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X-613
~
PRESS STA'l'bENt - ~NING tm'YSPAPERS JA.NIIARY 1J 191~.
THE FEDE&L RESERVE SYSTEM UJ 1917.
(Federal .Reserve &lleti:r.. Ja:rAAary 1918.)
In revieWing the year Just closed, the country can not
but regard with profound satisfaction the part played by ita. ba.nking system under the leadership and with tho suppOrt of the federal
Reserve Ba.:nks. The way in which the Federal Besetve System bas withstood every test to which it has been subjected shows the wi~domwith
which it was conceived; the foresight with which it bas been develop•4
and the strength wUh vilich it ha.s been adminstet~d; ir~ it the country
possesses a financial foundation of unrivalled selidity.
The Federal Reserve Banks t~ve taken their place in the
.A.rr.erioa.n f ina.ncial lyatem; they are the keystone of the Oa.nJd.ng arch.
Financing, of the war has,~ howeve-r.; placed unexpected and
heavy burdens~ not only upon the Federal Reserve ~nks 1 but on the
banks of the 4o~iry generallJ. The zeal and effiCiency with Which
they have t!l)SJ)OJaded to the call n:ade upon therL is evidenced by the
results which have ·been achieved in a year which will forever be a
uemorable o~e. Under the leadership of the Secretary of the Treasury~
the banks have done their duty admirably_ in placijlg both the short and
lcmg term iiocurities of the Governrr.ent. As long as the war lasts their
sarvices ir~ th6se ~irections will doubtless have to be relied upon in
the future a.s much as in the past. But there are other services of
equal, if not of greater consequer.ce· i::• .the successful final:lcing of the
war in which the help of the banks of the country will be ~eeded. In
extending a word of greeting to its member b~ks with the opening of the
new rear and as we appro&ch the threshhold of~our second year in the ~r~
the Board feels it proper to point out certain fundamental methods in
which it believes the banks 'ca.n help i1:. »la.cir,g the financing of the war
upon a fo~~dation of unshakable strength.
~ar financing in the last anal]sis l'llB&.na putt.ir.g tht Government in possession of goods an~ services. Fi:.>.lnci.r,g by J.oaL.s means
the sale· to the GoverrdOOnt of goods on credit. To wir. the war, our
Government and the Governments with which we are aseociated must have
goods and services. It is of as ~uch ~port~ce~ therefore 1 that the
Gove~At should be helped to obtain tho goode it requires~ as it is
t~t it should be helped to procure the credit it requires with which
to pay for goods. In neither respect are the American people as yet
co.ope.rating to a suf .ficie;lt dogroe; prilra.rily beoa.uee tboy have ~ot yet
been adequately impressed with tho param~t import~iCO of their cooperation - they have not yet been Dada thorougnly to real~ae the fact.
X-613
- 2 -
that the success or failure of the war -in brief, the fate of the
country - lies in their hands. In the g~at work of educating the
people of the country to an appreciation of their part in the effective
conduct of the war 1 the banks of the country have an opportunity to make
themselves leaders. In the corrmmi ties they serve 1 they should endeavor
to make it clear that the anount of goods th~t cau be produced 1 even in
a country as large and as rich a.s ours 1 is limited: that saving 1 therefore1is necessary a1~d th~.t by saving goods the people are serving their
country in four ways:
(1) They er.<:.ble our ow-n GoverniLent and our allied Governma:.ts to obtc..i:~ tho goods required with tho requisite speed. As everybody kaoffs~ tirr.e is a most import~nt factor at this juucture. Coal 1 copper 1 steel 1 ar.d food stuffs are cases in poL1t.
(2) By saving goods ~ot require~ by the Government they re~
laase corresponding quanti ties for export to otha r countries in exchz..nge
for which needed supplies nay be secured. To illustrate: if everybody,
i.~ tho United States would cut down consumption of cotton ar:.d woolen goods
even to a. .slight ~ount 1 goods to the value of ndllions of dollars would
be available for export and could b~ rrade the basis of exchange to pay for
much r;.eeded supplies of copper and nitrates for ·ourselves ani beef and
wheat for the use of our allies 1 obtained in South America...
(3) By co1.surni::g goods in s:rraller <:.rr.ounts 1 not only are goods
saved but money is saved 1 and the people thus put in a position to absorb and pay for the war loans of the Goverruumt out of savings.
( 4) By dimL1ishing the consUtLption of goods and by paying
for Government bonds out of savings instead of from funds borroweQ from
the banks 1 both the r~pid rise of prices of goods is retarded as well as
banking inflation, which accelerates the rise of prices.
It can not have escaped the attention of the banks~ that 1 since
the beginning of the war 1 deposits have increased at a rapid rate and
that loans 1 discounts, and investments have gro-vn at ar.. even rr,ore rapid
rate. It is true that the Federal Reserve 1 s holdings of gold have also
increased to a point where they c;;.:-e larger than those of any other country
but the percentage of the gold rest:rves against deposits and notes has
decreased. This is a farrdliar phenomenon in tiree of war and to a certai~ ~xtent perhaps unavoidable 1 but it rr.ust nevertheless be our constant
concer~ to keep every dangerous tendency in th~ banking situatio~ under
control and particularly to retard the too rapid expansion of ba.uking
credit as far as this can be done without jeopardiZing the main business
of the country at this tirr~ - the winning of the war.
"
.
X-613
- 3 are however every day making it clearer that the
co:userv~tion of our f ina.;;lcia.l strength is not ot it':'elf sufficient
to in~ure a. succesaful fin.;..ncing of the war. The hna.uciug of the
w~r is only in part a ~~ney proble~; in very large part it is an
oCOQowic problem - a proble~ of consetvi~~ the econondc as well as
tha financial strength of the nc:a.tion and developing our resources and
productive power to the point where they will be equal to sustah. tM
great military oparatious ~.rhich are in prosp\)ct and all that is incideut
to them.
Eve~ts
th~t
Nobody Should~ therefore, consume goods except to the extent.
thair consuaption is nacessary to maintain he•lth anl vigor.
Nobot1 sh~lli draw upor. the credit resource~ of the country
except to finance trar..eactions which are essential fot a natiO':.. co.t war.
Credit should be saved as rr.uch as goods.
Cons3rvation of creJ.it as regards non:-esser.tlal enterprises is
in order to provide, without undue expansion, the oradit required b7 the Governnent and by business essential to the success of the
war and the well-being of the country.
necoss~ry
The Board n;ost earnestly invites serj.ous consideration of
thase and kindred stops in tha developxr.ent of a-program of llatiou.l
aconomy and bespeaks the cooperatio~ of all the banks of the c~ntry
in behalf of their adoption in their several c~nities. the banks
are urged to teach ir. their districts the neaning and necessit7 of
saving ani its relation to the successful fir~ncing of the war; to tall
the city nerch&Rt and thi country storekeeper th~t this is not the time
to ~uy ar.d stock up .. especially with luxuries. Let the people every.il'here bs eucouraged .to consurrAJ fewer things a.:n.i lat those be the simple
and substa~tial things that are necessary to health and strength. Let
the public re~lize t~t it is ~ore respectable iu such war times as
confront us to bo seen in old clothes than in newlones. Let the ~ks
tell the paopla of th~ir c~nitics and th~ir ~uthoriti~s 1 the nayors
and governors, th-t this is not the ti~e for cities to be spending moner
on public works., rather should they be consUering the suspension of
existin6 work with the view of ral~~aing men and ~t~rial for tha use
of the Governn.ent and so as not to con.pate with the Government for the
savings of the people 1 thereby we~kening the ability of the Government
to place its loans.
X-613
••
- 4 -
There is neither ""n 1.mlir..ited supply of ri.en or of ~oods or
of credit. This is 1 therefore~ the t~e for both lar&e ~nl snall enterprises) not .;mg:l.ged in the production or hc:a.ndling of essentiz.ls, to
reduce inventories and thereby free goods and proeuctive power and
banking credit for essential uses.
Gig~ntic opeations of the Governrrent will cause a further
of bank deposits ~nd loans. Our credit structure should therefora be strengthened as far as possible and to this und tho banks should
bend their efforts toward three things:
gr~Nth
(1)
Absorption of governnbnt loans by
s~vings;
{i) Conservation of credit for public ~nd otheruses vtith curta.ilrr:ent to non-essential enterprises;
~~eential
(3) Increase of the gold holdings of the Federai Reserve
Banks so as to naintain an adequate basis for our growing credit
structure.
l::..ttor
The~/ results c~n be achieved if the b~nks ~nd the public>
like those of ~ngland a.nd Fr~nce - and Germany as well • unite in a
determined effort to concentrate gold and goli ce~ificates with the
Federal Reserve ~nks 1 usini Federal Reserve notes instead ~or general
circulation.
We mlst look to the future 1 and prep21.re unceasins;ly for
denands which ~Y be n~de upon ds. The President of the UniteJ
States 1 in a staterr:ent issued on Octobor 13J called ~ttention to th~
fact th::..t "the ext(.,nt to which our country can Nithst.:;.nd the financi~l
strains for ·Nhich we n:.ust be prepared 1 w·ill depend larg.;;ly upon t~
strength and staying. power of the Federal Reserve B-nks 1 11 <i~.nd urged
the in•portance of developin~ to the naxinun. de&r~e our banking power 1
and of providing fi~ncial nachinery adequate for the very great financial requiren:ents imposed upon our country by reason of the w-a.r. He
pointed out th~t all b~nks should cooperate in strengthening the reserves
of the Federal Reserve System1 thereby enlarging the nation's banking
power. The reserve requirerr;ents in a few States practically prohibit
the cooperc~.tion of State banks an~ trust con.p.:.ni:e~s with the Fejera.l ~
ssrve Systezr.~ and nake it in;possible for them to exchange their Federal
Roserve notes for gold 1 ana the Bo~rd would urge St~te banking institutions in these States to endeavor to obtain such lebislative action as
will enable then; to discharge what the President has termed. a. "solemn
obligation". In those States where the legislatures do not meet for a
ye~r or more~ the banks n~ght well petition their ;overnors to call a
sp0cial session of the legisl~ture. No st~te can ~fford not to do ita
iull d·uty at this tin.e in helping the national cause.
furth~r
The Bo~rd therefore ventures to call upon the banks, nember and
each in its co~unity to join in promoting and carrying on a
campaign of educ~tion alons the lines which have been iniicated 1 confiJent
th~t it may count upon their willing and effective cooperatio~
no~~ber,
12/29/17
!-
~
'·
5
.....
1-624
PRESS .STATEMENT ... RELEASED FOB L!Ql\NING PAPERS JANUARY 1 ·, 19J.a_.
Bankers and
others.havin~
coupons to coll@Ct, due
J~nuary
l., 1918; for foreign indiVi~~ls., finr.s, corporations., or
oth@rs.,
~re
not required, until further notice, to obtain
li~
censes tro~ the War Tra•e Boatd o~ authority frQ~ the Fe4erai
Reserve Board in order to nake eUch c~llection;
J.ny funds so received which the collecting
P&OViDED,
~zency
that
has re;;.t'on
to believe are the property of an enemy or a.Uy of an enemy,
or wil1 be used for. the benefit, llireQtly or indirectly., of
an enemy or all] oi an
ene~y, ~st
under notice to the Alien Propertr
be
hel~
in
CU.stod~n.
sep~rate
account
6
W, P, G, HARDING, 80YIRNOI
PAUL II. WARIUH, YICI fiiOYIUOI
FRIDIRIC A. DILAllO
ADOLPH C. II ILLER
CHARLEI S. HAIIUN
'IVILLIAII Iii, llcADOO
SICII'IAIY OP THI TIIAIUIT
CIIAIIIIAN
JOHN SKILTON WILLIAIIS .
COIIPfROLLIIl OP 1'HI
FEDERAL RESERVE BOARD
CUillllll~Y
H. PARKER WILLIS, IICOITAIY
IHERIIAN P. ALLEN, .UIT. IICltiTAIY
AND FIICA~ AUNT
WASHINGTON
ADDRK88 Jlt•PLY TO
PIIDIIRAI. RUIIRVII aCUiftD
DIVISION OF REPORTS AND STATISTICS
X625
Jan'U51.ry 2, l9lS.
..
Dear Sir:
find 9 sh13ets showine; Llova•
r;;.ent of discount rcl.tes durinb th-3 ciJ.lend.:.\.r y.:J..;.r 1917 in all BeEnclosed herewith
pleas~
serve districts.
Kindly &va the
to
yo~ Bes~rv~
turn
approv~d
r<.~.tes
4nd d.:&.tes of chant:;a
district checked
Qb~inst
or corrected sneets to our
your
,~;ert.::t.inint:;
r~or~s ~d
S~tibtical
ra-
Division
for insertion in the forthc~lint; a.mlua.l reJ?ort of the Federal
Ras<3rve Board.
An aarly caal:>liMOO with this requust will be appreQi-
ate d.
Respectfully•
Assis~t
Secretary.
Mr.
Federal Reserve .Ae;ent
•
l-627.
.Ea.nta.
7
The follaning is forwarde4 tor ~ tnfornation of Federal Reserve
other statenents !rom the War Tradt Loard will be sent out as received •
, WAR TRADE J::OARD
lti\5 K Street, N. W,
Washingtcn.
Janua.%7 3, 1918.
Mr. She~n Allen,
Federal Reserve Board~
Washington, D.
c.
Dear Sir:
ln accordance with what the secretary of t~e w~r Trade Board) Mr.
Be,nnett 1 said to you over the :t-elephone this a.!ternoon, 'I am sending you a
copy of two press notices vrmich we are releasing for publicat:.on tomorrow
morning, Md ho,Ping that JO'\l wH1 find it posdble to get special financial
pt.lblicity for them, by wire, to your JDerober banks. We are sending cop:l.es of
the sta.tett.ent~ to a select list of bank• (s'applied b9 us by the Comptroller of
the ~reasurr); on our general nailing list.
I hope to have the pleasure of talking over this n:atter with you.
personally before long.
Very truly yours,
W.A:R TRADE BOARD
By
LOUIS E. VAN NORldAN
Chief, Division of
Info~tion.
the War Tr~4~~ Board announces that the following concern has been
removed from ths Enemy Trading List:
Flack & Son1
~xico
City 1 Mexico.
·The Board further ann4>unoes that the following correction should
be acts ia the list; naa.ely, 11 Nicolas Castano, Havana.1 Ol.tba." ~ should be
changed to read "Nicolas Castano 1 Ca~otillo 1 Cisnfuf{;os, Cuba".
Released for publication. Janaary 4, 1918.
* * *• • • * • • • • * • • • * • • * *• • • • • • •
!be War fra"' Board batt issued the following annountemertt:
The War !l'ra4e Boar4 has autboHud br.a.nehel. t>l Ameriaan cor,Ptltat:ita8
Otber Ameri~an ho11ses established and engaged in bueriness in neutral colinttiea ana :l.n countries associated with the Uni-t-ed States in 't.l'l~ war tQ accept
•4 »&1 dr.att,e, t() 4~4\teto $111b4~, Warehwse4.. or otherwise stored.J and to pertoN oibit atili'41ar aats, notwithstanding such a.ets may involve trading with
1tenelliie•" or "allies ot enemies 11 1 when wch acts are necessary to prevent a
breach or violation of a. law or corr.mercial oblige.tion enforC~:~.blc in the courts
of ~he cQ.\ntry in which such branch is established; f.ROl!I:JEP,.., HOW~,1E.E,
(l) That nothing herein ~ontained shall ba held or cons";r!J.ed to auth·orize
said corporations) houses or their branchas" to hereafter ~no.erta.Jre or enter
,ll}to ~Q~:rtraqts o.r budness or cotmJeroial tranDa.ctions which will intTo!ve tra.ding With "enemies'' or ''ensmt allies 11 in order to carry oat or perf.r)rm trie same;
~
and
!l'ha.t evert case involving transactions of tra..d:tng wH.h the 11 enem:r"
or "ene.o:.:r allies" be reported to th.e War Trade. Board '"rithin thirj;y(30) 0.<\fS ·
.rtel" ths occt~rence
thereat, \lpon a. form to be furnished by the Wa.l' Trade
Board,
.....
"
. (2)
.
"
'
.,,...~tor poutatton
'
'·
<. ; · · ·
·'
>'-lt~t·•/'J····
; ..l~ '!'~~~' <! ..
1
•
J"a.maur
·~
1t1s..
X-628
Ja.nt.l.a.IJ 4, 1918.
STATnENT FOR THE "?RESS.
The la.w
reqt~ires
that the Federal Reserve
ing all necessa.r; expanses, tog$ther
ba.nk_s~
after pay-
~th 6~ c~la.iive divi~ends
to
their stockholders, shall carry one-half of excess profits remaining to
thJir surplus fund until the surplus amounts to
4o%
of the capital, and
shall pa.J the othe-r half of excess profits to the United States G"vern~nt
as a franchise tax, the entmre excess prvfits to be paid to the
Government.after the surplus of a Federal Reserve bank reaches
its capital.
4Q%
of
The Federal Reserve Banks of Boston, New York, Chicago,
Atlanta., Richmond, and W.nnea.polis ba.ve ;paid their dividends to stockholders to December 31, 1917, and have today paid'into the Treasury of
the United States as a franchise tax the sum of $1,l34,234.4S.; the
~ounts
being paid by the banks as follows:
•
Boston
New York
Chicago
Atlanta
Richmond
Minneapolis
$75,100 .. 00
649,363.57
215,799.18
40,000.00
116,4'71.73
37,500.00
These banks have also established on their books a surplus
equal
..,
fun.i in amounts/to the sun.s pa.id the qov~rrll"Lent.
.-.. ........
.......
...................
........
..............
...... .........
.............
................
...........................
-
AMUt~c..m.ua
.....................
ICMUI SUUOII wn.uAIII
FEDERAL~
-
.............
•• NIIDftUI.......-
RESERVE BOARD
. . . . . . . P.AU.D.Mif.~ •
WASHINGTON
January
5~
l918.
bear Sir:
I m autbonaa4 b7 the Secret&t7 of the
treaeury to make the se,ond allotment ot funde ~ for
expenclituros b7
Sta·~f'
D;rectora in conAection with
the War kvings damte:iga.
amounts ie
t~.oo~ooo
7h9 allotme~t 1n gr0t~s
for the wbole
the first allo·tment of I<Wember
then has been a
801118
of
sli~t ~hanga
tho Stat&G.
be haDdled
191'1~ o,nd
W38
ar~
cot,ntrr~
22~ 3.91'1~
in the
tbe same as
although
dietri~rti~
in
:!h$ mmn~r in which VWI!hera ehould
doecribBd in
ur
letter of
lov~r. 26~
more particularly .stated in trea.ourt
Jle,.na.nt Oircnla4'" No .. 97 I d&te4 lovember
sa.
1917.
I inclose ·herewith copy of this second al·
lota:ent.
ActiDg
Cbatr.man~
War Savinp COIIIDittee.
X-632.
WLR SAVINGS C01.J:dTTEE
Second Distribtction 21. Ex.pen.ruL Fund Allotrr.ent.
Basis: $500 1 000 1 allotted on basis 0f populati~n at rate of $0.00475 pP1'
unit of p;.;pulati~n as estin.ated bv Bureau d_ Census fur Jul-, 1.19&7.
Mr Harris' District (Bostor. and NeJil' York Federal Reserve District~)
Initial
Bust \Jn
Estirr.ated
Expense
District:
Populati.:.,n
Allutnent
C.:.,nnecticut
1)334)864
$ 61340
3) 7'25
•
Maine
7841216
1assachusetts
18)542
3J9J3)684
New Han.pshire
2)116
4451613
I\hode Island
3)099
631J505
Vern.unt
1, 753
368,260
!_c;tal B\Jston
6)836)637
$ 34 1 !:175
New Y...;rk
District:
New Jersey
New York State
New Yurk City
T ot.al Ne..1,v York
T . . tal Mr. Harris' District
- --
----
------
311201488
(
(1.,.,785)854
13) g.)6J 342
21.,3741484
--- -- -
14)822
25.,000 (State)
26,203 (City)
$ 66)025
$1011600
Mr. Lyon's District: ( Phil..:.. dalphia ana Cleveland Folleral Reserve Districts)
Philadelphia
District:
Delaware
2341.219
11112
Pennsylvania
27 1 483 (East)
81 6831'728
13,764 (West)
81917)947
$ 42~ 359
Cleveland
District:
Kentucky
Ohio
West Virginia
Total Cleveland.
Total Mr. Lyon 1 s District
2,.,4:::!5,.,460
5,.,261 .. 384
1.420.151
11 .. 520
9,~106.,995
$ L13 1 256
$ 85)615
18.,024 . . 942
24 .. 9Sil
5, 745
Mr. Marx.' s District: (Richn.unl and .Atlanta Federal Reserve Districts)
Richrr.cnd.
District:
Dist. uf Columbia
369)282
lJ 7 50
6)5,)0
lfl.aryland
1J 409) 415
North Carolina
11) 500
2)433,782
Swth Carvlina
8 .. 138
1 .. 646,6'*5
10,500
Virginia
2.25"t,l37
Total Richn.vnd
8) 113) 261
$ 38,388
- 2 -
Mr. Marx's District:(Rich~ond ani Atlanta Federal Reserve Districts)
(Continued)
Atlanta
$11,300
District:
Alabana
2,381,326
6,5J0
1,031,373
Florida.
12,000
2,875,2u4
Georgia.
9,100
Louisia.11a.
1,864 .. 524
9,500
1,995,495
Mississippi
lJ.. JJO
Tennessee
~_,.aa8..~. 1 z~$5~,400
12,476.,651
Total Atl~r_.~a
Total Mr. Marx 1 s D;lstr::i.c~
20,589.,912
$97 I 'TBB
---
Mr. Riley's District:(Chicago and
Chicago
District:
Minneapolis
District:
--- - - -
Y~nneapolis
$84,269
Minnesota.
Montana
Nortb Dakota
South Da.kc·ta
2,331,341
472,967
664,625
605.179
4,074,132
21,636,907
$11,500
3,000
2,000
2.000
$18,500
$102,769
Mr. Fleming•s Dietrict:(St. Luuis and Kansas City
Arkansas
Missot\ri
Total St. Louis
1,776,457
Colorado
Kansas
Nebraska
New Mexico
Oklahoxra
Wyoming
Total Kansas C.ii!.
1,014.,178
1,688,858
1,296,006
349,920
2J315.,178
Ialla.s
District:
Texas
Total ~.H
Total Mr. Fleming's District
....... - - - - - - - - - - -
~
Federal Reserve Districts)
$30,000
13,000
12.,269
16,000
13 •.,:2~
- -- - - - - -- - - - - - - - -- - - - - - - - -
Kansas City
District:
- - - - -- -
6,275 .. 779
2,916,193
2,376,526
3,458,186
2. 536,_Q91
17,562,975
T ota~ Mir.neg..ru!1.;Lft
St. Luuis
District;
-
Illinois.
Indiana
Iowa
Michigan
Wisconsin
Tctal Chicago
Tcta.l Mr. Riley's District
,
~
- -
-- ----- -
a~d Dallas Federal
Reserve. Districts)
3.54~.219
5.,325,676
$ 8,000
16.000
$24,000
7,006,472
$ 6,000
8,000
6.,0JO
3.,000
10,000
1.273
$36,273
4. 574. 24_Q
$'10.000
16,906,388
$60;273
}:42.33~
------ - - - -
x... b32
- 3 Mr. Bradl&y 1 s District: (San Francisco Fed.eral Reserve Bank District)
San Francisco
District:
-------
$ 1,250
Arizona
263 1 768
California (North)
California (South) 3 ~ 038 , 322
Idaho
446~577
Nevada
111,284
O~egon
862,239
Utah
445 1 196
Wash:'cngtrm
l, 55t}.J308
T_q_~~l 2g,_n .f.:r'0{Jt~~-~Q. 6J 728 .. 214
9 1 500 (North)
5~500 (S_,uth)
1,000
1~000
4,000
21000
7,705
$31,955
---
District alluted
tc.. Federal Director:
Mr. Barris
Mr. Lyon
Mr. Marx
~rerri torz
F ~li· Districts
B0ston
Ne-,v York
TrJtal
Population
Jttl! J. 1 Hl7
6,836)637
13, ~06,342
21,374,454
Phila.:lelphia
Cleveland
rt'vtal
91106,995
Riley
Mr. Fleming
Mr. Bradley
--
Initial
Expense
Allotment
$ 34,575
.66,025
$101,600
~
18.,024)~42
8,113,,261
12. 476~.. §_51
20,589,912
$ 38,338
59,400
$ f:J7.,788
Chicago
Minneapolis
Total
17 .,562, 975
$ 84,269
4.074.13~.
18,500
$102,769
St. Louis
Kansas City
Dallas
Total
5,325,676
7,006,472
4. 574,240
16.,906.,388
Hichmond
Atlanta
8, ~·P'7 I
~47
21.,636,907
$ 24,0CO
36,273
zo.ooo
$ 80,273
31 955
San Francisco
6, 728, ;ill4
~-.J--
All Districts
Grand Tutal
105,260.,847
$500,000
- - - - - - - - - -- - -- -- - - - - - - - - --
1/5/18
~
42.,359
43,256
$ 851615
~c~tal
~:
---
-- -
q.
~
Ex~OP'FICIO MEM8J:R•
W. P. G. HARDING, GOVERNOR
PAUL M. WARBURG, VICE GOVERNOR
FREDERIC A. DELANO
ADOLPH C. MILLER
CHARLES S. HAMLIN
Wll.LIAM G. McADOO
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAfiiS
COMPTROLLER OF THE CURRINCT
FEDERAL RESERVE BOARD
H. PARKER WILLIS, SECRETARY
SHERMAN P. ALLEN, AsST. SICRETARY
AND fiSCAL AGENT
WASHINGTON
ADDRESS REPLY TO
FEDERAL RESERVE BOARD
'
X534
January 7~ 1~16.
Dear Sir:
In order to con.plcte our records of r;;.omber
banks' £ata furnishei in your weekly statanent~ r-dll
you kinily furnish us with the fi::_v.res of special GrJvorm.ont deposits hold by
r;cr"b~r
banks report in,:: t0 you
on Decen.ber 7 ~ the :late uf tho first weekly ropurt, as
shown on the bouks of yvt.J.r Fiscal Agent clepartn.ant, and
oblige}
Yours very tl'1.!lY 1
Assistant Secretary.
Federal Reserve Bank,
X635
RATIO OF "".F.UlAT"' OF EACH FEDERAL RESERVE
JMruAR~
FEDEHli.L
RESERVE
BliNK
DOSTON
.:.•
...•·
.
'
.
CLF.A.RING
HOUSE
EXCHANGES
3.~79
!••
~+,1918.
BANx
TO EAB1UNG ASSETS AliD DEPOSITS,
.
...
..
: • TOTAL
: TO'UL ·
:
:
: :UNcOu.ECTED : COLJS:l:t10ti. :;
... ALL OTHER .i · ITEMS • .i.. · ITJ!MS: .·.. f
..:•' .s!BANSFEBS
..
..
BOUGHT
:. WCOLLEC'H!D ••
•
... DR..
.•
•.
••
:·
ITEMS
CR.
.
.• RATIO OFTO
•· .
'
.
.
: . IIFLC)M!"
..•:·TOTAL~
ING ASSRrS.
TOTAL
"FLOAT"
.
.
··--4
:PER eM
.. RATIO OF ''FLOAT'' ·
. TO IMMEDIATELY AVAILABLE
Alm .·BAliK
...• GOVEBliVJENT
DEPOSI!rS.
.
.
.
.
PER CM.
1S,S5l
22,1}6
15,96o
6,176
8.9
1·3
59.503
77,4n
43,071
}4,4o6
1·9
5-1
28,938
32,189
24,42S
7,f6l
12.8
7·8
PHILA!lEr.PH.T.A
3,251
--......
CLEVELAND
1,178
4000
17.539
201717
13,912
6,805
6.6
5·0
··-·.
12,637
12,931
U,022
1,909
4.J
4.1
14,987.
17,384
10,681
6,703
26.0
15·5
NEW YO:mt.
17.974.
294
RICBMOIID
ATLA.Nr.A.
1,354
... .1.,.()4J
2,544
15,249
20,JS1
38,174
24,952
13,22.2
11.6
,.a
ST. LOUIS
170
~lw5
.16,623
19,198
14,101
5,097
u.o
8.5
MllOO'.APOLIS
....
5.~?5
5.343
l0,46S
3.829
6,63~
27·7
13·5
KANSAS CITY
105
3~17
1;51945
19,967
10,507
9,46o
l.SaT
11·7
6,702
~SS2
lS,668
9.582
9,086
29·5
16.r
1 1 012
2,}35
9,348
12,69§
10,604
2,~
4.8
2.6
31,2~
38,776
.2}1~983
302,007
192.~
lO,,JSS
10.5
6.s
'
CHICAGO
g4.
DALLAS
.
.·
.,
',
·,
·~
SAN FRANCISCO
1'0TAL
'
••••• ·- •••••••••••••• ··-·· . . . . . . . . . . . . . . . . . . ···-··········· . . . . . . . . . . . . . . . . . . . . . . . . . .
~
. . . . . . . . . . . . . .., • • 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
'
'
EX•OF'FICIO MEMBERS
W. P. G. HARDING, GoVERNOR
PAUL M. WARBURG, VICI GOVERNOR
FREDERIC A. DELANO
ADOLPH C. MILLER
WJil.-Ll-Atl! G. MCADOO
SECRETARY OF THE TREASURY
CHAIRMAN
CHARLE~~~ g~
JOHN SKELTON WILLIAMS
FEDERAL RESERVE BOARD
COMPTROLLER OF THE CURRENCY
WASHINGTON
H. PARKER WILLIS, SECRETARY
SHERMAN P. ALLEN. Assr.SECR!TART
AND FISCAL AGENT
ADDRESS REPLY TO
FEDERAl. RESERVE IJOARD
January 8, 1 ;;18.
TJ·.J F~dcral
Resarvc A;:;.mt anJ. thu Guvornvr 1
Federal Reserve Bank of
G-3ntle:::.en:
Fvr sun.etirr.e tho :Joard has been aware of the conplic""teci
systen. of bookkeeping ,'ffiich was r:.ade necessary by the present rr.ethc,.;ds
ir. V'-;;•.1o at rr.vst of tho banks in acccunting fvr CGnn.crcial paper, nctes,
~n~ dCCu9tances ie;vsitod by the banks Nith tho Foderal Reserve agents
.;~.s ccll,at::Jral soCl.:trity fc,r Federal Reserve notes, and redepcsited by
ther.. with the banks :fur colloctiun, The Eoard is convinced that, in
view of the large Vi..lurr.e of business now being transacted by the Federal heserve banks, it is essential that any plan adopted for the ~e~
posit and custody of con.wercial paper with Federal Reserve agents
shoul:i be as elastic as possible, without violating the provisions of
the Federal Reserve Act.
The law as amenued provides that funds and
reserve notes shall be in the jbint control of the Feieral Reserve agent
and the bank.
In Aubust last the Doard sent a rremorandum to the Federal Reserve banks calling attention to the ~esirability of keepinb under joint
custody corrmercial paper and other eligible securities pledged as collateral for Federal Reserve notes~ ani suggested that "it would be
proper~ if desiredi for the Federal Reserve agent to lesignate a senior
en.ploye in the discount or credit departrr.ent as his representativo 1 :::md.
for the bank to appoint a sirr~lar representative to act as custodi~n
of pap0r pledged. 11 The following plan is offered not as a regulation~
but as a suggestion 1 with tho view of sin.plifying an..i unifying the
present rr.ethod of handlin.; pledged paper:
.
X-636
--...
- 2(1)
PLEDGE:
All eligible p~per may be pledge~ with the Federal
Reserve ~gent on the day of discount and £ crthwi th placed in the joint
custody of the Fe(leral hesorve ca.nk a11cl the Federal Reserve agent.
It desired, the Feieral Roserve bank rray designate an e~ploye in the
discount .:lepa.rtn.ont as its representative, and the Federal Reserve
agent rr.::1.y designate the assistant discount clerk., or an en;ploye of the
Federal Reserve agent 1 s Departrr.ent, as his representative., to holi in
joint custody all paper pled~od as collateral security for Federal Re~
serve notes.
'
·•
The Fod(3ral 1\eserve a€,ent x::ust r.ave title to a.ll paper
pledged.. Endorser..ents in blank are adr...issi ble., but notes nade Jayable
to or endorsed by th~ Reserve bank· Lust oo endorsed by the Reserve bank
in blank or spec~fically to the agent.
(2)
bECORD:
A daily record is nade by the heserve banks of all paper
iisoounted or ~urchased. A copy of this recQrd is sent to the Federal
Reserve Board.. At the present tin.e a record. is also rrade on a special
f om giving the m.ur.ber anl face amount of each note pledged with the
Federal Reserve agent. If 3.ll paper is pled~ed on the date of iiscount
or purchas' the follcwi~g notation r:.ay be n:a.de in lieu of the listing
of the numbers and amounts of each separate note:
..
"Notes Nos.
to
(except Nos.
_ ___,..._.) aggregating $
ruoro fully d.ascribed in B. D~
4 and 7 1 have this day been pledged w·1 th the FeC.e ral Reserve agent. 11
( 3)
WITUDMWAL:
la.ta
(a) Items settled for on p~ynant/(incl~ding it0~
pail for :p.rior to xraturity), an.l items withdrawn at;ainst excess collateral previoualy deposited.
It is necessary to list the number of the sefarate
notes., lra.fts., ani bills of exchange Hithdrawn in orler that the at;ent
n:a.y be in a position to trace or ilentify the items.
ag,gregating $ - - - - - - - - -
,
16
X-636
,._
17
- 3-
(b)
collection.
lten.s deliver(!Jd to heserve bank prior to rr.a.turity 1 for
Under the ruling of the Board of April 12 1 .1917, Federal
Reserve agentswere authorized to turn OVdr aaturing notes and bills to
their respective Federal Reservd banks for collection upon the execution
by the bank of a receipt reciting the fact that the notes and bills are
taken :over for collecticn only, and provided further that notes so deli,ered should be endorsed to the Federal Reserve Dank "For collection
for the acc~t of the Feieral Reserve agent."
\
.
Under this ruling in the case of paper released by the
agent to the bank prior to xra.turity anii for which cash settleu:ent is
not received, paper n:ust be endorsed "for collection for the account of
the Federal Reserve agent", if the bank is to consider such paper as
collateralseCl.lrity up to the date of n:a.tu,rity. The agent nus;t be
given a. receipt for all notes so released.
Endorsement
st~p
suggested:
"Pay to the orler of Federal Reserve
::3ank of
for collection for account of
Federal Reserve Agent.
Pay to the order of any bank or banker
·
for collection
Feieral Reserve Dank.
Cashier.
The point has been raiiel that sOira banks object to
Feiera.l a&serve bank endorsen:ents on ·custOir.ers' notes. In such cases
a printed rider with a gumr.ed edge could be attached. to the notes when
sent for collection. It is believed 1 however, that if the sta~mped A~
~orsen:.ent is placed on a.ll notes that there will be few ob}egiion:a •.
~gainst
(4) Com~tation of Reserve and Equalization of Reserve
notes ani deposits.
Under date of December 11 1 1~17 1 in answer to an inquiry
from the Federal Reserve agent at San Francisco, it was stated:
......
X-636.
- 4 -
'Gol.l held in the vaults of the b.:.mks rm.y be
countei ~s reserve ~g~inst Feier~l Reserve notes,
consequently if the rati.o ..vhich the gold held by
. 'the agents plus the bank's reden.ption f\W,d <bears to
the notes in circulation is less than the ratio which
the total Bash held by the banks bears to their net
deposit liabilities, then the bank uay easily equalize
reserves without actual transfer of gol~, by rec~oning
as part of the note reserve a sufficient a~ount of gold
held by it",
1
As a na~ter of policy it would be well for tederal
.
Reserve agents to retain, as part of tfle collateral security for FedOi.
eral Reserve notes an au~unt of gold which will be equal at all tinas
to at least 4G% of the Federal Reserve notes in actual circulation.
As already stated~ the foragoin6 is not a regulation,
but is merely a sugge~tion; it is., however .. desirable., in order to
facilitate the work/8la~ners .. that there be uniforu.ity in the nethods
adopted by all the Federal Reserve banks., and you are therefore requested to con.nunicate your views to the Board before taking steps
to put the propose'd p;J.an into effect.
Very truly yours,
Governor.
£X-OFFICIO MS:MBERS
W. P. G. HARDING, GOVERNOR
PAUL M. WARBURG, VICE GOVERNOR
WlLLIAM G. McADOO
FREDERIC A. DELANO
ADOLPH C. MILLER
CHARLES S. HAMLIN
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
FEDERAL RESERVE BOARD
H. PARKER WILLIS, SECRETARY
SHERMAN P. ALLEN. Asst. SICRITARY
AND FISCAL AGENT
WASHINGTON
~~~REPLY TO
FEDERAL. RESERVE IIOARD
Dear Sir:
Receipt is ackno,Nledged of your letter of the
instant asking whether certain paper would
be eligible for rediscount by a Federal reserve bank.
The i3oard fublishes in the Federal Reserve Bul•
letin irlf omal rulings a.n\1 opinions of Counsel relating
to the el:.gibHity o:r d:Ufex·ent classes of pa.Per. These
rulings al~s ueually rr.ade u_;;;on questions subrr,itted by the
Federal reserve bankt3~ While the general policy of the
Board has been to rrake such rulings only in those cases
which are sub~itted by the banks it has not heretofore
adhered strictly to thh:t rule but has from ti:rr.e to tirr.e
answered specif~,c inq_ui:r::..es subirJ.tted by others with· the
view of giving all interested parties full inforuation as
to the operations of the Federal Reserve i~ct. ~'hila it
still iesires to keep the public fully inforued as to the
operations of the .Act it finds it necessary to aihere rr;ore
strictly to its established policy and not to n:a.ke rulings
on any concrete or hypothetical cases except through Federal reserve banks.
The reGUlations of the Board and its published
rulings and opinions furnish a sufficient ~ide for ~ll
oriinary transactions and the constantly increasing lenands
nade upon the Tioard are such as to rrake it iapracticable to
give consi~eration to exceptional casas other than those
which actually arise in the administration of various Federal reserve banks.
Respectfully~
Governor.
EX·0FFIC10 MEMBERS
•
W. P. G. HARDING, GOV!RNOR
PAUL M. WARBURG, VJCI GOVI:RNOR
FREDERIC A. DELANO
ADOLPH C. MILLER
CHARLES S. HAMLIN
WILLIAM G, MCADOC
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
H.y~RJt§I 1 'VfiLLIS, SECRETARY
FEDERAL RESERVE BOARD
slfiRM~m_LEN,
WASHINGTON
ADDRESS REPLY TO
ASST,SECRETARY
AND FISCAL AGENT
FEDERAL RESERVE BOARD
J.J.nuary 9~ l':ii18.
Dear Sir:
ReferrinG to For.ffi
ready been sent you for
1~5~
a supply of
~istribution
~1ich
has al-
to State n.cn.bcr banks
to be used in naking reports of condition to their rosfeCtive Feleral reserve banks 1 question has been
the
as to
for which infornation as to dividends paid and
p~riod
lisfOsition of earnings is to be reported.
.iividend-~
rais~d
It appears that
periods are not the sa.n.e in all institutions;
·it has bean
~eter~ined
by the
Fe~oral
and
heserve Board 1 accord-
ingly 1 that the practice of National banks in waking reports
of
iivi~ends
~iffarent
and disposition of earninss at the close of their
dividend periols
~~Y
be iolloNed also by State bank
r::ewbers in furnishinG you the re1.. orts for which blanks have
already baen SUP.f'lied to
you~
as aforosai.i.
Very truly yours,
Secretary.
~-64~
~OPPICIOM8M88M
.· -·
'#:f. D. IIARDIN8/8oYUR08
PAUL H. WAUUH,
WILLIAH 8, HCADOO
IICIIIITAIIY OP THI TRIWIUIY
CtiAIRNAII
.ioHN SKILTON WILLIAHI
Y~l
21
410¥UIIOR
PUDIRIC A. DILANO
ADOLPH c;' IIILLU
CHARLES I, HAllUM
FEDERAL. RESERVE BOARD
C:0NPYROLLIR OP fHI QJRRIKCY
H; PARICb WILLIS, IICRITARY
IHIRHAN P. ALLEN, AIIT.IICIIITAIY
AIID PJSCA<. AI. .T
WASHINGTON
ADDJIUIIt8PI.YTO
PIIDI:I'IAL. RUI:RVK IIOAilD
Gentlemen:
Many bo~hereQme lleU.ils :ln connecticm ,91 tll es~blisbing
agencies and sales etaticma for War Savinp Bt.arr.pa aad !hrif' Stamps
have at last been bn.tshed aside by the plbllcation of treasul'J' Departant Circular lo. 96 and. with these 41Uioa<lea swept &aide it is hoped
that we can ncm push Yli thout vigor to succasaful a.ttaiDI'Lent tbe campaign tor war aavings and thrift. Of CO\lr&e tbe federal reserve ""uks
stand ready to do their part, but 1t 'tiAJ not be irr.proper to point ou't
in sirt~e phraseology the eUec:t of the lateat freaeury CircW.ar
(lo. 96) in respect to cash agent• of the sac:ond Qlasa.
·
lo acCCIUDtirlg is required.
It is possible for IQOh acents to avoid aakillg reports escept:
1. When requested to report by tbe Secreta.rJ of the
trea&Ur7.
a.
Upon tentiDatiOD of &genc:y.
3. When an agent in applyilai for &>4ditional stamps aske
for such an amO\IIlt as vriU u:alce the total of stampe
taken by him exceed the aggregate &QUAt sta.te4 in his
origilal ap~loatiGD.
'
Since necessity fwr accounting ani reporting tends sericuely
to minimise the number of agenciea, the cooper&tica of the ledanJ
reserve banta il" urged to the end that &p.Plicanta be requeatecl ill every
· iutanc:e t~ indioate in their~ appllaation _not urelr the ~ of atan.ps
they d.esire to. ta.ke ilm.e.diatelJ lMt the auregate. value of s._,. that
they expect to aell. durin& the/ ent~re year 191&. lf this 88.1&81tion
ia foUORecl• agents wiU not be re4fdred to fill e&at requiaition blanks
or to report until the tei'Dl1D&t1oa of their ageDC:J except \apGD request
· of the Secretary of the 'ln&INI'J•
· Beape&king yO\lr cordial assistance, I am
aoapeotfull.y yours•.
,.
•. 1
'
I
22
aEV.ARXS OF H., ·P,. WI LLZS.
Janu&f7 16, 1916.
I
Jlr. Cha.il"'::lan anJ. Gentlesrent
•'
r.:•nt
tour SecreUI-7 in lnvf_t,ing. Ul8 to. be
tb.ia
rr.cr!Wlg au.:.geated that ~ a;peat to JOO. 1p l'a.oo&al
Prtblea•.. 1 8\ippote 'QJa.t. lae ,..._, 'Uae~~o,a. ~
t)J.la vra.J out oC tbe !a:ogeaeH ol bia hC?JAtalitJ, f.n
&Dt••
~t in a6 'broad a. U.e1cl almO.t
oOLilll. U.u a:A
. ,
agreeable Oon:le'r. l knOW' that, he clicl aot aspect<zr.e to tq
oov,er aU .1.\~.~anoW pJ"Oblerr.a~
even aU. tbat ..,.. pl'e. .•
ing ·tot at,ention at th-e present tiu. lad.he cloa» eo the
dun.ticm of thla Ccmve11t1.cm ww14 b&ve .to be coaawen.b~
extended. I euppoae that the id.eaa' % can to. 'beet &dvutage
present to you ~~ ~torn1ng a.re those whioh relaw. to the
fiu.no:i.al. · probleu bJ wbl¢b . tbe bue:l.ru~·· ·np WJr.eelt is cOD•
':roated
th1a-panicular a011:ent • tbat .ia;.to &&J, thoe
eapacial prol>leq arowuc -· of wr c~.w ~d ore41t
poaitioa 'llhioh :&re I'LO.;t ·preatirsg ~t .\M.I ,\~•
i_,
or
a.'
'
lou have a4l.
.
'
•
.
t
.
·Jt.uth Of ~ueatioatot bcm4 .issue, J,-.u#
necessary ea~ingt. &ad taaatloa, and. he wo..Jlcl 'be. a b44· ...
. Who ~hcul" entieavor to· &0.4.. u,thing to y9U.r oS.»Jonra"• •
these tOpics. ftlore ia, bo1re..er~ a U.e~. 'Oi ~~t 1D-~if
~oo~otion that•has·bad oamp&r.&tive1J lit~e atte~~ioa ~the
br.laineaa m~.o• s ~ direct aacl eepeola.l re~t.~~~ •0'\'18.f
.
hetra;~d
·
Cl-.oing~
·
"'"
··
No point has been more clear11 broupt. ca&t. iD the cOtArae
the dieQWieion of the war~ thia,. ... ~hat...,.,, \be Gofe~
'"u'Qt,. indeacl aU governzra1te, needs ia .no\ m~~atr.":lut 18 au1 .
goods and aetvlc:ee. !he 'bUaiD!I•• rr.ari, lJ.D a~q o\'ts&r~ &ocxl
citiaen. lharea in the t,a.e.k 'Of. fUmiah~ a». 10', 11YUC "'
h~el~ and hi a c:hilcirea to \l3e ee rvloe ot Ule· .Sa\et: • at
h~,. at the asat ot GoYe,..at,or ·in 'the.. fS.l.4. MOPrt4DI
to eepeoW aptitude. JU.t du'f doea n~ diU•r, ~ ..,_,
of &nJ 9'\her good citiaen. · lt.ie b lt\lppltJJ.o&~aMq" ...,._
se"1,ce-e \laat. hie peO\&Uar _., becOP• 4~apl,ou..- .,..
·'~
..
par.en~. :We ~~ adm$t tlaa1 ~& eo0ftoxr4.oal. ~· .QI 0\WlJSMCl. ·
and our rt•~•• U. ~. 1• ••••at~ to ~J auoo_. f.a
the
~'
a&'-
JlOSi~ion, ~t
...
I
"
'
While we fteely -.cln41i ihie. -... Nl .abata• FO•
is true llere,.
in so nany other fieUa, h.t. a ·
a;•
23
.
.
x-64'1
-2-'
..
.
.
............... ·. ..
~
little knowledge is a dangercwt thing. llany rr.isintorpret
the idea of .eoonOUlJ and pettba,. clo as u.ucb bann in their
rr.isinterpretation aa those who reject i~. It ia the business
uan's duty of leaderehip an.i insight in cozmeotion with the
production and co~tion of gooa. ,that• emooUee his particular responai~ilitj at thie ttaa.
The wsiness zran is either a. pro.iuoer., a. listrib\ltor or
.a retailer, and in ::each of these ca.pa.citj,ea he ha.a Ilia OllfD .
individual tunc~ion to prefora.~ .Ae .uai.Nfacturer~ it is incim..bent upon him to ayoid attea.p:tUI · to encourage or even to
u.aintain those f oru of OOUf.\ll.ition· that at'S ob'Yiwaly waste•
f14 ud. ·have a. ten.ienoy t9 J.eetroy irateriale witbO\lt any· cor. responding return. In ye~~r own trad.o., 1011 have not been tree
tnm fault·in this regar4 for . . . ,.,.. pa.at., aDd to the
ordinaf1 ,~, .,. AOUwr..l'. it WOQ1,4 ae1m tbllt the timot.111l
of resu:.\ctiilg the dU t"srent iJpel of boC)ts ~.i .ahia• avail•
able on the :aarkst- to those ~\ are of ear. aet'fi~ a.ncl fall
witJWl the liml1• of· tllt.ti'Aib aense, 1. a.n important one. lve't7
,._atactunr.A~tt., I think, .reoognias '\he J.ut:r of a.ttempti:Ag
to ;,aU.ae Ilia ~Oduetion .to aatiaul. line• .in ~1Gb pablio
oltm¥d .,.. aqus•tioD&blJ .J.egitk.ate a.ncl,. ao !ar tU he reu-. a~r' -., t.Q cuna.u .tbe. pndUOtioa of thoee aniolse wlaioh
are ol1V~wal1 ef a .PV011 lUW'iowa ohara.oter ucl do not
~&!1 101 weu-sranecl ._.. !hie rsspouibilii7 naae ·
tbr'ou.;b a:U. of the -.ra.aea Yfhioh oater· to cUreot J)eraou-1 c.....
INit.J'U•• . too~ atre•• oaa· uarcel7 be laid. u,p• 'tbi•.. reaponaib1lit1 on the par.t. of tbe naDufacturer in abai1n& his 100~a
so ae to C!Anail ~iou aDd wuteful uea1 while at. t.he ·AD'S ti.rr.e
fullT WPP4fin& the nesde of tbe CCIIltUnitJ for aowid. and. staple
~icle•. · ·Jt is perhaps the moat unf ortUD&te eocmcamic ,pl'ase of
the war tba.t at a t.ilr.e when baaio uceasit1ea are eubleot to
gnat 1hortap there is of tea a aups~bunda.nce of .~r~n,.
frecp&entlJ at ,pries• lOiter thaD ordinary. BeoeHP7 ~llfiDNi'W.ea
n~ 1Direquelltl7 rise .£1& RriOo, while lU&Viea 4e~. }~J3e
_abnol'ai!G red.iatrib\&UOD of wealth thtON)l ~·-.of
wages and. through the eaf'fti.q .of UDe&!)8oted. proU.ta f11tl~:·
lRVing 10Ner Gilt of nonral obaDM1a 1D whi~ it ..,.. bNa :.
.exened 111;) raew anl unespeot~ct l~a.. Fonuaa.te&r ~~rera
c:an., U they wil1 1 · oontrol ~ of the vaga.rlet :Gt 'cion~
which are likely to result lnm t.hie state ot a.t.taira, -.a 14
tbs7 an cae ~1 can· ~""eot the comriulu,•a intereet. fl'to
f\l.UJ by w~1Ug tbe1r .qu~pat to lagitilta.~ or aOI'U.\ '"•••
•*t~sa 1 1n tl\8-•az..e •1 ~ retailer, vmots ue\liU eU9" !a
to iaoreat~ C~l'tion b7 tven le · ttinate •viae aaa eva
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artifice~ finds hiaau,· like xr.ost. other peraou, in a. •
position where he is cal.lelu~ t.o glva Mp hie ordi~I'J'
lines of t.hc:ugh1; ani to aaabaU~ate lltW ODes. flle CQIJIIW\1ty
asks hixr. not. to enccura.ge wasteful or ·lwmtiGN c.aelJII)pticm
either thrrugh tbe Q.rl')'illg tf \md1l11 varied tt.octa 01' th.rQlgb
extensive a4Ve1'tiaiflg, 01" thi"Gtlgh the e:&teUiOO Of Wl8GW1d Qredit.
It a.ab hixt tt a.p~ a tat~ zr.ethod of CQflcl\lttiae \'Maines• apd
to aubat~:tute for eoaoepUODI JDrelr 1Bfliv14ual, ;penaoBal aa4
Jr~.,.,~. tba:~ ·ot eertioe to the OGilaudt,J. He.-. beOCIIte ·ee ot
the eha.rmel.• Of diatnbu'ioa'bf wbich the pt.\blio-ie ·to be 8GpiUe4
and auata.bed, &Ad ·b ,perfo.ra4ng this luct~OD·hia earlier ~d
ae~fub stan:lpomta of ccmd111t have been ••t aaiie. It &r.&7 ~.
ta·~ ca.see it ws.u be, ·tru., ~t .iue to the ehaage4.o~1ti~
~~ trade .and tbe·Y. .UJ··bo.....,..; ••o,.. oC cl.-..l his profits will
DOt be ).eaa Oil tbe MW buil '~ UpGI&. the olt, · but tbiS) 10· 'aJU'
ouf, is ODJ.y·aa ~·•• fot·tl\e ••••i.tU• 0£ llie eenolc»
be.~ bec<m.e ·1\lpe&"iOI"· to tl:loaa ot bie ,penOD&l ·~CGU4i
fhi,a. 18 a· daf o!. cov•nur.ental J.Dtederanoe .·~. all·line• ol
\.-:de. ··b-.,p*-'Y ··le<lat£-oa bat acme ,te ........... of . ··leqtl'MI
abr•d, ·aa.i thouch ~o · taave not. ful)J ao ..itecl it. ~·~hit •~try ..
wt baYs tatea ac.e·· deticle4 ate~ ill tba.t U·rectJ,aa. · · GoYel'lli:$1lt · . ·
-.relll.P haa ·ll.re&q. bee~ apJ!Ued
lbet ·aaw ·ie proi01Je4 ·
£a. otben. fet tbere· are ,_.,_.,. • • btll.-e tbat it ·~ en•
'\$r8,1· .Poi•ibl.e··tor· bua&ae18·aa of a a1f'Uilet tr&Aa··o.- p,-ofeteioo
eo;~~. eona.•crt 'thelr:Miuaeea with a.a eJe single to the p~&1G.._
weltan that they·-.u •bWn rel'llt• n,per1or to ti... to be Md·
titrO\lgh the iate ...eaUOD. of CMtticler•• tbls. Ulld&ubteQ.y, ie mon
la.rgeli tJ'\le·of th:a.elbet ot l:Ms~Dt•• wbich nave to ·4• Wi~· the.
aupp1Jing ot. pare~ oonwm,pt'on tbao 1D Oil'ae", &Ai it is, ther•fore, true CJt JW. "(BlAt iD a,pJlJSDs; &faJ &er&el'al. etanPrdt ·of regu•
t.at'oa;·or· ccmt.rol to the iireot1on of b\uine••• noth1za& u 10 .· .
pOw-cniui ani lnflueatial ... lewld arl;i wib atanU.rd•· of 'ia4i'f'.i.~
i"efpDUibUi.tJ~· aD4 ireU.t.. !his :La ttu• at all tJ.Jr.O•• ·bill~ i\ ·1.1 ·
J.oObl.J' ~nae a\ lnOIIill~ like the pre teAt. We eeek ~e. all w.za&t ··
elae· ln' ~irr.ea ot peaO.·; ·bJ ~ uae of .r ••J~eU:tl•e\-.Piaeq ; ·
1<» lni.ns·.abOtrli the. &pponloauot o& aoOcll, •
bu$.1· Of WU. .,
a~_pt:lo;n; to: thoae tQmniDitiee or 1ncU.v1..1lw.le who an e11titlfii\
._o_ tbom1 · a:li vvbo., ~ &CotJ)t111G a.aol ccm8\AD4Dg1 wC.U 1noidentall7 .. .
~Jtodv.c:e the zr.oaae· of p;LyiDg for what. ther bave tlma bee•· allft•l. .. .
ll'cai ·the ge'heral rioa·.
T~ it ie that Va.ga.riee ot •G~r~peti.ti• ·
b&~e ~ tt.u:i• paet. 1ndet4 akoai ioattaatt.l.J, 'b~ a~- d1a•
tur'bo~ cofliiti,~ o( . ._.. . . wbiJil wOI.aJ:l Dot ••• · · levelo»o4
ha.i there'··baen ~ue regard. tot the well&l"e tl tbe 4•ms•n~~'Y· a¢ ttae
~ ..oa;de1" etbitt Qf · ·""''n... ~ ........ 0~ tbe ~iA of ·t.~ ~t ha.Ye
in..-,
•be
.
been the result of unsouni crelit wi~ely exten~e~ and as the
result of c~petition betweea sellers of goods which leal them1
in thoi·r anxiety for prof iS., to foster undue expansion of denand
ana cons~ption~ Such ~iaturbances of nor.mal oonditions are always to be deplored, but at the present tirr.e they are worthJ of
the most seri~s reproba'i~. ~ch as we are in the habit of
insisting upon econ~y in the consuu~tion of goo~s, we have had
comparatively little to~ aar with reference to the parallel economr
in ths use· ot credit aa extended both by oo~rcial houses and
_banks. Yet it ia this very eoon~y of credit that lies at tbe .
root ol all tne ecoc011:1y in goode. The business Q.D who estab•
lishea a careful cbeot up~ the credit o~ his ouat~rs and who
in every transaction is gOYerDOd bJ aoullQ sian~48 ill h.S.a
estinate ot the ~t of oredit to be exten4ed 1a aot QD17 pro~
te Qting hin.sel~ aga.in•t the t~e wbe~ ohangeli #oadi:tiou w.t.ll
supervene, but is protecti~ the co~it7 a~~ oxtr&vagaace
on the part of ind.ic~dUals iL8 well a.s a.ga.inet ~t f.&pa.ns'OD of
liability which in the 1-.et anaJ.ysieis l~elr to lead to U.aeter.
The den&l&d of tho ~C~Pnt is v.ndw.'bte~J . ftr ~. ut~t watcnfulnees on the part of
~~ 'bo lle ~f•oturel', diatd but or,
or retailer. wltb a vi~w to a.se~ng bimaelf that eYery cn·edit extepded is as eea.r~r l~~uid ae ~ watchful~•• ·&ad 'udgu;ent ca.n
rr.a.ke it~ Carr.peti~.iv~ c;on;U,iou in t~s ,paa\ lJt,ve J,ecl to the
extena~on of ~oag ~redi"• aa4 the abuae of seJ.Uzag teru • .Advance
datinga, ~proper and 'Ul\Oanaecl tisc~ta 1 and ~ ~lt4tude of ether
~oncessions xr:ade for the purpQite of ena~ing ~ ,,reta.~er, ~d
through h~ the conswr.er, to absQf'b goods ~t ~b.ey ahould ~ver
have tak,en, have been the oriler of the ~Ut.y. tbo.e· of ua who still '
believe tn the old econOIIlio ~octriDe of "la1Ne• ·fa.LI:e • believe
that thase wan.leriogs fr- the path SOWlil ·J~M evntuall7
bring their-~ retributi<m and so corr'e9t ~o,vot, 1J'lou.gb often,
it is tNe, at ·a heavy cost to the in~oc~nt u _,.,. at to tlle &Uilty.
The present le no tin;e 1 howevel", to penolt 1 expel"iuntat~on. Every
capable establishrr.ent kn~ a.pprox11:tate~1 the 11114"• of the aafe
and. unquestioud credit of :l.ts ouatOJlJOrs -.nd ~tbq~,ald restrict takings
of goods to the limit
ea~b3.i.B•4· it B!tou.ld. conqede no :levi&...
tion frQm the ~ath tbua narted.
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1 know that there are· ~7 wno reje9t t~il OGI'WI8l beoauu
of the sacrUice it enta.il.s. . There
a~ who ¥.tl,-d~apoeed to
seek ~ 1n.l'fOW~tent ~ the ol:leT s:r.eiho!e ~.fl.!. hO,d.\1 1IJ urelr oballg~
~ t-~l" ,...
~~1 •••m to r.a~OI& ~' !Wl·a}.t.,..~ol). of &J:pou~
~~qe w~~; ee~ tbe ·~ · ~~oe• u a ~S~. i,~ ~-aa, c•d~t. ~
t~~ re(j.'l.,\;re~~~.. of war ti~n.c:ing ab*' ~o a l.a.rg~r sbaro ot ~be
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capital available S.n the financial uarket, there is a iis•
position w the pa.i-\ of buyers to put their pa,Per into a fonn
available lor ~isc~nt at ~deral aeserre Baats in orde~ tha~
it ri.aJ e;ain ~ wider field ot sa.le, a.nJ. nay be .enable4 to take
adva.ntaa• of the lowes~ possible rate offered ~t aQJ _tine. Tbis
!n ~tself 18 a. aoocl developat; ;ye-t ,. ie n.,ost .....irable t~t
in thie process of reahaJ4,1tg the c~ercial Ra.per of the OOYil~I'J
there should be develoP"d a!11f kih:f of pape~ te~ioally elip~e
for liisc~nt but in fact not 1n conf onrl t7 )"11iA. 'til* spi·rl~ an4
purpose of the Fe.lera.l ileeene Aot a.nil of sound baaki~g princ~plef,
I naJ qntioa as an ezan.ple ·of what I zr.eaA• ·the Jlan reoeaUJ 10t
folwa.rd for finu.clng corporat19DIJ tor loaa& ,PtrioU br UlNDI·'~f a.
aeries 9f notea issued ·under an agreeu't aM .Provt41.Dg for IrSrJ'11
renewals. In the same way there has 'bee~ in ICIIIIaJI~n, a.
groath of so-called t&:a.de acceptances 'represent~ ,;.oli or al~
accounts. !hey are., o£ course, no b8tter t~ tbe •r.di'O Wlder..
lyiug the~., artd the Ir~Ste fact that they have 'beeQ. Jl'lt. into fom ,
· whicl'l is int.ende,cl, to suggest l1qu1d1t7 Ul no •1 a4ten their
Qharacter or the danger Whiob a.dher~s ~. t~ ~~illg ol .no.~t
on th.ie basi8. 'lb.,_e years aso, 1i:a' i\a lira~ ae~iea of· Oirtalran,
the Federal .Rosene Doar4 ;!:a14 dcwn ~e p•I'BJ. ',prbci;lea wh!oll
el:l~ld govafQ the exteuion of ban-~ns cr.e41\ ~ ~- t oUowtq
wor4.a;
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re 'luirea nut onlr the bills held. bJ the Fed.•
etal Reserve tanka ahoulcl be of ehQ.I"t and weU. diayi'bu'tecl
Iiatu~itiea,. ,~ i.n addition, ahOulcl be of s.!P obu'aot.r that it
t.a reaacma.bl7 oertaJ.n tb~t the)' oabbt co).+aotej wMO t.bef uat~1'e.
T~y ough\ to be easen\~J •sell.,.liqulat~" or# in other •
worO.s, eb~d, represent in every caae acm~"cU.et.j.J,t ate) Of etage
in the proa.uotive or cU.atlib\ltive ~proc.aa ·tiP ~t .JJOgnaei• ol
goods fr~ producer to co~'·
Tbe ~o~ nearly tbeae ateps
apprOach. the tina.l cona....,r tbe · azralt~ \fill be the ameunt j.%1,.
volved. ,in each tn..neao•Utm a.a )·represented bJ the bill. ani ·tile
~rt autQDiatica.lly aeli•UOiui4ating wfi~ be ita o~oter.
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"J)Q~bie Ja&Zr¥' Jia.PfJr drawn on a. puroba.aer a.ga.11urt an
aotwal sale of goods a.fforda, sroa tbe eoo~~o iOint ol vi~,
lll'in:a Jaoie evi4ence of tile oha.mot,.- ot . the 1Plli••·U011 IP•·
wh~cb it a.ro••· $.1Dgle . . p&Jl&J'. ilCH1.8Q f~tlJ \lattl. J.a.,._.
U~te4.. State••
.f'epl'eeent the fatt.i kind ~', 'tf¥lllt'tJ.._ ,...
t)ioae ~ar.\ni -~o ~· ~·~no!\ a8 # ~aHeVer ~~• ·~• Dlll£8
paper d.~f :nqt ahr::(lt -~ ~ite ~ace tlJe ~ote,l" o.f
..,...,ctiOJ)
ouf' qf whi..P it aroa• ~ an i~ t~Etd wtJa.lt~•. <~d ·~~· ~·.of· pa,per ~
i.'t is ~nCW,L~~t u,p• ~oh Fe\lera'- Rase~., ~~k tQ ~si&t. t~ t~ · ~
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economic nee.l, refuae it. It is rmch to 'be 4wbt.e4 wa.~r.
be obtairlecl thl'oqb t.be 11Dlte4 action o'
· l)a.nten. Self•S.ntenet and dUferenoe ot oJiDioa will.- 1a tile
banking field as in· a.U·,othen, ,DJ.11tate ap!Dtt •ch bamCDJ
an~ wntr of view. , leither is it to be espectecl tllat a ,perfect
ayatem of oontrol can be evolved 'by the GoYel"DDI'.8M or 'by asq
Govel"rrrlBntal 'bocl7• SV.ch ,au,pe.fri1i011 ·and inte"eniS.on 1e al•r•
itr.pe rfect and incomplete. It rrA7 nccee4 in aanbg out broa4
lines of procedure but it ONl ael4GIIl if ever do n.on than tb1s.
The question will alwa.71 recur, whether thoee th1Jaga wbio1a are
. neceaaaZ')' to one S.ncliv14ual or gi'O\Q of intiv14uale a7 Dot 'be
luxuries to anotber6 and whether the 4rawi.Dg ol a pu1'8l7 arUficial
line between olaaaee or graciea of Ull a4ght aot do zr..ore harm tban
good; tr.igbt not ao 4iacCIDIIlocle large cl&tne 1a taa. cOJ:rmam;ty aa.
to reduce their prodQctive ,..ar, and ao rea&er tbem leas efflcieat.
What is certa1a17 leu1'1e i l that evel'f 11ar*er iD ~b& eredita
should confine bia adva.Doel to thoae itellil of Jl&ll81' whioh an W'l•
mistakablr the product· of live comutrcial opara.tiou. We taow tbat
~kere, like others, in the wor4a of the ~~ poet. often •eee
the better wa.r but follow the woraa•. lverr 'ba:Aker, ae a reat.alt
of the atre8a of buailleu, 11 14ke17 to have a oertaiD el__, of
paper in his portfolio wbioh repreaelltt renewal•, aud 18 to bt
regarded rather aa inveatn:ent of .capital tban at adV&DCe of comlf<Grcia.l acoomo4at1on. It 1a thit eleuat of bank aeset.e wboee
el,ixtiraation 1a now earnestlr oa.Utcl for 'by the requi~uata of
war. So great are our natS.cmal needs, eo rela.tivelJ little it
tbe volun:.e of bank aCOQir.Ocia.tioa left aver after these natt.ODal
needs have bee~ ta.tiaf1e41 tb&t it 11 oaaential that tbe c~
~rcw paper of the coam~ eball lie, tall•ivolr a.a pOiti._,
of a liq.uicl, \short tenn, earlt aaturug n.rietJ wbiob eDIUI"ee
eettlerr.ent upon the .ius cia.tea. If ~ten a.D4 ~beet aa will
coopera'k in reatriotillg tlaaii" gn.me aad their dezraau 101"
a.ccou.04at1on to tranaactiODS of tbie d~toript1on tlae7 w1U
eatabliah the beat of all eyateu. of ,prioritl • tAe ~~orit7 w~ch
d.ependa upon liquidi.tr an~ pro.i\lctift pOMe~, and wbi.ob ... _,...
li~uida.tion at the preaor~be4 tina beoaQae of the faot ~t.pro.
duction baa taken pla.oe a.a a re~ult of the credit esteU&d.
a.rrr wch reeult can
•
Does this reorganisation of tbia credit eyttem involve aar
aerioua hardehi,p to the • • • • rran? I O&D aee tbat it 'IIAJ do
eo in not a few oaaee 1 yet, u I haYe Riel, 1t u the CJO\d'lt
indicated bJ pUbllo. a~1r1t. lot cm~.r· 11 ~~~ toN,, bu~ U u
a.J.,ao the course 4ea:a.n4e4 b7 a wiae coDaideratt.oa of prt.•ate welfare.
We cannot expec:t the present la'bulqualJ higb prt.oee to continuo
inie finitely. Alrea.iy the ~reau of t.&bor lbon an t.ncreaeo of
29
X-647
- as ozoo 50fo J.uring tbe J!llart since the opening of the European War •
OQr net gold. gains tince t:R.e ~ginning of the waJ' have been more
than $1 1 000,iJJJ,OOO; our increase of paper currencr hal been aoue
50% of ita f orn:.er &JLoun~. A like increase in our bank cle,Poa~te
or creJ.it curren07 baa aleo taken ,Place. There -are BODle rea.aonera
who regard these cban~es a.a the oauae ot tbe cu.rnut high prices ..
Othent think of the high prices as the result of lhortage <4 com•
r.;od1tiea accompa!Ued by unproductive oonaurt.pt,cm. I wS.U not
atte~pt to enter into this controversy but will confine mraelf to
sUggesting tha.t whichever sehoul of thought TIAJ prevail the 0\ltca..e
will in either caee be the sa.xr.e so tar aa the \xlailseas Dall is coDearned.. Evidently there mst be a shri11ka.ge of, prioea either through
the natural. redistribution of gold which will foll• the cloee of the
war or through the restoration of the au.e uonxal balanoe between consurr.pti on and P'J"Oduction. When that tin:e cons a tho8e wsioeae n:en \\h o
fini the~selves with exten~ed lines of oredit or with dead aseets
re,Prasente.:l by pa_pe.r whicb 1 while technicall7 lioiuid, is subject to
renewal or ettensiun in one fo~ or another, will hav& tv face tho
tazrJ.l~a.r con.litivna which gt-wr out of falling price levels and reversal
<Jf the currents· of Jema11d• It Will be a. tilr.e when thuae who lave set
their houses in o~~er will have reaaon 'o rejoice ia their foresightJ
f vr when that tiu.e cw.es nu power in tbe econou.lo world 11Aill b& al>le
to save th~n.. The world. will lace a. short supplf ol oa,piW and goo4s.,
an~ coneequentl7 banking eredit w1th interest ratea oor.respQQdin~T
aUeOted. He wut be a Wiae rra:a who is willibg to aaoritioe sar.e
present prot·it tor hu aw11 future welfare, if not fv·r that \I#, the c~
nunitfJ 'by keepin€; hb cBdits Withi.n the lWta of ,iN.iente and. Wi14om.
fbe business 1taZl 's t1nancUJ. probleiilS are tAus nvw, a.s al.wa7e,
n;.;thi!lg more tban the observance c4 s wnd princi~e• a.n.i oonael"!a.tiPI.
in the lllfl.intenanoe of his bus~la.. tt bap~l'a8 to be •oupiou~l1 .
true at this tins that t~ obaervance uS auch pr~ip,l.ea is a aatt~'
senioe tc the . commni tr bf Feetricting uectorlm• conewr..ptlon ud e·-o .
eaviAg goo.ie ani credit~ ~t just here it ~ wQI"th not&alg t)at ooe
teul'kable effect of the European War, eahibi.ted in· crarq >l·.iflerent
linea,. is proving to be that of emplaa.Jiaing the fleteMity of clu.i.Dg
ooDtinuouslj what Vl8 11ow find ourselves doznpeUecl 'to clo a.a a u.taeure
of temperai'J ..neoeseitJ. The War ~Ul und0\lbte417 lbOUf.a a$ one of ita
chief consequence•• changes in uihodl of procluoi1UJa ad. distribution,.
a.vo,dan~e of rouncl'!l&b.ou't facto1'J rr.etho4e &ll4 aba.ndomr.ent ot obselete ·
types of crgMliJatioa, Perhaps tbJ• will be one of the ll';ost beneficial.
results of the st·n1g~J it ia 1 at all eventa 1 ems th&t ma.7 be of veq
great aignifioa.noe to ~duatn-, %Jl the .tloel4 of p:eroa.ntile orecUt 1
't
u~.,o
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ought to be tnae at all t~.ea tha.t the pablio op4r4911 of tA& tn.lio
aulficee to cheok ua.ound aud d&Dgorou. ~otioe• wh1ob, it persil\e4
~n, rrar bring abwt W'ldue e~e•i(,ln and UDWhcleeou caond~''* b~ (.1'
prod\14tio~ and oompe\1"o~. ,, is fl<;t neoe••&ff to iu~' \lpOQ tlle
. view ~hat • • • oond~tione have often a.;peare4 &a •
,pa.~t, We ......
as I have· ~d"· nt.W· •••~ing ·to ~~~ t.n. for,.. sake ot 0\11--o~es
in ~· aziQ. clO\l'"l••• we e~l~ 8\lOoee4_.P fO ttt.ag ~ a g.-eater or lese
. 4e~~· J• it not ,._., t . o. f~,f8. Ot ~hat , . fO·~. •,OD .. O{ tkit
wU1
. ~inc\ 0\.\1' llu,\Deea an clete~ned. to re'\&ia
lea•oa rs:Jrf ·'be :
lea.necl ffQJXl this •rU. ex:perienoet ' ' wotA\cl ...". ~J taa.~r· to ·•ppoee
ao. ln that v~ew o( ~• oaoef let p o'oee. 'tlf_
·bf Nise•'\~
>yhat see~ to P to be the de sin.\le .tr,o ot CIF84't ors;at'IA~iaa to be
riaintai:ned., fof' we oa.a not an~ oaght not to eQett tp' ooa\rol ot oOA•
"\Ur.ption Will extend.· \Jef0.%14 ·the te~ti~ of •
or . .t p.. Oi\lCera
-~il,l na.eo•bU be o~led \lpon to O.o ~UOJ;"e '\haa. r.(~ · ftQlll ~<11-eeotr.e
methode ot· iti~tiug purchase.-. and oo~tt, th•4• eUone after
. the close. of the ~r wiU natura.J.+1 be mo.-e aad. mo~ coq i.aed·ito the
.. poeit~ve task· 6f xr.aking tho~ OWD.~thocls as •~ ae :poee-'~•~. ~d lees
and lee• .ievoted· to eupen1aioa ot ~~~\lm,f1&~ ~
hataite,· ot other..
~hey wil~ d.JL' to· streng-then t,_k :•re44\ o~tloa Wi\1\ a. Ylw:•o
pr.v.eatiDg the e~ie'1a~on o( .oreclit to -~4 41 , e·~trava.gant.., or un.ro1t.able
l~.·~·· · . They will stfeng\h•a aU • .,,.t~g
IJIMha.nifll:; wi\h a. vt.e•
~0 aeoei'\ainj,tlg and. inter.U.aAN i.Q'~~~iOII QOaQS~ bupest 0~41•
t~ona a.nJ. 4red~t .-a·U.np \lpoa a n..o~ eftioient 'ba.alf than a.t pweeent.
~87 wUl;, above· all thiilge, apdea:for eo fa17 aa prattiOa».e ~o ll~
war
•••••r
""*"'
*'•
ta.e
••'-'
a,.\0\i~ ···eoonou4c d~sta;ibuti~ of Q01f14-~cU.U.ee. axr.C)Ug tbe,. cl*f&~llt aeoti~
qf tA8 oo\Ul*.rf 1 . and :~ eo do,lng ,._, w;41 fr.a.ke · chiff!··~~e of t ... llarlking
•cmaniam of, the,~ ~ountry beca.\lae they will. knc.w tbat ·u~, is t~ uohanie
which' can l;leat b~ relied upon to gua.ge the c,on~g· a.Dii a.beor~ pCNior
o,f ~e · cliUe.-.llt oom.tUn:it:~ee.· tl'otr. _thie ,poia' of v~e\f the UP· oC flnanG•
.. ing the·· ~ooal,. retailer wit:~ gracl~f ·be· t...,fe~cl (.,<* the ~euJ.er
ana ·jobber~ to v.tlOXL it never bt•onged.~ ·to tlM lo~ banter:t .w~:~
the ocm.rwa1t7 f,n which he :\.s s~tVJ&te4 and ata.ncls rea4t to :pJ'GN
•~
U.dea.,. b7 :pro'Y~1ng the oa:pit~ ~t4ed ~ol' V.le uat4ng o( allot\ 'MQUloa.a•,
deeipecl f' or the· oonduot of live o.c;mr.eroia.1, o_pe-.'\i~· · t•· .4QR'JOI'OW
P.~:pe'r of the countl')', what.ever t.!Jtel it UAJ aaawto 4 o~ hC..wey4M, it at bfl
,d.rawn, will be nade to conform to :th~l ge.cal OOiletP't4Cm. ol a~cliU'
~d J!.fOmptneea iu pafJteni. ~ thi.a,.cwa.J ~o•••• w.\~. be ollecee44 , .~flat.io~
.· . ot_ prices and overburi.Dg wi~ be. keJ?t to a.,z:r.¥~., ·a.n\t the lien ot sowaa
. ~cl eata.bliahed Qredi't wi~ 'be g.ivea aqce•a to the ~-·• a.ad ~oet Savor•·
able· ratds of accw.oda.tion to be .. br,P.4 a' any ~~.e for \is <Jebel of •••ntl•
If. ·tliese changes Qan be promplf int•ocluceci '\oday u the tea~'\ o' comr.on
and united.aotion illtended· to. prOII'lote t~11eqa and efl,~ancr·, a. rea»lt
will ha~e. been attained which, -~ ,ord~na.rt. conn:erc1a.l.. 't¥4t w~.i ba.ve
'beer1 long iela.:Ytcl be~a.u~Je of ~~ 4ov.~ and ••lf4,8~•· ·let. ~t OllCO
· be accomplia~d: ., cCil'lllon tr.a.cle ao~j.'- and "" ·~ &.» :.tOiatiel t.,t a.
resul,t a~ ono. eo easr and eo 'be¥'-~cj;a.~ ha,d never ~·~~ au~~'""d.
*
·•
•'
..
'•l
·.
·' .
..
W, P. Gl. HARDINGI,.IIOYI. .OI
PAUL II. WARBUH, YICI GIO'fi&NOR
WIIJ.IAII .Gl, lleliDOO
PRIDI!RIC A. DnANO
-. -
-li~C.IIlt..t..ER
IICIITARY q.F..THI filiAl ... ~
A
CHAIIIIAII
JOHN SKELTON Wfi.LtAIIS •~ • .
COIIPfROLL. . OP TRI'CURIITICY
H. PARKIR WILLIS. SICIITARY
IHIRIIAN P. ALLEN, AliT. IICRITARY
FEDERAL RESERVE BOARD
AIID FISCAL UINT
WASHINGTON
Ja.nuary 141
..
'Cfl.illl S. HAllUM
ADD-8 RKPL.Y TO
l'trDI:MJ. RDII:NVI: IJOAilD
1~18.
the Boarl desires to EOint ~t-the ~portanoe uf securing
a wicle aDJ. unUom. distribution ill all of tho Federal reserve districts,
of fraa.arr certificates of 1ndebtedfteaa whiCh Will be issued pe~ing
receipt.a fron-. the saext Liberty J3on4 iaave. · the azr.w.nt to be rai,ed
1• YoltJ large, probablJ $300,000,000 ,per week. Heretofore the banks
1D tbo aecoa4 · Federal resene 418trin baYe a.baor'be4 frorr. 55 to 60
pel" coat. of t.heae certificates.. lMt it ia a:a.nUeatly Wlfail" to expect
tbe ~ iB a aingle dietriot to ~rtail neoea.ary credits 1D order
to eaa~e \bam to take more \baa their p.roporti~'• ab&re of certifioate•· he Icard hopes, ther~lore, that Jou.&" 1tarJt will gi•e· thia _rrat:tlme4iate attention, and ww14 reqaeat, tat, 'befon the nest Liber\7·
Boacl i.eaue ia offered to tth,.3'bli.o, JW !Ue•t~ .. ol"gaDj.a&tioDwhich
wUJ.- eMble JW. to e&ri'J on an effective ta~r.paip for the .iiat1"1lalt1on
of tbeae certlfioatea ill JOl&r ctiati'S.n. there is no tin;e to be lost
ia 'Mp..tag a qspaip ·ot thia 80~ for if anioa uoul-4 bo . .la,ecl
for a fevr weeks, it would be too late an4 ao'thillg could be ·doao 'Uiltil
. ~ ~--· It is •v.tteatocl,· theftfo,., that 'fo& aboul:i ~uate .
at oaa. a eampaigD of e4uoa\ioa $R 1w.r aetnot. ¥fith the YJ.ew oi ha•iag
701&r a-.ember laab •4entancl the •ooaaitJ. of OPtaU.~g aoaeaeentW.
Ol'e4lia, ot aol'ttlag •t M4 aoa4iag 10 to J01l e;ol.i 06-Rifioatea aa weU
as · gol.i co"', of eeoul"ing more. 8\ate 'bal:tle u a-•mben, aad ot a'beorbbas
,their ptopor proportion of these 8hart t~ tra&aai'J' certUioatea•
te'
-···
.l apeei&l do;partn.::nt of. JOUr bank dght~bO- organf·e-ci'--t~r
this work unller tho itt.;)d.iate suporvition ot Jotr.e prOJ:.il\ent bsnker in
r~r d~atrict, of tiaion anl iBfluenco, and aft~r. 7~r organisation has
be3D effecte4• representative ~ 1rorr. vanOUII ,arts of your district
&r4,1{.bt lie askocl to Visit rou .titA tbe vievr of ao~ua~tin& thoPelvea with
the ~e,.uil".~n&a\8 of the situa;tt.~n, an4 ot .lovlai~ tho best ~rea.ne of
a.eeti.D&
A defiai:to propol't.ioa of cert1f1aat~a r..i..;;ht bs a.llott\34
to each·
70~ aDka -~ c~ttecss lontSd in • • - grou; of th3 var101.18
·•t.a.to ba'U:40z; &~aociahOAI wAQSO dllt1 ~i wwli be to oorrea;o11d witb aall
*114
o'
_
....
A:-54<:;.
to visit all oanks in the £r4 oup, an~ to ut-ge upon the:rr. the in.~ortance
oC cooperation. It should be pointed. ;;,vt to youJ" u.en.ber e..L.l noxm:a:r:z:,ber.
baDU that by investing in these· Treasu17 c:erUficat.es of in£1ebtefiness,.
ucl ill placing there Wi. th their depositvrs .• they wou/.d best ine•J.re theu.solves against unclue strain in arranging for pa.]r.:en·;;,s ! or &'..lOS cri ,p-cio.ae
to t~e next Libert~· Loan issuu. · ThA ensuing :Jonci can.pai.gn .'.s goinf!, tp
be & most vigorous one, and special attentior. will be paid. to 1;h.e ~cu!ltrv
~istricts..
By arwsing interest in the sale of Treasury r.ertif:\ca".:es .•
you Will not only rtlncle:~.· rr.ost diective service t.o the Goven'ln.'3.\li; :~n
prariding for ita f~.14ancia). nece~sitier<,. hut )'OU will uo "' g.ree.t do.::tl
tu.tat'd prevent3.ng expam~ion o£ Ulmecessar;,- c-redit.e, a·:ul w~lt avoid a.
sV..iiJ. upon your :rr.ember bar..Jrs and:. upon youx· ut.':; hank whiJh, if not
~~lclpa.ted in this way. rr..;.g:bt be· very en:.>a.rrassin(;.•
4
'·
·The Board ho~ee, there!cre, that you will take ~mediate
s~eps to provide an etH.r.l.flnt orga.niaation for the sale of Trea.suty
~.I'U~J.cates in your district, an1 requests that. you inform it 'Qf
.tbe
action
that ycu propose to take ..
. :Governor.
....
I
32
W, P, e. HARDING, eou...a
PAUL M. WAlBURG, YJCIGova-a
PRIDIRIC: A. DILAllO
ADOLJoH C:. MILLER
C:HAIIUS s. HAMLIN
WILLIAM e. MCADOO
SICRITAIIY OF , . . TRIASURY
C:HAJRHjlll
JOHll SKILTON WILLIAMS
FEDERAL RESERVE BOARD
• I=OIIPTilOLL. . OF THI C:URRIMCY
WASHINGTON
H. PARKIR WILLIS, SICRITAIY
SHIRMAN P. ALLER, AIIT.IICIITAKY
AllP FIICAL AeaMT
ADD-·UPL.YTO
X-651.
•
f'JU)IUIAL. RBIIIERVB IIOAIID
<
Dear Sir:
t~ follQ\vin~
'b7 th.a Fuaeral
aao1.
lgttar
~sene
a.iar~sse.i
to the Wa.r fra.i@ Soar:l toay
Board 1a eant to you. tor ywr infonration
g\l:i.~a.noe:
lt'fo\U" lo;fttar of Janua.1"7 latl ·bae blian r~cgi\'vil an~
1a1.i beforf'l the falen.l ieaens Boa~ at 1ta ~etin&
todAy. In ra;ly 1 I am i1ractai to say that 1 1n a.c~orl•
a.nce with yw.r raqUQst, tha Boa.r·l \rill bv pll)a.aaa to
rof~r to tha Y.'a.r !rade ~oard all a.pplioationa which
aay be r.ecaivai 'or pel'llll.saton to ax,port ooin, 'bullign
or ourrancy to HallaDi, IN•~n,. Noi'Wa7, ~mark, fa.ero
lalanis, or Icelani. bafora llcans.. .Ze issuei for
RCh IJhi..:,~.u:~te • w
PJ.aa.sa c.cknonla.lie tecoi.Pt ot this 1~tte~.
,,'
Vary ti'W.y yours,
'
<
,
RATIO OF "FLLAT" OF EACH FEDEBAL RESERVE BANK TO
F.ARNn~G
aSSETS AliD DE?OSi'l,'S,
JANUABI 11, 1918.
::
•
.i
.
CLEARIUG
:_
BOUSE
:):XC~
·-
• 1
l30STOlt
:
• ALL
:
:
. -
.
. ·. OT~: ·'~ ·
.:
~
: TOTAL
:ustoLL~Cflm: .UNCOLIJX:TED : COL!Ji.UTIOll!
: ITPMS
; · InMS
:
:;
:
DR.
:
CR.
:
.. .
i · : .....
20,176
2.1,9)}
15,624
6,3'09
2,o4o
15.550
54.752
70,3()_2
55.441
14,861
•••
3.399
37.8~3
41lt2~
2:(,611
1},.625
@
1,964
17 ~'+72
19,436
15,274
4,162
@
l,2qS
'13,663
14ltS72
.ll.-664
3,~s
l~.3i3
20,541
ll;lJT
CBICAOO
31,49)..
)5.JS3
21.,.~.
ST. LOUlS
1(,78l.
DAI-I.AS
ZfO
11.7
6,075
2.9·8
},5J.J
30·5
2.,957
}1.1
4-,3'r.1 .
25,1~
10,701
9
16..14.)_
16,.152-
6..699
9,453
U,676
12,510
9.636
2,814
276,.415
}06,593
203.073
..........
. l,)¢lt
4,721
25,157
}O,l7G
4.0
},099
37
li©;>OSI~S~
PER CENT
11+.4
665
11.i99~
:
7·7
2.1
13,.841
10,946
SAN FRA1VCISOQ
41/ . . . !If • • • • • • • • • 1/1 • • • • • • • • -
1},:)~
::aru1K
PER Cl!m
··--
s,4G4 . -
10,94S
•••
iiNCLUDED IN •
;TOTAL "FL0AT1':
1,757
l,~g
TOTAL
tN.ET n~T-: ::RATIO OF "FLOATn! Bk.'flOOF- 11 FJ-O.JI.,_~•r:
:MEnT ni
!TO TOTAL EARti- :To llvlMEDI.ATEI.Y AVA!;...;
:·flWlSFEBS
!ING ASSETS
:ABLE GOVBBl:UvW:fr .Al'ID
:
• .,
:
@
'??
18.2
6.7
l.O.l
c . . . . . . . . . . . . . . . -- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . •· . . . . . . . ·- . . . . . . . . . " . ., • '-- . . . . . . •· • • ·- • - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..
---~
W. P. 8. HARDIR8; 410YIINOI
PAUL II. WARIUH. YICI 80YIIHOR
PRIDI!RIC A. DILAilOADOLPH C. IIILLIR
CIIARLII B. HAIILIII
WILLIAII 8. IICADOO
IICIItAIY OP THI TIIIAIUIY
CHAJIUK
. JOHJI SKEI.TOII WILUAilS
CoHnaOLLII OP THI CUOIINCY
H. PARKER WILLIS. BICIIYAOY
IHIRIIAII P. AI.LEII. AliT. IICIItAIY
FEDERAL RESERVE BOARD
AND FIICAL MINT
WASHINGTON
January
DIVISION OF R£PORTS AND STATISTICS
15~
1919 ..
Dear Sir:
Please arrange to M.nd us ea.oh week the
-ot all member banks
~n
names
your District reporting to you for
the first time tor your consolidated weekly statement of
condition of member banks so that we may add t.hem to our
mailing list tor the transmittal ot the Board's w·eekly
Cdli!S611de:ied statement
or
condition
-or
all reporting
mem-
bet banka.
uay
I al!o aU$gest that you use
I
you~
.
best
er~
'
'
torti t.o reduce t~ nwaber art\elinquent b&A.ks in ord~r
to make the weeklt stat6ment as eolllplete as pout.bie.
cc;ps.e•
ot the la.e~ statement issued
. wai-ded ttt th6 .. aembera
were
who~e ~a appeared on the
which was
sublili t.ted bf y<Ju in acta- dance wtth
request.
It will be appreciated it ycu
~ill
tor""
lht
6Ur recint.
send us the
names Gt banks whose statements were used the tirat time
in the Jan. 4th report, and will continue to send us each
week the names ot newly reporting banks.
Ver,y truly
yours~
Assistant Seeretar,y.
...
35
Federal ReserYe Agent·,
-.,;;,.IIEX•OPPICIO MllMIIKIIIl
1J, P. 8. HARDIIl8, 80¥-01
PAUL H. WAUUR8, Ytcl JJoYDilOI
FRIDIRJC A. DILAllO
.ADOLPH C. HILLIR
Cll.ARUI 1. NAHUM
WILLIAM II. MCADOO
IIICIITAIT OP THI TILUUIY
. -•
CIJAJIIIAJJ
JO\sll SICILTOil WILLIAMS
COIIPTIOLUI Of THI CUIIIMCY
ll, PARKIR WILUS, BIICIITAIT
IHIRH.AI\ P. ALLEN, AIIT.BIC:IITAIY
FEDERAL RESE:RVE BOARD
AIJD I'I•CAL AIIIIT
WASHINGTON
ADD. . .II llllPLY TO
NDIIRAI. RI:81:RVI: IIOARD
J-.65'1
In the lalnle of work -in .ao:-acRion lQ.tb liaoal.apacJ
t.ra.naa.ctiQ:.la. tho quea'tlOl;. of olleok oleal'lni bu been negl.eote4 in
a nt.m.bar of '\be J'oaeral Boeeno Diatnna an£ a-ll;h'\ pro,teea baa
bean 'aa4a in a4~1ng to ilu liat.
non ......... liiLJla ftllllttin& ..~
par. I ha.v~> 1114 pn~rad a. table whllb ehua tile lnoreaaea or 4eoraa.sea ~ 'Ule nwr.ber of bci;lka em tho ,par
J•r t.lle
~~:'U.s .a1~~ing »eec\e:r 15-t.'l, 1917. 1aa \Yil1 note ·t~~at tt. aboWa an
.:.ctu.a.l llimillD'Uvll l;1 f vu.r .;;.bt.riota. Wbile otoo of the ~irincta
r..a.~ a.bout stoo;l atiU; aix hc.;.Y" IZ'A.:le p.1.:.a a.n4 three of tbase lat-t~r ha.Ya w.ia Yal'f eubstcw~t.ial progress.
oJ
1ut.
•1••
I
1i ls proper to poir.t. <at• hOll'~er, tla&t the• paJ"Mnt.•
Q.~~as ~re SviiOvft'l&t. ad.alaa.;ling in 80U O&fil. roh.~ple. tbaft ia
:r;.~ :·...ir. sh~ iL .~ba Buat.un Diet.not. 116..-e aU t.be ·~ in the
Diatrict h..:.v-3 rad't.•ll a.t. ~r &r\it6. a. eta.n. 1totb
AZI.Ii nell
member. It _, ~ •ut .s.r. auzr.a ot.Aar ouva also. core \be ~
has be~:. ii.Dill.l, u. u beoauaQ the :l...mbel' of laar.U 1'8}';1ol't.1ni a JMl"
a.g.o reproi)ao-.tacl a la.rser ;ru~onio•• of aJ.l.'Uie 1:lar.t.b b t.aa. D.t.atrict tr.a.~. in o'thr Ua'triota. Rbicth .,ppuo-entlf . . - a lillt.tor sh(MIIIo
••r
bE•
WiwN ~\Jo;;. :. ru~h~flij baa 'b~n u..-le. it. baa lMter. almol~
inY:...ri....bly due to anar... ~tic e<olicl'\a.ti.Oil ltJ ur..o or mora of tlae
St..j.ff Of tho Jia.:.k whu h.ii.V~ di•ota4 their .:Umi '\O it. atl.i laYO aq
missi~y ROt't :j.n a..iJ.iaii tu their ~ un. lC&y I not V&• that
y~u r-3:1.-:..v- r-au-r "£f~rts a.l\J:.;;;; thia l.ill&t
·
Very tl\\ly yws-s.
(Signl.ld)
r.
A.. m:LIUIO,
Cbalnrar... Ogm. on Cllo&r~.
'
'
.
lP
WIUIAJI G. JlcADDO
S&CIITARY OP THI TRIAIIURY
CHAIIUIAII
JOKII SltiLTOII WJLLIAJIS
FEDERAL RESERVE BOARD
COMPIIOLLll OP TH& CVIRIIICY
WASHINGTON
Dear
in the table a.ccor;~pa.Lyin&
the
re~a.rd
..,..,.r:.Jillll., - - ·
aa sent out" the
II. PARKIR WILLIS; S&CRITARY
IIIIRJIAII P. ALLEK, MH, S&Ca&TARY
AIID PliCAL MOT
to
aD
error appearing
of Janua.rr 18~ (Uirr.eo.I-657)
~oroenta.ge
In
of increase in nOia'Umbor
ehc:Nld be a.1., ,and tho percentage of increue·tor t4e Philadelphia.
al.§i instead of
13.62.
It will bee all tbe JtOI'e a.ppa.rant tha.t the federal Resene
knk of Chicago bae zrade a. n.ost astonishing advance in' the ua:tter
of additions to the par l~at ancl that the Federal &sene Bank. of
Philadelphia also u:a.de a. verr goo!l ahOWing.
While 1 rogret the errore in the f om.oJ' eta.ten.ent, I
~;._
am glad to acknowledge it and to
me
to these Di,striots.
bereWitb corrected copies of the
l send
1~
the
a~atenant for your files.
Vel'f truly yO\lra,
·
f'KDIEIIAL RDIERVIE IIOARD
for the Chicago District is ehOV'Iil as 6.Jl., whereas .this figwoe
District should bo
.
ADD- lliPt.Y '1'0
CAlle~
rei letter
.~~
. . . . . . . . . . .UIIG,Ytcl_l _ _
PRIDIIIIC: A. DILAllO
.
ADOLPII 0. IIILLIR
CJIARLII 1. HAJIUII
to increasing tho nwLber of ba.nka on the par list.
statoan~
.banks
~
.
~r:
VJ attention bae been
in
,~·
correctio~~o
irJ. justice
00
~
S1'A'fil4EHJ SBQVING GRON'EH
OF
CLEARING 14EimERsHIP IN
I'Em:Ri.L RESERVE SYSTD J'OR
'
I
•
MEMBER
X-658
tHE TEAR 191'1,
BAliS
IOIJMJ:MBER
hchaao
DISTRICT
Month ending
Jan, 15 Dec. 15
Increa.ae
01"
DeerOA"
Boston
402
399
New York
628
651
Phi1adlphia.
632
638
CleYelancl
'1&3
'163
ll
Richn.on4
521
r,a'l
Atla.Dta
SS9
Chioa.go
3 (#)
BAlKS
Month enciiilg
Jp, 15
!lac. 15
Percent
.'15 (f)
01'
Decnu•
Percent
0 (•)
242
242
313
343
ao
.96
232
310
78
33.62
1.46
492
56$
'Ia
14!.8i
a
1.53
c286
266
ao
391
2
.51
416
326
90 (f)
1,044
1,084
40
3.84
1,429
2,331
902
63.1,
ft. Lcuia
468
479
11
2.35
883
99'1
114
1~.91
J&inneapoli.e
7(//
'1'13
66
9.33
1,100
'1,033
Xanaaa City
..9-43
959
16
1.'10
1,408
1,527
Dallas
619
633
14
2•26
2~1
211
San FranciatG
'522
f>34
u
2;30
1)108
'1~622
'1.823
aos
2.'13
a,_tao
as
4 (f)
4.49
.. 63 (f)
{#) ·Decrease.
(•) AU· Danks
"CORRECTED COPY
- Januar.r 24, 1918
(I)
67 (#)
119
'1.0.0 (f)
21.~
(#)
6.0i (f)
8.45
10 '')
4.5& (f)
l,lTO
62
5.59
. 9,321
1,1~1
14.64
iu Boston distri-ct are in
the Cleal'ibg Syatem.
f
.
j
~
T A T E Y E N T.
War's effect up?n ::1ati.onal :fina.ncs and bank;i.r.g i.s reflected
in th• fourth Annual Report of the Federal Reserve Board 1 transmltted to the.
January 22.
Sp~aker
of the House
o~ R~?presen~atives
The Boa!"d ·rev~.ews the conditions brought about by the
g17eat g':'ovvth oi foreign· tl;'ade and the various
ren:edy .:-esi.llttng
d.iffic'll.lt~es
of a
:tar~e
~asures
inten:ied to
or forestall dangers that have been
put :i.r.to effeo1 in consequence.
v1.sion
ott Tuesday
Chief
~ong
th? latter art;, the l'ro-
s-upply of rederal Reeen-e notes, which we!"e pro-
v::.ded. auo conv€'nient.J y sto!"ed ea:rly in the year 191'7 1 the develop..:cent
o:f nurcermls
expedj.en~:s
f O<' the conservatiov. of the gold s1~ppJ.)' 1 and
the ap.p1ication of the an:endn:flrrts o'l. June 21, 1917 .• to the Federl!tl,
Ti,1e
Boa.:r~.
r.s1lb
a.~te:.1t!.on
t<' the f'Uect cf the wa!:' upon the bank-
1917 J there has been a lossen:lng of tha iJ·uidi.ty and
~wa:LJ.ability
of
the·c~try's b~king resources the change is not surpris1ng in view
of the heavy requiren:ents.
pr~ces
It also points out that these che.nges in
a.J"e not necessarily due to alterations in ·the banking
pt)sit,io:n~
but tl1at a.bnorua.J. derranda and the wi thdrawa.l of labor a:nd capi.te 1 have
had an i~portant ana. fa.r-~ach;i.ng aff~ct.
•'
"Banking expansior.-", '!:he
_
..
. ·•'
-~
Boarci sa.ys 1
11 iA
an
unavoida.t.l~
2 ....
incident of war finance., but every effort
should nevertheless be r::ade to C'Junteract it so far as JlOSsible by elim• inating banking credit not claarly needed for the pu.rpose of purchasing
or carrying goods necessary for the life of a nation
the standpoint of the
of the Governr.-.ent' s
privat~ in~ividual
~larg~
at vwar".
From
it is noted that the effect
scale has been to wi.thdraw from
the xrarket a large prO,£JorUon of the funcis norrrally availa.ble for other
loans.
~'his
tendency has resv.lteci !nan effort to xra.ke paper ordinarily
reg,ardt1d as inel:l.g.;ible available for rediscount at Federal .Reserve Bar.ks •.
The policy of the Board., hcwever1 has
~nvariably
been to refuse such
applicat~ons ani to naintain the liquid character of bank assets.
"Under
no
circuxrsta.nces 11 1 sa.1e the Report., " can the Board adtrJ.t the
eligibility oi paper - ~ - - -
which in its essential character fails
to conf onn to sound ba:nking principles".
The Report., hO.v&-ver, suggest.s
early consi4eration.Qy Congress of the problem of
co~porata
fina.noing 1
in the belief that 110
sa.t:i.~fa.ctory solution of the general corporate
problem
and credit/will be found that does not involve sona degree of governn~nt
intervention.
The Board is of the opinion that soua plan for such inter-
vention or aid can be worked O'.lt that will rr.eet the situation sat:tsfactor.ily,
One effect of the war has been to enlarge the earning power of the Reserve
banks in a very naterial degree,
ooo.
The gross earnings are given as $15 1 800-
an4 the net earnings as $1~ 1 200 1 000.
The ciividends declared du4ing
.,,
41
.. ,.._,
•
~he
year are about
$6Jeoolooo.
X-660
Six (6} of the banks have pa~d their
dividends completely up to the end.of the year 1917 1 while
f~r (4)
others have paid up to June i0 1 1g17, and the temain1ng two (2) have
paid to the (6i1cl
. '
ot the year 2,9).6. Although t~ \lwlka are ·not operated
~...
'
'
Jrilr.arily ~oto ptcu,, the Board call• attentioii
the coming year their eanU.ng•
will
:i
to
the fact tha.t during
\&bll~lte~Ur 1>e
'
.
large, and that a
.
.
GUbetantial franchise tax w:\.11 be paid to tbe GG•enur.ent
W.t
of excess
The amQUnt pa.U. this year to the Goyenar.ent ~· d;l34J23~.
earni,ngs.
In COilner.tion with the rra~gement of the banks the Bc:ard ex~laina tha.t
tha. eyenta of the raat year have done anch to brmg inte) their pro;pe-r
re~at1qpa~i~
the several
ele~nte
ot tne federal Reserv'
Syetem~
and
that the
positio~
of the J3oard ae the govern1ng bo4y of all. the bulke ia
now well
defined~
the line ot diatinQtion between the
of each institution and the
ge~eral
local uanasementa
policies ot the System growing more'
I
&ncl
more:~rk~4.
describe~
the activities of the year that are tncidentally
are tbe further &.Jtteneion and d,evelopmant of the clearing
col1ecticm.
pe~ts
~ng
syst~m
~ll
and the con·tinua.tion of work under tbe Clayton Act,
for service as directors beini granted in 182. cases.
Applications
f"or fiducial'f fOWers have been granteli in. 1.12. ca8e&.
'l'he expense
t-
ot cond\loting tne
wor~
of the Board cl'llring the year q.s
been a
~~ttle
ot
Gq;l.d Se~'tleun" ~ for the ;year ha.s 'been abw.t $3,500, or $0.013
. Jtl"
$1.., 000,
less than $3501 000, incluO.ins all salar1es 1 while the cost
.
'
42
X-660
- 4-
WhUe no far:..:reaching at:endxrents to the Federal &serve Act are
recoiiZLended, a number of n;i,nor changet are
tion o£ Congress.
su~ested.
for :he considera-
A.'nong these itL a Qhange in ih~ present zr.ethod of
of electing directors Galled.
tor
by the fa.Qt that under present oohditions
.only a minority of all banks entitlea to vote are taking an active part
in the selection; a change in the denominations of federal Reserve notes
intended to penLit the issue of large bills; a change in the tetrLe Of_
Section
.'
12~
which relates. to transactions between directa and their
respe9tive banks; the
the incorporation
trade and
bran~es
~he
of
~dar
of Section
as designe4 to provide for
Federal Reserve cba.rter of banks for foreign
amendment of Section 25 to permit the establislment
~ational
In c1osing 6 the
concent~tion
amen~nt
ot
banks in the cities where suQh 'bN>.ks are loca.te4.
Board.·cal~s
attention to the fact that due to the
of reserves the Federal Reserve s;ystem is toclay the uliima.te
r;esource of the business and fiJla.nCial cOJilJXllnity and tba.t its position
as such is v.nquestiona.'ble.
~he responei'Q~l~ty
tnus laid upon it
empba.sizse the necessity of Q::a.king sure that every policy adopte4 m.tst
be
developed with 't!he
v~ew
of
maintainin~
and
strengtheni~g
the financial
position of the country., and of providing for tne readjustants to follow
the
war.
43
W, P. Ill. HARDING, llloYIHOR
PAUL II, WARBURIII, Yl~l MY&aiiOR
FRIDIRIC A. DELANO
ADOLPH C. MILLER
WltLIAM Ill. MCADOO
SICRITA.RY OP THI TRUSURY·
CHAR~_.6 r;rLIN
CHAIRIIAII
JOHN SKELTON WILLIAMS
COM"ROLLII OP THI CURRIHCY
FEDERAL RESERVE BOARD
WASHINGTON
H. PARKIR WILLIS, SICRITARY
IHIRMAN P. ALLEN, AIIT.II¢Rll'l't.R;r
A.. D FIIC-AL AGIHT
ADDid88 R&PLY TO
I"BPJIRAL RJIBJIRVJI WOARD
llea.r Sir:
1 am inclosing
f~ J~r Asaietan~
he~owi\h
federal
~eaer¥1
two ooJiel of Qath of oifioe
AgeDll•
exetN'ie4 au retu!"n to thie oUia. &t Jot)..r ear11eet conYenienco.
Very tnlJ 7<Ml"l 1
Secro'W.z7.
'
\,
'.
X-66/
ASSISTANT FEDERAL RESERVE AGENT •
.State
·.of------------
~s.
CilJ or cOt&n~J of - - - - - - - - . ~
I
1IJ · the·.undersip4, hav1n& been d~y a;ppQ~ted.. Assistant
. federal: Rese"e .Agent of :.the 'J'ederal.· Rese,-e BEmk
t;lf . - · - .-~--
:located :.in'. the, i'edera.1 reserve ci~J. of . ~..,._~....-:~--~ ·State. of
- - - - - · - - - - - and· in 4istl'ict NQ ......."""""'"'----
in accordance vvith the provisions 9f :the .Federal
citize# of the United States and a
nside~t
.Res~ne
Act} being a
of the ··SU.te of - - - - -
do eols~r e·JVear (affirm) that I will eupp~rt and defend the_ Cons~~~·
:. tion Of tbe . United States against all enexpies 1
f~reign
or. d_Qitesti~; that
·t will bear true fa.itb and allegiance to the aatr.&; .that· I wiil we~1
.
..
!,
and faithfUllY discharge the dUties of -the offiee Qf Ase,ista:at Federal
Reserve Agent on .which· I am a.bout.1o ~n·h.r; and that;: l'::t~ke>thie obliga....
tion .f:reeiJ~Y without any xr..ental reserva.tion !)r wrpose. 9f evasion; SO
. HELP ME GOD.
Subscribed ·and S'o'IOrn (a.ft,inr.ed). to bef.ore- the. und~r~i.Pd 1
a. Notary Public in .and for the State a!ld ...-...------....-----
.-af;oresaicl, tbis - - - - - d a y of--·--------~· l9lS.
Notary ~bH.c~-
x.-.w. ....~RDIIIG
WILLIAII G. IICADDO
IICIITARY or THI TRaAIURY
CHAIRMAN
JOHN SKELTON WILLIAIIS
COMPT'IOLLII
;r.;;••". '-'5
...:
••
PAUL II. WARBURG, YIGI80YIUOR
f'RIDIRIC A. DELANO
ADDLPH C, IIILLER
CHARLEI S. HAIILIN
FEDERAL RESERVE BOARD
or THI CURRINCY
WASHINGTON
H. PARKER WILLIS, SICIITAIY
IHIR.IIAN P. ALLEN, MIT. IICIITAIY·
AJID PliCAL AeiNT
ADDU.8 R.PLY TO
PllDI:ItAL RUIERVI: IIOARD
•
JaJUe.ry 21, 1918.
Dear Sir:
'J'here have been sCIDe cases where cash or sevuritiee belonging
~o
Faderal reserve b&r.ke have been abstracted or where securities
sent in br
memb~r
enl reserve bant.,
banta and receipted for b7 a representative of a f.edl'ta~re
d'-sappeared.
the Board bas received no inforua-
t10D np.rcling, these occul·rences until sClllle tw after they ave t.aken
place# and in one
ins~ance
ita first knowledge of the cirCWDS'tazlce ba.s
oca tbrOl.lgh the newspapers.
In the event that yOllr ba.nt shQlld have a misfortune of this
kiDd• you should, as . ohairrran of the board of directors of ycur bank, ·
reqaire the natter to be repcrtf>d to ycu at 011ce in order tbat yeA& rray,
aa
Fede~l
reserve agantJ advise the heard pram,tly.
Aavioea trans-
ILit"d by JOU should state tull particulars, includi.ng steps which .have
been taken to sec':.lre reaovery or to protect the blmk against loss. It
is necessary that the Board have thil inf onratioa uucU.at•lr· .tn order
that it rrAJ eecurs the cooperatioa of the secret service wben n.eces8ary.
Very truly yCA&rs 1
~
~
X665
RATIO OF "FLOAT". OF EA.CH FEDERAL
ill
J.Al'IDA.RY
FEDERAL
RESERVE
·BANK
.
ALL O'lli;ER:
IDTAL
TOTAL
TOTAL
:uncoLLECTED: uncoLLECTED : COLJXTION: "FLOAT"
.. ITD.15 .
IT:EMS -·.
IT»>S
:
DR..
:
.•
.
.... CLEARING .:•
~
F..OUSE
'
: EXCH.I\UGb"'S
.•
BFB~VE
...
:
..
I
'
: N.ET INVEST~ :BATIO OF "F.LOAT" :RATIO OF "FLOAT
!TO TOTAL EABl~~ !TO 11\fMEDIATELY AVA:IL: MEi:lT n~
GOYEB1'Tl·J~FIT AiTD
• Tn!:.USFERS
-~SETS
:BANK Dll:POSI~~.
ll'iCLu"DED IU !
PER CE!iT
TOTAL 11F'".LIOAT 11 : PER CENT
C~-
:m
..
..
.
'
.
Bki:J.K IJ'O P..A.J.ll:ll:iJG AflSE'l'S .AJlD DEPOSITS,
18, 1$10
!
2,577
20,593
23,570
16,?,.44
7,}26
1.695
11.8
7-6
22,040
61,355
83,895
66,244
17,651
....
4.. 0
2.6
P3!T. 1·~D":!: ·PHIA
7r495
39~277
46,772
32,990
1:3 782
23,672
25-5
l~.g
c:Li!!VEL(UID
1,896
21,193
23,089
16,175
6,914
),120
7-0
~.6
:illG~.10ND
1,745
17,568'
19,313
14#073
5,24o
•••
10.7
9·6
.AT!'.fL'iJ'r'A
1,919
20,386
22~305
13~836
8f969
517
38.6
20.4
CT<l~.AOO
3,504
57,871
61,375
20,584
4o,791
28,741
31-7
lS.-2
689
17,747
18,436
11,1'14
7,322
2,155
18.9
12.!j-
14,212
14,212
4,075
10,137
7.671
50·5
20.}
627
31,416
32,043
10,_4o9
21,6.}4
6,o43
43.9
26.6
12
18,733
18,745
6,472
12,273
5.644
41.0
24.il
nwrcxsco
2,64o
14,S13
17,453
~.512
7e94-l
4,2§0
16.8
8.9
TOTAL
45,144
336.564
381_, 708
221,728
15-5
9·5
:BUSTOU
Nm7 YOLK.
S!I'., I.OtiiS
....
~IimEA...'OQL!S
KAliSAS CITY
DALLAS
SAN
••
~
.................
.._ . . . . . . . . . . . . . . . . . • . . . . . . . . . . . ·•
....................
J#
...
.,
•••
J
8,3,8}8
159.980
.,
..........
.
,.,
•••••••••••••••
-- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
f -
*'*
r'' """
;;
47
X-667
Prop~Qd
fotm letter of approJ4l.
FEDERAL
RESERV:i!~
BOARD
. '
..
CAPU'A:L ISSUES CO!a411'1'EE
Washington, _ _ _ _
·1~.._
Dear
Si~~
Receipt ie acknowledged of your letter of
~
..
'
...
infonrdng the Coru!littee that your company desires to sell an issue
of $ - - - - - - - - - - - - - of
and. as~ing; the Committee for an ex:pre ssion o.f Dz>inion as to tbe
propriety
of. a public sale of these sec~rities under pted~nt
.
..
circwr.stances.
From the .facts stated bf you and. from infonra.tion in the"
COZ'W4.ttee~s possession, it does not appear that
.
the
sale of these
'
securi:Uea under the cirO\.UUJta.noes recited would prove pre judicial
to the public int.e:rest at this time, and the CoWLittee would,· there. ·!Of0 1 ·interpose no objection
~o
such si::i.le.
It is., of course, un.iel"-
stoOd that the only question considered by the Corrin'4. ttee is whether
~
a.l"8
pot the object
~f
this
l~
and the proposed use of the proceeds
compatible with the public intereS't at this tin:.e.
The Oonmittee
does. not in any ca.se undertake to pass upon the intrinsic va.lue of
\be_ e.ecufities- oUere4..
:t~te•'•
. ;,Clsfi.l'~ ·
An1 pros~..ctus n:a,king reference to the
aQtion in the Q.tte.r should
~r.a.ke
this ,point qu;l.te
48
Propoe.ed
fo~ ~etter
of approval to
fEDERAt
~QkBtl·
RJ!SERVE
CAPIV..L
BOARD
ISS~ C~fTEE
Washington
~----19__;,.,..
•
Deilr SU·l
is a~kncmledgecl ot ....,your letter ot' - - - - - - - - -
l\e4aip'
inf onr¢ng the Cottmi'tee tha.t you desil'e to sell a.n issue of $_._ _ __
of _....._ _ _ _ _ _ _ _ _ _ of the
and asking the
ot a
~blic
l~
Comn~ttee
fol" an e:.r.,presCJi.on of opinion as to the propr1e'7
sale of these
seo~ritiea
under ,present
oir~tancoa.
the iaota stated b1 you and from infor-mation 1n the
C~ttee's
posaeasio.n, it does not appear that the sale of these securities under
the c1rQW'llStanees reeite4 wwl.a. ,prove pretutic1al to the JNb'lic interest
at this tirre, and the OGmllittee would., tbetefon, interpose no objeotioP
to euch sale.
It is, of course, understood that the only q,uestion ccm- ·.
si'denll lay the
C~ttee
propo8ecl use of the
tbil tirre,.
the
pro~eeds
CC~lllll1ttee
intrin•ic value of the
to tho
are compatible with the .Jillblio interest at
does not in az)y caee undertake to pa.sa upoD the
aeo~r!ties
C~ttee'• a~tio~
')'
is whether or not the object of tbis lou and :tl'»
in
offered. Any prospectus
t~e ~tter a~ou~4
nake
~king
i~is po~at
reference
quite clear.
x~>G;lo
An act authorizing any bank or trust company incorporated
under the laws of this Commonwealth to becone a.mamber of a
Fede~l
Reserve Bank, and in such event to be subject to all the provisions
of the act o:f Congress known as the Federal Re-serve Act; allC\'ning
any such bank or. trust
co~pany
to comply with the reserve requirements
of such act in lieu of those established by the laws of this Comaonwealth;
and per-mitting the commissioner of banking to accept the examinations
and audits made pursuant to such act in lieu of those required by the
laws of this Coomonwealth.
SECTION l.
Be i t enactei by the
I
senate
n
t ives of
and House of nepresenta
the Commonwealth of - - - - - - - - - - - i n General Assembly n:et,
and it is hereby enacted by the authority of the sana,
That any bank
. or trust company incorporated under the laws of this Com:r.onweal th shail
have the power to subscribe to the capital stock and become a
~mber
of
a Federal Reserve Bank created and organized under an act of Congress of
the United
~tates
approved the twenty-third day of December anno Domini
one thousand nine hundfed and thirteen, and knPWU as the Feder.al Reserve
Act.
SECTION 2.
Any bank or trust company,.. incorporated under the laws of
this Commonwealth, whic:P. shall becorr.$ a member of a Federal Reserve Bank,
shall be subject to all the provisiQns of the Federal Reserve Act
C
•
v'•"•,"';~
'~~
50
- 2-
and its amencbDents, ·and to
~he
regulatiOnS of the Federal
Reserve~
Beard applicable .to sucll bank or trilst company, and shall have all
as~
the po-Rers and
all the liabilities conhrrali !l.nd imposed by
said act ..
SECTION
a.
~Y
such bank or trust company shall comply with the reserve
requirements of the Federal f\eserve Act and its
a.n-.en~nts,
and the
COlllpliance of such bank or trust con:pa.ny therewith shall be in lieu of,
and shall relieve such bank or trust company from, compliance with the
provisions of the laws of this Cor;.monwea.lth relating to the xraintenance
of reserves.
SECTION 4.
Any such bank or trust corr.pany shall be subject to the examinations required under the
missioner
o~
te~~
of the Federal Reserve Act, and the com-
banking may, in his discretion, accept such examinations
e~ations
in lieu of the
required under the laws of this
C~onwealth.
Section 5.
All acts and parts of aQts inconsistent herewith are llereby
.fepealecl ..
l/2a/la
- l
•
....
PAUL M. WARIURG, VlCI CIOYUNOR
FREDERIC A. DILANO
ADOLPH C. MILLER
CHARLES &. HAMLIN
WILLIAM G, McADOO
SICRITARY QP THI TRIAIUIY
CHAIRIIAN
JOHN SKELTON WILLIAMS
C:011.PTROLLIR OF THI CU RRINCY
51
w. P. G. NARDINI, GOYUNOR
EX·OII'P'ICIO M&M8&118
H. PARKER WILLIS, SICRITARY
SHERMAN P. ALLEN, AIIT,IICRITARY
FEDERAL RESERVE BOARD
AND FIICAL A81HT
WASHINGTON
ADDIIK88 ll.PLY TO
FKDJJ:RAL RJJ:GJJ:RVJJ: BOARD
DIVISION OF REPORTS AND STATISTICS
X671
Janue.ry 22, 1918.
Dear Sir:
A fetv days n.go we sent a supply
of the new weekly statement form 106 for use
in·reporting sales ·orWar Savings and Thrift
Stamps.
Kindly have this report fOMlarded
to the Board regularly each week showing condition as at close of business each Friday,
beginning January 18th •.
Yours very truly,
Assistant Secretary.
Federal Reserve Agent
•
X-5'72
Ex·OFFICIO MEMBERS
W. P. G. HARDING, GoVIR.OR
PAUL Ill. WARBURG, VIt;l CiOYIRNOR
FREDERIC A. DELANO
.
ADOLPH C. MILLER
CHARLES S. HAMLIN
WILLIAM G. McADOO
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
FEDERAL RESERVE BOARD
COMPTROLLER OF THE CURRENCY
H. PARKER WILLIS, SECRITART
IHI~MA~ P. ALLEN, AS.ST, SICRITART
AND !ISCAL AGENT
WASHINGTON
ADDRKSS REPLY TO
FEDERAL RESERVIE BOARD
Dear Sir:
In connection with the sale of V'rar ·sa.,•ings and
thrift stamps, the War Savings Committee: on Which I am
serving, would like very zr.uch to get from each of the Fad:_
eral Reserve Bank a ffiOnthly statenent showing the sale of
each of these kindaof stamps in ear,h of its States, and if
not too
~uch
trouble, we would like to have you give the
sales by counties.
Will you kindly advise us whether you can give
us the report for December nON and thereafter give us the
reports when the accounts for each month are closed.
Very truly yours,
'
'
\" Ye\_tf.:•• HARDING. Govlaaoll
£X..QP'FIC10 M&MBKRS
~! ""Wt#L r.~ WARBURG. VICI GGYIRHOR
FREDERIC: A. DELANO
ADOLPH C:. MILLER
C:HARLEI S. HAMUN
WILLIAM Gl. MCADOO
SICRITARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
H. PARKER WILLIS. SECRITARY
IHIRMAN P. ALLEN. ASST. S&CRITARY
AIID flSC:AL AGENT
FEDERAL RESERVE BOARD
COIIPTROL11R OF THE CURRENCY
ADQII ..S8 REPLY TO
WASHINGTON
FEPERAL RESERVE 'BOARP
January
26~
1918.
Dear Sir:
As you have hsretofore been advised, the question of accepting exaudna.tions of State
~ber
banks by the various State authorities
in lieu of examinations uade by exaudners selected or approved by the
federal Reserve Board, is now (by reason of
amend~nts
to
the Federal
Reserve Act) a. natter for detel"!Lina.tion by the Board of Directors of
the several Federal Reserve !lanka.
tion in
~mitteograph
This taet was called to your atten-
letter dated August 31, 1917.
It apjears from
subse~eDt
correspondence that the Federal
Reserve Banks have agreed to accept examinations bt State authorities
in JW'lf States., but that tho State a.uthori ties have not authorized this
in all of the States .. iD which State u:ernber banks are located, hence
this letter is'to call your attention to the fact that it is necessary
either for your Board of DirectOI'f to authorize an unqualified accept-ance of State reports, or for you to ll'J&ke arrangen:ents to have special
examinations mde, in all States where such authority hae not been giveu;
the oxarnina.tione in such caee to be Dade by your representatives o.r by
~ten
who have been or may be designated as special exarrliners by the Jled-
eral Reserve Board.
/
X··t 7'7
- 2 -
Where the State has
the
e~nationu
Gonsented~
and
y~
have agreed to accept
by State authorities, kindly make arrangenents if you
have not already done
so~
with the various State Banking Departments to
furnish you with two signed or certified copies of each report of examir!ation~
one br the files of the Fede~l Reserve Bank and one for tne files
of the Federal Reserve Board.
As a number of the officers and eiLployes hereto£ or dl.esignated
as special examiners., aro not now available for examination work, the
Board would be pleased to have each Federal Reserve Agent, after consultation with the Governor of the
Bank~
submit the namas of members of the
official and clerical ·staff Whom he desires to be designated as special
ezandners.
It is believed
desi~ble
that in each bank there should be
. an examiner available at all tilr8s to make examinations, if and when
necessary., of banks applying for or which have been admitted to membership, to make joint
~ke
e~nations
with State or other authorities, and to
any other special investigation.
The exam;l.ner might also properly
assist in ana.lyaing the reports of examinations of member banks and in
the au<lit of the various banking and fiscal (!apartments of the Reserve
Bank.
A supply of forms of report for use in examination of State member
banks baa been sent to you under separate cover, but examiners nay use
forma prescribed by the State Banking Departnent.
In general the Board desires that you assua.e the full responsibility for seeing that an &%amination is made of each State member
,.
'
x..f7',
- 3 -
institution in. your district at least once
designated State authority where the
eact year, either by the
:fun1is~1ing
of a report r..as been
•
consented to by the State authorities and approved by y0\1.r bank, or "':Jy
representatives of the Federal Reserve Bank who have been or may be
designated as special
e~ners
by the Federal Reserve BoarcJ..
In eitheX'
case the Federal Reserve Board nust be furnished with a signed or certified copy of the report.
It r.rust, however, be understood., that even thov.g.n acceptance
of State exanjnations is authorized, it nay be necessary to rrake special
examinations by exar:,iners selected or approved by the Federal Reserve
\
Board when such examinati.ons are deemed by the Board. to be requi:r.ed. ..
Very truly yours,
Governor.
J
56
X-678
To be released for the Morning papers., January 27 1 1918.
STATEMENT FOR THE PRESS.
It was learned today that the Capital Issues Conmi ttee of the
Federal Reserve Board has ~ompleted the ~raft of its gen~ral plans of.
organization.
In
Washinb~on, in addition t~ the three rrembers of the Federal
Reserve Board whose nan.es have heretofore been announced 1 there will be
an Advisory C~~ttee, consisting of Mr. Allen B. Forbes, senior partner
of the finr. of Harris, Forbes 8- Company 1 New York City; Mr. F. H. Goff~
I
President of the Cleveland Trust Company 1 Cleve1f•nd.., Ohio; and Mr. Henry
Mo.
C. Flower .. President of the Fidelity Trust Corr.pany 1 Knnsas City,
;,,~~ ':<."'.
Mr. Forbes will act as Cha.inr.an of the Advisory Corr.rr.ittee.
The
C~sel
of the Corrmittee will be Mr. Bradley W. Palmer,of the finm
of Storey., Thcrndike, Palu:er & Dodge, Boston.
Mr. Stephen L. Selden,
at present identified with the Aircraft Board, will be the Executive
Secretary of the Comnittee,, in which capacity he will be assisted by
Mr. James Q. Newton, of Denver., Colorado.
services without compensation.
All these have offered their
The Advisory Com:nittee will have an office
with the Federal Reserve Board in the Treasury Building and the staff of
the comm:i.tt.ee will be located in the Metropolitan Bank
Bulldj.ng~
opposite
tbe Treasury Building.
The Capital Issues Coillllj.ttee will organize at each of the twelve
4
Federal Reserve Banke 1 local comnittees fof the purpose of furnishing to
the Committee such additional information and recorr.mendations as the
Beard may require in dealing with cases originating in the respective
X-678
57
.., 2-
districts.
These local coii.Uiittees will consist of tho Chairman of the
Board and the Governor of the respective Federal Reserve Ea.nks and three
&clditiODal members, particularly equipped by banking or business experience,
to se·rve with these ex-officio officers of the bank; in .addition the Board
will approve a list of na.n:es of experts and pr~ent c·itizens in those
localities who may be called in as substitutes or additional advisers
for sueb local
c~ttees,
whenever required.
The Committee does not expect to deal with cases
t~ching
railroad financing, but it will give advice with respect to the sale of
securities involving rmnici.pal, public utility and :'mdu.strial
The Comnittee will act in a n::a.nner similar to
tha·~
Unanc~ng.
of the capital Issues
"
COll'lr;j.ttee in London, which exercises its influenc/3 roly.:'.:lg upon voluntary
cooperation on the part of tha banks, bankers, and business rr.en of the
cO\Ul.try.
For the
ti~
being,
the
Committee does not contemplate pass-
ing upon individUal issues of securities aggregating less than $500,000,
in the case of industrial and public utility corporations, and $250,000,
in the case of m1nicipali ties; nor upon securitie.s havtng a naturity of
iess than one year.
This does not rr.ean that for se:aller amounts the
Ccmnittee does not desire the cooperation of all concerned.
Indeed 1 it :i.s
considered imperative that a policy of avoiding appropriations for unessent!al expenditures be adopted by all witli the most scrupulous care..
,,....
fhe Comndttee bOJ!s, in due course 1 it will ·be able to devise ways and
me~a
to deal. also With transactions of smaller scope.
58
·X~'78
- 3-
It is distinctly 11nderstood that~:the ComrJ.ttee will not pa.ss
·•
'
upon the. intrinsic u:erits of
of
<
'
whe~her
cases, but only upon the question
indi~Jidunl
or not the objects for which money is to be raised and spent
'
are '6sssntial to and COILpatible with ths national welfare at this tirr.e.
It is the Committee's desire that applications be addressed
)
to
~t'at
<<
Washington.
From there, if.necessary, they will be transmitted
\
for further local :i,nvestigation to the respective districts.
•
There is no dcnlabt that pending
<
~·
possible action by Congress the
/J
Committee can count upon the heartiest cooperation of all
of the country askJ.ng for its advice ..
l/26/lS
concern~a.
As
59
•
W. P. G. HARDING. IIOYIItKOI
PAUL K. WAttaUH. YICIIIOYIIIIOR
FRIDIRIC: A. DILANO
ADOLPH C:. KILLER
C:HARLIS I. HAKLIN
>
,!flLLllK G. Kc:ADOO
•
IIU&TARY PP THI TRIAIUIY
CHAIRMAN
JOHN SKILTON WILLIAKI
COHnROLLIR OP THI C:URRINCY
FEDERAL RESERVE BOARD
WASHINGTON
X-66P. PARKER WILL;;:-;ICllTARY
IHIRKAN P. ALLEN. AUT. SICR&TARY
AND PliCAL A•INT
ADDil··· IIKPL.Y TO
FKDKIL\L RPERVK BOARD
January 22, 1918.
Dear Sir:
In order to Win the war, it is imperative at this titte that
good•, credit and savings be placed at the disposal of the Government
in the lar6est possible neasure.
. 8\U.nption of
~oodsJ
Any unnecessary production or con-
and any unnecessary uso o:f c:radit, sap.s and weakens
. the fighting strength of the nation.
There is no doubt
~bout
the
«illine;n~·R&
o! the people of the
Ullitecl States to IIJQet tbl') Governn;ent 1 s requirerr.cntd generously and withOllt resene; but they deU'!Cl.lld, and are entitled to, gl.lid.ance as to which
1D4uatriea and
~rsuits
are to
be
considered as necessary for the best
intere•t of the country, and, therefore, are to be stixwlated, and which,
· Qll
the other band., are to be held ae unneceaaary and, therefo~·e, to be
cliscauraged
un~e r
present circwutancea.
The problem affects With peculiar force our banking operations
bac:aueo cro41 t mproperly .granted not only wastes to that extent funds
that should be nade available to the Govermr.ent 1 but misdirects at the
H.UB
tiu the use of labor and a:raterial which should be devoted to our
national
~rposes.
.
.... 2 -·
To bring about a proper control of credit is,_ therefore. one
of the foremost endeavors of nati-ons at· war_,• and (
'
it is for
this reason
.
.
tione whose duty it is to state authorita.tiYelt whether or not- the "3&.le
.
'
of. se'cllri\J.es (itock.i or- bonds
or noies) iB
in the pUbliC lhtsrest .. t1o
sectiri't:{e-;· beinS p1U~d~ b)' v-bcltmta~ agreen:snt- or bJ a·ct Of law, exc~pt
W1 tll- ~- J.pproval of tlse se bo<iies-.
In a letter dated .farmary 11 1 1918, Secretary McAd-oo invited
the Federal· Beserve Board:
n-as another pa.triotie service· to a sswm the responsibility
be stJ'I:1nitted. to themln .
reSPect t;o capital expend~tiltes or issues of now s·e~u~i:tl.es. n
of passing up011 Ach proposals as zra.y
. J.t the
n:me. time
1
the Seo.ntta.ry· iSSU~d
&
~l)i.iQ Staisttent
w}lj.ch
~~
printed· bel~.:
th-e
acce;ill'l$
BOa.rd., acting upon
thl:s charee,
this
letter, J$ssed a re.,olution
app•inting t.hl'ee of its ea.bei'IJ, .Messrs .. Wa.i'bu.rg_,.
beian&:, to a.ct ua.r•ea.pttal ·Issues t:Qm:illttee ", a.Uihorizing
cozrmtttee to e11gage tbe nece&Sf11'f •taff aa.d to ea.ppoin'l an expert·
Han.i:ln_, aild
the
adviS-Ol"J ~Oininlttoe to aasie-t it it.t i.riwestigatilig and pa:seing; upon all
caae&
that woW.~ ~- before it.
~ssrs.
Allen
a~
Forbes. senior partner oi the finn of
Barris, Forbes & CompanJ,_ New tort C'it7; F. H. Goff, Ptesident of the
Cleveland Trust COO.pany1 Cleveland, ~io; a.n~t C. FlORer~ President.
of the FidelitJ Trust Company_,.
~vas
City, •
-. were then invited. to
becaue n:.embera of the- adVisory c~tte•• a.nd in a. fi~ spirit of patr_iot..ism, they have agreed tc sene in this capa-city...
.not
pass
intrinsic ·
upan
...
Th& Coa:DUttee
will
securities
60
61
X-666
-ato be offered for sale; it will only examine into two questions:
(l) whether the of fer i~ t:i.rr.oly with respect to the
financial operation3 to be undertaken by the GOV'ernment from
t:llr.e to t iite • and
(2) whether the objects for which the funds are to be
raised by the offer of secarities are compatible with the public
interest as above desert bed.
In developing its pOlicies as to the various classes of cases
involved and in passing upon them individually, the cottmittee expects
to eeok advice from the various departrr.ents and boards at Washington and,
in addition, it expects, whenever necessary, to call. upon the chainman
and governor of each Federal reserve bank for a local investigation and
report, authorizing them to invite, from a list tv
·~:~e
approved by the
Board, not more than three n:.en likely to be able tc g;J.·;e
e~;part
and
judicial advice in the case, to JOin •ith them in particular exarr.d.na.tiol;l
and report.
The committee is mindful of the fact that# on the part of the
baRks and bankers, there is no legal obligation to submit their cases.
It will be an entirely voluntary act by them.
The conn.d.ttee has no
· doubt, however, that . . it rra.y count upon their single minded patriotic
cooperation.
The conndttee hopes that before offering for sale stocks,
bonds or notes of corpo,rations in amounts of $500 J 000 and
above~
and in
the case of States, cou.ntles and JXUnicipalities of $250,000 and above,
\
advice will be sought from it as to whether such sale at the time will ·
be held to be compatible with the
~blic
interest.
While the committee
X-656
-
..-
- 4 ...
will
be glad to give advice to the best of its knowledg,e and ability,
in all questions of credit
expec~
s~bmi.tted
to it .. it does not in general
to pass upon notes having less than one year to run.
You are x·equested to bring this letter to the notice of the
banks and investment houses of your district and to invite their cordial
cooperation.
Appl.ication foms are in course of
preparation~
and they should
be addressed to "Federal Reserve Board 1 Capital Issues Comrrj.ttee 1
Washington 1 D. C.
Very truly yours,
PAUL M. WARBURG
Chairman~
Capital Issues Con:rrJ.ttee.
To all Fedaral Reserve Banks.
/
..
.
X-656
The statc:rrDnt
issue~l
3.
by tho S:cnt3.ry .Jf the Treasury_,
referred to on pa:;o 2; is as follows.
"In n.y annual report to Congn~ss) J.at.:;C4 D;ccu.bor 3,, l'jl7,
I rofcrr0d to the icportanco at this tir.o of avoi(iing umucossary
capital expcmJ.iturvc in toth P'.A.b1i0 .::..nl priva.t:; ..;:1tGrpris,;s. 1 ~Tni1.:.;
no spocific authority b2-s been confe::reJ. uy,on rLe to -.i::_:,;.rovo or &isapprove new undertakirie;s, a nurr.ber of corporation exeGut~_ves, bankers~ and ~unicipal officials) inspired by the idea that they should
do nothin[; which woulJ. in any way retard our efforts in the p:rosecution of the war, have subr;;itted to n.e plans for ne·.:v enterprise::
or new issues of securities.
"It is now apilarent that the Governrr.ent rr.ar cou:r..t Ul~on e. ful:.
of cooperation on the part of the States, nunicir;alitiesJ
ani friv::.to corporations, with the result that a lar;;e nurr:ber of
such plans for future C'.eveloprr.ents will be subL.ittod frorr; tirr.e to
tirr.e. It thJref ore becorr.es necessary that each of these proposals
receive adequate consideration and that a reconrwndat:i.on be rr.ad.e
without delay as to the course to bo pursued.
r.~easure
"Pending action by Congess) I have requ6stel thu F:Jderal
Reserve Joard to pass upon such r.roposals as uay be subrn5.tted to
therr. or referred to then: by n:.e_, and advise whether or not su.ch
expenditures of capital or such issues of new securitios should be
rraae. The Board has consented to undertake this responsible wurk 1
and ! therefore str9ngly urge ~pon the corporations and the b~nkers
of the country 1 that before nakinE; contracts requiring the use of
labor and rraterial, or betore placing new issues of securities or
agreeing to purchase new issues of securities.- they confer with the
Federal Reserve Board in order that it uay determine whether the
undertaking covered by the proposals is necessary for t~e public
health and. welfare; or contributes lirectly toward winning the war.
"This is not alone a question of capital., but of matGrial and
labor. Public improverr.ents or new private enterprises which in
tirr~ of peace naght be entirely proper, should n~~ be considered
in the light of 1 or in connection with, the great GoverrJmental
problerr.s arising out of our rdlitary necessities. I am confident
that I can count upon the cordial cooperation of all concerned in
this great work of conserving our capital resources, so that we
may devote them prirr.arily to bringing victory and peace. 11
W. P. G. HARDING, Gov&a&Oit
l£x•0P'P'IC10 MSMBKRB
·II'.
1.:
A"U
-
M. WARBURG, VICIIIOYIRHOR
7f#.UL
JIIIEDERIC: A. DELANO
ADOLPH C:. MILLER
C:HARUS S. HAMLIN
WILLIAM G. McADOO
SECRITARY OF THI TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER OF THI CURRINCY
H. PARKER WILLIS, SECRITARY
SHIRMAN P. ALLEN. ASIT. SICitiTARY
FEDERAL RESERVE BOARD
AND FISCAL AGEMT
AEJDR.a8& REIPL.Y TO
WASHINGTON
FEDERAL. RESIERVI: IIOARD
AUDIT OF FISCAL AGINCY
DEPARTME£t~
January 26,
1918~
Dear Sir:·
F~r
some months past monthly reports ot proofs and verifi-
cations made by the Audit Department of each Federal Reserve Bank
have been received by the Board.
From an inspection of these reports
it is quite apparent that the neeeesary attention is not being given
to the audit of the
:tn a number
vari~us
divisionl of the Fiscal Agent Department.
of instances no check of this department has been made by
the audit depRttment.
The same care must be given and check
main~
'
tained on the work ct the Fiscal departments as is given to the operating departments of the bank.
There is enclosed herewith copies ot new forms of Monthly
Report cf Proofs and
Verificat~ons
(Banking qperatione) and Monthly
Report of Proofs and Verifications (Fiscal Department.)
These reports
are to be filed in duplicate With the Federal Reserve Agent by the
auditors of the bank on the first da;v of each month.
be eent by the Federal Reserve
Ag~nt
Sepr.trate reports Rre to be fUeC. for
to the
e~.ch
Feder~l
One copy is ·to
Reserve Board.
branch bank.
In order to have a uniform audit of allotments, payments
and deliveries of each loan, you are requested to arrange to have the
'
'
X-679
•
Audito~
or his
~ep~esentatives
in the Fiscal Agent Department prepare
a prooi, ucing ite headings indicated:
Proof of Allotments, Payments and
Deliverie~
First Liberty Loan
Auaitor
.
Date of Proof
Ptl.)tments
Allot~ent Princi~ Inter-
pal
Deliveries
Gigned
Receipts
on file
Interest on Depositary
Balances
It is suggssted
foto the proof.
est
Unpaid
Balance
Remarks
a twelve or thirteen column sheet be used
The totals in the
su~y
should agree with the
figut-es shown on the Fiscal Agent t-epol'"t made to the Board.
The total
cash receipts should agree with the ••Receipts deposited to the credit
of the General Account, Treasurer of the
~i ted
States".
In the Fiscal Agent Department the Auditor should have a
eutficient and oompetent foro-e to maintain a daily check upon cash re•
ceipte, authorizations for deliveries, signed receipts for bond de•
Uveriee, complaints J reports of errore and adjustments made.
Period-
ical check should be made of all divisions in th& same mannet- as audits
are mA-de of. the cash, loans and investments of tbe bank.
The
X.. 679
.Chaix-man of Board and Executive officers of the Bank should be promptl:;
advi3ed of impor·tant errors, defects in system·, incompetency ·o'f
emplo-y~·
ees>holding responsible positions, arid securiti.es reported lost or
miasing.
Missing receipts covering bond deliveries should be promptly
traced.
In some instances it has been found tbat ywing to the rush
of work signed receipts covering bonds delivered '#Jere not checked and
the
missingr~ceipts
were made.
will be
were not traced for weeks after the l;leliveries
If such methods continue sooner or later heavy losses
su~tained.
If the work of the Auditor is to be effective, he should be
directly responsible to
t~
Board of Directors, to the Chairman of the
Board and the
G~vernor
of the Bank.
stru~tions of
any administrative officer or of an executive off:l.cer to
He should not be subject to in-
whom administrative duties have been assigned.
The Board will look to the Federal Reserve Agent, in his
capacity as
Chai~n
of the Board, to see that the Auditor is given a
sufficient force of compet·ent men to insure a thorough check upon all
•
departments of the bank and also to see that the proper standard is
maintained.
Very truly yours 1
Governor'~
-,.-
67
X•6&1w.
r. G. HARDING, Gov-•
•
*pAUL··· WARBURG, YICI eo-#IMOI
FREDERIC A. DELANO
ADOLPH C. II ILLER
CHARLEI S. HAIILIN
WlLLIAII 8. llcADOO ·
SICRITARY OF THI TRIASUR1'
CHAIRMAN
JOHN SKELTON WILLIAMS
FED.ERAL RESERVE BOARD
COII.PTilOLLIR OP THI C:URRIIICY
N. PARKER WILLIS, SICRITAIY
IHIRIIAN P. ALLEN, AsiT.IICIITARY
AMD FISCAL AGIINT
ADD . . . . . RI:P'LY TO
WASHINGTON
FIEDI:RAL RESIERYI: -.oARD
The Comptrolle~ of the Currency)
Washington, D. C.
Dear Sir:
In accordance with a telegraphic request received
fr~
the Federal Reserve Agent at
I have the honor to request that you will cause the
release to the Ji'ederal Reserve Agent by the Assistant
Treasurer. of tae United States at
of Federal Reserve notes in the following amounts and
denominations:
It is also requested that shipDnt of Federal
Reserve notes in like amounts and denominations be made
to the Subtreasury to replace the notes releasedon the
above
request.
Very truly
yours~
Governor.
Countersigned:
Secretary.
January 24• .1918.
Revise (5)
An:;A't!t to conserve the goid supply of the United States; to ~ermit
the settlement in silver of trade bala~~es adverse to the United States;
to provide silver for subsidiary coihage and for ccrtnnercia1 use; to as'"'
sisv the allies of the United State!J, and :for ether purposes.
BE
l'r l!!NACTED
BY THE SENATE AND HOUSE OF REPRESENTAT!VEi:l bF THE
UNITED STATES OF AMERI(t\ IN CONGRESS ASSEMBLED:
Sec. l. The Secretary of the Treasury is· hereby autho:-ized :from
time to time to melt or break up and sell as bullion any Standa:..·cl SHv-er
Dolll!!~s now· or· hereafter held in the Treasury of the United States to a
total of 150,000.000 of such dollars on the simultaneous retirement of
silver certificates (if any be outstanding against such Standard Silver
Dollars) at the rate of One Dollar face amount of such Certi!'icates for
each Standard Silver Dollar sold as bullion for any of the purposes of
this Act on terms FtS to price and otherwise to be established from time
to 1~e by the SecretA.ry of ;the Treasury.
Sec,. 2• Upon·the sale as bullion from time to time unG.er the provisi-ons of this Act, of any Standard Silver Dollars, the Se~reta.ry of tht:l
Treasury shall inlnediately direct the Director of the Mint to :purchast- an
amount of silver equal to 371-l/4 grains of fine silver in respect of
every standard silver d olla~ so sold, such purchases to be made in accord•
anee with the existing regulations of the Mint at a price not greater than
that ~btained for the sale of such bullion as shall have been sold under
the provisions of Sec-tion One. Such bullion so purchased shall be deliver6d, at the option of the Director of the Mint, at New York, Philadelphia•
Denver, or San Francisco. Silver so sold or so purchased may be sold or re•
sold for any of the purposes of this Act under rules and regulations to be
established by the Secretary of the Treasury.
The net amount of silver
purchaeed shall not, after making allowance for re-sale! at any time exceed
the amount needed to recoin any standard silver dollars sold as bullion
under the provisions of this.Act, and sueh purchases shall continue until
an amount of silve~ shall have been purchased sufficient, after making allowance for resales, tc recoin all Standard Silver Dollars eo sold.
'Ibe Secretary shall
recc~n
into Standard Silver Dollars the bul•
of this A ct, and may issue silver cerdelivered to the Treasury in amount
equal to the Standard Silver Dollare which may be coined out of said b~l
lion.
lio~ purchased under the provisions
tific~te• against said bullion when
PI\OVIDED, HOVJEVER, that whene'Vel" the Secretary shall have sold the
eilvet' .)lflU.on contents of lo,ooo,OOO sil,el" _-dollars he shall discontinue
further sal•e untU the Dis'~ct4>r of the Mint hils purcmeed or ccmtrncted to
P\*'.eh!l•• an equal aJftOunt ot 8UCh bullion tor eoj.page purpoaes at e. price
not,·~ -~ee.ed -tbe ftj.oe at which S¥-411 b\ll.li.on ftt1 sold· by him •
. ... .··1Jl • . . .
; 'f;
-2-
X-682.
Sec. 3. Silver m11.y be sold as bullion under 'luthority of th:is Act
for the purpose of conserving the gold supply of the United States; of
f"lCilit"l.ti.rig the settlement in silver cf trade balances· adverse to the
United ·st~tes; to provide silver for subsic'.iar.y coin'lge, 1.nd for cormnercial
or to assist the allies of the United States~ The allocation
to the Director of the M:i.nt for subsidiary coinage of any :::ilve:r shall~
for the purposes of thi3 Act, be :tegarded !".Sa sale or re-sale.
use,
See. 4. There is hereby. approprhied f~C'm any funds .in the Treasury
not ethel-wise approp.~:'.ated an amount sufficient to meet all expense in..
cur:fed in C"lrrying ou·~ this Act.
...
~
....
I
,. •
··-
X-683
...
:MEMORANDUM in re
SILVER CERTIFICATES
f• M.·w. Jan.zs, 'U1.
1,
The object of the Silver Certificate Auendrrant is to ~rcv1de
tr.eans f Of the payn.ent of things (which we and. our Allies bu.y in the
Orient) withcut being ~bliged to shl~ go~dL
tf the consequence of the contemplated legislation should be the
tying up of a large arr.ount of gold 1 the object of tbe legisla.t'ion would
06 defeated to that extent.
not
t,ree~ng
The
a.m~nt
of
s~lver
~r
silver
~st
theretore
65~ of
ot QUr g9ld to the extent of
be accompanied by the tying up
the amwnt so treed ..,. a conetition
ot
~t
~
would
brought about if for the
certificates withdrawn we should issue Federal Reserve
Notes.
If that were the case the entire legislation would not be wotth
while.
lt wculci be upsetting things without producing adequate results.
1
Unless 1
therefore~
the Governrrent should care to issue greenbacks
for the tirra being to the equivalent amount of
is only one way QUt 1 and that is
It has been
eugg~sted
~he
that we
'
si~yer certUicates~
there
Re~erve ~
notes.
issue of Fedefal
~ssue
Federal Reserve &lnk notes in
,.
'
amounts of fives and tens and rely
upon the ability of the
,·
:'
with~raw
a sufficient amount of
greenbacks
.
'
":
a~d
twos.
an~
to cut
ihemup into ones
.
There are several objections to this procedure:
t.~e
We would be
speed with which silver certificates can ·be wi thdra.wn,
,
.
I
'
and tnio withdrawal would have to be synchronized
. ,
First 1 i.:t will
As to tl'le speed wi:th which
the prQcess would progress, we would be tied up twice.
to
:tp
'
'
double the xr.echaniqal operations necessary.
l~ted
~reasury
.
,,
'
w~th
•
an
•
,
•'
'
e~u~va.lent
'
r
If'
I
- 2Secdnd, both the greenbacks and thp silver certificates have to be
cancelled and in 6ffect be reissued; for the silver certiiicates of one
.
.
and two .. dollars~ one and two-dollar greenbacks are to be issued; for the
greenbacks withdrawn, five and ten-dollar Federal Reserve Bank pates have
to be issued in orier to replace the currepc.y now in use.
We have~ . to
print twice, therefore, and we _ha,ve t.o wait twice·, and we have to aiJk.
,
the banks to sort wt currency twice .•
In
ad~i tion,
~
. ' ..
'
we are destroying reserve money - at' this 'tin:a a· process
very undesirable under present circumstances .• (We drive it into circulation and substitute F. R. notes in the vaults of F..
R~
ballks and member
banks).
More.over# if Federal Reserve Banks issued Federal Reserve Bauk notes
in fives and tens without any direct connection with the ones and twosthat have been withdrawn and substitu~ed by the Treasury~ it would be
'
'
very
. . difficult to. separate ihe item "Federal Reserve .Bank Notes" in 'our·
~
state~ent
culation.
in such a way as to eliminate it from the general reserve cal-
Ottr note issue would appear to have increased by $l50 1 000 1 000J
while if we issued the ones and twos direct we could establish a separate
"
item in our weekly stateu:ent, calU.ng it "One and Two-Dollar Federal Re·
serve .Ba.nk Notes", a.nd everybody would know tllat this ,l tom has nothing
to do with
0\lX'
Reserve Bank
tbat it
~s
general banking transactions for whiah $8,000,000 Federal
~otes
are a+ready !n circulation- everybody would .know
simply a temporary item to be kept
~t
just a.s long as our
~~
X-683
y
•.
- 3-
one and two-dollar notes saould be outstanaing in substitution for the
silver certificate$.
···
Jn that aase the five per cent reserve and redemp-
tion fund would fonn a separate item against these notes and would probably bQ considered adequate
and not draw anr
When'we cone to reissue the silYer
crit~cism.
certtf~cates.,
ani if we had
is~sd
one and two-dollar Fe d.eral {teaervs Sa.nk notes our process of redemption
would be sirnple; there would ·oe a reissue on the ,Part 9f the Treasury of
the ones and twos anti an equivalent withdrawal on our part of the bank
notes.
If the Treasury nO!o'V puts out ones and twos by cutting l.J.P the green-
backs., there will later on not be any redemption of the ones and twos issued, a.s. the greenba...cks are not redeemble, anq,
to
t~ Trea~1,1ry.
®Y have
-~~
'
issue silver certificates in fives and tens in competiti<m with the
Federal Rese'"'e Banks because 1 as conceivable 1 the country
wil~
have
been saturated with ones and twos.
I do not see why we should
:~.
.
c~mplicating
the proposi-
As long as we are willing to issue fede.ral Reserve 13a.nk notes
~ainst
\
insist upon
Government bonds and
certi~icates
of j.n(S.ebte4ne.ss., :the.re is no
'
t.
~tJ,erence
wbeth8r they a.re fives and tens or ones ana :twos.., provided
.t ..
:J;e_r: ape to be Withdrawn as soon as silver cert~fi~ates vy~l,l be Teise.ue~.
I strongly believe that the proper, modus .for us would 'be to begin
to print the Fed._eral Reserve :Bank note
is pa.s!3ed. and leave the greenbaeks
Ol'leS
and twos .:·"s
soo~ "s the law
... -·
undis~d
at this
we woul unnecessarUy -ad.d to the burden of :'the .member
..
-~~.
l;tank~~
otherwise
We have
X-683
.....
•
- 4 1
to appeal to them etten enough nowadays to help us
~n
gold certificates. We will have t9 ask them to help
the silver
cer·tifi~atesJ
anO. I do
any more inconvenienQe than ie
JlOt
thj.nk :it
absol~t~ly ~~easary.
'
W.
,
*
l - ?~ .... l~l
.....
.~
,
.
~s ~n
setting in
~ti ~4vieabla·
!
~. M.
getting in tbe
-·
,
to create
73
X-683 a
An Act to
co~1sen·e
the gold supply of the United States; to pern·it the
settlen.ent in silver of trade- balances advorse to the United States; to pre·vide silver for subsidicl..ry ccir•.age a:rld for co,.:n.ercial
State~~;
Allies of the tr:r:itE:d
usf:l~
and for the above purposes,.
t~>
t.-:J assist the
stab1lize th.;
price and encourage the production of silver.
BE IT ENACTED BY THE
SENA~E
AND BOUSE OF
REPBESENT~TIVES
OF
TH~
UNITED STATES OF AME!:\ICA IN CONGRESS ASSEMBLED:
Sec. 1.
to
ti~.e
The Secretary of the Treasury is hereby authcrtied from tirre
to r.:el t or break up and sell as bullion any Stand2.rd SHve-r Dollar·s
now or hereafter held :,i.n the, 'l'reasury of the United Stat'3c to a total of
$150,000,000,. Of such Ddle.rs on th~ sirr.uli.a::lf'O'.lS retire:::r:ent of siJ.ver
certificates (if any be ~1tstanding against such Standard Silver Dollars)
at the rate of One Dollar face a.rr.ount of such Certificates for each Stand·
ard Silver Dollar sold as bullion for any of the purposes of this Act
terms as to price and otherwise
to
0~
be established from tirr.e to tirr:e bJ the
Secretary of the Treasury.
Sec. 2.
of this
Act~
Upon the saie as builion fro~ tirr.e to tirr,e under the provirio~s
of any St:.r.d.ard Silver Dollars~ the Secretary of the Trec...sury
sl1all imrnd.eiately direct the Ditector of the !flint to purchase etn amount of
silver equal to 37ll grains of fine silver in respect of every St~~dard
Silver Dollar so sold, such _purchases to be in accordance with the existH!'';
re~lations
silver 1,000
of the
fine~
~int
and at the fixed price of One Dollar per
oun~8
de:tivered at the option of the Director of the Vlint at
'
New York, Philadelphi<;t,
of
Denver.~
or San Francisco.
Silver so sc,ld or so
X-683a
- 2-.
purchase£ r;my be sold or resold for any of the purposes of thJ.s Act under
rules and
re~lations
to be established by the Secretary of the Treasury 1
and any.excess of silver so purchased over and abova the needs for the
puc~
poses recited in this Act, shall be recoined into Standard Silver Dollard r.r
held !or the purpose of such coinage.
The net amount of silver purchase•t
shall notJ after rr.aking allowance for resales 1 at any tirr.e exceed the aiLvtmt
needed to recoin any Standard Silver Dollars theretofore sold as bullion
u:pder the provisions of this Act and such purchases shall continue until
an amount of silver shall have been
purchased~
sufficient 1 after naking
allcma.nce for resales, to reco:i.n all Stanclard Silver Dollars theretofore
sold Under the provisions of this Act.
PROVIDED, HOWEVER. that whenever the
Sec.retary has sold silver bullion tg the extent of $10,000,000 he shall dis~
gontinue
egual
th~
§UCh sal~§
arr~Mnt
h~
bas 11urchased or contracted to Rurchase an
of such bullion for coinage PMrpose§ at a prige not to
excee~
price at which such bullion was sols by hiw.
SecA 3.
for
until
th~
Silver rray be sold as bullion under authority of this Act,
purpose of conserving the gold supply of the United States; of..
. facilitating the settlerr.ent in silver of trade balances adverse to the
United States; to provide silver for subsidiary coinage 1 and for comr.er.cia.l
use, or to assist the Allies of the United States.
The allocation to the
Director of the Mint for subsidiary coinage of any silver shall 1 for the
purposes of this Act, be regar4ed as a sale or resale.
1/28/18
SUBMITTED TO BOARD> January 28
by Mr. Strauss. through Governo~ Harding.
An act to conserve the gold supply of the United.· Sta·tes;
to perudt the settleu~nt in silver of trade balances adverse to
the United States; to provide silver for subsidiary coinage and
for comnercial use; to assist the Allies o:f the United Statef'; and
f~r the above purposes 1 to stabilize the price and encourage the
Pl'Qduction of silver.
BE IT ENACTED BY THE SENATE AND HOUSE OF REPRESENTATIVES OF
THE UNITED STATES OF AMERICA IN CONGRESS ASSEMBLED.
Sec. 1. The Secretary of the Treasury is hereby authorized from
tina to tina to melt or break up ano sell as bullion any Standard Silver
Dollars now or hereafter held in the Treasurr of the United States to a
tota.l of $1501 0001 000, of such Dollars on the retirezr.ent of Silver certificates (if any be outstanding against such Standard Silver Dollars) at the
rate of One Dollar face amount of such Certificates for each Standard Silver
Dollar sol4 as bullion for any of tbe purposes of this Act on te~s as to
·price and otherwise to be established from tine to tirre by the Secretary of
the Treasury.
,/
Sec. 2. Upon the sale as bullion fro.m tizr~ to tirr.e under the provisions
of this Act 1 of any Standard Silver Dollar, the Secretary of the Treasury
shall irr~diately direct the Director of the Mint to purchase an amount of
silver equal to 37lt grains of fine silver in respa~t of every Standard
Silver Dollar so sold, such purchases to be in accordance with the existing
re~lations of the Mint and at the fixed price of One Dollar per ounce of
silver 1,000 fine~ delivered at the option of the Director of the Mint at
New York, Philadelphia, ~nver 1 or San Francisco. Silver so purchased nay
be resold for any of the purposes of this Act under rules and regulations
to be established by the Secretary of the Treasury, and any excess of silver
so purchased over and above the needs for the purposes recited in this Act,
shall be recoined into Standard Silver Dollars or held for the purpose of such
coinage. The net amount of silver purchased shall not, after n::aking allowance for resales, at any ti~e exceed the a~ount needed to recoin any Standard
Silver Dollars theretofore sold as bullion under the provisions of this Act
a.nd such purchases shall continue until an amount of dlver shall have been
purchaseo~ suf!icie~t, after rraking allowance for resales, to recoin all
Standard Silver Dollars theretofore sold und~r the provisions of this Act.
I
•
X-f-8.3 b
- 2-
Sec. 3. ·silver ·rray be .sold as bullion under authority of this Act~
for the purpose o'f conserving the gold sup'ply of the- United States; of
facilitating the settlen;ent in silver of trade balances adverse to the
United States; to provide silver f.or subsidiary coinage~ and for couzr.ercial
use·~ or· to assist the Allies of· the United States.
The allocation to the
Director .of the Mint for subsidiary coinage of any silver shall 1 for the
purposes ·of this Act 1 be regarded as a sale or resale.
sec. 4. In order to prevent contraction of the currency~ Federal Re ..
serve Banks rray be permitted or required by the Federal Reserve Board 1 to
issue Federal Reserve Bank Notes 1 in any denou~nations authorized by the
Federal Reserve Board, against the security of United States Certificates
of Indebtedne$s, or of One Year United States Gold Notes, in an aggregate
an;punt not to exQeed the arr.ount ot Silver Dollars rr~lted or broken up and
sola as bullion under authority of this Act.
The Secretary of the Treasury nay, at his option# extend the
. titre .of J)ayu:ent of uaturing Certificates of Indebte4ness held as security
f,9r Federal ~serve Bank Notes for a period of not exoeeding one year at any
on~ extensic;>f.l 1 and the deposit of Certificates of Indebtedness br Federal_Re,..
serve Banks as security for Federal Reserve .Bank Notes ·UDde.r authority o:f
this Act., shall be deerr.e4 to constitute an agreemmt on the part of the Fed•
eral Reserve l3auk tra.king such deposit., that the Secretary of the Treasu·ry
ttay so extend the tine of pay~~nt of such Gertificates of Indebtedness or
may pay such Certificates of Indebtedness in advance of maturity.
As and when Silver Dollars are coined out of bullion pu.rchased
under authoritr of this Aci, or S~lver Certificates are issued agains-t pullion held for- such coinage.,. Federal Reserve. Banks rray be required by the Federal Reserve Board to retil'e Federal Reserve Bank Notes in an amount equal to
the amount. of Silver Dollars coined 1 or Silver Certificates issued, hereunder,
and, in the discreticm of the Secretary of the Treasury., Certifi~ates of
Indebtedn~'s oeposited as security for Federal Reserve Eank Notes nay at
such tiD:e ,_be ~id off and canceled.
i•
When Federal Reserve Bank Notes are issued under authority of
this Act, against the security of Certificates of Indebtedness or One Year
Gold Notes of the United ~ates 1 the tax on aueh Federal Reserve Bank Notes
shall be so adjus~ed that the net return on such Certificates of Indebtedness,
or One Year Gold Notes, ca~culated at par, shal~ be equal to the net.return
on United States Two Per Cent Bonds_ when used to secure Federal Reserve
Bank Notes.
.
X-683b
..
- 3 -
.
Nothing ~n this Act shall be construed as repealing
. o~ restricting the tigh~ of Federal Reserve· Banks· to ·is·s\le Federal .
Reserve Ba.rik Notes under authority of Section 4 of the Fede:raJ. ijesarve
Act.
·
Except as. herein provided, Federal Reserve Bank Nqtes · ·
issued under authority· o1 this Act, shall be subject to all existing
laws relating to the iss~e; redemption, and retirenant of Federal
Re:~erve Bank Notes issuecl under authority of the Federal Reserve Act •
• .· . ' t
.
"';.
''
·- .·
; r
f
X685
l:A.TI<.' · OF "F.LOAT" OF FACH ::FEDZBAL RESERVE .BAHK TO EARNING ASSETS AliD DEPOSITS,
JANUARY 25, 1918.
..
Clearing : All other
: uncollecthouse
ed items
excba.nges
Federal
Deserve
Bank
.
:
...
Dr.
..
..
: Total col! lection items:
:
Cr.
•
..
.
Total
"FLOAT"
!Net inve~t- :Ratio of 11FLOAT"! .Ie.tio of 11FLOA.T 11 to
to
: ~edi~tely av~il:ment m
:total earning · ~ a.ole Governraant .:;tJUl
:t~sfdrs
assets
'!bank de,IJ OS itS •
:included in :
, Pel'" cent.
· :total ''FLOAT": Per cent •
.
..
1'+, 874
16,395
12,480
},915
15.877
59,421
75,298
55 •.906
19,}92
PHU.ADELPHIA
6,446
32,471'
}8,917
29,025
9,892
(a.) 2.00
CLEVELAND
a-,784
18,869
21,653
15,206
6,447
_1,580
BICBMOliD
1,178
17,431
18:bo9
12,792
5,817
ATLL"m
1,549
18,947
20,496
11,675
8,.821.
CHICAGO
~.079
41,693
45, TT2
18,793
258
i6,770
17,028
10,236
8,031
6
NEW YORK
t~
.
. Total uncol: lected ita.1s
..
1,521
. !OSTOlf
t
.
ST. LOUIS
MINNEAPOLIS
XAUSAS CITY
DALLAS
12-5
5·83
J-t.63
4.71
2..66
lO.Lt
17 .. 25
6.7
*·89
11.89
11.84
.. 7it9
4o.o6
20-5
26,979
15,615
20.1}
-14 .. 2}
12,840
4,188
1,66o
10.51
6.89
:10,236
3.573
6,663
5.275
29·87
14.24
19.~97
27 I 728
7.551
2.0,177
10,37~
~-7
2} .. 9
18,459
18,465
5.830
12,635
_5,372
42.16
24..1
11 1 628
12,106
~~284-
2a822
211J~
Z·J
4-l
)
S.Al'i FBAl'IC!SCO
la4!8 •
280,496
"323,703
128,.748
4},207
TO.rAL
194,.955
~.676
12-5
1·18
~-~----~---------------------------~~----~-----~------~-~-~---~--------·~---~--~----~---~---~------~~~~~-~·--------~-~~--~~~
... .
'
(a)lkceas ot an1ount of transfers
sold over amount ot trcs.nafers
.
.
•... ·
i>OUE:,~lt.
~. ,'
X-686
Under the terms of the order dealers are required to
file applications for registration certificates by January
31 1 1918 1 and from and after February 10 1 1918 1 persons other
than customers are not per.mitted to engage in transactions
covered by the order unless they hold a registration certificate issued by the Federal Reserve Board.
"The Board 1 however 1
is authorized to waive these requirements and in order that
dealers may be given full opportunity to procure the necessary
certificates it has extended the time for filing applications
to February 51 and has waived for a period of five days the
requirement that no transactions covered by the order shall be
engaged in by others than certificate holders ·after February
10.
This prohibition will 1 therefore 1
becorr~
February 15 instead of February the lOth.
1/29/18
effective on
{
W. P. G. HARDING. GOYI.&.Oit
PAUL If. WARBURG, Vl!:l GoYIRNOR
EX-OFFICIO MEMBERS
FREDERIC A. DELANO
WILLIAM II. McADOO
ADOLPH C. MILLER
SECRETARY OF THE TREASURY
CHAIRMAN
CHARLES s. HAMLIN
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
H. PARKER WILLIS. SF.CRITARY
SHIRMAN P. ALLEN, AUT. IICJt.ITART
AND FISCAL AGENT
FEDERAL RESERVE BOARD
WASHINGTON
X~oo68'7
ADLUt.I:SIS REPL.Y TO
FEDERAL RESERVE BOARD
( S·.<pe:rseding X~lf7)
( of Yay 18, 1317 )
January 30J 1918.
Sir:
In order to take car0 of a difficulty which has arisen in connection with the instruct~ons issued May 18~ 1917 in regard to Federal Rebank
serve/drafte 1 Federal Reserve exchange drafts and Federal Reserve transfers sold 1 the following rules for unifonn accounting
i~
.connection
with Fonr. 34 1 a!r.ending previous instuctions 1 are now issua.d, with the
request that you bring thew to the attention of your transit and auditing departn:ents.
You will note that Sections 1 1 2, and 3, of these
instructions are substantially identioal with the previous instruction 1
but that Section 4 has been modified.
l.
Federal resQrve bank drafts {Liability item on Form 34) should
be used to designate gross amounts of drafts drawn on the reporting
Fed·~
eral reserve bank by other Federal reserve banks 1 of which the reporting Federal reserve bank has received advice but which have not yet been
presented for payment.
Upon receipt of advice the bank should credit
item "Federal reserve bank drafts" and
charge item "BRAG".
When the
draft is actual'ly paid the bank the bank will charge item "Federal ·Rsserve bank drafts 11 and :rrake appropriate credit entry.
At the tirr.e the
draft is issued it will be necessary for the drawing Federal reserve
- 2 bank to credit. "~'ederal reserve banks
bel9w) and make appropria-';e ')ha:':"ge.
tl.~ansfers solrl (::lee parag;.~a.:p:il 2
At "':he ~xp:i.r1.t:i.':l:l 0t thA pcri0d
fixed by the banks' tin:e sch.;dule) the dre'llfi:ng hanY. will cn"d.i'lj
11
Due to
otha.T:.·Federal reserve banks ·· collec:ted fluids'' (Hem "CliO?") s.nd ch<::.rge
"Federal Reserve Bank 2.
T:~ansfers
sold."
Federal reserve bank<J - transfers sold 1 item
11
C:EN'.1' 11 , should be
used to designate amount of funds available as the result of tranl:lfers
sold.
Corresponding item on the a;::set side
11
BAIT 11 (Federal :L"eserve banks -··
transfers boughtL should represent amount of funds invested in transfers
bought from member and nomr.ember banks.
3.
Federal rese)AVe exchange grafts.
Re!erring to our circular
letter of April 20, and exhibits attached theretQ: Upon receipt of advice
from the drawing (Waco) bank that it has drawn F. R. ekehange drafts 1 the
F. R. Bank Of Dallas will charge the Waco bank's reserve account and credit
liability item
11
t.R.
exchange drafts 11 •
When the draft is received by the
drawee (Dallas) bank,
it will charge liability item 11 F. R. exchange dtafts 11
..
and credit"F. R. banks - Colleeted funds".
depositin~
credit the
The paying F. R. bank
will
n:ember bank' a reserve account and charge item "BARKH
(Federal reserve banks - other items) on the asset side.
4.
Federal Reserve Trangfer Drafts.
Upon receipt of advice from,
say 1 the 'l'enth National Bank of New York 1 that it has drawn a Federal Reserve transfer draft payable at San
Francisco~
the Federal Reser:e Bank of
New York will charge the reserve account of the Tenth National Bank and
X-687
- 3 -
credit account. "Federal Reserve transfer drafts", with telegraphic advice
to the Federal Reserve Bank of San Francisco, giving the necessary details
of the draft.
This advice should be considered as full authority for the
San Francisco Reserve Bank to pay the draft if
pay~ent
and when presented. Upon
of the transfer draft the San Francisco Bank will credit the re-
serve account .of the depositing uember bank and charge the account of
"Due from Federal Reserve Bank of
New York".
Upon receipt of telegraphic
advice of such paynBnt the Federal Reserve Bank of New York will credit
the account "Due to Federal Reserve Bank of San Francisco" and charge
11
Federal reserve transfer drafts."
The above suggestions do not imply the necessity for the Federal reserve banks to set up special exchange accounts with each of the
other Federal reserve banks.
It will be
sufficient~
so far as the Board
is concerned, if the banks will set up two general accounts - "Federal
reserve exchange drafts" and"Federal reserve transfer drafts" 1 through
which the two classes of drafts will be handled, irrespective of the bank
on which drawn, or at which payable.
It is also requested in this connection that Federal reserve
banks furnish the Federal Reserve Board at the close of each week
w~th
statement showing the rates at which trail and wire transfers were bought
and sold.
Respectfully,
Secretary.
'
..
.,
X·- 690fSu.,..~··~e-•..;n~
\
ro""' 'J.~ 6
X-650)
I.hi!:i Draft.
MEMORANDUM
FOR THE INFORMATION AND GUIDANCE OF THE FEDERAL
RESERVE BANK OFF!CERS AND ASSOC!ATED COMNiiTTEES
OUTLINE OF A PLAN FOR
~HE
CONSERVATION 01 CREDITS
Men in the councils of the Nation appreciate already that the
national
greatest/problem of today (because of the war} i$ the Conserva~ion of
Googs ang Services.
It is recognized that this can be brought about only
through cooperation and moral suasion.
Hence the prbpQsals hereinafter
outlined are fraffied with that object in view.
phrased in a different way
~~ght
The problem above stated
very truly be said to be the gigantic
labor problem of releasing workers and raw
~aterials
for war industries
by gradually curtailing unessential operations and doing it in such a
way as to cause as little hardship as possible to the workers or thair
effiployers.
This is by no ILeana an easy problerr. for it n:eans a very ...
general redistribution of labor.
In connection with the Problem·it will probably be necessary
or desirable:
(1)
To coordinate whereever practicable with the war savings Comndt-
tees already launched in the different States and utilize those organizations (State, County, and Municipal) so far as possible.
(Z)
To preach the gos:pel of the "Conservation ot goods and services"
until it is understood even though it means ringing the changes upon itj
and
harr~ering
(3)
it in as the first great essential.
To urge that all public or private expenditures for nonessential
improvenents be curtailed or postponed.
This rreans sooner or later
.I·
- 2 -
(a)
An appeal to Congress.
(b)
An appeal to the Governor and Legislature of ever State.
(c)
An appeal to the Mayor and Council of every City.
(d)
An appeal to the public utility or public service com~issions of every State and City not to require extensions
improvenents or betterr.~nts.which can be deferred till ··
after the war 1 and an urgent request that they refuse
authority for increrr~nts to capit~l for iffiproverr~nts which
they ~hink can be safely deferred.
To urge all corporations~ copartherships~· and individuals not to
{4)
tr.ako. in.provements which require new capitJ:l unless they be absolutely
necessary.
As the Governrr~ntis war needs can be net both by economizing
(5)
services on the one band. and by
of
l~bor
incr~asing
production or the productivity
on the other* it is well to urge an increased production
~long
the more essential lines:
(a)
By the effiployment of worr~n in all classes of industry
where their labor can be used to adv~ntage and especially
wherever nen whose labor is required can be released thereby.
(b)
By increasing the productivity of ~n's labor through
discussions and treaties with the representatives of
organized labor or by adopting u~thods which will 1 during
the period of the war 1 result in the n4ore continuous en.ployuent of labor or its productivitr.
lt may be pointed out that great progress along both• these lines has been
rrade in European
(G)
c~ntries.
Waste or·unnecessary consumption of bread 1 meat~ sugar~ and other
foodstuffs should be
stopped~
and'to that end there should be the closest
cooperation with the United States F.ood Administrator.
•
•
- 3 ·:.;.
In the saire way the consumption of other necessary sta;pies; such
as coal, fuel oil; gasoline, etc4, s:1ould be restricted wherever possible..,
to the end that these necessities shall not be used for unessential purposes.
In these
~atters
there should be the closest cooperation with the
Fuel Administrator.
(7)
It is important, and it should be borne in mind that the dis-
charge of workers from one kind of employment, unless some scheme is
devised for their reemployment in son:e necessary work, will not have a
benefic~al
effect but will be harmful.
In other words, it must be rerr.em-
bered that labor is fluid only to a limited extent and that workers can
not be shifted quickly from one point to another or !rom one kind of work
to another withqut a certain amount of enforced idleness and pecuniary loss.
(8)
While it nay be argued that
so~~
kinds
of
e~ployrnent
are unes-
sential to.the conduct of the war and therefore should be restricted, it
II.ust at the sa.&e tin:e be admitted that if 'the articles, however unessential
to our needs, are exported, let us say to soue neutral country from which
we are obtaining necessary articles, it is an industry which may properly
be encoura~d,
thro~gh
{9)
not at the direct expense of necessary industries, but
absorption of scarce materials or available labor.
It will probably be f~nd necessary to adopt so~~ sort of ap-
plication blank# in the nature of a "certificate of necessity" for all
proposed
c;:~.pita.l
expenditures and require all National and State banks
when askeQ. to lend money to corporations, copartnerships or individuals,
to Q.emnd suc}l certification, it being understood that this would not
•
•
- 4 -
apply to seasonal or com:r:ercia:. borrowing 1 but only t.o extensions of
credit for iiLproven:ents 1 bettera.9nta, and other capital expenditures.
by a
Con-~j_t.t.oe
appointed for each State anrl 1 if approved 1 :passei on with
that Cormii ttee 1 s recbtrn:endation tb the Federal Reserve
(10)
Ba~1k
The Federal Reserve Bank of the District sho:;.ld
:i!'. i,urll, p~ss
upon such requests for credit) and send them to the Federal
for final decision.
of tbe District.
Reser~e Bo~rd
The Federal Reserve Board 1 acting through
i~s
Com-
rrdttee on Capital Issues will issue its license or foriL of approval 1 if
approved, or will decline to do so.
The
Corr~ttee
on Capital Issues will in all probability pass
only upon requests in excess of $250)000 and will probably delegate to
the District
Corrn~ttees
the authority to rrake final decisions subject to
appeal to it in cases involving srraller arr.ourits.
( 11)
1'he cattying Wi Of this progra!IlLe presupposes and n:ut:lt have
to be successfu1
/the hearty coopetation of b~nks and bankers, ~erchants and aanufacturers 1
little and big all over the countl!Cy; with the object in view of dacent:ralizing the work and arresting the
fl~od of ~plications
so far
as
possible
at their source.
February l, 1918.
Paul M. Warburg
) Corrn.i ttee of the
Chairn.an
) Federal heserve Board
Frederic A. Delano)
on
Charles S. Hanllin ) Capital Issues
Allen B. Forbes of N. y.)
) Advisory
Chairrr:an
Henry c. Flower of
)
Corrnd ttJe
)
Kansas City
on
F. H. Goff of Cleveland ) Capital Issnes
EX·OFFICIO MEMBERS
X-6'~J
W1LLIAM G. McADOO
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
FEDERAL RESERVE BOARD
CoMPTROLLER OF THE CURRENCY
WASHINGTON
W. P. G. HARDING, GOYIAROR
PAUL •• WARBURG, VIOl IIOYjiR~Q·R
FREDERIC A. DELANO
ADOLPH C. MILLER
CHARLE$ S. HAMLIN
H. PARKER WILLIS, S!!CRITART
SHIRMAN P. ALLEN, ASiiiT. SJCftiTART
AftD FISCAL AGENT
ADDft&SS REPLY TO
FEDERAL RES&:RVIE -.oARD
Dear Sir:
In reference to a question raised by the Federal
Reserve Bank of Boston, the Board has ru.led that, in figuring
interest for rediscount transactions between Federal Reserve
Eanks, the basis of 36i days to the year should be applied.
A copy
ot the
Board's ietter to the tedeml Reserve l3azlk of
Boston is enclosed, for your information.
Very truly yours,
Vice Governor.
Governor, Federal Reserve Bank•
Encloev.re.
X·-69J.'l-
Jc.nuary 31,, 1918
Mr. Charles A. Morss.,
Governor., Federal Reserve Bank,
Iia.ss.
Boston.~
I:'ear Governor Morss:
In Governor Harc~.:tngts absence~ I am reply:bg
to your letter of January 28., in which you inform +,he
Board that, in connection with rediscounts with :Federal
ReserVe Banks., the point has been raised by one bank that
it is its habit to figure discounts on a basis of 360 days
to the year., while in your district they are figured on a
basis o! 365 days. The b~nk clai~ 1 therefore, the differ&nce tr.om yo-.1.
You
ha~e asked tha Board to give you
a ruling
in this respect, and after a full discussion of the
question it has been decided to rule that for rediscounts
on transactions between Federal Reserve B~nks, the basis
of 365 days to the year should be applied.
I am sending a copy of this letter to all banks,
for their future guidance.
Very truly yours.,
(Signe~)
PAUL M" WARBURG,
Vice Governor ..
X-59 2 w. P. G. HARDING, Gov,awoo
EX·OFFICIO MEMBERS
PAUL Ill. WARBURG, YIQ: hYIRKOR
WILLIAM G. McADOO
FREDERIC A. DELANO
ADOLPH C. MILLER
CHARLES S. HAMLIN
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
11. PARKER WILLIS, S!::CRITARY
IHIRMAN P. ALLEN, ASST. iJ:Cit!TARY
AND FISCAL AGENT
FEDERAL RESERVE BOARD
COMPTROLLER OF THE CURRENCY
'
WASHINGTON
ADE:Ift&SS REPLY TO
FEDE;RAL RES&:RVIE BOARD
February
l~
1918.
Gentleu.en!
As you have already been advised 1 there is being sent you a
supply of the Federal Reser;e Board • s publication containing the
Executive Order of the President, dated January 26 1 issued under
the authority of 'l'itle 7 oi the Espionage
Trading with the Enemy
proved by the Board.
Act~
the
f~ll~g
and Section 5 of the
accowpanied by forms which have been ap-
This Executive Order and accompanying forms
relate to the registration of dealerl in
Board thinks it well,
Act~
however~
forei~n
exchange.
The
to call to your especial attention
paragraph:
All transactions in foreign exchange~ export or earrr~rking
sil~er coin or bulliort or currency 1 transfers of
dredit in any form (other than credits relating solely to transactions to be execute~ wholly within the United States) an~
tranefers of evidences of indebte~ness or of the ownership of
property between the United States an~ any foreign country 1
whether enemy, ally of enemy or otherw.ise, or between residents
of one or more foreign countries, by any person within the
United States, except any such transactions or transfers conducted in confo~ity herewith, are hereby prohibited.
•t gold or
Comparatively little publicity seeus to have been given to this
Executive Order and regulations growing out of it,
an~
it is
suggeste~
~
-
·~
,.')• .. Jk
X-692
- 2 ...
that you take such methods as you lr'ay de$m
best.~
for the purpos.s
I
of calling to the attention of all those wmo are likely to be af•
fected by the Order t·he fact that it has been issued..
It is very
desirable also that all deaiers in foreign exchange should have
their attention particula.rit directed to the fol16wi%lg paragraph
of the regulations:
A deaJ.er sha.ll. require every customer p\lrchasl.hg foreign
exchange frw. hitn
selling foteigh exchange to him, to file
a staten:ent shOWing the :tn,lrpose ot such purchase or sale with
such details as the Federal Reserve Board. rr.a.y require, in•
elUding a-:. :ie claration to the effect tbiit no &D&Ilf or ally of
enem, of the United States has any interes~ directly or in•
dire etlt in such purchase or sale. Tile Federal Reserve Board
s~ll prescribe the forom of such declaration. Cbpies of such
stateaents shall be furnished by such dealer ~pon request to
the Federal Re.setve Beard.- thrwgh tne several Federal &serve
or
Banks.
A
further publication containing instroations to dealer-s in
floreigu exchabge governing the conduct of theit- bUsiness under
this Executi•& Order, and re~ations, will be sent you within a
feW 'day$.
Yours •ery truly,
Secreta.q.
Released for morning newspapers F<:3bmary 2 1 1918.
February 1 1 191U.
STATEMENT FOR THE PRESS_
Far reaching restrictions in the business of handling foreign
exchange transactions ;;:.nd the sale of securities for foreign accou.n+.,, both
for those dealing the rein and for those
becorr~
effective on Tuesday,
Feb~~ary
n~king
purch:.i.ses of the sarr.e ·' wHl
5, 1918.
Regulations covering the business of buying., selling, or dealir.g
in foreign e;ltchange or securities for or through foreign correspondents and
of earrying accounts or securities with foreign correspondents were distributed
the
by the Federal Reserve Board today. The regulations are issued under/order
of the President dated January 18, which expressly prohibits all transactions
in foreign exchange 1 export or earmarking of gold or silver coin 1 or currency,
transfers of credit in any form unless wholly within the United States; and
transfers of evidences Of indebtedness or ownership of property between the
United States and any foreign country, whether enemy, ally of an enemy or
otherwise 1 or residents of one or more foreign countries 1 by any person within the United States, except under the regulations of the Board.
The purpose
of the order of the President is to stop transactions
origimating in the United States which result in aid or profit to our enemies.
It is important that all those having any foreign transactions of <:..ny. nature
investigate and ascertain whether the business in Which they are engaged is
such as to require them to obtain registration certificates.
"persons", as defined under the Executive
Order~
In general
who are requiill'ed to n.ake
application for registration csrtificatas 1 are those who carry on a foreign
exchange business, such as
banks~
bankers and others# those who carry accounts
X-G':13
- 2-
abroad, such as certain classes of rr.erchants, industrial houses and ct;tcTs,
and those who carry accounts in tho United States for foreign intel'ests a-:d.
OI'
who hold or
de.:~.l
in securities for foreign interests, such as stock ex·:-
change brokers and others.
;3a,nks and b:::.nkers or tthGrs who buy :..nd sell foreign exchange for
account of their customers through
don~estic
corres.Pondents nust .u.ake ap··
plications for registration certif~.c""te:::l through the Federal Reserve B:..nks
of their districts but reports required by the FadJral
Reserve
BoZ::~.:rd.
nust be n:a.de through their dcm;eshc correspondents.
Furthor infortr~tion can ba obt~ined from the Federal Reserve B:..nks.
'
-·
.
RELATION OF LIBERTY LOAN TO THE WAR SAVINGS PLAN.
Stc.teu:ent by John S. Drun;, State Director
of War Savings for California (Northern)
before Liberty Loan conference in San
Francisco on January 16~ 1918.
***************
In calling for public subscrip-tions to Governrr.ent secur;;t.l,As
issued in aid of the
war~
the Treasury DepartiLent has not definitt:Jly es:;a.b ·
lished the relation which exists between the two types of secu.ri t:i.es. but
has prou.ulgated plans which conteiLplate that during at least a part of the
yea." both types will be on sc.le at the sa.zr.e tirre.
The very nature of the situation precludes any idea of eorr.petit·ion
between the Liberty Loan
coua~ttees
and the War Savings
conn~ttees.
At the
sane tiue it is advisable to analyze carefully the relationship between the
two campaigns 1 which I shall
atte~pt
to do under the headings of (a) objects)
(b) nethods, and (c) results.
l.
OBJECTS:
Of course 1 the prirrary 9bject of the Liberty Loan Cam-
paign is to obtain vast credits needed by the Government for the prosecu.tion
of the war.
Credits in the amounts necessary can only be obtained through
the
large subscriptions to Gove~ent loans by/great financial~ co~rcial~ and
.
induslrial interests oi the country acting together# and utilizing the resources of the Federal Reserve
Ban~ing
System.
It is barely conceivable trat
the war rrd.ght be Unanced entirely in this rr.anner 1 but the results 1 to be
cuss0d
later~
point of view.
,.,.
(li::;-
would not l;le satisfactory from either an economic or a polit5.cal
X-595
The secondary object of the Liberty Lo<l-n C.::.n.p.:.ign is to stirr.ulate
the patric..tism of tho people· by
of the country to
a~~pealing
to oVeryone to invest in thJ future
the extent of his ability 1 and at the sarr.e tic.e :re1:.ev0
tho pressure upon the financial, corr..rr.ercial 1 and industric:.l int0rests v.rhich
~ust
in any event subscribe tho bulk of the loan.
The prin.a.ry object of the War Saving Pl;:...n, on the other. hs.!1d 1 i:3
not to obtain credits for the Governu:ent 1 but to stirrclats patriotism by
rr~king
it possible for everyone to have a direct
fin~ncial
interost in the
outcoue of the war. E~ually important is the object of educatine all of the
.
by
.
people to save on nonessentials and/reducing their spending, to release labor
and rraterials needed by the Governrr.ent for war purposes.
to encourage the
pra~tice
A third object is
of thrift and saving, to the end that these
corr.e a national habit and lay the foundation for our
aconorr~c
~ay
be-
security after
the war ..
Finally 1 there is th0 practical object of raising
$2,000~000,000,
for war purposes 1 not one cent of which contributes to an increase in thG
tre~endous
inflation which results frolli the flotatimn of a credit loan as
distinguished from a strictly thrift loan.
To sun.rnarize the objects, then, we find that on the finz..ncial side,
the. war could go on for a time at least without the War
Sa~sPlan;
but on
the political side, it is the policy of the Governaent to atterrpt by every
u.eans possible to obtain the financial help of all of its citizens; and on
the economic side, it rray be stated as axion:atic that our war financing will
be sound exactly in proportion as we accomplish it without undue inflation.
X-695
•. 3 -
2.
METHODS:
Tho rr.ethod of the Liberty Loan C..n.p::t.ig!'l is a sp.Jct.acular
drive; the rwthod of the. War SavingsC.::..n.paign is a broad educational rr,oven.ent
involving n:inute organizc:..tion reaching into every horr.e 1 however
Liberty Loan C.::.r:.paign is directed ospcei:-..111 to
of the War
Sa.viDg~
ili:.:.9W~
Ca:.:r.paign is directed especially to
The one is designed) az I have saic. 1 to raise
~re1its
Ti1e
pooJ.·.
subsc::-:i.bJa.; the effort
~·bU.!!.
_oj_
n:Y.b:3C£.~.b.Q...:§...
regarci.less o!.
~r?
r:a.un13r;
the other is desig'!'led to bring !1or...c to ovary rr.an, wca:an.,and chili enjcy:•.r.g
the benefits of American lifo a raalization of the obligations of cHiz.mship
and how each rr.ay help through
saving,~
even in the sn:allest arr.ounts.
This is not to say that there is no over1.apping 1 for the Liberty
Loan Cau.:pa.ign is largely an appeal to patriotism.
rr.ado for the purchase of both types o: securities.
sarr.o uses.
large
The fl;;.n;e
<tan be
The money goos to the
The only difference is that Liberty Bor..ds
a~ounts an~
arg):l~mtu
rr~y
be subscribod in
on a credit basis 1 while War Savings Certificates
c~n
be
purchased in air.ounts not .exceeding $1000 for any purchaser 1 and they can not
be used as collateral.
To surrnarize
liothods~
then, the Liberty Loan
C~rr~aign
is pric.ari:y
a drive for subscriptions.; tho War Savings C;;..rr.paign is priz.:ariJ.y an educational catr.paign to teach the po ople @!.
evc~7one
::rnst h.}lp finance the wr-.r J as a
concrete patriotic dut-y, by rci:ra:ir.ins f:rorr. wasteful and noedJ.ess spcni.Jng and
loaning the rr.oney saved to tho Go7.~ernu.e:J.t.
3.
RESULTS:
The over-shadowing result of the Libert}- Loan
CaL~pa!.gn
is the irrn.odiate creation of ample crodits with which to carry on t!le war.
..
This result brings with it, however, the inevitable inflation of credits,
.
'
X-695
•. 4 -
which
r3acts upon our whole econorric life and contributes largely to the
increase in prices.
Inflation is a necos:;;ary evil; the offort of th.:J Treas-
ury De;parttnent is to :teduee it. to a ninin:w:n.
Hence the c:arr.paign tb obtain
srr.a.ll subscriptiona,either (a) frau; existing wealth, such as rr.or.ey on deposit
in savings banks, which is already represanted by funded
invost~ents
which
are placed in jeopardy by the withdrawal of deposits~ or (b) on instaJ.lmont
contracts involving trorr.endous detail labor for the banks and
e~ployers
who
advance the money and carry the subscribers during the period of their paywents.
'
It can not be overlooked that thousands of subscribers to Liberty
Bonds, on whom the Liberty Loan
Conn;i:~tees
expend tirr.e and energy dudng the
carr.pa.1gns 1 do not retain the bonds they buy but
11
spend 11 them exactly as cur-
rency_. in the satisfaction of personal wants vvhich i t has not been the effort
of the Liberty Bond Campaigns to curtail.
It is obvious that whenever a
subscriber pa.rts with his bond., except for reasons .of nGcessi ty 1 the w:vrk of
the
..
~iberty,
Loan Campaign is to that extent
~ndone.
The bonds that find their
way back into the rr-.arket n:ust be abso1·bed, and in practice arc absorbed> by
the financial, corr.merc5al and industrial interests which
were intended to
be reliev(tci by the original wide placerr.ent or distribution.
Moreover it is plain that the subscriber whose bond does not "stay
put" iS 4oing absolutely nothing to help the Governrr.ent, for when he "spends"
his
pond, he is competing with the Governuemt which his subscription was sup-
posed to help.
th~ ~oney
If I do without a suit oi clothes wnich 1 do not need and put
I saved into a Liberty
Bond~
I
~
giving the Governnent the first
X-695
- 5 -
call.upon the wool on the sheep's back and all of the productive factors
But if I later trade the bond for the
tween the wool and rre.
undone all the good
arising
fro~
suit 1 I have
the first transaction.
The War Savings plan is designed to encourage investing
A War Savings Certificate is not negotiableJ but as an
deerr.able at any titr.e without ioss to the invesiob
the vita1 5-tr.pbrtanee of
1ndlvi~ua11s derrartds
Saving
be~
offset~
and
hol~ing.
it is rrade ro-
The campaign will empha~:tize
·to ir.rltest;, pritr.ai"i1y 'because saving tedur.es the
upon the 1irrited supply of labor and rraterials available
for war purposes 6 and secondarily because the thrift wealth or savings of the
people Will be our chief
~en
security after the war.
econo~ic
per cent of the people bought Liberty
favorable conditions for securing wide distribution.
Bonds~
under the
~ost
At least thirty per cent
are ex,pecte4 to invest in War Savings Stan:,ps during the corning year.
Just as
the Liberty Loan Caxr.paign is far n.ore in:.portant financially 1 it is far less
important politically, where the rrain consideration is nUffibers rather than
aiLounts.
.
To sunnarize results 1 then 1 the Liberty Loan Campaign produces
money, but it
been reached,
Loan
C~paigns
On the
~st
be recognized that only ten per cent of the people have
On the economic side, it nust be recognized that
Liberty
rrake for inflation, whereas the War Savings Campaign does not.
poli~ical s~d~,
reaches three tirres
the War Savings Campaign will be a failure unless it
a$ ~ny
people as have been reached by the Liberty Loan
Corw.i ttees ..
~he
.
,.
X-69!;)
.. 6 ...
•'
'1'
•
It would seen. that both
one dove-tailing into the other,
can~paigns
have art in;portant part to play,
Briefly statedJ the object ot the
Gvvern~
n.ent is to finance the war pron.ptly; with a rrJ.n.in:un; of inflatib:b. and a rr.axi•
nun. of subscriptions.
The Liberty Bond Campaign is addressed prirr.arily to
obtaining the necessary creditsA regardless of
financial system.
conse~uences
entailed to
~~r
The primary object of the War Savings Can;paign is to secure
the greatest po&sible number uf srr.all individual
invest~ents ..
representing
thrift wealth.solely, and without inflation.
Our appeal to patriotism is the san.e.
The investor in one type of
security is helping exactly the sane as the investor of a similar amount in
the other type of security.
Experience of the first two Liberty Loans
r~s
shown that what is needed r:r.ost ia propaganda addressed directly to the individual, nQt for a brief period but as a part of every day routine.
This is the object of the Wat Savings
Can~aign.
It is a propaganda
of patriotisr:r.., and in order that it rray be effective_. the Governrr.ent has
oUered special inducen.ents to the people to save and invest srrall an;ounts,
in order to keep the evils of inflation at a rr.inin:um and to awaken the patriotlc interest of the whole public.
If the War Savings Campaign is successful, the n;oven.ent will be the
n;ost active feeder for successive Liberty Loan Drives.
If we can irr.press upon
the people the vital necessity of saving, larger affiOttnts will be available
for subscriptions to future Liberty
Loans~
• and withOQt inflation.
.... 7 -
We hope to educate the public to an understanding of why
should not be
sold~
through the
e~phasis
Govern~nt
securities
we shall place upon the reasons why
no one should redeeffi his War Savings Certificates except as a rratter
of
extrerre necessity.
On the other
hand~
the Liberty Loan Campaign will be an e!fective
rr.eans ~ throush its publicity and adve rtising 1 of bringing home to tile people
the irr.portance vf everyone doing his part., whether his ability is Ir.ea.su.red
by a. Liberty Loan
subsc~iptiun
cf fifty thvusand dullars or the purchase of
a. single War Savings Certificate Strucp.
(Signed) JOEN S. DRUM.
2/2/18
X.P696
NOTES ON THE LIBWY LOAN CAMPAIGN
.AND THE WAF. SAVINGS CAMPAIGN •
It is to be adn.itted tha..t there is
il..
s,o~
uverlapping in the
two can.paigns and yet the essential differences between then. are
well stated 'by Mr. Jahn S.
D~,
State Director of war sa7ings for
the nortllern half of Cali:f otnia.
The two Liberty ca:r..paigns with six billion bonds sold have
2.
reached ten ffiillion people; it is hoped to interest twenty nillion
by the
ti~e
the next drive is over, but even then this nagnificent
showing would rr.ean that ninety niillion people had not been induced
to invest in Governn.ent securities.
The Liberty Loan bonds are sold down to $50.00 denolLi.nations'
3.
arid even then on partial payn:ent plans.
bond
s~bscription
unit is $5.00
The average Libery Loan
is approxinately $600.00, whereas the war savings
(r~turity
value) with $1;000.00 as a naxinum; and
all we hope for is an average of $20.00 naturity value per capita.
A bond selling for $4.12 to $4.23 is really a poor nan•s bond 1
4.
and yet rrany rich men are subscribing the liffiit (200 of Stlch bonds)
partly to set a good example 1 but also to rrake gifts and so stir
their
,
,
up a spirit of loyalty in/
children, grandchildren and friends.
No one can say that is unwise, nuch less that it is
wren~.
If the
rich r::.en did not subscribe 1 people of srrall rr.eans rr.ight rightly
grow suspicious.
is
The addition of the interest to the principal,jin itself a
5-,
great stirrulus to thrift.
It points the way,
for~
whereas the
X-6~6
person who receives and spends his entire
inco~e
is a spend-thrift,
the person who adds his incon.e for five years to the principal, . · ...
is a real
sa~er.
As pointed out in ~r. nrwmt$ paper, the campaign for Liberty
66
Loan bonds is an i:l:ltensive and ~on:ewhat spectacular
.the war s~vings campaign is a continuous ~perfeqted fQr the war savings eampaigti is
one.
Besides the central
.
or~ni&ation
an
drive~
whereas
The organization
important artd affective
at Washington) there is in
every State a State director with a large conmittee of men and
w·or.uen serving as volu."lteers.
In ever1 county and in every important
city.there is a county and city chairrran with nany
serving on local
carr~~ttees.
u~n
and women
There are 3,000 counties in the Unit&d
States and on a ave1·age there are five towns in every county. In all
of' the important cities and xr.any of the to;vns thl!'re are precinct
captains.
Indeed~'
the organiZation has been built up on the theory
that every rr.an 1 won.an and child in the · United States will be soliciteQ. to buy at least one "baby bond 11 •
an effective carr.paign carried on by
and
~ong
i3esides this there has been
n~ans
of war savings
societi~s~
the school children to establish thrift clubs.
It is
probably a fair estirr.ate that there are 150 1 000 people in the
United States ilflp:'ng to di!"ect this war savings campaign.
2/2/18
X-697
DY .,. LAWS
:.ALTIMOiiE N\ANCH - FEDERAL hl:SERVE :ANK OF !~ICHMOND.
Pending the pronulgation by the Federal neserve Board of
•
r~les
and
regulations governing the operation of branch banks, under the provisions
ot Section 3 of the Federal fieserve Act) the following by-laws 1
ap~roved
by 'tihe Federal Reserve Bank of Richrr.ond under the authority of the Federal
Reserve Board) are hereby adopted by the Board of Directors of the Baltirr.ore
Branch of the Federal Reserve Bank of
n~nt
Rich~ond 1
for the conduct and govern-
of the said Baltimore Branch.
ARTICLE l.
Section 1.
Nan$ and Place of
Busines~.
This Branch shall have its place of business in the City of Baltimore,
State of Maryland, and shall be known as the Baltimore Branch of the Federal
Reserve Bank of Richmond.
Section 2.
Branch Territory.
The territory apportioned to the said Baltimore Branch for clearing
a~d
collection purposes, and for such other purposes as are hereinafter or nay
hereafter be, set forth in these by-laws, or any an2nduent thereof, shall
be that part of the Fifth Federal .Reserve District err.brated ·in the State
of Naryland.
The Federal .Reserve Bank of Richmond under such regulations
as it rray prescribe nay authorize banks and trust companies located in other
parts of the Fifth Federal Reserve District to deal vVi th the Bal tin:.ore Brancho
instead o! With the Head Office at
earrs extent as such dealing is
~ichmond,
pe~.itted
Va,J in like nanner, and tc the
to the banks located in the State of
..
X-697
- 2 -
Maryland, whenever it shall appear to the said Federal Reserve Bank of Richrr,ond
that the arrangen.ent will be to the advantage of the said banks or trust con.•
panies and. to the general-aavantage of the system.
Section 3.
Powers and Functions.
Subject to such rules and regulations as the Federal Reserve Board uay
~rescribe~
and under the direction and control of the Federal Reserve Bank
of t\ichrr.ond 1 the pO'vvers and functions of the Baltin.ore Branch shall be as
follows:
(a) To receive deposits frorr. and nake pay~ents to, or for, rr~~ber
banks, nonn~uiller banks 1 trust corr.panies, and other Federal Reserve Banks.
(b) Undef the Jir~otion and control of the Federal Reserve Bank
of ~ic~ondj and th$ Federal Reserve Agent, to rec$i~e and pay ~~ Federal Reserve notes of the Federal heserve Bank of hichmond~ and to re~
dee~ Federai Re~etve notes Of the Federal Reserve Eank of Ridhu.ond; ana
of otHer tede~al Reser~e Banks,
( o) To naintain ·and operate a departn.ent, or departr.:ents, for the
clearing and collection of checks and drafts payable upon presentation,
and also for the collection of uaturing notes and bills, and other cash
and credit instru~ents 1 for the account of the Federal Reserve Bank of
RichL.ond 1 as fully as r;;;..y be from tic:e to tin.e authorized by law1 for
Federal Reserve Banks.
(d) To receive fror.-. banks and trust con.panies, located in the
district assigned to the 3ranch, and from such other banks and trust
corr.panies as nay be authorized by the Federal Reserve Bank of 1\icbr,.o::ld
to deal directly with the Branch 1 offerings of bills, notes 1 and other
inst~~nts of credit, eligible for purchase, discount, or rediscount,
by a Federal Reserve Bank, and to transmit the sarr~ to the Federal Reserve Bank of Richmond, with appropriate recorm.endations, as hereiriafte,..
provided. Nothing herein contained, howe~er, shall be construed to
abr~dge the rights and powers of rr.ember banks to deal directly with the
Federal Reserve B:tnk of Richrr,ond 1 with respect to all relations of n.er-~
bar banks with their Federal Reserve Bank 1 as provided by law.
(e} To perfonr. such other duties and services as r.-.ay be specif: ·•
cally required of it by the Federal Reserve Bank of Richr~ond 1 or the
~ederal Reserve Agent for the said District.
X-697
Section 4.
Reports.
The said Bal tir..ore Branch shall n:ake such daily, other periodical and
special reports of its operations to the Federal Reserve Bank of Richr..ond
as nay be required on forr•.s to be prescribed.
rep~tts
to be
dete~ined
The sCOJ>e and fonn of such
cy the officers of the Federal Reserve Bank of
Richn;ond.
ARTICLE ZI.
RESEhVE ACCOUNTa - DEPOSITS - CHECKS
Section 1.
Reserve AccoMPts and Deposits.
The .Reserve Account of a n.en;ber bank assigned to deal with the Branch ..
or the Collection account of a
Branch, shall be kept
~t
non~~ber
the Branch.
bank authorized to deal with the
All checks and other iten>S for credit in
such account shall be sent direct to the Branch .. except as hereinafter provided .. and such itexr.s shall becor..e available a.s reserve in accordance with a
tin;e schedule prescribed by the Federal Reserve Bank of hichn.ond.
e~ce
With refer-
to each reserve account kept at the Branch, the Branch shall keep a
l"J£.cr4 which will show day by day the exact balance available as reserve,
and also day by day the required reserve of the n.en;ber bank.
Reports relative
to required reserve shall be na.de direct to the Branch by nen;ber banks naintaining accounts at the Branch.
Penalties for in;pairnent of reserve shall be
calculated and charGed to the respective accounts of the
~~ber
banks liable
to such penal ties, under the di-rection of th3 officers of the Fodera! Rese;ve
Bank o:f Richn>ond.
X-697
- 4
Section 2.
Checks
.;.~·and
~
Checks and Drafts.
Drafts drawn by rr.ember banks against their accounts kapt
!
at the Branch shall be drawn on the Ba.ltin.ore Branch of the Foderal Reserve
Bank of
~ichffiond.
Such checks and drafts shall be raceived
~subject
to
payn.ent) by the fi'ederal neserve &nk of Richn.ond, on a one day d.eferred
baais 1 bht by the Baltin.ora Branch tot- in.rr.ed:l.ate paytr.ent.
Checks a.nd drafts
drawn Qn the Federai f.eserve Bank of Richn.ond by a n.ember bank, whose reserve
account is kevt at the Head 0ffice 1 shall be received by the Baltin.ore
~ranch
on a one day def•rred basis.
§££tion 3.
Any
me~ber
Direct Eouting.
bank whose reserve account is kept at the Baltin.ore
TJ.aY be authorized by the Federal 1\eserve &.nk
direct to the Federal Reserve Bank of
Br~nch
ot Richrr.ond to send itetr.s
Ric~ond,
for credit with the Baltimore
Branch, subject to such rules and regulations as the Federal Reserve Bank of *
Richn.ond
rLaY
prescribe.
Sir.c,ilarly ~ any n:err.ber bank, whose
res~rve
account
is kett at the Hea~ Office in RichiLond, Va., nay be authorized by the Federal
Reserve Bank of Richmond to send iten:s diract to the Baltin:ore Branch) for
credit with the Federal Reserve Bank of Richn,oncl, subject to such rules and
regulations as the Federal Reserve Bank of Richu.ond n:ay prescribe.
ARTICt:§ III.
OFFERINGS FOR DISCOUNT OR PURCHASE
Section 1.
~mber
banks whose reserve accounts are kept at the Branch nay send
direct to the Federal Reserve Bank of RichiLond) for credit with the Branch;
any paper eligible for purchase)
~iscount
or rediscount, by a Federal Reserve
X-697
- 5 -
Bank; or Whenever it rray be desired to receive credit
send such paper to
t~e
~or~
proffiptly 1 nay
Branch 1 and When approved by the executive
corrn~ttee
of the Branch, nay receive irrn.deiate credit on the books of the Br.::..nch at
•
the face value of the paper, subject to final action by the Executive Committee of the Fode:ral Reserve Bank of Richn.ond,
Such offerings shall be
pron.ptly transl'llitted to the Federal Reserve Bank of Richrr.ond for action by
the Executive
Con~ittee
of that Bank.
Pa~er
so transzdtted shall be acted
..advised
upon prorr.ptly and the offering bank elliall be imri.ediately/by the Federal Re·serve Bank of Richmond of its acceptance or rejedtioh and of the arr.bunt of
discount
deducted~
and the Baltimore Branch
an.ount of the discount 1
of the
~ember
sh~ll
also be advised of the
vVhich shall be irr.n:ediately crart,ed to tha account
bank offering the paper for sale 1 discount; or rediscount 1 With
advice to member bank.
Section 2.
Rejected
Ite~s.
If any of the paper so offered is, in the opinion of the Executive
Co~ittee
of the Federal Reserve Bank of
Rich~ond,
ineligible for discount,
or purchase, under the provisions of the Federal Reserve Act and the
~ecula-
tions of the Federal Reserve Board) or for any other reason not .acceptable
for purchase, or discount) the
sa~e
shall be returned direct to the
~rr~er.
bank uaking the offering by the Federal Reserve Bank of Richffiond, with
reasons for ncn-acceptance,
The Federal Reserve Bank of Richwond shall, at
the sazr.e tirr.e, advise the Baltimore Branch of such
return~
and the Baltin.ore
Branch shall imrr.ediately charge the face value of paper to the bank by wh:ch
it was offered (provided such bank shall hava already received credit for
the face value of the .Paper) 1 and shall. charge such interest for the inter-
- 6 -·
vening tiue as rr.a.y be equitable.
The Executive Corrn.ittee of the Federal
Reaen8 Bank of Richn,ond r:.ay authorlze the Executive Corr..rr;ittee of the
•
Bal tirr.ore Branch to return offerings irr.rr.ediately to the sending bank when
paper
the/
offered is clearly ineligible; or technically not in acceptable
shape.
ARTIC:LE
I'[
~TOREi
S,SJ.Ction l.
N~::r.ber
and W.orum.
Oitutors shall be appointed annually.
'l'he number of Direct orE~
shall be Uve 1 of whom the Manager shall be one.
A rrlil.jority of the
Directots shall constitute a quoruu for the transaction ot
but less than a najority may adjourn from titre
to
ti~e;
busine~S 1
until a
~uoruffi
is in attenaance.
Section 2.
Va~anciei
Vacangie~.
in the rr.embershi:,p of the Board shall be filled in the rr.anncr
provided by law,
Section 3.
There shall be a
re~lar
Meetings,
meeting vf the B0ard on the second and
fourth Tuesdays in each month, at ten o'clock, a. m. 1 or i! either Tuesaay
be a. holiday, on the next succeeding full !Justness da.y.
The Manager shalJ.
be err.powered to call a special rr.eeting of the Board at any tirr.e 1 and he.
shall do so upon the request of the Federal Reserve Bank of Richrr.ond, or
the written
re~uest
of any two directors.
Notice of any
rr~eting)
if
sent
X-697
- 7 by trail, shall be nailed e,t leaAt 'me day prior to the date of n:.eeting 1
and if given by
•·
telegr~.ph C'r
te1ep'J.on<7 1 at least two hours before the tin:e
of r:.eeting, or in tirr,e to FermH D:lrectors to attend.
Section 4.
Executl,ve Con.rd.ttoe..:..
There shall be an Executi.ve Corrn.ittee 1 consisting of the Manager, the
•
Cashier, and one Director other than the Yanager, any two of w~om nay act.
The Director (other than the Manager) to serve or.1 the Execu"Uve Ccm..nJt.toe 1
shall be selected by the Board. of
fot thtee months,
o~
D~.rector.s
nf +-he Branch.
E9 E:hal.l serve
until his successor is selected, and each of the
Directors (other than the n.anager)
a three months ter.m on the Executive
Sac.tion §.
shall be given the opportl1nity to serve
Co~ittee
during the year.
Fees.
Ea;h Director, when present at Director's rr.eetings, whether at the
regular ~ontbly nesting or at a called neeting (as herein provided) shAll
rec~ive
a compensation of $10,00 for each day the Board is in session, and
an allowance to cove.r actual expenses incident to attendance a.t the regular
or special naeting,
The Director (other than the Mana.ger) 1 who is a. xr.ember of the ExecutiJe
Coxr~~ttee,
shall receive a
eo~pensation
of $5.00 for each attendance upon a
m11eting of the Executive Com:nittee, for every day of such attendance by hi:rn,
except the day upon which he shall also
of the Board.
attend a regular or special nee+,iilg;
,........ Section 6.
...
- 5·-·
.,
Qrder ot Busin§QS.
The follcwing aball l>e tho order of busiMae of each
~eting
of the
Boar4 of Directors of the Branch;
1 •. Reading
2~
an~
disposition of
Report of the llana.ger 1
ni~tee
inclu~illg
of the
las~
neetiDg.
inlonr.a.tion ooncerning banking
a.nd business ~ tbdl \ions in the Bran.'h teritory, aa well a.s a sw:arary ot all
bv.siness tra.baa.tteci s.ince the latt regula.r meeting 1 and a statement of pre•
I.
.·
sent bphdl:tiob.
3.
Readi~g by the Mabake~ bf
otti6ia.l
oor~SpqDdenc• with the Federal
Reserve Eank of Richmond.
'·tk
Reports of corarittees.
6&
Apl)rote.i of reports a.nd
bhi itiished
business.
reco~nctations
to the Federal. Reserve
Bank of Riahulonc\.
'f.
Vew Business.
ARTICLE V.
Sgptiqp l,
Officerf.
The officers . . Who shall be chosen by the Board of Directors of the
Federal Reserve Bank of Ric:-bmond 1 shall be a Ma.Aager, wbo shall be one of
the
Direc~ors
of the Bra.nch., a Caehier,. and such other
oUian~s
a.s, in t-he
opinion oJ the Directors of the Federal Reserve Bank of Richmond, nay be
necessary for the proper conduct of the business of the Br.ancb.
They shall
hold office during the pleasure of the Dir.ctors of the Federal Reserve Bank
of Richmond.
X-697.
- 9 -
§ecti9D 2·
!&a.ne.gor.
The Manager shall preside at a.ll D.irebtO'rs t n-.eetinga) and sha.ll ha.ve
gene raJ. char~ · of the Bra.nch.
~he i&a.nag6r sha11~ jQlniiy with the Cashier, ha.\}e c..ha1 g?
Ba.ltitLero Bra.nch.
Jl
Qf
a11
bel~
·.
He ~ha.l1 ~e of H4ially cl•signa.ted as l"al1a,.ger
u.cb-1~• and a.11 hmd.s 1 investxrents 1 colla:tera.ls, and other secu.r:i.i:ios 1
by the Branch1 subject to such rules as .the Federal Reserve Board nay
adopt for their safety.
officers) or other
by the
by~la.wa}
serve Bank of
inst~ctions
In all cas.es in which the duties of subordinate
e~ployees
of the Branch are not specifically
presc~ibed
or the Board of Directors of the Branch) or the Federal Re-
Ric~ond 1
they
eh~ll
be the duties prescribed by 1 and the
of 1 the Manager.
Section 3.
Acting Manager.
In the a.bsenoe 1 or disa.bili ty 1 of the Manager1 the Directors of th&
Federal Reserve Bank of Ricgmoncl, or the Executive CoJULittee of the Feclera.l
:Re.serve Bank ot Richmond) my appoint an Acting lle.na.ger 1 who shall exercise
the pCo'leh e.n<l discharge the duties of the Ma.J'Ulger.
Settian 4,
Qt§kier.
The Cashier shall jointly with the Manager hc:\.Ve cuetody of all moneys,
investments 1 GOllatera.ls, and other se~rities 1 subject to such rules as the
:Federal &serve Board my a."opt for their safety, and under such regulat:!.on!'J
as the Fe4era.l Rosetve Ba.nk of RichJ:t.oncl ma.y prescribe.
He shall keep the
minutes of the Board meetings., a.ncl of all ccmLitteee of the Board, and pe11oL.n
'\
suc;b other duties a.s may be assigne• to hilll from tin;e to
s'lib.ject to the ap pre~al of the Federal Reserve Ba.nlc of
through its Board of Directors or Executive Comnittee.
t~
by the
Ric~oncl,
lhna.ge~~
acting
_j;,;.
- 10 ..
Section 5.
Acting Cadbiar.
In the absence, or disability, of the Cashier,. the Executive
Conn~ttee
of the Boarcl oi Directors of the Branch rmy appoint an Acting Ca.shier, who
shall exercise the powers and perfor.m the duties of the Cashier, until such
t1ue as the Pedetal Reserve Bank of Richmond, acting through its
Boar~
of
Directors or Executive Cozr.mittee 1 shalf appoint a. successor to the Cashie:o•,
or Acting cashier.
Secti9n 6.
Other
Ric~on4,
employa~s
shall be app9intecl by the Federal Reserve Bank of
acting through its Board ol Directors, or Executive Connittee 1 or
they nay bo
or
~ppointed
by the
Exe~tive C~ittee
tion
~~
Federa~
Other EmploYeQs.
~na.ger,
subject to the approval of the Direottrs
of the Federal Reserve Bank of Richmond.
The compensa-
officers, clerks, and employees of the Branch shall be fi•es by the
Reserve Bank of
Ric~on4,
acting through its Directors,cr Executive
Committee, subject, bowGver, to the approval of the Federal Reserve Board.
Sect!o; 7.
ExpeQd!tMrQS.
All. expenditures of the Branch shalll:a subject to the approval of
the Federal Reserve Bank of Richu.ond, acting through its Directors or
Oommitt~e.
tiVG
tor~~
and in such
of Ricmnon<l.
day
!he Branch shall keep
The
ot tbe tPOnth
de~ailed
~nner,
~
regular expanse aocount 1
~n
as nay be prescribecl by the Federal Reserve
tota.l amount ot such accQunt shall
be
Execu~
such
~nk
charged on the last
to the Fedetal Reserve Ba.nk of RichTLondJ at which tin.e
report shall be nade to the said Bank.
§egtion 8.
Qounse~.
The General Counsel of the federal Reserve Bank of
·
Ric~ond
shall act
..
.,
X-69'(.
- ii ,
as Oounse1 for the B!anch, and shall
rep~esent
the Branch iri
such matters as
tt.a~.y 'be:; assigned to him,. and shall a.pproV• a.l.1' 1ega.1
docwr.ents.
''
The said
'
•
General COunsel c:..t the request of thli Federal Reserve Ba.nk of Richzr.i)nd nay
&ppoint a. iocal attor~ey) a.s Ass~ciate Counsel, with a reta!ner 1 to be
approved by the Fed6ral RaseT.'Ve Bank of Richmond.
Section 9.
Auditor,
The Auditor of the Federal Reserve Bank of Richmond shall act as
Auditor ot the Branch,
He shal:t, ha..vaver 1 have one or more assistants 1 :ae
nay be determined by the Federal Reserve Bank of Richmond 1 which assistant,
ot assistants, shall be permanently located at the Branch, and shall
such duties as rray be
ase~.gned
perfo~
to them by the Auditor of the Federal Reser,re
Sank of Ricbmcmd, and the Executive ComrJ.ttee of the Federal Reserve Bank
of
~chmon4,
COmmittee.
or the Manager of tha Branch, with the approval of said Executive
the chief Assistant shall be knowa as the Auditor of the Branch1
and he may be appointed Assistant to the Federal Reserve Agent of the Federal
&serve B:l.nk of Richmond, in which case he shall perform such duties as rray
be prescribed by the Federal. Reserve Agent.
A.RTigLE VI.
Seot!on l,
f?usiness Hours.
The Bank shall be open for bu$iness from nine a. m. to three p. m•.•
on each day 1 except Sa. turda.ys and Sundays 1 or days 1 or parts o! days e s'tab··
lishecl a.s legal holidays in the State of Maryland.
shall open a.t nine a.. m, a.nd close at
~Helve
noon,
On ea,turda.ys the Bank
..
.
X-697
- 12 ARTICLE VII •
§_action 1.
•
Arr.end.n.ents •
Amend.n:lents to these by-.. laws) which shall have been pt'eviouslY
authorized. and apprbvea by the Federal Reserve Bank of Richmond, tr.av bf?
adopted at any re_g\dar tt.eeting, by a rr.ajority vote of all birectors of the
Bal titnore
~ranch of the
Federal .Resetve Bank of
Richinond pt~v·ioUe ncrhce
1
of the proposed amendment havin$ been given by the Manager to each Director·
of the Branch.
Z/4/18
I'.ATJQ OF ":t'LOAT" OF E.\CH
nD~
Itl!SZB.VE BAliK. TO EL'IDJ:liiG ASSETS .AJ;;r]) DE.i?OSITS,
F.E.::RROARY l, l9'· 8.
··-·-~---·---·r·-...._.__.......__..
F~.de1.-al
Reserve
:Bank.
-.-.......................
~
:
: Cle~:d;:-..g
:. house
-....._........._~.._.____.
:
______________
:
-:
;: All ot.har ! Pot.a1. unc.U-: Total col! Total
! u.'l~o.:..loct~· :-l~cted ite~ns: l.tJCtion itemsi·11 l'U)AT 11
-! ed items :
!
:
•
•
:
Cr•
••
.... ~.x:dl.9.-.~"3s .
!
.
o-=-~---__,...,----=-::---~..--::,.---~__,...,,..,.....,~-
:Net invest-
:ment •in
:tra.n&fe.rs
!included. -in
!I-.a.tio ot. 11Fl0e:1t":
to
!tot41 ~rning
:
!
a.ssets
:
•
; total· "FLQAT": Per C?Jli
17,466
19,2~
14,394
725
7·14-
60,720
83,010
57.905
...
6.2
4.£78
,34,091
38,769
J0,284
3.f475
17,155
18,630
13,875
4,755
lUCBMONJ;>
1:615
16,:256
rr,s71
12,890
4-,981.
A~
1,457
).6,478
17,935
.9·907
CH1CAOO
4,,306
49,276
5},582
421
16,761
1,796
NEW YORK
S!r .. lOUIS
s.a
1,750
4.s
j.6
....
10.)
9-6
S,OU
J!).O
17·9
l~·;n
J7,o45
29·.3
19-5
17,182
11,158
6,021+
7.396
7~}9b
J,l09
4,2.87·
,J,ae
9·8
19,080
19,207
6.767
12,-440
14.8
18,419
18,437
5,826
12,~1
1--Gl9
4.g;6
1,305
9,1K>g
l.0.1ll.
. !,631
39.488
282,506
127
DALLAS
· · SAN . FRANCISCO
: Eei.- cent
14.5
~OLIS
IWr.31..S CITY
Bcl.tio oi 11 ...:wil.1' 11 to
imnediately ci.Yailable Govermaent cm.d.
bahk deposits.
10.2
.l,P}
191,283
~-------------------~--------·-------~-----~--~-·--~~~---~---~---------------~--- -------·~-~~------------------------ -~---··~-----
•
l-701
February
4~
19l8.
To all emplnyees of the ~edera1 Reserve Board:
the lndome Tax ~ct of September
e,
1916, requires report of the following information:
l.
~ ~-------------------------------Hotte address ·------------------------------
2.
3.
Ma.rrisci dr Singl$ _ .........._ _..__ _ _ _ _ _ __
4.
It not
~arried,
whether th$ head ol a
i~ily
Please give the required inf om.a.··
tion in the spaces above and return promptly.
Very respectfully,
SHERMAN ALLEN.
Fisca.l Agent.
W. P. G. HARDING, GoVERNOR:
PAUL M. WARBURG, VICE GOVIFUIOR
EX·0FP'1CIO MEMBERS
FREDERIC A. DELANO
ADOLPH C. MILLER
CHARLES S. HAMLIN
WILLIAM G, McADOO
SI!CRITARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRINCY
H·. PARKER WILLIS, SECRETI.RY
SHERMAN P. ALLEN, ASST. $1!CRITARY
FEDERAL RESERVE BOARD
AND FISCAL AGENT
WASHINGTON
ADDRESS REPLY TO
FEDERAL R&:SERVE BOARD
DIVISION OF REPORTS AND STATISTICS
X702
•
Februnr,r 4, 1918.
Dear Sir:
It is the desire of the Board that reporting member banks show each week the total of U. S. securities ownedj segregated under the three following
captions:
1. U. S. bonds to secure .circulation
2. Other U. s. l;>onds, including Liberty bonds
3 .. u. s. certii'ioates or indebtedness
To~al
U. S. securities ovmed,
Will you kindly instruct reporting member
banks in your district
to make
reports to you for Februar.y
the setregatiorl !ri their
21• (February 22
legal holiday) and therearter.
beihg a
Please state the addi-
tional items also in your own consolidated reports to
the Board beginning with the same date, and oblige,
Yours very truly,
Secretary.
Federal Reserve Agent,
TREASURY DEPARTMENT
X-703
WASHINGTON
NATIONAL
WAR SAVINGS COMMITTEE
•
In inclose for your 1nfornation copy of a statement
by State Director John S.
D~
o1 San Francisco, ~eb pointe
out in & vary elear way the essential difference iu the two
c~paigns,
the one for the salo of Liberty Loan bonds and the
other for War Savings Starr.ps.
It has been suggesteA by sorr.e of the Liberty Loan
people that the War Savings
can.pS~.ign
I "o no't bel,i.eve this is true,
~ci
would hl.lrt their campaign.
V\hile there is sWJe overlap-
'*-·the real job for tile War Sa•tags carr.paign to .PUt over is to
~f
reach a goo& sharG of tbe ninety willions
people who can hot
pewsioly be reaebe4 by a ~i~rty Loan campaign.
-
a s~·ort ~tlitem.n\ efititled
11
I Rave prePa.red
-
'\'.
Ntlieaa Oh the tibetiy Loah datnpaign and
the War Savings Campaignu which l .have attached to :Mr. Drum's
stateaent, and if you
w~ld
like extra copies of both these I
should be very glad to furnish
them~
X-703
- 2 -
My notion ts that the essential difference in these two
cau.paigns rray be phrased in two simple slogansj - that for the
Liberty Loan campaign,
paign, "How many".
11
How rr.uch"; that for the War Savings cam-
In other words 1 the Liberty Loan people are
interested in rai§ing. m9pey; their success is n:.easured by the
amou.nt o{ monEiY
they raise; the War Savings campaign is princi-
pally concerned in interesting a large
nurr~er
of wage-earners and
,people of srrall rr.eans in a campaign for thrift; their aim is to
eee how rrenY people they can interest in the campaign.
There are
at least ninety millions of people, as already stated, who can not
be reached bj a Liberty Loan campaign.
HQW manY of these can
be interested in our War Savings campaign?
Yours very truly 1
i
TREa~UR':i
DE R1.HTl.1ENT
iiASHING'l'ON
X 704
January 26, 1918
The Governor,
Federal Reserve
~oard.
Sir:
..
By direction of the Secretary, you are ~dvised th~t the Do~unent has referred to the AU~itor for the Treas~ry Department for settlement the account of
the :oureau of Engraving and .P-'i:nting for preparing FeJ.oral reserve notes during
the :perioJ. December 1 to 31, 1917, amounting to $il07,449.8"4, as follows:
Boston._ ......•••
New York ••••••.••
Ehiladelphia •••.•
Cleveland •••••.••
Richmond •••••••••
atlanta ••••••••••
Chicago ••••••••••
St. Louis ••••••••
MinneapOlis •• ~~ ••
DJ;l.sas city ••• • ••
Dallas •••••••••••
San Francisc<il., •.
4pl0
1£
27,000
46,000
128,000
50,000 .
196,000
51,000
108,000
152,000
95,000
48;000
122,000
116,000
'• 59!000
1 1 125!000
149,000
45,000
103,ouu
181,000.
19,000
36. 000
75,000
54,000
66 2000 '
, 8q_l,OUO .
2,939,000 sheets at
w2o
38,000
250 ,ooo
51,000
31,000
33,000
96.,000
99,000
41,000
46,000
36 .ooo
7,000
30!000
758,!000
~36.56
$50
21,000
33,000
23,000
35,000
14,000
3,000
6,000
4,000
7 ,ooo
5,000
5r000
15§ 20QO
itlOO
15,000
31.:,000
20,000
1,000
1e,ooo
6,000
6,000
2,000
3,000
---
Total
229,000
360, 000
144,000
412,000
].)53,000
316,000
444,000
161,000
137,000
241,000
. 177,000
5 2000
16~0U~
99!000 2 t 939%000
per l\f . . . . . . . . . . . . . . . . . . . :jj>l07,449.84
The chc.rges against the several l!'edera.l hcsorve banks are as follows:
Compensat ion.
Dureau appropriations
Plate
Inc. Com.Frinting
Uaterials pensf'.tion
$3,240.35 ~2,349.54
~274.80
5,094.00
3,693,60
432.00
2,037.60
1,477.44
172.80
5,829.80
4,227.12
494.40
2,164.95
1,569.78
183.60
4,471.40
3,242.16
379.20
6,282.60
4,055.44
532,80
2,278.15
1,651.86
193.20
1,938.55
1,405.62
164.40
3,410.,15
2,472.,66
289,20
2,504.55
1,816.02
212.40
Sheets.
Total.
Boston......
229,000
~2,507.55
$8,372.24
New York....
360,000
3,942.00
13,161.60
.Fhilade1;hia
144,000
1,576.80
5,264.64
Cleveland...
412,000
4,511.40
15,062.72
Richmunu....
153,000
1,675.35
5,593.68
Atlanta.....
316,000
3,460.20
11,552.96
Chicago.....
444,000
4,861.80
16,232.64
St. Louis...
161,000
1,762.95
5,886.16
.I.1inneaf0lis.
137,000
1,500.15
5,008.72
Kansas City.. 241,000
2,638.95
8,810.96
Dallas......
177,000
1,938.15
6,471.12
San Francisco.~~l~65~,0~0~0~~~1~,8~0~6~.~7~5--~f2~,~3~3~4~~~75~~1~,~6~9~2~.9~0~~~1~9~8~.0~0~~6~,~0~32~.4~0
~93i,OOO $32,182.05
¥41,586.85 $30,154.14 $3,526.80$107,449.84
The 'llureau appropriations will be reimbursed in the above amount from the
inuefini te ai-propriation, 4' .Freparatio~• ai1u Issue of ~'edera1 Reserve Notes, Reinbursable", an..:l it is requested that your JoarJ. cause such in~efinite appropriation to be reimbursetl iu like amount.
Res pectt'Ully,
J. H. Hoyle,
ASsistant i:::iec:retary of the Treasury.
''
.
X-706
CO~.UTTEE
C.b.PITAL ISSUES
OF THE
FEDERAL
R£SSRVE:
B01~RD
\"lASHlUGTON
February 7, 1918.
To the
Chatrman of the Sub-Committee on Capital Issues
of Federal Reserve District No.
Dear, Str:
The Sub-Committees of the Capital Issues Committee at Fashington will, no
poi~cies
d~ubt,
wish te be informed as te the princirles and
application~
te be adopted in dealing with
info~tlon
addressed
~
re~uests
fsr
them.
It is not possible to give at this
outlines.
and
tirr~ rr~re
than general
A mora definite policy will be developed 1 and tile Sub-Corr.-
ndttees kept inforned as to the
sarr~,
as soon as it becoffies possible
to socure from the various Government Departrr.ents a mor.J deiinita expression as to their own policies and requirenents.
A better under-
standing of the situation and the policies to be adopted will be developed as soon as concrete cases shall have boan submitted to the respective Departments and will have
forrr~d
the basis for comprehensive
discussion with therr..
I. POLICY:
The Central Corr.mittae and the Sub-Committees
are guided in their deliberations by the thought that only by subordinating local and personal interests to the public welfare and
by enforcing the most rigid economy in rrattors of personal expenditure
can the United States hope to. bear its part of the financial burden of
the war and to
without
~elease
dople~iol').
sufficient labor and rratorials for war purposes_
of our: own resources.
From this point of view the
·..
...,
.
- 2 Cou.mittee has adoptad it as its rolicy that d.u:r:i.ng tho pe.riod of the
war favorable ac·i;ion should be t.aken or.:.ly where St(\te 1 county 1 rr.unicipalJ .,
•
corporate 1 or indiVidual f.im.nc5.ng involve proj;3cts which will contribute .
to the successful prosecution of the war or whir.h are essential to the
public health and Nelfare.
'rhe Sul:l-C:)r,mittees will assist the Ceiltral
Corur.ittee not only by .i.nv Jstigating the casas submitted to -i;hem}. bv.t
they n.ay 1 in addition.,
rend0r most important service by wa ~ching closely
·and keJping th\:3 Board advised as to questions arising in their own districts~
both with respect to such securit:i.es as should con:.e into the
narket without the pruvious appr.oval of the Capital Issu0s Comnittee 1
and with respect to appropriations and comrr;ittrr,ents that
a:.:~e
being ir.ade
and which it is most in.portant to sto.P at the source.
It is hoped thc.t in the very near futu!'J the Ce:n.tr.::.l Comr,it·tee nay ba abl0 to rrake a direct app0al to those in charge of State a.nd
rr.unicipal ad1;,1inistrations.
For tile tin:c being, howevar_ it is essential
that the Sub-Corr:n:ittees uso their local j,nfluenca in proaching tlle gospel
of ec,onomy in their ccir.Illl.ni.tios and to invite coo,peration wher.ever t.hev
can.
As far as can bJ soen t.he Corm.i.ttees rray count on t.he wholehearted
and patriotic response on the part of all concerned.
All evidence points
in that direction.
The Central Comnittee rcs.;rves tho right, of cou,rs0, 'to deal
wj, th each individual case on its own
n~eri ts 1
but an expression as to
policy is givJn as illustrative of the main purposes tile: Conn.ittee
has in nJ.nd .
•
X-705
.... 3 (1) The Central Corr~ittee will consider favorably applica-
tions submitted to it invoiving the refunding of maturing obligations .
..
(2) The Central Co~ittee will consider favorably applications subn.i tted to it involving the funding of capi·tal expenditur~s incurred prior to February 1 1 1918;
Provided 1 however, that the Central Comffiittee rray deviate
from this policy if a.vailablG cash assets reasonably rray
be used for the pay~ent of such debts in whole o~ in
part or excessive cash distributions to sh~reholders
are cont•3rr.platod 1 or in casas wher0 the requirerr.ents
of the corporation rray be rr,et in sorr~ rranner without
undue risk or hardship.
It rrust, of course, not be understood that funding of banking indebtedness incurred after February 1, 1918 1 will not be perrr.itted.
Close investigation r.ay establish cases where such funding may be proper.
What is to ·.be avoided 1 however.t is that those intending to apply for
perrr.ission to issue ser!urities Hrst running into debt) conceivably
for purposes not corr.patible with thG public
int,:.m~sts 1
and then asking
for porn;ission to fund tho banking indebtedness already ir. . curred.
(3)
As a general basis for its conclusions the Central Cou1-
mittee is inclinod to adopt the policy that tho sale of only such new
securities ought to be considered favorably as will finance projects
likely to bring results within the calend""r y0ar 1918. Ji;xceptions will have
to be granted in cases where Govamn"Qnt Deparb"ents .:ldVise that as rr.atter
of IT>ilitary or
econo~ic
protection work ought to be undertaken extending
X-706
- 4-
over the yesr 1918, or "here ::o much money has
.
th:.... t the cmount necess<: ry to co,.n1ete
relevant as compared ,,ith the money
(4}
~he
alre~dy
been invested
,1ork. may be consicered as ir-
lreaC:y hazarded in the unc.ertaking.
lith res?ect to the :;uestion of ro&d buiicing <:nd ne
ci.evelO·)-
ment of arable lands, so £. r as they are to be financed by ne . bond
issues, the Cornidttee c.do,ted as its policy th,;t, in ;.:nl.ssing u-9on issues
for road construction or for irrig,·tion or drdnage projects 1 covering
J.c.nds not heretofore under cultivation, f ...vor<ble considetation should
be given only to tilose of great econouic or militfry
iC1-;?0rt~,nce
and from
.hich definite results c·n be secure.:. in tL,1e to be of assistance in
meeting the present emergency.
Bets in close touch
lr1 G.ealing with these cc__ ses, the Committee
ith the ne='artment of /·gricul ture, and hc. s received
assurc.nce of the hearty coo?er. tion of thrt
DepDrtme~Jt,
from which advice
is sought concerning the facts rnd merits of e;:ch individu'-'-1 case.
Each of the Sub-COiTh.1it1.ees on Ca:.>ital
I~sues
.;ill clo vvell to keep
the 3oard fully &dvised 's to projects for ro.d building in their districts
find
fnc.~
t~,_t
to .use their influence
ith local communities wherever they
<op:lro9riations are beinG made or sought for roads v.hich are
not of essential v._.lue either from an economic or militery point of view.
AS
to \hether l)r not the roacs have any such vE'lue, the Central Com.nittee
,iL seek advice in bnth cc: ses
t
herdquc..rters and '"ill be guided by such
Edvice.
(5)
i th res )ect to builcl.ing o~erations, SeCl'etary McAdoo made the
follo. int:;· statement:
X-706
- 5 causJ of the intanst vf tho TrJasury Dopartn:;cnt
in tho cuns~rvation of capital and crodi~ during tho pariod
of tho war, I liaVG r:.cDiV Jd s-:-v:::ral inquiri,:;s as to whJthor
building oporations of onJ kind and another should be discourag~d.
With ra6ard to plans for public buildings under
the control of this D:;;partn.ont, I ha.v.:; stopp;:-;d letting contracts -:;xcJpt in c::~.sss wh.Jra the;y wor:..; absolut.JlY n;;cossary.
11 B.:J
"Horr.o building is ::..n .JXC::lllont thing in norn.al tiu:Bs., but
at prcsjnt, unl:;;ss tho"a is a roal shortago of houses for war·Norkors, I strongly advise that rratorials, valuabL; labor and
crodit be not utiliZJd for this purpose. ~bothor hon~s should
be built should be dctonninGd strictly by tho urgoncy of tho
naod."
Frorr. this stabn.ont, it is dGsirablo that building op0rations
ought to bJ susp.:md.Jd at
r.c~nt
t~is
to hJal th or war work.
tirr.c as far as possibLJ without diroct dotriTho stat-'rr.3nt of tho S.;;cratary nay ba us.Jd
to advantage in doaling with plans on the part of n:;Unicipaliti~s and Stato
gov.Jrnn...mts to ~ontinu.;; or to provide for n.;w construction at this tirr.c.
II.
JVI.ETHOD OF ?ftOCEDt]RE:
With r.;;sp;;ct to th..;ir own procedure tho
F;,dcral R.Jscrv.;; Board 1 s,Conn.ittJo and the Advisory Comn>itteo, acting a.s a
C..:.ntral Corur.itt.:Je sitting in Washington,
haVJ
adopt;;d as a definite policy
that no n,onb..;r will vote or adviso in a rrattor in which ho rr.ay b3 intorostJd, diroctly or indir3ctly, and it is understood as a nattor of courso,
th:l.t tho Local
Corur.itto~s
will act in a likv nannor.
Th.., Fodoral R.;sorvc Ag;nt is .:;xpcct to sJrv.J as cha.irrr.an and
th.; Gw..;rnvr as vic;;-chain2.i:1 of th.;. Standing Comr.itt-:;c of fivo, and
thJ Conn.ittoJ will alNays bo in ;. position to call upon ono or n;oro
rr.orr.bors of tho Auxiliary ConnJ.tte,; to "sit in" on spocial cas..;s or to
assist th.:; Corr..rr.i ttc o in s:.>curin.:.o oxpCJrt inf orrr.a tion.
It is hopGd that all n.crr.b~rs of Local Conmitt3os will cooperate
in spr.:;ading th::; gospel and in n.akin; jficctiv;; th.J work of th:3 conn.ittoo
in
th~ir
districts.
X-706
- 6 -
It is suggested that the Sub Committees use the style "Sub..
Committee on Capital Issues, Federc::·l Reserve District No ••.•.•• "
As to all necessary exJenses of members of committees, for example, traveling expenses, the Federal Reserve Board thinks it
proper th&t such expenses should be refunded by the Federal Reserve
Banks and that all out-of-pocket expenses of the committees should
be C<'..:.rried in a special item and i t will be decided later on whether
they should be carried vs an ex)ense by each
ban~
or refunded by the
Federal Reserve Board.
It may be necessary for the Central Committee, particularly
in cases where prompt action is desired and where there is no need
for a local investigation, to act flithout consultation with the local committee.
In cert&in cases where the situation is clear pro-
vided thc::t the statement of facts can be accepted as correct, the
:Jvshington Comrni ttee, in or¢ier to save time, may decide to execute
the letter of approval or disapproval, as the case may be, and send
such letter to the local committee for transmission to the applicant
provided
t~t
the facts upon which the Central Committee based its
conqlusions are substantiated by the local committee.
In all cases,
hovvever, it is the plan of the central committee to kesp the local
committees advised as to applications and as to the decisions reached so that they shall be fully advised as to the situation in their
districts.
The Central Committee &t '·ashir.gton will a:pprecic::te it if in any
· case (even ;vhere action hc:s c;lready been taken by said cormnittee)
x-~706
- 7 -
the local committees will give it the benefit of Bny comment that might
appear to the.m helpful.
The central committee is most anxious to Teach
a fair and just conclusion in'all cases, and it must count on the cooperation of the entire organization to bring about the best understanding of the problem.
Please express, on behalf of the
cent~al
committee, tc>
all members of the standing committee, as well as of the auxiliary committee, the Federal Reserve Board's sincere appreciation of the willingness of the members to help in this work.
Very truly yourst
(Signed)
PAUL M. WARBURG.
Chairrran,
Capital Issues Committee.
\ .,
'
Ipstructions regotiing gpl!cations.
When an application
is made requesting.. the
Capital
\ .
. opinion of the
.
.
Issue*
Committee with regard to a proposed issue, a record of issue ~h'all be made out ill
•
duplicate, numbered and presented ~ith the file to the Advisort Committee, whose
votes will refer to the issue by name and rn~ber of the appliciltun..
The ~eoord
blanks ~ill be retained -with the "tile until the Advisory Committee l"eo't~$-tta ~ctio:1
·by the Capital Issues Committee.
~he vote of the Advisory Committee makhg ~ch
reco~endation will expr-ess
briefly the rea.Son:s..- for their action, which iUl be .
..
•,
copied ·on the record.
.
'
~d ~~bmitted
,.",
io the Capital Issues Committee.
One copy
~t
the record of issue -w~ll be ret'a.ined by the Capital Issues Committee, and the other
.
.
'
'
1tept in the Ule of the Aclvis~rY Committee.
When aa issue has been. p~sed .. tol" u.vbl-a.ble ~pihion, but the necessary d-escription is incomplete,.·.·.a preU.mlha.ry
letter wUl be sent by the Advisory Collilllittee
.
~
stating that the Opin.iQp or the Capital Issues Committee will be sent upon l"eeeipt
of the proper description .. :· .
fhe blanks are not to .:be used in cases of
inq~iry
or in other cases when not
appropriate•
A sepat'ate .list shall be kept of pendi!t lppliead.on$ for ready reference •
. Copies
6f the r-.ecord 'blanks. should be sen~ to all sub-comm.ittees, -who -will
find them convenient in ·sending for·Rard necessary information.
When final action .is tekea, a copy of the completed record. should. be sent to
the sub.... commlttee. which has atted thereon. ·
i
.•
l
;;• . :
.. ·~
X-708
For release Friday Morning Newspapers, February 8, 1918.
STATEi,lElfL'
.
FO::.. THE FRESS ..
In connection with tho Executive Order relating to the control of foreign
exchange transactions which was signed by the President on January Z6, the
Fed.~
cral. Reserve Board announced today that a large nuu.ber of ap pl:i.cat:.i.ons i or rogistration C-:>rtificatos f:roiL
11
dealors 11 (as defined in th.,:, Order) nho desi.1-e to
continue thoir f oro:i.gn exchange dealings have boen. received..
The
~card
calls attention to the fact that under the terms ofthe Or.aer
nc person other th:m a 1•custoll6i·s"(as d.efinod in the Order) who shall not have
obt~ined
on or before February 15J 1918 1 a registration certificate
sha~l)
after that date, engage in any foreign exchange transactions" export or oarzr.arking of gold or silver coin or bullion or currcncy 1 transfers of credit in
any foi"lL (other than cr0dit.s relating solely to transactions to be executed
wholly w;i.thin the United States) and transfers of evidences of indebtedness
or of the ownership of proforty b.:;tween the Uni t·3d States and any foreign
country whether ene~y, ally of ene~y or oth0rwise 1 or between residents of one
or
~ore
foreign countries by any person within the United States.
For guida.nce of "dealers" to whom registration certificates aro issued.,
th0 Federal Rese.rvo Joard has prepared a parr:.phlet "Instructions to Dealers
as defined under Executive Order of the President of the United States., dated
January· 26.- 19l8 11 J a copy of which will ba delivered to each "deaJ.er 11 to whor.r.
a registration certificate is issued •. Additional copies of the par;.phlot can
later be obtained froiL tho Federal ~eservo Banks or from the Division of foreign Exchange of tho Federal Reserve Board~ 16 wa11 Street 1 New York City.
Briefly,·_thc "Instructions: to Dealers" calls att;mtion to the :followjng:
•
X-708
' ·'
.. - .2-
Tha.t 11 d.ealers" when filing required reports are not released frott responsibility in reporting to tha Board prOffiptly and fully whenever they have reason
to believe that a:ny transactions are _directly or indirectly for tho benefit
of any
ano~y
or ally of
ene~y.
That declarations from all foreign correspondents of
11
dealors" to tho
0ffect that their transactions with such "dealers" will not be directly or
indirectly for the benefit of an enemy or ally of enex:cy of the United States 1
are required_; such declarations to be filed with the Federal Reserve Board
through a Federal Reserve Bank.
~orican~
That declarations will be required from
residents in foreign countries in the sane
~annor
as from foreign
cor respondents.
That special declarations of non-enemy interest are required in cortain
instances 1 which are to be filed with the Federal Reserve Board.
That it beconas necessary after February 15 for collecting agencies
throughout tho United States to exaudne all instrurr.snts received
points for enemy
dr~Ners
fr~
foreign
or indorsers.
That "customers" having business with 11 dealers" are required in their
application for service to state the purpose of tha transaction and that it is
not directly or indirectly for the benefit of an enemy Qr ally of
ene~y
of the
United Sti!-tes.
That no authority is extended to
cates to
en~go
an
or ally of
ene~.y
11
dealers 11 holding registration certifi-
in any transaction which invblvcs or nay involve trading with
ene~.y;
that should a.ccasion arise where. a
11
dealcr 11 might
X3(/3
' "
- 3-
desiro to
undcrt~ke
sudh ;;;; transaction, he ccm nc.;t do so until ho has ob-
tained a liconse from tho W::tr Trc..i.e Bc·ar:L
That all
11 d.oil.lerz" rr.:is'~
sccuri ties as of close of
file ft,:d.c.-wn:.n of "!::2-Jances of
b"J.sinos~ f-.a~Jt'i.lary
acc;o~mts
ancl
2C., and theroafter on Wed.n·3s<l3y
ports n wiE be f O'J.nd details as to thG f or.vvara ~ng of woekly repori·s.
instructions rolat 4.ng to the c<Jr..pilation of re1)orts is also
F\..J. L
cont.a~ned
in the
pamphlet.
Pa-rticular
foreign business
attont~on
c:;;~.llGc1.
to tho paragraph
throu~)1 dcrr~e~st:.c corrospond.e11ts· 11 ~
nobd that while such
cates~
i:3
they are not
11
11
DcaJ.ers 11 who tmnr;ac+.
f:.on . whJ.ch it v'lil\ bo
doalors;' r,.:wt tai:o vut the proper registration certifi-
re~uired
to nal:e reports to tho Foderal Reserve Boal·dJ
but rr.ust give full' inforrr:ation regarding each transaction to tho domestic
ndealer 11 through whom they operato 1 in order that such
11
dealers 11 can include
the transaction in their reports under the proper h0adings.
Should
su~h
"dealers" consun:mate any transactions directly with foreign correspo;'ldents,
they nust rr.ake aepara:te reports to thG Foderal Roserve Board through the
Feder~l
therr.~
Reserve Bank of their respective district~ and nust not include
or with them any transactions conaunn.ated through their dorrostic
~tropolital
agencies.
Full infurn.ation relating to the foregoing, as well as other infonr.ation
is contained in the
p~phlet 1
.
and its caruful reading by each holder of a
registration C3rtificate will be necessary.
X-'?08
- 4 -
Until F3bruary 15 1 1918 1 all persons (as defined in the Executive Ord.e:r)
who aro carrying on any business described under tbe word
11 dealer 11
rr.ay after
rra.k.i.ng proper application for registratir:m certificate with the Foo.e:ra1. Reserve Bank in their distr:tct continue their f ore].gn business exactly as in
the past.
By•February 15 1 it is expected tha.t all those whose o,ppJ icattons
for registration certificates a:r:e allowad will be in receipt of full instn•.c;tions as to how then to proceed.
N.erchants, industrial corporations~ stock exchange brokers, and others,
as wvll as foreign ex 1;ha.nge bankers who do a foreign bus}.ness, ahoulc aBc:ertain
from their Federal Reserve Bank whether the nature of their business is such
as to require them to apply for a registration certificate.
2/7/18
I'
W. P. G. HARDINCi. GOYIYOR
PAUL M. WARBUR&, Vlti:l eoYIIlNOR
EX-OFFICIO MRMBBRS
FREDERIC A. DELANO
c. MILLER
CHARLES S. HAMLIN
WILLIAM Gl. McADOO
X. .'/{1~LPH
SECRETARY OF THE TREASURY
CHAIRMAN
JOliN SKELTON WILLIAMS
COid.PTROLLifl: OF THE CURRENCY
K. PARKER WILLIS, SECRITART
IHIRMAN P. ALLEN, ASST. &ICII:ITARY
AND FISCAL AGINT
FEDERAL RESERVE BOARD
WASHINGTON
ADDU&• REPLY TO
FEDERAL RESERVE 'BOARD
Dear Sir:
Telegraph companies have called the attention of
the Board to the fact th1.t some Banks and Agents address
telegrams "l,'illis, Secretary, llashington", or "Broughton,
./
Washington", and that deliveryw::uld be expedited if the
.I
word "Treasury" was added to the ad.dress.
Reserve Board,
T.rss.ilurt~"·)\"/ashington,
is suggested /
.'
.. --
as a proper address for telegra.1D.S·intended for the Board.
·Please use this code address for telegrams in the future
except when they are intended as personal communicationf:! to
individual members of the Board.
Very truly yours,
Sec:..·eta:ry.
..
/.·
EX-OFFICIO MRMB.II8
W. P. Iii. IIARDINIO, IOOVIH81
PAUL N. WARBU RIO, VIOIIilo. . IIII<IR
FREDERIC A. DELANO
X-'IDbOII c. MILLER
!:taat£1 S. HANLIN
WILLIAN Iii. McADOO
SECRETARY OF THE TRIASURT
CHAIRMAN
JOHN SKELTON WILLIAMS
COIIPTROLLIR OF THE CURRIIICY
FEDERAL RESERVE BOARD
II. PARKER WILLIS, SECRITARY
SIIIRMAN P. ALLEN, ASIT, SICIITARY
AllD fiSCAL AlENT
WASHINGTON
ADDUS8 REPLY TO
JI'EDIIRAL RESIIRYIE IIOARD
..
February
8~
1918 •
Doa.r Sir:
~s a. mo:rr.bor of th~ Fod.;;ral Rosvrvo Board and also as a :rr..:rmbor
of th.J War Sa\•ings Comrnittoo {temporarily its Acting Chair!ran) ! an-. sond.ing you horowith a copy of a vory intorsating statJ:rr~nt by Mr. John s.
Drwr., of San Francisco, S·i..ato Dir·octor of War Savings for California .•
comparing tho War Savings a~d tho Liborty Loan campaig~s~ showing in a
vorJ cloar way the essential difforoncoa which exist in these two offorts.
It is an important thing ~o bo borne in mind and T. a~ thoroforo accompanying :W.r. Dntm'i's memorandum with so:rr.o brio:f 11 Motosnby myself on the subject.
It may b(} of interest to you to know t.hat th0 ~.ncreaso in tho
salo of War Savings sta:rr.ps and Thrift stamps is contir,uous.. Tho actual
r~sults obtained in the War Savings ca~paign fully boat out tho statorr.ant
1n tho rnoitorandu:rr. e~titlod. "Notos"~ that while th·J actual amount of money
rais~d in thia campaign dO.)S not nako a spectacular sho-N:i.ng
tho. result
O·f a steady push 1 doos bocomo m1)r3 and :o:oro:> ovidont. In sotre tCNns and
counties, intolligont soliditation has rosultJd in upwards of ninety p~r
cont of tho people subscribing - mon, women .• and childr.:m, bcginn.ing with
sorr.othing like eighty cents por capita and in a fGw wocks growj.ng by
nat~~l incro~nt to over two dollars por capita.
Si~dlar results all
over tho country would rr.oa.n n.orJ than two hund::vd :rr.illions raised, while
by no rwans a nogligiblo quantity, chlofly i~portant on account of tho
numbor of pooplo aroused and interested.
May I again ask you to give the fullost cooporation to your
stat3 directors and their cor.:Ir.itt.,os in connection with thJ War Savings
work?
Tho r~n and wo~on who arc doing this work arc giving their services patriotically and wo find that thoir success dopends very largvlY
upon tho cooporation which thoy rccoivo fro~ th; FodJral BJscrvo Banks
and from the principal post~astJrs. In St. Louis, for instance, whoro
an cnorgotic Stato Director is in closo touch with tho city post~stor
and tho Governor of the Fcdoral Rosorv~ Bank 1 thJ results arc nagnificJn!
as cawparcd with what thJy aro in ~ost of th~ oth~r districts.
Can wo not have thes3 results ev~rywhor~.
Very truly yours,
W. P, G. HARDING, GOYiaROII:
PAUL II. WARBURG. Vl~l $0VIRIIOR
EX·OFFICIO MEMBERS
FREDERIC A. DELANO
WILLIAM G. MCADOO
SECRETARY OF THE TREASURY
CHAIRMAN
ADOLPH C. MILLER
CHARLES S. HAMLIN
JOHN SKELTON WILLIAMS
COMPTROLLER OF THii. CURRENCY
M. PARKER WJLLIS, SECRITART
SHIRMAN P. ALLEN, ASST. iiCIITARY
AftD FISCAL AQEHT
FEDERAL RESERVE BOARD
=-·-711
WASHINGTON
ADOUSS REPLY TO
PEPERAL RESERVIE IIOARD
Febru~ry
8, 1918.
Do:..r Sir:
Inclosod hJr:.:wi th copy of !nstructions to Do.:.:.lers,
in connection with th:J f or0ign JXCh.:;.ngo control being
undortakJn by thJ
Fcdcr~l
hosJrVo Board in
accord~nco
with Executive Ordor of thJ Prcsid;mt, thinking it tr-ight
be helpful to you to have it in
adv~nco.
The forrr.s r;:;forrod to will b0 dolivcrod to you vvith
registration ccrtif:i.catc, ::.nd in the r,cantirr.J your foroign
business can proceed as usual.
With kind personal rogards, I c..r;,
Sincor.Jly yours,
Dinctor,
Division of Furoign Exch-ngc.
"'
~
~
..
Federal
Reserve
Bank.
: Clearing
-: house
~ exchar..ges
:
.
.
.
...
..
FEBRUARY
8, 1918.
.
,.
: Al.l o;Gher : Total. -uncol-: Total collec-!
~ <m.collect- : lected ~.tet1s! tion items
:
: ed iteras
:
Dr.
Cr.
..
0
.
. .....
. ..
. ..
~.
~
~
.
!Uet ilJ.VdSt- :R::~.tio of "FLOAT"
•
to
Total
:L1ent in
~ tota.l earning
~
"FLOAT'' ! transfers
. ! include<i in :assets
:Total ":E'Lil4 T " : Per cent
.
.Ratio. of ••F.LQAT 11 to
imnedia.tely available Governwent and
bank deposits.
Per cent
lt -(52
14,734
16,486
11,88'7
4,599
500
7·1
5·0
NJL'W YORK
18,909
46,572
65,481
44,081
21,4oo
•••
4.7
2.9
PHILADELPHIA
'2,896
24,541
27,437
20~893
6,544
(a.) 200
13.4
7·1
899
16,337
17,236
13,335
3,901
1,655
4..3
.}.2
lUCBMOND
2,519
16, ~{34
-~9,253
14,769
4,484
......
10.0
ATtAUTA.
1,396
14~065
15,461
9,134
6,327
},138
25·7
9·9
14.1
CHICAGO
8,423
41.098
49,52~
16,533
32,988
l2,823
32·5
17·9
ST.. LOUIS
265
14,709
14,974
12,052
2,922
90
7-1
5·4
r:.nnDr.APOLIS
....
6,055
6,055
2,645
3,410
1,'{23
14.6
7·1
KANSAS CITY
189
14,396
14·,585
7,697
6,888
6,236
14.7
8.9
11
14,257
14,268
5.328
8,94o
2,069
28.6
19,7
l.~H2
Bal11
11.14~
81 800 ·
2z~9
1t645
4.1
l•l
4o.631
231,875
272,506
105,352
29,559
10.2
6.5
BOSTON
CLEVELAND
'
X715
R!\.TIO OF "FI.,QA.T" OF EACH FEDERAL RESERVE :MiNK TO EAR.'1ING ASSETS .AND DEPOSITS,
DALLAS
SAU FRAJ.-;crsco
TOTAL
167,154
(a)
.
----------------------------·--------------------------------~------------------~------------------------~-----~~-----~-----~--~~----
(a)
http://fraser.stlouisfed.org/
,·JE.,
Federal Reserve
Bank of St. Louis
Excess af amount of transfers sold over amount of tre:a.nsfers bought.
~-
MUNICIPAL
~AR
SERVICE
RESOLUTIONS
{Adopted by the Unanimous vote of the Executive Committee
League of Kansas Mmlicipalities, January 17, 1918.
2/12/18
X-716
\.'HERE.AS, The supreme need of the time is the concentration of the
energies of
.
a~ru
individuals, organizations, and units of government upon
Wdrk necessary for the winning of the war; and
IIHERFLS, It is the desire and determination of the municipn.l
aut~lor].ties
and citizens of the cities and towns of Kansas to aid in every pC'sr>5 b.le rnr.nmer in the c ondua~ and success of this struggle for the honor a11.d.
our Natl on
a!ld our
allies~
r:af8t~t
(Jf
and for l:umanity and democtacy; and
WHEREAS, Jt is desirable that a statement of groper war-time pclic.f
for the municlpalities of Kansas be formulated and submitted on beh:3.l:'
o:
the organized citles a11d towns of the state, therefore
BE IT RESOLVED .T3Y THE EX:ZCUT IVE COMMITTEE OF THE L&.GUE OF
:K.~ NGA~
MUNICIPALITIES:
RECOMMEND~",.TION
1.
That it is recommended that during the period
of the war each and every city government in this state shall
under~ake
only eucb. paving nn.d other :improvement work as may be actually nccA.Ssary
to be undertaken at this time; therehu releasmng men and money for the
service of the National gove~eht.
lt i~ understood th~t adequate local pub!in
utility sei'vice must be zmintalned and that to that end the municipal
operation 3lld ownership of any privately owned public utility may be or
become a matter of vital public need and necessity.
RECQMl\flEND.-..TION 2.
Municipalities should make themse:i.ver. efficiP.nt
agencies of -publicity and education in matters relating to
~he
war and
war problems; and should set a good example to their citizens, as :for
example in the purchase of Liuerty Bonds for sinking funds.
- 2 -
RECOMMEND.u.TION 3.
Cities should :place at the Nation's service
such municipal property and such time and energy of their officers and
..
employees as may be utilized vrlthout detriment to the safety and welfare
of the city.
RECOMMI.lifD.'..TION 4.
Municipalities of size should organize and train
their police and fire departments for
render all
po~si ble
·emergency riot service; should
and proper ai.d to the home guard companies; l:}nd
should cooperate loyally and efficiently with the federal authorities
for the discovery and suppression of sedition, treason, incendiarism
amd sabotage. A vigorous and just enforcement of the law,
~entive
ot arime and disorder,,
is
a duty of the utmost
a~
a pre-
importana~ in~
cllinbent upon the tesponsible city au~horities•
RECOMMEND.~TION 5.
Cities should strictl~ observe the principles
of efficiency, rationdl ecor.omy and the elimination of waste, tl1rou:Jh
the
~erfecting
of their organizations, the constant study and improve-
man.t of municipal methods., and the utilization of community wastes such
as garbage and paper, in such manner as may be possible and practicable
under local conditions.
RECOMMENDA.TION 6.
For any family or person within the borders of
a city to suffer unjustly from want of fuel or ;rood is a disgrace to
that connnunity and its municipal government ..
We eommend the initiative and efforts of the
city of Lawrence in establishing an emergency municipal wood yard, supplying families of that city with wood for fuel, when coal was unobtainable, and furnishing and delivering such fuel at reasonable prices based
•
X·~yt
16
- :3 -
not on the privateering principle of all that could be obtained, but
upon cost; and we cornrrend this example to the cities throughout the
state ..
It is earnestly to be hoped the next legislature cf
l{ansas wi 11 see fit to grant to the cities of this state the legal
authority and financial power to establish municipal fu8l ya.rds for th3
sale of coal and wood to citizens, and likewise to p3rmit cities to
establish municipal ice plants for the
·
~e fur~er
ben~fit
;of their peopleo
suggest to interested cities and
citizen~
the advisability of their pubUcly questioning all candidates for
governor of Kansas and d£ ali candldates for the leglsla tu-re, as to the
stand of all such candtdates
on the question 'df r:e rr:tJ.itting ci'Gies to
estabiish municipal fuel ya:tds, ice plAnts and ~rkets fer the 'benefit
of their people ..
RECO:MMI:ND.'>.TION 7.
MunicipaHties must now put forth unusual efforts
to protect the public healtl:.
Efficient local health departments should
be supported loyally by 0ities and citizens.
Inefficient health officers
should be relieved of their duties, and through a reorganization of their
departments the public be better
protected against disease. Increased
attention to child hygiene and welfare is also undoubtedly a vital
necessity; and municipalities should h8artily cooperate with
an~
support'
the work of the state board of health in this service.
RECOMMENDATION 8.
The production and conservation of food being
essential to victory in the wa;r,we recommend as touching our obligations
_L
X-716
. "
- 4 -·
and opportunities in this connection:
{l)
..
That the cities and city officers lead wnoleheartedly in the
campaign for war gardens and vacant lot cultivation. Cities
should throw open to cultivation all available unused land
owned by them, and should either rent other vacant lots for
the purpose or lend their support
obtain the donation of
the use of such land by their owners.
to
( 2)
The looal authorities should aid in seeing that the ground
is plowed. If necessary, hiring the plowing and harrowing of
lands '~ich could not otherwise be gotten ready for cultivation.
( 3)
Seeds should be supplied at oost or less, and water for
garden use should be supplied by the city at very low rates.
( 4)
Expert advice and demonstrations should be provided to aid
first-gardeners in carrying out their good intentions.
Municipalities Should aid in the enforcement of food control
orders and requests of the federal government. For this purpose the c.i ties may· well stretch to the limit every power
tbey possess. In the same manner,
( 6)
It is the duty of the cities to see that there is no suffering of families for want of food. Municipal food kitchens
ma.y become necessary in Kansas cities as they have in the
land of our ally whose navy is one of our greatest protections.
We would, however, especially recommend to city officials
earnest consideration of the establishment of munidpal markets;
and of the purchase of needed staple articles of food, in
quantities, for sale to their people. Especial credit and.
distinction will come to those cities which work out this
problem intelligently and courageously.
REOOMMEND~ . . TION
9.
It is recommended t.llat for thd purpose of co-
ordina.ting the patriotic work of individuals, societies and organiza·.
tiona in the various cities of Kansas, the municipalities arrange for
ei ty war committees or war councils. in which the patriotic agencies
.referred to may be directly or indirectly represented. and through
which their e:fforts may 'Qe coordinated ;a.nd unified in the service of
the Nation •
•
- 5-
.....
It is recommended that this suggestion first be su11-
mitted to Hon.
1~rthur
Capper, Governor of Kansas, and if the same meets
with his approval he be requested to issue a statement urging the mayors
of
•
the
various cities of the state to proceed with the appointment of
city war committees or war councils •
RESOLVED,
Tha. t we a:pprove the Bdys • \V'Orkirtg Reserve
plaxis of the
federal government and urge all city officers in Kansas to cooperate
with the federal state <iirector of this work, Mr.
w.
L .. Porter, Commis-
sioher, Topeka.
RESOLVED,
Tbat we heartily approve the action of the President
of the United States in taking over the control and operation of the
J&il~&J'~Of
}~
urge'the
the Nation, under the act of August 29, 1916;
Repreea~t$tives
and we earnest-
and United States Senators of Kansas in
CotJg;ress to provide by legislation that goverrumnt operation of the
railroads shall continue until changed by act of Congress ..
RESOLVED,
That free labor employ.xe.l:lt service should be established
in the cities of the state, and th.a.t we recommend that such service be
established by the munidpa.lities.
R!CHXRD J. HOPKINS
CR:i.S. E. B.'J-TKER
\.'. L. PORTER
J. L .. MORRISON
P. :!:.- \?ALL
HOMER TALBOT
••
•
-
i -
X--718
STATE:tEITT FOT:. THE PRESS
Release for the r.1orning papers
of F0bruary 10, 1918.
The Capital Issues Committee of the Federal Reserve Boaxd announced today the fo:Cr"1ation of t-.-:elve local
comu1i ttees organized for the pur:Jose of assist in:; -Gl:e central
Committee in ·passing upon applications ori;inatL1g L1 their
reapective districts.
In each Federal Reserve District tl1ere
~7ill ~Je
a
con.::;ist of the Fed.er.J.l Reserve Agent, aa c:L1airman, the Gov-
other ;:::e::f.::ers chosen ·::ecaua e of speci3...l y_uJ..:::.if icat ions for the
financin;; of municipal,
~.:..;."'..nufacturing
or pubJ_ic utilities se-
fro::1 tiJ.::c to t ir:10.) as ·c:1eir 2.C:vice an:·. experience r.1ay "Je
interest.
use~
.
- a-
X-718
Mem;:,ers of these committees have uniertaken this
d..uty .:..s a patriotic servica to t:1e country.
As previously announced, all applications :for tJ.1.e
ap)rova.l of security issues are expected to ".Je nade direct
to t:1.e Capital Issues Co::11:1i ttee, Federal Reserve Board; Has::ington, which w·ill refer tha1J to the particular district fror.1
which a report is iesired.
The local committees are as follows:
BOSTON
Perr~anent
F. H.
',7insor,
John E. 016.harn,
Ro~Je:rt
c.
Gmn~~i ttee
Gu::·~i..:.i . . .
A. :1orG;:;,
; C:1..1.i::cnan
75.::..-J-c:~"~j_:_~
..~:1
Francis R. Eart
Auxilia.:cy Comi:.li tt ee
Charles Francis Adams:
Henry B.Day,
Allen Curtis,
Allan Foroes
PhililJ C.:.l.".Jot
Jar.1es F. Jacl;:aon,
Henry G. Bra&ley.
NEYJ YORK
Pierre Jay, Chairr.1an;
Benj. S~rong, Vice-Chai::cman,
F::c-3&ericl\: Strauss,
Jo~m R. Morron
C. A. Stone,
Auxiliary
Tho1.1as II. Lamont
G:.0rge B. Cort~lyou,
Ha. ...·ry 3:i.·onn0r,
Walt0::c P. Cooke,
Charles V. Ritch,
S. 2. Bertrar.1,
E.::;:n::..7 ::-:.. Tmme,
~o::ti~:r L. Schiff,
G.:;;or::;c Hardy,
Cou~nittee
W. P.. Grahar.1
E. H. Outer~Jriigc,
Arthur Sinclair, Jr.
Edwin G. :·1crr ill,
Chas. H. Sa.~Jin,
A. H. 'l!figgin,
Nevvcor.fJ Ca-rlton_.
VIm. 1 .. Saunders,
Alvin YJ. Krech.
·-~
-3,,
X--718
PHILADELPHIA.'
R. L. Austin, C~1airmanu
C. L. P~oads, Vice-Chairman.
Clarence D. Clark
John Gribbel,
Auxilia::y Conr.:i t tee
Fe::dinand W. Roe~J::..L1~, Jr.
H. 3. Schooley,
Horrard. S. Gr..:.:1ai:l)
Charles W. r!elch,
E. P. Passmorc,
Benj. E. Hann,
G. \'!. Re i 11 y
John l:eti:;olc~,
L. Sco-'c t To·.-n1s-end.,
Jol1n .=:coo:cs,
Gdorge ~. Frazier,
Louia ·C. Lillie,
ThoEns S. Gates,
CLEVELAND
D. C. '7illa, 6hairman,
E.- R. Fancher, Vice c:12.irman.
~
C.
2Ic::::l:-~ormey,
A. E.
Acla~:1s,
J. Art:1ur House,
Auxiliary Cou1mi ttee.
c. .,. ,
F.. rr.
E. H. Ca.d.y,
Sullivan,
Euntington,
C. i:T. :J:anning,
Cha..G. H. Dupuis,
C .• B. ~'fright,
Bairc::. :at chell,
-r,~;~:~. ::.. Bel:i}
HICH:10lJD;
Perr.1anent Cor.mli t t ce
Cald~ell Har~y, Chairr.1an,
Gcorse J. Scay, Vicc Chairman.
Fre C:.er ic '."!. Scott,
John :1. llillcr,
Her~ert
U. Jackson,
Auxiliary Cor.1mittee
rr..ild.o
~.
J~~n
F'!
B. H.
..
ir~ ~:co~·-:·~:r ~
F::-ies,
1. Di~~iTI~on,
Gris~oli,
:~.
E. T. l.Io~~3.n,
Geo. A. 3o~~crncas,
John Joy Edaon,
Colcr.1an Y;ortham,
~~. s. ~=:.:: .. ; -v t .,
Jc~:n A. La:a,
:. I~.. r:::1c:.~;;son,
-1-
X--?18
A'I LAN':' A
rr. H. K0ttig,
lL B. ·,.<.::llx.r·:l_, Chaj_cnan.
J. A" .l~cCo:;·G., f_ce C":t;:.dr-man.
,LE, Zu~.t3,.
Hollins Randolph,
Roby Ro·::Jinaon,
F. E. Gunter,
A. :1. :Saldvlin.
Jar.103 E. Cald7v0ll,
1:;.
Lan;,;,
;-:. H. Bass ing0::c,
Edii7ard
CHICAGO
rr.
I:-::ach_, C.O.airman,
::. B. llcD·J·,J..gal, V,j_cc Chairman.
A~
Joy lforton
E. D.. Hul"J0rt,
Rufus C.. Dar10s,
S h1on Ca.;; ady
George Reynolds,
Er,1ory Clark
Oliver C. Fuller~
S .. A. Fl\;tcher,
B. A. Eck·axt
Louis E. Ferguson)
Chauncey ::eep,
E. J. B1..1ff ington
Jobn J. Mite he 11
ST. LOUIS
Permanent pommittee
F. 0 .. \!atts~
.: •
~:.
\"T. :.IcC. :.Ia.rtin, Cl:ainnan,
Rolla ·,.'.;;lls ·' Vice Chairr.1an,
;::. R.
Bix:Jee,
Co;.~pton,
Auxil ia.ry Com:.u tt ee.
N. A. HciJillan,
Fea-Gus J. :.-:ade,
J. A. O<.fJ0rg,
S. T. Balla.rd,
L. Swear ingcn,
Er.1~y
Brcckin:ridgc Jones.
rlilliam E.. Guy
17. L. Hcming-vray,
\'Talker Hill
Bcnj~
'.T
~'-·
s•
Gratz,
~
...'onn tag>
X-718
1.7illiam .A. Du:cst,
George D. Dayton.
John :L Rich, Chairn.an,
Theodore rTold, Vice Chairman.
J. L. Record,
Auxilia:cy Cor.mlittee.
·nalter Butler,
James 1.1acNaughton,
Isaac Lincoln,
F. A. Chamberlain,
George TI. Burton,
Sam Stephenson,
John E •. l!Ii tchell,
C. B. Little,
A. :.1. Harshall.
SAN,FRANCISCO
•
I. Yr. Hellman,
George K. Heeks,
~rman~ht
Committee
John Perrin, dhairman,
Ja;:;'les :r:. Lynch; Vic.:; Chairman.
J. F. Sartori,
Auxiliary Committee
M. F. Ba.l:ntJ,
D. n. T·.7ony,
H. J. UcClung,
A. L. :,1ills.,
F. F. Johnson,
Geo. A. Batc~elder,
Ralph 8. Stacy,
L. H. Farns~orth.
DALLAS
Ed'.7ard Gray
HOi7Gll E. Smith.,
17. F. Ram:;cy, Chairman.
R. 1. Van Zandt, Vi~e Chairman.
H. C. Stripling,
Auxiliary Cor.ami ttee
Le'.-ris Hancock,
E. Rotan.,
D. E. Waggoner,
E. 0. Tenison.
John Sealy,
Gr Y.rn,
J. 0~ Tc:r:rell,
Tf. R.
LO.A:i.JS ON
90 DAY
X-719
PAPER
Se::;'l'.red ·cy Libarty LCl-".l.n 3onds or
c~tes of indeotadnoss
C~rtir'i
VI7L1:'3ER Bfi.:GS COLL.4.'I:_~f?'li.L
jJO':'E3 S::CUF2D 3Y L!]ERTY
TOTAL PAPER SECURED
EY LIBERTY EONDS &
l30N"'vS .& U. S, CERTIFICATES
U. S. CERTIFICATES
OF .INDEBTEDNESS
Es t ima t e r.1ade
Actual as of
by Governor
January 18,1918
Nov~ :3, 1917
(In thousands of dollars)
Boston
New Yo~k
Philadelphia
Cleveland
RjcbrJ'lond
Atlam;a
Chi cabO
St. Louis
Minnoapolis
Kansas City
Dallas
San Francisco
.;;75,000
200,000-300,000
50r000
6o,ooo
25,000
12.000
75,000
.. ...
75,000
30,000
5;000
20,000
$560,000-~660,000
Washington, D. C.
February 12, 1918.
Actual a.s of
January 18, 1918
(In thousands of dollars)
$36,029
67,294
16,465
9,308
6,278
29
5,691
.;; 3,158
90,331
1,550
5,462
4,919
3 ~806
"l,SQO
4,267
210
241
4,082
453
$147,580
OF !1IDEETEDNESS •
Actual as of
January 18, 1918
33,147
877
2,208
.p 39,187
157' 625
18,015
14,770
11,197
3,835
38,838
5,767
1,087
3,41t9
916
4,998
2,047
2,500
$300,268
EX·OF'FICIO MII:MDIER8
W. P. G. HARDING;, CIOYIHU
PAUL M. WARBURG, Yl~l e.c>Y&altOR
W1LLIAM G. McADOO
X..·7l~a ::~~=~~."M~i~NO
SECRETARY OF THE TREASURY
CHAIRMAN
CHARLES S. HAMLIN
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
FEDERAL RESERVE BOARD
". PARKER WILLIS. SECRITART
IHIRMAN P. ALLEN, ASIT. llcR!TARY
AKD FISCAL AGJNT
WASHINGTON
AD~IU:88
REPLY TO
PEJ:>IIRAL RESiiRVI: -.<)ARJ:>
February 12, 1918.
Dear Sir:
At the time.of the Board's last conference with the
Governo~s.
on November 10, 1917, they were aSked by me to estimate what, in their
opinion, would be the mxirnum amo1mt of rediscounts by their respective
banks
o~
90 day paper secured by Liberty Loan
bond~
or certifjcates of
indebtedness.
I giva you enclosed a list of the estimates made of 90 day
paper secured by Liberty Loan bonds and have added to that a co:it'Tilll
showing the borrowing on fifteen day notes secured by Liberty bonds and
a
certificates of indebtedness, andjfurther column showing the to::e.L
It would appear that the only estimate that was fairly correct
was that of Governor Van Zandt.
I am sandinG this believing it will be of interest to you.
Very truly yours,
X-720a
February 7. 1919.
Mr. Benjamin Strong,
Governor, Federal Reserve Bank,
New York; N. Y.
My dear Sir:
Recetpt is acknowledged of your letter of January 29th in which
you ask for a statement of the Board's policy in dealing with accep~.auces
drawn under credits extending (IVer a period Of one Or two years • .lfter
a very full discussion of the matter, the Board has decided t& authorize
this expression of its views in accordance with the principles outlined in
the~~ hereto. The ba.hke of New York may, during a period
which can be declared ended at any time, proceed upon the basis of this
memorandum in accordance with your letter of January 23rd. The essen~ial
principles may be summed up~s follows:
{1) Aooeptance ctedits opened for periods in excess,of ninety
days should only, in exceptional cases, extend over a period of mote ~ban
one year, and in no case for a time exceeding two yea~s.
( 2) Banks whj.ch are members of groups opening these credits,
should not buy their own acceptances, and where an agreement is made with
the drawer for purchase of acceptances for future delivery, the rate should
not be a fixed one, but should be based upon the rate ruling at the time
of the sale.
(3) Transactions covered by these credits should be of a
legitimate cormnercial nature, and acceptances must be eligible accorM:ng
to the rules and regulations of the Board.
f4) Whenever syndicates m·e formed for the pu.r:r;cse of granting
aceeptance credits for more than moderate amo1mts, Federal reserve banks
should be consulted with regard to the transaction. The question of
eligibility, both from the standpoint of the character of the bill and of
the amount involved, will be passed upon by th8 Federal reserve bank subject
to the approcal in each case of th~ Federal Reserve Board.
As stated in the memorandum, the Board will rely upon the fair
spirit of cooperation on the part of the New York banks, but it must be
understood in passing upon these transactions that not only quality but also
quantity must be the contro.lling factors. The aggregate of these acceptances should not be permitted to constitute the greater proportion of outstanding acceptances at any time, and it must be understood that while the
Federal reserve banks and the Federal Reserve Board mieht look with favor
X-72Ce.
- 2 ..
upon a transaction as long as the total amount involved is not excessive,
transactions of exactly the same character may be ruled out whenever the
aggregate amount of outstanding acceptances of this character becomes~ in.
the 4lpinion of the Federal Reserve Board~ unduly large.
You are authoriz8d to communicate the contents of this letter
to the,ac~epting banks of your district, arid the Board will advise the
other Federal reserve banks of the policy which has been .agreed upon.
Very truly yours,
(Signed) Vt. P. G. HARDINGo
Governor ..
''".f."
X-720b
MEMOR.AN'DOM:
In dealing with the question of acceptances. it is desirable
that the Board should not be obliged to adopt inflexible regulations
unless absolutely necessary.
lt should be borne in mdnd that we are
co1npeting in the acceptance field with other countries which have no
legal restrictions in Which sound business j1~ertt, guided from time
to time by the central banks of these countries, constitutes the unwritten, but none the less rigid law.
~he
banks of the United States
would greatly assist tha Board in its work of developing a modern and
efficient system of American bankers'
accept~oes
- and they would best
serve their own purposes - if they would study and assimilate the underlying principles which must guide the Board, and observe these principles
voluntarily without ~equiring inflexible rules.
operate with the Board in this
as
lo1~
1mu~1er,
Unless the bankers co~·
many transactions • unobjectionable
as theJ are engaged in for legitimate purposes and within reason-
·abie limits .... wi11 have to 1:1e barred beaause strict regulations do not
S.tlmi t
Of discriminatiOlh
Proper regard for conservation ot the attength ·of the Federal Reserve
System requires that it must be possessed of short paper well scattered
in its maturities {not exceeding ninety days), that when tais paper matures
it can he actually collected and that the sul.)ply of new paper coming into
the market can be controlled to a certain degree by an advance or decline
in the rate of interest at which bankers' acceptances are bought. Higher
rates will
e~ert
a restraining
~nfluence
on the producer and the dealer
and \nll thereby reduce borrowings and bring about a certain degree of
contraction.
X~720b
- 2 -
By
~eeping
these principles in mind - upon which the strength of
our structure depends • we can readily understand the hazardous conditions
which would be created 1£, for example,
$3oo.ooo,ooo
should be opened for the purpose of financing
of acceptance credits
co~porations
for a period of
two or three years, the corporations having secured £rom the acceptors
(directly or by a trading process) a fixed and definite rate o£ interest
for the entire term of the credit.
This rate would necessarily be much
f
higher than the (Jurrent rate for bankers acceptances.
$300,000,000 had been loaned to co~~orations at
the acceptance commissions.
a% for
Let us assume that
two years, plus
•
I£ during these two years the be:m.k rate
should advance to 20%, the corporations would not be affected thereby;
they would renew from time to time as though money rates had remained unchanged; and consequently, the bank rate, as far as they are concerned,
would lose its power to bring about contraction.
Thus the acceptance
would cease to serve the purpose of financing the borrower; it would be
for the purpose of financing the accepting bank.
It would really become
an accommodation draft for the benefit of the banker, regardless of the
current rate and regardless of general conditions, and whether these
conditions demand contraction or expansion, the bankers would have to rediscount these acceptances, at a profit or at a
so required.
loss, if their own position
Here, too, the bank rate would lose its power to produce con-
traction because the commitment is a definite one-for two years.
Another flaw in this method of financing is that there is practieally
no limit to the amount of acceptances which may be created in this manner •
•
·- "'"
X-720b
3
In addition. the rate guaranteed the corporation by the banker
would likely be so high as to tempt the accepting bank (having exchanged
its aaoeptan~e with another bank assoaiated
the aoa~ptahcie With
the
lrl
this business) to rediscount
Federal Reser•e baHk or to s~i1 it
•
lh
t
I
the open mar•
•
'
Fcsr the acoe~Ung batik thh transs.ehon wouid tidt invo111e the ilivest-
lteU
ment ot morley
fered.
lis
l~rlg
as
tlie l'Mtket iii able to abMrb the acceptances of-
The unavoidable consequence of this process must be in order to
prevent an avalanche of thee acceptances. the discount rate would have to
be
advance& so as to reduce the tempting margin and thereby lessen
supply.
the
These syndicate or accommodation acceptances would therefore tend
to raise the rate to the detriment of the legitimate business of the
country- particularly the import and export business.
\v.hen,three years
ago, we began our campaign to establish American bankers' acceptances,
our rate
\VoaS
2-2i% and the English rate was about 5%.
moved up to 4-41% while the English
~~e
Our rate has now
ia about 3-7/sf~
~his
signifies
that we have reached a. point where American houses find it to their advantage again to draw on English banks, as they di4 same years ago, ratl.er
than upon banks or the United States.
It 1a certain that if syndicate acceptances of this character were
offered in European countries the S&rket would at once discrimdnate
against than and put an end to such transactions.
lt is the application
of this rigid principle of keeping the acceptance market primarily reserved for strictly commercial uses that has kept the acceptance business
•
...
;~
X-720b
"
in -England in a sound condition and has ma.de the English acceptance
market so important an adjunct of the money market.
considerations
1
If in the light of these/
we seek to apply these
principles to actual operations we must reach these conclusionat
There is no reason why a bank should not agree that for legitimate
commercial purposes. and for transactions complying with the rules and
regulations of the Federal Reserve Board, it would commdt itself for two
years to accept tor a customer for importations or exportations, or for
tne purpose of carrying staples properly warehoused.
why a bank should not say to a
There is no reason
tobacco manufactU!'er 11 \'.'henever you have
tobacco properly stored and for which you will give me proper warehouse
receipts, I am willing to accept for you and charge you a cammission of
---J~''·
Whether
it
would be wise to make a commitment which would force
the bank to accept for a customer even when convinced that the borrower
is carrying too large a supply of raw material, or that the transaction
is speculative, is a. question of' banking
of course, if the banker
judgment.
lt would be safer,
could qualify his obligation to accept. But
this is an instance where it Y-rould be a mistake to lay down a rule and
where reliance must be placed upon the business sagacity of the banker
for, in such a case, the borrower would remain subject to the hazards of
the money market and any advance in rate would have an effect upon his
own commitments.
However, the manufacturer should not feel that, in dealing with a
bankers' acceptance he is taking any other risk than that of the interest
rate.
He
s~ould
be trained - and this is an important matter -
to
X-720b
understand that he can at any ti$e sell his acceptance, not to the
acceptor but to other banks, or through brokers in the market, or to
the Federal Reserve banks.
It
is much to be desired that the American
banks and banking firms should follow the European praretice of freely
endorsing first class bankers' acceptances.
No drawer of bankers'
acceptances in Europe, in normal times, would expect to encounter any
difficulty in selling his paper.
He can sell it to discount
cor~~nies
or to private banks, or bankers, to be rediscounted at rates a fraction
above the ruling interest rate.
1/B%
(In England for as little as
the discount rate and often less).
above
The manufacturer, after having his
bill accepted, should feel quite safe in keeping tpe acceptance in his
portfolio, being confident that, without any further negotiation, he
could sell it at any tlme that he would be in need of cash.
Instead of
forming syndicates 6uaranteeing the interest rate to the, acceptor, banks
should make agreements with manufacturing concerns to buy acceptancesg
from time to time, from the drawees at, say
1/4%
in excess of whatever
might be tbe rulin.::.; interest rate for bankers • acceptrumces.
way a real discount
Reserve banks
mar1~at
In this
would be d.eveloped in this country.
Federal
will, sooner or later, have to adopt the European rule of
buying only paper bearing a tbird name, viz: the indorsement of a bank,
banker, or responsible firm.
It is true that the banks accepting in the present syndicate transactions make an additional profit in the interest rate whtch they g1Aarantee
to the borrower.
It is su15gested, however, for their consideration that
it would be e. sounder policy if they wo11ld Charge a higher acceptance
X-720b
.. e commission for
do~estio
transactions of thiS kind, for larger comnissions
would be justified for credits extending over a considerable period. This
would be aouttder than to adopt
a
poiicy which. if permdtted freely to
develop, would undermine the safety of our acceptarioe system and our money
market.
The principles governing the acceptance are equally appli0able to
single name paper.
A bank may, agree to carry a customer over a period
of a year and to buy
£ro~time
to time his single name pa?er.
If this
paper, according to the statements submitted, should be eligible in other
respects, Federal Reserve banks might discour.J.t it, provided the paper ls
not part of a loan which has been negotiated at a fixed rate for a
definite period, a year or two for example.
a definite renewal agreement in this way is a
A ninety day hote made under
c~nouflage
for the conven-
ience of the banker to enable him to fina.noe himself by using the 90 day
form as a mask to conceal what is, in effect, an ineligible one year note.
But if the interest rate should remain open between borrower and lender
subject to adjustment to the market rate, a different aspect would be
presented, and the Federal Reserve banks might discount such notes within
reasonable limits.
\7hen .a c:redi t is required for two years, it should be regardled as an
unsound basis for commercial borrowings on 90 day paper.
Without a
guaranty for renewals it would be dangerous for the borrower.
a guaranty it would be an unsound banking credit.
With such
A demand for one or
two year money, except tor special contracts, indicates a need for greater
X--720b
•
- 7 -
working capital which ought to be obtained by increase of capital
or sale of obUga>tions l.n the i:nveatment market ..
It may be argued that there is at present nc investment
therefore these renewal transactions are necessary ..
tion of the investment
ma:~ket
commercial papel'· ma:.k.et also?
and.
But dceG the ahroge..-
afford a reason for the destr'lCticn of the
Some plan must, and will be developed. to
restore to a certain extent, at least, the security ma.!'ket.,
this restoration can not be
ma!'ke~,
effe~ted,
But even if
should we not look upon credit as a
commodity Ot which only a limited supply is available?
If we have ap-
proached the limit, would it not be wise to conserve oredi t and apply it
only in those directions where its use will :most greatly benefit the
country?
In the case of the Tobacco Company if it had not secured the
full credit, it sought, it would in that event have bought less tobacco
and possibly might have advanced its selling prices.
What if it had
reduced its inventories and the consumption of tobacco?
have been just what is atpresent required?
Would not th.is
The corollary is that uusiness
must adjust itself to credit; not credit to business at
-~his
time.
To recapitulate: - agreements to grant credits for an extended period
by the purchase of 90 day paper or by 90 day acceptances ought to be ba8ed
upon transactions connected directly with the purchase and sale of goods
and the intermediate process of manufacturing.
Credits so extended, should
relate to the resources of the borrowing concern, and should not be granted
·for the purpose of furnishing working capital, or for the temporary financ-
ing of permanent investment$.
X-720b
- 8 -
Thee& transactions ::Jhould be of an individual character; they caH
for direct contact between banker and borrower, and syndicate credits
should be avoided •. Agreements by bankers to furnish one or two year
money at a definite rate of interest against 90 day paper or accepta:cce:;
to be used to finance themselves should not be CO'U.-Yltenanced either openly
or in the form of exchange of paper between bankersc
These are the principles which the Federal Reserve
~yst8m nu1s~
applyo
It would·be inexpedient to attempt more than to establish the principles.
It w011ld be detrimental to formulate definite regulations dealing :in
minute detail with the various phases of the problem..
It would be far
better to give some latitude to the banks in dealing with these matters.
But this will depend entirely upon the wisdom and discretion of the member
banks.
The banks will best serve their own interests if, following the
example of European institutions, they will adopt these principles as selfimposed, well tried rules of business prudence rather than by abusing
their freedom of action to force the Board to tie their hands by rig:i.d
regula.t ions.
2/13/18
Stater.1ent for the Press
Release for r.lOrnin& pc~.
pers of February 14, '18
The Capital Issues Cor.m1ittee of the Federal Reserve Boa.rd
announced today tha.t the Sub-Cor.:r.li ttee on Ca.pi tal Issues of
Federal Reserve District No, 10 (Kansas City) had been organized as follow·s:
Perr.anent Cor.1r.1i ttee
Asa E. Ramsay, Chair.Gi.l.n
J. Z. Miller, Jr., Vice-Chairn~,
Peter W. Goebel,
H. P~ Wright,
F. P. Neal
of. Yili.nsas City.
Auxiliary Cor,JLlittee
0. C. Snyder,·
George s. Hovey,
of Kansas City,
J, G. Schneider,
of St. Joseph, N!o.
C. L. Davidson,
of Wichita, Kan.
J. R. :Burrow,
of Topeka, Kan.
Luther Drake,
R. C. Peters,
of Omaha, Neb.
A. H. Marble,
of Cheyenne, Vly01,dn6
John Evans,
of Denver, Colo.
D. H. F.ink,
of Muskogee, Okla.
•
The Conm1i ttee a.lso announced the addition of tile na.rae
of Mr. B. E. Sunney to the auxiliary cor.:.r.1ittee of the Chicago
District
c~.nd
ti1e l'li::i.r.le of Mr. Otto M. Marks of BiirJ.ingildJ,l, Ala-
bana, to the auxiliary cor.m1ittee of the Atlanta District.
PAUL M. WARBURG. CHAIRMAN
FREDERIC A. DELANO
ADVISORY COMMITTEE:
ALLEN B. FORBES, CHAIRMAN
CAPITAL ISSUES COMMITTEE
CHARLES S. HAMLIN
P.H.GOFF
HENRY C. FLOWER
OF THE
W. T. CHAPMAN, SECRETARY
BRADLEY W. PALMER, CoUNSEL
FEDERAL RESERVE BOARD
STEPHEN L. SELDEN
EXECUTIVE SECRETARY
WASHINGTON
JAIIES
Q.
NEWTON
AsST. EXECUTIVE SECRit'tAR'C'
X-722
February 12, 1918.
To the Chairman of the
Sub Committee on Capital Issues of
Federal Reserve District No.
Dear Sir:
The Committee has decided somewhat to recast the language
of clause· (4) on page 4, of its letter of F0brua.ry seventh
(No. X-706), and you are requested to destroy page four of the
copies of such letter hcretofoC"' sc;nt to !ou, substi tlftir;.g
therefor enclosed revised page
~~A,'--1
1-·l-·f/
) .
4-0
(1.0..--A~-1~1;.
nL<
~~ ' r-- / _.~
' . {;;
tJ <..
,.
c ?.
•Q--r::r
1.
/
..
-- · ~· - <\,./ 7
if'-.1·~--p-
j
/'
f·--<
/(
1-·-
Unless expressly excepted., it is un¢.erstood . ~~hat ~11 com_:
r.1Unications from the central committee to the sub-committees
arc to be treated as donfidential and not to be
gi~en
to the
public•
There is also enclosed, for your information, copy of
resolutions passed on January 17, 1918, by the League of
Kansas Municipalities.
It is suggested that you
b1~ing
this
document to the knowledge of municipalities in your ov7n district wherever you think that it may be necessary or advisable to do so.
I append copy of resolution adopted by the New York
Stock Exchange.
This resolution was vntirely voluntary by
the Stock Exchangc 1 and sets a valuable example to be emulated by other stock exchanges..
It v;ould be desirable, however,
6
6
,'
.
X;..;.722
Page 2
tha.t ail ac·tion taken by stock excl1anges should be taken a3
I ariclose .;.,.lso, fc,r-
Sommi·Gteea a~p,inted in
T~/t.1.::
'.:':J.. ch
L1:Zc:.::::x~:.on,
o~ -Gl:.s tr.;0lve Federal Reserve
Dis-G:4icts.
Chairman.
\
•
. ~ ........
listd of the S·u::l-
X-723
R~SOLUTION
ADOPTZD BY THE
NEW YOR:C STOCK EXCHANGE
11
'l!lhereo..3, the Feci.aral Reserve Board has, upon the
recr~est
::.::· the Fton. W. G. HcAd.oo, Sec:retary of
·~2:e
T:cea;:,·J..:ry, ar::>:Jinte ::. .:: Cor.1r:;itt ee of its members to
act as
2.
Capi·ta.J. IJ .sues Coh1t1i tt ee authorized to pas a
respect to capi t..;'..:. e:{.:._)end.itures or issues of new securities,
R::I:SOLVED, ThJ.. t t::e Comr.1i tt-:;e on Stoc~ List r.rill
:requir? as .a ccn:lition to ·c:1e +.isting
such new
ca.pitiz..:.. isouos the .i,Jresantat ion of the approval of
such Conu:Lt-~13e of th0 Fod.~tal :1Gse:rve Board .. 11
of
TREASURY DEPARTMENT
NATIONAL
WASHINGTON
WAR SAVINGS COMMITTEE
February 13, 1918.
Dear Sir:
It is very desirable that we should have from each of the State
Directors an approxinate survey of the }?l'Ogress of the War Savings Campaign in each of the States, say, as of March 1st,
I rvould S1'!f£!;est that
you do not lay dow·.a any fixed form of report, but leave it to the jud.gn1ent
of each State Director to tell his story in his own way, either in words
or figures, or both, cLS he prefers.
We find a very great difference in .the progress which has been
made in the various States, and even in the different counties, cities and
towns of the satte States.
We want to hear of those cases \vhere notable
progress has been r.Jade, in order that we r;ay find out what causes have
contributed to those results.
I am told inforr.ally that in several States the full q,uota will
probably have been subscribed by the first of Iv1ay, whereas in other States
it is said that this can not be expected.
Mr. Vanderlip le'ft a few days ago for the Pacific coast, after
a rather serious il:i.ness; but I know he is intensely intere~ted in the results of the campaign, and I should be glad to be able to report to him
the concensus of ~pinion of the Federal Directors and the State Directors.
Personally I feel very much encouraged abo·11t the c&:paign.
I
think We have a wonderful organization, and the average sales already running over $2,000,000 per day, are going to mount steadily to at least
double that figure.
As I have said before, in another connection, we are not conducting a Liberty !Joan Car.1pa:~gn, and we ought to do nothi.ng to interfere
with the campaigns c.,f those Caamlitt.ees.
The work r:ld.y overlap scmewhat 1
but our job is :pr.il'llf.l,r.Dy to get subscriptions from the 90,000,000 of
people who have no,:; ancl. can not subsc:d.oe to Liberty Loan bonds.
The
question for the Liberty Lo"'"n fellovv is how mr1-~h can he raise; our job
and our slogan is hmv n:r.u11: people can we-intere;t in our car;1paign.
Very truly yours,
Acting Chairnan.
X-724
W. P. G. HARDING, GOVERNOR
PAUL M. WARBURG, VICE GoVERNOR ·
FREDERIC A. DELANO
ADOLPH C. MILLER
CHARLES S. HAMLIN
EX-OFFICIO M&:MBERS
WILLIAM G. McADOO
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
H. PARKER WILLIS, SECRETARY
SHERMAN P. ALLEN, ASST. SICRITARY
AND fiSCAL AGENT
FEDERAL RESERVE BOARD
WASHINGTON
ADDRKSS REPLY TO
FEDERAL RESERVE SOARD
Dear Sir:.
'l'ho enclosed is a eopy of a let.ter bsins,
sent to each }!'edera.J. Director and through hi.u tv earb
State Director in the War Savings Campaign, and is
sent to you for your information.
Yours very truly,
X-724a
EX•OFFICIO MRMBJ:R•
W. P. G. HARDING, GOVERNOR
PAUL M. WARBURG, VICE CliOVIRNOR
WlLLIAM Cil. McADOO
FREDERIC A. DELANO
ADOLPH C. MILLER
CHARLE5 S. HAMLIN
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
FEDERAL RESERVE BOARD
COMPTROLLER OF THE CURRENCY
WASHINGTON
H. PARKER WILLIS, SECRETARY
SHIRMAN P. ALLEN, Assr. SICRITART
AND fiSCAL AGENT
ADDR:I!S8 REPLY TO
FEDERAL RESERVE !BOARD
February 14. 1918.
Sir:
The Second Edttion of the Index-Digest of the FedGral Reserve
in
.U.ct and Amendments. which has been/preparation for some t;me, is nrw
ready for distribution.
· It had been the intention to send these Looks to the Federal
reserve banks to be mailed to those sending in orders. the Board expecting to attach to each book one of its franked
would be no charge on the Bank for postage.
nk~iling
slips, so there
However, 'I''Ord has just been
received from the Postmaster General that the franking prio-ilege oould
not be extended
to the Federal reserve banks or the Federal reserve
agent for this purpose, and that the books could only be mailed under
frank by the Federal •eserve Board.
It has been determined, therefore,
to fill all orders direct from washington.
To carry out this plan you are requested to send to the Board
such orders as you receive as fast as they come in and the books \rill be
forwarded immediately from here.
accompany all
orders~
Remittance covering the cost should
as previously announced in the Bulletin, the sale
price is $1.25 each. bound in buckram, and
~1.00
each, bound in paper.
The Board will immediately send out all orders which have been received
up to date. including those ordered by the Federal r&serve banks for their
own use
Very truly yours.
Secretary.
X-725
EX·OFP'ICIO MI:MBERS
W. P. Ia. HARDING, GOVERNOR
PAUL M. WARBURG, VICE GOVERNOR
FREDERIC A. DELANO
ADOLPH C. MILLER
W1LLIAM Gl, McADOO
SECRETARY OP THE TREASURY
CHAIRMAN
X'72'1C:HARLES s. HA~
JOHN SK~LTON WILLIAMS
COMPTROLLER OF THE CURRENCY
FEDERAL RESERVE BOARD
H. PARKER WILLIS, SECRETARY
SHERMAN P. ALLEN, ASST. SICRITARY
AND FISCAL AGENT
WASHINGTON
ADDRESS RRPL.Y TO
FEDERAL RESERVE IIOARD
February 13, 1918.
Dear Sir:
I enclose herev·dth copy of a std.tement zwde to the
Federu.l Reserve
of the
Kans<o~.s
to charges for
Si:4S
Bo~;~.rd
City
here todd.y, presented by a Committee
Cle<o~.ring
exch<o~.nge
House
Associ<o~.tion
in
reg~;~.rd
py the Federa.l Reserve Bu.nk of Kd.n-
City.
The
like to
stt~.tement
ht~.ve, <o~.S
First:
explo;iins itself d.nd the Board would
soon a.s convenierlt, "" report from you on
As to the justice of the proposa.l.
Second: As to whether conditions similc;~.r to those disclosed exist in your District.
Third:
As to the
fe~sibility of mt~.king "" gener~l rule
the lines suggested; for ex.a.rnp1e, thi;;lt
New York excho.nge sht~.ll be t""ke:r: <o~.t pc::.r v.-hen
it is td.ken in puyrnent of checks h.earing New
York endorsements, and t""ken at ~ discount
when ti;l.~to build up btLlances in tha Federal
Reserve Bc..nk.
t~.long
Enclosure.
Yours very truly,
Chairman, Committee on Cled.ring.
..
X':/27-a
:WJCmoro.ndurn of a Presentation to the Federtil Reserve Board
by Ci
Committee of the Kansa.s City Clearing House Association
Februtiry 13, 1918·
Prior to January 1st, 1918, the Federal Reserve Bank of Kansas
City received from member banks, dro.fts on Chicago and St. Louis at par,
and on New York <:i.t lOy. per thousand discount.
The principle which un·derlay discounting New York exchange was not considered; as it was evi~
dent that the Federal Reserv·e Bank must protect itself against being
given the least desirable efichtinge, and the discount seemed the logical
way to tiCcomplish it.
Discount rates based on approximately 21c interest charge fot
time in transit, were established the first of the year, and the member
banks have felt very keenly the serious effect upon themselves, though,
in the press of abnorma.l business, had hardly set about studying the problem when the information th<:i.t discounts were to be largely increased -doubled, in fact -- rni:ide prompt action imperative.
The jealousy of the Federi:il Reserve Board for the Reserve strength
of the twelve banks is fully shared by all of us, and the last bit of gold
in our vaults has gone into your hi:inds in evidence of our support.
But
we do not believe thttt the Board has realized that, by the present and
contemplated regulations, they are taxing the members in our district for
the benefit of those in other districts and without Ciffecting the total
reserves of the twelve banks~ p~rticle·
It will be recalled that the Tr~nsit Department of the Federal
Reserve Bank at one time attempted to collect country items on the following basis:
Items were sent to country b~nks i:ind the i:imounts thereof were
charged to their reserve accounts on the day on which the items reached
them, according to schedule.
Correspondingly the endorsers on the ite::ns
received credit for them in their reserve accounts on that date.
Operation of this plan disclose~ the unfairness of it and the practice was
abandoned, so th~t items are not now charged to the bank sent until the
completion of the schedule covering the time to that bank and returns
from that b~nk to Kansas City, with~ correspondingly lengthened sched~le
in the period before the endorser receives credit in his reserve ac~ou:1t,
The second pl~n h~s not chan 6ed the reserve strength of the Federal Reserve Bank, but it has placed the whole burden of time in tr~nsit on t.he
endorser, where it belongs, ~nd not in any p~rt on the pttying bi:ink, where
it should in no w~y fi:ill·
It o·;curs to us tha.t the present pr.:..ctice of the Federal Reserv~
i.ank in hci.ndling items from outside of the district, is practically the
2
X72'7-o..
e~uivo..lent of the plan which is described o..bove as ho..ving been tried and
abandoned.
For exo..mple, items on Ko..nso..s City deposited with the Federal
Reserve Bank in New York, dre sent to the Federo..l Reserve Bo..nk in Kansas
City, which clears them, getting o.. credit bdlo..nce in the Clearing House,
for which immedio..te ~yment must be made·
In the nature of things, it is
impossible for Kdnso..s City bdnks to ho..ve o.. sufficient supply of cash on
hand to mo..ke these settlements, except in occo..sional instances.
Kansds
City bears the same business relo..tionship to New York which a country town
does to Kansas City.
For pro.ctical reasons, which need hardly be argued,
it is necesso..ry that banks there should have bo..lances in Eastern cities.
(More than ever is this true at present, because of the immense governmental and internationo.l o..ctivities concentro..ted at the Eo..stern seaboard.)
Therefore, they are obliged in pro..ctice, to pay for the items on themselves, received by the Federdl Reserve Bo..nk from out of the district, in
Eastern Excho..nge.
The endorsers thereon receive credit in reserve account, the day the items o..re pdid in Kansas City, o..nd Ko..nsas City banks are
forced to carry the interest burden from the day paid there until payment
on their Eastern ExchC4nge co..n be realized by the Federa.l Reserve Bank. In
other words; they are, in effect, obligea to pay for items by wire transfer to New York, the do..y the items reach Kansas City.
In fact, that is
the alternative pointed out if objection is ITade to paying the discount.
The New York endorser is not entitled to receive payment on Kansas City items the day of payment there, any more than K1:1nsas City banks
are entitled to receive payment on Salina items sent through the Federal
Reserve Bank the day they reach Salina..
We o..re therefore submitting that
the burdening us with an interest charge co..lled discount, on the Eastern
Exchange, which we give in settlement of Eastern endorsed items on ourselves, is unfdir.
If the Federal Reserve Boo..rd feels that the system can not c1:1rry
""ny float on transfers from one Federt~.l Reserve Bi:i.nk to another, their remedy, in this instance, lies in lengthening the time which they will require
for crediting Kanso..s City items to the account of the endorsers to the Federal Reserve B~nks in New York, Chico..go, St. Louis, etc.
It should take
longer for New York to collect Ko..ns~s City checks tho..n Buff~lo checks.
V~dt is true of Kanso..s City items is similo..rly true of items on
interior b~nks in this section.
If the Federo..l Reserve B~nk receivesitems on Sdlin~, Ko..ns~s, from New York, sends them to Salina for colle~tion,
the bank at Salino.. will send in payment therefor, Kanso..s City exchange, or
will build up their legal reserve bo..l~nces to ~ corresponding extent larg~
ly with ~nsas City excho..nge, so tho..t the burden of tr~nsferring money from
S~lina to New York ~lso falls chiefly on ~nsas City banks.
The endo~u~r
im New York will therefore hdve received the returns on o.. Salin~ item in
the time it h~s taken to send th~t item to Salino.. from New York vi~ Kansas
City, and returns to get baok <...s fa.r c.~.s K<:lnS<iS City.
The time it t ... kes
,
.~
3
X727-a
for the returns to go from KCJ.nsa.s City to New York is po.id for by the KanSd.S City banks, a.nd not by the endorser to the New York Federd.l Reserve
Bo.nk.
In simila.r munner is the burden J.aid on bc.nks in other Reserve
cities in District 10, ··-St. Joseph, Cmc!.ho., Denver, VJi"Lito., Oklo.borna
City, Muskogee, etc., jn settling for Eastern endorsed items on themsel-.res
and their country correspondents.
If the c~.rgume nts o.bove c~.re conceded to hi:ive merit, bar.ks in t:~.-·..:s
district should have the pz·ivilef!,e of paying the Federal Reser1e Bank :Z ur
such items a.s it receives from out of this district in out of the distr2ct
funds, particuleirly for those items which come from tb..e reser·.re centers
East of here, whe~e bo.lances from this district accumulate in the neitural
course of business.
The Federci.l Reserve BC4nk cleared on Ki::lnSc.cs City bc<.nks during the
year 1917 ••••.•......•..••....•.•...•.............•...• $1,356,864,914-17
Ka.nsd.s City bci.nks cleared on the Fe de rc;.~.l Reserve Bci.nk •• __..:;5..:;6~J.:.z:,..:;6:.;;:0;..::::8:.z:,:.;;:9..:::2:.:::2:.;·..:.9.;..7
mak:i.ng the net credit of the Federi::ll Reserve Bi::lnk in t!1e
Clearing House, • ....• ~ • •.•...••.•.••••.. - • ..• - • •.....•.• $ 795,255,991.20
The Federei.l Reserve Bcink of Kb.nsc;.~.s City received from other Federal Reserve &nks during the year 1917, on Kci.nsas City bci.nks,. $ 583,519,316-16
and on other banks in this district, ...................
370,4JS,J.9'7<72:
·
Totci.l 1 $ 953,934,4~3.88
This exceeds the amount of their credit bi;i.leinces in the Keinsas Clearing
House by about $158,000,000-00, which no doubt represents the approY~
mate d.mount of out of the district exchanges pctid to them by banks outside of Kansas City.
It is i::lppci.rent tha.t banks in the Tenth District have not been
borrowing money by selling the Federal· Reserve Bcink Eastern E~~change.
They have only asked to pay in Eastern Exchange by m~il, and 22i by wire,
for the items on themselves collected through the Fede:co.l P::;ser;,re Be;:J~>:s
for Eastern endorsers.
To enforce the proposed reguleition would cost
banks in the Tenth District c;.~.t le<:.<.st $125,000 a year, probably much more
than that.
The Federal Reserve Bunk of Kci.nsas City does not seek to
make th... t profit, a.nd its stockholders do not desire it.
The apportionment of the tota.l amounts of Eastern Exchange the
Federi::ll Reserve Bunk of Kansas City will receive at pi::lr from various ;nembers, is purely a mechanical problem, once the principle is aeknowlec.l.gnd.
We do not ask thd.t the Federal Reserve Bc;.~.nk receive Eastern Exchange at par, exce.E.t for Eastern endorsed items.
In other wordst we
do not <:4Sk you to loci.n, without charge, on our dra.fts due in New York,
Chicago or St. Louis, in one or two days; we only ask tho.t you refrain
from forcing us to wire payment to Eastern cities, so eiS to cut in two
the interest cost to them for Western items.
4
If we are forced to charge customers high rates of discount on
all Eastern items deposited, or else on all their checks sent East,
which cost us to settle for, their confidence in the pr.i;!mise of the Federal Reserve Bank will be shaken; for it hds led them to expect reductions, not increases, in charges on checks.
Years of astablished practice as well as the natural course of
business have given Eastern Exchange a v~lue in the eyes of the public.
To change this will require a long while and much patient e~planation of
poli~ias adopted by the Federal Reserve Board, <:tnd not understood by
b~nkers themselves·
If it is ever t·o be done, this is not an opportu:l8
moment.
EX-OFFICIO MSMI!IER8
W. P. G. HARDING, GOVERNOR
PAUL M. WARBURG, YICI GOVERNOR
W1LLIAM Gl. McADOO
FREDERIC A. DELANO
ADOLPH C. MILLER
CHARLES S. HAMLIN
SECRETARY OF THI TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
FEDERAL RESERVE BOARD
COMPTROLLER OF THE CURRENCY
WASHINGTON
H. PARKER WILLIS, SECRETARY
SHERMAN P. ALLEN. ASST. SICRI:TARY
AND FISCAL AGENT
ADI:»RKSS REPLY TO
FEDERAL RESIERVIE BOARD
X729
February 14, 1918
Dear Sir.:
::-.::acJ.o6Gd
please find supply of Form X538-Rev. for
reporting ·vree:dy consolidated figures or condition of member
bank~
in principal cities of your district.
You will note that item "U.
s.
securities owned"
in each division is preceded by three sub-items, code words
for whtch are shown on the neu form.
Please use all the cede words designated, beginning
with yol..t' weekly r€port for Fetruary 21st, and
oblige~
Very truly yours,
Acting Assistant Secretary
Federal Reserve Agent,
EX•OFFICIO MSMBitRS
W. P. G. HARDING, GOVIRNOJl.'
X- 731 a
WlLLIAM G. McADOO
::~~E:icw~~~~~N~•c• GovERNoR
ADOLPH C, MILLER
CHARLES S. HAMLIN
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
FEDERAL RESERVE BOARD
WASHINGTON
H. PARKER WILLIS, SECR~TARY
SHERMAN P. ALLEN, ASST. SICRaTARY
AND fiSCAL AGENT
ADDRESS REPLY TO
FEDERAL RESERVE BOARD
February 15, 1918.
Dear Sir;
The attention of the Board has been called
to a ruling of the Internal Revenue Bureau requiring
banks located in tl1e United States to withhold income
tax upon interest paid on deposits to non-resident alien
individuals and corporations.
The
matter
\~S
brought
to the attention of the Secretary of the Treasury, and
a copy of his reply is inclosed herewith for your information.
Very truly yours,
Governor.
W. P. G. HARDING, GOVERNOR
PAUL M. WARBURG, VICE GOVERNOR
Ex•OFFICIO M&MBER8
FREDERIC A. DELANO
ADOLPH C. MILLER
CHARLES S. HAMLIN
WlLLIAM G. McADOO
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
FEDERAL RESERVE BOARD
COMPTROLLER OF THI CURRENCY
WASHINGTON
H. PARKER WILLIS, SECRETARY
SHERMAN P. ALLEN, ASST. SECRETARY
AND fiSCAL AGENT
ADDR&SS RIEPL Y TO
Y.'/32
February 13,
FEDERAL. RESERVE BOARD
1~10
Dear Sir:
:May I request that on your schedules B.D. 4
and B.D. 7 in auc'H.ion tv d;;.ta heretofore given you
show the arr.ount of discount against each individual
iter:J., also
number of days each item has to run
t!~o
from date cf niscount or purchase by your bank to date
of rna turity.
to
calcul~te
fhis v. iU '3nable our Statistical Division
each month for each bank and the system
as a ·vrhole, th.;; average rate and maturity of the paper
discounted and bought during the month.
While the pre-
sentation of these data may increase somewhat the typewriting work of
yo~r
discount department, it is thought
that the results will fully warrant the additional labor of copying on the schedules information requested.
Very truly yours,
Acting Assistant Secretary.
Federal Reserve Agent,
Released for Morning NE-wspapers, February 16, 1918.
ST;\T:SMEI\'.C ..i!'OR THE ?:RESS
The Federal Reserve
3oa~>:d.
tiJday ann')'IDC0d the election of the fol-
lowing directors of the Baltimore Br:tnch of the Federal Reserve Bank of
Richmond&
By the Board:
Mr. r:illiam Ingle, President, B::Llt:'imore Trust
Co~,
m~O.
fo-r.mer.J.y Feri8ra::. Reserve A.geYJt at Richrnondv Baltimore; ar.d
Mr. Y,"ald.o Ne'.-Jcomer 9 P:r·e:::Ji.:ilent, National Ex.chmJ.ge Bo.r.ik.
Bc.lt~.mo:~e.
Ey the Bank:
Mr. Morton Me Prent is, now in the employ of the Bank¥ who wJ. lJ
be mar1.ager of the B:ran~h. Unde:t" the regulah0ns of the Federal Reserve Board., the Manager of the Branch is also a
Director.
Col. H. B. Wilcox:, Vice President of the Merchant:l-Mechanics
First National Bank of Baltirooxe, who is also a director
of the Federal Reserve Bank of Richmond.
Mr. Chas. C. Homer, President, Second. National Bank of BPI.ltirrore
and also President of the Baltimore Clearing House Asso0iation.
Mr. Prentis, who will be Manager of the Branch, has been with the
Federal Reserve Bank of Richmond in the capacity of Manager of the Libe.tty
Loan since last September.
He was born in St. Louis, Mo., and held a
position with the Third National Bank of that city for two years.
He was
with the National Bank of Commerce of Norfolk. va. for nine years.
From
1915 and prior to jt.is employment by the Federal Reserve Bank, he was
wj_ th
the Treasury Department as a National Bank Exannner for this District, undor
the Comptroller of tho Currency.
••
X-73~
- 2 ..
Mr. Chas. H. Wys.tt. who has bee.n with the Federal Reserve Bank
practically since its opening, will be Cashier of the Branch.
Mr#
~~auk:
McC. Leake, who has been with the Bank as Teller ever
since its opening, will go to the Baltimore Branch in the capacity of
Head Teller.
Mr. Richard . . B:r.adley, who ha.s been with the Bank a little more than
a year, will go to the Branch as Bookkeeper.
Mr. Chas. N. Duley, who has been for several years a. resident of ·
Baltimore, has been appointed Assistant Federal
Auditor of the Branch.
2/15/18
Rese~ve
Agent and
X-734
Release for the ~crnlng
papers, February 17,1918
The Chairman cf the Cct.pi tal Issues Committee, when se::m.
"Cc:day, anci ::J.sked to m:1:·e some statement concerning the act iviti~E>
of tbis Committ•:.e, S·:iid that the
~~~.:ttee
,r:hich the Com-
had received. f::..·om c:ll parts of tJ.1e country was most
ancourac.i.ne;.
~a.rily
SU)~)Ort
He 0i te:..i.
3.3
a.n ill us trc:t~; jon
3.
resolution voJun-
adoptt:d by th,:, Governin6 Corr..cittee of the Nev: York
Stock Exchange, reading as
follow~:
1'11Jhereas,
the F e:i.:;;ral Reserve Eo3.rd has, upon the ~
quest of the Han. Vi. G. ;,1cAdoo, Secrt:ta.ry of the Treasury,
2~ppointed ZL Com,..i tte:::; of its mer.!b.::r:..; to uct as a Capital
Issue.:.:; Co~:E,:J ttee :cuthorizeci to ~'Ja.ss upon Guch proposals as
may be au'b1:d 'tted to them in respect to caj)i tal expenditures or issues of ne~ ~ecurities,
HESOLVED, Th3.t the Co,.:.d +.tee on Stock List ·vvill
require, a3 a condition to the listing of such new
capital is.Jues, tl1e pru,:;enta.ti6n of the ap~:.roval
of s~1ch Cor.1mittee of the FeC:.eral Reserve Board. 11
Coop3rative resolutions have also been passed on the part
of municipalities.
A case in point in the League of Kansas
l!J:unicipali ties, 'Nhich,
r'•. mong
ether reco;,; :endations, resolved
chat
11
.,
it is recm~:cended that during the period of the war
each and every city government in this State shall
undertake only such paving and other improve:Jent
war:.: as may be actually neco:;s.J.ry to be undertaken
at this time; thereby releaain~ men and money fer
th8 service of the National Go~~rnment."
Another illustration of this 3pl:it of cooperation was
cited. by him in the resolution adop:; ,~,::
E::;tate Exchange, Rich:nond, Va.,
'3.8
~;y
the Rich{;-.ond Real
f,~llm: .:>:
"Ro.-.ol
....;. .,:C.~l
,.···' (V'"'C<.. ) Re.;;;'·
>" 1
Estate Exchange,
vv
v ed ''
'JY tb, R'lv,...h
...
t~a~ the President of the United Stat~~, and the Secretary
of the Treasury be, ~L~ they are hereby, re~ueatei to is3ue
an .::.p.!eal pror,:ptly to all Governor>, and. :;~:1-:ou::;h them to
L':-
-
/
X-·? ~~tt
(J)
State leg:::;lat·u.res, mo.yors ::lr...:. legislative bo\.i.ie ·' nf r"u:.ici·palities, reque3ting the~ to exercise the ~0at careful dCrutiny over all approprjation ..:.;. and tc exclu:'e from their l'e,;pective budgets every iter:1 ~hat does r10t re~:::>resen-c an actuJ.l
r~ec~JsaLty for the pro 1::Jer coniuct of the ~:ort::rnr:cnT, to the
end. th::tt the StateG ar_d v,unicip;;;.1iti03 ma~;i .:::et an ~X3 .. jJl\ i.r.
patricti~>m and sacrif:lce for the institutior:..; .::,:;.i indivi.uuaL::
;ri thln their respect ~.ve jr.r isd.ictio::.~;; anci -ch3. t .-;a t.~ric;.l c.,nd
L.i.~)Or rnaf be conJer-v~d for the needG of.' our lJ:ttional GY.rernn:ent. 11
ren.;;;;·ml cf maturing obl i.ga t ions .such rene.::-:.1 c;houl d
considered unle:;s there "..:.re particular readonB co
oe
t~·1e
favoL~':Jly
contrary.
A siL<lilar p.olicy is being a:lopted. by the Col:L·.ittec in O.ealin.:;
:;i t!.-1 the funding of 'oanl·:in:;::,
c;~~bt
incur:ced :::;rior to February l,
1918.
In dealing ryith bonds to 0e iJaueC for
road. construct ton, the Com,,.i ttee has been
~he pur~oae
;:;·,ovec~
n~~
of
i-'r L ar ily :.-y the
consideration of 1,•;hethor or not the 3e roaG.,:; ,:.re of i:.1port2.nce
oit~er
from a military or economic point of vie.;
~n~ whe~nar
0r
pi'©duction of electric poc.vc;r., the Oorc.n1i ttee was guided by the
fact that the amount involv·ed was small a.-a compared '•Vi th the
:_.'unds already hazarded in such und.ertakings ani :;y the fact
t:1e
po~ver
tL~-~~
to be produced was required prL.,;:uily for purposes
connected directly with thd succesdful prosecution of the
~ar.
X-734
{3)
In dealing with municipal and State issues the decisive
factor in the deliberations of the Committee has been whether
or not the expenditure is absolutely necessary for the health
and welfare of the community.
The Committee
urges that pub1
lie authorities, both State and municipal, approve appropriations only
MXgE~xx~
where urgently required by the health
and welfare of the people.
The Advisory Committee of the Capital Issues Comi11i tte.e
has been in close touch
'I,
i th all local committees establish-
ed by the twelve Federal Reserve B~nks; and all personal presentations of applications are being made to them.
On February 8th, it held a public hearing at which
there appeared representatives of the national organizations
of the public utility companies of the country.
These rep-
resentatives discussed with the Committee some of the problems and difficulties, both as to operation and finance,
under which they were operating due to war conditions.
They
all pledged their hearty support and cooperation to the purposes to be accomplished by the Capital Issues Committee,
and assured the Committee that, during the period of the war,
capital expenditures would be limited strictly to the most
imperative needs.
The Committee is consulting freely with representatives
of
t~e
various Departments and boards and its work has been
facilitated greatly by their advice.
W. P. G. HARDING, GOVERNOR
PAUL M. WARBURG, VICE GOVERNOR
FREDERIC A. DELANO
ADOLPH C. MILLER
CHARLES S. HAMLIN
EX•OFFICIO MEMBIER8
WILLIAM G. McADOO
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
FEDERAL RESERVE BOARD
COMPTROLLER OF THE CURRENCY
WASHINGTON
H. PARKER WILLIS, SECRETARY
SHERMAN P. ALLEN, ASST. SECRETARY
AND fiSCAL AGENT
ADDRESS REPLY TO
FEDERAL RESERVE 80ARD
X736
February 16. 1918.
Dear Sir:
With reference to inquiries received from some
of the Federal Res0rve banks regQrding proper method of
reporting disbursements of the 1!Tar Savings Department in
the monthly earnings and expense statements, may I request
that all disbursements on account of Liberty Loans, Certificates of Indebtedness issues, as well as War Savings
and 'l'hrift Stamps sales which are reimbursable by the Government, be consolidated and shown in one monthly report
on form 97a.
In case your report on form 97a for the month
of Janunry does not include o.ggregate disbursements of
your Fiscal Agent Department as outlined above, will you
be good enough to furnish us with a revised report at
your early convenience, and oblige,
Yours very truly,
Assistant Secretary.
Federal Reserve Agent,
w. P. G.
EX•OFFICIO MEMBJ:R8
HARDING; GOVIRMOR
PAUL M. WARBURG, VICE GOVERNOR
WILLIAM G. McADOO
FREDERIC A. DELANO
ADOLPH C, MILLER
CHARLES S. HAMLIN
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
FEDERAL RESERVE BOARD
COMPTROLLER OF THE CURRINCT
-,
X
H. PARKER WILLIS, SECRETARY
r;~ SHERMAN P. ALLEN. ASST. SECRETARY
~v
WASHINGTON
AND FISCAL AGENT
ADDRESS REPL.Y TO
FEDERAL RESERVE BOARD
February lt:, lS18 ..
Dear Sir:.
On February 14, the Board addressed you a letter stating that
the second edition of the Index Digest o! tl.e Federal Reserve
.Ac~ r.a.~1d
amendments, which had been in preparation for sometime, is ready for
distributionIt is suggested that in order tv bring the
~igest
to the
a~-
tention of the banking 4nd financial public you should circulari:z:e
t~.a
member banks in your district with respect to it, Bimply informing
the~
thtLt it is now ready for distribution !'it the prices named for the Ji!ferent bindings,
g.tl(i
tbd.t
orders~'/
be t:ntnsmitted through you.
n
is also suggested that you furnish local.. newspapers and journals in--
terested in
fi~ncial
and banking
~tters
with copies of the inclosed
no·Uce, \\'hich is to a.ppetiLr in the Federttl Reserve B.ulletin for March.
In thoee
c~see
in which you believe
th~t
the publication might be
s~f-
fioiently interested to print a brief review of the book the Board will
forwa.ri, upon your recommendation, a. fn$ copy.
Dumber ot
p~blications
'\ention to
~
It is assumed that the
which would be willing to give tha•"kint of at-
lndex Digest would be compa.ratively small in any distl'ic-:.
Yours very truly,
Secretary.
X-'1'2'7-a.
SECJND EtLTION OF THE DliDEX DIGEST
'l'h,} second edition
o~
the Indsx Diges-1; of tl:e
Federa.l Reserve Act is no·N ready for distrib .ttion and
1
is being sent to subscribers.
The volume contains 656
pages, and furnishes a complete analysis of the Federal
Reserve Act, as amended to date, including those provisions of .other e:..cts which affect the
tem.
Federt~.l
Reserve Sys-
Copies bound in paper are sold for $1-00 each, and
bound in buckrc:1m for
~1-25
each.
Subscriptions may be
sent to the Federal Reser•e Agent of each District, or to
the Federal Reserve Board direct.
W. P. G. HARDINGI. GOYIRNOR
PAUL M. WARBURG. VICE GIOVIRNOR
FREDERIC A. DELANO
ADOLPH C. MILLER
CHARLES S. HAMLIN
WILLIAM G. McADOO
SICRITARY OF THI TRRAIURY
CHAIRMAN
JOHN SKELTON WILLIAMS
H. PARKER WILLIS. SECRETARY
SHERMAN P.' ALLEN. ASST. SECRETARY
AND FISCAL AGENT
FEDERAL RESERVE BOARD
COMPTROLLER OF THI CURRINCT
WASHINGTON
ADDRK81l.,RKPLY TO
X...o738
F~bruary
I'BDERAJ. RESERVE BOARD
16, 1913.
Dear Sir:
B.v direction of the
Fede~al
Reser7e Boardv I am today
Sending to you under eeparat.& oover c. copy of tho sec;end
edition of the Index Digest of the Federal Reserve Act ani
Amendments
prepared by Hon. Chas.
s ..
Hmnlin, member of the
Federrl Reserve Board.
The Board believes thct this document will be found ot
convenience tor current reference aa.d will appreciate such
noti~e
as you mry see fit to give to it in your
Department.
Yours very truly,
Secretary.
~ook
Review
•·
.
Washington, February 13, 1918.
Me_more..nd'1Ill•
The Jbjer.t of this memo:ra.ndum is to outline briefly sor:Je Jf
the most
import~nt
points of difference, in substance and
e~Ie:rt,
between the so-called "0al.der BHl'' c...nd the VJar Finance Corporation.
(l)
~nks·
The Calder BUl wuuld give power
to Federal Reser-:e
to rediscount member banks' notes secured by "such bonds or
note;s of any rCLilroad, industrial, public utility
co:rporat~.on
or
municipality ... s the FederCLl Reserve Boc:Lrd upon inves"Ciga.t:i.vn dMms
a proper security for the Federal Reserve Banks to racaive as collateral .. "
aesu~e,
For the purposes of this memorandum, we must
of
course, tha.t if the bill were passed the Feder""l Reserve B.oe.rU. would
permit tl!e· ·rediscount of member
b~:mk
notAs secured by snch col.late.rA.l.
Upon thc:Lt assumption, it is clear that billions of outstanding s:::curities would become directly avta.ilable CLS
eolJ.ater~l
by Feder""l. Reserve Btmks, i:l.nd indirectly av...iiable
Feder... l Reserve notes.
It would not be
ci.
interA~t
or vd th the renewal of mtt turing ob) igi.i.tions, but
ptv.rer of
alre~di outst~nding
differentic:~.tion ~t
would become
....11
~s
the public interest at this '\;ime.
f')j.·
J.~he
~vail~ble
0.<1Jy
c.t ~.. hi:.
wh:Jle
Irk:L >!:;
t:~me·•,
>_,_
with~ut Q~y
to whether or not they-
~re
servinE,
The proceeds of such bo·rrowing
could be used for anything - compatible or
c:~.s S<'~t;U>:"ity
question Jf ufla.1'.ne;
with new· fimLncing "cvmp;4.tibJ.e with the publ.ic
securities
for t:i.dv.-..nces
incompatible~
It is un-
X-740
necessary to
(2)
elabor~te
2
the importance of this point.
Granting that most of the securities covered by the Calder
Bill amP.ndriJent are either unsalci.ble today or could be sold only with
substtmtia.l concessions, even as against the present heavily reduced
prices, the Calder Bill does not have for its object to find a means
of thawing out these frozen securities.
The only solution that the
Calder Bill provides is that holders of securities, either directly
or indirectly, pledge them against advances to be secured from Federal Reserve Banks.
The Finance Corporation, on the other hand, pro-
viues ways and means by which the appeal should be made not exclusively to the Federal Reserve System but to the securities market in general.
By substituting, in effect, the short term bond for the unsale-
able security of industrial corporations, public utilities, railroads
or municiFalities, or by substituting these short term bonds for the
maturing obligations of such corporation, a new security is offered
which will have a general marker, first, because it will be considered
a Government security, and, second, because of the fact that some provision is made, in case of emergency, to use these bonds as collateral
for borrowings from Federal Reserve Banks.
Suppose that an electric company has
million dollars;
m~turing
To make this
p~int
clear:.
bonds amounting to ten
it wants to offer instead a five year electric note
but finds it impossible to place the same.
Under the Calder Bill,all
that could possibly be aone would be to borrow the full amount from
the
Federd.~-
Reserve B.:mk ·
Under the plan of the War Finance
Corpor~-
tion, five year bonds of that corporation would be issued and either
X-'740
tak0n in
'3.Y.C~1 ...i.Y"6'?.
3
by the holders of the old, zr.aturing electric notes,
or the new fi·.re :,rsa':"' short term bonds coC-tld be placed on the zr.arket
and
the
t!~0
pruceeC..s us0d to pay off the maturing notes.
In otiher words,
C0rpard.tion should h"-ve the tendency of reopening the se-
F:i.~1ance
now unsAleable securities, so that new elasticity
curi~y rnar~et
fo~
will be
the securities tr.drket instedd of regarding this mdrket
give~
as hopt::)essly dea.d dnd inst.edd of using the Federdl Reserve System, an
instn1ment credted for the p.cotection of commercidl paper, as a zr.arket
upon
w~ich
to unload unsaleable securities.
(3)
It is safe to conclude from the above thdt the amount of
paper secured by Wur Finance Corporo.tion bonds expected to be rediscounted with Federdl Reserve Banks would be much smaller than the
amount likely to be borrow·ed from the Federdl Reserve System in the
case of the Salder Bill, not only because, in the first case, the absorbing povJer of the security rearket acts as a buffer
the security
zr.~rket
cannot
t~ke
C~.nd
on1y v.rhat
- and what, after that, the banks
cannot carry - wi.J.l go into the Federal Reserve System, but also, as
stated under (1), because the output of the short term bonds by ths
War
Fin<;~.nce
Corporation is restricted to definite purposes of the pres-
ent emergency, while, under the Calder Bill, the only possible
ass~st
ance would have to come through the Federo.l Reserve System, a.nd all
securities issued during
p~st
generutions
wo~ld
become
a.vail~ble
as
collateral without a.ny scrutiny t..s to the objects for which they have
been issw.3<.i.
"' ...
x.rf40
(4)
4
If we hb.ve these points clearly in mind, it is incompre-
hensible why the hue and cry of inflation should be raised agciinst the
Fincince Corporation by the very people who, apparently, are in favor of
the Cb.lde r Bill·
As a matter of fact, as above stated, we would have
to expect a much larger degree of inflation under the
Cc;~.lder
under the proposed Vlar Finance Corporation legislation.
Bill than
Are we not
driven to the logical conclusion that these critics of the Vib.r Finance
Corporation bill are opp'Jsed to it because it restricts infJ.ation so
much more tho..n the Calder Bill rather than becciuse they are generb.lly
apprehensive of too much inflation to be ca.used by the contemplated
legislation 7
?i;;l.u1 M.
Warburg~
•
00
00
'\-1
XTl+Z:
BATIO OF "::EU>A'X" OF EACH ZEDEML RESERVE BAUK TO EARlUUG ASSETS AUD DEPOSI'rS,
-F.EJmUARY 15, 1918
-
Federal
Be serve
13e.nk.
C1ea.r:ing
hpuse
excl'l.:mge s
: .All other :
uncoll~ct-:
ed iteus
Total
Total
uncollected ~ collection
itaus
items
Dr.
Cr.
: .Rit.tio of 11 J!'LiATrr :lli.tie oi :.i1.Q.;<.t" to
; i.nlll~diately availTotal :Net inve.s tLlan t, :
to
"FLOATu : L:1 tra.u.sfers
total eCA.rnill6 :a.JUe Gov~rm1ent a.nd
ba.nk deposits.
assets
~ inclus:lad. :in
:2er cent
To'tcl.l "Fl.OAT 11
Per cent
.
2,636
23,166
25,002
2l,392
4,410
6.0
5·2.
28,078
57.805
85,883
63,246
22,637
5·9
J.l+
PHILADEiaPHU
5,133
J2., 110
37,243
28,755
8,1+88
230
15·9
. 9-6
CLEVELAliD
2,908
18,644
21,552
18,412
J,l~
1,282
3·7
2.5
RIClU)Nl)
2,352
20,262
22,61.4
14,805
7,809
18.9
16.4
Au.Am'A
1,255
15,865
17,120
12,945
4,175
51.8
17·5
10.4
CHICAGO
6,917
53,125
6o,o42
23,330
J6, 712
. 20,741
3J.l
19·3
762
17.323
18,085
14,4-44
3,64-l
290
11.1
6.8
11,709
11,709
3,459
8,250
6,351+
J5·9
18-7
25,079
25,216
9,449
15,767
9,872
19,261
19,261
7,g'l7
11,444
s,SOl+
41.6
~·9
1,602
l0,94o
12,542
10,~5
2,307
2,650
3-6
2-9
51.780
305,289
357,069
22.8, 28.9
l28, 7SO
46,SOl
13-5
8.)
:BOS1'0N
.NEW YOllK
Sf. LOUIS
MilnmA.POL!S
KANSAS
137
CI~Y
DAiti.AS
SAN FBANCISCO
1'0!I!AL
(a)
(a)
4-7.8
19-9
------------~--------------------------------------------------------------------------------------------~----------~~---------
(a.)
Excess ot az:1ount of transfers sold over az:U)unt of transfers
bo~t.
X-743
Febrt1ary 18, lS18e
The regular quarterly session of the Federal Advisory Council opened
this m0rning, a joint meeting being held with the Federal
in the Board, s assembly room.
Tomorrow mornlng at
1~
R8sa~e
o'clock the
Doard
Council
and the Board will confer with the Secretary of the TreasuryQ
Today' s meeting was fievot ed to the usual opentng s.ddress of Governor
Harding.
Mr. Harding called the Council's attention to the recommendations
made by the Board in its annual report in favor of amendments to the Federal
Reserve .'l.ct and to the Board 1 s position as stated in the re.purt rega:t>ding
the treatment of paper technically eHgible for discount but in fact not
within the scope of the Federal Reserve Act.
Mr.
Hardin;_~
furr'cher suggested
that the COUJ.'lCil be prepared to discuss with the Secretary of the Treasury
questions perta5.nine: to bond and
certifi~ates
issues and he outlined
broadly the pres€nt reserve and discount rate problems of the System.
At the
mor~1lng
rr.eeting there were present, beside the members of tre
Federal Reserve Board, Messrs. Rue, (Phila.) Wing, (Boston) Rowe, (Cincinnati)
Norwood,(Greenville)
Wil:wnot,~.Austin)
Fleis"-aoker, (Sa.n Francisco) Mitchell,
(Minneapolis) Lyerly,(Chattanooga) rtatts, (St. Louis) ..
In the afternoon the Council held a closed session.
Y-74-6
W. P. G. HARDING, GOVERNOR
PAUL M. WARBURG, VICE GoVERNOil
FREDERIC A. DELANO
ADOLPH C. MILLER
CHARl-ES S. HAMLIN
EX~OFP'ICIO MEMBERS
WILI.IAM G. McADOO
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER Of THE CURRENCY
FEDERAL RESERVE BOARD
WASHINGTON
H. PARKER WILLIS, SECRETARY
SHERMAN P. ALLEN, ASST. SECRETARY
AND FISCAL AGENT
ADDRESS REPL.Y TO
FEDERAL RESERVE BOARD
February 19, 1918.
Dear Sir:
The Board bas received a commanioation from the Chief of the
Military Intelligence Branch, War Departzmnt, askillg that each Federal
Reserve Bank camnun1cate with S)me officer of each member bank alking
that some one man be detailed by each bank to keep a close look-out far
any suspicious account or transaction which mdght be interpreted as invol"V'illg enemy funds or money usecl for enemy propaganda work.
These
transactions should be reported direct to the Federal Reserve Board in
Washington, which could then communicate with the Mili ta:ry Intelligence
Bureau.
lt is suggested by the Chief of this Bureau that "in putting
this plan into execution, it should be borne in mdnd that the fewer
PeOple who are communicated with in this connection the better, in order
to establish the cooperation of every bank in tne Federal Reserve System,
and the officers ot these bank• who are entrusted with the duty of cooperating shoUld be strongly urged to obse~e the greatest secrecy. even
. among the other empl()yet or off16ets ot the bahk".
The Board is aware that compliance with this request will involve a good deal ot work and the exercise ef a discriminating judgment,
but in view of the evident importance of keeping track of any propaganda
work, it feels justified in bringing the matter to your attention and
asking your cooperation.
Very truly yours,
Governor.
.
W. P. G. HARDING, GOVIRNOR
PAUL M. WARBURG, VICE GoY~IfN.OR
FREDERIC A. DELANO
EX..OFFICIO MEMBERS
WlLLIAM G. McADOO
x- '7 46 ~~~~~~S CS~~~~~~N
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
FEDERAL RESERVE BOARD
COMPTROLLER OF THE CURRENCY
WASHINGTON
H. PARKER WILLIS, SECRETARY
SHE:RMAN P. ALLEN, ASST. SECRETARY
AND FISCAL AGENT
ADDRESS REPLY TO
FEDERAL RIISIIRVE BOARD
February 19, 1918.
Dear Sir:
I
enclose for your information a form of statement got-
ten out by the Pennsyl v1.nia Vln;r Savings Committee from data furnished by the Federal Reserve Bank of Philadelphia.
I
do not
know how much extra work the issuance of such n statement involves, but I am sure it is of very greflt vA.lue in stimuhting enthusiasm 'lnd in keeping those connected with the movement interested
"l.S
well as informed <>.s to wh'lt is being 'LCcomplished.
For
example, when one county- in the stA.te has sold War savings ·stamps
t"o 11.n <:tmount equnl to ~\2.92 per ct:tpit'l while other counties have
sold
t'ts
low <ts 14.¢' per c<tpitA., it is pretty good evidence that ef•
ficient methods have been used in one case and not in others.
As I have stated before, the VJar savings campA-ign is directed chiefly at the ninety millions of people who cannot possibly
contribute to the Liberty Loan campaigns.
The law limits subscrip-
tions of any one individual to $1,000 maturity value, or
$826.00
in cash, thus, while the average subscription to the Liberty Loan
campqigns has been
·~600.00,
the average subscription hoped for for
the Vlar Sqvings camp"lign is not to exceed $20.00 to $25.00.
An
individual saving two thrift stP.mps per week will have saved $26.00
in a year,
This is the class of people we are hoping to interest,
>otnd it seems that in order to accomplish it we must reach every
home qnd fireside.
some of the best results have been obtained
by interesting the school children <trtd especiqlly the high school
boys and girls.
Statements such as the one enclosed are im-
portant aids in the conduct of the
c~mpnign.
Very truly yours,
W. P. G. HARDING. GOVRN!>R. ..: ,
EX•OF'P'ICIO MEM81:R8
~:~~E:icw:~~~~N;!'!ca:~•.,•
WILLIAM G. McADOO
ADOLPH C. MILLER
CHARLES S. HAMLIN
SICRITARY OF THI TRIASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
H. PARKER WILLIS, SECRETARY
SHERMAN P. ALLEN, ASST. IICIITAIY
FEDERAL RgSERVE BOARD
COIIIPTROLLIR OF THE CURRIMCY
AND FISCAL AGENT
WASHINGTON
ADDRJ:SS RKPLY TO
FEDERAl. RESERVE SOARD
X-749
DIVISION OF REPORTS AND STATISTICS
February
21~.
1918.
Dear Sir:
Referring to our cir.cular·letter of February 15 in
the matter of reporting amounts of disco'.lrd:. vn Schedules B.D.
4 and B.D. 7, also number of days the
has to run, I desire
,pap~r
to say that it will be entirely satisfactory to the Board if
amoun~s
of discount for several items receiving the same rate
are given in the aggregate and not by single items as may be
inferred from the wording of our earlier letter.
To illustrate our thought, the following computation,
dated February 8, of discount for six i t:::~ms of various maturities but carrying tf!e sa;no :t·ate of discount,
3i
per cent, is
given:
Amount
3,375,833.33
1, r/12 ,500.00
155,000.00
145,000.00
343 ~ 921.22
277,124.71
Total 6,009,379.26
Due
Feb. 25
28
Mar. 4
5
4
5
Days
Discount
7
10
14
15
14
15
5,185.04
Very truly yours,
Assistant Secretary
Federal Reserve Agent,
I''
Release for the morning papers of February 24, 1918.
X-751
S'i' A'TEMEN'l"' FJR THE PRESS
The Capital Issues Committee of the Federal Reserve Board
that, upon the recommendation of its Advisory Committee, In v:.ew of the large aggregate of municipal issues offered
i~ rel!1-.~~-Yely small amounts, it had decided to re·iuoe from
$350, 00() to $100,000 the minimum lJ.r.:i t 6n mun:l.cipa.l issues upon
wh tcl1 i ""G would. giYe ad·~rice w~ th respect to the question of wl1ethe:.c or not such issues, at this time, were compatible with the
puo1ic :.nterest.
announc:~"d
J;n ~ great; many districts, the majority of the municipal
iasues ~c.~:td p:"tr-ticularly those that might well be postponed at
this ti.m.;;;) c\.:r·e of amounts smaller than $250,000, and it was
for this :cea.ao.n felt desirable to make this change
A great; many applications were disposed of during the past
week, :~u:td un Tuesday, the 2Gth inatant, j_t is expected that
the Federal Rcaarve Agents of tte twelve }·ederal Reserve D~s
tricts will be in Washington fer a conierenue with the Federal
Reserve Bua.rrt. Inasmuch as these F'eder:tl Heserve Agents are,
at the same tirr,e, c:r~airmen of the Sub-Cornrr,itt;ees on Cap:ttal
Issues of thE;h·~ l?Osp'ect:i..ve districts, a fuJ.l conference with
them will be l . fJld by the Capital Issues Corr.lni -;:;tee and its Advisory Commi·:-:;t:.~e for a comprehensive discusaion of the problems that mu.y arise in their districts in connection with
capital issues.
For the information and gu.i.d.a.noe of R.pplicants, the Committee has prepa:red and is distri0..It.ing widely in all districts the following instructions as to the data required by
the Washington committees for intelligent consideration of
applications:
·
for the morning papora of February 24, 1918.
X-751-a
Rel~aae
STATElmNT FOR 'l"HE PRESS
A conference has been arranged between the Capital !suues
Committee and its Advisory Committee
the Public
~ervice
a~c.
representntiV08 vf
Commissio:r. s of the United. States on Tl:'L:.r:.;-
day, the 28th instant.
This o·onference promises to be of especial value and. intGrqst in view of tho President's letter to
S~cret~ry
McAdoo,
inviting hirt actively to JJromote 3.n earneot consideration on
th~
part of these Public Service Cor...: i:n:tons of the bearinG
the
~xerui~:e
t-his til!le.
ter io
of their functiono upor..
t~s nati~nal
o~
interests ,;-..t
The Capital !t::::me3 Commi ttea 'e interest in the mat-
~entered
mainly on the question of whether or not, and
how, it may be possible for
~hese
public service commissions
to use their influence in postponing at this
tim~
construction
and development work, evtin if contracted for or even though
stipulated in ffanchises, whenever such work is not absolutely
imme:iiately necessary either for the public w10lfa.re or the successful prosecution cf the war.
fort to secure
th~
It must be the Committee's ef-
sympathetic cooperation of the public service
ccmmissiona to reduce, aa far as may be practicable, a.ny unnecessary
us~
of credit, saving po1:er, r:1ater lal and labor.
·~.. ,)
•.·.::.s'3..;. f.:·r the af·cernoon papers
)•! "9bbruary 23f 1918.
STATEMENT FOR THE PRESS
l'he limitation of highway bond issues in such manner z.s
most helpful to the Nation during the period of the war
wa~
't:C.e
'Vil~.
bo
~uoJect
o:':
an i"1}!crtant conference held in Washington recently, at which we1e present
L H. GJff. member of the Capital Issues Advisory Committee,
tnr: .Federal Reserve Board; L.
w.
represen~ing
Page, Director of the Federal Bureau of
Public Roads, and the members of the Executive Committee of the American
Association of State Highway Officials.
This ·latter organization is an o:r-
ficial body whose membership is composed of .the. 48 state highway departmeTI.td
A quick and loyal appreciation of the Nation's needs and of the necessity fm
subordinating local benefits
Wl}S
sh?wn by the representatives of the ".levJra"..
states, including among their number George P. Coleman, State Highwa.y rom. .
missioner of Virginia, ;;.. D. Williams, State Highway Commissioner of West
Virginia, Henry G. Shirley, Chief Engineer .of Marj!'land, Thomas II. Me.cDon<11d,
Sta.te Highway Engineer of Iowa, 'ihonns
H~
French, State Engineer of New Ivlcx.H·o,
and Paul D. Sargent, Chief Engineer of Mainee
A letter from Secretary McAdoo was quoted, in which he said•
••rre are engaged in a great war. a war in which the very safety of .A,tt\ericcL b
seriously imperilled,
We can not win thiS war unless every resource of the
nation is carefully husbanded and used with the utmost intelligence.
11he
great financial operations of the Government, greater than those ever under ..
taken by any government in the history of civilizationt. make it essential
that every unnecessary expenditure by the Government, by the states and
municipalities, and by private corporation& a.nd individuals be avoided while
- 2t~1e
war is in progress. Unless this is done it, will be impossible for t.t.e
people of the United States to furni,sh the money which the Government must
have to .support its soldiers and sa1lo1"s who are shedding their blood for us
upon the battleflelds••.
The Federal R&aerve
de~ir~d
Boar~.
it was made clear at the conference,
that during 'he continuance of the war state, county. municipal, cor.
i
porate, and individual financing sbould be strictly limited to projects which
will contribute to the snoaesstul prosecution of the war, or wbich are neces-
sary for publie health and welfare.
J:t was &'Uphasi.zed tmt only by subordina.t .
.ing locu and pers-onAl interest:s to the public welfare, and by enforcing the
most rigid economy in matters of' public and private enterprise, as well as L
matters ot personal expenditure. that the United States can hope to bear its
part of the financial burden gf the war afid to release sufficient labor and
m~terials
torwar
pur~oses
without depletioa of our resources.
Highway con~truction and maintehance calls dbring normal times fo=
an outlay or some $300,000,000 annually.
The Federal Government cooperates
directly with the states through a large Federal appropriation and pays 50%
of the cost of selected roads.
L.
w.
Pag~. Dltetitof of
the .Bureau
of Public
Roads. explained that already his bureau was eoeperating with all of the 48
state highway departments in a most rigid selective consideration of all highway projects llllder the provisions of the Federal Aid R66d .Act, to the end tlw.t
only thote Which are of militarJ
proved.
•r special eeontmic importance should be ap-
That the people should be taken fully into the conti·4ence of the state,
and Federal Officials and asked to cooperate in the weeding out of unnecessary
public
i~ovements.
was t.h&
'IUI.Qi!IIO'Jbl
sentiment of the offisials present ..
PAUL M. WARBURG, CHAIRMAN
ADVISORY COMMITTEE:
ALLEN B. FORBES, CHAIRMAN
F. H. GOFF
HENRY C. FLOWER
FREDERIC A. DELANO
CAPITAL ISSUES COMMITTEE
CHARLES S. HAMLIN
OF THE
W. T. CHAPMAN, SECRETARY
IIRADLEY W. PALMER, COUNSIL
FEDERAL RESERVE BOARD
STEPHEN L. SELDEN
EXECUTIVE SECRITAitY
WASHINGTON
JAMES Q. NEWTON
ASST. EXECUTIYI SIC:.RE'URV
:z -7 54
February 23, 1918.
To the
Chairman of the Sub-Committee
en Capital Issues of
Federal Reserve District No.
Dec..r Sir:
I send to you herewith copies of statements given to
the press today.
The form of instructions to applicants is merely a
printer's proof.
The
Chairma~
has telegraphed you asking
hOiv many copies of this fotm you desire for distribution
in your district.
It is expected that these forms will
be forwarded on Monday next.
Faithfully yours,
Secretary.
X-755
EXTRACTS FROM THE INAUGURAL ADDRESS OF
HONORABLE ANDREN J. PETERS 1 MAYOR OF BOSTON
(Delivered February 4J 1918)
* * * * ** * * * * *
The gigantic task which we are called upon to perforffi is one which
requires the n.obilization of all our resources 1
naterL~.l
can not all of us fight for deffiocracy on the plains of
and rr.oral. We
F~ance.
We can all
help win the battle for deffiocracy by our loyalty and sacrifice at hoqe. To
be effective, the national governnent rrust have the cooperation and support
of every unit of governuent 1 state and city.
The great rr.unicipal agencies
rr.ust shape their policies to strengthen and support the central power.
* * * * * * * * * * *
Improveffients which are not strictly
nece~sary
must be postponed.
****** ***• *
Whether naturalized or native born 1 we are all Arr.ericans 1 and the suecess or failure of Arr.erica in this world conflict will be our success or
failure 1 and the assurance of peace for democracy when won will be a blessed
heritage for us to p;-.ss on to our children.
The future of our city is woven clo$ely·in the future of America 1 and!
,
shall seek the cooperation of the national govermr.ent in :bringing about
irr.:portant irr.:prover.cents.
* * * * * * * * * * *
The support which.our uunicipality pledges to the national government
can nowhere be
mo~
effective than in the field of finance.
The enorrncus
and imperative needs which the national governnent must meet by the sala
t
f
bonds require that the competition in the sale of securities by other ag:•nc:i.es
should be restricted as far as possible.
The Federal Governrr.ent is
enti~J
to the first call upon every dollar av<:<.ilable for investment: just as n::ud
as it is entitled to the first call upon every man available fo:-:- militar:r·
service.
Local bonds must necessarily cospete in the rrarket witb our
f711
I'S6tional
secur~ties 1
and their isaue, therefore .• shoul". be restricted to tbt
lowest possible arr.ount·.
The President bas already
calls~
upon the Federal
.ilf
Bessne ·Boa.rd in Washington to }lass on the issuance of all securities a.ndto
(
discourage such a.s are not found to be of urgent public importance through
their connection~ directly or indirectly 1 with the one pa~nt necessity
of the war.
In recogiition of these conditions 1 the War Efficiency Conmittee of the
. Public Safety Comr.ittee. of Yass~chusetts addressed a.n apP,a.l over a mOnt&
a.p
to the mayors and uayors-elect of every city in the Sommonwealth1 urging the
necessity of great nstra.i.nt in the
isa~oe
of uunicipal. bonda 1 a.n4 the p08t-
poneant~ whenever possible 1 ~f any nunicipal UD4,e.rtakiriga 'Mlich wOUld further
inorease the demand for 'na.terials or labor urgently required. for the pQrpoea
Of abe J'ederal Govenurent.
Strictly local in.provements 1 in partioul.ar1 shCNl.
ia pural be poetponed untU a more favorable t.iu.
~/
St.lch loans as are issue4
lthould be chiefly devoted to the geural benefit of the Vlh ole city - to imc
. proving its present equi.PJI'l8-nt and facilities, to primotin& the general health
'·
'
(
an4 sAfety of its 1nhab-itants 1 a.nd to facUitating transportation 1 cC~a~~aroe
)
a.D4 industry.
•••••• ••• ••
The first step in this plan of :rw.nicipa.l economy wa.a- the adopti.on by
~ty
of Boston a few years ago of the segrepted lll.lclget.
' Wmpt
trs
lot only has this
~en *he aana of saving a considerable sum of money, but 1t .ha.s ena"!:·lec
'&ba City CouncU to pin a far bett~r knowleclge of the ,purpose for which· each
appropriation is Dlad.e.
•••••••••••
fhe European war has already place heavy burclens on the J'&Ople Of the
Vld.ta4 S1;a.tes.
ltJ b
These burclens are felt not only in the. increased taxes i'llposec'
fetl!il'4 Qcw•nm.ent ancl by state and n:unicipa.l govermoente; \'Jut in
t~A
~,
•••
X-755
- 3 -
advancing prices of conn.odities in general use.
That the people of Boston
possess the will and the ability to carry their share of such added burdens
j
will not be questioned by
an~one
who is familiar with the history of the city
and of the contributions of its citisens to the success of every war in which
our nation has been
with the national
mf the nation's
engaged~
interests~
welfare~
The city's interests
are so closely identified
its people are so firmly devoted to the promotion
and are so enthusiastic to establish throughout the
world the great ideals of democracy for which all lovers of liberty and justice
are struggling 1 that they willlnot hesitate to rrake any sacrifice which the
exigencies of the war derrand.
***********
OUr city governrr"ent conn"ences this year under the difficult conditions
of war 1 and we are facing, together with .our whole country, new and untried
problems.
I have confidence that the people of Boston will respond to the call
for public service.
they shall have a
You can not la-gislate a good government on a people. Whether
~ood
government or not depends on their patriotism and ideals.
The situation calls to our minds the words in which President Lincoln Ad<lressed
Congress in 1862.
He said:
"Fellow citizens, we can not escape history. We of this Congress
and this administration will be rerr~mbered in spite of ourselves. No
personal significance or insignificance will save the one or the other
of us. The fiery trial through which we pass will light us down in
honor or dishonor to the latest generation. We shall nobly save or
rr.eanly lose the last 1 best hope on earth."
Boston will do its part in the great struggle 1 its citizens will render
to the national government its full due 1 and we who are responsible for the
~nicipal
governrrent will try to place it on a new plane of uprightness,
frankness and efficiency.
2/25/18
The liovernor,
Feuer~l Reserve
'TREASURY DE B~.RTIIBN'T
X 759
Wii.SH INGTO'N
February 12, 1918.
~oard.
Sir:
By direction of the Secretary you are advised that the De":artment has referred to the auditor for the Treasury Department for settlement the account of
the Bureau of ~ngraving and Brinting for preparing ~ederal Reserve notes during
the period January 1 to 31, 1918, amounting to ~103,684.16,aa follows:
Boston •••••••••••
New York •••••••••
ihi li:.LL8l :,Jhia • o • • •
ClGvelund ••••••••
~ t ic~11~1or1C.. •
••••••••
.tl.. tlo.Ilta .•. ..•••••
~hicago, •••••••••
0t. Louis ••••• : ••
Minneapolis ••••••
Aansas City ••••••
~allas •••••••••••
San ~rancisco ••••
~
§gQ
$t20
<:,50
68,000
300y000
52,000
7,0u0
16,000
161,000
31,000
12,000
15,000
12,000
55,000
36%000
765,000
85,000
266,000
102,000
96,000
32,000
56,000
85,000
64,000
11,000
79,000
1,000
33!000
910,000
52,000
238,000
105 ,oou
2o,Ou0
llO ,000
61,000
76.000
50,000
18,000
:34,000
101,000
123!000
988,000
36.000
30,000
13,000
38,0UO
1,000
6,000
5,000
1,000
5!000
135,000
$100
Total
27,000
241,000
861,000
9 ,ouo
;.;n,ooo
l:6l,uuu
159 ,oou
284,000
197,000
1,000 128,000
45,uoo
1,000
125,000
157,000
197!000
38,000 2!836,000
2,836,000 sheets at ~36,56 per M •••••••••••••• ~l03,684.16
The charges against the several ~ederal reserve banks are as follows:
Sheets
Boston •••••••
York •••••
i-hiladel phia.
Cleveland ••••
Richmond •••••
Atlanta ••••••
Chicago ••••••
bt. Louis ••••
Minnoapalis ••
Kansas City ••
.J)allas •••••••
ban Francisco
241,000
861,000
281,000
161,000
159,000
284,000
197,000
128,000
45,000
125,000
157,000
1972000
Com pensution.
Plate
.tTintinB:
~
2,157.15
1,401.60
492.75
1,368.75
1,719.15
2,157.15
3,410.15
12,183.15
3,976.15
2,278.15
2,249.85
4,018..60
2,787.55
1,811.20
636.75
1,768.75
2,221.55
2,787.55
2,836!000~31!054.20
~40zl29.40
New
~2,638.95
9,427.95
3,076.95
1,762.95
1,741.05
3,19~.80
Inc. ComMaterials •
$2,472.66
8,833,86
2 ~883.06
1 ,651.86·
1,631. 34
2,913.84
2,021.22
1, 313.28
461.70
1,282.50
1,6lo.82
2!021.22
~29!097 .. 36
~nsation.
:W289.2o
1~033.20
337.20
193.20
190.80
340 .so
236.40
153.60
54.00
150.00
188.40
236.40
Total.
8,810.96
31,478.16
10,273.36
5,886.16
5,813.04
10, 383.0,4
7,202.32
4,879.68
1,645.20
4,570.00
5, 739.92
7,202.32
~3!403.20 ~103,684.16
The Bureau appropriations will be reimbursed in the above nmom1t from the
indefinite appropriation, ".Il"e:r;e.ration ~md Issue of Fedor:J.l Reserve i.iotes, RoilJbursnblo", and it is requested thut your iJoard cause such indefinite appro'i'
priation to be reimbursed in like amount.
Respectfully,
R. 0, Leff:i.ngwell,
.Assistant SecretQry of tho r.i.'roas·. try.
-'
.......
......
Fecf&zal
Jazdt ..
.
:
.
:
"
: Clearing : All other :
~tal
:
:
!fotal.
: house
! ~olleot-: uncollected : collection :
: e.mhaDgea : ed items
items
items
...
:
Dt.•
.•
Total
"FUlAT"
Or.
2.8
l-9
Z15
12.6
m
13.0
a.o
a.,
·;.580
6.947
13-.3
12.;
10,539
6~501
3«5
28.2
15·9
so,46o
~.736
-29,724
1.3.-553
Z'f·9
16.0
15.895
16,175
1J,4J7
·2..6SS
210
S.5
~-7
8,976
8,976
J ••
~4
4,930
w£.0
lJ.l
105
23.77;
~.88)
9.oaf5
.:\44195
7,090
JJ..o
16
17,005
17,021
7.537
9,414
4,351
;6.6
19·5
21.3
911-J
lO,J~
11,266
9,856
... l,J,.lO
1,810
a. a
1·1
23.253
276,149_
299,.llo2
199,275
100 ,124
45,711
9·1
6.~
17,891
1~,482
J,4l5
11119JE
9.~
53.345
62..9~-
49.757
-13~234
~
.3.331
.30.525
33,856
f!'(,OSlt.
Clil'f.ILAII)
1,4.71
17.365
18,836
17,809
-'~ 172.
1.. 027
¥miQ1I)
2,872
lS,l32.
21,()94
1;,~
m.aa
CBtc••
1,~
15,549
17,~
l,66o
1&8,800
211)
f·
!-,..
.,
1181&?0LIS
'USiscm
•tua
sa J'JUCISOO.
!OIAL
-
----.------------~-------....-.-·-------------------------------
(a) Excoas
..
J.a
16,45~
'
.
4.3
1,438
•• IGU!a..
:Ba.tiG of •F.~DAT":Jatio ot 11FLQA!l
: :iamea.ia,e)¥ a.va-.'
~0
:Bet investment:
:able Govel'IIID8Jltin
transfers
:
\otal
eaming
~
baDk 4epea1 t.
:
a.sse\8
: incl\ld.ed 1n
i81' Gent
:Total. "FLOAT" : Per cent.
:
ot
arDOUDt
5,939
(a)
.
...-----....-----------------------------~----------------....__.......___---·
ot t.l'&Ds.fers sold. over amGQDt ol' t1'&1ls.t'ers
•.
bOU&Qt.
W. P. G. HARDING, GOVERNOR '-
EX•OFFICIO MBMBI!.RS
~762
WlLLIAM G. McADOO
SECRETARY OF THE TREASURY
,
PAUL N. WARBURG, VICI GoViRMOR
FREDERIC A. DELANO
ADOLPH C. MILLER
CHARLES S. HAMLIN
CHAIRMAN
JOHN SKELTON WILLIAMS
FEDERAL RESERVE BOARD
COMPTROLLER OF THE CURRENCY
H. PARKER WILLIS, SECRETARY
SHERMAN P. ALLEN, ASST. Sli.CRITARY
AND FISCAL AGENT
WASHINGTON
ADDRI:SS REPLY TO
FEDERAL RESERVE IIOARD
February 25, 1918.
CONFIDENTIAL·
Dear Sir:
Inqu:i.ry having been :q1ade recently by several Federa.l Reserve bank
officials as to the issue of gold
has looked into the
mt~.tterp
certifict~.tes
by the Treasury, the Board
and through the courtesy of Treasury
of!ic~ls
has ascertained that the Treasury of the United States has received no
gold
certifict~.tes
last.
from the Bureau of Engraving and Printing since October
The Treasury ha.s pursued consistently the policy agreed upon
sometime ago of returning gold certificates in redemptionsc Oll~Y· wtr.:m
specifically asked for, and by rigidly adhering to the principle of paying
government
t~.ny
warr~nts
and checks in Federal Reserve notes ra.tbero tl1on lu
form of gold, there
h~;~.s
resulted a net gold
g~;~.in
to the Tr8a.sur'!
from November 14, 1917, to February 14, 1918, of $43,565,57'/.38, of whid;
amount the TreG~.sury has turned over to the Federal Reserve ba.nks $28,00(),000.
A short statement showing the exact figures fol}.ows:
Gold balance in genereil fund February 14 ---------- $67,JF.IJ,05:~67
"
"
''
"
"' November 14 -----------J~~l.0FJ1~.f.?.~.;..§':L
Gain ---------------------------------------------- :~.;..,:~8tY,J.'7~-· 23
Add gold paid to FederG~.l Reserve beinks ------------__3~Q~Q~O~~~Q_
" 3'•i"'
'Y:l
$(",'.J~,
oU 1 •"l'i'I"J
, ·.......
Deduct
Gold gain in Feder~;~.l Reserve note gold
Redemption Fund -----------------------------l.8-t.~~:.:.±:.l.~.~~-~:1_
• ----------------------------------------- 'ii'"i-4~.:J, r:.),•~·-'"
o t: > n-r-; ?C
Gold ga:Ln
1 • , ~ ·.)
Very truly yours.
Governor.
The Governor,
Federal Reserve Bank of
W. P. G. HARDING, GOYJHeJt ,
PAUL. Y. WARBURG, VIII . .yatUJoa
fREDERIC A. DELANO
ADOLPH C. MILLER
CHARLES S. HAMLIN
EX·OFFICIO M&:MI!IERS
WILLIAM G. McADOO
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
X&.fi>~ER WILLIS, SECRITAOY
FEDERAL RESERVE BOARD
COMPTROLLER OF THE CURRENCY
stl!MdtN
P. ALLEN, AliT. IICIIETARY
AND FISCAL AQitiT
WASHINGTON
ADDft&SIS REPLY TO
FEDERAL RESERVE BOARD
February 26, l91S.
CONJ:IJ2ENTIAt,
Dear Sir:
A letter Nas received a few days ago fr-om one of the Federal
Reserve banks asking if the practice of receiving Russian bonds
as
collateral for special government deposits should be continued.
This uatter was referred to the Secretary
of
the Treasury, and
a.t his request I an. writing to suggest that no further pledges
of
Russian governrrsnt bonds be accepted and that gradually, and without u.aking any announce:r.ent, you ask for the withdrawal
of
Ruasian
bonds already pledged and that other approved collateral be substituted,
Very truly yours,.
Governor.
The Governor,
Federal Resgrve Bank of
J'ebruary 36, 1918.
Governor Harding aaid tolia.y in diacwusing the u:.ovement to increaee
· interest rates on ba.nk deposits:
"the Fecleral. Resene Boe.rd regrets exceedingly to learn of the d.iapoaition evidenced by banks in
vari~s
sections of the
crease rates of interest allowed on de,!)osits.
o~ gr~p
any bank
c~ntry
to in-
lt is unfortunate that
of banks shoulJ undertake especially at the present
tU., to increase .depQSits by offering unusual inducen;enta in the way'
of interest, and it follows that any a.e,gressive steps which rray_ be taken
by aay bank to increase. its deposits a.t the spense; ~U other banks will
pcj.rl
cloiabtlesa be nst by protective n.ea.sures on tile
ness ie subjected to
_of banks Y.hoae wei•
att~ck.
"The Board does not believe that the
:interest. on deposits willtting any
xtor~
induce~Lent
of a highet rate ot
int~
r$a.l money
the banks, and
it feels tk.t the result of a. general increase iri the interest rate on
deposita will be. either a.n &ddeti burden to borrowers in 'the
ape
of
higher intel$st and duc®.nt ~tes, or the brlngins aboUt ot conditione
«hicb woula ~t the bah~ing business upon an unprofitable basis thereby
weakening our entire banking
11 fbe
structu~.
·
1 oa.na and. is posits of banks have increased enorr..oualy during
'
the,
pas~
three years, and it would
banks to undertake to place
see~
themeelv~s
to be
t~e
part of wisdam tor the
in a. position to continue to aid
the government in its financial operationa by curtailins unneceeeary
credits and by
encwra~ng ths:~ir
depositore to buy Treasury certificates
and gover=ent bon41 1 even thou.fiitb there be son.e
deposits
&a
a. cou.equence.
\ty
in their
Ba.nka ahould ren:en.ber that when deposita are
· re4uce4 reaervea are relea.ae4~
por"lecl
shri~ge
Re.ckleae OCirllpetition for deposita •up-
high U:atenat ratt• will tend to toroe the gOVsf'.Dit.ent to pa.J
l'ligher rataa 1 tbireDy- l.J;.poting additional burdens on the 9eo,ple; and any
forced and artificial espa.ndon of banking credits, will promO'te
than check infla.ticma.ry
te~nc.iea,
which should be
~ded
ra.tb~r
as;a.inat
c;~.~
X-765
- 2 "There does not
see~
to be any ienand bn the part of
.
~epositors
for increased rates of interest on their balances, and the Board wishes
it understood that it does not favor any rr.oven.ent to increase these
rates,and that it will do all in its power to discourage it.
It
sincerely hopes that those banks which have unduly advanced their rates
will consider well the consequences involved and that they wi.ll as far
as possible do their part tvNards'restoring rates to the 4orner level•.
W. P. 8. HARDING, GaU-l
PAUl. II. WARBURG, YJd - - ·
FRKDJBl~~AELANO
W1LLIAII G. MCADOO
•
ADOf!'ii'"I.'IU(LER
C:HARLII:I I. HAIII.IN
SICRITARY OF THI TRIAIURY
C:HAIRIIAJI
JOHN SKELTON WILLIAMS
COIIPTROLLII OF THI C:URRIIICY
II. PARKIR WILLIS, SICRITARY
IHIIIIAN P. ALLEN, A. .T,IICIITARY
FEDERAL RESERVE BOARD
Alii> FIICA.L All NT
ADD-811.1:1'LYTO
WASHINGTON
FIIDI:IJIIAL RESMVIE IIQARD
February 27, 1918.
Dear Sir:
Referring to the Board's. letter of February 19 (X-746}, I
quote from. a letter received fram the Chief of the Military Intelligence
Branch under date of February 27 1 which
exp~ains
more in detail the in-
formation desired, and which makes a more definite suggestion as to the
means of obtaining the- inf onrati.oni
" l. Offi~ers of Reserv-e banke ehQ\lld select 1rom the officers
of member banks those only whose discre~ion and ioyal~y are beyond question. While it is tmporlant to have a representative
in every bank, if possible, especial caution uust be exercised
in the case of institutions supposed to be in sy.mpatpy with the
enemy.
2. All of the officers selected should be impressed with the
necessity of secrecy. No one except those whose cooperation is
essential should be informed of the matter 1 and then only such
part discloeed to them as rray be required for the proper func ..
tioning of the plan.
3. Officers must use their o•vn jud~nt in determtning the nathods
of investisation, the accounts to be watched and the transactions
to be reported. Any information as to the ac~lation of funds
by suspects or the proba.ble use of money for enemy propaganda or
espionage is tmport~t. It is suggested that each officer keep up
for ~is ONn use a current list of suspect acc~ts and keep hirr4elf
informed as. to the source and use of the funds in them. In general,
attention is directed t oaccounts of suspected clients which shliiW:
re~lar
(a)
Unexplained
monthly or weekly remittances.
{b)
Unexplained increase in the average
(c)
Unexplained purchase or deposit of foreign exchange.
da~ly
balance.
X-766
.. z -
4.
(d)
Transactions with Mexico or South An:erica indicating
possible transfers of enemy funds.
(e)
Single unexplained transactions of unusual size.
All reports should be rrade promptly under confidential cover.
I trust that this plan rray be put into effective operation
as soon as possible.
It will undoubtedly prove of the greatest value
in detecting and limiting enemy activities in this country."
The Board has been informed that in soue districts the American
Protective League has representatives in a large nuiLber of banks, both
n:embers and non-rr.embers, and that by the appointment of investigators by
the Federal Reserve bank there will be a duplication of work. T,his has
been brought to the attention Of of Li.cials of the War Department who
stateJ however, that they would regard investigation on the part of the
Federal Reserve banks as supplementary rather than a duplication. The
Board appreciates the extreme difficulties in the way of efficient cooperation by the Federal Reserve banks, and realizes that there rray be
danger of more harm than good being done, and it desires to leave the
whole natter in your discretion.
It feels, however, that perhaps steps
may be taken safely to
the system proposed by the War Depart•
~naugurate
ment, if a limited number of letters be addressed to bank officials known
personally to you in whose judgment, loyalty, and good faith you can absolutely rely.
It is suggested that all replies be sent to you for your
infom.ation, and that they then be fozwardeo. to the Board which will
transmit them to the proper officials of the War Department.
Very truly yours,
The Governor,
The Federal Reserve Bank of
Governor.
/
W, P. 8, HARDING,
Ex·OP'P'ICIO M&M811ftS
WlLLIAM G. McADOO
SECRift:RY 9\l"THI TREASURY
'
&ou...a
PAUL H. WARBURii, YMII - · - ·
F!i~DE,!\15 A. DELANO
A~~~ !f811LLER
C:HARLU 11. HAMLIN
CKAlRIIAJI
JOHN SKELTON WILLIAMS
II. PARKER WILLIS, SICRITART
SIIIRIIAN P. ALLEN, AliT. SICRITARY
FEDERAL RESERVE BOARD
COMPTROLLIIt:'or lMi CURRENCY
Q. Q 1:. !,.
AJ(D FISCAl. Alliii .. T
WASHINGTON
ADDR&S8 REPLY TO
FEDERAl. RESERVIE IIOARD
February Z7J 1918.
My dear Mr. Secretary:
I wish to thank you for your courtesy in sending n:.e Senator CWen' s
letter
da~ed
staterr~nts
February 22nd 1 in which he corrments at lamgth upon the
rradQ in my letter to you of February 20th.
I was inforn:.ed last Saturday morning 1 the 23rd instant, by Mr.
Delano that Mr. Musher has told him that Senator ONen had written you
a thirteen
fying a
~age l~tter
i~sire
in
re~ly
to min&.
I shall refrain from grati-
to reply to the anirradversions contained in Senator
Owen's letter for. the rgaocn that Mr.
~sher
has an application pending
befoN thfl BCJard and I deem it improper to engage in a controversy with
him even though
Be~~tor ~ven
be the medium of corr.rrunication.
My letter of. Febru.ary 60th was subrr.:.\.tted forrr.ally to the Board. before it was deliver.ed to you a.nd :rerei,red its unqualif:i.eii approval..
I
~~ntion
this not that J. seek to evade reRponsibility for it 1 which I dis-
tinctly
avnw~
but. n.eroly to bring out the fact that I did not undev-taka
Senator- CwQn a.ll,;.rles to rrany rratters in his letter vlfhich are ontirely beyond the juriso.ict.ion o! the Federal Rese-.:-ve Board} wb.ose functiona
in the rr.a.tter of gold exports, subject to the
apprnva.~. 3.f
the Secr.etn.ry
of the Treasury 1 are to zrake such ruling in the rratter of licenses f 01·
gold shipments applied for "as it rray deenl proper 1 and if ;ill j.Ji.§. opir49n..
X-768
- 2-
the exportation be compatible .vith the public interest., to permit said
exportation to be n:a.de_, othe'milise to refuse
it~'
You will observe from
this quotation from the President 1s order that the Board is to be govenlits QQinion and not by the views of applicants.
ed by
In order that you rray be more fully informed as to the Board's
system for the licensing of gold ex:ports 1 I attach hereto a letter from
Mr. H. P. W:l.llis,. Secretary of the Board., describing it.
I attach also
a letter from Mr. Willis with respect to the application of the Pompeian
Company for perrr,ission to receive a payment of $1.,250_,000 gold in London
for shipment to Spain} and you will notice that this letter from Mr.Willis
refers also to another application from the Pompeian Company of which
no mention has been
~ade
by Senator Owen.
This application was dated
December 22nd and asked that the exportation be permitted as of July lst.,
1918., if in the rreantirr.e the company should find itself unable to liqui-
date its indebtedness by purchasing exchange at approximately the normal
rate; in other words., a six months' option was requested.
On yesterday., f ollcming a conversat:i.on over the telephone with Mr.
Delano on the previous day 1 the Board received a written
fr~ro
co~~unication
lv'JUsher asking for a hearing as he desired to present sorr..e new
Hr.
facts in relation to his application,
By direction of the Board I re-
plied that he should submit a written statement or brief and that after
he had submHted this brief the Board would. give him an
o~oportunity
comj.ng before it in order to rrake an oral staten:ent relating to the
brief.
Very truly yours .•
Hon.
w.
G. McAdoo,
Secretary of the Treasury.
of
X-768-a
c 0 p,y
UNITED STATES SENATE
February 22, 1918.
My dear Mr.
Se~retary:.
r_. have
your very courteous 1.etter of February 20th, advising·
me that upon the facts stated therein by
Go~ernor
Harding you do not
think the gold shipment requested by the fompeian Company should be
pe!'"IIlitted;
that ttthe interests o:f the
~Wmpeian
Oompany and Mr. Musher
must be considered from the standpoint of the public interest only".
Certainly I.agree with you that the interests of the Pompeian Oompany
must be considered from the standpoint of the public interest.
ize how far
yo~
must of necessity rely upon the Roard in this
I: real~tter.
am glad to see, however, that you make the reservation
t~t
the matter is based "upon the facts therein stated".
L have for that
r
your view in
reason very carefully read Governor Harding's letter to ascertain what
these facts
~;;~.re,
and what the argument is, and in this connection I wish
to make the following obser'Vt1tions which I s2lould be glad to have you
transmit to the Federal Reserve Board with the request that it be laid
before the whole Board. as I am informed that the action of the Board
in the matter of the Pompeian Company's request was based upon the de-
cision of the Gold Export Committee ar>.i not upon the decision of the
whole Board.
The protection of the expanding obligations of the United
States at home requires safeguarding our gold, and the gold embargo was
justified as a general proposition on that ground alone, but an exception,
in my judgment, was justified in the case of the Pompeian Company because,
X-768-a
first~ it would probab~y save the United States f300,000, which'' otherwise
might be transferred to
Spain~
unless the dollar discount in Spain were
otherwise adjusted. If it is adjusted that will .suffice to protect the
petitioning Company.
The United States cannot afford to let its mer-.
chanter suffer severe losses when. withou.t substantial expense •· it can
protect them., for the whole is
e~ual
to the sum of its parts, and
~r-
ieats success depends upon the success of its individual business men.
We are a collection of units, and these units in the aggregate.make the
power and dignity of the United Stti.tes. When a Government is willing
to ignore the right of its citizens to protection, that Government goes
into a deserved a.nd unescapable decay.
That is not the
generc;~.l
poli:cy
of the United States. The reverse is true.
Governor Harding's letter deals with the exceptions in this
instance. and argues agea.inst permitting it on the ground that it might
affect others. My answer to that is that Governor Harding is u:nable to
cite
~t
u
single instance except this one, a.nd again. if ·.there were several
would still be justified on the ground that the Act and the embargo
occurred long ca.fter the commitment was nade by.-the
Company.
Pompej,.~n
Governor Harding feels justified in reprouching the
Po~peian
Com-
pany for not having shipped gold before the gold embargo was established,
apparently forgetting the r~ot that if this had been done it would be of
precisely the same effect as granting the present
p~ayer.
Moreover, there
is a good re.t+son, which Governor Harding ignores, why the Pompeia.n Company
did not do this, and that is, tbat when this Company bought its oil in
1916 for delivery in l9l7, and contracted its sale at an established price
based thereon, our
became
do~ar
was at a premium, and when the purchase price
due in Spain the American dollar had gone from a premium down to
X-768-a
- 3 .•
.
151, discount,
;ip.volving ~;~. tremendous loss- to the innocent_ merchant.
.
To
pay for the oil when payment became due in Spain, after the dollar had
gone from
premium to a discount, was to suffer a
::1atur~;~..lJ.y
Company
fense
<::1.
~.o
desired to a·1oid..
se~rere
loss, which this
'I'bis should not be treated as an of-
the Government of the United S·ca.tes.
It was an innocent actP
an act b'2t-sed upon good business judgment.
The Pompeian Company endeavored to safeguard its interests by
establishing a temporary credit in Spain, but that is a credit upon which
it may be called at any moment, and which has cost the Company, I am informed, $4,000 a month to maintain.
The Federal Reserve Board in its letter to you recognizes the
importance of restoring the dollar to par.
!~remind
you of my letter to
you on October 30t 1917, caJ.ling attention to this matter and to its importe~.nce.
I was glad to oongratulate you upon establishing par
with Argentina l l exchange
~
ex~.;hange
credits. ;r am informed that the London County
and Westminster Bank, and the Anglo-South American Bank, together with the
London
e~.nd Mid).e~.nd
City Bank, and the Credit Lyonnaise"o:f' France, have
tablished branches in
es-
established credits there, and thereby can
Spe~.in;
furnish the favored merchants of Great B.rita:i.n and }"ranee with !imited
amounts to safeguard them from
loss~
I am advised that the Adm.i.nistration has been endeavoring to
promote the placing of French credits in Spain to offset the exchange
differentit~.l~
so
the~.t
the principle is conceded,
I., thought that when we pas:.:;ed t.he Federal Reserre A:;t it wou}.d
serve to safeguard 0ur American co::rrrne.r·ce abroad in such matters.
amended the Act to
e~.uthorize
the Federal Reserve Board t? requ:'tre
V'Cen we
ltedt~rBJ.
X-768--a
- 4 -
.reserve banks to fulfill this function, I hoped for results.
but feel that
s~tuated
·~he
Federal Reserve bank of New York, which is the one best
to serve in this matter, is so controlled by the New York City
banks who profit from handling
ba:r;.k
~.o
f~reign
exchange that we may not expect that
fulfill the fvnction which we dosired 1 e·-ren under coopu1sion, as
the last amendment to the Federal Reserve Act coutemplated.
1 remind you, was passed at the request of the Federal
realized
But I cannot
th~t
This aoenc!ment,
Rese~1e
Board, which
these banks would not voluntarily discharge the function we
desired of them.
President Wilson has realized the importance of this matter
and in his speech of July 10, 1916, at Detroit, in commenting upon the
business men of America, said:
''1 have alwt.Lys believed, .ahd 1 think you have a.lways believed,
that there is ~ore business genius in the United States than
anywhere else in tHe world, and yet America has apparently been
afraid to touch: or meddle with the great process of international
excha.nge."
On February 3, 1918, the President said:.
'~e have left it until very recently to foreign corporations to
conduct the greater part of banking business in bills of exchange.
We have seemed to hold off from handling the very machinery by
which we are to serve the rest of the world by our commerce and
our industry.
And now that the rest of the world is impaired in
its economic efficiency, it is necessary that we should put our~
selves at the service of trade and finance in all parts of the
world."
Again on September 25, 1916, the President said:
''Not until the recent legislation of·· Congress, known as the Federal
Reserve Act, were the Feder~l banks of this country given the
proper equipment through which they could assist American commerce.
not only in our own country, but in any part of the world where
they chanced to set up branch institutions. Bl·itish banks had
been serving British mercht.Lnts all o~er the worldj German banks
had been serving Germ~n merchants all over the world; and no natio~l bank of the United Stt.Ltes h~d been serving American interests a.nywhere in the world except in the United States. n
X-768-a
- 5 ...
Mr.
Secrett~.ry;
the President thought, I am sure* that American
banks, after the last amendment was passed, would be required to serve the
merchants of America everywhere in the world, and evidently he
app:x·o~
it, and I am justified in the belief that the President commended the
Government of the United
serving the merchants,
Sta~es
t~.nd
in providing these instrumentalities for
commended the policy of serving the merchants
throughout the world•
I have been a little surprised at the great irritation of Governor
Harding against Mr•
l~eher•
because
Mr~
Musher exercised his right as an
AmeriCdn citizen to try to create pUblic sentiment;
self.
You do this
your~
The President of the United States does this• and you are both fulw
ly justified;
and so is Mr• Musher justified in trying to create senti ...
ment which will give relief to all merchants by bringing the American dollar to par.
!.congratulated youlwhen you attempted to bring the dollar to par
in Argentina, and this is all that Mr• Musher is seeking in Spain·
he be charged with
~
crime tor trying to have the
publi~
Must
and our own Hon•
orable Federal Reserve Board realize the importance of a policy which you
yourself approve!
I deeply regret to feel that the numerous comments upon
Mr~ Musher 1 s activities disclose a sense of great personal irrttation
ag~inst
him·
I was rather chagrined myself to see a conspicuous advertise-
ment by the Pompeian Company in a local paper referring to my interest in
this matter; because my interest related to all of the people of the United
St~tes
• and not to the Pompeian Compg.ny ... only to the Company as repre-
senting
Americ~n
•commerce
upon which American prestige
~nd
American fi-
nance depend.
Governor Harding says the Board concluded that granting the re-
X-76a;..a..
.. 6 que,st ,of the Pompeian Company for the transfer of gold to safeguard this
Company from a heavy loss ''would not be cbmpatib1e with the public interest",
and thi::i.t Mr. S.trauss of Seligman & Company, sitting with the Board as your .
represen~tive
in passing·upon applications for licenses for
gold, concurred.
expo~ts
of
Precisely why it would not be compatible ought to be
clearly pointed out.
In justification of this conclusion, however, Governor Harding
immediately
ch~::~.rges
Mr. Musher with carrying on a propaganda and attempting
to influence public opinion, with a view to persuading the Government officers to consider this mi::l.tter.
He
~::~.lso
points out that "there never was
a time during the year 1917 up to September lOth, when the Pompeian Company. could not, !o, ~ absence
~
!. satisfactory, exchange
.!!!2., have
withdrawn.gold and shipped it to Spain for its own account''•
course, the identical condition
compl~::~.ined
This is, of
of.
Governor Harding must know that during that time the insurance
on gold for shipment amounted to between Tfo and 101o;
that the express
charges were about 2~, and American gold at the depreciation of Spain
against either France or Sterling in gold was 31o, making from 121o·to 151.
exchange rate, even on actual shipments.
In other words, the Pompeian
Company was justified in waiting for more favorable terms.
Governor Harding states as a fact that Mr. Musher "took· the position that he was entitled to receive the service he desired at his own
terms from banks or exchi::Lnge houses." Mr. Musher, however, vigorously
denies that he took
~::~.ny
such absurd attitude.
This, however, has nothing
to do with the Cc:t.Se, as the merit of the case is quite apart; from this
charge of folly made against the plaintiff.
L~::~.m
rather surprised to see that Governor Harding makes a point
X-768-a
'
- 7 -
.
that the Pompeian Company did not ti:l.ke into account the cost of shipping
the gold to London in making the tra!lsfer, sil'lce it is perfectly obvious
that the gold being in J.. ondon is accompJ.iehed by the indebtedness of
Great Brit~in to the United st~tes.
The gold g?es to London from Africa,
and it is not required to be shipped from the United States to London.
Our extensirm of nonFJtant credits is the only thing which prevents gold
coming now to the United States from London, and we are constantly accumulating gold credits tjere.
The assumption that the Britjsh Government WQuld have refused the
United States its consent to this transfer to Spain is obviously without
force, and I am surprised -tha·i:. Goyernor Harding would make such an argument,
the gold being our gold e.nd subject to our transfer frum London at our will,
and moreover.
a~~eat
Br:i.tc:dn is looking to us daily fCDr support in its gold
llld.rket, and is in no position wbatever to dictate to the United States.
We
can controJ. London in this xr.atter with ea.se <md with justice.
The next reason given by Governor Harding for refusing this re-
quest is ao f)J.lows:
That the B.oard has taken t:':le position not to permit exports of
gold "in
c~ses
where exchange is available and where the only benefit to
accrue is a saving to the shipper.''
In
o~r.er
~~~dfoon,
words, he repeats a conclusion which he has reached
but does not give the ·reason for denying the Pompeian Com-
pany's request based upon
~
and the making of the rule.
commitment previous to the passage of the law
But exchange is not available except at a
ruinouso rate, and the shipper can plead l l post facto.
X-768-a
- 8 I call your attention to the fact that Canada is
sbi~ping
gold to the
United States to protect her exchange which is only three or four per cent
against her, although she needs gold as greatly as we do and very much more
so, showing a difference of conceptios between a Government anxious to protect its
tion
merch~nts
and therefore its own national power, and
administra-
does not seem to realize the importance of this principle.
t~t
The next reason.for refusal is that the
culated
e~.n
litere~.ture
Pompei~n
Company has cir-
and ''sought to convey an impression which, if widely
accepted, would work to the injury of:our
!. distinct source .2£ comfort .l2_
financi~l
~enemy·"
charge follow, it being pointed out
thc;~.t
situation and would be
The specifications of this
the Pompeian Company has charged
that our credit bale:mce for 1917 was about $3,000,000,000; that notwithstdnding this, the
Americe~.n
eign countries, and that. the
exchange had been permitted to decline in forAmerice~.n
dollar has not been stabilized and
is worth abroe~.d only e~.bout 75~,of.its face value.
Is this supposed to be a secret?
The Department of Commerce sent me these tables some time since.
The Secretary of Statac,, Mr .. Lansing, made the statement to the House Committee on Appropriations, that the American dollar v.as at such a discount,
not only in Europe but in South American countries, and that neither the
Federal Reserve Board nor the Secretary of the Treasury could satisfactorily explain the
reaso~·
.I think he is mistaken in this latter statement
because the reason is perfectly obvious.
To impute unpatriotic purposes to Mr. Musher for stating what is
a notorious fact ill his plea for improvement of the parity of the dollar,
which would give the
Americ~n
is a just
It would be just
http://fraser.stlouisfed.org/
/ Reserve Bank of St. Louis
Federal
e~.rgument.
consumer more for his money, I do not think
e~.s
reasonable to charge that it is
X-76Sa
- 9 ...
worii~g in Germany's interest to perrriit the A~erican dollar to rerrain at a
heavy discount, thus preventing the Anerican dollar from buying a dollarts
worth throughout the world 1 for this actually
~eakens
Anarica in a most
serious manner, and would certainly be a condort to the enemy in dindnishing
the value of appropriations made by America in the conduct of thia war.
I have no sympathy with the practice, in dealing with public
questions 1 of involving personalities or to use the ar.guroentum
~
hominem,
which can only divert the mind from a just conclusion.
Governor Harding states that Arrarican ·exchange and the American
dollar are at a
prendu~
of about 2% as compared with the British pound
sterling, about 10% as compared with the French Franc 1 15% as compared with
the Italian Lira, 75% as co~pared to the Russian Ruble.
The financial position of the United States can not
be. measured by these countries, whose
position
.
in~the
an~
nust not
world as to credit
no longer corr,pares with Arr.erica 1 their own gold having a lax,-ge paper issue
a~inst
it which fully justifies a nuch greater depreciation than that which
is narred ..
Moreover 1 it is our loans directly from our Treasury to these
count~ies
that is putting the American dollar at so serious a disadvantage.
I approve these loans cordially and gladly, but, while these countries pay
4% for the money they borrow from us, our people are paying 25% on the goods
we buy from their creditors who are thus put in a position of injuring us on
a huge scale, a condition we can correct at once.
I
a~in
call your attention to the fact that this can be
reme~ied
by an adjustn:.ent of international credits; by insisting that these countries
which have an international trade balance shall make an adjustment with us
so as to par the
Americ~n
dollar, and I should be glad to see a par ot the
X-768a
.. 10 -·
British pound sterling and the French franc with the American dollar.
I belie~e that the Arr.erican Government, with the cooperation of
Great Britain and France 1 cansto;p_ this injur.y to. the Arr.erica.n dollar and
that we should do it, and do it :i,:r:unediately.
Governor Harding poipts ·out very wisely that "without involving
the shipn:.ent of an ounce of gold you have been able to rr:ake arrangements
with the Indian Governffient which enable An.erican importers to purchase rupee
exchange at moderate
rates~
and you have more recently concluded an arrange-
rumt with Argenti.which has had the effect of bring].ng exchange on.that
country down to apoint where the pren::i:um represents pract:i.cally whe.t would.
be the cost of shippi.ng gold n.
I am g:ratified to know that the Board hopes and believes that your
negotiations with Sp3.in wiJ.l be succ:essful 1 but his letter discloses that
negotiations have been in progrees a whole year without successful conclusion.
Governor Harding observes that the object of the gold
as the Board understands,; is to. prevent gol.d. getting into
embargo~
:/".
§.~~hands
through neutral countries •. This may. apply very well to Holland, Denrrark,
Noxway 1 and S1.veden.
It does .not appJ.y, however .. to Spain,, and Spain has
accounted for the gold she has received from the Unite!i. States in 1ilie increase of the gole'. holdings o:! the Bc<.nk of Stain •.
In concluding his letter) Governor Harding again says that he
does not feel the. Board. has authority to l3.cense expurtations of gold 1:m.less compatible with the _public
int.<:~rest;
that individual exceptions would
retard the progress of the negotiations which have been undertaken.
X-768a
- 11 -
The transfer of a million and a quarter of gold to Spain could not possibly
affect the internat:i.onal negotiations except favorably, and the exception
referredto is not an exception at all - it is the recognition of the principle that neither the country nor Congress 1 nor the order of· the President
should be administered !2A post facto.
Mr. Secretary 1 I have analyzed Governor Harding's letter because
! desired to ascertain what his reasons really are.
that justifies this
denial~
He has given no reason
but has merely asserted that it would not be
compatible with public interests 1 and that Mr. Strauss agrees with him.
The only real argMment that I can see is the suggestion by Governor Harding
that granting the :request of the
Pom~eian
Compap.y would retard the negotia-
tions between the United States, France and Spain.
Why?
Governor Harding
does not disclose and it is quite obvious this suggestion is without force.
To
pe~t
citizens of the United States to suffer vary severe
losses by administering a law
error.
~
post facto I think is an administrative
I believe our Government ought to protect its citizens in their
just rights, and that if there be any doubt in the case, the benefit of
the doubt ought to be given to the citiien1 and not against him, and that
he ought not to be prejudiced in his
rights~
discreet in urging his cause too stremums}.y.
even if he were thought inMost :r:r.en thinking themselves
in jeopardy would be strenuous in trying to save themselves.
I hope the Adrrdnistration will not by an
~ ~~
facto interpreta-
tion of the embargo rule cause so large a loss to the 300 innocent stockholders of this Company.
Great Britain through the Bank of England 1 whose directors ara
exclusively merchants 1 Great Britain through the Government itself 1 goes
......
X-7688:
- 12 -
to great pains to protect the British ILe-rchants throughout the
this has rrade Great Britain powerful in
Gernany~ as~
Fr.ance~
you
know~
corr~erce
world~
and
and finance.
poJ.icy~ and Great Br:i.tai,
has followed the sar£>e
Gernany and Spain ar3 now deliberately naking elaborate preparati:rms
for the protect.ion of their rr.e.rchants after the war.
This should be our policy.
I think~ in conclusion) that a careful analysis of the facts stated
in Governor Hard.ing 1 s letter does not iustify a refusal of the petition of
the Pompeian Corr.pany.
place it
un~er
e~b~rgo
the
the spirit of ilhe
Corr~pany
'.rhe facts :i.nvnlved in the case of this
~?£.post
do not
rule if that rule and the law are interpreted in
f£l.ct;o_ provision of the ConstitutS.on.
I gr"}atly regret to find. myself at variance with Governor Harding's
conclusion because it has always been my desire to actively cooperate with
the FederaQ Reserve Board and to hold up its hands.
I
h~pe
that the Board
will reconsider this matter and give the relief unless they accorr.plish the
result othexw·ise by the transfer of credits to
Spain~
as seems to be comte:o:-
plated.
If this is done it will give relief not only to the Pompeian Corr.pany 1
which stands
0'1
the
~-
E9._st facto ba.sj,s 1 but will give relief and more favor-
able terms to those who may now desire to import
con..rr,od~.ties
Ve~y respectfully~
ROBERT L • Oh'EN •
Hon. Wm. G. McAdoo J
Secretary of the T!·easury ~
Washington, D. G.
:{rom Spain.
111', P. 8. HARDING, Gou-e
PAU~ a. WARBUR8, Y... - Y - R
FRIIDERIC A. DELANO
C. MILLER
11. HAMLIN
W1LLIAM 8. M<:ADOO
SECRITARY OF THI TRIASURY
CHAJRIIAH
ADO~PH
CHAR~U
JOHN SKELTON WILLIAMS
COMPTROLLII f1P' THit CURRENCY
ft. PARKER WILLIS, SIECRITAIIT
I"IIMA.N P. ALLEN, AliT, SICfliTARY
AIID FISCAL AUNT
FEDERAL RESERVE BOARD
WASHINGTON
X-747
ADIJJlU• REPLY TO
FBDERAL RESERVE BOARD
February 20, 1918.
Dear Mr.
Sec~etary:
I aakllowledge receipt o:C your communmoatio,n transmitting Senator
Owen's letter to
~ou
of the 16th instant in Which he refers to an ap-
plication which -:tas made sometime ago by the Pompeian Compc-ny of Baltimore for permission to transfer $1,250,000 of gold tram London to
Spain in order to protect its commitments for oil purchases made in
Spdn before the embargo on gold shipments vas declared.
Senator Owen states that it is his view that every American citizen who had made comm.itments
~n
Spain requiring gold, should be pro-
tected against the subsequent embargo. and that in his opinion the
peian Company
is
entitled~to
letter from Mr. William
Ingle~
the relief asked for.
Pam~
He refers to a
President of the Baltimore Trust Camp-
any_ which states that beginning with and subsequent to February 1917
there were opened tbrcugh the instrumentality of the Baltimore Trust
Company credits aggregating a total ot something over 6,000,000 Spanish
pesetas for account of the Por.1fJeian
Company • to be available in Spain
for the purchase and importation into this country ot olive oil. The
exe~ut:i.ve
order issued by the President on September 7th provides that,
"subject to such limitations and exceptions as the Prosident shall prescribe, until otherwise ordered by the President or by Congress, coin,
bullion. and currency shall not, on and after the lOth day of September,
in the year
19:1~1 ,
be e:1.-ported from or sM.pped from or taken out of
tho United States or its territorial pc·ssessions 0 "and by d:irection
of the President the FederalReserve Board, subject to the approval
of the Secretary of the Treasury. is authorized and
upon
empowerec'l~
th'3 receipt of ana?;?lication for permission to expo1·t gold and the
recommendation cf the Federal Reserve Bank rt:g'arding.!'f;, "'to make
such rulil1g as it may deL:m proper l.n the clrcumstances, and if 0
~n
its opinion, the exportation be compatible with the public interest,
to permit said exportation to be made, otherwise to refuse it."
)
A few weeks ago the Federal Reserve Board received in reeular
course frcm the Federal Reserve Bank of Richmond• the application
from the Pornpei.an O:U Cor.:..pany to t':hich Senator Owen
refers~
After
due consideration the Board reached the conclusion that to permit
the exportat:i.on in question would not be compatible with the public
interest and the application was therefore refused.
Mr,. .A).bert
Strauss, the representative of the Treasury Department on the
wa:~
Trade Board. sits with the Board's comrnittee as your representative
in passing upon applications for licenses for exports of gold and he
concurred in the action taken regarding the application raf' the Pompeian
Company.
Mr• Musher of the Pompoian Company,
h~s
manifested a very
lively interest in peseta exchange since December 1916, when he began
a propaganda, that has apparently continued to the present tlme, which
seems to have for its object forcine the sale, of Spanish exchange by
X-747
someone
~
his Company at practically the normal r.e.rity..
He began
by sending for several months daily letters to the Secretary of the
Treesury and to every member ot the Federal Reserve
Bo~d,
demanding
that the Federal Reserve banka engagd in foreign exchan ge operations
and that they furnish exchange on foreign countries&
Later on he
sent circular letters to jobbers, to
and to chrnnbers
boa~ds
of
~rade 9
of commerce throughout the country 10 urging the establishment of a
foreign exchange bureau by the Federal Reserve Board, nnd asked the
recipients to write to the Secretary of the Treasury favoring the
suggestion.
Mr. Ingle's letter states that the Pornpeian Company 1 3 commitments
began in February !.917, and I wish to poi.nt out that there was never a
time during the year 1917, up to September lOth, when the Pompeian
Company could not, in the absence of a
sat~sfactory
exchange rate,have
withdrawn gold and shipped it to Spain for its own account.
That other
importers and exchange houses did this very freely, is evidenced by
the fact that from January lst to September lst7 1917 more than
~ea,ooo,ooo
in gold r.as sent from the United States to Spain, although gold is
not a legal tender in Spain and the Spanish Government permitted the
B ank of Spain during all that t in:e to purchase Jlli!erican r;old and
bullion at an arbitrary rate \lhich amounted to o.bout 3% dis coUllt.
This
discount on cold is of course, an added cost on ,;oods 5.mported from
Spain and it therefore has about the same effect on those transactions
X-747
- 4 as an export tax would ha.ve.
Our importers pay exfort taxes to
Chile and other foreign governments, without making any corn-
N~xico,
plaint.
Members of the B.oard upon whom Mr. Musher frequently called,
pointed out to him that if he could not
regarded as a fair rate,
h~
purbhat~e excba~g·3'
at what he
could meet his obligations by shipping
gold to Spain, but he took the position
th~t
he was entitled to re-
ceive the service he desired, at his own terms from banks or exchange
houses.
His attitude during all these months has been a cor1sistent
one of seeking to force the issue, either by having pressure
~ught
upon the Spanish government to compel the Bank of Spain to take
American gold at par or by seeking to force exchange dealers to sell
peset~
exchange at a figure satisfactory to him, regardless of the
cost to them.
In February,l917, the Federal Reserve Board, through
the State D9partrnent, inquired if th6
~nk
reciprocal relations with the
Reserve Bank of New York, and
the answer was
t~t
Feder~l
of Spain would enter into
the Bank of Spain did not
c~re
to enter into the
proposed relationship with the Federal Reserve Bank of New York and
that it did not propose at the time to take any steps to relieve the
exchange situation.
Lwish to call your attention to a feature of the Pompeian
aompany's recent application to the F'ederal Reserve B.oarcl.
It seems
that Mr. Musher's attention had been called by someone to the fact
that the Federal Reserve banks had a
speci~l
deposit in gold with the
X-747
- 5lia.nk of England amounting to about $52,500,000.
This deposit counts
as part of their gold reserve, and the arrangement is one of mutual
benefit to the Federal Reserve banks and to the Bank of England, and,
incidentally, to the American and British goverument.
The gold on
deposit in London serves a useful purpose at present and is held there
for certain future contingencies.
The Pompeian Oil Company in its
application asked that the Federal Reserve Board authorize the Federal
Reserve Bank of Richmond to release to the company $1,250,000 of· this
gold in London, against a de!JOSit of a like amounttee be made with the
Federal Reserve Bank of Richmond.
No mention was made in the application
•
of the cost of transferring this a:nount of gold from the United States
to London, but the Pompeian Company asked that this gold be delivered
to it .in London against a deposit on this side.
The application stated
further that if permi3sion were given the company to receive the gold in
London, it would be
deposite~
with the London branch of the Bank of
Spain, and that arrangements should be made with the British government
for
pe~ission
branch.
for the transfer of the gold to Madrid by the London
The British
~overnment,
which has the same motives for conserv-
ing gold and for preventing transfers of gold to Spain as we have, would
no doubt have refused to consent to the transfer.
The proposition,
therefore, in the opinion of the Board, ca;ne bacl-c to the question of
whether a license should be granted the Pompeian Company to send $1,250000 of gold from this c01mtry to Spain, and this involved the broad
X-74;
- 6 -
quostion as to
-~ether
gold be shipped from
it is to the public interest that this amount of
t~is
country at this time, and more particularly as
to whether it should be shipped to Spain.
The Board has taken the position
ever since it was charged with the duty of passing upon exports of gold,
that shipments should not be permitted in cases where exchange is available and where the only benefit to accrue is a saving to the shipper.
If the Pompeian Company is entitled to the relief it seeks, it follows
that all other American concerns which may ha·.re outstanding commitments
for payments in Spain which v:ere made before the embargo became effective,
should be entitled to the same relief, and this applies in like manner
to payments in Holland, in Dweden, Norway, Denlllark, Switzerland, and all
South .American countries.
I do not know what the aggregate amount would
be, but have no doubt that the sum involved would be so large that its
export could not be considered.
The ?ompeian Company can not plead lack of notice, for the Board
knows that it has been watching the exchange market closely ever since
December 1916.
The Board has Mr • .Musher's own statement that his company
has employed experts to aid it in the propaganda which it has carried on
during all this time, and that the company has been .able to effect renewals in Spain from time to time, through which it has avoided the
necessity of purchasing exchange or of shipping gold, and members of the
Board are informed by Mr. Musher that his company has been able to obtain
tnese renewals since the
embar~went
into effect.
I do not know
X-747
- 7 -
whether you recall the propaganda which has
~een
carried on by the
Pompeian Company, or whether you have seen gn.y of the advertisements
\\fhich it has caused to be inserted in newspapers tlp:'oughout the country.
Some of the advertisements and .literature circulated by this company
have sought tc convey an impression which, if widely accepted. would
work to the injury of our financial situation and would be a distinct
source of comfort to the enemy.
They have charged that notvnthstanding
the fact that trade balances with nearly all countries are in our favor,
and that our net credit balance for 1917 was about $3, 000, 000, 000,
American cu1·rency and exchanges have been permitted to decline in foreign
countries, that the funerican dollar has not been stabilized as is the
ease with the British pound sterling and is worth abroad only about 75%
of its faCe value.
The facts are that American e&change and the
American dollar are at a premium of about 2% as compared with the British
pound sterling, abO'J.t 10% as compared with the Ft:ench franc., 15% as com":'
pared with the Italian lira, 75% or more as compared with the Russian
ruble, and are at par or a
premiu~
in many other countries.
The bulk
of our foreign trade is with countries where American. exchange is at a
premium and the discount in European neutral countries such as Spain,
Holland, Norway, Sweden, Denmark, and Switzerland, and in rome of the
Latin American countries, is due primarily to our relations with the
allied powers with which we a.re associated in the war.
England, France,
and Italy are making heavy purchases in various parts of the civilized
..
X-747
- 8 -
world.
As Secretary of the'. Treasury, you are makir..g large loans to
these countries and you are permitting Great Britain to stabilize
exchange rates by purchasing sterling bills in the New York market.
l remember how carefully you considered the question several months ago
of whether or not you should fermit these exchange operations to be
carried on and how you finally reached the conslusion that their discontinuance would be very harmful to the allied cause and against
the best interests of the United States.
You decided that it
v~uld
be folly for you to lend money to the allies with one hand and with
the other to inflict a
stir~iLg
blow against their credit in the markets
of the world, even though such action might benefit a few lunerioan
importers.
In considering the general exchange situation, it should be remembered that in those countries where local exchange and local currency
are at a premium as compared with the
~~erican
dollar, they are at an
even greater premium as compared with the British sovereign or the
French franc.
The President by the executive order of October 12th
placed all matters pertaining to foreign exhh.ange in the hands of the
Secretary of the Treasury.
The Board recognizes the paramount influence
which you, as the world's paymaster, exert in the exchange markets of
the world, ruld has some appreciation of the problems with which you
have to contend ..
Its desire is
to give
you
its cordial co-
operation and to render you a:ny assistance tha:t may be in its power.
X-747
-9-
Paragraph (e) bf Section 14 of the Federal Reserve Act empowers the Board
to "order and direct Federal Reserve banks to open and maintain accounts
in foreign countries, appoint correspondents and to establi<sh agencies
in such countries wheresoever it may be
deen~d
best for the purpose of
purchasing, selling, and collecting bills of exchange, and to open and
maintain banking accounts for S\.lCh correspondents or agencies;" in
other words, the Board can direct the Federal Reserve banks to engage
in a general foreign exchange business.
With the world at wat how-
ever, there are so many international questions connected with foreign
exchange transaction& that th13 Board ha.s cordially concurred with you
in the view that any negotiations of this kind should, in the existing
circumstances, be
cond~cted
by the Treasury Department with the
cooperation, when necessary, of the State Department.
Without in-
volving the shipment of a.n ounce of gold you have been able to n'ctke
arrangements with the Indian government which enable American importers
to purchase rupee exchange at moderate rates, and you hctve more recently concluded an
ar~ngement
with Argentina which has had the effect
of bringing exchange on that country down to a point where the premium
represents practically what would be the cost of shipping gold·
The
Board is interested in the progress of your negotiations with other
South American countries and with
W~xico,
where y.our efforts are directed
toward securing satisfactory exchange arrctngements without shipping
gold·
Nor have you been unmindful of the requirements of the importers
of goods from Spain, for your representative has been engaged for
x.. 747
- 10 -
sometime past in negotiating with·financial interests in Spain,
through a foreign government, for a large peseta credit to be used
in relieving
Americ~n
importers who have obligations to meet in Spain.
The Board hopes and believes that these negotiations will be successful.
It requires time, however, to complete a delicate negotiation of this·,
kind, and any
publ~cvagitation
such as the rompeian Company has been
trying to stir up, and any wide-spread statements to the effect that
.American currency or exchange is at a heavy discount, do not in any way
facilitate the consummation of the arrangement desired.
The object of
the gold embargo, as the Board understands it, is first, to prevent gold
getting into enemy hands through neutral countries;
and second, to
conserve as far as possible our stock of gold, which is the basis upon
which our constantly expanding domestic credits must rest.
It should
be generally understood that all your negotiations relating to foreign
exchange have haajiheir object the creation of exchange facilities without shipments of gold, and that these arrangements are being perfected
as rapidly as foreign governments will agree to them.
The
BoG~.rd
does
not feel that it has authority to license exportations of gold unless
0
they are compatible with the public interest, and believes that any
weakening in your position by md.king exceptions in individual cases,
would have the effect of retarding the progress of the negotiations which
have been undertaken.
Very truly yours,
.
'
Hon. W. Gl. McAdoo,
Secretary of the Treasury.
Governor.
X-747
'
..
COPY
UNITED STATES SENATE
2/16/18
•
My dear Mr. Secretary:
Some days since, I handed the President an appec.l from the
Pompeian Company for pennission to transfer $1,250,000 of gold from
London to Spain to protect oil. purchase corm:li tments rr:ade there before the embargo on gold was found advisable.
Later I learned that
Mr. Nathan Musher ~vho is the President of the Company) was charged
with speculating in Spanish exchange, and for that reason his request should be denied•
I know of no reason why an American citizen might not buy
or sell foreign exchange, but whether he exercises this obvious· right
or not constitutes no reason to deny him
wh~t
is plainly his due.
Every Americc.n citizen who has made corrmitments to Spain requiring
gold should be protected against the subsequent embargo, which otherwise would be expost facto in its
oper~tion.
That the Pompeian Company is entitled to this relief is evidenced by the enclosed letter from Wm. Ingle, President Baltimore
Trust Company, showing the commitment made in good faith for oil
before the
~mbargo.
When the government can save its
merchG~.rlts
from such a loss·
and without cost, I think it should be done.
Yours very respectfully,
ROB.T. L. OV.'El'J •
Hon. W. Qt. McAdoo,
Secretary of the Trec..sury.
X-747
••
a:. 0
p y,
THE BALTIMORE TRUST CDr!.PANY
BALTIMORE. MD.
February 15, 1918.
Mr. Nathan Musher,
!~'resident,
Musher & Co., Inc., formerly
The ?ompeian Company,
Baltimore, Md.
My dear Sir: ,
This is to advise whom it may concern that
in the months beginning with and following February, 1917, through
the instrumentality of this Company, ~here was opened for account
of the Poropeian Company to be availi:ible in Spain for the purchase
and exportation tt this country of olive o~l, credits aggregating
a total of son:ething o•Jer 6"000,000 Spanish pesetas. Conditions
under which the credits were opened required that before honoring
drafts drawn against +.hero, ocean documents evidencing shipments
of the oil should accompany drafts respectively drawn in the
premises.
Such drafts in dne course, were drawn, presented and
honored by the. Pompeian Comfany.
I very much hope that your efforts to obt~in such
satisfactory settlement of your exchange account as would seem to
be due one who in such a large way has imported a valuable foodstuff~iroto this country, will meet with the success which they
merit ..
Yours V8ry truly,
Vlrv1. INCLE
President.
EI~ETH
.
'
.~.
~.
,:'
.,
.,
X-769
Release for the
morning papers
of March 3~ 1918
tr
STATEMENT FOR THE PRESS
Washington, March 2, 1918.
The Chairman of the Capital Issues Committee of the Federal Reserve Board, when seen today, stated that the work ~f the
Committee had. received a decided impetus during the past week.
Applications are being received in greater volume than ever and
are receiving the greatest possible despatch in consideration.
He expr.essed the· desire, however, that in view of th~ fact that
instructions were now being distributed widely in all districts,
prospective applicants should prepare and subrr,i t their applications as far in advance of the date of issue or sale as practicable; adding that the Comffiittee had been conJiderably puJned
to comply with the many requests that had been receiveQ for im•
mediate telegraphic consideration of issues the ss,le of ·Nhich
was imminent or the necessity of prompt action upon which \lao
necessary to meet maturing debts. While, in a number of C.:.:l.:::;es,
the Committee so far has been able to meet such requests, it
will not be possible in the future to undertake to give a:ivicE:
as to the .compatibility of tne large i.3sues of securities coming before it without having received the complete· information.
speciiied in its memorandum of instructions to applicants.
Even ihen it will be very oft an nece:3sary to refer api,)lica.tions
to the sub-committees for further investigation and report.
Applicant$ are rec1uested, therefore, to afford the Comiai ttee
as much time as pos3ible for the intelligent consideration of
contemplated issues.
Many applicants have inquired as to the reasons for the
activities of the Committee. In reply, the Comillittee has, as
a rule, stated its policy as follows:
"It is only by subordinating local and personal interests
to the public welfare, and by enforcing the most rigid economy in matters of public and private enterprise, as well as
in matters of personal expenditure, that the United States
can hope to bear its part of the fi-nancial burden of the
war and to release sufficient labor and m~terials fo.r war
purposes without depletion of its own resources. 11
Attention has furthermore been drawn to a statement in
this connection made by Secretary McAdoo reading as follows:
11 W~~ .:::.re engaged in a great war, a war in·wb:i.cb th..; very
safety of America is seriously in1perilled. i":e cannot win
this war unless every resource of the nation ia car~~ull;
"j
X-769
··~
(2)
husbanded and used with the utmost intelligence. The great
financial operations of the Government, greater than those
ever undertaken by any government in the history of civilization, make it essential that every unnecessary expenditure
by the government, by the statea and municipalities, and by
private corporations and iniividuals be avoided while the
war is in progress. Unless this is done it will be impossible for;~he people of the United States to furnish the
money which the government must have to support its soldiers
and sailors who are shedding their blood for us up6n the
battle-fields."
It has been most enco~aging to see the hearty response
that has been made to the call for cooperation in the CowJittee's
work. The Chairman stateQ that in addition to the resolutions
heretofore announced as being adopted ~Y the League of Kansas
Municipalities, the New York Stock Exchange, and the Richmond
(Va.) Real Estate Exchange, the American Bankers' Association
and the Secretaries and Officers of the Central States Banking
Association (the latter representing fifteen central States)
have also adopted resolutions indorsing the aims and purposes
of the Committee. Similar resolutions are bein~ adopted by the
Investment Bankers Association.
The Chamber of Commerce of Boston has adopted the following
resolution:
"Your committee, therefore, recommends that the Board of
Directors of the Chamber bring to the attention of the
Governor of Massachusetts the urgent neeQ for economy
in municipal financing and requestsHis Excellency to
make public a proclamation urging all cities and towns
within the Commonwealth to refrain from incurring expenditures and indebtedness for purposes other than those
imperatively necessary at this present time of national
utress.n
In response to inquiry by the Chairman, the Director of
Steel Supply of the 1'"'ar Industries Board stated:
11
We are certainly in sympathy with Secretary McAdoo's appeal .for cessation of building operations. We do not
feel that it would result in the hardship to labor as
generally supposed, as many of the most essential industries are running with greatly reduced forces, and we believe labor would be diverted to more important uses.
As regards the steel situation, would state that the
supply of structural steel is ample for all purposes,
but owing to the curtailment of operations of blast furnaces and steel mills, due to shortage of fuel and inadequate transportation, the pig iron situation is becoming
acute and any material incre1.se in building operations
would complicate an already bad situation in this line.
Many of tJ.1e ir;:portant mills ·:..f the country, including the
pl;3.te [JilL::, .:ne h?...vL:-:: t.:'.~.:; -:r:;;.:<.test iiffi-:::~·lty in secur-
X-769
(3)
ing sufficient iron to keep their plants operating, and
as every one appreciates the necessity of plates in shipbuilding, it is obvious that any iron put into structural work which could be utilized to turn out ship plates,
\70uld seriously interfere with the successful prosecution
of the war. We personally think that everythinG should
be done to discoura·ge any structural work or unnecessary
vrork at the present time. il
The Committee and its Advisory Committee have had two
very interesting and helpful conferences during the course of
this week~ one with the chairmen of the various suo-committees
on capital issues and the other with the War Committee of the
National Association of Public Service Commissioners, representing the public service comYLlissions of the United. States.
This committee v~Tas represented by Uessrs. Hax Thelen, of California, Chairman, Ralph w. E. Donges, of New Jersey, Joseph
B. Easttman, of lilassachusetts, Frank H. Funk, of Illinois,
Travis H. VJhitney, of New York, Eclrrard C. Niles, of New Ha.mpshire, and Charles E. Elmquist, Secretary. Members of the
Capital Issues Committee •:vere delighted to find that while
these Commissioners naturally had to take into consideration
their local conditions and requirements they were guided in
doing that by the same motives that prompt the ~ctions of the
Capital Issues ContrL1ittee. They expressed in no uncertain
terms their fvllest appreciation of the national needs at
this time, and members of the Capital ISsues Committee have
no doubt that the foundation has been laid for a most fruitful
cooperation between the representatives of the State and
municipal interests on the one hand and those acting at this
time purely from the national point of view. !ileasures along
these lines are in course of preparation and it is expected
that results will be announced shortly.
In opening the conference with the Chairmen of the SubCommittees the Chairman of the Capital Issues Committee took
occasion to read to them the follov~Ting resolution adopted by
the Cor"nnittee:
11
This Comm.ittee 17ill not express an opinion either of
approval or of disapproval in matters of new capital
issues belov7 the minimum heretofore fixed, but will
advise the local sub-committees to discb.ur~ge~;.non
essential undertakings irrespective of the amount
wherever practicable. 11
and the Chairmen of the Sub-Committees vv-.ere requested to urge
upon the members of their permanent and auxiliary committees
the necessity of suppressing at the source all unnecessary
expenditures at this time, even though such expenditures be
X-769
(4)
belov; the r.1inimum :..1.0\7 S·3t by the Comr.1ittee. He cited. the instance of a very effective piece of r;ork on the p.J..rt of an
auxiliary committee :·.1cmber vv-ho, upon his o·,m initiative,
appeared before "the J)Ublic d-:;"ot co::.l::Jiss ion of a cerJcain city
and, upon a simple patriotic appeal.) ca.usecl th~t comr.~ission
to reduce a cont.er:(._:Jlated. issuejof securities fi'c:-.1 ~~3,000,000
to ~l.)OOOJOOO.
If suc:1 effective r0sults can be ob-Gain0c-:. by
such simple and C.irect methods by tho sin.=;lo ha.nd0d. .:,ction of
an individual, even "\7here the auount involved ·;ras so large,
vihat r~1ight not ~:>e accomplished ir.. tho thousa:r:ds of cases of
unnecessary expenditures of a1~1ounts not coming vli thin the
purview of the CoEtrtd ttee at the prescmt ·cimc?
Th0 Chairman statGd to the conf,_;rencc that the following
rules of procedurG with r0s~ect to the h~ndling of applications had ".:leGn .:l.doptGd by the .Aclvisory Cou1:'".1i ttee:
Applications should be :~2.::.e in d.L::Jlicate and, w·henever possible, should be f:led ·;ri·~h and rccc;iv~.xt. :-:;y
the :-::rope:;:- sub-cor.mittec, one copy being rotaincd
by the su'b-comr.1i tte0 .;:n5. ·~1:·3 other sent to the C;;,_pi tal
Issues Corami t tee ·ah~..;n co::1)let0;
Th0 sub-conn:~ittoc .::h2.ll ~:>e recc,10sted. to sec that the
form of the c:..:::'):ic.:::.. t ion is suff L:: ient 3..nd. thJ. t ·che
info::.;mation fu::nishc.i co::1~:>:ies ·;;ith ·che requircr.1ents
of the genc~al instructions;
The sub com;::littoe to be re'tluested to (Lefcr invostigation anC.. thG fo:rr:1Ulation of 3.ny recon;·,1eniation until
requested by the Ad.vi:>ory Cor.1::1ittee.
The Chairrpen of thG Sub Co:J::;itte~Js g;:;n0ra.1:y reported. a
r.1ost satisfactory condition of :1earty coo)e:cat ion in every
cListrict on the part of :-::unici:Jalities, "bankers, bro1::0rs and
others. Some of them, howev0r, Jtatei that in 30~e rare cases
the unfortunate attitude had ~).::;011 tak0n :;y certain prospective
applicants of heeding peace ;ropagand.a and. lool::ing upon tho
Com:Jittee's work as a tempora.ry e:·:j_:)e<;iient th3.t ~.-rould soon
become obsolete u:')on the d.eclc:cration cf a. not very c~istant
peace. The Chair::1an enphasized. ·~:;.e obvious fallacy of such
belief and. stated th.:1t in a:l C..L.:;-~ricts d.etc:t:r]inecl efforts
should. be macle to ovcrcor.1e the ;;erniciou;;, tenclencies of such
a.n at t i tuc:Le .
W, P. 8. HARDING, GOYB-1
PAUL II. WARBURG, Yla& . .YIIIi.uR
FRIDERIC A. DELANO
ADOLPH C. II ILLER
CHARLES ll. HAMLIN
EX·OP'FICIO M&M8aRa
WlLLIAM Gl. McADOO
SECRETARY OF THI TREASURY
CHAJRIIAJII
JOHN SKELTON WILLIAMS
COIIPTROLLIR OF THE CURRENCY
11. PARKIR WILLIS, SICRITAaT
SHIRIIAN P. ALLEN • .UIT. IICBITART
FEDERAL RESERVE BOARD
AIID FISCAL ACiiNT
A.DDRa88 RaPt.Y TO
WASHINGTON
FBDBRAL RESERVE !BOARD
March
4~
1918.
Dear Sir:
I enclose herewith copy of a I-roposed bill Vlhich would authorize
any state bank becoming a national bank by conversion, and which at
tha time of
~ch
conversion is conducting a separate savings depart-
ment under authority of the laws of the state in which it is located,
to continue, after becamimg a national banking association, to conduct
or operate such savings department as a separate department of the bank
and to invest deposita received in the savings department
with the laws of the state.
in~ccordance
This idea grew out of a conference which
the Board held sometime ago with a caxmittee of state bankers .from
California, where the state laws as to reserves are such as to make it
practically impossible for state banks to beccme nembers of the
Fede~al
Reserve System, and it seems, because of the situatlon in California,
that many of the savings banks in that state would like to becnna
national banks rather than to apply for
~embership
as
st~te
banks in
the Faderal Reserve System.
I enclose also copy of a letter from the ~ounsel cf the Board in
which he discusses the bill at some length.
f:he Board would' be pleased
t·o have an expres.sion of your views regarding the ;r'>pOsC;d legislation.
Very truly
yours~
Governo.r.
ChG.inmn of the Board 1
Fede~l Reserve Bank of
X-7'72
. ..
(COPY)
~772-a
FEDERAL :RESERVE BOARD.··
M.n.. Elliott
WASHINGTON
'G.ounseL
FebDuary 23, 1918P
My dear a'overnor:;
T,!le committee representing sta.vings bta.nks ;).n California which
expects to come to Wta.shington about the twenty-eighth will prob~bly again
raise t~e question of procuring i:l.ll amendme1:1t which will enable savings
banks to convert into natio~l banks and to retain their separate savings
department.
in a conference held with members of
-ited Washington sometime ago, it developed that
Ce.liforn~oa. ma.ny of the st:Lvings banks would like
and not merely to become members of the Federi:l.l
the committee which visthe situation ie such i:n
to become nationd.l bd.nks
Reserve System.
The prirtcipoa.l reason assigned for this is that the laws of
Co:~.litorni(;l. are sb dravth as to vest little or no discretion in the superintendent of banks, and are, the ref ore, unust:u:L11y :rigid and not adaptable
to changing circumstt:.~.nces.
The superintendent of 'banks is, I.Laztl in•
formed, opposed to having discretionary powers vested_ in him.
.
L suggest /t~ one of the committee that it might be well to
have prepared a revision of the Galifornia statutes eliminating those
provisions which have been found to be unsatisfta.ctory, and retaining those
which are believe_d to:. afford the best safeguards to the depositor.
My
thought was that the Board would desire to have this in considering any
possible amendment to the Federo:~.l Reserve Act relating to savings accounts
or savings departments.
·
The proposed bill forwarded by the committee, which is hereto
attache<!., is not drd.wn along the lines that ·I had expected it to be. This
provides for the creation of departmental banks.
Xt does not accomplish
the purpose which I understood the committee to have, since the member
banks continue t~ operate under their State charters d.nd will, of course1
be subject to State laws.
I am C<a.lling this bill to the Board's attention merely because
it will prob~bly be brought up for discussion if the Board, or ~ committee
Ih this connection, I
of the Board, meets the committee from California.
am taking the liberty of submitting for the Board's consideration, a bill
permitting State banks to.become converted into national banks and to re•
tain and operate separate savings departments.
The plan is somewhat analogous to -Section Slss·or the Revised Statutes, which authorizes State banks
having broa.nches which beco~e converted into nt:.~.tion~l bt:.~.nks to continue to
.. .,
X-772;;a
operate such
br~nches.
I believe that the passage of such a bill would be of assistance
in bringing about a coordination of State and national banking powers. It
is undoubtedly, true that the customers .of a bank having established relations•w:jlth a particular institution, prefer in most cases to carry on all
of their banking operations with that institution.
Provision has already
been ~de for the operation of a trust depdrtment by national banks. The
amendment recommended by the Board, if passed, will broaden the powers of
national banks so as to place them in a position to compete more success•
fully with trust companies.
It seems to me to be entirely consistent with the purposes of
the act to ~ke similar provision for the savings bank business.
The
decision in the case of Bank vs. Fellows has recognized the right of Congress to vest national banks with any powers which are enjoyed by competing institutions.
I! such banks can operate a savings department, a
commercial department and a trust department, they would be in a position
to afford pr~ctica.lly any accommodation desired to their customers.
I .. do not think i:t necessary or desirable to d.Ssign a fixed
amount of capitttl to each department, but assets belonging to each department should be segregated and the opertttions of each department conducted
separately.
You will recall th~t the originul House bill provided for a
separate sAvings department, but this was eliminated primarily because of
the difficulty in working out the details of operation in a wd.y which would
meet the situation in each of the severa.l States.
Under the plan proposed
in the accompanying bill, savings bank departments could be conducted in
accordance with Sta.te l~ws, subject to regulation by the Board in those
States in which proper laws h~ve been enacted, and where the State laws iro
not afford proper protection, the Board can by regulation, adopt the necessary safeguards.
·
..
!Lbelieve that such a bill will make ~t an easier matter to work
out a proper basis of reserve requirements.
Lrecommend the accompanying
bill to the consideration of the B~rd.
Respectfully,
)4.. O~ELLIO'IT,
OounsEfl.
Hon. W.P.Q.Harding,
Federal Reserve Board.
(COPY)
2-.21-18
UCR-C
DFT 1.
I\E IT ENACTED BY THE SENATE AND HOUSE OF REPRESENTATIVES'
•
OF THE UNITED STATES OF AMERICA IN CONGRESS ASSEMB~D, That
"Any bank incorporated by speei~l law or organized under the general law of any State which becomes a
national banking association by conversion under authority of Section 5154, Revised S~tutes, and which at the
time of such conversion is conducting a spparate &avings
department under <:~.uthority of the laws of the State in
wh1ch such bank is located, may continue, after becoming
a national banking association, to conduct or operate such
Si:I.Vings department as ct.. separate department of the bank'
and may invest deposits received in such department in
accordance with the laws of the State; Provid~.d, however •
That the Federal Reserve Board, by regulation, may determine to what extent investments shall be made in any particular class of,security or property which savings banks
are permitted by the laws of the state to invest in, and
in those sttttes the laws of whichdo not prescribe the
character of investments to be made bysavings banks the
Federal Reserve Board, b~ regulation, may prescribe the nature and character of investments to be made.
Every national bank operating a separate savings department under authority of this Act snall segregate c:t.nd set apart all assets belonging to such department and, und&r regulations of the
Federal R&serve Board. shall keep a separate set of books~
and records, sho\Ving in proper de~il. all transactions" engaged
in·
No such natio~l bank shall receive in its savings department any deposits other t~n time deposits or savings deposits, as defined by Section l9~of the Federal Reserve Act.
In ease of liquid~tion of a national bank operating a
separate savings department either by a receiver duly appointed or by a liquidating agent, the depositors in.the savings
department shall hc:t.vc a first lien on ~ssets held in such
department. The Foder<:~.l Reserve B.o<1rd, bf regulation, may
permit any national bank to esW.blish and ~intain a separate
savings department to be ope~ted in accordance with the provisions of this act so fc:t.r as applicable·
W. P, Gl, IIARDINCi, GIQY~I
PAUL M. WARBURGI,YIU . .YI!IUR
FRIIDERIC A. DELANO
ADOLPH C, MILLER
WILLIAM Gl, McADOO
SECRETARY OF THE TRIABURT
C:HAR~Q ~. HAM~
CHAJRIIAK
JOHN SKELTON WILLIAMS
COMPTROLLIIt OF THE CURRINCT
FEDERAL RESERVE BOARD
II. PARKER WILLIS, SECRITAOT
SHIRIIIAN P. ALLEN, AUT. a&CRITARY
AND FISCAL Ac;INT
WASHINGTON
ADEaRU. fi:EPL.Y TO
FIIDERAL RESERVE: BOARD
Much 4, 1918.
Dear Sir:
In conducting its correspondence, the Board has frequent occasion
to address connunications to the Governors of the respective Federal R~
serve .Banks, to the Chairmen of the Boards and Federal Reserve Agents,
and someti~es letters or telegrams are addressed ~ the Federal Reserve
Banks. It is the intent of the officers &nd members of the Board to
address the officer or department of the Federal Reserve Bank more
directly concerned in the subject of the cawrrunication. But as oper-ating methods are not entirely unifo~ at all Federal Reserve Banks,
it is difUcult sornetixr.ea to determine to which official a letter or
telegram should be addressed, and therefore it has been the practice
here to address the bank, the thought being that upon delivery at the
bank the corr.nunication will be placed in the hands of the proper department or official. In some cases circulat letters are sent in duplicate,
one to the Governor and one to the Chairman and Federal Reserve Agent,
but it often happens that letters are sent in.reply to corrrr.unications
signed by the Governor or Deputy Governor or by the Federal Reserve
Agent or by the Assistant Federal Reserve Agent 1 and it V\OUld seem to
be of doub-piul propriety to send copies of these replies to other
officials. The Board has no objection, h~never, to the interchange
of any letters addressed by it either to the Governor or to ~he ~~air
n:an~ except such as rray be of a eon.fidential chr\,racter, and
it would
suggest that sons arrangement be made either by agreement between
th&se officials or by resolution of the Executive Committee or the
directors, to provide for a prompt interchange of letters and telegraas
transmitted by the Board.
Very truly yours,
Governor.
Chainooan of the Board,
Federal Reserve Bank of
X-773
RATIO OF "FLOAT 11 OF ~- FEDERAL RESERVE :BANK TO EARNING ASSETS .AliD DEPOSITS
:to.!ARCH 1, 1918.
.
Federal
Reserve
:Bank
.
~
.
·clearing
National :Bank: All other.: :Total un- : Total col· notes and
house
: uncollect-.: ~ollected : lection
exchanges notes of oth-: ed items
i tetlS
items
:er F.R. ba11.ks:
Dr.
Cr.
:
.
..
Total
."FLOAT 11
BOSTON
1_,915
4
17 ,D56
18,975
15,636
3,339
NnV YORK
4,572
2,662
68,497
75,731
54,010
21,721
PHILADELPHIA
2, 715
1,750
33,921
38,386
31~450
6,936
CLEVELAliD
1, 749
311
19,855
21,915
18,495
RICIM>ND
3,483
1,365
23,111
27,959
ATLANTA
2,913
3,178
14,951
CHICAGO
7,307
956
617
ST. LOUIS
MINNEAPOLIS
K.AUSAS CITY
DALLAS
SAN FRANCISCO
TOTAL
X-775
:Ratio of "FLOAT" :Ratio of ":FLOAT"
:.inL1ed:i.a. tely ato
!Net investment:
':'vailable Govern:in trdllsfers :total earning
:Llertt bank deposits
:assets
!included in
Per cent
: to tal "FLOAT n
Per cent
3·9
3·7
4.6
3·3
(a) 107
13.4
7·9
3,420
1,260
4.7
2.7
19,057
8,902
...
22.7
17.8
21,042
13,700
7,342
904
31.0
16.2
58,303
66,566
23,683 .
42,883
24,540
39·9
20-8
543
18,104
1.9,264
8,994
1.0,270
1,64o
31.4
15.g
94
12,199
12,293
3.988
8,305
7,294
35·9
15·9
363
249
31,718
32,330 ..
9,686
22,644
8, 736
72-5
27-7
17
6,262
14,893
21,172
5,884
~5,288
8~090
52-0
29-3
1,0-99
1,391
11,062
13,552
13,448
104
3,917
0.2
0.1
26,750
18,765
323,670
369,185
218,031
151,154
56,274
14-5
9·'+
...
, ...
·~
----------------------------------------------------------------------------------------------------~-----------------------------------------
(a) Excess of ~ount.of transf'ers sold over alaount of transfers bought.
H!EARING BEFORE THE FEDERAL RESERVE BOARD OF MR. NA'fHAN MUSHER, IN SUPPORTl
OF HilS APPLIOATION J.'OH THE EXPORTATION OF $.1 1 250,000
GOLD TO SFAIN.
Washington, D.. C., llacrcll 2, 1918, Twelve o'clock noon•
PHESBN'l.,..t: Qcrvernor Harding (pres:i.ding), Mr. Warburg, Mr. Hamlin, Mrft :Jelano,
Ur,. M_;_ller and Mr,. Willis.
Mr. Secretary, have all the members of the B.oard been
of the hearing!':
Mr. Harding:
no"'~i:: ;i_ed
Mx-~
Willis:
Mr. Harding:
Yes, sir, a written notice was sent to each member.
Geni;J.emen, Mr., MvshfH' has requested that thA Hoard rAec,?nsidBr e.::1 appJicat:Lo::'l ~ade by h::m which !"ea~hod the Board
on t!1e f:'i.rst of last I:-er:ember.
:Lundersta.nd, Mr. Musher,
that you want youl:" l.Btter lat~d Nt.l'trember 28,,1917 r to serve
as a brlef as the basis fol~ this hearing!!
Mr. Musher:.
Yes, sir.;..
Mr. He.rding::
What is your full name!
Mr. Musher:.
Nathan Musher.
Mr. Harding:.
Your business!.
Mr.
!~sher:.
Xmporter of olive oil, President of Musher and Company,
Washington.
Mr. Harding:
What is your residence!
Mr. Muf:!her:.
Washington, D.
Mr. Harding:
Your place of business!
Mr. Musher:
Baltimore.
c.•
Mr. Harding:.
You live in Washington and your place of business is
Baltimore.
What is the name of your firm!
Mr. Nusher:.
Today it is Musher and Company, formerly the Pompeian
Company of Baltimore.
'l'he present company are not sur.cessors
to the former company, but just a change of the corporate name.
Mr. Harding:
I understand.
You are an .American citizen!:
'X-!-7781
- 2-
Mr .. Musper: .
Yes~ sir;
Mr. Harding:
Residence is Washington!
Mr~
Yes sii'•
Musher:-
Mr. Harding:.
How do you want to discuss at this time your supplementali
application of Decembe~22nd,,in which you ask to have until
the first of July,, I .. believe, to make thiS' shipment of gold-:
in case you. should find yourseJ..f unable to liquidate your indebtedness by purchasing exe.ha1'lge at approxiJr.ate1yy· the normal~
rate!?
Mr .. Musher:.
Of course Lwould like to get the quickest relief, but
if tbat is not possible to get the application to permit the
exportation of gold· on July first unless exchange is avail~
able before.
That would be very much of a relief if agreeab.le to the B..oard.
L. can say i..t is· really a .Jcase of life and
death to u~=beca~se it means a $~00,000 loss if we should have
to buy exchange a·t its present market price. · That would mean
almost death to us.
Mr. Harding:
How long has the Pompeian Company been in business!
Mr. Musber:
About nine or ten years.
Mr. Harding::
Always in Baltimore!
Mr. Musher:.
Yes sp-.
Mr. Harding::
About what proportion of the importing business in olive
oil did your company do in the year 1917!
Mr. Musher:.
We did quite a large proportion.
Of course·, our imports
for the year 1911 amounted to approximately 800,000 gallons
of olive oil.
Mr .. Harding:.
Eight hundred thousand gallons!·:
Mr. Musher::
Yes sir.
Mr. Harding::
What is the value of that amount of oil:ve oil!
Mr. Musher:
originally, on the other side about $1.,?50,000 •.
is my first cost that I.am trying to pay for now.
Mr. Harding:
That was your import·s in 1917 representing purchases·,
that.yoQ contracted for in 1916, is that so!
Mr. Musher::
That
Ilt is not reallJ contracted for in the full sense of the
word.
We contracted in 191&. to deliver to customers in" 1917.
~778
- 3
Mr. Harding:
About whatcpropo~ion of the import business does your
company do • twenty, to twenty-five pe·r ·cent!
Mr. Musher:
We really do more than that,:. considering the use of
oli.ve oil amongst the American trade was about·c. 3, 000,000
gallons, and we suppli-ed 800,000 for 1917·
The total importations were 7,000,000; out of 7,000,000 gallons"'_of olive
oil the bigger part went to the Italian trade to which we do not
cater a great deal.
We only sell the second quality to the
foreign trade.
We only cater largely to the American trade,. -that i~, selling our Pompeian first quality olive oil·
Mr. Harding:
You are doing then about
ing ol:i. ve oil!
27fo
of the business in import-
1
Mr. Musher:
To the American trade.
Mr. Harding:
What firms and corporations are your principal compeditors!
Mr. Musher:
We really have not any such thing as large competitors,
because there are so many other concerns engaged in the business but not specializing in oliYe oil as far as I. know.
7
Mr. Harding:
There is no other ·eoi'l:cern then, that does the b'lSiness
in olive oil that you do;· ·for example!
Mr. Musher:
No sir.
Mr. Harding:
Heinz. and Company are large importers of olive odl are
they not!
Mr. Musher:
Heinz and Company, as the name implies, manufacture 57
varieties, but they really handle about 80 or 90 different
articles.
Mr. Harding:
They do not do
c;1.
jobbing business in olive oil!:'
Mr. Musher:.
No sir. We import and do a jobbing business.
import about 75,000 or 100,000 gallons·of olive oil.
They
Mr. Harding:
In your business you make ~ontracts a year ahead; in
you make contracts and make deliveries in 1915, and in
1916 in like manner lou do likewise to sell at a certain ·price.
You bought in Spain based on these contracts, the only trouble
was that when you came to pay for your goods in Spain you found
that, peseta exchange had advanced!:
19~
Mr. Musher:
Mr. Harding:
Yes sir, about 151.When was it first brought to your attention, -- this rise
in Spanish exchange! .
·~·.
- 4-
X~778
In Decemb~, 1916. -- In Juneand July, 1916, we made bur
contracts for olive oiLfor 1917.
Mr. Musher::
Mr. P.arding: .
Mr. Musher:
Had you bought your olive oil in Spain at that time!
No sir,,we had note because we buy_ our oil in the three
producing months direct from the falLOers.
Mr. Harding:.
You had your commitments out for the delivery of the
oil.. and you fel.t obliged to buy your goods in Spain!:
Mr. Musher:
Yes sir.
Mr. Harding:
WhAn you first found that this exchange had gone against
you, what did you do to protect yourself!
How much was it
against you!
Mr .. Musher:
It started off and went right quick.
Mr. Harding:
Mr. Musher:.
What did the other importers do at that time?
There are so very many importers who are not established
on the other side and to them exchange was not as important to
begin with, be~ause it was of a: smaller nature.
There are any
number of large concerns in New York that import fror Norway,
Sweden, Italy and France a variety of commodities so that they
were not so interested to begin with in the Spanish exchange
situation.
The Armstrong Company and the Crown Cork and Seal
Company were really as much interested in this as I was.
I.~.
thought we were all working together to bring about a change in
tho pesetas.
The Crown Cork and Seal Company was buying gold
in New York and was buying gold sterling in New York and shipping it to Spain bec~use they found they could get more for
gold sterling than they could for American gold.
At that time
Lcame to the memb~s o! the Federal Reserve Board.
I think I
have had the courtesy of half a dozen interviews with the Governor, Mr. Warburg and Mr. Delano,---
Mr. Harding:
Can you tell me, in case the Board"should reconsider this
application of youxS, just how much of a precedent that would es~
tablish!
How ~any other importers would say 'we have got to
make shipments too"!
Mr. Musher:
not believe there is another one in my position,
they have not been able to obtain facilities from the
Spanish banks to carry this thing on.
The banking officials·in Spain have been extremely nice to me and have gone out of
their way to help.
The other importers went ahead and either
shipped gold or bought exchange.
I~do
bec~use
Mr. Harding:
buy
What reason was given to you when you f.irst went to
for this advance!:
e~change,
..
'\, '
~778
- 5 -
Mr. Musher::
The ret1son given to me was .because there were no balances
available in Spain.
Ir!!ports were larger than exports.
That
is the reason I was so instrumental in digging out what information I could a·c the time.
Mr. Harding:
It is very evident that our imports from Spain have always~
run along less than our exports.
For instance, :i.n 19lr1 .:~ur exports to Spain were $S2.000,000.and ou~ imports from Spain were
$33,000,000~
Don't you think that the rellitions of tt:a United
States with the allied governments had something to do with it!
Mr. Musher:
Of course, but Ldid not know it at the time.
Mr. Harding:
You posted yoursel:f pretty well on this whole businessoin
December, so that by the f:lrst of June and July you were pretty
well posted on exchange?
Mr. Musher:
Yes sir~
I was in hopes and was givAn to understand
that som':lthi.ng would be dor1e to equalize and to get the thing
strair;ht3ned out.
Our contracts were made on a basis of about
ten per cen·~ profit.
We would :1ave lost $150,000. so it was
really fighting for life that pronpted me not to take advantage
at that time of shipments of golde
Mr. Harding:
Will you please explain what the trouble was ab"ut making
shipments of gold!
Mr. Musher:
The cost of freight and insurance was so ~reat and therefore
the depreciation on the ll.merican dollar was 12io on the fare of it.
Mr .. Harding:
The discount on Americtin gold after it got to Spain was
about 3 per cent!'~
Mr~
Musher::
Yes sir.
Mr. Harding:
That preyailed how long!
Mr. Musher:
Right straight through until
Mr.• Harding:
Has that been
t~ken
off now!
Mr. l.ilsher:
Now I understand it is a little different, because the Spanish Government is inclined to take any kind of gold at almostcits
par value except that it aJ.way~ favors sterling.
Mr. Htirding:
You have your own connections in Spain:
favorably known there, are you not!
Mr. Musher:
Mr. Harding:
you are well and
Yes sir.
Did you hB.Ye the facilities for shipping this gold, paying
insurance and transportation costs?
Did anybody_ have a preference
or any advantage over you in the matter of gold shipments!
x..,..77e
"" 6 -
Mr. Musher:
Yes sir, in this way, because my import banking facilities
were furnished to me by the Balt~ore Trust Company of Baltimore
which was acting as syndicate manager for five institutions, the
District National Bank, the Commercial National Bank, the Conti•
nental Trust Company; the National Bank of Comrr~rce of Baltimore
and the Baltimore Trust Company, so that all my obligaticns abroad
were made to the Baltimore Trust Company and they in r:3turn opened
those cradits through the Guardnty Trust Company, Irvi~g National
Bank, and National City Bank of New York, and if shipmer:ts oi
gold were to be made the Baltimore Trust Company tad to make
shipments of gold for our account wbich Yr. Ing~e did not l9bk
with fi:lvor upon.
Mr. Harding:
How much of a disadvantage were you placed at in
shipments!
Mr. Musher:
I could not really make any shipments:
Mr. Harding:
How
~An
~aking
I was so tied up---
you make one now!
Mr. Musher:.
Bec~use the Baltimore Trust Company, and since, Mr. Ingle,
who is well known to you, has taken his time to study and to realize that it would be safe to ship gold.
Mr. Harding:
Then you were handicapped by doing business wit;_, a bank
which was not conversant with the foreign exchange business!
Mr. Musher:
Yes sir·
The Baltimore Trust Company became so excited
and so impatient they were afraid that pesetas would go up to
30¢ and would wipe out the Baltimore Trust Company that L biid
to go to the Equit~ble Trust Co. urd the Philadelphia National
Bankrand put up my cash deposits with them so as to release the
Baltimore Trust Company from ~ny obligations whatever.
Mr. Harding:
How long since you have been in a position to make gold
shipments!
Mr. Musher:
About a month or so ago.
Mr. Harding:
Yet, don't you say here in this letter that had you supposed
that,an embargo would be placed on the exportd.tion of gold, you
would have immediately exported to Spain from this country a sufficient amount of gold to liquidate your peseta indebtedness,
rather than have allowed the gold to accomulate here!
Mr. Musher:
I had Mr. Ingle, on November 30th go to Richmond and make
arrangements -~
Mr. Harding:
Mr. Musher:
The embargo was before
Yes sirMr. Ingle - -
It was only at that time th<:lt I could persuade_
- 7 Mr. Harding:
Suppose you h~d had notice about the embargo sometime in
could you h~ve gotten ready!
~dvance,
Mr. Musher:
I do not know.
I h~ first of all to persuade Mr. Ingle
to either make shipments for his own account or show him that
by taking the money ~d tr~nsferring it to another institution in
New York that institution ---
Mr. Harding:
Then this staten:ent ought to be qualified a little bit!
Mr. Musher:
I would have had to have consider~ble notice really.
I have been working under a very severe hardship in getting the
Baltimore Trust Company to handle the matter.
Mr. Harding:
In other words, by having local credits with banks" which
were not international bankers and did not understand the foreign
exchange business!:'
Mr. Musher:
Yes sir, that is correct.
I really did not realize, I
am frank to say thtL t· I W&.s under the impression that at any time
if I wanted to make a gold shipn:ent I would have no hardshiP in
getting a. permit.
Mr. Harding:
Mr.· Musher:
No permits were necessary then.
Furthermore you will rec~ll that in my inte-rvie\tSI
there was no need of any gold having gone to
Sp~in, th~t I was ~lways ag~inst shipments of gold because there
was no reason for it.
I think the gold em~rgo was an exceptionally good thing.
No..
have
Mr. Harding:
Mr. Musher:
re~rked th~t
How had the market varied since!
Are pesetas much higher!
Yes sir.
Because, while we were restricting gold shipments,
we were not at the wme time restricting credit operations.
In
other words, we put an embargo on gold but did not put one on
credit.
Mr. Harding:
How much higher now than on the first of September!
Mr. Musher:
About one cent.
Mr. Harding:
You think a full one centt
Mr. Musher:
Yes sir.
Mr. Harding:
Whdt are they now, about 23!
Mr. Musher:
More than that, about 24.40.
as 22-SOJ
At one time they were as low
X-778
- 8 -
When!
Mr. Harding:
Mr. Mushe:r:
They went down for one di.;\.y_.
! remember the Philadelphia
Bank was shortlof peset~s and they bought them on that
to cov-er themselves.
N~tion~l
d~;~.y
Mr. Harding:
Did you cover yourself all this time!
Mr. Musher:.
I did not cover, I ha·ve just been carx-ying
myself~
The Board understands how youvhandle the 1918 business,
how did you protect yourself!
Mr. Harding:
Mr. Musher:
We did not make any contracts.
Mr. Harding:
You
~re
just selling on the market!
Mr. Musher:
Not exactly.
When the next oil ~;~.rrives in the United,
Sti.;\.tes we will name a pr:i.ce only upon the quantity received
~;~.nd pro-rate the price i.;\.mong our customers.
If the government ~nd the State department will assist me in bringing
over olive oil from Sp:l.in, I ~m not in position to bring over
the oil thiit I .. need if I hiive to pay for it in todays rt:t.te of
exch~;~.nge.
Bec~;~.use if it comes down b~ck to normal it would
mea.n th~;~.t the people who buyj from hiind to mouth woul. be in a
better position ~;~.nd I would sta.nd ii loss on $2,000,000 importd.tion of about $500,000, should 1he dollar go back to its
gold parity.
Mr. Harding:
In other words, 1he exchange problem directly interferes
with i.;\.11 your rrercantile operations.
Are you bringing in any
olive oil from Spain now!
Mr. Musher:
None whta. teve r.
Mr. &rding:
How long
s~nce
Mr. Musher:
Our
importat~on
Mr. Harding:
You mean
Mr. Musher:
Yes sir, 1917.
Mr. Harding:
None since!:
Mr. Musher:
Not a
Mr. Harding:
How have you kept in business!
Mr. Musher:.
l~;~.st
.
'..
Cd.me in in May or June, 1916.
1~17!
gC:~.llon.
We always buy our supply of oil in the three producing
months to ca.rry us for the whole year.
Our entire 1917 supply
was bought before the 15th of April, and imported before June, 1917~
X-778
- 9 -
Mr. Harding:
Mr. Musher:
This is about the tin:e when you begin to buy again?
We have already bought olive oil on the other side. Our
warehouses on the other side are full of olive oil·
We have from
$150,000 to ~175,000 worth of olive oil on hdnd now.
Mr. Harding:
You hG<. ve
Mr.
I am just arrG<.nging now how to pay.
Musher~
Mr. Harding:
arrc;~.nged
to pay over there!
Has this application got anything to do with your current
business!
Mr. Musher:
No sir:
Mr. Harding:
You can bring in the oil when you get ready, regardless of the
war!.
Mr. Musher:
Mr. Harding:
Yes sir, i f embargo will be removed.
The action of the BoG<.rd does not interfere with your bringing in new olhre oil?
Mr. Musher:
No sir.
Mr. Harding:
What you WG<.nt is relief for your
Mr. Musher:
trc;~.nsc;~.ction
in 1916!
Yes sir· I have a telegram here from the Guaranty Trust
Comrany in which I think the Board will be interested.
(Reads
telegrcml as f.ollows):
New York~, N.arch 1, 1918.
Mus her and Co. ,
ReG<.l Estate Trust Building, Washington, D.C.
We are in receipt of the following Cdble from our London office
Banco de Barcelona Sucursal &..rcelona cable us Mus her Companyt s
Spanish representative states you will place their disposal ·here
quarter million pounds being <oi.dvance to Musher up to five million
pesetas.
Banco .,.gree. Musher Washington cable us enquiring
regarding this.
Are you remitting us quarter million sterling
cable.
GUARANTY TRUST;COMPANY•
Mr. Harding:
Have you arranged for the 250,000 pounds sterling?
Mr. Musher:
I have not, but I
Mr. Harding: .
Just
Mr· Musher:
'
whc;~.t
cc;~.n.
does that make the peseta cost you!
This arrangen:ent would mean that the Banco Barcelona/is
tG<.king from us 250,000 pounds sterling and giving us 5,000,000
pesetas which ~s 50,000 pounds for every million pesetas.
X-778
- 10 -
Mr. Harding:
Mr. Musher:
You get your pounds sterling at a discount!
Yes sir.
Furthermore, what they do is keep their sterling
balance in London undisturbed so that at any time within a year we
can repay the pl),seta and take back the sterling•
The bank in
Spain is only interested in pesetas as th~t is the currency of
their land.
Mr. Harding:
The only chance you fuke is the exchange
·
contract expires!
Mr. Musher:
Mr. Parding:
Mr. Musher:
r~te
when tbat
Yes sir.
I would like to get on our record now just exactly what
this exchange is costing you.
I am only putting down collateral sterling I can deliver.
Mr. Harding:
Just J.ike a.n arrangement I heard of the other day where a~
large aoount of pesetas would be available but it is impossible
to fix a price.
Mr. Musher:
That is just exactly wh~t is going on today in the exchange
market between London and Spain.
First of all London banks have
established bunks in Spain, and help their merehants :,hrough
credits.
Mr. Harding:
Is Great Britain permitting any shipments of gold to Spain?
Mr. Musher:
Not as far as I know. The only thing they are doing is
encouraging the Bank of F rc.nce to ro<:lke arrangements for them.
Mr. Parding:
In your appliC<:ltion here you ask to have payment made to you
in London of $1,250,000 out of a fund which the Federal Reserve
banks have over there, to be delivered to the branch of the Bank in
Spain·
Would that satisfy you!:
Mr. Musher:
Absolutely, with permission to the
the gold.
Mr. Harding:
That permission would be necessary!
Mr. Musher:
Yes sir.
~nk
of Spain to export
Mr. Harding:
How could the Feder~l Reserve Board give th~t permission!
Is not the British Government interested in that?
I thought you
said that they were restricting shipments of gold!
Mr. Musher:
I am working ur.der the assumption that the gold in London is
the property of the Federal Reserve banks.
- 11 Mr. Harding:
The Federal Reserve Board does not have the right to tell
the British government to ship this gold to Spain, any more than
they would have the same right here.
Mr. Musher:
I ~n only suggest that I am quite sure that a Federal
Reserv& B.oard order for $1,250,000 to be transferred from London
to Spain to settle this obligation, would be honored by the British government.
Mr. Harding:
We are not so certain about that.
Another thing, have you
any information that would lead you to think that the British
government is permitting the exportation of any gold to Spain:t
Mr. Musher:
Mr. Harding:
Mr. Musher:
.'
X-778
No sit ..
We ha-:e had other appJ.icatitms from importers who have asked
for permission to ship gold. · ~rhey stand their own charges and
make their own shipments.
Your application asks for $1,250,000
to be delivarAd to you in IJondon.
Do you propose to pay any
charges on t!'le cost of that.
0n what tbeory do you base your
appl:lcatio~1~
I thougJ:d; you seemed to be under s orne misapprehens:i..on that we had gold Jver there tnat we wanted to get back to
this country.
.As a matter of fi:l.ct, we want the gold jlASt where
it :ls and we think more of thi:it gold th:.in we do of gold here.
Would you be wHJ.i:r.g to modify your app,ication for permission
to get gold here and to ship it over yourself!
Yes sir:
I would be wilJ.ing to modify it, it would be a help.
Mr. Harding:.
Now to sum up.
I think we have brought out the fact that
.you IIJl;l.ke ;rour c'ontracts in advance - that is a custom of the trade and that or.d.in<;:.rily you do not bother your'self about exchange and
never had any trouble c:overing, and in 1916 you went ahead based
on your px-evious business.
.Along in December 2916 you f. ound exchange l~ad jUL.lped up suddenJ.y 151.·
You began to get interested
in the exchange situa·tion, made a study of it and studied it hard,
so by ~y or June .191'1 you were very welJ. posted on the general
foreign'e.x:change sit-uaf;ion.
You did not ship gold for two or
three reasons, tr.e principal rec.son being tho.t your credits on this
side were with banks that were not doing an international bank.:i.n~
b!.lsiness and had no p..rticular knowledge of the foreign exchange
situation, and it was on.ly recently that they undetstood it. It
was only in November tha·t; Mr. Ingle got to the point where he was
willing to help you.
His io.ea was that something would turn up
·and you could cover, some normal adjustment of exchange, perhaps.
But as far as current business is concerned now you have changed
it around so that you are not making any contracts ahead.
You
bought your olive oil in Spain, making your arriillgements there to
pay for it, and when it is brought to this country you will charge
the trade (protecting yourself).
If you get relief on this particular proposition which is past, you will take care of yourself
in the future.
Now what we want to know is this: Suppose the
.,.
Xt-7'18
Baard did gr~nt this applicat1.on4.. We ·walit to know bow lDU.ch of a
· precectent that would set .lor. ..a. lot o( appliceltions for $hipments to
Spiiin from other people. all· over the country.
Perhaps theY' will
ea.y, ''we a.re in the s~e fix", -- how much that will amount towe are lltu.~ so much, now you helve done this for Mr. Musher, etc.
All these things have . to be considered.
Jbo. Mu.sher:
I do not believe there is· or will be another case of this
kind, ~cause other ~onoerns were not able to make these arrange•.
menta; even we hwi a ha.rd. time to make the arrqemen't to continue the credits.
llr· Harding:
The BQard i:Lppreci~tes just what its powers are •
There
,
are a great many internationcal questions concerned, - relations
~~ the Board with the Tret\Sury De:r:;artment, State I8partment, War
T~e Bo;;a.rd, etc.
I don •t think we have the same idea of the
powers of the Board in this m:a.tter ~s you ha.ve.
We want to understand about the future.
This pending appli~tion has nothing
to clo with
current business!
Mr. Myeber:
No sir.
I would not feel justified for a minute to come
to ask the B.oard to permit me to export gold to pay for my present purchases.
llr. Birding:
The Presiclent, in his executive order puts this matter subject to the approvu.l of the Secretary of the Treasury •
The
&arci tiLkes these JD;L tters in band. after applica. tion is macle through
the appropriate Federal Beserv~bank •nd the order authoriJes the
B9lU'ci if, in its opinion the exportation i.e compatible with the
public interest. to grant same, otherwise it must refuse it.
That aoes not give the Boara much lee~y. · · It is necessary that
the Bo~rd must be convinced..
We ~;a.ll understand and sympathiSe with
fGu in your liifliculties, but we must a.bi4e by the Pre.si4ent's
oraer in the ma.tter.
I et.m trying to help you on this matter a.ncl
we ~re not here in i:Lf11 unt:tiendlt spirit t:t.t all·
Now we woul~
like to M.ve you talk to the Board and point ou.t just wht it is,
in your opinion, compatible with the public interest that this'
a.ppliCCiLtion of yours for this relief should be granted -- point
out to the Board why it would be compatible with the public in•
ten st.
Mr· tilsher:
as
I WD not so well versed
to be iia.ble to define "compatible
with the public interest". . It. is such a lcu·ge a.na bl'oa.d wori
, and bia-s euch meaning back of it th~:a.t I am not q\it:t.lified to analyze thiot.t one word onl,Y t rom my own angle.
Through our im•
portationa of olive oil ~;a.ncl tbrou.gh .our prices based upon tbe
then 1'10~1 rate of excha.nge '.when the prices were made, tbe
Ameri~n coesumere throughout the co·untry we.-e a.ble to get Pompe,ian oUve oil a.t a. much lower price· thioLn it was selling either
in ~nglu.nd. or in J'ranee, or even i~ I~ly itself. where it was
prociuceci.
They co1.1lc:l bU¥ olive oil ..obet&i.pe.;t" frD$11
JOU t~
uyone else t
x... 77s
- 13 ..
Yes sir.
Mr .. Musher:
Mr. P.arding:
Mr.
You had pr.;..ctice;..lly control of the whole field;
wordst you were the best IDdrket for olive oil!
1~sher:
Mr. Harding!
Yes sir.
They could buy much cheaper from you the;..n
1916!
Mr. Musher:
~nyone
else in
Yes Sir.
Mr. Harding:
You
oil
MR· Musher:
in other
no ~greement with
prices!.
h~ve
~bout
~ny
other importers of olive
No sir, none w~tever.
I h~ve here letters from about
700 olive oil jobbers throughout the country.
They are form
letters but ~re written by e~ch one se~r~tely.
Mr. Harding:.
Just one minute, I overlooked ~sking you why it is th~t
you must get your olive oil from Spain!
Would Italian olive
oil do!
Mr. Musher:
The It~lian govermaent long ~go placed an embdrgo upon it.·
Here I have letters from Anniston, Al~bama, Birmingham, Alabama,
etc., etc.
Mr. Harding:
Just one minute, in 1916 you made these contracts for delivery during 1917 ttt a gu<:Lranteed price!
Mr. Musher:
Yes sir.
Mr. Barding:
You took care of that, although you lost money!
Mr. Musher:.
Yes sir.
We had a profit sharing guarcA.ntee to our customers which ran five cents a gallon.
In January 1916 every
customer received ""' refund check.
We took c... re of our contracts regardless of what happened to us.
Mr. Harding:
You were the cheapest
Mr. Musher:
Yes sir.
Mr.
~rding:
m~rket
for oil!
I! you had figured on all these gymnastics of the exchange
you would he;..ve had to put your price up!
m~rket
Mr. Musher:
Mr.
~rding:
Mr. Musher:
Yes sir.
If you
price up!
h~
anticipated this you would have put your
I would have
~d
to. ·
X-778
- 14 -
Mr. Harding:
You
Mr. Musher:
Only in
price.
Mr. Harding:
Mr. Musher:.
s~y
no one else imported
~
smuller
Did you not run
~
w~y.
~s
much oil as you!
We were the people who fixed the
little risk in ignoring exchange conditions!
Th~t never entered my mind becuuse I had my m~n over here
we spent c1. few nights tc..lking the thing over very carefully
~nd we were sure our prices covered our cost for the ~ll itself.
We entirely ignored the exch~nge situc..tion --c~.nd
Mr. Hcl.rding:
Let me usk you c..nother question.
Do you think the export""tion from this country of $1,250,000 of gold is compatible v1ith the public interest or not!
Mr. Musher:
I s~y that ~')J.,250,000 of gold going to Spc~.in to settle
an honest obligation of commi~ments made before the law under
which the embc~.::.~go wGa.s declared is compatible with public interest.
Mr. Harding:
LeQ.ve tha.t out.
v~~t
effect would
thc~.t
have!
Mr. wlusher:
It would have a good effect to show thc~.t the Americeo.n government is standing by the commitments of its merchants.
Mr. P.tA.rding:
Wha.t do you think of the exportation of $25,000,000 of
gold to Spuin!
Is there any danger of that gold getting into
Ge riJ"Jany!
Mr. Musher:
Never, because the Bank of Spain h~s accounted for every
dollur's worth of gold thc~.t hc..s come into Spc~.in since the outbreak of. the war.
Mr. Harding:
Suppose you go ahead and discuss this question of "compatible wi1;h the public interest", -- the right of the Board
to grc..nt this permit under the embargo order of the President.
I am bringing this out all very clearly so tha. t in cu.se the
BoGa.rd could not grant this application you ·;1ould like to have
this record if you should wish to go higher up.
We have the
order and we have to go by it.
Mr. Musher:
The public interest to my mind would be to do everything
that would benefit the public.
In this pci.rticula.r case it
has a.lre<.~.dy oenefitted the public for they have received the
olive oil ~t this price.
Mr. Harding:
What proportion of the public are jobbers of olive oil!
Mr. Ivlusher:
We sold last year ten million tins of oil.
Mr. Harding:.
I mean what proportion of the public are interested in
olive oil?
- 15 ,.,.
X..778
I think everyone is interested.
example. Every grocery store sells
Mr. Musher:
Th~t
Mr. Harding:
l~rge
Washington as an
quanties of Qil.
gives you some idea of the public interest in olive oil.
It is not quite
Mr. Musher:
T~ke
~s
common
c:~.s
wheat!
It is a food, c~.nd Dr. Frc;;.nklin Il..irtin of the Council of
Defense a.ppointed Mr. Smith Jlio get together G~.~l the
a.bout the medicinb.L V<:~.J.ue of olive oil·
1-Jd..tion<:~.l
dt~.t~
Mr. Harding:
We a.re digressing.
You a.dm.i tted "chat the importG~.tion of
olive oil could continue regt<.rdJ.eaa of the exchange rc:a.te •
It
is not c:a. question of being un~ble to continue the importation
·or oliYe oil·
If your i;;i.pplication is not gri;;l.nted whi;;l.t will
hi;;i.ppen?
Mr. Musher:.
Instead of the CJnsumers, jobbers and retG~.ilers being
:i..t ha.s gotten clown to c:~. point 111here it will fa.ll on
us ~s they have gotten ;a.ll. their benefits.
Our three hundred
employes, we ure the ones to be harmed.
ht~.rtoed
Mr. H:l. rding:
Mr.
Just how serious is it?
It is serious enough to tell you 1 do not know what I
would doa
A loss of ~300,000 with a corporation of$500,000,
~400,000, of which is tied up in plant and equipment, is a very
serious a.ffair.
~bsher:
Mr. Harding:
We gr~nt th~t it is ~ very serious affuir•
From the
standpoint of the public interest how can we reconcile ourselves in gr~nting the application!
Mr. Musher:
Public interests are served best by releasing $1?250,000 of
gold to save $300,000.
If I should not get the export permit
from here or the trG~.nsfer from London I might try. to see what
I can do with the Sp"'"nish bti.l1kS to have this gold earmarked for
them here or in London ~nd to ad va.nce me c:a. credit against it.•
Mr. Harding:
In order to at<.ve freight rates.
of buying Spanish bonds in London!:
Mr. MUsher:
Have you ever thought
You cc:~.n buy them only ut the current rate of
,exchi:i.nge.
Mr. &.rding:
care
Mr. Musher:
Sp~nish
I:t seems to me thc...t if I hi:i.d some Sp.:...nish bonds L would not
the current rate of Sp~nish exch~nge w~s.
wh~t
Oh yes, you would, Governor·
Here is the e""siest thing to
do.
Our Government is borrowing funds every dc:~.y from our own
people paying 41o·
Inste~d of borrowing from our own people
·
the government could ec:a.sily borrow from Spi:i.nish priv~te bi;;i.nkers,
say 200,000,000 peseti:l.S•
Mr .. lhrding:
The trouble
~bout
th-...t is that there is difficulty in
- 16 -
X.-778
opening these credits.
The burden is shifted from one pair of
shoulders to another.
Th~t proposition is something that does
not concern the Boc..rd·
The foreign exchange situation has been
put by executive order in the hQnds of the Secretary of the Treasury and the Board has nothing to do with it except to pass upon
applications for gold exports.
I would like to have you ~iplain
to us how we can reconc·ile the granting of this order.
We all do
realize that you are in a _hard place in the matter.
Mr. Musher:
I S<;J.y thut i t is to the public interest to permit the gold
exportation in this p;1-rticular case: f:i.rst because suppose I had
exported thetc$1,:::50,000 before the embarga:; went into effects
our go"Ternment a.nd. rmr goJ.d would t.~av0 been in the same position
c;~.S today.
I had the right before September, 7th to do it.
It
w~:~.s on.ly tor the f.,..ct that I was tied up with the Baltimore bankers tho.t I did not ship gold before.
Mr. Harding:
I know thC;J.t is :r;urt of the whole story.
How is it thc;~.t we
can t""ke a11 appli(;dtion C":)ming in ninety days after the embargo
goes into eifect and g1ant it?
We are talking sympathetically.
Mr. Musher:.
It is to the public interest to guard the interest of every
individual and every corporation and to guard our interest today would be to grant i;he permit i also thut the gold exported
todQ.y would lea.ve our country in the same position that it would
have been :i.n had L tuken thut g\)ld out before the gold embargo
went into effedt.
Mre Harding:
Mr. Musher:
It would not be right for the Board to show favoritism?:
No sir, certainly not.
exactly the same position.
tha.t s...me positiono
Mr. Harding:
bca.d~y
There is nobody else who is in
I know there is no one else in
On the other hand, is there anybody that would be very
c&.ffected by ------ I .. won vt get into tl1a. t; tl1ough.
Mr. Musher:
I ""m only trying to liquidate a peseta obligation which would
not have any effect on excha.ngas.
Mr. Harding:
You said "" while ago thut Sp....nish banks curried balances in
LondonCould you get your Spanish correspondent8 to establish
balances in New York!
Mr. Musher:
They want deposits in London.
From the cables I haye had
on this subject banks in Sp:;i.in ~ke sterling balances and do not
want to take dollar balc;~.nces.
Mr. Harding:
Well, you can get sterling very easily.
Would your Spanish exporter accept London exchange in payment!
Mr. Musher:.
They would accept ~s payment anything thut I would give
them ut today's rate of.exchange.
I am trying to get the gold
•
- 17 -
X-778
to se:..ve myself whC:~.t I can in the way of exchange.
If the Government should plc:t.ce me in C:l. position where I cJluld get the
6,000,000 pesetas at nortniil rates there would be no reason for
the exportation of gold·
Our imports ought to be the basis for
our exports --Mr. Harding:
I do not Wdnt to interrupt you, but before we get bff of it,
I want to know just what your point is about the public interest!
Mr. Musher:
It is not only possible to help us, but it is helping the
public interest to grt~.nt this permit in this particular case-,
bec;;~.use, by hf}lping us it is helping the public generally •
We
are a pC:!.rt of the public.
Mr. Ha.rding:
You have i;l.lready said tht~.t the importation of olive oil
would continue whether the application is granted or not. It
won't J:IlQ.ke the consumer :i.n this country get olive oil any
cheaper.
The only mi:l.tter is that it affects your company,,
three hundr8d stockholders out of one hundred million people
in the United States.
It is a question whether any special
act or fi:l.vor to one corporation would not hold the Board up to
severe criticism as to favori-tism.
Mr. Musher:
To put us out of business today would hurt others.
Mr. Harding:
This gold emhrgo does not apply only to Spain.
Every
country is affected.
We are not shipping gold anywhere. That
is the gret~.t trouble ;;~.bout this thingt -- jus~ where we get off
in IDi:i.king a special exception in your case.
Mr. Musher:
This is a matter where the commitments were ~de blore
the gold embargo went into effect t~.nd long before the li:l.w was
working.
To put us out of business today would really hurt and
hurt effectively, the jobbers and consumers throughout the entire
country in their olive oil business.
To put us out of commission would hurt the AmBrican public.
Mr. Barding.
!~understood you a moment i:l.go to say th~t you could
still bring in the oil.
Now you say it is life and death.
Do you mean thc.o.t yoU-. would really have to go out of business z·
Mr. Musher:
It all depends on what attitude my bankers would take
Mr. Harding:
Don't you think your bankers will take the attitude that
they are in a way responsible for you getting in this position
by not shipping your gold! . Don't you think they would see
you through!.
Mr. Musher:
I he:a.ve no right to hold them for any responsibility in the
matter.
Mr. Harding:
Oh, I know, it is merely a moral responsibility.
'
.
X.-778
- 18-
Now the Phila.delphi~:~. Na.tio r.u.l Ba.nk hc..s ca.lled upon me to li~
quida.te 3,000,000 peseta.s on ~hrch 7th. We are really fa.cing
dist:l.ster.
Harding:
Just suppose tha.t the worst should happen. Would your business be continued or wound up!
Musher:
I do not know. Th~t is going too far, I could cnly rr~ke
suggestions.
The business is in such a sha.pe now that I might
step out of it.
If I st.ep out of it the business wiJ1 be abolished~
Harding.
1J you had had the knowledge of the foreign exchange busi-·
ness tha.t you now have a few years ago, you would be in t1. very
much better 3ha.pe!
Musher;
Deddedly, yt:Js sir:
But now, no ma.ttor how expert a Il'.dn
is thare is no telli,.,. what will happen wit!. tbis war g.:>ing on. I
think p:r.obci.b.l.y one w~n is a.bout cl.S v.-eJ.l off as a.nother.
Not one
ban.'ker in d. thousc;~.n;i knows the roe.l meaning of foreign excha."lge.
In Eur0pe it is altogether dif:?e.rcnt.
Mr. Musher:
Mr.
Mr.
Mr.
Mr.
Mr. Harding:
I don 1 t see how anybody can guard himself a.guinst present
conditions.
Sura, normal conditions a.re altogether different.
Mr. Musher:
Mr. Harding:
I do not k.>1ow of anything else we Wc;..nt to u.sk you Mr. Mus her,
unless some ot."ler nember of the Board wa.nts to bring out a point.
I h<:~.vo asked you if you h<1d any cnmpBi:.i tors in thEl United States
who impod. .>J.Lre o;..l to sell_, <ind you s"'l.it~.. ted tht.~.t you were the
l<:~.rgest. importer and t,he others used it almost t.~.s incidentc~.ls.
Are there <:~.ny other impor·ters who sell to jobbers'!:
Mr. Musher:
There dre, on a sma.ll scale.
Mr. Harding:
Now there
Mr. Mus her:
None ..
Mr. H:a.rciing:
W<:~.s
Mr. Musher:
Yes, considering quality.
Mr. Harding:
W<:~.s
w~:~.sonly
one price.
There
Wt.~.s
~re
c..ny number.
there d.rly combinution!
yours the lowest!
there much
Vd.rit.~.tion
in price, others
considert.~.bly
higher!
Mr. Musher:
There was not very much variation in price; soms did sell
considera.bly highor a.l though hardly anyone sold any lower.
Mr. Harding:
You do not know whether or not they have been in the habit
of selling higher, O" ,..hether they· were afraid of the exchange
situation!
Mr. Musher:
Not necessarily th<:~.t.
They ~ere buying from merchants
abroad in a small w<:~.y.
They did not IDd.ke any contracts~as far
d.S I know, in 1916 for 1917 delivery.
x...778
Mr. Harding:
Mr. Musher:
Your company is the only comp~ny which has lost because
of this exchange prendum on imports?
I believe we are the QhlY concern of its kind.
Mr. Harding:
Mr. Uusher:
The others sold from
went along?
t~nd
to mouth and covered as they
Yes sir 1 that is correct.
Mr. Harding:
Do you know what the Crown Cork people did? We heard
from them for a while and then they suddenly stopped.
Mr. Mlsher:
They d~.d n.ot cover. They h;J.Ve a going business.
shipped g·:>ld a.s long as they conldo
Mr. Harding-:
Mr. :V.usher:
They
How a.n.t·h of a permit vri.lJ. they ask us for?
ThAy have no g:rm.md.s to ask for permits for past perfonm.nceso
Mr. Harding:
If we gx·ant this appl:i..c:::.tion there will be no comeback on it?
Mr. Musher:
No sir.
Mr. Harding:
Mr.
Mlsher:
Mr.
~rding:
Yoll did not ship gold because you were tied up with a. lot
of bankers who d1d nc·t undel·stand the situation?
We
h~d
credit arrangements over there.
You could at one tirrs have covered it at less than.half
the loss now confronting you?
Mr. Musher:
Yes sir. Ollly the IW.rket was so delicate that the minute
I stepped out and bought a m.i.J.liC'In peset.as the rate would go up
on me. I could not have covered my exchange at the begi~ming of the
year in this way. My oil started to con:e in and did not all
come in until about the first of .rune 1917. ! had to use it as
collateral to borrow freely or sell it in order to have money to
buy exchange. So in February and March after exchange welt down
l ... could not buy any exchange at this t:i.me because I did not have
any money to buy it with ncr any t,a.nk to bu.y it for me. I have to
buy a whole year's supply of olive oil in three months. vVhen I bring
the oil here I put it in glass lined tanks
Mr. Harding:
Mr.
~sher:
We have been over all that. You have studied the whole exchange situation. Have you gone back over a period of 30 years?
Is there any seasonal fluctuation!
No sir. The normal fluctuation is so small no one ever
paid any attention to it.
X-778
20-
Mr. Harding:
>
'
•
As far ~s sterling exchange is concerned there is a
in it when large shipments of cotton are going east.
What are the fluctuations in Spain?
dro~
Mr • Mus he r:
It has never
v~ried
more beyond the gold
shi~~ing ~oint.
Mr. Harding:
You said a few rrdnutas ago that you brought in 800.,000
g~lons of olive oil, the value of which in Spain was $1,250,000.
Tha tot~ value of our imports of olive oil according to figures
compiled by the Department of Co~rce is
You say
you are the largest exclusive jobber?
Mr. JAlsher:
Yes, we are the largest importer of olive oil. The Guaranty
Trust Comp.:..ny of New York in 1917,. February, -Mr. May at that
time was the manager - tried to get a credit from llbe Banca
Hispano for 2.,000,000 pesetas to carry us over for a year and
they replied "No., we will not extend you a credit".
Mr. Harding:
What did Mr. May advise you to do when you first went to
see him?
Mr. Musher:
They never offered me any advie&.
Mr. Harding:
Did not you see Mr. ~y a year ago when this thing first
got bad, to talk. with him? Do you know him well enough to
have him advise you?
Mr. :V.Usher:
I have known him for a few years.
Mr. &rding:
I thought you knew him
Mr. JAlsher:
:t.!r:
I opened 90 day credits.
~retty
well now.
I only know him through his connection with the Guaranty
Trust Compa.ny.
W::!.ftcrg:
That telegram that you have there - what interest do you
· ·
get in London on the 250,000 pounds and what interest do they
ch<l.rge you?
Mr • .V.Usher:
This was rrade on an ar;rangerr.ent whe·reby the a.nk in Spain
sells 5,000.,000 pesetas. They get 2501 000 ~ounds sterling, and
keep the sterling invested in London and are prepared to returnto us
when we return the pesetas to them. In other words, it is a buying and selling
operil.tion, which I am sure some other merchant would avail himself of.
lilr, lbrding:
Mr. Musher:
In.order to do that you bought exchange on London?
ln effect it means that we give them 50i1 000 pound. sterling
ani for it
they give us ~ udllion ~esetas.
X-778
- 21-
Mr. Harding:
Do ycru cover that right away?
Mr. Musher:
We could not give thern sterl~.ng Unless I had sterling
balances.
Mr. &rding:
Do you cover that exchange?
Mr. MAsher:
I have to pay with sterling.
Mr. Warbu;rg:
Anybody having money in the United States before the
embargo,; -aent into effect could ship gold.
Mr. Musher:
Yes si:r.
Mr. W<.~.rb-org:
So if you had had your money you could have shipped the
gold?
Mr. Musher:
Our money was tied up.
X-778
-22r
Mr•. Harding;
M~r. Musher explained that he was not in a position
to ship' gold until the first of December.
The whole
thing is as to whether or nor tlble shipment in question is
compatible with the public interest.
(Mr. Warburg then made a feVT remarks as to fluctuat:ilons in
exchange, winding u.p by saying thA-t "anybody who v.rould say
that Spanish exchange is regulated like English exchange is
mistaken. ' 1 )
M r.Musher:
bough~
Mr. Harding:
I never before speculated in exchange. First we
a great deai before this war from Italy.
You did not always take the precaution to cover!
Mr. Musher:
We never took a chance of any kind on covering.
always paid for our oil with sight exchange.
We
Mr. Harding:
I underst~nd you never took a chance you were not
obliged to take!
.- ..
Mr. Musher:
Our business has been built up by supplying the
American consumer with the best olive oil to be had for
the least money.
Mr. liarding:
Did you ever buy any olive oil in Italy!
Mr. Musher:
Yes sir, we have a place in Italy.
Mr. Miller:
Why didn't you cover vrhen exchange was going against
you in 191 '1!
Mr. Musher:
I could not at t mt time because I would have had a
loss of 15fc.
Mr. Miller:
You mean you could not have covered profitably!
Vihy didn't you take a loss!
Mr. Musher:
First because it looked as though the American
dollar had to come back to its value.
Mr. Miller:
Then you 'll'Tere waiting for the American dollar to come
back to its face value!
Mr. Musher:
There is alwa)s a speculation when you buy commodities.
'
On that proposition, others did not think it was
their duty to delay. They went ahead and covered. Your
difficulty at that point would appear to arise from the fact
that your credit facilitie.s were so good in Spain that you
did not need to be impatient about covering!
Mr. Miller:
.
• "1'-
x,-778
-23Mr. Musher:
Not our credit facilities exactly. The banks in
Spain extending us facilities did so because v1e .viere
there; th<:tt other houses were not established there.
I.
Mr. Harding:
I would like to ask you one more question here,
and you need not answer if you do not want to.. At any
rate, it can be stricken from the record i f you wish.
I v1ould like to know, say 8. y9ar ago, just what the financial position of. your company vms. What vias the capital stock!
Mr. Musher:
$500,'JOO prefered stock represented by actual assets, and
$l,OC0,000:. cormnon stock represented by good vlill which actually
cost one rnill::i.on dollars to aei:abl:l.!:'lh in development work.
Mr. Harding :
How much surplus and profits!
Mr. Musher:
None.
We used up ev.ery dollar.
Mr. Harding:
Do you remember what, approximately, was your position as to assets in the shape of accounts receiv~ble,
and cash in bank, resources, etc.
·
Mr. Musher:
We always carried a large plant equipment of about
from $350$000 to $375 1 000.
Mr. Harding:
Mr. Musher:
How much accounts receivable!
The rest of it was altogether in accounts receivable,
and oil on hand.
Mr • Harding:
How much?
Mr. Musher:
The difference between our assets and liabilities.
Mr. Harding:
~ere
You had, then working capital of·about
doing a business of about Cl,250,000!
~225,000
and
Mr •• Mus her:
Cur business for 1916 was $1,900,000.
Mr. Harding:
You are doing a business of about 5 times your capital!
Mr. Musher:
We were selling goods to our customers on sight draft.
We elimina-pe entirely accounts receivable and our losses
have been less than 1/100 of one percent.
Mr. Harding:
What I want to bring out is you are doing a business
annually of about 5 times your liquid capital!
Mr. Musber:
Yes sir.
We also have a $200,000 bonded indebtedness
which of course gives us more working capital.
x-778
-24-
Mr. Hamlin:
How many jobbers do you sell to!
Mr. Musher:
We have about 2400 accounts.
Mr. Hamlin:
Vlere your sales all uncondition':ll!
Was there no
estim<tte as to payment c.if prices! Was there any stipulation
that ir~ the event of any exch&nge trouble they sho"..l.ld pay
you a.nythir.g wore?
No sir.
Mr. Musher;
They were absolutely fixed f)eles.
MI'. Hamlin:
A<3 a rnv:~te~~ of: fact, did not the jobbers put up their
prices ver-y moteria lly in 1917!
Mr. Musher:
(Ai; req,l~l:if. r:>f Mr.> Milsher his ansv.ter to t.b~.e. qurtetion
is ·':: cnt~J.c:~~d H1 his J e·tt.er to Mr, :Jelan.o e.tia0hed
here'i.;c R~'lli rr.ade a part of the rec,ot·d a.s e~hibi·li l. ..
N:>v; we have +. o t.::>ke all of our prices off the tins and
rearre.nge the wtwle thing.
Jr. Hamlin:
oil?
Did net the retailers in food increase prices for olive
· Wh'lt i:.ime in 1917 was the price rn.isedZ
Olive
Rei;qilers were !l.ot permit·t:xt t.o raise prices on Pompeian
o:n, ·tne pr.i.ces c,n t-he t:J.na regulated that.
Mr. Musher:
.' ~
Mr. Harding:
Mr. Musher:
Are there any substitutes for Spanish oli-.re O:'il?
That is the o.11y oil todo.y4
·~he laqrest quantity.
Sp<1in and Italy both
produ~e
llr. Harding:·
Mr. Mus her :·
Suppose oli-.·e oil could not be obtained at all s.nd a
man vm.nted something to put on his greeus, whe.t would he do!
Ther~
are no sub::;titutes f
Of'
it as far as ed:'.tle ·oils are
c one e:~.·ned •
Mr. Harding:
What imitations!
Mr. Musher:
Cotton .seen oil, peanut· cil, sunflower oil, etc.
There are .mar..y j.rrd.tations but no subst.itutes.
Mr. Hamlin:
Did :the consumers of the· country, tr..r·otl.gh the ret':liler-s get the benef-it of lowsr p:<'ices in 1917?
Mr. Musher:
I -wo·ud r_bs safe in sayir1g tha:t, 9Sfo cf the c onsUiner:;J
got the· ben,afi{ of our old· priee J b:acause we made that
our business.
Mr. Hamlin:
How about your
compet~tors!
x-778
Mr. Musher:
They handle different brands. ConsUmers paid them
a much higher price in 1917 than in 1916. (See Exhibit l)
Mr. Harding:
Mr~ Musher, is there anything else that you want to
brfttg ~tit!
Mr. Mus her:
No sir, thank you. I want to thank you for your
courtesy and kindness in gran•~Jing me this polite hearing.
Mr. Harding:
Vie will let you know next week of our action in the
matter :~f vre C8.nv
('I'he hearing then adjout•ned 11 at 1:30 P. M.
At the request of Mr, iiii'lSher his letter addressed to
Goverr1or Harding on Iv!a:r-ch o, 1918 is attached here·i;o and
made A part of this rec;orJ. as Exhibit 2.
Atiac~.ed al3o nnd made a part. of this record as Exhibits J, 4 and 5 '1.:--e ~ Mr: ~ Muf' her~s letter ace ompanying
his original appl:L~<J.t~t()n dated Hovember 28, 1£117, his
supplemerr1ial let-cer of Dec.ember 22, 191'7 and his letter
of February Z7, 1918.
X.-778
.Q_OPY
MUSHER AND COMPANY
WASHINGTON.
Jllarch 5 1 1918.
Hon. Freder~.c A. Delano.,
Federal Eeserve Boarc. 1
Washington., D. C,
My dear Mr •. Lelano:
Perro~.t me to reply to your& of Mlrch 4th., Which is going to be
sorr.ewhat lengthy, but the shc,rt.e:Jt I can possibly rr.ake it.
l.
The averege wholesale price as given in the statistics for the
years 1916-191'/ are very hard to ana1yza. There are so rra.ny different
qu.ali ties of oliv;; oil that to take an average price would r.ot be fai:r for
the reason that t~:erfJ are largew quantities of cheaper oil soJd, and in
tha.t way the average price wcw.d not be a fair re_flresentation of the cost
of high qualHy g:.l?ds.
~here are jv.st as Ir.any different qualities of olive oils as
there are diffel'ent qualities of grapes., al)Ples., etc.
The figures as submitted by you .. however, would be a fair average of the cost for ordinary grades of olive oil imported and sold for
consumption amongst foreigners coming fx-om Mediter·ranean countries where
the price is more essential than the oil quality., for the rea$D that they
are all accustorred to the use of low quality olive oil and because there
are no . j9b'bers.' a.nd retailers' profits to consider. Most of the olive
oil is retailed by t~aders who act in the capacity of importers., jobbers
and retailers.
We ouFselves sold about 150,000 gallons of our second
quality
ROMANZA BLEND olive oil to the Italian trade at an average price of $1.60
per gallon. These goods were delivered through the year 191'1 to fulfill
contracts xrade by us in the sumr.er of 1916.
Our POMPEIAN BRAND olive on was soJ.d in the su.rr.mer of 1916 for
delivery in 1917 1 at a net price ~o tbc jobber of $2.15 per gallon,frpf~lY
prepaid, to any city in the United States. A::i.l these. deliveries were rrad~ >/
regardless of the rr.arket advance as shown by the labor etatis+.ics that the
price of
olive oil had risen from $1.60 in January 1917, to $3.26 in
December 1917.
2.
Eighty per cent of our total sales for the year 1917 were against
contracts rr.ade in 19].6 !or 1917 de1ivery. We advanced. our price somewhat
for goods s.old over and above contract., but even then. we had a rrul tiplicity
.of complications to contend with., the most important one being that our tins
were all printed with prices thereon. Our half-pints were decorated with
the words "Twenty-five· Cents". Our pints were. de.c.orated with the words
"Fifty Cents 11 1 our quarts with the words ••One Dollar".
EXHIBIT 1.
X-7'78
... 2 -
These prices ware intended to be the naxim.un that the consumer woufd pay
for these various sizes~ an~ the jobbers 1 and retailers' profits had to
coma between our prices and the retailers' selling
_ price 1 so that
with a few months! supply of tins on hand, as we always carry~ and ano~her
few months of decorated tin ready for manufacture into cans~ it was ~
possible for us to make any real advance in our price. Then the very next
reason for not advanr.ing our price was that so many jobbe~s having c0ntracted for a supply of olive oil to be delivered through the yeGJ.r 1917~
it was useless to name an advanced price and have the j ob"bers pay the !lew
price and try to sell the olive oil in competition with the jobbers who
had contracts and were able to supply the trade at the old list pr-1ces1
furthermore we considered it a duty not to distu::-b the trade by n:ald.ng a.ny
strong advances because the jobbers who had contracts with ua would have
advanced their prices to the retailer and the retailer would in turn ha.ve
to advance his prices to the consumer above the price named on the tins •.
In other words we were strug~1ing with the situation as best we
knew how to save the cabbage. and feed the goat at th& same time.
Our
prices to the jobber, the jobber's pr·~.ce to the retailer, and the retailer's price to the consumer has peen standard.ized by us., together with the
quality of our goods~ so that it was :i.mpossible to have made any move that
would have better·eo.. our con.O.it:ton., and there was nothing left for us to
do but endeavor to·.bri.ng about a saving by bring:i..r!g the dollar back to its
gold par value, or by arranging with the foreign l>anks to carry us until
the parity of the American dollar was reestablished.
The average cost for olive oil in the years 1916-1917 was only
about lo% higher than the average cost for olive oil in the years 1915-16.
I am referring only to the production months of 1915-16 and the production
months of 1916-17 1 - that o:f course does not take into consideration the
rise in exchange, and is only the basis of cost in Spanish pesetas.
Until our peseta obligations are entirely liquidated, our cost
and balance sheet for the year 1917 is in suspense, and it is therefore
that we so earnestly await the decision of the Federal Reserve Board in
the gold export natter.
Very truly yoursJ
(Signed)
MUSHER and COMPANY.
N. MOSHER
NM/qo
President ..
x-778
EXHIBIT lS,
COPY
ltarch 4, 1918.
Mr. Nathan UUsher,
Presiient, Pompeian Oil Company,
R~al Estate Trust Building,
Washington, D. C.
My dear Sir:
Here are some statistics which we have recently ~thered togeth~
have you got to say in relation to the fi~res quotedl. Also what ~ro
portion of mil sold by you in the ye~r 1917 was contract ~rice, and what
proportion were ·you free to u.xra ~ higher ~rice? ~n you give us the ~rice
of oil in Spain during the years 1916 and 1917?
.~hat
Very truly yours,
(Signed)
F. A. DELANO.
SPANISH OLIVE Qlk.
AVERAGE RETAIL P(t CE.
AVERAGE WHOLESALE PRICE.
ill..§.
ill1.
ill.§.
Jan. $1.55
$1.60
Feb.
1.55
1.64
Ml.r.
1.55
1.86
Apr.
1.55
1.98
May.
1.55
2.13
June
1 .. 55
2.25
July 1.55
2.38
Aug.
1.55
2.68
Se.pt. 1.55
2.68
Oct.
1.55
2.92
Nov. 1.56
3.05
Dec. · 1-20
3.i§
$18.66 $28.43
$3.30
O'Donnell's Drug Store.
Increase.
1916 - $2.76 Gallon
1917- 3.16
"
14.4%
Now - 3.92
"
42% over
1916
Cornwell's Grocery Store.
1916 - $3.00 Gallon Increase.
1916 - 3.50
n
'
1916
1917 - 4.50
II
28%
Now .... 5.00
"
66%
(Bureau of Labor Statistics)
Average increase 1917 over 1916 -
53%
Average increase 1918 over 1916 -
112%
Ml.rch 4, 1.918.
MUSHER and COMPANY
Real Estate Trust Bldg.
Vlashingtcn, D. C.
Exhibit 2.
March 5th, 1918.
Honorable
W. P. G. Harding, Governor,
Federal Reserve Beard,
Washington, D. C.
Dear Sir:
May I not be permitted to attach hereto, a letter
from Mr. Willinm Ingle, President of the Baltimore Trust
Company, which I would li:k!e to have as part of the record
in the hearing granted me.
I also want to state th~t in reply to the question
put to me by Honorable Paul M. VJ~rburg as to whether or not
I would h~ve brought to the United Stqtes Treqsury the difference in exchange if the exchange would have been in our
favor, I did not offer the proper explqnation, which should
have been as follows:
First, that every collar earned by an American
should be looked upon as anotherdollar added to the wealth
of the United States, and seconct, that every dollar earned
by an American pays an income tax direct into the United
States Treasury.
May I not' also ask that our letter of March 5th,
addressed to Honorable Frederic A. Delano, of the Federal
Reserve Board, also be made part of the record in our hearing.
In conclusion may I also state that England has
adopted the policy of carefully safeguarding invested capital
and in some cases the Government has actually paid losses to
private firms or corporations where such losses were sustained
by unforseen war conditions.
Quotinr Honorable Basil P.
Blackett, Financial Advisor to the British Embassy, from his
memorandum submitted to the Federal Reserve Bank of New York,
"The Voluntary Capit:J.l Issues Committee of England rules are
that permission to issue securities is always granted where
if to refuse permission would involve the complete loss of
capit~l already expended, or at any rate would involve a very
heavy loss of previously expended capit~l."
Respectfully submitted,
MUS HER and COMPANY.
President.
'
.
THE BALTIMORE TRUST COMPANY
BALTIMORE, MD.
Exhibit 2a
March l, 1918.
Mr. Nathan Mushet~ President,
Musher & Co., inc.-formerly
The Pompeian Compant,
Baltimore; Mtl.
My d.eat Sir:
*
This is to advise whom it may concern that in the
months beginning with and followinr February, 1917, through the
instrumentality of this Company, there was opened for account of t.he
Pompeian Company to be available in Spain for the purchase and
exportation to this country· of olive oil, credits aggregating a
total of somethinr over 6,000,000 Spanish pe~etas.
Conditions
under which the credits were opened required that before honoring
drafts drawn against them, ocean documents evid~ncing shipments of
···the·~oil6·should accompany drafts respectively drawn: in the premises.
Such drafts in due course, were drawn, presented and honored by
the Pompeian Company.
I very much hope that your efforts· t~. obtain such
satisfactory settlement of your exchange account as would seem to be
due one who in such a large way has imported a valuable foodstuff
into this country, will meet with the success which they merit.
Yours very truly,
President.
WI-ETH
'
..
X-779
'
.....
.;
Baltimore, Maryland.
Exhibit 3.,
November 28th, 1919.
To the Honorable, the ·f.lem\1eTs: of
The Federal Reserve Board,
Washington, D. C.
Gentlemen:
We, THE POMPEIAN
m~ny
co~~ANY,
I
respectfully represent that for
years we have been extensively engaged in the
import~tion
of olive
oil, and its sale to the American jobber and retailer; and through the
jobber and retailer to the American consumer.
In the ordinary course of business it was necessary to anticipate our
customers• requirements several months in advance; and it has been our
custom for the past eight years to solicit contracts during the summer
for delivery of olive oil during the following calendar year.
This plan
was adopted because, in order to obtain olive oil of the highest quality
at a fair price, it is necessary that it be purchased and exported from
the
pri~ry
markets of production within the three harvesting months.
In pursuance of this necessary business custom, in the summer of
1916 we accepted contracts from hundreds of American jobbers for the
delivery of several hundred thousand rallons of olive oil during the
calendar year 1917.
The contract price of the olive oil to the jobbers
was based upon the then existing basis of exchange·-19.3 cents for each
Spanish peseta •.
These contracts enabled the jobbers to sell to retailers,,and the
retailers re-sell to ultimate consumers, at the price
b~sed
upon the
normal rate of exchange.
The olive oil, to be delivered under these contracts, was purchased
(.
.~··
'
.
x-779
Exhibit 3.
-2in Spain during the latter part of 1916, and arrived in the United States in
the early part of 1917.
Through unforeseen conditions, the American dollar commenced to depreciate
to the extent of fifteen to twenty per cent (the peseta having risen to about
22 cents), and in order to protect ourselves against an enormous loss in
exchange, aggregating about $150;000.00, i t was necessary to arrange through
bankers letters of credit to defer payment for the olive oil imported until
such time as we had r·eason to believe that the American dollar would again
e ommand its full value.
These obligations in Spain, to cover the importa-
tions of olive oil, aggregate six min;.on (6,000,000) pesetas.
As is well known to the Board: sometime in September, 1917, the American
Government placed an absolute embargo on the exportation of gold from this
country, and owing to this emtargo the rate of exchange since then has· further
depreciated the value of the American dollar. until today it is at a discount
in Spain of about thirty per cent-·the peseta having risen to about twenty
three and one-half cents.
Had we supposed that an embargo would be placed on the exportation of
gold, we would have immediately exported to Spain from the
United States a
sufficient amount of gold to liquidate our peseta indebtedness, rather than
have allowed the gold to accumulate here.
Since the contracts for the delivery of this oil to the American jobbers,
and the purchase of this olive oil in Spain with v1hich to make deliveries under
such contracts, were made prior to the date of the gold embargo; we petition
your Honorable Board to protect us from an exchange loss approximating
$200,000.00 by issuing a permit to transfer from the gold ear-marked in
London for the Federal Reserve Bank, Richmond,
Virgin~a,
the sum of
$1,250 1 000.00 to the Bank of Spain (London branch), with permission to the
Bank of Spain to export the gold to its main bank in Madrid,
Spain~
·'
'
x-779
Exhibit 3.
-3-
We will deposit with the Federal Reserve I3artk, Richmond, Virginia,
through the Baltimore Trust Company, the sum of $1,250,000.00 to cover the
above named transfer.
Your Honorable Board will ·see from the Slb'ove statements that the
actualhy
American jobber, retailer and consume!/received the benefit of the low price
for this olive oil, based'upon
no~al
exchange rates that existed in the
summer of 1916; and that we have faithfully lived up to the letter of our
contracts by delivering every gallon of olive oil at the price made in the
summer of 1916.
In view of the fact that the American public--the consumers of the
several thous9.nd gallons of olive oil--benefited from the co .:.tracts made
in the summer of 1916--before the violent abnormal exchange depreciation
of the American dollar--we believe your Honorable Board will, as a simple
act of justice, permit
tb~
transfer of
~1,250,000.00
in gold to liquidate
a legitimRte obligation, made at a time before the gold embargo became effective.
Respectfully submitted,
THE POMPE!AN COMPANY
By
N, Musher
Presfarn:lt. "':.
·'
.
x-779
CONTINENTAL TRUST COMPANY
WASHINGTON 1 D. C.
Exhibit 3a.
30th
November~
IN RE PERMIT TRANSFER OF GOLD LONDON TO
1917.
Sf_,g~
Hon. Federal Reserve Board,
Washington, D. C.
Gentlemen:We have carefully read the petition of Pompeian
Company, of date 28th November, asking perm:l.t of you for
transfer of $1, 250,00C.OO of gold f rom London to Spain, to
liquidate obligations amoun·hng to 6, 000,000 pesetas, in
payment of olive oil imported during the early months of
present year.
The Pcm:peian Company are valued clients of Ol.lrs
and we know the statements· contained in thdir requsst of
28th instant to 'be correct, a11d we earnestly ask that their
petition be gran·~ed.
With great respect; we beg to remain,
Very truly yours,
(Signed)
C. W. WARDEN
Vice President.
x-779
THE COMMERCIAL NATIONAL BANK
WASHINGTON, D. C.
.illovember 30th, 1917.
Exhibit 3b.
To the Honorable, the Members·of
The Federal Reserve Board,
Washington, D. C.
Gentlemen:-
The Pompeian Company have shown us their letter of
N~vember
28th, addressed to you, relative to export permit for
gold to cover six million pesetas obligation in payment for
olive oil imported by them.
We have read the letter over carefully and are thoroughly
conversant with the
situation~
and beg to request th"lt your
Hbnorable Board will give this the very best consideration.
It is our hope that you will see the justice of their position
and allow the
permi·~.
The matter is so thoroughly covered in the letter of the
Pompeian Company that v1e think it needless to add mbre.
We beg,to assure you that the Company needs this assistance and,
in our opinion, is entitled to it.
Very truly yours,
(Signed)
T. K. SANDS
Vice-President.
'
. .; '
x-779
THE POMPEIAN CCMPANY
BAL'l'IMORE, U. S. A.
December 22d, 1917o
Exhibit 4.
To the Honorable
The Members of the Federal Reserve Board,
Washington, D. C •
Gentlemen:
Referring ·to our recent application for the
immediate exportation to Spain of Cl,250,000o00 of gold to
cover our obligation of 6,000,000 pesetas (due for the
purchase of olive oil imported to the United States in
the early part of 1917); we desire to amend the application
as follows:
Instead of granting permission for the immediate
exportation of the gold, as above indicated, we respectfully
petition your Honorable Board to agree to the exportation
on July lst, 1918, if, in the :meantime, we are unable to
I.
obtain foreign exchange to liquidate our indebtedness at
approximately the normal rate.
Your ruling, at an early date, on this supplemental
petition, will be greatly appreciated.
Respectfully submitted:
THE POMPEI AN COMPANY,
By
N. Musher,
President.
X-779
)lTTSHER and COMPANY
WASHHJGTON, D. C.
Febru~ry
Exhibit 5.
27th, 1918.
Honorable W. P. G. Harding, Governor,
The Federal Reserve Board,
Washington, D. C.
Dear Sir;
I have your letter of February 26th,
and th~nk you for the statement that your
Honorable Board wi.ll gr<tnt me the opportuni t.y
at a hearing, to make an oral argument regarding
the a.pplic'ltion of The Pompeian CompFmy for the
Exportation of $1,250 1 000 in gold to Spain.
The letter of November 28th, 1917, addressed
by The Pompeian Company to your Honorable Board,
sets out the facts upon VJhich the applic~tion is
based.
It is for the purpose of explaining those
facts that I respectfully ask for ~ heari~g, at
a time convenient to the members of your Board.
Yours very truly,
N.. Musher,
Presiden·t ..
X-779
c0
p
y
Philadelphia 1 Pa.
Y.arch 2 1 1918.
Dear Governor Harding:
In
accord~nce
with your request at the closing session of our
conference yesterday 1 I take :pleasure in submitting an outl5.ne of the :plan
of
org~nization
we have perfected in the New York District for the sale of
certificates and the greater consolidation of banLtng resources into the
Federal Reserve Bank.
While the organization was planned prirrarily to sell certificates
it seemed to us that we should not lose the opportunity of developing it
SQong lines which would permit of its cooperating with us effectively along
the following lines also:
l.
The sorting out of gold .::..nd gold certificates by every
bank in the district .::..nd thej.r shipment to us for credit
or for exchange into :Federal Reserve N(;Jtes.
2.
The securing of a.large proportion of the desirable State
banking institutions as members of the F~der~l Reserve System.
3.
The completimn of our par list. {althqugh we are collecting
on every b~nk in the district 1 76 banks are not remitting at
par) but are being collected through Express Companies or
Special Agencies .. )
4.
The education of every bank concerning the necessity of
conserving credit.
5.
The education of banks and their customers to reduce their
requirenents for new currency.
We felt
th~t
while we might be able to sell certificates satis-
factorily by sending out salesmen we could not
~ffect
thase other important
X-779
- 2 things through traveling
from local sources.
s~lasman;
they requiredsteady persistent effort
We, therefore, deterrrJ.ned to establish a series of
agoncies throughout the district, the agents being bankers, to work
steadily for the ends above described.
Our plan was to have every bank
in the district attached to one of these agencies so that our effort
should be ll!lOt
n~erely
comprehensive but complete.
We were confronted,
in the selection of our agents_, with the possibility that we lliight
' create jealousies by our selections.
For this reason and also to ob-
tain their influence, we asked the State Bankers 1 Associations within
our district to cooperate with us in this work anci select the agents to
act in the capacity of corr.mittees appointed by the Bankers 1 Association
in its plan of cooperation with the
Governrr~nt
Bank for these important national purposes.
and the Federal Reserve
The result is that we have
about seventy bankers in the district, at appropriate geographical intervals,acting as corr.mitteemen of the State Bankers 1 Association and as
agents £or us in accomplishing the work above outlined.
Each of these
bankers has from ten to twenty-five banks in his irrmediate vicinity
which he is charged with the duty of educating-along the lines of the
campaign.
It is understood that the work is to be done not by letter
writing but by personal interviews and by keeping in touch o'l!er the telephone.
Each of the seventy bankers advises us from day to day, or week
to week, of the attitude of each of his banks in respect to each of the
items in our prograrnrr.e, and we record his reports in our card index of
the banking institutions of the district.
We felt that i t was important to get thase seventy bankers
tho-roughly educated to the in.portance of the work 1 to the lines upon
Nhich it should ba handled} and. to the necessity for great discration
X-779
and tact in carrying it out 1 before turning tham loose on the district.
Governor Treman 1 therefore, wrote a letter to the President of the
Association outlining fully the programme and the method of approaching
~he
subject, the substance of which he in turn communicated to his
committeemen, and we then had all the committeemen come to New York and
spend an entire day with us going over every phase of the subject. This
latter step we consider of vital
iro~ortance,
as we
succeeded not only
in explaining the work thoro'..lghly to them but in impressing each of them
that in serving in this capacity he was acting as an agent of the government in a war activity of vital iroportapce.
among the
co~tteemen,
result of this day 1 s
We
A degree of
e~thusiasm
far beyond our espectations, developed as a
work~
or~ginally
planned to get in an outside banker to handle
the work from our end 1 but for the peersent this has not seerwd necessary and Deputy Governors Treman and Case are looking after New York,
and
N~N
Jersey respectively.
As New Jersey is a divided State the
Philadelphia Reserve Bank joined with us in
there.
or~nizing
the campaign
It is understood that the Federal Reserve Bank pays the out-of-
pocket expenses of the committeemen in their work.
The result of the campaign, although just inaugurated 1 has
already been to more than double the number of purchasers of certificates
and to change the attitude of a considerable number of the 76 banks who
were
compellin~~s
to collect on them by express.
The leaders of these
insurgents spent a day at the bank this Neek and determined to send out
a circular to their associates
ur~ing
them to remit at par for the peri94.
of the war as an evidence of their willingness to cooperate fully with
the governnent during this period of national effort.
This is a most
x-779
- 4 gratifying result to us.
We have not yet presented a
prog~e
to our
committeemen suggesting the lines on which they should recommend conservation of bank
credit~
Board on the subject.
awaiting a staterrent from the Federal Reserve
As soon as such statement is received it will be
placed in the hands of our coumitteemen for discussion with their banks.
I am enclosing copy of Governor Treuan•s letter to the President
of the
N0w
York State Bankers' Association outlining the progran:n::e.
In conclusion I may say that we all feel enthusiastic over the
possibility of this intensive and permanent organization of our district 1
not only for the work
~diately
at hand but for the future relations
between the Federal Reserve Bank and all the
in the District.
To have sorre
se~enty
banks~
member and non-nember 1
centres of understanding of the
Federal Reserve system and of personal influence .upon which we can call)
when needed~ is a roost valuable adjunct to a Federal Reserve Bank Organization.
Very truly yours)
(Signed)
3/7/18
PIERRE JAY.
X.... 779.,.t
CONFIDENTIAL
John H. Gregory, Esq.
President, Central Bank,
Rochester, N. Y.
De~r
Mr. Gregory:
The growing extent
~nd
importance of the national financing together
with the experience of the last :six months in connection therewith have convinced
the officers of this bank that the time has arrived when we must develop a more
intensive and effective org<tnization of the bRnks, both member and nonmember,
in this district in order that we may be in a position to render the servrices
required of us both for the national Government and for our own members.
We recognize of course thqt the responsibility for the success of the
work of such an organization will rest primarily upon this bank but
appreci~te
that the New York State Bankers Association, if it will c ooper<tte v1ith this bank
in such organization, can be of very great value and assistance, and we are
writing to you as president of the state Association to ask whether the associntion will thus cooperate with this bank and in addition, VJhether ycu personally
can arrange to give a large portion of your time in the immediate future to this
work.
The scope of the work at present contemplated, only part of which
h~rever
need to be undertaken at once, is as
follows~
l.
To enlarge and broaden the market for the Government 1 s
short time certific"l.tes of indebtedness in vrhich every
bank in the district should participate.
·
2.
To insure the sorting of all gold and gold certificates
and their shipment to the Federal reserve bank for
credit or for exchange for Federal reserve notes.
3..
To educate the banks to reduce ;their requirements i'o:r
new currency, which puts unnecessary burdens on the
Bureau of Engraving and Prin;ting~
4.
To educqte the banks how to conserve credit.
x-779
2/1/18.
John H. Gregory, Esq.
5.
To bring desirable State banking institutions ihto membership in the Feder9.l Reserve System.
6.
To persuade the 76 bank3 in the diJtrict which are not
nov' remitting at par that it is their duty to do so
The particular work to be done at the present time is along educational lines, much of Yrhich will require the exercise of great delicacy, every man
in the organization in f cCt must be thoroughly convinced of the dangers which
0
might arise through making any statement or taking any action likely to give rise
to 11hrm.
On the other hand, a great public service will be performed if the
work results in gradu::tlly allaying <tny fears thqt ms.y alrc,_dy have developed in
the minds of bankers.
Too gre'lt empha.sis, therefore, C'1nnot be laid upon the
necessity for discretion and for the employment of able and discreet men in this
work.
Referring to these in the order mentioned:
1.
CERTIFICATES:
debtedness I believe the
Since the first sale of Treasury certificates of in-
b~mks
in the City of Nevr York h'lve subscribed for some-
thing like 60~ of the entire "mount issued, the other 40%, or thereabouts, being very unevenly distributed throughout the United St'1tes.
not continue indefinitely.
This condition can-
The Treasury Department officials desire the reserve
banks to effect an equitable distribution of the amount allotted to each district and gradually to work to the pl<J.n that every bank in the United States
will consider it to be its duty to subscribe regularly for a certain percentage
of its resources.
The percentage c1n only be fixed after experience and uptm
knoYring the amount of ee,c¥1 sale.
Banke:.-purchasing the certificates may pay for
them by credit, pledging the certificates or other prescribed 3ecuriti-es- as
collater'll, and the money <Jt the Government '-s credit vrill be
g;radu~,lly
ar,d p-ro
r<J.ta withdravm, but the account s.g1'dn built up as ne\" sales of certificntes 1are
!Jl"ae.
The certificstes, except those issued to anticiapte taxes, payable in
X7fJ9 A
-3--· _._
John H. Gregory, Esq.
2/1/18
June, are intended to be used in m~king p~yment for subscriptitons to Liberty
bonds but it is nevertheless desirable that banks that buy them should resell -_,.
thettl to their customers "ts \'Jidely r,s possible.
VJhen a baflk purchases certi-
ficates and pays by credit, no occ'lsion ~rises to discount with the reserve bank,
as a secured Government deposit does not require any reserve-
As the Govern-
ment withdravrs the funds, the b~nks should: ~ccustc·m themselves to using the
facilities of the reserve bank.
The sb.tement will be mnde by many bn.nkers that the Government deposits
'lre withdrawn so quickly th'l.t thoy cr.nnot Rfford to take the. certific'ites; that
the rn.te of interest is too lov• :-,nd th'Ct
preclude their n.ccumul'lting the
l~rre
t~e dem~nds
of their regular customers
amounts desired.
must be deP.lt vrith intellig-ently "1nd t..-ctfully.
All of these questions
The princip•ll difficulty, that
of not having resources to meet the Government's requirements, will be covered
in No. 4 ..
2.
GOLD:
to its gold stock.
Since the vmr beg"m, this country has added over $1,200,000,oc:c;
Between
~~1,7oo,ooo,ooo
'ind Cl,800,000 1 000. out of about
~3,100,000,000. is now held by the reserve banks..
Probably $500,000,000. or
$600,000,000. more could be accumulated through withdrawal of gold now in general
circul"ttion and the deposit of a larger propertion of that held in bank reserves.
The reserve banks have novr so organized their affnirs that gold once paid in will
not under ordinary circumstnnces be p'l.id out as all dem:tnds for currency of $100
denomin'ltion and under c"'n be met by the uee of Federal reserve notes, and, when
pending amendments to the Federal Reserve Act become law, the demand for bills
of $500 and higher denomin"ttions c:om likeYrise be met by the use of Federal reserve
notes.
Only three kinds of
dem~nds
upon reserve b.,nks for gold can cause a per-
mttnent 1 oss:
One is through gold exports.
These "tre under control as the re-
X779a
J~hn
sul t
H.
Greg~ry,
Esq.
2/1/18
of the prcssnre of the Trading With The Enemy Act ..
Another is by the accumulation of gold reserves •by the b'lnks and
trust comp"lnies. This C'ln only be controlled by educRtional
work rtnd we must not create the impressioh by refusr1l to P~Y
out gold th'lt gold pr1yments hs.ve been definit.e1y suspended.
The third, and most serious loss of gold, would n.rise as a result of <tny t,er·.6.cncy on the pFtrt of the general public t 0
hoa~d gold for fe~r they might not later be able to get it.
In conducting the prop'LfRndn, therefore,, we have to consider
the dunger of stimnl:'l.t:ing hoarding by b"tnks and by the public.
No subject requires greater delicacy and, skill.
If it is handled
wrongly me might cren.te an al"Lrm which would not only defeat the purpose of
this plr1n of
in~re"1sing
our gold supply, but might bring about a great loss of
gold by the· reserve banks.
At the outset, V!e particularly require inform'ltion
at the Feder"tl reserve b<m.k
"S
pinf it to us.
to v1hich b-cnks <ere sortinp their pold and ship-
And the bankers themselves require
educ~tion
as to the
of doing so, conducted, however, in such a v!ay as not to alarm them.
import~nce
It is not
so much the 'ldV<tntage of getting the gold V!hich they now hold as it is to intercept the stress of gold certificates constantly passing throurh the banks so that
they operate as sieves, all th8 gold being arrested and shipped to us and all
payments of currency being Federal reserve notes.
Once that process is started,
the bankers will become accustomed to carrying only Federal reserve notes in
their tills and
W!i
are likely to get most of the gold now held in bank reserves
as well as gradually accumulate that in general circulation.
The suggestion
would be simply to have cautious inquiry made of each hank as to what its policy
is in that respect; whether the tellers have any instructions and, if so, how
diligently they are carried out.
You will have to answer inquiries as to the
;::!f
reason for this policy and it c:=tn be pointed out that the desire of the rese;rve
bank to increaee its gold reserve is simply to enable it ~o protect the b~King system, the need for which is greater in time of war than in time of peace,
•.
X-77Sq
-5~
John H. G~egory, Esq.
and, in geners.l, pe1.triotism demands cooperation.
2/1/18.
No urgency should be exhibited,.
The men undertaking this work must be c'lutionod that no publicity,
practically no letter writinp, :"tnd no urgency should be permitted.
~rticles,
Newspaper
or even prh=.te discussion of this m'lttcr th'lt might permeate through
the goner'll public would be dangerous.
3.
NEW CURRENCY:
One of the grcqtost embarrassments to the Federal
Government and the reserve b'lnks in connection with tho Liberty
Lo~ns
has boon
tho inability of the Bureau of #l1F"ravinv 3.nd Prin+.inr to furnish the actual bonds
promptly.
The res.son for this is tho immense pressure on tho plan to prepare
the gre'"'t amounts of m'3..tcrinl noquired
3.S
soon
'lS
the war beran.
Part of the
dem'lnd has been post'lge st<:.mps ur.d revenue st"Cmps, part currency, and, of course,
tho chief demand, the bonds s.nd interim certifie'Ctes.
If the bankers could be
persuaded th'lt ordin<try economy in p'lyinf out nevt currency will relieve a great
p'3..rt of the strqin on the Bure'lu, enablinr them to get the
Govcrn~ent
bonds out
more promptly, and enable them to meet the growinf demands for small currency,
it will be
'1
distinct rtdv-mtare all around.
4.
CONSERVATION OF CREDIT:
bristles with difficulties.
Here we re'3..ch
<1.
subject th9.t litornlly
I sh'l.ll not qttempt in this letter to olaborate the
<1.rguments from "ln economic st"lndpoint
"ls
to why our b'3..nkers must be educated, per-
suaded or even, if the war l"lets, required to
discrimin~te
in
exte~dinr
credit.
To illustr'ltc the point, i f the 28,000 banks in this country could uffoct u reduction of credit of only
~10,000
c'lch, it \-rould me"..n
~2,800,000)000
tion 9.nd qn immense strengthening of cur reserve position.
of liquida-
It would mean easier
money, e9.sier Government fins.ncing, in time lower prices for materials and a
more 'ldequ9.te supply of labor.
It must not be inferred th"'t old customers are to be embarrassed, that
m-cturing lo<tns must not be renewed, 'lt le'l.st in part, nor the ordinary conduct of
••
GF~rory,
.John H.
-6-
X-779a
Esq.
'··~
the country's industries interfered with, cE>rt'l.inly at the stn.rt.
in mind is to impress tho b"nkers in this district 'Pith
responsibility to sec th'l.t credit is not V/'.lstcc'! "'-nY
or other
ncces~ities
cashier should feel
lo-:m
th"~t
of life arc W!lstcd.
th~t
he extends to
more~
~
VJh'lt we have
sons(: of their
than foodstuffs, fuel,
I think every b<tnk prc..sident and
it is his duty to inquire into the purpose of every
<~.
customer, 'lltd, using tre'lsonable discretion,• so ns not
to cause embarr'lssment, loss, or even diss'ltisfqction, should be '.lble to pers\AAds his customer th'lt he, likt:wise, h~s
'.l
duty to his Government, which c1.n
on:y be performed by 'lVOidinr unnecessary expenditure involvinf. the usc of l1.bor,
m'ltcrinls '1.nd credit.
Should the impression ret nbro'.ld thnt the Government or the reserve
b~nks
intended to exercise such control OVLr credit as to interfere with the
business of the
b~nks
or brinr hnrdship to thE>ir custcmers, we would crentc a
state of feeling th"'t v1ould result in interferinr with the conduct of the W'lr.
If, on the other h'lnd, no steps are t'lken to conserve the resources of the country
includinr its credit resources,
'\'Te
tJre goinr to h:qvc n period of expansion,
elcv'-ltion of prices 'lnd wnr.es 'lnd renera.l economic disorder, for which some d'.ly
v:re \'!ill p<ty dearly
!16
in the civil
vr~.r.
On item No. 4, therefore, I feel thut
the gre".test C"'.ution is required -:tnd th'lt only men of discretion <tnd intelligence
C'ln conduct this educ..,tion!il e"lmp"'tign successfully and Ylith0ut 9.rousinr 'll'lrm.
s.
STATE B:1.tTK HEMBERSHIP:
Nev' York City has led the country in bring-
inr St,.,te b:'nks a.nd trust ccmp'lnics into the System.
members
ext~...nd
r~contly
The tot'll resources of the
admitted ae:greg9.te abcut OS,OOO,OOO,OOO.
\ie are anxious to
the movement throughout our entire district in order that v1e may have a
compact body of banks stronr enough to take care of the requirements of the Government and to support each. other through any emergeney that may arise as a re'•:
i:
sul t of the vtar.
X-779a
John H.
~regtry,
Eeq.
293
Lhts h<\ve been prep<ired ·a.t the b<Jnk of '111 stat6 banks and trust
comp<'lnies th<1.t are elirible for membership.
These must be carefully examined and
only those that would be desirable members dealt \vith.
The var·ious "l.t-guments as
to why membership is desirable have alreqdy been prepared in much detail and can
be furnished as required.
It may be thqt at first this work should be conducted
directly by the officers and employees of the bAnk, but I should hope not.
If
a tielrl force could be persuaded to undertake this work in the near future, I
believe we could count upon a great access of membership and one which would immensely strengthen our district in every vr.ay.
Vje
will need to establish a care-
ful filing systGm in the charge of competent men at headquarters, in which a
c
record of the attitude of each State bank may be maintained and an adequate
follow-up system adopted.
If this part of the program does not appeal to you at
the moment, later develop"•i!".nts may enable you to undertake it.
6.
There are now 76 State bA.nks upon which we are
'
collecting checks by exprest; or through loc"ll representatives. There is no doubt
COLLECTION SYSTEM:
whateVAr that the reserve system and its collection facilities have come to stay.
If these 76 banks could be persuaded to come into the plan it will relieve us and
them of e·ttnsiderable expenee and trouble, and,, what is more desirable, will remove
one of those causes of irritation that does no one any good and, in the present
n~tiona.l
ing to
emergen.cy, does distinct harm.
undert~ke
this work.
You and your a.ssoci<ttes may not feel will-
On the other hand, your efforts in this direction
would be much more likely to succeed than ours and, perhaps, after. the elapse of
some time, you
m~y
feel willine to
und~ake
it.
Should the State Association be willing- to cooperate in this matter a.nd
do so through their various groups, it would seem advisable to omit Group No. 8
which is in Uevr York City, leaving that to be dealt with directly by' the officeJ""s
294
John H. Gregory, Esq.
of the Federal reserve bank. or in such way as may be deemed best.
Should you
personally be v'lilling to enter upon this work there· are many important ·detaUs of
organization to be discussed and we S\lfrest ~hat you arranp:e, if convenient, to
C9ll at this bank on Tuesday morninr before your meetin£ vrith the group chairmen.
You will unders.t"l.nd, of course, th<tt this bq:nk expects to a.rranre for all reaeon"l.ble expenditures necessary.
This letter is unusually long but the subjects mentioned are so import"l.nt that a det"l.iled explanation of each seemed advisable.
The work to be under-
taken is <tS import"lnt as anythinr that we nov1 have on hand.
We are confident of splendid results if a rood organization is effected
and
di~ected
with skill and C"lution and v:e need not assure you of the great sense
of obliration which the directors and officers of the bank will feel if you are
willinp: to undert<tke it, and the State Association will join with us.
Very truly you.rs,
Deputy Governor.
RHT/ELS
W. P. 8. HARDIN8, 8oYIINOI
PAUL H. WARaUH, YICII8oYIINOI
FRIDIRIC A. DILANO
WILLIAN G. MCADOO ..
IICIHAIY OP THI TIIAIUY •
CIIAIIMAN
~~~~ci.·~~~~.
I
JOHN SKILTON WILLIAMS
COMniOLLII OP THI CUIIINCY
:a::::·,~!'i.i:.1:t:.':::.IITMY
FEDERAL RESERVE BOARD
AND .~ICAL A41UI ,
ADDRK1{~
WASHINGTON
P'IEDIERAI.. . . . .V& IICIARD
DIVISION OF REPO'RTS AND STATISTICS
:Ie.rc.n. 6 ,. 1918
Dear Sir:
With reference to inquiries received from some of the Federal
Reserve banks regarding code words for use tn connection with Federal
Reserve Transfer .drafts as
out~ined
in the fourth paragraph of' our let•
ter of' Januar,y 30, 1918, it is requested that Form X-96 attached to
circular letter X-102 dated April 25, l917 be changed to read ae f'ol~
lowe:
FEDERAL RESERVE TRABSFER .DRAFTS
"Nos. from
to
inc. Drawn by - - - - totalling
• Ae per their advice dated _ __
- - - - a r e good. When presented for pi.JI!lent charge
our account and wire us adviqe of parment upon receipt
ot which we will credit your account •"
It is also requested that code w_ord "00RD" be used to advise
other Federal Reserve Banks that Federal Reserve transfer drafts have
•
been drawn.
Upon payment of Federal Reserve Transfer draft& the pa.ying
. bank should telegraph the drawee Federal Reserve :aamt as follows:
"Federal Reserve transfer dratts drawn by·-~~~
as per their advice dated
have ~een paid and
your account charged
•"
COde word "0tmB" is designated for the purpose of
a
adviai~
d·rawee Federal Reserve banlta ot tlie payment of Federal Reserve Tranater
dratts.
Very t Nly yours,
federal Reserve
Agent ,
Assistant Secretary.
,. 1~
EX-OFFICIO M&M!IItRS
WlLLIAM G. McADOO
SECRETARY OF THE TREASURY
CHAiRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
FEDERAL RESERVE BOARD
WASHINGTON
s
W. P. Gi. HARDING. CiiOYIH.R. ,
PAUL M. WARBURG. VHtl . .YIIUIOR
FREDERIC A. DELANO
ADOLPH C. MILLER
CHARLES S. HANLIN
Pl. PARKER WILLIS, SECRITAitT
SHIRMAN P. ALLEN, AIIT.SICftETARY
AND FISCAL. AlilNT
ADDilJEQS REPLY TO
FEDERAL RESERVE BOARD
J4a.rch 6, 1918.
De.ar Sir:
For statistical purposes the Federal Reserve Board desiresJ
during the next three or four months, covering the ,perio<;l of heavy'
payments on account of incon:e taxes and Liberty Loan subscript:l.ons,
to keep in close touch with the movelllent of credits betvij'een the · ·
Federal Reserve districts.
With this in view, it desirea 1 beginning Monday, :March 18th,
to obtain from each Federal Reserve bank a daily record by telegraph
of the total footings of checks drawn on Federal Reserve city banks
which are sent by it to the other eleven Faderal Reserve".ba.nks for
credit. For the present it is not desired to have these telegraphic
statements include the amount of checks sent to a Federal Reserve bank
on points .oUtside of the city in nhich the Federal Reserve bank is
located, Ohecks sent to br~nches of Federal Resel~e banks which are
drawn on banks in the city where the branch j,s established., should be
inoluded. in the sum total as though sent ~ireot to the head office.
B:ranehes of Federal Reserve banks are re~ested to report by teleg~
each evening to the Fooeral Resarve Board at Washington the total
footings of checks sent by them to the eleven Federal Reserve ·oanks and
to the branchE-s outside o:f their o-,-m district., the foot::.ngs however., to
include cnly checks drawn on banks in Federal Res9rve cities and in
cities where br~ches are l~cated. Branch ban~s ue&d not make any report
of checks sent by them to their o-Nn Federal F.eserve bank or to any other
branch of the Feoeral Reserve bank in tneir own district.
In order that these daily ra~orts may be compl3te., the Federal
Reserve banks and branches are requested to include in their figu!es
the totals of cheeks sent by any nember banks in their respective
cities which are sent direct to Federal Reserve banks or branChes of
other districts, in each case howeverJ confining the figure5 to checks
drawn on banks in the city where the Federal Reserve bank or branch
thereof is lOCc::i.te<i. It nill. not be neoes:.;ary to furnish the exact
figures and. in order to avoid
necessity of sending these reports
in code the telegran:. rra.y be sent a.s a.n open m3ssage, in even figures;
with five ciphers omitted; thus $100,000 Nill be reported. as 11 one 11 ,
$1,500,000 will be re~orted as 11 fifteen"J ett •
any
. A hypothetical case uay be stated as follows:
Suppose the
Federal Reserve Batik of Boston is sending to the Federal. Res.erve Bank
of Cleveland. and to its branches in Pittsburg."l and Cit.cinuati, iten.s
a.s f oll owe :
297
$1,500,000 in checks on Cleveland city banks
2,000,000 in checks on Pittsburgh city banks
1.,0001 000 in checks on Cincinnati city banks
a total of $4,500,000 sent to the Federal Reserve Bank of Cleveland
for credit of the Federal Resel."Ve .Bank of Boston. Let us assutr.e .•
h~vever, that in ,addition to this $4,500,000 sent direct by the
Federal Reserve Bank of Boston .. the Fedel-al. Reserve Bank is advised.
by member banks in Boston that they have sent direct to the Federal.
Reserve Bank of dleveiand. a."'ld its ·branches, for crec!it of the
Federal &serve :Ba.nk of Boston
$1,000~000 to Cleveland
lJOOO;OOO to Pittsburgh
300,000 to Cincinnati
naking a. total of $2,300,000 sent direct by Boston banks for the .
credit of the Fed.el~al Reserve Bank of Boston, ( tfiese chec.ks be-l.ng
drawn exclusively on ~nks located in the three cities above named).
In addi U.on to the above there have been sent in the tau ·
of telegra.phll:.c transfers, $500,000 to Cleveland. Tbe total sendings,
:therefore, by Boston have been $4_,500,000 direct, $2,300 1 000 by
·
member banks and $500,00.) by telegraphic transfers, Ii.aking~ total
of $7 _,300,000, Nhich ,voulo. be reported. in the telegrax.;; to the
Fe.deral Reserve Board. as "Sent Cleveland. Sevent~-three. 11
As the Feder~ Reserve ~nk of Cleveland c~nno~ include in
its r~port the direct seniings of Pittsburgh and Cincinna.ti, it
be necessary for the branches in those cities to report their direct
send.ings to other Fe~eral Reserve banks and branches outside of
t~eir own district.
These ~ll.i'lO'J.:lts will be added. to the aggregate
of the -Cleveland footings by the Federal Reserve Board in Wc:..shington.
will
This plan '"dll enable the Federal Re~erve Board. to have a.
tabular view of the daily interchange of checks betneen eii.ch Federal
Beserve bank.. While the country bank items will not be:.included
in these totals, it is reasonable .. in view of the IW.ch larger volu.rte
of checks drawn on bha Federal Reserve cities, to assWffie that a
very fair idea of proportions in the currents of exchange wlll be
obtained. The figure,:; will be charted and val.~ble information will
·be gained. as to the extent of off sets ..
Please bring this letter to the attention of the
Governor, with request that he give necessary instru.:tions to the
. proper department of the bank in order tha.t the in.forn.at.:i on O.esired
ma.y be 'regularly furnished the Board, bagi:.:ming v'lith the transactions
of :March 18th.
Very truly yours..,
The
Ch.:.i~~1 of
Faiar~.l
.ti:a .3o.;...ri,
R$;:;_:rve :&.nk,
Goven1or.
r
\
..
X-785
,.
.
X-787
Release for the morning ;
papers of J.Jarch 10, 1918.
STATEMENT FOR THE PRESS
Washington, Ha:roh 9, 1918.
The Capital Issues
the following resolutions,
Cou~~ittee
~hich
has received copies of
arc typical of the spirit
with which it r.1eets in its afforts to r0strict or to curtail
as far as posai'.Jle issues not absolutely essential at thi$
time:
(By the Investr.1ent Bankers Association of America):
"VffiEREAS, the Boarc. of Governor..;; of the Invest1:1ent
Bankers As so cia tion of Aue;rica haa alre3..:"'..y heartily endorsed the plan fo::L the supervisivn of Capit.:1:i. Issues
which is now in operation, Resolved., That i·c is the
sense of this Board that no member of this Association
should buy or sell or offer for sale except sujject to
the final app:roval of the Capital Issues Cor.u:;.1i ttee any
securities vvhich come vdthin the scope of the Capital issues
Commit.tee :fiagulations unless the issuance of such securit; ica (i::Lst shall have ·oeen al::.:):rove:~ ")y t~1at Com"".1i"i:/cee. 11
(By the American Banke:rs Association)
11 \'ffiEREAS, The Sec::Leta.::y of t~1c 'I'reasu:cy ::ceq,_,_eatoc:.
the Federal Reserve Board to take up the question of a
limitation of the issues of ne¥1 secu:ci ties throu[;hout
the Unite& States alo4g the lines of the conservation
of capital for the pro3ecution of the '\7ar - that is to
say, to lir.1i·c so fa:r as possible tl1e issue of l1Gii secu.Xities for non... essential purposes, in orcler t:!a.:t esaential
financing including the government; financing i-Gi3c:::..f can
be mac-:..e possrJle, and
111.':HI2:rEAS, plli:'suant thereto,
the Federal Reserve Board
has named Hr. V'Varburg, Mr. Delano and Hr. Hamlin on a
Committee to be known as the Capital Issues Committee,
tTNOW, THEREFORE 1 Be it Resolved~ That vve, the Administrative Cornraittee of the American Bankers Association, are in full accord with this movement and give it
....
299
-·
X-78'1
(a)
our hearty and unqualified support. and furthcr 1 that we
to the members of the Am.::;r iean Bankers Association that they also extend their hearty support in carrying out the purposes for \v'hich the Capital Issues Commi tt.Je '\vas appointed."
rccomrt~end
The Chairman stated that the
to
conside~ ~~?~ications
Con~titt0c
had oeen asked ·
with respect to the issue by munici-
palities of notes running for one
yea~
or loss issued for
current expenses in anticipation of tax. payments, and that the
Committee does not consider that
purview.
s~:~
issues com0 within its
FZDERLL RES::c:RV3 :GOARD
REPORT OF CONDITIOt: OF LLL !,EMBER BANKS OF
X-789
T~
FEDERAL R2S.ERVE SYSTEM
Ol D,;:-,c:_iili ...c:t :.H, 1917, 1... J.~1LlG-D IY CiicES ::.S
(lncluc.irJ.g 7,657 l atiox"c..l b<...YJ.ks c-x.d. 250 Stc-te bc"llk:S C..hL ·l'ruot Cilm;?o..EiaB)
(in thousands of dollars)
300
Barch 12, 1918
------------------------------------------------------------------------------------~
:CEmRAL RESBRVE:OTIL:.;R RJSERVZ:
:COUNTRY BJ.NHS:
CITY BANHS : CITY B.:.N:KS
( 128 baLK~ 1
RESOURCES
:
(
TOTi.L
390 banks) : ( 7389 banks ) : ( 7907 banks;
------------------------------------------------------------------------------------wa.ns and discounts ••..•..•• :
Overdrafts •••••••••....••..• :
Cus t orne r s liab i l i t·iee aGct.•o t ~
acceptances .*•.•••••.•...•. ) :
U.-s. securities ••••••••••••• :
Other bonds, stocks & sec ••• :
Stock of F .R. banks, .•.••••• :
Banking house .............. :
.. Other real estate ovmed ••••• :
Furniture and fixtures •• ~ ••• :
Due from banks and bankers •• :
Exchangesfor clearing house :
also checks on ba!'lks in
same place ................. :
Outside chGcks and other
t&a~ ~ 111 ema r ••.•••........• :
Cash in vau1 t ............... :
Due from F. R. banks •••••••• :
Due frbm U.S. Treasurer .. ~ .• :
Other assets ••••••••.•••.••• :
.
'i'ttal ... ................. :
:11,806,512.
.16,268
- 377,356
4,106,378
1,225
240,106
3,310,361
3,202
117,445
. 4,389,773
l l ,8,.1
19,805
584,691
885,423
19,874
74,173
8,822
1,247
408,915
364,S88
670,930
18,801
106,426
18,031
5,837
809,329
908,714
1,227,268
32,068
159.,723
32.,678
28,107
910,312
1,858,093
2,783,621
70,743
340,322
59,531
35,191
2,128,556
708,852
208,'316
52,319
969,489
25,226
174,382
791,039
5,860
166,204
8,202,417
30,232
186,284
472,378
13,289
40,178
6,375,?29
26,838
266,924
392,883
24,549
16,097
8,499,899
82,296
627,590
1,656,300
43,698
22Z 24'79
.
:23,078,01b
313,100
349,828
358,918
298,139
639,132
437,143
1,311,150
1,085,110
113,241
86,537
171,755
371,53:?
9,960
6,900
4,974
21 831.
6,984
3,876
6,571
1'7 ,43:.
:161,689
689
: ..... 462,591
1,538
673,7~8
l, 707,576.
1,454,726
477,205
3,639,507
4,3'40 ,~42
454,664
337,153
2,845,304
712,358
189,854
3,993,430
1,989,199
122,406
:11,179,676
3,156,241
649,413
..
•·
:
L 1 !;;. B I I, I T I E S
Capital stock paid in ••••••• :
Surplus fund . ................. :
Undivided profits less ex~enses and taxes paid •••••• :
Amount· reserved for taxes
accrued .................... , :
Amount reserved for interest 1
accrued . ................... :
Eation~l b~nk notes outstanding ....... • .... · . · · · · • !
Due to F. R. Banks •••••••••• :
Due to other banks and
bankers ............•...... :
Demand deposits including
unpaid dividends and cash- :
ier' s checkS •••••••••••••• :
Tlme deposits ••••••• ! • • • • • • • • :
U.S. deposits ••••••••••••••• :
U. S. and other securities
borrowed • ..•..•............ :
aills payable with F. R.
banks ................ • •.•••. ;
Bills payable other than with:
F • R. ba.nks •.•. • . • • .. • • • • • • :
Aoceptanoes • .................. :
Other liabilities •••••••• , ••• ;
Total
Liabilities for rediscounts,
including those with F. R.
bankS ••••••••• • • • • ,.... • · • •- .... :
• Including customers
li~bility
49,448
963
.& •
3,130
:
83,914
29,551
.1~}168
132,633
&8,334
44,371
229,598
2,661
247,145
57.925
17,133
125,471
281250
65,464
20 .~84.
85,258
390,900
130 1 843
8,202,417
6,375,729
8,499,899
1>
126,893
...
44!668
: 23 , 07 6 , 045 .
\~
185,584
211,419
under lettersof credit.
174,914
571,917
x-790
0 A T H O'J D 1 R E C T 0 R.
B R A N C H
l3 A N K S.
State oi ................................. )
·····~~~-fFI·-·············~ oi· ....
) ss.
'lt . . . . . . . )
(City or County)
11 the undersigned) having 'been elected a. Ditector of
tha .• , ..•..• , , •.• • . , •.. ; . . . . . • Branch of the l.i"'edera1 ,Reserve .&.nk of
•...................•...•••
located in the City
\
O'f •• ·••• •· •••••• • ~. •. •
State of ... : .................. , and in District No.' ............... .
as
~
dete~ed
under the provisions of the
·Fa~eral
Reserve Act 1 being
citizen of the Ulldted. States, and. resident of the State -Qf •••••••••
do solemnly swea.r (affirm) tha.t I will, so far as the duty dev ol~es
upon me, diligently and honestly adnlinster. the affairs of said branch..
fairly and.
im~rtially.
and without
discri~tion
in favor of or
against any member bank or banks; that I willr not knowtngly 'tiolate.,
or willingly permit to be violated) any of provisions of law prescrib-
iag or in any way affecting the duties of my office •
... ... .. . . ... . . .. . . . . . . . . ... . .
Subscribed and. swom (affirmed) to before the undersigned~ a.
Notary Pu.blio in and for ·the State and . . . . . . . . • . • • . • . . . . • . . . af oresa5.d,
this ................ ~ . . . . • . day of ......... , . . . . .. . .. . 191" ..
.. .
. . . .. . . . . .. ... . . . . . . . . .. . . ... . . . .
Nota.ry Publie.
302
x.,. 793
For release in
morn~
papers of Wednesdaft
~~rch
13,
1918.
STATifMEN'T FOR THE PRESS •
The Federal Reserve Boa~d today sent the foll~ing teleg~ to
the Chair.men of the B~rds of the Federal Reserve Banks: ·
11
l3oard is anxd>uus to have you watch sit~Hon in your district
with respect to competition for deposits through advancing interest rates,
with view of getting banks contemplating advances to defer action and of inducing these who are
Pfi'.i~
n1ore tha.n normal rates to reduce them.
feels that Government financing should.
~ve
Board
right of way and that reserve
streng:ib of banks would be increased by encoura-ging the public to invest in
Treasury certificates of indebtedness and Libarty bond issues ratber t ha.n by
banks campeting for these funds and thus necessitating heavy investment in
these securities for their own account,
issues is n1ost important..
Wide distribution of Government
Deposits thro-ughout the co'Wltry show general ten-
dency t9, increase in volume and there seems to be no good reason to increase
rates of ht erest paid for them, thus adding to cost of money.
Tra-nsfer of
.balances from one bank to another does ncllt add anything to the strength of
banking position BDs a whole.
of this question..
Board urges that ~rQad national ttew be taken
In view of approa.ching Liberty bond campaign, sharp, nation
wide contest berween banks for deposits would be particularly
unfortunate~
New York Clea.ring House yesterday 'Ullallilnously adopted thi.s resolution:
'Resolved• t:bat this association wishes to record that any general cam-
paign for
as such
d~osits
a~tion
at increasing and competitive rates of interest i~smuch
is disturbing throughout the ration and does not add to tre
collective strength of banking res~rces 1 is at this t~e ~proper and should
not be 'Undertaken by any institution. I
It is e.x;pected tba.t New York Clearing
House will reach definite agreement within next ten ~ys or two weeks'
In
meanwhile interior banks are advised against ba.s.ty and ill considered action ..
Please bring this telegram to the attention of
~s
view of ascertaining their views and of enlisting
in your 4istrict with
their. cooperation.
HARDING.
"'
RATIO OF ''FLOAT O:H' EACH EIDERAL BESZRVE BfuTIC TO EAFJ:r::::HG- ~\.~S::T3 ~u:D m::rOSI'l'S
MARCH 8, 1918.
X-(93
Clearhlb :Natiom.l funk: All otll0r
Total
'i'otal
Total :Het investraent: fu.tio of
: &.tio of "FLOAT" i£,"Fed-::ra.l R.:serve: housa
: notes and : unco1lected:uncoll:;cted: collec tior..: "BLOAT" : in trd.nsf~rs :"FLOAT" to
:media tdy available
:Bank
exchanges :notes of oth-:
items
iteLlS
itdLls .
included in :totC~.l $<.1.rning:Goverru,,dnt ba.nk de:er F.R.ba.nks
Dr.
Cr.
:total 11:ELOAT 11
assets.
posits.
er c0nt.
BOSTON
1
16,827
18,412
15,269
3,143
4.4
3·7
50' 806
1.9, 010
3-6
2-7
200
15.6
9·3
1,140
3-3
llE\7 YORK
15,365
2_,220
52,231
PlllLADELPHIA
. 5~355
2,{)01
32,825
4o,18l
31,644
8.537
CLEVEIJulD
1,450
149
17,922
19,521
16,830
-2,691
RICHMOND
5.026
1,216
20,684
26,926
17, 791
9' 13 5
.ATLANTA
1,390
2,343
15,942
19,675
CHICAGO
5.754
970
50,445
57,169
205
497
1~,303
124
10,470
105
89
12
.1,280
ST.. LOUIS
DALLAS
SAN FRAHCISCO
TOTAL
.18-5
924
30-7
1].6
32.404
21,708
32.6
1..5,145
3,86o
765
10.]
4, 637
. 5. 957
5.733
32..6
25,520
10,783
14,931
4,376
19-9
6,357
10,911
5. 862
11, 418
3.796
24.8
1,376
10,334
12,990
11,759
1,231
3,285
1.8
a82,414
337,283
216,986 120,297
41,527
11.0
37' 526
(a)
22.2
_21,t,765
V!Il~lEAPOLI S
KANS/•_s CITY
(a)
Excess. of
~1ount
10,594
of transfdrs sold over alnount of trd.llsfers bought.
12.9
1.5
X-794
For release in morning papers of Wednesday, Harch
i3,
8
1918.
rvL::l.rch 12, 1918.
The Federal Reserve Board ha.s telegraphed the governors of
Federa.l Reserve Ba.nks asking that1 to con.e to Washington for a
conference on Friday r.•ornirlg, March 22nd,
.By tha.t tiMe Secretary
McAdoo expects to ha.ve L10re :.:ully JW.tured his pl&.ns i'Or the next
,..,_
Liberty Loan and will discuss some features of the next ca.lnpa.ign
·-j
which will begin early in April;
~
The conference will give an
opportunity also for discussion of interest rates botb. from the
standpoint of the general sit'UStion and with resp.ect to Treasury
financing,
?
305
IEX•OPPI~~M8~U
WoP. 8. HARDIH8, 8oV.IIIOI
PAUL II. WAQUU, YICIGCIYIINOI .
P'RIDRRJC A. DILANO
ADOLPH C. IIJLLIR
CHARLU 1. HAMLIN
WILLIAN G, IleA~
I&CIITAIIY OP HI 'hLUUIY
CHAI MAN
JOHN IKELTON WILLIAIII
CONPUOLLII QP THI CUIIINCY
FEDERAL RESERVE BOARD
I
H. PARKIR WILLIS, IICIITAIY
IHIRIIAN P. ALUH, Aln. IICIITAIIY
AND P'18CAL A•INT
WASHINGTON
DIVISION OF :REPORTS AND STATISTICS
.
.
MJ -AAM
Dear
ADDII&•8 II&PLY TO
X-7se:cii:RAI. RUII:RVII: •oARD
March 12, 1918
S~.r:
Some r,f the Federal Reserve bariks in repcr-r,ing to the Board purchases of Liberty bonds and Ue S.
ce~tificates or indebtedness uneer so-called repurchase
e.g:-eemer.ts (the selling bank obligating itself to re~
purchase these securities within 15 days) have been
classing euoh transactions. as 15.;.day advances upon members' coJJ ateral notes, instead of purchases of· Government, sec uri ties.
In order to insure uni.form treatment of su~h
transactiona by all the banks it is requested that the
purchase of such bonds or certificate& be reported to
the 'B.:>ard on Schedules or Investments Purchased, l<'orm
5.;.2, and that these· investments be carried on Fo::."l'il 34
under the following, or similar heading: 11 U. So Bonds,
repurcha;,e agreement", 11 U. S. ~ertificates of IndE.btedneos, repur::hase agreement". and t,hat in the Friday night
teleg:r;aml:l to tile Bca rd the bonds .so held be desi$nated ·
by code word "BUCK" and certificates ot indeb·t.ednes3 so
held by code word "BOON".
I·::. is also requested that conunercial parer o.f'
the seve~al maturities whe~ taken by the Federal Reserve
banks unller an agreemen~c. with the rediscounting bank the.t
the papar will be taken up within 15 days. shall·be reported on Sohe1ules B.D. 4 and that ~he wo~ds "Repur~hase
agreenent" !.'allow the name of the redi-scounting tnember
bank. This will ins·lre their proper o;tassifice.tion by c.ur
StatisticEtl Division. At present. it:. is difficult in some
cases to determi.ne whether the transactions represent
member banks 1 colbteral notes or paper discounted lmder
a repurchase agreement.
Very truly yours,
Assistant Secretary.
Mr.
Federal' Reserve Agent'·
1:.0
0
~
F.EDERh.L RESERVE BOARD
ABS'l'RACT OF REPOR'I'S OF CONDI'riON Ol!' :MEi>lliER STA'IE :BANKS AND TRUST COI11lPANIES
FEDERAL RESERVE DISTRICT ON DECEMBER 31, 1917
m
EACH
X-796
-----------------~----------------------------------1f~-~h2~§~g~§_2f-~2!!~~§l ______________________________~~~~-~~!-~~~~--------------------District District District District District District District District District District District District
No. 1
No. 2
No •.3
No. 4
Ho. 5
No. 6
No. 7
No. 8
No. 9
No. lO
No. 11
l~o. 12
14
4-4
8
13
1l+
20
7l
13
16
9
11
17
Total
United
S~tes
_________________________ Q~~2----~~§ ____ ~2----~~§ ____ 9~~2----~~§ ____ Q~~§----~~§ ____Q~~2----~~2----~~2----~~§_g5Q_Q~~§ __ _
RES 0 U R C E
~:
Loans and discuunts ....
Overdrafts .............
Custor.1ers 15.a.bili+;y account of acceptances*
u. S. secur;_ti~s .......
Stock of F. i:L 't:a.nks ...
Other bonds, stocks and
securitieo ...........
Banking house ..........
Other real estate owned
Furniture and Fixtures.
Due from banks and
bB.nkers. , .
Exchan,;6s f;;r Clearing
House, also checks Oi.l
ba:n!-:s 5n s'U:'e p 1.a.ce • ,
Oats..i.de ehe..;ks a.:1d
O'-" her C"..a.sh it ems •...•
c~\nl: I·c --:r:t. ... 'll "t " •.. , ...
Ftte:- .:'r·•)r:. ;'olt;lrr~l R3·
se rYP. ]c:l.:nks ........• ,
•
•
w
...
-
••••
<
.Dt.3 :f :':' 0'31 1.7
s.
••
13,731 114-,456
5,118 i.l!-5, 280
61783
998
. 38~158 423:946
5, 697 32,11!3
24
5,015
68
259
29,753 112,366
89,h66 162,320
105
56
21,714
39
1,773
27.575
1,823
445
1,082
213
84,954 111,913
4,450
6,729
1,522
3,218
192
386
21,-471
950
2,839
831
23,447
76.634 415,538 121,571
110
231
174
18,909
28
37,671
20
6,403
34
33,544 2,418,663
24
1,202
70
283
33
719
1,913
176
14o,847
234.592
14,810
4,010
32,623
2,241
2,210
10,202
964
771
105
1,585
169
9.236
937
416
59
14,250 138,142.
7 ,8l~1
4,683
482
1,4o5
172
1,133
31,413
1,972
441
368
1,656
297
13
100
9,032
710
64
26.
107
111
68
83
8, 759
1,143
818
66
871,566
66,713
13,486
2,912
6,184
20,334
71,958
16,718
2,94o
10,441
2,254
6,703
324,569
2,483
5,321
474
!
9,011 191,212
3,418
3,083
134.
7,~j
19,,447
4, 743
583
1,391
167
951
241,963
j,,094
91091
151
6.6~0
573
5,885
36
94-6
4,527
4,267
6,639
25, '(88
893
3,145
243
593
585
1,398
110
459
so
36:20{
2,591
22,721
97,000
25,159 253,6i'9
9;982
.16,.979
1,699
7,254
43' 54·8
13,473
1,264
4,969
728
2,904
387,438
l+3
307
462 J.36,Ji3
22
1,427
.150
32
6,22
4l+
154
l!{)l.j.
22,427
63
1,408
25
~s
22.2
2·.206
114~~32
43,804 150,656 792, t~25 209,694
27,527
68,099
11,133
'i, 790
rrr~as··
'Uror- ................ ~ ••
Ot.her arsets ...........
3z237
339.722 2707,541 228,440 369,147
TOTAL
.
200,355 1234,538
285
96
1,071
65,697 5,013,885
---------------------------------------------------------------------------------------------------------------------------------------------*
Inc~uding
custor;iers' liability under letters of credit.
Jo-rq-;JYIJ:'.:'\!, >:.:..H"Sr:RYF BO 4..f?D
.ABSTHACT OF BEPOETS o:E' CCi'ffiiTION OF IvCI,::S:::..E B.hlili3 n; EAGI: IE:JE3.LL P28Z:r,·.r:;; :JIS:'RICT OlJ DECD.vll3ER 31, 1:.)17.
(Incluu.ing (, oj7 hationci·L bc11.tks and 250 ;:)tat<J -bd.ll.t'::::> """nd Trust LOI.ll-u.nLs)
· X-789a
.
(In thousc1nds or uollcirs)
District District District District District District
No. 1
ilo. 2
No. 3
No. 4
No. 5
No. 6
403
668
639
763
532
392
banks
bc~.nks
Ma.rch 12, 1918.
~istrict
No. 7
1113
banks
District District District District
l~o. ll
No. o
:JJo. 9
No. 10
630
479
780
957
bc1nks
ba.nks ,
banks
bc1nks
Distr~ct
No. 12
551
banks
Total
Unit ad
States
1
7907 bcinkS
RESOURCES:
Loans and discounts
Overdrafts
Custor;1ers liability account of clCceptaacas*
United States securities
Stock of Federal Reserve
343,817 3723,261
475
1,3G2
734,114 1000,669
L~52
775
529 .• 358
1,271
62,541
. 96,001
222,798
14,679
12,091
6L;-6~273
11~!7:}9
210,1.~57
11,305
101,728
8,310
75.353
l3anks
5.855
18,693
Other bonds,_stocks and
192,413 1026,925
securities
Bunking house
26,228
76,317
Othar ra:....l est<...te owned
l, 192
10,327
1,278
2,683
Furniture u.nd fixtures
Due from h..:.nks ~nd b~~rs 120,367 )03, 633
Exch..ng0s for C1::;aring
F"n;""-·:.-'!!' c.1.lso ~:-,t~C1cs on
·oarucs J.n same p.i.ace
654,302
Outside checks io:AllU otha'r
6,144
21,451
C-~.sh items
Cash in Vt!.ul t
41,786 154,541
Due frOL1 Fedcr""-1 R0serve
:&.:.nks
95,929 709, 843
Due fror;1 U. S. Tro...~.surer
3,929
6,580
8,342 164,908
Other 3-ssets
6,141
3' 658
2,816
TOTAL
37'+~047
20,286
4,940
2,990
144,351
3,022 .
390,798
46,689
85,413
22,400
419,881 1678,867
2,065
2,531
5dl, 259
316
519,586
1,283
741,489
2,36o
437,292
l, 507
17,667
2051 596
6,652
83,884
2,051
53,448
26<+
93,115
2,001
74,372
16,197
107,.127
9,082
3,474
2,615
3,407
2,793
4,187
70,743
48,286 314,240
17,02.6
4J.,937
4, 945.
757
2.411
5,213
112,683 317,594
8), 764
15,046
2-595
1,978
114,648
55,422
14,370
3 '742
2,468
123,179
76,125
16,779
4,273
2,358
243,904
14,001
13,409
3,897
2,791
129,281
122,187
21,755
6, 510
4,331
194,481
2,783,621
340,322
59,531
35,191
2,128,556
17.950
12.456
22,706
7 J 584
4,281
39,822
82,296
627,590
63,477
3,173
6,909
1,656,300
43,698
222,479
·s,
0,03
2~520
3.253
212,231
2,417
112,124
47,345
28,762
16,274
19 J lJ.67
2,601
56,266
3,057
71,865
3,815
35,256
26,571
12,468
l0l,S07
2,370
25,664
4,419
22,468
5,568
32,978
106,728
3,615
2,278
138,368
6,302
5.695
66,403
2, 730
1,535
42 . 844
2,125
1,154
187,821
5, 763
25,]53
68,118
2,589
2,121
40,920
1,850
1,399
77,909
2,734
1,433
1546,325 7748,897 1634, 592 2148,727
99G,387
793 I 695 3005,081
932,928
7 ~138
862,496 1327,982
23,546
671,919 11,006,512
l .351
16,263
777.650 1300,785 23,078,045
-----------------------------------------------------------------------------------------------------------------------------------------------*
Including custaaers' liability under letters of cr.::dit.
00
0
~
ABSTRi,.CT OF HL'PORTS OF COHDITIOH OF MEMBER B.AlTI~S IN E.-"'.CH E_.!;EFJ\.L P.ESERVE DISTRICT ON DEC.)1, 1917 ·
(including 7657 National banks and 250 State banks and Trust Compani~s)
-
-.
-.
(In thous .....nCl.s of Cl.Ollurs)
------------------------------------------------------------------------------------------------------------------------------------------------
District District District District District District District District District District District District
Total
No.2
No.4
No.l2
United
No.1
no.3
No.ll
No, 5
No.8
No.lO
No.6
No.7
No.9
4"70
St .... tes
66S
403
1113
630
639
780
551
763
392
532
957
I ..I
ban};:s
banks
banks
banks
banks
banks
banks
banks
banks
banks
banks
banks
7907 ~n.ks
L I .A B I L I T I E S:
Capital stock paid in
'108,549
287,125
89,920 137' 149
Surplus fund
89,266
332,947 135.978 131,160
Undivided profits, less
ax.penses & ta.xes paid
116,762
36,300
32,015
35.527
.Ar.1ount reserv~<i for
taxes accrued
2,002
1,856
7,255
974
.Amount rcs..orved for
int~rest accrued
1,124
1,059
1, S75
7.4.5
National bank notes
outsta.nJ.:.ng
so, 014
90,006
85,925
55.579
Due to Fcci.Rcaerva banks
1
1,230
116
76
Dua to other
banks, banl:-.:rs and trust
conpani.Js
132,960 1333,101 196,604 243,236
D0.manci deposits
803,627 4252,427 804,423 944,141
Tir:1e d.:;pos{ts
510,4-36 248~ 727 443.657
173,062
United Statas d.:::posi ts
305,224
31,306
67,699,
55.327
U.S.& other S-JC. borro~:ad
16,282
1, 427
7,764
79.423
Bills payable othar tba.n
with ~ed.R0s0rve banks
20,048
4,685
7,156
9,425
Bills pa.yubl:;; ,;ith Fed.
Reserve banlr..s
11,161
123,871
7,384
6,599
Acceptances
229,281
65,205
12,354
16,997
Liabilities other t:b...:.:.n
those above stated
5.649
56,22Z
], 536
8,396
TOTAL
1546,825 7748,897 1634,592 2148,727
Li~~~fo~; ~~di~c.OUl~ts n· 125 , 725
37,821
30~ 514
187,547
__ tL1.)"~ ,,~L1 __ .R.bc.L••~s
75, 583
45,869
59,093
36,514
191,454
119,769
73,361
42,756
58,743
29,300
75,096
38,917
61,290
33,562
93.782 1,311,150
46,072 1,065,110
14,19::)
11' 615
46,401
14,107
15,000
16,227
12,3'30
20,910
371,533
453
423
4,047
603
1,315
1,060
091
955
21,634
1,324
375
1,557
4,.-"'
00
S62
669
217
656
17,431
50,930
1,302
39,790
25
78, 76S
390
42,665
3
28,301
1
46,204
36
43,363
61,383
0
673,728
3,190
124,042 315,138
333.578 622,444
239,498 169,250
19,336
16,756
1, 94o
1, 543
146,459
409,637
47,467
10,136
509
188,833 3, 639.507
620,956 ll,l79,676
205,431 3;1.56, 241
649,413
23.370
4,036
132,633
139,540
415)312
185,559
24,421
5,183
131,168 487,173 200,165
361,272 1237,058 374,801
124,600 665,816 1'1-2,648
10,917
4,958
79' 963
4,460
9,613
453
6, 933
4,674
10,068
4,410
3,765
3,124
6,587
4,383
85,258
12,896
11,308
7.398
8,Lf03
27,844
19,036
9, 583
6,163
1,208
2,864
17,483
357
1,490
1,962
2,681
16,970
229,598
390,900
26,124
2,:l29
793,695 3005,081
9,402
82,358
5zJ31
932,928
25,937
4,5}5
998;387
19,945
1 ! 94.2
2 1 618
862,496 1327,982
14,236
8,365
1}0,84}
1,682
10,}61
777,650 1300' 785 23,078,045
4,438
25,629
571,917
X-796b
FEDERAL RESERVE BOARD.
ABSTRACT OF REPORTS OF CONDITION OF MEMBER STATE BANKS .AND TRUST COMPAIHES IN EACH Th'DEBAL
RESERVE DISTRICT ON DECEMBER 31, 1917
(In thousands of dollars)
.MARCH 12, 1918
------------------------------------------------------------------------~----------------------------------------------------------~---------
District District District District District District District District District District District District
No. l
No. 2
No. 3
No.4
No. 5
No. 6
No. 7
No, 8
No. 9
No.lO
No. 11
No. 12
, lY..
44
8
13
14
20
71
13
16
9
ll
17
Total
United
States
-------------------------~~~----~~~----~~~----2~~----2~~~----~~----~~~----~~~----~~----~~~----~~~----~~ __ gJg_~!
L I AE I L I T I E
S~
Capital stock paid in ... .-:...16,100
90,933
13,050
14,82;
SUrplus fund...........
17,177 133,855 35,660
45,935
Undividdd profits, less
expenses & taxes paid
j , 462
18,347
2,799
Amount reserved for
taxes accrued .....•.•
6os
527
2,733
·Amount reserved for
interest accr~ed .....
86
4,971
917
Due t,o Federal Reserve
banks •..•....•...••.•
10
Due to banks and bankers . ................... .
18, 284 269, 402
7,092
9,059
DeLand deposits, including unpaid dividends.& cashiers·cko. 207' 779 1751, 530 144,761 122, 539
Time deposits ......... .
50,605 194,665 15,311 145,554
United States deposits.
8,409
77.399
4,898
18,346
Bills payable other
than with F.R. banks.
460
5,927
3.550
775
EilJ.s payable ·N~ th
F. R. bar..ks • . • • • . .••
1,060
125 18!193
Acceptances •........•.•
14,691 109,421~
1,m
950
Liabilities other than
those above stated •.•
871
30,152
166
3,013
TOTAL .-..... ... •••
Liability for rediscounts, includj~
tjose rvi th F. R. banks.
#
339,722 2707,541
21, 6oo
42,385
228,44o
1,6o4
104
875
48,483
59
6
117
6,113
25
1
103
7.551
1,004
1,611
10,422
3,681
330
27
100
1,458
77
14
42
242
466
10
2,203
16,095
13,553
997
61,633
20,058
59.930 294,468
29, 441 301, 147
248 22,280
80,402
59,452
Sj2
143
34,089
12,331
1,972
9,920
33,158
14,751
6,6o8
1,321
113
761
1
7,833
1,410
1,162
2,085
2,750
10
300
3.458
2, 499
1,150
4,083
5.753
1,634
74
1, 034
13 ,-395
2,678
46
66
369,147. · 43,804 150,656 792,425
209,694
27,527
:.~~·099
388
1,091
2,174
219,294
301,471
960
160
9,880
7,162
1,108
2,671
l2,7gl
10,163
21,796 2,746,899
22,740
858,46o
730
135,014
11)
18,375
720
30,349
136,074
5,282
:56:777
6oo
11,133
65,697 5,013,885
536
EX-OFFICIO MEMBERS
W. P.
e.
HARDING. CiiOYll•. .•
PAUL. II. WARBURG, YJ•I . .YUMR
FREDERIC A. DELANO
ADOLPH C. MILLER
CHARLU s. HAMLIN
W1LLIA.M G. McADOO
SECRETARY Of THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
ft. PARKER WILLIS, SECRITARY
IH!RMAW P. ALLEN, AIIT.IICitETARY
FEDERAL RESERVE BOARD
COMPTROLLER OF THE CURRENCY
AND fiSCAL AGiiNl'
WASHINGTON
ADDRESS REPL.Y TO
FEDERAL RESERVE BOARD
March 13J 1918.
Dear Sir:
In the Boa.rdts .Annual Report for the ;tear 1916 it was
stated with
11
r~ie~ance
to applications under the Clayton Act
tr~t
New facts or evidence 'bearing upon the business of given institu-
tions ma.y a:t any time develpp 1 or the natural grow-iih of their bus:!,ness ma.y
b'~'":i.ng
tb.e:m into substantial competHion 1 although they were.
not found so in the first instance,
It will therefore be
from time to t:!.me to revise decisions already ~de.
necessec~r
New c"'ndition:&
may develoP. 'Which will necessitate the revocation of permission al-
ready granted in ;certain cases in order to deal appropriately
w~.th
such condit:lone wHhout subj<Jcting some directors to a rule dif:erbnt
:from that applied in the case of c-ther~::~.tt
I am writing to
re~uest
that you report to
·~he
Board an1
conditions affecting the banks of your distriet which would seem to
require revocation oi any permit to serve as director in two or more
bankEJ.
Very truly yours.,
Governor.
The Chairr.t:an.,
The Fedel'a.l Reserve Bank of
X-798
. ..
FEDERAL AND STA?E LEGISLATION
NECESSARY !Q.:!NCREASE MEMBERSHIP IN !.JiE.
FBDErtAL
pESERV~
FEDERi.L
fdW STATE LAVv'S.
SYSTEM
* * * * *
FECOM1!£NDATIONS .Q[
C0u1~SEL
!Q. .1]j! FEDEHAL RESERVE BOARD.
X-799
FEDERAL AND STATE LEGISLATION 11ECESSARY TO
INCREASE r.illviBERSHIP IN THE FEDERAL RESERVE SYSTEM, .AND TO BRING ABOUT UNIFORMITY IIJ ITIJSBAL AND STATE LAWS.
The Federal Reserve Act is designed, a.r.1ong other
things, to make it pos::;i'ble to create a. conpact banking system out
oi the savara.l ti10usa.nd i~1ll.Elper~dent and unrala.ted banking institutions in the United Sr.a.tes.
The Pnsid.3nt £1a.s a.p:,;ealed to all eli(.,ible banks to
enter the syster.1 in ord.ar th:l.t the ba.~J.king resources of the United
Sta.tes r.:ta~' be ilseli to the f,;rcatest adv-a.nr.abe in the ;rasent eLier;ency ..
Under existing ia;;;s, t~IlY bank.s are 'W".c.Lble to enter
the .;ystem, ·.-;hUe o"Lh.;;rs are deterred frotl doing so because in the
opinion of tL'leir oi;;:'icers a.nci. directors r.1erabership would restrict
the OlJerations oi such ba.:ol:::s, or ·..rould. ir.1pose additional burdens
·,-Ji th.out acle-...u--...ta COi,•l.J<=mss.ting <:~.dv<:.ntages.
r·hne :'di'cher Federal nor State legisl.:;~.tion can r.Ja.ka
it possible Io:;.· .:;~.ll oan:..:li'\; instit'l:,tions to' becar.le l~l&i-Oers ;·vitnout
rao:ce or less r.:;~.a.ic.:;~.l chc.mbas in t;.1e syst<;r;l, r..any or' the soc.:;~.lled obstaclas to t1er.1barBhip can be rer;wved by c~.Clendments to the ll~edera.l
Re;;erve Act C:~.nd to v.:;~.:;,~ious Std.te la>Js.
In sde~:ine; to frocure this
nacessC:~.ry lat.,isl.:;~.tion, it is ir;::c.;orta.nt tit...d.t ·nills introc.:tuced should
be dr.:;~.·.a'l v.-ith c1. vie·;• of bringi:;,;; .:;~.i:Jou.t greatar coora.i!1cl tion in the
J?O-."lers or' n;.l.·~ionc.l. a.::1d. St""ta ·o.:;~.r.li'.::.;;;, d.~'la. 6 reater unii'or•.. ity in Faderal
0:1.nd State la,;s r-:: 0 --.lld.tli'lz; t:1e bc:!.:"i.::ing bu~inass.
In tne s1:.c:..ter:1ent r.i:l.a.e public thr01.;:,h the :2ederal Res~rv3 :Scc.rd. on Jc·co'J~:..· l), 1)'17, the Pr;:;sident, in app~ling to
S'.:.o:~:cc: ·o.;;~.:i:'.::s '.:iO -~;,;cor.:e "~;ar:it0rs of '~i1e systac-1 G~.nd in ref<Jrri...J.g to the
Feder<-<.1 :?..cs<trve .A:! t, ..!c.~.lls ""t~<J.•t io::J. -~o the ia.:::. t tr..at the "J'nification c:: o~..:.:: ·oan:l:<:i;."lg sys.tew and. the COLl.iJlete r,ioboliza.tion of reservol:> cl.re aeon; tl:e fund¢a.l 1::.rin::.:i;ples of the Act. 11
T.nis '-"'::"'l.i.::'ic.:..tion Cd.n h.:.~.rdly be acccr:;:f;lished by a.mendner..ts to the Feder.;:.l la·.~rs.
The :?ederal Raserve Act cd.nnOt 7 in other
·:Jord.s, 'be tjad,e ad.a.I t"-ble 'CO the 1,,.;,;.::; of i'o:-ty-eight jjj'ferent Std. tes,
and.~·.:.:~e:i.·e raust be coo:;;;;ra:cion as ·b0'v'·"'S~l tna Sta.ta and Federal authorities in ;;he L~tter o:;:· la_isla-~ion.
.
In o:::~~r to secure t~1is cooperation it is i.Llportant tbat
a iai'Llite :uolicy shc·.1J.._ ·.:~a adopted.; th::l.t consideration should be
given to .:Che c:kl.ractar oi l;;:~islc~:cion necessary on the part of the
St<-<.tes, and. or.. the pc.~.rt o: tl'le :2ederal Govartltient, and tbat the purpose C~.na. :prob<:<.ble effec'~ of any la;isl<:~.·cion acivocated, snould be made
,,
x...799
~2-
cl~r.
Tnis involve& a consid0ration of those Federal and State
laws v7hich either prohib~ t or have d. tendency to prevent nonmember
banks frcr.1 bec('r.ling mec1bers <'f the Federal reserve system.
Banks ··•hich are prohibited or prevented from
entering t:he system r;ay be divided into three classes:
1..
Those ,vJ.lich ara ineligible to t1et1bershibp
under the Federal Reserve Act.
2.
Those r111ich are prohibited from becot'lLm.g
nembers by State larvs.
3..
Those iJhich, ·;vhUe ali;:,iblet c~.re prevented
frQn joining beca.use the character of
their assets is such they are unable
to obtain adei.iuate accommodation from
the Federal Reserve funk, and are.
tnerefore, unwilling to assume the oblit;cl tions cf mer.1bership.
In d.eterr;Lming ,-;ha.t form or legislation is necessary
to increase the ne;:,.b0rship in the :Federal Reserve Systera, these three
classes, ior convenience, should be treated separ~tely.
BAIJKS IIIT:J:.IGIBLE U11D.ER FEDERAL LAW.
1.
The -:~.ua.lif:ica.tions prescribed by the Federal
Reserve Act exclude frOLl :c.1embership:
(a.)
(b)
Unincorporated banking associations havirlg no
capital stock;
Banks the capital stock of which is insufficient
to entitle thet1 to become national banks.
According to the Report of the Coz;1ptroller of the Cu:rrency for the year 1917, on June 20, 1917, the aggregate re~ources of
StC~.te banks, savings banks. private ba.nks, and loan and trust c~an:dles,
ar..1ounted to more than $20Fcoo,ooo,ooo.
Of this a.r.1ount, D1ore tba.n
$4.800,000,000 Has held b~t the 622 mut~l sa.vings bcl.:nks in the United
Sta.tes, a.nd it is e;:;tir,la.ted. than an ecJ.:ua.l or greater amo·Jnt v~a.s held by
inccrporatod. State Sd.Vings bd.nk:s w;Lthout sud!.ficient Ccl.pita.l to entitle
then to b.Jco::1e l'lationa.l b..;;.11ks.
I.l this estir,;a.te ;is correct, a.ppro.x.irna. t·Jly one-ba.lf of tr~c b..1nk:i.'1g reso":.:;.rc,Js of the United Sta. tes, other
tha.n those hel.:l. by l1il.tiorld.l banks, are ha:d ·by bd.:nks ,iihich are inelie;ible
under th.J :C.,edcra.l R,:;::>3:·ve Act to beccDa tleiDbdr [)a.nks. ·It is, therefore,
desirable -clk..·c p:..·ovisior.. ;;~J.o-..11J. be r.~d.e for t:ila adpuhssion of such banking associd.tior2s c:.s r;::ay be a.dr;y,;ttei wi.thot;.t onclP.J:Jgering the strength of
the systetl•
X-79!·
-3Unincorpor~ted associations have no capital stoCk ~·h
.,ihich t& baso thair subscription to the stock of the Federal reserve
bank,. but raost if not all, have surplus and undivided profits ··•hich
might be used as a basis for such subscriptions.
As an alternative
plan a liruted or -.~.ualified r.1et1bership tiit;ht be extended to these associations conditioned upor. the r.1ainte:nance of a fixed. deposit balance
with the Federal reserve bank without any re~uir~1ent that such banks
sbd.ll subscribe to the capital s«Jokkof the Federal Reserve bank,..
For
reasons hereinafter set forth, ~nowev.:;r, it is believed. to be the n1ore
conservative policy to offer r.1er.1bership to e;.ll banks t1ade el.I:hgible
upon substantially sirruill.at terms, rather than to have different classes
of IIlembership..
'
It is~ therefore, recot1t1ended. that the Federal Reserve
Act be ar.1ended so c~,s to permit Llutual savings associations to membership, provided their surplus ~s e':l.ual to the d.t1ount of capital stock
that ·would be re'l,uired of a national ba.nk doing business in the same
place in ••hich s~h associc~,tion is located.
admit to
provided
e':l.ual to
business
It is also reca:iLlend.ed that the Act be ar.1ended so as to
nembershi]? incorporated banks ·;-,rithinsufficient capital stock,
the comb,.ned ca]?ital stock and surplus of each such bank is
the d,r,lO"Illlt that ·;,ro-uld be re':luired. of a national bank doing
in the place in which such ba.nk is located..
The capital re':l.uirements of national banks are not
unreasonably la.r~e a.nd a. reduction v•ould not ba;ge a. tendency to strength~n the system •
.Banks with insufficient capital mtght, however, be
to become mer..1bers i f they ·,v-Ul agree to maintain a surplus
which added to their capital will e~ual the amount of capital stock
ra~.~-uired. of :Q.Q.tional banks.
A fixed surplus v.rould in such case
c~,fford the same protection to those dealing vvith the bank that is afforded by capital stock, except in those States in which the stockholders are under a double liability for contracts and debts of the
association.
The stockholders of national banks and of some State
banks ·and trust con:rpe;.n.n:s are subject to this double liability, but this
is not true of the stockholders of <:.11 banks adzaitted to r.1erabership in
the Fede1·al reserve systetl, a.nd. there is ac..:ordingly nr- inconsistency
in :Jexmitting a fixed surplus to be treated. as capital stock for' the
purpose of detenntning the eligibility of the bauk.
pe~tted
Section l of the cippendei.l bill, pu.ge_ _ _~ is drawn
L"tJ. accordance ·,;ith these recommendations.
X-799
MEMBERSHIP PJ!\OHIBITED 3Y STATE LAWS.
2.
Bank3 are prevented from becoming members by the
la.ws {Jf •nly five Stdtes:
Thirty-on<;J States have passed enabling
acts specifically authorizing State b~nks ~nd trust companies tt enter
the system.
The lci.Ws of twelve States do not expressly or impliedly
prohibit membership, and so it is necessary to obtain legislation in
only five States, in 0rder to make it possible fr,r all banks which
meet tho requirements of the Federal Reserve Act, to enter the system.
In some States, however, banks and trust companies becoming members of the system, are entitled to enjoy all of the privileges and are subject to the restrictions of other mt:Jmber banks, while
in other States, banks and trust companies are permitted to become members, but are still subject to reserve and other requirements of the
State laws.
It is, therefore, aesirable th3.t somt:i standard form of
enabling act should be adopted by the sevt:!ra.l St~tes, designed to place
all membt:ir banks on an equality.
There is appended ht:iret~a. tbn~a.tive
draft of bill int<>naed to accomplish this purpose. (See p.:~.ge
•)
BANKS PRE}'~NT§D FROM ENTERING THE SYSTEM BECAUSE
OF ADDITIO!-!}-k,I3_URDEN§_ IJiY_OJNEp_ IN MEMBERSHIP.
The largt:ist class of nonmember bc~.nks ia composed. of
those which cn5~5e in tho corr~ercial b~nkin5 business to l limited
extent only.
Few of the ~ssets of such banks ~re eligible for rediscount with, or purchase by, a Federal reserve bank.
Except to
a very J,imited. exte;nt, such Lanks are, therefore, unc~.tlle to procure
loana from tht: F~o;d'-'rc~.l reserve bci.nk and the benefits derivtld from
membership do not c~.ppe.:t.r to be of .:~. concreto or pr~ctical n~ture when
viewed from the at ..mdpoint of the earning c;;~.pacity of the bankThe attitude of those in control of institutions of
this clas·.;; may be summed up as follows;:
(~)
If the investme>nts th~t they c~.re ptlrmitted by
law to make, could be used wh~;;n n~;;ct:saary to obt~in loans from
Feder~l reserve banks, they could re~sonably ~fford to cc~.rry the re~uired reserve witn tne Federal reserve b~nk, and to invest surplus
in interest bearing sccuritiea instead of carrying this surplus with
other banks at interest.
St;;~.te
(b) On the other hand, if their Statb laws permitted investment in securities which are eli5ible for rediscount with,
or purchase by, Federc~.l reserve bank.;;, they could acquired rec~.sonable
proportion of elit,ible pc~.per and could thus obt.:~.in some adv~ntage from
membership in the Federal Reserve system.
Unless their assets comtl within the catt:!gory of
X-799
-5~ligible p~per, th~y feel that m~mb~rship imposes additional burden without compensating advantages.
FEDERAL LEGISLATION PERMITTING FEDERAL RESERVE
BANKS TO ACQUIRE NO~ LIQUID SECURITIES NOT
CONSISTENT WITH PURPOSES OF FEDERAL RESERVE ACT..
An amendm~nt to the Feder~l Reserve Act, authorizing
Federal r~serve banks to require long term securities other than
obligations of the United States, would hardly be consistent with
the purpos~s of the Act.
The succ~ss of the Federal reserve system is dependent upon, to a vt::.ry gre..it ext~nt, the ability of the
Federal reserve b~nks to respond to the dem..inds made upon them by
the member banks in abnorm..il as well as in normal times.
This
ability would, unaoubtecily• be seriously imp~irc~ if the Federal
rcservt:i banks were pt:rmi tteci to acquirt;; any large proportion of
non liquid securities.
Such securities would neCessarily be offered
to the Fedt:iral reserve banks in l~rge quantities at times when the
general ~rk~t for such securiti~s was most inactive, and when the
Feder~l reserve b~nk itself could not dispose of such securities in
ord~r to meet current de~~nds except at a loss.
Such an amendment
to th~ Federal Rt:serve Act would, therefore, inevitably have a tendency to weaken, rather than to strengthen, the system.
The true remedy for this aitu~tion would set:im to lie
with the States.
If the State laws ~re ~ended so as to authorize
noncom...l'lercial banks to invest some proportion of their asat;;;tS in
eligible commercial paper, such b~nks without any m~t~rial reductions in their earnings m~y c~rry such pap~r as ~ secondary reserve
and will thus be plact:d in a position as member banks to obtain
assistance from the Feder~l r~serve banks when neededAs these banks are not subject to th~ s~e proportion
of demand liabiliti~s as commercial b~nks, it will not bo necessary
for them to carry a large proportion of th~ir assets in eligible
paper, but they should be permitted. to carry aome proportion sor:as
not to be in times of stress, dependent upon other banks for assistance.
in thia class
Many of the banka/will, no d.oubt, become members, notwithstanding the fact that under existing laws the burdens of memb~rship are in many cases believed to outweigh ihs advantages.
X-799
-6A CHANGE IN RFS~RVE ~.9..V.I!§MENTS OF ~fEI~_Elt_ !3~
SHCULD ENC.P.!JB£GF.:...J-lniJCOm.1t:RCIAL BANKS T.9 ENTER
SYSTEM.
Assumin6 thcct St:l.t<:; leg,isLo.tion is necessJ.ry to ovt:rcor:,e this situ:ition ul tima.t"'ly, tht: queJtion :1rist:>s wh~;;tht::r or
not membc:rsnip cannot Lc;; en::c,urd.6t:d by an amendmt:nt to tht;; Fed-
er:cil Rus.;,rv6 Act d "'si 6 ned. to rt::coc;nize the principlt:l thc::lt the
a.mount to bto ccr.tr:.butod to resourct:os of tho Federal rest;rve b:cink
should be based to so::1(:; oXtc:nt upon th:;; a.dv.:~.nt.;~.ges to be derived
from tncmb"'rship.
In other v>ords, if th<:.> .:~.asets of a bank are
such th.:~.t it C-1.!'! pro:;ur~;;; only li::litt:::-:1 accomr::odc-ttion from th~;; Feder.il rt;sd·ve;; b:cink, it '.;ould St;o:;;n; to b~;; consistent to rtquire less
rcoato'rVe to bco r:u.intaincd thc:tn is r,~aint;;l.irtt;;d by commerci.il ba.nks.
It L; not unu.;;ua.l for b.:1nkers to r"'quire Ltrgt> borrowers to m:ciinta.in ~ 6r~.:~.t"'r d~rosit ba.lJ.nce thJ.n.thosc who do not
seek loJ.no from tht; b.:~.nk.
It may bo r"'.:~.son.ibly J.ssumed th.:~.t rtoncommercLl.l b.inks will l:Lt.Vt::. occJ.;;ion to co.pply for fewt:r loa.ns than
commerc:i.:~.l b.mks sinc:e such b.:mks are not subject to demand liabilitius to the s.:~.m~ extent ~s comrr"'rci.1.l b~nks.
The rt:cegnition of the principlo th~t resources contribut"'d to th.:: Fedt>r:::l.l rc:servc: b.::.nk stculd bt:J~r somo rel:.~.tion to the
bendits re;;ceiveci would not involve; .:my ch~n<bt; in the C:::l.pit:::l.l requiremc:nt-> since tht> stock of the Fedvr:.~.l reserve b~nks is now
yiddin6 a. f~ir r~;;turn tt the sub;;cribt:r d.nd · con3titutes C:i. desircJ.ble
.:~.nd. cons~;:;;rv.:~.tivt~ inveatn:e;;nt for "'ither -:~. comm_,rcLtl or a noncommercia.l bct.nk~
It \vould, ho·NeVcr 1 rt::quire some chc:tnge in the reserve
req uirc.r:icmt ch
In d.eter:winin,s the rcst:lr·.re to be m.;~.int.1inc;d, the chardcter
of li.:~.bility to wn.ich thb r:Jt;;i!Jver bcJ.nk i3 aubj ect should be taken into
c onsid"r.:lti on.
V:hilo not "'xpr"'ssed in thv statute this principle
wa.s rE::c ogniz ~;d in the Na.tion.:.a.l B.ii.nk Act in fixing thEJ reserve requirc:;rr.<;;nts of n.-:ttional banks.
Banks in rd>~;;rvc and co;;ntrJ.l res:;;;rV;::. cities WB~>e, a.nd a.r~;;,
required to ca.rry a hi.sh"'r reservt~ th.:~.r~ othor banks.
This distinction
was no .:ioubt rr,adt:> Oi:!C<AUSe the; banks i~ such cities c;;~.rry a l;;~.rger
amount of bank dtopoaita than these> loc.:~.tea. clSe\vhcrc:.
ReserVt; requirezpents should bo bas<;>d on th"' ch;;~.ractcr of :J.<_,cJit liability
rather tha.n on the.: c;eoe:;ra.phical loc.:..ticn of th" b;..~.nk.
Bank deposits owned by ot!H:Jr bank~ -.vhich J..re in turn
subject to demand li.:~.bilities of their cu.:>tomd:;; are more subject to
withdrawal thci.n other clJ..sses of d. eposi ts and :i hi~Sher rt:S\:lrVe shoul.d
be maintained a6ainst this th.in .igainst any other cld.ss.
X-79~
-7Adopting the principle that in fixing r~strVB requirem.e:;nts apecial consiJt)r::~.tion snoulJ be givvn tc the exttont to
which th.J deposit iti 3ulJjcct 't:J wi'thira:N:ll, it is recommt:nded
that Section lS cf tht F;::deral Re3t:r\·~ Act be :.l.lT:c;ndeei so d.S to
provide fer th0 iol}c·.:ing cl.:3~;ifi~::~.ticnJ:
(a.) Od.nk dc-pOJi t.;; j
(b) c omwt:rcial deposits, that is, dofO.:.d t3. of
p~rsons,
firms, or coq.on.ticn3 used in the conduct of
thtdr busir.. t:l.;;s j
(c) indivi.;u-'-.1 dtrr,:csit;;, tllct.'t i3, checkinz; accounts of
inct:.vic.ua.:3 used in t.i1c- p~;;;.~=:nt of current expenaes;
(o.) inv-"stmijnt depc;;i t.;;, tt~t is, t un:L:> hvld for inVt.:.3t~:"'i:t.
Hlls cJ.ci:;;.;; tc incl~;;<c savin,ss accour::-cs, C.crtitic.:::.t~:-_, of ·~'..oposi't ;A.nd other tine
d·~:rcsi ':.J.
The rvSv!'Vb to bt- m.... ir.':...o.incd
cla33eS 'to be ~s fellows:
i3-ink deposits
Co~er~ial
in
InJivi_;ud.).
d~positiJ
InVvdtrn~:;;nt
deposits
t!1~:-Sv
seV~;:.r-.1-l
15 pt;;r c"'nt.
10
do
7
do
5
Jo
Section 2 of th<:: a:pp .. naed bill (p~6'-'_ _ _ _) is cir ..1.wn
with this rvCOL'lni<-.tnci ..ttion.
..!.CCOrcHnCI;)
deposits
d.6..i~n3t
X-799a
FEDERAL LEGISLATION NECESSARY TO BRING ABOUt
GREATER COORDINATION ~N POWERS OF STATE
AND NATIONAL BANKS. AND TO PROMOTE UNIFORWuTY IN FEDERAL AND STATE LAWS
REGULATING THE BANKING BUSINESS.
** ****
The arr.endments to Federal and State laws hereinbefore suggested are intended to remove some of the legal obstacles to State bank rr~mbership~ and to encourage the nonrr.emb~r
banks to enter the system. In order to &3velop and strengthen
the system~ however~ it is necessary not only to increase the
rrembership, but it is e~ually important to insure as far as possible the same rights and privileges to all members and to place
all member banks in a position to meet successfully the competition of nonmember banks.
If banks are induced to become nembers in the
present emergency from patriotic motives., and at the end of the
war feel that membership places them at a disadvantage in competition vvith nonmember banks., there will naturally be a tendency
to withdraw.
From every standpoint, therefore, i t is important
that membership should add to the strength of the member bank and
should not result in unduly restricting the operations of such
bank.
State banks and trust companies which becorre
members derive their corporate powers from the States by whichth~y
t:.r;;t;.· created. It is not within the povver of Congress to broaden
or enlarge these powers, but this n:ust be accomplished by legislation on the part of the States. It is, honever, within the
po.ver of Congress to rrake it possible for all such banks to enter
the national system by conversion into national banks under circumstances which nill insure to such banks the exercise of all
powers enjoyed by competing State banks.
National bank po.vers
should be broadened to enable them to rreet corrpetition of other
banks.
In the recent case of Bank v. FellowsJ 224 U. S.
the Court has fully sustained the right of Congress to grant to
national banks any and all powers exercised by corporations created under State laws which corr.e into competition or quasi competition with such banks.
To preserve and perpetuate the Federal Reserve
it is obviously advisable to vest in national banks all
powers nhich can be safely and conzervatively exercised ar:d which
are necessary to enable them to rr.eet the corrjpetition of State
banks and trust companies.
It has, heretofore been
System~
X-799a
.... 2 -
generally conceded that the corporate powers of national
banks have been rruch more limited in scope than those of
competing State banks and trust companies .. _and that the
limitations on the exercise of their corporate poNers ha'U)e
been such as to place them at a ::!iso..dvanta.ge in meet:.i,ng the
competition of other banks.
PROBABLE EFFECT ON OTHER BANKS AND ON
STATE LEGISLATION.
I.f the poNers of national banks are broadened so
as to enable them to engage in the same classes of business
as their competitors., State banks which enter the system but
which are subject to certain disadvantages resulting from dual
control by State and Federal authorities will be encouraged to
convert into national banks. Those which have rerr.a.ined out of
the system because of the belief that their powers will be restricted will be encouraged to enter since they rO.y;;df it becorres necessary .. convert into national banks without loss ~.
of·power.
Assuming that banks entering the system are subject
to certain lirrdtations on their operations prescribed by the
laws of the United States for the purpose of safeguarding the
banking business .. this fact will in the end prove an asset in
meeting competition of nonrr~mber banks since the public will
prefer to deal with those banks which are subject to proper
safeguards in their operations. The State authorities will 1
therefore .. be encouraged to adopt sirr~lar restrictions and the
rr.uch desired uniformity in laws regulating the business of
banking will thereby be expedited.
To accomplish this purpose
it is recorrrrended:
FIRST: That the trust powers of national banks be
broadened so as to enable such banks under appropriate safeguards to conduct this class of business on the sar:ce basis as
trust company competitors. There has already been introduced
in Congress a bill reconn.ended by the Board ·Nhich is designed
to accomplish this purpose and which provides for segregation
of assets and the creation of a trust department.
SECOND: That national banks be authori~ed to conduct
a separate savings department uncler appropriate safeguards, on
the sarr~ basis as State savings bank competitors. Section 3 of
the appended bill, page
is drawn in accordance with this
1
recommendation.
It is not contemplated that there should be any-assignment of capital to each department 1 but merely that the assets of
the three departments should be segregated and the books and
X-799a
- 3 -
accounts kept independently.
The capital and surplus of the
bank •Nill, therefore, be used to cover deficiencies in the assets of any departrr~nt.
EFFECT OF THESE AMEND.!VJENTS.
If these two amendments to the Federal laws are adopt•
ed national banks will be authorized to engage in the business
of GOm:r;erciaJ. banks, savings banks and trust companies.
1'he
business of savings banks and trust companies is more or less
local in character and can properly be conducted in accordance
with the State laws subject to such restrictions as the Federal
Reserve Board rr.ay find it necessary to irr,pose.
The business
of corrrr,ercial banks, on the other hand, is both local and national in character.
Deposits received from and loans nade to customers at
the place of business of the bank rray be classed as local transactions but the services performed by the corrmercial bank for
its customers include the transfer of funds or "'C~ailits , from
one State to another, the collection of obligations maturing in
other States, and other transactions which necessitate the establishment of relations with correspondent banks located outside of
the State in which the corrmercial bank has its place of business.
Few of the customers of a corrmercial bank conduct their
business operations wholly within the State in which the bank is
located.
Such banks are, therefore, called upon to act as
agents and to perform other services in transactions involving
interstate as well as intrastate corrnerce. It is, therefore,
proper that this branch of the banking business should be conducted subject to the provisions of the National Bank Act as from
time to time amended.
~any of the provisions of this Act have
already been incorporated in the la..vs of several States and in
the course of tirre it Nill no doubt becorr,e the stanO.ard. form of
act regulating the corrEercial banking business i~ the United
States.
The restrictions on banking operations contained in
the National Bank Act, vvhich appear to be the subject of most
concern to State banks contemplating conversion into national
banks~ are those which limit loans on real estate and ..vhich limit
the amount that rray be loaned to any one person) firm or corporation.
Inasrr.uch as real estate loans under the foregoing plan
could be handled through the savings department of the bank, the
-czorrmercial department would be in a position to compete on more
or less equal terms with State corm:ercial banks in nearly a.ll
States except in some States State banks are permitted to lend
to one person~ firm or corporation an amount greater than ten
per cent of the capital and surplus of the landing bank~
In
X-799a
- 4 ·-
those State,> Section 5200 3 v•hich prohibits national banks from
lending an amount great0r than ten per cent of their capital
ancl surplus to any on0 person 1 firm or corporation) rr,ight still
deter State banks from converting into national banks.
It is not bolieved. that this limitation should be removed or that the aiLount that rray be 1 caned by a national bank
to one personJ firm or corporation should be incroased by statute. !t is, hOivever, im~ortant that the Fedaral Res;;;rve Board
shoull bo pem,ittel to suspond th5.s l.irr:itation under certain
circumstanceJ.
It is [.erterally COl'\CodeJ that cll..<r:ing p0riods when
cotton or other crops are being assernbleU. for rr.ov:.oment to the
rrarket, it has not always boen :possible to onforco strictly the
provisions of S0ction 5200 without serious consequences) and
some discretion shouLi b3 vestel in tho Board. to remedy this
situation.
In rr.any States, the laN provid.::ls that a bank may lend.
ten per cent to ona prson) firm or corporation, and rr.ay lenli
an additional arr,ount und1:r ~roper socuri ty.
.,
.If this provision shoulQ be incorporated in the Federal laNs 1 ·.vithout qu:A.lification 1 it n:.ight enable ths purchaser
of cotton 1 grain, and other corm.o:ii tios to hold such corrn;odi ties
an ind3finite perioi for speculative purposes. If, hoNeverJ the
Board is authorized to suspend these limitations during certain
periods when such ~orm,odi ties arc bc:ling asser.,bled.J the banks
would be able to assist in the rrarb;ting of such corrr;,od.i ties without resorting to the various de·v ic0s nod used. to evade the limitations of Section 5200.
It is 1 therofore 1 recorrn~nd.ed that the McKellar bill
which has heretofore been introducel in Congress 1 an.i the provisions of which are incorporated in Section 2 of the appended
bi11 1 page
ba included in the recorrrr:endations of the. Board to
Congress.
X-799a.
I
RESUME.
"'
~ion I .ofthe appended bill is intenued to rrake
it possible~ without actually reducing the capital requirements of national banks, for m:utual savings banks and certain
incorporated banks not noN eligible to membership 1 to bccorr..e
members of the Federal Reserve System.
Section II is intended to place the reserve requirements of the Federal Reserve Act on a more equitable basis and
to encourage those banks to enter the System the officers of
which now." feel that rr.embership involves the assumption of burdens without con~ensating advantages.
Section III is intended to broaden the powers of national banks enabling them, with the aid of other amendments
recomcended, to meet ~ll competition of State banks and trust
companies.
It is believed that this will encourage conversion
of State banks and trust companies and promote uniforn.ity in
State laws regulating the banking business.
If national banks
are placed in a position to extend any reasonable accommodation
to customers under appropriate safeguards, the State authorities will necessarily be induced to place banks organized under
State law in a position to meet the competition of national
banks under similar safeguards.
On the other hand, if national
banks continue to be handicapped in their operations there will
be no inducement for the State authorities to adopt laws similar.
to the Federal statutes.
Section IV is intended to give some flexibility to the
lirrdtations of Section 5200 Revised Statutes and to rrake it possible for corr.rr;ercial banks to rr~et conditions which normally
recur periodically without resorting to various methods of
evasion.
Respectfully submitted 1
CounseL
,1.)
X-7CJ9- '-"" •
PROPOSED FEDERAL LEGISLATION.
X-7<J9b
- 1 -
BE IT ENACTED BY THE SENATE AND HOUSE OF REPRESENTATIVES
OF THE UNITSD STATES OF /IYEHICA IN CONGRESS ASSEHBLED:
That, that paragr.1ph .Jf Section 9 of the Act apy.:,roved
SECTION l·
December 23, lSl3, known ar.d
her~;;in
referred to as Fhe
Federal Resc-:;;rVE:: Act, which re.id s:
"No applyine; bank sh.il.l be admit ted to mt;rnb~:;r
ship in a. Fec1er->.l reserve bank un.lesa it posdesscs a paid-up, unimpaired c;tpita.l sufficitmt to t<ntitle i t to becomt> a national
banking ci.ssocLition in the place where it is si tuatt:d under the
provisions of the nct.tional-ba.nk act 1 "
be
o.m<ind~;;d
.;;tnd rv"'enactcd to
re;;~.d
d.S
follows:
'No c:~.pplyin,s bank shall be admitted to ID<;;mbr;:;rship in a Fed;;;ral rc;:;.,rve bank unleas it possesst>s a paid up, unimp-Lir~;;a capital sufficient to "'nti tle it to become a national
banking associJ.tion in the pLwe where it is situated und0r thu
provisions of thr;:; nation;;~.l-b;;~.nk act, or unleas its combined C:i.pit.:~.l
.:;tock d.nd surplus :.<.re equal to the amount of C.3.pi tal stock it would
be r~quired to have to becomb .3. nation~l b.3.nkine; association in th~
plac~;:; ,'Jht;re it is aitu ..-tbd, and unlc;ss such bank d.gr·ves as .:1. comi.ition of m6mbership that it will not permit its comoinc.d c.:~.pH.:t.l
stock .:l.nd surplus to be rtoduced Oi:!low th.:it :illlount while .3. memb 8r
of the Ft;dt:ral rvs.-;;rve systc.mProvided, however, that mutud.l
s.3.vine;s d.Ssociations without ca.rita.l stock, but having a surplus
c:qua.l to the .3.mount of capital stock th.;~.t would b~;; rt:;quired of .
n-1tional banks doing busint:Jss in the p.L1c~ wh"'r"' such assocLt.tions
:Ud situated, may be admittt:d to nkmbvrship in the F'edt>ral fte.servt;
systt;;m upor. subscribine; to the amount equJ.l tl'l six per cent. of
such surplus and upon ent6rin5 into ..in agroem~nt not to p8rmit such
;;;urplus to be reduc8a. below the; amount of capital stock ..t n3.tion.::t.l
bank would btJ requirt;d to h3.ve in the pl3.ce whc:re the a..> 30ciation
is situ.:l.ted while a mt:on:ber of tht: Fbdorcil Rest:!rVe Syatem. r;
1
SECTION 2.
and
rc-en:act~:>d
That Section 19 of the
F~::idt:ra..l
Reserve Act be :imendod
as follows:
"3-:..nk doposi ts, wi ~hin
th~;:, n·,.;;.:~.ning
of this
Act, sh.:~.ll b~ h~la to m~~n th~ net a~ount due to oth~r b~nks ~ftcr
deducting therefrom tht;; J.mount du0 from othor t,..:~.r..ks.
Com.i1it:rcic~.1 d ~:;.posits a;:1.:ill be he 'J.d to mea.n
deposits of persons, firm.:>, or corpCL'. tiOi1S used in the condur~-L
of thdr busin<:;ss.
Ino.ividu..:tl de:r.)vsits sh.:..ll be neJ.d. to mc-;an
dt;;posits of inaividu~ls ust;;J in th~ p.:iJffiant cf curr~nt expens~s
Investmt;lnt depcsits sh ..:..ll be h~:Jld to inclU(ir;:; all depoc;:i..tz fld.Y..?. bltj
.:tft~;::r thirty aays, all s.:.~.vin;;;s ace ounts anJ c~:;rtif icc~·c,~<o> 1f d.c:t.: r-;;;l r,
,,
...
~
X-799b
-2which are subject to not Jess than thirty days 1 notice
before payment.
Every bank, ba.nking association, or
trust company which ia or ·which becomc:s a mE::mber of any
Federal reserve bank, sha.ll 0sta.blish and maint.d.in reserve bald.nces with its FE::dera.l n;;,st>rVe bank as foll'Ows~
(a) An actual net balance t;qual to not les2 than
fifteen per cent of its bank deposits;
(b) An actual net balanc:t: t:Jqual to not less than
ten per cent. of its commercial deposits;
{c) An actual net balance e~ual to not 1es3 than
seven per cent. of its individual d~posits;
(d) An actual net balance equal to not less than
fice per cvnt of its investment deposits.
No memb0r bank shall keep on deposit with any State
bank or truat company which is not a m~mber bank, a sum in
bXC ess of ten per cent. of its own paid up capital stock.
No
member bank shall act as a medium or agent of a non•member
bank in applying for or rt:;Ceiving discounts from a Federd.l
reserve bank under the provisions of this act, except by perrr;ission of the Federal Reserve Boa. rd.
The required balance
carried by a member bank with a Federal rt:S6!'Vt; ba..nk may under
tht: regulations of, and subject to, such p.:-nalties as tn..iy be
prescribed· by the Fed(;;ral RtJserve Bo.:trd, be checked -:J.ga.inst
and withdrawn by 3uch mvmber bank for the purpo3e of mt;:eting
existing liabili·cit::s. Provided, howevc;r, Th.;~.t no bank sha..ll
a.t any tirr.e, :.rHkt:o new loans or shall pay any dividtmds unle.35
and until thb total balance rt;;quited by law is fully restored,
National banks, or ba..nks organized undo:;r local laws, locat;;;;d in
Alaska, or in a dependency or insul:1r posstJssion of any part of
th<.J United States outsid;;;; tht.j continc.ntJ.l Unit-ed States, may re'main nonmember ba..nks, a.nd shall in that event, maint:1.in rese.rv,;:::;
.• nd comply with all th~:; conditinn:3 provided by la..w regulating
tht>m; or said banks may, with th<::: c onaent of the reserVE:! board,
becom,;, mc:.rr:b.:-r of any one of tht:~ reserv~;:; districts, d.. nd sh.1ll
in that t;;Vt.mt, takt;; stock, rraintain !'eservt:Js, .1ne1 bt;; subjt::ct
to all tht;; otht.jr provi 3ions of th:i.s act.
SECTION 3. "Any bank inc orporattJd by spo-jCi:il law er organizt.;;d
under the g<:meral law of any State which bt;comcs a na.tion2;.l
bankin& associd.tion by conversion und or authority of Section
5154, R"'vistd Statutes, and 'Vhich at th0 time of such convorsion is conducting a separate savings depa..rtment undt:r
authority of the laws of the Stc~.te in which such bank i.3
loca.tect, may continuet aftd' b"'coming a .!ut:i.or-,.;~.1 b2;.nking
association, to conduct or op~ra..te such savings d~partment
a.s a separate Ciepartzr"ent 0f the; bank and nu.y inv;,st dcpo.>its
rt!C ei vt:~d in such dt;pa. rt:nent in ace ordanct: ··Ni th tht; laws of
tht! Stdt6.
Pro via t;d, howevo:;r, ThJ. t the Ft;dcr.1.1. Reservt:
X799b
-3Board., by regulation. may- dett:rmin~;; t() what extent such d8posits may be inve;;:;teu in notes, drafts, bill.:; of ·.xch:l.nc,d,
acceptances, or other securities eli6ible for reaiscount
with, or purchase br, F<.;deral r6senro bdnks, and to .vt.at extent such deposits r£.ay be invt:st~:;d in a.ny particular class
of security or prop~;;rty ;v}cich .s~vin.:?;a banks ar.,;; pdrrr::i ttc;;d
by the law a of the St;~.te tc ir.vcst in; I'rovided further,
That in those Stcnea thE; l;;iivS oi which do not prescribe th.;:;
ch;;iracter or investrr.onts -r.o be ;n;;l.Cie by savings b;;inks tl';e
Federal He serve BO;;ird., by r10ogulatior., may pre.scribo the
nature and character of Lwostmenta to be maae.
Every
national bank opor:ni~g :t separate sdvings d<Jpartment und.er
ae1thori ty of this .\ct sh01.ll se;srog':l.te and. set apart a.ll
assets belongin;s to such department and, under regulations
of the F"ch.ral Rdervt; Bo.1rd,. shall ket-p a separat~;, set of
book:;;~ and record.;, ..>hO\':in;; in propwi'" det:1il all tn.na:1ctions
cn~.l6cd. in.
No 3Uvh nation...i.1 b:;~.nk sha.ll rvCviVc in it.J
savings depa.rtrro:nt .;;.ny dt;;podi ta ctht:r than timt:> doposits or
savings deposits, :~.:; d.,fineci by Section 19 of the Ft;deral
ReseEVt> Act.
In case of liquidation of a n:;~.tion:;~.l b~nk
opt:r-'lting ~ St;p:1ra.t..; savin;ss department ~;;:i t1·"~;.;r by :;l receiV<>r
duly .;ippoint;;;Cl or by 3. liquiC1ating ag.::.nt, tht; cteposi tors in
the savings dep~rtxent sn.::l-11 h.:l.Vt- a first lit:on on .'l.ssc;ts h<>ld
in such def..lrtmvnt.
The. Federal Rt:ost.rve 3oc.rcl, by rco;sul.::.tion,
may p~:>rrr:it ~ny n.:~.tional b..:t.nk to e3tiolian :;lnci n....~-int..:~.in ..:t. Scio.lr:tte savings dt~partm\:!nt to be op~;:;rated in accord:;~.nct:: with the:
provisiona of thia ..:t.ct so far a.3 a.p:rlic:.~.·ole.
SECTION 4.
That section dt:Nen or the Federdl Re.:'t::rv~
Let, a.s ctn16nd.~;:;d by Act of St;ptc;r:.~bt;r seventh, nin¢:··
tt:en hundred and sixteen, be further cl.Il':endGCt by .:::;.::..dinJ; a new paragraph as follows:
"Upon the affirmative Yotto of ..i majority of its
mt;mbcrs, tho Ft>Cit:oral Rt:o;;;~t;;rV.;; 3oaro. sh;.;tll haVt. r:o.Jcr
to auspend a limita--cion i<;;posecl by se;ction iifty-two
hunc.red. of the Re-vised S:..::.~utes of the Unitel.l Stlt~.o3,
which provides in ;;ubsta:c.ce th::..t tht: tot:il lia.bili tics
to :::tnJ n.J.tional or n:e:..ub::lr L::ink of :!..nJ person, cc:::p:~ny,
corpor:ition, cr firn:. for n·oney borroNt;;d, includint; in
tho liabilitit.3 :fuf thb c on:.p:~.ny or firG ~~,r.."" lia.tili ty
cf the St>VGr..:t.l mE:Jrrbers the;reof, ahal:L at no ti::uc t>XC~,;;o:;ri
one-te::":.h part ot t.h8 amcun'c. of ca.pi t_ll .Jt 8Ck of .;;u::.h
n.;ttion;.l or rr:ember b.ink :.:i.CtliJ.lly paid i:1 "'-.10- uninrp..;;.irt;d,
.J.n:i ont;-t~;;n-r,h p::..rt of its unim!)a.ircd 2U.rf-ltl;;:. 1cr·oyj_Jc;o,
ho\'i~jV0r, 'Ih::l.t in .:;.ny c..:..se:; in ·.vrdch such ~j_r;\)_t_;l+.i0JC:3jlr.;;
ausr.cnded, th& Ft::i;;;r.il RcSbt'V<.o Bo.:trd sh.l:;_:;_ rcquir"', J.3
a condition of such au.5pvnaion, thxt -:;):):;; n:;teJ, :lr.:if"(;,s,
a.nd bills 01 tXCh::l.n(;0, or othtor t::Vid..:;nCt;;:l :11' (j;;;(>t, rJ).:J••
cour:tc:d by a. n.J.tional or r:~t:t:u.~ber b..ink in ~xcc:.~;s of tflt; _;,.:-:~c:;
•
X-799b
•
provided by section fifty-two hundreti .;hall be s~;;;cured
by a first lien upon cotton, corn, wh.;;.~t, or some othtlr
st:l.ple a.gricul tural products, or by oblig-1tions of the
United Statt>S·
Thu Ft.;;d0r3.l R~:>avrV<:J Bo..tr·i shall, by
regul:ition, prc;scrib<:J tht:: lt::ngth of timv that such
lirnit3.tion shall bt; suspendt:>d, and the amount thcl.t any
person, firm, or corporation
~y
te permitted to become
lio.ble to a naticna.l or member bc.tnk under thE:: provisions
of this Act."
.
...
X-79S
PROPOSJ[Q STATE LEGISLATION
k:QBM OF' BILL.
mi.@1i IN ACCORDANCE WITH
RECOMNENDAT IONS
•
••
~.-799
An Act authorizing any bank or trust company incorporatud undor the laws of this Comrr,onweal th to become a mamber
of a Federal rGserve bank; to vast in such bank all pcrvvers conferred on member banks; to provide that the exercise of such
p0v1ers shall be subject to all of tha provisions of the Federal
R0serve Ac:t and to regulations of the Federal Ras0rve Board,
rr~de pursuant thereto; to alla# any such bank or trust company
to comply 'Ni th raserV3 rcquirecents of the Federal Reserve Act
in lieu of thoso established by this CommonNealth; to permit tRe
authorities of this Comrronweal th which supervise and examine
banks ani trust corr;panies organized under its laws~ to acc;apt
the examinations and audits rr~de pursuant to the Federal R~serve
Act in lhu of th osa rc;l{uired. by the laws of this Comrnonweal th
anC:.. to disclose to the Federal authorities inforrr.ation rolating
to th.:; condition and affairs of banks and trust cornpanies organi~ed under the laws of this State which have become or which
s.:;;ak to bJcom.:; mombcrs of tho Faderal Raserva System.
Be
it enacted by tho Senata and House of Reprasanta-
tiv0s of tha Cormom;c;al th of
in General
Assembly md, ani it is horaby 0nacted by the authority of the
same.
SECTION l.
Tha ",rord.s "Fadoral Raserva Act as h.Jrai.n
used shall ba hald to mean ani to includ0 tho Act of Congress of
th0 Unito.i Stat;;;s approv0d Do comber 23~ 1913~ as h.:JrGtof orq and
h: rsaf t0 r a.rr.Jnrl,;,d.
Th0 .vords
F.eioral R.:;scrvJ BoarJ. 11 shall be hJlii to
mean th2 F.:,deral R0sarve Boari create.:'. an:.. J.oscrib.:;.:l. in th.:; Faioral R3sorvc Act.
11
Th.:; vvords 11 Fa.iaral resarv,:;; bank" shall be hcli t.o
mean th;:;; F.,deral rosorvo banks croatad and orga."liZe·i unier authority of th..::: Fodaral Rosorva Act.
T'iL3 ;vords 11merr.b0r bank 11 s}u.ll b0 h,:;;li to moan any national bank, St:1.to bank or banking and trust company which has
become; or ·irhic:. . becozr.cs a m.:;mber of one of th-::; F.:;d..;ral n~sorvo
banks cr ..:;at3ci by th:J FJd0ral R:sorvJ Act.
SECTIOlJ 2. That any bank or trust ccmpany incorporated U.."ldar th-> lavvG of this Corr.mon.v,:;alth shall hava the pow..:;r
to subscriba to th0 capital stock and b;:;,com; a r:..;:rr,bar of a.
Fd.cral rcsarvc bank.
.
'
::-799
SECTiON 3. Any bank or trust company incorporated
under th~ l~ws of tnis Commonwealth which is~ or which becomes
a member of a Federal rossrve bankJ is by this Act vested with
all poNe rs confJrrod upon member banks of tha ·F0daral r.oserve
banks by tho terms of the Federal Reservo Act as fUlly and
corr~letely as if such powers were specifically enumerated and
dcscribad herein~ ani ~11 such powers shall b3 exercised sub'"'
ject to all rostrictions and lirr~tations imposed by the Federal
Reserve Act~ or by regulations of the Federal Reserve Board
rr:ad0 pursuant tharato. 'l'ho right~ howaver~ is expressly reserved to rovokJ or to arr.end the pONors horein conferred.
SECTION 4. A compliance on the part of any such bank
or trust company Nith the res0rve re~uirements of the Federal
RJserva Act shall be hclld to be a full compliance with those
provisions of the laws of this St~te which re~uire banks or
trust co~p~nids to maint~in cash balances in their vaults or
with other banks 1 and. no such bank or trust company shall ba
re~uired to carry or rr~intain raserve other than such as is
requirod under tho tarms of the F3deral Reserve Act.
SECTION 5.
Any such bank or trust company shall be
subject to the exarr,inations required under the terrrJS of the
Fe~eral R3serva Act~ and the authorities of this State having
suporvision ovor such bank, way in their discretion accept
such exan:in~tion in lisu of the examination required under the
laNs of this Comrr.onwaalth.
Such authorities 1 their agents
and Grr.ployl';les 1 rr:ay furnish to the Foderal fulserva Board~ the
Fedaral reserve banks, or to oxarr~ners duly appointad by the
Federal .Res:;rvo Board., or tho Federal raservo banks 1 copies
of all Jxarr.inations rr.ade~ and rr:ay disclose to such Foderal
R0s0rva Eo~r.:i, F0daral reserve banks~ or cxan;iner~ any infonra.tion Nith raference to the condition or affairs of State banks
or trust companies organiz;.;d under the laws of this State
which become members of a Federal reserve bank, or which apply
for mGmbership in a Federal reserve bank.
SECTION 6.
All acts and the parts of acts inconsistent herewith arc h~reby repealed ..
4-18-18
W. P. G. HARDING, GiOYIIMtea ·
PAUL M. WARBURG, YI81 . .YIUDR
FRIOERIC A. DELANO
ADOLPH C. MILLER
CHAR~ES S. HAMLIN
EX~OFFICIO MEMBERS
W1LLIAM G. McADOO
SECRIITARY OF' THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
Jll. PARKER WILLIS, SECRITARY
IHIRMA.N P. ALLEN, AliT. SICR:ETARY
AHP FISCAL AGINT
FEDERAL RESERVE BOARD
COMPTROLLER OF THE CURRENCY
WASHINGTON
ADDIIKSS REPLY TO
FEDERAL RESERVE IIOARD
March 13, 1918.
Memora.nudm for Faciera.l Reserve Ea.nks:
The Fecieral Rese.rve Board has received the f oll cming letter
from the 6Uice of the Comptroller of tha
it as
r~fers
to your bank is
fo~arded
Curren~y.
s~~ch
portion of
for your attention.
Assiatant Secretary.
Federal Reserve Board 1
Washington) D. c.
Gentlemen:
Dl.lplica.te copies of the following certificates of deposit "Jl!
account of 11Miscella.neou.s Receipts: Assessments upon National Banks
for Expenses of Ex.am:\na.tion& 11 J for the month of January, ha.ve not
been received and it is requested that the Federal Reserve Banks concerned. be aaketi to forward. copies to this office.
federal Ra§erve. BankEt
Boston
.Amoun+.
Da.t.e
Jan.
11
II
"
"
11
4
7
$
97. -~'/
2'/9.J.J
3l.8e
18
26
31
46.07
New York
Ja.n. 29
159.15
Philadelphia.
Ja.n. 11
779.?2
Cleveland
Jan. 17
17
28
2,807.93
450.18
33.81
Jan. 14
850.30
"
"
n
·New Orloa.ns
tt
St. Louis
II
II
11
II
22
. 31.49
Jan. 12
279.01
1,643.24
178.26
66.08
180.76
II
II
II
"
,,
II
tl
71.40
n
II
15
18
18
21
X-800
X-800
-2 &gou.ni
!19.-te
St. Louis (Conti:rued)
$
n
$
Jan. 21
"II 25
25
26
26
29.41
615.1.4
3'!.11.
166,19
II
II
II
II
II
!I
28
~93~
ll
11
19
If
ll
1?
19:ic80
29 • 5i3
11
:t
"
if
89
30
32~1 .,.'l:~
II
n
11
II
24
ll
II
31
300.53
Mi:f!.neapolis
Jan. 17
430.84
Dallas
Jan. 31
351.50
Seattle
Jan. 10
49.35
131.10
ZJ
188.76
3l. 2!)
24
18'?.63
Respectfully,
(Signed)
re.
P. KANE
Deputy Comptroller.
Released for publication,
Thursd~y
morning, March 14, 1918.
X-801
Not earlier
STATEMENT Fa! THE PRESS
334
FEDERAL RESERVE BOARD, MARCH 13, 1918.
ABSTRACT OF REPORTS OF CONDITION OF NATIONAL BANKS • MEMBER STATE
BANKS AND TRUST COMPANIES AND ALL MEMBER BANKS IN THE FEDERAL RESERVE SYSTEM ON DECEMBER 31, 1917.
(In thousands of dollars)
---------------------------------------------------------------------------Total member
National
:State banks
banks
(7657)
RE S 0 URCE S
---------
Loans and discounts ••••••••••
Overdrafts •••••••••••••••••••
Customers liabilities account
of acceptances*~~ •• ~ .••• : ••
U. S. securi·i:.ies •••••••• , ••••
Other bonds, stocks & sec ••••
Stock of Federal Reserve banks:
Banking house ••••••••••••.•••
Other real estate owned~ ••. ~~
Furniture and fixtures ••••••• t
Due from banks and bankers ••• ~
Exchanges for Clearing House
also checks on oanks"in
9,387,849
15,066
~and Trust com":
1panies (250)
2,418,663
1,202
banks
(7907)
11,806,512
16:o268
236~509
140,807
377,356
1,620,50].
1,912.055
55,933
27:3,609
234~592
11858~093
a·/1J566
46,045
66,713
13,486
32,279
1,803,987
2~912
2,783,621
70,743
340,322
59.531
35,191
324,569
2,128~556
14~810
969,489
same ple.ce, . ............... .
241,963
Outside.checks and other cash
items ••••••• ~ ••••• ~.~ •••• ~.
59,575
22.~721
82,296
Cash in vault................
530;590
97,COO
627&590
Due from Federal Reserve·banks: 1,268,862
387,438
1,656,300
Due from U, s. Treasurer.....
42,627
1:071
43,698
Other assets ••••••••• ; • • • • • • • t.._..~~4;;.;8i-!,~1:..;4~7_.:_..,......;l;..r7..;4.!.,;.33;;..;2~~---~~2m2~2~,.-r4~77:9__
TOTAL RESOURCES ••••••••• : 18,064,160
5,013,885
23,078,045
------------------------------:-------------!·-------------:---------.------L I ABI L I T I ES
Capital stock paid in •••••• ,,
Surplus fund •••• , ..•••••.••• ,
Undivided profits less expen~
ses and taxes paid •....•..•
~urit reserV-ed.. for taxes accru:
1,091,856
763,639
219,294
301,471
1,311,150
1,085,110
323.050
15,721
48.483
6,113
371,533
~t·~~·~·~~ ~~~ l•t~a~o~~.:
9~98)
1,651
National bank notes outstand,
Due to Federal r.eserve banks.
Due to other banks & bankers.
Demand deposits including unpaid dividends and dfl..Jd:rhrs '.:
673,728
3,180
3,190,492
...10
449,015
21,834
lf ••.:n
673,728
3,190
3,639,507
11,179,676
2,746.899
checks • ............ ~ , .. - ... , . ,.
s.~.7rtv
3,15E,241
858,460
Time deposits •••.•.•.•...••••
2,297,781
649,413
135,014
514,399
U, S. deposits ••••••••.•••. ,,
132,633
).32,633
U.S. and other sec. borrowed.
229,598
30,349
199,249
Bi-lls payable with F .J. banks.
Bills payable other th8n with
85,258
18,375
66,88:3
Federal Reserve banks •.•.•.
390,90.
136,074
254,826
Acceptanees** .•••.•••.•.•...•
130,843
56,777
74,066
Other liabilities ••.••••.....
23,078,045
ta,os4,16o
5,013.885
TOTAL LIABILITIES ••.•..•
------------------------------~-------------:--------------;----------------
Liabilities for rediscounts
including those with Federal Reserve banks .••.•.•••
475,416
96,501
571,917
-----~------------~----·-----------------·------~·---------·----------------
*
**
Including customers' liability under letters of credit.
letters of credit and tra,•lers' ehecks outstanding.
Including
\
W. P.
EX.. OFFICIO MBMBilR8
Q,
HARDING, GoV&Heft
PAUL II. WARBURG. YJCI . .UMOR
FREDERIC A. DELANO
ADOLPH C. MILLER
CHAI!LES S. HAMLIN
W1LLIAM G. McADOO
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
FEDERAL RESERVE BOARD
COMPTROLLEII. OF THE CURRENCY
WASHINGTON
H. PARKER WILLIS, SECRITAitT
IH!RMAN P. ALLEN, ASST. &ICitETARY
AND FISCAL AGENT
ADDRfSS REPLY TO
FEDERAL RESERVE IIOARD
lvl.arch 14, 1918.
Dear
Sir~
I
ta~e
pleasure in sending you herewith copy of a lett0r·
which I wrote for the SaYings
Ban~
Section of "".;he A:JJerican Bs.nks1·s 1
Ass ocia t 1. on,
lt was
~nderstood
that this letter was to he treated ae
confidential, but ! see that unfortunately it was p,..\.Dl h:hed broadcast, and inasl'LUrh as some abstracts of it have gotten :into the
papers, I t:1ink it advisatle to send you the document in fulL
'In~.s
was a personal latter of mine n:ot for publication
and, while I believe 1
expr~ss
the views of the Boarc\ n:embers .. I
had no opportuni..ty of conEi.llting with them about it v.rher.!. w:riting
a ...
it. It is in n0 w..y ~o ':>e considered/~~ official docu":rent.
Very truJy yours,
Vice Governor,
PAUL M. WARBURG, CHAIRMAN
FREDERIC A. DELANO
CHARLES S. HAMLIN
ADVISORY COMMITTEE:
ALLEN B. FORBES, CHAJUAH
CAPITAL ISSUES COMMITTEE
OF THE
W. T. CHAPMAN, SECRETARY
X-805
F. H. GOFF
HENRY C. FLOWER
BRADLEY W. PALMER,
FEDERAL RESERVE BOARD
COUNSE~
STEPHEN L. SELDEN ·
EXECUTlYE SECRETARY
WASHINGTON
.
JAMES Q. NEWTON
AsST. EXECUTIVE SECRJ.Ua.Y
'
Chairman, Sub-Committee on Capital Issues,
Federal Reserve District No.
Dear Sir:
We are
receivin~
from the various Sub-Committees
opinions relative to applications which have never been ·
presented to this Committee.
This causes much confusion
and unnecessary searching through our files.
Will you
please see that all matters referred to your CommittPe
are referred to us in duplicate.
It is also advisable that the decisions of your
Committee be transmitted to this Committee without disclosure to applicants of the result of your investigation.
Faithfully yours,
ADVISORY COMMITTEE
By_____________________________
SLShtr£..E
i:
UL M. WAR BURG, CHAIRMAN
ADVISORY COMMITTEE:
ALLEN B. FORBES, CHAIRMAN
F. H. COOFP
HENRY C. FLOWER
,. -FREDERIC A. DELANO
CAPITAL ISSUES COMMITTEE
CHARLES S. HAMLIN
OF THE
W. T. CHAPMAN, SECRETARY
FEDERAL RESERVE BOARD
BRADLEY W. PALMER, COUNSEL
STEPHEN L. SELDEN
EXECUTIVE SECRETARY
WASHINGTON
JAMES Q. NEWTON
ASST. EXECUTIYI SECRf'.'tARY
Dear Sir:
Please
~ive
careful attention to the following
suggestions:
Before the Canital Issues Committee can express a
final oninion in favor of any
iqau~
there can be no error or mistake.
ef
~he
s~~u~t~t~~.
it
t~
Sub·-commi ttees are
particularly requested to see that thetproper descriptions
of every issue are sent forward with the original application, or as soon as possible thereafter.
With regard to b6nds, notes and similar securities,
it is necessary to give the proper name, date. and dates of
maturity.
It is also very desirable to give the serial
numbets, and this is necessary in cases where the proposed
issue is part of a total aut-horized issue.
Copies of resolutions authorizing the issues will
generally provide the desired information with respect to
. municipal issues, but the resolutions do not always contain
the serial numb.ers.
-2-
X-806
The applications should conform to the instructions
contained in the circular recently sent you and all applicants should be notified of the above requirements in their
own interest.
In referring to the action of the Capital Issues
Committee the shorter form has bPen approved in the
following language:
"Passed as not incom-patible with the
interest of the United States, but
without approval of merits, security
or legality.
Opinion No.
(Sgd) Capital Issues Committee
of the Federal Reserve Board."
You may authorize the use of the shorter form in cases
where opinions have already bPen given.
In case a heading or title is given to this clause,
it should be "Finding of the Capital Issues Committee".
The word "certificate" should be avoided as it is likely
to be misconstrued.
Careful attention to these details will expedite
the work of the Cani tal Issues Corruni ttee in Washington
and avoid delay
Please give such nublicity to these suggestions
as you deem adcessary or desirable.
Faithfully yours,
ADVISORY COMl\HTTEE
X-807
TREASURY DEPART.t!ENT
TTASHINGTON
Uarch 12, 1918
The Governor,
Federal Reserve Board,
Sir:
By direction of the Secretary y;Ju aro advised th~t tho Department has referred to the Auditor f0r the Treasury Department for settlement the account of
the Bureau of Engraving and }l'inting for pruparing Federal reserve n:Jtas during
tho pari~d Fe)ru~y 1 tu 28, 1918, am~unting to $85,660.08, as follows:
Total
~Jst~n ..•••••••••
16,000
1~,ooo
aa,uoo
F.hilado1phia ...••
40 ,000
..•..•.
18,000
RichmonQ •.•••••••
25,000
ii. tlanta •.•• , ...• ,
21 '.! ,OJO
Chicago ...••. , ••. · 48,000
St. Louis ...•••••
Miunea pJ lis ••..•• i 52,000
Kausas City •...•• ~ 16,0JU
Dallas •..•.•.•..•
ZO ,OvO
san Francisco ..•. 1G,OJJ
70,000
90 ,000
74,000
31,000
148,000
70,000
142,000
42 ,ooo
·zG,OJO
67 ,uJU
59,0u0
932,000
74 ,uOJ
46 ,OJU
41,0JJ
G7,00U·
133,0JJ
'JG,•J0v
21 ,000
14 ,uJJ
New York ••••.•••• ~
~lwv~land_
480,J~C
--;:::w:AC"M-P
28,000
39 ,ooo
21 ,OvJ
1,000
2,UJO
18 .ooJ
1.000
5,0JO
3,0-..~u
5,uuo
1:18 ,UJU
l3~,uou
125,00~
500,0JO
225,UX
16":},(.)00
lOB·,0oc
2,0~0
156,000
7-jG,JJO
JJ2,uuu
201 ,uuu
4,00J
100,000
44,0Ju
';)7 ,000
G,O·J(J
35,0u,)
241,000
2,.J4.5,U.'J
2,343,000 sheets at $36.56 perM .... ···· .. $85,660.08
The charges against 'the several Federal reserve banks are as fo1lc:m.s:
Flate
Inc. CcmCorrrpenSheets
?otc.l.
J! in t ing In.at cr ial s. pens at ion.
~..!.1_:..
I
Boston .••.••.
New York .....
P-hiladelphia.
Cleveland ....
Richmond •..•.
A tla:uta.. .. . •
Chicago ••••••
St. Louis ••••
Min:1ea.polis .•
Kansas City. .
Dallas ••..•••
San Francisco
302,0uo
2Ul,OOO
198,UOO
l39,wu
125,ouo
500 ,ooo
225,0u0
163,000
108,000
44,000
97,000
241,000
~3,~6.90
2,200.95
2,161.10
l,522.u5
l,:.J68.75
5,475 .oo
2,463.75
1,784.85
1,182.60
481. eo
1,062.15
2,638.':15
2,343,ooo $25,655.05
;., 4,273.3:.!
2,844.15
2,8()1.70
1,'JG6.84
1,7G8.75
7,075.00
3,183.75
2,2()6.45
1,528.20
622.60
1,372.55
:w3.u":ie.52
2,062.26
2,C31.48
1,426.15
L282.5C
5, 1.30 .oo
2,3J8.50
1,672.38
1,108.06
451.44
3,4fb.l5
2,472.66
9~5.22
~03,153.44 i24,o3g.l~
~) 362~40
~11,041.12
241.20
..:.37.6C•
ll-6.80
150.00
600. oo
270.00
1Si5.60
129.GO
52. 00
llG.40
7,J48.5t
7,:=3G.Gl:
5,081.0-t
4,570.JG
lS ,280. oo
8,226.00
5,c.?5':J.28
;),948.48
1, 60 8. G4
j,546.S2
8,91(].%
289.20
*2,8ll.GG
~85.66o.os
The Bureau appropria,ti't')~ will be reimbursed in the above amount frflm t:J.l'
indefiui te appropriati m, ",B-eps.raticm and Issue of Federal Reserve 'N::>tes, Reimlursa.ole," and it is requested that your Board ,.,ause such indefinite a.prropriation tJ be reimbursed i:l ~ike amJunt~-
Respectfully,
1. S. Ru\';e,
Assistant t~ee.rctary Jf tho Troasury.
EX·OP'FICIO MEMBERS
W. P. Gl. HARDING. GOYIM. .
PAUL M. WARBU RG, VIC I IIOYIIUJQR
FREDERIC A. DELANO
ADOLPH C. MILLER
CHARLES S. HAMLIN
W1LLIAM Gl. McADOO
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
ft .. PARKER WILLIS, SECRITART
SH!RMAN P. ALLEN, As IT. llclt:ITAR;t"
FEDERAL RESERVE BOARD
COMPTROLL&:Jt OF THE CURRENCY
AND FISCAL A~ENT
WASHINGTON
ADDRilSS REPLY TO
FEDERAL RESERVE BOARD
x... 808
March 15, 1918.
Dear Sir:.
I... send you herevvith for your information three copies of
a report submitted to the Federal Reserve Board, under
l>hrch 12th, by the Committee of Five of the
Americ~n
d~te
of
Ba.nkers As-
sociation.
The Cornmitte.e of Five is the successor vf the Cormnittee
of Twenty-five, which tried to work out und fina.lly offered in
Congress 4n amendment to the
Feder~l
Reserve Act known us the
~rdwick Amend~ent.
In the opinion of the Feder"'"l Raserve Bo... rd it would be
very desira.ble if some equit...ble method could be devised o·f harmonizing a.ll bunking a.nd business interests of the country in the
matter of check collections.
However, we are not prepared to say
that the method suggested by the Committee of Five is the best method.
I huve entertained the opinion tha.t the small country banks
were entitled to some concessions in the
large cities;
r.1c:~.tter
of remitting to the
thut at the present time the bunks in the larger
cities, and especially in those cities where Federal Reserve Banks'
or br... nches thereof
over
country banks;
ities of the
~re
Feder~l
loeuted,
a.n
h~ve ~
adv~ntage
very
import~nt
advantage
which will grow as the
f~cil-
Reserve banks and the gold settlement fund dre
'
-2-
X-808
further developed.
One
w~y
of meeting this, which has occurred to me would
be to permit two cla.sses of checks to be used:
Cl~ss
"A"' checks,
which might be printed in some uniform color, and Class "B'' checks
which might be printed in
(;1.
different distinctive color.
checks would be collectible at
chC;~.rge,
pC;~.r
with no deduction for collection
but with a charge for immediate credit when credit is given
in ddvunce of the collection of the funds.
be subject to
~
collection
to collect a
mi~ted
Class "A"
ch~rge
chC;~.rge
Cl~ss
"B-'' checks o would
a.nd the drawee bank would be per-
of, say
3~
form charge against the public of, say
or
4~
5~
per item, with a uni-
per item.
If such a system were considered feasible, I would propose to deny banks in Federal Reserce Cities or in cities where
there
~re
brunches of Federal Reserve
B~nks
population of over, say 50,000 to 100,000
lege of using Class
checks.
"ill' checks
~nd
or in cities having
inh~bitants,
~
the privi-
compel them to use Class "A"
Cities a.nd towns'outside of this
to use Cluss "B" checks if they so desired.
clt:~.ss
would be permitted
The udva.ntuge of this
method would be thut the druwer of such a check would be on notice
thut i f he sent the check outside of his town it would be subject
to a definite collection fee which he could add to the face of his
remittance.
~t
is highly desirdble that the suggestion of the Committee
of Five be considered at the coming meeting of Transit l!anagers,
and even though no fina.l or definite conclusion is arrived at, it
X-808
-3-
is hoped· that it
c<:~.n
be discussed and that
submitted to the
B~ard
o.
recomm~nda.tion
be
or to the Eoa.rd 1 s Committee on Clearing.
I will thank ¥ou, therefore, to bring this matter to the atten•
tion of the Executive cffic.ers of your bank itnmec!iately,
F. A. DELANO
Chairman, Committee on Clearing.
Releaae for the morning
papexs of March 18,1918
STATE14ENT FOR THE PRESS
stated
The Chairman of the Capital Issues Committee/that· the work
of the Committee during the week had been particuiarly ~eavy,
a very large number of applications having been received .. He
atatei that the total number of applications zeceived up to
date, and. 1.ispoaed. cf by the Cornlilittee, was 96, aggreg6..t.ii:6
~232 868 91'8 .
T:-t3 r.a.jority of -::t.e apJ:r·ovala given ·Jy .;he .
Co._._i-~ ~c,J oovared ~enewala -nd refunding ·Operations.
A~~- :z:ovc...La
of .L ..ew. i~aues, J:}unici:;;>al or otharwise, represented in Uiany
c~acs reiuctiona of the amounts orl~inally ~ppliad fo~.
T~e
nut1ioer of caaes for~ally ~e·olined ia comparatively 3ma.ll .:=-or
~~e =eaaon ~hat ~ ~reat aany of the applications are being_ .
au~prea~eQ at the ~:urce either ;ecause the applicanta rea~~zoa
·::;~.=.:~ ~:1.a ):,ur:;oaes ior ·-;~ich t;ildy :-:ould.. desire to isaue ·.:t_,;:,-:~ri·G. i~a :;e~e. not compa.tiole tri t:1. t:1e national interest& or -udb-tt.:se
·~:1e loc2.l comU!i tteaa were abl~ -~o .:.mpress UJ:On wouli--ol3 ...._.~.li
can·~ o :v::.i :3 :>~int of vie·.{ beford ~::e a.pplicat ior~s rea.chtl~ ;~ld
""en-r""
~o -t..:
. . ··1 tt ~e - ·· ....... ,..h
· n6 t on.
..,
1 "' .::.. J. u
04-l..L
IJ
.:: .. "
•• .::..
A ~~eat ~eal of doubt and, in aoce cases, protest naa been
dlicite~ ~y Sdcretary l!cAdoo•a earlier vtatementa with res~ect
·t;c, ·~!1e cieairabili·t;y of restricting unnecessary building opert..-
tic~a:
Some lettar3 ~ave been received, particularly ~rom ~he
Pa?J.flc Coast, fro~ buil~ir.g aaaociationa and carpenters
un1on3, ~roteatir.J againat what they conaidered an embargo
u~on ;heir activities.
So~e of th~se letters were transmittea
?" ·S~c~~·;;a.ry iicA:~co ~Y :.:r. Samuel Gompera, and Secretary l:cAci.oo
..:.:.a ;1r1t·ten a. letter to :fr. Gompers further amplifying hia
via;. This letter reads -d follows:
. ' ...
344
.-.
OFFICE OF SECRETARY OF THE. TREASURY
WASHINGTON
Jla.rch 15, 1916.
My Dear ilr. Gompeta:
I have your letter of February 18th, inclosing copy of
a resolution adopted by the Building Trades Council ·of San Francisco in which ·it is stated that I have been report~d in the
·public press as having "appea.led to pro·perty· O\mers not to construct any homes or buildings G.uring the Ua.r." This is ·entirely
erroneous. I have s~id that buil~irig operations which are not
required to protect the health or provide for the comforta~le
needs of our people, or to supply facilities necessary for the
proper conduct of busineds esaential to the successful prosecution of the ~ar, shmuld be postponed.
As you know I have no autnority to &ireot that buil~ing
be curtailed. I have ~erely suggested that unn0cea-.
sary work of th~t kind ~e postponeQ until th~ end of the u~r.
Such postponement would, I am sUxe~ help ~in the war, but eve~y
patriotic 1~n must be determined by his oun conscience in the
matter and oust ~ecide for hi~aelr if he can postpone the erection
of a con·t~Llj;ilated building un·Gil the wa.r is over. Compliance
;-;ith this sugges:bion Llay cause some inconveniences rthich are to
be greatly deplored, but auch inconveniences are an unavoi~~le
incident to ~a.r. The situation i~st ~e viewed from a nation~l
and not fro~ a local stan~point.
oper~tions
Ue are engaged in a. colossal war, in which the safety of
Am\3~ica ia seriously i~p3riled~ ·We ca.n not r~in ·the 11ar m1less
every reaource of tae nation i~ carefully ~ua~anded an~ u~ei ~ith
the utnost ~ntelligence. The groat fin~nci~l o~e~ations of t~e
Gove~ntlent, greater th.3.n those ever und.e:cta.::en by a:ny goverm:1ent
in the history of civilization, rJ.9.ke it eGs6ntial tha,t ·3ve-.r·y
unnecessary expen~iture by the goveLnttent, ~Y the st~t~s ~nd
wunicip~lities and by ~rivate corporations ~nd incivi~uals, 0e
avo id.e:'.. :rhile t:1.e "\13I i~ .in p~·ogress.. Unless ·this ' is done, it
t1ill ~e ic:;;>o·sai~le for the people of the United. Sta.tes to fu:Lniah
the :10ney ·.1hi·ch the Governu1ent must ha.ve to support its solC:.ie:Ls
a.n! sa.ilora r:ho a.:re ahed~ing their '";.)lood. for us upon thz ~J.ttlafield .
..
X-810
.(3)
The issue a.t s·~a.ke is \VOZ"ld freedom .1nd \70rl6. denocracy.
Germany, drunk ~ith the lust fo~ power~ would rule the world.
We· are coming to recogniz·e t~:.::t nhether the wa.r is to be w9n
·
or lost depends upon whether ~e ~re willing to make the sac~ifice
of blood, treasuxe an~sa~vice neceasa.-y to enable ~sand our
allies to ·a9hieve the honora~le anc lasting peaoe to whic~ ~e
asp.ire. We a::e in~rea.singly ool:~int; to a.pprecia.te that t0 rna.ke
possible such a victo~y~ evexy w~n~ dO~~n ~ni child ill~at be
willing to ~o their ut~ost. The£e·oust ~e no slackers in Uall
Street~ non~ in the homes, none on the farms, none in o~
industries. Cdpit~l and labor ali.ke must do their utmost.
..
Thex·e ·~1ua:t be no ".7aste~ no ex·tra.vagence, no unnecessary expenditure. T~e N3.t·ion has need of all its oan-power, of all its
weal~h, of all ita. r~eourcea.
The successful fin~ncing of th~ ~ar depends in large
part upon the current savinzs of the people, upon the difference between '";That is i:lade a.nd tlhat ia spent. Ha.bi ~s of thrift
~ust ~e stimulated~ and i~ neec be~ every dollar of savings
ahouli be lent to the Govern~jent~ ~here is no better inveat~ent
for the poor and rich alike, th~ a United States· Governt1ent
loan bearing interest. Thcae ~ho fail tc ~~ve ~ha.t they should~
and to lend their aa.vings 3..3 neadei tc tha G0vern:;1ent,. will f.:.il
to do theil" full d-q.ty. Thoaa ~7l7.o nish ",jO tr0a.~uz.3 th~ reDenbrance of patriotic.service c~n h~ve no c~~ice. They ~u2t ~o .
their ut~oat tv· acxve ~nd t~ei= utmost to ~~ve ~n~ be wi~:in; to
len:: the Gov,3rnLlen·i; u.ll they t_j.:..ve.'
·
I hope you uill use youx influence to ~~3uade t~~ mewbers of the Builiing Tradea Jouncil o~ San Fr~ncisco t:_~t t~a
:-:.-,..-n,..
~-.., ··--:·n~y
al.,.1. ...~.~ ~,..._c.;~ :..__.
-=-~Jo;.1:- .........
::.
Gov v"''"".. ent . has need o.:.L c..;..J.J.
"-lv·. ···
.uV!
~ ,
.a. 3 '""
'--.Lc
mJ.teria.l., and all tlle tra.ns::K,~t;a.tion ·fa.cili·tiua ..,jha.t cs.n 0e ~.ta.d.e
available.· I should like thet1 to l;no\1 that i:ten d.:Ce needed .;o
build ships~ to build nousea to house men ~orking in the shi?yards, ·to er,3ct plants to ~::o:'..uce war ~~1at0r i.:l.l~ to ::un o-w..
r~il~oads., to o~0~~te o~~ in~~at~ies, an~ to ;~v~uce ~oo~
raquired·by tha al~ies in~ oursdlves. ·The~3 nae~a arc ~l~ea~y
great and will increase., not lesaen, as -'c:;h~ i.7J.Z pzobre~~ea. If
our ·:;J.ga-ea.rners are una."ule ~co find employment for \l.hic~1. ·t~l.3Y
~re ~est fitted and uhich t~0y woul~ prefer~ o~ if th~y ~::e
un.J.'ble to find ernJ?lOyraent wh0~o it r:ould be :-aoat ccnv0ni0n·t fo::
·the...ul- to ~o-"k
.. -t-:unl.· ·:-:y
1· D
~ p·.Lvt>v
.. '.),.. ';\n+e:
.:..~v-. ..:.v.
-· .....1.::'-'"'"' ...
.:. ···"' ..L J the o·"'·)o·
J.JJ:
J.."'
"'
v
... ~
...... .,.,,.,~ .)u.
:.. a.t::io·tio. se:a:vice ir1 t~1is p·~:::i·:J6. of natictL:.l ~t::Joa ·:y Be:;:.:in:;
o·ther kinds· of emj;i:i.vY~~·t--~nt, ..."..nG:~ if need "ue, :.:'='v!:l~ to .)·t!:0::
.&.
C:..ist::icts -whe:.:.e
\IO£}~
i.:; to
~e
had . ·
X-810
(4)
No one knows better than you tt.e need of the hour. Save
in exceptional cases, to expend money or to use material or
employ labor in the ·~roduction of vvhat is not needed to win
the war, as I view (t would be an unpardonable waste ar.d
would, in effect, be lending aid . . o the enemy.
I am .:::;ure that you are in accord. with the ..:rinciple underlying the views I ...:;.ave expressed ,~nd that you will, in that
splendid spirit of patriotism and service which has ~haracter
ized so strikingly your every action and utterance during this
war, join .,·ith me in appealing to .:-very good ci"'Cizen to help
the Government by conserving and using to the best advantage
those invaluable r2source3 of the na.tion, labor anc~ ;;JateriaL;,
xithout uhich free~o~ and democracy cannot be save~ for the
\VOild.
Very truly yours,
Signed ..... r.'. G. HcADOO
S.:wliuel Gor.1pcr s, Esq. ,
President, American Federation of Labor,
~ashington, D. C.
In addition to this letter, a communication has been received by the Chairman of the Capital Issues Committee from
r1r. J. B. Densmore, Director of the United States Employment
Service of the Department of Labor, containing
practical suggestions concerning this problem.
reads as follows:
-----
..
sem~
very
The letter
X-810
(5)
DEPARTl4E}JT OF LABOR
U.S.Employment Service.
Washington, March 14,
~918.
\ Hon. Paul !4. Warburg
Chairman, Capital Is~uea Oomm.itt.ee,
Washington, D. c.
Sir:
In responae GO your inquiry, growing out of the protest of
oappentera• ~iona against th~ policy of your co~ittee of restricting, ao far as practicable, ·the use in buildin6 construction of ~apital, oredit and materiala, I oeg to eay: ·
rhile it is true that the la~or situation in the United
States is comp~ratively satisfactory, it ia e~ually true that
~onditiona could be gr~atly impro7ed through a aore scienti~io
~!atribution of labor.
In many iuatances wen are engaged in
new linea of endeavor at advanced wages leaving unfilled their
original fielis. For examRle;·in the vicinity of mtL~ition
plants, one funds farm hands at work in factories, 3hile the
· farmer criea in
. vain for ilelp, . etc.
The uniona are quite correct in their statement that they
were told work a~aited them at the ahipyards only to learn upon
application there that auch was not the caae.
•
+
It has been stated ;robably ~uite frequently that the Emergency Fleet Corporation (Shipping Beard) was badly in need of
hml$ed.s of thousands of workers. This is quite true.
Butt he
Emergency Fleet Corporation could Piesently give employment to
onlv about 10,000. Thid wide va~iance between needs and eaployment capacity is caused by the i~bility of the ~hipyar~s to
houae the armies of ship-ouiliera necessary for ~he pro~uction
of the tonnage of which our nation is ao badly in need, and to
wnich it is entitled. ~ere carpenterd, for instance, find that
the policy of economy guidin'{ your coauui ttee curt&.ils or halts
their work, they can find pler.ty of vitally neoe3aary work, and
a patriotic ·~vork, in building ho_.es for those i.ho .are bJ.ilding
our ships - if not on the shi~s themselves.
Of.oourse, it is underJtood that change of aomicile by
workers entails aacrifice and expense. But you will not find .
the laboring ~ of America heaitstiug about the sacrifice of h1s
cowfort ·and oor.v~nience ~hen the nation calls.
....
X-810
(6)
~
To transfer labor from surplused to depleted sections, the
~~p~o~ment Service will shortly have a revolving trav~ling fund
oL ~250,COO. This may be used to advance transportatlOL, to be
later reimbursed by the intended employe. For the rush work .::.f
th~ E~ergency Fleet Corporation on the Pacific Coast, aLd in
cer\t':-ln ,army construction, fun0.s foT ·transportation are being
proVLieu uy the deuartments affecte::~, for the use of the Employm3nt Service.
~
Carpenters, shipbuilders, structural .Lron workers, and in
fact .;.Very kind of mechanic, in large m.lr.;bers, could find
aasistance in reaching ready anci remunerative employment upon
ap . :;lication
.
to the u.-S. Employrr.ent Service, a branch of which
· ca.n be found in every large city.
Res1:ectfully,
Signed. .... J. 13. DENSl'lORE,
Director, U.S.Employment Service.
W. P. G. HARDING, GOVIRKOR
PAUL M. WARBURG, VJCI GOYI.RNOR
Ex-OFFICIO MEMBERS
FREDERIC A. DELANO
ADOLPH C. MILLER
WILLIAM G. McADOO
SECRETARY OF THE TREASUR'f
Je2:!m:~ s. HAM~
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
FEDERAL RESERVE BOARD
,WASHINGTON
H. PARKER WILLIS, SECRETARY
SHIRMAN P. ALLEN, ASST. SICRI.TARY
AKD FISCAL AGENT
ADDR&SS REPL. Y TO
FEDERAL RESERVE BOARD
March 16 1 1918.
Gentlermn:
The Federal Reserve Board has r6ceived a request
for the establishrrent of a bran:h of the Federal Reserve
Bank of Kansas City at Oklahorr.a. City, and a similar request
for a branch at Tv.lsa.
As the added e.x.pe;.1se of establishing
a branch is very considerable (frcm$15.,000 to $30.,000 .. according to the functions which it is designed to perform) it is not
desirable that a branch be estab::..ished in the State of Oklahon:a
unless it is clearly demonstrated that it is very rruch needed.
You are therefore requested to reply to the questions propounded
on the attached blank form., returning your reply in the enclosed
addressed envelope at your earliest
convenience~
Yours very truly_,
Secretary.
X-,.812
RESPONSE 7Q LETTER OF FFpERAL. RESERVE BOARD
DATED MARCHJ_~_, l'%JR.
1.
Do you make
City?
2.
Would it
Feder~l
~ny consider~ble
use of the
Feder~l
Reserve Bank of Kdnsas
~dd considerdbly to your convenience to h~ve ~ bra.nch of the
Reserve B~nk of ~nsas City, either a.t Oklo.hOIDd City or Tulsa!
3.
Ii a br""nch w~ re est"'blished ~ t Okl""hor;:;a. City, would it be r.10re convenie:rrt. f o!~ ynu ·:~c senri your items for coJ.lecticn to th<-4 t point .... nd
send your ,;_iscou:tts or corr·esponcie::1ce there, or would you prefer to
send these direct tL. the !Co.nsas City he""d off ice?
4.
If a branch were estGJ.blished GJ.t Tulsa., wou).d it be more convenient for you
to send your items for collection to that point <:J.nd send your discounts
or ccrrespondenct: there, or would you prefer to send these direct to the
Kaneas City head office?
5.
Are there any eligible State banks in ycur city that wculd be willing
tc join the Federal Reserve System if a branch were estdblished at
Oklahomi:l. City?
6.
Are there any eligible St""te banks in your city that would be willing
to join the Federal Reserve System if a branch were established at
Tulsa?
7.
Do you keep b~nk bdl~nces in K~nsas City~ and would these bank balances
be shif:tnd tt.:; Okl~hc,m~;~. City if ~ branch bank wer0 located in that city?
8 •.
~o
yvu have b~nk b.,..li:i.nces in Kcms.... s City ~;~.nd would these balances be
shifted to Tulsa if a. branch b~;~.nk were lcc.... ted in thdt city?
X-812
- 2 9.
l u.
l"lease explain in what respect a branch would serve you better than
the headquarters Bank at Ke.nsas City.
j s the mail train time - in hours a.nd funeticns the roof - from
your r,·ity to
What.
(a.)
I<:o.nsas City
(r-,)
~kl<:~.hcmd. City
(c)
Tulsa
What nigbt train servic.e have ycu between your city o.nd Kansas City;
and will a letter mailed by you in the evening arrive in Kansas City
the following mcrningl
Signa -:uN--~~--....,.t;A.-.~------.-----t)Jarne cf Bank)
By _______________________________
(Title) _ _ _ _ _ _ _ __
·Date _____________
.
X-813
For release in Morning Papers of Tuesday 1 March l9J 1918.
STATE~~NT.
In his address before the
FOR THE FRESS
Southsn~
6ommercial Congress .in Baltimore
on Monday evening) :V.arch 18th., Governo:r Ha:rdlng said in part as
.
fol1oNs~
The develop4llent of our f0rei.gn trade is atte.I'decl. at the !lr'esen+ t~.me
with unusual. d.;_dlf:,_cu:J.t5...es. The Wa.r is the ovc-:rsnad~JI!ilh1g :factor which c=dfects all tcansactions throu.ghou·~ the civLlizocl. worlc. The no~T.fi.l pr0l:es·ses of product~.on and. d';.st:;·ib".ti o~ in :<1<7U t;···a~ cotmt:r:Lef'l a\\ w~:u a§!_ bel.l.J.g-d
erent, hfl.ve be,::;n sub:-ll'd<.na:cod ·1;0 l-he cx:J.gen(_:J.es of wr::.r. Unl' v·meP....LE,ss an
meatl~ss days are a c0ns~a:rt; :i."bmind.ar of th& i.ni;po:·tance of con8erving our
supply o.f food sta.pJ.es so :1~ "10 :a:.:.,ke ava:iJ.able 2.at'ger shiplT..ents to the armies
at it>he fl•on~; a.r..d 0u.:· uanu..fa.ctnring establJ.shrnents are O.a:U.y diverting the~.r
energies more and mo.re. to the :;:reduction Gf articles resuired in the conduct
of the war. It is evident, therefore, that v1e have not our accustomed vo).urr:.e
of goods available for exfort to neutral countries anci for o:rdina.ry :purposes.
The character of ~mr inports too has uniergone a change. We are confining
ourselves in a constantly increasing degree to the im}ort of essentials.
Lack of transportation is an additior~l handicap to the irrnediate ievelopmant of our foreign t rado. Shi.._'J '~uilding it is true, is proceedi.ng a.t a
ra~id rate J but nevv vessels as th,ey becorr;e available •iill he utilized as a
rule in transporting troops and supplies to the battle front. As a )art of
the #ar policy of the Governrr;ent there is a strict supervision of all exports
and imports) Nith restrictions and absolute prohibitions in UB.ny cases.
Every nation has in force a practical embargo upon shipments of gold, and
no gold is being exported from the United States except by special license
and then only in cases where the shipment is found to be cnmpa t i ble with the
publlLc interest~ Gold shipments are not permitted to be made to co1.1n·tries
vvhere the tl;;t:..nsfer zr..i..ght result in a benefit to the enezrif) nor in any case
unless it is shown that :the 1:al,;.e to the public of the goods or services for
which the gold is exchanged is greater than that of the g0ld itself.
In these circumstances) it is clear that the t~ansfer of gold or the
~xchange of creQ.Hs necessal'Y to carry on our tradw with foreign countries
ls attended with perhaps even greater difficulties ~han the transportation
of commodities. Our exporters and manufacturers should however) keep constantly in m:i.nd the great poss:i.bilities of a wD~i.cl. tx·ade n.iter the vvar is
over) and they should lose no opportunity of arousing a sent:i..ment favo:cable
to American goods in those countries with which our trade bas heretofore been
limited. The Federal Reserve Ac-t was designee\ in la.:r.ge part to expa-nd our
trade with foreign countries. Not anly wer"e -transactions based upon the
j.mportation
or exportation of goods accorcled. special considez·ation in
that section of the Act relating to operati()ns in wJ:d.ch Federa-l Reserve Banks
nay engage, but the Federal Reserve &nks themselves are authorized to buy
and sell bills of exchange and to establish and naintain agencies in foreign
countries. National banks having a cap:i.tal and surplus of a million dollars
are authorized by the F.aderal Reserve Act to E?stablish foreign br.anches)and
there are ~od.ay many branches of American banks operating jn Latin America~ 1
South Amer~can> as well as in European countries. These branches hav~ been
X-813
established as a rule by very large institutions~ but in or4er to give
all national banks an opportunity o~ sharing in the benefits of the
development of foreign trade~ the law provides that any national bank
xray subscribe an c..mov.nt not exceeding ten per cent of its capital to
stock of banks organized to transact a foreign banking business.
In this way several banks have been est2.blished which are Ol'med in
whole or in part by gro1:tps of national banks;~ a.nd one of them has at
this time 1 48 national banks as stockholders, who have thus combined
to facilitate !oreign trade. These banks are not authorized to receive
deposits in this country except such depos~.ts as nay be incidental to
or connected with their foreign ·businesfl. Tl1e Federal Reserve Board
has recommended to Congress that banks of this kind be given Federal
charters. Th0y are authorized to est:3:blii;;h branches abroad and many
such branches are already in operation. The foundation thurefore 1 for
financing our foreign trade properly through the nedium of American
institutions has already been laid 1 and when at .last the war is ended
and the restrictions upon comaerve can be removed and a greatly augmented
merchant rr:arine can spread its sails upon the seven seas and carry to <tUl
the nations of the world products of the fanns 1 thre mines and the factorie:o
of America 1 branches of American banks will be found at the distant potts
to wel~orr.e these rr.essengers of con:n:erce and to finance both their incoming and outgoing cargoes. '!'he foundation of an American financial
structure extending througbout the world has been carefully conceived
and securely laid, and the supe r-structwre will follow as conditions
become more favorable.
Ita.rch 18, 1918.
llil..TJO OE 1'Fi..OATii
O~r'
i:AC1i ..r:<':SDEBAL EEJErfiJE El!..NK IL• .t:A.RclhV;.MA1lr~H 15, J 9:J.8
L~-;."J:c,':::S
iJ.JTD JJ!!.PJSI1'S
--------------------------------------------------~------~--------------------------------------------------------------
Total
Total
Clearing :National Bank: All other
house
notes and :uncollected :uncollected:colltlction:
notes of
items
i ter,1s
items
Federal Reserve: exchanges
other
F.R.Banks
Dr.
Cr.
BOSTON
NEW YORK
1, 735
13
20,316
22,064
18,063
4,001
6.0
4.3
14.,234
2,095
. 68,361
84,690
59, 61l+
25,076
4.4
3-6
814
34,117
38,426
32,650
5, '{76
' .
PHILADET.....PHJA
CLEVELAND
2,158
813
23,397
26,368
2J.. 486
4,882
RICHMOND
2,970
1,298
21,888
26,156
17,523
8,633
1,756
2,406
15,875
20,037
12,287
7, 750
3.198
872
49,659
53.729
24,389
127
463
18,253
.18, 843
15,756
lp
10,872
11,045
CHICAGO
ST. :WUIS
-----------------
Total :Net investr,1ent: Ratio of
:ii;:;;.s::io of "Float" to
11 liLOAT 11
in transfers : 11 FLOAT 11 to : ir.li•lGCLiataly availincluded in :total earning:a.b].e Government
Total "TIOAT 11 :
assets.
:bank ueposi ts.
per cent
per cent.
MINl~OLIS
(a)
~00
6.2
1, 838
4.0
22.2
430
31.0
18.1
19,444
31.7
14-9
3,087
745
9·1
5·3
4,099
6,946
6,696
43.4
15-8
KANSA.S CITY
82
126
24,880
2..?,088
9. 530
15,558
9.232
37-2
19.4
DALLAS
17
6,645
11,547
18,209
5, 56o
12,649
-4.650
. 44.1
29.2
1,997
647
9,848
12,492
11,250
1,242
1, 830
1.9
1.6
232,207
124,940
44,665
11.3
7-8
SAN FBAliCISCO
TOTAL
309,013
-----------------------------------------------~-------------~--~----------------------------------------------------------------------
(a) Excess of araount of transfers sold over &lOunt of transfers bought.
QQ f y.
X-816
My dear Sir:
The Board has caraful1y considered the sta:t€m.ent whiGh the
Conn.ittee of Y-ansas City bankers, headed by yourself 1 left with.the
clearing corrJr.ittee on February 13 1 1918., and regrets that it nan not
agree with the suggestion xrade by your comr,itte.e.
.
N.embers of the Board who heard the pre·sentation of the w.ttorJ
as well as those vvho have read your staten:ents, ·JIIhile impresseo. witp
your argunents and with the exeellent presentation of the c~se from you~
st.andpoint 1 feel that there are certain facts and circumstances not dis~
cussed in your staterr.ent vvhich can not be overlooked., and) all things
consid.ered 1 the Board does not see how it can consistently a 1~J?rove the
action s~ggested.
.
In order to get co~plete infonration on this subject and to
bring out the various points of view 1 two copies of your staterr.ant ware
sent to each Federal Reserve bank., with a request for an analysi~;~. It
nay interest you to kncm that every Federi:a.l Reserve bank opposed the plan
suggested. The following is a composite of the objections urged:
(l) The suggestion that che.cks drawn on Kansas City banks
should be classified according to endorserr.ents is not regarded as
feasible., nor can it be sustained as a rratter of banking· r:-raCtice.
(2) As a check is an order on a bank or banker for the payxr.ent
of money at the bank's own counter 1 a check drawn agains~ a Kansas City
bank 1 whatever its source and regardless of endorsements 1 is an order
for the in:mediate payn.ent of money when· presented t.o the drawee bank.,
either at its counter or through the Kansas City Clearing Housee
( 3) The contention is nade that in norrr.e.l tirr.e s Federal Reserve
banks located in the west will buy more eastern exchange than they will
sell. This must be true because the balance of trao.e is nornal1y in
favor of the west 1 as the value of goods moving from •rest to east is
g;~.•eater than frC"an east to west.
Hence cash ;.ayr.r.ents in settl.err.ent of
balances xr.ust he made by the east to the .west. Under such conditions
New York exchange Should normally be at a discount at any western Federal Reserve bank.
(4) Federal Reserve cities west of the Mississippi river should
not permit Kansas City to lengthen tirr.e schedule on :1.-tems received from
them unless there was a reciprb¢al lengthening in credits for· items
received by ti:lem, and it is believed that such an arrangement woulCI.
tena. to drive business away from the Federal Reserve banks and reinstate the practice prevailing between national and state banks prior
to the establish~nt of the Federal Reserve banki~g system.
X-816
- 2 -
(5) In comparing the relations between banks in your distr£ct
and Kansas City banks with relations between banks in other Federal
Reserve cities and Kansas 8ity bar~sJ you appear to have overlooked
a very .important feature 1 nau~ly 1 the fact that the twelve Federal
Reserve banks and their fourteen branches are connected as i i by a
pipe line 1 through a central gold settlement fund in Washington.
By means of this fund it is possible to n:ake an instantaneous traaefer from one Federal Reserve bank to anot~r by a simple booklneping
entry. Hence the Federal Reserve Bank of Kansas City can r::.c··~ as collecting agent for the Federal Reserve Bank of New York and present a
check drawn on any Kansas City member bank for payment and credit to
the account of the Federal Reserve Bank of New York; and can have that
credit transferred instantaneously througp the gold settlement fund.
This faciility gives the banks in the Federal Reserve cities an exceedingly important position 1 as it gives them a great advantage over
banks in other cities as the custodians of bank deposits. The policy
advocated by the Kansas City Cl.earing House banks would tend to work
to the advantage of the New York banks in the matter of bank deposits
and to the detriment of banks in Kansas City and other Federal Reserve
cities.
(6) Se~eral of the Federal Reserve banks contend that a Check
bearing one or more member bank endorsenants and collectible within a
short space of tine 1 should be taken on the basis of the lowest current
rate of interest.
(7) It has been suggested that the fact that Kansas City banks
are,unabl~ .to offset in the Clearing House checks which come from other
districts;/~fue to their not utilizing fully the facilities offered by
the Federal.Resarve Bank of Kansas City. The banks could, if they
wished, build up their balances with the Federal Reserve bank by depositing out of town balances, including checks and drafts on New York 1 in
addition·to items on points in their ~vn district. Apparently their
pr,aciice is to use the Kansas City Clearing House for collection of items
drawn on banks within their own district 1 and use correspondent banks fer
collection of i tams drawn on banks outside of district No. 10.
Wa would ask whether the banks of Kansas CHy have adopted
the pa.ctice '?f drawmng tranefer and exchange drafts th~-:-c·1l8;h the Federal
Reserve bank, which would, to a. considarab.1.e degree .• do away with the
necessity of maintaining large balances in N~ Yo~k. It is not our purpoe• to suggest that this be done, but we wish :merely to point out that
these facilities are available.
Very tl'Uly yours,
(Signed)
W. P. G. HARDING.
Governor, Federal Reserve
Mr. P. W. Goebel 1
Cha~nan Committee of-Bankers,
Tenth Federal Reserve District 1
Kansas City, Kansas.
Bo~ra..
W. P. G. HARDING, GOYIHea
PAUL II. WARBURG, Ylttl . .fi-R
FRIDERIC A. DELANO
ADOLPH C. MILLER
CHARLES S. HAMLIN
WILLIAM G. McADOO
SICRITARY OF THI TRIASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
FEDERAL RESERVE BOARD
COMPTROLLER OF THI CURRIIICI
H. PARKER WILLIS, SECRITART
SHIRMAN P. ALLEN, Asst. SacaETARY
AND fiSCAL AGENT
WASHINGTON
•
ADDRESS REPLY TO
FEDIIRAJ.. RESERVE BOARD
Ma.roh 19, 1918.
To the Board of Directors
of the Feder.al Reserve Bank of
Gentlell8n:
The Federal Reserve Board h.a.s frequently been asked to
define, with greater
~rticula.rity,
Agent~,
the Board and Feciera.l Jieserve
oU~cer,
the clU.ef executive
the duties of tbe "Chairman of
a.s distinguished from those of
• s-;yled,, ''Governor" of th.e bank.
dis~sse~ into~y
The uatter bas been
in oanferences of
oUicia.ls of the Federal Res.rve Banks a.nd by the Federal Reserve Board
itself.
W.n~le
v~ews, ~t ~y
there is probably no W.sa.pprehension as to the Board's
yet
contri~te
to a. better understanding and. working of
the FederaJ, Reserve Syste.rn fo.r the Board to WJ.dertake to set tortb
with greater precision
the
or~ization
an~ departu:ent~
and
d~vision
of the
request the Boards
~ts vi~
fe~eral
of the basic principles underlying
of functiQr1s of tbe principal otJicers
Reserve Banks
ot the several banks to
a.n~,
mocii~1
i.n doing so, to
their practices or
to cba.nge their by-la.wa 1 wben neoesaa.ry to bring thelll into conformity
with tbete
JTinciples~
Very tJ'14y youre 1
Governor,.
X-818
EX·OJII'FictO MllM.ERS
W. P. a. HARDING. GonMGa
PAUL M. WARBURG, YICI eGYilULOR
FREDERIC A. DELANO
ADOLPH C. MILLER
CHARLES S. HAMLIN
WILLIAM G. McADOO
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
FEDERAL RESERVE BOARD
COMPTROLLIR OF THE CURRENCY
rl. PARKER WILLIS, SECRITAitY
IH!RMAN P. ALLEN, ASST. iiCitETARY
AND FISCAL AGENT
WASHINGTON .
ADDRESS REPLY TO
FS:DEIRAL RESERVE BOARD
March 19 # 1918.
Dear Sir:
The Board 1 s attention has been called to insistent ru.rnors
that acceptances are being nade, and dj.scount.ed by Federal resArvA
banks, which are not drawn in accordance with the provisions of the
Federal Reserve Act or the regulations of the Board.
It has been
stated that there have been cases where the accepting banks have
permitted customers, when the
5200 U. S. R.
s.
li~~t
of credit granted under Section
had bee.n reached, to draw; on the bank at ninety da.ys'
sight upon the unwarranted statement that the acceptance was against
a transaction involving the importation or exportation of goods,. and
t:r..at in this way the bank has evaded the provisions of the law.
The statement has also been
~ade
that there are some cases
where bar....ks, not finding it convenient to rr.ake cash advances, have
caused customers to draw upon them and have accepted these drafts
under the pretense that they were either eligible doz:r.estic acceptances.,
or acceptances connected with the importation or exportation of goods.
Staten.ents to this effect have been n:ade to niembers of the Board as
well as to members of Congress, and it is very important that the
Board should ascertain the facts.
You are therefore requested to bring this matter to the
attention of your executive committee and Board of Directors and to
X-819
X~·819
- 2-
have the acceptances held by your bank closeJ.y scrutinizf)d in 'order
that you rmy be inforrr.ed of the underlying tran5action in a.ny case
where there rray be occcl:sion to suspect a disregard cf the law or
regulations.
The Board wisi.e:'3 to be
in purchasing a.cceptances.
gato the
bJ.~is
or
or~.g:i.n
advis~d
as to you:r rules and :u:ethods
Is it the Ci.:..s't.om of your bank to i1Pesti--
of transactions in cases of <\oub+.: ur do yo•l
b1lY acceptances upon the statement by the acceptor or selJe:c that tl:,ey
are basecl upon eligible transactiOns?
V\'henever you rray feeL so1x:.e
hesitation in requesting acceptor.s 1 upon your own initiati-.re, to
give you the hec'9ssary inforn:ation 1 the Board will ass:i.st you., Jf you
will indicate the paper concerning which there rray be doubt .• by requesting in writing that you furnish information re§arding these
acceptances.
Very truly yours 1
To the Chairo::an . .
The Federal Reserve
~nk
of
X-822
CGRTaiLUENT OF UNNECESSARY CREDITS.
The roquost .-;hich th3 S.:1Cr:;Jta.ry ol thv Trea.(.lur;- naa,e· on F$bruary 6 1
1918 1 to every bank and tiUst company of th0 country th:l.t it should set
...
·aside
1%
icato:::; of
·'
of its. resourcea ea.ch V/iJ6k for investn:ent in the· Treasury certif.:..
indobt.,·ine·3G~
bank~
.has brouc:,:ht to the Fede.ral resorve
quirie3 as to ho,v the b.:mks could :a.ake available so.lg.rge
;l
J;..:l.ny ·.11l-
for the ·
GUm
u::::~ of the Gt. ivcrrur..ur.t and a.~ the same tirr:e maintain th~ir usual· business
with their deposit.ors anJ. custon:ers •. Thera is welco:.r.e ev.i.•i0nce that the
bankers of the country are giving thou.;htful ·.consideration to t:ne question
of conserVillg CrGdit for the
Governl~:r.t~
.:..nu the F.:.deral. .Reserve Board..·
thinks it the appx:opriate time to issue a statezi:ent expressing its views
upon the .r:rinci.Ples which should guide the action of the banks.
It is clc:a· that if the war requirements of the Goverrur.ent are tQ be
financed. without undue expansion of banking credit; not only nust ~here
b~.
\
sene raduction of existing credits
but there .will have . . to be applied ·
. 1
a rigid check upon the further expansion of credit in
di~sctions
not clear-
ly essential for the JlrOsecution of the war 1 and for the health·
necessary cOIL!ort of the people.
and
It is no more·. possible. to sup!3rimpose
upon the volwr.e of pre-war credits the imr..ense volume of ad.ditiona.l credit
re~uired
by the Government for war purposos
t~n
to ouperimpose upon the
volume of Jlre-war production of goods the imnense volume of additional
goods required by tha Gover:ru:rent to prosecute ·the war. Our .Pl ovlero is to
essential
convert ~ essential into mor$ /creO.i t, and to convert les;.; e.3sc.ntial to
mgre essential production ani distribution of goods.
The saving. of
~redit
and money goes hand in hand with the saving ol labor aud
aateri;~.ls
program of adjusting the business of the nation to a wo..r
ba.~is)
best hOJle of avoiding competition between 'i.he
;..nd itJ citizens
G~vernrr.ent
in the
and our
x-s~a
... 2 -
for crodit 1 rr.oney ~ labor ax:.J. n:a.terials 1 .-:hich ca.n only result in credit
and price inflation
As far as
...
.::~.nd
higher
exp~nditur"-z
cost,:;~
of living; .i.:J S2.tvin&.•
..:..ro financed by th..; s.;-..l.s· c1 nevv securities
they are scrutinized Ulldo•" the leaiership of tile Capital haueo Conmittee
of the Federal Resei'Ve Bo~rt; a:.> trustees
or
th;,; ir.liiviclual b'lnking credit
of tho country 1 however 1 the bankers arc ch:...rged with th0 duty of studyint;
and underst"".ading the program i.n
ord~r
t:h::.t ea.c.b. and everyone rr:ay in turn
educc.to his borroNers and th...: pople of his COllllU:ni.ty to tho neccocity of
Sc:l.Ving credit as well as food and other U.:dtori;.;,.lo, and u:a:y thereby conaervo.
the . credit of hl('.l bank i or the use vf the Cuv.;.;:·ntt.0nt as far
~s
rr;;;.y be prac-
nece;mary not only !or Government financing, but ·also for the protection ancl
".:..i.10
undue
of bank credits leads inevitably to unsafe
ex~~aoion
oconorr.ic
conci.l.tions~
banks themselves 1 individually ani
colloct~vely~
preservation d
~nd
si.r.cc
unoound
and no atone ahould bo- leit ur..tt.lrnod. to keep ou.r bank-
ine, inotitutions soui1d and strong.
It is not
. purpose of the Board tv suggest
til~
.
tl:~e
specHic. wc.y z in
which credit should be conserved. 1 or unnecessary expenditures curtailed;
each banker a:u.st determine this for hir..:self.
The Boa1'd can only discusJ
the subject in general tenns 1 with emphasis on the
~cess~ty
that
w~1ile
credit conservation should be undertaken rromptly it should be car:riod out
gradually 1 with reasonable discretion and ·td th the least possible avoidable
embarrassment to the business of inciividuals and industries,
education of borrowers and
cust~ers
. Proper
to the needs of the .situation will
accomplish far more than abrupt discri~dnation or pressure.
In the absence of any official classification of the more essential
X-822
- 3 -
and the l(;).;::s essontial things and ent23rprises it will be nocesQary ·for
each banker in determinine ho,·• he rra.y do his share in the conservation
of credit to use h.is o·m jud.;ment.
There seem to be, ho.vever, two clearly
defined groupG of loans:
(A)
(B)
Loans to .facilitate production or distribution.
Loans for non-productive or non-distributive purposes.
LOANS FOR NON-PRODUCTIVE OR NON-DISTRIBUTIVE PURPCSES.
Loans for
loans for
non-produc~ive
non~essential
or non-distributive purposes o.re usually
purpones.
The following are typoo of this class
of loans:
Loans i or ~,;urcha3inz or c<:~.rrying property, .vhe the r real
estate or persunal securities.
Loans for""' ddi tions to or improverurnts of property not
used in production or· di;::tr.i bution.
Loans to States or
uunicipaliti~o
for improvenants.
By inquiring the purpose for which each
n~w
loan is required, and
declining wherever practica:b1e to grant loans of these cla·sses, and by
gradually causing existing loans of these classes to be reduced or
eliminated, bankers could conserve credit
also give :u:any people an in:petus to save
importance to
t~e
nation,
borro·vers to reduce loans
withcr-.~t
a~~
ca-Llsint; hardship and
a tin.e
wi~en
s.:wing is of vital
Dut discretion uuot be uoeu in not forcing ·
to an extent that iJ unreasonable or would
cause avoidable hardship or emba.rmssmentj much can be accompli::.hed by
sound advice and the exertion oft
•
rr,or..tl
··
pressure •
X-822
- 4 L'OANS TO FACILITATE PRODUCTION OR DISTRIBUTION,
The three rr.ain ·groups of bcrrO'vr;;;•·s for productive or distributive
zr.anufactu~·ers
purposes are famers,
1.
FA:R:.mRS:
an:i
merch<-.nts~
The farmers a.r~ ·being asked to produce more than o•:er
. befol·e and loans for productive purposes must hatre the right ci way.
But
the kind of loans which should .be discouraged or declined are:
(a)
Loans for the aCquisition of additional property 1 unless tho
area U21der pr-oduction is to be increased· thereby and immediate
recul ts zuy be expected;
(b)
Loans for an:,· construction not necessax-y to the p·roductiveness
of the fann within 'tho year; and .
(c) . Loans for the purchase of articles of comfort ·.and 1uxur7.
In sections wnere farrrJ~g profits have been large, an
endeavor should
of 1on5 standing loans o.:.- to the financing of their. seasonal requirements)
thereby conserving bank credit.
2.
:MANUFACTURERS:
be urged to reduce or
lVJanufacturers who are rraking large profits should
e~tinguish
their debts rather
tha~
increase capacity
and output unless the industry is one which is clearly neccsoary to the
prosecution of the war.
All manufacturers should be urged
to.c~rry
inventories as practicable; to eliminate from their products
add to its cost but not to its intrinsic
v~lue
as small
el·~ments
·vvhich
and serviceability, or which
are. int.roduced simply for fashion or appearance;
a:~.~ LO
avoid
:,;.J
far as
practicable introducing new styles during the period. oi the cv0.r.
~anufacturers ~ose
product is not clearly
r~~uired ~ither
for the
prosecution of the war 1 or to rr.aintain the hea.lth and efficiency o:f our
civilian
population~
•
should be urged to assist the Governn.ent by .;l.dapting
X-822
- 5 ..
at least a part cf their ph.nts to the zranu.iacture of articles clearly
req,u.ire.i ior these purposes.
Bankers would do ·.ve;ll to scrutinize carefully
the credits of those engaged in induotrieJ not
cle~rly
esJential for these
pl.rpoaes since such industries are likely to "be the first ones to suffer
int..::rr... ption t;ooia transpcrt:..tion 1 fuel ot· po.vvr eru"bargoe:3.
3.
MERCHANTS:
Alu,cst ·.;he """n.e sug,ge<.;tions that have been rrade with
regard to the production of eoods by rra.nufacturers tray be applied to th6
distribution of goods by
~:chants;
nauely, reduction of stock carried;
reduction or elimination of that portion of their
sto~k
consisting of
articles of mere fashion or luxury anJ. tho .ubstitution of plainer c.-nd
more serviceable articleSi· and tho avoidance of the intro:luc'tion of new
styles in clothing, articles of personal comfort, etc.
The· Board feels that it would be impracticable to deal ,..,ith the subject
more specific1lly at the present tirr;eJ but urges that every banker assist
in the zr.oven;e:nt, to the best of his ability:
·•
(a)
By e::.tudy:;.r.g ·~a.ud understanding the econcmic necessity for
the consenra.tion of credit;
(b)
By a careful analysis of each loan in his inJtitution to.
ascertain those which are the least es~ential to the prosecution of the war;
(c)
By applying to each application fer a ne~·• lren the teat
11 is it necessary for the prosecution of thd r1ar or tne
health and safety of our civilian populJ.tion 11 •
{d)
By discussion with other bJ.nkers in tho SC;l.me place or
neighborhood as to rr.ethods of credit con;:;t;rvation which
it may be practicable for them to und~rtate.
(e)
By urging his local trade organizations and board of trade to:
study the subject and make iefinite recu~endations for the
conservation o.f credit and the conversion of less essential to
more essential production ar.i di:.tribution.
X-8ZZ
(f)
· (g)
.
(h)
By discussing the n:at·ter ·,v-fth his custon.ers with a view
.to ·educating thvm to the necessity of keeping their
ao:a..::.nd..1 for ~..: red~.t at ,., · mininum.
By exell'tiug .nis i:dluence upon h: -~ neighbors and his
llUnicipality to reduce expenditul·es for improvements
to a ll'..inin:um during the period of the war. Postponement of every improven.ent not absolutely necess:::..ry for
health and safety shoUld become a national policy.
By acting always with discretion and rei:l.s..;na.bleno;J:,::.
The conservation of credit and money will rr.·. ,1 t in the· savin.; of
(;\.
la.tor and rr.a.terials which the Government needs for tho prosecution of
in,proverr.ent
.
.
tho war; and every/
or expenditure Whloh a.n inaiviliual.~ a
corporation, or a n,unicipa.lity refrains from ma.king durit:r,r.. th·. . 'i'fJ..r
represents a
re~uirement
to be tulfilled. whan·the
war·i~
over.
Merchants ani .tri'.,1ufacturers will readily understand th"l..t p:..·esent
saving is laying up :fer the :future an important reserve purchasing power
which .they may
COUd O,tl
dUl"ing whateVe·r period
O.f
reajjustn:ent SJ follow
the end of the war; and i t must be .;..;pare.t•t to ev·:;q banker that the larger
the savings his custon:e .rs make the larg,u.· the
dcp<~.:>i ts
such saviugs -,vill
inevitably; create.
It is hoped. by the BoardJ that the Federc...l reserve bat.:is will
the~elves
the leaders in this campaign by
districts corr.mittees oi bankers, merchants 1
org~nizin~
an~
~ke
in their respective
uanufacturers so that
results riaY u.~ I~;;A.ched. (jy a mutual. understanding and a united effort for
the public g,u;;.Q. r;;..ther t.h.1.n by a policy of enforcing r..ard and fast rules.
If at any tine ·the
assii3t~nce
will be given GlaJlJ.
business wet be
t.:d~en
or advice of the Boar.i should be desireli .it
It is realized that each industry and branch of
upon its onn merits and ,that proper treatment in-
volves in a great many cases a redirection of industries anJ redistribution
'.
X-822
of labor.
:lhic is a pr.·oH.:.;rr. "'h.!.ch l1as beJ!:. actively ::Jtu:liod and in rm:ny
cases comprehensi•rely dealt 'Nith by var:i.oun d\'>pa:-trr.snt::; and boards of the
Governner.t.
Wher . wer your
corr.mitte~?s
dl:lsir-e the ad.vice or coopoJration of
these Governrr.ent agencies the Board will be glad to act as int0nnediary
and advisor in such cases.
3/21/18
',
X-622-a
There is
~ppended ~n ~rticle
which appeared recently, written
by H. Gordon Selfridge, formerly a Chicago merchant and now proprietor of one of the large
It would dppear
stores in London·
re~il
th~t
one of the first and most useful steps
that could be undertaken would be to h.. ve a committee of bankers and
dry goods people
~ke
up the problem, and agree upon a policy, of
discouraging extravagence d.nd
encour~ging
In this connection it is
helpful to have the ledding
the Committees and
~sk
suggest~d
newspap~r-s
thrift.
that it would be very
tuken into the confidence of
them to cooperate.
Nothing is more destruc-
tive to the development of the proper spirit of economy dt this time
th~n
the
~ges
of advertisements of new styles of ladies' wear, and
new styles of automobiles, that
ul~rly
in the
Sund~y illustr~ted
~re
cont~ined
in our
purtic-
p~pera,
ed)tions.
When the banks and dry goods people have
~greed
upon
a
policy
"'" committee composed of the prominent lddies of the community would
prove .... most powerful means of IDdking the pl .... n effective.
•
THE NEill YOR~ TU1ES. SUND_AY, MARCH. 17, 1918
ECONOMY A GOSPEL IN ENGLAND. NOW·
H- GorU.on
·s~;:lfridge
Describes· the
Rem<::~.rk"-ble
Readjustment
of Business in London.
Tr~de
G~.nd
Foster&d by Su.ving.
:r""'triotism Do Not Mix. ·.
By. H. Gordon Selfridge.
(Mr. Selfridge, formerlt"' Chic ... go mclchc;4nt, is now the proprietor of
the li:.i.rgest ret""il store in London • . Of his 3,50C employes, u thous.;;.nd have
been C.;;.lled to the colors.
The other.:; . b.....ve bought $.100, ooq of. wr..i.r sa.vings
certific""'tes.)
English business hu.s been entirely
re~djusted
to
a
glo.nd tried to muddle through in the first ye""r of war on
usuo.l" program, but we soon found th..;.. t such
war.
rnous
de~nds
The Government's
th~t
we could not meet them
o.
wo.r b«.sis.
a.
"business
En-.
""-S
blind policy would not win the.
on our industriGI.l resources were so enor~nd ~t
the
s~me
time continue to produce
all the things we.were o.ccustorned to h~ve before the wur.
The business of the English people is now tho business cf wo.r.
the productive energies of the nG1.ti0n
w~r
needs of the Government;
~re
All
directed. first, to supplying the
second, the necessities of the people;.
third,
the necessities of the export tr"'de.
Every one in Engl""nd is .... t work - including mo.ny men
women who
never worked be foro.
To be idlo in Engl_.nd tod"'-Y is not "good form".·
Every one is wu.cking;
w.;.ges o.re the highest ever recorded;
sca.le of
'
"'-tid
livin 1~
h""s been r""'ised;
wide economy anj saving.
the whole
domestic trude is good, despite n"'-tion-
Engl.... nd is doing her big job cheerfully, despite
•
- 2 -
the terrific cost of the war in blood
I
believe~
is
thu.t.~verybody,
~nd
treasure, and the reason for this,
rich dnd poor, is working for the nation with
a deterrnindtion to see it throug,h.
War is not a money-making business,· and money will. not win this great
struggle between democracy and
~utocracy.
English· merchants <:1nd
turers now see thd.t it isn't merely money th.... t ·d.
the product of huma.n labor.
n~tion
c:..t war needs, but
While we pay W(j,r taxes in money
Government bonds in money, what is
re~lly h~pp~ning
is
manuf~c ...
t~t
a.~d
pay for
the Government.
is taking a large share of our industrial production - our labor and material- d.nd consuming it in
Wd.rf~re
•.
Wu.ste Viewed c...s Treu.sondble.
No business man in Ertg)u.nd tod...y <..dvocc...tes liber... l individua.l spending,
because it is now reu.lized th<..~. t such spending .for person<-~.1 needs'· means one
of two things - either
c;~.tl
exhc;;.ustion of the necessities of life at a time of
thredtened famine, or else the selfish employment ~~ 1<-~.bor in luxury production when it ought to be devoted to necessa.ry production.
Spending for one's self in such
nized
i;I.S
a distinctly unsoci<.tl
Whut difference is there
<..~.ct,
betw~en
a.
time of
~tional~need
and tre<>.son.;.blo if
c<.~.rried
is now recog- _
to excess.
having curgocs of n:.::cdcd reateric....ls sunk by
enemy submC;I.rines or h"wing them consumed ....t hor;Je for mere personc.<.l gr"'tificution!
fo;.~.cturer
It took us some tim0 to soe thG truth cf this, but every
"'-nd merchC;I.nt in Engk.nJ tod . . . y knows thG gospel of "goods ..:4nd ser ...
vicestt, und the curt ..dlment of
Every thinking
.~
~4nu-
~r.m,~st.ic
Englis~~n,
spending is everywhere advocu.ted.
before spending for himself or his
f~roily,
stops to consider, not whether hv cun afford it, but whether the nation can
afford to
h~ve
him spend·
Economy is being const... ntly urged by the news-
41
..
· X.-822-b
papers, even though for the time it rreans less advertising
they realize,
But
do the merchi..i.nts, that the Wi:i~ cannot be provisioned, mu-·
<4S
fin~nced
nitioned, or
reYe~ue.
from
person~l
profits in business not essential to the
w~.
Luxury business h;;.s ceased in England.
orate gowns.
There hasn't been
Ger!T'b.ns·invaded Belgium.
i.4.
The women no longer buy eliib-
big social function in London since the
Motor riding for pleasure was. l,o!).g ""go abandoned
becduse the gdsoline is needed in Fl,:mders and the chauffeurs ure wanted at
the front or in the f""ctories.
be~n
mobile hus
~s
$2,500 on
last longer
backs.
made in England, bXCepting for war work·
mo.teri~ls
our labor und
a.
in new
priv~te
bec~use
For the
w~r
business
h~~
We
expend as much
~ke
our clothes
s~~e
it would be crimin<Al to waste it for personal grCJ.tireason
Industry.~
dr~stic
c~n
we know the boys in the·trenches need the wool for their
are not
we
more serious work for the spinners and
This
We do not consume
building - no one
building without Goverm~ent sanction•
VJool is scc.Lrce;
fic .... ticn.
For nt::<.orly two yec:.rs npt a single nelf{ auto-
r~king ~ny
new
c~rpets.
There is.
we~vers.
Shifted to Necessities •
curtctilment of
cert~in
not hurt business.
lines of production to make wuy for
It hus merely resulted in
shifting
d
of labor and bl.lsinoss activity from the less essentigl. to the vitctlly essentiu.l
industries.
To give .... fc:w illustra.tions:
Phonogr<;.oph.factories ure now turn-
ing our d"lic-...te sbt'll p;.•rts, jtll.'velry mc...kers are producing periscopes·, Wdtchm<:.<.kers ure <:djusting fuso;;, :wsic-roll
bakir;g
i.r
mc~.chinery
r~ctory i~
baby-food
turnod to ga.uge
pl;..ni is munuiu.cturing high-explosive shells,
making shell primers' gluzi<;re .... rc,
r~ctcry
rn.;~.kers h<.~.ve
I'k~kin,3
a.
m;;.~.king,
crea.m-separut-
c.-rtridge clips'
is producing plugs for shelh, tho output of
<.J.
a
a
textile-
..
X-822-b
jl
machinery plant is now
shall adapters.
field k~hs.j<'and ah'·a.aV:er·tising "'gency is making
Everybody is <:lt work, produci.ng more lind earning more than
ever before, but the output is war necessities.
No great nation can go thrnu~h this war without paying its share~
VJhen England entered the war, the London··
frofits and patriotism do not mix.
merchants expected to see their
ordilll;4r~ttade
~nd
disappear,
they were ready
to shoulder any burden the war imposed.·
But trade has not been wiped out.
The strange thing is that it has grown.
My own business has paid t'e Brit-
ish Treasury_, in two years $500,000 in excess-profits taxes;
t~kes 80
.the Go't-ernment
per cent. of the increased profits over the pre-war standard.
The reason for this growth in
getting very high wages, and they
ret~il
~re
trade is that the workers are
now raising their standard· of living.
But the more prosperous middle-cl"ss people have
They are giving up
scule of living·
wh~t
grc~tly
curtailed their.
the munition workers are gaining.
incomes <:lnd prof£ts have been reduced, their taxes have been
T~eir
and they
feeling the cost of the war.
~re
in England, und this surely is
The piano
nJ<;~.ny pi,;:~.nos
is
distinct
typi~l.
soci~l
~
great leveling
gain.
In our store., we are selling
~
gre;;;.t
to f"'milies who h"'ve drea.med for ye ... rs of being able to buy them.
But these are
m,;:~.king
tr~de
~
There has been
incre~sed,
not~
few pianos.
new pianos any more th.;.n we can for building new !louses.
second-ht;lnd pit.nos coming frcii1l the
midd.J.e-cl~ss
'ihese ure
homes, often sold to pro,.iJ.e.
funds for buying W<J.r bonds i.:l.nd w"'r Si.:I.Vings certificc-. tes.
Ii the merchants did
moving these
pi~nos
those of the highly
try.
a
business of millions of pounds of
from the homes of the more
p~id
prospe~ous
st~rling
in
middle cldss to
munition workers, there would be no loss to the coun-
No labor or material would be cunsumed 1 excepti.ng in the moving of the·
,.. . f)f
X-822-b
- 5 -
instruments.
In
f<..~.ct,
is really h"ippunin 10,
the Treasury v• .;ulu
by th-.; operi.74tion, becc:Luse what
Uut tho workt·rs <ir~.- trc:Lnst'erring some of· their spend-
.lB
l<.~ttt.r
ing power to the middle c.lc.. ss, c:i.nd the
ernment~
g<:~.in
The moving of the
piG~.no~
are tra.nsferring i t to the Gov-
simply· is ..... .way of getting
t.~.
part of the
munition worker's spending pcw0r turn(;d ov .... r to the na.tion. ·
London murch.:...nts
not only a.iding the Government in spre1:;4ding the
a..n;
go$pel... of war ec(momy, b\..i·t th0y a.re doing their part in diverting the wages
of munition workers fron
c~r...;bss
spending to Trea.sury fjnancing.
.~Iy
own
employes have put ~lOO,OOC of their ec:i.rnings into wa.r savings certificc:Ltes,
a.nd· each W8ek
w~
distribute
prizes to the holders of
extr~ certific~tes ~s
winning numbers.
Whvn the British Trec..sury
fl'ot~.ted
the lr:•st big war loa.n we offered a
ca.pital proze of ~ 5,000 (~25,000) in w~r b~nds to the customer buying the
bond
c~rrying
the winning number.
druwing of the numbers •
the London
officic~.l
Mrs. Lloyd ·George presided over the
B.ef ore ;;..dvertising this bond
corresponding to an
Americ~n
while you
t~.re
tht~.t
you hc:Lven't told me
r~cing
doing it I'll be
~
lottery.
t~.bout
it", was his reply, "and
south."
It is to the south of London where our men
trenches.
·I. telephoned
police commissioner to 4sk
him whether I would be put in ja.il for conducting
"Just consider
sc~.le,
~ro
giving their lives in the
We sold $17,000,000 of war bonds, a.nd to do it we spent $60,000
for prizes, a.dvertising, a.nd clerk hire.
iday shopping sea.son, a.nd after
Government we did the larbest
Tha.t
wt~.s
s~lling th~s gre~t
Christ~~s
business we
in the midst of the holamount of bonds ·for the
ht~.d
ever done.
PAUL M. WAR BURG, CHAIRMAN
ADVISORY COM MinE£:
ALLEN B. FORBES, CHAIRIIAN
FREDERIC A. DELANO
F. H. GOFF
CAPITAL ISSUES COMMITTEE
CHARLES S. HAMLIN
HENRY'c. FLOWER
OF THE
W. T. CHAPMAN, SECRETARY
8RADL£Y W. PALMER, COUNSEL
FEDERAL RESERVE BOARD
STEPHEN L. SELDEN
EXECUTIVE SECRETARY
X-oc..)
c-L'~ES
WASHINGTON
Q. NEWTON
AsST, EXICUTIYISICRJ."tAR~
March 20, 1918.
De3..r Sir:
The Committee is uncie.rt;:iking tne
tical report of it8 work.
.i~velOJ:rc,ent
of
.1
at.1.tis-
Any ouch ..cepo.ct I>Ouli, of course, not
reflect the .actual work ione unless it .;:;howed. the
numb,~r
3.nd
amot;.nt of items of the class consiciered by.the Comoittee wnich
were either
discour~ged
or postponed for the period of the war
through the efforts of the Sub Comadttees without being submitted
to the Committee at Washington.
Will you please be good enough to have
p~aced
in the hands.
of all your committee members, both permanent ·and auxiliary,
C3..rds in the form attache:i,
reY.U~Bting
them to f i l l out sucn
cards with respect to each item so handled oy
them~
This data
should be forwarded. to the Comxittee at Waohingtori daily by the
Sub Committee.
Faithfully yours,
Secl'dt.:t.ry.
Chairman, Sub Com~ni ttee
on Capital Isdues,
Federal Reserve Dist.rict No.
W. P. G. HARDING, GOYIRIIOit
PAUL )II, WARBURG, YICI GIOVIRHOR
FREDERIC A. DELANO
ADOLPH C. MILLER
CHARLEll S. HAMLIN
EX·OFFICIO MEMBERS
WILLIAM G. McADOO
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAM's
COMPTROLLER OF_ THE CURRENCY
FEDERAL RESERVE BOARD
WASHINGTON
M. PARKER WILLIS. SECRETARY
SHIRMAN P. ALLEN, ASS:T. &ICRITARY
A"D FISCAL AGENT
.
ADDRESS REPL.Y TO
FEDERAL. RESERVE IIOARD
March 20, 1918.
Dear Sir:
Counsel has submitted to the Board an outline
of the Federal and State legislation ;vhich, in his
opinion, will be necessary to increase n:embership in the
Federal Reserve system and bring about uniformity in
Federal and State laws.
A copy. is enclosed herevdth,
Ni th the rey_u.est thcl.t yuu consider the ;:;ug,g_estions made
in their rela:Ci;.;:: to yDur
01'1~1
dL:;trict; c.vni th.;;.t yuu
give t:J.e Bv... r.i ti1e benefit of your views on the subject.
No action
has
yet been taken by the Board in regard to
the uatters diicussed.
Very truly yours,
(E::~:l vt;>UI'i3)
Governor.
X-825
The Chairman of the Board,
Federal Reserve Bank,
375
..~.;•
X-829
.AMOUNTS OF :BAi:iKERS ACCEPTAiJCES i::iELD :BY T:iE FEDERAL RESERVE B.A.l'OO>,
DlSTRIBUTE.D BY ACCEPTORS, AT CLOSE OF BUSINESS
JANUARY 31 AliD FEBRUARY 28, 1918
(In thousands of dollars.)
---------------------------------------------------~------------------------------
AGGREGATE LIABILITY
As Acceptor
As Endorser
Name
Jan.31 Feb.28
Address
: Jan.31 :E'eb.28
~~-------------------------------------------------------------------------------.At1ericcm Trust Co.,
Boston, Mass.
687
370
Brovvn Bros. ,
11
First National Bank
11
Fourth Atlantic Hatl. Bank
"
International Trust Co.,
11
Lee, Higginson & Co.,
11
Merchants National Bank
11
J. B. Moors & Co.,
11
National Shawmut Bank
"
National Union Bank
11
Old Colony Trust Co.,
"
Second National Bank
u
State St. Trust Co.,
11
Webster & Atlas Hatl. Bank
11
11
·Commonwealth Trust Co.
Uational Bank of Fairhaven,Fairhaven,Mass.
Fall River National Bank
Fap River, Mass;
First National Bank
'
n
:Hassasoit-Pocassett Ha.tl.
Bank
Metacomet Natl. :Bank
1302
9472
15384
991
1581
599
12293
190
10555
2173
1099
607
39
1~9
714
285
7059
2968
1539
479
llO
39
1~9
It
II
472
II
251
Nassau He:t.tio:nal Bank
Peoyles Tl~st Co.
Brool:::lyA, H. Y.
Citizens Cor.1 1 l.Trust Co.
Mfg. & TrC:~.ders Ha.tl.:Bank
.Bu..ffal o,
Alliance Eank
Security Trust. Co.
Rochester, H.Y.
II
II
II
322
185
340
49
574
35
877
4oo
780
229
35
475
10
36
38
191
214
452
100
281
252
250
250
175
326
275
250
2ft~
5
398
100
150
II
II
453
149
II
ri. Y.
2593
963
3Lj(;
128
319
78
1091
220
763
50
100
9552 10747 ..
185
363
763
50
506
50
100
6375
901
454
1847
6484
5069
697
II
Safety Fund lJci tl. Bank
Fitchburg, l\1ass.
1'
Bay S to. t e 1Ja t i onal Bank
Lawrence
New Bedford 11
First National :Bank
II
II
Mo-cbanics Hat ional Brulk
II
II
!1iercila.nts lJatio:na.l Bank
11
Pittsfield
Agricultural Natl. Bank
11
Chap in nat i anal Bank
Springfield
II
II
Chicapee National Bank
II
II
Springfield Natl. Bank
II
II
Third National Bank
fl
Worcester,
IIIechanic s Hat i anal :P.ank
II
II
Me rcha.n t s National Bank
II
II
Worcester Bank & Trust Co.
Federal Trust Con~any
Boston, I11ass.
National State Capital
Concord, N.H.
Bank
Blackstone Canal lJational
Bank
Providence, R, I.
11
Merchants lJa t i onal Bank
11
Provide:pce National J3a.nk
· First Bridgeport Natl.Ea.nk,Bridgeport, Conn.
II
Phoenix National Bank
Hartford,
II
11
.Hartford Aetna Natl.:Bank
Boston, 11a.ss.
Nevv England Trust Co. ,
Putnum, Coru'l.
First National Bank of
7~87_6
15ol
813
50
100
X•829
{
•
-2-
.
376
.
·--------------------------------------------------------------------------------Na.c1e
AGGREGATE LIABILITY
As Endorser
As Acce32t or
:
Jan.31 Feb.28 : Jan.31 Feb.28
Address
-----------------------------------------------------------------~-----------------
Adirondd.r:'k Trust Co.
Fi:rct lJ<:~.·~ iona.l IJC:Lnk of
Saratoga Spgs. ,N.Y.
Utica, N. Y.
lJorthern N.Y. Trust Co.
Vlatertmvn, N.Y.
II
11
Waterto·~>vn Hational Bank
tl
II
Jefferson County Natl.Bank
American Exchange Hatl.
Bank
Uew York City
AL1erican Express Co:r:1pany
"
American Foreign Banking
II
Co:rp.
It
Anglo South American Bank
II
Atlanta Hat i onal Bank
II
Bankers Trust Co.
Bank of America
It
Bank of British Ho . .America
II
Bank of Montreal
It
Bank of New York N B A
It
Bank of United States
It
Bank of the Manhattan Co.
If
Battery Park National Bank
II
Broadway Trust Co.
II
Canadian Bank of Co:mmerce
II
Central Trust Co.
Chase National 13d.nk
II
Chen1ica1. lJa t ional Bank
II
Chatham & Phoenix
II
Citizens Uational Bank
II
Coal & Iron Hational Bank
II
ColUinbia Trust Co.
tl
Corn Exchange Bank
It
East River National Bank
H
Ey_uitable Tr_ust Co.
II
Farmers Loan & Trust Co.
II
Fifth National Bar~
II
First N"'- t i onal Ba.nk
11
Franklin Trust Co.
11
Goldr,:an Sc:~.chs & Co.
II
Guaranty Trust Co.
II
Hallgarten & Co.
II
Heidel bach Ickelheir.1er & Co.
Importers & Traders Na tl.
"
"
Bank
II
International Banking Corp.
Irving National Bank
Irving Trust Co.
Kiddei'.P.ab·~.
J(/}), ,,
La.denburg Thalman & Co.
Lazard Frer~s
Liberty National Bank
J,ondon & Brazilian :Bank
li¥,t;", ··Jtancet & Fulton nationa.l
BEmk
'Mechanics &, Metals Nat1.
..
Bank
Mercantile Bank of
Mercantile Trust &
Co.
Me rcha.:n t s lJa t i O!l<:l.l
Metropolitan Trust
America.
Deposit
Bank
Co.
11
11
11
II
11
11
"
11
II
50
624
643
50
27
50
65
5799
12
6128
43
378
41
40
13919
300
155
2
2355
15
1985
17
22
1024
2750
7476
1016
594
413
82
13712
600
154
2608
1425
141
12552
4391
12
217
910
2300
24685
225
1228
738
1628
2593
60S
500
321
18
1670
24
173
29
4176
5
2375
16
28
1190
750
704o
1778
500
935
257
3~
.;o
)./
32
208
12830
3452
12
421
930
3067
28778
12460
104
3347
24
24o48
136
3050
12
23879
139
65
35
83
20
37
1439
3011
11319
7426
3493
3332
100
10200
49
6417
30
100
7395
30
1649
935
1942
112
4965
1366
2214
652
626
2179
586
500
17341
64
'
1579
2942
1440
123
1420
24
7228
25
6692
36
350
9
"
4893
1251
3463
2200
5878
529
4363
"
100
110
383
100
514
383
1299
1307
11
II
II
235
'
.----------------------------------------------------------------------------------3-
Address
AGGREGATE LIABILITY
As Acce~tor
As Endorser
Jan.31 Feb.2S : Jan.31 Feb,28
.---------------------------------~-----------------------------------------------8761
J. P. Horgan & Co.,
Hev1 York City
7076
261
li1\Jllro·e & co. , John
11
139
11
15701 18997
Na. t i ona.l Bank of Comme rc e
18649 16805
7976
5381
lJational City Bank
Nat iona.l Park Ba.nk
Haumburg & Co., E
U. Y.Produce Excl:J.:l.nge :Bank
New York Trust Co.
Royal Bank of Canada
Pacific Bank
Seaboard National Bank
Seligman & Co., J. & w.
Sutro Bros. & Co.,
Union Bank of Canada
Union Exchange Hational
U. s. Mortgage & Trust Co.
"
"
8702
n
691
1099
250
57
242
Fidelity Trust Co.
Grace & Co. Bank
lf
12
If
96
"
"
"
"
"
"
"
"
"
11
First National Bank
First National Bank
Bank of Toronto
Perth .Amboy, N.J.
·Jersey City, N.J.
Toronto, Canada
Corn Exchange Natl. Bank
First National Ba:nk
Fourth St. lJa tl. Bank
Frankl in lJa t i onal :Bank
Girard Hational Bank
Girard Trust Co.
Market St. Hatl. Bank
Philadelphia Ha.tl. Bank
Philadelphia Trust Co.
Tradesr>lens Na tl. Ba.nk
Fidelity Trust Co.
Philadelphia, pa.
6190
5622
4836.
148
268
200
1150
17
200
29
433
1214
rr
n
"
"
"
11
u
u
"
"
Fifth Third Hatl. Ba.nk
Cincinnati, Ohio
If
German National Bank
Bank of COLmlerce U •.A.
Cleveland, Ohio
ff
Cleveland Trust Co.
First National BG:~.nk
"
Na tl • ConJLle rc ial Bank
"" ·
Union ConJLlerc e Hat i ond.l :Ba.nk
Huntington National Bank
Colurnbus, Ohio
Exchange National :Bank
Dover, Ohio
First National BG:l.nk
Springfield, Ohio
Lag onda Na. t i onal Bank
"
National :Bd.nk of Cor::merce Toledo, Ohio
Northern National :Bank
"
Fir$t National Bank
Troy, Ohio
"Iiank
& T.hird .l-la.tl.
First-Second Natl.Bank
Mellon lTat ional Bank
Pittsburgh Trust Co.
First National :Bank
Guardian T.rust & Savings
Bank
Lexington, Ky.
Pittsburgh, Pa.
"
"
Shelby, Ohio
Toledo, Ohio
328
200
1566
500
1450
57
1365
57
1365
4793
4696
50
105
35
1134
306
200
515
2426
2912
',
733
663
6995
1754
825
17
1216
50
105
4.4
1645
641
213
28
150
2054
500
1584
5377
50
698
25
25
2254
50
15
2311
804
31
923
40
900
621
2203
471
2393
4919
50
762
450
1303
100
2l
189
10
235
103
200
15
525
760
2510
100
10
166
69
30
20
70
71
1451
100
445
1579
16
378
14
50
250
'
.
x-ez9
-378
-4-
---------------------------------------~---------------------------------~-------~-
Address
AGGREGATE. LIABILITY
As Ac~t or
: · As E".nclorser
Jan.31 Feb •.28 : Jan.31 Feb.28.
----------------~----------------------------------------------------~------------
0
Citizens National Ba;;.1k
Fa.mers & Merchants Hatl.
II
Bank
\
~
Merchants & Mechanics First
II
Ua ti onal :Bank
II
Nat i anal Bank of Cornme rc e
II
Union Trust Co.
II
National Exchange J3a~
Beru1ettsville,s.c.
Peoples National E~
Bishopville Ua.tl. Bank
Bishopville, S.C.
Bank of Charleston
Charleston, S.C.
11
Peoples l1ationa.l Bank
Carolina Hatl. funk
Colur;lbia, s.c.
II
Palmetto Hatl. Bank
Merchants & Planters
lila. t i onal Bank
Ga.ffney, S.C.
Norwood National Bank
Greenville; S.C.
Na. t i on.a.l Union &.nk
Rock Hill, S.C.
II
Peoples national Bank
Ua.tl. Bank of Carol ina.
Sumter, S;C.
Merchants & Far£iers Bank
Chd.rlotte, N.C.
11
Charlotte Natl. 13a.:nk
II
Union National funk
Fitst National ~k
El izabeth 1~.C1'~..-v N. C+
Citizens U<:~.tional Bc.mk
Gastonia., jJ, c.
.American EAchange Natl.
Bank
Greensboro, N.C.
II
Greensboro Hatl. Bank
Murchison Uatl. :Bank
Wilt1ing ton, N.C.
Merchc:tnts Uatl. Bank
Winston-Salem, N.C.
.American Na. tional Bank
Danville, Va.
II
First National Bank
Schmelz National Bank
lfewport Hews, Va.
Citizens Bank
Norfolk, Va..
,
II
Na. t i orJal Bank of COLlLlerce
II
Uorfolk Hational Bank
II
Sea.boa. rd Na. t i orJal Ba.l"..k
II
Virginia l~tior~l Bank
American National Bank
Richmond, Va
First Nat i anal Bank
"
Mercha.n t s Ua ti ona.l Bank
II
Planters Ha.ti0".4lal Bank
38
43
433
348
1500
155
134o
155
150
300
10
48
950
ia
4
350
43
64
23
12
25
55
95
100
5
10
48
655
220
131
250
12
4o
23
74
25
55
167
25
)2
180
33
1699
50
30
110
1131
75
30
111
"
145
911
1026
174
125
480
1535
675
1489
181
439
1312
180
63
310
1305
782
1496
Continental Trust Co,
Wci.shington, D.C.
200
200
Central 1Iational
Albcmy, Ala.
50
71
City Hat i Oll.d.l :&nk
De0c:1.tur, Ala.
22
Fa:ro1ers national Bank
Geneva, Ala..
5
5
28
16
1'roy, Ala.
82
82
Athens, Ga..
10
130
150
100
34
....
.,.
Baltimore, !.1d.
]d.nk
~~~"-~'
Mj.~Q.
City. AJA.,.
4o
150
Farmers & Merchants Na.tl.
Bank
American State~
Georgia National Ba.nk
National Bank of
Atlanta. National J3a.nk
Central Bank & Trul:lt Co.
II
II
Atlanta:, Ga.
II
10
16o
150
100
. ,.-----------------------------------------------------------------------------------79
X-62!3
-5-
AGGREGATE LIABILITY
As Accel.)t.E.£_
As Endors....;e"""r-,--
Addl"ess
Uatle
Jan.31 Feb.28 : Jan.)l Feb.28
-~---------------------------------------------------------------------------------200
Atlanta, Ga.
250
Fo-grt h l:fa t i anal funk
II
2CC
Lowry iJa t i ona.l :.C.:~.nk
II
Third Hat i ona.l :&.nk
If
Tl'ust CompGmy of Georgia
Hampton, Ga.
First HC:i. t i anal funk
First National Bank
Jefferson, Ga.
Fourth Nat i on(;l.l Bu.nk
Macon, Ga.
First NEttional Bank
Rome, Ga.
Mercbants 11ational :Bank
Sava.n;.-.a.h, Ga •
II
National BurJc of
It
Savannah .Bcmk e~ Trust Co.
First Nat i or..al fur:k
Crowley, La.
Bank of Iota
Iota, La.
Canal Bank & Trust Co.
New Orleans, La.
Citizens Bank & Trust
II
Co. of La.,
Comm~rcial Garr;1ania Trust
II
& Savings Bank
II
COllj!,>erc id.l lJa. t i onal Bank
II
Hew Orl~ans i.Jatl. Bank
11
vThitney CentrC:i.l lJC1.tl. Bank
Citizens & Peoples HC:i.tl.Bank Pen<ia.~ola., Fld..
II
Comr.lercial lJational Bank
Fourth & First ITa tl. BC:i.nk
Nashville, Tenn.
Fir::>t lJationa.l Bank
Chc~. t t~mooga 1 Tenn.
Hiberr1ia Bank & Trust Co. Hew Orleans, La.
First National Bc~.nk
Valciosta, Ga.
Hational Bank of Wilks
'\:vashL1£;ton, Ga.
National Exchange :Bank
AUbusta, Ga.
Ban..1.c of Eu,fala
Eufala, .Ala. •
.American Na tio:::1al Bank
Pensacola, Fla.,
National City Bank
Rene, Ga.
Chicago Savings Balik &
Trust Co.
Continental & Comr:1ercial
ITatl. Bank
Corn Exchange Ira tl BCi.nk
First Nat i anal Bank
Fort Dearborn Natl. Bank
Merchants Loan & Trust Co.
Uationa.l Ba.nk of Republic
National City Bank
Union Trust Co.
Chicago, Ill.
II
"
II
II
II
II
11
"
138
150
20
10
558
96
225
441
805
30
36
345
360
236
603
-~00
37
59
257
12
209
300
429
471
1600
23
279
53
82
82
5586
317
1726
114
2732
142
329
50
7900
8.31
4577
562
4394
389
403
50
32
32
Indi~polis,
268
619
32
58
16
295
33
"
446
10
Datroit, Mich.
Grand Ilia.pids, lUch.
Dyersburg, Tenn
First National Bank,
Central State National Bank ivlemphi s, Ten."l.
First National :&.nk
n
National City Bank
Union & Planters Bank r?c
II
Trust Co.
fl
Mercantile Natl. Bank
88
175
240
First & Old Detroit :i.Ja.tl,
Rink
Old national Bank
lt"'letcher Aillerican Natl
Bank
23
651
50
Evanston, Ill.
~:';l'i'~.Na t i anal
50
80
City Hational BC:J.nk
Ind.
Milwaukee, Vlis.
288
502
790
437
75
432
305
80
75
417
135
20
558
170
35
300
200
X-829
.. ~ .38()
.. 6-
-------------------------------------~--------------------------------------------
Name
AGGREGATE LIABILITY
As Endorser
As Acceptor
Jan.31 Feb.28 : Jan.31 Feb.28
Address
----------------------------------------------------------------------------------
Boa.tLlens :Bank
St.Louis, Mo.
Central National Bank
"
Mercantile Trust Co.
!f
Mechanics .American Hatl.
Bank
!f
Merchants Laclede National
:Bank
n
Mississippi Valley Trust Co.
"
Na tl. Bank of Commerce
H
Third Natl. Bank .
"
St. Iiouis Union Bank
"
155
478
237
200
1214
950
825
929
1217
lj.9~
50
~~
566
704
1020
Cairo, Ill.
28
20
First Nationa.l :&l.nk
American-Southern
lJa.tional Bank.
White Hall, :Ul.
17
17
~rdin
B~
Natl.
National Bank of Comnerce
Planters
Natio~l
Bank
69
1082
63
Louisville, Ky.
Elizabethtov~,
150
250
Cairo Hational :Bank
First
15
31
150
250
Ky.
7
32
Louisville, Ky.
Clarksdale, Miss •
12
150
150
35
44
First & Security Uatl.
Minneapolis, .Minn.
Bank
Northv;estern Natl. Bank
29
14
1675
1000
950
950
First National Bank
Hutchinson, Kan.
City National Bank
Security National :i3ank
Atlerican Exchange· 1·Tatl.Bk
So. Texas Cora.N<:l.tl. Bank
Dallas, Texas
"
Houston, Texas
20
700
500
.At1erican National lknk
Anglo & London Paris
Natl • .Bank
San Francisco, Ca).
31
82
II
1544
1777
II
126
172
Bank of Califo~ia
Ea.nk of Italy
Crocker National Bank
First l~atioilal Bank
. . ·......· Sav~ Union Bank & Trust Cot
;~~~-~· i&l'&o 'Nevada. Ua.il ..
~~('
55
tf'
B&nk
La.dd & Til ton 13c:l.nk
Northwestern Natl. Bank
Natio~l l3cmk of Comr;~rce
Total
"
"
6
n
154
241
II
131
299
II
50
II
5QO
328
88
107
91
2
2
Port1d.l1.d, Oregon
"
Seattle, Wash.
200
88
295
-=-~tfficu&n--t;- OPEN ~tARKET
AMOUNTS OF TRA,DE
381
;
ACCE.PTANC.Ii5fH.clLD"4i~JEDERAL
RESERVE BANKS,
DISTRIBUTliD BY ACCEPTORS, AT Tful C10S.cl OF BUSINESS
JANUARY 31 AND FEBRVARY 28, 19'!8.
----------------------------------------------------------------------(In thousands of dollars.)
Aggregate Liability
---------------------------------------""---------------5!-l?_J..g.s;::.ep.t~r~----Acceptor
Address
'Jan.31
Feb.28
-----------------------------------------------------------------~-----·
)
Colonial Products Company
Boston, Mass.
American Smelting Co ••
B. Altman & Co.
H. A. Astlett
Ar1110ur & Co. ,
Balfour Williamson Co.,
Bowring & Co. ,
Braden Copper Co.,
Wm. Brandt Sons & Co.,
Chile Exploration Co.,
Cheney Bros.,
Dupont de Nemours & Co.,
Duplan Silk Co.,
Leo L. Dobbin Co.,
W. R. Grace & Co.,
V. Guerin'Fils
Hartman BrQs., Inc.,
Hadden & Co.,
~.F. Norden & Co.,
Morima.ri Arai & Co • ,
Nozawawa & Co.,
H. w. Peabody & Co.,
Rockhill & Victor
R. & H. Simon Co.,
Chas. F. Smillie & Co. ,
Tata Sons & Co.,
Fred' k Via· tor: & .Ae'lelis
Ralph M. Ward & Co.,
New York
Japan Cotton Trading Co. ,Ltd.,
G~rgas-Pierie Mfg. Co.,
·penna. Sugar Company
Pilling & Crane co.,
Union Petroleum Co.,
. American Trading Co.,
Atkins-Kroll & Co.,
Balfour Guthrie & Co.,
Goedyear Tire & Rubber Co.,
Alfred Kohlberg & Co.,
Ohashi Impt • Co • ,
Hind Ralph & Co.,
Jones Thierbaeh Co.,
• Pllillipe &. Co.,
~~~AA~--~~~,·~L--~•1M
tta & Pattereon
Tnta.l
201
24
2
35
21
147
II
II
II
II
52
II
---36
"
"
It
116
953
II
"
II
7
"
9
76
45
629
32
22
29
41
147
"
"
"
II
"
"
"
II
"
Yokohama
Philadelphia, Pa.
II
"
II
6
66
48
36
239
40
365
365
7
"
12
"
"
II
II
It
"
II
"
II
It
"
..
"
"
"
1t
30
763
32
19
29
10
79
46
San Francisco, Cal.
"
139
143
40
1043
116
11
II
"
35
21
131
15
150
36
150
3
"
"
",,
II
2
44
l2
123
152
1524
1620
4
5
193
2
159
98
3
140
2
~
6363
5456
X-832
COPY OF LETTER \iRIT'J:ElJ BY GOVERNOR &RDUIG TO ASSISTaNT SECRETARY
LEFiiNG\iELL ON MARCH 16, 1918.
(In re branches of Federal
Reserve banks)
"After discussing with counsel the matter referred to
in your letter of the 14th instant, I feel warranted in advising you that you~ understanding of the status of the branch
of the Federal Reserve Bank at Baltimore is entirely correct.
A branch of a Federal Reserve bank has no separate corporate
entity and its operations are in effect the operations of the
Federal Reserve bank.
R eserve deposits carried by "'1ember
banks upon the books of a branch are actuaJ. reserve carried
with the Federal Reserve bank, ani where deposits are rmde in
a branch by an agent of the governll'ent and are charged to
that bran~h on the books of the ~r8asurer of the United States,
the Board underst3.llds that this is ione 1nercly as a matter of
bookkeeping convenience~
'J:he deposit liability rests 1vith
the Federal.ResRrve bank.
There is no difference 5.r.o. this
respect in the status of any branch of any Federal Reserve
bank.
1.11ile so,ne J:<'eu.eral Reserve bcinks have Given the directors of a branch bank a broader discretion as to internal
m<:m.a.geir.ent of the branch and i:tx to discount ope rat ions th2-n
other .l!,ederal Ressrve banks have done wtth their branches, this
c .Lrcums tance does not interfere with the theory and the f<:LCt
that the assets, liabilities and operations of a branch are
actually the a.ssets, liabilities and operations of the hedd
office. - the iederal Reserve bank.''
Release for the
morning p~pers of
Ha:rch 24 1918.
X-834
2
Vlashinc;ton~
l.l.:lrch 22 2 1918.
STATEMENT FOR THE PRESS
The Capit.::..l Issues
Cor:_;~·.i t-c:::e
::1acle public yest0:cday a
statist ica.J. :c::;sur:1e of ap)licat ions for the issue; of s0cu:ci ties
that had rccei ved forr.1al act ion by the Cor.mi ttcc.
The :;:-cport
sh0'.7S
tha.t since Ja.nuary 12th~ o..lthough it s
early in February -
o:cganization -.7as not perfected until
Comr.1ittoe has sivon final disp?sit ion to
80!2.0
tl:e
130. issues.
These
TOTAL
PCl:lTT
issues were divided as fo11ous:
MUNICIPAL
App:coved
Tl
11 Refundingu
Disapp1·oved
Cu:ctJ..iled
Total-The
iSSU0S
25
30
4
7
66
PUBLIC
UTILITY
8
,.,,...
IHD'JST=-:.IAL
40
75
7
8
130
7
lS
2
1
29
.:.)0
1
0
35
30 .. 77
57 .. 69
5.39
6. 15.
100.00
aggregated $268,269,918.17, divided:
Disapl):CoveclAp?rovedLess 11 rGfunding 11
ap)lic3.t ionsNe-il Issues-
:2U3IJIC
UUIJICIPAL
UTILITY
INDUSTRIAL
$33,3l4,o18.17 $127,104,500 $107,850) 9 00.
4,326,000.00
3,000,000
3,830,000
28,888,518.17 124,104,500 104,000,900
15,331,912.00
13,656,606.17
101,509,000
22,595,500
-98,350,900
5,150,000
17,982,606.17
13,6562606.17
4,326,000.00
25,595,500
22;595,500
3,000,000
9,000,000
5,1;::)02000
3,350,000
ANALYZED AS FOLLOWS:
Amount of issue
n
approved,
Ou:ctailr.1ent cffec·ced-
So that out of a total suomii:;ted
(G)~clusive
of :cefunding
mittee as to $41,402,106.17 (78.77%L and c'dse,pl:.:cova.l vm. s ex-
~
I
t
(2)
X-834
The Chairnan of the Committee, in publishing the inf.ormation,
made it clear that these fiGures, representing as they d.o only the
issues forn1ally presented for the consideration of the Comr,1i ttee J
coulcl not ·;:)e accepted as reflect inr; ·,7holly the results of the nark
of· the Committee in its efforts to circur11scribe the use of capital,
labor, ::Jater ials and t:cansportat ion, vv-hen such. are so vi tally
needed for the public ,-,relfare..
He stated that, ·,-;hile no figures
were as yet available, it 1rould be reasonable. to assw.:1eQ that· the
.
issues presented to and discouraged by the· Sub-COI;r:Jittees would
constitute a very handsome aggregate.
Furthermore, the wide
publicity given to tho Committeos 1 w·ork has naturally resulted
in the supJ.:.:ression at the source of 1:.mny issues that in fairer
-rrea ther rmuld :·.1ect a differc:;nt 17elco::Je than novr a·wai ts the unessential security issue that would deprive the Govc;rnment of its
preferred claim upon the means of its bcmeficiarics.
Uembcrs of the Comn1ittee conferred rJ"ith l:Iajor General Goethals,
and received. t:l.e pledge of his expc;rt aclvice <:vnd assistance ir1 the
consideration of new issues for the purpose of constructing hard
surface roads, upon the theory that such roads constitute a
0
military necessityn.
The Committee also had a conference vri th Corar,1iss ioner of Education Claxton, and Lieut. Colon-:;1 1 •. P •. Ay~s, a l.Iember of the
General Education Board now acting as Statistician of the General
Staff of the U. s. Army, for the purpose of coordinating the
policies of the Comr.1i ttce vJ"i th those of the Educational Authorities
Yvi th a view to the development of a practical and at the sar.1e time
scientific method for dealing with the question of issuing
securities for the construction of new schools-
EX~OFFICIO
W. P. G. HARDING. GOVERNOR
PAUL N. WARBURG, VICE GQVIRNOR
FREDERIC A. DELANO
ADOLPH C. MILLER
CHARLE$ S. HAMLIN
MEMBERS
W1LLIAM G, McADOO
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
FEDERAL RESERVE BOARD
WASHINGTON
H. PARKER WILLIS, SECRITART
SHERMAN P. ALLEN, ASST. SICRITARY
AND FISCAL AGENT
ADDRESS REPLY TO
FEDERAL RESERVE 'I!IOARD
V..areh 23, 1918.
Dear Sir:
Referring further to correspendenee in regard
to the proposal of the Xansas City Clearing House Committee)
and to~ letter of February 13th (Mirr~o. X•727), I send you
herewith for ycr..1.r :l.r"forn:ation a copy o:f a letter ·:.,ritten by
Governot• Harding und.er date of March 18th to Mr. P. W. Goobe1 .•
Chairman of the
Comroi~tee
of Bankers.
Yours very truly ..r
X-835.
Inclosure: X-816
•
.
.
TREASURY DEPARTMENT
.
...·•
WASHINGTON
NATIONAL
WAR SAVINGS COMMITTEE
March 23, 1918.
Dear Sir:
One of the Federal Reserve Banks have raised the
question of postmasters declining to give War Saving Strumpe
for filled
thrif~
cards when these are presented by banks,
the cards having been taken up by the banks from individuals.
This na.tter was taken up with the Post Office Del)artment and
under 4ate of March 20th the Third Assistant Postmaster General
issued an order as per attached eopy, which will, I believe.,
cover the situation and· be of great convenience to your
~ember
banks.
lery truly yours,
'1
Actinf~ Chairm~n.
Inclosure: X-836a:.
X-836
Q Q
f.
X...836a
x.
March 20, 1918.
POSTli.JASTERS AT MONEY ORDER POST OFFICES l!.~.UST EXCHANGE WAR SAVINGS
CERTIFICATE STAMPS FOR THRIFT STAMPS 'h'HEN PiiESENTED BY
I~DIVIDUALS~ BANKS OR SALES AGENTS.
Complaint has been xr.a.de to the Dapartn.ent that sOQ:e Po'st•
na.ste:rs decline to exchange for War Savings Certificate. Stamps Thrift
Stan,JlS received f rolU the publig by bapks and
other sales agents.
Section 7 of the Instructions of the Department of January 18,
1~18, (Fo~
3348) provides as follows:
"When 16 thrift stamps, to the total value ot $4. have been
bought and affixed to a thrift card, they are exchangeable at any
money~ordar post office. if tendered with 12 to 23 cents (depending upon the month) 1 for an interest-bearing war-savings certificate stew:p. Post~sters shall accept thrift stamps in payment for
war-savings certificate stamps when tendered with the required
au.ount of cash 1 regardless of where ;urchased~'
This
Post~m.ste:rs
s~fs
re~lation
applies to
u.oney•o:rd~r
poet o!fices only and
are hereby notified t.llat they are :required to receive Thrift
of the value of $4, when
affi~e4
to a Thrift Card in exchange for
a. War-Savings Stamp H accorLpanied with the required
amount of cash
when tendered by banks or other sales agents as well as by people who
have
pur~hased
them at post
oft~ces.
A. M. DOCKERY,
Third
Assi~tant
Postmaster
Gene~l.
RATIO OF llFLQAT" OF EA.CH FEDERAL RESERVE BANK
MARCH 22, 1918
~0
EA.RNING ASSETS AND DEPOSITS.
.
'
X-839
------------------------------------------------------------------------------------------------------------------------------------~--~
Clearing :National :Bank: All other :
Total
•
Total : Total !Net investment: Ratio of
!Ratio of "FLO.&.'l'" to
house
notes and :'uncollected:"Uncollected~collection~ "FUlA.'l'" : in transfers : "FLOAT" to : i.mDJediately a.va.UFedera.l Reserve: exchanges . notes of
itenlS
items
items
: included in :total earning:able Government bank
:Bank
other
:total 11FLOAT 11
assets.
:
deposits.
F .. R.Ba.nks
!
Dr.
~
Cr.
•
Per cent.
Per cent.
1,025
6
19,034
20,065
17,015
3,050
4.3
3-3
19,591
2,098
57.617
79.306
54,295
2.5;011
4-3
3-~
Philadelphia
4,128
. 536
33.695
38,359
31,175
7~184
530
11.8
7-2
Cleveland
2,008
543
26,538
29,089
22,529
6,560
1, 589
8.2
5·3
899
23,980
27,627
20,283
J,.,J44
17.0
15-S
28.0
17-5
Boston
liew York
Richmond
Atlanta
2,626
2.552
14,562
19, 74o
11, 73~
8.,006
Chicago
8,481
995
55,118
64,594
25.731
38,863
2),828
38-1
19-J
22.7
674
16,917
17,818
1~. 291
J, 527
1,34o
9·5
5·7
Minneapolis
230
13,065
13~295
4,198
9.;{)97
8,113
53·3
19-7
Kansas City
156
28,5ZJ
29,354
10,852
).8,502.
11,2,30
42-9
23.-3
20
7.360
10,315
17,695
5,997
11,698
4o.4
25-7
1,486
784
8,609
10,879
43,011
16,833
307,977
367,821
St. Louis
.r
(b)
Da.lla.s
San Francisco
Total
.
11,015 (a)
136 (b)
229,115 138., 706
~
1,425
11.9
.;
~:
J·
8.4
----------------------------------------------------------------------------------------------------------------------1t---·-----------.
(a.) Excess collection items.
'it
(b) Excess of amount ·Of transfers sold over amount of transfers bought.
W, P. 8. HARDING, li<>YI.....
PAUL II, WARBURGI, Y..l . .Y...... R
FREDERIC A. DELANO
ADOLPH C. MILLER
CHARLES S. HAMLIN
EX•OFFICIO MBMBKRS
WILLIAM G. McADOO
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLIII OF THE CURRENCY
II. PARKER WILLIS. SECRITART
FEDERAL RESERVE BOARD
IHIRMAN P. ALLEN, AIIT,IICRETARY
AND fiSCAL AGJ:NT
WASHINGTON
ADDilKSS RIEPL.Y TO
FEDERAL RESERVE IIOARD
X-840
March 25, l918
Dear Sir:.
On
beh~lf
herewith outline of
of the Federal Reserve Board, I trunsmit
org~nization
together with typicQl chart.
of
Feder~l
Reserve bQnks,
The Bodrd requests that you
bring this to the dttention of your bodrd of directors with
the request
th~t
it consider
~king ~ny ch~nges
in by-laws
which may be necessary to curry into effect the plan of organization proposed •.
Very truly yours•
Governor ..
....
X-840
OUTLINE OF ORGANIZA'B.ION OF FEDERAL RESERVE
IAHJ!L.
While ihe o!fico o! Chairr:..an of tha ·BoC:.I.rd. of Dir0ctors and that of
the Federal Reserve Agent are by statute required to be held by one and
the same person, the duties
separate and distinct.
and~responsibilities
of the two officee
are
The holder of these offices occupies therefore,
a dual capacity in relation to the Federal Reserve bank.
CHAIRMAN OF THE BOARD.
Unuer the terms of the Act the Chairman of the Boara
~ust
be a
person of "tested banking experience" and it is. evic.ently conten;plated
that he should be qualified to j uage intelligently as. t c the efficiency
and ctderly cono.uct
ot
'
the r.•abagellient of the barlk•
±n so far as his
'
duties as Chairr:nan of the Boo.ra are speoifi6al1:'{ clefi.:hed; they are
{a)
To preside at weetings of the Beard of Directors;
(b)
To con;.uct elections of directo.rs, and
(c)
To transfer "public stock" i.e., stock held by subscribers
other than ::.an:.ber banks.
These apf'ear to be the only specif.ic a.ut ies anu powers vested by the Act
in any officer connected with the bank.
by the
All other powers are conferred
·• Board of Directors which is expressly authorized to apt:,oint such
officers and eruployes as it O.eel:ls necessary and to define their duties.
FEDERAa RESERVE AGENT.
The o.uties of the Federal Reserve ag,ent are defined in detail by the
statute •
Unc.er the ter<Us of the Act he is the official representative of
the Federal Reserve Boaro. in the exercise cf its supervisory powe·rs over
.
,..
1·840.
the bank, and all of his duties are performed in the capacity of a re17 ...
resentative of the United States .rather than in the capacity of an officer
of the bank.
It will be observed that the stat1,1te proviaes that the
duties of the Federal Reserve Agent shall be in adaition to his duties as
Chairrr,an of the Board of Directors of the Federal. Reserve Bank.
The Chairillan of the Boarci ana. Federal Reserve Agent is appointed by
the Federal Reserve Boaru, ana the chief executive officer or oanager of
the bank, who has been st'yled ''Governo·r" • is elected by the directors of.
the bank, two thirde of whom are chosen by the member banks, and he de40
rives his authority from the Board of Directors.
In accordance with the evident intent of the Aet, the following
division of functions in the organization and administration of Federal
~eserve banks is suggested:
(l)
Administrative, supervisory, and advisory;
{2)
Managerial and executive.
The first of these functions is governmental in character and is
perfon1ed by the Chairman of the B-oard and the Federal Reserve Agent, who
acts as the official representat:j.ve of the Federal Reserve Board and who is
required by law"t o maintain
pre~ises
o~
*
** *
a local office of said board on the
the Federal Reserve bank".
The second grol.1p of functions belongs to the Governor of the bank,
subject to sl.1ch liwitations as way be
Fro~
pr~scribed
by the Board of Directors.
the fore6oing a chart of organization has been developed, which
is submitted herewith and which may be
e~plained
as follows:
X-840
••
-3EXPLJU\fATIOlif OF ORGANIZATIOl'T CHART"
1.·
n~e Chairman znd Federal Reserve Agent, in his dual oapacity, as
Chc;,irm:::>n of tl~e Boarc of Directors of his banl: an:-' re:Jresentative· of the
Federal Reserve Board, must have active supervision of the ban: throus;h
the AucU tor 7 who Hill be elected by the Board of Directo:;.~s of the Banl{
anc'.. wi 11 re:__)ort to the Board. throu'~h him.
It 'llill )robably be found oQfiVenient for tl1e Auditor to make his
re:;.Jorts in du)licate or tri:olicate, so that at lec..st one COlJY ::1ay be
given to the Chairman of the Board and one CO:GJY to the. Governor of the
Barr:.
The Chairma~ .::..nd. Federal Reserve Agent ·will >.ve on his stc..ff one or
more i..ssistant Fede1·a1 Reserve Agents? to aid. l1i:1 in his no;::"J: c.s custodian
of the notes of tbe ~)2J.1k, anc'.. of the collateral for Yrhicll he is responsible.
He will also have on his staff such examiner or examiners as rr.ay be
required. for the examination of member banks or of state banlcs desiring
admission to the system; operating in this respect under cUrection of the
Federal Reserve Board at .Jashington.
n1e credit files of the banl:: sb,ould be in ~'1e joint custod.y of the
Government's representative and the chief executive officer of the bank.
ll·
The Governor, as the chief executive or managerial ofiicer of the bank,
will have direct charge of the various activities of the barut. There will
be one or more "I:eputy Governors, 11 a" Cashier, '1 and one or nlore "Assistant
Cashiers;r who, under eli recti on of the Governor, \Vill have charge of the
various operating departments of the banlc.
The Auditor of the Bank may be styled, 11 General Auditor, 1' or in the
case of the larger banlcs, ;'Comptroller. 11
'.lhile this independent officer relJOrts directly to the Board of Directors~ by which he is elected., and. is not on the staff of the Chairi"Han and
Federal Reserve Agent 9 he should transmit his reports through the Chairman
as the representative of the Board of Directorse
No cl~o.nges in the personnel or salaries of the Aucli ting De::x>.rtment
should be maC:.e until submitted. for approval through the Chainnan to the
Board of Directors.
It is assu.mee., though it is not mandator~)- uno.er the law, thc::.t the counsel of the banl-c should. be elected by the board of C'.irectors reporting directly to
X-840
-4-
it qs the legal advisor of the Board, and that he be consulted as occasion requires,
by the Ch~irman ae well es by the executive officers of the bank. Inasmuch as the
Federal Reserve Board, from time to· time, makes rulings on questions of law, or
gives its interpretation of the law, it is obvious that the counsel of each Federal
Reserve bank should~ work in absolute harmony with the Counsel of the Federal Reserve
Board.
v.
The Board of Directors of the Federal Reserve Bank will require a Secretary,
to have chqrge of·all its official minutes and records., The position may be elective by the Board, its incumbent reporting directly to the Board of Directors, or
it may very proper:J,y be merk.ed with "thjit of Counsel or with that of some member
of the Chairman's staff.
The latter method 1 on the whole, is to be preferred.
PAUL M. WARIIURG, ¢HAIRMAN
FREDERIC A. DELANO
CHARLES 5. HAMLIN
ADVISORY COMMfffE!:
ALLEN B. FORBES, CHAIRMAN
F. H. GOFF
CAPITAL ISSUES COMMITTEE
HENRY C. FLOWER
OF THE
W. T. CHAPMAN, SECRETARY
BRADLEY W. PALMER, COUNSEL
FEDERAL RESERVE BOARD
STEPHEN L. SELDEN
WASHINGTON
1
EWUTI~E S~RETAitY
JANES
.J..
Q. NEwJllll'"t54
ASST. EXECUTIYI SECRUAR'C
March 25, 1918.
Dear Sir:
Some misunderstanding with respect to the method of dealing
with applications appears to have arisen in certain districts:
Applicants should be instructed to prepare applications in
duplicate, sending the original direct to the Capital Issues Committee, \'Taahington, and the duplicate to you (the latter only for
the purpoae of having in your hanjs full information as to the application in the event the \'rashington Committee should find it
necessary to
com.~.unicate
·;,;ith you 'Jvith respect thereto).
Sub Committees are in no event to undertake the approval or
disap-;:roval of applications.
They are requested, wherever possi-
ble, to discourage or postpone issues of securities for non esaential purposes, whether or not above the minimum considered by
the Committee.
If they are successful in discouraging an issue
above the m¢nimum, that fact should be reported on the form cards
heretofore sent you.
If, however,. application is actually made,.
the original being sent to ·washington, the issue thereby becomes
one for the consideration of the Washington ·committee, which may
or may not refer the case to the Sub Committee, and under no circumstances would it appear to be advisable that the applicant be
apprised of the finding that the Sub Committee is reporting to
headquarters.
Faithfully yours,
Chairman,
Sub Committee on Capital Issues,
Federal Reserve District No.
Secretary.
X-843.
CAPITAL ISSUES COMMITTEE
Statistical Division
All statistics will deal only with issues above the minima,
considered ~Y the Com~ittee.
A statement of the work of the organization will be ~iven to
the press weekly on each s~turday morning. This statement will
show the results accomplished during the .week ended thursday evening
preceding.
A monthly statement will be published in the Federal Reserve
Bulletin.
The figures will be divided into three general classes, viz.
1.
2.
3.
Formal action,
Informal action.
Action of Sub.Committees.
The method of assembling the information for the reports will
be as follows:
1.
FORMAL ACTION.
All opinions will be formal and letters both of approval and
disap2roval will be assigned consecutive numbers, approval numbers
being prefixed with the letter "A", and disapproval numbers being.
prefixed with the letter "D". All such opinions will be signed by
the Chairman or Acting Chairman of the Co~nittee. Copy of the
minutes of the Committee (sho-.ving opinion numbers in each application dealt with) will be furnished to Statistician, which minutes,
together with recormnendations submitted, will give complete information as to partic~lar action. Recommendations should show accurately whether the issue is municipal, public utility or industrial
and if the issue is one for refunding purposes that fact should
be noted on the recommendation.
3.
INNORMAL ACTION.
Members and officers of the Committee will be furnished vvi th
descriptive c:ards -Nhich should be filled out and filed with the
Statistician upon day of action for all applications presented to
them which they have taken up with applicants and induced applicants
to postpone for the period of the war or otherwise.
3.
ACTION OF SUB COMMITTEES
Sub Committees have ~een furnished with descriptive cards for
use in reporting issues, the postponement of which has been secured
through the efforts of Suo-Committees or individual members thereof.
'J;'hese cards are be_ing for·"varded daily by S,..lb-Commi ttees.
Washington. March 37, 1918.
W. P. G. HARDING, GOYIIMl.lt
PAU~ M. WARBURG, YI41 . .YioiJOR
FREDERIC A. DELANO
ADOLPH C. MILLER
CHARLES s. HAMLIN
W1LLIAM G. McADOO
SECRETARY OF THE TREASURY
CHAJRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
FEDERAL RESERVE BOARD
H. PARKER WILLIS, SECRITAII.Y
SHERMAN. P. ALLEN, AliT. SICII.ETARY
AND fiSCAL AliiNT
WASHINGTON
ADDRESS REPLY TO
FEDERAL RESERVE IIOARD
.!Varch 27 1 1918.
L::.ar S2.:r:
The Boarci ha.s 1·eceived rrany inl\U.ries of lq,te as to the
eligi'Jility of notes ~jven by farmers in payn:.e:o.t of tractors used
by th..)m in agr~.r,.ll't.urcd. 0pe·:raticns. The Board has already ruled
that notes g1.ven for the pur.chase price of fan11 inplements which
are to ba reGolCl. mz;.y be cUs-::ount~d. as corra;ercial paper) and if the
implement.B are to be Uf'!e(l. f. ~1r l.l.n agricultural purpose not0s given
in payment rrr..y be disr.ounted as agricul turaJ. .Paper. The Board. has
considered. the question whether a tractor can be regarded as a farming ir.nploment or Nhether it n;ust be treated as a pern.anent fixed
investment..
'h'hile i t is expected that tha use of a tractor will be
extended over several seasons 1 this circumstance does not make neces~
sa:ry the classificr;~tion of a. tractor as a fixed investruent. Horses
anJ. n.ules bought for fartL work are purchased with several years 1 use
in viaw 1 yet there can be no question that a note given by a fa.nner
in payrr.ent of a pair of n:ules to be used in farm work~ n:aturing within six mor,ths 1 is eligible as agr.icultural paper. vVhe:>:'e tractors are
used to supplement th0 vvork of horses or m.J.les or are use0. aJ.together
instead of these animals 1 H seems to the :aoaro that. nottes given by'
farrr:.ors for the purchase price of traetorsJ and maturing -.vith5.:n six
rnonths 1 should be ad~itted to discount as agricult,.lr.al. paper,, ano
you are requested to advise your member banks accordingly.
Very· truly yoursJ
Governor.
To the Chai m:an ~
The Federal Reserve Bank of
w. P. G. HARDING. GOYIRHOR.,
PAUL M. WARBURG, VICI GOYIIHOR
FREDERIC: A. DELANO
ADOLPH C:, MILLER
C:HAR~ES S. HAMLIN
IIX·OPPICIO MI:MRilRR
WIUIAM G. MCADOO
IICRITAIY OF THI TRIAIURY
CHAIRIIAII
JOHN SKELTON WILLIAMS
FEDERAL RESERVE BOARD
COIInROL.UR OF THI CURRENCY
WASHINGTON
'H, PARKER WILLIS, SECRETARY
SHERMAN P. ALLEN. ASST. SICRITAIY
AND FISCAL AIINT
ADDRU8 R&PLY TO
f'EDIERAL. RIESERYII BOARD
ltla:rcb
29, 1918.
Gentlemen:
In connection with subscriptions to certiticates of
indebteGness, it is
desi~ble
that each
Feder~
reserve bank
keep the Board regularly advised as to ..the amount oi certiiicates
placed, and their distribution.
The Treasury Departnent some time ago,telegraphed for
tbese details, but the figures that have been received frQm some
of the oanks are incomplete.
There is inclosed herewith a copy of a report raceived
from the Federal Reserve Bank of Boston, and the request is nade
that your bank furnish the Board promptly
wi~h data~r~nged
in
a similar n:a.nner.
Ver:y truly yours,
Inclosures.
GOVGrnor.
X-847
The Federal .Reserve Bank of
IEX·OPPICIO MJEM•ER.
W. P, Gl. HARDING, GIOYIRNOR
PAUL Jl, WARBUR&, VtCI GIOY. . ~OIJ
FREDERIC A. DELANO
·· ·· ··
ADOLPH C. MiLLER
CHARLES S. HAll LIN
x-s4s
WILLIAM Gl. JlcADOO
SICRUAIIY OF THI TRIAIUIY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER OP THI CURRINCY
FEDERAL RESERVE BOARD
H. PARKER WILLIS, SICRITARY
SHERMAN P. ALLEN, AliT. SICIITAIY
AND FISCAL AGINT
WASHINGTON
ADDRit88 IIRPL. Y TO
FEDERAl. RESERVE BOARD
DIVISION OF AUDIT AND EXAMINATION
MJ-JCO
Ms.rch 29, 1918
Dear Sir:
Beginning April l, 1918 weekly reports of Liberty
loan operations, Form 104, nay be discontinued and a monthly
report of these operations as at close of business on the
last day of each month, using the same Form 104, r.ay be substituted.
It is essential that these monthly reports reach
us at as early a date as possible after the close of business
of the report tlonth.
Very truly yours,
Assistant Secretary
Federal Reserve Agent,
X-849
Release for the morning
papers of April 1, 1918.
Capital Issues Committee.
Washington, March 30, 1918.
Public and private qrganizations throughout the country
are fast allying themselves withthe Capital Issues Committee
in its work of confining to essential purposes present c2"pital
expenditures. Duriag the course of the week just.passed the
Committee had a conference .vith the Mayor, the Comptroller
and the Solicit6r of the City of Philadelphia. These officers
expressed themselves as ih hearty sympathy with the aims of
the Committee and stated that, at a mutually convenient .d.ate,
they would ret'!,lrn to Washington. and go over with the Committee,
item by item, the entire City budget of many millions, with
a view to bringing the City 1 s capital .expenditures into line
with the Committee's policy. Philadelphia contributes a
further aid to the Committee's endeavors by the following
resolution of its Stock Exchange.
"WHEREAS, the Federal Reserve Board has, upon the
request of the Hon. ~. G. McAdoo, Secretary of the
Treasury, appointed a Committee of its members to
act as a Capital Iss~es Committee authorized to pass
upon such proposals as may be sub~itted to them in
respect to capital expeniitures or issues of ne,v
securities,"RESOLVED, That the Conunittee on Stock Liat will
require as a condition to the listing of such new
capital issues the presentation of the approval of
such Committee of the Feieral R~serve Board."
One of the very largest public service corpora-wions of
the nation, whose activities reach 0Very village, city and
tm•vn in the country~ and whose expenditures are of huge proportions, has informed the Committee of its intention to
submit its budget for careful scrutiny.
The Associated Advertising Clubs of the World are cooperating also by discouraging ad.vertisements that would be apt
to interfere with the gendral purposes of the Committee.
An arrangement has been p0rfected whereby Dr. J. A. C.
Chandler, superintencient of schools of Richr;,ond, Va., ..-ill
Sl:ler..:i ha.lf of each week in YTashington for t]:~e pur)ose of
advising the Col:u::;ittee with respect to a,I).._:.lications irJ.volving
the issue of securities for the purpose of erecting school
buildings. Dr. ChandJ,.er, whose work in this connect ion vvill
be under the supervision of Commissioner of Education Claxton,
will have the advice of Dr. George D. Strayer) of the faculty
.
# _,
X-849
-2-
of Columbia University, New York, who is serving on the War
Savings Committee at VTashington, and also that of Lt. Col.
L. P~ Ayers, a mamber of the General Education Board, who is_
now serving as Statistician of the General Staff of tlle Army.
This central body will have at its disposal the facilit~es of
the-Bureau of Education throughout the country.
This specialized organization is created because. of the
vary large number of school issues and. the necessity of dealing
with them also from the educational angle. The Committee is
most anxious to avoid, as far as it can be done consistently
with a policy of reduction of capital exp~ndituresJ the impairment of the facilities for mental training of the gro~ing
generation.
A report given out by the
January 12th up to March 38th,
organization was not pe1~fected
has given final disposition to
follows:
Committee sho.-;s that from
inclusive, (although its
until early in February)· it·
some 15'7 issues, d:i.v;Lded as
.MUNICIPAL _PUBLIC
Approved .......
If
11 R0funding" .
Disapproved ....
Curtailed ......
Total------
34
31
INDUSTRIAL
U'l':C1ITY
8
5
2.3
-;-;
oo
9
1
8
5
0
43
1
82
33
TOTAL
-47
86
15
9
~157-
PERCENT
32.00
o4.70
8.30
5.00
J.60.oo-
The issues aggregated $300,386,752.17, divided:
MFNICIPAL
PUBLIC
UTIL:C~CY
T~tal applic 'ns-·-"$38;0~0 _, 45;::f.-· ---,r44-;2.9·G-;4oO
DJ.Sapproved------__§, 379, POQ
Approved--------- 31, 660,453
Less"refunding 11 - - 15 831 912
New Issues-------15s-2"'8l.S40
-..r
•
'
-'
.~.~ew ~ssues last
year ·excluding
refunding------- 47,444,365
--~l OQ~~_QQO
141_, 39E:., 400
Jl8,64,0 000
-z-265_6L4o-c5
'
'
86,099,075
INDlTS'I'RIALfffi:050,900
__J}.:J-..350 ~00 l06,700,900
__ 98_,_850,_~00
7,850_,000
212,670,900
-----------------------------------------
Analysis of new issues:
Amount ofisslie- 22 057 540
19,200,000
25,656,400
'
'
Amount approved-- 15,828,540
22,656,400 __1,850,000
Curtailment
effected------- 6 229 000
11,350,000
3,000,000
'
'
So that, out of a total submitted (exclusive of .refWld5.ng
o:perations) of $66,913,940, approval was expressed by the Comm~ttee as to $46~334,940 (69.3%), and disapproval was expressed
witl_l respect to ~30,579 000, (30.7%). In ad.dition thxee applicat~ons for a total of $2,800,000 were submitted informally to
the Committee and postponed for the period of the war. The
Committee is collecting data from the various districts with
respect to applications upon which postponement has been secured
lineally.
W, P. G. HARDING, GOVERNOR
PAUL M. WARBURG; YI6E~GoViRNOI
'
FREDERIC A. DELANO
ADOLPH C. MILLER •
CHARLES S. HAMLIN
WILLIAM G, McADOO
IICRITAIY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
CoMnROLUR OF THI C:URRENCY
FEDERAL RESERVE BOARD
WASHINGTON
H. PARKER WILLIS, SECRETARY
SHERMAN P. ALLEN, ASST. SICRITARY
AND FISCAL AGENT
,ADDRESS RIEPLY TO
FEDERAL. RESERVE BOARD
March 29, 1918.
Dear Sir:
An info:rn:al ruling of the. Board is published on page 65,
volume 2, of the Federal Reserve Bulletin to the effect that it is
the view of the Board that cattle should be considered as a readily
narketable conmodity and that a Federal reserve bank may consider as
eligible a bankers' acceptance secured by a chattel mortage an cattle.
This has apparently been construed to nean that a national
bank zr.ay accept drafts if secured at the tin.e of acceptance by a chattel mortgage on cattle.
In the particular instance in which this ruling was rr.ade the
drafts were drawn against a trust company V\hich was not a rr.ember of the
Federal Reserve System and the q1.lestion before the Board was whether or
not this bankers' acceptance was eligible ior disQ01.lnt by a federal r.eserve bank and not whether a national bank was authorized to aocept drafts
or bills of exchange secured by a chattel mortgage. As the lan~ge of
tb& ruling is, however~ susceptible of this int~rptetation the Board
~esires to correct any misapprehension on the subject an~ ras ruled that
drafts or bills of exchange drawn in domestic transactions against a
national bank can not, under a1.lthority of Section 13 1 be accepted when
secured. by a chattel mortgage on cattle but only when, accompanied by
shipping doC\.lillents or Whe.n aecure~ by a warehouse re Cilipt or other
siu.ilar docun..ants conveying or securing title to readily marketable
staples.
While cattle may be treated as readily marketable staples, a
chattel mortgage is no't considered:' a docwr.ent similar to a warehousi receipt sirice the borrower retains the possession of the goods and conveys
to the bank only the le~ title.
The Board having reached the conclusion t~t national banks
are not authorize~ to accept bills secured by chattel mortgages on cattle,
dee~~ it adVis~b~4
that Federal reserve banks should consider as ineligible bills ~rav~ against tba security of such chattel mortgages,
whether accepted by member or non·~mber banks.
Respectfully,
Governor.
X-851
IIX~OF'P'ICIO
W. P. G. HARDING, Go\'ERNOR
PAUL M. WARBURG, VICI GOVIRNOR
FREDERIC A. DELANO
ADOLPH C. MILLER
CHARLES S. HAMLIN
MIEMBI:R8
WILLIAM G. McADOO
IICRITAIY OF THI TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
C:OMPTROL.LIR Of THE CURRENCY
FEDERAL RESERVE BOARD
WASHINGTON
H. PARKER WILLIS. SECRETARY
SHERMAN P. ALLEN, ASST. SECRETARY
AND FISCAL AGENT
ADDRI:&S R&:PLY TO
FEDERAL RESERVE BOARD
X-854
March 29, 1918
Dear Sir:
A suggestion has been made by one of the Federal Reserve Agents
that an effort should be made to induce the banking departments
~f
the
various states to adopt for use of examiners in making reports of examination, a form used by the Federal Reserve Board's Division of Audit and
EXamination (Form 103).
It is
realized~
of course, that it will probably
be very difficult to accomplish this, and that ronny bank commissioners
may flatly decline to change thoir forms,
On the other hnnd, some of
them may be willing, .a.ftet- consulting with their examiners, .to adopt the
Board•s form, in which C'lse a step toward uniformity will have been attained.
The Board has never communicated with any of the bank commis•
aioners regarding this matter, but would be pleased if each Federal Reserve
.Aigent would ascert"lin the views upon this. subject of the bank commissioners
or superintendents ot the states in his own district.
very truly yours,
Governor.
Chairman of tho Board 1
Federal Res0rve Bank,
t~~·~·'
'.~Mt,i:11#POP
I?·. I·;·~·I!IMIY OJ' Till 'I'IIIAIUaY
.
CKAIIMAII
~OMM :Sl(ILTQII WILLIAMS
cbiiPTRULLIK 0, THI CUIRINCY
H. PARKER WILLIS, IICII!I'Aal'
.
SHEllMAN P. ALLEN. ASIT,IItCIIIrftY
FEDERAL RESERVE BOARD
,
WASHINGTON
A"~
FIICAI. AfiiNT
ADDRESS R'KPL.Y TO
FEDERAL RESERVE BOAJUt
X-855
!lhrch 30, 191$.·
.
Dear Sir:
You will doubtless roo.ember tmt a.t the .conference laet
Saturday there ~ some discussion as to the proper n.ethod of dis~tribution an.ong the Federal reserve banks of bills a.nd acceptances
, bought by the Federal Reserve Bank o:f New York, and attention was
called to the probability that the New York Bank would like to dispoee of a block of these acceptances during tba prasent week.
A stateaent of the reserve poaition of tha various banks
was rea4 and the suggestion that tho amount be
dis~ributed
an.ong the
.six or seven banko having the highest reserve was readily acceded to,
and it seeir..ed to
be
the general sentin:ent that 4{~ vrould be a fair
rate.
The CJUestion, however 1 was not discussed as fully as wQU.ld doubtless
bave 'been the cae:e had Governor Strong been present.
Members of the
har4, havi.D.g in n.ind recent transactions where two Federal .reserve
banks sold acceptances at a
41-%
rate,. and feeling that a.t'ter all the
rate was of no mterial consequence
~
view of the excess earnings now
being sra.cle by all the banks, did not press this mtter of rate for dis·cuaaion as fully a.s they might otherwise ha.ve don&, and the Governors of
the bauks interested in the arl1t.ugement left with the ieeling that the
paper would be offered t~m a.t ~
4t%
rata.
It has developed since, however, that this rate wa.s not en-
tirely eatj.sfactory to Governor Strong and the 4irectore oi tMI Feciera.l
Hew York, and tba
Be;;.r~
understa.nda t.ha.t eales by that
X-855
- 2bank have been n:e.cle on the basis of 4% up to 60 days ancl 4-l/8% from
60 to 90 days.
f~
The Boarcl wishes to call your attention to the fact that
a considerable period of tin&, -- probably during more than two years
follOW'ing the establishn:ent of the Federal reserve banks, when there was
only a negligible derr.e._nd for rediscounts and the earnings of the banks
were small, -- the Federal Reserve
~nk
of New York very generously gave
all other Federal reserve banks an opportunity of participating in the
New York bill narket by n:aking a.llotn:ents to the other banks of bills
purcbased by it.
It is true that the Federal Reserve Bank of New York
was allowed a conndssion of l/8 of 1% for ita services, but this did not
by any .o:eans cover the loss of incon:e that it sustained through its
policy of dividing its purchases with the other Federal reserve
As a result, during all this tir:e 1 it was able to take
advant~ge
local :u:a.rket to not more than 20% of the purchases n:n.de.
~ks.
of its
The bankts
policy was inspired entirely by a desire to be of service to the whole
system1 and the other Federal reserve banks were able to make much larger
earnings than would have been the case had they been compelled to rely
upon strictly local discounts.
. Since the entry of the Ubited States into the war 1 conditions
have radically changed.
The Government is constantly in the rxarket for
funds, and reserve banks general.ly have withdrawn from
'
ment and now uake only occasional pu.rchasesof bills in
the old arrangeNe~v
York; and
Governor Strong advises the Board that the directoi;s of the Federal Reserve Bank of New York feel that the disadvantage under which the bank
X-855
-3...
operates in this respect is BQfficiently i~portant
understanding than
~w
exists.
ta
justify a better
He pl)ints out that the JJew York .Bank
is net able to take advantage of its own ttarket when it is obviously
te its interest to
d~
so. but that it must carry the entire burden of
the New York market when it isto the apparent advantage of the other
Federal Reserve banks to withdraw. although their reserve positions
may be much stronger than that of the New York bamc.
It hardly seems fair
that by witbdrawing from the market atd a:waiting a distribUtion of the
bills purchased by the Federal Reserve Bank of New York under the provisions of the Act which en3ble the Federal Reserve Board to regulate
rediscounts between the rospccti ve Federal Reserve bariks, that tho Ee banks
which have withdrawn should be able to got bills at better rates than
would have been tho case had they pa.rtic ipated in
tm
purchase originally.
Furthermore, the New York bill and acceptance market is a
ve~
factor and i t is essential that it should. be sustained.
As the control
important
of this market by the Federal Reserve Bank of New York in the early days
of the system redounded to the advontage of all the other Federal reserve
banks by reason of the allotment policy adopted, it seems that all Federal
reserve banks should cooperate w1 th the Federal Reserve Bank of New York
in sustaining the market now, and wi th•u t imi.isting em endorsements where
they were willing heretofore to buy acceptances without endcrsement.
In view of these consjdera.tio:-,s the Boa:ra. feels
the FGderal Reserve banks
sh~uld
th,~t
each of
look at the matter from a national rather
than a local sta:rxlpoint, both as to.- the rate of interest 3.nd as to the
question ef endorsement by the Federal Reserve Bank of Jl!ew York. In the
i-855
exercise of
i~s
statutory power to require inter-bank rediscounts, the
Boa:N. would hesitate to direct •ne Federal Reserve bank to take paper
f~m
another without the
certainly seems
t~
endors~ment
of the selling bank, but there
be no occasion, when ptiper is sold by one bank to
another as the result ef negotiation and not by direction of the Board,
for the endorsement of the selling bank te be given, if the names on the
paper
be~ht
are well known to, and satisfact0ry to, the purchasing bank.
In the case of p:1per sold by the Hew
York banks the names as a rule are
well knO'·•n to all the Federal Reserve banks and have been bought freely
by them in the past
\~thout
the.endorsement of the
quite probable that, although the Federal Reserve
New York bank.· It is
Bank of New nrk
might be desirous of building up its reserves, it would prefer
te~~
con-
tinue t" carry the burden of the New Yoek market rather than sell bills
with its endorsement 4}t a higher rate than that at which they were
purchased.
It will be the
B.tard's policy
t~
watch. the reserve situatien
very closely, with the view of preventing any disproportionate decline
at any Federal Reserve bank, and hereafter, should the Board have
occasi•n to invite voluntary rediscount operations, it hopes that the
principles
Baaktl.
ab~ve
outlined will be observed by the
Reser~e
In case any of the Federal Reserve banks should be required by
the Beard to rediscount paper
:\
Federal
f~r
ether Federal Reserve banks, the en-
dorsement of the selling bank will be given. when demanded by the purchasing bank. but the transactitm \Jill be cJ.t a lower rate than would
obtain if sold without
endors~uent.
The Board would appreci<.l. te c::r1 e.JC_t)ression of gour views on this
,
subject.
Very truJwyours.
Governor.
RESPOliSE TO LETTER OF FEDEHAL HESERVE BOARD
DATED MARCH 30,
X-856
1918~
1.
Are you in '1Ctive or frequent correspondence with the Feder'l.l Reserve
Bank of AtlQnta?
2.
Would it add rn'lteris.lly to your convenience tc have Q br.-an<:h of the
FMer'll Reserve Bank of Atlanta el.ther nt Nashville, Tennessee, or
Birmingh.,.m, A1 ?.bA.ma 7
3.
If '1 br<J.nch v.rere establishec' at N"tshville, v1ou1:d it be. mere convertient
for you to sent". your items to it and to deal with it, ~mc1 send yo.ur
discounts and letters there, or vrculd you prefer tc sene~ these direct '
to the Atlanta head office?
·
4.
If '1 br!lnch were est<~.blished at Birmingh<trn, woulc:. it be rnore convenient
for you to send items to it qnd to c~e'l.l with it, 'lnd send your diseounts
<l.nd lette:o:-s there, or would you prefer to· send these direct to the
Atlanta head office?
5.
Are there any eligible state bamks in your town thr,t would be vJilling
to join the Feder"l.l Reserve system if a branch were est'lblished ':'l.t
l'hshville?
6.
.Are there any eligible state banks in your town th9.t nould be v1illing
to join the Federal Reserve system if a branch were est<"J.blished at
Birmingh<=tm? .
7.
Do you keep balances at A tlanta, <md would these be shifted to i:Jnshville
if a branch bank were lOcated in th<1t city!
• •
X-856
8.
Do you keep bal9.nces in A tlanta, and would these be shifted to
Birmingham if a branch were located in that city!
9.
10.
11.
Please explain briefly why and in what respects a branch would serve
you better than the headquarters Bank at Atlanta,
What is the mail tr"lin time - in hours and fractions thereof - from
your city to
(a)
Atlanta
(b)
Nashville
(c)
Birmingham
VJhat late afternoon or night train service have ycu between your town
and
( "1.)
Atlanta
(b)
Nashville
(c )
Birminghqm
and Will a letter mailed by you in the evening arrive the following
morning in
12.
(a)
Atl 'lnta
(b)
N"tshville
(c)
Birmingham
Please state
(a) Your bank's capital
(b) Surplus
(c)
Total ~ootings
":lS
shown by last statement
Signature_____~~----~~~~--------- Town or City____________
( Name of Bank)
By____________________________
{~tle).
____________________
Date - - - - - - - - - - - -
EX·OFP'ICIO MEMBI:FtS
W. P. G. HARDING, GOYORNOtt
PAUL M. WARBURii, VICE (;OVIRNOR
WILLIAN G. McADOO
SICRITARY OF THE TRIASURY
CHAIRMAN
JOHN SKELTON
.
WIL~IAMS
FREDERIC A. DELANO
ADOLPH C. MILLER
CHAR~ES S. HANLIN
.
FEDERAL RESERVE BOARD
COMPTROLLER OF THE CURRENCY
H. PARKER WILLIS, SECRETARY
SHERMAN P. ALLEN, ASST. SICitiTAIIY
AND fiSCAL AGINT
WASHINGTON
ADDFtESS REPLY TO
FEDERAL. RESERVE BOARD
DIVISION OF REPORTS AND STATISTICS
X-856-a
March 30, 1918.
Gentlemen:
The
Feder~l
Reserve Board has received requests
for the est"tblishment of another branch of the Federal Reestablish~
B~nk.
ing
branch is very cortsiderable (from $15,000 to $30,000,
"l.
of
As the added expense of
serve
Atlant~.
according to the functions which it is designed tc perform)
it is not desir"tble that n second branch be estnblished in the
sixth district unless there is cle11r demonstrR.tion thnt such
br~nch
is needed.
<1
You 'lre therefore requested to reply to· the
questions propounded on the attqched blank form, returning your
reply in the enclosed addressed envelope at your e'1rliest convenience.
Yours very truly,
secret':3.ry.
I...
W. P. G. HARDING. GOVERNOR
PAUL II. WARBURG. VICE GOVERNOR
FREDERIC A. DELANO
ADOLPH C. MILLER
CHARLES S. HAMLIN
£X..0PI'ICIO MKMBCR8
WILLIAM G. McADOO
IICRITARY OP THE TREASURY
CHAIRIIAN
JOHN SKELTON WILLIAMS
H. PARKER WILLIS, SECRETARY
FEDERAL RESERVE BOARD
COIInAOLUR OF TKI CURRlNCY
SHERMAN P. ALLEN. ASST. SECRETARY
AND FISCAL AGENT
WASHING'l'ON
ADDRESS RRPLY TO
FEDERAL RESERVE BOARD
lhroh 30., 1918.
X...858
Ge ntl amen: ·
The Board is advised by the Division of Issue and Redemption
that redemptions of Federal reserve notes are 'running in very large
amounts and
that~
in many ~nstances, notes are sent in which are fit
for circulation.
The Board understands,. of
c~rse~
preference and demand for new bills, but in
that there
t~s
is a strong
like the present,
when it is necessary to economize· in al1 directions, it seems to ne
that the spirit of economy should be
rency.
It
is
exten~td
also to the use of cur-
suggested,· therefore, that Federal reserve banks ask their
nember banks to continue to _pay out Federal restnve notes as long as they
are rea.nna.bly fit tor use, and to refrain frcm sending notes to Washing-
ton for redemption unless they are so worn or soiled. as to be actually
unfit for circulation.
The capacity .of the Bureau of Engraving and
Printing is strained to the utmost, and the Board feels that the banks
and the public can render a. ·publi~ service by acting upon this suggestion.
Very truly yours,
Governor.
The Federal. Reserve Bank of
W. P. II. HARDING. IIOVIRNOI
PAUL M. WARBURII. YICI IIOYIIHOI
FREDERIC: A. DELANO
ADOLPH C:. MILLER
C:HARLES S. HAMLIN
WILLIAM II. McADOO
IICIITAIY OP THI TRIAIURY
CHAIRIIAII
JOHN SKELTON WILLIAMS
COIIPTIOLLIII OF THI C:URIIHCY
H. PARKER WILLIS. SICRITARY
SHERMAN P. ALLEN. AsST. SICRITARY
FEDERAL RESERVE BOARD
AND FISCAL AGINT
WASHINGTON
ADDR••• RRPL.Y TO
PIIDI:RAL. RIISERVI: BOARD
April
l, 1918.
Dear Sir:
Arra:npments
~ve
been uade with the Federal
Farm Loa.n
Board for the payment through Fecie.raJ. Reserve banks ot coupOns of
Federal Farm Laa.n ).on4s issued by Federal taDii Ba.nks.
Onder this arrangement i" is contemplated that thtf Federal'
La.nd Bank will deposit with the Federal Resene &nk of »lew York a
s\lfUcJ.ent swn to pa.y n:aturillg
Fed$ral Reserve
~nk
ctup~
on 'bOD4.s iss\led by i't'.
of New York w1ll afr.ange with
oth~r
1'he
Federal Re~
serve banks ta receive suoh coupons on deposit or til pa:z them Nhen
pre_seDted and to charge same to its
a.ecoun~.
All such bonds ebwld be f orNarded to the Fe<iera.l Reserve
Bank of Jew York anci will be cha.rge4 to the account of the Federal
l,a.nd .&.nk..
ln the adjustment of the accounts as betwe.- tbe Federal
Rese"e banks these coupons ma.y be trea.te(j as checks or drafts on the
Federal lvuerve Bank Qf New lQrk.
'he Bca.rd has approveli
this a.rrangezwnt.
The federal ieserve Bank of New York will a.+range any
necessary details witn tbe other Federal Iuane banks ..
Bespectiully,
.
t
W. P. G. HARDING. GOVERNOR
PAUL M. WARBURG. VICE GOVIRNOI
FREDERIC A. DELANO
ADOLPH C. MILLER
CHARLES S. HAMLIN
EX·OO'PICIO MIIMBIIR8
WILLIAM G. McADOO
SICRITARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMnROLUR OF THE CURRENCY
H, PARKER WILLIS, SECRETARY
FEDERAL RESERVE BOARD
SHERMAN P. ALLEN, ASsT. SECRETARY
AND FISCAL AGENt
ADDR&S8 REPLY TO
WASHINGTON
FllDIERAL RIESERVE BOARD
April 1, 1918.
X-859
Dear Sir:
The Board has been advised by Assistant Secretary of the
Treasury Leffingwell that he f1nds there is a ronsiderahle dif£erence
of opinion among the Federal res.arve banks as to
th~
d6sir.al,i.lity and
feasibility of permitting them to attend to the registration of bonds
of the third Liberty loan, and that there have, at the sane tirre,
developed in the Treasury scue doubts as to the lege>l questions involved.
Mr. Leffingwell states that the Treasury
reluctantly reached the conclusion that, for t.he
the registration and transfer of bonds
w~st
offt~j~ls
pr~sent
have
at least,
·be attenden to
excl~sively
at the Treasury Departn:.ent ..
If you have any corrnents or recQmmendations to nake regarding this .d.6c1Dion I will be pleased to transmit them to the Department ..
Very truly yours,
Governor.
,
W. P. G. HARDING, GOVERNOR
PAUL M. WARBURG, VICE GOVERNOR
EX·OF'F'ICIO MEMBERS
FREDERIC A. DELANO
ADOLPH C. MILLER
CHARLES S. HAMLIN
WILLIAM G. McADOO
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
FEDERAL RESERVE BOARD
WASHINGTON
H. PARKER WILLIS, SECRETARY
SHERMAN P. ALLEN, ASST. SECRETARY
AND fiSCAL AGENT
ADDRESS RRPLY TO
FEDERAL RESERVE BOARD
x-861
April, 2, 1918.
Dear Sir!
In connection with the authoricy of banks to accept drafts
against transactions involving tho export of goods, the attention of
the Board has been called to certain acceptance transactions, the contract or pledge against which reads as follJws:
We hold aga:i.nst export orders received through United
states Food Commission for the Allies, goods in excess of
.. one Hundred thousand dollars ($100,000.00) and shall continue to so hold in excess of this runount during the life
6f and for account of our drafts, #2753 to #2756 inclusive,
for "'''J'Ienty.-five thousand ·dollars($25,000.00) each, dated
March 18th, 1918, payable ninety days after sight, drawn upon
you, until same are fully paid.
11
·~re hereby undertake to pay into your hands one day
before the maturity of these drafts the amount required to
retire them."'
The question arises whether the bank is authorized to accept
these drafts.
(a) on the ground that it is a domestic transaction and is
secured at the time of acceptance by warehouse receipt or other
similar document conveying and securing title to the bank, or
:;
(b) on the ground that the drafts are drawn in a transaction
which involves the export of goods.
The opinion of counsel on this question, in which the_Board
concurs, is as follows:
x-861
- 2
'!"
''It appears that certain dealers in staples who
have a large domestic business are under contract to export food to the allies. The question has arisen to Vlhat
extent and under what circumstances member banks may accept drafts or bills of exchange dra~m by such dealers.
· {1) Where the drafts are drawn in a domestic transaction, under section 13 they must be accompanied by shipping documents or the bank must be secured at the time
of acceptance by a warehouse receipt or other similar document conveying or securing title to the goods involved.
(2) V/he:re the draft grovts cn:t of a pa!""ticu1ar
trans'lction invol iring the expJrt of goods ·i~he regulations
- of the Board require that the bilJ. m1J.St have been drawn under a credit opener' for the purpose of conr'ucting or settling accounts resulting from such transaction.
In other words, it must appear that the bill is
drawn and the proceeds are used in connection with the export transaction.
The Federal reserve bank must be satisfied either by reference to the acceptance itself or otherwise that it is eligible for redisco~nt.
Satisfactory evidence of the eligibility may consist of a stamp or certificate affixed by the acceptor in form satisfactory to the
Federal reserve bank.
In the case under consideration it is assumed that
the dealer is engagect in the purchase of goods for export and is purchasing the same character and class of goods
for domestic use.
Some difficulty may be encountered,
therefore, in ascertaining whether the goods purchasec in
any particular transaction are to be used for export or for
domestic consumption.
You have asked that consideration be given to the
question of what evidence the accepting bank should require
if the acceptance grows out of a transaction involving the
export of goods' and what form this evidence should take.
It is respectfully suggested that where the dealer
desires to finance the purchase and sale of goods to be
exported his contract with the bank should provide (a) that
he has entered into a contract for the export of the goods
of a fixed amount; (b) that the total amount of drafts drawn
by him under the credit opened to finance the export of such
goods shall at no time exceed the aggregate amount of the
import or export transactions contracted for and in process of
execution; (c) that the proceeds of drafts drawn against the
x-861
accepting bank under this credit are to be used in connection with the export contracts referred to, and that the
proceeds of the sale of the goods exported will be applied
in payment of the acceptances unless the dealer has in the
meantime placed the bank in funds to meet them at maturity
or has secured such acceptances by shipping documents, warehouse receipt or other similar document conveying and securing title to readily marketable staples.
Unless the dealer can ~d will assure the bank that
the proceeds of the credit are to be used in an export
transaction and that the proceeds cf the goods exported are
to be used to liquidate the accep·tances, the dealer should
be required t.o t.rcat the bills as d:-awn in domestic transactions and the b9.nk should require security provided by section 13."
Please convey this information to accepting banks in
your district.
very truly yours,
Governor.
BA.TIO, OF
.
-----------------------~------_ ......
: Clearing
• house
Federal Reserve! exchanges
:Bank
:
iWAT" OF EACH lniDERAL ~EltV.i .BAJ.'JK PC; EA.BNING
MARCH 28-29~ 191S •
__________________________ ,.
AS~ETS
1\J.ID DEPOSITS
~-------------------------------------------------------------------------------
__
~National
:
:
:
0
&nk:
All other : Total
: i'otel
: unco1lect-! unco1lect- : collection : Total
ed iteDls
ed. items
•
it~ms
• "l!'I.-I)AT tt·
notes and
notes of
other F. R.:
banks
:
.•
:
·
Cr.
.•
:lie~
lr.vastmant: Ra.tio of
:RJ.tio of "FLOAT" to
: "FL0A'l' 11 to d.mmedia.tely ava.il:total earning:able Govemt~t ·~iJJll
:to·t.a.l "FLOA'I'" :assets
:hdlt deposits.
: Per cent
:
Per c.mt
; in lira.nsfers
i'irc1.1.1dt=d i':l
1.553
3
16.,122
17,8@
14,903
2,975
J.O
20" 5.93
1,857
48,933
71,383
57,650
13,733
l.S
PHILADEI.PHIA
6,190
510
)4,310
41,0~0
34543
8,467
8.4
CLEVELAliD
1,981
604
16,820
19,4o5
15,804
3,601
3·9
J.O
3,092
1,126
29.330
20,484
8,846
17-9
17·3
.1.,.897
1,884
15,758
19,539
10.,981
8,558
916
29-3
17·9
4,771
1,256
50.579
56,6o6
.2(),294
36,312
19,221
31-3
18.1
115
704
18,230
14,301
3.929
2,080
8.8
:BOSTON
NDI YOHK
CHICAGO
ST. LOUIS
MINNEAPOLIS
26o
13,506
13.766
4,295
9.471
8, 717
20.0
211
20.241
20,496
,,647
10lt849
4,036
13.4
29-4
2.6
KANSAS CITY
44
DAIJ.AS
52
11,457
19,496
"6;120
13,376
4,180
1,076
10,569
11,991
9.[75
2,116
695
281,018
339,130
216,$97
122,233
SAN FRA11CISCO
41,}64
16,748
10.2
--------------------------------------------------------------------------------------------------------------------~--------~------------
(a.) Excess of atlOunt of transfers sold over <.a.mO\'IIlt of transfers bought.
W, P. G. HARDING, GOVERNOR
PAUL II. WARBURG, VICI GOYIRNOR
FREDERIC A. DELANO
ADOLPH C. II ILLER
, CHARLES S. HAIILIN
WILLIAM G. IICADOO
IICI&TARY OF THI TIIAIUIY
CHAIRMAN
JOliN SKILTON WILUAIIS
I:OMPTROLUR OP fU CIIRR,&NCT
FEDERAL RESERVE BOARD
WASHINGTON
H. PARKER WILLIS, SECRETARY
SHIRIIAN P. ALLEN. AIST.SIECRITARY
AND FISCAL AGINT
ADDR&ea IIKP&.Y TO
FEDERAL RESERVE BOARD
X•865
Deazo Sir:
The Federal Reserve banks of Boston and New York are now
collecting cheeks on all banking towns in their respective dietrjcte.
The Federal Reserve Bank of Chicago has been able, within the last
few weeks, to add approximately five hundred banks in three hundred
towns to its par list.
It ia interesting to note the methods
which have been pursued by the Chicago bank which have produced this
good result, and for the information of your officers and directors,
copies of for.m letters and of special letters sent out by the Chicago
bank are enclosed herewith.
very truly yours,
Governor.
Enclosures.
The Chairman of the Board,
Federal Reserve bank of
I
t
x-sss:;o.a
Memorandum of procedure adopted by.the Federal
Reserve Bank of Chicago in the campaign for
~
conducted during october, November and December
points
191~.
·In this campaign we first directed our efforts to secure
par points_in the towns iri which there were two or more non-member
banks and no member banks, forwarding to the largest and strongest
bank in the town (preferably a state bank), letter attached hereto,
marked No. 1.
If no reply was received in the course of about two
weeks, a second letter was recehred in about ten days'· time, or if
a letter was received definitely declining to accept our proposal,
the
a~ove
.process was repeated on the second best bank in the same
town, until the tovms of two or more non-member banks had been thoroughly canvassed.
The results from thes.e letters were approximately
140 tovrns with 290 banks
~dded
to the par list.
We then directed our efforts toward the towns having only
one bank and that a non-member.
(ii~.
A letter was addressed to them
3, similar to No. 1), and if no reply was received, a follon=up
letter· (No. 4, simil"'r to No. 2) was forwardea in the course of about
two weeks, until we had been in touch with all of these
one-b~=tnk
The results from these letters were approximately 115 town::;, -,,;t L.1
banks added to the par list.
towt..<:J
11~
.
x-865-a
- 2-
we then aclc1ressec a letter (l!o.5) to our member b-=tnks
in towns where there were non-member banks not on the par list, following this letter up ih the course of a week or ten dqys with letter
No. 6.
The results from these letters atnounted to approxim'ltely 50
towns, with lOO b<tnks <tddecl to the par list.
It is estimated that the 11bove letters and correspondence
in connection therewith incidentally proved of materi11l assist'lnce in
securing about twenty-five
s
t11te Bank members in the
Feder~
Reserve
System.
Due to one of our Des Moines member banks declining to
continue to handle a large number of row11 towns at par, in an effort
to reduce its expenses and "float", it became necessar.y for us to conduct a camp11ign in the towns ,which h'1c: previously been handlec' for us
by the Des Moines member b11nk, in which campaign, by me':'l.ns of letters
similt:tr to the t:ttt<tched (Nos. 7 and 8) we were en"l.ble0 to est<J.blith
direct collection facilities with about 125 of the 150 row<~. t:mr..-3 i>lvolved.
''
.lll'l
-,r...
X-865-B
LETTER SENT TO
~B.AEKSTO\"JNS
Dear Sir:
We arc nov• collecting at par, checks on 8805 non-member
banks and on 7666 member baru~, or 16,471 in all, out of about
29,000, tho total number of banlcs in tho Unitotl s . . ates.
Non-member banlrn arc receiving tho advantages of the par
facili tios of tho Federal Reserve Banks through member bD.llk
correspondents in tho Reserve cities and collecting cantors.
We arc desirous of increasing our par list for non-member
bank checlrs in order that member bankS and non-member banks
also may receive directly or indirectly increased par facilities.
We wish, therefore, to establish a connection for the
collection of chocks on your t~vn. Will you kindly advise
us if it w"ld be agreeable to you to act as our collecting
agent and receive direct from us checks on the banks in your
town to be remitted for at par on da.y of receipt in Cl":ico.go
exchange, or we will receive in ~mont shipments of currency
upon· v7hich v;e will pay the transportation and insurance charges.
If you accept this,ar~cngcmont you ~y print on all checks
dravm on your banlc 11 Col1cetiblo throur.4h tho Federal Reserve Bank
of C!:icago''' thus advertising tho fact to your customers and to
the l)Ublic that your choclrs are pe.id by your bank at their face
value.
We trust the :proposed crr["..lgcmont vlill receive your
favorable consideration and assure you that if you decide to
act as our collecting agent \70 shall endeavor to malce our relations mutually satisfactoryo
We enclose herein self addressed stamped envelo:;>o for
your re]?ly.
Yours very truly,
02.Shiero
X• 86Sc
FOLLOW-UP LETTER SENT TO TWO-BANK TOWNS
Dear Sir:
We do not· appear to have received a reply to our letter
to you of.
· ~ in which we requested y"our bank to act as our
agent for the collection and remittance at par inChicago exchange of
ehecks on your city.
In this connection, we are. pleased to advise that we have
received a very large number of favorable replies in.our campaign for
par points, and believe that i! will be 'but a short time until the
banks which do charge exchange in paying ~heir customers' checks, will
be considerably in the minority.
, The advan'tage to your institution of printing or stamping
on your checks "Collectible through the Federal Reserve Bank of Chicago",
thus advertising the fact to your customers and the public that your
checks are paid by your bank at their face value, is a factor to be
considered~
About s.eventy per cent of the checks rec.eived by the banks
:in this. district on the Federal·Reserve··par li·st,.are deposited with.
us·
by the Chicago bankt:~ and would, therefore, reach you in one latter each
day, instead of a large number of separate .cash letters, which you undoubtedly receive at present,· meaning a ·considerable sa:ving to your bank
in the matter of postajge, stationary atld la"bor in remitting in payment
of these letters;.·
·... We truet tpat . consid.era\ion of thiS broad stl'bj~ct will oa\ase
you to ·!avor us with your acceptance td o\ir _pt~pdsal.; and We hfe desitoUs
or adding the name ~f yoUr city io our par list.
Awaiting your reply, w.e remain,
Very truly yours,
Assistant Cashier.
•
x-865-D
LETTER ·~·miTTEN T\1c-BA:NK TO'd.NS IN IOWA (Des Moines)
Gentlemen:
\le have been coliecting cl1.ecks on the banlcs of your city at
par through one of our
1i1C111bo:L~
banl>;:S in Des Moines.
i7e arc clesirous, however, of e.rra.nging for a cdroct connection
for the collection of these items &mcc uri te to inquire if H will
be a.pooreea.ble to you to ac'c as our agent for
remittance at par in
Chica~o
t~he
collection aml
exchange .on day of receipt 9 of our
checks on your city.
¥our favorable reply will be .greatly
~prociatodo
Very truly yours,
Assistant Cashier.
X-865-E
LETTER >IRITTEN Ql\TE-B.Al'lli: TOWNS IN IO\'!A {Des Moines)
Gentlemen:
'7e have been collectinJ checlcs on your bank at par through
one of ou:c ms:ml:Je:r bcl1.ll:s in Des Hoines •
.le 2,rc c"'-esirous 9 lwrove1· 9 of arranging for a cUrect connection
fOJ:'
the collection of these items 2-nd \'lri te to inquire if it Will
be agreeable to
3~ou
to act c..,s our c..,gent for the collection anci.
remittc:..nce at par in Chicago exch2hge on day of
recei:;~t~
checks on your city.
Ver··· t:culy
you1~s,
Assistant
~Shier.
of our
X-865-F
S.AMPLE
Dear Sir:
·v·fe are in receipt of your favor of the
in
repl,y to our letter to you of
and note your statement that you have no Chicago account and ti~at you could only remit in Indiru~a:polis or New York exchange in payn:en t of our cash
letters.
It is our rigicL policy to accept only Chicago exchange,
or currency (we to/pay tlle cost of insurance <o~ne. t:r;-2ll.sportation on
the latter) in payinent of our cash letters. T~1is is tue to the
fact the.t we Cl~etlit the de~ositing barli: :for itei;ls on this castrict
on the basis of two days' time in \i\hich to receive l:la;yi>lent in
Chicago. You can readily understand, therefore, tl12-t vrere we to
accept your Inedana.polis or lifew York exclw.nge, it y;oulc':. necessitate
at least two and. four days addi tiona.l in 1fuic~1 to rec"Luce this :i!ayment to local exchange, and. it w·ill be ap-parent to you that this
i"IOUlC. necessitate an enonnous "float 1' in the aggregate.
i:Je trust that you will c:.ccept our proposc:,l should you agree
the.t it \VOuld be to your advc::mtage to ship currency, or com::?lete
arrangements for a Chicago account.
Very truly yours,
Assistant Cashier.
•
c865-G
Dear Sir:
\Jc are in. receipt . of your f<lVOr Of the - - - - - in reference to our letters to you of
·and.
________., in which ·we requested your bank to act as our
agent for th:e collection and remittance at :par in Chicago exchange of checlrs on your city, and the contents have been
carefully noted.
~1e advantages to your bank mentioned. in our t>~ letters;
the receipt by you of over seventy per ce:nt of your checks in.
the one letter from u·s each day, instead of the 1m..ny cash letters
which you now receive; the printing or staml:>ing on your checks
11 Collectible throul9;1 the Federal Reserve Bank of
Cllicagoi'# the
fact;.that you coulc~ ship to us .currency in :;;>aJ11nent of our letters;
the trans:;;>orta tion and insurance on these shipments
be paid by
us; are deciding factors in the uwny favorable replies received·
by us frbll1 banks which havb, prior to thiS time, .charged a
nominal ·rate of e~::change.
·
.
to
wre YI01.lld also be willing to e11close vd th each cash- letter·
sent you, a stan~d addressecc envelope :for your use in forvvarding your draft in :;,:>eyr"1ent, "1\hich vvo'Uld eliminate the ex:f>ense ·
to you of ?6stage and envelope.
W!e believe that your consid.era.tion of t~1e above vvill. cause
you to favor us with your acceptance of our request that your
ba:nlt: act as our agent :for the collection of checlts on your city.
Awaiting your
reply~
we remain
Yottrs very truly,
Assistant Cashier.
X-865-h
Dear Sir:
___
in reply to
We are in receipt of your favor of the
hand
your
statement
tbat
you
hav·e no
our letter to you of
Chicago account, but would be willing to remit at par in Detroit exchange,
has been duly noted by us.
...;......_~_
In this connec~ion, would advise that it is our rigid policy
to accept only Chicago exchange, or currency (we to pay the cost of insurance and transportation on the latter) in payment of our cash letters.
This is due to the fact that we credit the depositing bank for items in
this district on the basie of two days' time in which to receive payment
in Chicago. You can readily understand, therefore, that were we to accept your Detroit exchange, it would necessita:te at least two days additional in which t~ reduce this payment to local exchange, and it will be
apparent to you ttl.at this would necessitate an enormous "float" in the
aggregate.
We trust that you will accept our proposal, should you agree
that it would be to your advantage to ship currency, or complete arrangements for a Chicago account.
Very truly yours,
Assistant Cashier.
RH.EL
X-865-i
...;Pear Sir:
We are in receipt of your favor of the
in reply to
our letter to you of .
and note your statement th)a.t you ·ha.v.e:.
no Chicago account and that you could only remit in Indianapolis or
LaFayette exchange in payment of our cash letters.
We now write to inquire if it will be agreeable to you for us
to forward checks on your city t·o your Indianapolis· correspondent, we
first to receive their approval of this action, which approval has al~
ready been o'btained in a number of similo.'r instances.
YQur correspondent will remit to us at par in Chieago exchange
on day of receipt and will then forward the items to you.
Your favorable reply will permit·us to accept your
. furthering the par collection l)f .checks on non-member banks.
Very truly yours,
Assistant Cashier.
RH ..EL
servi~Jes
in
..
41=3
X-865-j
)
LETTER SENT TO ONE-BANK TOVillS
Dear Sir:
We are now colleCting .. at ~a:r • checks on 9165 non-member
banks and on 7722 member banks; or 16;887 in all, of which "total
3255 banks (1063 membe:r and 2192 non-member banks) are located in
this Federal Reserve district,
Noh'-member banks are receJ.v:mg the advantages of the par
facilities of the Federal Reserve Banks through member bank correspondehts in the Reserve cities and collecting centers.
We are desirous of increasing our par list for non-member
bank checks in order that member banks and non-member banks also
may receive •::irectly or indirectly increased par ficilities.
We wish, therefore, to establish a direct connection for
the collection of checks on your town. Will you kindly advise us if
it would be agreeable to you to act as our collecting agent and"receive direct from us checks on your bank to be remitted for at par
on day of receipt in Chicago exchange, or we will receive in payment
shipments of currency upon which we wi~l pay the transportation and
insurance charges.
If you accept this arrangement you may print or stamp on
all checks drawn on your bank "Collectible through the Federal Reserve Bank of Chicago 11 , thus advertising the fact to your customers
and to the public that your checks are paid by your bank at their face
value.
We trust the proposed arrangement will receive your favorable consideration and assure you that if you decide to act as our
collecting agent, we shall endeavor to make our relat~ons mutually
satisfactory a
We enclose herein stamped addressed envelope for your reply.
Very truly yours,
Assistant Cashier.
"
.
xes65-k
]fOLLOVI-UP LETTER SENT TO OllE-BAIJK TC\HJS
Dear Sir:
we do not appear to have received a reply to our letter
to you of """'"--~-.,...t in which we 1·equesten your bank to net as onr
agent for the collection and remittance at par in Chicago exchange of
cheeks on your city.
In this connection, we are please~ to arvise that we have
received a very large number of favor<~.ble replies from· banks which have,
prior to this time, charger, a nominal rate ()f exchange, indicating their
acceptance of the fact that the principle of making a charge in paying
their customers' checks is unjust.
The advantage to your institution of printing or stamping
on your checks ~tc¢lleetible through the Fe{:eral Reserve Bank of Chicago",
thus advertising the fact to your custome~s and the pubiic that your
ehecks are paid by your bank at their f~ce ~·~,lue, is 'l factor to be considered.
About seventy per cent of the checks receiver: by the b':lnks
in this district on the Feder<~.l R eserve par list, are C:eposited with us
by the Chicago banks and woulc, therefore, re~ch you in· one letter each
day, inste<~.c of a large number of separ'lte cash letters, which you undoubtedly receive at present, meaning a eonsider'lble saving to your bank
in the matter of postage, stationery and l<tbor in remitting in payment
of these letters.
·
We trust that consider<~.tion of this broac subject will C'luse
you to favor us with your accept~nce of our propos<tl: qs we are desirous
·of adding the n~me of your bank to~ pnr list.
AWiliting youi' I'eply, we rem!1in,
Very truly yours,
•
Assistant Cashier.
#-5
x-sss-L
LETTER viRITTEN :MEMBER BANKS
Dear Sir:
·,·le are now collccti:rcg at ;par~ choclts on 9345 7J.on-me:1)er
banks anC o:~·. 7736 member b<:ID.l{S 11 or 17,081 in all, of vmich total
3452 banks (1077 member c.:.ncL 2375 non-member bankS) are located.
in this Federal Reserve district.
We are desirous of increasing our ps.r list for non-member
bank checl~s in order that member banks may recci ve directly
increased par facilities.
'.le uish 9 there foro, to establish a direct connection for
the collection of non-member banl\: checks on yov.r town. ·rrill
you kincU~r advise us if it 1.ould be a&;recable to you to act as
our collecting agent and. receive C'drect from us checlcs on
non-member banlcs of your toYill to be remitted for at ~Jar on c1ay
of recei:?t in Chicago excl'E:ngo, or we will receive in :payment
shipments of currency ~"?on which vw will ?ay the transportation
and insurance charges.
·
Your co-operation in this matter will prove of considerable
assistance in furthering tl1e par collection of checks on nonmember banlcs.
7e enclose herein stanr_pcd ado.ressed envelope for your.
relJly.
Very truly yours,
Assistant Cashier.
X-865 ..m
FOLLOW-UP LETTER TO MEMBER BANKS
Dear Sir:
· We do not ap~ear to have received a reply
to our letter to you of
, in which we requested that you act as our agent .for the .collection and remittance at par in Chicago . ."exchange oh day of receipt, of
checks on the non-mekbei- banks of your city; or.as adVised, we will receive in payment shipments· of currency
upon which we will pay the transportation and insurance
charges.
In this connection, we are pleased to advise
that we have received a yery large number of favorable-replies from banks which have, prior to li;his· time, c·harged
exchange for the collection .of the non-member bank checks.
It is only through the greatfJst degree of co ...
operation on the part of the member banks that the Federal
Reserve par ·collection system, for the good of the member
banks, and indirectly for the good of ''the non-member banks
through thei~ member bank correspondents, can be perfected,~
Awaiting your reply, we remain,
Very truly yours,
Assistant Cashier.
EX·OFP'ICIO MI!MBIIRS
W. P. G. HARDING, GOVERNOR
PAUL M. WARBURG, VICE CiiiOVIRNOR
FREDERIC A. DELANO
ADOLPH C. MILLER
CHARLES S. HAMLIN
WILLIAM G. McADOO
SECRITARY OF THI TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
FEDERAL RESERVE BOARD
COMPTROLLER OF THE CURRENCY
WASHINGTON
H. PARKER WILLIS, SECRETARY
SHERMAN P. ALLEN, ASST. SICIIITAIIY
AND FISCAL AGINT
ADDRESS ft:B.PLY TO
FEDERAL RESERVE BOARD
DIVISION OF REPORTS AND STATISTICS
X-867
April 2nd, 1918.
My dear Mr. Elliott:I \nsh you-would kindly read this opinion carefully and make
such
suggestion~
From a
cursor~r
as to interpretation of it as you think proper.
reading once, I juclge that state banlts are not
required to remit at par to Federal Reserve
do remit to Federal Reserve Barnes,
~~e
Baru~s,
but that if they
Reserve Baruts are not
permitted to pay them any exchangeo
It perhaps is also a fair intel..._f)retation or
coroHar~r
of the
opinion tl1at Federal Reserve Barucs are not justified in charging
for the collection of checks.
lif so, it is important to knov: it,
because at the present moment the Board is debating the suspension ·
of all service charges by Federal Reserve Banks upon checks collected
by them for their customers.
Yours very truly,
\ Sig'r.l.ed) F. A. J;elano.
Mr. M.
c. Elliott,
Counsel.
W. P. G. HARDING, GOVERNOR
PAUL M. WARBURQ, VICE GOVERNOR
FREDERIC A. DELANO
ADOLPH C. MILLER
CHARLES S. HAMLIN
EX-OFJI'ICIO MEMBERS
WILLIAM
~cADOO
SEC~F THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
FEDERAL RESERVE BOARD
WASHINGTON
H. PARKER WILLIS, SECRETARY
SHERMAN P. ALLEN. ASST. SECitiTAJIY
AND FISCAL AGENT
ADDRESS REPL
vAo
X-8~dftL1.t.sJ!:RvE
BOARD
DIVISION OF REPORTS AND STATISTICS
April 3 • 1918.
I have read the op~n~on of the Attorney General
dated March 21, which relates to those provisions of the Federal
Reserve Act which impose limitations on charges made by banks
for collecting and clearing checks •
,
As I in-terpret the opinion. the Attorney General
holds
FirstThat Congress has recognized the right of
all banks to make reasonable chatges for the collection or payment of checks and drafts arid remi.ssi6n therefor by exchange or
otherwise.
SecondIn so far as inetnber banks and banks which
voluntartly clear through Federal reserve.banks are concerned,
these charges are to be determined and regulated by the Federal
Reserve Board, and in no case are to exceed ten cents per one
hundred dollars.
ThirdThat no member bank or bank which voluntarily
cleo.rs through the Federal reserve bank, can make any charge against
a Federal reserve bank.
FourthAs a consequence i f
a member, and which
it cannot undertake
any charge.
That no Federal reserve bank can pay any charge.
it receives a check drawn on a bank which is ncit
does not clear through the Federal Rese-rve Banlt,
to make the collection if the drawee bank demands
FifthNone of the prov~s~ons of the Federal Reserve
Act nave any application to banks which are not members of the
Federal Reserve system and which do not voluntarily clear through
the Federal reserve bank.
Under this opinion it would seem that if the member bank
or a bank which carries a deposit with the Federal reserve bank,
-2receives items for collection from other such banks, it may,
suljec'\ to regulations by the Federal Reserve Board, charge ·
a reasonable fee not to exceed ten cents per one hundred dollars for making the collection and. remitting' the proceeds.
If, however, such a bank receives an item for collection from
a Federal Reserve pank, it can make no charge against the Federal reserve bank.· Tho opinion does not d.ecide the following
question which has been raised by the Committee of Five of the
American Bankers' Association:
Where member bank "A" sends an item for coliection to its Federal reserve bank drawn oi1 momber bank "B" and
the Federal reserve bank forwards it to bank "B" with instructions to remit, granting that no charge can be nade against the
Federal reserve bank, rtl£LY bank 'iB'' charge bank "A" for. the service of collection, on the ground that tho Federal reserve bank
acts merely as the agent for bank "B" in forvvarding the item?
In other words 1 it has been suggested that the
statute intended to prOhibit a member bank from charg:i.ng a Federal
reserve bank for the service of collecting items belonging to the
Federal reserve bank, but was not intended to prohibit member
banks from making a charge for the service of collecting items
sent to such member bank by the Federal reserve bank acting as
agent for another member bank.
If we assume that no ch~rge can be made in any
case in which an ·item is received by a member bank from its Federal reserve bank, it necessarily follows that all items cleared
through a Federal reserve bank must bo settled for at par by the
drawee bank and all items cleared through any other source than
the Federal reserve bank are subject ~o a reasonable charge ~or
collection under regulations of the Board.
Respectfully)
(Signed)
k,
c.
Elliott
Counsel.
Mr. F. A. Delano,
Federal Reserve Board.
EX·OFPICIO MEMBERS
W. P. G. HARDING, GOVERNOR
PAUL M. WARBURG, VICE GOVIR,NOR
WILLIAM G. McADOO
FREDERIC A. DELANO
ADOLPH C. MILLER
~HARJ.ES S. HAMLIN
SECRETARY OF THI TRIASURY
~
CHAIRMAN
JOHN SKELTON WILLIAMS
.COMPTROLLER OF THE CURRENCY
A-8t>8
H. PARKER WILLIS, SECRETARY
FEDERAL RESERVE BOARD
SHERMAN P. ALLEN, .-.ssr. SECRITARY
AND FISCAL AGENT
WASHINGTON
ADDRESS REPLY TO
FEDERAL R&:SERV. BOARD
DIVISION OF REPORTS AND STATISTICS
April
5,
1918.
Dear Sir:
Instruct.ions to l!olJ 6c";crs of Custo.c1s :b.a.ve been modified
so that hare<:J.fter
~r,::.v·elers
lea.ving the country will be permitted
to Cciorry on the:i.r persc;ns -or in their baggage United States Notes,
National Ba.nk Notes, FedorCJ.l Reserve
subsidiary silver coin
;;).UC.
l~otes, Am~ricw~.n
SiJ.ver Dollars,
S.:i.lver .Cartifica.tes nC\t to exceed $1000
for eu.ch adu"l t, wherer,f nc,..t r.1ore than $200 for each <;.dul t Lay be
in the for11 of
Silver
.~.medc8.n
Certifict:.~.tes"
S \tver D~Ua:c!":, subsidiary sil·ver coin and.
'I'rd.ve.Lers desiring to
c.;~.rry
on their persons
Or in their bc.ggagP. la.:r·gAI' amouncs of currency bt silver and gold
coin or gold
certificai;.:;~
r.:u.:::.t nake app:ication for permission there-
for to the Division of ?oraign Excha.nge, Federal Reserve Boord,
through the J?ederu.l R3sa::ve banlc of their district, stati<1g the
re<J.sons why such p,;rr.u.ss:lcn is des;.red.,
Yours very truly,
Secretd.ry.
Federal Reserve AgAnt;
PuSt;,·•
~J.e
Division of Foreig:..'l EJXc:bange wilJ..
c.'.etc;;.jJ.ed. d;.;l.ta rega.:..~d.ing the
neiv plci.n abuve ~:t<.i.ted..
·~ra.nsm:i.t
W. P. G. HARDING, GoVERNOR
PAUL M. WARBURG, VICE GOVERNOR
FREDERIC A. DELANO
ADOLPH C. MILLER
CHARLES S. HAMLIN
EX-OFFICIO MEMBERS
WILLIAM G. McADOO
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
FEDERAL RESERVE BOARD
COMPTROLLER OF TKE CURRENCY
WASHINGTON
H. PARKER WILLIS, SECRETARY
SHERMAN P. ALLEN, ASST. SECRETARY
AND FISCAL AGENT
ADDRESS REPL.Y TO
FEDERAL RESERVE BOARD
April 5, 1918.
X-869
Dear Sir:
The Federal Resorve Board has
caroi~ly con~idered
the report
submitted by the Transit Managers of the Federal Reserve banks, endorsed
by the Governars o£ tho banks, which was discussed in conference :i.n Wash-
ington recently, ani has reached the following
concl~sicns:
l.
The Board approves the recon.rnendation to suspend 1 or eliminate
for the tirr.e being, cervice cha.l"'ges. for the collection of caoh itenJS;
this elimination of charges to a.pply to checks received frou:. member banks
and fro.m other Federal Reserve banks and to become effective on and after
June 15 1 1918.
2.
The Board approves the recoc:mcnda.tion that the 10¢- charge on
collection ite~ between Fe~eral Reoerve banks be eliminated for the present and until fu:rth~r noti~e 1 but that a charge of 15¢ per item be made
on all such items returned unpaid, this rule to boeou:e effective June
15., 1918.
a. The Board approves the reconnendation that telegraphic transfers be bougnt and sold at par, each Federal Reserve bank absorbing the
telegraphic expense, but with the proviso that checks on other Federal
Reserve cities or Feder~l Reserve Branch cities be taken at par, subject
only to deferred availability in accordru1ce with re~Jlar ti~e schedules.
4.
The Board approves in principle the recommendation that the
discount rate on nail transfers shall be based upon tho fifteen day rate,
but 1 because it is desirable that the rate for such transfers shall remain as nearly unifor.m as possible and not vary too frequently 1 suggests
that for the tirr.e being and until further notice a charge of lO¢ per day
per thou$and 1 or at the r.ate of 3.65 pe~ cent be fixed as the rate for
all mail transfers.
5.
endorse~
The Board approves the recomwendation of the Transit
by the Governors,
"That all trail transfers to banks in other
Federal Reserve Cities be na.de by draft on the
Federal Reserve Bank and sent direct to the bank
to which the transfer is ordered, rather than to
the Federal Reserve Ba.nk. 11
~nagers 6
6.
The Board approves the s~ggestion that there shall. be a general
revision of all time schedules, effective June 15~ 1918, wh~ch shall take
into consideration recent changes in nail train schedules, and the creatian
of new collection centers at branch bank cities.
7.
The Board approves the recom'llenda.tion that "trade acceptances 11 ,
cash
items.
wher~er payable, be handled as collection items, not as checks or
ite~s, but suggests that "bankers' acceptances" be. treated as cash
T~e
Board has under consideration and expects to approve within
a few days a plan for linking together by private telegraph system the
twelve Federal Reserve banks with its office at Washington, and expects
these
to have/additional facilities available within a short tine.
A number of other recommendations relating to details and
standard accounting methods have not been considered by the Board and
are left for your deter-mination.
Very truly yours,
Governor.
X-870
ENABLING LEGISLATION
ENACTED BY THE SEVERAL STATES SINCE THE PASSAGE OF THE
FEDERAL RESERVE ACT AUTHORIZING
~/EMBERSHIP
OF STATE BANKS AND TRUST COMPANIES IN
THE FEDERAL RESERVE SYS'fEM
AND
STATE LEGISLATION SUGGESTED AS NECESSARY TO
BRING ABOUT COORDINATION IN THE POWERS
OF MEEBER BANKS AND UNIFORMITY IN
LAWS REGULATING THE BUSINESS
OF SUCH BANKS.
MEMORANDUM PREPARED BY
Counsel to the Federal Reserve Board
at the :request of thth P:resid ent of
The American
B~nkers
Association.
-2-
X-870
~:/i'_.'o.'J.'tJ':; OF I<i~1 3 OF '.1.'1E ~{_ V:Cil. I, G'i'~_._~"'LS
B:::LA'rHJG 'l'O r. C£1B::.RSHIP OF 3TNrD BANKS PJID TRUST COI.'lPLN-
ILS IN TH:J
F~:':'..RAL
RLS::::.RVE SYS1SH,
PROVISIONS \7HICH SHOULD BD Il"Cm:PORAJ:SD IN EN-
ABLING LEGISLATION
~NACTLD
BY THI, STA1ES.
In order that the :powers of all member b<1nks may be coordinatecl as far <:!.S possible? nncl that their opero.tions may be conducteC:. subject to th0 same limitations and restrictions, it is desirable that enabling acts passed by the several_ St2.-tes should provide:
{a)
That Stnte b2.nl;:s nnd trust comp.::.nies mo.y subscribe to
stocl;: of, .::tnc. becomG 1:1embers of, Feder.::..l reserve b.:>..nks.
(b) That bru11cs nnd trust companies becoming members of a
Feclerul reserve bC'..lll;: sholl be vested \ri th all pavers c onfcrred upon
member bc.nlcs by the Federal Reserve Act c.nc~ aiaenclment;s there·bo,
and that such po\-:ers shall be exercised subject to the restrictions
and limi tc.tiom imposed by the Feclerc.l_ Reserve Act c.nd its amendments, and the rec,ulo.tions of the Federnl Reserve Board mo..de pursu.::..nt
thereto.
(c) Tho.t c. complia.nco vri th the reserve requirements of the
Feder;.:.l Reserve !'.ct slrll be c~eemed ::. complio.nce Hith the reserve
require•'"lents of the Sti<.'.te L:;.\1.
(d)
That such bo.nl:s 2.11d trust comp<:>nies sh2.l1 be subject to
ex.c..min.::r.tion by the FederD.l c.uthorities; th<1t the St2.te authorities
ino.y c.ccopt e:~rainations i:1.o.de by the Federal authorities in lieu of
those i.~ecuired by St.::..te 12.\i o.ncl may disclose to the Federal <:'.uthorities all informc.tion in reference to the aff.o.ir:.J of those b.:;nlm or
trust comlX4'1ies -v:hich become, or des ire to become, members of a
Federal reserve bo.nl<::"
A tentuti ve drc.ft of bill embodying the foregoing provisions appears on :;?o.ge 15"
The folloY;in~~ analysis is intended. to shO\.' 1Pho.c·~ lec;is lntion h:.:.s been enc.cted by the several Stc.tes ;_;i nee the pc.c.; so.ge of ·che
Feder.::..l Reserve Act encoblinc; State bonlcs .::.nd trust compc.nies to become 1~1ombers of the Feder.::..l :::l.eserve syster.1, <::.nd -,,hcot legisl2.tion is
necessnry to bring ;:.-.bout the desired co-ordinc.tion of the pov&rs of
member bont:s o.nd. uniformity in 12.\'JS rcc;ul.::..ting tho business of t~uch
banks.
-3-
X-870
S'J:ATr.S WHICH HA VI: :SNACT.;l) NO ::::NABLING
JL',GISLATION.
In the follo\;ing St::,tes there has apparently been no legislation affecting membership of State ban1\:s <md ·Trust comp~ies in the
Federal reserve system since the passage of the Federal Reserve Act.
It is, therefore, clesirable thut a standard form of bill embodying
·the provisions hereinbefore referred to,· should be introduceC'.. in each
of these Stutes:
ILLINOIS,
lNDlliNA~ .
ALA..BAMA,
.ARIZONA,
.ARKANSAS,
COLORADO,
DLLAV!.ARE,
KANSAS,
MAR YL.AliD .,
NORTH C.A..'WLINA,
OKLAHOMA,
TENNES&SE,
UTAH,
VCRMOHT,
\':rEST VIRGINIA.
WYOHll!G.
STATUS OF LAV!S · 0:&' OTHER STAT::::.S •
CALIFORNIA;
State bruli<s ~e permitted to become· members, but apparently
no provision has been made for trust companies to do so. (Bank Act,
Section 56.) Bo.nks becoming members rn£.Y. have and exercise 0-ll pov1ers
not in conflict with State laws. (Ba:nk. Act, Sec. 56.) C:.uch banks
may carry Vti th Federnl reserve bank that. pnrt of their reserve required by Federnl Reserve Act. · (B.cmk Ac·t) Sec. 20.}
Legislation
neccss~r~.
Trust compnnies sho.uld be ·nuthorized to 'become me1i.1bers.
Complinnce with reserve rcquirer.1ents of the Federal Reserve Act should
be accepted in lieu of State requirements. Provision should be r.1c.dc
for oxat:lina.tion by Federal nuthori tics; for the nccepto.nce of such.
exnmin['.tions by the State n.uthori ties in lieu of those required by
State laYl, o.nd State authorities should be c.uthorized to disclose t.o
the Federal authorities information as to the nffn.irs of bo.nks becoming or desiring to become members of the Federal reserve system.
CONNtCTICUT:
No enabling legislation enacted since passage \:If :E'ederal
Reserve Act, e:::ccpt that Stc.te bt.:.nlm o.re :permitted to cotmt bnl::'..llces
carried \Ti th Fcdcrnl reserve brulics as :p~t of their reserve. (Bnnk
Act 1917, :puge 4).
Le~islc.tion ne~cssa.ry.
It is desirable thc.t standard form of bill hereinbefore referred to should be introduced in Connecticut.
-4FLORIDA:
State 1.:w1s provide ttw.t it is not lawful for ~;to;tc b~.nks or
trust cocpanies to buy stock in ~ny other corpor~tion except FcdcrDl Reserve b~. (..t\.ct June 4, 1917.)
Legisl~tion Neccss~y.
St~te banks ~d trust compenies should be expressly authorized·
to become members. Provision should be ondc to vest in such b~s ell pouers conferred on oember b~s by the Federcl Reserve i~ct. Co~pli~nce with
reserve requirements of Eeder~l Reserve l.ct should be ~ccepted ::::.s n compliance with the Sto.te lnws. Provision should be i-;l<:'.f.e for eXD-i-ain::::.tion by F¢ernl nuthorities; for accept~nce of such excmin~tion in lieu of those required by State law end State nuthorities should be authorized to disclose
to the Federal authorities o.ny informtion v;i th reference to banlrs becornng
or desiring to becmmc meobers of the Federcl reserve system.
GLORGIA:
Bn.nks o.re permitted to become members and o.re required to comply
'lith Federal Reserve Act.in joining system. (Acts 1915, No. 143, page 33.)
Legislation necessary:
Bonks becoming members should be vested with all powers conferred
on member banl:;:s by the Federal Reserve .'...ct. Compliance \Ji th reserve requirements of the Federal Reserve Let should be accepted as compliance with reserve requiremen·i;s of State laYIS. Provision should be made for examination
by Feder.::.l ~uthorities; for the acceptance of such e~:o.mino.tion in lieu of
that required under the State lan end State authorities should be authorized
to disclose to Federo.l authorities informatica 2.-s to the affairs of State
banl{s and -trust COiil?Zllies becominc; or desiring to become members of the Federal Reserve System.
IDAHO~
Banlcs are permitted to become members; apparently no provision for
Trust COi'i'lpanies. (Bank La\7S 1915. Sec. 41-u.) Such banks are authorized to
comply with 1m-1s of the United States and regulations of the Federal Reserve
Board and Comptroller of the Currency; anyJching in the State laYiS notvli thstand.ing. ( Brolirinc; Lo.v1s 1915, Sec. 41-<::..}
Legislation Necessnry.
Bctll{S becoming members should be vested \Ji th o.ll powers conferreC:
on member b~lt:s by the I<'ederal Reserve Act.
Cornpli<::.nC/3 \7i th reserve requirements of the :h'ederal Reserve Act should be accepted o.s complic.nce with
State la~. Provision should be mo.de for e:~mino.tion by Federo.l o.uthorities;
for the acceptance of such examinution by the State o.uthoritics in lieu of
tho.t required by the Stutc la~, ~~~nd State authorities should be uuthorized
to disclose inform<::.tion relating to the uffo.irs of bcnks whi_ch become or
desire to become members of the Federo.l Reserve System.
.......
-5-
State banks, savings banks and tl'USt conpa.nies authorized to
become members of the Federal Reserve System on vote of 51% of stockholders.
(Ba:nk laws 1917, page 37.)
.
.
Legislation Necessary.
Law should be anended so as to make it unnecessary for stockholders
Banks becoming members should be vested with all
powers conferred on member banks i)y ·the FeC..eral Reser:ve Act. Compliance
with reserve requirements of the Federal Reserve Act ahould be accepted as
compliance with State laws. Provision should be made for examination by
Federal auth~rities and the acceptance of such examination in lieu of those
reqttired by State laws. State authorities should be authorized to disclose
to Federal authorities information with reference to the affairs of State
banks or trust companies becocing or desiring to become members of the Fed~
eral Reserve System.
to vote on membership.
X!JN'l'UCKY:
State b~ and trust companies are permitted to become members.
Are subject to all provisions of the Federal Reserve Act and amendments and
to the regulations of the Federal Reserve Board. Vested with all.powers
and subject to all liabilities prescribed by the Federal Reserve Act. Reserve requirements of the Federal Reserve Act accepted in lieu of State
requirements. State ba.nl~ and trust companies becominG members subject to
examination by Fe<.1eral reserve bank and State B~ Comnissioner &rw.y accept
same in lieu o~ State examination. Copieo of report of e~amina·tion by State
autnorities may be furnished the Federal reserve agent. (Amendment 1918.)
Legislation Necessary:
None.
La.TISI.ANA:
State ba.nlcs and trust companies may become members, Required to
conform to regula:'cions of the ~'ederal Resel. . ve .t...c·c but ourrenc.er no rights
under State Law. (Ba.nkinc; Laws 1911; :l? .. 51 .. ) ..
Legislation Necessar·y:
Banks becomi~ members should be vested wit,h all powers conferred
by the Federal Reserve Act on member banks.. Compliance with reserve reqUireq~ents of Federal Reserve !1ct should be accep·ced as coor;liance wit~ s·tate
laws. Provision should be ma.C.e for· e:ltamination by Federal authol:i·ties and
acceptance of such examination by the ~tate autlmrities in lieu of those required by State law. s·ta-'ce au-'chox·i·bies should be author·izeC.. ·to C.isclose to
Federal authorities all information in reference to affairs of ~~:s becouing ~~Bir~ to become members of the Fedexal Reserve Gystem~
'f .<Jt ;. ••
-: J.'::;:;:: ~.>
x..a7o
-: I
MAINE.:
Trust
componi~s.~y beccme
bc:~.nks.
Ma.y have
reference to State
members.
dJ'lO
Apparently no ·
e.&ercis~ all powe~s anCl
p~ovisions of Federa~ Re-
privileges of m~mber banks. Subject to
serve Act 1 eoncerning·reserve .in s•bstitution for ~tate requirements. (Ba~~ Laws l917,.p .. ~3) Provision ~e for.joint ex~na
tion of State~and national b4nkin6 institutions when occupying
same rooms. (Bank Laws 1917, p. 27).
--
tEGlSLATlON NECESSARY:
.;;;.;;..;;.;;;.,;;;.;;;;;..;;.~-
.
~
.Provisi•n sh•lel be mid.e. for examinations by Federal·
autk•ritie~~ the aoeptance of sue~ ex~minatiorls by 'the St~te:
authoritiea3in lieu of those requited by State law, and~ State·
.
authlrities,should be authorized tc disclose. to the Federal
authotities,iOformation·with refeten~e t• banks ~ecoming ot
desiring to become members of the Federal ~eserve System. .
MAS~Acadsft'rs:
Trust companies per.~.itt~·'• b.acoma.members.
No r.ef-:
State ianks.
It ia.Una$rstooa that there ·~re·n9
State banks in Massachusetts exc~pt a fe\v recently Ori;aniz'ea.
under an old statu tee and thctt probably none of these eire ·in.
actual operation at this time,
Trust cgmpanies pecoming me111bers under the terms of -&he Act ma.y hc:~.ve :iu:l exercise 'ca.ll pow. era and privileges of.member banks.unaer the ~ederal ~eserve
Act.
Federal Reserve Act rttttaftct ·t:aqut•~ellt~ nbstituted for
erence~to
State.requir.ements.
Bank Commissioner
~Y
furnish national
bank examiner or national government such information, reports
ana statementsJ~s he may deem bes~ •. (Acts 1914, Chap. 537 ,
Savings Bank Lawstl917. Sec. 5.)
.
LEGISLATION NECESSARY:
e~al
State a$horities should be a•horizeo to acc-ept Fed.examinations in lieu of those required by St:ite law.
MICHIGAN!
Banks ~y become members.
The amount of reserve rQquired to be kept on haDCl by a bank beoomill6 a member sJ;lall be
as fixed by Federal Reserve Act instead. of State l&w. (Bctnk
Laws 1915, p. 10).
~EGIS~JJON
!!mCESSARY:
Banks becon:ing members shtuld be vested with all pow.o» ~emb~r bank$ by the Federal~~eserve Act. ·Pres-
ers.co~ferred
- 7 -
X-870
ent prov1s1on as to reserve requirements somewhat ambigucue;since Federal Reserve Act requires no reserve on hand
but all reserve is carried with Federal reserve bank~ Compliance with reserve requiremen~s of Federal Reserve Act should be
a.ccepted.as compliance with State law. Provision should be
made for examination by Federal authonties; for the acceptance
by State authorities of such examination in lieu of that re~uihd by State law • and State authorities should be authorized
to disclose to Federal authorities information in reference to
the affairs of banks becoming or desiring to become ~embers of
the Federal Reserve System.
MINNESOTA:
State tanks ana trust companies may become members.
{Bank Laws 1917, p. '15).
LEGISLATION NECESSARY:
Banks becoming members should be vested with all pow- ers conft3rred_ on member banks by Feciera.l Res fTVe Act. Complia.nce,with reserve requirements of Federal Reserve Act should be
acc~pted ~s c~mpliance with State law.
Provision should be made
for examination by Federal authorities; for the a.cceptance of
such examinations by State.authorities·in lieu of those required
by State law, and State authorities, should be a.uthorized to disclosecto the Federal authoritiesoall information with reference
to the affairs of banks becoming or aesirin& to become members
of the Federal Reserve System.
MISSISSIPPI:
Banks and trust companies may become members. Compliance with reserve requirements of Federal Reserve act accepted as
compliance with State law.
LEGISLATION NECESSARY:
Banks becoming members should be vested with all powers
conferred on member banks by Federal Reserve Act.
Provision
should be made for examination by Federal authorities, for the acceptance, of sueh examinations by State authoritiesJin lieu of
those required.by State law, c;~,nd State authorities should be authorized .. to disclose to the,Federal authorities information with
reference to the affairs of banks and trust compa.nies becoming
or desiring to become members.
X-870
- 8 J.ttSSOUM:
Banks and trust eompa.nies may 'bec,olX!e members.
Have
and exercise all powers of membe~s under the Federal Reserve
Act not in conflict with State law, ~t generally subject to
all provisions of State Banking Laws.. R.equired to maintain
only such reserves as are required by the Federal Reserve Act
and d.lX!endlXIents. (Banking Laws 1915, pp. 52, 86, 95).
J,EGISLA'l'!ON NECESSARY:
Provision should he maCe for ~amir.ation by Federal
authorities; and for the acceptance,_ of such examiru.tion in lieu
of those required.by State law.
State authorities should be
authoriied~ to disclose to Fe<ieral authorities .all information
with reference to State banks ana trust colXIpanies becoming or
desiring to become members of the Federal Reserve System.
MONTANA:
Banks, trust cott.panies, savings banks and. investment
companies may become members.
May conform to and transact its
business.in accoatance,with the terms of the provisions of the
Act of Congress,creauing and the&rules and regulations of the
association. Compliance with res~rve requirements of the Sjstem accepted in lieu oi requirements of State law. (Bank Act
1915, Sec. 23. Bank Laws:l917, p. 42).
LEGISl.lt!f:ON NECESSARY:
Provision conferring addition~l powers somewhat ambiguous. Provision should be made,for examination by Federal
authorities) for the acceptance. of such examination of State
authorities;; in lieu of those required by Stat.e law. State
authorit~s should be authorized to ~isclose to Fejeral authorities information with reference to banks or trust companiesbecoming or desiring to become members of +.he Federal Reserve
System.
NEBRASKA:
Banks and trust companies may becl)me membt~rs. H:1ve
power to assume liabilities and exercise all powP.rs of member
banks and are subject to all provisions of the Fbtie=al ResP.rve
Act and regulations of the Federal Reserve Board. Such banks
subject. to examination by authorities under Federal Reserv~ Act
am State authorities may a(.cept such exardna.tion in lieu of
that requirt:d. by State law. (B-:}nk Laws 1915, pp 25 and :i.6),
x...a7o
- 9 -
LEGISLATION NECESSARY:
Compliance with reserve requirements of Federal Reserve Act should be accepted as compliance with Stats laws4
NEVADA:
State banks permitted to become members of System.
Apparently no reference to trust companies. (Bank Laws 1915,
P• 8) •
LEGISLATION NECESSARY:
Trust companies should be authorized to become members of the System.
Banks becoming members should be vested
with all powers conferred by Federal Reserve Act on meu~er
banks.
Compliance with reserve requirements of Federal Reserve
Act should be accepted as compliance with State law.
Provision
should be madedor examin::ition by Federal authorities, for the
acceptance. of such examination by State authorities in lieu of
those required by State law, and State authorities should be au~
thorizedJto disclose to the Federal authorities information with
reference to the affairs of banks and trust companies becoming
or desiring to become members of the Federal Reserve System.
~.HAMPSHIRE:
Power ()f trust companies to become members recognized·
by implication. Such companies becoming members may have and
exercise all powers and privileges,under Federal Reserve Act as
members. Are sgtiject to reserve requirements of the Federal
Reserve Act::in substitution of State requirements.
{Bank Laws
1917, p. 58).
LEGISLATION NECESSARY:
Provision should be made for examination by F~deral
authorities, !Qr the a~ceptance of such examination by the
State authoritiessin lieu of those required by State law, and
State ati;horities should be authorized to disclose information
to the Federal a\.1-thoritit::s with referf:!nce to thb d.ffairs of
State,.banks and trust companies, becoming or C:esiriug to bee ame
members of the :li'ederal Rtlserve System.
St;;~.te banks sb%Jd b~
specifically aut.horized to become members.
illd! JERSEY:
State banks and trust companies rlld.Y become members;
may assume the liabilities. and bf;;lCome entitled to the bendits
X-870
.. 10 -
recited in th~ F~deral R~serve Act; are subject to reserve requirements of Federal Rt::st::rv-e Act inst6ad of Std. ttl law. (Bank
Laws 1916, p. 41; Bank Lqws 1916, p. 7~ ; Act Mar. 29, 1917}.
LEGISLATION NECESSARY:
Provision shoula be made for ~xamination by F6deral
authoritit::a, for acceptance of such examination by the State
authorities in lieu of those require<i by State law. State authorities shoula be authorized to disclose info~ation to Federal authorities with reference to the affairs of State banks
or trust companies becomin6 or aesiring to become members of
the Syste:m.
~MEXICO:
State banks, savings banks or trust companies miY bee orne members; may exercise all powers of memb!'r banks under
Federal Reserve Act. All Statti banks, whether members or not,
may keep on <ieposit with Federal reserve b~nk that part of their
reserve not required to be kept as cash in vault. (Bd.nk Laws
1917, pp. 10 and 31}.
LEGISLATION NECESSARY:
Compliance with rt;serve requirements of Federal Reserve Act should bt: accepted as compliance with State law. Provision sbould be made for examination by Federal authoriti~s,
for the acceptance of auch examination by the State authoritit:Js
in lieu of those required by State law. The State authorities
should be authorized to disclose to the Fo:,deral a.uthorities information with reference to State ba.nks and trust con1panies b0c oming or desiring to become m6mbera of the System.
NORTH DAKOTA:
Banks may become members.
(Bank Laws 1917, p. 17).
LEGISLATION NECESSARY:
Banks becoming members shoulo be vested with all powers
conferred on mt>mb~;;r banks by Federal RestlrVt: Act. ComplianctJ with
r~;;serve requirements, of the Federal R~stlrve Act should be acceptt.\i
as compliance with State laws.. Provision should bt: made for tJXamination by Federal authorities1 accept::~.nce of such examination
by the State authorities in lieu of those,requirt;;d by the State
l;.1w and the Statt~ a-cihori ties should bt: authorized to disclose to
the,,Fede:r:tl authorities;all information with reft.;rence to the affairs of any bank or trust company bee oming or dL.:>irin,~ to bee om~;;
a rr.~:>rr.bt::r of t.ht: Ft-:deral Reserve SvstHlll·
- 11 -
X-870
State banks and trust companies rray become rrembers;
nay have and exercise all powers conferred on member banks by
the federal Reserve Act not in conflict with State laws; may
rraintain as reserve on deposit Nith Federal resfirVe bank such
portion of its total reserve as shall be required by the Federal Reserve Act 1 but a bank with an office in a borough of
two million or over ~ust carry the remainder of its total reserve as reserve on hand. (Morgan &: Parker's New York Banking
Laws pp 81 1 94 1 169 1 188).
Legislation Necessary:
Provision should be rrade for exa~ation by Federal
authorities; for the acceptance of such examination by State
authorities in lieu of these required by State law. State
authorities should be authorized to disclose infornation to the
Federal authorities with reference to State banks ortrust co~
panies becoming or desiring to becorr.e n:embers of the Federal
Reserve System.
Every corporation having power to receive money on deposit
nay become a member bank. Have right and power to do everything required of or granted by the Federal Reserve Act to member banks.
Compliance with reserve requirements of the Federal Reserve Act accepted in lieu of compliance with State requirements.
Penmits
exchange of certain valuable inforrration relating to banks and business of banking with national bank authorities. (Bank Laws 1915 1
pages 71-76).
Legislation necessary!
Provision should be rrade for exaffiination by Federal authorities; for the acceptance of such e~.in~tion by State authorities;
in lieu of those required by State law.
OREGON:
State banks and trust companies rray becorr~ ~smbers. Have
and exercise all powers under Federal Reserve Act not in conflict with
State laws. Remain subject to all State laws. May maintain on deposit with Federal reserve bank such part of total reserve as is required by Federal Reserve Act. ( Bank laws 1915, pp 4, 11; Trust. Companies Laws 1917; pp 71 23).
Legislation necessary:
Compliance with reserve requiren:ents of the Federal Reserve
Act should be accepted as compliance with State lawj provision should
be rrade for exannnation by Federal authorities) the acceptance of such
X-870
... 12examinations in lieu of those required by State law and State authorities should be authorized to.disclose all information with reference
to banks becoming or desiring to becone nembers of the Federal Reserve
System.
PENNSYLVANIA:
Present law contains provision substantially similar to
those herein referred to. (Act July 17 1 1917).
Le~islation
necessary:
None.
RHODE ISLAND:
Banks and trust companies may becon:e members. Have and
exercise all powers and privileges under Federal Reserve Aot and becoae subject to provisions of the Federal Reserve Act and re~lations
of the Fedetal Reserve Baard. Lawful for Bank Commissioner or Assistant to exhibit or disclose records of exan.ination and other infortr.ation
relative to member banks to the Federal Reserve Board or its agent.
(Bank Laws 1917} pp 70-71).
Legislat~on
necess&ry:
Compliance with reserve requirenents of the Federal Reserve
Act should be accepted as complisnce with State law; provision should
be made for exa~nation by Federal authorities; the acceptance of such
examination by State authoritieQ in lieu of that required by State law.
SOUTH CAROLINA:
members.
Banks, banking associations and trust companies may become
(Acts 1914, No. 333). State law does not require any reserve.
Le~islation
necessarv:
Banks becoming members should be vested with all powers conferred on ~~mber banks by Federal Reserve Act. Provision should be
made for examination by Federal authorities; the acceptance of such
exa~nation in lieu of that required by State law 1 and State authorities
should be authorized to disclo.se to the Federal authorities all inf ornation with reference to the affairs of State banks and trust companies
becoming or desiring to. become ~mbers of the Federal reserve system.
SOUTH DAKOTA:
State banks nay becorr.e members. This language probably
includes trust companies 1 since the te~ is held to include all corporations which receive deposits. Banks becoming members must comply
with and be subject to the Federal Reserve Act and amenduents 1 anything
in the laws of the State to the contrary notwithstanding. '
(Bank Guaranty Law 1915 1 pp 15 and 28).
X-870
- 13 -
Legislation necessary:
Provision should be rrade for examination by Federal authori ..
ties; the acceptance of su~h examination by the State authorities in
lieu of that required by'State law} and the State authorities should
.
be authorized to disclose to the Federal authorities information in refer~nea to banks becoming or desiring to beco~ members.
TEXAS:
Banks and trust companies rray become xrembers; have authotity
to confonn to and are subject to Federal Reserve Act and anendments
and
to regulations of the Federal Reserve Board. Reserve requirements apparently those originally contained in the Federal Reserve Act.
C~issioner of Insurance and Banking or any State Bank Examiner authorized to forward to Comptroller of the Currency or Federal Reserve
Board copies of reports of examination of any member bank. {1914
~ndmmt to Bank Laws., Sec. 1-4).
·
Legislation necessary:
Compliance with the reserve requireuents of the Federal
Reserve Act should be accepted as compliance with State law; provision
should be made for examination by the Federal authorities and the
acceptance of such examination by 'the State authorities in lieu of
those required by the State law·
VIRGINIA:
Banks and trust companies trlay become members. (Bank Laws}
19161 p 35).
'
Legislation necessary:
Banks becoming members should be vested with all powers
conferred on member banks by the Federal Reserve Act. Compliance
.with reserve requirements of the Federal Reserve Act should be
accepted as compliance with State laws. Provision should be rrade
for examination by Fe~eral authorities~ the acceptance of such
examination by'the State authorities in lieu of that required by
State law. State authorities should be authorized to disclose to
Federal authorities all information with reference to State banks
or trust companies be coming or de siring to be coxr.e rr.embers of the
Fed~ral reserve system.
X-870
- 14 -
WASHINGTON:
Banks and trust companies nay bocome rrembars. ~4Y cou,ply
with any regulations of the United States laws and regulations in
pursuance thereof. Reserve· requiren:ents of the Federal reserve
system accepted in lieu of State reserve re~uirements, and State
authorities nay disclose information to Federal bank ex~miner.
(::Ba.nk Laws 1917 1 pp 18, ZOJ 34).
Legislation necessary:
Banks becoming rrembers should be vested with all p~vers
conferred on member banks by .Federal Reserve Act; provision should
be made for Federal examination and the acceptance of such examina.tion by State authorities in lieu of that required by State law.
WISCONSIN:
State banks nay become nembers; have and exercise all
powers not in conflict with laws of State, but continue subject
to duties and liabilities under State l~N. State authorities nay
compare notes concerning banks with National Bank Examiner. (Bank
Laws 1915 1 pp 7 1 18J 19).
Legislat~on
necessary:
Compliance with reserve requirements of Federal Reserve
Act should be accepted as compliance with State law. Provision
Should be nade for exa~nation by Federal authorities and for the
acceptance of such exandnations by State authorities in lieu of
those required by State law.
4/6/18
',. ·.,..
An Act authorizing any bank or trust company incorporatod undor the· laws of this Comrr.onwaal th to become a member
of a Federal reserve bank; to vast in such bank all powers ,conforr;Jd on member banks; to provide that the axercisa of sucn
powers shall be subject to all of the provisions of the Federal
Rosarve Act and. to r;;~gulations of th.s Federal Rasarve Board,
rrade pursuant thereto; to allo# any such bank or trust canpany
to comply vvi th reserv3 require&:.3nts of the Federal Raservo Act
in lieu of those establishoi by this Commonwealth; to pe~~t tne
authorities of this Cornrr.orrneal th which supervise and examine
banks and trust companies organized under its laWs 1 to accept
th~ oxa~inations and audits rrado p~rsuant to the Federal Reserve
Act in lieu of thos<J r~:~'l,uirea by the laws of this CQmmonNealth
an~ to disclosa to tho Federal authorities inforrration rolating
to th0 con1ition and affairs of banks and trust companies or~
ganizad under tho laws of this State which have b..:;coma or which
SJek to bJcome members of the Federal Raserva System.
Be it enactad by the Sanate and House of Rapras.:;ntativa s of tha Comrr:on'Neal th of --------------------~in General
Assembly
m0t~
and it is heraby enacted by the authority of the
same.
SECTION 1.
The words 11 F.3d.Jral Reservo Act as horain
used. shall be hald to mean ani to include the Act of Congress of
the Unitci Statas approved Dace~bor 23~ 1913, as heretofora and
he rsaft0 r arr.ond.;,d.
The Nords 11 Fe:ivral R:;s.:;rve Board. 11 shall bo hol~ to
mean the Federal Reserve BoarJ create~ an~ Jcscribe~ in th~ F~J
eral Reserve Act.
Th0 words "Faieral raserv0 bank 11 shall be h..;ld to
maan tho Faderal reserve banks created and orga~ized under authority of the Federal Rasarva Act.
T'n0 words "merr.bcr ba~k 11 shall be hald. to maan any national bank~ Stata bank or banking and trust company which has
became or ·Nnich bJcorws a momb0r of one of th0 F..:;d.:;ral rJserva
banks cr0a.tad by tho Fvdor'al fusona Act.
SECTION 2. That any bank or trust company incorporated und.;,r the lavvs of this Corr.roonw;;>alth shall hava the pONJr
to subscri'to to tho capital stock and boCOn'Aj a ~0m"ber of a
F-::deral rosarvJ bank.
SECTION 3. Any bank or trust cOILpany incorporated
under the la.:No of this Commonwealth whi.ch is 1 or which b0comes
a n:;,:n;;bcr of a F0dora.l r0sarve bank., is by this Act vested with
all po,va ri:l conf3rred upon membc.r banks of tho Federal r,:::sarvo
banks by tho terms of the Fodoral Reserve Act as fully and
completely as if such powors were specifical~y enurr~rated and
dcscrib.:)d herein~ ani all s!lch powers shall b.:: oxc:r:;ise:i subject to all restrictions and lin~tations imposed by the Federal
Reserve Act .. or by regulations of the Federal Reserve Board
rr:ada pursuant thereto. The right., how.;:;vor .. is expr~ssly reserved to revoke or to am:md the pONors he-rein conferred..
SECTION 4. A compliance on the part of any such bank
or trust company Nith the ras0rve requirements of the Federal
Bcs~rva Act shall be hald to be a full compliance with those
provisions of the la,vs of this State which require banks or
trust companias to maintain cash balances in their vaults or
\rvith cthe r ba.nksJ a.nd no such bank or trust company shall bo
required to carry or rraintain rJs?rve other than such as is
required under the ter.ms of the F3daral Reserve Act.
SECTION 5.
Any such bank or trust company shall be
subject to th;:; exan;inations requirJd under th0 terms of the
Federal R2serve Act., and the authorities of this State having
supervision over such bank .. rr~y in their discr~tion accept
such exardn=..tion in lieu of th3 examination required und.;Jr the
laNs of this Corrn;onw<:al th.
Such authorities) their agants
and crrployees# rr~y furnish to the Foderal Reserve Board, the
F.;d;;;ral rcsarv"' tanks~ or to oxarr,iners duly ap~oointJd by the
Federal Res~rve Board~ or tho Federal reserva banks, copies
of all exarrinations rrnda~ and rray disclose to such Federal
R..::s0rv~ i3oar;i, F:;deral reserva banks, or cxarr.iner~ any infonration Nith rderence to th;;. condition or affairs of Stat;;: banks·
or trust companies organizoJ. under tho la,vs of this State
which beco~8 members of a Faderal rssorVc bank, or which ~pply
for 1n0mb3rship in a Faderal reserve bank.
SECTION 6.
All acts and th~ parts of acts inconsistent h;;;r..;.v-ith arc hereby repealed.
4-13-18
X-8'70
APPENDIX
1fl.BLE SHOWING_OFFICIAL CITATIONS TO STATUTES
CITED _INfORMALLY ABOYE_~
-------------------------------------------------------------------------S TATE
: CITATION GIVEN ABOVE
: OFFI CI.AL CI T.ATI ON
California
:funk Act 1 Sec. 20
:Bank Act, Sec. 56
:Cal if ornia Bank .Act~ Sec. 20
:California Bank Act,Sec.56
:Eank Act 1917
:General Statutes, Sec. 3400.,
:as an.ended by Public Acts~
~1917. Chap.lO.
Connecticut
J
p. 4.
:
Florida
:Act June 4, 1917.
~La>vs of Florida 1 Chap. 7269 (No.
----=-=l==1)approved June 4. 19.;:..:1:..:7'-".--
:Acts 1915.No.l43 1 p.33,
Georgia
Idaho
:Eank L.1-ws 1915,Sec.41-a
:&nking Law.,as arr.ended 1915,
" ..
--~t·-~'--------~--------------------·-------:~S~e~c~._41~-~a~·-----------------
Iowa
:Bank Laws, 1917,p.37.
:Code Supple~~nt, Title 9 1
:Chap.l2-a. Sec. 1889_-~o·~---
Kentucky
~AI:4ondrr.e nt 1918.
:Kentucky Statutes (Cq.rroll
:1915)Sec.l65, 579, 584,as arr.end: ed by Act approved :Wurch 27,
~1918.
Louisiana
~Banking
11:aine
:Bank Laws 1917Jp.27.
Laws 1917,p.51.
:Act 305 of 1914.
:Revised StatutesJChap.52Jsec.5l;
--------------~:Ba~n~k~L~a~w~s-=1~91~7~·P~·~4~3~·---------:~R~e~v~i~s~ed. Stat~te~hap.52,sec.8l.
l.t.assachusetts
:Acts 1914,Chap.537
:Acts 1914 1 Chap.537
:Savings Bank Laws 1917 1 sec.5~Acts 1908)0hap.590~Sec.5.(as
_ _ _ _ _ _ ___:..________________.:.=.arr..end.ed "Qy Acts 1912,QhaP-.l73.)
Michigan
:Bank Laws 1915,p.l0.
---------------~--------------------· _______
:CotLpiled Laws 1897Jsec.6093;
:as arr.ended 1913,Act .11;1915,
;Ac~t~2~5~·---------
X-870
S.'l'A'l'E
~
CITATION GIVEN ABOVE.
:Chap.?8. S. L- 1915.
Minnesota
!Aissouri
:Banking Laws
1915~p.52.
:Banking Laws 1915. p. 95
..:Bank Act 1915
:Revised Statutes 1909 (as
by 48th General Asse~
:blyJ Art. IIJ Sec. 66,
:Id. Art. III 1 Sec. 127.
:Id, Art. III, Sec. 138,
:arr~nded
:
:Banking Laws 1915 1 p. 86
Montana
:OFF{CIAL CITATION.
Sec. 23.
1
:Bank Laws l917j p. 42.
:Session Laws 1915.,
:Sec. 23 •
:Session Laws 1917 1
~p.89,
Ohap.136~
:S • 1
Nebraska
:ffl.nk Laws 1915. pp.25 and 26 :Session Laws l915.Chap.175.
Nevada
..:Bank Laws 1915
New Hampshire
1
p. 8.
:
:32
:Bank Laws 1917., p. 58
:Session Laws
:Sec. 28./
:
New Jersey
:Bank Laws 19161 p. 41.
:Bank Laws 1916 1 p. 72.
:Act. March
New Mexico
29q~917.
:Bank Laws 1917 1 p. 10
:Bank Laws 1917 1 p. 3l
:
New York
-· .. . .. .
North Dakota
Ohio
:Banking Laws" sec. 13 1 as
:anended 1 Statutes 1915.,chap .
1915.,Chap.109~
:Laws 1914 1 Chap. 159
:Laws 1914, Chap. 159
:Laws 1917. Chap. 225
:Laws 1917 1 Chap. 53 1 sec.9;
:Banking Laws 19151 Art.VII 1
:Sec 96 ..
:Morgan & Pa.rker 1 s New York
:Consoljidated Laws, Chap. 2,
:Banking Laws, p. 81
: (Chap. 369 of 1914,with amend..
..._ .......... _ ....... . .
. . . -- .. ·- :~.!l:t s 191'0. ~!3 c ~J-9.~
..
:Id.p.94
:Id.p.l69
:Id.p.l88
...:Bank Laws 19171
:I d. Sec .112
:Id.Sec.185
: Id. Sec .197
p. 17.
:Bank Laws 1915, p. 71
Laws 1915. p. 76
:Bank
:Corr.piled Laws l913.,Chap.28.,
:Sec.5187 1 as arr~nded by Sess:ion Laws 1915. Chap • 54.
:General Code, Sec. 12898
:GeneraJ. Code. Sec. 9796-2.
X-870
STATE
: ClTATI ON GIVEN ABOVE
:OFFICIAL QITATION
Oregon
:B3.nk Laws 1915 1 p. 4.
:Trust Co. Laws 1917 1 p.23
••
:Lord 1 s Oregon Laws.,sec~
:4564.,as amended by General
:Laws 1915,Chap.285 •
:Lord's Oregon Laws,Sec.
:4579,as a~ended by General
:Laws 19151 Chap. 285 •
:General Laws 1917,ch.l97,
:Sec. lO,subsec.l3 •
:General Laws 1917,ch.l97,
:Sec. ?5 (a) •
PennsYlvania
:Act Julx 17. 1917.
:Act July 17. 1917.
Rhode Island
:~nk
:Public Laws 1917. Ch.1514.
:
.
.:Bank Laws 1915.,
.
p. 11 ..
a
:Trust Co. Laws 1917,p.7.
.
a
Laws 1917. p. 70.
South Carol!na :Acts 1914. No. 333.
South Dakota
.:Bank
..:Bank
:Acts 1914. No. 333.
:Bank
:Sec.
Guaranty Law 1915,p.2S !Bank
:Sec.
Guaranty Law 1915,p.l5
Guaranty Law, Art.z,
1•
Guaranty Law,Art42 1
36 •
Texas
:1914 A~endnent to Bank Laws, :Senate Bill No. 5~ 3rd
:Galled Session of the 33rd
: Sec. 1-4.
:Legislature,l914,approved
::
:Oct. 19. 1914. Sec.l-4~
Virginia
:&.nk Laws 1916. p. 35,
:Act approved March 2a1914.
Washington
~Bank
:Laws 1917, chap. 80.
Wisconsin
:Bank Laws 1915., p. 7.
Laws 1917.pp.l8,20.34.
.:Bank Laws 1915.,pp.l8,19.
:Wisconsin Statutes,Chap.94,
:Sec.2020;Acts 1913,Chap.721.
:Wisconsin Statutes,Chap~94,
:Sac.2024-9;Acts 1915,Chap•
:76 ..
W. P. G. HARDING. GoYIRNOif
PAUL M. WARBURGi, VJC:I GOYIJI.JtOR
FREDERIC A. DELANO
ADOLPH C. MILLER
CHARLES S. HAMLIN
WILLIAM G. McADOO
SEC:RITARY OF THI TRIASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLJR OF THI
CURRIN~Y
FEDERAL RESERVE BOARD
WASHINGTON
H. PARKER WILLIS, SECRETARY
SHERMAN P. ALLEN, ASST. iiCRI.TAJI.Y
AND FISCAL AGINT
ADDRESS R.IEPLY TO
FEDERAl. RIISERYIE aO-'ItD
DIVISION OF REPORTS AND STATISTICS
MJjJCO
April 6, 1918
X-87l.A
Dear Sir:
The 11 War Finance Corporation" Act which was signed by
the President on April 5, provides among others that no
stamp or tax shall be required or imposed upon a promissory
note secured by bonds or obligations of the United States
issued since April 24, 1917, or secured by the pledge of a
prorr.issory note v>'hich itself is secured by the pledge of
such bonds or obli~tions: Provided, That in either case
the par value of such bonds or obligations shall equal the
amount of such note.
In view of the above change in law it will
no longer be
necessary to affix revenue stamps to member banks'· collateral
notes secured by Liberty Loan bonds or U. S. Certificates of
Inde bte dne ss.
It is suggested, therefore, that the practice of purchasing Liberty Bonds and Certificates of Indebtedness under
so-called repurchase agreerr~nts be discontinued and that such
borrowing by merr.be:t" banks oe rrade on their own prorr,issory
notes secured by such bonds and certificates.
Paragraphs 1 and 2 of our letter X-795 of March 12 rray
also be disregarded and the new code words on form 34 "BUCK"
and 11 BOON" rw.y be elirr.inated as soon as the bonds and certificates now held under repurchase agreements mature.
Future borrovdngs secured by War obligations should be reported on schedules of 11 Bills discounted--members" - BD 4
and against n:emorandum items 11 MAZE 11 and "MiST" on Form 34
as rr~mber banks' collateral notes or custorr~rs' paper secured
by Liberty bonds and certificates of indebtedness. Discounts
of conn.ercial paper taken under repurchase agreertent rr.ay be
reported as heretofore in accordance with instructions found
in the last paragraph of our ~imeograph letter X-795 of _March
12.
Very truly yours,
Secretary.
Federal Reserve Agent,
FEDERAL RESERVE BOARD
WASHINGTON
M.C.ELLIOTT
COUNSEL
April 8, 1918·
Mr. C. A. HinsCh, President.
The American B.::..nkers Association,
c/o Fifth-Third liationa.l :Ba.nk,
Cincinnati, Ohio.
Niy dear •vlr. Rinsch-:
As requested, I have prepared. from the records in this
office the accou~ying r.1e.t1orand\lJil with reference to State le~islation
affectill6 r.:embership of State ban:l::i:i aud trut>t coLJpa.nies in the Federal
Reserve Systetl·
While I have a.ttei.pted to obtain tl~ latest available infon.--ation with reference to the sta.tus of State la•vs on this subject,
I ba.ve not had an opportunity to have this aua.lyds checked by Couusel for
the various Feder-d.l reserve banks or ·Jy tl1e State authorities and it is
not iailibirly that inaccur&.cies ·.1111 be discovered. I will greatly appreciate it if you, or any of thO$e to \ihOiil this ,_,etlorandw:;l is referred,
will call t~1e atte:ation of this office to any errors that are discovered·
Under tb.e heading of "Legislation Hecessa.ry" in th(j several
States, I ha-va I;~enti oned th~e I;atters which have not been specifically
covered by statute. It is, of course, true that in .tany States the
State authorities ara not prohibited fror.1 disclosine. to the Federal aU:thori ties inforrnation ·,Ji th refere.'1ce to ;,19,.:ber banl:s, a~1d where banks
are parmi tted by State laws to becor.Je Lielilbers of the System they are
necessarily sub"ected to exa;nnation by the Federal authorities. It is
·probable, therefore, that i t is not actually necessary to obtain sor.;e of
the a~iend.;:.ents to State laws that are S"Ugt;ested iu the accoo!lanying rntlorandum. Not ·..\'ishil1g to undertaka to construe the State laws in these
several particulars, I have s~ested as necessary aA.endJ,Jents to the
State laws trwse :provisions which have been adopted by so.;e State;:; but
have not been .:Mpressly included in the statutes enacted by the State
under consideration.
I trust this will :;ive you the infornation desired.
With best
~ishes,
Cordi&.lly yours,
{Sif,ned) i1!. C~ ELLIOTT,
Counsel·
fEDERAL RESERVE BOARD
WASHINGTON
OFFICE OF THE GOVERNOR
April 9, 1918.
X--874
Dear Sir:
The Federal Reserve
~nk
of New York has advised the
Board that it has appointed a special comnittee, composad of men
competent to judge the value of collateral, to examine in detail
lists of collateral deposited by various institutions which have
received governuant deposits, in order to ascertain Wbether the
collateral deposited was Within the regulations of the Treasury
Departuant, the market price and diversification of the collateral.
The Treasury Depa.rtrrant is so well pleased With the report received that it has requested the Board to suggest to all
other Federal reserve banks that they have similar
uade.
e~nations
The Board would request, therefore, that you name a com-
mittee of bankers to exaudne the lists of collateral deposited by
the various institutions which have received government deposits
through your "txmk.
Very truly yours,
(!overnor ..
The GovernO!f
1e4era'l Reserve
~
of
RATIO OF "FLOAT" OF EACH FEDERAL RESERVE :BANK TO EARNIUG ASSETS AND DEPOSITS
APRIL 5, 1918
:
!
~
:
Bank:
All other :
Total
: Clearing :l'iational
Total
:notes & notes:uncollected:uncollected : collection :
Federal Reserve: house
Bank
exchanges
of other
items
items
itenlS
: F. R. batiks
Dr~
:
Cr.
Total
"FLOAT"
•
:Net investment: IATIO OF
~Ratio of "FLOAT" to
:in transfers : "FLOAT" to :immediately avail:included in
:total earning:able Governn~t
:total "FLOAT"
assets
:and batik deposits.
per cent
Per cent.
1,667
2
19,276
20,945
17,688
3,257
4.4
3-4
NEW YORK
14,730
1,909
49,555
66,194
52,268
13,926
2-5
1-9
PHll.ADELPHIA
· z,612
919
36,403
39.934
34,150
5,784
(a) 100
9-3
CLEVELAND
2,002
647
18,583
21,232
4,203
2,923
4.6
5·7
J.4
RIC:m:>ND
2,484
933
20,355
23,772
15,551
8,221
15-9
16.0
ATLANTA
1,315
2,186
14,694
18,195
l~02Z
6,173
534
20.4
13."9
CHICAGO
9,139 .
1,124
59,632
69,895
25,144
44,751
2.4,039
33 .. 0
22.8
795
20,444
21,346
18,298
3,048
1,960
6.2
5~1
119
,10, 767
10,886
4,246
6,640
5,206 '
27.3
13.6
313
162
25,201
25,676
13,111
12,565
4,259
20.4
15-2
81
7.379
11,210
18,670
5,779
12,891
3.377
35· 7
29-8
994
8,724
601
1,003
(b)
:BOSTON
ST. LOUIS
107
MINNEAPoLIS
XAUSAS CITY
DALLAS
SAN FRANCISCO
294,844
10,853
346,997
226,139
(b)
•
120,858
-----------------------------------------------------------------------------------------------------------------------------------------(a) Excess of transfers sold over amount of transfers bought.
(b) Excess collection items.
DISCOUNT
RATES
Discount rates of each Federal Reserve Bank approvec1 by the Federal Reserve Boa.rd up to April ll, 1918.
-----------------------------------------------------------------------------------------~---------------------------------
MATURITIES
DISCOlJNTS
TRADE ACCEPTANCES
:Secur~d
by U.S. c~rtifi
of indebtadnass
or Liberty Loan bonds
:Agricultural: Within 15 days
16 to
l to 6o
: and live- :including menfuer : 90
days
:stock paper :banks 1 collateral: days :inclusive
:ovor 90 days:
notes
incl.
cat~s
:
:Within 15 days
:including n~r.~
:ber banks' co:t:latora1 notes :
16
to
61
to
60
90
. days_
:.
day~
61 to 90
days
inclusive
-----------------:---------------:--!U£lg§!Y~-:!Q~lYQ!Y~-:------------:-----------------:-------:----------:-------------:
4
4
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St Louis
•
; " _:lil'l!JH~jlolis
Y..ansa-9 City
Dallas
San Francisco
4
41
4!
4
4
4
4
4
.
4
4
4~
4!
4!
4~
44
5
5
51.
54
5
51
5:a
5-k
5-k
5-
4i
5z:
4~
41
4!
4!
4~
4~
44
4.;!
5
4~
4!
4.2.
4t
4!
4!
4:1
53
·5~
4l
4
41
4
41
4
41
41
4l
41
:
4
4
4
4~\.
4!
41
4l
¥
4-"-
4l
4
41
41
4
4
4
4l
4.!.
4.1.
.a.
4.1.
44:
~
4
5!1
4:l
4!
t
4~
f'
..
~------------------------------------------------------------------------------------------------------~--------~---~------·
Note 1.
Acceptances purchased in open c.arket, oininJW;l rate
Uote 2.
Rates for COl;ID1odity paper have been r:Jerged
Note
those for
. ... .
co.r.'l!,~ercidl
3. ·In case the 60 day trade acceptance ra. te is higher than the 15
within 15 days will be taken a.t the lower rate.
Note 4.
~•ith
4 per cent.
.v ,,· ... _
"
pdper of ;corresponding naturities.
dd.y discount rd. te, trade acceptances ~a. turing
Whenever application is L:ade by Llember banks for renewal of 15 day paper, the Federal Reserve banks nay charge
a rate not exceeding that for 90 day paper of the sanJe class.
~
* Rate of 3 to 4! per cent for 1-day discounts in connection with the
loan operations of the Govern•,Jent.
RA,.TIO OF"FLOA.T" OF .EACH F$DEBAL RESERVE BANK TO EA.Ih'UNG ASSETS AND I;l.EPOSITS
APRIL 12, 1918
X-882
------------------------------------------------------------------------------------------------------------------------------------------.
.
.
:
!Net investn~nt! Batio of !Ba.tio of "FLOAT" to
:
!
:national Bank: All other ·:
Total
Total
!Hotes and
: :uncol1ected:uncollected : collection
exchanges :notes of
i ter.lS
i tenlS
iteDls
:
! other F .R..
Dr.
Cr.
:
banks
:
..: Clearing
house
-.
.
BOSTON
r·
1,790
Total
lfl!LOATII
: in transfers ! "FLOAT" to :Imc.~diately available
: included in :total ea.rn-:Governn~nt & bank de-·
.
:total "FLOAT" :ing assets !posits.
: per cent
Per cent
_23,077
24,867
21,747
3,120
4.3
3-3
\
'
10,170
2,343
69,210
81,723
56~906
24,817
4.5
3·3
PHILADELPHIA
3,102
759
37,962
41,823
36.709
5,114
8.2
5·5
CLEVELAND
1,770
860
23,707
26,337
22,071
4,266
4.2
3-4
BIClM>ND
1,994
703
22,353
25,050
17,110
7 ,94o
14.4
16.2
ATLANTA
2,234
1,739
19,364
23,337
12,436
10,901
715
36·8
26.2
CHICAGO
7,645
1,475
58,909
68,029
22,132
45,897
16,823
36.2
22w8
468
1,027
20,5?2
22,017.
16,708
5.309
1,575
11-9
182
12,315
12,497
4,809
7,688
7,119
29~2
16.3
1:85
269
22,051
22,505
11,258
11,247.
5.542
18.0
14.8
37
7,130
13,448
20,615
5,921
14,694
5.781
37·6
31.0
924
11278
11 1 997
141 209
11 1 463
2t146
3z020
4.3
.2-1
30,329
17 I 765
317,150
3§3~009
239,270
143.739
41,370
11~7
8 .. 6
NEW YORK
ST .. LOUIS
MINNEAPOLIS
·KANSAS CITY
DALLAS
SAN FRAUCISCO
TOTAL
795
•
9·4
W. P. G. HARDING, GOVERNOR
PAUL M. WARBURG, VICI GOVERNOR
ltx.QPPICIO MIIMBiltuJ
FREDERIC A. DELANO
ADOLPH C. MILLER
CHARLES S. HAMLIN
WU.LIA II G. McADOO
SICR&TAAY OF THE TREASURY
CHAIRilAII
.IOJUI SKELTON WILLIAMS
FEDERAL RESERVE BOARD
COMPTROu.&R Of TU C81lR,E.NCI
H. PARKER WILLIS, SECRETARY
SHERMAN P. ALLEN, AsST. SECRETARY
AND FISCAL AGENT
ADDRESS REPLY TO
WASHINGTON
FEDERAL. RESERVE BOARD
April 17, 1918.
X865
Deal' Sir!
The attention of the Federal Reserve Board has been
called to the iact that several of the Federal reserve banks
have sent circulars to their member banks announcing that they
are prepared to receive on deposit for imrediate credit, subject
to final payment, bill of lading drafts drawn on demand, or at
sight~ or upon arrival of car.
The custom appears to be to charge
the current rate of interest for the period between the date upon
which credit is given and the date upon which advice is received
tba t the draft has been paid. In case 1t is not paid the amount
of the draft is charged back to the JXsmber bank t s account and the
draft is returned to the ~mber bank or is entered for collection
on the books of the Federal reserve bank.
There is grave doubt as to the legality of this practice.
Bill of lading drafts of this character are obvi~sly not eligible
for rediscount by a Federal reserve bank under the provisions of
Section 13 of the Federal Reserve Act since they are not necessarilY
payable within ninety days a.s required by that . Section.
While these drafts may be receivea by a Federal reserve
bank for collection 1 and credit when paynent is received 1 the Fed~
eral Reserve Board is of the opinion that the law does not authorize
any Federal reserve bank to receive such drafts on deposit for collection and immediate credit even though thay ~y be charged back
to the account of the depositing bank if returned unpaid.
It is true that Section 13 ~>ermits Feiieral reserve banks
to receive on lieposit "checks and drafts payable upon presentation"'
but this lan~ge is not construed by the Board as including bill of
lading d~fts payable upon demand~ or at sight, when drawn against
individualsJ fi~, or corporations other than banks.
Fed~ra.l
'l'his question was discussed in circular letter to all
reserve banks cia.ted August 11, 1917.
X-885
- 2-
While the Board. d.esiras the Fed.eraJ reserve banks to
extend every reasonable accommodation to the member banks~ and. to
encourage in every way the use by member banks of Federal reserve
banks as collecting agents, it is necessary, nevertheless, that
the operationG of the Federal reserve banks shall be CQnducted in
accordance with the r.estrictions i:nposed. by tho Foderal Reserve Act.
Federal reserve banks which have issuen circulars (':on-+;rary to the
principles d.iscu.ssed in this letter are, therefore, requested to
withdraw or to amend such circulars in accordance with the suggestions
herein contained.
·
Respect fully 1
Governor.
\
-
....
MEl\J!ORANDUiil TO ACCOLVIP.ANY DIAGRAJ.'v1S SHOWING MOVEi1ENTS OF PREJCIPAL ASSETS AND
LIABILITIES OF ALL FEDERAL RESERVE BABKS.
Figures for continuing the curves on tha charts, with one eAception noted
below, nay be obtained frora the Board's weakly stataDJent of co:r;1bined resources
and liabilities of the twelve Federal Reserve Banks:
Figures for April 12 are obtained a.>1d thd curves r;:ay be continued each
th~ following r;:anner:
week in
A.
CHART OF RATIO OF CASH RESERVES TO NET DEPOSIT AliD lJOTE LIABILITIES.
(In millions of dollars.)
Curve No.1: Net Deposits.
From item Gross Deposits
- - - - - - - - de. duet item: Total deductions from gross deposits - - - - - - - - - Net deposits - - - - - - - - - - - - - Curve No.2: Aggregate Net Deposit and F.R.Note Liabilities.
Add to curve Ho.l (Het deposits) ... - - - - - F. R. notes in actual circulation - - - - - - -
April 12
1,919
385
1, 534
1, 534
1.499
Curve No.3= Total Cash Reserves.
This is item Total Reserves - - - - - -
1,895
Curve No.4: Ba.tio of Total Cd.sh Reserves to Aggregate Het Deposit and F.R.Hote Liabilities.·
This ratio appears in the sta.tei,Jent under the
sacJe heading - - - - - - - - Please note that a special "Per cent" scale is
provided on the chart for curve lJo.4.
B.
0 F
R E S E R V E S
(In nillions of dollars)
C HA R T
Curve Ho.l: Banks 1 Gold Settlement Fund.
This appears in statement under caption Gold
Settlen~nt Fm1d - F.R.:Soard - - - - - - - - Curve No.2: Total gold held with F.R.:Soa.rd including amounts
standing to the credit of F.R•.Ag<:Jnts.
Add to curve lJ o .1 - - - - - - - - - - - - - item Gold Settler.1ant J!,und - F.R.:Soard in the
stateD1ent of F.R.Ae,.:mts accounts - - - - - -
April 12
4o8
408
564
972
\
Curve No.3: Total Gold Reserve agE~.inst Deposits plus gold
held with F.R.Eoard to the crddit of F.R.Agdnts.
To
i tam Total gold h0ld by ba:::iks - Add Item lted;;r.-ption fund - - - - - - - - - - - - and iter.1 Gold SettL3r.lent Fund - F.R.:Ooc.~,rd in
the Agent 1 s stat er.1en t
1,537
-2April 12
Curve No.4: Total Gold Reserves against Deposits and F.R.
Notes.
This is item Total gold raserves in
weekly statement
1, 830
Curve No.5: Total Rasarvo:;s, including Silver, U.S.Hotes, etc.
This is item Total Reserves in the weekly
statement - - - - - - - - - - - - - - - - - -
1,895
C.
C HA R T
E A R N I 1J G
A S S E T S.
(In millions of dollars.)
0 F
Curve No.1: Memb0r Banks' Colla.taral Hotes.
This figure ;vill ·oe supplied to the F.R.Banks
each Saturday ni~ht.
It can not be obtained from the statement -
April 12
316
Curve No.2: Total Discounts.
This is item Bills Discounted for Merabers and
F.R.Banks in the weekly statement -
713
Curve No.3~ Total Bills Held, Including Open liiarket Purchases.
This cor.~rises Total Bills on hand - - - - - Curve No.4: Bills plus U.S. Bonds.
To curve lro.3 (Total Bills on hand) - add U. S.Governn1ent long-term securities
- ---
----
Curve No.5: Bills plus all U. S. Securities.
To curve No.4 (Bills plus U.S. Bonds)
add U.S.Government short-term securities
1,032
1,032
54
1,086
1,086
142
1,228
Curve No•6: Total Earning Assets, including Municipal Warrants.
This is itetn Tota1 Earning Assets in weekly
stater.~nt - - - - - - - ~ • - - - ~ - - - - -
1,231
X-889
\.
Narch 21., 1918.
S i r
You haYe requested mf opinion as to
wh~ther
the
limitations contained in Section 13 of the Federal Reserve Act relating to charges for the collection and
paymant of checks can be held to apply to State banks
which are neither members of the Federal reserve system
..,
nor depositors in Federal reserve banks.
As originally
tio~ i-~
enacted.~
the first paragraph of Sec-
reads as follows:
"Any Federal rase~ bank may receive from
any of its member banks 1 and from the United
States~ deposits of current funds in lawful money 1
national-bank notes, Federal reserve notes., or
checks and drafts upon solvent nerr~er banks., payable upon presentation.~ or 1 sol~ly for exchanga
purposes., may rJceive from other Federal reserve
banks deposits of current funds in lawful money.,
national-bank notes., or checks and drafts upon
solvent m;,mber or other Federatl reserve ·oanks.,
payable upon presentation".
In Section 16, apparently as the basis of a. system
·.
check clearing or collectj.on., it is provided that Federal
~f
X-889.
-2reserve banks i>A~l _r:t::.<?_eA!_e__ o_n_~_e.P.'?...S.!i2-~.J~ar__ E,!_lec_k_s_~~- ~~~s on mt:mber
and other Federal rt;ser.ve banks; and tht:: Federal Reserve Board is authorized to fix by rule the ghargt:!J...:tP_P.t:l••col}.ect~~- P.i.. El~.~t~r ban~_s_!£..2!!Lp~trona
whose checks ~!ear~throu~h ~h~ Federal rt:aerve hank~ charge-for
the service of clearing ~r collection rencter~d by the Federal reserve bank.
It will be noted that under the first paragraph of Section 13 in its original form the only classes of banks which might be de•
positors in and thus clear through a Federal reserve bank were its member.
banks and other Federal reserve banks, and the only checks and drafts specified as receivable on deposit Wt:Jre checks and drafts drawn upon member banks
or upon other Federal reserve banks.
The Ac~s of Septt:mber 7, 1916, and June 21, 1917, so
amended the first paragraph of Section 13 as to t.lXtend the clearing and
collection facilities of the Federal r(:~St;~rve system to· include checks and
drafts generally, to make th(:lae facilities directly available to nonmember
banks and to establish the limitations as ~o charges rt~ferred to in the
question submitted.
The paragraph as so amended reads as follows:
Any Federal reserve oank nay rt:ceive from any of its member banks, and from the United States, dt:posits of current funds in lawful money, national bank notes, Federal rt:serve notes, or checks and
drafts, payable upon prt:sentation, .:a.nd cilso, for collection, maturing
notes and bills; or, solely ~or purposes of exchange ~r of coll~ction,
may rtoCt;:iVe from othbr Federal I'tlStlrVe banks deposits of current funds
in lawful mon~y, n~tional bank not~s, or c.h~cks upon other Ft:deral r~
servtJ banks, and checks and drafts, payable upon presentation within
its district, and maturing notes and bills payaole withi!>. its district;
or, solely for the purpus8S ·1f exchange or ot coJ.ltlction, may rbc~ive
from any nonmember bank o:: trust company dep6si ts of current f"unds in
lawful money, n;:l.tional bank notes, Feder-al reserve nott:s, cht>cks and
drafts payable upon presentation~ or maturing nottls and hills; Provided,
Such menmt:m'ber bank or trust company maintains with the Fedtlral rt:serve
banlr of its district a balance suff.'ici<mt to offset the i t\;;;ms in transit held for its account by the Federal rt:serve bank; Provided further,
That nothing iE. this or any other section of this L\.£1..§~h9-).J. b_tl con~
strued as prohibi t.ing a msmb'3r. or nnnmt::rrbe!..J?ank from making rt:Jasoncible
charges, to be__:Lt;~tt:l"'!lint:d an~ r~~,?t_~t?.Y the FedP-ral R~se~ E! Boaro,
bE-.! 1!! .!l2. ~ ~ ~cet:d .!Q _£,ent.s ,l2!it. ,llQQ. or fr-action therf.lof 1 based
on the total of checks and drafts prestlnted at any one time, [£r~
lection ~ payment ~ checks ~ d~afts ~ rtlmission thi:;;refor by exchange
X-860
""( 3 -
•
or otherwise;
reserve banks.
The
l~itations
st the Federal
as to charges referred to in the question submitted
are contained in the second proviso quoted above.
This proviso, apparently
recognizing an existing right of Immber and nonmember banks to nake reasonable charges for the collection or
pay~nt
of checks and drafts and remission
therefor by exchange or otherwise, provides (l) that these charges are "to
be determined and regulated by the Federal Reserve Board 1 but in no case to
exceed 10 cents per $100 11 1 but (2) that "no such charges shall be .trade
against the Federal reserve banks".
Clearly these limitations apply to national banks, which are compelled
to be n:ember banks, to such State banks as becOILe member banks by voluntarily
• Act 1 and to such
accepting the terms and provisions of the Federal Rese.rve
other State banks as do not becone ttember banks but by becoming depositors
in Federal reserve banks upon the conditions specified avail themselves
directly of the facilities of the Federal reserve clearing system.
The specific question to be deterrr.dned is whether these limitations
apply to nonmember State banks which do not becorra depositors but checks
\
j..
upon whieh may pass through Federal reserve banks in process of clearing or
collection.
The theory and schene of the Federal reserve legislation seems incon-
,,
sistent with the purpose on the part of Congress to subject State banks
j
against their will
tQ Federal control or regulation.
State banks are not
compelled to became members of the Federal ·reserve system or depositors therein.
Those possessing the necessary qualifications are, however, invited to
becorr..e members.
They are not only free to accept o.r decline 1 but if they
accept remain at liberty to withdraw from the system.
(Sec.9}
By Section
13 as amended 1 State banks not desiring to become members or too small to be
X-860
- 4 -
eligible for membership afe likewise invited to share in the clearing and
collection facilities of the system by becoming depositors in Federal reserve banks.
But they may accept or reject the invitation, and if they be-
come depositors rray close their accounts at their pleasure.
It would accordingly seem that the limitations referred to ought not
to be regarded as intended to be imposed upon State banks not connected with
the Federal reserve system as members or
depositors~
against the will of such
banks, unless that intention clearly appears.
The term "nonmember bank" as used in the proviso may reasonably be construed as referring to a nom:r..ember bank that has become a depositor as, authorized in the preceding provisions of the paragraph.
If this term is so
construed, obviously the provision requiring charges "to be determined and
regulated by the Federal Reserve Board) but in no case to exceed 10 cents
per $100 11 1 will have no application to nonmember
depositors in a Federal reserve bank.
State banks which are not
The broad language of the concluding
clause 1 nno such charges shall be xr.a.de against the Federal reserve banksn,
may be construed not as directed against State banks which are not depositors
but merely as specifying a condition upon which checks may clear through the
Federal reserve banks -- in effect a prohibition against the payment of such
charmes by the Federal reserve banks.
Under this construction 1
~mber
banks and nonwember banks which are
depositors in the Federal reserve ban:·J will be subject to the limitations
in the proviso but
nonxr~mber
ject to the limitations.
banks which are not depositors will not be sub-
All 1 hoHever 1 will have to adjust their charges
among themselves and with their own
depositors~
being prohibited from paying such charges.
the Federal reserve banks
.
\
X-860
- 5 -
This construction seems to be in hanmony with the intention of the
framers of the arr£ndment to Section 13 embodying the above nentioned proviso.
The Act of June
Federal Reserve
contained
Act~
21~
1917 1 amending Section 13
and other sections of the
as originally introduced in both the House and Senate
no part of the (second) proviso 1 the section in the proposed
amended form ending with the preceding proviso.
The Senate 1 adopting an
au:..e.odment offered by Senator Hardwick 1 added the second proviso in the f ollowing form:
Provided further 1 That nothing in this or any other section of
this Act shall be construed as prohibiting a member or nonmember
bank from n:aking reasonable charges, but in no case to exceed 10
cents per $100 or fraction thereof 1 based on the total of checks
and drafts presented at any one time 1 for collection or payment
of checks and drafts and rerr~ssion therefor by exchange or otherwise.
(55 Cong. Rec. 2065.)
It was thought
the effect of the Hardwick anendment would be to
recognize the right of any bank upon which checks are drawn to make charges
against the Federal reserve bank through which such checks might be cleared
or collected.
The Hardwick amendment was opposed by the Federal Reserve
Board 1 as appears from letters from its Governor to Senator Owen and Congressman
Glass~
Chairnen of the respective Corrndttees on Banking and Currency
of the Senate and House.
(Pages 207l 1 3795.)
The President also called
attention to the seeming effect of the arr£ndnent in a letter to Senator Owen 1
reading as follows!
I have been a good deal disturbed to learn of the proposed
arr£ndrrent to the Federal Reserve Act which seems to conterr~late
chargipg the Federal r§serJe banks for pay~nt of chegk§ cleared
by them1 or charging the payee of such checks passing through the
reserve banks with a corrmission. I should regard such a provision
as most unfortunate and as almost destructive of the function of the
Federal reserve banks as a clearing house for member banks 1 a function
which they have ;erforued with so rr.uch benefit to the business of the
country.
I hope most sincerely that this rratter tray be adjusted without
interfering with this indispensable clearing function of the banks.
(P. 4083.)
X-860
- 6 -
In
conference~ appar~ntly
as the result of the letters of the Governor
of the Federal Reserve Board and t·he
President~
form1 two changes being rrade by the conferees:
the proviso took its present
First 1 the charges which
u.ember or nonmember banks rray nake were nade subject :, "to be determined
and regulated by the Federal Reserve Board 11 ; and second, the final clause
was added 1 "but no such charges shall be n:ade against the Federal reserve banks!'
In presenting the conference report to the Senate . . Senator Owen emphasized the importance of not
interfe~ing
with the clearing functions of the
Fedsral reserve banks 1 explained that under the proviso as amended
the banks can charge each other for uaking these accorr~odations
if they like 1 ·and they can adjust that to their own satisfaction
with one another, without troubling the reserve banks,
and apparently conceded that State banks not connected as u.embers or depositors with the Federal reserve system could not be subjected to Federal
legislation.
(P. 4083.)
Mr. Glass in presenting the report to the House _ said:
The Congress has no control whatsoever over nonu.ember banks.
It can not regulate their charges and will not regulate them
if this Eardwick anendment should prevail. * * * This Houoe has
no control over the nonuember bank in this matter. Even the Federal Reserve Board has no control over their operations unless
they voluntarily join the voluntary collection system established
by the Federal Reserve Board. (P. 3794.)
and further
No noniDember bank thatdoes not voluntarily join the collection
system established by the Federal Reserve Board will be specifically
affected. No law that we pass here can directly affect the~ The
only way they can be affected is incidental. (P. 3795.)
It thus seems clear that the proviso was understood by Congress as
designed to protect the clearing functions of the Federal reserve banks and
not directed at State banks which have no connection a.s members or depositors
with the Federal
~eserve
system and upon which it was considered the effect
of the proviso could be only incidental.
X-889
•
It may be argued and is probably true that the proviso will
necessarily affect the practice of State banks, though not
menters or depositors, as to making charges for the payment
of checks drawn upon them.
WHh the concentration of reserve balances in Federal reserve banks as required by the
Federal Reserve Act, the Federal reserve clearing syotem may
offer the only adequate a..nd convenient facilities for clearing ,or collecting,checks,drawn upon balks at a distance~:; and
depositors; may find . . it inadvisable to maintain accounts with
banks, upon 'Altl.ich checks; cannot bt> cl~:>ared. or collected. by
the use of these facilities.
The Ft:lderal Reserve Act, however, does:> not
command or; compel these State,banks.to forego any right they
may have under the State, laws ,to maktk charges, in c-onnection
with the payment of checks,drawn upon them.
The Act merely
offers the clearing_,and collection facilit:i.es of the Federal
reserve banks upon specified conditions.
If the State banks
refuse, to comply. with the conditions by insisting upon making_;
charges-, a.gainst:. the Federal reserve banks, the result will
simply b~, so far as,the Federal Reserve Act is concerned,
that .::>ince the lt~ederal r~::serve banks cannot pay these charges
they cannot clear or c oJ.lect checks on banks demandingo such
payment from them.
From what.hasobee.n said it follows that in my
opinion the limitations;containect. in Section 13 relating to
charges for the c0llection and payment of checks?dj not appiy
to State banks QOt connected with the Federal reserve system
as members,or depositors.
Checks,on banks.making such
charges cannot, however, b~;:; clea:o:ed or c ollectt:d through
Federal l'eserve banks.
Respectfully,
(Signed) T. W. Gregory,
Attorney
The President,
The
Whit~:: Hous~::.
G~neral
X-891
RATIO OF "FLOAT" OF EACH FEDERAL RESERVE BANK: TO EARNING ASSETS AND DEPOSITS.
APRIL
19, 1918
------------------------------------~-----------------------------------------------------------------------------------------------------
Total :Net investment: Ratio of
:Ba.tio of "FLOAT" to
"FLOAT" ! in transfers : "FLOAT" to : imnedia.tely avail• included in :total earning~able GovernnEnt &n4'
:total "FLOAT"
assets
:bank deposits.
Per cent
Per cent.
Clearing :Uational funk: All other :
Total
:
Total
house
: notes and :uncollected:uncollect~d:collection
items
Federal Be serve: exchanges : notes of
iteras
items
other
Bank
li'.. .R.. Banks
Dr.
Cr.
..
~
2.-623
3
22,627
25,253
21,133
4,120
6.2
4.2
17,798
2,640
6},506
83,944
65,293
18,651
3-5
2.6
Philadelphia
2,858
607
41,268
44,733
34,682
10,051
16.2
10.3
Cleveland
1,799
794
23,669
26,262
22,817
3.445
Richmond
2,139
869
22,987
25,995
7,9g5
Atlanta.
2,360
1,705
17,077
21,142
6,036
757
18.1
14.0
·Chicago
5,842
1,193
61,i4o
68,175
24,811
43,364
12,635
33.8
22.1
St.Louis
972
25,587
26,964
17 J 670
9,294
1,550
17.4
16.6
Minneapolis
220
6, 667
6, 887
5,913
974
1,197
3·3
2.1
1,524
191
22,099
23,814
13,040
10,774
3,299
1].1
15
6, 612
10,329
16,956
5.950
11,006
3,496
28.4
827
1, 611
141 613
1I,051
11,795
5.256
3,415
8.4
331,569
.387,176
256,220
130,956
26,744
10 .. 8
Boston
New York
Kansas City
lla.l1as
San
__
.:;.,;:;._
Francisco
Total
.
3.8,190
(a)
200
2.9
595
18.2
s.o.
--~---------------------~---------------------------------------------------------------------------------------------~--------------~---
(a)
Excess of amount of transfers sold over amount of transfers bought.
,.
EX-OFFICIO MEMBERS
W. P. G. HARDING, GOV!ItMOR
PAUL M. WARBURG, VJCI rliOVIRNOIJ:
WILLIAM G. McADOO
FREDERIC A. DELANO
ADOLPH C. MILLER
CHARLES s. HAMLIN
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER OF' THE CURRENCY
FEDERAL RESERVE BOARD
WASHINGTON
H. PARKER WILLIS, SECRETARY
SHERMAN P. ALLEN, ASST. SECRETARY
AND fiSCAL AGENT
ADDRESS REPLY TO
FEDERAL RESERVE BOARD
Apr:l.l 22, 1918.
X-892
Dear Sir
Referring to cSrcu.lar letter of April 17 1 X-885, relating
to drafts drawn vv:l th bill of lading a.ttachcd,. payab:~~;~ ~:J.t. ~ight n1· upon
arriYa.l of car, tho Board wishes it 1.:..nderstooti that it :recog::1:i..zes the
importance of haY~.:tJ.g ]"odoral reserve banks provide facilit:i.es for handling bill of lading drafts for ~~ber banks~ and that it regrets that
legal considerations rr.ade i t necessary to :i.nterfere with the establi.shed
practice of some of the Federal reserve banks respecting drafts of this
character.
The Board. is informed that some of the Federal. reserve banks
havo boe.n taking drafts from ID3rnbers payable at sj.ght wHh insti.t\c-~ions
to hold until arrival of car., thus IIa.k~g drafts in effect payable upon
arrival of car, at the same t~.:r.r.e taking f:rom the mcmb0r bank a written
order authorizing any drafts outst.anciing and unpaid after a per;i..od of
sixty days from date of rece:i.Jlt by the· Fedor.;:.l reserve bank to be charged
to the account of the m.;,mbe1· bank.
After con~lting with counsel I wish to advise you th~t no
objection will be rrade to yrur disco1..·.n·t5.ng fox- membez· banks drafts wi+.h
bill of lading attached, drawn :payable "on or before thirty days ait-3!'
da.te 11 ~ "on or before sixty days after date; 1 ~r 11 on or bo!ore ninety days
after date", and any arrangement n:ade by you to cha!'go in·terest for the
actual time the drafts are outstanding will be approved by tho Board.
Very truly yours,
Governor.
FEDERAL RESERVE BANK NOTES
.A.Qril 23, 1918.
51s
Bank
Philadelphia
.......
10 1 s
Oi.~
X-894
HAND
Tota.l
5U 1 s
20's
$320 .. 000
$440;000
$240;000
0
Cl&vttland .••••.... : 1,000,000
z~ooo,ooo
.. ...... ..
z. ooo . ooo
0
200,000
400,000
400,000
0
Atlanta •• , •.....•• :
640 .. 000
480JOOO
480,000
400,000
1,800,000
1,600,000
0
2,680 .. 000
0
0
4,ooo .. ooo
2 .. 699 .. 900
Richmond
Chicago .•••.•••••• : 1,600,000
.•
Minneapolis ..•••.• : 1_.320 .. 000
Kansas City .••..•• :
923 .. 500
9 21 .. 600
854,800
0
Dallas ............ :
627 .. 600
440 .. 000
240 .. 000
0
1,960,000
1,3601000
!'·
: $11 .. 121 .. 600
$7 .. 174,800
San Francisco ••••. : 1,680.. 000
Total ....•.. :$8,311 1 100
...
.
$400 .. 000
$1,0001000
..
5,0C.G.,OCO
1,ooo .. ooo
.
~
.•
..
z,.ooo . ooo
s,ooo . ooo
1 .. 307 .. 600
s,ooo .. ooo
... $27
1
007 1 500
Note-Plates for fives 1 tens 1 twonties 1 fifties 1 and hundreds have been engraved
for both Boston and New York; and fives 1 tons and twenties for St. Louis 1 but no
currency ordered printed.
...
X-895
'iJ.<>.SHlNGTON
~il
13, 1';118
The Govcnor,
1
Federal Reserve Bpard.
Sir:.
By direction of the Secretary, you are advised that the Departoent has referred to the auditor for the Treasury Departoent for settlement the account of
the Bureau of Engraving and :Erinting far preplring Federal Reserve notes during
the period March 1 to ~.U, 1:118, aoounting to ~100,247.~2, as follo,w·s:
Boston •••••••••••••
~
4~,900
New York •••••••••••
lbiladelpnia ••••••• ~~,000
Cleveland. •••••••••• 52!,000
Richmond ••••••••••• 53i,OOO
atlanta ••••••••••••• 55,000
Chicago •••••••••••• 18l,OOO
st. LOUis •••••••••• 2.,ooo
I,1innea po 1i s ••••••
8l,boo
Kansas City •••••••
-•L
;Dallas ••.•.••••••••
~--san b'raucisco •••••• 164,000
657.000
;.;1o
100 ,ooo
202,000
117,000
26,000
42,000
117,000
<.e20
16,000
126,000
11:3,000
101.,.000
16,000
154,000
89,000
·; ,000
18,ooo
51.000
,.JOO
. .U7 ,000
26,000
24,000
57,000
33!000
1.166,000
2,742,000 sheets at
160!000
855.000
~36.56
·@
5,000
2';1 ,000
tlOO
6,000
3,000
1,000
3,000
5,000
4,000
4,000
2,000
. 52.000
2 1000
12.000
Total
170,000
f.'S ,000
323,000
186,000
117,000
326,000
584,000
128,000
52,000
81,000
57,000
3592000
2.742.000
per u •••.......••....•• ~l00,247.?2
The charges c.gainst the several Federal reserve bunks are as follows.
Sheets.
Boston •••••• , ••• l70,000
New York ••••• , •• 35~ ,000
lhiladelpnia •••• 323,000
Cleveland ....... 186,000
Richmond •••••••• l17,000
Atlanta ••••••••• 326,000
Chicago ••••••••• 584,000
St. Louis ••••••• l26,000
Uinneapolis ••••• 52,000
Kansas City ••••• 81,000
Dallas. • • • • • • • • • 57 ,000
San Francisco ... 35'J,OOO
cor.1pen
sation,
~1,861.59
3, ~31.0 5 ·
3,536,85
2,036. 70
1,281.15
3,56~.70
6,394,80
1,401.60
569.40
886,95
624.15
.?"int ing
,405,.50
5,07'J.85
4,570.45
2 ,§_31.90
.tl,655.55
~2
4,612.~0
8,263,60
1,811.20
73s.eo
1,146.15
806.55
Ha.teriuls
Total.
~1,744.20
~6,215.20
3,683.Z4
13,125.04
11,808.88
G,eoo,l6
4,277.52
11,918. ffi
21 '351.£4
4,679.€8
1,901.12
2, ii61. 36
2,083.92
3,$13.~8
1 .~oa. 36
1,200.42
3,344.76
5,991.84
1,313.28
533,52
831.06
584.62
3~931.05
~~7~4-2~0-00---,~~~0~2~4~.~~~~~~~~--~~~~~~~~~~~~~
The Bureau appropriations will be reimbursed in the above ao.ount from the
appropriation, ".?"e}:tlration and Issue of Federal Reserve Note 1 Reimbllrsable''D and it is requested that your Bourd cuuse such indefinite appropriation to be reimbursed in like o.nount.
~ndefinite
Respectfully,
J. H. Hoyle,
assistant secretary of the Treasury.
~
~
ACCEPTANCES :OOUGH'l' Ili OPEN MARKET AliD HELD BY FACH FEDERAL RESERVE BANK
·'
DISTRIBUTED BY
(In
Federal Reserve
Bank
•
:
Member
banks
lion-member
: Hon-membl:3r:
~ Trus'-'' .B.c:q,anies : State Ba.nks :
ON MARCH 30, 1918,
CLASSES OF ACCEPTING INSTITUTIONS.
thousands of dollars.)
:Foreign banks~
: branches and:
Private
: agencies
Total
bank~
X-896
Trade acceptances
Total.
bO}?;ght in ~en n::u.k-et
:Doruestic:Foreign: Total : Acceptances
-------------------------------------------------------------------------------------------------------------------------~--------------12,952
10,189
~oston
12,050
903
1,586
903
375
New York
97,525
Philadelphia
20,578
750
24,447
Cleveland
..
200
:J,385
1,408
130,887
22,052
9
9
22,061
26,615
300
300
26 .. 916
1,371
22,199
7,633
129,478
308
1,155
11
15
1,474
479
23
..
:
10,082
Richmond
9,348
Atlanta
8, 704
St. Louis
Minneapol-j.s
10,809
Kansas Cj. ty
Dallas
San F1•ancisco
200
~
.
50
260
1,262
:
46,758
11,222 :
13,125
680
13,805 :
5.555
125
1,36o
.
..
46;758
8, 704
.
11,222
--..
..
13,805
;
5,680 :
110
. 2,635
64
22,445 : .
1,884
31,179
8,562
318,729 :
9,838
:
8, 704 :
--:~
19,636
.
!
:
10
10,082
.
9.838
lio3
275,144
Total
30
200
45,246
Chicago
I
10,082 :
5,680
23
:5.395
5.395 :
27,839
:7,992
!.015 :
326,744
------------~------------------------------------------------------------------------------------------------------------·----------------
F.EDERAL RESERVE BOARD, .
OF REPORTS AND STATISTICS.
,_,..
lh'WISIOH
.
http://fraser.stlouisfed.org/
Federal Reserve Bank of St.: Louis ,.
~
X-896
A.MOt.T.NT3
4'79
0~•'
BANKZF.S ACCEPT.t.NCE3 HELD BY THE FEDlRAL EESERVE BAN.RS,
Dif,I!'RIBU'l'ED BY AC~EPTORS, AT ClOSE OF BUSINESS
MAP.CH 30, 1918
•
(In tbo,lsands cf dollars)
-----------------------------------------------------------------------------: AGGREGATE LIABILITY
-----~~~~---------------------~=~~~~~-----------------~~~a~~h~~~~~~~~a~g~~O~~
DISTRICT N0.1 - BOSTON
American Trust Co.
Br.own BrotherR
Commonwealth Trust Co.
Federal Tr..:.st Co •
First Nat ior:.a.2 Bm11-:
F~urth Atlar.t~.c 1%tJ.• Bank
International Trust Co.
Lee, Higginson & Co.
Merchants lilat ion:ll :t?anlt:
J. B. MJors & Co.
National Shavnnut Bank
National Union Bank
New England Trust Co.
Old Colony Trust Co.
Second National B8nk
Stat a St. Trust Jo.
Webster & Atlas Natl. Ban.lt
Boston, Mass.
National
Fairhaven, Mass
Bar~
of Fairhaven
Fall River National Bank
Massasoit-Pocassett Natl.Bank
Metacomet National Bank
.,
,"
~,~
10
13,417
672
?0
1,764
2,863
815
7,674
285
II
"
II
"
"
II
II
If
s; 01t~ ·
II
2., S16
1,767
II
II
371
"
Fall River, Nass.
"
"
Bay State National Bank
Merchants Trust Co.
Lawrence, Mass •
First National Bank
Mechanics Nat i(')nal Bank
Merchants National BEU~lt
New Bedford, Mass.
b.gricultural National
Pittsfield,
1Ias~:;.
2·~14
"
l.~ass.
Worcester, I,·;ass. ,
"
National State Capital Bank
ConcC'rd, N.H.
19
]. 1
II
::..co
II
121
It
"
Providence. R.' I.
"
First Bridgeport Natl.Bank
Bridgeport, Conn.
Phoenix National B~nk
:-1;3-rtford Aetna ~Jatl. Bank
Hartford, Conn,
First National Bank of
Putnum, Conn.
II
-----~----------------------------------------------------
Total
J.85
32.8
II
Mechanics National Batik
.Merchants National Bank
Worcester Bank & T.4"1lSt Co.
Prtvidence Fational Bank
247
"I
:3pr.ingfield., I'lass.
Bank.
53
25•1
"
Chapin National Bank
Chicopee National Baru:
Springfield National Bank
Third liat ional Bank
''!ifere11a:nts rational Bank
39
~129
t1
Fitchburg,
Ban!c
4,103
12,065
200
II
"
3'70
9,869
110
"
II
Safety Fund National Bank
Blackstone Canal National
.
II
,-·
....
~
t:.26
t.:))
"0;3
.f-.50
~z
n
250
35
3,513
259
50
480
-2-
X-89i
-----------------------------------------------------------------------------AGGREGATE LIABILITY
Address
Name.
:As A~ceptor:As Endorser
:March 30 :March 30 .
-----------------------------------------------------------------------------DISTRICT N0.2 -NEW YORK
American Exchange Natl. Bank New Y'-'rk City
American Express Company
"
American Foreign Banking
6,297
31
14,531
Cor];>.
AngU South American Bank
Atlantic Nat i anal Bank
Bank of Cuba
Bank of Taiwan. Ltd.
Bankers Trust Co •
Bank of British No. America
Bank of Montreal
1,277
383
105
295
3,407
Bank of New York N B A
Bank of United States
Bank of the Manhattan Co.
Battery Park National Bank
Broadway Trust C6.
Canadian Bank of Commerce
i:'l.~lt;c:..: r·.:--~tlOX~D. l
"
II
4
"
. s~
II
15,aso
"
53
29
3,627
tl
II
,,
5
II
"
"
fl
f1;
Central Trust Co.
Chase National Bank
Chemical National Bank
Chatham & Phoenix lhtionc:~.l
Citizens Fational Bank
Coal & Iron National Bank
Columbia Trust Co.
Corn Exchange Bank
East River National Bank
Equitable Trust Company
Farmers Loan & Trust Co.
Fidelity Trust Co.
First National Bank
Franklin Trust Co.
Goldman Sachs & Co.
Guaranty Trust Co.
Hallgart en & Co .
Harriman Natl. Bank
Heidelbach Ickelheimer & Co.
Importers & Traders Natl. Bank
International Banking Corp.
Irving National Bank
lrving Trust Co.
Kidder Peab•dy & Co.
Ladenburg Thalman & Co .
Lazard Freres
La.wyers Title & Trust Co.
Liberty Kational Bank
London & Brazilian Bank
t.:~;.~~·_;:.[t .5
It
~-_;::1.·
Mechanics & Metals Natl. Bartk
Mere ant ile Bank of ~he ~e.ricas
Mercantile Trust & Depo&it Co.
·Merchants Bank of Canada
Merchants National Bank
Hetrtpolitan Trust Co.
II
II
II
It
II
II
II
II
II
II
II
2,067
152
22
421
1,500
8,740
3,273
1,000
957
·273
2,604
715 ;
134
13,041
4,906
II
II
83
23
37
1,933
6,277
2,725
100
37
3,829
30
II
11
II
"
11
It
II
II
II
5,585
50
443·
2,621
4,627
4~4
'·
"
218
2,507
13
309
II
231
II
450
"
II
6,794
6,088
500
II
416
2 ,o97
12
1,300
3,871
3,109
100
91
496
3,908
259
II
II
II
II.
"
J. P. Morgan & Co.
II
Munre e & co • , John
"
"
"
9,825
122
19 '731
13,813
4,724
711
35.
1,918
671
4,045
27,616
383
350
383
Bank of Ce:nmerce
fatilnal City Bank
rational Park Bank
r au;:1burg & Co . , E
25,581
139
12
II
~rational
64
II
It
613
717
4,957
3,480
1,978
X-696
-3-
----------------------------------------------------------------~------------AGGR~ATE
Name
LIABILITY
:As Acceptor:As Endorser
: ~~rch 30 : March 30
Address
----------------------------------------~-------------------------------------
New York Produce Exchange
Bank
New .York Trust Co.
Philippine National Bank
Royal Bank of Canada
Pacific Bank
Wm. Schall & Co.
Scandanavian Trust Co.
Schultz & Ruckgaber
S eligrna.n & Co • , J. & W.
Unicn Bank of Canada
New York City
II
It
II
II
II
II
II
&
3,786
455
76
21
26
450
:317
"
"
Grace
C•. Bank
1,414
196
Brooklyn Trust co.,
Nassau National Bank
Brooklyn, N.Y.
Farmers National Bank
Amsterdam, N.Y.
CLtizens Com'l. Trust Co.
Buffalo, N.Y.
Rondout National Bank
Kingston, N.Y.
28
Alliance Ba:nk
Security Trust Co.
Rochester·, N.Y.
50
100
Adirondack Trust Co.
Saratoga Springs, N.Y.
First National Bank of
Oneida National Bank
Utica Trust & Deposit Co.
Utica, N.Y.
Northern N. Y. Trust Co.
Watertown National Bank
Jefferson County Natl. Bank
Watertown,
ional Newark
Banking Corp.
~;at
618
307
II
U. S. Mortgage & Trust Co.
250
2:33
II
II
5,077
200
200
15
150
50
273
75
48
"
II
N ,y.
50
6
II
II
65
& Essex
Newark,
N ,J.
100
First National Bank
Perth amboy, N.J.
50
First National Bank
Jersey City, N.J.
61
--------------------------------------------------------------'Iotd.l
DISTRICT N0.3 Cern Exchange
1~at1.
PHILAD~LPHIA
Bank
First National Bank
Fourth St.National Bank
Franklin National Bank
,
Girard National Ba:nk
~;.> ·..
Girard Trust Co.
~·-.&rltit ·Street Natl. Bank
Philadelphia National Bank
Philadelphia Trust Co.
Tra.desmens National Bank
Fidelity Trust Co.
Commercial Trust Co.
Philadelphia, Pa.
II
II
II
II
u
II
"
"
tl
II
"
1,555
175
104
150
2,405
:3,:350
500
1,313
4,167
3,575
50
809
200
100
100
----------------------------------------------------------------11,528
1,185
25.
. ::-896
-----~-----------------------------------------------------------------------: AGGREGATE LIABILITY
Name
:As Acceptor;As Endorser
: March 30
:March 30
Address
~------------------------------~---------~---M--------------------------------
DISTRICT NO.4 - CLEVEIAt"'D
•
o.
Bank of Commerce N A
Cleveland,
tl
First National Bank
II
National Commercial Bank
II
Union Commerce tational Bank
II
Union National Bank
479
3,055
330
.J!,J7l
221
o.
1,129
Huntington National Bank
Columbus , Ohio
100
Citizens National Bank
Gallion, Ohio
First National Bank,
Lagonda National Bank
Springfield,
:Fifth Third
1--~ational
Guardian Trust
Bank
&
Bank
Cincinnati,
7
o.
66
67
II
Savings
o.
50
First National Bank
Troy, Ohio
100
Farmers Deposit Natl. Bank
First-Second Rational Bank
Pittsburgh Trust CQ.
Pittsburgh, Pa.
Toledo,
II
II
--------------------------------------------------'.lo·Gal
100
1,351
445
J
g 1
DISTRICT N0.5 - RICHMOND.
'
'
"-""
.,..,..,.,"""'
va..
American National Bank
First National Bank
Merchants 1-rational Bank
Planters National Bank
Richmond,
Citizens National Bank
Farmers & ~;ierchants Nat l.
Bank
Merchants & Mechanics First
National Bank
National Bank of Commerce
Union Trust Ce.
National Exchange Bank
Baltimore, Hd.
Bishopville National Bank
Bishopville,
Bank o£ Charleston
Peoples National Bank
Charleston, S.C.
Carolina National Bank
Palmetto National Bank
Columbia,
Norwood Nat iona.l Bank
Greenville,
National Union Bank
Peoples National Bank
Rock Hill,
Merchants & Farmers Bank
Charlotte National Bank
Union National Bank
Charlotte. N.C.
673
721
852
1,604
"
"
"
43
II
323
"
1,065
215
150
500
II
II
II
s.c.
II
s.c.
II
s.c.
s.c.
"
"
"
48
725
395
106
243
40
23
79
~.5
142
50
250
483
X-896
-5-
-----------------------------------------------------------------------------: AGGREGATE LIABILITY
:As Acceptor:As Endorser ·
:March 30
:March 30
-----------------------------------------------------------------------------Citizens National Bank
American .Exchange :National
Bank
Greensboro National Bank
Gastonia, S.C.
Murchison rational Bank
\'/ ilmingt on, N •C •
Merchants National Bank
Peoples National Bank
Winston Salem, N.C.
American National Bank
First National Bank
Danville, Va.
Citizens Bank
National Bank of Commerce
Norfolk National Bank
Seaboard National Bank
Virginia National Bank
Norfolk, Va.
Continental Tru&t Co.,
Commercial National Bank
Washington~
Green& boro, N.c.
170
67
II
II
12
II
II
1,350
51
30
30
172
471
1,023
1,480
201
273
II
"
II·
II
D.C.
II
300
50
-----------r--o:--1----------------------------------J..
l,tU. ......
DISTRICT N0.6 - ATLlNTA
Fourth National Bank
Lowry National Bank
Third National Bank
Trust Company of Georgia
Atlanta, Ga.
Central
Albany, Ala.
Natio~al
11
11
11
Bank
American State Bank
Georgia National Bank
National Bank of
rational Exchange Bank
First ~ational Bank
Athens, Ga.
Fourth National Bank
First l~ational Bank
First National Bank
Hacon, Ga.
~: ewmCill , Ga.
Pelham, Ga.
First National Bank
National City Bank
Merchants National Bank
ratinnal Bank of
Savannah Bank & Tru&t Co.
Citizens & Southern Bank
Rome, Ga.
Rome, Ga.
Savannah, Ga.
Bank of Camillia
Camillia, Ga.
Cc.Jli11 Bank & T rub t Co •
Comnercial Trust & Savings
!ank
New Orleans Natl. Bank
Whitney Central Nat 1. Bank
!Jew Orleans, La·.
Hibernia Bank & Trast
II
If
Augusta, Ga.
Jefferson; Ga.
~
.•
11
"
11
"
11
II
"
"
300
200
200
170
50
10
150
130
195
26
652
42
3
95
62
75
622
955
924
30
227
200
449
1,307
75
.
484
X-896
-6-
,
---.--------------------------------------------------------------------------· · AGGREGATE LlARILITY
Name
:As·Accepter:As End•rser
: March 30 : March 30
Address
-----------------------------------------------------------------------------Commercial National Bank
American National Bank
J.~ew Orlt:a.ns, La.
l\.msa.ccw, Fla..
10
. 29
Fourth & First Natl. Bank
Nashville, Tenn.
279
First National Bank
Chattanooga, Tenn.
Bank of Eufala
Eufala, .A.la•
54
-----------------------------~--------------~------
Tot.u.l
DISTRICT N0.7 - CHICAGO.
Continental and Commercial
National Bank
Corn Exchange Natl. Bank
Drovers National Bank
First 1\Tational Bank
Fort Dearborn National Bank
Live Stock Exchange Natl.
Bank
Merchants Loan & Trust Co.
Illinois TruBt & Savings
Bank
National Bank: of Republic
National City Bank
Union Trust C'mpany
Chicago, Ill.
7:(31
1,416
500
5,254
II
II
It
1,505
"
175
5,010
fl
It
200
440
II
II
559
300
"
II
City National Bank
Evanston, Ill.
24
Hyland Park State Bank
Detroit, Mich.
50
Fletcher American Natl. Bank
Indianapolis~
First National Bank
MilwaUkee, Wis.
First National Bank
Dyersburg, Tenn.
Central State National Bank
First National Bank
National City Bank
Union & Planters Bank &
Trust Co.
Memphis, Tenn.
"II
-~·
...
..
Ind.
871
464
50
347
305
94
JBO
"
-·ro~:r~ a~~~---,..:..---------·-----------------
25, ij75
DISTRICT N0.8 - ST. LOUIS
St.Louis, Mo.
Boatmens Bank
Central National Bank
"
II
Mercantile Trust Co.
II
]4echanics American Natl. Bank
Merchants Laclede Nat1. Bank
:t. . .
Miss i&s ip:pi Valley Trust Co.
"
·-~~~·~~l »ank of Commerce
II
.Third :Fa't ional Bank
II
St. Louis Union B~uk
il
II
Ca. ire :!\:at ienal Bank
Fir~t
rational Bcmk
Cairo,
Ill.
V!hi t e Hall, Ill.
205
365
2,270
825
914
1,827
707
1,149
500
13
10
450
250
-7-
J~-896
---------~----~--------------------------------------------------=------------
; AGGREGATE LlABILITY
Address
Name
:As Acoepto~:As Endorser
: March 30 : March 30
--------------------------------------------~---------------------------------
National Bank of Commerce
Louisville, Ky.
American Southern Natl. Bank Louisville; Ky.
First Hardin National Bank
Elizabethtown, Ky.
Planters National Bank
Clarksdale, Miss.
52
69
16
-----~--------------------------------------------'.i.ot<...l
-----
----------------
DiSTRiCT NO.9 - MUTNEAPOL1S
First & Security }iatl. Bank
Midland rational Bank
==7~
Minnes.:polis, r.:inn,
II
30
~00
·,:1--------------------------- ----~--.._-_--:._-_-_-_-· _ _____l: . 3L::C:._·.- - - - -
DISTRICT NO.lO - '-'
KANSAS CITY
Stock Yards National Bank
Omaha, Neb,
First Fational Bank
Hutchinson; Ka.n.
150
8
Fi8
DISTRICT N0.11 -DALLAS
City National Bank
Dallas • Texas
II
Security National Bank
American Exchange Natl. Bank
"
So. Texas Com. Natl. Bank
1,875
800
1;500
Houston, Texas
~ot~l
DISTRICT NO .12 -SAN FRANCISCO
American National Bank
Anglo & London Paris Natl.
,Bank
Merchants ·National .Bank
Bank of California
Cr!»cker National Bank
First Fational Bank
.Wells Fargo Nevada Natl.
Bank
San Francisco, Cal.
La.dd & Til ton Bank
Northwestern National
Portland, Oregon
First National Bank
B~k
II
113
2,401
"
. 6
II
206
"
211
II
291
320
II
Pu:Urna.n, Vl ash.
150
101
66
15
i'ota.l
-~
,r
G:c.:a.nd total
318,729
491
135,758
X-1~6
486
-eAMOUNTS OF TRADE ACCEPTANCES PURCHAS£D IN OPEN MARKET
HEID BY THE FEDERAL RESERVE BAN.KS
DISTRIBUTED BY ACCEPTORS,
AT THE CIDSE OF BUSiNESS MARCH 30, 1918.
(In thousands of dOllars.}
---------~--·-·-------------------~-------------------------------------------
Acceptor
Address
:Aggregate Liability
:As Acceptor, March 30
-----------------------------------------------------------------------------Colonial Products Co .•
Booton, 1Iass
American Smelting Co ••
B• Altman & Co • ,
H. A. Astlett
Armour & Co. ,
.Balfour William::. on Co.,
John 1~unroe & Co.,
Braden Copper Co.,
Wm. Brandt Sons & co.,
Chile Exploration Co.,
Cheney Bros. ,
Dupont de Nemours & Co.,
Duplan Silk Co. ,
w. R. Grace & co.,
Hadden & Co • ,
A. F. Norden & Co.,
B:orimari Arai & Co.,
Nozawa.wa & Co.,
H. W. Peabody & Co.,
Rockhill & Viitor
R. & H. Simon Co,,
Chas. F. Smillie & Co.,
Tupman Thurlow & Co.,
Frederick Vietor & Achelis
F. Blumenthal Co.
New York
II
t1
II
II
II
"
201
24
2
5
21
131
19
150
rt
136
II
150
It
64
rt
l52
II
"
9
1,325
II
j_l5
II
131
II
282
It
9
935
33
"
II
II
II
l
29
"
59
12
II
7
II
Japan Cotton Trading Co., Ltd. Yokohama
48
Doehler Die Casting Co.,
Brooklyn, N, Y.
22
American Trading Co.,
Atkins-Kroll & Co.,
Balfour-Guthrie & Co.,
Gf!lodyear Tire & Rubber Co . ,
Alfred Kohlberg & Co.,
Hambarger Polhemus Co.,
Hind Rolph & Co.,
J, T. Wright & Co.,
M. Phillips & Co.,
·Jolm C. Siegfried
Otis McAlister Co.,
San Fran.cisco, Cal,
85
2
,.
It
2,922
II
4
5
196
5
II
"
"
"
II
II
Total
.532
II
288
2
2
8,015
.
W. P. G. HARDING, GOYIOHOI
EX·OPF'ICIO M&MB!,RA
PAUL M. WARBURG, V1c• Gov•RIIiOR
FREDERIC A. DELANO
ADOLPH C. MILLER
CHARLES S. HAMLIN
WILLIAM G, McADOO
SECRITARY OF THI TREASURY
CHAIRIIAH
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
FEDERAL RESERVE BOARD
WASHINGTON
~897
H. PARKER WILLIS, SEC"ITARY
SHERMAN P. ALLEN, ASST. SECRETARY
AND FISCAL AlENT
ADDR.8S REPLY TO
FEDERAl. RESERVE 'BOARD
.April 23, 1918.
I:ea.r Sir:
Referrin~ to the telegrrun '~1ich ~s sent to your batik this
morning, the Board desires to call your attention to the importance
of gettlllg silver certificates into the Treasury as rapidly as
possible in order that silver dollars may thereby be released to be
broken up and sole. under the provisions of the Pittman Bill which
is no·u a laYT.
Federal Reserve bank notes may be issued· in denominations (
of ~5, $10, $20, $50 and $100 under provisions of Section 18 of the
Federal Reserve Act, and any bond of the United Stat~s which is
availa~e to national banks as a basis of circulation, may be used
.
to secure the circulation of Federal Reserve b~~ notes issued in
these denominations. Federe.l Reserve bank notes of the o.enominetions
of ~~1 or ~$2, however 9 can be issued only against Treasu.ry one-year
notes or Treasnry certificates of indebtedness. I enclose a copy of
the bill as passed, from "M:lich you will see that the net return to
the Federal Reserve bartics on the Federal Reserve notes issued tUl~cr
its provisions shall not be greater than the net.retur.n on ~otes
in lar~er denominations secured by United States 2% bonds, i. e.,
the tax on outstanding circulation rmere it is based on Treasury
certificates or notes bearing a higher rate of interest than 2% Shall
be so graduated as to bri.."1g down to 1-i% the net return on the
circulation.
There were outstanding on March 30, 1918, :,~251,426p43'? in
$1 bills, of which amount ~227,146,278 were silver certificates, and
Jal,903,639 of ;$2 bills, of which amount ~~53,113,164 rrere silver
certific~?.tes, anc"c )691, 706,445 of -;~5 bills~ of nhich. )141., 963 9 ':"42
were spver certifica~es. ...'l.t the same t\me ti'l~re were outstam'.ing
about Jl4,400,000 of :,illO silver certificates, '}15,000,000 of ;20
s,ilver certificates, :)7 ,850,000 of :;$50 silver certificates, anec
~?275,000 of ~~100 silver certific.:..tes. I enclose a tab18 showi:n.::; the
amount and denominations of Federal Reserve bank notes norv on ha.nd
in \Iashington for nine Federal Reserve 'Banlcs. These denominations run
from :j~5 to ,~50. PlDtes h::ve b~en pre?arec: for three other Fed.eral
Reserve banlts, but no notes have been printee~ for thera. The total
amount is comparatively su'18ll~ being only 1f27 ,007 ,500. PLtes are
·in :-_:>rocess of :.;>re;?aration for ~~1 anG. ,;;2 Federal Reserve bank notes,
and. as stated in my telegrafu, it:is, impor~s.nt thc:.t Fedel"at ·Reserve . i ;
banks enter their fol.~· ~al ord.ers for the :;>re~)al~ation of these plates
X-897
-aand for the printing of an adequate supply of notes of the various
denominations, and that they send specimen signatures of their
Governors and Cashiers t.o be engraved on the notes. A Federal Reserve
bank ll'ay pay out banll: notes issueC'~ by a:n,y ether Federal Reserve bank.
The apportionment of b·ank notes between the Federal Reserve bankS as
stated in my telegrJD., is tentative only~ and is based upon the present
outstanding note issued of the banlcs.
The Treasury Department has suggested that in order that the
supply of available sil vcr coming into the general fund shall be
increased as rapidly as possible, the procedure nov1 beillb follmved
as to the conservation of gold should, as far as practic~ble, be
adopted wi. th respect to silver. The method pursued in returning
currency sent in for rederrotion by ir.ember banks should be follow·ed
with respect to silver certificates, and the opportunity should now be
availed. of to extend this Ol')eration to non-member banlcs. The Treasurer
will be instructed in all c~ses where currency is received fOl"
redemption from any banlc., v•hether member or non-member~ to pass a
credit in favor of that banlc upon the books of the Federal Reserve
bal'llr of its district, except in cases v;here barll>:.s specifically demend
that currency be returnct1 • In case it should be ruled that it is not
lawful for a Federal Reserve banlc to enter a credit of this ldnd on
its boolcs in favor of a non-member bank, the Treasurer will no doubt
send the non-member bank his check upon the Federal Reserve baru{ of
its district. Federal Reserve banks are requectec not to celiver silver
certificates against such credits or in p3Jrmen t of such checlcs except
in cases ·where they .:::.re actually demanded or where other forrils of
currency are not available. For the present, this may be tbe case
in respect to silver certificates in the ~1 and ~2 denominations. The
Federal Reserve banlts are requested, also, to pay into the Trcasu!';;
any silver certificates on hand which they feel can be spared and
charge the Treasurer's general account.
As soon as Federal Reserve bank notes are available in the
$1 and ~2 denomil'l.a,tions~ silver certificates in all denominations
Should thus be turned in, but for the present care must be taken not to
create a stringency in the available supply of currency in ~all
denominations through the retirement of silver certificz.tes in the
$1 and $2 denominations \l!l::J.ich it may l1e im,possible to replace with some
other forru of currency. Silver certificates in the denomination!:!of
$5 and aver may no1i7 be rap5.dly replaced by Federal Reserve banlc notes
or by le(;al tender notes, but until Peder.s.l Reserve bank notes can be
printed in the denomine.tions of $1 a:n.d ~2 (~obably si:::: vrecks) they
will not be availo.ble to fill a:ny c.eficiency resulting from the retirement of silver certificates in the ~~1 2nc. $2 deno.min.:'.tio:'ls. The Board
is informed by the T;:easu:::-:r De;::~artmen t~ hOi7ever. that this deficienc;,r
will be made good. as far
possible tc~lr}o::e,rily, at least pending ·
a..s
X-897
-3-
the :preparation of Federal Reserve banl-;: notes in the sn:all
denominations, by splitting all United States notes o£ the denomination of $5 and. over as rc:.::_?ic~y as received at the Trcasur,.-f i:r:to $1 DJlc\.
*~2 denomina.tio:ns. Vlllen t..'IJ.e Federal Reserve bank notes in these sr:-cllol..
denominations are available, it may be the policy of the TreaS'Ur'J to
discontinue the conversion of lcrger denominati·JnS of United States
notes into $1 and $2 bills.
The Bo~~d. is infor.:1ed also that the Treasu~J Department
contemplates the issue of a special form of Tre2.su::-y certificate
rur_,ning not lont;er then one year to be purchasect by Federal Reserve
banks and used. c.s the basis o£ circUlation tmt.cr the r>rovisions of
the Pittm2l1 Act. The Board requests thc.t no ci:!:·cular be sent to your
mm:1bcr banks fo:.:' the ::_Jrcsent rcr:;ardi710 the retirement of silver
certificates, or at lo:~~st until advance co:1ies have been submitted
to the Boc·.rc. it baing deemed. .r:.c'l.vis::,.blc th.::.t tho l.:>.nguage c:.n.C:. the
policy of all Fedcr.:.J. Reserrc :x::.:l:s be uni£orm.
Very truly
:votrs,
'
Governor.
W. P. G. HARDING. GOYIRNOR
EX·OP'P'ICIO MIIM8K118
PAUL M. WARBURG. YICI GQYIII.NOII.
FREDERIC A. DELANO
ADOLPH C. MILLER
CHARLES s. HAMLIN
WILLIAM G. McADOO
SICRITARY OF THI TRIASUII.Y
CHAIR'!""
JOHN SKELTON WILLIAMS
COIIPTROLLiR
MJ -JCO
c)p THI CURRINGY
H. PARKER WILLIS. SECRETARY
FEDERAL RESERVE BOARD
SHERMAN P. ALLEN. Assr. SICll,I,TARY
AND fiSCo\L AIIIHT
WASHINGTON
ADDRK8S IIEPLY TO
FEDERAL. RIUI&:RYI: BOARD
DIVISION OF REPORTS AND STATISTICS
April 24, 1918
Dear Sir:
Referring to circular lette'r X-892 of April 22,
may I request that all Bill of Lading
d~afts
which have a
definite maturity and are discounted by Federal Reserve
Banks be included among bills discounted - Members, on
forms 34 and 38,
al~t
in yQur monthly
~eport
(Form A) of
Investments Purchased.
It is also requested that the banks continue to
use the letters "B/11'
en their discount schedule, form
BD-4, to distinguish bill of lading drafts from other paper.
Bill of lading drafts which do not have a definite
maturity and are accepted for collection only should be reported on form 34 against memora.ndtlm item "Maturing bills
and drafts received for collection".
amounts should be reported
aga.i'n~t
Accordingly, no
Resource item "BISE" on
form 34, "Bill of Lading Drafts."
Yours very truly,
Acting
Assi~:>tant
Secrutary.
Fed0ral Ruserve·Agent,
X-897
X-900
A MEMORANDUM ON ANNUITIES:
People of small means, and especially wage earners, are
mo~e
concerned as to what will happen to them when they can no longer earn
good wages than over any other single fact.
The great difficulty of saving enough and investing it safely
and wisely to provide an income adequate to the needs of old age, looms
up very big before them. Safe investment bri!lgs in such small returns
(for aJample, a one thousand dollar bond brings an annual income of only
$40. to $50.) 1 whereas investrrents which offer good returns are so
ous that the feeling is comr;on among working people that there
adequate way for them to provide
a~inst
ha~rd-
is no
their declining years.
Under these conditions we find:
(a)
Some people hoarding money because they will not
even trust savings banks;
(b)
Some people rraki:nr:; s<wings deposits .. the principal.
of which wlll be nsed in CC'.se of old age or sickness;
(c)
Some people making 11wild.cat 11 investments because they
have been tempted by some alluring prosp0ctus.
To sum up the situation there is a vary great and general
demand for annuities.
This demand has been recognized by the Nations of
Europe ~.and by our Canadian neighbor.
~"':-
The cash requirements of the Government at this time
s~em
suggest the possibility of utilizing tho war savings campaign as a
to
m~thod
of meeting the situation adequately and completely, and providing an annuity, wnich will begin say 1 at the age of 55 1 60, 65, or 70, and which
may be securad say, on January 1st, 1919, based upon the age of the applicant at his last birthday and in exchange for completed' war savings
certificates, uaturing January 1st, 1923, at $100. each.
death at any time before the first
pay~nt
of annuity
In event of
~alls
due all pay-
ments made, with 4% compound interest, ~ight properly be rtfunded to
X-900
- 2-
the heirs, and in the
annuity
becoma~
e~ent
of deatb within the tirst ten years after
paya.b];e the payments would be continued for the full
ten years as the purchaser udgnt direct.
The plan should provide that if the annuitant survived the
ten years, the annuity would be continued so long as the annuitant lives,
and be paid in qu,rterly instalments, i. e., every three months.
As an example, and to ·:!'illustrate what this plan would provide,
let us take the case of an applicant for annuity, aged at the present time,
20 years, and having purchased one completed war savings certificate costing~
say, $83, and maturing at $100. January 1st, 1923.
Instead of taking
the cash on the first of January 1923 for his completed war savings certificate, he should have the option of taking an annuity bond of the United
States Governaant, paying him a life annuity, if beginning at the age of:
55
60
65
70
- $26.54
- 35.81
-
48.16
64.16
with the privilege, that if he should die before the annuity fell due,
all that he had paid to the Gover~ent, with 4% co~pound interest would
be returned to his heirs or
ben~ficiaries.
If he should die before the annuity fell due his heirs would
receive, in lieu of the annuity, beginning when he would have reached
t~-e
age of:
55 .... the lump sum of $375.
60-
II
II
II
t1
65 70-
tf
II
tl
II
499.
II
II
II
11
607.
410.
f
•
X-9JO
- 3 .,.
If this annuitant should die after only one payment of an-
nuity the Government would continue the payu.ents to his wife or heirs,
in quarterly instalment~~ until either; $266.40; $358.10; $481.60; or
$641.60., gu4ra.nt.!od under the Annuity Bond. which rmy have been chosen,
had been
paid~
If on the other hand, this annuitant !3hould survive ten years,
he would receive $26.40; $35.81; $48.1£ or $64.16 per year in quarterly
pa.yn:ents so long as he lives.
An approximate tablo preparad for ualos, which would be substantially the same for females, showing the age of the applicant for
annuity on January 1st 1 1919, and the amount of annuity which he would
receive beginning with the age of 55 and advancing five years up to 70,
illustrates clearly the general plan:
M A 1--L§..
Age when annuity
begin~
Age Jan.
lst. 1919.
1
Year
5
Years
10
"
15
20
II
"
25
n
30
35
II
40
4~
50
55
"
II
.
II
65
11
70
II
53.01
32.41
26.64
43.58
35.81
29.33
24.19
14.78
12.17
10.04
8.22
6.69
tr
60
$74 :5a
62.10
39.45
21.90
18.02
cr
60
55
$56.20
47.98
19.90
16.33
65
$100.58
82.43
68.43
u.
$134.46
110.16
90.27
58.59
75.16
48.16
64.16
52.75
43.34
39.58
32.53
26.72
zz.Oi
35.62
29.17
13.45
11.09
9.08
18.05
14.86
12.26
19.77
16.28
7.39
10.04
8.11
13.42
10.94
. ..
24~10
8.94
The law under which the war eavings plan was put into operation,
provi~es
that no one holder of war savings certificates can invest
to an amount exceeding $1 1 000 naturity value, but this is sufficient to
allo.v a:tlY wage earner to provide a.n.p1y against old age or sicknees, and
would yield ten tines the sums indicated in the above table prepared
X-900
":' 4 ...
for $100. ce.rtificates.
The whole plan presupposes that the
~paign
of thrift al-
ready begun, shall be carried forward so as to effeet a great economic
benefit to the people of our country.
It is safe
t~
assune
fr~ ~ost
recent fi~res that as to 30 millions of people, or say, 25% of our
P9pulati~,
are
wage earners and dependent largely. if not wholly,
on the wages th&y earn.
The plan proposed and explained in the above outline, places·
self *inSQrance, or protection against old age and sickenss, on a
~quarely
business basis.
has already provided,
~d
It avails itself of facilities the Governnent
makes the
~overnment
of the United States the
custodian of people's savings which are repaid in the fonn oi
ann~iiee.
It furnishes a form of protection quite as important and desirable to
the rank and file of wage earners as war risk insurance is to the sailors
and
soldiers.
'
- ..
X90I
COPX
.!q>ril 22, 1918.
~
dear Governor:
I have road '7.Lth nmch interest tho letter of Mr. F. o. Williams,
President o:f tho Natione..l Association of SL1~:x;rvisors of State Ban.'l{s,
dated April 15, 1918, written to you u~ criticism of certain
rcc()D]!lendations made by mo to the Foc.oral Reserve Board in a memorandu.'ll
on tho subject of State and Federal legislation.
It is very evident that the purpose of these recommcmdations
has boon misunclcrstood and I &11 glad to have an opportunity to explain
row position in the matter.
Mr. Williams is of tho ~inion that the adoption of the policy
advocated vill have a very unpleasant and tisturbing result and will
seriously interfere \nth that cordial cooperation vd1idh exists at the
present t~e be~voon tho State and Federal banlcing authorities.
This view is obviously prcdi~cd upon tho assumption that the
purpose of the legislation proposed is, or the probable effect \vould
be, to encroach upon, if not to destroy, tho State systems.
I
I wish to disclaim any intention of recOJ."111nending legislation
that has this end in view, and to state in tho beginning that I :t'ully
agrcu Y.ri th Mr.. Uilliams that no action should be taJ.ton \"hich 'l<~uld
have a tcnc1cncy to Cl.cstroy that ver.J splendid spirit of cocperation
\lhich o:::i sts es bet\7Cen the State ane_ Federal ba:nking au tllori tics, or
which •10uld antagonize tho several thousand State banl~s and trust
companies ~~1idh l~vc rendered and aro rendering such petriotic and
valuable assistance to the Government in the conduct of its fiscal
e.ffairso
I respectfully submit that the adoptiou of the policy recommended
if pr<>p)rly uno.orstood should. he.ve neither effect.
As pointed out in the memorandum reforrcct to, tho Su~:;.~emc Court of
the United States has c.'l..ociced that Cong·ross may vest national banks
with any ~or.vers c~joycd by State corporations which come into competition with na tior:.al banl~s.
l:;pav~·,·me~ely su..:,oog0sted that the pmvers of national banks in
accordance with thir> d.ccision shoulcl be extended so as to enabl(; them to
moot successfully the competition of State banJ.;:s anc1 trust companies on a
basis of cquali ty, and to c~~tcnd to their cuctomors the character of
accommodation desired.
Eg:pcrionce has sho\Vll t.."lat tho bank custcr,1or prefers to deal with
one rather than. vd th several classes of banl::ir:..s institutions.
In
·'
•
X-90!
J>
theory, it may seem advisable to require commercial bari!tf.
confine
their operations to the business of commercial ba:nlcing, to require trust
companies to engage only in the trust company business and to prohibit
savings banks from doing any commercial ba.n£-..ing business.
State corporations, hovv-ever, have found it profitable to combine
these several functions and national ~cs have admittedly been at a
serious disadvantage in meeting competition of State banlm and trust
com1Janies Which have enjoyed much broader corporate po•vers.
In creating the Federal Reserve System, Congress has extended the
privilege of membership to State banks and trust companies. 'l!b.e Federal
Reserv.e Act e:>..":pressly provides that ttsubject to the provisions of this
Act and to the regulations of the Board made pursuant thereto, a:rr.y bank
becoming a member of the Federal Reserve System 9 shall retain its full
charter and statutory rights as a State bank or trust com};any and may
continue to exercise all corporate po...-vers granted it by the State in
which it is created, and ru1all be entitled to all privileges of member
banks."
·The Act, therefore, admits to membership banlcs vJhich admittedly
possess broader powers thru1 national banks. It also recognizes the right
of these banlt:S to t"Jithdraw from the system, while national banlcs are
required to go into liquidation in the event of wi thdrm7al.
Under the circumstances, the State authorities could l1ardly be
said to be justified in re~~sb1g to cooperate with the Federal authorities
if Congress should undertake to broaden the powers of national banks so
as to place them on an equality with other rr.ember banks.
Mr. Williams is opposed to any attempt to pass legislation which
might in a:rry vvay be construed as intendeo. to drive State banking interests
into the Federal Reserve System and seems to feel that any broadening
of national banldng pov;ers should be construed as au effort to accomplish
this purpose.
In my opinion, legislation designed to place all member banks on a
basis of equality should not be constr'~ed as intendeo. to drive State banks
and trust compa.nies into the system, but on the contrary, should forestall
the possibility of legislation hav:l.ng this purpose in view.
In other words, legislation intended to force State bankS into the
system would probably talte the form of some penalty or tax. ~.m.posed upon
those rem.ining out of the system. For e:ltample, i t has been suggested
on more than one occasion that a tax should be imposed on all interstate
checks drawn against banks vhich are not members of and do not clear
·'
X90I
-::;....
through Federal Reserve banks. It is obvious that legislation of this
sort woulo_ seriously impair the activities and. affect the business of
State banks and trust com:,Ja.nies remaining out of the system.
It may be contended that it is by no means likely that Congress
vvill undertake any such radical action. You will recall, however,
that the lack of uniformity in the la\7S of the several States and the
failure of many States to adOj_)t proper safeguards to protect State bank
circulation resulted in 1864 in the passage of a Federal statute
imposing a tax of ten lJer cento on State banJ.,;: circulation, thus depriving
such banlcs of this p:ri vilege. Prior to the passage of this .Act, State
banlcs had been offered by the Act of 1863 the :privilege of issuing
circulating notes against the security of United States Government
bonds~ but failed to avail thmi1Selves of this j?rivilege.
I do not.
mean to imply that it will be necessary for Congress to follow the
precedent established in that case, or that it is liltely that such a
bill will be passed. On the contrary 9 every indication points to the
fact that the barucs outside of the systemwill respond to the appeal
made by the President to become members in sufficient numbers to rrako
any such legislation ucru1ccessary. The banl~rs generally realize
that we are no\7 faced rli th a situation \7hich c~,lls for the scient.ific
utilization of our on.tire bahJ.dng pcvJOrs. 'E1is is not merely a
temporary~ but a continuing si tuat.ion.
~e demands made upon our
ba.xllting resources during tho period of readjustment follovdng tho
war uill in all probability be as great or greater than during the
present time. no radical log.i.slation should., thercfore 9 be necessary to
force the banlcs to become ;,1ombors.
Mr. Williams has obviously overlooked the fact that membership
does not deprive State banks of the right to exercise the powers
granted them by the States, bu.t as above stated, merely involves a
compliance with those restrictions \lhich apply to all member banks and
vfuiCh arc adopted for the protection of ~1ose dealing with suCh balli{s;
nor C.oes it impair the supervision of the State authorities over tho
operations of barU{S and trust companies organized under State law. 'E1e
FeC..cral Reserve Board is authorizeC. to accept the e:x.a.i11inations n:ade by
the State authorities in lieu of those requircC. by the Federal Statute,
and in many, if not most instances? c"..oes accept tl1ese examinations.
I respectfully submit~ therefore? that the legislation recommended
by me should not disturb the cordial relations existing between the State
ancl Federal authorities, and shoulcL not antagonize those in charge of
the operations of State banlcs anc_ trust companies.
In conclusion* it is hardly necessary to say that I fully agree
Williams that the Federal Reserve board
shoulc'c give carGfu1 co11..siCteration. to all aspects of the situation before
1,-1i th the suggestion made by Mr
'(
.
X-90I
reaching any conclusion as to the legislative policy to be adopted.
It v;ill, of courset do this in any event. The memorandum prepared. by
me was offered merely as a tentative suggestion ano. has 11ot been
acted upon by the Board and l]aS not been published" With tho consent
of the Board, copies were furnished to representatives of some of the
committees of tho .American Banlrers Association and to tho Fecteral
Reserve agents.
Under the circumstances~ if an issue can be said to have been
created, it seems to be "Shall Congress broaden the powers of national
banlcs in accordance vvi th tho decision tin
,. the case of Barile v. Fellows 9
or would such an attoml?t have an unfortunate and disastrous effect
upon the State systems and upon the banks v.ihich compose those systems?''
In order that the Board may have before it all facts necessary
to enable it to roach a conclusion, I would suggest t:b.at :Mr, Williams
point out in just what v~y the e~tension of national banlcing powers
vvill encroach upon or have a tendency to destroy the State systems,
and why such systems will be injuriously affected if additional State
banlcs and trust cmnpanics become members of the Fbderal Reserve system.
Respectfully,
(Signed) M. C. Elliott
Counsel.
Ron. W. P. G. Harding 9
Governor, Federal Reserve Board.
EX-OFFICIO MII:MBIER8
W. P. G. HARDING. GOVERNOR
PAUL M. WARBURG, VICE GOVERNOR
W1LLIAM G. McADOO
FREDERIC A. DELANO
ADOLPH C. MILLER
CHARLES S. HAMLIN
SICRITARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
FEDERAL RESERVE BOARD
COMPTROLLER OF THE CURRENCY
WASHINGTON
H. PARKER WILLIS, SECRETARY
SHERMAN P. ALLEN, ASST. SECRETARY
AND FISCAL AGENT
ADDRESS REPLY TO
FEDERAL RESERVE BOARD
April 25, 1918.
1·903
Dear Sir:
1 enclose herewith copy of a n:emorand\Utl submitted to
the
B~rd
by counsel relating to the engraving of the 8lgnatvres
of Federal Reserve bank oU1cers upon the new
Feder~
lteserve bank
notes, together vri.th two forms of power of attorney v$1cb should
be authorized by your board of directors Qr.executive committee
and signed by the Governor and Secretary.
One copy 1 duly executel1,
should be sent to 1he ·Federa.l Reserve Board. and the o-ther retaineli
by your bank for its records.
Very truly yours,
Governor.
(Enclosures)
Tlle Chainxan,
Federal Reserve Bank#
W!"':·'.
c
0 p
X-903a
y
SUBJECT: Issuance of
Federal reserve bank notes.
April 24J 1918.
MEMORANDUM FOR THE BOARD:
Under the authority of Section 18 of the Federal
Reserve Act 1 Federal reserve banks 1 upon deposit with the
Treasury of United States of bonds bea.ring the circulating
privilege, are entitled to receive £ram the Comptroller of
the Currency circulating notes in blank registered and
countersigned as provided by law equal in amount to the
par value of the bonds so deposited. This section provides that such notes shall be issued and redeerr~d under
the en:.e tenne and conditions as national bank notes except·
that they shall not be lirr~ted to the amount of capital
stock of the Federal reserve bank issuing them.
Section 5172 Revised Statutes provides in part
that national bank notes 11 shall state upon their face that they are seCUl'ed by United States bonds *** certified by the
written or engraved signatures of the Treasurer and
Register and by the imprint of the seal of the Treasury.
They shall also e~press upon their face the promdse
of the association receiving the sarr2 to pay on demand,
attested by the signature of the president or vicepresident and .-.:ashier".
The Act of July 28, 1892, provides that •·
"The provisions of the Revised Statutes of the
United States providing for the redemption o! national
bank notes shall apply to all national bank notes that
have been or nay be issued or received by any national
bank notwithstanding such notes rray have been lost by
or stolen from the bank ~ put in circulation without
the signature, or upon the forged signature, of the
Eresident or Vice-President and Cashier".
Under this provisiQn the national bank is liable to
an innocent holder whether or not the note is signed by the
proper officers~ and it has been custorra.ry for national banks
to have these signatures printed or · stamped on notes issued,
The question has been raised whether tta signatures
of officers of Federal reserve banks can be . printed on Federal
reserve bank notes by the Bureau of Engraving and Printing
before they are actually delivered to the Federal reserve bank.
X-903a
- 2 -
In view of the fact that the statute ~equires these
notes to be delivered by the Comptroller in blank it w~ld seem
.to be necessary for delivery to be made before the signatures
can be printed thereon.
Inasnuch as one and two dollar notes have been ~thorized
have to be issued in great numbers~ it is very important
• that some arra.ngemen·t shrold be nade which will render it unneces•
sary for the officers to sign or affix facsimile signatures to
these notes after they are shipped to the banks. To meet this
situation it is suggested that each Federal reserve bank~ under
authority of its board of directors, causa to be executed a power
of atto~ey. in form substantially similar to thai whicii is attached. a
The Comptroller could thereupon designate some representative to
receive and receipt for thee& noto& and. to imoodia.tely redeliver
thom to the Director of.tho Bureau of Engraving and Printing as
tho agent of tho Fe·doral resa:r.ve bank to wbioh they are iss-ood,
accepting thorofor a receipt of such agont. Tho Director could
thon cause tho facsw.lo signaturoe to be printoa. on the notss
and Ship them to tho issuing bank.
and ~ill
While, in my opinion, this
~thod
would constitute
a substantial compliance with the provisions of the Aot, it
seems nocossary to call tho Board 1 s attGntion to the fact that
a bill has been introducod amending the National Bank Act so as
to authori:~Se national bank notes to have the signatu.ree of the
pr.opor of f:l.cers ongravod. t.hereon. !f this bill should be voted
on and· should fail to booome a. la.w, the a.r.gwmnt might be mde
that this action tndica.tes an intention of the part of Congress
not to permit this to bo done. As the n.a.ttor now stands this
plan oould 1 in my opinion .• bo legally fo:Uowed.
Respectfully,
(Signed) M. C. ELLIOTT.
Counsel.
X-903b
KNOW ALL MEN BY THESEPRESENTS 1 Whereas, Se,ction 4 of the Fcders.l
Reserve Let in onnm0rating tho cvrpora'te powers of Federal Reserve Banks,
providos that such ban\:s when duly organized shall hKv-e povvo;::
~
**********************
:•Eighth. Upon deposit with the Tre<:'.surcr of the United States of
any bonds of tho ·United States in tho rr.anncr provided by existing law relating to national bank~~ to receivo from the Comptroller of the Curroncy
circulating notes 1 }.:.~J.-~bl~rrtk, registered and countersigned as rrovidod by
law, equal in amount to the par. va.lu6 of. the bonds sc deposited,, such notes
to be issued under tho samo conditions e.nd provisions of law a.s n~late to
the issue of circulating notes of national banks secured by bonis of the
the United Statos bearing tho circulad.ng privibgo, oxr.opt that tho issue
of such notos shall not bo limi tod to tho capital stock of such Federal.
Rosorvo Bank."
ifil'hO,LcM this ba.nk has dopositod with tho Treasurer of tho United
Statos lxmds boaring tho circ-ulating privilGgo t.o the amount oi $_____
and has applied for an i::;sue of FGdf9ral reserve bank notes of the sazre
amount in denominations he~einafter set forth;
Whereas by resolution of the board of direotors of this bank
authority has been given to arrange with the Bureau of Engraving and Printing at Wa:shington to engrav~ the :facsimile signatures of the Governor and
Cashier of this bank on such notes.
NOW 1 THEREFOHE, BE IT RESOLVED:
Fi:rst, th<i"t the Com_!)troller of the GJ.rrency be, and he hereby is,
authorized and requasted to deliver to the director of the Bureau of Engraving and Printing $
in .aotes of this benk, r·egister~d and
countersigned in blank, in the following denominations and amounts:
(Insert here the ni.lffiber, denon:.inatlons and arr.ount of notes)
SeJlQ.n,S, that the director of the Bureau of Engraving and Printing is hereby constituted. a.nd appointed atiomey in iact for. this bank and
is hereby authorized and empowered to receiV!!} for the accoun1; of this bank,
and to execu.te a proper receipt !he::efor as its agent, the foregoing notes
and to engrc=:.ve ther,.,on the facsimilie signatures of
_ and ----.J
it being fully understood and agreed. by this bank that the dGlivery to the
director will be deen:ed. and considered a delivery tv this b::Lr..k .• and that
eaid director shall hold and tra:tsmit such notea of this bank as its duly
authorized agent or attorney in fact.
In witness wherepf) the Federal Resurve Bank of
has
caused this power of attorney to be signed by its Governor 1 its corporate
seal attached, attested by its Socteta~ on thia _____ day of
1918.
(Seal)
Governor.
ATTEST: ·
Secretary.
X-904
April
26~
1918.
To the Officers & Employees
of the Federal Reserve Board:
By direction of the Federal Rose:cve Board,
tho offices of tho Board. will be closed at 12 o 1 clocl:: this
date in order to enable its moniliers and staff to participate
in tho Liberty PSJ,radc.
Arrangements have been made by the Chief
Clerl-c of the Treasury Department for the members of the
Board to march 1:;i th tho Lssi sto.n t Sccretari es of tho Treasury 9
and for tho members of the staff to march with the staffs
of tho offices of the Assistant Secretaries.
Treasury Department instruct ions are
attached hereto.
Actil'lg Assistant Secretary.·
EX•OP'FICtO M•Ma.RS
W. P. G. HARDING, GOYIRNOR
PAUL M. WARBURG, VICI GOVIRNOR
WILLIAM G, MCADOO
FREDERIC A. DELANO
ADOLPH C. MILLER
CHARLES S. HAMLIN
SICRITARY OP THI TRIASURY
CHAIIJIAN
JOHN SKELTON WILLIAMS
COMPTROL).IR
FEDERAL RESERVE BOARD
or THI CURRENCY
WASHINGTON
H. PARKER WILLIS, SECRETARY
SHERMAN P. ALLEN, AsST.SICRITAIY
AND FISCAL AGINT
ADDR.88 RIEPL.Y TO
FEDERAL. RESERVIE BOARD
DIVISION OF REPORTS AND STATISTICS
X-906
April
27~
1918.
Dear Sir:
In view of the increasing number of branches
of Federal Reserve B~ks~ it becomes necessary to adopt
a uniform method for the submission of daily statements
of resources and liabilities on Form 34.
l~y I request that in the future all Federal
Reserve Banks which have branches, forward to our Statistical Division each day, one consolidated report
showing the combined resources and liabilities for the
bank and all its branches. On Friday and on the last
day of each month a separ~te mail report should be furnished for the bank and for each branch in addition to
the consolidated mail report which is to be furnished
each day. No change should be made in the present method
of telegraphing Friday night fiGures to the Federal Reserve Board for publication in its weekly statement,
nor, for the present, in the scope or form of the daily
telegrams giving the principal assets and liabilities
of the banks and branches.
Very truly yours,
Secretary.
Mr.
Federal Reserve Agent,
505
X·-90'.'
W. P. G. HARDING. GOYIINOR
PAUL M. WARIURG. YICI CiiOYIINOR
FRIDIRIC A. DILAllO
ADOLPH C. MILLER
CHARLES s. HAMLIN
WILLIAM G. l!cADOO
IICRITAiY OP T~l TRitMUftY
:CH.URIIAR
JOHN SKELTON WILLIAMS
COMPTRO:LLIA OP THI CURrtiNC:Y
H. PARKER WILLIS. SICRITART
SHERMAN P. ALLEN. AliT. SICIIYAIY
FEDERAL RESERVE BOARD
AND FIICAL AeJNT
WASHINGTON
A.DDRKS8 IlK PL.Y TO
I'IIDERAI. RI:SIIRVI: •OARD
April 27, 1918
DIVISIONU.JVeeRTS AND STATISTICS
Dear Sir:
Seme confusion has arisen at a number of the Federal Reserve
B...Dka as to the proper method of
reporting iterns handled by both the
parent bank and its branches, on monthly,report of clearingtperations,
Form 50.
In order to insure uniformity of reports it is requested that
the procedure outlined below be followed by all banks:
Items sent by the parent bank to one of its branches should
1.
be shown in the report of the parent bank under.the caption
"Average number and amount of items handled daily by both
parent bank and branches •11
11... the report of the branch these
items shot.lld be shown against one of the first two captions, as
the case may be, and should not be included with ;, Items handled
by both parent bank and branches."
2.
Branch banks should report items drawn on banks in the city
where the branch is located against caption "Banks located in
the Federal Reserve city •"
3.
In consoliaating reports from its branches with ito ovna report the parent bank should incluue all items drawn on banks in
cities where a branch bank is located with items drawn
~n
"Banks located in this district outside Federal Reserve City."
4.
Items sent by a branch to the parent bank
~;;hould
be shown in
the report of the branch with iterr-w handled by both parent bank
'
X-907
-2and branchAs whHe the parent bank in its report will make the
proper distribution according to the location of the banks on
which the items are drawn.
5.
In case one branch sends items to another branch of the same
Federal Reserve Bank, they should be handled on Form 50 in the
same manner as if sent to the parent bank.
By adopting the procedure outlined above, items handled by
6.
both the parent bank and one of its branches, or by two
same
branches in theLFederal Reserve district, will be included twice
in the total items handled, but this duplication will be apparent on the face of the report.
For the System as a whole the
aggregate of items drawn on "Banks located in the Federal Reserve City" and on "Banks located in this district outside of
Federal Reserve City" will represent the actual daily average
number and amount of items handled without any duplications.
May I also request that you inbtruct your transit department to furnish us with a copy of the monthly report of the parent bank and of each
branch separately in addition to the consolidated report showing the
daily average number and amount of items handled by the bank and all its
branches.
Yours very truly,
Secretary.
Mr.
Federal Reserve Agent,
X-909
RATIO OF ."FLOAT" OF EACH FEDERAL RESERVE BAl\K TO EARNING .b.SSL'T3 AND DEPOSITS.
APRIL
26, 1918
----------------------------------------------------------------------------------------------------------------------------------------.
:net im•est.ment: Ratio of
:Batio of "FLOAT to
Clearing :National Bank: An other :
Total
:
Total
11
f
house
Fedara.l Reserve: exchanges :
Bank
!
:
notes and
notes of
other
F.R.Eanks
:uncollected:uncollected:collection
. items
items
items
. Cr.
:
Dr.
Total
:
: in transfers ~ "FLOAT" --to : imnediate).y availincluded in !total earning:able Governn~nt and
total "FLOAT":
assets
:bank deposits.
:
Per cent
:
Per cent
FLOATn .
11
:
2,666
18
18,762
21,446
17,088
4,358
6.. 0
4.2
32;415
2,037
52.742
87,194
52,733
34,461
6.2
4.6
Philadelphia
3,748
747
34,747
39,242
31,939
7,303
200
10.8
7-5
Cleveland
2,056
595
29,901
32,552
24,041
8,511
515
8. 7
6.5
Richmond
1~650
936
23,045
25,631
17.638
7.993
.14-5
16.1
Atlanta
1,644
1,399
16,931
19,974
7.569
601
24.0
Chicago
5,628
1, 568
42,625
49,821
27 ,183
13,288
18.3
17-9
13 .. 2'
272
1,118
30,232
31,622
19,316
12,306
1,800
21.2
19-7
317
7,480
7.797
5,508
2,289
2,067
4.8
57
155
25,159
25,371
11,526
13,845
6,974
7·5
21.4
17.0
l>allas
107
7,283
13,321
20,711
8,802
11,909
4,801
30.8
27.6
San Francisco
986
1,764
14,420
17,170
11,54o
5.630
5,838
9.2
6.2
143,357
35.684
Boston
New- York
St.. Louis
Minneapolis
Kansas City
TOTAL.
51,229
378,531
(a)
8.4
----------------------------------------------------~------------------------------------------------------------------------------------
(a)
Excess collection i ter.m.
\Y. P. G. HARDING, GOVERNOR
EX·OFFICIO MBMBI:RS
PAUL M. WARBURG, VICE GOVERNOR
FREDERIC A. DELANO
ADOLPH C. MILLER
CHARLES S. HAMLIN
WILLIAM G. MCADOO
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
H. PARKER WILLIS, SECRETARY
FEDERAL RESERVE BOARD
COMPTROL!..ER OF HIE CURRENCY
SHERMAN P. ALLEN, ASST. SECRETARY
AND FISCAL AGENT
ADDRI:SS REPLY TO
WASHINGTON
FEJ:Ill:RAL. RESERVE BOARD
April 30, 1918.
X-911
Dear Sir:
The Board has been advised that since January 1, 1918,
the cost to the Federal Reserve banks· for the engraving of plates
has been $130. for each original and $120. for each duplicate plate.
As 50,000
sh~cts
are about the
rrax~
number which can be printed
before a plate becou.es too vvorn for further use, several duplicate
plates will be required before tho order recently placed by the Board
for the printing of $1001 000,000 of Federal Reserve bank notes of the
!ht dollar denomination for
completed.
tht~
various Federal Rese!'Ve banks, can be
In order to faci1itate the printing of these notes, there-
fore, the Board deems it advisable that additional plates be prepared
fer the respective Federal Reserve banks as follows:
Boston
New York
Philadelphia
Cleveland
Richnlond
Atlanta
l
11
2
2
l
l
Chicago
St. Louis
Minneapolis
Kansas City
San Francisco
4
l
1
l
1
The law require~ that the expehse Of preparing these plates
l
I
rrust be borne by the Federal Reserve banklil.
ln order tQ savQ time 1 the
Board has entered an order for the preparation of the plates for the
respective ·Federal Reserve banks indicated above, and weuld requast that
you file a formal order for the preparation of the additional plate or
plates
£~r
your bank, in confirrration of
th~
Board's action.
Very truly yours,
Governor.
W. P. G. HARDING, GOVERNOR
PAUL M. WARBURG, VICE GOVERNOR
EX-OFFICIO MEMBERS
FREDERIC A. DELANO
ADOLPH C. MILLER
CHARLES S. HAMLIN
WILLIAM G. MCADOO
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
H. PARKER WlLLIS, SECRETARY
SHERMAN P. ALLEN, ASST. SECRETARY
AptD fiSCAI.•AGENT
FEDERAL RESERVE BOARD
WASHINGTON
ADDRESS REPLY TO
FEDERAL. RESERVE BOARD
X-912
•
Dear Sir:
At the raquost of tha Traasury Dapartmant, tho Board
has entered an ord6r for the printing of $100,,000J(;00 of F-3deral
Reserve bank notes in the five dollar deuomi.nation in order to
establish a reserve supply of notes of that denomination; proportioning the amount of notes for each bank in aceordanc0 with
the percentages enumerated in my telegr~"1l of April 23rd) the
amount to be printed for each bank being as follows:
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
$ 6,000,000
32,000,000
8) 000 000
8,000,000
,I
5,000~000
4,000;000
15, 000,, 000
5)000,000
3,500~000
5,000,000
2, 500 .. 000
6,000)000
Several of the Federal Reserve banks have req·..Aest.ed the
Board to have printed addJ. tional FedrH'al Reserve bank n0tcs of
other denominations, chiefly cnes and itwos, and in orcl.?j,~ to facil;i.ta te the printing of such other addi tiona] bank notes as rr:ay ·bo
necessary, will you kindly advise rr.e of the am•)unt of n':ltes, oth!'3r
than those of the five dollar denominatinn, which you wish printed
and rraintained on hand in Washington for your bank, in connection
with the plan for the retirement of silver certificates as outlined in my letter of the 23rd ultimo.
Very truly yours,
Governor.
The Chainr.a.n)
Federal Reserve Bq.nkJ
W. P. G. HARDING, GOVIRMOR' ·
PAUL M. WARBURG, VIC! GOVERNOR
FREDERIC A. DELANO
ADOLPH C. MILLER
CHARLES S, HAMLIN
EX·OFFICIO MEMBERS
WILLIAM G. McADOO
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
H. PARKER WILLIS, SECRETARY
SHERMAN P. ALLEN, ASST. SECRETARY
AND FISCAl. AGENT
FEDERAL RESERVE BOARD
WASHINGTON
ADDRESS REPL. Y TO
FEDERAL RESERVE BOARD
X•915
May 1, 1918.
Dear Sir:
The Board ruled sometime ago that the books of Federal Reserve
banks could be closed for the purpose of paying dividends, on the last
business day of June and December of each year.
section '7 of the Act
provides that "After all necessary expenses of a bank have been paid
or provided for, the stockholders shall be entitled to receive an annual dividend of 6fo on the paid-in capital stock, which dividend shall be
cumulative".
Dividends are permitted to be paid at this rate, semi-asmuttlly,
for the greater convenience of the member banks, and the Board holds that
this does not require that payment to the government be made at the semiannual dividend periods.
Therefore, in making your dividend distributions, either current
or cumulative, on June 3oth, no addition should be made to the surplus
of your bank and no return need be made to the government.
These matters
can be adjusted on the last business day of December, at which time all
depreciation can be provided for and the proper amounts carried to the
surplus fund and paid over to the government.
It is, of Gourse, under•
stood that at your semi-annual dividend period'in June you should charge
off the expense account as shown by your books, as well as any ascertained
losses, in order that no dividends may be paid which have not actually
been earned.
very truly yours,
Governor.
The Chairman,
Federal Reserve Bank,
X-917
(Copy)
April
2.9~
1918.
The Governor,
Federal Reserve Boardo
Sir:
By direction of the Secretar.y you are advised that pursuant
to and under authority of the provisions of section 1 of an Act of
Congress entitled ".An Act to conserve the gold supply of the United
States; to pennit the settle1r..ent in silver of trade balances adverse
to the United States; to provide silver for subsidiary coinage and for
commercial usc; to assist foreign gover.rur.ents at vmr with the enemies
of the United States: and for the above purposes to stabilize the price
and encourage the production of silver", approved April 23, 1918, the
Secretary is causing standard silver dollars to be mol ted or. brolmn
up and sold as bullion. T'.ae total operations in this respect unc:.;r
said act may not exceed the melting or breaking up of 350,000,000
standard silver dollars. For the illJ.tia1 operation under this provision of the act 2.9 9 737,374 standard silver d.ollars have been withdrawn
froln the general fund of the Treasury in order to provide bullion containing 2.3,000,000 fine ounces of silver. Further operations and consequent further withdrawals of standard silver dollars from the general
fund will depend Upon the retirement of silver certificates from circulation· with the resulting release of atandard silver dollars, the amount
of standard silver dollars actually in circulation being a negligible
quantity. At the present time there are approxirrately 460,980,783
standard silver dollars held in the Treasury, 12,779,784 being held in
the general fund, and 448,200,999 being held in trust against silver
certificates in circulation. On March 31, 1918, the date of tho last
statement available, the follovdng silver certificates \rero in circulation:
.Amount
:Denomination
$1
$2
$5
$10
$20
$50
hoo
$500
$1000
Less amount held in Treasury,
Net amount in circulation,
~f,227 ,146,278
58,113,164
141,963,742
14,440,081
15,082,6SO
7,851,635
274,920
15,500
16,00Q.
$464,904,000
12...,102, 236
':M52 801 764
'll""
'
'
,
x-
..
917
- 2 -
During the ye~r ended M~rch 31, 1918, silver certific~tes were received
at the Treasury for redemption (th<J.t is for e·"chnnge) as follows:
Denomination
$232;183~539
$1
~2
Total
~1
$5
Amount
and $2
63;389;371
572,910
lHl;-645,665
&414,218,575
$ 3,920,170
4,757,080
~295,
TOt!1l $1, $2 ~nd $5
$10
$20
2,271~775
$50
$100
17' 900
500
$500
Tot~1 $10 ~nd upwards$ 10~967,425
Totn.l all
$425,186,000
It will be noted thqt 70f, of the redemptions were of the $1 nnd t2 de28% of the C5 denomin~tion n.nd only 2f, of the denomination
$10 and upwards.
:r..~onthly redemptions throughout the ye~r ::tver:-tged
about $35,500,000.
nomin~tions,
From the nbove it v1ill be apprecin.ted th'lt in order to mnke
stnndnrd silver dollnrs nvnilnble for bullion silver certific::ttes of
the $1, $2 and $5 denominations must be retired.
As you know, the act
in question contempln.tes the replacement of such circulntion with Federal Reserve Bank notes of appropri'lte denominations.
Anticipating
the retirement of silver certificates of the $5 denomination the
Comptroller of the Currency hqs teen requested to establish a reserve
stock of $loo.ooo,ooo $5 notes available for issue by the Federal Rese~ve Banks, the rqtio of printing for each bank to be determined by
Action accordingly hqs been taken.
The comptroller of
your Board.
the Currency is now being requested to establish a similnr reserve
stock of printed notes of the $1 uhd $2 denomination bf n.pproximntely
$250,000,000 in such proportion for each bank as your Board may suggest.
Inviting '1ttention to the provisions of section 5 of said
act the Federql Reserve Bo'1rd is hereby requested to arrnnge for the
several Feder!'ll Reserve B··mks to issue Federal Reserve Bctnk notes at
such times and in such amounts and in such denominations as silver
certific~tes m'ly be withdrawn from circul'1tion, or in such other denominations '1S the need therefor later m~y develop.
The actu'll issue
requirements will be confirmed to you from time to time as silver cer•
tificates are retired.
And in order to secure such issues of Federal
x-917
-3-
Reeerve Bank notes it is requested that the Federal Reserve Board
arrange for the purchase by t.he several Federal Reserve Banks of certificates of indebtedness of a special issue to be made for the purpose, which will bear interest at the rate of two per cent per annum
payable half-yearly, and which will mature one year from date of issue,
but which will be subject t·o redemption at the pleasure of· the Secretary and to renewal without notice as provided in said act, and which
will be issued to the several Federal Reserve Banks in such amounts
from time to time as the Board may determine upon notice from the
Secretary of the amount of silver certificates withdrawn from circulation.
While it is not possible at this time to state the total
amount of standard silver liollars that ultimately will be melted or
broken up under authority of section 1 of said act, it is suggested
that the program now be arranged for the maximum possible operation,
and which should provide for the ultimate issue of approximately $200,000,000
Federal Reserve Bank notes of the ~1 denomination~ ~50,000,000 of thP. $2
denomination and ~100,000,000 of the $5 denomination, a total of
~350,000,000.
By taking this action, Federal Reserve Bank notes may be
issued without delay as they may be required to replace silver certificates retireq, the retirement may be fa¥ilitated and contraction of the
currency avoided.
·
Respectfully,
(Signed)
R. C. Leffingwell
Assistant Secretary of the Treasury.
(COPY)
X- 918
FEDERAL RESERVE
B o·A R D
Office of Counsel
May 1, 1918.
Subject:
Cost of printing Federal reserve bank notes.
MEMORANDUM .EQ!i H
BOARD:
In the accompanying letter Governor McCord
of the Federql Reserve
B~nk
of Atlanta
~sks·whether
the cost of printing Federal reserve bank notes will
be paid by the Comptroller of the Currency out of
funds provided for that purpose.
Under the terms of the Act these notes are
issued under the same terms
~nd
conditions as nation-
al bank notes.
It is my understanding that national banks
are required to pay the cost of the plates but that
the distinctive paper and printing of the notes are
paid for out of a fund which is reimbursed by taxes
on circulation.
Respectfully,
M. C • ELLIOTT,
Counsel.
W. P. G. HARDING, IIOYIRNOR
EX·OFFICIO MEMBERS
PAUL M. WARBURG. VICI GOVERNOR
FREDERIC A. DELANO
ADOLPH C. MILLER
CHARLES S. HAMLIN
WILLIAM G. McADOC
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
H. PARKER WILLIS. SECRETARY
SHERMAN P. ALLEN, ASST. SECRETARY
AND FISCAL AGENT
FEDERAL RESERVE BOARD
WASHINGTON
X-919
ADDRESS REPLY TO
Kay 3, 1918.
Dear Sir:
I enclose herewith copy of a letter
~hat
has
been sent to the Chairman of the Federal Reserve Bank of
San Francisco, which may be of interest to your directors
at sometime in the near future, if not at present.
Very truly yours,
Governor.
The Chairman,
Federal Reserve Bank,
FEDERAL RESERVE BOARD
EX~OP'FICIO
W. P. G. HARDING, GOVERNOR
PAUL M. WARBURG, VICE GOVERNOR
FREDERIC A. DELANO
ADOLPH C. MILLER
CHAR~ES S. HAMLIN
MEMBERS
WILLIAM G. McADOO
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER OF' THE CURRENCY
FEDERAL RESERVE BOARD
X-919-A
WASHINGTON
H. PARKER WILLIS, SECRETARY
SHERMAN P. ALLEN, ASST. SECRETARY
AND FISCAL AGENT
ADDRESS REPL. Y TO
FEDERAL RESERVE BOARD
May 2, 1918.
Dear Sir:The Board has carefully considered your letter of April 20th, referring
to land which has been acquired by the Federal Reserve Bank of San Francisco
on which it proposes, as conditions permit, to B.rect a building for its'useYou state that your present plans are to have your new bank building
occupy only that part of the lots acquired which has no buildings upon it, and
that it is your intention as to the remaining part of the block upon which
there are buildings, to rerit the property until such time as it may be needed
for an extension of your bank building.
You state that you wou~d like to
separate the ground value, estimated on a conservative basis, from the cost
of that part of the property upon which the old buildings stand, and that on
June 30th you.propose to charge off the entire cost of the old buildings,
and you ask if this will meet with the approval of the Board.
In view of the fact that you have acquired this bolck of land with the
intention of covering it c~entually with a building for the use of the bank,
it appears that the present buildings represent no permanent value, as they
will have to be torn down.
when the buildings are removed your bank would
hecessarily have to charge off that proportion of the cost of the property
Which represents tV,e value placed upon tht:J buildings by the vendor·, and the
13oard sees no objection, in case your earnings permit, to your directors anticipating this loss and making the proper deduction in the value of your
real estate at the approaching dividend peri6f~.,
The Board is not unmindful of the circular letter of December 7, 1917,
x-555, which was sent to all Federal Reserve banks, in which it was stated
that "on the cost of bank premises, depreciation allowance in any 'one year
should be limited to 5fo of the total cost" but this ruling was intended to
apply to those Federal Reserve banks which were already occupying buildings
of their own.
There is, therefore, no inconsistency in authorizing you to
carry your real estate acquired for building purposes at its ground vii.lue.
The Board is not, in any event, barred from allowing rnore rapid am®rtization
of the cost of bank premises tham~that suggested in its letter of December
7, 1917.
Very truly yours,
Governor ...
Mr. John Perrin,
Chairman 'Federal Reserve Bank,.
San Francisco, California •.
.
"'-··.
W. P. G. HARDING, GciY_I.IUroR·:
PAUL M. WARBURG, VICE GOVERNOR
FREDERIC A. DELANO
ADOLPH C. MILLER
CHARLES S. HAMLIN
EX-OFFICIO MEMBERS
WILLIAM G. McADOC
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
FEDERAL RESERVE BOARD
COMPTROLLER Of THE CURRENCY
H. PARKER WILLIS, SECRETARY
SHERMAN P. ALLEN, ASST. SECRETARY
AND FISCAL AGENT
X-920
WASHINGTON
ADDRESS REPLY TO
FEDERAL RESERVE BOARD
May
3, 1918.
Dear Sir:
Your attention is invited to copy, enclosed herevdth, of a letter
received from Assistant Secretary
Leffin~vell
regarding the retirement
of silver certificates and the substitution of Federal Reserve banlc notes
in appropriate denominations, in their place.
In compliance with his request, the Board has aslced that notes in
denominations of one and
tv~
dollars be prepared for the Federal Reserve
banlcs, the allotment being the same as was made in the case of the notes
of the five dollar denomination.
(which
inclu~e
Orders have been placed, therefore,
any orders vbich may have heretofore been given) as follows:
Ones
Boston
York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
Sto Louis
Mi:rm.eapolis
Kansas City
Dallas
San Francisco
~12,000,000
64,0009000
16,000,000
16,000,000
10?000,000
8,000,000
30,000,000
10,000,000
Neu-
<7-~ooo.-ooo
10,000,000
5,000,000
12,000,000
$200,000,000
I have advised Assistant Secretary
Twos
$3,000,000
16,000,000
4sOOO,OOO
4,000,000
2.11 500,000
2,000,000
7,5009000
2,5009000
1 9 750s000
2,500,000
1.250,000
3.000,000
$50,000.,000
Leff~lg'\-,ell
ths t suggestion: :has been
made to the Federal Reserve banks that they use the 3% one year notes Yihich
they have on hand, as the basis of security for the Feder;;.l Reserve bank
notes first received, and that the banks will be requested to enter their
orders for the
poses.
2%
certificateg as actually required for circulation
~ur-
,,
X-920
- 2 Your attention is directed also to a mt-.··orandum of counsel, copy of
which is enclosed herewith, from which it appears that while the Federal
Reserve banks will pay for the plates from which the notes are printed,
just as the natior•l banks do, the cost of paper and printing will be
paid by the Comptroller of the Currency out of funds accruing from the
tax upon circulation of this charqcter.
The Comptroller of the Currency will be requested to maintain an
adequate supply of Federal Reserve bank rtotes on hand which will be forwarded to the Federal Reserve banks in the s'lme manner as
notes are sent to those institutions.
nat~onal
banh
It appears that it is not neces-
sary for Federal Reserve banks to give any instructions as to the prep··
aration of plates or the stock of Federal Reserve bank notes to be kept
in Washington.
In view of the a.bo·.,e, you will please dior9r;a:<"rl my letter of May
lst, X-912.
very truly: youn:
I
GTii·e;~nor.
2 Enclosures.
X-921
RATIO OF "FLOAT" OF FACH FEDERAL RESERVE OOJK TO .EABilnm ASSETS AliD DEPOSITS.
..
..
:. house
.. exchanges .
MAY 3, 1918.
.
.
..
Total
.:uncollected:uncollected:collaction
.. items : items .. d. terns : "FLOAT"
.
...
Dr •
:
Cr.
--------~------------------------------------------------------------·-----------------------------------------------------------·------:Ratio of "FLOAT II t 0
Clearing ~Uational :Bank: All other
Total
:Net invest£1Em·ii: Ratio of
Total
Federal
Reserve
Bank
·•
.
notes and
notes of
other
F. R.:Ba.nk:s
;...
'
.
in transfers : li:&'LOAT" to :imned~.ately availincl·aded in : t ota1 earning :able Gove:nrnent and
• bank deposits .
assets
total "FLOAT"!
Per cent
_!>er cent
3,769
8
22,749
26,526
17.972
8,554
11.(
8.7
21,639
1,495
61,971
85,105
6l,o47
24,058
4.5
3·3
Philadelphia
5. 732
651
41,895
48,278
38,520
9,758
200
14.2
9 .. 8
Cleveland
3,126
1,191
29,080
33.397
24,234
9,163
1,380·
10.0
7-8
Bichmond
2,190
722
25,o43
27,955
19.376
8,579
14.5
17-5
Atlanta.
1,338
570
25,339
2'f,~T
12,471
14,776
947
43.0
34~7
Chicago
5,699
1,366
43,962
51,027
24,920
26,107
12,828
18.3
13.1
St. Louis
1,636
848
33,594
36,078
24,705
11,373
3,025
20.9
'19.9
394
9.998
10,392
5,062
5.330
J,850
16.9
11.4
390
242
18,644
19,276
13,208
6,068
7.535
9.6
7-8
70
5,698
10,993
16,761
5.496
11,265
4,100
28.5
27-3
1.526
1.42"4
14.693
11.643
10,.582
11061
3al55
1l.l
8.9
'47,115
14,609
337,961
399,685
257.593
142,092
36,620
11.4
8.7
Boston
Uew York
Minneapolis
Xa.nsas City
Dallas
San Francisco
(a)
·~
. T~ta.J.
"\
------~-----------------------------~------------------·--------------------------------------------------------------------------------
..3. .
'.
.,
jp;,l<'*'-~"'_~-;:.
,.
W. P. G. HARDING, GOYIRNOR
EX-OFFICIO MEMBERS
PAUL M. WARBURG, VICE GOVERNOR
FREDERIC A. DELANO
ADOLPH C. MILLER
CHARLES S. HAMLIN
WILLIAM G. McADOO
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENC'Y
FEDERAL RESERVE BOARD
WASHINGTON
H. PARKER WILLIS, SECRETARY
SHERMAN P. ALLEN, ASST. SECREtARY
AND FISCAL. AGENT
ADDRBSS REPLY TO
FEDERAL RESERVE BOARD
X... 923
May 3, 1918.
Dear Sir:
S~~
Federal Reserve banks, in transmitting the
weekly discount rate sheets, are in the habit of subm+tting rates for the week ending with the date on which the
sheet is received.
The blanks should, in every case, be
so filled in as to make them recommendations of rates for
the week following the approximate date of their presentation to the Board.
The sheets should be received, as
nearly as possible, on Thursday of each week in order that
they may be presented to the Board at its regular meeting
Friday morning.
Respectfully,
secretary.
EARNINGS, EXPENSES, BATES OF DIVIDEND EARNED, ALSO TRANSIT DWAR'IMENT DISBURS:EMENTS AND NET SFJlVICE CHARGES RECEIVED AND
DFISCAL AG:ENT DISBURSEMENTS .AND AMOUHTS REIMBURSEABLE FOR THE MONTH OF lvrARCH, 1918.
---------------------------------~---~---------------------------------------------------------------------------------------------------------
Federal
Reserve
Biulk
Total
: Current
:Excess of:
:Dividend
: earnings :expenses of !earnings : Capital :Dividend:
and
~ including : ·;;_.::~banks
: over
: paid in ~require- : expense
:net service: including : current :March 29th:ments i% :require: charges :Transit Dept.:expenses
:per month: ments
:Annual rate
:_.·.·of net
:earnings on
: capital.
: Per cent
:Disbursements :~1t. due from
:Disburse-! Net
:of Fiscal .Agt. :U.S.Treasurer
: ments :service ~Dept.which are:March 30,1918
: Transit =charges : reimbursable :Account Fiscal
: Dept. =received:by U.S.Tieasury:.Agt.Disbursanents
----------------------------~------------~-----------------------------------------------------------------------------------------------------
6,351,000
31,755
79,518
43-3
~9.684
56.706
217,125
1,730,447 19,711,000
98,555
234,625
105.3
8,699
169t 768
111,610
6,873,000
34,365
77.357
29.1
10,803
8,614
44,878
249,653
8,363,000
41,815
107,998
30.8
19,639
8,043
66,466
243,685
112,151 3,761,000
18,805
59,476
35-8
15,228
6,218
22,743
84,665
2,943,000
14,715
34,584
27.2
3,532
4,518
42,643
137.502
9,431,000
47,155
112,626
38-3
6,124
1,473
213,580
452,123
33,221
100,014 3,476,000
17,380
50,601
34-5
. 5,070
2,611
67 '761
110,785
79,780
22,814
56,966 2,738,000
13,690
36,504
25.0
4,639
4,950
23,734
57,212
Kansas City
1118,032
45.941
102,091
3,450,000
17,250
63,191
5,819
4,106
34,636
113,087
Dallas
107,067
22,725
84,342
2,830,000
14,150
36.875
4, 776
4,749
31,978
132,256
San Fr.ancisco
255,202
46.458
208.744 4.296.000
21.480
67.938
6,419
3.966
62.819
453.247
Total Mch.
1918
3.975,167
590,178
3,374,989 74,223.000
371,115
966,043
111,189
67,631
837.712
2,362,950
54,252
55,085
Boston
229,157
276,920
47 J 763
1,866,517
136,070
Philadelphia
209.376
42,992
166,384
Cleveland
281,121
66,183
214,938
Richmond
152,822
4o,67l
Atlanta
98,726
19,869
78,857
Chicago
366,369
65,471
300,898
St. Louis
133,235
Minneapolis
New York
.Total March
1917
563,062
,
264,819
56.4
NON-MEMm:R BANKS AND TRUST COMPANIES WITH CAPITAL STOCK SUFFICIENT TO MEET CAPITAL REQUIREMENTS FOR MEMBERSHIP nt THE FEDERAL RESERVE SYSTEM.
~Data taken from latest ava~lable reports and con~iled by Fede~al Reserve B~~s during April, 1918.)
Y. -925b
--------------------------------------------------------------------------------------------------------------------------------------~~~----
Citie~
Boston Uew York
with population of
3,000 or under .
3,001 to 6,000
6,001 to 50,000
50.001 and over
.. Total .. . .
.
.
..
.•
-
...
46
30
52
~
173
107
41
78
...1!!:
300
NUMBER 0 ]' BANKS
Phua.. Clevel. Riehm. Atlanta Chicago St-Louis
87
30
71
345
62
120
61
588
....5§_
246
5~·8
359
46
71
90
188
187
22
724
_ill
64
...19.
495
~.. "~509
:;...
2,001
rSf?.:~
1'18
60
_n
959
Minn.
Ka.n.Cy.
511
34
51
11
607
693
78
87
...n.
889
Dauas
330
42
34
.J1.
417
San~Frcul.
488
8(j
87
I'otal
5, 781
839
962
t::r_2.?•
_!i?l_
710
8,109
-~----------------------------------------------------------------------------------------------------------------------------------~·--------
CAPITAL
3 ,000 or under •
},001 to 6.ooo .
6, 001 to 50,000
50,001 and. oyeJ'
. Total . . .
.
..
.
.
•
2,076 4,208
1,872 3,492
7,975 11,925
22 1 802 481226
34,725 67,851
(In thousands of dollars.)
18,725
5,8~ 12,.974 13,306
3,1
6,196 3,404
12,650 20,450 12,039
33a525 33.261 151869
55,154 72,881 44,618
6,227
8.503
10a195
43' 650
51,431 28,111 15,838 23,408 11,338.
11,141 8,931 2,070 4,680 2,670
24,680 8,475 7.550 6.;965 5,629
50.220 16.356 6. 500 _4..J.ll 6.100
137 472 61,873 31,958 39.390 25,737
20,05:J
6, 722
16,358
32.366
79.501
207,305
60,549
143,199
6,t09
2, J1
5,811
~98 16.063
6,765 30,824
100,813
30,002
81,354
J
283.152
694,810
SURPLUS, EXCLUSIVE OF UNDIVIDED PROFITS
3 , 000 or under .
3,001 to 6,000 •
6,001 to 50,000
50, 001 and over
.. Total
• • •·
...
1,662 4,321
1,142 2,516
4,739 10,268
13.744 ~
21,287(a75,438
{In thousands
3,547 4,811
2,483 2,843
11,141 14,354
34.844 29.934
52,015 51,942
of dollars.)
6,820
24,6)4
2,048
4,571
3,938
5,348
9.100
2.082
21,9o6
36,635
19,969 10,006 7.315 7,457
4,887 3,542 1,011 1, 481
15,174 3,030 3.771 2,512
34,2.82 9.335 _?~ --1...11.5.
74,312 25,913 14,740 12,825
3.762
1,037
1,268
212-~ll
424,602
-------------------------------------~--------------------------------------------------------------------~----------------------------------
TOTAL
3,000 or under .
3,001 to 6,000 •
6,001 to 50,000 . .
50,001 and oYeJ'
.. Total • • •
33,001
60,619
31,694
44,506
133.164 198,735
241.431 946.253
439,296 1.250,113
RESOURCES
(In thousands
53,297 127,867
29,629 58,195
128,528 209,327
301,247 4oo.616
512,701 796,005
of dollars.)
132,882
126,935 526,107 211,822
36,398
52,4o9 129,020 78,743
112,066
56,699 303,031 71,616
107.308
81.'002 612.854106.163
388,654 (b)317,045 l,51J.,Ol2 468,944
190,470
24,595
68,643
2],343
311,051
264,817
47,507
78,879
51.052
442,255
88,485
21,333
36,274
26.610
172,702
179,416
68,676
171,170
506.530
925,792
1,995,718
622,705
1,568,132
3.4o9.015
7,595,570
----~--------------------------------------------------------------------------------------------------------------~-------------------------
(a) Include's undivided profits of banks in State of New York.
~,(b) Aggregate capital, surplus, time and der.and depoSits.
iJ
~~ NOU-MEM:BER STATE BAlUCS AND TRUST COMPANIES WITH CAPITAL INSUFFICIENT FOR MEMBERSHIP BUT WHOSE COMBINED C.APITJ'.L AND ~UIT~US
L:.S
(EXCLUSIVE OF UNDIVIDED PROFITS) WOULD MEET THE CAPITAL B&lUIBEMENTS FOR M:EMBERSHIP •
lDa.ta taken from latest available reports and compiled by Federal Reserve Banks during April,
Number of banks in each Federal Reserve District.
Cities with a population of
3,000
or under •
3,001 to 6,000 • .
6,001 to 50,000 • .
50,001 ~d over
Total • • . • •
X-925
1918)
Boston New York Philadelphia Cleveland Riehm. Atlanta Chicago St.Louis lVlinn.Ka.ns.Cy~Dallas San Fran
•
4
28
1
16
26
15
18
69
8
g
2
~
_ll
20
3
8
27
119
17
20
.J5
171
129
7
5
285
27
42
224
362
301
105
18
8
8
8
2
7
4
_5
11
146
365
6
245
4
5
5
315
117
374
...J!
10
_g
32
Total
1,574
102
129
102
1,907
~-------------------------------------------------------------------------------------------------------------------------------------------------
CAPITAL
(In thousands of dollars.)
3,000
3,001
· 6,001
or tinder •
to 6,000 .
to 50,000
50~001 and. ove;r;••
. Total . • . . .
230
120
2,100
2,450
45
311
2,072
. 2,428
490
287
810
2.312
3,899
2,656
673
1,816
8,2".\1
13.376
3,957 6,051 4, 981
240
230 120
240 200
440
179 _ _-:- 130
5,416 6,521 5.431
2,3;;4
229
329
575
3,467
2,392
330
65
625
200
1,220
28,058
3,303
8,061
18.515
57 ,f337
1,108
205
250
137
90
641
21,852
4,236
10,959
------------------------------------------------------------------------------------------------------------------------------------------------SURPLUS, EXCLUSIVE OF UNDIVIDED PROFITS
•
(In thousands of dollars)
),000 or under •
3,001 to 6,000 .
6,001 t? 50,000
50,001
tlOd. ov~;r
Total •
121
1,l05
833
165
1.315 ~
2, Go~ {A) 6, 667
76
760
}.345
4,181
349 2,244
199 1,004
1,750 2,192
4, 03Q. !LJ_()6
6,328 16,746
.
2,200
291
475
191
3, 757
3,277
887
2,592
1,4q2
8,248
3,444 4,837 4,180
246
283
77
244 223
562
86o
115
5,112 5,364 4,655
-
4oo
~~443
. . . .
..
1,268 66,490
1, 563
----------------------------------------------------------------------------------------------------------------·-------------------------------TOTAL RESOURCES
3,000
or under •
to 6,000 .
3,001
6,001 to 50,000
.50,001 and. oyj;lr
. . . To1oa1 • • •
2,595
19,339
. 22,514
. 44,448
9,104
_2,836
67.352
79,292
.
(In thousands of dollars.)
6,425 ~2.~31 25,574
987
8, 953
39.167
49,107
76,031 47~183 69,260
4,849 10,967 3,148 16,182
4,995 4,719
21,818 29,801 4,754 44,254
6,907 3,459
51.254 113,!13 . 8,802 24.950 12,914
84,346l9~312(Bl_42,278 161,417 71,999 77,438
84,337
1,900
3,971
3.270
93,478
18,526 4,599
3,448 1,480
9.798 17,299
5,863
3--1--,7._7_2 29,241
375,353
63,387
173,189
349.199
961,128
--------------------------------------------------------------~----------------------------------------------------------------------------------
(A) Includes undivided profits of' banks in State of New York.
(B)
Aggregate capital, surplus, tir,~ and demand deposits.
)
MUTUAL SAVINGS BANKS WITHOUT CAPITAL STOCK BUT WITH SURPLUS V7HICH IF CONSIDERED AS CAPITAL WOUT,D MEET CAPITAL
~Ul BEMJ.lNTS FOR MF.MBERSHIP.
(Data tal:en from latest available reports and compiled by Federal Reserve Banks during April, 1918.)
-----------~--------------------------------~------------------------------------------------------------------------------------------------NUvffiER OF BANKS.
Boston New York Pbila.
C1evel'. Riehm. Atlanta Chicago St.Louis Minn. Kan.Cy.Dallas San Fran. Total
Ci-ties with a. population of
3, 000
or under • . .
. •
3,001 to 6,000 • . . .- . . .
6~001 to 50,000
and
. • · · · ·
. . . . . .
10
13
68
39
3
44
1
.Jm
_]_
110
1
81
...
52
'
3
_g_
5
159
-- --
_l.
_l
..1_
l.6l
g
"1
1
~2
1
455
Total . . • . . . . . .
147
8
2
~-------·-----------------------------------------------------~-------------------------------------------------------------------------------
. 50,001
ov~r
-6S.
SURPLUS
_!!.
...5.
t EXCLUSIVE OF UNDIVIDED PROFITS.
In thoUsands of dollars.)
·3 ; 000
or mder
J,OOl to 6,000
";001 to 50,000
50,001 a.nd eve~
Total • . . .
4,210
4,508
30;218
2,944
2,632
15,379
160,390
107
21.650
83,344(ah8l,345
21,757.
44. 4os
.
7,279
7,140
125
150
5.200 ~
4,538
5,200
651
675
1,326
600
Goo
1
1
3,099
3,099
46,505
240,286
301,210
~~---------------------------------------------------------------------------------------------------------------------------------------------
TOTAL RESOURCES.
(In thousands of dollars.}
3 1 000 or under .
3,001 to 6,000 .
6,001 to 50.,000
50,001 and ov~r
~ota.1
73.343
87,132
26,134
3,001
27,726
578,861
219, 7"20
526
2,271
986.75] 2.091 140 2$.855 106, 406 66.195
1,726,093 2,334,720 255.381 106,406 71,467
I
102,ij7S
114,858
7,381
5.947
13,328
808,759
69.530 3. 578.352
69,530 4,604,447
·------~--------------------------------------------------------------------------------------------~----------------·--------------------------
(a)
Includes undivided profits of banks in State of New York.
W. P. G. HARDING, GOVERNOR
PAUL M. WARBURG. VICE GOVERNOR
FREDERIC A. DELANO
ADOLPH C. MILLER
CHARLES S. HAMLIN
EX~OFFICIO MEMBERS
WILLIAM G. McADOO
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
FEDERAL RESERVE BOARD.
WASHINGTON
H. PARKER WILLIS, SECRETARY
SHERMAN P. ALLEN. ASST. SECRETARY
AND FISCAL AGENT
ADDRILSS REP I.. Y TO
FEDERAL. RESERVE BOARD
Yay 7 ~ 1918.
X-927
My dear Sir:
As Acting Chairman of the Comrr.dttee on the Admission of
State E<iUlks I want to draw your attention tc the table which appears
on page 414 of the current Bulletln1 showing the number o·f State banks
which have been admitted to the SystGm up to and including April 30th,
which shows an extraordinary difference in respect to certain States.
New York 1
Illinois·~
Pennsylvania} Michigan, Texas and Massa-.
chusetts have made a fine showing 1 but some States have been very backward, and there are yet no State bank representative9 in the States of
Neva<).a 1 New Hampshire 1 Vermont and Wyoming.
~~
The iieewali••t••a of the service charges on check collections
and the decision of the Attorney General as to the effect of the law,
also printed in the Bulletin 1 puts at rest for a considere,ble tirre at
least 1 any effort toward the granting of exchange charges to country
banks 1 and ought to enable us to make more rapid progress in getting
State bank members.
It may be remarked incidentally, that it is the
larger and stronger State banks that we are most anxious to get, not
only because that will help our reserve situation; but because there is
more risk through having large State banks outside of the System.
Yours very truly 1
F. A. DELANO
Acting Chairman 1 Cocrnnttee on
Admission of State Ban~.
W. P. G. HARDING, GOVERNOR
PAUL M. WARBURG, VICE GOVERNOR
FREDERIC A. DELANO
ADOLPH C. MILLER
CHARLES S. HAMLIN
EX•OFFICIO MEMBERS
WILLIAM G. McADOO
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTO.N WILLIAMS
H. PARKER WILLIS, SECRETARY
SHERMAN P. ALLEN, ASST. SECRETARY
AND FISCAL AGENT
FEDERAL RESERVE BOARD
COMPTROLLER OF' THE CURRENCY
WASHINGTON
ADDRESS REPLY TO
FEDERAL RESERVE BOARD
May 7, 1918.
X-930
Dear Sir:
The discount cannittee of the Federal Reserve Board has
reported that, in its opinion, "Fedel"al Reserve banks should insist
that acceptances when due should be paid by checks on the local Federal Reserve bank, in order that they may be charged to the account
of the acceptor on the day of
maturity~
or else that acceptances
should be paid by checks through the clearings•
If an
arrahge~ent
on these lines can not be perfected) Federal Reserve banks ought to
be required to add one day to the actual number of days the acceptance has to run when bought, so as to make up for the loss of interest
incurred in collecting in this manner".
This report has been agreed to by the Board) and your bank
is requestedJ in buying acceptances, to charge discoAnt fo:. one
ditional day, except in casAs where satisfactory
made to make actual cash
pa~ent
at. the l<'ederal
arrange~ents 2.r13
FE?so:CV;;l
'tank
day of rraturity.
Very truly yO".;.rs 1
0-ovo rn nr.
·~·
~d-
'Jn
the
.
{'"' CONFIDENTIAL
0~
'
STATU1ENT. OF EARNINGS ..AND EXP:Ei.JS~S OF THE FEDERAL RESERVE :BANKS.
JANUARY 1, Tg' ijARCH 31, 1918.
L,_----------------------------------------------------------------,....-----~
Ea.mings
Boston New York
P:hna:
y
~..-
.
9' -r.
J.'
. . ...:.------------------..,-----":::-:.-------------------------------------St.Louis Minn. Ko.n.Cy. Dallas San Fran1. Total
Clevel. Riehm. Atlanta Chicago
----------------------------------------------~------------------------------------------------------------------~---------------~--------
· Bills discounted
537,220 2,011,382
Acceptances bought
124,6361,538,329
U.S. securities
26,077
755,756
Municipal warrants
2,367
Bill of Lading drafts
Transfers- Net earnings
Deficient reserv~ penalties
4,538
2.756
Comr;lissions :ceceived
8, 650
Het service charges
24,724
23,374
· =..Sun~d':.!.r..:r..Y..JP~r..::::O.:..fl:!:.!·t~s:___ _ _ _ _.:::..l0:::..9u•..::::8.:::.03"---=.:18~7_z..-=.:002
Total earnings
826,998 4,529,616
272,883 109,472 327 'lt~ 5, 5i9, 781~
22,088 100,564 242,766 2,730,498
90,995 1.}8,171 23,658 1,576,051
3::994
--8, 547
24
4,660 1,235
30,212
60,445 23,155 19,861 213,755
16,724 5,118 16,665 121,679
8, 650
24,574.20,898 19,389 12,095
15,168 10,466 14,288 12,264 14,162 11,152 202,554
11,844
164
980
5.254
21,068
322
360
3
38 9.1)01 346.339
576,315 874,082 455,740 267,6781,183,076 417,607 250,185 475,426 309,334 652,01219,&8,069
279;039 376.707 309,744 114,147
157,727 159,807 · 84,462 65,392
96,926 294,816 2+',470 50,858
49
1, 469
2,847
7,790
7,957
6,156 13,900 19,695 7,659
836,836
137,929
88,421
662
7,937
62,700
12,355
288,944
63,452
24,879
--3,849
12,594
13,101
116,236
33,346
54,024
6
9,660
19,253
3,012
--------~--------------------------------------------------~---------~-------------------~,------------------------~----------~------------
EXPENSES
Assessr.1ents Acct. expenses
F. R• .Board
7.909
Federal ·Advisory Council
210
(fees & traveling expense)
Governor~s canferan~es (including traveling expense)
70
F.R.Agents 1 conferences (including tr-aveling expense)
14,562
Salaries! Bank officers
41,007
Clerical staff
1,260
Directors• fees
. Directors' p3r diem all owance
310
Directors traveling ex.penses
227
7.738
Rent
Cost of F.R. currency issued
All other e~enses
45.517
Total expenses
ll$t810
25,225
8,292 10,154
4,927
3 797
515
295
150
99
67
25
J
30
128
105
33
46,463 13,812 18,287 11,208 12,872
1391939 37,319 43,548 22,608 17,462
480
910
615
5, 215 1,120
60
262
32,967
80,598
109.170
440,447
4,691
3,540
3. 773
5,497
94,462
252
150
1,498
150
3,817
127
106.
14o
657
118
123
143
107
564
139
20,650 16,950 11,750 15,544 12,016 19,516
50,784 29,212 17,347 24,460 22,101 41,473
980 1~985
930 1,425
894
3~
1,490
213,630
487,260
15,874
12,274
190
240
200
422
160
400
24o
850
300;
452
3,824
294
307
333
534
359
566
341
1,667
297
5,187
2,740 6,331
1,307 4,344
8,926
4,552 2,445 3,992
---, 6,185
81,527
23,520 46,397 12,072
6,467
5,789 22,438
63.3'
197,914
27.929 63,211 36.913 14,407
76.513 24,754 21.437 53.428 21.052~ 46.325 536.662
115,414189,777 90,4~6 54,522 . 170)919 89,758 64,239128,455 62,276Jl21,1961,646,299
. Net earnings
708,188 4,089,169 460,9(>1 684,305 365,254 213,156 1,012.,157 )27,849 185,946 346,971 247,:1
. ·.······,····530,816 9,160,804
Ba.tio of ne~ earnings to paid·
. · '
in Capital
.44.6
83.0
26.8
32 .. 7
38.8
29.0
47.6
37·7
27.2
40.2
34.. ·.. 49.4
49.4
W. P. G. HARDING. GciYONi>R
PAUL M. WARBURG. YICI GOYIRNDR
FREDERIC A. DELANO
ADOLPH C. MILLER
CHARLES S. HAMLIN
Ex·OJI'FICIO MRM8BR8
WILLIAM G. McADOO
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
H. PARKER WILLIS, SECRETARY
SHERMAN P. ALLEN. ASST. SECRETARY
AND FISCAL AGENT
FEDERAL RESERVE BOARD
COMPTROLLER OF THE CURRENCY
WASHINGTON
ADDRESS R.PLY TO
FEDERAl. RESERVE BOARD
Dear Sir:
The Federal Reserve Board has 9een ·. mof ficial1y
advised that there has been a change in the policy of the
Mexican
Govern~nti
whereby that Governaent now requires
expprters of silver bull:i.on to re-import in gold fifty
per cent of the val1::.e Clf the silver bullion or silver in
ore thus
formerly.
exported~
instead of twenty-five per cent as
The Board 1 however, is not willing to grant
licenses for export that are in
exces~
of twenty-five per
cent of the silver value 1 this being the same as its past
practice.
It requests 1 · therefore 1 that you bear this
ter in ndnd in passing upon
export gold when
sub~tted
applic~tions
for permission to
to you for action and transmission
to the Board.
Yours very truly,
Se creta.ry.
Federal Reserve Bank;
Il.la.t~
EX·OFFICIO MEMBERS
W. P. G. HARDING. GOVIRNOR
PAUL M. WARBURG, VICE GOVERNOR
FREDERIC A. DELANO
ADOLPH C. MILLER
CHARLES S. HAMLIN
WILLIAM G. McADOC
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SK"ELTON WILLIAMS
COMPTRO~LER OF THE CURRENCY
FEDERAL RESERVE BOARD
WASHINGTON
H. PARKER WILLIS, SECRETARY
SHERMAN P. ALLEN, ASST. SECRETARY
AND FISCAL AGENT
ADDRESS REPLY TO
FEDERAL RESERVE BOARD
May 9, 1918.
X-935
Dear Sir:
The Board has received a letter from the Chief Inspector
of the Post Office Departrr.ent calling attention to losses of currency in the ~ails which have ocourred at rather frequent intervals,
and to the efforts which have been rrade by the Post Office inspectors
to recover the mon0ys and to apprehend and prosecute persons corr.mitting the de prs dt'."t ir,r;.s, Re fe renee j_s n::a de to one case where more than
half of the ar:,\Ji-lrJ·c f'T.oJon was recove::-ed, a.nd the rcbbers captured,
this result being JIBde possible by ree.sJn of the fact that the shipping bank kept a record of the serial nu.":l.bers of the bills.
It is
pointed out, hovvever, that in other cases where no record of numbers
Of the notes was kept, inspectors have been seriously handicapped in
their investigations) and no recoveries or arrests have been made.
The InspJctor has requested me to bring this matter to
the attention of the :.t•'ederal Reserve lanks, and to suggest that when
shipments of curroncy are rr~de by them) especially of large amounts,
they keep a record of the numbers of the notes in each package. It
is suggested by tho Inspector that in order to a'Toid delays. and to
minimize the clerical labor 1 a record be kept only of the numbers of
·the first and last bill in each package.
The foregoing is presented for your consideration, and
for such action as you nay deem proper to take.
Very truly yours 1
Governor.
The Governor 1
Federal Reserve Bank,
WaSHINGTON
X-936.
May 6=,: 1918
The Governor,
Federal Reserve Board:
Sir:
By direction of the secretary you are advised that the Dep1rtment has referred to the AUditor for the Treasury Department for settlement the aecount of
the Bureau ef Engraving {;lnd p.r':tnting for pre,I:Bring Federal reserve notes during
the period April 1 to 30, 1918, amounting to $109,021.92, as follows:
:a:.> ston •.••...••••
York •..•..•..
!hilaQelphia •••••
Clevelanu ..•..••.
Ri •1al:10nd .•..•.•••
~~tlanta ..•....•••
Chicago •••••.••••
t)t. Louis .••••••.
Minneapolis .•••••
Kansas City ••••••
Dallas •••••••••••
San Francisco ••••
New
~
58,~p
38,000
7 ,OflO
54,000
16,000
90,000
20,000
10 ,ooo
21,000
5,000
100 2000
l/~19 2 000
44~~00
~.ooo
1,480,000
2,982,00 sheets at
12,000
5,000
1,000
2,000
3,000
2,000
1!000
63!000
3 1 000
83.000
93,000
170 ,coo
250,000
26,000 .
36,000.
101,000
38,000
18,00U
139,000
23;;DOO
28,000
. 9'37 !000
~36.56
4,000
j50
38 ,coo
189,000
268,000
33,000
5,009
34 ,IJOO
33'1,000
33,000
24,000
87,000
17,000
$100
3,000
57,000
2,000
4,000
9,000
$2.0
15 ,;)00
Total
546,000
362,000
478,000
309 ,ooo
98,000
86,000
541,000
98,000
52,000
252,000
22,000
138.000
229821000
perM ••••••••••••••••••• $109,021.92
The charges against the several Federal reserve banks are as follows:
Sheets.
Boston •••••••• 546,000
NEWt York •••..• 362',000
,Fhi lade 1 z;hia •• 478,000
Cleveland ...... 309,000
Richmond •••••• 98,000
Atlanta ••••••• 86,000
Chicago ••••••• 541,000
st. L•uis .•.•• 98,000
1Jinneapolis ••• 52,000
Kansas City ••• 252,000
Dallas •.•••••• 22,000
San Francisco. 138,000
2!982!000
Compensat ion.
~5,978. 70
·3,963.90
5,234.10
3,383.55
1,073.10
941.70
5, 923.95
1,073.10
669.40.
2,759.40
240.90
1 1 511.10
~32.652. 90
Bureau
plate
Frintin~
:jp7.725.90
5,122.30
6,763.70
4,372.35
1,386.70
1,216.90
7,655 .. 15
1,386.70
735.80
3,565.80
311.~
. 1! 952.70
:J42!195.30
a~~o~iations
1viateria1s
4P5,601. 96
3,714.12
4,904.28
3,170. 34
1,005.48
882.36
5,550.66
1,005.48
533.52
2,585.52
225.72
11415.88
~30 1 595.32
Inc. Com-pensation
Total.
4P655.20 ~19,961.76
1:3,234.72
434.40
17,475.68
573.60
11,297.04
370.80
3,5_82.88
117.60
3,144.16
103.20
19,778.96
649.20
3,582.88
117.60
1,901.12
62.40
9,213.12
302.40
804.32
26.40
165.60
. 5 1045.28
~3 2 578.40 il09 2021.92
The Bureau appropriations will be reimbursed in the above amount from the
incl.efinite·apprQ]_')l"iation. ·'}reparation and Issue of l<'edera1 Reserve Notes, Reimbursable", and i t fs requested that your Board cause such indefinite appropriation to be reimbursed in like amount.
Res pecttully,
J. H. Uoy1e,
AssistanttSecretary of the Treasury.
w.
EX·OFFICIO MEMBERS
P. G. HARDING, GOYIRNOit'-'PAUL M. WARBURG, VJCI GOVIRNOR
FREDERIC A. DELANO
ADOLPH C. MILLER
CHARLES S. HAMLIN
WILLIAM G. McADOO
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
FEDERAL RESERVE BOARD
COMPTROLLER OF THE CURRENCY
H. PARKER WILLIS, SECRETARY
SHERMAN P. ALLEN, ASST. SECRETARY
AND FISCAL AGENT
WASHINGTON
ADDRESS REPLY TO
FEDERAL RESERVE BOARD
x.. 936
Dear Sir:
.As the Attorney General of the United States has tendered an opinion,
which appears on pages 367-371 of tha May
is~e
of the Federal Reserve Bul-
letin 1 in which he holds that member and de positing banks must remit without
charge to Federal Reserve banks for checks
depos~ted
with
them~
and as the
service charges by Federal Reserve banks fQr handling checks will be abolished ·On June 15, it now seems desirable that the Federal Reserve Board
should issue regulations covering charges which rray be made by member banks
against their customers and against each
other~
in.accordance with that por-
tion of Section 16 of the Federal Reserve Act, page 36, reading as follows:
.,The Federal Reserve Board shall, by rule, fix the charges to be
collected by the nembar banks from its patrons whQse checks are
cleared through the Federal Reserve bank and the charge which n:a.y
be imposed for the service of clearing or collection which may be
rendered by the Federal Reserve bank. 0
Heretofore the Board has not deeaed it necessary to establish a schedule of
charges~
believing that the banks themselves would adopt fair and
reasonable rates 1 but in viow of the reasons above outlined and of the further
fact that there is no
made, it
unifo~ty
in banking practice with respect to chargJa
proper for the Board to fix a schedule of rates which may .
seems
be charged by member banks against their customers and against other banks 1
except Federal Reserve banks, for their services in making collectioroand
rendttances.
These rates should
becorr~
effective not later than July 1 1 next.
With this end in viewJ the Federal Reserve Board will be pleased to
have your sugffestions as to what rates should be established 1 it being
X-936
- 2 -
desirable that they should
~a
as uniform as possible throughout the country.
In establishing a schedule of rates it is assutt:ed that the following
transactions
should be considered:
(1)
Remittance of exchange in payrr~nt for checks;
(2)
Remittance of exchange for collection ite~ which
must first be collected and then remitted;
(3)
Crediting items in reciprocal accounts; balances to
be remitted at stated interrals, or upon requestj
(4)
Cashing out-of-town checks for depositors or non-depositors;
{5)
Crediting customers with out-of-town checksi thereby rraking
funds iarr~diately available, although the checks may not be
actually collected except at the expiration of 21 4, 6, or
8 days.
!n cases (4) and (5) 1 there should be considered the question of interest while the checks are in transit)
a~d
in the case of ( 5) there should
also be taken into account whether or not the bank allows interest on the
deposit.
The Board would be pleased to have you give i.mn::ediate cons ide ration
to this matter 1 and hopes to pave as prompt a reply as possible.
Very truly yours,
Governor ..
The Governor,
Federal Reserve
Bank~
·
W. P. G. HARDING, GOVIltNDI
EX·OPP'ICIO MIIMBitRS
PAUL M. WARBURG, YICI GOVIRNOI
FREDERIC A. DELANO
ADOLPH C. MILLER
CHARLES S. HAMLIN
WILLIAM G. MCADOO
SECRETARY OP THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
FEDERAL RESERVE BOARD
WASHINGTON
H. PARKER WILLIS, SICRITAIT
SHERMAN P. ALLEN, AIST.IiiCRITARY
AND FISCAL AlENT
ADDIIIIS8 RIIPLY TO
FEDilRAL RIESERYil BOARD
1'e.y 22, 1918.
X-939
Dear Sir:
By direction of the Gold Expc-r·t Committee of the Federal
Reserve Board, 1 inc:lose you herewit:'l co.:-r f)f a revision of tbe regula.tion governing travelers' f11r.ds..
The re·;ision is in su bstantia.l agree ... •
ment with the instructions which hav9 already been sent you, except that
it has been determined to pls.ce in yonr ha11il.s a.uthority to pass upOD applications made by travelers to carry with them funds as follows:
(a)
United States notes, Naticnal bank notes, Federal Reserve
notes or Federal Reserve bank nctes in excess of the $1,000.
allowed under the circular, ann up to $?.,000.
(b)
Gold coin or gold certificates up to $200.
(c)
Silver dollars or silver certificates up to $500.
Applications exceeding the amounts thus set forth are to be transndtted
to the Board as in the case of ordinary co.mmerctsl applications, with
favorable or unfavorable recoatnendation,. a.s ·you
m:1y
see fit.
In caee of
need for immediate action yoti will, as in the case of caromercial applications~
telegraph, and instructions will be returned by the same method,
formal application in each case to be forwarded by nail, the usual license
being returned in the same way.
In general it is the view of the Bgard that the allowances
n:ade should be sufficient for all ordinary requirements and that action
X-939
- 2 -
enlarging ther:e allowancero, or
·tJ:ave::..er.:: t:-o take go!d coin
pen::.~·:::~.~r~
or certificates> or silver dQ}.lars
o:.~ s~C:rt.i:Z:i..cat.es
should be considered
only for special reasons not prirrarily based upon the fact that failure
to grant such allowance would involve the traveler in additional expense.
You are requested to report every Saturday all applications
granted by you during the week 1 stating your reasons
w~en
permits are
granted in cases of the limits contained in the ·circular.
A supply of the revised circular
be transmitted to you at any early date.
distributed by you to such persons as in
is being printed and will
On receipt they should be
y~~r
judgrrent desire the
info:rrnation.
Very truly yours,
Secretary_.
Federal Reserve Bank 1
W. P. G. HARDING, liOYIRNOR
PAUL M. WARBURG, VJCI GOVIRNOR
FREDERIC A. DELANO
ADOLPH"C. MILLER
CHARLES S. HAMLIN
EX·OF'FICIO MEMBERS
WILLIAM G. McADOO
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
H. PARKER WILLIS, SECRETARY
FEDERAL RESERVE BOARD
COMPTROLLER Of THE CURRENCY
SHERMAN P. ALLEN, ASST. SECRETARY
AND FISCAL AGENT
WASHINGTON
ADDRESS REPLY TO
FEDERAL RESERVE BOARD
Nay 13, 1918.
X-940
Dear Sir:
I enclose herewith copy of a circular letter which
will be sent out by one of the Federal Reserve banks to banks
and trust companies in its
district~
requesting them to send
in their silver certificates in denominations of $5. and over.
The Board will be pleased if your bank would send a similar
letter to the banks and trust companies in your district.
Very truly yours 1
Governor.
the Governor_,
Federal Reserve Bank,
Enclosure.
X-940a
To the CaehierJ
S i r :
For the purpose of conserving the N~tion's gold supply) pe~ittirig
the settlement in
silver~
where practicable, of adverse trade
bal~nces,
providing silver for subsidiary coinage and commercial use) and assisting Allied Governments in the war against Germany, Congress has recently
authorized $350,000,000 of tho silver dollars held in the United States
Treasury to be broken up and sold as bullion.
held is represented by silver certificates in
As most of the silver thus
circulation~
it can only be
obtained by the return of silver certificates to the Treasury for
cancel~
lation.
The withdrawal of silver certificates from circulation is not intended to be permanent 1 as the
~ct
provides that the Director of the Mint 1 as
soon as practicable after a sala of silver bullion has been made 1 shall purchase a like quantity of silver to take the place of the bullion sold. To
provide temporarily the necessary circulating medium during the interim
bet~een
the withdrawal of the silver certificates and their subsequent ro-
issue when the silver supply has been replenished by purchases of silvor 1
Feder~l
reserve banks will issue Federal reserve bang notes in denominations
of $l.OOJ $2.00, $5.00 ~nd upward.
F~deral
These notes will be obligations of the
reserve bunks secured by United States certificates of indebtedness
or bonds and similar otherwise to national bank notes,
We ask the banks of this district to
cooper~te
with the Government
by furnishing us with their present supply of $5.00 silver certificates,
which can be replaced in circulation at once by Federal reserve
notes~
X-940a
- 2 -
Federal reserve
~nk
notaa, or United States notes.
In a few weeks,
wban Federal reserve bank notes of the $1.00 and $2.00 denominations
are ready, a request will also be uade that silver certificates in these
denominations be sent in.
Will you not, therefore, please sort out of your cash and forward
to ue, at our expense, all silver certificates of $5.00 and upward which
you tray have on hand or receive from time to time 1 in return for which
we will either,
(a)
Furnish you, free of expense, other currency o! the
same or larger denominations, as you may prefer, or
(b)
P.lace the amount to you~ credit in this bank or in any
designated bank in this city.
We feel confident that you will be willing to cooperate with the
Government in furnishing it the silver it needs for its own requirements
and those of the Allies.
Very truly you.rs 1
Governor ..
·~
-
..
RATIO OF ''FLOAT" OF EACH FEDERAL RESERVE BANK TO EARNING ASSETS AliD DEPOSITS.
MA.Y 19, 1918
.
.
X-941
---------------~-~~~~~~~--~;:~~~~;-~~---------~-~--~;~~~~---~---;~~~~--~---------~;~~-~~~~~~~~~--;:~~~-~;---~~~:-~;-~~;~-~~Federal
Reserve
: house
: notes and
: exchanges · . notes of
other
· ·
F.R.Ba.nks
Bank
: All other :uncol1ected:colle<::tion::
:uncollec.ted:
items
items
items
Dr. ·
Cr.
-:
11
Total : in transf&rs = · 11 FWAT 11 to =•:~ediately availF.IDAT" : included in :total earning:aJ4e Gc;>vernmant and
:total "FOAT 11
assets
: ~'bank deposits.
Per cent
: .i.
Per cent
3,118
151
19,937
23.215
18,12S
·5_,087.
7.1 .
,-)• 3
15,02$
1,825
60~507
77.-358
57.052
2C,.)C5
3.1
2.5
Philadelphia
6,911
859
35,090
42,860
23 ,13}
19,677
140
. 29.0
17·.6
Cleveland
2,675
764
46,262
49,701
22,990
26,711
1,355
30.8
18.3
Richmond
1,975
761
38,458
41,194
31.789
9,4o5
15-7
17.4
Atlanta
1,673
987
26,515
29,175
21,069
8,106
290
24.4
18 ..1
Chicago
7,693
1, 783
40,8.31
50.307
23,546
26.761
10,132
18.5
•. 13.1
St. Louis
2,210
1,145
46,288
49,643 .
34,913
14,730
5.895
26.4
20.9
164
14,474
14,638
11,177
-),461
6,011
10.1
6.S
(bTr,l19
8,088
{b)
(b)
11~109.
4,406
30.6
25.8
Boston
.New York
. Minneapolis
(a)
Kansas City
253
347
37.504
38,1o4
45,223
D:::~.llas
486
5,280
12,306
18.072
6,963
4,489
1,690
21,773
27,952
13.739
14,213
3,663
23.4
15.1
46,509
15,766
399,9.45
462,220
309,773
152,447
39,700
11.1
8.5
.
· San Francisco
Total
-
----------------------~------------------------·------------=-·---------~-----------------------------------------------~--------~--------
(~)Excess of amount of transfers sold over amount of transfers bought
·(b) Excess collection items.
W. P. G. HARDING, GOVIRNOil
PAUL M. WARBURG, VJCI GOVERNOR
EX·OFFICIO MEMBERS
FREDERIC A. DELANO
WILLIAM G. McADOC
ADOLPH C. MILLER
SECRETARY OF THE TREASURY
CHAIRMAN
CHARl..ES S. HAMLIN
JOHN SKELTON WILLIAMS
COMPTROLLER
Of1
H. PARKER WilLIS, SECRETARY
FEDERAL RESERVE BOARD
THE CURRENCY
SHERMAN P. ALLEN, ASST.SICRETARY
AND FISCAL AGENT
WASHINGTON
ADDRESS REPL. Y TO
FEDERAL RESERVE BOARD
May
15~
1918.
X-944
Dear Sir:
The Board has been requested by the Chairman of the. National
War Savings Corrndttee to ur$e the Federal Reserve banks to use their
influence with memb0r banks to get them interested in
the work of the
Coundttee and to secure if possible; a more active participation by the
banks of the country in the War Savings work.
It is pointed out that same banks have rendered most valuable
service 1 having constituted themselves agents of the government by carrying a supply of stamps which they sell over the counter to customers 1
and nanifesting a most helpful interest in the great work Which the
mittee is undartaking.
Co~
It has been demonstrated beyond question that
the people are being deeply influenced by the War Savings propaganda 1
which inculcates the true principles of econOmf and thrift 1 and that
they are coming to compreh,md very generally that the Govermmnt needs a
vast amount of labor and material in the effective
war and that to
that sone
perso~l
If
~et
the requirements of the
sacrifices be
0~ch b~k
~de
by
~ll
pr~socution
Tre~sury
of the
it is necessary
of us.
in the country will recognize the
im~ortance
of
. I
X-944
- 2 br~gnt
this movonDnt and can be
back of it
~ro
essential to
that anything which it
redound directly to tho
will
undorst~d
~Y
to understand
s~nd
do to
th~t
the principles
war financing and to comprchond
~ke
its own
fin~nci~l import~ca
c~nity
of its
thrifty will
locality~
tho
how dosirablo it is that they should cooperate
~nks
in this
movoment.
A
b:l.nk runs no risk whatovor in carrying a stock of those
stwmps 1 for they con be rodoomed
sign on a. bank vv.indow, ''War
~t
S~:~.vings
any time on short notico 1 and a
Stamps For Sale Hore 11 will doubt-
less attract many persons into the bank who Will bocomo depositors.
Tho Board would
gr.c~tly appreci~te
addross a lottor to its momber
b~nks,
it if your
~nk
would
calling their attention to tho
importanco of tho work of tho War Savings organization and roquosting
thom to support tho movomont with tho sama cordiality and patriotic
spirit which thoy ha.vo ma.nifostod in the Liberty loan campaigns.
Vory truly yours,
Govornor.
Chairman of the Boa.rd 1
Federal Reserve Bank,
W. p, G. HARDING, GOVERNOR
PAUL M. WARBURG, VICE GOVERNOR
FR!DERIC A. D!LANO
ADOLPH C. MILLER
CHARLES s. HAMLIN
EX·OFFICIO MEMBERS
WILLIAM G. McADOC
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
H. PARKER WILLIS, SECRETARY
FEDERAL RESERVE BOARD
SHERMAN P. ALLEN, ASST, .iiCRETARY
AND FISCAL AGENT
MJ-JCO
ADDIUI:SS REPLY TO
WASHINGTON
FEDERAL RESERVE BOARD
.llf.c.y
17' 1918
Dear Sir:
Under separate cover we are forwarding to your bank,
100 copies of Form X-938 for use in taking weekly reports to
the Eoard of Federal Reserve
Bar~
note issues.
~eekly
tele-
graphic data are desired only for itetw 2 and 8 showing Federal Reserve Bank notes by
deno~inations
received during the
week covered by the report and on hand at close of business
each Friday.
In case no Federal Reserve bank notes are re-
ceived during any week, it is requested that the weekly telegram contain the words "TUFT none 11 without mentioning any
other c ode v1ords against item 2.
Data against it em S should
be wired each week, regardless of whether or not any changes
are shown.
May I also request that the first report be subtli t ted to the Board on the Friday following the receipt of
the first shipment of Federal Reserve bank notes nade to
your bank.
Yours very truly,
Assistant Secretary
Mr.
Federal Reserve Agent,
EX•OFFICIO MEMBERS
W. P. G. HARDING. GOVlftNOR
PAUL M. WARBURG. YICI GOVERNOR
FRIDERIC A. DELANO
ADOLPH C. MILLER
CHARLEII S. HAMLIN
WILLIAM G. MCADOO
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER Of' THE CURRENCY
FEDERAL RESERVE BOARD
WASHINGTON
H. PARKER WILLIS, SICR!;TAitY
SHERMAN P. ALLEN, ASST. liiCRETARY
AND FISCAL AGENT
ADDRESS RKPLY TO
FEDERAL RESERVE I!IOARD
May 17, 1918.
X-948
De·ar Sir:
The Gold Export Coxr.mi tt0e of thCJ Fadoral R0scrvG Board
has voted to authorize Federal RosGrvo banks to issue continuous
licenses or permits for the exportation of Mexican paper currency
to
Y~xic0 1
good until revoked.
In accordance with the terms of
this authorization therefore 1 it will be unnecessary for those who
wish to ship Mexican paper currency to Mexico to make separate
applications for permission to ship, but they may act under general licenses issued by the Federal Reserve bank of their district.
It is, however 1 desired that all such shipments be reported weekly
to the Federal Reserve bank oi the district and by it to the Federal Reserve Board.
Yours very truly,
Secretary.
Federal Reserve Bank,
......
X-950 Superseding
X-690.
MEMORANDUM
FOR THE INFORMATION AND GUJDPNCE OF THE FEDERAL
.RESERVE DISTRICT COlvl.AJ TTEES
OUTL!NF. OF
A
PLAN FOR THE CONSERVATION OF CREDITS
N.en in the councils cf
~he Na:t.:l.c-:1
a..Y-lpreciate a.lready that the
greatest national problem of today ( becatlse of the war) is the Conservation of Goods and Services.
It is recognized that this can be brought
about only through cooperation and moral suasion.
Hence the proposals
hereinafter outlined are framed with that object in view.
The problem
above stated phrased in a different way might very truly be said to be the
gigantic labor problem of releasing workers and raw materials for war industries by gradually curtailing unessential operations and doing it in such
a way as to cause aa little hardship as possible to the workers or their
employers.
This is by no rr.eans an easy problem for it means a very gen-
eral redistribution of labor.
In connection with the Problem it will probabiy be necessary
or desirable:
(1)
To coordinate wherever practicable with the War Savings Committees
already launched in the different States and utilize those organizations
(State 1 County 1 and Municipal) so far as possible.
(2)
To encourage the gospel of the "Conservation of goods ~nd services"
until it is understood even thougp it
and hannsring it in
(3)
~s
~eans
the first great essential.
To urge that all public or private expenditures for nonessential
improverr.ents be curtailed or postponed.
ringing the changes upon it 1
This may mean sooner or later:
- 2 -
(4)
X-950
(a)
An appeal to Congress for assistance and cooperation.
(b)
An appeal to the Governor and Legislature of every State
for assistance.and cooperation.
(c)
~~ appeal to the ~~yor and Council of every City for
assistance and C00peration.
(d)
An appeal to the pubJ i.e ut:i.l:i:ty or public service · con:missions of every State and C5.r:7 not to requ.ire extensions,
improvements or bette rrr..;:::,ts which can bs •1efcrred till
af.ter the war, and an u::-gfmt request that they refuse
authority for increments +.o cap;i,;tal for improverr.ents
which they think can be saiely deferred.
To urge all corporations, copartnerships, and individuals not to
make improvements which require new capital unless they be absolutely
necessary.
(5)
As the Government 1 s war needs can be met both by economizing
services on the one hand and by increasing production or the productivity
of labor on the
other~
it is well to urge an increased production along
the more essential lines:
(a)
By the employment of women in all classes of industry
where their labor can be used to advantage ~d especially
wherever rren whose labor is required can be released thereby.
(b)
By increasing the productivity of men's labor through
discussions and treaties with the representatives of
organiZed labor or by adopting methods which will, during
the period of the war~ result in the more continuous
employment of labor or increase its productivity.
lt rray be pointed out that great progress along both these lines has been
made in European countries.
(6)
Waste or unnecessary consumption of bread# rraat, sugar, and other
foodstuffs should be stopped, and to that end there should be the closest
harmony and cooperation with the United States Food Administrator.
X-950
- 3 -
In the same way the
consump~ion
of other necessary
staples~
such as coal 1 fuel oil 1 ga'3oljr.o .• etc. 1 shoul:. be restricted wherever
possible 1 to the end that these
essential purposes.
~ecessities
shall not be useJ for un-
In these matters there shoulJ be the closest harmony
ani cooperation with the Fu.el.AJ.ministrator.
(7)
It is important) anl it shoulJ be borne in mind that the dis-
charge of workers from one kinJ. of employment 1 unless some schezr.e is
devised for their reemployment in some necessary
work,~
beneficial effect but will be harmful.
~rds 1
In other
nambere.i that labor is fluil only to a limited extent
Will not have a
it must be re-
an~
that workers can
not be shifted. quickly from one point to another or from one kind of work
to another without a certain amount of enforced idleness ani pecuniary loss.
(8)
While it may be argued that some kin.is of employment are un-
essential to the conduct of the war and therefore should be restricted 1
it must at the sane time be aJmitted that if the
articles~
however un-
essential to our needs 1 are exported - let us say to sons neutral country
from which we are obtaining necessary articles- it is an inJustry which
may properly be encour.aged 1 not at the expense of necessary in.iustries 1
but only through absorption of available labor.
(9)
It will probably be found desirable to adopt some sort of
appl:i,cation blank, in the nature of a "certificate of necessity" for all
proposed. capital expenditures and require all
Natio~
and State banks
when asked to leni money to corporations 1 copartnerships or individuals 1
to demand the filling out of such certification, it being unierstooi that
this W«Duld not apply to seasonal or c omnereia]. borrowing, but only to
....
X-·950
- 4 -
extensions of creiit for
improvements~
betterments, and other capital
expenditures.
The blanks when filled out ana attested would be passed upon
by the District Coamittees and, i: approvei, passed on with that
tee's recoxm;enlation to the
Ca~ital
Is:1ucs
Corr1:1ht.e~;:~
in
CoL~t-
Wa~hington.
(10) The CorrJirrl. ttee on r.a.pital IE:su:;w wiJ.l p21.ss cnly upon reque~ts
in excess of $100..,000 but will delegate to tha District Comnittees the
authority to
~ke
final decisions subJect to appeal to it in cases in-
volving smaller amounts.
(11) The carrying out of this program presupposes, and to be sue-
cessful zrust have the hearty cooperat5.on of banks an.l bankers, merch::mts.and manufacturers, little
an~
big all over the country, with the object
in view of decentralizing the work and arresting the fLood of applications,
so far as possible at their source.
Charles S. Harr.Qin, Chairnan
James B. Br~m
Frederic A. Delano
Jonn S. Drum
Henry C. Flower
Freleric H. Goff
John Skelton Williarr.s
)
)
)
)
)
)
)
Capital
Issues
Conmi ttee.
RATIO OF~" OF EACH MIDE.RAL RESERVE :BANK TO FABNING ASSETS AND DEPOSr.r5.
_______________:_________:____
~----~---:
KAY ~ 7,
___________:____________
1918
_.
: Clearing :National Bank:
•
:
·
: house : notes and : All other :
Total
: Total. • Total
!excha.nges! notes of !uncollected:uncollected:collection: 11FLOAT"
:
·•
other
·:
items
:
items
: items . .
:
· :. F.R.l3anks.
Dr.
~
Cr.
»oston
NeW- York
!Net investment: Batie of ~'-- of. "F.UlA!" to
: in transfers : •iLQAT" to JIM ·ratel7 avaU: included m :total. ea~ Government and
:total "F.t0A.T" ! assets
· J ~ deposita.
-:
: Per cen.t
:
Per cen\.
8,276
6o
25,507
33,g43
22,4)4
ll,4o9·
l9.J
12.0
12,197
1,299
59,712
73,208
59,039
14,169
a-.6
1.9
36,041
40,818
31,332
9.486
200
14.. 2
. 9·7
6, 797
6.5
s.o
7 ,16~
14.1
16.5
14,211
6,990
24.2
16.3
Philadelph:ia
3,924
Cleveland
4,739
1,828
. 30;604
6,168
31,003
/
(a)
Richmond
1,623
723
25,538
Atlanta.
1,416
1,050
18,735
Chicago
6,031
2,lllo
37,683
26,265
19,589
6,110
14.3
10.1
llK>
1,252
41,991
33.,977
9•4o6
2,115
2:3-7
371
8,05C
8,42)
7,414
1,009
2,855
3-1
17 .. 4
a.1
124
317
16,287
·-11-'2!
·1Ji..,;!J
-~IJ5
4,181
.' ='-S'
J.O
99
4,903
10,913
15,915
6,373
9.• 542
3,714
_2:( -2.
23-3
554
1,447
17.962
19,963
15,119
4,844
2,095
1·6
6.0
39.123
16,243
St .. Louis
Mimleapo1 is ·
lre.nsa.sCit1
Dallas
San
Francisco
Total
.
X-95'!
· ··
~-------------------~--------------~------~-----~J~~---------------
20,715
21,201
28,963
.
·6.J.
------~---------------------~-~-~-----~--.------------------------------~----------~----------------------------------------------~--
(a.)
Excess of a.JilOUnt of transfers sold over amount of transfers bought~
X-957
STATE~~NT
FOR THE PRESS.
May 21, 1918.
The Federal Reserve Advisory Council held its regular
quarterly session on I•;Iay 20 and 21, two joint sessions being
held with the Federal Reserve Board.
The members of the
Council present were as follows:
Messrs. Wing (Boston) 1 Morgan (lJew. York), Rue (Philadelphia),
Rowe (Cleveland), Lyerly (Atlanta), Forgan (Chicago), Watts (St.
Louis), Mitchell (Minneapolis), Swinner>-(K!:tnsas City), Vlilmot (Dall'ls),
Fleishhacker (San Francisco).
Among matters of interest discussed by the Boo.rd nnd Council
were the question of discount rn.tcs at Federal Reserve Banks, in
which the Council
~ecommended
no changes.
The excellent
distribution of the Third Liberty Loan was commented upon as likely
to bring about a corttraction of loans during the next few weeks.
The question of rates to be allowed by banks to depositors, especially on deposits made by ~anks with othar banks was reviewed; as
well as the plan for curtailment of unessential credits vd th whith the
Council declared itself in fullest accord.
Legislation now pending in
Congress with reference to amendments of existing law was also considered.
In the afternoon members of the Council conferred with the
directors of
1h.tf Y/ar Finance Corporation in order to exchange views con- t
cerning the general situation.
\
~958
Travelers Leaving the Country
Instructions have been issued by the Treasury Department to
collectors of customs to permit t.rayeJ.ers leaving the country to
carry on their persons or in their baggage:
(a) United States notes, national-ban:tc notes, Federal
reserve notes, or Fede=el reserve bank notes not to
e::rceed ,1~1, 000 for each ad.ul t;
(b} SUbsidiary silver cojns not t0 exceed $100 fo;,; eooh
adult, su~~ coin to be in lieu of a like amount of
notes under \a) above.
Collectors of customs have been info:rmed that in dealing
with travelers they rray act in accordance with these regulations,
\7i thout conmunic at ing with the Federal Reserve Board or with the
Federal Reserve Banlr: of their district.
Travelers viho desire to taJce wi-t;h them silver dollars or gold
coin., or gold or silver ce.rtificates in a:ny amount., must obtain a
license frrnn the Federal Reserve Bank of their district., from
Yihich application blanlts may be obtained. Whenever such 1 icenses
are issued, the Fec3.eraJ. Reserve Bank vvill give due notice to the
collector of customs at the port from which the applicant expects
to' leave the Uriited States, and collectors of cus~oms have been
notified that in dealing ~ith travelers to vmom such licenses have
been issued they may act >vithout communicating vd.th the Federal
Reserve Board.
X-959
FINANCING THE WAR.
Considering the size of our country and the wide distribution
of our population; considering also the distance
f~om
actual
~litary
operations, it is not surprising that it has taken a year for the public
to appreciate the seriousness of the vva;;· that is now being waged, and to
form some adequate conception of wh':l.t it is all about; but thanks to the
operations of the draft law, and to the three campaigns of education in
connection with the sale of Government bonds, there can be no doubt in
any one 1 s mind today that the citizens are solidly behind the Congress
and The President in supporting any measures that may be deemed necessary
to the successful prosecution of the war.
The subject of financing the war is not a simple one to deal
with; it does not lend its0lf reacl.ily to popular oratory, so because it is
dry 1 and because it is
ccmplex~ i t
ia largely left to the specialists.
On the other hand the effects of bad financing are so serious that it is
highly desirable that the subject be better understood; and for that reason it will be
rr~
endeavor to state as briefly as I can, and in as simple
phraseology as I can co!mand, the principles involved and the probable
results of various measures already adopted or in contemplation.
\rv'HAT THE GOVERNMENT NEEDS !N PROEECUTING THE WAR.
To begin with, as will be readily conceded 1 war is essentially
wasteful, and
therefore~
to counteract the evil effects of the
war~
there
must be great economy.
When a nation goes to war 1 the Government as the representative
of all the citizens nust take nany men out of productive
use them as soldiers.
employ~ts
and
It nust take other men and women from their various
occupations or avocations and employ them in making munitions and equip-
.::-
X-959
- 2-
ment 1 or
b~ilding
ships, docks, and all sundry things which are required;
and finally the transportation system of the c~niry must be taxed to the
utmost to collect, distribute and forward the men,
ihe munitions, and the
equipment,
In other words, the Nation requires, using a phrase which is already hackneyed,
11
goods and services".
It
ILU~t
obtain the services of the
men and women, those who fight and tb. ose who se ITe in other capacities. Bu.t
in order to obtain this servi6e or theau
accumulate
money~
&rL.terials, the Governtnlnt u:ust
because tha·t is the co:rmon denominator to which goods and
services rray be reduced, oor t:ne termr. in which their value rray be expressed •
•
Hence, it is for this reason tha.t the first act of a nation at war is to pass
laws authorising it$ fiscal or'Treasury officials to raise money bJ taxation
or
or b~ borr9Wing/both- It is clea~ that the greatest financial errors ever
n:a.de in attacking such pro'l:llems have. ,,sually been due to a failure on the
part of a nation's leaders tc B-Fzr('eciate th€< seriousness or rragnitude of the
uatter.
Thus at, the beg:i.nn:l:u.g of o11r. C5.vi,. War, President Lincoln called for
seventy-five thousand
vo:u~te:7:.· s~ldiers
financial plans then made wAr3
soldiers that would be
requ~.retl
b~sed
for three months service, and the
upor.. the
thfi~·r:-r
that the number of
woulO. not be ver: large, and that the dura.-
tion of the war w?uld be sbort.
Even with the li.nitsd
pe:rsp~ctive
we ha-re of the present contest
in Europe, which began less than f ou!' years ago, it is apparent to us already
that all of the European
natio~s
greatly underestimated the magnitude of the
struggle 1 and if we have bean more forehanded in this country 1 it may be
attributed in great _pa.rt to the fact that the imoense scale of EurQpean
operations has becone apparent to us and we have thus been saved fram making
some of the mistakes that were made by the nations of Europe.
However, it is
. ·f·
.·.11'>..
.f
-a-
•
X-959
explained 1 it is certainly a fact and an interesting one, too, that the
expenditures by .our Nation the first year of the war have been actually less
than
estimated~
because the ability of the counirJto provide goods and ser-
vices has actually lagged behind the
appropr~tions
made by Congress and the
estimates of the fiscal officers of the Government.
RAISING MO!\lJI:Y.
There are two ways, and perhapR only two ways, in which the
government of a nation can secure
fun~s
from its people.
It must do it
either by taxation, which may take any one of many forms., or i i n:ust do it
by borrowing from the people and issuing its bonds or ••promises to pay" in
FUrther-mote; when tha necessities of a Government are as great
exchange.
as they are with us in the preser.t crisis, every effort to obtain funds must
be employed.
On the other hand .. irrespective of how funds are
raised~
the
ul ti:o:ate source is the sav:l.ngs of the people, existent or potential. If the
existent savings of a wealthy nation like the United States could be tapped
to any large extent
1
there would be little difficulty in financing even so
great a war as this; but the o.i:fficulty_ is that people's savings are nonexi~tent
in the form of currency or coin 1 but are represented by investments
in Government and aunicipal
in
i~prove~nts;
in colleges., schools, churches;
hoaes, factories., railways and steamships; or as the phrase usually goes,
in ''bricks and mortar".
termed producti!e,
that
A large percent.age o·f these investrr.ents rray be
is~
investments of such a nature that they yield
a. return in the form of interest or profit, and even those permanent ex-
penditures which do not yield monetary returns 1 may be rightly claimea to
yield a compensation in the
fo~
of greater comforts or enduring satisfac-
tion in some form.
Starting with the assumption that we can finance the war only from
people's savings~ either already existent (and not appropriated to other uses)
X-959
- 4 or prospective, we rray go on to consider and discuss the best rr.ethod of
diverting these savings to the coffers of the Government.
To that end let
us first consider the subject of taxation.
TAXATION.
As already stated, taxation may take rrany forms; for example, we
may have direct taxes against the individual 1 such as the inco~ tax or the
real estate tax; or we rray have an indirect tax in the form of taxes on purchases or upon merchandising, rranufac"turing, or other enterprises 1 whether
corporate or not, which, while direct in one sense, are in their final
incidence indirect upon the ind:i.vidual.
The extent to which
with the conditions under
t~xes
whic~
rray be applied, of coursel varies greatly
the taxes are levied, but it is generally
recognized that in war, a loyaj, people vlill sustain its Governusnt, and will
cheerfully bear a far more hea·vy burden of taxation than in ordinary times.
There is naturally a wide d.ive:rsH.y of opi:>1.ion as tn how taxes should be
levied, as.to the
inequ~lit:r
o! taxn.tion, etc.J. and while it is at best a
subject upon which it is e:ccoedi7lgly difficult to secure a complete agreement, it is safe to sB.y that the people will, in such times as these, accept
the decision of The Presiden·t and the
While i t is out of the
C~Jns;ress.
·q:uest~.on
to attempt to cover the whole
field of taxation in a iew brief parz.gr·aphs,. it is at leant proper
to set
down some principles which are to be generally agreed upon by the experts.
first:
It is very
desi~ble
that the taxes shall be so applied that
,they will cause people to economize, for 1 as already stated, the only source
of funds is savings and the only one way to neutralize the wastefulness of
war is by the most rigid economy.
Second: Direct taxes, such as the income tax in the United States,
!
... 5-
X-959
or the real estate tax, used in most of our cities, have a distinct merit
because they can not be avaded, and the individual knows exactly what he
is paying•
...
Thitd: Indirect taxation, which may taJte any one ot severaJ. forms, is
highly desirable in some respects, though objectionable in others. ln so far
as it operates as
~-tax
on consumption, such for example as
a tax on tobacco
and spirits, or on articles of food and luxury, it is very valuable both
because it is easily collectible, and because by adding to the cost of the
article it tends to reduce its use, and therefore results in economics.
Indirect taxes are
p~ular
with the legislators, because the tax
is included in the price of the article, and is paid by the public without
grumbling, and in so far as this form of taxation does not fall upon the bare
necessities of life it is desirable. (*)
Other forms ot taxation such as corporatlon taxes, presumably
direct in their effect are, in many cases, indirect.
The reason is that the
corporation must pass on the tax either to its stockholders, its creditars
or the consuming public,
~d
the result is that even so justifiable a tax as
an excess, profits tax is largely paid by the ultimate consumer without his
knowing that he is making the tax contribution. The tact to be borne in mind
is that taxes enter into the cost of production and cost of marketing commodities just as much as wages, hence the consumer pays them when he pays his
butcher's and grocer's bill or his rent.
(*)
Taxes· on the consumption of necessities of life are objectionaal~-' but
even fuel, meat. bread, sugar, etc., should be taxed if used in more
than
necessary quantities~ - Just how such taxes· can be applied and not be evaded
is ~ ma..tter wor·thy of some study. -
X-959
- 6 -
Taxes at th0 source when applied against public service or public
utility corporations (e.g., gas. electric 1 telephone, telegraph. or transportaticn) which are under contract or law required to furnish service at a
.
fixed cost can not be thrown upon the consumer, except (and that is an important consideration)
in the for.m of diminished quantity or quality of service,
and llllst therefore come in part if not wholly out of the profits or dividends
of the owners.
This sort of taxaticn is unequal and undesirable chiefly because
it results ultiwately, if not at once, in the impairment of the service which
the public desires.
THE LIMITATIONS ON TAXATION.
It may be asked with a good deal of force, to what limit
go in fixing·its taxes?
~ay
a nation
That is indeed a difficult question to answer, and one
in which experience and education are the only safe guides.
It was not many
years ago that a national tax of kro biD ion dollars seemed very high ·in the
United States, whereas we C::in
n(JW
lt:ok at national taxes which will
possibly twice this figure, witfl considerable equanimity.
taxation, as about
until he tries".
~any
othe::- things, that
11
yield
It may be said about
ong does not know what one can do
It is prcba'cle that if the public were thoroughly informed
as to the advantages of the
11
pay as you gon policy> and appreciated the com-
parative results fro:n raising funds by taxation and raising them by issuance
of bonds, it would submit with
cb~~rfulness
to a more severe form of taxation
than any yet suggested, but rru.ch educe.ti on is needed to bring our people to
the proper frame of mind.
The individual) whether in private life or in the conduct of his
business, must not feel that taxes are so severe that he can no longer endure
them. or that his business is to be ruined.
He must be convinced that the
winning of the war and the future safety of the nation depends on sound war
finance, and that that involves heavy taxes, because 1'we must pay as we go" ..
- 7 -
• It is an undeniable fact that all forms of taxes are unpopular 1 that almost
every individual Who pays taxes has a deep rooted convietion that some other
individual has
~anaged
to evade his share, or ·is paying less than he should.
At the same tiua, the payment of taxes, whether national, State or municipal
tends to bring home to the citizens the 5.mportance of an efficient and good
governn::ent and contributes to good governrr,3n't by i"rnposing upon the citizenry
the necessity of watching public expendi·h.:.res.
SECURING FUNDS BY BOJJlOWING.
The only other alternative for raising money to pay for the war is
by borrowing it from the citizens through the issuance of Govarnn::ent bonds.
BorrOWing money from the public is the usual way of financing a war.
One obvious reason for it is that the machinery for borrowing is simpler and
can be put into operation moro speedily and easily than the machinery for
taxation.
As soon as a nati0n detJnnines upon this course there is compara-
tively little room for dif.t:eronccs of ('lpinio:n,
and the economists trat the evil effocts cf
~nd
it is only among the experts
borr~ing
are appreciated. Howev8T1
"it should be o)vious to ar..y on9 th.:.t the s01-trc9 of snppJ.y, whether tQe funds be
borrowed or whether they be ta!wn by te.xa.tionJ is the sax:n.e, to wit, the savings
of individuals.
In one case these savings are contr:i.t'.lt;ed by the individual
to the Govermr.ent once and for all 1 in the other case they are loaned to the
Governn::ent with the prom:i.se of
r0paymerri..
in one case we make the
gGneration pay for the war whereas in the other
pre~~nt
It is the corrmon understanding that
1
case we think we are. putting the burden v.pon the future generation; but this
statenent~
in the opinion of may econonQSts, contains a fallacy which should be
carefully studied and analyzed.
The economists who believe this statement to
be fallacious maintain that there is no way in which the cost of a war can be
deferred; that the reason the war must be paid for at the time and not by
X-959
- 8 -
posterity can perhaps be best explained by pointing out the essential fact
that what the Government requires is 1 as we have already said.,
11
goods a.nd
services 11 ; that the services of the soldiers and the services of the n:en and
~uen
behind the lines~ to rrake the nunitions, clothing, etc., an~ to supply
transportation by land and sea, rrust be paid for when supplied.
The conception tha a government could nake posterity pay for present
day expenditures seems to have becorre fixed in the public mind from the analogy
of every day corporate finance.
Thus when a railway, or a mining or
manufa~-
turing corporation, or a merchandise undertaking raises capital it borrows
from the public today with the expectation of paying the money back from the
a
accruing profits.
In
such/case~
if the ehterprise is successfully administered,
the public has contributed to it and so has borne the burden as well as en)9yed
whatever profits the undertaking rray have yielded.
In that case the funds
originally contributed are not spent for goods and services .. which are thereupon consurr.ed and wasted., but are spent in creating and developing an organization which will produce goods or services for sale to the public, and which
will from the profits from future sales repay the investors.
On the other hand,
when a nation borrows money from i.ts people the money is at once spent for
munitions of war, for food, clothing,. blankets and a rrul titude of other things
which add nothing to the wealth of the nation 1 and which are soon consumed.
The further fact which seems constantly to be lost sight of is that
the same people from whom the money is borrowed by the nationJ rr.ust be taxed
to pay the interest and repay the
principal; for the money has been spent
for the conduct of the war and not to create new or added earning capacity.
Because the truth of this staterrent may not be readily conceded 1 let
me see if I can rrake it more plain,
Let us suppose that we were a nation of
a million people, each with an annual income of ten thousand dollars.
X-959
- 9 -
If the
Governw~nt
should call upon us to subscribe to the Liberty Loan bonds
and we each subscribed the sane amount 1 say one
ment would receive a
tbousand dollars, the Govern-
round billion of dollars and we or our heirs would re-
ceive forty million annually as interest upon our investment.
pay back the principal at zr.a.turity?
Governzr~nt
V\J'hy we 1 the sar.ce people from whom the
J.n other words 1
borrowed the money.
We are lending the money to ourselves
eventually repaying the principal to
::~.nd
Y'{Q.
sorr~
might do nothing".
~
illil. Government. (*)
paying ourselves the interest and
ou~selves
at naturity.
"what i f s orr.e of us do not subscribe to the bonds?
share and
But who would
But 1 you ask,
Some might do twice their
In that event 1 what would happen would be
that the rran who did not subsc~ioe would still have to contribute in payrr.ent
of taxes for the repayment of the money.
Thus 1 he would be required to pay
taxes to rr~et the interest on his assurr~d share of one thousand dollars worth
of bonds 1 even if he had net subsr.rib9d to the bnnds.
In the case assu.rred,. eric.:h rr.an h"ts contri.bu.ted ten per cent of his
incorr.el or one thousand dollano: c:.nd has to pay in taxes each year enough to
pay himself the forty dollars
the
bonds at rraturity.
~f
interest due him1 plus enough more to pay
If the h:ond.s n.m for twenty-five years that would
be 1 say, forty dollars a year more as a s2.nking fund, or., say eighty dollars
total.
If he does not subscribe:. ·and eJ,other rran te.kes his share 1 he receives
no incon.e £rom Governrrent bonds vvvned by him) but finds himself taxed for his
share of the interest and sinking ftmd payments.
(*) Lincoln expressed it in undying words: "A Governn;ent of the People,
by the People., for the People".
X-959
- 10-
INFLATION.
The essential difference between raising money from the public by
taxation and ~aising it by the issuance of bonds 1 is the resulting inflation.
Inflation is a word that is rruch used 1 but not always understood.
In its
simpler and most readily comprehended rreaning it is that fonn of inflation
of the currency which was con:.mon in our
c::.vil
W;:;.r, when the Government, in-
stead of printing its promises to pay in the form of investrr.ent bonds,
printed them in the form of cHrreillQY- notQ~.
Under that method of inflation
a governrr.ent wishing to buy a million dollars worth of produce, or to pay a
million dollars in wages,
~uld
"promises to pay 11 , and these
simply print a million dollars of its own
pr~"mises
to r;ay in the form of currency would
thereafter pass from hand to han~ as money.
The extent to which this sort
of inflation rmy go without wrecking the financial structure of a nation
depends entirely upon the wea.J:th of ti.le nati.on 1 and the confidence which the
public or other nations have in its ab:i.J.ity to keep its promises.
The usual
symptoms of such rr.etho·ds of inEation are tl1e diss.p]_)earance of rr.etallic money
and the general advance in the prices 0f commod::i.tios.
In this terrific warl
moet of the European nations have resorted to this or similar rr.ethods of
inflation, and because the oper.:--,tions of various governments have been
united through banking transar.tions anr. by reason of 5.nterdependence and
close international reJ.at) onc4h.i.p) even those nations entirely unconnected
with the war have felt the effects of inflation.
As a result 1 there has
been in effect in the last three and one-half years 1 a world inflation the
like of which has never before occurred.
To illustr.ate:
Prior to our
entry into the war 1 when the European nations were buying heavily in the
United States 1 they paid largely in gold for what they bought 1 and as a
result about a billion dollars in gold coin caree to this country in the
.
. "'
X-959
- 11 -
period of two and one-half years.
The reason the European nations were able
to send us their gold was that they printed paper money for thnir own uiiel
releas~ng
gold for us.
explanation of the
But that gold inflation in this country is one
general advancl3 in prices of all cornrnoditiesl although
undoubtedly it is not the only explanation; for it rr.ust be freely admitte~
that prices have been effected 1 first by sc:arcit.y ~ occasioned by increased
dena.nd from Europe for rrany articles prod:u.r.ed by us; second by reason of the
fact that increases in taxes and wages of labor have entered into the cost
of production and sale of all articles 1 and account for a share of the in-
creased prices of commodities. (*)
lt is doubtful if we in our country could have avoided inflation)
no rratter how hard we had stuck to the plan of higher taxation or the "pay
as you go" policy 1 but we rray as well frankly admit that while our financial
policy has been conservative, thA great increase in our currency issues has
contributed to the general
infla~io:t.
T11..1e~
we have not issued currency or
Goverrur.ent prornises to pay in the form of circulating notes; but Vl£e have
issued
boni•~
and we have pGrrrdtted - and indeed could not have forbidden -
(*) The extent to whir.:h inflation has accmmted for the general rise in
prices is of course debatable. Those who dispute it, point to the rapid
advance in wages since 1914, due to thf3 increased derr.a.nd. for labor and
the withdrawal of rr.any soldie:.s from ir.du:.Jtry.
The 1.ncreased derr.and
or diminished supply nf rr.ar..y rorrr:.odJ.ties :i.s also pointed to.
As
against these argun:ents we have the increar:ed index number of more than
two hundred comnodities 1 the increase:\ deposits and loans and discounts
of our banks 1 the increase in thr? volum3 of currency fer capita and the
increase in the national debts of all the great nations.
X-959
the use of these bonds as collateral for bank credit.
Governrr.ent
has
Thus while the
not paid for "goods and services 11 with its own circulating
notes) it has issued its promises to pay in the form of bonds and it
permitted the-se bonds to be hypothecated
~as
!or currency; and thus 1 through
our banking system1 has created a naehinery under which the owner of Government bonds might secure bank credit with which he might pay by check or in
. currency for what he bought.
We have thus far in this country been able
to hold down the issuance of currency
by
rraintaining a high gold reserve
against itJ and there is no national currency that is on a
strc~ger
basis;
but to deny that the issuance cf Gove:rnrront bo;:1ds to raise funds to pay for
goods and services result in inflation 1 would exnibit an unwillingness to
look the facts in the face.
How raising of funds to pay for all but perrranent improvements
results in inflation might well be illustrated by the analogy of corporate
finance familiar to lliost people.
If a railway corporation or a nanufactur-
ing concern were to issue its bonds or notes to
pay
for wc.ges or fuel, it
would at once be recognized as doing a reckless thing, the common rule with
all honestly managed corporations bsing that money raised by sale of bonds 1
notes or added capital can only be sp9nt for
those
for~
permanent betterments, or for
of expenditures which increase the earning capacity of the
corporation.
THE GOOD AND EVIL EFFECTS OF INFLATION.
~bile
the effects of inflation are manifestly bad, it would be
unfair not to admit that inflation has
soiT~
good effects.
In so far as it
increases the prices of corr.modities generally, it results in compulsory
(except vrbere w~.ges or ooney incornee increa.se in li~e proportion)
econoiiJ.ies.;and in this sense operates as a sort of tax on consumption.
Hence 1 if it be true, as we have contended, that econoiDf is necessary in
X-959
- 13 war tinss, it might be urged that a heavy consumption tax was a most desirable
method of bringing about enforced econondes.
A just answer to that suggestion
seems to be that such a form of consumption tax falls with great severity
upon the citizens in general, because it adds to the cost of the necessities
of life, upon the wage earner it falls hP-avily
able to get his wages advanced in
propor-~.::.on
~unless
and until he is
to the amount of the inflation -
and upon those dependent on moderate f:i.xod incomes or fixed salaries it is an
unduly heavy burden.
It affects, of ccurse, all corporations or individuals
engaged in nanufacturihg and other innustrial enterprises, but it may in nany
cases be passed on to the consumer in the shape of increased prices.
With
those corporations who, by reason of contract or law, are required to accept
a fixed compensation, it is very burdensone.
dictrrent against the results of
infla~ion
Perhaps the most serious in-
is the fact that it dislocates all
the delicate inter-relations between wac:'?s, compensation, payrrent for services,
prices of con:.modities, etc., ann_ althr·'l..o.zh bT"ov:.;ht about by the operaticilns of
the Governrr.ent itself, its effect is to J'ai"le pri:es against the Governrr.ent,
thereby increasing the :r.3ce:;::sity for still
h~rther
In other words, it est2.blishcs what rm.y be termed. a
first raises prices, and by so doing
money, and so still further rc;.ise.::J
cre~tes
p::-ic0~1
taxation or borrowing.
~~c-19..1:§. Q.Yif.;t~in
that it
the necossity of raising more
again.
Our conclusion r.:a"lt tl;.e:-of o:~c be:
First:
That the Go7enJ.rr.ent needs rigid eccnomy d all its citizens
to win the war; that it requires it not only because it needs money to
X-959
- 14 -
comuand and pay for goods and
services~
but because every self denial will
release some goods or some service which the Governnent can use to good
advantage.
Second: It is clear that taxation is not only the best way for
citizens to support their Government, but taxes intelligently applied
will do uuch to produce the very savingo of which we have been speaking.
Lastly: Taxation and the
resulta~t
savings are the only ways to
mitimate the perils and pitfalls of inflation.
F. A • DELANO.
W. P. G. HARDING, GOVERNOR
PAUL M. WARBURG, VICJ GOVIER NOR
FREDERIC A. DELANO
ADOLPH c. MILLER
EX-OFFICIO MEMBERS
WILLIAM G. McADOO
SECRETARY OF THE TREASURY
CHAIRMAN
CHARLES S, HAMLIN
.JOHN SKELTON WILLIAMS
H. PARKER WILLIS, SECRETARY
SHERMAN P. ALLEN, A.!ST.SECRETARY
AND FISCAL AGENT
FEDERAL RESERVE BOARD
COMPTROLLER OF THE CURRENCY
WASHINGTON
ADOR.&:SS REPL. Y TO
FEDERAL. RESERVE BOARD
:ir-961
May 27, 1918.
Dear Sir:
I run instructed to inform you that the Federal
Resorvo Boaro. has ordered that in all
blmiitet license
is.. issued
c~ses
uhero o..
permitting continuous ship-"
ments of foreign currency out of the country, suc.'l
licenses sh?..ll specify that Shipments may. be permitted
only to those countries by whom the currency
being
e~1?orted
be required to sign a custon:er's
b~r
~e
issued should
st~temont
us rc-
Executive Order of Jo.nu2Xy 26, 1918.
Yours ver:;.r truly,
Secretary.
Fcd.eral Reserve Bmi!::,
is
wo..s originally issued •
.Pn.:rties to whom such 1 icenscs
quir·x"t
~miCh
CONFIDENTIAL
DIVISIOlT OF LOANS AnD C:UI'.RJ::!TCY
x-962
TR&'\.SURY DEPARTJ''!ENT
REPORT OF SILVER CERTIFICATES 17ITIID:RAWU FROU CIRCULATION li1TD CANCELLED
ALSO SILVER DOLLARS MELTED OR :SROKEH UP
DURING THE ¥lEEK ENDING FRIDAY, MAY 17, 1918,
AND FROM APRIL 23. 1918.
..
l• Lcr::reg2.te
1TUHJER OF NOTES
..
'
i•
••
Silver certificates ~
·ni thdravm from dr~ i
•
culation .ond cance::..-:
led bet\7een ATJril
:
23,c:md t12.y 10,1918. l1,222,800
(NET)
:
~ithdrawn and cancelled ~~ek ended
;;p:;c
.jp20
______,~ ainount
; Doll-::crs
l.:;,;:_oo .'
...
•'
t
•
.·
•'
\
:.
't
\
~
I
796,050
24,500
1,?78,200
:
:
l ~ 5('6
10,110
..
l
46
...
!
~
{
•'
''
• $9,733,000
'
.
''
•''
.
'' 5,101,000
4H .. 5
~Ma~y--1~7~·~1~9~1~G~·----~-+--~o~~~i2~--4~0~6~·~6~4~4~r-~6~4~7~,1~6~2~~:~1o~·~5~2~e--~1~5~·~3~2~9~~--~~~~~----~~~~~~--..:;
Total wi thdrawn and
•
:
~
'
cancelled since
l
~
:
~
.•...
.'''
~;.
April 23, 1918 lNET);l,921,542 !1,262,694
1,925,352
~-35,028 :15,439
I
I
I.
1,920
ts2
~ 14 '834 ,000
Sta.ndard si 1 ver dollars rre 1 ted or broken up between April 23, and Mcy 10,1918, ••••••• 29 • 737 ,374
11
11 week ended May 17,1918,
"
"
"
"
:'
•••••••••••••••••• 8,144,000
Total, ............................................ ·- ................................. 37,.881 9 374
{Signed)
'lff.::..y 13. 19:8.
Chief~
wm.s.
Broughton
Division of Loans and Ourrenqy.
X-963
FEDERAL RESERVE BAN¥ NOTES ON HAND
Mcy 20,1918.
ONE YEAR TREASURY
NOTES ON HAND
;:<:,
Bank
5's
Total
50's
20's
lO's
Boston., .........• :
0
0
0
0
0
$ 1,416,000
New York •..•••••• :
0
0
0
0
0
2,226,000
Philadelphia ••••• : $ 320,000
$ 440,000
$ 240,000
Q
$1,000,000
1,537,000
2,000,000::
0
5,C00,000
2,660,000
Cleveland •••••••• :
l~COO,OOO
2,000,000
Hiohmond ••• ~ ••• •.:
2t10~000
400,000
400,000
0
ls000,01)0
1,513,000
Atlanta, .•••••••• :
54J,CQC
480,000
480,000
40'))000
2,000,000
1,141,000
Chicago ...•...• **:
0
1,400,000
1,600,000
0
3,000,000
2,962,000
St. Louis . .. ~ .... :
0
0
0
o..
0
511,000
Minneapolis •••••• ~
1,32D,000
2,680I'uoo
()
0
4.,000,000
880,000
Kansas City ••••##:
857,3CO
693,000
ace ,:)OO
0
2,350,300
1,374,000
..
l
Dallas ••••••••••• :
627,600
440,000
240,000
0
. 1,307,600
1,430,000
San Francisco •••• :
1,680,000
1,960,000
1,360,000
0
5,000,000
1,500,000
. Total ••••••• : $6,644 '900 :$10,493,000
$7,120,000
$ 400,000 :$24,657,900
$19,150,000
.
Note-Plates for fives, tens,twenties, fifties, and hundreds have been engraved for both Boston
and New York; and fives, tens nnd twenties for St •. Louis, but no currency ordered printed.
**
#II=
$2,000,000 shiuped May 8 on deposit of bonds.
349,600
"
in rer>lacement of mutilated notes destroyed~
.
X-964
ST.ATEMEHT
FOR
T_ill;
PRES§.
The Federal Reserve Board today elected Howard Bruce
of Baltimore; Class C Director of the Federal Reserve Bank of
Richmond.
Mr. Bruce suooeeds Mr. Gcuver.o.eur of North Carolina;
resigned.
Mr. Bruce is a native Virginian; a graduate of the
Virginia Military Institute.
For the past sixteen years he has
been connected with the Bartlett-P..award Company of Ba.ltimore 1
probably the largest emp:aters of labor in Baltimore and is
now President and principal owner of that Company.
Third Liberty CGUnpaign
e~ery
employee of this Company, number-
ing over 12 1 000 were buyers o:f ·Liberty bonds.
:May 24)
1~18.
In the
x-965
Release for morning
papers of May 25.
The work of the Division of Foreign Exchange of
the Federal Reserve Eoard has developed so rapidly that it has
been found necessary to secure an Assistant Director of that
division.·
The Federal Reserve Board has been able to enlist
the serVices of Mr. D. H. G. Penny, who has volunteered to
serve as Assistant Director of F oreign Exchange, and who during his incumbency will receive
l~ave
Irving National Bank, of which he is
of absence from the
Vice~President.
W. P. G. HARDING, GOYIRNOR
PAUL M. WARBURG, YIC:I GOYlRNOR
FREDERIC A. DELANO
ADOLPH C. MILLER
CHARLES S. HAMLIN
EX·OP'PICIO MEMBERS
WILLIAM G. McADOO
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SK£LTON WILLIAMS
COMPTROLLER OF THE CURRENCY
FEDERAL RESERVE BOARD
WASHINGTON
H. PARKER WILLIS, SECRETARY
SHERMAN P. ALLEN, ASST. SECRETARY.
AND fiSCAL AGENT
AQDRESS REPLY TO
FEDERAL RESERVII: BOARD
Ji-966
May
24~
1913.
Dear Sir:
For yo-ur infonnation there is enclosed a copy of a statement
issued by the Division of Lows and Currency of the Treasury~ showing silver
certificates vvithdrawn from c~rcula tion and ca.ne-elled, and silver
dollars meillted or brolten up dur:lng the week end.ed. N.ay 17th. You ·will
notice that as a result ot: these oper::~.tj,or..s 7hG circulating meclium lms
been decreased by $37,881~374.
In order to avoid arry shortage in small bills, the Board is of
the opinion that Federal Reserve banlts s:Could, acting together as a
system, replace vdthdrawals of silver dDllars and silver certificates
by the issue of Federal Reserve bank notes. It is the intention of
the Board to ltee:p the Federal Rese:t'11-e banks info111.1ed each -..veelt of the
amount of silver and silve~ certificates \nthdravv.n and to allot to
each Federal Reserve banlc j.t3 proper proportion of Federal Reserve
ballk. notes as nearly as possible on tile basis of distribution outlined
in its letter of April 29th, 1::~917.
It is desirable that Federal Reserve banks should get their
Federal Reserve baruc notes as received, into circulation, before
issuing additional Federe.l Reserve notes. For the present, it will not
be :possible, however, to adb.e.1.·0 str~ ctly to the basis of distribution
outline in the letter of April 29th becro1se the amount of Federal
Reserve banJ.c notes available in the '~"tari0us distr>.ctl'i is not tmiform,
and three of the Federal neserve banks 112.lre 110 banlc notes :g,vailable at
all. A statement is enclosed Showing the amount of Federal Reserve
banlc notes available for each bank on May 20th.
·
It has been deemed advisable that Federal Reser'7e banks should
first deposit their one year 3% notes as seour5.ty fo::- their Federal
Reserve banlc notes and that they give power of attcr:1ey to the Federal
Reserve Board to request thP. Secretary of the 'rrec;;.sU.l'Y from time to time
to deposit with th'3 Treasurer of the United Statas, through the
Comptroller of the C!u:L":rency for accou.nt of the resiJactive banlcs, such
amounts of Unitec. States cer~if:i cateci of ino.ebtedness as rray be
necessary to secure, after all the on'= year 3% notes have been deposited, the Federal Reserve ba:ulc notes '.7hlch v;ill be issued in
substitution for silver ~ertif:i.cates withdravv.n. Tr..e Treasurer of
the United States can thereupon. charge the ac~ount of each Federal
Reserve banlc, as a deposit in his gen~ral account, v1i th the amount, of
the purchase price of the certificates.
In order to carry out this plan the Board requests the Federal
Ji-966
Reserve banks to call for Federal Reserve banlc notes in the amounts
indicated below and to deposit as security with the Comptroller of
the Currency an equivalent amount in one year 3% Treasury notes:
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
Minneapolis
Kansas City
Dallas
San Francisco
$1,000,000
2,660,000
1,000,000
1,~.411000
2.,962,000
880,000
1,374,000
1,307,000
1,500,000
As soon as Federal Reserve banlt notes for all of the banlts are
available the Board will mrute the proper adjustment between the
·
banlcs.
Very truly ;yours,
Governor.
W. P. G. HARDING, GoVERNOR
PAUL M. WA.RBURG, VICE GOVERNOR
FREDERIC A. DELANO
ADOLPH C. MILLER
CHARLES S. HAMLIN
EX·OFFJCtO MEMSERS
WILLIAM G. McADOO
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN Sl{f'LTON WILLIAMS
COMPTROLLER or lHE CURRENCY
FEDERAL RESERVE BOARD
H. PARK£R WILLIS, SECRETARY
SHERMAN P. ALLEN, A3ST,SECRETARY
AND FISCAL AGENT
ADDRESS REPLY TO
WASHINGTON
FEDERAL RESERVE BOARD
Ms,y 27, 1918..
X-968
t~1e
Nmv that
third Liberty Loan campaign is over, it seems
that we have, during the next two months, a f~vor.able
opportunity of
rraking an organized and determined effort in each Federal Reserve district to
secure
State bank members~
The fact is not overlooked that your time and that of
·other
officers of your bank is fuliy occupied with the constantly increasing
duties which are being placed upon the Federal :?-eserve banks, and i t is
suggested, therefore, that
it may be advisable for all Federal Reserve
banks to engage one or more men to devote their entire time in organizing
and prosecuting a systematic carrpaign for bringing in the member banks.
Possibly competent men may be found who would give their time to this
work as a voluntary contribution, but if necessary they could be given
adeqpate·compensatian.
To secure the best results it may be found advisable that the
districts be organized in groups as has been done in the Liberty Loan campaigns.
The organization should be carefully planned and ~ch thorough
follow-up work done.
The military situation in France and the heavy
financial burdens which are ahead of us should nake
the present an op-
portune time for driving home the argument that it is the duty of every
'
- 2'-
eligible bank to do its share in protecting the finances of the country.
~nere
is enclosed herewith a copy of a letter which has been
addressed to the Board by Mr. Pierre Jay, Chairman of the Board of Directors of the Federal Reserve Bank of New York.
This letter describes
fully the methods which hEwe berm a.dopted in the second district to
stimulate the State b.'U'..k r.1embership campaign..
that these
It seems to the Board
methods 01.:ght to be very effective, and while it may not be
possible to adopt them without variation in all districts, the letter
offers most valuable suggestions and is sent you for the careful consideration of yourself and of your directors.
I would request that you keep me informed of the steps that
your Board
of Directors r,ny take regarding this matter, and that you
do not hesitate to call upon the Board for any assistance it can give
you in promoting this work in your district.
Very truly yours,
Governor..
Enclosures:
,.. __ A
..
QQ!:I.
X-968
FEDERAL RESERVE
OF
NEW
YORK
BANK
May
21~
1918.
Dear Mr. Warburg:
In accordance with your request I am submitting to you a
rather full
memorandum of the new plan we tried last week for accelerating applications
for membership of State banks.
We have felt for some weeks that iumediately after the close of the
Liberty Loan campaign we should wake a determined effort to get a real
movement among the State banks towards membership in the System.
We have
been disappointed in the lack of results along this line obtained fran
the New York State Bankers Association conndttee, due somewhat to the fact
that the president of the
association~
member and does not wish to become one.
althougn a State banker 1 is not a
Consequently the commdttee gets
no encouragement from him to work for State bank membership.
to remain only the old plan of personal appeal
of the bank.
There seeaed
on the part of the officers
As the officers could not possibly spend the tina required
to travel around and visit the bankers locally Mr. Treman suggested that
we should invite them to come in to call on us in groups, and we have been
pursuin:g this plan during the past week, having had four groups of from
ten to fifteen each on four separate days of last week.
I attach copy of
the letter of invitation, iromwmich you will note that we paid their
expenses.
The method proved to be a great econamf of the time of the officers,
and gave the visiting bankers an opportunity of Visualizing the work of
the bank and of' discussing the matter with one another, two elements
which would have been lacking if we had called on them locally.
X-968
- 2 -
We thought it advisable to rra.ke each of the groups represe.uta.UyerQf
the entire State so that we should not run up against any local prejudices
which might have o·oourred were the groups nade more local.
We began to in-
vite them about two weeks in advance and found this very necessary because
rrany were unable to come and it took much telegraphing at the last to keep
the groups filled up.
In each group we included one or two
officers of
State banks which had become members and this proved most valuable as
it
gave the nonmembers a chance to ask questions and gave the members a chance
to bear witness as to their experience indealing with us and the effect of
nembership on their profits.
In fact 1 we all felt that this feature is
absolutely essential to the success of the plan. We also in some cases
asked the bank officer to bring in a director who was particularly in need
of education.
There is often a single iufluential director who keeps a
bank from joining.
At each of the conferences the programu.e has been about
lO:oo to 10:15
as follows:
Assembly 1 introduction 1 welcome and assurance that we did
not intend to embarrass our guests by asking them to join
the System1 although we hoped before the end of the day
to show them strong reasons why they should do so.
10:15 to 11:15 · Visit to all the departments of the bank.
11:15 to 12:45
Discussion of conditions of membership.
12:45 to 2:00
Lunch.
2:00 to about 3:30
Continuation of discussion and presentation of the
argument of national necessity as a reason for State
bank membership.
The topiGs discussed were as follows:
1.
CONDITIONS OF MEMBERSHIP:
(a)
Capital stock subscription
(b)
Amount, of deposit required.
X-968
- 3 -
2.
(c)
Retention of charter powers.
(d)
Loaning powers not curtailed.
(e)
Examinations.
(f)
Reports.
(g)
Withdrawals.
TRANSACTIONS WITH FEDWL RESERVE BANK:
(a)
Rediscounting.
(b)
Collections.
(c)
Offsets to loss of interest on reserve deposits:
(i)
Where State law petmits many banks can establish
part of thai%" 'balance with Federal ·reaerte bank
out of their vauit cash•
( 2)
Many banks a.ocustomed to carry excess reserves)
largely against ettergencies; feel that when they
become members the facilities of the System make
excess emergency reserves unnecessary~ and can invast the former excess reserves in paper yielding
a much higher rate.
(3)
Use of collection facilities will enable most banks to
consolidate or abandon collection balances and invest
the money at higher rates at home.
(4)
Use of the rediscount facilities of the Federal reserve bank will usually save the country bank money~
as the Federal reserve bank rates are usually lower
than those of the city correspondents.
Many banks ask this question:
indebtedness~
helped to sell Liberty
We have bought certificates of
1
bonds~
and turned in our gold. Is
not this sufficient cooperation with the Government"?
To answer this
we had printed and distributed to those who attended the conferences
the attached report of the United States Trust Company which ansWers
this question very clearly.
X-968.
- 4-
We have handed to each of those who attended a list of the State
member banks in the district in order that they may write to them if
they so desire.
Having taken up all of the topics on the programme in the order
above given, a point usually reached by the and of lunch, and having
have
corrected as far as possible all of the ~any. misapprehensions State banks/
about membership in the System, ending with that which is uppermost in
~he
minds of all of them;
n~~ly,
the cost of nembership (in dispelling
which the officers of State institutions which have already become
me~
bers did splendid work) we proceeded to the real object of the meeting.
This was to present to them the necessity of joining in order to bring
the System up to its full strength and keep it strong 1 this being the
only ground which we have found effective in securing rr.embers.
We care-
fully avoid using the word "patriotic" or "patriotism" in this connection
as the State bankers are very sensitive on
t~is
point.
We emphasize their
patriotic cooperation in buying certificates 1 selling bonds and turning in
gold.
We stated that we did not consider
~mbership
in the System as an
essential test of patriotism be&ause the convers9 of that proposition is
that a State bank which is not a
w~ich
rr~mber
we would not for a monent admit.
is unpatriotic - a proposition
We stated that the reason for
their entrance was purely one of national necessity.
An outline of the
a.rgurrent used is attached hereto. (X-968s.)
Usually after this appeal} lasting fifteen or twenty minutes, had
been made, two or three banks would stand up and say they intended to join.
This usually led to further dissussion with the burden of proof thrown on
those who wished to explain why they did not jo.in.
X-968
- 5 -
At th0 clos8 of the last of these conferences the State ~kers
present asked an opportunity to consider the matter by
themselves~
eluding the officer present from the State bo.nk n:ember.
in-
This was a. good
idea and we shall always suggest it hereafter.
OUr impression is that from 30% to 50% of those who attended will
join the System in the near future 1 altho'lgh many of them were outspoken
opponents of membership when ·Ghey cazre to our conferences) a number of
them baing those on whom we are having to collect checks by express.
intend to continue
thee~
We
conferences during the first week in June until
we have gotten practically every nonu.ember State institution in New York
State to attend one of the con:ferences.
Subsequent expressions from
those who attended have been of the most friendly nature 1 and we are
satisfied that these conferences.are very well wot·th the time 1 energy
and money they
con~ed.
Our belief is strong that the necessities arising from our participation in the war are about the only
movement toward n:embership.
.;~.rgu.ment.
which will lead to any general
We believe thr.t the
prose~lt
tirr.e 1 while the
military situation is , ao nncertain 1 is by h::.' the most favorable to
press this argument horr.e, and we there foro i.rlt.enrt
·~
o continue
tbes~
con-
ferences throughout the remainder of May and the month of Ju::loJ using also
every outside influence we can bring to bear upou
in a determined effort to increase very
individU.;~.l
institutions
greatly our State bank membership.
We believe that soxr.ewha.t the sa.xr:e psychology v•hic.h obtains in Liberty Loan
campaigns can be
develo~ed
in a drive on the State banks, and we trust we
shall not be disappointed.
Very truly
Hon. Paul H. Warburg~
Vice Governor 1 Federal Reserve Board)
Washihgton 1 D. C•..
your~,
PIERRE JAY
Chainra.n.
OUTLINE OF APPEAL TO STATE BANKS TO JOIN FEDERAL RESERVE SYSTEM
ON THE GROUND OF NATIONAL NECESSITY.
1.
Developnant of Au.erica 1 s ideas in
(a)
r~rd
to participation in the war.
MILITARY
When the Gernan Ambassador was given passports in early February 1
1917 1 it was thought that this action would satisfy our national honor
and self respect.
A month later 1 as· subuarines continued to sink our
vessels 1 the idea of armed neutrality was brought forward.
When on April
6 1 President Wilson declared war 1 it was generally understood that our
destroyers would escort convoys of narchant ships and attempt to beat off
any Ge:nran subuarines which might attack.
Toward the end of April the
FrenCh and English missions cane over and told us that in addition to
American material they nust have American men to fight with them.
The
im?ression prevailed that an army would be raised and sent over under its
ONn
general to cooperate with the armies of England and France.
Today 1
after a year has.elapsed 1 we find our soldiers fighting under a generalissimo and our regiments and battalions brigaded with those of England and
France, eating French and English rations and fighting under French and
English generals.
(b)
A year ago our war
~dget
FINANCXAL
for the fiscal year beginning July 1 1 1917j
had not been forrned 1 but it seerr.ed likely to be reasonably moderate.
Finally it proved to be in the neighborhood of $20 1 000,000 1 000.
The war
budget for next year now seems likely to approximate $30 1 000 1 000 1 000.
A year ago the Treasury was selling $200 1 000 1 000. of Treasury certificates
every three weeks.
every two weeks.
Recently it has been selling $500 1 000 1 000. certificater
X-968 a
- 2-
(c)
CREDIT.
The Federal Reserve Syatem1 which is the credit making power of the
country, has increased proportionately.
$700 1 000,000.
ab~t
A year ago its deposits were
Last August 1 after the required reserves had been increased
by Congress, its deposits rose to $1,100,000,000.
Now, after the entrance
of the larger State institutions, the deposits are $1,500,000,000.
demands on the credit power have been heavy.
The
The Federal Reserve Bank
of New York was called upon for $212,000,QOO. of additional credit in
the first nineteen days of last June.
:tUring the second Liberty Loan
period it was called upon for about $450,000,000 of additional credit.
We can not say what
a~nt
Third Liberty Loan period,
of credit
it will be asked to furnish in the.
but it will undoubtedly be large.
its reserves have fallen fram
as%
to below
In a year
60%.
It is of vital importance to the member banks, the nomaember banks,
to 't:he businessof the country, and above all to our successful prosecution of the war, that the Federal Reserve System sh9Uld be able to provide all the credit needed during the war and still continue
strong.
I think nothing would be a_ greater calamity to the banks and business of
the country and would hinder wr participation in the war more than to
have the Federal Reserve System not continue strong.
Yet, although it
has to furnish lOo% of the credit needed, only 7o% of the banking resources of. the country are contributing their share to it.
This is an
unsound and unsafe situation for the country in war time, a.t least, when
it is essential that it should have its J:m.ximun strength.
X-968a
- 3 2..
The Military Situation Abroad.
ho~.
So nuch for our situation at
On the other
side~
all during
the winter months the people of France and England were assured that
their line would hold.
Yet 1 in a little over a week 1 when the German
drive opened 1 the allied line had suffered a great disaster.
Under the
stress of this disaster the British Government accepted General Foch as
Com::rander-in-Chief of the Allied Armies 1 and introduced a bill raising
the draft age in England to 50.
This is typical of the whole conduct of
the war on the part of the Allies.
They have fought the war with hind-
sight whereas the Germans have been fighting with foresight.
The Allies
were willing to make every sacrifice 1 but not in advance; only after
events had shown the necessity for it.
The demand of the Allies for
more and more American troops with the utmost speed is a clear indication
that the burden of the war from novv on will fall increasingly on America
and her only hope of winning it is to get away from the hindsight prograune and make her preparations and above all her sacrifices in advance.
This is the real task to which Americafs brains and energy must be de~
voted.
All through the past two months we have bean wondering where Foch' 3
reserves were.
While 1 of course 1 there is no information available on
this point) it seems reasonably clear to me that Foch 1 s reserves were
the Americans 1 and the Arrericans simply were not there) and because they
were not there the war will be IIUCh longer 1 our suffering much bitterE'r,.
and the sacrifices we nust make nuch greater.
If the American troops were Foch 1 s military reserves) Foch 1 s
financial reserve is the Federal Reserve System.
In order to naintai:n
our full fighting strength and unity in France we nust have our full
X-96aa
- 4-
fighting strength at home
a~
well 1 and we can not have this unless our
credit making power is given such strength and such unity and given it
imaediately 1 as will enable it to respond instantly and unhesitatingly
to any demands made upon it 1 however great they may be.
There seems to
be just as distinct a financial service for banks to enlist in as there
is a military service for our boys to enlist in.
is a soldier in every family in this country.
On the aiterage there
There is all:lo a soldier
in every bank in this country, and this soldier is its reserves.
But,
just as the human soldier can fight no battles if he stays at home but
~st
put on the unifonn and get into the organization and go where he is
needed 1 so the banking soldier can fight no battles unless it too puts on
the unifor.m and gets into the
the war.
or~nization,
at least for the period of
But why do the State institutions hesitate to respond to the
call for mobilization which is just as urgent to them as is the call of
General Foch to President Wilson for the utmost speed in sending our
soldiers over to France?
Solely 1 I believe because of
th~
cost which
they feel they nay incur, although I think that those who have been here
today are pretty well convinced that this cost·., if any 1 is negligible.
But does not the spirit in which Anerica entered the war give us a snfe
basis upon which we uay decide nany of the war ·questions whic!l perplex·
us in our COrJlorate and private lives?
in entering the war.
America did not count the
Cf'ls·t
Nor did America enter the war for any gain or
advantage, for dollars or territory.
She entered the war to give €'Tery
man and every dollar she has to achieve victory for a principle.
So :r.er.
people in every part of the land are asking one another and are asking
the Government not what profits they ·can reap out of the war 1 bv.t cnlr
what they can do, what sacrifice they can nake 1 how they can help to
·.,~
X-968a
- 5-
win the war.
And the reason we feel
perfectly satisfied that the
State institutions are going to join the Federal Reserve
System~
at
least for the period of the warJ is because these same people who in
their private capacity are of faring to make every sacrifice for the war
are the officers 1 directors and stockholders and depositors of the State
institution~~
and when once they understand how vital 1 how necessary it
is for their institutions to join the System1 those institutions will
The
step forward in a body 1 eager to respond to/President's call for a
complete mobilization of the banking reserves of the United States 1 and
eager for the burden and the privilege which The President said must
be
shared by every banking .. institution in the country.
X-9f>8b
• •
W. !3. Augsbury) Esq.,
President, Bank of A»tworp,
Antwerp 1 New York.
Dear Mr. Augsbur;·:
We are asking offic0rs of a few State banks in different parts
of New York State outside Gf New
Yo:.~k Cit~·
tn c::>me to New York on 1fay 16,
to discuss with us the general question oi membership of State institutions
in the Federal Reserve System, and we should be very glad if you could confer with us at ten o'clock on that day and take lunch with some of the
officers of the bank.
We do not know wh.:..t your attitude is tovvtl.rd membership in the
Federal Reserve System1 but we feel very strongly that, whether you do or do
not intend to becorre a member 1 the great financial requirements of the
Governrrent make it desir.able that the workings of the System should be
understood by all
the banks in the district and that we in turn should
know and understru1d their point of view.
Wo trust that you will under-
stand that this conference called is foD a mutual exchange of views and
that attendance will entail no further obligations whatever.
As in the case of conferences of out-of-t~~n b.:..nkers heretofo~e
called by the Federal reservo bank to discuss the collection system, thB
sale of Treasury certificates of :t.ndebtedness and other r-i:l.ttero, we sho'.1l.d.
of course, expect to reimburse you for any expense incurred in
x-esponding
to our invitatio*.
Trusting thJ.t we w.ay h2..Ve the pleasure of seeing you on May 16 1
Yours ver; truly 1
Chairuan 1 Board of Directors.
X-968c
REPORT OF THE EXECUTIVE COMMITTEE OF THE
UNITED STATES TRUST COMPANY
OF NEVI/ YORK CITY .
Novemb~r
13 1 1917.
To tho Board of Trustees:
At the rogula.r meeting of the Board of Trustees of the United States
Trust Company of Now York 1 hold November 1 1 1917., tho following resolutions
were unanimously adopted:
"RESOLVED., That the Federal Re$erve Bank of New York be designated
aa a depositary of the funds of this corporation 1 and that
i t continue a.G such depositary until the furtl:ar order of
this Board."
"RESOLVED,
That the Executive Corr.mittee be requested to consider and
report to this.Board on the subject of th~ relation of
this comJUny to the Federal Reserve Bank System and to the
administration of the national finances during the present
war."
The selection of the Federal Reserve Bank as a depositary of our funds
was 1 on the same day., communicated to the State Superintendent of Banks.
The deposit with the Reserve Bank o.f this district of such portion of our
gold reserve as is not needed in the transaction of our business has thus
becon:e possible.
The subject of the second resolution of the Board; naxrely, the relation
of this
Comp~ny
to the Federal Reserve Bank System and to the adndnistration
of the national finances during the present war., has been carefully considered
by the Executive Corn:xiittee.
Since war was declared last April this company
has constantly sought to cooperate with the Government in ueeting the financial needs of the nation.
We have subscribed to 1 and actively solicited
subscriptions for 1 the two issuesof Liberty bonds.
We have also subscribed
to every issue of temporary certifi•ates of indebtedness put out by the
GoverDIU3nt and have participated in the general effort rrade in this city
.
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')
during the last few months to stabilize money conditions and to facilitate
Governuent borrowing.
In all this we have simply fulfilled the traditions
of the company in time of war and of other national stress.
action of our Board
per~ts
T;e recent
the deposit with the New York Reserve Bank of
the bulk of our gold reserve.
The question now presented is whether we
shall go one step furths.r and beco:r:r.e a fonra.l and complete, as well_as an
banking
independently cooperating part, of the federated/
_ forces of the
country.
While this question was already in all our ndnds, the President of the
United States, on October 16, issued a statenent setting forth the prospective financial needs of the country, and urging all State ba.Dks and
trust companies in the fulfilment of what he described as their soleDlJl
obligation, to join the Federal Reserve System.
During this company's entire
corporate existence we have steadfastly adhered, in theory and practice, to
what we believed to be the fundamental distinction between a trust company
and a bank.
1'.,kt~
This distinction has heretofore rendered direct membership
in the admirable Federal Reserve System neither necessary nor helpful to
us.
OUr designated depositary banks have fully represented us in that
system, and our business being strictly confined to that of a trust company
as distinguished from the general banking business, we have heretofore considered only our awn interest in deter.mining the question of nembership in
the system.
The situation is now, however, radically changed.
The appeal ·of
President Wilson and the urgent money needs of the country make it the
duty of every financial institution to come forward with all the moral,as
well as financial aid which it can lawfully furnish.
Whether the facilities
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afforded by nembership in the reserve bank are useful to us or not,
whether the conditions of aembership would, having in view the restricted
character of our business 1 in fact result in a slight pecuniary loss to
us or not • such considerations are in our opinion as of no weight whatever, in view
of the vital importance to the country under existing
conditions of omitting no act which can 1 either directly or morally, either
by the furnishing of resources or the exhibition of a spirit of hearty
cooperation/ tend to strengthen the financial system of the nation.
For these reasons the Executive Committee recomuends 1 as promoting
the highest interests of the
company~
an early application ior admission
to Plembership in the Federal Reserve Bank of New York.
step the
co~ttee
~ssential
feels confident that the
business of the company will not be
~anged
In taking this
character of the
nor its corporate
tra~itions
modified.
For the Executive Comrr.dttee,
EDWARD W, SHELDON
President.
I
\
* *** ** * * * *
ttl.
The chairnan of the committ6e on State bank zr.embership sho'llld appoint
some individual, who wiJl have
nqthi~
else
to~.
to wotk up a programne
for taking a 1eal drive for State bank membership beginning immediately
and lasting, say: until the middle of July.
The reason for undertaking
it inmediately is b~cause the Liberty Loan dd.ve:: il> now bver and the next
six weeks seem a goocl time to n:al:e real
headway~
.first, because of the pre-
sent nature of the military situation abroad, and second, because we can
catch people before they go away on their summer vacations.
This individ-
ual, let us call him secretary, would study the situation in ea.ch State
and prepare 1 et tars to the Federal Reserve banks regarding c ondi ti o·ns in
each State to be signed by the chairnan, and in general keep in active
correspondence with the proper officers of each Federal Reserve bank as
to ways and methods of bringing about prony;>t res'Ul ts.
atte~t
He would also
to stimulate rivalry between the different districts as to the
number of applications secured by advising districts weekly of how each
of the other districts were doing.
The
same thing might be carried on in
respect to the States and reports made to banking conventions or group
meetings of the bankers in those
2.
~tates.
In each Federal Reserve bank sorr.e one officer should be designated
to take charge of the drive and if he has not enough assistance in the
batik to enable him to carry the work on vigorously no dc~bt some volunteers
could be drafted in for six or eight ·,veeks :rom member banks,,
It is of
vital inJ;:>ortance that there shouJ.d he sorrP one in each Federal Reserve
bank who is thinking of nothing slse but f'tate bank membership,
- 2 studying each prospect in detail, and planning how best it can be reached.
Practically nothing, I believe, can be dane by circular letters, and
relatively little by correspondence.
I believe that there mu.st be the
opportunity of personal contact with tha pros:pecJ~s..
bankers
associ~tion
This nay be had
at
1'1ee";ings, whic:t are -u::-watid'a.ctory because it is dif-
ficult to focus a rran 1 s e,ttention~ oy .cal:l.ing o~ ·oankers in their own
towns~ which is very costly of the Fede-ra.l Reserve bank officers 1 time,
or by ~etting the bankers into the Federal Reserve bank.
This is also
some•·•ba.t costly of time, unless they are gotten in by groups.
The gro~
plan bas the advantage of enabling them to discuss it with one another
and of the workings of group psychol?gY&
Sometimes bank superintendents
will help; sometimes banl:ers associations will help; sometimes local bankers
will help.
The conditions differ in each State and one can not generalize;
one can only use every available method.
But the funda.r.1ental thing, as I
see it from the point of view of both the Federal
Reserve Eoard and the
Federal Reserve bank, is to have one or more men in each place who
have nothing else whatever on their minds but getting State bank members.
With the pressure of business upon us all the rrs,tter is sure to be sidetracked unles
@FedFRASER