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511
84tt
Washington, D. C., January 24, 1916,
ANALYSIS OF THE RESERVE CITY SITUATION,
First;
Under Clause (a) of Section 11, of the Federal Reserve
Act, the Federal Reserve Board is authorized and empowered:
"To add to the number of cities classified as
reserve and central reserve cities under exist
ing law in which national banking associations
are subject to the reserve requirements set forth
in Section twenty (should be 19) of this Act; or
to reclassify existing reserve and central reserve
cities or to terminate their designation as such,"
Second:
The Reserve, requirements at the end of thirty-six months
after the Banks were organized - i. e. until November 2, 1918,
will be as follows:
At the end of 36 months from the starting of the banks,
(ice. November 2, 1918) the member banks will have the option
of keeping the following percentages of their demand deposits
in the manner indicated, depending upon their location:
(a)
Membe r
Bank
Located
In
(b)
Required
Minimum
Federal
Reserve
Bank
Vaults
Required
Minimum
In own
Vaults
(e)
(d)
(c)
i
Reserve
Which at
Option of
Member Bank
may be Kept
in Federal
Reserve
Total
Total of
Bank or in
(b) and (c) Reserves
Own Vaults
Central)
Reserve)
Cities )
6$
7$
V
12$
18$
Re se rve)
Cities )
bfo
5%
4'jo
10$
15$
5$
*
”35
O
j^
Q
8$
12$
Country)
Cities )
&Towns )
i
4$
i
!'
511.
Third:
Under Section 19, of trhe Federal Reserve Act, which is
tho Section making provision for the payment of reserves into
the Federal Reserve Banks, the Banks in cities already known
as central reserve cities or hereafter so defined, are required
to pay in their reserve deposits at once, whereas, banks in
reserve cities and non-reserve cities are given three years in
which to transfer their reserves.
Fourth;
There are in the United States at the present time three
central reserve cities and tn-fk-jCMn reserve cities.
Grouping
these cities according to the tweiW Federal Reserve Districts,
the list appears as follows:
List of Central Reserve and Reserve Cities, Grouped by Districts
and According to Population*
DISTRICT Ho. 9 :
DISTRICT No. 1:
(*) Boston
Population
670,585
(*) Minneapolis
St. Paul
Population.
301,408
214,744
DISTRICT No. 2:
(*) New York City
Albany
4,766,883
100,253
DISTRICT No. 3:
(* Philadelphia
1,549,008
DISTRICT No. 4:
(* Cleveland
Pittsburgh
Cincinnati
Columbus
560,663
533,905
364,463
181,548
DISTRICT No. 10.
i Kansas City; Mo.
Kansas City,Kans.
Denver
Omaha
S.Omaha,Nebr.
St.Joseph,Mo.
Oklahoma City
Wichita,Kans.
Pueblo,Colo.
Lincoln,Nebr,
Topeka,Kans.
Muskogee,Okla.
248,381
82,331
213,381
124,096
26,259
77,403
64,205
52,450
44,395
43,973
43,684
25,278
844
DISTRICT No.. 5:
DISTRICT No. 11 :
Baltimoro
558,485
Washington
331,069
!) Richmond
127,628
Charleston,S.C,. 58,883
DISTRICT No. 6: ‘
New Orleans
(*)Atianta
Birmingham
Nashville
Savannah
Chattanooga
San Antonio
(*) Dallas
Houston
Ft. Worth,
Galveston
Waco
96,614
92,104
78,800
73,312
36,981
26,425
DISTRICT No, 12 :
339,075
154,389
132,685
110,364
65,064
44,604
(*) Sa n Fran cisco 416,912
319,198
Los Angeles
237,194
Seattle
207,214
Portland
104,402
Spokane
Salt Lake City 92,777
82,972
Tacoma
DISTRICT No. ,7:
(*) Chicago
2,185,283
Detroit
465,766
373,857
Milwaukee
Indianapolis 233,650
Bes Moines
86,368
Sioux City,la. 47,828
38,494
Dubuque
Cedar Rapids 32,811
DISTRICT No. 8:
(*) St. Louis
Louisville
687,029
223,928
Federal Reserve Cities marked with (*)
Fifth:
In order to study the reserve situation from the standpoint
given under.the law, a list of cities having a population of 100/300
or more, in. each District, is herein shown, also, a list of cities
having 50,000, but less than 100,000.
It will be noticed that there
are fifty cities in the United States having a population of more than
100.000, and fifty-four cities having more than 50,000, but less than
100.000,
For the convenience of the student of this question these
cities are grouped by Federal Reserve Districts.
(See Exhibit 'A )
EXHIBIT
A
846
{
LIST OF CITIES IN UNITED STATES
HAVING A POPULATION OF OVER
ONE HUNDRED THOUSAND
Classified as to Federal Reserve Districts
PJ-R.TR.XCT NO. 1 :
(*)
Boston, Hass.
Providence,R *I .
Worcester > Hass *
New Haven^Conn,
Fall River, Mass.
Lowell, Mass.
Cambridge, Mass,
Bridgeport> Conn.
DISTRICT NO- ? L
670,585
224 ,326
145,986
133,^05
119,295
105,294
104,839
102,054
(*)
Chicago,111
Detroit,Mich.
Milwaukee,Wis.
■ Indianapolis,Ind.
Grand Rapids, Mich.
DISTRICT NO. 8;
(*)
DISTRICT NO. 2:
(*)
New York City
Buffalo, N.Y.
Newark,N.J.
Jersey City,N.J.
Roche ster,N .Y.
Syracuse ,N.Y.,
Paterson, N.J.
Albany,N .Y .
4,766,883
423,715
347,469
267,779
218,149
137,249
125,600
100,253
(*)
687,029
223,928
131,105
Minneapolis,Minn,
St,Paul,Minn.
301,408
214,744
DISTRICT NO. 10;
(*)
1,549,008
129,687
St. Louis, M q »
Louisville, K y .
Memphis,Tenn.
DISTRICT NO. 9:
DISTRICT NO. 3:
(*) . Philadelphia,Pa.
Scranton,Pa.
2 ,185,283
465,776
373,857
233,650
112,571
Kansas City,Me.
Denver, Colo.
Omaha, Nebr.
248,381
213,381
124,096
DISTRICT NO. 11:
DISTRICT NO. 4:
DISTRICT NO. 12:
(*)
Cleveland,Ohio
Pittsburgh,P a .
Cincinnati,Ohio
Columbus,Ohio
Toledo,Ohio
Dayton, Ohio
560,663
533,705
364,463
181,548
168,497
116,577
(*) San Francisco,Cal.
Los Angeles, Cal.
Seattle, Wash.
Portland, Ore.
Oakland, Cal.
Spokane, Wash.
416,912
319,198
237,194
207,214
150,174
104,402
DISTRICT NO. 5:
(*)
Baltimore, M d .
Washington, D.C.
Richmond, Va.
558,485
331,069
127,628
This list totals 50 Cities.
Note:
-DISTRICT NO. 6:
(*)
New Orleans,La,
Atlanta,Ga.
Birmingham, Ala.
Nashville, Tenn.
339,075
154,879
132,685
110,364
Federal Reserve Cities
are marked with (*).
(Exhibit A)
(Sheet No,2 )
LIST OF CITIES IN UNITED STATES
HAVING A POPULATION OF OVER
FIFTY THOUSAND
BUT LESS THAN ONE HUNDRED THOUSAND
Classified as to iFederal Reserve Districts.
DISTRICT NO. 1:
Hartford, Conn,
New Bedford, Mass,
Lynn, Mass.
Springfield, Mass.
Lawrence, Mass.
Manchester, N.H.
Portland, Me.
Holyoke, Mass,
Brockton, Mass,
Pawtucket, R.I,
DISTRICT NO. 6:
98,915
96,652
89,336
88,926
85,892
70,063
58,571
57,730
56,878
51,622
Savannah,G a ,
Jacksonville, F1&Mobile > Ala,
DISTRICT NO. 7:
Des Moines, la,
Peoria, 111.
Ft, Wayne, Ind.
Terre Haute, Ind.
South Bend, Ind.
Springfield, 111.
Saginaw, Mich.
DISTRICT NO. 2:
Yonkers, N.Y.
Troy, N.Y.
Utica, N.Y.
Elizabeth, N.J.
Hoboken, N.J.
Bayonne, N.J.
Passiac, N.J.
79,803
76,813
74,419
73,409
70,324
55,545
54,773
65.C64
57,699
51,521
86,368
66,950
63,933
58,157
53,684
51,677
50,510
DISTRICT NO. 8:
Evansville, Ind.
69,647
DISTRICT NO. 9:
Duluth, Minn.
78,466
DISTRICT NO. 3:
DISTRICT NO. 10:
Trenton,N .J .
Reading, Pa,
Camden, N.J.
Wilkes Barre,Pa,
Harrisburg, Pa.
Johnstown, Pa.
Altoona, Pa.
Allentoivn, Pa,
96,815
96,071
94,538
67,105
64,186
55,484
52,127
51,913
DISTRICT NO. 4:
Youngstown, 0.
Akron, 0.
Erie, Pa.
Covington, Ky.
Canton, 0.
79,066
69,067
66,525
53,270
50,217
Kansas City, Kas.
St. Joseph, He.
Oklahoma City, Okla.
Wichita, Kas.
62,331
77,403
64,205
52,450
DISTRICT NO. 11:
San Antonio, Tex.
(*) Dallas, Tex. •
Houston, Tex.
Ft, Worth, Tex.
96,514
92,104
78,810
73,312
DISTRICT NO. 12:
Salt Lake City, Utah
Tacoma, Wash.
92,777
83,743
DISTRICT HO. 5:
Norfolk, Va.
Charleston, S.C.
67,452
58,833
This list totals 54 Cities
Note:
F e d e r a l R e s e r v e C i t y marked ( * )
84?
848
-
-511-
6-
The question naturally arises, whether this problem
of greater reserves in certain banks than in others should be ap
proached,
(-)
From the standpoint of the population
of the city, on the theory that the banks in
cities of considerable population are more vul
nerable, e. g. liable to a run, than banks in
country districts;
(b)
Based on the theory of the size of the bank,
banks with large deposits being more vulnerable
than banks of smaller deposits; or
5c)
Based on the theory that different reserves
should be kept against different classes of deposits.
For instance, one basis of reserves against individual
deposits, and a higher percentage against bank deposits.
If we proceed on the population theory, we can go ahead
under the Act as it is ; •; or we can even combine the population
theory with that of geographical location, with that <;f distance
and relations of the Federal Reserve Bank as a convenient agency.
If, however, we proceed under proposals (b) or (c), we must ask for
an amendment to the Federal Reserve Act.
It may be said with a
good deal of justice that it is unfair to apply a different rule
of reserves to a small bank in the suburbs of a large city, which
is, to all intents and purposes, a country bank , than applies to
a country bank a few miles further away.
However, this is an in
justice which might be remedied by giving the large city baijks the
right to operate branches in the same city.
If some intelligent solution of this problem is not
found, complaint will certainly be made by banks in central reserve
cities that they are required to maintain reserves on a basis of say
18$ while given no privileges under the Act ( after the three year
511.
- 7 -
period) which do not apply to bank.' in smaller cities.
The-
result is certain to be that pressure will undoubtedly come
to reduce
reserve requirements down to the fifteen per cent
or even to the twelve per cent level.
Already banks in non
reserve cities are asking to have their reserves reduced to
nine per cent,
Seventh:
In order to show the effect on Federal Reserve Banks of
giving Federal Reserve Cities the designation of Central Re
serve Cities as provided in Section 11 of the Act, a table has
been prepared showing the ratio to capital and'available re
serve deposit.-.
This table shows that in New York this ratio
is .• 9 per cent whereas in the three Southern Districts, ex
cluding special Government deposits of $ 5 ,0 0 0 , 0 0 0 each, it
varies from 31,9 to 34,4 per cent,
In order to show what
the effect would be of requiring banks in these Federal Re
serve Cities to carry IS per cent reserves instead of 15 per
cent reserves, all of which should be paid in at once, an
other table has been prepared to show the results of this
designation.
(See Exhibit B & C)
In the case of the Minneapolis District, on account of
the close proximity and great competition
existing between
St, Paul and Minneapolis banks, both of these cities have
been treated as Central Reserve Cities.
850
EXHIBIT
JO
511.
•
STATEMENT OF
CAPITAL and RESERVE DEPOSITS
-alsoPERCENTAGE OF COITAL TO THE CO IIPINED AMOUNTS OF
CAPITAL AND 6 5 # OF RESERVE DFPOSITS
(Figures ao of December 1,1913)
(In thousands of dollars)
Federal
Reserve
Bank of
Paid-in
C?.pital
BOSTON
5,171
NET YORK
1 1 ,0 6 1
Roserve
Deposits
Percent Paid-in capital rPorcentage of capital
plus 6 5 ^ of Re :to sum of Capital and
Rcservo
D o d o s its serve Donosits :65# of Rosorve Deposits
65
1 7 ,7 1 !*
2 2 ,8 8 5
22-2
1 7 1 ,11+1*
111,21*1*
1 2 2 ,3 0 5
9.0
27,252
PHILADELPHIA
5 ,2 7 c
23,72S
15,U23
2 0 ,6 9 3
25-5
CLEVELAND
5 ,9 3 1
2U,U36
15,883
2i; 811*
2 7 .2
RICHMOND
3,35**
(a) 15, ll*9
(b) 10, ll*9
9 ,81*7
6,597
1 3 ,2 0 1
2 5 .1*
9,951
33*7
(a)12,100
2,1*21
ATLANTA
7 ,8 6 5
10,286
(b) 7,100
l*,6l5
7 ,0 3 6
23*5
3 I4A
CHICAGO
6,6i+l
52,51*5
3 U,1 5 U
1*0 , 7 9 5
1 6 .3
ST.LOUIS
2,750
1 2 ,5 0 2
S,i26
1 0 ,9 0 6
2 5 .5
M inneapolis
2 /4 9 7
13,557
8,812
11,309
22*1
KANSAS CITY
3 ,0 3 0
13,692
8 ,9 0 0
11,930
2 5 .4
DALLAS
2 ,7 5 6
(a)ll* ,0 5 3
(b) 9,053
9,135
5,385
11,891
8,61*1
2 3 .2
17,331
1 1 ,2 6 5
1 5 ,2 0 7
25-9
3 1 3 ,2 2 2
17-5
13 a
SAN FRANCISCO 3-,9*2
5U,85U
TOTAL
Nota:
(a)397,!*89-258.363
(b)302,439 2 h o ,6 1 S
3 0 3 ,1*72
(-) I^c 1..o i v j of $j,jGC,CCO of Government Funds,
(b) Exclusive of $5,000,000 of Government Funds t
Division, Reverts & Statistics,
1/25/16.
31*9
EXHIBIT C.
GJ
511
FEDERAL RESERVE DEPOSITS OF NATIONAL BANKS LOCATED IH THE NINE FEDERAL’RESERVE CITIES NAMED, AND ST. PAUL;
■ ALSO ADDITIONAL RESERVE DEPOSITS REQUIRED IN CASE THESE CITIES ARE MADE CENTRAL.RESERVE CITIES.
(Figures in thousands of .dollars taken from-Comptroller's report for November 10, 1915)
Net Amount
on which
■reserve is
coimuted.
BOSTON
*
Reserve
required after
Nov. 16. 1915
Per ct.
Amount
Due from Federal
'Reserve Bank.
Nov. 1C. 1915(a)
Per ct. Amount
313,195
2.95
99,253
4
363,144 '
3.50
12,713
CLEVELAND
88,778.
3.16
RICHMOND
31,34e
ATLANTA
'
Reserve required
if the cities
named were made
Central •Reserve
Cities
Per ct.
Amount
Excess ovsr amount
required after
Nov. 16. 1915.
Amount
Per ct.
Excess
over amount held
on Nov.. 10.1915(a)
Per ct.
Amount
12,528
7
21,924
4.05
12,671
.3
9,396
■4
14,526
7
25,420
3.50
12,707
3
. 10,894
2,801
4
3,551
7
6,214
3.84
3,413
.
3
2, G53
. 3.23
1,027
4
1,274
7
2,229 .
3.77
. ^1,201. .
..'3
955
23,659
4,58
1,084
946
7
1,656
2.42
'572
.3
710
ST. PAUL
'
MINNEAPOLIS
68,749.
82,175
2.52
2,66
1,733
.2,188
4
4
2,750
3,287
7
7
. 4,812
5,752
4.48
4.34
!3,079
3,564
3
3
2,062
2,4.65
KANSAS CITY.
84., 377
3.55
2,994
4
3,375
7
5,906
3.45
2,912
3
2,531
DALLAS .
24,152
3.34
806
4
966
7
1,691
3.66.
835-
3
725
142,084
2.69
3,827
4
5,683
7
9,946
.4.31
6,119
■3
. 4,263
TOTAL •
For nine F. R.
Cities and St.
1,222,161
Paul.
3.14
38,426
4
48,886
7'
85,550
3.86
. 47,124
3
.36,664
PHILADELPHIA
SAN FRANCISCO
(a)
’1/25/16.
.
4 .
As shown by Comptroller's report..
@FedFRASER