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1.
W . P . G . H A R D I N G . GOVERNOR
A L B E R T S T R A U S S . VICE GOVERNOR
EX-OFFICIO MEMBERS
ADOLPH C. MILLER
CHARLES S. HAMLIN
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
FEDERAL RESERVE BOARD
J O H N SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
J . A. B R O D E R I C K . SECRETARY
L . C. A D E L S O N , ASSISTANT SECRETARY
W . T . C H A P M A N . ASSISTANT SECRETARY
w . M. I M L A Y . FISCAL ACENT
WASH INGTON
ADDRESS REPLY TO
FEDERAL RESERVE BOARD
January 2, 1919.
X-1337.
SUBJECT: Foreign and I n t e r n a t i o n a l Banking I n s t i t u t i o n s ;
Report of Condition as of Close of Business Decemoer 31, 1918.
Dear S i r :
Under a u t h o r i t y of the agreement entered i n t o by your
corporation with the Federal Reserve Board, you are hereby r e s p e c t f u l l y requested to f u r n i s h the Board with a r e p o r t of c o n d i t i o n , a s
of close of business December 31, 1918, giving in d e t a i l a l l a s s e t s
and l i a b i l i t i e s of your corporation and the d a t a asked f o r in the
accompanying memorandum.
Please arrange to f i l e the report of your Head O f f i c e as
soon a f t e r January f i r s t as p o s s i b l e . Separate Reports of branches
and a f f i l i a t e d banks should be sent as soon as they a r e received by
you. I t w i l l be a p p r e c i a t e d i f , a f t e r the r e p o r t s have been received
from a l l of your branches and a f f i l i a t e d banks, you w i l l havd prepared
a consolidated statement fOf your corporation to bo sent t h e Board*
While the Board has Htled t h a t no s p e c i f i c reserve has t o be
c a r r i e d by f o r e i g n branches or a f f i l i a t e d i n s t i t u t i o n s of American banking
corporation^ a g a i n s t d e p o s i t s abroad, i t , n e v e r t h e l e s s , wishes t o be
advised as t o the average reserve c a r r i e d by a l l such branches and
a f f i l i a t e d i n s t i t u t i o n s of c o r p o r a t i o n s , which are operating under
agreement with t h e Federal Reserve Board. You a r e , t h e r e f o r e , requested
t o have each of your branches, agencies, o f f i c e s and s u b s i d i a r y banks
f u r n i s h you, f o r transmission to the Board, a report of the average
reserve c a r r i e d during t h e month of December, 1918, a g a i n s t deposit
l i a b i l i t i e s in the form shown in the accompanying memorandum.
Kindly acknowledge r e c e i p t .
Very t r u l y yours,
Secretary.
X-1337a
The following inforiration i s desired in connection with the report of
c o n d ition t o be trade as of close of business December 31, 1918:
A. HEAD OFFICE
1»
Balance sheet showing a l l a s s e t s and l i a b i l i t i e s , including
contingent l i a b i l i t i e s ,
2.
Amount of
(a)
(b)
(c)
3.
Detailed l i s t of investments, showing:
(a) Issuing Government or corporation
(b) I n t e r e s t r a t e
(c) Maturity
(d) Par value
(e)- Book value
( f ) Approximate market value -
4.
Ownership
(a)
(b)
(c)
of stock
Per cent
Per cent
Per cent
5.
Amount of
(a)
(b)
(c)
(d)
balances due from:
Government bank
Local banks (exclude s u b s1i1 d i a r y banks, if any)
Other banks ( "
"
"
" .)
Branches, agencies, o f f i c e s and a f f i l i a t e d i n s t i t u t i o n s
6.
Amount of balances due t o :
( a ) Banks and bankers
(b) Branches, agencies, o f f i c e s and a f f i l i a t e d i n s t i t u t i o n s
7.
B i l l s payable:
(a) Payable t o :
(b) Amount
(c) I n t e r e s t
(d) Maturity
( e ) C o l l a t e r a l - give l i s t
8.
Rediscounts:
(a) Amount
(b) With whom
(c) Bate
loans and d i s c o u n t s , d i v i d e d :
De-rand
T iira
Overdrafts and other advances
Total
Secured
- Unsecured
of a f f i l i a t e d i n s t i t u t i o n s :
owned by yourselves
owned by f o r e i g n Governments
owned by i n d i v i d u a l s and c o r p o r a t i o n s
X--13 3 f a
— 2 —
9.
Reserve Statement:
Deposits in the United S t a t e s :
a.
Net demand, d e p o s i t s ( a f t e r deducting u n c o l l e c t e d demand
items payable within United S t a t e s - exchanges)
b,
Tine d e p o s i t s .
c.
Reserve h e l d :
Cash in hand
Bank balances
Total
•Per cent of reserve -
10.
Acceptances - l i m i t a t i o n s :
a . Total outstanding acceptances
b. C a p i t a l and s u r p l u s
Excess a over b
$
$
$
Acceptances secured
Acceptances unsecured
$
$
c.
L i s t of drawers of d r a f t s accepted, with t o t a l aggregate
l i a b i l i t y in excess of 10 peif" 6etit of
c a p i t a l and s u r p l u s .
Name Address
Business
Aggregate l i a b i l i t y
Security
d. Reserve a g a i n s t outstanding acceptances:
Required - 15 per c e n t .
1.
2.
3.
4.
11.
Cash
Bank balances -(Head Office c i t y )
Bankers acceptances S e c u r i t i e s approved by Federal Reserve
Board ( L i s t in d e t a i l )
Total
General l i m i t a t i o n s :
a.
b.
Total d e p o s i t s and acceptances outstanding
C a p i t a l and s u r p l u s
$
Per cent d e p o s i t s and acceptances o u t s t a n d i n g t o
c a p i t a l and surplus
Limit fixed by Federal Reserve Board
O
X-
iL 3 -*
12.
L^st of o f f i c e r s and d i r e c t o r s .
13.
L i s t of stockholders, showing number of shares owned by each.
14.
L i s t of branches, sub-branches, agencies, o f f i c e s and a f f i l i a t e d
i n s t i t u t i o n s - date of opening of each and the l o c a t i o n .
15.
Date of l a s t examination or a u d i t - by whom cade.
Branches. Agencies, and Subsidiary S--nkg_ and Corporations:
1.
Balance sheet t o be furnished by each shewing in d e t a i l a l l
a s s e t s and l i a b i l i t i e s , including contingent l i a b i l i t i e s ,
as a t close of business Decsaber 31, 1918.
2.
An.ount of loans and d i s c o u n t s , showing:
(a) Demand
(b ) T ime
(c) Overdrafts and other advances
3.
Detailed
(a)
(b)
(c)
(d)
(e)
(f)
°ecured
- Unsecured
l i s t of investments, shoeing:
Issuing Government or corporation
Interest rate
Maturity
Par value
Book value
Approximate carket value
4. An.ount of balances due froti:
(a) Government bank
(b) Local banks
(c) Other banks - (exclude head o f f i c e and a f f i l i a t e d banks)
(d) Head O f f i c e
(e) Other branches, agencies and a f f i l i a t e i n s t i t u t i o n s
5.
Airount of balances due t o :
(a) Banks a.nd bankers (exclude Head Office)
(b) Head O f f i c e
(c) Other branches, agencies and a f f i l i a t e d banks.
6.' B i l l s payable:
(a) Payable to
(b) Amount
(c) I n t e r e s t r a t e
(d) Maturity
(e) C o l l a t e r a l (Give l i s t )
7.
Rediscounts:
( a ) Amount
(b) Maturity
(c) S e c u r i t y
X--13 37a
- 4 Deposits:
a.
Government d e p o s i t s (if secured
give l i s t of c o l l a t e r a l )
1. Demand
2. Time
Other deposit?
3. Demand
4. T ime
Total
b.
Deposits - how payable:
1. Local Currency
2. Dollar
3. S t e r l i n g
4 . Otherwise
Total
Amount
Local
Currency
Rate of
Exchange
Dollar
Equivalent
Special Reserve Statement - average f o r the month of December 1918:
Local
Dollar
Currency
Equivalent
a.
Net Deposits:
1 - Payable in l o c a l currency
2.
"
in d o l l a r s
11
3.
in s t e r l i n g
4.
"
otherwise
Total
b.
Reserve:
1.
2.
Amount, if any, and composition required
by l o c a l laws.
Amount h e l d :
Amount Per cent t o
net d e p o s i t s
a . Gold and s i l v e r
b. Local currency
c. Other cash
d. Balance in l o c a l Govt, bank
e. Other reserve funds
TOTAL
Date of l a s t examination or a u d i t - by whom made.
X-1338
STATEMENT
FOR
THE
PRESS
For i n n e d i a t s r e l e a s e January 2, 1919,
Tils Federal Reserve Board announces t h a t i t has been advised
by the Federal Reserve Bank of S t . Louis t h a t the L i t t l e Rock (Arkansas)
Branch of t n a t Bank w i l l ce opened f o r business on Monday, January 6, 1919
E f f e c t i v e t h a t date L i t t l e Rock becores a reserve c i t y a.nd a i l i t s banks
t h a t are r.er.bors of the Federal Reserve systerc. n.ust n&intam reserves of
10 per cent instead of 7 per cent as h e r e t o f o r e when L i t t l e Rock m s ' i a
country bank p o i n t .
E X - O F F i C I O MEMBERS
W . P . G . H A R D I N G . GOVERNOR
A L B E R T S T R A U S S , VICE GOVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
J O H N SKELTON WILLIAMS
COMPTROLLER o r THE CURRENCY
FEDERAL RESERVE BOARD
WASHINGTON
J . A . B R O D E R 1 C K . SECRETARY
L . C . A D E L S O N , ASSISTANT SECRETARY
W . T . C H A P M A N . ASSISTANT SECRETARY
W . M. IMLAY, FISCAL ASENT
ADDRESS REPLY TO
F E D E R A L R E S E R V E BOARD
January 2, 1918.
CONFIDENTIAL
X-1341
SUBJECT: DRAFTS MADE PAYABLE, OR PAYABLE
IF DESIRED, AT A DESIGNATED BANK.
Dear S i r :
I i n c l b s e f o r your c o n f i d e n t i a l information
copy of a l e t t e r from t h e Board's General Counsel which
r e l a t e s t o d r a f t s drawn by f i r m s or c o r p o r a t i o n s upon
themselves and trade payable, or payable if d e s i r e d , a t
a designated bank.
The Board i s i n c l i n e d t o agree with t h e view
taken by i t s General Counsel, but before formally adopting
t h e opinion would be glad t o have an expression of t h e views
of your bank on the s u b j e c t t o g e t h e r with a statement a s t o
what i t s p r a c t i c e i s regarding such items.
In t h i s connection I d e s i r e t o c a l l a t t e n t i o n t o
an opinion rendered by the Attorney General of t h e United
S t a t e s s e v e r a l months ago, which takes the p o s i t i o n t h a t
the Federal Reserve Banks a r e not a u t h o r i z e d t o receive
items which involve the payment of exchange charges.
Very t r u l y yours,
Governor.
X-I341a
FEDERAL
COPY.
RESERVE
WASHINGTON
BOARD
Decerr.ber 31, 1918.
Ebar Governor:
Under Section 13 of the Federal Reserve Act, Federal Reserve Banks a r e authorized to receive froir. other Federal Reserve
&nks, s o l e l y f o r the purposes of exchange or c o l l e c t i o n , checks
drawn upon other Federal Reserve Banks, and checks and d r a f t s payable upon p r e s e n t a t i o n .
I t appears from the correspondence submitted t h a t i t i s
customary f o r some of the l a r g e r f i r e s or corporations t o issue d r a f t s
drawn upon themselves payable a t a designated bank. One of the Federal
Reserve Banks has objected t o receiving these itetr.s f o r c o l l e c t i o n on
the ground t h a t they are not checks and because t h i s f o n t of instrument
i s used by the drawer t o enable hirr. to issue these d r a f t s without f i r s t
depositing the money with the bank a t which i t i s payable, t o p r o t e c t
there.
From a l e g a l standpoint, if the instruments in question a r e
in n e g o t i a b l e form, t h a t i s t o say, if they contain an unconditional
order on the drawee t o pay a f i x e d sun t o a designated person, t h e r e
i s no o b j e c t i o n t o a Federal Reserve Bank receiving them f o r c o l l e c t i o n .
Under Section 87 of the Negotiable Instruments Law "Where the instrument is trade payable a t a bank
i t i s equivalent t o an order t o the bank t o pay
the sane f o r the account of the p r i n c i p a l debtor
thereon."
3his Section i s omitted in I l l i n o i s , Nebraska and South Dakota. In
Minnesota, the word "not" i s i n t e r p o l a t e d so t h a t in t h a t State a
d r a f t would not be equivalent t o an order on a bank t o pay the same. In
the other S t a t e s which have adopted t h e Negotiable Instruments Law such
a d r a f t could be t r e a t e d to a l l i n t e n t s and purposes as a d r a f t on the
bank a t which i t i s payable. The Negotiable Instruments Law has now
been adopted by a l l of the S t a t e s except Georgia and Texas.
In some instances which have been brought t o the a t t e n t i o n
of t h i s O f f i c e , t h e instrument presented does not contain an unconditional
order t o pay a f i x e d sum and i s t h e r e f o r e t e c h n i c a l l y n o n - n e g o t i a b l e . In
such cases a Federal Reserve Bank i s e n t i r e l y j u s t i f i e d in d e c l i n i n g t o
receive such items f o r c o l l e c t i o n .
X-1341a
— 2 —
The Board*s a t t e n t i o n has "been c a l l e d t o the f a c t t h a t some
question has been r a i s e d as t o the r e c e i p t on d e p o s i t of checks or
d r a f t s drawn by Federal Treasurers of the Railroad Administration
a g a i n s t various r a i l r o a d companies. While the forms used oy the
Railroad Administration a r e not e n t i r e l y uniform,an examination
of p r a c t i c a l l y a l l of these forms furnished t h i s O f f i c e by the
Director of Finance and Purchases of the United S t a t e s Railroad
Administration, i n d i c a t e s t h a t t hese d r a f t s a r e in n e g o t i a b l e form
and t h e r e would seem to be no reason why they should r o t be handled
as any other bank checks* The f a c t t h a t in some instances t h e check
or d r a f t i s accompanied Ly an explanatory voucher showing the d e t a i l s
to enable the a u d i t o r to make proper d i s t r i b u t i o n , should not a f f e c t
the n e g o t i a b i l i t y of the instrument.
Respectfully.,
(Signed)
M. C. ELLIOTT.
General Counsel.
For Governor Harding*
to
W . P . G . H A R D I N G , GOVERNOR
A L B E R T S T R A U S S , VICE GOVERNOR
EX-OFFICIO MEMBERS
ADOLPH C. MILLER
CHARLES S. HAMLIN
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
FEDERAL RESERVE BOARD
1 °HN^SKELTON^ WILLIAMS
[.
C
. A D E L S O N . ASSISTANT SECRETARY
W . T . C H A P M A N . ASSISTANT SECRETARY
w . M. IMLAY, FISCAL ACENT
WASHINGTON
ADDRESS R E P L Y TO
FEDERAL RESERVE BOARD
January 2, 1919.
X-1342
SUBJECT: VERIFICATION OF AMOUNTS WITH
GOLD SETTLEMENT FUND,
Gentlemen:
For purposes of v e r i f i c a t i o n w i l l you kindly have
t h e inclosed, statement showing the balance in your account
with the Sold Settlement Fund as a t close of business January
2nd r e c o n c i l e d , noting exceptions, if any, and trail t o Federal
Reserve Board, Division of Audit and Examination.
H e r e a f t e r , a statement showing the balance in your
account with t h e Gold Settlement Fund w i l l be trailed t o you a t
the close of business each Thursday ( i f a holiday, the next
business day) f o r v e r i f i c a t i o n , to be signed and returned t o
the Division of Audit and Examination as soon as convenient.
Very t r u l y yours,
Assistant Secretary.
Federal Reserve Bank,
1 1
EX-OFPICIO MEMBERS
W . P . G . H A R D I N G , GOVERNOR
A L B E R T S T R A U S S . VICE GOVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
J O H N SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
FEDERAL RESERVE BOARD
WASHINGTON
J . A. B R O D E R 1 C K . SECRETARY
L . C . A D E L S O N . ASSISTANT SECRETARY
W . T . C H A P M A N . ASSISTANT SECRETARY
W . M. IMLAY, FISCAL AGENT
ADDRESS REPLY TO
FEDERAL
January 3, 1919.
X-1346
SUBJECT: CAMPAIGN FOR THE ESTABLISHMENT
OF NEW PAR POINTS.
Dear S i r :
The value of the Federal t , z . rva Banks' c o l l e c t i o n
system i s d i r e c t l y r e l a t e d to the number of p o i n t s upon which
c o l l e c t i o n s can be trade at par, and the importance of s e c u r i n g
s u b s t a n t i a l a d d i t i o n s to the par l i s t i s not open to q u e s t i o n .
R e f e r r i n g t o c i r c u l a r l e t t e r of December 26, 1918,
(X-1333) the Board i s of the opinion from r e p o r t s received
t h a t t h e present i s the most opportune t i n e f o r c a r r y i n g on
a campaign by a l l t h e Federal Reserve Banks f o r the purpose
o. auv "g nonmember banks to the present par l i s t s of the
Federal Reserve Banks. The Board t h e r e f o r e urges t h a t a l l
Federal Reserve Banks begin the campaign on January 1 5 t h .
The work may be c a r r i e d on by correspondence a t f i r s t and
may then be followed up by personal v i s i t s whenever necessary
and p r a c t i c a b l e .
I t i s suggested t h a t t h i s campaign be conducted w i t h out p u b l i c i t y , f o r nothing ghoul" be u~~o to arouse organized
o p p o s i t i o n . I t seems necessary t h a t t h i s campaign should begin
a t the time above mentioned in order t h a t i t may be completed
before the campaign f o r t h e next Liberty Loan begins. If t h e
campaign f o r a d d i t i o n a l par p o i n t s should be d e f e r r e d u n t i l
a f t e r the close of the L i b e r t y Loan campaign, t h e summer vacation
period would be reached, which i s obviously an inopportune time.
The Board e a r n e s t l y r e q u e s t s , t h e r e f o r e , t h a t t h i s work be undertaken a t t h i s time.
Kindly acknowledge r e c e i p t .
Very t r u l y yours,
Governor.
RESERVE
BOARD
W . P . G . H A R D I N G . GOVERNOR
A L B E R T S T R A U S S . VICE GOVERNOR
EX-OFFICIO MEMBERS
ADOLPH C. MILLER
CHARLES S. HAMLIN
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
J O H N SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
FEDERAL RESERVE BOARD
WASHINGTON
J . A. B R O D E R I C K . SECRETARY
L . C . A D E L S O N . ASSISTANT SECRETARY
W . T . C H A P M A N . ASSISTANT SECRETARY
W . M. I M L A Y , FISCAL ACENT
ADDRESS REPLY TO
FEDERAL
January 6, 1919.
X--1350.
SUBJECT: REVISED REGULATIONS.
Bear S i r :
I i n c l o s e herewith f o r your c o n f i d e n t i a l information
t e n t a t i v e d r a f t of revised r e g u l a t i o n s which the Board proposes
to i s s u e a t an early d a t e .
Before promulgating these r e g u l a t i o n s , however, t h e
Board would be pleased to have such comments and c r i t i c i s m s
regarding them as you may d e s i r e t o make, and would suggest
t h a t you d i s c u s s them with the Governor and Counsel f o r your
bank.
Please l e t us hear from you a t your e a r l i e s t convenience.
Very t r u l y yours,
Governor.
Inclosure.
RESERVE
BOARD
X-1350 a
T e n t a t i v e D r a f t of Regulations A, B and C, S e r i e s IS2.9,
which r e l a t e t o
A. Rediscounts and Advances under Section 13,
B. Opan-?v!arkat Purchases of B i l l s of Exchange
and Acceptances.
C. Acceptance by Member Banks of D r a f t s and B i l l s
of Exchange under Authority of Section 13.
T e n t a t i v e r e v i s i o n of Regulation F, S e r i e s 1917, which r e l a t e s
t o t h e e x e r c i s e of t r u s t povers by n a t i o n a l banks, has a l r e a d y been
forwarded t o counsel f o r Federal Reserve banks, w i t h e x p l a n a t o r y
rieecoranda prepared by Counsel f o r t h e Federal Reserve Board. A copy
of t h i s memoranda and proposed r e g u l a t i o n i s sent f o r your i n f o r c a t i o n .
I t i s not contemplated t h a t any m a t e r i a l changes w i l l be cade in
Regulations D, E, H, I and J , though they Tray be changed somewhat
i n f orm.
These r e g u l a t i o n s a r e no.v in the hands of the Board Members f o r
c o n s i d e r a t i o n , but have not yet been considered by t h e Board.
X-1350 a
DEFINITIONS.
The following terms which appear in the Federal Reserve Act, //hen
used in these Regulations, are defined by the Federal Reserve Board
as follows:
ACCEPTANCES .
A negotiable draft or b i l l of exchange payable otherwise than at
eight or on demand, which has been accepted without q u a l i f i c a t i o n by
the d rawee.
AGRICULTURAL PURPOSES.
Shall include the use of the s o i l for planting seed, r a i s i n g and
harvesting crops, and the rearing, feeding and management of l i v e stock*
BANKERS' ACCEPTANCES,
A draft or b i l l of exchange of which the acceptor i s a bank or trust
company, or a firm, person > company, ot corporation engaged in the business
of granting bankers* acceptance c r e d i t s ,
BILLS OF EXCHANGE.
An unconditional order in writing addressed by one person to another,
signed by the person giving i t , requiring the person t o whom i t i s addressed
t o pay at a fixed or determinable future time, a sum certain in money to
order or t o bearer.
COMMODITY PAPER .
A note, d r a f t , b i l l of exchange, or trade acceptance accompanied
and secured by shipping documents or by a warehouse, terminal, or other
similar receipt covering approved and readily marketable, nonperishable
staples properly insured.
BILLS OF EXCHANGE DRAWN AGAINST
ACTUALLY EXISTING VALUES.
A b i l l of exchange discounted before acceptance n&y be treated as
drawn against a c t u a l l y e x i s t i n g value only when i t i s accompanied by
shipping documents, warehouse r e c e i p t s , or other similar documents
securing t i t l e to the goods sold. An accepted b i l l of exchange unaccompanied by shipping documents or other similar paper tray be considered
X-1350 a
(Definitions)
as drawn against a c t u a l l y e x i s t i n g value if drawn against the drawee at
the time of or within a reasonable time a f t e r the shipment or delivery
of the goods sold. In t h i s l a t t e r case there must be reasonable grounds
to believe that the goods are in existence in the hands of the drawee either
in t h e i r original form or in the shape of the proceeds of t h e i r sale.
BORROWER.
A person, firm, or corporation who receive* from a member bank either
in cash or by credit on the books of the member bank the funds or proceeds
resulting from the negotiation of a note, draft, b i l l of exchange, Unless
the b i l l of exchange discounted or sold to the member bank i s a b i l l of
exchange drawn against actually e x i s t i n g value as defined in these
Regulations.
DRAFTS.
See "Bills of Exchange".
GOODS,
Shall be construed to include goods, wares, merchandise or agricultural
products, including l i v e stock*
INDUSTRIAL.
Shall be construed as relating to manufacture or t o the product of
industrial l a b o r . 1
ISSUED OR DRATO.
A note nay be said t o be issued or a draft or b i l l of exchange t o
be drawn when i t has been executed by the primary obligor and delivered
to the obligee as an evidence of indebtedness. If the indebtedness arises
out of an agricultural, industrial or commercial transaction i t may be
said to be issued or drawn for one of these purposes.
MUNICIPALITY .
Shall be construed to mean State, county, d i s t r i c t ^ p o l i t i c a l
subdivision, or municipality in the continental United S t a t e s , including
i r r i g a t i o n , drainage and reclamation d i s t r i c t s .
NET FUNDED INDEBTEDNESS.
See Regulation - p
-3-
(Psf in i t i .lis)
X-1350 a
PROMISSORY NOTES.
An unconditional promise in w r i t i n g , signed by the irakcr, t o pay,
in the United S t a t e s , at a fixed or determinable f u t u r e time, a sum
c e r t a i n in d o l l a r s t o order or to bearer.
PROCEEDS OF NOTESJ DRAFTS .OR
BILLS OF EXCHANGE.
Shall be held t o include the proceeds or funds received e i t h e r in
cash or by c r e d i t on account as a r e s u l t of the f i r s t or o r i g i n a l
n e g o t i a t i o n by the owner of the note, d r a f t , or b i l l of exchange, a f t e r
i t s execution and d e l i v e r y as an evidence of indebtedness by the person
primarily l i a b l e thereon.
SAVINGS ACCOUNTS .
See Regulation -* p
•
TIME CERTIFICATE OF DEPOSIT .
See Regulation - p
TD-'E DEPOSITS - OPEN ACCOUNTS.
See Regulation - p
TRADE ACCEPTANCES ,
A b i l l of exchange drawn by the s e l l e r on the purchase of goods
sold and accepted by t h e purchaser.
X-1350 a
REGULATION A,*
REDISCOUNTS AND ADVANCES UNDER SECTI08 13.
St*t#orT f g g u ^ r ^ q t ? ,
Form.
An instrument t o be e l i g i b l e for rediscount under Section 13 suet
be in the form of a note, or of a d r a f t , or b i l l of exchange, before
or a f t e r acceptance.
Ifetur^ySuch notes, drafts or b i l l s of exchange trust nature within ninety
days fro& date of rediscount, unless they are issued or drawn f o r
agricultural purposes or ate based on l i v e stock, in which case they
mist nature within s i x months from date of rediscount.
Endorsement.
Notes, d r a f t s , b i l l s of exchange and acceptances rediscounted under
t h i s section, must bear the endorsement of at l e a s t one member bank,
except that drafts accepted by member banks .to furnish dollar exchange
need not be endorsed unless the regulations of the Board so provide.
#
Character of
'
-
-
Notes. Drafts and B i l l s of Exchange
E l i g i b l e for Rediscount.
A note, draft or b i l l of exchange to be e l i g i b l e for rediscount
under t h i s section
(a) Must have been issued or drawn for an agricultural,
industrial or commercial purpose.
(t>) I t s proceeds must have been used for one of such purpose*; or
( c ) I t must have been issued or drawn for the purpose of carrying
or trading in bonds and notes of the Government of the
United S t a t e s .
-2*-
X-135C a
(A)
I t must not have been issued or drawn f o r t h e purpose of
carrying or t r a d i n g in stocks, bonds or other investment
s e c u r i t i e s except bonds and notes of the Government of
t h e United S t a t e s and trust not cover merely investments.
Character of.
iember Bank Acceptances
Eligible for jMlsccimt.
Any d r a f t or b i l l of exchange drawn (a) in a domestic t r a n s a c t i o n ,
(b) in a t r a n s a c t i o n involving the importation or exportation ox goods,
or (c) to f u r n i s h d o l l a r exchange, which i s l e g a l l y accepted by a member
bank, i s e l i g i b l e f o r rediscount with a Federal Reserve Bank.
Limitations on
Amount of Motes. D r a f t s , and B i l l s of Exchange
t h a t rrav be rediscounted.
There i s no l i m i t a t i o n on the aggregate amount of n o t e s , d r a f t s and
b i l l s of exchange t h a t may be rediscounted f o r any one :.ank, but the note?,
d r a f t s or b i l l s of exchange ( except " b i l l s of exci^nge drawn a g a i n s t
a c t u a l l y e x i s t i n g value'))bearing the signature or endorsement of any one
borrower rediscounted f o r any one bank trust in no case exceed in the
aggregate, an amount equal to ten per cent, of the c a p i t a l and surplus
of the member bank.
Regulations.
Form.
The term "notes, d r a f t s and b i l l s of exchange" i s held to include
commodity paper and t r a d e acceptances as d e f i n e d in these r e g u l a t i o n s .
^11 instruments rediscounted by any Federal Reserve bank must be in
19
-3~
X-I350 a
(A)
n e g o t i a b l e form, must have a d e f i n i t e and fixed maturity, ( t h a t i s , trust
not be payable a t sight or on demand) and trust conform in all r e s p e c t s
t o the s t a t u t o r y requirements of Section 13 as enumerated and defined
in th e s e r e g u l a t i o n s .
Applications f o r Rediscount.
All a p p l i c a t i o n s fo.- rediscount must contain a c e r t i f i c a t e of an
executive o f f i c e r of the cemcer bar.K to the effect t h a t t o the best of
h i s knowledge, information or belief,, the instruments o f f e r e d f o r r e discount conform t o the requirements of the S t a t u t e and to the r e g u l a t i o n s
of the Board.
Evidence of E l i g i b i l i t y .
In a d d i t i o n to c e r t i f i c a t e of e l i g i b i l i t y f i l e d with or as part
of the a p p l i c a t i o n for rediscount, each r: ember bank when so required,
must f u r n i s h t o the Federal Reserve bank s a t i s f a c t o r y evidence of
e l i g i b i l i t y of any note, d r a f t or b i l l of exchange offered f o r rediscount.
To t h i s end i t should r e q u i r e i t s customers, e i t h e r by n o t a t i o n on the
instrument i t s e l f , or by c o l l a t e r a l statements, t o show f o r what purpose
the instrument was "issued or drawn" or f o r what purpose i t s "proceeds
were used".
Where t h e customer i s engaged in an a g r i c u l t u r a l , i n d u s t r i a l or
commercial business, a f i n a n c i a l statement of such customer showing an
excess of quick a s s e t s over current l i a b i l i t i e s may be accepted as evidence
of the f a c t t h a t the proceeds of the instrument n e g o t i a t e d were used f o r
such purposes. Unless such instrument was "issued or drawn" as defined
in these r e g u l a t i o n s f o r an a g r i c u l t u r a l , i n d u s t r i a l or commercial
purpose, i t s e l i g i b i l i t y s h a l l be determined by the use made of i t s "pro-
http://fraser.stlouisfed.org/
repriq"
«.<?
Federal Reserve Bank
of St. Louis
herein defined.
X-1350 a
Advances t o Member Banks,.
^
Form.Loans or advances tray be trade by Federal reserve banks t o member
banks on the promissory notes of the member bank,
Maturity,
Such notes trust mature within f i f t e e n days.
C o l l a t e r a l Security Esquired.
They trust be secured e i t h e r h> notes, d r a f t s , b i l l s of exchange or
acceptances e l i g i b l e f o r rediscount under Section 13, by b i l l s of
exchange or bankers acceptances e l i g i b l e f o r purchase under Section 14,
or by bonds or notes of the United S t a t e s .
X-1350 a
REGULATION B.
OPEN MARKET PURCHASES OF BILLS OF EXCHANGE
AND ACCEPTANCES.
S t a t u t o r y Requirements.
Form.
Negotiable instruments purchased under a u t h o r i t y of Section 14 of
t h e Federal Reserve Act ray. be in t h e form, of b i l l s of exchange or
acceptances but canr.ov. bu in the form of prcrru^sory r.otos.
Maturity.
The m a t u r i t y of b i l l s of exchange or acceptances purchased should
conform t o t h s requirements of Regulation A,
Endorsement.
Such b i l l s of exchange or acceptances may be purchased with or
without t h e endorsement of a member bank,
Character of
B i l l s of Exchange and Acceptances
E l i g i b l e f o r Purchase.
B i l l s of exchange and acceptances i n c l u d i n g d r a f t s drawn a g a i n s t
and accepted by member banks, may be purchased in t h e open market if they
conform in a l l r e s p e c t s t o t h e requirements of Section 13 and of
Regulation A,
D r a f t s drawn a g a i n s t and accepted by non-member banks or bankers
nay l i k e w i s e be purchased under a u t h o r i t y of t h i s Section if they meet
the requirements of a b a n k e r ' s acceptance as d e f i n e d i n t h e s e r e g u l a t i o n s .
X-1350 a
REGULATION C.
ACCEPTAHCE BY MEMBER BANKS OF DRAFTS AND BILLS
OF EXCHANGE "
S t a t u t o r y Authority.
National banks ( and other member banks l<cated
in S t a t e s , the laws af
which expressly confer upon them a l l the powers and p r i v i l e g e s of a m b e r
banks) are authorised t o accept d r a f t s and b i l l s of exchange
(a) Which grew cut of t r a n s a c t i o n s involving, the importation
or exportation cf goods,
(b) Which grew out of t r a n s a c t i o n s involving the domestic
shipment of goods;
(c)i;Which are secured at the time of acceptance by warehouse
r e c e i p t or other such document, conveying or securing
t i t l e to readily marketable s t a p l e s ;
(d) Which are drawn under regulations prescribed by the Federal
Reserve Board by banks or bankers in foreign c o u n t r i e s ,
dependencies or i n s u l a r possessions cf the United S t a t e s ,
f o r the purpose of f u r n i s h i n g d o l l a r exchange*
Member banks, other than these above menticned may accept d r a f t s and
b i l l s cf exchange t o the extent permitted by the laws of the S t a t e under
which they are organized.
For convenience, d r a f t s or b i l l s described in paragraph (a) w i l l be
r e f e r r e d to as f o r e i g n b i l l s ; those described in (b) and (c) w i l l be
r e f e r r e d to as domestic b i l l s , and those described in (d) w i l l be r e f e r r e d
to as d o l l a r exchange d r a f t s .
-2i
X-1350 a
(C)
»
Limitations on Aggregate Amount of D r a f t s and
B i l l s of Exchange t h a t tray be Accepted,
The aggregate of domestic and foreign b i l l s accepted by any member
bank trust not exceed an amount equal to f i f t y per cent, of the c a p i t a l
and surplus of the accepting bank unless t h e consent of the Federal
Reserve Board t c accept a l a r g e r amount has f i r s t been obtained. With the
consent ot the Federal Reserve Board, the member bank may accept d r a f t s
of the character described t c an amount wh.rch dees net exceed one hundred per cent, of the c a p i t a l and surplus of the accepting bank but the
amount of domestic b i l l s accepted mast in nc ease exceed f i f t y per cent.
of the c a p i t a l and s u r p l u s .
In a d d i t i o n to the foregoing, a member bank may accept d o l l a r
exchange d r a f t s to an amount -which does not exceed f i f t y per c e n t , cf i t s
c a p i t a l and s u r p l u s .
Limitations on Amount t h a t may be accepted f o r
any one person, company, firm or c o r p o r a t i o n .
No member bank i s permitted to accept for any one person, company,
firm or corporation, e i t h e r domestic or foreign b i l l s in an amount equal
t o more than ten per c e n t , of i t s c a p i t a l and s u r p l u s , u n l e s s the bank
i s secured by attached documents or by some other a c t u a l s e c u r i t y growing
out of the same t r a n s a c t i o n as the acceptance. Even though thus secured
nc member bank i s permitted t o a c c e p t ^ , f o r t h e same person, company,
f i r m or corporation, in an amount in excess cf f i f t y per cent, of i t s
c a p i t a l and s u r p l u s .
No member bank i s permitted to accept d o l l a r exchange d r a f t s f o r
any one bank in an amount exceeding ten per cent, of i t s c a p i t a l and
surplus.
,;><A
X-1350 a
< v
(C)
Regulations.
D r a f t s Drawn in T r a n s a c t i o n s Involving the Importation
or E x p o r t a t i o n of goods.
Where a member bank a c c e p t s d r a f t s drawn in t r a n s a c t i o n s i n v o l v i n g the
importation or e x p o r t a t i o n of gccds, i t must have on f i l e an agreement or
guarantee frctr. t h e customer t or whom the d r a f t s a r e accepted, containing
p r o v i s i o n s t o the following e f f e c t
(a) That such customer has an agreement t h a t n e c e s s a r i l y involves t h e
e x p o r t a t i . n or importation of t h e goods and t h a t t h e proceeds
of t h e s a l e cf the acceptance w i l l be used in a t r a n s a c t i o n
d i r e c t l y connected with such importation or e x p o r t a t i o n .
(b) That t h e proceeds of t h e s a l e cf t h e goods imported or exported
w i l l be used to pay t h e acceptance a t m a t u r i t y or to pay a
renewal thereof within s i x months frctr t h e d a t e of t h e o r i g i n a l
acceptance.
'Drafts Drawn in Domestic Transa.nt.-iowa.
A member bank a c c e p t i n g a d r a f t drawn in a domestic t r a n s a c t i o n mist
be secured a t t h e time of acceptance by shipping documents or by warehouse
r e c e i p t or o t h e r s i m i l a r document, conveying or s e c u r i n g to t h e bank t i t l e
t o r e a d i l y marketable s t a p l e s . If the d r a f t s accepted f o r one customer exceed
in amount ten per c e n t , cf t h e c a p i t a l and s u r p l u s of the a c c e p t i n g bank,
the s e c u r i t y must not be r e l e a s e d during t h e l i f e of t h e d r a f t s . Where the
aggregate cf the d r a f t s i s l e s s than ten per c e n t , t h e a c c e p t i n g bank nay
r e l e a s e the s e c u r i t y upon t h e execution by the customer of a t r u s t r e c e i p t
t h e r e f o r or cf an agreement t h a t t h e r e w i l l be d e p o s i t e d w i t h t h e bank so
much of t h e proceeds of t h e s a l e of t h e goods r e p r e s e n t e d by t h e s e c u r i t y
as may be n e c e s s a r y to pay the d r a f t a t m a t u r i t y .
-4-
1 *
X-1350 a
(C)
A
%is agreement imst be entered into with the customer for whom the draft
i s accepted and to whom the security i s released whether or not such
customer's name appears on the draft as drawer or endorser^.
Drafts Drawn to Furnish Dollar Exchange.
Where the Federal Reserve Board has by general or special ruling
determined that the usage of trade in any foreign country or in any dependency
or insular possession of the United States, makes i t necessary or advisable
f or banks or bankers located therein to draw drafts on member banks of the
Jbderal Reserve System to furnish dollar exchange, any member bank, so long
as such ruling i s in force, may accept such drafts subject tc the limitations
and requirements of t h i s regulation. Upon application of any member bank a
l i s t w i l l be furnished of the countries, dependencies or insular possessions
from which such d r a f t s may be drawn.
TELEGRAM
FEDERAL.
BOARD
RESERVE
WASHINGTON
Jc.nvu3.ry 6, 1919.
X-1351
CONFIRMATION OF "TELEGRAM:
Federal Reserve Agents:
Boston
New York
Philadelphia
Cleveland
Minneapolis
Kansas City
Dallas
San Francisco
Richmond
Atlanta
Chicago
S t . Louis
Please i n s t r u c t a l l member banks in your d i s t r i c t o t h e r
than n a t i o n a l banks t o report condition on revised form 105 as of
close of business on Tuesday, December 31, 1918.
This r e p o r t
should be in your hands w i t h i n ten days a f t e r c a l l or a f t e r r e c e i p t
of form by r e p o r t i n g
.member.
Comptroller i s making c a l l as of
same d a t e .
ADELSON
A s s i s t a n t Secretary
OFFICIAL BUSINESS
Digitized for
G OFRASER
VERNMENT RATES
http://fraser.stlouisfed.org/
CHARGE FEDERAL RESERVE
Federal Reserve Bank of St. Louis
BOARD
X-1S53
S T A T 3 L 2 N T
FOR
T HJ
P R j 5 3
For immediate r e l e a s e January 7, 1919.
The F e d e r a l lie servo
Board t o d a y announced t h a t i t s January B u l l e t i n had
been completed and s e n t t o t h e p r i n t e r .
The i s s u e w i l l f u r n i s h a g e n e r a l r e -
view of t h e c o n d i t i o n and p r o g r e s s of t h e F e d e r a l lie s e r v e System d u r i n g t h e
past year.
I t a l s o c o n t a i n s some d i s c u s s i o n of t h e p r e s e n t g o l d s i t u a t i o n of
t h e world, and of t h e United S t a t e s i n p a r t i c u l a r , accompanied by c o m p i l a t i o n s
of s t a t i s t i c s d e s i g n e d t o show t h e p r e s e n t g o l d p o s i t i o n of t h e European banks
and p a r t i c u l a r l y of the F e d e r a l Reserve system.
the Board i s t h a t f i n a n c i a l and economic
The g e n e r a l p o s i t i o n t a k e n oy
c o n d i t i o n s a r e now i n a t r a n s i t i o n
s t a g e from a war t o a peace b a s i s and during t h i s p e r i o d t h e r e s h o u l d be extreme c a u t i o n and a c o n t i n u e d a p p l i c a t i o n of t h r i f t and c o n s e r v a t i o n p r i n c i p l e s
With r e f e r e n c e to gold i t i s p o i n t e d out t h a t the r e s t Drab ion of a f r e e g o l d
market under p r o p e r c o n d i t i o n s at as e a r l y a date as may be f e a s i b l e i s
s t r o n g l y t o be d e s i r e d and i t p o i n t s out some of t h e problems t h a t must be
solved in t h i s connection.
In o u t l i n i n g t h e development of t h e Reserve system d u r i r g t h e p ^ s t ye~r,
the Board says t h a t " t h e i n c r e a s e i n t h e power of t h e F e d e r a l Reserve cystom
and i t s enormous i n c r e a s e i n a s s e t s during t h e y e a r 1910 has been i n no small
degree the r e s u l t of t h e i n c r e a s e i n membership.
approximately
charters.
The system today numbers
0,700 i n s t i t u t i o n s , of which 936 are o p e r a t i n g under S t a t e
This g r e a t a g g r e g a t e of banks and t r u s t companies p o s s e s s e s r e -
sources amounting t o over 27 b i l l i o n s ($27,250,000,000) and u n q u e s t i o n a b l y
r e p r e s e n t s about 75 p e r cent of t h e t o t a l a s s e t s of t h e commercial bunks i n
the c o u n t r y .
S t r o n g i n t e r e s t i s b e i n g e x h i b i t e d by n a t i o n a l i n s t i t u t i o n s i n
t h e e x e r c i s e of f i d u c i a r y powers which t h e .iCt of September 36, 1918, p e r m i t s
28
- 2 the Federal Reserve Board t o grant them.
X-1353
Some of
;be l a r g e s t ana s t r o n g e s t
banks of the country are nor; equipping themselves to perform such s e r v i c e s
h e r e t o f o r e c h i e f l y l e f t to t r u s t companies.
On t h e other hand, many of the
State bank and t r u s t company members of the system which o r i g i n a l l y entered
i t l a r g e l y from p a t r i o t i c motives are begi^niiig t o develop p o r t f o l i o s of commercial
paper e l i g i b l e f d r discount and t o "broaden the scope of t h e i r com-
mercial a c t i v i t i e s .
The s i t u a t i o n p o i n t s to the gradual e v o l u t i o n c£ a more
or l e s s homogeneous and uniform type of banking i n s t i t u t i o n , i r r e s p e c t i v e of
whether such i n s t i t u t i o n be organized under n a t i o n a l or S t a t e c h a r t e r " .
Board ther: c a l l s a t t e n t i o n to
The
the rapid development during t h e p a s t month
seen in the t a k i n g over of f i d u c i a r y powers by n a t i o n a l barks i n New York under
l i c e n s e s granted to them pursuant t o t h e terms of the Federal Reserve Act.
In sketching the s i t u a t i o n of t h e Federal Reserve system as a whole with
s p e c i a l r e f e r e n c e t o t h e gold p o s i t i o n of the country i t i s noted t h a t for f i v e
weeks ending December 27th, the banks' gold r e s e r v e s show a f u r t h e r g a i n from
2,060.3 t o 2,090 m i l l i o n s , and t h e i r net deposits a decrease from
t o 1,552.9 m i l l i o n s .
1,632.8
Federal Reserve notes in a c t u a l c i r c u l a t i o n increased
during the f i v e weeks from 2, 555.2 t o 2,685.2 m i l l i o n s , or at t h e r a t e of 26
m i l l i o n s p e r week, as against an average of 10.5 m i l l i o n s f o r the preceding
f i v e weeks.
The r a t i o of cash reserves t o aggregate net d e p o s i t s and Federal
Reserve note
l i a b i l i t i e s f l u c t u a t e d but s l i g h t l y during the p e r i o d and on
December 27, stood a t 50.6 p e r cent compared with 50.5 p e r cent on November 22.
During the month ending December 10, the net inward movement of gold was
#1,230,000, as compared with a net outward movement of y 2 , 5 l ? , 0 0 0 f o r the
month ending November 10.
Gold imports f o r the month, amounting to ^2,412,000 came l a r g e l y from
Canada, llexico, and Portuguese .ufr i c a , while gold exports t o t a l i n g <*>1,132,000
http://fraser.stlouisfed.org/
were consigned
Federal Reserve Bank of St. Louis
c h i e f l y t o Chile and Mexico,
- 3 -
X-1355
The g a i n i n the c o u n t r y ' s stock of gold since August 1, 1914, was
$1,071,669,000 as may bo seen from the following e x h i b i t ;
GOLD EJPORTS AND EXPORTS
(000 omitted)
.
Imports
6
Aug.
Jan.
Jan.
Jan.
Jan.
1
1
1
1
1
to
to
to
to
to
Dec'.
Dec.
Dec.
Dec.
Dec.
Total
31,
31,
31,
31,
10,
1914
1915
1916
1917
1910
23,253
451,955
605,745
553,713
61,066
1,775,7.32
^ Excess imports
Exports o v Q r e x p o r t 3
104,972
31,426
155,793
372,171
39,701
704,063
(1) 01,719
420,529
529,552
101,542
21,342
1,071,669
(1) Excess of exports over imports.
In t a k i n g up the gold s i t u a t i o n i t i s noted t h a t the s o - c a l l e d
Ounliffe
Committee which r e c e n t l y issued a r e p o r t on t h e currency and the f o r e i g n exchange s i t u a t i o n in Great B r i t a i n has advocated the continued r e t e n t i o n of
gold i n bank v a u l t s i n s t e a d of i t s use as a hand t o hand c i r c u l a t i n g medium.
It is pointed out t h a t t h e United S t a t e s hus long employed t h i s sane general
expedient, except t h a t
i t r e t a i n e d i n c i r c u l a t i o n paper r e p r e s e n t a t i v e s of
gold (gold c e r t i f i c a t e s ) which during t h e war have now been p r a c t i c a l l y withdrawn, so t h a t i t likewise i s p r a c t i c a l l y employing a
fiduciary circulation
based on gold, t h e n e t a l i t s e l f being accumulated as r e s e r v e .
the Board says, "A large absolute supply of g o l d does not
On t h i s p o i n t
appear to be neces-
sary t o the s u c c e s s f u l maintenance of the gold s t a n d a r d i f a country occupies
the p o s i t i o n of a banking c r e d i t o r holding a large volume of f o r e i g n b i l l s
and has an e f f i c i e n t banking system.
In t h e United S t a t e s t o d a y , both gold
and gold c e r t i f i c a t e s have l a r g e l y disappeared from c i r c u l a t i o n and the r e maining currency in the
hands of the people now c o n s i s t s l a r g e l y of Federal
Reserve notes, n a t i o n a l bank notes, and Federal Reserve bank n o t e s . "
X-13b2
The q u e s t i o n of a f r e e gold market is t h e n considered,and i t i s shown
t h a t \7hile e a r l y resumption both of f r e e movements of gold and of the c o n t r o l
of such movementa by changes in the discoant r a t e are d e s i r a b l e , the r e s t o r a t i o n of such a market is n e c e s s a r i l y dependent t o some e x t e n t upon the demands
of f o r e i g n countries while t h e resumption of actual c o n t r o l of gold movements
i s conditioned
and exchange r a t e s through v a r i a t i o n of the r a t e of discount/upon thr- f i s c a l
policy of the n a t i o n .
It i s s t a t e d that "should the f i n a n c i n g of foreign-
requirements become a matter of p r i v a t e banking arrangements, the c o n t r o l of
gold movements and exchange r a t e s would assume a new p h a s e . "
The e x i s t e n c e of a g e n e r a l l y i n f l a t e d
c o n d i t i o n of c r e d i t and p r i c e s
throughout t h e world i s again noted and a t t e n t i o n is c a l l e d to the f a c t that
thus f a r t h e r e has been' l i t t l e change in t h e p r i c e l e v e l .
E f f o r t s of business
men to s t a b i l i z e p r i c e s can only temporarily have the e f f e c t of tending to hold
p r i c e s up to t h e i r p r e s e n t l e v e l .
A r e t u r n toward the old l e v e l cf p r i c e s
w i l l occur when normal i n d u s t r i a l conditions and the f r e e i n t e r n a t i o n a l
movement of the p r e c i o u s metals have been r e - e s t a b l i s h e d .
The B u l l e t i n contains e l a b o r a t e t a b u l a t i o n s showing the present gold
p o s i t i o n of the world and also the change i n the s t a t u s of the United S t a t e s
as an i n t e r n a t i o n a l c r e d i t o r , due t o i t s large holdings of s e c u r i t i e s p u r chased or absorbed during the war.
30
31
Ex-Officio m e m b e r s
W . P . G . H A R D I N G . GOVERNOR
A L B E R T S T R A U S S . VICE GOVERNOR
ADOLPH C. MILLER
C H A R L E S S. H A M L I N
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
FEDERAL RESERVE BOARD
J . A . B R O D E R I C K , SECRETARY
W . T . C H A P M A N . ASSISTANT SECRETARY
w . M. I M L A Y . FISCAL AGENT
a d d r e s s
WASHINGTON
r e p l y
FEDERAL
January 7,1919,
t o
RESERVE
BOARD
X-1354
SUBJECT: Geld Settlement Clearings by Branches
cf Federal Reserve Bank of S t . L o u i s .
Ifear S i r : be trade
terophis
lfederal
Ibderal
The Federal Reserve Bank cf St-Louis has requested
t c have t h e i r three tranches located a t L i t t l e Rock,
commence s e t t l i n g d i r e c t through the Gold Settlement
Reserve Banks in the same manner a s t h a t which i s in
Reserve Banks and the San Francisco branches.
t h a t arrangements
L o u i s v i l l e and
Fund with other
e f f e c t between
Accordingly, on February 3rd and every settlement day t h e r e a f t e r ,
Louisville, Memphis and L i t t l e Rock branches, in a d d i t i o n to the St.Louis
head o f f i c e , w i l l telegraph to the Federal Reserve Beard, code Labeg, t h e i r
c r e d i t s f o r other Federal Reserve banks as a t close of business the previous
day to be s e t t l e d through the d a i l y gold fund c l e a r i n g . The four o f f i c e s of
the St.Louis bank w i l l render s e p a r a t e l y to each Federal Reserve bank and
branch s e t t l i n g d i r e c t through the gold fund> d a i l y trail t r a n s c r i p t s supporting
c r e d i t s s e t t l e d through t h e fund. The Board w i l l include in the d a i l y Bepeg
telegram to other Reserve banks c r e d i t s of the St.Louis o f f i c e s as follows:
St.Louis
L i t t l e Rock
Louisville
Memphis
amount
amount
amount
amount
The Federal Reserve banks a r e requested t o open s e p a r a t e accounts
with the f o u r o f f i c e s cf the St.Louis bank on February 1st and wire the Board,
code Labeg, f o r t h e February 3rd gold fund c l e a r i n g , amounts of c r e d i t s f o r
each of the four o f f i c e s of the St.Louis Bank, and to render to each o f f i c e
daily mail t r a n s s r i p t s supporting c r e d i t s ao reported in t h e gold fund c l e a r i n g . Please note t h a t the old system w i l l continue, - statements as of
January 31st, c l e a r i n g , February 1 s t ; new plan e f f e c t i v e , - statements February 1 s t , c l e a r i n g February 3rd,
R e f e r r i n g t o our telegram of December 7,1918 giving form f o r r e p o r t ing d a i l y Labeg telegram, please show amounts f o r S&.Lauis branches following
amount f o r St.Louis as follows:
L i t t l e Rock
Louisville
Memph i s
amount
amount
amount
Kindly a d v i s e branches and acknowledge r e c e i p t .
Very t r u l y yours,
Assistant Secretary.
.
X—1355
opi
OO
STATEMENT FOR THE PRESS.
Ibr r e l e a s e a f t e r n o o n papers January 8th,1919.
Business conditions throughout the United S t a t e s a r e reported by the
Federal Reserve Board in i t s January B u l l e t i n as f o l l o w s :
The Business ,and Financial S i t u a t i o n in December, 1918.
Since t h e establishment of t h e Federal Reserve B u l l e t i n t h e Federal
Reserve Board has been in t h e h a b i t of publishing monthly a r e p o r t t r a n s m i t t e d
by each Federal Reserve Agent and intended t o s t a t e the c o n d i t i o n of business
e x i s t i n g in h i s own d i s t r i c t as observed by him. These r e p o r t s proved of so
much general i n t e r e s t t h a t , a few months a f t e r t h e i r p u b l i c a t i o n was f i r s t
undertaken, the Board, in response to numerous l o c a l demands, authorized
federal
Reserve Agents to make public t h e i r r e p o r t s f o r l o c a l use en the f i r s t
day of each month, while i t continued the p u b l i c a t i o n of t h e combined r e p o r t s
in the Federal Reserve B u l l e t i n . Owing to the wide d i s t r i b u t i o n of these r e p o r t s
on a date probably e a r l i e r than t h a t on which the Federal Reserve B u l l e t i n can
be given t o t h e p u b l i c , and owing a l s o t o t h e pressure of m a t t e r f o r p u b l i c a t i o n in the B u l l e t i n , the Board has determined to d i s c o n t i n u e t h e p u b l i c a t i o n
of th e s e r e p o r t s and to s u b s t i t u t e in l i e u thereof a business summary of i t s
own, designed t o f u r n i s h a general survey of n a t i o n a l c o n d i t i o n s . In preparing
t h i s survey the Board w i l l make use not only of t h e r e p o r t s of Federal Reserve
%ents but a l s o of the r e s u l t s obtained from i t s own i n v e s t i g a t i o n s of p r i c e s ,
i n t e r e s t r a t e s , and production in various l i n e s ,
fttrsuant
to t h i s plan the Beard
on December 17 issued the following l e t t e r to Federal Reserve Agents.
X-1355
"The Federal Reserve Board has been publishing in the Federal Reserve
B i l l e t in each month a surnrary review cf business conditions which has been
obtained from each Federal Reserve Agent. I t understands the p r a c t i c e of the Federal Reserve Agents now i s to rcake public the se r e p o r t s of business conditions,
r e l e a s i n g them f o r newspaper use on the f i r s t of each month.
I t i s now proposed t o make a change in the Board's method of using these
r e p o r t s . This proposed change w i l l be as follows:
(1) The r e p o r t s w i l l be expected as usual and up or, 'the u s u a l date, tux
t h e i r p u b l i c a t i o n in the B u l l e t i n w i l l be discontinued a f t e r the present month.
(2) In l i e u of the reports of business conditions prepared by Federal
Iteserve Agents t h e r e w i l l be published in each B u l l e t i n a general review of
business conditions which w i l l be based upon the r e p o r t s of t h e Federal Reserve
A gents, and s i g n i f i c a n t passages from the r e p o r t s w i l l be quoted.
(3) Federal Reserve Agents w i l l be expected to continue the l o c a l publicat i o n of t h e i r owit r e p o r t s of business conditions exactly as a t p r e s e n t .
The e f f e c t of t h i s plan w i l l be t o give each Federal Reserve Agent exclusive
l o c a l use of h i s r e p o r t , while the Board w i l l publish i t s own n a t i o n a l r e p o r t . In
view of t h i s change i t w i l l be d e s i r a b l e to have as f u l l and complete r e p o r t s
from t h e Federal Reserve Agents as p r a c t i c a b l e , and the r e s t r i c t i o n s as to l e n g t h ,
l i m i t a t i o n in the number of s u b j e c t s t r e a t e d , e t c . , which have h e r e t o f o r e been
applied a r e hereby revoked. Each Federal Reserve Agent i s urged t o f u r n i s h as
complete and f u l l a review of business conditions in h i s d i s t r i c t as foe i s a b l e ,
the Board, as in the p a s t , l e a v i n g i t t o h i s judgment what to publish l o c a l l y .
Reports of business conditions, when transmitted by the Federal Reserve
Agents to the Board, w i l l be c i r c u l a t e d among t h e members of the Board f o r
information and w i l l be placed on f i l e f o r f u t u r e r e f e r e n c e a f t e r they have
been used in the preparation of the monthly sumrrary which i s t o appear in
the B u l l e t i n . "
Important changes in the business and f i n a n c i a l s i t u a t i o n have occurred
during the month of December. The t r a n s i t i o n from a war to a peace b a s i s i s now
in f u l l swing and f a r - r e a c h i n g m o d i f i c a t i o n s in the organization of business are
under way« Reports t o the Federal Reserve Board from the s e v e r a l Federal Reserve
d i s t r i c t s show t h a t the following s i g n i f i c a n t f a c t o r s may be enumerated.
(1) Far-reaching m o d i f i c a t i o n s of Government control over i n d u s t r y , t r a n s p o r t a t i o n , manufacture, and p r i c e s .
(2) Extensive c a n c e l l a t i o n of Government c o n t r a c t s f o r manufacture and
purchase of war goods and goods needed in connection with m i l i t a r y o p e r a t i o n s .
(3) Displacement and readjustment of l a b o r r e s u l t i n g from the suspension
of war production and the absorption of l a b o r in i n d u s t r i e s which have thus f a r
s u f f e r e d from shortage.
-3-
X-1355
(4) Changes in the volume of trade> i n d i c a t i n g on the whole a s l i g h t
tendency toward decline in volume*
(5) Revision of p r i c e s with considerable shrinkage in s p e c i f i e d a r t i c l e s
and on the average a d i s t i n c t though s l i g h t downward tendency.
(6) Expansion of demand f o r banking accommodation and f o r c a p i t a l .
In g e n e r a l , the t r a n s i t i o n from the war to the peace b a s i s has thus f a r
proceeded with very considerable smoothness and with decided lack of f r i c t i o n ,
Slfch Slackening of business as has occurred i s described as due to conservatism
and h e s i t a t i o n , the outcome of a d e s i r e on the part of producers to know more
of the public p o l i c i e s and the probable trend of business. In the New York
d i s t r i c t " i n d u s t r i e s are marking time, awaiting developments, h due in p a r t t o
"conservatism in buying" and "a f e e l i n g t h a t prices w i l l d e c l i n e and t o unc e r t a i n t y as to the Government's policy r e l a t i v e to cancellations and the disposal
of stocks and m a t e r i a l s and s u p p l i e s . " Other d i s t r i c t s report a s i m i l a r condition of a f f a i r s , but add t h a t the s t a t e of t h i n g s i s such as meets general
approval and c a l l s f o r t h the opinion t h a t the t r a n s i t i o n period i s unavoidable
and i s proving b e n e f i c i a l in i t s e f f e c t s . A strong tendency to d e f e r committments
and to exercise caution before undertaking f u t u r e c o n t r a c t s i s noted in various
regions. "Taken as. a whole," says the F i r s t Federal Reserve D i s t r i c t , "the
s i t u a t i o n i s one of w a i t i n g f o r more s e t t l e d c o n d i t i o n s . " From p r a c t i c a l l y a l l
d i s t r i c t s comes the p r e d i c t i o n t h a t the slowing down w i l l be temporary.
Thus f a r the process of r e a d j u s t i n g l a b o r t o the new conditions has caused
but l i t t l e inconvenience or d i f f i c u l t y . Labor s e t f r e e in war i n d u s t r i e s has
been s t e a d i l y absorbed by general business so t h a t the p r i n c i p a l e f f e c t thus f a r
of the i n c r e a s i n g f r e e supply has been merely t h a t of r e l i e v i n g a previously
e x i s t i n g shortage. There i s s t i l l an excess of demand a t many p o i n t s . In some
places considerable numbers of employees have been dropped, but of these a part
were temporary workers who had taken employment partly in order to aid war production, while many others have been promptly reemployed. Costs bavs a l t e r e d
but l i t t l e , and the high expense of l i v i n g has made employers f e e l t h a t i t i s
incumbent upon them to maintain wages, so f a r as p r a c t i c a b l e , pending d i s t i n c t
revision of p r i c e s f o r n e c e s s a r i e s . In some cases i t i s reported t h a t t h e r e i s
a tendency t o a " s e t t l i n g down" upon "a higher l e v e l of p r i c e s and a higher
average of wages than prevailed f o r some time preceding the war." From the
productive standpoint, conditions continue to be s a t i s f a c t o r y in most s t a p l e
l i n e s . A g r i c u l t u r e , in p a r t i c u l a r , i s reported to be in an e x c e p t i o n a l l y promising
condition. The farmer i s said to be in "the best f i n a n c i a l shape t h a t has prevailed f o r many y e a r s . " In the south he i s holding h i s cotton f o r b e t t e r p r i c e s
and is marketing h i s output c o n s e r v a t i v e l y . Excellent crop prospects a r e .reported, not only from the cotton region but a l s o from the wheat S t a t e s of the west:,
and from C a l i f o r n i a . On the P a c i f i c Coast the prospects f o r e x c e l l e n t crops f o r
the coming year are exceedingly b r i g h t .
In the
probably go
tone in the
movement of
t i n u e s very
ing Section
l i v e stock region "conditions a r e much improved" and c a t t l e w i l l
through the season in f a i r c o n d i t i o n . " There i s an a c t i v e and firmer
beef t r a d e , and record purchases of animals have been trade. The
l i v e stock to the l e a d i n g markets of the Kansas City d i s t r i c t conheavy. Tables which have been compiled by the Business Index Reportshow r e c e i p t s and shipments of l i v e stock a t more than s i x t y important
4
*
~4w
X-1355
35
j; markets f o r t h e f i r s t eleven months of t h e year a t high f i g u r e s . While compiled
1
Oh cember f i g u r e s a r e not yet a v a i l a b l e r e p o r t s of Federal Reserve Agents i n d i c a t e
t h a t t h i s movement has been s u s t a i n e d d u r i n g t h e past months, Iron and s t e e l , so
f r e q u e n t l y t a k e n a s an a u t h o r i t a t i v e index of business c o n d i t i o n s , a r e u n s e t t l e d
on account of t h e cuts t h a t have a l r e a d y been made and t h e expected new p r i c e
b a s i s f o r them and f o r t h e i r d e r i v a t i v e s . Orders f o r new b u s i n e s s a r e of some
a s s i s t a n c e , but they a r e not yet of a volume s u f f i c i e n t t o i n d i c a t e t h a t p r i c e s
have become s e t t l e d . The market f o r s t e e l i s q u i e t and t h e r e i s no d i s p o s i t i o n
to crake undue r e d u c t i o n s in p r i c e s . Pig iron production in Binxdngham f o r
November was a t about the same l e v e l as in October, Figures compiled by the
&ard T s Reporting Service and published elsewhere in t h i s B u l l e t i n e x h i b i t the
p r e s e n t outlook f o r ingot s t e e l , pig i r o n , and u n f i l l e d o r d e r s . The index numbers
submitted in connection with t h e s t a t i s t i c s f o r q u a n t i t y production show a s l i g h t
f a l l i n g off in a l l of t h e s e t h r e e f a c t o r s in the i r o n - t r a d e s i t u a t i o n f o r t h e
month of November. Federal Reserve Agents' r e p o r t s point to a f u r t h e r continuance
of t h i s movement during December. From Cleveland i t i s r e p o r t e d t h a t in " a l l
l i n e s of i r o n and s t e e l manufacture t h e r e may be said to be a w a i t i n g mood, a
t a k i n g of s t o c k , and a p r e p a r a t i o n f o r t h e f u t u r e . " P h i l a d e l p h i a producers regard
t h e present r e d u c t i o n of t h e high t e n s i o n of t h e l a s t few years as very welcome,
p e r m i t t i n g t h e p l a n t s to be overhauled and placed in good p h y s i c a l c o n d i t i o n
f o r the expected l a r g e volume of a f t e r - w a r b u s i n e s s . While coal production has
n o t recovered t h e l e v e l which had been a t t a i n e d p r i o r t o t h e f i r s t of November,
and while sotiie shortage e x i s t s hefre and there> the output i s again moving u p ward, eat s e r v i c e has improved in c e r t a i n s e c t i o n s and l a b o r c o n d i t i o n s a r e
reported f a i r l y s a t i s f a c t o r y . The Board's study of coal production shows marked
d e c l i n e in- monthly production of bituminous and an e s p e c i a l l y marked f a l l i n g
off in a n t h r a c i t e , while coke has f a l l e n s l i g h t l y , t h e f i g u r e s e x h i b i t i n g r e s u l t s
up to t h e end of November. December developments i n d i c a t e a tendency t o recover
from c o n d i t i o n s t h u s d e p i c t e d . The production of copper and of o t h e r m e t a l s
which have been in e x c e p t i o n a l demand during the war, i s a l r e a d y showing the
e f f e c t s of conversion of i n d u s t r y to a peace b a s i s . Zinc has been c o n t r o l l e d , both
in production and shipment, in the mid-continent f i e l d , while t r a d i n g i n copper
and o t h e r metals has been comparatively l i m i t e d . There i s an a p p a r e n t f e e l i n g
t h a t t h e p r i c e of 260 f o r copper, which continues f i x e d u n t i l January 1 s t , was
too high f o r commercial b u s i n e s s . The production of l e a d was about normal in
November and s t o c k s continue s m a l l . Producers of petroleum i n t h e m i d - c o n t i n e n t
d i s t r i c t have only about t h r e e months' supply and regard t h e outlook as f a v o r a b l e .
Stored stocks i n c r e a s e d somewhat during the e a r l y autumn in C a l i f o r n i a , but a
shortage of g a s o l i n e i s now expected.
In manufacturing t h e outlook i s by no means u n i f o r m . F r e i g h t i s moving f a i r l y
w e l l , although some s e c t i o n s complain of d e l a y . Munition i n d u s t r i e s have l a r g e l y
reduced t h e i r a c t i v i t y . Machine-tool manufacturing i s demoralized on account
of the c a n c e l l a t i o n of Government o r d e r s . Cotton and wooden m i l l s have been
running f u l l , but t h e end of u n f i l l e d o r d e r s i s now approaching and but l i t t l e
new business i s being p l a c e d . Figures compiled by t h e Board f o r i d l e s p i n d l e s
in v a r i o u s c l a s s e s of machinery engaged both in the wool and in t h e c o t t o n
i n d u s t r y , show a decided tendency t o an i n c r e a s e in the percentage of i d l e
machinery. Shoo manufacturing i s a l s o l e s s a c t i v e . There has been an i n c r e a s e in
r e t a i l t r a d e , due t o t h e h o l i d a y season and some d i s p o s i t i o n t o e n l a r g e expend i t u r e s f o r p e r s o n a l consumption, not only on account of t h e u s u a l h o l i d a y
a c t i v i t y , but a l s o in consequence of r e l a x a t i o n of economics due t o t h e war.
-5-
X-1355
4 *
36
At some p o i n t s t h e r e would appear to be a development cf extravagance.
Prices on the whole have shewn only s l i g h t change, decrease in basic
f o o d s t u f f s being o f f s e t by increase in d a i r y products, meat and g r o c e r i e s . Large
changes have occurred in only a few l i n e s . There has, if anything, been an
advance in p r i c e s of Consumers' goods, while raw m a t e r i a l s have shown a d i s p o s i t i o n t o d e c l i n e - While t h e s e s t a t i s t i c s r e l a t e t o conditions only up to the
f i r s t of December, preliminary r e p o r t s f o r the early weeks of December i n d i c a t e
a maintenance of a p r a c t i c a l l y s i m i l a r s i t u a t i o n . The average l e v e l of p r i c e s
appears to be past the peak, but as yet with only comparatively s l i g h t movement
downward. Thus f a r such changes in the p r i c e s as have occurred a r e apparently
due t o l o c a l and sporadic modifications of demand, due t o a l t e r a t i o n s in employment and buying power, r a t h e r than to any fundamental m o d i f i c a t i o n of the
underlying f a c t o r s of production.
Up to t h e 15th of December the Board's Reporting Service shows t h a t changes
in r a t e s of i n t e r e s t have been more marked than f o r some time p a s t . In c o n t r a s t
t o the month ending November 15th a general tendency may again be perceived,
most d i s t r i c t s showing a considerable decrease. In c e r t a i n c a s e s , conspicuous
among which are New York, St.Louis and Minneapolis, the decrease occurs for
p r a c t i c a l l y a l l the types of paper f o r which quotations a r e given. On t h e o t h e r
hand, r a t e s in several d i s t r i c t s on the whole show an i n c r e a s e , New Orleans and
San Francisco being cases in p o i n t , while a small number of c e n t e r s , among which
Chicago nay be mentioned, r e p o r t r i t e s p r a c t i c a l l y unchanged from those p r e v a i l i n g during t h e period ending November 1 5 t h . Customary r a t e s , in general with
few exceptions, remain unchanged, the movement in r a t e s being confined t o changes
in the high and low q u o t a t i o n s . The decrease i s most pronounced in the case of
commercial paper and c o l l a t e r a l l o a n s . Rates f o r bankers' acceptances on the
whole show a f r a c t i o n a l decrease, while r a t e s charged on interbank loans a f f o r d
an approximately equal number of cases of increase and d e c r e a s e . Rates on paper
secured by Liberty bonds and c e r t i f i c a t e s of indebtedness, which on t h e whole are
lower than on ordinary commercial l o a n s , or on loans secured by other c o l l a t e r a l ,
remain p r a c t i c a l l y unchanged. A g r e a t e r degree of u n i f o r m i t y between r a t e s p r e v a i l ing in v a r i o u s s e c t i o n s may be observed in the case cf commercial paper purchased
in the open market than f o r p r a c t i c a l l y any other type of paper, t h e r a t e s in
many instances being lower than those if or customers' paper of s i m i l a r m a t u r i t i e s ,
prevailing
J o t a l t r a n s a c t i o n s a t banks compiled by t h e Board up to December 18th show
s l i g h t decreases in volume of t r a n s a c t i o n s f o r i n d i v i d u a l account, but considerable gains in t h e volume of t r a n s a c t i o n s f o r bank account. On the whole, the
t o t a l volume of current business of banks included in 152 c l e a r i n g houses remains
about s t a b l e . Federal Reserve Bank operations during the l a t t e r part of the
month show a tendency to a f a l l i n g ' o f f in war paper. The money market has undergone but l i t t l e change, but such change as has occurred i n d i c a t e s t h a t a c t i o n a l
banks a r e again e n t e r i n g the commercial market as p u r c h a s e r s . The purchases
have been s p a r i n g and made with d i s c r i m i n a t i o n , but in t h e middle west a r e said
to i n d i c a t e a gradual d r i f t toward a more normal s i t u a t i o n in the supply of f u n d s .
A s i m i l a r s i t u a t i o n in the Fourth D i s t r i c t i s r e p o r t e d , and although i t i s
s t a t e d t h a t money conditions a r e in no sense easy, t h e banks have now some funds
to invest and a r e i n v e s t i n g them in l i q u i d paper. C o l l e c t i o n s vary considerably
throughout t h e country and in some d i s t r i c t s a r e reported very s a t i s f a c t o r y , while
elsewhere they a r e slow, a p p a r e n t l y due tv the f a c t t h a t farmers a r e holding
t h e i r crops f o r b e t t e r p r i c e s .
1 &
X-1355
37
P o s t - o f f i c e r e c e i p t s a r e showing a d i s t i n c t d e c l i n e in many s e c t i o n s .
Pending the development of new c o n d i t i o n s , b u i l d i n g o p e r a t i o n s are s t i l l a t
a low l e v e l , although i n c r e a s e i s expected a s a development of t h e n e a r
future.
On the whole, the conclusions t o be derived from a general review of
i n d u s t r i a l and commercial c o n d i t i o n s , both as furnished by Federal Reserve
Agents, and from the Board's own a n a l y s e s , point to t h e d i s t a n t development
of the movement toward a normal or peace b a s i s with very s u b s t a n t i a l a l t e r a t i o n
of conditions in p a r t i c u l a r l i n e s , but with a good volume of output in t h e
s t a p l e a r t i c l e s of corm.erce s t i l l maintained. F i n a n c i a l c o n d i t i o n s , considering
the great demands t h a t are s t i l l made upon the banks, a r e s a t i s f a c t o r y .
COPY
X-1356 a
FEDERAL RESERVE BOARD
WASHINGTON
E. C.Elliott
Counsel
January 4,1919.
MEMORANDUM FOR THE BOARD:
From the accompanying f i l e i t appears t h a t some confusion of thought
e x i s t s in the minds of c e r t a i n o f f i c e r s of Federal reserve banks and
member banks a s t o the Board's i n t e r p r e t a t i o n of those p r o v i s i o n s of Section
13 of the Federal Reserve Act which r e l a t e
(1) To the power of member banks t o accept d r a f t s drawn in domestic
transactions;
(2) To t h e e l i g i b i l i t y f o r rediscount by Federal reserve banks of
member bank acceptances.
The understanding of t h i s o f f i c e of t h e provisions in question as
i n t e r p r e t e d by the Board i s as (follows:
POKER OF MEMBER BANKS TO ACCEPT DRAFTS
DRAWN IN DOMESTIC TRANSACTIONS.
Subject to the l i m i t a t i o n s prescribed by the Act, member banks
a r e authorized (a) To accept d r a f t s or b i l l s of exchange which grow out of t r a n s a c t i o n s
involving the domestic shipment of goods, provided shipping
documents conveyi&g or securing t i t l e a r e attacned a t the t_inigs.
of acceptance.
(b) To accept d r a f t s or b i l l s of exchange which are secured a t t h e ,
time of acceptance by warehouse r e c e i p t s
other such documents
conveying or securing t i t l e covering r e a d i l y marketable s t a p l e s .
All d r a f t s accepted in domestic t r a n s a c t i o n s must be secured a t
the time of acceptance. If the aggregate amount of d r a f t s accepted f o r one
person, f i r m or corporation exceeds a sum equal to t e n per cent of the
c a p i t a l and s u r p l u s of the accepting bank, such d r a f t s must remain secured
throughout t h e l i f e of the d r a f t since the Act provides t h a t "No member bank s h a l l a c c e p t , whether in a f o r e i g n or domestic
t r a n s a c t i o n , f o r any one person, **" * * * t o an amount equal a t
any time in t h e aggregate t o more than ten per centum of i t s paidup and unimpaired c a p i t a l stock »nd s u r p l u s , u n l e s s t h e bank is
secured e i t h e r by attached documents or by some o t h e r a c t u a l s e c u r i t y
growing
out of t h e same t r a n s a c t i o n as the a c c e p t a n c e . "
39
#
~2~
X-1356 a
To give t h i s language any meaning i t trust be assumed t h a t the
accepting bank tray r e l e a s e the s e c u r i t y in any case in which t h e t o t a l
amount accepted f o r any one customer does not exceed ten per cent, of
i t s c a p i t a l stock and s u r p l u s , but must not r e l e a s e i t if the amount
accepted exceeds t h i s sum.
Unless t h i s i n t e r p r e t a t i o n i s placed upon the s t a t u t e , the provision
j u s t quoted would have no meaning in so f a r as i t r e l a t e s t o domestic
t r a n s a c t i o n s since a l l d r a f t s accepted in domestic t r a n s a c t i o n s must be
secured a t the time of acceptance*
Member banks should be cautioned, however, t h a t when Congress granted
the power t o accept d r a f t s in domestic t r a n s a c t i o n s , i t c l e a r l y intended
t o f a c i l i t a t e domestic commerce and did not intend t h i s power t o be
exercised f o r the purpose of extending unreasonable l i n e s of c r e d i t to
i n d i v i d u a l borrowers. If Congress had intended t o give g r e a t e r l a t i t u d e
to banks under i t s j u r i s d i c t i o n in the matter of loans t o i n d i v i d u a l
borrowers a much more d i r e c t method would have been t o remove or broaden
the l i m i t a t i o n s of Section 5200 Revised S t a t u t e s ,
ELIGIBILITY FOR REDISCOUNT OF MEMBER
BANK ACCEPTANCES.
Any d r a f t or b i l l of exchange which a member bank has the power t o
accept i s t e c h n i c a l l y e l i g i b l e f o r rediscount with a Federal reserve
bank. This does not mean, however, t h a t Federal reserve banks a r e required
by law t o rediscount any such acceptance tendered t o i t * In developing a
market f o r acceptances the Federal reserve banks a r e c a l l e d upon t o carry
a l a r g e amount of t h i s c l a s s of paper* I t i s , of course, d e s i r a b l e t h a t
t h i s market should be developed in order to give g r e a t e r e l a s t i c i t y t o the
c r e d i t f a c i l i t i e s of the member banks* I t i s important, however, t h a t the
Federal Reserve Board and the Federal reserve banks should take a l l
necessary s t e p s t o insure conservatism in the e x e r c i s e of the acceptance
power of member banks. The policy of t h e Board, t h e r e f o r e , as r e f l e c t e d
in i t s v a r i o u s r u l i n g s , has been to caution Federal reserve banks t h a t in
red iscounting d r a f t s accepted in domestic t r a n s a c t i o n s they should consider,
and in many cases i n v e s t i g a t e , the circumstances under which the d r a f t was
accepted in order t o determine whether the s p i r i t as well as t h e l e t t e r
of the s t a t u t e has been complied with.
The Board has recognized the f a c t t h a t in the ordinary course of
business, shipping documents securing d r a f t s accepted must be released in
order t h a t the customer f o r whom the d r a f t was accepted may procure the
goods represented by such documents. I t a l s o recognizes t h e f a c t t h a t where
such d r a f t s are secured by warehouse r e c e i p t s i t i s probable t h a t at some
period during the l i f e of the d r a f t i t w i l l be necessary f o r t h e r e c e i p t
t o be surrendered t o the customer f o r whom the d r a f t i s accepted in order
t h a t the t r a n s a c t i o n involved may be consummated.
X-1356 a
-3-
In the case of shipping documents, however, i t i s o r d i n a r i l y
necessary to r e l e a s e the documents a t an e a r l i e r period than in the
case of warehouse r e c e i p t s .
In e i t h e r case, the s e c u r i t y should not be surrendered by the
bank u n t i l t h i s becomes necessary in order f o r the t r a n s a c t i o n to
be consummated, and when surrendered, the bank should p r o t e c t i t s e l f
by r e q u i r i n g e i t h e r a t r u s t r e c e i p t or a d e f i n i t e agreement on the
p a r t of the customer to whom the s e c u r i t y i s surrendered t h a t the
proceeds derived from the s a l e of the goods represented by the
shipping documents or warehouse r e c e i p t s w i l l be deposited with
the accepting bank when a v a i l a b l e to pay the d r a f t a t m a t u r i t y and
w i l l n o t ' b e used by the customer f o r other purposes.
Respectfully,
(signed)
M.C. ELLIOTT.
General Counsel.
W . P . G . H A R D I N G , GOVERNOR
A L B E R T S T R A U S S . VICE GOVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
EX-officio memb ers
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
FEDERAL RESERVE BOARD
J O H N SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
J . A. B R O D E R 1 C K , SECRETARY
L . C . A D E L S O N . ASSISTANT SECRETARY
W . T . C H A P M A N . ASSISTANT SECRETARY
w . M. I N L A Y . FISCAL ASENT
WASHINGTON
ADDRESS REPLY TO
FEDERAL
January 13,1919.
X-1358
SUBJECT: D r a f t s made payable, or payable if d e s i r e d ,
a t a designated bank,
Dear S i r : The Board has been in correspondence r e c e n t l y with
several of the Federal Reserve banks regarding d r a f t s made
payable, or payable if d e s i r e d , a t a designated bank, and you
a r e requested t o inform the Executive Committee and t h e
o f f i c e r s of your Bank t h a t i t i s the view of the Board t h a t
Federal Reserve banks should be guided by the terms of Section
13, which provides t h a t they iray receive from any member bank
and from the United S t a t e s , "deposits of current funds in
l a w f u l money" * * * "or checks and d r a f t s payable upon
p r e s e n t a t i o n , and >also, f o r c o l l e c t i o n , maturing notes and
bills * * *
The Attorney General of the United S t a t e s , in
an Opinion rendered sometime ago, expressed the view t h a t
because of t h e provision t h a t no exchange charges s h a l l be
made a g a i n s t t h e Federal Reserve banks, these banks should
not take any items which involve a payment of exchange by them.
The Board i s of the opinion, t h e r e f o r e , t h a t Federal
Reserve banks should r e c e i v e , on d e p o s i t , from member banks,
any item, whether i t be a check or a d r a f t , which w i l l be
paid on p r e s e n t a t i o n a t a bank without deduction f o r exchange,
and t h a t they would be j u s t i f i e d in d e c l i n i n g to receive
on deposit items which involve e i t h e r a delay in payment a f t e r
p r e s e n t a t i o n or an exchange charge. By giving n o t i c e t o member
banks, Federal Reserve banks can p r o t e c t themselves in t h e
matter of p r o t e s t of dishonored items having a designated
drawee and payable elsewhere "if d e s i r e d " . Counsel's opinion
as to p r o t e s t of such items w i l l be t r a n s m i t t e d in due course,
f o r your i n f o r m a t i o n .
Kindly acknowledge r e c e i p t .
Very t r u l y yours,
The Chairman,
Federal Reserve Bank,
Governor
RESERVE
BOARD
TREASURY DBjkRTMENT
X-1360
WASHINGTON
January 10, 1919.
The Governor,
Federal Reserve Board.
Sir:
By d i r e c t i o n of t h e S e c r e t a r y you a r e advised t h a t t h e Department has r e f e r r e d t o t h e a u d i t o r f o r t h e Treasury Department f o r s e t t l e m e n t t h e account of
t h e Bureau of Engraving and p r i n t i n g f o r p r e p a r i n g Federal Reserve Notes d u r i n g
t h e period December 1 t o December 31, 1918, amounting t o ^203,791.50 a s f o l l o w s :
Boston........ ...
New York
Philadelphia..
Cleveland.
Richmond.
Atlanta
Chicago
...
St. Louis.....
Minneapolis...
San F r a n c i s c o .
70,000
95,m
3,000
1.417,000
———
256 ,000
213,000
160 ,000
115,000
147,000
276,000
170 ,000
60 ,000
25,000
90 ,000
135,000
1,647,0.00
^20
35,000
239,000
174,000
185,000
102 ,000
90 ,000
202,000
75,000
50,000
22,000
44,000
,131,000
1,349,000
4,554,000 s h e e t s a t ^44.75
—
—
— —•
31,000
10 ,000
22,000
8,000
6,000
5,000
1,000
1,000
— — ~ "~
——•
84,000
........
Total
119,000
658,000
588,000
601,6M)0
370 ,000
423.000
581,000
421,000
—
251,000
59.000
1,000
214,000
269,000
57,000 4,554,000
folQO
14,000
22 ,000
1,000
6,000
5,000
5,000
3,000
y
..„..^203,791.50
The charges a g a i n s t t h e s e v e r a l Federal Reserve Banks are as f o l l o w s :
Sheets.
Boston.
.119,000
New Y o r k . . . . .658,000
ihiladelphia.588,000
C l e v e l a n d . . . .601,000
R i c h m o n d . . . . . 370 ,000
Atlanta
.423,000
.581,000
Chicago
S t . L o u i s . . . .421,000
Minneapolis. .251,000
Kansas C i t y . . 59,000
.214,000
Dallas
San Francisco269,000
4 ,554.000
Compensation.
4>1,814.75
10,034.50
8,967.00
9,165.25
5,642.50
6,450.75
8,860.25
6,420.25
3,827.79
899.75
3,263.50
4.102.25
69.448.50
Bureau a p p r o p r i a t i o n s
plate
I n c . ComTotal
printing. Materials. pensation.
^5,325.25
314,16
41,651.72.
$1,544.62
1,737.12 29,445.50
9,133.04
8,540.84
8,161.44
1,552.32 26,313.00
7,632.24
7,800.98
8,341.88
1,586.64 26,894.75
5,135.60
976.80 16,557.50
4,802.60
5,871.24
1,116.72 18,929.25
5,490.54
8,064.28
7,541.38
1,533.84 25,999.75
5,464.58
5,843.48
1,111.44 18,839.75
3,257.98
3,483.88
662.64 11,232.25
765.82
818.92
155.76
2,640.25
2,777.72
2,970.32
564.96
9,576.50
3,733.72
3,491.62
710.16 12 ,037.75
59,110.92 63,209.52
12,022.56 203.791.50
The Bureau a p p r o p r i a t i o n s w i l l be reimbursed in t h e above amount from the
i n d e f i n i t e a p p r o p r i a t i o n " p r e p a r a t i o n and I s s u e of F e d e r a l Reserve N o t e s , Reimbursable," and i t i s r e q u e s t e d t h a t your Board cause such i n d e f i n i t e approp r i a t i o n t o be reimbursed i n l i k e amount.
Respectfully,
J . H. Moyle,
a s s i s t a n t S e c r e t a r y of t h e T r e a s u r y ,
W . P . G. H A R D I N G . GOVERNOR
A L B E R T S T R A U S S , VICE GOVERNOR
A D O L P H C. M I L L E R
C H A R L E S S. H A M L I N
ex-Officio m e m b e r s
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
FEDERAL RESERVE BOARD
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
J . A . B R O D E R I C K , SECRETARY
W . T . C H A P M A N , ASSISTANT SECRETARY
W . M. I M L A Y , FISCAL AGENT
a d d r e s s
WASHINGTON
r e p l y
January 17,1919,
X-1361
SUBJECT: Correspondence and. Enclosures
Method of transmitting..
Dear S i r :
I t is requested t h a t i n s t r u c t i o n s be given t h a t in
sending l e t t e r s with enclosures t o the Federal Reserve Board.,
the enclosures s h a l l bear an i d e n t i f i c a t i o n mark and be folded
t o g e t h e r and attached t o the forwarding l e t t e r with a c l i p or
a rubber band.
The Board f r e q u e n t l y receives l e t t e r s containing
enclosures t h a t do not bear i d e n t i f i c a t i o n marks and. are not
attached to t h e forwarding l e t t e r . In the opening of the l a r g e
amount of mail which the Board r e c e i v e s , l e t t e r s and enclosures
become separated, r e s u l t i n g in considerable inconvenience and.
a l s o u n c e r t a i n t y as t o whether or not the enclosures were
a c t u a l l y received.
t o
F E D E R A L R E S E R V E BOARD
Kindly acknowledge r ^ c o i p t . -v:* ,
Tours very t r u l y ,
Secretary.
W . P . G . H A R D I N G . GOVERNOR
A L B E R T S T R A U S S , VICE GOVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
EX-OFFICIO MEMBERS
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
J O H N SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
FEDERAL RESERVE BOARD
J. A. BRODERICK, SECRETARY
L . C . A D E L S O N , ASSISTANT SECRETARY
W . T . C H A P M A N . ASSISTANT SECRETARY
w . M. IMLAY. FISCAL ASENT
WASHINGTON
ADDRESS REPLY TO
FEDERAL RESERVE
January 23,1919*
X-1366
SUBJECT: Signatures of O f f i c e r s of
Federal Reserve Banks,
Dear S i r : In order t h a t t h e records of t h i s o f f i c e may "be
brought up t o d a t e , i t i s requested t h a t you f u r n i s h a s
promptly as p o s s i b l e specimen s i g n a t u r e s in d u p l i c a t e
of a l l o f f i c e r s authorized t o sign on behalf of your bank.
Yours very t r u l y ,
Assistant Secretary.
Governor, Federal Reserve Bank,
BOARD
TELEGRAM
FEDERAL
RESERVE
BOARD
WASHINGTON
X-1367
CONFIRMATION OF TELEGRAM
January 33,1919,
Jay, New York
Austin, Philadelphia
Wells, Cleveland
Hardy, Richmond.
Wellborn, Atlanta
Heath, Chicago
Ramsay, Kansas City
Ramsey, Dallas
Perrin, San Francisco
Referring t o Board's l e t t e r of January 6th (X-1350)
transmitting t e n t a t i v e draft of revised regulations which i t i s
proposed t o issue at an early date i t i s requested that any
suggestions or additional cornrents thereto which you desire to
make be submitted so as t o reach t h i s o f f i c e not l a t e r than
January 31st,
HARDING.
Governor.
I
OFFICIAL BUSINESS
DigitizedG for
O V EFRASER
RNMENT RATES
CHARGE FEDERAL RESERVE
BOARD
EX-OFFICIO MEMBERS
W . P . G . H A R D I N G . GOVERNOR
A L B E R T S T R A U S S . VICE GOVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
CARTER GLASS
SECRETARY o f THE TREASURY
CHAIRMAN
J O H N SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
FEDERAL RESERVE BOARD
J . A. B R O D E R I C K . SECRETARY
L . C . A D E L S O N , ASSISTANT SECRETARY
W . T . C H A P M A N . ASSISTANT SECRETARY
W . M. I M L A Y . FISCAL AGENT
WASHINGTON
ADDRESS REPLY TO
F E D E R A L R E S E R V E BOARD
January 29, 1919,
' SUBJECT:
X-1370
Deductions allowed, in computing member banks 1
reserves c a r r i e d with Federal Reserve Bank..
Sir:
Section 19 of the Federal Reserve Act, which r e l a t e s t o reserve
requirements of member banks and which supersedes Section 5191 Revised
S t a t u t e s , provides in p a r t as follows:
"Every bank, banking a s s o c i a t i o n , or t r u s t
which i s or which becomes a member of any
Reserve Bank s h a l l e s t a b l i s h and maintain
balances with i t s Federal Reserve Bank as
company
Federal
reserve
follows: ***
"In estimating the balances required by t h i s Act,
the net d i f f e r e n c e of amounts due to and from other
banks s h a l l be taken as the basis f o r a s c e r t a i n i n g
the deposits a g a i n s t which required balances with
Federal Reserve Banks s h a l l be determined."
Under a u t h o r i t y of t h i s provision of the Act, i t has h e r e t o f o r e been customary t o permit banks t o t r e a t "exchanges f o r c l e a r ing house" and "checks on other banks in the same place" as part of
the balance due from other banks, so t h a t these amounts have been
deducted from "balances due to other banks" in computing reserve.
The Board's a t t e n t i o n has been c a l l e d t o the f a c t t h a t in many
instances "exchanges f o r c l e a r i n g house" g r e a t l y exceed the ledger
""balances due to other banks" and as a r e s u l t banks which carry few
accounts f o r o t h e r banks are required to maintain a reserve against
such exchanges. I t . h a s accordingly been suggested t h a t where t h i s
condition e x i s t s , the member banks should be permitted to deduct
"exchanges f o r c l e a r i n g house" from i n d i v i d u a l d e p o s i t s . The Board
i s advised by counsel t h a t t h i s would not be c o n s i s t e n t with the
l e t t e r and s p i r i t of the Act but t h a t inasmuch as "exchanges f o r
c l e a r i n g house" and "checks on other banks in the same place" a r e
X-1370
—2—
t r e a t e d a s p a r t of the "balance due from other banks" on the assumption
t h a t such items n e c e s s a r i l y become a part of such balance in due course
of business, i t would be c o n s i s t e n t with the purposes of t h e Act t o
permit the o f f s e t t i n g items of " c a s h i e r s ' or t r e a s u r e r s ' checks outstanding'' and " c e r t i f i e d checks outstanding", which in due course w i l l
be presented by and become a p a r t of balances due to other banks, t o
be t r e a t e d as part of such balances. The Board has accordingly ruled
t h a t in computing reserve, banks may deduct the t o t a l of
(a)
(b)
(c)
Balances due from other banks;
"Exchanges f o r clearing house";
Checks on other banks in the same place;
from the t o t a l of
*
(a) Balances due t o other banks;
(b) Cashiers 1 checks on own bank outstanding
(c) C e r t i f i e d checks outstanding.
In determining the balances t h a t must be maintained with the
Federal Reserve Bank t h i s method of computation tray be followed.
The Comptroller of the Currency concurs in t h i s r u l i n g and
w i l l give the necessary i n s t r u c t i o n s t o n a t i o n a l bank examiners.
Kindly acknowledge r e c e i p t .
Respectfully,
Governor,
* This w i l l include S e c r e t a r y ' s or T r e a s u r e r ' s checks in case of
i n s t i t u t i o n s where such o f f i c e r s s i g n .
4.8
i' X-1372
FEDERAL
RESERVE
BOARD
STATEMENT FOR THE PRESS
Release f o r a f t e r n o o n papers,
Thursday, January 30,1919.
- The Federal Reserve Board a u t h o r i z e s p u b l i c a t i o n of t h e f o l l o w i n g
statement:
GROSS AND SET EARNINGS AND DIVIDEND PAYMENTSOF THE FEDERAL RESERVE
BANKS DURING 1918; ALSO AMOUNTS TRANSFERRED TO SURPLUS FUND
AND RESERVED FOR GOVERNMENT FRANCHISE TAX.
Federal
Reserve
Bank
:• Gross
: Earnings
BOSTON
4,475,195
3,505,180
384,180
35 ,314, 736
22,634,033
1,195,026
PHILADELPHIA
4,367,740
3,270,824
583,983
1,304,172
1^304,172
CLEVELAND
5,226,864
4,234,678
716,107
1,776,000
1,776,000
RICHMOND
2,979,048
3,32S;4&7 !
233,432
1,039^799
l,039*f09
ATLANTA
2,293,059
1,665,585
182,473
735,000
735^000
CHICAGO
8,481,747
6,831,073
604,635
3,100,223
3,l00>223
ST,LOUIS
2,676,828
1,950,807
404,837
801,656
801,656
MINNEAPOLIS
2,049,954
1,585,546
168,103
688,672
688,872
KANSAS CITY
3,451,936
2,76?*708
309, 729
1,210,713
1,210,713
DALLAS
2,089,526
1,554,102
261,502
592,204
592,304
SAN,FRANCISCO
FRANCISCO
4.187,78 5
3,117,215
497,674
1,224.088
1.224-08B
N # YORK
TOTAL
: Net
:Dividend -.Transferred
Reserved f o r
: Earnings :Payments : t o s u r : Government f r a n c h i s e
; p l u s fund
tax.
1,460,500
1,460,500
7,672,677 12,795,215
$ 6 ^ 5 8 4 , 4 1 8 $55,436,978 $ 5, 540,681$ 21,605,904^26,728,443
FEDERAL RESERVE BOARD.
Statement f o r the P r e s s :
^
Release simultaneously with
r e l e a s e of Annual Report to
be submitted t o Congress 12
o'clock noon, February 8, 1919.
The Annual Report of the Federal Reserve Board for the
calendar year 1918, as submitted to Congress today, has been prepared in
much g r e a t e r d e t a i l than h e r e t o f o r e and gives a most complete s t o r y of
the n a t i o n a l financing during the l a s t and most important year of the
Great War*
In submitting the report the Board says;
"In meeting the emergencies occasioned by the war, Governments
everywhere have been compelled to make unprecedented d r a f t s upon
t h e i r n a t i o n a l incomes and resources. With the g r e a t nations engaged in a death grapple, p r e s e r v a t i o n of n a t i o n a l l i f e has been
the supreme o b j e c t , Most d i f f i c u l t questions of f i n a n c i a l expediency have been presented to finance m i n i s t e r s i n deciding upon
the most a v a i l a b l e and e f f e c t i v e means of mobilizing n a t i o n a l
resources* The decision once made, i t became t h e duty of a l l
separate a d m i n i s t r a t i v e agencies concerned with f i s c a l or banking
f u n c t i o n s to cooperate in giting e f f e c t t o p o l i c i e s adopted, and i t
was in t h i s s p i r i t of cooperation t h a t the Federal Reserve Board
f e l t i t t o be iit^s duty to a s s i s t in making e f f e c t i v e the p o l i c i e s
determined upon by the Secretary of the Treasury, however i n c o n s i s t e n t some of the s t e p s necessary to be taken might be with p r i n c i p l e s which usually govern in normal times. The demands ef war
are imperative and must be met without delay, and in f i n a n i n g the
t i t a n i c struggle happily ended by the armistice l a s t November, f i r s t
c o n s i d e r a t i o n could not always be given to what was t h e o r e t i c a l l y
d e s i r a b l e ; o r convenient from the standpoint of banking p r a c t i c e .
The f i n a n c i a l o b l i g a t i o n s of the Government are being met, the
war has been won, h o s t i l i t i e s have been ended, and r e p r e s e n t a t i v e s of t h e United S t a t e s and the a l l i e d powers arc now in
conference regarding terms ofpence. The country i s confronted,
i t i s t r u e , with the problems i n c i d e n t to the demobilization of
t r o o p s , t h e readjustment of p r i c e s , and^the d i v e r s i o n of industry
from war a c t i v i t i e s t o the employments of pfc&ee* Wu are approaching an era of general readjustment and resumption of c o n s t r u c t i o n
at home, and of r e c o n s t r u c t i o n abroad, but the t e r m i n a t i o n of the
war at a time f a r i n advance of popular expectation has minimized
instead of magnified our n a t i o n a l problems. We should have been
X-1374
-
2 -
confronted w i t h t h e n i n any event whenever the war temin&fca$,Laad
t h e Government has not been r e q u i r e d to withdraw from t h e i r ordinary
employment the 2,000,000 or more of ran i t was p r e p a r i n g t o w i t h draw i n September l a s t , nor i s t h e country faced w i t h the n e c e s s i t y
of equipping t h e n , and of maintaining overseas m i l i t a r y and naval
f o r c e s f o r a year or more of 4*000,000 to 5,000,000 men*
The
expenditures of $25,000,000,000 t o #30,000,000,000 which had been
a n t i c i p a t e d f o r the year 1919 w i l l bo g r e a t l y reduced* and i n s t e a d
of sending new men t o the f r o n t t h o Government i s b r i n g i n g back
a large p o r t i o n of the f o r c e s which i t .'bad been maintaining abroad*
country'
"Within a few months t h e
:•
war f i n a n c i n g w i l l havo been
completed, and t h e Board can t h e n cieal with the problems incident
to b r i n g i n g our c r e d i t s t r u c t u r e and our banking operations back
to a commercial b a s i s . Our banking s i t u a t i o n i s strong and i n h e r e n t l y sound, and i s much stronger than would have been tho case had
t h e war continued f o r another y e a r .
"On December 31 the Federal Reserve Banks h e l d a r e s e r v e of
about 50 p e r cent against t h e i r combined l i a b i l i t y f o r d e p o s i t s and
note i s s u e s , and i f the reserve against d e p o s i t s be computed ..on t h e
b a s i s of the l e g a l requirement of 35 per c e n t , the r e s e r v e against Fede r a l Reserve notes would be 60 p e r c e n t . The a b i l i t y of the country to
absorb investments has proved t o bo f a r g r e a t e r t h a n had bean ant i c i p a t e d , and our c r e d i t s t r u c t u r e , although expanded, i s unshaken.
We have no currency problems, and condit ions are not comparable
with those which e x i s t e d a t t h e close of the C i v i l War, and while t h e
volutes of c i r c u l a t i o n i s l a r g e r than i t has been at any p e r i o d i n our
h i s t o r y , t h e r e has bean no d e p r e c i a t i o n in the gold value of our c u r r e t o y , every form of which i s on an absolute p a r i t y with gold* True,
t h e purchasing power of money has declined, but t h i s i s duo t o
the abnormal and urgent demands f o r goods and s e r v i c e s and the
accompanying expansion of c r e d i t and currency. The q u a l i t y of our
currency has been maintained; t h e r e i s a s i n g l e standard of p r i c e s
which -j® based upon the lolla-r, and not a double standard, one
based upon the gold d o l l a r , and the other upon the paper d o l l a r ,
as was the case during and a f t e r t h e C i v i l War. The increased v o l ume of F e d e r a l Reserve notes has been an incident or an e f f e c t of
expansion of c r e d i t s , r a t h e r t h a n the cause of such expansion,"and
the c o n d i t i o n s which r e s u l t e d i n a d d i t i o n s to t h e c o u n t r y ' s gold
stock of more than #1,000,000,000 during the y e a r s 1915 and 1916 have
changed.
"With the development of our foreign, t r a d e , with i n c r e a s e d s h i p ping f a c i l i t i e s , and w i t h the g r a n t i n g of c r e d i t s t o o t h e r nations
t o a i d them i n t h e i r work of r e c o n s t r u c t i o n and t o enable us to s e l l
them goods, a new i n f l u e n c e w i l l be f e l t i n due coursw* which w i l l
work towards the r e s t o r a t i o n of more normal l e v e l s . Banking c r e d i t s ,
which are not extended beyond our power t o s u s t a i n t h e n , but which
are at p r e s e n t concentrated i n t h i s country, w i l l become more widely
d i f f u s e d throughout t h e world and t h e e l a s t i c q u a l i t y of our c u r rency, t h e main c o n s t i t u e n t of which i s now the F e d e r a l Reserve
X-1374
- 3 note, w i l l soon be m a n i f e s t , as indeed i t has already been evidenced
in some degree by the retirement of approximately $200,000,000 of
notes since the c l o s e of the y e a r . "
In t h i s connection, a t t e n t i o n i s c a l l e d t o the f a c t t h a t , while the
minimum r e s e r v e a g a i n s t Federal Reserve notes required by law i s 40%, as
a matter of f a c t , t h i s r e s e r v e has not f a l l e n below 60%, and t h a t , while the
maximum of Federal reserve notes i n c i r c u l a t i o n during t h e year waa
$2,701,956,000, the 60% gold "reserve (which otherwise would have been in
c i r c u l a t i o n ) h e l d against such notes was $1,621,173,000, so t h a t the a c t u a l
increase of c i r c u l a t i o n due to Federal Reserve notes amounted t o but
#1,080,783,000.
•'An o b l i g a t i o n " , says the r e p o r t , " r e s t s upon t h e American
people to a s s i s t the Government in the completion of i t s f i n a n c i a l
program and t o absorb the s e c u r i t i e s which have been and are yet t o
be i s s u e d . This absorption can be accomplished by reasonable economies
and by p e r s i s t e n t saving f o r some time to come, and i t w i l l be the duty
of the Federal Reserve Board and of the ha.n>s in t h e meanwhile t o a i d
i n t h e extension of c r e d i t f a c i l i t i e s , necessary in the processes of
production and d i s t r i b u t i o n
That the. Board i s not unmindful of the many elements of danger lurking
in forced and premature c o n t r a c t i o n of c r e d i t and currency i s !' shown
by the following e x t r a c t from i t s remarks:
"Drastic c o n t r a c t i o n would be followed by r e s u l t s no l e s s
d i s a s t r o u s t h a n those which would a t t e n d undue expansion, and the
processes of d e f l a t i o n must t h e r e f o r e be permitted to work themselves out i n a gradual and orderly manner. Discount r a t e s ,
which f o r the past . 18 months have been based upon the r a t e s borne
by Government i s s u e s , must f o r the time being continue t o be
f i x e d with regard t o Treasury requirements, but when the war
o b l i g a t i o n s of the Government have been digested, and. t h e invested
a s s e t s of the Federal Reserve Banks have been r e s t o r e d t o a commercial b a s i s , r a t e s can be established, with r e f e r e n c e t o the commercial requirements of the country.
"The Board i s profoundly conscious of the r e s p o n s i b i l i t i e s
imposed upon i t by the Federal Reserve Act, and during the period
of readjustment and afterwards as progress i s made i n t h e r e establishment of peace c o n d i t i o n s , i t s purpose w i l l be t o e x e r c i s e
i t s c o n t r o l of our c r e d i t s t r u c t u r e i n such manner as best t o
promote t h e n a t i o n a l we 1 f a r o , the a g r i c u l t u r a l , i n d u s t r i a l , and
commercial i n t e r e s t s of the country, and the development of our
foreign trade."
X-1374
- 4 Some conception may be had of the g r e a t service rendered by t h e
Federal Reserve Systen t o the Government in i t s war f i n a n c i n g in noting
the following statement of t h e f i s c a l agency operations of the Federal
Reserve Banks:
"A t o t a l of $11,1.13,816,250 of bonds of t h e t h i r d and £>urth
Liberty loans, and ^10,659,743,000 of Treasury c e r t i f i c a t e s of
indebtedness issued in anbicipation of the se loans, of the f o r t h coning f i f t h loan, and of 1918 and 1919 tax r e c e i p t s have been
subscribed, a l l o t t e d and c o l l e c t e d through the 12 Federal Reserve
Banks,
"Including operations in 1917, c e r t i f i c a t e s of indebtedness
and Liberty bonds subscribed f o r and c o l l e c t e d through the Fe.leral
Reserve Banks have amounted to *31,452^290,250, composed of
$14,529,708,000 of c e r t i f i c a t e s and #16,922,582,250 of Liberty bonds."
—- 0
X-I374
In an i n t e r e s t i n g chapter dealing with the development of the
market for bankers acceptances the Board gives a f u l l explanation of t h e
reasons f o r the variancebetween the London and Hew York market r a t e s , p o i n t i n g
out t h a t while the London market r a t e has been lower than t h a t in New York
the o f f i c i a l (Federal Reserve Bank) r a t e has been 4 - 1 / 2 % as a g a i n s t an o f f i c i a l
(Bank of England) r a t e of 5/L
Opening the chapter r e l a t i n g t o i t s discount p o l i c y , t h e Board saysr
!
The discount policy of the Board has n e c e s s a r i l y been coordinated
throughout the year with Treasury requirements ard p o l i c i e s , w h i c h
in t u r n have been governed by demands made upon the Treasury for
war purposes. All l i n e s of business a c t i v i t y have been subordinated
t o war n e c e s s i t i e s ; more than two m i l l i o n men have been under arms
in France, another m i l l i o n at s t a t i o n s and t r a i n i n g camps i n t h i s
country, half a m i l l i o n more were in the Navy, making more than
t h r e e and a half m i l l i o n men a c t u a l l y under arms; and i t i s e s t i mated t h a t the labor of f i f t e e n m i l l i o n more has been devoted to
the production, manufacture and d i s t r i b u t i o n of commodities and
m a t e r i a l required in the conduct of the war• The Government has
been the p r i n c i p a l purchaser and consumer of goods, as well as the
chief employer of labor, and the financing of the Government t h e r e f o r e has been of
importance from a commercial as well as
a p a t r i o t i c point ofvicw.
The r a t e s of i n t e r e s t borne by the Treasury c e r t i f i c a t e s of indebtedness and by the Liberty loan bonds have been determined by the
Secretary of the Treasury w i t h i n the l i m i t s fixed by Congress,and
the Board h a s f e l t i t to be i t s duty t o a d j u s t i t s discount r a t e s
i n such manner as to a s s i s t the d i s t r i b u t i o n of the various Treasury
issues >
The Board has t h e r e f o r e continued the p o l i c y , as explained in the
l a s t annual r e p o r t , of giving a p r e f e r e n t i a l r a t e of discount to
notes made or o f f e r e d by member banks secured by the Government's
war o b l i g a t i o n s , and has continued to yg^iffcit the Federal Reserve Banks
t o discount f o r nonrnemberbanks , upon the indorsement of a member
bank* notes secured i n t h i s manner.11
The following statement i s quoted as i l l u s t r a t i n g the manner in
which the System has f u l f i l l e d i t s mission in making funds a v a i l a b l e as needed
throughout the country by means of r e d i s c o u n t s and s a l e s of paper between Federal
Reserve Banks;
"Transactions oi t h i s c h a r a c t e r between the Federal Reserve Banks
have been unusually heavy during the past year, due t o t h r e e causes
named in the order of t h e i r importance; Fir-st, t r a n s f e r s of Govern
inent funds;
second, j o i n t purchases of bankers 1 acceptances; and t h i r d , seasonal requirements incident t o crop moving.
X-I374
The Board's p o l i c y has been to equalize > in an approximate degree, the r e serves of the 12 Federal Reserve Banks with the purpose of avoiding undue variat i o n s in t h e i r reserve position* Discount t r a n s a c t i o n s between the banks have
not, as a r u l e , been negotiated by the banks themselves, but through the medium
o^the Federal Reserve Board, i n s t r u c t i o n s being given by telegraph, and t r a n s f e r s
incident to the operations were e f f e c t e d in the same way.
Open-market purchases of bankers acceptances have shown a very s u b s t a n t i a l
growth. Investments i n paper of t h i s c l a s s reached a maximum of $388,383,000
on October 25. The principal market for acceptances ^ New York, although an
open market f o r them has been established in Boston under the auspices of the
Federal Reserve Bpnk there. The Federal Reserve Banks of other d i s t r i c t s have
found i t more convenient to p a r t i c i p a t e in the purchases of acceptances made by
the Federal Reserve Bank of New York, and some of the banks have undertaken to
take care of the acceptances o r i g i n a t i n g in t h e i r own d i s t r i c t s which are sold
in the New York market, Voluntary t r a n s a c t i o n s between the banks in acceptances
have been permitted without the indorsement of the Federal Reserve Bank s e l l i n g
them, but i n a l l cases where the Board has required rediscount operations the
indorsement of the bank disposing of the paper has been given,
Rediscounting because of seasonal or crop-moving requirements has been
confined t o f i v e banks- the Federal Reserve Banks of Kansas City, Minneapolis,
Dallas, Atlanta, and Richmond- but i t i s probable t h a t none of these banks would
have had occasion to rediscount except for the f a c t t h a t they were discounting
heavily f o r member banks paper secured by Government o b l i g a t i o n s . Transactions
in paper of t h i s c l a s s have been so heavy and t r a n s f e r s of balances from one
d i s t r i c t to another so constant t h a t the process of rediscounting between banks
has been continuous through the g r e a t e r p a r t of the year.
All of the banks have disposed of paper except the Federal Reserve Banks
of Cleveland and San Francisco. Rediscount operations between the Federal Reserve Banks, including voluntary purchases of bankers 1 acceptances, during the
year, have aggregated $655,638,000, as shown i n d e t a i l in the following t a b l e :
INTERDISTRICT fOVEIENT OF BILLS DISCOUNTED OR PURCHASED BY FEDERAL RESERVE BANKS
DURING THE PERIOD FROM JAM. 1 TO DEC. 31, 1918,
(IIn thousands of d o l l a r s )
*
Rediscounts and s a l e s between
Fede r a l Re sex'70 Banks,
Federal
Reserve
Bank,
Rediscounted
of sold
by -
Dis: counted
: or pur: chased
: by -
: Excess
Excoss
: of redis-* of dis- Amount
; counts
counts
pur: and
ana pur- chased
:sales.
chases .
by •
Boston
Ne v York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
S t , Louis
Minneapolis
Kansas City
Dallas
San Francisco
Total
120,29 7
180,901
50,149
69,063
75,293
9,984
12,500
24,996
8,530
103,925
19,898
67,681
66,365
137,115
331
2, 514
195,398
9,051
99,462
25,047
8,242
34,534
Acceptances
purchased f o r
account of
other Federal
Reserve
Banks.
•
100,399
113,220
68,732
72,779
3,449
9 5, 683
16,216
137,115
185,414
74,466
16,517
24.534
174,860
Direct
purchases of
acceptances in
other federal
Reserve
districts.
Amount
purMarket
Purchased
in
f o r ac- which
chasing
count of purbank.
chased .
1,907
18,949
65, 628
2,057
41,634
57
1,093
6,384
11,047
1,283
68.512
655,638:: 655,638;: 454,262 : 454,262 : 174,860 : 174,860 : 43,691 :
15,503
21,397
5,014
3,685
2,770
2,057
265
Interdistrict
movement of
discounter an
purchased
paper.
Excess
movement
from 92,046
329,714
68,732
72, 722
679
94,135
;
Excess
movement
tc —
56,562
207,757
190,192
82,907
27,564
93,046
43,691 : 658,026 : 658,028
-3-
X-1374
The following brief t a b l e quoted in the Report gives a graphic p i c t u r e
of the e f f e c t of two years of war financing upon the Federal Reserve System.
I t w i l l be seen t h a t t h e enormous needs of the country, both f o r m i l i t a r y
and comrercial purposes, have been provided f o r , while the System's surplus
over required r e s e r v e s has been lowered only by $17,400,000.
(In m i l l i o n s of d o l l a r s )
Apr.5-6
.
1917
Deo,27,
1918
Increase.
Total cash reserve
962.7
2,146,.2
1,183.5
Total n e t deposit and Federal Reserve*1> 136.8
3,io;.3
4,238.1
( not • e l i a b i l i t i e s
Total required reserve . . . . . . .
1,200.9
1,617.6
416,7
Reserve percentage . .
50.6
34.1
84,7
Total earning a s s e t s ,
2, 092 . 6
2,318,2
225.6
Free Gold
17.4
528.6
546.0
Federal reserve notes o u t s t a n d i n g .
, 400.7
2,454.9
2,855,6
Collateral:
. ( a ) 22.3 . ( b ) l , 5 6 7 . 3
Required paper „ . .
l j 545.0
849.9
• (e) 373,4 ( d ) i , 2 8 8 - 3
Gold
43.5
Note i s s u e power . . .
1,321.5
. -1, 365.0
( a ) 6 per cent (b) 55 per cent (c) 94 per cent (d) 45 per cent
The m a t e r i a l changes in the items comprising resources and
l i a b i l i t i e s of the Federal Reserve Banks from March 30,1917 (which
date was p r i o r t o t h e d e c l a r a t i o n of war and a l s o before the a c t was
amended on June 21,1917, which changed reserve requirements by providing
t h a t a l l reserves of member banks be c a r r i e d with the Federal Reserve
Banks), t o December 27,1918, were:
__
( i n m i l l i o n s of d o l l a r s )
Resources
Increase
1.Cash;
Gold . .
1,152
Legals and s i l v e r
4.7
1,199
2. B i l l holdings:
DiscountsWar paper. . . . 1,400
Other discounts
283
Acceptances, . .
219
1,902
3. Government s e c u r i t i e s
Long term
Short term . . . . .
264
4. Warrants,
(a)
16
5. Float
171
6. 5 per cent redemption
fund a g a i n s t Federal
Reserve tank n o t e s . .
6
7. All o t h e r r e s o u r c e s , net 17
Total
3_J>43
(a) Decre a se
Increase
Liabilities
25
Capital
1
Surplus .
Deposits:
Government
43
Member bank . . . . .
867
Foreign Government. .
( and o t h e r c r e d i t s
107
1,017
Federal Reserve notes
2,328
Federal Reserve bank n o t e s
117
All other l i a b i l i t i e s , n e t
including 1918 n e t earnings
55
Total
3,543
Figures showing the earnings and expanses of the s e v e r a l Federal
Reserve Banks f o r 1918 have already been made p u b l i c . The aggregate net
earnings were $55,446,979, while the average r a t e of earnings f o r the year,
based on t o t a l invested a s s e t s , was 4,12%. I t i s i n t e r e s t i n g t o study the
* t a b l e of changes during t h e year in the several c l a s s e s of earning a s s e t s
held by the banks, v i z :
(In thousands of ..dollars)
Jan. 4,
1918,
B i l l s discounted:
"""Secured by Government war o b l i g a t i o n s :
Customers' paper
Member banks' c o l l a t e r a l notes
Total
otherwise secured and unsecured Agricultural paper
livestock paper
Ifember banks' c o l l a t e r a l notes
Trade acceptances In the f o r e i g n t r a d e
In the domestic t r a d e
At1 o t h e r , n . s
Dec'
1918
Total
363,025
1,037.346
217,817
896 .635
285,919
1,400,371
1,114,452
„,q
'
247. 513
339,894
Total discounted b i l l s
625,813
Bills bought inoopen market:
Eknkers 1 acceptances 1
In tSa foreign t r a d e
In t h e domestic t r a d e
Dollar exchange b i l l s
Increase.
145,208
140.711
7,901
8,601
61,110
)
,)
'
'
29,384
21,483
27,334
18,733
21,616 > (i)39,494
(
(
27)
15,959)
208.247
'
(1139.266
302,567 . (i)37,327
1,702,938
1,077,125
180,609
82,867
1.850
129,162 • (i)51,447
166,493
83,626
79 6
(i ) 1.054
265,326
296,451
31,125
5,516
49 6
3,843
3.379
(i ) 1,673
2.883
6,012
7,222
1,210
Total b i l l s bought in open market . 271,338
303,673
32,335
51,167
28,869
(i )22,298
92,058
5,167
282,677
13
190,619
( i) 5.154
1,045,543
" (i)Decrease*
2,318,170
1,272,627
Total
Trade acceptances -G
In the foreign t r a d e
In t h e domestic t r a d e .
Total
UHited S t a t e s Government long-term
securities
United S t a t e s Government s h o r t - t e r m
securities
All other earning a s s e t s
Total earning a s s e t s
.jrr
-
- 1G -
X-1374
* » A t t e n t i o n i s d i r e c t e d t o t h e f a c t t h a t "of t h e t o t a l of
$897,151,000 b i l l s d i s c o u n t e d and bought, as shown by' the s t a t e ment of January 4 , 1 9 1 8 , $285,919,000, or 5 1 . 9 ^ t h e r e o f , c o n s i s t e d
of paper secured by Government war o b l i g a t i o n s , the b a l a n c e
being o t h e r n o t e s and b i l l s r e d i s c o u n t e d f o r member banks,
$339,894,000, and b i l l s and a c c e p t a n c e s purchased in the open
market $ 2 7 1 , 3 3 8 , 0 0 0 . The t o t a l of p a p e r secured by Government
war o b l i g a t i o n s h e l d by the F e d e r a l Reserve Banks on December
27, was $1,40 0 , 3 7 1 , 0 0 0 . "
The r e p o r t d e a l s in d e t a i l with the o p e r a t i o n s of the
v a r i o u s d i v i s i o n s of the B o a r d ' s work. That b e a r i n g on t h e work
of the D i v i s i o n of Foreign Exchange, under the a d m i n i s t r a t ix o n
of D i r e c t o r F . I . Kent, i s p a r t i c u l a r l y i n t e r e s t i n g . T h i s
d i v i s i o n , a c t i n g i n c o - o p e r a t i o n with a l l o t h e r i n t e r e s t e d
departments and bureaus of the Government and through i t s c l o s e
r e l a t i o n s w i t h the p o s t a l and cable ownerships, h a s served the
twofold purpose of s t o p p i n g t r a n s a c t i o n s t h a t would have b e n e f i t e d
enemies or a l l i e s of enemies and of accumulating a v a s t s t o r e
of v a l u a b l e s t a t i s t i c a l m a t e r i a l b e a r i n g on the t r e n d of b u s i n e s s
throughout the w o r l d .
The Report r e v i e w s a t l e n g t h the s u c c e s s f u l working of a
p l a n of d a i l y s e t t l e m e n t s through the Gold S e t t l e m e n t Fund,
m a i n t a i n e d at Washington*. I t says t h a t
"Combined c l e a r i n g s and t r a n s f e r s t h r o u g h ' t h e
fund during t h e year 1918 a g g r e g a t e d § 5 0 , 2 4 2 , 5 9 2 , 0 0 0 ,
a s compared with $27,154,704,'000 in 1917, $5,533,966,000
in 1916, and $1,052,649,000 i n 1915, making a grand
t o t a l of $83,983,911 f 000 s i n c e the o p e r a t i o n of t h e
f u n d was begun Kay 20,1915. A comparison of t h e amounts
of t h e average weekly s e t t l e m e n t s shows c l e a r l y the •
growth of the volume of t r a n s a c t i o n s .
Average weekly
1918, July 1
1918, J a n . 1
1917 . . . .
1916 . . . .
1915 . . . .
volume of c l e a r i n g s ard t r a n s f e r s :
to Dec. 31 . . . . .
. .$1,064,596,000
to June 30 . . . . . .
.
966,203,000
. . . . . . . . . . . .
522,206,000
. . . . . . . . . . . .
106,422,000
. . . . . . . . . . . .
31,898,000
-
11
-
X-I3 TA
A n a l y s i s of t h e p r i n c i p a l t r a n s a c t i o n s growing
out of t h e Government's f i n a n c i a l program, and of
the t r a n s a c t i o n s through the gold s e t t l e m e n t fund
s i n c e the d e c l a r a t i o n of war, A p r i l 6, 1917, shows
t h e i m p o r t a n t p a r t the fund h a s p l a y e d i n f i s c a l
agency o p e r a t i o n s , f o r through i t the Treasury h a s been
enabled to t r a n s f e r , w i t h o u t the a c t u a l h a n d l i n g
of cash, v a s t sums from d i s t r i c t s where they bad
accummulated to o t h e r d i s t r i c t s where f u n d s were
needed t o meet d i s b u r s e m e n t s , the time consumed i n
t r a n s f e r s being measured i n minutes i n s t e a d of d a y s . "
The e f f i c a c y of t h i s up to d a t e method of s e t t l i n g b a l a n c e s
between v a r i o u s s e c t i o n s of the country h a s l e d the Board to suggest
the p o s s i b i l i t y of a n i n t e r n a t i o n a l gold f u n d , based upon a s i m i l a r
p r i n c i p l e . The Beard says:
"The s u c c e s s f u l o p e r a t i o n of the gold s e t t l e m e n t f u n d
has suggested t h e p o s s i b i l i t y ox a v o i d i n g shipments
of gold from one country t o a n o t h e r in s e t t l e m e n t of
b a l a n c e s a r i s i n g out of o r d i n a r y commercial t r a n s a c t i o n s ,
and the Board i s r e a d y , if a u t h o r i z e d t o do so, to
undertsk e n e g o t i a t i o n s l o o k i n g to the establishment,
of an i n t e r n a t i o n a l gold exchange f u n d , or t o a s s i s t
i n any way in i t s -oower in n e g o t i a t i o n s which may
be begun bv a Government department looking t o t h a t
end. The Board r e a l i z e s t h a t the s u c c e s s f u l o p e r a t i o n
of a p l a n of t h i s kind i s dependent u i o n t h e s t a b i l i t y
of the governments concerned, and b e l i e v e s t h a t d e f i n i t e
p l a n s can n o t p e r h a p s be worked out u n t i l a s t a b l e peace
has been a s s u r e d . The Board would p o i n t out the imp o r t a n c e of excluding a l l t r a n s a c t i o n s a r i s i n g from
the a d j u s t m e n t of war o b l i g a t i o n s and of l i m i t i n g t h e
work of the f u n d t o c u r r e n t commercial and exchange
t r a n s a c t i o n s . The g o l d d e p o s i t e d in a government bank
or banks should be i n the n a t u r e of a s p e c i a l or t r u s t
f u n d , and a l l n a t i o n s p a r t i c i p a t i n g s h o u l d d e p o s i t
t h e i r p r o p e r p r o p o r t i o n s of g o l d . Assuming t h a t t h e
l e a d i n g n a t i o n s of the w o r l d w i l l be a t peace f o r a
long p e r i o d of y e a r s , t h e r e seems t o be no r e a s o n why
an i n t e r n a t i o n a l arrangement of t h i s kind should not
o p e r a t e as e f f i c i e n t l y a s our own g o l d s e t t l e m e n t f u n d ,
which h a s c l e a r e d enormous t r a n s a c t i o n s between d i s t a n t
s e c t i o n s of a country of v a s t a r e a . The saving of l o s s
and expense i n c i d e n t to a b r a s i o n and t r a n s p o r t a t i o n
c h a r g e s and i n t e r e s t on gold t r a n s f e r r e d w i l l be
enormous, and t h e advantage t o t h e commerce of t h e
world w i l l be i n c a l c u l a b l e . I t w i l l p r o b a b l y be n e c e s s a r y
m the beginning t o l i m i t p a r t i c i p a t i o n in t h e f u n d
to the U n i t e d S t a t e s and the e n t e n t e a l l i e s , and to
a few of the l e a d i n g n e u t r a l n a t i o n s , b u t i t i s conc e i v a b l e t h a t a l l c i v i l i z e d c o u n t r i e s may e v e n t u a l l y
be p a r t i c i p a n t s . "
X-1375
FEDERAL
R iS S 'J R V ii
BOARD
STATSENT FOR TH4 PRt2S3.
For r e l e a s e i n morning
newspapers of February 6 t h .
The February issue of the Federal Reserve B u l l e t i n was complete! and
sent to the p r i n t e r today.
In the Review of the Month, the f i r s t i t en in the nev? i s s u e , the Bull e t i n discusses the general s i t u a t i o n as t o p u b l i c and p r i v a t e f i n a n c i n g
a n ! t h e n says t h a t in s p i t e of the beginning of i n d u s t r i a l demands at banks
and the requirements of the l a s t i n s t a l l m e n t s of the Fourth Liberty Loans
t h e r e has been e x h i b i t e d a tendency toward the increase of bank balances at
f i n a n c i a l c e n t e r s , "Easier r a t e s f o r money" t h e Review continues "have accompanied t h i s inward movement of f u n d s , although the p r i c e paid for longer
term c a p i t a l f o r i n d u s t r i a l use has not boon lowered, while r a t e s f o r c a l l
loans and o t h e r prime commercial paper have f a l l e n but s l i g h t l y . The tendency
however, has been downward and may be taken as i n d i c a t i v e of d i s t i n c t r e cuperative power on the p a r t of the f i n a n c i a l community",
AS an i n d i c a t i o n
of c a p a c i t y to r e e s t a b l i s h normal conditions a t t e n t i o n is c a l l e d to the beginning of a ".ecline in the amount of war paper, both at
anu at member banks.
Federal Reserve Banks
This .leeline has not been as r a p i d as has beai t r u e
a f t e r the close of former L i b e r t y loans.
The e x p i r a t i o n of the installment
period of t h e loan with the close of January has, however, seen the successf u l l i q u i d a t i o n of most of the i n s t a l l m e n t accounts while t h e r e are encouraging i n d i c a t i o n s t h a t borrowers who obtained accomodation f o r a 90-day p e r i o d
are e i t h e r reducing or canceling t h e i r indebtedness, thereby r e l e a s i n g a p r o PprjupTy.to a n Q u n t
Qf
bank
fund3
for
U3Q
j_n other f i n a n c i n g .
- 2 -
X-1375
Of the s i t u a t i o n with respect to i n d u s t r i a l f i n a n c i n g thy Review remarks
t h a t : "Thus f a r t h e r e has been l i t t l e more than a beginning of i n d u s t r i a l
f i n a n c i n g f o r f o r e i g n c o u n t r i e s , and the scope of such operations w i l l
depend much upon the outcome of the peace conference.
So m#3h at l e a s t
seems c l e a r — t h a t the United S t a t e s w i l l have a l a r g e r amount of new c a p i t a l
a v a i l a b l e f o r use i n i n d u s t r i a l development than w i l l other nations*
Our
problem w i l l be determination of the basis upon which t h i s c a p i t a l i s to be
divided between domestic and f o r e i g n demands and the c o n d i t i o n s under which
i t w i l l be found advisable t o enlarge our holdings of f o r e i g n i n d u s t r i a l
obligations.
However t h i s problem may be worked out, i t is already p l a i n
t h a t a fundamental and e s s e n t i a l aid i n i t s s o l u t i o n w i l l be t h e accumulation
of as much f l u i d c a p i t a l as
possible.
The requirement t h a t saving be
f u r t h e r e d and promoted i s t h e r e f o r e again emphasized.
There i s already a
tendency in many q u a r t e r s toward a r e l a x a t i o n of the r e s t r a i n t s upon exp e n d i t u r e imposed while the war was s t i l l in progress*
The c a l l f o r modera-
t i o n in outlay and a c t u a l accumulation of funds i s , however, as uigent as
ever if r e a l soundness in n a t i o n a l and i n d i v i d u a l finance is soon to be
restored."
The condition of the currency c i r c u l a t i o n of the country and the
tendency of Federal Reserve notes t o r e t u r n to the i s s u i n g banks i s given
a t t e n t i o n , both as an i n d i c a t i o n of some slackening i n business a c t i v i t y
and as a demonstration of the e l a s t i c i t y of the Federal Reserve note issue
itself.
On the l a t t e r point i t is observed t h a t r e c e n t redemptions of
Federal Reserve notes c o n s t i t u t e t h e most extensive r e d u c t i o n that has
occurrred since the o r g a n i z a t i o n of the system, while contemporaneous with
t h i s r e d u c t i o n in outstanding Federal Reserve notes t h e r e has been observable
a tendency, not y e t s t a t i s t i c a l l y measurable, toward the r e d u c t i o n of o t h e r
noteworthy
forms of currency i n c i r c u l a t i o n . " I t i s a •
f a c t ' says the
X-1375
- 3 ?
Review "that at nany banks the o v e r - t h e - c o u n t e r d e p o s i t s are beginning to
include a considerable amount of gold coin and gold c e r t i f i c a t e s .
This
r e t u r n of funds t o t h e financial, c e n t e r s i s in p a r t the outgrowth of g r e a t e r
confidence due to the t e r m i n a t i o n of the war,, which has c e l l e d f o r t h much
hoarded currency from i t s h i d i n g p l a c e s , but i t i s also due in no samll
degree t o the slackening of b u s i n e s s a c t i v i t y and i n l e s s e r measure to the
f a l l i n g of p r i c e s already noted.
The decline in busine ss a c t i v i t y lessens
the amount of cash r e q u i r e d by i n d i v i d u a l s f o r t h e i r personal t r a n s a c t i o n s ,
by f i r m s and corporations f o r the maintenance of t h e i r counter or v a u l t cash,
as well as f o r p a y r o l l s , and even by country banks f o r the c u r r e n t meeting of
d a l l a of d e p o s i t o r s .
Lowered volume of busine ss has in years p a s t always
given r i s e to a flow of a c t u a l currency and money toward the f i n a n c i a l
c e n t e r s , and under present conditions t h i s flow is in no small degree
eventually a flow toward the Federal Reserve Banks, r e s u l t i n g in the ultimate
c a n c e l l a t i o n of outstanding note currency.
The movement thus observable w i l l a f f o r d „ no ground f o r s u r p r i s e t o
those f a m i l i a r with the underlying p r i n c i p l e s of the Federal Reserve note
system, demonstrating as i t does the e l a s t i c q u a l i t y of the Federal Reserve
note, and showing t h a t , with reduced business requirements, the c i r c u l a t i o n
w i l l reduce i t s e l f with the sane f a c i l i t y as i t had p r e v i o u s l y shown in i t s
prewar expansion t o meet increased requirements»
That i t should r e t u r n t o i t s
prewar amount i s not to be expected, e s p e c i a l l y in view of t h e f a c t t h a t so
large a volume of Federal Reserve notes has been issued i n s u b s t i t u t i o n f o r
the outstanding gold c e r t i f i c a t e s which have been impounded f o r t h e purpose
of s t r e n g t h e n i n g the reserve of member and Federal Reserve Banks. Remembering,
however, t h a t , as shown i n the Federal Reserve B u l l e t i n f o r October 1918, t h e
r e a l " i n f l a t i o n " or abnormal expansion of currency i n the United S t a t e s i s l e s s
X-1375
than the f i g u r e s nominally r e p r e s e n t i n g the growth of the c i r c u l a t i o n , the
c o n t r a c t i o n ;vhich has already occurred within-i the s h o r t space of a month
or a l i t t l e more suggests t h a t i t nay not be long b e f o r e t h i s exooss expansion
w i l l bo m a t e r i a l l y reduced."
As t o the business s i t u a t i o n and outlook the Review emphasizes the f a c t
t h a t the country i s now passing through a p e r i o d of t r a n s i t i o n in which
extensive readjustments a f f e c t i n g both c a p i t a l and labor are a c h a r a c t e r i s t i c
feature.
I t c a l l s a t t e n t i o n to the study t h a t i s being given the problem of
c u r r e n t business i n othet c o u n t r i e s and t h e tendency t h e r e t o r e t u r n to-, a
stable price level.
"Reports of business c o n d i t i o n s " na.de to t h e Board by Federal Reserve
agents i t i s noted, "show t h a t the r e t u r n of active production and consumption i s being r e t a r d e d by high expenses of p r o d u c t i o n . Uncertainty*
not only among consumers, but also among those who would o r d i n a r i l y be in
the market f o r raw m a t e r i a l s with which to manufacture goods, concerning
t h e p o s s i b i l i t y or p r o b a b i l i t y of a f u r t h e r drop in v a l u e s , tends in t h e
same d i r e c t i o n .
I t i s argued t h a t any such decline w i l l be c a r r i e d by
those who are a t the moment i n p o s s e s s i o n of the stocks of goods which
are thus tending to move toward lower l e v e l s .
Producers of secondary
a r t i c l e s involving t h e a p p l i c a t i o n of largo q u a n t i t i e s of primary raw
m a t e r i a l s are r e l u c t a n t t o absorb t h e loss
t h r e a t e n e d , although some
business men are showing a d i s p o s i t i o n t o t r e a t such l o s s e s as one of unavoidable charges upon business in the process of a speedy readjustment>
The g r e a t volume of our export t r a d e d a r i n g t h e month of December f u r n i s h e s
a measure of f o r e i g n demand, but i t remains t r u e t h a t t h i s export t r a d e i s
in largo p a r t concerned with raw m a t e r i a l s , foods, and the l i k e , and t h a t
wo are s t i l l f a c i n g t h e problem of i i n d i n g or making a market f o r our
- 5 -
X-1375
n a n a f a c t o r e d goods i n f o r e i g n c o u n t r i e s , a process i n which we can h a r d l y
hope t o make tho d e s i r e d success so long as p r i c e s continue upon a l e v e l
higher t h a t t h a t e x i s t i n g i n other c o u n t r i e s .
Those c o u n t r i e s which f i r s t
succeed in r e a d j u s t i n g t h e i r c o s t s of production and r a s t o r i n g t h e i r industry
to a normal l e v e l of values w i l l be most s u c c e s s f u l i n developing t h e i r
exports and c o n t r o l l i n g the markets of consuming nations t h e world over.
The f a c t s i n the Cu.se appear to be understood
abroad, as i s i n d i c a t e d by
the content of t h e r e p o r t s of t h e v a r i o u s boards and commissions which have
l a t e l y been looking i n t o the banking and c r e d i t s i t u a t i o n and which have
expressed t h e i r opinions with reference t o t h e course p r o p e r l y t o be followed
in b r i n g i n g about a r e t u r n t o s t a b l e conditions*"
The B u l l e t i n contains a r e p r i n t of the B r i t i s h r e p o r t on "Financial
F a c i l i t i e s " as well as a c o l l e c t i o n of recent important documentary m a t e r i a l
r e l a t i v e t o gold production, c e n t r a l bank r e s e r v e s and gold novenents.
Business conditions throughout the United S t a t e s are surveyed a t l e n g t h ,
both as p r e s e n t e d in t h e r e p o r t s of Federal Reserve Agents and i n those
of tho
Federal Reserve Board's own business index s e c t i o n .
>5
Ex-Officio Members
W . P . G . H A R D I N G . GOVERNOR
A L B E R T S T R A U S S . VICE GOVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
CARTER.GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
J O H N SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
FEDERAL RESERVE BOARD
J . A. B R O D E R I C K , SECRETARY
L . C. A D E L S O N , ASSISTANT SECRETARY
W . T . C H A P M A N , ASSISTANT SECRETARY
W . M. IMLAY, FISCAL AGENT
WASHINGTON
ADDRESS R E P L Y TO
FEDERAL
RESERVE
February 4,1519
X-1376
SUBJECT: S t a t e L e g i s l a t i o n t o s t a n d a r d i z e r e s e r v e s .
Dear S i r :
There a r e now in s e s s i o n , or w i l l be during t h e y e a r , t h e
l e g i s l a t u r e s of about f o r t y - t h r e e s t a t e s , and t h e Board wishes t o
c a l l your a t t e n t i o n to t h e f a c t t h a i the present i s an opportune
time f o r i n i t i a t i n g any l e g i s l a t i o n that may be needed in connection
with t h e membership of s t a t e banks in t h e Federal Reserve system.
In many of the s t a t e s the laws which r e q u i r e s e p a r a t e
r e s e r v e s o p e r a t e t o d e t e r s t a t e banks from becoming members, and you
a r e urged t o take s t e p s t o have b i l l s introduced in t h e l e g i s l a t u r e s
of the s t a t e s in your d i s t r i c t designed t o b r i n g about u n i f o r m i t y
with r e s p e c t t o r e s e r v e s and o t h e r requirements- There i s enclosed
herewith copy of a b i l l which has been introduced in s e v e r a l s t a t e s ,
which b i l l h a s been prepared by t h e General Counsel of t h e Board
a f t e r c o n s u l t i n g w i t h counsel of v a r i o u s Federal Reserve banks. In
some of t h e s t a t e s l e g i s l a t i o n has a l r e a d y been seoureo a l l o w i n g
s t a t e banks and t r u s t companies, members of t h e system, t o d i s r e g a r d
t h e s t a t e S t a t u t e s r e l a t i n g t o r e s e r v e s , and i t has been found t h a t
a p p l i c a t i o n s from s t a t e banks have been most numerous in t h e s e s t a t e s .
The Board would a p p r e c i a t e acknowledgment of t h i s l e t t e r
as well as a r e p o r t a s t o t h e adequacy ©r the r e v e r s e of p r e s e n t
laws of t h e v a r i o u s s t a t e s in your d i s t r i c t .
Very t r u l y yours,
Governor.
BOARD
L-799
An Act authorizing any bank or trust company incorporated under the laws of this Commonwealth to become a member
of a Federal reserve bank; to vest in such bank all powers conferred on member banks; to provide that the exercise of sucn
powers shall be subject to all of the provisions of the Federal
Reserve Act and to regulations of the Federal Reserve Board,
made'pursuant thereto; to allow any such bank or trust company
to comply with reserve requirements of the Federal Reserve Act
in lieu of those established by this Commonwealth; to permit tke
authorities of this Commonwealth which supervise and examine
banks and trust companies organized under its laws, to accept
the examinations and audits made pursuant to the Federal Reserve
Act in lieu of those required by the laws of this Commonwealth
and to disclose to the Federal authorities information relating
to the condition and affairs of banks and trust companies organised under the laws of this State which have become or which
seek to become members of the Federal Reserve System.
Be it enacted by the Senate and House of Representatives of the Commonwealth of
„
in General
Assembly met, and it is hereby enacted by the authority of the
same *
SECTION 1.
The words "Federal Reserve Act as heroin
used shall be held to mean and to include the Act of Congress of
the United States approved December 23, 1913, as heretofore and
hereafter amended,
The words "Federal Reserve Board" shall be held to
mean the Federal Reserve Board created and described in the Federal Reserve Act«
The words "Federal reserve bank" shall be held to
mean the. Federal reserve banks created and organized under authority of the Federal Reserve Act,
The words "member bank" shall be held to mean any national bank, State bank or banking and trust company which lias
become or -which becomes a member of one of the Federal reserve
banks created by the Federal Reserve Act.
SECTION 2* That any bank or trust company incorporated under the laws of this Commonwealth shall have the power
to subscribe to the capital stock and become a member of a
Federal reserve bank.
67
X-799
SECTION 3.
Any bank or trust company incorporated
under the l a w s of this Commonwealth which' is, or which becomes
a member of a Federal reserve b a n k ; i s by this Act vested with
all powers c o n f e r r e d upon member banks of the Federal reserve
banks by the terms of t h e Federal Reserve Act as fully and
completely as if such powers were specifically enumerated and
described herein, and all such powers shall be exercised subject to all restrictions and limitations imposed by the Federal
Reserve Act, or by regulations of the Federal Reserve Board
made pursuant thereto. The right, however, is expressly reserved to revoke or to amend the powers herein conferred.
SECTION 4. A compliance on the part of any such bank
or trust company with the reserve requirements of the Federal
Reserve Act shall be held to be a full compliance with tnose
provisions of the laws of this State which require oanks or
trust companies to maintain cash balances in their vaults or
with other banks, and no such bank or trust company shall be
required to carry or maintain reserve other than such as is
required under the terms of the Federal Reserve Act.
SECTION 5.
Any such bank or t r u s t company s h a l l be
subject to the examinations required under the terms of the
Federal Reserve Act, and the authorities of this State having
supervision over such bank, may in their discretion accept
such examination in lieu of the examination required under the
laws of this Commonwealth *
Such authorities, their agents
and employees, may furnish to the Federal Reserve Board, the
Federal reserve banks, or to examiners duly appointed by the
Federal Reserve Board, or the Federal reserve banks, copies
of all examinations made, and may disclose to such Federal
Reserve Board, Federal reserve banks, or examiner, any information with reference to the condition or affairs of State Danks
or trust companies organised under the laws of this State
which become members of a Federal r e s e r v e bank, or which apply
for membership in a Federal reserve bank*
SECTION 6.
All a c t s
and the p a r t s of a c t s incon-
sistent herewith arc hereby repealed*
4-13-18
X-1377
t
FEDERAL
RESERVE
BOARD
STATEMENT FOR THE PRESS.
For release afternoon ,
papers February 7, 1919.
Business conditions throughout the United. States are reported by
the Federal Reserve Board in its February Bulletin as follows:
Business Conditions in January, 1919.
"Practically throughout the country the month of January has
been characterized by the uncertainty incident to a period of
transition in business. In some cases more readjustment than had
been expected has proved to be necessary. Favorable developments
which some had thought would present themselves immediately after
the conclusion of the armistice with Germany have been delayed.
There has, therefore,been "hesitation" in business but not essential
loss of confidence in the future of the general situation. Vast
changes are now occurring in industry and extensive readjustments in
labor. Slackening in productive effort is reported from manufacturing
districts,but retail trade has as yet shown only moderate decline and
in some cases little or none. Such dullness as exists is attributed
to the usual after-holiday reaction, and it is the general opinion
that the influence of changes in manufacturing and wholesaling lines
have not yet reached the retailer and consumer.
"In the manufacturing field the changes that are taking place
are affected primarily by alterations in the prices of raw materials
and changes in the direction of demand. The extensive cancellation
of Government war contracts has resulted in modifying the plans of
many producers, while the withdrawal of Government restrictions upon
the movement of raw materials has led others to the adoption of a
conservative policy, pending the "settling down" of prices upon a
stable basis. The changes that have taken place are, however, described
as being productive of less disturbance than might reasonably have been
expected,while the tone of the business community and its expectation
of prosperous conditions to develop in the near future is strong.
There has been some disappointment over the failure of export trade
in manufactures to develop promptly, but confidence in the capacity
of export demand to develop vigorously is still felt.
"In a variety of lines in which the Government has controlled the
bulk or a large part of vhe stock of a commodity, t h e process of bringing about readjustment is not proving easy. The wool auctions, for
example, which were first held seemed to be on too high a price basis,
but subsequent revisions of prices have brought about better buying and
stronger demand. The large supply of wool now available has limited
X-1377
-
2 -
buying in South America. Producers of dry goods, however, find
t r a d e s l a c k , while in the cotton t r a d e s reductions of p r i c e s which
have already occurred a r e the l a r g e s t a t any time since the C i v i l
War, and the p r o f i t s a t the m i l l s have been Correspondingly curt a i l e d . Nevertheless, buyers a r e s t i l l r e l u c t a n t to take the product
off the hands of the manufacturers a t e x i s t i n g l e v e l s . In the consuming p a r t s of t h e country purchases of r e t a i l e r s a r e n e v e r t h e l e s s
reported about normal, although in rrany places buyers a r e cautiously
operating upon a cash b a s i s , so f a r as p r a c t i c a b l e . In l e a t h e r and
shoes p r i c e s continue high and r e t a i l e r s ' stocks a r e reported low.
The s t e e l business has been u n s a t i s f a c t o r i l y small, and as a r u l e
the industry has not truch more than a month's orders ahead. Although
a reduction of p r i c e s ranging from $4 to $6 per ton on f i n i s h e d
m a t e r i a l s had been recommended before the close of 1918,demand has
not been enlarged, while the purchases of t h e shipbuilding companies
and the r a i l r o a d s have f a l l e n off m a t e r i a l l y , Purchases f o r b u i l d ing purposes have been small and would-be consumers who had made cont r a c t s a t high p r i c e s have derranded a revision of the r a t e s charged then.
"Price movements show, on the whole, a general tendency to d e c l i n e ,
which has become more marked since the opening of the new y e a r . While
t h e general index number of the Bureau of Labor S t a t i s t i c s retrains
unchanged a t 206, the number f o r producers' goods as computed by
t h e Federal Reserve Board shows a f a l l i n g off from 205 in Novembert o 199 in December. In raw m a t e r i a l s t h e r e i s a s l i g h t increase from
197 to 198 due t o an increase in the p r i c e s of farm products from
234 in November to 237 in December. Animal products remained unchanged
a t 208, as did f o r e s t products a t 105, while mineral products declined
from 183 t o 182.
"On the o t h e r hand, consumers 1 goods showed a continued increase,
r i s i n g frem 214 in November to 216 in December. During t h e e a r l y
part of January t h e r e was a sharp downward tendency in many c l a s s e s
of p r i c e s , p a r t i c u l a r l y in s t a p l e woolens, cottons, iron and s t e e l ,
and f i n a l l y in some clashes of farm products. The movement toward
p r i c e reductions i s now f u l l y under way. From the second d i s t r i c t
i t i s reported t h a t producers of raw m a t e r i a l s and manufacturers
g e n e r a l l y express the belief t h a t prices w i l l hold about as they
a r e now, a t l e a s t f o r a considerable time to come, and t h a t those
which a r e holding off from purchasing in the hope t h a t p r i c e s w i l l
be lower soon a r e l i k e l y to be disappointed. R e t a i l e r s and jobbers,
however, take the view t h a t p r i c e s must come down, and t h a t while
t h e r e has been a s e l l e r ' s market f o r the past f o u r y e a r s , the
s i t u a t i o n i s now e n t i r e l y changed and we a r e having a b u y e r ' s market.
An i n t e r e s t i n g evidence of t h i s i s given by an important f i r m dealing
l a r g e l y in dry goods, which s t a t e s t h a t those who speculated too
f r e e l y in piece goods have been obliged t o cut p r i c e s s h a r p l y , so
t h a t woolens and worsteds are o f f e r e d to-day on a lower b a s i s than
m i l l s can manufacture them.
- 3 -
X-137 7
"The volume of business during the month, as a l r e a d y i n d i c a t e d ,
has shown a decided slackening i n most productive l i n o s - Information
received by the Board's business index r e p o r t i n g s e c t i o n , covering r e t u r n s up to the end of December, i n d i c a t e s an upward movement i n t o t a l r e c e i p t s of g r a i n at primary and secondary markers,
while shipments from t h e s e same p o i n t s show a f u r t h e r s l i g h t
decrease. Stocks on hand in these markets at the close of the
month are not m a t e r i a l l y changed, the aggregate r e p o r t e d at the
end of December being 4.27,000,000 bushels of t o t a l g r a i n s . The
movement of g r a i n s , both to and away from the m a n m t s , was p r a c t i c a l l y
p a r a l l e l , f i g u r e s showing s u b s t a n t i a l l y the same i n c r e a s e s and
d e c l i n e s expressed i n terms of percentages as? to wheat, o a t s ,
corn, b a r l e y , and rye. Flour production has increased about 20
per cent during the month, the stocks on hand at the close of
the month, however, retraining p r a c t i c a l l y unchanged. In t h e coal
t r a d e , bitumunous production shows recovery, but has not yet
reached the high normal l e v e l e s t a b l i s h e d during the month of
October. Anthracite production s t i l l shows a decline as compared
with October and even with November, when the i n f l u e n z a epidemic
was at i t s worst. The production of beehave coke f o r the month
of December was 2,255,000 t o n s , which i s lowest since February
1918. The by-product, however, shows an increase over November,
t h e f i g u r e being p r a c t i c a l l y the sama%or October, which was the
high month of the present y e a r . Conditions during the e a r l y p a r t
of January i n d i c a t e continued increase i n the production of ant h r a c i t e and bitumunous c o a l , as compared with t h e low point reached
during the h o l i d a y s , and are p r a c t i c a l l y back t o the s t a n d a r d of
the f i r s t h a l f of December. In iron and s t e e l , production during
December shows an increase in p i g iron and a s l i g h t f a l l i n g o f f
of about t h r e e p o i n t s in s t e e l ingot production, the index number
(1911-1913 average being taken as a b a s i s ) being 128 f o r November
and 125 f o r December. The corresponding index numbers f o r p i g
i r o n were 145 f o r November and 148 f o r December. U n f i l l e d orders
of the U.S. S t e e l Corporation at the close of December were 7,380,000
t o n s , as against 8,125,000 tons a month e a r l i e r , the index number
being 154 f o r November, as against 140 f o r December.
"Information for the f i r s t two weeks of January, which was
t r a n s m i t t e d by one of t h e p r i n c i p a l producing c e n t e r s , i n d i c a t e s
t h a t t h e production of s t e e l m i l l s in t h e d i s t r i c t i s about 65
p e r cent of c a p a c i t y , such production, however, being equal to about
90 p e r cent of t h e prewar production of the p l a n t s . In the nonf e r r o u s m e t a l s , r e p o r t s from various producing d i s t r i c t s are
unfavorable. In Colorado the value of g o l d , s i l v e r , copper, l e a d ,
and zinc was only ,#33,000,000 f o r 1918, a f a l l i n g o f f of $10,000,000
from the previous y e a r . In t h e J o p l i n d i s t r i c t the end of t h e war
brought an end of the p r i c e agreement on high-grade zinc o r e s ,
and t h e p r i c e of a l l grades of zinc blende was #44.60 in December
a g a i n s t $56.20 i n November. Sales were about s t a b l e , or 26,000
tons p e r month. In s p e l t e r the decline in p r i c e s brought a n
increased production in Becember t h e output being 47,000 t o n s ,
the l a r g e s t f i g u r e s i n c e April,1918. The stocks on hand a t t h e
c l o s e of t h e year increased s l i g h t l y over the f i g u r e s f o r t h e
c l o s e of October and the c l o s e of November. Lead shoved the sharpest
r e d u c t i o n i n p r i c e s yet recorded, going down from #100 p e r t o n
e a r l y in December, and #65 at the close of t h e month, "/ages were
cut correspondingly*
71
- 4 -
X-1377
"Cattle r e c e i p t s at the s i x markets of the Kansas
City d i s t r i c t have been about 43 p e r cent l a r g e r than in
January a year ago and have shown a higher l e v e l of p r i c e s
than p r e v a i l e d a t the beginning of l a s t y e a r . The supply
and movement of meat animals is more extensive t h a n a t the
opening of 1918 and r e c e i p t s of hogs as well as of sheep
are p a r t i c u l a r l y heavy. Packers report a continued run of
the heaviest business they have ever handled.Cotton consumed
durirg the month of December was s l i g h t l y l a r g e r than daring
November, the r e l a t i v e index numbers being 101 and 105,
r e s p e c t i v e l y . During the e a r l y p a r t of January t h e r e has,
however, been a tendency of c o t t o n consumption t o d e c l i n e .
The number of active spindles daring December was s l i g h t l y
more than daring November, but since the opening of January
has also shown a tendency t o f a l l o f f . Both c o t t o n and woolen m i l l s
are r i g i d l y c u r t a i l i n g t h e i r production for the f i r s t time
in t h r e e or four y e a r s .
"Labor is passing through a period of r e d i s t r i b u t i o n .
Demobilization is proceeding r a p i d l y and is already l i b e r a t i n g
a considerable Quantity of men a v a i l a b l e for employment,
while i t is also bringing about a r e d i s t r i b u t i o n of men, many
deciding not to r e t u r n t o t h e i r o r i g i n a l places of residence.
On the other hand, many employees are being set f r e e in the
s o - c a l l e d "war i n d u s t r i e s " . The process of. absorbing the
labor made a v a i l a b l e in these two ways into other l i n e s is
s t i l l r e l a t i v e l y slow. In s p i t e of the existence of unemployment at some p o i n t s , t h i s condition has not become
s u f f i c i e n t l y general to cause serious d i f f i c u l t i e s thus f a r ,
and t h e e a r l y r e s t o r a t i o n of f u l l a c t i v i t y in business, if
accomplished, may r e s u l t in absorbing the s u r p l u s supply
of labor from t h e market comparatively soon.
"The labor s i t u a t i o n v a r i e s very g r e a t l y from place
to p l a c e , and in some of t h e e a s t e r n s e c t i o n s of the country
where r e t u r n e d s o l d i e r s have been demobilized in large
numbers unemployment p r e s e n t s a problem of d i f f i c u l t y .
X-1377
- 5 "The f o l l o w i n g t a b l e prepared by the United S t a t e s Employment
Service gives a general estimate of the s i t u a t i o n beginning with the
week ending November 30, 1918:
£
o
&
Week
ending.
CO
<D
•H
~P b0
•H
O *tiH
U -P
U
CD O
S <D
3 L.
%
co
CO <D
<D W)
*H c3
-P Tp
•H U
O O
rC
U
Q CO
rO hO
w P:
$3
1918
Nov. 3 0 . . .
Dec. 7..„
Dec. 1 4 . . ,
Dec. 2 1 . . .
Dec. 2 8 . . . .
115
122
122
120
122
29 ;•
29
30
25
26
1919
Jan. 4 . . .
Jan, 1 1 . . .
Jan. 1 8 . . .
Jan. 2 5 . . .
121
122
122
122
27
22
18
18
CD
hO
d
-p
u
o
&
CO
T(D
*
-P
cd
e
•H
-P
W
33,878
48,226
47,130
41,002
35,542
33,397
20,033
18,644
14,350
m
CO
3
H
C
P-t
0)O f-1
•H 3
-P CO
•H
O bO
O
^
e
3
S5
3
H
p4
W
3CO
(D
*P
d
e
£
Number cities
showing industrial relations
as:
T(D
3
H
-P
CD
<D
^
o
^
w
+»
W
**C$
o
5
12
16
26
37
41
11,114
22,200
30,000
66,350
91,889
90
91
95
88
91
12
8
7
7
6
:
:
;
:
:
120,682
176,145
211,700
258,332
87
81
83
83
9.
8
12
14
: 6
: 8
:12
: 8
48
47
55
61
ro
:
::
::
:;
O
ro
5
5
5
4
7
7
"At Cleveland the unemployed, as reported by the United States
Employment Service, f o r the week ending January 25, 1919, amount to
65,000, as compared with 55,000 f o r the preceding week; Detroit,33,000,
as compared with 30,000; Buffalo,17,000 as compared with 15,000;
Milwaukee, 10,000, f t , a s compared with none; and S e a t t l e , 10,000, as
compared with 8,000. Other c i t i e s showing a considerable surplus are
the following: Toledo, 9,000; Dayton, 8,000; P i t t s b u r g h , 8,000; Butte,
7,500; Bridgeport, 7,000; Portland, Ore., 6,500; New Haven, 6,000;
Worcester, 6,000; Minneapolis, 5,000; and Syracuse, 5,000,
"There has been some measure of i n d u s t r i a l u n r e s t evidenced by
s t r i k e s , but s e v e r a l of t h e s e have already been s e t t l e d , among them
t h a t of the New York City workers in men's and boys' clothing,who, t o
the number of over 50,000, have been out f o r t h r e e months. They r e turned t o work on January 23, the employers having granted t h e i r demand
f o r a 44-hour working week. A s t r i k e of 23,000 employees of t h e General
E l e c t r i c Co. a t Schenectady began December 19 and ended January 11.
- 6 -
X-137 7
About 15,000 members of the Marine Workers Union quit work
January 9, t y i n g up p r a c t i c a l l y a l l shipping i n New York harbor,
but r e t u r n e d to work January 12, and t h e Federal War Labor Board
is conducting hearings on the matters i n d i s p u t e , which include
wages and h o u r s . The only large s t r i k e pending i n the New York
d i s t r i c t i s t h a t c a l l e d on January 21 and involving about 35,000
garment workers in t h e New York City waist aid dress t r a d e . In
Connecticut the labor s i t u a t i o n is bad and t h e r e i s an oversupply due t o the discharge of employees from munitions f a c t o r i e s .
Somewhat the same s i t u a t i o n e x i s t s throughout the manufacturing
d i s t r i c t of New England, with some few exceptions, t h e most
favorable p o s i t i o n being found where progress has been madetoward t h e readjustment of industry t o peace c o n d i t i o n s , ard
where consequently demobilizatli labor has been r e a d i l y reabsorbed.
In t h e a g r i c u l t u r a l regions labor is s t i l l scarce and expensive.
On the P a c i f i c coast t h e r e is some unemployment, but the bulk
of the labor a v a i l a b l e has been r a p i d l y reabsorbed. I t i s s t i l l
too soon t o s t a t e with any degree of c e r t a i n t y how the labor
s i t u a t i o n w i l l develop a f t e r industry has been reconverted t©
i t s normal b a s i s .
" I t had been expected t h a t b u i l d i n g would almost immediately
expand with the removal of r e s t r i c t i o n s which had been imposed
upon the movement of m a t e r i a l s , but i n most d i s t r i c t s it would
seem t h a t recovery has been thus f a r very small. There is s t i l l
considerable confidence that b u i l d i n g must promptly be resumed
on account of the shortage of accommodations f o r business and
f o r dwellings, but the high p r i c e s which s t i l l p r e v a i l have
prevented would-be b u i l d e r s from embarking on any large operations
thus f a r . In lumber and o t h e r a r t i c l e s c l a s s e d as m a t e r i a l s , p r i c e s
have in some sections advanced even above war l e v e l s since the
removal of Government r e s t r i c t i o n s , while men employed in the
b u i l d i n g t r a d e s are i n some cases asking h i g h e r wages than they
received during the war p e r i o d . These f a c t o r s tend t o prevent
recovery i n c o n s t r u c t i o n .
" F i n a n c i a l l y i t i s r e p o r t e d t h a t banking c o n d i t i o n s are
encouraging. Money is flowing back t o the f i n a n c i a l c e n t e r s , and
t h e r e has been a shrinkage in t h e outstanding volume of Federal
Reserve notes a t a number of banks. United S t a t e s Treasury c e r t i f i c a t e s have g e n e r a l l y been s a t i s f a c t o r i l y disposed o f ,
although some banks have had t r o u b l e i n absorbing t h e i r quota.
This has l e d to some increase in rediscounting at a number of
banks. During the p a s t 10 days, however, t h e r e has been an
e a s i e r tendency i n money and r a t e s have been lower. In some
s e c t i o n s banks have not taken up t h e i r e n t i r e quota of Treasury
c e r t i f i c a t e s . Commercial paper is markedly e a s i e r , e s p e c i a l l y
f o r t h e prime v a r i e t i e s , but r a t e s f o r c o l l a t e r a l loans are
but s l i g h t l y changed. The r a t e tends t o become f i r m as the
p e r i o d of the paper i n c r e a s e s . Financing i n the form of s h o r t term notes and bonds has been s u c c e s s f u l , but r a t e s have been
firm to strong.
- 7 -
X-3.3 77
Foreign loans sold in the New York market daring
the month of December were o f f e r e d on terms very
f a v o r a b l e t o the i n v e s t o r , the conditions i n d i c a t i n g
c l e a r l y appreciation, on the p a r t of borrowers t h a t
the supply of a v a i l a b l e c a p i t a l i s not overabundant.
In New York c a l l loans have f a l l e n from 6 p e r cent
t o 5 per c e n t , anl occasionally a renewal r a t e of 4
per cent was made. Time money is not only somewhat
lower i n the New York market, r u l i n g toward the end
of January at 5 p e r cent to &§• per c e n t , but is
d i s t i n c t l y more abundant.
X-1380
CONFIRMATION OF TELEGRAM:
February 13, £913.
To a l l Federal Reserve Agents except New York, Richmond,
Dallas and San Francisco.
SUBJECT: Release of Annual Report of Federal Reserve Agents.
In response to several i n q u i r i e s , Board has r c o b j e c t i o n
t o the imrediate release of the text cf your annual r e p o r t as
printed in returned galley proof or a press sutrrrary t h e r e o f ,
but e x h i b i t s should nut be published u n t i l a f t e r the f i n a l
report has been released by the Board, Before f i n a l p u b l i cation by the Board, the f i g u r e s reported by the Reserve
Agents trust be checked and reconciled with t h e f i g u r e s
compiled by our ' S t a t i s t i c a l Division, The iiuaerous c o r r e c t i o n s
and adjustments w i l l probably delay f i n a l p u b l i c a t i o n f o r
several weeks.
If you d e s i r e to r e l e a s e t e x t or a press suimary before
t h a t time, you should arrange t o have p r i n t i n g done l o c a l l y
a s s e p a r a t e r e p r i n t s in pamphlet form can be furnished by
Government P r i n t i n g Office only a f t e r f u l l r e p o r t has been
printed.
Please acknowledge.
BRODERICK.
TELEGRAM
FEDERAL
RESERVE
BOARD
WASHINGTON
X-1382
CONFIRMATION
February. 17,1919. '
Telegram t o a l l Federal Reserve Agents.
SUBJECT: Statement by Federal Reserve Agents as t o
readjustment of business in t h e i r d i s t r i c t s .
Please get f u l l e s t s p e c i f i c information obtainable
and send in connection with your monthly report of
business conditions or as a separate Report, statement
of extent t o which business in your d i s t r i c t has readjusted i t s e l f to peace conditions, showing how f a r
labor Has fceeft freemplbyed in peace a c t i v i t i e s # how.far
the industries of the d i s t r i c t readjusted themselves,
what changes in basic prices have occurred, how far
demand has resumed i t s normal footing, what special
d i f f i c u l t i e s are being encountered, what i s the outlook
for business both domestic and export and what i s the
prevailing tone of business sentiment. Please acknowledge,
I
BRODERICK*
OFFICIAL BUSINESS
DigitizedGfor
O V FRASER
ERNMENT RATES
http://fraser.stlouisfed.org/
CHARGE FEDERAL RESERVE
Federal Reserve Bank of St. Louis
BOARD
FEDERAL
RESERVE
BOARD
Statement f o r t h e P r e s s .
February 18,1919.
-
X-1384
Release f o r morning papers
Wednesday, February 19,1919.
The Federal Reserve Board having been advised
t h a t a t t h e l a s t meeting of the Board of D i r e c t o r s
of t h e Federal Reserve Bank of Atlanta t h e r e s i g n a t i o n
of Mr. J.A. McCord as Governor of t h a t Bank was accepted;
and t h a t Mr. M.B. Wellborn, Chairman of t h e Board and
Federal Reserve Agent has been e l e c t e d Governor e f f e c t i v e
March 1 s t , has appointed Mr. McCord as Class C D i r e c t o r
f o r . a term ending January 1, 1921, and designated him
a s Chairman of the Board and Federal Reserve Agent f o r
t h e calender year 1919. The Board i s a l s o advised t h a t
t h e D i r e c t o r s of the A t l a n t a Bank have elected Mr. L.C.
Adelson, A s s i s t a n t Secretary of the Federal Reserve
Board and A s s i s t a n t Chief of i t s Division of Audit and
Examination, a s Deputy Governor of t h e A t l a n t a Reserve
Bank. Mr. Adelson having accepted t h i s p o s i t i o n , h i s
connection w i t h t h e Federal Reserve Board w i l l t e r m i n a t e
March 1 s t .
FEDERAL
RESERVE
BOARD
February 24,1919.
X-1386
CONFIRMATION TELEGRAM
Federal Reserve Agent,
Boston
New York
Philadelphia
Cleveland
Richmond.
Atlanta
Chicago
St.Louis
Minneapolis
Kansas C i t y
Dallas
San Francisco
Beginning Friday February 28 please add in your weekly
t e l e g r a p h i c r e p o r t s new item code MUSS giving f o r your bank cont i n g e n t l i a b i l i t y a s endorser on b i l l s rediscounted with or sold
t o other Federal Reserve banks. This item w i l l be shown f o r each
bank in Board's weekly statement and should l i k e w i s e be shown in
your own weekly press statement.
Secretary,
79
W . P . G . H A R D I N G , GOVERNOR
A L B E R T S T R A U S S , VICE GOVERNOR
EX-GFFLCIO MEMEERI
ADOLPH C . M I L L E R
CHARLES S. HAMLIN
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
FEDERAL RESERVE BOARD
J O H N SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
J . A. B R O D E R I C K , SECRETARY
L . C . A D E L S O N . ASSISTANT SECRETARY
W . T . C H A P M A N . ASSISTANT SECRETARY
w . M. I M L A Y . FISCAL AOENT
WASHINGTON
ADDRESS REPLY TO
FEDERAL RESERVE BOARD
2-1389
Dear' S i r s :
I n c l o s e d hereivith I hand you c o p i e s of two l e t t e r s from
the Treasury Department c o n t a i n i n g s t a t e m e n t s of t h e c o s t of p r e p a r i n g F e d e r a l Reserve n o t e s d u r i n g t h e month of
last,
t h e t o t a l amount chargeable a g a i n s t your bank being ^
W i l l you p l e a s e d e p o s i t t h i s amount in t h e General a c c o u n t , T r e a s u r e r , U. S. , on your books, and i s s u e C/D on form 1 ,
N a t i o n a l Banks, f o r c r e d i t of " S a l a r i e s & Expenses, F e d e r a l Reserve Board, S p e c i a l Fund/', c o s t of p r e p a r i n g Federal Reserve n o t e s ,
m a i l i n g d u p l i c a t e C/4) t o t h e F e d e r a l Reserve Board.
Your prompt a t t e n t i o n t o t h i s m a t t e r v . i l l be a p p r e c i a t e d .
Very t r u l y y o u r s ,
F i s c a l Agent,
Inclosures.
X-1388
TREASURY d e b j r t m e n t
WASHINGTON
F e b r u a r y 12, 1919.
The Governor,
F e d e r a l 'Reserve Board,
Sir:
By d i r e c t i o n of t h e S e c r e t a r y , you a r e advised t h a t t h e D e p a r t ment h a s r e f e r r e d t o t h e a u d i t o r f o r t h e T r e a s u r y Department f o r s e t t l e m e n t t h e account of t h e Bureau of Engraving and p r i n t i n g f o r p r e p a r i n g f e d e r a l Reserve N o t e s , S e r i e s l y l 8 , d u r i n g t h e p e r i o d January 1 ,
1919, t o J a n u a r y 31, 1919, amounting t o ^ 7 4 2 . 8 5 , as f o l l o w s :
Boston......... .
Philadelphia... .
Cleveland
.
Chicago........ .
San F r a n c i s c o , . .
#1 *000
6,000
l,0u0
2,500
500
500
2,000
1,500
14,000
v5,G0o
Total.
. 6,000
5,000
1,000
——•
2,500
500
5#
200
2,600
—— — ——
1.500
1,200 16,600
svio ,000
——— — — —
1,000
————— —
400
—
1,400
16,600 s h e e t s , a t ^ 4 4 . 7 5 . .^>742.85
The c h a r g e s a g a i n s t t h e s e v e r a l F e d e r a l Reserve Banks a r e a s
fOllOT.S;
Sheets
Boston
New York.
P h i l a d e l p h i a . . . . 2,500
Cleveland
Atlanta
San F r a n c i s c o . . . . 1 , 5 0 0
16,600
Compensation
$91 .59
45 .75
38 .13
7 .62
7.63
39 .65
22 .87
^253 .15
Bureau a p p r o p r i a t i o n s
plate
Mater- I n c . Compensat ion Tota .1
p r i n t ing i a l s
.88
.28
#268, 50
v77.
$83,
# 5 ,84
.92
134. 25
7
.94
.64
38,
41,
111. 88
.60
.45
34,
.70
6
32,
' 22. 37
6..94
6..49
1 .32
22. 38
6,.94
6..49
1 .32
6 .86
116. 35
36,,09
33..75
6 7 . 12
19..47
20-,.82
3 .96
< 742,85
;^215.47 #230.41
$43 .82
The Bureau a p p r o p r i a t i o n s w i l l be reimbursed i n t h e above amount
from t h e i n d e f i n i t e a p p r o p r i a t i o n " p r e p a r a t i o n and i s s u e of F e d e r a l
Reserve N o t e s , R e i m b u r s a b l e , " and i t i s r e q u e s t e d t h a t your Board cause
such i n d e f i n i t e a p p r o p r i a t i o n t o be reimbursed in l i k e amount.
Respectfully,
R« C- Leffingv e l l ,
A s s i s t a n t S e c r e t a r y of the; T r e a s u r y .
TREASURY DEBBTMENT
X-1387
WASHINGTON .
February 12, 1919.
The Governor,
Federal Reserve Board.
Sirt.
By d i r e c t i o n of the S e c r e t a r y , you are advised t h a t t h e Department has ref e r r e d to the a u d i t o r f o r the Treasury Department f o r settlement the account of
the Bureau of Engraving and p r i n t i n g f o r preparing Federal Reserve Notes during
the period January 1 t o January 31, 1919, amounting t o $243,171.50 as follows:
.
r
M
105.
120
: : : : : : M
Philadelphia....192,00 0
Cleveland
205,000
Richmond
174,000
Atlanta.
14,000
Chicago.........170,000
S t . Louis
95,00)0
Minneapolis
55,000
Kansas C i t y . . . . . 1 5 5 , 0 0 0
Dallas
30,000
San F r a n c i s c o . . . 1 5 6 . 0 0 0
1,641,000
62,000
95,000
40,000
246,000
362,000
220,000
80,000
134,000
.
168,000
114.000
2,066,000
80,000
90,000
76,000
165,000
232,000
60,000
69,000
186,000
22,000
105,000
1.641.000
_|50 •
$100
' Total
M .
31,000
12,000
4,000
4.00U
4,000
—4
4,000
2,000
•
1,000
67,000
5,434,000 sheets a t $44.75
19,000
334,000
21,000
306,000
429,000
770,000
379,000
224,000
476^000
220,000
375.000
5,434.000"
$243,171.50
The charges a g a i n s t the s e v e r a l Federal Reserve Banks a r e as follows;
Bureau a p p r o p r i a t i o n s
CompenPlate
i n c . ComSheets. sat ion.
pr int, ing
Materials
sensation.
Total
Boston
666,000' «K>;&56.50 48,644.68
244.08
$1,758.24~ $29,803.50
New York
834,000 12,718.50 10,825.32
11,575.92
2,201,76
37,321.50
Philadelphia..334,000
5,093.50
4,335.32
4,635.92
881.76
14,946.50
Cleveland
421,000
6,420.25
5,464.58
5,843.48
1,111.44
18,839.75
Richmond
306,000
4,666.50
3,971.88
4,247.28
807.84
13,693.50
Atlanta
429,000
6,542.25
5,568.42
5,954.52
1,132.56
19,197.75
Chicago
770,000 11,742.50
9,994.60
10,687.60
2,032.80
34*457.50
S t . Louis
379,000
5,779.75
4,919.42
5,260.52
1,000.56
16,960.25
Minneapolis.,.224,000
3,416.00_. 2,907.52
3,109.12
591.36
10,024.00
Kansas C i t y . . .476,000-' 7,259.00
6,178.48
6,606.88
1,256.64
21,301.00
Dallas...
220,000
3,355.00
2,855.60
3,053.60
580.80
9,845.00
San Francisco.375,000
5.718.75
4.867.50
5.205.00
990.00
16,781.25
6,484,000 £.82,868.50 $70,533.52 # 5 , 4 2 3 . 9 2 , $14 , 345.76 $243,171.50
The Bureau a p p r o p r i a t i o n s v»ill be reimbursed in the above amount from the
i n d e f i n i t e a p p r o p r i a t i o n " p r e p a r a t i o n and Issue of Federal Reserve Notes, Reimbursable," and i t i s requested t h a t your Board cause such i n d e f i n i t e approx
p r i a t i o n to be reimbursed in l i k e amount.
Respectfully,
B*
Leffingwell,
A s s i s t a n t Secretary of the Treasury.
82
W. P. G. HARDING. g o v e r n o r
ALBERT STRAUSS, v i c e g o v e r n o r
ADOLPH C. M I L L E R
C H A R L E S S. H A M L I N
e x - o f f i c i o members
CARTER GLASS
S e c r e t a r y or t h e T r e a s u r y
Chairman
FEDERAL RESERVE BOARD
J O H N SKELTON WILLIAMS
c o m p t r o l l e r of t h e c u r r e n c y
WASHINGTON
j . A. B R O D E R I C K , s e c r e t a r y
L . C. A D E L S O N . a s s i s t a n t s e c r e t a r y
W. t . CHAPMAN. a s s i s t a n t s e c r e t a r y
W . M. IMLAY, F i s c a l A g e n t
a d d r e s s
r e p l y
FEDERAL
February 26, 1919.
SUBJECT:Topics suggested by Federal. Reserve Board for discussion
a"C Conference with Governors of Federal Reserve Banks,
March 2 0 , 1 9 1 9 ,
Dear Sir:
There is enclosed herewith a tentative list of topics
which the Board desires to discuss with the Governors at the meeting to be held m
the Assembly Room, Metropolitan Bank Building,
Thursday, March 20th,
Ample time will be afforded for the dis-
cussion of any other topics which may be submitted by the Governors
or any of them, as well as matters pertaining to the Victory Loan.
Very truly yours,
Governor.
t o
RESERVE
BOARD
CONFERENCE WITH GOVERNORS
OF
FEDERAL RESERVE BANKS
MARCH 20,1919.
X-I390a
CONFERENCE WITH GOVERNORS
GENERAL FINANCIAL SITUATION: Present Problems.
I. DOMESTIC
(A) Present financial conditions.
1. Reserves ana Loans of Federal Reserve Banks
2. Money Market
3. Investment market
(B) Government Financial Program
(C) Railroad Financing - Temporary and Permanent
(D) Settlement for unfinished Government Contracts
(E) Probable effect of Topics B,C, and D upon Reserve and Loan
condition of Federal Reserve Banks; money market at
financial centers; general investment market.
II. FOREIGN
(A) Eifegt u^on financial and business
States o$'
1.
2.
3.
4.
conditions in United, .
Signing Treaty of Peace
Discontinuance of Government Loans to Allies
Discontinuance of Supervision of Foreign Exchange transactions
Discontinuance of control of gold exports (Extent to which
gold may be shipped to foreign countries.)
i
(B) Financial Relations with Foreign Countries
1. Present indebtedness of Allies
2. Present favorable trade balance
3. Adjustment of 1 and 2, and t'*e effect upon future trade
(C) Development of Trade with Foreign Countries
1.
2.
3.
4.
Financial facilities.
Shipping facilities.
Formation of export corporations and associations.
Cooperation with Governmental agencies.
(D) Providing means of Payment for Commodities
1. Acceptance credits to finance exports and imports
2. Long term credits to finance American exports
3. Necessity for establishment and development of broad market
'for securities of foreign governments and corporations.
4. International Gold Clearance Fund - Use of plan of earmarking
gold.
TOPICS SUGGESTED FOR
DISCUSSION AT
CONFERENCE WITH GOVERNORS
OF
FEDERAL RESERVE BANKS
MArch 20,1919,
Meeting in Assembly Room,
Metropolitan Bank Building,
a t 10:30 A.M.
TOPICS - u ' c F O R DISCUSSION AT CONF^NCE WITH GOVERNORS ,
OF FEDERAL RESERVE BANKS, J'ARCK 20, 1919.
Westing a t Assembly Room, Metropolitan Ewak Building, a t 1 0 : a .
m,
DISCOUNT POLICIES:
a.
How long should Reserve banks continue the present d i f f e r e n t i a l
r a t e s in favor of notes secured by Government o b l i g a t i o n s ?
b.
Current r a t e 3 of member banks f o r bank loans in the several
Reserve d i s t r i c t s , and t h e i r r e l a t i o n to present rediscount
r a t e s of Federal Reserve Banks.
c.
Liquidation of Government secured paper a t Reserve banks.
d.
Expression of opinion as to the length of time which / / i l l
be required t o make a permanent d i s t r i b u t i o n of the Government s e c u r i t i e s held by member banks.
e.
Discussion of recommendations made by Advisory Council as
t o discount r a t e s and p o l i c i e s .
BANKERS' ACCEPTANCES - OPEN MARKET:
a.
Development of open market.
b.
Is a low r a t c a t Federal Reserve Banks necessary to develop
the acceptance market?
c.
Reserve Bank - p o l i c i e s in making purchases:
1.
Direct from accepting banks.
2.
From member banks, with or without endorsement
(miscellaneous b i l l s other than own acceptances).
3.
Through brokers and accepting houses.
4.
Through other Federal Reserve Banks.
5.
Through brokers or banks other than Reserve banks,
of acceptances of member banks in other d i s t r i c t s .
d.
Sales of acceptances to other Reserve banks with or without
Reserve bank endorsement.
5.
Expression of opinion i s asked as t o d e s i r a b i l i t y of Reserve
bank making miscellaneous s a l e s of bankers' acceptances:
1.
To member banks in i t s own d i s t r i c t .
2.
To other banks, bankers, brokers or accepting
houses in rfits own d i s t r i c t .
3.
f»
To "banks, bankers, brokers or a c c e p t i n g houses
in other d i s t r i c t s .
X-I390a
Necessity f o r general cooperative policy covering a l l
i n t e r d i s t r i c t purchases, s a l e s and r e d i s c o u n t s ,
BANKERS1 ACCEPTANCE?- GENERAL;
a.
To -vhat extent i s inquiry trade by Reserve Banks to d e t e r mine e l i g i b i l i t y of bankers' acceptances. 7
b.
D i s t i n c t i o n - foreign and domestic acceptances as to
s e c u r i t y required a t the time of and subsequent t o acceptance.
BANKERS' ACCEPTANCES - DQI^STIC:
a. Use and abuse of domestic acceptance.
b.
Custody of c o l l a t e r a l .
c.
Discrimination in purchases by Reserve Banks.
LOANS TO ME?B"R BANKS:
a.
What is the policy with respect to discount by Reserve banks
of notes and b i l l s secured by commodities; margin require^ ?
b.
The a t t e n t i o n of the Board has been called t o what has been
termed "extraordinary l i b e r a l i t y of loans to strail member
banks". The margin between the Reserve bank discount r a t e
and the r a t e charged to customers of r e d i s counting bank tends
t o encourage easy c r e d i t .
Discussion as t o extent to which s n a i l banks or i n s t i t u t i o n s
which a r e in a weak or over-extended condition should be permitted t o rediscount with Reserve bank; n e c e s s i t y f o r c a r e f u l
a n a l y s i s of the c r e d i t statements submitted before r e d i s c o u n t ing; and requirements as to a d d i t i o n a l c o l l a t e r a l . D e s i r a b i l i t y
of s p e c i a l c r e d i t i n v e s t i g a t i o n s in cases where a bank o f f e r ing paper i s over-extended, or where an o v e r - l i b e r a l loan
tendency i s a p p a r e n t .
CREDIT STATEMENTS•
a.
Extent t o which r e l i a n c e is placed upon the standing and
condition of an endorsing bank and i t s c e r t i f i c a t e as to the
e l i g i b i l i t y of n o t e s submitted f o r r e d i s c o u n t , r a t h e r than
determination as to e l i g i b i l i t y as well a s d e s i r a b i l i t y ,
through a n a l y s i s of f i n a n c i a l statement of the payers of
the n o t e s r e d i s c o u n t e d .
88
4
- 3 b.
7.
\
13 9
Corporations operating s u b s i d i a r y companies; suggested
requirement, t h a t such companies f u r n i s h to Reserve banks,
s e p a r a t e f i n a n c i a l statements of parent and a l l p r i n c i p a l
s u b s i d i a r y corporations as of the same d a t e .
REDISCOUNTS BETWEEN RESERVE BANKS•
At p r e s e n t , when the reserve percentage a g a i n s t combined
note and deposit l i a b i l i t i e s i s reduced to about 40$, b i l l s
are sold to or r e d i s c o u n t s ! with other Federal Reserve Banks.
At present the reserve percentage of a number of Reserve banks
i s in excess of 65$. I t has been suggested t h a t the red i s counting point be raised from 40$ t o 45$.
8.
CREDIT BAROMETRIC^:
Consideration of the suggestions made by A. Wall of D e t r o i t ,
t h a t a Bureau of Barometrics be e s t a b l i s h e d by the Federal
Reserve Board. Would the b e n e f i t s warrant the expense?
9.
RESERVE BANK- BUILDINGS;
Need f o r cooperation and interchange of ideas in the development of plans f o r the e r e c t i o n of new bank b u i l d i n g s , i n s t a l l a t i o n of v a u l t s and other equipment.
10.
RESERVE BANK INSURANCE:
Central Insurance Agency:
.
Is i t d e s i r a b l e to e s t a b l i s h or appoint a c e n t r a l
insurance agency to represent a l l the Reserve banks,
in placing r e g i s t e r e d mail and other insurance.? I t i s
claimed t h a t t h i s plan w i l l have the advantage of
uniformity in p o l i c i e s and r a t e s , and t h a t b e t t e r
r e s u l t s w i l l be obtained f o r the twelve banks a c t i n g
in unison r a t h e r than as twelve s e p a r a t e u n i t s as a t
present?
Limited Self Insurance
•rf. Reserve bank has submitted to the Federal Reserve Board
f o r approval a plan f o r the readjustment of i t s f i d e l i t y
insurance, which contemplates:
a . Primary individual bonds.
b. Excess insurance, bankers' blanket policy, and Llcyas
blanket policy to be continued u n t i l accumulation in
"cslf insurance fund" would j u s t i f y the discontinuance
of suchnxcess i n s ura nce.
c.
The s e t t i n g a s i d e annually out of earnings of a
s t a t e d sum over and above cost of priirary bonds and
excess insurance while the l a t t e r i s maintained, t o
c o n s t i t u t e an insurance reserve fund.
I t has been suggested t h a t if t h i s plan can l e g a l l y
be adopted, i t might be wall to have t h a t or a s i m i l a r
plan in other Federal Reserve Banks, or have the twelve
banks join in e s t a b l i s h i n g one "Insurance Reserve Fund".
BRANCHES OF FEDERAL RESERVE BANKS:
Expression of opinion i s desired from the Governor
cf each Federal Reserve bank having branches as t o :
a.
The extent of service rendered to member banks.
b.
Thevalue - of such s e r v i c e to member banks of the
d i s t r i c t in which the branch i s l o c a t e d ,
c.
Extent and value of s e r v i c e rendered by the Branch
to other Federal Reserve banks.
d.
Cost of operating branches.
e.
Branches with l i m i t e d f u n c t i o n s .
f.
Use of agencies instead of branches.
CONCENTRATION OF GOLD AT FEDERAL RESERVE BANKS:
a.
P o s s i b i l i t y of f u r t h e r i n c r e a s e in gold h o l d i n g s .
b.
Demand f o r cold;
1.
In exchange f o r Federal Reserve notes
redeemed a t Federal Reserve Banks,
2.
For o t h e r purposes.
INTER-DISTRICT COLLECTION SYSTEM:
a.
Suggestions as to improvement in present f a c i l i t i e s so t h a t
Reserve banks nay render increased or b e t t e r s e r v i c e t o
member banks.
b.
D e s i r a b i l i t y of harmonizing present i n t e r d i s t r i c t time
schedules, a t l e a s t between Federal Reserve c i t i e s .
c.
Reduction in f l o a t c a r r i e d by Reserve banks.
d.
Recommendation of Federal Advisory Council t h a t items be sent
d i r e c t l y t o c i t y or town in which they a r e payable.
-5-
X-139Ca
14. LEASED WIRE 5SR7ICI!;
a. P r o b a b i l i t y t h a t e n t i r e cost w i l l have t o be assumed by Reserve
banks a f t e r the Victory Loan Bond campaign has been completed.
b. Suggestions as t o improvements in present service*
15. PENALTIES FOR DEFICIENCIES IN MEMBER BANK RESERVES:
D e s i r a b i l i t y of adoption of uniform method of determining
d e f i c i e n c i e s in reserves and a s s e s s i n g p e n a l t i e s .
16. FORM OF APPLICATION FOR EMPLOYMENT AT FEDERAL RESERVE BANKS:
ADDITIONAL TOPICS FOR DISCUSSION
17. NATIONAL BANK NOTES:
Suggestion of Federal Advisory Council t h a t Reserve banks receive
n a t i o n a l bank n o t e s on deposit and pay out in place of them c l e a n
Federal Reserve n o t e s ,
IS. OFFICERS OF FEDERAL RESERVE BANKS ACTING ON COMMITTEES OF BANKINGASSOCIATIONS,
19. DIRECTORS AND OFFICERS OF F.R. BANKS - MENTION OF CONNECTION WITH
FEDERAL RESERVE BANK IN DEALING- WITH PRIVATE ENTERPRISES IN WHICH
THEY MAY BE INTERESTED.
20. PAR POINTS:
Campaign f o r a d d i t i o n a l par points*
21. CHECKS AVAILABLE BUT NOT PAYABLE AT A F.R, BANK,
Suggestion t h a t Clearing Houses put on d i s c r e t i o n a r y l a s t checks
marked 'The amount of t h i s check i s immediately a v a i l a b l e w i t h out deduction upon p r e s e n t a t i o n a t t h e Federal Reserve Bank of
t
22. SUGGESTED AMENDMENT TO SECTION 5202 OF REVISED STATUTES:
Suggestion by Federal Advisory Council removing l i m i t of b i l l s
t h a t a bank might n e g o t i a t e by indorsement.
TOPICS SUGGESTED BY GOVERNORS
23.
F a i l u r e to obtain d u p l i c a t e checks to replace checks
deposited by t h e C o l l e c t o r of I n t e r n a l Revenue, and
l o s t in the m a i l s .
Suggested by:
Govr.McDougal
•% m
- 6 -
X-1390a
24.
P e n a l t i e s f o r d e f i c i e n c i e s in r e s e r v e . (On the
program suggested by the Board -Topic So,15)
Suggested by:
Govr. McDougal
25.
Uniform t i t l e f o r Bond Departments in Federal
Reserve Banks.
Govr.Miller
26.
A d v i s a b i l i t y of securing an amendment to the
p o s t a l laws i n c r e a s i n g the weight l i m i t on
franked mail matter'.
27.
Our general campaign f o r a d d i t i o n a l par p o i n t s ,
and, in connection with t h i s , our campaign
f o r t h e purpose of$ increasing S t a t e bank members h i p . (See Board s Topic No,20 )
28. How can excessive borrowing on the p a r t of i n d i v i d u a l banks be best regulated? (See Board's
Topic No. 5b)
29.
Exchange charged by Ns.v York banks on Federal
Reserve exchange d r a f t s .
30.
Uniform form of endorsement stamps used by
Federal Reserve banks and t h e i r members
authorized to send items d i r e c t .
31.
Present method of recovering f o r postage and
insurance f o r shipments between Federal Reserve
banks.
32.
Real e s t a t e and bank b u i l d i n g . (See Board's
Topic No.9)
33.
Duties of the Federal Reserve Agent, and proper
coordination of h i s work with t h a t of the
Governor.
34.
Formation of Credit Department and the extent t o
which the banks a r e j u s t i f i e d in g e t t i n g f i r s t hand information regarding paper o f f e r e d f o r
rediscount,
35.
C a l c u l a t i o n of i n t e r e s t . Treasury Department
pays on a 365-day b a s i s while a l l t h e Federal
Reserve banks except those of New York and
Boston c a l c u l a t e i n t e r e s t and discount on a
360-day b a s i s . Cannot u n i f o r m i t y be obtained
in t h i s regard?
36.
Necessity f o r the banks maintaining an agency t o
count and witness the d e s t r u c t i o n of Federal
Reserve bank n o t e s .
Den. Govr. Curtis
w . p. g . HARDING. g o v e r n o r
E x - O f f i c i o M e m b e r s
ALBERT STRAUSS, v i c e g o v e r n o r
A D O L P H C. M I L L E R
C H A R L E S S. H A M L I N
CARTER GLASS
s e c r e t a r y of t h e t r e a s u r y
Chairman
JOHN
SKELTON WILLIAMS
c o m p t r o l l e r of t h e c u r r e n c y
FEDERAL RESERVE BOARD
washington
j . a . BRODERICK, s e c r e t a r y
L. C . A D E L S O N , a s s i s t a n t s e c r e t a r y
W. T. CHAPMAN. a s s i s t a n t s e c r e t a r y
w . M. I M L A Y , F i s c a l a g e n t
a d d r e s s
r e p l y
FEDERAL
February 27,1919,
X-1391
SUBJECT: Release of monthly r e p o r t s of business
conditions by Federal Reserve Agents.
Dear S i r :
In response to frequent suggestions f o r the r e l e a s e
of monthly r e p o r t s of business conditions to member banks and
l o c a l newspapers a t an e a r l i e r date than the f i r s t of the
month, you are advised t h a t h e r e a f t e r such r e p o r t s w i l l be
issued as "Report of Federal Reserve Agent" and not as h e r e t o f o r e "Report to the Federal Reserve Board", and may be
r e l e a s e d on or a f t e r the 35th of each month.
The report t o be issued should be in the hands of
the Board however^not l a t e r than t h e 20th of each month.
Very t r u l y yours,
Secretary.
t o
RESERVE
BOARD
FEDERAL
RESERVE
BOARD
STATEMENT FOR THE PRESS.
Release f o r morning papers,
March 1,1919.
X-1392
R e s t r i c t i o n s placed upon f o r e i g n t r a d e by reason of war conditions are
being raised from t i n e to t i n e as. f a s t as compatible with the best i n t e r e s t s
of the Nation. Acting upon advice from the S t a t e Department, the Federal
Reserve Board, t h s War Trade Board and the cable and postal censors, a c t i n g
simultaneously, announce the r a i s i n g of r e s t r i c t i o n s a f f e c t i n g foreign exchange t r a n s a c t i o n s , foreign trade and commercial and f i n a n c i a l cables and
communications, The Federal Reserve Board announces t h a t d e a l e r s (in foreign
exchange) as defined under the Executive Order of the President of January
26,1918, nay now, and u n t i l otherwise i n s t r u c t e d , make t r a n s f e r s of funds to
persons, not enemies or a l l i e s of enemies, r e s i d e n t as follows:
Rouman i a ,
Servia,
Syria,
Mesopotamia,
Finland,
Bulgaria,
Turkey in Asia,
Turkey in Europe,
All Black Sea Ports,
Bohemia, and Moravia (as e x i s t i n g August 1,1914)
Within t e r r i t o r y included in tho l i n e s e t out in A r t i c l e 3
of the 'Military clause of the Armistice Protocol of
November 3,1918 (part of the Trentino)
Those portions of P a l e s t i n e extending as f a r north as the
l i n e from A l e x a n d r i a to Aleppo, i n c l u s i v e , and as f a r
east as the: Bod jaz 5a-iWay.
The Board a l s o announces t h a t foreign exchange d e a l e r s in f u t u r e need
not present f o r approval t o i t a p p l i c a t i o n s f o r t r a v e l e r s 1 l e t t e r s of c r e d i t
in excess of $5,000, i n s t r u c t i o n s to open. Commercial l e t t e r s of c r e d i t or to
make t r a n s f e r s of funds f o r the purpose of purchasing commodities to be warehoused, or a p p l i c a t i o n s to open commercial c r e d i t s f o r the purpose of exporting goods from one f o r e i g n country t o another f o r s i g n country.
In making t h i s announcement, the Board s a y s :
"The withdrawal of t h e s e requirements does not remove the
r e s p o n s i b i l i t y from d e a l e r s of t a k i n g proper d e c l a r a t i o n s of
non-enemy i n t e r e s t , nor from r e p o r t i n g t o the Division of
Foreign Exchange before t a k i n g any a c t i o n in case they have
reason to b e l i e v e t h a t any t r a n s a c t i o n requested of them would,
if c a r r i e d out, be detrimental to the i n t e r e s t s of t h e United
States."
The Board has a l s o rescinded i t s r e g u l a t i o n of June 11,1918, in so f a r
as i t a p p l i e s t o advice to i t of d e p o s i t s by " d e a l e r s " f o r account of foreign
94
" »
-2-
: X 1392
correspondents but s t i l l r e q u i r e s t h a t d e a l e r s accepting such d e p o s i t s
derrand from those making the d e p o s i t s who may not be d e a l e r s , customers 1
statements d e s c r i b i n g the t r a n s a c t i o n s * The Board c a l l s the a t t e n t i o n of dealers
t o the following f a c t s :
1. The "Trading with the Enemy Act" i s s t i l l law:
2* The Executive Order of The President of January 26,1918,
must bo obeyed, t o g e t h e r with the r e g u l a t i o n s which have
been issued under i t ;
3* I t is s t i l l against the law to make remittances to "enemy"
t e r r i t o r y without regard to whether i t i s a t present within
a l l i e d control or n o t , except as permission i s extended
through the Division of Foreign Exchange.
As rapidly as i t is fcund possible the Board w i l l authorize t r a n s f e r s
of funds t o portions of
enemy t e r r i t o r y under Allied c o n t r o l .
I t is i n t e r e s t i n g in t h i s connection to read the following order issued
by the Board.
"Until otherwise i n s t r u c t e d the exportation or importation
of Russian rubles, or the t r a n s f e r of funds f o r t h e i r purchase
by persons and dealers in the United S t a t e s i s prohibited*"
Great B r i t a i n , Canada and France are a c t i n g c o i n c i d e n t a l l y with the
United S t a t e s in the measures outlined„
FEDERAL
RESERVE
BOARD
CONFIRMATION OF TELEGRAM TO ALL FEDERAL RESERVE AGENTS
(EXCEPT BOSTON AND N£W YORK)
v
Februar.
,1919. X-1394
SUBJECT:Campaign for establishment of new par points.
Austin
Wills
Hardy
tic Cord
Hsath
Martin
Rich
Ramsay
F&treay
iferrin
- Philadelphia
- Cleveland
- Richmond.
- Atlanta
-Chicago
f St. Leuis
- Minneapolis
- Kansas City
• • 'h
- San Jtrancisco"
Please advis3 number of banks added to par l i s t during month
February and t o t a l additions since January f i r s t .
Also as of close
of business twenty*sight t o t a l number of national bank members, Stats
bank members, nonmamber banks on par l i s t and n on member banks not on
par l i s t .
BRODERICK
FEDERAL
RESERVE
BOARD
WASHINGTON
February 27, 1919.
X-1395
CONFIRMATION OF TELEGRAM TO ALL FEDERAL RESERVE AC-ENTS.
SUBJECT:State 'bank a p p l i c a t i o n s f o r membership.
Board urges thai, during tho coming month you make
a s p e c i a l e f f o r t t o i n c r e a s e S t a t e bank membership.
The e x c e l l e n t r e s u l t s accomplished in your d i s t r i c t in the
p a s t a r e a p p r e c i a t e d and i t i s hoped t h a t the good work w i l l
be continued u n t i l every e l i g i b l e s o l v e n t S t a t e bank has become
a member of t h e System.
'Please ackowledge.
HARDING-.
FEDERAL
R E SE'R V E B O A R D
STATEMENT FOR THE PRESS
X-1398
Release f o r afternoon papery
February 28* 1919*
Mr. Milton C„ E l l i o t t has resigned as General Counsel f o r the
Federal Reserve Board to resume p r i v a t e p r a c t i c e . Mr, E l l i o t t has been
connected with the Federal Reserve System since i t s organization* In
1913 he was appointed Counsel t o the Comptroller of the Currency and
during t h a t year as s p e c i a l r e p r e s e n t a t i v e of the Treasury Department
he a s s i s t e d in the r e v i s i o n of the b i l l which became the Federal Reserve
Act, when i t was under consideration by the Banking and Currency Committee
of the Senate. This b i l l 'became a law on December 23,1913, and Mr. E l l i o t t
was then appointed Secretary and Counsel of the Reserve Bank Organization
Committee and as such had charge of the a d m i n i s t r a t i v e and l e g a l work of
the Committee in organizing the twelve Federal Reserve Banks. When the
Federal Reserve Board was organized he was appointed Counsel and has continued in t h a t p o s i t i o n since t h a t time. Mr, E l l i o t t
has been
retained as Consulting Counsel of the Federal Reserve Board a t Washington.
Mr, George L. Harrison has boon appointed General Counsel of the
Board to succeed Mr, E l l i o t t . Mr, Harrison, who has been A s s i s t a n t Counsel
f o r the Board since November 1,1914, was formerly law s e c r e t a r y f o r Mr*
J u s t i c e Holmes, of the United S t a t e s Supreme Court, t o which p o s i t i o n he
was appointed upon graduation from the Harvard Law School.
Washington, D»C.
February 28,1919+
FEDERAL
RESERVE
BOARD
gg
CONFIRMATION OF TELEGRAM TO ALL FEDERAL RESERVE AGENTS*
3ML399
February 26, I9I&.
SUBJECT: Bankers acceptances; a v a i l a b i l i t y of proceeds.
Curtiss - Boston
Jay
— New York
Austin - Philadelphia
Wills
- Cleveland
Hardy
- Richmond
WitHlyoni— Atlanta
The
Heath - Chicago
Martin- St.Louis
, Rich - Minneapolis
Ramsay— Kansas City
Ramsey-- Dallas
Perrin- San Fiancisco
schedule adopted by the Federal Reserve Bank of New York by
arrangement with other Federal Reserve banks, shows that the proceeds of
bankers acceptances collected through the Federal Reserve Bank of New
York w i l l be available substantially as follows:
1 . At maturity: Acceptances payable at a l l Federal Reserve
and Federal Reserve branch c i t i e s .
v
2. One day a f t e r maturity: Acceptances payable elsewhere in
a l l d i s t r i c t s except Nos. 5 and 6. .
3. In the Atlanta d i s t r i c t on acceptances of members and ncnmembers payable in Atlanta, Jacksonville, New
Orleans and Birmingham: Proceeds w i l l be a v a i l able at maturity.
Member bank acceptances payable outside of the
four dities* Proceeds w i l l be available one. day
a f t e r maturity.
Nonmember bank acceptances payable outside of
the four c i t i e s : Proceeds w i l l be available
when collected.
4. In the Richmond d i s t r i c t on acceptances payable in Ricbrond
and Baltimore: Proceeds available at maturity.
Acceptances payable, elsewhere in Maryland, Virginia
and D i s t r i c t of Columbia: Proceeds available two
days -.fter maturity.
Acceptances payable in West Virginia, North Carolina
and South Carolina: Proceeds available three days
a f t e r maturity.
The arrangements cade with other Federal Reserve banks r e f e r only t o
items c o l l e c t e d for the account of the Federal Reserve Bank of New York.
Please -confira by wire that you are prepared to c o l l e c t in accordance with
above schedule, acceptances received from or f o r the account 6f =ny Federal
Reserve bank. It i s the understanding,of course,that the items to be collected
must be received by a Federal Reserve bank in time f o r presentation at
maturity
to the accepting bank or t o the bank designated as the
nf
http://fraser.stlouisfed.org/
payment.
'
BRODERICK.
Federal Reserve Bank of St. Louis
EX OFFICIO MHMBEH8
w . P. G. HARDING. g o v e r n o r
ALBERT STRAUSS, v i c e g o v e r n o r
ADOLPH C. M I L L E R
C H A R L E S S. H A M L I N
CARTER GLASS
S e c r e t a r y of t h e T r e a s u r y
Chairman
FEDERAL RESERVE BOARD
J O H N SKELTON WILLIAMS
C o m p t r o l l e r or t h e C u r r e n c y
washington
j.
L.
w.
w.
a . BRODERICK, s e c r e t a r y
C. a d e l s o n , a s s i s t a n t s e c r e t a r y
t . CHAPMAN. a s s i s t a n t s e c r e t a r y
M. IMLAY, f i s c a l a g e n t
a d d r e s s
r e p l y
FEDERAL
February 28,1919,
X-1400
SUBJECT: Cred.it 3arorcetr5.es; Proposed Tstablishtnent of Bureau.
Dear S i r :
The,re i s enclosed herewith a g a l l e y proof of an a r t i c l e
which w i l l bo published in the March B u l l e t i n , covering an i n v e s t i g a t i o n rrade by Mr. Alexander Wall of the National Bank of
Con.rr.erce of D e t r o i t , on t h e s u b j e c t ''Credit Barometrics",
The suggestion has been made t h a t the Federal Reserve
Board e s t a b l i s h a bureau f o r the purpose of continuing t h e study.
The t o p i c has been suggested f o r d i s c u s s i o n a t t h e next. Governors 1
Conference.
I t would be a p p r e c i a t e d if you w i l l give t h e Board an
expression of your opinion as to t h e value of the r e s u l t s of the
study, and t h e a d v i s a b i l i t y of t h e e s t a b l i s h m e n t by the Board of
a bureau or d i v i s i o n f o r the purpose, oi caking a n a l y s e s of c r e d i t
s t a t e m e n t s and c o n d i t i o n s along t h e l i n e s o u t l i n e d in t h e r e p o r t
of Mr. Wall,
Very t r u l y yours,
t o
RESERVE
BOARD
100
X-1401
GOVERNORS AND FEDERAL RESERVE AGENTS
OF THE TWEL7E FEDERAL RESERVE BANKS.
GOVERNORS:
Bank
. i
3
3
o
7
8
9
10
11
12
Narre
Boston
New Yorl:
p
hiladslphia
Cleveland.
Richmond
Atlanta
Chicago
S t . Louf.s
Minneapol i s
'Kansas City
Dallas
San Francisco
Chas. A. Morss
Benjamin Strong, J r .
E. P. Passmore
E. R, Fancher
Geo. J. Seay
M. E, Wellborn
Ja-.nes B. McDougal
David C. Biggs
Theodore Wold
J . Z. M i l s r . J r .
R. L. Van Zandt
J . K< Lynch
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
S t . Louis
Minneapolis
Kansas City
Dallas
San Francisco
F r e d e r i c H. C u r t i s s
P i e r r e Jay
Richard Li Austin
D. C. Wills
Caldwell Hardy
Joseph A. McCord
Wm, A. Heath
Win. McC. Martin
John H. Rich
Asa E. Ramsay
Wm. F. Ramsey
John P e r r i n .
FEDERAL RESERVE AGENTS:
1
2
3
4
5
6
7
8
9
10
11
12
FEDERAL RESERVE BOARD
WASHINGTON, March 1, 1919.
EX-OFFICIO MEMBERS
W . P . G . H A R D I N G . GOVERNOR
A L B E R T S T R A U S S . VICE GOVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
J O H N SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
FEDERAL RESERVE BOARD
J . A. B R O D E R 1 C K , SECRETARY
L. C. A D E L S O N , ASSISTANT SECRETARY
W . T . C H A P M A N . ASSISTANT SECRETARY
w . M. IMLAY, FISCAL AGENT
washington
ADDRESS R E P L Y TO
FEDERAL
March 1, 1919.
X-1404
i o l a t t o n e of Section 22 of the Federal Reserve Act.
Dear S i r :
Your a t t e n t i o n i s d i r e c t e d to the p r o v i s i o n s 'of
Section 22 of the Federal Reservo Act imposing p e n a l t i e s
f o r c e r t a i n a c t a t h e r e i n made unlawful.
I t i s tho d e s i r e of the Board t h a t you rrake prompt
r e p o r t t o i t d i r e c t ox each and every v i o l a t i o n , or apparent
violation., of the provisions of t h i s section of the law t h a t
come t o your knowledge.
Kindly acknowledge r e c e i p t .
Very t r u l y yours,
Governor.
RESERVE
BOARD
1.053
Ex
W. P. G. HARDING, GOVERNOR
ALBERT STRAUSS. VICE GOVERNOR
OFFICIO M e m b e r s
ADOLPH C. MILLER
CHARLES S. HAMLIN
CARTER GLASS
SECRETARY o r THE TREASURY
CHAIRMAN
J O H N SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
FEDERAL RESERVE BOARD
washington
J . A. B R O D E R I C K . SECRETARY
L. C. A D E L S O N , ASSISTANT SECRETARY
W . T . C H A P M A N , ASSISTANT SECRETARY
W . M. IMLAY, FISCAL AGENT
a d d r e s s
r e p l y
FEDERAL
t o
RESERVE
BOARD
March 3, 1919.
x'* a 4:05'"'3-
SUBJECT: Domestic Acceptances,
Dear S i r :
There i s sent to you herewith, f o r your
information and guidance, copy of opinion by
the
General Counsel of the Board under date of February
28, bearing upon s e c u r i t y of acceptances in excess
of 10^.
This opinion was approved by t h e Federal Re-
serve Board a t i t s meeting today.
Very t r u l y yours,
Governor.
: X-14C5
1 O'i'
FEDERAL RESERVE BOARD
WASHINGTON.
February 26,1919,
•'T'..'GR/.HEUM FOR THE BOARD,
S u b j e c t : Domestic Acceptances,
From t h e accompanying f i l e i t appears t h a t some confusion of thought
e x i s t s in the Kinds of c e r t a i n o f f i c e r s of Federal r e s e r v e banks and tr.ac.ber
banks as t o the Board's i n t e r p r e t a t i o n of t h o s e p r o v i s i o n s of Section 13 of
t h e Federal Reserve Act.which r e l a t e
(1) To the power of member banks t o accept d r a f t s drawn in
domestic t r a n s a c t i o n s ;
(2) Tc t h e e l i g i b i l i t y f o r rediscount by Federal r e s e r v e
banks of member bank a c c e p t a n c e s .
The u n d e r s t a n d i n g of t h i s o f f i c e cf the p r o v i s i o n s in q u e s t i o n as
i n t e r p r e t e d by t h e Board i s as f o l l o w s :
S u b j e c t t o t h e l i m i t a t i o n s prssc-ribad by t h e Act, mzmber banks are
authorized (a) To a c c e p t d r a f t s or b i l l s of exchange which grow cut of t r a n s a c t i o n s
i n v o l v i n g the domestic shipment of .goods, provided-"shipping documents
conveying or s e c u r i n g t i t l e a r e attached;..at t h e time of a c c e p t a n c e .
(b) To accept d r a f t s or b i l l s of exchange which a r e secured a t t h e time
by warehouse r e c e i p t s or other such documents convoying
—
or s e c u r i n g t i t l e covering r e a d i l y marketable s t a p l e s *
All d r a f t s accepted in domestic t r a n s a c t i o n s must t h e r e f o r e be secured
a t t h e time of acceptance e i t h e r by shipping.documents or warehouse r e c e i p t s
or o t h e r such documents, as s p e c i f i e d in t h e law. If t h e aggregate amount of
d r a f t s accepted f o r one person, f i r m or c o r p o r a t i o n exceeds a sum equal t o
ten per c e n t , of the c a p i t a l and s u r p l u s of t h e a c c e p t i n g bank, such d r a f t s ,
whether in a f o r e i g n o r domestic t r a n s a c t i o n ^ must retrain secured throughout
the l i f e of t h e d r a f t since t h e Act provides t h a t "No member bank s h a l l a c c e p t , whether in a f o r e i g n or domestic t r a n s a c t i o n ,
f o r any one person, * * 1 * * * t o an amount equal a t any time in t h e aggregate'"
t o more than t e n percentua: cf i t s paid up and unimpaired c a p i t a l stock and
s u r p l u s , u n l e s s t h e bank i s secured e i t h e r by a t t a c h e d documents or by some
other a c t u a l s e c u r i t y growing out of t h e same t r a n s a c t i o n a s t h e acceptance."
X-1405
To give t h i s language any meaning i t must be assumed t h a t t h e accepting
bank may, if i t chooses, r e l e a s e the s e c u r i t y in any case in which the t o t a l
amount accepted f o r any one customer does not excedd ten per cent, of i t s capital
stock and s u r p l u s . Unless t h i s i n t e r p r e t a t i o n is placed upon the s t a t u t e , the
provision j u s t quoted would be meaningless in so f a r as i t r e l a t e s to domestic
t r a n s a c t i o n s since a l l d r a f t s accepted in domestic t r a n s a c t i o n s must be secured
a t the time of acceptance.
In any case, however, where the t o t a l amount accepted f o r any one customer
exceeds ten per cent, of the c a p i t a l stock and surplus of the accepting bank
the s e c u r i t y l e g a l l y cannot be released unless some other a c t u a l s e c u r i t y growing out of the same t r a n s a c t i o n as the acceptance i s s u b s t i t u t e d t h e r e f o r . This
immediately r a i s e s the question as t o whether or not the ordinary t r u s t r e c e i p t
s u b s t i t u t e d f o r shipping documents, warehouse r e c e i p t s , e t c . , c o n s t i t u t e s an
a c t u a l s e c u r i t y such as i s required by t h i s provision of the a c t . In an opinion
f i l e d by t h i s o f f i c e on October 12,1917, and printed on page 881 of the
November,1917, B u l l e t i n , i t was stated "that a t r u s t r e c e i p t which permits the purchaser of the goods
to obtain control of those goods e i t h e r f o r milling or other
purposes i s not an a c t u a l s e c u r i t y within the meaning of the
a c t , and t h a t , t h e r e f o r e , acceptances secured by such t r u s t
r e c e i p t s corns within the 10 per cent l i m i t a t i o n imposed by
s e c t i o n 13.
"A d i f f e r e n t s i t u a t i o n r e s u l t s , of course, in any case
where the t r u s t r e c e i p t is of such a character as not t o permit
the purchaser to gain control of the goods as where they are
held f o r the account of the acceptor by some person, warehouse,
or corporation independent of the borrower*"
The view expressed in t h i s opinion has been followed by the Federal
Reserve Board in various r u l i n g s r e l a t i n g not only to the purchaser in a
t r a n s a c t i o n involving a s a l e , but a l s o to any customer f o r whom a d r a f t i s
accepted r e g a r d l e s s of whether or not there i s an actual s a l e of the goods
covered by t h e documents attached to the d r a f t ,
ELIGIBILITY FOR REDISCOUNT OF MEMBER
BANK ACCEPTANCES.
Under the terms of section 13 any d r a f t or b i l l of exchange vhich a
member bank has the power to accept under the provisions of t h a t section,
i s t e c h n i c a l l y e l i g i b l e f o r rediscount by a Federal Reserve Bank. This does
not mean, however, t h a t Federal Reserve Banks are required by law to r e discount every such acceptance tendered t o ^ a t n f o r t h a t purpose. In developing a general market f o r acceptances the Federal Reserve Banks are n e c e s s a r i l y
called upon t o carry a l a r g e amount of t h i s c l a s s of paper, but i t is important
t h a t the Federal Reserve Board and the Federal Reserve Banks should take a l l
necessary steps to insure conservatism in the e x e r c i s e of the acceptance
power by member banks. The policy of the Board, t h e r e f o r e , as r e f l e c t e d in
i t s various r u l i n g s , has been t o caution Federal Reserve Banks t h a t in r e discounting d r a f t s accepted in domestic t r a n s a c t i o n s they should consider and
in many cases i n v e s t i g a t e , t h e circumstances under which t h e d r a f t was accepted
in order to determine whether or not the p a r t i c u l a r t r a n s a c t i o n complies with
the s p i r i t as well as t h e l e t t e r of the s t a t u t e .
X-1405
- 3 I t was in view of t h i s policy t h a t the Federal Reserve Beard has cons i s t e n t l y r e f r a i n e d from encouraging Federal Reserve Banks t o rediscount cr
purchase warehouse acceptances a f t e r the warehouse r e c e i p t s have been r e leased though t h e r e i s nothing in the law which p r o h i b i t s the rediscount of
such acceptancesx I t i s recognized, however, t h a t an u n r e s t r i c t e d policy
of rediscounting or purchasing such acceptances a f t e r the warehouse r e c e i p t s
nave been released tight very probably lead t o an abuse of the domestic
acceptance p r i v i l e g e by f a c i l i t a t i n g the use of the warehouse r e c e i p t as a
rrere cloak f o r a s t r a i g h t loan in v i o l a t i o n of the provisions of Section
5200. It can not be s t a t e d , of course, as a hard and f a s t r u l e t h a t the
acceptance c£ a d r a f t secured by a warehouse r e c e i p t was not a bona f i d e
t r a n s a c t i o n ire r e l y and solely because the warehouse r e c e i p t has been surrendered before the acceptance i s presented to the Federal Reserve Bank
for rediscount. I t should, however, put the bank on n o t i c e anu. should
suggest extreme caution in order to determine whether in f a c t the acceptance
complies in every way with both the l e t t e r and s p i r i t of the law* When
Congress granted the power to accept d r a f t s in domestic t r a n s a c t i o n s , i t
Clearly intended to f a c i l i t a t e domestic commeros and did not contemplate
t h a t t h i s power should be used f o r the purpose of extending unreasonable
l i n e s of c r e d i t t o individual borrowers in s u b s t a n t i a l v i o l a t i o n of the
l i m i t a t i o n s of Section 5800 of the Revised S t a t u t e s . If Congress had
intended to g i f e g r e a t e r l a t i t u d e to banks under i t s j u r i s d i c t i o n in the
n a t t e r of loans of t h i s c h a r a c t s r a much more d i r e c t method would have
been to remove or to broaden the l i m i t a t i o n s of Section 5200.
The Board has ^recognized the f a c t , however, t h a t in the ordinary
course of business, shipping documents securing accepted d r a f t s ®ust be
released in order t h a t the customer f o r whom the d r a f t was accepted rray
procure the goods represented by such documents. I t a l s o recognizes the
f a c t t h a t where such d r a f t s a r e secured by warehouse r e c e i p t s i t is probable
t h a t a t some period during the l i f e of the d r a f t i t may be necessary f o r the
r e c e i p t t o be surrendered to the customer f o r whom the d r a f t i s accepted
in order t h a t the t r a n s a c t i o n involved nay be consummated, In the case
of shipping documents i t i s o r d i n a r i l y necessary t o r e l e a s e the documents
a t an e a r l i e r period than in the case of warehouse receipts<
In e i t h e r case, as a matter of policy the s e c u r i t y should not be s u r rendered by the accepting bank u n t i l t h i s becomes necessary in order f o r
the t r a n s a c t i o n t o be consummated, and even when surrendered, banking prudence r e q u i r e s t h a t the bank p r o t e c t | t s e l f b^ procuring e i t h e r a t r u s t
r e c e i p t c r a d e f i n i t e agreement on the part of t h e customer t o who# the
s e c u r i t y i s surrendered t h a t the proceeds derived from the s a l s of the goods
represented by the shipping documents or warehouse r e c e i p t s w i l l be de-~
posited with the accepting bank when a v a i l a b l e t o pay the d r a f t a t maturity
and w i l l not be used by t h e customer f o r o t h e r purposes, I t should be r e membered, however, as previously s t a t e d , t h a t in any case where a t r u s t
r e c e i p t i s s u b s t i t u t e d the ten per cent l i m i t a p p l i e s if the t r u s t r e c e i p t
i s such as to give control over the goods to the borrowers or the customer
f o r whom the d r a f t was accepted.
Respectfully,
(Signed)
M.C. ELLIOTT
General Counsel.
FEDERAL RESERVE BOARD
WASHINGTON
X-1406
March 3,1919
CONFIRMATION TELEGRAM
SUBrJECT:
Bankers Acceptances; a v a i l a b i l i t y of proceeds
Morss
Strong
Passmore
Fancher
Seay
Wellborn
Boston
IIew York
Philadelphia
Cleveland
Ricnnond
Atlanba
Mc Bougal
Biggs
Wold
Miller
Van Zandt
Lynch
~ Chicago
- St.Louis
- Minneapolis
- Kans?.s City
— Dallas
- San Frazjr.iaco
R e f e r r i n g t o telegram of the twenty eighth., advices have been
received from a l l Federal Reserve Barks t h a t they a r e prepared t o
c o l l e c t bankers acceptances received from or f o r account of any
o t h e r Federal Reserve Bank and t h a t s u b j e c t t o f a n a l payment, proceeds
of such acceptances w i l l be a v a i l a b l e in accordance with t h e schedule
published by Federal Reserve Bank of New York dated February twenty
s i x t h and outlined in our telegram dated February twenty e i g h t h , with
the understanding t h a t items t o be collected must be received by the
c o l l e c t i n g Federal Reserve Bank or Branch in time f o r p r e s e n t a t i o n a t
maturity t o t h e accepting bank or t o the bank designated as the place
of payment. R e f e r r i n g t o telegram twenty eighth please note proceeds
of acceptances payable in S t . P a u l , Minnesota,, w i l l a l s o be a v a i l a b l e
a t m a t u r i t y . As the e f f e c t of agreement i s t h e adoption of a uniform
acceptance c o l l e c t i o n plan covering a l l Federal Reserve d i s t r i c t s , the
Board requests t h a t changes in the time schedule be s u b j e c t t o t h i r t y
days n o t i c e .
Please wire acknowledgment.
HARDING.
Governor,
FEDERAL RESERVE BOARD
WASHINGTON
X-1407
March 3,1919.
CONFIRMATION OF TELEGRAM
Curtiss
Jay
Austin
Wills
Hardy
McCord
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Heath
Mart in
Rich
Pair-say
Ramsey
Perrin
-
Uncago
St.Louis
Minneapolis
Kansas C i t y
Dallas
Ban Francisco
S u b j e c t : C e r t i f i c a t e of D e s t r u c t i o n , Federal Reserve Notes.
I t has been suggested t h a t c e r t i f i c a t e s of d e s t r u c t i o n f onn
twenty t h r e e t h i r t y f o u r sent, by o f f i c e of Comptroller of t h e
Currency a d v i s i n g d e s t r u c t i o n of Federal Reserve n o t e s of your
bank be discontinued* On day n o t e s a r e d e l i v e r e d to Comptroller
byNational Bank Redemption Agency Comptrollers o f f i c e g i v e s
c r e d i t t o agent w i t h advice as t o d e t a i l s . I t i s s t a t e d t h a t
date of d e s t r u c t i o n i s t h e only a d d i t i o n a l information on c e r t i f i c a t e s
and value i s questioned as i t i s d i f f i c u l t t o i d e n t i f y amount of
n o t e s destroyed with previous advices of c r e d i t s . Please wire
i f you a r e in f a v o r of t h e discontinuance of c e r t i f i c a t e of
destruction.
BRODERICK.
F E D E R A L
R E S E R V E
B O A R D
WASHINGTON
STATEMENT FOR THE PRESS.
For immediate r e l e a s e March 5, 1919.
The passage of the b i l l making some minor amendments t o
the Federal Reserve Act has resulted in increasing from
$22,739,901 t o $49,465.341 the combined surplus of the twelve
Federal Reserve Banks.
The law before amendment provided t h a t , a f t e r payment
of expenses and dividends, one half of the net earnings of
the banks should be paid in to the Government as a f r a n c h i s e
tax and the retraining one half (up to 4Qfo of t h e i r paid in
c a p i t a l ) could be
r e t a i n e d by the banks as s u r p l u s .
As
amended# the law permits the Federal Reserve Banks to r e t a i n
as surplus t h e i r net earnings (including those f o r the year
ended December 31, 1918) up t o 100^ of t h e i r subscribed
c a p i t a l , and 10$ t h e r e a f t e r .
FEDERAL
RESERVE
BO A R B
STATEMENT FOR THE PRESS-
1.09
X-14C9
K^rch 5,1919,
Release f o r a f t e r n o o n papers,
March 6,1919,
BUSINESS CONDITIONS IN FEBRUARY, 1919.
v
n.'j..'1 s progress in the readjustment of 'business t o peace conditions
i s report: : by the Board's r e p r e s e n t a t i v e s in the s e v e r a l d i s t r i c t s t o
have been Trade during the month of February, and while the advance in
d i f f e r e n t p a r t s of the country i s reported g e n e r a l l y g r a t i f y i n g , sens
u n e a s i n e s s i s expressed by t h e public a t l a r g e because the progress i s
not more rapid, Although the readjustment process is s t i l l f a r froc. having
reached completion t h e r e i s much evidence t h a t the f a c t o r s which trust be
reckoned with in bringing about the d e s i r e d r e o r g a n i z a t i o n of business
and f i n a n c i a l r e l a t i o n s h i p s a r e cooperating in a f a i r l y s a t i s f a c t o r y way.
"Although business i s by no treats, on a s e t t l e d basis" " r e p o r t s the F i r s t
Federal Reserve D i s t r i c t , "confidence is apparently r e t u r n i n g " , In the
Third D i s t r i c t the process of readjustment ''"ifciS made some progress",
while elsewhere in s p i t e of s. s d i f f i o v V t conditions approach to a s e t t l e d
s t a t u s has been d i s t i n c t l y marked. In t h e Seventh D i s t r i c t i t i s observed
t h a t "both l a b o r .and c a p i t a l a r e cooperating t o continue t h e orderly r e adjustment now u n d e r w a y , " This general s i t u a t i o n e s t a b l i s h e s a favorable
b a s i s upon which t o build t h e processes of m o d i f i c a t i o n and a l t e r a t i o n t h a t
are now a t work in various f i e l d s of e f f o r t *
Labor and employment conditions ever since the s i g n i n g of the a r m i s t i c s
with Gertnany have
B O
•T I
regarded as. c o n s t i t u t i n g the
XxinDATT'OTITal
probXein
cf business readjustment and coupled with thet) the rein"trod.ug*tin of a
normal f o o t i n g f o r p r i c e s . Reports as t o l a b o r uneoipLoyr.,e-«x n^ve been
nutrecous
i n t h e press, but the r e p o r t s of Federal Reserve Agents shew t h a t
—2—
X—1409
t h e r e has probably thus f a r been over-anxiety and exaggeration with respect
to t h i s m a t t e r . From several of the Manufacturing d i s t r i c t s of the Federal
Reserve system i t i s reported t h a t l a b o r conditions are f a r from s a t i s f a c t o r y ,
and t h a t t h e r e i s considerable unemployment; but i t is a l s o noted t h a t the
condition does not seem t o have grown worse during February. The process of
absorbing unemployed labor is c e r t a i n l y proceeding with some degree of success
vVhile the existence of unemployment is admitted by most of t h e Federal Reserve
agents, i t appears that the surplus of l a b o r i s smallest in the South and
Southwest, while in only a very few d i s t r i c t s is i t reported t h a t serious
labor controversies are in progress. As t o wages and t h e i r readjustment t o
the new conditions, the trend i s by no means uniform or d e c i s i v e , In the
South and Southwest there are no i n d i c a t i o n s of any reduction in the wage
s c a l e , vhile in the North and East employees are demanding higher wages, n o t withstanding the existence of considerable unemployments Some r e v i s i o n s of
wage s c a l e s are reported from the kiddle West, but there is as yet no general
revision of wages downward, although t h e r e are i n d i c a t i o n s of a tendency to
l e t wages s e t t l e to a d e f i n i t e l e v e l which s h a l l withcut question be higher
than t h a t e x i s t i n g before the war. There has been a tendency to provide labor
f o r a g r e a t e r number of persons by eliminating overtime or e s t a b l i s h i n g s h o r t
time. The connection between wages, p r i c e s and costs i s well recognized, and
i t is the view of manufacturers in general t h a t wages should not go down
f a s t e r than prices> Such r e v i s i o n s as are occurring, t h e r e f o r e , are f r e q u e n t l y
p a r a l l e l , wages and p r i c e s receding in l i k e measure.-The opposition of l a b o r
t o any reduction in wages i s very general and extremely p o s i t i v e , but in some
cases i t i s accompanied by the modifying statement t h a t cuts in wages must
not go f u r t h e r than changes in costs of l i v i n g .
X-1409
-3-
The p r i c e q u e s t i o n i s i n e v i t a b l y of commanding importance, not only
t o the employee bat a l s o t o t h e community as a whole.
The S e c r e t a r y of
the Treasury has c a l l e d a t t e n t i o n in his l e t t e r to the chairman of t h e Ways
and Cleans Committee t o the n e c e s s i t y of reducing c o s t s Of l i v i n g .
t i o n s have, however, proceeded only very slowly.
Altera-
Sauerbeck's index number
f o r B r i t i s h p r i c e s shows up to February 15 a r e c e s s i o n of 5-3/10
from the peak of 197, reached toward t h e close of the war.
points
The general
index number of the Bureau of Labor S t a t i s t i c s f o r the p e r i o d ending January
31, has declined four p o i n t s from the peak of 206, reached during November
and .December, 1919.
The Board's a n a l y s i s of the p r i c e s f u r n i s h e d by t h e
Bureau of Labor shows t h a t a r e c e s s i o n of about t h r e e p o i n t s has occurred in
the group of raw m a t e r i a l s , where the index number f o r t h e p e r i o d ending
January 31, d e c l i n e d from 198 to 195.
The index numbers f o r a l l of t h e sub-
groups included under the head of raw m a t e r i a l s have likewise d e c l i n e d .
l r t h e subgroup of mineral products the r e d u c t i o n has boon from 182 t o 177,
l a r g e l y due t o the decided cut i n the p r i c e of copper.
During the month the
market f o r metals g e n e r a l l y has shown a sharp decline with decided weakness
at the end of the month.
Lead, zinc, and copper have sihown marked r e c e s s i o n s ,
while g r a i n s , except wheat, have likewise f a l l e n o f f s h a r p l y . P r i c e s i n i r o n
and s t e a l are l a r g e l y nominal, although t e n t a t i v e l y quoted the- same as at the
apening of the y e a r , and t h e p o l i c y of the t r a d e is t o l-sava the i n i t i a t i v e
as
p r i c e concessions t o the consumer.
w i l l probably be met by most p r o d u c e r s .
Firm bids f o r d e s i r a b l e business
-4<r
*
In monuf a c t u r t h e
X-1409
1 J 2
problems of the read justment s i t u a t i o n a r e n a t u r a l l y
more obvious than elsewhere, One of t h e most d i f f i c u l t problems i s presented by
the t e x t i l e i n d u s t r y , In D i s t r i c t No„l curtailment of wo?len-mill production
i s s t i l l in progress, while in D i s t r i c t No.3 readjustment i s s t i l l proceeding
and values are u n s e t t l e d . The cotton industry ic even more d i r e c t l y a f f e c t e d .
In New England the cotton market i s at a complete s t a n d s t i l l , so f a r as the raw
material i s concerned, while the m i l l s t h a t are operating a r e running only a
fe.v days each .week, and p r o f i t s have been reduced t o a minimum or have disappeared.
In the Third D i s t r i c t demand f o r yarns has reached a minimum f i g u r e and
>7£&q' s
have declined s h a r p l y . Spot cotton business is in a complete s t a t e of s t a g n a t i o n ,
while i t i s estim&ted t h a t the m i l l s in both North and South have about a three
months' supply of raw cotton s t i l l on hand. Cancellations have occurred in
various l i n e s , while in a number of s p e c i a l t i e s , such as underwear, manufacturers
continue t o s u f f e r from slack business.
In l e a t h e r and shoes, raw m a t e r i a l i s today h i g h e r than when the a r m i s t i c e
was signed, and by some i t i s predicted t h a t the price of shoes .yill advance
r a t h e r than d e c l i n e . This has led some manufacturers to continue production, even
though they have no o r d e r s . Leather d e a l e r s in the Third D i s t r i c t are reported
to be o p t i m i s t i c .
Iron and s t e e l production has shown no increase in a c t i v i t y and the derrand
f o r s t e e l i s i n s u f f i c i e n t to take the output of the m i l l s , while equipment
establishments are working mostly on old o r d e r s . In the P i t t s b u r g h d i s t r i c t there
has been a decrease of business, while in Youngstown operations are about 60 per
cent of normal. The d i v i s i o n of the s t e a l industry which i s a f f i l i a t e d with the
r a i l r o a d s i s p r a c t i c a l l y suspended. U n f i l l e d orders of
—5—
X—1^09
it:
* the United S t a t e s S t e e l Corporation show a continuous d e c l i n e from 7,379,15s;
tons a t the close of Decen.ber t o 6,684,268 tons a t the c l o s e of January, t h e
index numbers being 140 and 127, r e s p e c t i v e l y , while pig iron production shows
a d e c l i n e from 3,433,617 tons in December t o 3,303,260 tons in January, the
index numbers, r e s p e c t i v e l y , being 148 and 143. S t e e l ingot production has
increased from 2,992,291 tons to 3,082,427 tons, an i n c r e a s e of f o u r p o i n t s
frem 125 t o 129. In view of t h i s s i t u a t i o n i t i s n o t a b l e t h a t some iron and
s t e e l men p r e d i c t a period of unusual p r o s p e r i t y a f t e r a somewhat f u r t h e r r e adjustment has occurred. In coal, demand has been r e l a t i v e l y l i g h t , due t o the
mild w i n t e r , and consuming p l a n t s a r e well equipped- This has enabled miners
in some d i s t r i c t s t o moderate t h e i r a c t i v i t y , and from Ohio and Pennsylvania i t
i s reported t h a t some of the l a r g e r mines a r e operating only from one t o three
days per week.
In metals some d r a s t i c r e v i s i o n s of conditions have occurred. P r i c e s of
lead, z i n c , copper and o t h e r nonferrous metals have f a l l e n in a n o t a b l e way,
and t h e market has shown weakness. Gold mining has improved in t h e Colorado
d i s t r i c t . Petroleum, while threatened with a d e c l i n e in crude, shows steady
progress in the development of new w e l l s and in the p u t p u t . The production of
copper during January shows c u r t a i l m e n t , while mining earnings were poor and
p r i c e s shrank in some cases t o 16 cents per pound, The l a r g e accumulation of
copper which occurred during the l a t t e r months of the war has provided the
l a r g e r mines with the means of meeting the demand f o r many months t o come.
A g r i c u l t u r a l l y t h e outlook throughout t h e country i s b r i g h t . From the
Southern S t a t e s comes the r e p o r t t h a t the prospects i n d i c a t e a l a r g e cotton
acreage, so much so t h a t a determined e f f o r t has been organized f o r t h e purpose
of holding off the market as much of l a s t y e a r ' s , crop as p o s s i b l e and f o r t h e
curtailment of the p l a n t e d a r e a by o n e - t h i r d , m t h r e f e r e n c e t s vtheat, t h e Ninth
d i s t r i c t r e p o r t s t h a t t h e mid-winter output has been helped by
Digitized for and
FRASER
that preparations
a r e b e i n g ma.de w i t h a v i e w t o a v e r y l a r g e
CQit&iUcna,
The
-6-
: X-1409
P a c i f i c Coast r e p o r t s t h a t stored stocks of*grain are beginning t o move slowly,
and t h a t the general outlbok i s e x c e l l e n t , the s o i l being in good condition,
while combined acesage of w i n t e r and spring wheat nay a t t a i n record proportions
Flour m i l l i n g in the Ninth d i s t r i c t , however, i s s u f f e r i n g from lack of orders,
due in p a r t t o t h e f a l l i n g off in exports r e s u l t i n g from the s h i f t i n g of foreign
demand to the Argentine and Australian product. In the Tenth d i s t r i c t t h e r e has
been a spurt in a c t i v i t y during the f i r s t s i x weeks of 1919. The January production of wheat flour* f o r the country a t l a r g e as reported t o the United States
Food Administration wag 12,994,000 b a r r e l s , as coir pared with 11,759,000 b a r r e l s
in December. Cereals o t h e r than wheat have f a l l e n in p r i c e s , and in consequence
some reduction in acreage may occur. Citrus f r u i t crops have been damaged by
unfavorable weather in December and January, but the e n t i r e y i e l d i s l i k e l y
to develop f a v o r a b l y . Complete returns f o r 1918 a r e now a v a i l a b l e as t o prunes,
r a i s i n s , and the l i k e , the r a i s i n crop of 1918 being t h e l a r g e s t ever recorded,
with a t o t a l value close t o $19,000,000, From the Southeast i t i s reported t h a t
f r u i t and truck crops have been unusually remunerative, the movement of oranges
and g r a p e f r u i t being vary l a r g e .
In l i v e stock e x c e l l e n t crop prospects and
improved conditions are leading to l a r g e expansion of business by stockmen. The
Tenth d i s t r i c t r e p o r t s unusually heavy r e c e i p t s of c a t t l e , f a t s t e e r s , ranging
up t o $18,40 per hundred pounds, as compared with $13.50 a year ago. Receipts
of hogs during January a t Kansas City were 535,000 head, or 50 per cent more
than in January 1918, with p r i c e s a t a maxiimro. Receipts at 15 p r i n c i p a l markets
were considerably h e a v i e r than a year ago with respect t o a l l food animals* The
r e c e i p t s of hogs were e s p e c i a l l y l a r g e , the f i g u r e s standing a t 4,603,335, as
compared with 3,333,591 a year ago. On the other hand, f i g u r e s f o r January f o r
c a t t l e and sheep show a s l i g h t f a l l i n g off from the December l e v e l .
In r e t a i l t r a d e f a v o r a b l e r e p o r t s a r e g e n e r a l , notwithstanding d i s t u r b e d
conditions and reduced production in some d i s t r i c t s . Even f rem some of the
manufacturing d i s t r i c t s i t i s reported t h a t the r e t a i l business s i t u a t i o n i s
very encouraging,
with an increase in some l i n e s of 25 per cent over 1918,
1 1 5
-7-
' 7-1409
In the F i r s t d i s t r i c t the public i s purchasing f r e e l y , while in the South and.
Wast a t l e a s t f a i r l y good t r a d e i-s r e p o r t e d . In the Midal- e Wsst reductions of
prices a r e noted in some q u a r t e r s and buying has not bean s a t i s f a c t o r y . Everywhere r e t a i l e r s thorns elveo a r e purchasing £ rem hand t o mouth on account of
u n c e r t a i n t y of p r i c e s . This has u n s s t t l e d the jobbing and wholesaling business
•which in any case would show a no r e a l reduction in a c t i v i t y a t t h i s season of
the year. There is a strong dstrand in cany q u a r t e r s f o r jewelry and l u x u r i e s ,
including pianos, which i n d i c a t e s t h a t consumers s t i l l have resources f o r
current u s e .
F i n a n c i a l l y , conditions during the month have bean q u i e t and r e a s s u r i n g .
have
I n t e r e s t and discount r a t e s /on the whole baen s t a b l e , with a tendency toward
moderate decline in r a t e s f o r time paper, e s p e c i a l l y paper with prima commercial
names. Call money has been firm, with an upward tendency reaching ? per cent
on February 34.. The suspension of operations by the money pool has had but
l i t t l e if any p e r c e p t i b l e e f f e c t upon c o n d i t i o n s . Rates a t Federal Reserve
Banks have retrained p r a c t i c a l l y unchanged, with the exception of a s l i g h t
a l t e r a t i o n a t Boston. Bank operations, as shown by the Board's report of bank
iep.osits ( published in place of clearings ) show a marked increase in volume,
which has been e s p e c i a l l y pronounced in the l a r g e r c e n t e r s . From the Seventh
d i s t r i c t i t i s reported t h a t bank c l e a r i n g s are s t i l l very l a r g e , gross bank
deposits ah owing decided i n c r e a s e . Banking conditions in general show a condition
of g r e a t e r ease, with some accumulation of funds a t centers and a s t r o n g tendency on t h e part of hoarded money t o r e t u r n t o t h e banks. According t o some
bankers 1 estimates, the amount of hoarded money ths.t has' been returned, t o banks
since the a r m i s t i c e would aggregate $300,000,000.
116
Ex-Officio Members
w . P. G. HARDING. GOVERNOR
ALBERT STRAUSS. VICE GOVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
CARTER GLASS
SECRETARY
KGY OF
OF THE
THE TREASURY
JOHN SKELTON WILLIAMS
FEDERAL RESERVE BOARD
COMPTROLLER OF THE CURRENCY
washington
J. A. BRODERICK, SECRETARY
L. C. ADELSON. ASSISTANT SECRETARY
W . T . CHAPMAN. ASSISTANT SECRETARY
W. M. IMLAY, FISCAL AGENT
a d d r e s s
r e p l y
t o
FEDERAL RESERVE BOARD
March 6,1919.
Subject:
X-1410
Campaign f o r New Par Points.
Dear S i r :
There i s enclosed herewith a copy of r e p o r t prepared
from r e p l i e s received from a l l Federal Reserve Banks in response
t o our telegram of February 27th, asking f o r information regarding
the progress of the campaign being conducted f o r t h e establishment,
of new par p o i n t s .
Very t r u l y yours,
Enc
Secretary
s>
REPORT OF FEDERAL RESERVE BANKS FEBRUARY 28,1919, RE
CAMPAIGN FOR NE^,' PAR POINTS.
Federal
Beserve
Bank of
National
Banks in
District
State
Bank
Members
Total
Member
Banks
Non-ir.embsr
Banks on
Par L i s t
No, of Banks
added to Par
L i s t in Feb.
1919.
No. of Banksadded to Par
L i s t since
Jan.1,1919.
X-1410 a
No. of
non-member
banks not on
Par L i s t ,
T o t i l No.
non-irercbaf
banks in
district,
-
-
224
*-
-
324
14
19
80
425
793
40
70
339
1,132
568
331
17
19
1,189
1,520
53
426
230
18
20
1,344
1,574
1,043
296
1,339
2, 542
91
145
1,630
4,172
St.Louis
468
43
511
1, 255
102
223
1,318
2,573
Minneapolis
801
72
873
1,2C9
22
50
1,629
2,838
Kansas City
965
29
994
2,193
3
Dallas
631
106
737
249
7
SanFrancisco
560
94
654
1,036
7,755
969
8,724
10,731
Boston
391
32
423
224
-
New York
620
102
722
324
-
Philadelphia
625
31
656
345
Cleveland
748
73
821
Richmond
530
38
Atlanta
373
Chicago
*
Washjfcgton, D.C,
m r c h 6,1919,
.
-
- 2 (*)
312
- 7(»)
1,012
3,205
15
935
1,184
- 4 (*)
165
1,201
550
( j ) Withdrawals
9,641
20,372
FEDERAL
RESERVE
118
BOARD
STATEMENT FOR TH1^ PRESS.
X-1413
For Release in Morning Newspapers
of Sunday, March 9,1919.
The Federal Reserve B u l l e t i n f o r March was completed and sent to the
printer to-day.
The l e a d i n g f e a t u r e of t h e B u l l e t i n , the "Review of the Month," i s p r e dominantly a d i s c u s s i o n of readjustment t o a peace b a s i s , while the Bulletin
as a whole has been designed t o f u r n i s h as much information as possible with
r e f e r e n c e t o the progress t h a t i s being made in connection with readjustment
throughout the country. A f t e r a brief discussion of public finance during t h e
month of February and a sketch of the new l e g i s l a t i o n adopted by Congress, the
Review of the Month c a l l s a t t e n t i o n to Secretary G l a s s ' s statement of the r e adjustment problem in h i s l e t t e r t o Chairman Kitchin, in which he s a i d , "Upon
the enactment of a p p r o p r i a t e l e g i s l a t i o n t o enable the Food Administration t o
p r o t e c t the g u a r a n t i e s given by the United S t a t e s , I am hopeful t h a t i t w i l l
prove possible t o r e s t o r e the operation of the law of supply and demand with
respect to f o o d s t u f f s w i t h , as I b e l i e v e , a consequent reduction in the cost
of l i v i n g . A period of r i s i n g p r i c e s and of intense i n d u s t r i a l a c t i v i t y such
as we have experienced during the past four years is always a period
of great
apparent p r o s p e r i t y , and a period of f a l l i t i g p r i c e s and of the contraction of
c r e d i t s i s always a period of depression. The r e t a r d a t i o n of t h e process of
readjustment by a r t i f i c i a l mer,ns can only increase the e v i l s inherent in the
s i t u a t i o n . Buying w i l l not begin and a c t i v i t y w i l l not s e t in u n t i l the commun i t y _t l a r g e i s s a t i s f i e d t h a t p r i c e s have reached bedrock." Enlarging f u r t h e r
upon the ideas thus suggested by the Secretary of the Treasury, t h e
Review of
the Month then c a l l s a t t e n t i o n t o the problem of r e s t o r i n g p r i c e s t o a s t a b l e
b a s i s , and a f t e r expressing agreement with the view of t h e S e c r e t a r y of the
Digitized for Treasury
FRASER
that
reduction in costs of l i v i n g i s much t o be d e s i r e d , i t says,
—2—
X—1413
jf.jf
" ^Readjustment* thus becomes a problem which involves t h e e f f e c t i v e t r a n s f e r
of labor from war work back to peace employment a t s t a b l e and s a t i s f a c t o r y r e muneration, the curtailment of costs of production t o a point t h a t w i l l enable
our manufacturers t o s a t i s f y domestic demand and compote favorably with f o r eigners f o r the export t r a d e , and the adjustment of values g e n e r a l l y to one
another upon the new basis created by normalization of p r i c e s and wages. I t
would be unreasonable f o r any f a c t o r in production t o a s s e r t th:.t i t would not
bear i t s share, in t h i s general process of r e a d j u s t m e n t . Such readjustment i s
designed f o r the common b e n e f i t of a l l p a r t i c i p a n t s in i n d u s t r y and the public
a t l a r g e . If i t be e q u i t a b l y c a r r i e d out, i t s e f f e c t s w i l l not tend t o f a v o r any
p a r t i c u l a r c l a s s or group in the community, but w i l l operate, while leaving a l l
in the same r e l a t i v e p o s i t i o n , or a t a l l events in an admittedly equitable
r e l a t i o n s h i p one to another, to increase the general volume of business and the
r e g u l a r i t y and smoothness with which the i n d u s t r i a l mechanism moves and
functions,"
The Review then takes up various s p e c i a l phases of readjustment and deals
f i r s t with t h e question of l a b o r , quoting recent f i g u r e s t o show the extent of
unemployment. Of i n d u s t r i a l readjustment i t says t h a t s u b s t a n t i a l progress has
been made through t h e reduction of t r a n s p o r t a t i o n r a t e s ana the modification of
war p r i c e s in a number of fundamental l i n e s . A n e c e s s i t y f o r s p e c i a l care in
t h e investment of c a p i t a l during the readjustment period i s n o t e d , and a t t e n t i o n
i s called t o the b i l l recommended by the Capital Issues Conn i t t e e f o r the purpose of p r o t e c t i n g i n v e s t o r s who might otherwise be induced t o commit themselves
to u n d e s i r a b l e or inopportune e n t e r p r i s e s . Of f o r e i g n t r a d e t h e Review says t h a t
" I t i s now becoming more and more evident t h a t an important phase of readjustment
must be sought in connection with our f o r e i g n t r a d e . Opinion as t o t h i s branch
of business has undergone some change during the past month. Up t o the opening of
February i t had s t i l l been hoped by many t h a t t h e r e would be a s w i f t r e v i v a l of
a c t i v i t y and
t h a t our manufactured products would be exported in something
,3-
1-1413
130
Approaching the volume developed during the war* Several i n f l u e n c e s have i n t e r vened t o prevent such a development. Important among these i s the u n s a t i s f a c t o r y
p o s i t i o n of the exchanges, making i t imperatively necessary f o r some foreign
countries t o devote t h e i r e f f o r t s t o improving the exchanges by keeping down the
indebtedness,
amount of t h e i r current foreign
..Moreover, i t has appeared t h a t no
inconsiderable part of the f o r e i g n - t r a d e a c t i v i t y of the year 1918 was d i r a c t l y
due t o the f a c t t h a t the United S t a t e s was f i n a n c i n g t h i s export movement a t low
r a t e s of i n t e r e s t through the advances made by the Treasury Department to the
several f o r e i g n Governments. That these w i l l not be continued upon t h e i r former
l e v d l i s , of course, an i n e v i t a b l e incident of our change from a war to a peace
b a s i s , and with t h i s change in Treasury policy some change in the a c t i v i t y of
those branches of export t r a d e which were dependent upon a s s i s t a n c e of t h i s kind
is unavoidable* 11
Considerable a t t e n t i o n i s a l s o given t o the p r i c e s i t u a t i o n and the question
of r e l a t i o n s between wages, p r o f i t s and p r i c e s of goods. With r e f e r e n c e t o banking, a t t e n t i o n i s called t o the steady movement toward the development of banking s t r e n g t h in foreign i n s t i t u t i o n s , the s l i g h t tendency toward higher r a t e s of
discount in the domestic commercial loan market and t o the evidence t h a t l i q u i d a t i o n is in process* With r e f e r e n c e t o l i q u i d a t i o n the Review says:
11
This i s
e n t i r e l y due t o n a t u r a l causes and not to a change in the discount policy of
Federal Reserve Banks. There have been no noteworthy changes in Federal Reserve
Bank rates* Such l i q u i d a t i o n as has taken place a t Federal Reserve Banks i s not
that policy
t o be regarded as r e s u l t i n g from change in the Board 1 s discount policy f /being what
i t has been throughout the recent period of heavy Government f i n a n c i n g .
"The heavy r e t u r n movement of Federal Reserve n o t e s occurring during January
and amounting in the aggregate to about $235,000,0C0 has given way t o a s l i g h t
outflow in the month of February, i n d i c a t i n g t h e s e l f - r e g u l a t i n g c h a r a c t e r of
Federal Reserve n o t e c i r c u l a t i o n in the e x i s t i n g circumstances* The heavy return
flow noted above
i s in p a r t t o be explained by the n a t u r a l l i q u i d a t i o n which
X-1413
normally occurs a t t h e turn of the year but in l a r g e r measure was probably
occasioned by the r e t u r n t o banking channels of t h e considerable volume of notes
t h a t there i s reason t o b e l i e v e were hoarded during t h e war, 11 The Review of the
Month f u r t h e r f u r n i s h e s d e t a i l e d information concerning t h e changes in the p o r t f o l i o s of Federal Reserve banks during the month of February, as well as in the •
condition of s e l e c t e d member banks* In c l o s i n g , the Review c i t e s some i n t e r e s t i n g
changes which have occurred during the month of January in the personnel of the
Federal Reserve system, summarising these as f o l l o w s :
11
In the Advisory Council Mr, J.P* Morgan has been
succeeded by Mr.A.B* Hepburn f o r the second d i s t r i c t ;
Mr. J , W„ Norwood has been succeeded by Mr, Jo$t e CrBrown f o r the f i f t h d i s t r i c t ; Mr. J.R, Mitchell has
been succeeded by Mr, C*T, J a f f r a y f o r the n i n t h d i s t r i c t ; and Mr, Herbert Fleishhacker has been succeeded
by Mr > A.L, Mills f o r the t w e l f t h d i s t r i c t . Governor
Rolla Wells, of the Federal Reserve Bank of S t , L o u i s ,
has been succeeded by Mr, David C. Biggs. In the
Atlanta d i s t r i c t , Federal Reserve Agent
Wellborn
has succeeded Mr, J o s . A, McCord as governor of the
Federal Reserve Bank of Atlanta, while Mr, McCord has
become .Federal Reserve agent in place of Mr, Wellborn,
Mr. Louis C, Adelson, formerly a s s i s t a n t s e c r e t a r y of
t h e Federal Reserve Board, has become deputy gov3rnor
of the Federal Reserve Bank of A t l a n t a . In the New York
d i s t r i c t , Mr. R. M. Sidney, formerly a s s i s t a n t Federal
Reserve agent, has become manager of the new branch of
the Federal Reserve Bank of New York a t B u f f a l o . Mr,
George L. Harrison, formerly a s s i s t a n t counsel of the
Federal Reserve Board, has been appointed general counsel
of the Board in place of General Counsel Milton C. E l l i o t t ,
who has resigned t o e n t e r p r i v a t e p r a c t i c e . Mr. E l l i o t t
continues as consulting counsel to the Federal Reserve Board, n
The B u l l e t i n contains an e l a b o r a t e study which has been prepared under the
d i r e c t i o n of t h e Division of Analysis and Research by Mr. Alexander Wall of
D e t r o i t , Michigan, on the s u b j e c t of "Credit Spirometries.** Mr, Wall proposes an
e n t i r e l y new method f o r the purpose of t e s t i n g the c r e d i t s t r e n g t h of commercial
concerns which a r e a p p l i c a n t s f o r c r e d i t a t banks. The study i s based upon and
supported by a compilation of s t a t i s t i c s derived from t h e statements of condition
furnished by commercial houses* The B u l l e t i n a l s o p r e s e n t s t h e e s s e n t i a l data r e l a t i n g to the
f i f t h Government l o a n , the t e x t of the amendments t o the Federal
-5-
* W
X-1413
Reserve
/ Act^ and a number of other important o f f i c i a l documents. Among s p e c i a l
f e a t u r e s t h e r e a r e furnished the r e s u l t s of an extensive i n q u i r y into
the progress made in business readjustment in the several Federal
Reserve d i s t r i c t s . The usual s t a t i s t i c a l m a t e r i a l is printed and
included with i t i s f u r t h e r enlargement of the Board's system of
business indexes*
3/7/19
1}2<2
X-1414
WASHINGTON
March 7,1919.
Curtiss
Jay
Austin
Wills
Hardy
McCord
-
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Heath
- Chicago
Martin - St.Louis
Rich
- Minneapolis
Ramsay - Kansas City
Ramsey - Dallas
P e r r i n - SanFrancisco
SUBJECT: L i a b i l i t y of Member Banks t o Reserve Banks
in Excess of Capital and Surplus.
Please mail a t e a r l i e s t convenience as of close of business
February 28th above information in schedule form giving:
A. Name of bank
B. Location
C. Loan l i a b i l i t y , s t a t i n g s e p a r a t e l y amount secured
by United S t a t e s s e c u r i t i e s , o t h e r s e c u r i t i e s
and unsecured l o a n s , a l s o acceptance l i a b i l i t y ,
then t o t a l l i a b i l i t y ;
D. Capital and s u r p l u s .
E. Also i n d i c a t e amount of a d d i t i o n a l c o l l a t e r a l held
if any.
BRODERICK.
X-1415
TIE FOLLOWING STATB INSTITUTIONS IlaVE B11EN QUITTED
TO THE FSDERaL EESEEVE SYSTEM DURING THE "VHEK
ENDING IkECH 7, 1919.
Capital
Conneaut Mutu-1 Loan & Trust CO.,
COnneuut, Ohio.
i.100,000
Clay County S t a t e Bc-idc,
L o u i s v i l l e , 111.
25,000
Surplus
T o t a l Resources
,,65,000
^1,621,598
7,500
192,066
Ore
e x
W . P . G . H A R D I N G , GOVERNOR
A L B E R T S T R A U S S . VICE GOVERNOR
o f f i c i o m e m b e r s
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
ADOLPH C. MILLER
C H A R L E S S. H A M L I N
FEDERAL RESERVE BOARD
J . A . B R O D E R I C K , SECRETARY
W . T . C H A P M A N , ASSISTANT SECRETARY
w . M . I ML A Y . FISCAL AGENT
ADDRESS REPLY TO
washington
F E D E R A L R E S E R V E BOARD
March 12,1919.
X-1419
- SUBJECT: Reference t o Federal Reserve Bank Connections
in Advertisements of P r i v a t e B u s i n e s s .
Dear S i r :
The a t t e n t i o n of t h e Board was c a l l e d sometime s i n c e t o a c i r c u l a r
which had been sent out by a brokerage f i r m o f f e r i n g f o r s a l e stock in an o i l
company. This c i r c u l a r b e g i n s , as f o l l o w s :
"Would you join s e v e r a l D i r e c t o r s of t h e United S t a t e s Federal
Reserve Bank in a producing oil" e n t e r p r i s e ? " , and goes on t o say
"The P r e s i d e n t , M r . , i s a D i r e c t o r of the United S t a t e s Federal
Reserve Bank of t h e
D i s t r i c t , which in i t s e l f i s a guarantee of
t h e unusual c h a r a c t e r of t h i s o i l - p r o d u c i n g e n t e r p r i s e . "
While t h e Board does not assume any j u r i s d i c t i o n over t h e b u s i n e s s
a f f i l i a t i o n s of any d i r e c t o r of a Federal r e s e r v e bank except in so f a r a s
such connections may a f f e c t h i s q u a l i f i c a t i o n s a s p r e s c r i b e d in Section 4 of
t h e Federal Reserve Act, i t has always e n t e r t a i n e d t h e view t h a t no d i r e c t o r
. o r o f f i c e r of a F e d e r a l r e s e r v e bank should permit h i s connection w i t h t h e
bank t o be used in f u r t h e r i n g h i s p r i v a t e b u s i n e s s or t h e i n t e r e s t of any
c o r p o r a t i o n w i t h which h e may be a s s o c i a t e d .
The Board i s c o n f i d e n t t h a t i t i s supported in t h i s opinion by t h e
d i r e c t o r a t e s of a l l the Federal r e s e r v e banks, and i t s i n v e s t i g a t i o n of t h e
p a r t i c u l a r case above r e f e r r e d t o has demonstrated t h e f a c t t h a t t h e d i r e c t o r
i n . q u e s t i o n did n o t s a n c t i o n t h e r e f e r e n c e t o h i s connection w i t h t h e Federal
r e s e r v e bank in t h e a d v e r t i s i n g l i t e r a t u r e sent o u t , n o r was t h e stock o f f e r e d
f o r s a l e by t h e c o r p o r a t i o n with which he i s connected, but t h a t t h e stock
o f f e r e d belonged t o i n d i v i d u a l h o l d e r s and t h e u s e of t h e d i r e c t o r ' s name was
made without h i s knowledge or consent. The Board i s informed a l s o t h a t a f t e r
h i s a t t e n t i o n had been c a l l e d t o t h e s e c i r c u l a r s he demanded t h a t no more of
them be s e n t out and t h a t he spent a c o n s i d e r a b l e amount of money in c a l l i n g
in t h e a d v e r t i s i n g m a t t e r which contained t h e improper r e f e r e n c e .
In o r d e r , however, t o avoid any misunderstanding of t h e Board's
a t t i t u d e in t h i s m a t t e r , you a r e requested t o lay t h i s l e t t e r b e f o r e your
d i r e c t o r s a t t h e i r n e x t r e g u l a r meeting in order t h a t i t may be understood thai:
i t i s t h e view of t h e Federal Reserve Board t h a t no d i r e c t o r of a F e d e r a l
r e s e r v e bank ( o r of a branch) s h a l l permit a r e f e r e n c e t o h i s connection
X-1419
-2-
with t h e bank t o be used f o r t h e purpose of a d v e r t i s i n g or promoting
h i s p r i v a t e business connections, and t h a t any f a i l u r e or n e g l e c t
on t h e p a r t of a d i r e c t o r t o prevent or to stop r e f e r e n c e t o h i s
o f f i c i a l p o s i t i o n in advertisements of a p r i v a t e business w i l l be
deemed s u f f i c i e n t cause f o r c a l l i n g upon him t o sever h i s connection
e i t h e r with t h e business so a d v e r t i s e d or with the Federal reserve
bank.
Very t r u l y yours,
Governor.
FEDERAL
RESERVE
BOARD
WASHINGTON
X-1422
March 13,1919.
S u b j e c t : Fees paid t o D i r e c t o r s a t Branch O f f i c e s ,
Federal Reserve Bank o f :
Cleveland
Richmond
Atlanta
Chicago
St.Louis
Kansas City
Dallas
SanFrancisco
Please advise the fee per meeting paid by you
t o d i r e c t o r s a t branch o f f i c e s . If t h e r e i s a discount
c o m i t t e e advise fee paid t o each d i r e c t o r f o r attendance
a t such meetings.
BRODERICK.
W. P. G. HARDING, g o v e r n o r
ALBERT STRAUSS, v i c e g o v e r n o r
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
ADOLPH C. MILLER
CHARLES S. HAMLIN
FEDERAL RESERVE BOARD
J. A. BRODERICK, SECRETARY
W. T. CHAPMAN, a s s i s t a n t s e c r e t a r y
w . M . I M L A Y . FISCAL AGENT
washington
a d d r e s s
r e p l y
March 14, 1919.
X-1424
SUBJECT: Trade acceptances by the Railroad Administration.
Dear S i r :
You a r e requested to bring to the immediate
a t t e n t i o n of your Executive Committee, and of your board
of d i r e c t o r s a t the next meeting, the enclosed copies of
correspondence between the Director General of Railroads
and t h e Federal Reserve Board.
t o
FEDERAL RESERVE BOARD
Very t r u l y yours,
Governor.
±29
X-1424a"
Federal Reserve Board.
Washington, D. C,
tirch
,
,
14
Sirs:
In considering the tteans f o r f i n a n c i n g c u r r e n t requirements of the
D i r e c t o r General of Railroads and of the several r a i l r o a d corporations
whose property i s under Federal c o n t r o l , the question has a r i s e n whether
the Federal Reserve Banks may properly rediscount f o r member b a n k s , d r a f t s
discounted by them drawn upon the Director General of Railroads by manuf a c t u r e r s , d e a l e r s or f u r n i s h e r s , whether individual or corporate, of
equipment, m a t e r i a l or supplies t o cover the cost of equipment, m a t e r i a l
br s u p p l i e s of any character whatsoever, to be used by the D i r e c t o r Gene r a l upon or in connection with p r o p e r t i e s s u b j e c t to Federal c o n t r o l ,
sold to t h e Director General of Railroads, when accepted by t h e Director
General of R a i l r o a d s ,
I should l i k e t o have the r u l i n g of your board on t h i s question>
I have been advised by my General Counsel t h a t under the Proclamat i o n s of the President and the Acts of Congress t h e r e u n t o enabling, a f f e c t i n g the Federal control of r a i l r o a d s and systems of t r a n s p o r t a t i o n ,
I have a u t h o r i t y to make such acceptance as Director General of Railroads %
Truly yours,
WALKER D. MINES
D i r e c t o r General of Railroads.
APPROVED
JOHN BARTON PAYNE
General Counsel.
FEDERAL RESERVE BOARD
Washington, March 13, 1919,
D i r e c t o r General of Railroads,
Washington, D. C,
Sir:
The Federal Reserve Board has received and considered your l e t t e r
of March 13th in which you ask t o be advised whether or not Federal r e serve banks iray properly rediscount d r a f t s drawn by manufacturers, equipment , m a t e r i a l and supply men, i n d i v i d u a l s or corporations, upon the
Director General of Railroads t o cover the cost of equipment, m a t e r i a l ,
or s u p p l i e s sold to the Director General of Railroads, when such d r a f t s
have been accepted by the Director General of Railroads and o f f e r e d f o r
rediscount by a member bank.
Under the provisions of Section 13 of t h e Federal Reserve Act, and
the r e g u l a t i o n s of the Federal Reserve Board issued in pursuance t h e r e o f ,
Federal reserve banks may properly rediscount f o r t h e i r member banks
d r a f t s , commonly r e f e r r e d t o a s trade acceptances, drawn by the s e l l e r
upon the purchaser of goods sold and accepted by such purchaser, provided, such d r a f t s have a maturity a t the time of discount by the Federal
reserve banks of not more than n i n e t y days exclusive of Says of grace,
and, provided, t h a t they otherwise conform to the provisions of law and
the r e g u l a t i o n s of t h e Federal Reserve Board.
I t i s the opinion of the Federal Reserve Board, t h e r e f o r e , t h a t
s u b j e c t to the l i m i t a t i o n s of t h e Federal Reserve Act d r a f t s drawn and
accepted under the circumstances set f o r t h in your l e t t e r a r e e l i g i b l e
f o r rediscount by Federal reserve banks a t the p r e v a i l i n g r a t e s of d i s count f o r trade acceptances.
Respectfully,
W, P, G. HARDING.
Governor,
ex-Officio m e m b e r s
W . P . G . H A R D I N G , GOVERNOR
A L B E R T S T R A U S S , VICE GOVERNOR
ADOLPH C. MILLER
C H A R L E S S„ H A M L I N
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
FEDERAL RESERVE BOARD
J . A . E S O D E R I C K , SECRETARY
W . T . C H A P M A N , ASSISTANT SECRETARY
w. M. I M L A Y . FISCAL AGENT
washington
a d d r e s s
r e p l y
t o
F E D E R A L R E S E R V E BOARD
X-142o
THE FALLOWING STaTE INSTITUTIONS HaVE BEEN ADMITTED'
TO THE FEDERAL RESERVE SYSTEM DURING THE Y/EEE
ELDING MARCH 14, 1919.
Capital
Bank of Grayson,
Grayson, G^.
#25,000
S t a t e Bank of iL-shua,
Nashua, Mont.
25,000
Farmers Commercial & Savings
(Bank, Oakley, Idaho
25,000
Farmers & Merchants Bank, •
provo, Utah.
100,000
Bank of Vernal,
V e r n a l , Utah.
60,000
Surplus
T o t a l Resources
%. 157,952
4?
3,000
180,419
10,000
229,007
2,500
614,010
15,000
494,648
You a r e a l s o advised t h a t t h e F i d e l i t y Trust Company, Tacoma, V'ish.,
has been purchased by t h e Bank of C a l i f o r n i a , N. A. and i t s a s s e t s taken
over by t h e IX.coma Branch of t h a t bank.
X-1427
The following re Gormen da t ion was trade by the Federal Advisory
Council t o the Federal Reserve Board:
(Meeting of February 17 and 18, 1919, )
Topic 2,
I t has been suggested t h a t the Federal Reserve Banks
should send a l l checks and o t h e r items f o r c o l l e c t i o n d i r e c t l y
t o the town or c i t y in which they are payable, even if such
town or c i t y i s located in another Federal Reserve d i s t r i c t
r a t h e r than send them in the f i r s t place t o the Federal Reserve
Bank of t h e d i s t r i c t as i s now the p r a c t i c e with a t l e a s t some
of the banks.
Recommendation: The Council i s of (bpinion t h a t c o l l e c t i o n s
should be made in the most d i r e c t and expeditious way p o s s i b l e
and would recomnend t h a t in the i n t e r e s t of increased and b e t t e r
s e r v i c e the Board should look into t h i s matter with the view of
seeing to i t t h a t due d i l i g e n c e is exercised by the t r a n s i t
departments of the Federal Reserve Banks in the matter of check
collections.
X-1427
The following recomr.endation was cade by t h e Federal Advisory
Council to t h e Federal Reserve Board;
(Meeting of February 17 and 13,1919.)
Topic 5,» I t is suggested t h a t the Federal Reserve Banks should
r e c e i v e on deposit national-bank n o t e s and pay out i n place of
them clean Federal Reserve n o t e s .
Recommendation: The Council recommends t h a t t h e Federal Reserve
Board, as a, n a t t e r of a d d i t i o n a l s e r v i c e t o member banks, request
the Federal Reserve Banks t o receive on deposit f o r immediate
c r e d i t from member banks national-bank notes u n f i t f o r c i r c u l a t i o n .
X-1427
The following recotrmendation was trade by t h e Federal Advisory
Council t o the Federal Reserve Board:
(Meeting of February 17 and 18, 1919.)
Topic 9 .
You have asked our advice as to the discount r a t e s current
a t the Federal Reserve Banks, p a r t i c u l a r l y as they are a f f e c t e d by
the amount of Government i s s u e s remaining undigested as evidenced
by the f a c t t h a t the l a r g e r part of the invested a s s e t s of t h e
Federal Reserve Banks c o n s i s t s of member banks' 15-day notes
secured by Liberty bonds and Treasury c e r t i f i c a t e s and of customers 1
notes maturing within 90 days secured in l i k e manner.
The Board would l i k e the opinion of the Council as t o the
m e r i t s of d i f f e r e n t i a l r a t e s * Assuming the d i f f e r e n t i a l s have been
necessary t o aid the Treasury in f l o a t i n g i t s s e c u r i t i e s , does the
Council f e e l t h a t d i f f e r e n t i a l s with respect to the c h a r a c t e r of
paper and not tri> time of maturity should be continued as a permanent
policy?
Recommendation: U n t i l the Liberty bonds already issued and
t h e Victory bonds to be issued a r e d i s t r i b u t e d among permanent
i n v e s t o r s and paid f o r by them and u n t i l the banks are r e l i e v e d
of the o b l i g a t i o n they a r e under to carry such l a r g e l i n e s of them
f o r t h e i r p a t r i o t i c customers who have gone in debt f o r them, and
u n t i l our Government gets through with " i t s temporary f i n a n c i n g
on short-time c e r t i f i c a t e s , the discount r a t e s a t t h e Federal
Reserve Banks should continue t o show some preference on loans
covered by Government s e c u r i t i e s . The r a t e s might well be continued
as they now are u n t i l a f t e r the next bond issue has been placed,
but t h e r e w i l l come a time when such preference should not be
continued, otherwise loans on Government s e c u r i t i e s w i l l continue
t o form too l a r g e a proportion of the Federal Reserve Bank loans
t o the disadvantage of commercial paper and t h e r e f o r e to the d i s advantage of i n d u s t r i a l and commercial e n t e r p r i s e . The f i n a n c i a l
n e c e s s i t i e s of the Government f o r the payment of i t s war d e b t s
w i l l however have to be met and provided f o r before such d i s c r i m i n a t i o n
in favor of loans covered by Government s e c u r i t i e s as w i l l induce
people to borrow t o pay f o r them in a n t i c i p a t i o n of t h e i r f u t u r e
earnings and incomes can be discontinued.
1
X-1427
The following recommendation was trade by the Federal Advisory
t o the Federal Reserve Board:
( Meeting of February 17 and 18, 1919. )
Council
Topic 10+
^
You have asked f o r the views of the Council, as to whether i t w i l l
be necessary f o r some time t o come in order t o develop an acceptance market
in t h i s country to s t i m u l a t e i t by a lbw r a t e at the Federal Reserve Banks,
and you. have drawn our a t t e n t i o n t o the lower r a t e s p r e v a i l i n g in London f o r
bankers 1 acceptances than those current h e r e ,
Recommendation: In the opinion of the Council the acceptance market in t h i s
country i s developing as well as could be expected. The market for bankers 1
acceptances i s now and has been m a t e r i a l l y i n t e r f e r e d with by our Government*s
financing on c e r t i f i c a t e s of indebtedness* This i n t e r f e r e n c e w i l l continue as
Ibng as the Government continues i t s short-time f i n a n c i n g . In the meantime the
acceptance r a t e s a t the Federal Reserve Banks should be maintained just about
as they have been. When conditions again s e t t l e down on a peace basis suppi>
and derrand combined with competition in foreign markets w i l l govern such r a t e s
In comparing discount r a t e s f o r bankers' acceptances current here with those
current in London i t should be remembered t h a t during recent years much of
Europe *s f o r e i g n business, p a r t i c u l a r l y t h a t of England, has been financed
through loans made by our Government. In t h i s connection i t i s of i n t e r e s t t o
note t h a t the acceptance business of the London banks and banks domiciled
in London, on December 31,1913, amounted t o approximately
117,CL0,0u0
s t e r l i n g , while on December 31,1917, the same had f a l l e n t o approximately
L 82,000,000. On August 31,1918, i t had advanced t o L 86,000,000. This
decrease of from 25 per cent to 30 per cent in the volume of the London
acceptance business, together with the f a c t t h a t our loans to the B r i t i s h
Government had the e f f e c t of l a r g e l y r e l i e v i n g the London banks of responsib i l i t y f o r financing t h e i r Government on short-time obligations while i t
threw exactly t h a t burden on the banks of t h i s country, l a r g e l y accounts
f o r the low discount r a t e s f o r acceptances p r e v a i l i n g t h e r e and for the
higher r a t e s prevailing here. When England again resurr.es the financing of her
imports and exports through the ordinary banking channels and the present
a r t i f i c i a l r e s t r i c t i o n s a r e withdrawn by both Governments in connection with
t h e i r imports and exports, and our Government r e s t r i c t i o n s on a l l foreign
exchange t r a n s a c t i o n s a r e removed a b e t t e r equilibrium of the two discount
markets i s l i k e l y to be e s t a b l i s h e d . In other words, f o r e i g n exchange markets
during the war have been in q u i t e an abnormal condition and a r e l i k e l y t o
continue so u n t i l Government war debts between the n a t i o n s a r e f i n a l l y and
permanently a d j u s t e d and i n t e r n a t i o n a l business t r a n s a c t i o n s r e t u r n to t h e i r
norrral and n a t u r a l course f r e e from the governmental r e s t r i c t i o n s and impediments placed on them during the war. Until then e x i s t i n g conditions
do not a f f o r d an equitable basis on which a comparison of current r a t e s
e x i s t i n g in London and New York can be made.
X-1427
The following recoim.endation was Trade by t h s Federal Advisory
Council t o the Federal Reserve Board:
(Meeting of February 17 and 18, 1919.)
Topic 11.
1
The Council would draw the a t t e n t i o n of the Federal Reserve
. Board to the following:
Under the provisions of section 5202 of the n a t i o n a l bank a c t
the l i a b i l i t i e s incurred by a n a t i o n a l bank d i r e c t l y and i n d i r e c t l y
can hot Exceed the amount of i t s c a p i t a l stock except f o r c e r t a i n
purposes namei. •
I t would seem t h a t the amount of b i l l s of exchange which a
n a t i o n a l bank rray discount in London and other f o r e i g n centers cotr.es
under the p r o h i b i t i o n of t h i s s e c t i o n .
The r a t e a t which 60 or 90 days b i l l s of exchange on London are
sold in t h i s country i s based upon the s t e r l i n g cable r a t e l e s s c e r t a i n
deductions, p r i n c i p a l l y an i n t e r e s t charge at the open market r a t e in
London for discounting b i l l s . This r a t e , which to-day i s 3-7/16 per
cent r u l e s much belbw market r a t e s f o r money in t h i s country.
In purchasing export s t e r l i n g b i l l s a n a t i o n a l bank trust discount
the b i l l in London immediately upon i t s a r r i v a l if i t i s to engage
in a p r o f i t a b l e t r a n s a c t i o n . If i t does not discount the b i l l i t
c a r r i e s a 3-7/16 per cent investment t o maturity when money in t h i s
country i s worth more. This no bank w i l l do.
But to engage i n t h i s class of business to the e x t e n t required
by the demands of American exporters and t o discount the b i l l s purchased
upon t h e i r a r r i v a l i n London the contingent l i a b i l i t y created by the
bank by the indorsement of b i l l s w i l l quickly exceed the amount of i t s
capital.
As i t i s the d e s i r e of the Federal Government and the Federal
Reserve Board t o encourage as f a r as possible the development of
bankers' acceptances and the financing of foreign commerce by American
banks to meet the competition of London banks, i t i s suggested t h a t
s e c t i o n 5202 be amended so as t o exclude from i t s p r o h i b i t i o n s the
l i a b i l i t y created by n a t i o n a l banks as an i n d o r s e r on accepted b i l l s
of exchange a c t u a l l y owned by the bank and rediscounted a t home or
abroad, or if t h i s object can be accomplished by a r u l i n g of the
Federal Reserve Board i t would be more d e s i r a b l e than t o attempt an
amendment t o the a c t .
There i s no l i m i t t o the amount of b i l l s drawn a g a i n s t a c t u a l l y
e x i s t i n g values which a bank may purchase and hold, hence i t would
seem l o g i c a l t h a t t h e r e should be no l i m i t upon t h e amount which a bank
might n e g o t i a t e by indorsement.
I '*6
e x - o f f i c i o
m e m b e r s
W . P . G . H A R D I N G , GOVERNOR
A L B E R T S T R A U S S , VICE GOVERNOR
ADOLPH C. MILLER
C H A R L E S S. H A M L I N
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
FEDERAL RESERVE BOARD
J . A . B R O D E R I C X , SECRETARY
W . T . C H A P M A N , ASSISTANT SECRETARY
W . M . I M L A Y , FISCAL AGENT
washington
a d d r e s s r e p l y
t o
F E D E R A L R E S E R V E BOARD
March 17,1919.
X-1428
S u b j e c t : Advice Blanks f o r use in Connection with Return
of U n f i t Federal Reserve Motes t o Treasurer U.S.
Dear S i r :
The National Bank Redemption Agency of t h e o f f i c e of t h e
Treasurer of the U.S. has suggested t h a t uniform advices be adopted
by a l l Federal Reserve banks in connection with shipments of u n f i t
Federal Reserve notes forwarded to the Treasurer of the United
S t a t e s f o r redemption^
The enclosed forms have been suggested f o r
u s e , and if adopted the National ^ank Redemption Agency w i l l p r i n t
and f u r n i s h a supply t o a l l reserve banks.
Please t e l e g r a p h the undersigned a t your e a r l i e s t convenience
if you approve the adoption of the se forms.
Very t r u l y yours,
Enclosure.
Secretary.
1 8 7
X-1429
E f f e c t on Reserve S i t u a t i o n of Federal Reserve Banks of
discounts of Trad? Acceptances of the United S t a t e s
Railroad Administration,
In t h e a t t a c h e d
t a b u l a t i o n an attempt has been made t o
c a l c u l a t e the e f f e c t upon the reserves of the Federal Reserve Banks
of discounts of paper accepted by t h e Railroad Administration. Varying
degrees o£ d e p l e t i o n of the excess r e s e r v e s a r e shown, the r e s u l t
depending upon whether the paper i s discounted i n i t s e n t i r e t y or
in p a r t only by the Federal Reserve Banks, a l s o whether t h e Federal
Reserve Banks pay by deposit c r e d i t or by Federal Reserve n o t e s .
The l e a s t d e p l e t i o n of reserves i s shown in case member banks r e discount with Federal Reserve banks only enough t o provide s u f f i c i e n t
r e s e r v e balances a t t h e i r Federal Reserve banks t o cover t h e i r own
r e s e r v e requirements. I t i s assumed t h a t a l l member banks a r e in
c e n t r a l reserve c i t i e s and t h a t accordingly a 13 per cent r e s e r v e
minimum i s r e q u i r e d .
In t h e note t o the t a b l e f i g u r e s are given showing t h e present
amount of the " f r e e gold" and t h e a d d i t i o n a l lending c a p a c i t y of
t h e Federal Reserve Banks. On March 14 the amount of " f r e e gold"
was 576.2 m i l l i o n s , which w i l l support a t o t a l of a d d i t i o n a l d e p o s i t
c r e d i t of 1,646.3 m i l l i o n s or of 1,440.5 m i l l i o n s of Federal Reserve
notes.
In the following t a b l e a r e shown amounts of the s e v e r a l c l a s s e s
of paper held by t h e Federal\Reserve banks on March 14,1919:
IX 8
X-1429
-2-
War paper
Other discounted paper
Acceptances bought
$1,702,351,000
184,012,000
262,139,000
Total
$2,148,502,000
D i s t r i b u t e d by m a t u r i t i e s
as f o l l o w s ;
Maturing w i t h i n
"
"
"
"
"
" after
15 days
30 "
60 "
90 "
90 "
1,624, 727,000
124,142,000
301,941,000
76,645,000
21,047.000
Total
$2,148,502,000
R e s p e c t f u l l y submitted,
M. JACOBSOH.
Statistician
March 18,1919.
X-1429
STATEMENT SHOWING EFFECT OF DISCOUNT OF U.S. RAILROAD ADMINISTRATION TRADE ACCEPTANCES
UPON THE RESERVE POSITION OF FEDERAL RESERVE BANKS.
Reserves required a t Reserve Banks
against
Total
F.R. notes
Deposits
All or 700 m i l l i o n s sold t o Reserve Banks:
For c r e d i t
75$ f o r c r e d i t and 25$ f o r F.R. n o t e s
$245,000,000
183,750,000
70,000,000
$245,000,000
253,750,000
One-half or 350 m i l l i o n s sold t o Reserve Banks:
For c r e d i t
75$ f o r c r e d i t and 25$ f o r F.R. n o t e s
122,500,000
91,875,000
35,000,000
122,500,000
126,875,000
13$ of t o t a l or $9,100,000 sold t o Reserve Banks:
For c r e d i t
75$ f o r c r e d i t and 25$ f o r F.R. n o t e s
3,185,000
2,389,000
NOTE:
Excess r e s e r v e s ( " f r e e gold") of Federal Reserve Banks on March 14,1919;
Net d e p o s i t s $1,769,445,000 x 35$
$619,306,000
F.R. note c i r c u l a t i o n $2,503,095,000 x 40$ . . . , .,1.001.238.000
Total reserves required . . . . . . . . . . . .
Total r e s e r v e s h e l d
.
Excess r e s e r v e s ( " f r e e gold") . . . . . .
1,620,544,000
2.196 . 737.000
576,193,000
This " f r e e gold" w i l l support $1,646,266,000 of deposit c r e d i t s
or
1,440,482,000 of note c i r c u l a t i o n
910,000
3,185,000
3,199,000
X-1429
ADVANCES TO THE ALLIES BY THE UNITED STATES GOVERNMENT:'
COMMITMENTS AND ACTUAL PAYMENTS BY THE TREASURY.
(Figures as of March 15,1919)
Comritments
Actual Advance;
$4,118,481,000
$4 Z 072,000,000
France
2,517,477,800
2,, 287,477,800
Italy
1,421,500,000
1,411,500,000
Belgium
340,555,000
283 , 745,000
Russia
325,000,000
137,729,750
Greece
39,554,036
United Kingdom
35,000,000
14,100,000
Serbia
2 7, 000,000
22,0:0,000
Rourran i a
15,000,000
10,000,000
15,000,000
10,000,000
5,000,000
12,000
.Czecho Slovaks
Cuba
Liberia
$8,859,567,836
$8,298,564,550
X-1429
BALANCE OF TRADE, ALSO OF GOLD AND SILVER MOVEMENTS SINCE AUGUST 1,1914:
(In thousands of d o l l a r s ; i . e . , 600 omitted)
1 . COMMODITY MOVEMENT.
Imports
Aug. 1 Dec. 31, 1914
Calendar year 1915
"
"
1916
"
"
1917
"
"
1918
Total
Excess of
Exports.
Exports
648,683
1,778,597
2,391,635
. 2,952,468
3,031,305
912,642
3,554,671
5,482,641
6,233,478
6,150,193
263,959
1,776,074
3,091,006
3,281,010
3,118,888
10,802,688
22,333,625
11,530,937
2. SILVER IMPORTS AND EXPORTS
1
Imports
Aug 1. Dec. 31,1914
Calendar year 1915
"
" 1916
"
" 1917
"
" 1918
Total
Exports
Excess of
Exports
12,129
. 34,484
32,263
53,341
71.376
22,140
53,599
70,595
84,131
252.847
10,011
19,115
38,332
30,790
_ 181.471
203,593
483,312
279,719
3. Total Commodity and S i l v e r Imports and Exports*
Aug.l, 1914 - Dec. 31,1918
Imports
11,006,281
Exports
22,816,937
Excess of
Exports
11,810,656
4 . TOTAL GOLD IMPORTS AND EXPORTS.
Imports
Aug, 1, 1914 - Dec. 31, 1918
1,776,616
Exports
705,210
Excess of
Imports
1,071,406
142
X-1429
IMPORTS AND EXPORTS OF CURRENCY
July 1918 t o Feb. 1919.
(Note: Data furnished by the War Trade Board.)
1918
July .
Imports
Exports
Net Expor
$444,194
$3,168,406
$2,724,212
August
5Co.199
2,410,319
1,908,120
September
280,697
12,079,497
11,798,800
October
701,734
2,712,354
2,010,620
November
506,346
7,585,726
7,079 , 3 8 0
December
5,557,131
2,139,987
(a)
3,417,144
1919
January
February
938,688
3,374,678
$12,305,667
(a)
Net imports.
1,373,167
289,439
$31,758,895
434,479
(a)
3,085,239
$19,453,228
e x - O f f i c i o
W . P . G . H A R D I N G . GOVERNOR
A L B E R T S T R A U S S , VICE GOVERNOR
m e m b e r s
ADOLPH C. MILLER
C H A R L E S S. H A M L I N
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
FEDERAL RESERVE BOARD
J . A . B R O D E R I C K , SECRETARY
W. T. c h a p m a n , a s s i s t a n t s e c r e t a r y
W . M. 1MLAY. F i s c a l A g e n t
a d d r e s s
washington
March 18,1919,
r e p l y
t o
F E D E R A L R E S E R V E BOARD
X-1430
SUBJECT: Cancellation of Unfit Federal Reserve Notes of o t h e r
than Issuing Bank Forwarded f o r Redemption*
Dear S i r :
The National B^nk Redemption Agency of t h e o f f i c e of
the Treasurer of the United S t a t e s advises t h a t i t '.ATill- be agreeable
to them f o r a l l Federal Reserve Banks a c t i n g under the power of
a t t o r n e y granted by other Federal Reserve Banks t o p e r f o r a t e and cut
in half u n f i t Fedsr&l Reserve notes of other r e s e r v e banks f o r warded to the Treasury f o r redemption. This arrangement w i l l mean
a m a t e r i a l reduction in the cost of shipping u n f i t Federal Reserve
notes of other reserve banks to Washington f o r redemption*
In making shipments to Washington of u n f i t Federal
Reserve notes of other Reserve banks p e r f o r a t e d and cut in h a l f ,
the National Bank Redemption Agency requests t h a t t h e r e g u l a t i o n s
given in paragraph 9 of the Board ! s l e t t e r 495, dated Jan* 18th,
1916, which a r e as follows, be observed:
"Federal Reserve Banks holding t h e i r own
u n f i t Federal Reserve notes may transmit them
to the Treasury f o r redemption, cut and punched
in the manner prescribed f o r u n f i t United States
currency* w
I t i s a l s o requested t h a t the two bundles of halves be
securely strapped and bear i d e n t i c a l markings so t h a t t h e r e may be
no d i f f i c u l t y in i d e n t i f y i n g and matching up t h e n o t e s in case a
shortage or overage i s found in counting one of t h e bundles of
halves*
Kindly acknowledge r e c e i p t .
Very t r u l y yours,
Secretary*
X-1431
REGULATION F
Series of 1919.
TRUST PO'-RS OF NATIONAL BANKS.
I - . S t a t u t o r y Provisions,
The Federal Reserve Act as amended by the Act of.September 26,1918,
provides in p a r t :
(QUOTE)
I I . Applications..
A' n a t i o n a l bank d e s i r i n g to e x e r c i s e any or a l l of the powers aut h o r i z e d by Section 11, Subjection (k), of t h e Federal Reserve Act, as
amended by t h e Act of September 26,1918, s h a l l make a p p l i c a t i o n to the
Federal Reserve Board, on a form approved by said Board, f o r a s p e c i a l
permit a u t h o r i z i n g i t t o e x e r c i s e such powers. In t h e case of an o r i g i n a l
a p p l i c a t i o n , t h a t i s , where t h e applying bank has never been granted
the r i g h t t o e x e r c i s e any of t h e powers authorized by Section 1 1 , ( k ) ,
t h e a p p l i c a t i o n should be made on Form 61-A." In the case of a supplemental
a p p l i c a t i o n , t h a t i s , where the applying bank has already been granted
the r i g h t to e x e r c i s e one or more of the powers authorized by Section 11
(k), the a p p l i c a t i o n should be made on Form 61-b, Both forms are made
a p a r t of t h i s r e g u l a t i o n .
Ill-
Separate Departments.
Every n a t i o n a l bank permitted to act under t h i s s e c t i o n s h a l l e s t a b l i s h a separate t r u s t department* and s h a l l place such department under
the management cf an o f f i c e r or o f f i c e r s , whose d u t i e s s h a l l be prescribed
by the board of d i r e c t o r s of the bank.
IV.
Custody of Trust S e c u r i t i e s
and Investments,
The s e c u r i t i e s and investments held in each t r u s t s h a l l be kept
s e p a r a t e and d i s t i n c t from t h e general funds and s e c u r i t i e s of the bank
and s e p a r a t e and d i s t i n c t one from another. Trust s e c u r i t i e s and i n v e s t ments s h a l l be placed in the j o i n t custody of two or more o f f i c e r s or
other employees designated by t h e board of d i r e c t o r s of the bank and a l l
such o f f i c e r s and employees s h a l l be bonded.
V.
Deposit of Funds Awaiting Investment
or D i s t r i b u t i o n .
Funds received or held in the t r u s t department of a n a t i o n a l bank
awaiting investment or d i s t r i b u t i o n may be deposited in t h e commercial
department of the bank to t h e c r e d i t of the t r u s t department, provided,
t h a t the bank f i r s t d e l i v e r s t o the t r u s t department United S t a t e s bonds,
or o t h e r s e c u r i t i e s owned by the bank, of t h e kinds e l i g i b l e f o r investment
by the t r u s t department, in an amount equal to the amount of t h e funds
http://fraser.stlouisfed.org/
so deposited.
Federal Reserve Bank of St. Louis
X1431
VI.
A.
Investment of Trust Funds,
Private Trusts:
Funds held in t r u s t must be invested in s t r i c t accordance w i t h
the terms of the w i l l , deed,or other instrument c r e a t i n g the t r u s t *
Where the instrument c r e a t i n g the t r u s t contains provisions a u t h o r i z i n g the bank, i t s o f f i c e r s , or i t s d i r e c t o r s to exercise an u n r e s t r i c t e d d i s c r e t i o n in the matter' of investments, funds h e l d in t r u s t
may be invested only in those c l a s s e s of s e c u r i t i e s which a r e approved
by t h e d i r e c t o r s of the bank. Where the instrument c r e a t i n g the t r u s t
does not s p e c i f y t h e c h a r a c t e r or c l a s s of investments to be made and
does not expressly v e s t in the b a n k , i t s o f f i c e r s , or i t s d i r e c t o r s an
u n r e s t r i c t e d d i s c r e t i o n in the matter of investments, funds held in t r u s t
s h a l l be invested in any s e c u r i t i e s * in which corporate f i d u c i a r i e s in the
S t a t e in which the bank i s l o c a t e d a r e authorized to invest under the laws
of t h a t S t a t e or under the decisions of i t s c o u r t s . If the laws of the
State do not s p e c i f y or describe the investments t h a t may be made of funds
held in t r u s t by corporate f i d u c i a r i e s , and if t h e r e i s no decision of
the courts of t h a t State describing such investments, such funds may be
invested in those c l a s s e s of s e c u r i t i e s which are approved by the
d i r e c t o r s of the bank.
The Federal Reserve Board reserves the r i g h t in any case, however,
to require a n a t i o n a l bank a c t i n g in any f i d u c i a r y capacity to .dispose
of any t r u s t fund investments, other than those made in accordance with
the terms of the instrument c r e a t i n g the t r u s t , which/d$es not b e l i e v e
to be compatible with the best i n t e r e s t s of the b e n e f i c i a r i e s under the
trust.
B. Court T r u s t s :
Except as h e r e i n a f t e r provided, a n a t i o n a l bank a c t i n g as executor,
a d m i n i s t r a t o r , or in any other f i d u c i a r y capacity, under appointment by a
court of competent j u r i s d i c t i o n , s h a l l make a l l investments under an order
of t h a t court and copies of a l l such orders should be f i l e d and preserved
with the records of the t r u s t department of t h e bank* If the court by
general order v e s t s an u n q u a l i f i e d d i s c r e t i o n in the n a t i o n a l bank to inv e s t and r e - i n v e s t funds held in t r u s t , or, if under the laws of the State
in which the bank i s located corporate f i d u c i a r i e s appointed by the court
are permitted t o e x e r c i s e such u n q u a l i f i e d d i s c r e t i o n , n a t i o n a l banks so
appointed may i n v e s t in those c l a s s e s of s e c u r i t i e s which a r e approved
by the d i r e c t o r s of the bank»
VII•
Books and Accounts.
All books and records of the Trust Department s h a l l be kept seperate .
and d i s t i n c t from o t h e r books and records of the bank, All accounts opened
should be so kept a s to enable the n a t i o n a l bank a t any time to f u r n i s h
information or r e p o r t s required by t h e State a u t h o r i t i e s , and such books
and records s h a l l be open to the inspection of such S t a t e a u t h o r i t i e s .
145
*
- 3 -
#»
VIII,
X-1431
Examinations.
Examiners appointed by the Comptroller of the Currency or
designated by the Federal Reserve Board w i l l be i n s t r u c t e d t o
make thorough and complete a u d i t s of the cash, s e c u r i t i e s , accounts,
and investments of the t r u s t department of t h e bank a t the same time
t h a t examination i s made of the banking department.
IX.
Conformity with State Laws*
Nothing in t h e s e r e g u l a t i o n s s h a l l be construed to
n a t i o n a l bank e x e r c i s i n g the powers permitted under the
of Section 11 (k) of the Federal Reserve Act as amended
or p r i v i l e g e s in contravention of the laws of t h e S t a t e
the bank i s lovated within the meaning of t h a t Act.
X.
give a
provisions
any r i g h t s
in which
Revocation of Permits.
The Federal Reserve Board reserves the r i g h t t o revoke permits
granted under the provisions of Section 11 (k), as amended, i n any
case where in the opinion of the Board a bank has w i l l f u l l y v i o l a t e d
the provisions of the Federal Reserve Act or of t h e s e r e g u l a t i o n s
or the laws of any S t a t e r e l a t i n g to the operations of such bank when
a c t i n g in any of the c a p a c i t i e s permitted under the provisions of
Section 11 (k) as amended.
XI.
Changes in Rules,
These r e g u l a t i o n s a r e subject to change by the Federal Reserve
Board; provided, however, t h a t no such change s h a l l p r e j u d i c e any
o b l i g a t i o n undertaken in good f a i t h under r e g u l a t i o n s in e f f e c t a t
the time the o b l i g a t i o n was assumed*
March 20, 1919.
146
147
e x - o f f i c i o
w . p. g . HARDING. g o v e r n o r
ALBERT STRAUSS, v i c e g o v e r n o r
m e m b e r s
A D O L P H C. M I L L E R
C H A R L E S S. H A M L I N
CARTER GLASS
SECRETARY O F - W E TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
C
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J . A. BRODERICK. s e c r e t a r y
T . CHAPMAN, ASSISTANT SECRETARY
w. M. 1MLAY. FISCAL AGENT
w.
a d d r e s s
washington
r e p l y
t o
F E D E R A L R E S E R V E BOARD
•:.,rch 31,1318.
X-1U32
(Revised)
Subject:
Section 11 (k) of the Federal Reserve Act*
Sir:
An opinion has been asked with reference to the construction of Section
11 (k) of the Federal Reserve Act as amended by the Act of September 26,
1918. That s e c t i o n as amended, provides in part that the Federal Reserve
Board shall be authorized and empowered
"To grant by special permit to national banks applying therefor,
when not in contravention of State or l o c a l law, the right to act
a s t r u s t e e , executor, a d m i n i s t r a t o r , r e g i s t r a r of stocks and. bends,
guardian of e s t a t e s , assignee, receiver, committee of e s t a t e s of
l u n a t i c s , or in any other fiduciary capacity in which State banks,
trust companies, or other corporations which come into competition
with national banks are permitted to a c t under the laws of the State
in which the national bank i s located.
"Whenever the laws of such State authorize or permit the exercise
of any or a l l of the foregoing powers by State banks, trust companies,
or other corporations which compete with national banks; the granting
to and the exercise of such powers by national banks shall not be
desmed to be in contravention of State or l o c a l law within the meaning
of this Act."
The qestion f o r determination i s whether a national bank may exercise
any of the eight powers expressly set forth in the law quoted above in any
case where neither State banks, trust companies nor other competing corporations are authorized to exercise those powers. In other words, in a
State where State banks or trust companies may e x e r c i s e a l l of these eight
powers with the exception of "admini stratdn.", for instance, nay national banks
located in that State be permitted to act in that capacity?
Under the interpretation of the term "when not in contravention of
State or local law" a s construed before the amendment of September 26,1918
and as generally followed by the Federal Reserve Board prior to that date,
there i s no doubt that the Board may permit a national bank in such a case
to act as "administrator" i f there i s no express provision in the laws of the
State which e i t h e r d i r e c t l y or by necessary implication prohibits national
banks from acting in that capacity.
I t may be argued that the second paragraph quoted above was intended to
make a complete and exclusive d e f i n i t i o n of what c o n s t i t u t e s "when not in
contravention of State or l o c a l law" and that even though •, there i s no express
X-1432
1.48
provision of the State law which prohibits national banks from exercising any
particular fiduciary power, nevertheless, such banks shall not be permitted to
act in any fiduciary capacity in which a State bank, trust company or other
competing corporation cannot a c t . I t does not appear, however, that t h i s construction can properly be supported not that i t i s c o n s i s t e n t with the purpose
f o r which the amendment was enacted.
The phrase "when not in contravention of State or local law" i s the Only
r e s t r i c t i v e clause applicable in t h i s discussion f o r i t i s apparent that the
succeeding paragraph i s permissive rather than r e s t r i c t i v e and operates s o l e l y
as an exception to the r e s t r i c t i v e clause of the f i r s t paragraph. The purpose
of t h i s exception was merely to insure to a national bank the r i g h t to exercise
fiduciary powers i n any case where a State bank, trust company or other competing
corporation i s permitted under the State law to exercise those powers, even i f the
State laws should contain an express provision e i t h e r d i r e c t l y or by necessary
implication prohibiting national banks from doing so.
In other words,, the sole f a c t that Congress expressly provided that i t i s
not in contravention of State law within the meaning of the f i r s t paragraph of
Section 11 (k) for a national bank to exercise any fiduciary power which a State
bank or trust compary may e x e r c i s e , cannot of i t s e l f reasonably be construed to
imply that i t i s i n contravention of State law f o r a national bank to exercise
a fiduciary power which a State bank or trust company cannot exercise. I f that
had been the intention of Congress the term "when not in contravention of State
or local law" would have been omitted from the f i r s t paragraph and the second
paragraph would have been made to read substantially as f o l l o w s :
"No national bank shall be permitted to exercise any of the foregoing
powers which neither State banks, trust companies or other competing
corporations are permitted to exercise under the State law."
That, however, was not done. The r e s t r i c t i v e phrase "when not in contravention of State or local law" was retained in the f i r s t paragraph without
change and the second and supplementary paragraph was inserted s o l e l y to protect
national batiks from aiy p o s s i b l e discrimination on the part of State l e g i s l a t o r s .
In short, while giving to the l e g i s l a t u r e of each State i n the f i r s t paragraph,
the right expressly to prohibit national banks from exercising fiduciary
powers, Congress, in the second paragraph, eliminates the p o s s i b i l i t y of .'discrimination against national banks by providing, as a rule of law, that no
State statute shall be construed to prohibit a national bank from exercising
any fiduciary power which a State bank, trust company or other competing corporation can e x e r c i s e .
I t i s r e s p e c t f u l l y submitted,therefore,that the Federal Reserve Board nay
l e g a l l y approve the application of any national bank to exercise any of the f i duciary powers authorized by Section l l ( k ) unless there i s an e g r e s s statute of t
the State in which the national bank i s located which e i t h e r d i r e c t l y or by necessary implication prohibits a national bank from exercising those powers, and
that even in the case where there i s such an express statute, the Board may
approve the application i f any State bank, trust company, or other competing
corporation i n that State i s permitted to exercise the powers applied for by the
national bank* That, I b e l i e v e , was the intention of Congress and the purpose
of the law as amended.
Respectfully, •
GEORGE L. HARBISON.
Hon. W.P.G* Harding,
fie serve Board.
Governor,
Federal
General Counsel.
±4
' X-1434
FEDERAL
RESERVE
BOARD
STATEMENT FOR THE PRESS.
For immediate r e l e a s e
March 20,1919.
The Federal Reserve Board's announced conference with t h e Governors
of Federal Reserve Banks began today and i t i s expected t h a t i t w i l l not
be able t o conclude i t s s e s s i o n u n t i l Saturday a f t e r n o o n . Among those
present a t t o d a y ' s session were the following:
Messrs. W,?»G.
C.S..
A.C.
John
Harding, Governor,
Hamlin,,
Mill3r,
Skelton. Williams,
of the Federal Reserve Board,
L.L. Rue,
A. Barton Hepburn,
W.S. Rave
F.O. Watts,
D.G. Wing,
of t h e Executive Comxittes of t h e
Federal Advisory Council,
R.C. L e f f i n g w e l l , A s s i s t a n t Secretary of t h e Treasury,
and the following Governors of Federal Reserve Banks; Chas. A. Morss (Boston),
Benj. Strong (New York), E.P. Passmore ( P h i l a d e l p h i a ) , E.R. Fancher (Cleveland).,
Chas. A. Peple, Deputy Governor (Richmond), M,5. Wellborn ( A t l a n t a ) , J . B .
McDougal (Chicago), D,C. Biggs ( S t . L o u i s ) , Theodore Wold (Minneapolis), J . Z .
M i l l e r (Kansas C i t y ) , R.L. Van Zandt (Dallas) and J . K . Lynch (SanFrancisco).
The meeting today was of a purely preliminary c h a r a c t e r f o r the exchange
of views on the forthcoming Victory Liberty Loan and r e l a t e d q u e s t i o n s . I t
does not appear, however, t h a t t h e r e w i l l grow out of t h e meeting any r e commendation looking t o a change of discount policy*
The D i r e c t o r General of Railroads came before the meeting and o u t l i n e d
h i s t e n t a t i v e views as t o t h e f i n a n c i n g of t h e immediate requirements of
the r a i l r o a d s .
Among o t h e r m a t t e r s discussed was t h a t of permanent q u a r t e r s f o r Federal
Reserve Banks.. Several of the banks have acquired p r o p e r t i e s upon which t h e y
w i l l e i t h e r c o n s t r u c t new b u i l d i n g s or remodel e x i s t i n g s t r u c t u r e s , but no
d e f i n i t e a c t i o n was taken in t h i s respect and t h e Board w i l l not undertake
t o approve plans in t h i s connection u n t i l the needs of t h e s e v e r a l banks have
been more c a r e f u l l y studied and analyzed.
FEDERAL
RESERVE BOARD
150
WASHINGTON
The telegram given below is hereby confirmed.
Assistant Secretary.
March 20,1919.
X-1435
Federal Reserve Bank of A t l a n t a r e q u e s t s t h a t arrangements be trade
t o have New Orleans branch commence s e t t l i n g d i r e c t through Gold S e t t l e ment Fund with o t h e r Federal Reserve banks in same manner as now in
e f f e c t between Federal Reserve banks and branches of S t , Louis and San
Francisco.
Beginning April 2nd and every settlement day t h e r e a f t e r New Orleans
branch in a d d i t i o n to A t l a n t a head o f f i c e , w i l l t e l e g r a p h t o Board code
Labeg i t s c r e d i t s f o r o t h e r Federal Reserve banks a s a t c l o s e of business
previous day f o r settlement through daily gold fund c l e a r i n g . New Orleans
branch w i l l render s e p a r a t e l y t o each Federal Reserve bank and branch
s e t t l i n g d i r e c t through Gold Fund, d a i l y mail t r a n s c r i p t s supporting
c r e d i t s s e t t l e d . Board w i l l include in d a i l y Bepeg telegram t o o t h e r
reserve banks c r e d i t s of New Orleans branch as f o l l o w s :
Atlanta
amount
New Orleans amount
Federal Reserve banks a r e requested t o Opett s e p a r a t e acdotint with
t h e New Orleans branch of A t l a n t a on April 1 s t and wire Board, code Labeg,
f o r April Snd gold fund c l e a r i n g amounts of c r e d i t s f o r He.v Orleans branch
of A t l a n t a and t o render t o t h i s branch d a i l y mail t r a n s c r i p t s supporting
c r e d i t s so reported in gold fund c l e a r i n g . Please note t h a t old sjrstem
w i l l c o n t i n u e , - Statement March 31st Clearing April 1 s t , new plan, e f f e c t i v e , statements A p r i l 1 s t , c l e a r i n g April 2nd,
A t l a n t a bank suggests t h a t a l l deduction of d i f f e r e n c e p r i o r t o
April 1 s t be made in settlement with A t l a n t a bank d i r e c t .
Please acknowledge r e c e i p t by wire*
BRQDERICK
FEDERAL
R E S E R V E
BOARD
STATEMENT FOR THE PRESS
Release f o r afternoon
papers, March 21,1919.
X-1436
The Federal Reserve Boa hi has issued, the following
regulations e f f e c t i v e today:
"All r e s t r i c t i o n s as to the sale or purchase of
l i r a exchange by 'dealers 1 as described in the Executive Order
of the President of January 26th, 1918, are hereby removed u n t i l
otherwise instructed."
"Notice is hereby given that ^dealws* as defined
under the Executive Order of the President of January 26th,1918,
u n t i l otherwise instructed, oay nalfe t r a n s f e r s of funds t o persons
not enemies or a l l i e s of enemies resident in Croatia, Slavonia,
Bosnia, Herzegovina and Dalmatia,"
*
52
ex-Officio m e m b e r s
W . P . G . H A R D I N G , GOVERNOR
A L B E R T S T R A U S S , VICE GOVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
F
E
D
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R
A
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R
E
S
E
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V
E
B
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washington
a d d r e s s r e p l y y o
F E D E R A L R E S E R V E BOARD
March 22,1919,
Subject:
J . A. B R O D E R 1 C K , SECRETARY
W . T . C H A P M A N , ASSISTANT SECRETARY
w. M. 1MLAY, FISCAL AGENT
*
X-1437
Uniformity of Gold FUnd Clearing Telegram,
Dear S i r ;
In f u r t h e r r e f e r e n c e t o the request from t h e Federal Reserve
Bank of A t l a n t a f o r d a i l y s e t t l e m e n t through t h e gold fund c l e a r i n g
between t h e Federal Reserve banks and the New Orleans branch, the
Board wishes t o c a l l a t t e n t i o n t o i t s telegram of December 7,1918,
and l e t t e r of January 7,1919. Beginning April 2nd t h e d a i l y telegrams
t o the Board should read as f o l l o w s :
Labeg (x)
Boston
New York
Philadelphia
Cleveland .
Richmond
Atlanta
New Orleans
Chicago
St.Louis
L i t t l e Rock
amount
n
H
H
li
11
II
n
II
»
Louisville
Memphis
Minneapolis
Kansas City
Dallas
San F r a n c i s c o
Seattle
Spokane
Portland
S a l t Lake
II
amount
II
none
amount
II
II
II
II
II
II
Factotum (xxx )
(x) Charge our account in Gold Settlement Fund t o t a l of $
and c r e d i t
.
(xx) If any bank i s not r e c e i v i n g c r e d i t in the s e t t l e m e n t
please s u b s t i t u t e the word "none" f o r amount.
(xxx) A.B.A. code f o r December 7 t h , d a t e of c r e d i t s .
Please issue t h e necessary i n s t r u c t i o n s t o have the c r e d i t s t o
t h e v a r i o u s banks and branches reported to t h e Board in t h e o r d e r shown
above.
Kindly acknowledge r e c e i p t .
Very t r u l y yours,
Assistant Secretary.
15.3
ex-off1cio
W . P . G . H A R D I N G , GOVERNOR
A L B E R T S T R A U S S , VICE GOVERNOR
ADOLPH C. MILLER
C H A R L E S S. H A M L I N
m e m b e r s
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
F
E
D
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R
A
L
R
E
S
E
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B
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J . A . B R O D E R 1 C K , SECRETARY
W . T . C H A P M A N , ASSISTANT SECRETARY
w . M . I M L A Y , FISCAL AGENT
a d d r e s s
washington
r e p l y
t o
F E D E R A L R E S E R V E BOARD
X-1440
THE FOLLOV/IEC- STATE INSTITUTION HAVE BEEN ABUTTED
TO THE FEDERAL RESERVE SYSTEM DURING THE WEEK
ENDING MARCH 21, 1919.
M i l f o r d T r u s t Company,
M i l f o r d , Delaware.
Farmers Savings Bank,
L y t t o n , Iowa.
W. B. Worthen Company4 Bankers,
L i t t l e Rock, Arkansas.
Union Trust & Savings Bank,
East S t . L o u i s , 111.
Capital
Surplus
T&tal ResourceL
425,000
$35,000
$913,052
30,000
5,000
475,870
200,000
200,000
1,876,494
200,000
50,000
2,470,781
TESASTIRY DEIAETMENT
X-244J.
* r~
-I
Washington
March 11, 1913.
The Governor,
Federal Reserve Board.
Sir;
By d i r e c t i o n of t h e S e c r e t a r y , you a r e advised t h a t t h e Department has r e f e r r e d t o t h e a u d i t o r f o r t h e Treasury Department f o r s e t t l e m e n t t h e account of
t h e Bureau of Engraving and p r i n t i n g f o r p r e p a r i n g f e d e r a l Reserve Notes d u r i n g
t h e p e r i o d February 1 t o February 28, 1919, amounting t o $220,975.50 a s f o l l o w s :
$10
235,000
335,000
87,00>0
200,000
110,000
Atlanta
231,000
145,000
St. Louis...» . .
140,000
M i n n e a p o l i s . . . . . .* 159,000 122,000
Kansas C i t y
1.60,000
D a l l a s . . . . . . . . . . . . 150,000 205,000
San F r a n c i s c o . . .
43,000
1,955,000 2£15,000
Boston.
New York
ihiladelphia....
Cleveland.
$20
70,000
286,000
5,000
176,000
20,000
104,000
80 ,000
29,000
16,000
20,000
100,000
42,000
948,000
ifp50
2 ,uUu
12,000
1,000
3,000
2,000
1,000
4,000
1,000
v lvOC
10 ,000
2,000
2,000
«•» i n I III mm*mm
1,000
m.i
i—— —
27,000
— — — ——
1,000
15,ouv
4,938,000 s h e e t s a t
Total
55r ,OCO
838,000
288,000
526,000
334,000
417,000
423,000
290 ,000
297,000
313,000
4513,000
151,000
4,938,000
,220,975.50
The charges a g a i n s t t h e s e v e r a l Federal Reserve Banks a r e a s f o l l o w s ;
Sheets.
Boston
556,000
New Y o r k . . . . 888,000
P h i l a d e l p h i a 288,000
C l e v e l a n d . . . 526,000
Richmond.... 534,000
A t l a n t a . . . . . 417,000
C h i c a g o . . . . . 423,000
S t . L o u i s . . . 290,000
Minneapolis, .297,000
Kansas C i t y . 513,000
D a l l a s . . . . . . 455,000
San F r a n c i s c o l 5 1 , 0 0 0
4,958.000
Compensation.
$8,479.00
13,542.00
4,392.00
8,0-21.50
5,093.50
6,559.25
6,450,75
4,422.50
4,529.25
4,773.25
6,958.75
2,302.75
&75.304.50
Bureau a p p r o p r i a t i o n s
plate
I n c . Comprinting. Materials. pensation.
To t a l
$7,216.88 #7,717.28 $1,467.84
$24,881.00
11,526.24 12,325.44
59,758.00
2,544.52
12,888.00
5,758.24
5,997.44
760.52
6,827.48
23,538.50
1,588,64
7,300.88
14,946.50
4,355.32
881.76
4,635.92
18,660,75
5,412.66
5,787.96
1,100.88
5,490.54
18,929-25
5,871.24
1,116.72
12,977„ 50
3,764.20
765.60
4,025.20
784.08
5,855.06
4,122.36
13,230.75
4,062.74
4,344.44
826.52
14,006.75
5,905.90
6,515.40
1,201.20
20,361.25
1,959.98
2,095.88
598.64
6,757.25
£64.095,24 ^68,539.44 W_3.Q56.52 ^,220,975.50
The Bureau a p p r o p r i a t i o n s w i l l be reimbursed i n t n e above amount from t h e i n d e f i n i t e a p p r o p r i a t i o n " p r e p a r a t i o n and i s s u e of F e d e r a l Reserve N o t e s , Reimbursa b l e , " and i t i s r e q u e s t e d t h a t your Board cause such i n d e f i n i t e a p p r o p r i a t i o n t o
be reimbursed i n l i k e amount.
Respectfully,
R. C. L e f f i n g w e l l ,
A s s i s t a n t S e c r e t a r y of t h e T r e a s u r y .
X-14'i.'i
TREASURY DEmRTMENT
WASHINGTON
March 10, 1919,
The Governor,
F e d e r a l Reserve Board,
Sir:
By d i r e c t i o n of t h e S e c r e t a r y , you a r e advised t h a t t h e Department has r e f e r r e d t o t h e Auditor f o r t h e Treasury Department f o r s e t t l e m e n t t h e account, of
t h e Bureau of Engraving and p r i n t i n g f o r p r e p a r i n g Federal lieserve Notes d u r i n g
t h e period February 1 t o February 28, 1919, amounting t o 4,192,43 a s f o l l o w s :
FSPEBaL RESERVE NOTES, 1918
Boston......
Philadelphia
Cleveland...
Richmond....
Atlanta
St. Louis...
^5000
500
500
100
300
100
100
1600
—— ——
— — — —
1000
— — — —
3000
2000
Total
500
800
200
1400
200
. 1200
4300
*10000
—» — — —
300
100
100
100
100
700
O
•8
sheets at v
The charges a g a i n s t t h e s e v e r a l Federal Reserve Banks a r e as f o l l o w s ;
Boston.......
Philadelphia.
Cleveland....
Richmond
At1ant a . . . . . .
St. Louis....
Sheets
Compen- ,
'• sat i o n .
500
800
200
1400
200
1200
4300
63
12. 20
3. 05_ .
21. 35
3. 05
18. 30
%)65. 58
Bureau a p p r o p r i a t i o n s
plate
Increased
p r i n t i n g . Hat e r i a l s Conpensat ion
4,6..49
10..38
2..60
18,.17
2.. 60
15..57
$55.81
SfG .94
'
11..11
2..78
19,.43
2,,•68
16..65
%p59,.69
MA .32
•
2..11
,52
3..70
52
3..18
«%)11,.35
Total
^22..38
35..80
8.,95
62,,65
8 <,95
55.,70
V192,,43_
The Bureau a p p r o p r i a t i o n s w i l l be reimbursed in t h e above amount from t h e
i n d e f i n i t e a p p r o p r i a t i o n " p r e p a r a t i o n and i s s u e of F e d e r a l Reserve Notes, Reimb u r s a b l e , " and i t i s r e q u e s t e d t h a t your Board cause such i n d e f i n i t e a p p r o p r i a t i o n to be reimbursed i n l i k e amount.
Respectfully,
R. C. L e f f i n g v . e l l ,
Assistant S e c r e t a r y of t h e T r e a s u r y .
Ex OFFicio
W. P. g . HARDING. g o v e r n o r
ALBERT STRAUSS. v i c e g o v e r n o r
A D O L P H C. M I L L E R
C H A R L E S S. H A M L I N
m e m b e r s
CARTER O W A .
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
F
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A
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R
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washington
J . A. BRODER1CK. s e c r e t a r y
W . T . C H A P M A N . ASSISTANT SECRETARY
w . M. I M L A Y , F i s c a l A g e n t
a d d r e s s
r e p l y
March 26,1919.
X-1444
SUBJECT: Request for data regarding building s i t e s
and buildings of Federal Reserve Banks.
Dear Sir:
In order that the Federal Reserve Board may have
complete and accurate detailed data regarding property owned
by your bank, i t w i l l be appreciated i f you w i l l have the
information asked f o r in the accompanying form compiled, as
of March 31,1919, and sent to the Board at your e a r l i e s t
convenience t h e r e a f t e r .
Very truly yours,
Secretary,
Enclosure
t o
FEDERAL RESERVE BOARD
jf t i
X-1444 a
"4k
t
Building S i t e s and Buildings of Federal Reserve Banks.
The following information i s desired, as of March 31,1919, separately f o r
Head Office and for Branchess
1 . Original investment a. Land
$
or
Land and buildings
.
b . Vaults
c . Buildings erected by banc
TOTAL
2;
,
$
Improvements, repairs, taxes, e t c . on property owned*26
1916
a.
b.
c.
Taxes on land and buildings
Repairs and improvements
Repairs, e t c . on v a u l t s .
TOTAL
3»
1917
1918
1919
Total
$
$
Amounts charged to P r o f i t and Loss *a. Land
b. Buildings
c . Land and bldgs ( i f "a" and
"bn not separated)
d. Vaults
$
1916
1917
1918
1919
Total
—
TOTAL
4. Book value of 'Bank premises 1 5. Please furnish data of any options held, part payments made, purchases
pending, e t c .
6. Please also furnish diagram of property owned, showing:
a. dimensions of property;
b. t o t a l area ( I s a l l of area owned available f o r building?)
c . names of s t r e e t s bordering on propertyp
d. compass directions
e . cost per square f o o t based on o r i g i n a l price of land with any
buildings on land at time of purchase;
f . general description of buildings, i f any, standing on propertyframe, brick; ten-story, etc*
NOTE: Please see that t o t a l of items 1 and 2 equals t o t a l of 3 and 4.
** Should include
amounts put through both -Bank premises * and '• CUrx-exi'o expense
EX-OFFICIO MEMBERS
W. P. G. HARDING. GOVERNOR
ALBERT STRAUSS, VICE GOVERNOR
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
ADOLPH C. MILLER
CHARLES S. HAMLIN
JOHN SKELTON WILLIAMS
.
COMPTROLLER OF THE CURRENCY
F
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V
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B
O
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J - A . BRODER1CK, SECRETARY
D
W1. T. CHAPMAN, ASSISTANT SECRETARY
w . M. IMLAY, FISCAL AGENT
WASHINGTON
a d d r e s s
r e p l y
t o
FEDERAL RESERVE
March 26,1919.
X-1445
Subject: L i a b i l i t y of Member Banks to Reserve Banks,
in excess of Capital and Surplus»
Dear Sir:
With further reference t o the Board's telegram of
March 7th, confirmation No. X-l4l4, i t w i l l be appreciated
i f you w i l l please mail to the Board, as of c l o s e of business
March 31st, and as close of business l a s t business day of
each month thereafter, statement giving "Liability of member
banks t o Reserve Banks, in excess of c a p i t a l and surplus
i n schedule form, as followst
(a)
Name of bank,
(b)
Location,
(c)
Loan l i a b i l i t y , stating separately amount secured
by United States s e c u r i t i e s , other s e c u r i t i e s ,
and unsecured loans, also acceptance l i a b i l i t y ,
then t o t a l l i a b i l i t y .
(d)
Capital and surplus,
(e)
Indicate a l s o amount of additional c o l l a t e r a l held,
i f any.
Very truly yours,
Secretary.
BOARD
i.Q
W . P . G . H A R D I N G , GOVERNOR
A L B E R T S T R A U S S , VICE GOVERNOR
ADOLPH C. MILLER
C H A R L E S S. H A M L I N
Ex-Officio m e m b e r s
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
F
E
D
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B
O
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J . A. 8 R 0 D E R 1 C K , SECRETARY
W . T . C H A P M A N , ASSISTANT SECRETARY
W . M. I M L A Y , FISCAL AGENT
D
a d d r e s s
WASHINGTON
r e p l y
FEDERAL
t o
RESERVE
X-1447
FEDERAL BESERVE BOARD BULLETIN FOR THE WEEK
ENDING MARCH 28, 1919.
ADMITTED TO THE EEDERaL RESERVE SYSTEM:
Capital
surplus
The Uhion Banking & T r u s t Co.,
Du BoiS, fenna.
^,125,000
*175,000
AUTHORIZED TO ACCENT DRAFTS AMD B I L L S OP
EXCHANGE Up TO 100 FEB CENT. OP CUPITAL
AND SURPLUS:
paterson N a t i o n a l Bank, p a t e r s o n , New j e r s e y .
o
T o t a l Resources
^2,145,602
BOARD
FEDERAL
RESERVE
BOARD
STATEMENT FOR THE PRESS
X-lUUS
Release f o r a f t e r n o o n papers,
April 1 s t ,
The Federal Reserve Board has issued the f o l l o w i n g r e g u l a t i o n
e f f e c t i v e today:
"Notice i s hereby given t h a t ' d e a l e r s ' as d e f i n e d
under the Executive Order of the P r e s i d e n t of January 26,
1912, u n t i l otherwise i n s t r u c t e d may make t r a n s f e r s of
funds to persons not enemies or a l l i e s of enemies, r e s i d e n t
in Esthonia, Lectland, Lithuania and Poland."
FEDERAL
RESERVE
WASHINGTON
BOARD
X-1449
March 3 l , l $ i g ,
Curtiss,
Jay,
,
Austin,,
Wills,
Hardy,
McCord,
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
SUBJECT:
Heath, Chicago
. . Martin, St.Louis
Ri ch,
Minneapcli s
Ramsay, Kansas City
Ramsey, Dallas
P e r r i n , San Francisco
Campaign f o r S t a t e Bank Members.
In view of favorable l e g i s l a t i o n i n v a r i o u s S t a t e s
the Board b e l i e v e s t h a t the p r e s e n t i s an opportune time f o r
a vigorous campaign f o r new S t a t e bank members.
HARDING.
FEDERAL
RESERVE
BOARD
WASHINGTON
X-IU50
March 31,1919
Pas snore, Philadelphia
Fanchez1, Cleveland
Seay, Richmond.,
Wellborn, Atlanta
McDougai, Chicago
SUBJECT:
Biggs, St.Louis
Wold, Minneapolis
Miller, Kansas City
Van Zandt, Dallas
Lynch, SanFrancisco
Campaign for New Par Points.
Board appreciates r e s u l t s of e f f o r t s in your d i s t r i c t
to increase par points and i t i s hoped that the good work
w i l l be continued up to the opening of Victory Campaign*
when every e f f o r t should be directed to thd successful
f l o t a t i o n of the new loan. Please advise the Board of number
of banks added to par l i s t during month of March with total
additions since January f i r s t ; also as of the c l o s e of business
March t h i r t y f i r s t the total number of National bank members,
State bank members, non-member banks on par l i s t and non-member
banks not on par l i s t .
HARDING.
F E D E R A T. R E S E R V E
BOARD
X-1451
WASHINGTON
March 31,1919
Movss,
Strong,
Pes snore,
Fancher,
Seoy,
Wellborn,
SUBJECT:
Boston
New fork
Philadelphia
Cleveland
Richmond
Atlanta
McDougal,
Biggs,
Wold,
Miller,
Van Zandt,
Lynch,
Chicago
St.Louis
Minneapolis
Kansas City
Dallas
San Francisco
Items handled by Collection Department.
Please advise (One) the extent to which the f a c i l i t i e s of your
c o l l e c t i o n department are used by your member banks and by Federal
Reserve banks of other d i s t r i c t s , approximate number of items daily.
(Two) The character of the items handled, such as b i l l of lading
d r a f t s , trade acceptances, sight drafts and maturing notes and b i l l s #
(Three) The approximate d i v i s i o n between items payable on demand
and items payable a f t e r sight or at a future time.
(Four) Approximate percentage of items handled which are payable
at banks in Federal
Reserve or branch c i t i e s and percentage of items
payable by individuals or concerns other than banks.
(Five) Wttat i f any service charge i s made by the Federal Reserve
bank on paid items and on unpaid items.
(Six) In case items are c o l l e c t e d f o r your account by other
banks in your d i s t r i c t what charge i s made by such banks and what do
you consider a f a i r charge.
HARDING,
FEDERAL
RESERVE
BOARD
WASHINGTON
CONFIRMATION OF TELEGRAM.
Mo:.1 ss
Strong
Passrnore
Fancher
Seay
Wellborn
Boston
New York
Philadelxjhi
Cleveland
Richmond
Atlanta
McDo'jgal
Biggs
Wold
Miller
Van Zardt
Lynch
X-IU52
April 1, 1919Chicago
St. Louis
Minneapoli s
Kansas City
Dallas
Sail Francisco
SUBJECT:Federal Reserve Banks a c t i n g a s F i s c a l Agents
f o r War Finance Corporation.
You w i l l receive s h o r t l y from War Finance Corporation
p r o s p e c t u s of i t s proposed issue of $200,000,000 S e r i e s A
% gold bonds to be dated April 1, 1919, maturing April 1,
1920.
Board has no o b j e c t i o n to your a c t i n g as f i s c a l agent
of War Finance Corporation in t h i s p a r t i c u l a r t r a n s a c t i o n ,
HARDING.
ex-Officio m e m b e r s
W. P. g . HARDING, g o v e r n o r
ALBERT STRAUSS, v i c e g o v e r n o r
ADOLPH C. MILLER
C H A R L E S S. H A M L I N
CARTER GLASS
S e c r e t a r y of t h e T r e a s u r y
tchaiqtfan
JOHN SKELTON WILLIAMS
C o m p t r o l l e r of t h e c u r r e n c y
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J . A . B R O D E R I C K , SECRETARY
W . T . C H A P M A N , ASSISTANT SECRETARY
W . M. I M L A Y , FISCAL AGENT
a d d r e s s
WASHINGTON
r e p l y
t o
F E D E R A L R E S E R V E BOARD
A p r i l 1, l g i g ,
x-li+53
SUBJECT:Appointment of Consulting A r c h i t e c t .
Dear S i r :
Several of the Federal reserve banks have developed p l a n s
f o r permanent banking q u a r t e r s , and three of the banks have announced
that they a r e ready to l e t c o n t r a c t s f o r c o n s t r u c t i o n . Other Federal
reserve banks have acquired b u i l d i n g s i t e s and have b u i l d i n g p r o j e c t s
in contemplation which w i l l c a l l f o r the development of p l a n s in the
near f u t u r e .
The Federal Reserve Board i s required by law to approve the
expenditures of Federal reserve basks, and as the approval of outlay f o r
permanent housing n e c e s s a r i l y c a r r i e s with i t approval of the c h a r a c t e r
and scope a s well as the cost of the contemplated s t r u c t u r e s , the Board
has deemed i t advisable to employ a c o n s u l t i n g a r c h i t e c t to a s s i s t i t in
the discharge of i t s duty i n t h i s r e s p e c t . The Board has, t h e r e f o r e ,
appointed Mr. Alexander B. Trowbridge of New York City with the t i t l e
of Consulting A r c h i t e c t . He w i l l maintain an o f f i c e i n the E q u i t a b l e
Building, 120 Broadway, New York City, and w i l l a c t as the medium f o r
the exchange of views between the several Federal r e s e r v e banks which
are engaged in planning b u i l d i n g s in order t h a t a l l the banks may have
the b e n e f i t of h i s suggestions i n the s o l u t i o n of t h e i r common problems*
I t i s expected a l s o that the Consulting A r c h i t e c t ' s o f f i c e may be the
means of s t a n d a r d i z i n g c e r t a i n f e a t u r e s of the work, such as v a u l t construction, fire-proofing, materials for interior f i n i s h , furnishing,and
any other matter which may be deemed s u i t a b l e f o r s t a n d a r d i z a t i o n . The
l o c a t i o n of the o f f i c e s and of the v a r i o u s departments, the arrangement
of the f i x t u r e s and accommodations f o r customers a r e among the m a t t e r s
which i t i s b e l i e v e d w i l l f i n d t h e i r b e s t s o l u t i o n by means of an exchange of views and suggestions through the Consulting A r c h i t e c t ' s o f f i c e .
The Board has already communicated t o the banks i t s view that
while the b u i l d i n g s of the Federal r e s e r v e banks should b e d i g n i f i e d in
t h e i r c h a r a c t e r and i n t h e i r a r c h i t e c t u r a l treatment, they should be of
a p r a c t i c a l type and excessive ornamentation and the use of c o s t l y
d e c o r a t i v e m a t e r i a l s should be avoided.
- 2 —
#
X-1453
*
Those banks which have already engaged a r c h i t e c t s to prepare
p l a n s a r e requested to send r e p o r t s of the s t a t u s of t h e i r b u i l d i n g
p r o j e c t s and p l a n s to the Consulting A r c h i t e c t and to f u r n i s h him with
copies of p r e l i m i n a r y p l a n s and sketches, and in c a s e s where the p l a n s
have been completed, i t i s desired t h a t they should send him copies of
the d e t a i l e d p l a n s and s p e c i f i c a t i o n s a s w e l l . These banks are requested
to have t h e i r a r c h i t e c t s communicate with the Board's Consulting Architect
with r e f e r e n c e to t h e i r work i n order that the Consulting A r c h i t e c t may
submit to the Federal Reserve Board h i s recommendations f o r any changes
which may appear to him to be a d v i s a b l e .
Those banks which have not as yet engaged a r c h i t e c t s or begun
the development of t h e i r p l a n s are expected to a v a i l themselves of the
s e r v i c e s of the Board's Consulting A r c h i t e c t i n order t h a t they may
secure the b e n e f i t of the p l a n s or experience of the other banks and in
order t h a t when an a r c h i t e c t has been s e l e c t e d the bank and the a r c h i t e c t
may be f u l l y informed as to the type of b u i l d i n g and d i s p o s i t i o n of space
b e s t adapted t o meet the requirements of a Federal r e s e r v e bank.
Those banks which expect to have open or l i m i t e d competition
b e f o r e making f i n a l s e l e c t i o n of an a r c h i t e c t are advised to a v a i l themselves of the s e r v i c e s of the Consulting A r c h i t e c t in f o r m u l a t i n g a p r o gram of competition.
Very t r u l y yours,
Governor.
X-1454
FEDERAL
RESERVE
BOARD
STATEMENT FOR THE PRESS
April 2, 1919.
Release f o r morning papers,
April 3, 1919*
BUSINESS AND FINANCIAL CONDITICSS DURING MARCH, 1919.
Improvement i n general business conditions and the continuance of an
undertone of confidence i n the e s s e n t i a l s t r e n g t h and soundness of the
country 1 s economic p o s i t i o n a r e i n d i c a t e d by the r e p o r t s of Federal Reserve
agents as r e p r e s e n t a t i v e • of the business s i t u a t i o n toward the c l o s e of
March.
The a c t u a l s i t u a t i o n i t s e l f has not changed very fundamentally, but
there are symptoms p o i n t i n g to improvement in f u t u r e p r o s p e c t s and t o a
more complete readjustment of b u s ine ss to normal c o n d i t i o n s .
According to the r e p o r t from the F i r s t D i s t r i c t , " s a t i s f a c t o r y progre ss
i s being made * * * in a d j u s t i n g b usiness to p r e v a i l i n g c o n d i t i o n s , " r e t a i l
trade being g e n e r a l l y good, savings d e p o s i t s i n c r e a s i n g , and stagnant
businesses beginning to recover.
In the Second D i s t r i c t there i s "a general
b e l i e f t h a t fundamental conditions a r e soundj V although there i s s t i l l a
waiting a t t i t u d e and u n c e r t a i n t y as to p r i c e s .
In the Third D i s t r i c t de-
c l i n e s i n p r i c e s during the p a s t few weeks have "improved the b u s i n e s s
•situation and i n d i c a t e t h a t p r o g r e s s i s being made i n the p r o c e s s of r e adjustment. "
In the Fourth D i s t r i c t "industry may be said to be
1
looking
up,I t h a t i s , i t i s glancing upward toward g r e a t e r a c t i v i t y , r a t h e r than
downward, a s formerly, to a f u r t h e r p e r i o d of s t a g n a t i o n , depression, and
decline.
The optimism which has been c o n s t a n t l y i n evidence, during the
w&ole p e r i o d of t r a n s i t i o n , i s being slowly but s u r e l y s u b s t a n t i a t e d by f a c t s .
The F i f t h D i s t r i c t s t a t e s t h a t "while r e p o r t s s t i l l show c r o s s - c u r r e n t s from
very
Tinner t a i n tv, there are/ few t h a t do n o t i n d i c a t e some improvement,
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Federal Reserve Bank of St. Louis
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or
-2X-I454
P r o1 s p e c t i v e , and the s p i r i t g e n e r a l l y i s c o n f i d e n t of overcoming
"l
difficulties.'
In District No,6 "no great p r o g r e s s has been nade during the past few weeks
toward a return to normal conditions,n but the general status of business is
fairly satisfactory and it is felt that "as soon as cotton begins to move at
a satisfactory p r z . c e , trade in all lines will revive *" I n pistrict Wo. 7 >
business men "while proceeding along conservative lines, reflect less
apprehension regarding the immediate future than a month ago," It i s also
stated that h there is every reason to expect increased activity all through
the Middle West," In District No»8
:r
business is rapidly resuming a normal
basis i n many l i n e s . " District No*9 reports that " t r a d e i n a l l
the principal
wholesale l i n e s i s satisfactory and retail t r a d e lis l i k e w i s e good* Collections
a r e good." In D i s t r i c t No. 10 " r e p o r t s from a l l s e c t i o n s * * * point to a
year of a c t i v i t y and p r o s p e r i t y , while business is f a r less inclined than
h e r e t o f o r e t o wait f o r the development of new c o n d i t i o n s / 1 In D i s t r i c t No, 11
no changes of importance have occurred i n the g e n e r a l t r a d e situation during
the p a s t 30 days, but " f u r t h e r p r o g r e s s i s evident i n t h e readjustment period,
and
l e s s i s heard of the u n c e r t a i n t i e s f o l l o w i n g the t u r n of the new year,l1
In D i s t r i c t No• 12 " manufacturing and i n d u s t r y have been, on t h e whole, fair ,"
while p r o s p e c t s a r e good, e x p o r t s the l a r g e s t ever r e p o r t e d , and the p r i n c i p a l source of a n x i e t y i s due t o the l a b o r s i t u a t i o n *
From a l l Federal Beserve d i s t r i c t s i t i s r e p o r t e d t h a t the p r i c e s i t u a t i o n
i s s t i l l t h e c o n t r o l l i n g f a c t o r in b u s i n e s s c o n d i t i o n s and outlook* Several
developments of importance a r e evident i n t h i s connection* There h a s been a
continuous though moderate d e c l i n e of p r i c e s . P r a c t i c a l l y a l l of the s t a n d a r d
index numbers show a f a l l i n g o f f . B r a d s t r e e t *s number f o r March 1 was $17.2244,
a decrease of 2~3/lO p e r cent from February 1; Dun's index number was $217-037
on March 1, a s compared w i t h $220,050 on February 1, a d e c l i n e of 1 - 4 / 1 0 p e r
cent * Sauerbeck's B r i t i s h index number i n d i c a t e s a p a r a l l e l f a l l i n g off of about
2 per cent.
X-1454
-iL
- 3 The general index number of the Bureau of labor S t a t i s t i c s for the month
ending February 28th has decreased 5 points, from 33 2 to 197*
The Board*s
compilation of index numbers showing the s i t u a t i o n up to March 1, indicates
that during February the p r i c e s of consumers' goods decreased 10 points,
the number for the month of February standing at 202.
Smaller decreases
were shown i n producers* goods, from 1$4 to i g i , and for raw materials, from
195 to 192, the decline in the l a t t e r being due l a r g e l y to the decline in
the index number for farm products from 2^2 to 222;
Reports since received
indicate that the d e c l i n e i n p r i c e s has been moderately continued in some
lines.
Almost equally important with the decline i n p r i c e s i s the f a c t that
the public at large has apparently given up expectations of immediate and
decisive d e c l i n e s .
From some d i s t r i c t s i t i s reported that, in the opinion
of the l o c a l business community, "Whatever change in priced i s yet to come
w i l l come slowly, n and that in consequence the business community has decided that further postponement of a c t i v i t y , in the b e l i e f that drastic
declines w i l l occur, i s not warranted.
there were
During the l a t t e r part of March
further downward r e v i s i o n s of p r i c e s in important l i n e s .
The
s t e e l industry sent a representative committee to Washington which, i n
consultation with a board representing the Government, agreed upon standard
quotations for the principal s t e e l products, representing a reduction of
about $5 per ton. Some further r e v i s i o n in copper and other metal p r i c e s
has likewise occurred. The problem of working o f f the Government's surplus
copper stocks i s s t i l l unsettled or only p a r t i a l l y s e t t l e d .
X-1454
- 4 -
The War Department announced t h a t under a t e n t a t i v e agreement reached
with 90 p e r cent of the copper producers, the l a t t e r w i l l s e l l the
Government s u r p l u s a t the market p r i c e , charging the Government a c t u a l
cost f o r so doing.
Producers w i l l d i s t r i b u t e i t in connection with
t h e i r own product, a minimum monthly amount being f i x e d and the a c t u a l
amount disposed of being a c e r t a i n percentage of t h e i r t o t a l s a l e s , if
It
exceeds the minimum amount.
15 months.
The copper i s to be d i s t r i b u t e d i n
P r i c e s f o r lead a r e expected n o t to be advanced from t h e i r
c u r r e n t low f i g u r e u n t i l e x i s t i n g overstock has been l a r g e l y disposed
of.
Lead ores averaged
$51-95 i& February, a s compared with $60.
in January, while a year ago average p r i c e s ranged around
$85.
x
_5Cotton p r i c e s have continued to decline somewhat during the early part
of the month, hut the prospects of a resumption of f r e e export trade have
materially strengthened them. According to the prevailing opinion in most
d i s t r i c t s , rapid and general decline of the prices of loc^l products are not
to be expected* Very great d i v e r s i t y of conditions e x i s t s in the manufacturing
f i e l d - From Philadelphia i t i s reported that in a number of l i n e s conditions
are s t i l l unsettled at m i l l s . This i s d i s t i n c t l y true of cotton manufacturing
and of iron and steel* The iron and s t e e l output i s s t i l l r e l a t i v e l y small
and probably does not exceed more than 60 to 66 per cent of capacity in the
case of the independent m i l l s , although the United States Steel Corporation
reports about 95 per cent of f u l l operation for February, as compared with 97
per cent for January, During March conditions have improved somewhat, as shown
by reports received by the Board from some of the principal producing d i s t r i c t s
Pig iron production during February amounted to 2 ,940,168 tons, as compared
with 3*302,260 tons during January, and 2,319,399 tons a year ago, the re143
spective index numbers being '1?6,
and 107• Steel ingot production likewise
shows a decline from 3,082,42 f tons in January to 2,688,011 tons in February,
as compared, however, with 2,273*741 tons a year ago, the respective index
numbers being 129, 120, and 102. The u n f i l l e d orders of the United States Steel
Corporation have continued t h e i r decline, the figure at the c l o s e of February
being 6,010*787 tons, as compared with 6,684,268 tons at the close of January,
the respective index numbers being 114 and 127> while the figure at the c l o s e
of February, 1918, was 9>2 88,453 tons, corresponding t o an index number of 176%
In general manufacturing the s i t u a t i o n i s reported as
M
somewhat mixed*"
Manufacturers of boots and shoes report from various d i s t r i c t s that t h e i r b u s i ness i s almost normal and in some cases up t o capacity* In groceries r e t a i l e r s
are buying slowly, while large stocks on hand have caused sharp d e c l i n e s in
price* In some parts of the country, however, wholesalers f i n d business im-
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Federal Reserve Bank of St. Louis
the Middle West a c t i v i t y in many l i n e s i s a l l that could be asked,
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while elsewhere production i s s t i l l f a r from normal. Woolen m i l l production has
reached i t s lowest point and i s beginning t o improve. The
American Woolen Co.,
i n consequence of the cut i n p r i c e s inaugurated some time ago, h a s , i t i s b e l i e v e d ,
succeeded i n booking a considerable volume of orders and has adopted a p o l i c y of
aggressive bidding f o r new b u s i n e s s . In miscellaneous l i n e s t h e r e i s a very
variable
s i t u a t i o n . The demand f o r jewelry, automobiles* and o t h e r l u x u r i e s
appears to be b r i s k i n many d i s t r i c t s . Purchases of gold a t the assay o f f i c e in
New York f o r the purpose of manufacturing jewelry were g r e a t e r i n January grri
February than during any preceding month since October, 1 9 l b . In the case of
m a t e r i a l s and in some cases c l o t h i n g , which has been a f f e c t e d by the unusual
weather c o n d i t i o n s , demand i s u n s a t i s f a c t o r y and manufacturing low. Production
of a n t h r a c i t e coal has reached a low l e v e l , due t o the f a l l i n g off of demand
consequent upon e x t r a o r d i n a r i l y mild weather i n most p a r t s of the country, while
the production of bituminous coal and of coke has likewise decreased, although
recent r e p o r t s show a tendency to an upward movement.
In connection with the manufacturing s i t u a t i o n t h e r e i s t o be noted a
d i s t i n c t improvement i n the labor and employment outlook. From D i s t r i c t No. 1
i t i s r e p o r t e d t h a t except i n c e r t a i n c e n t e r s where s t r i k e s have been i n progres s
c o n d i t i o n s a r e not alarming, while many of those who have been r e l e a s e d from
war work a r e f i n d i n g i t comparatively easy t o s h i f t i n t o o t h e r occupations. In
Chicago the employment s i t u a t i o n i s n o t i c e a b l y improving. Returning s o l d i e r s a r e
being g e n e r a l l y reemployed, although t h e r e i s d i f f i c u l t y i n p l a c i n g those who
d e s i r e h i g h e r wages and b e t t e r appointment than they had b e f o r e e n t e r i n g t h e
Army*
173
t
.
X-1454
- 7 In the a g r i c u l t u r a l d i s t r i c t s a l a r g e demand f o r labor i s now opening, due
to the p r o s p e c t s of e x c e l l e n t crops.
On the P a c i f i c coast the problem of
unemployment i s s t i l l serious, but i n various p a r t s of the d i s t r i c t the s u r p l u s of unemployed i s beginning to decline and i n some s e c t i o n s i t i s b e l i e v e d t h a t by May 1 the e n t i r e labor surplus w i l l have been absorbed.
In New York City, although the supply i s only about equal to demand, cons i d e r a b l e labor trouble s t i l l e x i s t s , with a number of s t r i k e s i n p r o g r e s s .
Reports from the producing d i s t r i c t s continue to be very s a t i s f a c t o r y .
In the West and Middle West i t i s s t a t e d t h a t the c o n d i t i o n of w i n t e r wheat
i s e x c e l l e n t and in some q u a r t e r s the b e s t t h a t has
the month of March.
ever been recorded f o r
In the Tenth D i s t r i c t i t i s r e p o r t e d t h a t crop p r o s p e c t s
"are b r i g h t e r a t t h i s time than a t t h e winter break-up of any of the l a s t
10 y e a r s . n From the Chicago d i s t r i c t i t i s r e p o r t e d that crop c o n d i t i o n s a r e
e x c e l l e n t and t h a t an unprecedentedly small amount of complaint of crcrp damage
i s heard from p l a n t i n g d i s t r i c t s . In the South there has been a r e d u c t i o n of
c o t t o n acreage, but p r o s p e c t s f o r production a r e good, while the other crops
of the South and Southwest are s e l l i n g a t high p r i c e s and have a t l e a s t p r o ,
duced a f a i r y i e l d .
Grain movements have considerably declined during the p a s t month. This
F
has been n o t i c e a b l e f o r each of the f i v e p r i n c i p a l g r a i n s . Stocks on hand a t
the c l o s e of the month a l s o show a r e l a t i v e l y s l i g h t d e c l i n e i n each case.
Flour production l i k e w i s e shows a decrease,amounting to 7*736,000 b a r r e l s
during February, a s compared with 12,994,000 b a r r e l s i n the p r e v i o u s month.
X-1454
While the stocks have increased from 3*341,000 at the c l o s e of January to
3)544,000 at the close of February, conditions as a whole are d u l l , and there
i s a d i s p o s i t i o n to await further developments.
In the l i v e - s t o c k market the situation i s reported as b r i g h t . The average
price of c a t t l e has advanced very considerably over a year ago, while sheep
and lambs f o r February averaged about the same. The price of meats has advanced; while there has been a slight decrease in the stocks of meats, there
has been a 50 per cent increase in the stock of lard. The trend of prices for
l i v e hogs for Chicago during February and early March has been higher than a
year ago. Receipts of c a t t l e and calves at 15 principal markets have decreased
considerably from l a s t month, respective figures being 1,656,046 and
1,096,118 head, corresponding t o index numbers of l 6 4 and l l 6 . The February
f i g u r e , however, i s almost as large as that for a year ago. A decrease has
likewise occurred in the receipts of hogs, the figures for the two months
being 4,603,335
an
<l 3»^5l»8$4, corresponding to index numbers of 209 and l6S,
The receipts during February, 1919, are approximately the same as receipts
f o r a year ago, while receipts of sheep have also ftecreased considerably
from the January f i g u r e s . They are, however, somewhat larger than the February, 1918, f i g u r e s . The figure f o r February 1919, i s 744,891.. head, as
compared with 1,079*377 during January, the index number having decreased
from 79 t o 6 l , while figures for February, 1918, are 733>895 bead, corresponding to an index number of 58.
Receipts, meltings, and stocks of sugar at th# c l o s e of February show a
considerable increase, both over the f i g u r e s f o r the previous month, and over
the same month in 1918, the increase in r e c e i p t s , and e s p e c i a l l y in stocks,
having been
considerably greater, however, than the increase in meltings.
X-1454
- 9 -
I n t e r e s t and. discount r a t e s have not v a r i e d m a t e r i a l l y i n any of the
markets during the month of March. The Board's r e p o r t s show minor v a r i a t i o n s
at different points.
In the
New York market occasional i n c r e a s e s i n both
c a l l and time f u n d s have been followed by f u l l y o f f s e t t i n g d e c l i n e s .
No
d e f i n i t e trend i s to be n o t i c e d i n any of the p r i n c i p a l f i n a n c i a l markets of
the month.
The Board's f i g u r e s , showing d e b i t s to d e p o s i t accounts, both of
i n d i v i d u a l s and batiks, r e g i s t e r a moderate decline during the f i r s t h a l f of
March, the high p o i n t (based on d a i l y averages) having been reached during the
l a s t week i n February.
Bates a t Federal Reserve Banks have been stable*
Banking conditions as a whole have been s a t i s f a c t o r y , with some operations
of considerable s i z e s u c c e s s f u l l y completed.
Prominent among these was the
Belgian i n d u s t r i a l c r e d i t f o r $50,000,000, while other o p e r a t i o n s have been
undertaken and are i n progress.
reserve note
There has again been an i n c r e a s e i n Federal
c i r c u l a t i o n , the t o t a l advance f o r the period between February
28th and March 28th amounting to $49,469,000.
X-1455
FEDERAL
RESERVE
BOARD
PRESS STATEMENT
For immediate r e l e a s e .
The Federal Reserve Board has issued the f o l l o w i n g
r e g u l a t i o n , e f f e c t i v e today, superseding i t s r u l i n g of April
1, i n t h a t t r a n s f e r s of f u n d s to persons n o t enemies or a l l i e s
of enemies, r e s i d e n t i n L e t t l a n d and Lithuania, w i l l not be
p e r m i t t e d ; b u t t r a n s f e r s of f u n d s may be made to persons not
enemies or a l l i e s of enemies, r e s i d e n t i n the Austrian Hungarian Monarchy as i t e x i s t e d previous to August f i r s t n i n e teen f o u r t e e n with the exception of Hungary.
"Notice i s hereby given t h a t ' d e a l e r s ' a s def i n e d under the Executive Order of the P r e s i d e n t of
January twenty-sixth,' n i n e t e e n eighteen, u n t i l o t h e r wise i n s t r u c t e d may make t r a n s f e r s of f u n d s to persons
not enemies or a l l i e s of enemies, r e s i d e n t i n Esthonia,
Poland and the Austrian Hungarian Monarchy as i t exi s t e d previous to August f i r s t n i n e t e e n f o u r t e e n with
the exception of Hungary."
April 2, 1919.
FEDERAL
RESERVE
BOARD
WASHINGTON"
CONFIRMATION TELEGRAM
April 3.1919
X--1457
Subject: Notes Secured by War Finance Corporation
Bonds not Exempt from Revenue Stamp Tax.
Morss, Boston,
'Strong, New York
I'assmore, P h i l a d e l p h i a
Fancher, Cleveland
Seay, Richmond
Wellborn, A t l a n t a
Biggs, St. Louis
Wold, Minneapolis
M i l l e r , Kansas City
Van Zandt s Dallas
Lynch, SariFrancisco
Board c a l l s a t t e n t i o n to f a c t t h a t notes, whether
customers' or member bank n o t e s , secured by War Finance Corporation
bonds, are n o t exempt from revenue stamp tax*
HARDING.
FEDERAL
RESERVE
BOARD
WASHINGTON
CONFIRMATION TELEGRAM
April 3,1919.
Subject:
X-IU5S
Rediscount r a t e s f o r Paper secured by War Finance
Corporation Bonds.
C u r t i s s , Boston,
Jay, New York
Austin, P h i l a d e l p h i a
Wills, Cleveland
Hardy, Richmond
McCord, A t l a n t a
Martin, St.Louis
Rich, Minneapolis
Ramsay, Kansas City
Ramsey, Dallas
P e r r i n , SanFrancisco
Upon a p p l i c a t i o n of Federal Reserve Bank of Chicago, Board
has today approved r e d i s c o u n t r a t e s f o r paper secured by War Finance
Corporation bonds at r a t e s 1% above p r e v a i l i n g r a t e s f o r e l i g i b l e commercial
paper of corresponding m a t u r i t i e s i n Chicago D i s t r i c t , and i s prepared
to a c t upon recommendation of your bank as t o r e d i s c o u n t r a t e s f o r member
bank promissory notes and customers' n o t e s secured by such bonds. Under
p r o v i s i o n s of Section 13 of War Finance Corporation Act, the r a t e mast
not be l e s s than i f o . per annum above the p r e v a i l i n g r a t e s f o r e l i g i b l e
commercial paper of corresponding m a t u r i t i e s .
HARDING.
W . P . G. H A R D I N G , GOVERNOR
A L B E R T S T R A U S S , VICE GOVERNOR
ADOLPH C. MILLER
C H A R L E S S. H A M L I N
ex-Officio m e m b e r s
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
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R
J . A . B R O D E R 1 C K , SECRETARY
W. T. CHAPMAN, a s s i s t a n t s e c r e t a r y
w . M. I M L A Y , F i s c a l a g e n t
D
a d d r e s s
WASHINGTON
r e p l y
t o
F E D E R A L R E S E R V E BOARD
X-1460
FEDERil RESERVE B0.&RD BULLETIN FOR THE Y/EEK
Eiroi:iG>ERIl 4 , 1919.
ADMITTED TO THE FEDERAL BESERVE SYSTEM$
Capital
The Macomb County Savings Bank,
Lenox :and Richmond, Mich.
Valley County Bank,
Hinsdale, Mont.
C a p i t a l City Bank,
Santa Fe, Hew Mexico.
The F i r s t S t a t e Bank,
Loraine, Texas.
F i r s t Guaranty S t a t e Bank,
Valley View, Texas.
Security Savings Bank,
Brighan C i t y , Utah.
surplus
Total Resources
%,50,000
%10 ,000
$712,869
25,000
5,000
175,516
50,000
10 ,000
373,007
20,000
15,000
171,254
25,000
10,000
145,063
50 ,000
13,000
653,174
e x - o f f i c i o
W . P. G . H A R D I N G , GOVERNOR
A L B E R T S T R A U S S , VICE GOVERNOR
A D O L P H C. M I L L E R
C H A R L E S S. H A M L I N
m e m b e r s
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
F
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A
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V
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B
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J . A . B R O D E R I C K , SECRETARY
W . T . C H A P M A N , ASSISTANT SECRETARY
w . M. I M L A Y , FISCAL AGENT
D
a d d r e s s
WASHINGTON
April 7,1919.
Subject:
r e p l y
t o
F E D E R A L R E S E R V E BOARD
X-1462
"Advice Blanks f o r use i n Connection w i t h
Return of U n f i t Federal Reserve Notes to
Treasurer of the United S t a t e s . "
Dear S i r :
Favorable r e p l i e s have been received from a l l Federal
Reserve Banks t o B o a r d ' s l e t t e r X-1428 of March 17th,1919»"Advice
Blarikss f o r use i n Connection with Return of U n f i t Federal Reserve
Notes to Treasurer of the United S t a t e s " , and the f o l l o w i n g modi f i c a t i o n s which were suggested by the Federal Reserve B a n k s have
been adopted and w i l l be incorporated.
An a d d i t i o n a l copy has been added to be enclosed with
the "uppers" when they a r e forwarded to Washington. The wording
of t h i s copy i n the upper r i g h t hand corner i n the p a r e n t h e s e s
w i l l r e a d as f o l l o w s : "Inclose with u p p e r s " .
The wording i n the p a r e n t h e s e s i n the upper r i g h t hand
c o m e r of the second, t h i r d and f o u r t h copies w i l l read as f o l l o w s :
"Inclose with lowers".
The National Bank Redemption Agency w i l l have a supply
of these forms p r i n t e d a t once and sent to the v a r i o u s banks.
Very t r u l y yours
Secretary.
;
-ILL
W. P. g . HARDING, g o v e r n o r
ALBERT STRAUSS. v i c e g o v e r n o r
ex-Officio m e m b e r s
A D O L P H C. M I L L E R
C H A R L E S S. H A M L I N
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
F
E
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A
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S
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V
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B
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J . A . B R O D E R I C K , SECRETARY
W . T . C H A P M A N . ASSISTANT SECRETARY
w . M. I M L A Y . FISCAL AGENT
D
a d d r e s s
WASHINGTON
April 7,
1919.
X-1U6U
Subjects S e c u r i t y covering Acceptances i n E±cess of 10$
L i m i t a t i o n of Section 13; Section l l ( k ) of the
Federal Reserve Act.
Dear Sir:
I am forwarding herewith for your information
copies of two memoranda prepared by counsel, X-l46l
(Security covering acceptances in excess of 10 per cent
l i m i t a t i o n of Section 13), and X*»l432 r e l a t i n g to the
construction of Section l l ( k ) of the Federal Reserve Act
and to the release of security against acceptances
aggregating ten per cent of the capital and surplus of
the accepting bank. These memoranda have been approved
by the Federal Reserve Board f o r publication in the
April B u l l e t i n .
Very t r u l y yours,
Governor.
(Mimeograph prepared f o r purposes of Record;
Typewritten l e t t e r sent to a l l Federal Reserve
Agents.)
r e p l y
FEDERAL
t o
RESERVE
BOARD
W . P. g . H A R D I N G . g o v e r n o r
ALBERT STRAUSS. v i c e g o v e r n o r
E X - O F ^ Y (^MEMBERS
ADOLPH C. MILLER
C H A R L E S S. H A M L I N
CARTER GLASS
s e c r e t a r y of t h e t r e a s u r y
chairman
JOHN SKELTON WILLIAMS
c o m p t r o l l e r of t h e c u r r e n c y
F
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D
j . A. BRODER1CK, s e c r e t a r y
W. T. CHAPMAN. a s s i s t a n t s e c r e t a r y
w . M. I M L A Y , F i s c a l A g e n t
A D D R E S S R E P L Y TO
WASHINGTON
FEDERAL
April 5,1919.
RESERVE
BOARD
X-1461
SUBJECT: Security Covering Acceptances in Excess of
10 per cent Limitation of Section 13Sir:
In an opinion of this o f f i c e printed on page 2^4 of the March 1919
Bulletin, i t was stated. th:t although Section 1J of the Federal Reserve
Act authorizes member banks to accept d r a f t s drawn i n domestic transactions
only when secured at the time of acceptance, nevertheless, the security
may properly be released a f t e r acceptance, provided, however, that in
any case where the total amount accepted for any one customer exceeds
ten per cent of the capital and surplus of the accepting bank the security
cannot be released unless some other actual security growing out of the
same transaction i s substituted therefor.
The question has since been raised whether the accepting bank may
release the security against drafts aggregating ten per cent of the capital
end surplus of the bank in a case where the total amount of d r a f t s accepted
for one customer and outstanding at one time i s in excess of that l i m i t .
Section 13 provides in part that:
"No member bank shall accept, whether in a foreign or
domestic transaction, for any one person, company, firm,
or corporation to an amount equal at any time in the
aggregate to more th.11 ten per centum of i t s paidup and
unimpaired capital stock and surplus, unless the bank i s
secured either by attached documents or by some other
actual security growing out of the same transaction as the
acceptance: and no bank shall accept such b i l l s to an
amount equal at any time in the aggregate to more than
one-half of i t s paid-up end unimpaired c a p i t a l stock and
surplus."
The question under consideration involving a construction of t h i s
paragraph may present i t s e l f in either one of two ways:
First:
Under the provisions of the section quoted above, a bank may properly
accept for one individual at one time, d r a f t s aggregating as much
AS 50% of i t s capital -nd surplus i f the bank i s secured either by
attached documents or by some other actual security growing out
of the s a n e transaction as the acceptance. In such a case may the
bank a f t e r acceptance release the security covering drafts aggregating 10% of i t s capital and surplus i f i t r e t a i n s the security
covering the balance of the""drafts?
x-l46l
-2-
Second.:
Under the provisions of the section quoted above, a bank may
properly accept for one individual d r a f t s aggregating 10$
of i t s capital and surplus, and inzrediately thereafter r e lease the security against that 10$. The question then i s whether
the bank may properly accept additional d r a f t s for the customer before the f i r s t d r a f t s have been liquidated i f the
bank holds some actual security to cover those additional
acceptances?
A careful consideration of the provisions of the law indicates that
Congress intended, that the accepting bank m y properly rely upon the general
credit of the customer i n acceptance transactions up to 10$ of i t s capital
and surplus but that for any acceptance l i a b i l i t y i n excess of that amount,
incurred for the same customer, i t must hold some actual security.
In the second case mentioned above, therefore, where a bank has accepted
for a customer d r a f t s aggregating 10$ of i t s capital and surplus, i t may
accept additional drafts f o r that same customer even before the f i r s t drafts
have been liquidated and even though i t no longer holds any security against
those f i r s t drafts, provided, of course, that i t holds some actual security
against the additional draftsI t seems certain that Congress did not intend in any case of that
character e n t i r e l y to prohibit the additional acceptances but that i t i n tended to authorize them only i f the accepting bank r e t a i n s some actual
security against those additional acceptances so long as they c o n s t i t u t e
an acceptance l i a b i l i t y in excess of 10$ of i t s capital and surplus. If t h i s
we?e not the proper construction of the law a bank which unquestionably might
have accepted for one customer drafts aggregating even as much as 50$ of i t s
capital and surplus when secured, would be l i m i t e d to 10$ for that same customer i f i t had outstanding any acceptances of the customer, no matter how
small in amount, against which i t had already released the security. Or
to put i t another way - a bank which had accepted for one customer unsecured
d r a f t s aggregating 10$ of i t s capital and surplus growing out of an export
transaction, would not be permitted to accept any domestic d r a f t s whatever
f o r that same customer, Unless the law i s construed to mean that the security
provided for in the section quoted above i s required only as to the amount
over and above the 10$ l i m i t a t i o n .
I b e l i e v e that both the l e t t e r and the s p i r i t of the law authorize, the
accepting bank to rely upon the general credit of the customer on i t s acceptance l i a b i l i t i e s up to an amount equal to 10$ of i t s c a p i t a l and surplus and
that in the f i r s t case described above, i t may release the security against
d r a f t s aggregating that amount provided i t holds some actual security against
the balance of the d r a f t s accepted for that customer and that i n the second
case described above i t may accept the additional d r a f t s over and above the
10$ l i m i t even though i t has previously released the security against the
f i r s t d r a f t s , provided that i t retains some actual security against those
additional d r a f t s as long as they c o n s t i t u t e an acceptance l i a b i l i t y in
excess of ten per cent, of the bank1a capital and surplus.
Respectfully,
Hon. W.p.G^ Harding,
Governor, Federal Reserve Board.
GEORGE L. HARRISON.
General Counsel.
W . P. g . H A R D I N G , g o v e r n o r
ALBERT
STRAUSS, v i c e g o v e r n o r
ADOLPH C. M I L L E R
CARTER GUTFS
s e c r e t a r y of t h e t r e a s u r y
C H A R L E S S. H A M L I N
chairman
JOHN SKELTON WILLIAMS
Comptroller of t h e C u r r e n c y
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W . M . I M L A Y , FISCAL AGENT
WASHINGTON
a d d r e s s
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F E D E R A L
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RESERVE
BOARD
X-1432
(Revised.)
Subject:
Section 11 (k) of the Federal Reserve Act,
Sir
An opinion has been asked with reference to the construction of Section
11 (k) of the Federal Reserve Act as amended by the Act of September 26,
1918. That section as amended, provides in part that the Federal Reserve
Board shall be authorized and empowered
"To grant by special permit to national banks applying therefor,
when not in contravention of State or local law, the right to act
as trustee, executor, administrator, registrar of stocks and bonds,
guardian of e s t a t e s , assignee, receiver, committee of e s t a t e s of
l u n a t i c s , or in any other fiduciary capacity in which State banks,
trust companies, or other corporations which come into competition
with national banks are permitted to act under the laws of the State
in which the national bank i s located,
"Whenever the laws of such State authorize or permit the exercise
of any or a l l of the foregoing powers by State tanks, trust companies,
or other corporations which compete with national bariks, the granting
to and the exercise of such powers by national banks shall not be
deemed to be in contravention of State or local law within the meaning
of this Act.*
The question f o r determination i s whether a national baric may exercise
any of the eight powers expressly set forth in the law quoted above in any
case where neither State banks, trust companies nor other competing corporations are authorized to exercise those powers. In other words, in a
State where State banks or trust companies may exercise a l l of these eight
powers with the exception of "administrator", for instance, nay national banks
located in that State be permitted to act in that capacity?
Under the interpretation of the term "when not in contravention of
State or local law" a s construed before the amendment of September 26,1918
and as generally followed by the Federal Reserve Board prior to that date,
there i s no doubt that the Board may permit a national bank in such a case
to act as "administrator" i f there i s no express provision in the laws of the
State which either d i r e c t l y or by necessary implication p r o h i b i t s national
banks from acting in that capacity.
I t may be argued that the second paragraph quoted above was intended to
make a complete and exclusive d e f i n i t i o n of what c o n s t i t u t e s "when not in
contravention of State or l o c a l law" and that even though there i s no express
X-1432
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p^pv^sion of the State law which prohibits national banks from exercising any
particular fiduciary power, nevertheless, such banks shall not be permitted to
act in any fiduciary capacity in which a State bank, trust company or other
competing corporation cannot a c t . I t does not appear, however, that t h i s construction can properly be supported not that i t i s consistent with the purpose
for which the amendment was enacted.
The phrase "when not in contravention o f ' S t a t e or local law" i s the only
r e s t r i c t i v e clause applicable in t h i s discussion for i t i s apparent that the
succeeding paragraph i s permissive rather than r e s t r i c t i v e and operates solely
as an exception to the r e s t r i c t i v e clause of the f i r s t paragraph. The purpose
of t h i s exception wap merely to insure to a national bank the r i g h t to exercise
fiduciary powers in any case where a State bank, trust company or other competing
corporation i s permitted under the State law to exercise those powers, even i f the
State laws should contain an express provision either d i r e c t l y or by necessary
implication prohibiting national banks from doing so.
In other words, the sole f a c t that Congress expressly provided that i t i s
not in contravention of State law within the meaning of the f i r s t paragraph of
Section 11 (k) for a national bank to exercise any fiduciary power which a State
bank or trust company may exercise, cannot of i t s e l f reasonably be construed to
imply that i t . i s in contravention of State law for a national bank to exercise
a fiduciary power which a State bank or trust company cannot exercise. If that
had been the intention of Congress the term "when not in contravention of State
or local law" would have been omitted from the f i r s t paragraph and the second
paragraph would have been made to read substantially as follows:
"No national bank shall be permitted to exercise any of the foregoing
powers which neither State banks, trust companies or other coupe ting
corporations are permitted to exercise under the State law."
That, however, was not done. The r e s t r i c t i v e phrase "ehen not in contravention of State or local law" was retained in the f i r s t paragraph without
change and the second and supplementary paragraph was inserted s o l e l y to protect
national batiks from aiy possible discrimination on the part of State l e g i s l a t o r s .
In short, while giving to the l e g i s l a t u r e of each State i n the f i r s t paragraph*
the right expressly to prohibit national banks from exercising fiduciary
powers, Congress, in the second paragraph, eliminates the p o s s i b i l i t y of . d i s crimination against national banks by providing, as a rule of law, that no
State statute shall be construed to prohibit a national bank from exercising
any fiduciary power which a State bank, trust company or other competing corporation can exercise.
I t i s r e s p e c t f u l l y submitted,therefore,that the Federal Reserve Board nay
l e g a l l y approve the application of any national bank to exercise any of the f i duciary powers authorized by Section l l ( k ) unless there i s an express statute of t
the State in which the national bank i s located which e i t h e r d i r e c t l y or by necessary implication prohibits a national bank from exercising those powers, and
that even in the case where there i s such an express statute, the Board nay
approve the application i f any State bank,, trust company, or other competing
corporation in that State i s permitted to exercise the powers applied for by the
national bank.. That, I b e l i e v e , was the intention of Congress and the purpose
of the law as amended.
Respectfully, •
•
GEORGE L. HARRISON.
Hon. W. P. G" Harding,
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Federal Reserve Bank of St. Louis
Board.
General Counsel.
W. P. g . HARDING. g o v e r n o r
ALBERT STRAUSS. v i c e g o v e r n o r
Ex-Officio members
A D O L P H C. M I L L E R
C H A R L E S S. H A M L I N
CARTER GLASS
s e c r e t a r y of t h e t r e a s u r y
chairman
JOHN SKELTON WILLIAMS
c o m p t r o l l e r of t h e c u r r e n c y
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W . T. CHAPMAN. a s s i s t a n t s e c r e t a r y
w . M. IMLAY, F i s c a l A g e n t
address reply to
WASHINGTON
FEDERAL
April 8,1919.
X-1465
Subject: Circulars Re- Becorraertdations made "by Governors
Of Federal Reserve Batiks at Conference with
Federal Reserve Board, March 20-22,
Dear Sir:
For your information there i s enclosed herewith
copies of'Board's c i r c u l a r s X-14-59 and X-146J.
Very t r u l y yours,
Acting Chairman,
Executive Committee®
RESERVE
BOARD
X-1U59
TOPICS DISCUSSED AND RECOMMENDATIONS MADE BY
GOVERNORS AT CONFERENCE WITH FEDERAL RESERVE BOARD-
WASHINGTON, MARCH 20-22,1919.
1.DISCOUNT POLICIES:
a. How long should reserve banks continue the present
d i f f e r e n t i a l rates in favor of notes secured by
Government obligations?
Recommendation:
I t i s the opinion of the meeting that present d i f f e r e n t i a l rates
in favor of notes, secured by Government obligations, should be continued u n t i l a f t e r the f i f t h loan i s placed, and for such reasonable
period thereafter as w i l l permit a considerable liquidation of such
borrowings without imposing undue penalties upon the banks which are
required to rediscount with the Federal reserve banks.
I t i s further suggested that no recommendation for a change in the
present d i f f e r e n t i a l rates can well be made u n t i l i t i s known at what
rate the next loan w i l l be offered, at which time some readjustment
of rates for loans to be secured by bonds of that issue may be necessary. The establishment of a d i f f e r e n t rate for loans secured by
the bonds of the F i f t h loan may necessitate a review at that time of
rates applying to loans secured by bonds of the e a r l i e r issues.
b» Current rates of member banks for bank loans in the several
reserve d i s t r i c t s , and their r e l a t i o n to present rediscount
rates of Federal reserve banks.
See ommendation:
None,
c . Liquidation of Government secured paper at Reserve Banks.
d. Expression of opinion as to the length of time which w i l l
be required to make a permanent distribution of the
Government s e c u r i t i e s held by member banks.
Recommendation:
I t i s the opinion of the meeting that i f no further permanent
borrowing i s required by the Government after the F i f t h loan i s placed,
and provided the general tendency toward a general commercial l i q u i dation continues as expected, the amount of unliquidated paper held
by member banks and by the Reserve Banks at the end of a period of
say a year from June 1 s t , next, w i l l be so small as to be a n e g l i gible factor in the p o s i t i o n of the Federal reserve banks and can be
readily dealt with at or before the expiration of that year by re
adjustment
of rates.
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X-1459
G. Discussion of recommendations made by Advisory Council as to
discount rates and p o l i c i e s .
Rec ommendat i on;
The answer to topic (a) f u l l y answers topic ( e ) , except that i t
i s the unanimous opinion of the meeting that the r a t e s to be adopted
and maintained by the reserve banks, for loans secured by Government
bonds and notes should be uniform i n a l l the reserve banks.
BANKERS1 ACCEPTANCES - OPEN MARKET.
a. Development of open market.
b» Is a low rate at Federal Reserve banks necessary
to develop the acceptance market?
Recommendation:
I t i s recommended that in general the present p o l i c y as to rates
for bankers 1 acceptances be continued. The present developments in
foreign exchange may, however, present the opportunity for securing a
large increase in the volume of b i l l s drawn in d o l l a r s , of which advantage should be taken, in c.ase i t does a r i s e , by quoting favorable
rates for open market purchases, and p a r t i c u l a r l y forward rates for
b i l l s to arrive, even though that involves a larger accumulation of
b i l l s by the Reserve *
- banks.
I t i s further recommended that in order to develop an active
market for b i l l s i n the d i f f e r e n t reserve d i s t r i c t s , that steps
should be taken by the reserve banks to insure dealers in b i l l s a
s u f f i c i e n t supply of credit with which to carry them, without penalty
of a high rate, u n t i l they are able to market them.
I t i s suggested that the reserve banks can f a c i l i t a t e the development of carrying arrangements for dealers by making arrangements
for special purchases of b i l l s from them under contract to repurchase
within f i f t e e n days, in cases where member banks are not w i l l i n g to
make c o l l a t e r a l loans on b i l l s at reasonable rates.
c. Reserve Bank P o l i c i e s in making Purchases:
1. Direct from accepting banks.
2. From member banks, with or without endorsement.
(Miscellaneous b i l l s other than own acceptances).
Recommendation:
I t i s recommended that the purchase of b i l l s be made f r e e l y from
member banks, with their endorsement, unless bearing otherwise s a t i s factory endorsements, those b i l l s , however, to be other than those
accepted by the s e l l i n g banks.
3. Through brokers and accepting houses.
Recommendation:
That steps be taken by the reserve banks to encourage the development of the business of dealing i n b i l l s i n each of the reserve bank
c i t i e s , as a f a c i l i t y for the development of t h i s market, and that
dealers be encouraged by having f r e e access to Federal reserve banks,
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X-1U59
to s e l l t i l l s and to carry them under a 15 day repurchase arrangement,
4, Through other Federal Reserve banks.
5. Through brokers or banks, other than reserve
banks, of acceptances of member banks in
other d i s t r i c t s .
Recommendation:
That Federal Reserve banks should not appear as purchasers of
b i l l s in other Federal Reserve d i s t r i c t s , except through the Federal
Reserve banks of those d i s t r i c t s #
d. Sales of acceptances to other Federal Reserve banks
with or without reserve bank endorsement*
Recommendation:
I t i s recommended that where voluntary open market purchases are
made by one reserve bank through another reserve bank, no endorsement
be expected or required.
Where sales of b i l l s by one reserve bank to another reserve bank
are made by mutual arrangement, endorsement may be required by the
purchasing reserve bank and such transactions should promptly be
reported to the Federal Reserve Board. That where rediscounts are
X-l4j3
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- 4 arranged through the Federal Reserve Board, a t r a t e s f i x e d by the
Board, endorsements should always be given by the borrowing bank.
e.
Expression of opinion i s asked as to d e s i r a b i l i t y of
reserve banks making miscellaneous s a l e s of bankers 1
acceptances.
1. To member banks in i t s own d i s t r i c t .
2 . To other banks, bankers, brokers, or
accepting houses in i t s own d i s t r i c t .
3* To baiks, bankers, brokers, or accepting houses i n other d i s t r i c t s .
Be c o mnendat ion:
It i s recommended that i t be the p o l i c y of the System that no
s a l e s of b i l l s be made by reserve banks out of t h e i r p o r t f o l i o s ,
except to other reserve banks; but as a temporary matter, to aid
in the development of the market f o r b i l l s among member banks,
c e r t a i n reserve banks may f i n d i t necessary for the t i n e being to
act as the agent of member banks in making purchases of b i l l s
and to some extent to act as dealers in b i l l s f o r t h a t p u r p o s e .
That Federal reserve banks may very properly buy b i l l s ' nfemBer banks,
a s s i s t them i n t h e i r purchases by giving advice and taking d e l i v e r i e s
for them.
f.
Necessity f o r general cooperative p o l i c y covering a l l
i n t e r d i s t r i c t purchases, s a l e s and rediscounts-
Recommendation:
It i s the sense of the meeting that where one Federal reserve
bank takes i t s b i l l s i n another Federal reserve d i s t r i c t , i t should
be through the Federal reserve bank of that d i s t r i c t .
Special Recommendation:
That the Federal reserve banks be permitted, as l o c a l c i r cumstances warrant, to e s t a b l i s h f r e e luncheon f a c i l i t i e s for t h e i r
employees , i n the b e l i e f that the expenditure involved w i l l be more
than o f f s e t in economy of time and increased control of the e f f i c i e n c y of the workers.
3.
BANKERS' ACCEPTANCES - GENERAL.
a.
To what extent i s inquiry made by reserve banks to determine e l i g i b i l i t y of bankers' acceptances.
b.
D i s t i n c t i o n — Foreign and Domestic Acceptances as t o
Security Required at the time of ardsubsequent to
Acceptance.
(General d i s c u s s i o n - no recommendation)
BANKERS' ACCEPT#CES — DOMESTIC.
a.
Use and abuse of domestic acceptances.
be
Custody of c o l l a t e r a l *
c.
Discrimination in purchases by reserve banks*
Recommendation:
The discussion developed the f a c t that there i s a growing
tendency on the part of member banks to misuse and possibly abuse,
the right of acceptance credits in domestic transactions. These
abuses doubtless grow, in many cases, out of a lack of knowledge
of what are correct practices, and to some extent out of d i f f i c u l t i e s incident to the war/ The principal abuses noted were in
the employment of acceptance credits for transactions which are
in f a c t loans upon commodities* In such cases the use of the
acceptance credits i s frequently a subterfuge to escape the prov i s i o n s of Section 5200 of the National Bank Act, and in other
cases an improper drawing of b i l l s against domestic shipment of
goods * It i s the b e l i e f that i t would be a mistake to endeavor
to correct these practices through general regulations applying
to the purchase of b i l l s by the reserve banks.
Recommendation:
That the Federal Reserve Board obtain the s e r v i c e s of bankers
who are thoroughlyfa mi l i a r with both domestic and foreign acceptance c r e d i t s , to prepare l i t e r a t u r e for use by the reserve banKs
in educating their member banks in sound methods to be employed
in a l l branches of the acceptance business. It was further recommended "that no attempt be made, by regulation of the Federal
Reserve Board, t o control the method employed by member banks in
conducting t h e i r business, u n t i l the l i t e r a t u r e above referred to
has been prepared,"
Attention was directed to a memorandum in regard to a ruling
by the Comptroller of the Currency, "If t h i s ruling i s s t r i c t l y
construed, no bank buying the acceptances of another bank, in
excess of 10 per cent of i t s own c a p i t a l , would be able to ascertain whether the provisions of section 5200 had been v i o l a t e d or
not, without inquiry as to every transaction under which these
b i l l s originated. The danger l i e s in the p o s s i b l e impairment of
the marketability of the b i l l s , r e s u l t i n g from the fear of granting
excessive loans to member banks through the account 1 b i l l s purchased 1
x-V-19j
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The ruling of the Comptroller of the Currency i s as f o l l o w s :
11
Subject:Limitations of Section 5^00, as applied to bankers'
acceptances.
"Recently Mr. NewJrhsm, supervising examiner of the Comptroller f s
o f f i c e , was c a l l e d to discuss t h i s subject i n the l i g h t of present
practice and rulings of the Federal Reserve Board, and the theories
of the Comptroller's o f f i c e .
"He explained that in the Comptroller's o f f i c e i t has been held
f o r many ye^rs that only paper which resulted from the sale of goods
could be classed as commercial paper, a c t u a l l y owned, e t c . , or if
b i l l s of exchange as b i l l s of exchange drawn against actually e x i s t ing values, that, the mere fact that there were goods as c o l l a t e r a l
security pledged to a b i l l of exchange would not constitute actually
existing values.
"The opinion of counsel published in the Federal Reserve Bull e t i n of March 1, 1917> c i t i n g from the decision of the case of
the Second National Bank of Oswego, versus Burt, 93 N. Y. 233> i s
considered affirmative of this view. Mr Newnham a l s o inclined to the
b e l i e f that with regard to acceptances discounted f o r or purchased
from the acceptor, such purchase or discount constitutes a loan
to the acceptor and would be l i a b l e to the limitations of the statute
as borrowed money; that they could not be considered as commercial
paper actually owned, e t c . , by the acceptor offering them f o r sale
or rediscount.
"Also, that with regard to b i l l s drawn on a n a t i o n a l bank
against the pledge of goods in warehouse owned by the drawer:
(a) If the b i l l i s taken by the acceptor that i t i s
merely a secured loan and f a l l s within the
limitations of the s t a t u t e .
(b) That in the hands of a third party as there i s no
sale f o r goods antecedent to the instrument i t is
within the limitations of the statute and could
not be held by a national bank purchaser for an
amount inexcess of 10 per cent of the capital stock
and surplus of the national bank purchaser,"
5.
LOANS TO MEMBER BANKS:
a.
What i s the p o l i c y with respect t o discounts by reserve
banks of notes and b i l l s secured by commodities;
margin required.
Rec ommendat i on:
In view of the statements made, i t seems to be the opinion of
the meeting that special conditions e x i s t in only one or two of the
Federal reserve d i s t r i c t s , and they had. best be dealt with d i r e c t l y
by the Federal Reserve Board with the banks in those d i s t r i c t s ,
rather than be made the subject of a recommendation by t h i s meeting.
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I
.
b. The attention of the Board has been c a l l e d to what has been
termed "extraordinary l i b e r a l i t y " of loans to small member banks.The
margin between the reserve bank discount rate and the r a t e charged
to customers of rediscounting banks, tends to encourage easy c r e d i t .
Recommendation:
I t i s the sense tif the meeting that during the period when the
Government i s making Such heavy demand Upon the banks, i t i s impossible
to r e s t r i c t the l i n e s to individual bortowers, as would otherwise be
the case, and individual inagiry and remonstrance as a general practice
i s checking the tendency on the part of member banks to profiteer*.
The development of the special department of examination in the
reserve banks has provided f a c i l i t i e s f o r making not only special
c r e d i t investigations in cases where needed* but examinations of member
banks themselves, with a view to checking up their condition and improving their banking p r a c t i c e .
In general, the examining board f o r the reserve banks cooperates
with the examiners of the State Banking Departments.
6. CREDIT STATEMENTS.
a. Extent to which reliance i s placed:upon the standing and cond i t i o n of an endorsing bank and i t s c e r t i f i c a t e a s to e l i g i b i l i t y of
notes submitted for rediscount, rather than determination as to e l i g i b i l i t y as well as d e s i r a b i l i t y , through analysis of financial s t a t e ment of the payers of the notes rediscounted.
Discussion of t h i s topic d i s c l o s e s the f a c t that a l l the reserve
banks require financial statements for a l l commercial paper discounted
where the regulations of the Board require i t . In the case of some of
the reserve banks, statements are required where the amount of the note
taken i s considerably l e s s than the maximum required by regulations of
the Board. In general, a l l large l i n e s of paper taken through the member banks are considered not only upon the standing and condition of
the endorsing bank, but also the value and quality of the paper discounted.
b. Corporations operating subsidiary companies; suggested requirement, that such companies furnish to reserve banks, separate f i n a n c i a l
statements of parent and a l l principal subsidiary cooperations as of the
same date.
Recommendation:
In the opinion of the meeting, i t i s desirable that separate f i nancial statements of parent and principal subsidiary corporations as
of the same date, be furnished.
?. EE-DISCOUNTS BETWEEN RESERVE BANKS.
At present when the reserve bank percentage against combined note
and deposit l i a b i l i t i e s i s reduced to about f o r t y per cent, b i l l s are
sold to or rediscounted with other Federal reserve banks. At present,,
the reserve percentage of a number of reserve banks i s i n excess of 6.5$.
I t has been suggested that the rediscounting point be r a i s e d from 40
to 45 per c e n t .
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x-1459
Recommendation:
I t was the unanimous view of the meeting that there should be no
change in the present p r a c t i c e .
8. CREDIT BAROMETRICS.
Consideration of the suggestion made by A. Wall of Detroit, that
a Bureau of Barometrics be established by the Federal Reserve Board,
Would the b e n e f i t s warrant the expense?
Rec ommendat ion:
I t i s the unanimous b e l i e f of the meeting that the b e n e f i t s of
the employment of t h i s service would not warrant the expense involved.
9. RESERVE BANK BUILDINGS.
Need for cooperation and interchange of ideas in the development
of plans for the erection of new bank buildings, i n s t a l l a t i o n of vaults
and other equipment.
Rec ommendat i on:
After f u l l discussion, i t was the unanimous opinion of the Governors
of a l l the reserve banks, that i t would be desirable to adopt the
suggestion of the Federal Reserve Board, that an architect be employed
to act as a clearing house for information in regard to building plans
between a l l of the reserve banks, and to act as advisor to the Federal
Reserve Board i n giving approval of certain plans.
The meeting also favored the employment of Mr. Alexander B. Trowbridge, as recommended by the Board.
10. RESERVE BANK INSURANCE.
Central Insurance Agency:
I s i t desirable to e s t a b l i s h or appoint a central insurance
agency to represent a l l the Reserve Banks in placing
registered mail and other insurance? I t i s claimed
that t h i s plan w i l l have the advantage of uniformity
in p o l i c i e s and rates, and that better r e s u l t s w i l l be
obtained f o r the twelve banks acting in unison rather
than as twelve separate unitS"sat present.
Limited Self Insurance:
A Reserve bank has submitted to the Federal Reserve Board
f o r approval a plan f o r the readjustment of i t s f i d e l i t y insurance, which contemplates:
a. Primary individual bonds.
b. Excess insurance, bankers* blanket policy,and
Lloyd's blanket p o l i c y to be continued u n t i l
accumulation in "self insurance fund" would
j u s t i f y the discontinuance of such excess insurance.
c. The s e t t i n g aside annually out of earnings of a
stated sum over and above c o s t of primary bonds
and excess insurance while the l a t t e r i s maintained, to c o n s t i t u t e an insurance reserve fund.
I t has been suggested that i f t h i s plan can l e g a l l y
be adopted, i t might be w e l l to have that or a
similar plan in other Federal Reserve banks, or
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X-1U59
have the twelve banks j o i n i n e s t a b l i s h i n g one"Insurance
reserve fund."
<
(Mr. Kenzel was appointed Chairman of the Committee with
authority to s e l e c t representatives from two other reserve banks
to a c t with him as a committee in making recommendations covering
uniform p r a c t i c e of r e s e r v e bank insurance^ which recommendations
are to be submitted i n w r i t i n g to the reserve banks at a l a t e r date.
Committee was a l s o authorized to make a study of pension fund p l a n s . )
11. BRANCHES* OF FEDERAL EE SERVE BANKS.
su The extent of service rendered to member banks.
b. The value of such service to member banks of the
d i s t r i c t in which the branch i s located.
Recommendation:
In the opinion of the meeting the s e r v i c e s rendered to member
banks f o r the establishment of branches, i n furnishing prompt supplies
of currency and c o l l e c t i o n f a c i l i t i e s , are of s u f f i c i e n t importance
to j u s t i f y the establishment of a system of branches, even though the
expense involved i s considerable, and frequently without regard to
the earnings of the branches from discount operations*
Geographical conditions l a r g e l y determine the extent of the
t r a n s i t f a c i l i t i e s in each branch. The extent to which branches are
permitted to grant c r e d i t s to member banks must be governed by l o c a l ,
geographical, and other conditions, which vary so greatly i n the
d i f f e r e n t d i s t r i c t s that no general formula can be stated to govern
that type of business.
c. The extent and value of service rendered by the branch
to other Federal reserve banks.
Recommendati on:
The extent and value of service which may be rendered by branches
to other Federal reserve banks l e confined almost e n t i r e l y to the
e f f e c t i n g of prompt c o l l e c t i o n s and transfers, which w i l l be developed
with experience,
d. Cost of operating branches.
Recommendation:
In the opinion of the meeting, the value of the branch should not
be measured by i t s earnings or by c o s t of operation, but by the value
and e x t e n t of the s e r v i c e s which i t i s capable of rendering to the
member banks, to the parent bank , and to the other reserve banks.
In the c a s e s of branches e s t a b l i s h e d for the purpose of supplying
currency and t r a n s i t f a c i l i t i e s , w i t h discounts conducted i n the head
o f f i c e , no earnings can be shown, and the only measure of the value
of the branch would be the volume and
value of the s e r v i c e s rendered.
To a considerable e x t e n t , the added c o s t of the branch represents a
reduction i n the c o s t of operating the main bank.
e. Branches with l i m i t e d functions,
f . Use of agencies instead of branches*
-10-
'
X-1459.
Recommendation:
•
I t i s the opinion of the conference that we have not s u f f i c i e n t
experience at this time to enable us at this time to form a d e f i n i t e
opinion upon this very important question. When we have further experience and have learned what the developments of the agency at
Savannah are from Governor Wellborn, and possibly from other Governors,
in d i s t r i c t s where agencies have been established, we w i l l probably
be in a position to make recommendations.
12. CONCENTRATION OF GOLD AT FEDERAL RESERVE BANKS.
a. P o s s i b i l i t y of further increase in gold holdings*
b. Demand for Sold.
1. In exchange for Federal reserve notes
. received at Federal reserve banks.
2. For other purposes.
Recommendation:
1. That the Federal Reserve Board send s p e c i f i c directions to
each Reserve Bank, c a l l i n g attention to the importance
that no obstacle shall be offered at any reserve bank or i t s
branches to the immediate redemption of Federal reserve
notes in gold.
2. That each reserve bank be requested to keep a careful record
of a l l receipts of gold and the sources from which the gold
comes, and of a l l payments of gold and the purposes for
which the payment i s made, whether for redemption, for
manufacturing purposes, for export, for reserves of banks,
or otherwise; that this information be assembled in a report
to be rendered monthly to the Federal Reserve Board in such
form that the actual gold movement through the reserve system
can be calculated and made a matter of record.
13- INTER-DISTRICT COLLECTION SYSTEM.
a. Suggestions as to improvement in present f a c i l i t i e s , so that
reserve banks may render increased or better service to
member banks.
Recommendation:
The meeting recognized that the principal improvement in present
f a c i l i t i e s w i l l consist in an increase in the number of banks remitting at
par, and that aggressive steps, should be taken, a f t e r the next Liberty
Loan, with the object of putting a l l non-member banks on the par l i s t .
b. Desirability of harmonizing present i n t e r - d i s t r i c t time
schedules, at l e a s t between Federal Reserve c i t i e s .
Rec ommendati on:
A committee of transit experts i s now engaged in the study of time
schedules, with the object, among others, of harmonizing present interd i s t r i c t time schedules, and they expect shortly to submit a report.
The committee of transit experts w i l l include in their report
-11-
4
X-1459
various proposals for the reduction of f l o a t carried by Federal Reserve
banks, including r e v i s i o n s of i n t r a - d i s t r i c t and i n t e r - d i s t r i c t schedules
c . Reduction in f l o a t carried by reserve banks.
Recommendation:
I t i s recommended that the Federal Reserve Beard secure from the
Treasury Department such rulings as w i l l reduce the f l o a t now arising
by reason of immediate credit for the various checks received on
deposit in Federal Reserve banks as the Government's f i s c a l agents.
d. Recommendation of Federal Advisory Council that items be
sent d i r e c t l y to c i t y or town in which they are payable*
Recommendation:
I t i s urgently recommended to the Federal lbserve Board that no
extention of the plan for direct sending of items be now undertaken
u n t i l the number of par points i s increased and u n t i l the mechanical
problems of the c o l l e c t i o n system are more f u l l y developed and the
system i s working smoothly.
In addition to the recommendation above mentioned, the attention
of the Board i s c a l l e d to the probability of the nenewal of an aggressive campaign, under the leadership of the smaller banks of the country,
to secure the restoration of exchange by ametidment to the Federal
Reserve Act.
14. LEASED WIRE SERVICE.
a. Probability that entire c o s t w i l l have to be assumed by
reserve banks after the Victory Loan campaign has besn
completed.
b. Suggestions as to improvements in present service.
(Governors McDougal and Fancher were appointed as a committee
to consider the matter of increasing e f f i c i e n c y , and a l l other
points in connection with the operation of the wires; also to
consider and report upon the subject of the use of codes.)
15. PENALTIES FOR DEFICIENCIES IN MEMBER BANK RESERVES.
D e s i r a b i l i t y of adoption of uniform method of
determining d e f i c i e n c i e s in reserves, and
assessing p e n a l t i e s .
(Governor Fancher offered a motion f o r a uniform method of
c a l c u l a t i n g reserves, which motion was duly seconded and carried.)
Recommendation:
After the above r e s o l u t i o n was adopted, i t was found that the
p r a c t i c e s , which vary in the d i f f e r e n t Federal Reserve D i s t r i c t s , cannot
be changed by agreement among the Governors, and i f uniformity i s to
be obtained i n the method of c a l c u l a t i n g d e f i c i e n c i e s in reserves, i t
w i l l be necessary to have i t adopted by a r e s o l u t i o n of the Federal
Reserve Board, the a l t e r n a t i v e being the continuance of methods which
are not uniform in the d i f f e r e n t d i s t r i c t s . The d i s c u s s i o n developed
that there are p e r s i s t e n t offenders against the reserve requirements
—12—
'
X-1U59
in some d i s t r i c t s , and. i t i s suggested that any rule which may be
developed for uniform method of c a l c u l a t i n g d e f i c i e n c i e s , provide
an exception in the case of these i n s t i t u t i o n s so that they may be
more severely dealt with.
16. FORM OF APPLICATION FOE EMPLOYMENT AT FEDERAL RESERVE BANKS.
Becommendat ion:
I t i s r e s p e c t f u l l y suggested that the Federal Reserve Board consider
whether a ruling should not be issued as to the form of blanks used by
applicants for p o s i t i o n s with Federal reserve banks, which would e l i minate the p o s s i b i l i t y of c r i t i c i s m a r i s i n g on account of some d i s crimination in matters of race or r e l i g i o n . I t i s a l s o suggested that
i t may be advisable, in the interest of the system, that employees of
Federal reserve banks should only be c i t i z e n s of the United States, or
those who have declared their intention of becoming c i t i z e n s .
17. NATIONAL BANK NOTES.
Suggestion of Federal Advisory Council that
reserve banks receive national bank notes
on deposit, and pay out in place of them
clean Federal reserve notes.
Recommendation:
Unanimously disapproved.
18. OFFICERS OF FEDERAL RESERVE BANKS ACTING ON COMMITTEES OF BANKING ASSOCIATIONS.
Re c ommenda t i on;
I t i s the unanimous view ofl the meeting that the recommendation
of the Governors, made i n 1917# that o f f i c e r s of reserve banks should
not serve on committees of banking associations, be followed out.
19. DIRECTORS AND OFFICERS OF F.R. BANKS - MENTION (F CONNECTION WITH FEDERAL
RESERVE BANK IN DEALING WITH PRIVATE ENTERPRISES IN WHICH THEY MAY BE
INTERESTED.
Recommendation:
I t i s the understanding of the conference that the Federal Reserve
Board has taken cognizance of the p o s s i b i l i t y of embarrassment arising
,
in t h i s matter, and the conference expresses i t s hearty endorsement of
the views entertained by the Federal Reserve Board.
20. PAR POINTS - CAMPAIGN FOR ADDITIONAL PAR POINTS.
(Covered i n recommendation submitted to Board on
Topic 13 )A.)
21. CHECKS AVAILABLE BUT NOT PAYABLE AT A FEDERAL RESERVE BANK.
Suggestion that clearing houses put on discretionary
l i s t s checks marked "The amount of t h i s check i s
immediately available without deduction, upon
presentation at the Federal Reserve Bank of
."
Recommendation:
The meeting recommends that the p r a c t i c e described under t h i s
heading should, i f p o s s i b l e , be checked and u l t i m a t e l y eliminated,
X-1459
^2, SUGCESTED AMENDMENT TO SECTION 5202 OF REVISED STATUTES.
Suggestion by Federal Advisory Council removing l i m i t
of b i l l s that a bank might negotiate by endorsement*
Be c omrrenda t i on:
Advisory Council's recommendation approved.
23. FAILURE TO OBTAIN DUPLICATE CHECKS TO REPLACE CHECKS DEPOSITED BY THE
COLLECTOR OF INTERNAL REVENUE, AND LOSf IN THE MAILS.
Recommendation:
The conference unanimously recommends to the Federal Reserve
Board that the Board send a circular l e t t e r to a l l Federal Reserve
Banks requesting a report as to the extent of the d i f f i c u l t i e s and
of possible l o s s e s which they have encountered by reason of l o s s e s
in the mails of checks deposited by the Internal Revenue Collectors
. of which duplicates cannot be obtained by reason of the f a i l u r e of
the c o l l e c t o r s of internal revenue to keep adequate records and
descriptions of checks so deposited. I t i s further recommended that upon
receipt of these reports» the Federal Beserve Board undertake in
behalf of the Federal reserve banks to secure siich r e l i e f ill this
matter as the treasury Department i s able to a f f o r d .
24. PENALTIES FDR DEFICIENCIES IN RESERVE. (On the program suggested by the BoardTopic 15.)
Recommendation;
None.
(Topic discussed under Topic No. 1 5 . )
25. UNIFORM TITLE FOR BOND DEPARTMENTS.
Recommendation:
None.
26. ADVISABILITY OF SECURING AN AMENDMENT TO THE POSTAL LAWS, INCREASING THE WEIGHT
LIMIT ON FRANKED MAIL MATTER.
Recommendation:
None.
27. OUR GENERAL CAMPAIGN FOR ADDITIONAL PAR POINTS, AND IN CONNECTION WITH THIS,
OUR CAMPAIGN FOR INCREASING STATE BANK MEMBERSHIP.
Recommendation:
None.
(Covered i n the d i s c u s s i o n under topic No. 13 •)
26. HOW CAN EXCESSIVE BORROWING ON THE PART OF INDIVIDUAL BANKS BE BEST REGULATED.
Recommendation:
None.
(Covered in discussion under topic 5-B.)
29. EXCHANGE CHARGED BY NEW YORK BANKS ON FEDERAL RESERVE EXCHANGE DRAFTSRecommendation:
I t i s recommended that Federal Reserve Exchange Drafts be placed
on the par l i s t s of a l l Federal reserve banks.
30. UNIFORM FORM OF ENDORSEMENT STAMPS USED BY FEDERAL RESERVE BANKS AND THEIR
MEMBERS AUTHORIZED TO SEND ITEMS DIRECT.
•
Recommendation:
I t i s recommended, that the subject of uniform endorsement stanpe
be referred to the special committee of transit experts f o r investigat i o n and recommendation.
31, PRESENT METHOD OF RECOVERING FOR POSTAGE AND INSURANCE FOR SHIPMENTS BETWEEN
FEDERAL RESERVE BANKS.
RecOmmenidation:
I t i s recommended that this question be referred to the next
meeting of Auditors of Federal reserve banks.
32. REAL ESTATE AND BANK BUILDING.
(Board's topic No. 9 . )
Recommendation:
Subject discussed and recommendations made at the meeting o§
the Governors, on Thursday, March 20th.
33- DUTIES OF THE FEDERAL RESERVE AGENT, AND PROPER COORDINATION OF HISTORKWITH
THAT OF TEE GOVERNOR.Recommendation:
After discussion of the above topic, the conference requested the
Chairman to discuss this subject informally with Governor Harding.
34. FORMATION OF CREDIT DEPARTMENT AND THE EXTENT TO WHICH THE BANKS ARE JUSTIFIED
IN GETTING FIRST HAND INFORMATION REGARDING PAPER OFFERED FOR REDISCOUNT
(Topic discussed at an e a r l i e r session under heading
No. 6, credit statement.)
35. CALCULATION OF INTEREST;
Treasury Department pays on a 365 day b a s i s while a l l the
Federal reserve banks except those of New York and
Boston calculate i n t e r e s t and discount on a 360 day
b a s i s . Cannot uniformity be obtained in t h i s regard.
Recommendation:
I t i s recommended that discounts with Federal reserve banks and
between Federal reserve banks, be calculated on the b a s i s of 0365 days
a year, beginning July 1 s t , next.
36. NECESSITY FOR THE BANKS MAINTAINING AN AGENCY TO COUNT AND WITNESS THE
DESTRUCTION OF FEDERAL RESERVE BANK NOTESRecommendation:
I t i s suggested that the Federal Reserve Board ascertain from each
of the Federal reserve banks the total cost and the c o s t per thousand
of present f a c i l i t i e s , and the probability of an increase in the cost
for witnessing the destruction of Federal reserve bank notes, at the
Treasury Department i n Washington.
I t i s also r e s p e c t f u l l y suggested that the plan recommended by
Mr. Emerson to Mr* Broderick be examined with a view of determining
whether that, or some other plan, cannot be adopted, which w i l l r e l i e v e
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i
x-1459
the banks of this expense, or at l e a s t reduce i t .
Governor McDougal:
I would l i k e to bring up the subject of forwarding to
Washington mutilated Federal Heserve notes. Under the present
practice, such notes are forwarded to Washington uncancelled^
registered mail, insured or expressed, and the cost of such
shipment charged to the Federal reserve bank issuing the notes.
.This cost would be very materially reduced i f we could be
permitted to ship mutilated Federal reserve notes of other
Federal reserve banks to Washington in the same manner as we
do our own.
During 1918 a saving of $5,993* 53 could have been made on
Federal reserve notes shipped to Washington by us for other
Federal reserve banks, and on our Federal reserve notes shipped
by them. From this you can see that the saving for the twelve
d i s t r i c t s would be well worth while.
. Governor Strong:
I t i s suggested that the Federal Reserve Board give consideration to the adoption of some plan by which Federal reserve
banks may be permitted to ship reserve notes of other Federal
reserve banks, u n f i t for circulation, cancelled and s p l i t , as
they do with their own notes.
e x - o f f i c i o
w . P. g . H A R D I N G , g o v e r n o r
m e m b e r s
ALBERT
STRAUSS, v i c e g o v e r n o r
ADOLPH C. MILLER
CARTER <5LA^3
s e c r e t a r y of t h e t r e a s u r y
C H A R L E S S. H A M L I N
chairman
JOHN SKELTON WILLIAMS
C o m p t r o l l e r of t h e C u r r e n c y
J. a . BRODER1CK, s e c r e t a r y
F
E
D
E
R
A
L
R
E
S
E
R
V
E
B
O
A
R
D
W. t .
CHAPMAN, a s s i s t a n t s e c r e t a r y
W . M. IMLAY, f i s c a l a g e n t
a d d r e s s
WASHINGTON
SUBJECT:
r e p l y
F E D E R A L
t o
RESERVE
Comments and rulings by the Federal Reserve Board
with respect t o recommendations made by Governors
of Federal Reserve Banks at conference with Federal Reserve Board, March 2 0 - 2 2 * 1919•
X-1463
Dear Sir;
A stenographic copy of the minutes of the conference held on
March 20th-22nd has been sent to the Governor of each Reserve Bank,
and upon request a copy of the minutes of the meetings held on lVkrch
20th was sent to the Advisory Council member f o r each Federal Reserve
district.
There i s enclosed herewith f o r reference, a l i s t of topics
discussed, with the recommendations submitted by the Governors to the
Board ( s t e n c i l X-1459)•
The Board has c a r e f u l l y considered the recommendations made
by the Governors and with respect to certain of the recommendations the
Board o f f e r s special comments and in a few instances rulings have been
made as hereafter indicated.
For convenience, the topics referred to are numbered in same
order in which they were discussed at the conference, and are a l s o
l i s t e d in the same order in the mimeograph (X~l459) enclosed.
TOPIC 2 .
BANKERS1 ACCEPTANCES:
(d) Sales of acceptances to other Reserve Banks
with or without Reserve Bank endorsement.
Recommendation:
It i s recommended that where voluntary open market
purchases are made by one Reserve Bank through another
Reserve Bank, no endorsement be expected or required.
Where s a l e s of b i l l s by one Reserve Bank to another
Reserve Bank are made by mutual arrangement, endorsorient
may be required by the purchasing Reserve Bank and sush
transactions should promptly be reported t o the Federal
BOARD
X-I463
- 2 -
Reserve Board. That where rediscounts are arranged
through the Reserve Board, at rates f i x e d by the
Board, endorsements should always be given by the
borrowing bank.
The Board approves the recommendation with the exception
that i t considers i t e s s e n t i a l that a l l i n t e r d i s t r i c t s a l e s of bankarrangement s
ers ' acceptances be made through, or under participation/approved by,
the Board, in order that i t may be kept f u l l y informed of the loan
and reserve conditions of a l l Federal Reserve Banks.
This i s the
practice at present.
Special Recommendation:
That the Federal Reserve Banks be permitted,
as l o c a l circumstances warrant, to e s t a b l i s h free
luncheon f a c i l i t i e s f o r their employees.
The Board i s not prepared to approve such expenditures at
t h i s time, as i t i s believed that i t has not the power to permit appropriations for this purpose.
It i s considered proper, however,
that the Federal Reserve Banks be permitted to e s t a b l i s h f a c i l i t i e s
and serve luncheons to t h e i r employees at a price s u f f i c i e n t to cover
the c o s t .
In the new building plans, i f p o s s i b l e , i t w i l l be well
to provide f a c i l i t i e s for t h i s purpose.
TOPIC 9 .
RESERVE BANK BUILDINGS:
Need f o r cooperation and interchange of ideas
f o r the development of the plans for the erection
of new bank buildings, i n s t a l l a t i o n of vaults and
other equipment.
Recommendation:
After f u l l ,discussion i t was the unanimous
opinion of the Governors of a l l the Reserve Banks
that i t would be desirable to adopt the suggestion
of the Federal Reserve Board that an a r c h i t e c t be employed
-3-
X-I463
to act as a clearing house for information in regard,
to building plans between a l l the Reserve Banks and
to act as advisor to the Federal Reserve Board in
giving approval of certain p l a n s .
Comment„by the Board;
On April 1st the Board advised the Federal Reserve Banks of the appointment of Mr. Alexander BTrowbridge as Consulting Architect of the Bo&M, and
the banks have been furnished with an outline of the
work of h i s department (see Stencil X~l453)•
TOPIC 10.
RESERVE BANK INSURANCE:
Mr. Kenzel, of the Federal Reserve Bank of New
York, was appointed Chairman of a committee with authori t y to s e l e c t representatives from two other Reserve
Banks, to act with him as a committee to draw up recommendations to be submitted to the Reserve Banks with a
view to establishing uniform practice in Reserve Bank
insurance. The committee was also authorized to make
a study of the pension fvad plans.
surance",
The Board approves the principle of Reserve iBank "self in
TOPIC 12,
CONCENTRATION OF GOLD AT FEDERAL RESERVE BANKS
Recoranendati on:
That the Federal Reserve Board send s p e c i f i c d i rections t o each Reserve Bank c a l l i n g a t t e n t i o n to
the importance that no obstacle shall be offered at
any Reserve Bank or i t s branches to the immediate
redemption of Federal Reserve notes in gold.
That each Reserve Bank be requested t o keep a
careful record of a l l receipts of gold and the sources
from which the gold comes, and of a l l payments of gold
and the purposes f o r which the payment i s made, whether
for redemption, for manufacturing purposes, for export,
f o r reserves of banks, or otherwise, that t h i s i n f o r mation be assembled in a report to be rendered monthly
t o the Federal Reserve Board in such form that the a c t ual gold movement through the Reserve System can be
calculated and made a matter of record.
The Board recognizes the f a c t that through the constant ef
f o r t s of the o f f i c e r s of the Federal Reserve Banks e x c e l l e n t r e s u l t s
have been accomplished in accumulating gold in the Federal Reserve
—
Banks.
X
-
"
X
4:63
According to the figures compiled, by the Division of-Reports
and S t a t i s t i c s , the gold holdings of the System have shown a steady
increase.
However, in the desire to retain the gold, the Reserve
Banks must not lose sight of the f a c t that Federal Reserve notes are
redeemable in gold or lawful money at Federal Reserve Banks and in
gold at the o f f i c e of the Treasurer of the United States at Washington>
It i s not expected that, as long as the gold embargo i s in
e f f e c t , Federal Reserve notes w i l l be presented f o r redemption in
any considerable volume, since the gold so obtained could be exported from the country only under license issued by the Federal Reserve
Board.
The presumption would, therefore, be that redemption was
asked for in order to obtain gold for hoarding.
It i s , nevertheless,
the opinion of the Board that no obstacles should bB put in the way
of immediate redemption in gold of Federal Reserve notes at any Federal Reserve Bank or i t s branches, unless there i s good reason to
believe that a use incompatible with the public interest i s to be
made of the gold thus obtained.
At the present time the Board maintains a weekly record of
gold receipts and disbursements of the Federal Reserve Banks on Form
X—1053» which data are received Saturday morning by wire as of the
close of business Friday.
The Board's S t a t i s t i c a l Division i s pre-
paring a new blank which w i l l embody the suggestions made by the
Governors,
TOPIC 13-
INTER-DISTRICT COLLECTION SYSTEM:
(a) Suggestions as to improvement in present
f a c i l i t i e s so that Reserve Banks may render increased or b e t t e r service to member banks.
_5-
X-1463
Recommendation:
The meeting recognized that the principal improvement in present f a c i l i t i e s w i l l consist in an increase
in the number of banks remitting at par, and that aggressive steps should be taken a f t e r the next Liberty
Loan with the object of putting a l l non-qpembei: banks
on the par l i s t .
The Board i s desirous of increasing present i n t e r - d i s t r i c t
c o l l e c t i o n f a c i l i t i e s at Reserve Banks and urges that an aggressive
campaign be waged at Reserve Banks for the addition of new par points
up to the time of the opening of the Victory Loan Campaign, when every
e f f o r t should be directed to the successful f l o t a t i o n of t h i s Loan.,
After the completion of the Loan Campaign e f f o r t s should be renewed«
The Board i s of the opinion that the best results are obtained in securing new par points in those d i s t r i c t s where the Campaign i s conducted under the leadership of an o f f i c e r of the bank well versed in
transit matters.
(c)
Reduction in f l o a t carried by Reserve Banks.
Rdcommendation:
It i s recommended that the Federal Reserve Board
secure from the Treasury Department such rulings as
w i l l reduce the f l o a t now arising by reason of immedi a t e credit f o r the various checks received on deposit
in Federal Reserve Banks as the Government 's f i s c a l
agents.
Representatives of the Board have discussed with the off i c i a l s of the Treasury Department the question of f l o a t carried by
the Reserve Banks arising from the f a c t that immediate credit i s given
for checks and d r a f t s received in connection with the bond and other
f i s c a l agency transactions of the Government, and as soon as d e f i n i t e
X-1463
conclusions are reached the Board w i l l advise the Reserve BanksTOPIC 15.
PENALTIES FOE DEFICIENCIES IN MEMBER BANK RESERVES
D e s i r a b i l i t y of adopting a uniform method of
determining d e f i c i e n c i e s in reserve and assessing
penalties.
Recommendation:
Governor Faneher offered a motion to have a
uniform method of calculating reserves, which mot i o n having duly seconded was carried.
After the above motion was adopted, i t was
found that the practices which vary i n the d i f f e r ent Reserve D i s t r i c t s can not be changed by agreement
among the Governors, and if uniformity i s to be obtained i n the method of calculating d e f i c i e n c i e s i n
reserves i t w i l l be necessary to have i t adopted by a
resolution of the Federal Reserve Board, the alternat i v e being the continuance of methods which are not
uniform in the d i f f e r e n t d i s t r i c t s - The discussion
developed that there are persistent offenders against
the reserve requirements in some d i s t r i c t s , and i t i s
suggested that any rule, which may be developed f o r a
uniform method of calculating d e f i c i e n c i e s , provide
an exception in the case of these i n s t i t u t i o n s , so
that they may be more severely dealt with.
The Board concurs in the above recommendations and with
the view of insuring uniformity in the method of determining def i c i e n c i e s in reserves and assessing p e n a l t i e s , requests that the
following rule be adopted, e f f e c t i v e July 1 s t :
In the case of member banks in reserve and central
reserve c i t i e s , d e f i c i e n c i e s in reserves should be computed on the b a s i s of average d a i l y net deposit balances
covering a weekly period, and i n the case of country
banks, that d e f i c i e n c i e s in reserves should be computed
on the b a s i s of average daily net deposit balances covering a semi-monthly period.
In the case of banks in reserve and central reserve
c i t i e s , the Reserve Banks have the option of requiring
member banks t o render a report weekly showing the d a i l y
net deposits against which reserve i s required t o be maintained, or to render weekly a report showing the average
X-1463
-7-
net deposit balances against which reserve i s required. to be maintained. In the case of the country hanks
the Reserve Banks have the option of requiring a report
t o be rendered semi-monthly, showing the d a i l y net dep o s i t s against which reserve i s required to be maintained, or a report showing the average net deposit
balances against which reserve i s required t o be maintained. If the present practice at any Reserve Bank
i s more stringent than that suggested by the Board, i t
i s optional with the Reserve Bank whether to continue
i t s present rule or adopt the plan suggested by the
Board,
TOPIC l b ,
FORM OF APPLICATION FOR EMPLOYMENT:
In connection with the recommendation made by the Governors
as to form of application f o r employment of Federal Reserve Banks, i t
i s suggested that in the future a l l reference t o r e l i g i o n or country
of b i r t h be omitted from the application blank.
This i s in accord
with the present rules of the Civil Service Commission.
The Board would be pleased to be advised of the number of employees at each Federal Reserve Bank who are not c i t i z e n s of the United
States or who have not taken out f i r s t c i t i z e n s h i p papers.
TOPIC 17-
NATIONAL BANK NOTES;
Suggestion of Federal Advisory Council that the Reserve Banks receive National Bank notes on deposit and
pay out i n place of them clean Federal Reserve n o t e s .
Recommendation:
Disapproved.
The Board considers that i t should be l e f t t o the d i s c r e t i o n
of the Reserve Bank whether i t desires t o receive notes of National Banks
on deposit and pay out in place of them clean Federal Reserve notes, but
suggests that a Reserve Bank should not give immediate credit f o r u n f i t
National Bank notes deposited.
l e c t i o n items only.
Such notes should be received as c o l -
X-I463
TOPIC 23-
FAILURE TO OBTAIN DUPLICATE CHECKS TO REPLACE
CHECKS DEPOSITED BY THE COLLECTOR OF INTERNAL
REVENUE AND LOST IN THE MAILS.
The conference unanimously recommends t o the
Federal Reserve Board that the Board send a c i r c u l a r
l e t t e r to a l l Federal Reserve Banks requesting a report as to the extent of the d i f f i c u l t i e s and of poss i b l e l o s s e s which they have encountered by reason of
l o s s e s i n the mails of checks deposited by Internal
Revenue Collectors, of which duplicates can not be
obtained, by reason of the f a i l u r e of the Collectors
of Internal Revenue to keep adequate records and descriptions of checks so deposited. It i s further
recommended that upon receipt of these report9 the
Federal Reserve Board undertake, in behalf of the
Federal Reserve Banks, to secure such r e l i e f in t h i s
matter as the Treasury Department i s able to a f f o r d .
The Federal Reserve Banks are requested to furnish to the
Board as soon as convenient a report of l o s s e s which have been sustained by reason of l o s s e s i n the mails of checks deposited by Internal Revenue Collectors which have been sent out f o r c o l l e c t i o n ,
and of which duplicates could not be obtained by reason of the f a i l ure of the Collectors of Internal Revenue t o keep adequate records
and descriptions of checks deposited with Reserve Banks; a l s o , a s t a t e ment as to the extent of d i f f i c u l t i e s in connection with deposits received from Collectors of Internal Revenue in your d i s t r i c t .
Upon
receipt of t h i s information from the various Banks, the Board w i l l
discuss the question with the Treasury Department.
TOPIC 35.
CALCUIATION OF INTEREST:
Treasury Department pays on a 365 day b a s i s , while
a l l the Federal Reserve Banks, except those of New York
and Boston, calculate i n t e r e s t and discount on a 360
day b a s i s . Can not uniformity be obtained in t h i s regard?
-9-
X-I4-63
Rec ommendat ion:
It i s recommended that discounts with Federal Reserve Banks and between Federal Reserve Banks be calculated on the b a s i s of 3&5 days a year beginning July
1st next.
The Board concurs in the recommendation of the Governors and
requests that e f f e c t i v e July 1, 1919$ the computations of i n t e r e s t or
discount on loans to member banks or Federal Reserve Banks be made on
a 365 day b a s i s .
It i s believed desirable that t h i s method be con-
tinued as long as the b i l l holdings of the Reserve Banks continue to
be based l a r g e l y on Government paper, i n t e r e s t on which i s figured on
a 365 day b a s i s .
TOPIC 36.
NECESSITY FOR THE BANKS MAINTAINING AN AGENCY
TO COUNT AND WITNESS THE DESTRUCTION OF FEDERAL
RESERVE BANK NOTES.
Recommendation:
It i s suggested that the Federal Reserve Board asc e r t a i n from each of the Federal Reserve Banks the t o t a l
cost and the cost per thousand of present f a c i l i t i e s ,
and a probable increase i n t h i s cost for witnessing the
destruction of Federal Reserve Bank notes at the Treasury
Department in Washington.
It i s a l s o r e s p e c t f u l l y suggested that the plan
recommended by Mr. Emerson to Mr. Broderick be examined
with a view of determining whether that or some other
plan can not be adopted which w i l l r e l i e v e the banks of
t h i s expense, or at l e a s t reduce i t .
The Board i s at the present time negotiating with the Treasury
Department with a view of eliminating "special count" made by Agents
cff the Federal Reserve Banks of mutilated Federal Reserve Bank notes
forwarded t o the Treasury Department f o r redemption and d e s t r u c t i o n .
X-1463
-*1.0w
As soon as s a t i s f a c t o r y arrangements have been completed, the Federal Re
serve Banks w i l l be advised.
Recommendation by Mr. McDougal:
It i s suggested that the Federal Reserve Board
give consideration to the adoption of some plan by which
Federal Reserve Banks may be permitted to ship reserve
notes of other Federal Reserve Banks, u n f i t for circul a t i o n , cancelled and s p l i t , as they do with t h e i r own
notes.
The
above
special suggestion by Governor McDougal i s covered
by Board's l e t t e r X-1*4-30, dated March l o t h , on the subject of "Cancell a t i o n of Unfit Federal Reserve Notes of Other than Issuing Bank Forwarded for Redemption".
The Boaid desires to express i t s appreciation of the consideration given to the topics suggested f o r discussion, as well as the
valuable suggestions made at the Conference.
Very truly yours,
Governor.
April 8, 1919.
r'')
•
FEDERAL
RESERVE
BOARD
WASHING'i'ON
..
Confirrration of Telegram
April 10,1919 ..
X-1467
Morss - Boston
Strong - New York
Passmore - Phil&delphia
Fancher - Cleveland
Peple - Richmond
Wellborn - Atlanta
McDougal - Chicago
Biggs - St.Louis
Wold - Minneapolis
Miller -Kansas City
Van Zandt - Dallas
SUBJECT; Gold,Fund Clearing- Closing Salt Lake Branch April 15,1919.
..
·~
~
r-'C.. _...._. f::,
Sa.l t Lake Branch closed Tuesdey April 15th holiday. Salt Lake
branch therefore will not participate in Gold Fund clearing Wednesday
April 16th. Please omit Salt Lake credits your daily code Labeg
Engrain wire for April 16th gold fund clearing. Your Labeg Engrained
wire for April 17th clearing should include Salt Lake credits as of
close of busin3ss April 15th ru1d 16th. Please advise branches and
acknowledge by wire.
BRODERICK .
•
....
(-., ··~- ?.._)
•
W. P. G. HARDING. GoVERNOR
ALBERT STRAUSS, VICE GOVERNOR
EX-OFFICIO MEMBERS
ADOLPH C. MILLER
CHARLES S. HAMLIN
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRIIAM
J. A. BRODERICK, SECRETARY
FEDERAL RESERVE BOARD
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
W. T. CHAPMAN, ASSISTANT SECRETARY
W. M. IMLAY, FISCAl AGENT
ADDRESS REPLY TO
WASHINGTON
FEDERAL RESERVE BOARD
•
.April
l5,19l9•
. X-lll69
Subject:
T:rust Powr;.rs of Natior..al Banks.
Dear Sir:
In
compliar~e
with your recent request I send you
•
Trust Powers of National Ila.n.k.a.
Very truly youJ.·s,
W.T .. CHAPMAN ..
•
.Assistant Secretary ..
(
·~:
..L
.i£.
W. P. G. HARDING, GOVERNOR
EX~OFFICIO
ALBERT
MEMBERS
STRAUSS, VICE GOVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
CARTER Gl..ASS
SECRETARY OF THE TREASURY
CHAIRMAN
FEDERAL RESERVE BOARD
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENcY
J. A. BRODERICK, SECRETARY
W. T. CHAPMAN. ASSISTANT SECRETARY
W. M. IMLAY. FISCAL AGENT
ADDRESS REPLY TO
WASHINGTON
FEDERAL RESERVE BOARD
•
April 10,1919 ..
X-1470
Subject!
Trust Powers of National Banks$
Regulation F, Series of 1919~
Dear Sir:
-
I am handing you, herevnth, pageproof of Regulation
F, Series 1919, relating to the exercise of trust powers by·
national banks. This regulation is now in the hands of the
printer and will be released April 15th.
Yours very truly,
-
Secretary ..
Enclosure ...
•
FEDERAL
RESERVE
BOARD
WASHINGTOn
-
Confirmation of Telegram
'
April 11,1919.
X-11·!·71
Morss, Boston
Strang. New York
Passmore, Phil~delphi~
F~ncher,
SUBJECT:
Clevel~d
Pep le , Richmond
McDougal, Chic;£.go
Big-gs, St.Louis
WoJd 9 Minneapolis
1\fJiller, Ka.ns~.s Cit~,
Van .ZCW,dt ~ Da 2.1a.s
Lynch,Sa.nFrancisco
Gold Fund Clearing: Clostng New Orleans Branch April 18,1919,
New Orleans br~nch closed lt'd.day April 18th holiday. New
Orleans branch therefore wilL no:~ participate in gold fund clearing
Saturday April 19th. PJ ea8e omit. New Orleans credits your daily
code Labeg Engulfed wire for April 19th gold fund clearing. Your
L::l.beg Engulfing wire fer· April 21st clearing should include New
Orleans credits as of close of business April 18th ~d 19th. Please
advise bronches ~nd a.c}:nowledge by wire~
BRODERICK.
-
-
W. P. G. HARDING, GOVERNOR
ALBERT STRAUSS, VICE GOVERNOR
ADOLPH C. MILLER
EX-OFFICIO MEMBERS
CARTER GLASS
CHARLES S. HAMLIN
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROllER OF THE CURRENCY
J. A. BRODERICK, SECRETARY
W. T. CHAPMAN, ASSISTANT SECRETARY
W. M. IMLAY, FISCAL AGENT
FEDERAL RESERVE BOARD
ADDRESS REPLY TO
WASHINGTON
FEDERAL RESERVE BOARD
-
X-:ik473
FEDEB.cl.L RESERVE BOaRD BULLETIN FOR THE WEEK
~~DING APRIL 11, 1919.
.ADMITTEil TO THE FEDERAL RESERVE SYSTEM:
-
Franklin county Trust Co.,
Greenfield, Mass.
waltham Trust Company,
Vialtham, Mass.
The Fidelity TrusLCompany of
Buffalo, N. Y.
The Shadyside Bank,
Shadyside, Ohio.
The peoples Bank,
New Bern, N. c.
State Bank of Reform,
Reform, Ala.
Bank of Tennessee,
Nashville, Tenn.
Farmers State Bank,
Rice~ Texas.
surplus
~200,000
~100,000
~2,721,760
200,000
100,000
4,891,089
1,0.00,000
1,000,000
19,026,685
35,000
3,900
2()6 ,639
100,000
50,000
1,834,599
25,000
6,000
312,109
200,000
50,000
250,000
40,000
11,000
183,387
AUTHORIZED TO A.CCEFl' DRA.i:"TS AND BILLS OF
EXCHANGE UP TO 100 JER CENT OF CAFIT.>.L
aND SURPLUS:
-
National Newark & Essex Banking Company, Newark, N. J.
Mercantile Trust & Deposit Company, Nev; York, N. Y.
phoenix & Third National Bank, Lexington, Kentucky.
TOtal Resources
Capital
FEDERAL
RESERVE
:BOARD
WASHINGTON
-
Confirn:a.tion of Telegr.::B!.
April
X-1474
Curtiss, :Boston
Ja..y, New York
Austin, Philadelphia
Wills, Cleveland
SUBJECT:
-
Hardy, "Jiicbmond
lvlcCord, Atlanta
Hea.th, Chicago
Nbrtin, St.Louis
Rich, Minnea.pol:i.s
Ramsay, K:.l.ns,_j. s City
Ramsey, Da.. 11;1. s
Perrin, SanFrancisco
Regulation F. - Trust Powers National B:l.nks.
In pii.ge :t?roof of Regu:a tion F, forwa.rded to you and G<:>vernor
under date of .April 10, X-1470, in paragr<::~.ph A, under investrhent
of Trust Funds, elir.uillcl.te the ·,r.,rord unrestricted and in ~ragraph
:B, eliminate the word uncpalified. Corrected copies will be ~iled
Monday ..
BRODERICK.
secretary.
'
12 ,1919.
'
FEDERAL RESERVE BOARD
•
C•:.~
STATEMENT FOR THE PBESS.
' d :._;_)
For release in the morning
})apers Tuesday, April 15th, 1919.
-
The Federal Reserve Bulletin for April was sent to the printer today.
Its publication has been deferred for some days in order to furnish at the
earliest possible moment the official statement of the Secretary of the
Treasury, concerning the fifth, or Victory Liberty Loan.
A large part of
the 1'i~view of the M:onth, which, as usual, is the leading feature of the issue,
deals with the conditions of the loan and the banking situation, as affected
by it.
-
After quoting at length the statement of the Secretary of the Treasury,
in which- the terms of the new offering are stated, the Board discusses some of
its salient features as follows:
"So clearly are the terms and conditions of the new issue set forth
~n the Treasury statement" says
the Review "that colmlent w·:>uld seem to
be called for with
res~ect
the announcement.
Of these the most important is
only to one or two points in connection with
proba~ly
tha character
of the new offering as an issue of 'notes' rather than of 'bonds'.
-
The
new notes, undet the terms which have been fixed by the Secretary of the
Treasury, are
to run for not over four years. Practically, therefore. the
difference between the old and
the new issues is that while the
Go~ern-
ment must redeem or refund the notes after a given period it might or
might not, at its option, refund· the older issues.
There is evidently no
warrant whatever for the view that the notes are assentially a differant
)
kind of investment or are to be regarded in some special or peculiar way
'
as contrasted with ~.. the bonds.
obligations,
They are like the latter Government
while· the period of their life is 0ntirely sufficient · to
X-1476
..
·~
- r.
-
'
warrant the ordinary investor in putting his funds into them.
Indeedt
as ie well known, before the war one of the most important conservative
investments in the
mon~y
market of the United States was offered by a
series of short-term notes issued by railroads and public-service ·cor-
porations.
•
These had become a favorite investment with discriminating
buyers, their ITaturity being from one to five years. the preferred life
as a rule not exceeding two or three
y~ars.
When the investor purchases
a Government note with a :Dati.!Xity of four years he has the assurance that
the obligation thus purchased will possess greater stability of value
than could possibly be given by any
bo~d
whose maturity is long or
which is subject to the· possibility of redemption after a specified
period, but which has n0 definite
-
upon the maker or isst1.er· oi.'
su~h
o~
positive
bono.s.
cla~
for such redemption
Far from its being true, there-
fore, that the new 'not.es 1 are not well adapted to private subscription,
tbey are eminently so adayted.)
w~ile
the conditions under which they
are to be issued should bring them much close:':' to the r<::quirements
Liberty Loan$·"
The J_eview then describes tme financial si tuatio:-:. w;·uch has called
.
!
forth the new offering of notes, s~ing tnat this is so well known that only
.A
very general
descri~Jtion
of the cireum.stances attendant upon the
of the issue need be furnished.
...' ' '
:placing
.
~~
."
..
f:; :"\
~"''•;,.;.: ~.•-..:P \;~
'
-3-
'
X-1476
It is noted tMt
"the
Tre~sury ~s.
from the beginning of Decerrber
l~st
to the end
of the month of lV~rch issued :i.n certificates of indebtedness intended to
anticipate the proceeds of this flota-tion a.pproxirr.a.tely $Lt, 700,000,000,
..
~ter
deducting exchanges
~nd
redemptions. These obligations run five
months from their date of issue. At the present time the expenditures
of the Treasury are running e,t the rate of a.bout $1,300,000,000 per month,
a. figure decidedly less
t~n
the rate of
e~enditure
in January a.r.d about
the same a.s that which. was estdblished during February. The exact outlay
for ~arch ~s been $1,379,811,785~ Esti~ted expenditures up to the end
of this fiscal
y~r
will bring the outlay for the fiscal year a.s a whole
to about $18,000,000,000 or $19,000,000,000 of which
-..
expended up to the end of
~reb
s~~
there ha.d been
$15,164,224,227. Congress bas in the
meantime adopted legislation designed to afford new sources of revenue
from
ta.~tion,
the first installment of which wa.s turned into the Treasury
on lVurch 15. This legislation, however, will not suffice to meet the
re~irements
of the Depdrtment, as the figures already furnished amply show.
"
The Board a.lso con1l1lents upon the fact thi.t the new loan will a.ll be used,
as pointed out by the Secretary of the Treasury in his statement, for the retirement of outstanding certifica.tes of indebtedness, which h::l.ve been issued
-'
'
in anticipation of the sale of the notes. On this point the R-eview continues
as follows:
"The policy of issuing short-term certified.tes of indebtedness wa.s
resorted to by the
Tre~sury
Department
e~rly
in tbe wa.r a.t a time when the
needs of the Government were exceptionally urgent dnd unexpected in character. They h:i.ve served their purpose well
..
·,_
a.s& .me=~.ns
of supplying the
Treasury without de l.d.y with the funds of which it stood in need. In so doing,
however, the
certific~te
policy ha.s necessarily placed upon the ba.nks tbe
X-1476
necessl ty of bearing a co1'l.tlnu1ng ourden of war securities •.
This burden was,- of course, at a minimum inmediately after tha conelusion of a Libertr loan, inasmuch as at that time at least a considerable part of the new bonds had been sold to the public and the
certificates to that extent 'funded 1 •
In so far. of course, as.a
Liberty loan did not result in inducing the public a.CtUa.lly to take
O'f~r
and pay for the.-P new bonds. the banks instead of carrying the
short-term certificates of the Government now carried the paper at
whatever date maturing. which had been made by their clients for the
purpose of enabling themselves to subscribe for bonds.
Inasmuch as
the process of borrbwing by the Government against certificates has
almost invariably been begun within a very short time after the completion.
.
.I
of a Liberty Loan, there has been steadily in the hands of the 'banks a
vary~g
quantity of certificates which,has increased as the date of
flotation of each Liberty Loan drew nearer, thereafter to be technically
reduced by the pUblic through the process of borrowing at the banks for
the purpose of absorbing the bonds.
The necessity of general puvlic
subscription as an ~indispensable element in the process of finQ.llcing
th*s becomes apparent. 11
a
·..~
•
Atte.ntion ie then called to the necessi,tf of a~ing
distribution of the new notes, as
agai~st'
a wide popular
the condition in which they
might be left in the hands of the banks, and the statement of the
Secretary of the Treasury, issu.ed on March 12th, wherein broad~:
subecription to the notes was urged, is qu<>ted.
comments upon the necessity of taking'up the
possible, saying:
The
~otes
J,13Vi~w
then·
as generally as
X-1476
.,. 5 It
"It should be understood that under the plan of financing which
has been pursued by the c-overnment since the entry of the United States
into the war, the direct source from which public funds are drawn is the
commercial banks of the country.
Precisely this same situation exrsts
in the case of the fifth loan, and precisely the same obligation rests
•
•
I
upo.n the community to participate in the purchase and absorption of the
bonds needed for the
funding of the certificates.
During the
cont~-
a.nce of the war there wao, of course, the impetus growing out of the
belief that. subscriptions made
~n
this way were necessary for the pur-
pose of aiding in the immediate maintenance of the armies in the field.
The Goverilment still has strong military forces in Europe engaged in the
ilqlortant and necessary work of con.pleting our operations there..
-
The
obligations which have been met sincA the opening of the year and are
still to 'be liquidate<i are those which :cemain subsequent to the conelusion of the war, and which represent'the
obligations or indebtedness
'
incurred for the conduct of 'the struggle,
EsJent).a'tly, however~ the
reason why the public should subscribe i.cr enll.
·r..eJ.:C:J ,r-.P the secu.ri ties
offered in one of these great periodical loans is that cf self-interest.
If the obligations
•
alreac~¥
taken 'by the banks a.re not li.qlJ.idated, the
communit,y at.large will suffer from a continued inflation of banking
credit and from the high\ prices that a.re consequent upon this condition
of affairs.
Only one reme4.¥ for the situation now existing can be
applied - that, namely, of subscribing freely for the Government
obli~
ticms when offered and of paying for them out of the 'proceeds of saving.
or to be accumulated
either already SJ:.cumulated/f.rom time to time-Indeed, the urgency for ad.' herence to this policy is greater now than it was turing the war, inas, much as at that time there was strict oversight and control. on the part
of the Governmsnt over production, distribution, and.
-6-
X-1476
in a. measure, consumption, while dot present tm.t
ani properly been grea.tly rela.xed,or, in many
oversight las Il<;;i.tura.lly
br~ches
of business entirely
abolished. The responsibility of saving d.lld c cnserving resources thus renains
with those who are tbe recipients of current incomes, either fr<m investments
or from sa.J.a.ries and wages, in
per~ps
a. higher degree than
WI.$
previously
true.
"Neglect on the ,part of the public full¥
~ a.ppreci~e
dnd fully to
perform its duty in taking up a.n:l· :,;:aying for the forthcoming VictQry note
issue'\ says the aaview, "would b.:ive a. very :preJwiici..a.l effect
ing fOsition by
.o~.ggra.va.ting
\ij)On
04~-
the
the st;,J.te of credit exp.:a.nsion which cil.Q.red.dy
e~ieh,. 11
It is pointed out tba.t, under the Income Tax 11-w a.pprox.il:lately $1.,00l,COO)OOO
h:a,ve Urea.d.y been received
·•
•
<il-t
a. first installment. "This'! s;;a.ys tbe review,
"'is currently a.ecepted a.s equiv..:1.lent to about one-qaa.rter of the total
return ttl be expected, but is probably in excess of that figure. Whileprobably the la.rge majority of individ.ua.ls a.nd corporations will :px-efer to
take adv<:l.llt.il.ge of the inst<iillment methOd of ployment, there d.re not
who .;a.re following the custom of former
ye~rs
of
~ying
;.n lump
SU'III ..
4
few
Such
payments tend rel.;i.tivel;r. to reduce the pd.yn..ents to be received at subsecpent insta-llment periOds. There is no me..ms of estim..a.ting with d.Ccara.c1
the toW-1 return on the b.J.sis of the installment of Mit.rch 15, unless it
be
~ssumed
tha.t this inst.;a.llment is roughly equa-l to one-quarter of tbe
total, in which
C<l-~e
the gross
incOi.t:e
from the income, corpora..tion <Jnd
excess profits taxes will Qmount to not more thd-0
$4,ooo,ooo,ooo.n
"\]' 1'.""•7 6
...._ ...
The moreys received on March 15 served to
li~uidate
issues of
of indebtedness which were falling dne on that date and
sirr;ply to transfer a specified amn;:n·;; of ba."'lk credit
certificate~
consequentl~l·
f:;.~om
one gro1:p 5n
the community to another through the med5um, ih·s·:;, cf tax pa;yme:r:1ts to
the Government, and
ing certificates.
t~'len
liqo.Lidat.iug
pa;yment:;~
Inas much as practically
15 receipts were thus abs():::'beo. in
tax payment leaves the
'l'~ea::mry
f;et~li:ng
rr..ade tJ meet
$Soo.ooo,ooo
:it~ outst.Fmd-
of the March
mat.U'ing cla5.ms., the first·
in abcut the same posi tic:..1 as before,
so far as current payments are concerned, and it must therefo:..:·e dispose
of the same problem as heretofore in con..'l'lection with its progl"am of bc:r-and expendi t1.1re .. n
rowing
After thus discussing the situation as to the prospective fifth loan,
the B.eview takes u;p the questicn of railroad financing and points out that
this
~
matter is now definitely shifted to the War Finance Corporation
unde;;.• the plan already announced, whez·eby that organ..hation cooi?erated with
the Director General of Railways.
The War Finance Coi'}?oratio:o. bonxl offering
of April 2nd is descr.ibed and the lleview then t:uxns t.o t.he gene:ca,l
commeJ..~r-,iaJ
paper si tuat:i.on, saying that
"Renewed purchases of commercial paper by banlcs
are reported,
while not a few institutions are stated. to be ccnsideril:lg the best
methods to be followed in the use of t.he5.r flu:i.d fu.."lds when
Treasury certificates of
indebtod~ess
shall be
withdraWl~
short~-term
fromfue market.
The volume of funds available for private industrial an!ierprises has
seemed to be
reasm~bly
at a tolerably
high
satisfactory, although rates have been kept
level
as
a
result
of
the
X-1476
conservatism of ba.nkers who desi._.e to avoid the development of a."f!.:y
cramped position which might result from the demands of the Government ,during the progress of the fifth loa.n. While the Government is still
supporting the export trad.e in no inconsiderable degree, it is note'
worthy tba.t a substa.ntial :percentage of the new financi!lg now in
progress is intended for .,hP. pm:pose of facilii;ati:ng the
movemen·~
of
goods to foreign count:r.ies. These credits are ta.kir..g the fonn in many
instances of acceptances, wh:.le in others tbey a.re
simpl~
ordina-ry
advances designed to sustain business which is being developed for
export a.ccount."
The recent Belgian industrial credit is cited a.s an example of current peace
borrowing
for the
re~~ilitation
of European countries, whose productivity bas
been in\Paired by the war. On the question of foreigp exchange, the lleView, after
referring to the suspension of governmental control, or "pegging", says that
''These ch.mges in the sitw.tion of exchange rra.rk the beginning of a.
new period in international finance. The witho.ra.wa.l of Government support
in important brcnches of e.xchd.nge is equivd.lent to e. staterr.ent that hence-
forth the movement of commodities for private account between the United
States ar.d other countries must be fina.llced on some basis o-.her than th:l.t
of Government guaranty. In nornal tirr.es the decline of e.xchange occurs
in countries adversely affected by a.n unfavorable balance of tra.de.
X-1476
• •
- 9 The effect of such an adverse balance is to depress the rate of exchange and thus to raise the price of imported commodities in the country-;·
which is zuffering from a fall of exchange and a tendency is thus auto~atically
$et up to restrict further excessive buying by importers. Great
Britain has already found 1 t necessary to adopt strong measures to prevent further importations of commodities and the withdrawal of support
for sterling will tend to make these restrictions still further effective.
The same situation will probably exist
~ortations
with respect to
these conditions
axport trade.
ffiUSt
in an even more marked degree
from the united States into Italy.
All
necessarily exert an important effect upon our
Indeed, the extent to which we can now export to foreign
countries which have
lately been belligerent will depend upon their
ability to finance their own
needs~
or to 'obtain adequate assistance in
such financing from American banks and bankers.
Undoubtedly such assist-
ance will be forthcoming in considerable measure, but it can hardly be
expected that so tremendous a flow of goods out of the United States
will be maintained as has been true for a long tiwe past, giving us
during the years 1916-1918 a favorable meechandise balance of about
$9,000,000,000.
So far as it is thus maintained, the result will be
accomplished only through action on the part. of Americans looking to the
purpose of financing foreign bcyers in their purchases.
This, in other
words, means that the United States, t.n order to continue as a great ex~
porter, must also continue as a great investor in foreign countries, and
that to the extent she is able to do so her selling power
raspondingly developed and sustained.
~~ill
be cor-
It mu.st soon become a question,
therefore, through what agency and methods the American investor can best
be reached in entering the field of foreign investment.
.--.,
{
,,
~-.., ~.
_:;
,
.
- 10 .,..
"A special situation had developed early in March in connection
with French exchange.
The most striking fdature of these occurrences was
a rrarked decline in the international value of the franc - French francs
being
~oted
on March 18th at 5.80 per dollar, since when the quotation
has fallen 'below 6
vari~sly
francs~
The decline of the French franc has been
attributed to developments in connection with French Govern-
ment financing, to a del:l.berate relaxation of the control or "pegging"
'of French exchange by
the Government of France, and to other factors.
The truth of the situation is that our payments to France, both through
Government loans and through disbursements for the Arrey on the spot, have
greatl' fallen off.
New credits opened by the United States Treasury
to the French Government since the armistice and up to the end of March
amount to only $285.000,000, while the withdrawal of fully half of our
troops and their transfer back to the United States has correspondingly
decreased the amount expended for soldiers' pay and, expenses.
has not and will not for
so~e
France
time to come be in a posi ticr.a to export
effectively, and the destruction of much of her northern industrial
region, and the disorganization of other pr 0 iucing sections, as well
as the delay caased by the necessity of converting her war plants to
peace uses will necessarily retard ·
still further the development
of her power to ship salable goods.
France must therefore contemplate
for
a
considerable
time
to
come a situation
in
.
X-1476
- ll -
...
which she
~st
either purchase less abroad or rrust expect in the absence
of artificial control an unfavorable state of the exchanges.
The removal
of the restrictions by France upon the movement of gold would involve
the shipment aut of the country of a considerable volume of the metal
for the
purpo~e
of equalizing exchanges, e.nd this makes it less probable
that there will be such a restoration of the free movement of gold in
the immediate
nFrom the
f~ture.
stan~.poi~t
of the United States, the continuance of large
exports of grain and foodstuffs which have kept the record of January,
February, and t:he early part of JVf.arch fully up to that of any corresponding period in the past, means that foreign co~,tries will be under the
satisfactory
continued necensity cf -::.irr.Ung/m~w.lr. of settling with the United States
for gbods w!.i··:J:... tr.ey
aT{..
nr;t in
~osi ti.on
ing e.xports of t:1e :Tni ~ed Stute3.
to offset by means of correspond-
This suggests that the exchahge prob-
lem may become more pressir:g. Bot.h it <md the question of gold embargoes
will need to be considered at an eax·ly date.
Vecd:~i.rr3~
it is worth while
to note that the Treasury still has limited. powP.1.'s vi ext.enni,lg f:i.r.ancial
accommodation to foreign countries. 11
and
.. financial conditions during
The usUal review of business
in the
Bu~•.letin
M::~rch
is included
and, in addition, there is published a series of statements from
the Federal Reserve Banks with reference to the liquidation of war paper now in
their hands. Among the other features contained in the issue are a description
of current indexes of business conditions, and a translation of the law extending
the charter of the Bank of France, together with a review of its war operations-
X-Hn
WASHINGTON
April 8 , 1919.
The Governor,
Federal Reserve Board.
Sir:
By direction of the secretary, you are ad-;.rised that the :Jel,U:t:-t:nent has referred to the AUditor for the Treasurjr Department for settlement the account of
the Bureau of Engraving and Frinting for preparing Federal Reserve Notes during
the period March 1 to March 31, 1919, amounting to $203,344.00 as follows:
:E.
Boston .••.. ~···· 265,000
New York •••••••• 176,000
~ilade1phia ••••
86,000
Cleveland •••••••
2,000
Richmond •••••.••
zo ,000
Atlanta ••••••••• 281,000
Chicago ••••••••• 570,000
St. LOuis •••••• ~
94,000
Minneapolis •••••
zo ,000
Kansas City ••••• . 481,000
Dallas ••••••••••
26,000
San Francisco •••
5,000
2,046,000
.wL
l8t:1:,000
844,000
50,000
33,000
144,000
91,000
580,000
16,000
50,000
163,000
2J.,OOO
19,000
2~05,000
§!>50
$20
36,000
69,000
5,000
11,000
2,000
~8~000
5,000
40,000
,'4,000
42,000
3,000
2,000
2,000
5,000
32,000
275,000
11,000
J.lOO_
2·,·880
5,000
7,000
Total
485,000
'1 ,091,000
141,000
46,000
209 ;000
412.000
1,156,000
154,000
93,000
644,000
52,000
61,000
4,544,000
4,544,000 sheets at $44.75 ........................... ~203,344.00
The charges against the seYeral Federal Reserve Banks are as follows:
Sheets
Boston •.•.•••• 485,000
New York •••••• 1,09l,OOO
philade 1 phi a •• 141.000
Cleveland •••••
46,000
Richmond •••••• 209,000
atlanta •••.•••• 412,000
Chicago ......... 1 ,156,000
St. Louis ••••• 154,000
Minneapolis •••
93,000
Kansas City ••• 644,000
Dallas ••••••••
52,000
San Francisco •
61,000
4,544,000
Bureau a~£rOQriations
plate
Inc. comcom penprinting. Materials. Eensa t·i on.
Total
Ration.
:jp6 ,295. zo
$1,280.40 $21, 7G3.75
%>7,396.25
$6 '731.80
48,822.25
2,880.24
16,637.75
14,161.18
Hi,l"=3,C8
3~'2.24
1 ~ 957 ,(..8
6.:309. 7f
2,150.25
l;~W.18
638.48
121.44
2,058 .. 50
701.50
597•08
9,352.7F
3,187.25
2,'712.82
2,900.92
551.76
5,347.76
5,718.56
1,087.68
18,437 .oc
6,283,00
15,004.88
16,045.28
3,051.84
17,629.00
51' 7.31.0(.
1,998.92.
2,137 .. 52
406.56
6 ,891.!3('
2,348.50
4,161.'/f~
1,418.25
1,207.14
1,290.84
245.52
8,359.12
8,9~8.72
9,821.00
1,700.16
28,819.00
674.96
721.76
137.28
793.00
2,327~00791.78
846.68
930.25
161.04
2 '729.7f.
69,296.00 $58,981.12 $63,070.72 §pE,996.16 4e203 ,344.oo
The Bureau appropriations will be reimbursed in the above amount.from the
indefinite appropriation "-preparation and Issue of Federal Reserve Notes, Reimbursable," and it is requested that yourBoard cause such j_ndefin.ite appropriation to be reimbursed in like amount.
Respectfully,
. I
R. C. LeffingwelJ ,
ASsistant
Se~reca.r,y
of the Treasury.
FEDERAL
E~~'.iijiV~
BO,ARD
STATEMENT FOR THE PRESS!
.......
X-1478
For inru~diate release
Wednesday, April 16,1919.
Feder~l Reserve Bod.rd ~kes public the following
instructions to
Reserve Eunks, be~ring on the rediscount of ~per secured by
Government obligations.
The
Feder~l
:"',•.
.
~\
· Section 3 of the Act dpproved NJa.rch 3,1919, a.mends Section 11
of the Federal Reserve Act by the substitution of a new su~section (m)
which r~ds d.S follows:
"(m) Upon the affirmative vote of not less than five of
its ruembers the Federal Reserve Boa.rd s~ll hd.ve ·power to
pennit Federa-l Reserve banks to discount for any member
bank notes, drafts, or bills of exchange bea.ring the sig~ture
or indorsement of <J.ny one borrower in excess of the .:mount
perndtted by section nine and section thirteen of this Act,
but in no ca.se to exceed twenty per centum of the member
bank ls ca.pitd.l dll d surplus: Provided, however, Thd.t all such
notes, dra.fts, or bills of e&c~ge discounted for ~Y member
bank in excess of the d.IDO\.:.-nt permitt•ed under such sections
shall be secured by not less tl:lan a. like face dmount of bonds
or notes of the United States issued since Ap:..•il twer.tyfourth,
nineteen hundred ani seventeen, or certifica.tes of indebtedness
of the United Stc:4.tes: Provided further, Tha.t the provisions of
this subsection (m) s~ll not be operative after December thirtyfirst, nineteen hundred ~d twenty.w
Under the provisions of this Section, Feder~l Reserve ~nks are
permitted upon the affirmative vote of not less tb.Jn five members of the
:Federc:~.l Reserve Bo~rd, to rediscount far any one member bank, notes, dr4ts
or bills of exchange of any one borrower in excess of those limits now i~
posed by Sections 9 <J.nd 13 of the Federal Reserve Act, provided that the
aggregate in no ca.se shall exceed twenty per cent and provided t!ut a.rq
rediscounts over a.nd above ten per cent sha.llbe secured by Government
obligations of the kinds specified.
The interpretd.tion of this clmendment is very clea.r .as to rediscounts for na.tiond.l member bQI.nks ani the only question which might a-rise
is as to whether or not the power to rediscount a.n additional ten per cent
of pil.:per secured by the p~roper Government obligations ap,Plies to the ca.se
of a. State membel" bank which under the Stc;at e l.:t.w ha.s alre..3.dy loaned. under
the regular line of credit in excess of ten per cent to one borrower.
Section 9, independent of the amendment • provides in substance tha.t if a.
State bank ha.s loaned in excess of ten per cent to d.n::f one borrower, the
Federc:~.l Reserve ba~ ca.nnot rediscount for that bank any of the paper of that
borrower, but i f on the other ha.nd it has not loa.ned in excess Oil ten
percent
then the State meniber b.,j.nk sh.l.ll be a.fforded the reguld.r rediscount
,.
-2-
'
privileges conferrad by Section 13 .EQ .12 the limits set forth in Section
{
' .'
.~~
lJ.
The amendlr,ent of March 3,1919, confers powers 11 in excess of the z:mount"
set forth in Sections 3 ~ .13. so that in order. to give full force to th?.t
part of the language which refers to Section 9 it must be interPreted to rna~
that even though the State member bank has loaned in excess of ten per cent to
one borrower under his regular line of credit, nevertheless the Federal
Deserve bank rra.y rediscount paper of that borrower which is secured by the
Government obligations of the kind specified, provided that the age:regate of
all rediscounts does not exceed twenty per cant of the meu;ber bank's ce:.pital
and surplus.
If it were intended to authorize Stc:.te member bc.nks to rediscount with
their Federal Reserve banks, paper secured by Government o',:,ligations onll in
the case where the Stc:te bank h.:.s loaned less than ten ·oer cent under its
regular line of credit, there could have~ no pur~ose in referring to
Section 9 in the amendrrent.
The Board therefore rules under authority ~anted in this amendment that
the Federal ~eserve banks may rediscount until Decenber 31,1920 for w tional
and state member banks. paper secured by not less th~ a like f~ce amount of
bonds or notes of the United States issued since April 24,1917, or certificates
of indebtedness of the United States, without regc..rd to the an;ount the
borrowing bank rray have already loaned to its borrower under his regular line
of credit; provided, however, that the ag?regate of ~1 rediscounts must in
no case exceed twenty per centum of the capital and surplus of the n;err,ber bank,
Ill~stration: The result in a specific case would be as follows:
Stc:.te member bank A has loaned fifteen per cent to X on his regular line of
credit and fifteen per cent to X on the security of Government obligations of
the kindsspecified. What and how much mi~ht the reserve bank rediscount of these
items? The regular line being in excess of ten per cent., Section 9 applies
and~ of that paper may be rediscounted but the amendrr:ent of March 3,1919,
authorizes the rediscount of paper in !'excess" of what co..Ud have been rediscounted heretofore under Section 9 provided first th~t the excess be
secur-nd by Government obligations of the kinds specified and -provided second,
that the ag.p;-egate in no event ~ll exceed twenty ~l' ~,.~en\<, ~:;.l, tne c.::.se su.pposed
therefore, the reserve bank could take all fifteen per cent of the paper seeured
hy the
Gov3rnn:ent obligations but none of the paper tDken in X' s regular
line of credit. If the commercial line had been nine per cent., for instance,
the reserve b~ could rediscount all of the nine per cent and in addition
eleven per cent of the paper secured by Government oblig&tions, rraking a total
of twenty per cent of the capital and s~lus of the member bank. n
W. P. G. HARDING, GOVERNOR
ALBERT
EX-OFFICIO MEMBERS
-r
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
J. A. BRODERICK. SECRETARY
FEDERAL
BQARD
..... ......RESERVE
..
. . ..
JOHN SKELTON WILLIAMS
COMPTROLlER OF THE CURRENCY
. -'
., . ..
'
W. T. CHAPMAN. ASSISTANT SECRETARY
W. M. IMLAY, FISCAL AGENT
ADDRESS REFLY TO
WASHINGTON
.. -
-
t - .... ;
STRAUSS, VICE GOVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
FEDERAL RESERVE BOARD
.
.Apri 1 16,1919 •
X-1480
Subject:
Dec~.r
Regul~tion
F- Series 1919.
Sir:
There i$ being sent you today under
•
supply of
Regu~tion
separ~te
F, Series of 1919, superseding
cover
~
Regu1~tion
Series of 1917, Trust Powers of Na.tioru1 :Sci.nkll. Kindtly forward
one of these reguld.tions to e..ich na.tiona.l bank in your district
which h3.s been gra.nted fiducia-ry powers.
Very truly yours,
Assistant
Secret~ry.
F,
~:-;; ,'1- ' ·:-~t
,.,,·.,.·_)c}
W. P. G. HARDING, GovERNOR
ALBERT STRAUSS, VICE GoVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
EX-OFFICIO MEMBERS
CARTER GLASS
SECRETARY OF THI TREASURY
.,._.
CHAIRMAN
JOHN SKELTON WILLIAMS
FEDERAL RESERVE BOARD
COMPTROLLER OF THE CURRENCY
J. A. BRODERICK, SECRETARY
W. T. CHAPMAN. ASSISTANT SECRETARY
W. M. IMLAY, FISCAL AGENT
WASHINGTON
FEDERAL. RESERVE BOARD
A-pril l6 , 1919•
x-1482
Subjeet-:
Collection of TrQde
Accept~nces.
·Sir:The Ar.uericd.Il Acce:pta.me Council rus ca.lled the cl.ttention of the
~oard
to the desirability of having
a.t member
~ks
same terms
The
~s
t~t
fo~
acce:ptdnces which are paya.ble
or c lecl.ring member b.3.nks collected free of ch:<.rge on the
ba.nkers 1
Fede~l
acce~t~nces
tr~de
~ccept~nces
Reserve
be given
~11
your bQDk, if it
~~rd
a.re collected.
is desirous that holders of trade
collection facilities possible, and reqlests
~s not-~lre~dy
the collection of trade
done so, effect arraDgements
~cceptQnces pa~ble·a.t
wember
b~nkS
on the. sa.m9 terms ca-s b.3.nkers' Q.Ccepta.nces ..
Very truly yours,
Governor.
·
ADDRESS REPLY TO
W. P. G. HARDING. GoVERNOR
ALBERT STRAUSS. VICE GOVERNOR
EX-OFFICIO MEMBERS
ADOLPH C. MILLER
CHARLES S. HAMLIN
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
FEDERAL RESERVE BOARD
JOHN SKELTON WILLIAMS
COM!tTROLLER OF THE CURRENCY
J. A. BRODERICK. SECRETARY
W. T. CHAPMAN. ASSISTANT SECRETARY
W. M. IMLAY. fiSCAL AGENT
ADDRESS REPLY TO
WASHINGTON
FEDERAL RESERVE BOARD
April 17,1919.
X-1487
""Subject: Holidays - Federal Deserve Banks.
Dear Sir:
In order to eliminate unn8sessary confusion ani to
relieve a part of the congestion of the telegreph wires, the
Board requests that the Federal Reserve Banks advise the Board
at least one week in advance of local holidays which the bank
is going to observe, in order that the Board may issue the necessary instructions with regard to handling credits through the
daily Gold
fig,u-es~
Fund Clearing and also' with regard to re:porting "Tend 11
The :Soard will also advise other Reserve Banks imn-;ediately,
me$ing it unpecessary for the closing batik to send advices to the
other Reserve Banks.
Kindly acknowledge receipt.
Very trul.y yours,
Assistant
Secret~ry.
W. P. G. HARDING, GoVERNOR
ALBERT STRAUSS, VICE GOVERNOR
EX-OFFICIO MEMBERS
ADOLPH C. MILLER
CHARLES S. HAMLIN
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
FEDERAL RESERVE BOARD
COMPTROLLER OF THE CURRENCY
J. A. BRODERICK, SECRETARY
W. T. CHAPMAN. ASSISTANT SECRETARY
W. M. IMLAY, FISCAL AGENT
ADDRESS REPL.Y TO
WASHINGTON
FEDERAL RESERVE BOARD
X-1488
FEDERAL RESERVE BOARD BUI.LETIH FOR THE WEEK
ElJDING Al-RIL 18, 1919.
ADMITTED TO THE FEDERAL RESERVE SYSTEM:
Capital
surplus
Total Resources
Burlington Cj_t.y Loan & Trust co.,
Bnrlin~:;-~on,
N.
u.
Union Saviat;s Bank & Trust Co.,
Steuben-rille, Ohi0.
The Fi.rst i·)·b.te Bank,
Cli:'Jt. 0 n, f;l;::la.
First Gua.l·arty ;:~tate Bank,
Se;ymou:r. Texas.
Bank 0f EagJ.e,
Eagle, Idaho ..
Bank of camas prairie,
Grangeville, Idaho.
Gonzales State Bank & Trust co.,
Gonzales, Texas.
*'100,000
%>1,664,333
250 ,000
250,000
3,482,391
50,000
5,000
510,095
35,000
3,000
104,463
:jplOO ,000.
191,098
25,000
50,000
50,000
866,346
75,000
25,000
674,995
EX-OFFICIO
W. P. G. HARDING,
MU~BERS
GOVE~NOR
ALBERT STRAUSS. VICE GOVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
CARTER GLASS
SECRETARY OF THE T"EASURY
CHAIRMAN
JOHN SKELTON WILliAMS
FEDERAL RESERVE BOARD
CONFTROLlER OF THE CURREiiC't
J.
A. BRODERICK, SECRETARY
W. T. CHAPMAN, ASSISTANT SECRETARY
W. M. IMLAY. fiSCAL AGENT
ADDRESS REPLY TO
WASHINGTON
FEDERAL RESERVE BOARD
April 22,1919.
X-1 490
Subject: Communication between the Federal Reserve
Board and Federal Reserve :Banks.
Dear Sir:
Paragrayh 8, Section 4 of the Federal Reserve Act provides
that,
"Class C directors shall be
ap~ointed
by the Federal Reserve
Board".
and that,
ftQne ••• shall be designated by said board as chairman of
the board of directors of"the Federal reserve bank and aa
1 Federal Reserve asent' *** and in addition to his duties as
chairman of the board of directors of the I"ederal reserve
bank he shall be required to maintain $** a l~cal office of
said board on the -premises of the Federal reserve bank. He
shall make regular reiJorts to the Federal Leserve Board and
shall ac1i as its .official representative for the p3rforrr.ance
ot the functions conferred upon it by this act".
To obviate aelays ~1ich have arisen in bringing to the
attention of officers and directors of the Hanks direct
con~unic~tions frorr. the Federul n~serve Board to the Chairman and Federal Reserve Agent, the Board has decided that
in future it will address to the Federal Reserve Agent, as
such~ all co~T.Unications pertaininr to the business of his
office as defined by the statute, and to the Chairman of
the Board all corriliunications affecting the oper&tions of
the Bank itself. Communications addressed to him as Chairman should be corrn.iWlicated :promptly to the Executive
Corrndttee of his bank and he rray exercise his discretion
as to letters addressed to him as Federal Deserve Agent.
Kindly acknowledge receipt.
Very truly yours,
Governor.
<-,;,
c.·.: •• ..,.,.f
( .-,~· ~'...) ~.
EX~OFFICIO
W. P. G. HARDING. GoVERNOR
ALBERT STRAUSS, VICE GOVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
MEMBERS
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE ClJRRENCY
FEDERAL RESERVE BOARD
J. A. BRODERICK. SECRETARY
W. T. CHAPMAN. ASSISTANT SECRETARY
W. M. IMLAY, FISCAL AGENT
ADDRESS REPLY TO
WASHINGTON
FEDERAL RESERVE BOARD
April 22,1919 ..
X•wl49l
Subject:
Circular Letters sent to Member Banks.
Dear Sir!
Several of the Federal Reserve Banks have recently furnished
the Board with canvas ring binders, which they furnish to member banks
of their district, containing copies of all general letters, cirC"JJare,
and bulletins sent to member banks which are in effect. If your Bank_
furnishes this service to your member banks, the Board would be pleaGed
to receive one of your binders, with copies of all general letters you
have issued that ~re in effect, and would also appreciate being placed
on your rr.ailing list to receive co:t;ies of all new letters issueEl.
If your Bank does not furnish this binder service, the
would appreciate receiving copies of all general letters sent to
member banks which are in effect, and \vould be glad to be placed
your mailing list to receive all general letters issued, so that
Board may ~aintain a complete file;
Board
your
on
the
Very truly yours,
Assistant Secretary.
X-1492
EX-OFFICIO MEMBERS
CARTER GLASS
SECRETARY OF THI TREASURY
W. P. G. HARDING, GOVERNOR
ALBERT STRAUSS, VICE GOVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
CHAIRMAN
JOHN SKELTON WILLIAMS
FEDERAL RESERVE BOARD
COMPTROLLER OF THE CURRENCY
J. A. BRODERICK, SECRETARY
W. T. CHAPMAN. AssiSTANT SECRETARY
W. M, IMLAY, FISCAL AGENT
ADDRESS REPLY T0
WASHINGTON
FEDERAL RESERVE BOARD
Dear Sir:You will find enclosed herewith a specimen report of examinat ion which has been prepared_ by· Mr. s. G. sargent , Chief Examiner, Federal Reserve Bank of San Francisco, to be furnished. the examiners in
his d.istrict with a·view to making all reports more or less uniform.
It has been suggested that if the examining departments of
the other Fed.eral Reserve Banks would mal;:e up similar specimen reports
to
b~
exchanged. with the other examining de:r;artments it would be possi-
ble to d.evelop a comprehensive repart which could be standardized
ttrmughout the entire system.
With this in view will you kin.d.ly subm).t the specimen report
herewith to your examining d.epartment with instt·uctions to prepare a
similar specimen report for inspection by the examining department of
the other Fed.eral Rese.rve Banks.
we will also be glad tc c0nsid.er any
changes that may be suggested in the print/3d formof report {Form 103}.
Kindly have sufficient copies, say 15, forwarded to this office
so that an interchange may be made with other Federal Reserve Banks.
very truly yours,
secretary.
{Enclosure)
'•'•'-. )~j:
W. P. G. HARDlNG. GoYER~OR
ALBERT STRAUSS. VICE GOVERNOR
ADOLPH C. MII.LER
tHARLES S. HAMLIN
EX-OFFlCIO MEMBERS
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
FEDERAL RESERVE BOARD
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
J. A. BRODERICK, SECRETARY
W. T. CHAPMAN. ASSISTANT SECRETARY
W. M. IMLAY. FIM:A.L AGENT
ADDRESS REPl. Y TO
WASHINGTON
FEDERAL 'RESERVE BOARD
April 23, 1919·
X-1493
SUbject: Opinion Acting Commissioner of Internal
Revenue as to whether Five Per Cent
Bonds of War Finance Corporation are
"Admissible Assets".
Dear Sir:
Your attention is invited to an opinion of the Acting
Commissioner of Internal Revenue as to whether the five per cent
bonds of the War Finance Corporation are "inadmissible assets"
under the provisions of Section 325 of the Revenue A.ct of 1918,
&.s follows:
"The term 'inadmissible assets• is defined in
the aforesaid section of the Act to mean 'stocks,
bonds, and other obligations (other than obligations
of the United Stetes), and dividends the interest
from which is not included in computing net income•.
Section 213 (b) of the Act provides that the interest
on bonds issued by the War Finance Corporation shall
be exempt from taxation to the extent provided in the
Act authorizing the issue of such bonds; and it is
provided in Section 16 of the War Fi~nce Corporation
Act that the bonds issued by the War Finance Corporation shall be exempt, both as to principal and
interest, frorr. all taxes except estate and inheritance
taxes, and also from graduated additional income,
excess profits and war profits ta~s on the interest
on an amount of such bonds the principal of which
does not exceed $5,000.00. Under the terms of Section
17 of the War Finance Corporation Act such bonds are
not obligations of the United States".
"It is accordingly held that the bonds of the
War Finance Corporation, the principal of which does
not exceed $5,000.00 are inadmissible assets. Bonds
of the Wc..:t Finance Corporation, tr...e :princil,.Jal of
which exceeds $5,000.00 are admissible assets~~
Very truly yours,
Governor.
240
W. P. G. HARDING, GOVERNOR
EX-OFFICIO MEMBERS
ALBERT
CARTER GLASS
STRAUSS, VICE GoVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
FEDERAL RESERVE BOARD
COMPTROLLER OF THE CURRENCY
J. A. BRODERICK, SECRETARY
W. T. CHAPMAN. ASSISTANT SECRETARY
W. M. IMLAY, FISCAL AGENT
ADDRESS REPLY TO
WASHINGTON
FEDERAL RESERVE BOARD
April 24,1919 ..
X-1494
Engraved Signatures of Bonk Officers
on Feder..;~.l Hes~rve 13.;1,nk Notes.
Subject:
Dear Sir:
The attention of the Board
~s
been ca.lled by the
Director of the Bureau of Engraving and Printing to the fact
that the change of the n:i.rne of d. bank officer on d. plate in-volves a good ded.l of tLne a.nd expense, and ..a..s there is no
legal objection to the use of the
~!Le
of a former officer
on a bank note, even though the note is issued after the
connection of the officer with the bd.nk ha.s ceased, the
Fed~ral
Reserve Bo.:...rd requests th.-;l.t ·Nhenever there is a
chd.nge in the office af a. governoe or cashier, specimen
signatures of the new official be sent to the Bod.rd in
order that proper signd.ture way be engraved upon new plates,
which will not be used, however, until the old plates d.re
wor-.a out. All pld.tes in use .•. therefore, will be employed d.s
long
d.S
they d.re fit vvithout·a.ny cha.nge in the na.r1:es of
officers, ci.nd as the old pld.tes
be substituted
be~ring
the new
~re
discarded new ones will
names~
Vory truly ;;,r..::-..rs,
Governor.
241
EX~OFFICIO
W. P. G. HARDING, GoVERNOR
ALBERT STRAUSS, VICE GOVERNOR
MEMBERS
ADOLPH C. MILLER
CHARLES S. HAMLIN
CARTER GLASS
SECR£TARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROlLER OF THE CURRENCY
J. A. BRODERICK, SECRETARY
FEDERAL RESERVE BOARD
W. T. CHAPMAN. ASSISTANT SECRETARY
W. M. IMLAY, FISCAL AGENT
ADDRESS REPLY TO
WASHINGTON
FEDERAL RESERVE BOARD
April 257J.5'~-9·
X-1L~97
Subject: Request by a Disco~nt Corporation that Federal
Reserve B~~s receive and transmit Bills purchased by the Discom~t Corporation from Member
Banks~
Dear Sir:
The Federal Reserve Board has been inforrr.ed that a certain
discount corporation has comrrronicated with Federal Reserve barurs
requesting that the respective Federal Reserve banks should, for
the convenience of the discount corporation. take delivery and
becorr..e terr.!j)orary purchasers from their member banks of acceptances
sold by them to the discount corporation and forward such bills
to another Federal Reserve batik for delivery to the discount
corporation as a resale by the res~ective Federal Reserve banks
to the corporationa
After careful consideration of the matter, the Board
has reached the conclusion that transactions of this kind ought
not to be engaged in by a Federal Reserve bank. Facilities 9f
this character extended to any particular firm or corporation
would, of course, have to be extended to others, an~ the arrangement proposed appears to the Board. as -infringing upon the ·functions
of member banks. There seems to be no reason why the proposed
service cannot be rendered equally well by member banks who can
avail themselves of the services of the Federal Reserve bank,
if necessary, but as a rratter of policy it seems that private
firms and COI'1Jorations and non-merr.ber banks should not be permitted
to transact business of this kind through a Federal Reserve bank.
In sorre cases this mighi imply a?proval by the Federal Reserve
bank of the specific transaction, and the Federal Reserve bank has
no right either to approve or di Sa.J.lprove, and in a:ny event could
not undertake to pass upon the bills delivered to it for transmissicn.•
Kindly acknowledge receipt.
Very truly yours,
Governor.
242
EX-OFFICIO MEMBERS
W. P. G. HARDING. GoVERNOR
ALBERT STRAUSS, VICE GoVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
FEDERAL RESERVE BOARD
COMPTROLLER OF THE CURRENCY
J. A. BRODERICK, SECRETARY
W. T. CHAPMAN, ASSISTANT SECRETARY
W. M. IMLAY, FISCAL AGENT
ADDRESS REPLY TO
WASHINGTON
FEDERAL RESERVE BOARD
X-·1500
.april 26 9 1919.
SUBJECT~
F0Rr.1S OF FIDUCIARY CERTIFICA'I'E.
Dear Sir:.For your information I am sending you herewith
sample copies of the engraved forms of permit which the
Board is issuing to national banks which have been
'
g~ant
ed permission to act iu fiduciary capacities uno.er Ser::ti(:H
ll-K of the lt'ederal Reserve Act as amended.
th~t
You will
ns·~e
one form is for use where barucs are granted only a
portion of the powers specified in the act, and the other
where banlr.s are granted full pov,ers.
very truly yours,
assistant secretary.
Enclosures.
243
W. P. G. HARDING, GoVERNOR
ALBERT STRAUSS. VICE GoVERNOR
EX·OFFICIO MEMBERS
ADOLPH C. MILLER
CHARLES S. HAMLIN
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
J. A. BRODERICK, SECRETARY
FEDERAL RESERVE BOARD
COMPTROLLER OF THE CURRENCY
W. T. CHAPMAN. ASSISTANT SECRETARY
W. M. IMLAY, FISCAL AGENT
ADDRESS REPLY TO
WASHINGTON
FEDERAL RESERVE BOARD
X-·150!.
FEDERAL
HES}~!tVE BOARD BULI~E'riN FOR
El~j)ING APHlL 25, l9l9 •
..ti..i1MITT~. D
T!IE WEEK
'?0 'tilE FEDEB.AL RESERVE SYS'rEM:
Total ·Resources
surplus
Ca:;J:ital
Mechanics Bank,
Brooklyn, N. Y.
~1,600,000
Kempf Commercial & Savings Barur,
Chelsea, Michigan.
40~000
~34
$320,000
40,000
'706 ,848
776 '342
CHJIJ1TGZ O.E' NAMES:
Mercantile Trust & Deposit
.
Mercantile Trust
cor~~pany,
Nev. Yo:rlr, N. Y.
to
Sullivan Banl{
& T.tust Company,
.i.10ntgomer,v, Ala.
VGLUNTARY
New
Y01'~{,
Mercho..·o. tr,
to
Ean1~
of
LIQUID.t~.TIONS:
&
'l'rust Comruuy,
AUTHORIZED TO ACCE.FT D:BAPTS .t~.ND BILLS
OF EXCHAi'IJGE UP TO 100 .IER CENT OF CAPITAL aND SURPLUS:
:w:r;.tr;~./:rP:zy,
MC:.1tgome.·,:-y, Ala.
Farmers & Stoc1rgl"O;,ers Bank, Snlt Lake City, Uto.h.
The .Security J3a:lk, Webster, S. D.
(Reincorporated und.er the name of the Security Bank
\'. ebstt:;:r, s. D. )
Liberty Bank, Bt. Loui.s, Mo.
CompaD~r,
N. Y.
244
W. P. G. HARDING, GoVERNOR
ALBERT STRAUSS, VICE GoVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
EXROFFICIO MEMBERS
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
FEDERAL RESERVE BOARD
COMPTROLLER OF THE CURRENCY
J. A. BRODERICK, SECRETARY
W. T. CHAPMAN. ASSISTANT !£cRETARY
W. M. IMLAY, FISCAL AGENT
ADDRESS REPLY TO
WASHINGTON
FEDERAL RESERVE BOARD
April 26 1 1919.
X-I502
Subject:navenue Stamps on Acceptances Based on Exports.
Dear Sir:
For your information, the Federal Reserve Board has
received the following inquiry from a Federal Reserve Bank:
"Can you find. out for "l.'!.s whether an accept::mce
drawn as an inherent bona fide part of an exportation
of merchandise requires revenue stamps under the new law?",
and in reply
h~;ts
sent the following message:
11 Bacau.se of constitutional restrictior~ against
taxes on exports, drafts which are dr~v.n against shipments f1·om the territorial United States, :.ncluding
the District of Columbia, Hawaii and Alaska to foreign
countries are not subject to stanw tax even though accepted or delivered or both acce:;)ted and del:i.vered
within the United States. Shipments from thG territorial United States to the Canal Zone, Virgin
Islands, Porto Bico and the Philippines are not considered shipments to foreign countries but drafts
against shipments to :Porto Rico, the Virgin I slc.nds
and the Philippines are exeii!Pt from stanp tax by
express legislation".
Very truly yours,
Governor.
245
X-1503
FEDERAL
RESEhVE
BOARD
STATEMENT FOR rruE PRESS
For imned.iate release,
4Pril 28th, 1919.
The Feder<:Ll Reserve Board announces the appointment
of Mr. Embry L. Sv;earingenp President of the First National lla:nk
and the Kentucky Title Savings. Bank and Trust Compar.y of JJouisville,
as director of the Lou.isville Branc.h of the Federal Reserve Ilerik of
St. Louis, to succeed Col.Charles E. Hoge, deceased.
246
W. P. G. HARDING, GovERNOR
ALBERT STRAUSS, VICE GOVERNOR
EX-OFFICIO MEMBERS
CARTER GLASS
ADOLPH C. MILLER
CHARLES S. HAMLIN
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
FEDERAL RESERVE BOARD
COMPTROLLER OF THE CURRENCY
J. A. BRODERICK, SECRETARY
W. T. CHAPMAN, ASSISTANT 5'£CRETARY
W. M. lMLAY, FISCAL AGENT
ADDRESS REPLY TO
WASHINGTON
FEDERAL RESERVE BOARD
May 1,1919.
X-1506
Subject: Elilliination of Count of Federal Reserve Bank Notes
by ~)ecial Agents of Federal Reserve Banks.
Dear Sir:
In reference to the recommendation made at the Governors'
Conference to T~ic NUmber 36 for the elimination of the count by
S,J:lecial .Agents of the Federal Reserve Banks of mutilated Fec3.eral
Reserve bank notes forwarded to the Treasury Department for rederq,.)tion omd destruction, the BoCll'd desires the following information:
1.
Total an;ount paid to Special Agents.
(a) From January lst to Decerrber 3J ,1918.
(b) From January lst to M&rch 31,1919.
2.
Cost ver thousand for
~resent
facilities.
3· Date of expiration of present contracts.
The Board would ~ppreci~te receiving this information as
soon z.s convenient as it will be of assistance in determining whathsl'
Or -not i t will be ::_,ossible to formulate a less expensive plan. Any
further inforn~ation or suggestions that you may be able to. furnish
in this connection will be appreciated.
Very truly yours,
Assistant Secretary.
X-1508
FEDERAL
RESERVE
B 0 A R D
ST.AT1!,1-1ENT FOE TEE PRESS
For irrmediate release
May 1, 1919.
The Federal :Reserve Board issues the two following regulations
effective immediately:
nuntil otherwise instructed, the requirement is~ed
by the Division of Foreign Exchange on June 11th, 1918,
prohibiting 'dealers' as defi~d under the Executive
Order of the President of J8nuary 26, 1918, from acting
upon confirrrbtions of c&blegrams received by them wh8re
the original cablegram in part or in whole has never been
delivered, and also requiring that all confirrrntions of
cablegrams be delivered to certain F~deral Reserve Banks,
dependent upon their destination, is hereby revoked, with
the exception of confi.rn:a tions referring to any cablegrams
which might cover transactions either directly or indirectly
with terri tory not formally opened to trade and transfers •
of funds. n
"The War Trade Board, at the request of the Supreme
Economic Council, has issued a general license th~ough
the Bureau of Enemy Trade which autho:dzes the transfer
of funds to Germany, provided the proceeds are used for
the purchase of food to be shipped to Germ~y; and until
otherwise instructed 'dealers' as defined under the
Executive Order of the President of January 26, 1918, are
permitted to mClke transfers of funds to Germany through
the American Helief Administration in accordance wi tn
regulations issued April 22, 1919, covering the making
of similar remittances to various other Central European
countries. "
FEDERAL
RESERVE
BOARD
WASHINGTON
Confirmation of Telegram
April
30,1919 ..
X-1509
Austin
Wills
Hardy
McCord
Heath
Subject:
-
Philadel:phia
Cleveland
Richmond
Atlanta
Chicago
Martin
Rich
Ramsay
Ramsey
Perrin
-
St. Louis
Minneapolis
Kansas City
Dallas
SanFrancisco
Campaign for :Ear foints.
Please advise number of nonmember bw.ks added to par list
during month of April and total ne+, additions since January first;
also advise as at close of business April thirtieth number of
National bank menl>ers,
St~~te
bank members, nonmt1Ilber banks on par
list and non-meniber banks not on par list ..
During first three months of this year about one thousand·
par
po~nts
were added to list..
The Board feels sure that
w~.th
experience gained still greater progress will be made during ::1e.or.t
few months and the
b~nks
are urged to continue their efforts.
HARDING.
W. P. G. HARDING, GOVERNO'R
ALBERT STRAUSS, VICE GOVERNOR
EX-OFFICIO MEMBERS
ADOLPH C. MILLER
CHARLES S. HAMLIN
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
J. A. BRODERICK, SECRETARY
FEDERAL RESERVE BOARD
COMPTROLLER OF THE CURRENC\'
W. T. CHAPMAN, ASSISTANT SECRETARY
W. M. IMLAY, FISCAL AGENT
ADDRESS REPLY TO
WASHINGTON
FEDERAL RESERVE BOARD
X-I5IO
FEDERAL RESERVE BOARD BUlLETIN FOR
ENDING MAY 2, 1919.
~HE
WEEK
Alnr!TTED TO THE FEDERAL RESERVE SYSTEM:
Capital
Ironbound Thust COmfuny,
· Newark, N. J.
;.,zoo ,ooo
Berks County Trust Company,
RBading, pa.
250,000
Farmers & Merchants Bank Co.,
11etamora., Ohio.
25,000
Citizens Bank of Delavan,
Delavan, Wis.
50,000
First State Bank,
prescott, Ark.
50,000
security Bank & Trust company,
Webster, s. D.
60,000
Farmers & Merchants Savings Bank,
100,000
Logan, Utah.
surplus
Total Resources
:jj,lOO,OOO
41;7,353,873
155,000
4,137,296
5,500
297 ,832
25,000
875.971
1,500
305,617
25,000
1,601 '387
15,075
388,926
CONVERSIONS:
City Bank,
Syracuse, N. y,
Fidelity Trust Company,
Kansas City, Mo.
into
into
City Bank Trust Company,
Syr~cuse, N, y,
Fidelity Nutional Bank &
Trust Com;_;a.ny,
Ko..ns:J.s City, no.
VOLUNTARY LIQUID.aT):C'"JS:
First Standard B:J.nk
&
Trust Company, Maysville, I(entucky.
250
FEDERAL
For r~lease afternoon
Tuesday, ~y 6,1919.
~pers,
BUSINESS
RESERVE
BOARD
X--1511
STATEMENT FOR THE PRESS ..
CO!IDI~IONS
IN .APRIL
1919.
During the month<..cf April business prospects hd.ve improved, reta-il tra.de
has
incre~sed
in volume, prices have apparently a.ssumed
a more
position, and business generally is considered on a stronger
ing. The floa.ting supply of labor which
~d
~d
stable
better foot-
threatened a.. considerable awount
of unemployment dUring the months of February a.nd 11a.rch ha.s been pa.rtia.lly
absorbed a.nd the prospect of a. large gra.in crop promises still further opportunity for the use of the entire labor
SupflY~ Fede~al
Reserve Agents almost
without exception report a growth in confidence a.nd improvement in general
trade a.nd industria.! conditions.
~uf~cturing
is still rcta.rded in steel and
some other basic industries, but there is improvement in the copper and lea.d
situation. Textile manufacturing, both in wool
former, is improving. The
ex~ort
nancial conditions have been
~nd
cotton, pa.rticularly the
tra.de of the month has been large
~iet ~nd
~nd
fi-
reassuring.
In the First rFedera.l Reserve District "the turn in the tide of business.
which wa.s beginning to be felt a month ago, becomes increa.singly evident each
week, and the impression is becoming general thd.t no
low~r
price level will
be established at least for some time. This is having the effect of encouraging
buyers to place orders with more confidence, and manufacturers
~r~
going
~he~
in a surprisingly satisfa.ctory manner. It will be a long tiffie before all
sections of this district are back again on a. strictly pea.ce basts end before
labor a.nd na.terials are a.ga.in evenly distributed, but the period of vr.n.ewployment
a.nd stagnant business, •ilh ich many expected, shows no sign of r.ateria.lizing, a.nd
the trend is decidedly in the other direction"
25:1
- 2 -·
From the Second Federal R3serve
Distrir.t it is reported that growth in
confidence is manifested !lin the mo!"e numerous adva11ce orders placed with
wholesalers for the fall.
Certain l~nes in the ordinary distributive trade,
such as jewelry, automobiles, and musical instrwnents, are very active.
Retail trade, including the rr.ail-order business, has contin.ucd to 3xpand,
and production in textile mi..lls has 5.ncreased 11 •
District No. 3 reports re-
tail trade "wonderfully good and reports from all parts of the district
very encouraging."
Reports from District No. 4 state that "the whole indus-
trial field is breathing easier, and gains along practiccl.ly every line,
while in many cases
infinitesirr~l
in scope, reflect a condition whiCh gives
indication of progress both steady and permanent."
From District No.
is stated that there is indication of "increasing confidence
5 it
and stability 11 ;
from District No. 6 that "during the past month there has been an increase
in practically all lines of business"; from District No. ( that "fundamental
conditions, aside from a lack of confidence in the stability of the present
price level, are considered sound"; from District No. 8 th3.t "bus·iness
activity continues to inq>rove with the further readjustment of prices, and
in some lines it is :p:racticall.y normal"; from District No.
9 that 11 the
general outlook throughout the district is very good"; f!"om Distr:i.ct No., 10
that "a more hopeful spirit seems to prevail and in most lines of industrial.
activity things have assumed a cheerful aspect."
speaks of "unparalleled prospectlil for
buying.
bu~er
The Tenth District further
crops" and of an inc::ea<Je in
In the Eleventh District it is stated that "a sound and normal
business is being transacted"'; from the T'Nel:fth District it is reported
that "manufacturing and industry are fair, but increased activity is expected, due to ill!Proved labor conditions," wh:i.le agriculture and stock-.
raising enterprises are said to be in excellent condition.
X-1511
252
- 3 Possibly the most conspicuous feature of the whole business situation
is found in the fact that prices have apparently been somewhat "stabilized".
Marked declines are still reported here and there in some special lines, but
from nearly all districts it is reported that the uncertainty concerning
prices has been mitigated and that business men now expect that existing
levels of prices will be substantially maintained for some time to come.
The Bureau of Labor's commodity index numbers show that the decline in
prices noted during the past three months has now not only been checked,
but that prices as a whole have apparently taken a slight turn upward, the
general index number increasing from
as further analyzed in
197 to 200. This general situationt
the Eoardts compilations, shows that during March·
the decrease in price of producers' goods continued; the index number for
the group standing at 189 as compated with 191 for the month of
February.
Ti.le decrease is paralleled by a decrease in the prices of raw mineral
products, the index number for which. group stands at 170 as compared with
173 for the month of February. The index numbers in the case of consumers 1
goods and the other groups of raw materials, however, show an incx·ease. This
is particularly marked for farm products and animal products in the latter
group. the index numbers increasing respectively from 222 to 235 and from
208 to 216.
During the early part of April a further strengthening of
prices in many lines has been noted.
Efforts at Governzr.ent price fixing
are still under consideration, the difficulty of bringing about a definite
adjustment in connection with steel, coal, and other basic articles having
as yet proved insuperable.
This leaves those industries without a standard
price level recognized by the Government, but with the expectation on the
part of dealers that prices will not decline materially below present
figu~es.
- 4 -X-1512.
The most import~nt industri~l development during the month of April h•.~-s
und.oubtedl;r been the Governrcent
~s estimc:~.te for d.CTe~ge .;llld prnd•tr.~tion
principal a.gricultura.l crops. The forec;l.:.;t
and showed a. condition of 9) .. e7 per
ever recorded on the l.J.rgest
whea.t wa.s concerned. The
st~nces
~rea.ge
fC''!" gt"..:~.:i.n
Ci;!r~·i:;, or
w.l.s u..:.l.r1.e p1~l1li.::;
the higb.cst
of the
en April 8
co~d.i~·.ion percentc:~.ge
ever under cultivd,tion, so
f~r
...a.s winter
~sti.m.3.ted
yield of winter whe..l.t u."'lder these cir.'c.um.·
cereal
is 837,000,000 bushels, with other/crops in a.~ost e~u~l~ p~o~ising
condition so far a.s
c~
the Middle West it is
conditions are
be foreca.st a.t this se..l.son. From the whea.t district of
st~ted
sa.tisf~tory,
that spring wheat seeding is well
a.dv~ced
while winter wheat and other cereals
~ve
th~t
Jnd
come
through the sea.son in excellent condition. On the Pa.cific coa.st crop condi Uo:;.'ls
a.re unusually fa.vora.ble, wheat sown in the fall ha.s wintered well, the acreage
of winter wheat is cOnsiderably greater tha.n that of last year, while other
products of the soil promise an
unus~lly abund~t
outturn. Practically all
growing crops in the South and Southwest are reported as satisfactory, there
being a. good outlook for incred.sed
movement of
grai~
for large yield per acre. The
a.cre~ge ~nd
to the markets continues in sm3ller volume, due to
marketing in the fall a.nd early winter. Domestic flour derodlld
~
of foreign ma.rkets to American wheat ha.s tended to raise prices.
he~vy
the open:i.ng
of
Receip~s
corn a.t the principal narkets a.re comparatively small ani the same is true of
oa.ts and other gr.l.ins. Flour milling bas illq)roved during the month a.nd in son1e
sections is as much as 50 per cent above the total for the correspondjng
~te
in 1918. Production during the month a! March wa.s 10,247,000 barrels·,
corupa.re·i
with 7,736,000 during the month of February
~d
12,994,000 during
.J.S
Jd.n~ry.
The
stocks d.t the mills show an increase from -3,544,000 a.t the close of Febru3.ry
to 4,578,000 barrels at the close of
~rch. As
for live stock, movements to the
primary markets of the Southwest show same decrease as coropa.red with
while a. stea.dy rise in hog prices since the removal of the Government
~
year
~go,
gua.r~teed
figure of $17-50 bas been observed. The price of hogs at about the middle of
Digitized for~ril
FRASER'was i20.00.
The decrease in the receipts of hogs during Mbrch bas been
253
254
:C-1511
- 5espeei~lly
pronounced. receipts at 60 ~rkets for the month being 3 1 632,874, ~s
compared with 4,4o4, 751 during Februo.ry
~nd
4,444,4o6 during r.arch,l91S. The
figures of receipts of cattle and of sheep likewise show a.
f~lling
off from the
figures for MarCh,l918, though both are slightly above the figures for February
of the present year. This condition-is reflected in reduced purchases by packers
during Much. The reports indicate that packers r operations in prilll""ry uarkets
were reduced 9 per cent in ca.ttle 1 1 per cent in hogs, 5· 7 per cent in calves,
as
c~red
with
p~rcbases
for slaughter in March 1918. Stocks of beef in the
United States on April 1 are reported to show a
heavy decline from the March l
figure, although for pork products no material change is noted. There
~ppears
to have been a continuance of the heo.vy export movement of meat products which
was so well susto.ined during the winter months. The fact th:A.t the industry bas
been released as of April l from industrial control by virtue of a. procl:wla.tion
signed by the President, leaves the price and movement of the product to be regu.it
lated by demand and supply. In the cotton-growing regions the prospect for yield
is satisfactory, weather conditions having been good, but owing to efforts to
bring about a curtailment of acreage it is now estimated in some sections that a.
reduction in the tota.1 area of liind under cultivation amounting to
per cent to 20 per cent of the
~rea.ge
of 1918 will be effected.
<3.S
much a.s 15
X-J.5ll
6-
255
In the rranufacturing industry fundamental interest continues to center
• around the steel situation.
This is still undecitled because of the failure
to arrive at a definite price policy for the coming months.
So far as known,
the schedule of prices tentatively agreed upon between the Goverruuent and
representatives of the industry during March has continued practically in
effect.
Latest reports indicate that the mills of the United States Steel
Corporation have been running at 7lt per cent of ca:paci ty, while independents
are running at 45 to 50 per cent of capacity.
Pig-iron production during
March was 3,090,243 tons, as compared with 3,14l,lb0 tons during February,
the respective index numbers being 133 and 136.
Steel-ingot production like-
wise declined, production in March being 2,262,265 tons, corresponding to an
index number of lll, as compared with 2,668,011 tons during February, the
index number for the latter month being 121.
United States Steel
The unfilled orders of the
Corporation have continued to decline, standing at the
close of Md.rch at 5, 430, 572 tons, as conwared with 6, 010,7 87 tons at the
close of February, the index numbers, respectively, being 103 and 114.
It is reported from Dallas that the present situation in the copper industry
"has nothing about it to stimulate enthusiasm, n the market being practically
at a standstill, while during the past month there have been
low as 14t cents.
~uotations
as
T.he curtailing of output from 30 per cent to 50 per cent
has had little effect on reducing the world's surplus, as sales have not
equaled the reduced output.
These conditions have been in :process of slow
re.c; tU'ica.tion since the middle of the month.
The copper situation has become
more encouraging during the month of .April,· some considerable sales being
reported at prevailing prices.
Lead ores hav'e declined in value, but the
demand for them remains firm, and there is no accumulation of sur.plus stocks.
Zinc has shown a downward tendency, but with
com~aratively
heavy shipments.
Productian of both metals has been considerably Qecreased during the past
continues
several months. In coal, production
. at about the same rate, but
(
256
- 7the present demand is naturally very light..
O:rde.:..-s for the coming winter's
supply have not yet begun, while some plants which are usually heavy consumers have suspended demand.
In the West Virg1nia district conditions
show little improvement, and sales of mining machinery are slow. Biturninous
coal production during the month of March
with
was
33,716,000 tons, as compared
31,497,000 tons during the month of February. The daily production
the
of anthracite coal declined somewhat from/February figures, total production
for the month being
February.
3,938,907 tons, as compared with 3,871,932 tons during
The respective index numbers were
70 and 74. Figures for pro-
duction of both bitumdnous and anthracite coal are very much below those
of a year ago, when bituminous coal production was
of anthracite
and
7,276,777 tons, the index numbers being, respectively, 131
129. The production of beehive coke has continued to decline, amount-
ing during March to
as compared with
was
48,631,115 tons, and that
1,768,449 tons, corresponding to an index number of 68
1,822,894 tons during February, the index number for which
75· In lumber, markets show generally a firm tone, with demand still up
toward the output and practically no decline in prices, but on the contrary,
advances in various grades ..
In general manufacturing, conditions still continue
so~hat
"spotty 11 •
In many sections mills have smaller stocks than usual, but with an improving
demand both for goods and for yarns, while many factoriw.s ara estimating
on new orders and showing a larger interest in the situation.
The depleted
condition of retail stocks has led to purchases of a hand-to-mouth variety,
even on the part of dealers who do not wish to commit themselves fully as
to the future.
Greater activity in
reported by wholesalers and jobbers.
pr~~aration
for the spring trade is
It is predicted in some quarters
257
X-1511
- 8 ..;
I
that demand from now on will be sufficient to enable the South to
without further sacrifice of the cotton it is
in the cotton-milling regions are still
carr-y~ng.
~tnsettled.
di~ose
Labor conditions
In the woc1en trade
demand for men's wear has become very much more active.
A
of orders has been developed during
From Ricbmond
·~e
IIIOnth of April,
large volume
it is reported that business is still dull with the underwear and blanket
mills, but in other lines mills are reported as having
re~lized
much benefit
from the :policy of drastic ·price reduction initiated two months ago.
The
industry is now regarded as being once more upon a normal basis so far as
volume is concerned, while raw wool has recently sold at auction upon a
basis of parity with the Government prices.
The automobile industry is
apparently fully occupied and is running on the basis of about 90 per cent
of existing facilities.
In leather and shoes the principal companies
have reported phenomenal profits and prices are strongly maintained with
abundant orders.
The lifting of the English embargo on the cheaper
grades of leather has stimulated foreign demand.
- 9 General labor cand.itions c1.re improving,
~ d~stricts
X-1511
From many of the rrunufacturing
they a.re reported. a.s fairly sa.t:i.sfa.ctory .. The q.1estion of wd.ge re-
258
adJustment ha.s ma.d.e compara.tively little progt·ess a.nd labor continues to be
employed on nearly a W'd.r basis of rci.tAut:.er,;j.tion. The volume of unem:c,:loyruent on
the Pacific coast is very much less
New England..
t~n
agof~nd
a. month
the same is true of
From many sections a. shortage of fann hands is reported. Partial
revival in the building trad.es prQmises to opert a
consider~ble
new field of
demand for labor heretofore uhemployed or obl!ged to seek occup""tion in other
lines of industry. The labor situation is less sa.tisfd.ctory on the
sea.b~rd
~~tl"'"ntic
than in the interior, due to the fdet tha.t consid.erable numbers of re-
turned soldiers have failed to redistribute themselves to their points of origin.
In the Middle West,especially in the chief a.gricultura.l regions, the situcl.tion
has decidedly improved.
Export trade during the month has continued. large, although
it
consi~ts
predominantly of raw ma.terials a:ld articles for further rrld.nufa.cture. Nevertheless,
interest in the export trade cont:.nues una-bated, d.nd. several irnport ....nt developments have occurred during the month.
Ship~ing
rd.tes have shown a decided down-
ward tendency, while the organization of an investment trust for the pu!'}.;ose of
encouraging the absorption of foreign securities
practical financing of export
business~
h~s
made
~
The organization of
beguming in the
~ssoci~tions
underthe
Webb law for the purpose of facilitating foreign trode. indicates a. continuous
interest on the part of manufacturers, both
of markets abroad. Two export
organiz~tions
of the banking industry and twenty-five
~rge
and small, in the development
have been formed by
~rge
import~nt
membars
lumber mills have united for the
same purpose. Similar activity is reported in a number of other lines ..
A
cotton
export corporation organized to facilitate the distribution of cotton in other
countries and its steady movement from the United States is projected. The
announced action of the economic council a.t Paris, 1!lclde public on April 23, by
virtue of which the black list is to be abolished ani the system of licensing
exports for shipment to foreign countries term:i.na.ted) is regarded in many lines
"
259
.
X-1511
- 10 -
of trade a.s promising a
much better opportunity for foreign shipments. Parci.llel
.::a.ction has been announced by the War Trade Board on Apri 1 23.
Financially the month has been quiet. The Board 1s compilation of interest
and discount rates from the principal centers shows relatively few
fluct~tions
and
these not of a character to indicate any decisive trend. The greatest variations
have been noted in connection with call money, which has fluctuated from
cent to
around
6i
5i
3t per
per cent, but has been firm during the latter part of the period at
per cent. The supply of bank acceptc~.nces has been srru.ll and total
volume in the market indicates a falling off. There has been a tendency to shorten
rDaturities of
co.u.."er~i.::a.l
paper considerably, while the <iken...:l.nd for tbe best nclmes
has been very satisfactory. The opening of the Liberty loa.n campaign on April 21
bas tended to hold various industrial enterprises in check, pending the cowpletion
of the Government Is requirements. As a. rule, the policy of bankers ha.s been to
conserve their lending power until after the loa.n has been fully disposed
of.
Some tendency to liq!dation was noticed among the banks prior to the offering of
the Victory loan, the effort of these institutions being to reduce their outstanding commitments wherever reasonably possible.
Feder.::~.l
reserve notes b..:l.ve
incred.sed somewhat during tbe early part of the month, but later showed a slight
tendency to fall off. The prospects for moderate accommodation to business and
industry appear to be encouraging, most ba.nks
of lending power •
•
~ving
still
~ subst~ti.::~.l ~rgin
F E D E R A L R E S E R.V E B 0 A R D
260
WASHINGTON
CONFIRMATION OF TELEGRAM
May
Curtiss, Boston
Jay, New York
Austin, Philadelphia
Wills, Cleveland
SUBJECT:
6,1919
Rich, Minneapolis
A sa E Ramsay
Wm. F. Ramsey
Perrin, SanFrancisco
Hardy, Richmond
McCord, Atlanta
Heath, Chicago
Martin, St.Louis
Raising of Restrictions on
Si~ver
X-1513
Exports•
On August fifteenth nineteen eighteen, the
Fede~al
Reserve Board announced
that licenses for the export of silver would thereafter be granted only for
civil or military purposes of importance in connection with the prosecution of
the war and only in cases where the
e~orter
certified that the silver to be
exported had beenpurchnsed at a price which did not directly or indirectly
exceed $1.01! per ounce one thousand fine ~t the point where silver is refined
in the case of silver refined in the United States or at the point of importation in the case of imported silver. The occasion which required the above
limitations on the ex..l:'ort of silver having now passed, the Federal Reserve
Board will hereafter, unless a governmental necessity should again arise, resume
its former policy of granting freely end without condition all applications for
the export of silver bullion or.of silver coin of foreign mintage. This change
of the policy of granting licenses does not do away with the necessity of
filing an application for licenses to export silver bullion or silver coin of
foreign mintage. SUch 3pplications must, as heretofore, be filed through the
Federal Reserve Bsnk of 'the cq:>propriate district, but such applications will,
as stated above, be freely granted by the Federal Reserve Board. The Secretary
of the Treasury does not contemplate any further sales of silver under the
f'ittman Act, except to the Director of the Mint. The Board especially requests,·
however, that all batiks continue to segregate silver certificates received znd
forward them
for redemption as heretofore.
261
X-1514
Ni.ay
\.
7) 1919.
TO THE EMPLOYEES OF THE FEDERAL RESERVE BOARD.
Under provisions of an Act approved ~rch l, 1919, there was
created a Comruissio:;.'l known as the "Joint Commission on Recla-ssification
of Salaries11 • This r.ornmissi.on is cb.a.:r-ged with the duty of investigating
the rates of compensation paid to civilian employees of the Government
in the District of Coluu.ibia. including the executive departments and other
Government establishrnents, and of repo:cting what reclassification and
readjustments of compensation should be made.
Under plan as outlined by this Coromisdon i t is artanged that
in each department or independent organization, there is to be organized
a Central Committee composed of a representative of the organization,
and a representative of the e:rnployees, the former representative to be
appointed by the executive head of the orga."'lization, a.nd the latter by
the employees themselves.
There is, therefore, enclosed a ballot which shnulll be filled
out by each employee, designating the employee of the Std.ff of the Federal Reserve Boar.d. desired as the representative of the Boa.rd. 1s employees
on the Central Comu::ittee. These ba.:1.lots sh:)ul1 be seo.led and returned
to this office without delay, as it is necessary that ou:- representative
be elected at the earliest possible momer:.t.
The following tellers to count the ballots have been appointed:
J. E. Horbett,
Rolfe E:. Brett,
Margaret A. Rice.
By order of the FEDERAL RESERVE BO.{ffiD,
J . DE LA. lVjjl..TER
Chief Clerk.
262
BALLOT
Federal Reserve Board.
For representative of employes of Federal Reserve
Board on the Central Committee to co-operate with the
Joint Commission on the Reclassification of Salaries,
( Indicate hereon the name of your choice as representative. )
Signature o£ employe
Nay
1919
263
X-1515
'\
FEDERAL
RESERVE
BOARD
STATEMENt' FOR THE PRESS
Release morning papers, Thur·ad.J..y,
Nay 8, 1919·
The Federal Reserve Bulletin for Ma.y was completed and sent to tbe
printer today.
In the Review of the Month, the leading feature of the issue, principa.l
attention is devoted to the changed position of the Government a.s a borrower.
and to the altered conditions in the business world growing out of the pa..rtial readjustment of trade
~nd
industry to post war conditions.
Speaking
of the financial sittu.tion, the Review, a.f.ter sketching the prospects in
,.
connection with the Victory Loan ~ni subsequent financing, calls attention
to the position of the Government as a commercial borrower in the money
IDarke t and sa.ys: ·
11 The whole investment situation has been c~licated by such a
va.riety of (c::LCtors since we entered the war that the shrillkage in vct.lues
sustained by ~Y of our leading investment securities mct.y not safelf
of itself be taken a.s an indication of recdo_l>italization or adJustment
to a new level of interest retu~.
Subsequent to the conclusion of
the aflnistiee and prior to the placing of t:p.e fiftl::. 'Libei'ty loan there
was an interruption to normal development of b11siness, <'iue to the fact
that whereas war demands bad been suspended, peace doma.':lds had not yet
begun to make themselves effectively felt. It was a.u epoch
of
"readjustment" and of transition from war to peace. The fifth loan
marks, financially speaking, the close of this transition :period, and
future sales of securities, whether governmentally or privately issued,
will have to be adjusted to the new basis of yield. On the whole, this
alteration is a desirable change in the conditions w~ich have he~etofore
existed and gives promise of the early restoration of std.bili ty and normal equilibrium in the investment market& It probably meas also that
the Governwent 1s offerings of securities will be more and ruore tct.ken by
investors who purchase them bee~use they desire to hold and retain them."
... 2The Review then passes to the relationship between
industria-l activity_..
1-1515
financi~l
and
On this point it aUliiiila.riz.es the existing conditions
as follows:
"The entry of the Government into the investment market upon what
rray be regarded as practic~lly a. normal basis synchronizes with the reopening of industrial activity upon a substantially parallel footing .•
The close of the month of April finds business apparently readjusted to
the new conditions, a.t least tempora.rilf, and ready to proceed with current activities in the belief that existing conditions will not, for a.
reasonable tiue a.t least, l::e very ma.teria.llf altered. This situation is
:reported. to"t he Board .by. F.ed.e~al Reserve Agents from all part.s of t be.
country, it being their view that present conditions a.re beginning to
be recognized a.s, in effect, normal. for the time."
Discussing the business prospects, the Review suggests tba.t a temporary
•
adjustment ~s practiea.lll' been brought a.bo¥t, and that with this as a. basis
i t ma.y be expected
that a. period of business activity will now set in a.nd
continue for some time to come.
tt sketches the position of industry a.s out-
lined by Federa.l Reserve Agents, and the:n,describes the present status of
prices in the following
~a.ge:
nThe decline of prices which bas already occurred ba.s been chiefly
confined to rela.tively few ba.sio comnodities, and while these enter
extensively as materials of production into the manufacture of consu.ma.ble
goods, competition has not yet served to restore the l~vel of general
prices a.t retail to aren the new basis which bas been reached in the
underlying or es$entia.l lines referred to. On the other ~. world
conditions have been such as either to hold certain classes of prices
practically st.:a.ble or even in some cases tol:ring about a. slight -upward
trend. Pa-rticularly has this been -tr~ in some instances where, through
Gover',Jmlent control, the price level bad been held down to a basis lower
than tba.t which it would naturally have assumed. The net result, a.s
shown in the Board's price index, therefore, is a. slight advance in the
general level. This bears out the view often expressed in the Federal
Reserve ~lletin that the underlying and most general factor tending to
sustain the· present high level of values is the credit and banking
situation, . inflated a.s it is throughout the world. So long ca.s the
condition of inflation referred to continues to exist a.s a.t present, it
must be expected that reductions of price will, occur slowly as a result
of chazlges in the denwld for and supply of commodities. This will in
some cases bring about reductions in the levels of values, but in others
will produce corresponding ani offsetting v'-"'riations in the opposite
direction. Prices will thus be subject to tewpora.ry oscillations, but in
order to b·ring abou.t any brOad and far-reaching readJustment affecting
the rel&tionship of al.l camnodities to the unit of purchasing power,
inflated. credit condtions must be eliminated, and the business community
muat.be placed upon practically the footing in relation to credit and.
moni';ly which it is no mal]¥ to occU}ly."
X-1515
.
- 3 Business, it is pointed out, is becoming
IDl}Ch
more a.ctive and vigorous
tbart during the past few months.
11
The readjustment of business" says the Review,
"to a new price basis is, however, proceedingt ~nd the increased a.ctivity
of trade due to the revival of purchasing ~~der the,prospective great
increase in agricultural output ~nd the general disposition throughout
the country to abandon the attitude of hesitation and postponement,
which h3.s been chd.racteristic for some time past, has rendered the
question of control of prices by public authority less urgent than it
seemed to be a few vveeks ago. What is now happening seems to indicate
that business will, after a. period of initial re.:J.dj,":stn,ent in prices,
proceed upon a level net far removed from that established during the
war, leaving the question a.s to the ultillU.te level of prices to the
future and to more slowly acting forces."
Considerable attention is devoted to the prospect of the foreign trade
of the Country.
The Board takes the position
goods is hardly to be expected.
"·,:J~
c.
t~t
a great inrush of foreign
On this point it says:
"The view has been expressed in some quarters that the resulting
state of the exchanges would lead to heavy exportation of goods t o the
United States, the procee~s thereof to be available to pay for or settle
outstanding interest cl.d.).ms and perhaps accruing installments of
principal obligations, or, at all events, to liquidate new .md heavy
purchases of ~terial from this country. Developments during the past
few weeks have raised avery serious doubt how far any sut;!h movement
is to be expected. In many lines European costs are riow ~pparently
higher than in the United States, this· being true of textiles and other
items in which Great Britain seemed formerJy to enjoy,:~. decided competitive advantage. The existence of high ~nney costs ahroa.d will
necessarily alter the competitive situa.{jion which hc.d existed before
the war, and will raise the question how foreign CO'!:JJ.t::ies ~1·e actually
to pay off their indebtedness unless the price situation is fa-vorable
to shipments of goods to the United States. AdJustment of international
price levels to the altered coniitions of the different co~~tries is a
necessary step to the readjustment of international tTade on a stable
basis.
In order to
stabili~e re~tions
with other countTies and to provide
a means of a.t once keeping up our export trade and paying for imported goods,
looks with favor upon
the ~oa.rd
the formation of so-called investment trusts. After describ-·
ing the methods by which such investment trusts operate in foreign countries,
their relation toe xport business is outlined a.s follows:
X-1515
- 4"The investment trust, from this standpoint, would be ID:;~.de
highly beneficial to those who participated in it simply as investors.
In the present situation, however, the establishment of companies for
foreign financing will serve a very much larger end. ":::'11is end is the
facilitation and promotion of the export business of the United States.
It is highly probable th.:l.t in present circumstdllces the proceeds will be
used in purchasing American supplies and materials even though there
has been no e:xpress stipulation that the proceeds growing out of ·such
advances shall be spent in the country from which the capital is derived
or that they shall be used in the purchase of mdChinery, ruaterials, and
the like, produced by designated concerns or groups of concerns. In the
present situation, the extension of our actual export t~ade in materials
is more feasible than ever before because of the fact tha.t the United
States occupies so conspicuous, not to say uni~ue, a position as a
creator a.nd furnisher of ca.pital in interw.tional business. · Occupying
the position it does, the Nation is thus able to make its own terms !or
the furnishing of capital. It may be able, in other words, within limits,
to establish its own price for goods sent to foreign countries, taking
its payment in the form of securities which are then distributed to buyers,
but clearly, good judgment and moderation in'fixing the terms of the loans
and the conditions of purchase will be required if a satisfactory and
permanent relationship is the object aimed at."
The :Board considers foreign exch:l.nge developments
d~ring
the past month
in considerable detail, and also gives the position of reserve a.nd member banks
and of exports and iaports of gold out of and into the United
St~tes.
lroportant
action with reference to the acceptance situation is outlined in the following
..
paragraph:
~~t a meeting of governors of Federal Reserve Banks with the Federal
Reserve :Board at Washington on March ·:20..22, . the following report was
made:
'The discussion developed the fact that there is a growing
tendency on the part of member banks to misuse and possibly
abuse the right of acceptance credits in domestic transactions.
These abuses doubtless grow, in many cases, out of a leek of
knowledge of what are correct practices, and to some extent out
of difficulties incident to the war. The principal abuses noted
were in the employment of acceptance credits for transactions
which are ~n fact loans upon commodities. In such cases the use
of the acceptance credits is frequently a subterfuge to :£scape
the provisions of section 5200 of the National Bank Act, and in
other, cases an improper drawing of bills against domestic shipment of goods. It is thebelief that it would be' a mistake to
endeavor to correct these practices through general regulations
applying to the purchase of bills by the reserve banks. 1
"After full consideration of the situation the Federal Reserve
:Board has re~uested a conmittee of Federal Reserve Agents to prepare
sui table acceptance literature designed to explain · the acceptance
266
X-1515
- 5principle .;~.nd to guide the development of acceptance methods among the
barking comM.mit;1 w:i.th a view to improving present practic.es, and at
the same time with the object. of stimulating the wider use a.ni application of the ar-~epta.:-:we princtple, both in domesti.; and foreign
tra;de under sound and sa.fe conditions. The investigation of this
situati.on will probably be begun shor'ii1y after the conclusion of the
Victory loan campaign, and i t will be sought to obtain general expressions of opinion from all those who are most conversant with acceptance
principles al"..d. practices • 11
The May issue of the Bulletin contains an elaborate description of
the war experience of the banks of Belgium, as well as an
accou~t
of the
war activities of the German Reichsbank. New and important rulings by the
Board and by the
Division of Foreign Exchange are published, and detailed statistics relating
to prices at home and ab=oad are furnished.
The usu.;i.l
sta.tisticc~.l
and summaries of Federal Reserve Ba.nk condition are included.
ta.bles
268
W. P. G. HARDING. GoVERNOR
ALBERT STRAUSS. VICE GoV!:RNOR
CARTER GLASS
ADOLPH C. MILLER
CHARLES S. HAMLIN
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
FEDERAL RESERVE BOARD
COMPTROLLER OF THE CURRENCY
J. A. BRODERICK, SECRETARY
W. T. CHAPMAN, ASSISTANT SECRETARY
W. M. IMLAY, FISCAL AGENT
ADDRESS REPLY TO
WASHINGTON
FEDERAL RESERVE SOARD
May 7,1919.
Subject:
X-1518
Publicity.
Dear Sir:
The Board is desirous of ascertaining the practice of local newspapers regard~ the use of matter appearing in the Federal Reserve Bulletin.
As y~ know, the present practice of the Board is to issue first a preliminary press bulletin stating what the forthcoming ~ulletin will say on
business conditions, which statement is followed within. a few days by a
statement of the contents of the Bulletin, under the head~ing "Review of the
Month", and then, when the Bulletin itself corres from the printer it is
given to the newspaper men in order that they may piCk out such special
features for publication as they may see fit. It is believed that this method
has resulted in giving to the Bulletin better publicity than prevailed prior
to the adoption of the present syst~• Will ~ou be good enough, thereforet
to send to the Board clippings from the leading newspapers of your District,
containing either editorials or news matte~ based on the contents of the
Federal Reserve Bulle tin•
. In this connection, will you please instruct that greater care be
exercised in the selection of newspaper clippings for transmission to the
Federal Reserve ibard. Xn some instahQes, we receive clippings from Federal
Reserve Banks in the original ertvel~es in which they are transmitted to the
B~nks by the clipping bureaus. lt is not the desire of the B6ard to receive
all clippings merely mentioning the Federal Reserve System. What it does
desire is, as above, all clippings bearing upon the Federal Reserve Bulletin
and all editorial and~~rtinent news bearing on the Federal Reserve System
as such, or, of oourse, particular Federal Reserve Banks .. We ·receive ma:qy
Clippings in connection with the Liberty Loan Campaigns, in which the only
reference made to the Federal Reserve System is that "Banks in the - - - District have subscribed,"etc. ·
Very truly yours,
Secretary.
269
W. P. G. HARDING, GovERNOR
ALBERT STRAUSS. VICE GOVERNOR
EX-OFFICIO MEMBERS
ADOLPH C. MILLER
CHARLES S. HAMLIN
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
J. A. BRODERICK, SECRETARY
FEDERAL RESERVE BOARD
W. T. CHAPMAN, ASSISTANT S'ECRETARY
W. M. IMLAY, FISCAL AGENT
ADDRESS REPL V TO
WASHINGTON
FEDERAL RESERVE BOARD
IVay
7 t 1919.
X-15J.9a
Subject:Campaign for New Par Points.
Dear Sir:
There is enclosed herewith
prepa.reu fru:n replies received from
~
:::~.ll
copy of report
Federal Reserve
Banks in response to our telegram of April }Oth,
~sking
for information regarding the progress of the campaign
being conducted for the establishment of new par points.
Very truly yours,
Secretary.
Enclosure.
.
0
!'C\2
CAMPAIGN FOR lVEiV PAR POIN~S.
REPORT OF FEDERAL RESEIHIE BANKS APR.IJJ 30f1919.
]'~cieral
Reserve
Bank of
National
Banks in
District
State
Total
Member
Bank
Members
B<::.nks
Non-member
Banks on
Par List
No. of Banks
added to Par
List in A:pi'.
1919.
i
:A-1519
No. of Banks
added to Par
List since
Jan 1J_l919.
No, of
non-,mernber
banks not on
Par List
__j
Total No,
non-member
Banks in
district.
Boston
392
33
425
243
243
New York
622
105
727
322
322
Philadelphia
632
34
'666
349
15
5lJ.
55
Cleveland
746
75
821
803
8
86
325
Richmond
529
4o
569
295
2
27
l
095
l
390
Atlanta
367
60
427
285
17
25
1300
l
5158
344
2 883
220
496
1 289
4 172
Chicago
046
l
298
l
404
1 128
St.Louis
467
45
512
1341
41
311
1 236
2 577
Minneapolis
801
72
873
1 294
43
125
1 554
2 848
Kansas City
971
31
002
2 279
82
77
970
3 249
Dallas
629
112
741
281
l
85
1 194
1 475
Sari.Francisco
566
96
662
911
--
-16 •
150
l 061
Total
7,768
1,001
8, 769
11,289
429
Washington, D.c.
May 7,1919.
l
1,270
• Withdrawals
9,168
20,457
2 71
1
W. P. G. HARDING, GoVERNOR
ALBERT STRAUSS, VICE GOVERNOR
EX-OFFICIO MEMBERS
ADOLPH C. MILLER
CHARLES S. HAMLIN
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
FEDERAL RESERVE BOARD
J. A. BRODERICK, SECRETARY
W. T. CHAPMAN, ASSISTANT SECRETARY
W. M. IMLAY, FISCAL AGENT
ADDRESS REPLY TO
WASHINGTON
X-1520
Subject:
RUles of Clearing Hbuse Associations.
Dear Sir:
For the information of the Board, please secure.
and forward at your earliest convenience, a copy of the present
rules in force at the principal clearing house associations in
your district, with particular reference to schedule of charges
for collection of checks.
Very truly yours.
Governor.
,
FEDERAL. RESERVE BOARD
X-1521
Federal Reserve Board.
For release morning papers, Tuesday.
May 6,1919.
STATEMENT FOR THE PRESS.
On
August 15,1916. the Federal Reserve Board announced that licenses
for the export of silver would thereafter be granted only for civil or
military purposes of importance in connection with the prosecution of the
war and only in cases where the exporter certified that the
silver to be
exported had been purchased at a price which did not directly or indirectly
exceed $l.Oli per ounce one thousand fine at the point where silver is
refined in the case of silver refined in the United States or at the point
of importation in the case of
in~orted
silver. The occasion which required
the above limitations on the export of silver having now passed, the
Federal Reserve Board will hereafter, unless a
gover~ental
necessity should
again arise, resume its former policy of granting freely and without
~·
condition all applications for the export of silver bullion or of silver
coin of foreign mintage.
This change of the policy of granting licenses does not do away with
the necessity uf filing an application for licenses to export .silver
bullion or silver coin of foreign mintage. Such applications must, as
.
heretofore, be filed thruugh the Federal Reserve Bank vf the
a~propriate
district, but such applications will, as stated above, be freely granted
by the Federal Reserve Board.
The Secretary of the Treasury does not contemplate any further sales
o~
silver
ur~er
the
Pitt~an
Act, except to the Director of the Mint.
W. P. G. HARDING, GOVERNOR
ALBERT STRAUSS, VICE GoVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
EX-OFFICIO MEMBERS
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER Of THE CURRENCY
FEDERAL RESERVE BOARD
J. A. BRODERICK, SECRETARY
W. T. CHAPMAN, AsSISTANT SECRETARY
W. M. IMLAY, FISCAL AGENT
ADDRESS REPLY TO
WASHINGTON
FEDERAL RESERVE BOARD
Md.y
7, 1919.
X-J.522
Subject!Notary fees on items protested.·
Dear Sir:
Please advise the practice at your bank (head office
and branches) with respect to the protest of unpaid checks,
drafts and other items.
Are the services of a salaried employee
utilized for this purpose, or are the items protested by outside
notaries?
If the notary is an employee of the head office or
branch, please state whether or not the fees collected are retained by him or are paid to the bank.
If the latter is the
case, please advise to what account such fees are credited, and
whd.t amount was so credited during 1918, a.nd.
t,n3
first quarter
of 1919.
Very truly yours,
Secretary.
274
W. P. G. HARDING. GOVERNOR
EX-OFP'ICIO MEMBERS
ALBERT STRAUSS. VICE GOVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
CARTER GLASS
SECRETA-OF .'Jtl£ TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
J. A. BRODERICK. SECRETARY
W. T. CHAPMAN. ASSISTANT SECRETARY
W. M. IMLAY. FISCAL AGENT
FEDERAL RESERVE BOARD
ADDRESS REPLY TO
WASHINGTON
FEDERAL RESERVE BOARD
M::l.y
8, 1919.
X-1524
Subject:Gold Settlement Clearings by Baltimore Branch of
Federal Reserve Bank of Richmond.
Dear Sir:
The Federal Reserve Bonk of Richmond ~s requested tb3t arr~nge
be made to have their Branch at Baltimore commence settling direct
through the Gold Settlement Fund with other Federal Reserve Banks and
those Branches which are now settling direct, in the s~e ~nner as is
now in effect between Federal Reserve Banks ald a. number of the Branches.
~nte
"
Accordingly, beginning on June 3rd and on every settlement day thereafter, the ~ltimore Branch, in addition to Richmond Head Office, will
telegraph to the Federal Reserve Board, code LABEG, its credits for other
Federal Reserve Banks and direct-settling Branches as at close of business
the previous day to be settled through the daily gold fund clearing .. The
Board will include in the daily BEPEG telegram to other Federal Reserve
Banks and direct-settling Br~nches the credits of B~ltimore as well as
Richmond. as follows:
Richmond
13a.ltimore
amount
amount
and the Baltimore Branch will render to each Federal Reserve Bank and
Branch, settling direct through the gold fund, daily mail transcripts
supporting credits as settled through the fund.
The ~ederal Reserve Bank of Richmond de.sires tru.t all credits in
Baltimore territory, immediately due or deferred maturing June 2nd ~d
thereafter, be credited through Gold Settlement Fund to B~ltimore Branch.
The Federal Reserve Banks and those Branches settling direct through tue
gold fund are requested, therefore, to open an account with the Baltimore
l3ranch i:il.t such time as will permit credits therein becoming available
June 2nd and thereafterj and to wire to the Bo.Jotd; code LABEG, the dlll01.m.t
of such credits for the June 3rd gold fundtclearing gnd for e~ch daily
clearing thereafter. They will also render 0 the B.-\.1 timore Branch d.-d ly
mail tranecripts supporting credits thus settled through the gold furd
clearingr
~
.
- 2 -
It is ~lso requested t~t ~11 deductions from credits for return
itemsJ errors, differences, etc., be Jlk.l.de in settlement. with whichever
B,;.nk (Richmond or Bd.ltimore) the origin.-\l item w~s settled~
Please note that new system is affective statements
of business June 2nd, cle~ring June 3rd.
cl.S
of close
Kindly advise your B::oanches .i.l.nd acknowJ.edge receipt of this letter
by wire.
Very truly yours,
Assist~nt
Secretary~
X-
1526
FEDERAL "RESERVE BOARD
ST ATEIVENT FCR THE PRESS
!v'!..,J.y
9, 1919-
For immedi~te Release,
Frida.y, MJ.y 9, 1919.
Arrd.ngements have been llld-de with the Americ.;l.n Relief
under which class "A" dealers who
h~ve
in a.ny of the countries covered in the
Relief
Administr~tion
reestd.blished their
regul~tions
.Administr~tion
b~nking
reld.tions
issued by the American
April 22nd, may purchase exchange on the countries in
question from the American Relief
Administrati~n,
whenever it is in the
•
market, for
remitt~nce
to their banking correspondents to cover ca.bles,
demand or money orders which they may sell directly to theit- customers in
the ordinary manner and without restrictions.
This arrangement does not
revoke the regulations issued April 22nd, which prohibit
the purchase of
exchange in any of the countries concerned fran any source except the
American Relief Administration, nor does it authorize remittaaces to
Germany except through the American Relief Administration.
The circular
of instructions will be issued by the Relief Administration in a. few days,
but in the meantime eligible Class
"~1
dealers may
~ke ~pplic~tions
exchange to the American Relief Administration, 115
Broadway~
for
New York Cityo
FEDERAl,
RES"SHVE
BOARD
CONFIRMATIOlJ OF TELEGRAM.
Boston
New York
Philadelphia
Cleveland
Richmond
Atla.nta
Chicago
McDo·ugal
St. Louis
Biggs
M:.rmea;po:!.is Wold
K:ms.>s City Miller
San Fra!lcisco Ca.lk:1nc
Morss
Strong
P~ssmvre
F~ncher
Seay
WeJ.lb0:rn
El Paso Br·"mch of Federal Reserve :B.;.p_k of D::1lJ.as will
..
settling direct with 0tbe1· : ·
con:.men::~e
1'eder,1.i R(;:lserve l'..•nks and direct settling
Branches through the goli se1·.tlerc.ent f1..:..nrl effective statements M.l.y sever. -·
teenth clearing 1.11::\Y
nine-t:.ee;:~~.h.
Da.ll<.l.s reg_uest.s tha.t a.ll letters
return items to ani frvxn 1!;1 l!CJ.so da.t;eu priOl' to M.:l.y
of date received be hano.led 'hy JJ...;\.l:ta.s as heretofore.
sevi.m~eenth
inchd:\r1~;
irrespeet.i.ve
All ret11rn item
letters frOm or to El Pa.sc bea.r:tng date ~/b.y nineteen'jh and t.berea.:f'ter will
be handled by El Paso
i:r"t'e~::..:)ec:tive
originally enclosed.
:Board's letter of proc.edu:te n:ailed tod~
of
da.~e
advise branches and acknowledge receipt. 'by
of .let·;:.e-r :in wh::ch item was
wire~
BRODERICK
q
Please
EX-OFFICIO MEMBERS
W. P. G. HARDING, GoVERNOR
ALBERT STRAUSS, VICE GOVERNOR
·• I
ADOLPH C. MILLER
CHARLES S. HAMLIN
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
FEDERAL RESERVE BOARD
COMPTROLLER OF THE CURRENCY
J. A. BRODERICK, SECRETARY
W. T. CHAPMAN. ASSISTANT SECRETARY
W. M. IMLAY, fiSCAL A&ENT
ADDRESS REPLY TO
WASHINGTON
FEDERAL RESERVE BOARD
May 9' 1919
Settlement Clearings El Paso_Branch
of Dallas.
Subject~Gold
Feder~l
X-1528
Reserve Bank
Dear Sir:
The following is a confirmation of
Bo~rd's
wire sent you
t~y:
"El Paso Branch of Federal Reserve Bank of Dallas will
commence settling direct with other Federal Reserve Banks and
direct settling branches through the gold settlement fund effective statements May seventeenth clearing May nineteenth.
Da.lla.s requests that a.il letters including return itema to a.nd.
from El Paso dated prior to May seventeenth irrespective of date
received be handled bt ~llas as heretofore~ All return item
letters from or to El Paso bearing date May nineteenth and thereafter will be handled by El Paso irrespective of date of letter
in which item was originally enclosed. Boards letter of procedure
mailed today, Please advise branches and acknowledge receipt by
wire·.n
Accordingly, beginning l'lb.y 19th and every settlement day thereafter,
the El Paso branch in addition to Dallas head office, will telegraph to
the Federal Reser'9'e :Board, cOde tA'BEG, its credits for other Federal Re-.
serve Banks and direct settling branches as at close of business previo~s
day to be settled through the daily gold fund clearing. The Board will
include in the .daily BEPEG telegram to other Federal Reserve Banks and
direct settling branches the credits of El Paso as well as Dallas as follows:
Dallas
El Paso
amount
amount
and the El Paso branch will render to each Federal Reserve Bank and branch
settling direct through the gold clearing daily mail transcripts supporting credits as settled through the fund.
2'79
"
X-152'5
- 2 -
.
The Federal Reserve Bank of Dallas requests that all letters
including return items to and from El Paso dated prior to May 17th. irrespective of date received, be handled by Dallas as h~retofore. The
return item letters from or to El Paso bearing date of May 19th and thereafter will be handled by El Paso irrespective of date of letter in which
item was origina-lly enclosed. The Federal Reserve Banks and those branches
settling direct through the gold fund are requested therefore to open a~
ace oun t with the El Paso branch at such t ime as wi 11 permit credits there in
becoming available May 17th and thereafter; and to wire to the Board, code
L.A13EG, the amount of such credits for the May 19th gold fund clearing anci
for each daily clearing therafter. They will also render to the El P..:1.so
branch daily mail transcripts supporting credits thus settled through the
gold fund clearing.
Please note that new system is effective statements as of close
of business May 17th, clearing May 19th.
Kindly advise your branches and acknowledge receipt of this
letter.
Very truly yours,
Assistant Secretary.
r
280
EX·OFFICIO MEMBERS
W. P. G. HARDING, GovERNOR
ALBERT STRAUSS, VICE GOVERNOR
ADOLPH C. MILLER
CHARLES S, HAMLIN
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
FEDERAL RESERVE BOARD
J. A. BRODERICK, SECRETARY
W. T. CHAPMAN, ASSISTANT SECRETARY
W. M. IMLAY, FISCAL AGENT
WASHINGTON
ADDRESS REPLY TO
FEDERAL RESERVE BOARD
X-1530
.F'EDER.c!.L RESERVE BOi!.RD BULLETIN FOR THE WEEK
ENDING MaY 9, 1919.
ADI.IITTED TO THE FEiJE.h.&L RESERVE SYSTE.11:
The
Bank co.,
.EUndora, Ohio.
Security Trust Company,
Wheeling, VI. Va.
Merchants & Farmers Bank,
Emporia, va.
1Ierchants & Farmers Bank,
Dumas, 11-rk.
Union Trust Company,
~.Iadison, Ill.
Bank of Illaplevvood,
.Maplewood, Mo.
Bank of Goltry,
Goltry, Okla.
First State Bank,
Ralls, 'I·exa:s.
Cache Valley Banking co.,
Logan, Utah.
Capital
SurpltHI
$,25,000
~7
Total Resources
i~rmers
,·
,500
~22;),127
200,000
200,000
2,827,915
50,000
50,000
554,526
50 ,000
13,250
314,424
50,000
50 ,000
50,000
6,050
473,097
25,000
2,500
209,599
25,000
2,500
79.318
100,000
22,000
1,374,839
CONSOLID..a~
ION:
The Mercantile Trust Company and the Union Trust Company, Little Rock,
Ark., have consolidated under the name Union and Merco.ntile Trust co.,
Little Rock.
W. P. G. HARDING, GoVERNOR
EX-OFFICIO MEMBERS
ALBERT
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMP'TROLLER OF THE CURRENCY
STRAUSS, VICE GOVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
CARTER GLASS
FEDERAL RESERVE BOARD
J. A. BRODERICK, SECRETARY
W. T. CHAPMAN. ASSISTANT SECRETARY
W. M. IMLAY, FISCAL AGENT
ADDRESS REPLY TO
WASHINGTON
FEDERAL RESERVE BOARD
X-15ZO
FEDE!ldL RESERVE BOARD BUI..LETIN FOR THE WEEK
EJ."'DING MAY 16, 1919.
ADMITTED TO THE FEDERaL RESER\"E SYSTEI\!1:
Capital
The :teoples Bank Company,
Frazeyburg, Ohio.
4P25 ,000·
First Trust & Savings Bank,
Des Mo~nes, Iowa.
200,000
Dardanelle Bank & Trust Co.,
Dardanelle, Ark.
50,000
Citizens Bank & Trust Co.,
England, Ark.
100,000
Cotton Belt Savings & Trust co. t
Pine Bluff, Ark.
100,000
Bellevue State Bank,
Bellevue, Idaho.
zo ,000
surplus
Total Resources
:u-35,000
*'482,650
17,122
1,784,461
10,000
424,880
10,000
465,912
40,000
901,561
8,000
401,640
AUTHORIZED TO ACCEPl' DRAFTS AND BILLS OF
EXCHANGE UP TO 100 lER CENT OF CAPITAL
AND SURPLUS:
Citizens National Bank, Hillsboro, Texas.
282
T-15~8
FEDERAL :RE&"ERVE BOAIID ANNOUNCEMENT FOR THE WEEK
E.NDIN\l I.I.AY 23, 1919.
ADIHTTE.D TO THE FEDERAL RESERVE SYSTEM:
surplus
Total Resourcea
50,000
35,000
721,714
218,700
1oo.ooo
709,413
Capital
Firestone Park Trust & &avings Bank,
.Akron, Ohio.
Citizens State Bank,
Roundup, Montana.
Tracy .r.oan & Trust Comra.ny,
0alt Lake City, Utah.
~200,000,
CONSOLIDATIONS:
The Charleston Trust & Savings Bank and the Second Nutional Bank,
Charleston, Ill., have consolidated under the name of the National
Trust Bank of Charleston.
AUTHORIZED TO ACCEPr DR.ti.BTS AND BILLS OF
EXCH..tiNGE UP TO 100 .FER CENT OF CAPITAL
AND SURPLUS:
Edisto National Bank. Orangeburg,
s. c.
W. P. G. HARDING, GoVERNOR
EX-OFFICIO MEMBERS
ALBERT STRAUSS, VICE GoVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
FEDERAL RESERVE BOARD
J. A. BRODERICK. SECRETARY
W. T. CHAPMAN, ASSISTANT SECRETARY
W. M. IMLAY, FISCAL AGENT
ADDRESS REPLY TO
WASHINGTON
FEDERAL RESERVE BOARD
X-15:30
•
FEDERaL RESERVE BOARD ANNOUNCE11ENT FOR THE WEEK
ENDING MAY ZO, 1919.
ADMITTED TO THE FEDE:RiiL RESERVE SYSTEM;
Bank of East Aurora,
East Aurora, N. Y
Geneva Trust Company,
.Geneva, N. Y..
Bank of Commerce & Trusts,
Richmond, Va.
Guaranty State Bank,
Troup, Texas.
Capital
Surplus
~75,000
*'25,000
100,000
175,000.
3,507,520
250,000
200,000
3,237,256
25,eGO
15,000
268,337
Total Resources
~,1 ,220
,494
284
W. P. G. HARDING, GoYEIINOR
ALBERT STRAUSS, VICE GoVIRNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
EX-OFFICIO MEMBERS
CARTER GLASS
SECRETARY OF THE TREAIUII\'
CHAiiiiiAN
JOHN SKELTON WILLIAMS
FEDERAL RESERVE BOARD
COIIPTIIOU.IR Of THE CURRENCY
J. A. BRODERICK, SECRETARY
W. T. CHAPMAN, A$SISTANT SECRETARY
W. M. IMLAY, FISCAL MINT
ADDREII8 REPL.Y TO
WASHINGTON
FEDERAL RESERVE BOaRD
FEDERAL RESERVE BOARD
.t~.NNOUNCEUENT
FOR THE WEEK
ENDING JUNE 6, 1919.
ADMITTED TO THE FEDERAL RESERVE SYSTEM:
Total Ref!ources
Capi ta.l
SUrplus
Gloucester Safe Deposit & Trust co.,
Gloucester, Mass.
~200,000
The Ne'\·; Bedford Safe Deposit & Tr. co.,
~200,000
~4,945,687
Nev. Bedford, Mass.
peoples Bank of Buffalo,
200,000
500,000
4,46~,466
Buffalo, N. Y,.
The First State Savings Bank,
Cros"ll.ell, I.Iich.
First State & Savings B~nk,
600,000
600,000
16.482,564
25,000
5,000
503,866
1Jiich~
w,ooo
60,000
1,26S,363
The Hopkins State savings Bank,
Hopkins, Mich.
First State & Savings Banl:.,
25,000
5,000
423,527
HOlly,
I~lason,
25,000
:Mich.
CONVERSION:
St. LOUis Union Bank,
St. LOuis, iJ.O ..
into
St. Louis Union National B3.nk,
St. Louis, MO.
285
X-1530
FEDERAL RESERVE BOARD ANNOUNCE11ENT FoR THE WEEK
ENDING JUNE 13, 1919.
ADMITTED TO THE FEDERAL RESERVE SYSTEM:
Capital
Bridgeport Bank & Trust oo.,
Bridgeport, Ohio.
$75,000
First State Bank of Henderson,
25,000
Henderson, Texas.
First State Bank,
Drummond, Idaho.
25,000
Helper State Bank,
Helper, Utah.
50,000
security State Bank,
Lacrosse, wash.
30,000
SUrplus
Total Resources
~40,000
$915.318
15 ,OQO
180., 916
54,035
25,000
AUTHORIZED ~0 ACCEP.r D~FTS AND 311LS OF
~XCHANGE UP TO 100 FER CENT OF CAPITAL.
AND SURPLUS:
Brownwood National B.:.nk 1 Br.OVinwood, Texas.
493,909
286
X-l5W
FEDERAL RESERVE BOARD ANNOUNCEMENT FOR THE
WEEK ENDING JUNE 20, 1919.
ADMIT~ED
TO THE FJIDEBAL RESERVE SYSTEM:
Capital
Bank of Buffalo,
Buffalo, N. y.
Equitable Trust Company,
Atlantic City, N. J.
Second security Bank,
Chicago, Ill.
First State & Savings Bank,
HO\-;ell, Mich.
Bank of Arcadia,
Arcadia., Wis.
SUrplus
TOtal Resources
41>1 ,000 ,000
$1,000,000
$29,925,166
200,000
100,000
1,947,869
200.,000
100,000
2,975,149
75,000
15.,000
631,642
25,000
15,000
647,067
CONSOLIDATION:
The American National Bank and the Bank of Commerce, member banks,
and the American Trust Company, a non-member bank, all of Little Rock,
Ark., have consolidated under the name american Bank of Commerce & Trust
company, '-;hich institution has been alloted stock and is now a member bank.
287
X-1530
FEDERAL RESERVE BOARD .dNOUNCEMENT FOR THE
WEEK ENDING JUNE ·z7, 1919.
ADMITT.ED TO THE FEDE!kL RESERVE SYSTEM:
American State Bank,
Saginaw, raich.
First State Bank,
Brownsviile, Tenn.
capital
SUrplus
$>200.000
$100,000
Total Resources
$3,089,732
200,000
Note.- The state Be~k of Reform, Reform, alabama, has Qecided not to complete i18 membership by making payment on account of capital stock, and it
is, therefore, not a member of the Federal Reserve System.
\.I'l'HD&WN:
The Exchange Bank of Kentucky, M·t. St;er iinr;, Ky. , has vii thdrawn from
membership.
AUTHORIZED TO n.CCEIT DRAFTS ~lND BILLS
OF EXCikNGE UP TO 100 PER CENT OF
c~PITJ:I.L
First National Bank, Kansas City, Mo •
.:rortland National Bank, .FOrtland, Me.
aND
SURPLUS~
288
W. P. G. HARDING. GovERNOR
ALBERT STRAUSS, VICE GoVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
EX-OFP'ICIO MEMBERS
CARTER GLASS
SECR~ THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
FEDERAL RESERVE BOARD
COIIPTWOLLER OF THE CURRENCY
J. A. BRODERICK, SECRETARY
W. T. CHAPMAN. ASSISTANT SECRETARY
W. M. IMLAY, FISCAL AGENT
ADDRESS REPLY TO
WASHINGTON
FEDERAL RESERVE BOARD
•
X-1533
Uninsu~ed
Subject:
Shipments of Cancelled
Liberty Loan Bond Co-u,pons.
Dea.r Sir:
For your information, there is enclosed herewith
a copy
of.~
letter received from a Federal. lleserve Eank
in rega-rd to the d.bove stated svbject and d. copy of the
Bo~rd•s
reply thereto •
•
Very truly yours,
Assistant
Enclosures,.
Secret~ry.
W. P. G. HARDING, GoVERNOR
ALBERT STRAUSS, VICE GovERNOR
EX-OFFICIO MEMBERS
ADOLPH C. MILLER
CHARLES S. HAMLIN
CARTER GL'""-~ •
SECRETARY
OF
THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
J. A. BRODERICK, SECRETARY
FEDERAL RESERVE BOARD
COMIITROLLER OF THE CURRENCY
W. T. CHAPMAN. ASSISTANT SECRETARY
W. M. IMLAY, fiSCAL AGENT
ADDRESS REPLY TO
WASHINGTON
FEDERAL RESERVE BOARD
April 22,1919.
X-1533 a.
..
Mr. J.Z. Miller, Jr.,
Governor, Feder~l Reserve
Kansas City,Missouri.
B~nk,
" SUBJECT: Shipment of cancelled Liberty Loan Bond
coupons~
Dear Sir:
Receipt is
~cknowledged
of your letter of April 15,
regarding shipments by your bd.tlk to W.:;.shington of c.n celled
Liberty
bond .coupons. We 1uve conf 0rred -.vi th
Lo~n
of the Tredsury
Dep~rtment ~nd ~re
informed
th~t,
offici~ls
should cinY
shipments of coupons be lost in tr~nsit, it would be a. very
difficult matter to obta.in settlement frorr. th0 Trea.surer of
the
Unite~
Stdtes; - in fact, it is the opinion tha.t your
bank would not
Dep~rtment.
h..;~.ve d.UY
We
h~ve
recourse wh..a.tever froru the TreJ.sury
further been
~dvised.
by the Treasury
~
Department tlut recently several of the Federal Reserve banks
have taken this
r~tter
up with the Treasurerts office, but
that no uniforrn
pr~ctice
is being observed
~t
the present
time~
Should your bank decide to insure shipments of cancelled coupons
to
W~shington
at your own expense, Treasury Department officiala
advise that it will be possible for your banK. to make such ship-ments under the
would effect
•
..;~.
Tre~sury
very
Department insurance policy, which
ruateri~l
saving over
ordin~ry
r~te
r..2.tes."
Very truly yours J
Assistant
Secret~ry~
290
FEDERAL RESERVE BANK
OF
KANSAS
ClTY
April 15, 1919 ...
•
X-1533 b
Federal Reserve Board,
Washington, D.C.
Gentlemen:
"Under date of September 13,1918, we received telegraphic
instructions !rom Assistant Secret~ry of the Treasury teffingwell
from which we quote as follows:
'From this date, Federal Reserve Banks are not
authorized to. insure shipments of paid canceled
coupons for account of Treasury Department or
Treasurer, and if coupons are insured by any
Federal Reserve Bank for own account, expenses
of premiums therefor will not be reimbursed
directly or indirectly by the Department. 1
In compliance with these instructions, ·11e have been forwarding canceled coupons by registered mail un-insured. It occurs to us,
however, that in the event of loss of any of the coupons in transit
between our bank and the Treasury Department, it might be a very difficult
matter to obtain credit on the books of the Treasurer of the United States.
The Department's rule, as you know, is that a duplicate check cannot be
issued under the expiration of 90-days from the date of the original check.
Furthermore, in the event of a. lost check, the Department required in some
cases affidavits and an indemnity bond.
We believe that in the event of a lost shipment of coupons, we
might have gven greater difficulty dnd feel that we should take steps to
protect ourselves. It is understood that one of the Federal Reserve Banks
bas reached the conclusions that shipments of canceled coupons will be
insured at its expense, and we will a.ppreci~te your recommendation on the
subject."
Yours truly, . .
J
.z.
MILLER JR.
Governor.
2'91
W. P. G. HARDING. GovERNOR
ALBERT STRAUSS, VICE GOVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
EX·OFFICIO ME.MBERS
CARTER GLASS
SEc.11:ETA~1.i. OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
FEDERAL RESERVE BOARD
COMPTROLLER OF THE CURRENCY
J. A. BRODERICK. SECRETARY
W. T. CHAPMAN, ASSISTANT SECRETARY
W. M. IMLAY, FISCAL AGENT
ADDRESS REPLY TO
WASHINGTON
FEDERAL RESERVE BOARD
MJ.y 13, 1919.
X-1534
Subject~Campaign
for Par Points.
Dear Sir:
Four hundred and twenty-nine (429) banks
were added to the par
list during April, and a total of twelve hundred and seventy (1270) since
January 1st.
Eight.
Of this number over eight hundred are in Districts Seven and
The Victory Loan campaign is coupleted, and you are now asked to put
the power of your bank organization back of a determined effort to place
every solvent bank upon the par list of your District.
Every non-par bank
should be reached either by correspondence, or by a personal visit of a
representative of your
system.
This latter
Bank who is thoroughly familiar with the transit
pl~n
has been very successful in two districts.
The prospect of the extension of the par territory by States is
more favorable than by district%.
the trend will be
For instance, from present indic4tions
westward from the Atlantic, and probably eastward from
the Pacific States:
PAR TERRITORY
New England (6 States)
New York
New Jersey
Delaware
Districts
1 and 2
2 and 3
3
5
Pennsylvania
All· banks
2
............... ·?~
"
"
"
II
II
"
Number of non-par banks
28
52
33
95
-2-·
X-1534
_4
____
Districts
..
Ohio
Michiga.n
Indid.Il.:l.
7 a.nd 8
Illinois
7 and 8
Number of non-par
200
324
292
7
267
Attention is called to the above
extension of par lists by
Benlk~
t~ble
just to show the possibility
of the
St.;~.tes.
For instance 1 where a. State is in two Federal
the
Reserve Districts, the campaign in both sections of/St~te should be simultaneous.
A statement is frequently made to the Reserve Ba.nk representatives by
officers of the non-par banks, tha.t such banks will not agree to remit at par
until the Reserve Bank is in a position to place all banks in the State on
the par list.
It is recognized, of course, that lim some States an
irreduc~ble
minimum
will shortly be reached. It has been suggested that, in justice to the banks
that are now on the par list, in such States a date should be fixed, up to
which time a.n intensive
c~paign
should be m.;l.de
~d
every non-par ba.nk
a.n opportunity to volunta.rily join the par collection system, but
time the Reserve Bank should adopt such
me~ns
as
r~y
~ft~r
given
which
be necessary to insure
collection at par of items on all banks in such Sta.teso
The continued success of the collection system depends
;~pon
to a.dd at lea.st four to five thousa.nd banks to the par list. The
our ability
p~r
territory
will spread if the Reserve Ba.nk officials enter wholeheartedly into the movement. The Boa.rd realizes tha.t difficulties in some districts a.ppear almost insurmounta.ble, but the objections will be gradually overcome and the system extended until items on every solvent bank
.;~.re
collectible through the Reserve
Ba~~s~
.
X-1534
'
- 3 The Board is confident
this campaign
be~use
t~t
successful results will be
the officers of FederQl Reserve
~nks
who
~re
f~iliar
with the transit
problems •
What progress will your
B~nk
report by July lst?
Very truly yours,
Governor.
in
it will be intelligently &nd carefully directed by
~
•
att~ined
293
294
EX-OFFICIO MEMBERS
W. P. G. HARDING. GoVERNOR
ALBERT STRAUSS. VICE GOVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
CARTER GLASS
'
SEt:~ETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROllER OF THE CURRENCY
FEDERAL RESERVE BOARD
J. A. BRODERICK, SECRETARY
W. T. CHAPMAN, ASSISTANT SECRETARY
W. M. IMLAY, FISCAL AGENT
ADDRESS REPLY TO
WASHINGTON
FEDERAL RESERVE BOARD
IVl:=.>.y
13, 1919.
X-1535
Subject:Suggestions ~s to proper definition
of term 11 Readily no.rketab le staples".
Dear Sir:
Section 13 of the Federal Reserve Act as ~mended provides
that any member bank rJJd.Y ..:;~.ccept drafts or bills of exch:mge dravm.
upon it which grow out of transactions involving the domestic shipment of goods "provided shipping documents conveying or securing
title are attached at the time of acceptance; or which ..:;~.re secured
at the time of acceptance by a. warehouse receipt or other such
document conveying or securing title covering readily ~rketable
staples".
Inquiries r6ceived by the Board indicate that there is no
unanimity of opinion as to w:pat articles I!Jij.y be classed as "re.;:.dily
marketable staples", and the Board feels tha.t it will be necess.a.ry
for it to give in a regulation .a. specific definition of the term.
It is desired before the regu~tion is issued that definite suggestions
as to the proper definition of the term be received from the chairmen
and governors of all Federal Reserve Bd.!lks, and you a.re requested to
give the Board the benefit of your idea of a. proper definition at as
ear~ a date as way be convenient to you.
A tentative definition, which is favorably regarded by the
members of the Federal Reserve Board, is as follows:
11 A 1 readily m.;a.rketable staple 1 may be defined as a.n
unspecialized article of cammerce 1 prefer..:;~.bly a material
of industry, of such wide and varied uses as to ~ke it
the subject of constant dealings in ready ~rkets with
such frequent quotations of prices as to make (a) the
price easily Jnd definitely ascertai~ble, and (b) the
staple itself easy to realize upon by sale at ~y time."
Very truly yours,
Governor.
x-1536
295
OFFICERS .AND DIRECTCRS OF FEDERJL Pm:SERVE :BAES•
Feder~l
District No. 1 -
Reserve
~nK
of Boston.
{Frederick H. Curtiss, Ch~irffi..a.n md Feder~l Reserve Agent, Allen Hollis,
deputy ch""irm..l.n, Ch.l.s. A. Morss, Governor.) ·
------------------------------------------------------------------------------TERM EXPIRES·
DIRECTOR
BUSINESS AFFILIATIONS
RESIDENCE
.
.
Dec.
31, -
-------------------------------------------------------------------------------
· Cl..• ss A.
.
Boston,~ss
Edw..a.rd s. Kennard RumfordtM:i.ine
F M Drew
Ansonia, Conn.
.
Tho~s P~ Be~l
.
Cl<::~.SS
B.
Pres.
2nd~N~tl,B~k.Bosion,
t~sbier,Rumford N~tl.~k
I
v...p ·Ansonia
..
. '
...
Natl.' :Bank
Proctor, Vt .. ·
Treas.Vermont Marble co.
E. Walpole, Mass. Bird ~d Son., Inc.
Paper Manufacturers
Chd.s. G. Wa:sbburn Worcester ,MQ.ss Trustee & ~ufacturer
Edmund R. Morse
. .....
·'
·
1919
Phillip R. Allen
1920
1921
Class. C
Jesse H. Metcalf Providence, R.I.
Manufacturer
Frederic B. Curtiss Boston,~s~
Chair~, Federal Reserve Bank,
• Boston and Federal Reserve Agent.
Allen Hollis
Concord, N.H.
Lawyer
1919
1920
1921
!======================·=======================================================
District No. 2 - Federal Reserve Bank of New York.
{Pierre Jay, chairman and Federal Res~rve Agent, George Foster Peabody,
deputy chairman, Benjamin Strong Jr., Governor.)
Class. A
Wm. Woodward
R.B. Trenan
Cha.r le s Sr.lli th
York
Ithaca, N.Y.
Oneonta, N.Y.-
Pres. ~over Natl. Bank
1919
Pres. To~kins Co .. , Ncit.tl. Bank
1920
Pres. Citizens Natl. Bank,Oneonta 1921
New York
Yonkers, N.Y.
Chairman, Yale & Towne Mfg. co .. ,
(Officer cmd Director of
Croton-o~Budson(Sundry Corporations
N.Y.
{
1919
1920
1921
New York
1919
Lake George, N.Y. Campania ~talluigica
Mexicana
New York
Chairman & Director
Ingersoll-Rand.Co.,
1921
New
Class B
H.R. Towne
W.B. Thompson
Leslie R. Palmer
Class C
Pierre Jay
George Foster
Peabody
W. L. Saunders
1920
..
X-1536
-2-
District No.
~-
Federal Reserve Bank of
Phila~elphia.
(Richard L. Austin, chairman and Federal Reserve Agent, H.B.
chairman, E.P. Passmore, Governor)
Tho~son,
deputy
--------------------------------------------------------------------------------TERM EXP:rBES
RESIDENCE
BUSINESS AFFILIATIONS
DIRECTOR
Dec. 31, -
Class A
,l
M. J • Murphy
ClaEks Green,Pa.
Francis Douglas
Joseph Wayne,Jr.
Wilkes-Barre,pa.
Philadelphia, Fa.
c/o A.B. Leach & Co.
Invest.Barikers, N.Y.
Cashier,ist Natl. Bank
Pres. Girard Natl. Bank
1919
1921
1920
Class B
A.B. Johnson
Philade1phia,Pa.
E. S. Stuart
Chas. K. Haddon
Philadelphia, Fa.
Camden, N.J.
Pres.Baldwin Loco.Works
Phi1adelphia,Pa.
Merchant,Philade1phia,Pa.
Pres.Victor Talking
Machlne Co.,Camden.N.J.
1919
1920
1921
Class C
H.B. Thompson
Wilmington, Del.
Richard L. Austin, Philadelphie.,Pa.
Chas. C. Harrison Philade1phia.Pa.
--------
'
Pres. U.S. Finishing Co.,
New York
1919
1920
c/o Harrison & Co., Bankers 1921
'
-------~-----------~---------------------------------------------·-------
District Nt). 4• Federal Reserve Bank of Cl~Veland
(D.C. Wills, chairman and Federal Reserve Agent, Lyrran H. Treadway, deputy
chairman, E.R. Fancher, governor.)
Class A
w. S. Rowe
Robert Wardrop
O.N. Sams
Cincinnati, C.
Pi ttsburgh,Pa.
Hillsboro,O
1st Natl. Bank
Peoples Na t1. Bank
Merchants Natl. Bank
1919
1920
1921
Class B
R.P. Wright
T.A. Coombs
John Stambaugh,
Erie,Pa
Lexington,Ky
Youngstown, 0.
Reed Mfg. Co.,
Coombs Lumber Co.,
Brier Hill Steel Co.
1919
1920
Peck, Stow & Wilcoa
1919
1920
The Columbus Dispatch
1921
1921
Class C
Lyman H. Treadw~y C1eveland,O
D.C. Wills
Cleveland,O
ao1umbus,O
H.P. Wolfe
-3-
..
X-1536
District No. 5 - Federal Reserve Barik of Richmond.
(Caldwell Hardy, chairman and Federal Reserve Agent, James A. Moncure, deputy
chairman, George J. Seay, governor.)
DIRECTOR
RESIDlENCE
BUf:INE38
A]FILIATIONS
TEEM EXPIRES
Dec. 31, -
--------------------------------------------------------------------------------
Class A
•
J .F. Bruton
Edwin Mann
Chas. E. Rieman
Wilson, N.C.
Bluefield, W. Va
Baltimore, Md.
Pres, 1st lhtl. Bc:nk
Pres. 1st Natl Barik(Bluefield)
Pres. We s t.:;;.:rn l~a f·,J.. JJ'J.:nk
Washington, D.C.
Hartsville, S.C.
Richmond, Va
Merchant, Washington, D.C.
Merchant & Planter
•
Pres. Atlantic Life Ins.Co.
Richmond, V@:.
Richmond, Va
B<:i.l timore, Md
Sec.&Treas. Richmond Guano Co.
1919
1920
1921
Class B
James F. Oyster
D.R. Coker
Edmund Strudwick
1919
1920
1921
Class 0.
James A. Moncure
Caldwell Hardy
Howard Bruce
Pres.Hartlett-Hayward Co.
1919
1920
1921
District No. 6 - Federal Reserve Batik of Atlanta.
(Joseph A. MCCord, chairman and Federal Reserve Agent, Edward T. Brown, deputy
chairman, M.B. Wellborn, governor.)
Class A
F.W~
P~R.
Foote
Kittles
John K. Ottley
Hattiesburg, Miss
Sylvania, Ga.
Atlanta, ~(k.
V-P lst Natl Barik
Pres. Natl Bank of Sylvania
V~P 4th Natl Bank
1919
1920
1921
Nashville, Tenn
New Orleans,La.
Decatur, Ga.
Hartford Hosiery Mills
Atty. at Law
C~ntractor & Engineer
1919
1920
1921
Class B
W.H. Hartford
Jas. E. Zunts .
J.A. McCrary
Class C
W.G. Kettig
Jos. A. McCord
Edward T. Brown
Birmingham,Ala.
Atlanta, Ga.
Atlanta., Ga.
Sou.Rep.Crane Co.
( Cap"i talist and
(Attorney
1919
1920
1921
298
-4-
X-1536
District No. 1 - Federal Reserve Bank of Chicago.
(William A. Heath, chairman and Federal Reserve Agent, James Simpson, deputy
chairm;.:,n, James B. McDougal, governor.)
------------------------------------------------------------------------------·--TERM EXPIRES
BUSINESS .AFFILIATIONS
RESIDENCE
DIRECTOR
Dec. 31t -
Class A
James B. Forgan
E. L. Johnson
Geo. M. Reynolds
Chicago. Ill
Waterloo, Iowa
Chicago, !11
Chairman,lst Natl. Bank
Pres.Leavitt & Johnson Trust Co.
Pres. Continental 8:
Commercial Natl. Batik
1919
1920
1921
Class B
John w•. Blodgett
Albert R. Erskine
A.H. Vogel
Grand Rapids,Mich Chairman & Treas. Blodgett Co.
South Bend, Ind
Pres. Studebaker Corp
Milwaukee, Wis
Pres.Pfister & Vogel Leather Co •
1919
Des Moines, Iowa
Chicago, Ill
Chicago, Ill
1919
1920
1921
•
1920
1921
Class C
E.T. Meredith
James Simpson
Wm. A. Heath
Publisher"SUccessful Farming"
1st V-P Marshall Field Co.
-- - -- - ---- - - - -- -- - - - - - - - - - -- - District No. 3 -Federal Reserve Bank of St.Louis.
(William M~C~;Martin, chairman and Federal Reserve Agent, John W. Boehne,
deputy chairma."'l, David C. :Eigg~1, governor)
Class
A
Sam. A. Ziegler
Walker Hill
J .C. Utterback
Albion,Mich
St.Louis,Mo
Paducah,Ky
Cashier,Albion Natl. Bank
Pres.Mechanics-Amer.Natl. Bank
Pres. City Natl Batik
1919
1920
1921
Little Rock, Ark
Greenville,Miss
St.Louis, Mo.
Plurikett-Jarrell Gro. Co.
Attorney & Planter
1920
Meq:>his Tenn
Evansville, Ind
St.Louis,Mo
Editor"Commercial Appeal"
Retired Capitalist
Class B
W.B. Pl"Wlkett
Leroy Percy
Rolla WeJ.l s
1919
192:
Class C
C.P,J. Mooney
John w. Boehne
Wm. McC. Martin
l-919
1920
192:.
-5-
•
299
X-1536
District No. 9 - Federal Reserve Bank of Minneapolis (John H. Rich, ch.c-:irmm1 ~-,nd Federal Reserve Agent, Wrn. H. Lightner, deputy
chairman, Theodore Wold, governor.)
-------------------------------------·--------------------------------------------TERM EXPIRES
BUSINESS AFFILIATIONS
RESIDENCE
DIRECTOR
Dec.
31, -
------------------------~--------------------------------------------------------·--
•
Class A
Pres. Northwestern Natl. Bank
Ex-Gov. North Dakota
Pres. 1st Natl.Bank
1919
St.Paul,Minn
Helena, Mont
La Crosse, Wis
Insurance
Holter & Co., Hdwe.
Hixon & Co., Inc.
1919
1920
1921
Hough ton, Mich
Minneapolis,Minn
St. Paul,Minn
Retired
1919
1920
1921
E.W. Decker
Minne£1>olis,Minn
L.~... ~ ~
; i ~argo, N.D.
Wesley C. MCDcwe11 Marion, N.D.
1~20
1921
Class B
F.R. Bigelow
N.B. Holter
F.P. Hixsn
Class C
:
John W. Black
john H. Rich·
Wm. H. Lightner
Attorney
· District No. 10 - Federal Reserve Bank of Kansas City
(Asa E. Ramsay, c~irman and Federal Reserve Agent, F.W. Fleming, deputy
chairman, J.Z. Miller Jr., governor.)
Class A
W.J. Bailey
C. E. Burnham
i.e. Mitchell
Atchison, ltas
Norfolk, Nebr
Denver,Col.
Pres. Exchange Natl Bank
Pres. Norfolk Natl Bank
Pres. Denver Natl. Bank
1919
1920
1921
Class B
M.L. McClure
Harry W. Gibson
T.C. Byrne
Kansas City, Mo
Muskogee, Okla.
Omaha. Nebr
V-P Drumm Conma. Co.
Retired
Byrne & Hamner Dry Goods Co.
Ketnsas City, Mo
Kansas City,Mo
Denver,Col.
Retired
1919
1~20
1921
Olass C.
F. W. Fleming
Asa. E. Ramsay
R.H. Malone
Retired
1919
1920
1921
300
X-1536
District No. l* - Federal Reserve Bank of Dallas
· (W.F. R<?msey, chairman and Federal Reserve Agent, W.B. Newsome, de1juty
chairman, R.L. VanZandt, governor.)
-------------------------------------------------------------------------------TERM .ElP IRES
BUSINESS AFFILIATIONS
DIRECTOR
RESIDENCE
Dec. 31, -
-------------------------------------------- ·-----------------------------------Class A
B~nk
1919
1920
1921
Ft.Worth,Texas
Livestock Commission
Paris, Texas
Cotton Oil Mills
Wichita Falls,Tex. Wbolesale Grain
1919
1920
1921
B.A. McDuiley .:,.....Dorant,Ok:la
E.K. Smith
Shreveport,La.
John T. Scott
Houston, Texas
V-P Durant Natl,
B~
Pres. Commercial Natl. Bank
Pres. 1st Nat1.
Class B
Marion Sansom
J .J. Culbertson
Frank Kel1
Class C
R.O. Wooten
W.F. Ramsey
W. B. Newsome
Abilene, Texas
Dallas, Texas
Dallas, Texas
Wholesale Gro8eries
1919
Investments
1921
1920
District No. 12 - Federal Reserve Bank of San Francisco
{John Perrin, chairman and Federal Reserve Agent, Walton N. Moore, deputy
chairman, .J..lJ •. •O,.J.kiriS"-ili, go:ver1lor)
Class A
C.K. Mcintosh
J.E. Fishburn
M.A. Buchan
San Francisco
Los Angeles,
Palo Alto
V-P Bank of ·,Calif. N.A.
Pres. Merchants N<: t. Bank
Pres. 1st Natl. Bank
1919
1920
1921
Class B
E.H. Cox
A.B.C. Dohrmam
J .A. McGregor
San Francisco
San Francisco
san Francisco
Pres. W$ed Lumber Co.
Pres. Dohrmann Comml. Co.
Pres. Union Iron ··:works
1919
1920
1921
Class C
Edward E. Elliott Berkeley,Cal.
lohn Perrin
Walton N. Moore
SanFrancisco
SanFrancisco
Atty. & Prof. of International
Law, Univ. of Cal.
Pres. Wal ton N. Moore.
Dry Goods Coiipaey
1919
1920
1921
.
30i
X-1536 a
..
OFFICERS AND DIBECTORS OF FEDERAL BESERVE :BRANCH :B.ANKS •
District No. 2 - Buffalo :Branch of the Federal Reserve :Bank of New York,
(Ray M. Gidney, Mana@Br)
DIRECTOR
•
:BUSINESS AFFILIATIONS
RESIDENCE
Clifford Hubbell(a)
Chas. M. Dow( a)
Elliott C. McDougal
Harry T. Ramsdell
District No.
:Buffalo
JaDBstown
Buffalo
:Buffalo
TERM EXPIRES
Dec. 1
Pres. Fidelity Trust Co.
Pres. Natl. c:1a'l te.uqua Co. Bank
Pres. 3ank of :61-'.ffalo
Pres. Mfg. & TraderE Natl Batik
-
1919
1919
1920
1920
4- Cincinnati :Branch of the Federal Reserve :Batik of Cleveland.
(L.W. Manning, Manager)
Hon. Judson Harmon
Cincinnati,O
Chas. A. Hinsch
W.C. Proctor
w. s. Rowe
Cincinnati,O
Cincinnati,O
Cincinnati,O
Atty. Harmon,Colston,Goldsmith,
and Hoadley
Pres.5th-3rd Natl. :Bank
Pres. Proctor & Gamble Co.
Pres. lst Natl. :Bank
1919
1919
1919
1919
------------ -------------------------------------------------------------------District No.
4- Pittsburgh Branch, Federal Reserve Batik of Cleveland.
(George DeCamp.Manager)
~
Chas. w. Brown
James D. Callery(a)
T.H. Given(a)
R.:B. Mellon
I
Pittsburgh,Pa
Pittsburgh,Pa
Pittsburgh,Pa
Pittsburgh,Pa
Pres. Pittsburgh Plate Glass Co.
V-P Philadelphia Co.(Pittsburgh)
Pres.Farmers Deposit Natl :Bank
V~P Mellon Natl. :Bank
1919
1919
1919
1919
-----------------------------------------~-----------------------~----------------
District No.5- Baltimore Branch,Federal Reserve Bank of Richmond.
· (M.M. Prentis,Manager)
Chas. c. Homer,Jr.
Ingle (a)
Waldo Newcomer{a)
H.B. Wilcox
Wln.
:Baltimore,Md
:Sal timore, Md
Baltimore,Md
Baltimore,Md
Pres.2nd Natl Bank';Savings :Bank
Pres. Baltimore Trust Co
Pres. Natl Exchange Bank
V-P Merchants-Mechanics lst
Nat1 :Bank
1919
1919
1919
1919
District No.6- New Orleans Branch,Federal Reserve Batik of Atlanta.
(Marcus Waiker,Manager)
J.P. :Butler,Jr.
John E. Bouden,Jr.
P.H. Saunders{a)
Frank Roberts
H.B. Lightcap
A.P. Bush(a)
- Jas. E. Zunts( a)
New Orleans,La.
New Orleans,La.
New Orleans,La.
Lake CharlesJLa.
Jackson, Miss
Mobi1'3, Ala.
New Orleans,La.
V-P Canal B & T Co.
Pres.Whitney-CentralNatl :Barik
Pres.Comrrarcial Trust & Savings
Pres. Ca1casieu Natl Bank
Capitalist & Farrmr
Wholesale Grocer
Attorney at Law
1919
1919
1919
1919
1919
1919
1919
---------------------------------------------------------------------------------
6- Birmingham Branch,Federal Reserve Bank of Atlanta.
District No.
302
. · (:A .E. Walker, Manager)
" ,.
BUSINESS AFFILIATIONS
RESIDENCE
DIRiC'lOR· ·
W.H. Kettig(a)
Birmingham,Ala.
n
Oscar Wells(a)
n
T.O.Smith
n
w.w. Crawford
John
____________
H• Frye
,... "__
TERM EXPIRES
Dec. )1, 1919.
Sou.Bep. Crane Co~
Pres. 1st Natl• Bank
v...p Birmingham Trust & Savings Bank
Pres. AJ:r.erican Trust & Savingtt Bank
Pres. Traders Natl Bank
~
--.-- - --- -- --- - . ~
District No. 6- Jacksonville Branch, Federal Reserve Bank of Atlanta
( George R. DeSaussure, Manager)
John C. Cooper(a)
Edward w. Lane
Bion H. Barnett
Giles L. Wilson
Fulton Saussy
District No.
Jacksonville,Fla.
"
"
II
II
Atty. at Law
Pres. Atlantic Natl. Bank
Pres. Barnett Na tl. Bank
V-P Florida National Bank
F. Saussy Company
-- - - - - -- - - - -- - - - - - - - - - - - - -
7- Detroit Branch of Federal Reserve Bank of Chicago.
(R.B. Locke, Manager)
John Ballantyne(a}
Emory W. Clark
Julius H. Ha&s
Charles H. Hodges(a}
Detroit, Mich
11
n
II
Pres. Merchants Na tl Bank
Pres. First & Old Natl. Bank
Pres. Wayne County & Home Savings Bank
Manufacturer
District No. 8- Louisville Branch, Federal Reserve Bank of St.Louis
(w.P. Kincheloe; Manager)
Geo. W. Norton
F.M. Sackett(a)
w.c. Montgomery
Embry L. Swearingen
Louisville ,Ky
Louisville,~
Elizabeth tovm, Ky
Louil!lville,Ky
--- - - - - - - - - - - - - - - - - - ~
Capitalist
Pres. Pioneer Coal Co.
V-P 1st-Hardin Natl. Bank
Pres. lst Natl Bank
~
District No. 8- Memphis ~ranch, Federal Reserve Barik ot St.Louis~
.
(John J~ Heflin, Manager)
R! Brinkley §nowden
John D. McDowell
T.K~ Riddick(a)
s.E. Ragland
Merriphi s, Tenn
Memphis, Tenn
Memphis,Tenn
Memphis, Tenn
V-P Bank of Commerce and. Trust co·
V-P Union & Planters Bank & Trust Co •.
Attorney·
Pres. Central-State Natl. Bank
District No.8- Little Rock Branch, Federal Reserve Batik of St.Louis.
(A.F. Bailey, Manager)
·
Ed. Cornish
Wright(a)
Geo. W. Rogers(a)
C.A. Pratt
Moo~head
· Little Rock, Ark
"
"
"
Pres. American Natl. Bank
Pres. Union Trust Co~any
V-P Bank of Corrmerce
Prest. Exchange Na tl. Bank.
- - - - - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - -
~
..
"'
.
303
X-1536a
-3-
District No. 10 - Denver Branch, Federal Reserve Bank of Kansas City.
(A.A. Burkhardt, Manager)
DIRECTOR
c.c. Parks
A.C.Foster
John Evans (a)
Alva Adams (a)
---
RESIDENCE
Denver, Colo
"If
Pueblo, Colo.
--- - --- - -- - -- -
BUSINESS AFFILIATIONS
TERM EXPIRES
Dec. 31, 191~
V-P 1st Natl. B.s.nk
V-P United States Natl. Bank
Pres. :(nternational Trust Co.,
Pres. Pueblo Savings & Trust Co.,·
-- - --
District No. 10- Omaha Branch, Federal Reserve Bank of Kansas City.
(O.T. Eastman, Manager)
Luther Drake
J .c. McNish
P.L. Hall(a)
.m..o. Marnell(a)
Omaha, Nebr
Omaha, Nebr
Omaha, Nebr .
Nebraska City,Nebr
Pres. Merchants Natl. Bank
Pres. McNish Cattle Loan Co.,
Pres. Central Na tl Bank
Cashier, Merchants Natl. Bank
· District No. 11 - El Paso Branch, FederalReserve Bank of Dallas,
· ( R.R. Gilbert, Manager)
w.w.
Turriey(a)
A. P. Coles( a)
El Paso, Texas
II
A.F. Kerr
It
U.S. Stewart
It
District No. 11 -
H~ston
J .A. Pondrom .
Frank Andrews
J.C. Chidsey(a)
J.J. Davis (a)
Houston, Texas
Attorney at Law
Investments
V-P El Paso Bank & Trust Co.,
Pres. City Natl. Bank .•
Br?nch of the Federal Reserve Bank of Dallas.
( sam. R. Lawder, Manager)
It
:n
Gal ve !J ton, Tex~
- - - - - - - - -- - - - -- - -
V-P so. Texas Commercial Natl. Bank
Director, Union Natl Bank
V-P Houston Natl. Exchange Barik
Pres. South Texas State Bank, Galveston.
- - - - - - - - - - - - - - - - - - - --
District No. 12- Portland Branch, Federal Reserve Bank of San Francisco.
( C.L. Lamping, Manager)
E.A. Cookingham
Portland, Oregon
J.C. Ainsworth
"
It
Nathan Strau.ss (a) .
Joseph··N... 'Pe8l·(a)
Pres. United States Natl. Bank
Gen. Mgr. Fleishmer Mayer & Co.,
--------·--------------------------District No. 12 - Seattle Branch, Federal Reserve Bank of SanFrancisco.
(C.J. Shepherd, Manager)
M.F. Backus
Seattle, Wash.
M.A. Arnold
n
Chas. H. Clarke(a)
"
Chas. E. Peabody (a) "
Pres. Natl. Bank of Comrrsrce.
Pres. Kelley. Clarke Co ••
Puget Sound Navigation Co.,
1'
"
"'
-4-
304
X-1536 a
District No. 12 - Spokane Branch, Federal Reserve Barik of San Francisco.
(Chas A. McLean, Manager)
..
.
DIRECTCF
.
RESIDENCE .
D.W, Twohy
Spokane, Wash
R.L. Rutter
n
Peter McGregor( a)
"
G.I. Toevs{a)
n
BUSH~SS
AFFILIATIONS
TERM EXPIRES
Dec. 31,1~19 _
Pres. Old Natl Bank.
Pres. Spokane & Eastern Trust Co.,
Pres. McGregoe Land & Livestock Co.,
V-P Centennial Mill Co.,
-------·
District No. 12 - Salt Lake Branch, Federal Reserve Bank of SanFrancisco.
(Chas. H. Stewart, Manager)
L.H. Farnsworth
Salt Lake City, Utah
Chapin A. Day
Ogden, Utah
G. G. Wright( a)
Idaho Falls, Utah
Lafayette Hanchett~a) Salt Lake Ci ty,Utah
Pres. Walker Bros. Bankers.
Director·lst Natl Bank, Ogden Utah
.Asst. Gen. Mgr. Con. Wagon & Mch. co.
Director, Natl. Copper Bank,
Salt Lake Mining Engr.
-------------------------
· (a)
Appointed By the Federal Reserve Board,
. I
-----------
305
FEDERAL RESERVE BOAR})
WASHINGTON
~y
.
Curtiss, Boston
Jay, New York
Au. s tin , Phil.;;;~. de lphie:a.
Will~, Cleveland
Hardy, Richmond
McCord, At la.nta.
Heath, Chicago
IVT.artin, St ~Louis
Subject: Cla.ssifica.tion of Victory Notes on Fo~
15,1919. X-1537
Rich,
Mizlne<:~.f o
~s~y,
~~s~s
:as
City
Ramsey, l>J.lla.s
Perrin,
S~nFr~ncisco
34.
Please include in your Fri<Ll.y night telegr<lm foro 31~ for lV!Ay 16
cmd subsequent weeks amount of. V~ctory notes on bd.r..d cod~ :{3AKE. Such
notes should be r~p9rted sep~rately on ma.il form 34~ :Bo.a1·d •~ W!iel;.ly
ba.nk st~tement will show one U.S. Government bond, two U.S .. Vi.ctory
notes ..md three u.s. certific~tes of indebtedness instea.d of u.. e.
long and short-term secv.rities as heretofore .. Plec;~.se !'Il;;.:l.ke sarta
segregation in your own weekly press stJ,tement. Certific<:~.tes of
indebtedness should include as heretofore e:a.ILOunts bought under Pi :tnb'~
Act .mel held to secure Feder.l.l Reserve b;;mk note circulation, .,!.}SO
holdings under repurc~se agreements ~ holding$ of certificates
issued in anticipation of taxes ~d Victory lo..m.
BRODERICK.
306
W. P. G. HARDING, GovERNOR
ALBERT STRAUSS, VICE GOVERNO!~
EX-OFFICIO MEMBERS
ADOLPH C. MILLER
CHARLES S. HAMLIN
CARTER GLASS
SECRETA•
O~E TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
J. A. BRODERICK, SECRETARY
W. T. CHAPMAN, ASSISTANT SECRETARY
W. M. IMLAY, FISCAL AGENT
FEDERAL RESERVE BOARD
COMPTROLLER OF THE CURRENCY
ADDRESS REPLY TO
WASHINGTON
FEDERAL RESERVE BOARD
May 20,1919.
X-1541
.
Subject: Revi sit.m of Weekly Member Bank Condition
Statement to Provide for Classification
of Victory Notes.
Dear Sir:
With' the view of enabling the Board to follow more closely
ch&nges in member bank holdings of Victory notes, may we request that
you instruct all banks submitting weekly condition reports (form 51-A)
to report separately, beginning with the report for June 6, their net
investments in United States Victory notes.
There are
forw~rded
herewith
copies of form St. 51
(revised) for the use of yvur bank in submitting your consolidated report
to the Board. The only import&nt changes in the form are the addition of
new item "U.S. Victory Notes" to follow item 2, and the substitution of the
caption
11
Loans secu=ed by U.S. Government war obligations:-: for "Loans
secured by Lib::rty bonds and certificates" c1s shown against item 5 of
the old form.
Form 51-A should be changed in the same manner as indicated in
form St.
51,
and
in
addition the explanation following item
5
should be
modified so as to read nAll loans carried by bank for which borrower has
pledged Liberty bonds, Victory notes or Treasury certificates as security
(exclusive of paper under rediscount)". In case a new supply of form 51-A
is ordered by your bank care should be exercised to see that the changes
made in the form forwarded with our letter dated April 1
(~t~302),
relative
~-2-
30'7
X-·154-l
to the method of figuring net derr.ancl deposits. are incorporated in the
revised edition.
In this connection please be sure to instruct your member banks tl'lat
in reporting their holdings of U.S. war securities they should include
their ~ investmen-ts only in such securities. For example, if bank
•
11
A" 'hu;;rs
Liberty bonds or Victory notes on the Government plan for the purpose
of selling such bonds or notes to its customers, the bank should report as its
holdings of Liberty bonds or Victory notes the excess of the amounts paid
to the Government o\'er the amounts Qf installment payments received from
individual subscribers, viz., if
b~nk
"A"
has paid the Government one
million dollars, and individuals or corporations
purch~sing
bonds or notes
from it on the installment plan ha\'e paid installments amounting to $400,000,
the bank should report merely its net investrrent in such securities as
$600,000.
In case individual subscribers purch~sing bonds or notes on
the installment plan have paid the reporting bank an amount in excess of
·that which it has invested in.such bonds or notes, such excess should be
reported among the demand deposits of tne repurting bank f(Jr the reason
that such amounts represent obligations of the bank to purchase and
deliver bonds to the individuals or corporati(ms subsci:·iblng through it.
Yours very
truly~
Secretary.
EX~OFFICIO
W. P. G. HARDING, GoVERNOR
ALBERT STRAUSS, VICE GoVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
MEMBERS
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELfiflN -J'JLLIAMS
COMPTROLLER OF THE CURRENCY
FEDERAL RESERVE BOARD
FEDERAL RESERVE BOARD
May 20,1919.
.
W. T. CHAPMAN. ASSISTANT SECRETARY
W, M. IMLAY. FISCAL AGENT
ADDRESS REPLY TO
WASHINGTON
Subject: Weekly Press Statements of
Federal Reserve Batiks •
J. A. BRODERICK. SECRETARY
X-1542
Dear Sir:
An examination of the Press Statements issued by the Federal
Reserve ~anks giving their condition as at close of business on Friday
of each week Shows that some of them are made out practically in
accordance with the form adopted ·by the Board for its weekly published
reports, while others show figures in much greater detail or adopt a
different classification from that followed by the Board. It is difficult
therefore for the public to ITake intelligent comparisons of the reports
issued by the several Federal Reserve ~anks.
With the view of having all published condition reports compiled
on a uniform basis in order to render easier comparisons of the statements issued by the various Reserve· banks, it is requested that in
future press reports showing the resources and liabilities of your bank,
Y'm use the same captions and follow the same order of presentation as
adopted by the Board in its weekly press statement. In case you desire
to show items in greater detail than in ou:- weekly statement, there wil1
be no objection on the part of the Board provided you show the detailed
items under sub-heads and give, in addition, totals against the same
captions as are shown in the Boardt s weekly statement. For example~ in
the deposit block ".All other deposits" are made U:!.) of :Non-rcem::..,r bank
clearing account, Due to War ?:i.nance Co!'porat:i.on, Cash:'.e:::- 1 s che:;ks,
Federal Reserve exchange and transfer drafts. 'I·hese i~ems mr'.y all be
specified in your weekly press statement if yJu so cles:i:ce, pro-..;id.ed the
total is also shown under caption "All other deposits, in::::lu,:ling foreign
government credits", or under 11.All other deposits" in case your bank
has no foreign government creditsIn the same block- item "Due to Members - Reserve accour-tn
Should tc-:ke the place of the caption ~~Member banks deposits (mtj ,;,~sed
at present by some of the Federal Reserve ~anks. The above caption
should represent all member bank deposits credited to tbeir :cese:-:-ve
account, and not the net deposits as figured by some banks at tho preseot
time and by the Board prior to January 1917.
·
:·
.
X-1542
-2-
In arriving at figures to be shown under the captions as given
in the Board's weclrly press statement, it is requested that you be
guided by the instructions given in our letter of December 18 ( S";.ll3):
copy of which is enclosed herewith,
Yours very truly,
(Enclosure)
Secretary.
3"tr''9'
L
•
X-1543
WAR TRADE BOARD
..
ACTION OF liMY 2,
1919 •
The Bureau of Exports is hereby instructed to remove from the
Conservation List, on May 5, 1919 or as soon thereafter as possible,
all manufacturers of gold whereof the value of the gold content does
not exceed 65 per cent of the total value:
The BUi'eau of ~orts is further directed to advise the Customs
Division of the Treasury Department that in every Export Declaration
covering a shipment of manufactures of gold, whereof the value of the
gold content does not exceed 65 per cent of the total value, there
must be embodied a staterr~nt setting forth the value of the gold
content as well as the total value of each item of such shipment,
and stating that the value of the gold content of each item of the
shipment does not exceed 65 per cent of its total value;
The Bureau of Exports is further directed, jointly with ·the
Federal Reserve Bot=,rd, to advise the Customs Division of the Treasury
Department that all manufactures of gold, whereof the value of the
gold content exceeds 65 per cent of ·the total value, are to be regarded
as gold bullion, the exportation of wh&ch is subject to the exclusive
control of the Federal Reserve Board pursuant to the Proclamations
and Executive Orders applieable thereto, and that applications for
licenses to export such commodities should be made through the Federal
Reserve Bank of the district from which the application is made, and
that all such applications must state the value of the gold content
of the articles proposed to be exported, as well as the total value
of such articles.
. ....
,
X-1544
Governor
BOSTON Chas. A. Morss
Cashier
Deputy Gover,nor
Chas. E.
~encer,Jr.
C.C. Bullen(also
(See Deyuty
governor)
cashier)
..
NEW YORK
B$njamin Strong
R.H. Treman
J .H.
Case
~.F.
Curtis
Sailer
L.F.
Assistant CaShiers
Wm. Willett
E.M. Leavitt
F.W. Chase
Wm. N. Kenyon
H.A. Saunders
L.W. Sweetser
L.H. Hendricks
E .. R. Kenzel (Mgr of
investments)
J.D. Higgins
A. W. Gilbart
G.E. Chapin
J .w. Jones
A.J .. Lins
w.B. Matteson
L.R. Rounds
I. W. Waters
J.E. Raasch
C.H. Coe
J.E. Crane
W.A. Hamilton
W.A. Dyer
Thomas Gamon,Jr.
C.A. Me Ilhenny
James M. Toy
R.M. Miller, Jr
Frank LaBold
W.J. Davis
R.T. Crane (Asst.
.~o Governor)
•
PHILADELPHIA
E.P. Passmore
CLEVELAND
E.R. Fancher
, Wm. H. Hu.t t ,Jr.
M.J .. Fleming
) H. G. l)a.vis
Frank J. Zurlinderi)
(Assistants to
Governor)
C.W. Arnold
W.F. Taylor
R.F. Strater
Cbas. A. Peple
R.H. Broadus
George H. K.eetee
C. V. Blackburn
Thos. Marshall,Jr
W. W. Dillard
L. c. Adelson
M.W. Bell
R.A.
J.L.
W.R.
W.B.
H.F.
RICHMOND
George J. Seay
ATLANTA
M.B. Wellborn
Sims
Campbell
Patterson
Roper
Coniff
312
X-1544
...2-
•
Governor
CHICAGO
J .B. McDougal
Deputy Governor
C,R. McKay
Cashier
S.B. Cramer
B. G.. McCloud(Asst
to Governor)
Assistant Cashiers
F.J. Carr
Clark Washburn
Frank A. Lindsten
O.J. Netterstrom
D.A. Jones
I
J1.F. Dilla~d
F. Bateman
,
F.R. Hanrahan
A.H •. Vogt
K.C. Childs
Louis G. Meyer{Acting)
ST.LOUIS
David C. Biggs
MINNEAPOLIS
Theodore Wold
KANSAS CITY
J .z. Miller 7 Jr.
O.M. Attebery
R.A. Young
C.A. Worthington
(Asst. to Governor)
J.W. White
S.S. Cook
J.W. Helm
(Acting)
A.H. Haill
J.W. Rinkleff
W. H. Glasgow
F. C.
Gray
R.E.
L.E.
Dunlop
Warren
Towle
Rast
John Phillips,Jr
E.P. Tyner
L.H. Earhart
G.E. Barley
C.E. Daniel
M.W.E. Park
DALLAS
R.L. Van Zandt
Lynn P. Talley( also
Cashier)
( See Deputy
Governor)
Wm. A. Day' f. ~ : :·..
Ira Clark
Fred Harris
Paul G. Taylor
R.B. Coleman
DNight P. Reardon
SAN FRANCISCO
J. U. Calkins
W.N.
C.D.
B.C.
J. C.
C.R.
Ambrose
Phillips
Vogelsa."lg
Galbraith.
Shaw
Wm. Hale
~'-13'
U.Jl
W. P. G. HARDING, GOVERNOR
ALBERT STRAUSS, VICE GOVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
EX-OFFICIO MEMBERS
CARTER GLASS
•
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
FEDERAL RESERVE BOARD
COMPTROLLER OF THE CURRENCY
J, A. BRODERICK, SECRETARY
W. T. CHAPMAN. ASSISTANT SECRETARY
W. M. IMLAY, FISCAL AGENT
WASHINGTON
ADDRESS REPLY TO
FEDERAL RESERVE BOARD
•
SUBJECTt
Credit Barorretrics.
Dear Sir:
In response to your request for a copy of the
FEDERAL RESERVE BULLETIN containing an article on Credit
Barometrics, you are advised that this article was pub, lished in the March issue of the FEDERAL RESERVE BULLETIN,
which, I regret to say, is now exhausted. I understand,
however, that Mr. George H. Paine, Land Title Building,
Philadelphia, Pennsylvania, has had the article reprinted
in a separate pamphlet, and doubtless you will be able t$:>
obtain a copy by addressing him.
Very truly yours 7
Acting Assistant Secretary.
EX~OFP'ICIO
..
314
MEMBERS
W. P. G. HARDING, GoVERNOR
ALBERT STRAUSS, VICE GoVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
CARTER GLASS
SECRETARY OF THE TREASURY
• _ CHAIRIIA.N
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
FEDERAL RESERVE BOARD
J. A. BRODERICK, SECRETARY
W. T. CHAPMAN. ASSISTANT SECRETARY
W. M. IMLAY, FISCAL' AGENT
WASHINGTON
ADDRESS REPLY TO
FEDERAL RESERVE BOARD
May 22, 1919.
X-1546
...
Subject:Campaign for State Bank Members.
Dear Sir:
The following is confirmation of telegram sent you today:
"During the year 1918. six hundred and eighty-six
State institutions were admitted to rrembership, ninetyone banks have joined the system since January first, 1919.
With the Victory Loan ca.inpaign finished ani favorable legislation enacted in many States, the ]oa.L~d ~elieves the present
to be an opportune time to start an aggress:i.ve campaign for
new members. A dri1/e for addiUons to the par list is already
under way.
"Solvent State banks whic~ you believe would make desirable
members should be approachei either by correspondence or by a
personal visit of a reprepentative of ym.1r bank who is fully
familiar with all the departments of the Reserve Bank and the
various ways in which se!'Vice may be I·end.ered to rr.erobex- b.a.r..ks.
"Officers and employee3 of b;•an0he:'l should be used. and
directors should be a~ed to give en;~ou:..'agerrent and suppo:r."t
to the campaign in branch territory. The ccopera.thm of officers
of large member banks shcul~ be rAquested. ~ne Board believes an
aggTessive campaign w:i.ll produce excellF?.nt ree;u). ts a.-1d desires
to be kept informed as to the progress made".
For your information there is enclosed a statement s:howing
the number of State institu.tions membgrs of th3 Federal B.eserve System
by Districts and by States as of January 1, 1918, January 1, 1919, and.
May 20, 1919.
Very truly yours,
Assistant Secretary.
(
I'('-
.
315
'
TABLE SHOWING NUMBER OF STATE INSTITUTIONS, MEMBERS OF TIIE
FEDERAL •RESERVE SYSTEM, BY STATES AND DISTRIC'.£15.
****•
Ja.nua.ry l, 1918
4
0
0
0
l
2
Alabama
Arizona.
Arkansas
California.
Colorado
Connecticut
Delaware
District of Columbia
Florida
Georgia
Iddho
Illinois
Indi.:ma
Iowa.
K:msa.s
Kentucky
Louisi.a.rw.
:._
~
~ine
.Maryl..md
Ma-ssachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana.
Nebraska.
Nevada.
New Thlm_pshire
New Jersey
New Mexico
New York
North Carolina.
North l).;l.kota
Ohio
Oklahoma.
Oregon
Pennsylvani.:~.
.
Rhode Isbnd
South Ca.rolinu.
South D....kotd.
Tennessee
Texas
Utah
Vermont
Virginia.
Washington
West Virginia
Wisconsin
Wyoming
Total
January 1, 1919
11
3
10
4
3
6
3
l
l
1
2
7
2
24
3
10
4
3
0
3
11
35
6
1
10
4
2
0
0
7
0
39
0
3
10
0
3
8
1
5
1
1
11
0
0
4
9
1
5
0
250
13
4
15
4
4
6
4
1
8
8
18
27
71
19
33
70
23
79
l2
11
64
21
6
6
Ma.y 20, 1919
6
15
16
6
7
25
123
24
"2
22
20
9
2
2
22
117
24
2
20
17
9
0
0
29
6
75
5
5
46
6
l2
36
3
13
0
0
32
7
78
6
5
58
8
11
4o
3
14
11
l2
5
90
6
.~.
15
0
9
28
3.
31
0;..
936
102
21
0
10
28
4
32
0
1027
'"
I
••
. ·-}·,
X--~:_; ? •• ~:.
..
-2-
'
Districh.
Janu..a.ry
l, 191S
January
l, 1919
20,1919.
May
l
13
31
34
2
46
101
106
3
7
30
35
'4
15
67
80
5
14
37
41
6
20
54
58
7
72
2SS
301
s
13
44
53
9
16
10
75
10
9
.27
32
11
11
100
12
14,
81
250
936
·Total
113
I
~~
1,027
t!
W. P. G. HARDING. GoVERNOR
ALBERT
EX-OFFICIO MEMBERS
STRAUSS, VICE GoYEANO R
ADOLPH C. MILLER
CHARLES 5. HAMLIN
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
CoMP'TROLLER OF THE CURRENCY
J. A. BRODERICK. SECRETARY
W. T. CHAPMAN, ASSISTANT SECRETARY
FEDERAL RESERVE BOARD
W. M. IMLAY, FISCAL AGENT
ADDRESS REPLY TO
WASHINGTON
FEDERAL RESERVE BOARD
May 22,1919 •
X-1548
...
·~
Subject: Collection of Trade Acceptances.
Sir:
Referring to the Board's letter dated April 16,1919, (X-1482), in
•
which the Reserv'e Banks were requested, if they had not already done so,
to effect arrangements for the collection of trade acceptances payable at
member banks on the same terms as bankers 1 acceptances, the Board has
received replies from the Federal Reserve Banksfrom Which it is noted that
little difficulty will be experienced in the collection of trade acceptances
payable in cities where Federal Reserve Banks or branches are located, on
the same terms as batikerst acceptances.
It is a·.;l')arent, however, that there :rr.ay be considerable difficulty in
the collection of trade acceptances payable at member banks in other cities,
and for ·that reason it is believed well at this
ti~
to defer the request
made in our former communication tintil such time as the par collection
system is more fully developed, so that trade acceptances payable at both
.member and non-member banks may be collected on the same basis.
The Board urges all Reserve Banks to endeavor to collect all trade
acceptances at par, and on the same basis as
b~ers'
acceptances if it is
possible to do so.
Very truly yours,
Governor.
W, P, G. HARDING, GovERNOR
ALBERT STRAUSS, VICE GovERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
EX-OFP'ICIO MEMBERS
CARTER GLASS
SECRETAitY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COIIPTROUIR OP THE CURRENCY
FEDERAL RESERVE BOARD
J. A. BRODERICK, SECRETARY
W. T. CHAPMAN. ASSISTANT SECRETARY
W. M. IMLAY, FISCAL AGENT
ADDRESS RIEPLY TO
WASHINGTON
FEDERAL RESERVE BOARD
May
27,1919.
X-1551
Subject:
Construction of Vaults by Federal Reserve Banks.
Dear Sir:
The Board is in receipt of the following suggestion
with respect to the construction of vaults by Federal Reserve
Banks:
"We find as a result of other investigations we have
made th~t there is no concensus of opinion as to what is
the proper material out of which to build a vault. In
this city the best vaults are built of armor plate, but
we are told by sorre that it is not burglar proof, bec~1se
the electric torch can cut a hole through armor plate in
a short time; others say that this is so theoretically,
but that a hole'sufficiently large cannot be cut in heavy
armor plate under conditions under which burglars would
have to work. Manganese steel is recorrJLended by some, and
laminated steel plates by others. It is recomi-rended,
generally, that all vaults be protected by a covering of
concrete, reinforced with steel, but there are very decided
differences of opinion as to the proper thickness of this
cove ring. ·As nearly every Federal Reserve Bank will have
to build a vault and will want to have it built of the
best material and in the best way to provide the maximum
amount of protection, would it not be well to have a
commission appointed to investigate the matter of rraterial
and form of construction, and so avoid the necessity and
expense of every bank doing it?"
Will you please cornrr~icate to Consulting Architect
Trowbridge any suggestions that you may have to make on this
topic, in order that he may r:make a proper study and recommendation to the Board in the premises.
Very truly yours,
Secretary.
319
EX-OFP'ICIO MEMBERS
W. P. G. HARDING. GovERNOR '
ALBERT STRAUSS. VICE GoVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
FEDERAL RESERVE BOARD
COMPTROLLER OF THE CURRENCY
J. A. BRODERICK. SECRETARY
W. T. CHAPMAN, ASSISTANT SECRETARY
W. M. IMLAY. fiSCAL AOENT
ADDRESS REPLY TO
WASHINGTON
FEDERAL RESERVE BOARD
May 27,1919.
X-1552
Subject: Calculation of Interest or Discount.
Dear Sir:
With further reference. to Topic No. 35 of the Conference
of Governors, March 20-22, 1919, subject, "Calculation of Interest",
which is given below, together with recorr:mendation of the Govarnors
and the Board's ruling, tl1e question has been raisecl whether all
interest or discount in connection with all loan operations of
Federal Reserve Banks, comrr.encing July 1, 1919, is to be calculated
on a 365 day basis.
It is the understanding cf the Board
count on bills discounted or rediscounted for
all rediscounts between Federal Ibserve Banks
a 365 day basis, but t·hat no ch·J.nge is to be
interest or discount on open market purchases
Banks.
"Topic 35:
that interest or dismember barlk.s and on
wHl be computed on
made in cal~lating
of Federal Reserve
CA:WUL.ATION OF INI:EF.EST:
Treasury De11artment pa.ya on a 365 day basis while
all the Federal Reserve Banks, except those of New York
and Boston, calculate interest and discount on a 360 day
basis. Can not uniformity be obtained in this regard?
RECOMMENDATION:
It is recommended that discounts with Federal
Reserve Banks and between Federal Reserve Banks be calcu.l:ated
on the basis of 365 days a year, beginning July 1st, next ye~.
The Board concurs in the recommendation of the Governors
and re~ests that, effective July 1, 1919, the computations of interest
or discount on loans to member banks .or Federal Reserve Banke be rrade
on a 365 day basis. It is believed desirable that this method be continued as long as the bill holdings of the Federal Reserve Banks continue
to be based largely on Government pqper, interest on which is figures
on a 365 day basis."
Very truly yours,
Secretary..
320
E:X-OFP'ICIO MEMBERS
w.
P. G. liARD lNG, GoVERNOR
ALBERT STRAUSS, VICE GoVERNOR
ADOLP!i C. MILLER
CliARLES S. liAMLIN
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
FEDERAL RESERVE BOARD
J. A. BRODERICK, SECRETARY
W. T. CHAPMAN, ASSISTANT SECRETAR1
W. M. IMLAY. fiSCAL AGENT
WASHINGTON
ADDRESS REPLY TO
FEDERAL RESERVE BOARD
!Yay
27 1919.
I
X-1553.
Subject:Transmissibn of Gold Settlement Clearing 1elegram.
Dear Sir:
With a view td increasing the efficiency of the leased wire
system. and at the same time facilitate the handling of the Gold Settlement Fund clearing telegrams, will you kindly issue instructions to your
telegraph opera.tor.&ho that, commencing with the telegram for June 9th:
clearing, the narues of the Federal Reserve Banks and their branches be
designated in the d~ ly Labeg messages by the following letters of the
alphabet, in the order shown below:
Boston
(A)
New York
(B)
Phiwelphia (C)
Cleve lii.ind
(D)
Richmond
(E)
Baltimore
(M)
Atlanta.
(F)
New Orleans
Chica.go
St. Louis
Little Rock
Louisville
Memphis
(G)
(H)
( 0)
(P)
(Q)
Minnea:po lis
(I)
(N)
Y..ansas City
Dallas
El Paso
San Francisco
Seattle
Spokane
Portland
Salt I.a.ke
(J)
(K)
(R)
(L)
( S)
(T)
(U)
(V)
Under this arrangement, the operators in sen~ing the gold settlement f\ll'l.d clearing telegrams will use instead of the name of the bank a.
single letter of the alphabet, which will be followed by tbe amount to be
_ credited to the bank through the gold settlement f'l.'.nd clea:dng,
For example:
BOSTON
$ (.Amount)
will be shown:- A $_l.Amount)
The same fonn will be used by the Washington operators in sending the daily Bepeg telegrams to the banks.
For your information, there are enclosed copies of the Frinted
fonns used by the Board inreceiving and sending the daily·gold settlement
fund telegrams.
-Kindly advise branches and acknowledge receipt.•
Very truly yours,
Assistant Secretary.
3'\[i...q
~...t.
W. P. G. HARDING, GoVEIINOR
ALBERT STRAUSS, VICE GoVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
EX-OFI"ICIO MEMBERS
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER Of THE CURRENCY
FEDERAL RESERVE BOARD
J. A. BRODERICK, SECRETARY
W. T. CHAPMAN. ASSISTANT SECRETARY
W. M. IMLAY, FISCAL A&ENT
ADDRESS REPLY TO
WASHINGTON
FEDERAL RESERVE BOARD
June 6,1919.
Subject:
Transmission of Gold Settlement Clearing
X-1553
a
Telegr~
Dear Sir:
Referring to our wire of May ~st requesting that instructions
given in the Board's letter of May 27th, subject: "Transmission of Gold
Settlement Clearing Telegrams" be disregarded, owing to the reQneei for
participation in daily ~ldFund Clearing of additional branches, the
Board requests that effective June 16th, the names of the Reserve Banks
on the daily Gold Settlement Fund Clearing messages be designated by
symbols as indicated below:
Boston
New York
Philadelphia
Cleveland
Richmond
B4ll timore
Atlanta
New Orleans
(A)
(B)
(C)
(D)
(E)
(EA)
(F)
(FA)
Chicago
St.Louis
Little Rock
Louisville
Memphis
Minneapolis
Ka"'l sas City
Denver
( q)
(H)
(HA)
(HB)
(HC)
(I)
(J)
(JA)
Omaha
(JB)
(K)
Dallas
(KA)
Et Paso
San Francisco(L)
(LA)
Seattle
Spokane
(LB)
Portland
(LC'
Salt I..ake
(LD)
Under this arrangement the operators sending the G;oJd S:;ettlen:ent
Fund <Hearing telegrams will use a single letter instead of the name of the
parent Bank ccrld two letters instead of the name of the Branch, which will
be followed in each case by the amount to be credited to the Bank or Branch
through the (gold S;ettlement r·und c;learing.
For Exaii!Ple RICHMOND amount will be shown E amount
BALTIIv:ORE amount "
"
" EA amount
The s~e form in exactly the same order will be used by the
Washington operators in sending the daily Bepeg telegrams to the BanksKindly advise branches and aCknowledge receipt by wire.
Very truly yours,
Assistant Secretary.
Letter sent to Governors of
F.R. Banks.
X-1555
FEDERAL
tv.
RESERVE
322
BOARD
STA'l'EMEN!' FOR THE PRESS
Released for afternoon papers
Thursday, May 29, 1919.
During the month of May, there bas been a noticeable upward trend in
business, with evidences of great activity in certain lines, especially those·
closely related to the leading retail trades which have felt the release of
buying power held back during the war and in the first months after the
armistice.
Practical~
uniform reports fran all Federal Reserve
~nts.
point to a summer and autumn of unusual activity with many indications of
"business prosperity'' especia.lly in agriculture and merchandise, and to some
degree, in nunufacturing.
The country now seems to be passing through a
period of free expenditure or reaction from the enforced
restrictions of the war ps·riod.
econ~
and business
If the present activity should prove to be
based principally on these causes, a reaction therefrom may be looked for ·
when these 'forces have spent themselves.
From District No. 1 it is reported that "manufacturers and merchants in
practical~
all lines_are doing a large business and buyers who withheld orders
awa.it.ing lower prices are now purchasing heavily before costs advance further",.
From District No. 2 it is reported tba.t business readjustment bas gone forward
despite prices and
t~t
the pressure of the retail purchaser, working from
the bottom, has forced activity into the
br~nches
of industr.y where doubt in
the future and disinclination to go ahead bad prevailed because of the high
cost of materials a.nd labor.
District No. 3 repQ)rts that the business
situation continues to show improvement in many lines and tba.t further increases are expacted as the year advances. District No.
4 reports that "we
are no longer awaiting prosperity, it is already with us.
:Business is
323
X-1555
- 2 -
breMhing easier .n
From the Fifth District it is reported tha.t
11
improving
conditions in trade have developed rapidly **** few unfavorable comments are
heard, and optimistic reports are so general as to excite caution as to accepting them without qualifications""
In the Sixth District "business iw. a.l-
most all lines has continued active, retail trade is still on the increa.se,
and wholesale merchants also report a.n increased volume of trade." In the
.
t.
Seventh District "the volume of business *** is sufficiently large ***
to
indicate the enormous buying power which high farm prices, wages, and the
production of the war period has
created~~
The Ninth District reports that
"industrially speaking, the outlook is for a.n a.ctive year.
is active and retail trade is very satisfactory~
Wholesale business
Collections are good."
In the Tenth District correspondents of the Federal Reserve Agent "a.re more
optimistic **** than· a.t any tizre this year" a.nd there is "cheerfulness
part of bankers, merchants, farmers, llldllufa.cturers and wage-earners."
on the
All
correspondents regard conditions a.t this time as favorable to a. continuance
of prosperity for many months to came.
In the Eleventh District general
and careful investigation tends to confirm earlier predictions that •business
has reached a. period of prosperity which was not only
believe, is not fully appreciated."
w~erFected
but, we
The Twelfth District states that "manu-
fa.cturing and industry have been active in most of the centers of the district.
Wholesale and retail trade are good and collections va.ry from good to fair
****·
ta~or
except Utah."
is now
Q~ost ful~
employed in a.ll sections of the district
324
X-1555
- 3 .,.
The price and reconstruction
practically
~
situ~tion
continudtion of that
Prices in some districts are at
~lready
"~bout
throughout the country is
noted during the month of April#
the same level for corresponding
months of l~st ye~rlri while eisewhere business men are reaching the conclusion
that the return from war to normal conditions does not necessarily mean the
pre-w~r level, but that "far-reaching and permanent ecqnomio c~gesn have
been ; . produced,
Tra.de in some sections has "reached the conclusion that
most of its fears have not been realized and were without
"merchants
for
~ny
****
years." . One Federal Reserve Ba.nk finds
drop in prices and is reconciling· itself to the
pre-war prices may never again be reached."
pre-~r
while
are in a. condition of solvency which they have not enJoyed
adjusting itself to the convictiou. that there
a good
fo~tion,•
th~t
"the public is alowly
is to be no
prob~biltty
.~t
r~pid
post-wdr
that the old
would have been accepted
volume of business is much less likely to be
ac~eptable
as sufficient volume for our reconstruction work.
The
Bo~rd 1 s
index
b.;~.sed
upon that of the Department of I.a.bor, shows
that prices luve exhibited ·no tendency to
~r·:;tl'agra:de,
but on the whole
are moving slightly upward, the figure rising from 200 to 203 in April.
The effect of this condition bas been to bring about
grea-ter confideme and to develop
.1.
~
condition.of
latent buying power which
Wd.S
aP-
parently only awaiting decision as to the probabilities of the coming
months before
~king·
itself felt.
incre.J.se in the prices of
r.;~.w
The increase is due entirely to the
Illo3.terials and consumers t goods, the index
nunhers for the groups in questi.on rising from 197 to 200 d.D.d from 206
to 210 respectively.
On the other hand, the index number for the
GS
X·-1555
- 4group of producers 1 goods decUned from 190 to 186, while
c..roorl~i•·
the
sub-groups included under the hea.d. of r"''w materials the index r.:JIDber for
the mineral products group likew·:tse decHneC. from 171 to 169.
however,
wh:~.chr
did not serve to offset cons:J.dera.ble incrca.sec in t:1e lJrices
of both fQrm a.nd a.niiilal products t the index numbers for the la.tter g1.•oups
increasing from
235
to
243
and from
216
to
223
Reports
respectively.
th~t.this
of Federal Reserve Agents develop the conspicuous fact
increase in prices has brought about a. general belief
th~t
slight
the time has
came when business men may proceed actively with further commitments
without running the risk which they
bad some months ago predicted of
const<a.ntlt shrinking values for ra.w Ill;;l.terial.· stocks.
Agricul tura.lly, the remarkable promise of the : · early spring appears
to be sustained in an unusual degree.
to warrant the forecast of a wholly
Winter whea.t still continues
unprecedente~
made known by the Department of A.gricu1tu!'e.
winter
wheat
Weo.ther
f;X0¥i0TS
cond.~tions
a.re
durl.ng
have been beneficial in checking the too rank growth which was ®de
by wheat in the early spring.
not
Jn the Ka.nsa.s City :3istrict
is reported in excellent cond.:".. tion and ·
counting on the l..::l.rgest yield in history ..
~y
yield which has been
be much increased, dU$ to
The spring wheat
~creage prob~bly
will
weather conditions, but the prospects
326
- 5-
X-1555
for a large yield are said to be of the best.
that
"soil and
out the month."
moi~ture
conditions
~ve
The Ninth District
st~tes
been generally favorable through-
In districts where crops ha.ve been poor fort wo years
pa.st the outlook is very
s~tisfactory.
In the ccrn-p:t"Oducing States \.'.
the prospect is thus far very favorable and in the cotton region the outlook is for a"hopeful growing season"•
Diversification due to
org~ized
effort is. making progress and the cash returns to farmers are expected to
be unusual..
On the Pacific Coast the staple crops hd.ve "made
s~tis
fa.ctory advancement and are in good condition" although r.nn is needed ..
Some losses of fruit crops have occurred but the food outlook is
promising..
Gra.in movements to primary uarkets have for the most part
been slightly heavier in April than in February and March, but shipments
have been more than three ttmes the volume of receipts.
Flour production
during the month of April a.mounted to 11,274 1000 ba.rrels a.s c.ompared wit·h
10,498,000 during the pre7.ious month, though stocks a.t mills ~t the close
of the month on the other hand, show a slight decrease.
In consequence of
the increases in the price of flour which recently occurred, steps were ta.ken
by the Grain Corporation to check the rise, though the efforts inc erta.in
loca.lities at any rate appear as yet to hd.ve met with little success.
As a
result of stimulated prices milling operations since April 1, have been
about double those of the same period last yea.r, but
has been
th~s
increased activity
experienced only by those mills which were able to obtain allot-
ments from Government wheat stocks.
It is reported from certain centers
tha.~
the mills have booked sufficient orders to absorb the present stocks of whea.t
which are available but are unwilling to make further commitments in view
of the decrease in wheat stocks.
It has been remarked that during the pa.st
X-1515
- 6 .,. .
yeartthe United States raised insufficient corn to supply domestic
re~uire-
ments, due largely to the increased de!l.k:l.nd for feeding purposes. Speculative
trading in the
COID!ll~d.i ty
has 'been exceedingly heavy of late with specta..cula.r
movements in prices and marked on the whele by a considerable increase.
it
Fran Chicago/is reported t~t prices of cattle are considerab~ higher
than a year ago, while prices of sheep are lower.
while mutton and
~b
have slightly fallen.
Beef
S~ller
principal markets have resulted in a decrease in the
lard.
Kansas City, however, reports
t~t
~s
therefore advanced
receipts of hogs at the
stocks of pork and
the cattle trade has been rather
dull with prices slightly weaker, although they still show a. considerable
margin over
paying
~
a.
year ago.
Hogs, however, have continued to advance, speculators
to $21.
In Kansas City there was a decrease during April of 34% in the receipts
of cattle, an . increase of 34% in receipts of calves, a. decrease of 7tfc .in
hogs, an increase of 29% in sheep and a.n increase of 58% in horses and mules.
Receipts of cattle during April at fifteen
head as compared with 1,094,614 during
prin~3pa.l
M~rch,
markets were 1,255,379
the respective index numbers
being 125 and 109 as compared with 1,533,147, corresponding to an index
number of 152 a year ago.
Receipts of hogs decreased from 2,842,663 head
during March to 2,823,484 head during April, the respective index numbers
being 129 and 128, while receipts during April ·1918, were 2,942,449 head,
corresponding to an index number of 134.
increased from 847,842
to
Receipts of sheep on the other hand
970.070, with respective index numbers of 62 and.
71, as coapa.red with 733,709 a year ago, corresponding to
54.
~n
index number of
It is expected t~t the export movement will continue on a large scale
for some time to came.
-7-
.
X-1555
In steel and iron the reports for the month Show a reduction of output to
what are said to be the lowest figures for a good while past. In spite of this
fact prices of steel stocks as quoted on the exchanges have materially advanced.
A notable development during the month has been the establishment of an open
market for steel through the abandonment of the effort to stabilize values and .
prices, aided by the entrance of the Railway Administration into the market.as a
large buyer of rails and equipment. Bids for 400,000 tons of railway steel were
200,000 tons hGve been ~llotted.
requested by the Railway Administration on May 8 and
A much
better tone in the steal and iron
~arket
is reported at various points, although
the mill activity is said to be only about 70% of normal in the establishments of
the United States Steel Corporation and 50% at independent mills. Pig iron production shows a continued decrease from 3,090,243 tons during March to 2,478,213
tons during April, the respective
in~ex
numbers being 133 and 107. The latter is
the lowest figure since February, 1918. Steel ingot production likewise shows a
decrease from 2,662,265 tons during March to 2,239,711 tons during April, the
index numbers respectively being 110 and 93. The unfilled orders of the United
States Steel Corporation have also decreased from 5,430,572 tons at the close of
March to 4,800,685 tons at the close of April, the index numbers respectively
being 103 and 91, while the figure at the close of April, 1918 7 was 8,741,882 tons,
corresponding to an index number of 166. The figure for the close of April, 1919,
is the lowest since June, 1915, at the end of which month the total was 4,673,196
tons. Although pig iron trade in the Atlanta district is dull as it is elsewhere,
the steel mills are active and ra.ils are being rolled in preparation for a considerable trade. The high freight rates heretofore prevailing out of the Atlanta
district have been a handicap. but a recent ruling by the Interstate Commerce
Commission seems likely to give them access to trade in northern territory which
has up to the present been
i~possible, ~fuile
the bituminous coal industry is
reported to be at present depressed _and unsatisfactory, with an output less than
70% of that of a
year ago, and while there has be :m a large accumulation of fuel,
-3-
X-1555
'coal operators are optomistic for the future. The current use of fuel is in
excess of production and stocks are being consumed, while an increase in the
production of bituminous coal since the opening of May is notes. Shipments
of anthracite for the month of April show a substantial recovery from the low
figures for the two previous months, the tonnage for April being 5,224,715 as
compared with 3.938,908 for March, the respective index nurr.bers being
93 and 70.
The production of beehive coke on the other hand continues to decline, the
output for April being 1,316,960 tons as compared with 1,768,449 during March,
the corresponding numbers being 50 and 68. It is reyorted from the New York
market that after several weeks of almost no demand the copper market shows a
slight inprovement. Quotations have been_ reported as high as 16¢, while producing companies are operating on a 50% basis. Production of four large companies 'uring the first four months of 1919 amounted to 122,541,610 tons as
compared with 180,425,458 tons during the last four months of 1918. In spite
of the reduced domestic output, stocks have continued to incre2se due in considerable measure to continued heavy importations. The lead market is somewhat
firrrer than it has been for some time past and the tin rrarket is dull. From
Kansas City it is reported that considerable reductions have occurred in the
prices paid for zinc and lead ores and there has bean a decrease in their
production. It is reported that production in the lead industry, however, is
at a considerably higher level than in the copper. zinc and iron industries.
During the month of April more than 1000 new petroleum wells were completed with new production of about 43,600 barrels daily in the Kansas City
district. A substantial gain in production is now expected.
General rra.nufacturing is showing decided improvement. The wool market is
strong with prices in favor of the seller. ta.rge orders have been placed with
the mills both for yarns and finished goods. Weavers have operated fre:oly in
purchasing wool at Government auctions in the Philadelphia district,
-9-
X-1555
Woolen and worsted mills are going back to full time with a large
•
orders. While fine wool is in considerable
de~and
volume of
and comrr.ands high prices,
low-grade wool on the other hand is in relatively little demand and a lower
trend in prices is indicated. Fall orders for wcolen underwear and high-grade
hosiery are appearing in good volume. Very decided improvement has occurred
in cotton milling
~:md
orders are being booked well into the fall. The demand
is for the finer goods ani prices have be3n advanced until they even exceed
winter levels. There has be m active buying from the new wool clip in the West.
These conditions are reflected in the demand for dry goods and shoes which
is one of the most marked symptoms of trB,de recovery in the month under review.
Foreigners who are leaving the country ,in considerable numb,ers are reported to
be carrying with them many pairs 6f shoes to meet needs abroad. Prices are being
~arked
up for fall delivery, the outlook now being for an increase of 25 to 50¢
a pair for retailers.
. '··
Retail trade practically throughout the country is assuming unprecedented
volume, while prices continue
abnor~ally
high. Retailers in most sections have
made little or no adjustment but continue to demand :-'rices based Ul)On war
conditions. In New York large establishments report a volume of business twothirds greater than a year ago and in Chicago returns range from 25 to 50~ in
excess of 1918. The demand is largely for the highest class of goods with prices
a secondary consideration only. In the Soutfr there is said to be ''no contraction
in the public buying power" while a greater proportion of cash sales is reported.
In the Richmond District there is an "active trade, consumers buying freely
without
question as to prices." The effect of this active purchasing thro1::.ghout
the country is being reflected in the activity of wholesale business, advance
orders for goods for autumn being reported satisfactory in volume, although
still less than a year ago. Prices for cotton and wpol goods have again advanced
and retail stocks have in many cases been reduced to a low point. Retailers
in sorre sections are actively placing orders for imrrediate delivery. The high
X-1555
-10-
wages prevailing in most parts of the country and the increasing
vol~~e
of
• employment creates a condition of rerrarkable strength in local business, both
volume of sales and receipts of cash surpassing past records. Manufacturing is
already feeling the impetus furnished by this contin11ation of strong purchasing
power.
In building there has been a distinct revival throughout the
countr~
and
particularly in the principal population centers warked advancement is now noted.
Chicago shows a gain in building permits of
169% compared with a year ago, and
similar or larger gains are reported in most of the large cities of the Middle
West. In New York building has been retarded, although the need is very great,
an obstacle being presented by the difficulty of obtaining satisfactory building
loans, but the realty market is better than for the
past eighteen months. The
value of building contracts awarded in the Seventh District for the year thus
far is about double those awarded in the same period of 1918. Advancement in
building has been less noticeable in the far South, but sucp reports as are
available point to a coming revival, while in some places the greater activity
is a1ready very encouraging. On the Pacific Coast reyorts from nineteen principal cities for April show an increase of
31% over March and 47% over April, 1918.
In the states of the southern and eastern seaboard building is progressing
rapidly. The Fifth District reports that the housing
~lestion
is urgent and that
there is considerable activity"in ho:re sites and building, particularly apartment
houses in cities".
Real estate values are said to be hardening and in some
places there is a decided boom, while sales of farm lands are on the
incre~-se.
Labor and employment conditions have made further progress toward normal.
In the principal
manufaco~ing
centers it appears for the most part to be true
that labor is fairly well employed. Skilled labor is generally in demand
throughout the country and at unprededentedly high wages. Notable advances of
wages have occurred in the
co~ton
wages of labor there being fully
textile mills of New Englttnd 1
100% above pre-war figures.
th·~
present
Ther~ is an
X-1555
-ll-
increasing shortage of laborers on farms and of skilled mechanics in shipyards
• •
and although the supply of farn, labor in many sections now equals the demand, an
increasing deficiency is
ei~e~ted v~thin
the next few weeks. Unerrployment is most
frequent at 1)oints of disembarkation where returning soldiers are being mustered
out of the military service, but even at these points good progress is being wade
in the process of absorbing the floating supply of labor. In the Southwestern cotton
region the past ninety days has witnessed almost a complete reversal of previous
conditions, and there is a greater demand for corrmon labor than heretofore. Few
strikes are now in progress, although here and there labor difficulties have been
reported. This is particularly noticeable in the New England district, where i_t is
stated that the increased cost of living, as well as the higher scale of living
to Which workmen have become accustomed, has had the effect of rendering the new
rates of remuneration less satisfactory than the old ones, and as a result some
unrest is reported in that district.
A rerrBrkable feature of the business situation is the continuance of an
enormous favorable export balance. This balance, according to official reports for
the month of April amounted to the unprecedented total of $442,000,000. While
the shipments still consist largely of food stuffs and raw materials there are
some indications of an advance in sales of manufactured goods
and these are ex-
pected to increase from now on, granting that favorable provision is made for
financing sales to foreign
couu·~ri9s.
Trade with the Scandinavian countries has
shown spec:i:al advancement, but business with South America, Japan and China has
been partially cheCked. From the New York district it is reported that
75%
of
shipments now going forward r6?resent orders placed and largely paid for some
time ago. Shipping facilities have irrr2ro-;ed somewhat during the past month, but
sailin~
0
dates of vessels are still very unreliable. Plans are in prospect for
the developn:ent of methods of financing and facilitating the growth of export trade,
The month of May has witnessed some important, not to say remarkable, fiDigitizednancial
for FRASERdevelopments.
The stock market has be8n passing through a speculative era
-12-
333
XJ:!l555
only comparable to that of three years ago. Transactions on the New York
..
..
Exchange in the week ending May
17
were the largest for any week since 1901.
The heavy purchases are attributed largely to the presence of out of town buyers
who are in possession of large amounts of funds. In interest rates, however,
despite this
rerra~able
speculative activity, there has been a distinct down-
ward trend during the month. This trend has been noticeable in almost all classes
of paper, but particularly in the case of commercial paper sold in the open
market, and also in the case of interbank loans, as well as a fractional decrease for indorsed bankers'
accep~ces.
Prevailing rates for customers' prime
comrr.ercial paper on the whole show decrease, '""bile collateral loans on the
other hand remain relatively firm. In the call money rate, however, there has
been at tirr.es a distinct upward trend and on
~ne
accasion the rate reached a
level of 7~ in New York. This figure, however, was maintained only for a few
hours. The rate for paper collateraled by Liberty loan bonds has been slightly
advanced in places, due to the desire on the part of banks to encourage customers to
li~idate
their obligations for overdue subscription payments. Liberty
loan bonds themselves have commanded decidedly better prices during the latter
part of the month of May, this result being attributed to the popularity
of the fifth Victory
notes whose value was in a measure reflected upon other
classes of Government securities. The banking position of the country is reported
reeerve
as on the whole sound, present circumstances considered, anc: ..
· percentages of the Federal Reserve system have shown an ability to hold their own.
Transactions at clearing house ?anks which report to the Board show essential
stability with a slight tendency toward an increase in volume.
A remarkable feature of financial developrrents during the month has been
the sharp decline in quotations of most foreign currency. Lire and francs have
established new low rates going respectively to
8.}6
and
6.70
up to May 20,
while sterling, which had shown some ability to reach higher levels, has again
fallen off.
uuCi!4
rl>"l
W. P. G. HARDING. GoVERNOR
ALBERT STRAUSS. VICE GoVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
EX-OFPICIO MEMBERS
CARTEffGLA!s
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
FEDERAL RESERVE BOARD
COII!tTROUER OF THE CURRENCY
J. A. BRODERICK. SECRETARY
W. T. CHAPMAN. ASSISTANT SECRETARY
W. M. IMLAY. fiSCAL AGENT
ADDRESS REPLY TO
WASHINGTON
FEDERAL RESERVE BOARD
Nay 28' 1919
X-1556
Subject:Export of Manufactured
;
Gold~
Dear Sir!
~
On May 2nd, the War Trade Board issued a regulation in connection with the export of manufactured gold, which stated that applications for gold, the value of the gold content of which exceeded 65% of
the total value, were to be regarded as gold bullion, and subject to the
control of the Federal Reserve Board, a copy of which regulation was
~iled
you on May 20th.
In this respectt further regulation was issued by the War Trade
Board on Nay 9th, stating that applications fo? gold, the ¥alue of the gold
content of which did not exceed 65% of the total value, could be exported
without individual licenses from the War Trade
Board~
and in order that you
ct:l
.......
gJ ·may properly handle any applications which are filed throv.gh your Ba.nkt we
are enclosing copy of regulation of May 9th for your guidance.
Such ap-
plications for manufactured gold filed through your Bank which must come
before the Board should be made out on the regular Federal Reserve Board
application fonns.
Kindly acknowledge receipt.
Very truly yours,
Assistant Secretary.
Enclosure.
"'
.
X-1556a.
WAR TRADE :SOARD
WASHINGTON
(W.T.:S.R.
732)
~ORTATION
OF GOLD AND MANUFACTURES THEBEOF
The War Trade :Soard announce the following regulations
govern,.ng the e:x:pqrtation of manufactures of gold, effective
May
9,1919:
All manufactures of gold, the bullion value of which
does not exceed 65% of the total value, rr.ay be exported,
without individual export licenses, under the special export
licenses applicable to the exportation of commodities not
on the Export Conservation List. The shipper must, however,
state ·in his Export Declaration (Customs Oat. No. 7525) the
bullion value of each item in the shipment and the total
value of such item, and that no item in such shipment has a
bullion value in excess of 65% of the total value of such item.
Every manufacture of gold, the bullion value of which
exceeds 65% of the total value, is now regarded, fo:..~ the purpose
of exportation, as gold bullion, the exportation of which is
under·the exclusive control of the Federal Reserve Board. All
applications, therefore, to export rnanufe.ctures of g(l1d. the
bullion value of which exceeds 65% of the total value::, 1:1hould
be filed with the Federal R3serve Bank of the dis·i:.riot from
which th.:J ·shipment is made. On such applJ.cations rr.ust be stated .·:· '·
the value of the gold content of the articles proposed to be
eJq:~orted, as well as the total value of such articles.
Vance
•
c.
McCormick,
Chairman4
,., "",,...,
uuo
W. P. G. HARDING, GoVERNOR
ALBERT STRAUSS, VICE GoVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
EX~OFFICIO MEMBERS
CAR~;~~~·~.S~F TiiE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
J. A. BRODERICK, SECRETARY
FEDERAL RESERVE BOARD
COMPTROLLER OF THE CURRENCY
W. T. CHAPMAN, ASSISTANT SECRETARY
W. M. IMLAY. fiSCAL AGENT
ADDRESS REPLY TO
WASHINGTON
FEDERAL RESERVE BOARD
May
31, 1919.
X-1558
SUBJECT:Closing of books on June 30, 1919.
Dear Sir:
The Board requests that the books of the
Federal Reserve Banks be closed on June 30, 1919,
and in order to insure uniformity of practice the
following method of treatment of reserves, depreciation allo~vances and earnings has been approved for
the period ending June 30, 1919:
1.
Cost of Federal Reserve and Federal Reserve
)3a.nk _notes and Furni tur.e and Eguipmen t:
Charge balance of accounts as shovrn by
books on June 30 to current expense account.
2.
Reserve for~' in~luding tax~ Federal
Reserve Bank note circ,J.lation:
Set aside sufficient amounts to take care of
all taxes accrued, whether on account of
bank no 'IE circulation or otherwise.
3.
Extraordinary Charge-offs .2! Depreciation
Allowances:
That all action regarding extraordinary
charge-offs or depreciation allowances,
including depreciation charges on account
of bank premises, be deferred until closing
of books on December 31, 1919.
LETTER SENT TO ALL CHAIRMAN;.
...
.
X-1558
- 2 -
4.
Profit an~ ~~ a.nd _Surplus Accounts:
Transfer to surplus a.ccotmt 90% of the b.;~.la.nce
remaining in profit and loss account~ after
making a].J.o~.".'<.rlce i or dividend pa.ymc.;nt s,
the reroai~ing 10% to be ret~ined in profit and
loss acco1.mt until the books are closed on
December 31, at which time proper provision
should be made for depreciation and extraordinary charges against earnings for the
year 1919.
May we request that you present this letter
to your Board of Directors at an early date so that their
resolution in the matter of closing the books and payment
of di vidands on June 30, together with a statement of the
estimated amount of gross and net earnings, also of dividends
accrued for the six months ending June 30, 1919, may re~ch
the Board not later than June 15, 1919.
Very truly yours,
Governor...
F E D E R A L R E S E R V E B 0 A R D.
t'J"lff"'"i,8··
uu'·
STATEMENT FOR THE PRESS.
To be relaased for morning
papers, Tuesday, June 3,1919.
The Federal Reserve :S.J.lletin for June was sent to the printer tod.a.y. The
issue is largely devoted to the discussion of current conditions udftecti.ng
:Prices of commodities and the export trade, while the Review of the Month, which
is as usual the leading feature of the number, places the main emphasis upon the
progress that is being made in reconstruction, and the relationship between this
reconstruction process on the one hand and foreign advances and shiprr.ents on the
other. With reference to the general question as
to how far advances can safely
and wisely be made for the purpose of improving the situation in Europe, the
Bulletin says!
"Not to establish a working community of prices, values and rates
of yield on investn:ent would mean that interchange of goods E:.nd of
investment funds
among
n~tions
would
~eet
with difficulty. The situation
of the world today is such that for some time to come there will be a
marked reduction of the differences between the economic systems of the
leading countries. It is certainly not to the interest of any nation
that other nations with which it has close relations should be seriously
retarded in the legitimate use of resources and in the proportionate
employment of labor. The attention of the people of the United StE.tes
has naturally been focused upon the further improvelr.ent and expc.msion
of domestic industry, but the position of the country when considered
S1.1.CCeSs
from a world standpoint shows that such expansion involves for its fullesV
expansion elsewhere, both in order that
purchase
custo~ry
markets for sale and
may continue to exist for domestic products and in order that
foreigners :Lay be enabled to liquidate in due time their obligations to
American creditors
growing out of advances made to them in the past and those
- 2 -
necessarily to be rr:2.de to tbern in the fv.ture. The
advances according.1y impl:i.es
to .<:tttain
'~hat
X-1560
continu~·tion
of such
such foraign countries shall be helped
a condition in wh5.c:n they rrfl.y settle their- ind.obtedness by
fully employ unless they tcre enabled to place thmnselves in a prcductive
condition. Our b<:lr.king and finencial organit';.l.tion thus has a new and important function to perform- more import.:::nt ,:nd responsible than c.ny it
has been called upon to perfo:::w in the past - thc:t of determining the
division of capital in the int:;rn::ctional field just
'lS
it h2.s heretofore
been one of its principal fU.nctions to determine the division of capital
within our own terri tory "''nd within different fields of industry.
11
Domestically, reconstruction is yroceeding in a satisfactory way, and conditions during the month of Mc:..y hc.v3 tended toward the developn:ent of an optomistic
point of view on the p:1rt of business men ¥.nd bankers. Prices hc:.ve advc.nced slightly,
and building operations are better, - a general condition of improvement which is
set forth at length in the usual monthly review of business conditions. The Review
of the Month, after merely
refer~ing
to this business iqn·ovement. notes that it is
closely connected with the termination of restrictions and llmitations upon trade
v
along various lines. It states thc•t 11 The restoration of business to a competitive
basis necessarily implies the restoration of our ba:nl;:ing and financial rr.echanism
to the exercise of its normal fllilctions in connection with the developmmt of trade 'Attention is sharply called to the s:peculative situation in the stock mrket, End
the relation of the banl;:ing n:echanism thereto, as follows:
"One phase of the })ressnt situation which :J;Jarc.llels conditions that
have existed at the close of rr;ost iorrDer wars is the devAlopment of an
active speculative situation in the securities market. During the yast
month operations on the New York Stock "Ecchange have been U}.;On a basis
~ractically
urrprecedented since the 9pening of the war and paralleled
X-1560
- 3 -
only by the active rrark6t operations whi¢h marked the advent of large
munitions orders when the European contest had definitely established
itself. A succession of
in wany classes of
"million~sr~re d~ys~nith
goods~
has
abnormally high prices
indicated the scope of the speculative
movement i tself 7 while the fact that much of the buying within recent
weeks is said to have corrB not from professional traders but from
prospective investors throughout the country, indicates the hold which
the movement is already taking upon the population of the United States.
One ~anomenon which has presented itself as an incident to this
speculative movement is the existence of high call money rates. These
rates have at times gone as high as
7~
per cent, although only for a
short period in any instance. Such fluctuations of the call money rate
have promptly been followed by little more than very moderate curtailment of the volurr.e of banking
accow~odation.
There is here undoubtedly
an elerr.ent oi danger to the financial position of the country. Ordinarily
a sharp check could be administered through the advancing of the rates
of rediscount at Federal
Rese~e
Barurs.
~ch
a check for the moment
encounters soma difficulty as long as tne Federal Reserve
B~nks
deem it
necessary to promote the absorption of Liberty Loan securities by
maintaining low rates. For the moment the avoidance of abnormally high
loan accounts must be effected by means other than those which would
ordinarily be
a~plied
under the methods and principles of central banking.
Eventually, when circumstances will permit,and the Federal Reserve Banks
assume their normal fu;1ctions making advances dhiefly against liquid
comrrercial paper, reducing to snall proportions advances against
United States Government collateral, a natural and effective check to .
existj.ng conditions in the money rr:arket may be afforded through cllanges
in rates at Federal Reserve Banks-"
341
~·
·
· g1.'ven a prom"nent
p1ace
because of the
Th is specu1ati"te
sl.· t'~&tl.on
1.s
...
-
'
sho~tness
--
of the supply of capital in various parts of the world,- a condition of affairs whic1 1
is then outlined in the review at sorce
length~ ~"ne
comnm..'"lity is warned that the
tendency at the :present ti1TB is "Co :'att8;-;-rpt to occoqJlish too mu.ch in a short
time, and to go beyond the ncct\::.rD.l limits set by available resources." It is noted
,..
that the situation abroad is one of peculiar difficulty, involving unprecedented
, financial problems, and the ReYiew points out t:C.a t the. European countries must
necessarily obtain large assistance from abroad. On this point the following
s ta temen t is rra de :
"Studies of financial and bankj.ng conditions in the principal European
countries, published both in the current number of the Bulletin and in the
May issue, show that the currency and banking si tua ti.on ort the Continent is
unusually difficult, while it would appear that supplies of available cepital
have been reduced to a minimum basis. It does not seem probable that
condi~
tions in these foreign countries can be promptly restored to a normal footing
without importing from abroad in
very large meas11.re the funds that are needed
in the process of financial rehabilitation. In tnis connection the question is
pertinently raised what will be the· effects of the rcpa.rati0n which is to be
made by the Central Powers as a result of the peace set.tlemf"mt .. This reparation
will of course operate to create a one-sid.ed balance of trade in goods, ships ,
and forms of
ca~ital,
as well as of securities, between the Central Powersiand
the countries with which they transact business. It will therefore tend to
place the recipients of the reparaUon in possessiort of funds with which they
may liquidate their obligations to their
O\m
ci "Liz ens or to foreiW1-
cc"LTn7-.ries~
France, Belgium, and other continental nations are hae.vily :i.ndcbted. to l}reat
Britain, as well as to the United States, whHe Great Er:. tain likewise is· a
heavy debtor of this country. The reparation
:paj~ents,
whi+e passed through the
countries which are their recipients, will thus in the last analysis furnish
the basis for
payments to the United States designed to liquidate the advances
X-1560
- 5I
made by this country to cover the cost of the war, save in so far as American
investors rray prefer to leave thei;r. funds actually at work abroad."
Referring to the
ez:ch~nge
sitm1.tion
and the market fluctuations in
various foreign countries, the Review calls attention to the large requirements of current financing intended for the m-.1.inten<-Lnce of the export trade,
and furnishes the following analysis of the relation between the export
trade and prices:
11
The priroa.ry effect of the present gre(:l.t exportation of goods from
the United States is twofold - that of keeping fields, factories 7 and
men employed, and disposing of their product, on the one
the other, tha.t of rDd.inta..ining prices.
A
~nd;
and, on
slackening of the export trade
would nean an increased consumption of goods at home or else a lessened
production of them.
The constant ass'U!l:lPtion is thd.t the latter of the
two alternatives would be the one to be pursued and that accordingly a.
reduction of exports from the United States would mean a limitation of
prices in this country.
Shortened industry, less demand for labor and
accordingly falling prices, would be the net result of such a cha.nge in
the direction of our business.
For this reason roa.n.y business r.1en and
financiers today evidently regard the nuintena.nce of our great export
balance .3-s prd.Ctically e ssentia.l • the chief modification which they seem
to wish to make in it being that of substituting manufactures for a part
of the agricultural products which we
~re
now
shipping
a.broa.~.
It is
for the attainment of this end, and incidentally that of selling these
exports at practically the prices now prevailing, that much of tbe current theorizing and most of the practical expedients that are now suggested in prevailing discussion of our international position
ed.
~re
intend·»
This leaves untouched, hqwever, the possible alternative that even
3 /"!C)
•x,<.~
X-1560
- 6 -
if our export trade should be less active there might be developed an
e~ual
demand for our goods in domestic trade which would result in em-
ploying our L:l.bot< and cc.iptal at practically the same rate."
This condition of affairs, it is pointed out, raises the
~uestion
how
far the country can safely and wisely go in the application of its capital
abroad as contrasted with the development of better conditions at home.
The
view taken on this point is stated as follows:
"New industrial opportunities ha.ve not presented themselves with their
accustomed speed and only in a comparatively few induatries whose work
was largely contributory to the waging of the war can it be said that
there has been a. sufficient stimulus to development.
evidenced by the high rates of interest
~many
This situa.tion is
industries stand ready
to pay for the obtaining of capital in the present market.
Assuming that
foreign countries are in position to pay equally high_ rates, the
of the use of our available loan funds
wo~ld
~uestion
be determined by the views
entertained by business men and experts concerning the probable earning
power of the industries of those countries.
A reduction in our export
trade would necessitate some readjustment of conditions or relationships
such as
t~t
which followed the armistice, but the
d.oubtedly be effected.
present exportations are
basis which it would be difficult to maintain as
tr~nsition
could un-
un~uestionably
~
upon a
pen1unency, being as
they are so far above the prewar level."
The positive opinion is expressed that the time has come for the Government to withdraw so far as possible from the further extension of aid in post
war financing, it being urged that the responsibilities in this important
field be taken over by the banks of the country.
As to that the Review says:
- 7"In this situc,ticn it is not
un.Yla.turc;:~.l
t'ha.t some important private
interests have beF::n ca}.J i.ng i'or Go".rerim1e!lt aid in SkJ?pOrting exchange and
in the extensio:n of c:;.·PC.i ts Yor
E::lC'I;c.rt
buf.insss.
Congress has a.lrea.d.y
declined to i~c.rr-::as8 t;te :::l(lVI;:;,~s of t'l2<- ~r:~sa.su:r;y J)epa::.'trne:ot with respect
to direct loans to 0e
'
;TJ..>d:>
to foro)gr. cour-.tr'\es, and it rerruins to be seen
how far the c:-edit o£ $l,OOO,C:OO,OCO plc!.08d. wit:':1.in the raa.ch of the War
Finance Corpora.tion f'.an be availed of in practice.
Whateve~~:
'['[Jd,y be deter-
mined on this score 1 i t is not desirable that Gove::-nrr.cnt Cl.irection of
private industry shouli be continued longer tr..an is a'oqolutely essential.
When a. foreign country obtains a.n advance from
tr~e
Gover:nment of the
United States anc<. then spend.s the funds thus allotted it in the purchase
of An:erica.n goods forex:porta.·i;ion to its own citizens, there has been
practically a joint Government guarantee of either private consumption or
private manufacture, or of both, with the results which usua.lly follow
from such guarantees.
These results ma.y be considered embodied in a.
tendency to indis!'!rimina.te consl.l!llption d.nd more or less 1.mecono:wic use of
the funds or goods
development.
whi~h
a.re thus s3t a.}}a:rt for the promotion of national
A tin.e must inevitably arrive when the emergency is no
longer such as to require
natior~l
borrowing in behalf of private indi-
vidua.ls and when to continue this policy of subsidy or public support
practically results in the increase of an indebtedness which is passing
beyond the power of the debtors to
liquid~te.
Our present banking organi-
zation is capable of safeguarding the country against undue devotion of
itb funds to foreign development should such tendencies manifest themselves, and at the aama time of avoiding unwise withholding of support
which comes from a lack of vision or a. failure to understand the
results of the refusal of present accommodation.
~his,
ulti~te
of course, still
- s-
.,
X-1560
..
leaves open the question of the precise means by which our bankers and
exporters can thus protect
problem is now
the~selves.
Eut it is understood that the
fulJ.~r '\Xn(J.e.,.. c0r:.si!:l~ra.tion.
the needs of the future
ruay
c:md reasonable provision for
a.ccording:.y be expected. 11
A tendency on the part of the public to decline in thrift is noted, .::md
placed
emphasis is
~pon the necessity of maintaining the impulse to save, which
was developed during the war.
The Review of the Month contains a cawment upon the present bcinking
situation, the gold import and export situation. and various activities of
the Federal Reserve System.
An exceptionally thorough and encouraging review of business conditions
following detailed reports from the several Federal Reserve Districts, is
also furnished.
In the general section of the Bulletin, there is further discussion
of foreign banking developments, and an elaborate sum1la.I'y of tables rela.ting
to comparative price conditions in the United States and foreign countries.
An
account is also furnished of the Eoard's plan for the development of a
"collection index" designed to show in relative terms the state of things
as to the collection of outstanding mercantile accounts.
Legal decisions,
and the Board 1s detailed statistics of business indexes showing the develop·
ment of commercial conditions during the month of May, and covering
interest rates, and volume of trade are also furnished.
price~,
flY;;
EX-OFF'ICIO MEMBERS
ADOLPH C. MILLER
CHARLES S. HAMLIN
CARTER GLASS
SECRETARY OF THE TREASURY
•
C«A.JRIIAN
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
FEDERAL RESERVE BOARD
J. A. BRODERICK, SECRETARY
W. T. CHAPMAN, ASSISTANT SECRETAR'I'
W. M. IMLAY, fiSCAL AGENT
ADDRESS REPLY TO
WASHINGTON
FEDERAL RESERVE BOARD
June 2,1919.
X-1561
SUBJECT:
List of Officers and Employees of Federal
Reserve Banks, July 1, 1919.
Dear Sir:
With reference to the Federal Reserve Board's letter of September 11,
1913, X-1189, on the subject of salaries of officers and employees of Federal
Reserve Banks, as of January 1st and July lst of each year, it is suggested
that, in order to secure uniformity in submitting this data for July 1, 1919~
the followingform be followed:
Department;
Date of
Employment
Position
Present
Annual
Sala;:y
Proposed
Increase
Proposed
Annual
Salary
This list should show all employees of each department, and also any officers
and employees not assigned to any particular J.epart:rr;ent.
Also, please show on separate sheet a recapi tulatlon by departments, giving
the following information~
Departn:en t
Number of
Employees
Total Annual
Salaries
Total
Proposed
Incr2ases
Total proposed
.Annual
_§21. 8.J?J2.§_
This recapitulation should be footed and show grand totals •
.As req.J.es ted in the Board's letter of September 11, 1918, the Board desires
detailed information on al-l increases in salary, amounting to $300~00 or more
per annum, also proll11?t advice in the case of appointrrent of any new employee at
a salary of $2,400.00, or m0re, per annum, with a statement des:cribing the duties
to be perforn:ed, the qualifications of the employee, and the proposed salary.
In addition to the fo:regoing information, the Board desires that you submit
a rt,emorandum with your rep:):r.t t.'or JJ.l:r 1st, covering the duties assigned to each
officer of the bank cmd the departrr:Gnt::-;: V'ihich are o:perated under his general
supervision, or imrr:ediate direction; also a description of the duties of eiriJloyees
receiving salaries of $3.000 or more :pe:r. annum, who are engaged in special work
for the bank, but who are not assigned to any particular department, stating the
rate of compensation, and whether the errr~loyee devotes his entire time to the work
of the Reserve Bank.
.~
v'"JI:b
W. P. G. HARDING, GoVERNOR
ALBERT STRAUSS, VICE GoVERNOR
X-1561
-2-
...
~;/""!.·~
U':i:. If
...
The Board desires fu:ctb:e:~ srat the rr.err,o~andum include a brief descriJ;tion
covering the scope of the w;)rk of ec..ch dei>artment, its subdivisions the name
of the officer or err:p1oyee j::1 c:tarsc of ectc1l 0.e}.)artr:.ent, or subdivision, the
names of his principal nssis tants, a:r.d t:i-::.e nBrLG of the officer of the bank,
who has general supervision of the orJeraticn cf the departrrent.
To secure uniformity, H is suggested
in accordanc-e with the attached form.
th~t
this information be furnished
Very truly yours,.
Enclo'sure ..
Governor.
Letter sent to Chairrr;en of Federal Reserve Banks.
X-l56la
DEPARTMENT:
Discount Departffient
but brief description of the
work of the dt,partment.
C~neral,
GENERAL SUPERVISION:
Deputy Go'lfernor.
IMMEDIATE SUPERVISION:
Assistant Cashier.
ASSISTANT Mf,N. I\GER:
.
DIVISIONS:
.1\ssist;;:.nt
Loc-ns to rr.ember banks, unsecured
______
Loans to member barlics, Government collateral;.............
Member bank promissory notes
Acceptances purchased
Rediscounts with or for other Federal
Reserve Banks
Custody of collaterel
Records
EX-OFF!CIO MEMBERS
W. P. G. HARDING. GoVERNOR
ALBERT STRAUSS, VICE GOVERNOR
CARTER GIJII;S • •
ADOLPH C. MILLER
CHARLES S. HAMLIN
SECRETARY OF THE TREASU!tY
CHAIRMAN
JOHN SKELTON WILLIAMS
FEDERAL RESERVE BOARD
COIIP'TROLLER OF THE CURRENCY
J. A. BRODERICK. SECRETARY
W. T. CHAPMAN, ASSISTANT SECRETARY
W. M. IMLAY, FISCAL AGENT
WASHINGTON
ADDRESS REPLY TO
FEDERAL RESERVE BOARD
J1llle
4, 1919.
X-1562
SUbject:Gold Settlerr~nt Clearings by Denver and Omaha Branches
of the Federal Reserve Barik of Kansas City~
Dear Sir:
We confirm our wire to you today as follows:
11 Denver and Omaha Branches of Federal Reserve Bank of
Kansas City will commence settling direct through the Gold
Settlement Fund eff~ctive statercents J"-une 14th clee.ring
~une i6th. Accounts with Denver' and Orr.aha Branches ,,.ill be
haridied in accordance with our letter of May 8th, X-).524, in
re Baltimore Branch settling direct. ~ill letter instructions
being mailed today. Kindly a~knvwledge by wire. "
The Federal Reserve Baclc of Kansas City has req~ested that
arrangements be made to have their Branches at Denver and Omaha commence
settling direct through the Gold Fund Clearing with other Federal Reserve
Banks and their Branches which are now settling direct in the same manner
as is now in effect between Federal Reserve B~r~s and a rnuGber of their
Branches.
Accordingly, beginning on June 16th and on ever~· sattlerr£nt day
thereafter, the Denver and Omaha Branches, in addj tlm: to Fa."lsas City
Head Office, will telegraph to the Federal Reserve Bc.ar.;!, code IJJlEG,
their credits for other Federal Reserve Banks and d!rect-sett.ling Branches
as at close of business the previous day to be settled thr0ugh the daily
Gold Fund Clearing. The Board will include in the daily BEPEG telegram
to .other Federal Reserve Banks and· direct-settling Branches the cr·edi ts
of Denver and Omaha as well as Kansas City, as follows:
Kansas City
Denver
Omaha
amount
amount
amount
and the Denver and Omaha Branches will render to each Federal Reserve
Bank and Branch, settling direct through the gold fund, daily mail
transcripts supporting credits· as settled through the fund.
The Federal Reserve Bank of Kansas City desires that all credits
in Denver and Omaha territory, i~mediately due or deferred, maturing
•
June ll+tb and thereafter be credited through the Gold Settlement Fund · '
to Denver and O~a Branches .. The Federal Reserve Banks and those Branches
settling direct through the Gold Fund are requested, therefore, to epen
350
.....
-2-
accounts with Denver and Omaha Branches at such time as will permit
credits for the respective Branch becoming available June 14th and
thereafter; and to wire to the Board, code LABEG, the amou::1t of such
credits for the .June 16th Gold Fund Clearing and for each daily clearing
thereafter. They will also render to Denver and Omaha Branches daily
mail transcripts supporting credits thus settled through the Gold :F-..1..11d
Clearing.
It is also requested that all deductions from credits for return
items, errors, differences, etc. be made in settlement with whichever
bank (Kansas City, Denver or Omaha) the o~iginal item was settled.
Please note that new system is effective statements as of close
of business June 14th. clearing June 16th.
Kindly advise your Branches and acknowledge receipt of this
letter.
'Jery t.culy·
yo•~rs,
Assistant Secre<ta.ry ..
Letter sent to Governors of all Fed.eral
Reserve Banks.
0"'
..__~, -~;~
L>v'JL
W. P. G. HARDING, GOVERNOR
ALBERT STRAUSS, VICE GOVERNOR
EX-OFFICIO MEMBERS
ADOLPH C. MILLER
CHARLES S. HAMLIN
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
FEDERAL RESERVE BOARD
J. A. BRODERICK, SECRETARY
W, T. CHAPMAN, ASSISTANT SECRETARY
W. M. IMLAY, FISCAl. AGENT
ADDRESS REPLY TO
WASHINGTON
June
FEDERAL RESERVE f!OARD
4,1919~
Subject: Notary Fees on Items Protested.
Dear Sir:
With further reference to tha Board's letter of May 7, 1919,
(X-1522 - subject 11 Notary Fees on Items Protested"), the Board is
advised by its Gene~al Counsel that there cppears to be so~e conflict
of authority as to the right of a baru~ or a notary to enter into an
agre~rrent whereby the notary, in consideration of his err~loyment by the
bank, shall assign to the bank his notary fees. The general and well. established princip+es of public policy• as well as statutory and
common law, prohibit a public officer from assigning his unearned salary
or fees, although it has been held that the principles which apply to
the assignment of unearned salary or fees do not apply to the assignment
of salary or foes earned prior to the assignment.
The Board believes that, oecc.use of the doubts as to the propriety
of a bamk's receiving notary fees for its own account, it would be well
to either employ notaries not connected with the bank or to permit a
notary Who is in the employ of the barik in another capacity to retain the
fees for his own use as part of hie compensation for general services. If
the fees amount to aey considerabla sum the bank may properly take that
into account in determining the salary to be paid to that ~mployee or
they may be divided among several employees doing notarial work. It does
not se~m proper in the circumstances, for the bank to divert all or any
portion of the notary fees to its own use.
Very truly yours,
Governor.
Letter sent to Chairmen.
Feder~l
Reserve
Bank~.
W. P. G. HARDING, GoVERNOR
ALBERT STRAUSS, VICE GoVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
EX-OFPICIO MEMBERS
CARTER GLASS
SECRETARY OP' THE TREASURY
CIIAIRIIAN
JOHN SKELTON WILLIAMS
COIIPTROLLER OP' THE CURRENCY
FEDERAL RESERVE BOARD
J. A. BRODERICK, SECRin'ARY
W. T. CHAPMAN, AsSISTANT SECREI'ARY
W. M. IMLAY, FISCAL AoENT
ADDRESS REPL.Y TO
WASHINGTON
FEDERAL RESERVE BOARD
June 5,1919 ..
X-1564
The Federal Reserve Board believes there is need for a better
understanding of the business of American corporations engaged principally in foreign banking business, and the conditions under which
such corporations must function, in order that the Board may get better
light on the subject of the extent to which it would be possible to
make uniform the agreements executed by such corporations with the
Board in order to make their stock eligible for investment by National
banks. Accordingly you are invited to have a representative of your
company present at a conference with the Federal Reserve Board, to be
held at ten a.m. Wednesdq • June 18th, in the Assembly Room of the
Federal Reserve BCE.rd on the Seventh Floor of the National Metropolitan
Bank Building, washington.
It will be the chief purpose of the conference to determine whether
or not it is necessary or desirable to make further modifications in the
e•isting agreements with foreign banking corporations, and the Board would
be glad to have your representative come prepared to give to the Board the
benefit of your views. '1'he Board is very desirous of imposing upon the
corporations only such conditions as will best enable them to conduct
their operations and develop their business along sound banking lihes.
Very truly you.rs;
Governor.
Letter sent to selected list of batiks.
engaged in foreign banking
353
Released for publication in morning papers pf Saturday, June 7th, 1919 •
.AF'IER-WAR ADJUSTMENT:
An
THE PRESENT PRICE OUTI,QOK
address by
A.C. Miller, Member. Federal Reserve Board,
Delivered at Pittsburgh,
Friday morning,
June 6, 1919~
before the
National Hardware Association of the United States.
The perplexity in which the business mind of the country
was left at the time of the annistice by the confused price
sit~tion
resulting from the war has been much relieved by what has taken place
in the last six months and particularly in the last three months. It
would be premature to say that the situation has clarified itself sufficiently to speak of the price outlook with confidence.
Certain factors,
however, which are destined to exercise a very considerable influence
upon the trend of prices in the future, are coming to be discernible and
it is worth while, because of the decisive bearing which the price
situation has upon business and employment, to undertake at this time
to examine them.
The expectation that prices would drop and go on dropping was
expressed by competent students at the time of the armistice and was
shared by many business men.
Civil War.
Such had been our experience after the
Indeed, some, who had in mind that experience, feared that
thedecline of prices might proceed so rapidly as to be disturbing.
Prices dropped some 30 per cent in the first six months of the year
1865.
This fact suggested that at least a considerable decline might
not unreasonably be expect.ed in the United States following the close
of the great war.
Such, moreover, had been a very conmon feature of
the after-math of other great wars.
There seemed to be justification, therefore, for the expectation
that prices in Europe and the United States would begin to
the turn of the year 1918.
with
The only question was how rapid would be
the decline and how long continued.
fc.~.ll
The operation of natural economic
X-1565 .
"""2-
forces and particularly the devotion of the productive energy a.nd resources of different countries to peace industries was expected to do
much to relieve shortages which were in part responsible for the momentous
price changes induced by the war.
The fact that fifty million men or more
were to be released from armies and from war work led to the belief that
there would be a
~uick
resumption of industrial activity in Europe and
increased production of goods and resulting declines in values a.nd prices.
This conclusion also seemed to be the logical consequence of the general
acceptance of the view that the price situation, which had developed
throughout the world as a result of wa.r conditions, was highly artificial
and highly inflated.
~tever
differences of opinion may have existed during the war as
to the cause or causes of the
revolutio~ry
advance of prices experienced,
it is now coming to be more and more clearly recognized and frankly a.d-
•
mitted that the chief factor in the price revolution is to be attributed
to the enormous increase in the volume of circulating credit, bank notes
and government currency put ·out in the past four and a
ha~f
years.
The situation in the United States is coming to be so well under.stood that no extended reference to it is necessaryo
It is well known
that in our five Liberty Loan Campaigns the Treasury has been"obliged
to borrow from the community and issue government obligations more
rapidly than the
co~arative
rate of savings by the people could support,
with the result that a considerable part (perhaps as much as seven billions of dollars) of the several issues of bonds made by the Government
have had to be financed by an . expansion of banking credit and, to a
lesser
d~gree,
of banking currency.
u.Jo
0'.~"""~
3 It is coming to be recognized that our banking and financial
tion can never be as healthy and strong as it
situ~
should be until the ba.nks
a.re relieved of the burden of carrying such large investments., either
for themselves or for their customers, in Liberty Bond operations. This
means that such parts of the community as have not yet done their full
part in absorbing and digesting the government issues, must by one method
or another be induced or
~de
to save and pay up, or buy.
Those who
believed that this process would be rapid, and they were many, and that
the Government would soon disappear from the market as a competitor for
current loan funds, expected as a natural consequence that the volume
of our circulating bank credit and currency would shrink and that with
the shrinkage would come a lowering of the price level.
Other countries, it was thought, would move along the same general
course as the United States, though of necessity more slowly because of
their continuing financial difficulties.
A reduction in the volume of
circulating media of one kind or another was, however, regarded as such
an essential part of good financial policy in the process of post-war
readjustment that this reduction was taken almost as a certainty.
The feeling of
caution and hesitation, which cha.racterized the
temper of the American business community at the close of the war, was
the natural outgrowth of this expectation of the probable future course
of prices.
It is well known that this view was shared by an important
agency of the Government, which was set
assisting theeqpected
price revisions.
downw~rd
~
for the special purpose of
course of prices by gradual and orderly
By mediating the transition from war prices to
prices, the Industrial Board of the Department of
Co~erce
undertook
to bring about the resumption of industry and its adjustment to
~eace
- 4 ....
,... . -
anticipated conditions more q_uickly than if left to.the u:rld.ssi3ted
\
working of natural econcmics forces,
....
Price stabilization was
~::;pects,J
to bring buyers in to the :market, particuJ2,rly for ba.s:i-c 1l:lateria.b
required in construction work and thus to a. ccelera.te
industrial readjustment and improve the er:l:!J?loyment
ths }:'rn·-:.ess o::
~:ltua.ticn.
'r11.e
abandonment of this policy by the voluntary retirement of the Industrial
Board and other steps
t~t
have left the process of
have been taken toward decontrol of industry
re~justment
pretty much to the unimpeded action
of the market.
The movement since the armistice is interesting.
For the first
month or two there wa.s little or no change; with the opening of the year
1919, prices moved downward, though slowly; toward the end of March the
downward trend halted and with the beginning of April there is a noticeable upward trend - most marked in the retail trades and those manufacturing trades which a.re closely auxiliary to the leading retail trades
(such as the textiles, clothing, boot and shoe trades), but with sawe
evidence recently that it might develop into a. more general forward movement.
At the moment, p:rices are close to the war level and, in many
instances, moving forward.
Many q_uestions are raised by the le,ba.vior of prices since the armis-
tice:
Is the recent forward trend to be regarded as indicGtive of the
probable future course of prices, or is the advance to be regarded as accidental and temporary and as merely marking
expected downward trend? These
with positiveness.
~uestions,
of course, CGU not be answered
The factors which influence the price situation and to
which it is responsive, even under normal
diverse
an interruption of the
and frequently
so
conditions
obscure
that
.:.t.re
so
358
-5-
the resultant is always a matter of great un0ertainty. The unexpected is apt to
supervene and destroy the validity of even the most carefully considered forecas·;; ..
~sa
result of the war, the price situation in all parts of the world h<:Lt;
"!)~come
so vastly complicated that conjecture is perforce a much more hazardous undRrtaking than usual, particularly if any attempt is made to ded.uGe general concl usions from tendencies discernible only in particular industries
o~ group~
of
industries. so subtle and exceptional are the influences now at work in different
fields of industry.
PRICE SITUATION CLARIFYING
However hazardous the undertaking, it seems nevertheless worth while to
direct attention to some of the underlying factors which seem now to be emerging
and which seem likely to exercise an important bearing upon the future trend of
prices, looking forward:
(1) to a period of some years, during which the general readjustment
of the world's industry and trade is being worked out; and,
(2) to a briefer period of a year or more, during which Europe will
be in the first stages of her reconstruction.
All business calculations run in terms of prices. Business judgments are
for the most part price judgments. Ba.w materials, .labor, fuei., an'.i the other
requisites of production are bought at prices; they are conver-ted into goods
to be sold at prices. Unless the prices at which the
re~isites
of production are
bought and the products are sold are fairly calculable and a satisfactory margin
of profit shown between them, the attitude of business will be hesitant. Falling
prices are, therefore, obviously to be regarded as an addition to the ordinsry
hazards of industry. It is therefore a question of vital concern to inquire
whether the price si~tion has clarified itself sufficiently to snggest some
expectation of what
may
be the .future price trend.
Until Europe recovers industrially and brings its productive capacity up
t~
what will be normal for its decimated population, no considerable or rapid fall
-6o~
commodity prices is to be expected. Indeed, until the point is reached where
the process of recovery is well under way. a rise of prices rather than a fall is
to be expected. Should the eventual outcon:e show
~hat;
some have often predicted.
that tlie war has given an added ill[)ulse to the inventive sp:iri t and to the instinct
of thrift, the rasul ting increase in :t:Jrodu.ction and savings wo-..lld ba•.re :m
ir1~1?0r-
tant effect in hastening the readjustment of prices. It cannot be too strongly
emphasized that it is only as more goods are produced in
exch&~ge
for the inflated
currencies of the world, or more income saved from earnings and used for the
purpose of liquidating loans and adva.'1ces made by the banks, that the financial
and credit situation will gradually be improved by the
re~uction
of outstanding
bank liabilities and prices respond by a gradual fall. How long it may take the
mov:m:ent, as ·thus dafined, to run its course, no one can
It is a matter of corrmon
l~nowled.ge
predict~
that it was fourteen years before the
currency disorders growing out of the Civil War were measurably corrected and tb.e
greanback dollar brought to a parity with gold- It took Europe fifteen years to
effect the restoration of public credit, reorganization of currency and banking,
and the readjustment of industry to a stable basis, after the clot.e of
tJ~8
Napoleonic Wars. Considering thG vast reach of the present war, whj.ch on its
economic side has not yet closed, and considering the great descruction of indusi:1
trial and financial capital, the terrible disorganization of inc.t•.sr.ry, and the
impairment of the morale of the working forces of Europe, there seems little
reason to expect that the process of reconstruction and readjustment, first the
one and then the other, through which Europe is about to pass, will be short or
easy. Ten years would seem, on the whole, a shott period in whiGh to expect a
restoration of economic conditions in Europe to a normal basis and the rectification of the price situation.
The general outlook, therefore, may be said to be for a gradual fall of prices
during the next ten years or longer, depending mainly upon how rapidly Europe will
recover her productive power and correct her currency disorders by deflating her
•
X-1565
-7-
360
distended currency.
Those who take a more sanguine view should not overlook the bearing
whi~h
an artificially forced rapid deflation - should that in any event be practicable
- would have u:pon the debt status of the European Gov.::rnments. One of the zr.ain
reasons for believing that deflation and, therefore, price reductions, will not
:proceed rapidly in Europe is derived from this cause."
The enormous debts, which the war has left European countries, have been
contracted in terms of depreciated currencies; by and large commodity prices are
double or more than double vvhat they were in Western Europe in 1914. They have
incr~ased
100 per cent in the United States; they h&ve increased more in England
than in the United States; more in France than in England; more in Italy than in
France; in Russia and in the countries that constituted the
fo~r Austro~Hun•
garian Empire, conditions are so chaotic that no basis for comparison is availahle.
If prices could be and were put back to their
much the
s~e
pre~war
level, the effect would be
as doubling the debts of the several countries of Europe while
maintaining their existing price levels. Such a proceeding would, of necessity,
of national debts
place a burden of taxation virtually so heavy as to force a repudiation/under one
guise or another. Even under their existing depreciated currencies, European
countries are struggling with the problem of handling their great debts, and their
enormously swollen national budgets. This condition alone, if nothing else, would
will
be a
slow process in
seem to compel the expectation that deflation
Europe and that,, as deflation will be gradual, so the fall of prices will be gradua::
Many factors will, no doubt, enter into the restoration of the value of the
flated currencies of Europe.
in~
But, in the end, it is likely to turn out, as in
the United States after the Civil War, that Europe's main .reliance in correcting
the present condition of inflation will be the natural process ofngrowing up"
now
to its
excessive and redundant volume of currency.
With the
price~strUctures
in all leading countries more closely interlocked
-S-
community
than ever before because of the new
of interest and fortune resulting
from the war, no one country, like the United States, can set itself apart and
maintain a price structure very far out of line with the world price
structure~
Price movements in the United St&tes are bound to be affected by the price
movements in Europe and no great changes in the price structure of this country
are to be expected except as they reflect changes in the world's price structure.
With the larger part of the commercial world in a serious condition of inflation
and no prospect that the period of economic readjustment will be a short one;
the fall of prmces, to which rreny have been looking forward as an inevitable
consequence of the war, seems likely to be a slow one; so slow that for most
ordinary purposes in making business calculations and in reaching
bus~ess
it may be taken as a negligible factor. While prices, looking
forward over a long series of years, rr.ay assuredly be expected to show a downward
course, the fall of prices from year to year, it is to be repeated, will probably
be so small as to make possible losses from the decline a factor of no conseqQence, except in the case of long period investments of fixed capital upon an
extensive scale, when it would probably be a wise precaution to set up special
sinking funds to amortize shrinkages of value from this cause.
While the general trend of prices for the next ten or fiftaen years may be
expected to be downward, the downward movement is not likely to pursue a steady
and unbroken course. It will probably be
bro~en
by frequent ups and downs in the
process of finding a new norwal level because the general process of economic
r~adjustment
is likely in each important stage of its development to result in
some mal-adjustments, which would inevitably produce price disturbances.
The future price trend, in other words, is likely to have much of a fluetuating character and, therefore, to give to the period of readjustment something
more of a speculative character than is usual in normal circumstances.
So much as regards the general and more distant price trend. As regards the
.,
near future, there is little reason, I think, to expect any marked interruption
of present :price tendencies in our own and other leading rr.arkets, mainly because
the world's urgent need for goods. Europe is in a bad condition in nearly every
way · economically, socially, :politically, physically and psychologically.
<Jf
The process of disbanding the armies and getting the men back to farm and workshop is proving a difficult and slow one. Idleness since the armistice has worked
its effect in
~ndustrial
demoralization. One of the main problems presented by
the transition to peace conditions is the restoration of the economic morale of
lar@B sections of the population of Europe. Feeding the hungry ?lld clothing the
naked is an obvious anci imn:ediate necessity; equally necessary and as important
in its general effect is the
alirr~ntation
and equ.iprr.ent ; farms must be
restocked;
of industry in Europe with raw materials
implerr~nts
are lacking; the railroads must .
largely be reconstructed; machinery must be rebuilt or replaced; everywhere there
is need of basic materials and tools before Europe can get back to a condition
where she
~an
:produce goods enough to
~stain
herself and pay for her iaports.
It will take time to effect this work of restoration and repai:i!.• While no accurate
estimate can be made of the needs of the several European countries, enough already
and
.
is known to make it clear that they are/for sorre time will continue to be very
considerable. Whether it will take one or two years to
acco~lish
the first stage
o£ her reconstruction, it seems certain that until it is accompliShed her needs
.will tax the ability of the non-European world to the utmost to supply foodstuffs
and raw materials. It may be expected, therefore, that there will be a very heavy
demand upon our markets for a great variety :6f goods during the first :phase of
the reconstruction process, provided we are able and willing to finance Europe
in its purchases for such a period of time as Europe mu.st have before making
fima~
settlement: that is, provided we supply by loans the capital needed in
Europe to assist her recovery.
The most important thing now, from every point of view, is that Europe should
~ rl)
- 19 -
go to work. In those pa.rts wh;.;rc they can not work becc>.use they la.ck t1:0
tools and materials, they must be helped to work. Where they do not ·g;?.nt
to work, because demoralized, they must be made to work.
Htmger and
idle~ess are one of the greatest menaces in Europe~
They present the immediate ObJectives of pohcies of coopera-tion with the
reconstruction needs of Eur9pe.
Momentarily, Europe lacks the rnea...'1s of paying for tte f cod. anc
material that she must get from the outside world..
S..l-:ie :ha.s no go0da to
give ine xcbange for these, at least not in adeq_ua.te amount; she
~s
no
gold which she can spare, nor do we, or other nations in our position,
need or want more gold.
But with fair prospect that her economic and
political morale will be restored, she has what should be acceptable to
us in the process of extending economic assistance, towit:
cr~dit.
The foundations of credit, both na.tionc>.l and private, a.re reputation for
integrity or good fa.ith and demonstrated economic capacity, a.nd these 1
fortunately, still exist in Europe.
The prospect, therefore, is that
there may be expected a very considerable credit demand for American
goods, that is to say a demand both for goods and for the credit wi t.n.
which to buy them during the initial period of Europef\n reconstruction.
short-period
The
price trend may, therefore, be rea~orL~~lf expected to
rule high, if our exports to Europe on credit cor:..tir. . uq
O':'l
anything like
their .present sca.le.
We are now exporting a net excess of goods over what we are receiving as
~orts
dollars a year.
at a rate of well over three thousand millions of
Assuming that the value of our annual
output of goods
of all kinds and descriptions amounts • under present conditions, to
a. a
sixty billions of dollars or more, the exportation/ of/ net excess of
three thousand millions means
a loan
to Europe of capital goods to the
extent of five per cent of our tota.l annua.l production.
·5'!l
uvu
On its purely
X-1565
-11 -
economic side, the q_uestion whether we cc1.n indefinitely go on doing th:i.e
reduces itself to a q_uestion of productive capacity.
On the financial
side, it reduces itself to the q_uestion of our willingness to save and
add to the capital supply of 1\meri.ca. available for use in Europe after
•
the needs of our own :tnd.ustry have been reasonably p:ro-..ided.
the
question is a
tec~,ical
Beyond tba.t
one; it is that of devising the best form of
machinery for mobiJ5"'ing such capital as can be spared for the purpose
for the use of Europe ..
Complete and accurate data are not available for estimating the
extent to which the productive capacity of the United States bas increased in recent years, much less have we any satisfactory indication
of the increase in the capital or saving capacity of the United States.
There is, however, statistical foundation for a.n estimate of 16 per cent
increase in the productive capacity of the United States in the past five
years, measuring the increase not in'its money value
but , far more
significantly, in its physical volume, to warrant the use of this ratio
in estimating the financial capacity of the United States.
Accepting 35
billions as an approximate estimate of the money value of the products of
American industry before the beginning of the European War, an increase
of 16.per cent in the physical productivity of industry would yield an
increase of 5 .. 6 billions of dollars in the money value of the nation 1s
productivity.
But figured, as the increase should be, on the basis ofthe
1918-19 price level, which is 100 per cent higher than the 1914 level,
the increase would amount to 11.2 billions.
It is most noteworthy that
this increase in the economic productivity of the United States has taken
place without the usual addition to our working forces from immigration.
j~._1'"l:-~
'(j.JQl
•
- 12·The period has been one of emigra-tion, rather than of immigration., '}lhe
estimated 11.2 billions is, therefore, to be regarded as pretty much a
purely economic surplus, after n:aking deduction of c:rurse for the
expense of taking care of the natural increase in our population,whir.h
has occurred in this interval of time and which is asti:r.uated a:t s.:,.w.e
four millions.
In other words, this increase in
o~
production is due
to the fact that the industries of the nation have been working at a
high pitch of intensity under the
~ulse
that was given by war
conditions and that a larger percentage of the nation, than before the
war, entered the ranks of its productive workers.
:Bearing in mind that the capital which Europe needs and will seek
to obtain from·us by borrowing will consist of goods which are the
product of American labor, it is obvious that the process of accommodating Europe will involve either the continued high activity of American
industry or a reduction in the amount of goods available for .American
consumption.
In either event, must there by saving.
Nationally, the
question is whether we shall undertake to finance Europe by savings
out of a reduced volume of production or out of a susta.ined volume of
production.
In the latter event, the problem of ma.ktr.og reasonable
advances of capital to Europe should present no great difficulty
econ~ically.
The problem will then be to convert an adequate amount
of the potential savings of the nation into actual savings.
former event, however, the question would present
a~ost
In the
insunnountable
difficulties and the attempt to undertake any excessive financing for
Europe would probably in the end result in the forced growth of the
savings fund of the nation b) a further inf1ation of credit and a
further increase in the cost of living.
- 13No more pressing financial problem confronts the United States than the
setting up and putting in motion the machinery for determining the extent to
which we can safely undertake to finance reconstruction in Europe. Fundamentally
the :problem is one of keeping the industrial activity of the nation stimulated and,
equally important, keeping the savings spirit of the country from weakening,. The
people must everywhere be made to appreciate that in the :present condition of the
European world, it is our urgent duty to keep up our newly acquired saving habit.
Beyond that a sufficient portion of the community must be educated to an interest
in the purchase. of European obligations or American obligations based upon
European
collat0ral~
More than this, some corr.petent agency. which will merit the
confidence of the American people - public in character but preferably not
governmental - must be set up for seeing to it that the ap}lortionroent of such
capital as may be yielded by the savings of the nation Shall be made wisely,
with due regard., for the economic needs of .American industry and the American
consumer, as well as the needs of European industry and the European consumer.
The opportunity to mske financial and truders' profits out of the needs of Europe
by the sale to Europe of goods and materials on long-term secu.ri ties floated in
the American market is such that great care must be taken that such operations
are constantly kept within the limits of national economic prudence, both in our
own interest and in Europe's interest. It might therefore be advisable to set u:p
a Committee on Financial Facilities for Europe composed of a membership -following the analogy of the Federal Reserve organization - one-third representing
financial interests, one-third comiT£rcial interests and one-third to be selected
by the Federal Reserve Eoard representing the general public interest. But
whether this or some other method is adopted, it is of primary importance that a
national and representative character should be given to any movement for the
mobilization of our financial and economic resources for Europe's use. The matter
is one of too grave consequence to be left to the determination of private
3<07
- 14 temptations,
interest alone .. The situation offers so many ·
that abuse of the crec.it
facilities of the Federal Reserve System would be almost certain to result with
consequence
a further and disastrous inflation of credit as a
. No method of providing
for tha financing of Europe that does not contain careful aafeguards against this
contingency can be regarded as satisfactory. What Europe needs is eapHaL The
Federal Reserve Banks are not investment institutions; they d8a1 in
cA"Gdit~
not
capital. The attempt, under any disguise,· to use their facilities as a substitute
for capital would be fatal to the Fed.eral Reserve System and injUJ5ious to the
public at large.
615/19
FEDERAL
RESERVE
BOARD
STATE"NlENT FOR THE PPESS.
7-·15?;6
For imnediate release,
Thursday, June 5,1919 •
.
Announcement is made of the apyointment of the following directors of the
Boustotl~:}3ranch of the Federal Reserve Bank of Dallas:
Mr.
S~.R.
Lawder
Mr. J.A. Pondrom
Mr.
F~~
Andrews
Mr. J.C. Chidsey
Mr. J.J. Davis
The first three gentlemen have been appointed by the Board of Directors
of the Federal Reserve Bank of Dallas, while the last two are the appointees
of the Federal Reserve Board. Mr. Lawder has be-m the Manager of the El Paso Branch
of the Federal Reserve Bank of Dallas and will serve in a similar capacity at
the Houston Branch. Mr. Pondrom is First Vice President of the South Texas
Commercial National Bank, Houston, Texas. Mr. Andrews is a Director of the Union
National Baruc of Houston. Mr. Chidsey is Vice President of the Houston National
Exchange Batik, and Mr. Davis is President of the South Texas State Barik, Galveston,
Texas.
.
-
X-1570
FEDERAL
RESEP.':f.E
STATEi.ilENT FOR THE PRESS
For il!liiiediate release,
June 9, 1919 •
..
The Federal Reser"Q'e :Board. a:::-mounces
t.ha~:
•.::>,ft~r ccnsulta.tion wl.th
the Sedretary of the Trca.sury. and with his <i:pprcva1, it hat?- been reccmmended to· t);le President, and the President bas a.p:proved the recommenda. tion
thdt the control which has heretofore been exercised over transactions in
foreign exchange and over the exportation of coin, ·bullion cl.nd currency, be
terminated, except as to the importation or exportation of rouble notes or
exchange operations with that
pa~t
of RUssia now urder the control of the
so-called Bolshevik Government, and except as toe xcbang(S transactions
with territories in respect of which such transactions are at :present permitted only through the American Relief Administration,
Licenses for
tb~
export of silver
ha~e
so that the present step, so far as cor:cerns
recently been freely granteQ,
silv~Sr,
invo~ves
no cba.ngs of
policy.
Control over the export of gold has, until now, been actually exercisod,
although since the termirution of hostilities greater ld.ti·t.v.d.e has been dollowed than before that
t~e
in. granting
applic~tions
1
after, applications for the export of gold will, like
for its export. Hereapplic~tions
for the
export of silver, be freely granted, irrespective of destination or amount.
Applications for both gold and silver exports must. however, continue to be
made to the Federal Reserve :Board until such time as the President
sb~ll
by
proclamation formally bring to an end the present control.
The control at present exercised over foreign exchange, including the
reports required to be IL.:.l.de by dealers, will necessarily continue \ointil tb.e
http://fraser.stlouisfed.org/
President shall,
Federal Reserve Bank of St. Louis
by
for~l
action, put an end to tho
~res~nt ren,.~
~
t ~~
~~~remen
X-1570
• -:111*
but so.far as licenses are
re~uired.
to.
u11"}17,')
v
specific transactions, such
licenses will be frGe ly granted, except for the :i.mportati on or exportation of
rouble notes, or for foreign exchange
tran~actions
with that
p~rt
of Russia now
under the control of the so-called Bolshevik Gcvernment, and except as to
exchange transactions with territories in
~
~es?ect
cf
w~ich
such transactions
are at present permitted onli through the American Relief Administration.
Attention is called to the fact that neithet the present modification of
policy 1 nor the termination of the
~bove
terminat¢d by action of the President,
controls, when they shall have been
aut~orizes
transactions with enemies}
e-xcept so. far as such transactions may be authorized by general or specific
~A~~nses
The
granted by the War Trade-Board.
~onditions
do not now exist which led during the war to the restrictions
on the free movement of the money metals and on exchange operations,. It is felt
that at the present time every step toward the restoration of natuaal conditions
is a help, not ~nly to this country 1 but to the entire world ..
Our gold reserves are so strong that even a very considerable outward movement of gold
c~n
be faced without any apprehension. To the extent
th~t
such
shipments tend to restore normal conditions elsewhere, they tend to increase the
buying power of na.tionaltl:ld.t wish to become, and should be, our customers. The
advances by the United States to Governments associated with us in the prosecution of the War a.re rapidly coming to an end 1 with the result that the COllliDi;:l.lld of
the rest of the world over our gold will be decreased, and it is
~ite
possible
that with the restoration of more normal conditions elsewhere and the continuance
of large favorable trade balances, a
move~snt
of gold toward this country may set
in. Such a movement may well prove to be undesirable, tending 1 as it would, to
keep our prices above the level of other ma-rkets and so put us at a. disadvantage
in internatiolld-1 trc:.\de ..
It is confidentlY believed that we should
http://fraser.stlouisfed.org/
·these -.c.irrmortant
.
_t ~k 1ng,
Federal Reserve Bank of St. Louis
~ake,
and that we are sa.fe in
steps toward the restoration of natural conditions ..
... -
W. P. G. HARDING. Govi!IINOI
ALBERT STRAUSS, VICE GoVI!IINOI
ADOLPH C. MILLER
CHARLES S. HAMLIN
EX-OFI'ICIO MEMBIER8
CARTER GLASS
SI!CIII!TARY OF THE 1'11..CIIAIIIIAII
JOHN SKELTON WILLIAMS
COIIPTim.LIR OF THE CURRIIICY
FEDERAL RESERVE BOARD
J. A. BRODERICK, SICRI!TAIIY
W. T. CHAPMAN, ASSISTANT SICRI!TARY
W. M. IMLAY. FISCAL AlENT
ADDRDS REPLY TO
WASHINGTON
FEDERAL RESERVE BOARD
June 10,1919.
X-1571
Subject:
Cempaign for .New Par Points.
Dear Sir:
There is enclosed herewith a copy of report
•
prepared from replies received from all Federal Reserve
Banks in response to our telegram of
M~y
29th, asking
for inforrration regarding the progress of the campaign
being conducted fer the establishment of new par points.
In addition there is also enclosed a special
report showing non-member banks not on par list distributed
by states according to Federal Reserve
di~tricts.
Very truly yours,
Enclosure.
Assistant Secretary.
Letter sent to ,;·Chairmen of all Federal Reserve Bruik~'l>
W. P. G. HARDING, GovnNOR
ALBERT STRAUSS, VICI GoVDNOI
ADOLPH C. MILLER
CHARLES 5. HAMLIN
Ex-OI'PICIO MEMRIERII
CARTER G~SS ,
SICRETAIV OP THI TREAIUIIY
CIIAIIIIAM
J. A. BRODERICK, SICRITART
W. T. CHAPMAN, AsSISTANT SICRITAIT
W. M. IMLAY, FISCAL AliiNT
FEDE.RAL RESERVE BOARD
JOHN SKELTON WILLIAMS
C0MP11lOLLIR OF THI CVRRINCY
ADDRI!SII RIEPLY TO
WASHINGTON
FEDERAL RESERVE BOARD
June 10,1919 ..
X~l572
Subject:
Transit and Audit Conference.
Dear Sir:
me are enclosing herewith six copies of a
tentative program of topics suggested for discussion
at the conference of Transit Managers and .AU:di tors of
Federal Reserve Banks, to be held at Cleveland, Ohio·,
June 23-25, 1919, in order that representatives of your
Bank who will attend may acquaint themselves with the
subjects that will be taken up.
Very truly yours, •
Enclosure ..
.Assistant Secretary.
Letter to
Chairrr~n
of all Federal Reserve Banks.
\
X-1572a
Copy of Governor Harding's telegr.::m o:f June 5. 1919
suggesting Transit and Audit Conferance to be held
in Cleveland June 23-25, 1919.
" Subject: Transit 2.nd
A1~.c.~
t. Conference.
The Board suggests that a conference of transit ~en and
auditors of Reserve banks be held at Cleveland Jur~ 23rd to 25th
to discuss transit questions and accounting probleres between
Reserve banks. The Board is advised thc;.t the coromi ttees appointed
at the last conference will submit their reports at the rreeting.
You are requested to telegraph n9t later than tomorrow
night the names of representatives who will attend and also topics
suggested for discussion at the tr&nsit ~eeting and suggested
topics for the audit meeting other than those which have already
sent to Mr. Jefferson, all of which will be included in a tenta.tive
program which will be prepared and sent to each bank and designated
representatives.
Please communicate direct with Strater at Cleveland regarding
hotel accommodations.n
r:;: \""':.,1 r='
u{J
X-1575
CONFERENCE OF TRANSIT MANAGERS AND AUDITORS OF FEDERAL RESERVE BANKS.
CLEVELAJID, OHIO.
June 2_3-25, 1919
•
The Federal Reserve Banks will be represented as follows:
:llli:Nsl T
BOSTON
Mr. Willett
AUDI'I'
Mr. Currier
NEW YORK
Mr. Henaricks
Mr. Coe
Nr. Rounds
Mr. Jefferson
PHILADELPHIA
Mr. Dyer
Mr. Gam on
Mr. Stockton
CLEVELAND
Mr. Fleming
Mr. Wagner
Mr. Strater
RICHMO:ND
Mr. Blackburn
Mr. Walden
ATLANTA
Mr. Adelson
Mr. Patterson
Mr.
CHICAGO
Mr. :Kramer
J'.1r. Bachrr.an
Mr. Burges::::
Mr. Attebery
Mr. Novy
ST. LOUIS
T~ylor
Mr. Ho!Jkina
Mr. Behring
I.1r. Gilmore
MINNE.APOLI S
Mr. Warren
Mr. Core
Mr. Long
KANSAS CITY
Mr. Helm
Mr& Tyner
Mr. Wardell
Mr. Taylor
Mr. Weiss
DALLAS
Mr. Burkett
SAN FRANCISCO
Mr. Hale
Mr.
House
C'D ;.c-,J_-~
0t0
X.,-1577
CONnRENCE OF TRANSIT MANAGERS GF J:<'EDERAL RESERVE BANKS,
CLEVELAND. OHIO, June 23-25, 1919.
~gf!e s ted
l. Any plan of operation s..do-pted by Conference must be
strictly followed by all Federal Reserve Barks,
and can be modified only on approval of a r.ajority
of Transit Advisory Corrmittee &nd the Secretary
of the Federal Reserve Board.
'Ll. FLOAT:
A.
Report of Committee ..
III. TIME SCBEWLES:
IV.
A.
Report of Committee.
B.
Time schedules on Reserve cities in other districts.
C.
Possible improvement of inter-district end intradistrict clearing tirr.e schedules through co-operation
of Poat ·office Department <:ind readjustment of mail
train schedules~
7
PAR LIST:
A.
B.
C.
D.
Representatives should be prepared to explain any
methods used by their re~ective banks since
last conference, in ac~iring par·points4
4
The desirability of furthering the par collection
system at this time by collectiu~ on non-member
banks where the latter refuse to remit at par
through the ~edium of post offices or express
companies at the respective points.
11-4
Whether Federal Reserve Banks should advise each
other by wire of withdrawals from par list.
Recognize changes only as published in par list and
supplements.
E.
F.
G~
ll
8-12
Removal of points from par list before next edition
of suppleu£nt is published-
10
Handling of items drawn on points which ha.ve withdrawn from par list between supplements.
11
That on new :par lists nan:es of all banks in a city
that can be handled be shown in detail and not as
na11 banksn or "all National banks"..
11
by
X-1577
, H.
I.
J.
Sugg!?sted b.v
Routing of non-rrember b3rik items.
8
Direct routing of time i ten1s between Federal
Reserve districts.
1
Should savings banks and trust companies not
carrying actual cheCking accocnts appear on
par list?
11
K. Every Federal Reserve Bank should
h~ve a list
of member batiks attached to each Federal
Reserve district ~nd shoul$ be notified from tirre
to time of riny change - such a list is absolutely
necessary w;l8n returning items direct.
L ..
V.
Should not the Federal Reserve Inter-district
collection system boOks be amplified so that
member banks may iiAtttt~-ttmaer.t'MJl:;hoifE.>IIOd·.
ttlil•t• . t~·im'Cite their items?
2
2
CASH .LETTERS:
A. Should a Feder~l Reserve Bank acknowledge to member
banks in other Federal Reserve districts, cash
letters received from them.
2-4-8-11
Cash letters to incl ud.e i terns drawn on banks and
bankers only..
7
Uniform cash :n.etters between Federal Reserve BanksShall Federal Reserve Batiks supply cash letters
to direct sending bariks?
7
D.
Discontinuance of coupons at bottom of cash leiters,
substitu~ing postal card advice therefor.
7
E.
Uniform method of deferring country cash letters
when.•a Sunday or holiday intervenes.
12
In order to avoid unnecessary accounting and numerous
entries, would it not be better to handle cheCks
drawn on insurance coJI!Panies, railroad conpanies,
l~rge corporations, etc. payable in Federal Reserve
cities, when missorted through cash letters, rather
th~ to enter them for collection.
2
Dispense with acknowled@llSnt of cash letters received
direct from member banks in other Federal Reserve
districts.
3
Discontinuance by Feder~l Reserve Banks of forRarding
duplicate as well as original advices of receipts
for letters received by them from other districts.
11
B.
C.
F.
G.
H.
(."""J:)·C~,,;~
I.
VI.
That Feder<-,1 Reserve Banks do not uckno,vledge receipt.·.·
of cash letters to rr.embers of other districts, but
let such bank inquire of its own Federal Reserve
b!;l.nk.
utO
11
COLLECTION ITEMS:
A. Should proceeds old large items in other districts
be telegraphed on date of
7
pa~nent7
B. Protest foes on unpaid collection items should be
classeJ as ceductible items.
11-12
C. Uniform forms for advising items deducted and entered
for collection.
12
D. Uniform form of advice of payment of all collections
crijdited on same day.
12
E. Telegraphic advice to rrsmber banks of credit for
collections.
12
F. Collection of trade accept.:-nces.
12
G. Direct rcuting by rr.ember banks of one district to
other Federal Reserve Banks of collection items.
12
H. Recovery of charges on unpaid collection items routed
direct.
12
I. ·Should n:.ember banks of one district forward "' collection
to a b~k of another district and request that
J. Should
bank to deposit proceeds with its Federal Reserve
Bank for credit for transfer by wire.
12
~ check with special instructions to telegraph
payment or non-payrr.ent he handled for cash or collection.
2
K. Advisability of sending non-cash collection items to
member e.nd non-member banks mn other districts
for remittance when paid to the sending Federal
Reserve Bank or the Federal Reserve Bank of the
district in which the collection bank is located~
t. Should a
Feder~l
4
Reserve Barik assume the riSk of loss
by crediting member banks with proceeds of collec-
tions upon advice of member or non-member banks
of other districts that a remittance has been
I!'.ade to their Federal Reserve Bank.
~l
X-1577
-4-
Suggested by
VII. WIBE TRANSFERS.
A. Wire transfers from a member bank in one district
t.o a Feder2.l Reserve Bank or branch in another
district for use of a non-member bank in that
district.
4
B. Uniform closir:g hour for wire transfers at all
Federal Reserve B::mks, and uniform method of
8-10
h.::ndling~
..;
1.
When re.::eived from member banks ..
2.
When received from Feder3l Reserve Banks
or branches.
C. Proceeds to be available to member b~~s as of day
on which funds were transferred.
8
D. Wire trcmsfers between member banks or between
rnember banks and non-rr.ernber banks for account
of individuals or firms.
6-11
VII I. LEASED WIRE SER\TI CE ..
A. Telegrc®S over priv~te wire system to be signed to
show department or officer to whom reply should
be addressed.
B. Use of private wire for advising of returned items
and other transit operations.
4
5-8
C. Small telegrams between Federal Reserve Banks covering
unpaid i terns sent direct by member banks of other
districts be sent over leased wires with instructions to notify sending banks.
D. Adoption of A.B.A. code for transit managers.
7
8
E. The private wires ~re occasionally loaded with business could not sozre thing be done to relieve this condition.
IX.
2
TELEGRAPHIC CHARGES.
A. Should a Federal Reserve Bank absorb telegraphic charges
on wires sent direct to member banks
other districts.
in
B. Absorption of cost of telegrams on unpaid items •
2-'2.0
G
-5-
X-1577
suggested
c.
bz
Telegraphic charges on rr.essages to and from a
member bank re unpaid items to be absorbed
by the Federal Reserve Bank of the district
to Which the cash letter is .forwarded, re-
gardless of whether received from another
Federal Reserve Barik or a member bank of
another district.
12
X. UNIFORM PROTEST INSTTI!lrCTI ON..S ..
A. Uniform protest instructions to be followed by
all Federal Reserve Banks.
B. Should protest fees on collection items, telegram charges, etc., be handled as deductions.
11
12
X-1577
6jJ
Suggested
XI.
EXC?ANGE DRA.li'I'S AlTD TRAN'SFER DRAPTS:
A.
Removal of limit one xcha.nge drafts.
4
E.
Federal Reserve Banks and direct settling
branches to draw drafts on other Federal
Reserve Banks and direct settling branches.
g
c.
n.
XII..
1. Method of handling by br~nches.
Transfer drafts should be treated ~G deductible itemsRecommendation t~t use of transder
stinlula.ted or abolished.
dr~fts
l2
be either
EXCHANGE CHa GE5:
A. Possibility of exchange charges on items payable
in Federal Reserve cities.
XI I I,
Ez
1
ENDORSEMENl'S:
A#
Uniformity of da.te and A.. B • A. number.
B.
Distinctive form of endorsement used by banks
forwarding remittances direct to other
Federal Reserve Banks.
c.
g
9
Practice of staJq>ing endorser 1 s number on face
of
~ck.
9
X :1V. 'RFJ.IURNED ITEMS-;
A.
Sba.ll UZ1paid or irregular items be returned
dlreet to sending bank?
10
B. Where a check is returned unpaid without reason
for non-payment, Federal Reserve lb.nk should
return check to its endorser but notify the
returning bank that it failed to give a reason
for refusal-
A.
Cdll any uniform plan for pa.ying postage to member
b9tlks for remittances made to Federa.l Reserve
Back be ~volved.
B.
Uniform method of co.npilation or abolition of
transit expense records.
ll
l2
(-"J __.,
OU.Ji...
~, (
I
J
'U\.J<...,i
... 7-
X-1577
Suggested by
XVI...
LOST ITEMS.
A. Failure to report :J,ost items within a reasonable
time.
7
XVII • GENERAL.
A. Advisability of using words nAt par" in the wording
placed on checks to show that they are co1lectible through Federal Reserve Banks
9
B. Use of the words "Payable at" or "Payable through"
on checks and drafts.
9
c.
Uniform phraseology in writing and wiring Federal
Reserve Banks in regard to credit deductions
and deferred debits.
12
D. 3.Pecial symbols on checks to indicate Federal
Reserve Banks or bank through which checks
should be col lee ted.
E. Po.rent bank should be addressed with request to
convey to or secure information from its branches.
F. Uniform rules and regulations at various Federal
Reserve Banks to govern handling of transit 1 tems.
8
9
X-1572
CONFERENCE OF AUDITORS OF FEDERAL RESERVE BANKS
CLEVELAND, OHIO, JUNE 23-25, 1919~
Suggested
I.
II.
Any plan of operation adopted at conference of
auditors must be strictly followed by all
Federal Reserve Banks, and can only be modified on approval of a majority of the Auditors'
Advisory Coillilitt.ee and the Secretary oft he
Federal Reserve Board.
FED~AL
A.
RESERVE :BANK PCCOUNI'S:
Adoption of uniform report of open items in uncollected funis and exception accounts.
4
B.
Uniform method of adjusting erroneous deductions
and credits.
4
C.
Method of handling accounts with other Federal Reserve Banks..
D#
Semi-month~
ll
'
E.
Inter-Reserve :Banks t arrangements with branch banks.
11
F.
Supporting transcripts with copy of entriesy
11
G.
Handling exceptions by wire4
11
H.
Errors made by one Federal Reserve Bank corrected
by another.
11
ACCOUNI' ING METHODS :
A.
IV.
ll
reconcilement between Federal Reserve
Banks.
III •
.P.z
Official recognition of Dunlop plan of accounting.
9
GOLD SETTLEMENT FUND:
A.
~ductions
from Gold Settlement Fund Suspense Account:
( l) Revision of list of ite~s.
(2) Protest fees and cost of telegrams.
(3). Lost checks.
2
11
4-9-2
X-1572
- 2 Suggested J?.l
B.
C.
D.
E.
i~
G.
V.
Calculating a.nticip;a.ted credits through
Gold Settlement Fund.
11
Desird.bility of settlement through Gold Settlement Fund by Federal Reserve Board same day
as credits are wired by banks.
4-7
Method of treatment when debits exceed credits in
Gold Settlement Funi clearing.
6
Adoption of practice of wiring daily advice direct
to beneficiary banks of gold settlement credits
reported to Board.
10
Advisability of Federal Reserve Board rendering
weekly written statements of transactions
in Gold Settlement Fund. This in addition
to daily telegraphic advice as at present.
7
Elimination of reports by and for Federal Reserve
Banks or direct settling branches observing
holida,v s on which other Federal Reserve .Banks
are open for business.
3
FORMS:
A.
Revis1on of forms
X-794 and X-794a.
4
B.
Standardization of inter-Federal Reserve Bank forms.
2
(1)
Advice of deductions, Gold Settlement
Fund Suspense Account.
c. Uniform forms for advising of items deducted and
entered for collection.
D.
E.
F.
12
Uniform form of advice of payment of all collections
credited On same day_
12
Uniform form for verification of outstanding debits
between Federal Reserve Banks.
~
Uniform forms of advice of shipments of Federal
Reserve notes.
5
"""'1-' ""*
uU;)
• •
X-1572
- 3Su,gge s ted
VI.
EXPENSE ITEMS BETWEEN FEDERAL RESERVE BANKS:
A.
Cost of shipping Federal Reserve notes.
(1) Method of recovery, monthly versus
daily~
9-ll
B.
Cost of shipping Federal Reserve notes to other
banks to be absorbed by Federal Reserve Bank
making shipment.
6-7-8-11-12
c.
Present method of recovering for postage and
insura:r:' e for shipments between Federal
Reserve Banks.
Conference of
Governors
March 20-22/19
ll
._;.',.
III.
REDISCOUNT TRANSACTIONS!
A. 'Federal Reserve Banks anticipating notes rediscounted with other Fede~l Reserve
:Banks should wire total principal and
total discount sepa.~te~.
B.
VIII.
Disposition of discount paid to Federal Reserve
:Banks in e xcess of amount collected from
members.
B.
RecorJCilement of accounts.
8
5-6-11-12
Ad~tion
of A. B. A. code by auditors
8
FEDERAL RESERVE NOI'E SHIPMENTS!
A.
XI.
11
LEASED WIRE SERVICE:
A.
x.-
4
DEFERRED DEBITS:
A. Adoption of uniform method of monthly advice
regarding exceptions in deferred Stebits
account.
IX.
E.l
Responsibility for tracing shipments of
Federal Reserve notes
5
COLLECTIONS:
A.
Final proceeds to be shown on paid non-cash
collections.
4
·•
..
X-1572
- 4Suggested
XII.
RELATIONS WITH TREASURY DEPARTMENT:
A. Relations of Federal Reserve :Banks with
Treasury Department
:a.
Advisability of requesting Treasury Department for weekly detailed etatellient of
Redemption FUnd Accounts.
C, Interest on depository balances should continue
to the t:i.me w hen the remittances covering
withd~awals are ava.i~ble.
D.
XI II.
.£1
Arrange wlth Treasury DeJla.etment to permit debits
and credits to the Treasurer's account for
the purpose of correcting errors.
ll
7
11
7
GENERAL:
Auditors t and Assistant Auditors t signatures
to be on file in all Federal Reserve :Banks
a.nd :Branches.
7
Advisability of assigning a number to each bank.
7
Signatures of officers to be filed singly in
· order to obviate necessity of new cards
for single change.
12
in accounting phraseology between
Federal Reserve :Banks.
4-5-S
Unifo~ity
EX-OFPICIO MEMBERS
W. P. G. HARDING, GoVERNOR
ALBERT STRAUSS, VICE GoYE8NOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
FEDERAL RESERVE BOARD
CoMPTROLLER OF THE CURRENCY
J. A. BRODERICK, SECRETARY
W. T. CHAPMAN, ASSISTANT SECRETARY
W. M. IMLAY, FISCAL AOENT
ADDRESS REPLY TO
WASHINGTON
FEDERAL RESERVE BOARD
June 10, 1919.
X-1573
Subject:Borrowings by Member Banks on Security of
Government Obligations.
Dear Sir:
The Federal Reserve Board is concerned over the existing
tendency towards excessive speculation, and while ordinarily this could
. be corrected by an advance in discount rates at the Federal Reserve Banks,
it is not practicable to apply this check at this time because of Govern-
ment financing.
By far the larger part of the invested assets of Federal
Reserve Banks consists of paper secured by Government obligations, and the
Board is anxious to get some information on which it can form an estimate
as to the extent of member bank borrowings on Government collateral made
for purposes other than for carrying customers who have purchased Liberty
bonds on account, or other than for purely
The Board would aypreciate your
co~ercial
co~ents
purposes.
on this situation
in your district.
Very truly yours,
Governor.
Draft of letter to the Chairman of each Federal Reserve Bank.
r:-. ;----·; . .----.. .,
ucJlL}
W. P. G. HARDING, GoVERNOR
ALBERT STRAUSS, VICE GoVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
EX·OFI'ICIO MEMBERS
CARTER GLASS
SECRETARY OF THE TREASURY
CIIAIRIIAN
J. A. BRODERICK, SECRETARY
W. T. CHAPMAN, ASSISTANY SECRETARY
W. M. IMLAY, fiSCAL A•ENT
FEDERAL RESERVE BOARD
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
ADDRESS REPLY TO
WASHINGTON
FEDERAL RESERVE BOARD
June 10.1919.
Subject:
X-1574
Definition of Term "Readily Marketable Staples".
Dear Sir:
The Federal Reserve Board transmits herewith a definition of the
term "readily marketable staples" as used in that part of Section 13 of the
Federal Reserve Act which authorizes any member bank to accept drafts which
are secured at the tirr.e of acceptance by a warehouse receipt or other such
document conveying or securing title covering "readily marketable staples" ..
The Board issues this definition as a guide to Federal Reserve Banks
and rrember banks in determ.ining what staples may properly be considered readily
marketable within the n:eaning of that Section and suggests that although the
law does not expressly restrict eligible staples to those which are non-perishable, nevettheless banks as a matter of prudence and protection to themselves
should not consider as eligible any staple which is in its nature so perishable
as not to be reasonably sure of maintaining its .value as security at least for
the life of the draft which is drawn against it ..
-
DEFINITION.
-··•
A readily marketable stc~le rr~y be defined as an article of corrmerce;
agriculture or industry of such uses as to make it the subject of constant
dealings in ready markets with such frequent quot'ations of prices as to rr.ake
(a) the price easily and definitely ascertainable; and (b) the staple itself
easy to realize upon by sale at any time.
Governor ..
Letter to Chairmen of all Federal Reserve
3Z~9
W. P. G. HARDING, GoYDIIOR
ALBERT STRAUSS, VICE GoYDNOI
ADOLPH C. MILLER
CHARLES S. HAMLIN
EX-OP'PICIO MEMBIDIS
CARTER GLASS
SI!I:RETAI't'W ,-HI TIEACIIAIIIIM
JOHN SKRTON WILLIAMS
COIIP.-..11 OP THI CURII!NC't
J. A. BRODERICK, SI!I:RETART
W. T. CHAPMAN, ASSISTANT SI!I:RETART
W. M. IIILAY, FISCAL MINT
.
FEDERAL RESERVE BOARD
ADDRESS REPLY TO
WASHINGTON
FEDERAL RESERVE BOARD
June 10, 1919.
X-1576
Subject:Reclassification of Reserve and Central Reserve Cities.
Dear
Sir~
In a.ection 13 of the Federal Reserve Act there is a clause which
:provides tba.t 11 the orgd.!lization of Federal reserve districts and Federal
reserve cities shall not be construed as changing the :present status of reserve and central reserve cities", and consequently in the exercise of the.
power conferred u;pon the :Board in paragraph (e) of section ll, "to add to
the number of cities classified as reserve and central reserve cities under
existing law in which national banking associations are subject to the reserve requirements set forth in section twenty of this Act; or to reclassify
existing re~erve and central reserve cities or to termi~te their desi~tion
as such", the :Board did not change the status of the three central reserve
cities, New York, Chicago and St. Louis, which had been central reserve cities
for many years prior to the passage of the Federal Reserve Act4 Consequently
member banks in th~se cities are obliged to carry reserves of 13% against
their demand deposits while banks in the other cities having Federal reserve
banks, which .were also reserve cities under the old law, need carry only
10~ reserves a~inst their demand deposits.
More than two years ~go the :Board announced its policy of classifying all cities in which branches of Federal reserve b~ks might be located
as reserve cities, and accordingly member banks in all such cities are now
required to carry lo% reserves ~ga.inst their demand deposits. It is obvious,
however, in view of the change in reserve requirements made by th~ Federal
reserve law as originally enacted ~nd more'particularly by the amendment of
June 21, 1917, that the old classification of reserve and centr~l reserve
cities has become obsolete. The member banks in St .. Louis, for example,
have no greater opportunity for expansion than have those of Boston, Philadelphia and Cleve!Qnd, all of which cities exceed St~ Louis in population,
but because of the previous status of St. Louis as a central reserve city
they are required to carry 13~ reserves asainst demand deposits while thuse
of the other three cities named need carry only 1~.
The Board is considering the advisability of reclassifying the
list Of central reserve and reserve cities, and as all twelve cities in whi~t
Federal reserve banks are located have become the financial centers of thei:··
respective districts, it seems that there may be good reasons for classifyiilf.
..
.
X-1576
- 2 -
them ~11 as central reserve cities. Such action would increase the reser~e
requirements in nine of the Federal reserve cities from 10% to 13% as against
demand deposits. It is not the purpose of the Boarc. to take hasty action,
and if the Board should determine to make the change, it would give a:"'ll,p1e
notice.
The present ~w does not require nor permit any part of a member
bank's lawful reserve to be carried :i.n ~.ts o~~ vati.:lt, and the amount of ca.sh
carried by a member bank is opi;iona.l with it. A mer:iber bank in a Fede1·al reserve city can, therefore, afford to let i.ts vault cash run do·.m. to a minimum
for the reason that it can replenish its cash OLJ. a. few minutes notice, while
banks located at a dist.,;~,nce feel that prude:r.:.ce demands tru,t they carry a
larger amount of vault cash as time is a necessary factor in adding to their
cash holdings in case o.f t:;nsxp~cted need or eiLergency. The same observa.tions
apply to cities which have bra::~ches of Feder.:1.l reserve banks, and it may be
argued that those cities a.lso should be classified as central reserve cities.
The Board feels, however, that it must consider the effect upon
the member banks and particuJ~rly upon State banks which have become members
of the system and which can exercise their statutory privilege of withdrawing
on .six months' notice. , If it should be deemed advisable to classify branch
bank cities as centralreserve cities, it might be well to give them longer
notice than in the case of Federal reserve bank cities of such intention in
order tlut the member banks in any branch bank city may have ample time to
decide whether to increase their reserves or to have their branch discontinued.
The Board is receiving a good many applications for the establishment of additional bra.nches, and perhaps if it were known that all branch ba.nk
cities would be classified as central reserve cities the desire to have additional branches established would not be so keen.
This is a confidential letter and in discussing it with your
executive committee and your directors you should have it so understood. It is
important, however, that the matter be carefully considered before any action
is decided upon, and yo~ are requested, after conferring with your officers
and directors. to write the Board stating frankly the consensus of opinions
expressed. You are also invited to give a full dnd free expression of your
ovvn views.
Very truly yours,
Governor.
LETTER SENT TO CHAIRMAN OF ALL BANKS
391
FEDERAL
RESERVE
BOARD
CONFIRMATION OF TELEGRAM.
..Tune 12,
19~9.
X-1581
-·
.
Curtiss,
Jay,
Austin,
Wills,
Boston
New York
Philadelphia
Cleveland
Hardy,
McCord,
Heath,
Martin,
Riohmond
Atlanta.
Chicago
St. Louis
Minneapolis
Rich,
Ramsay, Kansas City
Ramsey, Dallas
Perrin, San Francisco
Effort is being made to secure early publication of BULLETIN.
Board would appreciate receiving
pro~tly,
not later than the twentieth
of the: month in accorda..'lce with Board's letter February 27, 1.919, X-1391, ·
your monthly report of business conditions fo; June.
BRODERICK..
~·
FEDERAL
RESERVE BOARD
WASHINGTON.
June 12,1919.
X-1582
CONFIRM TI ON TEtEGRAM
Curtiss~ Bos to:n
Jay, New York
Austin, PhiladGlphia
Wills, Cieveland
Subjectt
Hardy, Richmond
McCord, .Atlanta
Heath, Chicago '
Martin, St.Louis
Rich, Minneapolis
Ramsay, Kansas City
Ramsey, !lalias
Perrin, SanFrancisco
Redemption of Federal Reserve notes in Gold.
Board calls your attention to importance in all cases of redeeming
Federal Reserve Notes in gold promptly when gold is demanded as this is
obviously a necessary ir.cident in removal of export restriction. You
should not however relax your efforts to bring back gold into Federal
Reserve Bank.
HARDING.
Governor.
Letter sent to chairmen of all Federal Reserve Banks.
~,-., ,.-~
~._j()
W. P. G. HARDING, GoVERNOR
ALBERT STRAUSS, VICE GoYI!IINOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
£lc.OFPICIO MEMBERS
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
FEDERAL RESERVE BOARD
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
J. A. BRODERICK, SECRETARY
W. T. CHAPMAN, AsSISTANT SECRETARY
M. IMLAY, fiSCAL A$ENY
W.
ADDRESS IIEPLY TO
WASHINGTON
FEDERAL RESERVE BOARD
June 13, 1919 ~
X-1584
SubJect:
Pe~lties
for Deficient Reserves.
Dear Sir:
With a. view of insuring uniform practice in ~11 Federal Reserve
districts in the ruethod of determining deficiencies in reserves QOd assessing penalties, the Board desires to amplify its letter of .April 8th, X-1463,
and .requests tha.t the following rules be a.dopted:effective October 1.1919&
1. Coruputa.tion of deficiencies in reserve balances:
Deficiencies in r~serve b~lances of member banks
in centr~l reserve and reserve cities should be computed
on the basis of average daily net deposit ba.l~nces covering a. weekly :period. Deficiencies in reserve balances of
country banks should be computed on the basis of a.vera.ge
daily net deposit ba.~nces covering a. semi-monthly period.
2. Report of member banks:
Reports showing, day by day, in even hundreds, tbe
amount of net demdnd deposits, and the amount of time deposits, should be rendered weekly by member banks in central
reserve and reserve cities, and semi-monthly by country bg.nks,.
3.
Method of assessing penalties:
Pe~lties for deficiencies in reserves should be assesses
monthly, on the basis of a.verc~oge daily deficiencies, covering
a. weekly period for banks in centrc~ol reserve ~nd reserve cities,
and covering a semi-monthly period in the case of country banks.
Federal Reserve Bdnks may ~t their dis~wetion, in extreme cases
assess pena-lties for deficiencies in reserves on the ba-sis of
d~ily deficiencies.
4. Ra.te of pe~lty:
The Bo~rd bas fixed a. basic r~te of 2% above the 90-dcl.y
discount r~te of e~ch district in assessing penalties for deficiencies in reserves. The Board will approve, upon a.:pplic~
tion by Reserve Banks, a progressive penalty rate, increasing
one-ha.lf of one per cent for each subsequent deficieney within
the calendar year.
Very truly yours,
Sent to cha.ir.men all
F~R,
Banks.
Governor.
W. P. G. HARDING. GOVERNOR
EX-OFFICIO MEMBERS
ALBERT STRAUSS, VICE GOVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
CARTER GLASS
5f:CQi:TARe.oF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
FEDERAL• RESERVE BOARD
COMPTROLLER OF THE CURRENCY
J. A. BRODERICK, SECRETARY
W. T. CHAPMAN, ASSISTANT SECRETARY
W. M. IMLAY, FISCAL AGENT
ADDRESS REPLY TO
WASHINGTON
FEDERAL RESERVE BOARD
June 19,1919 ..
X-1586
Personal and Confidential
Subject: Transfer of certain Sub-Treasury Functions
to Federal Reserve Banks •.
Dear Sir:
There is enclosed herewith for your personal and confidential information, a memorandum which is now being considered
by a committee recently appointed by the Secretary of the
Treasury to report upon the advisability of recomrrending the
transfer of certain sub-treasury functions to the Federal
Reserve Banks.
The Board is advised that the committee is desirous of having
the benefit of your views, and it will therefore be appreciated if
you will forward to this office at your earliest convenience such
criticisms, suggestions and comments as you may care to make.
Very truly yours.
Enclosure.
f
Governor.
Letter to Chairmen and Governors of all F .R. Banks.
<;pERSONAL AND CONFIDENTIAL
Subject: Memorandum presented to Special Col!l!Di tte3 Suggesting the
Transfer of Certain Sub-Treasury ~~ctions to Federal
Reserve Banks.
nThe following suggestions relative to work to be performed by the Federal
Reserve Banks in the event that the Subtreastiries should be discontinued,
are respectfully presented for your consideration:
1. It is suggested that all work now performed by the Subtreasuries be
transferred to, and be performed by, the.Federal Reserve Batiks, and that
this work be done by the Federal Reserve Batiks, not as Fiscal Agents .of the
United StatesJ but as a depositary function. It is suggested that the trust
funds of the United States be transferred to the three Coinage Mints, the
Assay Office at New York, and the Treasury of the United States at Washington,
D. C~
2. The special features in connection with this transfer that deserve
attention. are as follows:
(a)
(b)
(c)
(d)
(
Storage and Custody of the Trust Funds.
Distribution of Subsidiary and Minor Coins.
Exchange of Subsidiary and Minor 6oins~
Exchange of Currency..
Storage and Custody of the Trust
Funds~
It is believed that the custody and control of trust funds should
be absolutely kept within the control of the Treasury Department and under.
·the supervision of one of its designated officers or employees .. The transfer
·of the Gold coin and Standard Silver Dollars now in the custody of the Subtreasuries to the three Coinage Mints and the Treasury at Washington, would
have the advantage of insuring the distribution of such funds to points in
the United States where it could be convenient for ready use and at the same
time the transfer could be effected without additional cost to the Government
as to custody. If the trust funds were transferred to the Federal Reserve
Banks and vaults in such banks were set apart for the use of the Treasury
Department. it would be necessary at all times to have a representative of
the Treasurer of the United States in charge of such funds which would be
an element of cost not necessary if such funds were transferred to the Coinege
Mints •. the Assay Office at New York and. the Treasury at Washingtipn. Also. the
necessity for having a wide distribution of the trust funds held by the
Governrrent, is not apparent and if there is no necessity for such procedure,
it is not understood how justification can be made for the additional cost
that would be necessary, as well as the fact that the matter might be o.i mo.t>e Ct'
less inconvenience to the Federal Reserve Banks.
The question of the issuance of Gold Certificates payable to the order
of a specified payee, is not believed as important at the present time as it
was before the authorization of the issuance of Federal reserve notes in the
larger denominations. Again, if neces~ary, arrangen:ents may be made whereby
Federal Reserve Banks could be authorued to accept deposits of Gold and is;;;u~?
r::.tr~'(0
(.
..
-2-
X-1586 a
o~o
therefor docurrents in the nature of imtertm receipts which would be honored by
the Superintendents of the Coinage Mints, or the Assay Office at New York, or
the Trea~rer at Washington, for the issuance of Gold Certificates payable to
the order of a specified payee. Again, the Federal Reserve Barks might be .rrade
the custodians of the stock of unissued Gold certificates payable to order, and
upon receipt of deposits of Gold coin or demand Gold certificates, issue such
certificates payable to mrder of definite payees and at the same time make
payment to the Treasurer of the United States through transfers of an equivalent
amount in the Gold Settlement Fund,
Distribution of SUbsidiary and Minor Coins.
There seems to be no good reason why the Federal Reserve Banks cannot
take over the work of the distribution of the subsidiary and minor coins in
the same manner as such distribution is now effected by the Subtreasuries.
The holdings by the Federal Reserve Banks of subsidiary and minor coin
would not reach any volume sufficiently large as to cause concern. In the event,
however, that such holdings should be found too large for current distribution
needs, transfers could be made to the Mints.
The subsidiary Silver coin would be counted as reserve money and for this
reason would not be a tax on the reserve percentage of the Federal Reserve Banks.
It is the present practice for the Government to pay transportation charges
on subsidiary silver and minor coins from the Mints to the different Subtreasuries or between Subtreasuries, and banks desiring these coins which are
located in other cities, must pay the transportation charges from the various
Subtreasuries. In other words, shipments of subsidiary and minor coins from
the Subtreasuries and Mints direct to consignees, are at the expense of such
consignees. At one time, the Governrr.ent paid transportation charges on such
coins to the consignees through annual apPropriations made by Congress, but the
discontinuance of such appropriation made necessary the collection of c~rgea
from consignees.
Exchange of SUbsidiary and Minor Coins.
The redemption of subsidiary and minor coins now being performed by the
Sub-treasuries could be transferred to the Federal Reserve Banks and consider~~.
as exchange5 rather than redemptions inasmuch as the operation in effect iJ
siinply the getting of one kind of money in exchange for another kind. ShouJd
at any time the holdings of minor and subsidiary coin by the Federal Reserve
Banks assume proportions too large for .any use, such holdings may be transferre~
to the Coinage Mints, as above state~
Exchange of Currency.
·No reason is apparent as to. why the exchanges of currency cannot be as
well handled by the Federal Reserve Banks as by the SUbtreasuries~ Such curreuc:-t
as may be received by the Federal Reserve Banks in performing this function, that
is unfit for use, may be transferred to the Treasury at Washington and accounti:.1t:•
arrangements made whereby the amounts of such currency in transit as is avail··
Digitized forable
FRASER
or considered as reserve money, can still be counted by the Federal
.. ...
Reserve :Sanks as a part of its available assets.
It is tne present custom of the Subtreasuries in making shipments of unfit
currency to this office, to cancel the san:e before shipttent and to forward the
uppers and lowers on different days. No reason is apparent why such procedure
Iray not be followed by the Federal Reserve :Sanks when acting in a similar
capacity.
ia:yxc.ent of Checks over the Counter •
If the Subtreasuries are discontinued, it is submitted that it will be
necessary for the Federal Reserve :Sariks to make payments to the public creditors
of cheCks presented to them over the counter. It is not believed tnat this
function will be any great·addition of work to the Federal Reserve :Banks, but
it appears to be essential that the public creditors have definite points, as
at present, where they can secure payment for checks issued under the authority
of Government Disbursing Officers. Also, it will be necessary that Disbursing
Officers of the United States have a definite place where they can present
their checks over the counter and get in return therefo~ currency of requisite
denominations that will enable them to use for payroll and other purposes.
Costs..
1
Inasmuch as the entire cost of the Subtreasury system, exclusive of
salaries paid to the Assistant Treasurers of the United States, is somewhat
less than $500,000 per annum, it is not believed that the Federal Reserve :eanlr~
would demand of the Government reimbursen:ent for the transfer of the above
mentioned functions to be performed by them instead of the Subtreasuries·. How·
ever, this matter is presented for your consideration..
· Fiscal ,Agen,!!.
The uatter was thoroughly diseussed as to whether ot not the above mentioned functions should be performed by the Federal Reserve :Sanks as Fiscal
Agents of the United States, or as to whether it would be better for such
functions to be performed as depositaries with ~eciBl provision in the Act
which discon.tinues, or may discontinue, the Subtreasuries, to the effect that
all of the above mentioned functions shall be :performed by the Federal Reser,·~
:Sanks under the control ot the Treasurer of the United States, such control
to be exercised under the general supervision of the Secretary of the Treaou.'!."J"
in the same manner as the latter office now ~xercises general control over th::J
acts of the Treasurer in relation to the business now performed by the SUbtreasuries .. "
0."!"'-r')
~J~/0
W. P. G. HARDING, GOVERNOR
ALBERT STRAUSS, ViCE GOVERNOR
EX-OFFICIO MEMBERS
ADOLPH C. MILLER
CHARLES S. HAMLIN
CARTER GLASS
SECRE~RY
Cl'IC THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
FEDERAL RESERVE BOARD
COMPTROLLER OF THE CURRENCY
J. A. BRODERICK, SECRETARY
W. T. CHAPMAN, ASSISTANT SECRETAIYY
W. M. IMLAY, fiSCAL AGENT
ADDRESS REPLY TO
WASHINGTON
X-158lfDERAL RESERVE BOARD
June 21 9 1919.
SUBJECT:
.ASSESSGENT FOR GENERAL EXPENSES OF THE FEDERAL RESERVE
BO.APJ), JULY 1 TO DECEEBER 31, 1919.
Dear Sirs:There is inclosed for your information and attention copy of a
resolution adopted by the Federal Reserve Board at a meeting held on June
19, 1919, levying an assessreent upon the several Federal Reserve Banks of
an amount equal to one hundred seventy-six thousandths of one per cent
(.00176) of the total paid-in capital stock and surplus of such banks to
defray the estimated general exj_)enses of the Federal Reserve Board from
July 1 to December 31 9 1919. This assessment does not include the cost
of engraving and printing Federal Reserve notes.
There is also inclosed a statement showing the basis upon which
the assessment is levied.
The assessment should be computed upon your·paid-in capital and
surplus as of close of business June 30, 1919, that isy ·11pon capital paid~
in as shown by books on that date, and surplus after adjustment in accordance \"lith circular letter X-1558, dated May 31, 1919.
I have the honor to request that you bring this :rmtter to the
early attention of the Board of Directors of your bank, and deposit onehalf of the amount of your assessment in the General AccoU11t, Treasurer,
U. s., on your books on July 1, 1919, and one-half on September ly 1919,
in each instance issuing a C/D on Form 1, National Banks, for credit of
11 Salaries and Expenses, Federal Reserve Board, Special Fu:ndt 11 assessment
for general· expenses.
Kindly send duplicate C/D to Federal Reserve Board.
Very truly yours,
Fiscal Agent.
Inclosures.
http://fraser.stlouisfed.org/
LETTER SENT TO
Federal Reserve Bank of St. Louis
.ALL CHAIRiVlEN.
•
X:-1588a
RESOLUTION LEVYING ASSESSi.'IBNT
\7hereas, under section 10 of the act approved
December 23, 1913, and known as the Federal Reserve Act,
the Federal Reserve Boatd is empowered
levy semi-an~ually upon the Federal Reserve Banks in proportion to
their capital stock and surplus a:i.l assessment sufficient
to pay its estimated expenses, including the salaries of
its members, assistants, attorneys, experts, and employees
for the half year succeeding the levying of such assessment together witl1 any deficit carried fo~vard from the
preceding half year; and
to
\v.hereas, it appears from estimates submitted and
considered that it is necessary that a fund equal to one
hundred seventy-six thousandths of one per cent ( .00176}
of the total paid-in capital stock and surplus of the Federal Reserve Banks be created for the purpose hereinbefore
described, exclusive of the cost of engraving and printing
of Federal Reserve notes; Now, therefore,
Be it resolved, That pursuant to the authority vested
in it by law, the Federal Reserve Board hereby levies an
assessment upon the several Federal Reserve Ban~s of an amount equal to one.hundred seventy-six thousandths of one
per cent (.00176} of the total paid-in capital stock and
surplus of such banks, and the Fiscal Agent of ~1e Board is
hereby authorized to collect from said banks such assessment
and execute, in the name of the Board receipts for payments
made. Such assessment will be collected in t~o installments
of one-half each; the first instal~nent to be paid on July
1, 1919, and the second half on September 1, 1919.
..
.
~C-1588b
ESTDVIA'J:E FOR ·J1JLY 1919,
ASSESSI;~l'J'l:o
Average monthly encvnforance for period
January 1,1919, to JUJ.1e 30, 19l9c" . . . . . . . . . . . $45,027 .. 28
Estimated r.1onthly requirements, July 1
to December 31, 1919~ inclm;ive . • " • • .
48,605.00
o
Estimated r.10nthly i:lcrease ,
3,577 .. 72
$00&*6
Estimated requirements, June to
• • • 291,630,00
December 1919, inclusive • • • • • • . • • •
4,000.00
Estimated unenc1..:u:ubered balance Jm1e 30, 1919 • • • •
287,630.00
Estimated paid-in capital and surplus of
Federal Reserve Banks, as of close of
business June 30, 1919 • o • • • • • •
.An assessment of one hundred seventy-six
thousandths of one per cent ( ,00176)
will produce •
oo•400QOaoooe-o
. 163,700,000.00
I have the honor to recommend., therefore, that
an assessment of one hundred seventy-six
thousandths of one per cent (.00176} be levied.
Fiscal .Agent.
288,112..00
DETAILED STA1:'E;1IENT OF
"'
.
B2:?El~lil'i'UBJ,_;J
AlU
COl=:iiTi.J.:.:l·i'J:L~
AS A
BASIS 01<' ESTiiviN1':2
Estimated
monthly reEstimate quirements ..
i~~~~eJuly 1 to Dec ..
. -:mthly aver.-'c'f. Jan .. 1 to
•Ju.; 10 30• 1919.
- - - - - - - . , . - - - - - - - - - - - _____________. ;: 1;_;:_9=1.: . 9-:-_ _--..=31::.:,L-::1;.:;..9=1~9.:.___
PERSON~
SERVICES:
:;;6,366.77
Board and its clerks •
Secretary's office •
3,655.88
Counsel's office • • •
1,979.52
Division of Audit and Exar1inR.tion. ,
5,195.36
Division of Reports an~ S~atistics •
4,.103 .. 09
Division of A11alysis ana. Research
1,411 ... 78
Division of Issue . . , , . . . , • . • . 2.,867 .. 53
:.1essengers ·• • •
722~22.
.Charwomen • • • • • .
77 ... (1.~
Archi tee ture
402.78
Contingent •
~?26, 782.79
NONPERSONAL ~VICES:
Transportation and subsistence Board and its clerks • • • • •
201.57
Secretary• s office • • • • • • • • •
19 .. 99
Division of Audit and Examination
.2,887,.46
Division.of Reports and Statistics •
Division of Analysis and Research.
70 .• 20
Counsel's Office • • .
• • • • •
::.:e ssengers • • • • • .
4 .. 17
Communication service Telephone
182.89
'i'elegra.:ph • • • , • •
206 .. 11
•
18.25
Postage
. • • • • • • • • •
Printing and binding, etc • . • •
• 3,099.45
Contract repairs • • • • • • •
13.00
Electricity (light and l)Oiver)
35.20
St e2ii1 ( l1ea t )
25.00
Other nonpersonal services
338.48
e
o
SUpplies Stationery • • • • • • • e • • • • • • •
447.03
Periodicals • • • • • • o • • • • • • •o
21 .. 31
..
•
0
•
•
•
•
0
0
Q
Other •
0
•
0
• ., . . • • .
6
•
•
•
o
•
•
267 .. 76
•
Equipment:
Furniture and Office
•••
746.41
Books • • • • • • • • • •
• • • • • •
35.87
Gold-Settlen1ent Fo~1d (including salaries) •
869.84
Rent • • • • •
652.77
Contingencies.
TOTAL • • • • e e • e • 10,142.76
o
DIVISION
OF
•
•
•
0
•
0
o
•••
•
o
••••••••
FOREIGN EXCHANGE
GRAl'if.D TO TAL • •
Total expenditures and committments
January 1 to June 30, 1919 • • • •
http://fraser.stlouisfed.org/
Total estimate for next six months •
Federal Reserve Bank of St. Louis
0
•
• • • •
•
0
•
•
:$6~39~;50
3,595,.00
2.,090 .. 00
5.224.99
4,290.84
1,337.50
3,1~8.49
7!50.65
78.0G
555.56
$7,500.00
4,000 .. 00
2,500 .. 00
6,000.00
4,5oo~oo
1,600.00
3,500.00
750 ... 00
100.00
560 .. 00
2 000,.00
$27,442.53
$33.010.00
182.21
10 .. 00
3,128.78
200.00
100 .. 00
3,500.00
55.0(.,
100 .. 00
5.00
5.00
1%.40
225 .. 50
20.00
2,500 .. 00
15.00
35.20
25.00
490 .. 31
200.00
250.00
20.00
3.500.00
15.00
35.00
25.00
350 .oc
576.97
36.80
450.00
30.00
275.00
315.35
856.40
30.00
875.84
719.83
700.00
40.00
1,ooo .. oo
800.00
1 000 .. 00
10. 2.91.59
12,595.00
8.101.73
6.597.39
3,000~00
45~027. 28
44,331.51
48,605,00
•
Qo
• • • • • ~ • • • • 270,1C3.70
• • • • • • • • 291,~0.00
_,., f\2,.
W. P. G. HARDING, GOVERNOR
ALBERT STRAUSS, VICE GoVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
EX-OFFICIO MEMBERS
CARTER GLASS
'X.v
SECRETARY or-tHE" tREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
FEDERAL RESERVE BOARD
J, A. BRODERICK, SECRETARY
W. T. CHAPMAN, ASSISTANT SECRETARY
W. M. IMLAY, FISCAL AGENT
ADDRESS REPLY TO
WASHINGTON
FEDERAL RESERVE BOARD
Jaly l, 1919.
X-1589
SUBJECT: Foreign and International Banking Institutions;
Report of Condition as of Close of Basiness
June 30, 1919.
near Sir:
Under authority of the agreement entered into by yoar corporation
with the Federal Reserve Board, you are hereby re~ectfully requested
to furnish. the Board with a report of condition, as of close of business
June 30, 1919, giving in detail all assets and liabilities of your corporation and the data asked for in the accompanying memorandum.
Please arrange to file the report of your Head Off~ce as soon after
July first as possible. Separate reports of branches and affiliated banks
should be sent as soan as they are received by yoa. It will be appreciated
if, after the reports have been received from all of your branches and affiliated banks, you will have prepared a cansol1dated statement for your
co.:rporation to be sent to the Board.
While the Board bas ruled that no specific reserve bas to be cc:a.rried
by forei~ branches or affiliated institutions of American banking corporationsagainst deposits abroad, it. nevertheless, wishes to be advised
as to the average reserve carried by all sach branches and affiliated
institutions or corporations, which. are operating u.."ld.er agreement with
the Federal Reserve Board. You are, therefore, requested to have each of
your branches, agencies, offices and subsidiary banks furnish you, for
transmission to the Board, a report of the ~vera~ reserve carried during
the month of June, 1919, against deposit liabilities in the for.m shown in
the accampanying memorandum.
Kindly acknowledge receipt.
Very tl'\lly yours,
Secretary ..
Enclosure.
X--1589 a
BEFORT OF CONDITION TO FEDERAL RESERVE BOARD.
The following inforrr.ation is desired in connection with the report of
condition to be made as at close df business June 30, 1919:
A. BEAD OFFICE
1. Detailed balance sheet showing all assets and liabilities, including
contingent liabilities.
2. Amount of loans and discounts, divided: secured - Unsecured
(a) Demand
(b) Time
(c) Overdrafts and other advances
Total
3· Detailed list of investments (including stoCk of affiliated institutions)
showing:
(a) Issuing Government or corporation
(a) Interest rate
(c) Maturity
(d) Par value
(e) Book value
(f) Approximate market value -
4. Ownership of stock of affiliated institutions:
(a) Per cent owned by yourselves
(b) Per cent owned by fcrelgr~ Governments
(c) Per cent owned by in1liv idnal s and corporations
5. List of banks, branches, etc. having balances due to your corporation
with amount for each ba1·1k separately:
(a) Governmen~ bank
(b) Local banlrs (excl"'...lrl9 subsidiary banks, if any)
(c) Other banks {
"
n
n
n
")
(d) Branches, agencj es, offices and affiliated institution~.
6. List of banks, branchesf etc. having balances due from your corporatic..n
with ammmt for each bcmk separately:
(a) Ban..lrs ancl.. ban"kers
(b) BrancheG, agencies, offices and affiliated institutions.
1. Bills payable:
(a}
(b)
(c)
(d)
(e)
Payable· t1,>:
Amount
Interest rate
Maturity
Collateral - give list.
-2-
."
8. Rediscounts:
(a) Amount
(b) Maturity
(c) Rate
(d) With whom
(e) Secured or unsecured - if secured, give detailed infor~ation
regarding security.
9• Reserve Staterrent:
Deposits in the United
States~
(a) Net d.emand deposits (after deducting 'l'ncollected derr.and items
payable within ~nited States - exchanges)
(b) Time depositA ..
(c) Reserve held~
Cash on hand
Bank balances
Total
Per cen: of reserve -
10. Acceptances - limltations~
(a) Total outstanding acceptances
(b) Capital and s~~plus
Excess .§- over ~
$
$.$:____ _ _ __
Accep ta:nces secm.'ed
$
Acceptances unsecut·ea.
$
Amount required to be sCC'lred under
agreerr.ent with F'ed.enl He serve Board
$
(Give list of security b.uld as required above·.
giving description and approximate amount)
(c) List of drawers of drafts accepted., with total
agQregate liability in excess of 10 per cent
of capital and surplus ..
-·Bu:3iness
-- ____ .._
!gg::e gate Liability
_5e<:,1J.Ei ~t*)
or OJ.aran ty
(d) R"3serve againGt outstanding acceptanc.es:
'Req_uix-sl - 15 per cent, ..
l,. CaF:l1 ( ~·*}
2. Ba"lk balan C3S ~ (IIead Office ci t;>r) ( **)
3. Bankers acce:r_:Jta:rv~es ..
4" Secur.lties app::·ovo~. by Federal Reserve
Board (List in detail)
Total
( **) These amo1.mts, of course, must not include those
~~pearing in 9-(c) as part of your reserve against
deposits.
(*) If security, state what
http://fraser.stlouisfed.org/
and approximate value;
Federal Reserve Bank of St. Louis
the security consists of, giving quantity
if a bank guaranty, give name and location of ba!k
X-1589 a
-3..~;:-
•
•
•
o<
.;,
. ~':·:
.
.
''~,.
'
0
0
11. General limitations:
(a) Total deposits and acceptances outstanding
(b) Capital and surplus
Per cent deposits and acceptances outstanding
to capital and sur~lus
Limit fixea by Federal Reserve Board against aggregate
. deposits and acceptances outstanding------12. List of officers and directors.
13.
List of stockholders,
~bowing nurr~er
of shares owned by each.
14. List of branches, sub-branches, agencies, offices and afiiliated
institutions - date of opening of each and the location.
·15. Date of las.t examination or audit .... by whom made.
B. Branches, Agencies and SUbsidiary Banks. and Corporations.
1. Balance sheet to be furnished by each, showing in detail all assets
and liabilities, including contingent liabilities, as at close
of business June 30, 1919.
2. Amount of loans and discounts, showing: Secured - Unsecured
(a) Demand
(b) Time
(c) Overdrafts and other advances.
3. Detailed list of investments, showing:
(a) Issuing Govern;ent or corporation
{b) Interest rate
(c) Maturity
(d) Par value ·
(e) Book value
(f) Approximate market value
4. Amount of balances due from: (Nazre of bank and amount for each)
(a) Government bank
(b) Local banks ·
(c) Other banks - (exclude head office and affiliated batiks)
(d) Head Office
(~} Other branches, agencies and affiliated. institutions
5·
Amount of balances due to: (Name of batik and amount for each)
(a) Banks and bankers (exclude Head office)
(b) Head office
(c) Other b1·anches, agencies and affiliated banks
6. Bills payable:
(a)
(b)
(c)
(d)
(e)
Payable to
Amount
Interest rate
Maturity
Collateral (Give detailed list)
405
...
.
-4-
1!
Rediscounts:
(a) Amount
(b) Maturity
(c) With whom
( <,1.) Rate
(e) Secured or
X-1589 a
unsecured~
if secured, give detailed data
8 .. Deposits:
Dollar
Eq_uiva-
(a) Government deyosits (if secured give
list of collateral)
1. DeJJ>.and
2.. Time
Other deposits
3· Demand
4-. Time
Total
(b) Deposits -how payable:
1. Local Currency
2. Dollar
3- Sterling
4. Otherwise
Total
~
------------------
--------------------
9- Special Reserve Statement - average for the month of
Jun~,
1919;
(a) Net deposits:
L Payable in local currency
in dollars
2.
"
. 3.
11
in sterling
4.
n
otherwise
Total
(b) Reserve:
l. Amount, i f any, and co~o sit ion re(luired by local laws ..
2 • .Amount held:
·.Amount
Gold and silver •... $
Local currency .....•
Other cash •.........
Balane? in local
Govt. bank ••......
(e) Other reserve funds~----·
Total
(a)
(b)
(c)
(d)
10~
Date of·last examination or audit- by whom made.
NOTE: l. Where a schedule does not refer to your corporation, please
indicate this by inserting the word "None".
2. Reports for foreign branches, agencies, etc. • should be in
terms of United States money, stating the rate of exchange
at wbich they were converted.
~
EX ..OFFICIO MEMBERS
•
CARTER GLASS ·
SECR,ARY ./}F THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
.·,
FEDERAL RESERVE BOARD
WASHINGTON
W. P. G. HARDING, GOVERNOR
ALBERT STRAUSS, VICE GoVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
J. A. BRODERICK, SECRETARY
W. T. CHAPMAN, ASSISTANT SECRETARY
W. M. IMLAY, FISCAL AGENT
ADDRESS REPLY TO
FEDERAL RESERVE BOARD
X-1590
SUBJECT ~Form of agreement required by the Federal Reserve
]oard of Foreign J3d.nking Corporations as a condition
precedent to the I'urcba.se of their stock by National
banks under the provisions of Section 25, of the Fed~
eral Reserve Act.
Dear Sir:.
The Boi;U'd desires t.o fJ:ptess to yQu its apptecia.tion of
your pr~t compliance with "''req~st to ba•e a representative
attend the conference held in 1raahington on June 1.8th for the purpost of discussing genera..~ the terms of thll aueement with the
various foreign banki~g ¢orporations•
The conference proved t.o be a most interesting one, and
as a result the B~rd has formulated the enclosed draft of agreement.
to be gnerally uniform with res}lect to all such corporations. It
will be noted that the modifications are of a minor character.
It is req\lested that you submit the. revised form of agreement to your officers and directors at your -rlti convenience. and
if satisfactory to them, advise the ]oard of ·yo-Jr: forna.l acceptance
thereof • which you will signif1' by executing and forwarding to the
Boa.rd an agreement in the form herewith tra.n$1llitted. Upon receipt.
of the new agreement it will be substituted for the one now on file
with the :Board.
Very truly 10urs,:
.GOvernor.
SERT TO BANKS & CORPORlTlONS DOING BUSINESS IN FOREIGB COUBTRIES
mrnm
THE SUPIRVISl em OF THE FE.DI!lU.I. RESERVE BOJ.Rl).
X-1590 a
• •
Fonn of .Agreement required by the Feder,;~.l Reserve
Board of Foreign Banking CorporQtions as a Condition Precedent to the Purc.h~se of their Stock by
National Bsnks uu:i.er the Provisions of Section 25
of the Federal Reserve Act.
In order to enable you ~ other corpor~tions of the same
character to coW.Pete eff~ctively in foreign countries, it is
necess~ry t~t latitude be given in the developruent of bus~ness
abroad, ~nd the Bo~rd believes thatJ for the present at leastl
restrictions should not be rigid or too much in detail) and
that it is desirable to pr~s~ribe only general rules for your
guidance. AS occasion required, the B~rd will ~Odify its regu.lcl.tions in such manner as experience r.r:ay prove to be necess..u-;y..
B.
POWERS:-
l. ln the United states:
a. DeEosits: It is clea.r t:tat in order to avoid CO!lipetition in
the matter of receiving deposits with national banks and st~te
banks. which do not enJOY the wide powers which you n.ust necessarily possess in order to coupete successfully in foreign
. countries .. ycu should not be perwitted in the United. States
to receive individual deposit accounts or domestic bQnk exch:i-nge or collect ion accounts. You will be permitted, however •
to receive any deposit which is incidental to, or for the
purpose of~ carrying out transactions in £oreign countries
or dependencies of the United Stat as, where you. haYe established agencies. branches, or business connections. Deposits
of this character may be made by individuals, firms, corporations or banks, whether foreign or domestic, an9. may be time
deposits or on deiDdnd~
'Reserves: It wi 11 be requi.red thdot, against all such deposits
received in the .United States, you ID::l.intain a reserve in the
amount required by law against such deposits of ruerober b~
located in central reserve cities. The Federal Reserve Banks
are authorized, for purposes of clearing or collection, to
receive deposits from non-mei.Uber banks, and yo~ reserve
agaim~t domestic deposits nay be maintained by opening a.
cle~ring d.Ccount with the Federal Reserve :Bank of your district,
where an adequate balance ~Y be carried by you.
b.
Acceptances:
In the wa.ttur of acceptance of drafts and bills of exchange,
the Board bd.s concluded that you should be authori.~ed. to a.cce.Pt
for all transactions permissible to men.ber b<itnke Ullder the provisions of the Federal Reserve Act • provided that you nake no
'
..
-2-
X-1590 a
acceptance for account of any one drawer in an amount aggregating at any
time in excess of ten per centuru of your· subscribed capital and surplus.
unless the transaction be fully securedr or represents an exportation or
~portation of merchandise and is guaranteed by a bank or banKer of undoubted solvency; Qnd provided that whenever the ~ggregate of your acceptances outstanding at any t:ilne (a) exceeds the aruount of your subscribed
capital and surplus, fifty per centum of all acceptances in excess of
such amount shall be fully secured. or (b) exceeds twice the amount of
your subscribed capital ~d surplus, all accept~nces outstanding in excess
of such amount shall be fully secured, whichever of said two requireruents
slall call for the muller amount of secured acceptances; i::.lnd provided
further that in no event shall the a~grega.te of all your acceptances
outstanding, plus the t.;)tal of all deposits held by you, whether foreign
or domestic, exceed six·times the amount of yo~ subscribed capital and
surplus, except with the approval of the Federal Reserve :Board.
Reserves:
It must be underetood, furthermore, that a~inst all acceptances
outstanding you will ~intain a reserve of at least fifteen per centum
in liquid assets, which shall consist of:
'
l.
Cash;
2 ..
with other banks;
Bankers ' acceptances; and / or
Such securities as the Board way,
time to time, permit.
3.
4.
2.
~~ces
fr~
In foreign countries.
You are authorbed to accept deposits of any kind from banks, individuals and carporations in foreign countries, and generally to exercise
such powers and to do such things as are incidental to banking conducted
in the countries and dependencies in which you way transact business. The
Board assumes however that in the aatter of receiving deposits, making
loans, and in all other business conducted in foreign yOuntries. you will
be guided primarily by the laws of those countries and by sound business
judgment and banking principles. While the Board will not require you to
carry abroad cash reserves against deposits abroad, should it appear at
any time tb;;tt your business methods are such a.s to afford insufficient
protection, the Board will formulate such restricting regulations as way
be proper in the circumstances.
C.. REPORTS AND EXAMINATIONS:
1. You will be required to make two reports annually to the Feder~l
Reserve Board, covering such details as IDGY be prescribed.
2. You will also be subJect to such e.xawina.tiona as the Board uay order
these examinations to be made either by employees or agents of the Boa~d
or of the Federal Reserve Bdnk of yo~r district.
i
'
FEDER.A.L RESERVE BOARD
STATEMENT FOR THE PRESS
X-1591
For immediate release Friday. June 20, 1919.
The Federal Reserve Board had today a conference with the executive
committee of the Federal Advisory Council {Mr. James B. Forgan of Chicago,
Mr~
L.
L~
Rue of Philadelphia, Mr. Daniel G. Wing of Boston and Mt.
w.
s.
Rowe of Cincinnati) to consider problems relating to the financing of the
foreign trade of the United
states~
There wa.s discussion as to what unusual features attached to this
trade and the bearing thereof upon the American banking situation.
The
Board and the Committee of the council were in entire accord that the
~tter
of providing long term advances for Europe presented an investment rather
than a banking problem and t W.t the necessary funds must therefore come from
the investment market.
It was, however, the opinion of the conference that
as a step towards supporting plans for
~he
firancing of our foreign trade it
would be well to add a new pa.ragra.ph to Section 25 of the Federal Reserve Act
so a.s to permit National banks until January 1, 1921, without regard to
the amil\unt of their capital and sur:plus, to invest not exceeding in the
aggregate five per centum of thdr capital and surplus in the stock of one
or more corporations principally
eng~ged
in such phases of international or
foreign financial operations as may be necessary to facilitate the e .xport
of goods from the United States.
legislation to congress.
The
Board voted to recommend this
W. P. G. HARDING. GoVERNOR
ALBERT STRAUSS, VICE GOVERNOR
EX-OFFICIO MEMBERS
ADOLPH C. MILLER
CHARLES S. HAMLIN
CARTER GLASS
,.
}
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN S..aTON WILLIAMS
J. A. BRODERICK, SECRETARY
FEDERAL RESERVE BOARD
COMPTROLLER OF THE CURRENCY
W. T. CHAPMAN, ASSISTANT SECRETARY
W, M. IMLAY, fiSCAL AGENT
ADDRESS REPLY TO
WASHINGTON
FEDERAL RESERVE BOARD
June
Subject:
23,1919.
X-1592
Plan for conducting Corr~etition
for Selection of Architect.
Sir:
I enclose herewith for your information copy of a letter
\
addressed to the Governor of the Federal Reserve Bark of New
York comrrenting upon his plan for conducting a competition for
the selection of an architect for the oarik building.
The Board feels that in view of the qu.asi-puollc character
of the Federal Reserve Banks it would be desirable in all cases
where an architect has not already been selected that a reasonable
number of
~ualified
architects be considered and that a choice
be made by some competitive method.
Very truly yours,
Governor.
Letter to all Chairn:en, copy to Governors.
http://fraser.stlouisfed.org/ F.nc losure
Federal Reserve Bank of St. Louis
..
X-1592 a
.
/
"
June 21,1919.
Dear Governor Strong:Your letter of the 12th instant outlining your plana for
conducting a competitioa in your selection of an architect for your
building has been brought to the attention of the Board and the
method proposed Ir.eets with its approval ..
l,
The·Board understands that a number of leading architects
will be invited to submit plans under conditions set out in your program of competition prepared by Mr. Trowbridge and approved by your
directors, and that the plans will be judged anonymously, the award
to be rrade upon the final decisibn of the directors, the terms of the
contract being specified in advahce in the program of competition. The
Board understands further that ohly those architects will be invitedto compete as have such qu&lifications as would justify the bank in
awarding the work to any one of them wfthout cozqJeti tion• so that the
anonyrrity of the plans and the award upon that aasis will i:r'l.~e a
suitable selection and at the same time a fair competition beyond any
possible criticism. You state that the competitive plans selected will
not necessarily be those adopted for the building nor is it your e:xpectation to have the plans and estimates produced by the competition
determine in any way the probable cost of the building, and that the
competition is primarily for the selection of an architect rather than
for the adoption of building plans, completion of which will necessarily
be deferred until after the archi teet has been selected,
The Board would be gratified if those Federal Reserve Banks
which have not already selected their architects would conduct competitions
along similar lines for the selection of their architects.
Very truly yours,
(Sign~d)
Mr.
Benjamin Strong,
Governor, Feder~l Reserve Bank,
New York City.
W.P.G. HARDING.
Governor.
Enclos'lilre sent with X-1592 _to all Chairmen, copy to governor ..
(" f
,<'")
L_;.,:J.._tJ
W. P. G. HARDING, GoVERNOR
EX-OFFICIO MEMBERS
ALBERT STRAUSS. VICE GOVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
CARTER GLASS
SECRE1ARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
J. A. BRODERICK, SECRETARY
FEDERAL RESERVE BOARD
CoMPTROLLER OF THE CURRENCY
W. T. CHAPMAN. ASSISTANT SECRETARY
W. M. IMLAY, FISCAL AGENT
ADDRESS REPLY TO
WASHINGTON
FEDERAL RESERVE BOARD
June
Subject:
26,1919 ..
X-1594
State :Bank Membership Applications held by
Federal Reserve Banks.
Dear Sir:
Section 9, of the Federal Reserve Act, provides that any bank
by or organized under any law of any State or of the United
states, desiring to beco;r;e a n:ember of the Federal Reserve System, rray
make application to the Federal Reserve Board. It is further stated that
"in acting upon such applications the Federal Reserve Board shall consider
the financial condition of the applying bank, the general character of its
management, and whether or not the corporate powers exercised are consistent
•
with the purposes of this actw 8
incor~orated
It is the custom of the Federal Reserve Banks to forward to the
Federal Reserve Board, with the recorr~endation of the Reserve Bank comrrdtte~s,
applications of those state banks which are considered to be in a condition
sU!ficiently satisfactory to warrant their admission to the Federal Reserve
System~ The cowrni ttees inaa.ribly suggest conditions of rr.embership. The Board
has been informed that, in a nurr~er of districts where the Reserve Bank
committees are not satisfied with the conditions of the applying banks, such
banks have been given an opportunity to withdraw their applications, with the
understanding that when the criticized conditions have been im.t?roved the
Reserve Bank comrrdttee will again be willing to consider the applications.
The Board is desirous of having in its files a complete report of
all applications made by State banks for membership in the System, and you are,
therefore, recauested to send, at your earliest convenience, a list of applications on which definite action by you has been deferred, giving the reason;
why action has not been taken by your committee. It is also suggested that
in future, in case an application is withdrawn, the Boar~ be so advised.
very truly
yours~
Governor.
Letter
to
Chairmen of all Federal Reserve Banks ..
t· 414
F E D E R A L R E ·s E R V E B 0 A R D
x-1601
STATEMENT FOR THE PRESS
For immediate release
June 30, 1919.
'l;he Federal Reserve Board has been advised through the
Secreta.17 of the Treasury that the President ha.s signed a procl.a.ma.tion
revoking, subJect to certain exceptions, certain :prior procla.u.ations
and brdera including the e.xeeutive order of Jan\Ja.r;y
26,
191~ relating
to the embargo on coih' b\tllio.h and. c'lirrency and. to the restrictions on
transactions in foreign exchange.
Under this action and the action
thereunder which has been ta.ken by the Federal Reserve Board with the
approval of t be Secretary of the Treasury all restrictions have been
removed from the export of coin, bullion and currency and from transactions in foreign exchange e.xcept with or for persons in that part of
Russia now under control of the so-called Bolshevik Government, ino.luding
also the export and
~ort
of ruble notes.
Applications and licenses,
beginning July 1 1 1919, will not be required for the export of coin,
bullion or currency e.xcept as above stated.
.·
Neither the procl.ama.tion
nor the action of the Federal Reserve Board in connection therewith,
should be construed so as to authorize remittances to enemy territory
which are permittee\. as heretofore, only under special or general license
of the War Trade Board.
415
W. P. G. HARDING, GoYIRIIOI
ALBERT STRAUSS, VICE GoVIRNOI
ADOLPH C. MILLER
CHARLES S. HAMLIN
EX-OFFICIO MEMBERS
CARTER GLASS
SECIITARY OP THI TREASURY
CHAIRMAII
JOHN SKELTON WILLIAMS
FEDERAL RESERVE BOARD
COII!lTROt.LIR Otr THE CURRENCY
WASHINGTON
J. A. BRODERICK, SICRDAIY
L. C. ADELSON. ASSISTANT SICIOARY
W. T. CHAPMAN, ASSISTANY SICIDAIY
W. M. IMLAY, FISCAL MEJIT
ADDRD8 II:EPLY TO
FEDERAL RESERVE BOARD
•
January 9, 1919·
· SUBJECT:
Report of EarniLgs and Dividends.of
State Bank and Trust Company members.
Dear Sir:
We are forwarding today under separate cover
copies
of. form 107 for the use of State Bank and Trust Coq>any members
in submitting their semi-annual report of earnings and ditidends.
May we request that you advise the banks that this report
cover the six-month period ending Decemher 31, 1918, even though
they may not have closed their books on December )1, 1918 and the
dividends declared cover a period other
th~
that msntioned
above •
Yours very . truly,
Assistant Secretary.
Mr.
Federal Reserve .Agent,.
St •.l46
~:
W. P. G. HARDING. GoYIRIIOI
ALBERT STRAUSS. VICE GoY!RNOI
Ex.OFP'ICIO MEMBERS
ADOLPH C. MILLER
CHARLES S. HAMLIN
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
lOHN SKELTON WILLIAMS
COII. ..TROl.LIR 0'
J. A. BRODERICK, SJO:REJAIY
L. C. ADELSON. ASSISTANT SECRETARY
W. T. CHAPMAN. ASSISTANT SICRKTAIY
W. II. IMLAY, fiSCAL AQENT
FEDERAL RESERVE BOARD
THE CURRENCY
WASHINGTON
ADDRES8 REPLY TO
FEDERAL RESERVE BOARD
January 14, 1919
•
Gentlemeri: ·
Your courtesy will be appreciated if you
will kindly cause to be forwarded regularly to
· the Federal Reserve J3oard copies of periodical
press statements and reviews bearing upon
~he
money market and business condi t:i.ons, also
copies of semi-annual and annual reports of
condition that your bank may· prepc::re for gene:: al
distribution.
tn teturn the J3oard Wili be pleas"'a. to
place the name of your institution on its mailing list for the regular transmi tta 1• of copies
of its own weekly bank statements and annual
reports, both of which,it is thought, may prove
of interest to you.
Respectfully,
Assistant Secretary
I
St.l56
r 417
EX-OPPICIO MEIIBERI
W. P. G. HARDING, GoVI-1
ALBERT STRA~SS, VICI &oYIRMOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
. CAR'fjl! GLASS
SICIDAIY
or THI
TIIASURY
CIIAIIIIM
JOHN SKELTON WILLIAMS
FEDERAL RESERVE BOARD
COIIPTIOLLII OF THI CURRINCY
WASHINGTON
J. A. BRODERICK, SICIOAII
L. C. ADELSON, ASSIITANT SICIOARY
W. T. CHAPMAN, ASSIITANT SICIOAJIY
W. M. IMLAY, FIIICAI. MDT
ADDREII RIIPI..Y TO
FED€RAL RESERVE BOARD
Jan'IJ8:ry
15, 1919.
•·
SUBJECT:
Form St-5la., weekly eondi·tion
report of member banks in
selected cities.
Dear Sir:
There are being forwarded to you today
under separate cover
copies of fonn
St~5la.
for distribution among your reporting member banks.
The only cba.nge
from,
the preliminary fonn re-
lates to tha note at the bottom which has been
change. d to r~ad '!This report should be mailed to (
·the Federal Reserve Bank on SATURDAY ril.orning of
each week. "
//'
Yours very truly,
,•
.Assistant
Secret~y
Mr.
Federal Reserve Agent·,
'
l
st.l57
•
li.X-OFP'JCIO MIEMBI!R8
W, P. G. HARDING. GoVIR"OR
ALBERT STRAUSS • .YICE GoVIRHOII
ADOLPH C. MILLER
CHARLES S. HAMLIN
CARTER GLASS
SECIETAIY Of THE TREASURY
CHA.IRMAII
JOHN SKELTON WILLIAMS
FEDERAL RESERVE BOAHD
COIIPTROLLI'I 0, THE CURIINCY
J. A. BRODERICK. SECRIUIY
L. C. ADELSON. ASIIITANT SICR.ITARY
W. T. CHAPMAN. ASSISTANT SICII'TUt'
W. M. IMLAY, FISCAL AGENT
WASHINGTON
ADDitDI ltJUIL Y TO
January lS, l919
FED&:RAL RESERVI!: BOARD
•
Dear Sir:
In addition to the purchase of acceFtances by the
New York and
Bost~
banks for the account of other Reserve
banks, a new practice has recently developed whereby direct
purchases in the New York and Boston markets are made by
other Federal Reserve banks,
In order that complete data
regarding such purchases may be available may we request
tha.t each Federal Reserve bank furnish the Board with a
statement for the calendar year 1918 showing by months
ame-unts of direct
purchase~
of acceptances in markets located
outside its ovvn Federal Reserve district.
A siu.ilar state-
ment for January 1919 is desired, when complete data for the
month have become ·available.
Beginning February l, it is
requested that repor·ts d.escl·ipti ve of such operations be
given on separate schedules BD-7 which are to bear additional notation as follow.s_t
"Direct Purchase in
~-,....---
market .• 11
Yours very truly,
Assi.stan.t Secretary
I
)
Fed~ral
Reserve Agent,
J
, ···•c; ··.·.~·
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.¥ ,.n.:..:.:~_~:z t tr ~.!;
(~~a:ncb.e~t"lx
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,;$.arctian
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tl!' 1·
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-sa.fM.r~.a.y bec,zS'.l9li5)
·,T!LEAS$1;::" .2LVIS!!i) IJ:'O ~~FuSE A '.;u;.Sii;'i.
T
The C:r'liliittee :prc$i.Ced 6.~~r by Lord lnch~~~±:~hich was B.;p:pointed. last Septem'be~ .
to com:id.ar and repo':'t lrpcn the e:.ffect of the wai U.pcn the gv1d j.:'roduction of~.the . ·
British Ihpire, with, refar3ncs p~..rUc1.:.larly to the treatment of low-grade ores and
ho.w· f<:Jr ~ ~ 1nay bs of· ~r.npC~Ita~1·~'C ·to .the national :i.r.te1·ests to secu.rs the continuance
of the t:;.·t~a.i.lr.ani• of S\~.cp. c~.~·&s, an=i. g(~nera.JJ.y :how to •;t·)JI.~uJ.at:e tllS ~)ro·iuction of gold,
r..a.s submitted i'.;s repolf~ to the 'l':.·eanur;r. The C~;l~~.tt3e says i'; i3 n:>t prepared to
reoooU!'".end a."ly b~unty r:Jt ~l:.btddy' fvr the PUl'POSe uf stii:ll:tlati::'l.g ~he t::old ot·.tput of
th3 Enpire, G::~ld beirig ·th3 standard of value, no more ca., l'fjc:per ly be paid for it
than its value j.n cur:re.:1ay.
In 191'7 ti1r-re wa.s a. reduction as compn.red~th the previous yr3ar in the valus
of the g()1.d J;;roC.uce,d !.n the Enpire o:Z -t3 •429, ln5, a:1d :n 1915 a furth3r fall of
t4! €52, 207 • as ~:on:r,t. a.l:'€:d ~dth. the 1917 pl·odu.ction, is a:.~ticj:pated. T'ne d<3cline in
the Transva-'ll la.tl'ii year .was due to a caubinaticn of ehortaee cf expJ..os:ives and
shvrtage of la:)ou:: a;;1d inl913 mainly to the shortage of labat:.r, not d"L'e tb any
large ex·ten·~ to. the ;ve.:t. J!he clscli.le in AuEitrs.la.sia. in 1917 a.."ld 1918 \\'aS norrual
and due i1~. t:be main to natural ca.,'..ses. but it was a.ccelern.ted b;r the ,.ncr.ea.se of
costs and d.ecrease in the efficien~y of labour cause.d by the Wa.t' up to the date of
the Canmi ttee Is a.?lJO:lntmE>nt.
, The treatment of l~w--grade "='e in the Transvaal has net t,o eny exten~ Which
co:.1.ld be deter.-o.inad bee~'l r.,:,du~ed. by tha wa:r.. Fro:.:.1 tl'J.S :t.•oint of view solely of gold
procluctio:r. the a.bandonmQnt of the treatment of lfJW'-8l'ade ore in fa•rcu:':' of higher
grade ore will not wi t.h:h~ ar...jl meaS'l.U'able 'P~riod. :~edace the total cr:ttpu.t of the Enpire, and the ct.nt:.n'tk'"'Jlcc o:: t!.te working o:'lo'.'l-g. ·v.da
.
mines w:1ich a:e unable to work
a.t a profit to th$Js'31ves io not the:.'efore a mat·cer of eny great i.'1lpo::+:,anr:e ":io
na~iona.l inter'9sts.
·
S~SIDY
WCULD ENRA17CE PRlC:t<JS.
A s-.;~.'bsiC~t for
~~"lt.ally '\lnsound..-
the. :p~od~1ct:.on cf gold 3-ppaar J to the Comud t ~Ele to be f\L'lda-.
G'ilc't has b<:>or: l;j.ro:~1ted as the st.anca:L'd of '7<t.l·!le because byreMon of
"op~ra.tio'.'l cf ns.tu.x·al causes :i. t i a available in su~h Cl'J.a.r..ti tie::: ar~d at such a. cost
of 'Production in torus :;;,f :;;,th3r co~odi ties as to ·give it a more or less .stable
value. Its ~·al1.1.e ~n t(;)rms oil'i:.>c.c.mroodi ties j s d.irontly inf.11.en0ed ~1 the laws of supply and d(Jlland. Period:;; of tncraE-sei gold :produ<::.tion, foJ..loNin~Ztne discovery of
tu:t>thel' de:posit:: of geld ca;.tiab::.e of extractio11 at a lo·,., co~t. have been ma.rked by
an· increase in t:1~ ~rice of com:nocli ties, ~"b.e exba~.utior. oft these sources of supply
has bean a~compar.. iee. br a deolina in the price of corwodi ties. The intention of the
rob$idy il"t:ggostPd by the goJd j?rOd\:.Cf\rS is tO enable gold tO be pr0d1:10ed Which
other~.se would not., nonf..:r.nabl~r w~~th the econa:nic laws of supply a;.'ld demand, be pro. dueed a.t e-ll. Oth,3r -~hillgs be~ng equal, the z·esul t .wo"11ld be that the purchasing
P9·.ver_ of the w:,.vh of the worlU.'s gold would be d1:minisbed. p:ro tru.'lto.
The value
in terms of gold ofthe callllod.ities for which it is eY..chal"lgcd would ri.ae.
It is undoubtedly dos:i.l'able (Tha Cot.~it,tee go on to sa.y) that considerable g~
reserves should be held in this co'l,n·~ry, but in our Yi~w th~ IL'Ost important functieil,
of a. gold: rase::.-ve is that it shoulc. be available for exr-ox-t at the stallda.rd price
whan re.qJ.iren ·co raeet forei~ ir.d.et tednee.s. We think ~.t ess.,mt5.al to preserve a
·free markt:t :Cn eold, bu~ clearly it ''rould ~.ot be a 1-)us:'l.noss :pro:~osi tion to do so if
we had to pay iJ.:. :'.Cs. 3d· fer an ounce of go1.d in ordor to oxport it at ~. l7s•j;•, ..
lO~d. •. We can ot.lyma!.ntain c·:.1r gold reeerves if th~ va.luo of our exports, visibl(/
and ·invisible, axoee1s on the balance the value cf:JO't'.r impcr·.;e.
The I,ondon Clll"4lber of 0cr!.ltnerce appreh9r..d thai~ price.s mav fa11 ra.p~.dly at :peace,
th dlsa!\lt.-ous results to ind\1s~ry 1 a.."ld contend ths.t it might 'be tn the ~ublio
· terest to take ''Steps to pre:~n'l; :th~ rapit:i. .fall in the p::-ice of' commodities by
.,,,.""'~o~•Qting th.~ prc¢1oticn c.f' gold a.~ tr...e exp(3nsa o! t!.l.a ·~a..x:pa.jl'~r.
w~; nsi ther share
a.p:QI'ahen!'i:ton ~t)l a.coept ~~be!r con~tion. We have no. .J.'ea.aon to believe that
'will no~. l1e fo~th~cmir~g from. ~a 'Br~i ti~:l?, ~pir~ on a. pari t~r b"-9i~ ae ~~ gold
shall neeet fdr th~ p'J.J.jj)ose cf: ·~~~1.11tt:Qur ·' :- · · re~erit•3a, but i.n any e&IO
tio:r:La.l .?m ••tt-.nt of [;old which at best we «i~ti ap.p to secure by a subsidr
Sl.l the orinio~l of our· ~.ta.essAs• be of .~~,:••t4'3 to this country for
up' reserves "tmle:se we can a.ffozod to J::e$J! f.{h
'.
--o-.-
,.-. ~·-
.:~,::· -~-~~.
W. P. G. HARDING, Gov!RIOOR
EX-OF'PICIO MEMBERS
ALBERT
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COIIPTROLLIR Of THE CURRENCY
STRAUSS. VICE GoVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
FEDERAL RESERVE BOARD
J. A. BRODERICK, SECREtARY
L. C. ADELSON. ASSISTANT SICRITARY
W. T. CHAPMAN, ASSISTANT SKC8&rARY
W. M•. IMLAY. FISCAL AGENT
WASHINGTON
ADDRESS REPLY TO
FEDERAL RESERVE BOARD
February 1), . 1919
Dear Sii ··
Fonns 44 and 3Sl have been reVised to include Federal
Reserve notes of higher denanination tban. $100, authorized
by the provisions of the Act of Congress approved September
26, 1918, aoending the Federal Reserve Act, and a supply of
each is being forwarded to you today under separate cover.
•
The latter form now consists o! two sheets, fonn }Sl
to be used for reporting FederaJ. Reserve notes received
frCJll. and returned to other Federal Reserve banks during the
month and form )Sla for reporting the aggregate amounts :received from a.nd returned to other Federal Reserve banks
fran the beginning of the calendar tear to the end of the
report month•
Very truly yo'l.ll"s,
AsSistant
S~retary
Mr.
· · Federal Reserve Agent,
st.207
f
421
EX-OFP~CIO
W. P. G. HARDING. GoVIRIIOI
MEMBER8
ALBERT STRAUSS, VICE 'GoYIRNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
CARTER GLASS
II
SICHTAIY OP THI TREASURY
CHAIJUI:AII
JOHN SKELTON WILLIAMS
COIIPTIIOUIR Ofl' THI CuRRINCY
.FEDERAL RESERVE BOARD
J. A. BRODERICK, SICRIITARY
L. C. ADELSON, ASSISTAHT SICIIITARY
W. T. CHAPMAN, ASSISTANT SIICIIIITUY
W. M. IMLAY, FISCAl. All lilT
WASHINGTON
ADDREII. REPLY TO
FEDE:RAL RESERVE BOARD
February 14, 1919.
SUBJECT:
•
~
Discontinuing weekly telegraphic
reports, form x.. 938, showing F. .R •
bank.no.tes receiV'ed,, on hand, etc.
,.
Dear Sir:
In the ·future i.t will not be necessary for you to telagraph we·ekly figures, form X-938, showing Federal Reserve
..
•
bank notes received from the Comptroller, on hand, etc.
It
is requested; however• that you continue to forward the
co~
plete mail report to the Board showing figures as of close of
· business each Friday·•
Yours very truly,
.Assistant Secretary.
St.209
f
~
jl
")11r1J
0..:_r..,.,~
EX-OFPICIO MEMBERS
W, P, G. HARDING, GOVERIIOR
ALBERT STRAUSS, VICE GoV!RNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
CARTER GLASS
SECRETARY' OF THI TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COIIIPTROI.LIR 0' THE CURRENCY
FEDERAL RESERVE BOARD
J. A. BRODERICK, SECRETAIY
L. C. ADELSON, ASSISTANT SE(RITARY
W. T. CHAPMAN. ASSISTANT S!CRKTAAY
W. M. IMLAY, FISCAL AGENT
WASHINGTON
ADDRDI RIIPLY TO
FEDERAL RESERVE BOARD
February 20, 1919
SUBJECT:
Corrected nFloat 11 Statements
for January 31 and February 7.
Dear Sir:
Vie are enclosing corrected copies of the
11
FLO.AT"
statement for January 31 and February 7 which please substitute for those previously furnished.
In the statements originally sent you, figures
•
for net debits
a~d
net credits in the Friday morning
set~
tlements were inadvertently used instead of figures of
the Saturday morning settlement.
Very truly yours,
Assistant Secretary
•
st .. 222
f
EX-OFP'ICIO MEMBERS
W. f'. G. HARDING, GOVERNOR
ALBERT STRAUSS, VtCE GOV!NNOR
CARTER GLASS
ADOLPH C. MILLER
SECRETARY OP THE TREASURY
CHARLES S. HAMLIN
CHAIRMAN
JOliN SKELTON WILLIAMS
FEDERAL RESERVE BOARD
COMPTROll!R 0' THE CURRENCY
WASHINGTON
J. A. BRODERICK, SECRETARY
L. C. ADELSON, ASSISTANT SECRETARY
W. T. CHAPMAN. ASSISTA"'T SECRETARY
W. M. IMLAY, FISCAL A'EHT
A.OORESI "EPLY TO
FEDERAL RESERVE BOARD
Mar.ch
str.BJ'ECT:
Weekly report o£ War
series
1919•
- )·
Sav~ngs
4, · 1919
and Thrift Stamps,
Dear Sir:
There are being forwarded to you today under separate cover
copies of for.m 106, Ueekly report on War Savings and .Thrift Stamps,
Series
•
l9l9·
This report should be submitted to the BQa:t"d on and' as
at close of business on FridaY' of each week.
No further repol:'ts covering transactions
J;'ela~ing
to 1918
series of Wa,;r: Savings and Thrift Stamps nee.d be forwarded to tbe
Yours very truly,
Assistant Seeretary
.
Mr.
Federal Reserve .Agent,
I
.I
11
-:-''1 <:1
'::if.../1:
W. P. G. HARDING, GOVJ:RNOR
ALBERT STRAUSS, VICE GOVIRNOR
I!X·OFP'ICIO MENBHRS
ADOLPH C. MILLER
CHARLES S. HAMLIN
CARTER GLASS
SECR£TARY 0' THI TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
J. A. BRODERICK,
FEDERAL RESERVE BOARD
COMPTROlliR 01' THE CURRENCY
SOCRilAR~
l. C. AOELSON. A55IITANT SECRITARY
W. T. CHAPMAN. ASSISTANT SICUTARY
W. M. IMLAY, fiSCAL AGENT
WASHINGTON
ADDRESS REPLY TO
FEDERAL RESERVE: BOARD
March
StJ]JECT:
4, 1919
17eekly report of 5th Liberty Loan
transactions, also sales of 1918-19
tax certificates.
Dear Sir:
~here
are being forwarded to you today under separate cover
capias of fonn ]32 for reporting transactions relating to the Fifth
Liberty Loan also sales of 1918-1919 tax certificates.
.
This report
should be submitted to the Board on and as at close of business on
Friday of each week.
special attention is invited to the
me.oorand~1
at the bottoo of the form raquestihg infon1ation regardint; the
arnoul'l.t of pay.nents on Fifth Liberty toan bonds
m~de
by cash, cer-
tificates and credit.
Reports on form 130 covering transactions pertaining to the
Fourth Liberty Loan may be discontinued on April 1.
Yours very truly,
•
-t
Assistant Secretary
VIr.
Federal Reserve Agent,
W. P. G. HARDING, GOVIRNOR
ALBERT
IEX-Of'PICIO MKMBBR8
STRAUSS. VICE GOVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
CARTER GLASS
SECRETARY OP THI TREASURY
CHAIRIIAtl
JOHN SKELTON WILLIAMS
COIIPTRO\LII 0' THI CURRENCY
FEDERAL RESERVE BOARD
WASHINGTON
March 4 ' l9l9
'
J. A. BRODERICK. S.ICRIITAIY
L. C. ADELSON, ASSISTANT Sl<RITARY
W. T. CHAPMAN. ASSISTANT SECRETARY
W. M. IMLAY. FISCAL AGENT
ADDitE.B REPLY TO
FEDERAL RESERVE BOARD
'
SUBJECT: VTeekly Clearing
House Bank Statement.
Dear Sir:
Referring to previous circular instructions1 e~ecially
letter to Clearing House Managers dated August 30, 191S, and
with the view of insuring uniformity of statements, the following explanations and amplificationsof former instructions
are issued for your future guidance:
1.
Reports should be confined to the banks which are
members of the local clearing house· or which clear
through clearing house members (so-called clearing
house non~member banks.) In order that we may be able
to followmore intelligently changes in the weekly figures, may we request that your telegraphic reports
state.in addition to total debits, also number of banks
covered by the report (code word IDES.)
2.
Debits to individual account should include all
debits charged to the accounts of individuals, firms
and corporations, also ,'0"! the Unitad States Gov3rnment,
including debits to war loan d.eposi t account. Checks
and othe:t' debits against savings accounts and payments
from trust accounts, also certificates of deposit paid
should be t3portad among debits to indtvidual account.
3·
Debitsto bank account should include all debits to
account of banks
bankers, exclusive of.
(a) debits to account of Federal Raserve bank,
(b) debits in s3ttlam~nt of clearing housa balancas.
It is important tl~t the report show aggragate debits
to individual account separately from aggregate debits
to bank account.
•
.. .
~
and
Re ~ectfully,
Secretary.
Mr.
426
W. P. G. HARDING. ·GovnNoR
Ex-OFFICIO Mlr:NBKRI
. ALBERT STRAUSS, VICI: GoYIRNOII
ADOLPH l:. MILLER
CHARLES S. HAMLIN
CARTER GLASS
SICIIITAIY or THI: TIIEASUIIY
CHAIR.AN
JOHN SKELTON WIUIAMS
FEDERAL RESERVE BOARD
CO•I'TROLLU or THK CURIIKHCY
J. A. BRODERICK, SKRITAIY
L. C. ADELSON, ASSISTANT SKCRI:TARY
W. T. CHAPMAN. ASSISTANT SI!CIIETARY
W. M. IMLAY, FISCAL Alii!NT
WASHINGTON
ADDRESS REPLY TO
FEDERAL RESERVE BOARD
March
SUJ3JECT:
Weekly ra:port of bank
4, 1919
transactions~
I
D3ar Sir:
Enclosed herewith please find
copies of circular
let tor ·for tra:nsmi t.tal to r·eporting · clearing· house mana.gar s
in your district. You ~.rill note· that the enclosed instructions
modify but sli~tl~r l:.!... ~vious circular of Augt.l_st 30... ~y I
su.ggast that in sending owe t:.:.S circular you enclo .3;;.1 "' 1,:; tter
over your O\vn sig:1ature, expressing a;_p:praciation of t~1s s{=.rvico r3ndvred h.erGto:fore and adding sugg~stions for the ':mprova:A-en t of the ssrvi ce tr.~.a t may occur ·to yo1.: as· tile result
Of your OV~ 6A~erience ip ~~dling tne vV3ekly clearin6 lwusa
bank rzpor ts.
Please note also tl~ follo~T.lng instructions in· answer to
inquiries fran Federal B.e serve banl\:s!
In r-eporting weekly· dabi ts=to bank accoUL"lt,~
Federal Reserve Bal'lks should include debits to
members' ra serve account and non-wembar s 1 cleating_ account only (code IKRA. ... ) .JX> not include any
debits. on account of transactions with other Federal Reserve banks. Tiebit~ to ~abial depositary
banks shown on the books of· the F1 seal Agent ~
par'b:nent should not be includ~d with debits to
either· Goverrment or bank account.
Yours vary tru.lyt
Secretary.
Federal Reserve .Agent,
st.244
,.!:
For relaase in Monday morninG, March 10 papers; not earlier.
STATEMENT FOR THE PP.ESS.
March 7, 1919
The Federal Reserve Board has completed its state-..1ent showing condition· on
December 31,, 1918 of all oei'.lber banks, including 7., 762 National banks and 930
Trust. Companies and State banks.
~
,
h.
.\
r
-
•
4
Loans and discounts (including overdrafts) were 13 • 562 ~illions, of which
3,634 millions or 27 :per cent rep':'esent:> bans a..."ld discounts of Trust company and
State bank members. .Among the.: to ~al in7es"lme~1ts reported - United States Liberty
bonds figure to the extent of aro11t ls539 mill:i.ons, of which 375 millions are reported by the member non-national banks. Treasury certificates held at the close :
of the past year by all I!lember banks totaled 1,303 millions, of which 3.21 millions
represent the holdings of non-national illsmb.ttrs;
Loans upon the security of Liberty bonds and Treasury certificates carried by
member banks at the close of the year aggregated lt·4o2 millions, of which 345
millions; or about 25 per cent is shown for member institutions other than
National banks. Most of these loans are secured by Liberty bonds. For the
National banks the Ccmptroller shows 1,020 mill.ions loaned on Uberty bonds and 37
millions on Treasury certificates, whi~h together constitutes: about 10.6 per cent
of the total loans and di scou.nts of the national banks reported for the end of
1918. For the other member banks this percentage works out at 9·5 per cent.
The total of these loans (so-called \var paper) is exclusive of approximately 360
millions. the amount of war papar held under rediscount on tecamber 31, 1918 by
the Federal Reserve banks. It thus appears that at the end of 1918 the mamber
banks held about 4,300 millions of their invested funds in the shape of United
States war obligations and war paper, or more thru1 20 per cent of the 20,525 mil•
lions of their total loans and investm.Jnts (other than fixed investments) reported
at the close of the past year.
Aggrezate reserve balances of all member banl{S (all with the Fedora~ Reserve
banks) are given as 1,654 millions, of which 474 millions or 29 per cent represents reserve balances of members other than national banks. Combined capital and
surplus of all member banks is shoWn. as 2,713 millions, of which 759 millions or
about 28 per cent represents the capital and surplus of meu1bers other than
national banks. Demand deposits of all member banks totaled 13,305 millions, of
which 3, 848 millions was reported by the 930 Trust company and State bank members
of the System. Of the total of 483 millions of government deposits. about 172
millions or over 35 per cent is given as the share of the non-national members,
while of the total time deposits of 3,826 millions about 1,353 millions is reported
by the Trust Company and State bank members.
Acceptance liabilities of all mamber banks were in excess of 480 millions, of
whieh over 37 per cent is shown for the non-national institutions, mainly the·
larcer Trust companies in New York city. Of the total rediscount liabilities
(lar6ely to the Federal Reserve banks) of about 730 millions, about 228 millions
or 31 per ccnt is given as tho sr..ara of members other than national banks.
/"! ;···.·':I
'..:Lt.,.;(;
EX-OFFICIO MEMBERS
W. P. G. HARDING, GOVERNOR
ALBERT STRAUSS. VICE GOVERNOR
ADOLPH C. MILLER
CHARLES 5. HAMLIN
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
FEDERAL RESERVE BOARD
COMPTROLLER OF THE CURRENCY
J. A. BRODERICK, SECRETARY
W. T. CHAPMAN. ASSISTANT SECRETARY
W. M. IMLAY, FiSCAL AGENT
WASHINGTON
- ADDRESS REPLY TO
FEDERAL RESERVE BOARD
March 10, 1919 ~
SUBJECT: ·Condition Nports of State bank
and Trust conJ?any mcnibers.
To the Cashier or Treasurer!
Enclosed please find three blank forms of report of condition to be
used for submitting staterr.ent of condition of your institution at close of
business on Tuesday, March 4, 1919 ..
May I call your attention to the following changes on face of the
report:
Item No. 3 •In this item should be entered thG armunts po..id
by the bank in settlen:ent of dro..fts drawn on it
for payment, under authority of its letters of
credit, and for which payments the bank has not
yet been reimbursed by its customers. This item
has no connection with item 38 on the liability
side of the report cmd should not show an offsetting entry to that item under any circumstances,
nor should it be confused with it em 4, as it em 3
relates to drafts drawn for payment, and not acceptances, by the b\J.l:lk. When a custozr.er becomes
liable to the bank on acco1mt of .ACCEPTANCES drawn
under a letter of credit such liability of the
custoxr.er should be shown in item 4 and not in
item 3.
Item No.
38-
In this item should be shown only letters of cre~d traveler's checks WhiCh were SOLD FOR CASH
and o..re still outstanding. This item is in no ~y
connected -vvith item 3, resources; tmd. should not
be 'Used for offsetting antries to that item; nor
shoti.ld it 'be confused with item 39 as only liabilities on account of acceptances should be shown
in item 39·
dit
Please forward two copies of your report to the Federal Reserve Agent
of your District and retain one copy for your files ..
Respectfully,
(St .253)
EX-OFFICIO MEMBERS
W. P. G. HARDING, GovERNOR
ALBERT STRAUSS, VICE GoVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
CARTER GLASS
SEcRETARY OF THI TREASURY
CIIAJRIIAN
JQHN SKELTON WILLIAMS
FEDERAL RESERVE BOARD.
COIIPTRoUER OF THE CURRENCY
J. A. BRODERICK, SECRETARY
W. T. CHAPMAN, AssJSYANY SICREYARY
W, M. IMLAY, FISCAL AGENT
ADDRESS REPLY TO
WASHINGTON
FEDERAL RESERVE BOARD
March 19, 1919.
str:BJECT:
•
Revision of form 50,
nnnthly raport of
claaring opcr3ti~ns •
Dear Sir:
past few nnnths consid~rable difficulty has been
~xpcriancad in securing comparable reports from all Federal Reserve
Banks with referonc~ to clearing operations and to tha nurfuer of
membiJr and non-Il,lcmber banks in the district and non-member banks on
the par list.
D'ith a. viev.r to standardizing th.::se reports .:1nd obtaining complete data from all banks tv1o new forms (50 and 50-A)
have bJan dcvi sed to t.:l.k.e the place of form 50 now in use.
During
th~
You will note that wo have provided on thi3 new forM 50 for the
total numb~r and amount of it~nls heandl..1d• in addition to the daily
averag~s which were requir.;d heretofora; also that additional cap~ions have bsen provided to insur~ tniform reporting of items sent
diraat by l!aderal Reserve Banks to banks located in their branch
citiest and by branch banks to banks located in their head office
cities, as well as items sent direct to banks loc~ted in other F~&
eral Reserve districts.
The total on this form, following item 7,
should represent the number and amount of i t>.3mS handled by the reportir.g F~d.)ral R0scrvs bank or br<:<r.:.ch wi. thout duplication, while
items 8, 9 and 10 should represent items which have be,~n handled by
a Fe~eral Reserve Bank and a branch, or by two F~deral Raserve Banl~
or br<mche s.
With raferenc.J to form 50-A, it will be noted that we have
callad for somevilat more d~tail.ad infornation roe;arding changes in
the status of both member and non-mambar banks~ Data. ropcrt~d on
this form should <3nable the Board to follow the changes ir: membership and in par points much more. closely them has beilll possibl.J in
the past.
Inasmuch as a numbor of Fade.ral Ros.Jrve' Banks would find
it practically iL})ossibla to definitely ascertain avery increase or
{St • 275)
I. 430
EX~ao,.......
---'IKAMY
CARTER GI.ASS
c:......
101M IUL'I'OR WILLWIS
~ ..... Cclllllllc't
FEDERAL RESERVE BOARD
ADDRDS...._YTO
WASHINGTON
SODJECT: Forw
o£
st.51-A, Weekly
~..lber
FEDERAL RIESERV£ BOARD
Cox:.d1 tion Report
:Sanks in Selected
Git~es ..
12a.r Sir:
The :Doa.rd's sup_l)ly of form st.5J.·A~ Weekly condi ti.on Report of I!eraber :Bank~ in Selected. Ci t·:. a s, is no1;; p~a.ctically
exhausted, .and as eevaral Fa~aral Reserve»~~ hav9 express3d
a desire to ·have this fom printed loca:tJy ;n "rd.er tba.t the. naue
of the Raserve Dank. and 'tihe deparilaent. to which it is to be ad~
dressed .may app.,ar tileraon, the Df,a.rd. ha.s decidad not to have
this form raprinted at the Govarment Print in~ Office but to
lat each Reserve 13ank print its own supply. It is. requested,
bowevert that in printillb these foms yoc. usa the 8&4G description of the. variou.s 1 tans a~ adopted ~y the :noard ..
· You will nota fran the r~vi sed fQl'fi' enclos~d borewi th
that tho cnly chani;e which has bean ~1ad.e in the fon1 ralatos
to the method of fi~in£ net der.land dgpoE?:i.ts. itec. 9· This
change is necassary in ord3r to conf;Jlt:l to the :nca~·J.llf rocent
ruli113 ralatin~ to the method of arrivinr; at eao11nts due to
banks and bank3rs for tbe purpose of calculatinG roquirad re-
serves.
'·
Yours very trul;r,
Assistant Secretary.
St.J02
EX-OFFICIO MEMBERS
W, P. G. HARDING, GoVERNOR
ALBERT STRAUSS, VICE GoVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
FEDERAL RESERVE BOARD
COMPTROLLER OF THE CURRENCY
J. A. BRODERICK, SECRETARY
W. T. CHAPMAN. ASSISTANT SECRETARY
W. M. IMLAY. FISCAL AGENT
ADDRESS REPLY TO
WASHINGTON
FEDERAL RESERVE BOARD
April l, 1919
..
SUBJECT: Abstract of condition of
member banks as of Decewber
31, 1918.
Dear Sir:
r~e
arc forwardinG to you under sep8.rate cover
copies of the Eoard 1 s .l\.bstract No.5 show"i.n; condition of
member bruiks as at close of business December 31, 1918.
Please forward one copy of the abstract to each State bank
and trust company oa1ber in your district.
Yours v.:;ry truly,
As si stan t Se ere tar;>r
st.303
EX~OFFIC:IO
W. P. G. HARDING. GoVERNOR
ALBERT STRAUSS, VICE GoVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
MEMBERS
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
CoMPTROLLER OF THE CURRENCY
FEDERAL RESERVE BOARD
J. A. BRODERICK, SECRETARY
W. T. CHAPMAN, ASSISTANT SECRETARY
W. M. IMLAY, FISCAL AGENT
WASHINGTON
SUJ3JECT!
ADDRESS REPLY TO
FEDERAL RESERVE BOARD
Charts showing movemer.t of :t:rir.d:pal a sse"; .sno. J. .i.ab.i.li ty · i t.em::;
d·..:w"':'ing 1)13 and 1919.
:Oaar Si.r:
We are forwa.rcii.ng to you today und.er separ.::;.,te cover
two charts showing the m?vanent of
(1) 1\fet deposj. t and note lia'uili ties, also cash
res<::rves, and..
(2) the vari.ous classes of earning assets:
of aJ 1 Fec.8ral Reserve ]aY'Jrs d:uor:i.n.s tba perioo. J'mTclPXY 1,
1918 to Ua:cch 7, 1919. .A.ll the jnf t):r.oati. on re.cr,1.irc:d to
cont:'cnlle the sev<:>ral curvos for th~ rama..\.nde::: vf th8
pres~mt calendar year may be obtained frOIL the J3oard' s
xegularJ.y weekly pu"b15.shed statements.
As the al:-,ove ch..a:rts do not pr~vide for show:Lng member banks 1 c.nJ].e:~en;ol notes sepa.r.sttel:7 froT.i. otl1er classes
o-;: ')?Sper 1 we v11il:~ d5.scontinue sendl.ng the reg\::lar wt:;ekly
memox·ancum shovvi.ng ths amo-w."lt of such notes held at close
of business each Friday.
Yours very truly,
Assistant Secretary.
st.3o6
/< cr·; c')
{..
.. ...,.;,.
...,;~;-<._;
EX-OFFICIO MEMBERS
W. P. G. HARDING, GoVERNOR
CARTER GLASS
ALBERT STRAUSS, VICE GOVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
SttRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
FEDERAL RESERVE BOARD
WASHINGTON .~ril
3, 1919
J. A. BRODERICK, SECRE'IARY
W. T. CHAPMAN. ASSISTANT SECRETARY
W. M. IMLAY. FISCAL AGENT
ADDRESS REPLY TO
FEDERAL RESERVE BOARD
SUBJECT:
Distribution by F .. R8 Bank of
weekly report of debits to
daposit account.
]Car Sir:
we are advised by one of the Fedoral Reserve Banks that,
with the view of arousing graater interest in the Board's
weekly stat~1ent of debits to individual and bank accounts,
it proposes to cOll!Ul.encG direct distribution of the :Board's
consolidated vreekly statement of these dQbits among reporting
clearing house banks ih tho district. The Reserve bank ac.eordingly req_uests that we supply it with a sufficient ntmber
of copies of our we3kly report to enable it to forward one to
~ach of the reporting banks•
Wi 11 you be good enough to inform the :Board whether or
not you balieve it desirable to suprly each of the r3porting
banks in your district with a copy of' the statc:::....cnt, and if
so how dany copias you will re$luire for this purpose.
Yours vary truly,
Assistant Secretary.
•
st .320
EX-OFFICIO MEMBERS
W: P. G. HARDING, GoYERNOR
· ALBI!RT STRAUSS, VICE GOVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER Of' TUE CURRENCY
FEDERAL RESERVE BOARD
.A:p:.d 1
J. A. BRODERICK, SECRETARY
s,
W. T. CHAPMAN, ASSISTANT S.Et:RETARY
191~ M. IMLAY, Fl~ AGENT
WASHINGTON
Sf.JJ3JECT:
Revision o.f weekly F,
R~
ADOR:ESS REPL V TO
FEDERAL RESERVE BOARD
ban"k: statcrJcnt •
.
"'·
Boar Si!':
Confiming our telegram of April 7 r.~garcling ac,di. tioneJ.
t3legr?,ph:.tc infonnat:ior~ for :publ:.cation in ths :Boa1·d' s wsekly
press statem.0nt, rog,c'!.i 1i€; a;:; follcv:s:
' 1RefE>rrin.g m::..:r F;;b:rr.ary 24 t~;;1egram :r.eg2rc~.::ng
publication of contingaCJ.t lie:b~.J.i ty o~ redhccn.mted
paper, please tslegraph as at closa of bus:i.ness
each Friday as part of your reguls.:r weekly statemen'.;
form )4 - Contingent liability a.s enr.torser on dis-"
cour1t3d. pap·3r rediscounted wi. th each other Reserve
ba...1k, co\ie }fiA.lN~ Emd on ban...':.:;;.r s a(!cepta."lcG s so~d to each
otr1er FGieral Ras(j.:"J'O bailie with y0ur endorsement, code
MEND· Stop. Pleace "'>ire also ar.ilount of bills sacu:.:-ed
by gov;)rrment vvar oblig9..tions cl:: seoilatGd serarate1y fo~·
ea~h Rcs0rve bank, coda H!I.1; also 'Ja:rk,:rs' acc;ptances
bough·~ separately froffi each e;th&: Reserve bank with its
endorst:.::.1evt, code MODE; and bankGrs acc;~ptances bought
frcr.1 each F0dera: Rc s,;;rve bcmk w:t ..._hou t its endorsement
coriv r/IUSE. Flaa-s:3 cont'lrJJe to _sive t;;le;graphic data for
eode words ~·:russ, HEID and. MOR~ in your daily TEND tele.gram but ~1it frm1 Friday night telegram; also place
Boardls Stati.sticaJ. Division on mail:tng list for :F'rid.ay
night press state:rnent showing condition your bank. J,e ~,_.
ter f olloi-;s. n
Beg~.nning with Friday April 11, the d<Jtaile.d. state-~nent sh0wing :rescmrces c::md liabiJ.itias of 'c£13 FJO..:;:ral Re:;orva bar.k:s wilJ.
n:pp2a:r on t;vvo sheets, ·c1.1.2 r~sourcc:s on one ai.'lci. t.De liabilities on
tha otl1ar. The r8sourca sl:.oot wi.ll coDtain the follm'Vi.ng wem.orancla!
(a)
11 Includes bills discounted for other Federal
Reserve b'>.nlcs, viz .......................... n
as a footnota to asset item 11Bills discounted,
secured by government war obligations~ 1T
(b) "Includ3s ba.ni::ers' acceptances bought from
othar Fedoral Reserve b<mks With their cndor scrr.en t •..........•......•.
Wi tho\.1t tr...3ir endorsement ................ "
as a footnot0 to asset item "Bills bought in
open mar kG t. n
St.323
• •
-2-
The liability shaet will show each baJ.±' s co:1ti:-::.;e::t liability as endorser on paper sold to or radiscou~:ted vvit::.-1 other
Fedaral Reserve banks, as follows:
liability as 0nd.orscr on paper rediscounted with
other FedJral Reserve b~~s
(b) :Bankers' acceptances sold to other
FedGral Reserve ba..J.ks ........... n
"Conting~nt
•
(a)
Disc~~ted
The stater;,snt showing Fed<)ral Reserve notes outsta::.di:r..g and the
maturity distribution of bills and other short-t.:;rw investru~mts
held by Fedoral Reserve banl-:s now ap:paarin,g as me:;::;.orar:durrl i toL,s
at ti:w bottom of the Federal RGscrve Agents,'· stat3:.:uc:::.t will br:
transf.JrrGd to th;:; liability shoet to follow tt.o figu_r8s showing contingent liability as above indicated.
It is requGst;;d that 70u show on thG reverse side of your
fonn 34 as at closo of business on each Friday the additional
information regarding your ba.nk 1 s holdings of pa:per
discountcd for or purcl~sed from other F. R. b~~s, also its contingent liability as ondorser on paper rediscounted \~thor
sold to other ~edoral Reserve bar~s in the following wan~ar:
-----------------------------------------------------------------Barur0rs' Acccpt- ContingJnt liability as
1
1
' ro1c~s ac~uirod cndorsor on bills rc'Discount0d1 fran othor F.R. 1 discountad with or sold
1 to other F.R. banks
paper
banks
1
t acquir;.Jd
With ' 'VJithout 1
1
'fro~ other'
their 1 their 'Discounted' Banl{Grs'
Reserve 1 ondorsG- 1 ondorsa- 1
bills 'Acceptances
:Banks
mont
went
1
1
•
:Boston
Ncv.,r York
Philadelphia 1
Clove land
Ricrr.1ond
Atlanta
Chicago
st. Louis
Binncap oli s
Kansas City
Dallas
San Francisco'
I
.I
Totals
------------------------------------------------------------------
-3Thu total against .:.tOL&ora.ndml i tara... (a) hBll~s discounted for
otmr Federal Rasarv·e banks 11 to bo s'hown in tho Jloa'!"d • s sta.t3llent
as e fcotnote to
rosourca it~ "~ills diszounted, socured by
Governllent· war <Jbligation.-;u must agrue wit~ t!l:, total of r.1aoorand:-.11
i tau (a) on tl13 liability sha·3t - "Contfngant lia.cili ty as endorser
on discount-3d pap~r rediscounted with othar Reserve :Banks ·•
fna~ch as thase t.'igtlXeFJ will ba t.elagraphed to the :Soard by diffaront banks tho utw.oot ~a-ro lllllst be exorcised in ·tmir canpila.tion,
or differancos :will: o~cUl· whlc~ i·:; may ~ec~e necessary to adjust by
talegran on Saturday before tha :Beard's svatcwcnt can be released
to tha press.
Please aCknowledge receipt.
Yoors very truly,
J
·st-323b
EX-OFFICIO MEMBI!.RS
W. P. G. HARDING, GoVERfWR
ALBERT STRAUSS, VICE GOVERNOtrl
ADOLPH C. MILLER
CHARLES S. HAMLIN
C.4RTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROllER OF THE CURRF.NC¥
FEDERAL RESERVE BOARD
J. A. BRODERICK, SECRETARY
W. T. CHAPMAN, ASSISTANT SECRETARY
W. M. IMLAY, FISCAL AGENT
ADDRESS REPLY TO
WASHINGTON
..
FEDERAL RESERVE BOARD
April 16, 1919 ·
SU:DJECT:
:ttevi sian of "rreekly Report
of Gold Receipts and Disbursements, 11 fonu X-1053.
Dear Sir:
There are bein~ forwarded to you today 50 copies of form X-1053,
revised so as to enable the Bo::trd to follow more closely the movement
of gold into and out of the Federal Reserve system.
•
It wiJl be noted that on the reverse side of the form we have
added a detailed distribution of amo,J.n. ts shown against item ORIN HAll other receipts'' and item PORK- 11All other d.is"j:lrsements."
Tie
have also added a r;lassification designed to show tho purposes for
1l'b s cla,ssification shows
which gold wi.thC:rawals are to be used..
the amou..nts withdrav,n for export, for use ln the lndt:strial arts, for
reserves of banks, for paJmer.ts to the Unitsd States Government, and
for all other purposes (the latter to be S:;?eci.fied in detail), and is
in accordnnce with the recon:mendat:i ons nade by tne Governors at their
conference in nashington, March 28-·22,
In order that the Board may be atle to follow more closely the
gold situation fr6rn week to week, it is reques'cei tr...at l.llltil further
notice you forward this additional info11nation likewise each week together with the other data on the form.
Yours very truly,
Assistant Secretary.
St ·336
EX-OFFICIO MEMBERS
W. P. G. HARDING, GoVERNOR
ALBERT STRAUSS, VICE GOVERNOR
ADOLPH C, MILLER
CHARLES S. HAMLIN
CARTER GLASS
SECREtARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
FEDERAL RESERVE BOARD
W, T. CHAPMAN, ASSISTANT SECRETARY
W. M. IMLAY, FISCAL AGENT
ADDRESS REPL. Y TO
WASHINGTON
-
J. A. BRODERICK, SECRETARY
FEDERAL RESERVE BOARD
I
'7
.April 16, 1919 ·
SUBJECT:
Revision of form ".At',
Monthly Report of Investment operations.
Dear Sir:
we are forwarding to you today under separate cover
copies of form "A"·
This form has been revised so as to pro-
vide for more detailed information regarding open-market purchases of acceptances, especially of acceptances acq,uired from
.•
banks and dealers in other Federal Reserve districts and from
other Federal Reserve banks.
None of the branch banks have been supplied with copies
of this form.
Yours very truly,
Assistant secretary.
St ·337
l
I
W. P. G. HARDING, GOVERNOR
EX-OFFICIO MEMBERS
"' I
ALBERT STRAUSS, VICE GOVERriOR
ADOLPH C. MILLER
CHARLES 5. HAMLIN
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
SUBJECT:
-
W. T. CHAPMAN. ASSISTANT SECRETARY
W. M. IMLAY. FISCAL AGENT
REPLY TO
April 25, 19ltof>DRESS
:J FEDERAL RESERVE BOARD
WASHINGTON
~ar
J. A. BRODERICK, SECRETARY
FEDERAL RESERVE BOARD
COMPTROLLER OF THE CURRENCY
Revision of form 3S, "Distribution,
by classes, of paper ~d short-term
investments held."
Sir:
1Je are forwarding to you today undGr separate cover
copies of fonn 38, revised as of April 12, 1919.
The only
change made in the body of the fonn has been the addition
of new items to show acceptances bought in the open market
classified according to endorsements.
•
May I request that
you render your first report on the revised fonn as at
close of business Frida¥, May 2.
SPecial care should be taken to see to it that proper
amounts are reported each week against memorand'tLl i tem.s
"Acceptances bought from
~cceptor"
and "Acceptances bearing
endorsement of more than one bank or banker. "
Separate reports are desired for parent '...ank:s and for
each branch bank which carries earnin6 assats on its own
books, and in addition a combined report from the parent
bank for both parent bank and branches. Branches which
carry earning assets on their own books should be supplied
by the parent bank with copies of the new form.
Yours very truly,
.(
Assistant Secretary
st.353
..
EX.OFFICIO MEMBERS
. W. P. G. HARDING, GOVERNOR
ALBERT STRAUSS, VICE GOVERNOR
CARTER GLASS
ADOLPH C. MILLER
CHARLES S. HAMLIN
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
·
FEDERAL RESERVE BOARD
J. A. BRODERICK, SECRETARY
W. T. CHAPMAN. ASSISTANT SECRETARY
W. M. IMLAY, FISCAL AGENT
ADDRESS REPLY TO
WASHINGTON
FEDERAL RESERVE BOARD
May
-
SUBJECT:
13, 1919
weekly report of debits to bank
account at clearing house banks.
Dear Sir:
•
An ex~ination of the reports received fran Federal
Reserve Agents sho~~ng debits to bank account as reported
by clearing housa managers in the various cities in their
districts seems to indicate that there is a lack of uniformity among reporting banks in the compilation of these
figures. It will be appreciated, therefore, i f you will
ascertain fran each clearing house manager submitting repor.ts to you, the exact methods adopted by the reporting
banks in compiling figures of debits to bank account •
In this connection may I again call your attention
to the statement on page 258 of the Board's March Bulletin,
that debits to bank account should include all debits to
account of banks and bankers, exclusive of (a) debits to
account of Federal Reserve bank, (b) debits in settlement
of clearing house balances. It is evident that the amounts
of cash letters forwarded to correspondent bal"'...k:s must be
included with other debits to bank account. OUr attention,
however. has been called to the fact that some of the banks
have not been including such figures.
Will you be good enough to give this lliatter your early
attention in order t:b..at any lack of unifozmi ty which may
exist in the compilation of these figures may be revealed
and corrected at the earliest possible date.
Yours very truly,
Assistant Secretary.
ur.
Federal Reserve Agent,
st-381
I,:
-
W. P. G. HARDING, GOVERNOR
ALBERT STRAUSS, VICE GOVERNOR
ADOI.PH C. MILLER
CHARLES S. HAMLIN
EX-OFFICIO MEMBERS
CARTER GLASS
SECRETARY Of THE TREASURY
CHAIRMAN
....:
JOHN SKELTON WILLIAMS
J. A. BRODERICK, SECRETARY
W. T. CHAPMAN, ASSISTANT SECRETARY
W, M. IMLAY, FISCAL AGENT
FEDERAL RESERVE BOARD
COMPTROLLER OF THE CURRENCY
ADDRESS REPLY TO
WASHINGTON
FEDERAL RESERVE BOARD
May 22, 1919
SUBJECT: weekly member bank condition
report (fonn st-51).
1.
:near sir:
May we request that in consolidating the weekly ·member b~k
·statement specia..l efforts be .tnade to cheek each item against the
corresponding i tam for previous weeks·; with the v~w of detect-.
ing er~Ori;~ . made ,in the Originalt:returns sent to YOU by reporting
banks •.. This will fa.cili ta.t.e -our work ·of compilation and obviate
· ~h~. :z;.ec,a~e~ty ·of our, telegraphing .f.or· confirmation or correcti9n
. 0~' t.l;l~. ~:r;~o:li'd.a.te:d:' .i terQ$ •. ' .•
' '
. .
' ·. :. r:· . . . ;
; :;. :! ". . .'
> : :. ··.:
t..,~ ;.~. ·:~ :. .
''
.
' :
. . _:·.:,..~· .i·.s. sugg?st.ed: that' tl)e accollll(tant. ;j,;~ _Qharge of: th~ con-
soli!iation.maintail:i·•:a ·w~rking
shee;~ ·fo~
&a,ch
:repor~ting,
bank and
en~-;ir thereon; :i:n: pait.~lle~ col'\Wi'iE!i ~~- '~cces.si;ve weekly figures
of.· eaCh H_erp.,. :·.'.I':f~:this is, ~ot. pract,iqalb;le ~ would. st+Uest the
use of.sucl:!.·.working .sheets -to s4ow the combine~ figurett: for rep~rting ban~ti~·~ea"Ch sa':le'Oted city in your district. ·In any
.e.;yent; sPecif').c~ instructions should be given to ~v3 all figures
~, ~l;l,e; wo:ddng·:,sheet whi'ch is forwarded. to· the Federal Rese.rve. Board
~:Cmipared;:·~ ~l'cc~t'ra·spop~ng figures on the werking she~t for the
p·:t.e:ee-4-i:iJ.g,t~~k .;p~fQre ;t':i:we;; are ~elegr<fl.phed to the Boar4·
~::.·'"t_~,..·. :·:·: ~~···;·.·!>~:···~~·:-;.·· ... ·~if.
. .·:~r~ :,;,
::. ·
. : .. ':·: ·=
J
l
~
j
i ·,,
.i·:. ~
-~·. ~ :. '·• ~. · -~ ··;.; ~-....
.,...,· .... ·.·
~}~.
·
.,
.
~·
~-Yours Terif;· ~-~lY t
J.
:··=:
....
... ' . •··. ·!;,
'···
•.
I·
..~ssistant
l
secr~tary.
i
;.
1.
i'
i
i'
l(
l
st-393
-
EX-OFFICIO MEMBERS
W. P. G. HARDING, GoVERNOR
ALBERT STRAUSS, VICE GoVERNOR
CARTER GLASS
ADOLPH C. MILLER
CHARLES S. HAMLIN
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
FEDERAL RESERVE BOARD
COMPTROLLER OF THE CURRENCY
J. A. BRODERICK. SECRETARY
W, T. CHAPMAN, ASSISTANT SECRETARY
W. M. IMlAY, FISCAL AGENT
WASHINGTON
ADDRESS REPLY TO
FEDERAL RESERVE BOARD
-
May 28,
1919.
SUJ3JECT: Loans secured by Liberty
bonds and U. s. Treasury
certificates of indebtedness.
near sir:
Enclosed please find one copy each of tabulated
statements shoWing (a) amounts of paper secured by Liberty
-
bonds and
u.
s. Treasury certificates of indebtedness held
among its assets by each Federal Reserve bank as at close
of business on May
9, including amounts discounted for
other Federal Reserve banks, and (b) amounts of such paper
discounted for member banks in each Federal Reserve district and outstanding on that date, including paper under
rediscount with other Federal Reserve banks.
Yours very truly,
•
Assistant secretary
St.407
ol
-
C::·~3
EX-OFFICIO MEMBERS
W. P. G. HARDING, GoVERNOR
ALBERT STRAUSS, VICE GOVERNOR
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
ADOLPH C. MILLER
CHARLES S. HAMLIN
JOHN SKELTON WILLIAMS
CoMPTROLLER OF
FEDERAL RESERVE BOARD
THE CURRENCY
J. A. BRODERICK, SECRETARY
W. T. CHAPMAN. ASSISTANT SECRETARY
W. M. IMLAY, FISCAL AGENT
WASHINGTON
ADDRESS REPLY TO
FEDERAL RESERVE BOARD
June 2,
-
1919
SUBJECT: Abstract of condition of
Member Banks as of March
4, 1919
tear Sir:
we are forwarding to you under separate cover
copies of the Board's Abstract No.6 showing condition of
member banks as at close of business on !/larch
-
4, 1919.
please forward one copy of . the abstract to each state Bank
and Trust Company member in your district.
very truly yours,
As si stan t secro tary •.
Mr.
Federal Reserve Bank,
st-412
copy
of this letter forwarded to each Chainnan of Fedoral Res. Bank.
-
'.
fjX-OFFICIO MEMBERS
W. P. G. HARDING, GOVERNOR
ALBERT STRAUSS, VICE GoVERNOif
CARTER GLASS
ADOLPH C. MILLER
CHARLES S. HAMLIN
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
FEDERAL RESERVE BOARD
COMPTROLLER OF THE CURRENCY
J. A. BRODERICK, SECRETARY
W. T. CHAPMAN, ASSISTANT SECRETARY
W. M. IMLAY, FISCAL AGENT
WASHINGTON
ADDRESS REPLY TO
FEDERAL RESERVE BOARD
June
-
SU]JECT:
24, 1919.
Report of Earnings and
Dividends of State bank
and Trust conpany members.
Dear Sir!
We are forwarding today under separate cover
of form 107 for the use of State bank and Trust
copies
con~any
meniliers
in subnutting their semi-annual report of earnings and dividends.
Please advise the banks that this report is to cover the
six-rrDnth period ending June 30, 1919, irrespective of whether
-
they
~y
have closed their books on that date or not, and whether
the dividends declared cover a period other than that mentioned
above.
Yours vary truly,
Assistant Secretary.
..
Mr.
Federal Reserve Agent,
st.44l~
mi S
(
LETTER. SENT TO ALL FEDKRAL .RESERVE AGENTS •
445
Ex-OFF'ICIO MEMBERS
W. P. G. HARDING. GoVERNOR
ALBERT STRAUSS, VICE GoVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
CARTER GLASS
SECRETARY OF THE TREASURY
CNAIRIIAN
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
FEDERAL RESERVE BOARD
J. A. BRODERICK, SECRETARY
W. T. CHAPMAN, AsSISTANT SECRETARY
W. M. IMLAY. FISCAL AGENT
WASHINGTON
ADDRESS REPLY TO
FEDERAL RESERVE BOARD
June 24,
-
SUBJECT:
1919
Condition reports of state
bank and Trust Company
members.
near Sirt
Enclosed hetewi th please find
copies of form 105,
CrJndi tion report of state bank and Trust company members,
revised as of June 14 1 1919, together with
copies of
circular of instructions for the infonnation and guidance
of reporting members.
-
In too past considerable difficulty has b~an experianced
in getting comparable reports from all member banks, and with
the view of securing greater uniformity in methods of canpi lation it has been thought desirable to furnish each reporting bank with a copy of instructions explaining the meaning of
certain of the items appearing in the report, also outlining
the manner in which reports are to be prepared.
please mail three copies of form 105 and t.b.ree co.piea of
of instructions to each state Bank and Trust company
member in your district at the earliest practicable date, w1 th
instructions to hold the blank forms in readiness for the next
condition report. Ten.days after receipt of call by the member banks, please request delinquent institutions, by wire if
necessary, to forward their reports immediately. It is important that these reports be canpilcd and forwarded to thG
Board with as much dispatch as possible, in order that the
figures may be consolidated at the earliest practicable date
following the date of call,
circu~ar
-
Yours very truly,
Assistant secretary.
f
-..
f~X·OFPICIO
MEMBERS
W. P. G. HARDING, GOVERNOR
ALBERT STRAUSS, VICE GoVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
FEDERAL RESERVE BOARD
J, A. BRODERICK. SECRETARY
W. T. CHAPMAN, ASSISTANT SECRETARY
W. M. IMLAY, fiSCAL AGENT
WASHINGTON
ADDRESS REPLY TO
FEDERAL RESERVE BOARD
I •
stmJECTt Report of earnings • expenses
and dividend
for 1919 •
p~onts
...
Dsar Sir:
please be good 0nough to accowpany your earnings and
expense raports for the month of J\lniJ with an additional
statement showing tha following information for t:OO 6
months ending June 30, 1919:
-
•
1. Gross earnings • • • •
• • • .
2. Total current e~~onscs • . • • • •
3 • Net earnings • • • • • . .
4. profit and loss January 1, 1919
5· Net debit or credit to profit and
loss during 6 months period • .
6. Net amount available for dividends,
su.rplus, etc. . . . . . . . . .
•
•
.
.
7. Di vidcnds paid • • • •
8. Interest paid on stock
surrendered • . . . .
9·
Total dividend payments . . '· • . ~ • .. . . ., ..
10., carried to surplus fund 7 .. -:···---ll., carried to profit and loss . • • • •
Total • . . . . . . . . . · . ·
0
Ho~
An add.i tional statement should also be furnished tho
Board• showing in ®tail all debits and credits in the
profit and loss account during tho first six~onths of the
year•
It will be appreciated if you will have data regarding
gross earnings, cod.G "Eachn; net earnings, code ''Earnn;
total- dividend p~.:;nts, code ~retr; amounts carried to
su.r-J?lus fund, code ''Evcnu, and amounts carried to profit
and loss, code ''Eadsn, ccmpiled and telagrapb.:Jd to tho
:Board not later than July 7, 1919 ·
yours v.;;ry truly,
Assistant secrotary.
st.45s
@FedFRASER