e c o n
tra c ts .
A n u m b e r o f In d u s tria l p la n ts
a r e a c tu a l ly c lo s e d f o r la c k o f c o a L
" T h e re s till s e e m s to b e
dem and
l a r g e ly in e x c e s s o f t h e s u p p ly in a l
m o s t e v e ry b ra n c h o f th e iro n a n d s te e l I
b u s in e s s — In f a c t , m o s t m ills a r e s o ld !
up
th ro u g h
th e
e n tire
year
1917.
P r ic e s h a v e a d v a n c e d s in c e l a s t m o n th ,
t h e m o s t n o t a b l e b e in g t h a t in s t e e l
ra ils.
C a r s h o r ta g e Is a c u te a n d c u r
ta ilin g s h ip m e n ts . M a te r ia l is a c c u m u
la t i n g o n th e s h ip p in g b e d s , a n d m ills
a x e f a c in g c lo s in g d o w n to r e lie v e th e
s itu a tio n .
a
" I n s u f f ic ie n t c a r c a p a c i ty a n d m o tiv e
p o w e r Is t h e p r o b le m o f a ll th e r a ilr o a d s
In t h i s d i s t r ic t .
R a i l r o a d s a r e I n th e m . - .r k e t f o r e q u i p m e n t , b u t d e l i v e r i e s a r e
u n c e rta in a n d p ric c s a r t a lm o s t p r o h ib
itiv e .
T h e f r e i g h t tra itic e c o n g e s tio n
s h o w s n o im p ro v e m e n t, a n d h a s c a u se d
a d e c r e a s e o f 6 p e r c e n t o v e r l a s t m o n th
in l o a d s b ille d w it h in t h is d i s t r i c t o n o n e
i m p o r t a n t t r u n k lin e .
" T h e l a b o r s i t u a t i o n is d iffic u lt, p r in c i
p a lly b e c a u s e o f th e s c a r c ity
of
b o th
s k ille d a n d u n s k ille d la b o r e r s .
'• M e r c a n t i l e t r a d e c o n t i n u e s a t t h e r e
c e n t m a x im u m , a n d s u r p a s s e s a ll p re v i
o u s to ta ls a t th is se a so n .
" R e p o r ts o n c o lle c tio n s t h is m o n th a r e
n o t q u ite s o s a tis f a c to r y a s 30 d a y s a g o .
F ro m
so m e q u a rte rs
com e
c o m p la in ts
t h a t c o lle c tio n s a r e a tr if le s lo w , d u e t o
th e f a c t t h a t th e e x is tin g h ig h p ric e s re
q u ir e m o re c a p ita l to d o b u s in e s s .
"B ank
d e p o s .ts
c o n tin u e
heavy, and
c le a r in g s a r e s h o w in g h ig h to ta ls .
P rac
t i c a l l y t h e w h o le o f D i s t r i c t N o . 4 Is
a b u n d a n t w ith a v a ila b le fu n d s.
T he de
m a n d f o r lo a n a b le f u n d s is n o t a s g o o d
a s l a s t m o n th . S ix m o n th s ’ p a p e r o f th e
h ig h e r g r a d e n a m e s h a s b e e n s e llin g r e
c e n t l y i n t h e c e n t e r s a t 3}4 p e r c e n t , a n d
c o m m e rc ia l
paper
b ro k ers
p re d ic t
a
th re e -p e r-c e n t r a te
fo r J a n u a ry .
The
s u p p ly o f s e c u r itie s o f r e c o g n iz e d s ta n d
i n g i s n o t s u f f i c i e n t t o f il l t h e d e m a n d .
R e c o rd p r ic e s a r e b e in g m a d e f o r In d u s
t r i a l s h a r e s , a n d th e r e is la r g e s p e c u la t
iv e b u y in g .
D e a le r s w ith s to c k s in n e w
e n te r p ris e s a re ta k in g a d v a n ta g e o f th e s o
c o n d itio n s a n d a r t h a v in g l it tl e d iff ic u lty
In p la c in g th e i r e e c u r itle a w ith t h e p u b
lic ."
_ ________ __________ ____________ :
Cincinnati inquirer
Decenber 3, 1^16
HOW MONEY MARKET W AS
IMPROVED LAST WEEK
D IS C O U N T S A N D B IL L S B O U G H T IN O P E N M A R K E T
BY F E D E R A L R E S E R V E B A N K S A G G R E
G A T E D $30,000,000
T h e N e w Y o r k F e d e ra l R e se rv e B a n k C o n trib u te d $ U r
000,000— I n A d d itio n th e H ig h e r M o n e y R a te s a t
T h e re a d y in flu en ce o f m oney ra te s a t th is c e n te r
upon o u tsid e fu n d s is a s tr ik in g c h a r a c te r is tic o f th e
m o n e ta ry situ a tio n . T h e p re s e n t re s u lt w a s th e r e fo r e a
fo reg o n e conclusion in v ie w o f th e e v e n ts o f l a s t w eek.
I t is t r u e t h a t m oney did n o t b e g in to a r riv e a t th is
c e n te r fro m th e i n te r i o r u n til to w a rd s th e close o f th e
w eek. T h is is in d ic a te d b y th e f a c t t h a t th e a v e r a g e
cash in c re a s e w a s o nly $18,814,000, a s c o m p a re d w ith th e
$27,364,000 a c tu a l c a sh in c re a se . B u t no w t h a t th e m ove
m en t h a s s e t in e x p e rie n c e m a y be co u n te d u p o n to look
fo r a c o n tin u a tio n o f th e p ro c ess o f e q u a liz a tio n a n d th is
w eek w ill p ro b a b ly w itn e s s a f u r th e r s u b s ta n tia l in c re a s e
in*the s u rp lu s re s e rv e , w h ich w ill b r in g t h a t ite m u p above
$ 100 , 0 0 0 , 0 0 0 .
T h is C e n te r B r o u g h t A b o u t th e N a tio n a l
MONEY
C o rrective P rocess — L o a n s D e
cre a sed f 30,600,000
AID
N ea rly H a lf the C redit E xtevd ed Last Week by Federal
T h e v o lu m e o f re d fs o o u n tin g done by th e m em ber
b a n k s a t th e N ew Y o rk F e d e ra l R e se rv e B a n k l a s t w eek
w a s ?9,289,086 w h ich r a i s ^ the. a m o u n t o f d isc o u n ts held
by th e local in s titu tio n to $9,941,566. T h is is n o t only t h e ,
la r g e s t a m o u n t re p o rte d b y t h i s in s titu tio n b u t one o f th e
la r g e s t a m o u n ts show n so f a r b y th e re gional, b a n k s since
t h e i r e sta b lish m e n t. I n a d d itio n , th e N ew Y o rk R e se rv e
B a n k in c re a s e d i ts p u rc h a s e s o f b a n k e r s ’ b ills in th e open
m a r k e t b y $4,705,846, b r in g in g th e to ta l to $41,386,090.
T h e to ta l o f bills d isc o u n te d a n d b o u g h t by t h e F e d e ra l
R e se rv e B a n k n o w a m o u n ts to $51,327,656, a n in c re a s e
o f 513,995,533.
T h ro u g h o u t th e F e d e ra l R e se rv e sy ste m th e volu m e of
b ills d isc o u n te d a n d b o u g h t w a s in c re a s e d d u rin g th e w eek
a lm o s t e x a c tly $30,000,000. O f th is a m o u n t th e N ew Y o rk
F e d e r a l R e se rv e B a n k ’s q u o ta w a s a b o u t $14,000,000, th u s
le a v in g a b o u t $16,000,000 a s th e e x te n sio n o f c re d it b y th e
j o th e r F e d e r a l R e se rv e b a n k s f o r th e r e s t o f th e c o u n try ,
j T h e t o ta l c a s h re s e r v e h e ld b y a ll th e F e d e ra l R eserv e
: b a n k s w a s re d u c e d $17,400,000.
I t is e v id e n t t h a t th e d isc o u n t o p e ra tio n s a n d p u r
c h a s e s o f t i l l s in th e o p e n m a r k e t b y th e F e d e ra l R e se ry e
b a n k s la s - w eek sw elled th e volu m e o f o u ts ta n d in g P ede r a l R e se rv e n o te s f ro m $268,270,000 to $279,462,000, or
a n in c re a s e o f $11,192,000.
S a t u r d a y ’s c le a r in g h o u se b a n k s ta te m e n t fu lly b o re
o u t g e n e ra l p re d ic tio n s in b a n k in g c irc le s. T h e r e w a s th e
s u b s ta n tia l in c re a s e o f $32,790,530 in th e s u r p lu s re se rv e ,
w hich b ro u g h t t h a t ite m u p to $73,790,840 in th e a c tu a l con
d itio n o f th e b a n k s a t th e e n d o f th e w eek. L o a n s w e re
d e c re a s e d $39,599,000 on a c c o u n t o f th e t r a n s f e r o f a c
c o m m o d a tio n s t o o u ts id e b a n k s w hich h a d been in d u ce d to
com e in to th e lo cal m o n e y m a r k e t t h r o u g h th e h ig h e r r a te s
N o d o u b t lo a n s w o u ld h a v e sh o w n a g r e a t e r r e d u c tio n i
h a d i t n o t been f o r c e r ta in s y n d ic a te o p e ra tio n s to w a rd s
th e close o f th e w eek . I t is a ls o c e r ta in t h a t c a s h w o u ld )
h a v e sh o w n a g r e a t e r in c r e a s e t h a n $27,364,000 i f a ll th e
g old t h a t h a s been re c e iv e d h e r e la te ly co u ld h a v e b een
c o u n te d a n d p a id f o r in tim e so a s to e n te r b a n k in g c h a n
n e ls.
'
•
MARKET
Reserve Was by the N ew Y o rk Bank
N e a rly h a lf th e c r e d it e x te n d e d to th e m oney m a rk e t
| la s t w eek by th e F e d e ra l R e se rv e sy ste m w a s c o n trib u te d
: by th e N ew Y o rk F e d e r a l R e se rv e B ank. I t d isc o u n te d
| $9,290,000 o f b ills, a n d b o u g h t $4,706,000 in th e open
j m a rk e t, a to ta l o f $13,996,000.
A lth o u g h th e B o sto n
I F e d e ra l R e se rv e B a n k d isc o u n te d b ills to th e e x te n t of
$4,726,000, i t re d u c e d its h o ld in g s o f b a n k e r s ’ a c c e p ta n c e s
by $2,359,000, so t h a t i ts e x te n sio n o f c re d it w a s o nly
$2,367,000.
P h ila d e lp h ia c o n trib u te d $3,889,000 to th e
su p p ly o f c re d it, o f w h ic h $2,409,000 w a s in d isc o u n ts , a n d
$1,480,000 r e p re s e n te d b ills p u rc h a s e d in th e open m a rk e t.
F o llo w in g l is t sh o w s th e a d d itio n a l d isc o u n ts a n d
b ills b o u e h t b y th e tw e lv e in s titu tio n s d u r in g th e p a s t
w eek:
B ills
A d d itio n a l
D isc o u n ted B ills B o u g h t
B ills H eld
B oston ................... . . . $4,726,000 *$2,359,000
$2,367,000
N ew Y ork ............ . . . 9,296,000
4,706,000
13,996,000
\ P h ila d e lp h ia . . . . . . . 2,409,000
1,480,000
3,889,000
I C lev e lan d ............ . . . 1,^79,000
1,244,000
2,523,000
R ichm ond ............ . . .
*174,000
410,000
236,000
246,000
436,000
A tla n ta ................. . . .
682,000
C hicago ................
2,140,000
2,014,000
*809,000
844,000
St. L o u is .............. . . .
35,000
177,000
1,747,000
M in n e a p o lis . . . . . . .
1.824,000
555,000
K a n s a s C ity . . . .
516,000
*349,000
569,000
220,000
D a lla s ................... . . .
1,730,000
S an F ra n c is c o . .
1,713,000
T o ta l ................. . . .$16,613,000
‘ D ecrease.
all Street Journal
December 12, 1916
$13,403,000
$30,016,000
th e d is tin g u is h e d New Y ork b a n k e r
h n s n o t re a liz e d t h a t th e ju d g m e n t of
t h e c o u n tr y is a g a in s t h im . o r else
h e is o b s tin a te . It Is th is p e rsiste n c y
t h a t s u b tr a c ts fro m h is v a lu e a s a
c o u n s e lo r a n d ra is e s th e logical
q u e ry In th e m in d s o f th o s e w h o
striv e
to
fo llo w
h is
u tte r a n c e s
w h e t h e r h is a d v ic e is to be rece iv e d
a b o v e t h a t o f a n y o th e r m e m b e r of
th e c o m m u n ity e n jo y in g th e sam e
a d v a n ta g e s fo r o b s e rv a tio n of c o n d i
tio n s . E v e n ts seem to h a v e m a d e ot
h im » p e ssim is t, o r w h a t is c a lle d in
W a ll s t r e e t la n g u a g e , a " b e a r ,’’ upon
th e f u t u r e o f t h e U n ite d S ta te s.
T h e re is .o n e s e n tim e n t h e e x p re ss e d ,
th o u g h , J n w h ic h a ll m av jo in w ith
h im , b e c a u s e i t is a s n e a r a p a n a c e a
a s c a n be fo u n d fo r th e c u re of
t h e w id e s p re a d ' m e n ta l c o n se rv a tis m
w h ic h afllclF th o se w h o m is ta k e n ly
r e g a r d th e E a s te r n s p e c u la to r s a s
o u r re a l b u sin e ss m en . l t is th is :
“ M u st w e n o t s a f e g u a r d th e f u tu r e
fro m th e u n w ise p a r tic ip a tio n of
G o v e rn m e n t in b u s in e s s l>y se e in g
t h a t b u s in e s s is so w e ll c o n d u c te d , so
f a ir ly a d m in is te r e d , so c o m p le te ly
re s p o n s iv e to l e g itim a te n e e d s th a t
th e r e w ill b e n o s o u n d re a so n fo r
g o v e rn m e n ta l p a r ti c i p a ti o n ? "
T h e firs t s te p in th is d ire c tio n
s h o u ld b e th e s e p a ra tio n of a c e r ta in
ty p e o r b u s in e s s m e n fro m p a r tic ip a
tio n in t h e c o n tr o l o f th e G o v e rn m e n t
f o r n e g a tiv e e n d s r a t h e r th a n affirm
a ti v e o n e s. I t is b e c a u se o f t h e i r
n e g a tio n t h a t g e n u in e b u s in e s s fin d s
its e l f c o n f ro n te d w ith a ffirm a tiv e
g o v e r n m e n ta l c o m p e titio n , r e g u la tio n
a n d c o n tro l. U n h a p p ily t h e r e a r e
s o u n d re a s o n s w h y t h is s h o u ld c o n
t in u e u n t il t h e real c a u s e s f o r p a r
tic ip a tio n b y the G o v e rn m e n t a r e ex
p o se d and eradicated.
cUn, Heal Thyself!
question the fin a n c ie rs and
business men of the U n ite d S ta te s
are possessed o f sufficient judgment
t n give i ts true value to the preach
ment o f President Frank A. V a n d e rlip, o f th e National C ity H ank o i New
Y o r k , upon the subject o f c o n d itio n s
After the European w a r. T h is b a n k
ing institution, through i ts P r e s id e n t
and its familiar circular l e tte r , h a s
Bet itself up a s an oracle o f n o t only
f in a n c ia l m a tte r s , b u t o f n a tio n a l
s t a t e c r a f t a s w e ll. P e r h a p s i t is u n
c o n sc io u s ly t h a t th e P r e s id e n t a n d
t h e C o u rt c ir c u la r e d it o r find th e m
s e lv e s in a g r e e m e n t u p o n t h e po in t
t h a t w h a te v e r is b e s t f o r t h e i r p a r
t i c u l a r Wank is a lso b e s t fo r th e
U n ite d S ta te s .
S e v e ra l w e e k s a g o th e c ir c u la r a n d .
M r. V a n d e rlip a d v is e d in v e s to r s o f
t h i s c o u n tr y o f t h e d a n g e r s t h a t th e
c o n tin u e d in flu x o f g old w o u ld p ro
d u c e in th e b u s in e s s w o rld , a n d re c
o m m e n d e d t h a t o u r s u r p lu s f u n d s be
c o n v e r te d in to th e s h o r t- tim e n o te s
w h ic h th e f o re ig n G o v e rn m e n ts a re
i s s u in g a s o n e o f th e i r m a n y w a r
tim e e x p e d ie n ts . W ith u n u s u a l u n a
n im ity th e a d v ic e w as re je c te d in
fin a n c ia l c irc le s , a n d th e F e d e r a l R e
s e r v e B o a rd fo rm a lly w a rn e d th,e
m e m lie r b a n k s t h a t th e s e s e c u ritie s
w o u ld n o t be d is c o u n te d a s c o m
m e rc ia l p a p e r.
In h is m o s t re c e n t a d d r e s s d e liv
e re d In C h ic a g o M r. V a n d e rlip a s
s e r te d t h a t th e F e d e r a l R e se rv e
B o a rd h a d a c te d u n w is e ly , b e c a u se
th e
in v e s tm e n t h e re c o m m e n d e d
w o u ld h a v e h a d a te n d e n c y to r e
stric t
fu rth e r
g old
im p o r ta tio n s ,
w h ic h m ay lea d to d a n g e r o u s d o m e s
tic in fla tio n , t t Is q u ite e v id e n t t h a t
Cincinnati
auirer
December 19, 1916
COLLATERALS AND THE
RESERVE SYSTEM
P. S. Babcock, secretary of the Trust Com
pany Section of the American Bankers A s
sociation, has asked members for sugges
tions for topics to be considered by the sec
tion at the Kansas City convention. Dr. J.
R. Morrow, president of the Continental
Trust Co., has given ttys m atter careful a t
tention, and replying to Mr. Babcock, in part
says:
“I would advocate the discussion of leg
islation, with a view to the advantage of
trust companies becoming members of the
Federal Reserve System, as the law is so con
stituted at this time that there is no advan
tage to be gained in belonging to the Fed
eral Reserve System, unless your company is
specializing on commercial business, which
kind of business is not the object of and is
not carried on to any extent by the trust com
panies, as th?y were drganized to act in a
fiduciary capacity. Where they do a gener
al banking and savings business, accepting
deposits subject to check and time, their mon
ey is used principally in m aking collateral
loans on demand and time, accepting as col
lateral the active and high-class securities
of the country, such as active railroad, in
dustrial, and public service corporation stocks
and bonds, and municipal bonds, which col
lateral loans should receive the sam e consid
eration by the Federal Reserve Banks as
commercial naner. It is iu st as necessary
tor the prosperity of the country that col
lateral loans secured by the collateral of our
railroads, public service corporations and
m unicipalities be re-discounted as it is neci essary that commercial paper be re-discount
ed, as commercial paper is only a part of
I the great wheel o f prosperity. There is noth
ing more important to the successful future
development than the prosperity of our rail
roads and public service corporations, and if
we, expect to foster these corporations and
add value to their securities, the Federal Re
serve Act should provide to accept securities
. of this kind on the same basis as commercial
j paper is accepted.
Money k Commerce
P ittsburg 1916
A fte r
PAR CHECK COLLECTIONS
(r r p "
T h e r e c e n tte
tie x te n s io
i n o f th e s y s te m f o r p a r ch eck col
le c tio n s w itn t h e N ew Y o rk C lea rin g ; H o u s e is i m p o r t a n t,
a s i t m e a n s s tre tc h in g : th e f a c ilitie s to t h e g r e a t e s t lim it
p o ssib le fro m a ll p r a c t ic a l s ta n d p o in ts .
N ow , an y ban k
o r t r u s t o o m p a n y w h ic h is a b le t o r e m it p a y m e n t f o r c h e c k s
d r a w n o n i t , so t h a t r e m itta n c e w ill be re c e iv e d i n N e w
Y o rk in tim a to be c le a re d in th e r e g u l a r e x c h a n g e s th e
fo llo w in g d a y , is e lig ib le to th e d i s c r e t i o n a r y l i s t , w h ic h
an
e x h a u s tiv e
in v e s tig a tio n ,
th e
c o m m itte e
fo u n d t h a t th e c le a r in g h o u s e m e m b e rs d e r iv e d a n e t in
co m e o f $97,467 fr o m t h e p r e v a i li n g c h a r g e s d u r i n g 1911.
T h is w a s a t th e r a t e o f a b o u t S 1,J00 f o r e a c h tia n k , t h u s
r e f u t i n g t h e c h a r g e s m a d e by t h e P u jo m o n e y t r u s t in
v e s t ig a t in g c o m m itte e of- a n e x o r b it a n t le v y t h r o u g h th e s e
c h a r g e s b y t h e N e w Y o rk b a n k s . T h e c o m m itte e t h e r e
f o re re c o m m e n d e d t h a t n o c h a n g e ba m a d e in th e sc h e d u le
o f c h a r g e s t h a t h a d b e e n in fo rc e f o r so m a n y y e a r s . I t ,
h o w e v e r, re c o m m e n d e d t h a t t h e r e be a d d e d to th e d is
is p r a c tic a lly t h e s a m e t h in g a s s a y i n g 't h a t t h e i r c h e c k s
c r e t io n a r y
p a s s c u r r e n t in N e w Y o rk C ity a t p a r .
b a n k o r t r u s t c o m p a n y lo c a te d in M a s s a c h u s e tts , R h o d e
I s la n d , C o n n e c tic u t, N e w J e r s e y , a n d N e w Y o r k , w hich
u n d e rto o k to r e m i t in N e w Y o rk f u n d s a t p a r o n t h e d a y
o f r e c e ip t f o r a ll f u n d s d r a w n o n i t re c e iv e d fr o m reeth-
The
p re se n t
s y s te m
has
n o t been
e s ta b lis h e d
over
n ig h t.
I t is th e o u tco m e o f f o u r y e a r s o f c a r e f u l con
s id e r a tio n a n d e v o lu tio n , e a c h n e w s te p b e in g t a k e n a s
c irc u m s ta n c e s d e v elo p ed .
T h is f a c t is w o r th n o tin g , a s
th e o p in io n w a s g e n e r a lly h e ld u n til a s h o r t tim e a g o t h a t
a g r e a t in ju s tic e , p r e v a ile d in
r e g a r d to t h e s y s te m
of
c h a r g e s f o r in la n d e x c h a n g e in fo rc e a t t h e looal C le a r in g
H o u se, a n d d e m a n d s wre re m a d e by b a n k s i n t h e n e ig h b o r
in g s t a t e s f o r s w e e p in g c o n ce ssio n s. B u t w ith e v e r y e f
l is t, c o n s is tin g
of c e rta in
n e a r b y c itie s , a n y
b e rs o r a s s o c ia te m e m b e rs o f th e C l e a r i n g H o u s e / T h is
w a s p u t i n to e ffe c t M a rc h 1, 1913.
T h e n e x t, s te p c a m e a f t e r t h e F e d e r a l R e se rv e sy s te m
w a s e s ta b lis h e d .
T o th e a b o v e d is c r e tio n a r y l is t w a s
a d d e d s u c h ite m s a s a r e c o lle c te d t h r o u g h th e F e d e r a l
R e s e rv e B a n k in N e w Y o rk , w h ic h t h e l a t t e * ’v a s p r e p a r e d
a im o f th e n e w b a n k in g la w s to o p e n t h e d o o rs w id e to
u n iv e r s a l p a r check c o lle c tio n s ; t h e in n o v a tio n h a s o n ly
to re c e iv e fr o m its m e m b e rs f o r im m e d ia te c r e d i t a t p a r .
F o r t h e f u r t h e r c o n v e n ie n c e o f th e c o u n tr y b a n k s th e col
le c tio n d e p a r t m e n t o f t h a C l e a r i n g H o u s e w a s f o r m e d in
been p o ssib le th r o u g h a slow p ro c e ss .
N e v e r th e le s s , w h a t
A u g u s t l a s t y e a r , w h ic h e n a b le d t h e b a n k s t o r e m i t in
ha.- b e e n acco m p lish ed " m u s t be r e g a r d e d a s h ig h ly s a t i s
f a c to r y .
,
b u lk t o t h e m a n a g e r o f t h e C le a r in g H o u s e in s t e a d o f
f o r t to c o n c ilia te th e s e d e m a n d s , a n d n o tw i th s ta n d i n g t h e
I t is i n te r e s t in g to r e c a ll th e s te p s t h a t h a v e b e en
ta k e n to b rin g a b o u t t h e p r e s e n t s y s te m t h a t e x i s t s a t
th e C le a rin g H o u se. T h o se w h o a d v o c a te d a c h a n g e r e
g a r d in g th e c o lle c tio n o f c h e c k s o u ts id e o f N e w Y o r k in
1912, b a se d t h e i r a r g u m e n t on t h e f a c t t h a t t h e s y s te m
o f c o lle ctio n s th e n in fo rc e h a d n o t been r e v is e d s in c e
th e y w e re a d o p te d , in A p ril, 1 8 9 9 ; a’wd d u r i n g t h a t t h i r
te e n y e a r s th e v o lu m e o f c o lle c tio n s h a d in c r e a s e d e n o r
m o u sly , w hile th e m e th o d s o f h a n d lin g e x c h a n g e s by t h e
d if f e r e n t c le a r in g h o u se s t h r o u g h o u t t h e c o u n tr y h a d b e en
g r e a t l y im p ro v e d . A c c o rd in g ly , a c o m m itte e w a s a p p o in te d
b y th e C le a rin g H o u s e , in A p r il, 1912, to in v e s ti g a te th e
m a t t e r a i d to see w h e th e r i t w a s p o ss ib le to m o d ify th e
e x is tin g c h a rg e s .
'
d i r e c tl y t o th e in d iv id u a l N e w Y o rk b a n k s , t h u s s a v in g
l a b o r a n d p o s ta g e .
I
The
recen t
am endm ent
e lim in a te s
th e
b a rrie rs
t h e five 9 ta te lin e s. W h e re v e r a b a tik o r a t r u s t c o m p a n y
c a n fin d p o s ta l a n d t r a n s n o r t a t i o n f a c i li t ie s so t h a t i t s
r e m i t ta n c e c a n re a c h N e w Y o r k b y t h e f i r s t m a il o n t h e
f o llo w in g m o r n in g , i t c a n e n jo y t h e p a r p r iv ile g e i n N e w
Y o rk . B e y o n d t h i s i t is n o t r e a s o n a b le t o e x p e c t th e N ew
Y o r k b a n k s t o g o . A s it is, t h e y a r e g iv in g tw o d a y s
c r e d i t on d e p o s it o f t h e s e o u t- o f - to w n c h e c k s.
A p p re
c i a t in g t h e p h y s ic a l d iffic u ltie s in t h e m o v e m e n t, i t w o u ld
a p p e a r t h a t a u n iv e r s a l p a r c o lle c tio n s y s te m
is a lo n g
'. w a y off. T h e p ro b le m s o f t im e a n d spc.cc a r e in h e r e n t obj s ta c le s in t h e sc h e m e . B u t f o r th e s e , S a h F r a n c is c o c h e c k s
: m ig h t n o w b e c u r r e n t i n N e w Y o rk a t p a r .
W a ll Street Journal
Jan u ary 1 0 ,1 9 1 7
of
RESERVE NOT UNDERSTOOP,
j
John Perrin Find* Much Haziness
About Banking System.
Aa a ru le , a n n u a l r e p o r ta w h ic h c o m e
f r o m t h e G o v e r n m e n t P r i n t i n g O f f ic e In
W a sh in g to n m a k e v e ry d ry a n d u n in te r
e s tin g r e a d in g , c lo th e d a r o u n d m u ltitu d i
n o u s s ta tis tic s w h ic h a p p e a r In c o m p re
h e n s ib le e v e n to t h e m o o t In te llig e n t. N o t
so in th e c a s e o f th e t h ir d a n n u a l r e
p o r t o 'f t l i e F e d e r a l R e s e r v e B o a r d , a
v o lu m e o f 488 p a g e s , w h ic h c o n s is ts n o t
o n l y o f a r e v i e w o f t h e B o a r d ’s a c t i v i
tie s . b u t a c o m p ila tio n o f “ r e p o r t- le ts "
fro m
e a c h o f t h e t w e l v e F e d e r a l HICT
er
s e rv e A g e n ts .
,
,
T h e h u m o ro u s s e c tio n o f th e v o lu m e
a c o n trib u tio n fro m J o h n P e r r in o f th e
F e d e ra l R e s e rv e B a n k o f S a n F ra n c is c o ,
th e e a rn in g s o f w h ic h b a n k , b y th e w a y ,
I
w e re th e s m a lle s t o f a n y o f th e tw e lv e
in s titu tio n s w h e n
co m p ared
w ith
th e
p a id -in
c a p ita l.
M r.
P e rrin ,
w ho
is
w e ll k n o w n in N e w Y o rk , d e v o te s a p a g e
o r m o re to th e d is c u s s io n o f " p u b lic
r e la tio n s ,” a s s e r tin g t h a t th e p u b lic h a s
u n q u e s tio n a b ly
a c c e p te d
th e
F e d e ra l
R e s e rv e s y s te m a s a n in s tr u m e n ta lity o f
in e s tim a b le v a lu e to c o m m e rc e a n d in
d u s tr y in a ll d e p a rtm e n ts .
L ie r e g r e t s
t o b e o b lig e d t o r e p o r t f r e q u e n t m a n i
f e s ta tio n s o f “ h a z in e s s o f id e a s ” a b o u t
th e s y s te m , a n d illu s tr a te s h is p o in t b y
th e fo llo w in g s e le c te d a n s w e r s to q u e s
tio n s jfu t to th o s e s e e k in g l ic e n s e s .a s
te a c h e r s in o n e o f th e S ta te s o f h is
d is tric t:
Q U E S T IO N S .
VThat i s th e F e d e ra l R eserv e a c t of 'Wll
so n ’s A d m in istra tio n ? H ow m an y b a n k s
w ere fo rm ed a n d how governed?
A N SW ER S.
1. T h e F e d e ra l R eserv e a c t w a s m a k i n g j
a p a rk I n C olorado, v e ry m u ch lik e T e ilow ptone N a tio n a l P a rk .
2. To fo rm N a tio n a l R eserv e B an k s te 1
;
New York Times
March 1 8 ,1 9 1 7
)
a id in b rin g in g th e w a r in E urope tfe a
c lo s e .
3. T he regional b a n k s a re to be con
tro lled by corp o ratio n s e lected b y th e
P resid e n t.
,
4. T he F e d e ra l R eserve a c t Is ta k in g
c a re of th e old sold iers a n d b a v in * th e m
p ra c tic e w ar.
5. T h e F e d e ra l R ese rv e a c t is oha s to r
in g m oney o r th e c o u n try , a n d a n y one w ho
is w ith o u t m oney, or " b ro k e ," c an go to
th e se b a n k s an d g e t w h a t m oney th e y need.
6. T he F e d e ra l R eserv e a c t is th e ta x
w hich h e (P re sid e n t W ilson) h a s levied or
th e stam p s he h a s caused to be p u t on a ll
goods b o u g h t or sold in th e U nited S tates.
T h e re is a lso a ta x on te le g ra m s, te le
phone lo n g -d ista n c e calls, ^ Ac. T his Is to
ra is e a fu n d to im prove th e a rm y a n d n a v y
a n d h e lp p a y th e n a tio n a l debt.
7. T h e re is a F e d e ra l R eserv e b a n k la
each c ity o f over 10,000. c ontrolled b y th e
officers.
8. T he F e d e ra l R eserv e a c t w a s to lay
a sid e a c e rta in a m o u n t of th e U n ite d S ta te s
m oney, a n d th is is to be used only in tim es
w hen th e c o u n try is in need of I t an d d e
m an d s Its usage. T h is m oney is to be \iaed
only w hen a ll o th e r m oney of th e U nited
S ta te s is a t a n end.
M r. P e r r i n f a i l s to s t a t e w h e th e r o r
n o t th e a u th o r s o f th e s e a n s w e rs w e re
d u ly a p p o in te d t e a c h e r s and* w h e t h e r o r
n o t th e y h a v e b e e n in tr u s te d w ith th e
r e s p o n s ib ility o f e d u c a tin g : t h e b a n k e r*
o f th e n e x t g e n e ra tio n .
41 O r g a n i s e d a n d s y s t e m a t i c p u b l i c r e
la tio n s w o r k ,” s a y s M r. P e r r in , “ w o u ld
b e in v a lu a b le , b o th
in
In fo rm in g th e
p u b lic s o t h a t t h r o u g h k n o w le d g e t h e y
w o u ld h a v e i n te llig e n t r e lia n c e in a o u n d
m e m b e r b a n k s fo rtifie d b y a F e d e ra l
R e s e r v e b a n k , an d a l s o i n d e v e l o p i n g t h e
u n d e rs ta n d in g o f m e m b e r b a n k s w ith
r e s u ltin g g r e a te r c o -o p e r a tio n a n d c o n
s e q u e n t p r o f it to th e m s e lv e s a n d b e n e fit
to g e n e r a l b u s in e s s .
“ T h e o b je c tiv e r e s u l ts o f th e F e d e r a l
R e s e rv e s y s te m so d e p e n d u p o n k n o w l
e d g e b o th o f b a n k e r s a n d o f t h e p u b lic
th a t it se e m s im p o rta n t t h a t th is p h a s e
o f a F e d e r a l R e s e r v e b a n k ’s e n d e a v o r s
s h o u ld
not be
s p o ra d ic ,
b lit in c o n
fo rm ity w ith a d e fin ite ly o r g a n is e d p la n .
P r o g r e s s in d e v e lo p m e n t s e e m s lik e ly to
b e in d ire c t p r o p o rtio n to th e c h a r a c te r
a n d q u a lity o f su c h e f f p r t.”
1FEW RESERVE BANKS
USE REDISCOUNTS
•
•
-
Less Than 10 Per Cent of the
Local Institutions Avail Them
selves of Opportunity.
302 APPLICATIONS IN YEAR
A ggregata of $22,601,332, Although
Sm all, la About Doublo the
Amount of Prevloua Year.
L e s s t h a n 10 p e r c e n t , o f t h e 025 b a n k s
w h ic h a r e m e m b e rs o f th e F e d e r a l R e r c s e r v e W ank o f N e w Y o rk a v a ile d th e m
s e lv e s l a s t y e a r o f th e r e d is c o u n tin g
f a c ilitie s o f t h e in s titu tio n .
P ie rre J a y .
C h a i r m a n o f t h a B o a r d o f D i r e c t o r s , In
h l« a n n u a ! r e p o r t w h ic h h a s J u s t b e e n
Issu e d , p o in ts to th e f a c t t h a t d u r in g
t h e y e a r o n l y 802 a p p l i c a t i o n s f o r r e d i s
c o u n ts o r a d v a n c e s w e r e re c e iv e d , th e
sam e
a g g re g a tin g
122.001.882.
T h ese
c a m e f r o m 62 m e m b e r b a n k s o f w h i c h
16 w e r e I n N e w Y o r k C i t y a n d 10 e l s e
w h e r e In t h e d i s t r ic t .
A l t h o u g h t h e a m o u n t I s s m a l l , i t Is
a b o u t d o u b lo th e f ig u r e s f o r th e p r e
v io u s y e a r w h e n 277 a p p li c a ti o n s , t o t a l
i n g * 1 1 ,8 8 4 .0 3 7 . w e r e r e c e i v e d .
I t la
I n te r e s t in g to n o te t h a t w h ile in 1015,
th e d iff e re n c e b e tw e n th e a p p lic a tio n s
re c e iv e d a n d th o s e a c c e p te d a m o u n te d
t o $ 1 , 710 , 405 , l a s t y e a r t h i s d i f f e r e n c e ,
w h ic h r e p r e s e n ts r e je c tio n s , w a s o n ly
* T h a * ’n u m b e r o f d i s c o u n t . R e m a i n
w a s 2.GU0 c o m p a r e d w i t h 2 , 2 o l U »e p r e
v lo u s v e a r
T h e h e a v ie s t re d is c o u n t
o p e ra tio n s o c c u rre d in D e c e m b e r, d u r I n i/ w h i c h m d n t h , t h e b a n k g r a n t e d d i s
n u M i o r a d v a n c e s a jiio u n tin g to t^ K rly
* 18 , 000,000 o u t o f a t o t a l o f a l i t t l e m o r o
t n a n ? iv .0 0 0 ,U 0 0 f o r t h e w h o l e y e a . . T h e
la r g e s t s in g le a p p lic a tio n * u
f o r * 3 .(J7 7 .0 0 0 a n d
th e
s m a lle s t.
*4o0.
rn e
la r g e s t s in g le p ie c e
jls
w a s * 1 . 000,000 a n d t h e s m a l l e s t , * i s .
T h e la ru e t o ta l f o r D e c e m b e r d is c o u n ts
is a c c o u n te d f o r b y M r. J a y , w h o s a y s
t h a t d u r in g th e p e rio d o f u n s e ttle m c n t
w h ic h p r e v a i l e d in t h e s t o c k a n d m o n e y
li-a rk -jt d u r in g t h e l a t t e r v a r t o f th e
m o n th th e l a r g e N e w Y o rk C ity b a n k s
m a d e u se o f th e d is c o u n t f a c ilitie s fo r
th e f ir s t tim e , t n e i r d is c o u n ts a g g r e g a tT h e * N ^ ° ' Y o r k d i s t r i c t ; - s a y s M r.
J a y in h is r e p o r t, " I s d is tin c tly a c re d i
to r d is tr ic t, a n d its b a n k s a r e le n d e rs
ra th e r th a n b o rro w e rs or m o n ey ,
wn
J u n e 30. 1016. t h e t o t a l a m o u n t b o r
ro w e d b y o u r m e m b e r b a n k s f r o m a ll
so u rc e s
w as
* 4 ,9 0 0 0 u 0 , a g a i n s t t o t a
m e m b e r b a n k s b o r ro w in g s fo r th e en
t i r e c o u n t r y o n t l i e M B p f t 0! |# .t e o f * 8U>
0 6 7 .0 0 0 .
-
-
T h e r e p o r t r e v i e w s t h s i n c r e a s e In
t h e v o l u n j a o f b u s i n e s s f i n a n c e d In t h i s
i c o u n try
under
b a n k e rs'
a c c e p ta n c e
c re d its , o r " d o l l a r c r e d its ." a s th e y
a r e c a ll e d b o t h a t h o m e a n d a b r o a 'i
T h e N e w Y o rk R e s e rv e B a n k , d u rin g
t l i e l a s t y e a r , p u r c h a s e d 6 ,2 9 6 a c c e p t
a n c e s . a g g r e g a t i n g * 1 2 3 ,4 0 6 ,5 4 0 , o f w h i c h
* 1 1 2 ,0 6 4 ,0 1 8 c o v e r e d e x p o r t a n d I m p o r t
tra n s a c tio n s,
* 4 .0 2 6 ,8 1 8 w e r e i n d o r s e d
t r a d e b i l l s o f f o r e i g n o r i g i n , a n d * 6 .4 8 5 .11 2 w o r e d o m e s t l o a c c e p t a n c e s .
1 t ie
b a l a n c e o f * 2 3 0 ,0 0 0 w e r e b i l l s d r a w n t o
f u rn is h " d o lla r e x c h a n g e ."
T h e N ew
Y o rk
R e se rv e
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a ls o
p u rch ased
8 ,6 6 7 a c c e p t a n c e s , a g g r e g a t i n g * 1 2 6 ,4 8 7 ,830 f o r t h e a c c o u n t o f o t h e r r e s e r v e
banks.
,
,
J
D is c u ss in g th e p r o g re s s m a d e d u r in g
t h e y e a r l i» t h e d e v e l o p m e n t o f a d i s
c o u n t m a rk e t, C h a irm a n J a y s a y s :
“ R e s p o n s ib le b a n k in g a n d b r o k e r a g e
h o u s e s h a v e b e c o m e d e a le rs a n d s p e
c ia lis ts in b a n k e rs ’ a c c e p ta n c e s , p u r
c h a sin g th e m a t w h o le s a le a s th e y a re
a c c e p te d a n d o f fe r e d In th is c o u n tr y ,
q u o tin g r a t e s b y c a b le to fo re ig n c o u n
t r i e s w h e r e t h e y o r i g i n a t e a s b ills o f
e x c h a n g e , a n d c o n tra c tin g fo r th e ir p u r
c h a s e u p o n a r r i v a l h e r e . T h is is g iv in g
a n in c r e a s in g c u r r e n c y a n d s ta b ility to
t h e ' d o l l a r ' b ill In f o r e ig n t S a r k e t s .
■’ T h e d e m a n d f o r s u c h b i l l s d u r i n g
th e y e a r fro m b a n k s a n d o th e r in v e s t
o rs r e q u ir in g liq u id a s s e t s o f s h o r t m a
tu r ity h a s g e n e ra lly e x c e e d e d th o s u p
p ly a n d h a s te n d e d to k e e p r a t e s f o r
th e m w e ll b e lo w th o s e c o m m a n d e d b y
a n y o th e r f o rm o f c o m m e rc ia l c re d it
In s tru m e n t.
T h e e a s e w ith w h ic h th e y
w e re n e g o tia te d a t s ta b le r a te s d u rin g
p e rio d s w h e n o th e r m o n e y r a t e s ro se
a b r u p t l y d e m o n s t r a t e d i n a c o n v in c in g
w a y t h e i r d e s ir a b ility a s p r im e a n d
liq u id b a n k in g a a s e t s , w h ic h h a s lo n g
b e e n r e c o g n iz e d in o t h e r c o u n tr ie s .
“ T h e lib e ra l p u r c h a s e o f b a n k e rs '
a c c e p ta n c e s b y th e re s e rv e b a n k s h a s
u n d o u b te d ly a d d e d s ta b ility to th e o p en
m a r k e t a n d a id e d I ts d e v e lo p m e n t.
” T h e v o lu m e o f A m e ric a n a c c e p t
a n c e s c u r r e n t a t t h e c lo s e o f 1916, I n
c lu d in g th o so o f n o n m e m b e r b a n k s a n d
p r iv a te b a n k e r s , a n d t r a d e b ills o f f o r
e ig n o r ig in d r a w n o n A m e r ic a n " firm s
a n d i n d o r s e d b y b a n k s , la e s t i m a t e d t o
b o a b o u t * 2 5 0 ,0 0 0 ,0 0 0 .
” D u r in g th e y e a r th e F V d eral R e s e rv e
B a n k o f N e w Y o r k h a s f o llo w e d th e
s a m e p o lic y in p u r c h a s in g a c c e p ta n c e s
aB d u r i n g t h e p r e v i o u s y e a r .
T lie a c
c e p ta n c e s o f n o n m e m b e r b a n k s a n d o f
p riv a te b a n k e rs h a v e b e e n p u rc h a s e d
a s f re e ly a s th o s e o f m e m b e r b a n k s ,
a lth o u g h
th e r a te o n th e la tte r h a s
b e e n s lig h tly m o re fa v o r a b le .
In o rd er
t o e n c o u r a g e t h e i n d o r s e m e n t o f b ills
a s lig h t d if f e r e n tia l h a s a ls o b e e n m a d e
i n f a v o r o f b ills In d o rs e d b y p r im e
b a n k s o r b a n k e rs ."
-
*
'lew York Tines
’’arch 18,1917
PLANS FOR MOBILIZING
D. S. GOLD RESOURCES
PROPOSED AMENDMENTS TO THE
is
It
t£ e
as
o r ig in a lly
by
th e
la s t
to
F e d e ra l
s e ss io n
th #
3 .— E f f o r t s
R e se rv e
m o b iliz a tio n
R e se rv e
of
an d
th e
fo r
ren e w e d .
g o ld
o th e r
T h is
a t
th e
fo r
a m e n d m e n ts
act
to
p e rm it
reso u rc e s
of
p u rp o se s,
a re
le g is la tio n
w as
a
th e
to
fo rm
o f m o b ility
new
th is
so m e
of
a lly
a p ip r o v e d
by
th e
C o m m itte e s
la s t
s e s s io n ,
b u t
th e
c a le n d a rs
B a n k in g
of
b o th
th e
and
houses
le g is la tio n
because
of
th e
C u r
in
d ie d
b r e iv ity
b e a rin g
s e ss io n
and
c lo s in g
days,
th e
of
a ll
th e
filib u s te r,
p re v e n te d
w h ic h ,
th e
T he
F e d e ra l
R e se rv e
p e c ia lly
B o a rd , lik e
. est
o n ly
m o re
days,
th e
and,
th a t
th e
h e lp e d
U n ite d
v id u a lly
o w in g
g o ld
h as
th e
th e
m em ber
g o ld
•o m e
ID L E
cash
by
CA SH
now
a t
F e d e ra l
W OULD
id le
sam e
fo r
in
tim e
g o ld
in
th e
bank
th e
to
$ 9 0 0 ,0 0 0 ,0 0 0 ,
fin a lly
B o a rd ,
a s
upon
re s ts ,
th e
al
am erg en cy
a b le
to
dem ands,
p rev e n t
w h ic h
th e
c e n tra l
b e b e tte r $ b le n o t o n ly
re c B o S S ^ j
about
a p p ro x im a te ly .
g o ld
to
v a u lts ,
th e
ac
of
th e
v a u lts
ban k s by
be
s u rp lu s
in c re a s e
b illio n d o lla r s , b r in g in g
c re d it
to
w o u ld
o f th e
R e se rv e
se rv e
F e d e ra l
REJLDA-SED.
BE
of a
of
and
done
p r& p o s a ls
F e d e ra l
th e
R e
c o in
now
ter
tro llin g
th e
R e se rv e
g o ld
is
th e
of
in d ire c tio n .
ly in g
of
of
c o u n tr y
red u c e
th e
g o o d ly p o r tio n
th e
c u m u la tio n
to
exchange
w h ic h
e ffe c t o f th e s e
re le a s e a
an d
in
s u rp lu s
F e d e ra l
a llo w
e x te n t,
T he
tsh e
re c e iv e
n o te s ,
w h o le
re q u ire d
to
c e rtific a te s
of
a
q u a r
th e
to ta l
B y
th e
con
b a s is
F e d e ra l
R e
agency,
w ill
fin a n c e n a ti o n
but
w ill
o v fe r-in fla tio n
in
a ls o
he
a ll
d i-
th is
a
d is
in c re a se d
num ber
a re
in
to
B anks,
in g
n a tio n a l
k e e p in g
bonds
an
on
on
banks
of
th e
of
in te r
F e d e ra l
W h ic h
th e
f a c ilitie s
u n til
a v a il
be
re q u ire d
th e m s e lv e s
to
keep
w ill
B o a rd .
M e m b e rs
of
B o a rd
a re
m e n ts
e n a c te d
im p re s s
a ll
be
by
and
w ith
as
a t
d is
F e d e ra l
w ill
R e se rv e |
am end
th e
p res
a c c o m p lis h
fo r
th e
th e
th e
be
a ll c h e c k s .
th e s e
C o n g re ss
a s
th e ir
th e
F e d e ra l
C o n g re ss
w e ll
of
by
see
To
checks
b a la n c e
s y s te m
to
n ecessary
p ar
de
f a c ility
c o lle c tio n ,
In c lu d e
th e
s e ss io n .
upon
tim e s ,
to
a n x io u s
s p e c ia l
w ill
a t
f ix e d
T he
enough
th is
B ank
be
reco m
w h ic h
of
fo r
th e
n o n -m e m
banks
cover
sys
F ed
c o lle c tio n
fo r
to
w h ic h
th e
d e fin ite ly
sen t
R e se rv e
w h ic h
u n
re q u ire d
th e ir
c o m p e n s a tin g
m ad e b ro ad
it
has
th e m s e lv e s
on
en t
b y s te p
been
to
c o lle c
R e se rv e
e x te n d
s m a ll
and
c o n te s t
c o lle c tio n
T he
R e se rv e
of a
S te p
to
h a s
F e d e ra l
p ro p o ses
r e s tric tio n s — r e p
F e d e ra l
H o a rd
ban k s
tric t,
based.
w h ic h
c le a r in g
la s t s ta g e
a
w as
of
S ta te s
n o n -m e m b er b a n k s
R e se rv e
m ended.
n e c e s s ity
U n ite d
th e
s p e c if ie d
th e
re lie v
to
w hen
banks
in
to
of
m em ber
th e
th e
o ld
c irc u la tio n
f ir s t s ta r te d .
e ra l
of
o ffic e rs
and
a m e n d m e n t— th a t
e x te n s io n
te m
bank
d e p o s it th e
re s e n ts th e
in d i
th e
th is
p o s s ib le
in
de
banks
F e d e ra l R e se rv e
w o u ld
B anks
in
to
rese rv e s
ban k s
R e se rv e
to
it
of
s y s te m , a n d
s e rv e
th e
la rg e
f lo w e d
b e lie v e s
p e rc e n ta g e s
to J
th ro u g h
s tr o n g e s t,
s in c e t h e w a r b e g a n , th e
B o a rd
O w in g
G o v . H a rd in g
m ake
to
su g
banks
r e la tiv e
w ill
been
fa c t.
c o lle c tiv e ly ,
w o rld , a n d
th a t
to
S ta te s
and
have
a
w h ic h
R e se rv e
w ay,
th e
in
h av e
d e v e lo p m e n ts ,
a re
F e d e ra l
s ire
to
th e
c e rta in
es
in
e x tr a o r
e x is tin g
a ls o
changes
m ea
g e n e ra l
p ro s p e rity
c o u n try , w h ic h
h as
a
ac t th a t
e m p h a s iz e
c la r e s
in
a m e n d m e n ts
u n p re c e d e n te d
o u t th e
p rep ared n ess
im p o rta n t
F e d e ra l R e se rv e
g e s te d
In
is
to
der
e v e ry
th e < G o v e m m e n t,
in te re s te d
s u re s th e s e
th e
of
th e
| R e s e rv e s y s te m .
T h e s e a m e n d m e n ts i n
v o lv e
s m a ll,
b u t som ew hat
im p o r ta n t,
ber
b ran c h
p ro p o sed
n e c essa ry
p ro p o sed
g o ld
a m e n d m e n ts ,
on
p assag e
up
p e rio d
a m e n d m e n ts ,
to
f u tu re
th e
of
f a c ilitie s
le g is la tio n .
o th e r
w ith
tio n
in
now
fo u n d
w ill
on
been
SOME M INOR AMENDMENTS.
began
th e
n o rm a l
new
th e y
have
w h e th e r th e y re la te to th e e n tr y o f th is
c o u n try
in to
th e
E u ro p ean
w a r Its e lf
o r a r e m e r e ly c o n fin e d to f in a n o in g s o m e
o f th e b e llig e re n t P o w e rs .
th e
of
been
T he
few
in te re s t
p ro ce e d e d
a
te s tim o n y
and
d a te ,
th e
p o s s ib le t h a t h a d
fin a n c ia l s itu a tio n
o o u n try ,
tin c t
th is
in
a m e n d m e n ts
bear
d in a ry
t» a f l
s y s te m
have
a g re e a b le .
fa c t,
a c t,
C o n g re ss,
a t
I t is
th a t,
e ffic ie n t i n s t r u
o n ly
th ro u g h
th e
n ot
*»»t
R e se rv e
lib e r a liz a tio n ,
b a n k in g
tim e
m ig h t
or
and
n e c essa ry .
O ne
ren c y
h ig h ly
th o s e
an d
m o b iliz a tio n
m ade
B o a rd
o f C o n g re ss
F e d e ra l
c o u n try ,
bo
A p ril
a
b u t th a t,
.m in o r
W a s h in g to n ,
p assed , by
changes,
C o u p le d
Correspondence o f T h e E re s lo g P o st.]
F e d e ra l
m e n t o f la w ,
fo
[S p e c ia l
r e m a rk # ! * .-
U ie
p ro w e d n o t o n ly
th e
Changes Sought by Board at Last Ses
sion of Congress Failed of Pas■age and Now Efforts for Such Legiilation Will Be Renewed—Propo
sals Would Bring Accumulation of
Gold in Federal Reserve Banks to
About $900,000,000.
a
"W ljO’. e ,
fo u n d
FEDERAL RESERVE ACT.
rafh t r
on
B o ard
n e c e s s ity
e m e rg e n cy
th is
to
fo r
n a
tu r e o f th e le g is la tio n p ro p o se d .
I t is
g e n e ra lly
u n d e rs to o d
th a t b o th H o u se s
o f C o n g re s s d e s ir e to to u c h o n ly s u c h
le g is la tio n
a t th e
p r e s e n t s e s s io n a s is
a b s o lu te ly e s s e n tia l to th e g e n e ra l w e l
f a r e o r n a tio n a l d e fe n c e , b u t i t is b e
lie v e d
th a t
C o n g re s s w o u ld b e w illin g
to h e lp t h e B o a r d m o b iliz e t h e f in a n c ia l
r e s o u rc e s o f th e c o u n tr y a s q u ic k ly a s
i t w o u l d a s s i s t t h e a r m y a n d n a v y g e t.
m en
ah d
s u p p lie s , p a y m e n t f o r w h ic h
m ig h t e a s ily b e c o m e a p ro b le m in v itin g
th e a tte n tio n a n d c o o p e ra tio n o f th e F e d
e ra l B o a rd .
New York Eving Post
o ril 4, 1917
CLEVELAND, OHIO
D av id G. W ills, c h a irm a n o f th e C lev elan d F e d e ra l R e s e rv e
B a n k , in h is a n a ly s is o f c o n d itio n s in th e F o u r th D is tric t,
s a y s , in p a r t, a s fo llo w s:
“ D u rin g M arch , e sp e c ia lly fo r th e w e ek e n d e d M a rc h 17,
th e r e w a s a n o tic e a b le h e s ita n c y a n d u n c e r ta in ty in m a n y
lin e s o f b u sin e ss th r o u g h o u t D is tric t No. 4. T h e fo re ig n r e
la tio n s of o u r G o v e rn m e n t a n d th e tr a n s p o r ta tio n s itu a tio n
c a u s e d c o n sid e ra b le u n r e s t in c o m m e rc e a n d in d u s tr y . In d i
c a tio n s a t th is w r itin g p o in t to g e n e ra l re lie f fro m th is fe e l
in g a n d r e s u m p tio n o f a ll a c tiv itie s to th e f u lle s t e x te n t.
“ P r e s e n t in d ic a tio n s a re fo r a f a ir y ield o n ly of thi* w in
t e r w h e a t crop. F ro m th e K e n tu c k y se c tio n th e r e p o rts show
t h a t t h e to b ac co a n d h e m p c ro p s of l a s t y e a r w e r e m a rk e te d
a t g r e a tly in c re a s e d p ric e s to th e fa rm e r, a n d p re p a r a tio n s
a re b e in g m a d e now fo r in c r e a s e d p ro d u c tio n o f th e s e c ro p s
in th e se c tio n . S p ecific in q u ir y th ro u g h o u t th e d i s t r ic t r e
v e a ls a r a th e r u n s a tis f a c to r y c o n d itio n re g a r d in g p la i s fo r
in c re a s e d p ro d u c tio n of fo o d stu ffs. T h e la c k o f suffici- n t or
c o m p e te n t fa rm la b o r e rs is u rg e d a s th e ch ie f d ifficulty, d u e ,
o f c o u rse , to th e d e m a n d fo r la b o r i n in d u s try a t h ig h e r .'ages
t h a n th e fa rm e r c a n afford. T h e r e a r e in d ic a tio n s t h a t in
so m e a g r ic u ltu r a l s e c tio n s f a n n in g m achinery- w ill be u se d
to a g r e a t e r e x te n t th a n h e re to fo re , b y w h ic h th e e ffe c t of
th e la b o r s c a rc ity w ill b e m odified.
“ T h e r e p o rts re c e iv e d fro m v a rio u s s e c tio n s of th e d is
tr ic t in d ic a te t h a t th e s u rp lu s s u p p ly o f liv e s to c k u se d to r
foods is a t m o st n o t g r e a t e r th a n th e a v e ra g e o f p re ip flin g
y e a rs, a n d th e r e h a s a p p a r e n tly b e e n lit t le r e a l e ffo rt to im
p ro v e th e situ a tio n .
“ S in c e th e m id d le o f M a rc h th e in d u s tr ie s of t h e d is
t r i c t h a v e re s u m e d t h e i r f o rw a rd m o v e m e n t w ith e n e rg y , and
th e in d ic a tio n s a r e fo r c o n tin u e d a g g re s s iv e n e s s .
" P ig iro n , b ille ts , p la te , b a r, r a il a n d s h e e t p ro d u c e rs
a n d m a n u fa c tu re rs r e p o r t v e ry s tro n g d e m a n d fo r a ll c la s s e s
o f p ro d u c tio n , w ith s o a r in g p ric e s . Q u o ta tio n s a re m a r k e d
u p a ll a lo n g th e line. T h e p r o s p e r ity a n d c a p a c ity o f p ro
d u c e rs is a p p a r e n tly lim ite d o n ly by in su ffic ie n t t r a n s p o r ta
tio n , la b o r a n d fu e l su p p lie s . A g r e a t m a n y of th e p ro d u c e rs
h a v e in d ic a te d in te n tio n s o f s u p p ly in g G o v e rn m e n t n e e d s in
a d v a n c e o f all th e i r o rd e rs , a n d in so m e in s ta n c e s th is c o n d i
tio n h a s re n d e re d n e c e s s a ry t h e p o stp o n e m e n t o f p r iv a te de
liv e rie s . I t is e n tir e ly f a ir to s a y t h a t th e o b s e rv a tio n s a b o v e
m ad e a p p ly w ith e q u a l fo rc e to fin is h e d m a te ria ls a n d o th e r
f a b ric a te d a rtic le s .
“ T h e p ro d u c e rs a r e e n tir e ly u n a b le to s e c u re a n a d e q u a te
la b o r su p p ly fo r th e p ro d u c tio n o f a su ffic ie n t a m o u n t of o u t
p u t to m e e t t h e i r d e m a n d . R e p o r ts sh o w t h a t in t h e P e n n
sy lv a n ia , O hio a n d K e n tu c k y c o a l re g io n s o v e r tu r e s h a v e
b e e n m a d e fo r e n tir e o u tp u ts o f th e m in e s a t a d v a n c e d
p ric e s. In som e in s ta n c e s c o n tr a c ts h a v e b e e n m a d e , a n d in
o th e r s re fu s e d e ith e r o n a c c o u n t o f c o n d itio n s o r in t h e h o p e
o f m a k in g b e tt e r a r ra n g e m e n ts , o r, a s n o tic e a b le in th e P e n n
s y lv a n ia fields, p ro d u c e rs h a v e f e lt t h e n e c e s s ity a n d d e
s ir a b ility o f m a in ta in in g a p e rc e n ta g e o f o u tp u t a s fre e coal.
“ T h e r e is n o t m u c h c h a n g e fro m t h e p re c e d in g m o n th s
in c o m m e rc ia l a c tiv itie s , u n le s s i t b e a le s s e n in g of s to c k s
of g o o d s b y re a s o n of in a b ility to s e c u re s h ip m e n ts ; b u t col
le c tio n c o n d itio n s h a v e b e c o m e a l it t le le s s fa v o ra b le . Food
stu ffs c o n tin u e to a d v a n c e in p ric e , a n d th e r e is in tb e c itie s
e v id e n c e of d e c re a s in g s u rp lu s s u p p lie s , in d ic a tin g p e rh a p s
f u rth e r advances.
“ A c u r s o r y e x a m in a tio n o r th e p u b lis h e d s ta te m e n ts of
b a n k s u n d e r t h e C o m p tro lle r’s a n d S ta te B a n k in g D e p a rt
m e n t’s c a lls f o r re p o rts o f c o n d itio n a s o f M a rc h 5tb in d i
c a te s f u r t h e r g a in s in th e d e p o s it lin e s g e n e ra lly , th o u g h in
so m e lo c a litie s t h e in c re a s e h a s b e e n m e r e ly n o m in a l. T h e
s u p p ly of lo a n a b le fu n d s in b a n k s is m o re th a n a d e q u a te for
t h e n e e d s o f th e re s p e c tiv e lo c a litie s , a n d r a te s c o n tin u e for
th e m o s t p a r t u n c h a n g e d . T h e r e w a s a le s s e n e d d e m a n d a t
lo w e r p r ic e s f o r in v e s tm e n t s e c u ritie s d u rin g th e firs t h a lf
of tile m o n th o f M a rch .
“ B a n k c le a rin g s m a in ta in in c re a s e s o v e ? t h e c o rre sp o n d
in g p e rio d of t h e p re c e d in g y e a r.
“ T h e o u tlo o k is good fo r c o m m e rc e a n d in d u s try , a n d
f a ir a s r e g a r d s a g r ic u ltu r e ; n e c e s s a rily , t h e a g r ic u ltu r a l
s itu a tio n w ill a ffe c t u n fa v o ra b ly th e g e n e r a l c o n d itio n s la te r.
T h e re h a s r e c e n tly b e e n re n e w e d e ffo rt t o e n c o u ra g e fa rm
p ro d u c tio n , a n d if .th is sh o u ld in s till g r e a t e r e n e rg y in to th e
f a rm e r th e p r o s p e c ts w o u ld b e b e tte r. I t d o e s n o t s e e m t h a t
th e m o v e m e n ts f o r in c re a s e d a c re a g e o r m o re sc ie n tific
m e th o d s in fa rm in g h a v e b e e n o rg a n iz e d o r d e v e lo p e d to su c h
a n e x te n t a 3 to b e p ro m is in g o f r e s u lts b e fo re t h e p la n tin g
s e a s o n .”
American Banker
pril 7, 1317
Pa*e 958
@FedFRASER