The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
44'7l
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X-1530
FEDERAL RESERVE BOARD ANNOUNCEMENT FOR THE
~rEEK ENDING JULY 4, 1919.
ADMITTED TO THE FEDERAL RESERVE SYSTEM:
DISTl!UCT NO. 8
: Farmers Bank & Trust
co.,
.
$50,000
$28,000
$757,6'13
w,ooo
Magnolia • .Ark.
w,ooo
334,881
DISTRICT NO. 10
saline county Bank,
wesie~,
Nebr.
·.
"
448··
..
x-1500
-
.dDMITTED TO THE FEDER.iU. RESERVE SYSTEM:
•
'
FEDEll&U, RESERVE BO.tJill ~OOBCEMENT iOR THE
WEEK ENDING JULY 11, 1919 •
\
'.
I
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Capital
DISTRICT NO. 3
Bankers Trust ·company,
atlantic City, N. J.
~100,00~
DlS'miCT NO. 4
Citizens Savings Bank,
Upper Sanduclcy" Ohio.
50 ,000
DISTRICT NO. 7
First State Savings Bank,
EVart, Mich.
50 ,000
Chemical State Savings Bank,
Midland, Mich.
50 ,ooo
State Sivings Bank,
Nashville, Mich.
26,000
DISTRICT NO. 10
American Bank,
Sidney, Nebr.
100,000
DISTRICT NO. 12
pullman State Bank.
r;ullman, v;ash.
37 ,5oo
Central Bank of Toppenish,
Toppenish, ~:ash.
60,000
SUrplus
Total Resources
--
~100,000
00,000
785,393
10,000
705,692
. ~-
740,196
5,000
383,962
25,000
1,220,067
lO ,000
. 606,401
18,000
437,096
Note.+•The Jirst State Bank, W~lfe point, MOntana, has decided not to compJ.ete-l .
.its membership bW making payment on account of capital stock, and it is,
therefore, not a member of the Federal Reserve System.
.AU'hiORIZED TO .ri.CCEpr DRAFTS a.ND BILLS
OF EXCI!dGE UP TO 100 IlER CENT OF
CaPIT~L ~D SURPLUS:
Canal National Bank, IOrtland, Maine.
Northwestern National Bank, Minneapolis, Minn.
--------------------'""!!'""....,....----~ --"""~""""""
449
"
FEDER.t.J. RESERVE BO.dl\D 4NNOtJNCE£.1ENT :FOR TF.E
\m£K ENDING JULY 18. 1919 •
-
..
..illiiiTTED
THE FEDER<>.L :RESERVE SYST.Ej:,I:
DISTRICT NO. 4
.tembervi lle S•vings B<:lnlc Co. ,
pemberville, Ohio.
DISTRICT NO. 6
Gl~ county Bnnk,
Brunsuick, G<:....
DISTRICT NO. 'l
Stat8'- f&Yin~~Uj-'<;a.,. ,
_ Caro, Mich.
DISTRICT NO • 8
Desha Bank & Trust co.,
Arkansas City, ~rk.
Chicot Bank & Trust co.,
Lake Village, ark.
~:arren
'
~0
Capital
SUrplus
:W25,000
~5,000
100,000
~o4,704
25,000
918,167
100,000
100,000
1,134,164
100,000
21,000
796 t 389
75,000
20,000
495,020
100,000
3,117,261
Bank,
~ia.rren, ~rkansas.
101,746
2,500
27,500
2,500
97,378
AUTHORIZED TO ACCEFr DRAFTS .t.ND BILLS
OF EXCHANGE U.P 'rO 100 .FER CENT OF
CAPITn.L aND SURPLUS:
First-second Nation3l Bank,
itt:585,124
50,000
Lincoln savings Bank & Trust co.'
Louisville, Ky.
500,000
DISTRICT NO. 9
powder River county Bank,
25,000
Broadus. Mont.
Jlmerican Bci.nk of La\Ulel,
25,000
Laurel, Mont.
12
DISTRICT NO.
The Inland-Empire Bank,
pendleton,· Ore.
250,000
Monticello State Bank,
25,000
aonticello, Utah •
..
Total Resources
~ron,
Ohio.
~· 450
.
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I
I;-1530
L
J'.E.1)EBAL
REBERVE BOARD ANHOU1mEii1ENT FOR THE
WEEK ENDING JULY 25, 1919.
ADMITTED TO THE FEDERAL RESERVE SYSTEM:
DISTRICT NO. 4
Hubbard Banking Cot®any,
. Hubbard, Ohio. ,
Capital
Surplus
Total Resources
$50,000
$25,000
$92Q,619
DISTRICT NO. 6
Bank of Orange & Trust Co.,
Orlando; Fla.
100,000
15,000
540,846
12,500
505,775
9,000
879;276
5,000
288,932
7,500
82,500
5,000,000
1,250,000
103,866,960
200,000
50,000
250,000
DISTRICT NO. 8
Citi£ens Bank & Trust Co.,
Batesville, Ark.
50 ,ooo
Union Bank & Trust co.,
Batesville, .Ark.
75,000
:Sank of Lebanon,
50,000
Lebanon, Ill.
Farm~rs & co~ercial savings Bank,
Clayton, Mo.
75,000
DISTRICT NO. 12 .
Bank of Italy,
. San Francisco, Calif.
The Marine Ba:.nk,
seattle, Wash.
The Evanston Trust & savings Bank, Evanston, Illinois, has changed
its name to ''State Bank & Trust Conpany", and has increased its capital
to $300,000.
:.
451
W. P. 8,JtAIDI118, 8oYI. .OI
AUIIT ITRAUII, YICI 80YIIIOI
IIX OI'PICIO ...........
ADOLPH C:. IIILLII
C:HAILII I. HAJIUII
CAITII 8LAII
IICIITAIY OP THI TIIASUIY
CIIAIIIIAN
JOHII lltiLTON 'lrlLLIAIII
COMnHLUI OP THI CUIIIIICY
J, A. IIODIIIC:It, 81CII'fAIY
W, T, CHAPIIAII, AIIIITAMT IICII'fAIY
W. N,IIILAT, FIICALAIIHT
FEDERAL RESERVE BOARD
ADDRK88 IIKPL.Y TO
WASHINGTON
I'IEDilRAI. RIEIIERVIE JIOARD
· X•l5Zft
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FEDERAL RESERVE BOARD ,oo:JJUNCEMENT FOR fl'HE
WEEK ENDING AUGUST 1, 1919.
ADMITTED '1'0 THE FEDE&.L RESERVE SYS'l'El\4;
DISTRICT .NO. 2
.sussex county Trust OOu
·
J'l'ankl.in, N. Y.
Capital
surplus
TOtal Resources
$;1.00 ,000
,20.000
~120,000
Kingston Ttust company,
l(1ngston, ~· Y.
.150,000 ..
. '. '.
])ISmiCT NO. 4
...
:onion .,.vings & '"-at co.,
~o.oao
warr•, Ohio. ·
DISTRICT N9~· 6
tJDion savings Bank,
200,000
:Mobile, .ua.
:Meroau.tile ·Bank & Tru.st oo:•. ,
200,00.0
sa.vaD:Da.ht. Ga.
DISTRICT NO. 7.
·· Farmers state Bank,
35,000
LafOntaine·, Ind.
.....
The ~era Bank,
so·,ooo
:Mason, :Mich.
..DISTRICT NO. lO .Bank,
Nebraska State
35-.000
08d, Nebraska.
P-roducers state Bank,
200,000
Tulsa, ok~.·
:DlS'l'Rlm' NO. ll ..
First Guaranty State Bank.
50,000
:Denton, ~:ias.
CDmmercial GUaranty State Bank4 ,
50...000
.san Augustine, Texas.
60,000
.•
I
1,075,495
'l
300,000
4,552,237
6,595
1,076,307
3,500
1,226,860
491
142,962
10,000
543,886
129000
476,'128
. 25,000
·3,517,552
5.,.000
269,282
3,000
25'1 ,968
/
,4
•
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I
W. P, Q, HARDING, IOYIIMOR
IIX OPPICIO MIIIIBIIR8
'
"'
ADOLPH C. MILLER
CHARLES S. HAMLIN
IICII&TAIY OP THE TRI.UURY
\
CHAIRIIAN
JOHN SKBLTOR WILLIAMS
COIIPTIOLLIII Of THI CURRINCY
J. A. BRODERICK, SECRITARY
FEDERAL RESERVE BOARD
W. T. CHAPMAN, ASSISTANT SICRITARY
W.II.IIILAY, FISCAL AGENT
ADDRESS REPLY TO
WASHINGTON
FEDERAL :RESERVE :SOARD ANNGUNCEMENT FOR THE
WEEK ENDING AUGUST S, 1919•
FEDERAL RESERVE BOARD
ADMITTED TO THE FEDER.il.L RESERVE SYSTEM:
I
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L
ALBERT STRAUSS, VICI GoVERNOR
CARTER IU.I
DISTRICT NO. 2
Liberty Bank of Buffalo,
Buffalo. N. Y.
DISTRICT NO. 4
Middlefield Banking co.,
Middlefield, Ohio.
DIBmiCT NO. 6
Atlanta TrUst co.,
Atlanta, Ga..
DISTRICT NO. 7
Great Lakes TrUst Qo.,
Chicago, Ill.
First State Savings Bank,
Birmingham, M1oh.
st. Charles state Bank,
St. Charles, Mich,
State Bank Of K~aunee,
Kewaunee, Wis.
DISTRICT NO •. 10
Far.mers state Bank,
Genoa., Bebr.
Cap~. tal
surplus
Total Resources
$1G500,0QO
$1,000,000
$~.976.680
25,000
25,000
37l,OM
1,000,000
100,000
2,107,970
3,000,000
600,000
3,600,000
40,000
15,000
944,253
25,000
5,000
442,633
60,0QO
15,000
940,860
25,000
-- ---
242,690
The Depasi tors state & Savings Bank, Chicago, Illinois, has cha.l:lged. its
name to "Depositors State Bank".
The Indiana. Bank & Trust Company, Roc:hester , Indiana, has changed its
name to "United States Bank & Trust Com:pa.ny". .
.
The Con:mercia.l & savings Bank, Mitchell, south Dakota, has changed its
name to ''Commercial Trust & Se.vings Bank" • ·
Correction: (A.mlouncement of-Auguat 1, 1919)
sussex county Trqst CQ., Franklin, N. Y. should be sussex CO"'.mty Trust co.,
Franklin, N. J.
453
...
Xl5~0
FED~ RESERVE BOARD ANNOUNCEMENT
FOR THE
'
•;;EEl{ ENDING AUGUST :15, 1919.
bDMITTED TO THE FEDEIW. :RESERVE SYSTEM:
Capital
SUrplus
$200,000
$200,000
Total Resources
Hibernia Bank of savannah
Sava.nna.h; Ga.
$3,772,825
WITHDRa\JN:
"·
The Farmers & Merchants Bank, Hickman, KY., has withdrawn from membership.
454
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A-1530
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FEDERAL RESERVE BOARD ANNOUNCEMENT FOR THE \.lEEK
ENDING APGUST 22, 1919.
· .ADMITTED TO THE FEDERAL RESERVE ·SYSTEM:
Total Resources
Capital
.Olean Trust Company,
Olean, N. Y.
Wakeman Bank com.Pa.ny, .
Wakeman, Ohio.
Rittman Savings Bank,
Rittman, Ohio.
PB.rk City State Bank,
Park 9i.ty, Mont •
~.
SUrplus
$100,000·
$20,000
~,281,837
. 25,000
10,000
304,164
25,000
8,500
366,938
25,000
10,000
313.031
CONSOLIDATION:
The Conmercial Trust and Savj.ngs Bank (a member bank), the United states.
Trust and. Saving~ Bank and the Canal Ba.nk a.nd Trust Company of New Orleans,
Louisiana~ (a member ·bank), ha7€: consolicL"l.ted under the title of the ca:nalCommerc.ial Trust and Savings Bank as a mem;:,er b'alik •
.
.
•
. ' ,y
·- ,- .•n;.:.:
. '·~
A
"
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. t'
455
x-1530
FEDERAL RESERVE BOARD ANNOUNCWJ.ENT FOR THE
EliDING AUGUST 29, 1919.
·~JE.EK
AllUTTED TO TP..E FEDERAL RESERVE SYSTEU:
Capital
Apple Creek Banking Co.,
Apple Creek, Ohio.
,$25.,000
The Canon Bank,
Canon, Ga.
25,000
Bank of Sasser,
Sasser, Ga.
25,000
·Guaranty State .Bank,
Grand Prairie,• Tex~q. t -~-~~00:
Carbon County Bank,
Price, Utah.
Surplus.
Total Resources
,,~15,000
12,500
·. $c.ooo
f
105,597
25,000
'··'
$367,957
178,138
---
77,798
5,000
55,000
B~ni
The City savings
& Trust Ccmpany, Alliance, Ohio, has changed ita
name to uci tizens. Savings Bank & Trust Co.mpa:ny••.
WITHDRAWN:
The Hillsboro State Bank, Plant City, Florida, and the Kellerton
·
Bank, Kellerton, Iowa, have withdrawn from membership.
AUTHORIZED TO ACCEPT DRAFTS AND BILLS
OF EXCHANGE UP TO 100 PER CENT OF
CAPITAL AND SURPLUS: .
..
I ,.
...
City National Bank, Bridgeport, Conn.
BamUtC>:tl:ci i'rus.t::··tto&l>~r ·Paj)~rs~ '.llT., .il~ ·
National :.1arine Bank:, Baltimore, Md.
Bank of Commerce & Trusts, Richmond, Va •
Hibernia Bank, Savannah., Ga.
Comr~roe Trust Company, Kans~s City, Mo.
Lumbermans National Bank, Houston, Texas.
National Banlc of Commorcof Houston,. Te:xa.s ..
Thames National Bank, Houston, Texas.
Lamar State Bank & Trust Company, Paris• Texas.
First Nat ionnl Bank, San lmgelo, Texas.
"
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S~te
456
X-1500
,.
FEDERAL RESERVE BOARD .ti.NNOUNCEivlENT FOR THE WEEK
ENDING SEPTEMBER 5, 1919 •
.tJ>lAITTED TO THE FEDERAL RESERVE SYST:Fl;;:
Capital
surplus
$150,000
~
Citizens Trust company,
Adams , Ne,; York.
Bank Of United States,
New York City.
state Bank of Revere,
Revere, Minn.
Home State Bank,
Anthony, Kans.
...
Total Jtesources
75,000
$1,351,304
1,000,000
250~000
20,643,918
;)() ,000
30,000
190,398
25,000
1,500
27,500
WI TltD!\A.VV!l:
'
The Cherokee County Bank, Centre, Alabama, has wi thd.rav~n from membership.
ACCEP.rdCES TO lOO%.
correction - announcement of August 2~.
Thames National Bank, Houston, Texas, should be Thames National Bank,
Norwich, Conn.
•
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457
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X-1530
I
FEDERAL RESERVE BOARD AN1JOUNCEMENT FOR THE \VEEK
EliDING SE?TEiviBER 12; 1919.
.ADMITTED TO TF...E FEDERAL RESERVE SYSTEM:
Capital
savannah,
r,
I
~
I
"'
$25,000
$731,186
250,000
2,315,407
200,000
50,000
918,573
50,000
11,500
569,27~
50,000
50,000
866,281
25,000
3,500
252.,134
100,000
50,000
1,675,018
2.5,000
aa.
Total Resources
150,000
Columbia County Bank,·
Magnolia~ Arlt.
Citizens .Bank,
Dyersburg, Tenn.
South Shore Bank,
South Shore, s. Dak.
State Bank of La Crosse,
La Oro sse, ·,vis.
State Bank of Caledonia,
Caledonia, Mich.
SUrplus
~25,000
Lewistown Trust Company,
Lewistown, Pa.
Security Bank,
Portsmouth, Ohio.
Citizens Trust Company,
14,000
470,043
The Chicago Savings .Bank & Trust Company, Chicago, Illinois, has changed
its name to "Chicago Trust Company''•
AUTHORIZED TO
J~CCEPT
DRAFTS .k.lm BILLS
OF EXCHANGE UP TO 100 PER CENT OF
CAPITAL A1.W SURPLUS:
New Bedford safe Deposit & Trust Company, New Bedford,
Union National Bank, Pittsburgh, Pa.
National Bank of Commerce, Kansas City, Mo.
I
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1~ss.
458
W, P. G. HARDING, GOVERNOR
ALIIRT STRA.USI, VICE GOVIRNOR
ADOLPH C. MILLER
CHARLES S. HAll LIN
EX OPF'ICIO MEMBCRS
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
FEDERAL RESERVE BOARD
JOHN SKELTON WILLIAMS
COMPTROLLER OF THI CURRINCY
J. A.. BRODERICK, SECIIITAIY
W. T. CHAPMAN, ASSISTANT SECRETARY
W.II.IIILAY, FISCAL AGENT
WASHINGTON
ADDRESS REPLY TO
FEDERAl. RESERVE BOARD
I,
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X-1530
!
.AliliOUl~CE.FElJT FOR THE \fEEK
EliDING SEP'I.'E:iliER :L9, 1919 •
FeDERAL RESERVE BO.ARD
.ADL:IT'I!ED TO THE FEDERAL RESERVE SYSTEM;
capital
'DISTRICT lifO. 9
Farmers State Bank,
·;raconia, Minn.
SUrplus.
~25,000
Total Resources
.,?8,500
DISTRICT NO. 14
Bank of St. Helena,
St. Helena, Calif.
•
75,000
754,175
.
me Ol'l'lc•o
459
w• .. ••R•
:...-
.
W. P. 8, HAIJIN8, GOVIRNOR
ALJIIT STRAUS., VICI GOVIRNOR
ADOLPH C:. MILUR
CHARLES S. HAMLIN
CARTER 8LASS
IICR&TARY OP THI TIIAIURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COIIPTIOLLIR OF THI CURRINCY
FEDERAL RESERVE BOARD
J, A. BRODeRICK, SICRITAIT
W. T. CHAPMAN, AIIIITAHT SICRITARY
W. M.JIILAY, FIICALAIINT
WASHINGTON
ADDil.811 R•PLY TO
Ft:DI:RAL RIE.I:RVI: BOARD
I·
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:.
•
FEDE...lthL RESERVE BOA"RJ .Al'lliOUl'l"Cilli::El~T FOR THE ',·JEEK
ElifJ)IHG SEP'ilEMBER 26, 1919.
.
.
.ADMITTED TO THE FEDE.RlU. RESERVE SYSTEM;
DISTRICT l~O. 12.
Ocean Park Balik,
Santa Monica~ Calif.
Citizens State Bank,
Stamvood, Wash.
Total Resources
Capital
SUr-plus
~~100,000
$16,100
$1~053,290
25,000
2..,500
2..7,645
The t:etropoli tan Ba:nk, New Orleans, Louis~ana, has changed its name to
"Pan-American Bank & Trust Co~"
The announcement of .August 29, of the change of name of the City Savings
Bank & Tr-t.J.st Co., Alliance, Ohio, to "Citizens savings Bank & Trust Co. 11 ,
was in error.
·
WI THDRAYJ.\f:
The following State institutions have withdrawn from membership;
Citizens Bank & Trust Co., Athe~s, Alaba~.
Lake Providence Bank, Lake Providence, Louisiana.
The City Bank & Trust Co.,_New Orleans, Louisiana, bas merged 'l'dth the
Whitney Central Trust & savings Bank of New Orleans, and has surrendered
its stock in the Federal Reserve Bank.
AUTHORIZED TO ACCEPT DRAFTS AND BILLS
OF EXCHANGE UP TO 100 PER. CENT OJ!'
·CAPITAL .AND SURPLUS:
Central National Bank, Cleveland, Ohio.
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!I"'
460
W. P. G. HARDING, GOVIRNOR
ALBERT STRAUSS, VICE GOVIRNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
EX OP'P'ICIO MEMBERS
CARTER GLASS
SICRUARY OP THI TRIAIUIY
CHAIIIIAN
JOliN SKELTON WILLIAMS
COMPTROLLER OF THI CURRIJICY
FEDERAL RESERVE BOARD
W. T, CHAPMAN, SECRETARY
R.G. EIIERSON,AIIIITANT SICRITA•Y
ADDRESS REPLY TO
W. II. IMLAY, FIICAL AGINT
WASHINGTON
FEDERAL RESERVE BOARD
X-1530
I.
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FEDERAL RESERVE BOARD .ANNOUNCEtilENT FOR THE \lEEK
ENDING OCTOBFJl 3, 1919.
AD11IITTED TO TBE FE~ RESERVI: SYSTEivl:
Capital
DISTRICT NO. 4
The Pearl. Street Savlngs & Tru.st Co.,
~oo,ooo
Cleveland, Ohio.
'l!b.e Orrville Savings Bank,
50,000
Orrville, Ohio.
DISTRICT NO. 9.
central Savings Bank,
sault Ste Marie, Mich.
100,000.
~tal
SUrplus
~0,000
$14,127,455
45,000
867,865
20,000
975,200
aUTHORIZED TO ACCEPT DRAFTS AND BILLS
OF EXCHAlifGE UP TO 100 PER CENT OF
CAPITAL AND SURPLUS:
Henderson National Bank, Huntsville, Ala.
Citizens Trust Company, savannah, Ga..
,
Canal-Conmercial Trust & Savings Bank, Nev1 Orleans, La.
Resources
•
. "i"'''
.
r
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f•
FEDJii!=W.
:\lEs:illV""~
FN.JINL~
BO.e.RD
~TQi)}TJE~'!I.J.'l'T.
OCTOBER :'.0 •
FOR
~liE
WEEK
19~. 9.
ADMITTED TO THE FEDEIW. RESERVE SYSTEM:
1.~
I
['
I
l
I
,::.
i
,,
i·I
I,
1.:
l
i
I
l
,i""
/
.,
•
~
DISTRICT NO. 2
Capital
Eiizabethp0rt Banking Company,
Elizaoeth, N.. J ..
$213,787
DISTRICT NO. 11:
"
Gl'ange Trust Company,
Huntin.gdl)n, .:tenna.~
125,000
DISTRICT NO. t
Marshall county Banlt,
MOl.mdsville t W Va..
•
150,000
DISTRlCT NO. 8 ·
Bank of Commerce,
El Do:r&.do, .a.rk.
50.,000
Belleville Savings Bank,
Belleville, Ill.
150,000
DISTRICT NO. 10
Farmers State Bank,
50,000
Cozad, Nebr.
DISTRICT NO. 12
Bank of No~valk,
25,000
Nor-walk, Calif.
. Italian American Bank,
1,000,000
San Fran~sco, Calif.
l_,,
~·
t ..
}"
'
'
'
r.
I'..
I'
'
)'
..
surplus
$50,000
Total Resources
%r4,410,095
664.586
40,000
1.224,577
5,000
55,000
400,000
4,239,860
10,000
829,679
.
)~
10,000
00~,350
142.,500
11,135,353
462
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x-15~
FEDERAL RESER'TE BOARD ·ANNOUNCEMENT JOlt THE WEEK
ENDING OCTOBER ~'7, 1919 •
.tU>MITTED TO THE FEDEP.AL BESERVE SYSTEM:
!~
.
DISTRICT NO. 3
capital
The Sch:uyl1::~.ll Haven Trust co.,
SohuylkHl Haveu, penna.
$125,000
DISTRICT NO. 8
The FruMners & Me~chants Bank,
Dyer, Tenn..
40,000
DISTRICT NO .. JO
cordell state Dank,
COj';"del:&., ukla.
'~,000
•
DISTRICT NO. 12
Fl·ench ~;.IDe:: i can Bank O! Savings,
San F·.ranc :i sao , r.e.Hf.
J. ,000 ,noo
commercial 'J!'U.f.t & sav:tr.r.;s Bank,·
santa :oa:r.be.:ra, Cal:Lf ..
Drovers & Me.reLe.nts tan~,
Ibila'iE>lpi.in., .rcr.u.s. ..
5'75,000
into
surplus
Total Reeources
$55,000
1,212,121
18,941
331,188
3~000
368,896
z5q,ooo
13,551,774
20Jr000
6,480.S70
Drove:-:"s & Mer.Cil.&D.:iiENa.tional Barik,
!hi ladel phi a, .FeiUla.
AUTHOniZF.J) TO .ACCF.FT DRA1'TB a'\\1'1 R1LT..S OF
EXC&NGE UP TO 100 !ER CENT 0~' Ca.FITAL
aND suP.rr..us~
National Bank of Comme:rcet Fort wor·(.h, ~exe.s.•
Stockyards Natio~al B~~k, Fort. Worth, Texas.
waxahachie Nat:Jonal Bank, vaxahachie, Texas.
,
r
'
'
463
W. P. G. HARDING, GOY!RNOR
ALBERT STRAUSI, VICI CiiOVIRNOR
ADOLPH C. II ILLER
CHARLES S. HAll LIN
EX OFFICIO MEMBI:RSI
CARTER GLASS
SICRITARY OF THE TREASURY
c;HAIRMAN
•
JOHN. SKELTON WILLiAMS
FEDERAL RESERVE BOARD
·
COMPTROLLER OF THE CURRENCY
W. T, CHAPMAN, SECRETARY
R. G. EMERSON. ASSISTANT SECRITAIY
W. M.JMLAY, FISCAL AGENT
ADDRESS REPLY TO
WASHINGTON
FEDERAL RESERVE BOARD
FEDERAL RESERVE BO;,J\.D .b.NNOUNCEMENT FOR THE \'iEEK
ENDING OGT03ER Z4 9 1919 •
.t;IDMITTED TO THE FEDERAL RESERVE SYSTEM:
DISTRICT NO. 5
Cit~.zen.s Bank & Trust Co.,
Rock Hill, s. c.
DISTRICT NO. 7
Capi. tal
surplus
$5,000
~567,572
8,000
1,200,211
17,000
542.497
20,000
459,352
2,300,000
60' 5()9 ,192
1,F.25,000
45,621,028
~100,000
American State Bank,
Fort Madison, Iowa.
100,000
DISTRICT NO. 10
The Citizens state Bank,
Lit-eral, Kansas.
50,000
Cheyenne State Bank,
Cheyenne , Wyoming.
100 .coo
DISTRICT NO. 12
The San Francisco saving~ & Lo~n
Society, Snn Flanclsco, Ca.llf. J,OOO)OOO
Savings Un5.on Bank & ~l':toUst en. ,
San Francisco, Cal~f.
1,500,000
Total Resources
The Mount 4yr s~ate Bankt Mount AJl , Iowa, !..as wU;hd.:ra?vn f:rom membe.r-
ship.
CONVF.RSION:
Bank of Commerce,
Ihilade 1 phi a,
~nna.
National Banko! Commerce,
]hiladelphia, PBlLna.
into
AUTHORJZED TO ..aCCE.1:1l' DRAFTS aND BILLS OF
EXCRtl..NGE UP TO 100 .FER CENT OF CAPITAl.
AND SURPLUS:
Citizens & southern Bank, Sa'lfan":lah, Qa.
First National Bank, val.d.::>stat Ga.
464
I .
...... ,""!'.
:ra~:-1£1
.
.....
~
....
,., ·~'
-r· •. •. ~·.
.
.;
RESERVE BCD.aBD ANNOUNCEMENT FOR THE \,EEK
E11DING OCTOBER ~1, 1919 •
.ADMITTED TO THE FEDERAL RESERVE
DISTRICT NO. 7
Bank of Fountain,
Fountain, Mich.
DISTRICT NO. 10.
First State Bank,
North Bend, Nebr.
DISTRICT NO. 12
Renton State Bank,
Renton, wash.
SYS~EM:
Capital
surplus
Total Resources
$25,000
$ 5,000
$ 173,394
15,000
578,073
25,000
CONVERSION:
Rigby state Bank,
Rigby, Idaho.
lnto
First National Bank,
Rigby, Idaho •
.AUTHORHJID TO ACCEP.r Dru..FTS i!ND BILLS OF
EXCHANGE UP TO 100 lER CENT OF CAPITAL
At-l1> SURR.US:
Utica Trust & Deposit Cor,npany, Utica:; N. Y.
First National Bank, Gainesville, Texas.
Lowry National Bank, atlanta, Ga.
Chicago Trust Ce>Wpany, Chicago, Ill.
First National Bank, St. Louis, Mo.
65,531
465
I
I
EX 0PP'ICIO MltMSIIt8
I
L.:
W. p, G. HARDING, GOYIRNOI
ALBERT STRAUSS, YICI GOVERNOR
ADOLPH c. MILLER
~HARLIE .. S. HAMLIN - · • ••
...
CARTER GLASS
SECRITARY OP THR TREASURY
"CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER OF THI CURRENCY
FEDERAL RESERVE BOARD
W. T. CHAPMAN, SICRITARY
R. G, EMERSON, ASSISTANT SICRITitRY
ADDRESS REPLY TO
WASHINGTON
FEDERAL RESERVE BOARD
.
W. M,IIILAY, FISCAL AGENT
X-1530
'
-
I
-
FEDERAL RESERVE BOARD ANNOUNCEMENT FOR THE WEEK
ENDING
NO~ffiER
7, 1919 •
.ADMITTED TO THE .B'EDERAL RESERVE SYSTBM:
DIBTRICT NO • 4
ca;pitai
~he Farmers State Bank,
Eldorado, Ohio.
~35,000
DISTRICT NO. 5
Commerce Bank & Trust co.,
Charlottesville, va.
100,000
DISTRICT NO. 6
Farmers state Bank,
Huntsville, ..,la.
100,000
The ~oples Bank,
Calhoun, Ga.
55,000
DISTRICT NO., 9.
Brule State Bank,
Chamberlain, s. D.
50,000
DISTRICT NO. 12.
First State Bank of Teton City,
Teton City, Idaho,
zo ,000
.Anglo-California Trust Co •. ,
San Francisco, CaL.
1,500,000
surplus
Total Resources
2,675
$448,817
10,000
110,010
35,000
660,866
11,000
575,619
10,000
852,313
3,000
3:3,000
500,000
21,002,7~2
~
CONVERSIONs.
American Exchange Bank,
. firginia, Minn.
--Parma State Bank,
lnrma '· Idaho.
into
.American Exchange Na.tlonal Ban1:,
Virginia, Minn.
into
Flrst National Bank,
.Farnia , Idaho •
466
X-1500
F....DERA.L RESERVE 30.t:..RD .Lil:il'l"OL'NCEi>TEHT .FOR THE V1"bEK
ENDING NOVh:MB:t.:R 14, 19J. 9.
•~lJMI TTED
TO THE
~'EDE&l.1
RE8ERVE
SYS~EUI:
'~
....
Capital
DI6TRICT NO. 9
Security Bank & Trust
Bozeman, Mont.
DISTRICT NO .. 10
Farmers state Be.nk,
Allen, Nebraska.
....
Total Res::mrces
:jp20 ,000
{p371,992
50f000
co.'
surplv.s
$35,000
DISTRICT N0.7
MovUle state Bank,
Moville. Iowa.
Sibley state Bank,
i:iibley, Iowa.
15,0()0
819,560
112,840
100,000
2S ,5CO
5,000
289~%~
467
x-15$
F.Ji:DEB.,_..I; RESERVE BO.nRD .. J:·Il·JOU1WEMEHT l<'OR THE YiEBK
~miNG NOVEUBER 21, 1919.
DISTRICT NO. 2
The East Orane;e Bank
East Orange, N. J.
The Bank of Orchard park,
Orchard rark, N. Y.
DISTRICT NO. 5
Independence Trust Compdny,
Charlotte, N.. C.
Citizens Bank,
Blackstone, va.
DISTRICT NO. 12
Hibernia Savings Bank,
.R>rtland, Ore.
The Union savings Ban:;:,
"Union commercial Bank"
Capital
~150
bUr plus
Total Resources
~,1
,000
~25,000
zo ,000
6,000
406,844
500,000
250,000
~.965,665
100 ,OUO
4~,000
717,312
200,000
100,000
5,051,535
,897,575
~.1obile' ..;.1•·-t.:::n~, h:.:i.S Cllcll~E.d. i t3 U<J.le
to
468
X-1530
FWER.b..L REl:lERVE BO•..RD i ..NNOTJNCEl·ilBNT .B'OR THE \;EEl{
ENDING NOVEMBER 28, 1919.
DISTRICT NO. 7
First State Bank,
Vj.cKs-burg, i:Jichu
DISTRICT NO. 10
L:ive stock ~tate Bo..nk,
Kansas CJ.ty 9 MO.
Custer St&te Bank~
Broken Bow, Neb:r.
Tot~l Resources
C<:i.pital
c.urplus
;wzo ,ooo
~3,500:
·it-40.5 ,666
200,000
37,50()
2,}.48,802
~5,000
?,coo
534v5~8
WI THDRA.\.N:
The Cit.izens State Savings
from membership.
Bo.nl;::~
Otsego, Michigan., h2.s withdr:.1vm
The Title Guarantee & T:rust compal'l;)T' Lextn5tOn. xer..tucky' hc..s
chane;ed its name to "Gu<:.r~n·~~y Ba~lk & TJ.·ust Company."
469
X-1530
-
FEDERAL RE0BRV"B BO.il.RD .t1NKOUNCEI.1ENT FOR THE.
~:ZF.K EN.JING DECE~,1BER 5, 1919.
DISTRICT NO. 7
Capital
Farmers State Bank,
:W25,000
Bellevue, Mich.
DISTRICT NO. 8
Bank of -\,aynesville,
25,000
Waynesville, I.lo.
DISTRICT NO. 10
The First State Bank,
25,000
Locust Grove, Okla.
DISTRICT NO. 12
Alameda S:.wings Bank,
Alameda, Calif.
236,300
Surprise Valley Bank,
Ced.arvUle, Cclif.
25,000
Californ•_a Bank of BD.n Llnteo
County, San I3:i:uno, Calif.
25,000
The Citizena Bank of Renton,
Renton 9 \:ash.
25,000
Surplus
u
'It'
Tot£.1 Resources
5 ' 000.
5,0uo
8t50U
230,098
125.000
4,228,830
25,001.)
346,183
27,500
5.0l10
684,907
VOl.UN'l'.dtY LIQUlD.ci.TIOHS:
Scandinavian Tru.st Comp.my, Nev. York, N. Y.
The Bank of ·\iillistGn, Williston, No.rth Dakot.:...
CHANGE OF NAI!E:
The Citizens B::..nk & Trust Company, Ta.mpl, Florida, has
name to "Citizens-.An·,erican Bank & Tr.-ust Company .. "
cha;1g~d
its
_.,.
_____
_____ __
...........,....
.,.....
--:--------,.-....-...,..,.------,.,.--,-....,--~---~~----------~-----
'470
-
-
~
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X-1530
· FEDERAL RESERVE:!BO.ARD ANNOUNCEMENT FOR THE
WEEK EIDING DECEMBER 12, 1919.
ADMITTED TO THE l<'EDERIU. RESERVE SYSTEM:
DISTRICT NO. 2
Capital
Citizens Bank of Cape Vincent,
~so·,ooo
Cape Vincent, N. Y.
DISTRICT NO. 7
The First State Bank,
25,000
Carsonville, Midh.
Lake Odessa State Savings Bank,
25,000
Lake Odessa, M:ich.
Farmers State Bank,
25,000
Vicksburg, Mich.
Crossman & Willia~ State Bank,
40,000
Williamston, Mich.
DISTRICT NO. 9
Commercial Bank,
100,000
Menominee, Mich •
Co.,
.tUnerican Banlt: & Tr.1st
100,000
Missoula, Mont.
Reed !Qint State Bank,
25,000
Reed JOint, Mont.
DISTRICT NO. 10
The State Savings & Mercantile Bank,
200,000
Wichita, Kansas.
Kilgore State Bank,
25,000
Kilgore, Nebr.
Stockgrowers State Bank,
60,000
R.l.whuska, Okla.
DISTRICT NO. 12
Bank of Sausalito,
50.,000
Sausalito, Calif.
State Bank of Enumclaw,
Enumclawt V/ash.
llormgercial B..'lnk,
.
pa.nish,Forlt:, Utah.
First State
zo.oco '
50$000
Total Resources
Surplus
~8,ooo
~170,606
5,000
481,228
12,500
392,830
5,000
•
484,557
12,000
396,237
20,000
717,494
11,500
1,887,218
5,000
188,368
20,000
1,786,824
5,100
299,747
6,000
~()l
7,000
615,639
10)000
686.,502
387,987
_109000
,Z05
LlQlJIDAT IONS:
Bank~
Dallas, Texn.s. (Consolidated with Security National Bank
.
Rio Grande Valley Bank & Tr~st Co., El lhso. Texas. (Consolidated with the
Natioual Bank of El Pclso, Texas.).
•
Fanners State Bank, Rice, Te:..cas. (Consolidated v;ith First State Bank of
Rice, Texas.)
of Da~.las, Texas.}
CONV"ERSIOU:
Denver Stock Yards Bank, Denver, Colo. into Stock Yards National Bank.
I
AUTHORIZED TO ACCEFT DRAFTS A}ID BILLS OF EXCHANGE
t·
UP TO 100 1ER CENT OF CAPITAL .AND SURPLUS:
''
~tlanta
Nu.tional Bank, Atlanta, Ga.
Bank, Hoboken, N. J.
First National
f'.:.\'
> '1,!1,
X-15~
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FEDERAL RESERVE SOARD ANNOUNCEMENT FOB. THE
vreEK
&~ING DECE~BER
19, 1919 •
.ADMITTED TO THE FEDER.t,.;.L BESERVE SYST&\1:
DISTRICT NO~ 2
Bonk of Nutley,
Nutley, N. J.
DISTRICT HO. 4
Wheeling Bank & Truct Co*,
Wheeling, Vl. Va.
DIS'I'RICT NO. 7
f.aphc.rrt State &..vings E<11~k,
Northville • Mich.
DISTRICT HO. 9
Southern Mont~n~ Bank,
Ennis, .Mont.
J..liSTRICT NO. l l
Central Savings B&.nk & 1'.ru::Jt
Monroe, La.
DISTRICT NO. 12
Butta County Bank,
arco, Idaho.
The Wachington Truot Co.,
Spokane, Wash.
Total Resourceo
C21.pita1
Surpluc
~100,000
~35,000
wl,5za,9ao
160,000
520.000
5·,487 ,985
50,000
15,000
721,595
.25,000
20,0i.Ju
398,854
Co.,
250,000
62,500
2,119,517
28,750
25,00U
200,000
40,000
1,196,810.
LIQUIDATION~
Firot Guaranty St~te Bank & Truat Co., Ennis, Texas.
the Ennis N~tional Bank, Ennis, Texas.)
(Con:oli~ted
AUTHORIZED TO ACCEI-T Dfu~~'TS aND BILLS OF
EXCHANGE .UP TO 100 .PER CENT OF CaPITaL
.AND SURPLUS:
First Na.tion~l B;..nk, New Bedford, ~/lass.
Marine Bank, Norfolk, V~.
Firct National Bank, Clarkcville, Tenn.
with
r~~~,-~H'i/-.·::.;\:1~:q,, r.Lt*. ?."%;
·
'l
, .4
•
;; .¥.
,A>qw. ... +.5
•
•
j
•
'\•
X-15~0
FEDERAL RESERVE BOARD aNNOUNCEl,1ENT FOR THE
V:EEK ENDING DECEMBER 26, 1919.
ADMITTED TO THE FEDERAL RESERVE SYSTE.11.a.:
'
I
I
DISTRICT NO. 2
State Bank of Endicott,
Endicott, N. Y.
DISTRICT NO. 8
The Bank of Vers~illes,
Versailles,. Mo.
Cc.pital
Surplus
Total Resources
~50,000
$10,000
~60,000
75,000
7,000
577,984
1,000,000
28,216,489
1,725,000
36.,001,546
1,100,000
62,634,439
10,000
275,665
DISTRICT NO. 12
Guaranty Trust & Savings Bank,
1,500,000
Los Angeles, Calif.
Los angeles Trust & Savings Bank,
Los Angeles, Calif.
1.~500,000
Security Trust & Savings B<;:.nk
1,800,000
Los Angeles, C~lif.
The Myton State Bank,
25,000
Myton, Utah •
..
...
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'~
473
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x-l.6oo
FEDERAL
R E SE R V E
B. 0 A R D
STATEMENl' FOR THE PRESS ..
To be relea.sed a.feemoon papers
July 2nd,
1919.
Busin~as
· ··
.and Financial Coniitioni
-·~-rin~ J_up.e,.
1919 •
. '.
Increasing confidence in the continuance of business e:.ctivity and an expansion of industry along x.oany lines have been the characteristic features ot
·the month of June. This condition has been reflected in the spec~tion which
has been reported fran several districts t with some indica.tiaa. ~ttfl'l'".ly of danger
that it would develop to excess. Underlying business conditions hav~ nevertheless shown strong and steadf.development. In nearly all of the districts ~e
opinion is entertained that the prospects for a successful and :prosperous yea.r,_
with very large output of goods ~ a.~ost unprecedented financial returns both
to manufacturers, agrieulturists 7 i:llld laborers. are now positive. The possibiliQ'
that speculation may be carried too far and ra:ay exert. an inJurious influea:e,
·
aided and furthered by the existence of free credit and speculative tendencies,
appears .as the principal offsetting influence in the situation..
General conditions in district No. lase based upon "consensus of CWinion
that business conditions will remain good for a considerable tiRe to ccme-" .
:Buyers are increasingly "ready to enter into future commitwents," but "speculJ...
t ion has become popular, n and various doubtful securities .are being offered. to
the public. In District No .. 2 11 the inclination to buy bas not aba-ted ..... ~dea.lers
h ...ve been obliged to increase their dewand. on manufacturers' &id~ prod:ucers with
the result that JD<:l,ny industries report maximum activitt• The export deilloimd ~':
supplememted domestic requirements."
-
I
p-.o.;
.
In district No. 3 there has been no cbange"in the favorable business ~ondi- ,.
tions and the optimistic outlook!' noted during the preceding month, but prices '_
ba.ve continued to advance, and there is a great latent demand for "nearly ;;.ll.
kinds of goods" .. From district No. 4 it is reported that the wide distribution
of orders for commodities is giving a tthealtey color to business", and ~a ."fb·mer
feeling of confidence prevails tbdn ba.s been evidenced in a.r:J:¥ of our previous
teviews." District No. 5 reports "a continuously rapid iq>rovexuent in b1lsJness,
~he volume moving.. a.~parently being limited only by tbe suppl.J of raw IlJi:l,teria.l."
In district No. 6 business conditions "in a.ll parts of the district are reported·
satisfactory" • and demalld has appreciably increased during the pa.st few we-eks~
In district No .. 1 it appears that wheat is "in fine condition," general crop
conditions good, land vca.lues higl:Lw selling conditions and collections good, am
the pr~ipal danger seen in a developllent of speculation. In district No. S
there is "great activity in retail trade 'Lil'ldim1:Dished, prospect of ~ excelleD.t
crop yield .... likelihood that the over suppq of labor .... •ill. soon be converted.
into an act~l shortaae•" District No. 9 reports tba.t ~e to crops ha.s been
averted ani that labor, agriculture, aDd general 'business ha.ve good pt·ospects~
·;)
...---~~-----------------~-~--~-- ----~-~---~------
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474
X-16oO
In district Nm .. lO n a. high tide o~ general business and industrial activity
is shown 9••· in reports •••• from all sections of the ••• district~w These
reports uniformly agree that ~there is incredsed confidence and more satisfactory progress in practically every line of trad.e." In district No .. lJ.
ttearly predictions of good crops and business conditions have fully 11z0..terialized,
and there is no hesttancy in the trade." In O.istrict No4 l2 "industry is
active, trade and collections good, and agricultural rrospects enccuraging."
Practically throughout the country the labor situation is reported improving and
wages high, and if anything a scarcity of men for actual productive work.
Prices have continued to rise throughout the month, both in this country
and England, dDd •re fast waking ~ the setback which occurred after the signing
of the armistice, when a slight reduction in prices over the high levels of the
war pe:riod took place. The enormously heavy dell.land for goods for export b.:.a.s
rendered products in wany lines scarce, or has even put the~ out of reach. In
nearly all districts it is reported that the conclusion bds been arrived at by
business men t~t they can rely upon heavy defua.nd and continuouslY sustained
prices fOr some time to caue, while a feeling of apprehension which r ....:1 been
entertained early in the year is disappearing, and jobbers and retailers are
readily entering into comwitments for the fall and winter, very large orders in
many cases being placed. 1n one district it is reported that, contrary to expectations, there ~s been little or no reduction in prices; in fact, in many
directions there has been a stiffening in prices, and there is a general disposition to accept present levels and expect a continuation of them. During
May the upward movement of wholesale prices noted in Mil-rch and April has continued, the generQl index n~ber of the Bureau of Labor Statistics now standing
at 206, the ~we figure as for November ahd December, 1918. The increase has
been general, being exhibited by each of the groups of c~odities for which
index numbers ~re calcu~ted. The index number for the group of consumerst goods
bas increased frOlll 210 to 215, for the group of producers 1 goods from 166 to
190) and. for the group of raw materials from 200 to 203, the increase in the
last named group being largely due to the increase in the prices of farm. products,
the index number for which sub-group bas increased from 243 to 254.
In many respects the agricultural prospects of the ear1Y spring are being
more tha.~ JUstified- The figures given out by the Government, which promised
an enormous yield, have naturally declined somewhat as the season has advanced, such being always the tendency as the crop approaches ~tuz·ity, but
the figures are well above the 10-year average, both for winter and. spring
wheat. Grain in ~ontana and. western North Dakota escaped danger early in the
month through timely rains, and the prospects in MOntana ani other parts of the
northwest are favorable, the South D;;i.kota outlook "is excellentn .:ilJd. "j,n
practically all of North Dakota very good." In Minnesota and Wisconsin pros~ects are for a big crop. In district No. 1 "the winter wheat crcp is coming
to the harvest in fine condition" and com is looking fairly well. Tobacco gnd
corn have been freely ~~ted, and hold out an excellent prospect. In district
No. 6 corn is in ~rge acreage and showing spendid growth, while cotton w~
· in fair condition before the recent rains. In ~exas the cotton crop has suffered
soruewhat from heavy rains, while acreage reduction has proved succef'sful, but
corn is in an unusually favorable position and other crop prospects ~~e s~tiet
factory. On the Pacific coast the grain harvest has cOJ:Wienced &nd it is believed
that the year's output will be the largest in some States ever prOQUCed 1 and in
c~lifor.nia th6 largest since 1907-
-3-
-.
•
'l75
x-l6oo
•
No important developments have occurred in the flc.?~ market. Live-stock
continues bigh
price with receipts of cattle at fifteen of th.e primary
markets about stabler being .1,255,379 dv.l'iug April and 1,262.065 di.lring
~y, the index number for e~ch month being J254 Receipts of hogs nave
increased, the figure for Na.y being J,049,223, as COP.!Ja.red with 2t_823,.484
during April, the c-orresponding index numbers being 139 Qlld l2Z .. Packe!"5s
purchases of cattle for s~ugbter in the Eansas City district are less
than a year ago, but the killing of hogs and sheep shows a decided increase •
.
-
..
in
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•
X-1600
476
In steel and iron the month has witnessed a distinct turn for the ,better,
and ~ufacturers now report a much more encouraging prospect. Philadelphia rep~rts "large orders from automobile concerns and for export". Operations of
stsel plants .·in the third district show increases for early June. In the
southern iron district 11 inq_uiries are mul tiplying 11 • Pig-iron plants which were
idle in .A}jril are now operatiing, and others are naking preparations to begin
operations. Steel plants in the Birmingham district a::e operating steadily.
Large orders for steel rails have been placed by the railroads, and inquiries
for a large amount of steel tonnage for export trade ,,~have appeared. The unfilled steel tonnage for the United States Steel ·corporation as of May 31 was
reported as 4,232,310 tons. but the reduction thus indicated is believed to
represent the iowpoint of the movement downward, which set in soon after the
armistice. Pig-iron production during May was 2,108,056 tons, corresponding
to an index number of 91, as compared with 2,478,218 tons during .April, the
index number being 107. Steel ingot production likewise shows a decline, from
2,~39,711 tons during .April to 1,929,024 tons during May, the respective index
·numbers being 93 and 80. Even where the pig-iron trade is slightly smaller and
where plants have not yet resumed their activity, there is a much more hopeful
feel&ng. Pipe plants and steel mills are beginning to receive increased inquiries for their products. Foundries and cast-iron pipe makers are also run- ·
ning more steadily.
The fuel situation has been Illllch l".elow normal so far as pro due tion is concerned since the first of the year, and the bituminous market is dull, but there
is an increasing demand due to a reduction in stock and the fact that industrial
consumers are coming to the conclusion that a tight situation in the production
of coal will exist next winter. A great deal of high-grade bituminous coal is
now said to be covered by contract up to next .April. .A very large demand !or
anthracite coal for next winter is now·predicted. Increased production of both
bituminous and anthracite coal during May is reported, the ou~ut of the former
being 37,547,000 t~ns during the month as cowpared with 32,164,000 tons during
.April, the respective index numbers being 101 and 87 • .Anthracite coal ou~ut
for May is 5,711,915 tons as compared with 5,224,715 tons during .April, the
respective index numbers being 101 and 93.
Mines have been producing far below capacity, and there is a possibility
of shortage. The coke market is quiet and prices are little above the cost of
. production. Production of beehive coke during )t1'.ay was 1,135,840 tons, as compared with 1,316,960 tom! during April, the index numbers being respectively
43 and 5Q. These conditions tend to provide a cheaper medium s~ply of fuel
than would otherwise be available, but with the probability of higher prices
later on. In the Pittsburgh district millions of d.ollars are being spent in
repairs and enlargements by steel companies, and this is interpreted to mean
that prospects of great expansion are foreseen by shrewd operatorr.. B·uyers all
accept present levels of prices in steel, and are willing to close tonnages at
present prices to a more forward date than the producers have heretofore been
willing to entertain. Steel is now being sold in the first open mal:ke·l; since
the beginning of the war, but shows strong capacity to maintain its price. Orders
are well distributed throughout the country, and there is a large derrand for
structural steel. ·wire plants are now operating at about 85 per cent, while
the pig-iron plants in the Pittsburgn district are on a basis of from 65 per
cent to 70 per cent. Metal mining industx·y is again improvin.g, assisted. b;r ~"le
removal of restrictions affecting the export of silver ar4d the prospects of a
better ~rket for copper. Copper prices have strengthened during the month
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and the price of copper stocks has moved up in synpathy with them. A ·more
favorable feeling in the Colorado district has been produced by better prices
for lead and zinc. The volume of labor remains about the same, but wages have
been somewhat reduced. Zinc ore fell slightly in price d"'ll'ing the month of May
in the Joplin district, but lead ore has been practically stable. Operations
are c~rried on at about ~ of capacity in both metals~ In common with the
steel industry, manufacturing has taken a strong 1.-q;>wa.rd. turn during the month.
In New England the demand for fine cotton goods exceeds production, and the ·
bwers in 'fi.'J8ny cases are wi,lling to pay premiums in order to assure themselves
of having goods when need.$d. There is a. shortage of s1tilled labor throughout
the cotton district. Shoe manufacturers .are producing at maximum capacity,
while the heavy demand from Europe is drawing off a very large portion of the
available supply. In Philadelphia inquiry shows that the cotton mills are in
much better J?Osi tion than a few months ago, and that prices have risen to very
high levels, the advances being greater proportionately than the rise in raw
materials. Export business is good and limited only by the financial ability
of foreigners to );lay, Raw wool is in very strong demand througn~t all of the
woolen-J?roducing sections. and a. higher level of prices prevails at .the Government auctions. Products are now sold ahead for many months, and active business
is expected for the r en:a.inder of the year. Imports of raw silk d"tll'ing the,
month of May were 4,878,646 J?OUnds, as compared with 2,988,838 J?Ounds durmg
the month of AJ?ril, the respective index numbers being 238 and 146.
Demand
for leather has been on the increase and prices have movEd very high. Tanners·
are endeavoring to bw from one another in New England and manufacturers
·are finding it considerably more difficult to btiy their supplies in advance.
In St. Louis great increases in the boot and shoe business are reported
and orders for fall delivery are already being }Jlaced. The leather situation
is difficult practically everywhere.
Automobile manufacturing is running
in many plants at record levels.
Expenditures on the part of consumers
have led retailers to stock up roore heavily than heretofore, and wholesalers
generally report very strong demand from their customers•.
Building shows continuation of the revival already noted. Heavy
"
buying of lumber on the part of retailers has become general. In New England
the number
and value of per:aji ts in May showed a very large gain over those
of the preceding month and year. In the Fifth District there .is an increase
in the number of permits issued amounting to about 22 J?er cent over April.
In the southwest building is slower,. but there is activity in r9);lairs and
reconstruction. There is a. shortage of house accommodations, but new building has not been actively resumed.. In Philadelphia and New York the demaud
for accoiiillodations is far in excess of supply, prices of building materials
.advancing, and reconstruction ·is being rapidly developed. There is much
trading in houses and a. great deal in business property in many parts of the
country.
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The labor situation ha.s now reached a distinctly adv&lced stage of full
employment. There is apparently no present condition of.tmemployruent; indeed,
fr~ny industries report that they CQn not get the ruen they need, while wages
are fully up to past levels or higher. The requirements fof fa~ help are
absorbing sur:plus labor in practically all parts of the country. There is
some surplus of unskilled workers in s~e centers, but this is not different fran
the condition which frequently exists in normal times .. In the northwest the
labor situation h::a.s greatly improved, :particularly in the copper mines. The
Fourth District re~orts that skilled workers are particularly few as conpared
· ... to the denand, and that there is very little unrest. No reduction in
wage scales is now foreseen. One of the principal problems in the labor situation
that is noted by thoughtful observers is the fact that clerks and office e~
ployees, d.S wel'l as other workers receiving more or less fixed incomes, h.;i,ve
not yet participated in the advance in wages. Improvement for these classes
of workers will be necessary if prices are to continue at their present level, but
willJ of course, add correspondingly to the cost of business to the Government.
Return4ng soldiers are being rapidly and steadily ~bsorbed into business, and the
~roblem which for a time seem/:id. to threaten in this connection is now apparently
minimized in all directions .. From the farming districts particularly comes the
report that the supply of labor is scanty and like~ to prove more so as business
progresses.
Official figures for the month of May now show expprt balances of $277,000,000
ca.nd while this figure is considerably below thd.t of the preceding month, it still
represents an abnorma.lly high balance. EX'forts of manufactur~ . are beginning to
show a. relative increase as compared with shipments of foodstuffs supplied. The
export probleim has assumed greater proportions as a matter of illiWedia.te current
business adJustment 1 cmd the month ~s seen several fdol'-reaching plans for the
financing of exports brought forwd.rd and urged. There has been a somewhat better
development of shipping facilities during the month, and the growth of ou.z trade
with,v~rious countries, which has heretofore suffered fran unsatisfa.ctor.y methods
of communications, bids fair to showing improvement. The export sit~tion is
being watched in n..:a.ny parts of the country and is regarded as a very i.r.l:q)ortant
element in the maintenance of businass. There is, however, less relative anxiety
about it than heretofore 7 on account of the very great growth in the demand for
domestic cowmodities, and the feeling that domestic business should he.ve the
first c~im for attention.
Speculation during the month has reached an unprecedentedly high :point, both
in New York and elsewhere. call money has been quoted as high as 15 per cent,
<i-nd although this level was not long ma.intained, it wa.s taken as em indication
of danger and led to a. reduction in the volume of stock speculation. An 5.nquiry
into the sources of funds for call loans has shown that they a.re widely distri-buted throughout the country, and. that the tendency toward speculation is not
localized, but general. J3a;nkers are watching with particular interest the development of this movement on account of the large re~uirements of the crop
season and the obvious needs for the financing of the export trade.
QOvermuent crMit is in good con<lition, ca.s evidenced by tb.e high and rising
market for Liberty bonds of practically all issues., particularly
Victory notes. Apprehension is expressed in a nuruber of quarters lest bankers
may get into the habit of overlending, and lest the prevailing high prices fo:
real estate and corumodities may result in advances up to Qn unduly great port1.on
of the norfua.l value of the property or security offered.
479
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.A$ the year advances there is some tendency towc;~,rd a. strengthening of rates
in various classes of cawmercial p~er, while both stocks ~d bonds have, in
spite of some reactions on the excha.nge, rear.hed and fairly well maintained
what are considered very high prices as compared with the levels existing during
the war period. No marked movement in r<:~.tes on the whole is evident. In certain
centers, in particular Minneapolis and &.11 Frand.sco, rates in general hd.ve
declined. In other centers a somewhat firmer tone in rates is noted, although
no pronounced instances of general increase in rates are noted. The low rat~for
customera1 comruerci~l paper on the whole have decre~sed, as h<:~.ve to a less marked
extent both low and custoruary ra·~es for cOD:irllercial paper purchased in the open.
market,. The :Board ts weekly figures for check transactions show a marked growth
in the volume of operations, due no doubt to the increase in voluwe of business
and heavy financing which has been in progress.
Removal of the gold embargo bas been a feature of the month ts developments,
and has been followed by moderate shipments of gold which, however, <:~.re zwch
more than offset by gold either ~mported or shortly to be imforted, and whose
early arrival is certain. Foreign exchange has been in wost cases weak ~nd lower
than during the preceding month, franc~ and lir<:~. being in G particularly unfavorable condition. The bQnking situation ~s a whole is regarded as sound, credit
and collections throughout the country being considered unusually good &nd
failures unprecedentedly small and few •
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FEDERAL RESERVE
BOARD
1
WASHINGTON
Confirmation of Telegrpm
July, l, 1919.
X-1602
SUbject}. Leased Wire service.
Morss. Boston
Fancher, Cleveland
Strong, New York
Peple, Richmond
Passmore,Philadelphia Wellborn,Atlanta
McDougal, Chicago Wold.Minneapolis
Biggs, St.Louis
VanZandt,Dallas
Miller, Kansas City Calkins, san.Fran
Favorable replies having been received from all Federal Reserve
Banks to the Boardt s wire of June 27th. "Basis Treasury payzrant
telegraph servicen, commencing July lst Treasury business will
be handled on flat basis of 25% of the total cost of main line
service, each Reserve bank to charge as fiscal agency expense
25% of its pro rata share leased wire cost. Board today approved
report of Governors on leased wire service and effective July 1st
expense of leased wire service will be pro rated between Federal
Reserve Banks on per word cost basis.
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FEDERAL
RESERVE
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~OARD
f
S'I'A..mmENT FOR THE PRESS ..
For immediate
July 2, 1919.
rel~se,
The Federal Reserve Board announces that, owing to
the pressure of personal business, Mr. James E. Zunts
l~s
found it necessary to resign a.s Chairman and Member of the
Board of Directors of the New Orleans Branch of the FeO.erc;-,1
Reserve Bank of Atlanta...
Mr. p. H. Saunders, President of
the Commercial Trust Savings Bank, New Orleans, who is a.t
present a. Director of the New Orleans Branch, bas been a.ppointed Chairman of the Board, and Mr. L .. M# Pool, President
of' the lll.larine Bank and Trust Company-, bas been appointed a
director to fill the vacancy in the board caused by the
resignation of Mr. Zunts.
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FE D·E R A L R E SERVE B 0 A R D
STATEMENT FOR lffiE PRESS
X-1604
To be released for morning
papers, July 1 4, 1919."
The Federal Reserve Bulletin for July was completed and sent to the printer
today. Much of the rratter
conta~ned
in the issue relates to two important
~es
tions which have been before the Board during the month - the problem of export
financing, and the raising of the embargo on gold and foreign exchange. With
reference to the question of export financing, the Board calls attention first
of all to the fact that the oversight and direction of this matter has passed from
the hands of the Government to that of private interests, and must be carried
forward by the latter. As to this the review of the month says:
"With the determination on the part of the Government that it will
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not continue the large participation in export trade financing un-
I
dertaken during the war, but will leave this fi_eld to be developed
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by priv.ate enterprise, our export operations will henceforward call
for the assumption of full responsibility on the part of financiers
and business men who must recognize that the war period in our
foreign business has ended. The war period in exportation comes to
a close when Government support of foreign trade is removed and when
business is left to maintain itself upon its own basis. That such
..
should be the course of development· from now on has for some time
!·,
past been the view of the financial authorities of the Government -
I
a view in which the Federal Reserve Board freely concurs, as indicated
by the decision reached at the conferencesheld during the past month..
The view of the Board is that the matter of providing long-term
advances for Europe presents an investment rather than a banking
problem; that the necessary funds must therefore come from the investment market.
The 9:1-estion how to obtain these funds through an
appeal to investors is, therefore, the
of the moment in connection
After calling
at~ention
w~
483
X-1604
-2irr~ediate
and practical problem
the financing of the
business~"
to the recomnjendation to Congress already announced
sorra tirr.e ago, whereby banks would be permitted to invest
5%
of their capital
and surplus in the securities of export corporations, the Board once more notes
that the purpose of this provision is not primarily that of obtaining funds, but
is merely that of
~f.tordi.ng
en
e~ample
to private investors. The review of the
month then passes to a discussion of the extent to which investors should commit
their resources to the financing of the foreign
~ile
t~de
and says:
the working out and application of financing the plans which
are called for in connection with our export business is thus a
matter to be
dispose~
of by bankers and business men at their ow.n
risk, under such terms and conditions as are desired through nego-
r
tiations with foreign buyers and consumers, the volume and dirijction
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of our export trade is essentially a question in which the American
I
consumer, as well as the local producer and distributor, is vitally
interested. As domestic business has resumed its activity and vitality,
it has become more and more apparent that the supply of commodities
available to the home consumer is becoming relatively reduced as
compared with the demand for them. Already a tendency to advances
in price is obvious, and it is clear that in some cases what is
exported will constitute a deduction
r
which will leave the buyer with
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inade~uate
the total needed supply,
means of rreeting his
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requirements. Excessive shipments of goods therefore signify,
even when buyers abroad are solvent and able to repay the advances
thus made to them at some reasonable date in the future, a deduction
. from home consumption, which will .leave the consumer in the United
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States in a less favorable position than he would otherwise have
The value
been~
o£ our present excess of exports, announced as $277,000,000
x-1604
for May, is still the outgrowth of war conditions, and the abnormal
situation which has succeeded them."
As to the effect of the large exports upon prices the review notes that:
"The export situation is possibly of most direct importance to the
domestic consumer in a way that is very frequently overloOked. This
is in connection with prices, There is a shortage of many essential
materials and corrROdities in the world at large. Increased credit
dewand for goods for export necessarily implies relatively decreased
sup-ply of goods for domestic use. Demand and supply are autbmatically
equalized by changes in price, but such changes in price are, in ·the
circumstances here under consideration, necessarily upward. The dome.stic
consumer, therefore, when aSked to finance export trade, should remember
that the outstanding effect of such financing upon too great a scale
I
would necessarily be the exaggeration of the prices which he himself
must pay for the things he needs. 'This necessarily means, therefore.
that he is in a sense bidding against himself when he enables others
to purchase overfreely with the funds which he has supplied. If a
large export financing process is conducted by banks out of credit,
the result is to place the fluid credit of the country at the disposal of foreigners in purchasing and settling for doll'~stic products
which they obtain from American producers .. The situation is Ql.ite
-
different in its effects from that which exists when domestic investors take u:p. and pay for the commodities b¥ actually turning over
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484
saved funds and withdrawing their own dezrand from the merchandise field.
In this connection it is worth while to recall what is
~eant
Inflation has been defined by the Eoard as the process of
by inflation.
~ing
addi-
tions to credits not based upon a commensurate increase in the pro,.
duction of goods; in other words, not offset by genuine savings, this·
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X-1604
485
process resulting in an increased tendency. toward the bidding up of prices.
It is in order to avoid a recurrence of this menace in the form of
an undue exportation of goods not purchased by a corresponding amount
of savings that the Board has urged that the basis of export credit be
found in the investment rrarket and not at the banks. There is the same
necessary opposition of interest between the domestic and export trade
in such circumstances as that which existed bwtween the needs of the
Government and those of private individuals during the war; and there
is the same argument in favor of the exercise of thrift by domestic
buyers in order that they may provide the saved funds necessary to finance the movement of goods abroad that there was in connection with
the purchase of Government
obli~tions.
It is for this reason that
the amount of export trade securities to be purchased and held by
banks must necessarily be limited to a minimum figure, in order that
there may be no danger of unduly increasing the total amount of such
obligations which find a place in the portfolios of banking establiShments, and which to that extent tend to create the kind of inflation
that resu:J, ts from the purchase and carrying an undue amount of long-term
obligations by institutions which are engaged in providing purchasing
power for current uses.n
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Considerable attention is given to the balance of trade theory, and to the
effect produced upon this view of international relationships by the peculiar
conditions and problems growing out of present
e~ort
trade. On this subject
the review says:·
"The abnormal conditions which exist at the present tirr.e in connection with
our export :comrr.erce are the reverse of those which ordinarily prevail
when trade with-other portions of the world is substantially equal, and
when the
·•balance' that may be found upon one side or the other of the
.. \
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X-1604
• account is small relatiV'ely to the total volume of the business. Under
the latter conditions, goods are imported in somewhat the same proportion as they are exported, ot in other words, the domestic market
obtains a quantity of goods of about the same worth and volume that
it has released. The relations between goods and purchasing power is
thus kept substantially stable, and the financing of export trade has
~~
exactly the same effect as the financing of domestic business-if based
upon actual consumable
corr~odities
which are regularly sold and consumed,
it does not tend to change the normal price level. No
11
export pboblem'!
can then exist. The situation to-day is entirely different since we have
at present relatively litt+e importation into the United States to offset
the great
vol~e
of goods which we are expected to ship abroad.
Inde~d,
our trade with some of the European countries is almost wholly one sided.
In the circumstances existing to-day, an extension of credit for the.
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purpose of purchasing goods for export is to all intents and purposes a
'
loan of capital, and has an effect very similar to the latter. The goods
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we are shipping abroad might have been used at home in productive en-
terprises, but instead they are parted with, presumably for productive
purposes in other countries. This is a transfer of the countryts capital
in the real sense of the term. This entirely changes the financial aspects
of the case, and necessitates a careful
s~dy
of the conditions under
which credit:· is to be extended or capital loaned abroad, as well as
consideration, from the public standpoint, of the extent and degree to
which it is desirable on economic grounds that American citizens Should
provide the funds that are necessary for the continuance of this unprecedented and enormous movement of goods out of the country. The idea of a
balance of trade in which the surplus of exportation is pa,id for in
money and is regarded as beneficial to the people of the country which
obtains such
payment disappears when the result of a continuation of such
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487
trade is obviously that of impairing or destroying the ability of the
consumer at home to provide for his cwn needs. Trade with foreign countries
which results in the actual shipment of goods to the United States, however,
adds to the available supply of
con~able
commodities and so tends to
ease and improve the consumer1 s condition ..~"
The review further indicates that the absolute requirements of export financing
have probably been overestimated in Il'any q,uarters, and that as a matter of
~act
"sorre part of the export demand is likely to disappear as soon as actual
commercial security is required for the protection of shipments. There
is a substantial part of the trade which will provide its own liquidation
if loans are wisely placed abroad. Some commodities will be enabled to move
by the use of the advances which are supplied to foreign borrowers, while
in other cases the loans will permit the completion of manufacturing
operations which
are as yet incomplete, and in which there are in con-
siderable volume goods still remaining :'tied up'·. Wise financing will
thus in many cases serve to furnish its ow.n means of settlement. It is
quite probable, also, that as European countries succeed in reestablishing
themselves, their recovery toward a
self-~pporting
more rapid than has be9!l expected. Far more time is
basis will be much
re~ired
for the
e:x:pendi ture of great sums in the purchase of goods than is generally
comprehended. The war, with its tremendous drain upon the wealth of the
world, is now
o~er,
and expenditures to be made for peace purposes or
for recons.truc tion will require care and patience if they are to yield
returns under competitive business conditions. They can not he overhastily rrade, and this will in itself ease the urgency of the
pres~e
for
export financing. When all these elements have been eliminated there will
remain a very great residue of urgent industrial
re~rements
abroad,
and these it is both economically and otherwise sound and desirable to
488
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finance as promptly and effectively as possible, in order that
fofeign demand for our goods rray be maintained, our markets
conserved, and our general position in world trade protected."
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489
Turning to the cpestion of the gold embargo and the m<?difica.tion of it,
the Board furnishes a statistical review of experience under the embargo as
follows:
ttThe gold embargo bas resulted in t!le issuance by the :Board of a.pproximately 1,1142 licenses for the shj.::pment of $152,3 26,976 of gold.,about
-
1,500 licenses covering $502,756 1 003 of silver, and about 1,817 licenses
covering
$208~170,700
certificates.
of currency other
t~~
United States gold and silver
Same 755 applications of all cla.sses were declined.
The
net movement of gold and silver into and out of the country since approxima.tely the b:eginning of the gold embargo is represented in the following
table;
GOLD AND SILVER IMPORTED INTO AND EXPORrED FROM THE UNITED STATES
DURING THE PERIOD SEPT .. l, 1917, TO MAY 31, 1919._ __
.
.
GOLD
;
.
Imports
Exports
SILVER
Imports
.
:
Exports
Sept.l to Dec.31,1917;$28,293,467;$54,247,766;$26,086,b95;$32,3b2,293
Jan. l to Dec.31,1918: 62,042,748: 41,069,818: 71,375~699:252,846,464
Jan. l to ~y 31,1919: 24,310,573: 14,035,6'{2: 35,510:854:129,497,080
TarAL
:114,646,788:109,353,256:132,973,243:414,705,837
Excess of gold iq>orts over exports since sept. 1 7 1917
$5,293,532
Excess of silver exports over imports since sept. 1,· 1917, $231,732,5S9
-
- - - - - - - -- -- --- - - --- - - -- - - - -- --- --
On the whole, therefore, the effect of the embargo way be
s~id
to
have been that of holding pract.ica.lly intact the net national geld reserve
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this, a.t least, so far as the figures indica.te the
surf~ce
effects. On
the other hand, there is a. large field for inquiry as to the effect of
the embargQ, taken ·by itself, in changing the a.ctua.l a.vaila.ble bi:mk eeserve
supply of both gold and silver.
Whatever · these effects way have been.
they were necessarily more ·or less offset by other influences which were
set at work, chief among them the effort to draw into the ba.nk.s the floating gold supply actually in circulation and in the pockets of the people.
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- 9The situation prod.v.ced in other countries by the e sta.blisbment of the
gold embargo is outlined in the following la.ngua.ge:
"Pending further action by foreign governments, the United States
stands today as practically the only free-gold market in the world,
those neutral nations where no embargo exists being too small in the
scope of their transactions or too limited in the operation of their
banking machinery, to afford
count or gold market.
a~
genuine or well-developed world dis-
Relations between the United States and other
countries are therefore necessarily on a. one-sided basis. This onethe
sided condition is rendered/more peculiar and difficult by reason of the
tremendous merchandise balance oft rade which has been gradually developed.
That merchandise balance for the past three calendar years may be
stated in round numbers a.t about $9,000,000,000. end bids fair to run
at 8omething like the same rate for the current year.
In the following
table are set forth the figures showing the movement of goods between the
the
United States a.ndthe rest oftthe world a.nd/net balance thereof.
MERCHANDISE IMPORTED INTO .AND EXPORrED FROM THE UNITED STATES
DURING THE PERIOD SEPT. 1, 1917, TO MAY 31, 1919 ~
IMPORTS
EXPORTS
EXCESS OF
:EXPORTS OVER
:IMPORTS
S~pt.l
to Dec. 31,1917
Jan. l to Dee. 31,1918
Jan. 1 to May 31,1919
TOTAL
: $1,178~00,400
3,118,087,926
1,81 ,12lt852
"What is thus made evident is tha.t although the United Ste:..tes bas
. become possessed of the greatest single stock of gold in history, it is
now:the cla.~t of the greatest favorable merchandise balance ever before
developed. This bi:i.lanee may be liquidd.ted iil any one of many Wd.YS 1
but in thedbsence of any other liquidation it would of course have to
be paid in gold or remain a.s an open banking or book credit - that is
i o say, · as a. potential claim to gold.. In these circumstances it
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491,
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is clear t~t the United States, while it may lose gold under the· new
regime to any one of
~
nuwber of countries with respect to which its
bal.a.nce may be temporarily unfavorable, or to which for
other rea.sons
a. small movement of gold would naturally set in, it c<:~.n not lose gold
in any considerable c®ounts relatively to its entire business, while such
tend
adverse moveru.ents as nay occur in t rad.e.,.isold.ted countries will
to
correct themselves.
The United States,
in other words, sta.nds today
as an almost irresistibly strong claim:mt of gold, and, but for the
interferences with gold ru.ovements existing abroad, c oulid theoretically
free
draw to itself most of the remaining/ gold of the world. "
The BoC:I.rd a.ga.in calls attention to the speculative situa.tion <:~.nd the need
1
of repressing overspeculation, reiterating its ~rning of a month ago in ..
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the following language:
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"DUring the month of June speculation es continued
although it bas been subJect to many fluctuations.
reached
15 per cent
on a. high level,
On June
16 call money
in New York, and on June lO the Board sent a. letter
to c:l.ll Federal Reserve Agents asking for information concerning the purposes for which funds obtained by rediscounting were being used by n.ember
banks.
This letter was wade· public and one effect of it was apparently
tha.t of leading some bdllks to hesitate about llldking a.p)?lica.tions for
rediscounts where the funds were unq,uestiona.bly intended for purely
speculative purposes.
After the ruieidle of June the volume of specula.tion
on the New York stock exchange was reduced from one-fourth to one-third
for some days, and this lessening of the demand for money naturally
lowered the intensity of the demand for funds which ha.d previously llkotde
itself felt.
The extremel¥ high level of prices for stocks, i;llld for
staple comruodities for which there exists a speculative ~rket, which
~ been
developed in New York and elsewhere, dlld the fact that speculation
492
X-1604
- 11has spread
widely throughout the countty, has undoubtedly had a con-
siderable effect in.irawing heavily upon the available liquid resources
of banks, which at best were none too abundant prior to -the time when
speculation fever became well marked.
It is well to reiterate the fact
that the funds of the Federal Reserve System are in no sense intended
for the support of speculation and that member banks should bear
this in mird when arranging for the extension of accommodation to
borrowers."
After the usual review of business and financial conditions during the
month and the special reports on conditions in the several:. districts, the
July l3ulletin furnishes anesti.Dlate oft he effect of the wa.r on the country's
J
I
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r.
real wealth, which has been prepared Under the direction of the Secretary
of Agriculture as follows:
I
I.. PRODUCTION
(000 omitted)
: Prewar
:a.nn.Ud.l
:average, :
: 1909-1913 : -=1~9.:::_14..:....___:'----=1:.!.9::..15~--=----=1:.!.9:::lb::_----=--..:.1::.!.9.:::.17L..-_.:___..:.l:..!.9.:;.18=--
• .
cereals .• bu. :4,801,000 * 4,9&3,000: 6,011.000: 4,793,000: 5,681,000; 5,508,000
Potatoes. bu.
(sweet & Irish) 41'.-I·.;.<X>O:
466,000:
435,000:
358,000:
526,000:
486.,000
.Meat .•• lb. :
:l5,587,000:l6,721,000:17,S93,000;16,325,000~l9,495,000
Dair.y products:.lb.
a..Fa.ctory butter
786,000:
760,000~
744,000:
793,000
11
b.
cheese
377,000:
315,000:
372,000:
353,0UO
c.condensed milk
875,000:
998,000= 1,354,000: l,o75,000
*Does not include grain sorghums, which
WdS prob~bly
about
100,000~000
bushels.
~l
II.
EXPORTS FOR FISCAL YEARS ENDING JUNE
(000 omitted)
.:::::t
...::>
30.
:· Prewd.r
:: annual
: average ~
: 1910-l 14: 1914
1915
:
1 16 : 1917
1: 18
Cereals ..••..••.. bushels! lb2,000:
19,000: 3~7,000: 318,000
: 517,000:
Med.ts ..•.•..••.• poun~s :1,291,000: :1,500,000:1,828,000! 1, 872,000:2 ,271,000
])a.iry ~roducts: ·
a..Fa.ctory butter
"
4,278: 3,693:
9,851:
13,487:
26,835:
17,736
b.
"
cheese
"
4 1916 : 2 1 427 :
44,394:
66,000:
55.363:
~.331
c , Condensed milk
"
15,774: 16,209:
37,236: 159,600: 259,100: 529,750
·.o
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THE PRODUCTION AND EXPORT FI~S FOR WHEAT FOR THE YEARS INDICATED ARE AS FOLLOWS:
PRODUCTION,
~nnua.1
Prewar
average (1909- 1913)· .••..••.••.• , •...
1915
1916 .
~
1917 ... ' ' .......
It
tl
t
c I
•
tr
•
.,
'
••
t
•
r
t
1918 . •
lf
"
•
•
•
•
t
ll
.....
'
t
•
•
•
"
t
II
II
f
•••••
•
~
c ... '
.... ,.. •
~
t
~
t
#I
t
•
•
t
"
•
..
•
•
•
•
~
•
a
•
c
•
...........
Ill:
'
'4
........
•
-.
'
'
i
•
t
......
'
•••••••
fl
II
,.
e
4.
"'
I
•
•
•
e
II
"
•
a •
•
"
•
4- 9
11
.. •
•
t
•. . . . . . . . . .
~
'
c
e t
••
t
•
•
J
'
•
;,
4
c . . . . . . . " ..
t
•
"
e
•
" •
11>
•
:Bushels.
687,000,000
1,026,000,000
636,300 '000
636,650,000
917,000,000
EXPORTS/ FISCAL YEARS ENDING JUNE 30.
Prewar ~nn~l aver4ge (1910-1914) . .•.....•. ..•.•.•••
105,000,QOO
1915 ·~·····, ..... _.......... , ...... ~ ....... ,, ........ , ... ~.
333,000,000
~............
24J,ooo.ooo
1917 ····~·,••a.••·-· .. ··-······~······· .. ·····~·······•.t
l91B ., ...
<II."'.~ .........
A'...
204,000,000
133 . 000,000
1916 .................... , ...............
I'
•••••
II
'
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_!_· Bank
Federal Reserve__ _ of St. Louis
_ _ _ _____.I..__
--------
..
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..........
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----X-1604
- 13-
l.
i
Results of a study
I
the general subJect of
is also published·..
~e
by a committee of Government
br~nches
e~erts
into
of Aruerican concerns in foreign countries
This has to do with bclrlking bra.nche.s, insurance branches,
trading branches and llJd.nufa.cturing.
continuing the
Bo~rd 1 s
past
stu~ies
of foreign branch conditions, an
analysis is furnished with reference to the operations of the Netherlands
Bank and the Ja.vasche Bank during the wa.r.
Rulings and opinions of Counsel,
and the usual statisticd.l slJLLil:Ui.l.ries are included, a.s well as a special
study of housing and living conditions in New York, J?repared under the
supervision of the Federal Reserve EGnk of New York.
I
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:
494
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CARTER .GLASS
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495
1
W. P, G. HARDING, sovaALBERT STRAUSS, :VIc• lloYIRNOtl
ADOLPH C. MILLER
.
CHARLES S. HAIILIN
EX..()Jri'JCIO MEIIIIIEIII.
Slll:RifARY OF THI TUAIURY
CIWIIIIAN
JOHN SICILTON WILLIAMS
FEDERAL RESERVE BOARD
COIIPTROLLI!R OF THI CURRINCY
J, A, BRODERICK, Slll:RITARY
W, T. CHAPMAN, ASsiSTANT SICRBTARY
W. N. IMLAY, FISCAL MINT
ADDRESS IIIEPLY TO
WASHINGTON
FEDERAL RESERVE BOARD
July
2,1919.
X-1605
SUbject: Appointment of Mr. Emerson, Acting Assistant secretary..
j
I
Dear Sir;
The Federal Reserve Board has appointed Mr. R.. G.
Emerson Acting Assistant secretary, and as such he is
authorized to sign communications on behalf' o£ the Board.
\
Very truly yours,
Seoretaey ..
Letter to
I
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Chair~n
of all Federal Reserve Banks.
r-.
49a····
W. P. G. HARDING, GoVIRNOR
ALBERT STRAUSS, VICE GoVERNOR
ADOLPH C. ·MILLER
CHARLES S. HAMLIN
EX-OFFICIO MEMBERS
CARTER
Gl'liSS''
SECRETARY OF THE TREASURY
CHAIRIIAN
JOHN SKELTON WILLIAMS
CoMPTROLLER OF ·THE CUARENCT
FEDERAL RESERVE BOARD
ADDRESS REPLY TO
WASHINGTON
FEDERAL RESERVE BOAitD
july
Subject:
J. A. BRODERICK, SECRETARY
W. T•.CHAPMAN. ASSISTANT· SECRETARf
W. M. IMLAY, FISCAL AGINT
3,1919 ..
x-l6o7
comnents by Federal Reserve Board in re Report
of Governors of Federal Reserve ~s covering
improvements in Service and Distribution of
· Expenses of Federo:il Reserve ~ased Wire Systeql.
Dear Sir:
The Federal Reserve Board bas approved the report of the Governors
of the Federal Reserve Banks, a c~y of which is enclosed, with re~rd to
improvements in service of the Federal Reserve leased wire system, and suggests
that the recominendations embodied therein be effective July 15th, eccept with
regard to the t~ics discussed below.
I
~
IMPROVEMENr IN SERVICE
Topic (f). Wire transfers of funds·through the Federal Reserve
Banks shall be strictlY limited to those ordering
p~nts or credits to banks or bankees. Direct pay..lliilents by Federal Reserve :Banks to individuals, firms.
or corporations other than banks will not be permitted,
but such transfers can be effected through their banks.
For example: A message requesting one Federal Reserve
_Bank to deposit with another bank a certain sum of
money for the account of a.n iniividua.l, firm, or col'poration, is :proper am will be handled; on the other
hand, a request for a. Federal Reserve :Bank to pay
direct to an individual, firm or corporation other
than a bank or banker, funds over its own counter,
or otherwise, will not be handled.
-
With reference to the above topic (f), it is ~.hfl,,1mdersta.nding of the :Soard
that wire transfers of funds through the Federal Reserve Banks d.nd branches
aJa.y be ordered by member banks only ..
·,]
1
"-----'--~-~----~-~----~------J
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In ·the ex~le quo ted in the report under topic (f) ,
marked .DJDr Example", in a case where a transfer is made from a
member bank t~ough Federal. Reserve Banks to anotherbank for the
~ccount of an individual, firm or corporation the Board believes that
the sending Federal Reserve Barik should accept the transfer from the
member bank with an agreement to the following effect:
l
I
"The liability of the Federal Reserve
Bank is limited solely ~o the proper transfer
· of the funds to the receiving Federal· Reserve
Bank for credit to the account of or for payment to the payee bank. n
'
Topic
(j). A manual outlining the plan of operation of
the system shdl be prepared for the guidance
of operators an.d for the information of others
concerned with the handling of telegrams. This
manual, or set of rules, would embody the general instructions under which we are operating
and it is recozrntended that the Federal Reserve
Bank of Chicago; which is responsible for the
operation of the system, be charged with the
preparation of ~he s~.
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'
The Federal Reserve Bank of Chicago has been ree;uested to prep.ure a. :
manual iri accord.Clnce with the above recommend:.:. tion to be reviewed and
approved by the Board ·and distributed to all the Federal Reserve Banks
for use by persons concerned with the handling of· telegrams over the
leased wires.
Topic (k)
-
Recommended t~t: The Federal Reserve Bank
of Chicago shall. be considered as the managing center of telegraph service of the Federal
Reserve BQOks, and that the Federal Reserve Bosrd
be aSked to issue a letter to t~t effect to the
several Federal Reserve Banks.
The Federal Reserve Board ap}:)roves the above reconmend... tion. All
matters pertaining to the operation of the leased wtres should be
referred to the Federal Reserve B~ of Chicago. All matters of general
policy, as heretofore. will be submitted to the Board for approval~
DISTRIBUTION OF EXPENSES.
The Federal Reserve Board approves the recommendation made
by the Governors that the expense of the system be prorated among the
twelve banks according to the total number of words sent bv t.'l·.:.
b._
t
498
l
during the month~the new method to be effective commencing July l,l919.From that
date each Reserve Bank will keep a d~ily record of the total number of
words sent over the leased wire. The bills rendered, covering business
handled during the month of July, will be based upon the number of words
se~t by each bank~
I
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X-1Go7
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Under an a.rr~ :rgement with the Treasury Department ,Federal Reserve
:Banks were authorized to c~rge 50% of the total main line leased wire
expense as a fiscal agency expense .. This arrangement terminated June 30,
1919. The Board was advised that corrmencing July 1, 1919 1 t);te Treasury
Department would be willing to pay a fla.t rate of 25% of the total :main
line leased wire expense or to pay on a. per wor~ cost basis. GOvernor
McDougal, Chairman of the Leased Wire Commit tee~ recomn.ended that the
Treasury business be handled on a flat basis of 25%. This reconw.endation
was submitted to the Governors of the Federal Reserve Banks by wire,
and all have wired approval to the ....Bo~rd .. According]¥, commencing
July 1, 1919, the Federal Reserve Banks will reimburse themselves on
account of fiscal agency business by cha.rging to the Treasury Department
25% of their prora.ta share of the monthly expense. The War FinanCe
Corporation will continue to reimburse the system for its telegrams at the
Government rate.
Very truly yours,
Governor.
Letternto Governors of all Federal Reserve :Banks.
x-1596
...
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:REPORT OF GOVERNORS OF FEDERAL RESERVE BANKS
TO FEDERAL RESERVE BOARD COVERING RECOMMENDATIONS
FOR I~ROVEMENT IN SERVICE AND DISTRIBUTION OF
EXPENSES OF THE FEDERAL RESERVE LEASED WIRE
SYSTEM.
The comadttee appointed at the recent conference of Governors, to consider
ways and means for improving the leased wire service and to provide, if possible,
a more equitable division of the expense of the system, asked for suggestions
along these lines fraw the Federal Reserve Eanks and the Federal Reserve :Board,
and after considering carefully all suggestions received, respect~ully submits
the following recommendations:
IMPROVEMENT IN SERVICE
(a) Only fast and experienced operators should be employed.
(b) To facilitate prompt routing and delivery of ~essages
received, each message should indicate the department
for whose attention it is intended in the receiving
bank a.nd also the departn.ent in the sending b.mk for
whose attention reply, if any, should be directed.
(c) The custom of using the words "quote, stop, period,"
etc. , should be discontinued through the use of ordinary
punctuation in preparing Oa.PY· for which sy.wbols are
understood by all operators, as per copy attached.
(d) Brevity should be observed in wording telegrarus, and
in no case should the wire be used when the ruails would
serve the s~e purpose. Each office should arrange for
a. careful censorship of all mes.sages sent, with a view
of eliminating unimportant telegrams and unnecessary
words ..
(e) That the wire service of the System shall be lindted
to messages between Federal Reserve Banks, their
branches, and departments of the govern~t.c~ercial
messages 1 and messages dgned by member banks, cannot
be sent over the wires of the System without violation
of the Interstate Commerce Law(f) Wire transt:ers of funds through the Federal Reserve
:Banks shall be strictly limited to those ordering
payments ·Or credits to banks or bankers. Direct
payments bf Federal Reserve Banks to individuals,
firms, or corpora.t ions other than banks will not be
permitted) but such transfers can be effected through
their banks •
For example:
A message requesting one Federal
R~serve
:Bank to deposit with another bank a certain sum of
money for the account. of an individual, firm, or cor-
http://fraser.stlouisfed.org/
poration
Federal Reserve Bank of St. Louis
is proper and will be handled; on the other
499
-2-
X-1596
hc:md, a request for a Fedel"'"l Reserve Bank to pay direct
to an individual, firm, or cor:poration other than a bank
or banker, funds over its own counter, or otherwise, will
not be l:i.andled..
·
(g)
One transfer of funds should constitute a message, for if
several are included, an inaccuracy in the test word delays
them all. The time limit fixed for the acceptance of transfers for current execution should be strictly adhered to except
in extreme cases. This would guarantee that credits would be made
on day of receipt.
(h)
That all telegrams between .Federal Reserve Banks involving
the payment of moneys or tr~sfer of funds shall be identified
by consecutive numbers, one set of such consecutive numbers
to apply to the usssages sent to each other Federal Reserve
:Bank, respectively. That the first word of each weaaage shall
be a code word, indicating the consecutive number of the
message; and t~t the last word of each wessage shall be a
code test word, in determining.which one factor shall be the
consedutive number indicated by the first code word of the
message. Tb.d.t the remaining factors in deterwining the last
test word shall consist of items A,D,E,Fr ca.rd G of the formula
for determining test words now in use between Federal Reserve
Eanks. That as an additional safeguard to the above, the item
A (the correspondent ts index number) shall be changed by the
Federal Reserve Bank on receipt of advice fran the Federal
Reserve :B<:m.k of Chicago, to reach each bG:I.Ilk at least three
days before the change shall became effective. That these
.
a.dvices sbt::i.ll be sent under confidential cover, by registered
mail, addre~sed to the Governors of the respective Federal
Reserve'Ba.nks.
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{i) In the opinion of this €~ittee, the t~e has now come when,
for the protection of Feder~l Reserve :Banks and their mewbers,
a special code system with individual test wards for ea.ch
member should be devised for use with Federal Reserve :Banks
and their members and betwe""' --t Federal Reserve :Banks, at least
in all instructions given blw·«ire involving the transfer or
payment of funds, ·and this Co!llt..J.ttee recOD.li.o.~ends that:
A COI!lll4ittee be appointed by the GOvernors in conference, to
consider and prepare a code that will be comprehensive as to
all matters of transfer af funds, the delivery of securities~
and such other matters as they Illi:J¥ deem ne·cessary••
(J)A manual outlining the pla.n of operation of the System shall
be :prepared for the guidance of operators ani for the information of others concerned with the handling of telegrC:W.~s ..
This manual, or set of rules, would embody the general instructions under which we are operati~g. and it is reco~~-,
that the Feder~l Reserve :Bank of Chicago, which is res:ponsi'b l~
for the operation of the system, be charged with the :prepa.ra
tion of the same.
500
501
• '
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X-1596
(k)
Recomr11end.ed that:
The Federal Reserve ~nk of Chicago shall be considered
as the managing center of the telegraph service of the
Federal Reserve :Ba.nks. a.nd tha.t the Federal Reserve :Board
be asked to issue a letter to that effect to the several
Federal Reserve Banks.
DISTRIBUTION OF EXPENSE
It is recoumend.ed that the expense of the system be prorated among the twelve
banks according to the number of words sent by each b~, instead of according to
the capital stock, the present method. Each bank"would reimburse itself in the
same manner as it now does, by charging one-half of its pro rata to the Treasury
Department as a part of the expense of fiscal agency operations~ The war Finance
Corporation would continue to reimburse the system for its telegrams figured at
government rate.
While the business sent by the Treasury Departruent does not represent one ...
half of the total volume of business sent over the wires, consideration must be
given to .the fact that all overhead expenses of the system, such as office rent,
clerical help. messenger service. etc, are borne by the banks, and only operators'
salaries and wire rental are prorated.
This plan would not only provide a. fairer diviai·on of the ex:pensey but would
t.end. th. rilake the banks exercise more care in eliminating unnecessary words in
sending tele~rams. This ruethod, if adopted, could be made effective without delay •
·,,
.
. The attached reports show (1) the total number ~M classification of words
sent over the leased wires during the week ending .April 12th, (2} the division of
. the expense under the present and proposed plans of distribution.
·,
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502
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X-1596 .
DIVISION OF EXPENSE OF THE LEASED WIRE SYSTEM
Schedule A
The following figures show the percentage of cost borne by each Federal
\
Reserve Bank and the Treasury Departruent (1) under the present plan of distributing cost, i.e. apportioning the total cost a.ruong the twelve banks according to
capital stock, each bank cbarging the Treasury Department with one-half of its
share, cmd. (2) under the proposed pldn, i.e .. , a~portioning the total cost among
the twelve banks according to business done, each bank charging the Treasury
Department as in plan (l)•
~
(~
Percentage paid
under present method
~
Boston
New York
Phila.delpbia.
Cleveland
Richmond
Atlanta.
Chicago
St.Louis
Minneapolis
!Qlnsas City
Dallas
San Francisco
Treasury Department
.0416
.1284
.0465
.0566
.0252
.0195
.0693
.0235
~)
Percentage paid
under proposed methOd
.016
.. 0857
.019
.04o3
.. 0423
.0185
.()566
.04o1
.. 0181
.0229
.0158
.0197
.0391
.0287
.50
.o677
.. 0589
.. 50
Total
Both of the ci.bove plans contemplate that the war Finance corporation will
reimburse the system for business chargeable to. it f1gure4l at government r ... te.
To arrive at the percentages shown under plan (2)• the total number of words
of
sent during the week April 12th by each bank exclusive/ those pertaining to war
Finance Corporation, was used as a basis.
[.
f
503
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X-1596
REPORT BASED ON FIGURES RECEIVED FROM FEDERAL RESERVE
BANKS AND WASHINGTON SHOWING TCJrAL NUMBER AND CLASS!•
FI CAT I ON OF WORDS SENT OVER LEASED WIRE SYSTEM FOR WEEK
ENDING APRIL 12. 1919.
Schedule l3
Bank Business Fisca.l Agent
'"' \
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
st .Louie
Minneapo lie
Kansas City
Dallas
SanFra.ncisco
Washington
Total
/
6,680
37,460
7,570
16,176
16,871.
1,245
23,139
15,934
5l936
98,630
16,994
22,052
41,475
246,212
f28
2.712
War Finance
~
g,184
676
1.481
877
1,511
1,423
1,220
1,026
1,631
804
1,653
1,157
1,426
2, 701
2,914
1,441
3,315
2,382
1 t~37
3,102
1,365
5,528
35! 747
11,~72
"1,653
9,801
20,388
21,208
9,9o6
27,530
20,447
8,177
33,385
19,516
29 ,oo6
89,194
65,326
26,857
338,395
~;3)4
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.. ]28 of total
l3ank business is
Fiscal Agent business .193 " 1t
War Finance Business .0]9 " "
lOo%
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504
X-1596
tEASED WIEE SYMBOLS
Schedule C
i.
PN
I
End
DN
Interrogation
Begin cpote
ex
ca;pital letter
~
End
15
Small letter
~
Begin quote within quote
E5
Not abbreviated
QY
End
HX
Hyphen
ux
-
Dash
QN
.
DX
py
~
Begin parenthesis
Underline. or a.ll Cdops
NX
#
UJ
End of underline or caps
MM
Paragraph
KO
Colon
oso
"
"
t1
"
"
)
or )
%
SI
Semicolon
OUTO)
~
.A;posthophe
Asteris~
KQ
colon follo...;ed by quot.:a.tion
c OII:iil.IQ. dot dash dot dash
KX
Colon, dash
Period dot dot dash dash
indicated by xts
~ot
dot
505
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FEDERAL
RESERVE
BOARD
CONFIJ14ATION OF TELEGRAM ..
SJBJEC'R: call tor Condi ticm Reports,
June 30, 1919.
Curtiss - Boston
Jay
Austin
Wills
- NeW Yo~k
- Philadelphia
-·:Cleveland
Hardy
McCord
Heath
Martin
July 5, 1919.
- Richmond
-Atlanta
- Chicago
- St •. Louis
X-l6o9
Ri~
- Minneapolis
BamsSl' '!" Kansas CitT
Ramsey ~ Dallas
Perrin - $an JTancisc~
Please instruct all membl9r hanks in your district other than ·
report condit:ton on revised form 105 as ot close o£
J~t,~~iness June 30, 1919.. This report shou+d be in your bal.ld~ within ten
· ;.~;-s after receipt o£ eall by reporting bank, Coq>troller is ~g call
·'- ot satJS date. Please acknowledge by wire.
.~n~ banks to
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Hll.BDING.
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506
F E D E R A: L
COPY
R E S E R V E 'B A N K
X-1610
OF NEW YORK.
June 26, 1919.
Dear Sir:
Replying to your favor of the 19th instant, X-1586, on the subject
of the transfer of certain Subtreasury functions to Federal reserve banks, I
am now replying, so far as it is possible to do without an extensive investiga.tion of this whole subject such as might unduly delay a reply, and this let.,,-::
ter represents in general the views held by
~he
officers of the bank.
We all agree that it is desirable that many of the functions now
1.
exercised by the SUbtreasury in New York should be performed by the Federal
ieserve Bank, and that the transfer can be effected in the near future without
t.
inconvenience either to the public or to this bank, provided certain conditions
are deal t•. wi tb, which are referred to later.
2.
(a)
Storage and Custody of Tru.st Funds:
It is agreed in
general that it will be undesirable to transfer the tzust funds: to the Federal reserve banks, and the.method of dealing with them suggested in memorandum X-1586~ appears to be the best ~~d most p~~cticable. with the exception,
however, of the fund of $153,000,000, approximately, held for the redemption
of United States Notes and the retirement of Treasury Notes.
The gold reserve
against the $346~000,000 of United States Notes now outstanding is approximately
\.
45%, without allowanc~ for greenbacks which tnay have been dest:royed and lost
during the last fifty years.
In
our
opinion, the time has arrived when
legislation should be sought from Congress authorizing the Reserve banks to
assume the greenbacks, retire them as ret.:pidly as they come in for redemption
and issue Federal reserve notes in place thereof.
transfer
of
the
gold
reserve .
This would invol,ve a
x-1t.:w
- 2 -
507
to the Federal reserve banksJ and the issue of a Government obligation
to the Reserve banks for the difference between the amou."lt of gol.d and
am.ount of United stat.es p.otes ass'Ull'led.
This suggestion justifies stating
;
'
~uite
fully the objectsto be
gained and the reasons for attempting it:
First, it will result in the consolidation and s:i.Iqllification of
the country's currency.
Second, it will vitalize $153.C00t000 of gold which now, in fact,
does not serve as reserve in our banking system, nor, since the establishment
of the Reserve banks,. does it serve practically any useful purpose except to
exhibit to the country that a gold f1md exista for the redemption of greenbacks
which it is unlikely will ever be presented for
r-
go~d
redemption under the new .
conditions.
Third, it will ultimately retire the debt created during the Civii
War, which in its origin certainly was unsonud, and which has been a bad influence '\ll)on monetary and currency legisl12.t:i.on ever since, and will continue
to be a reminder to the public and to Congress of mcnetary and financial
expediency
My
of an unsound or even destructive nat11i'e.
~ggestion
naturally raises the
thou~~t
that if legislation in
regard to the subtreasuries necessarily involves dealing with trust ful1ds,
~
! ..
this particular trust f'Ulld rri3.Y be dealt with by the method proposed most
naturally and logically because it would simply in.volve the substitution of
one Government obligfttion, namely-, Fed.eral reserve notes, for another Government obligation, to wit, United states notes, behind which there is now held
substantially a similar percentage of reserve.
Should the argument be
advanced that this was an effort by the Reserve batiks to add to their gqld
holdings for purposes of expansion, etc., the an.swer is that the expansion
has already taken
place and this is simply recognition of its existence without
508
..,; 3 -
~·
necessarily increasing itj but, on the other hand, giving opportunity
r •
for
decre~sing
it because of the elastic
~haracter
Of our circUlation,
which we contract upon a fixed gold bas5.s whenever business declines
~nd
contraction .is desirable.
If this OJ?portunity is not availed of to deal with the greenbacks,
it would appear that no S1JbseC:l,uent opportu."l:i ty of as favorable a charac.ter
.
be
could be expected. It would/neoessary.to introduce a bill which would be
greenbaCk legislation and
nothing
~lse,
whereas this will be a part of the
ganeral scheme of dealing with the subtreasuries' trust funds, etc., in a
scientific manner.
The bonds to be issued by the G-overnment should be at a sui table
rate of interest offset by a tax to reduce the cost to the· Government to a
reasonable amount and the profit to the banks ·to such sum as would defray
the expense of managing, printing, etc., of this large volume of small bills.
The Federal Reserve Act provides that the surplus earnings of
the Reserve banks may,. in
t.~e
discretion of the Secretary of the Treasury,
be applied to increasing the gold redemption fu.>''ld bah'-.nd the greenbacks, or
to retiring the Government's debt.
The
e.ff~ct
of this proposal would be
to consolidate those purposes, as the Secretary of the Treasury would apply
the tax payment, which after this year will be quite large, to the repayment
of the bonds held by the Reserve banks, having exactly similar effect to
1~
I
\..
increasing the gold redemption fund.
The history of legislation amending the Federal Reserve Act and
legislation of similar character since the Reserve banks were established
leads me to believe that the time is opportune, and that little
~"lger
of
unsound propositions is to be apprehended if the Secretary of the Treasury
and the Federal Reserve Board are willing to submit definite recommendations
and stand firmly behind them.
x-1t:1o·5o9
- 4-
'
one danger to be apprehended, however, is the charge that we are
eliminating frorn the cutTency the only paper in circulation which is legal
tender.
This is more apparent than real, because the greenbacks are now.
so split into small denominations that their value in a large way for legal
tei'lder purposes is very slight'
I would not hesitate to offset this sug-
gestion with the recommendation that Federa1 reserve notes be made legal
-'.t,
'
tender, or at any rate, failing that, that they be redeemable in gold at
a~
.Federal reserve bank as, with the greenbacks retired, gold coin·would hereafter be· the· only· conveniently available currency for legal tender purposes.
The :Board will doUbtless observe that with this change effected in
our currency the whole currency probiem becomes considerably simplified. The
.
.
.
..
provisions of the Federal Reserve Ac~ for the retirement of National :Bank
notes, together with the almost complete retirement of gold certificates and
the great reduction in the volume of silver certificatea, leaves the bulk of
our circulating medium Federal Reserve notes, with some hope that in time
all paper currency may be consolidated into this one note issue.
I shall
. hope that the policy of the s):stem would conteJllPlate, likewise, the ultimate
.
bank
retirement of Federal reserve/notes~
The :Board•s attention is called to the repo;t of the conference of
governors, dated June 11, 1917, containing, at the foot of page 8, a recommen·
•
•
dation in regard to the retirement of greenbacks, which I believe was unan* .
imously ado.pted by those at the
meeting~
As to gold certificates, they are now quite generally out of circulation; they are not
le~l
tender; and, unless the quality of Federal re-
·serve notes in that respect is changed it appears to us quite probable that .
such demand as arises for gold will. take the form of a demand for ·gold coin
$-
••
rather than gold certificates and that special provision for issues of gold
certificates
such as are called for from time to time could readily be ma.de
:c-161c
- 5~
' irl such a way that they could be issued through the Federal reserve bpnks.
2.
{b)
Distribution of SUbsidiary and.Minot Coins:
We do not
believe that any difficulty will be presented in arranging for the Reserve
Bank at New York to handle the distribution of
tdbsidia~y
and minor coins,
which is now handled by the SUbtreasury of New torki but, inasmuch as the
-.~
establiShment of twelve centres of distribution, in
piac~
of the subtreasuries
and the Denver Mint, will somewhat change the relationship between the banks
and the distributing points, it seems to us to be necessary to wvork out sotne
uniform plan to cover shipping charges which will be rigidly adhered to by
all the Reserve banks, as, otherwise, inaquality of service might result from
the change.
2.
(c)
Exchange of Subsid:i.ary and Minor Coins:
There would seem
to be no difficulty in arranging to take over this function, and I assume
that the Reserve ba.nks will be protected,. if the protection is not already
afforded by existing law, against abrasion losses.
I am not sufficiently familiar with the statutes with regard to
our coinage to be certain that these functions can be exercised in our
ca.paci ty as deposi ta.ry, and I am asking Mr. Curtis to make an investigation
of the statutes in this and other matters relating to the proposed change.
2.
~
(d)
Exchange of Currency:
We are under the impression that
the Federal Reserve Batik of New York is today handling a much larger volume
of currency in its money department than has ever been handled at the SUbtreasury in New YOrk, and there will apparently be no difficulty in enlarging
our organization to handle such additional business as would result from this
consolidation.
The custom of this bank in making shipments of unfit currency
to the Treasury for rederqption is substantially similar to that adopted by
the Subtreasury
2. (e)
investigated
'at New York.
Payment of checks over the counter:
This matter will be
at the Subtreasury, if you will authorize us to discua& the
510
511
- 6-
treasury building. hereafter mentioned.
2.
(f)
Coste:
This heading raises the entire ·subject as to the
relations between the Treasury and the Federal. reserve ba:nks, and I take the
liberty of repeating in t~is letter something which I. believe has already been
submitted in former letters to the Federal Rese.rve :Board or to the Secretary ·
of the Treasury, - With the earnings of the Federal reserve banks now reach-
ing the point where large payment~ of excess ~earnings will shortly be mde to
the Treasury Department, there will be constantly presented the
temptati~
to .
enlarge the functions and ser'ltices of. the Reserve banks both for the Treasury·
i
I·
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.
Department and for the member bmks, and we are most anxious that at no time
the charge can be made that the revenues of the Reserve banks are used in such
a way as to escape the necessity of.going to ·congress for appropriations. In
general we think the principle. should be adopted that the Federal reserve banks
should be reimbursed for the e:x;penses involved in performing their functions
as fiscal· agents, po,ssibly even that a basis of compensation should be arrived
~
•\
l
•
at, the effect of which would be simply to swell the profits of the Reserve
banks, which, \in turn, would result in a greater payment to the Treasury, so
that the principle underlying all the financial affairs of the Government
would apply to the reserve banks, viz., that no· mo~ey may b.e paid out of the
general fund of the United States except under authority of an appropriation ·
"{
act by Congress.
The argument that the cost of the SUbtreasury system is
only $500,000 per
annum..
which can be absorbed out of ~he profits of the
Reserve banks, strikes us generally as contemplating.a violation of a
·- ...•...
---
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----- ----
---------.--------------------,---------~----
512
f
... 1 principle which is so fundamental in our Government as to give occasion
for grave doubt.
2. {g)
Fiscal Agen~
Thia t'pi~ raises a legal cuestion of great
significance to the Reserve ~ariks and to the Treasury.
As depositaries
of the general fund of the Government, our :-elations are those recogr.J.ized.
legally as that _of debtor and· creditor and, as such, our powers are limited
and our functions as an agent practically
nil~
As soon as the Reserve
banks assume duties such as those contel!illated by the transfer of the
business now conducted by the subtreasuries, it makes little difference
whether the banks are regarded as
per::or~uing
thvse f•.mc tions s.s dQ,Posi taries
or as fiscal agents, the facts would. pro'!Jably be found to control, namely,
that we were acting as fiscal agents ar.d.that our duties and re~onsibilities
and liabilities would be determined by that actual relationship rather than
by an assumed relationship of
d~btor
and creditor.
In general, it seems that the Federal reserve banks are able to
perform these duties as fiscal agents jnst as capably, and with j_ust e.s
little liability of loss or inconvenience to the
Government's own officials, 1.-e.,
Assist~~t
Gove~ent
as are the
Treaeurers at the SUbtreasuries,
~
and· our inclination now is to strongly reconmend that any di.stinc'Gion
legal relationship between that of debtor and creditor and depositar,y be
made perfectly clear and it be understood that we are not ~ssuUdng to perform fiscal a.geooy duties as depositaries and endeavoring to c:t·eate
a
fiction which would not stand the test of the courts.
2.
(h)
SUbtreasury Buildings:
The subtreasury building in
New York is a. monument of national iq>ortance.
We would very mu.ch regret,
and believe the people of this city would resist, any
~ffort
either to do
away with the building or to transfer it to some other service of the
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
.
-
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.
513
X-1610
- 8 -
Government than that having to do with the operations cf the Treasury
Department.
Th.e entire building needs renodeling inside, and new vaults
should be constructed.
-
Our suggestion would be that, telq}crarily, when the
transfer is effected, this bui.lding . be turned over to the Reserve bank
for the conduct of the business which can readily be bou.sed in that building,
with provision to be
~~
in our new building for a
t~mporary
transfer of
the business now done in the subtreasury pending the construction of new
vaults and the rearrangement of. the interior, and, when both our new building:
and the subtreasury building are completed and remodeled, the subtreasur,y
building be used by the Reserve bank pez"Ir.anently for such .departments of til$
.
bank, - principally;· I believe, the mcn~::y and coin d-epartments, - as can be
conveniently handled there and and as will· best serve the needs of the bank-
ing community in that congested area.
If that were dona, it would be very
simple to have the clearings effected in that building should arrangements
ever be effected with the clearing ho,ke to h..9.ve thA ¢leal"ings take place
at the ·Reserve bank.
2.
(i) _9C2!!!P,ensa.tion:
Shot'lld. the
ou.gges·t')u~s·1..·.:~der
"Costs" and in the last paragraph, appeE:.:t to be
~:·easible,
the heading
I am under the
1q>ress1on that an &.rrangement could readily be wcrked out· by· which the
subtreasury would remain the prO¥ertl' of the United state~, to be used b)'
the Reserve bank at a fair rental, and the payment of rental. to be considerably offset by an allowance of ex;penses and COII'!Pensation in coniucting
the work of the Treasury•
.,
.
'
.
-
t
514
"' ..
X-1610
- 9 In conclusion, I hope that no legislation is undertaken along
the line of the suggestion contained.in the memorandum accompanying your
letter without a very thorough study of all the statutes of the· Vnited States
bearing on this matter.
If the change is to.be effected, 1 should hope that
it would be thorough going and take pla~e after e. su,fficient lapse of time
to enable us to effect the change Without any inconvenience to any of the
interested parties,
Very truly yours,
(Signed) BENJ.
STRONG
Governor.
Honorable W. P. G. Harding,
Governor, Federal Reserve Board,
Washington, ·n. c.
..
.
..
..
515
·.•
W. P. G. HARDING, GoVERNOR
ALBERT STRAUSS, VICE GoVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
EX-OFFICIO MEMBERS
CARTER GLASS
SECRETARY OF THE TREASURY
'
CHAIRIIAH
JOHN SltELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
FEDERAL RESERVE BOARD
J. A. BRODERICK, SICRITARY
W. T. CHAPMAN, AsSISTANT SICRITAIT
W. ~·IMLAY, FISCAL AGENT
ADDRESS RIEPLY TO
WASHINGTON
FEDERAL RESERVE BOARD
July
9., 1919.
X-1611
•
SUBJECT: Telegraphic Charges.
Dear Sir:
The attention of the 'Board has been directed to the fact
that .there is no uniform policy_ in regard to the payment of charges
on ·telegrams addressed to Federal Reserve .Agen·ts by member banks and
managers of clearing houses reporting figures which are used. by the
Board in it; weekly published statemento.
The .following practice is suggested ~d the Board requests
that you so ad•rise reporting member bankc and ms.na.gers of clearing
houses in your dist1•ict~
All telegrams furnishing information with regard to the
weekly reports requested by the Federal ReserVe Board should be addressed to the Federal Reserve Agent and sent collect with a notation
on the telegr~ as quotao. in example below:
"Official. business~ Go'ltfn:·nment ra\;63.
Charge Federal Reserve .Agent, 11'ede:ra.:t.
Reserve Bank,. Boston, Ma~s .. 1'1
The Federal Reserve Banks will, of C'-'Urr;e,
continue to bear the cost of these messages.
-
'
••
a13
heretofore,
Kindly acknowledge receipt.
Very truly yours,
Assistant Secretary.
LETTER SENT TO ALL FEDERAL RESERVE AGENTS.
516.
X-1612.
FEDERAL
BOARD
STATE'\.ffi:'NT FOB TRW. PRESS.
For in:n.edie, te release,
July 9, 1919.
The Federal Reserve Board calls attention to the following
facts:
The March installment of income and profits taxes (deposits
from March 10 to March 24, inclusive) which aggregated $1,035,993,534,
had been prepared for by the Treasury through the issue of certificates of indebtedness, maturing March 15th and acceptable on that
date in payment of taxes, to the amount of $834,000,000, and this
r
payment was handled without dbturbance in the money market.
I
•'-.
•
FOr
the June instalLr.ent of income and profits tax payments 0depoeits
I
from June 1,0 to June 24, ·inclusive), the amount of which aggregated
$903,586,676.77, the Treasury mad made even greater lJre!l.sration..
The aggregate amount of certificates of indebtedness of all issues
which matured on June 16th and 17th was $1,018,885,000, and the
Treasury had on June 9th announced its readiness to make payment of
these certificates before ~aturity and as well of $491,4o7,000 of
•
'
..
RESERVE
certificates maturing July 1, at the option of the holder.
aggregate a:mou.'"lt of Treasury
certif~cates
The
of indebtedness affected
by this option of redemption before maturity was $1,510,292,000, yet
the total amount of certificates actually redeerr.ed before June 16th
was only $153,191,500, or 10.1% of such aggregate.
'
evident
t~~t
Thus it is
the banking institutions of the country preferred to keep
-I
1
J
..
2
I
investe~
their funds
in
Tre~sury
517
X-1612
certificQtes
be~rinb
interest
~t 4~
rather t~n to td.ke ci.dva.ntd.ge of much higher ra.tes on stoch. colkterd.l.
It is, therefore, apparent
· that the :re1-e.:a.ted flurries in t11e c .... ll ,J,..oney ,J.J<,.l.rJ.ret
.~::- ri.l:o.:Lri ly r~ot
in the first half of June clre to be d. tt ri but ea.
-
tax paywents of that month but to the
March
tax pa.~ent
consequent
Uj?on
f~ct t~t
in the
to tile
~erioa
since the
there bad been a. great expansion of the loan account
a continuous speculation for a. rise in stocks and th.J.t
the bQnkers of the country, partly influenced perhaps by the warning of
the Federal Reserve :Bocird, :freferred to keep their credit resources
avd.ila.ble for the requirements of the Government a.nd of commerce and
industry rather
I
,
t~
to devote still further sums to the supfOrt of
such speculation.
Regrettable as they
money on stock
of
fi~nctng
si sted in.
~y
collc:~.teral
be, such flurries in the rates for call
are inevitd.ble so long as
and settling speculative
trc:~.nsactions
~he
present methOds
in stocks are per-
AS things are now, they cd.n be gUcirded i;i.ga.ins t only by such
methOds as were adopted during the war, providing a reason.:a.ble supply of
credit for carrying stocks but, contrariwise, td.king effective mea.aures
to prevent undue specul<;l.tion or expg.nsion of t11e loan account, but it ••ou.lu..
be in every way undesirable and
such
unfort~te
to
~erpetUdte
in
~e~co
ttwes
~rbitrclry rue~sures.
It is not the function of the Trea.sury nor of the
Fvei~r.;J,l R~sv!"?"C
:Banks or the banking institutions of the country to provide cheap money
for stock speculation and the Board feels that the reflex action of the
rates for call money on stock collateral upon the Government's financial
program and the requirements of commerce and industry has greatly decreased, (as, indeed, was evidenced by the small redemptions of Treasury
certificates
notwithstanding high call money rates and the relatively
o
- ..
I •
-3-
X-1612
'
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'
~1
•£feet upon the rates for comnercial borrowings) and will
continue to decrease as it becomes better and better understood
that the true function of the banking institutions of the country
and of the Federal Reserve System, acting in their aid,is, subject to
the temporary requirements of the Government, to finunce comnerce and
industry.
Only those banking institutions which ~dhere to this policy are
performing their true function and are being wisely and
conservatively handled in the real interest of their stoCkholders
and the public.
The demands for credit for stock speculation must
yield precedence to these prior demands, and the rates for stoclt
speculation ruling from time to time, however erratic, can have no
permanent effect upon the rates for Governmental and corraercial and
industrial purposes.
To have definitely established the fact that there is no
necessary connection between rates for speculative purposes and for
comrr.ercial transactions is in itself an important development.
I
~.
518
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...
·~·
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...~
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519
W. P. G. HARDING, GDHINOR
ALBERT STRAUSS, VJCI GCIV-R
ADOLPH C. MILLER
CHARLES S. HAMLIN
EX-OFFICIO MI!M.EIOIS
-"'• .-rCARTER GLASS
SICRITARY OF THE TREASURY
CHAIRIIAN
JOHN SKELTON WILLIAMS
FEDERAL RESERVE BOARD
COIIPTROUER OF THE CURRENCY
J, A. BRODERICK, SICRITARY
W. T. CHAPMAN, ASsiSTANY SICRITARY
W. M. IMLAY, FISCAL AGENT
TO
FEDERAL RESERVE BOARD
ADDREU IOIIIPLY
WASHINGTON
J:ulJ 10, 1919.
X-1613
~JECT: Code massages to be used .in redise~t
·transactions between Federal Reserve Banks.
Dear Sir:
Ih view of the large number ot rediscount tr~saetions
between Federal Reserve Banks and the mcessit;r that .they be c-Onsummated. quickly, and also in order t~ relieve some of the cOngestion·
on the leas&d wires, the Board suggeats the ute of the f'oliowing code
mea sages,_.· effeetite JUly 21; 1919:
1b
ta.)
--
be sent bt the bank wi8hing .to rediscount,
to
the
~oard:
CODE 'PORD:
CEN'l'ER . • • .. Pl.ea.se arrarige for this bank t~ed.iseo\'lllt (eta. !!!) (12.a_QOO .ooo)
· member bank protduoey notes secured by Goverr..ment
· obligations maturing <1l...!E. 15.1. de.;ys. Gold Settlement
FUnd transfer.
·
To be sent by the Board to the
(b)
bd:
Board. has requested (~:.8::~9.~1{2) radisoa'.mt fer your bank
( da.te) (j2.000.::0JOj member bank promisscry notes secured
by Government obligations ma.turi"'lg (!}. to 15) days rate
(.see, code &"!en bel~). Gold Settleme:lt :s'and tr~sfer.
Please arrange details direct..
TEMPER
(c)
red.:tscO\mti~g
To be sent by the Board. to the discounting ·bar.Jr:
TANNEB .•••• Board requests you:, bank to discou."'lt for (~laP. H.§..!~)
( i2, 000 3 000) member bank promissory noyes secure. d. b.Y
Qoverrmtent ob1.1gat1ons maturing (lU!!...l5J. ®ys · ra.te
(see code given belt)W), Gold settlemer1t Fund ·t:tan1:1fer.
Please arrange details direct.
l.
'
'
520
-
X_,c,.·..,q
!'
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- 2 -
{d)
.1
..........
To be sent by the discounting bank to the rediscounting ban1r:
RAMMER .•..• In accordance with request of the Federal Reserve Board we
shall be pleased to discount for your bank (dat~) (j5_,000,000)
member bank promissory notes secured by Government cbligations maturing (11 to 15) days rate (~ code given belo!)•
Please deposit paper wi. th ]'ederal Reserve Agent of your bank
for account Federal Reserve Agent this bank and have him
wire our Agent acknowledging r.ec~ipt of bills and collateral.
Wire details reporting separately amount secured by certificates of indebtedness and amou.~t secured by Liberty bonds
and Victory notes; also please forward schedules. Payment
will be made through Gold Settlement Fund direct transfer.
(e)
To be sent by the Agent of the rediscounting bank to the Agent
of the discounting bank:
PAMPER ••••• I have received from the Federal Reserve Bank of (Dallas)
( $5,000 ,000) member bank prorni ssory notes secv.red by- Government obligations maturi:ng (11 to 15) days rate (~U9de
given below) and am hold.i41g sa.II!e in trust for you for account of Federal Reserve :Sank of (Qhice.g.2) which bank is
discounting above p~fer. Detail figures and schedules will
follow;
(f)
To be sent by discounting bank to Board:
HANGER ••••• , In accordance with BoardT s request we will discount .for
(Dallas) (t)...a.900 . 00CH member bank promissory notes
secured by Gov6rrl.Ulent obli.gat!ons maturing (_11 to 151
days at rate (.~ee coc;i§_
_g:Lven belo'!!).. We are arx·anging
details direct with (L~~:~~E)· We are making Gold Settlement Fund transfer (C!a!.,~).
·
·
TINDER ••••• Four per cent on paper se~urecl. b) certificates of indebtedness and four and one-qua~ter per cent on paper secuxed by
Liberty bonds or Victory notes.
Kindly acknowledge receipt.
I
Very truly yours,
I
I
I
Secretary.
I
LETTER SENT 'It> CHAIBMAN OF .ALL BANKS
-
521
W. P. G. HARDING, Go::RNOR
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. BRODERIC~ETARY
W. T. CHAPMAN, ASSISTANT SECRETARY
W. M. IMLAY, FISCAL AGENT
ADDRESS REPLY TO
WASHINGTON
FEDERAL RESERVE BOARD
July 10, 1919.
X-1514
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SUBJECT: Campaign 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 June 28th, asking
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for information regarding the progress of the campaign
being conducted for the establishment of new par points.
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In addition there is also enclosed a special
report showing nonmember banks not on par list distrfbw4:ed
by States according to Federal ?eserve Dlstr:ictz.
Very truly yours,
Assistant secreta,..y.
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Enclosure,.
LETTER SENT TO ALL CHAI BMAN•
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X-1614-a.
lfJ
CAMPAIGN FOR NEW PP..R POINTS
REPORT OF FEDERAL RESERVE BANKS .JUN:H.: 30. 1919.
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Federal
Reserve
Bank of
:
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National - State
Total : Nonmember: ~atio of nonmember
: No~ of Banks !. No. of Banks :
.
: Banks in : Bank
: Member : Banks on
Banks on Far List to : added. to Par : ad<'!:~;~.e-·~n pa.:District : Members : Banks : Par List
total nonmember banks
:
List. duriag : Llst since
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:
Ju.nfl 1<,21~.
: Jan. 121919 ·in dist:t":i'"'t
.
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%
No. of nonmember banks :
not, CU..t
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PQ:x· List
Total No.
nonmember
banks in
District
34
~27
243
100
243
New York
393
625.
107
732
319
100
319
Philadelphia
632
36
668
407
100
Cleveland
745
80
825
833
Rich:nqnd
530
l.,l2
572
Atlanta
366
58
424
Chicago
1.047
305
St. Louis
468
Minneapolis
Boston
407
51
70
76.1
62
155
261
1~094
339
23.8
4o
65
1,083
1,422
319
20.0
23
69
1,276
1,595
1,352
3,035
72.9
27
655
17131
4,166
52
520
1, 560
6o.4
137
530
1,023
2,583
811
15
886
1,308
45 .. 8
17
144
1,546
2,854
Kansas City
971
31
1,002
2,292
70.6
19
111
953
3,245
Dallas
628
113
741
323
26.8
22
150
883
1,206
San Francisco
567
103
670
910
85.6
3
- 1
153
1,063
7,783
1,036
8.819
11,888
58~9
4ol
1,949
8,309
20,197
TOTAL
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FEDERAL RESERVE BOARD
WASHINGTON
July 10, 1919.
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523
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. X-1616
A
B I L L .
TO AMEND THE ACT APPROVED DECEMBER 23, 1913,
KNOWN AS
. THE FEDERAL RESERVE ACT.
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l3E IT ENACTED BY THE SENATE AND HOUSE OF REPRESENTATIVES
OF THE Ut'IITED STATES OF AMERICA IN CONGRESS ASSEMBLED, That
·the Act approved December 23, 1913, known.as the Federal ~e-·
serve Act, as amended, be ·further amended by adding a new section as follows:
BANKING CORPORATIONS
.AUTHOE.~
TO DO FOREIGN :JMNK!NG
BUSI1\"ESS.
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section 25 {a): Corporations to be organized for the ~urp9se
of engaging principally in international or foreign banking or
other financial operations, or banking or other financial operations in a de~ndency or insular possession of the United
States, either directly or through the agsncy, ownership, or
control of local institutions in foreign countriGs, or in such
dependencies or insular possessions as 1•rovided by this· section, and to act when required as fiscal agents of the United
States, may be formed by any ntunb"'r of natur.al persons, not
less in any case than five.
SUch persons shall enter into articles of association
'JIIhich shall specify in general terms the objects for which the
association is formed and may contain any other provisions not
inconsistent with law which the association may see fit to
adopt for the regulations of its business and the conduct of
its affairs.
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~ch articles of association shall be signed by all of the
persons intending to ).Jarticil>ate in the organization of the
co~oration and, thereafter, shall be forwarded to the Federal
Reserve Board and shall be filed and preserved in its office.
The persons signing the said articles of association shall, under their hands, make an organization certificate which Shall
specifically state;
First: The name assumed by such corporation, which shall
be subject to the ayjJroval of the Federal Reserve Board.
Second:
The }!lace or places where its operations are to
be carried on.
Third: The place in the United States where its home office is to be located.
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X-1616
Fourth: The amount of its capital stock and the number
of shares into which the sarr~ shall be divided.
Fifth: The names and places of business or residence
of the ~ersons executing the certificate and the number of
shares to which each has subscribed.
Sixth: The fact that the certificate is made to enable
the IJersons subscribing the same, and all other l'ersons,
firms, companies and cor:r.orations, who or which may thereafter subscribe to or ~urchase shares of the capital stock
of such corporation, to avail themselves of the advantages
of this Section.
The ~ersons signing the organization certificate shall
duly acknowledge the execution thereof before a judge of
some court of record or notary public, who shall certify
thereto under the seal of such court or notary and, thereafter, the certificate shall be forwarded to the Federal
Reserve Board to be filed and preserved in its office.
~on duly making and filing articles of assoc~ation and an
organization certificate the association shall become and
be a body corporate, and, as such, and in the name designated therein, shall have :)ower under such conditions and
regulations as the Federal Reserve Board may ~rescribe to
adopt and use a cor1;orate seal which rna; be changed at the
pleasure of its board of directors; to have succession for
a ~eriod of twenty years unless sooner dissolved by an Act
of Congress or unless its franchises become forfeited by
some violation of law; to make contracts; to sue and be
sued, coJIUJlain and defend in any court of law or equity;,
to elect or all}}Oint directors, a. wajority of whow shall be
citizens of the United States; and, by its board of directors, to appoint such officers and employees as may be
deemed proper, define th~ir authority and duties, re~uire
bonds of them and fix the penalty thereof; dismiss ~ch
officers or e~loyees , or any thereof, at pleasure, and
a.:•llOint others to fill their ;places; to prescribe, by its
board of directors,by-laws not inconsistent with law or
with the regulations of the Federal Reserve Board regulating the manner in which its stock shall be tr~sferred,
its directors elected or apvointed, its officers and employees appointed, its property transferred, and the
privileges granted to it by law exercised and enjoyed.
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Each
eorpor~tion
so
org~ized s~ll ~lso
have power:
(a) Tm purchase, sell, discount ~nd negotiate notes, drafts,
checks, bills of exc~nge, ~ccept~nces, including b~nkers 1 accept~nces, ~ble transfers ~d other evidences of indebtedness; to
purchase ~ sell securities, including the oblig~tions of the
United St~tes or of ~y St~te thereof; to ~ccapt bills or dr~fts
dr~wn upon it subject to such limit~tions ~nd restrictions
~s the Federal Reserve Bo~rd may tmpose; to issue letters of
credit; to purchas~ ~nd sell, exch~nge,· coin~ bullion; to
borrow' .:3.nd to lend money on re~l or person~l security; to receive
deposits; and gener~lly to exercise such powers as ~re incident~l
to the powers ·conferred by this act or ~s ~Y be usu~l in co.n·nection with the transaction of the business of bc:mlting or other
financial operations in the countries, colonies, dependencies, or
possessions in which it s~ll tr~nsact business.
(b) To establish ~nd m.:3.int.:3.in for the tr~s~tion of its
business branches or ~gencies in foreign co1mtries, ti:leir dependencies or colonies and in the dependencies or insular possessions
of the United States, at such places as ~Y be approved by the
Federal Reserve Board ~d under such rules ~nd regul~tions ~s it
may prescribe; ~nd to establish and maintain such ~ditio~l
br~nches or agencies as the Feder.:3.l Reserve Bo~rd ~Y from tirue to
t~e authorize even in countries or dependencies not specified in
the original organization certifica~e.
(c) With the consent of the Feder..:il Resenr8 Bo...1.rd to
and hold stock or other certificates of ownership
in any other co~oration org~ized under the provisions of this
section, or under the laws of any foreign country or ~ colony
or dependency thereof, or under the ~ws of any State, dependency
or insular possession of the United States, not tr..:ins~cting
business in the United States 7 except such as in the JUd~ent
of the Federal Reserve Board may be incidental to its inter~tian
al or foreign business; provided 1 however, that without the consent of the Federal Reserve Board, no corpor~tion orgQnized hereunder slull invest in any one corpor.J.tion an .J.Inount in excess of
ten per centum of its own capit~l and surplus.
The provisions of
purch~se
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Section 1 of the Act ;l.pproved October 15, 1914, entitled WAn Act
to Supplement Existing taws ~~inst unlawful restraints and
monopolies and for other purposes," shall not ~pply to corporations or to officers, directors or employees of corporations
. "'•r.~bed under this section ..
(d) Corpor~tion~ organized under authority of this section
may be granted perrission by the Feder~l Reserve ~~rd to exercise
~Y or ~11 of the powers specified in section ll(k) of the Feder~l
Reserve Act in so· far as the exercise of s~id power rw.y be
necessary in the conduct of the foreign or internatio~l business
eng~ged in by such corporations~
No corporation organized under this section shall c~rry
on ~ny part of its business in the United States except such as,
in the judgment of the Federal Reserve Bo~rd, shall be incidental to its international or foreign business; and provided further
that except such as is incidental and preliminary to its organiz~
tion no such corporation sh~ll exercise any of the powers conG
ferred by this sectiQn until it has been duly authorized by the
Federal Reserve Board to commence businass as ~ corpor~tion org~n
ized under the provisions of this Section.
No corporation shall be organized u...-'lder the provisions of
this section with a capital stock of less th.J.n two ruiJ.lion dollars,
one quarter of which must be paid in before the corpord.th'n m.;:~.y be
authorized to begin business. The capital stock of ~ny such corporation may be increased at any ti~et with the approval of the
Federal Reserve Board» by a vote of two-thirds of its sh~reholders, or by unanimous consent in writing of the shareholdera without ·
a meeting and without a formal vote;and may be reduced in like ~art
provided that, in no event, shall it be iess than two willian doll~rsA majority of the shares of the ea.pital stock of .my such
corporation shall be held .and owned by citizens of the United
States, by corporations ~har~$red under the laws of the United
States or of a State of the United states or by firms or comp~ies,
th~ controlling interest in which is owned by the citizens of the
Un1ted States or of ~ st~te thereof. The provisions of section ei~ht
of. the Act approved October 15, 1914, entitled 11 .An Act to Supplement
Ex1sting Laws ~g~inst unlawful Restraints and Monopolies, and for
other pnrposes," shall not be construed to apply to the directors,
other officers, ~gents} or employees of ~orpor~tions org~nized under
the provisions of this section.
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Sbareholders in ..1.n:r corporation organized under t:te prov~s1ons of this
section shc:cll not be :!.i~ble for tl:.e contracts, ·iebts rend en;-;a-:c.::ents of such
cor~oration except to tl·e extent of their unpuid stocl: subscri_;_:>tions.
Any
member bank ~Jay act c.:..s ~-<~ent for any corporation erg<:mized unier the ;:Jrovisions of this section for the pur:?ose of dealing ni th any Federal resorYe
bc:..n.l.r .i.nd tl1e Federal Reserve Eou.rd shall es ta·~usl:J c:..nd pror.m.lgate ru.les &.nd
regul&.tions defining <.Uld ;:::overning transactions whic:l corporations organized
hereunder may have ''it}~ Federal reserve banks, either directly or through
the agency of a r.:.e;:.1ber burl::. No suc~1 corporc.:..tion, ho"tever, shall becor.Je a
mer:cer of any Federal reserve bn.:nl::.
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Should c..ny corporation orgc...nized llsreunder fE~-il to cooplzr ~-.rith any
of t:~e ·.3rovisions of the laws of t1Je United States) all of its rightst
privileges ~nd franchises derived herefroD r::d.~" thereb? be forfeited. Be fore any such corporation sl~ll be declu.red dissolved, or its rights,
privileges and franchises forfeited, uny noncoopliu.nce nith, or violation
of s....,_ch le:..ws sl>..all, ho,rever, be deter:llned ar..d ad,judged by a court o! the
United States of coopetent ,iurisdiction: in a suit brought for that pur pose in the district or territorz;• in nhicl'. the haDe office of such corporation is located, which suit shall be brought by the United States at the
inst~nce of the FeC!.eri!.l Reserve .:Board.
Upon ad,iudicD-tion of such noncocpli•
a.nce or violation, each director u.nd officer r1ho ?U.rtieipatod ~n, or ass'ented to, the illegal act or acts, sl>~ll be liable in his personal~r in.
di vidual eapaci ty for a.ll d.ar:~ages nhich the s .... id corporation shail have
sus ta.i ned in consequence thereof. No dissolution shall take at.,ay o·r impair
any remedy against the corporc.tion, its stockholders or officers for any liability or penalty previously incurred •
.Any such corpor.:..tion my go into volunt<lry liq,nida.tion and be
closed by a vote of its s11£Lreholders owning trro- thirds of its s took ..
ruenever the Federal Reserve Board shall becooe satisfied of the
insolvency of any such corporation, it r:ay appoint a receiver who shall
take possession of all of the property and assets of the corporation and
~ercise the sat:e rights} privileges, powers c..nd authorit~r \7itl1 respect
thareto as are now exercised by receivers of national ba.nl::s appointed by
the Comptrollar of the Currency of the United. States; provi((,ed, however,
that the assets of the corporation subject to the laws of other countries
or _.;-g.r;Lsdictions shall be dea.lt with in accordi..nce with· the tert1S of such
laws.
Every corpor~tion or&w.nized under the provisions of this section
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shall hold a meeting of its stockholders annually upon a date fixed
in its by-laws, such meeting to be held at its horne office in the United
States. Every such corporation shall keep at its home office books containing the names of all stocYJlolders thereof, and the naoes and addresses
of the members of its board of directors, together with copies of all reports made by it to the Federal Reserve Board. Every such corporation
shall make reports to the Federal Reserve Board at such times and in such
form as it may require; and shall be subject to exnoinatio:m whenever
deemed necessary bW the Federal Reserve Board by e~iners appointed by
the Federal Reserv~ Board, the cost of such exaoinations) including the
compensation of the e~ners, to be fixed by the Federal Reserve Board
and to be paid by the corporation examined.
July II. I9I9.
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529
W. P. &. HARDIN&, GOYIRIIOR
KX OPPICIO MKM8KIIt8
ALBERT STRAUSS, VICI GOVIRNOR
ADOLPH C, MILLER
CARTER GLASS
IICRITARY
_C:H.,._RLE~ S•_HAIILIN
or THI~I'HUitY
CHAIR II AN
FEDERAL RESERVE BOARD
JOHN SKELTON WILLIAMS
COMPTROLLER
or THE
CURRINCY
J, A. BRODERICK,
W. T. CHAPMAN,
ADDR91111M~O
WASHINGTON
July l2 ?
SUBJECT!
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by the
1919
Postage on currency shi,Pments.
The following letter was received toddy
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from Postmaster M.
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Chance of the
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Washington City Post Office, and in accordance with
his request, we are advising
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~o!M1..1:' ftESERVE BOARD
De-u- Sir:
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SICRITARY
ASSI~TA.NT SECRETARY
" W. M. IMLAY, FISCAL AGENT
the Federal ~eserve
"This office has recei ve.d complaints
from some of the Feder~l Reser~e ]&nks on ~ccount
of what they ci.ppear to think wa.s an undercharge
in the post.:':l.ge on shipments of cl.4rrency. These
b~nks have failed to t:;~.ke into consideration the
fact that there was cl. reduction in first-class
postage rates, effective July l, fr~ 3¢ an ounce
to 2¢ an ounce. !f you will be good enough to
infonD the various branch banks to this effect,
it will eliminate unnecessary correspondence."
Very truly yours •
ASsistant Secretary •
530
W. P. G, HARDING, GOYIIROI
ALBERT STRAUSS, YICI IIOYIRROI
ADoLPH C. JIILLIR
CHARLES S, HAJILIN
CARTER GLASS
IICRITAIY OP THI TRIAIURY
CHAIRMAN
FEDERAL RESERVE BOARD
JOHN SKELTON WILLIAIIB
COMPTROLi.IR OP THE CURRINCY
J. A. BRODERICK, SICRITARY
W. T. CHAPMAN, AsSISTANT SECRETARY
W.II.IMLA.Y, FIICALAGINT
ADDRI:88 RI:PL.Y TO
WASHINGTON
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FI:DIERAJ. REBIERVB BOARD
July
15, · 1919 ..
X-1618
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SUBJECT!
DecJ.r
Officers ~ Employees of Federal Reserve
Authorized to EXamine Member Banks •
~ks
Sir~
In order to check the records of this office,
pled.se send at your earliest" convenience, the inforna.t ion
requested below.
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l.
Names of examiners ;;;~.pproved by your b.:a.nk and
approved by the Federal Reserve Board. ·
2.
List of other officers or employees who have
been desi~ted as special e~iners with
the approval of the Federal Reserve Board,
....nd. who are now authorized ·to examine or to
assist in the. e.xarui:na.tion of
(a)
Banks applying for membership
(b)
State
or to
Mem~er
Banks
credit investigations or.
of Nationc.t.l or Ste;a.te Member l:l.mk:S ..
~ke speci~l
e~na.tions
Kindly acknowledge receipt.
very truly yours,
Assistant secretary.
LETTER SENT TO ALL CHAIRMAN.
b
W. P. G. HARDING. GIQYIRNOR
OPPICIO MaM.KR8
ALBERT STIIAUSI, VICI GIOVIRNOR
ADOLPH C. IIILLIR
CHARLES S. HAll LIN
CARTER GILASS
I&CIITARY OP THI TRI.AIURY
CHAIRIIA.N
JOHN SKELTON WILLIAIIS
COIIIPTIOLLIR OP THI CURRENCY
FEDERAL RESERVE BOARD
J. A. BRODERICK, SECRETARY
W. T; CHAPMAN. ASSISTANT SECRETARY
W. M.IIILAY, FtiCALAc;EN1'
ADDRaSS RaPLY TO
WASHINGTON
FEDERAl. RESERVE BOARD
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July 15,
1919~
X-1619
SUBJECT: List of Employees of the War savings organization
as of August l, 1919 ..
Dear Sir:
In view of the fact that the wa.r Savings Organization
is conduct.ed under the supervision of the officers of the Federal
Reserve ~nks and that it is likely to becon:e ~ perw.ment division
of the )ederal Reserve ~~ks 1 you are requested to sub~t to the
Federal Reserve Board, Gl.S of AUgust l, 1919, a. cai~>lete list of
employees, giving the following data:
na.te of employment
Name
Position
Present annw.l sa.la.ry
You are also requested to ~vise the ~~rd of ~11
proposed a.d.)ustments in sala.ries in the s.we ~r as outlined in the ~card ts circular X-1561, dated June 2, 1919 •
Kindly acknowledge receipt.
very truly yours,
GOvernor.
UTTER TO GOVERNORS AND COPY TO CHAIRMAN OF ALL l3.ANRS
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BOARD
Statement for the press
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July 16 • 1919
For
immed~te
release July 16,1919
The
of Mr·
H~rrison
Feder~l
Reserve
Feder~l
deceased.
Qnnounces the
Nesbit. President of the
Pittsburg, Pennsylvania,
the
Bo~rd
Reserve
B~nk
~s ~
of
B~nk
~ppointment
of Pittsburg, N•A•
Director of the Pittsburg Bronch of
Cleve~nd,
to succeed
Mr~
T·
~rt
Given,
FEDERAL
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X-1622
Confirma.tion of Telegram
July
SUBJECT:
A.rg~tine
17, 1919
deposit accOunt
We are advised by the Federal Reserve :Bank of New York that
transfer wUl be made through the GOld Settlement Fund covering
your allotment of the Argentine Government deuosit account.
.
This allotment should be entered under liabilities, Form 34,
·code word CERE acc.P:Jmt "Fo:rei~ GOvernment Credi ts•~ _
Nota.t1on, lioweter, anoU.l.d. '6e maa.e on ledger record tnat the
account is "Du.e to the Federal Reserve .Bank of New York,
Foreign Agency Acco"UJ}t"• In the press statement issued by
l'OUi" ba.nk the aocount shOUld be· included under the heading
ftQther Deposits including Foreign Government Credits•.
STRAUSS~
Vice-Governor.
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To Go.amore of All Federal Reserve :Banks,
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W. P. G. HARDING, IIOVIRMOR
ALBERT STRAUSS, VICE GOVERNOR
lEX OFP'ICIO MIEMBIER8
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ADOLPH C. II ILLER
CHARLES S. HAll LIN
CARTER GLASS
SECIITAIY OP' THE TREASURY
,._
CHAIRMAN
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FEDERAL RESERVE BOARD
JOHN SKELTON WILLIAMS
COIIPTIOLLIR OP THI CURRENCY
J. A. BRODERICK, SECRETARY
W. T. CHAPMAN, ASSISTANT SECRETARY
-W.II.IIILAY, FISCAL AGENT '
ADDRESS REPLY TO
WASHINGTON
FEDERAl. RESERVE BOARD
X-1624
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SUbject:
Use of teased Wire System Facilities.
Dear .Sir:
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.. At a recent meeting of the .Board attention was callet
·to the rapidly increasing cost of operatins :the leased· wire
system. The experme·~ot the main and branch line service at the
present time 'is· at the rate of. about $20,000 per month. The
Board recognizes, of course, that it is essential for the
system to have adequate facilities to transmit messages pron:ptly
and accurately .. It is probably a tact that comparatively few
member banks are now making use of the te~egraphic transfer
system. A sugge~tion has been made that the member banks
deriving the benefit should be required to nake some contribution toward de.frqiJlg the expense, and that a nominal charge
of fifty cents for ~ach telegraphic transfer Should be made.
The qu.esti~n has be~n rai$ed as to the extent to which the
wire transfer system is of benefit to customers of member
banks and whether cu~tomers are charged for transfers made
· without cost to Jiember bazllcs.
An expression of ~inion as to the above is requested.
The Boarci wishes to have full and detailed information
as to the. use which is being made of the present wire facilities
and requests that detailed records be kept ·beginning August 1st.
Based upon reports made by the. offices on the main line
system, a record is kept by the Federal Reserve Bank of Chicago
as follows:
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Wire rental and operators• salaries.
Numb,er of messages handled on each circuit.
(Includes messages in ··either direction)
NUmber of messages transmitted by each office.
NUmber of words transmitted to eaCh office
classified as follows: Bank; Fiscal .Agent,
war Finance •.
:;:a....
In addition td this report. which is tb be made to the Federal
Reserve Bank of Chicago as heretofore, yoil a.re reQlested to forward
to the Federal Reserve Board as soon as practicable after the first
of each month, a report for the previous month giving the fol~owing
information:
Intra.district branch wire lines.
(.A)
l.
2.
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branch offices.
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(a) Gold settlement. clearings and transfers.
(b) Daily and weekly reports of condition.
(c) All other reports and usssages.
2.
Treasury Department and Fiscal Agency - number of
words sent to or for account of Treasury.
3.
Wire transfer of funds (exclusive of Treasury transfers).
(a) Number .and dollar amount df transfers by
days - average for month.
(b) SUbdivision showing· transfers tor member
banks and those for account of customers
of member banks.
(c) SUbdivision showing amount transferred to
each· Federal ··Reserve Bank 4
t '.
(d) Number of merrber banks making wire transfers dUring month.
(e) Name and location of member bal.lks transferring $500,000 or more during month.
giving totai number and total amount
transferred•
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Other messages between Reserve Banks (number of messages
and words).
Kindly acknowledge receipt.
Very truly yours,
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tetter to chairmen of all Federal
Reserve Bal:lks.
I.
Federal Reserve Board. (Messages and words).
1.
..
I
Monthly expense - wire rental and operator~ salaries;
other expenses.
(i) Classification of messages handled by head offices and
I
•
Number of messages and words transmitted by the
head office to the branch offices and by branch
offices to the head office and other brandh offices.
Governor.
535
536
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 SOARD
.....
SUbject:
Address by Wallace D. Simmons
"Exchange of Checks at par.~
Dear Sir:
The Board has received from the Federal Reserve Batik of
an address made by Mr. Wallace D. Simmons before
the Chaznber of Co1m..erce of the United States at a meeting in St.
Louis on April 30th last on the subject of "Exchange of Checks
at Par". The Federal Reserve Bank of St. Louis is using a booklet
containing this address in its crurr~aign for par points and is
distributing it among banks and their customers in the Eighth
District.
st. Louis a copy of
It is believed that you would be interested in this booklet,
and that you might be able to use i t to good a,dvantage in your own
district. If you have not already seen it, it is suggested that you
write the Federal Reserve Bank of st. Louis for a copy.
Very truly
yom~s,
•
I,
.
Governor.
tetter to all chairmen of Federal Reserve Banks
except St.Louis
"
537
FEDERAL RESERVE BCABD
Office
Corre~ondence.
July
24,1919 ..
X-1626
SUbject:
Leased Wire Telegrams.
To the Staff, Federal Reserve Board:
Your attention is directed to the Report of the Governors of
the Federal Reserve Banks covering recommendations for iuprovement in
service. of the Federal Reserve Leased Wil•e sYstem, with particular
reference to paragraphs (c) and (d), quoted below:
(c) The· custom of using the words "~otef 1 stop! •·period,'
etc., should be. discontinued through the use of
ordinary punctuation in preparing copy, for which
symbols are understood by all operatorst •
~ ..
• ·...
o
I
(d) Brevity should be obse:t""'.red :J.n wording telegrams, and
in no case should the wire be used when the mails
would serve the same p·W'],)0::'!0. Each off:tce .should
arrange for a careful. cens.,:tship of all messages
sent, with a view of eliminat!ng un~mportant telegrams . ·•
.and unnecessary words.
In sending messages,· punctuation should be used exactly as in
letters# If the words 'stop', r~ote•,rperiod•,.etc., are used, it is
necessary for the operator.to spell out these words,whereas the symbols
covering punctuation require ver,y much less time.
..
I,
paragraph (d) is self-explanatory •
Your cooperation is requl;j.sted.
Yours truly,
Assistant Secretary.
538
W. P. G. HARDING, GOVIRNOit
ALBERT STRAUSS, VICE GOVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
CARTER GLASS
~·
l
SICRETl'ff·~THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
CoMPTROLLER OF THE CURRENCY
FEDERAL RESERVE BOARD
J. A. BRODER!CK, S!CRETA:.l'
W. T. CHAPMAN • ASSISTANT SECRETARY
W. M. IMLAY, FISCAL AGENT
ADDRESI5 REPLY TO
WASHINGTON
FEDERAL RESERVE BOARD
f
July 24,1919.
X-1628
Subject: Code Messages to be used in Rediscount
Transactions between Federal Reserve Banks.
Dear Sir:
Referring to the Board's letter of July 10 (X-1613) on the
above subject, there are given below two additional code words to be
used in rediscount messages between Federal Reserve Banks, effective
August 1, 1919*
To be sent by rediscounting bank to discounting bank in new
transactions:
REAPER:
In accordance with your wire (June 1st) we have delivered.
to the Federal Reserve Agent of this Bank to be held in
trust for the Federal Reserve Agent of your Bank for the
account of your Bank (~5-,000,oqq) member bank promissory
notes secured by Goverrurent obllgations maturing ( l1 to
];,2) days. please. make special transfer of { $.2z..QQO,-OOQ)
(June lst) through Gold settlement Fund. We credit your·
account (~3,287,~) discount at (~) for (10} days on
($.3,000?000} secured by certificates of indebtedness and
($.2,)28. 77) discount at (41%) for (lQ) days on ($2,000,000}
secured by Liberty bonds and Victory notes~ Total credit
for discount ($5,616.44). Schedule of bills pledged with
our Agent being mailed.
To be sent by rediscounting bank to discounting bank in
renewal transactions:
RECAST:
In accordance with your wire of (June 1st) we have delivered
to the Federal Reserve Agent of this Barik to be held in trust
for the Federal Reserve Agent of your·Barik for the account of
your Bank ($5,000,000) member barik promissory notes secured by
Government obligations. maturing (11 to 15) days. We have received from the Federal Reserve Agent of this Bank paper lodged
with him (10) days ago in equivalent amount. We are paying you
for todayt s maturities through the Gold Settlement Fund by direct
transfer today and re~est that you make direct transfer to us
of ($,5.000,000) covering new transaction. We cre~t your account
r~~~··"·.'
I
i· '
c
539
.
($3~287.67) discount at (.~) for (lQ) days on ($.j,OOO,OOO)
secured by certificates of indebtedness and ($2,328~77)
discount at ~) for t!Q) d~ys on ($2,000,000) secured
Liberty bonds and Victory notes. Total credit for
discount ($5.616.44) • schedule of billa pledsed with
our Agent being mailed.
by
'
very truly yours,
1.
Assistant Secretary.
I
~
Let·ter to Chairmen of all Federal Reserve .Banks •
•
540
W. P. G. HARDING, GOYIRIIOR
ALBERT STRAUSS, VICI GOYIRNOR
ADOLPH C. II ILLER
CHARLES S. HAMLIN
CARTER GLASS
SICRETARY OF THI TREASURY
I
~MltMAN
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
FEDERAL RESERVE BOARD
J. A. BRODERICK, SECRETARY
W. T. CHAPMAN, ASSISTANT SECRETARY
W. M.IMLAY, FISCAL AGENT
ADDRESB REPLY TO
WASHINGTON
FEDERAL RESERVE BOARD
X-1630
( NOT FOR PUBLICATION)
...
SUBJECT:
Charges by Member Banks on Checks deposited
with them, and correction of present discrimination against Member Bank Checks.
Dear Sir:
"'
I
! •
"'
There are now nearly twenty-one thousand banks on the par lists
of the Federal Reserve Banks~ and the number is gradually growing. Frequent
complaints, however, have been made to the Board that drawers of cheCks
on memb~r oanks and on no:1-member banks which are liD the par list are
being advised by those to whom they remit cheCks that charges are being
imposed by banks with which these checks are deposited considerably in
e~cess of a reasonable allowance for interest for time in transit, and
that checks on banks which are not on the par list, collection of which
involves a substantial charge, - in sorr.e cases as high as one-quarter of
one per cent~ - are received on deposit on exactly the same terms as cheCks
on member banks. This is in effect a discrimination against checks drawn
upon member banks and upon other banks on the par list.
At ·some of the Federal Reserve Banks arrangements have been made
with certain member banks by which checks on those bank·s are taken for
immediate credit, being charged directly to the account of the member
bank on 'receipt at the Federal Reserve Bankt and credited subject to
final payment. Member banks making this arrangement carry an excess balance
over reserve requirements with the Federal Reserve Bank. The Board feels
that this privilege should be extended to· all member banks desiring to
make. such an arrangement.
· It is suggested that the Transit Managers of all Federal Reserve
Banks meet with the Board at washington on Monday, August 18th. for the
purpose of working out a practical method of according these facilities
and of determining the cha:-ges that nay be made by member. banks agail;l.st
out-of-town checks deposited with them which are in turn collected througn
the Federal Reserve Bank. Section 16 of the Federal Reserve Act provides that
nthe Federal Reserve Board shall, by rule, fix the char~s to be collected
by the member banks from its (sic) patrons whose checks are cleared through
the Federal Reserve .Bar..k." The Board constl"'IJ.es this cla\1se a.s above ind.i·~
cated. Realizing that cooperation on the part of member banks and their
----------------------------~-·-·-
~----
541
.. ,
-
d~ositors
is necessary to enable the Federal Reserve Banks to forward
transit items expeditiously. the Board has decided that any rule' made
by it will apply only to such checks as have stanped or printed plainly
upon their face a symbol indicating, (l) that the cheCk will be given
~ediate credit subject to payment on its receipt at the Federal
Reserve Bank or proper branch bank of the district in which the drawee
bank is located, or (2) that the cheCk is collectible at par through
the Federal Reserve Bank. '!'he Board has determined 'Upon a system of
transit numbers for use in this connection, and in the case of a member
bank located elsewhere than !n a Federal Reserve or branch bank city
wishing to arrange for irrnediatE credit on receipt at the Federal Reserve
Bank of checks drawn uron it, su.bject to payment, the symbol shall be:
This would indicate to all transit clerks that the check is drawn on some
bank in the Boston district, and that it is subject to immediate credit
on receipt at the Federal Reserve Bank of Boston. In the ease of member
banks and banks whose names appear on the par· list, the s~bol will be
,.
which would indicate that it is drawn on a bank in the Chicago district,
and that it is collectible at par, subject to the proper time allowance,
through the Federal Reserve Bank of Chicago. In the case of branches, the
letters A, B,. c·, etc .. , will be added to the district number.
It is the purpose of the Board to have these symbols copyrighted and to
arrange with each Federal Reserve Bank to -allow the use of either or both Of
these symbols to such rr.ember banks as mq. desire to make the necessary arrange•
ments, apd to permit the use of the second symbol by all banks on the pa.r
list, whether members or non-members.
·
Whell: the Board rules on the charges that· member banks may impose on
cheCks deposited with them, a schedule will be furnished applicable in all
districts alike, and interest for time in transit will. be computed as far
as possible at not· exceeding 6% per annum, although the rates must, of
course, be-in round percentages to admit of ready computation.
It is proposed that member bcmks be notified that upon the date the
plan becomes effective the Federal Reserve Banks will receive from them
free of service charge only such cheeks as have the second symbol imprinted
or st~ed upon them, the right being reserved to impose a service charge
upon all other checks. Member banks can in ·turn notif;y their depositors
---~---------
~--------~----------------
542
-3-
X-1630
that the minimum rates will apply only to checks so i~rinted or st~ed,
and that all other checks even though dra,.wn upon member banks are subject
to a higher charge at the discretion of the rr.ember bank ..with which the
checks are deposited~ It is to be expected that banks will charge at
least cost on checks subject to a so-called exchange charge, and which
cannot be collected through a Federal R$serve Bank~
I
I·
The Board believes that it will be practicable to work out a
schedule of charges which may be imposed by banks on checks deposited
with them bearing the Fede:;;·al Reserve collection symbol, with one-tenth
of one per cent. as a ~&xi~~, and in case,of checks involving a shorter
time in transit that the charge may be fixed at one-twentieth, and in
some cases one-fortieth~ of one per cent. Ample notice, of course, will
be given of these proposed changes after thay have been definitely determin'ed upon, in order that the banks and the public may thoroughly
understand them and na.y have au.q:>le time to prepare for them..
It is believed that the effect of this plan when put into operation
will be to create a demand on the part of depositors for checks bearing
the symbol
(or the transit number of any other Federal Reserve
Bank or branch) and that many banks which are not now Ibn the par list will
feel obliged to meet the wiShes of their customers to have this facility
extended, the result being constant and substantial additions to the par
lists.
An
ac~owledgement
of this letter is requested.
Very truly yours •
•
Go.vernor.
Letter to all Governors
- copy to each F.R. Agent.
X-1631
F E DE R A L
RE SE R
E
1'
:B 0 A R D
STATEMENT FOR THE PFESS
To be released Fricla.y Afternoon
~lllgust 1, 1919 ..
During the rAO::lth of Jvly t;vnfidence in the contJ.nU;a.tion of business
dustry ha.s been noted..
T:1e yolnme of tri?.de, both
wholes~le
d.nd. ratail, ha.s
continued to grow, ..:.md there h<l.S been ii:.crea.::;ed activity in some of the b.J.sic
industries.
Complaints are heard, however, in
s~crtage
tivity is most pronounced of a
of raw
~ifferent
fields in which ac-
~teri~ls, ~nd ~bQr
troubles
have been much in evidence in severc,l d:i.s tric ts 1 although the maJority of the
districts report labor conditions as entirely
no~l.
Instead of the fear of
unemployment which had been expressed during the .eCJ.rly part of the year, the
reports received
tbe reverse feeling, n3roely, the fear of an impen&-
~fest
ing shortage of labor..
'!'he agricultural outlook on the whole is
a-lthough indications point to a much shorter cotton crop
in the summer,
favor..i.ble,
t~n forec~st e.:;~.rlier
The large volume of speculation which oc-curred during the
month of June, a.fter a slight recession towd.l"d the close of trut month, bas
at~in resumed its upward course a.nd both industria-l a.n.ci r...:.i.L·oa.•i s~res ~t-
tained higher price levels.
•
is favorable, and prospects
On the whole, the genera.·l ind\.J.stria.i.
~re
bright for continued business
sHu.;~otiPn
a~tivity
in
leading lines.
It is st.j,ted in District No. l tb...>.t "there is
.;~.I'P:.:.1.rent 1.y
in the gentlr..i-1 industri.:J.l activity in the New En.gla-r-.d.
materi.J.l Il:arket
,;;~.nd
the
turers fa.ce incre.:i.singly
l~bor
difficult"~
which comr..only re..-..cl:ws its
sumwer," d.Od
.:;~. gener~lly
unrest ruve
cl~
:w..~de
no <J.bcl.tement
D~.ft£·:1-::.t.
The
the p't'oblem which m.ir
In District No.
2._
11
IIli;l.n~xf.J.C-
comu.::rci.::..l .J.ctivity
in M;>.y rus been continued into the
f .....vora.ble outlouk is noted.
r~rv
e~rly
In District No. 3
543
544
- 2 ...
X-1631
"the general business situation contines to show an increasing demand for
merchandise at advancing prices t
d.
nd. fUDda.m~mtal industries operating on a.
larger scale," but the abnoi'IIJcl.lly high: prices preva.iling
.,~.re
viewed with
In District No. 4 the continued optiwistic view is ba.sed upon
disquietude..
favora.ble conditions preva.iling in the steel industry and in agriculture, al...
though the present high
No ..
5
pr~.ce
level
re~ins
a disturbing element. From District
it is reported tbc;.t "the rising tide of activity continues in .i.i.ll lines
and confidence in the genaz-1:!.1
establ~shed."
sta.bilit~
cf. business r:J.JO,y be regarded
6
Reports from a.ll parts of D5 strict No.
indic~:;~.te
.;~.s
re-
":pracUcd.l)¥
all lines of business increasingly active , 11 aJ. though i t is stated tha.t the
as reg.s.:rd.e
agricultural outlook, especia.lly/cottG:1, is not as encouraging a.s a. month
ago.
In District No .. 7, while mercruniis:i.n.g and manufacturing are
~bor
there has developed "a rather decided feeling of
in Chicago. n·
a record, business.
actj~e,
in some cases
9 is
are some discour.,.ging spots in the ·..... ., ·- "
In District No. 10 "the business and industrial activity" which
in the month of June is extending through July and there is no
indication of
come.
an
The whole situa.tion in D:i.strict No.
s\.llllmed u.:r as "good, although there
\
doix~
There are complaints of difficulty in obtaining raw
materials and skilled labor."
prev~iled
especial~
unrest,
In District No. 8 the business situation continues excellent;
"wholesalers and retailers in most lines are
district."
e~.ctive,
Q
slowing down of this activity for
~ny
weeks or
m~n~hs
to
In District No. 11 there ha.s been "practically no s'll!illler dullness in
trade and financial circles this year; this
unus~l
condition being attribut-
able largely to the petroleuiD industry? which has exerted a very favorable
influence on trade."
In District No. l2 July
duction a.re slightly below June figures, while
est~tes
11
of
agricultural~ro-
ind\.lstrial i::loCtivity is
r(
- 3-
I
545
X-1631
I
No recession in commodity prices from the high price levels which ha4 been
reached the previous month is noted. but instead further increases in many lines
have occurred. In many districts the high p:rilces now prevailing ho.ve not served
to cheCk demand, but the possibility of obtaining goods seems to be of greater
moment to the buyer than the price fixed. On the other hand. the very great price
increases which have taken place in certain lines have made buyers more cautious,
care being taken not to unduly increase stocks accp.ired at the present price level
for fear that a decline in prices Should occur. In general, however, there is a
disposition to accept present price levels and to expect a continuation of the
prevailing level for some time to come. The general index of the :Burea'li Of Labor
Statistics stands at 206 for the month of June, as conpared with 207 for the.
month of May. The index number for the group of
producers~
goods has increased from
189 to 197, while decreases are shown in both the index numbers for the groups of
con~rs'
goods and of raw materials, from 215 to 212 and from 203 to 201. Among
the subgroups included under the head of raw materials, the index number for far.m
products has decreased from'54 to 251, and for animal products from 223 to 213,
while the index number for forest products shows an increase from
146 to 154 and
for m.I:neral p:t·ocl.uc ts from 169 to 170.
The agricultural outlookr on the whole, continues promising. There has been
further decrease in the earlier ~stimates of the wheat crop, but the concU tion of
corn has improved. While the prospects for wheat in Montana and western North and
tl
South Dakota are"discoil.raging ",east of the Missouri River conditions are reported to be "just the reverse". In dli.strict No. 19 "the· condition of corn is
still above normal" and great improvement has been made since the earlier estimates., although the a.Creage has been decreased from last year. Wheat prices are
slightly above the guaranteed mintrnum. In District No.
7 corn is
re~orted
in
good condition, but a decreased yield of wheat is indicated., due both to rust
and adverse weather conditions. Cor.n in district No.
6 has suffered from an excess
X-1631
546
ot rain. but in Texas nthe yield of small grains promises to be thE? largest 1n
the history of the tristl"iet .. " On the Pacific coast unfavorable weather has
a.clversel-7 affected the previous estima.tea for wheat and. barley. although oats
are in good condition throughout the section. From certain Aistricta it ia
reported that wheat which has been harvested shows an 1muaually lOif yield per
acre, due to the lack of matured grain.
M increased acreage of tobacco is reported both in Kentucky and eleewhere, :
I
and the outlook 1s promising.. Fru.i t crops on the Pa.cif\C coast are reported in
good condition. Cotton acreage is smallP.:"
u-~an
last year and the yield which
had promised to be extremal¥ favorable now appears to be below normal. Throuahout
the. cotton belt the crop has been damaged by rains, and. the boll waevU is
reported acti"V"e. A lack of labor is also rema:rked and considerable acreage baa
been abandoned. Thia decreased output is. however, offset from the point of
viw of the
I
I.
grower by the material advance in the price of cotton which baa
occvred, due to the fact that both domestic and fqre1&n consumers to a large
extent "have subordinated the cost of the raw material to the question ot gettina
. ~t". It is reported.from
the Ksnsae· City District that interest 1e beina mani-
fested in flour made from the new cro.P, and goocl buaine.ss 1a expected, al.thoQp
pttrchaeing is aomtrRhat delqed.. :rlour
·United States Grain Corporation, was
prod.~tion
during June, a.s reported by tb8
7,1}0,000 barrels, as compared
with
10,738,000 barrel• during *7•
•
Receipts of cattle during June have decreased. from tile May figa.res. being
l,U2,782
head• as conpared with
1,262,o65 chu'ing MaT
atld.
1,292,505 during June,
1918, the respective index numbers being 111,125, and 128. Receipts of hop
.cont;lnue a.Qou.t .v;able, being J,o6l,&3S during June, a.s COiqlar.ed with 3,~.223
during Ma7, and
2.,369, 501
du.rin8 J\ma, 1918, the Hs,pective index llUlli;)ers being
1}9,139. and lOS. Beceipts of Sheep show a. considerable increase, being 1,116,003
d.uring J1me,corresponding to an index number of 82.- a.a coupared, with 934,613,
corresponding to
an ·md4tx n\JD.\ber
ot 68, dur~ Mlr,
anc1
8S9,o&.o, correapond.ing
547
-5...
· to an index number of
65,
during June 1918. Vfuile the price of cattle has continued
to decline, the price of'hogs has moved steadily upward. It is reported from. the
Kansas City Distric7, that the price of bogs has increased each month this year at
the six principal markets :in t.he district~ the price on July 14 being $22,45, or
$5.20 per hundred...we5.ght higher than a year ago.
In iron and steel it is :felt that the tide has now definitely
\
t~rned,
The well-
known indices in the industry all point to better cond:, tions. Pie-iron prod1.lction
index number for each
mor:.t~1
be:i:ng
91~
St,eel bgot p-rod."J.ction has incre.:1sed from
1,929 1 024 tons during May 1 corresponding to an index number of 80, to 2,219,219' tons
during June, corresponding to an index number of 92, while the
u.~filled
orders of
the United States Steel Coryo:..~ation at the close of June were 4j892, 855 tons, as
compared with 4, 282,310 tons at ·~he close of May, the respective index numbers being
93 and 81, The steel industry is now reported to be operating at from 70 to 75'per
cent of capacity. Reports from the PHtsburgh District show that conditions are im...
proving steadily and nit is an assured fact that a distinct gain has been made." In
the Birmingham District it is reported that ninquiries are briSk in the pig-iron
market. n
Prices appear to have been stabilized, some incc,nsJ,>im.'"!.ous ccncessions being
re}:>orted only in plates and sheets, although it is stat;ed that the independent pro ...
ducers favor increased prices, The chief acti.vi ty is i:'l lapwcld tubes, due to the
•
increased oil and gas field operations, sheets, wire, bars, and tin plates. On the
\
other hand, some of the heavier lines are still lagging, plates, rails, and shapes
in particular, due to small railroad purchases and absence of demand from shipyards.
Demands from automobile and agricultural implement manufacturers are stated to be
heavy, while increased bookings of structural steel are reported with the expansion
in the building trade. Pig-iron sales in June in the Pittsburgh District were the
heaviest since. the armistice. An increase in the e~~ort demand is noted, Japan being
in the market for considerable quantities of rails and ship plates • .Attention is
being given
- 6 . .;.
"' .
, ¥1
548
X-1631
the Pittsburgh District to a possible shortage of labor, due to continued
heavy emigration of
foreign~bor.n
workers.
r
Some improvement in the fuel situation is noted. Prodaction of bituRdnous
coal during June was 36,806,000 tons, as compared with 37.547,000 tons in May,
the respective index numbers being
99
and 101. While figures for both months
show an increase over t.,_e April figures, they are still substantially below the
-
output a year ago, the flg;.ll'e for Jm1e, 1918, having been
57,757,224
tons,
corresponding to an ind.e:r.: XllJmber of 1t~o .. Warnings have been issued of an impe~
ding coal shortage for Q.u.ite soma time, and consumers are being urged to· "buy now£'
Several reasons have been assigned for the shortage. It is believed that the
emigration of foreign-born workers will continue, and added thereto is the
possib~ity
of a car Shortage.·on the other_hand, a.n increased export demand is
looked for, due to the expected shortage of coal production in England and sons ·
of the other European countries. It is reported from District No.
3
tha~
"bituminous and anthracite coal have. both been in much larger demand during the
past month than for s~me. time heretofore" and that "high grade i'bi tuminous coal
is very difficult to. secure." Prices of both bituminous and anthracite coal·
have risen
J~.J
levels beyond the older prices of the United States FUel Adminis-
tration • .Anthracite coal production dUJ"ing June was slightly less than during
May, being 5,619,519 tons, as corq>a.red with 51 711,915 tons, the ~respective index
nwnbers being 100 and lOL The output of beehive coke increased slightly from
1,135~840 tons during May to
1,170, 752
tons during June. Greater activity is
\
anticipated for the second half year, and increases in the
~rices
of certain
grades are noted.
The copper rna.rket has continued to improve, prices moving steadily upward,
although it is stated that sales of copper by American
·•
~roducers
daring June
, were not quite so large as during May. The greater part of the Governinent surplus
which had threatened to be a drag on the mrket for many months has, however,
been disposed of
• several large dealS have been re11orted in the Tenth Federal
549
X-1631
-7-.
Reserve District, involving extensive
silver~producing
properties, which Should
result in an increased production of that metal in a few months; also that from now
on
greater productive activity is
~ticipated
on the basis of present prices.
Zinc ores in the Joplin market rose appreciably in price during the month of
June, due, it is reported, in part to diminished output cmd increasing demand,
also 'to the fact that the s~~~lus stock in the districts is held in strong hands.
Lead ores have likewise shtD!m a c1.ecided i!I!P:t•ovement in price. A shortage of production in the JO]:>lin distl'ict io :reported, due to the large number of miners
working in the harvest at high wages which farmers offer.
Manufacturing continues active. }From New England it is reported that the
I
derrand for cotton goods is extremely heavy, especi.ally for the fancy lines, and
!.
marked advances in price have occurred. Many mills are oversold and are declining
I
~
I
'·.
future business, owing to uncertainty regarding sufficient su;pply of long staple
cotton, also because of the shortage of skilled labor .. Export orders are reported
to be large. Many foreign customers have been unabie to obtain merchandise because
manufacturers have been obliged to allocate their shipments in an effort to meet
present requirements .. From Philadelphia it is reported that activity in the cottonyam market is increasing and that prices are constantly rising.
\
•
r
,
t
.
550
' R* . Mul continraee in very strong demazld, especialq fine
wools~
Relid
frcm present high prices is not expected until the tranaportCJ.tion Situation is
The western clip has been selliz:l&
such .as to render foreign stocks a.vaila.ble.
IWCh earller than usual, and prices ha.•e been ver:f high.
for fine worsted y.arns, and price increases are noted.
-
NO. l are operating to c.ap.aci ty..
.& strong demaz'ld exists
woolen mills in District
Manufet.etu.ters of r.oeri ts weu goods are l.a.rgel.7
oversold for the heavy-weig.'b.t season, and the light weight seoson is oorrespOi:Jel.i.
ingq shortened, sOIIla mills showing no goods for tha.t
se~son.
Be.avy sales Of
\ZIXlerwea.r at illCreased. prices a.re reported, .and acutaeturers of higb.-gr~e
hosiery are l4rgeq sold up, a.lthougb the interest in low-end hosie17 is still
relativeq small.
Prices of raw silk continue to rise a.nd wge si;i.leS of
finished. goods a.re noted.
I•
I
The d.eJ:IICIDl for leather continues to incret.trse
cand prices likewise move
,.... upwa.rd.. With the removal of foreign iq>ort restrict10ll8 can increa.aed ex,port is
ctic1pated.
c~sses
Prices of bides have continued to rise, the prices for
at Cbic.._go on
Ding of APril-
Juq
ll being a.lmoat double those prevailing in the beam-
Shoe manufacturers in New Dlglant\ a.re producing a.t ca.pct.City, aD:l
'sales exceed. those of the same period la.st
ye~.
F~actories ·in
are being offered more business tba.n can be ~led.
I'
•
District No.
3
In cer'tii.in sections it ia
ft})Orted. that there is not the usual suumer lull in production.
~
sODB
Qpinion
prev~ila
in certain q~ters ~t shoes for next se&aon will be solA at ~ considera-ble
adVQDCe over present prices.
AUtCillObi~
production contimlea
in~
pl.mts at high levels, althol.\ih
it is st.a.ted in District No. 4 that "cOiq?.a.r""tively few firms h.l.ve rec:.ched tha!z
prewa-r basisn of production.
to be &et1ve.
of raw
a~r,
The hc£.rdwtt.re dlld furniture industries are reported
Y,lU.ngs of refined
am e.xports of refined
su~
a.re considera.bq in excess
su~r
bas been discontinued in order to
remecl¥ local sl:lortases which have developed
at rec.eipts
~t
several places.
.. ."
x-1631 551
- 9 ,,.
Retail trade bd.s continued
active in spite of present high prices, .;;l.M oue
of the principal complaint.s of wercha.nts is their i~bili ty to obtain goods
from jobbers a.nd manufacturers..
continues.
Dellli;;I.Dd. for the better grades of ltlerchd.ndise
In District No .. 11. however, "it is fl.!lly expected in some quarters
thil.t the individual const:mer will not b 1.zy- freely this f.;~.ll until the prospect
i·
-
of price reduction is settled. one way oJ..~ .:w.'lPtber.
viction that prl.ces tn1:tst co:re dcw:~ .. :r
It b.:l.s firmly become. a. con-
In Diotdct No .. 7 the labm.~ unrest pre-
Vcl.iling is decl.a.red "to 1~e om out.r,rOj?pL"'lg of the effect of the continued high
cost of living."
The reviv~l in bu5.ldi.ng hci.s contin11ed..
E::;:pecta.tion of lower costs, both
for ~IJ..;~.teri.;~.ls ~nd. for k.bor 1 bds d.is,;,p,poa:red and builders are looking to higher
rents
to make up for tb.e i':l(;Na.sed costs. In sever<o~.l distrits a. short~:~.ge of
,.
la.bor is faced.
'
consjder';;1.'ble d.dVJ.nces have occurred in the prices of va.riol.lS
classes of lumber ~s the heavy de~nd ~s continued.
Shipments exceed pr~
duction in muny sections, d.nd stocks a.re consequently decreasing.
in the demand for
pr:;~.int r:;~.nd
v....rnish is i;l.lso noted.
mits issued in June d.t'e less in number <and
V~'\lrJ.a
An increase
In severQ.l districts per-
than for M.W", ·but this is
custOil.k:il.ry sea.son.:a.l phenowenon and actual constructi(ln is ine:rea.sing..
cl.
In New
England, while building has increased considerably for the first six months
of the year, the increase in constl'tl.Ction
reported for other sections.
of requirements.
In New York the
In Chicago the building
the present month by la.bor t:ro,Jbles.
meet the housing dema.nds wve
reported in the
constr1.~cti9:n.
~:~.p:pa.rently
b-.~.rely
s~ply
i~.ustry
In t.he
~r.sas
has not equaled that
of buildings is far short
has been
~pered
City Distx-ict efforts to
st<J.rted, .Utho1lgl1 gre:J.t a.ctivity is
of con.Jil:erci._.l, school a.nd public buildings .. In
the Southwest there is "still plenty ·of rcom for ).mprCYement.n
s~les
durin$
COnsit1er~ble
of city real estate ci.t.nd of farm ld.llds a.re reported in v.J.rious districts
and pric~s 1uva a.uvci.t.nced,
recorded.
http://fraser.stlouisfed.org/
.... ,_
Federal Reserve Bank of St. Louis
in some sections rea.ching the highest point ever
------ ------
--~--~~-~~~----c----::-----c;:-------....-..,.,.,..~,............,...,.....,...-,.----~---
x-1631
-
une~loywent
The
~ppe;:~.rad.
cert~in
specter which
'Inst&Mi there
sections
~
for
~e
]_(J 1>
552
thre~tened sever~l
lliOnths
~go ~s
· dis-
now indic.-.tions of deJ:Lk;l.nd outrunning suwly in
cert~in cl~sses
of
l~bor.
F~r.w ~s ~re
reported to
be sc~rce in sever~l districts, ~lthough ~ surplus is indic.-.ted in Minne~polis.
1.
-
A scarcity of
unskilled la-bor
thre.:~.tens
steel .:...nd COJ.l industri.es. due in
born workers.
consiC.er.;.~.ble
W.;.~.ges
noted in some districts.
"~ r~ther
A shortage of skilled l...bor is ~lso
..~-re
a
reported centering upon this issue.
pronounced feeling of ld.bor unrest" has devel;oped, in-
volving both skilled ...nd
un~killed l;:~.bor.
the largest plQ.Ilts in the city, .:md the
w~;;~.ges.
~dv~ce ~nd
in certaiu lines continue to
. considerable nvmber of lo1.bor d.is!,lutes
increase in
mecl.sure to the exodus of foreign-
It is expected th:;}.t 35,000 will b...l.ve departed from Clevel.md
~lone before the. close of the ye.;.~.r.
In Chicago
in the building tra.des and in the
Th~
Strikes
trt~.Ction
~ve
occurred in some of
employees h...a.ve de!Il.;a.nded an
de.J.IJaDds of the carpenters 1 union resulted in .-. lock-
out operative July 18, which cl.ffected directly
~;;~.nd
indirectly
~cl.rd
of
100,000 men, and demands for increased pC:J.y have also been presented by miners
in the India-na..
co~l
affected .
fields.
"Eastern
MJ.ss.;~.chus~tts
by unsettled labor conditions
ha;;1 prob~bly bean more
t~n
at
~ny
previous
t~en.
In New York the chief difficulty w.as the recently settled. seawen ts strike,
thre~tened ~
which
to the
complete tie-up of ... 11
tr~ns-Atl...ntic tr~de.
co~stwise
shipping,
~lso
to extend
In other sections the labor situ...tion is re-
\
ported as
f~irly satisf~ctory.
Official figur"'s for the r.oonth of June show an export baLmce of $625,-
000,000,
.J.S
compared with $277,000,000 for the month of
~y.
Export trade
in Xib.Ily Unes is reported to be increasing and keen interest is displayed by
s~ll
as well as by
l~rge
houses.
The recently
demonstr~;;~.ted
""bility of
.American steel manufacturers to coar_pet!::: successfully for severa.l foreign contr~ts ~s ~forded
much
encour~gament.
The removal of restrictions by the
'
·:o~
553
. ....
X·-1631
- 11-
~
war Trcld.e Board, as well as by several of tlle principal European countries,
will pave the way for
as machinery
~d
~
return to normal conditions.
tools, foreic,--:n ordero
which there hc:Ls been
-
~
l~ck
In certain lines, such
se:rved to tide over a. :period in
l:lr1.·~·a
of domestic deliland, while in others, notably cotton
goods, inability to supply current domestic needs has resulted in sowe.cases
in a refusal of foreign orders.
although it appeared at one
striously hamper
forei~
~rovement
ti~e th~t
the
trade expansion.
in the shipping situation continues,
se~~ents
strike at New York might
The shipping factor is of
also in connection with the shortage of raw
n~terials
i~ort~nce
in certain lines,
not~bly
hides and wool, and efforts are being made through the alloc.:a.tion of shipping
to remedy the ·sitUQtion as far as possible.
rel axa tio:o
After a temporary la.te in Jnne, speculation has· again continued
at an
high lavel, both in New York and elsewhere. An investment
~recedently
demand, however.
~s
ported to have been
revealed itself and an unusual amount of stocks is ret~ken
from the market, the consequent
resulting in further increase. in prices in the face
. money has continued to fluctuate greatly
ancl
deo~eQse
in
supp~
of continued demand .. Call
has been quoted. as high as 2Cf,
· ori mixed collateral, the highest rates for such loans since November, 19:12..
The Board's figures of the volume of check tronsa.ctions continue at the high
level noted for the month of June.
cally all centers.
de~lers
Interest rates
t~ore
reported firm in ]?racti-
Acceptances continue in light demand, the portfolios of
in New York increasing.
Several
inst~nces
of plans for the use of
acceptances in woving certain crops are, however, reported.
noted that
11
siUd.ller country banks are beginning
'
to buy bank acceptances a.s
~n
investment for temporary funds. In the middle of Ju~ rates for sterling,fr~cs,
lire broke srurply' sterling being quoted. O!l July 17 at 4.2675. B..;.:ikers a.re
watching the situation with interest. The ba.::lking sitl.hl.tion cc':ltinu.es to be
regarded as sound, credit and collection conditions are very gcod, and fail11.res
continue to be unprecedentedly small <:md few.
and
'
In Cleveland it is
554
S.fATEMENT FOR THE PRESS
'
I.
For immediate releases
Wednesday July 30.1919.
The Federal Reserve Board made the follovving announcement today:
The Board feels that it has already made clear its position
regarding the call loan market and has nothing further to say on the
I.
r "'
subject at the present time,
I
~.
''·
.
RX OP'P'JCIO MEMBERS
CARTER GLASS
~
I&CiftAitY OP' THI TRIAIURY
CHAIRMAN
I'
JOHN SKELTON WILLIAMS
--Q)MPTIOLLIR OP THI cttlltllfCY
FEDERA-l.--RESERVE BOARD
I
WASHINGTON
J. A. BRODERICK, SECRETARY
W. T. CHAPMAN. AIIISTANT SICRITARY
W.II.IMLAY, FIICALAGINT
ADDRESS REPLY TO
I'IEDII:RAI. RIESIERVIE •oARD
L\.·
DeM Sir:
;to
·
In ita ~tte_.
70a ·CD ·tae ~on ·~"'• ' - cW.te of J\lq 2}. 19~..·. (»-1624),. tJai '»~· n.-tted em
eX,pl'easion of 70vr opirdOJ) ..tt.a t.o ..._..._ o• - ' · • ........,., Gt
tift7 canta pe:r meii~p.NacW&tl:le i~~Wo.84 ·_.,. ~,. bNaU
cleriv1Dg tbe ~on.fit of f.ne '-lear~ ·~..,..tv••
In view of·'tM ~- :·t.JJM \b• .._,..esiou of opiDi.<lG
received ~7 the ]Joori lllil't>--.SmoUaJ¥ m· oppoaltioa •t.O the
imposition of auch •
tbe ....-4 hu 4ecl4e4 \O wit.hdratr the auageet~.
I)
. 555
W, P. G, HARDING, GOVIIHOI
ALBERT STRAUSI, VICI GOVIRNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
oa..r.-.
·~
556
.
I'"
FEDERAL RESERVE BOARD.
WASHINGrON
~ONFIRMAT I ON
OF TEL"EGR/I.M
-
X-1636
-··
Subject:
p~rticip~tion
D~ily
by Houston
Gold FUnd
Morss ... Boston
Tren~ - New York
Passmore - Phi h.i.de lphia.
FGncher - Cle~el~nd
Bt~nch
in
Cle~ring.
Peple - Richmond
Wellborn - Atl.:mt.
V...cDouga.l - Chic~go
Biggs - St. Louis
Wo1d - Minne~polis
Miller - ~sas City
calkins - ~ Fr~ncisco
Houston B~a.nch of Dall~s will open for business ~gust 4th
and will comu1~mce settling direct with other Federd.l Reserve :ad.nks
~d direct settling brQnches through the Gold ~d Clearing effective
statements August 2nd clearing August 4th .•. Dallc;~.s requests tb.::l.t Cioll
items maturing August 3rd ~nd.there~ter drawn on b~nks in Houston
district be included in C.i.I.Sh letters direct to Houston. All return
items should be ~dled in .accorda.nde with letter in which i ten1 w~s
originally enclosed. Bod.l'd 's letter of procedure Wd.iled today. Ple.as~
~dvise br~nches ~d d.Cknowledge receipt by wire.
·
557
..
FEDERAL RESERVE BOARD
WASHINGTON
CONFIRMATION OF
TELEG!MM
Augu.st 1,1919.
-
I
X-1638
SUbject:
•
Use of Symbol - Gold FUnd Clearing Telegrams.
Morss - Boston
Treman - New York
Passmore - Philadelphia
Fancher - Cleveland
Peple - Richmond
Wellbor.n - Atlanta
·McDougal ... Chicago
Biggs - St.Louis
Wold - MinneaFOlis
Miller - Kansas City
Van Zandt - Dallas
Calkins - San Francisco
Wi'th further reference to Board's wire tod.q re participation of
Houston branch in daily gold fund clearing will you please issue instructions to your telegraph operators beginning August 4th to use
symbol KB imrr.ediately following symbol KA instead of the name of the
branch when sending ;your daily LABEG wire. The Board's operators will
use the same symbol when sending BEPEG wires. to the banks. Please
advise branches.
I>
r.
•
I l
I .
558
W. P, G, HARDING, GDYIIMDR
ALIIIIT STRAUSI, YICI GDYIRNOR
ADOLPH C:. IIILLER
CHARLES I. HAll LIN
" ' OP'PICIO MKMa•11•
IICRITARY or THI TRIAIURY
CHA.IRIIAN
JOHN SKELTON WILLIAMS
FEDERAL RESERVE BOARD
COMPTROLLIR OF THE CURRJNCY
J. A. BRODERICK, SICRITARY
W. T. CHAPMAN, AsiiiTA.NT SICRITARY
W.II.IIILAY, PIICALAGRNT
WASHINGTON
ADDRK88 RaPLY TO
FI:DI:RAI. RUI:RVI: BOARD
NOT FOR PUBtlCAT!ON
SUBJECT:
X-1639
Automatic Routing of Checks
with Indicated Time Allowance.
·Dear Sir: ...
As explained in circular letter (x-1630) of July
29,
1919, the
Board has determined to'discharge the duty imposed upon it by Section 16
of the Act to fix the charges which may be collected by the member banks
upon cheCks deposited with them
wh~ch
are cleared througn the Federal
Reserve Banks, and the charge which may be imposed for the clearing or
collection servi.ces .rendered by the Federal Reserve Banks. No hasty action
will be taken
~d
ample notice
wi~l
b.e given in order that the banks and
the public ma.y acconm:od.ate themselves to the change without inconvenience ..
The schedule of charges will not be determined by the Board
until after the .conference with Transit Managers on August l8th 1 which
conference is, of course, open to any of the senior officers of any of the
Federal Reserve Banks who may care to attend. The schedule to be fixed will
I
regulate the
maxi~
charges, and no mamber bank will be required to inpose
a charge if it prefers not to do so. It is the desire of the Board to simplify
present operations, and in order to bring this about it will be necessary
to have the coo:Peration of the member banks and the public, and the~efore
the
Bo~rd
will not for the present undertake to place any limitation upon
charges which may be made against checks drawn upon member banks and banks
on the par list the routing of which is not clearly indicated on the face
-
I .
559
X-1639
of the checks, and the Board has no authority to regulate the charges which
may
be made against checks which are not collected through the Federal Reserve Bariks~
It ~s the desire of the Board to bring about a. very general use of the
Federal Reserve collection symbol, Which, as has already been explained, will be
a circle enclosing the letters F.R. and the numeral indicative of the district
number of the Federal Reserve Bank. Branch banks will be indicated by the addition
to the numeral of the letter A, B, C, or D, according to the seniority or order of
establishment, of branches in a given district; for example, the
symbol
.
8
.
should be imprinted or sta.rq>ed upon. all checks drawn u;pon bariks in the Philadelphia
district, and the symbol
·
(~
~
should be imprinted upon all checks of
banks in the collection zone of the Cincinnati Branch of the Federal Reserve Bnnk
of Cleve land.
The Board is considering the establishment of a fixed rate of one and one-half
cents per one hundred dollars per day which member banks may charge upon vroperly
indicated checks. This is equivalent to a rate of five and four-tenths ~~r cent.
per annum, which rate is. slightly in excess of the Federal Reserve Banks' ninety
day rEl.te on rediscounts.
It is important that every depositor of a member bank and the member banks
themselves should be able to determine readily, without reference to a cumbersome
par list, the time in t~ansit of every check. Every member bank is, of course,
aware of the transit tina be tween its home town .~d the Federal Reserve Bank or
branch of its district, and a table should be prepared by each Federal Reserve
Bank giv!ng the transit time between the head office and each of the branches in
the district to every other federal Reserve Bank and. branch. This could be printed
on a small card which could be widely
http://fraser.stlouisfed.org/
L__ _ _ _ _ _ _ St. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ . ··--- --Federal Reserve Bank of _ Louis
•
.
,,
.
. ..
560
-J-
distributed. Then there must be considered the time in transit from a Fedara~
Reserve Bank or b'ranch receiving checks on its district for collection to the
.
.
banks u;pon which the checks are drawn.. This can readily be indica ted by the
addition of a dash. and the number~· 1, 2, or 3, after the numeral which rep~e.,..
I
I
•
-
i
Reserve Bank, thus the symbol
sents the
"'..
'"'
awn upon banks in the Minne2polis district
should be printed upon all
which involve a. two day ~ime allowance between Minneapolis and the town \.:1a~:. ·
which the drawee bank is located. Checks drawn on banks in the collection zone
of the Denver Branch of the Federal Reserve Bank of Kansas City (which was the
second branch established in that district) and subject· to a one da;r time
.,
their face ·the symbol
allowance out of Denver,
In printing the symbol, the figure representing the time allowance should be
printed· in distinctly smaller twa than the figure which indicates t~e district
number of the Federal Reserve Bank.
In case your batik is contemplating ~ readjustments of time allowances to
towns in your district. the Board
re~ests
that you make these changes during
the month of August, as i.t is hoped to begin the operation of the new plan
about the first of September..
In actUal practice a member bank in f'i~ing time allowance would include
(l) time to the Federal Reserve Bank or branch to which it is assigned,· (2) time
between the Federal Reserve Bank or :branch o£ its district and the Federal
Reserve Bank or branch of the district· to which the check is sent, and ·(3)
• time be.tween that Federal Reserve Bank or branch and the bank upon which the
I
check is drawn. j
561
<r
•
.•
The Board intends, after all details have been carefully worked out
and public announcement made of the new system, to bring the symbols to the
attention of bank printers and stationers throughout the country with the
-
vi~w
of having the symbols printed UJ?On new orders for checks ..
The Board believes that 1t would be a great convenience to the Federal
Reserve Banks i.f all checks received by them should be self-routing in tlie
manner above indicated, and in order to insure the fullest cooperation 1 t
will probably be necessary in the course of a few months to re•tore the
service charge, which was abandoned several months ago, with respect to all
checks which have not the Federal Reserve collection symbol iii!Prdlnted
o~
stamped upon them. This will force a discrimination in favor of checks so
' l
indicated, and will, .in the opinion of the Board, result in pressure from
depositors upon banks which have so far declined to have their names placed
upon the 'par list.
While the Board has determined that it rnu.st carry out the provisions of
Section 16 above referred to, it will be glad to receive ar.I:Y suggestions,
..
criticisms or comments which you rray desire. to' cia:ke regarding this plant and
it would apprec.iate· your views as to the maximum charge which member banks
ma, be permitted
~o
make . on checks deposited with them which are collected
through the Federal Reserve Banks.
Very truly yours,
Governor.
tet~er
to all Governors and copy to Federal Reserve Agents.
··---------------------
--~-~--
--
. ,..._9
· X-l!!j ···e.
FOBM OF SPECIAL DEPOSIT SLIP
.
.
- - - -- - - - - - - - - - - ---- .
~
~
~
'!- -
-
.
:
.
"
List on this sheet only checks bearing
Federal Reserve Collection Symbol.
4
.
:
.
.
..
562·'
•
.
.
:
DEPOSITED WITH
:
First National Bank
.•
. of Checktown
Se})tewber 15,1919 .. :
By Jones,Brown & COiq>any
--------------- ~
----------------------------~
;~;it-;----"------------------Ch;;~;;-ii¢-Time.
: Detail :
per day per
:
~s
: . List
Totals :
$100
.
.
;
..
.
:
: -------------------------------------------- :
. 29.6o:
1
.
.
. 54.80:
.
.
"
124.90:
:
.
327 .. 60:
:
. 842.50:
...
:
.
162.90: 2,142.. 3(;)
.32
.
:
2
72'.21:.
:
.
5.00:
:
i
;
;,
~
.
.
.
.
.
.
.
10.00! .
..
.
3
·,4
:
:
:
•
:
.
.
.
28.10:
1,856~82:
• . 11.42:
: 768.Q9:
..
..
.
•
962~00!
:.
:
2.19:"
. : . 7.'14:
:
21.40:
.. 328.60:
. J6.80:
...
·~
.
.
96.io:
:
·55
:
•
.
:
.
436.13:
·~
.
.
.:
24. 70':
225.10: 345~90:
: 4.. 781 .. 15:
1,28·:
.26
:
.21
1.28
.
.
:
:
....'·
.
:========~========;=========~=~===============t
: Total
Note:
:
; 4, 779-!'f:
It is not intende.d ·to COJI!Plicate the work of the member banks and no
rule will be fixed for any checks unless the de~ositor cooperates by
doing his part in itemizing his checks on a S,Pecial deposit slip. The
Board will merely afford depositors a means of securing minimum charges.
Assum1ng that the ordinary charge on the above deposit would be 1/lOth
or $4.78, it is for the depositor to decide whether the additional time·
and labor in filling out the ~ecial deposit slip is worth the difference
of $3.50 •
•
•
563
llx OI'PICIO M&IIR&IIR
W. P. G, HARDING, GOYIIIOI
AUIRT STRAUSI, YICI Govi. .OI
ADOLPH C. NJLLIR
CHARLES 1. HAMLIN
CARHRGLAH
•
S&CIUAIY OP THI TRIASbRY
CH.UIHAN
JOHN SKILTON WILLIAIII
COIIPrROLLIR OP THI CURRINCY
FEDERAL-RESERVE BOARD
WASHINGTON
J. A. BRODERICK, IICIITAIY
W. T. CHAPMAN, AIIIITAIT IICIITAIY
W. II. I II LAY, FIICAL AGINT
ADDRa•s IIKPL..Y TO
I'IEDJERAJ. RUJERVE •oARD
SUBJECT: Gold Settlement Clearing Houston Branck~"· ·
FedeJ;S.l Reserite :Bank of Dallas.
-
'··.
Dear Sir:
The Federal Reserve Bank of Da.liat requests that arrangements be made to
have Houston Branch coamence settling direct through the Gold Settlement Fund
1d th other Federal· Reserve Banks and Branches in the same manner aa now. in ·atfeet ·between Federal RBeerve Banke and Branches and Dallas bead office and
El Paso.
·
.
Accordingly, beginning Augu.st 4th Jmd evert settlement da7. thereafter,
the Houston Brmch in addition to Dallas ·bead. office md El Paso Branch will·
telegrs,ph _to the Federal Reserve Boar.d, code LABEG, .ita credits for other Fed:- ....
eral Reserve. Banks and ~ireot settling branches
at cl·ose of bu~iness previous da7 to· be settled through the daily gold fund clearing•.• The Board will
.:·
include in ,:the ·da.il7 BEPEG telegram to other Federal Reserve Banks and direct
settling br~hes the credi ta of Bou~t·on as well as Dallas and El P&so as
tollowa:
Dallas
amount
El paso amount
_Houston amount
as
and the Houston Branch will render to each Federal Reserve Bti.llk and Branch
settling direct through 'the gold clearing daily -mail transcripts supporting
credits as settled through the fund.
The .Federal Reserve llank of ])i;;\llas requests that all items maturing
AUgua.t 3rd and thereafter d:'awn on banks in Bcnist\>n district. be inclUded in
cash letters direct to Houst~. All return items should be handled in accord-.
anee with letter in which item was originally enclosed. The Federal Reserve
Banke and those BranChes settling direct thr~ the gold fund are requested
therefore to open an account with Houston ::Sran~h at such tiDJe ~ will permit·
credits therein becoming available A'Ugllst 3rd and thereafter; and to wire to
the Board, code LABEG, the ~t of such credits for the Augu.st 4th gc;ld fund
clearing and tor .each daily clearing thereafter. . · They will a.l so render to the ·
B~uston Brandl dail7 mail transcripts wpporting credits thus settled thrcn:a.gl1
the gold tund eleari~.
·
· Please noie that new qstem is effective statements a.s of close of
·bueinesa Au&118t 2nd, clea.rin& Alig\lst 4th.
Kindly &.dV;ise yoW: b·ranches and ackriowledge receipt of this letter.
Ver.v truly ,.aura,
Acting .Assistant secrata17.
I· •
LET'lft SENT. TO ALL
ooVERNORS.
FEDER!;.L
I".
I
RE~:ERVE
BOARD
X-1641
STATEMENT FOR THE PBESS
To be released for morning
papers, August 6,1919.
Goverrur.E'nt fi:-:cal;o:;erations ·and thei!' effect. on bank:u::.g conditions, also
the latest <lE;V':>lopments iJ::: the foreig:n. exche.nge market are discussed in the
""
forthcoming numbe!' of the 7ederal Reserve Bulletin for August.
A large part of the issue is devoted to a statistical review of operations
of the Federe:.l Reserve S·y~tJm since its establishment on November
16, 1914.
Statistically the materiaJ. is present€d separately for the ).Jeriod preceding the
entry of the United Stater>
i .. nto
the wo1:!.d war, t.hat is from November, i914~ to
April, 1917, and for the war and post war period, A remarkable growth is ex.
.
hibi ted by the Federal ReEerve S\ystem from 1 ts in::.11gnration when the bank~ had
a cotribined paid in capital (f about 18 ~: ·: llions and aggregate resources of about
250 millions, to the end of June, 1919, a~· out four and one-half years later,
when the :paid in capital was about 83 millions and the resources in excess of.
5,500 millions. The growth in the capital and resources of the Federal Reserve
S:ystem has been due in part to the coming in of many new banks under the l.nf1uence of the financial necessities of the war and the patriotic impulse to
strengthen the system, and, before the war, to the paying in of reserves by
member banks, :prior to tte expiration
en June 21, 1917, of the time limit set
by the original act. The great growth in redisco"Wlts would not have occurred
within the years in question l1a1 it not been for the war and its effects~ for
most of the i::idvance in th;, 1-J.}!C~' l~oldings i.s an incree:.se in war p.ctper as such.
Nevertheless, there has been. a C.i.~tinct increase in strictly comr.cercial paper .
operations, as shown by the fact that the holdings of all discounts other than
war paper have increased from $125~789,000 on July 27,1917 to $251,392,000 at
•.
•
the end of Jul7. 1919.
One
of the
most striking features of the evolution of Federal Reserve Banks
565
X-1641
.
is the growth in the circulation of Federal Reserve notes from a small
I
\
1914 to an aggregate of $2,504,497,000 at the end of July, 1919. These notes
I ~
have practically displaced the gold certificates
~
is~e
in
circulation, the latter
being drawn into the banks and used as reserves. While the Federal Reserve
notes
.
I
I
a~e
thus not a net addition to the cirrency of the country except in so
far as th3ir amount exceeds the amount of other forms of currency that have
been withdrawn or retired, nevertheless the services of these notes in supplying a medium of exchange is conspicuously important. These notes have come to
circulate also in increasing volurre in Mexico, Central America, and West Indian
countries, as well as to some extent in more distant regions.
One of the earliest actions of the Federal Reserve Board was to formulate
and issue a set of regulations in
eo~~ection
with the use of barikerst accept-.
ances whi¢h represented an important means for investing bank fliDds in live
commercial paper and for the pu:::-pose of assisting in the financing of export
trade. The acceptance early became a standard form of investment for Federal
Reserve Banks s.nd, together with other :paper, mainly war paper, has served as
a useful means of effecting transfers of resources between Federal Reserve Banks
through the interbank rediscounting
p~ocess.
Since the United States became a. belligerent, war paper, i..e. customerst
notes or notes of the banks themselves, collateraled by Governrrent war obligations, naturally constit.af;ed a considerable element in the business of Federal
Reserve
BatiKs~
Such notes received a
preferenti~l
rate which encouraged the
public to buy governrrent obligations in the assurance that if unable to make
payments in full they could secure accommodation from their b&lks which in tu.rn
would relieve themselves by rediscounting with Federal ResEU've Banks. The
Federal Reserve Banksr holdings of war :paper increased from about 26 millions
on June 29, 1917 to 1,616 millions on July 25, 1919.
.
One of the most' notable results o£ war banking and war :finance has been
···''
-l-
'
566 . .
X-1641
the enormous accumulation of gold 'in the vaults of Federal Reserve Banks. b
Fede~&l Reserve SYstem• s nacbillery for centralizing reservest the great eJCports
of merchandise duritlg the war, and the s'\:ibstitution of no tee for gold both in
the tills of member banks and in circulation ha.ve caused the gold holdings of
the Reser:'fe Banks to reach an un:pr~ce-dente.d ~:®ount, the maximum figure of· 2,201
••
millions being reported for June 6 1 1919~.
Fedet'a.l Reserve· Banks earned comparatively sn:all profits before the war, but
owing to the large amounts of wa.r paper handled .during the war period as well as
since the signing of the &.rmistice. the earn~gs of the banks increased greatly.
The personnel of the ba.nks and the mamber of branChes all show increases comnen..:.
surate with the growth o£ operations, while over 1,000 state banks and. trust
coTii'anies have joined the system since its organization.
-----·------------An article on Banting and Economic conditions i~ Japan,·
1914-1919 is part
1
of the Bulletin. War conditions resulted in a great increase in Japents foreitp
trade and in the establishment of a balance ·favorable to Japan. Many industries
:producing articles of e:xpo~t flourished during the ~ as the result of the
grec:.t demand for war IIBterials by the belligerents and the sbsenee of European
competition in Eastern mar.kets.
Ship building experienced an ~recedented
boom caused by the great need of cargo space. The Bank of Japant-a gold !loldinga
showed a constant growth during the war e:md ita holdings of foreign bills
also
increased• .Am.ounts due to the bank from agencies and banking hou,ses, rose from
164 million yen in 1914 to 937 millions on June 14-, 1919. Rates of exchange on
foreign cOWltri,es were favorable to J<lpan throughout most of the period upder
review.
Serio~s
setbaCks to war-fostered industries followed the cessation of
·
· the continued increase in the price
hostilities and many failures, together withf
·
of foodstuffs
.
resulted in an ·economic crisis necessitating government intervention~ Japan is
.
.
at present going through a period of readjustment and great efforts are :mc.de
to establish its
war-made industrial and commercial position on a permanent
r
567
'
'
-4-
X-1641
peace basis.
\
The Bulletin carries also its regular monthly statistics relating to banking
conditions, physical volume of trade, and wholesale prices. Aggregate increases
of 96.3 millions in investments, largely the result of open market purchases
i
-
I •
of batik. acceptances, and reduction of 53.6 rrdllions in gold reserves, as a
resu.l t of exports following removal of the gold embargo, are the principal
ch~-nges in the status of Federal Reserve Banks between June
20 and July 18.
Gold e~orts, following the removal of the gold embargo on June
7, proce3ded
on a large scale, and for the monthly period ending July 10 amounted to
$98,441,384.
Of the total exports, $32,460,000 was consigned to Argent~na,
$25,850,000 to Spain. $17,024,000 to J~an and $7,4o5.000 to Uruguay, the
remainder being shipped princi:pally to Venezuela, Hongkong, Peru e.nd Bolivia.
I
In the Bulletin are also printed texts of several bills pending in
Congress amending the Feaeral Reserve and National Bank acts with a view to
facilitating the participation of ~ember banks in foreign co~1ercial banking
and in
th~
financing of.the export trade.
',
568
II:X OPPICIO
W. P. G. HARDING. SOYIANOR
ALIIRT STRAUSS. VICI GOVIIHOR
ADOLPH C. II ILLER
CHARLES S. HAll LIN
MIEM..CitS
CARTER GLASS
r
SICRITA~I
TREASURY
CHAIIIIAN
FEDERAL RESERVE BOARD
JOHN SKELTON WILLIAMS
(OII"ROLLIR OP THI CURRENCY
J. A. BRODERICK,
W. M.IMLAY, FISCALAGINT
r
ADDR&8:!J REPLY TO
WASHINGTON
-
FEDERAL RESERVE BOARD
Subject: Schedule of 'rima Allowances tor· Checks in
Trana1t between Federal Reserve Benke and Brancli>s.
Dear Sir:
There ia enclosed c. form showing transit numbe:rs
of all Federal Reserve Bank and branch cities w1tb space for
time al~owancee in dq's for cheoks. in transit between OlfT Fed-
eral Reserve Bank or branch.
You are reqUested to bring this
form to the a.ttel)tion of 1CIIl.;r Transit Depo.rtmant and. to instruct
;your repreaenta.tive
a~
the tran:sit conference to be held on
August 18th a.s to your wiehea as to the time to be al+owed.• In
the. opinion of the Board this tim should be suffic.ient to cover
all reasonable contingencies, for it is evident ~t an under
est~~e of
time will result in a large addition to the float
which mat be carried by the Federal Reserve Bimk&.
r
I •
~
SICII:ITARY
W. T. CHAPMAN, ASSISTANT IICRETA.RY
Govemor,
LETTER SENT TO GOVERNO.RS AND AGENTS.
.
Enclosure,
..
569
.
X-1642 a
TIME ALLOWANCE
For checks in Transit from
Federal Reserve Bank ( or Branch)
of._.__ _ _ _ __
...
'"
I
to
Federal Reserve Barik
of
Boston
New York
Buffalo Br.
Philadelphia
Clevelf.lnd
Cincinnati Br.
Pittsburgh Br.
Richmond
Baltimore Br.
Atlanta
New Orleans Br.
Birmingham Br.
Jacksonville Br.
Chicago
Detroit Br.
St.Louis
Louisville Bra
MeJl!Phi s Br #
Little Rock Br.
Minne<:.~.polis
Helena Br.
K<:.~.nsas
City
Br.
Denver Br.
Dallas
El Paso Br..
Houston :Sr ..
San Francisco
portland Br ..
seattle :Sr.
Spokane Br.
Salt Lake City Br.
Omah~
(Ttansi t No.)
1
2
2A
3
4
4A
4B
5
5A
6
6A
6B
60
7
7A
8
SA
3B
3C
9
9A
10
lOA
lOB
11
llA
11:8
12
12A
12B
120
12D
(Days)
m- V
;p
F -,
I
I
570_-
I
r-.
~
I
FEDERAL
RESERVE
STA't'~m:Nl'
BOARD
]'OR Tffi1 PP..E33
To be released for morning papers,
August 1, 1919 ..
r
I
The Federal Reserve Board. anl':.ounces the resignation, effective
September lst, of Mr• J. A· ~roderick, who has been thief of the Division
of Audit and E:xam:i.nation since the organi?.ation of the Board in 1914, and.
who bas, since September l•
Board.
Mr~ B~oderick
1~18.
been Secretary of the Federal Reserve
resigns in order to becrme a Vice Pres!dent of the
National Bank of comuerce in 1-Tew York.
The Board has no
successor..
Mr ..
w.
anno,mc~..oent
T. Cha.proan,
Ass:V~tant
pending further action t>y the Boar-d,.
•
l·.
http://fraser.stlouisfed.org/
,,
Federal Reserve
~'~ ,;'.< ~'"""""".........- Bank of St. Louis
to make as yet as to Mr. Broderi.ck 's
Secretary, will be Acting Secretary
.
.
.
._::; . .
~
J'EDERAL RESERVE B
r.
W.ASHIN<n'ON
~
O,D~.if~
..
..
·
·."\··
·t:
QaNFIBM.ATlON OF TEU!GRAJ.
-
l·
571
'
.
x-1644
.,..
~
curtiss .. ~oston · ·
Jq- New York
Austtn·- !biladelphia
Willa -.Clevelaod
Hardy - Bicl::mlom
McCord- Atlanta
Heath- Chicago
~1:1 ... · st.l,ollt. . ....
Bich- MinneapoUs
R&il.ISS¥ - l{ansaa C1t7
Ramsey - Dallas
Perrin - San Francisco
:Board is' releasing for pubUcation in papers tomorrow morning
August 7.th following azmoUDCement Which it is suggested you.
mdte t>U911c ~t SEW£ thue in your district. "The Federal Reserve
:Board announces the resignation, effective Septe~ber 1st, at
Mr. J .A. :Broderick, Who has been Chief of the Division of Audit
and Examination since the organization of the Board in 1914, and
who bas, since SeptellJber 1, 191S, been secretary of the Federal
Reserve Board. Mr. Broderick resigna in order to becOUie a .Vice
President of the National Bank of Comwerce 1n New York. '.l'he
Board has no azmouzicement to maa &.s J&t as to Ml"• Broderick's
successor. Mr· w.T •. Chapnan, A8Bistant secretary, will be ACting
Secretary pending further action b7 the Board.•
·
I
572
W. P. G. HARDING, GOVERNOR
1!X OP'I"'CIO MEMBERS
ALBERT STRAUSS, VICE GOVERNOR
ADOLPH C. II ILLER
CARTER GLASS
SECRETARY
or THE
CHARLES S. HAMLIN
TREASURY
CHAIRMAN
FEDERAL RESERVE ·BOARD
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE• CURRENCY
J, A. BRODERICK, SECRETARY
W. T. CHAPMAN, ASSISTANT SECRETARY
W. M. IMLAY,
WASHINGTON
X-1645
Subject: Additional Code Word for uee
in Discount Rate Telegrams.
Dear Sir:
Ref~rring to the :Board "s letter of neceruber 14.
1918, X-1307. subJect .. "Rates of DiscCJunt"', the following
code word ie suggested for use in telegrams to the Board
vrhe.n r~p~J:rting recoWu.enda.tion of no change in disccunt
CODE WORD:
--
week~
-
·DIAL ........ Referring to Board fs letter X-13C7 ~ l)eceDber 14,
1916, no chango in discount rates is reco~ended
for this bank for the week eruiing_...,l<t~)
•
Very t r}lly :yvu:r s •
Aeting
AGENT
FEDERAl. RESERVE BOARD
-
rates for the ensuing
FISC~L
ADDRESS REPLY TO
secretary~
•
..
I~
573
W. P. G. HARDING, GOVERNOR
ALBERT STRAUSS, VICE GOVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
IIX OFFICIO MEMURS
CARTER 8LAII
SICII!.IY OP THE TREASURY
-~Jl'\V'MAN
JOHN SICELTOII WILLIAMS
FEDERAL RESERVE BOARD
COMPTROLUR OF THI CURRENCY
J. A. BRODERICK, SECRETARY
W. T. CHAPMAN, ASSISTANT SECRETARY
W. M. IMLAY, FISCAL AGENT
WASHINGTON
SUBJECT:
Camp~ign
ADDRESS REPLY TO
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 July 29th, asking
for information :regarding the progress of the cam:paign
being conducted for the establishment of new par points.
In addition there is also enclosed a s:pecial re-
I
port showing nqomember banks not on par list distributed
by States according to Federal Reserve Districts.
Very truly yours,
Acting Assistant Secretary •
.
Enclosures :
FEDERAL RESERVE BOARD
I
--------------------,~
C.AMP.AI GN
]"ederal
Reser-o-e
Bank of
: National : state !
Bank
: :Sanks in
:
District
Members :
:
:
:
.
.
NEW
.
:
429
:
241
100
New York
:
627
.
.
111
.
738
Philadelphia
:
632
•
.
37
:
669
Cleveland
:
746
33
:
329
903
Richmond
.
532
42
:
574
374
.Atlanta
..
365
60
!
425 :
337
.
21.2
Chicago
:
1,047
310
ls357
3,159
:
st. Louis
..
465
55
520
Minneapolis
:
816
77
Kansas City
.
.
977
33
san Francisco
TOTAL
.
.
:
:
318
.
!
35
100
1,056
:
18
37
:
1,254
1,591
.
178
783
:
1,005
:
57
:
587
998
2,615
47.1
:
4o
:
179
1,517
2,805
38
.
191
877
3,249
:
146
893
1,212
154
1,064
7,941
: 20,249
910
:
85.5
676
1,066
8,366
:
73-0
60.7
12,303
I
1,430
26.}
:
·I
1,095
.
lc6
:
137
75~9
.
233
91 .. 8
"
I
405
79
319
.
570 .
:
:
26.2
1,617
I
I
318
32.9
:
2,372
746
T1.1tal No.
nonmember
banks in
District
241
:
!
100
1,348
:
7,800
405
893
116
.
100
:
1.,010
:
:
630
Dallas
:
X.· .~r~•· i -a
P 0 I NT S.
P.AR
REPORT OF FEDERAL RESERVE BANKS, JULY 31, 1919 ..
Total : Nunmember : Ratio of nonmember
: No. of Banks : No. of Banks : No. of non- ..
Member ; Banks on : Banks on Par List to : added to Par
added to Par : mewber banks :
Banks : Par List : total nonruem"ter ba..~s: List durillg
not on
List since
:
:
in District
Jau. 1, 1919 : Par List
July, 1919
:
36
393
~aston
FOR
--------;11
3
6"
:
2,306
504
.
.
4,164
-------------------------------------------------------------------------------------------------------------------------------------------FEDERAL RESERVE :BOARD
W.ASHINGTON
.August 8., 1919~
~
~
~~--
------
~-
--·---
----~-
-----
-~----~~----------------
~~--
---·---
~
---------
575
W, P, G, HARDING, fiOVIRNOR
ALBERT STRAUSS, VICE GOVIRNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
CARTER GL.\18
SICIIYAIT
or THI
TRIAIURY
CHAIRMAN
FEDERAL RESERVE BOARD
JOHN SKELTON WILLIAMS
COIIPTIOLLIR OF THI. CURRENCY
J. A. BRODERICK, SECRETARY
W. T. CHAPMAN, ASIISTANTSECRITARY
W.II..IIILAY, FISCAL AGENT
WASHINGTON
ADDRJ:S!I REPLY TO
FEDERAL. RESERVE BOARD
OOPY
August 8, 1919.
For release to Mon4ay Morning Paper;.
August 11, 1919.
Dear Sir:
The Federal Reserve Board
aeknowle~s
X-16~8
receipt of your letter
of the 5th instant asking for an ex_pression of its views
C:I.S
to the
advisabilit.Y of legislatian providing for the gradual reductian of
the currency in circulation as proposed by Senate Resolution 1~2~
1be .Board would suggeet that in determining whether or not
legislation is necessary or desirable to regulate tne volume of
(
currency in circulation. consideration be given to the various forms
of money which aake -up the sum total of our volume of currency.
A
distinction shoul.d also be drawn between the stock of money in the
country and. the amount actually in circulation.
With respect to gold coin. goid certificates; standard silver
dollars~
silver certificates,
s~bsidiary
silver and Treasury notes
of 1890, the Board assumes that it is recognized that no legislation
. is necessary.
.
!he United Sta.t$s notes, or legal tenders, which have remained
at the f1xed amount of $3146,681 1 016. :. ·. since March 31, 187S, have
not been a. d.isturbing factor since the passage of the act of March
14, 1900~
An ad,equate golcl reserve of
more than 45~ is now held
against these notes, most of which are in the form of small bills
..
http://fraser.stlouisfed.org/
-~·
Federal Reserve Bank of St. Louis
~
..
fi" ',.' : •'h1'' •
'c>,
~':
'•' '
~
576
of $1, $2, and $5 denominations.
Notes of these deno~nations are
needed in the daily transactions of the public, and were the united
States notes to be retired, the ism1e of an equal volvme of
bills in some other fo~ of currency would be necessary.
s~11
To effeot
the retirement of the United States notes, funds would have to be
withdrawn from the Treasury to be s~plied either by tax~tion or by
the sale of interest-bearing obligations.
The Board does not believe
that ~ legislation with re~ect to United states notes is necessar,
or desirable at this time.
1-be national bank notes outstanding on A~st l, 1919, amounted to
$658,118,555-00, a reduction of nearly $60,000,000 since July 1, 1914.
The greater part of these notes is secured by United States 2% bonds,
and provision has already been made in Section 18 of the Federal Reserve
Act for their gradual retirement.
Federal reserve bank notes, which are secur.ed by United States
obligations and are taxed just as national bank notes are, have been
issued only to replace in,part national barik notes
retire~,
standard silver dollars mel ted or broken up and sold as
and
~llion
under
authority of the a~t of .April 23, 1918, known as the Pittman Act..
1-be
issue of thes·e notes has, therefore, brought about no increase in the
circu+ating medium.
The amount of Federal reserve notes outstanding has increased from
$357,239,000 onApril1, 1917, to $2,5014.753,000 on August 1,1919.
It appears therefore that those who see in the larger
volum~
of cir-
culation in the United States. the prime cause of increased costs of
'
• •
'. k ' '
X-1648
- 3
~ '
living and who seek a. . remedl
b7
577\
a. forced contraction of tbe
currency must have in mind the Federal reserve note and .section
16 of the Federal Reserve Act as amended June 21, 1917, which provides for its issue and redemption.
In analyzing our present monetary situation, and in considering
the causes which have led to the e:x:_pansion of credits and note issues
during the war. we should not lose sight of some of the developments
of the pre-war period and of their effect upon credits and prices.
Very heavy purchases of supplies of
ail
kinds were made in this
country by European belligerents during the years 1915 and 1916 7
payment for Which involved the shipment to us of large amounts of
The stock of gold in the United States on July l, 1914, was
gold.
(
$1,890,678,304.
This amount increased steadily until April, 1917,
the date of our own entry into the war, when it reached $3,088,904,808,
an increase of about $1,200,000,000.
Bank deposits likewise show a.
large increase, the net deposits of national banks having risen from
$7,495,149,000 on June 30, 1914, to $10,489,217,000 on March 5, 1917,
while the net deposits of all banks in the United States increased
.
from $17,966,150,000 in June, 19k4, to $24,891,218,000 in Jtme, 1917.
Net deposits of national banks had further increased up to May 12, 1919,
to $11,718,095,000, and those of all banks in June, 1918. {the latest
i
·date for which figures are available)
to $26.769,546,000.
Shortly after
April 61 1917, when the Congress declared war, the Treasury began. to' sell
bonds, notes and certificates in large amounts resulting in a net
inc~ease
in the public debt to August 1, 1.919, of $24,518,064,840.
On
July l, 1914, the total stock of money in the United States,
exclusive of that held by the United States Treasury, was
•
~,4~,1~.~~
'?'" ·, • . ~
-
\··;
. ~,
\
578
X-1643
-4On
April l, 1917, the stock of money, estimated on the same basis,
was $4,702,130,941, an increase of. $1,282,962,573 of whlch inr.ree.se
$38},481,028
was
On July 1,
in gold.
1914, there were no Federal reserve notes in existence,
while on April l, 1917, there were outstanding $357,239,000.
The amendment to the Federal Reserve Act approved J1:ne 21, 1917,
changed substantially the original reserve requirements :for memb"3r
. ba:nks and provided that their entire lawful reserve should be carried
with the Federal reserve banks.
Federal reserve banks to
The same amendment authorized the
excban~
Federal reserve notes for gold. The
result of these two changes in the law was to transfer immediately
large gums of gold from the vaults of the member and nonmember bariks
and from general circulation to the Federal reserve banks, and this
caused a change in the
~ethods
of accounting for gold
by
the Federal
reserve banks and Federal reserve agents.
In order to avoid confusion in determining the volUme of money in
actual circulation, it is necessary to distinguish between tables showing
the total stock of money in the country, and tables showing. the circula-
·"
tion outside of the
~reasury
and Federal reserve agents' vaults, and to
I
lo
limit our view to amounts held by member and nonmember banks and the
public, which are exclusive of amounts on band at Federal reserve banks,
held by Federal reserve
a~nts,
and held in the Treasury.
579
•
l.-7:.64~
-5!be reserve &.uoney held by or for the Jl)deral res.;lrvc:: banks
of course, as
~
in circulation.
basis for cr-=-clit, but it forius no ):)art uf tht.: currency
Upon this basis, the aJ:.uount oi' .tlioncy in circulation on
July l, 1914, (There being no Federal reserve
-
s~rves,
ti1:oe) was $3,419,168,368,
uladd up as fvllows:
b~lks
in operation at that
Gold coin ano. certificates
$1,649,775•_803; silve:I' Ci.ollars an"- silver certificates, including Treasury
notes of 1890, $552,203,610; all uthar currency $1,217,183,955, being eirculation ~er capitu $34.53·
The correspond.ing
aJ:.uoun~s
of
tuon~:.:y
in circulation on April l, 1917, ·
December l, 1918, c.nu. August 1, 1919, are shown in the
follo\~ing
table.:
AMOUNT OF MONEY OUTSIDE THE TREASURY AND FEDERAL RESERVE BANKS
A•• •
.April 1,
1~11
Gold coin tmci certificates
$1,989,152,0UU
.Au~ust
Dect..wbi.:r l,
19115
1,
l~l~
$ 301,245 ,ouu $ 728,046 .ooo
Silver dollars and silver
certificates, (including
Treasury notes of 1890)
532,700,000
372,489,000
241,505,000
Federal Reserve notes
357,239,000
2,607,445,000
2,504,753,000
3,170,000
.87,737.000
lbb ,2b9 ,000
All _other currency
1,218, 715,000
1.,201. o69 ,ou0
l,l5t>,297,00U
Total
4,100 .97b ,ouu
5,129,9S5,ouu
4, 7'Jo, t>90 ,(;0Q
Federal Reserve bc:ak notes
,,
~
.Aruount fur ca1-:ito. uutsid.a the
Treasury c:·.nd the F.;d.cral '
~es.:::rvo ba.r:..tes
$}T-ats~
$48.13
$45.16
3f 3 -¥'
;
<
580
I
i
~
i'
I
X-1643
-6Assuming
th~t
the date Deceruber l, 191S, wcrks the begining of the
post-war period, the table shows
1, 1919, as follows:
chcngP-~
during this period up
to August
Gold coin and. ce.t ·:ific<~tes in circula.tion decreo.sed
$133,199,000; silver dollars and silver certificates, including Treasury
note~
of 1890, decrea.sed $130,934,000; Federal reserve notes
d~creased
$102,692,000; Feder~l reserv~ bnnk notes increased $78,552,000; all other
·currency decreased $44,772,000, ·being u net decrease in ~irculation for
the post-war 2eri0d of $333,095,000 1 or $2.97 per capite.
In considerinb the ·-luestion or currency in circulc..tion, there should
be taken into account the vurious
f~tors
demond for currency, omong which u.re!
which have entered into the
The grudual enlarg0ment of po.yrolls,
both as to the nuuilier of workers and amount paid to each; the effect of
higher wages upon deposits in banks and upon the cwounts of money carried
by shopkeepers in their tills and by individuo.ls in their poc.kets; the
amounts of money locked up or carried on their persons by ;,wr.kJ.uen who have
been receivin·g high Wl.tges and who,
foreigners, ure unwilling to
in Governn.ent bonds; the
esp~cio.lly
do;~pusit
~:~uount
t:O.~...oir
of woney
ing to their homes in foreign countries;
in ti:w
or ignorc.nt
S<..ivings in b<..:..1Ks or to invest
cc.1.r:~ied
n.w;:;.y by 'NOrku,tln return-
<:.nd. the fuct t:nc,t t.£J.e circu-
latinrg n..ed.ia of the Philip:pine Islands, Hc.wo.ii,
nowingo J
C[.. se
Cub<~,
Porto Rico, Sc.nta
includes
Haiti' Honduras, Panawa, ond in pu.:;-t, Mexico' I
"Qi United
Statt>s paper currency o.nd subsidiary silver.
these countries. li>Ost of
creased in the
l~tfew
Nhic~:.
years. ·
The amounts
reu:;,uUQ~-
in
ure very prosperous, have 5 rec,t ly in-
Thstot~l foreign circulation of United States currency cannot be stated
a.ccura.tc:ly, but is estiwated to be at least one hundred and fifty nlillion
dollars.
The difficulty, indeed the iupvssibility, of Keeping in circulation
-
an excessive volwu~ of Federal Reserv~ notes should be understood.
The
issue of these notes has been c~refully safeguarded by the federal Reserve
Act, and. ample provlsion has bljen made for their red8niption.
Federal ,
resC)rve notes c:.re redeewcbl..- in gold; they cannot be forced into circulation in p:::.ywent of the e.qxmses vf ti.10 Gov<::rnllient, or for uny other
purpose, ::ts tney c.:;,n be issued only in o:;;.xchange for
6 olu.
or
~c:.:.inst
u.
action, plus the reY.uireci 15olo. reserve vi nut less tuc:...n 40 :per centw.
be::~,:;n
Upon payment vf COJuiLbrCi<::.l pe.per whicn nas
I'
de}?IJsited to
s~:;cure
Federal Reserve note.s 1 there r-.asults .::d t:aer an iu.u.ediate return of an
I
'
581
-7-
equal amount of notes to the bank, or an auto£,"atic inc;-ease in the percentage of gold reserve available for tn"'ir
red~;;
•iftion.
Ft::d0ral R0serve
notes. are not lee!,al tender, nor do tncy count as roscrve mon;;;y fur lut:rubor
banks.
Tn<>y are issued· unly as a nt:ec.. for
become redundant in e;.ny loce.lity they are
th<;:~
devulor;s , anCl as they
returned tu the •rreasury at
Washington, or to a Federal Reserve bank for redemption.
Thus there can-
not at any tiu.e be u,ore Faderal Rc:sl::rVtl notes in circular.tion tht.m
needs of tb.c; country
.
;,~t
ne ..;d abctes the: volume
th.:: present l;;:;vel of J?ric<>s rtq.uirt:, ond
o~
th~::
L.<.S
the
notes outst.:....nding will bci correspondingly re-
duced through redenrption.
Th.:o incre<~sed volurutl of Fed<jr[..l Res.::rve notes
in circulation during the pust three:
result of direct e.xch<.nges for
~::,old.
ye~.rs,
in so far ns it is not the
r.nd gold certificates which bc.ve been
I• .
ij
..
withdru.wn frau;
c.nd
not their
circ1flt~tion,
cause.
is tlle effect of t.idv'-'Ilcing
w~ges
<mo. prices,
l.
i
"';
'
582
~
- 8 There has undoubtedly taken place during the last two years a. certain
amount of credit expansion whic.h, und.er the circumstances co:nnGt! ted with
our war financing, was inevitable, but. th.is will bs corrected as the
securi~-
ties issued by the U:.1.:t ted States Govel'nment for war pux-1)0ses are gradually
I '
absorbed by investors.
This credit expansion ls eQ..ua.l to the 'd.ifference
between the total of the wa1·
expendi vU"es of the GoYe:.."'lmerl.t on <;he one hand,
and on the other, the total amnunts r aised by the Govex·nrnont th:t.•ough ta.1ta,.
tion and by the sale
~f
its obligations so far as pajd for cut of savings.
No reliable estimate can be made of this diffe:':'ence, which must be gra.duall1
absorbed through future savings for the l~eascn that b<:~nks are lending and will
always lend freely on Government bonds a.s collateraL
The principal cause of the advance of prices before and du.:t·:l.ng the war
was the urgent need of the go~ernments of the aJJ. ied wn.r1 d for goods of all
kinds for Cluick delivery in la.rge volume, and the con:;?etition of this buying by governments with purchases by private individuals who failed to contract their expenditures at a rate comnensurate with the g!·owing expend.it\1res
of these governments.
In the post-war period, throu.g'tl w);.Jch we are now
passing, the cou.ntrf has experienced rising prices ~wir.g, in part, to a
general relaxation of the war time regime of personal
€('!'";1'1.mrr.;t
~
r-emll ting in
an increased demand for commodities by individuals who l"'-lst~~5.cted their
purchases during the war but who are now buying in COII!Petition with export
demand.
In ad.di tion, accrued incomes and increased wages have led to heaVY'
demands for commodities not of :prime necessity, wh~.ch have resulted in
diverting labor and material. from essentials to nonessentials ..
,,
••
I '
583
l, :
•
- 9The Federal Reserve Iloa:.:O. helieves tr..at aey cil!':>:ency legislation
for the present. sj t'J.C\t'lon is tl:.r3 same, n.am2l;1 tt' wc·rk
·,
the largest
p::H;~:·'i.".:llc
a~'ld
to save; .
vo}JJ..'T!G of comm<",,U t;l.es~ al;ld to exerci,.;:o reasonable
economies in o:r:-de:r. tnat money, good.s: aud servico3 may be d.evoted
primarily to the l:i.Q.·llida:t.i.:ln of debt a."ld to the
snti~fe.ction
nf the
demand for necensi f;ies 1 rather than t.o :i.r.cl1.1.lgence in e.xtr.avaga.nces or
wa.:r
the gratificat..i.c.n of a desire for l·J.:~urS.es.
sense - and while the
bil~s
'l1he /~;; over, - in a military
have been settled by loans to the Government,
these obligations. so far as they are carded by the bar:ks, m1:1st be
absorbed before the war chapter of the financial hisi;ory of the
can be closed.
Very truly yours,
w.
P. G.
ru.nmim
Governor ..
Ron. Geo. P. McLean, Cha~.rznatl,
Committee on Ba.rJcl.r..g an:i C1lrrency,
United states Senate,
Washington,
I.
D.
c•
C.;cur~tr~"
'\
584
I!X OP'FJCIO MEM81ER8
W. P. G. HARDING. GOVIRNOR
ALBERT STRAUSS, VICE GOVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
CARTER GLASS
SICIETAIY OF THE TREASURY
CHAIRMAN
FEDERAL RESERVE 1;30ARD
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
J. A. BRODERICit, SECRETARY
W. T. CHAPMAN, ASSISTANT SECRETARY
W. M. IMLAY, fiSCAL AGENT
WASHINGTON
ADDRESS REPL. Y TO\
FEDERAL RESERVE BOARD
Augu.st 8, 1919.
...
X-1649
SUbject:
Board's views as to need for legislation
providing for reduction of currency in
circulation.
Dear Sir:
There is enclosed herewith, for your information,
c~y
of a letter which the Board has
to~
addressed to the
Chairman of the senate Conmi t tee on Banking and Currency in
response to a letter from him requesting an expression o£
the Board's views as to the advisability of legislation providing for the gradual reduction of the currency in circulation,
as proposed by
~enate
Resolution 142.
You will note that the Board desires that no publicity
be given to this letter until the morning of August 11th.
'\
Governor,.
Enclosure.
EACH
LETTER TO/CHAIRMAN, GOVERNOR, MEMBER ADVISORY COUNCIL
-
'
I
IDe 0PI"'CIO
585
MEMBER.
W. P. II. HARDIN&. IIOYIRMOR
ALBERT STRAUSS, VICI GOVERNOR
CARTER IILAlll
ADOLPH C. MILLER
CHARLES S. HAMLIN
SICIIIAIY OF THE TRIAIURY
CHAIRMAN
JOHN SKELTOI WILLIAMS
COMPTIOLJ.&R OP THI CURRENCY
FEDERAL RESERVE BOARD
1
J. A. BRODERICK, SECRITARY
W. T, CIIAPMAN. ASSISTANT SECRETARY ~
W. M.IIILAY, FISCAL AGENT
WASHINGTON
ADDRESS REPLY TO
FEDERAl. RESERVE BOARD
August 11, 1919.
X-1650
SUbject:
Printing Requirements of Federal Reserve Notes.
Dear Sir:
The Bureau of Engraving and printing has advised
the Board that the present statement furnished the Bureau,
giving, by denominations:, the minimum balance ot Federal
Reserve notes ot each Federal Reserve Bank required to be
maintained in Waehingtcm, is not sa.tisfactoey.
'!'he Bureau. desires a schedule showing the average
daily printing require~ts of Pederal. Reserve notes ot each
Federal Reserve BSDk covering a given period, and the Board,
theretol"8, requests that you forward to it,
soon as practicable, an estimate of the daily amount of Federal Res~rve
notes and Federal Reserve !ank notes, by denominations, which
you believe should be printed for your Bank during the three
months - september, October and November.
as
It is planned to fumisb the Bureau with a printing
estimate eve;ey three month&, but an:! Federal Reserve Bank l'nlq"
revise its estimate at any time in ease new conditions justify.
Upon receipt· of this information from all ·Federal
Reserve Banks, the Board, wUl prepare a schedule and forward it
to the Bureau of Engraving and Printing for their gu.id.anea in
me~ting the reqUj.zoementa of the Fed:eral Reserve Banks in the
printing of I'ederal Deeerve :00'-• .
Very ~r tows;
Acting Assistant Secretaey-.
LE'l'TJi:R SENT
ro
CHAIRMAN OF .1iLir BANKS
•
[1
~--,e>'J'·':•·'·'' -'· ~'
•
I
RESERVE
FEDERAL
586
X-1651
<
BOARD
I
STAT.EMB;NT FOR THE PRESS
For immediate release,
August 12, 1919.
PRESENT STATUS OF
PROHIBITION~) ~TING
IQ._E0REI GN EXCHANGE TRANSACTIONS.
By the Proclamation of the president, dated June
26, 1919, all
previous 1Jrocla:mations prohibiting the exportation of coin, bullion, or
currency, and the power and
aut~ority
vested in the secretary of the Trea.S'Ul7,
and in the Federal Reserve' Board, and all orders, rules and regulations issued
or prescribed in connection therewith were revoked and cancell.ad except that
such proclamations, orders, rules and rsg.:Ua.tions
we~·e
ccntir..uad ln force and
effect in so far as they were necessary ·to enable the Secretary of the Treasury
and the Federal
R~serve
Board effectively to control --
All exportations of co~nt b\ul\on, ~nd currency to that
part of Russia now under the control of the so-called
Bolshevik Government;
(1)
;t
(201
AxJy and all dealings or exchange transactions in Russia.'"l rubles;
0) 1'ransfdr of credit or exchange transactio:na
wi tJ-2, t'hat part of
Russia now under the comtrol of the so-calle(l Blilshev:lk Qove:tnme:n,t;
(4)
and all transfe1·s of credit or exchw:.:.go tl•l.:•ns..ct:.o.:lu with
territories in respect of which such transactiollfl were then
permitted only through the AiDerican Relief .Ad.rrti:r.d s :;:ration..
Any
This Proclamation d.J.d not authorize remittances to enemy territory
which were thereafter, as theretofore, parmi tted only under sp'ecial or general
license of the War Trade Board.
up ·to the pressmt time by
th~
except in certain specified
Under the
Gen~ral
Enemy Trade Licenses issued
War Trade Board, howevert such trade is permitted, -
ax·t~.~les
a..'"ld conmodi ties, with all persons with ·
whom trade is prohibited by the Trading with the .;Enemy Act, except trade with.
1.• ~ .
Hu.ngary]and tlu:l.t porti<m of Russia. under the control of the Bolshevik authorities.
I
•
·'
-2On June
:SO,. 1919 • the Federal Reserve Board
anno~ed
that
remittances to the countries referred to in the fourth exception mentioned
above were not tbereo.fter subject to
O'lq
The Federal Reserve Boord has
restrictions.·
~ust
announced the isaue of
£l.
-
Russian rubles, pro•ided that notice of such eJtportations be given to the
I .
customs Division of the Treasury De,pa.rtxnent and to the Di.,is:S.on of Foreisn
general license permitting the
e?~;Portation from
the United
States of
.
Exchange of the Federal Reserve Bom-d.o
the
~orta.tion
This ··teguhl.tion does not authorize
into the Unitecl states of Russian rubles ..
The present situation is, therefore, that a.ll restrictions have
been removed from the eX!lort of coin, bullion,
~d
transactions in foreign exchange eaept a.s to (1)
curreney
am.
trans£~C.tions
from
with or
for persons in that part of Russia now under the control of the sQooiOco.lled
BolShevik Government; (2) the importation of, or exchange tronsactions int
.
·.~
Russian rullles.
It should be noted
th£~t
the War Trade Boe.rd has not authorized
transactions with or for persons in Bunga17.
I·,
I
l
1.
-·--·--·----------------------------..---':""'""---
588
lEX OFFICIO MEMBERS
W. P. G. HARDING, GOVERNOR
ALBERT STRAUSS, VICE GOVERNOR
ADOLPH C. MILLER
CHARLES S. HAll LIN
CARTER GLAII
SICRIIAIY 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
WASHINGTON
ADDRESS REPLY TO
FEDERAL RESERVE BOARD
Augu.st 21,1919.
X-1655
SubJect:
Form o£ Condensed Financial Statement.
Dear Sir:
There is enclosed for your consideration a form of
condensed financial stateruent which was approved lost year
by the Clearing House section of the ~erican Bankers'
Association. This statement is designed for the protection
of banks which purchase .commercial paper in the ruarket or from
note brokers, and the suggestion has been
made
to the Board
that an impetus would be given to the use of this fona if the
Federal Reserve Banks should
recOiu~:uend
it, and particularly if
they should ask mewber banks having occasion to rediscount
purchased paper to attach a copy of the statement at the time
the offering is
n~e.
The Board is
to your attention without
mere~
bringing this matter
rec~uend~tion.
very truly yours,
Enclosure.
GOvernor.
Letter to each governor.
589
W. P. G. HARDING. GOV!RNOR
BX OF'I"'CIO I!IEMaiiRI
ALBERT STRAUSS, VICE GOVERNOR
ADOLPH C. II ILLER
CHARLES S. HAMLIN
CARTEIIliLAII
IICUTA•T OP THI TREASURY
""CMAIIIYAN
• JOHN IKI!!LTOII WILLIAMS
COMPTROLL.IR OP' 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
Augu.st 23, 1919 ..
Subject:
•
X-1657
Code Messages to be used in Rediscount
Transactions between Federal Reserve Banks ..
Dear Sir:
Referring to the Board's letter X-1613, of July 10, 1919, and
X-1628, of July 24, 1919, on the above subject, the Board re~uests the
use of the following code wor.d effective September 8; 1919, in rediscount
telegrams between Federal Reserve Bariks, advising of advance payment of
rediscounts:
RESORT:
.
We are paying your bank tociay by direct transfer through thtr
Gold settlement Fu:ncl on a~:ccmt 0f pror~eeds of advance payment
for our rediscou11t wi tl~ y01.u.· bank dne l,_s~.t~) as follows:
Rate (_l.l) per cent
(Name) or ( N\liiJ.b e r) Amt. ( ~15 , 000) Di so.
(Name) or ( Number) Amt. ( $10,00J) Disc.
$.141~88. 49)
~!9~2.,2,2)
i~l~:~t~ ProceGds (( $.
Proce:;ds
Rate (~) per cent
(Name) or (Number) Amt. (;tlO,OOO} Disc. (~) Proceeds ( $. ¢!~91. 85)
(~) or ( N".liilber) Amt. ($. 5,000) Disc. ( $. .07) Proceeds ($ .995·9.2)
Very truly yours,
Acting Assistant secretary.
To chairmen of all Federal Reserve Batiks.
X-1656 ·
June 25, 1919.
The Governor,
Federal Reserve Board.
Sir:-
By direction of the Secretary, you are advised that the De]>artment has referred to the Auditor for the Treasury Department for settlement the account of
the Bureau of Engraving and Printing for preparing Federal Reserve notes during
the period June 9 to June 21, 1919, amounting to ~Zy205.75, as follows:
1§.
j}Q._
$20
~
-?100
Total
Boston............ 65,000
50,000
3,000
5,000
123,000
New York ••••••••• a74,000 · 288,000
115,000
9,000
4,000
690,000
Philadelphia •••••• 39 ,ooo
18 , COO
23,.000
1, 000
61,000
13,000
2.,000
10,000
33,000
Cleveland ••••••••••• 8,000
Richmond •••••••••••• z,ooo
2,000
4,ooo
Atlanta •.••••••••• 104,000
3,000
7 ,ooo
114,000
68,000
115,000
5,000
430,000
Chicago ...•••••••• 226,000
St. Louis .••••••••• 59,000
26,000
4,000
1,000
90,000
Minneapolis •••••••• 36,000
38,000
- --7,000
Kansas City •••.••••• 7,000
Dallas •..••••••••• l03,000
103,000
San Francisco •••••• 93,000
1t~QQO
8~000
116,000
1,020,000 479,.iY)Q_ _?~9CQ
34,000
5,000 1 1 637,000
...
I t
·'.
1,837,000 sheet& ~t ~44~75 •.••••••••••••••••••••• $82,205.75
'l'he charges against the se~J"eral F&deral Reserve Banks are as follows:
Bureau a£~ro~riations
.Plate
CampenInc. comPrint;J..ng Materials. 12en§at~on. 'l'Qtal.
sat ion.
~eets
Boston•••••••• 1a•.ooo $l,976ot'l5 n~~6&) ..:s4. :;j;£~~'1. u· $ 32.4.rl2 $5,504.25
'-;;t ....
8,956.20
9,5n . . 20
1,821.60 30,677.50
New York•••••• 690,000 10,52.2-.50
1, ),:?'4. ?.8
3.,624.75
213.64
l,051.3c3
Philadelphia •• 81,000
1,235.25
4!:H.,O·i
503.,25
428.34
67.12 1,476 .. 75
Cleveland ••••• 33,000
f;5.52
10.56
179.00
61.00
51.92
Richmond.......
4,000
300.96
5,101.50
Atlanta ........ 114,000
1,479.72. 1,582~32
1,738 .. 50
6,051.68
1,151.04 19,511.00
Chicago ••••••• 436,000
5,649.00
5,659.26
4,027.50
237.60
1,2~.20
St. Louis ••••• 90,000
1,372.50
1,166.20
100.32 1,700.50
527.44
493.2.4
579.50
Minneapolis ••• 38,000
313.25
18.48
97 .. 16
90.66
105.75
Kansas City •••
7,000
271.92 4,609.25.
1,429.64
1,336.94
Dallas •••••••• ·103,000
1,570.75
311.52. 51280.50
1.799.50
1.531.64 1.637.84
San Francisco. 118.000
'J&i:.t,
1.837..t9_00"~~~~.?!?
~23.844.26 ~25.497.56
~.849.68 ~2.205.75
The Bureau appropriations will be reimbursed in the above aniDunt from the
indefinite appropriation 11Preparation and Issue o:£ Federal Reserve Notes. Reimbursable," and it is requested that your Board cause such indefinite appropriation to be reimbursed in like amount.
RespectfUlly,
R. c. Leffing\vell,
t
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Assistant Secretary of the Treasury.
590
TREASURY DEPARTMENT
WASHINGTON
-~1657
JUly 14, 1919.
The Governor,
Federal Reserve Board.
t.
Sir:-
-
B.y direction of the Secretary, you are advised that the Department has referred to the Auditor for the Treasury Department for settlement the account of
the Bureau of Engraving and Printing for preparing Federal Reserve notes during
the period June 24 to JUne 28, 1919, amounting to $32,354.25; as ·follows:
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.k_
Boston•••••••••••• 18,000
New York•••••••••• 77,000
Philadelphia ••••••• ----Cleveland......... 2,000
Richmond •••••••••• 25,000
Atlanta •.••••••••• 56,000
Chicago •••••••••• 36,000
St. Louis ••••••••• ----Minneapolis ••••••• -- --Kansas City ••••••• 19,000
·Dallas ••••••••••••. 21,000
san Francisco ..... 11,000
~10
$20
j§Q,
jlOO
Total
-- --- --34,000
140~000
63,000
9,000
289 1 000
30,000
14,000
- --~000
46,000
-- -•12,000
14,000
-- ---- --25 1 000
25,000
4,000
85,000 ·
19~000
78,000
133,000
26,000
5,000
- --31,000
2,000
-- --2,000
-- ---- --19,000
-- ··--- --21,000
-- ---·--------1::::.:3...,.""'0.........._ _ _ _ _ _ _ _ _ ___.24__.,~0-00--..
00
16,000
~Jill~~.g~~?9 ==1==§=9~·o=o=o===:::9:::l'!:::o=o=o==2=·=o=o=o===7=23:::::!:,o=o=o=
723,000 sheets at $44.75 •.•••••••••••••••••••••• $32,354.25
T.hecharges against the several FedeTal Reserve Banks are as follows:
---------~----~B=t~ ap~to~p~r~i;a~t~io~n~s~-----------
CoropenPlat·~
Inc. ComSheets
sa.tion..
l?rint_:id!K Materials.
pensation. Total.
Boston• •• ••• 34,000
$ 518.50 $ 44.1.32. l 1l'l:C9-~
$ 89.76 $1,521.50
New York •••• 289,000
&,407.25
3,751.22 4,011.32.
762.96 12,932.75
Philadelphia.4o,OOO
701.50
597.08
638.48
121.44 2,058.50
Cleveland•••• l49 000
213.50
181.72
194.32
36.96
626.50
Richmond ••••• 25.ooo
381.25
324.50
·347,00
66.00 1,118.75
Atlanta •••••• 85,000
1,2.96.25 1,103.30
1,179 •.80
224.40
3,803.75 ·
2,028.25 1,726.34 1,846.04
351.12 5,951.75
Chicago••••• 133.000
st. Louis ••• 31,000
472.75
402.38
430.28
8l.84 1,387.25
Minneapolis. a,ooo
30.50
25.96
27.76
5.28
. 89.50
Kansas City •• 19,000
289.75
2.46.62
263.72
50.16
650.25
Dallas ••••••• 21,000
320.252.72.58
2.91.48
55.44
939.75
San Francisc;.:.::;o.:;24~·a.=0;.::::0:.:::.0_-::-::~-.::;36~6::..:•:.::::0~0---~~3~11=..•~5~2:;..-~~3;..:::3~3:..:.1::.::2~-~~63::_;.;•~3~6~~1~,~0~7~4.:.;,0:-:0:72.3,000
J$11.,025.75 $91f384.54 :ikl0.035.24
$1,908.72 $32,354.25
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 your Board oause such indefinite appropriation to be reimbursed in like amount.
Respectfully,
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R.
c.
Lef'fi~ve11,
Assistant Secretary of the Treasury.
591
592
IIX OPPJCIO MIIMBIIR.
W, P, fil, HARDING, GOVIRNOR
ALBERT STRAUSS, VICI GOVIRNOR
ADOLPH C. IIILtER
CHARLES S. HAll LIN
CARTER fiiLAII
SICRII'f.UY OF THI TRl"Asllit:Y~ ·~-·~~ ~'. lJ,.,; : .
CNAIRIIAN
•
F.EDERAL RESERVE BOARD
JOHN SKELTON WILLIAMS
COMPTROLLIR OF THI CURRENCY
WASHINGTON
W. T. CHAPMAN, AIIISTANT SECRETARY
W. M. IMLAY, FISCAL AGENT
ADDRESS REPLY TO
FEDERAL. RESERVE BOARD
X-1658
August 23, 1919.
-
I.
J. A. pRODERICK, SECRITART
SUBJECT: Interdistrict
T~
Schedule.
S i r :
.
The representatives of the transit departments of
the
~arious
Federal Reserve Banks at the conference held
in WaShington on the 18th instant reported an interdistrict time schedule as set forth on the enclosed sheet.
You are requested to bring this to the attention of your
officers and Executive Committee and have it ratifiad as
far as your batik is concerned. subject, of course, to
changes that may be necessary.
The Board will appreciate advice o£ the action
taken.
Very truly yours,
Governor.
Enclosure •.
Letter to each Chairman copy to Governor.
any
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l
593.
IIX OPPICIO IIIIIMIIIIR.
W. P. G. HARDING. GOYIRNOR
:~~=~ ~~R.:~~~!RVICE GOVERNOR
CARTEl! &LUI
C:HARLES S. HAMLIN
IIC&IIA&l OF THE TRIA.URY
\
CIUIIIIAH
JOHN SKILTOI WILLIAMS
FEDERAL RESERVE BOARD
C0MP1'ROLLIR OP THI CURRENCY
WASHINGTON
ADDRESS REPLY TO
FEDERAL RESERVE BOARD
August 27, 1919.
-
x-1659
SUbject:
Consideration of Senate Bills
2582 and 2590·by Federal Advisory Council.
Dear Sir: ·
The Boa:rd has ~uggested to the President of the
Feder~
l.
I ,
W. T. CHAPMAN, ASSISTANT SECRETARY
W. M.JMLAY, FISCAL AGENT
'~
.
J. A. BRODERICK, SECRETARY
cou~il
Advisory
Senate Bills 2582
anQ.
that consideration 'be given to
2590 aild that the council, when it
meets here on Septembet' 15th,
make
such ree01Illllendations as
it deems advisable regarding the 1,>roposed legislation. At
the request
are handed
of
fOU
Mt. Forgan, copies ot the bills referred to
herewith.
Very truly yours,
QoVel'JlOJ' •
Enclosures:
mTTER SENT TO EA(m MEMBER OF THE FEDERAL .ADVISORY COUNCIL
EXCEPT MR.. FORGAN.
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594
STATE!ftNT FOR THE PRESS.
For. release F'I'ida.y at'ternoon,
. Se:ptewber 5,1919.
Business
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J'EDE'R-AL RESERVE DOARD
a~~
Financial Cond:tions
du~ing
August.
Dl'Iing the i.'UOnth of .Augus·;~ factors which had. not hitherto arrested much
attention exercised great ir.<flue~1ce on the business sit•J.ation, Referen-:;e is JJ.lade,
of course, to the :prcb 1er... of corurJ.tndity :prices, in pax·tict.llar those going to ~:~>ake
u:p the cost of living, ar~d to the conseqlJ..er. .t cond:l.ticn of laboz· unrest .. Whereas
previously emphasis haa. been :pluced upon the great activity displayed by business,
and the two problems ruentio:J.ed a-p;:eared merely as d.istu:t'bing eleruents in a general
situation, which was con5.:ldered sa~;:i.sfa;.~to:~.·y in the ruain, t-he :probler.:. of p.rice .
the relation of wages aml p.t•ice~ .. A rroveu.e:J.t tcwa;Cl. :ower- pr·iees appears to be :in
process in certain directions, prices of' ce:r.tai.n f::•:"cl2.:-:v.f:::'s a:;.-e declinine:;; and a
.feeling of convervatism i.s r-'~tico::abl~ in.cert.;:d.n J:hJes, s.leh e.s the textile ilild
sho·e jndustries 1 in which pri~e ad.vunc.:es had p1·evionsly been u.ost marked , 11 re.sa.les11
at soo..e concession in prlce
being latterly reportP.d. l1t=T10rts reGeived from tha
Federal Reserve agents gen.erally iniiicate a feeling of confidence tr..at a sa.ti'sfac-·
tory solut.ion of the pr:tce and wage prablerus wi U be reached. The actual voluu..e
of business transacted con·i;im,;,es at an extremely high level for the present seasca
of the year, although transpo~tation·difficulties and shortage of labor have been·
h~pering factors in certain lines. Increase4 activit~ is in fact reported in
certain of the basic industries. The agricultural outlook on the whole is distinct\~.
less favorable than a month ago, although the large acreage so'fm in certain cases
will corupensate for decreased yield per aere.;. Cotton in particulo.r is in poor con-
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dition. Reflecting the feeling of uncertainty which prevails. the volune of
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_.,_
595,;(
x-1664
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speculation has abated, Dnd declines in the price of securities have occurred. The
general business situation, while presenting sorue disquieting features. is however,
at bottom strong. Barring industrial conflicts, the customary swell. in the volUUJ.e
of business during the fall wonths is probable.
It is stated in district No. l that "the industrial unrest has oversba.d.owed
all other factors, and the inte~ference with transportation facilities has caused
for the most part a general slowing down, due largely, however, thus far, to appre•
hension of the :wanufa.cturer rather than to any direct slackening up of business
den.and." In district No. 2 "business hat continued in great voluwe and labor has
been fully elllployed,'' while the situation, in spite of the disturbing elen.ents
which have appeared, continues favorable on the whole. In district No.
3, "while
the vol~e of.business transacted is very satisfactory, the business cowwunity is
disturbed over the outlook owing to the continuance of labor agitation and efforts
to reduce the cost of living."
In district No. 4, although the sarue disturbing
factors are noted, there is "continued il.Cq)roveoent in all LJanufacturing lines." In
district No.
5 "trade
and com1.uerce continue highly active, without apparent pause
.
and without· any llla.terial recession: as yet in prices, but there is rather a
suppressed feeling of Uncertainty pending the eventual solution of present
proble~s~
In district No. 6 the agricultural situation is poor, but there has been "little
· of the usual slackening of co.u....ercial activity, although the agitation of the hie)l
cost of living has caused sorue merchants to exercise caution in buying .. 11 In
district No. T 11 for the moment :matters seeU1 to be in a wore reassuring state, The
labor crisis, which was giving general alarw a fortnight ago, a:vpears to have
passed, and business is going forward on 'high gear t. ".
In distric~ No .. 6, although ,}
"no marked decrease in the volume of business is apparent", business in s01. . e. lines
has tended to become unsettled, and "there is evidence of uneasiness in some
q,uarters".
In district No.9 "the general situation is very good" and. should.
continue so for
some tiwe" "if the feeling of unrest axuong the laborin6 peoJ:)1e c~.
be
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ward with ~azing strides under difficulties, and an unwistakable feeling of confidence in the continuation of busy Dnd prosperous tifues" prevails. In district
No. ll general business conditions have apparently not been affecteu to any great
extent by unfavorable factors. In district No. l2 conditions are generally favorable
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and the outlook is very good.
DUring the present uonth the comruodity price situation has u.ttracted widespread attention~ A sharp increase in prices occurred during the wonth of July.
The general index
n~ber
of the Bureau of Labor statistics for
at 219, the highest level ever reached, as
an increase of
com~ared
that ruonth stands
with 207 for the wonth of Junet
5.4 per cent. The increase in prices, while general, has been
greatest in the case of the group of consumers
group) as c O~>lpared with
t
goods, being o-lper cent for that
4.6 per cent for the producers ' goods group, and 5,4 per
cent for the group of raw :w.a.terials. The indeli: n'UD..;bers for each of the subgroups
included under the heo.d. of raw materials have also
an~al
increo.sed~
The nUI::lber for the
products subgroup shows an increase of 8.4 per cent, while that for the
mineral products subgroup shows an increase of 2.1 per cent, and those for the
farru products and forest products subgroups show increases, respectively, of 4.1
and
6.6 per cent. Practically all the index nULJbers for the v;;l-rious groups given
above represent the highest levels reached, and the vast waJOrity of the
individu~l
co.au.aodities included in the construction of the index nuwber increased in price.,
The general feeling of unrest which is noted has f ou:nd one of its chief expressions
r
in discontent with the high levels which prices have reached. Measures for controlling the situation and keeping the prices of necessaries at least within
reaso~
able lil.uits were taken by the Government 1 following the message of the President
read before congress on August 3. As far as the Federal Governwent was concerned.
..
, these measures took the iorw of more drastic use of existing legisla.tionJ including
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r1,~~.~~~:¥ !.·~€3 fi+M¥:'·~·e"~ -: ,"~··-*t.
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x... 1064
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the application of the provisions of the food control act to profiteering and hoard·
ing. Congress has also under adviseruent the ena.ctw.ent of a.d.ditioru~-1 legislation
extending to a nUTiJber of articles other than foodstuffs the penal provisions of the
I··
existing act, nod providing for greater pUblicity. regarding wholesale prices of the
...
principal articles of dawestic cons~ption. Furtherruore, sundry w.easures were und~r..taken, such as the disposal of surplus arwy supplies and the eliruination, where
· practicable, of the w.id.dleman in the uarketing of necessaries, etc. A
IuUCh
IUOre
conservative feeling now prevails in certain lines, such as the textile and leather
and shew industries, in which price advEtnces have been wost war ked, and resales at .
son..e concessions in :price are reported. The prices of' sol.i.l6 cau.uodities, in particu-
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lor foodstuffs, have shown o. downward tendency since the opening of the month,
r.
As
(:orall.a.I'.Y
·.... to the price problen.. ond. the high cost of living there is the
feeling of labor unrest which is warkad at the present time und which has given
iq>etus to the agitation
concerning prices. Reports fro.w the IiiliJority of districts
designate the labor situo.tion as "unsettled", although frow Chici.'l.gO it is stated
that "the labor crisis, which was giving general alan! a fortnight o.go, appears
to have passed,"
while several other districts report such conditions a.s fairly
satisfactory- New wage dewands and·strikes, actual or threatened, are fre~uent
r
in certain districts, although in Philadelphia it is stated that inquiry revealed
"~hat
uctual difficulties were few." Labor conditions in the iron and steel ~
dustry have been unsettled, and the efforts to effect the unionization of the
workers will be watched with interest. Traction
stri~es
are reported from various
centers. The strike of the railroad. sho,pmen'<. ha.s been far reaching in its effects,
r:
and has resulted. in material embarra.ssraent to trade. The transportation situation
is again in the foreground of public discussion, both in
http://fraser.stlouisfed.org/ annoUQCement
of tlle
Federal Reserve Bank of St. Louis
azld
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conse~et~e
of this strike
by the railroad brotherhoods of their plan :for :the. future
~~·:.~~~;frij~~~¥:~!ktr:t*!?Y* >t~5'"·.':* *:' h: *-·
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598
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.operation of the railroDds •.In certain districts a decreasing efficiency of labor
is ren1atked, which ·is ascribed to relaxation froru war time pressure for rua.xin.Lum
production • .At the sawe til:ue additional deru<.inds made by the workers have been
granted·~
and city and fal'Ll, which exists in r..r:my secti'ons. In ruany districts it is reported
'that no one who wishes to v1ork need be idle, ani actual sur-.,l:)luses of labor which
are reported are few and scattered ..
The agricultural outlook is in many ways less satisfactory than a ru~th ago,
in particular with respect t;,o the grain crops. Excessive w.oisture at a critical
stage has resulted in ,increased growth of straw nnd a reduced yield per acre of
winter wheat. l:l.lthough, owing to the large acreage sown, it is expected that the
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country ts crop will be the second largest ever produced. The outlook for ~·spring
wheat is also less favmro.ble, the est~ated yield on August l being only
I
225,0uu,ooo
bushels, as cot~ared with
9 »srU.a.ll
322,ouo;ooo
bushels on July
1.
In district No.
grain reports are still very discouraging, showing a ~uch lower yield per acre than
wo.s expected," but "the corn crop is in· excellent condition.," In district No. 10
" a good crop is assured,n the corn being benefited by the August rains, while
"conditions have been highly favorable to oats, rye, und barley,."
corn continues very favorable" in district No~ '11.
"The outlook· for
Reports frow the Pacific coast.
indicate that less d&r...age to grain has resulted from the
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in .large part due to the general shortage of labor, skilled and unskilled
11
Unfavorable conditions"
reported last ruonth than was anticipated.
"
The outlook for tobacco in Kentucky' and connecticut is pror.uising, but ex.- .
cessive rain 'bas caused dau.age in the Carolinu.s. Good fruit crops are reported on
the ·Pacific coast. The condition of the cotton crop
~n July 25 wus b7 .1.
the lowest
on record at this d.ate 1 and the yield was estiwated at ap:tJroxil:uately 1,000,000
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·bales under that of last year. As a. result of e~cessive ruins, cotton has not
.
fruited well, and
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tbe boll wee·vil has been active. There is a considel-able
... 6"carry-over" of low grade 1 very short staple cotton, which ~ ordinarily exported.
Spot prices of cotton in the South are reported to have been steady, although
violent price declines occurred in both spot cotton c.nd futuees in New York during
the raonth. In New England sales of the shorter staple show renl declines in price,
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while long staple has not ceased to advance.
It is reported from- the
~sas
City district
tr~.t
willing operations have
been heavy since new wheat cOIIJl..enced to arrive, but buyers of flour are not .placing
orders far in oGVance. Flour prices have declined only slightly, in about the sane
proportion as
~ve
wheat prices, while the price of corn futures has had a sudden
drop frO.i4 the fon.er high level. Trode reports frow various centers indicate thut
the dewund for flour has-decreased noticeably during the ruonth. Flour production
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during J_uly, as reported by the United states Grain Corporation wu.s 8,3)9,000
bushels, as corupared with 7 ,130,0v0 bushels during June. !4.eltings of refined sugar
continue considerubly in excess of the
decre~sed
receiFts of raw .·sugor, und care
is being used in the distribution of existing SUJ?plieser
Receipts of cattle at 15 priwary warkets increased frow lt122.732 heod during
June to 1, 527,881 head during July, o.s co4pared with
l,t>97 • 193 heu.d. during July 1
1318, the respective index numbers beine. lll, 152, cmd 168. Receipts of hogs show
a falling off frow 3,061.,838 head o.uring June to ?,411~539 head d1;.ring July~ ~nd
2,530,414 heM. during July, 19lB, the respective index numbers being 139, 110 cmd
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115. Receipts of sheep again show a considerable increase, being 1,558,767 heod
during July, corresponding to an index nuwber of 114, as cowpnred with l,llb,OO}
head during June, corresponding to on index n\lr.:lber of 82, ond 1,145,488 head during
July 1918, corresponding to an indeat nun.ber of 84 .. It is reported froru the Kansas
City district that the price of cattle has advanced fror.i.i the lower level prevailing
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in June, while
~harp
breaks occurred t'ro:w the record hog prices prevailing during
July, hogs on August l5'being down to $22.25 per
hundred\~ight,
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c~pareo.
with
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the top price of $23.1KJ reached during July.
In iron and steel further increase of activity is noted. Pig-iron prQd.uction
has increased froiD 2,114,863 tons during June to 2,428,541 tons during July, the
respective index numbers being 91
and 105. Steel-ingot production
has increased
fron. 2,219,219 tons during June, corresponding to an index I'lUIUber of 92.• to
2,508,176 tons during July, correspondingto on index number of 104, while the
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unfilled orders of the United States Steel Corporation at the close of July were
5,578,661 tons, a.s cor..pared with 4,892,855 tons at the close of June, the respective
index nuwbers being'lub and 93. The steel industry at the close of July was reported.
to.be operating at fr~ 70 to 80 per cent of capacity.
Price increases are reported in certain cases, but leading producers favor
continuance of the established levels. Brisk purchasing of pig iron has continued,
with prices tending upward, but producers are reluctant to book urders for deliver;y
beyond J t..nuary. The derua.nd is still chiefly for the prQd.uc ts noted in last month •s
report. Manufacturers of lapweld. pipe, wire, sheets, bars,
Emd.
tin plate have
sufficient business booked to enable them to operate for a considerable period •
.An.ong the lines which have logged, iuproven..ent is noted in the dewand for .f!lates
and. shapes. while the railroad purchases for waintenance account have given IWCh
encouragement to the industry. Slight improvewent is noted in the demand for
structural steel. It is reported from district No. 3 that the increase in the
tonnage ordered is represented by a large nUI'llber of moderate sized orders, and
indicates a better promise than if a faw large tonnages had been closed. Active
export inquiries are noted. Trades allied with the iron and '\eel industry, such
qS machine tools and hardware, are very active. The
industr~s been hampered by
the labGr situation. Operations in sowe centers, notably Chicago, were hindered by
the strike of the railroad sh~ruen, which in conJunction with a strike of dock
workers at upper lake ports interfered with iron-ore shipll&ents. The prin::ipal
,.question,
however,is
engaging the efforts
that of the unionization of the industry, which is at presen\
of labor leaders.
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Consumers have taken head of tha warnings as to a possible coal shorte.ge,
emu. i.l.:~.vy :_.u.rc~ a.sinc, 1s r.:;ported.
-~:..-..::'.:;_ r~u.
coal
A rush of buying by consumars of anti:raci t~
as a res1i!_ t of tt0 ::,;ublici ty CEJ:<J::?a.ign oi th:3 bi tl..li1Jinc;t...s ·
:c·oduc~rs,
and the anthracite producers are now seeking to reassure the public of the
sufficiency of prospective supplies of anthracite.
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Production of bituminous
coal during July amounted to 42,946,000 tons, as compared with 36,so6,000 tons
during June, the res~ective index numbers being 116 and 99·
Anthracite coal
shil_:.ments during July also increased, being 6,052 1 ·334 tons, corres-.i:londing to
con~ared
an index number of 108, as
:tJOnd.ing to an index number of 100.
with 5,619,519 tons during June, corresCoal l•roduction is being ilillJeded in certain
sections by labor difficulties and by car shortage, and 'the out;t;ut of bi t'Wllinous
shows a considerable decrease during the present month.
I•
The
out~ut
of beehive
coke during July was 1,512,178 tons, as COD::I,1Jared with 1,170,752 tons during
June.
Increased demand
of the
o~ening
fo~
r~orted
cOke is
of add.itiona.l blast
in district No.
~urn~ces.
The activity in the copper market noted for the ruonth
Sales by
~roducers durin~
7 as the result
~f
that month, amounting to 225,000,000
July has subsided.
~ounds,
were
ths largest for any month during the present year, the figure for Mey, the
next highest, being 208,000,000 younds.
It is stated
th~t
producers of
c~er
and zinc have booked sufficient business for the months of August and September
and ere now opening their books for October.
Stocks of refined copper and
! t
lead
~re di~inishing.
During the month of July higher prices continued to
be paid for both lead and zinc ores in the Joplin district, and had a rather
stimulating effect upon production.
August
by
.'
tr~nsactions
specul~tors,
in copper, lead.,
and shading of prices
situation at the opening of
Pu~st
its surplus stocks upon tha ma.rke t.
Lead likewise increased in price.
~d
h~s
During
zinc have consisted largely of resale
occurred.
A factor in the zinc
was the decision of the Government to throw
'!he tin market has be .m quiet ;;;.nd :prices
".
·,
"'•·
<''
-
, . •_,
602
•
&
X-1664
- 9-
have declined, with expectation of still further decline now th.;..t free
I
in~ortation
is permitted.
Genercl manufc..cturing continues active.
The "feV•3rish activity" which
characterized th3 textile and dry goods industry for several months has abated
sorr,ewhat, but business is still unusual.Jy heavy for this per5.od of the year.
A spirit of gree:cter conservatism on the part of buy:;rs, howev·?r, iz noticeabl'.3.
'
I
These conditions are se3n particularly in the case of cotton goods.
I
have plenty of business booked, and hen0e show no disposition to make price
l
concessions, holders of gvods for resale feel less secure than they did
While J.O:i.lls
previously and are willing to make concessions in order to dispose of their
holdings.
Despite the feeling of consex·v..;tism, however, the market r·Jadily
absorbed, at prices irl most cases closely approximatin; current market prices,
the large Government-owned stocks of cotton cloth offered at auction on
July
30.
Trading in cotton yarns is reported to be rel.,.tively small.
The raw-wool market is quieter than a month ago, but prices ar9 firm.
Most of the mills have sufficient wool with which to corr.r1Jlete :_)resent c0ntra.cts.
Worsted spinners .slre unwilling to offer govds for del.i;o; zrJi· :uter tha first of
the year.
Woolen mills are still busy on c..rders for fall dGli·1ery..
It has
b.aen evident for soir,e tirr.e that offerings of gootts for th0 sj)r.i.ng sea.son of
1920 will be restricted. SUch lines of rr.en' s wear goods 2,s h<Ne be·~n opaned
are selling up rapidly, and an allotrrjent systerr. pr ::vails,· as is L1rgsly the
case also in other branches of· the textile industry.
and women's clothing report a v ::;ry l?.r;e business.
HanuL:c turP-rs of men 1 s
Textile and garrr;ent
manufacturers, because of subsequent iri.creBses in the cost of. production, are
raported in m:.my cases to b3 seeking to obtain a higher price for goods
..
delivered un contracts maae in the opening months of the year.
Heavy J:iurchases
of cotton underwear are rs~orted, in particular for the current fall season.
·•
'
'' ,'•' , . .
-
603'~
X-1664
- ·10
•
•
t
~&.demand for silk. hosiery cont~es •. A feeling· of caution prevails an the·
part of the majority of buyers of cotton hosiery, which is not the case with
buyers of silk hosiery and underwear.
The raw-silk market is dull.
A more conservative feeling is evident in the hide, le~th~r~ ~d shoe
industries.
...
Tanners are cautious in their hid3 purchases .'.'lnd in the ,qcce:.jtance •
of orders f0r future delivery.
It is reported from Boston that "le~ther is
not in quite as great demand as a few weeks ago, but while prices have b~come
steadier, they are still high with ~urther increase anticip'::l.tad."
leather C•)ntinues to display the greatest strength..
UJ}!Jar
The volUJle of shoe sales
continues large, and demand is still for the better grades.
The high ~rices
j?revailing for ruaterials, however, enforce caution. in particulr.tr with respect
to orders for future delivery.
Automobile ~anufacturers report an extraordinary deill~d, couplet with
a steady increase in production.
Manufacturers of auto .:.ccessories in the
Cleveland district report similar condi tilms, while manufacturers of electrical
su~~lies in that district have bo~ked a large number of orders~
Re~ail trade continues exceedingly active, .o.nd in many sections little of
the usual midsummer lull is noted.
The demand for watches <-'Ild jewelry
continues very heavy, while in some districts a lessening of ihe de~and for
shoes and clothing is }:ierceptible.
Heavy l:JUI"Chases by retailers in many lines
I'
I
I
•
are reported, a considerable volume of orders bJing }laced for future delivery,
al thuugh in Kansas City it is stated that svme merchants are now j_jl.:icing i11ore
I
frequent but smaller orders.
Complaints continue t.o be h"Jard in the 'Vestern
distr.icts of the inability of jobbers to get ~srchandise ·to meet ths retailer's
~equiren.ents.
In Cleveland it is stated thet "n.ost I.C9rchm ts have acce:ptsd the
fact that >Lerchandiae is very scarce and that J:Jrices are going to ren.ain high
..
fo_r sou1e tiwe," and in New York it is st:::1ted t~at "the consensus of opini\Jn
seems to be that :retail prioeJs u.re likely to be fcirl7 sta~ for the· next six
http://fraser.stlouisfed.org/
n1onths."
Federal Reserve Bank of St. Louis
;
, ... ,1
'h; q
' ¥f
.§
8·
'¥¢'£
-ll-
-
t.
~le
increase in blulding activity continues, Permits issued during
July vver;; the largest for .cmy month d"'.l.Ting the present ye2.r, :md <ctual construction likewise shows an increase.
is still distinctly below normal.
The activity,
howeve~,
in many
s3cti~ns
In New York C:i.ty cor•.s truct,ior ir, c.:nsidered
to be at 2,bout 50 per. cent of the norliJC.tl prewar ~=tctivity.
The short=.tge of
-
dwellings is expected to·. ~ontinue f')r some time to c:o:r:e, c·.nd l"Lrge manufacturers
I
in certain districts are engagjng in horr.e·-buiJ.ding project.s in the intJrest
I
I
of their employes.
Constraction is being hbdered by th·J hi6h cost and shortage
l
of both labur and rr.~tericls.
Fu:.~t.her a.dv:mces in the prices of v<:.rivus classes
of lumber have occurred, but it is reported that there is cunsiderable feeling
in the induc;1try in favor of stabilizatLm of prices.
O};'ders and shipments
I
1
i
of lumber in gen9ral cont.inne to exceed production, and stocks are being
I
further depleted.
The building tr:e,des lockout in Chicago con t:i.nues and bll
construc~ion is held up.
ln c2rta!n districts the activity in real estate
continues and pr1ces are rising, '.'Vhile in Iowa .and Illinois options are now
employed in dealing jn farm lends.
Official figures for the month of July show an export balance of
$225,000,000, as compared with
$620,ooo.ooo
for the month of Jun8.
The decline
in exports, whHe general; has been relatively greater for foodstuffs and for·
finished mamu ac ture,_.., than for crude rna ter ial s and manu.f ~c tu~
"
use in manu:fac turing~
for further
A co:osiderable part of this decline is probably to be
ascribed to the ha:rbor strike in New York, and no hasty conclusions as t•.: the
future ccurse of our foreign trade sh·-uld be d.r.a'.vn from the month's developrr.ent.
The =xpected resumption of a large cotton exportation has not occurred,
the July figures of raw cotton exports showing considerable decline from
..
those for Juoe.
Active inquiries are rsported by the iron <~d steal industry•
Following the se ttlen.ent of the New York strike improveu:ent in t.he shipping
'.'t
·~
',,
~L 8 ' <:S.:,,.c~*:' 04'14',
'f'\'* ,· )·A.-;t.!l'r:'f,k ·~f;¥4#J'.4% ,.,..¥f'"t'\'*1't ·JfLft i')\t</"l1W'{?J.1i!& N~"'. ~ 1 '{''h.
X-166~
-" 12 -
...
"' "'·
) .~·~:f'\*:'i.'"> :·~-~~
"i
605'!
)!
situation is noted• end. a lower level of ocean freight r.::,tes td Great Britain
and the Argentine prevails.
For some time after the opening of the month. speculation continued
e:.t an extra.ordin..tr:$;ly high level, but was succeed.ed by ~ period of relative
quiet in the stock market~
-
r
Public participation in the market has become
noticeably ;;~bsent, as the influence of the v-.rious deterrent factors hc.s
been felt.
Large ~d sudden declines in the prices of stocks have caused an
unprecedented volume of liquidation.
Bond prices have also declined.
There
has, however, been heavy absorption of new issues of securities, and the
volume of incorp.>Jrations during July reached a record figure.
Fluctuations
in the call-money rate have been confined within r3latively narrow limits,
and c£.11 money on the whole h"'s become easier.
On August
6 a rate of 3 per
· cent for loans on mixed collateral was reached, whiQh was a ne~v low record
for the year, while the highest rate for such loans during
~he
month 'vas
_)
8 per
cent~
check
tr~sactions
.::.t tained on August 22c
The Board's figures of tha volume of
continue at the high
l~vel
noted for the month of July.
InterP.st r".te.s are firm, and on the whole 3xhibit no marked ch:mges.
A
·strong demand for funds is reported in cert~in districts, ~lthough liquidation
is noted in other districts as returns from the sale of crops ire received.
Coincident with the decline in call-money rates since the n.iddle of the month
a good den4nd for
accept~ces
is reported by dealers.
Foreign-exchange rates
showed a practically continuous decline during the ~arlier part of the month,
sterling, frmcs, and lire among the more import.:tnt exchangas re.:..ching new
low levels, being quoted on August 20 at 4.1625, 8.16, and
9·57,
respectiv~ly~
Many of the older as well as pructicL~lly all of the newer European ne.tions
are seeking Americcn credit, and credits have been granted to several.
,. '
The
banking situation continues to be regarded as sound, credit ~md collection
unprecedentedly
COnditions are good, and failurea-.;.~tinue ~ small and f·3Wo
606
IIX OPPICIO
-
W, P, G. HARDING GOVIRMOR
X-1666~LBERT STRAuss; V1c1 Gov•••oa
ADOLPH C. MILLER
CHARLES S. HAMLIN
MEM~ERS
CARTER IILASI
IICIITAIY OP THI TRIA.URY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTIOLLIR OF THE CURRENCY
FEDERAL RESERVE BOARD
WASHINGTON
September
5,
J. A. BRODERICK, SECRETARY
W. T. CHAPMAN, ASSISTANT SECRETARY
W.II.IIILAY, FISCALAIIINT
ADDRESI!I REPLY TO
1919•
FEDERAl. RESERVE BOARD
Dear Sir:
I'
I
As the gold which was received from Ger~ in
payment for food supJ:.o].ies is transferred from Belgium and Holland
to the Bank of England rind earmarked for the acco'Ullt of the
Federal Reserve Bank of New York (then to be prorated among all
Federal Reserve banks), it will be counted as part of the gold
reserves of the Federal Reserve Banks. The total amount of gold
which will be involve.d in the transfer will be in excess of one
hundred and ten million dollar.s. and as received and earmarked
from titre to titre by the Bank of England wlll be ·reflected in
the increaied percentage of reserves.
For sometime past the combined percentage of reserves
of Federal Xteserve i&tilq; has fluctuated between 49¥ &Di 53~. but
it should be remembered that for several months immediately preceding APril 191.1 the combined reserves of the Federal Reserve
Banks ranged from 65% to 8~.
You are requested to inform the officers and directors
of your bank that it is the view of the Board that.as new gold
is received it should be used to strengthen the reserve position
of the Federal Reserve system and that these improved reserves,
whether growing out of an actual increase in the amount of gold
held or because of contraction in the amount of credit extended,
should be regarded merely as a symptom of return to more normal
conditions and not as an incentive to a loan expansion not essential to the public interest nor to the accomn:od.ation of coimterce
and business.
It has been the policy of the Board for sometime past
to maintain the combined reserve of a Federnl Reserve Bark at not
leas than 40~ by means of rediscounts with other Federal. Reserve
Banks whenever that level was reached, but the Board wishes it
understood that with a .general improvement 1m reserves a higher
standard ~ be establiShed in which case a Federal Reserve
!a.nk might oe expected to rediscount when its reserve approximates
45%.
Very truly yours.
Governor •
••
~his letter
sent to Chairman of each F. R.·Bank
-
' ,_.,.
607
X-1667
.
FEDERAL RESERVE BOARD
8'J'ATF'ViENT FOR THl':! PRESS
To be released.for morning
papers se~tember 8, 1919.
The Review of
-
t~e
Month for the September Federal
Reserve Bulletin is devoted mainly to a discussion of cost of living, foreisg
exchange, foreign trade end foreign financing problems.
.£2.st of
Living~
It says:
High prices and the advancing cost of living have become
the occasion of widespread anxiety in the United StatesJ <~d recently have
becorr.e the subject of legislativn attention.
The President in an addrt3ss to
Congress on August 8, ~eclared that "the prices the people of this country are
paying for everything th.::~t it is necess::.ry for them to use in order to live
I •
are not justified by a shortage in supply 1 either present or ~respective."
The
Federal Reserve Board in a letter of the sarr1e date to the Senate Com~ittee on
Financ.e and 13al1_king ():!ublished in the .August :Bulletin)., rejected the idea that
•excessiven volUme of currency was the cause of prevalent high prices.
This
is the view which has been consistently maint;.ined by the :BoardJ the letter
being rrerely a restatement with amplified detail of the position tJ=en by the
Board on previous occasion, notably in the October, 1918, :Bulletin (p. 927),
•
where the conclusions were expressed that "the incre&se in the ciruulatian of
the Fed.;ral Reserve note hCA.s be,m in the main in response to actudl needs, .:lXld
th~t whatever inflation of prices may be said to axist can not properly be
said to have been induced by overissue of Federal Reserve notes."
In its recent
letter, particular occasion is taken by tlle :Board to point out "the ·.difficulty,
indeed the impossibility, of kee~ing in circulation an excessive volume of
Federal Reserve notes.
;
.
They are issued only us a need for them develops, and
as they become redundant in any locality they are returned to the Treasury £tt
I
1
l
Washington, or to a Federal Reserve :Bank for redanption.
Thua there can not at
808
- 2
any time be rr:ore Federal Reserve notes in circul.:<.tion th9l'l the needs of the
country at the present level of prices require, and
~s
the need abates the
volume of notes outstwding '.vill be correspondingly reduced through redemption.
The increased volume of Federal Reserve notes in circulation during the past
three
-
ye~s,
in so far as it is not the result of direct exchanges for gold
and gold certificates which have been withdrawn from circulation, is the effect
of
adv~cing
wages and prices, and not their cause."
Under the elastic note-issue system provided by the1tederal Reserve
Act, the Federal Reserve note possesses a self-regulating quality quite
auto~atic
in its operation-
While it is technically a true stateffient to say that
the Federal Reserve note when issued is issued by the Federal Reserve. Bank, th.e
greater truth in underst&nding our present monetsry machinery is missed unless
it is ~erceived thQt the occasio~ of the issue of a Federal Reserve note is
determined not,& the bank for itself but..!.£! the bank by the
question whether or not
a
community~
The
Federal Reserve note shall be issued is decided by
the business and general conn1unity in
accor~ance
with its circulation needs.
It
ia its needs rather thGn the bankfs'desire which determines the question of
issue.
Thus, then, the Federal Reserve note when issued is issued at the
instance of the community, not at the instance of the barik.
inevitably be
I r
•
~o
That this mnst
is clear from an·apvrecietion of the fact that there is no
method by which the Federe:J. Reserve
B~nks,
even should they so desire, can put
out i::llld keep out e. gre-ater quantity of notes than the convenience of the
comrrunity requires, so long as the facilities for the redemption and
of the reserve notes provided by the Federal Reserve Act are
r~tirement
~~intained,
as they
have been since the organization of the Federal Reserve System, in a state;·.ot
effective opetation.
While th~s disposing of the currency as the cause of
t.
riaing prices, the Board does not overloOk the important influence exerted by
609
- 3-
-
. credit expansion.
That the expansion of credit has be en a considerable
factor in our financial and price situation is clear; that it is a continuing
factor and one which still calls for correction' by the process of incre~singproduction and savings ::.nd by the investment of the proceeds of savings in the
absorption of Government ·bonds is equally clear.
-
The most recent data ~vailable show that for the year ending June 30,
1919, total deposit liabilities in natione:.l banks increased by the C:il'r;oun.~ of
~1,902,356,000, or from $1~ 1 021,609,000 to $15,924,865,000, and ~hat loans and
discounts increased by the amount of $954,4J6,ooo, or from $9·,620;4o2,000 ·to
$10,574,838' ooo.
The increase in deposits. therefore, exceeded the increase
.
.
in loans ail4 disc.eunt s by the amount of $946,920,000, or close to 100 per cent.
The rate of increase in deposits for the year was 13.6 per cent, as against
9.92 per cent for loans :;Jld discounts.
A substmt~al portion of the incre<1.se
in deposits, it ap~ars, lll1lst therefore be . . .ccounted otherwise than by m
incredse in the cormercial 1om s.ccount of the banks.
The signi:fic;;nt change
in their resources is found in their investments in Governinent bonds and
Treasury certificates.
These increased by an amount of. $1,055,127,000, or from
$2,116,785,000 to $3,171,912,000, an increase of 49.8 per cent.
It thus appear~
that the increase of deposi.ts noted above is to a considerable extent to be
regarded as a pure credit expansion not called for by increased industrial
I
'
activity, but occasioned by the use of the b~st credit for Gov<Jrnrt.ent fi:nancinp.,
It shows once more how ffiUCh care ~ discrimin~tion must be used in interpretinf
increases in b,.nk "deposits" ane1 bamt "resources" in times like the J.Jr-3sent and
the recent past, when conditions in the financial world h~e been so highly
abnorn:.aJ.~
. The naive idea that a bank deposit normally originates by the
••
bank's dustoi.Ler mcking a deposit of cash in the b.:illk does not reveal the
X-1667
-
- 4
610
.~
substance of the situaticn in C0\:.ntries like the United States, with a
highly developed system of b,Z'k credit and its 'ltilization through the form
of the deposit d.Ccount.
The ruos t usual form in vihich bank deposits originate
is by borrowers going to a b.:.nk to seek accomr;od<:;l.tion end offering their notes
-
for discount, the bcmk
making the loan sought by the customer by op.:ming
credit or "depositn on its books in the borrower's f.::lvor ..
·'l
Normally, therefore,
what are c~lled deposits increase as loans and discounts do; in other words,
as borrowings from bariks increase. When such is not the case and the loans and
discounts do not grow in correspondence with the deposits, the cause of &xpunsion will usually be found in an increase in the investment account of the banksu
Such, in fact, has been the trend of our banking operations during recent years,
notably since our entry into the European war. It is a mistake, therefore, to
deduce from the rapid increase of bank deposits inferences as to the growth in
wealth or prosperity of the country at large. Were the growth of bank liabilities
to be invariably taken as an index of the growth of real wealth, it would have t"
be adrr}i tted that some of the recent European .belligerents, an inspection of whos0
banking sitUdtion reveals a very much more rapid growth in bank liabilities and
resources than does the -4;J.tuation of our banks, were experiencing greater presperi ty and a more r,;.pid growth of wealth than the United Stat11s. such has~ howe'!t.J'
only too obviously not been the case- Europels economic and financial condition
is serious and worst in those countries where the credit and banking situation
is most extendedp
E!rqpets Economic Situation •
The gravity of the economic and financbl sj tu?.~·
tion left Europe by the war has latterly been the subject of frequent comment fx,:m
statesaen nod business leaders
..
th~re.
The :British Chancellor o! the Exchequer (Mr. Austen Chamberlain) in pre;;;eu ~ir:
his budget last spring, called attention to "hard and inexorc:ble ec;onomic fu.c;·~s
Digitized for obscured by a
FRASER
fictitious appearance of wealth:~. "There is," said the Ch•onr.-.el"'..m:·
..
I
61i
X-1667
-5-
• •
"between two and three times as llltlch legal te11der money in circulation as there
was before the war. The deJ:iosits at the joint--stock banks have more than doubled.
The position·of these banks, judged by every approved criterion of sound banking,
is stronger thm it. ever was before.) but the securities - British Governme;Ilt
securities standing behind the deposits, standing behind the legal tender money - ..
-
represent to a large extent not existing wealth, but wealth consumed in the
i.,
operations of the war, which it mu.st be our business to replace out of the exertion~
of the present. Both are drafts of future labor .on the future· creation of
wealth. Pending their payment they are an irnrr.ense reservoir of artificial purchasing power, and therefore
d~inishing
in effect with
e~ch
new increased
is~e.
"Look behind .the count!3r and you 'see a different picture. We have sold one
·thousand million of our foreign investments, losing the equivalent power to draw
l.
on the wealth created in foreign countries. we have incurred debt to the extent
of r,. 1,300,000,000, but the position of our debtors forbids us to count upon their
claims for large immediate relief. Ultimately and· gradually that relief will, we
h()I)e, mature,· but we can not count upon
i~
for irr.iitediate purposes. In yec;.rs to
come .a considerable part of our production must be devoted to paying our foreign
.creditors a part, and a large part, making good the wastage and arrears of. war.
OUr roads, our railways, and in a lesser degree - still, in some degree - our
machinery suffer from the absence during these past years of the ordinary upkeep
and development. Houses, which were short before the war,
arrears.
Alar~
are
now hopelessly· in
part of the production of the next- I don•t·know whether I ·
should say few years - a large part of the production of the coming year - both
the production of labor and of
capit~
-will be needed to
~~e
good
t~ose
losses
and to pa;y the new liabilities that we have incurred.
"I
••
ask
the committee therefore to be under no ndsapprehension as to the
magnitude of the task which lies before us. Again I repeat that there is
need for national and individual.
econo~.
urger.~
Nothing but the unity of all class9s 1
•
. ..
612
-6comparable to that which we have
s~en
X-1667
:ln thP- yP.ars of war, will enable us to face "
the years of difficulty wb.ich rm.:.st follow at the conclusion of so great a crisis."
More recently the British
Pre~er
(Mr. Lloyd-George), in an &ddress to the
House of Comrr.ons on .Augu.st 19th, in speaking about the financial situation, laid
-
. particular s tres·s on the serious magnitude of England's adverse trade balance.
.
.
According to his statement, that balance already 3l'nOu,nts to $4,000,000,000 and
threatens to reach $5,000,000,000 if Great :Britain continues in its present course.
Before the war the adverse balance amounted, for a ·series of years, to an average
of $750,000,000. This then presented no difficulty oecause of England's large
overseas investments, the full magnitude of which hgve only recently beco~~ public •
.
•
..
..
-
~he
61.3.
x-16ti7
-7-
entire amount at prE:lsent accruing from foreign sources is
esti.JLated at
about $5Qu,000,000• an amount JUst about sufi'icient to }lay tbe intere.st u:pon her
foreign obligations. Engl<.Jldls
iruLu.edi~te
prablen. is the reduction o:t' the adverse
balance .. "We ruust bridge th~ chasm or at the bottom of it is ruin•" said LloydGeorge.
11
We are building a teUil?orary bridge by p·orrmwing; not only state borrowing,
but traders
1
borrowing, for raw waterial, food, etc4, that will only <Ad to tse
catastrophe. In every direction we are
spe~ing
more, and we are earning less; we
ar~ consux..ing ware, and we are producing less. These are facts; it can not last."
In every line, except asriculture, according to the Prewier 1s stater..ent, British
.output is less ..
Mr, Asquith,
fo~er
British Premier, discussing the
econ~ic
situation in o.
speech delivered before the Free Trade Union recently, usked:"Whut is the real
remedy against high prices and of the individual hardships which the war has brought?
First and foremost, public economy •
production
**
*•
* *·
The prirue economic need e:.t this moment of
duction should be increased until the
~imum
heme in the dowestic sphere is not only
. the international
TRPDE BALANCES.
The next thing is increased and better
output is
eq~lly
~nd.
obt~ined.
is that pro-
What is true at
;rue but mor.G significantly true in
sphere~"
The "adverse" tro.de balance com}llained of in England is ruost
manifest in her relations with the United States, On our side it has given rise to
a situation which is conventionally described as
because of the large excess of goods exported
~~
~bove
"fuvorable" bulonce of trade
those imported,
le~ving
a
resulting balance of indebtedness to be wet. Looking ut the w.atter fro.w t;tle point
of view of the ordinary Awerican consur.uer, however, the effect of such u "fu.vora.ble 11
balance of trade is far t'ror.a favorable for hiLl. Whatever 'econ<lluic and financial
Justification there may be for the Vtlst quantities of merchanciise the United. Sto.tea
l
has been sending to Europe, p~nt for which, looking at the trunsa.ction from the
point of
view of
the nation u.s a whole, is to be tuade sot.~eti.u.e in the future when
l
...,. . ,_.,.,
, ...,"•·-,---~r···-··--~-·~,.,...........,-~-~--1
~-
---"""J''i!6""!!"'!'14"!l'!!I"'!'·Jii
IJ-.
L~~
tke economic and financial circur.ustances of tb.o irnporting nationa of Europe are
more satisfe.ctory, the iiJU1ediate present effect of it in~ lines of industry
is to curtail the supplies ava).lable for the AWericE>.n consumer and thereby to
be.come a factor of considerable iwportance in our price level. To the_ extent' that
the J,D:.erican consumer, or u sufficient percentuge of .Americun consumers, do not
voluntarily reduce consuwption by amounts sufficient to release for the use of the
Europe~
consumer the great quantities of goods which are being sent oversea, .there
results in the American
~arket
competition between the European demand and the
American demand, the,inevitnble effect of wh&ch is to drive up
~rices ond
to induce
the speculation which rising prices usually occasion. "Buying in competition with
export den.and" uno.oubtedly has been a lllaJOr cause of rising pr-ices in the post- .
war period in the United States. For the fiscal yecr ending June 3U 1 l919J the
exports froc. the united States amounted to $7,225 1 100,000, and
~:IJOrts
amounted to
$3,095t900.000, leaving therefore nn excess of exports amounting to $4,129,200,000
as a~ainst ~2,974Jooo,ooo for the fiscal year 1918, ~d $3 1630t700,000 for the
fiscal year 1917. It is noteworthy not only that the figures of our
our net exports for the year
1919
e~ortS
Wld
o..re the highest ever attained, but also that the
valw:e of our exports showed with little interruption an increase through the
fiscal year. attaining its highest point in June, the l~t month of t.he fiscal
year, when our total exports amounted to $918,300 1 000- Elsewhere in the current
number of the Bulletin are presented details of our export trode, showing its
(
•.
cOIUposition by leading group'i of conm:odities und their vol'U1,4e by quantity as well
\·
as by value. lt appears that the greatest increase in our exports for the fiscu.l
1·
year 1319; as couilared with the preceding year, was in the groups "Foodstuffs"
prepared and
over
••
6~ :r~r
unpreparea~
cent.
Exports in these groups showed un increaSe in value of
Baccn, hams, und lard showed nn increase in value of. about 85
per cent compared with the preceding year, una un increase of hlore than
60
per
cent in qUEIZltity. The gr<?Ull "IvJu.nui'o.ctures ready for consWl,Ption," which const.itutes
.j,
-9~
the 1argest single group for hoth years 1918
t;l1c\
l919, shows an increase for the
latter year of 9 .. 1 per cent, notwHhstanding that the item "Explosives" showed o.
decrease of over
$25o,ooo.ooo
in
1919
as cawpa~ed with
1918.
V!hether our export tro.de will keep up anyt{ting like the 1919 volume during
the current fiscal year (July, the first wonth of the yee.:r, shows a falling off
-
of exports by
$348,169,000),
seems dov.btf~l, but it seems hi~~ probable that it
will maintain a volume so far in excess of the normal ratio of our exports to
total production in prewar days tho.t it will be a factor of moment in the domestic
price situation and in living eosts. As long as circumstances
w~e
it necessary
or advisable for the Uriited Stutes to sell a large volurue of merchandise to
Europe on credit, there wust be shortages of supp~ in the domestic mar~t unless
industry is ke:pt in a state of high activity and <.tll hands ·r.re at work to increase
output. Unless this is done resulting shortages will wean reduced consuruption to
•
I
~
615
x-1667
be met either by voluntary saving on the part af the consuwers, or
saving through the process of high or even
perh~:ps
co~ulsory
rising prices.
The whole situation is one that can be wet, as pointed out b;y the
BoC~.Td ~;~.
month ago, only ii the doctrine "work 2..nd save" is taken to heart by every class
in the Nation and made its guiding principle
unt~l
the trying conditions left by
the war are finally surmounted. "Only by keeping the cost of production on its
present level, by increasing production L'Jld by rigid economy nnd saving on the
..
part of the people can we hope for large decrenses in the burdensome cost of
living which now weighs us down.J" said the President in his oda.ress to the co\.mt-r-y
on August
25.
Foreign Exchqnge Situation.
Closely associated with the moveruent of ov.r
c..t:~.\"'J. ~
trada noted o.bove, have been the further •md considerable declinP.s in the values
of foreign currencies in terms ot' the dollar, which have given rise to consid.cr•;;,\:.:.<:
• t
discussion of the probable effects of such declines. These declines are :priLunri l'·
l_ ~ue
that
to the fact
:foreign countries hu.ve large :po.yn.ents to M:Ke in d.olli;;.:>-:t;; t:n
616
-10-
x-1667
the United States at a tiwe when they rxe not sending us commodity
e~orts
of
corresponding value to their in.9,.iorts from us to l;rovio.e the exch:::mge requisite to
J?CJ.Y for their p;:uerican purchc:..ses. Otherwise stated 1 the decline in the value of •
-
foreign currencies, when exchonged for dollars, makes more expensive payments in
doll<.~rs
by countries having available for such purpose only their own currencies ..
current discussion of these conditions too frequently treats the
~roblem
of the
foreign exch~ges and our export trade separately fr~ the provlem of domestic
trade. It is too frequently assumed by those complaining of the f~ll of foreign
exchanges that trade on the scale of our recent e.x;ports is a thing desir.:ible in
itself and. to be kept up by keeping up the value of foreign currencies in the
~eric<~ r~rket. But when the export trade is considered in connection with the
dou.estic trade it becomes clear, as already pointed out, t:j;rat the source of much
•
of the difficulty presented by the existing situation"' is the continued. competition
of the ex:r;,ort deru<md c.nd the howe deruand. The stn.te of the foreign exch<:lnges merely
reflects tpa state of international trade. The correction of the exchange situation
so much cow~lained of by t~ose who look ~t the watter frow the exclusive standpoint
of the eXfort interest, \"Jill, therefore, only find. its natural and peruanent solution through a reduction of our exports and an increase of our imports until
they reach a point of approxi~te equilibrium,
l
• <-
617
- 11Corr0ctivo effect of fallini; i;Xchangc.
It s.10uld bo understood that a de-
cline in i3Xchange op;:;ratcs as a corr.;ctiv0 to th0 situation which has brought ahO.l 1 ·
th.:;: decline • by checking exports and s tirnulatin(; i.a:ports.
Viewed,
~he ref ore,
pure·
ly frow our own dor.:.cs tic s tandpcint, the falling cxch.om.go ratos aro· beginning .:11A
rcad,y to relieve tho prcs.:::nt "-bnormal and difficult si tu.:ltion.
•
-
•
The large voluwc of
exports during the past few i.•Onths has boon rcndorod possible by advances from tho
United States Treasury to the govcrnrucnts associat0d wi k, us in the war.
These .:1d-
vanccs nave amounted, from the date of the ar-.wistice to ..\ugust 31, to $2,177, 09~2!.2·
~~0rc is some danger also that tho present abnormal situation may undergo a more
violant chango in the future when Europoan countries shall have stocked up on commoditi~s
and our domestic consumers have bratified the rnood of reaction from war
economy, and we may then oxporionco an abrupt falling off in exports so groat as to
em barT ass some of our indus tries which anticipated their natural growth under the
intensified stimulus of war concli tions-
Such a condition can be Cl.Vcrtcd throug,.'-1
·,
timely action by the industries involved, which should be considering the steps
necessary to correct such a situation in case it should arise.
'n1.e fact remains,
however, that tho pr~s~mt relationship of CJ!tlrts to imports - the volume of one
being very lar~e and the other co•:Iparati vely suall - is unhealthy and scrioMly
disadvanta.;cous to this country, looking at tho situation,.purcly froLl our domestic
point of view.
Looking at tho m:att..;r from anot1.1cr angle, it. is evident that Europoan countries find. it difficult in tho present circumstances to make purchases in this
country, but tho outstanding fact is that thcs.c countri0s h-:wJ not seen fit so far
to adopt any cffccti vc m.:;asuros for tha correction of existing rates of exchange.
Minist3rs of several. of these countriGs have lookod with coL.1placcncy upon the de~
cline in exchange which tends to limit purcr~scs here.
This decline makes it pos-
sible for tho countries affected to leave their comwcrce unrestrictedwithout dangcr of having their nationals
ovcrb~
in our markets.
618
-12'!here are many factors constantly at work which can not
·oe fully enumerated
v
or oven traced, which tend to correct the declin-:; of oxchange, and some are alroaJ,:·
operating to that end and they will tund to operate ::uore effectively with every
successive decline, but it should be borne in. ;:;:;inci that \'.ihili; declining cxcha.•·1.t;o
operates to set in oo.tion certain corrcctivo factors, after a.>1 exchange rate has
had its decline and is oscillating moderately around a lower stabilized base tho
In other
tendency is for all factors to adjust thousclves about the now base.
words, a declining rate of
oxch~ge
tends to produce certain effects, while a rate
of exchange which has experienced a decline and is more or less stable at a lower
level produces these effects in a uuch
~aller
degroo.
The tendency of a declining
rate of cxchan6o for the currency of any country is to sti@Ulate exports
country and to curtail i:nports;
fro~
that
a declining rate offers residents of tho country
involved a heavy prouiuw on the sale of their foreign securities in countries in
whose favor the exchange rate is running.
powerful
ar~~0nt
This premi1.:rm is in many countries a uorc
with the private holder of foreign securities than any government
requisition can be;
it tends to wake foreign creditors to whow money is
~uo
in
currency of the debtor country leave the funds on deposit pending a more favorable
tirJ.e for their transfer to the creditor country;
the debtor country to borrow abroad and romit
as any
~provcocnt
it stimulates the nationals of
th~ pro~oeds
home for domestic use,
in cxchango will afford a profit at the ttno
of.~epaymcnt.
Those arc a few of the corrective factors.
Providing for foreign demands..
From the best infomation available it ap-
pears that the pro'bablo dcraands of foreign nations upon this country for rcconstruction purposes have been greatly overestimated in the public prints.
It is p3rhaps
not unn2.tural in a situation where distressed. peoples feel they must draw for thoir
ncGds on a limited fund of CaJ?i tal that they should cs timate their requirements
very liberally or olso they LJ.aJ7 not
oo
sufficiently supplied.
For
many
reasons it
appears that tho need~ of Europe should bo su:ppliGd throug}l the private ini tiativc
of foreign manufacturers.
merchants, and bankers dealing with similar American
L·.grou1Js •and not
,
619
X-1.66~
. . 13-
through tho concerted efforts of the govcrru,.mts concerned.
From the standpoint of tho bo::rowin;; country alraady burdened wi tb an •
.mor··
mous public d.e.bt, money borrowed by private indi vi duc:.ls for usc in their ·ovm businoss will be
c~~ondcd
more
car~fully
and judiciously and better provision will be
made for its ropayr.u.cnt than would bo the cas;;: i f the woncy should bo borrowed
cy
• governments, whJrc othor than purely economic conditions uay influence the c.xpcndi-·
.. tur.;;.
It has be0n well said that where r.1onoy is borrowed for reconstruction pur-
poses by governments tho tondcncy has been to establish bread lines instead of wood
yards;
in other words, to subsidize uncmploTwent rathor than to create
From the viewpoint of the lending country; i. e., the tnitcd States:
cmploy-~ont.
after cam-
plcting its own war financing the ability of our Govcrnwent to assist foreign
Gov-
crnwJnts without vast inflation and consequGnt danger to our ovv.n credit is preble• matic~
!Jll,:; i,worican pcopla have subscri bcd.libc.;rally to war loanst but there is
nothing to indicate that when they shall have closed the account by doing tr.oir part
in such financing as rcnains to be dono to liquidate the war bills they will be inclined to buy any considerable at:tounts of bonds of this Government for the pur:posc
of further financing Europe.
The coz:tpl0tc stabilization of f!)rCid'l exchange could be effcct3d only through
unli.r:ri. ted :1civanccs to for0i91 countries, advances against which those countries will
draw as their needs require,
.N:. drafts arc drawn and sold abroad, tho proceeds in
,tforeign currency would go to the Governments concerned and bocor:lc availabl.:; for tbe
purposes of those Governments.
This process would ;ivc those Governments power to
draw on this country indefini tc ar:aounts for unspecified or unclisclosGd purposes, and
to moot those drafts our Govei"!1Llcnt would have to sell additional obligations to its
own ci tizons.
Thus, to the extent of tho ere d.i ts Jxtcnd.c d., the burdJn of foro ign
war debts would bo transferred to the shoulders of tho hroorican people, offset, of
·course, by such repayr,.1onts on account of interest or principal as the foraign Q-ov....
crnmon ts r.1igh t ua.ke fror.1 t:irac to tiwe;
but even if ultUnatcly fully offset
'
our
m~•
- 14-
620
"Gov"'G~ont obligations must still in the first instance bo markct-~d.
Existing machinery.
Th0r0 is no reason to doubt that private initiative,.
su:p:plcmontcd by such facilities as Govcrnrw.cnta1 agcnci~s aro authorized to make
under existing law, can deal vffoctivoly wi t..li the: present situation.
Facili tics
arc providod by the Webb-Pomerene .Act and by tho liar Finance Corporation act as
amended.
Manufacturers can combine to fona export companies, putting in as capi-
tal such su:.1s. as they arc severally willing to devote to th3 export business, and
these corporations can borrow from the War Finance Corporation sums based upon
their financial standing..
The rcsponsi bili ty o'f the interest directly concerned
is essential to prevent reCkless business, and unloss we propose to burden our people gonerally for tho purpose of
s~bsidizing
exports, those whoso products are to
be sold and who reap the advantago of such sales ought, with the aid abovo out-
line d., to be prepared to finance their own sales.
Pending legislation Md safeguards.
uation and thv purposes to be achieved-
Such arc the fundamentals of the si ~
As for providing the machinery for achicv-
ing those aims, certain things remain to be done, and legislation covering these
points is now pending in Congress, notably the Edgo bill, which provides Fcdoral
charters for corporations principally engaged in foroign transactions and financing,
and another bill, amGndatory of section 25 of the Federal Reserve .Act, which permits national banks to invest
t
of such
5 per cent of their capital and surplus
in the stock
corporations~
Credits cxtcnicd abroad and foreign securities purchased must in ncarly.all
cases run for periods beyond the limitations of ordinary banking credits, and banking resourcus can be safely utilized to a limited extent only in giving the accour.1odations now noedcd abroad.
Appeal uust bo wade to those who arc in a position to
purchase sccuri tics for inv()str::l.Jnt and pay for them with funds accuwulatcd to their
• crodi t in bank.
Such purchases reduce bank deposits and as the proceeds arc
present circumstances,
x;.ost likely to
oo
,
under
applied directly or indirectly to t..1.e re-
·~
.
621
X-1667
- 15-
dQction of bmllc loans, they tend to strengthen tho percentage of bank reserves.
\
The fact that many banks and trust ccmpanics have investwcnt dcpartn:&cnts and deal
in socuritios through th,;sc dcpartrnc:nts tends to obscure this distinction.
Somo
confusion results also froo1 tho difference bohvcon the British and Aoorican usc· of
tho t:::rw "trust company. n
In Gr.;.; at Britain a trust company is an invos tmcn t cor-
poration issuing its d.:>bcntuNs to tho investing public and holding in trust for
tho dob5ntun holders the securities which it purchases ..
With us a trust company
is practically a banking institution holding deposits which must be paid on demand
or on reasonable notice.
Looking to the soundness of tho Jo;;;rican banking system, which is at all
times concornod in pros-:orving tho liquidity of tho banks; it is of first :ioportancc
that proscnt conditions and their boaring on tho banking situation should bo fully.
und::;rstood by the public and that our banking institutions be not loadod with slow
crcdi ts and with investment securities .of liui ted uarkotabili ty..
It oust not bo
forgotten that any issue of Uhitod States Government securities beyond tho abilit,y
or willingness of the inv0sting public to absorb vvillmGan that the obligations
will go, not into th;:; hands of investors, but must bo carrivd by tho banks either
as invostm.)nts or as loans, thus expanding still further an already expanded volumo of crodi t, which it should be the ai;.:a of thG banking cowmuni ty to r;;ducc grad-
ually to moro normal limits.
•
622
W, p, R, HAlliNG, GOYI. .OR
11X OFPICIO MRIIRRRR
ALIIRT STRAUII, VICI GOVIRHOR
ADOLPH C. IIILLEII
CHARLES I, HAll LIN
CARTER GLASS
SICR&T~HI
TR&UURY
CHAIRMAN
.
FEDERAL RESERVE BOARD
-
JOHN SKELTON WILLIAMS
COM"ROLLIR OP THI CURIIMCY
J. A. BRODERICK, SICRITAIT
W. T. CHAPMAN, AIIIKAHT SICIITAIT
YI.II.IIILAY, FIICALAIINT
WASHINGTON
ADDRI:SB RKPLY TO
FIIIDI:RAI. REII:RVI: BOARD
S~tember
5,1919
X-1668
Subject:. Campaign for New Par Points.
I.'
I
r
I
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 Augu.st 29th, asking
r
for information regarding the progress of the campaign
being conducted for the establiShment of new par point~.
In addition there is also enclosed a special·
report showing nonmember batiks not on par list distributed
by States according to Federal Jleserve Districts.
Very truly yours,
Enclosures •
•
Acting Assistant secretary.
Letter sent to all chairn:en.
----------
-----~-
-----
....--
--~-----
CAMPA I GN FOR NEW PAR P 0 I N T S
. Natic.-.c-1
.
Federal
Reserve
Bank of
.
State
~
Total
!
Banks in B8.nk
Distrbt .: Members
Member
Banks
4
Boston
.
•
•
.
.
393
.
0
.
7lU
:
317
.
.
100
408
•
•
lOU
628
113
633
•
•
37
670
:
Cleveland
7-48
.!
87
835
_..,
Richmond
530
Philadelphia
.
Atlanta
S18
.K-ansas City
•
.
~
:
979
Dallas
:
San Francisco
631
-
: 7,811
- - -
-
572
-;
-528
1,706
•
.
65.1
896
-·
l_.l;i.81
...
78
-·.
35
:1,014.
: 1,093
21
.
...
61
_..
:
27.6
76.2
-·
.
•
31:'/
•
•
..
4o8
139
.
121
.
..
1s038
96
1,245
39
•
•
767
107
:
694
133
•
.
15
76.8
139
~
748
3:34
.
27.4
:
24
.
.
680
915
:
85,8
:
9
312
.
.
.
.
.
1,385
320
.
.
755
.
:: 8,904
2,_501
:
12,765
- - - - - -- - - - -- - -- - -SEPTWlffi.ER 5.1919.
•
•
63~o
241
.
282
.
.
.
.
.
51.7
•
.
:
49
:
__.,
~
•
•
87.3
3,168
;lij64
~
.
•
.
No.
nonmember
banks in
District
.
.
.
.
.
. Total
:No. of non:member banks:
:not on par •
•
List
•
•
•
s.
.
•
•
21.7
346
!
.
.
.
•
-:
FEDERAL RESERVE BOARD
.
•
395
427
109
WASHINGTON
.
953
61
117
571
Total
- ·-
:
467
:
Miweapoli.s
-·
317
366
.
'St;-I,ouis
--
42
. 1,047
.
ChLcago
.
,
.
.
.
429
36
X-lb6SJ..
,OF FEDliRAL RESJT:RVE B.ANKS 1 AUGUST_ }1 1 1219·
Nonmember
: Ratio of Nonmember: No. of Banks
No. of Banks
Banks on Par: Banks on Par List
added to Par
added to
List
to to tal nonwember : List during
Par List
banks in District
August,1919 : since Jan.1,
:
1919.
%
241
100
.
.
.
.
New York
,1-;EP~RT
536
:
2,757
.
.
1,433
1,591
:
4,156
.
.
.
.
2,866
;
3,256
885
165
- - - -
988
1,092
.
.
1,219
151
:
1,066
913
7,499
2,619
: 20,264
- - - - - - - - -
-
CJ
(\:>
CY
~
...
'
624
[
I
INDEX-
DIGEST
0 f
PART
III
of the
ANNUAL
REPORT
of the
FEDERAL. RESERVE BOARD
for 1918
cover.ing ·RecoillUlenda.tions of the
FEDERAL ADVISORY
washington,
Sept.ember 8, 1919.
I •
COUNCIL
625
-1-
-A!.'·.,...
!~~aeion
of Gold.
Federal Reserve :Banks o.re JUstified in ass'llllling loss
from, received on deposit.
September 18, 1917.
844
Absence or disability.
See: Awendwents: sec. 4
Assistant Federal Reserve Agent.
Absorption of cost.
:By Federal Reserve :Banks of expense of transfer of
currency and securities to and from member banks,
approved.
Septeruber 17, 1918.
865
Accept.
See; Foreign banks.
Acceptance credits.
Revolving a.cceptonce credits with renewal agree;:nents,
even if technically eligible, are not self liquidating
and not within spirit of Federo.l Reserve Act.
November 20," 1916,
816
Acceptances, bankers.acceptances.
(see also: Bills of exchonge, Trade acceptances.)
Acceptances ond capital and surplus.
Ratio . of 6 to l e;p:pr.cved for present.,
November 19, 1918.
867
Act
September 7, 1916.
Omission by error, of power to accept up to
lOO%t from act .of September 7, 1916, should
be eorrected.
822
February 19, 1917.
:Banker
:Bankers, private.
Purchase of o.cceptunces of, should be li•.1i ted. to those whose
of
•
Figures at the right hand side indicate the number of the page in the
1918 Annual Report on which the reference appears.
626
X-1669
Acceptances - continued.
Ot.ltstanding occeptonces do not exceed 10~ Qf their capital
and surplus.
,April 20,3.915.
773.774.
Basis of.
Farm loan bonds should not be permitted to serve as basis of
acceptances, as provided. in E·')llis bi:.l •
·
Noven.bs1· 1.6, l~JJ 5.,
787
C~ll
loans. ·
preferential ru.te for call
Capit~l
).or:~.~s cecurcd by acceptances, approved.
Sep1;ernber 1( ,1918.
861
and S\,ll;'f;l';;"'o
Ratio of nc\~.r~:P ·~·0Z~~.:.OP t,o, E'±·I'h :J"."eC. f:)i'- p:rescrL~ c-.t 6 to l·.
..
N01!l?mber 19, 1918•
667
Crops.
conservativs brolb.~rs indi.spt.>~~d· to f~mmce movement of crops
through bankers acceptances~
septetu.ber· 17,1918.
862 .
~velopment
·
of open market ..
· Should be encouraged by giving banks greater acceptance power.
MD¥ 21,~918.
sbl
.
Against use of, for financing their movement of crO}>s.
sept~mber
17,1918.
862
Preferential rates for call loans secured by, approved.·
September 17,1918.
861
No further steps needed at present time.
..
November 19,1918.
866.
Shot.lld be made available as reserves for owning bank on
of maturity and pqment, through Gold· settlement Fund.
November 19, 1918.
970
'
d~
Discount or purchase.
Acceptances based on movement of g~ods or merc~dise between
foreign countries are eligible for.
April 20,1915.
774
Discount or purchase of own acceptances.
Necessary at times, pending further development of open market,
although not in accord with best bonking principles.
November 20,1917.
848
Discount rates for acceFtances.
Regulated by bank deposit and call loan rates.
Mq
16.1916... 802
FOreign ra.tes also must be considered.
May l6 t 1916. 802
~ be re~lated or controlled thraugn purchase of dacestic
bankers
acceptances.
·
SepteLilber 1&1 1916.
806
627
-3~cceptances.
continued-
Explanation of low discount rates for acceptances.
May
16,1916.
801
Dollar exchange •
Acceptances for furnishing dollar exchange may later have to be
extended to countries other than central and South Americ~.
November 20,1916. 866
Domestic.
Federal Reserve Banks should not purchase the acce~tances of
merchants and manufacturers under pre::;ent financial and business
cOlld.i tions.
APril 20, 1~15... 774,775 •
Federal Reserve Banks should purchas~,~l~. frcmmewber b~~s with
their endorsement.
April 20,1915.
776
General discount rates may be controlled by purchase of dowestic
bankers acceptances.
September 18,1916.
B06.
Draft, New. Sec. 13 Acceptances.
Approved.
November 20,1916.
817,818.
European money centers.
Rates in, mu.st be conside.red in fixing discount rates on ac~eptancee.a
May 16,1916.
802
Farm loan bonds.
Should not be per.mitted to serve as basis for, as provide~ in
Hollis bill.
November 16,1915.
787
Foreign Countries.
Acceptances based on movement of goods or ~erchandise between
foreign countries are eligible for discount or purchase,.
APril 20,1915.,
771~
Foreign Acceptances.
European discount rates. on,IWst be considered in d.ete:.'T..o.ining
discount rates.
May
16,1916.
801, &>2
Power to accept up to 200% should be giv~n to national banks.on
purely forei.gn transactions.
Nover..ber 19,1918 .., fh9,870.
'
Hollis Bill:
farm
provisions of, perudtting
1va:'l b::mc'3 tr> serv3 us basis for
acceptances should be striken out.
No·ve:c.lber ~6, 13J.5o
737
Indorsement by member banks ..
Bankers acceptances of ruember banks or those eno.o:-sed by n..eri..ibel'
banks only should be purchased.
Deceruber 24,1914~ 765
·Jan. 19: 1915
767
.April
20,1915
Nov. lb. 1915
77.3. 774
789
628
-4-
x-1669
continued. ...
Acceptances.
Indorser, Lia.biHties a.s,
~l?- ~cepted 'J"'i~ actually ovmed by a national banking association
ani rediscounted at home or abroad should be added to exceptions in
U.S~ Hevised Stat'.Atas .. Sec. 52t)2, as amended by Sec. l3. ]'cdera.l
Eeaerve .Act.
&18
November 20,l9l6.
Limitations on acceptance power~
Pr?vision of B:m~te bill fixing a limitation on accept9.rtcAs fer
~ny one person etc., to 20% of capital and surplus sh011ld 'lie
stricken out ..
Jipr:U 18, 1917 ~
828
Limi tati.ons on p0'1'7er to :purchase acceptances..
.
.
ShO\\ld be confined to acce:pta.YlCes of member banks or to acceptancf;!S
indorsed by member banks ..
December 24~ 1914.
765 ·
January 19,1915
767
.
April 20, 1915
773, 774, 776
November 16: 1915
789
If extended to Sttlt e bank.s and bankers should be limited to thoee
whose issve o1' acceptances does not exceed 100% of
capttal and sur:plus.
.April 20,1915 ..
Federal Reserve Danks should not purcho.se domestic acce-ptan~Jes of
merchants Md manuttacturers under presep~ bus5ness end fil1ancia1
conditions.
. .AI>ri l 20, 1915 . .
Should ·be confined t'oacceptances cord'•:>:.-n:ing to :'.J.m~.t.a:':j.ons of
Sec .. 13. Federal Reserve Act as to t:J s(.C"ll,t'h
(a)· must gr.ow out of exports or il!J'l:Jvrh.
(b) have not r..ore than three months to run.,
(c) should r..ot exceed 50% of ca.p:i. t.3.l a"1d. !'l\.O:I<tun ;f bank
for wluch
pur~'haNJd.i.
J c.nucu-y l':) ~ l.j J.?
.~:'\]/!'~::. 20, 1?1~
Liquidating. self.
See Infra..
Renew.-~l.
'1t:.>1,
n3.
763
ngr:eemA:r.t.;;.
Maturit.y.
Should be made avai la'l) le e.s r.es~1·;j(;3~
of .waturi·cy a.'"ld payr;.1ent., thro1.:gh t:v;;
~;r.'
,..;,·~.tliJ:J.C,
(;l: ~.d
nate
'bnn.k. 0t.A.
S"} ~ t le:::::er. t Jt\lnci ..
No-..~;""'~'(n· :.:.~~~
19J.o..
B76
Member banks,
Purchase of acceptL~.nces should t:W con-fined t.o those of or
indorsed by ..
Nov4l6,19J.5 739
rec?n.bE~r 2L~t 191..4.
765.
Ja."luary lC) r 1915
7S7
,Apr 20 1915
7 7 ~ -.74
I
I -
'
.
nt~
629'
- Acceptances.. ( cvhtinued)
Negotiability.
Should contain no staten.ents of detail which might affect.
Decen.ber 2 l+r 19 JJ~.
7t5
One hundred per cent.
I
~
'
'
I
l
Clau.se (fmitted. "by errcr from J.ct .:.:·i Clept.embe•~ 7, l9J6, pe!'mitting
acceptances up to, should be res~or8~.
:Feb::-ua-:':f J9~ ::!.917.
S22
Open market.
see Inf r &. )
etc • ,
oi own 8.Cceptan;es.
l)cnr G l0]?;:1E'!]l t
Pu.j~<:hase
Own acceptances, discaun~ or pu:rehase of ..
Necessary at times t:J.l1.til open market 'f\rr":.h:a:.- de'leloped:, but not
in accord with best banking .
practice.
November 20, 1917.
848
JElQillent.
Should be available as reserves to owning bank on day of
maturity and p~ent, through the Gold settlement FUnd.
November 19, 1918.
870
Power of acceptance.
Should be given greater power.
May 21, 1918.
861
Up to 200% of capital and surplus in pu::-el.7 foreign transactions.
November 19, l918v
870
Preferential discount rates.
On call loans secured by bankers acceptances, approved.
Sep·~ember 17, 1918.
861
Purchases of acceptances~
See Supra.
Limitations of power etc.
purchase of own acceptances.
May be necessary until further development of 01-an market but 1s
not in accord with best banld.."lg practice.
November 20, 1917.
848
:Ratio.
Acceptances to capital and surplus. Six to one reasonable at present time.
November 19. 1918.
867
Regulations of Federal Reserve Board on, approved.
December 24, 1914.
765
B3o
-6-
X-1669
continued.
Accepta::1ce s.
Renewal agreements •
.Revolving acceptance credits with renewal agreen:;ents even if
technically eligible are not self liquidating and not within
spirit of Federal Reserve Act~
November 20, 1916..
816
•
Revolving credits.
See Supra.
Renewal agreements.
Reserves, available as.
Should be made available as reserves to owning bank on day of
maturity and p~nt. through the Gold settlement Fund·
November 19, 1916.
870
Section 13. Federal Reserve Act.
New draft of Federal Reserve ~Board on acceptances approved.
November 20, 1916.
817
L~al?ility as indorser on accepted bills owned by national banks and
rediscounted at home or abroad should be added to exceptions under
U.s. Revised Statutes, sec 5202, as amended by section lJ., Federal
Reserve Act.
November 20, 1916.
816
Self-liquidating.
See Supra.
Renewal agreements.
Senate bill No. 8259·
.Provisions of, limiting acceptances to one person etc., to 20% of
capital and surplus, should be stricken out.
April 18; 1917 ~
S28
State banks and trust companies.
If Federal Reserve banks are pe~itted to p~chase acceptances
of, which council does not approve~ should be permitted only in
eases when their outstanding acceptances d.o not exceed lOO% of
their capital and surplus ..
J.pril 20, 1915.
773, 77 4.
statements,.
Acceptances should contain no statements of detail which ruight affect
negotiability.
December 24, 1914..
765
~
U.S.
hundred per cent.
P.ruendment approved .. For purely foreign transac~i.o::1s ..
November 19, 1918.
369)
R~v~sed
statutes.
870
Sec. 5202,
U.S. revised statutes, Sec. 5202. as amer.ded by Sec. 1;,
Federal Reserve Act., should be further amended by add.ing the followi.r.g
as an additional exception:-
x-1669
"Liability as indorser on accepted bills actually owned and
'rediscounted at home or abroad."
· ·
Noveruber 20, 1916.
818
Account, Collection or Exchange.·
see Hayes bill.
Act· of Septeruber 7 , 1916.
Change Should be ruade of error in droppi~g out power to ~ccept up to
lOO% etc.
822
.~
Actually owne d.'
See U.S. Revised statutes.
Sec. 5202
Admission of State banks.
see state BanksAdvicel immediate•
See Federal Reserve EXchange drafts.
Advice, on.
see Federal Reserve EXchange drafts.
Agencies, Federal Reserve Branch.
see .Amendments; sec. 3
Agencies, foreign.
see foreign agencies.
Agents,
Approved reserve.
See Reserves, EXcess.
Agents, Fisc~l:
see U.S. Bonds.
Agreements, Revewal.
See Bankers Acceptances,
Revolving credits.
Allies of enendes.
'
· cowmercial
see: secretary of Treasury.
Amendments.
1. Clayton ,Anti-Trust Act ..
Interlocking directors.
and
foreign excbahge.
])raft.
February 16, 1916.
799
2. cowptroller of currency.
.
Absorption of office in Federal Reserve Board favored.
November 16, 1915. 785
3· Federal Reserve Act.
.
Revises recowwendntions of February 19, 1917, and approves draft
of amendments prepared by Federal Reserve Board, except that
relating to section 22.
A,pril 18, 1917. 830 to 6}8.
'
•
632
'
l!mendments. continued..
_g...
x-~9.
Federal Reserve Act.
continued.
3.
section 2.
Recommends reduction of 2/3 of paid in capital stock of Federal
Reserve Banks.
Rate 6 to 34
· Negative, Wing, ~drey and Rowe •
. Novelliber 16, 1915.
786
Subscribed capital and double liability should not be changed.
·
November 16, 1915.
786
Reverses its opinion and advises against reducing paid in
capital stock ..
Approves mutual savings banks as associate members.
523
FebrUa.ry 19, 1917..
Section 3·
Approves amendment to Sec. 3 in sec. 700 of H.R. 2o661 giving
right to establish branch ~ncies of Federal Reserve Banks
instead of branches whenever advisable.
February 19, 1917.
824
section 4.. .Approved amendment taking awag from the Chairman of the
:Board of each Federal Rese~ve Bank the duty of classifying
the member banks into groups for the purpose of electq
directors and placing this duty Y,pOn the Federal Reserve
Board,·. stri}ting out ·the provision that the groUJ>S shall
consist as nearly as may be; of banks of similar capitalization.
·
· February 19, · 1918.
853, 854
Approves creation of office
of Assistant Federal ResRrve
Agent am abolishment of office. of Depilty Federal Rese:-ve
.Agent, and advises that the clause 1illl.iting the powers of
tbe Assistant j.'ederal Reserve Agent to "absence or disabiltty"
of theFederal Reserve Agent be stricken out.
F·ebruary 191 1917.
f23
section 1·
Approves change in law permitting surplus fund to ~cwmlat.e
3.00% of· the paid in capital ~tock..
November 19, 191~.
sh9
UJl to
section 9·
Disapproves suggestion that state banks in existence NoverobP-:t·
16, 1914, but not having requisite capital to b3c0111e ··
national bank it, be admit ted to the Federal Reserve S~stem.
November 20, 1911.
849
/
Section ll.
Approves amendment permitting Federal R.eserve :Bnard. to
modify reserve requirements of State n:ember bP.nk~, vnd l
June 1, 1919 ,whose state lmo1s do not permit- restn.-ve ba}a.IY'~S
with Federal Reserve banks to be co~~tP-d in lieu of state
reserve re~uirements •
. February 19, l9US.
658
633
-9.Amendments.
continued.
Federal Reserve Act.
Section
continued.
13. Approves new dratt. Acceptances.
November 20, 1916.
317
APproves restoring power to accept up to 100% etc.,
omitted by error from s.rnending ,Act of Septewber 7, 1916.
February 19, 1917~
822
Approves
increasing anneptance power of national banks.
May
21, 1918.
361
.Approves giving acceptance power up to 20096 of capital
and surplus as to purely foreign transactions.
NOV~lliber
19, 1918.
370
Above lir,1it of 200% should include acceptances of foreign·
banks or bankers for account of and under guaranty of
wember banks, and should be in addition to the power
to give domestic acceptances.
Novewber 19, 1918.
370
Disapproves suggestion of an amendr.u.ent perrui tting
rediscount of notes secured by Railroad and industrial
bcmds.
Noveruber 20, 1917.
349
Section 16.
Issue of Federal Reserve notes against gold etc.,
Approved. Vote 6 to 3•
Negative, Wing, Ardrey, Rowe.
Novetnber 16 1 1915. 735, 7S/3
Unanimous February 19, 1917
~19
API)roves L.laking Federa.~ Reserve notes legal reserves in
va.ul ts of ruember banks.
November 16, 1915.
Cost of printing Federal Reserve notes should be borne
by goverrll.CJ3nt. vote 6 to 3·
.
November 16, 1915. 786, 738
'
Federal Reserve notes should be issued in place of gold
certificates which should be retired.
February 19, 1917.
825
Approves Federal Reserve notes in higher denominations.
February 19, 1918.
354
Section 17.
Section
18.
Requirement of ~nimum deposit of u.s. Bonds by national
banks with Treasurer of u.s. should be repealed,
February 19 ,' 1917. e22
Approves aruendment providing for exchange of
u.s ..
2% bonds
.
'""'.
\';
634
Amendments. continued.
Federal Reserve Act.
con~i~ued.
. . instead of
section 18. for u#s. 3% bonds,.
ror one half
U.S, 3% bonds and one half u.s • .3% one year Treasury notes ..
November 20, 1916.
819
February 19, 1917.
623
U.S.
3%
one yea~ Treasury notes should be abolished.
February 19, 1917.
323
19.
D~.sa:p:proves :power to be given to Federal Reserve
Board to fix lower reserves for banks in outlying
districts of reserves and central reserve cities.
November 20, 1917.
849
· February 19, 1915.
855
Unwise at present tirue to change :present reserve
requirements of 13, · 10 and 7% although they ruay
be unJust to sorue cities.
.
February 19, 1915.
852
Section 22. Dlb.sapproves draft of awendment prepared by Federal
~eserve :Board as to d.irectors _fees·etc ... and submit~
proposed draft approved by it.
February 19. 1917.
~l
Apr'il 18, 1917. 830 to 8}8
Section 24 • Suggests broadening ,powers of .national banks to
permit loaDS
on ~roved farm land, within 100 miles
from ot'f'ice of bank ma.kiilg tl;le loan.
November 16, 1915.
766,
section
Section 25.
4.
Favors JOint ownership by. national banks of stock
of banks organized under state or Federal charter,
principally engaged in internation~l or foreign
banking etc~
·
November lb, 1915, 7bb
February 15, 19164
795•
Approves giving national charters to such banks.
February 19, 1918.
855
May 21, 1918.
859
Income Tax.
.Undistributed profits- of Federal Reserve :Banks
should be subject only to the normal tax •
September 17, 1918. · · B64
Approves bills of National Dry Goods Association
providing for a reasonable allowance on ipventoried
merchandise for increaEed cost of :product :over
·
average cost of the pre war period.
Septew.ber. 17, 1913.
665
National :Bank Act..
in aational banks
Favors. branches of ,fin same city.
September 21, 1915
November 16, i915
Feb. 19,1917 822
November 20, 19lti.
,
·-
x-1669
-11-
.Amendlnents.
f
continued.
National :Bank Act. continued.
Should be allowed in all states even though sowe do not
permit branches of state banks etc.
February 19. 1917.
822
Favors branches in cities or counties.
· ·February 19, 1918.
858
Mini~uw deposit u.s. :Bents. As amended by sec. 17 Federal
Reserve Act~
Should be repealed.
February 19, 1917.
822
See also: Guaranty of deposits.
Public Utility Rates.
.
Should be fixed by a national :Board appointed by
the president.
September 17, 1918.
863
Secretary of Treasury.
Council approves report of a.n inforrual ca.umittee to,
concerning limitation of unnecessary twports, regulation
of gold exports, control of foreign exchange transactions,
earmarking of gold etc. , dated septe uber 13, l~ 17 •
September 18, 1917.
844
(For report, see Page ~)
Trading with Enemy Act.
Should be ~ended to give Federal Reserve :Board power
over gold exports until six months after peace is declared.
November 19. 1918.
868
U.S. Revised Statutes. Sec. 515}
Favors broadening of, so that. state til.aLber banks mq
receive government deposits.
September 17, 1918.
864
U.S. Revised Statutes. Sec. 5202
To the exceptions to rule stated in, 1~it1ng liabilities
of national banks,there shoUld be added a clause excepting
from its provisions the liability as endorser on accepted
bills of exchange actual~ owned by the Association and
rediscounted at home or abroad.
November 20, 1916.
818
War Finance Corporation Act ..
The director of, should be pe~tted to deal direct with
borrowers without the intervention of banks ..
septewber 18, 1918.
863
See
also:
Cl~ton .Act.
Foreign branches
National Bank .Act.
National Banks
Trade Acceptances.
635
X-1669
Anticipation of last reserve
Dis~proved at present time.
·Vote 6 to 3·
Noven·,ber 16, 1915 •
Favored. Novewber 20, 1916.
817
See. a~so.
Reserves: .AnticipateQ..
See
.Anti Trust .Act,
see
787
9e~tificates.
Anticipatory U.S.
U.s.
Bo4ds •
Clayton.
Amendments:
Clayton Act.
Arbitrage of Exchange ..
·M~ be necessary to prevent, as far as possible in cQbJunction
with other Nations, as laid down in report of inforwal cowwittee
to Secretary of Treasury.
Septeruber 18, 1917.
843, 847
Ardrey.
I
if
'
~a~erit.
'(
voted against cost of Federal Reserve Notes being pail by
governxuent.
November 16, 1915.
7S6
Voted against redv.ction of paid in capital· of Federal Reserve
:Banks.
November 16, 1915.
186
Voted against issue of Federal Reserve Notes against gold etc,
Novewber 16, 1915.
788
Assistant Federal Reserve ~nt,
Favors creation of office of, Power, however, should not be
limited to absence or disability of Fe~eral Reserve Agent.
February 19, 1917.
823
Atlanta District.
Advise no change in discount rates.
Preferential rates in collateral l'.la;ns and eou;mod:t..ty rates,
and purchase of domestic bankers aoce:ptam~es will bring ato~~t
any changes needed.
september 18~ 1916.
Excess reserves in banks of Dist1·int are norr.:.a.l.
Septerube:- 18, 1;;J6.
~06
Attorneys fees.
See:
~enu~ents:
Sec. 22
.Availability, deferred.
see: Charges,. Sec .. 16
Availability, ~uwediate.
See. Federal Reserve Exchange drafts.
Record
·tT.J ..
636
,, '#',<.~:·~
;.
'•'-:f.
.
.':1",'
.
......
... ..
. ... .. .
.
.
'' )\
•.
..
''·,.
•
..
..
I>
,,
'
'
.
- B -
l
-13-
Balances ~ ·
. · · \~·
Clearing •. ""'5ee- .Ba.Ye.s··'bill.
Clearing. Rouse. See Reserves:· Optional
"
: Vaults
Co n:pensat Ot".J'·
See clearing members.
Compulsory.
See Reserves
Domestic Exchange. See Federal Reserve Drafts ••
Excess reserve. See checks: Immediate credit.
Net.
See Reserves.
·Unfavorable trade. See Gold. •.
Bank balances:
Anticipation of last reserve payment.
See same.
Bank commercial letters of cred.i t ..
See Comptroller of Currency.
Bank cre<U ts.
Liberty Loan operations will expand.
I
Sept. 18, 1917.
842
Sept. 18, 1917.
842
I>
:Bank dapo sits.
Liberty Loans will dislocate.
;-.
See also:
Acceptances: Discount rates
Deposits
Reserves
Ba.ri.k deposits.
Gua.ra.n ty of. ·
See Senate Bill No.
"
"
"
9
742
Bank deposits, Savings
Liberty Loans will cause small investors to encroach on.
Sept. 18, 1917.
loans for capital purposes.
Bank loans, competitive bidding.
Bankers Acceptances.
Bank
BoNilkers, Private.
See Private bankers
!3~g
ca.paci ty.
See Reserves
842
See Capital Issues Comnittee
See Clayton Anti-Tru.s t Act.
See Acceptances.
...,... 'X~l6€9
-14-i.
I
638
Banking COrporations, Foreign
See Amendments : Sec. 25
Foreign Branches
Banks.
Accepting for foreign countries.
Amero..dmo!lii.
See Dollar Exchange
Acceptanc'?S up to zoo~t
A:mend..'Jlsnts
Soc. 13
Engaged in foreign 03J.lki:ug:.
See Arrzndments: Sec. 25
Foreign banking.
Exa.minat ion of.
See Na.t5.ona.l bank examiner.
Foreign.
See Amencments: Sec.25
1c:;.·eign ba.n!;:;.ng
Foreign b~anGhes
Investment in Public Utility secu.~i t'ies.
L:i.mitations on
See Acceptances: Limitaticris
Mltua.l Savings.
See Amendlrents: Sec. 9
Ba.nk deposits
Deposits
New grouping of. See Ameno;nents: Sec. 4
Tax. Undistributed profits.
Up to 100%.
See .Amen.dmmts: Ir..cone tax.
Acceptances
See Acceptaroe~: Act of Sept ·7 .· , 1916.
Bidding, coupetitive
See Clayton Act.
Bill, War Finance Corporation.
See War Finance Corporation.
Bills of
Ex~ha.nge
SE!e Acceptance-s
Domestic .Accepte.ncos
Heyes Bill
Bills, Srrall
Bureau of Engraving and Printing should expedite printing of.
Sept. 18, 1917.
848
Bond issues, supervision of
See Capitol Issues
Co~~ttee
Bonds, Corporate and R. R.
See Savings banks.
~-,. ~-
Bonds, Industrial
See Industrial bonds.
639
X- 1669
-15-
Bonds, minirr.u.m deposit.
See Arr.endments: Sec. 17
Bonds, R. R. Paper setrured by.
See R. R. Bonds.
Bonds, U. S.
See
u~
849
S. Bonds
Boston District.
No changes 5.n discount rates recommended.
Sept. 18, 1916.
Excess reserve
806
is$27,000,000 of whi~b$24,000~000 is inN. Y.
Sept. 18, 1916.
804
Branch Agencies
See Azrendments: Sec. 3
.
.Branch bank", Foreign
See Anendments: 5ec. 25
.Branches.
Federal Reserve .Banks.
Favors arrend.mmt to Sec. 3 a.s to domestic
Feb·. 19, 1917.
824
Disapproves establishment of forei~ agencies or branches.
F"ao·.. 19, 1917.
8Z4
Branches, National Banks
Domestic
See Alrandments: National Bank Act
National :Banks; Branches
Foreign.
See Arrendments: Sec. 25
Foreign branch banks
Foreign branches. National banks
National banks
.Bullion.
See Silver bullion•
.Bureau of Engraving and Printing.
Should exi>edite pri mting of siiall bills.
Sept. 18, 1917.
Business
cond~tions
848.
after war.
Discussion of
Nov. 16, 1915.
By-laws.
Federal Advisory Council.
787
763.
•
X-1669
- 16-
-c-
......
Call loans.
Approves preferential rate on, secured by
Acceptances of :Banks a.nd bankers.
Sept. 17, 1918.
See Acceptanees: Call loans
861
Canada
Makes no recorr.mendation as to permitting gold exports to, as
exchange relations are in pro CF:.-.£'.:l of satisfactAl"'Y adjustment
Nov. 20, 1917.
850.
Capital and bond issues.
Supervision over.
See Capital Issues Comnittee.
Capital and reserve deposits.
III!Practicable to estimate w:r..a.t portion of, should be invested
to earn expense and dividend reqo.irezmnts.
795
Feb. 15, 1916.
Capital and Surplus.
See Amendments:
Sec. 13
Capital and surplus. Ratio of acceptances to.
Six to one held r~~ble for the present.
Nov. 19, 1918.
867
Capital Issues Committee.
Supervision of capital and bond issues by, a.pproved.
Fsb. 19, 19L8.
853
Supervision of bank loans for cap~tal purposP-s by, approved.
864.
Sept. 17, 1916.
Capital Stock, Paid in . Federal Reserve Banks.
Voted that, should be reduced by two-thi.rds but that. unpaid.
subscriptions and doubl~ liability be left unchanged.
Negative; Wing, Ar.dr~Yt Rowe
786
Nov. 16, 1915.
Voted, should not be reduced
Nov. 15, 1916.
795
Negative:
Swinney, Jaffray, .F'or~a.n
Minority reports.
Feb. 15, 1916.
795
..
~
Capital Stock. Pa.id in
Ratio of surplus to
See Surplus fund
Carriers, common
See Clayton Act
Cash, Vault
See Re..serves
..
http://fraser.stlouisfed.org/
·.
Federal Reserve Bank of St. Louis
640
....X l669-·······~
...
Central banks - Europe
See Gold
64:1.
-17....
C'entra.l Reserve cities
See deposits
Central Reserve Cities, Classi fi.cation as
See Federal Reserve c::. tiesCentral Reserve Cities
Reserves, Cut.lyjng dlstr:icts.
See Amendtrents: S~c. 19
Reserves
Certification
·· ·
·' of eligibility. See Circular No. 3, Series 1915
Certificate of indebtedness.
See U. S. bonds
Character of deposits
See Reserves
•
Charges, collection
See 6beoks
61earing System
Charges, per item
See Checks
Clearing System
Charges. Sec. 16
Assuming tha.t Sec. 16 n:eans that rre®er ba.nks are entitled
to charge cust.ottf'rs the cost of hand.Eng out of town chAcks,
plus interest for period of def~rred <:.'QaUabili tv on items
collected. th'"'ough Federal Rese-..·ve Banks. the 'Fed8ral Reser\'e
Board should regulate such charges.
811.
S3pt. 13. 1916.
C.harter, Nat)onal
For banks cba.rter<3d t,o do foreign banking
See Amendments: Sec. 25
Checks.
See Clearing System.
Chicago District.
Discount rates: no c.hii1nges recorrmend.m"-·
Sept. 18, 1916.
Excess reserves.
Cl"Jicag') banks very low
Other banks "8.6 millions
Reserve Agents hold 89.3 rrd1lions
808
800
Sept. 18, 1916.
Resolution of .Federal Reserve Bank of Chicago:
1. Should purchase domestic acceptances only from
rr.ember banks wi tl:l their endorsement.
Chic&go District. (Continned)
·
Resolution of Federal Reserve Bank of Chicago: (Contino.ed.)
2. ~endency to put conmsreial deposits to t'ie' deposita
to re~ce reserve re~irements is ~gerous.
April 20, 1915. 776
I.
Circular No. 3. Series 1915. Regulation B. 1915.
Fedara.l Advisory Cour.cil submitll with some altera.t'Dns to meet
Hs 'liews, astn ce:r·iiiflcation of eligibility, credit files
and cred:i t ini~Hon.
Jan. 19, 1915. 768,769,770
Circulation
See Feiaral Reserve Notes
Cities, Reserve and Central Reserve
See Deposita
Federal Reserve Cities
Resttrve Cities
Cities, Reserve and Central Reserve
Outlying districts. Reserves
See 1~1~nts: Sec. 19
Res111rves
Class A & B Directors.
Election of. New grou,tng of banks
See Airendments: Sec. 4
Class C Directors
Abolisbment of Deputy Federal Resel"Ve Agent
Creation of Assistant Federal Rese»ve Agent
See Arr.endments: See. 4
Classification of member banks.
Election of directors
See Airsndments: Sec. 4
Classification of deposits
See Reserves
Classification of Reserve and Central Reserve Cities
See Federal Reserve Cities
Reserve Cities
Cl~ton
·•
Anti-Trust Act.
Suggests amendmmt peJ'mitting one interlocking director in a.
·
National a.nd State bank, and making private bankers so eligible.
Sept. 21, 1915. 783
Nov. 16, 1915. '186
Approves amendmmt submitted by Federal Reserw Board
reb. 16, 1916. 79?
Advises rule tha.t bank loans having not more tnan I years
to run, be exempted from necessity for competitive bid4ing.
Asks that Federal Reserve Board take this up wi tb Interstate
Commerce Comnission.
643
Clearing balances.
See Hayes Bill
Clearing House 'ba.lances.
See Res'3rvas: Optional
i1
:
Vau.l~
Clearing System.
Allowa.nce, Tirr..e
See Infra., cb~cks
fi,
Ava.ilabili ty, De fez-red
Sea Infra. 1 cba=gss Sec.l3
Balance, com~en~atory
See Intra., checks 7 Hayes Bill ·
Balances, excess
See Infra, checks
4
Clla.rge.
Not advisable to allow me~her banks in smaller cities or towns
having no clea.dng house, to clk"\rge eve.a a. moderate fee for
collecting check~ ~n State b&""tks.
Nov. 20, 1916.
817
Charge, Exchange
See Infra., collectible at par.
Charge, Handling
See Infra, colloctibl~ at p~.
Charges. Sec. 13
Chaeges, Per item
See Infra., Per item charge
Charge per $1, 000
See Infra., Per item charge
Charges. Sec. 13
If this section authorizes the Federal Reserve Board to
regulate cha:ges ma.de by member ba.r..ks against their
customers for out of town checks deposited which are
collected through the Federal Reserve Bank, it is the
duty of the Board to regulate them.
The Board should baoee such regulation on the principle,
already recognized by it as fair and equitable, - tba.t
member banks are entitled to charge to their customers
the cost of handling such items plus interest at a reason•
able rate for the period of deferred availabili~ of the
funds or Stems collected through the Federal Reserve Bank.
Sept. 18, 1916.
811
Checks:
l. Drawn upo.n member or Federal Reserve Banks of other
Districts ean only be received on deposit under Sections
•
..
644
X-1669
Clearing System (Continued).
Checks (Continued).
13 and 16, by a. Federal Reserve :Sank when remitted by
another Federal Reserve Bank solel1 for exchange or
collection purposes.
Jan. 18, 1915. 766, 767
2. Shouid not be charged by a Federal Reserve :Sank to the.
reserve account of a. men:iber bank without its authority
and without its having an opportunity to pa.ee; upon them.
Jan. 18, 1915.
767
3. Can not have an effective clearing system oYer whole countey
until it is possible to collect checks upon non member banks.
Feb. 15, 1916.
793
4.
5.
6.
7.
8.
:Found impracticable in operating the recently abandoned
voluntary system, involving immediate debit and credit,
for member banks, especial~ in Reserve Cities, to maintain the necessary excess balances to protect an unknowable amount of checks coming into the hands of the Federal
Reserve Banks.
Sept. 18, 1916.
811
Federal Reserve Banks should not be requited. to receive
for immediate credit(funds to be immediatelY available)
checks drawn on member banks maintaining excess balances,
thas abrogating the time allowance now in-force against
such checks.
The present system of deferred credits should be tried ou.t
on its merits before even a. partial return to the old system.
Sept. 18, 1916.
811
Inadvisable to allow member ba.nks in smaller cities o:r: towns
having no clearing house to cbarge even a moderate fee tor
collecting checks.
Nov. 20, 1916.
81'1
Approval of clearing membership for banks too small to enter
Federal Reserve system provided they keep with the Federal
Reserve Bank a. compensatory balance and .remit at par on
checks on themselves.
.821
Feb. 19, 1917.
Disapproval of ~es Bill. Tax on
See Infra, Hayes Bill
Clearing House.
6
: See Supra, Checks
Clearing privileges
Clearing members.
See Supra., Checks
7
· See Infra, Hayes Bill
Clearing privileges.
Nonmember banks should not have, unless· meubers of the clearing
bouse, if any, in city or town of location.
Nov. 19, 1918.
870
'.
645
- 21 Clearing System (Continued}
Compensate~ balance
See Supra, Checks
7
Collectible at Par
The lagend on many checks "collectible at Par" through the
Fede~al Reserve Bam of
, is misleading a.s they are
S\'lbject to the ha.vrlling c!Jarge of the Fed.era.l Reserve Bank
and in. rrany cases to a. charge of the bank receiving them.
The words 11At Pe.r 11 should be stricken out.
Sept. 18, 1916.
814
Cost of handling items.
See Su.p1'a, Ch:u·ge.i3: Sec. 13
Credits, Deferred
See Supra, Checks
5
Credit, Immediate
See Supra., Checks
4, 5.
Customers, Charges against
See Supra, Charges, Sec. 13
Debit and Credit, Immediate
4.
See Supra., Checks
Deferred availability
See Supra, Charges, Sec. 13
Deferred Credits
See Supra, Checks
5.
Deposits
See Supra,
1.
Checks
Distance, Disregard of
Disregard of elements of time and distance now being attempted
by some Federal Reserve Danks may so involve and absorb the
funds of the Federal Reserve Banks as to seriously impair their
usefulness as banks. of issue and de,P:)sit.
Jan. 18, 1915.
767
Excess balances
See Supra, Checks
4.
Exchange charge
See Supra, Collectible at Par
Exchange purposes
See Supra, Checks
1.
~
r ,
646
X-1669
- 22 Clearing System (Continued)
Federal Reserve Banks.
See Supra, Distance, Disregard of collectible at par.
See Supra, Hayes :Bill
n
"
Collectible at par.
Federal Reserve Board
See Supra, Charges, Sec. 13
Federal Reserve Districts.
See S,~pra, Cr.. eck~, l.
Handling charge
See Supra, Collectible at par
Charges, Sec. 13
Hayes Bill
.
Disapproval of Hayes Bill which imposed a tax on checks paid
which bear the endorsetnE>.nt of or are· collected
through any
other bank, etc. located outside of the gtate in which the
checks are made payable, the tax not to apply to !AllY Federal ·
Reserv·e Bank, member bank, or nonmember clearing member, etc.
April 18, 1917.
828
Immediate debit and credit.
See Supra, Checks, 4
Immediate credit.
· See Supra, Checks,
4, 5
Indorsement.
See Supra, ~es Bill
Interest.
See Supra, Charges,
Sec. 13
Intra-district clear'ings
Should not be made mandatory
Sept. 21, 1915.
783
. Items.
Member banks unq.er new clearing system can not practically
maintain necessary excess balances in Federal Reserve Banks
to protect checks coming into hands of Federal Reserve Banks,
as volume of 1 tems ie nuch greater than under the .reeentlJ
abandoned voluntary system under which i t could not be done..
Sept. 18, 1916.
811
·
Sea also Supra, Charges, Sec. 13
Items, Cost of handling
.Sea $upra, Charges; Sec. 16
Ma.nda.t ory
Intra-district system should not be made
Sapt. 21, 1915.
783
X-1669
647
- 23 -
Clearing
Syst.~:~m (C~ntinued)
Merrib a r ::ban.'It
S0e Supra,
Hayes Bill
Members, Clearing
Approval of plQn for State bank clearing memberswhere too s~all
to enter Federal Reserve System provided a compensatory balance
be kept with the Federal Reserve Bank and that they remit at par
fo:r checks on themselves.
Jab. 19, 1917.
a21
. Per· item charge
Recommended in preference to a charge per $1,000.
Sept. 18, 1916.
Privileges, Clearing
See Supra, Clearing privileges
810
See also, Supra, Hayes Bill
Norunember Banks
S~e Supra,
Checks, 3
Hayes Bill
Member, Clearing
Clearing privileges
Out of town checks
See Supra, Charges, Sec. 13
Par, collect at
See Supra, Collectible at Par
Par, Remit at
See Supra, Member, Clearing
Remit at par
See Supra, Members, Clearing
Reserve Account
See Supra, Checks,
2.
Sec. 13, Federal Reserve Act
See Supra, Check3, ·1
Chargc1s, Sec. 13
Sec. 16, Federal Reserve Act
See Supra, Checks, 1
State Banks
See Supra,
Checks, 6
Members, Clearing
Tax on checks.
See Supra,
Eayes Bill
Tir.oo, Disregard of
See Supra, Distance, Disregard of
.•..
#• . . •
·*·
·· .. '
:
X-1669
Clearing System (ContinUed)
Tine a.llowa.nce
See 5~pra, Chs~ks 5
Voluntary clearing systam
·' J.
".~'
i:
See Supra., . Checks t~.
See also, Federal B~serve Exchange Drafts
Federa.l 1:1aserve Banks
Sectioas 13 and 16, Federal Reserve Act
I
I,
Cleveland District.
Discou..--:tt rate:::
No change recommended,
Sept. 18,·1916.
806
Sept. 18, 1916.
805
Excess reserves are nominal,
.•
Collateral Notes •
Preferential rates on, corrmodity rates. and purchase of domestic
bankers a.ccaptcmces will control discount rates. No change recommended by Atlan~a for this reason.
Sapt. 18, 1916.
806
Rates on, should be sarr~ as for. rediscount of 10 daf commercial
paper.
Sept. 18, 1916.
809
Collectible at Par.
See Clearing System
Collection.
See Clearing System
Collection Account
See Hayes· Bill
Commercial Credits. .
See Conservation of Credit
Commercial letters of credit.
See Con;ptroll~ of Currency
Commercial Deposits.
See Reserves
Coiiii!Srcial PaJU r.
Suggested changes in Circular 3, Serit3s 1915, Reg1.1lation B..
Jan. 19, 1915.
768
Commission, Federal
·
See Railr~~d
Savings Banks.
1.
- Z5-
Gcarnittoes.
B.;}Y/..,:h~\~ tV~, t~
fo:rr::ign branches
Col:.:1ci:. a.;?r>roves rer·n·t
Sept. 18, 1916.
l>.~)~.':::':"l\'3S re:;pr.~
Comrnodi ty Pa;)8r
809,810
to Sccruta..ry of ':llrea.r;ury.
8ept. 18,. 1917.
843,845
D~scipp:;.~ovGs CJ.Y::c·l.al ra.t.ss
for
21, 1915.
20, 191? .
781
848
Sapt. 21, 1915.
?83
•
Govornnr Sea:' d:i sser.1.ts.
· See AtJa.nta
Commodity Rates
See discount ra.+..es·
Common Carriers
See Clayton Act
Compensatory
Balan~es
See Clearing System
Con{letitive ]jddlng
Certain cank.loans should be exempted from, under
by Interstate Commerce Commission.
Cl~ton
Act
May J.6, 1916.
803,. 804
Comptroiler of Currenr,y.
Should furnish ..iF.II~tl ba.r.k examined wi.::.h. a. copy of the National
]a..7}k E..'tami:ner 1 s Heport.
Nov. 1:3: 1915.
78~
Functions of off:i.c.e of Cl'\mptroJ.lar of t:1o c·u:r::enc:y ~.bo,:.ld be
abcorted a.nd a.dwin:i st.e.t'ed by Fe·i<:r-a~_ lt-:s~::v8 B'}<.:,rrl.
rr-'"''· 16, lS1:'5.
785
Statement of:, ::a.s to exosss reserves ref~;~:rred ·i;o.
F(~t. 15, 1916.
79J.
Th~ ruling of, as to ~ank comrrerc5.al lctte:--s of credi·li
was
d:is~ssed
e..nd a joint conference on it w:.th the Federal
Reserve :Eo.::a.rd. was recomrJended.
Feb. 15, 1916.
?99
Compulsory Balanc8s
Seu Reserves
Conservation of Credit.
Fcc1.er.:>1 Reserw~ Board sl"JJuld urge, 'lpon F?.(le:-aJ. Reserv-e Bank
Fen. 19, l9.i..8.
21, 1913.
S:::i:~
iV'ey
8:~·9
Sept. 18, J.9l7.
84:?
Conservation of Gnli.
Strongly fa:;ro.I.'Ad.•
See
a.lso
Gold.
•
'51'.,.\,.}("',
I
... 26 ..
X-1669
Conservation of Reserves.
See Discount rates.
Constitationality.
Of National
~oard
to fix Public Utility rates discussed.
Sept. 17, 1918.
863
Contingent liability
See U. S. Revised Statutes: Sec. 5202
Contraction.
Inpossible to bring about so long as banks have large surplus
of reserve rr~ney.
Feb. 15, 1916.
7~0
Would be dangerous as an after war policy to business interests.
Nov. 19, 1918.
867
See also, Discount Policy, Federal Reserve Board.
Conversion of U. S. Bonds.
See Amendments: Sec. 18
H. R. 5901
Cooperation of foreign nations.
See Foreign Exchange
Corporate Bonds.
See Savings Banks
Correspondents, Foreign
See· .Foreign Corrss}X)ndents
Cost.
See Absorption of cost
Fede ra.l Reserve Notes
Cost ·of handling Governmmt deposita.rr busir1ess.
See Fedsa.l Reserve Banks
Cost~of
production.
See .Almndments: Imome Tax
Counter
P~ments.
See Reserves : vaalt
Coupon rate
See U. S. Bonds
Credit.
See Commercial letters of
Conservation of credit
Contraction
Discount policy, Federal Reserve Board.
,
650
•
' l
X...l669
... 2'1 ..
651
Credit Filet.
Charges a.s to, Circular 3, 1915, Regulation :a, 1915.
Jan. 19, 1915. 7?0
Credit, Imnsdia.te
See Clearing System
Credit information.
Changes ~ggested in Circular 3, 1915,
Credit Statements ..
See Private Bankers
Re~lation
:a.
Jan. 19, 1915.
770
Credits.
See Bank Credits
Co~rcial Credits
Conservation of credits
Curtailment of credits
Essential and nonessential credits
Credits, Revolving.
Containing renewal agreements, e,ven if technically eligible
are not within spirit of Federal Reserve Act.
Nov. 20, 1916.
816
Criticisms of Federal Reserve Act.
Council has heard of no vital, except ~ch as have a.lreadJ
been referred to by Federal Reserve :Soard. in its annual report.
; May 16, 1916.
800
Crops, W.overr.ent of
Conservative bankers do not favor financing, by bankers 1 acceptances.
Sept . 17, 1918 .
862
Cumulative dividends
See Dividends, cumulative
Currency,
Federal Reserve :Sanks should at all tirr.es have gold
and currency in denominations required by member banks.
Sept. 18, 1916.
Nov. 20, 1916.
809
815
Federal Reserve Banks should absorb expenses incident to transfer
of currency and securities to and from n:.enber banks~
Sept. 17. 1918.
865
See also Gold
Current :FUnds.
See Federal Reserve :Sanks
Curtailment of Credits.
Federal Reserve Board should advise member banks as
Feb. 19, 1918.
Nay 21, 1918.
Bas worked no undue hardship
Sept.l?, 1918.
Curtailment of importation of luxuries favored.
Sept. 18, 1917.
desirability of
852
859
862
845
'
- 28 -
X-1669
652
Dallas.
Discount rates.
15 day rate fixed at 3~%
Low rates in :. tro~"' •oo-ce:ptances should continue ..
808
Septer.!'ber 18, 1916.
Excess reserves ..
.Are norwal.,
Dealings in securities.
See Clayton .Act.
Deferred availabilityQ
See Charges: sec. 16
Deferred credit.
see Clearing System.
Deficient reserves
Advises iruposition.of a penalty for •
.April 20, 1915.. 775 .
Delano, F.
To see Forgan. M~rch 5. 1915.
·
Rediscounts between Federal Reserve Banks.
Asks suggestions as to proper rate of discount. 771
Forgan to Delano. March 7. 1915.
1. Rediscounting Federal Reserve Bank should raise its
discount' rate in its district l~ above rates in the
district·s which are to rediscO'I.mt its pa~~ .. but shQI4ld
pay to the rediscounting Federal Reserve l3a.nk its current
rate.
.
2. Jroper that it should make profit beca\ls& of its endorsement:
3· If the need for rediscounting is caused. b.f a. falling off of
,
its deposits or reserve resources ani the other Federal
Reserve :Banks have similar conditions, the disca\mting
Federal Reserve Bank should make no profit bf redisc~ting,
b1.1t should supply its indorselllent wi tho~t -profit.
4. All Federal Reserve Banks Sho~ld be allowed to pro rate tn
giving rediscounts.
5. would be willing to have the business transacted through
Federal Reserve Banks of New York and have their accounts
charged by it with their pro rata share.
'
6. These are r.uy personal views.
772
Reaffirmed. Septeuber 21, 1915.
783
~Y 21, 1915.
SUggestions as to proposed clraft of state bank. l'egulations. 76()..,
Forgan to,
Deruand deposits.
See r&serves ..
653
-· 29 -
x-1669
Demand
Loans~
Preferel!tial rates on, securee by acceptances. approved.
septeruber 17' 1918.
861
Denominations ..
See
.
Federal Reserve Notes.
'
Deposit• Minim'UIIl. U.S. bonds with Treasurer of
See .Asuendr.uents. Sec. 17
'
•
u.s.
Depositary banks.
See Federal Reserve Banks.
Depositor.
See
Sections
13 and 16.
Federal Reserve Act.
Depositors, Insurance or Guaranty relief for.
See.
Se.o. Bill 9
II
p
7~
Deposits.
!
Bank.
Larger reserves required in reserve and central reserve cities
bec~use they receive.
Maf 16, 1916.
All banks receiving, should maintain
May
See also:
Acceptances.
16, 1916.
Character of,
See Reserves
Classification of.
See Reserves
Deluand
788
See Reserves
GOvel'Dll!ent ,
See Government deposits.
Guaranty of,
Disapproved.
APril 18, 1917.
May
15%
21, 1918.
800
reserves.
800
842
861
some plan for prompt relief;.;qpt be devised by Federal
Reserve Board.
April 18, 1917.
842
Insurance of.
see Supra.
Guaranty.
Senate Bill 9
"
n
742.
Interest on.
see: Interest on deposits.
pyraruiding of.
Impossible to prevent but causes inflation of bank
de}losits.
I
I
654
...,.. )0-
X-1669
Deposits, continued.
pyramiding of, . continued.
Federal Res'"rve Act reduces dcnger by preventing
deposits with.approvaa ResGrve agents oeing
counted ciS resGrvas.
May 16, 1916.
Disability.
See:
Disbursements.
See
Discount market.
See
Discount :t-olicy.
t
800
Ratio of Capital to.
See Sen6l.te Bill ·742
839
Reserve !deposits.
See Cdpit~~ ~~d resGrve d~Josits
Savings deposits.
Interest on shotll d 'be high snough to induce thrift ..
November 16, 1915.
789.
Time de~osits, Savings and.
Change sl,fggested in dretft of regulation
submitted by Federal Reserve Board.
December 18, 1914.
766
Deputy Federal Reserve Agent.
Abolishing office of, approved.
February 19, 1917.
823
Directors.
Classes A and :S. New grouping of bB.nks.
Approved.
• Febru:.1ry 19, 1918. 853, 854
Class C. Abolishing De-~uty Feder:U Reserve
.!'!gent Md creating Assistant
Federal Res~rv~ Agent •
.Approved with qualification.
Febr1.1ary 19, 1917. 823,830.
Clayton Act. See smne.
Common carriers. See Clayton Act.
Federal Reserve District.
Director should res:..gn on wovin~~ out oi'
September 18, 1916.
814
Fees of. Section 22.
see .Amendments. sec. 22
Interlocking.
See Clayton Act
Railroads.
See Clayton Act
.A.lnendments Sec. 4,
Assistant Federal Reserve Agent.
Federal Reserve Banks.
.Acceptances.
Federal Reserve Board.
The Fed.eral R;::sarve Board has kept its discount
rates above open market rates for commercial paper.
This is all it can do
- 31 ..
Discount Policy.
655
continued.
except through open market powers, to check eXJ:.~ansion.
Cause of ex,t:;ansion is the large surplus in the banks .. On
NOVe4~er 10, 1915 the excess reserves of national banks were 891
ruillions.
February 15, 1916.
790
Discount rates.
,.
Acceptances. Reasons for low rates on.
· May 16, 1916.
801
Eetween Federal Reserve Banks.
See: Delano, F·
Changes rec«amended. (~e also Infra, increase)
Boston. No change.
New york. Ten day rate should be changed to 15 days.
Philadelphia.. No change.
Cleveland.
No change
Ricl:mlond
No change
Atlanta
No change
Chicago
No change
st. Louis
No change
15 day rate established in place
of 10 day.
Minneapolis
No change
tow Federal Reserve Eonk rates lead s~
sruall banks to unduly increase loabs.
Kanst~s City.
Should not be lowered, would encourage inflation.
15 day rate fixed at 3~. i,pw rates in t.rad.e
acceptances should be continued to encourage
them.
San Fro.nc~s.co. No change ..
septeruber 18, 1916.
808
See lnfra. Increase in rates.
Collateral notes.
Should take same rate as 10 day. co~erc1.al paper.
septe1.aber 18, 1916..
809
COwluercial open ruarket rates.
Federal Reserve Bmk rutes have been kept above.
February 15. l916.
790
COlllUlodity paper.
Against preferential rates on.
Septe;•.ber 21, 1915.
781
Novewber 20, 1917.
848
Gov. seat dissents.
SepteLuber 21, 1915.
783 ..
Expansion.
Controlled by raising.
Septe1ubel' 18, 1917
84J
Federal Reserve BanKs, between~
see: Delano, F·
656
Discount rates.
continued ..
Fixing of.
Suggestions and rec~endations anould be initiated by
directors of Federal Reserve ~~.
septer/Jber 21, 1915.. 781
GOld.. market.
Development of, regulated by discount rates.
Nove~ber 19, 1918.
869
Increase of.
Looks for higher rates. February 19, 1917.
624
Advises increase of frQW ~ to 1 % both discounts and
on
purchases.
Novewber 20, 1917.
851
No iwwediate necessity for increase. ~be later as
discounts increase.
February 19, 1918.
852
Advises no increase or change.
May
Advises against increase.
21, 1918.
861
Septeruber 18, 1918.
864
Contracttc~
by means of increased rates, as an after wa:r policy
would in,Jute d~estic business.
Nover.1ber 1,, l91S.
867
Should be as liberal as is consistent with safety.
NOVeL.lber 19, l91S.
867
Liberty Loan, Jrd.
Interest rates suggested.
Liberty Loans.
Preferential rates on loans secured by u.s. bands should
be continued.
Novewber 20, 1917.
848
February 19, 1918.
852.
septewber u, 1916.
864
Preferential rates.
See; SUpra.
Cowwodity paper.
Liberty Loans.
Public utility corporations.
See same.
Rediscount rates, Between Federal Reserve Banks.
see: Federal Reserve Banks~
;
war paper.
See:
Supra.
Liberty Loans ..
657
- 33 -
Districts,
out~ing..
See;
Reserves.
Awendments
Reserves.
Section 19•
Dividend requireruents.
see:
Dividends,
C~ital
C~ul~tive.
and reserve deposits.
Feder~l
Reserve Banks•
Temptation to increase investments.
February 15, 1916.
796
Dollo.r Exchange. ·
Rather doubts practicability of enqJ1oying e.x,pert to study :. ,
and investigate.
Feb~ 19, 1917.
826
Should be stabilized in neutral countries such a.s Sweden, Holland,
Switzerland and B.Pain, :provided dOes not involve an undl:le shipment
of gold.
Novewber 20, 1917.
850
See Acceptances.
Gold.
Dollar Exchange Drafts I.
Privilege of drawing, tu~ have to be extended to other countries than
Central and South America, under devel~ents of Peace conditions.·
No necessity now.
Novet.uber 19, 1918. · 866
Domestic Accept:mces.
Should be purcho.sed only from w.eu.ber banks with their indorsement.
May 21, 1915..
776
Proposed extension to 200% of capital and surplus for bankers accept...
ances in pure q foreign transactions.
Shoul~ be in addition to power of giving.
November 19, .1918.
870
see also: Atlanta.
Domestic Exchange Drafts.'
See: Federal Reserve ·Exchange Dra.fte •
Drafts
See: Dollo.r exchange drafts.
Federal Reserve Exchange drofts
H~es Bill.
t
Double liability of stock holders.
Should not be changed 1f p~id in Cc~ital of Federal Reserve Banks
be reduced.
Noveruber lb, 1915.
780
. '·"·:P;"'!I· ,.i_-'\f L.. _, ... J,
X
1669
·658'
-Jq;.
E
Eazmarking of gold.
Steps should be t.G.:;:en to prohibit our banks in the future from
earmarking gold or tating it'into custody.
.
'Sept • 18? 1917.
81J.7
certification of.
Changes suggested in draft of Federal ··~serve .Board. ·
Regulation .B. 1915
Jan. 19~ 1915.
769
El~gibility,
•.
Eligible.
See:
Foreign banks.
Embargo, Gold.
Gold~
·sea:
Enemies, Allies of.
. see: secretary ot Treasury; Con:mittee an Foreign Exchange.
England.
See; Great Britain.
Enterprise, Taxation on..
see: Taxation, Government.
Essential and nonessential credits.
Not feasible to l~ down ~ general rule of differentiation.
sept. 17, 191s.
~opean
see:
eS2
·
central banks.
Gold.
Ewopean war.
Iupossible to predict business von4.itions following.
Nov. 16, 1915. 785
. ·
Examiners R~orts.
should ·be shown to directors.
Nov. 16, 1915.
785
Examinations of state banks,
Should be made under direction of Federal Reserve Board and not
by Comptroller of Currency.
Nov. 16~ 1915.
785
Excess profits tax.
see: Taxation.
Excess reserve balances.
See: Clearing system.
Be serves.
Exchange accOQDt.
·. see
Hqes Bill.
659
Exchange, Arbitrage of.
See: Arbitrage of exchange.
Exchange drafts, Domestic.
See: Foreign Exchange drafta.
Exchange, Foreign.
Discussion of.
843
.Exchange mame t.
·
See: Foreign bills of exchange.
Exchan!B
~erations.
see: Foreign Exchange operations.
Executor, Trustees, etc.
Inpracticable to frame general regulations as state laws apply.
Jan. 18, 1915. 765, 766.
E~ansion
of credits.
See: Bank eredi ts.
Diecount :policy. F. R. :Board.
Discount rates~
Federal Reserve notes.
Expense of transfer.
Federal Reserve Banks should absorb, of currency and
securities to
from member banks.
and
sept. 17, 191s.
816
Expenses, Federal Reserve banks •
.See: Cspi tal and l"e serve deposits.
Export of gold.
See: Arbitrage of exchange.
Gold.
Exports.
Should be facilitated during war.
Nov. 20, 1917.
850
J'.
Faciltiies, Free.
See; Federal Reserve banks.
Farm land loans. ·
Advises broadening of Sec. 24.
Nov. 16. 1915.
786
Farm loan bonds.
Should not serve as security for Federal Reserve baxllts
loans nor for acce-J?tances by member banks, as provided
in Hollis bill.
No?. 16, 1915.
787
~I.
.
•'
,,
X"-'-·:.+ il'
".~'.
,\
TA,J;
'·· , " ' . "'i11§~'<•:'''.
,,
Federal Advisory Council.
Against recoumm.dation of Federal Reaerve Board
tn office of membera.of.
·
Feb. 19, 1917.
827
660
ot rotation
Federal charters.
Foreign banks doing foreign bu;.;iness, approved.
M~ 21 1 1918. 859
Federal Commission.
See Railroads.
savings banks.
Federal Reserve Act.
C<NnCil has heard no vital criticisms of, not contained
in ammal report of Federal Reserve Board.
MaJ 16,· 1916.
300
see: Amendments, Federal Reserve Aot.
Sees. 13 and 16, F. R. Act.
Federal Reserve Agents.
see: .A.mendmen ts' sec •. 4.
Assistant Federal Reserve Agents •
. Deputy F •. R. Agents.
Federal Reserve notes.
Federal Reserve bank loans.
.
see Farm llJan bonds.
Federal Reserve lank of Chicago.
Itecoiiiilendations. May 21, 1915.
PUrchase of domestic acc~tsnces.
J1ctitious time deposits.
776
Federal Reserve Bank of New York.
.
Forgan suggests that all redisCO\U'lts between Federal
Reserve banks be transacted through.
Mar. 7. 1915. · 771
Federal Reserve Ba:nks.
Abso~tion
of
~nse.
Of transfer of currency and securities to and from
member banks~ recommended. ·
Sept. 18, 1918.
865
Branch agencie.s.
sea: Alnendments: sec • .}.
Capital stock, Paid in.
Favors reduction of, Vo~, 6. to ).
Negative: \IT.ing, birey, Rowe.
Nov. 16, 1915. '786
Opposes reduction. :reb. 15, 1916.
795
Minority report by Sllfinney, 7affrq and Forgan.
Feb. 15, 1916. 795
795
"i
661.
Federal Reserve banks, continued•.
· Credit
con~~rvation.
Urged.
Feb .• 19, 1918.
May 21, 1918.
853
859
Credit contraction.
As an after war policy would injure business interests.
·
Nov. 19, 1918. 867
Directors.
see: same.
Depositaries, Government.
Should become Government depositary banlra
basis as to cost of handling the business
Feb. 19, 1917•
All current funds of Government should be
disbursements made by check.
Feb. 19, 1917.
on an equitable
and profit therefrom.
825
deposited in, and
825
Discount rates.
Advises a liberal policy as to loans secured by Government bonds ..
Other undue expansion shOUld be checked by raising ra tea.
Sept. 18, 1917.
842
see also': U. s. Bonds.
Fiscal agents.
see: U. s. Bonds.
Bills.
Should be purchased and sold by, only to regulate the exchange
market and control gold.
Nov. 19, 1918. 868
Forei~
Foreign business.
should be dona through correspondents and not through foreign
agencies or branches.
Feb. 19, 1917. 824
Mey 21, 1918. 859
Free faci1i ties.
No further~ to public advised.
Nov. 19, 1917.
867
Gold~
Concentration of, strongly approved.
Sept. 18, 1917. 844
.
Loss from abra$ion on gold deposits should be assumed by
Federal Reserve banks.
Sept. 18, 1917. 844
Income tax.
Normal rate of tax only should i=lpp1y to undistributed profits
of F. R. banko.
~tr 18, 1917. 86~.
662
--3&Federal Reserve Banks, continued.
Policy, Peace.
see: Supra,
Credit contraction.
I
(
i
~
Reserves.
No portion of deposit reserves held in foreign countries
by foreign branches of national banks should be required
to be kept in Federal Reserve banks.
Nov. 19, 1918. 866, 867.
Should maintain strong reserves.
Nov. 16, 1915.
787
Rediscounts between F. R. banks.
Forgan gives personal opinion that rediscounting barir $houl:d
increase the rates v;p to l% ~bove that of the Fecieral Reserve
bank giving the discount; that all banks shoul,d be allowed to
pfill"tiGi~, that all rediscounts might be transacted through F. lt.
Bank of New York.
Mar. 7, 1915.
f
772
Reaffirmed by Council.
sept. 21' 1915.
'
See also:
783
t.lelano, F.
SUrplus.
100~
1918~
Surplus should be increased to
U.
s.
Subtreasury.
Nov. 19,
of paid in capital.
869
Functionaoi', should be gi~t:!n to Federal Reserve banks
so they can furnish gold and currency in required
denominations.
..
Functions ot, except han.dling of the trust funds, should
be transt·erred to.
Feb. 19, 1917. 825
It such functions are transferred, .the question. of int~rest
is not material, as all proti ts over 6% dividend and surplus
goes to tt •. S. Treasury.
Feb. 19, 1917. 825
The trust funds, gold and ,silver, should not be transferred.
Feb. 19, 1917. 825
IDi.ted States Treasury.
(
Should supply Federal Reserve banks with U. s. notes,
Treasury notes and sUver certificates in desired d.enomina...
tiona.
Feb.. 19, 1917. 825
663
Federal Reserve banks, continued.
u. s. Treasury, continued.
See also: Hayes Bill.
National bank examiners report.
Fe~eral
Reserve Board.
Amendments.
Approval of amendments suggested by, except sec. 22.
Feb. 19, 1917.
819
April 18, 1917. 830 to 838
Bankers 'kceptances.
Should not take steps to develop open market. Must grow by degrees.
Nov. 19, 1918. 866
Charges for
deferred availability.
See Charges, Sec. 16
Conservatism.
Should urge conservatiem of credit.
Feb. 19, 1918.
853
May
21,
1918. 859
Criticisms of Federal Reserve Act.
Have heard no material, except such as have been pointed out
in annual report of.
May
16,
1916.
800
Comptroller of CUrrency.
Functions of, should be absorbed by and administered by the
Federal Reserve Board.
Nov. 16, 1915. 785
Costs of transfer.
Should have Federal Reserve banks absorb, of currency and
securities to and from member banks.
sept. 17, 1918.
865
Discount policy.
See: Discount pol icy. F. R. Board.
Examination of state banks, etc.
Should be under direction of Federal Reserve Board.
Nov. 16, 1915.
785
Foreign exchange business.
Should settle attitude towards. Should be one of cooperation
with member banks.
Feb. 19. 1917. 826
Unwise to regulate, further than Treasury does now.
May 21, 1918.
859
see: Foreign Exchange.
J'ederal Beaerve Board,- continued.
Gold Exports.
Federal· Reserve Board should be given control over embargo on gold
for six months after declaration of peace.
Nov. 19. 1918.
868
'.
Action of President in placing control over gold exports in F.
Boa.rd approved.
Sept .. 18, 1917.
844
664
B.
Guaranty of deposits.·
Disapproved, but :F. R• .Board might d.e7.ise some plan for prOl'I!Pt relief . ·
for depositors in f;,liled national banks."
April 18, 1917.
842
Reserves.
Disctpproval of suggestion that Federal Reserve :Soard be given power
to increase reserve requirements.
Feb. 19, 1917.
821
Approves power to F. R. Board to modify reserve requirements of state
banks, etc. whose state laws do not permit balances with Federal
:Reserve banks to count as reserves.
Feb. 19, 1918.
858
Approves ruling of Federal Reserve Board that no fixed ratio of
reserves be required for foreign branch banks.
·
Nov. 19, 1918. 866, 867. ·
Approves ruling of F. R. Board to effect that reserves held by foreign
branches of national banks are lett to discretion of the parent bank
and that no part need be carried in Federal Reserve ~anks.
Nov. 19, 1918.
866, 867.
;'
Federal Reserve Cities.
Disapproves proposed classification of all Federal Reserve cities as
central reserve cities.
Feb. 16, 1916.
791
Availability of drafts.
See Foreign Exchange drafts.
Federal Reserve Districts.
Reserve situation.
See Reserves.
Federal Reserve Exchange drafts.
Disapproval of plan of Federal Reserve Boar~ under which a member
bank draws on its F. R. Bank and the draft~ be cashed by any
Federal Reserve bank on advice from drawee b.a.nk, immediate advice to
be given by drawer to d.aawee Federal Reserve bank.
...
·•.
~
..
Reasons for disapproval:
l .. Double advice is cwnbersome.
2. No profit and considerable er~ense to drawer member bank.
). Member banks can now sell N. Y. Exchange and make their checks
on N. Y. practically immediately available by offsetting their
daily remittances of checks to N. Y. peyable through New York
Clearing House.
•,
665
Federal Reserve Exchange drafts, continued•
~
4. If member banks were required to give the drawee Federal Reserve
bank funds imr.aediately to pa,y tbe drafts, the F. R. bank might have
to receive their checks on New York received from their customers
at par for irnmediat~ availability. free .of serv.ice charges.
5·
Otherwise New York items would be subject to 2 days deferred
availability while drafts on F. R. banks would have to be· covered
by imr.o.ediately available funds.
6. The profit
of member banks on drafts for exchange pU.rposes, other
than the cornrrdssion, is derived from the interest received on e.g.
their N. Y. balances while the drafts are still outstanding.
1. Federal Reserve banks pay no interest, and, therefore, are not _in
a position to compete and should not compete with their member banks
at large financial centers in this legitimate branch. of the banking
business.
.
'
..
.
8. Even after all reserve balances are transferred to Federal Reserve
banks,· IDan1 member banks will have ·to maintain ·balances .for use in J..;
domestic exchange and they are entitled to a profit over and above .
the interest paid them in these balances.
,- .
9·
The principle is the same as charges for Post Office money orders.
Minority report by Record.
sept. 18, 1916.
812
Sept. 18, 1916.
.
812.
If adopted by F. R. Board, drafts should be made lJayable"m advice" and
not "Receivable for immediate availability."·
·
Record votes contra.
Feb. 19, 1917. 827
Federal Reserve Bank notes.
Against U. s. one year gold notes as security for .
.Feb~ 19, 1917. 823
•
Federal Reserve notes.
Certificates.
Should take place of gold certificates.
Nov. 16, 1915. 788
Feb.
19, 1917. 825
Should be substituted for silver certificates.
sept. 18, 1917. s47.
...
Denominations.
Increase in denominations approved.
Feb. 19, 1918.
854
Expansion.
Not desirable to try to cheCk.
Their issue makes possible expansion incident. to war financing.
·
.
X 1669
-42-
'
I
\o
'
Federal ReserVe note~, continued.
Expansion, continued.
Their issue and redertqltion respond to trade requirements.
Natural and not artificial methods should control the situation ..
NOv. 19, 1918.
865.
Gold.
Held by Federal Reserve Agents as collateral should be counted
as part of gold reserve required against.
Feb. 19, 1917. 819, 827, 828, 833·
Should be permitted against deposit of gold, etc.
Wing, Ardrey and Rowe, contra.
Nov. 16, 1915. 785, 788.
Unanimous in favor.
· ··
Feb. 19, 1917.
8i9, 827, 828.
Printing of. ·
Cost should be borne by Governrr.ent.
Vote 6 to 3· Nov. 16, 1915,
/
.
· 7f6, 788.
Reserve, Legal.
Should be legal reserve in vaults of member banks.
Vote 6 to ;. Wing, Ardrey and Rowe contra.
Nov. 16, 1915. · 786, 788.
Reaffil'rrl8d.
Vote 9 to 1.
Rowe contra.
Nov. 20, 1916.
Sl5 •.
Federal Reserve sYstem.
Re~erve requirements.
Power to F • .R. Board to ;increase, would keep state banks
out of F. R. System.
Feb. 19, 1917. 821.
State banks.
Disa:pproves amending Act to penuH etate ~anks, etc.
which were in existence on Nov. 16, 1914, but which
do not have capi·tal large enough to become national banks.
to join Federal Reserve System.
.
Nov. ?~, 1917. 849
Fees of .clirectoJ"s. ~~pt to. sec. 22.
Draft proposed by Council.
Feb. 19, 1917.
821.
Fiduciary powers, National banks.
ID!Prac ticable to formulate general rE$gulations as state laws
govern.
Jar•• 13. 1915.
765, 766.
Fifteen a.a, r$te.
See: Dallas.
New York.
St. Louie.
I
866
X
."'
1069-~-·---~~
667
-4}Files, credit •
Changes suggested to proposed draft of Regulation B,l915, as to.
Jan.· 19, 1915. 770
Financial conditions, after war.
Impossible to predict.
Nov. 16, 1915.
787.
Fi seal Agents,
See: U. S. Bonds.
Fixed investments.
See: Taxa t.ton, G<.YVel·;.-J.IDen t.
F1eishhacker, H.
Votes against suggestion that banks with foreign branches may invest
part of their capital in local foreign corporations.
Feb. 15, 1916. 799.
Food administration Grain Corporation.
Loans by national banks to, should be exempted from the 10~ limitation
of u.s. Revenue Sta~tes, Sec. 5200.
Sept. 18, 1917.· 844.
Foreign Acceptance rates.
see: Acceptances.
Foreign Agencies, F. R. Banks.
..
-· .
Not adyisable at ~tesent tirr.e to est~blish joint agencies in foreign
countr es for rore1gn trQde transact1ons.
Reaffirmed. Sept. 21, 1915. 783
. . Feb. 15, 1916. 797, 798.
Foreign business should be done through correspondents.
Feb. 19, 1917. 824
May 21, 1918. 859·
Foreign banking business.
Shoulld be undertaken by national banks subsc~ibing to stock
of banks organized to do,
·
Sept. 18, 1916.
809, 810.
Foreign banking corporation~.
Favors Federal charter for banks or corporations organized
to do principally a foreign banking business.
Feb. 19, 1918. 855
See also Arrandments: Sec. 25.
..
Foreign bills of exchange.
Federal Reserve banks should purchase and sell foreign bills
only to regulate the exchange market or to contl'ol gQld ,'JriOvement •.
Nov. 19,. 1918.
868.
Acceptance power of national banks should. 'be increased to 2~
in purely foreign transactions.
Nov, 19, 1918.
869.
'·
-44-
.
I
'
I
/
668
Forei{gl Branches.
Federal Reserve Banks.
Disapproved.
Feb. 19, 1917.
May 21, 1918.
Meinber banks. Stockholders.
Acceptances.
Should be allowed to accept.
Feb. 15, 1916. 799
Should be eligible for discount with Federal Reserve Banks,
if otherwise eligible.
Feb. 15, 1916. 799
Present ratio between acceptances and ca.pi tal and deposits
is reasonable, but may have to be increased later.
Nov, 19, 1918.
867
Capital and surplus.
·
Present ratio of acceptances to capital an4 surplus of 6:1 is
reasonable but may have to be increased later.
Nov. 19, 1918.
867 .
Should be empowered to invest a. definite percentage of capital
and surplus in holdings of foreign banks operating under local
charters.
Sept. 18, 1916.
799
Contra.
FOrgan, Fleisbhaeker, Swinney and Record.
799
DepOsits.
In u.
s.
should be limited to deposits incidental to foreign
business.
Feb. 15, 1916. 799
No fixed reserves Should be required against, in foreign.
countries.
Feb. 15, 1916.
798
For deposits in United States should be same reserve as for
member banks.
Feb. 15, i916. · 798
No fixed r~tio of reserves to deposits Should be.required.
· Nov. 19, 1918. 866, 867
nevelopmen t.
No further steps needed.
Feder.al charter.
Favored.
Feb. 19, 1918.
see .Amendments:
Nov.
855
19, 1918.
sec.
866
25
Federal Reserve Banks.
Should be allowed to rediscount with, under special restri~tiGil
·
Feb. 15, 1916. 198
.·
.
No portion of deposit reserves in foreign C()"Unt,ries S\lOuld
be required to be kept in.
Nov· l9. 19lf!.
866, 867
!
X . l6G9
Foreign Branches, continued
Member bal:lks. Stor.kholders, continued..
Federal ~eserve sYstem.
Should be members of, so as to be under jurisdiction of
Federal Rr.serve Board.
Feb. 15, 1916.
798
Foreign banks operating 1.mder local charters should have power to
invest a definite percentage of capital and suxplus in.
Sept. 18o 1916. 799
'
Liability.
Should not incur double.
Feb.
15, 1916.
798
Member banks.
Need not own majo~ity of stock.
Feb. 15, 1916.
798
Holdings should be limited to 10% of capital and surplus of
subscribing bank.
Feb. 16, 1916. 798
Other than member banks II:Jay $Ubscribe.
Feb. 15, 1916.
798
~/
t
Feb. 15, 1916
Record., C\Q!lt.ra.
Majority of stoCk.
Need not be owned by member banks.
:
~~·
669
-45-
·.
National Bank Act.
Should be amended to provide for joint ownership of national banks
in such bar~s or corpo~ations.
Sept. 21,
1915.
78}
Reaffirmed.
Cont.:tta:
Feb. 15, 1916.
799
Fleish..l-J.acker
Forgan,
SWinney, Record.
Reaffirmed:
sept. 18, 1916.
799
809, 810
Ratio. Acceptances to ce:Pital and surplus.
Present ratio of 6:1 is reasonable. May have to be increased later.
798
Feb. 15, 1916.
Nov. 19, 1918. 867
Ratio. Reserves ·~o dc;;posits.
No fixed ratio should be required. Nov. 19, 1918. 866. 867
Regulations.
Committee appointed to confer with Federal Reserve Board as to.
.
Sept. 18, 1916.
809
Rediscounts with Federal Reserve banks.
Approved. Feb. 15, 1916.
798
Reserves.
No fixed, against d.eposi ts in foreign countries should be
required.
Feb. 15, 1916.
798
sam~ reserve as for member banks against deposits· in u.s.
http://fraser.stlouisfed.org/
·
Feb. 15, 1916. . 798 ·
Federal Reserve Bank of St. Louis
•
~
I'
I
I
670
X-1669
Foreign ~ranches (Continued)
Member ~anks, Stockholders, (Continued)
Reserves (Continued)
No portion of reserves against deposits in foreign countries
should be req_uired to be kept in Federal Reserve Banks.
Nov,. 19, 1918.
866, 867
No fixed ratio of reserves against deposits should be re~ired~
Nov. 19• 1918. 866, 867
Stock in.
Other than rr.exroer banks rray take .
798
Feb. 15, 1916.
Majority nesd not be ovmed by n:etnber banks.
?98
:&<etT. 15, 1916.
Stock in banks having local foreign charter.
These banks should have power to invest in, up to a definite
percentum of their capital and surplus.
Sept~ 18, 1916.
799
Contra: For~a~.Fleiahbacker, Swinney, Record.
199
Foreign Business, Federal Reserve ~anks.
Should be done through foreign correspondents and not
through foreign agencies or foreign branches.
Sept. 21, 1915.
783
Feb. 15, 1916.
?97,798
Feb. 19, 1917.
824
May 21, 1918.
854
Foreign Correspondents.
See Supra, Foreign business. Federal. Reserve :Banks,
Foeeign Countries.
No further steps needed to encourage American banking facilities.in,
Nov. 19, 1918. 866
No necessity for informal conferences with central banking
systems of, for re~lation of gold.
Nov. 19, 1918.
868
Foreign Exchange.
Report to Secretary of the Treasury by special co~ttee. I
Sept. 18, 1917.
843, ~5
Foreign Exchange Bank.
Unwise to establiSh a, under present conditions. (Owen Bill)
May 21, 1918~
859
Foreign Exchange Operations.
Arbitrage.
See Arbitrage
Gold
Developmmt of
Expert should stu~,
Feb. 19, 1917.
826
Federal Reserve ~anks
Should not now engage in,
April 20, 1915.
?75
~
....... ..
,
·-X 1669
671
II
I '
Foreign exchange operations, continued,
Federal Reserve Board~
·Should settle tn advance its attitude as to.
Feb. 19, 1917.
826
Unwise for Federal Reserve Board to undertake to regulate.
May 21, 1918. 859
Licenses for foreign exchange operations approved.
Sept. 18, 1917.
846
Bepouti, daily to Federal Reserve Board of foreign exchange operations
favored ..
Sept. 18, 1917.
846
Stabilisation of dollar exchange.
see: Gold.
Foreign Exchange situation.
Discussion of.
Sept. 18, 1917.
~3
Pore~gn a.ft~r
war policy.
Federal Re&etve Banks.
•( Gold market •
. Sec; (Gold embargo
Nov. 19, 1918. 868, 869
Foreign trade, extension of.
See: Acceptances
Dollar exchange
Foreign agencfes
Foreign banking business
Foreign banking corporations
Foreign bills of exchange
Foreign branches
Foreign business
. Foreign countries
Foreign exchange
Foreign exchange bank
Foreign exchange operations.
Forgan, J. B.
Letter of Delano to. Mar. 5, 1915
Rediscounts between Federal Reserve banks. 77~
Mr. Forgan to Mr. Delano. Mar. 7, 1915
Rediscounts between Federal Rese1.·ve 'bar.ks.
Rediscounting bank should raise its rates to 1% above rates of
Federal Reserve bank giving the rediscount.
Discounts should be prorated.
Might be arranged through Federal Rese;.oove Ba.."lk of New York. 772
Reaffirmed by council.
sept. 21, 1915.
783
Forgan
Mr.
to Mr .. Delano.
http://fraser.stlouisfed.org/
As to state _ _ _ _........MJa.Y. 21 •.
batlk ·regulations/
________
Federal Reserve Bank of St. Louis _ _ _ _
1915.
780
Forgan, J. B. continued.
Mr. Forga_11 tel MY.'. Deleno, conti.nued.
Ado:ises :::ho·J'.ring na,t.imlal banks copies of
·
Nov. 2,
bank
n~tional/examiners
1915.
reports.
784
Joined in minori..~y report against vote that. p0.id in capital stock of
Federal Reserve barks ~hou.ld not be rl;)\lu.ced.
.
F'eo. lc:: . .~.,.,.,J.
'.h ~ r.• c.;
795
Vo~ed
agai.nst vote of Council that bank:R and co;,.--poz·ations doing
principally a foreign banking business might invest in capital
of local fcreign ba~s abroad.
Feb. 15, l916.
799
Free facilities.
No f~tter, suggested for Federal Reserve bank6 to give to Public.
Nov. 19, 1918.
867
Fund, Indemnity.
Depositors.
See flenate Bill 9
n
n
7~·2
Fund, International gold.
Disapproveri. Nov. 19,
1918.
868
G.
Gold.
Abrasion.
Loss by
·canada.
ab::-as:'~on
See
en
go~.d
received sho,J.ld be absvrbed by F. R. banks.
Bept. 18, 1317.
844
.
~:~arne.
Certifi~ates.
Oh01.1.ld be retired and Feder.<U Reserve notes issue .din place.
Nov. 16, 1915.
:F'eb.
CoUllili ttee.
Federal Reserve Board.
788
19, 1917.
See infra.
825
Embargo •.
Concentrat:i.on.
In F'.H.le:.:-al ReserYe banks approved.
Nov. 16, 1915.
Sept •. l8, 1917.
Discount rates.
Movement of, should be regulated by.
Nov. 19,
1918.
788
8W..
869
Dollar exchange •
.See s all'S.
EarDJaJ.iri~g
of.
ShoUld· be
prevented..
Sept:. 18, 1917.
glfl-
X 1669
••
'673
Gold, continued.
.
~bu~.
Should be relaxed only to settle unfavorable trade balances oefore
dollar exchange abroad falls eo low a.s to increase intolerably
cost of our imports.
Nov. 20, 1917.
unwise to remove embargo at this time except as to Mexico in
return for silver bullion.
sept. 18, 1917.
863
,
Should be left to Gold Coiimi ttee of Federal Reserve Board, but
power should be given continuing its control for six months
after declaration of peace.
·
Nov. 19, 1918. 868
E:Jr;ports.
Should continue exports to neutral countries even if it ili!Pairs
bur resources, it1 order to win war.
sept. 18, 1917.
843, 8~
Nov. 20, 1917. 850
see: secretary of Treasury; Comnittee on Foreign Exchange.
..
Federal Reserve Agent.
Gold held by should count as part of the gold reserve against
Federal Reserve notes.
Feb. 19. 1911. 819. 827, 833, 835
Federal Reserve Bank notes.
See Infra.. u. s. one year gold notes.
Federal Reserve banks.
Should supply gold and currency to all banks in denominations
required, and United States Subtreasury functions should
be transferred to Federal Reserve banks for this purpose.
Sept.
18, 1916. 809
Federal Reserve Board.
Approve action ot President 1n putting gold exports under.
Sept. 18, 19.17. 8~~4
Not advisable for Federal Reserve Board to confer with
European central bariks as to regulating international flOII of
gold.
Nov. ·19, 1918.
868
Federal Reserve Notes.
Should be issued against gold. Vote 6 to 3.
Contra: Wing, Ardrey, Rowe.
Nov. 16, 1915. 785,
819
·Feb. 19. 1917.
788
(Unanimous)
Foreign bills.
Should be purchased and sold by Federal Resene »anks only to
control exchange market and flOw' of gold.
Nov. 19, 1918.
868
~
I
X 1669
-5oGold, continued.
Free market for.
Embargo should not be lifted at present time, but free market must
be reestablished, in conjunction with Great Britain, at earliest
possible tin:e.
Nov. 19, 1918~
868, 869
IIIq>ortations.
Maintenance of Federal Reserve b~ reserves depends an importations
of gold.
Feb. 19, 1917. 824, 825
International golt\ f-;,mt~..
~ treaty stipulations as to an, are advisable.
Nov. 19, 1918.
Neutral nations.
Shipment of gold to, most advisable.
868
Sept. 18, 1917..
843
Reserves.
see: Federal Reserve notes.
Trust funds.
Gold, should be kept in physical control of Govermr.ent.
Feb. 19, 1917. 825
U. S. one year gold notes.
Disapproves, making, collateral for Federal Reserve bank notes.
Feb. 19, 1917. 823
United States Subtreasury.
Functions of, except trust funds, should be transferred to
Federal Reserve
• Banks. Sept. 18, 1916. 809
Gold Settlement FUnd.
settlement of Federal Reserve exchange dr~ts through, not favored.
Sept. 18, 1916. 612
Acceptances should be made available as reserves for owning bank on
day of maturity and payment through the.
Nov. 19, 1918.
870
Government~
U.s.
See United States.
Government depository banks. See Federal Reserve banks.
Government deposits.
Favors amendment o:t U. s. :Revised Statutes, ,Sec. 5l-53, so that state
member banks mag receive ..
Sept. 17, 1918.
864
Government foreign exchange bank.
· Unwise to establish a, at p~esent time. (Owen Bill). Mcq i!l, 1918. 859
Government taxation.
674'
Grain.
see: Food Administration Grain Corporation.
675
Great Britain.
United States in conjunction with, Should establish a free gold market as
soon: as possible.
868, 869
Nov. 19, 1918 ..
Groups, Classification of banks.
See: Ar.~ndments, sec. 4.
Gu.aranty of bank deposits.
t
Oppib sed to.
April 18, 1917.
M~
21, 1918.
842
861
Federal Reserve Board could devise some plan for immediate relief of
depositors in failed national banks.
·
April 18, 1917.
842
See Senate Bill. No. 9
n
"
It
742
H.
mimlin, c. s.
Forgan to. Nov. 2, 1915
National Bank Examiners reports should be shown to banks examine<\.
784
Harding, W. P G.
To Forgan.
Asks whether a director should resign on moving out of district.
Council arlawers yes. Sept. 18, 1916.
814
See also:
Revol•,ring cr.ed.:?. ts.
Hayes Bill.
seo. 1.
N.mual ta."!t of 1/10 of 1% on aggregate amount of checks paid b:y
any bank, etc. during each fiscal year, whi.ch bears the indorsement
of or are collected through any other bar.l~, etc. or private banker
located outside of the stat.e ln r.hic;h such cr.ecks are ma.d.e p~al:ile.
Provid~d, . \.ax not to apply to F&deL'a1 Feae,.-;e banks or mem~er banks
or to non member ba."lks which maintain. a collection or exchange
accOWlt with any Federal Reserve bank under authority of Sec. 2.
Sec. 2.
A non member bark pe~itted to deposit, solely for purpose of
exchange or co::..Ler:-tioiA, in l!'ede.ral Rosen·e bank current funds,etc.
checks, drafts payab! e upon prt:.e;mtation, or maturing notes and
bills, pl'ovided it maintains a balam~e, t~ be determined by
Federal-J:te'Seffe Board, not to exr.eed. al'!lollnt of reserves i.t would
have to maintain i f it ·were a meml:·er bank, and .:gz;,o_~1~~ it
a.gr.ees to comply with the px·ovisions of la.w and regulations of
the Federal Itenerre .:Bow~d ~el::~.U'1.r?; to the collectio::1 o:r clearance
of checks, drafts, n"te:J and Mlls thro,:t€)1 FedE:.r~l Reserve bar.lks .
. Council disapproves.
A~ril 18. 1917. 828
-52-
i.
I
t.
Hoarding of gold.
The concentration of gold in Federal Reserve banks should be done
cautiously to avoid.
sept. 18, 1917.
844
Holland.
see Dollar Exchange.
Rolli s Bill.
see Farm liben bonds.
H.R.
5901
Prior to issue of U. s. bonds the secretary of the Treasury should
state definitely all terms as to conversion privileges, etc.
Sept. 18, 1917.
844
H. R. 20661
see : Amendments, sec. 3 •
Imnediate advice. F R r.;o h
See -·
·
.... :..4t~~<t. drafts.
Immediate availability.
See: F.R. exchange drafts.
Record.
Immediate credit.
see Clearing system.
Importation of luxuries.
Curtailment favored.
Sept. 18, 1917.
845
Imports.
Restriction of, favored.
Nov. 20, 1917.
850
See: Gold.
Income tax.
Normal tax only should apply to undistributed profits of F.R.
banks.
Sept. 17, 1918.
864 .
See Taxation, Government.
Increase of reserve requirements.
See Reserves.
Increased rates. Urged for public utility corporations.
Sept. 17, 1918. 863
see also: Discount rates.
677
-53-
X 1669
Indermi ty fund.
See Senate Bill, No. 9
tf
It
"
742
Indorsement.
see .Acceptances
Domestic .Acceptances.
Open market purchases.
Indorser.
See U. s. Revised Statutes; Sec. 5202.
Industrial bonds.
Disapproves amendment allowing rediscount by Federal Reserve
banks of notes secured by.
Nov. 20, 1917.
849
Inflation.
See: Bank credits.
Discount rates.
Expansion.
Information, credit.
proposed Regulation B criticized and changes suggested.
Jan. 19, 1915. 770
Sept. 18, 1916.
811
Insurance of bank deposits.·
See QuaZanty of bank deposits
senate Bill No. 9
"
"
" 742
Interest.
See .Amendments! Sec. 22
Federal Reserve Banks
Federal Reserve Exchange drafts.
Interest for deferred availabi+ity.
See Charges: Sec. 16
Interest on deposits.
Usury laws and supply and demand will regulate.
Might be more of a hardship than a benefit to unduly restrict rates
a bank in a pioneer community can either pay or receive.
· Nov. 16, 1915. 789
Interest on savings deposits.
Such rates should be maintained as will induce to saving and thrift.
Federal Reserve banks should not attel'I!Pt to regulate interest paid
by member banks on deposits beyond offering such reasonable
rediscount rates as are likely to reduce the current rates for
loans in communi ties having little or no accumulated wealth, which
will in turn reduce rates paid lim deposits.
Difficult to regulate such matter artificially.
Nov. 16, 1915.
789
678
-54InterloCking directors.
see Clayton Act.
International banking corporations.
Apprmves Federal· charter for.
Nov. 20, 1917.
International gold fund.
· Not advisable.
855
868
Nov • .19, 1918.
Interstate Commerce Commission.
Should by rule exempt from necessity for competitive bidding under
f1la.yton Act bank loans not exceeding 2 years to run.
May 16, 1916.
803, 804.
!ntradistrict clearings.
·see Clearing system.
ln~entories of merchandise.
See Amendments;· Income tax.
lJnvest~le
surplus.
See Taxation, Government.
Investments.
see Capital and reserve deposits.
Investrr~nts,
Fixed.
see Taxation, Government.
Investments of Federal Reserve bariks.
787,
793,
802
See Hollis Bill
Capital, paid in
ii:.-.ic.• Investments to .capital.
Reserves.
Investments, permanent. ·
See Taxation, Governrrant.
Issue.
See Federal Reserve notes.
Issues, capital.
see Capital Issues Committee.
I tern charge, per.
see Clearing system.
· Items collected through.Federal Reserve banks.
see Charges: sec. 16
·
..
-· · ... ~· .. Jaftray, ·c. T·
Reao.tied
.•
a.g~nst vote that paid in capital of Federal Reserve
.679
X 1669
- 55 Jaffray, C. T. continued
banks should not be reduced.
Feb. 15, 1916.
Kansas City District •
.Against lowering discount rates.
Would cause inflation.
Sept. 18, 1916. 808
Excess reserves are high.
·
Sept. 18, 1916.
808
~-
Legal reserves.
See: Federal Reserve hotes.
Reserves.
Legislation, pending.
see .A..IJlendmen ts.
Taxation.
Letters of credit, Commercial.
See Comptroller of Currency.
Liability, Double.
see Double liability.
Liability, contingent.
see U. s. Revised
Liberty bonds.
see u.
s.
s.
Sec. 5202.
bonds.
Liberty Loans.
see u.
statutes~
bonds.
Light weight gold.
See .Abrasion..
Gold.
Liquid condition.
Necessary for Federal Reserve banks.
Nov. 16, 1915.
Loans.
see Call loans.
Contraction.
Farm land 1 oans.
Demand li>SJlEJ.
Nin6 ty
day
leans.•
787
795
--56-
'.
Loans.
680
P~oportion
to taxes.
Taxes should/~~ed
25%· April 18, 1917.
829
Loans, Publ:l.c Utility.
Banks should not invest in, to any great extent.
Sept. 17, l9l8.
863
Loans
secured by Government securities.
see u. s. bQnds.
Wa.r paper.
Lowered reserve requirements.
For outlyi:1g ~iot;ricts in reserve a."'ld central reserve cities.
Disapproved.
Nov. 20, 1917.
849.
See also Reserves.
Luxuries.
Favors curtailment of importation of.
Luxuries
Sept. 18, 1917.
845
tax~
See Taxation, Government.
Market, Discount.
See Acceptances.
Market, Exchange.
See Foreign bills of. exchange_.
Market, Open.
see Gold.
Maturity, Date of.
See Acceptances .
.Amendments: sec. 13
Gold Settlement Fund.
Reserves.
Member banks.
Branches.
See Foreign Branches
National banks.
CollEJ.teral notes. see sarr..e.
Deposits, Limitation on. see sees. 13 and 16, F.R.Act.
Farm loans. see same.
Free facilities. see s~.
Foreign branches, Stock in,
Should not be limited to member banks.
Should be limited to 10% of ca:pi tal and surplus.
Feb. 15, 1916.
798
Foreign exchange. See same.
Reserves. See same.
Member
http://fraser.stlouisfed.org/ banks, State.
Federal Reserve Bank of St. Louis
~~-------~---------------~---_sea Goverrment
deDosits-
'X 1669
- 57 -
681
Members, Clearing.
Eee Clearing system.
Hayes Billv
Mexico.
..Gold embargo may be modified in exchange for silver bullion from.
Sept. 17, 1918.
863
Minimum deposit. u. 54 bonds.
See Amendments. Sec. 17.
Minnesota District.
Discount rates.
No change recommended bu;t si tua.tion e'l:lonJ.d. be closely watched.
Low Federal Reserve rates tend to induce smaller banks to increase
loans unduly. Sept. 18, 1916. 808
Excess reserves.
Low. Ba:cics may have to rediscount with Federal Reserve banks.
Sept. 18, 1916.
807
Minority reports.
Against vote opposi~g reduction of paid in capital of Federal
Reserve banks.
Feb. 15, 1916. 795
Record. Favoring Federal Reserve Exchange drafts.
Sept. 18, 1916. 812
Record.
Favoring immediate availability of Federal Reserve Exchange
drafts. Feb. 19, 1917. 827
MOney orders, p.o.
See Federal ResBrve Exchange drafts.
Mutual insurance fu..."'ld.
See Guaranty of bank deposits.
senate .Bill No. 9
"
"
n
742.
Mutual Savings banks.
Favore~
I
I,
I
as associate members.
Feb. 19, 1917.
823
•
682
National Bank Act.
Should be arrended so as to :permit joint ownership by national~·
banks of foreign branches.
se:pt. 21, 1915.
783
see .Amendments.
National banks ..
National Bank examiners·.
Arrangements made by Comptroller as to·su:ppl1ing Feder&l Reserve
barilcs with information as to reports of, is satisfactory.
Sept. 21, 1915. {82, 784.
Reports of, should be shown to officers of b~1ks examined.
Nov. 2, 1915. 184
National banks.
Acceptances up to 100%.
Power should be restored.
Feb. 19, 1917.
822
Branches of, in same city favored.
Sept. 21, 1915.
783
Nov. 16, 1915.
786
Nov. 20, 1916
816
Should apply to all states, whether allowing branches of
state banks or not.
·Nov. 20, 1916.
816
Feb. 19, 1918. 858
Branches in cities and count ies approved.
Feb. 19, 1918.
Examiners reports.
See National bank examiners.
Fiduciary :po'<vers.
See Infra
Trustee, etc.
Foreign agencies.
See same.
Foreign branches. see same.
Guaranty of deposits.
See Guaranty of deposits.
Senate Bill No. 9
n
Mininruro deposits.
u.s. bonds.
nn7.42
.see Mininruro deposits.
Trust powers, etc.
Impracticable to frame regulations,as state laws control.
Jan. 18, 1915.
U.S. Revised Statutes; sec. 5200.
National charter.
For foreign banking corporations approved.
Feb. 19, 1918.
May
765.
see same.
21, 1918.
855
859
:s.txt~
r'
683
Xl66g
- 59 National Dry Goods Association.
Bill of, should be changed so that a reasonable allowance b6 made
in inventories of merchandise under the Income Tax to allow for
increased cost of production over average cost during pre war period.
Sept. 17, l91S.
865
Net balances.
see Reserves.
Neutral countries.
See Dollar Exchange.
District~
New York
Discount rates.
No change reconmended except that 10 day rate should be changed
to 15 days.
Sept. 18, 1916~
806
Excess ·reserves.
Certain of larger New York banks hold practically C;j.ll of.
Needed to care for bank deposits.
sept. 18, 1916.
805
Ninety day loans.
see United States bonds.
Non easential credits.
See Essential and non essential credits.
Non member banks.
Should. not have clearing privileges unless they belong to the local
I in -place of location.
clearinghouse, if 1m3./ ·
· Nov. 19, 1918. 870
See Clearing system.
Notes, drafts, etc.
See Hayes Bill.
Notice, Sixty days.
See Reserves;
•
Anticipation of •
684
- 60-
Officers of member banks. Fees. Sec. 22
See Amendrrents: Sec. 22
On adnce.
See Federal Reserve Exchange drafts.
Open market. See AccA:9tances.
Gold.
Open market
oper"lt,~.ons.
A
contr~J.ling fa~tor
in reserve situ.ati.on.
May lb, i1l6.
802
Open market purchases.
See Acceptances.
Do~estic Acceptances.
Operations, Foreign F,~change.
See Foreign Exchange operations.
Optional reserves.
See Reserves: optional
"
: vault
Orders,PO Money.
see
Federal Reserve
exchange drafts.
Out· of town checks.
See charges: Sec. 16
·Outlying districts. Reserves.
Disapproves suggested change in law to permit Federal Reserve
Board to fix lower reserves for bariks in outlying districts
of reserve and central reserve cities.
Nov. 20, 1917.
849
Feb. 19, 1918. 855
Owen Bill.
Creating a foreign exchange bank.
Disapproved.
·
May 21, 1918.
Own Acceptances, purchase of.
See Acceptances.
·Owned, Actually.
See u.s. Revised Statutes: Sec. 5202.
859
- 61 -
685
Paid in capital.
See Capital stock, Paid in.
Surplus fund.
Paper.
Comr:r.ercjal.
Changes sugge.sted in draft of Regulation B. Jan. 19, 1915.
Commodity ..
. Disa:Pproves preferential rates for.
Sept. 21, 1915,
Nov. 20, 1917.
Governor seay dissents.
Sept. 21, 1915.
See Atlanta.
· Federal Heserve notes.
Issued against 100% paper or gold.
Feb. 19, 1917.
781
848
783
819
Industri3.l and Railroad bonds.
Rediscount of paper secured by, should not be permitted.
Nov. 20, 1917.
849
War paper.
Approves preferential rate for.
Nov. 20 1 1917.
Par, collecti-ble at.
See 0learing system.
par, .Rem! t at.
See Clearing system.
payment of reserves.
see Anticipation of final reserve payment.
Reserves.
Payment, Date of.
See Acceptances.
Amendments: Sec. 13
Gold Settlement Fu..'ld.
Reserves.
pegging of pound sterling.
Approved, Sept. 18, 1917.
See: pound sterling.
847
penal statute, Sec. 22.
Draft of Sec. 22, directors fees.
Feb. 19, 1917.
Penalty,
Deficient reserves. Approved.
April 20, 1915.
821
77§.
848
769
X
1669
- 6i ...
per item charge.
See Clearing system.
Percentage, Reserve.
See Reserves.
permanent investrr.ents.
See Taxation, Government.
Philadelphia Distrir:t.
Discoun+;. rates.
1~o r.ih.:.:.:nge recom..TIJended.
Sept. 18, 1916~
Excess re~:;or;8 s.
32 millions of -1 in clearing house r.a.."lks.
Sept. 18, 191G.
806
805
Policy, After war. Federal Reserve batiks.
Should be as liberal as is consistent with safety.
Nov. 19, 1918.
867
Policy, Discount.
See Discount poli.cy.
Federal Reserve Board.
· Population.
See Reserves.
Post Office money orders.
see Federal Reserve exchange drafts.
Pound sterling.
pegging of, ~proved.
Sept. 18, 1917~
847,
850.
Preferential rates.
Acceptances.
On demand loans secured by. Approved. Sept. ·17, 1918.
War paper.
On loans secure~ by. Approved.
From
1/4
Sept.
is, 1918.
86l
864
to 1/?.% below coupon rate. Approved. Sept. 17, 1918.
863
See Atlanta.
Commodity paper.
·
Disapproved.
Sept. 21, 1915.
781
Nov. 20, 1917 .. 845
Governor
~ay
dissents.
.
Sept. 21, 1915.
783
.President of United States.
.
Action of, in putting gold exports under control Qf Federal
Reserve Board. approved...
.
http://fraser.stlouisfed.org/
Sept~ 1.8, 1917.
844
Federal Reserve Bank of St. Louis
686
.,..........,.,..---.......-.~-----------------~--~---~~-
687
.. 63-
Printing.
See Federal Reserve notes.
Privilege of converRi.o:n.
see H.R. 5901.
Priori ties.
Capital and bond issues must y:i.eld to necessities of Government.
Feb. 19, 19'18.
853
Private banker.
see Clayton Act.
Private bankers sta:•:,er..::>n ts.
Should be in c!:-c..; tc:uy of the Governors of Fed.8ral Reserve banks;
no others should have access to thew · except the Federal Reserve
agents.
Nov. 16, 1915. 789
Private banks.
See Foreign Agencies.
Prorating of inter Federal Reserve bank rediscounts.
See Forgan,J.B.
.
Federal Reserve Ba~s.
Profit.
From handling Governrnent .business by Federal Reserve banks.
See Federal Reserve banks.
From rediscounts between F.R. banks.
See Fo!gan, J.B.
see Fec.eial Reserve exchange drafts.
Profits, Undistributed. F.R. banks.
See Federal Reserve banks.
Incorr.e tax.
Proportion.
Taxes to bond issues.
Taxation should not exceed
25%·
April
18, 1917.
829
Public Utility corporations.
Notes secured by bonds of, should not be discountable by
Federal Reserve banks~
Nov. 20, 1917.
849
Should be .financed during war by Government.
Nov. 20, 1917. 849
Government commission should be appointed to fix rates of.
Sept. 17, 1918.
See also: Railroads.
863
•
I,
I
•
688
- 64-
public Utility l&ans.
See PUblic Utility securities.
PUblic Utility securities.
The banks should not invest in, to any large extent.
sept. 18, 19;1.8.
863
Po.rchase of own acceptances.
.See Acceptances.
pyr&Jliding of bank deposits.
prior to Federal Reserve Act the dauble or triple reckoiling
of b&'lk deposits as legal reserves formed the greatest evU
of the pyramiding process.
Federal Reserve system has greaUy reduced this !1-anger by prowid..
ing that no bank deposits other than with Federal Reserve
· banks shall be available &G legal reserves and b7 providing
rediscount facilities.
M~
16, 1916.
801.
-65-
•
689
Railroad Bonds.
Disapproves suggested amendment perndtting rediscoact of
notes secured by.
NOY. 20, l~ 17.
849
See Savings Banks
Rai lroa.ds.
Approves legislation for financing b7 the Govel'JUDI!nt of Railroads,
Public Utility corporations. and sa.rings ba.ak&, di.reotq or indirectly, during war, urider supervision of Fede'ral Be servo Board~
·
Nov. 20, 1917.
849
See also Clayton Act.
Rate of Taxation
See Amendments:
Income Ta.x
IDCOD!e 18.&
Rates.
See Acceptances
Discount r~tes
Public Utility Corporation
Preferential rates
·~
Rates·of discount
·
See Discount rates
Rates, Rediscount, Between Federal Reserve :Ba.nks .See Federal Reserve .Banks
Ratio.
Acc~ptance s
to capital ·and surplus, Foreign Banks
Present ratio of 6 to 1 reasonable. Maf later have to be changed.
Nov. 19, 1918.
867
Cash reserve to total liabilities.
See Rce:erves
Receivable for in:medi.a.te availability.
See Foreign Exchange drafts
Record 't.J.
Record, T. J.
Voted against c~~ncil's reconnanda.tion that there should be no
double liability on banks tald.ng stock in Foreign branch corporations.
Feb. 15, 1916.
?96
Voted against recomnenda.tion of Council that foreign branch ba.nk
corporations "lllaY' invest part of capital in local foreign banks.
Feb. 15, 1916.
?99
Minority report of, in favor of Federal Reserve Exchange drafts.
Sept. 18, 1916. · 812
Mimrit7 report favoring iimJediate availability_ of iederal Reserve
Exchange drafts.
Feb. 19, 1917.
827. ·
690
- 66 -
Redenption.
See Federal Reserve Notes.
Rediscount
See Foreign Branchex
RediscO\lnts between Federal Reserve Banks
See Federal Reserve Banks
Rediscounts, contingent liability
See U. S. Revised Statutes : Sec. 5208
RediscO\lnts, Notes secured by Railroad and industrial bonds.
Nov. 20, 1917.
849
Disapproved.
Reduction of paid in c~pital.
Voted in favor of.
Voted against
Federal Res£rve Banks
Nov. 16, 1915.
Feb. 15, 1916.
Regulation B
Suggested changes in.
Jan. 19, 1915.
786
795
768,769
Regulation of charges.
See Charges: Sec. 16
Regulations.
See Foreign Branches
Relief for depositors, Failed banks
See Guaranty of bank deposits
Senate Bill No. 9
11
"
No.
742
Renewal agreements.
See Acceptances
Revo.l ving credits
Reports.
See Minority reports
National Bank Examiners• reports
Sec. of Treasury : Committee on foreign exchange
Reserve ACcount
See Sections 13 and 16, Federal Reserve Act.
Reserve Agents, Approved
See Deposits
Reserve Cities
Reserves : Excess
Reserve Balances, Excess
See Clearing System.
Res<Jrve Cities.
Cities designated as, on losing privilege of acting as legal
reserve agents, should be pla.oed on a parity with banks in
X-1669
- 67 -
69:1
Reserve Cities (Continued)
other cities of e~al banking capacity.
Feb. 16, 1916.
?92
Branches of National Banks in,
See Branches, National Banks.
Lower reserves in outlying districts of,
See Amendments : Sec. 19
Reserves
Pyraudding of deposits in
See Pyramiding
See also Deposits.
Reserve Co rdi tions.
See Reserves
~eserve
Excess
Deposits.
See Capital and reserve deposits.
Reserve, Gold
See Federal Reserve Notes
Gold
Reserves
Reserve., Legal
See Federal Reserve Notes
Reserve
Reserve
Anticipation of last
See Anticipation etc.
Reserves
p~ment,
re~irements.
See
Ane ndmen t s
Sec. 11
Reserves
Reserve-situation.
See Reserves
Reserves:
1.
.Excess
Federal Reserve Banks.
Gold against Federal Reserve notes should count as part
of gold reserve.
Feb. 19, 1917, 827,833,835
Conservation of, re comtr.e nded,
Nov. 16~ 1915. 787
Sept .1e
Not prepared to recommend
Reserve Banks
aey f:\.z.:lCI
I
l<:;:t.. 7,
8~±2~ . s"*z.
FP.~<:::x-aJ.
,n; !lJ.Ir.>l.,n for
May l6, JS".J.F.,
8("1;3
Favor keep big a.11 reserves in Fed~ral Reserve Ba.~:.LCs.
Nov. 20, 1916. 817.
X-1699
692
.. 68Reserves (Continued)
Z. Mexrber banks
Acceptances.
Should be rrade available as reserves to owning ba.nk on
date of rraturi ty and payrrent
Nov. 19, 1918.
870
Anticipation of final p~ment.
:Viaapprcved
Nov. 16, 1915.
787
Favored, on 60 days notice,Nov. 20, 1916.
Sl7
:Basis of,
Should be based on conbi ration of population and banking
capacity.
Feb. 16, 1916.
792
Should be based on character of deposits, -bank, comnercial
and time.
Nov. 20~ 1917.
850
•
Changes in,
None adv~sed at present
Feb. 19, 1918.
852
Conservation of reserves
Favored
Sept.l8, 1917.
842
Deficient reserves.
Penalty for, favored
April 20, 1915.
775
Excess reserves.
U. S. National Banks, 801.2 millions with approved Reserve
Agents. 842.3 millions or 41.1 millions rrcre than total
excess reserves.
Sept. 18, 1916.
806
Banks would be induced to deposit vault reserves in Federal
Reserve Banks thus increasing excess reserves if they could
always obtain gold ap.d currency from Federal Reserve Banks in
needed denominations.
Nov. 20, 1916.
815
..
D£sapproves giving immediate credit b.Y Federal Reserve Banks
on checks of membe·r banks rra.intaining excess tQla.ace •.
Sept. 18, 1916.
810.
Expects shri nka.ge in.
Feb . 19, 1917.
824
Federal Reserve Distriots:
Boston - 27 millions of which 24 millions are in New York
Sept. 18, 1916.
804
New York- Certain of larger banks inN. Y. City hold
practically all.
Needed to care for bank deposits.
Sept. 18, 1916.
805
Pbila. Clearing house banks hold 32 millions.
Sept. 18, 1916.
805
Cleveland -About normal.
805
Sept. 18, 1916.
Ricbnond - Normal.
Sept. 18, 1916. 806
Atlanta. - Normal.
Sept. 18, 1916. 806
·.
- 69 -
693
Reserves (Continued)
s 2. (Continued)
Excess Reserves (Co nti•JY:S;;..w...i~t-...
Federal Reserve Districts (
tinued)
Chicago
- Chicago Bank down to limit
Other National anks, 78.6 ndllions.
With approved R serve Agents, 89.3 mdllions
Sept. 18, 1916. 806
St. Louis
- Normal
Sept. 18, 1916. 807
I
~
I
Minneapolis
- ID.w, :Banks rray ha
Reserve :Bank,
•
I -.
Kansas
I
Dallas
Cit~·
- High.
Sept. 20, 1916.
808
-· . .N'o::-mal.
Sept. 20, 1916.
808
Sept. 20, 1916.
808
San Francisco- High.
Federal Reserve Banks.
Doubts wisdom of keeping all
•
to redisc~t with Federal
8(Jl
Sept . 18,1916.
res~ves
with :Federg,l Reserve :Banks~
Feb. 19, 1917; 8l,9
Favors keeping vault reserves in, Sept.i8, 1916.
809
Favors nember banks keeping all their reserves in,
Nov. 20, 1916.
817
Suggests possible change in reserves.
\
Februo.ry 19, 1917. 820
Advoc'fltes no c;h.<mge in present requi:tements.
\
,
February 19, 1918. 852
Reserves for foreign branches of nc':l.tiono.l banks need not be kept
in Federal Reserve Banks •
I
Federal Reserve Board.
Disapproved giving, p01wr to increase.
February 19, 1917 •.
821
Federal Reserve Notes.
Should be lega.l reserves in vaults of J..Smber b~mks.
Noveu.ber lb, 1915 .. 785, 7s6, 788
Nove....ber 2o, 1916.
815
Rowe, w.s. contrn. 815
Foreign branches of national banks.
No part of reserves need be kept in Federal Reserve Banks.
November 19, 1915 Sbb, 567
See: Foreign brunches: Reserves.
GOld Reserve.
GOld held by Federal Reserve Agent should count as ~art of
gold reserve against Federal Reserve notes.
February 19, 1917.
819
Increase of reserves.
Undesirable to give power to
Reserve Board to order an,
February 19, 1917.
521
Feder~l
Liberty loans ..
Will decrease reserves.
February 19, 1917.
€24
-7oReserves. continued.
Member banks.
694
continued.
tower reserve requirements.
Disapproves reco~ndation of Federal Reserve Board :or
. 7, 10 and 13% \olith 5% till Il.Loney reca.... .•end.s 6, 9 <:.nd. 12"
with 5,6, &nd. b% tfll Il.LOney.
February l9t 1917 • 819
Qptional reserve.
Until state banks generally JOin Federo.l Reserve system •
much of the optional reserve ruust be kept by LlElliiber
bt'.lll{.s as vault cash for p~ent .of clearing house balallee&
as well as counter deiiJDDds.
Septewber 18, 1916. 809
•
Outlying districts ..
Lower reserves in• of reserve and central reserve cities
disapproved.
Novewber 20, 1917.
849
February 19, 1918. 855
Penalty for deficient reserves,
.Approved-.
•
April 20, 1915..
775
Ratio of.
No fixed ratio should be required. for foreign branch
.798
bonks. February 15, 1916.
Novewber 19, 1918. 806, 867
state laws.
Modification rec~ended of reserves for· state ba~s whose·
laws do not pe~it reserves with Federal Reserve ~s
to be counted ·as c~11sace with stute laws.
Till Money
February 19, 1918. 858
see: Vault reserves.
vault
res~rves.
Until state bunks generally JOin Federul.Reserve syste~,
member b~s, especiallY in large cities,.must keep cash
in vaults for clearing house balonces as well as till
money for counter use.
per eent
Septewber 1g, 1916. 809
Five · cash in vault recOIULlend.ed by Federal Reserve Board
will not be sufficien~ .. Should be 5, 6 ond 6% ..
February 19, 1917..
819
see also:
.Awendl.lents ... Sec .. ll
Depo~its.
Foreign branches.
Resignation as director.
see: Direct ora.
-71Revolving acceptance credits.
,
With renewal privileges, even if technically eligible, are not selt
liquidating mld not within spirit of Federal Reserve Act.
Novewber 20, 1916.
816
Richmond district.
Discount rates •
No change ndvised.
•
t.
Escess reserves.
Norn1al
1916.
S06
Septewber 18, 1916.
eo6
Septewber 18,
Rotation in office.
See: ~deral Advisory Council..
Rowe.
•
Voted against having cost of Federal Reserve Notes borne by
government.
November 16. 1915.
7fb
Voted against Federal Reserve Notes as legal reserve in vaults
of me~ber b~~
NoveL:iber 1.6, 191~.
7~
Novewber 20, l9lb.
815
Voted against reducing paid in capital of Federal Reserve J3lmks.
·
Novewber 16, 1915. 786
Vot~~ agninst issue of Federal Reserve Notes against gold.
Novewber l6, 1915.
788
f
,•
696
:..72:-
-s-
x-1669
san Francisco
distriet.
Discount rates.
No changes advised.
1916.
808
Septer..ber 18, 1916.
sos
Septe,..ber 18,
Excess -;hserves.
Hi •
•
St.Louis district •
Discount rates.
No chonge advised.
15 d~ rate establisheG. in place of lO d~ rate.
Septeruber 18, 1916.
EXcess reserves.
Normal.
septeiuber 18, 1916.
808
007
Savings accounts.
proper definition of.
Decauber 24,
1914.
766
Rates.
SUpply and demand and usury lows will regulate.
Should be hil$h enough to encourase saving and thrift.
Novewber 16, 1915.
788 789
Sn.vin&s banks.
Mutual, should be admitted.
see: .Amend.wents..
Sec 9
Present law admits no relief to, by loan to, against security of
R~itrood ond industrial bonds.
Noveruber 20, 1917.
U.s. should finance, during war.
November 20, 1917.
""
r '
r
savings deposits.
Liberty loan subscriptions will encroabb on.
September 18, 1917..
See also:
Bazik deposits.
Interest on savings deposits.
jlla
savings, Taxes.
See: Taxation, Qovt.
sea.y,
Gov.
Dissents froru disapproval of differential com.uodity rates.
·
SepterJber 21, 1915.
783
Motion to anticipate final reserve payment voted down, 6 to
Novewber 16, 1915. 787
Secretary of Treasury. (See u.lSo. U.S. Bonds,)
of intoi'Llal Corumittee on foreign exchange aJ?proved.
Septer.lber 18, 1917. Bl+3 8li5
Report
3·
--~--..,.....-...,.--.----~--------,...----------...,----~--~-~~,--
x-1669
•
'<.
'.
~
secretary o£ Treasury. continued~
Report of CauJittee:
1. Carefully scrutinize go~ e~ort applications.
2. Curtail importation of luxuries under Trading with Ene!i.G' Act.
3· Allies should exercise sin:d.lar control.
4. Much gold carri.ed out by traveliiers.
..
5· Fede~al Reserve Board should appoint Gold C~ttee.
6. Eaeh member of CODJuittee to be under oath.
7. pound sterling should be continu~ ·to be stabilized, but
without material diLlinution of u.s. gold supp~.
8. GOld :here must be maintoined a.s basis of our credit operations.
9· If gold movement not controlled through allied agreement 1
arbitrage operations must be restricted or prohibited.
10. Hardships involved will be· investigated if banks in foreign
countries unfavorably o.t'fected would. erupl$Yj their fUlJ!is in
loans or investments in u.s .. insteaQ. of. exacting gold.
ll. Earmarking ~f gold by our banks should be prevented.
12. Banks should report how wch they have earmarked or held
in custody and for wban.
·
13. Federal Reserve uotes should be substituted tor silver
certificates and release bullion used for subsidiary
coinage, the balance to be exported. Be~fits of this
policy stated.
·
14,. Printing of Sli;a,ll bills bf. Bureau of llngraving should be
e~dited.
Sec.
Sec.
848
3 Federal.Reserve Act.
See:
4.
Ame~nts:
Sec.J
Federal Reserve Act.
See : ..AJuendments: Sec. 4
sec. 13 Federal Reserve Act.
· ./IJl;lendments suggested on acceptance provisions.
November 20, 1916.
817
Sec. 13 and 16. Federal Reserve Act •
.Checks drawn on .wewber banks or Feder61.l Reserve Ballks of other
districts cannot be deposited by member banks. Federal Beserve
!anks can receive thew only when re~tted by another Federal
Reserve Bank.
M~ 21, 1915•
767
Federal Reserve Banks should not charge checks on member banke
received by it ~tnst r~serve account of the ue~er b~ without
their authority and without their having an ~portunit7 of passing
upon them.
Mq 21, 1915.
767
Sec.
16. Federal Reserve .ADt ..
Clearing and collection charges.
See: Charges. Sec. 16
I
I,
(
697
sec.
17.
Federal Reserve Act.
see : AJnendments. Sec.
17
698
Sec. 16. Federal Reserve Act. Conversions,
See: ~endments. sec. 18
Sec. 22.
•
Federal Reserve Act$ Fees of directors etc.
DisappToved draft of Fede~~l Reserve Board.
Rec~nds a draft.
.April 18, 1917. 330 to 338
See: Awendmente. Sec. 22
Sec. 24. Federal Reserve Act.
Suggests broadening power to loan on farru lands.
NoVehlber 16~ 1915.
787
sec. 25. Federal Reserve Act.
Branches of national banks, Foreign.
See ~~nts. Sec. 25
Section 5200, U.S. Revised Statutes.
see U.S. Revised Statutes: Sec. 5200
securities.
See:
i
I
I
._
AbSOI'J?tion of cost
Cla.yt·on Act~
Public Utility Corporation~.
Self liquidating.
see: Revolving credits.
senate Bill No. 9·
GUaranty of bank deyosits etc.• ,
Insurance indewni'ty fu..."ld.
Disapproved.
.April 13, 1917.
Senate Bill No. 742.
GUaranty of bank deposits.
Mutual insurance fund.
Disapproved.
Senate Bill No. 4226.
Guaranty of.deposits up to $5,000.
Disapproved.
May 21, 1918.
·.
359
senate Bill No. 8259·
Should strike out provision liwiting acceptances for ony one
person etc to 2o% of capital and surplus.
February.l9, 1917. 828
'
t
<
Shipment of gold.
See: Arbitrage.
Gold.
699
• +
Silver.
Trust funds should not be turned over to Federal Reserve Banks.
Februar.y 19~ 1917. 325Silver bullion.
Gold elllbargo may be ~Odified a.s to ~xico in exchange for,
See; Silver certificatea
Septewber 17 • 1918.
863
.. .....
Silver ce~tificates •
. Federal Reserve Notes should be substituted for.
Septewber 18, 1917.
847
SiXty da.ys notice.
See:
Reserves:
.Anticipa.taietc.
Spain.
·See:
Dollar exchange.
Special rates.
see: Con.truodity rates •
.Stabilization.
See: Dollar exchange
Pound sterling
State Banks etc.,
Acceptances.
Sho:uld be purchased only from, vlhose issue of acceptances does
. not exceed 10~ of capital and surplus •
.f(pril 20. 1915..
774
Admission.
.
Approves regulations of Federal Reserve Board but suggests advice
of counsel whetber it can by regulation provide for withdrawal
of state banks qpoo reasonable notice and equitable terms.
January 18, 19lt..
767
..
'
Asks Federal Reserve Board to frmne regulations ..
April 20, 1915. 775
Applications for admission should be sUbmitted to executive
c~ttee of FederQl Reserve Bank.
.
May 21, 1915780
Regulations seem fair o.nd liberl:l.l..
Sel>te:wber 21, 1915. 78a
Nothing more can be done to expadite ~ssion of ..
MaY lb, 1916.
814
:&ranches, Foreign..
see: ~e:rllklents:
cap~tal.
Sec. 25
-
Inadvisable to pern.dt state banks in existence Nove1.1ber lb 1 1914
bJ.&t not baviJli sufficient capital to becc:llle Lle@er banks, to JOin
~dera.l Reserve Syste~a..
Novewber 20, 1917. 849
700
-?6-
x-1669
state Banks. continued.
Clearing r.ueru.bers.
·
Approved.
February 19._ 1917.
!:21
Clearing privileges.
See! Infru. Non kewber.
Clearine: system.
see same ..
collection of checks. Fee farSee: c leoring systec.
Draft of or..end.Iuent s ..
Approved, revising recowwendations of January 1917.
February 19, 1917.
338
Examination of.
Shou1d be under direction of Federal Reserve Boord.
Noveruber 16, 1915.
755•
Absorption of office of C~uptroller would put an end to iouble.
Nover.uber 16, 1915. 735
Multiplicity of • is chief reason why state banks will not
Join Fedort' l Reserve system..
Novewber lb, 1915.
755
Exchange charges.
Disapproved.
uover.uber 20,
1916.
317
Governwent deposits.
Should be allowed to receive.
SepteJJ.o~ber 17, 1918.
364
Hayes Bill.
See Sarue.
Non n..er.J.ber stute ba1Jks
Sho).lld not have cleu.ring privileges unless a wer.. ·ber ol:
local clearing house, i f any ..
Nover.uber 19, 1918.
370
-·
t
Real Estate Lo<ms.
Limitation of power favored.
~~~'•Y
21, 1915.
780
Regulations.
Are JUst and libernl.
• <
Reserve requirements.
Power in Federal Reserve Board to increase • would keep
state banks out of Federul Reserve systec.
.
February 19, 1917.
321
Ft..vors power to Federal Reserve Bou.rd. to modify, \Jhen
state laws do not perruit reserve. deposits ~•ith Federal
Reserve Banks to count as reserves.
Februu.ry 19, 1916..
858
----------------------...-----~---------~------------
701
'
•
-·
-77State Laws. Reserves.
See:
,Awend.ment s i
sec. 11
Statements, credit.
See: Private bankers.
sterling exchange.
see: Poimd sterling •
Stock
ownershipSee: Foreign brHnche.;;.
Stockholders.
See: ·Double liability.
Strong, Gov.
. •
Se0: Secret<:l.l'y of ~reasury: COll:.IWittee on Foreign Exchu.nge ..
Su.bT reasurie 6i11a:lJ ~ ;.;.
See: U.S. Subtteasuriei
Subscribed capital.
see: Ca.pitul st~k, J:IO.id in.
subsidiary silver coinage.
see:Silver cert-ificates.
SUpervision of capital and bond issues.
See: Capital Issues C~ttee.
surplus fund.
RecOillruends increase to lOa% of :tJUid in C£:lpita.l.
Novewber 19,
Surplus. Investo.ble.
see: TE\.UI.tion, QOver:ur.uent
1918. 869
surplus profits tax .•
see Taxation, Government.
$reden.
see :
SWinney, E.F ..
Dollar exchtmge.
voted in favor of reducing paid in criJito.l of Federnl Reserve
Banks ~ o.go.inst vote of council.
February 15 • l9lb..
795
voted .?..go.inst recoW!..endation tho.t boclts doing u foreign bonking •
business w.ay invest part of their c~ite1.l in local for.ei€Jl
b~ stock.
Fe bruury 15, l9lb •
799
S\li tzar land ..
-see:
Dollar exch.unge ..
702
x-1669
See
Taxation, government
Tax on checms etc.,
See: Hayes bill ..
..
Taxation, governwent •
prop-ortion of taxes should not exceed 25% of war cost for first year.
50%.would produce too great a strain.
APril 18, 1917.
829
To inq>ose a surplus profits tax Qild an additional income tax on 1916
incanes would. be unJUSt and put an excessive burden upon corporations
e.nd _individuals who having provided for l9l6 taxes, and thereby
discharging their tax obligation to the governwent, have put thf) balance
in permanent inq;rove111Snts or fixed investwnts.
April 18, 1917. f29
Large incar.ues should not ·oe taxed in undue proportions as the goverlllUent
is to ruake huge der.Jallds upon the investable surplus of the country.
April lS, 1917.
829
Should be levied upon luxuries and as little as possible ~on thrift,
enterprise nnd suvings~
.April 18, 1917. 830
Twtation of undistributed profits. Federal Reserve Banks.
Only the norua.l incot.1e tax should app]¥.
664.
Septeruber 17, l9lS.
Ten day paper •
See: · Collateral notes.
Tt<m :la;r rate.
Dee: Dallas
New york
st.touis
Ten per cent lhuitation
~e~~ U.S. Revised Statutes.
f
sec. §200
Term of U.S. Bond issue.
See~
U.S. Bonds.
Thrift 1 tax on.
See: Taxation,
gove~ent.
Till n.oney.
See:
option~l.
Reserves,
"
vault.
Tirue deposits.
Suggested definition of.
~anger
See:
fraw
fictit~ous.
Mi:..y 21,
Reserves.
1915-
T76
703
-79-
x-1669
Trade Acceptances.
Larger'differential for, not advisable.
Septei"lber 21, 1915.
•
781
Trading with eneruy .Act •
~portation of luxuries should be curtailed under.
Septer.J.ber 18, 1917.
S45
Should be umended to give Federal Reserve :Board control over
gold e~orts until 6 fuonths after pe~ce declared.
Novewber 19, 1918Tre.de :Balances .,
see: QOld.
Transfer of currency and securities.
Federal Reserve Banks should absorb cost of, to and frow weober banks.
Septewber 17. 1918.
865
•
r
Treasurer of U.S.
Minimum deposit of U.S. banks with.
See: Amendments: Sec. 17
I'
Treasury Certificates.
Should be issued in anticipation of long ter-m bonds •
.April l~, 1917.
829
Treasury Department.
Should supply Federal Reserve .:Banks with gold and currency to weet
necessities of roewber banks.
S eptewber 18, 1916. 809
Trea:ty
~tip~la.t~,on.
For an internationul gold fund not advisable.
November 19 1 1918..
-~~
Trust Funds.
GOld
~md
silver, should be kept in physical control of
und not transferred to Federal Reserve Banks.
February
19, 1917 •
868
u.s ..
government
825
Trustee, etc., National b~s.
lug?racticable to frmhe regulations u.s laws of e~h state would apply.
Junuary 18, 1915.
765, 766
------------------------c-~
·----------- -··
x-1.669
704
UDdistributed profits.
Normal income tax on.l.1' should appq to. of· Federal Reserve Barl!tS•
september 17' 1918.
861+
Unfavorable trade balances.
see: Qold.
.
u.s. one year gold notes. )
United States Bonds. (see also, U.S. Treasur,y certificates)
.Anl.ount of issue. First war loan.
•
Reeow;1.ends one billion dollars of long term bonds, if adequate
to meet necessities of governwent.
1. Will assUE;i;: successful flotation.
2. Should not be in e~ess of chort term certificates issued
in antici~ation, thus avo~ing tying UF of ~oney or credita.
3· If thus handled the entire bond financing could be handled
through the Federo.l Reserve :Banks as fiscal agents.
4. serious disturbances of bank ba.i.talces would thus be avoided.
5· Coupled ~lith careful use of short certificates this method
would obviate aecessity for general deposit of government
funds in the ba:-mks.
6. The bonds should run· for 30 years but callable after 5 years •
Bank deposits.
.lPril lS, 1917.
829
I •
Pending issue will dislocate bcnk deposits.
I
Small investors ~vill encroach on savings deposits.
Rediscounts with Federal Reserve B~ will increase.
Sept~ber 18, 1917.
S1f2
conversion privileges.
Should be cl.ear4r announced by secrett.ry of Treasury.
septer.ibcr 16, 1917.
644
Discount rates.
Preferential rate on 90 duy pap~r secured by, is
de·sirab le ..
November 20, l9l7.
84S
Februa.lif 19. 1918.
S52
On 4th Liberty Loan, of. frw ! to j of lt/; below
coupon rate.
Septer.lber i7, 191~. &3, 564
Min:l.r.lum deposit of, with Treasurer of U.S.
see: ,Amandr;l6nte: sec. 17
. ..
Preferential rates •
See SUpra, Discount ra.tee
•
Rates.
For next Liberty ·LOan should be 61. shurt tenu. ta.Dble
~ bond..- Government L&USt more near 11 approach market
yalue of mODey.
J'~Jbruary 19, 1918.
. 852
Term of
See Su,pra "or.uuunt" otc.
Three por cent conversion boucls.
see: AwandiDents, sec. 18.
Two per cent bonds.
Should be eAChangeable into J~s Without circulation
privilege~ am. not l/2 into u. ·s. One Year GOld NOtes~
see: ,APlendments, sec. lS..
February 19,1917 823
united State$ Qove~nt.
Should bear cost of printing Fe<leral. Reserve notes
Nov~r 16," 1915 76
- 81-
•
United states Government.
Should retcdn physical control over gold <:tnd. silver
trust funds.
Februory 19, 1917.
Should finnnce Railro~~s during war.
November 20, 1917.
Should fl.ssist public through WAr Fin.:.mce Corporation
February 19, 1918.
Should assist Public Utility corporntions.
•
.
se:pterJber 17, 1918 •
Should be allovied to deposit publlc moneys in state
member ba~. 1\Ulendruent of U. s.
Rev.statutes,Sec.5153
864.
. .
Se:pteruber 17, .1918.
United. States Three Yeo.r Treasury Notes.
u. s. 2.6f:, bonds should be exch.c.'Ulgeable into u.s .. 3%s
without circulation privilege and not into l/2 u.s.
One Year Treasury Notes.
Nover..ber 20, 1916.
819.
ReconJWends discont~nmmce of,
Fobt'UP7 19, 1917
823
United States Revised statutes.
section 5200.
The ~ limit at ian should not apply to loans by nationu.l
banks to Food Adw.lnis tratiori Grain Corporation.
.
september 18, 1917.
844
section 5153Fo.vors omendru:mt of, so that state weuiber banks may receive
Gover.nruent deposits.
Septewber 17, 1918..
864
Section 5202.
Recon. ends udding an additional exce_t,;tion to:
Liabilities as indorser in accepted bills of exchange,
actually owned by the Associ&tion ani rediscounted at howe
or ~;,broad.
uoveL.lber 20, 1916.
518
UW.ted States Sub-treasuries.
Functions of, should be trtmsferred to Federal Reserve BD.n.ks
so that they con furnish gold nnd. currency to ruauber banks
in required denominations.
•
Se~tember 15, 1916.
809Functions of, except the trust funas, should be transferred
to Federnl ~esorve Banks as depositary bonks.
February 19, 1917..
825
United States Treasurer.
See: Treasurer of U. s.
united States Trea~ucy.
See: To:x:ation, GOvernrae~t
U .. s. :Bonds.
UnitM States Treasury Certificates.
PreferentiRl rrtte on custowers 90 uay paper secured by,
is desirable.
Bovember 20 1 1917
848
February 19, 1918
852
705
-82-
706
•
United states Treasury certificRtes (cont).
Unnece~sary to tnke steps to force distribution of.
November 20, 1917.
See: U. S. Bonds.
Vault Cash.
See: Reserves
Vault Reserves:
See: Reserves- Excess
vault
Vo.ults.
see: Federal Reserve notes.
•
I
-wwo:r.
'
I
•
'
I •
.
851
Impossible. to predict business conditions o.t'ter.
November 16, 1915.
9ee: FederRl Res~rve Banks
Policy
War Toxation.
• •
See: Taxation,. Qovei'l'lUlent
U.
s.
Bonds
War Finance Corporation.
The bill creating tbe, is a public necessity.
February 19, 1918.
Should be permitted to denl directly with borrowers,
wtthout intervention of banks.
september 17, 191S.
War PJI.per.
Preferential rntes for, favored.
Nove~er 20, 1917.
september l8, 1918.
See: Discount rates,
Pi-eferential rr.~.tes
U.
s.
Bonds
War policy, after. Federul Reserve Banks:
Should be as liberal as is.consistent.with safety •
.AJ:r3 at tewpt at enf arced contrt1etion of credit would be
injurious to the business interests.
Noven.iber 19, 1918.
war profits tax.
See: Taxation, Governwent.
Wflr taxati~n.
See: Taxation., Qovertllllent.
Warburg. P.
131
On private bankers credit statements.
November 16, 1915.
853
863
848
864.
707
•
•
'·,
- 83-
Warrants.
AFprova1 of regulation, 1914.
DeceiUber 24, 1914.
Wells, Governor
Does not vote on question of ~ng intradistrict clearings
roondatory.
784
Septeu.ber 21, 1915.
Wing, D·.
Voted in minority on question of cost of Federal Reserve Notes
being borne by Qoverllr.:lent.
Noveober 16, 1915.
766
•otes against reduction of paid in capitu1 stock of Federo.1
Reserve banks.
Novewber 16, 1915..
786
Voted against penuitting Federo.l Reserve Notes to be issued
against gold etc.
Noverriber l6,. 1915 • 788
•
•
•
708
FEDERAL RESERVE BO.AJID
Office of Chief Cler!;;.
Septer.1ber ll, 1919.
To the Duployes of the Federal Reserve Board:
The officials of the Treusury Depo.rtr.•ent, in conJunction with th~ Citizens B~ing nod Selling Lea~ue, have perfected
an organizC\.tion whereby· eru:ployes of the Trea.su-ey Department uey
purchase foodstuffa at a material sewing. The employes of the
Federc.l Reserve Board are perr.dtted to participate in this arrangement which is substantial~ as follows:
~loyes o.re pern.d.tted to join the organization upon
the purchase of a membership certificate at a cost of $5.00• The
capital thus obtained is to be used as a working fund for the
establishment of the store. The certificate is not transferable~
and is evidence of Llewbership in the orBanization; but ony r.ueLlber
m~ withdraw upon thirty days notice and receive a refund of his
initial payment.
The sale of goods will be by meons of purchase
tickets,. which at present will be in the denominations of $1, $2,
$5. and $10.
Sp~e will be provided in the Treusuey nepartL1ent for
the store which will be opened from 8 or 8:30 a. w. until 6 1>• Ll•,
thus enabling er~loyes to call before or after office hours to make
purchases.
At the present time, while no free delivery system
will be inaugurntE:ld, it ~nll be the endeavor to perfect a.rr.mgements
whereby bulq materials IN4Y be delivered at cost, the idea being
that a. delivery charge shall not be assessed where purchases are taken
a.wB:9 by the cust0r.1er.
• ·
Mr. John J. McGrath, who hils had considerable
e.x,perience in this line of work, will be in charge • and he is r~ing
arrangements for the purchase of supplies at wholesale prices •. A
sufficient percentage will be addeci to the cost to cover actual
overhead charges, but it is the opinion of all concerned th~:~t the
selling price will be materially below that in the retail markets.
Similar organizations in other dep<~tLlents have
)roved highly successful, and there is no doubt tm:..t this venture
will also be of great benefit if a. sufficient number of people are
interested. .The eertific~te~ of ruembership will 9e r~~ for
distribution on and t~ter September 15th. Pa.~ents wt1l not be
required, however, unti.l tlw certificates o.re in hanq. •
.It is ho}Jed that the eJll>lOyes of the Federal. Reserve
.Board will feel free to tbl.l.te odvontage of this privilege. for this is
your store and its success depend.s upon your interest,.
J .. ·.ne La MATER.
Chief:. Clerk.
..
'709
•
FEDERAL RESERVE BOARD
STATEMENT FOR THE PRESS •
•
i.
•
Release for morning papers.
Saturday, Septewber 13, 1919.
Addressing the convention of the west Virginia.
Be~er 1 s
Associatiun at White sulphur Springs yesterday, Governor
Harding, of the Federal Reserve Board, selected as his topic the
cpestiun, "Shuuld e'A:ports be restricted as a. means of reducing the
Recognizing
present ~ign·cost of livingn.
the problem of high living
costs to be une of universal rather than purely national
urg·:~~cy,
Qvvernor Harding stated the primary cause of present high costs to
be the destructivn of l:i..fe ~ property and the c0nsuuptiori of liquid
wealth occasivned by the world war.
He said:
"There bas been a vast expansion of credits, not only ·in this ·
co\Jntry but throu.ghcn:~.t the civilized worlci, and.wor.kers have
. manifGated since t.he suspe11sion of hostn:.. ties a desire to
reJ..ax: from tb9 ri.gcrs of the wa.r-tmme rE>gl,.e, fr-om tJr.s.:3t.iC
economies and depd.va.tions, and. tho.y a:.cr: a.t t:be sa.rre t=.ILS
derca.nd:i.ng short,er wo't'hing hou:rs at!d :norc :pa.y. B~ca:2se of
th".s and of the :t~·T:rpa5.lm.qnt of l'l'OCL..:!Ctive c?...p3.cit.;:;, there has
been a. curta.ilxren".; of pJ:""od~lction and. higher costs i:::1 the
?rocesses of dist.&.·jbution, ·whi0h b.ave ..i;J:""iver. pr.ines up to
a higher level than was reached clt1.ring the closing months
of the war.
710
•
•
.
-2-
X-18'71
"Much has be~n said about the reduced purchasing power
of the dollar, and according to the index figures frequently
referred to by_econanists, it is clear that when expressed
in terms of staple articles of commerce the value of the
dollar is only about half what it was give years ago. But
it is true, nevertheless, that in terms of the currency of
many foreign countries, including all ~f the recent belligerents, the value of the dollar has increased. While a
drastic contraction of currency and credit would no doubt
be followed by a reduction in the price level, as expressed
in terms of dollars, it is certain that a lower price level
brought about in this manner would be accompanied by decreased
production. A drastic change would, moreover, undoubtedly
result in much financial distress and in .a grave economic
situation. In seeking a ~emedy therefore, for present high
prices we should bear in mind that before and after the
entrance of this Country into the war there was an urgent
need on the part of the Governments of the allied world for
goods of all kinds for quick delivery and in larga volurne
and that price was a minor consideration. There was also
competition between this buying by governments and purchases
by private individuals who failed to contract their expenditures at a rate commensurate with the growing expendit~es
of the various governments.
"Yie are now passing through a period of general relaxation from the war-time regime of personal economy, which
has resulted in an increased demand for commodities by individuals who restricted their purchases during the war but
who are now buying in competition with export demand. Accrued incomes and increased wages have led to a heavy demand
for articles not of prime necessity, with the result t~t
labor and material have been diverted from essentials to
non-essentials. The increased volume of credits in this
Country is the inevitable result of the financial operations
of our Government, which was called upon to make vast expenditures for the maintenance of its own military·and naval establishments, and to extend assistance to the. governments
associated with it in the war. From the first of April, 1917,
to the first of August, 1919, the interest-bearing indebted-.
ness of the United States increased by about twenty-four and
one-half billion dollars, an amount greatly in excess of the
normal savings of the people, and the success of the financial
operations of the Treasury was due to the patriotic support
given by all classes of citizens who were willing to anticipate
their future savings by borrowing from the banks, and also by
the ability and v:illingness of the banks to make the loans.
-~----------------~---.---------;-----~-----
711.
•
-3-
These expanded credits, however, should be reduced as rapidly
as possible out of current savings, and the most effect.ive
remedy for present condjtions, whether viewed from an economic
or financial standpoint, is to work and save. Reasonable
economies should be exercised in o~der that money, goods and
services may be devoted to the liquidation of debt Gnd to the
satisfact:~on of deman.ds for necessities rather than to in-dulgence
ln ext~a·1agances and luxurj.es. Inn:::-cased. production of
essential articles is necessary, and it is m~st important
that there be no interruption in the processes of production
and distribution.
.
..
•
X-1671
"Our exports increased enormously during the war period,
and because of the contjnual rise in prices the5r value, as
expressed in dollars, increased in greater proporti.on than
the volume of goods sent abroad. In May, 1917, tne Government of the United States began to make loans to its cobelligerents, the total amount of these loans will soon reach
ten billion dollars, which, unle.ss the laws are amended, >vill
be the ultimate and final limit. Because of the financial
. aid given by the public treasury, our export problems during
the war period were limited to the production and transportation of the goods, and the burden of finandng vvas bo.rne by
the nation as a whole~ '::ith the e.xhaustinn of Government
credits the question of finaneing exports has become one of
prime importance, and in considering the problem we should
first of all reconcile ourselves to the id~a that it is
neither practicable nor desirable to export, to European
. countries at least, on as large a scale as we have done for
the past thr-ee or four years. It j_s not praotlcable for the
reason that these countries are unable to settle in cash for
SO large an advense trade balance, nor can WE: CCnl.ijnue to
eztent them credits for so large an amount. It is not desirable because with the limitat"ions upon our production we
could not continue indefinitely to send so large a volume
of goods to Europe without causing a Scal•city at home, which
would result in even higher prices and more unsettled labnr
conditions than those which are now giving us so muci1 concern •
"'I'he war has levied an enormous tax upon the resources
of all Luropean countries, and there is nothing to show forthe vast sums expended by the belligerents which have gone
up in smoke. It is necessary that these countries should
henceforth conserve their resources in order that they 1nay
rehabilitate themselves as ra?idly as possible, give emplojment to ·their idle populations, and work themselves back to
a self-sustaining basis. The goverr.~rnents of these countries
are doing <:3.11 in their power to discourage a demand for
•
•
712
..
-4-
X-16?1
luxuries and· to prevent extravagant expenditures, and it is .
evident that they do not regard a severe decline in their exchanges as an unmixed evil. Low exchange rates in the bel. l igerent countries increase a.utomat ically the cost of all
goods imported into these countries and operate to reduce
consumption • 11
For example, he s-aid:
"If an .American·exporter ships goods to Liverpool and
draws sterling bills against the shipment in the customary
way for,· say, blO,OOO sterling and wishes to convert his
bills into dollars, he would receive, not :;p48 ,966, as he
would under normal conditions with the pound sterling on a
parity v.rith the dollar, but he would receiv.e only J41,550.
This difference of $?,116 represents a loss in exchange
without ref.erence to ocean freight rates and insurance,
and this loss must be borne either by the producer of the
goods, the exporter, or by the consumer on the other side.
If borne by the consumer it will tend to bring about
economies and reduce the amount of goods consumed. If
borne by the exporter, the loss will be immediately transferred to the produoer in the shape of a lower price paid
for his goods.
713
•
-5-
X-1671
Mr. Harding expressed the belief that by adopting sound principles
.
I
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~
I
!
.
America .could a.ccou;plish the. twofold purpose of fostering her export
trade a.nd
redu.~..ing
her living CDsts, saying:
•I do not wish to be understood a.s minimizing the importance
of maintaining and extanding our legi tima.te export trade• but
I wish to point out that in dealing with Europe other considerations nust govern than mere profit and \I'01'\1IIJ$ o:t business.
Europe nust have the equipnent and the goods which are necessary
to restore its productive capacity and to .bring it back to a
self-su.staining basis, and as the adver.se exchange rates reflect
1 ts ina.bili ty to pay in gold or to offs~t its i.Irq;lorts by exports,
it follows that temporary credits ·on a very large scale nust be
·provided. Ordinary banking credits will not avail, for these
credits cannot well be extended beyond six rr.onths, a. period
manifestly too short for the restoration of more normal rates
of exchange. Longer credits are required, running ~rom one
to three years, which cannot properly be exteilded by the
commercial banks, which ru.ve large deposit li~bilities payable
on demand. a
"These credits m.lst be extended with a. definite object in
view- the rehabilitation of the countries to which they are
extended - and the American people should ooopera.te with the
Governments of these countries in preventing large purchases of
luxuries on credit. The credits granted should be used for the
purchase of· essential articles necessary for the preservation
of life ~d the restoration of a normal capacity for production."
"It happens that the necess::l.ry niateria.l and supplies ' :·
·
.of which Europe stands in need at the present time· come ·within
the class of comnodi ties of which we normally produce· a surplus
available for export. We should endeavor to increase our
production, of these articles and to send them over withrut stint
up to _the limit of the credits provided, but we should neither
encourage nor per.mit, as far as our power lies, these peoples
a.lrea.dy so hea.vily in our debt to becol'fe further indebted to
us for the purchase of no~essentia.ls and luxuries.n
"The field is broad, and we should n,ot neglect our
opportunity to extend our trade to ·those m.>re fortunate countries
which ~ve relied hitherto mainly upon Europe for their finer
goods. Soxre of the EtU'opea.n neutrals, such as Spa.int the
Netherlands, and the Sca.ndinavia.n countries, are able to pay
iin cash for the goods they buy, and in the Orient, Japan is
prepared to pay cash. The South Axr.erican countries are about
to enter it.pon an era of great prosperity. and their narkets
. offer a. most attractive outlet for our nora expensive articles
of UWlllfacture. We should, therefore, be prepared to sell to
714
•
•
-6-
x...l671.
tc ·any nation atr3 goods for which that nation nay be able
·to PaJ in cash, but the point I wiSh to emphasize is this:
where we sell on c'redit we should exercise a wise discretion
as to the .charact~r of the articles sold."
"I am aware th,.t many exporters believe that the Government .of the United States should continue for a while longer
its wa.r-tin:e policy ·of extending credits to the nations.
lately associ'ated with us in the wa.r in order tha.t we may luve
a. ready narket in thbse countries for cnir goods. I thinJ:t
hpwever, that the soo~er this idea is abandoned the better, for
I see no indication of a. willingness on the part of the Congress
of the United States.to grant further credits 1 nor do I believe
that it is for.the best interest of our country t~t war
policies be continue-d in tinBs of peace_
..
•
•
.
.
While it is tru.e that the meJ.ntenance and development of our
export trade affects the pro~...:erity o:.f the people a.s a wlx>le,
it is also true, nevertheless, that a comparatively small
portion of the people are mere directly concerned and benefited
than a.re the masses of the people, and I think that we should
reach the conclusion as spledil¥ as possible that the developxrent
of our foreign trade, apart from ~eh incidental assistance as
the (Jevernrrent ma:y properly give, is a. matter for private
initiative and individual enterprise. While the direct credits
which this favr;rnment may grant to foreign gove.r:t:lltSnts is limited
to an aggregate of ten billion dollrs, of which only a. few
hundred millions rema.1n unuseC., the War Finance Cor];loration, the
stock of which is owned by the United States Trea~ry, is
empowered to DBke advances up to one billion doll.a.rs to assist
export transactions. National banks having a capital and surplus
of not less than one million dollars are authorized, 1mder
regulations prescribed by the Federal Reserve Board, to subscribe
to the extent of ten per cent of their capital and surplus to
the capital stock of banks or cor];)orations organized under the
laws of the United States, or o.f any State thereof, and
prinltipally engaged in foreign banking, and a. bill ha.s recently
passed both Houses of Con~ and is now. in the hands of the
President which will permit a.DY national bank, regardless of
its size, to pubscribe to th& extent of five per ce&t of its
capital a.nd surplus to the capital stock of corporations
princi~J..ll" engaged in such fi.nd.llcial operations a.s may be neeess.J.ry
to proJWte the export of gGC!tds, wares and merchandise from the
United States or a.ey of its dependencies. Another measure, known
a.s the "Edge :Bill n, which ha.s alread¥ passed the Senate '=l.nd bas
gone to the House, authorizes the Federal incorporation, under the
supervision of the Federal Resene :Board, of banks and corporations
engaged principally in foreign banking or in financing exports.
Our shipping facilities have been greatly increa.s·ed; an American
Merchant m.rine has been established, and our goods can be sent
to the four corners of the earth, throughout a.ll the seven seas,
and in .Ansrica.n bottoms."
"The opportunity is ours - an opportunity greater than we
ever dreamed Qf - to becone a powerful factor in world financing and
~rld trade.
Surely we will grasp this opportunity! We DUst take
advantage of the world-wide denand for the products of our fields,
our mines, and our factories, sending whatever may be desired to
those countries which are able to pay cash, and send.ing the
articles most needed to those re~iring credit.•
"The controversy between capital and labor will receive
serious consideration ~t the conference which ha.s been called to
meet in October, and let us hope th3.t the wbole·question will be
approached in a "Broad American spirit, that wise counsels will
preva.il, and that the differences will be ironed out and adjusted
fairly
inpa.rtially. Let us realize that crops cannot be
grown, coal cannot be brought above the ground, xretals cannot be
fabricated nor textiles woven without ca.pital and without v.tlrk,
that capital is entitled to ~ just return at?-d that the laborer is
worthy of his hire; that increased production and greater
economies a.re the only correctives for the present high cost of
living and are essential if we wish to have a ~lus og goods
to send abroad; that shorter hours coupled with higher pay tend
inevitably to reduce production and increase costs.
and
I
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715
716
X-1673
•
SHOULD EXPORTS BE RESTRICTED
.AS .A MEANS OF REDUCING THE PRESENT HIGH COST OF LIVING?
Address by Hon. w. p. G.. Harding,
Governor of the Federal Reserve Board,
before the West Virginia Barikerst Association,
White SUlphur Springs, w. Va., September 12, 1919 •
.
The high cost of living, which is 'the most serious proble."1
confronting the American people at the present time, is not merely a
local question nor a national one, but is a world-wide condition.
While
various factors have contributed to the existing situation, its fundamental
cause is being better understood every day, and the principles which
must govern the application of the only effective remedy are becoming
n1ore cles.rly defined.
Whi1e the gratification of a general desire to
possess more of the comforts and luxuries of life and the demand for more
hours of leisure and recreation has undoubtedly contributed to higher costs,
it is recognized that the primary cause of the great
and wages during the past four and
of life and property and the
a
a~vance
in prices
half years is the terrible destructiori
cons~tion
of liqtiid. wealth occasioned by
the world war.
There has been a vast expansion of credits, not only in this
.
country but
through~t
the civilized world, and workers have manifested
since the suspension of hostilities a desire to relax from the rigors of
the war-time regime, from drastic economies and deprivations, and they are
at the same time demanding shorter working hours and more pay.
Because of
this and of the impairment of productive capacity, there has been a curtailment of production and higher costs in the processes of distribution. which
have driven prices up to a higher level than was reached during the
---~--
~------------
X-1~73
- 2-
•
closing months of the war.
Much has been said about the reduced purchasing power of
the dollar, and according to the index figures frequently referred to
by economists, it is clear that when expressed in terms of staple
articles of comn:erce the value of the dollar is only about half what
..
it was five years ago.
But it is true, nevertheless, that in terms
of the currency of many foreign countries, including all of the recent
belligerents, the value of the dollar has increased, and While a
drastic contraction of currency and credit would no doubt be followed
by a reduction in the price level, as expressed in terms o? dollars,
it is certain that a
lowe~
price level brought about in this
would. be accompanied by decreased production.
manner
A drastic change would,
moreover, undoubtedly ·result in much financial distress and in a grave
economic situation, and in seeking a remedy for present high prices
we should bear in mind that before and after the entrance of this country
into the war there was an urgent need on the part of the governments.of
the allied world for goods of all kinds for quick delivery and in large
volume
and
that price was a minor consideration.
There
w~s
also
competition between this buying by governments and purchases by private
individuals who failed to contract their expenditures at a rate comrnenI
.
i
'
surate with the growing expenditures of the various governments •
We are now passing through a period of gen3ral relaxation from
the war-time regime of personal economY, which has resulted in an
increased demand for commodities by individuals who restricted their
purchases during the war but who are now buying in cOIIJPeti tion with
export demand.
Accrued incomes and increased wages have led to a heavy
demand for articles not of prime necessity, with the result that labor
......
717
718
•
-3and material have been diverted from essentials to nun-essentials. The
increased volume of credits in this country is the inevitable result of
the financial operations of 'uur Government, which was called upon to
.
m~e
vast expenditures for the maintenance uf its own ruilitary and naval establishruents and to extend assistance to the governruents associated vdth it
in the war. From the first uf
the interestbearing
A~ril,
ind~btedncss
1917, to the first of August, 1919,
of the united StRtes increased by about
twenty-four and one-half billion dollars, an amov~t greatJy in excess of
the normal savings of the people, and the success of the financial
~eratiuns
of the Treasury was due to the patriotic support given by all classes of
l
.
l
citizens who were willing to anticipate their future savings by
borr~wing
from the banks, Eand also by the ability and. willingness of the banks to
make
the loans. These expanded credits, however, should be reduced as rapidly
as possible out of current savings, and the most effective remedy for present
conditions 1 whether viewed from an economic ur financial standpoint, is to
work and save. Reasonable economies should be exercised in wrder that money,
goods and services 1uay be devoted to the
li~uidatiwn
of debt and to the satis-
faction of demand for necessities rather than to indulgence in
and luxuries. Increased production of essential articles is
extravagance~
neces~ary,
and it
is wost ~ortant that there be no interruption in the processes of production
and distribution.
OUr exports increased enormously during the we.r period, and because of
the continual rise in prices. their value, as
e~ressed
in dollars, increased
in greater proportion than the volume of goods sent abroad. in~.
1917, the
Government of the United Stntes began to make loans to its co-bolligerents.
The total
~unt
of these loans will svvn reach ten billion dvllars, which,
..
u:W.ess the laws are amended, will be the ultimate and. final limit • 'Because (Jf
aid g1v:en by the public treasury, our export problems during
\he .• fin,.ancia.l
-~--
~--
--------------------
719
•
the war period were liruited to the production
~
transportatiun of the
goods~
ond the burden of financing was borne by the nation as a. whole.
With the exhaustion of Government credits, the question of financing
exports·ba.s become one of prime
i~ortance,
and in considering the p·roblem
we should first of all reconcile ourselves to the idea that it is neither
-
practicable nor desirable to export to European countries at least, on as large ·
a scale as we have done for the past three or four years.
It is not
practicable for the reason that these countries are unable to settle
in cash
for so large an adverse trade balmce; nor can we continue to extend them
credits for so large m amount.
It is not desirable, because with the
limitations upon our production we could not continue indefinitely to send
so large a volume of goods to Eu.rope without causing a scarcity at horne,
which would result in even higher prices and more unsettled labor conditions
..
than those which ure now giving us so much concern.
The war has .leviad
European
countries~
an enormous tax upon the resources of
2~1
and there.is nothing to show for the vast sums,
expended by the belligerents, which have gone up in
sm~e.
It is necessary
that these countries should henceforth conserve their resources in order
that they may rehabilitate themselves as rapidly as possible, give employment
to their idle populations, and work themselves back to a self-sustaining
basi.s.
The gov0rnments of these countries are doing all in their power
to discourage a demand for luxuries and to prev·'9nt extratagant expenditures,.
•
and it is evident
that
as an unmixed evil.
they do not regard a severe decline in their exchanges
Low exChange rates in the belligerent countries
increase automatically the cost of all goods imported into these countries
.
and operate to reduce consumptic.n.
The pound sterling, which has been for centuries the comnerci&l
•
unit of value .:b.roughout the world, was pegged during the war
few months ago at a disccunt of about two per cent; that is to
~d
up to -a
s~,
the
. '720
X-1673
- 5-
•
British Government, out of loans made to it by the United States Government,
$4.76-7/16
bought sterling bills at a fixed rate of
per pound.
But the
British Government is no longer meking ;my attempt to stabilize sterling
exchange, and since its support has been wi thd.rawn sterling bills have fallen
rapidly.
They have been quoted as low as
cable rc:.te in New York was $4~151..
$4.12, and on a recent date the
The rate for sight and time bills· is, of
course, lower than the rate for cable transfers.
As the par value of the
pound sterling is $4.8~6, the present rate means that there is a depreciation
of
71¢
on every pound sterling.
Consequently, if an Arrarican exporter ships
.goods to Liverpool ~d draws sterling.bills ag3inst the shipment in the
customary way for, say, LlO,OOO sterling and wishes to convert his bills into
dollars, he would receive, not
..
$48,666,
as he would under normal conditions
with the pound sterling on a parity with the dollar. but he would receive
only
$41.,550· This difference of $7,116 represent:s a loss in exchange without
reference to ocean freight rates and insurance, end this loss must be borne
either by the producer of .the goods, the exporter, or by thv consumer
on the
other side. . If borne by the c'onsumer it will tend to bring about economies
and reduce the amount of goods consumed.
If borne by the exporter, the loss
will be immediately transferred to the producer in the shape of a lower price
r·
.
paid for his gpods •
•
r11 '
The same observations apply to shipments made to France and Italy,
and will apply to the Germanic countries as soon as trade relations with those
countries shall have been reestablished.
Exchange rates are far more demoralized
in all these countries than they are in England.
of which normally
5.18
For instance, French francs,
make a dollar, have daclined to a point where there
are required about 8.32 francs to be the equivalent of a dollar.
721
,
-6~
This means that on every purchase IUade by a. Frenchiuon in terrus of dollars
he must p~ }.14 francs, or about
6o¢,
additiunal, or,.stated in another
way, the Anerican dollar is at a premiuw of
6o%
in France.
The Italitan. lira is norrually worth the same as a franc, but instead
•
of 5-18 lire being equivalent to a dollar, 9-72 lire are required, so
that the Italian purchaser of ,A):nerican goods has to pq 4.54 lire additional
on each dollar 1s worth uf goods he buys. This is equivalent to a premi\111
of nearly
90%
on each dollar •
. The Qerman.markt nori.tJO.lly worth about 24¢, wo.s recently quoted at
4.35 ·cents. Consequently, the German who buys goods in terms uf dollars
will pay in exchange near)¥ six tiiu.es what he would have had tv pay before
the war.
I do not wish to be understood a.s n1inimizing the importance of main- .
I
\,.
I
I
I
ta.ining and extending our legi tima.te export trade, b1llt I wish to point out
that in dealing with Europe other consideratiuns must govern than mere
profit and volume of business.
Europe must have the equipment and the
goods which are necessary to restore its productive CB.}lacity and to bring
it back. to a self-sustaining basis, <:md as the adverse exchange rates
reflect its inability to pay in go1d or to offset
•
it follows that
te~orary
~ts
iwports by exports,
credits on a very large scale must be provided •
Ordinary banking credits will nut avail, for these credits cannot well be
extended beyond six months, a period wonifestly too short for tho restoration of more nonwul rates of exchunge. Longer credits are
from one to three years,
~thich
cannot
proper~
re~uired,
be ex.tende4. by the cOIIIIilercial
banks, which have large deposit liabilities }la.Ja.ble on demand,.
running
I
t'
I
•
722
X-1673
These credits must be extended 1vith a definite
obj~ct
in view-
the rehabilitation of the countries to which they are 3Xtended- and the
Aruarican people should cooperate with the governments of these countries
in preventing large purchases of luxuries on credit.
The credits granted
should be used for the purpbase of essential articles necessary for the
preservation of life and the. restoration of a normal capacity for production.
SUppose a large farmer or manufacturer, a good moral riSk, has
become involved in financial difficulties and that he has applied to a group
of bankers to whom he is already indebted, for an extension and for some
I
further au.vances in order to enable him to work back to solid ground.
AnY
banker participating in this addi ti.onal credit would expect the borrower
to t.pply the ::mount to the necessities of his business, md if he should
divert the proceeds to the i:)urchase of expensive Jewelry, automobiles and
pianolas, he would become the object
of
just indignation and could expect no
leniency at the hands of his creditors.
It hd.ppens that the necessary material and supl,)lies of which Europe
·stands in need at the present time come within the class of commodities of
which we normally produce a
surpl~
available for export.
we should endeavor
.to increase our production of these articles and to send them over without
stint up to the limit of the credits provided, but we should neither encourage
nor perridt, as far as our power lies, these peoples already so h3avily in our.
debt to become further indebted to us for the purchase of non-essentials and
lU.Xuries~
723
,.
-
_g...
X-1673
The field is broad., and we should not neglect our opportunity to extend
our t.rade to those r.uore fortunate countries which have relied hitherto mainly
upon Euro~e for their finer goods .. Some of the European neutrals, such as Spain,
the Netherlands, and the Sc<md.inavian countries. are able to pay in cash for the
-
goods they buy,
am
in the Orient, Japan is prepared tv pey C<:l.Sh. The south
American countries are ~bout to enter upon an era of great prosperity, and their
markets offer a ruost attractive outlet for. our more e~ensive articles of ruanuI
facture .. We shuuld, therefore, be pr~pared to sell to any natiun any goods for
which that natiun may be able to pay in cash, but the point I wish to e~hasize
is this: where we sell un credit we should exercise a ~.rise discretion as to the
character uf the articles sold.
..
,,
i
I am aware that ruany exporters believe that the Qove:t"''lment uf the United
credits
·States should continue for a while longer its war-ti.rue !>Olicy of extending/to
the nations lately associated with us in the war in order that we
~ay
have a
ready market in those countries for our gc,ods .. I think, however, that the sooner
this idea is abondoned.tbe better. for I see no indication of a willingness on
the part of the Congress u£ the United States to grant further credits, nor do
I believe that it is for the best interest of our country that war policies be
continued in tiwes of peace. OUr governr,lent is the peoples 1 guvernwent, and its
revenues are derived entirely frow the people. It eon raise w.uney only by tC:LXes
•
levied upon the people or by the sale of
int~rest-beartog
obligations_ which
must be subscribed fur by the :people, and eventually paid by the people. While
it is true that the maintenance and developruent of our export trade affects the
·prosperity of the peo!>le as a whole, it is also true, nevertheless, that a
comparative~
small portiun of the people are mvre directly concerned and
benefited than are the masses vf the people.
There is an abundance of wealth in this country, there is plenty of organi
zing ability
and no lack of business acumen, and I think thea.t we should reach the
i ..
..
.
I.
~
r
724
- 9 -
X-1673
conclusion as speedily as possible that the development of our foreign
trade, apart from such incidental assistMce as the Government may properly
give, is a matter for private initiative and individual enterprise •
While the liquid wealth of Europe has been grJatly reduced because
of the druins made upon it by the war, tho fixed wealth and mater'ial resources,
are not vi te~ly aff.3ctect..
I have no doubt th'l t even in thos0 countries which
suffered most there are abundant r3sources to secure any credits which may
be needed for the purchase of necessary articles, and our
Gov~rnment
is
offering ample facilities to those desiring to arrange to send to Europe the
things most needed.
to
for~ign
While the direct credits 1¥hich this Government
~
grant
governments aalimitted to an :>.ggregato of ten billion dollars, of
which only a few hundred millions remain unused, the War Finance Corpor<:.•tion,
the stock of which is owned by the United States Treasury, is empowered to
make advcnces UIJ to one billion dollars to assist export trcmsactions.
Nationcl banks having a ccpit<ll c:nd surplus of not less than onG million
dollars ara authorixed, under regulations prescribed by the Federal Reserve
Board, to subscribe to the 3Xtent of ten por cent. of their c:pital and
surplus to the capital stock of banks or corporations organized under the
laws of the United States, or of
~y
State thereof, and principally engaged
in foreign banking, and a bill has recently passed both Houses of Congress
Lnd is now in the hands of the President which will permit any nutional bapz,
~agardless
of its size, to subscribe to the extent of five per cent of its
capital and sur:plus to the
C$pit~:l
stock of corporations principally engaged
in such financial operations as m2y be necessary to promote the export of
goods, wares and merchandise from the United States or any of its dependencies.
-
725
-10Another
measure~
X-1673
known.as the "Edge Bill", which has
and has gone to the Rouse, authorizes the
Feuer~l
alre~y
passed the Senate
incurporatiun, under the
supervisiun uf the Federal Reserve Board, of bunks and corporatiuns eng[l.ged
principally in foreign btmking or in financing e:x.}lorts. Our shipi)ing facilities
I
-
•
I
I
I
have been greatly· increased; an American. merchant mar.ine has been established,
und our goods can be sent to tha :f:'uur corners uf the earth, throughuut all the
seven seas, in American bottoms under the protecting aegis vf the American flug.
The opportunity is
U\~rs
- an opportunity greater than we ever dreamed uf -
to become a powerful factor in world financing and world
grasp this op:.,ortunity ..
We
must
products of our fields,
O'..rr
take
t~~e.
Surely we will
advantage uf the world-wide dew.and for the
nrb.es, &.nd. our factories, serrling
wh~tever
may be
desired to those countries which are able to pay cash, and sending the articles
most needed to those requiring credit.
The controversy between capital and labor will receive seriuus consideration
at the conference which has been called to meet in washi.ngtun in October, and let
us hope that the whole question will be approached in a bro<:ld .Amer~.cnn. spirit·,
that
wi~aa-
counsels will prevail and that the differe::tees wi!.l be ironed out ani
imparti~lly.
adJusted fairly and
doctrine, heresy and
schism~
In the language uf the lituny - Frum all false
Guvd Lord deliver us.
Let us realize that crops ccmnot be grown, cual ca:nnot be brought above the
ground, llieta.ls cannot be fabricated nur textiles woven without capitul and withuut
work, that capital is entitled to a just return and that the laborer is worthy
uf his hire, that increased productivn and greater ecunumies are the unly
correctives for
th~
present high cost of living and are essential if we wish to
have a sur:plus uf ·goods to send abroad, that shorter huurs coupled with higher
pay tend inevtta.bly to reduce production and increase costs, and that the American
Union, which is represented by the flag which waved
fields of
http://fraser.stlouisfed.org/ France,
allegiance.
Federal Reserve Bank of St. Louis
triumpkk~t
on the battle
is the supreme union and is the vne to which we owe pa.ran.uwt
726
-·.
casMer
GOvernor
BOSTON
Chas. A· Morss
Che.s. E. Spencer,Jr.
C.C .. Bullen
Wm. Willett
E.M. Uavitt
F.. W, Chaee
Wm. N. ICIIU'On
H.A. 8a\1DClel'a
t.w.
t
NEW YOBK
Benjamin Strong · R. H. Treman•
L.H. Hendricks•• G.E.
J .H. ease•
L.F. Sailer•
Wm. \V004ward•
E.R. Kenzel••
J.D. Higgins••
{Inactive)
Chapin#
J.E. Crane#
W.B. ~llittinl
W,A~ Bamiltonf
J .w. Jones#J
W~B. Mattesol#
R.M~ O'Hara#
. L~ R~ Rou:Ddal
C.B. Coef
R.T. Cranef
A. w. on..an~
H.M. Jeff~aonl
:!i. T. Crane(Aast
to
A.J.
Governor~
,
H.R.
J .. E.
..
w.M.
t.w.
!
i ,.
-
SWeetser
PHILADELPHIA
E.p .. Passmore Wm.. H. H\\tt, Jr
w•.1. Dyer
LJ.naf
Wna.r#
Baa•cbl
st .. Jolm# ·
waters/~
1'bomas Gamon, j~
C.A. McnhemlJ
James M. 'l'o7
R.M. MUler ,Jr
Frank La.Bold
w.J. Davis
CLEVELAND
E.R. Fancher
ttlaJMONl>
George J. Sea¥
M.J. Fleming
)
Frank J. Zurlinden)
(Assistants to
Gov:ernor)
Chas. A .. Peple
H.. G.. Davis
W.F. Taylor
H.F. Strater
c.w.
George H. Keesee
R.H.:&roadus
Arnold
c. v.
Blackburn
Thos. Ma.rshall,Jr. .
W.W. Dillard
.
Edw. Waller,Jr.
ATLANTA
M.B. wellborn
L.C. Adelson
M.W. Bell
R.A. Sims
J.L. Canpbell
W.R.
... ,
Patte~son
'W .. B. llop61'
H.F. CQnnlf f
f MaJia8er
'
.. .
l
. X-l67lf.
I
('..overnor
Deputy Governo:r.·
CHICAGO
J .B. McDougal
· C.R. HcKay
Cashier
S.B. Cramer
B.G. McCloud(A.sst
to Governor)
Assistant Cashiers.
F.J. Carr
Clark Washburne
Frank A. Linclaten
O.J.
N·~tterstrom
D.A. Jones
J .H. Dillard.
F. Bateman
F. R. Hanrahan
A.H. Vogt
K.. C.. Childs
Louis G. Meyer(Acti~
Vanemin Lamont(Aetina)
ST.LOUIS
. Davis
c.
Biggs
O.M. Attebery
A.H. Haill
J. w. Rirlkleff
W.H. Glasgow
MINNEAPOLIS
'lbeodore Wold
R.A. Young
~s.s.
Cook
F.C. Dunlop
Gray- warren
R.E.
..
~e
L.E.. Rast
I
i
I ...
KANSAS CI'l'Y
J .z. MiJ.ler, Jr. C. A. worth5.ngton
(Asst. to Governor)
J.W. Helm
John Pbillips,Jr.
(Acting)
:!. P. t'Jlner
L.H. Earhart
G,.E. Barley
C.E. Daniel
M.W.,E .. park
DALLAS
R.L~
van
Zandt
Lynn P. Talley( also
Cashierj
,•
-
SAN FRANCISOO
J.U. Calkins
Wm. A· Dey
(Ira Clerk{.Asst
Deputy Governor) .
· Corrected to September 15,1919.
(-Gee Deputy
Governor)
Fred Harris
Paul G. Taylor
R.B.· Coleman
Dwight P. Reordon
W.N .. .Ambrose
C.D. Phillips
H.C. Vogelsang
C.R. Shaw
Wm. Hale
F .H. Holman
727
,
•x
i
728
W. P. G. HARDING. GOVERNOR
ALBERT STRAUSS, VICE GOVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
OP'FJCIO MEMBERS
CARTER GLASS
'
1-
SECRETARY OF THE TREASURY
'
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER OP THE CURRENCY
FEDERAL RESERVE BOARD
'
ADDRESB REPLY TO
FEDERAL. RESERVE BOARD
Septen.ber 18,1919.
X-1676
SubJect:
Election of Class A and B Directors.
Dear Sir:
The Federal Reserve Board bas instructed
~
to advise
you that it is desired that groups for the election of Class A
and B directors this year be selected on the same basis as
prescribed by the Board last year. The Board has designated
Tuesd~,
-
SECRETARY
W. T. CHAPMAN, ASSISTANT SECRETARY
W. M. IMLAY, fiSCAL AGENT
WASHINGTON
-
..
J. A. BRODERICK,
NoVeQber 18, 1919, as the dnte for opening the polls.
~
Please u.ct:nowledge receipt.
Very truly yours,
secretar~.
Letter to Chairuen of all Federal Reserve :Banlra.
.
-
729
Ex OPP'ICIO
W. P. G. HAIIDING, GOVIRNOO
ALII!IIT STRAUSI, VICE GOVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
MEMBERS
CARTER GLASS
IICRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COIIPTROLLER OF THI! CURRENCY
FEDERAL RESERVE BOARD
WASHINGTON
J, A. BRODERICK, SECIIITAIT
W. T. CHAPMAN, ASIISTAHT SECRETARY
W, M.IIILAY, FISCAL AGENT
ADDRESS RIEPLY TO
FEDERAL RESERVE BOARD
September 20,1919.
X-lb77
SubJect:
Investment dewand fur Treasury Certificates.
near Sir:
Referring to,tbe telegrams of Assistant Secretary
of the Treasury ~ff~ngwell under date of Septei.Jber 6th ani
Septeu;ber 18th, the :Board is convinced tha.t the greo.t success
,of the offerings of certificutes Series T-9 and T-10 roarks the
turning point of Treasury war financing, and will have the
effect of demonstrating the desirability uf Liberty loan issues
for investruent purposes. This shuuld l£:;ad to cuntractiun of
credit ~;nd to cunsequen~ strengthening of the Foderfl.l R,eserve
Bonks I reserve percentages~ This advant~eous situation will,
however, work its full effect only if the banks of every
district fully cooperate in .Placing these TreASury cer.-ifica.tes
with actual investors and ta.JC1ayers~
In View uf circulars sent by the Treasury :pepartwent to
over six hundred thvusand bondholders and taxpayers, a de~d for
these certificates will uridoubtedly develo~ frvm these sourc~s,
and banks should be urged wherever :J:>OSsible to. sell their .own
certificates to investors and taxpeyers, e:.nd in cases where tbe
banks hold no certificates they should be urged tu purchase certificates for account of their custumers~ The f~cilities of the
Federal Reserve systeru should be freely used to secure the widest
possible distribution of certificates to invt<sturs and l~~ers;
Federal Reserve Banks that cannot supply certific&tes shuuld buy
theru frum those Federal Reserve Banks which o.re in position to
supply yhem.
The procedure above outlined will be an i.Iuporta.nt factvr
in carrying out the wishes of the Board for the establishment of
a higher reserve percentage, ~s set forth in circulac letter of
Septer1:ber 5th (X.:.l666)very truly yvurs,
••
Governor ..
Letter to each Governor ..
730
Released. for publication, morning papers, Septeruber 25, 1919.
I
I
~
••
I
An address·by
Ar
c.
Miller, Member. Federal Reserve Board,
Delivered at Chicago,
Wednesday, September 24,
1919,
before the
American Associution of the Baking Industry*
-o-
~·: q:~~~·1;-:~':'.::"i"~'I.t''"~·:"l~':~"'"·~:';:-"·~;.,.r;""'i""'?'f~~"t(,P~~.~~·--
·
'
..
1
x-l67S
731
- 1-
That there is a fee ling of ,n.rest abroad in the country is too obvious
to admit of questioning#
That this unrest is delaying the recovery and re~
adju.stLJ.ent of industry and in general the restoration of normal conditions
seems
a~ost
•
equally obvious.
is becoming clearer every day.
That this unrest is social as well as industrial
That the unrest in the United states is a part
of the general world unrest following the great war has latterly became evident.
That the situation is a serious one can not be denied, but JUst because it is
serious it is well not to make it more serious by taking it too
seriously~
Plarm and apprehension do not create the best atmosphere in which to take
wise counsel and make wise decisions.
On the other hand the situation is not
one to be taken light-heartedly as some are showing a disposition to do.
It
will not do to dismiss the existing unrest with the remark that it is "natural"
after such a war as the world has gone through these past five years and that
conditions are worse in other countries than our own.
condition of unrest with which we are confronted..
It is no ordinary
Industrial discontent forms
a large part of it but it is wore than an industrial question that is presented ..
Doubts, distrust and antagonism have taken hold of the mind and soul of large
sections of the populations of all the leading countries of the world, our own
included, with respect to
e~isting
institutions and other social classes. The
prevalent unrest presents therefore, a condition of mi.nl to be dealt. with.
To handle it successfully means that its causes must oe carefully understood.
Sympathy', as well as .intelligence Llust, therefore, be applied. to their examina,..;
tion, if a quick way out of the impending situation is to be found and. our
country saved the pain. and t~oil, sacrifice, waste, ruin and class bitterness,
which an unintelligent and
uns~athetic
handling of the situation would
~nvolve •
http://fraser.stlouisfed.org/
Federal Reserve Bank of St. _ _
t.....o.oo................_........__ _....._Louis _ _ _~-------~
··~-----------~---··--····-
1.
~
I
X-1678
- 2 CAUSES OF . INDUSTRI~ UNREST
.Among the causes of .il'ldustrial unrest in the qnited States at the ·
present time there are two which seem especially worthy of public attention,
particularly among the employing classes:
h~.gh e.nCI.
1..
The dec lining value cf tb.e do1lar with· the
of living; ard,
2.
The absence of a nat:i.onal and constructive :policy with respect to
labor.
Indeed, these two are largely intertwined.
ad.va'rlcing cost
cost of living has devel~ed into
much more than a cost of liv:ir.<g problem because until quite recently no definite
and com,petent :program for dealing with it has been undertaken.
The fact that
the Government and the Natio~ have drifted without admitting that there was
an industrial situation which ought to be studied and remedied as quickly as
conditions would permit, not unnaturally established in the minds of the working .classes J many of whom were suffering real hardships because of high ..and
advancing prices, a feeling that now that the war was won anCl. over, the:l:r ·
condition.and rieeds had ceased to be a matter of national concern.
As a
result the .war has left us not only with a cost of living problem, but also
with the problem of restoring the faith of the average working man in the
disposition of the country at large to concern itself with his welfare.
r.t is tin..e, therefore, that earnest thought should be given to the
present industrial unrest.
something wust be done to help labor meet the cost
of living problem, but beyond that something substantial wust be done to put
labor in a better frame of mind on the larger q,uestion of its future ecomomic
position.
we need a constructive policy in labor matters.
Labor should be
given an obJective - an attractive obJective - toward which to work in order
that hope and cQlltentment, as well a.s wages, way be its portion in .AJnerican
industry.
732
X-16713
- 3-
•
~
I
HIGH COST OF
LI~ING
so far as the unrest in the united
high and
risin~
733
sta~es
is econar.J.Iic in character, the
cost of living ll.le-y be said to be the chief source of irritation..
During the war the acute situation :produced by rising :prices was endured
on
the whole with fortitude and patience, because, it was said, 11 We are at war",
and in the confident expectation that the war would be brief and that the close
of hostilities would bring a lower level of prices ana a great and progressive
improvement in the cost
of living situation. As a mat1er of fact, barring the
first wonths following the armistice, the price situation as it af1'ects the
cost of living (that is to
s~
the prices of articles of general consumption
such as food, clothing, fuel, light and housing), has grown worse instead of
better.
Why is this 1
What is it that is keeping prices up1
These q_uestions must
be answered before the real nature of the cost of living problem can be understood and a solution undertaken.
In general the answer is that the continuance of many of the influences
that raised prices during the war is responsible for the continuance of high
prices after the war, with a new aggravation added in the shaJ?e of profiteering.
PROFITEERING
The extent to which profiteering, that is to
s~
hoarding and speculative
holding of goods for a rise of prices, is responsible for recent price advances
in the United States is not, of course, a matter that can be statistically
determined.
It is, however, a matter of widespread belief,
s~ported
in part
by official investigation of the practices pursued by certain industries since
the ar.mistice, that prices of many articles of
or~i~y cons~tion
:preciably, higher than econOIIlic cordi tions warrant.
are ap-
The recent declines of
X-1678
A.
4-
retail prices in several lines cont'irm this impression.
same mitigation of
the cost of living situation may be expected from the eliwination of control
of profiteering practices, but it seems not
~robabl~
that when all is.
accomplished that can. be accomplished through investigation, publicity and
prosecution, to effect a red.uct:i.on of pr.ices, the coun~ry wiJJ. still be left
with a price situation which will be
f~
from satis.fa.ctrn·y
am
which will
indicate that the causes. of the high cost of living which have got to be
reached in order to solve the cost of living problem lie ueeper.
Indeed. the increase in profiteering itself is a thing which needs explana;
/ tion.
.After all wb.y i.s there so much :rpore profiteering than ordinarily?
profiteering is an o;Ld instinct of human
nature~
Cupidity or the desire to
make all the profit that can be made out of a situation by pushing prices to
the limit of endurance is no
"
ne~i
trait of man.
changed in this particular by the war..
Human nature has not been
The war has si.nq?ly afforded an oppor-
tunity for a more active and aggressive assertion and play of certain human
1iraits .• ·
The seller has always sought to get for his goods all the money that he
could.
The bqyer has
he could.
alw~s
sought to get for his money all the goods that
As a rule, buyer and seller are·matched in intelligence, acumen
and intensity of desire.
From their action there have usually resulteu prices
that C01tld properly be regarded as the outcome Of :warket COII!Petition...
Some-
times, however, conditions are such that a buyer is in the position of vantage;
for exar.uple, when the outlook indicated that prices would fall.
There are other
tixoos when the conditions are such that.the seller is in a position of vantage;
for example, when the outloOk was for a rise of prices.
which induce hoarding, specuiation and profiteering.
It is rising prices
Ordinarily buying for a
rise in such circumstances undoubtedly tends to accelerate or aggravate the
rise of prices.
But is is always a question whether speculation and profiteer-
734.
....
'
X-1678
... 5ing are more tbe cause of high prices than they are the effect of high prices.
When all is said and the g:-eatAr economic truth is stated, the fact is
that prices make themselves :t'a:r- r..ore than tb.ey a.r.-e made.
profiteering has
'
flourished in the United states and elsewhere in recent years because the
price situation has been favo:::·a~Je to it.
conditions.
The profiteer is a creature of
He does not make conditions, though he frequently doee much to
make them worse.
Like the poor, the profiteer is always with us ever ready
to go when the going is good.
To say that prices are high because of }.lrofiteer-
ing explains little, and does not get us far on the way toward a solution of the
cost of living ..
OUr high prices are far more an economic fact than a criminal fact. Their
correction will therefore be found more through the processes of industry than
through the processes of the courts.
Prosecution of profiteers will do some-
thing; it is to be hoped will do 111uch to improve the situation, but prosecution
of industry will do more.
·• will not produce goods.
Prosecution of profiteers may lower prices but it
What is LlOst wanted at the present Juncture is not
alone lower prices but more goods at lower prices.
So far as the price pro-
blem has given rise to a cost of living problem it is mainly a problem in
production.
The causes of the existing situation are mainly econauic and the
remedies must therefore be mainly economic.
WAGES AND PRICES
Much the same may be said of wages as a cnuae of the high cost of living •
..
There is a good aeal of misapprehension particularly anong
· of the relation between wages and prices.
em~loyers
of labor
Looked at from the point of view of
the individual ef4Ployer of labor wages is an element of expenses of production
which regulate the price which
enterprise is. to succeed.
mus~
be received for the product if the business
It is not surprising therefore, that the eniiJloyer
735
736
- 6who ordinarily reason from wages to prices, should conclude, when both prices
and wages are risi.ng, that :v6;;es are rising because wages a::e rising. There
is) however, little foundatio:>. for this view of the
conn~ction
between high
wages and hig.b. prices, looking at the matter as an economic t::ond.iti.on rather
than a business condib.rm.
When are wages hi&'1?
for the fun of it.
to do
so~
'!he emplorer does not eng-_;loy wor.kruen and pay v;agee
He employs wen and raises their wages
on~
as it pays him
It pays bim to do so when prices are rising and profits are follow-
ing in the wake.
High wages are rather, therefore, the resultant of rising
prices than the cause, and there is far less of a
vicio~s
tion of wages and prices than is currently alleged.
circle in the
rel~
As a general pr~ositiop
the economic sequence which results in high wages way be stated briefly as
follows:
Brisk trade, intensive demand for goods, rising prices, increasing
w-
..
profits resulting in increased demand for labor and rise of wages,
This
sequence, I think, represents the approXimate relat:i.onship between the move-
ment of prices and the movement of v;ages in the United Ste.tes during the
years 1914 to
1919~
Both prices and wages (which are the price of labor), have risen frmn the
same general causes~
either
OIB
They do not explain one another.
They are not themselves,
or the other, a priw.ary cause but the effects and the exp~ession of
fundamental forces governing
1.
The money and credj t dew.and for g.oods, and
2.
The supply of
goods~
WHAT HIGH PRICES ARE DUE TO
The more the matter is studied the clearer .it is that the high prices
which deve.loped with the European war in 1914, and which are still with us
as a heritage of
the war) are
si~Xq)ly
to be regarded as an e.x.tre:we case of
. ?;·Z
- 7the working of the til:r.e-old. economic law of demand and supply.
In the
United states, as the world over, through the past five years, intensified
demand (credit as well as economic demand), for goods and an inadequate
supply of goods have put up md kept up prices and given us the acute cost of
living situation so widely complained of.
Turning then to the major influences in the price changes which have
taken place in the five years, there are three that
staP~
out conspicuouslY.
They are;
t. The excessive demar.d
by belligerent governments for war
sapplies both before and after our entry into the war~
2~
The excessive expansion of banking credit.
3-
Shortage of supplies in mapy lines, due to
ful
.
(a)
wastejconsumption and loss of goods
(b)
Heavy loans of capital and exportations of goods, and
(c)
Slackening of production.
I
~
I
Taking the five year
peri~,
1914 to 1919, as a whole, the most
persistent single influence affecting prices has been tbe expanding state
of credit.
Taking the period before our entry into the war the enormous demand of
Europe for American war supplies, aided by easy credit
United States, was the most
~ortant
condit~ons
in the
influence affecting prices.
Taking the period since our entry into the wa.r, a fact. or of equal
~ortance
with those already enumerated was the inability of our industry
i:amediatel;y to reorganize itself to meet the vast requirements of the GOvernment for war supplies of one kind or another for the use of its armed forces.
Coupled with this and ag8ravating the situation was the heavy d.ra.in of goods·
from the United states for the use of the Armies and the civilian populations
of the nations with whi-Ch we were as&OC~ted for which no goOds,, at an:~ rate
in q'tb.,i.na like
an equivalalt alilomlt, were receiveQ. in return ..
737
- 8-
Taking the most recent period, the fiscal year
1919, which includ.es eight
months followi.ng the arru.i.stice, the active and ituuea.iate causes of rising
prices are the greatly inc!'ea3i:!d shipment and sale of ruer..::.handise on credit to
Europe, particularly focdstvffs and war11ll'actu::-es res1y fo:!" c.ntH'l'..lll~ption, slackening of production, 'Hll.linished eronoray of cor.,sw:r:>:>t:i.on 9J.ld., n.;,
:profiteering and. the f>Per.ulati.1T3 hol.d.ing of goods for
alJ.~ead.y
noted,
R- :r:i.;;e ..
_Qtm:DIT EY,PAN§.l9!i _
The form that credit deme.:-I.Cl (and expaTlsion) has taken in the United states
has beon banking credit in the shape of bank deposits..
rency· has played a very subordinate role.
Expansion of the cur-
It is no exaggeration to say that
expansion of the currency has been a consequence rather trum a cause of our
Wholesale prices began to rise shar,ply i.ri the united States with
high prices.
heavy demands for our goods from Europe shortly after the
in 1914.
beginnin~
of the war
Credit was e.x,pan.ded. to Iileet the requirements of e.J~.lJOt·t industries ..
Prices at wholesale rose and kept on rising.
Retail prices had to follow suit,
and thus there was called into existence an increased amount of pocket money to
accommodate the needs of the conmunity.
So
far as
~xpansion
of the purchasing medium uf the co1.mt.cy is res11onsible
for our great rise of prices it has been and is purchasing weuium in the form
of 'bank deposit credit and not in the form of the Federal Reserve Note.
commercial bank deposit credits in the United states have increased from
$16,264,000,000 to $30,099,000,000 an increase of about 85 per cent, between
the dates of June 30, 1914, and June 30, 1919..
ments of the
s~
LOans, discounts and invest-
institutions have increased in the sawe period from
$15,819,000,..000 to $29 1 765,000,000 or about 6811er cent.
A large part of the
increase in the loan and investQent aCcount is tuade ·u.p of war securities and .
war loan paper..
This is estiDJated to amount to as much as frcm si.x to seven
. l
X-1678
:. 739
··;·
- 9Treasury needs have been the chief factor in our credit expansion.
The situation of the United States obliged the gove~ent to borrow money
faster than the· rate of saving of the caww~ity could sustain.
The result
was reliance on banking credit to r..1ake u:p the defiCiency; .ar:d. thus the resul.ting rise of prices r.aay be descr:i.'Qed in its econom'.c effect.:; as a method of
forcing econOmf and saving on the cawmunity, or large sections of the c~
munit~, because most people buy less and consume less as prices rise.
As the present volume of undigested Liberty Eonds is absorbed out of
savings, the investment account of the banks which is now swollen because of
the large amount of war securities they are earrying will diminish and wi~
the diruinution vnll go a decline in the volume of bank deposits, following
which will come a decline in the volume of currency in circulation.
Prices
will then fall and the cost of living decline.
Working to the same effect in bringing about a lowering of :prices will
the
be/expected diminution in the rate at which the United States have been
ex,porting goods to Europe on credit.
The large volume of exports we have
been sending out of the country in excess of what we have received as im.Ports
has been on~ of the great determining factors in our rising cost of living
through the last five years 8nd especially in the last year.
X l67S
-10...
740
A compari..son o: our ox:port tra.d.e for the five years since the
beginning of the Eurorean war, and particularly the period foJlowing
our entrance into the
w~r,
with conditions in the five years preceding
the breaking out of the Eu.ropean war yields some very instructive results.
Our exports of domestic merchandise for the years 1910 to 1914,
inclusive, arrounted to $10,652,143,234, Qr an annual average of
$2,130,428,647
For the five years, 1915 to 1919,inclusive, our
dorrestic exports arr.ounted to $26,.128, 183,680, (an annu.a.l average of
$5,225,636,736), o£ which ~$19,139,827,636 represents export ~f domestic
merchandise for the years 1917, 1918 and 1919,
~nd
$7,074,011,529
domestic exports for the last fiscal year 1919. Our average annual
exports for the five years from the beginning of the war exceeded our
average in the earlier period,
l45.3 per cent.
/1ro
~
to
I 9/~
1~,
by $3,095,208,089, or
For the three year period since we entered the war,
the amount by which exports exceed those which were normal before the
war, is $4,249,513,898, or 199.5 per cent.
the excess
is
For the last fiscal year 1919,
$4,943,582,882, or zze.2 per cent.
These comparisons are rrade on basis of our custons house reports
an..i
do not include exports made by the government itself, which consti-
tuted a very important addition to our exports in the period since we
entered the war.
Government e.x.:ports have been estimated as high as from
30 to 35 per cent of the exports regularly
reporte~
by the customs house.
Some indication of their volume is given by the returns of the aggregate
weight of a.rey shiprrents for the period June 1917, .to 0 ctober 1918, of
4,897,600 short tons, and of navy
shipments for the period May 1917, to
December 1918, inclusi'9e, of 1, 090,724 net tons .•
X 1678
-11-
74:1
Of eq_11al signHicance v•i t.l1 the
trade in the last
si tion.
fl~ts
incr~ase
of the totals of our export
ye.;,..rs A-re figunfj indicating charges in its
Gron"?ing our e2:po.-:-t:s in'..;o <liX great;
gro~.i.ps,
'N()
COJ1lPO-
have:
rrarru.:fa~t·ur:i.ng.
1.
Cr-u.de ma.teri3.ls fo:r:- use in
8.
Foo~-13klf:fs
3.
Foodstuffs pa.rtly or wholly prepared.
4.
M.amuactures fo:r:- further use in mOi.nufacturing.
5.
l\1anufact.ures red.d.Y for cons'UII!Ption.
6.
Miscellaneous.
in crude condition .:1nd food a.ninals.
We find tlat whi.le the first na.rr~d group, cru.de l!'.ateria.ls for use
in manufacturing, constituted an average of 33.1 per cent of our annual
exports in the five year period, 1910 to 1914, it fell to 14.89 per cent
~
in the five year period, 1915 to 1919.
The second group, foodstuffs in
crude condition and food animals, rose for the same period from 5.94 per
cent to 9.68 per cent.
The third group, foodstuffs partly or wholly pre-
.
pared, rose from 13.84 per cent to 18.11 per cent•. The fourth group,
nanufactures for further use in nanufacturing,. held its own, being 16.04
per cent in the ea.rl:l er period, and 16. 69 per cent in the la.tter period.
The fifth
gro,~p,
rra.nufactu.res ready for consunption, · rose from 30.71 per
cent in the earlier perioi, to
~n
average of 39.49 per cent in the latter.
The sixth group, miscellaneous, rose from .37 :per cent L"l the earlier period,
to 1.20per cent for the latter.
It must be a.dmi tted tha.t the comparisons just. :rmde for the :yurpose
of showing the increase in the e7.port trade of the country give an
exag~r-
a.ted and distorted "'fiew of the export trade a.s it bears upon the cost of
living situation because the V:Q.ll~ of our exports is stated in value, not
in quantities. The
great rise of prices has reflecte¢ itself, of course, in
1
i'
742
-12-
X 1678
a rise in the money value of our exports far in excess of the growth in_
Phe physical volume of exports.
It nevertheless appears that when the
price factor is elindnated in estimating the growth in the voJ.ume of our
exportations, the ~ti ties of goods we have sent overseas in the past
five years are so la:t.·gely in exc~ss of what was our customa..cy pre-war
normal as to constitute a serious deduction from the goods left in the
United States available for donestic consumption.
For the fiscal year
1915, our exports by quantities show an increase over the average exportations by quantities for the years 1910 to 1914 of about 25 per cent;
for the two-year period embracj:gg the fiscal years 1916 and 1917, an increase of over 20 per cent; for the fiscal year 1918, an increase of 9
per cent, and for the fiscal year 1919, an increase of 35 per cent.
It
is notable that the year which shows the heaviest increase of exports was
the last fiscal year of which eight rr~nths followed the armistice, and
that 35 per cent of our exports in this year consisted of foodstuffs.
i
,j
743
X-1678
-·------.. -----
----
RE!VIEDYING TH.I£ COST OF· I.TVING SITUATION
-~·,--
.
unaer this view of the· cause's of our present difficulties, it is
clear that there c::.n oe no short cut remedies, "'nd therefore no eurly
prospect of u return to the price sit\~~tion we had bei?re the war in 1914.
Prices -:••ay be expected to decline, but the wore then one hundred p0r cent
advance wi:ich they have scored in the past fiv..:; yGars will not be retraced
short of at least a similar period, if not, more likely, a period of ten
years or more.
The most consider'lble relief in sight may be expected to
come with diminishing exportation of foodstuffs and other articles of
general consumption to Europe with the termination or,
~t ~~
rate, re-
duction in the volume of the credits wnich Eu:tope has had at its disposal
in the American market during the p9.st two years.
~
Food should certainly
become cheaper, and so f&r as food is the most irr~ortant item making up
the budget of the working classes, there should be an appr.eciable diminution
in their cost of. living and the cost of living problem therefore find some
considerable sol.ution in this way.
The ultimate a.."'ld
co~lete
solution, however, will come only as the
volume of purchasing media created in the last five years is reduced and
the volume of
~ods
vroduced is increased.
This solution, ho,v.:;ver, will
take time, and in the interim we sh<,tll continue to have a more or less
.
I
I·
acute and troublesome cost of living problem.
some r;.ethod of dGa.ling with
it in a practical manner is therefore one of the first and necessary steps
to be taken toward the revival of industry il"i the United States and the
improvement of the industrial situation
gener~lly.
Until some satisfactory
method of dealing with the wage problem aso it bas been affected by the
rising cost of living is worked out there will be unrest, industrial strife
.
.
•.
:.~
744
-14-
X-1678•
and retardation of the processes of industrial recovery that will be costly
in their effects to the nation, and costly to the world.
that the United States
c~
not afford at this time is
The one thing
su~ension
of
industry through failure to establish a good working relationShip between
employers and employed.
Some acceptable method of adjusting wages to
chan~s in the cost of living is an obvious first requisite in dealing with
the cost of living problem.
While wage earners as a class have not been the only sufferers .
from the rising cost of living, their ranks undoubtedly embrace a larger
IIaDlber of sufferers than any 4)ther class of income receivers,
In its
most acute form, therefore, the cost of living problem is a labor problem
and a wage problem.
The problem is partly one as t.o facts, and partly
a question of remedies.
Have the great mass of those who are dependent
. on wage income been compensated for the rising cost of living by
commensurate increase of wages?
This is the a~ect of the cost of living
problem that is exciting discussion and unrest "in the United States at
the present time.
This is the real cost of living problem..
Besides this,
there is an imaginary cost of living problem and a pretended cost of living
problem which must be Sharply distinguished from the real cost of living
problem.
There are a good many people who imagine they are suffering
unwarrantably from the advance of prices.
For the most part they are those
whose incomes in the forms of wages and salaries have risen sufficiently,
and in many cases more than sufficiently• to offset the rise of the prices
of the things that constituted their customary consumption in prewar days.
''
X-1678
745
- 15Increase of money income
usua.l~.y
it is a fictictious prosperity.
en~elo;pe
:produces a feeling of prosperity even when
Many wage earners getting a bigger pay
think themselves better off irres.IJective of the fact that the pur-
chasing power of the dollar has declined in substantially the same ratio as
th~ir
wages have increased. People in this position are frequently teilipted to
extravagance.
The man who five years ago received a salary of four or five
dollars r.~ay now be making eight or ten dollars.
He is apt to imagine himself
.
rich in consequence and probably is spending a considerable part of his increased money earnings for things that foi'lilerly constituted no part of his
normal consumption.
cheap Jewelry,
fall:~y
The retail trade everywhere reports heavy pUrchases of
clothing and the like.
It is a rnatter of comwon observe.-
tion and remark that no line of business has experienced a brisker demand for
its output than the automobile trade and the trade in automobile accessories.
aPending heavily on purchases of this kind, the
~gin
that is left over for
the purchase of necessaries and real conveniences of life is inadequate at
present prices to r.uaintain custor.Jary standards.
Those who are victinls of
their extravagance and foolishness then COII!Plain that they are suf:fering from
the high cost of living, when tP,e cause of their difficulties is the change
in their standard of living.
It ruay be right that the standard of living
should be raised, but it does not induce clear thinking.but ruerely confuses
the issue not to note the distinction between the real and the fictictious
problem
problem. It is the real cost of living
·
. that concerns the nation at
this time.
Unfortunately our sources of statistical
info~tion
are not yet such
that coiqJarisons can be made on an extensive scale between the .incomes of
different groups (by income) of the wages-receiving class and the prices
of the articles that go to make
~
the customary
cans~tion
or
no~al
-16-
• •
st8Zidat'cl ot
746
living of the several sro'l?s• What is needed for this purpose ir.
1.
A coat of living im.ex, which shall carefully exhibit aDd measure
changes in the eottt of living to lallor classified by inccme
sr0'4>s, and
2..
A wage index,¥Fbich she.l:t. exhibit ~ meast-re cbanps in the
wage ~ODie of th~tt~ different ,l~o,.;:s scrh es will enable
a e~arism-. ~o ·ne ronde f~r tbe -purpo"'e o'C de~e1.1.05nlug
whether v1~os a."'e Jr'!C9ing pace 1'1' th p:ic<"'e.
The united States
l!U..~t'!t of
work in this connection
:t..:.bor stat!sti.cs ha.3 uM81"i.a!t£n SO'IIe iuportant
w!lith~
· results which will be of
as it i.s ca.r:-ied to conpletion, will yield
t.igbest usefulness. .Among other th1Jlga, the
investigation bas been planned, for the purpose,
(a)
of determining the cost of all iq>ortaut items of fam\.q
cona\lll)tion in ail the more ~or ;;:,ut centers of !~t17
in the t.rd ted States i
(b)
of enabling the !!•re~m of Labor statistics to c0Jl4)ute a coat
of Uving index naer that will show variations in total
family ex.penses Sn the same wtq as its retail food price
index now shows variations in the cost of the family food
bud.get. anc1.
(e)
ot formulating·event,l&lq tentative attmdvd budgets to be
uaecl by wags Ead,JUGtment boards in detc...'1D!ninf< minimum imd
f&;ir wase awards.
The statistical services of sClDie our states are lalOVing in the same
direction.
until the d.a.ta develO}Ied throup these aoWGes are available,
it will be premature for SDTODe to venture an authoritative pronoUD08Dl811t
t.J.PO.D the relative trend of wases and the cost of living in recent montba or
18&J"S for .American industry as a whole •
•
SUCh statistical data as a:re available show that food. constitutes
fran 35 to 115 per cent of the total e~eDditure of t7_Pical wage-earnina
famiUes eansiatin& of parents aDd tbree children un\er fifteen pars of age.
The perCCAtage s.pent for food is wser in the lower iueane
grO\I)S
but the
amount spe:At for food is larpr in the .bigber imCJUe P'ou.P•· J'Ood prices
aliow an iDct-ease of 91
}181'
cent for tbe six year period frCD _,. 15, 1913
to *1 15, 1919., the increase for the single par 1918 to 1919 being
•
• •
27 per cant. and fo~ tn<- 111nm·'' Jl'f'.t:l. l~ ~-- )·~ \-;: l919, 2 per cOl'\~..
malr8a up freD 15 to 20
l'~" uc:.•~'·
faD il7, the illCrease i."'\
eo~1.
of
Cloth!ns
•J! tre e~c,-\JJ.t;;:.A--e of f;ba avereff) wa!\8 eannns
~!~t'hing c~uted
ire the imex m'mber of
wholesale prices as COfrl' U.nci by the Pureau o! Lab@ Statistics beiDg about
150 per cent, to
June
19:9.
elq>erxlitllre of the average
l\At aalres u.P
W&tf'
fr"A 9 to 15 per cent of the
Mm1Ds far.oi.lJ, but no satisfact017 data at'e
available as to the ave:-e.p increase 1n rents.
Bu~,
it is a
D~&tter
of cCI:aiDOil
observation and c0119)laint that rents have advaDCed ccmaiderab]¥, eapecia.l.q
aiDce the aipi.DS of tbe armistice. J'Qel md li~iD& make up from
7 per cent of worldDg f.S.]¥
a;peD~U.turea
3i
to
ancl these items have a4vamecl 1n
price over the 1913 level a0118 to per cent. Bouse fumishiD&a DaalcB up frca
4 to 7 per cent of
e~emditure, aDd baVe
advuced1n price aiDce 1913,
1~
per cent.
It is clear, tberefore, that there baa been a ve1"7
~ked
advaJ)CG in tbe·
prices of aU groups of cCIIROd..\tiea that li1ake up tbe ccma11'qpt1on of the
average working class famiq. lbetber
W&tPtS
have kept pace can not be cSeter-
miDecl em a aatiafactotT scale until the 1Dlv.atrial 8\1l"ft7 UDCJ.ertaken b7 the
BWeau ot I.abor, aid now •uin& CODilletion, 11 cOIIl»leted 8D4 the resu).ta
published.. De 'pre)imiDarJ' report now 1n progress will present the basic
facta concemecl, the hours worDd 8Dd. tbe e8Z"D1Dp received., for a larp
r-ae of OCCURationa. It will aupp]¥ a basis on which in tiae D¥ be erecte4
a wa&e indeX for all the iq.ortant industries of tbe CCRilti'J' 41stribute4
tbroupout ita lAm&th aDl breadth.
In the meantime tbe results of the investiption of tbe 8nf york state
!Dlustrial C«a.culaaion abowiDS coq;arative iD:lex ll1Jd)ers of averaae weekl7
,
eat'DiDp in New tor:k state factories aDd of retail tood prices 1n the Qdted
•
States since June 1914, are wonh DOtiD& aa of ccmaiQ.erable value:
7-18
- 1S-
For the year 1914, the index number for wages if'
.
9~
as coq>at>ed with
105,
for food; for the year 1915, 101. as COD.l>ared with 102; for the year 1916,
114 as cOIJI)ared with 115; for the year 1917, 129 as compared with 147; for
the year 1918, 1.60 as coupe.red with 170; for th9 first quarter of the year
1919, 117 as caJ!pared \vith 179• Tnese tiguras iX'di<-n.ta' a rit'3 Qf l6 per
cent in wages for tbB yc~~ 1'17, a..'\'l 6.25 ~er c~.at !·>t· t.ilr.. ~M 191&, with
the gap alaost closed tn •..:te '3aa.-: 1919. This sho'Rs the situation in the
state of New York.
How fa.. it is repr JSentati.ve is a 'Dlestion.
...
Data derived frCID other s0\4--ees snowing 1;1-..e LaOVewent ot union wage rates
in 19 trades in about 12 cities in 1914, to and in-;luding
sane interesting results especia1q in the
bui~
*" 15, 1916, yield
trades:
Bricklqers 1
wages lagged 21 per cent, Car',&)enters 1 18 per cent, cement finishers 1 20 })er
cen+,, granite cutters t lS per cent, hod carriers t 9 per cent, painters t
14 per cent and plasterers •
5 per cent, iron-molders
boiler-makers
25
per cent..
5 per cent, and
The wages of blackso.d.tba
L~aehine-makers
gained
10 per cent, while
lost 5 per cent., Pluui:>ers t and gas-fitters • wages lagged 20
per cent, structural iron-workers t 14 per cent, stone Cl.ltters t lS per cent,
coupositors • 25 per cent 8l3d electrotJ.Pers' 27 per cent.
'Iald.ng tbese fi&UNS
as a. whole, tbey show a considerable lag of wages cau,pared
~th
the advance
in the cost ot living.
In certain 1D&>-.rtant industries which were stimulat84 by war ccmditiona
a different situation is presented.:
Real wages in the boot and. shoe ind.ustq
gained 23-5 per cent, in the cotton finishing indusAr,. 6 pe11 cent, in the
I
cotton manufacturing industry 13 per cent, in the manufacture of hosiery am.
underwear 11 per cent, in tbe silk ind.ustey 5 per cent, in woolen manutacturin&
9 per cent, 8Jld in the iron and s tee 1 industry
45 per
cent, CCJIII)&Ting the
closing weeks of DecefA'i)er 1914, with the e1ld ot Septellber 1918.
•
•
so fa:r as these
d£:-<~a
=~9
749
••
tilselose tf\e situation, it must be sai.a. that
there has been on the v:bo1.t........ lack of elote -;orrespond.'3nce of cwnges of
~n
wages with changes
the
c;cs~
In '!LH:'~ cases wages have l~d,
o£ living.
in other cases they r...ave ove::te.kfn nr.d outrun the rise in the cost of living.
There has been no
sener~l
pc.lle,y, either public or private. governing the
action of industry in the matter of wage 80.Jllfltment to changed. living
conditions.
All sorts of in!'1.uenees have been at work in deterndning the
outcome; the tuaintenance of the standard ot' living has not been the controllillg consideration.
Tho state of the labor market in ciifferent industries
has, at tiu.es, resulted in increase of wages more than the increase in the
cost of living, and at other tiiWs wages have lagged.
The extent to which
dif-ferent trades were unionized &.lso had much to do with the
L.~atter ..
These facts and indications, fragmentary as they a:re, reveal a situation
which from every reasonable point of view must be regarded. as unsatisfactory.
MUch as was achieved in certain industries
duri~
the wa:r through the action
of public or private agency. the maintenance of the standard of living does
not occupy the decisive place it should in the c1etermina.tion of wages.
Chance and circumstance
plaw too large a role. anc1 principle too littie.
'Pages n.ust be regarded as the first charge of ina.ustry, and the waintenauce
of at least those living standards which were custQr.1817 before the wa:r must
be made secure.
The first duty of the nation is to preserve the health and
strength of its workers.
public
anc1
The standard of living is, therefore, a matter of
national concern as well as of indivi<iual concern.
The Nation
can not afford, industry can not afford., to run the risJ:t of ilfllairing its
worxtng forces through lack of some effective
the cost of living.
of adJusting wages to
This 1.s in an iw&led.iate sense, the £AOst pressing as.Pect
of the cost of living problem with
~th~
which
we
are
confronted. ..
75(
- 20:Close stud¥ Sbou.ld., therefore, be given by different 1Dd.uatries 1n eve7:T
sect4an of t}k) countq to methods of bazrili...,g the probl'!tJa 1n an effective
..and
equit~le
we:,... EegS.1:minsa have been mado 1.."'\ . , _ buslneas 8Dl iDd.ustrial
ente:rpr1aes, but tt.e problw. eho'.l!d. be
national scale in ord.er
public
~timent b~
tlle
tA~t ~-
.
U1:l~e0.
ta~s:en
neAC.M
bold of on a
re~tllts
cball l'e
Stat-ea .a.s r3i'idl7
acb!~.
fQCUJ~Vj
prl:aciple, ea1 the 811J>l078r who attaqpts to eecepe it.
likely to fiD\ himself 1n eonta.qpt of public
ststew:.~io
OJ!1..~co.
as:4
sew-
t.tselt '-"Por.. this
cr resist it,
is
. Slmh ectiao is
particularq urgent in view of tbe extreme:Q- ur.certain
am disturbed com:se
wh1.ch prir.ea and the coat of .living seem 1\kell to follow for a good DiaD¥
~s·
to cCJ:De, or until tbe ati'airs of tbe ':\=!world we Cllee more in a state
of settled. &\Uilibria.
x,t will not do to leave
chaups 1n the coat of
liviD&, either to the slow
.
.
tbe a}.Justment ot waaes to
aaA ~ertai.n aotiCID Df
tbe f~s of coa:petition, or to the coat)¥ ana. cU.arugtive ection of 1Dduatrial
warfare.
so fw as the strika is a method. of s&etd'it:g
I'All acl.l•18ben~
0! waaea
to riting prices it ahoul4 beccme an obsolet,e toature of the .JralBL"i9BD iDd.ustrial
syst..
X 167S
a
751
FEDERAL @SERVE l3QARD.
STA,TEMENT FOR THE PRESS
Release for morning papers
Thursday, Sept 25, 1919.
Addressing the American Association of the
Chicago yesterda¥, Dr. A C. Miller,
B~ing
Industry at
of the Federal Reserve Board, dis-
cussed "The Cost of Living Problem. 11 After defining some of the: causes of
the· present industrial unrest, he said.
"While wage earners as a class have not been the only sufferers
from the rising cost of living, their ranks undoubtedly enbrac~ a
larger nux!Der of sufferers than any other class of income receivers, In its most acute form, therefore, the cost of living problen, is a labor problem and a. wage probilem • The problem is partly
one as to facts, and partly a ~estion of remedies. Have the
great mass of those who are dependent on wage incorr.e been co~
pensated for the rising cost of living by comrrensurate increase
of wages? This is the aspect of the cost of living problem that
is exciting discussion and unrest in the United States at the
present tirr~. This is the real cost of living problem. Besides
this, there is an imaginary cost of living problem and a pretended cost of living problem which must be sharply distinguished
from the real cost of living problem.
WWages must be regarded as the first charge of industry,
and the maintenance of at least those living standards which were
custorrary before· the war must be rrade secure. The first duty of
the nation is to preserve the health and strength of its workers.
The standard of living is, therefore, a matter of public an4
national concern as well as of individual concern. The Nation
can not afford, industry can not afford, to run the risk of impairing its working forces through lack of some effective method
of adjusting wages to the cost of living. This is in an immadiate
sense, the most pressing aspect of the cost of living problem with
Which we a.re confronted.
nrt must be said that there has been on the Whole a lack of
close correspondence of changes of wages with Changes in the cost
of living. In maey cases wages have lagged, in other cases they
have overtaken and outrun the rise in the cost of living. There
has been no general policy, either public or private, governing
the acti-on of industry in the matter of wa.ge adjustment to changed
living conditions.
All sorts of influences have been at work in
determining the outcome; the maintenance of the standard of living
has not been the controlling consideration. The state of the labor
market in different industries has, at times, resulted in increase
of wages more than in the increase in the cost ~f living, and at
other times wages have lagged. The extent to which different
trades were unionized also had nuch to do with the matter.
/
752
X 1678 a
"These facts and indica.tions 1 fragmentary as they are, reveal a
situation which from every reasor~ble point of view must be regarded
as unsa.tis:factor.r. Mnch as w~s a~hiEnred l'1 certain industries during
the war through "the action. of pu.blic or pri va.te agency, the na.intena.nce
of the standard of Hv.tng does no~ o~~·~:PY ·the decisive place it shoul4
in the determination of wages. Cha.nce and circumstance play too large
a. role 1 and principle too little. Close. study, should, therefore, be
given by different iMJ.latries in every sect:i.on of the country to
methods o:f ha.nd.l.ing the problem in a.n effective and. equitable wa.y ·
'Beginnings have been :::JB.d.l3 in ~orr.e business a.r..d. ir.td\!strial enterprises, but the prcblem should be ta.ken bold of on a. systenatic and
national scale in order that the needed re~:o'Ul ts shall be achieved.
Some mecha.ni sm by which wages rray promptly be adjusted to cha.nges in
the cost of livir.g rm1st be accepted a.s an essential part of the American
wage system. Public sentiment in the United States is rap1dly focusing
itself upon this principle, and the err~loyer who attempts to escape it,
or resist it, is likely to find himself in contempt of public opinion.
Such action is pa.rt:i.cularly urgent in view of the extreme}¥ uncertain
and di stu.rbed course which prices a.nd the cost of living seem likely
to follow for a. good many years to come, or until the affairs of the
world a.re once ffiOre in a. state of settled e~ilibrium. It will not do
to leave the adjustment of wages to changes in the cost of living.
either to the slow and uncertain action of the forces of competition,
or to the costly and dis.ruptive action of industrial warfare. So far
a.s the st~ike is a method of securing a.n adjustment of wages to rising
prices it should become an obsolete feature of the American industrial
system.
•
753
il]Jnfortunately, 11 he said, "our co·.~rces of ste\tistical information are n•.)t yet such that comparisor.s can be made on an extensive
scale between the incomes of rl_ifferent gl•oups (by income) of the wagesreceiving class and the prices of th<J articles that go to make up the
customary consumption or nor:nal standara. of living of the se·.reral groups.
What is needed for this pu...-pose is
1.
A cost of Living index, whi.cn shall carefully exhibit
and measure ch.:m.ges in t.he cost of li,ring to labor
classified oy incorue grou_l:)n, and
2.
A wage index, vvhich shall e.1hibit and me.3.sure changes in
the wage income of these different groups such as will
enable a comparison to ·oe made for the puryose of determining whether wages c.TG keejJing pace with prices.
"The United States Bureau of Labor Statistics has undertaken
some important work in this-cmmection '"lhich, as it is carried to
completion, will yield results which will oe of highast usefulness.
"Such statistic2~ data as are available show that food constitutes from 35 to 45 per cent of the total expenditure of typical
wage-earning fa:nllies ;COnsistbg of };larents end thre~ children under
fifteen years of ago. The percentage spent for food is larger in the
lower income groups but the amount S'J?ent for food is larger in the;
higher income groups. Food prices Show an increase of 91 per cant
for the six year period from Mey 15, 1913 to May 15, 1919, the increase
for the single year 1918 to 1919 being 27 per cent, and :or the month
April 15 to May 15, 1919, 2 per cent. Clothing mal;:es up from 15 to
20 per cent of the expenditure of the average wage earning family, the
increase in cost of clothing computed from the indax number of wholesale prices as compiled by the B~aau of Labor statistics ':Jeing about
. 150 per cent, to June 1919. Rent makes ~ frow 9 to 15 per cent of the
expenditure of the average wage earning family, but no satisfactory
data are available as to the average increase in rents. But, it is
a ~atter of corr~on observation and com_l:)laint that rents have advanced
considerably, especially sinc0 the signing of tha armistice. Fuel
and 1 igh ting mako up fran. 3~ to 7 par cent of working family expenditures and these i terns have adva:ncGd in yrice over the 1913 level some
80 per cent. House furnishings make up from 4 to 7 per cent of expenditure, and have advanced in j?rice since 1913, 131 per cent.
I
I l
rti t is clear, thereforG, that there has oeen a very marked
advance . in the i:Jricesof all groups oi commodities that make u:-2 tl';le
crms~tion of tha average worl:lng class family.
Whether wages have
kept }:lace ccn not be determined. on a satisfcctory scal-a ULtil the
industrial survey undertaken by the Bureau of Labor, and now neuring
completion, is completed and the results publishea.. The preliminary
rGport now in progress will present the basic facts concerned, the
hours worked and the e.J.rnings rGceived, for u le.rge range of occU'J?3.tions.
It will supply a basis on which in time may be .erected a wage index for
all the important industries of the country distributed throughuut
its length and breadth.
"'---------------------------··:~·
·~....d
I
l
"There are a good many people, however, who imagine they are
sufferring unwarrantably f:-om the advance of prices. For the most
part th~y are those whose incomes in the forms of wages snd salaries
have risen sufficiently, and in many cases more than sufficiently, to
offset the rise of the pr i0e s of the things that cons ti tu ted their
customary consumption in prewl:ir dl.~ys. Incfease of money income
usually produces a feeling of prosperity even when it is a fictiti~WJ.
prosperity. Many wage earners getting a bigger pay envelope think
themselves better off irrespective of the f~ct thet the purchasing
power of the dollar has declined in subst~tially the same ratio as
their wages have incre~sed. peoplG in this p~sition are frequently
tempted to extravagance. The m~n who five ye~rs ago received a salar.y
of. four or five dollars may now be making aight or ten dollars. He
is apt to imagine himself rich in cons~quence arid probably is spending
a considerable part of his increased money earnings for things that
formerly constituted rio part of his norrnl:ll. consumption. The retail
trade averywhere reports heavy purchases of cheap jewelry, fane~
clothing and the like. Spending heavily 011 purchases of this kind,
the margin that is left over for the purchase of necessaries and
real conveniences of life is inadequate at present prices to maintain
customary standards. Those who are victims of their extravagance and
foolishness· then complain that they are suffering from the high cost
of living, when the cause of their difficulties is the chang~ in
their standard of living. It may be right that the stand9.I'd of
living should be raised~ but it does not induce cled.l' thi:lking but
marely confuses the issue not to note the ciistincti•.m oetween the real
and the fictitious problem. It is the real cost of living prob~em
that concerns the nation at this time ..
Analyzing the causes of present high prices, Dr. Miller said:
"Both prices and wages (which are the pric'e of labor):· .
have risen from the sarw general causes. They do not explain
one another. They are not theroselves, ·either one or the other, a
primary cause but the effacts and the eX)?ression of fundamental
forces governing
l.
2.
The money and credit demand for goods, and
The sup).Jly of goods •.
"The more the matter is studied the clearer it is tha~ the high
prices which developed with the European war in 1914, and which are still
with us as a heritage of the war • are simply to be regarded as an
extreme case of the working of the time-old economiv law of demand and
supply. In the United States. as the world over, through the past
five years, intensified demand (credit as well as economic· demand), for
goods and an inadequate supply of goods have put up and kept up prices
and given us the acute cost of living sitQation so widely complained of.
I.
x-l678(a)
- 5"Turning then to the maJOr influences in the price changes which
have taken place in the five years 1 there are three that stand out
conspicuously. They are:
1..
The excessive domand by beJ.ligereut bo'l;erncuE;lnts for war
supplies both befote and after 01.1r entry into the war.
2.
The excessive expansion of bank.i.ng crodit.
3.
Shortage of su,ppl:l.es in LJanY lines, due to
(a)
(b)
(c)
Wasteful consuwptirJn and loss of goods
Heavy loans of ca;l:JHal and exportations of goods, and
Slackening of production.
Taking the five year period, 1914 to 1919, as a whole, the most persistent
single influence affecting prices has been the expanding state of credit.
"Taking the period before our entry into the war the enormous deLl&ld
of Europe for American ·war s~~lies, aided by easy credit conditions
in the United Statea, was the ruost in:portant influehce affecting p'tiees.
"Taking the period si.nce our entry into the war, a factor of equal
i~ortance with those already enumerated was the inability of our
industry iiil'.llediately to reorganize itse'-f to meet the va$t requirements
of the Govemmcnt for war SilJlplies of lime kind or another for the use
of its armed forces. Cot..'Pled with this and. aggravating the situation
was the heavy drain of goods from the United States for the· use of the
Armies and the civilian popub.tion,s ofthe nat:i.ons .vith which we we:re
associated for which no goods, at any rate in anything like an equivalent
amount, were received in return.
"Takl.ng the most recent period, the fiscal year 1919, which inc.ludes
eight months following the armi.stice, .+-he active and immediate causes of
rising prices 'U'e the greatly increased. s~1:•:pment and sE:J.;a of merchandise
on credit to E!,lrope, paxticu.larly foodstuffs and rnar..ufactures ready for
consumption, slackening of production, dim~.nished economy of consULiption
and.
' :pro~iteerl.ng ~d the speculative holding of goods
for a rise.
"The form that credit demand(and e:x:pansion) has taken in the united
states has been banking credit in the shape of ba1 k depos!.ts. Expansion
of the currenny has pleyed a ve~y subordinate role. It is no exaggeration
to say that expans:i.on of the c'Girre11cy has been a CC'lnsey_uence rathe:t· than
a cause of 0,1r· hie.,h prices. Wholesale pr:i.ces began to r!.se sh~rp~.y in
the United States with heavy demands for cur good.s from Eu.ro:pe shortly
ai'ter ·the beginn:i.ng of the w~ in ·1914. credit was e:..:;vanded to meet the
requirements of expor·t irrlus+,:r·ies. Prices at wb.olesal.e rose and kept
on rlsing. Reta:\.1 _pric.es hac1. to follow suit, and. thtls there was c&.l'i.ed
into existence an increa.sed amou."lt of pocke·~ money to accOlllliOd.ata t.n~
needs of the coruwvnity.
755
X..,l678(a)
.756
,·:v.
-tne·
"so far as expansion of
l:Jurchasing medium of tbe cou.."'ltry is
responsible for our great rise of prices it has been and is purchasing
medium in the form of bank deposit credit and not in the form of tbe
Federal Reserve Note.
"Commercial bank deposit credits in tbe uniteO. states have increased
from $16,264,000,000 to $30>099,000,000 an increase of about 85 per cent,
between the dates of June 30, 1914, and June 30, 1919. Loans, discounts
and investments of the same institutions have increased in the sazue }Jeriod
from $15,819~000,000 to $29,675JOOO,OOO or about 88 per cac_t. A large part
of tbe increase in the loan and investr>lent ac.cotmt is made up of war
securities and war looo paper. This is estir,;alied to amu1mt to as much as
from six to seven billio:ns of dollars.
"Treasury needs he.ve been the chief factor in our credit expansion.
The situation of the United 5tates obliged the GOvernment to borrow money
faster than the rate of saving of the coruwunity could sustain. The result
was reliance on bmking creciit to make up the deficiency; and thus the
resulting rise of prices may be described in its economic effects as a lll.ethod
of forcing economy and saving on tbe colll.!lunity, or large sections of tbe
comnunity, because most people buy less. and consume less as prices rise •.
"As the present voluue of undigested Liberty Bonds is absorbed out of
savings, the investment account of the banks which is now swollen because
of the large amount of war securities they are carrying will diminish and
with the diminution will go a decline in the volume of bank deposits,
following which will come a. decline in the voluue of currency in circulation.
Prices will then fall and the cost of living decline.
"Working to the same effect in bringing about a lowering of prices
will be the expected dUninution in the rate at which t4e United States have
been exporting goods to Europe on credit
The large volume of exports we
have been sending out of the country inex:cess of what we have received
as imports has been one of the great determining factors in our rising cost
of living through tbe last five years and especially in the last year.
'
I
I "
I
G
:...7-
x 1678
a
"Under this new of the r.auses of our present difficultiest
it is clear th.;,t there c::-.n "be no s!:..0rt cut remedies, and therefore
no early prospect cf a ret;-u:'Il to the price si t'W).tion we bad before
the war in 1914. Prices rrfi.y be expe0ted. to decline, but the more
than one hundred :;?f:':i:' e8n i:; a.dva.nce which they have scored in the
past five yea.rs will no~t be retraced short of at least a similar
period, if not, more likely) a period of ten years or more. The
most cons5.dcra.b:}.e reli.ef in sight rray be expected to come with
diminishing E'.xporta.tion 0£ foodst,lffs and other articles of general
consu<1Y:1t.ion ·~o Eu.rope with the termination or, at any rate, reduction in the volw:e of tha credits \'ihich Europe has had at its
disposal in the P.Esrican rrarket during the past two years. Food
should certainly becorr.e cheapex·, and so far as food is the rr.ost
important item making up the budget of the working classes, ther~
should be an appreciable di~nution in their cost of living and
the cost of living problem therefore find some considerable solution
in this way.
nThe ul t'in:ate and complete solution, however, will come
only as the volurre of purchasing media created in the last five
years is reduced ~ld the volurr.e of goods produced is increased.
This solution, however, will take time, and in the interim we shall
continue to have a more or less acute and troublesome cost of living
problem. Some method of dealing with it in a practical rranner is
therefore one of the first and necessary steps to be taken toward the
revival of industry in the United States and the improvem:mt of the
industrlal situation generally. Until some satisfactory method of
dealing with the wage problem a.s it ha.s been affected by the rising ~
cost of living is ~~rked out there will be unrest, industrial strife
and retardation of the processes of industrial recovery that will
be costly in their effects to the nation, and costly to the world.
The one thing that the United States can not afford at this tiiTe
is suspension of industry through failure to establish a good working rela-tionship between employers and employed.
"Cost of l i vi.ng has developed into mu.ch rrDre than a cost o:f
living problem because until quite recently no definite and competent program for dealing with it bas been undertaken. The fact tl~t
the Government and the Nation have drifted without admitting that
there was an industrial si tua.tion which ought to be studied. and
remedied as quickly as cozlditions would permit, not unna.turany
established in the minds of the working classes, rra.ey of whom v<re ...·a
suffering real hardships be cause of high and advancing pri.cE: s, a.
feeling that now that the war. was won and 07er, their cond.l U.on ~nd
needs ha.d ceased to be a matter of national conce::-n. As a. res-..;clt
the war has left us not or~ly with a cost of l i vj ng prc\·tfJ.<:,m, bat a.l;30
with the problem of reotor·ing the faith of the avera. 1~e work:i ne;; rr:~.n
in the disposition of the c-::>untry at large to ccncern it:;;elf w:.':.th
his welfare.
757
X-l67S(a)
- s11 It is t ir.le , the ref ore, that ea:rne st thought should be given to the
present industl·ial unrest. S0r,1ethi.r.g runst be cione to help labor meet the
cost of living probJem, b~t beyond t:.hat so:w~thing substantial :wust be
done to put la1.Jor in a better frarueof mind on the larger q,uestion of its
future economic posi ~ion. we need a constructive policy in labor matters.
Labor ·should be given a:."l objec~,;ive ·- an attre..ctive obJective - toward
which to work in orde!" that hope end contentmentt as well as wages, LJay
be its portion in p~erican i~~stry."
\
\
'
'<
758
759
w. P. G. HARDING, GOvERNOR
ALBERT STRAUSS, VICE GoYERN.OR
ADOLPH C. MILLER
CHARLES S. HAMLIN
BX OP'FICIO MEMBERS
CARTER GLASS
IICRITARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER OP THI CURRENCY
FEDERAL RESERVE BOARD
J. A. BRODERICK, SECRETARY
W. T. CHAPMAN, ASSISTANT SECRETARY
W. M.IMLAY, FISCAL AGENT
WASHINGTON
ADDRII:S!S REPLY TO
FEDERAL RESERVE BOARD
I·
September
I
l
SubJect:
23, 1919.
X-1679
.AnnounceT.LJent C'f Admi ss5.on to i\'.lembe:r.sb5p
of
s·~c.te
:sankG.
Dear Sir:
The Board has decided that no public _announcement
will be madE of the admittance of StRte banks to the Federal
Reserve System until such banks have made payment for their
capital stock.
It is
d.es~.rable
1
however, that there be no und.ue
delay in anno\mcing the adn1ission of new Stat.e bank members,
and i t is thsrefore requested that when state bar.ks have made
p!1yment for their capital stock, you wire the Board, using the
following code word:
1~WCOME:
(BJ.ank State Banks Smithtown, New York)
hastoc'.ay pa~d for its subscription to
ca;-pital stock of this bank.
ve-::y truly yours.
Secretary.
760
X-·1680
l
BALLOT
Federal Reserve Eoard
For representative of
,,
I
of the .Federal
Reserve Board on the central CODmittee to cooperate witb
the Joint Cawmissian on the
~classification
of salaries.
{Indicate hereon the name of your choice as representative)
VO!'E FOR ONE
Signature
..
I
e~loyes
.
September
o~
exu,i)loyee •
lj..l68I
FEDERAL
RESERVE
BOARD
STATEMENI' FOR THE PRESS
For immediate release
Wednesday, September 24,
'
1919.
Announcement is hlade of the
appoint~ent
of the
follow~ng
directors of the Nashville Branch of the Federal Reserve Bank
of Atlanta:
Mr. Wr H: Hartford,
Mr.
p~
Mr. J:
M: navis,
E: caldwell,
Mr. E: A: Lindsey,
Mr.
T. A.
E>.~bry.
The first two gentleinen have been appointed by tpe Federal
Reserve Board, while the last three are the a:pi>Ointees of the
Federal Reserve Bank of Atlanta.
Mr8
w.
H. Hartford of Nashville,
who is a Class B Dtrector of the Federal Reserve :Bank of Atlanta,
h~
9een designated Chairman of the Branch Boa:cd cf rirectors.
.Mr.
.
P. M, navis is Vice President of the .American Natiom,l Ba:tlk at
.
Nashville, Tennessee.
Mr· J. E. Caldwell is president of·the Fourth
and First National Bank of Nashville, and also pres~de~t of the First
I
Presi4en~
I
Mr· T. A. IDnbry is president of the Fa.rhlers National Bank, Winchester,
Savings Bank and Trust Company of Nashville.
Tennessee ..
\
k
Mr. E. A. Liridsey is
of the Tennessee Herruitage National Bank, Nashville; C:IJld
r
:, 762
W. P. G. HARDING, GOYIRNOR
ALBERT STRAUSS, YICI GOVIRNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
CARTER GLASS
IICRKTA.... "'OF~I TRU.IURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER OP THI CURRINCY
FEDERAL RESERVE BOARD
J. A. BRODERICK.
S~CIITARY
W. T, CHAPMAN. ASIIITANT SECRETARY
W. II.IIILAY, FliCALACiiiNT
WASHINGTON
ADDRI:SB RJ:PLY TO
FI:DI:RAL. RESERVE aOARD
·,
september 25, 1919.
SUbJect:
Use of leased wire fac;l.lities.
Dear Sir:
In order to insure uniformity of reports
from Federal Reserve Eanks covering operations over
the leased wire system. as· requested in the Board's
letter X-1624, dated July 23, 1919, there are enclosed
twenty-five copies of blank forms for use of your bank
in furnishing such inf"ormation to the Board monthly.
very truly yours,
Assistant Secretary.
LETTER SENT TO CHAIRMEN OF ALL. FEDERAL "RESERVE BANKS
EXCEPl' KANSAS CITY.
X-1682
763
•
FEDti:RAL BEf1KtlYE BANK OF
--------------------------·
Re!>ort of leased wi:i.·e oper-a.tions d-v.X"L1g month of _______ ,
A.
19
INTRI'.DIST.rt;.Cl' B:RANCR WIRE LINES.
1. ll'vmbe:r of mensagee an~. w~rtis tra.Tlnmitte;l by. head
of11~e to btanc.h of:fi~As 1 and by hrar.ch c.fficAs
to heC~.d office and other branr.h off lees:.
By head office to
bran~hes
..
By branches to head off:i.ce and
other brar1ches
..................
_.__
Total
I
I
2"~
Expenses :
I
I
It
Wire rental
I
I
Operators'
salaries
..
Head office
e:.o:pense cha.rge-: ..
atle to b:ran'~
wire lines
Other expense _ __
Total
B.
CLAS~IF'ICATION
OF MESSJ..GES HANDr.;flm BY HEAD OFFICE AND BRANCH OFFICES.
l... Federal Reserve Board!
(a) Gold Settle:!Ilent clea.rings
anrl. trennfers
(b) Daily
ant
(c) All other
weekly reports
ef collditjon
ra:por~;s
and
meEJsages
Total
No. wo:r.d.s
-----·-
..
X-1682~
- 2 -
No. messages
~.·Treasury Depart.ment ~d. Fiscal
.Agen·~;r.
(Sent to or
fO!!
a.;covnt
cf 'I·reasu::y)
3· Wire
t-ra11;:;fers 9f f1mds (exclusive
of TreaS".l.!'Y trans.fe1· s)
(a)
Nur.tber_ an.d c.ollar amount of
transfe:.:s by days
Date
1
2
3
4
5
6
I
I
7
f.
8
I
9
10
ll
12
13
14
15
16
17
18
19
20
21
22
_E,2.:__E!~~~e s
}To. W:)rds
764
X-l682a
765
-}-
B.
3. {a) (Continued)
N<?· messages
23
24
25
26
27
28
29
30
31
I
Total
I.
Daily average
(b)
sn.bdivi~ion
..... '
. - .............. . .
----
show:l.ng transferf\ for
m~mter ba."'lks anL:. those fer acccn.lnt
of customers of menilier banks:
Members
Cu~tomers
of members
(a) SUbdivision showing
amount trt=~r..sferred to
each Federal Raserv~ Barik:
F. R. Bank of
l. ·
Boston
2.
New York
3·
4.
Philadelphia
5-
Richmond
6.
Atlanta
7.
Chicago
8.
St. Louis
9-
Minneapolis
Cleveland
Amount
I
766
X-l682a
- 4-
.....
F.R.Bank of
B. 3. (c) ( Cont.inu.ad).
10.
11.
. . . . ..
'
Dallas
12.
Total
Kansas City
San Francisco
.
...................
"
..
(d) Nu."Dber of memb:.-r banks making
wire t.ra:nsi'P.rs d:u.ring month
(e) Name and loc~t5.on of member
NOTE:
ba'""lk3 t:-:-.s.;"'""l~feT:ring $::>00,000 or
more du·:ing m;~nth, ~5.Y:i.ng t:.·tal
nurr!l:ler anQ. to·~al amcmnt t:ce.no:ferred:
J../) c '). t ::i. \.)!l
...
--~------
...
lit.m::l::er of
t:r.'3.n:;.fers
------------------------------------------~~
Please show this
i t.::..:n · C·n S3})~n·a te
scherl·.1.le, in fox·m
given below.
Arn?u.nt of
t:r~n::fer.s
----------- ·-----
I
I.
I
---·----. To ta..:.: :l____________
·4.
Oth~r -nessages between Reserve
Ba1ks ( rr.0ss.3.ges o.nd wc•rds}
No.
wo~
b
OP'JI'ICIO MEMBERS
W. P. G. HARDING. GOVERNOR
ALBERT STRAUSS, VICE GOVERNOR
ADOLPH C. II ILLER
CHARLES S. HAll LIN
CARTER GLASS
SICRETARY OF THI TREASURY
':CHlMtMAN
FEDERAL RESERVE BOARD
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRINCY
J. A. BRODERICK,
SECRETARY
CHAPMAN, ASSISTANT SECRETARY
W. M.IMLAY, FISCAL AGENT
W. T.
WASHINGTON
ADDRESS REPLY TO
FEDERAL RESERVE BOARD
September 25, 1919.
X-1683
SUBJECT:
Examination of State Member Banks.
Dear "Sir:
Referring to the Board's letters of January 26, and December
24, 1918, (X-677 and X-1327, respectively), concerning the subject mentioned above, it is requested that a statement be submitted on September
30, 1919, containing the
fo~.lowing
information in regard to State member
banks in your Federal Reserve District:
1.
2.
3.
4.
Name of each State member bank.
Date of last exaw~nation (As shown by yuur records
on September 30) •
Total resources when last examined.
Character of exa~ination:
(a) Reserve Bank Examiners.
(b) State authorities.
(c) Clearing House Examiners.
{d) Joint - ~eserve Bank and State Examine~s.
(e) Joint - Reserve Bank and Clearing House Examiners.
It is requested that the institutions be grouped by the months
in which they were last examined.
the
r~orts
With a view to securing uniformity in
submitted, an outline of hoadings is attached.
Very truly yours,
secl"etary.
LETTER SENT TO CHAIRMAN OF ALL BANKS.
~~~----------~-
-----
----
--------~---
......
--~--
X-1683a
• •
- - - - - - F e d e r a l Reserve D i s t r i c t - - - - - - - - - - -
Information concarning Sta~ member bank examinations submitted
Sept. 30, 1919, in rGsponse to letter of Federal Reserve Board of Sept. 25. 19F)
I'
Name of Bank
:Date of
last
:examination:
1 l
Tota~.
reso,;,tces
that date
Character of
Examination
(Under "Total Resources that date" give nearest even hundred dollars, and
under ncharacter of Examination" use letters as indicated in "4" of Board's
letter of S8i}tember 45. 1919)
769
X-1687
FEDERAL RESERVE BOARD
•
s•r PTEMENT FOR
THE P'RESS
Release for morning papers,
Sund.ay, September 23, 1919.
The Federal Reserve Board announces that, in view of the very largd
increase in the volume of the work of its staff, it has decided to divide thB
duties heretofore performed
tary of the Board..
by~~.
J. A· Broderick, recently resigned as secre-
Mr. Broa.erick, in ada.i tion to his duties as secretary, was
Chief Federal Reserve Examiner and Chief of the Division of
tion~
.Au~it
and
EXawin~
.Accordingly, the Board t...akes public announcement of the following
appointments:
I
W. T. Chapman,
R· G• IWerson,
w. w. Haxton,
W. W. Paddock,
J. A· Will,
J. F• Herson,
f.
secretary,
.Assistant secretary,
Executive secretary,
Chief of Division of Operations and Examination,
Chief Federal Reserve Examiner, western Division,
Chief Federal Reserve Examiner, Eastern Division.
Mr. Chapman, who succeeds Mr. Broderick as Secretary, becawe con-
nected with the Board's staff
Honorable Paul M. Warburg.
~on
its organization in 1914 as secretary to
'Qpon r etirerr.ent of Mr. warb\U'g in August. 1918,
Mr. Chapman was assigned to the office of the secretary of the Board as general
assistant, and was appointed. Assistant secretary on september l, 1913.
Mr· Emerson, who succeeds Mr.
Ch~man
as .Assistant secretary, comes
fraa Haverhill, Mass., is a graduate of New York University and was
fo~erly
financial statistician with a leading investment service company in New York.
He entered the Board's service as an accountant in the statistical Division
in December, 1917, en 0. subsequently was a:p!)ointed general assistant in the
secretary's office, with the design•tion of .Acting Assistant Secretary.
·
'
.
x-1687
770
- 2 -
Mr. Roxton will be connected with the
:Board, performing
~ch
work of tbe
duties in connection with technical banking matters
as may be assigned to him by the Board.
St. Louis Clearing
~dministrative
Hou~e
Mr. Roxton was formerly with the
Association, for eight years as Assistant Manager and
ten years as. Mana.ger, which latter position he resigned to become beputy Governor
of the Federal Reserve Bank of
st.
Louis.
After four years service as such be
resigned to head the acceptance department of an in-v-estment banking house in
Cleveland, Ohio, whence he comes to join the Board's staff.
Mr.
Paddock, who succeeds
Mr.
Broderick as head of the examination
division, is a former National bank examiner, assigned first to the southern
New Jersey district, and then with the Chief National Bank Examiner at Philadelphia.
In Augu.s t, 1918, he was appointed examiner by the Federal Reserve Bank
of Philadelphia.
He resigned from the
Philad~lphia
Bank in the fall of 1918
to accept appointment as a Federal Reserve Examiner.
Mr. Will and Mr. Herson will be in charge of the field forces of the
Board engaged in the
Mr.
ex~ne.tion
of Federal Reserve Banks and their branches.
Will's territory embraces the Federal Reserve Banks of st. LOuis, Minneapolis,
Kansas City, Dallas and San Francisco and their branches, while that of Mr.
Herson embrace; the Federal Reserve Banks of Boston, Philadelphia, Cleveland,
Richmond and Atlanta and their branches.
The two forces are combined tn the
examination of the larger Federa! Reserve Banks at New York and Chicago. After
an extended banking and accounting experience, Mr. Will became Auditor of the
Federal Reserve Bank of
st.
Louis.
He resigned this position and was appointed
a Federal Reserve Examiner on August 15, 191§.
Mr. Herson was associated for
I·•
(
771
.
- 3-
a llUJilber of years with one of ti.1e largest t.rust companies in New York,
leaving which he was for two years with a
canada,
~d
Ipndon; England.
~r1~ate
banking house in Montreal,
He then became connected with the New York
State ·Banking Department .and was appointed a Federal Reserve Examiner in
Augu.st, 1917.
772W . P . G . H A R D I N G . GOVERNOR
• X OFFICIO MEMBERS
A L B E R T S T R A U S S , VICE GOVERNOR
ADOLPH C. MILLER
CARTER LASS
SECRETARY OF THE TREASURY
^hR A
C IMM
A
CHARLES S . HAMLIN
FEDERAL RESERVE BOARD
J O H N 3KELTOH WILLIAMS
COMPTROLLER OF THE CURRENCY
V . T, C H A P M A N , SECRETARY
R . 6 . E M E R S O N , ASSISTANT SECRETARY
ADDRESS REPLY TO
w . H . I l l LAY. FISCAL AOIHT
WASHINGTON
FEDERAL RESERVE BOARD
October 2,1919.
X-1689
Subject* Report of Co&wittee on advisability of
transferring sub-Treasury Functions to
federal Reserve Bonks,
CONFIDENTIAL
Dear s i r :
please find enclosed, for your confidential
information* a tentative difaft of repoH by a sib*
committee of thecomtiiittbe appointed by ttie S@th6ta^y
of the Treasury id ieptot on the gjteStioh Of the
advisability of abolishing the sub-treasuries and of
turning over their functions to the federal Reserve
Banks.
Will you be good enough to examine this c r i t i c a l l y ,
consulting the governor and other executive officers of
the federal Reserve sank, and report at the earliest
possible moment any suggestions or criticisms which you
deslr# to males? please examine carefully each section
of the draft of b i l l , and ptt in specific form any changes
you may think desirable.
Kindly acknowledge receipt.
Very truly yours.
Secretary*
Letter to a l l federal Reserve Agents.
X-1669 a
Provisions of the Federal Reserve Act with respect
to deposit in the Federal Reserve Banks of moneys
in the General Fund of the Treasury*
773
'
The authority granted to the secretary of t£e Treasury under section
15 of the Federal Reserve Act, approved December 2}, 1913j relative to the
use of the Federal Reserve Banks in conducting tjie financial transactions of
the Government may he summarily stated as follows;
(1)
The moneys held in the general fund of the Treasury, except
the f i v e per cent, fund for the redemption of outstanding national-bank notes
and the funds provided in t h i s Act for the redemption of Federal reserve notes
may, upon the direction of the Secretary of the Treasury, he deposited i n
Federal Reserve Banks.
(3.)
Federal Reserve Banks, when required by the Secretary of the
Treasury, shall act as f i s c a l agents of the united States.
(3)
The revenues of the Government or any part thereof may be
deposited in such banks,
(4)
Disbursements of the Government may be made by checks drawn
against such deposits*
Federal Reserve Banks at present handle the greater
portion of the Government V f i n a n c i a l transactions*
s
The regular active national-bank depositaries of the Government located
in the same c i t i e s with Federal reserve banks were directed by the secretary
to transfer on January 2, 1916 to the respective Federal Reserve Banks in such
c i t i e s a l l balances of public moneys held by them t o the credit of the
Treasurer of the united States.
The Federal Reserve Banks, from and a f t e r such date, bec*.ame active agencies
of the government in the receipt, payment and accounting f o r a part of the
public moneys *
-2-
X-lb89 a
By reason of the f a c t s that (1) the banks and. t r u s t companies throughout
the United States have had greatly increased financial transactions with
the Federal Reserve Banks and t h e i r Branches due to the Government Loans,
(&) the check clearing system of the Federal Reserve Banks through which
approximate3y twenty thousand banks and t r u s t companies make t h e i r check
clearings, (3) that clearing house balances in many Federal Reserve and
Federal Reserve Branch c i t i e s are settled through the Federal Reserve Banks,
and (4) other conveniences extended by the Federal Reserve Banks and their
Branches to t h e i r member and clearing banks, the volume of the government*s
f i n a n c i a l transactions now handled by the Federal Reserve Banks i s such
a large p a r t of the t o t a l that in
the opinion of t h i s Committee there
i s no longer any necessity for the continuance of the Sub-treasuries of the
United States for any purpose*
Financial transactions of the Government performed
by subtreasuries that are not performed by Federal
Reserve Banks.
The only Government transactions not now being handled by the Federal
Reserve Banks and their Branches that form a part of the transactions of
the Subtreasuries ms$ be stated as follows*
(1)
Redemption of subsidiary and minor coins of the United States.
(2)
Distribution of subsidiary and minor coins.
(3)
Payment of Government checks and warrants over the counter.
While the transactions involving the redemption and d i s t r i b u t i o n of
subsidiary s i l v e r and minor coins are large in the larger Subtreasury c i t i e s ,
yet both can be readily handled by the Federal Reserve Banks and t h e i r Branches
with greater s a t i s f a c t i o n to banks desiring such coins f o r use or wishing
their redemption on account of the advantages of the locations of the Federal
Reserve Banks and t h e i r Branches as against, the locations of ( l e s s than one
-3-
X-1689
a
, t h i r d the same number) the Subtreasuries.
With respect to the payment tf Government checks and warrants over
the counter, however, i t i s the opinion of this Committee that with the
discontinuance of the Subtreasuries as cash payment points for the use
of the public creditors and disbursing o f f i c e r s of the Government, and
the continually decreasing number of national'-bank depositaries, i t i s
necessary that the Federal Reserve Banks extend f a c i l i t i e s in t h i s respect
at least equal to the Government agencies that they are replacing. This
point i s covered in Section 9 of the tentative d r a f t of the b i l l presented
herewith which gives the secretary of the Treasury authority to require
Federal Reserve Banks to perform a l l duties heretofore performed at the
Subtreasuries.
While Section 15 of the Federal Reserve Act does not specifically
prohibit the Secretary of the Treasury frow depositing in the Federal
Reserve Banks the t r u s t funds, yet by limiting the moneys that can be
deposited in such banks to the c l a s s i f i c a t i o n of funds specified under
the heading of "moneys in the ^General Fund of the Treasury", i t would
seem t o have been the intent not to make such deposits with the Federal
Reserve Banks. These funds can readily be taken care of by the coinage
mints and the Assay Office at New York and also the Treasurer of the
,
united States on account of the vault storage space available through
the melt of standard silver dollars and sale of the resultant bullion
under the terms of the Act of April 23,1918,
In order, however, to make
provision for unforseen contingencies that uay a r i s e in the future with
respect to the Inderal Reserve Banks on account of deposits in the Treasury
for credit in the Gold Settlement Fund and also deposits i n the 'Treasury
for the redemption funds required under the Federal Reserve Act f o r the
redemption of Federal B&serve notes, i t has been thought best t o incorporate
-4-
X-1689
a
into the tentative d r a f t of the b i l l herewith submitted* a provision that
would authorize the Secretary of the Treasury to keep special gold deposits
with the Federal Reserve Banks.
I t will be recalled that the amendment to the Federal Reserve Act,
under date of June 21, 1917, authorized the Federal Reserve Banks and
Federal Reserve Agents to keep the Gold settlement Fund on deposit with
the Treasurer of the United States, such fund to be subject to the check
Of the Federal Reserve Board and payable in gold. Deposits for credit
i n the Gold Settlement Fund by the Federal Reserve Banks and the Federal
Reserve Agents as well as deposits by Federal Reserve Banks and Agents
for credit in the Gold redemption funds f o r redemption of Federal Reserve
notes, have been made with the Assistant Treasurers of the United States
under the authority of the Act of June 21, 1917. This has been quite a
convenience to the Federal Reserve Banks and the Federal Reserve Agents
and i t i s not believed wise to omit from the present b i l l discontinuing
the Subtreasuries, some provision that will continue such conveniences.
This, i t i s believed, i s f u l l y covered in Section 7 of the proposed d r a f t
of b i l l discontinuing Subtreasuries*
Federal Reserve Banks to perform sub treasury duties
without reimbursement therefor from the Government.
The expenses for the maintenance of the subtreasury system exclusive
of salaries paid to the Assistant Treasurers of the United States are less
than $500,000 per annua. It i s not believed that the cost to the Federal
Reserve Banks of performing the Subtreasury duties w i l l equal t h i s sum,
by reason of the f a c t that such banks necessarily maintain at present
organizations which handle similar duties in almost every respect. Also,
i t is not thought wise t h a t the Federal Reserve Banks should demand of
the Government reimbursement f o r expenses incurred when taking over the
—
5"*
X-1689 a
d u t i e s performed by the S u b t r e a s u r i e s due t o t h e f a c t t h a t i t w i l l be
practically
impossible t o s e p a r a t e such f u n c t i o n s from the normal
f u n c t i o n s performed by t h e F e d e r a l Reserve Banks i n c o n n e c t i o n w i t h
t h e i r d u t i e s a s d e p o s i t a r i e s cf p u b l i c moneys and f i s c a l agents of
t h e United S t a t e s * When d i s t r i b u t e d among the twelve F e d e r a l Reserve
Banks and t h e i r Branches t h e i n c r e a s e d c o s t t o any one F e d e r a l Reserve
Bank or Branch w i l l n o t , i t i s b e l i e v e d , be s u f f i c i e n t t o cause any
unnecessary or unusual h a r d s h i p . Replies received by t h i s Committee from
the s e v e r a l F e d e r a l Reserve banks r e l a t i v e t o a b s o r p t i o n by them of these
c o s t s without s p e c i f i c reimbursement by congress, have i n d i c a t e d t h e i r
w i l l i n g n e s s t o accept the Subtreasury d u t i e s without reimbursement.
Date for proposed act authorizing discontinuance
of Subtreasuries to be e f f e c t i v e .
By reason of t h e f a c t s t h a t (1) the Federal Reserve Banks have n o t
a t p r e s e n t s u f f i c i e n t accomodations, i n c l u d i n g v a u l t s , f o r t h e a d d i t i o n a l
work t h a t may be p l a c e d on them i n the event of t h e discontinuance of the
S u b - T r e a s u r i e s , (2) t h a t s e v e r a l of such Banks have i n contemplation the
e r e c t i o n of t h e i r own b u i l d i n g s and (3) t h a t a p p r o p r i a t i o n s f o r the maintenance of the Sub-Treasuries t o the c l o s e of the f i s c a l year 1920 have
been made, i t i s recommended t h a t the d i s c o n t i n u a n c e of the Sub-Treasuries
be not made e f f e c t i v e u n t i l the c l o s e of b u s i n e s s on June 30,1921.
Subtreasury buildings owned by the Government.
The only b u i l d i n g s owned by the Government t h a t a r e used e x c l u s i v e l y
f o r s u b t r e a s u r y f u n c t i o n s a r e those a t Sew York and San Francisco* while i t
i s b e l i e v e d t h a t t h e coinage Mints and t h e Assay O f f i c e a t New York w i l l
p r o v i d e s u f f i c i e n t v a u l t space f o r t h e s t o r a g e of t h e T r u s t Funds, i t i s
-6-
X-1639
a
recommended t h a t t h e above mentioned b u i l d i n g s "be n o t assigned t o
o t h e r uses u n t i l the T r u s t Funds a r e e f f e c t i v e l y t r a n s f e r r e d *
In view of the f a c t t h a t i t i s proposed to have the F e d e r a l
Reserve Banks take over the d u t i e s now performed by the Subt r e a s u r i e s without compensation from the Government, i t i s deemed
j u s t and proper t h a t a l l equipment now i n use by t h e s e v e r a l Subt r e a s u r i e s belonging t o t h e Government s h a l l be turned over t o
t h e F e d e r a l Reserve Banks without c o s t to such banks, or such
p o r t i o n thereof as may be d e s i r e d by the Federal Reserve Banks*
All such p r o p e r t y not so taken over by the F e d e r a l Reserve Banks s h a l l
be forwarded t o the General Supply Committee f o r d i s p o s i t i o n i n
accordance w i t h e x i s t i n g r u l e s and r e g u l a t i o n s .
X-1689 to
BE IT ENACTED BY THE SENATE AND HOUSE OF REPRESENTATIVES
OF THE UNITED STATES OF AMERICA IN CONGRESS ASSEMBLED,
That the Subtreasuries of the United States located at Baltimore, Mi.,
New York, N. Y-, Philadelphia, pa., Boston, Mass., Cincinnati, Ohio.,
Chicago, 111,, St. Louis, mo. , New Orleans, La. and San Francisco, Calif
shall be discontinued at such date with respect to each such Subtreasury
as may be determined by the Secretary of the Treasury, but in no case
l a t e r than the close of business on June 30, 1921, and thereafter a l l
o f f i c e s created under existing laws at each such Subtreasiary so
discontinued shall be abolished.
All laws or parts of laws prescribing
or defining the duties to be performed by an Assistant Treasurer of
the United states at any Subtreasury are hereby repealed.
2»
&11 gold and silver coins and bullion held in such
subtreasuries, forming part or a l l of the Trust Funds to secure
outstanding gold c e r t i f i c a t e s , silver c e r t i f i c a t e s ana Treasury Notes
of 18901 the Gold Reserve Fund to secure United States Notes am
Treasury Notes of 1890 and the Gold Settlement Fund held in such Subtreasuries under the provisions of the Act of June 21, 1917, shall be
transferred to the Mints of the United States at Philadelphia, p a . ,
Denver, Colo., San Francisco, C a l i f , , and the Assay Office at New York,
N« Y., or to the Treasurer of the United States at Washington, as the
Secretary of the Treasury may d i r e c t •
3»
All paper currency of any kind or description neld in
such subtreasuries shall be transferred to the Treasurer of the United
States at Washington, except, however, such amounts not forming a part
of the Trust Funds, may be transferred to the Federal Reserve Banks
as the Secretary of the Treasury may d i r e c t .
-24.
X-lb89
b
All subsidiary silver and minor coins held in such sub-
treasuries shall be transferred to the Federal Reserve Banks, or to
the Treasurer of the United States at Washington or to the Mints of
the United States at Philadelphia, Pa., Denver, Colo., and San Francisco
C a l i f . , and the Assay Office at New York as the Secretary of the
Treasury may d i r e c t .
5* All replacements of mitilated or u n f i t United States paper
currency and redemptions of united States paper currency and subsidiary
silver and minor coins shall hereafter be wade by the Federal Reserve
Banks and t h e i r Branches and the Treasurer of the united States, and
subsidiary silver and minor coinsmay be redeemed at the Mints and Assay
Offices of the United States, a l l in the discretion of the Secretary
of the Treasury and under such rules and regulations as he may prescribe
b.
Gold c e r t i f i c a t e s in denominations of ten thousand dollars
now authorized to be issued in the discretion of the Secretary of the
Treasury and payable to the order of a specified payee upon a deposit
of an equal amount in gold coin or bullion may hereafter be issued, in
the discretion of the Secretary of the Treasury, by the Federal Reserve
Banks upon transfer to the Treasurer of the united States by such
Federal Reserve Banks of an equal amount in gold through check on the
Gold Settlement Fund held by the Treasurer of the United States to the
credit of the Federal Reserve Board or through gold payments to the
Treasurer of the United States or to the Mints and Assay Offices of the
touted States as the Secretary of the Treasury may d i r e c t . For the
-3-
X-16S9
b
purpose of t h i s section the Secretary of the Treasury is authorized to
keep such supply of blank, c e r t i f i c a t e s in the j o i n t custody of the
Federal Reserve Agents and the Federal Reserve Banks as may be necessary,
7*
If in his opinion i t may be necessary, and notwithstanding
the provisions of Section 2 of t h i s Act, the Secretary of the Treasury
i s hereby authorized to establish and maintain with the Federal Reserve
Banks and their Branches special gold deposits of t r u s t , redemption and
reserve funds which shall be held by such banks in a special gold
account to the credit of the Treasurer of the united s t a t e s , subject
to withdrawal on demand without notice, and no part of such special
gold deposits so held shall be counted by the Federal Reserve Banks as
part of their gold assets nor included in deposits against which reserves
must be maintained, but the t o t a l amount shall at a l l times on their
books and in a l l public statements, be shown separately, as a deduction
from the t o t a l gold holdings of such banks,
8.
Hereafter, national banks may make deposits in Federal Reserve
Banks and their Branches to the credit of the Treasurer of the united
States for credit in the f i v e per cent, fund to redeem t h e i r circularting notes, and similarly deposits may be made by national banks to
r e t i r e their notes from circulation, and so much of existing provisions
of law requiring such deposits to be made with the Treasurer of the
United States in lawful money, i s hereby repealed. Nothing in t h i s section
shall prohibit the secretary of the Treasury from requiring such deposits
782
)
-4-
X-lbgy
b
to "be made in lawful money if in his opinion such action may be necessary#
9* Except as herein specifically provided, a l l duties hereafter,
performed at the Subtreasuries, shall be performed by the Federal
Reserve Banks and their Branches, .the Treasurer of the united States,
or the Mints and Assay Offices of the United States under such rules
and regulations as the Secretary of the Treasury may d i r e c t .
10.
All employees in the Subtreasuries in the classified Civil
Service of the united States who may so desire, s h a l l be eligible
for transfer to c l a s s i f i e d Civil Service positions under the control of
the Treasury Department, or if their services are not required in such
Department they may be transferred to f i l l vacancies in any other
executive Department with the consent of such Department« To the
extent that such employees possess required qualifications they shall
be given preference over new appointments in the c l a s s i f i e d Civil
Service under the control of the Treasury Department in the c i t i e s in
which they are now employed. Nothing in this section shall be construed
to prevent the Secretary of the Treasury from r.igiV-ing request of the
Federal Reserve Banks to take over a l l employees in the Subtreasuries
and to continue payment of not less than their present rates of annual
compensation for at least a period of one year from date of July 1, 1921,
or to cause such employees during such period to lose their c i v i l service
status.
783
%
-5-
11.
x-lo89
b
Hereafter the Federal Reserve Banks or Branch Federal
Reserve Banks shall not be required to give bond, either with
or without surety f o r the issuance of duplicate checks or warrants
in l i e u of such checks or warrants cashed by said banks or branch
banks or for coupons cashed, and subsequently lost in t r a n s i t
between said banks and the office of the Treasurer of the united
States at Washington, D.C.
12.
All laws and parts of laws inconsistent with the provi-
sions of this act are hereby repealed.
x-1691
FEDERAL
RESERVE
BOARD
784
STATEMENT FOR THE PRESS.
TO be released in Sunday morfcamg papers,
October 5. 1919*
During the month of gepteoiber labor unrest has become the most prominent
factor in the business situation* prevailing unrest found expression i n various
forms, including demands f o r improved working conditions, increased wages, and
l o c a l s t r i p s , and found i t s culmination i n the s t r i k e i n the s t e e l industry*
% spite of the resulting uncertainty injected into the business situation, the
n
customary autumnal swell in the volume of business i s noted. The high r e t a i l
prices prevailing do not appear as yet to have a noticeable e f f e c t in checking
consumption, aid the demand f o r higher grade products continues, while the
o f f i c i a l wholesale p r i c e index number shows a f u r t h e r r i s e from 219 i # J u l y t o
222 in August, some readjustments in wholesale prices have taken place during
the present month, involving price reductions in several leading foodstuffs and
in various cotton t e x t i l e s , hides, and other lines in which advances had hithertc
oeen most ^arke&, a s p i r i t of conservatism, however, manifests i t s e l f in various
future
trades and greater attention i s paid t o the probable/trend of p r i c e s ,
% agriculture the exceptional promise of the spring has not been f u l f i l l e d ,
n
in particular the winter wheat crop has been considerably below expectations.
&
This, however, i s p a r t l y made up by the larger yield and harvest of corn. T ®
o f f i c i a l forecast f o r cotton i s less favorable than last month, indicating an
unusually l a t e crop. The credit demand for crop-moving purposes has been less
heavy than was anticipated in many quarters and was e a s i l y met by the local
banks with the assistance of the f e a e r a l Reserve Banns, the l a t t e r reporting
substantial increases during the month of discounts secured by commercial
paper and corresponding increases in their note circulation* conditions in the
tjew
fork m o n e y
market have became e a s i e r , but no great increase i n the volume
"
2
"
X-lb91
^85
of speculation i s noted'; For the present the labor d i f f i c u l t y overshadows in
Importance a l l other factors in the business situation, but a feeling of confi*dence generally prevails that a satisfactory solution of the present troubles
will be found.
Reports received from the several Federal Reserve Agents as of September 20
indicated l i t t l e change in the business situation from the favorable conditions
prevailing during the previous months. Although the labor situation was
generally remarked as the principal factor in rendering conditions somewhat
unsettled, the feeling was expressed in a number of d i s t r i c t s that there was
"a growing realization on the part of the workmen that their i n t e r e s t s are bound
up with the i n t e r e s t s of the community as a whole and that increased efficiency
r e s u l t i n g in greater productivity" i s imperative. In d i s t r i c t No. 1 i t was
stated that "business on the whole continues very active, although manufacturers
are cautious in buying raw material ahead of immediate demands, while r e t a i l
purchasing a c t i v i t y continues apparently unabated™. In d i s t r i c t No* 2 financial
conditions are good, the readjustment of prices i s progressing, declines in
"certain products at the core of the cost of living** being noted, and the outlook i s generally favorable, In d i s t r i c t No. 3 "general business continues to
show a high degree of activity and a l l the outward marks of prosperity, B In
d i s t r i c t No. 4 general business, both wholesale and r e t a i l , continues active.
Reports from a l l sections of d i s t r i c t No. 5 contain "optimistic notes of general
business conditions, the few unfavorable comments heard being confined to high
l i v i n g costs, extravagant expenditures for luxuries and nonessentials, and
the shortage of farm labor." In d i s t r i c t No. 6 i t i s stated that "activity in
a l l l i n e s of business has continued to exceed in volume a c t i v i t y for the same
period of any previous year-** In d i s t r i c t No. 7 there continues, alike among
a l l classes, a rather marked disposition to "capitalize" present price conditions, in p a r t i c u l a r to attempt to make the price situation the basis of
additional p r o f i t ,
although "business"is generally reported as very good."
X-lb91
786
$TOto d i s t r i c t NO. 8 i t i s reported that "& tendency t o await developments
before making larger commitments f o r the future has been in evidence and
the expansive impetus of the early summer months has been checked in a
measure by a growing conservatism." while the e f f e c t has been to retard
i
somewhat the growth of commerce and industry in the d i s t r i c t , business
continues active,
% d i s t r i c t $o« 9 & f a i r crop of small grains i s comn
pensated by the very satisfactory situation with respect to corn and hay,
and general business i s very good-
conditions in d i s t r i c t jjo. 10 have become
somewhat more s e t t l e d , "the volume of trade i s at i t s highest peak of the year,"
and the farmer "has found 1919 a f a r better year then the average", both as
to size of crops and prices received. % d i s t r i c t
n
11 i t is stated that
"renewed a c t i v i t y i s noted in many lines as the f a l l season opens,n and crops
other than cotton are in good condition, although "an atmosphere of conservatism i s rather noticeable in business on account of the uncertainties of the
f u t u r e . " District no, 12 states that "business conditions have been characterized
by a c t i v i t y in manufacturing and increasing a c t i v i t y in nearly every line of
wholesale and r e t a i l trade,"
The labor problem has become the paramount issue during the present- month,
the question of the cost of living receding from i t s former position of prime
i&portance^ Reports indicate a desire of the workers to secure a larger share
in tne returns of industry, demands f o r increased wages being accompanied by
demands for shorter hours• At the same time, however, public opinion appears to
be awakening to the reaction which increased wages and decreased output may have
upon commodity p r i c e s , and the vicious c i r c l e which may r e s u l t , production
has been hindered in various lines . in
which the demand i s greatest, both by
a shortening of hours, by decreased" efficiency, and by aisi&clinat^on in
certain cases t o work more than part time. The labor unrest,
exhibited frequently
X-lb91
'
heretofore "by new demands as to wages, hours, and conditions of employment
and by s t r i k e s , actual or threatened, in various industries, as well as by
the agitation against high p r i c e s , has now found expression on a widespread
scale in the present stride in the steel industry, ana has forced i t s e l f
sharply upon the public- a t t e n t i o n . %t had been generally hoped in the industry
that intervention by the president would result in a postponement of the c a l l
f o r the strike pending the conference of labor and capital called by the
president to meet in Washington on October b, at which the question could be
thorough!/ discussed*
New wage demands and strikes are frequent in certain d i s t r i c t s , prominent
among those noted during the present month having also been the
M
strike* of the
Boston police and the formulation of new wage demands by the bituminous coal
miners- although the railroad shopmen have returned t o work, the transportation
situation continues to occupy a prominent position in public discussion, both
in consequence of the consideration of plans f o r the future operation of the
railways and because of the car shortage which is hampering business activity
in various lines.
Commodity prices reached new high levels during the month of ^ugust, though
since the middle of the month a downward movement appears to have set in a f f e c t ing the prices of some leading staples. ?he general index number of the Bureau
of Labor s t a t i s t i c s for that month stands at 222, as compared with 219 for the
month of July* The increase in prices, while again general, was greater for the
groups of consumers! and producerst goods than for the group of raw materials,
the index number f o r consumers« goods increasing from 2)0 to 241, for producers t
goods from 205 to 215, and f o r raw materials from 214 to 21?, the corresponding
percentages of increase being 4.8,4.7, and 1.5-
Among the subgroups included
in the group, of raw materials, the index number for f o r e s t products shows a
considerable increase, from Ibb to 193> the numbers f o r animal products and f o r
~
x-1691
7 8 8
mineral products lesser increases* from 233 t o 236 and from 177 t o i?8,
respectively, while the index number f o r the subgroup of farm products alone
shows a decrease, from 261 t o 251* The prices of a considerable number of
commodities on September 1 were lower them on August 1. Since the opening of
the present month, p r i c e declines in c e r t a i n f o o d s t u f f s , as well as in raw
cotton and various cotton t e x t i l e s and in hides, have continued. The more
conservative f e e l i n g noted l a s t month s t i l l prevails and moderation in naming
p r i c e s i s ucged i n c e r t a i n lines# rather than the policy of exacting a l l that
•the t r a f f i c w i l l bear."
Retailers % sales during the present f a l l season have
been closely watched in some lines in view of the p o s s i b i l i t y of a curtailment
of consumption in consequence of the high prices demanded.
i n agriculture, the r e l a t i v e l y unsatisfactory s i t u a t i o n prevailing with
respect to wheat as compared with e a r l i e r prospects i s compensated by the
favorable situation with respect to corn, the bulk of which w i l l soon be past
danger of damage, and to hay, the yield of which i s much above the average, com
i s of good quality, but i n the case of spring wheat the grain i s l i g h t . %
n
consequence of deficiency of r a i n f a l l i n d i s t r i c t no. 9, a l l small grains are
showing a poor return, with many sections in North Dakota, south Dakota, and
Montana reporting »a complete failure»#
Although good returns have been
received by farmers i n d i s t r i c t no* 10, i t i s stated that indications point
to a decrease in the wheat acreage sown t h i s f a l l , due p a r t l y to unfavorable
s o i l conditions f o r f a l l plowing and seeding and p a r t l y to
"a desire to return
to the pre-war plan of d i v e r s i f i e d farming»" D i s t r i c t no. 11 *made the heaviest
and best corn crop ever raised,» and "the grain crop was also large beyond
precedent. » The harvesting of grain, except com and r i c e , i s now p r a c t i c a l l y
completed i n d i s t r i c t no. 12
Deficiency of r a i n f a l l has damaged tobacco in Kentucky aad Ohio, and "the
outlook i s rather discouraging,*while i n the carolinae the crop ranges "from
- 6-
x-l»91
789
e x t r a good in the i n t e r i o r to very poor in extreme eastern counties," The
condition of cotton showed a f u r t h e r decline to 61.4- on August 25, and the
lateness of the crop i s r e f l e c t e d in the small amount ginned to d a t e , additional
injury has been done i n Georgia and Alabama by constant rains and by the b o l l
weevil and heavy damage by insects i s reported in Texas, although improvei#nt
i s noted in the c a r ° l i n a s . prices have been i r r e g u l a r , with a downward tendency*
%t i s reported from %ansas City and Minneapolis that f l o u r mills are
operating a t almost f u l l c a p a c i t y . There i s good demand f o r f l o u r , although
trade reports indicate that eastern buying has lagged somewhat, and the demand
class
for f i r s t
has been especially l i g h t . Flour production during august, as
reported by the united s t a t e s grain corporation, was 12,042,000 b a r r e l s , as
compared with 8,339*000 barrels during July, prices of grain and f l o w have
shown a downward tendency#
With the increase in receipts of raw sugar, meltings have again increased,
although the scarcity previously remarked continues and the s i t u a t i o n in t h i s
industry i s reported to r e f l e c t tne uncertainty as to the conditions under which
the new crop w i l l be marketed*
R e c e i p t s of c a t t l e a t 15 primary markets i n c r e a s e d s l i g h t l y , from 1,527,861
head during J u l y t o 1,541,133 head d u r i n g a u g u s t , a s compared w i t h 1,586,553 head
d u r i n g August, 1918, the r e s p e c t i v e index numbers b e i n g 152,153» a m 158.
Receipts of hogs show a continued f a l l i n g o f f , from 2 ,411,539 head during July
to 1*595,759 head during august, as compared with 1,970,08b head during August
1918, the respective index numbers being 110, 73» and. 90- Receipts of sheep
again show a considerable increase, being 2,220,229 head during August, corresponding to an index number of 162, as compared with 1,538,767 head during July,
corresponding to an index number of 114, and 1,424,677 head during August, 1918,
corresponding to an indent number of 104, prices of live stock, i n p a r t i c u l a r
Digitized forhogs, showed a
FRASER
downward tendency, gogs at Kansas c i t y on September 13 reached
-1a low f i g u r e of $16.23 p e r hundredweight, as compared w i t h $19«50
h^/fr
at
the
close of August.
The o u t s t a n d i n g f e a t u r e i n the i r o n and s t e e l i n d u s t r y h a s , of course*
been t h e labor s i t u a t i o n , yp to the a c t u a l day of t h e s t r i K e a f e e l i n g p r e v a i l e d t h a t i t would be avoided, and the i n d u s t r y as a v,'hole, as w e l l as
consumers,viewed the s i t u a t i o n calmly, while t h e r e was a decrease i n new
buying d u r i n g t h e f i r s t h a l f of t h e month as c o n d i t i o n s becau.e u n s e t t l e d ,
the f u r t h e r i n c r e a s e i n p r o d u c t i o n which had been noted f o r the month of
august c o n t i n u e d , p i g - i r o n output i n c r e a s e d from ?. ,423,541 tons during J u l y
t o 2,743,388 t o n s d u r i n g August, the r e s p e c t i v e index ragabere being 105 and.
118, s t e e l - i n g o t p r o d u c t i o n i n c r e a s e d from 2,508,176 tons d u r i n g J u l y , c o r r e s ponding t o an index number of 104, t o 2,746,081 t e n s during August, c o r r e s ponding t o an index number of 114, while the u n f i l l e d orders of the united
S t a t e s s t e e l Corporation a t t h e c l o s e of August were b,109,103 t o n s , as compared with 5,578*b6l tons a t the c l o s e of J u l y , the r e s p e c t i v e index numbers
b e i n g l l o and 106, although i t i s r e p o r t e d t h a t new o r d e r s booted are' running
below those of a month ago*
j t i s r e p o r t e d t h a t the demand f o r p i g i r o n d u r i n g the month has not been
a c t i v e , with t h e chief i n t e r e s t i n foundry i r o n , but stocks a r e s t a t e d to have
decreased d u r i n g August f o r t h e third, month in s u c c e s s i o n , and merchant
f u r n a c e s a r e w e l l s o l d over the remainder of t h e y e a r , a lessened, demand, but
with l i t t l e output a v a i l a b l e f o r d e l i v e r y b e f o r e t h e f i r s t of t h e y e a r , i s
r e p o r t e d i n t h e l i n e s which have h i t h e r t o been most a c t i v e , such as s t e e l b a r s ,
s h e e t s , w i r e , t i n p l a t e , and lap-weld p i p e . Regular consumers i n many cases
a r e s t a t e d t o be w e l l covered i n t h e i r r e q u i r e m e n t s f o r t h e remainder of t h e
y e a r , while t h e r e has been r e l a t i v e l y l i t t l e i n q u i r y a s y e t f o r t h e next year ts
d e l i v e r y , and m a n u f a c t u r e r s were n o t d i s p o s e d t o quote thereon*
c e r t a i n of
the h e a v i e r l i n e s , such a s r a i l s and shapes and p l a t e s , c o n t i n u e t o l a g , t h e
* 791
- s l a t t e r showing weakness i n p r i c e ,
-
x-it>9i
p r i c e d e c l i n e s have been noted i n the old-
m a t e r i a l markets s i n c e the middle of August.
a l t h o u g h the volutr.e of domestic
b u s i n e s s booked has diminished somewhat the i n t e r e s t i n the export f i e l d , i t
i s r e p o r t e d t h a t t h e ..-expert agency of t h e independent producers s h o r t l y a f t e r
the middle of t h e month r e q u e s t e d from t h e i r p r i n c i p a l s an i n c r e a s e i n the
tonnage a l l o t t e d t o f o r e i g n business from the p r e s e n t f i g u r e of 10 p e r c e n t .
continues
of o u t p u t . The machine-tool i n d u s t r y
active.
varying
The s t r i a e c a l l e d f o r September 22nd had
e f f e c t s i n the several
districts,
Reports i n d i c a t e t h a t t h e s t r i k e was most widespread i n t h e
Colorado, Cleveland and Chicago D i s t r i c t s , a p r a c t i c a l f a i l u r e i n the Birmingham D i s t r i c t , while c o n s i d e r a b l e i n t e r r u p t i o n
t o p r o d u c t i o n was noted in the
P i t t s b u r g h District. The f a c t t h a t f o r many of t h e independent producers
agreements n e g o t i a t e d a n n u a l l y were i n e f f e c t , a i a e d m a t e r i a l l y i n maintaining t h e output of l i n e s f o r which the demand had been g r e a t e s t , such as s h e e t s ,
and t i n p l a t e .
The p r o d u c t i o n of t u b u l a r goods was c o n s i d e r a b l y c u r t a i l e d ,
while the manufacture of wire p r o d u c t s was s t a t e d t o have been w e l l maintained
a t a l l p o i n t s except' Cleveland,
The g r e a t e s t e f f e c t of the s t r i k e i s r e p o r t e d
t o be on the h e a v i e r p r o d u c t s , such a s b a r s , s t r u c t u r a l shapes, p l a t e s and
r a i l s , f o r which demand has h i t h e r t o been l i g h t e s t .
The claim i s made t h a t
the s t r i k e r s a r e l a r g e l y f o r e i g n workers, performing t h e lower c l a s s e s of
work, and t h a t i n c e r t a i n cases t h e s t r i k e on t h e i r p a r t has f o r c e d out other
employees who d e s i r e d t o continue wont-
The employers have been o p t i m i s t i c
and, where a s u f f i c i e n t number of t h e r e g u l a r working f o r c e has n o t ' - i
r e p o r t e d , have suspended o p e r a t i o n s .
E f f o r t s have been made by t h e workers
t o e n l i s t t h e a i d of unions c o v e r i n g r e l a t e d t r a d e s , such a s ore c a r r y i n g on
the Great Lakes.
Reports i n d i c a t e t h a t a s t r i k e c a l l e d f o r Monday, September
S $ t h , a g a i n s t the l e a d i n g independents had r e l a t i v e l y s l i g h t s u c c e s s ,
,
. * 792
X-lb91
^
likewise e f f o r t s a t the same time t o f o r c e a shut down of the leading independent producer a t P i t t s b u r g h .
t h e c l o s e of t h e month, the s i t u a t i o n i s
r e p o r t e d t o have been r e l a t i v e l y l i t t l e changed, a s f a r as p r o d u c t i o n was
concerned# from c o n d i t i o n s p r e v a i l i n g during the e a r l y days of t h e s t r i k e *
p r o d u c t i o n of bituminous c o a l d u r i n g august amounted t o 42, 883,000 t o n s ,
as compared w i t h 42,94b,000 t o n s d u r i n g J u l y , t h e index numbers f o r b o t h
months b e i n g l i b .
a s t r o n g demand f o r a n t h r a c i t e c o a l i s r e p o r t e d , r e s u l t i n g
i n i n c r e a s e d shipments during August of 6,144,144 t o n s , corresponding t o an,
index n w b e r of 109
as
compared with b,052,33^ tons d u r i n g J u l y , corresponding
t o an index number of 108.
p r o d u c t i o n i s being iapeded i n c e r t a i n s e c t i o n s
by c a r shortage and by labor d i f f i c u l t i e s ,
n o t i c e has been given by the
bituminous miners of the a b r o g a t i o n of the e x i s t i n g wage s c a l e i n the c e n t r a l
c o m p e t i t i v e f i e l d on November 1, and a conference of o p e r a t o r s and miners has
been proposed by the l a t t e r t o meet a t B u f f a l o on September 25, t o c o n s i d e r
t h e i r demands.
The output of beehive coke showed a continued i n c r e a s e up t o
the month of geptember, 1,808,595 tons being produced d u r i n g August, as coon
pared w i t h 1,512,178 tons during J u l y .
Due
t o the s i t u a t i o n i n t h e s t e e l
i n d u s t r y , d e c r e a s e d p r o d u c t i o n has been r e p o r t e d .
Furnace coke has d e c l i n e d
i n p r i c e * but foundry coke has been i n good demand and p r i c e i n c r e a s e s have
been n o t e d .
Continued q u i e t i s r e p o r t e d i n the n o n f e r r o u s m e t a l i n d u s t r i e s , w i t h
l i t t l e buying by consumers,
at p r e s e n t p r e v a i l s .
j n view of the s t e e l s t r i k e , a w a i t i n g a t t i t u d e
T r a n s a c t i o n s have c o n s i s t e d i n l a r g e p a r t of r e s a l e s by
s p e c u l a t o r s a t p r i c e s below t h o s e asked by p r o d u c e r s .
The g r e a t e s t s t r e n g t h
has b e a n shown by l e a d , the p r i c e of which i n c r e a s e d about t h e middle of the
month,
continued weakness i n s i n e i s r e p o r t e d , demand from t h e s t e e l i n d u s t r y
f o r b o t h t h a t m e t a l and t i n b e i n g c u r t a i l e d i n view of the p r e s e n t s i t u a t i o n
x-iogi
- 10-
793
I t i s r e p o r t e d from the Kansas c i t y D i s t r i c t t h a t t h e reduced shipments are due
l a r g e l y t o " t h e d i f f i c u l t y of o b t a i n i n g c a r s f o r s h i p p i n g out the ore p u r c h a s e d j "
but t h a t p r o d u c t i o n grew n o t i c e a b l y d u r i n g t h e month of a u g u s t .
The a c t i v i t y i n g e n e r a l manufacturing c o n t i n u e s , although markets i n c e r t a i n
c a s e s p r e s e n t a q u i e t appearance due t o the f a c t t h a t some m a n u f a c t u r e r s a r e w e l l
s o l a ahead, while i n c e r t a i n q u a r t e r s a wore c a u t i o u s p u r c h a s i n g p o l i c y i s n o t e d .
The c o t t o n - y a r n market d u r i n g the month has been r e l a t i v e l y q u i e t ana p r i c e s of
medium and coarse count carded
yarns have shown a tendency t o d e c l i n e .
The
demand f o r c o t t o n goods on the whole has been q u i e t , and p r i c e d e c l i n e s i n gray
goods are ^ r e p o r t e d .
This c o n d i t i o n i s r e f l e c t e d i n t h e p r i c e s obtained a t the
second government a u c t i o n held a t yew york on September 4, a t which most of the
f a b r i c s d i d not bj&ng more than 90 p e r cent of t h e c u r r e n t p r i c e s , although market p r i c e s were w e l l below those p r e v a i l i n g a t the c l o s e of J u l y , t h e time of the
f i r s t a u c t i o n , when market p r i c e s then p r e v a i l i n g were exceeded i n some i n s t a n c e s .
The allotment of f i n i s h e d goods f o r s p r i n g d e l i v e r y c o n t i n u e s , a t p r i c e s which
are regarded as moderate by t h e t r a a e i n view of e x i s t i n g c o n d i t i o n s , and the
goods are r e a d i l y t a k e n .
The raw-wool market
continues
q u i e t , with p r i c e s f i o m , g r e a t e s t s t r e n g t h
being shown by t h e f i n e r g r a d e s ,
worsted yarns a r e q u i e t b u t s t r o n g , s p i n n e r s
being sold up t o the end of the year and d i s p l a y i n g a s yet b u t l i t t l e d i s p o s i t i o n
to discuss o f f e r i n g s f o r next season-
The market f o r men's wear woolens i s again
q u i e t , such s p r i n g o f f e r i n g s a s m i l l s have made b e i n g l a r g e l y s o l d up- Advances
i n the p r i c e s of men's c l o t h i n g f o r n e x t s p r i n g a r e announced»
The women's
c l o t h i n g i n d u s t r y has been p r o t e s t i n g a g a i n s t t h e h i g h p r i c e s of f a b r i c s , and•
a n x i e t y i s expressed l e s t t h e next s p r i n g season see a r e s t r i c t i o n of purchasing
by the consumer.
During the month p r i c e r e d u c t i o n s by j o b b e r s have been r e -
p o r t e d i n some' l i n e s of d r e s s goods,
underwear shows q u i e t n e s s c h a r a c t e r i s t i c of
x-ibgi
- 11 -
H
Y94
-
the between-season p e r i o d , . m i l l s having a r e l a t i v e l y l a r g e amount of o r d e r s booked,
though few openings f o r t h e s p r i n g season have as y e t o c c u r r e d .
A s p i r i t of
g r e a t e r c a u t i o n on t h e part of buyers was also n o t i c e a b l e about t h e middle of the
A
month. The demand f o r s i l k ana h i g h grade c o t t o n h o s i e r y c o n t i n u e s , while s i l k
m a n u f a c t u r e r s s t a t e t h a t they a r e sold ahead £or some tiuje to cows, t r a d e r e p o r t s
i n d i c a t e a n o t i c e a b l e s l a c k e n i n g i n demand, and s t a p l e f a l l s i l k s a r e s t a t e d t o .
have been o f f e r e d by
j o b b e r s a t concessions i n p r i c e .
The i n d u s t r y has been
handicapped by labor d i f f i c u l t i e s , i n p a r t i c u l a r by t h e p a t e r s o n d y e r s f s t r i k e
and t h e r e c e n t P e n n s y l v a n i a s t r i k e *
During the p a s t month the f e a t u r e of the h i d e and l e a t h e r markets has been
the d e c r e a s e i n t h e p r i c e s of h i d e s which comwenced i n country hia.es toward the
c l o s e of a u g u s t , although about the middle ci the p r e s e n t month p r i c e s f o r b o t h
c o u n t r y and p a c k e r h i d e s have again becctue f i r m e r *
i n l e a t h e r the i n f l u e n c e on
p r i c e s has been c h i e f l y f e l t by the l e s s d e s i r a b l e g r a d e s , though concessions
on both upper and s o l e l e a t h e r are r e p o r t e d .
The l e a t h e r market has been c±uiet
f o r some time# but t a n n e r s a r e w e l l s o l d up#
Manufacturers of shoes continue t o
o p e r a t e a t c a p a c i t y , and f a v o r a b l e r e p o r t s are r e c e i v e d from salesmen now on
the road.
Demand f o r the b e t t e r grades of footwear c o n t i n u e s .
The customary s e a s o n a l s w e l l i n the volume of b u s i n e s s i s noted i n many
sections.
Both w h o l e s a l e r s and r e t a i l e r s r e p o r t a l a r g e volume of b u s i n e s s ,
and the f e a r s which had been expressed t h a t h i g h p r i c e s might serve t o check
demand c o n t i n u e t o r e p r e s e n t a f u t u r e p o s s i b i l i t y r a t h e r than a p r e s e n t a c t u a l i t y *
yrom p r a c t i c a l l y a l l 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 e x t r a v a g a n t p u r c h a s i n g , b o t h
i n r e s p e c t t o the c h a r a c t e r and q u a l i t y of goods, c o n t i n u e s u n a b a t e d .
There i s
a continued heavy demand f o r a u t o m o b i l e s , j e w e l r y , and uigh-grade wearing
apparel.
R e t a i l e r s t stocks are b e i n g d e p l e t e d , and i n many c a s e s d i f f i c u l t y
c o n t i n u e s t o be e x p e r i e n c e d
i n o b t a i n i n g merchandise, a l t h o u g h i n
Philadelphia
and S t . Louis improvement i n d e l i v e r i e s i s n o t e d . Merchants a r e , however,
operating cautiously
i n view of present conditions.
•f ,
x~to9i
F u r t h e r i n c r e a s e i n b u i l d i n g a c t i v i t y i s r e p o r t e d , p e r m i t s issued, d u r i n g
august exceeded tne f i g u r e s f o r J u l y , t h e p r e v i o u s r e c o r d month of t h e p r e s e n t
year* The i n c r e a s e has "been e s p e c i a l l y g r e a t f o r new york c i t y where i t i s s t a t e d
t h a t " f o r t h e f i r s t time i n s e v e r a l years the amount of "building now under way
i s f u l l y up to normal «n
%n s e v e r a l other d i s t r i c t s , however, i t i s s t a t o d t o
be s t i l l below normal, and a f u r t h e r i n c r e a s e i s a n t i c i p a t e d * g r e a t a c t i v i t y
i n the i n d u s t r y p r e v a i l s i n s p i t e of h i g h wages and t h e s h o r t a g e of b o t h lumber
and l a b o r , and h i g h e r c o s t s thus f a r a p p a r e n t l y nave had l i t t l e i n f l u e n c e i n
checking c o n s t r u c t i o n . Qraers and shipments of lumber i n g e n e r a l have continued
t o exceed p r o d u c t i o n , which has been hampered i n c e r t a i n s e c t i o n s by c a r and
labor shortage and weather c o n d i t i o n s , and stocks have been f u r t h e r depleted*
Recently, however, a decrease i n demand has been n o t e d .
O f f i c i a l f i g u r e s f o r the month of august show a r e c o v e r y t o $ j j b , 0 0 0 , 0 0 0
i n the export b a l a n c e from the low f i g u r e of $225,000,000 f o r the month of J u l y ,
though t h i s amount i s s t i l l f a r below the June f i g u r e of $624,000,000. a s comp a r e d w i t h J u l y f i g u r e s some g a i n s a r e shown i n t h e e x p o r t s of b r e a d s t u f f s , l a r g e l y
wheat, and of m i n e r a l o i l s , while the August e-sports of meat and d a i r y p r o d u c t s ,
a l s o of raw c o t t o n , show a f u r t h e r d e c l i n e b o t h i n q u a n t i t i e s and v a l u e s , while
June e x p o r t s t o Europe were approximately equal t o the e n t i r e ^ g u s t e x p o r t s , a •;
growth of gouth American b u s i n e s s i s n o t e d , i r o n and s t e e l e x p o r t s , a f t e r a
sharp decrease i n J u l y , recovered somewhat d u r i n g a u g u s t , l i b e r a l p u r c h a s i n g by the o r i e n t and s o u t h .America being r e c o r d e d .
f i g u r e s of raw c o t t o n e x p o r t s
show a c o n s i d e r a b l e d e c r e a s e from those f o r J u l y . The f o r e i g n t r a d e c o n f e r e n c e
t o be h e l d at A t l a n t i c c i t y , which has been postponed from September 3t) u n t i l
October 20 i n order t o p e r m i t t h e attendance of t h e f o r e i g n d e l e g a t e s , w i l l be
watched w i t h i n t e r e s t .
i
a s h o r t p e r i o d of f a i r a c t i v i t y i n t h e s t o c k market at t h e opening of t h e
.
month was succeeded by a p e r i o d of r e l a t i v e q u i e t , and p u b l i c p a r t i c i p a t i o n h a s
796
V ' »-13-
x*-I691
again become a small f a c t o r i n t h e g e n e r a l s i t u a t i o n . <phe market has become
a d j u s t e d t o the e a s i e r c o n d i t i o n s i n t h e money market, and no sharp d e c r e a s e s
i n the p r i c e ' s of s t o c k s such as c h a r a c t e r i z e d the p r e v i o u s month have been n o t e d ,
while s t r e n g t h has been d i s p l a y e d since the opening of the s t e e l s t r i k e , jn t h e
bond market the b u l k of t r a n s a c t i o n s was i n ths u n i t e d s t a t e s s e c u r i t i e s , and
p r i c e s show a r i s e , while one-year u n i t e d s t a t e s c e r t i f i c a t e s of the geptewber
15 i s s u e are s e l l i n g above p a r , r e c e n t s a l e s being on a Ui p e r cent b a s i s * R a i l road bonds have been d u l l , but r e l a t i v e l y unchanged i n p r i c e , and i n d u s t r i a l
bonds have d e c l i n e d , ^he a b s o r p t i o n of new s e c u r i t i e s has continued to be much
l a r g e r than u s u a l f o r t h i s season of t h e y e a r , f l u c t u a t i o n s i n the call-money
r a t e have again been confined w i t h i n narrower l i m i t s than d u r i n g p r e v i o u s months,
the extreme r a t e s being 4 p e r cent and 8 per c e n t . Decline i n r a t e s i n the New
york money market i s n o t e d , f o l l o w i n g heavy redemption of u n i t e d s t a t e s c e r t i f i c a t e s of i n d e b t e d n e s s , and accompanying a smaller demand than a n t i c i p a t e d f o r
crop-movigg f u n d s . i n t e r e s t r a t e s i n g e n e r a l , however, remain f i r m , a s t r o n g demand
both
f o r funds being noted i n c e r t a i n d i s t r i c t ^ f o r crop-moving purposes and. to meet
the s e a s o n a l requirements of m a n u f a c t u r e r s , a l t h o u g h an e a s i e r s i t u a t i o n i s noted
i n some of the a g r i c u l t u r a l d i s t r i c t s , j h e board is f i g u r e s of the volume of check
t r a n s a c t i o n s c o n t i n u e at a high l e v e l , f o r e i g n exchange r a t e s have shown a downward. tendency s i n c e the opening of t h e month, s t e r l i n g , f r a n c s , and l i r e among
the more important exchanges again r e a c h i n g new low l e v e l s , b e i n g quoted on
September b a t 4.135, 9 - 2 1 , and 1 0 . l 4 , r e s p e c t i v e l y . Recovery has s i n c e been
no t e a . The banking s i t u a t i o n c o n t i n u e s to be regarded as sound, c r e a i t and c o l l e c t i o n c o n d i t i o n s a r e good, and f a i l u r e s continue unprededentedly small ana few.
,
FEDERAL
RESERVE
BOARD
STATEMENT FOR THE PRESS
To be r e l e a s e d f o r morning papers
October 6, 1919.
says:
The Review of the Month f o r the October Federal Reserve B u l l e t i n ,
PUBLIC FINANCE IN SEPTEMBER.. F i s c a l operations of t h e Government during
September were "unusually l a r g e and included issue's on September 2 of
$573,841,500 of f i v e months* 4g loan c e r t i f i c a t e s , and on September 15
of two s e r i e s of t a x c e r t i f i c a t e s , of which one, f o r s i x months, and b e a r i n g
i n t e r e s t a t the r a t e of 4*$, y i e l d e d $101,131,500 and the o t h e r , f o r twelve
months, and bearing i n t e r e s t a t the r a t e of 4gji, y i e l d e d $657,469,000. An
a n a l y s i s of the amounts taken i n each Federal Reserve d i s t r i c t of each of
the three s e r i e s i s given i n the following e x h i b i t :
Federal Reserve
District.
S e r i e s C-1920
Series T 9
Boston
$45,765,500
$5,704,000
$31,753,000
$83,221,500
New York
253,679,000
25,582,500'
412,319,000
690,580, 500
27,155,000
5,563,000
54, 586,-500
87,304,500
39,088,500
8,788,000
53,802, 000
101,678,500
Richmond
10,493-, 500
2,999,500
10,339,500
23,832,500
Atlanta
19,312,000
3, 706, 000
5, 618, 000
38,636,000
Chicago
63,193,500
24,057,-500
35,172,000
122,463,000
S t . Louis
17,975,500
3, 616, 500
12,232,500
33,822,500
Minneapolis
16, 000, 000
4,750,000
. 7 ,750, 000
28,500, 000
Kansas City
16,000,000
2,835,000
4,165,000
23,000,000
Dallas
23,179, 000 .
3,491,500
8,332,500
34,903,000
Philadelphia
Cleveland
Total
$ 573,841,500
1
:
-
'
$101,131, 500
0
3
__ . 43, 000,000
_
8
San Francisco
"
S e r i e s T 10 A l l t h r e e s.erie
: «••••'
$657,469,000 1^32,442,000
X-1692
- 2 -
Redemptions of outstanding Treasury c e r t i f i c a t e s were considerably larger
and included:
1.
Ti>e redemption oti September 9 (when a 20$ i n s t a l l m e n t on the V i c t o r y
2.
The redemption on September 15 (when the third installment of the
Loan was due) of outstanding balances of the l a s t two series of
c e r t i f i c a t e s issued in anticipation of the Victory Loan and due
September 9 and October 7 respectively.
Income and War p r o f i t t a x e s was p a y a b l e ) of the o u t s t a n d i n g b a l a n c e s
of two s e r i e s of t a x c e r t i f i c a t e s .
At the beginning of the month i t was calculated that the aggregate amount
of c e r t i f i c a t e s maturing or called for redemption during the month was in
the neighborhood of 1800 millions, and that t h i s amount, somewhat reduced
by exchanges and cash redemptions, would oe f u l l y covered from the cash in
bank, and payments on account of Victory Loan subscriptions, also income
and p r o f i t taxes due on September 9 and 15 respectively. In h i s circular
of September 8, the secretary of the Treasury announced that there remained
no other maturities of c e r t i f i c a t e s to provide for prior to 1920, as the
c e r t i f i c a t e s maturing December 15, of which over 750 millions had been
issued, were more than covered by the income and p r o f i t tax installment due
on that date, The total amount of Treasury c e r t i f i c a t e s outstanding at the
end of September i s slightly over J»5 billions (as against 6^ b i l l i o n s on
April JO) of which only about 1.6 b i l l i o n s are loan c e r t i f i c a t e s requiring
to be refunded.
In view of the success attaining the most recent tax c e r t i f i c a t e issues,
which realized 757*5 millions in the three days during which subscriptions
were taken, and the very large cash balance of the Treasury i t i s expected
that no new c e r t i f i c a t e issues will have to be resorted to during the month
of October.
7 9 8
*" lb93
799
•OUTLOOK K)B LIQUIDATION. More than t h i s , m a t e r i a l improvement i n t h e f i n a n c i a l
p o s i t i o n of the Treasury and t h e . f a v o r a b l e c o n d i t i o n s on which r e c e n t i s s u e s of
loan c e r t i f i c a t e s have been p l a c e d c a r r y c o n f i r m a t i o n of the views expressed by
the s e c r e t a r y of t h e Treasury i n h i s l e t t e r of J u l y 25 and - r e p e a t e d i n M a
l e t t e r of September 8 t h a t the borrowing o p e r a t i o n s i n c i d e n t to t h e f i n a n c i n g
of the war would be c a r r i e d to completion without a n o t h e r g r e a t f u n d i n g l o a n ,
go f a r as l o n g - t e r n government war f i n a n c i n g i s concerned, i t may be s a i d t o
have come t o a c l o s e w i t h t h e v i c t o r y loan* Such f i n a n c i n g a s i s s t i l l t o be
provided can c l e a t l y be c a r r i e d through by s h o r t - t e r m i s s u e s m a t u r i n g on t a x
dates*
The outlook i s d i s t i n c t l y encouraging, t h e r e f o r e * f o r an improvement i n
t h e investment s t a t u s of the o u t s t a n d i n g funded s e c u r i t i e s of t h e government and,
with i t , f o r an improvement i n t h e loan and investment accounts pf the banns.
The e x t e n t t o which t h e banks of the country subscribed t o war bonds of the
d i f f e r e n t i s s u e s which they d i d not i n t e n d as a m a t t e r of p o l i c y t o c a r r y p e r manently as a p a r t of t h e i r long-term investments, c a n not be a c c u r a t e l y determined.
Neither can the volume of loans made by the banks t o customers on account of t h e i r
s u b s c r i p t i o n s t o government war i s s u e s and s t i l l o u t s t a n d i n g be a c c u r a t e l y determined. D e t a i l s of an estimate made f o r t h i s purpose and elsewhere p r e s e n t e d
i n the B u l l e t i n i n d i c a t e t h a t the volume of unabsorbed war s e c u r i t i e s i s undoubtedly
l a r g e , l i q u i d a t i o n of these war f i n a n c e investments and loans i s c l e a r l y a n e c e s s a r y p r e l i m i n a r y t o any large and genuine improvement i n t h e banking and c r e d i t
s i t u a t i o n * such l i q u i d a t i o n means the purchase of war s e c u r i t i e s b y a c t u a l i n v e s t o r s .
That such l i q u i d a t i o n w i l l be stimulated through improvement i n t h e market f o r
government bonds i s c l e a r * The r e c e n t improvement i n the government bond market,
fore-shaskawing as i t probably does a p r o g r e s s i v e improvement because of increased
r e a l i s a t i o n t h a t government long-term f i n a n c i n g i s over, i s , t h e r e f o r e , of good
augury f o r the g e n e r a l banning s i t u a t i o n .
L i q u i d a t i o n , i n the n a t u r a l c o u r s e , of war l o a n accounts seems l i k e l y b e f o r e
long | o become a c h a r a c t e r i s t i c of the banking t r e n d , whether such l i q u i d a t i o n ,
however, w i l l r e s u l t i n a l a s t i n g d e c l i n e i n the t o t a l volume of o u t s t a n d i n g bank
c r e d i t s w i l l depend upon the s t a t e of i n d u s t r y and t r a d e and upon the movement of
prices.
DISC0UR% POLICY*
As the p e r i o d of war f i n a n c i n g begins t o approach i t s end, the
Federal Reserve Banks w i l l again be i n a p o s i t i o n to shape t h e i r p o l i c i e s , without
being under the n e c e s s i t y of g i v i n g f i r s t c o n s i d e r a t i o n to the i n t e r e s t s or needs
of the t r e a s u r y . Since the e n t r y of the u n i t e d s t a t e s i n t o t h e g r e a t war, the
Federal Reserve Banks have from the n e c e s s i t i e s of the s i t u a t i o n u t i l i z e d t h e i r
resources i n every l e g i t i m a t e way i n support of war f i n a n c e , T h e i r discount policy*
i n p a r t i c u l a r , has been shaped, f i r s t w i t h a view of f a c i l i t a t i n g t h e placement of
the g r e a t i s s u e s of b o t h long-term and s h o r t - t e r m o b l i g a t i o n s brought out by the
Treasury, and secondly w i t h a view of s t a b i l i s i n g t h e market f o r L i b e r t y Bonds.
With these o b j e c t s i n view, d i f f e r e n t i a l r a t e s ( d e t a i l s of which a r e elsewhere
p r e s e n t e d i n the B u l l e t i n ) have been maintained a t Reserve Banks i n f a v o r of
borrowings by member banks e i t h e r on t h e i r own or t h e i r customers* n o t e s , when
secured by war o b l i g a t i o n s *
The e f f e c t of t h i s p o l i c y of d i f f e r e n t i a l r a t e s has r e f l e c t e d i t s e l f i n the
s u c c e s s f u l placement of f i v e g r e a t loans a g g r e g a t i n g $21,500,000,000 and many
—
800
E
W
X-1D92
and, u n t i l the f i n a n c i a l operations incident to the war were completed., the main
"business of the nation was the e f f i c i e n t prosecution of the war and the f i r s t
duty of i t s financial and credit system, therefore, the constant support of the
government is f inancial program*
The disappearance of the Treasury from the long-term loan market and the
rapid reduction in i t s requirements for short-term accommodation fore—shadows
the approach of the time when the d i f f e r e n t i a l rate as an agency for furthering
the financial operations of the Government may be expected to disappear and
federal Reserve Bank rates once more be fixed solely "with a view of accomodating commerce and business,"
EXPANSION A D DISCOUNT HATES* The extent to which Federal Reserve Bang, rates
N
rr.ay nnrrnai ly be expected to be "effective", in the sense in which that term i s
used in England and continental Europe, s t i l l remains to be determined, our
experience under the federal Reserve system i s too brief to enable definite
conclusions to be drawn with reference to this matter* i t seems doubtful, •
however, whether, for a long time to come and taking the country as a whole,
there will be any such close connection of Reserve Bank rates with the volume
of credit in use as was to be noted f o r example in England, the home of central
banking, in pre-^cr days, our nearest approach to an effective Reserve Bank
rate was reached in the closing months of the year 191b»
The habitual temper of the American business community id sanguine and
jjperican business i s , for the most p a r t , done on liberal margins* T^e bulk of
the requirements for credit f a c i l i t i e s comes from industry and trade mainly
domestic in i t s i r i g i n and. character, such a condition does not make f o r sensitiveness to the influence of changing rates such as was the case in England
where much b u s i n e s s i s done on a narrow margin of p r o f i t and where ban King r e -
sources were normally largely employed in the international loan markets
At any rate i t seems f a i r l y clear that l i t t l e desirable restraining w f luence could have been exercised by Reserve gank rates in recent months* w^ile
repeated tendencies toward speculation of one kind or another have manifested
themselves and, at times, given rise to an undesirable situation, there is no
reason to believe that an advance of rates would have held these tendencies in
check, at any rate no such advances as could have been undertaken without serious
injury to legitimate business and. desirable enterprise which was entitled to
encouragement and support*
is no ready method in reserve banking by which
the use of reserve f a c i l i t i e s can be withheld from use in undesirable lines of
activity without, also, being withheld from use i n desirable lines*
The problem of controlling the volume and uses of credit in a country with
so much diversity of business interests and business temper as the united states
i s f a r from simple and f a r frow certain of solution* E^OP^rience alone can de*
termine whether and in whattoestisr a technique of control through rates can be
developed Which will secure the desired r e s u l t s . The objects to be obtained are
however clear and vastly important- Tdey are to regulate the volume and. uses of
credit so as to give at a l l times to productive industry the beneficial e f f e c t s
of credit stimulus and support without, however, opening the way to the costly
evils of creait and price i n f l a t i o n .
801
- 5 -
x-ibSi
CBEDIT AND PRICES: The dependence of p r i c e s on c r e d i t has had convincing
e x e m p l i f i c a t i o n i n the p a s t few y e a r s . C r e d i t expansion has admittedly been
one of the major i n f l u e n c e s i n b r i n g i n g p r i c e s to t h e i r p r e s e n t l e v e l s . The way
in which c r e d i t a f f e c t s p r i c e s n e v e r t h e l e s s r e q u i r e s d i s c r i m i n a t i n g a n a l y s i s .
Of i t s e l f and alone, c r e d i t can n o t be s a i d to determine p r i c e s . Credit a f f e c t s
p r i c e s only as i t i s used i n the purchase and payment of things- I t can a f f e c t
p r i c e s , t h e r e f o r e , only when a c t i n g i n c o n j u n c t i o n with o t h e r f a v o r i n g conditions.
There a r e times when the banking o r g a n i z a t i o n h a s l a r g e r e s e r v e s of c r e d i t
power and yet i n d u s t r y and t r a d e being 0 slow" there i s l i t t l e demand f o r additional
c r e d i t and consequently l i t t l e c r e d i t i s added to the volume of c r e d i t in use
and consequently l i t t l e e f f e c t i s e x e r t e d by c r e d i t i n changing p r i c e s . A bank
may o f f e r ' s , customer c r e d i t but i t can not make him take i t . I t i s the c r e d i t
which i s taken and used, not the c r e d i t which i s o f f e r e d , t h a t counts i n the
movement of p r i c e s . There are o t h e r times when the r e s e r v e s of c r e d i t power
a r e low and yet the demand f o r c r e d i t , because of buoyancy in i n d u s t r y and trade,
i s l a r g e and the volume of c r e d i t i n use consequently l a r g e and i t s influence
on p r i c e s unmistakable. The volume of c r e d i t . i n use depends, t h e r e f o r e , quite
as much upon the s t a t e of trade as i t does upon the s t a t e of c r e d i t . The l i m i t s
within which the use of c r e d i t can be forced by the banks are p r e t t y narrow.
Credit, a s such,can n o t , t h e r e f o r e , be said to be the cause of p r i c e , changes.
By enabling and f a c i l i t a t i n g t r a n s a c t i o n s in the purchase and sale of m a t e r i a l s •
and goods and l a b o r , which r e q u i r e the use of a l a r g e volume of purchasing media,,
c r e d i t n e v e r t h e l e s s i s a decisive f a c t o r i n the p r i c e s i t u a t i o n . I t i s the
b u s i n e s s of the banking organization to create and supply purchasing media.
• Thus, a t times, when trade i s b r i s k and the s p i r i t of i n d u s t r i a l e n t e r p r i s e runs
high, the increased volume of c r e d i t supplied by the banks s u s t a i n s and f a c i l i t a t e s , if i t does not indeed induce, the purchasing movement and thus supports
the r i s e i n p r i c e l e v e l s - without such an enlargement i n . t h e volume of c i r c u l a t i n g c r e d i t or purchasing media i n other s u i t a b l e forms, the accomodation
of p r i c e s to changing conditions in a period of a c t i v i t y would be impeded.
while c r e d i t , t h e r e f o r e , can n o t c r e a t e a s i t u a t i o n which r e s u l t s in high p r i c e s , i t i s e q u a l l y t r u e that a s i t u a t i o n which r e s u l t s i n high p r i c e s can not eventuate
without the a s s i s t a n c e and mediation of c r e d i t , while there must be a desire
t o r the use of c r e d i t b e f o r e c r e d i t can expand, once under way an expansion of
trade g e t s so much, encouragement, stimulus and support from an expansion of
c r e d i t t h a t i t i s a t times d i f f i c u l t to say which i s more cause and which i s more
e f f e c t , eo c l o s e l y interdependent and interwoven are the two. Questions of
t h e o r e t i c a l formulation a p a r t , however, the c l o s e connection of c r e d i t and p r i c e s ,
or of p r i c e s and c r e d i t , does not admit of reasonable doubt. What i s s t i l l to be
t e s t e d i s the k i n d and measure of c o n t r o l a t once e f f e c t i v e and b e n e f i c i a l in i t s
el f e e t s t h a t can be e x e r c i s e d on c r e d i t through the i n s t r u m e n t a l i t y of Reserve
Bank r a t e s and o p e r a t i o n s - t h a t i s the e x t e n t to which the volume and c h a r a c t e r
of Beserve Bank o p e r a t i o n s w i l l be s e n s i t i v e l y r e s p o n s i b l e to changes of r a t e .
x-169.2
— 6 FELERAL EE SERVE NOTES:
The responsiveness of the volume of Federal
Be serve note c i r c u l a t i o n t o f l u c t u a t i n g requirements i s again i n p r o c e s s of
p r o o f . A y e a r ago a t t e n t i o n was c a l l e d in the B u l l e t i n t o the i n c r e a s e of
Federal Reserve notes, i n the months synchronizing with the crop-moving p e r i o d .
The same phenomenon i s now being repeated.
While seasonal requirements thus appear to be the p r i n c i p a l cause of
3hC*t»-period changes i n the volume of outstanding Federal Reserve n o t e s ,
the fundamental i n f l u e n c e determining t h e i r n o r m a l 1 volume i s the movement of
general p r i c e s and the volume of outstanding bank" c r e d i t . No mathematically
d e f i n i t e and q u a n t i t a t i v e r e l a t i o n s h i p between the volume o# bank c r e d i t and
the volume of c i r c u l a t i n g notes can be s p e c i f i e d , but a close connection between the two e x i s t s . The connection i s indeed so close t h a t an increase i n
the volume of c i r c u l a t i n g notes may o r d i n a r i l y be expected to f o l l o w c l o s e l y
upon an increase i n the volume of c i r c u l a t i n g bank c r e d i t . This i s p a r t i c u l a r l y
true i n times when a close connection i s observed between changes i n the v o l ume of bank c r e d i t in use and general p r i c e s . At such times and generally i n
times of i n c r e a s i n g trade a c t i v i t y , p r i c e s a t wholesale r i s e f i r s t . In t h e i r
wake there follows of n e c e s s i t y a r i s e of r e t a i l p r i c e s and i n consequence a
need f o r increase of c i r c u l a t i o n . I t may be s t a t e d as a general p r o p o s i t i o n ,
t h e r e f o r e , t h a t changes in the volume of currency i n t i n e s of expansion follow
p r i c e changes. They do not precede them. There i s , t h e r e f o r e , no foundation
in p r e s e n t American experience f o r the view s t i l l sometimes urged t h a t changes
i n the volume of currency are responsible f o r changes i n p r i c e s .
While i t may be true a s a t h e o r e t i c a l p r o p o s i t i o n t h a t p r i c e s a t
r e t a i l could not r i s e without an increase in the volume of currency and that_
r e f u s a l to supply currency might impede an upward movement of r e t a i l p r i c e s f
(though i t i s much more l i k e l y t h a t r e f u s a l to supply currency would lead the
community to adopt devices such a s d u e - b i l l s or bearer checks, e t c . of small
denominations to meet the demand f o r currency s u b s t i t u t e s ) , i t i s a l s o true
that such a method of c o n t r o l l i n g p r i c e s , if s u c c e s s f u l , would be a t the cost
of business d i s a s t e r .
p r i c e s a t wholesale are not appreciably a f f e c t e d by the volume of
pocket money. I t i s the volume of c i r c u l a t i n g bank c r e d i t t h a t i n f l u e n c e s the
trend of wholesale p r i c e s . R e s t r i c t i o n of bank note i s s u e s would n o t , t h e r e f o r e , act as a d i r e c t r e s t r a i n t upon the movement of wholesale p r i c e s . Such
e f f e c t s a s might conceivably be e x e r t e d from t h i s source would a t b e s t be
i n d i r e c t and would e f f e c t u a t e i t s e l f by what would be tantamount to & bre
down i n the organization of trade by making i t d i f f i c u l t f o r r e t a i l p r i c e y to
a d j u s t themselves to changes, proceeding from more or l e s s fundamental i n f l u ences, i n the movement of wholesale p r i c e s - The pocket currency of the country
i s a f u n c t i o n of the general money volume of the country*s b u s i n e s s . To a t t e a p t
to turn i t i n t o an instrument of c r e d i t control would be a p e r v e r s i o n of t ©
aarrency f u n c t i o n of the banking system.
The c o r r e c t i o n of the p r i c e s i t u a t i o n w i l l come i n a more n a t u r a l ^
and economic manner, p r i c e s a t r e t a i l w i l l f a l l to more normal l e v e l s as p r i c e s
at wholesale do. p r i c e s a t wholesale w i l l f a l l a s savings accumulate and
l i q u i d a t i o n of the war loan accounts of the banks ensue and r e d u c t i o n advances
to the p o i n t where i t more n e a r l y matches the g r e a t i n c r e a s e
803
*
ft
vtuich
•ffc tpp v
i n tne volume of c i r c u l a t i n g or purchasing wedia
have been
c a l l e d f o r t h during tire successive emergencies of r e c e n t y e a r s .
v
The manner in which liquidation of the war loan business of
the banks will operate a reduction of currency may ba explained.
It should also be noted that such liquidation will be most effective
if those who are now debtors to the b^nks on 4c count of Liberty loan
subscriptions take up their obligations out of their own savings.
Repayments of funds borrowed from the banks may take the for® e i t h e r
of bank deposit credit or of Federal Reserve notes . In the latter
case, Federal Reserve notes would begin to accumulate in the bands
of the member banks. They would take them to the Reserve Banks for
credit to their reserve accounts. Since the reserve.accounts of moat
of the member banks have been brought to their present l e v e l s through
extensive radiscounting, the return of thd Reserve notes to the Reserve
Bank would be in effect a reduction of the member baak*s liability to
its Reserve Bank and a retirement of the Reserve note through such process
of redemption. There would thus be a direct reduction in the volume of
Federal Reserve notes in circulation and a corresponding reduction of
rediscounts. In the former case, where the debtor of the member bank
made payment by credit, there would take place a reduction in tha first
instance of the volume of the member bank,s liabilities and in the
second instance of the Reserve Bank's deposit liabilities—and, it may
be added, on the asset side of the statement a reduction of its discounts. The whole volume of outstanding bank credit would thus contract itself and the same causes that brought about the contraction
would result in a lowering of prices which would necessitate a smaller
volume of pocket currency and a return flow of redundant- currency to
the banks and eventually to the Reserve Banks.
Taking things as they are, tha bulk of outstanding Federal
Reserve notes may properly be regarded as supplied to the borrowing
member banks against rediscounts. Expense in the shape of a discount
charge is, therefore, entailed to member banks in obtaining increased
supplies of notes. While Reserve notes are freely issued to the banks
in the sense that no limits have been imposed upon the amount, they
are not issued without cost. As increases in the volume of Federal
Reserve note currency, particularly in times of expansion, will be obtained against rediscounts or bills payable of member banks, the Federal
Reserve note, as long as it is out, involves serious cost to the bank
that takes it. The member bank, therefore, has every inducement, as
notes accumulate in its hands, to use them in reducing its borrowings
from the Reserve Bank. Thus has an automatic machinery been provided,
operating by the method of profit and loss, for sending into retirement
and redemption such part of the Federal Reserve note circulation of
the conaxjunity as may fot any time be in excess of requirements.
The main condition, as already observed, determining currency
requirements is the level of prices. The reduction of the volume O
f
the currency is, therefore, a price problem far more than the reduction
of prices is a currency problem.
804
•
*
-s-
X-1S92
C S O LIVING- P O L M That the high price levels which have been attained in
OT F
R BE *
the united, states present a grave situation is clear frow the attention which
current discussion of the causes of industrial unrest is directing to the cost of
living problem, jt presents the most urgent and immediate phase of the problem
of post-war business and industrial readjustment, jt promises to remain a persistent phase of post-war conditions unless its nature and cause are understood and a
rational economic attitude toward tt is developed,
so f a r a s t h e p r o f i t e e r i n g p r a c t i c e s , which c u r r e n t d i s c u s s i o n s assume have
developed widely and r a p i d l y s i n c e t h e a r m i s t i c e , a r e r e s p o n s i b l e for the price
a g g r a v a t i o n s which have been experienced i n r e c e n t months, some c o n s i d e r a b l e
m i t i g a t i o n of t h e cost of l i v i n g s i t u a t i o n may be expected and, indeed, is a l r e a d y
in s i g h t . The a c t i v i t y of a fair p r i c e * committees in d i f f e r e n t p a r t s of the c o u n t r y ,
local a c t i o n by the states, i n v e s t i g a t i o n s and p u b l i c i t y by the f e d e r a l Trade
Commission and p r o s e c u t i o n by t h e Department of j u s t i c e , under f e d e r a l law, which,
as elsewhere n o t e d , i s i n p r o c e s s of amendment, a r e / p r o d u c i n g r e s u l t s ,
already
The problem of reducing the c o s t cff l i v i n g i s , however, mainly t h a t of
r e s t o r i n g the p u r c h a s i n g power of the d o l l a r . The d o l l a r has l o s t p u r c h a s i n g power
because expansion of c r e d i t , under t h e n e c e s s i t i e s of war f i n a n c i n g , proceeded a t
a r a t e more r a p i d t h a n the p r o d u c t i o n and s a v i n g of goods. The r e t u r n t o a sound
economic c o n d i t i o n and one which w i l l involve a s l i t t l e f u r t h e r d i s t u r b a n c e of
normal economic r e l a t i o n s h i p s as p o s s i b l e w i l l be a r e v e r s a l of t h e p r o c e s s which
has brought t h e c o u n t r y t o i t s p r e s e n t pass# i n other words, the way i n must be
the way o u t , AS t h e way i n was expansion of c r e d i t a t a r a t e more r a p i d than
expansion of p r o d u c t i o n and s a v i n g , so t h e way out must be a n i n c r e a s e i n p r o d u c t i o n and i n s a v i n g . The e f f e c t of i n c r e a s e d p r o d u c t i o n w i l l be t o p l a c e a l a r g e r
volume of goods a g a i n s t t h e g r e a t l y enlarged volume of our p u r c h a s i n g media and
t h u s t o reduce p r i c e s . The e f f e c t of increased saving w i l l be a r e d u c t i o n i n the
volume of p u r c h a s i n g media i n use ahd, by consequence, a r e d u c t i o n of p r i c e s also*
is needed is the restoration of a proper
balance between the volume of credit and the volume
of goods f. said governor gar ding, speaking before the
a n n u a l convention of the American Bankers association
a t st- Louis, September 30th, "Because of the war
financing of the government it is not practicable to
reduce the volume of credit except gradually# and the
best and p r o b a b l y the only remedy for the present unrest
is to increase the volume cf goods, and the facilities
for their distribution, shorter hours and higher wages
do not tend to increase production, but rather the reverse, and strikes and walkouts are doubly harmful in
that they stop production without materially reducing
consumption-*
«V?hat
X-J692
805
The cost of living problem on its financial side is misconceived,
unless it is conceived, as .the problem of restoring the value of the
dollar. To accept the depreciation worked in the dollar by war conditions and to standardize the dollar of the future on this basis
would be to ratify the inflation wrought 'by the war and the injustices
i t produced. H artificial solution for an economic situation of
o
this kind is likely to commend itself to the better judgment and
the sense of equity of the country, even could some artificial method
of dealing with the question of monetary depreciation be devised
which would not bring in its train a crop of new difficulties and
and problems.
x-1692
806
-10 COST OF LIVING INDEX AND W G " ADJUSTMENT.
AE
So f a r a s the main incidence
of the h i g h c o s t of l i v i n g i s to bs found i n the r a n k s of l a b o r , i t s
c o r r e c t i o n p r e s e n t s an i n d u s t r i a l problem r a t h e r t h a n a monetary problem —
a problem t o be met n o t by a change i n the monetary s t a n d a r d b u t by a
change i n the machinery of i n d u s t r i a l remuneration. The s u c c s s s i u l handling
of the c o s t of l i v i n g s i t u a t i o n , so f a r a s concerns l a b o r , i s i n l i r s t
i n s t a n c e a m a t t e r of determining the e x t e n t to which the a c t u a l c o s t of
l i v i n g to d i f f e r e n t grades of l a b o r i n d i f f e r e n t p a r t s of t h e country has
been i n c r e a s e d by r i s i n g p r i c e s , and secondly, of d e v i s i n g some e f f e c t i v e
method ox a d j u s t i n g money wages t o changes i n the money c o s t of l i v i n g .
The former i s a t e c h n i c a l s t a t i s t i c a l problem and i s having the a t t e n t i o n of
the Bureau of Labor S t a t i s t i c s , which i s accumulating d a t a on the b a s i s of
which can be c o n s t r u c t e d a c o s t of l i v i n g index number t h a t w i l l show
v a r i a t i o n s i n t o t a l expense of f a m i l i e s dependent upon wages because of p r i c e
changes. The l a t t e r i s the p r a c t i c a l problem of improving the s t a t u s of
l a b o r by the e s t a b l i s h m e n t of new working p r i n c i p l e s governing the r e l a t i o n s
of employers and employed.
Speaking on t h i s s u b j e c t a t the Jbinual Meeting of the American
A s s o c i a t i o n of the Baking I n d u s t r y i n Chicago September 24th, Mr. M i l l e r
of the F e d e r a l Reserve Board said*
"There has been no general p o l i c y # e i t h e r p u b l i c
or p r i v a t e , governing the a c t i o n of i n d u s t r y i n the m a t t e r
of wage adjustment to changed l i v i n g c o n d i t i o n s . A l l
s o r t s of i n f l u e n c e s have been a t work i n determining the
outcome; the maintenance of the standard of l i v i n g h a s n o t
been t h e e c o n t r o l l i n g c o n s i d e r a t i o n . The s t a t e of the l a b o r
market in d i f f e r e n t i n d u s t r i e s has, a t times, r e s u l t e d i n
i n c r e a s e of wages more t h a i the i n c r e a s e i n the c o s t of
l i v i n g , and a t other times wages have l a g g e d . **** * I t
must be s a i d t h a t there has been on the whole a l a c k of
vClose correspondence of changes of wages w i t h changes in the
c o s t of l i v i n g .
"The f a c t s and i n d i c a t i o n s , f r a g m e n t a r y a s they
a r e , r e v e a l a s i t u a t i o n which from every reasonable p o i n t
of view must oe regarded as u n s a t i s f a c t o r y . Much a s was
achieved i n c e r t a i n i n d u s t r i e s during t h e war through the
a c t i o n of p u b l i c or p r i v a t e agency, the maintenance of the
s t a n d a r d of l i v i n g does not occupy the d e c i s i v e p l a c e i t
should i n the d e t e r m i n a t i o n of wages. Chance and circumstance p l a y too l a r g e a r o l e , end p r i n c i p l e too l i t t l e .
Wages must be regarded a s the f i r s t charge on i n d u s t r y , and
the maintenance of a t l e a s t those l i v i n g s t a n d a r d s which
were customary b e f o r e the war must be made s e c u r e . The
f i r s t duty of the n a t i o n i s to p r e s e r v e the h e a l t h and
s t r e n g t h of i t s workers. The s t a n d a r d of l i v i n g i s , t h e r e f o r e a m a t t e r of p u b l i c and n a t i o n a l concern a s well a s of
i n d i v i d u a l concern. The Nation can n o t a f f o r d , i n d u s t r y
can n o t a f f o r d , to r u n the r i s k of i m p a i r i n g i t s working
f o r c e s through l a c k of some e f f e c t i v e method of a d j u s t i n g
wages to the c o s t of l i v i n g . This i s , i n an immediate
T k
-U-
x-lb92
sense, the most p r e s s i n g aspect uf the c o s t of l i v i n g problem
with which we. are c o n f r o n t e d - close study should, t h e r e f o r e ,
be given by d i f f e r e n t i n d u s t r i e s in every s e c t i o n of the country
t o methods of handling the problem in an e f f e c t i v e ana equitable
way. Beginnings have been made i n some business and i n d u s t r i a l
e n t e r p r i s e s , but the problem should be taken hola of on a systematic and n a t i o n a l scale i n order t h a t the needed r e s u l t s
s h a l l be achieved, some mechanism by wfcich wages may promptly
be a d j u s t e d t o caan&es in the cost of l i v i n g must be accepted
as an e s s e n t i a l p a r t of the American wage system. *** such
a c t i o n i s p a r t i c u l a r l y urgent i n view of the extremely uncertain
and disturbed course which p r i c e s and the cost of l i v i n g seem
l i k e l y t o follow f o r a good many years t o come, or u n t i l the
a f f a i r s of the world are once more i n a s t a t e of s e t t l e d equilibrium*
I t w i l l not do t o leave the adjustment of wages to changes i n
the cost of l i v i n g , e i t h e r to the slow and u n c e r t a i n action
of the f o r c e s of competition, or t o the c o s t l y and d i s r u p t i v e
a c t i o n of i n d u s t r i a l w a r f a r e , so f a r a s the s t r i k e i s a method
of securing an adjustment of wages £0 r i s i n g p r i c e s , i>t should
become an obsolete f e a t u r e of the American i n d u s t r i a l system."
T E E P R SITUATION'
H XO T
l i t t l e change i s r e f l e c t e d i n the recent volume of our
f o r e i g n trade shown by the l a t e s t statement of the jQepartitsnt of commerce covering the month of august. Exports f o r August were $o4b>253,000 as compared with
$570,083,000 f o r j u l y , the f i r s t month i n the f i s c a l year 1950, and $602,090,000,
the average f o r the f i s c a l year 1$19- Largely increased exports, as compared with,
j u l y , are shown f o r unprepared f o o d s t u f f s , p a r t i a l manufactures, ana manufactures
ready for consumption, while smaller exports f o r the month a r e shown f o r prepared
f o o d s t u f f s , mainly meat and d a i r y products. Raw cotton exports show a f u r t h e r
decline f o r tne month, while exports of mineral o i l , cotton goods and automobiles
show considerable g a i n s . August imports were $ 3 0 7 1 , 0 0 0 as compared with
$344,000,000 f o r the month of J u l y and $257,950,000, the average f o r the f i s c a
year 1919. Excess exports f o r august were $33&»926,000 compared with $22b,0&5»00
f o r j u l y and $344,100,000, the average f o r the f i s c a l year 1919.
The f i r s t two months of the current f i s c a l year a r e , t h e r e f o r e , characterized
by a very marked diminution in the outward movement of goods. %t i s c l e a r t h a t
the large American c r e d i t s at the d i s p o s a l of f o r e i g n governments and t h e i r d i s p o s i t i o n to draw heavily on j p e r i c a n supplies f o r t h e purpose of " s t a b i l i z i n g
the f i r s t steps in the process of after—war r e a d j u s t m e n t , were mainly responsi
f o r the heavy outflow of goods during the l a s t f i s c a l year, i t has not yst ©en
determined, nor i s i t c l e a r , how much must be done Sor how l i t t l e w i l l s u f l i c e
in f u r t h e r f i n a n c i a l and economic support of Europe i n the f u r t h e r process 0
readjustment, flor i s i t c l e a r what should be done i n support of c e r t a i n of our
i n d u s t r i e s which a t t a i n e d conspicuous importance as export i n d u s t r i e s under
pressure of the a r t i f i c i a l s i t u a t i o n produced by the war.
X-1692
-12
I t seems highly probable, however, t h a t new o u t l e t s f o r the excess products
of these i n d u s t r i e s w i l l have to be found if anything approaching t h e i r
volume of production during the war i s to be sustained*
In the meantime i t should be noted t h a t some improvement in our
c o s t of l i v i n g s i t u a t i o n i s l i k e l y to r e s u l t from the diminished outflow
of goods to c o u n t r i e s not i n a p o s i t i o n to make payment by r e t u r n shipments
of goods*' Elsewhere i n the B u l l e t i n are given the r e s u l t s of an attempt
to estimate the growth of the physical volume of our export trade i n r e c e n t
years a f t e r e l i m i n a t i n g the p r i c e f a c t o r - i n other words, an attempt to
estimate the growth in p h y s i c a l volume. While the data a v a i l a b l e f o r such ,
an estimate are not as comprehensive as might De d e s i r e d and the r e s u l t s
are, t h e r e f o r e , n o t to be taken as conclusive, they are believed, nevert h e l e s s , to be of fcrery great value a s giving a more f a i t h f u l p i c t u r e of
changes in our export s i t u a t i o n than can be derived.from t o t a l s s t a t e d i n
terms of money value* Taking the pre-war f i v e - y e a r p e r i o d 1910-lU as a
base f o r purposes of comparison and noting the increase f o r each of the
succeeding f i v e years as compared with the pre-war average, the following
index numbers are reached;
1910 - 1914
1915
1916-17
1918
1919
100
125
120
109
1)5
I t i s noteworthy that the f i s c a l year 1919 shows the g r e a t e s t
increase over the pre-war average - an increase of 35 P e r c e n t , - a r a t e
of increase more than f o u r f o l d t h a t shown f o r the preceding f i s c a l year
1918. Such a gain i n the r a t e of increase suggests t h a t hezvy exports
( e f f e c t u a t e d f o r the most p a r t by c r e d i t advances) to Europe have been a
very considerable f a c t o r y in our c o s t of l i v i n g s i t u a t i o n * I t i s a l s o
noteworthy t h a t an estimated 35 P e r cent of the p h y s i c a l volume of exports
in the l a s t f i s c a l y e a r consisted of f o o d s t u f f s *
V
I
808
W . P . 0 . H A R D I N G . GOVERNOR
fcx O F F I C I O M E M B E R S
A L B E R T S T R A U S S , VICE GOVERNOR
CARTER OLASS
SECRETARY OF T H I TREASURY
ADOLPH C . MI LLER
ap m A
qm M M
t
C H A R L E S S . HAMLIN
FEDERAL RESERVE BOARD
J O H N SKELTON W I L L I A M S
COMPTROLLER OF THE CURRENCY
W . T. C H A P MA N , SECRETARY
R . G . E M E R S O N , ASSISTANT SECRETARY
address reply to
FEDERAL RESERVE BOARD
W . M. INLAY, FISCAL AOENT
WASHINGTON
October 6,1919-
X-1693
S u b j e c t : . Campaign f o r New p a r p o i n t s .
Dear s i r :
There i s enclosed herewith a copy of r e p o r t
p r e p a r e d from r e p l i e s r e c e i v e d from a l l Federal Reserve
Banks i n response to our telegram of September 26th, asking
f o r i n f o r m a t i o n r e g a r d i n g the p r o g r e s s of the campaign b e i n g
conducted f o r the e s t a b l i s h m e n t of new p a r p o i n t s In a d d i t i o n there i s a l s o enclosed a s p e c i a l r e p o r t
showing non-member banks n o t on p a r l i s t d i s t r i b u t e d by S t a t e s
according t o Federal Reserve D i s t r i c t s ; a l s o , a statement
showing t o t a l number of banks on p a r l i s t d i s t r i b u t e d by S t a t e s
according to Federal Reserve D i s t r i c t s .
Very t r u l y yours*
Assistant secretary.
3-Incl.
To Chairmen of a l l Federal Reserve Banks
o
CAMPAIGN
FOR
NEW
PAR
P O I N T S
REPORT OF FEDERAL DESERVE BANKS, SEPTEMBER 30, 1919
X-1693 a
National ; s t a t e
$ T o t a l • Nonrcembar
R a t i o of ncnmeriisr : Number of
No. of Banks
Banks i n » Bank
> Member • Banks on p<=T Banks on p a r L i s t ; Banks added
added to par
D i s t r i c t ; Members ; Banks ;
List
t o t o t a l nonmeniber r t o p a r L i s t
List, since
bunks i n D i s t r i c t •
„
during
J a n . 1, 1919.
: Sept, 1919.
Federal
Reserve
Bank of
Boston
;
394
New Y ork
;
629
Philadelphia ;
635
Cleveland
«
749
Richmond
;
531
;
42
Atlanta
;
367
:
63
Chicago
*
1,047
:
317
St.Louis
;
467
:
Minneapolis
:
824
Kansas C i t y
:
Dallas
36
:
430
242
100
:
—
~
:
116
:
745
318
100
z
——
r
36
:
673
U09
100
z
840
1,011
93.1
:
62
344
:
573
425
29.4
=
30
:
430
346
21.7
:
: 1,364
3,201
60
:
527
:
82
:
981
:
36
1
631
:
117
:
SanFrancisco :
571
:
109
:
No, of ncn member banks
n o t on p a r
List
Total
;
7,826
**—
:
242
—
*****
:
318
:
409
75
:
1,086
151
1,020
;
1,445
6
96
1,245
:
1,591
76.2
34
833
996
:
4,197
1,827
68.9
125
8I9
826
1
2,653
906
1,496
52,1
:
15
327
1,373
i
2,869
: 1,017
2,829
36.3
:
329
648
449
:
3,278
748
638
52-0
318
469
590
:
1,228
680
918
86.1
148
:
1,066
: 8,933
13,660
.
67.0
•Decrease
Total No,
nonmember
banks i n
District.
—
91
: 1,107
;
:
*
;
FEDERAL DESERVE BOARD
WASHINGTON
OCTOBER 6,1919,
:
3
952
z
r
-9*
J
3,7>1
6,722
: 20,382
e x OFFICIO MEMBERS
CARTER G L A S S
SECRETARY OF THE TREASURY
CHAIRMAN
W , P . E . H A R P 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 . HAMLIN
»
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
W . T. CHAPMAN, ASSISTANT SECRETARY
W . M. IJILAY, FISCAL AGENT
A D D R E S S R E P L Y TO
federal reserve board
October 10, 1919*
X-1697.
Subject:
Telegraphic Charges,
Dear s i r :
With f u r t h e r r e f e r e n c e t o the Board*s l e t t e r of
J u l y 9» 1919, X - l b l l » r e g a r d i n g uniform p o l i c y of payment
of charges on t e l e g r a m s addressed t o Federal Reserve Agents
by member banks and managers of c l e a r i n g houses r e p o r t i n g
f i g u r e s which are used by t h e Board i n i t s w e e k l y p u b l i s h e d
s t a t e m e n t s , the commercial t e l e g r a p h companies have r e q u e s t e d
t h a t t h e n o t a t i o n on t e l e g r a m s , which was suggested i n the
Boardts l e t t e r mentioned above r e a d i n g as f o l l o w s %
" O f f i c i a l b u s i n e s s , government r a t e s ,
Charge f e d e r a l Reserve Agent, F e d e r a l
Reserve Bank, Boston,Mass."
be changed t o r e a d ,
"Collect.
O f f i c i a l business*
government r a t e s . "
The commercial t e l e g r a p h companies advise t h a t t h e r e has been
c o n s i d e r a b l e c o n f u s i o n , owing t o t h e use of the n o t a t i o n o r i g i n a l l y
s u g g e s t e d , and s t a t e t h a t i t w i l l g r e a t l y f a c i l i t a t e t h e i r work
i f the r e v i s e d n o t a t i o n i s u s e d .
Kindly a d v i s e r e p o r t i n g member banks and managers of
c l e a r i n g houses i n your d i s t r i c t , and acknowledge r e c e i p t of t h i s
letter.
Very t r u l y y o u r s .
L e t t e r t o a l l chairmen.
Assistant secretary
w . P. a . H A W 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 . HAMLIN
e x OFFICIO MEMBERS
CARTER G L A S S
SECRETARY OP THE TREASURY
CHAIRMAN
J O H N SKELTON WILLIAMS
COMPTROLLER OP THE CURRENCY
FEDERAL RESERVE BOARD
J . A. BRODER1CK. SECRETARY
W . T. CHAPMAN. ASSISTANT SECRETARY
W . M. IMLAY, FISCAL AGENT
A D D R E S S REPLY TO
WASHINGTON
federal reserve board
October 11,1919.
X-I69S
Subject:
Act amending Sections 5200 and 5 262 U.S.R.S.
Dear S i r : ~
I enclose h e r e w i t h , f o r the information of the
o f f i c e r s of your bank, a copy of House B i l l 7^78 amending
Sections 5200 and 5202 of the Revised S t a t u t e s of the
United States-.
This b i l l , which was passed by the House on
October 7 t h , i s i n the exact form i n which i t passed the
Senate on October 2nd, and i t w i l l become a law a f t e r i t
r e c e i v e s the signature of the P r e s i d e n t , or without h i s
signature a f t e r the lapse of ten days from the tizre the
engrossed copy i s sent t o the Tvhite House,
1
Very t r u l y yours
Governor.
813
W . P . 6 . 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 . HAMLIN
CARTER G L A S S
SECRETARY OF THE TREASURY
CHAIRMAN
FEDERAL RESERVE BOARD
J O H N SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
WASHINGTON
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. IMLAY. FISCAL AGENT
ADDRESS REPLY TO
FEDERAL RESERVE BOARD
October 11,1519.
X-1693
Subject:
Memorandum r e "Calculations Showing the E f f e c t
of Changes in Reserve Requirements,"
Dear S i r :
There i s enclosed, herewith, f o r your
c o n f i d e n t i a l use i n considering t o p i c (b) "Amendments", ( l ) "Beserves and net d e p o s i t s " under
"Federal Reserve Bank P o l i c i e s " i n the l i s t of
t o p i c s f u r n i s h e d you by Federal Reserve Agent
Jay f o r d i s c u s s i o n at the Conference of Federal
Reserve Agents to be held i n Washington October
22, a copy of a memorandum p r e p a r e d by the B e a r d ' s
S t a t i s t i c i a n on the s u b j e c t , "Calculations Showing
t h e E f f e c t of Changes i n Reserve Requirements"*
(Enclosure)
Very t r u l y yours,
Assistant Secretary,
To f e d e r a l Reserve Agents a t a l l F e d e r a l Reserve Banks*
814
August 28,1919*
X-^1660
Subject:
Calculations Showing the Effect of
Changes in Reserve Requirements.
„T
MEMORANDUM FOR GOVERNOR HARDING,
In accordance with your request I hand you herewith statements containing the following calculations based upon March 4,1919, r e t u r n s .
1.
Amounts of required reserves for national banks located in Federal
Reserve Bank and branch c i t i e s on the one hand and national banks
located i n other places on the other, a i figured by the Comptroller •
in accordance with present law; i . e . , 13 per cent against net demand
deposits in central Reserve c i t i e s ; 3.0 per cent in other Reserve
c i t i e s ; and 7 per cent Outside of Reserve c i t i e s . Modlfication^of
these figures has been made on the supposition that cash iii vault
including lawful money and other cash i s to be deducted ftotn demand
deposits in f i g u r i n g required reserves.
2.
Changes in the amounts of required reserves f o r national batiks
located in Federal Reserve Bank and branch c i t i e s
(a) assuming uniform reserve requirements
of 15 per cent against bank deposits;
10 per cent against demand deposits
and the continuation of 3 per cent
against time deposits*
and l i k e changes f o r national banks outside Federal Reserve Bank
and branch c i t i e s
(b) assuming uniform reserve requirements of
15 per cent against bank deposits, 7 per cent
•against demand deposits and the continuance of
3 per cent against time deposits.
3.
Like changes i n required reserves f o r national banks located in
Federal Reserve Bank and branch c i t i e s on the one hand and in other
places on the other, assuming uniform reserve requirements of 14
per cent against bank deposits and 3 per cent against time deposits;
12 per cent against demand deposits held by banks i n Federal Reserve
Bank and branch c i t i e s and 7 per cent against demand deposits held
by banks in other p l a c e s .
X-1660
If a change i n r e s e r v e requirements as o u t l i n e d i n p a r a g r a p h 2
was e n a c t e d , r e q u i r e d r e s e r v e f o r t h e hanks i n F e d e r a l Reserve Bank
and b r a n c h c i t i e s would d e c l i n e from 643 t o b22 m i l l i o n s , and i f i n
a d d i t i o n v a u l t c a s h were t r e a t e d as a d e d u c t i o n f r c m detuand d e p o s i t s ,
r e q u i r e d r e s e r v e s would d e c l i n e t o 6o4 m i l l i o n s , t h u s making a t o t a l
d e c l i n e i n r e q u i r e d r e s e r v e s of 39 m i l l i o n s . This d e c l i n e , a s shown
i n t h e d e t a i l e d s t a t e m e n t i s t h e combined r e s u l t of a l a r g e r c a l c u l a t e d
d e c l i n e f o r the hanks i n t h e c e n t r a l Reserve c i t i e s and i n c r e a s e s f o r
the hanks iii most of t h e o t h e r F e d e r a l Reserve Bank a m branch c i t i e s .
If t h e change i n r e q u i r e d r e s e r v e s as o u t l i n e d i n p a r a g r a p h 3
was adopted, r e q u i r e d r e s e r v e s f o r t h e backs i n F e d e r a l Reserve Bank
and branch c i t i e s would, r i s e from 643 t o 687 m i l l i o n s . If v a u l t c a s h
was t r e a t e d a s a d e d u c t i o n from demand d e p o s i t s , an I n c r e a s e t o bb5
m i l l i M I S would r e s u l t , or an i n c r e a s e by about 22 m i l l i o n s a s a g a i n s t
a d e c r e a s e of 39 m i l l i o n s under t h e f i r s t combination. But here again#
as under t h e f i r s t s u p p o s i t i o n , t h e change i n r e s e r v e requirements would
b e n e f i t the banks i n t h e c e n t r a l r e s e r v e c i t i e s by reducing t h e i r r e q u i r e d
r e s e r v e s from 403 t o 380 m i l l i o n s , or by 22 m i l l i o n s , a s a g a i n s t a r e d u c t i o n of 53 m i l l i o n s under the f i r s t s u p p o s i t i o n . On the l a t t e r assumpt i o n , however, i t i s found t h a t banks i n a l l F e d e r a l Reserve Bank and
b r a n c h c i t i e s o t h e r t h a n c e n t r a l Reserve c i t i e s w i l l be r e q u i r e d t o
keep l a r g e r r e s e r v e s t h a n under t h e present low.
R e s p e c t f u l l y submitted,
M. JACOESON.
Statistician-.
O f f i c e Memorandum*
Not t o be t r a n s m i t t e d t o F e d e r a l Reserve Banks.
CO
gf)
* -- •
-
S A E E T S O I G A O NS O E S R E W I H N TO A B N S A E R Q I E T C R Y WT F D R L R S R E B N S
T T M N H WN M U T F E E V S HC A I N L A K B E UR D O A R I H E E A E E V A K
P E E T L W A D R S R E W I H T E B U D B R Q I E T C R Y U D R C R AN P O O E A E D E T,
R S N A N E E V S HC H Y O L E E UR D O A R N E E T I R P S D M N M N S
(Based on figures shown in Comptroller's abstract for March 4,1919*)
(In thousands of dollars)
X-looQ a
1.
B N S IN F.R. A D B A C CITIES. >
AK
N R NH
»
Reserves required:
On bark deposits - - - - - - O demand deposits - - - - - n
On time deposits - — - - —
2.
1
3.
Pre sent Proposed 11 proposed
law
amendment 1 amendment
Amount Amount # 'Amount %
171,506 2335$00 15'199,360
Column 2
over
column 1
42,094 '
14
12 ( a ) 6 3 , 1 8 1 »
3
After deducting cash in vault from demand
0 S1 v S
460,002
11,591
396,321
11,591
10'476,185
3 ' 11,591
643,099
622,012
'687,136
604,226
21,935
340,658
67,973
37,149
321,112
67,973
15* 34,672
7*321,112
# 67,972
15,214
14
7 ( a ) 19,546
3
426,234
*423,757
( a ) 4,332
™ ~ —— - —
•
B N S O T I E F.R. B N A D B A C CITIES
A K U SD
AK N R NH
Reserves required:
O bank deposits - - - — _ _ _ _ _ _ _ _ _
n
O demand deposits n
— - - - - - - - O time.deposits n
- - - - - - - - - - -
After deducting cash in vault from demand
deuosits — — — — — — — — — — — „ 408,226
— — —
m
A L N TO A ^ A K .
L A I N LB N S
Reserves required:
On net deposit liabilities as calculated at
A f t e r d e d u c t i n g cash i n v a u l t from demand
deposits - - - —
________ —
Decrease i n r e q u i r e d r e s e r v e s r e s u l t i n g from
t r e a t m e n t of v a u l t cash a s a d e d u c t i o n from
demand d e p o s i t l i a b i l i t i e s - - - - - - - - -
(a) Excess of column
(b) Excess of column
(c) Excess of column
( 1 ) over column ( 2 )
( 1 ) over column ( 3 )
( 2 ) over column ( 3 )
27,854'(c)l4,240
16,183'
79,364
1
'665,793
430,566
Total
E XCESS
1
Column 3 'Column 3
' oyer
'
over
'column 1 'column 2
1,073,665 1,048,246
1,012,452
35,794
'405,749
1
I
I
n , 110,893
I
'1,071,542
t
I
1
39,351
(a)21,087
1
44,037'
65,124
61,567
12,737 ( c ) 2,477
(b)l9,546
( b ) 6,809
( c ) 2,477
( c ) 2,477
(a)25,419
37,228
62,647
59,090
Q*
W . P . G . H A R D I N G . GOVERNOR
EX OFFICIO MEMBERS
ALBERT S T R A U S S , VLCI GOVERNOR
ADOLPH C . MI LLER
CARTER G L A S S
HCFTFTARY OF THE TREASURY
CHAIRMAN
C H A R L E S S . HAMLIN
FEDERAL RESERVE BOARD
J O H N SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
W . T. CHAPMAN, SECRETARY
R . G . E M E R S O N , ASSISTANT SECRETARY
address reply to
FEDERAL RESERVE BOARD
WASHINGTON
W . M. 1MLAY, FISCAL AGENT
October l 6 , 1919*
X-1701
CONFIDENTIAL
Subject: Study of Present Credit Situation with view
to devising steps to curtail ejqpansion.
Dear Sir:
In the opinion of the Board the expansion of credits
is fast reaching the danger point, and at its conference with
the Governors of the Federal Be serve Banks this question will
be given serious consideration.
It is evident that some effective steps nmst be devised
to regulate the granting of credits, and the Board requests that
each Governor, before coming to the conference, look over the
discount lines of his bank and bring with him a memorandum showing
the names of all banks which habitually rediscount in excessive
amounts, as well as the average line carried by each of each
institutions since October 1st.
The Board has knowledge of cases in several of the
Federal Reserve Districts where member banks appear to be carrying
Liberty Bonds and Treasury certificates far in excess of their
combined capital, surplus and deposits and ure rediscounting the
entire amount with their Federal Reserve Bank, the intention being,
apparently, to make the profit out of the differential in rate.
As an example your attention is invited to the following figures, .
which relate to a State member bank in a certain Federal Reserve
District:
Loans and Discounts
$ 173*579Liberty Bonds,
1,658,825*00
United States Victory Notes
200,000.00
Stock of Federal reserve bank.
7,500.00
Other bonds, stocks and securities
117,875-00
Lawful reserve with Federal reserve bank . . 70.5H-00
- 0 -
X-1701
C a p i t a l stock
Surplus.
Undivided P r o f i t s . . . .
Total gross deposits.
B i l l s Payable w i t h F e d e r a l r e s e r v e b a n k . . . .
$ 200,000.00
50,000.00
1,854.00
110,24g.86
1,950,000.00
T h i s bank h a s used a l l i t s Government s e c u r i t i e s a s c o l l a t e r a l
t o s e c u r e i t s f o u r p e r c e n t , n o t e s w i t h t h e F e d e r a l fie serve Bank;
i t c a r r i e s no v a u l t c a s h and does not do an a c t i v e b u s i n e s s ; i t s
minimum annual n e t p r o f i t derived from the r e d i s c o u n t i n g of p a p e r
secured by Government o b l i g a t i o n s i s :
W
on $1,658,825,
3/4# on $ 200,000,
$4,147.00
1,500.00
5,647.00
T h i s i s a n e t p r o f i t which does n o t c a l l f o r t h e investment
of a n y of t h e b a n k ' s c a p i t a l and s u r p l u s .
• Very t r u l y y o u r s ,
Governor
L e t t e r t o each g o v e r n o r .
818
E x 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
CARTER G L A S S
SECRETARY OF THE TREASURY
CHAIRMAN
ADOLPH C. MILLER
C H A R L E S S . HAMLIN
FEDERAL RESERVE BOARD
J O H N SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
W . T. C H A P M A N , SECRETARY
R . G . E M E R S O N , ASSISTANT SECRETARY
A D D R E S S REPLY TO
FEDERAL RESERVE BOARD
WASHINGTON
October 17,1919.
Subject:
W . M . IMLAY, FISCAL AGENT
X-1702
Manual of the Federal Reserve System
Leased Wire Service*
Dear S i r :
There are s e n t you under s e p a r a t e cover
c o p i e s of the Federal Reserve Board, "Manual Of The
Federal Reserve System Leased Wire > Service O u t l i n i n g
B r i e f l y The Plan Of Operation, And Containing I n s t r u c t i o n s
For The Guidance Of O p e r a t o r s , Together With General
Information For Those Concerned With The Handling of
Telegrams* prepared by the F e d e r a l Reserve Bank of
Chicago i n accordance w i t h recommendations of the
Governors of the F e d e r a l Reserve Banks to the F e d e r a l
Reserve Board ( B o a r d ' s l e t t e r X-l607) c o v e r i n g the o p e r a t i o n
of the Federal Reserve Leased Wire System.
The Manu*l has been approved by the F e d e r a l
Reserve Board and becomes e f f e c t i v e i a m e d i a t e l y .
Will you k i n d l y f u r n i s h c o p i e s to o f f i c e r s and
employees of your Bank concerned w i t h the h a n d l i n g of
telegrams over the F e d e r a l Reserve Leased Wire System?
Very t r u l y y o u r s ,
Assistant Secretary.
TO THE CHAIRMEN OF ALL FEDERAL RESERVE BANKS,
,
, 820
x-1703
EEBEHAL RESERVE AGENT*S SPECIAL FUNCTIONS.
(a)
NOTE J.SSUK
(1) Discussion of expansion and c o n t r a c t i o n .
(2) Supply of coin and. currency.
Does Federal Re serve Batik supply i t s d i s t r i c t
completely or do member banks get supply
l a r g e l y from t h e i r correspondents?
Each Federal Reserve Agent to r e p o r t .
(3) Redemptions,
Can the volume of shipments by member banks and
by Federal Reserve Banks be reduced?
(b)
INFORMATION.
k
(1) Monthly business review.
(2) Intermediate information.
(3) Annual Report.
(4) Standardized s t a t i s t i c s .
(c)
AUDITING.
( l ) Recommendations of Auditors conference.
(d)
EXAMINATIONS OF M M E BANKS.
E BR
(e)
CLAYTON ACT
( l ) Should e x i s t i n g permits be r e v i s e d .
(f)
TRUST POWERS.
(g)
RELATIONS WITH MEMBER BANKS.
(1) Services, present and p r o s p e c t i v e , and t h e i r cost*
(2) Are many members considering withdrawing?
(3) Proper use of System by members; can a programme be
formulated?
(h)
RELATIONS WITH NON-MEMBER BANKS.
(1) What can be done to increase membership?
(2) Reconauendation of d e f i n i t e programme to Federal Reserve Board.
(3) Report from Federal Reserve Board's Counsel a s to condition
of State laws. What l e g i s l a t u r e s meet in 1920?
(4) Value of non-member c l e a r i n g accounts.
(i)
RELATIONS WITH PUBLIC.
(1) P u b l i c i t y r e g a r d i n g Federal Reserve m a t t e r s .
(2) Campaign of education f o r b u s i n e s s men. Would i t c r e a t e
sentiment among b«sik d i r e c t o r s t o have t h e i r banks
j o i n and remain in System?
(Discussion by F.R. Agents
( C r i t i c i s m and suggestions
(by F.R. Board,
x-1703
FEDERAL RESERVE BANK POLICIES.
PAR POINT CAMPAIGN.
(1) Report from each D i s t r i c t ,
(2) Symbol p i en.
(3) Fixing maximum charges.
(4) Clearing House charges.
AMENDMENTS.
(l)
RATES.
(1)
(2)
Reserves and. n e t d e p o s i t s .
Classification.
Changes; t h e i r purpose and probable e f f e c t .
RELATION TO M N Y MARKET.
OE
(1) Contracting discounts through r a t e s or p r e s s u r e
of individual bunks(2) Acceptances; development and market.
(3) Gold movements.
RELATIONS TO SUB-TREASURY.
(1) L e g i s l a t i o n .
(2) Operation.
BRANCHES.
FOREIGN CREDITS.
(1) P r e s e n t a t i o n of s i t u a t i o n as viewed by Federal
Reserve Board.
(2) Can Federal Reserve Barks do anything t o improve
f o r e i g n exchange s i t u a t i o n ?
833
X-1703
Supplementary L i s t of Topics suggested by Federal Reserve
Agents to the Federal Reserve Board f o r d i s c u s s i o n a t
the Federal Reserve Agents' Conference i n Washington, October 22, 1919*
Suggested by Federal
Reserve Agent a t :
FEDERAL RESERVE AGENT'S SPECIAL FUNCTIONS
(a)
NOTE ISSUE.
(4) A d v i s a b i l i t y of amending Federal Reserve Act
to make Federal Reserve n o t e s l e g a l tender«
St.Louis
(d)
EXAMINATIONS OF M M E BAMS.
E BR
( l ) D e s i r a b i l i t y of Federal Reserve Banks 1 r e c e i v i n g c o n f i d e n t i a l p a r t s of r e p o r t s of n a t i o n a l
Bank Examiners*
San Francisco
(g)
RELATIONS WITH M M E BANKS.
E BR
(4) Advantages of i n s t i t u t i n g a system of v i s i t i n g
member banks f o r the purpose of h e l p i n g and
i n s t r u c t i n g them.
(j)
FEDERAL RESERVE AGENT'S DEPARTMENT,
(1) Necessity of A s s i s t a n t Federal Reserve Agents
a t branches, and d u t i e s of such agents.
(2) D e s i r a b i l i t y of organizing a Federal Reserve
Agent's Department with the Chief Examiner
as the Federal Reserve Agsnt's chief a s s i s t ant.
Chicago
S t . Louis.
San Francisco
FEDERAL RESERVE BANK POLICIES.
(a)
PAR POINT CAMPAIGN.
(5) Policy as to compulsory c o l l e c t i o n of checks
at par.
San F r a n c i s c o .
(h)
COMPENSATION OF EMPLOYEES.
( l ) Wages and bonuses.
(i)
DESIRABILITY OF AN INTERCHANGE OF JUNIOR OFFICERS.
AND DEPARTMENT HEADS BETWEEN FEDERAL RESERVE BANKS. San Francisco.
(j)
GOLD POLICY.
(1) D e s i r a b i l i t y of l i m i t i n g payments of gold c o i n s
to those of $20 denominations.
San F r a n c i s c o .
823
W . P . G . H A R D I N G . GOVERNOR
EX O F F I C I O M E M B E R S
ALBERT S T R A U S S , VICE GOVERNOR
ADOLPH C . MILLER
CARTER G L A S S
SECRETARY OF THE TREASURY
CHAIRMAN
J O H N SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
ADDRESS REPLY TO
FEDERAL RESERVE BOARD
C H A R L E S S . HAMLIN
FEDERAL RESERVE BOARD
W . T. CHAPMAN, SECRETARY
R . G . E M E R S O N , ASSISTANT SECRETARY
w . M. IMLAY, FISCAL ASENT
WASHINGTON
October 24, 1919
X-I705
Subject: Amendment to Section 5200 and Rediscount Powers of Federal Reserve Banks.
Dear Sir:
There is enclosed herewith an analysis of the
amendment to Section 5200 of the Bevi eed Statutes of the United States, which became a law on October 22, 1919, together
with a memorandum discussing the distinction which must be
. drawn in making rediscounts for national bank and state bank
members.
Very truly yours
Governor#
X-1705 (a)
LOANING- POWERS OF NATIONAL BANKS
UNDER THE A E D E T TO SECTION 5200 U.S.R.S.
MN MN
APPROVED OCTOBER 22, 1919 •
The amendment to Section 5200 of the Revised S t a t u t e s which became a law on October 22, 1919, has made c e r t a i n m a t e r i a l changes i n the
loaning powers of n a t i o n a l banks * For the convenience of n a t i o n a l banks
and o t h e r s i n t e r e s t e d i n the e f f e c t of those changes, there i s submitted
herewith an a n a l y s i s of the p r o v i s i o n s of Section 5200 now i n f o r c e .
The' amounts which a National Bank may p r o p e r l y lend to any one
p e r s o n , company, c o r p o r a t i o n or f i r m (including i n the l i a b i l i t y of a company or f i r m , the l i a b i l i t i e s of the s e v e r a l members t h e r e o f ) under the
v a r i o u s c l a u s e s of Section 5^00, as amended by the Act approved October
22, 1919, are s t a t e d i n terms of the percentage of the paid-up and unimp a i r e d c a p i t a l stock and surplus of the lending bank.
Character of Loans.
(A)
Accommodation or s t r a i g h t loans,
whether or not s i n g l e name,
(B) " B i l l s of exchange drawn i n good
f a i t h against actually existing
values".
The law e x p r e s s l y provides t h a t
t h i s phrase s h a l l a l s o i n c l u d e :
(a) D r a f t s and b i l l s of exchange
secured by shipping documents conveying or securing
t i t l e t o goods shipped.
(b) Demand o b l i g a t i o n s , when s e cured by documents covering
commodities i n a c t u a l p r o cess of shipment.
(c) Bankers ' acceptances of the
kinds d e s c r i b e d i n Section
13 of the Federal Reserve
Amounts Loanable.
1
1
1
'
1
'
1
1
1
1
1
1
1
'
1
'
'
'
1
—
Maximum l i m i t ,
of b a n k ' s .
paid-up and unimpaired c a p i t a l
and s u r p l u s .
No l i m i t imposed by law,
X-1705 (a)
-
2 -
Character of Loons.
(C)
Commercial or b u s i n e s s paper (of
other makers) a c t u a l l y owned by
the p e r s o n , company* c o r p o r a t i o n
o r f i r m n e g o t i a t i n g the same.
(D)
Notes secu r ed by shipping documents , warehouse r e c e i p t s or
other such documents, conveying
or securing t i t l e covering r e a d i l y marketable non-perishable
s t a p l e s , including l i v e s t o c k .
No bank may make any loan under
(D), however,
(a) Unless the a c t u a l market v a l ue of the p r o p e r t y securing
the o b l i g a t i o n i s not at any
time l e s s than 115$ of the
f a c e amount of the n o t e , and
(b) Unless the p r o p e r t y i s f u l l y
covered by insurance, and i n
no event s h a l l the p r i v i l e g e a f forded by (D) be exercised f o r any
one customer f o r more than s i x
months i n any consecutive twelve
months.
(E)
Notes secured by not l e s s than a
l i k e f a c e amount of bonds or
notes of the United S t a t e s issued
since April 24, 1917, or by c e r t i f i c a t e s of indebtedness of the
United S t a t e s .
(F)
Notes secured by U. S. Government
o b l i g a t i o n s of the kinds d e s c r i b ed u n d e r (E) the f a c e amount of
which i s a t l e a s t equal t o 105$
of the amount of the c u s t o m e r ' s
notes.
•Amounts Loanable,
No l i n i t imposed, by law.
15$ of b a n k ' s c a p i t a l and surplus,
i n a d d i t i o n to the amount allowed
under (A); or if the f u l l amount
allowed under (A) i s not loaned
then the amount which may be loaned
i n the maimer described under (D)
i s increased by the loanable amount
not used under (A) . In other
words, the amount loaned under (A)
must never be more than 10$ but the
aggregate of (A) and (D) may equal,
but not exceed, 25$.
of b a n k ' s c a p i t a l and s u r p l u s ,
i n a d d i t i o n to the amount allowed
uuv...? (A), or if the f u l l amount
allowed under (A) i s n o t loaned,
then the amount which may be loaned
i n the manner described under (E)
i s increased by the loanable amount
not used under (A). In other
words, the amount loaned under (A)
must never be more than 10$, but
the aggregate of (A) and (E) may
equal, b u t not exceed. 20#.
No l i m i t , b u t t h i s p r i v i l e g e , under
r e g u l a t i o n s of the Comptroller of
the Currency, e x p i r e s December
31. 1920.
,
X-1705 (a)
' 8
SOME EXAMPLES OF W A A NATIONAL BANK M Y LEND AT ANY ONE TIME
HT
A
TO A Y ONE CUSTOMER UNDER THE A E D E T TO SECTION 5200
N
MN MN
APPROVED OCTOBER 22, 1919, EXPRESSED IN TE%S OF
PERCENTAGE OF THE BANK'S CAPITAL AND SURPLUS.
Illustration
1
Illustration
2
Illustration
2
(.A)
Accomodation or s t r a i g h t loans,
10$
5$
5$
(D)
Notes secured by warehouse r e ceipts , etc.,
15$
20$
15$
lofo
35$
10$
35$
, 15*
35$
(E)
Notes secured by a l i k e f a c e
amount of Government obligartions,
(B)
B i l l s of exchange drawn a g a i n s t
actually existing values,
(C)
Conzuercial or b u s i n e s s
(F)
Notes secured by a t l e a s t 105$
of U. S. Government o b l i g a t i o n s ,
October 24, 1919.
paper,
,,
No l i m i t imposed "by law.
11
"
"
"
"
"
n
"
"
"
827
X-1705 (b)
W A A FEDERAL RESERVE BANK M Y DISCOUNT
HT
A
FOR JT§ MEMBER BANKS.
The l i m i t a t i o n s imposed upon the amounts of r e d i s c o u n t s which
a Federal r e s e r v e bank may make f o r a member bank, whether State or nat i o n a l , are determined by the p r o v i s i o n s of the Federal Reserve Act and
are n o t i n any way a f f e c t e d by the amendment to Section 5200*
Under the p r o v i s i o n s of Section 13 of the Federal Reserve Act
any Federal reserve bank may rediscount f o r any member bank, whether
S t a t e or n a t i o n a l , the o b l i g a t i o n s of any one borrower to the e x t e n t of
t e n p e r cent of the member H a n i ' s c a p i t a l and surplus but i t i s expressl y provided t h a t " b i l l s of exchange drawn a g a i n s t a c t u a l l y e x i s t i n g v a l ues™ s h a l l not be included i n determining t h a t ten p e r cent l i m i t .
In the opinion of the Federal Reserve Board t h i s phrase " b i l l s
of exchange 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" includes " d r a f t s or
b i l l s of exchange secured by shipping documents conveying or securing
t i t l e to goods shipped" and "bankers 1 acceptances of the kinds described
i n Section 13 of the Federal Reserve Act" even though Section 1) (unlike
the amendment to Section 5200) does not expressly s t a t e t h a t those two
c l a s s e s of ptaper are b i l l s of exchange 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.
In the opinion of the Board, hpwever, accepted demand b i l l s on
which the drawer i s r e l e a s e d from l i a b i l i t y are not " b i l l s of. s^schange"
w i t h i n the meaning of Section 13 and must, t h e r e f o r e , be included i n determining the l i m i t s on the mount of paper of m y one borrower which a
F e d e r a l r e s e r v e bank may rediscount f o r any member bank.
Under the terms of Section 11 (m), as amended by the Act of
March 31 1919, any Federal reserve bank may, u n t i l December ~$lt 1920,
r e d i s c o u n t f o r 31 y member bank, whether State or n a t i o n a l , the obligati o n s of any one borrower to the e x t e n t of twenty p e r cent of the member
b a i k ' s c a p i t a l and s u r p l u s , provided, however, t h a t the excess over and
above t e n p e r cent must be secured by bonds or n o t e s of the United S t a t e s
issued since A p r i l 24, 1917, or by c e r t i f i c a t e s of indebtedness of the
United S t a t e s .
Special P r o v i s i o n s R e l a t i n g to Rediscounts f o r
Member S t a t e Banks.
The above d i s c u s s i o n r e l a t e s to the g e n e r a l powers of a Fede r a l r e s e r v e bank to make r e d i s c o u n t s f o r any member bank, whether State
or n a t i o n a l . I t must be observed, however, t h a t under the terms of Sect i o n 9 of the Federal Reserve Act no Federal r e s e r v e bank can r e d i s c o u n t
f o r a member S t a t e bank any of the paper of any one borrower who i s l i a b l e to such member S t a t e bank i n excess of ten p e r cent of the c a p i t a l
and surplus of that S t a t e bank but i t i s provided t h a t the d i s c o u n t of
b i l l s of exchange 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 and the discount
of commercial or b u s i n e s s paper a c t u a l l y owned by the person n e g o t i a t i n g
the same s h a l l n o t be included i n determining the amount to which a
2 *
*
X1J05 (b)
borrower i s l i a b l e to such member S t a t e "bank.
The p r o v i s i o n s of t h i s Section 9 are i n no way a f f e c t e d by
the amendment to Section 5^00 of the Revised S t a t u t e s and the same t e s t
as to the e l i g i b i l i t y of any p a r t of the l i n e of paper of any one borrower which i s held by a member State bank i s a p p l i c a b l e now as b e f o r e
t h a t amendment t o Section 5200*
Under the p r o v i s i o n s of Section 11 (m) as amended by the Act
of march 3 > 1919, the Board has r u l e d t h a t a Federal reserve bank may,
u n t i l December 31 f 1920, rediscount f o r a member State bank paper secured by not l e s s than a l i x e f a c e amount of bonds or notes of the United
S t a t e s issued since A p r i l 24, 1917, or c e r t i f i c a t e s of indebtedness of
zhe United S t a t e s , without regard to the amount the borrowing bank may
a l r e a d y have loaned to i t s customer under n i s r e g u l a r l i n e of c r e d i t ,
provided, however, that the aggregate of a l l rediscounts of the paper
of any one borrower must i n no case exceed twenty p e r cent of the capi t a l and surplus of the member State bank.
In other words, if the r e g u l a r l i n e of c r e d i t of the borrower
from a member State bank i s not more than the t e n p e r cent l i m i t f i x e d
by Section 9 of the Federal Reserve Act, Federal reserve banks may r e discount f o r State member banks to the same extent t h a t they may f o r
member n a t i o n a l banks« I f , however, the regular l i n e of c r e d i t of the
borrower from the member State bank i s more than t h a t ten p e r cent l i m i t t
then the Federal r e s e r v e baniL cannot rediscount any of t h a t r e g u l a r l i n e
of c r e d i t but may rediscount t h a t paper which i s secured by Government
o b l i g a t i o n s of the kinds s p e c i f i e d up to the l i m i t s described above *
(See r u l i n g of the Federal Reserve Board p r i n t e d on pages 3bl and 3 62
of the A p r i l , 1919, Federal Reserve B u l l e t i n - )
October 24, 1919,
STATJSMENT
FOR
I H2
P R E S S.
X-1706
839
FEDERAL RESERVE BOARD.
Release morning papers,
October 2$, 1919.
Summary of Address by W.P.G. Harding before I n t e r n a t i o n a l
Trade Sonference, A t l a n t i c City, N.J. October 24, 1919*
W,P. G. Harding, Governor of the Federal Reserve Board, c a l l e d a t t e n t i o n
to the f a c t t h a t the Federal r e s e r v e system could do but l i t t l e i n the present
circumstances towards f i n a n c i n g our trade with Etiropeati c o u n t r i e s . The Federal
Reserve Act provides that the m a t u r i t i e s of a l l paper discounted with Federal
Reserve Banks be not longer than n i n e t y days, except i n the case of a g r i c u l t u r a l
paper, or paper based on l i v e stock, which may be taken when i t has not longer
than s i s months t o r u n .
He s a i d " I t i s the view of the Federal Reserve Board t h a t the need of
Europe i s for long c r e d i t s , and that the S i t u a t i o n , t h e r e f o r e , i s one which
appeals to the investment market".
Many of the problems which now confront
European c o u n t r i e s a r e p r e s e n t i n an acute form i n t h i s country, and there i s
a great need f o r l a r g e r production, reduced consumption, more economy and t h r i f t *
The l i q u i d wealth of the world a s r e p r e s e n t e d by goods and commodities has been
reduced to an alarming extent by reason of the war, and the volume of c r e d i t .
throughout the world i s out of a l l proportion to the volume of goods. In order
to b r i n g about more normal c o n d i t i o ns, i t w i l l be necessary to r e s t o r e the proper
balance between c r e d i t s and goods. This process w i l l n e c e s s a r i l y be a slow one,
but i t i s e s s e n t i a l t h a t a beginning should be made and the r e s t o r a t i o n can be
mslde only by r i g i d a p p l i c a t i o n of the p r i n c i p l e of work and s a v e . "
"The United S t a t e s Government, beginning s h o r t l y a f t e r i t s entrance i n t o
the war, a u t h o r i z e d advances to the governments of the n a t i o n s a s s o c i a t e d with
-2-
3ML?06
8 3 0
C i
i t i n the war a g g r e g a t i n g ten b i l l i o n d o l l a r s * n e a r l y till of which h a s now been
a l l o t t e d and u s e d . There i s no reason whatever t o b e l i e v e t h a t our Government w i l l ,
nor, indeed, could i t without the most harmful i n f l a t i o n , continue to make advances
out of i t s t r e a s u r y to f o r e i g n c o u n t r i e s , and I am convinced, t h e r e f o r e , that the
problem of f i n a n c i n g Europe, a s f a r a s America i s concerned, i s one f o r p r i v a t e
i n i t i a t i v e and i n d i v i d u a l e n t e r p r i s e . "
" I t i s to the mutual i n t e r e s t of Europe and America t h a t any c r e d i t s which
may be extended s h a l l be employed in the purchase of necessary a r t i c l e s , raw
m a t e r i a l s , machinery, and such manufactured goods a s a r e necessary t o r e l i e v e
d i s t r e s s and enable the c o u n t r i e s of Europe to resume productive o p e r a t i e n s . Credits
f o r the purchase of l u x u r i e s should be discouraged, but i t i s m a n i f e s t , of course,
that action
i n t h i s r e s p e c t should be i n i t i a t e d in Europe r a t h e r than in t h i s
country. *
" I t should be borne i n mind t h a t while the United S t a t e s now occupies r e l a t i v e l y a stronger p o s i t i o n in. the f i e l d of world f i n a n c e than i t has even held, our
bankers have had comparatively l i t t l e experience i n extending long time c r e d i t s in
f o r e i g n c o u n t r i e s . Their t r a n s a c t i o n s have h i t h e r t o been i n the d i r e c t i o n of d e a l ings in short b i l l s and i n p l a c i n g American s e c u r i t i e s i n f o r e i g n c o u n t r i e s , end i t
i s important t h a t the judgment and cooperation of European bankers be e n l i s t e d when
we undertake the new r o l e of purchasing long time s e c u r i t i e s , e s p e c i a l l y of p r i v a t e
e n t e r p r i s e s , with which we cannot be expected to be f a m i l i a r . "
"The Federal Reserve Board a p p r e c i a t e s very deeply the importance from every
point of view of promoting our f o r e i g a t r a d e , and b e l i e v e s t h a t the banks of t h i s
country generally understand t h a t longer c r e d i t s than can s a f e l y be granted by
backs a r e necessary i f we d e s i r e to export our s u r p l u s of e s s e n t i a l commodities."
Under the Federal Reserve Act n a t i o n a l banks having a c a p i t a l and s u r p l u s of not
l e s s than one m i l l i o n d o l l a r s are authorized ei.ther t o e s t a b l i s h branches i n f o r e i g n
c o u n t r i e s or t o take stock to the e x t e n t of t e n p e r c e n t , of t h e i r c a p i t a l and
Digitized surplus i n banks
for FRASER
or corporations p r i n c i p a l l y engaged i n f o r e i g n banking, and under
~3~
x-1706
a r e c e n t amendment to the Act a l l n a t i o n a l banks.* r e g a r d l e s s of t h e i r
s i z e , are authorized to subscribe not more than f i v e per cent of t h e i r
c a p i t a l and surplus to the stock of corporations p r i n c i p a l l y engaged
i n such forms of f i n a n c i a l operations as are necessary or conducive
to the export of goods*
The Edge B i l l , which has r e c e n t l y passed
the Senate and which has been r e p o r t e d favorably by the House Committee
on Banking and Currency, provides f o r the Federal i n c o r p o r a t i o n of f o r e i g n
banks and of corporations to finance f o r e i g n business*
The l a t t e r are
authorized under the terms of the b i l l to issue t h e i r awn o b l i g a t i o n s or
debtentures against, s e c u r i t i e s acquired abroad which they may o f f e r to the
i n v e s t i n g public*
These corporations w i l l be under the general supervision
of the ^Federal Beserve Board* ana as t h e i r funds w i l l be drawn d i r e c t l y
from the investment market, t h e i r operations w i l l not impair the l i q u i d i t y
of the a s s e t s of the Federal Reserve Banks**
e x OFFICIO
W. P . G. HARDING, GOVERNOR
ALBERT STRAUSS. VICE GOVERNOR
CARTER C L A S S
S * 6 L « M L N 0 F THE TREASURY
CHAIRMAN
ADOLPH C. MILLER
CHARLES S . HAMLIN
J O H N SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
ADDRESS REPLY TO
FEDERAL RESERVE BOARD
FEDERAL RESERVE BOARD
HENRY A. MOEHLENPAH
W . T. CHAPMAN, SECRETARY
R. G. EMERSON, ASSISTANT SECRETARY
w . M. INLAY, FISCAL AGENT
WASHINGTON
October 27,1919.
X-1707
Subject:
E l i g i b i l i t y f o r Rediscount
of Cotton F a c t o r s * Paper,
Dear S i r :
There i s quoted, below, f o r your i n f o r m a t i o n , t h e t e x t of a l e t t e r
r e c e n t l y a d d r e s s e d t o one of the F e d e r a l Reserve Banks, i n which the Board
d e f i n e s i t s view a s to the e l i g i b i l i t y of c o t t o n f a c t o r s ' p a p e r :
"The Federal Reserve Board h a s c a r e f u l l y c o n s i d e r e d the q u e s t i o n
whether c o t t o n f a c t o r s 1 paper may p r o p e r l y be c o n s i d e r e d e l i g i b l e f o r r e d i s c o u n t a s commercial paper w i t h i n the meaning of S e c t i o n 13 of the Federal
Reserve Act. The Board i n i t s c o n s i d e r a t i o n of t h i s s u b j e c t h a s examined the
b r i e f submitted by t h e d i r e c t o r s of the Memphis Branch of the F e d e r a l Reserve
Bank of S t . l A i i s * t o g e t h e r With t h e l e t t e r s and s t a t e m e n t s of v a r i o u s other
p e r s o n s i n t e r e s t e d i n the d e t e r m i n a t i o n of the q u e s t i o n .
"In view of the f a c t t h a t i t i s apparent
hand t h a t the c i r c u m s t a n c e s and c o n d i t i o n s under
paper i s i s s u e d vary so much i n d i f f e r e n t c a s e s ,
c a t e g o r i c a l answer t o the q u e s t i o n p r e s e n t e d , or
t h a t c o t t o n f a c t o r s ? p a p e r , a s such, i s e l i g i b l e
from a l l the evidence on
which s o - c a l l e d c o t t o n f a c t o r s '
i t i s impossible t o give any
to make any g e n e r a l r u l i n g
f o r rediscount.
"The Board i s f i r m l y of the opinion on the one hand t h a t p a p e r , the
proceeds of which a r e used t o l e n d t o some t h i r d p a r t y , i s f i n a n c e paper
r a t h e r than commercial paper and i s , i n consequence, i n e l i g i b l e f o r r e d i s c o u n t
even though t h a t t h i r d p a r t y may u s e the proceeds f o r a commercial purpose. On
the other hand, the Board b e l i e v e s that any p a p e r , the proceeds of which are
used t o purchase goods t o s e l l t o some t h i r d p a r t y , i s e l i g i b l e f o r r e d i s c o u n t
a s commercial paper w i t h i n the meaning of Section 1 J . Whether or n o t a given
t r a n s a c t i o n f a l l s w i t h i n one c l a s s at the o t h e r , i s s o l e l y a q u e s t i o n of f a c t
f o r the d e t e r m i n a t i o n of the D i r e c t o r s of the F e d e r a l Reserve Bank to which
the paper i s p r e s e n t e d f o r r e d i s c o u n t . I n other words, the mere f a c t t h a t a
borrower on a given n o t e i s a c o t t o n f a c t o r , does n o t of i t s e l f r e n d e r t h a t
n o t e i n e l i g i b l e , s i n c e i t s e l i g i b i l i t y i s a m a t t e r t o be determined by the use
to which the p r o c e e d s of t h a t p a r t i c u l a r note a r e p u t . I f a c o t t o n f a c t o r borrows
on h i s own note t o i n c r e a s e h i s c a p i t a l f o r t h e purpose of l e n d i n g t o h i s
customers, the n o t e would come w i t h i n t h e f i r s t c l a s s and would be i n e l i g i b l e ,
b u t i f i t can be determined t h a t the proceeds of the n o t e i n s t e a d of b e i n g
r2r
X-1707
loaned, t o a customer by the f a c t o r are used by the f a c t o r t o purchase
goods which are shipped t o the customer and which a r e charged by the
f a c t o r a g a i n s t the customer's account, then the note a t t a i n s a
commercial s t a t u s because of the commercial purpose to which i t s
proceeds are applied by the f a c t o r . In order t o a s c e r t a i n the
necessary f a c t s i t may be proper f o r a Federal Reserve Bank to
r e q u i r e statements or a f f i d a v i t s from the maker of the note as to
the exact n a t u r e of the t r a n s a c t i o n out of which i t a r i s e s . With
these p r i n c i p l e s a s a guide, the Federal Reserve Bank must determine
the e l i g i b i l i t y of any p a r t i c u l a r paper i n the l i g h t of the circumstances i n which i t was i s s u e d , and i t s proceeds disposed o f , "
Very t r u l y yours,
Governor,
«
L e t t e r to Chairman of each bank.
FEDERAL
R£ SERVE
BOARD
834
x-1709
STATEMENT FOR THE PRESS.
For Release i n Morning Papers#
Sunday, November 2, 1919.
,
The f o l l o w i n g i s a review of general busine ss and
f i n a n c i a l c o n d i t i o n s throughout the s e v e r a l Federal
Reserve D i s t r i c t s during the month of October, a s
contained i n the forthcoming issue of the Federal
Reserve B u l l e t i n :
Great general p r o s p e r i t y throughout the country, w i t h s t r o n g demand f o r
commodities verging a t times upon r e c k l e s s n e s s in buying, i s the general business
s i t u a t i o n as r e p o r t e d by Federal Reserve agents in the several Federal Reserve
d i s t r i c t s f o r t h e month of October* Crop r e t u r n s have been good i n most s e c t i o n s ,
and even where d e c l i n e i n output has brought, the t o t a l y i e l d below the f o r e c a s t s ,
p r i c e s are r e p o r t e d as the h i g h e s t on r e c o r d , the money r e t u r n s being thus l a r g e l y
augmented in s p i t e of the decreased volume» Staple commodities have moved s a t i s f a c t o r i l y t o market during the month, although the volume of grain thus shipped
i s smaller than l a s t y e a r , while shortage in some commodities, such as sugar, has
brought about unusual care i n the d i s t r i b u t i o n of e x i s t i n g s u p p l i e s . Production
of coal has been on the i n c r e a s e , while the demand has been unusually s t r o n g , owing
to the f e a r s of consumers concerning the prospect of a s t r i k e t o d a t e from November
1, There has been no decline in general uai.ufacturing, while p r i c e s continue firm#
The upward movement of trade u s v a i l y noted i n the autumn has been i n evidence
during the month. Speculative a c t i v i t y has been extensive throughout the country
and i s reaching dangerous level s . This and the p r e v a i l i n g high p r i c e s have l e d
in some Quarters to a f u r t h e r development of the s p i r i t of conservatism noted i n
the l a s t i s s u e ofl the Federal Reserve B u l l e t i n , and in some important l i n e s of
business l e a d i n g f a c t o r s f o r e c a s t the p o s s i b i l i t y of a shrinkage e i t h e r of p r i c e s
or of volume of business, or both, A trouble sous f a c t o r i n the i n d u s t r i a l s i t u a t i o n
i s seen i n the existence of a widespread condition of i n d u s t r i a l and s o c i a l u n r e s t ,
and while d i s t u r b a n c e s growing out of s t r i k e s have n o t increased, during the month,
prospects f o r a growth i n t h i s d i r e c t i o n have been such a s to cause some anxiety*
General business conditions i n d i s t r i c t No* l ' c o n t i n u e to r e f l e c t unprecedented
p r o s p e r i t y as defined i n terms of high wages and purchasing power, high p r i c e s ,
complete f u l l time employment i n a l l l i n e s of i n d u s t r y , orders booked by manufac—
f
t u r e r s i n some cases f a r i n t o 1920, p r o j e c t e d plans f o r expansion of p l a n t s and
equipment, and the absence of serious or widespread d i s l o c a t i o n of working r e l a t i o n ship between employer and employee i n any of the- g r e a t b a s i c i n d u s t r i e s ; although
i n d u s t r i a l u n r e s t lj.es very close to the s u r f a c e , " In d i s t r i c t No* 2 the f i n a n c i a l
s i t u a t i o n i s c h a r a c t e r i z e d by heavy demand f o r funds and i n c r e a s e i n s p e c u l a t i v e
a c t i v i t y , wholesale and r e t a i l trade i s i n l a r g e volume, and labor c o n d i t i o n s are
d i s t i n c t l y u n s e t t l e d , f i n d i n g p a r t i c u l a r expression i n s e v e r a l g r e a t s t r i k e s . I n
d i s t r i c t No. 3 the demand f o r commodities of a l l k i n d s continues unabated, p r i c e s
display g r e a t f i r m n e s s , and l a b o r t r o u b l e s have not proved very d i s t u r b i n g . In
d i s t r i c t No. 4 "most concerns are o p e r a t i n g a t c a p a c i t y , " although i n jobbing and
wholesale t r a d e there i s some h e s i t a t i o n due to u n c e r t a i n t y of l a b o r c o n d i t i o n s .
R e t a i l e r s r e p o r t s t r o n g demand. In d i s t r i c t No. 5 crop r e t u r n s , owing t o the high
p r i c e s r e a l i z e d , have been abundant, business i s a c t i v e , and "unfavorable f a c t o r s
have had l i t t l e d e t e r r e n t e f f e c t . £ I n d i s t r i c t No. 6 general business conditions
"show no o u t s t a n d i n g change," and f a l l r e t a i l trade i s opening up in l a r g e volume,"
both corn and c o t t o n crops a r e poor. I n d i s t r i c t No. 7 "business generally
although
•••-*-
' 835
•continues to r e f l e c t the n e a t l y i n c r e a s e d buying power growing out of the high
^ wages and a g r i c u l t u r a l p r o s p e r i t y of the_ l a s t three y e a r s . w J,n d i s t r i c t No, 8
m0s
.
who.i.8said and r e t a i l "busxneso show increase's "over, the sor responding,
p e r i o d m 1918 and "optimism s t i l l p r e v a i l s , " In. d i s t r i c t No.'9 general business
i s a c t i v e , the unusually good c o m crop has been h a r v e s t e d , and" the: .general
:.
1 8 g00d
*' 'Reports from a l l trade and 2'ndnscrial c e n t e r s " of di strict-NO. CIO. '
t e l l of continued a c t i v i t y i n p r a c t i c a l l y a l l vljnes of business• in:,the face" df. "
such discouragements a s would a t . other t i n e s Ve c a l c u l a t e d to bring business to
a s an s t i 1« Apparently there i s a determination on the p a r t of business to carry
on, an
t ~re i s a growing f e e l i n g of c o n f i d e n c e , t h a t e f f o r t s now b e i n g made w i l l
r i n g an aim,cable adjustment of the d i f f e r e n c e s between labor and c a p i t a l . * In
! i S J r i n t x J ' 0 * ; X ! h e T e i s " a n auspicious opening of f a l l a c t i v i t i e s i n a l l l i n e s of
*a e,
o d i s a p p o i n t i n g outlook f o r cotton i s o f f s e t by e x c e l l e n t .yields end
adequate p r i c e s r e a l i s e d on other farm products, the production of the o i l f i e l d s
i s scva- y i n c r e a s i n g , and condi.ti.cns on the whole are sound aid prosperotis.
Active trade i n l a r g e volume, labor disturbances to a l a r g e e x t e n t £..romid\San
rancisco .. ay ; vvith f u l l employment elsewhere, itod h a r v e s t i n g and movement of crops"
have characterized, the s i t u a t i o n i n d i s t r i c t No. 12 .
•
.'
During October the labor s i t u a t i o n has occupied a p o s i t i on-of primary i'm-.
portance. ihe r e p o r t s of Federal Reserve agents show t h a t - there has been an i n c r e a s i n g degree of general u n r e s t throughout the country, which has culminated i n
a s e r i e s of s t r i k e s , e i t h e r a c t u a l or s e r i o u s l y t h r e a t e n e d . The s t e e l s t r i k e , '
which nas already been long drawn out, although with production well' maintained,
i s apparently approaching i t s end. This s t r i k e has not i n r e c e n t weeks s e r i o u s l y
hampered production, and the r e p o r t from d i s t r i c t No. 4 i s to the- e f f e c t t h a t - i t s
influence has been on a s t e a d i l y d e c l i n i n g ' s c a l e . Certain d i s t r i c t s and p l a n t s
rom
e oeginning were able to maintain t h e i r o r g a n i z a t i o n almost i n t a c t , and i n
other cases the d e f e c t i o n was not of proportions to c r i p p l e general o p e r a t i o n s . e
On the other hand, s e r i o u s labor d i f f i c u l t i e s in New York, prominently among
6
° ! ^ S oremen and i n the p r i n t i n g t r a d e s , have r e s u l t e d i n extensive unemploymen , i ore s e r i o u s , perhaps, i n i t s p o s s i b i l i t i e s than any other labor disturbance
was the t h r e a t of a general coal-mining s t r i k e to be c a l l e d on November 1, nagp~, •
t i a t i o n s i or an adjustment having apparently be ax brought t o /nothing during t h e '
l a t t e r p a r t ol the month, Hopeful i n d i c a t i o n i n the labor d i f f i c u l t y i s the f a c t
t h a t in some d i s t r i c t s a smaller number of actual s t r i k e s , or a smaller number
° ^ e n . 0 U \°^~ w o r ^ : a s a r e s u l t of s t r i k e s , i s r e p o r t e d . Unfortunate, on.the other
hand, has been the f a c t t h a t the i n d u s t r i a l conference a t Washington, from which
muc was oped, p a r t i a l l y d i s i n t e g r a t e d , thus disappointing the e x p e c t a t i o n s of
many who had b e l i e v e d that- i t .would be productive of g r e a t and immsdiate good,
^rom several 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 c u r r e n t opinion had strongly i n c l i n e d
o
e view t a t a s a t i s f a c t o r y s o l u t i o n of the d i f f i c u l t i e s would r e s u l t from the
meeting, and disappointment i n the outcome was accordingly keen. Summing up
i s n e t abcr s i t u a t i o n s , i t would appear t h a t i n the New England r e g i o n there
i s no general or s e r i o u s d i s l o c a t i o n of working r e l a t i o n s h i p s , although there i s
unusual caution among employers, while in P h i l a d e l p h i a but l i t t l e disturbance has
eu3 experienced, Conditions i n the South, a t A t l a n t a and the a d j a c e n t region, are
i a i r l y s a t i s f a c t o r y , while in.Minneapolis and the Northwest there i s f u l l employment a t good wages. Unrest e x i s t s in New York and Chicago, while the labor s i t u a tion i n the Southwest and on t h e P a c i f i c c o a s t i s s t i l l u n s e t t l e d , although some
c o n t r o v e r s i e s h e r e t o f o r e i n p r o g r e s s a r e now apparently approaching adjustment
or are a c t u a l l y disposed o f .
Commodity p r i c e s show a r e c e s s i o n from the high, l e v e l s reached during the
month of August. The general index number of the Bureau of Labor S t a t i s t i c s stands
a t 221 f o r the month of September, a s compared w i t h the r e v i s e d f i g u r e of 226 f o r
the month of August, a decrease of 2 . 6 p e r c e n t . The downward tendency noted in
-3
some of the l e a d i n g s t a p l e s during the month of September has continued during
the p r e s e n t month, i n p a r t i c u l a r corn and l i v e s t o c k , though i n c r e a s e s a r e
noted in the p r i c e s of othor staples* such a s raw c o t t o n and s i l k and v a r i o u s
of the n o n f e r r o u s metals* S c a r c i t y of merchandise i n c e r t a i n l e a d i n g l i n e s ,
and i n s u f f i c i e n c y of a n t i c i p a t e d output to meat demnd i s a f a c t o r tending to
keep these p r i c e s at p r e s e n t high levels* Whi+e there i s a widespread b e l i e f t h a t
the peak of p r i c e s has been reached, in c e r t a i n q u a r t e r s no great, d e c l i n e s i n
the near f u t u r e are a n t i c i p a t e d , b u t r a t h e r comparative s t a b i l i t y . Producers 1
goods remained unchanged i n p r i c e , the index number being 212, while decrease
in p r i c e occurred f o r both the groups of raw m a t e r i a l s and consumers 1 goods, the
r e s p e c t i v e index numbers decreasing 1*7 per cent, from 218 to 214, and 6*3 per
cent, from 24l to 226# Among the subgroups included i n the group of raw m a t e r i a l s ,
the index numbers f o r farm and animal products show considerable decreases, from
251 to 24Q and from 235 t o 215 r e s p e c t i v e l y , while the numbers f o r f o r e s t and
mineral products show i n c r e a s e s , from 193 t o 215 and from 180 to 184 respectively*
In a g r i c u l t u r e there has been a f u r t h e r increase i n the estimated y i e l d of
com, as a g a i n s t small decreases f o r spring wheat and o a t s . Both wheat and oats
show low y i e l d per a c r e , and the q u a l i t y i s poor* In d i s t r i c t No. 9 n the unusually
good corn crop has oeen h a r v e s t e d , but the r a t h e r u n s a t i s f a c t o r y y i e l d of wheat,
which i s both l i g h t and shrunken, has presented d i f f i c u l t i e s i n connection with
seed supplies f o r next spring*" Reports i n d i c a t e a s l i g h t r e d u c t i o n i n the
acreage of wheat sown t h i s f a l l i n d i s t r i c t No. 10, while "corn has been helped,
by the September moisture and has matured n i c e l y , " In d i s t r i c t No. 7 "the corn
crop i s in v e r y f i n e condition i n most l o c a l i t i e s , " and wheat sowing has been
aided by the r e c e n t r a i n s , but the acreage i n the e x c e s s i v e l y dry s e c t i o n s ' i s
smaller than l a s t year*
I t i s r e p o r t e d t h a t the deciduous f r u i t crop i n d i s t r i c t No. 12 promises
to be the l a r g e s t on record. In d i s t r i c t No* 4 "tobacco i s disappointing, e s timates p l a c i n g the I919 crop a t 2§ per cent below t h a t of 191S> Last y e a r T s
unsold tobacco i s now moving a t 4 to 5 c e n t s per pound over l a t e q u o t a t i o n s . The
crop in d i s t r i c t No. 5 i s estimated at only 60 per cent of nofrmal, but p r i c e s a r e
the h i g h e s t ever r e a l i z e d , and i t i s being sold r a p i d l y . The condition of cotton
showed a f u r t h e r decline to 51*l%on October 25, and the crop i s moving slowly*
D e t e r i o r a t i o n i n q u a l i t y i s a l s o noted i n consequence of the unfavorable weather
conditions which have p r e v a i l e d , and e x t r a o r d i n a r y p r i c e s f o r the choicer q u a l i t i e s
have r e s u l t e d , as well as i n c r e a s e s in the p r i c e s of other grades. Some tendency
on the p a r t of p l a n t e r s t o hold the s t a p l e i s reported*
Movement of g r a i n to market i s in smaller volume than l a s t year# Receipts
of wheat a t 13 i n t e r i o r c e n t e r s during September were 56,480,997 b u s h e l s , as
compared with 67,699,895 bushels during September, 1918, while r e c e i p t s of corn
and oats show a g r e a t e r f a l l i n g o f f , being r e s p e c t i v e l y 12,906,830 b u s h e l s and
20,945,036 b u s h e l s , as compared with 19,309,863 bushels and 28,957,695 bushels
during September, 19I8* Wheat and oats p r i c e s in the Kansas City d i s t r i c t show
a s l i g h t d e c l i n e up to the middle of the month, while corn p r i c e s have declined
considerably. I t i s r e p o r t e d t h a t m i l l i n g o p e r a t i o n s are heavy, and t h a t m i l l s
are well sold up as f a r in advance as p e r m i t t e d . Recent t r a d e r e p o r t s , however,
indicate a decreased demand. Flour production during September, a s r e p o r t e d by
the United S t a t e s Grain Corporation, was 14,Q87,800 b a r r e l s , a s compared with
12,042,000 b a r r e l s during August*
• In view of the p r e v a i l i n g shortage of sugar, c a r e i s oeing used i n the
d i s t r i b u t i o n of a v a i l a b l e s u p p l i e s ; a l l c o n t r a c t s on the books of r e f i n e r s w i l l
be pooled, and a zoning system w i l l be i n s t i t u t e d , whereby the East w i l l be
supplied
by A t l a n t i c Coast r e f i n e r s , the West by domestic b e e t sugar producers.
.and the South by Southern refiners*
Receipts of c a t t l e a t 15 primary markets during September were considerably
l e s s than f o r the same month l a s t year, the r e s p e c t i v e f i g u r e s being 1,871,042
head and 2,249,017 head, corresponding to index numbers of 1&6 and 223, while
r e c e i p t s during August, 1919, were 1,541,133 head, corresponding to an index
number of 153. Receipts of hogs were a l s o smaller, being 1,704,944 head during
September, 1919, corresponding to an index number of
as compared with 1,775*842
head during September, 1918, corresponding to an index number of 51, and
!*595.759 head during August, 1919* corresponding t o an index number of 73Receipts of sheep, however, show a considerable i n c r e a s e , being 2,890,831 head
during September, a s compared with 2,220,229 head during August and 2,408,609
head during September, I 9 I 8 , the r e s p e c t i v e index numbers being 212, 162, and
Drought conditions in the Northwest are r e p o r t e d to be l a r g e l y responsible f o r
the heavy movement df caheep. Decreases in the p r i c e s of the v a r i o u s c l a s s e s of
l i v e stock are noted. I t i s noted in Chicago t h a t "the average p r i c e of beef and
mutton i s considerably lower than a year ago," while "the p r i c e s of hogs are the
lowest in two years**
lj6«
The labor s i t u a t i o n has continued the dominant f e a t u r e i n the i r o n and s t e e l
i n d u s t r y . Due t o the f a c t that the s t r i k e was only c a l l e d on September 22nd.,
l i t t l e e f f e c t i s shown in the September f i g u r e s f o r the standard indexes of the
i n d u s t r y . P i g - i r o n production during September amounted to 2,441,554 tons,
corresponding t o an index number of 105, as compared with 2,743,3&8 tons during
August, corresponding to an index number of 118. S t e e l - i n g o t production likewise
shows a decrease. The u n f i l l e d orders of the United S t a t e s Steel Corporation a t
the close of September were 6,284,6)8 tons, as compared w i t h 6,109,103 tons a t
the close of August, the r e s p e c t i v e index numbers being 119 and l l 6 . Operators
r e p o r t c o n t i n u a l l y increased production since the opening of the month.
Buying a c t i v i t y i s r e p o r t e d to hare centered t o considerable e x t e n t in pigi r o n , the p r i c e s of which, both f o r prompt and f o r forward d e l i v e r y , have advanced,
though trade r e p o r t s i n d i c a t e some tendency towards spot t r a n s a c t i o n s i n view
of the threatened s t r i k e of the bituminous coal miners. Dernand f o r f i n i s h e d
products has a l s o been heavy, but there has been r e l u c t a n c e on the p a r t of p r o ducers to accept f u r t h e r bookings in c e r t a i n l i n e s . Increases i n the p r i c e s of
c e r t a i n products, such as tank p l a t e s , s t r u c t u r a l shapes, and s t e a l b a r s , have
occurred. Premiums are l a r g e l y o f f e r e d f o r prompt d e l i v e r y . The growing shortage
of some forms of f i n i s h e d s t e e l has r e s u l t e d i n d e p l e t i o n of warehouse stocks, but
p r i c e declines f o r old m a t e r i a l s in Chicago were noted during the second week of
the month.
Production of bituminous coal during September was 47,403>000 tons, as
compared with 42,883,000 tons during August, the r e s p e c t i v e index numbers br$ing
128 and 116. Increased production i s r e p o r t e d during the p r e s e n t month, the output
f o r the week ending October 11 e s t a b l i s h i n g a new high r e c o r d f o r the y e a r . While
from P h i l a d e l p h i a i t i s r e p o r t e d t h a t p r i c e s have sagged somewhat, due to the
l a r g e tonnage thrown on the market a s a r e s u l t of the s t e e l s t r i k e , consumers i n
general have r e a d i l y taken the coal o f f e r e d , i n view of the threatened s t r i k e i n
the c e n t r a l competitive f i e l d . Anthracite coal shipments during the month of
September were 5*687,401 tons, corresponding to an index number of 101, a s compared
with 6,144,144 tons during August, corresponding to an index number of 109* Active
demand e x i s t s f o r domestic s i z e s , but steam s i z e s are weak. The wage agreement with
the miners has been renewed, to continue i n e f f e c t u n t i l April 1, 1920. The output
of beehive coke increased from 1,733*971 tons during August, t o 1,790,466 tons
during September. A decrease i s , however, noted since the opening of the s t e e l
t
strike, production during the third week of the strike being "but 69 per'cent of
the pre strike average, although still above the low level prevailing during the
second quarter of the year.
835
Z,
R e l a t i v e Q i i e t continues i n the n o n f e r r o u s metal i n d u s t r i e s * Transactions in
copper have c o n s i s t e d l a r g e l y of r e s a l e s , while i n c r e a s e s i n the p r i c e s . o f lead*
t i n , and zinc were noted in the f i r s t h a l f of the month* I n September there was
" p r a c t i c a l p a r a l y s i s of the e n t i r e shipping of ore and f u e l * i n the J o p l i n d i s t r i c t ,
due to an extreme * d e a r t h of c a r s , * and extremely l a r g e stocks of ores accumulated
before r e l i e f came a t the close of the month.
>
^
No abatement i n general imnufacturing i s noted. The cotton-yarn market cont i nues f i r m , with i n q u i r i e s numerous. I t i s r e p o r t e d t h a t c o t t o n - m i l l output i s
contracted f o r up t o the close 1 of the y e a r , and t h a t considerable orders are being
booked f o r 1920. Fine goods continue very f i r m and high, but from Boston i t i s
r e p o r t e d t h a t f e a r e x i s t s t h a t adjustment of p r i c e s of p r i n t goods and fancy .products to meet the r e c e n t advances i n the p r i c e of cotton may r e a c t unfavorably upon
demand, Or a t l e a s t cause i n c r e a s e d consumption of l e s s expensive grades#
The raw-wool market continues q u i e t , with p r i c e s of high-grade wools f i r m .
Lack of i n t e r e s t i n low-grade wools continues, r e f l e c t i n g absence of p u b l i c demazld
f o r low-priced f a b r i c s * Considerable i n t e r e s t i s displayed i n the prospective
o f f e r i n g s of A u s t r a l i a n wool by the B r i t i s h Government, and t h e i r p o s s i b l e e f f e c t
upon the market# In worsted yarns there i s absence of d e s i r e on the p a r t of both
buyer and s e l l e r t o c o n t r a c t ahead f o r the more d i s t a n t future# Mill openings of
both men1 s and women* s wear woolens f o r spring are on an allotment basis* I t i s
r e p o r t e d from the P h i l a d e l p h i a d i s t r i c t t h a t "they could very e a s i l y book new
business f a r i n t o 1920*, but t h a t d i s i n c l i n a t i o n to do so e x i s t s . Marked advances
have occurred in the p r i c e of raw s i l k , and an upward tendency i n the p r i c e of
f i n e s i l k goods i s n o t e d . A s c a r c i t y of merchandise i s r e p o r t e d i n k n i t goods, with
no general c o n t r a c t i n g f o r spring d e l i v e r y , because of p r i c e u n c e r t a i n t y , except
i n the case of s i l k h o s i e r y , i n which orders f o r next June d e l i v e r y have been
noted. Recent trade r e p o r t s i n d i c a t e l i t t l e p l a c i n g w i t h manufacturers of new orders
f o r clothing* due apparently t o heavy e a r l y purchases-
The hide and l e a t h e r markets during the p r e s e n t month have been r e l a t i v e l y
<Jiiet, and the upward movement of p r i c e s appears t o have been checked# A w a i t i n g
a t t i t u d e has been l a r g e l y assumed by tanners with respect t o hide purchases,
although several l a r g e r e c e n t s a l e s of packer hides in Chicago have been reported#
In l e a t h e r the between—season i n a c t i v i t y has been noted, but p r i c e s i n general
have been w e l l maintained#•Lower grades, however, have moved a t concessions in
price* Tanners have thus been enabled to c a t c h up i n some measure with o r d e r s
previously booked. Active demand f o r shoes continues, i n excess of the a b i l i t y
of manufacturers to supply. R e t a i l e r s r purchases have n o t been r e s t r a i n e d by the
} high p r i c e s p r e v a i l i n g . From Boston i t i s s t a t e d t h a t "some of the l a r g e s t concerns
i n the United S t a t e s have reached a p o i n t where i t w i l l be impossible f o r them to
accept a d d i t i o n a l orders f o r f i v e or six months#"
The customary seasonal swell i n the volume of b u s i n e s s continues# S a l e s , both
wholesale and r e t a i l , i n many s e c t i o n s a r e r e p o r t e d to be i n excess of those f o r
previous months and. f o r the same p e r i o d l a s t year# Stocks of both wholesalers and . #
r e t a i l e r s in l e a d i n g l i n e s a r e running low, and complaint i s being made of a i f f a c u l t y
in obtaining merchandise. The demand f o r high-grade goods c o n t i n u e s , although i n
both the Boston and Kansas City d i s t r i c t s a growing tendency i s noted on the p a r t
of consumers to l i m i t the amount spent f o r v a r i o u s a r t i c l e s , and from the former i t
i s r e p o r t e d t h a t " i n buying wearing a p p a r e l and other a r t i c l e s of household u s e ,
X-1709
except food,, the p u b l i c i n general i s not paying the f u l l amount of the increase
i n p r i c e s necessary t o obtain the q u a l i t y which i t formerly bought."
A continuance of b u i l d i n g a c t i v i t y i s r e p o r t e d . Permits i s s u e d during
September show a seasonal decrease from the August f i g u r e s , the l a t t e r , however,
being the r e c o r d month of the p r e s e n t y e a r . Labor d i f f i c u l t i e s and shortage and
high c o s t of c o n s t r u c t i o n both f o r labor and m a t e r i a l nave continued to be r e t a r d i n g f a # t e e 9 , Continuance of a s a t i s f a c t o r y amount of b u i l d i n g throughout the
winter i s p r e d i c t e d . Seasonal decrease i n the demand f o r lumber i s reported from
c e r t a i n d i s t r i c t s . S l i g h t l y lower p r i c e s a r e reported on c e r t a i n grades, such as
southern p i n e , while o t h e r s , i n p a r t i c u l a r western p i n e , have increased i n p r i c e .
Increased production as y e t has succeeded but l i t t l e i n b u i l d i n g up stocks*
O f f i c i a l f i g u r e s f o r the month of September show a decrease to $l6l$100,000
i n the export balance from the f i g u r e of $338,900,000 f o r the month of August*
This i s the lowest f i g u r e f o r any month since July, 1917* Accompanying a decrease
of approximately $50,000,000 in exports was an increase of $128,000,000 i n imports.
I n t e r e s t i s displayed i n the f o r e i g n trade conference which assembled a t A t l a n t i c
City during the l a t t e r p a r t of the month.
Large decreases in experts are shown f o r meats, c h i e f l y bacon, hams,
shoulders and l a r d , and raw c o t t o n , the September exports of the l a t t e r a r t i c l e
being 50 per cent l e s s i n quantity than the month b e f o r e . On the other hand
exports of b r e a d s t u f f s , mainly f l o u r and wheat, were l a r g e r both i n q u a n t i t y
and value than f o r the preceding two months. Of the t o t a l increase since
August of about 128 m i l l i o n s i n imports, 70 m i l l i o n s r e p r e s e n t an increase i n
the value of crude m a t e r i a l s imported, c h i e f l y raw s i l k from Japan, Egyptian
cotton, h i d e s and skins, a l s o f i b e r s , and about 32 m i l l i o n s - an i n c r e a s e in
the value of imported a r t i c l e s of food, c h i e f l y sugar from Cuba and c o f f e e from
Brazil.
Exports to the United Kingdom, 153-7 m i l l i o n s , show the l a r g e s t d e c l i n e
f o r the month, and account f o r almost the e n t i r e decrease i n the t o t a l exports
r e p o r t e d . Exports to France, 51*4 m i l l i o n s , show a decline of about 4 m i l l i o n s
since August and approximate those f o r J u l y . September e x p o r t s to I t a l y , 3^.9
m i l l i o n s , and to Belgium - 23.6 m i l l i o n s , on the other hand, were considerably
l a r g e r than the month b e f o r e . Total exports to Europe during September were
about 56 m i l l i o n s l e s s than i n August, exports t o South America f a l l off 9*^
m i l l i o n s , those to A f r i c a 2 . 6 m i l l i o n s , and those t o Oceania - 0.8 m i l l i o n s *
On the other hand September e x p o r t s to North America, l a r g e l y Canada, show a
gain since August of 15.4 m i l l i o n s and those to Asia - a gain of 3*6 m i l l i o n s .
On the import side a l l the important European c o u n t r i e s , except Spain,
are c r e d i t e d with l a r g e r imports than f o r August, imports from.'Great B r i t a i n
alone, 34.7 m i l l i o n s , shewing an increase f o r the month of n e a r l y 10 m i l l i o n s *
or about equal to the i n c r e a s e i n the combined imports from France, I t a l y , and
Belgium. September imports from Europe a s a whole show a continuous increase
since J u l y . Imports from Asia were over 40 m i l l i o n i n excess of the r a t h e r low
imports f o r August, while c o n s i d e r a b l e gains a r e a l s o shown i n the imports
from North America and Africa*
-7-
x-1709
<* *
In the stock market the p r e s e n t month has been c h a r a c t e r i z e d by a c o n t i n uance of the s p e c u l a t i v e a c t i v i t y which commenced during the l a s t week i n
September, and p r i c e advanees have occurred. Bond p r i c e s have shown a tendency
to r i s e , the r e t u r n i n g s t r e n g t h of high-grade r a i l r o a d bonds being e s p e c i a l l y
marked. Transactions in L i b e r t y bonds have been heavy, and they have led the
r i s e i n the general investment market. September i s s u e s of new s e c u r i t i e s were
the h e a v i e s t f o r any month during the p r e s e n t y e a r , and October issues are
r e p o r t e d to show l i t t l e or no f a l l i n g off in volume. Speculation was n o t . a d v e r s e l y a f f e c t e d by the i n c r e a s e in c a l l money r a t e s which accompanied the r e c e n t
great increase i n loans of the New York Clearing House banks and borrowings from
the Federal Reserve Bank of New York. A f t e r touching 15 per cent a t the close of
September r a t e s remained a t a r e l a t i v e l y high level throughout the e a r l y p a r t
of October, again reached 15 per cent on October 14 and 15, since which time
they have declined sharply with an increase in a v a i l a b l e funds and reached a
low f i g u r e of 4 per c e n t . An upward tendency in commercial paper r a t e s in New
York i s r e p o r t e d , as well a s a l i m i t e d demand f o r acceptances. The customary
heavy seasonal demand f o r funds i s generally noted. Bates in other c e n t e r s have
beaa steady and have not r e f l e c t e d the e r r a t i c f l u c t u a t i o n s in the New York
market* The Board's f i g u r e s of the volume of check t r a n s a c t i o n s continue a t a
high l e v e l . The banking s i t u a t i o n continues to be regarded as sound, though
need of caution i n loan expansion i s emphasized in c e r t a i n q u a r t e r s , p a r t i c u l a r l y
in view of heavy seasonal requirements f o r funds and the h i g h - p r i c e l e v e l s now
p r e v a i l i n g - Credit and c o l l e c t i o n conditions are good and f a i l u r e s , while
showing an increase f o r September over those f o r the two previous months, continue tinprecedentt^l^btoa! l-sad'-few.
840
841
X-1710.
FEDERAL
RESERVE
BOARD
STATEMENT FOR THE PRESS*
Release f o r morning papers,
Monday, November 3* 19^9*
The Federal Reserve Board makes the following announcement with
r e f e r e n c e to the h e a r i n g held i n Washington on October 21, 1919* regarding
the establishment of a branch Federsl Reserve Bank by the Federal Reserve
Bank of Kansas City i n the southern t e r r i t o r y of the Tenth Federal Reserve
District.
"The Federal Reserve Board has considered the b r i e f s and oral
arguments presented by the r e s p e c t i v e p e t i t i o n e r s i n the matter of the
establishment of a branch Federal Reserve Bank i n the southern p o r t i o n
of the Tenth Federal Reserve D i s t r i c t by the Federal Reserve Bank of
Kansas City, and has reached the following conclusions:
^While the p o r t i o n of the d i s t r i c t t r i b u t a r y to these c i t i e s
i s being well served i n the matter of rediscount f a c i l i t i e s by the
Federal Reserve Bank of Kansas City, i t i s the opinion of the Board,
however, that a branch with l i m i t e d powers i n the m a t t e r of r e d i s c o u n t s ,
the a c t i v i t i e s of which should be devoted mainly to the forwarding
and r e c e i p t of currency and to t r a n s i t operations, would be a convenience to the member banks and to the p u b l i c i n the t e r r i t o r y served
by such branch, and would increase the e f f i c i e n c y of the t r a n s i t
system* I n view of the proximity of Wichita to Kansas City, i t i s
m a n i f e s t t h a t a branch l o c a t e d a t t h a t p o i n t would not give any
appreciable a d d i t i o n a l f a c i l i t i e s i n t h i s r e s p e c t to the more remote
p o r t i o n s of the D i s t r i c t ; and the Board w i l l t h e r e f o r e d i r e c t the
Federal Reserve Bank of Kansas City to e s t a b l i s h a branch a t e i t h e r
Oklahoma City or Tulsa, In view of the t e c h n i c a l n a t u r e of t r a n s i t
o p e r a t i o n s , the Board has requested a r e p o r t from the Federal Reserve
Bank of Kansas City, giving an a n a l y s i s of the source, volume, and
d i r e c t i o n of outgoing business, and the volume and d i r e c t i o n of
incoming b u s i n e s s , together with a complete a n a l y s i s of a l l mail
schedules with r e f e r e n c e to the t e r r i t o r y t o be served by a branch
l o c a t e d i n one or the other of these two c i t i e s * The Federal Reserve
Bank of Kansas City has t h e r e f o r e been d i r e c t e d to transmit to the Board,
n o t l a t e r than November 25, 1919* the i n f o r m a t i o n c a l l e d f o r , i n order
t h a t a d e c i s i o n may be reached as to the proper l o c a t i o n of & branch#
842
W . P . G. HARDING. GOVERNOR
EX O F F I C I O M E M B E R S
ALBERT STRAUSS, VICE GOVERNOR
ADOLPH C . MILLER
CHARLES S . HAMLIN
CARTWt CLASS
SECRETARY OF THE TREASURY
CHAIRMAN
FEDERAL RESERVE BOARD
J O H N SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
W . T. CHAPMAN. SECRETARY
R. G. EMERSON. ASSISTANT SECRETARY
ADDRESS REPLY TO
FEDERAL RESERVE BOARD
W. M. INLAY. FISCAL A6ENT
WASHINGTON
November 1,1919*
x-1711
CONFIDENTIAL
Subject!
Mote Raising Operations.
Dear S i r : For the information of your Board, of D i r e c t o r s and. f o r such
a c t i o n as they may deem proper, I quote below the text, of a communication
received from the Chief of the Secret Service Division of the Treasury
Department"There have been very extensive n o t e - r a i s i n g o p e r a t i o n s developed
throughout the country r e c e n t l y . Agents of t h i s Service a r e e x e r t i n g
every e f f o r t to suppress the i n d u s t r y , and are almost d a i l y e f f e c t i n g
a r r e s t s in connection therewith.
In t h i s campaign we have e n l i s t e d the cooperation, among o t h e r s ,
of the banks, r e q u e s t i n g them to promptly n o t i f y our agents or son©
other o f f i c e r of the law of the r e c e i p t of, or any information r e l a t i n g t o , t h i s a l t e r e d currency. We have a l s o r e q u e s t e d the banks
to c a r e f u l l y note the r e c e i p t of any n o t e s , of denominations from
$5 up, t h a t have been m u t i l a t e d by naving the ends torn or c u t . o f f ,
and inform the n e a r e s t agents of t h i s Service as quickly a s p o s s i b l e
of the r e c e i p t of these m u t i l a t e d n o t e s , and from whom they were
received if possible.
We base t h i s r e q u e s t on the f a c t t h a t the method employed by the
n o t e - r a i s e r , i n some i n s t a n c e s , i s t o remove the ends from b i l l s of
the l a r g e r denominations to be used i n r a i s i n g the b i l l s of smaller
denominations. I t then becomes necessary to r e a l i z e on the m u t i l a t e d
b i l l s by p r e s e n t i n g them a t the banks or the b u s i n e s s houses.
-2-
x-1711
While we have endeavored t o cover the f i e l d and get i n touch
w i t h a s many of the banks a s p o s s i b l e , i t i s r e a l i z e d t h a t w i t h our
l i m i t e d f o r c e i t i s p o s s i b l e t h a t we may n o t r e a c h a l l of them and
impress on them the g r e a t importance of t h i s c o o p e r a t i o n . I t h e r e f o r e r e s p e c t f u l l y r e q u e s t t h a t the F e d e r a l Reserve Board communicate
w i t h the r e g i o n a l banks on t h i s s u b j e c t , u r g i n g them to l e n d t h i s
i m p o r t a n t a i d t o the S e c r e t S e r v i c e , and t h a t they communicate t h i s
r e q u e s t t o a l l member banks a s a c o n f i d e n t i a l communication,™
Very t r u l y y o u r s ,
Governor.
L e t t e r t o Chairmen of a l l F e d e r a l Reserve Banks,
E x O F F I C I O MEMBERS
W . P . 6 . HARDING. GOVERNOR
ALBERT STRAUSS, VICE GOVERNOR
ADOLPH C. MILLER
CHARLES S . HAMLIN
CARTS* GfcASS
SECRETARY OF THE TREASURY
CHAIRMAN
FEDERAL RESERVE BOARD
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
FEDERAL RESERVE BOARD
W. T. CHAPMAN, SECRETARY
R . G . EMERSON, ASSISTANT SECRETARY
W. M. IMLAY, FISCAL AGENT
ADDRESS REPLY TO
WASHINGTON
November 3»1919-
X-1712
CONFIDENTIAL
Subject:
Marking Raised Currency.
Dear S i r : The Federal Be serve Board has r e c e i v e d a communication
from a Federal Reserve Bank, suggesting t h a t r a i s e d currency r e ceived by a Federal Reserve Bank should be marked i n r e d ink i n
some manner c l e a r l y to i n d i c a t e t h a t f a c t i n order to insure a g a i n s t
i t s use f o r any purpose other than redemption a t i t s proper v a l u e .
In view of the f a c t t h a t i t has been brought to the
a t t e n t i o n of the Board t h a t c e r t a i n r a i s e d n o t e s r e t u r n e d by
Federal Reserve Banks to member banks f o r reclamation, appear to
have been put back i n t o c i r c u l a t i o n , the Board b e l i e v e s t h a t i t .
would be very h e l p f u l i n r e s t r i c t i n g the c i r c u l a t i o n of r a i s e d
n o t e s to have Federal Reserve Banks and other banks d e t e c t i n g them,
mark or stamp them in the manner suggested.
Very t r u l y yours,
Governor.
L e t t e r t o a l l Chairmen except
Richmond - copy to Governor.
.845
x-1713
FEDERAL
HESERVE
BOARD
STATEiiEOT FOR THE PRESS
To be r e l e a s e d f o r morning
p a p e r s , Tuesday, November 4, 1919.
The Review of the Month f o r the November Federal Reserve B u l l e t i n ,
w i l l say:
PUBLIC afD PRIVATE FIKWCS:
The month of October has been unusually f r e e from Government f i s c a l
operations l i k e l y t o i n f l u e n c e i n any way the d i r e c t i o n of the money market.
During the month i n t e r e s t disbursements, including i n t e r e s t payments on the
f o u r t h Liberty loan due on October 15 amounted to about $113,000,000, the
e f f e c t being, as u s u a l , a temporary s h i f t i n g of funds from Government to
p r i v a t e hands and a corresponding rearrangement of bank d e p o s i t s . L i t t l e
extraneous i n f l u e n c e o r i g i n a t i n g with the Treasury operations has been f e l t
i n any other d i r e c t i o n . Expenditures f o r the month have amounted to. approximately $736,718,000 while incomes have been $433>022 ; 000. The opinion
expressed i n the l a s t issue of the Federal Reserve B u l l e t i n t h a t no new
c e r t i f i c a t e i s s u e s would be required during the month of October has been
j u s t i f i e d , the very large cash balance of the Treasury and t h e s u b s t a n t i a l
y i e l d of the l a s t p r e c e e d i r g tax c e r t i f i c a t e i s s u e s having provided a l l t h a t
was n e c e s s a r y t o c a r r y the department through the month.
The month has been an unusually a c t i v e period i n p r i v a t e f i n a n c e .
Great f l u c t u a t e s in c a l 1- money r a t e s and v a r i a t i o n s i n the r a t e s charged
on commercial paper have occurred since the end of September» There has
been an i n c r e a s i n g demand f o r funds from p r i v a t e b u s i n e s s , both i n commodities and s e c u r i t i e s . Speculation i s a t t a i n i n g an unprecedented a c t i v i t y
and i s embracing not only corporation i s s u e s of a l l kinds, but a l s o r e a l
e s t a t e and many c l a s s e s of commodities. P r i c e s both of farm l a n d s , s t a p l e
commodities such as c o t t o n , s e c u r i t i e s and other p r o p e r t i e s continued to
r i s e , notwithstanding the r e d u c t i o n of Government purchases and. the f a c t t h a t
the Government has i t s e l f r e l e a s e d to consumers large q u a n t i t i e s of goods
purchased f o r Army u s e . Two f a c t o r s have c l e a r l y developed themselves during
the month as dominant i n the whole f i n a n c i a l s i t u a t i o n - the problem of
domestic s p e c u l a t i o n and the p o l i c y to be pursued w i t h r e s p e c t t o the demands
on c r e d i t r e s u l t i n g from i t .
846
X-1713
—2In a t e c h n i c a l sense t h i s c o n d i t i o n has r e f l e c t e d , i t s e l f i n a
«®esfc©ning of the r e s e r v e p o s i t i o n of Federal Reserve Banks- The reserve
percentage reached on October } l s t the f i g u r e of 47.9$, that being the
lowest p o i n t ever r e a c h e d . As has been p o i n t e d out i n former i s s u e s of
the B u l l e t i n , too much importance may be a t t r i b u t e d to what i s c a l l e d the
" r e s e r v e p e r c e n t a g e T h e decline of the r e s e r v e percentage a t .Federal
Reserve Banks ought n o t to be considered as rn i s o l a t e d phenomenon, but
has p r i n c i p a l s i g n i f i c a n c e i n connection with the c o n d i t i o n of member
b a n k s . These banks rediscount f o r the purpose of r e s t o r i n g t h e i r reserve
b a l a n c e . Such a balance may become depleted f o r any of s e v e r a l reasons,
b u t i n a time l i k e the p r e s e n t the chief f a c t o r leading to r e d i s c o u n t i n g
i s the expansion of loans and discounts mode i n favor of customers.
Analysis of the a s s e t s of member banks t h e r e f o r e becomes necessary i n order
to a s c e r t a i n the r e a l meaning of an increase i n r e d i s c o u n t s . Such an
i n c r e a s e may be due to advances i n aid of s p e c u l a t i o n pure and simple, or
i t may be the outgrowth of l e g i t i m a t e demand f o r commercial funds- . The
member bank i n r e d i s counting n a t u r a l l y s e l e c t s those items from i t s p o r t f o l i o upon which the most favorable r a t e w i l l be granted by the Federal
Reserve Bank. If there be a p r e f e r e n c e i n favor of some s p e c i f i e d kind of
p a p e r , as i s t r u e today of paper secured by Government o b l i g a t i o n s , such
paper almost i n v a r i a b l y i s s e l e c t e d as the b a s i s f o r r e d i s c o u n t i n g . The
fsc t t h a t the r e d i s c o u n t s with Federal Reserve Banks c o n s i s t so l a r g e l y as
they have h e r e t o f o r e of what i s c a l l e d nwnr paper" can not t h e r e f o r e be
taken as conclusive evidence of the purpose f o r which the r e d i s c o u n t i n g h a s
been undertaken* Loan accounts of member banks, as already i n d i c a t e d , may
be extended because of the demand f o r funds f o r speculative purposes, or
because of advances f o r s t r i c t l y commercial and i n d u s t r i a l undertakings,
or f o r the purpose of carrying s u b s c r i p t i o n s to Government s e c u r i t i e s .
Were the d i f f e r e n t i a l r a t e which now f a v o r s war loan paper to be reversed
so Ifchat i t would favor commercial paper, i t i s l i k e l y that the p o r t f o l i o s
of the Federal Reserve Banks would change i n c h a r a c t e r . Member banks
would s e l e c t t h e i r commercial paper as a b a s i s of rediscount? and i n
consequence Federal Reserve Bank p o r t f o l i o s might c o n s i s t p r i m a r i l y of
commercial b i l l s r a t h e r than of war loan p a p e r . A true a p p r e c i a t i o n of the
c r e d i t s i t u a t i o n t h e r e f o r e can be obtained only by considering the p o r t f o l i o s of Federal Reserve Banks and those of member banks as an aggregate.
OPERATIONS OF M M E BANKS:
E BR
This view of the case makes i t important to consider n o t only the
s i t u a t i o n a t Federal Reserve Banks, b u t that stmember banks as w e l l . In the
Federal Reserve B u l l e t i n f o r October there was p u b l i s h e d the r e s u l t of a
s t a t i s t i c a l a n a l y s i s of the e n t i r e war loan paper s i t u a t i o n , which showed
that as of June t h i r t i e t h l a s t , the t o t a l volume of such paper i n t h e
banking system might be taken as about s i x and f i v e - t e n t h s b i l l i o n s of
d o l l a r s . There L a s been a decrease i n such war paper since June t h i r t i e t h ,
b u t there has been a continued expansion of loans and investments of
member banks as shown by the f o l l o w i n g f i g u r e s ;
847
- 3 3-171)
MOVEMENT OF LOANS AN) INVESTMENTS OF FEDERAL RESERVE
BANKS, AND OF ABOUT 775 MEIvSER BANKS IN SELECTED CITIES.
Date
F e d e r a l Reserve
Banks
Jfeiriber Banks i n Selected
Cities
June 27, 193^
$2,354,167,000
J u l y 25, 1919
2,482,558,000
l4,379,579,000
August 29, 1919
2,448,977,000
lU,36s,907,000
September 26, 1919
.2,503,088,000
15,297,458,000
October 24-, 1919
2,751,751,000
15,537,104,000
_
'
$14,350,197,000
.
-it-
•
848
X-1713
The growing volume of d i s c o u n t s made "by t h e banking system a s a whole, in
i t s t u r n , mist "be s u b j e c t e d t o the same c r i t e r i a of judgment t h a t have been
i n d i c a t e d w i t h t h e h o l d i n g s of t h e Federal Reserve Banks. There i s no a v a i l a b l e
t e s t of the r e a s o n s g i v i n g r i s e t o such borrowing except t h e s t a t e m e n t s or informat i o n which nay be f u r n i s h e d by the a c t u r a l borrower, t o t h e bank a t which he
discounts.
DISCOUNTS AND RATES:
The r e a l c h a r a c t e r of t h e s i t u a t i o n depends upon t h e u s e t h a t i s b e i n g nude
by member banks of tits c r e d i t f a c i l i t i e s t o be o b t a i n e d a t F e d e r a l Reserve Banks.
I t i s j u s t hers* t h a t tha p r e s e n t s i t u a t i o n nast be regarded a s u n s a t i s f a c t o r y .
The evidence which i s c u r r e n t l y a v a i l a b l e seems to p o i n t t o t h e f a c t t h a t member
banks, under the i n f l u e n c e Of s t r o n g p r i v a t e demand, a r e i n n o t a few cases g r e a t ly expanding t h e i r l o a n s . The r e p o r t s which cone to t h e Board from t h e Federal
Reserve D i s t r i c t s , g e n e r a l r e s u l t s of which : a r e reviewed i n the summary of
b u s i n e s s c o n d i t i o n s f o r t h e c u r r e n t month, •
s t r o n g l y s u g g e s t . a marked
advance i n the growth of s p e c u l a t i v e t r a n s a c t i o n s . I t mast be bottle i n mind t h a t
the growth of a c t i v i t y of t h i s k i n d weakens the e n t i r e banking s i t u a t i o n .
Federal Reserve Banks can n o t , i n a time l i k e the p r e s e n t , e a s i l y c o n t r o l t h i s
c o n d i t i o n of a f f a i r s merely through changes ofl d i s c o u n t r a t e s * however important
the i n f l u e n c e e x e r c i s e d by such changes. The f a c t t h a t t h e r e i s a s y e t no f r e e
movement of gold between n a t i o n s and t h a t b a l a n c e s of t r a d e are wholly abnormal
p r e v e n t s r e d i s c o u n t changes from e x e r t i n g the e f f e c t * h i c h they would i n normal
times* Cooperation on the p a r t of member banks i s t h e r e f o r e n e c e s s a r y to the
p r e s e r v a t i o n of a s a t i s f a c t o r y c o n d i t i o n of s t r e n g t h throughout the banking
system a s a whole, and. good r e s u l t s can n o t oe obtained through any s i n g l e method,
l e a s t of a l l through t n e use of those modes of r e s t r a i n t and c o r r e c t i o n which
are i n o r d i n a r y circumstances s u f f i c i e n t f o r the purpose- The r e s e r v e p e r c e n t a g e ,
however, s u b j e c t to the q u a l i f i c a t i o n s and r e s t r i c t i o n s which have been s t a t e d , i s
an index of the changing c h a r a c t e r of the s i t u a t i o n , and one whose i m p l i c a t i o n s
should be c o n s t a n t l y k e p t i n mind.
As was s t a t e d i n t h e Federal Reserve B u l l e t i n f o r Octooer, the disappearance
of the Treasury from the l o n g - t e r m loan market and the r a p i d r e d u c t i o n i n i t s
requirements f o r short—term accommodation foreshadows the approach of the time
when the f i n a n c i a l o p e r a t i o n s of the Government w i l l cease t o be the important
f a c t o r i n shaping Reserve Bank p o l i c i e s and r a t 5 s which they have been. A
review of a l l the c o n d i t i o n s i n the banking s i t u a t i o n has confirmed t h e Board
i n the view t h a t i n the a p p l i c a t i o n of i t s discount p o l i c y an advance of r a t e s
should no longer be d e f e r r e d .
W . P . G. HARDING. GOVERNOR
EX OFFICII
ALBERT STRAUSS, VICE GOVERNOR
ADOLPH C. MILLER
CHARLES S . HAMLIN
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
FEDERAL RESERVE BOARD
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
ADDRESS REPLY TO
W . T. CHAPMAN, SECRETARY
R . G . EMERSON, ASSISTANT SECRETARY
W . M. 1MLAY, FISCAL AGENT
WASHINGTON
FEDERAL RESERVE BOARD
November 4 , 1919
X-171U
SUBJECT:
Campaigi f o r New Par P o i n t s .
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 r e c e i v e d from a l l Federal Reserve Banks i n response
to our telegram of October 2 6 t h , asking f o r information r e g a r d i n g the p r o g r e s s of t h e campaigp being conducted f o r t h e e s t a b lishment of new p a r p o i n t s .
Very t r u l y y o u r s ,
A s s i s t a n t Secretary
Incl
o
to
GO
C A M P A I ON. FOR NSW PAR P O I N T S
l(F!>lrUp JL UP JW
KJ
i iJ\AJj JBSu^JXY£* VJklWXO* \J\ XIA7
W
R a t i o of non-member : Number of
Non-meznber
: Banks added :
Banks on Par L i s t
Banks on p a r
; to Par L i s t :
t o t o t a l non-member
List
;
during
:
barks in D i s t r i c t
: Oct. 1919 :
%
:
241
100
/ L V L D » N
State
Bank
Members
Total
Member
Batiks
39^
36
430
:
651
116
747
322
100
PfcyLlulelyhia, :
637
38
675
409
100
7*6
92
841
1,054
96.8
:
44-5
30.5
:
-
t
$
Cleveland
I X ,
No. of Banks
added to Par
L i s t s ince
J a n . 1, 1919
Total No
No. of nonmember banks
n o t on Par
List
:
Fedei-el
Reserve
Bank of
: National
: Banks i n
: District
Boston
:
New York
:
NORUNERLDEJ
b=mks in
District
241
322
-
93
43
:
387
35
1,089
20
:
171
1,017
1,462
409
Richmond
532
43
575
Atlanta
368
6l
429
351
22.1
5
:
101
1,241
1,592
Chicago
1,048
31S
1,366
3,524
84.0
325
:
1,158
671
4,195
144
:
963
692
;
:
2,658
*
322
1,387
:
2,878
218
:
863
262
:
3,306
205
:
671
317
:
1,220
26
986
:
:
4,729
St.Louis
:
466
65
531
1,966
74,0
:
lAianeapolis
:
828
64
912
1,491
31-8
-
Kansas C i t y
:
9#
4l
1,025
3,044
92.1
:
Balla6
1
635
119
753
903
74.0
119
**
1,131
694
8,978
934
14,684
88.9
71-9
Oftffl JX U . 1 S O •.
f £ 3C C
*£ottil
-
SV7R
7 , 3 4 7
*
FDR L RSR E B AD
E E A EE V O R
W S I GO
AH T N
N
i
1
:
12*V
5,747
——
NOVEMBER 4, 1919
1
:
,\,m
: 20,431
851
E x O F F I C I O MEMBERS
W. P . 6 . HARDING, GOVERNOR
ALBERT STRAUSS, Vice GOVERNOR
ADOLPH C. MILLER
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
CHARLES S . HAMLIN
FEDERAL RESERVE BOARD
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
ADDRESS REPLY TO
R. G. EMERSON, ASSISTANT SECRETARY
W. M, IMLAY, FISCAL AGENT
WASHINGTON
FEDERAL RESERVE BOARD
W . T. CHAPMAN. SECRETARY
November b,1919»
3L1716
SUBJECT:- Topics f o r D i s c u s s i o n a t Conference
of Governors on November 19,1919.
Dear S i r
There i s enclosed a l i s t of t o p i c s which w i l l be
p r e s e n t e d f o r d i s c u s s i o n at the conference on the 19th i n s t a n t .
This l i s t embraces t o p i c s which have been suggested by s e v e r a l
of the Governors as w e l l as soue which have been o f f e r e d by
I
members of the F e d e r a l Reserve Board* and i t i s b e l i e v e d t h a t
i t i s s u f f i c i e n t l y comprehensive t o absorb a l l the time a v a i l able f o r the c o n f e r e n c e . The l i s t , however, i s n o t a c l o s e d
one, and i f t h e r e are any other t o p i c s which any Governor would
l i k e t o submit, they can be considered*
Very t r u l y yours#
Enclosure.
Governor.
L e t t e r t o each Governor
jU171b~A
TOPICS JOB DISCUSSION AT GOVERNORS 1 CONFERENCE
WEDNESDAY, NOVEr/iBER 19,1919.
RESERVES:
(a) Tne Federal Reserve Board i s authorised to r e c l a s s i f y e x i s t ing r e s e r v e and c e n t r a l r e s e r v e c i t i e s .
Should t h i s power be e x e r c i s e d , and if so, how?
Should Congress be asked to amend Section 19 so as to
r e q u i r e uniform r e s e r v e s throughout the c o u n t r y , d i f - •
f e r e n t i a l s to be based on the various c l a s s e s of deposits ?
(b) Is there a demand f o r the payment of i n t e r e s t on r e s e r v e dep o s i t s , and should such a p o l i c y be considered?
SHOULD FEDERAL RESERVE B N KS EXERT ANY INFLUENCE UPON THE POLICY OF
A
MEiviBER BANKS IN THE AVO N OF INTEREST ALLOWED ON DEPOSITS?
llUT
SHOULD EFFORTS BE M D TO INDUCE MEMBER BANKS TO CONTINUE THE PROCESS
AE
OF SORTING AND DEPOSITING GOLD CERTIFICATES IN FEDERAL RESERVE
BANKS?
SHOULD THE FEDERAL RESERVE BANKS CONTINUE TO ABSORB THE ABRASION
LOSS ON GOLD COIN?
TRANSIT OPERATIONS:
(a) Method of treatment of t r a n s i t problems through meetings of
t r a n s i t Managers *
(b) In the i n t e r e s t of more prompt p r e s e n t a t i o n and payment of
checks, should not nearby banks i n given s e c t i o n s c l e a r
on each other d i r e c t l y , instead of through Federal Reserve
Banks? Should the Federal Reserve Banks promote the e s t a b lishment of such l o c a l c l e a r i n g houses?
(c) C o l l e c t i o n of D r a f t s , B i l l s of Exchange, etc# Should the c o l l e c t i o n f a c i l i t i e s of the Federal Reserve Banks be extended
to include c o l l e c t i o n of commercial paper maturing i n
Federal Reserve c i t i e s and branch c i t i e s , and c r e d i t given
on d a t e of m a t u r i t y s u b j e c t to f i n a l payment?
(d) Transfer D r a f t s and Exchange D r a f t s : The T r a n s i t Conference
held i n Cleveland on June 2$, 19191 recommended t h a t l i m i t
on exchange d r a f t s be removed. Is i t d e s i r a b l e to remove
the l i m i t on exchange d r a f t s aad d i s c o n t i n u e the use of
transfer drafts?
-2-
_
X-17 lb A
(e) T r a n s i t Expense: Jn view of the f a c t t h a t no uniform
method has be on adopted, of determining t r a n s i t
expense, should n o t t h i s s e g r e g a t i o n be abolished?
( f ) Use of express companies by Federal Reserve Banks i n
c o l l e c t i n g checks.
(g) Prospects of p u t t i n g e n t i r e country on par b a s i s ,
b : RELATIONS WITH STATE BANES.
(a) State Bank Membership: Is any organized work, being conducted s i n d l a r t o the campaign t o get p a r p o i n t s ?
(b) Fraudulent advertisement or claim of membership i n
Federal Reserve System. What means e x i s t f o r preventing?
? : DISCOUNT RATES:
(a) Review of p o l i c y i n the l i g h t of e f f e c t of- r e c e n t changes.
(b) E f f e c t of 15-day c o l l a t e r a l r a t e s : Snou?.& d i f f e r e n t i a l
i n f a v o r of short time borrowings be discontinued?
(c) C a l c u l a t i o n of
practice is
on b a s i s of
open market
calculation
I n t e r e s t a t 3^5 Days p e r Year: Present
to compute i n t e r e s t on notes rediscounted
3°5 days and on b i l l s purchased i n the
a t 3b0 days p e r y e a r . Should b a s i s of
be uniform?
8: CREDIT SITUATION:
(a) Discussion of the p o l i c y of the system. Governors are
requested to b r i n g some r e p o r t of general p r i c e movements as to r e a l e s t a t e , commodities and s e c u r i t i e s i n
their respective d i s t r i c t s .
(b) Experience of the governors as to the Exercise of d i r e c t
p r e s s u r e upon i n d i v i d u a l banus t h a t are i n c l i n e d t o
borrow too f r e e l y .
(c) Discussion of the complicated s i t u a t i o n p r e s e n t e d by the
amendment to Section 5200 U.S.R.S.
9 : DISCUSSION OF FOREIGN BUSINESS OF BSSERVE SYSTEM A D H W IT IS
N O
MANAGED.
10: ADMINISTRATION PROBLEMS:
(a) Salary a d j u s t m e n t s .
(1) S p e c i a l compensation to meet high l i v i n g c o s t s .
(2) ggploye's r e p r e s e n t a t i o n .
(3) S a l a r y s t a n d a r d i z a t i o n .
(4) Overtime p o l i c y .
853
~3-. ,
jul?lb-A
10: ADiviINISTRATIOK PROBLEMS: c o n t i n u e d .
(b) T h r i f t and Savings P o l i c i e s :
(1) Savings f u n d .
(2) Ho.u>e b u i l d i n g .
(3) Cooperative s t o r e .
(c) Health Program:
( l ) iViedical examinations, including both eyes and t e e t h .
(d) S e l e c t i o n ond Education:
(1) mental t e s t s .
(2) Training school.
(3) Course i n Federal Reserve Act.
(e) Personnel
Service:
(1) C a f e t e r i a .
(2) Rest p e r i o d s .
(3) Recreation.
( f ) Pension p l a n s :
(1) Group i n s u r a n c e .
(2) D i s a b i l i t y and r e t i r e m e n t allowances.
(g) Bank. P r o t e c t i o n :
(1) P o l i c i n g .
(2) Riot d u t y .
11: BRANCH BANKS:
(a) Published Comparisons of Branch Operations and Expenses:
Inasmuch as s t a t i s t i c s a f f o r d no opportunity f o r comp a r i s o n unless the f u n c t i o n s ana o p e r a t i o n s are comp a r a b l e should tney n o t be subjected to a n a l y s i s or be
discontinued?
(b) A d v i s a b i l i t y of conference of Branch Ban^ Managers to s£ud.y
. .
problems of branch bonk o p e r a t i o n s .
12: U.S. TREASURER'S ACCUUM1:
(a) Can wore prOj.pt and dependable v e r i f i c a t i o n s and r e c o n c i l e ments be obtained?
855
FEDERAL
RESERVE
BOARD
WASHINGTON
CONFIRMATION OF TELEGRAM
November b , l y ! 9 *
Morss
Strong
Passmore
Fancher
Se ayWellborn
McDougal
Biggs
Young
Miller
Van Zandt
Calkins
X-1717
Boston
New York.
Philadelphia
Clevsland
Richmond
Atlanta
Chicago
S t , Louis
Minneapolis
Kirnsas City
Dallas
San F r a n c i s c o
Board hopes you w i l l do what you can t o discourage member
banks from using advance i n Federal Reserve Banks r a t e s as excuse
f o r i n c r e a s i n g i n t e r e s t charge t o those borrowers on Government
s e c u r i t i e s who are^ doing what may be r e a s o n a b l y expected i n the
way of l i q u i d a t i o n . In such cases member banks should be s a t i s f i e d
with moderate d i f f e r e n c e i n t h e i r f a v o r . Board does not mean t o
suggest r e d u c t i o n i n r a t e s h e r e t o f o r e charged customers on such
t r a n s a c t i o n s or to advocate any p o l i c y which would r e s u l t i n a e l a y
of o r d e r l y l i q u i d a t i o n of bond secured l o a n s .
HARDING.
856
THE SECRETARY OF THE TREASURY
WASHINGTON
COPY
November 5* 1919*
®
Dear Governor Harding:
I nope t h a t the Federal Reserve Board w i l l not allow the Governors of
the Federal Reserve Banks to r e l y wholly or too h e a v i l y , f u r the p r e v e n t i o n
of the abuse of the f a c i l i t i e s of the Federal Reserve Syutem, upon the increase
I n r a t e s iww established, with the approval of the Butxa, myself i n c l u d e d .
The experience of a l l European c o u n t r i e s (and Japan) , i n c l u d i n g those
c o u n t r i e s which have been n e u t r a l i n the war and thus© which have malutaitied
a h i g h c e n t r a l bank r a t e , supports the view t h a t discount r a t e s w i l l not
s u f f i c e i n these e x t r a o r d i n a r y times.
The Reserve Banks 1 r a t e s should., of course, s c i e n t i f i c a l l y be above the
commercial r a t e and not below i t . That cannot happen u n t i l the independent
r e s o u r c e s of the ban&s s u f f i c e f o r the normal requirements of t h e i r c u s tomers f o r commercial, i n d u s t r i a l and Government p u r p o s e s . Banks cannot be
expected t o meet th»se requirements h a b i t u a l l y a t a l o s s . Their dependence
upon the Federal Reserve System should be seasonal or occasional and not
h a b i t u a l . U n t i l t h a t c o n d i t i o n comes about as a r e s u l t of the production and
saving of wealth the tendency w i l l b e , as Reserve Bank r a t e s are i n c r e a s e d ,
f o r the r a t e s t o t h e Government and r a t e s t o the commercial borrower to be
inc r e a s e d i n t u r n . The world has been f o r f i v e y e a r s consuming or d e s t r o y i n g
more than i t has produced* % own b e l i e f has been and i s t h a t with the c u r t a i l ment of export demand consequent upon the c u r t a i l m e n t of f o r e i g n c r e d i t s and
with i n d u s t r i a l production proceeding f u l l steam ahead we should soon have
reached an e q u i l i b r i u m i n t h i s country a t l e a s t * In the meantime, however, the
.*-171* a
labor s i t u a t i o n has become so acute as gravely t o t h r e a t e n production- and the
I
s p e c u l a t i v e mania has developed to such an e x t e n t as g r a v e l y to t h r e a t e n our
credit structure.
The c o n d i t i o n s under which changes i n the Reserve Banks ' r a t e s of discount
would operate e f f e c t i v e l y do n o t e x i s t here today. Ma i n c r e a s e i n the discount
r a t e w i l l not r e s u l t i n the importation, nor c u r t a i l the e x p o r t a t i o n , of gold
to any m a t e r i a l amount. I t w i l l not r e s u l t i n a curta ilment of the importation
of goods nor i n i n c r e a s i n g our e x p o r t s m a t e r i a l l y . In the p r e s e n t p o s i t i o n
of the i n t e r n a t i o n a l balances and of the f o r e i g n exchanges and, because of gold
embargoes the Federal Reserve Bank r a t e s cannot f u n c t i o n i n t e r n a t i o n a l l y , and .
w i l l operate s o l e l y upon the domestic s i t u a t i o n . In t h a t c o n d i t i o n an important
f u r t h e r i n c r e a s e i n Federal Reserve Bank r a t e s might have the e f f e c t of p e n a l i z i n g and discouraging the borrower f o r commercial aid i n d u s t r i a l purposes,
thus c u r t a i l i n g production and d i s t r i b u t i o n and i n c r e a s i n g the shortage of
goods,and consequently the p r i c e of them, and thus, i n t u r n , s t i m u l a t i n g
s p e c u l a t i o n . ( An i n c r e a s e i n r a t e s (per c e n t , per annum) f a l l s very l i g h t l y
upon the borrower f o r s p e c u l a t i v e purposes, who f i g u r e s a very large p r o f i t
on the turnover i n a day, a week, a month or some other s h o r t p e r i o d ) . I t
might have a l s o a very grave e f f e c t upon the Government's f i n a n c e s .
In consequence of the war the Government has issued sane $25,000,000,OCX)
of i n t e r e s t b e a r i n g s e c u r i t i e s which are of prime e l i g i b i l i t y . Before the war*
when the Government's debt was only $1,000,000,000 and t h a t a l l s t o r e d away
in s t r o n g boxes, the p o s s e s s i o n of e l i g i b l e paper was very s t r u n g presumptive
evidence of the r i g h t of a member bantu, to borrow. N<v.w aid f o r the l i f e of t h i s
g r e a t war debt the p o s s e s s i o n of e l i g i b l e paper w i l l be no evidence a t a l l .
Therefore, I b e l i e v e i t t o be of prime importance t h a t the Federal Reserve
Board should i n s i s t upon and t h a t the Governors of the banKs should e x e r c i s e
a f i r m d i s c r i m i n a t i o n i n making loans t o prevent abuse of the f a c i l i t i e s of the
T3~
< "
•
X-1718 a
8 5 8
Federal Reserve System i n support of tide r e c k l e s s speculation i n stocKs, land*
c o t t o n , c l o t h i n g , f o o d s t u f f s and commodities generally#
We cannot t r u s t t o the copybook texts* Maying c r e d i t more expensive w i l l
not s u f f i c e * There i s no precedent i n h i s t o r y f o r the g r e a t war which we have
been through nor f o r the conditions now existing* The Reserve Bank Governor
must r a i s e h i s mind above the language of the textbooks ana f a c e the s i t u a t i o n
which e x i s t s * He must have courage t o a c t promptly and with confidence i n h i s
own i n t e g r i t y t o prevent abuse of the f a c i l i t i e s of the Federal Reserve System
by the customers of the Federal Reserve Banksf however powerful or i n f l u e n t i a l *
Speculation i n stociis on the New Yor& Stock Exchange i s no more vicious
i n i t s e f f e c t upon the welfare of the people and upon our c r e d i t s t r u c t u r e
than speculation i n c o t t o n or i n land or i n codAodities generally* But the
New York Stock Exchange i s the g r e a t e s t single organized user of c r e d i t f o r
speculative purposes• I t i s the organized instrument of a countrywide specular
t i o n . I believe t h a t the p r a c t i c e of financing speculative t r a n s a c t i o n s i n stocks
by loans on c a l l , with d a i l y s e t t l e m e n t s , i s unsound and dangerous to the general
w e l f a r e . Call money loaned to c a r r y speculative t r a n s a c t i o n s i n stocks i s only
l i q u i d when there i s no need. The paper i s not
I f - l i q u i d a t i n g and, i n the case
of an emergency, a s , f o r example, upon the outbreak of the European war, and
throughout the period of our p a r t i c i p a t i o n i n the war, such loans are i n the
mass u n c o l l e c t i b l e . The use of l i b e r t y Bonds t Victory 'Notes and Treasury
C e r t i f i c a t e s as c o l l a t e r a l f o r borrowings made by member banks from the Federal
Reserve Banks f o r the
purpose of carrying speculative t r a n s a c t i o n s i n stocks
makes i t the r i g h t as well as the duty of the Federal Reserve a u t h o r i t i e s to see
t o i t t h a t the methods of f i n a n c i n g such t r a n s a c t i o n s are reformed and reformed
immediately*
Open and n o t o r i o u s manipulation of stocks has been taking place during
the p e r i o d o f , say, nine months, since the removal of the c o n t r o l of the
Sub-committee
<i
%
Money of the Liberty Loan Committee. This
manipulation,
which
—
a
859
takes the form of p u t t i n g up the p r i c e f i r s t of one s t o c k and then of another,
no matter what may be the condition^, f o r the purpose of s t i m u l a t i n g i n t e r e s t
on the p a r t of the u n i n i t i a t e d , p u b l i c , i s , I imagine, c o n t r a r y to the lav Of
the S t a t e of New YorK and the r u l e s of the New York StocK Exchange# In any event*
i t needs only vigorous a c t i o n t o p u t an end t o i t . The F e d e r a l Reserve Bautc
of New York i n i t s r e l a t i o n to the Subcommittee on Money of the L i b e r t y Loan
Committee, voiich Committee was a t a l l times i n touch with the of1 l e e r s of the
Stock Exchange, n a t u r a l l y sought t h e views of the Treasury by r e a s o n of the
f a c t t h a t i t s prime duty concerned the s a l e of l i b e r t y Bonds. A c o n t r o l now
put i n t o e f f e c t w i l l be p r i m a r i l y f o r the c o n s e r v a t i o n of the g e n e r a l c r e d i t
s i t u a t i o n and should t h e r e f o r e be i n i t i a t e d and s u p e r v i s e d , n o t by the T r e a s u r y t
b u t by the F e d e r a l Reserve Board.
I need n o t say t h a t such s t e p s should be t a k e n not only f i r m l y but with
d i s c r e t i o n and i n such a way as not t o involve grave h a r d s h i p t o i n d i v i d u a l s
or i n j u r y t o t h e g e n e r a l w e l f a r e ,
I have w r i t t e n t h i s l e t t e r b e l i e v i n g t h a t you and the o t h e r members of
the Board a r e i n g e n e r a l accord w i t h the p r i n c i p l e s said views expressed i n i t
end t h a t i t might be of some a s s i s t a n c e t o you i n d e a l i n g with the problem
with the Governors of the Banks t o have t h i s w r i t t e n e x p r e s s i o n of the views
of one of the members of the Board whose other o f f i c i a l d u t i e s p r e v e n t h i s
f r e q u e n t attendance a t your meetings,
I need s c a r c e l y aid t u a t t h i s l e t t e r i s w r i t t e n i n no s p i r i t of c r i t i c i s m *
The Governors of the Federal Reserve Banns have served t h e i r c o u n t r y w i t h d e v o t i o n , courage and wisdom d u r i n g the t r y i n g p e r i o d t h a t i s p a s t . I t would be
d i f f i c u l t f o r me t o g i v e adequate p r a i s e t o the p a t r i o t i c s p i r i t of s e l f - s a c r i f i c c
which has a c t u a t e d them 06 adequate a p p r e c i a t i o n t o the s k i l l and s a g a c i t y with
which they have performed t h e i r d u t i e s - During the war they have n a t u r a l l y turned
f o r l e a d e r s h i p t o t h e T r e a s u r y s i n c e i t s o p e r a t i o n s were the dominating f a c t o r
880
* *
2-1718 a
i n the f i n a n c i a l s i t u a t i o n * I t would f however $ be a g r e a t misfortune i f ^ now
t h a t the Treasury (operations are on a diminishing s c a l e , the Governors of the
Federal Reserve Banks are allowed to f e e l t h a t the problems of the f u t u r e
were f o r them to solve each according to h i s own b e s t judgment.
The need of
l e a d e r s h i p i s no l e s s g r e a t , the need of examining the s i t u a t i o n from a broad
national
and i n t e r n a t i o n a l p o i n t of view i s no l e s s imperative* X look t o
see the Federal Reserve Board# not c r i t i c a l l y nor a g g r e s s i v e l y b u t p a t i e n t l y
and p e r s i s t e n t l y , provide t h i s leadership*
Very t r u l y yours,
CARTER GLASS.
Hon. WeP,G. Harding,
Governor, Federal Reserve Board.
861
W . P . 6 . HARDING, GOVERNOR
ALBERT STRAUSS. VICE GOVERNOR
EX OFFICIO. MEMBERS
ADOLPH C . MILLER
CHARLES S . HAMLIN
CARTER CLASS
SECRETARY OP THE TREASURY
CHAIRMAN
HENRY A . M O E H L E N P A H
FEDERAL RESERVE BOARD
JOHN S K E d W f l L L I A M S
COMPTROLLER OP THE CURRENCY
R. G . EMERSON, ASSISTANT SECRETARY
ADDRESS REPLY TO
W. M. IMLAY. FISCAL AOENT
WASHINGTON
FEDERAL, R E S E R V E B O A R D
November 7>1919*
Subject:
W . T . CHAPMAN, SECRETARY
2-1719
Recomr.sndations made at Conference of Federal
Reserve Agents, October 22-24, 1919-
Dear S i r t The Federal Reserve Board has considered the recommendations
of the Federal Reserve Agents 1 Conference, held, i n Washington, Oct. 22—
24, 1919,. copy of which i s attached h e r e t o , and submits the following
comment with r e f e r e n c e t o c e r t a i n recommendations made.
FEDERAL RESERVE AGE1JTS' SPECIAL FUNCTIONS
(a)
NOTE ISSUE
(3)
(
Redemptions,
The Federal Reserve Board wishes t o urge upon the Federal
Reserve Agents the n e c e s s i t y f o r c l o s e r s o r t i n g of u n f i t Federal Reserve
notes forwarded t o Washington f o r redemption, and r e q u e s t s t h a t t h i s
matter be brought t o the a t t e n t i o n of the o f f i c e r s of the Federal Reserve
Banks. At the p r e s e n t time, about $11,000,000 of Federal Reserve notes
are being shipped t o Federal Reserve Agents from Washington d a i l y , while
the output of the Bureau of Engraving and P r i n t i n g i s only about $7,000,000.
In order to meet the heavy f a l l demand f o r currency, ana f u r t h e r m o r e , in
the i n t e r e s t s of economy, i t i s necessary t h a t Federal Reserve Banks s o r t
t h e i r notes much c l o s e r and forward to Washington f o r redemption only those
n o t e s which a r e u n f i t f o r f u r t h e r c i r c u l a t i o n . In a r e c e n t communication
which the Board received frora the Treasurer of the United S t a t e s , the
statement was made t h a t i t was estimated the r e m i t t a n c e s received from
some of the Federal Reserve Banics contained from 35 to 60$ f i t notes.
#
(4)
Design of Federal Reserve Notes.
The Board has under c o n s i d e r a t i o n the recommendation t h a t
s t e p s be taken to change the design of Federal Reserve n o t e s i n order to
make f r a u d u l e n t use more d i f f i c u l t . The Board d e s i r e s , however, t h a t no
p u b l i c i t y be given t o t h i s m a t t e r , f e e l i n g t h a t perhaps more unscrupulous
persons might be tempted t o engage i n c o u n t e r f e i t i n g or r a i s i n g Federal
Reserve n o t e s .
X-1719
ig)
RELATIONS WITH MEMBER BANKS.
(3)
Proper use of system by members - can a program be formulated?
The Board i s i n accord with the expression of opinion t h a t
personal c o n t a c t w i t h member banks i s very d e s i r a b l e , and f e e l s t h a t each
Federal Reserve Bank should Ire jp i n personal touch with as l a r g e a number of
i t s member banks a s p o s s i b l e , the method t o be determined by each Federal
Reserve Bank to meet i t s own l o c a l c o n d i t i o n s .
(h)
RELATIONS WITH NON-MEMBER BANKS.
(l)
iShat can "oe done to i n c r e a s e membership?
The Federal Reserve Board approved the recommendation " t h a t
an e n e r g e t i c and organized campaign should be immediately inaugurated i n every
Federal Reserve D i s t r i c t to secure lumbership In thd Federal Reserve System
of e l i g i b l e and d e s i r a b l e s t a t e banks", and b e l i e v e s t h i s to be an opportune
time in the m a j o r i t y of d i s t r i c t s to s t a r t such a campaign, i n view of the
missionary work which has already be^n done by the o f f i c e r s of Reserve Banks
in t h e i r par p o i n t campaigns; and b e l i e v e s t h a t a s t i l l more i n t e n s i v e s t a t e
bank membership campaign should be launched immediately f o l l o w i n g the f i r s t
of the year; and concurs with the recommendation that the campaign should also
embrace educational work among member oanks to acquaint them w i t h the value
and the proper use of the f a c i l i t i e s of the Federal Reserve System*
FEDERAL RESERVE BANK POLICIES
(a)
PAR POINT CAMPAIGN.
The Board concurs with the recommendation t h a t on January
1, 1920, those s t a t e s in which there are r e l a t i v e l y few non-par r e m i t t i n g
banks, be p l a c e d on the par l i s t i n e n t i r e t y , and. t h a t checks of those banks
which continue to be u n w i l l i n g to remit a t par, be c o l l e c t e d by agents,
express companies or otherwise.
(a)
2 . "We de3m i t f e a s i b l e and d e s i r a b l e to obtain cooperation
and a c t i o n from the c l e a r i n g houses throughout the country
i n modifying schedules wherein the time element a c t s in a
d i s c r i m i n a t i n g way a g a i n s t c e r t a i n p o i n t s and s e c t i o n s of
the country. *
The Board concurs i n the above recommendation and
d e s i r e s t h a t Federal Reserve Agents endeavor to obtain cooperation pnn
a c t i o n from the c l e a r i n g houses i n t h e i r d i s t r i c t s with a view to modif y i n g schedules wherein the time element a c t s in a d i s c r i m i n a t i n g way
against c e r t a i n p o i n t s and s e c t i o n s of the country.
862
-3-
(h)
x-1719
COMPENSATION OF EMPLOYEES,
(l)
Wages and Bonuses.
The
Board has considered the recommendation on the above
s u b j e c t , out i n view of the f a c t t h a t the matter w i l l oe discussed f u l l y
a t the Conference with the Governors on the 19th i n s t a n t , does not deem
i t a d v i s a b l e to make any f u r t h e r c o m a n t s a t t h i s time.
Very t r u l y yours,
Governor.
L e t t e r to Chairmen of a l l F.B. Banks
864
X-1719&
There follow the recOi-aaendations oi the Federal Reserve Agents
to the Federal Reserve Board, adopted oy the Federal Reserve
Agents'
Conference h e l d i n Washington October 22 - 24, 1919.
FEDERAL RESERVE AGENT'S SPECIAL FUNCTIONS
(a)
NOTE ISSUE
(1)
Discussion of expansion and c o n t r a c t i o n .
,
Expansion ana c o n t r a c t i o n i n Federal Reserve n o t e s i s dependent
i n general on the p r i c e l e v e l . While i n a g r i c u l t u r a l d i s t r i c t s there has
been expansion ana c o n t r a c t i o n to meet seasonal demands, the e x t e n t of cont r a c t i o n i s s t i l l dependent on the p r i c e l e v e l , f o r the f i g u r e s show as the.
l e v e l of p r i c e s i n c r e a s e s Federal Reserve n o t e s in c i r c u l a t i o n revain a f t e r
each seasonal f l u c t u a t i o n a t a higher l e v e l .
Unless 6owe d i r e c t uethou. can be devised to decrease the p r i c e
l e v e l there can be no permanent c o n t r a c t i o n of Federal Reserve n o t e s , except
through curt&iluiant of p u b l i c d e ^ n d through econoujr and savings,
(2)
Suvvly of coin and currency.
In those d i s t r i c t s where i t i s g e n e r a l l y known t h a t the Federal
Reserve Bank s u p p l i e s currency f r e e of a l l t r a n s p o r t a t i o n c o s t , the Federal
Reserve Bank s u p p l i e s i t s d i s t r i c t almost completely.
I t i s suggested t h a t i f a compaign of education i s conducted i n
a l l d i s t r i c t s so t h a t the member banks know they can get currency without
cost from t h e i r Federal Reserve Banks each Federal Reserve Bank w i l l supply
i t s d i s t r i c t and add to i t s p o p u l a r i t y , and t h i s service can be used a s an
argument f o r enhancing the value of membership. In some of t h e l a r g e c i t i e s
correspondent banks a r e shipping out currency to member banks i n other
d i s t r i c t s , a p r a c t i c e which t h i s educational work w i l l tend to discourage.
(3)
Redemption.
The volume of shipments f o r redemption by member banks and by
Federal Reserve Banks can be reduced by a c l o s e r s o r t i n g of u n f i t Federal
Reserve n o t e s i n a l l Federal Reserve Banks and a l s o by demands on the Treasury
Department f o r currency in Federal Reserve d i s t r i c t s being supplied by l o c a l .
Federal Reserve Banks r a t h e r than by shipments of Federal Reserve n o t e s of
other Federal Reserve Banks i n t o a- Federal Reserve d i s t r i c t .
- 2 -
•
'
(4)
x-1719ft
Design of Federal Reserve n o t e s .
I t i s recommended t h a t i m e d i a t e s t e p s be taken to improve
the design of Federal Reserve n o t e s i n order to make f r a d u l e n t use
more d i f f i c u l t , and to expedite sorting*
The conference submitted the f o l l o w i n g r e p o r t f o r the
information of the Board,
Mr. Chase r e p o r t s as f o l l o w s :
From a p r a c t i c a l s t a n d p o i n t , I t h i n k the design on
Federal Reserve n o t e s could be improved by adopting
two changes which I understand a r e the p a t e n t e d
p r o p e r t y of Edward B. Andrus of the Cosmopolitan Trust
Company of Boston. He has p e r f e c t e d and p a t e n t e d an
improved design f o r currency which embraces among
other f e a t u r e s the two following, which are of c o n s i d e r able merit:
1.
That the f i g u r e s on the smaller denominations of
b i l l s be l a r g e r than the f i g u r e s on the l a r g e r
denominations so t h a t genuine f i g u r e s from the
• l a r g e r denominations could n o t be torn off and
p a s t e d over the f i g u r e s of the smaller denominat i o n s a s has been done throughout the country of
l a t e on a l a r g e s c a l e ,
2,
Mr. Andrus has p e r f e c t e d a design on the diagonal
p r i n c i p l e so that however i t may be p l a c e d a note i s
always r i g h t side up. This does not improve the
a r t i s t i c appearance of the n o t e s but i t would be a
tremendous p r a c t i c a l advantage to people who a c t u a l l y
handle currency, e s p e c i a l l y f o r banks such a s ours,, in
which hours of labor are wasted i n a day merely i n
arranging notes r i g h t side up and r i g h t side t o .
(s)
CLAYTON ACT
(l)
Should a%istinfr permits be revised?
I t i s the judgment of t h i s conference t h a t the
p o l i c y of the Federal Re serve Board i n ae termining what i s
s u b s t a n t i a l competition unaer the Clayton Act amended has
r e s u l t e d , s a t i f a c t o r i l y and t h a t no review of p r e s e n t permits
i s necessary except i n those cases where a decided and known
change has taken p l a c e i n the n a t u r e of the busine ss of the
i n s t i t u t i o n s with interlocking directors.
(g)
RELATIONS WITH M M E BANKS
E BR
(l)
Services, v r e s e n t and p r o s p e c t i v e : and t h e i r c o s t .
Th«s s e r v i c e a f f o r d e d by the Federal Reserve Banks i s
valuable t o member banks and i s , or should be, an inducement to
membership on the p a r t of nonmembers.
Dividends are l i m i t e d
X-1719a
~ 3 ~
by -law to s i x p a r c e n t , a f a i r r e t u r n oil c a p i t a l investment.
I n t e r e s t on b a l a n c e s i s very p r o p e r l y disallowed. Nevertheless
the p r e s e n t l a r g e e a r n i n g s and prospective p r o f i t s a r e , to a l a r g e
e x t e n t , the r e s u l t of use of the c a p i t a l and r e s e r v e s of member banks,
and such member banks should, t h e r e f o r e , be e n t i t l e d to the l a r g e s t
p o s s i b l e r e t u r n in the form of service dividends. There seems to be no
reason to b e l i e v e t h a t the cos* of operation should i n the f u t u r e
advance beyond a normal i n c r e a s e due to n a t u r a l growth, and t h e r e f o r e , there i s nothing to prevent the continuance of such dividends
in s e r v i c e ,
(2)
Are any members considering withdrawing?
A number of banks have already withdrawn from membership
and i t appears t h a t some o t h e r s have f i l e d a p p l i c a t i o n f o r withdrawal. Some banks havihg i n d i c a t e d a d i s p o s i t i o n to withdraw
have concluded not t o do so a f t e r a personal v i s i t from an o f f i c e r
of the Federal Reserve Ban-s, i t being demonstrated i n these cases
that the d i s s a t i s f i e d member had an inadequate conception of the
r e a l purpose of the system and a lack of comprehension of b e n e f i t s
to be obtained through proper use of the f a c i l i t i e s o f f e r e d .
In general, i t appears t h a t withdrawals may be c l a s s i f i e d
unaer two groups — l i r g t . those wno wish to make membership merely
a source of d i r e c t and increased p r o f i t through excessive use or
abuse of the p r i v i l e g e s granted, (which members a r e of no b e n e f i t
to the system); and second, such .uamoers a s come in through purely
p a t r i o t i c motives, n&ving l i t t l e or no occasion t o use the r e d i s counting p r i v i l e g e ' s , and t h e r e f o r e f i g u r e t h a t continuing membership naans l e s s e n e d p r o f i t s without compensating b e n e f i t s . I t i s
t l i k e l y t h a t i n such i n s t a n c e s , or most of them, a personal v i s i t by
soma well q u a l i f i e d r e p r e s e n t a t i v e of the Federal Reserve Bank would
r e s u l t in the abandonment of i n t e n t i o n t o withdraw.
B06
867
- 4 (3)
X-1719a
Proper use of system by members - - can a program be f o r m u l a t e d '
I t i s i n p r a c t i c a b l e to frame a d e f i n i t e program f o r u n i v e r s a l
a p p l i c a t i o n , f o r each d i s t r i c t has i t s own p e c u l i a r c o n d i t i o n s which
must be d e a l t w i t h accordingly. However, i n important r e s p e c t s a proper
use of the f a c i l i t i e s of the system can-be brought about and should be
encouraged on the p a r t of member banks throughout the country without
abuse of the p r i v i l e g e # I t i s manifest t h a t many member banks are as
y e t without proper imowledge i n these m a t t e r s . I t i s suggested t h a t
p e r s o n a l touch and acquaintance p r o p e r l y followed up may open the way
f o r c o r r e c t i o n of t h i s s i t u a t i o n . The p a r t i c u l a r method, however, must
be worked out i n each d i s t r i c t according t o l o c a l c o n d i t i o n s .
(h)
RELATIONS WITH N M E B R BANKS.
O MM E
(1) What can be done to increase membership?
We are convinced t h a t p e r s o n a l contact and d i s c u s s i o n
f u r n i s h e s the most p r a c t i c a l method of i n c r e a s i n g membership. The appeal
to p a t r i o t i s m alone i s no longer e f f e c t i v e . Desirable nomneober banks
are already l a r g e l y informed, in a general way, a t l e a s t , as t o the
system. The b e s t advertisement i s a s a t i s f i e d customer. If our prbsent
members r e c e i v e s a t i s f a c t o r y s e r v i c e , they w i l l recommend i t t o o t h e r s .
We b e l i e v e t h a t an e n e r g e t i c and organized campaign should
be immediately inaugurated i n every Federal Reserve D i s t r i c t t o secure
membership i n the Federal Reserve System of e l i g i b l e and d e s i r a b l e s t a t e
baa ks and t h a t any proper and l e g i t i m a t e expense necessary t o reasonable
success should be i n c u r r e d . Included i n t h i s e f f o r t and as an aid to i t s
accomplishment t h e r e should be a general and i n t e n s i v e campaign t o acquaint
member banks with the value and proper use of the f a c i l i t i e s of the Federal
Reserve System,
(i)
RELATIONS WITH PUBLIC.
( l - 2) We b e l i e v e i n p u b l i c i t y , but we a l s o b e l i e v e t h a t
i t should be s p e c i a l i z e d p u b l i c i t y , and t h a t i t should be d i r e c t e d from
time t o time toward the o b j e c t i v e s t h a t we are aaxious to r e a c h . In baa.cs;
the d i r e c t o r s as w e l l as the o f f i c e r s , should be l i s t e d and. gone a f t e r .
A mailing l i s t of the d i s t r i c t leaders i n t r a d e , i n d u s t r y and a g r i c u l t u r e
should be kept and added t o f r o m time to time f o r t h i s purpose.
F E D E R A L R E S E R V E BANK P O L I C I E S
(a)
PAR POINT CAMPAIGN.
In p r e p a r i n g t h i s r e p o r t the Committee had b e f o r e i t r e p o r t s
made y e s t e r d a y by the s e v e r a l chairmen of the r e s u l t s of the campaign
f o r par c o l l e c t i o n s i n t h e i r s e v e r a l d i s t r i c t s . Two things were developed
by these r e p o r t s ,
( l ) The p r o p o s i t i o n of the Federal Reserve Board t o i n s i s t
upon the use of symbols on checks had given an impetus t o the campaign,
since r e s e r v e banks as well as other banks foresaw the d i f f i c u l t i e s i n
i t s p r a c t i c a l o p e r a t i o n together with the d i s c r i m i n a t i o n a g a i n s t nonr e m i t t i n g banks t h a t the use of the symbols would provoke.
http://fraser.stlouisfed.org/
\
Federal Reserve Bank of St. Louis
x-1713*
- 5 *
(2)
S a t i s f a c t o r y p r o g r e s s i s being made i n a m a j o r i t y of
the d i s t r i c t s , and i t appears t h a t when n o n - r e m i t t i n g banks were n o t i f i e d
t h a t on a f i x e d date checks an themselves would be put on the p a r l i s t
and c o l l e c t e d by a g e n t s , e x p r e s s companies, or otherwise, over SO per
cent of the banks thus n o t i f i e d signed agreements to remit a t p a r .
We recommend t h a t i n S t a t e s where there a r e r e l a t i v e l y
few n o n - r e m i t t i n g banks* such n o n - r e m i t t i n g banks be n o t i f i e d t h a t not
l £ t e r than January 1 s t , t h e i r checks w i l l be put on the par l i s t and
c o l l e c t e d i n the manner h e r e t o f o r e mentioned; t h a t i n those S t a t e s that
have a l a r g e number of n o n - r e m i t t i n g banks, such banks be n o t i f i e d t h a t
not l a t e r than March 1 s t checks on themselves c l e a r e d through the Federal
l b serve Banks w i l l be c o l l e c t e d a t par*
Such a c t i o n i s j u s t i f i e d since Federal Be serve 'Banks are
paying the c o s t of currency shipments*
While we do n o t believe the symbol plan i s necessary i n
S t a t e s t h a t a r e e n t i r e l y on the par l i s t , we reconznend t h a t the Board do
not withdraw a t t h i s time i t s i n t e n t i o n of u s i n g sti£h plan*.
In view of the apparent ambiguity of t h a t p a r t of
Section 16 of the Federal Reserve Act r e l a t i n g t o the f i x i n g by the
Federal Reserve Board of charges to be made on checks c l s a r e d through
Federal Reserve Banks, we f u r t h e r recommend t h a t the Board defer promulgating
a r e g u l a t i o n of t h i s k i n d u n t i l a t l e a s t a f t e r the completion of the
campaign i o r par points* I t i s almost impossible to make a f a i r and
uniform charge t h a t w i l l include i n t e r e s t f o r t r a n s i t time as well as
compensation f o r r i s k and service * These l a t t e r charges depend upon
the v a r i n g c o n d i t i o n s i n the several d i s t r i c t s together w i t h the value
of the customers 1 endorsement and account*
(Mr* McCprd and Mr- Rich wished to be recorded a s
v o t i n g a g a i n s t t h i s paragraph.)
We deem i t f e a s i b l e and d e s i r a b l e to o b t a i n cooperation
and a c t i o n from the c l e a r i n g houses throughout the country in modifying
schedules wherein the time element a c t s i n a d i s c r i m i n a t i n g „ way a g a i n s t
c e r t a i n p o i n t s and s e c t i o n s of the country*
-6-
X-1719 a
A E D H T>
MM M MS
(l)
Reserve ana Net D e p o s i t s .
There aoes not appear to be any demand a t the p r e s e n t time f o r
a r e v i s i o n of the r e s e r v e s i t u a t i o n or the p r a c t i c e of
a r r i v i n g a t the n e t d e p o s i t s upon which r e s e r v e s are to be
c a l c u l a t e d t h a t would warrant your Committee i n recommending changes without more c a r e f u l study and a n a l y s i s of
the s i t u a t i o n than the limited time given the Committee t o
d i s c u s s the s u b j e c t would allow.
I t would be irapossible, both from the National Ban& and member
S t a t e Bank s t a n d p o i n t , to have changes recommended, especially
those r e q u i r i n g l e g i s l a t i v e action* without the g r e a t e s t
study and care as t o the e f f e c t of those chaiges on the
d i f f e r e n t c l a s s e s of banks and commercial, i n d u s t r i a l aid
a g r i c u l t u r a l i n t e r e s t s i n d i f f e r e n t s e c t i o n s of the country,
BATES
Of the t o p i c s assigned t o the Conaoittee there has only been
opportunity to consider b r i e f l y the question of the present
expansion of c r e d i t and irhat methods of c o n t r o l of c r e d i t
may be s u c c e s s f u l l y used by the Federal Reserve Barnes i n
view of the Government's p a s t and p r o s p e c t i v e f i n a n c i a l
program.
The i n c r e a s i n g demands f o r c r e d i t appear t o come (a) from the
higher c o s t s of commodities and labor i n the production
and d i s t r i b u t i o n of goods, caused by excess of demand over
supply, and (b) from the higher p r i c e s of s e c u r i t i e s , land,
and other forms of f i x e d p r o p e r t y , as well as of many
commodities, caused by active s p e c u l a t i o n a l l over the
country.
The normal checjs. f o r the Federal Reserve Banks t o use i s a
higher discount r a t e . But i n the opinion of your Committee
the c o n d i t i o n s p r e v a i l i n g at home and abroad are so abnormal as t o render t h i s method not wholly e f f e c t i v e of
i t s e l f . The European c o u n t r i e s are extremely s h o r t of
goods, and we ourselves have not yet been able to s a t i s f y
the accumulated demand f o r goods r e s u l t i n g from two years
of p a t r i o t i c s e l f - d e n i a l on the one hand and a more widely
d i f f u s e d spending power on the o t h e r . Furthermore, i n t e r n a t i o n a l t r a d e i s extremely u n s e t t l e d and a l l the important
European exchanges are h e a v i l y i n our f a v o r . I t i s evident
that the use of c r e d i t f o r producing the goods of which
the world i s s h o r t should not be unduly c u r t a i l e d , and i t
seems e q u a l l y evident t h a t the immoderate use of c r e d i t by
those engaged i n s p e c u l a t i o n i n s e c u r i t i e s , land and
commodities to f o r c e p r i c e s higher i s not only u n d e s i r a b l e
from i t s e f f e c t on the cost of l i v i n g but i s laying the
foundation f o r f u t u r e collapse and d e p r e s s i o n ,
liome i n c r e a s e i n the bank r a t e , however, seems the necessary
f i r s t s t e p i n any program f o r the r e s t r a i n t of u n a e s i r a b l e
creo.it expansion, as an i n d i c a t i o n t o tne barucs t h a t , with
the war f i n a n c i n g of the government now on a d e c l i n i n g
<*1719 a
(c)
* *
(h)
RATES
870
(continued.)
s c a l e , the F e d e r a l Reserve Banks may be expected h e n c e f o r t h t o
f u n c t i o n normally. But such increase?, which need not be l a r g e , or
uniform i n a l l d i s t r i c t s , would be i n e f f e c t i v e unless accompanied by
a campaign, undertaken g r a d u a l l y and with great d i s c r e t i o n to
secure g r e a t e r moderation by banks in the extension of c r e d i t f o r
s p e c u l a t i v e and other u n d e s i r a b l e purpose.
The f a c t t h a t Government f i n a n c i n g i s on a descending s c a l e no lobger
seems to r e q u i r e such a degree of u n i f o r m i t y i n Federal Reserve
Bank r a t e s as p r e v a i l e d during the war, when the Liberty bond r a t e
n e c e s s a r i l y overshasfeo6ed a l l others and p r a c t i c a l l y d i c t a t e d u n i f o r m i t y , I t i s the b e l i e f of your Committee t h a t r a t e s at the
s e v e r a l banks need no longer be e s t a b l i s h e d e i t h e r simultaneously
or a t s i m i l a r l e v e l s .
Your Committee i s of the opinion t h a t the present p r e f e r e n t i a l r a t e cn
government paper has served i t s purpose and may now or s h o r t l y be
modified or withdrawn, and that in f u t u r e r a t e s at which government,
secured paper i s taken by Federal Reserve B a n k l j ^ e such as not to
permit re<j.iscounting a t a p r o f i t over the coupon or i n t e r e s t r a t e .
COMPENSATION OF EMPLOYEES
(l)
Wages and Bonuses,
Bonuses, as such, a r e o r d i n a r i l y given by commercial banKS,
manufacturing and i n d u s t r i a l i n s t i t u t i o n s , as an a c t #f
g r a c e , or as a bounty or in a p p r e c i a t i o n of l o y a l and f a i t h *
f u l s e r v i c e . In concerns conducted f o r ^ r e f i t , - when the gams
of the business have been large and the p r o f i t s are subject
to d i s t r i b u t i o n i n the reasonable d i s r e c t i o n of i t s p r i n c i p a l
owners, there can not only be no o b j e c t i o n to the granting
of t h i s bonus to employees, but the p r a c t i c e nay o f t e n be
commended. I t i s b e l i e v e d , however, t h a t the reasons underlying the granting of bonuses by concerns organized and
conducted f o r p r o f i t can have no a p p l i c a t i o n to Federal
Reserve Banks whose earnings are s u b j e c t to d e f i n i t e d i s t r i b u t i o n under the law. Bonuses i n Federal Reserve Bamts can
only be j u s t i f i e d and upheld as i n the nature of r e a d j u s t ment of s a l a r y i f and when made necessary by unusual conditions,
such as now o b t a i n , and which have obtained now f o r a cons i d e r a b l e time. We b e l i e v e that the c o r r e c t r u l e shotild be
f o r each Federal Reserve Bank to f i x at s t a t e d aid not too
f r e q u e n t i n t e r v a l s the s a l a r y of each employee and t h i s with
some r e f e r e n c e to the s c a l e of pay f o r s i m i l a r work p r e v a i l ing i n the s e c t i o n where such bank i s located, but more with
e s p e c i a l r e f e r e n c e to the nature of the employee^ work, and
the experience, a b i l i t y and f i d e l i t y of tne employee. We
t h i n g i t poor economy t o f i x s a l a r i e s a t unreasonably low
f i g u r e s and m a n i f e s t l y wrong t p pay a wage unreasonably h i g h .
There i s a middle ground where s a l a r i e s would be f i x e d ins.a
s p i r i t of c o n s i d e r a t i o n of the value of the s e r v i c e s of the
employee and i n a l i k e s p i r i t of exact j u s t i c e t o the bank»
Under normal c o n d i t i o n s we b e l i e v e a l l compensations should
be f i x e d in d e f i n i t e s a l a r i e s , with no promise, expressed
or implied, t h a t a bonus would be p a i d .
871
4
*
X-1719
(h) C M E S TO O E P O E S
O P NA I N F M L Y E
(l)
Wages and Bonuses,
a
continued
continued.
We b e l i e v e , h o w e v e r , t n a t under p r e s e n t c o n d i t i o n s the
payment of r e a s o n a b l e and s u b s t a n t i a l bonuses i s
r e q u i r e d aid demanded b o t h as an a c t of j u s t i c e to
the employees and i n the i n t e r e s t of the ^Federal
Reserve Banks, The u n i v e r s a l and r a t h e r unexpected
i n c r e a s e i n the c o s t and expense of l i v i n g , i n c l u d i n g
an unprecedented i n c r e a s e i n the c o s t of housing,
majKes the g r a n t i n g of f a i r bonuses seem an a c t of
needed j u s t i c e to the employee. The c o m p e t i t i o n f o r
good c l e r i c a l h e l p , n o t only among banics but with
r a i l w a y s , manufacturing and i n d u s t r i a l concerns, and
the g e n e r a l ^ r a n t i n g by p r a c t i c a l l y a l l such businesses
of consider able and sone t i n e s generous bonuses se _-.ms
to make i t a l i o s t a matter of n e c e s s i t y f o r Federal
Reserve B^nka to f o l l o w a s one what s i m i l a r course
i f they are to maintain t h e i r o r g a n i z a t i o n s unimpaired
and to r o t a i n t h e i r h e l p w i t h any f e e l i n g of s t a i s f action.
V e do n o t b e l i e v e i t p r a c t i c a b l e t o f i x any s c a l e of bonus
v
payments which s h a l l be uniform among a l l banes4 The
s c a l e of.bonuses to be paid should be l e f t to the
sound d i s c r e t i o n of the Boards of D i r e c t o r s of the
s e v e r a l F e d e r a l Reserve D i s t r i c t s , s u b j e c t , of c o u r s e ,
t o the c o n t r o l and approval of the F e d e r a l Reserve
Board. We- t h i n k t h a t i t could w e l l be s t a t e a i n the
l e t t e r accompanying the t r a n s m i s s i o n of such bonus
checks t h a t the payment of same under p r e s e n t cond i t i o n s was not to be understood as f u r n i s h i n g any
p r e c e d e n t f o r the f u t u r e .
(Mr4 Hardy tooted "no" on t h i s r e p o r t . )
t
1/
872
W . P . 6 . H A R D I N G . GOVERNOR
EX O F F I C I O M E M B E R S
A L B E R T S T R A U S S . VICE GOVERNOR
ADOLPH C. MILLER
CARTER G L A S S
SECRETARY OP THE TREASURY
CHAIRMAN
C H A R L E S S . HAMLIN
FEDERAL RESERVE BOARD
J O H N SKELTON W I L L I A M S
COMPTROLLER OF THE CURRENCY
W . T . C H A P M A N , SECRETARY
R . 6 . E M E R S O N , ASSISTANT SECRETARY
A D D R E S S REPLY TO
FEDERAL RESERVE BOARD
WASHINGTON
W . M. I N L A Y , FISCAL AGENT
November 10, 1919
X-1720
SUBJECT:
Fragments of M u t i l a t e d Notes
Dear S i r : The Board h a s r e c e i v e d a l e t t e r f r o m one of the F e d e r a l
Reserve Ijariks, from which the f o l l o w i n g i s an e x t r a c t :
"We have found i n s o r t i n g and s t r a p p i n g u n f i t
n o t e s t h a t we accumulate l a r g e q u a n t i t i e s of t o r n
p o r t i o n s of n o t e s , which, i f o b t a i n e d by d i s h o n e s t
p e o p l e , might be used f o r the purpose of r a i s i n g
o t h e r n o t e s . Our t e l l e r s a r e i n s t r u c t e d t o k e e p
t h e s e b i t s of n o t e s i n t h e i r p o s s e s s i o n and p u t
them away i n t h e i r s a f e s a t .night., a s they do t h e i r
c a s h , and p e r i o d i c a l l y these .torn b i t s a r e burned
under proper s u p e r v i s i o n . "
I t a p p e a r s t h a t i t would be d e s i r a b l e to r e q u i r e t e l l e r s
t o t u r n over t o a d e s i g n a t e d o f f i c i a l a l l f r a g m e n t s of n o t e s
i n order t h a t any danger of t h e i r misuse may be avoided.
Very t r u l y y o u r s
Governor
L e t t e r t o Chairman of each F e d e r a l Eeserve dank.
873
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
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
J O H N SKELTON WILLIAMS
COMPTROLLER OP THE CURRENCY
ADOLPH C. MILLER
C H A R L E S S . HAMLIN
FEDERAL RESERVE BOARD
HENRY A. MOEHLENPAH
W . T . C H A P M A N . SECRETARY
R . G . E M E R S O N . ASSISTANT SECRETARY
ADDRESS REPLY TO
FEDERAL RESERVE BOARD
W . M. 1MLAY, FISCAL AOENT
WASHINGTON
November 13, 1919 »
X-1721
Subject:
Questionnaires f o r Employees
of Federal Reserve Banks.
Dear Sir
You w i l l r e c e i v e w i t h i n a s h o r t time a c i r c u l a r
l e t t e r from Mr, W i l l i s , D i r e c t o r of the Division of Analysis
and Be s e a r c h , asking f o r information as t o the number and
c l a s s i f i c a t i o n of persons employed by your bank r e c e i v i n g
annual s a l a r i e s of various amounts not exceeding f i v e
thousand d o l l a r s .
This Division has a l s o prepared a questionnaire
r e l a t i n g to the incomes and expenses of employees of Federal
Reserve BanKs, which has been p r i n t e d . A number of copies
of t h i s q u e s t i o n n a i r e w i l l be sent d i r e c t t o your banc from
the Government P r i n t i n g Office within the n e x t few days. A
memorandum of explanation and a l e t t e r s e t t i n g f o r t h a uniform
p l a n of handling the matter w i l l a l s o be transmitted by the
Division vf Analysis and Research. If f o r any reason you
should deem i t inadvisable t o d i s t r i b u t e the q u e s t i o n n a i r e s ,
you are not r e q u i r e d to do so, but are requested in t h a t
event to communicate to the Board the reasons f o r o b j e c t i n g
to their distribution.
Very t r u l y yours;
Governor.
l e t t e r t o a l l governors.
Copy to a l l Chairmen.
W . P . G . H A R D I N G , GOVERNOR
EX OFFICIO MEMBERS
874
A L B E R T S T R A U S S . VICE GOVERNOR
ADOLPH C. MILLER
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
C H A R L E S S . HAMLIN
FEDERAL RESERVE BOARD
J O H N SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
W . T . C H A P M A N , SECRETARY
R . G . E M E R S O N , ASSISTANT SECRETARY
ADDRESS REPLY TO
FEDERAL RESERVE BOARD
W . M. IMLAY, FISCAL AGENT
WASHINGTON
November 12,1919"
Subject:
HENRY A. MOEHLENPAH
X-1722
P r e p a r a t i o n of Annual Report*
Dear S i r : I t was explained to you when you were here a t the r e c e n t conf e r e n c e of F e d e r a l Reserve Agents t h a t the J o i n t Committee on P r i n t i n g
had p r e s c r i b e d c e r t a i n l i m i t a t i o n s as to the s i z e of the volume containing
the Annual Report of the Board and the e x h i b i t s and supplements t h e r e t o .
Therefore, should the r e p o r t s of the Federal Reserve Agents be published
as h e r e t o f o r e as supplements t o the Board's r e p o r t i t would probably be
necessary to place r e s t r i c t i o n s Upon t h e i r scojpe arid 'lengtil* which might
be u n s a t i s f a c t o r y t o the banks i n the r e s p e c t i v e d i s t r i c t s and. t o the
Federal Reserve Agents themselves. The Board has, t h e r e f o r e , decided t h a t
i t w i l l not ask you t o observe c l o s e l y t&e o u t l i n e d l i m i t a t i o n s provided
f o r previous r e p o r t s , but t o ask i n s t e a d , t h a t you make such a r e p o r t a s ,
i n your judgment, w i l l give a s a t i s f a c t o r y review of the v a r i o u s f i n a n c i a l
and commercial a c t i v i t i e s of your d i s t r i c t during the period covered by
the r e p o r t .
These r e p o r t s can be published i n f u l l by each Federal Reserve
Bank and d i s t r i b u t e d on an agreed date i n advance of the p u b l i c a t i o n of the
Board's r e p o r t . I t might be d e s i r a b l e t o have the r e p o r t s from a l l twelve
d i s t r i c t s bound i n a s i n g l e volume, which can be done very r e a d i l y with
comparatively small expense. The Board w i l l i n i t s own r e p o r t p u b l i s h an
a b s t r a c t of the r e p o r t of each Federal Reserve Agent i n s t e a d of p u b l i s h i n g
the r e p o r t s im f u l l , as h e r e t o f o r e , and i n order t o a s s i s t the Board i n the
p r e p a r a t i o n of these a b s t r a c t s you are requested to g i v e , immediately
following the i n t r o d u c t i o n , a general review of the s e r v i c e and a c t i v i t i e s
of the Federal Reserve Bank during the y e a r , t o be followed by a statement
and d i s c u s s i o n of earnings and expenses*
For such use as you may care t o make of i t i n the p r e p a r a t i o n of
your annual r e p o r t , there i s enclosed herewith a copy of Board*s c i r c u l a r
l e t t e r of November 15, 1918,(X-1270) with the request t h a t you t r a n s f e r
Section 2 , r e l a t i n g t o g e n e r a l business and banking c o n d i t i o n s i n your
d i s t r i c t , t o the end of the o u t l i n e .
Very t r u l y yours,
Governor.
l e t t e r t o a l l F.R. Agents
EX-OFPICIO MEMBERS
W. P . G . HARDING, GOVERNOR
ALBERT STRAUSS. VICE GOVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
WILLIAK*&;J£CADOO
SECRETARY OF THE TREASURY
CHAIRMAN
C PRLE 0T E U BN V
0 T 0LRFHC RE C
J O H N SKELTON WILLIAMS
"
__
___
FEDERAL RESERVE BOARD
WASHINGTON
tAc.
w . T. CHAPMAN. ASSISTANT SECRETARY
w . M. IMLAY, FISCAL ACENT
ADD.=S,.e,L^
November 1 5 , 1 9 1 8 .
RESERVE BOARD
X-1270
SUBJECT:
PREPARATION OF ANNUAL REPORT.
Dear S i r : In t h e p r e p a r a t i o n of your Annual Report f o r 1918, i t i s suggested
t h a t you follow s u b s t a n t i a l l y the o u t l i n e s adopted in 1916 with the incorporat i o n of the a d d i t i o n a l data c a l l e d ' f o r in 1917, e l i m i n a t i n g , however, a l l
r e f e r e n c e t o t o p i c s which have become obsolete and c u r t a i l i n g remarks regarding
those which have proved of minor importance.
The work of the Federal reserve banks has been of exceptional importance l u r i n g the past year, and your report should include a review of the a c t i v i t i e s of the Federal reserve bank in connection with public f i n a n c i n g .
I t w i l l be recalled- t h a t h i t h e r t o the Federal Reserve Agents have used
t h e i r own judgment as t o the opening or introductory m a t e r i a l embodied in t h e i r
r e p o r t s , thus varying t o some extent the c h a r a c t e r of the matter submitted and
destroying the harmony of the r e p o r t s as r e l a t e d t o each o t h e r . The Board does
not d e s i r e t o l e s s e n i n any way the freedom of a c t i o n which may be necessary in
the p r e p a r a t i o n of a s a t i s f a c t o r y r e p o r t , but i t i s suggested t h a t as f a r as
p o s s i b l e a standard o u t l i n e be followed in order t h a t these r e p o r t s may admit
r e a d i l y of comparison, one with a n o t h e r .
I t i s p a r t i c u l a r l y recommended t h a t s t a t i s t i c a l t a b l e s be c a r r i e d in
t h e appendices except so f a r as brief t a b u l a r p r e s e n t a t i o n s may be necessary
in the body of t h e t e x t f o r i l l u s t r a t i v e purposes. The method of p r e s e n t i n g
s t a t i s t i c s employed in t h e r e p o r t of D i s t r i c t No. 1 f o r t h e year 1917 i s called
t o your a t t e n t i o n as an example. Considerable s t a t i s t i c a l matter w i l l appear
Digitized in FRASER
for the appendices
t o the Board's own r e p o r t , and as i t i s d e s i r a b l e t h a t the
-2-
,
X-1270
e n t i r e r e p o r t covering t h e operations of the Board and the Federal reserve
banks be contained in one volume of reasonable s i z e , i t i s necessary t o
request tne Federal Reserve Agents t o keep t o t h e i r t e x t , avoiding unnecessary
verbiage and p r o l i x i t y „ I t i s suggested t h a t i n most cases the r e p o r t s should
not exceed f i v e or s i x thousand words. Some of the r e p o r t s submitted l a s t
year were several times t h i s l e n g t h and i t was necessary t o e d i t them in order
t o bring them with in reasonable l i m i t s .
I t i s suggested t h a t in preparing your r e p o r t t h a t you endeavor t o give
s t r e s s t o t h e p a r t i c u l a r commercial or f i n a n c i a l developments which have
s p e c i a l a p p l i c a t i o n t o conditions in your own d i s t r i c t . I t does not appear t o
be e s s e n t i a l t h a t the r e p o r t s from the several d i s t r i c t s be given a n a t i o n a l
coloring; t h a t being the scope of the Board's own r e p o r t , but in each of the
d i s t r i c t s t h e r e w i l l . b e some outstanding i n d u s t r i a l or business developments
upon which s t r e s s can properly
be placed*
Your a t t e n t i o n i s i n v i t e d to the general o u t l i n e , enclosed herewith,
^which i t i s suggested be followed as f a r as p r a c t i c a b l e in ordar t o secure
u n i f o r m i t y i n the c h a r a c t e r of the r e p o r t s .
An attempt was made l a s t year to have t h e r e p o r t s in hand by December
20th, but i t was found t h a t t h i s date was too e a r l y and t h a t the i n c l u s i o n of
the f i g u r e s a t the end of t h e year delayed a c t u a l p r o g r e s s . The
Board has
accordingly decided t h i s year t h a t a l l r e p o r t s be placed in i t s possession in
completed form by January 8,1918.
Very t r u l y yours,
Federal Reserve Agent,
Federal Reserve Bank,
Governor,
877
„I. ?
X-1270_A
SUGGESTED OUTLINE OF TOPICS AND THE ORDER IN WHICH THEY SHOULD BE TAKEN
UP BY THE FEDERAL RESERVE AGENTS IN THEIR ANNUAL REPORTS FOR 1918.
1 . F i n a n c i a l r e s u l t s of o p e r a t i o n ;
(a) Earnings, expenses, dividends, e t c .
(b) Comparative balance s h e e t s f o r December 31,1917 - 1918.
( c ) P r o f i t and l o s s statements f o r 1918.
2; General Business and Banking Conditions:
(a) Volume of b u s i n e s s .
(b) Labor.
(c) Money Market.
3. Discount Operations:
(a) Rediscounts - Conrrercial Paper
(b) Rediscounts - Liberty Loan
Trade Acceptances
5. Acceptances
( a ) Growth of open market f o r acceptances
(b) Policy on acceptance purchases
6. Reserve P o s i t i o n
7 . Movement of Membership
(a) National Bank
(b) S t a t e Banks
8. R e l a t i o n s with National Bank Members
(a) Discount operations
(b) Trustee powers
9. R e l a t i o n s with S t a t e banks and t r u s t companies:
(a) Discount operations
(b) Examinations
(c) Reserves
,
-2-
'
X-1270. a
10. F i s c a l Agency Operations
(a) For Treasury Department
1 . Allotment of Treasury C e r t i f i c a t e s among banks i n d i s t r i c t
2. Deposits of Treasury funds with banks, and t h e i r withdrawal.
3. F l o t a t i o n of Liberty Loans
4 . Work in connection with s a l e of War Savings C e r t i f i c a t e s .
(b) War Finance Corporation
(c) Capital Issues Committee
11. Note I s s u e s .
( a ) Federal Reserve n o t e s
(b) Federal reserve bank notes
12. P o s i t i o n of commercial banks as a r e s u l t of war f i n a n c i n g :
( a ) Increase of t h e i r o b l i g a t i o n s ,
(b) E f f e c t on commercial paper of d i s t r i c t *
( c ) Relation t o , and e f f e c t on, general b u s i n e s s .
13. Policy t o be pursued in r e s t o r i n g l i q u i d i t y of banks:
(a) Probable time in which they can c l e a r up t h e i r "war paper".
(b) Policy of Federal reserve bank toward them meanwhile.
14. Operations of Federal Reserve Bank branches:
15. Miscellaneous: i n c l u d i n g :
(a) I n t e r n a l o r g a n i z a t i o n ,
(b) Clearings,
(c) Collections
(d) Gold Settlement Fund
( e ) Foreign accounts
( f ) Banking Quarters - new b u i l d i n g s .
879
f x OFFICIO MEMBERS
—
W. P . 6 . HARDING, GOVERNOR
ALBERT STRAUSS. VICE GOVERNOR
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
ADOLPH C. MILLER
CHARLES S . HAMLIN
HENRY A. MOEHLENPAH
FEDERAL RESERVE BOARD
—
ADDRE
R . G . EMERSON, ASSISTANT SECRETARY
w Me
WASHINGTON
F8EDRERAYLTRESERYE BOARD
'
November 13,1919 •
172.3
Subject:
Campaign f o r S t a t e Bank t*fembers.
Dear Sir
By d i r e c t i o n of the Board, the campaign f o r
b r i n g i n g S t a t e banks i n t o the Federal Reserve System
and f o r strengthening the hold of the System on those
S t a t e i n s t i t u t i o n s which are a l r e a d y members has been
placed under the d i r e c t i o n of Mr. E.A. Moehlenpah,
Member of the Federal Reserve Board, a s s i s t e d by Mr..
W.W. Hoxton, Executive Secretary*
In order to avoid d u p l i c a t i o n of e f f o r t s and
t o insure the c o o r d i n a t i o n of a c t i v i t i e s , you are requested
to advise Mr. Moehlenpah as t o the plans and o r g a n i z a t i o n
of your bank f o r work i n t h i s d i r e c t i o n , and are f u r t h e r
requested to keep him advised frum time to time of progress
made.
Very t r u l y yours,
"
Governor,
l e t t e r to Chairmen of a l l F.R. Barms.
F,$CAL A6ENT
880
OF TK« TREASURY
^
CHARLES S . H A H U N
CHAIRMAN
HENRY A. MOEHLENPAH
FEDERAL
RESERVE
——,
BOARD
„.t.c„ap«A^7™V
R . G . E M E R S O N , ASSISTANT SECRETARY
ADDRESS REPLY TO
.WASHINGTON
FEDERAL RESERVE BOARD
W . M. I I I L A Y , FISCAL AGENT
November 15 > 1919 X-17^5
Subject:
Reports of Conferences of T r a n s i t Managers and Auditors of
Federal Reserve Bani»s, held i n Cleveland,June 2)-2$, 1919.
Dear S i r :
The r e p o r t s of the Conferences of T r a n s i t Managers and Auditors,
held at Cleveland June 23-25, 1919, have be on r e c e i v e d by the Board and
considered, together with recommendations of Federal Reserve Agents and
Governors of Federal Reserve Ban&a approving or disapproving the a c t i o n
taken a t the Conferences. The Boara has approved the r e p o r t s of the Conf e r e n c e s and the a c t i o n t h e r e i n recommended, and suggests that the recommendations be made e f f e c t i v e November 25th, except with regard t o the topics
discussed below.
For convenience, the t o p i c s r e f e r r e d t o below are numbered the
same as i n the Conference Reports,
TopicII "FLOAT"
A.
Report of Committee.
( l ) Clearing House Exchanges.
Ha)
RECOMMENDATION:
Board's l e t t e r X-H21.
I t i s f e l t t h a t the recommendation of the Committee a t
the o f f i c e s of the Federal Reserve Board on August 7»
191S as covered i n Federal Reserve Board's l e t t e r 2-1121,
r e ^ u i r i n ^ t h a t c r e d i t be given r e m i t t i n g F e d e r a l Reserve
Banks on day of r e c e i p t by r e c e i v i n g Federal Reserve Bents
f o r Clearing House items, whether or n o t r e c e i v e d i n time
f o r the d a y ' s c l e a r i n g , i s a s t e p backward i n the s c i e n t i f i c
treatment of " f l o a t " . Actual " f l o a t " cannot be eliminated
881
)ul725
by buokiieuping processes* as the remedy must be found i n
the c o r r e c t i o n of time schedules, Where items are received
a f t e r Clearing House hours, 1 d a y l s "float 1 1 r e s u l t s , and
the order t h a t c r e d i t be given by the r e c e i v i n g ban^ on
the premise that the items w i l l be c o l l e c t c a on the same
day settlement i s made through the Gold iund with the re-^
mivting Federal Reserve Bam:, merely t r a n s f e r s the " f l o a t
from the r e m i t t i n g Federal Reserve Banx to the receiving
Federal Reserve BanK and has no e f f e c t on tne system as a
whole*
I t would seem that the s o l u t i o n in t h i s case would be
the lengthening of the t i n e schedules t o the d e p o s i t i n g
member banks, thereby placing the " f l o a t " where i t properly
belongs and r e l i e v i n g the system to that extent*
The Commit wee, t h e r e f o r e , recommends t h a t the provisions
of Federal Reserve Board *s l e t t e r & - l l ^ l , August 12th, W
rescinded i n so f a r as i t a p p l i e s to tne s u b j e c t hereof , and
sL&t the Federal Reserve
IOOK to the c o r r e c t i o n of
time schedules a f f e c t i n g them*
The Board i s unable to concur with the recommendati..ns of the "Float"
Committee that i t r e s c i n d that p a r t of i t s l e t t e r X~ll£l r e q u i r i n g that c r e d i t
be given r e m i t t i n g Federal Reserve Banks on the day of r e c e i p t by receiving
Federal Reserve Banks f o r Clearing House items, and r e q u e s t s t h a t there be no
change i n the p r e s e n t p l a n of handling such items* I t i s the understanding
of the Board that where Clearing House items are received from other F e d e r a l
Reserve Banks a f t e r c l e a r i n g hours, the amount of such items i s d e b i t e d to
"Clearing House Exchange" and c r e d i t e d to "Gold Settlement Fund Suspense"*
This method of handling does not r e s u l t in the r e c e i v i n g barui*s c a r r y i n g any
" f l o a t " on account of such items, as c l e a r i n g house exchanges are permitted
as a deduction from t o t a l gross d e p o s i t s , which include Gold Settlement lund.
Suspense account, The Board r e a l i s e s , of course* t h a t if c r e d i t i s given to
member banKs i n t n e i r r e s e r v e accounts f o r items p r i o r to t h e i r c o l l e c t i o n by
tne Federal Reserve System, " f l o a t " i s c r e a t e d , ana t h a t the only way to
e l i m i n a t e such " f l o a t " i s by lengthening the time schedules*
A-1F5
f
- 3 (3)
T r e a s u r e r ' s Account.
RECOMMENDAT I ON:
The T r e a s u r e r ' s account as a r u l e has a balance cons i s t i n g of c o l l e c t e d funds more than ample to cover
i t s own f l o a t , and i t i s f a i t t h a t the gross balances
i n t h i s account should be held a t a l l times a v a i l a b l e
to the Treasurer f o r checking purposes. However, i n
order to avoid, the f l o a t showing r e s u l t i n g from such
treatment, the committee recommends ttiat the account
be divided on statement Form 34 to show T r e a s u r e r ' s
account c o l l e c t e d funds and T r e a s u r e r r s account unc o l l e c t e d funds; the uncollected f u n d s ' account to
a c c u r a t e l y r e p r e s e n t items i n t r a n s i t .
The Board does not deem i t d e s i r a b l e to r e q u e s t a t the p r e s e n t
time t h a t any change be made i n the method of handling the account of the
United S t a t e s T r e a s u r e r , but concurs with the recommendation of the Gonad, t tee
t h a t information should be a v a i l a b l e to show, f o r purposes of a n a l y s i s , the
amount of " f l o a t " a c t u a l l y c a r r i e d by a Federal Reserve Bank f o r the Treasurer;
and accordingly, commencing, with November
, the Board r e q u e s t s that each
F e d e r a l Reserve Banc show i n a short column on form 34 the amount of uncoll e c t e d items which have been c r e d i t e d to the Treasurer Ts General Account, and
a l s o r e p o r t to the Board on the d a i l y TEND telegrams the amount of c o l l e c t e d
funds and u n c o l l e c t e d funds c r e d i t e d t o the T r e a s u r e r ' s General Account, as
f ollows:
Government A, c o l l e c t e d fund balance;
Government B, uncollected fund balance.
(4)
National Bank n o t e s , F e a e r a l Reserve Bonx n o t e s , and
Federal Reserve n o t e s .
RECOMMENDATION: As National bank notes and Federal Reserve Bank notes
i n p r a c t i c e are a v a i l a b l e f o r the l i q u i d a t i o n of an
e q u i v a l e n t amount of member banks ' d e p o s i t s , i t i s
recommended that they be not included i n c a l c u l a t i n g
"float".
Federal Reserve n o t e s of other banks are i n f a c t an
item of " f l o a t " and may be thus shown, although your
cocEiiittee f s a l s that i t should be recommended to the
Federal Reserve Board tnat» i f Congress should, amend the
Act so t h a t the so n o t e s may be p a i d out by any F e d e r a l
Reserve Ban^> then t h i s item of " f l o a t " should be eliminated
from c a l c u l a t i o n s .
A-172 5
-4~
883
The Board r e a l i z e s t h a t National bank, and Federal He serve Bana. notes are
a v a i l a b l e f o r l i q u i d a t i o n of an e q u i v a l e n t amount of member b a n k s ' d e p o s i t s ,
providing they are s o - c a l l e d " f i t n o t e s " . The Board, however, permits t h e i r
deduction from d e p o s i t s on the ground that they are demand o b l i g a t i o n s of a
bank, and as such mtist be t r e a t e d as uncollected items so long as they are
held a t Federal Reserve Banks, Under the p r e s e n t lav/, t h e r e f o r e , the Board cannot
c o n s i s t e n t l y a u t h o r i z e Federal Reserve Banns to t r e a t such n o t e s as deductions
from d e p o s i t s without c l a s s i n g them as uncollected demand o b l i g a t i o n s of the
i s s u i n g banK, and i f they are u n c o l l e c t e d demand o b l i g a t i o n s of a fcanii the Board
holds t h a t they must be classed as " f l o a t " .
(6)
Board's Table of Ratio of "Float" to Earning Assets and Deposits.
RECOMMENDATION:
Your committee f e e l s that the c a l c u l a t i o n of " f l o a t " to t o t a l
earning a s s e t s i s conducive to misunderstanding, a s the same
amount of " f l o a t " i n d o l l a r s would show a d i f f e r e n t percentage
from day to day as the earning a s s e t s might go up end down, and
would recommend that t h i s column be eliminated from the Board l s
table.
In t h i s connection, the committee i s of the opinion that the
l a s t column of the Board's t a b l e , r a t i o of " f l o a t " to immediately
a v a i l a b l e Government and bank d e p o s i t s , i s the proper b a s i s f o r
determining the percentage of " f l o a t " , and a l s o t h a t a recommend a t i o n be made to the Federal Reserve Board t h a t such weekly r e p o r t be based upon the average d a i l y t o t a l s f o r the p e r i o d .
The column r e f e r r e d to i n the d i s c u s s i o n of t h i s t o p i c was eliminated from
tne Board's " f l o a t " statement i n December 19IS.
The Board approves, the recommendation t h a t i t s weekly "f loat" statement
be based upon the average d a i l y t o t a l s f o r the p e r i o d , and a c c o r d i n g l y the new
f.orm of r e p o r t w i l l be e f f e c t i v e tiervember 6,
1919-
Topic 1X1 TIME SCHEDULES.
A,
Report of Committee.
A proposed I n t e r d i s t r i c t time schedule has been submitted by the
Board to a l l Federal Reserve Ban^s (Board's l e t t e r X-lb^tS),
-5Topic IV
i »
F.
X-i7^5
88
PAR LIST.
I t i s recommended t h a t the Board arrange t o omit the p h r a s e ,
" s u b j e c t t o change without n o t i c e " , from the published par l i s t
and. supplement.
In accordance witth the recommendation under t h i s t o p i c , commencing
witth the October f i r s t supplement t o the Par L i s t , the n o t a t i o n on the f r o n t
cover of the Federal Reserve Board Par List and monthly supplements, "Subject to
change without
K.
riotice",
w i l l be omitted.
I t i s recommended that the par l i s t issued by the Federal Reserve
Board c o n t a i n a s a supplement a l i s t of s t a t e baziK members of the
F e d e r a l Reserve D i s t r i c t s , l i s t e n by s t a t e s and d i s t r i c t s , and that
the supplement to the p a r l i s t contain the changes between the d a t e s
of the issuance of the complete par l i s t s .
Board adopted t h i s suggestion, e f f e c t i v e with the J u l y f i r s t
Par L i s t .
Tonic V.
E.
CASH LETTERS.
Uniform method of d e f e r r i n g country cash l e t t e r s when a Sunday or
holiday intervenes.
I t i s recommended t h a t the deferred, time be by a c t u a l business a ays.
The Board considers t h a t i f an item i s a c t u a l l y i n t r a n s i t on a
Sunday or a h o l i d a y , t n i s day should be counted i n c a l c u l a t i n g the d e f e r r e d time;
i f , however, the item i s due to a r r i v e on a Sunday or holiday at i t s d e s t i n a t i o n
or an i n t e r m e d i a t e p o i n t , the Sunday or holiday cauuot be counted as a business
day, and one more business day should be added i n c a l c u l a t i n g the d e f e r r e d time.
Tonic VI
COLLECTION ITEMS,
G D i r e c t r o u t i n g by member banks of one d i s t r i c t t o other F e d e r a l Reserve
>
BanKs of c o l l e c t i o n items»
I t i s the sentiment of t h i s conference t h a t , i f p o s s i b l e , c o l l e c t i o n
f a c i l i t i e s should be extended t o member banks t o enable them t o d i r e c t r o u t e c o l l e c t i o n items to Federal Reserve Barnes zuu Branches of other
districts.
i'he F e d e r a l Reserve Board has ruled, t h a t , urner Section 1) of the
Federal Reserve .Act, a Federal Reserve Baiuc i s a u t h o r i z e d to c o l l e c t maturing
-6-
X-1725
n o t e s , b i l l s or d r a f t s payable w i t h i n i t s own d i s t r i c t when received from i t s
1 »
own member banks or from another Federal Reserve Bank, b u t i * not authorized to
handle such items when received d i r e c t from a member bank located i n another
Federal Reserve D i s t r i c t . The r u l i n g of the Board above r e f e r r e d t o i s published
on page 467 of the F e d e r a l Reserve B u l l e t i n f o r May 1, 1919*
K»
A d v i s a b i l i t y of sending non-cash c o l l e c t i o n items t o member and non-
member banks i n other d i s t r i c t s f o r remittance when paid t o the sending Federal'
Reserve Bank or the Federal Reserve Bank in the d i s t r i c t i n which the c o l l e c t i n g
bank i s l o c a t e d .
I t i s recommended t h a t any Federal Reserve Ban*: having c o l l e c t i o n items payable i n any other Federal Resdrve D i s t r i c t , send those item
to the Federal Reserve Bank or Branch i n the d i s t r i c t -where the item
i s payable.
The Board f e e l s t h a t a c t i o n on t h i s t o p i c should be d e f e r r e d , and th
there be no change i n the present method of handling by Federal Reserve Banks of
c o l l e c t i o n items payable i n other Federal Reserve D i s t r i c t s .
VII
WIRE TRANSFERS.
The Board's l e t t e r of J u l y 3 > 192-9 (X-l6Ci7)» advises a uniform
method of handling wire t r a n s f e r s of funds between Federal Reserve Banks adopted
by the Board, e f f e c t i v e J u l y 1$.
XI.
EXCHANGE DRAFTS /IIP TRANSFER DRAFTS .
I t i s recommended t h a t the l i m i t on excliaise d r a f t s be removed,
and t h a t t r a n s f e r d r a f t s be abolished.
The Federal Reserve Board disapproves the motion t h a t the l i m i t
on exchange d r a f t s be removed and t h a t t r a n s f e r d r a f t s be a b o l i s h e d , and r e q u e s t s
that the procedure of handling exchange and t r a n s f e r d r a f t s as o u t l i n e d i n the
Board's l e t t e r of A p r i l 12, 1917 (X-92) bu adhered t o .
AUDITORS1
Topic I I
B.
CONFERENCE
FEDERAL RESERVE BAdK ACCOUNTS .
Uniform method of a d j u s t i n g erroneous deductions and c r e d i t s .
886
* »
-7-
x-1725
1. When s h a l l e r r o r s i n deferred, cash l e t t e r s be deducted?
I t i s recommended t h a t tho adjustment be made cn the d a t e of d i s c o v e r y .
The Board concurs with t h i s recorcraendation, p r o v i d i n g the d a t e of d i s covery ie. the d a t e of a v a i l a b i l i t y or a date subsequent t h e r e t o .
Tonic V FORMS
-A.
Revision of t orms X-7^4 and ^-79^The Board has prepared and forwarded a supply of r e v i s e d forms
%-794 and -X-79^-a, and i f n e c e s s a r y these forms w i l l be again r e v i s e d -January
1, 1920.
Very t r u l y yours,
Assistant Secretary,
L e t t e r t o a l l Chairmen of F.R.
Banks,
X-17=2 6
887
Supplementary l i s t of t o p i c s suggested f o r d i s c u s s i o n a t the Conference
of Governors t o be held i n Washington, November 19, 1919.
Suggested by
Federal. Reserve
Bank No.
5.
TRANSIT OPERATIONS:
(h)
(i)
Discussion by Federal Reserve Bank of New York
of d e s i r a b i l i t y of curta ilment or e l i m i n a t i o n of p r a c t i c e of d i r e c t r o u t i n g of items
by mamber banks t o Federal Reserve Banks i n
other d i s t r i c t s ,
2
Use of immediate c r e d i t symbol.
5
13.
DESIRABILITY OF AFTERNOON SETTLEMENT THROUGH GOLD SETTLEMENT FUND AT WASHINGTON FOR EASTERN FEDERAL RESERVE
BANKS, (Suggested by Federal Reserve Board,)
14,
ABSORPTION OF EXPENSE BY FEDERAL RESERVE BANKS:
(a)
(b)
15
How f a r can Federal Reserve Banks go i n absorbing
expense of c o l l e c t i n g checks on non-member
non-par r e m i t t i n g banks ?
In view of large earnings of Federal Reserve
would i t not be well to f u r n i s h postage
pay a l l express and postage charges f o r
banks, covering t h e i r t r a n s a c t i o n s with
Reserve Barnes ?
Banks,
and
member
Federal
FEDERAL RESERVE BANKS AS FISCAL AGENTS:
(a)
Future a c t i v i t i e s of Federal Reserve Banks as f i s c a l
agents of the Treasury Department.
11
(b)
Payment of i n t e r e s t coupons as f i s c a l agency f u n c t i o n .
11
(c)
L i a b i l i t y of Federal Reserve Banks f o r s e r v i c e s p e r formed a s f i s c a l a g e n t s .
16.
CONTROL OF FOREIGN EXCHANGE TRANSACTIONS TO PREVENT DISHONEST BANKING PRACTICES. (Suggested by Treasury
Department.)
17.
UNIFORM METHOD OF HANDLING REVENUE TO BE DERIVED FROM SALE
OF CANCELLED POSTAGE STAMPS. OF LARGE DENOMINATIONS.
18.
FEDERAL RESERVE TELEGRAPHIC CODE.
11
19.
STANDARD FORMS FOR ALL FEDERAL RESERVE BANKS.
11
20.
INCREASE OF FEE PAID TO DIRECTORS ATTENDING EXECUTIVE
COMMITTEE MEETINGS.
2
3
888
COPY
November 1?, 1919.
X-1727
My dear S e n a t o r :
Receipt i s acknowledged of your l e t t e r of t h e lUth i n s t a n t .
The Federal Reserve Act i s intended f o r the b e n e f i t of commerce
and i n d u s t r y and not f o r the s t i m u l a t i o n of the investment market or of
s p e c u l a t i v e movements. The s h o r t t i t l e of the Act r e a d s , as f o l l o w s :
"An Act To provide f o r the establishment of Federal Reserve Banks,
to f u r n i s h an e l a s t i c currency, t o a f f o r d means of r e d i s c o u n t i n g
commercial p a p e r , t o e s t a b l i s h a more e f f e c t i v e s u p e r v i s i o n of banking i n the United S t a t e s , and f o r other purposes." Section 1) of
the Act provides i n p a r t t h a t Federal Reserve Banks may discount
n o t e s , d r a f t s , and b i l l s of exchange a r i s i n g out of a c t u a l commercial
t r a n s a c t i o n s ; t h a t i s , n o t e s , d r a f t s , and b i l l s of exchange issued
or drawn f o r a g r i c u l t u r a l , i n d u s t r i a l , or commercial purposes, or the
proceeds of which have been used, or are t o be used, f o r such purposes.
I t provides f u r t h e r t h a t nothing contained i n the Act s h a l l be cons t r u e d t o p r o h i b i t such n o t e s , d r a f t s , and b i l l s of exchange, secured
by s t a p l e a g r i c u l t u r a l p r o d u c t s , or other goods, wares, or merchandise
from b e i n g e l i g i b l e f o r such d i s c o u n t ; " b u t such d e f i n i t i o n s h a l l not
include n o t e s , d r a f t s , or b i l l s covering merely investments of issued
or drawn f o r the purpose of c a r r y i n g or t r a d i n g ifa s t o c k s , bonds, or
other investment s e c u r i t i e s , except bonds aid notes of the Government
of the United S t a t e s " .
The Board has r e p e a t e d l y c a l l e d a t t e n t i o n t o the f a c t t h a t r e s o u r c e s
obtained from the F e d e r a l Reserve Bmks should n o t be Used f o r specular
t i v e p u r p o s e s , and a t v a r i o u s times when there has been unusual speculat i v e a c t i v i t y i t has i s s u e d p u b l i c warnings as t o t h e bad e f f e c t of
such a c t i v i t i e s upon t h e banking s i t u a t i o n . The f i r s t warning of t h i s
kind was i s s u e d a s long ago as October, 1915, and the warning has been
r e p e a t e d on s e v e r a l occasions since t h a t date when c o n d i t i o n s made i t
necessary.
On June 10, 1919, the Board made p u b l i c a l e t t e r , which i t had
addressed to a l l Federal Reserve Agents, reading as f o l l o w s :
"The Federal Reserve Boara i s concerned over t h e e x i s t i n g
tendency towards excessive s p e c u l a t i o n , and while o r d i n a r i l y
t h i s . c o u l d be c o r r e c t e d by an aavance i n discount r a t e s a t the
F e d e r a l Reserve Banks, i t i s n o t p r a c t i c a b l e t o apply t h i s check
a t t h i s time because of Government f i n a n c i n g . By f a r the l a r g e r
x-1727
889
p a r t of t h e i n v e s t e d a s s e t s of F e d e r a l Reserve Banks c o n s i s t s of
paper secured /by Government o b l i g a t i o n s , and t h e Board i s anxious
t o g e t some i n f o r m a t i o n on which i t can form an e s t i m a t e a s t o
the e x t e n t of member "bank borrowings on Government c o l l a t e r a l made
f o r p u r p o s e s o t h e r t h a n f o r c a r r y i n g customers who have purchased
L i b e r t y Bonds on a c c o u n t , or o t h e r than f o r p u r e l y commercial
purposes."
This l e t t e r was s e n t out f o r t h e purpose of a s c e r t a i n i n g t o what e x t e n t
Government o b l i g a t i o n s were b e i n g used t o secure loans from F e d e r a l Reserve
Banks f o r o t h e r t h a n commercial purposes or f o r c a r r y i n g s u b s c r i p t i o n s .
In i t s monthly p u b l i c a t i o n , t h e F e d e r a l Reserve B u l l e t i n , t h e Board
has c a l l e d a t t e n t i o n r e p e a t e d l y s i n c e t h a t d a t e t o t h e dangerous s p e c u l a t i v e t e n d e n c i e s which have "been p r e v a l e n t *
In a p r i n t e d s t a t e m e n t during t h e summer, the Board made the s p e c i f i c
announcement t h a t i t would n o t s a n c t i o n any p o l i c y which would r e q u i r e the
F e d e r a l Reserve Banks to withhold c r e d i t s demanded b y commerce and i n d u s t r y
f o r the . p r o c e s s e s of p r o d u c t i o n and d i s t r i b u t i o n i n order t o enable member
banks t o f u r n i s h cheap money f o r s p e c u l a t i v e p u r p o s e s .
In o r d i n a r y circumstances and normal times one check would have been
t o advance d i s c o u n t r a t e s , but owing t o t h e f a c t t h a t the Government has
s o l d over twenty-one b i l l i o n d o l l a r s of L i b e r t y Bonds and V i c t o r y Notes,
many of which s e c u r i t i e s have been s o l d t o persons who were unable t o pay
f o r them i n f u l l b u t were obliged t o pay f o r them i n i n s t a l m e n t s out of
s a v i n g s or accrued incomes, i t was f e l t t h a t an advance i n the d i s c o u n t r a t e
on n o t e s secured by Government o b l i g a t i o n s should, so f a r as p o s s i b l e , be
avoided.
The s p e c u l a t i v e movement continued; i t s demands on the banks f o r
c r e d i t coming on top of commercial r e q u i r e m e n t s , of t h e s e a s o n a l crop moving
demand, and of demands a r i s i n g out of the unusual c o n g e s t i o n of export
commodities a t p o r t a .uwiag t o t h e delays i n t r a n s p o r t a t i o n . As a c o n s e quence of. these c o n d i t i o n s , txie r e s e r v e s of the F e d e r a l Reserve Bam.s began
to d e c l i n e , and those of the Federal Reserve Bams, of Hew York, i n p a r t i c u l a r , dropped to such an e x t e n t t h a t the Board, about two weeks ago, approved
an i n c r e a s e i n d i s c o u n t r a t e s of t h a t i n s t i t u t i o n averaging about one-half
of one p e r c e n t . A l l o t h e r Federal Reserve Banks, s h o r t l y a f t e r w a r d s ,
e x p r e s s e d the desire* t o p u t i n t o e f f e c t a s i m i l a r advance i n t h e i r r a t e s ,
which t h e Board approved,
The F e d e r a l Reserve Bank of New York, on November 2nd, the d a t e on
which tne advance i n i t s r a t e s was made p u b l i c , i s s u e d the f o l l o w i n g s t a t e ment supplementing the r e p e a t e d warnings of the Board:
"The r e a s o n f o r the advance i n r a t e s announced, today by t h e
F e d e r a l Reserve Ban±c of Mew York i s the evidence t h a t some p a r t
of the g r e a t volume of c r e d i t , r e s u l t i n g from b o t h Government
and p r i v a t e borrowing, which war f i n a n c e r e q u i r e d , as i t i s r e l e a s e d
from t i n s t o time f r o o Government needs, i s b e i n g d i v e r t e d to
s p e c u l a t i v e employment r a t h e r than to r e d u c t i o n of baruc l o a n s .
As t h e t o t a l volume of t h e Government's loans i s now i n course
of r e d u c t i o n corresponding r e d u c t i o n s i n barn: loans and d e p o s i t s
should be made i n order to i n s u r e an o r d e r l y r e t u r n of normal
credit conditions."
Notwithstanding t h i s n o t i c e , a c t i v i t i e s on t h e exchanges continued
s t i l l d e c l i n e d . During the
Board s o l d to o t h e r F e d e r a l
and
tne r e s e r v e s of the F e a e r a l Reserve Banic
http://fraser.stlouisfed.org/
week ending November och the F e d e r a l Reserve
Federal Reserve Bank of St. Louis
->
X.1727
Reserve Banks n i n e t y m i l l i o n d o l l a r s of acceptances f o r account of the
Federal Reserve Bank of New York, but i n s p i t e of t h i s a c t i o n the r e s e r v e s
of the New York hank f e l l to f o r t y per c e n t . In these circumstances, i n
order to prevent f u r t h e r expansion, i t "became necessary to c a l l the
a t t e n t i o n of the large r e d i s c o u n t i n g banns to the s i t u a t i o n .
The high r a t e s f o r c a l l money which have p r e v a i l e d continuously f o r
the p a s t two weeks and i n t e r m i t t e n t l y f o r several months p a s t , were in
themselves very c l e a r i n d i c a t i o n of the s t r a i n e d p o s i t i o n ' i n t o which the
unbridled s p e c u l a t i o n had thrown the stock market and rendered a r e a d j u s t ment i n e v i t a b l e unless the resources of the Federal Reserve Banks were to
be i n d i r e c t l y drawn upon f o r stock market purposes* The public has had ample
n o t i c e of the Board *s policy*
You are so f a m i l i a r with the Federal Reserve Act t h a t i t i s hardly
necessary to c a l l your a t t e n t i o n to that paragraph of Section 4, which t r e a t s
of the d u t i e s of the board of d i r e c t o r s of a Federal Reserve Bank and which
provides t h a t {r Said board s h a l l administer the a f f a i r s of said bank f a i r l y
and i m p a r t i a l l y and without d i s c r i m i n a t i o n i n favor of or against any
member bank or banks and s h a l l , subject to the provision of law and the
orders of the Federal Reserve Board, extend to each member bank such d i s counts , advancements and accommodations as may be s a f e l y and reasonably made
with due regard f o r the claims and demands of other member ban##** This
would, of course) a f f o r d means f o r a s t r i c t r a t i o n i n g of c r e d i t s should
such an extreme course ever become necessary.. I t i s i n t e r e s t i n g to note
that there no longer e x i s t s i n the mind of the public or in f a c t a connection
between c a l l money r a t e s and che commercial paper markejr, and i t must be
g r a t i f y i n g to a l l those i n t e r e s t e d i n sound banking methods that the events
of the p a s t week have had no e f f e c t upon the market f o r commercial paper*
Very t r u l y yours,
Governor,
Hon. R,L. Owen,
United S t a t e s Senate
801
W. P. 0 . HARDING. GOVERNOR
ALBERT STRAUSS. VICE GOVERNOR
EX OFFICIO MEMBERS
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
FEDERAL RESERVE BOARD
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
ADDRESS REPLY TO
WASHINGTON
FEDERAL RESERVE BOARD
ADOLPH C. MILLER
CHARLES S . HAMLIN
HENRY A. MOEHLENPAH
W. T. CHAPMAN, SECRETARY
R. G . EMERSON. ASSISTANT SECRETARY
W. M. IMLAY, FISCAL AGENT
Nove mber 19,1919*
X-172S
Subject:
Member Banks Subject to Provisions
of Clayton Act.
Dear Sir
At a meeting of the Federal Reserve Board
y e s t e r d a y , I was requested to ask the Federal Reserve
Agents t o submit a l i s t of member banks i n t h e i r r e spective d i s t r i c t s which are s u b j e c t to the p r o v i s i o n s
of the Clayton Act, f o r which j o i n t d i r e c t o r s h i p s haye
h i t h e r t o been authorized aid which may, owing t o chrjtnged
c o n d i t i o n s or a change i n the c h a r a c t e r of thcj.r b u s i n e s s ,
now be regarded as competing i n s t i t u t i o n s .
The Board d e s i r e s to have, n o t l a t e r than
December 10th, a l i s t of member banks i n your d i s t r i c t ,
j o i n t d i r e c t o r s h i p s i n which might be re&ardea as of
doubtful l e g a l i t y .
Very t r u l y yours
governor.
L e t t e r t o Chairmen of a l l F.R. Banks.
2-1729
/
OPT
1919 NOV 19
MEMPHIS TENN
GOVERNOR W P G HARDING
WASHINGTON D C
NATIONAL FARMERS UNION IN SESSION HERE ASK I F YOU REFERRED TO
WITHDRAWAL OF TWO MILLION BALES FROM MARKET OR I F YOU MEAN PRICE .
HIGH ENOUGH AND REGIONAL BANK MONEY WILL BE WITHHELD I F HIGH PRICE
IS SOUGHT TO BE HAD BY FARMERS
T T McELDERRY
FOR COTTON COMMITTEE.
*
•
8
0 P Y
X-1729-A
TELEGRAM
FEDERAL RESERVE BOJSRD
Washington
.
November 19 , 1919
T . T. McElderry,
Cotton Committee,
National Farmers Union,
Memphis, Tern*
Federal Reserve Board does n o t undertake to f i x p r i c e of c o t t o n or to
express an opinion a s t o m e r i t s of p r e s e n t p r i c e , i t s only concern i s to
administer the Federal r e s e r v e system i n sound and "businesslike manner, to
see t h a t paper rediscounted f o r member t a n k s i s adequately secured, and t h a t
Federal r e s e r v e banks i n extending accommodations s h a l l observe the r e q u i r e ment of t h e law t h a t the a f f a i r s of the Federal r e s e r v e banks be administered
f a i r l y and i m p a r t i a l l y and without d i s c r i m i n a t i o n i n f a v o r of or a g a i n s t any
member bank or banks, and
t h a t t h e r e s e r v e banks extend t o each member bank
such advancements, d i s c o u n t s and accommodations as may be s a f e l y and reasonably made with due r e g a r d f o r the claims and demands of other member banks«
The Board does not b e l i e v e t h a t the r e s o u r c e s of Federal r e s e r v e banks should
be used d i r e c t l y or i n d i r e c t l y f o r s p e c u l a t i v e purposes or f o r f a c i l i t a t i n g
the hoarding of commodities f o r such p u r p o s e s .
tained that
Board has c o n s i s t e n t l y main-
g r a d u a l and. o r d e r l y marketing of crops i s proper p o l i c y and
b e l i e v e s t h a t banks should extend t o producers such accommodations as can be
s a f e l y made t o c a r r y t h i s p o l i c y i n t o e f f e c t , thereby avoiding s a l e s a t
s a c r i f i c e p r i c e s which u s u a l l y r e s u l t from f o r c i n g undue volume of commodities
on market a t one time
W. P. G. HARDING,
Governor •
EX OFFICIO MEMBERS
w . P . 6 . H A R D I N G . GOVERNOR
A L B E R T S T R A U S S . VICE GOVERNOR
CARTER G L A S S
SECRETARY OP THE TREASURY
CHAIRMAN
ADOLPH C. MILLER
C H A R L E S S . HAMLIN
FEDERAL RESERVE BOARD
J O H N SKELTOM W I L L I A M S
COMPTROLLER OP THE CURRENCY
HENRY A. MOEHLENPAH
W . T . C H A P M A N . SECRETARY
R G . E M E R S O N . ASSISTANT SECRETARY
ADDRESS REPLY TO
FEDERAL RESERVE BOARD
WASHINGTON
W . M. IMLAY, FISCAL AGENT
November 20,1919*
3*1730
CONFIDENTIAL
Subject:
Cooperation with the Secret Service i n
matter of Raised. Notes and C o u n t e r f e i t s ,
Dear S i r : The Chief of the Secret Service has informed the Board
t h a t he has advised a l l of h i s agents i n the f i e l d t h a t the p o l i c y
of h i s bureau i s t h a t a l l c o u n t e r f e i t or r a i s e d currency received
by a bank from an i n d i v i d u a l should be turned over t o the Secret
Service immediately; and a l l c o u n t e r f e i t or r a i s e d currency r e ceived by one bank from another bank may be returned t o the sending
bank f o r reclamation purposes, but the Secret Service agents should*
i n such case, be immediately advised of that f a c t * Under t h i s r u l i n g
of the Bureaui i t w i l l be p o s s i b l e f o r a Federal Reserve Bank which
r e c e i v e s c o u n t e r f e i t or r a i s e d currency to r e t u r n i t to the sending
bank f o r reclamation purposes t provided that the r e c e i v i n g bank
immediately n o t i f i e s the Secret Service Agents*
The Federal Reserve Board f e e l s sure that the Federal
Reserve Banks d e s i r e to a s s i s t the Secret Service i n every p o s s i b l e
way i n i t s e f f o r t s t o procure information leading t o the a r r e s t of
a l l those engaged i n c o u n t e r f e i t i n g or r a i s i n g currency#
Very t r u l y yours,
Governor.
l e t t e r to a l l Chairmen of F%R. Banks
895
k
ESLEASED FOB FUBLICATIOM
,r
"THRIFT A D THE FINANCIAL SITUATION"
M
By
A, C, MILLER,
Member, Federal Reserve Board.
(Prepared f o r the forthcoming
January 1920 number of the
Annals of t h e American Academy
of P o l i t i c a l and Social Science
s p e c i a l volume on T h r i f t . )
x-iyja
•
•
.
THRIFT AND ffiB FINANCIAL SITUATION
What i s the f i n a n c i a l s i t u a t i o n of the United S t a t e s , more p a r t i c u l a r l y ,
what does our f i n a n c i a l s i t u a t i o n d i s c l o s e t h a t makes the p r a c t i c e of t h r i f t
ana saving a .natter of very g r e a t n a t i o n a l urgency a t the p r e s e n t time?
The g r e a t o u t s t a n d i n g f a c t s i n a summary view of our f i n a n c i a l s i t u a t i o n ,
which are p e r t i n e n t to t h i s i n q u i r y , a r e :
1- Tha p r o d i g i o u s scale of our p u b l i c expenditures;
2. The unprecedented weight of our d i r e c t t a x l e v i e s ; and,
3« The excessive volume of our governmental Borrowing.
Extraordinary expenditures occasioned by the war thus f a r amount to over
t h i r t y o i l l i o n s of d o l l a r s with the prospect t h a t ttie f i g u r e w i l l be r a i s e d to
t h i r t y - f i v e b i x l i o n s oy the end of the c u r r e n t f i s c a l y e a r . D i r e c t tax l e v i e s an
i n d i v i d u a l incomes ana the earnings of i n d u s t r y are running a t the r a t e of about
six b i l l i o n d o l l a r s a y e a r , Tne money borrowed by the Treasury to f i n a n c e the
p u b l i c requirements, since the beginning of the"war, amounts to t w e n t y - f i v e
b i l l i o n s of d o l l a r s .
Tnese are stupendous f i g u r e s - Events and c o n d i t i o n s since the a r m i s t i c e are
beginning to b r i n g home t o many of us i o r the f i r s t time the economic meaning
to tne n a t i o n and to the l i f e of the average c i t i z e n of the f i n a n c i a l s i t u a t i o n
t ras developed by the war and l e f t a f t e r i t s c l o s e .
Expenditures of the magnitude of those i n c u r r e d by the United S t a t e s f o r
tne war unquestionably mean some considerable impairment of the r a t e of the
n a t i o n ' s c a p i t a l accumulations during the p a s t two and one-half y e a r s . No
cuuntry i s r i c h enough to stand such a d r a i n upon i t s economic r e s o u r c e s as the
IfnitJu S t a t e s has oean subjected to during t h i s p e r i o d without s u f f e r i n g an .
appreciable impairment of i t s capital- account. Tne e x t e n t t o which the huge
e „ .onuitures of the government have cut m/cu tne c a p i t a l accumulations of the
89G
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X-1732
country can not be determined, but common observation and complaint bear evidence
t h a t i t c o n s t i t u t e s a very important item i n the economic c o s t of the war. The
circumstance , t h a t during the vyar the whole thought and energy of the nation
was concentrated on the problem of i n c r e a s i n g production f a c i l i t i e s f o r the
production of war s u p p l i e s , r e s u l t e d i n l e s s than the normal p r o v i s i o n being made
f o r the upkeep and extension of such of the c o u n t r y ' s i n d u s t r i a l equipment as was
not p r i m a r i l y needed i n war-time however important i t might be i n peace-time. The
run-down c o n d it i o n of the t r a n s p o r t a t i o n system of the country, p a r t i c u l a r l y the
s t r e e t car s e r v i c e , and the g r e a t shortage of dwelling house accommodations are
s t r i k i n g examples coming w i t h i n the experience of most people of the way i n which
the war and the i n s i s t e n t and voracious demand i t made f o r f i r s t c a l l upon the
productive c a p a c i t y and r e s o u r c e s of the country, i n t e r r u p t e d the up-keep of many
the productive f a c i l i t i e s ot the country not c l e a r l y e s s e n t i a l to the prosecution
f the war. There are many other evidences h e r e , there and elsewhere throughout the,
country, of the f a c t t h a t the war has l e f t the c a p i t a l equipment of the n a t i o n ~
^ s ' b u i l d i n g s , t o o l s , machinery, e t c — in many important f i e l d s of i n d u s t r y
where much must be done to oring i t up to a normal s t a t e of adequacy and e f f i c i e n c y .
More b u i l d i n g s , more machinery, more trackage, e t c . e t c . must be b u i l t * These
things are a p a r t of t h e i n d u s t r i a l equipment of the community - they are i t s
c a p i t a l . On them depends the p r o d u c t i v i t y of American i n d u s t r y a n d American l a b o r .
Impairment i n the r a t e of growth of c a p i t a l neans impairment of our i n d u s t r i a l
c a p a c i t y . The p r o d u c t i v i t y of American i n d u s t r y and labor depends, more
can
be said of any other community i n the world, upon the c h a r a c t e r and the e x t e n t of
the i n d u s t r i a l equipment with which they are provided. Our r a p i d i n d u s t r i a l p r o gress in the p a s t , i t has long been recognized, was l a r g e l y due t o the f a c t t h a t
abundant p r o v i s i o n was always made out of the product of i n d u s t r y f o r i t s f u r t h e r
extension and development and improvement *
Before the war about one-sixth of our productive power, a s n e a r l y as can be
-3-
X-1732
898
e s t i m a t e d , was devoted annually t o the-improvement and e x t e n s i o n of the indust r i a l equipment and p l a n t f a c i l i t i e s of the c o u n t r y , t o the development and
e x p l o i t a t i o n of i t s n a t u r a l r e s o u r c e s , to the b u i l d i n g of roads and houses, and
to many other t h i n g s , which added much every year t o the c a p i t a l resources and
productive c a p a b i l i t i e s of the country* In b r i e f , b e f o r e the war about ones i x t h of the w e a l t h , Which wte annually produced, was saved and p r a c t i c a l l y a l l
accrued to the n a t i o n * s i n d u s t r i a l - and f i n a n c i a l - c a p i t a l account.
During the war much, i f not most, of our customary i n d u s t r i a l expansion was
suspended, d e s p i t e the f a c t t h a t there was a n o t a b l e i n c r e a s e i n the i n d i v i d u a l
savings of the American people. All of the new savings and most of the normal
savings during the period of the war were absorbed by the Government and were
used d i r e c t l y or i n d i r e c t l y i n f u r t h e r a n c e of war production. No doubt much
of the new i n d u s t r i a l equipment c a l l e d f o r t h by war production w i l l , a l s o , be
found u s e f u l f o r peace-time production and, to t h a t e x t e n t , be n o t a l t o g e t h e r
l o s t to the c a p i t a l account of the country. Nevertheless, most of the savings
appropriated f o r p u b l i c use i n the time of our war emergency r e p r e s e n t s somet h i n g which, from the p o i n t of view of the n a t i o n ' s peace-time economy, must be
regarded as unproductive expenditure and economic waste*. There i s , t h e r e f o r e ,
a shortage i n the c a p i t a l equipment of the c o u n t r y uue to the d i v e r s i o n of the
bulk of the c o u n t r y ' s savings during the war from the production of peace-time
f a c i l i t i e s to war—time f a c i l i t i e s , which must somehow or other be made good &f
American i n d u s t r y i s to maintain i t s normal p r o d u c t i v i t y . There i s but one
known economic method by which t h i s r e s u l t can be accomplished and t h a t i s the
method of s a v i n g .
How i s saving r e l a t e d to the a l l - i m p o r t a n t matter of r e s t o r i n g aid inproving and i n c r e a s i n g the i n d u s t r i a l equipment or c a p i t a l of the country?
To most people saving i s thought, of as l a y i n g a side money, or as giving
up something which has c u s t o m a r i l y been consumed or which might be consumed.
This i s , however, merely t h e f i r s t s t e p of the saving p r o c e s s , as a b r i e f i l l u s d i s c l o s e . Perhaps 1 am on the p o i n t of buying an automobile.
tratio
http://fraser.stlouisfed.org/n w i l l
Federal Reserve Bank of St. Louis
8 9
.4'Heeding the i n j u n c t i o n to save, 1 decide to give up iay purchase of
en automobile, a t any r a t e
f o r the p r e s e n t , and u n t i l the p r e s e n t n a t i o n a l and world emergency i s measurably
9
over. What does iuy a c t i o n i n f o r e g o i n g the purcnase and use of an automobile do
to he lp i n d u s t r y ; s p e c i f i c a l l y , how does i t r e s u l t i n an a d d i t i o n to the indust r i a l c a p i t a l of the country and thus h e l p t o make i n d u s t r y more productive? Sb
f a r a s I can t r a c e my a c t i o n a l l t h a t I save i s the d o l l a r s which the automobile
would have cost and which the g a s o l i n e , t i r e s and other r e q u i s i t e s f o r the
operation of the automobile would have c o s t . What do ay saved d o l l a r s do to improve
the economic s i t u a t i o n - to r e p a i r or b u i l d f a c t o r i e s and otherwise expand product i o n f a c i l i t i e s ? I can see what iqy saved d o l l a r s 4o to give me d o l l a r s against
the contingencies of a r a i n y day sometime in the f u t u r e by a s s u r i n g me of something
in the bank with which to buy food and c l o t h i n g , b u t I have s t i l l to be shown how
my r e f r a i n i n g now, z'.or example from the purchase of an automobile, i n c r e a s e s the
p r o d u c t i v i t y of i n d u s t r y , makes goods more abundant, and thus h e l p s to bring down
p r i c e s and improve* the f i n a n c i a l s i t u a t i o n generally*
When you save d o l l a r s , Mr, Reader, you save what d o l l a r s w i l l buy. In the
case in question, ytiur going without an automobile e i t h e r saves t h a t automooile f o r
more
some/important use than your p l e a s u r e or, what i s more l i k e l y , supposing t h a t
others axe doing as you a r e doing, i t saves i n d u s t r y the
n e c e s s i t y of devoting
as uiuch l a b o r ana m a t e r i a l and machinery to the production of automobiles as
would -otherwise be necessary and thus r e l e a s e s t h a t l a b o r and u a t e r i a l and ma?
chinery f o r something e l s e , which, i n the e x i s t i n g circumstances of the country
and the world, i s more necessary. In b r i e f , when you save money by c u t t i n g down
your c u r r e n t consumption, you save more than d o l l a r s and you save more than the
goods t h a t you go without. You save the labor t h a t i t c o s t s to produce those
goods and you l i b e r a t e the labor and productive power thus saved f o r the product i o n of other t h i n g s - such as, machinery, b u i l d i n g s and other much needed r e q u i s i t e s of production - which i t i s most urgent the country and the world should
have more of a t the p r e s e n t time*
900
a i L
The need of a g r e a t increase in i n d i v i d u a l savings, i n Meier t o provide
the r e q u i s i t e c a p i t a l f o r expansion of our i n d u s t r i e s , gets much a d d i t i o n a l
emphasis from the circumstances t h a t a l a r g e p a r t of the tax revenues, now being
c o l l e c t e d by the Government under the new methods and the high l e v e l * of taxation
which were developed with the war, a r e undoubtedly e a t i n g i n t o the current savings
and, t h e r e f o r e , the c u r r e n t c a p i t a l accumulations of a very important s e c t i o n of
the n a t i o n 1 s saving c l a s s . The tax revenues, which i t i s estimated w i l l be c o l l e c t e d
by the Government f o r the f i s c a l year 1920, aggregate s i x and a h a l f b i l l i o n s of
d o l l a r s . The g r e a t bulk of t h i s revenue comes from s u r - t a x e s on the higher grades
of income and from excess p r o f i t s taxes an business. Large incomes and the e a r n ings of b u s in e s s a r e , a l s o , the source from which has h i t h e r t o come a p r i n c i p a l , i f
not the p r i n c i p a l , p a r t of the savings of the country and the new c a p i t a l , which
from year to year became a v a i l a b l e f o r t h e use of i n d u s t r y . Receivers of large
incomes i or the most p a r t do not spend a l l t h e i r income f o r c u r r e n t consumption
but i n v e s t a consideraole proportion, probably the g r e a t e s t p o r t i o n , i n i n d u s t r i a l
undertakings. The stream of saved income t h a t flowed from t h i s source i n t o indust r y , supplying i t with new c a p i t a l , now flows, to a l a r g e e x t e n t , i n t o the p u o l i c
treasury, supplying i t w i t h the ueans of meeting i t s c u r r e n t disbursements. The
c u r r e n t expenditures of the Government are not to any appreciable e x t e n t to be
regarded a s economic e x p e n d i t u r e s . I t i s only i n d i r e c t l y , as the income of the
Government i s used i n l i q u i d a t i n g war c o n t r a c t s , e t c . and thus flows back i n t o
the channels of b u s i n e s s , t h a t any considerable p o r t i o n of i t w i l l be saved and
accrue to the c a p i t a l account of the c o u n t r y .
While i t i s impossible to estimate the e x t e n t t o which the diminution i n the
flow of savings from the incomes of those who bear the main burden of high
taxa-
tion i s thus o f f s e t , i t does not seem l i k e l y to be s u f f i c i e n t to i n v a l i d a t e the
p r o p o s i t i o n t h a t the extremely high d i r e c t taxes, which a r e being l e v i e d by the
-6-
X-17J2
901.
Government of the United. S t a t e s , a r e e a t i n g i n t o the c u r r e n t c a p i t a l accumulations
of the country to a degree t h a t i s c o n s i d e r a b l e . The e f f e c t s w i l l be s e r i o u s
u n l e s s the l o s s thus a r i s i n g i s made good by increased savings on the p a r t of a l l
those in the community whose a b i l i t y to save has not been impaired as a r e s u l t of
the f i n a n c i a l s i t u a t i o n occasioned by war. This means, to put the matter b r i e f l y ,
t h a t the in c r e a s e d savings of the many must make up f o r the diminished savings
of the few, as long a s the f i n a n c i a l neads of the Government, car other conditions,
or c o n s i d e r a t i o n s of s o c i a l p o l i c y , make i t necessary to keep d i r e c t taxes at t h e i r
p r e s e n t high l e v e l s *
Questions of d i r e c t t a x a t i o n a r e commonly regarded only from the p o i n t s of
view of f i s c a l expediency and d i s t r i b u t i v e j u s t i c e . In ordinary circumstances these
p o i n t s of view may s u f i i c e , out in the p r e s e n t e x t r a o r d i n a r y circumstances of our
country and the whole world, a more fundamental p o i n t of view must be taken. With
the. c a p i t a l account of a l l the l e a d i n g c o u n t r i e s of the Western World seriously
depleted, a s a consequence of the g r e a t war, and with the burden of d i r e c t taxation reaching a p o i n t never b e f o r e thought p o s s i b l e , the e f f e c t s of t a x a t i o n upon
the productive economy of the several c o u n t r i e s must be given thoughtful study.
The war ana every experience which has followed since the a r m i s t i c e , has taught
us to think in terms of production, A considerable section of the population of
Europe - the most h i g h l y organized p a r t of the world - i s and has been i n a s t a t e
of want with d e s t i t u t i o n and., i n some p a r t s , s t a r v a t i o n t h r e a t e n i n g , because of
i n s u f f i c i e n t p r o d u c t i o n . Production, more production, more e f f i c i e n t production,
t h i a , the
i s an urgent need of the world in the throes of/
most severe a f t e r - w a r c r i s i s
ever experienced.
In these circumstances f i s c a l and f i n a n c i a l q u e s t i o n s must be looked a t from
the p o i n t of view of n a t i o n a l economic i n t e r e s t , a s well as from the point of
vi®w ofi s o c i a l j u s t i c e . Looking a t the s c a l e of our p r e s e n t d i r e c t t a x a t i o n from
the economic p o i n t of view, i t does not admit of q u e s t i o n t n a t t h e r a t e of growth
of c a p i t a l i n the United S t a t e s w i l l be s e r i o u s l y a f f e c t e d u n l e s s , to r e p e a t the
'
x-ma
903
statement, the savings of the many make up f o r the decrease i n the savings of the
few. Dependent as the growth of i n d u s t r y and production i s upon the stream of
with
c a p i t a l / w h i c h i t i s f e d , saving i s the urgent need of the hour. Saving i s producing*
More of us must make our d o l l a r s produce. Things, which are now scarce and dear be*-.
then
cause production i s inadequate, will/become more abundant and p r i c e s f a l l .
Ill,
But saving w i l l do more than t h i s to improve the f i n a n c i a l s i t u a t i o n . Saving
w i l l not only b r i n g down p r i c e s by i n c r e a s i n g the production and supply of goods
but w i l l b r i n g dOwn p r i c e s oy reducing the supply of money* The most troublesome
f e a t u r e oi" our f i n a n c i a l s i t u a t i o n i s the high and r i s i n g l e v e l of prices* Recent
I
events a r e showing t h a t high and r i s i n g p r i c e s present more than a f i n a n c i a l d i f f i c u l t y . They are the cause of our acute c o s t of l i v i n g problem and the i n d u s t r i a l
u n r e s t and general unsettlement of mind and the f i n a n c i a l i n s t a b i l i t y which invariabl y attend g r e a t p r i c e disturbances- Reasonable s t a b i l i t y of value i n the monetary
standard i s necessary to a good s t a t e of mind i n a h i g h l y organized i n d u s t r i a l
community. I n s t a b i l i t y i n e v i t a b l y breeds u n r e s t and u n s e t t l e m e n t . Until the upward
movement of p r i c e s i s a r r e s t e d and the d o l l a r begins to recover i t s l o s t value,
we may expect to have an u n s a t i s f a c t o r y and troublesome f i n a n c i a l s i t u a t i o n with
the e v i l economic and s o c i a l consequences, which such a s i t u a t i o n i n v a r i a b l y e n t a i l
To c o r r e c t the e x i s t i n g f i n a n c i a l and p r i c e s i t u a t i o n i s , t h e r e f o r e , tantamount to
taking the most important s t e p toward the c o r r e c t i o n of our c u r r e n t s o c i a l and i n d u s t r i a l u n r e s t . People are everywhere uneasy and apprehensive because of the dec l i n i n g value of the d o l x a r . To r e s t o r e the d o l l a r t o something more n e a r l y
approaching i t s normal value and t o reduce p r i c e s may, t h e r e f o r e , be s a i d to oe the
most important f i n a n c i a l proolem before the country.
That there i s no way of handling the problem t h a t does n o t involve the p r a c t i c e
of t h r i f t and saving by a l l s e c t i o n s and c l a s s e s of the country upon an i n t e n s i v e
-6-
X-1732
903
scale becomes c l e a r on examination of the f i n a n c i a l f a c t o r s t h a t have helped to
bring prices to t h e i r present levels*
Speaking i n broad terms, changes in prices- proceed from changes i n the r e l a t i o n of the volume of purchasing media (what, inccommon speech, i s cAiled money)
and the volume of goods o f f e r e d f o r sale*
When people, generally, nave u»ore
money in t h e i r pockets, or more c r e d i t a t t h e i r banks, with which t o buy, than
there are goods on the shelves of shop-keepers, which can be bought, goods get
dear and money g e t s cheap.
In other words, when there i s more rnopey sedcing to
buy goods than there are goods seeking t o buy money, p r i c e s r i s e and t h e i r r i s e
w i l l go on a s long a s the increase i n the supply of purchasing media or money
proceeds a t a f a s t e r r a t e than the i n c r e a s e in the stipply of puTchassbi® goods.
That e x c e s s i v e supply of c r e d i t and currency has been one of the
p r i n c i p a l i n f l u e n c e s i n p u t t i n g up and keeping up p r i c e s i n the United S t a t e s
is incontestable.
That excessive borrowing by the Government has been t h e main
occasion of the excessive increase i n the volume of purchasing media seems p r e t t y
c l e a r , i f , by excessive borrowing be understood, n o t borrowing i n excess of what
the Government has r e q u i r e d t o defray i t s expenditures, but borrowing i n excess
of the c u r r e n t savings of the country.
The Treasury of the United S t a t e s has borrowed, during the p a s t two years
and a h a l f , over $25,000,000,000.
borrowed by the i s s u e of bonds.
Of t h i s amount about $21,500,OCX),000 have been
The remaining t h r e e and a h a l f b i l l i o n s have been
borrowed by the i s s u e of s h o r t - d a t e d c e r t i f i c a t e s of indebtedness.
Twenty-five
b i l l i o n s i n the course of two y e a r s and a half i s an e x t r a o r d i n a r y amount of money
to r a i s e , even f o r a country as r i c h as the United S t a t e s .
$1,250 f o r every American f a m i l y .
family.
I t averages about
I t i s an average of $500 per year f o r each such
That such an amount could be taken out of the average income of the
American people, except a s they g r e a t l y reduced consumption and g r e a t l y increased
savings, needs no demonstration.
People of moderate means who d i d t h e i r f u l l duty
a-1I yd
- 9 in s u b s c r i b i n g to the loans of the Government by a c t u a l l y c u t t i n g down t h e i r curr e n t expenditures and paying f o r t h e i r bonds i n d o l l a r s a c t u a l l y saved out of
t h e i r incomes know from t h e i r own experience t h a t there i s no method by which
such v a s t loans can be taken up and p a i d 1'oY except by the p r a c t i c e of severe
economy.
I t was because a l l of the people d i d not p r a c t i c e economy to the
r e q u i s i t e degree t h a t the savings of the country were n o t adequate to taking up
the s e c u r i t i e s i s s u e d by the Treasury a s genuine "savings l o a n s " .
To the extent
t h a t the borrowings of the Government were i n excess of what were p a i d f o r by
savings, the loans became " c r e d i t loans" and, as such, r e s u l t e d i n a great i n crease in the volume of the c o u n t r y ' s c i r c u l a t i n g c r e d i t and i t s currency.
The following t a b l e shows f o r s e l e c t e d d a t e s , under the heading of "Deposits
the i n c r e a s e which has taken place i n the
volume of c r e d i t extended by the banks
( n a t i o n a l and s t a t e banks and t r u s t companies) and, under the headings "Loans
and Discounts" and "Investments", the operations a g a i n s t which the newly created
c r e d i t was extended.
The dates s e l e c t e d are ( l ) the eve of our e n t r y i n t o the
war; (2) the a r m i s t i c e ; and (3) the most recent date f o r which d a t a are a v a i l a b l e
Date
'Gross Deposits'
Loans & Discounts
Investments.
( I n m i l l i o n s of d o l l a r s )
March,
1917
24,863
17,020 .
4,955
November 1, 1918
25,862
19,792
8,909
October,
33.159
22,275
9.751
1919
The above f i g u r e s , which a r e p a r t l y o f f i c i a l and p a r t l y e s t i m a t e d , show
t h a t , between March 1917 and November 1, 1918, 3,999 m i l l i o n s of new banking
*
c r e d i t in the shape of s o - c a l l e d d e p o s i t s were c r e a t e d - an i n c r e a s e of 16.1
per c e n t . Similar comparison f o r the item "Loans and Discounts' 1 shows t h a t
between the same two d a t e s there was an i n c r e a s e of 2,772 m i l l i o n s - an increase
of 16.3 per c e n t ; and, f o r the item "Investments" f o r the same d a t e s , there was
Digitized foran i n c r e a s e of
FRASER
3,95^ m i l l i o n s - or 79-8 per c e n t .
-10k
#
3U1732
,
9 0 5
I t w i l l be noted, t h a t the most s t r i k i n g i n c r e a s e of percentage i s found i n
the item " Investments" between the d a t e s March 1917 and November 1918, when an
increase of c l o s e t o f o u r b i l l i o n s of d o l l a r s i s shown i n the investment holdings
of the banks. This was the period when the Government *s g r e a t bond-issuing
operations were a t t h e i r h e i g h t : The banks were under p r e s s u r e t o make heavy
investments of t h e i r c r e d i t i n subscribing f o r government loans; they were a l s o
extending c r e d i t accommodation on l i b e r a l terms to t h e i r customers f o r the like
purpose. This was a l s o the period when the t o t a l currency i n c i r c u l a t i o n was i n creasing most r a p i d l y - the i n c r e a s e between March 1917 and November 1918 amounting
to over one b i l l i o n and a q u a r t e r .
But the expansion of banking c r e d i t did not come t o a stop w i t h the a r m i s t i c e .
Figures given i n the table above shew that expansion has continued at an alarming
r a t e since then. And the end i s n o t yet a s s u r e d l y i n s i ^ a t . Between the d a t e s
November 1, 1918 and October 1919>
4,297 m i l l i o n s of d o l l a r s of new c r e d i t have
been c r e a t e d ; loans have increased 2,483 m i l l i o n s of d o l l a r s ; and investments 842
m i l l i o n s of d o l l a r s .
I t thus appears that f o r the. whole p e r i o d , March 1917 t o October 1919» 8,296
m i l l i o n s of d o l l a r s of new banting c r e d i t have been c r e a t e d , most of which was
undoubtedly occasioned by the exigencies of government f i n a n c i n g .
I t has r e c e n t l y been estimated (Federal Reserve B u l l e t i n f o r October, 1919:
page 942) t h a t the banks of the country hold among t h e i r investments over f o u r
b i l l i o n s of d o l l a r s of government war s e c u r i t i e s (Liberty bonds, Victory n o t e s or
C e r t i f i c a t e s of Indebtedness) and, among t h e i r loans and d i s c o u n t s , two and a
h a l f b i l l i o n s or more r e p r e s e n t i n g loans made t o customers secured by government
obligations and made, presumably, f o r the most p a r t , i n a i d of customers * subs c r i p t i o n s t o government loans- Altogether then, i t appears that the banks are
c a r r y i n g , d i r e c t l y or i n d i r e c t l y , between s i x and seven b i l l i o n s of government
war o b l i g a t i o n s a g a i n s t which has been extended newly c r e a t e d c r e d i t i n the form
o s i t s or
of d e p
currency .
i
-11-
x-1732
c v o
This newly c r e a t e d c r e d i t , l i k e the new currency, c o n s t i t u t e s an a d d i t i o n
to the supply of the country* s purchasing media, I t i s f o r a l l p r a c t i c a l purposes
to be regarded a s money. I t i s acceptable a s a means of purchase and payment. I t
•acts on p r i c e s s u b s t a n t i a l l y the same as money* I t i s the new and l a r g e addition
to the c o u n t r y ' s c i r c u l a t i n g media, r e s u l t i n g from t h e placement of so l a r g e a
*
p o r t i o n of the Government's loans i n the form of " c r e d i t loans" - t h a t i s , in
excess of what the c u r r e n t savings of the people would support - t h a t i s l a r g e l y
responsible f o r t h a t f e a t u r e of our f i n a n c i a l s i t u a t i o n which has r e s u l t e d i n the
continuing high p r i c e s , of which there i s so much complaint.
The b e s t way to improvo our p r i c e s i t u a t i o n i s to improve our c r e d i t s i t u a t i o n . Indeed, no great improvement in the p r i c e s i t u a t i o n need be looked f o r u n t i l
the c r e d i t s i t u a t i o n i s m a t e r i a l l y improved. The banking and c r e d i t s i t u a t i o n w i l l
improve a s the l a r g e amount of war loan paper and investments now c a r r i e d by the i
banks i s l i q u i d a t e d . There i s only one way to l i q u i d a t e them and t h a t i s out of
the proceeds of savings. Those who are debtor to the banks f o r c r e d i t accommodation
in aid of s u b s c r i p t i o n s to government loans must be made t o take up t h e i r o b l i g a tions to the banks out of t h e i r i n d i v i d u a l savings, if i t i s a t a l l possible for
them to do so. I f they can not do i t , or, r a t h e r , to the extent t h a t they can not
do i t , o t h e r s mast i n e f f e c t do i t for them; o t h e r s must save and out of t h e i r
savings buy Liberty Bonds i n the market. Thus w i l l the market f o r government
bonds be improved and thus w i l l i t be made p o s s i b l e f o r the banks t o l i q u i d a t e
by s e l l i n g in the market bonds, which they have bought on c r e d i t , and t h e i t
customers, the bonds which the banks a r e holding a s c o l l a t e r a l . Such l i q u i d a t i o n
w i l l at once reduce the loan and investment accounts of the banks on t h e one side
and t h e i r deposit l i a b i l i t i e s on the o t h e r ; and i t w i l l , in a d d i t i o n , being a
r e t u r n flow of currency t o the oanks. I t i s thus t h a t t h e r e w i l l r e s u l t from the
process of saving r e d u c t i o n i n the volume of purchasing media and d e c l i n e of
prices.
907
-12-
X-173.2
If everyone had done h i s f u l l duty during the war by v o l u n t a r i l y r a t i o n i n g
himself and saving to the r e q u i s i t e degree, most of the expansion of c r e d i t and
currency and i n f l a t i o n of p r i c e s , from which we a r e s u f f e r i n g , would have been
avoided. Because t h e r e were f i n a n c i a l s l a c k e r s who did not do t h e i r duty, expansion of c r e d i t and currency was c a r r i e d to the point of i n f l a t i o n . Die e v i l s
of i n f l a t i o n , of which the President warned the n a t i o n i n h i s War Message of April
2, 1917, are now upon us i n the shape of high cost of l i v i n g s p r o f i t e e r i n g ,
speculation, r e c k l e s s extravagance and i n d u s t r i a l u n f e s t and s t r i f e . These e v i l s
the
are to be reckoned a s a p a r t of the cost of/war , They are the cost of i n f l a t i o n .
That cost must now be met. Until i t i s met, those e v i l s w i l l remain to plague us.
Indeed, there i s danger t h a t they w i l l grow worse through postponement or through
n a t i o n a l s e l f - d e l u s i o n t h a t they can be escaped. Recent months have given dramatic
evidence t h a t the a p p e t i t e f o r i n f l a t i o n , l i k e most other a p p e t i t e s , grows by
what i t f e e d s upon. I n f l a t i o n i s breeding i n f l a t i o n . A h a l t must be c a l l e d .
Saving must again become the order of the day. We have too much c r e d i t and too
much money outstanding in the United S t a t e s - above a l l , too much unproductive
c r e d i t . I t s volume must oe reduced. There i s but one sure method; t h a t i s saving.
November 24, I 9 l d .
908
W . P . 6 . 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
C H A R L E S S . HAMLIN
CARTER C L A S S
SECRETARY W * * TREASURY
CHAIRMAN
HENRY A. MOEHLENPAH
FEDERAL RESERVE BOARD
J O H N SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
W . T . C H A P M A N . SECRETARY
R . G . E M E R S O N . ASSISTANT SECRETARY
ADDRESS REPLY TO
W . M . IMLAY, FISCAL A6ENT
WASHINGTON
FEDERAL, R E S E R V E B O A R D
November 25,1919*
S u b j e c t : Data Regarding Building S i t e s and. B u i l d i n g s of
Federal Reserve Banks, a s of November 29, 1919*
Dear S i r e There i s a t t a c h e d h e r e t o memorandum with r e f e r e n c e
t o c e r t a i n information which the Board d e s i r e s regarding
b u i l d i n g s i t e s and b u i l d i n g s owned by Federal Be serve Bank's
and Branches. Please have these d a t a prepared and forwarded
to the Board as soon a s p o s s i b l e a f t e r November 2$, 1919*
Very t r u l y yours,
•Enclosure.
Assistant Secretary.
L e t t e r t o chairman of a l l F.B. Banks.
x-1733
909
DATA REGARDING BUILDING SITES AND BUILDINGS O N D BY FEDERAL
WE
X-1733&
RESERVE BANKS' AND BRANCHES, AS OF NOVEMBER £'3,1919.
1-
O r i g i n a l investment (property now owned)
$
2.
Actual expenditures on b u i l d i n g s e r e c t e d or i n course of
erection..-
$
3.
Vaults - c o s t of c o n s t r u c t i o n and r e p a i r s .
$
4.
Taxes p a i d t o date
$
5»
Other improvements and miscellaneous expenses
$
6.
TOTAL of Items 1 t o 5 inc.,
$
7-
DEDUCT - Income from b u i l d i n g s
$
S«
NET COST a s of November 29,1919
$
9.
Total amount charge a off to November 29, 1919
$
10. Book value - November 29, 1919*
$
11. Area of property ( a v a i l a b l e f o r b u i l d i n g purposes)
sq.ft.
12. Cost per sq. f t . on Item 1 - "Original Investment"
$
13. Cost per sq« f t . on Item 6 - "Net Cost*
$
14. Total estimated c o s t of new b u i l d i n g under c o n s t r u c t i o n or
planned, i f any.
$
15. Please f u r n i s h diagram of any pr ope Sty purchased since March
15, 1919, ( d a t e of former i n q u i r y on t h i s s u b j e c t )
showing size i n f a e t , name5 of s t r e e t s bordering^
compass d i r e c t i o n s , e t c .
NOTE:
Give data s e p a r a t e l y f o r branches owning p r o p e r t y , so f a r
as t h i s i s possible.
910
W . P . « . H A R D I N G . GOVERNOR
EX OFFICIO M E M B E R S
A L B E R T S T R A U S S . VICE GOVERNOR
ADOLPH C. MILLER
CARTER GLASS
SECRETARY OF THE TREASURY
C H A R L E S S . HAMLIN
JGHAIKMAK
FEDERAL RESERVE BOARD
J O H N SKELTON W l t L l A M S
COMPTROLLER OF THE CURRENCY
HENRY A. MOEHLENPAH
W . T . C H A P M A N . SECRETARY
R . G . E M E R S O N . ASSISTANT SECRETARY
ADDRESS REPLY TO
W . M. 1MLAY, FISCAL AGENT
WASHINGTON
FEDERAL RESERVE BOARD
November 26,1919*
X-1734
CONFIDENTIAL
Subject:
Location of Branch Bank i n Oklahoma*
To the Member Bank addressed,
Tenth Federal Reserve D i s t r i c t ,
S t a t e of Oklahoma.
Gentlemen
The Federal Reserve Board has under c o n s i d e r a t i o n
the establishment of a branch of the Federal Reserve Bank of
Kansas City a t e i t h e r O L H M CITY or TULSA.
KA O A
In order t h a t t h i s branch may be l o c a t e d w i t h a
view t o the i n t e r e s t s of the t e r r i t o r y to be served, the
Board d e s i r e s from you an unbiased statement i n d i c a t i n g your
p r e f e r e n c e as between the two c i t i e s named. Please d i s r e g a r d
a l l previous communications which you may have r e c e i v e d upon
t h i s s u b j e c t from any source.
<
No decision w i l l be reached by the Board u n t i l an
opinion has been received from tha member banks in t h a t part
of Oklahoma l y i n g within the Tenth Federal Reserve D i s t r i c t ,
exclusive of Oklahoma City and Tulsa. You a r e t h e r e f o r e r e quested, a t the e a r l i e s t p o s s i b l e moment, to i n d i c a t e your
p r e f e r e n c e by f i l l i n g out the a t t a c h e d form and mailing i t
to th3 undersigned. Kindly have the form signed by an exe c u t i v e o f f i c e r of your Bank - p r e f e r a b l y a senior executive
o f f i c e r - and accept the assurance t h a t the expression of your
p r e f e r e n c e w i l l be h e l d as s t r i c t l y c o n f i d e n t i a l *
Very t r u l y yours,
•Enclosure.
Executive Secretary*
To a l l
member banks i n Oklahoma except Oklahoma City and Tulsa*
X-173Ua
Date
Mr. W.W. Hoxton, Executive S e c r e t a r y ,
Federal Reserve Board,
Washington, B.C.
Dear S i r : You a r e authorized to r e p o r t to the Federal Reserve
Board t h a t , i n the opinion of the undersigned member bank, the
Oklahoma branch of the Federal Reserve Bank of Kansas City
should be l o c a t e d a t
-•
I t i s understood t h a t t h i s e x p r e s s i o n of opinion
i s t o be regarded as c o n f i d e n t i a l .
Name of Bank
Name of O f f i c e r ^
T i t l e of O f f i c e r
91ti
W . P . a . H A R D I N G . GOVERNOR
EX OFFICIO MEMBERS
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 . HAMLIN
C A R T ER G L A S S
SECRETARY OF THE TREASURY
CHAIRMAN
FEDERAL RESERVE BOARD
J O H N SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
HEHRY A. MOEHLENPAH
w . T . C H A P M A N , SECRETARY
R . G . E M E R S O N . ASSISTANT SECRETARY
ADDRESS REPLY TO
FEDERAL RESERVE BOARD
W . M. IMLAY, FISCAL AGENT
WASHINGTON
November 26,1919
Subject:
x-1735
C e r t i f i e d Copies of Amendments to A r t i c l e s
of Incorporation or Charter of Member S t a t s Batiks.
Dear S i r : . I n order t h a t the Federal Reserve Board may
be advised and i t s records k e p t complete, i t i s r e q u e s t e d
t h a t you tibtain and forward, c e r t i f i e d copies of a l l c u r r e n t
amendments t o the a r t i c l e s of i n c o r p o r a t i o n or c h a r t s r o± any
member S t a t e i n s t i t u t i o n .
Very t r u l y yours,
Assistant
Secretary,
L e t t e r to Chairmen of a i l F.B. Becks
W . P . 6 . H A R D I N G . GOVERNOR
EX OFFICIO MEMBERS
913
A L B E R T S T R A U S S . VICE GOVERNOR
CARTER C L A S S
SECRETARY OF THE TREASURY
CHAIRMAN
J O H N SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
ADOLPH C. MILLER
C H A R L E S S . HAMLIN
FEDERAL RESERVE BOARD
HENRY A. MOEHLENPAH
W . T . C H A P M A N . SECRETARY
R . G . E M E R S O N . ASSISTANT SECRETARY
ADDRESS REPLY TO
FEDERAL RESERVE BOARD
W . M. IMLAY. FISCAL AGENT
WASHINGTON
November 29,1919*
Subject:
E x h i b i t s N and 0,
x-1736
1919 Annual Report.
Dear S i r ; There a r e enclosed herewith e x t r a c t s from the
Board 1 s Annual Report f o r 1318, .showing those p a r t s of
E x h i b i t s Si and 0 ( " S a l a r i e s of O f f i c e r s and Employees"
and " O f f i c e r s and D i r e c t o r s of Federal Reserve Banks",
r e s p e c t i v e l y ) which r e l a t e to your Bank.
I t i s requested
t h a t you add to these t a b l e s data f o r the year 1919» 'U-P to
and i n c l u d i n g December J l , and forward the r e v i s e d t a b l e s
t o the Board a s soon a s p o s s i b l e .
Any changes a f f e c t i n g these r e p o r t s which may
occur a t your bank a f t e r the r e p o r t s have been forwarded
should be sent t o the Board promptly, so t h a t the ne cessary
changes may be made i n the p r o o f .
Very t r u l y yours,.
Enclosure
A s s i s t a n t Secretary
To Chairman of a l l F.R. Banks
FEDERAL
RESERVE
BOARD
STATEMENT FOR THE FBESS
X-1737
For Release In Morning P a p e r s ,
Monday, December I , 1919.
The following i s a review of g e n e r a l b u s i n e s s and.
f i n a n c i a l conditions throughout the s e v e r a l F e d e r a l
Reserve D i s t r i c t s during the month of November, as
contained i n the forthcoming i s s u e of the Federal
Reserve B u l l e t i n :
Hie r e p o r t s on b u s i n e s s and f i n a n c i a l conditions f o r the s e v e r a l Federal
Reserve d i s t r i c t s continue t o emphasize the prevalence of an unabated b u s i n e s s
a c t i v i t y due t o p e r s i s t e n t demand f o r goods a t a l l stages of production- The
eagerness and sustained buying c a p a c i t y of the u l t i n a t e consumer appear t o be
the explanation of a continued Expansion of wholesale and r e t a i l t r a d e , which
i s to be found even i n those d i s t r i c t s most immediately a f f e c t e d by the c o a l
and the s t e e l s t r i k e s . Curtailment of i n d u s t r i a l operations because of the c o a l
shortage had been only s p o r a d i c a l l y enforced up t o the middle of the month, but
the imminency of d r a s t i c a c t i o n looking toward the conservation cf vanishing
c o a l supplies was already apparent at that d a t e , the shortage being e s p e c i a l l y
acute i n the Kansas City a i d S t . Louis d i s t r i c t s .
Notwithstanding the demoralizing e f f e c t s upon general b u s i n e s s t h a t might
have been expected t o accompany any widespread i n d u s t r i a l d i s t u r b a n c e i n the
b a s i c i n d u s t r i e s of the country, there was* v i r t u a l l y unanimous testimony concerning the i n c r e a s e i n the volume of wholesale and r e t a i l trade i n terms of p r i c e
measurement. In s e v e r a l d i s t r i c t s emphasis i s placed upon the i n c r e a s e in p h y s i c a l
volume of s a l e s , d i s t r i c t No. 1, f o r example, r e p o r t i n g t h a t the general r e t a i l
trade shows " i n c r e a s i n g b u s i n e s s over l a s t y e a r , not only i n amount as measured
i n terms of money r e c e i p t s , b u t i n volume". In d i s t r i c t No. 2 , i n q u i r i e s covering over 4q establishments engaged i n v a r i o u s brandies of r e t a i l trade i n d i c a t e d
percentage i n c r e a s e s i n s a l e s values ranging from US p e r c e n t i n j e w e l r y t o 141
per cent i n c l o t h i n g , while the percentage i n c r e a s e s i n number of u n i t s sold
varied from
per cent i n f u r n i t u r e to 4S p e r cent i n f u r s . D i s t r i c t No. 3 a l s o
t e s t i f i e s t h a t the volume of r e t a i l s a l e s f o r the f i r s t p a r t of November was
q u a n t i t a t i v e l y g r e a t e r than f o r the corresponding p e r i o d s l a s t year and
last
month. In d i s t r i c t No. 8 alone the r e t a i l trade i n the r u r a l d i s t r i c t s had f e l t
the e f f e c t of bad weather, which had a l s o influenced unfavorably the s a l e s of
wholesale dry goods i n c e r t a i n s e c t i o n s . Orders placed with wholesale boot and
shoe concerns, however, were improving and even e x c e p t i o n a l l y heavy i n some
cases.
The r a p i d turnover i n wholesale and r e t a i l trade i s e v i d e n t l y o u t s t r i p p i n g
i n c r e a s e s i n c u r r e n t p r o d u c t i o n , as evidenced by d e p l e t e d o r exhausted d e a l e r s '
stocks and by the o f t e n r e p e a t e d complaints of manufacturers, who a l l e g e s c a r c i t y
of labor and of raw m a t e r i a l s . Widespread d i s a f f e c t i o n on the p a r t of a l l c l a s s e s
of workers i s a s s e r t e d to be a f u r t h e r cause of diminished o u t p u t . There i s ,
p o s s i b l y , a tendency t o exaggerate the magnitude of buying o p e r a t i o n s , by thinking. of p u r c h a s e s and s a l e s i n terms of pre-war p r i c e s , i n s t e a d of c o n s i d e r m g
them i n r e l a t i o n to money incomes on the new p r i c e b a s i s . N e v e r t h e l e s s , i n view
of the ephemeral c h a r a c t e r of the i n d u s t r i a l s i t u a t i o n i n t h e p r e s e n t t r a n s i t i o n
p e r i o d , more c o n s e r v a t i v e buying m i # i t have been expected. But t h e r e a r e not as
y e many
Digitized fortFRASER i n d i c a t i o n s of a d e s i r e t o r e s o r t to the p r a c t i c e of t h a t econojcy which
h a s been urged upon the country f o r so many months.
-
-2-
X-173T
915
P a r a l l e l i n g the t r a d e a c t i v i t i e s j u s t o u t l i n e d , a growing volume of speculat i o n has developed. In the review of b u s i n e s s
f i n a n c i a l conditions during
October i t was pointed out t h a t s p e c u l a t i v e a c t i v i t y throughout the c o u n t r y was
reaching dangerous l e v e l s . This a c t i v i t y continued unabated u n t i l e a r l y i n November the F e d e r a l Reserve Banks advanced d i s c o u n t r a t e s . The advance was s l i g h t
b u t accompanied, as i t was, by an announced discount p o l i c y , i t was e f f i c a c i o u s
i n causing a r e d u c t i o n of l o a n s ,
»
Reports from the a g r i c u l t u r a l s e c t i o n s of the country i n d i c a t e a considerable
amount of crop damage due to excessive r a i n s and i n s e c t p e s t s . D i s t r i c t No. 6
s t a t e s t h a t the c o t t o n crop i s t h e s h o r t e s t on record in t h a t t e r r i t o r y as a
r e s u l t of the a c t i v i t i e s of the b o l l weevil, while the Texas c o t t o n crop, although
i t promises to be the l a r g e s t from the p o i n t of view of money value, i s 15 per
cent below the 10 year average of condition because cf bad weather. The q u a l i t y
of Oklahoma c o t t o n has been damaged by r a i n s which have a l s o i n t e r f e r ed with
c o t t o n picking i n d i s t r i c t No. 8 . For the same reason, the sowing of winter wheat
was delayed i n d i s t r i c t s No. 8 and 11, the acreage being reduced i n consequence.
A large area has been p u t i n winter wheat i n d i s t r i c t No. 10 and a good stand
i s r e p o r t e d - Sowing was i n p r o g r e s s i n the P a c i f i c Northwest, the p r o b a b i l i t i e s
being that the acreage would l a r g e l y exceed that of 1918. The corn c r o p , although
raixwianiaged i n c e r t a i n l o c a l i t i e s w i l l , i t i s estimated, prove t o be l a r g e r thafi
t h a t of 1918 except i n d i s t r i c t s No. 5 and 6, Pennsylvania r e p o r t s the l a r g e s t
corn crop in the h i s t o r y of the s t a t e .
D i s t r i c t No. 1 r e p o r t s t h a t the tobacco grown i n the Connecticut v a l l e y
r e g i o n w i l l exceed the output f o r 19I8. The Kentucky and Tennessee yield., a s
r e p o r t e d from d i s t r i c t No. 8, a l s o shows an increase not only over the preceding
year but i n excess of the 10 year average. The crop grown i n d i s t r i c t No. 4,
however, i s estimated t o be from one-quarter zc one-third s h o r t , and the y i e l d
i n d i s t r i c t No. 5 w i l l probably be about 60$ of normal. Bright tobacco i s bringing
40 to 70# per pound and the export demand : s very i n s i s t e n t . The q u a l i t y of the
crop i n Pennsylvania i s poor and production below the ten year average, as the
r e s u l t of adverse weather conditions.. With the year ending October ) 1 , d i s t r i c t
No. 12 r e p o r t s t h a t C a l i f o r n i a has rounded out "the l a r g e s t c i t r u s and deciduous
f r u i t season" i n the h i s t o r y of the s t a t e . F l o r i d a c i t r u s f r u i t s are not maturing
as w e l l as they should and the market i s s a i d t o be poor,
The g r a i n movement has been slow, the Minneapolis d i s t r i c t r e p o r t i n g that the
farmers are holding t h e i r g r a i n f o r higher p r i c e s , while d i s t r i c t No. 10 r e p o r t s
that corn and oats are being held back f o r s i m i l a r r e a s o n s . U n t i l th® middle of
the month, wheat p r i c e s i n Kansas City showed continued s t r e n g t h ; oats remained
p r a c t i c a l l y unchanged, and corn advanced a f t e r a p r i c e r e c e s s i o n .
Receipts of wheat a t 16 i n t e r i o r markets during October were 50,774,164
bushels, as compared with 65,178,605 bushels during October 1918. Receipts of c o m
and oats show a marked f a l l i n g off from the t o t a l s f o r the same month l a s t y e a r ,
being 12,364,107 bushels and 24,041,974 b u s h e l s , r e s p e c t i v e l y , a g a i n s t 2),2$7,o50
bushels and 31,567,793 b u s h e l s . Wheat f l o u r production i n October amounted to
15,00$,000 b a r r e l s , as compared with 14,087>000 b a r r e l s i n OctoberRecei-pta of c a t t l e a t 15 primary markets during October were somewhat i n excef
of thP t o t a l f o r the same month l a s t y e a r , the r e s p e c t i v e f i g u r e s being 2,317,4$?
http://fraser.stlouisfed.org/
corresponding t o an
Federal Reserve Bank of St. Louis
>
•
-3-
„
X-1737
October, 1918, corresponding to an index number of 123* Receipts during September,
1919. amounted t o 1,704,944, the indeat nuniber being 7? R e c e i p t s of c a t t l e a t
the s i x p r i n c i p a l markets of the Kansas City d i s t r i c t vt sc 5 per cent l a r g e r
during October than i n the same month of the preceding y e a r , but the t o t a l s f o r
the 10 month p e r i o d were 8,5 p e r cent below the f i g u r e s f o r the corresponding
months of the preceding y e a r . The decrease i s " a t t r i b u t e d i n p a r t t o the large
t r a n s f e r of c a t t l e from the dry regions of. the Northwest to the South, where a
p l e n t i f u l supply of f e e d abounds,' The car shortage and a d i s p o s i t i o n to hold
c a t t l e on f e e d f o r higher p r i c e s are a l s o considered as f a c t o r s i n the r e d u c t i o n
of supplies of c a t t l e on the markets." There was a shprp f a l l i n g off i n r e c e i p t s
of hogs a t the markets of the /Kansas C i t y d i s t r i c t , 31 per cent below the f i g u r e s
f o r October a year ago. I t i s said t h a t while t h i s i s taken as a sign t h a t there
are fewer hogs now i n t h i s country than l a s t y e a r , i t i s a l s o contended t h a t
many hogs are being h e l d back f o r f a t t e n i n g as there i s more corn i n the country
than at t h i s time l a s t y e a r . Sheep r e c e i p t s f a l l off i n October 5 - 5 per cent from
the monthly record of a year ago, while marketing of horses and mules was 17 per
cent h e a v i e r . Receipts of c a t t l e during October i n the p r i n c i p a l markets of the
Chicago d i s t r i c t , a l s o show a 6 per cent i n c r e a s e ; although f o r the f a l l t e n months
the 1919 r e c e i p t s decreased 7 per c e n t as compared with the corresponding period
of the preceding y e a r .
Average p r i c e s of beef and mutton i n the Chicago market f or October show a
d e c l i n e from the p r i c e s of October, 1918. Kansas City s t a t e s that c a t t l e p r i c e s
advanced s l i g h t l y i n October, "but t h a t there was a sharp drop i n the market f o r
hogs.
Lumber stocks are e x c e p t i o n a l l y l i g h t , being reported as 75 per cent of normal
i n d i s t r i c t s No. 6 and 11 and about 70 per cent of normal i n d i s t r i c t No. 12,
Production i n d i s t r i c t No. 6 i s not over 60 per cent of normal f o r the season, the
prime causes being labor s&ortage and bad weather, although there has a l s o been
a s l i g h t l e t - u p i n volume of orders r e c e i v e d . On the other hand, d i s t r i c t No, 12,
r e p o r t s a. s t e a d y increase i n orders at a time when a normal seasonal d e c l i n e
might have been expected.
In g e n e r a l , b u i l d i n g a c t i v i t y has been unpreaedsntsd f o r t h i s time of. the
y e a r . Where a f a l l i n g off i n c o n s t r u c t i o n a c t i v i t i e s i s i n d i c a t e d by a drop i n
b u i l d i n g p e r m i t s , the movement i s not as pronounced as u s u a l a t t h i s season and
s e v e r a l d i s t r i c t s r e p o r t i n c r e a s e s i n . p e r m i t s during October over the preceding
month.
x
According to d i s t r i c t No. 6, " F l o r i d a r e p o r t s i n d i c a t e that the weather has
been f a v o r a b l e f o r n a v a l s t o r e s p r o d u c t s , and r e c e i p t s have been p r o p o r t i o n a t e l y
l a r g e r than f o r previous months. Notwithstanding the h e a v i e r r e c e i p t s , the market
has kept up w e l l and p r i c e s continue e x c e l l e n t . Export demand i s i n c r e a s i n g and
there i s a large domestic demand f o r both r o s i n and turpentine*"
Production of bituminous c o a l during October was 54,579>000 tons as compared
with 47,403,000 tons during September, the r e s p e c t i v e index numbers being 147
and 128. The high record f o r production during the week ending October 11 was
surpass A by the output f i g u r e s f o r the week ending October 25, which were
2,000,000 tons in excess of the e a r l i e r f i g u r e s , the speed up being due to p r e p a r a t i o n s f o r the impending c o a l s t r i k e . Anthracite c o a l shipments d u r i n g the
month of September were 6,560,150 tons, corresponding t o an index number of.117.
as compared w i t h 5,687,401 tons during September, corresponding to an index
number of 101.
916
*
917
»
x-1737
The o u t p u t of beehive coke decreased f r o m 1,790,466 t o n s d u r i n g September
t o 1,551,980 tons i n October,
D i s t r i c t No. 3 r e p o r t s t h a t the C e n t r a l Pennsylvania c o a l f i e l d s are t i e d
up v e r y c o m p l e t e l y . D i s t r i c t No. 4 says that the C o n n e l l s v i l l e r e g i o n has n o t
been a f f e c t e d by the c o a l s t r i k e . " L a s t year t h i s r e g i o n produced f o r i t s r e c o r d
weekly output a i d f o r i t s own coking o p e r a t i o n s 500,000 t o n s , b e s i d e s shipping
s e v e r a l hundred thousand t o n s . Recently the r e g i o n produced 300,000 f o r i t s own
coking b e s i d e a much l a r g e r tonnage t o o u t s i d e consumption." D i s t r i c t No. 9
r e p o r t s s u f f i c i e n t c o a l s u p p l i e s at the docks t o c a r e f o r t h e needs of the
interior.
D i s t r i c t No. 12 r e p o r t s a decrease both i n the d a i l y output and i n s t o r e d
s t o c k s of petroleum. D i s t r i c t N<), 10, on the other hand, announces a new high
record f o r p r o d u c t i o n from the w e l l s of Kansas and Oklahoma i n the mid-continent
f i e l d . Wyoming has surpassed Pennsylvania as an o i l producing s t a t e and now
ranks s e v e n t h .
Labor c o n d i t i o n s i n the zinc and lead, mining d i s t r i c t s are r e p o r t e d to be
improving, although c e s s a t i o n of operations was t h r e a t e n e d by the c o a l s t r i k e .
T r a n s p o r t a t i o n d i f f i c u l t i e s have betn s e v e r e , shippers u t i l i z i n g broken c a r s
a f t e r making l o c a l r e p a i r s , while empty c o a l c a r s , t r u c k s , and teams have been
used f o r h a u l i n g lead i n order to r e l e a s e c a r s f o r z i n c t r a n s p o r t . There have
been only s l i g h t advances i n the p r i c e of z i n c o r e s . No s u r p l u s s t o c k s have
been moved. Lead p r i c e s h a r e cdvvnced, however, and s u r p l u s s t o c k s have been,
used u p .
Copper i s s e l l i n g at a p r i c e not much above the average c o s t of p r o d u c t i o n ,
while s i l v e r h a s touched new r e c o r d high p r i c e s , the q u o t a t i o n b e i n g $1,363
per ounce on November 2 4 ,
< fr
- 5 -
X-1737
918
Except i n c a s e s of enforced, i d l e n e s s due to i n d u s t r i a l d i s t u r b a n c e s , the
chief l i n e s of manufacture continue to e x h i b i t the marked a c t i v i t y c h a r a c t e r i s t i c of the preceding months, r i s i n g p r i c e s of raw m a t e r i a l s not o p e r a t i n g to
r e l i e v e the p r e s s u r e of buying orders, although here and t h e r e counseling
caution i n the accumulation of producers' stocks. D i s t r i c t No# 1 r e p o r t s the
market f o r raw wool more a c t i v e than a month ago, f i n e r grades being i n
e s p e c i a l l y g r e a t demand with p r i c e s f u l l y 5 per cent
h i g h e r , while medium
grades a r e lower and coarse wools n e a r l y 50 per cent below the maximum p r i c e s
o b t a i n i n g during the war. Corroborative testimony comes from D i s t r i c t No. 4
to the e f f e c t t h a t the f i n e r grades of wool a r e held f o r exceedingly high p r i c e s ,
while medium low grades a r e f a i r l y p l e n t i f u l . There appears to be u n c e r t a i n t y
regarding the p r o b a b i l i t y of a s h i f t of demand from the higher to the medium
grades. The percentage of woolen machinery i n operation i n the New England m i l l s
has never been g r e a t e r a t t h i s time of the y e a r .
As f o r the New England cotton m i l l s , those manufacturing gray goods are
reported to have, had a phenomenal business which has r e s u l t e d i n many c o n t r a c t ing f o r t h e i r e n t i r e output f o r several a d d i t i o n a l months- The s c a r c i t y and
abnormally high p r i c e s of the f i n e r q u a l i t i e s of cotton have l e d to the buying
of more Egyptian and Peruvian cotton by the
oTine goods m i l l s . Present i n d i c a t i o n s are f o r higher p r i c e s of•fcha f i n i s h e d product s i x months hence. I t i s
s i g n i f i c a n t t h a t D i s t r i c t No. •) mentions i n c r e a s i n g s a l e s of machinery t o
c o t t o n m i l l s , l a r g e p r o f i t s having induced expansion.
The most r e c e n t a v a i l a b l e news concerning c o t t o n yarns i s to the e f f e c t
t h a t t r a d i n g has become slack, the p r i n c i p a l demand now coming from k n i t t e r s .
P r i c e s remain s t a t i o n a r y a t achieved hi^x l e v e l s .
Summarizing the p r e v a l e n t conditiona i n the hide and l e a t h e r using
i n d u s t r i e s , i t appears t h a t stocks of fchu coarser grL.deG of hides are
accumulating somewhat. The demand f o r calf skins and f i n e r grades of l e a t h e r
i s unappeasable, however. In the boot arid shoe industry, heavy orders i n d i c a t e
sustained demand a t p r e s e n t or even higher p r i c e s
Up to the middle of the month the coal s t r i k e was not yet proving a
f a c t o r to be reckoned with i n the production of iron and s t e e l , e i t h e r i n the
P h i l a d e l p h i a or the Cleveland D i s t r i c t s , while the Birmingham region r e p o r t e d
business to be very a c t i v e . This does not mean t h a t the m i l l s in (District
No. 3 and D i s t r i c t No. 4, were, a s a whole, operat.'.ing any where near capacity,
the Cleveland r e p o r t s t a t i n g t h a t the production of s t e e l during October
averaged about 60 per cent of the r a t e immediately b e f o r e the s t e e l s t r i k e ,
while a t the time of w r i t i n g i t had r i s e n to 70 per cent of t h a t amount*
The s t e e l m i l l s in the Chicago D i s t r i c t were gradually i n c r e a s i n g the scale
of t h e i r o p e r a t i o n s , but excessively s h o r t coal supplies were causing
apprehension.
The l e a d i n g i n t e r e s t s are i n c l i n e d to r e s i s t the p r e s s u r e to i n c r e a s e .the
schedule of p r i c e s f o r s t e e l products, b u t m a t e r i a l f o r quick shipment i s commanding even higher premiums. • Crude and s e m i - f i n i s h e d m a t e r i a l s show a pronounced p r i c e r i s e , while i t i s r e p o r t e d from Cleveland t h a t the p r i c e s of
semi-finished s t e e l , p i g i r o n , and scrap are a l l several d o l l a r s higher than
a month ago*
« ft
x-1737
Pig i r o n p r o d u c t i o n , a s was t o be expected, declined, sharply i n October,
from an output of 2,487,§65 tons f o r September t o 1,863,555 f o r October, the
index number dropping from 107 to 80. U n f i l l e d orders of the United S t a t e s
Steel Corporation i n c r e a s e d from 6,2sU e 638 tons a t the end of September to
6,472,66s tons a t the end of October, the r e s p e c t i v e index numbers b e i n g 119
and 123.
•
Wherever c o n d i t i o n s of employment are r e f e r r e d t o , evidence i s adduced to
show shortage of supply. A temporary surplus i n D i s t r i c t No. 12 due to the
r e l e a s e of l a r g e numbers of workers i n the shipyards was b e i n g r a p i d l y
absorbed. The Boston employment o f f i c e r e p o r t s employers' demands t o be 18
per cent h e a v i e r than a t the same time l a s t y e a r . Numbers employed i n New
York S t a t e during October according to the I n d u s t r i a l Commission f e l l about
2 per c e n t , as a r e s u l t of s t r i k e s , although numbers of employees in s t r i k e
f r e e l o c a l i t i e s showed a s l i g h t i n c r e a s e . D i s t r i c t No. 3 i s s u f f e r i n g from
a scanty supply 0'£ both S k i l l e d and u n s k i l l e d l a b o r ; there i s a shortage of
farm l a b o r i n D i s t r i c t No. 6, and D i s t r i c t No. 8 mentions e s p e c i a l l y the l a d e
of s k i l l e d l a b o r .
In view of the disturbance:; to production occasioned by s t r i k e s , with
no counterbalancing diminution of buying p r e s s u r e , i t i s n o t s u r p r i s i n g to
note a s l i g h t increase i n p r i c e s f o r October. The index number of wholesale
p r i c e s of the Bureau of Labor S t a t i s t i c s increased from 221 i n September to
223 i n October. A new high, l e v e l f o r raw m a t e r i a l s was reached, the index
number r i s i n g from 216 i n September to 220. Among t h e subgroups i n c l u d e d i n
the group of raw m a t e r i a l s f o r e s t products achieved a r e c o r d f i g u r e of 234,. .
surpassing the previous September record of 227. The index f o r farm products
r e g i s t e r e d 253 a g a i n s t 240 f o r September. The animal products group alone
declined s l i g h t l y from 215 to 212. Consumers goods rose from 226 to 228 aad
producers' goods decreased from 212 to 211.
The sudden drop in the p r i c e s of cotucrodi ta.es and s e c u r i t i e s t h a t had been
the f o c u s of a s u s t a i n e d speculative i n t e r e s t followed the advance i n d i s count r a t e s announced on November 3 by the Federal Beserve Back of New York#
Call l o a n r a t e s rose r a p i d l y to. a spectacular climax on November 12 when a
quotation of 30 p e r cent was reached — a f i g u r e n o t a t t a i n e d since the
panic of 1907. Heavy l i q u i d a t i o n of stock shares with s a l e s exceeding
m i l l i o n shares on the same day caused a v i o l e n t drop i n the i n f l a t e d p r i c e s
. of many s e c u r i t i e s t r a d e d i n . The New York c o t t o n market a l s o f e l t the e f f e c "
of the monetary stringency and p r i c e s receded h a s t i l y .
The d e t e r r e n t e f f e c t upon speculation of high c a l l l o a n r a t e s h a s been
somewhat o f f s e t by the a c t i o n of outside banks i n i n c r e a s i n g t h e i r loans on
c a l l i n the New York market, thereby to a c e r t a i n e x t e n t counterbalancing
the r e s u l t s obtained by l o c a l c o n t r a c t i o n . D i s t r i c t No. 4, f o r example,
r e p o r t e d t h a t d e s p i t e abnormally heavy demands both from the country d i s t r i c t s
and from i n d u s t r i a l c e n t e r s f o l l o w i n g the e f f e c t s of the s t e e l s t r i k e , the
l o c a l s t r i n g e n c y had been i n c r e a s e d by d i s p o s i t i o n to l e n d f u n d s on c a l l .
At a time when high c a l l loan r a t e s i n the money c e n t e r s coincide with the
existence of s u r p l u s funds i n s e c t i o n s where crops have been harvested-and
l o c a l demands a r e smaller the t r a n s f e r of f u n d s to money c e n t e r s may n o t
s.
only be a s e r i o u s hindrance to the e f f e c t i v e curbing of s p e c u l a t i o n , b u t
may go forward a t a time when other d i s t r i c t s are i n need of
f u n d s f o r a g r i c u l t u r a l or commercial p u r p o s e s .
s
919
-7»
x-1737
The New York market f o r conmer6ial paper i s r e p o r t e d t o be d u l l , with
r a t e s l a t t e r l y on a 5S per cent to §4 per cent basis* d e a l e r s f i n d i n g t h a i r
b e s t market among the i n t e r i o r banks* Bank c l e a r i n g s everywhere have been
e x c e p t i o n a l l y heavy* The Board 1 s f i g u r e s of volume of check t r a n s a c t i o n s
continue t o show expansion.
The i s s u e of new s e c u r i t i e s by uomestic corporations during October
i s reported by D i s t r i c t No* 2 to amount to about*$390,000,000, being in
excess of the September f i g u r e s * A very l a r g e number of p r e f e r r e d shares
were put out* I t i s not s u r p r i s i n g , in view of p r e v a i l i n g high i n t e r e s t
r a t e s and the u n c e r t a i n t y as t o the length of time t h a t may elapse before
the investment r a t e f a l l s , , to f i n d p r e f e r r e d shares to a c e r t a i n e x t e n t
taking the place of long time bond i s s u e s .
During the month s t e r l i n g exchange, f r a n c s , marks,and l i r e f e l l to new
low l e v e l s , marks s e l l i n g a t 2.05 cents on November 18; s t e r l i n g a t 3.991
and f r a n c s a t 9-&0 on November 20+ Lire were quoted a t 12+60 on November 12*
Since then t h e r e have been s l i g h t r e c o v e r i e s , but no improvement i n the f o r e i g n
c r e d i t s i t u a t i o n t o warrant any s u b s t a n t i a l or permanent r i s e i n quotations#
931
E x OFFICIO MEMBERS
... _
W . P . 6 . H A R D I N G , GOVERNOR
CASTER
A L B E R T S T R A U S S , VICE GOVERNOR
SECRETARY OP THE TREASURY
ADOLPH C. MILLER
CHAIRMAN
C H A R L E S S . HAMLIN
FEDERAL RESERVE BOARD
—
ADDRESS REPLY TO
FEDERAL RESERVE BOARD
WASHINGTON
W . T . C H A P M A N , SECRETARY
R . G . E M E R S O N , ASSISTANT SECRETARY
W . M. I N L A Y , FISCAL AGENT
November 29,1919*
Subject:
X-1738
Balances of Non-Member Clearing Banks.
Dear S i r r *
Some question has been raised, a s t o the method, of computing the
amount and c h a r a c t e r of the balances to be maintained with t h e i r r e s p e c t i v e
Federal Reserve Banks by non-meitiber c l e a r i n g banks, t h a t i s , banks which have
made d e p o s i t s with the Federal Reserve Banks f o r the purpose of exchange or
c o l l e c t i o n under the p r o v i s i o n s of Section 1J of the Federal Reserve Act.
On pages 617 and 6lS of the August 1917 B u l l e t i n there i s published
an opinion of counsel t o the e f f e c t t h a t the purpose of the proviso i n the
s o - c a l l e d Hardwick amendment t o Section 13 i s to a f f o r d p r o t e c t i o n to the
Federal Reserve Banks a g a i n s t any p o s s i b l e l o s s r e s u l t i n g from c l e a r i n g t r a n s a c t i o n s with non-member banks and t h a t the Federal Reserve Banks are t h e r e f o r e
authorized t o r e q u i r e and should r e q u i r e a c l e a r i n g non-member bank to maintain
a balance s u f f i c i e n t i n the judgment of the o f f i c e r s of the Federal Reserve Bank
to o f f s e t checks or other items drawn a g a i n s t the d e p o s i t i n g bank and presented
by the Federal Reserve Bank f o r payment as well as items r e c e i v e d from the
d e p o s i t i n g bank.
There i s quoted below f o r your information a l e t t e r addressed to one
of the Federal Reserve Banks under date of October 2g, 1919, which i s not
intended in any way t o amend the opinion above r e f e r r e d to b u t which i s merely
f o r the purpose of d e f i n i n g , f i r s t , the amount t h a t i s necessary to c o n s t i t u t e
an " o f f s e t " f o r checks d e p o s i t e d by a non-member bank w i t h the Federal Reserve
Bank and s t i l l i n the process of c o l l e c t i o n , and second, the c h a r a c t e r of the
"balance s u f f i c i e n t " to make the o f f s e t .
"Dear Sir
" I have received your l e t t e r of October 2 1 s t ,
suggesting some m o d i f i c a t i o n s of the B o a r d ' s a t t i t u d e
upon t h a t p o r t i o n of Section 13 of the Federal Reserve
Act which r e f e r s t o the c l e a r i n g accounts of nonmember banks.
"The language of Section 13, which i s r e p e a t e d i n
Regulation J , p r o v i d e s , in connection with the e s t a b lishment of c l e a r i n g accounts by non-member banks and
t r u s t companies t h a t , 1 such non-member bank or t r u s t
company m a i n t a i n with the Federal Reserve Bank of i t s
.
-2-
X-173S
922
d i s t r i c t a balance s u f f i c i e n t t o o f f s e t t h e items
i n t r a n s i t h e l d f o r i t s account by the Federal
Reserve Bank. 1
"Before d i s c u s s i n g whether a ' b a l a n c e 1 means a
book balance or a c o l l e c t e d b a l a n c e , i t would be well
to throw some l i g h t upon the meaning of the word ' o f f s e t ' •
In c a s e s where a non-member bank c o l l e c t s items through
a Federal Reserve Bank and r e c e i v e s d e f e r r e d c r e d i t only
a f t e r the items have a c t u a l l y been c o l l e c t e d , i t i s c l e a r
t h a t no balance whatever i s n e c e s s a r y to o f f s e t items i n
t r a n s i t h e l d f o r account of the non-member bank by the
Federal Reserve Bank. The B o a r d ' s c o n s t r u c t i o n of the
word ' o f f s e t ' , t h e r e f o r e , i s that i t must apply to the
l a b o r performed and the expense i n c u r r e d by the Federal
Reserve Bank i n c o l l e c t i n g the items f o r t h e non-member
bank. I t seems, t h e r e f o r e , in determining wnat balance
w i l l be s u f f i c i e n t t'o o f f s e t items i n t r a n s i t h e l d f o r
account of a non-member bank by the F e d e r a l Reserve Bank
where c r e d i t i s n o t given u n t i l the items a r e a c t u a l l y
•collected c o n s i d e r a t i o n should be given t o the average
volume of c o l l e c t i o n s made by the Federal Reserve Bank f o r
the non-member bank and the p r o p o r t i o n borne by such b u s i n e s s t o the t o t a l c o l l e c t i o n b u s i n e s s of t h e Federal Reserve
Bank. I t w i l l be found i n many c a s e s t h a t the value of a
small a c t u a l balance w i l l be s u f f i c i e n t to compensate the
Federal Reserve Bank f o r i t s work i n h a n d l i n g c o l l e c t i o n s
f o r a non-member bank and t h a t the amount of balance r e q u i r e d
w i l l be l e s s than the average d a i l y volume of c o l l e c t i o n s
r e c e i v e d from the non-member bank.
"While the Board has made no formal r u l i n g covering i t s
i n t e r p r e t a t i o n of the words 1 a balance s u f f i c i e n t ' i t has,
n e v e r t h e l e s s , construed these words to mean a c o l l e c t e d
b a l a n c e . I f a non-member bank should be p e r m i t t e d t o maint a i n only an u n c o l l e c t e d balance a g a i n s t i t s items i n process
of c o l l e c t i o n by the Federal Reserve Bank, i t i s l i k e l y t h a t
the F e d e r a l Reserve Bank would be l e f t most of the time with
only an u n c o l l e c t e d balance on i t s books, r e p r e s e n t i n g no
a c t u a l f u n d s a v a i l a b l e t o the end of compensating i t s e l f f o r '
the work and expense involved. No commercial bank, having
r e g a r d f o r good banking p r a c t i c e , would t o l e r a t e such a
s i t u a t i o n . I f the p r i v i l e g e you suggest were accorded to
member banks, the Federal Reserve System might a t times have
no u s a b l e f u n d s , and the g r a n t i n g of i t to c l e a r i n g nonmember banks would make i t t o the i n t e r e s t of a s t a t e bank
to become a c l e a r i n g non-member r a t h e r than a r e g u l a r member.
Such a bank could, i n v a r i o u s ways, do i t s borrowing through
i t s correspondents, and a t the same time u s e the c o l l e c t i o n
f a c i l i t i e s of the Federal Reserve System w i t h o u t c o n t r i b u t i n g
one penny t o the upkeep of t h a t System.
"This problem would appear t o solve i t s e l f , if the
bank commissioners of the v a r i o u s s t a t e s , i n d e s i g n a t i n g the
Federal Reserve Bank a s a r e s e r v e agent f o r s t a t e banks,
should s t i p u l a t e ( as they probably w i l l and as I think they
s h o u l d ) , t h a t the r e q u i r e d r e s e r v e must be c a r r i e d i n c o l l e c t e d
f u n d s as i n the case of n a t i o n a l banks.
-3-
3-17)6
, 923
"The opening of c l e a r i n g accounts by non-member banks
w i l l undoubtedly accrue t o the advantage of the Federal
Reserve System, and w i l l m a t e r i a l l y add to the service i t
r e n d e r s . Success i n a t t r a c t i n g such accounts w i l l , a s you
s t a t e , f a c i l i t a t e the a c q u i s i t i o n of par p o i n t s , and such
a c q u i s i t i o n of par p o i n t s w i l l encourage member banks to
send a l l miscellaneous items d i r e c t t o the Federal Reserve
Banks and branches, with the i d e a of checking a g a i n s t excess
r e s e r v e s i n f a v o r of correspondents with whom i n t e r e s t - b e a r i n g
balances are d e s i r e d . In a d d i t i o n , the opening of c l e a r i n g
accounts by non-member banks w i l l a l s o very l i k e l y give impetus
t o the proper r o u t i n g of items, because these banks, i f the
volume of t h e i r b u s i ne ss j u s t i f i e s , can be authorized to send
items d i r e c t to t h e Federal Reserve Banks and branches f o r the
c r e d i t of t h e i r c i t y correspondent. I t seems to me, however,
t h a t the Board should continue f o r the presegat, to construe
the words 1 balance s u f f i c i e n t ^ to mean a c o l l e c t e d balance.
"Your information as to the a c t i o n which w i l l be takenby the s t a t e bank commissioners in your d i s t r i c t i s very i n t e r e s t i n g . I t would be e x c e l l e n t if these commissioners, i n
d e s i g n a t i n g the Federal Reserve Bank as a r e s e r v e agent f o r
s t a t e banks, could be p r e v a i l e d upon to make the conditions and
requirements covering such reserve b a l a n c e s uniform. I s h a l l
be pleased to have you keep me posted on t h i s phase of the
s i t u a t i o n a s i t develops."
As i n d i c a t e d above where a non-member bank c l e a r s items through a Federal
Reserve Bank and r e c e i v e s a c r e d i t only a f t e r the items have been c o l l e c t e d ,
i t i s evident t h a t no balance whatever i s necessary to o f f s e t items i n t r a n s i t
in order to p r o t e c t the Federal Reserve Bank a g a i n s t any p o s s i b l e l o s s r e s u l t i n g
from the t r a n s a c t i o n . The Board has r u l e d t h e r e f o r e t h a t i n such a case t h e
reserve bank might r e q u i r e the non-member bank to maintain a balance s u f f i c i e n t
to o f f s e t the expense i n c u r r e d by the Federal Reserve Bank in nuking the
c o l l e c t i o n s . I t should be noted, however, t h a t t h i s should not i n any way
i n t e r f e r e with the c a l c u l a t i o n of the amount of deposit which must be maintained
i n accordance with the opinion published i n the B u l l e t i n i n order to p r o t e c t
the Federal Reserve Bank a g a i n s t any p o s s i b l e l o s s in the case of items drawn
a g a i n s t the non—member bank which are b e i n g c o l l e c t e d through the Federal
Reserve Batik.
Very t r u l y yours,
Governor.
To Governors and Chairmen of a l l F.R, Banks.
Bx o r n o o M i M u i t s
w . p . « . HARD.NS, SOVMHO,
•
E
FEDERAL RESERVE BOARD
R
FEDERAL RESERVE BOARD
WASHINGTON
- ®- E M E R S O N , ASSISTANT SECRETARY
w.
December 2,1919.
Subject:
~
W . T . C H A P M A N , SECRETARY
R
ADDRESS REPLY TO
E
M. IMLAY. FISCAL AGENT
x-1739
L i s t of O f f i c e r s and Employees of Federal Reserve
Banks a s of January 1, 1920,
Dear S i r : With r e f e r e n c e t o t h e Federal Reserve Board's l e t t e r of September
11, 1915, X-1189, on the s u b j e c t of s a l a r i e s of o f f i c e r s and employees of
Federal Reserve - Bojdks a s of January 1 s t and J u l y 1 s t of each y e a r , i t i s
suggested t h a t , i n order t o secure u n i f o r m i t y i n submitting t h i s data f o r
January 1, 1920, the following form be followed:
Department
Date of
Employment
Name
Position
Present
Annual
Salary
Proposed
Annual
Salary
Proposed
Increase
This l i s t should show a l l employees of each department, i n c l u d i n g the War
Savings Organization and the F i s c a l Agency Department, and employees not
assigned to any p a r t i c u l a r department. In those cases where s a l a r i e s are
reimbursable, e i t h e r i n whole or i n p a r t , by the Treasury Department, i t i s
requested t h a t n o t e be made t o t h i s e f f e c t .
A l s o , p l e a s e show on a s e p a r a t e s h e e t a r e c a p i t u l a t i o n b y d e p a r t ments, g i v i n g the f o l l o w i n g information:.
Department
Nuniber of
Employees
Total A —
n
nual S a l a r i e s
Total
Proposed
Increases
Total P r o posed Annual
Salaries
This r e c a p i t u l a t i o n should be f o o t e d and show grand t o t a l s .
As r e q u e s t e d in the Board's l e t t e r of September 11, 19IS, the Board
d e s i r e s d e t a i l e d information on a l l i n c r e a s e s in s a l a r y amounting, t o $300 or
more per annum; a l s o prompt advice of the appointment of any new employee
a t a s a l a r y of $2 r 400 or more per annum, with a statement d e s c r i b i n g the
d u t i e s t o be performed, the q u a l i f i c a t i o n s of the employee, and the proposed
s a l a r y . I t i s a l s o r e q u e s t e d t h a t prompt, n o t i c e be given t o the Board of t h e
r e s i g n a t i o n of any o f f i c e r or employee whose s a l a r y i s $2,400 or more per
annum.
924
x-1739
-2-
925
In a d d i t i o n t o the f o r e g o i n g information the Board d e s i r e s t h a t you
submit a memorandum with your r e p o r t f o r January 1 s t covering the d u t i e s
assigned t o each o f f i c e r of the bank and the departments which are operated
under h i s general supervision or immediate d i r e c t i o n ; a l s o a d e s c r i p t i o n
of the d u t i e s of employees r e c e i v i n g s a l a r i e s of $3,000 or more per annum,
who are engaged in s p e c i a l work f o r the bank but who are not assigned to
any p a r t i c u l a r department, s t a t i n g the r a t e of eompensation, and whether
or not the employee devotes h i s e n t i r e time to the work of the Reserve
Bank.
The Board d e s i r e s f u r t h e r t h a t the memorandum include a "brief d e s c r i p t i o n covering the scope of the work of each department, i t s subdivisions,
the name of the o f f i c e r or employee in charge of each department or sub- .
d i v i s i o n , the names of h i s p r i n c i p a l a s s i s t a n t s , and the name of the o f f i c e r
of the bank who has general supervision of the o p e r a t i o n of the department.
To secure u n i f o r m i t y , i t i s suggested t h a t t h i s information "be f u r n i s h e d
in accordance w i t h the a t t a c h e d form.
Very t r u l y yoursj
Enclosure.
Governor.
L e t t e r t o Chairman of a l l F.E, Banks.
X-156la
DEPARTMENT:
Discount Department
SCOPE:
General, but b r i e f d e s c r i p t i o n of the
work of the department.
GENERAL SUPERVISION:
Deputy Governor.
IMMEDIATE SUPERVISION:
A s s i s t a n t Cashier.
MAMSEB:
ASSISTANT M M GBR:
DIVISIONS:
In Gharge
Assistant
Loans t o member banks, unsecured
Loans to member banks, Government c o l l a t e r a l
Member bank promissory n o t e s
.
__
—
Accep tances purchased
Rediscounts with or f o r other Federal
Reserve Banks
' Custody of c o l l a t e r a l
.
__
—
—-
937
W . P . 6 . H A R D I N G . GOVERNOR
EX OFFICIO MEMBERS
A L B E R T S T R A U S S . VICE GOVERNOR
A D O L P H v. nmLtn
nvvi.rn C . M I L L E R
CARTER G L A S S
SECRETARY OF THE TREASURY
CHAIRMAN
.
y
C H A R L E S S . HAMLIN
FEDERAL RESERVE BOARD
J O H N SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
F
HENRY A. MOEHLENPAH
J
W . T . C H A P M A N , SECRETARY
R. G . E M E R S O N , ASSISTANT SECRETARY
ADDRESS REPLY TO
W . M. I N L A Y , FISCAL A6ENT
WASHINGTON
FEDERAL RESERVE BOARD
December 3»1919"
Subject:
X-l?40
Campaign f o r New Par P o i n t s .
Dear S i r s There i s enclosed herewith a, copy of r e p o r t
prepared, from r e p l i e s r e c e i v e d from a l l Federal Reserve
Banks in response t o our telegram of November 2Sth, asking
f o r information r e g a r d i n g the progress of the campaign being
conducted f o r the establishment of new par points*
I n a d d i t i o n there i s also enclosed a s p e c i a l
r e p o r t showing non-menber banks not on par l i s t d i s t r i b u t e d
by S t a t e s according to Federal Reserve D i s t r i c t s .
Very t r u l y yours,
v
2-Incl.
Assistant Secretary.
To Chairmen of a l l F.R. Banks.
/
0)
.
CAMPAIGN FOR Mi® PAR POINTS,
Reports of Federal Reserve Banks November 30» 193-9
F e d e r a l Reserve
Bank
; National • S t a t e : Total
; Banks
: Bank
: Member.
:
in
; Members: Banks
*
: District ;
*
Boston
:
394
New York
•
635
Philadelphia
:
Non-Member
Banks
on
Par L i s t
*
36
:
430
i
118
:
753
635
:
36
:
676
Cleveland
748
•
93
;
Richmond
537
:
46
:
Ratio of
Non-member
Banks on Par
L i s t to t o t a l
Non-member banks
in d i s t r i c t
X-1740 a
Number of
: Number of banks
banks added
added t o Par L i s t
to Par L i s t
: since Jan 1, 1919
during November:
1919
:
IMULuOer uf 1Total
Non-member :number of
Banks not ; non-member
on Par L i s t j b a n k s i n
•district
243
100
—
i
——
320
100
——
:
——
:
411
100
—
1
93
——
641
:
1,070
98.6
IS
::
404
16
;
l,0e>6
:
583
:
450
30.6
5
:
176
1,021
:
1,471
:
428
:
349
22.0
—
1
99
1,241
:
1,590
:1,36S
: .)3,784
db.4
160
:
1,342
486
:
4,192
• —
——
:
243
:
320
411
Atlanta
:
365
:
63
Chicago
i
1,047
:
321
St.Louis
:
468
:
66
:
534
:
2,203
62.7
240
:
1,203
46l
:
2,664
Minneapolis
:
632
:
85
:
917
:
1,494
51.8
3
:
325
1,392
:
2,086
Kansas C i t y
:
986
:
44
11,030
:
3,145
94.4
107
i
964
186
:
3,331
Dallas
;
640
:
US
:
758
:
1,037
64,4
135
:
798
191
;
1,226
SanFrancisco
:
577
:
120
:
697
:
945
86.8
12
:
18
119
;
1.064
Total
:
7,o67
: 15,371
75.0
700
:
5,422
5,115
: 1,148
z
:9,015
•
.
; 20,486
.
I
NON-MEMBER BANKS NOT -ON PAR LIST NOVEMBER 30,1919,
DISTRIBUTED ACCORDING TO STATES AND FEDERAL RESERVE DISTRICTS
Bostun
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St.Louis
Minneapolis '
Kansas City
Dallas
San Francisco
Total
Boston
Now York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
SanFrancisco
Total
X
Kentucky
16
Va.
West Va.
211
84
N,C. : S.C.
418
JOS
Ala.
202
FLa.
. 140
Ga.
La*
Mi ss.
510
1P3 ,
102
102
153 ,
v
118
* Term.
:
:
__
;
:
;
:
184
:
;
;
:
:
:
;
184
211
:Minn
:
:
:
:
:
:
:
;
576
:
:
:
: 576
Mich.
X-1740 b
Ark. :
Wis.
192
284
15
141
214
430
206
:
206
t
•
84
418
. 308
202
) IkO
:
510
103
255
TOTAL
. % Mont.
- N,D. : S.D.: Nebr - Ariz : TexasI Oreg : Wash ;
:
:
:
;
:
;
:
;
;
;
;
;
;
'
:
:
•
;
•
;
;
:
;
;
:
;
~
;.
~ :
;
i£~
:
.
;
;
—
j
;
1^.021
:
;
:
:
:
:
:
;
:
1^241
: _
_
::
:
:
;
:
:
;
488
:
•
;
:
;
:
;
;
;
461
j. _ , 44_ _:_306_ J 110
J
:
J. __ _ W 9 2
:
:
:
; 186_ j.
1
:
:
186
:
:
:
"~j.
:
:_igi_
:
%
191
:
;
;
;
3.5 :
bO_ J __ 44_
119
:
44
: 306 : 310 ; 186 : 15 . : 191
60 :
44 :
5>115
*
;
t
.
.
.
.
1
;
I
^
_J
*
:
W. P . 6 . H A R D I N G , GOVERNOR
A L B E R T S T R A U S S . VICE GOVERNOR
BX OFFICIO MEMBERS
— *
ADOLPH C. MILLER
JH
ON
c=™»orLTA„M,s=u,,,cr
FEDERAL RESERVE BOARD
w . T c l ™.s.™
R . G . E M E R S O N , ASSISTANT SECRETARY
ADDR
federal"e3erve board
r,,CAtA9EHt
WASHINGTON
December 3>1919*
Subject:
x-iyUi
Treatment of Extraordinary Charges a g a i n s t Earnings of
Federal Reserve Banks a t the c l o s i n g of hocks December 31, 1919*
Dear Sir
With t h e view of maintaining u n i f o r m i t y of p r a c t i c e , the
Federal Reserve Board has approved the f o l l o w i n g r u l e s to be adopted
by the Federal Reserve Banks f o r the treatment of d e p r e c i a t i o n and
e x t r a o r d i n a r y charges a g a i n s t n e t earnings and p r o f i t and l o s s a t the
c l o s i n g of bocks Dec. J l , 1919*
1.
Cost of Federal Reserve and Federal Reserve Bark Notes.
Balance of account, a s shown by books on Dec. 31» t o
be charged to c u r r e n t expense account*
2.
F u r n i t u r e and SauiTxmnt.
Balance of account, a s shown by bocks on Dec. 31» t o be
charged to current expense account.
3.
Cost of Vaults*
A l l expenditures made during the year 1919 f o r v a u l t s
and v a u l t equipment to be charged to c u r r e n t expense account.
4.
A l t e r a t i o n s and Improvements.
Charge a g a i n s t c u r r e n t expense account a l l e x p e n d i t u r e s
made during the year 1919 i n r e p a i r i n g , a l t e r i n g or r e modeling bank premises.
5.
Bank Premises.
(a)
Where p r o p e r t i e s have been purchased with the i n t e n t i o n
of e r e c t i n g new bank b u i l d i n g s b a r k s w i l l be p e r m i t t e d
t o charge a g a i n s t p r o f i t and l o s s account an amount
s u f f i c i e n t to. cover the e s t i m a t e d value of b u i l d i n g s
which w i l l have to be razed, such e s t i m a t e d v a l u a t i o n
of b u i l d i n g s to be submitted to the Federal Reserve
Board f o r approval b e f o r e d e p r e c i a t i o n allowance i s
determined.
-2r
.
X4?Ul
(b)
(c)
6.
Where p r o p e r t i e s have been remodeled and are now
used a s permanent banking q u a r t e r s by a Reserve
bank, a reasonable d e p r e c i a t i o n charge w i l l be
p e r m i t t e d but in no case s h a l l i t exceed 10 per
c e n t of the estimated value of b u i l d i n g s on Dec.
31. 1919.
Where a Reserve bank has purchased or may purchase
a s i t e f o r a new b u i l d i n g i t w i l l be p e r m i t t e d to
charge down the book value of premises now owned
and occupied to a f a i r s e l l i n g p r i c e , such p f i c e to
be submitted to the Federal Reserve Board f o r approval
b e f o r e d e p r e c i a t i o n allowance i s determined.
A"oparent Depreciation on Government . S e c u r i t i e s
F u l l p r o v i s i o n should be made f o r apparent d e p r e c i a t i o n
(based on market value) on government s e c u r i t i e s before
any amount i s t r a n s f e r r e d to surplus account. No change
should be made i n book value of s e c u r i t i e s b u t depreciat i o n allowance should be charged to p r o f i t and l o s s account
and c a r r i e d to account
Depreciation reserve on U.S. bonds.
Adjustments should be figtired on the b a s i s of December
1919, market q u o t a t i o n s which w i l l be telegraphed t o you
from Washington on the morning of December 31 "1919. .
7*
Surplus snd Franchise Tax .
A f t e r a l l c u r r e n t expenses, e x t r a o r d i n a r y c h a r g e - o f f s , and
dividend payments have been provided f o r , the balances r e maining i n the p r o f i t and l o s s account should be d i s t r i b u t e d
as f o l l o w s :
1 . Transfer to surplus account a l l n e t p r o f i t s u n t i l
such surplus account i s equal to 100 per cent of
the b a n k ' s subscribed c a p i t a l .
2.
Of the balance, i f any, remaining in t h e p r o f i t
and l o s s account, 10 per cent should be t r a n s f e r r e d
to surplus account and 90 per cent p a i d to the
Government a s a f r a n c h i s e t a x .
Kindly acknowledge r e c e i p t *
Very t r u l y yours,
Governor.
L e t t e r t o Chairmen of a l l F. R. Banks,
^ 3 1
932
X-1742
RELEASED FOR PUBLICATION
AFTERNOON PAPERS DECEMBER 1 0 t h .
AN
1919.
ADDRESS
by
HENRY A.
MOEHLENPAH,
Member, Federal Reserve Board..
Delivered a t t h e Convention
of the
Oklahoma S t a t e Bankers
Association,
Oklahoma City, Oklahoma.
December 10, l ^ i g .
-I-'
X-1743
* Gentlemen of the S t a t e Bankers* Association- I t i s unnecessary f o r me to s t a t e ay jgreat p l e a s u r e in meeting
with you a t t h i s Convention,
I regret, exceedingly t h a t Governor Harding,
could, n o t be here a s you d e s i r e d .
May 1 ask you t o l e t me come i n w i t h
you as a State Banker, f o r as you know, f o r twenty-five y e a r s t h i s has
been my b u s i n e s s , s e r v i n g a country a g r i c u l t u r a l community and I- f e e l
more a t home.
I come n o t f o r the purpose of making a speech b u t t o s i t with you,
i f I may, in Conference and to have a chat with you r e g a r d i n g some things
of mutual s i g n i f i c a n c e and importance a t t h i s time.
Indeed I r e g a r d i t
as u n f o r t u n a t e t o come here perhaps in a way r e p r e s e n t i n g the Board upon
which I have the g r e a t honor to s i t , and you may think t h a t I speak- from
the l a r g e r supervisory r e l a t i o n s r a t h e r than with you as a banker. . May I
assure you I do not - a d e s i r e t o be of service t o my f e l l o w - b a n k e r s , alone •
prompts nie. My serving i n t h i s c a p a c i t y however, a s s u b s t i t u t e today, i s
not your f a u l t .
I t i s a . s i g n a l honor t o meet with t h i s d i s t i n g u i s h e d gathering of r e p r e s e n t a t i v e b u s i n e s s men and bankers of Oklahoma, t h i s g r e a t new Empire
6f OUr c o u n t r y .
The e x t e n t of your immense t e r r i t o r y and of your resources
with only t h i r t e e n m i l l i o n of your f o r t y ' • t h r e e m i l l i o n s of atireg of land
under c u l t i v a t i o n , can h a r d l y be measured.
Some, twenty odd years ago i t
was• my g r e a t p r i v i l e g e t o spend some time h e r e .
small; your country new.
Your c i t i e s then were
Transportation f a c i l i t i e s of l i t t l e consequence.
Today the evidence of your p r o s p e r i t y , of your e n t e r p r i s e and v i s i o n , overwhelms me.
The r e s t of t h i s country has l e a r n e d to r e s p e c t and honor Oklahoma
n o t only f o r your progcessiveness and your e n t e r p r i s e , b u t because of your
•Americanism so pronounced and so wonderful iji t h e s t r e s s f u l days j u s t passed.
A s t a t e t h a t can produce i n one year (1919) n e a r l y t h r e e hundred m i l l i o n s
9
3
*
of d o l l a r s i n food crops
250 m i l l i o n s i n o i l and can produce and maintain
$120,7^9>000 °f l i v e stock and have so p o t e n t i a l a p a r t in producing those
things so necessary f o r the p r e s e r v a t i o n of l i f e and f o r the commerce of our '
n a t i o n , i s incomparable.
I a p p r e c i a t e too t h a t you n o t only r e p r e s e n t t h i s great
and s i g n i f i c a n t volume of resources but t h a t you men a r e the p i o n e e r s , the key
men, the l e a d e r s i n your banks, in your State c h a r t e r e d i n s t i t u t i o n s , r e p r e s e n t i n g
eleven m i l l i o n d o l l a r s of c a p i t a l a;id n e a r l y four and a h a l f m i l l i o n s of surplus
and the d e p o s i t s of your c l i e n t s approximating 1$0 m i l l i o n s of d o l l a r s .
figures are s i g n i f i c a n t .
These
And I would be indeed r e c r e a n t a s a c i t i z e n to come
to you w i t h any mea&age of pessimism, because these a r e days when we should
value the r e s o u r c e s of our own l i v e s and the c o n t r i b u t i o n that the world and
events have made t o u c .
They axe a challenge n o t o look backward but only
forward to the o p p o r t u n i t i e s and p r i v i l e g e s and b l e s s logs t h a t c o n f r o n t u s and
t o enc-OUrage ourselves only because of the achievements of the p a s t A w r i t e r r e c e n t l y says, "Pershing with the whole s t r e n g t h of h i s p e r s o n a l i t y ,
s e t himself the task of i n j e c t i n g t h i s "will to win" irate h i s army. Nothing
vividly
t y p i f i e s Pershing 1 s c h a r a c t e r s<y
as does the d r i v i n g f o r c e t h a t he put
i n t o h i s campaign*
He had a plan of campaign, a d e f i n i t e plan, asd he stuck
to i t through thick and t h i n , l e t t i n g nothing come i n the way.
" His o f f i c e r s were made to f e e l t h i s d r i v i n g f o r c e .
"General Pershing has
ordered t h i s and i t ' s got to be dona" - that was the s p i r i t t h a t dominated the
army.
n
J u s t two i n s t a n c e s :
1
An o f f i c e r sent t h i s message to headquarters.
I must s u r r e n d e r . "
"Unless I have reinforcements
Immediately the order went back from Pershing: "Turn your
cemmand over and r e p o r t a t
tokadgtiarters."
An e f f i a s r could ask f o r needed r e i n -
forcements, but he could not t a l k surrender.
• " ItersMng asked another o f f i c e r :
"They are
t i r e d out.
"What c o n d i t i o n a r e your troops in?"
They a r e not i n condition to continue i n a c t i o n . "
4
-3»
The answer was snapped:
X-1742
9 3 5
" I t ' s not your men t h a t are t i r e d out, i t i s you.
Show your men that you've got the stamina to hold on and your men w i l l hold on
with you. n
Quoting from an e d i t o r i a l in a Metropolitan Journal*
"We a r e besieged by an army of calamity howlers.
nightmare»
The Bolsheviki i s the
The nerves of these people go a l l to pieces when they discover some
r a d i c a l l i t e r a t u r e or a r a d i c a l speech* and they can almost name the day when
Revolutionists w i l l overthrow our Government."
"We must s i l e n c e those who would make us believe t h a t we a r e to have a panic,
and to a s s e r t not only our courage but our f a i t h in our American i d e a l s .
If those
who had come before u s hadn 1 £ had f a i t h and courage t h e r e would not have been any
United States of America,
I t i s demanded of the Americans of today t h a t they
have the same f a i t h and courage, i f t h i s country i s to overcome any f u t u r e d i f f i c u l t i e s and be b e t t e r and greater f o r the experience. n
"We must have patience.
We a l l have our ideas as to what should be done,
but they cannot be r e a l i z e d at once.
The United States and i t s i n s t i t u t i o n s have
come through a century and a half of change.
and f u r t h e r development.
I t i s going on to
other changes
I t i s f o r us to concentrate on that f a c t with courage,
with f a i t h , and p a t i e n c e , n
Why should our message not be one of optimism?
Who upon t h i s planet have
greater reason to be o p t i m i s t i c than the c i t i z e n s of our Republic? Two years ago
or more we were c a l l e d in the Providence of God, I believe*, to the great mission
of redeeming and saving the world from the despot and the autocrat to a l a r g e r
and more pronounced l i b e r t y than yet any of u s of the human family have reached
or believed.
I t i s not p o s s i b l e t h a t men could make the s a c r i f i c e s i n v a i n t h a t our sens
'
have made i n going with c l e a r h e a r t s and clean hands to help the opp^^ssed peoples
on the other side of the world.
To us who have had some humble p a r t
-4-
xri?42
936
as
with them i n the s a c r i f i c i a l thing, to go back to do our work i n l i f s
b e f o r e would, be to dishonor o u r s e l v e s .
I t i s our p r i v i l e g e as business
men t o occupy completely the sector t h a t belongs to u s .
Great t r i a l s and
o b s t a c l e s and problems may confront u s but what care we; t h i s i s what has
made the hone and sinew of our people.
country g r e a t .
This i t i s t h a t &as made our
As we c o n f r o n t the new s i t u a t i o n economically i n t h i s world
and as we launch our bark upon an uncharted sea, economically speaking, l e t
us remind ourselves t h a t our boys, new and u n t r a i n e d i n war, f o r days and
n i g h t s l i n g e r e d i n the trenches before the enemy, u n a f r a i d , and yet could
not go out t o engage the enemy i n combat be cause the time was not y e t .
But
when the word was given, trench or bombs or barbed wire or overwhelming odds
did not r e t a r d or stagger.
With one voice {.hey cried "Let us go".
t h i s s p i r i t , unconqierable, that made the issue complete and quick.
I t was
When
America w i t h i t s men a r r i v e d a new s p i r i t was p r o j e c t e d i n t o the plans of
battle.
I t i s t h i s s p i r i t t h a t I would l i k e to r e f l e c t , i f I could, as we
think of our problems as bankers.
Sfe have a r i g h t to b e l i e v e t h a t the things
we have accomplished as a Nation and a s men we cannot only duplicate in the
f u t u r e but can improve and e n l a r g e .
Who would have thought t h a t two years ago or so t h a t t h i s n a t i o n could
have r a i s e d in money i n so short a time a sum of thirty™two b i l l i o n s of
dollars* Twenty-two b i l l i o n s to equip our boys and armies i n the f i e l d s , and
ten b i l l i o n s to loan to the A l l i e d Nations.
Do you remember t h a t when i t
•
was proposed to make the f i r s t war loan the great f i n a n c i e r s of our country
from N-w York said "The sum asked f o r under no circumstances should be l a r g e r
than a half b i l l i o n of d o l l a r s ; t h a t i t would be impossible to get morti?"
The Secretary of the Treasury, struck the h e a r t of
the sons of l i b e r t y ,
they not only gatze a h a l f b i l l i o n but over n i g h t added t h r e e and more f u l l
b i l l i o n s . You men i n t h i s room airi. p a t r i o t s l i k e you a l l over the country,
have been the l e a d e r s i n accomplishing t h i s .
-5r
X-17U2
9 3 7
May I remind, you t h a t "before we were c a l l e d i n t o t h i s great c o n f l i c t
and when war was declared on the other side of the world, we owed the nations
of Europe in trade balances about U00 m i l l i o n s of d o l l a r s .
Besides t h i s ,
Europe owned and h e l d in t h e i r strong boxed about f o u r and a half b i l l i o n
d o l l a r s worth of the s e c u r i t i e s r e p r e s e n t i n g the r a i l r o a d and commercial and
i n d u s t r i a l c a p i t a l of our country.
The problem of paying nctt only t h i s debt,
but of buying back our s e c u r i t i e s which were being dumped upon the exchanges
was most a p p a l l i n g .
But to be b r i e f , Gentlemen, we not only paid t h i s debt
but bought these s e c u r i t i e s back i n the main.
I am sure from t h i s brief r e c a p i t u l a t i o n t h a t I have given you a f a i r
reason why we should be o p t i m i s t i c as we approach the problems of the future*
The pioneer never was a p e s s i m i s t .
The producer who sees the reward of h i s
labor i s always an optimist and I appreciate today t h a t I am f a c i n g not only
pioneers but producers.
Men, you are honored t o have to do with the greatest
producing c l a s s of America, namely, the farmer.
We hear much these days about " i n f l a t i o n " and "over expansion" and
" d e f l a t i o n " of c r e d i t . Would not " c r e d i t regulation" be the b e t t e r term?
I t i s p e r f e c t l y obvious t h a t with twenty-five b i l l i o n s of c r e d i t opera- •
t i e n s , represented by the Government bonds issued during the war, t h a t f o r
a long time things w i l l be abnormal and i t may be f a i r t o s t a t e t h a t the
credit situation is inflated.
This can only be changed by an absorption of
t h i s debt by the savings of the people.
This means economy and t h r i f t and
saving on a no mean s c a l e .
I t i s j u s t as equally obvious t h a t America never had such o p p o r t u n i t i e s
f o r production and when I say
1
c r e d i t should be regulated 1 I mean t h a t a v a i l -
able funds of the banks i n the Federal Reserve System and a l l banks generally
should be wholly d i r e c t e d into the channels of production f o r the increase
of a l l commodities, the need f o r which i s w o r l d w i d e and without precedentBankers w i l l have to become a n a l i s t s , to d i s c r i m i n a t e c a r e f u l l y on
938
-5t~
X<L?U2
loans w i l l be a d a i l y t a s k ; they w i l l have t o stand a s guardians and t r u s t e e s
a s never b e f o r e in t h e i r b u s i n e s s to see that, no funds go f o r speculation
whether i t i s upon the stock markets, i n commodities or i n land or anything
else.
The f u l l power of a l l c r e d i t should he conserved and be behind p r o -
duction.
With patience and care America w i l l surmount a l l her d i f f i c u l t i e s *
Time i s e s s e n t i a l *
You know our c i t y f r i e n d s do not f u l l y understand our r e l a t i o n s to the
economic welfare of t h i s country.
r e s e n t i n g true wealth.
Too often they r e g a r d the d o l l a r a s r e p -
This i s not so.
There i s no wealth c r e a t e d except
by the l a b o r e r who produces an a r t i c l e to s e l l or the farmer who from the
s o i l or the e a r t h produces sorts thing f o r use t o maintain and s u s t a i n l i f e .
And I consider i t a s i g n a l p r i v i l e g e and honor to spsak to men who have to
do with the a g r i c u l t u r a l i n t e r e s t s of our c e r a t r y .
u s f u l l y a p p r e c i a t e the sigaifieitoce of t h i s -
I am sure t h a t none of
The country banker has without
question the l a r g e s t opportunity of a l l other b u s i n e s s men a t t h i s time in
our country.
You a r e to deal d i r e c t l y with the men who t h i s year i n t h i s
n a t i o n of ours have produced ten b i l l i o n s of d o l l a r s worth of food crops
alone and who added an increase of l i v e stock approximating 700 m i l l i o n s
of d o l l a r s .
I d e s i r e a l s o t o take you back b r i e f l y i n t o the f i n a n c i a l h i s t o r y f f
cur own country as compared w i t h your p o s i t i o n today.
thi s
I am reminded to do
,6-.
•
x-ifte
9 3 9
i as I have r e c a l l e d f o r yoxif c o n s i d e r a t i o n the achievements of these years
and to s t a t e t o you. without any f e a r of exaggeration or c o n t r a d i c t i o n t h a t
none of these things could have be in p o s s i b l e i f i t had n o t been f o r the
Federal Reserve System.
As I have s t a t e d to you, my banking experience has
been confined almost e n t i r e l y f o r a q u a r t e r of a century to a S t a t e chartered
institution.
My l i f e has been r e l a t e d almost e n t i r e l y t o the a c t i v i t i e s and
b u s i n e s s of t h e farmer and with you I have had the experience t h a t every banker
has had, n o t of going through a war b u t of going through f i n a n c i a l war and
panics.
With chagrin and shame as a t r u s t e e of the p a o p l e ' s money repeatedly
we have had to apologize and r e f u s e to give them t h e i r money when Called f o r *
And I wish here t o s t a t e t h a t I am a f i r m b e l i e v e r i n the p o s i t i o n of the
State Banker i n our economic l i f e ,
I b e l i e v e you have j u s t as d i s t i n c t a
r e l a t i o n of importance to the people a s the National Bank h a s .
Each have
t h e i r place and we should preserve the independent r e l a t i o n s we occupy as
earnest
bankers, but i f we wish to preserve t h i s independence I ask f o r your
and c a r e f u l c o n s i d e r a t i o n of what t h i s r e l a t i o n has to do with the Federal
Reserve System a t t h i s time.
Are you a
p a r t i c i p a t o r i n and f o r the System,
or are you s a t i s f i e d w i t h being a b e n e f i c i a r y ?
I s i t of any concern to you
as a banker t h a t you play i n t o the game and be p a r t and parcel of t h i s f i n a n c i a l organism or t h a t you s u p e r f i c i a l l y s t a n d on the side l i n e , too o f t e n
criticise
to
and y e t partake of the b l e s s i n g and b e n e f i t s and make no r e a l
contribution.
I do n o t come here today i n any s p i r i t of c r i t i c i s m , and as A
commenced, I d e s i r e to t a l k only as a S t a t e banker wi th my f e l l o w s t a t e
bankers, b e l i e v i n g t h a t we have a message f o r your thoughtful c o n s i d e r a t i o n .
The remedy f o r our e x i s t i n g f i n a n c i a l condition and the r e o c c u r r i n g panics
i n the f i n a n c i a l h i s t o r y of our country was p l a i n to a l l our Statesmen, but
because of c e n t r a l i z e d i n f l u e n c e s , s e l f i s h i n the extreme, i t was q u i t e imp o s s i b l e f o r l e g i s l a t o r s t o p r o j e c t a programme to remedy t h i s s i t u a t i o n .
took
a s o - c a l l e d
1*
U n i v e r s i t y P r o f e s s o r , now the o u t s t a n d i n g f i g u r e in a l l the
,7-
9 4 0
X-17U2
world - P r e s i d e n t Wilson - t o not only conceive the p l a n i # i t s f u l l n e s s
and t o add the n e c e s s a r y v i s i o n but a l s o the n e c e s s a r y f o r c e t o demand of
congress the enactment of the law e s t a b l i s h i n g the Federal Reserve System.
We shudder t o t h i n k what our p o s i t i o n would have been i f t h i s system
had not been ready when war broke upon the world* Without doubt f i n a n c i a l
chaos would have r e i g n e d .
In the o l d days when the stock gamblers would p l a n t h e i r l i t t l e p a r t i e s
and set the wheels of s p e c u l a t i o n going, when the game got beyond t h e i r
c o n t r o l , you w i l l remember, they were p l a y i n g with the f u n d s the producing
people had on d e p o s i t , and when we d e s i r e d these f u n d s f o r t h e i r u s e , and f o r
l e g i t i m a t e purposes to i n c r e a s e production and care f o r our communities, we
were t o l d t h a t we could not have them and we were compelled to r e s o r t to one
device and another to care f o r our need.
The Oklahoma Bank had i t s r e s e r v e s
deposited a t Kansas C i t y , and Kansas C i t y i n Chicago and the Chicago Bank i n
New York.
Thus were our r e s e r v e s pyramided.
day of s t r e s s .
Never K,obelized f o r use f o r the
I am not going t o waste any time today t a l k i n g to any man here
who has not the v i s i o n to see the importance of t h i s g r e a t m a t t e r .
The f i r s t
n e c e s s i t y i f we p r e s e r v e our indepenaenfcvrelationship a s bankers to our own
i n s t i t u t i o n s , and "our own communities, i s the mobolization of our r e s e r v e s
for use.
When we commit them to another i n t e r e s t ,
s e l f i s h or p e r s o n a l ,
they mast of course be use a f o r p r o f i t , and when same are so used they may
not always be l i q u i d enough to become a v a i l a b l e ,
I do n o t b e l i e v e i t i s necessary longer to t r y t o prove to any banker
what i t means to mobolize r e s e r v e s .
This has been a proven f a c t and i n s t e a d
of pyramiding as we used to i n the old days we f i n d now a f o u n d a t i o n i n the
mobolized r e s e r v e s of the Federal Reserve System, upon which we can b u i l d
a s t r o n g s u p e r s t r u c t u r e of c r e d i t . If the a s s i s t a n c e of these r e s e r v e s i n
has
the Federal §eserve System
not y e t appealed t o
X-1742
you as being the f o u n d a t i o n of your own "business as banker, I s h a l l
not waste time to argue f u r t h e r *
not ap p rec i a t e d *
I t i s obvious and s e l f - e v i d e n t if
The l a r g e r c o n t r i b u t i o n you make t o those r e s e r v e s ,
the s t r o n g e r your bank w i l l be and the g r e a t e r your a b i l i t y t o serve
your community.
If you a r e s t i l l on t h e s i d e l i n e s as I have i n d i c a t e d
you are s t i l l b u i l d i n g apon the c o n t r i b u t i o n and s e r v i c e of otners*
Do you t h i n k i t v;ould be p o s s i b l e f o r Oklahoma t o have done
h e r noble and splendid p a r t i n c o n t r i b u t i n g $l63,918,400 xor the war
i s s u e s of Government bonds, which i s e approximately ]>0 m i l l i o n s above
h e r a l l o t m e n t , i f i t had n o t been f o r t h i s f o u n d a t i o n l a i d ?
I n 1917, $25,693,596.worth of p a p e r was r e d i s c o u n t e d f o r
banks i n Oklahoma by t h e F e d e r a l Reserve Banks :.t Kansas C i t y and
Dallas,
Then i n 1912, as the advantage of t h e System haa become more
widely known and as more banks had become members, a t o t a l , of
$148,3^51896 was r e d i s c o u n t e d f o r Oklahoma,
For the f i r s t nine montns
$242 , 9 4 ] , 668
of I9I9 the t o t a l of paper rediscounted was .
'
other
words, t h a t much money was loaned t o your s t a t e from
out side
" sources;
-
t h a t much money was given to Oklahoma1 s use because i t has banks
prudent enough to j o i n the F e d e r a l Reserve. System.
Vh-t v / i l l i t be f o r
1920 i f you do your aasy i n production?
May I suggest h e r e , Gentlemen, t h e need of t h e c l o s e s t
a n a l y s i s of a l l loans
- t h a t c r e d i t f o r s p e c u l a t i v e "purposes, e i t h e r
on stock exchange, i n commodities or in l a n d , be denied*
s i t u a t i o n c o n f r o n t s us*
A stern
Twenty-five b i l l i o n s of Government debt has
been c r e a t e d which must bo absorbed by t h e s a v i n g s of the p e o p l e .
Any
a d d i t i o n a l c r e d i t c r e a t e d o t h e r than n e c e s s a r y f o r i n c r e a s e d p r o d u c t i o n
Xwl?42
i s but adding a hazard.
bankers.
This i s your f i r s t duty i s American
Let u s not i n f l a t e , but dofl?.te i n o r d e r l y f a s h i o n .
V.'e
should a l l be p r e a c h e r s vmd d o e r s i n t h r i f t and economy.
I need not take more of your t i n e t o review t h e s e f u n d a mental p r o p o s i t i o n s .
We have -tt the p r e s e n t time in t h i s country in
the c o n t r o l of t h e Feder.,1 Reserve System, over two b i l l i o n s of jolcu
As near a s can be estimated, t h e r e i s o u t s i d e some 600 m i l l i o n s of
gold i n the p o c k e t s of the people or i n the c o n t r o l of s t a t e bonks.
I appeal t o you, gentlemen of f i n a n c e , a s the ciistodians of the
i n t e r e s t s of your communities, t h a t i t i s s e l f - e v i d e n t .xnd h i g h l y
inportzmt t h a t t h i s cold be deposited i n the common r e s e r v o i r f o r use
i n the day of o p p o r t u n i t y or s t r e s s th.it may be before u s .
TBiile we are concerned f o r the day of s t r e s s , we must
provide abundant resources t o take - d v i n t a ^ j of our p r e s e n t job as a
world power, t o produce the n e c e s s i t i e s of l i f e iznnediately -nd in
volume as we never have b e f o r e , i f the world i s to be saved from u t t e r
s t a r v a t i o n and f i n a n c i a l d i s t r e s s .
I know t h a t there a r e alarmists i n the country.
The croaker
c r i t i c , e f f i c i e n c y e x p e r t s , and so c .lied economists are a l l e y s i n
evidence.
They were here when the Federal Reserve System was e s t a b -
l i s h e d , you w i l l rsmembsr.
TJhen the prqpositionswas conceived of
b r i n g i n g i n t o t h e c r e d i t f a b r i c s of our country the l i q u i d a s s e t s , the
wealth if you p l e a s e , as r e p r e s e n t e d by the n o t e s of the f.:.raer,
merchant -nd manufacturer, to be available f o r currency, and when
i t was propose^, and as i t i s now a f a c t , t o p u t with t h i s wealth
-nd c r e d i t of our people n a d d i t i o n a l kC$> of gold t o u n d e r l y t h e
F e d e r a l Reserve note i s s u e , many of these e x p e r t s met and s a i d t h a t
X-1JU2
-10-
currency would "become too i n f l a t e d :.nd t h a t we would not have enough
gold to hold the s t r u c t u r e up.
Let ma remind you .i./_.in of the volume
of gold now i n thy country, and
of
our currency medium and of i t s value
as compared with any money standard i n the world.
But I would f u r t h e r
remind you, i f I may, i n a more f o r c i b l e way, t h a t f o r the f i r s t time
i n the h i s t o r y of our country the rc.,1 wealth as represented by the
l a b o r e r and t h e products of our xvhole people and p r o p e r t y are mobilized.
Yes, we h^-ve the gold.
We are a c r e d i t o r n a t i o n .
We have now a
foundation to b u i l d the s u p e r s t r u c t u r e of c r e d i t , s a f e , deep and sound.
W have democratized our banking system - 12 g r e a t banks with branches e
serving a l l our people, commercially and geographically, and not any
one group, c i t y or d i s t r i c t .
The Federal Reserve System i s the
g r e a t e s t s i n g l e piece of c o n s t r u c t i v e l e g i s l a t i o n ever p l a c e d upon
the s t a t u t e s of our country.
The denunds to be made upon us i f we do our p a r t are to be so
great that anything we can do to increase p r o d u c t i o n as the l e a d e r s -md
r e p r e s e n t a t i v e s of the farmers should be done with p r e c i s i o n and in
volume.
The F e d e r a l Reserve Act was passed to s t a b i l i z e the i n d u s t r i a l ,
commercial and a g r i c u l t u r a l i n t e r e s t s of our country.
The resources
of the System were never c a l c u l a t e d by the founders or by the Government
to be used f o r s p e c u l a t i o n .
I t has '.'.ltvays been the f u l l purpose to
have the law so administered by the Board at Washington to give
p r e f e r e n t i a l r a t e s b f o r a l l paper based upon commodities and to provide
f o r the s a f e , o r d i n a r y movement of same to the markets.
If we .can
-as country bankers, p l a y our p a r t as l e a d e r s to see t o i t t h a t our
customers, our c l i e n t s , w i l l avoid :.ll s p e c u l a t i o n i n commodities and
«
:fi:
»
x-1742
944.
t h a t t h e r e i s an o r d e r l y market a t a l l t i m e s , there never need he
a f e a r but what you can go on end increase without f e a r the expansion of
a l l e f f o r t to increase production.
There may be someone here who would
l i k e to muddy the water and warn us about the danger of i n f l a t i o n .
No
prudent man i n the banking b u s i n e s s would f a i l t o study and appreciate
t h i s danger.
The events of the post f o u r y e a r s , however, w i l l not warraat
any man i n s u S S e s s f u l l y s t a t i n g or proving t h a t we are s u f f e r i n g frcub
o v e r - i n f l a t i o n of currency a t the p r e s e n t time, - but over-inf l a t ion of
c r e d i t i s a p o s s i b l e danger.
May I r e f e r b r i e f l y to the l e t t e r cf
Governor Harding to Senator Mclean, dated August 8, 1919, ae f o l l o w s :
"There has undoubtedly taken place during the l a s t
two years a c e r t a i n amount of c r e d i t expansion which#
under the circumstances connected with our war f i n a n c i n g ,
was i n e v i t a b l e , but t h i s w i l l be c o r r e c t e d as the
s e c u r i t i e s issued by the United S t a t e s Government f o r war
purposes are g r a d u a l l y absorbed by i n v e s t o r s . This c r e d i t
expansion i s equal to the d i f f e r e n c e between the t o t a l of
the wap: expenditures of the Government on thb one hand,
and on the o t h e r , the t o t a l amounts r a i s e d by the Government
through t a x a t i o n and by the sale of i t s o b l i g a t i o n s so f a r
as paid f o r out of savings. No r e l i a b l e estimate can be
made of t h i s d i f f e r e n c e , which must be gradually absorbed
through f u t u r e savings f o r the reason t h a t banks are lending
and w i l l always lend f r e e l y on Government bonds as c o l l a t e r a l . "
I urge
and to get i s import,
upon every banker here t o read that l e t t e r c a r e f u l l y
I again wish to s t a t e t h a t I am an expansionist
or any other old thing t h a t you may wish to c a l l i t , Mien I say to you
t h a t we can f i n a n c e the farmer without l i m i t to increase h i s operations
to produce t h a t which the people may eat or wee* without any danger of overproduction.
No man or economist l i v e s i n t h i s world who can guage or
prophesy what the outcome w i l l be economically i n tas c o u n t r i e s of Europe,
so weak and broken down by the war, but one t h i n g we may be sure o f , t h i s
s l a c k w i l l never be taken up by our standing s t i l l or by p i l i n g u p " r e s e r v e s ,
.Again l e t me s t a t e , r e a l wealth i s only produced.
Our problem i s simple
-la~
X-17U2
and. we should legyn our lesson as r a p i d l y as p o s s i b l e .
spend l e s s , economize and save.
Produce more
I do not come here to s e l l anything
or to s o l i c i t anything. I may perhaps be making a f e e b l e e f f o r t to
a d v e r t i s e something worth while.
X-1742
You remember the s t o r y which i s the foundation of R u s s e l l Conwell ! s
simply
g r e a t l e c t u r e e n t i t l e d n Acres of Diamonds** which he gives B
O
and.
p l a i n to h i s audiences by i l l u s t r a t i n g how so many people look f o r t h e i r
f o r t u n e , t h e i r E l Dorado, someJ$fa§re e l s e than where Grod has p u t them to
work and achieve*
He t e l l s how a f a r m e r , I think i t was i n A f r i c a , who
had heard of a g r e a t diamond mine somewhere and with a l l the allurement
and p a s s i o n t h a t came t o him with the overwhelining d e s i r e to possess an
immense f o r t u n e he sold h i s l i t t l e farm and personal p r o p e r t y and went on
a long search f o r the diamond mine.
The purchaser of h i s farm one day,
while at the w e l l watering h i s stock*
discovered a g l i s t e n i n g i n the sand
and upon i n v e s t i g a t i o n found a diamond,
(r» fixtiher i n v e s t i g a t i o n he found
more and to msk e a long s t o r y short the purchaser of the farm was the owner
of the g r e a t e s t diamond mine i n the world*
I l l u s t r a t i n g a g r e a t lesson
t h a t we a l l ought to l e a r n to value w e l l our own p o s s e s s i o n s , our p r e s e n t
o p p o r t u n i t i e s and our place in l i f e .
I t would be well worth while to
think of t h i s as c i t i z e n s of the Republic, but I would l i k e t o c a l l your
a t t e n t i o n t o the other s t o r y as a b a s i s f o r h i s other l e c t u r e e n t i t l e d
n
Five Million D o l l a r s f o r the Face of the Moon?
He commences t h i s
l e c t u r e by t e l l i n g the simple s t o r y of a man lying s i c k unto death i n
one of our E a s t e r n c i t i e s , &iven up by p h y s i c i a n s , surgeons and s p e c i a l i s t s *
He resigned himself to d i e .
An old lady in the neighborhood hearing of
h i s c o n d i t i o n asked f o r a v i s i t *
She prayed she might have the p r i v i l e g e
of serving some t e a brewed from herbs she had gathered i n the woods»
The r e s u l t was, t o make another s t o r y s h o r t , the p a t i e n t began to improve,
soon was convalescent and began t o r e a l i z e he had a lease on l i f e .
x-i742
-14He began t o s t u d y and t h i n k of what he should do w i t h h i s l i f e so d e a r l y
bought.
Being a t r u e p h i l o s o p h e r , he decided to Secure the r e c i p e f o r
the herb t e a which cured him.
He began t o s e l l i t t o h i s f r i e n d s , i t s
fame grew, soon he had salesmen and wagons on the r o a d .
He began to build
large b u i l d i n g s t o manufacture and the world was b l e s s e d by the use of
t h i s new medicine.
His advertisements appeared on the barns and the
f e n c e s , on the s i d e s of t h e roads and on p l a c e s of prominence.
Even the
Rocks of G i b r a l t a r were p l a s t e r e d w i t h advertisements of h i s medicine so
t h a t the passengers on p a s s i n g ships could r e a d ; on the mountains of the
Andes he dared t o go.
One n i g h t h i s f r i e n d s found him s t a r - g a z i n g , look-
ing up i n t o the moon i n a l l i t s b r i l l i a n c y .
what he was doing.
One bold s p i r i t asked him
He sighed and said " I f I could secure the f a c e of the
moon I would give f i v e m i l l i o n d o l l a r s " .
He was asked "What f o r ? " *
He
said he would place f i v e words upon the f a c e of the moon so t h a t a l l the
world might gaze, read and p r o f i t thereby.
He was asked what the f i v e
words would be t h a t he would choose from the languages of the e a r t h t o
place "here.
What do you suppose were t h e words he would p l a c e t h e r e ?
The g r e a t l e c t u r e r , C o n w e 1 1 , a f t e r taking h i s audience to t h i s p o i n t would
leave them and draw lessons from l i f e as t o what man was r e a l l y placea
upon the e a r t h f o r .
Service.
The f i v e words he would place upon the
Advertise
moon were t h e s e : " F i n d Good, Then
I t " . A simple b u t wonderful
thing which I have o f t e n thought we should p r a c t i c e .
There i s i n the
h e a r t of man enough good which i f encouraged, c o r r a l l e d , coached and
coaxed would be s u f f i c i e n t to d r i v e out a l l the e v i l or darkness,
I am
here t o a d v e r t i s e , i f I may, a good t h i n g .
I b e l i e v e , Gentlemen, t h a t from t h i s war we have a l l become b e t t e r
men, b e t t e r c i t i z e n s , b u t I would l i k e t o apply t h i s l a s t thought t o you
9 4 7
" 948
as S t a t e "bankers, asking f o r your good c o n s i d e r a t i o n of the b e n e f i t s
t h a t may come t o you "by becoming members of the Federal Reserve System#
To those of you who as bankers a p p r e c i a t e the new r e s p o n s i b i l i t y
upon you as community b u i l d e r s and as t r u s t e e s of the p e o p l e ' s money,
I ask f o r your very c a r e f u l c onsider& ion t o the importance t o you of
p l a c i n g your banks i n t o the Federal Reserve System, and having t h a t close
complete r e l a t i o n s h i p which assures absolute s a f e t y f o r the f u t u r e ,
whatever problems may be*. You w i l l be a p a r t of a Federal i n s t i t u t i o n ,
which i s n a t i o n - w i d e , cohesive, a complete f i n a n c i a l o r g a n i z a t i o n having .
f u l l r e s p e c t f o r every i n t e r e s t of our people„
i n organization c o n t r o l l e d
by the s t r o n g e s t Government on the f a c e of the earth#
A system which
today c o n s i s t s of 7821 n a t i o n a l banks and 11-03 s t a t e i n s t i t u t i o n s , with
a t o t a l c a p i t a l of $1,527*171,000 and a surplus of $1,312,205*000
and with t o t a l r e s o u r c e s of $30,280,234,000 i n d i c a t e a f i n a n c i a l machine.
of s t r e n g t h and one of cooperative power without compare,
in institution
which has i n i t s c o n t r o l over two b i l l i o n d o l l a r s worth of gold, the
g r e a t e s t amount of gold ever assembled i n the h i s t o r y of the world i n
the c o n t r o l of any one Government.
Does i t mem anything to you to be a r e a l p a r t of such m
i n s t i t u t i o n ; to be recognized by i t and as p a r t of i t ?
Save you taken time to secure the viewpoint of your d e p o s i t o r s
when they once grasp t h i s tremendous f a c t and ; s they draw checks upon
your i n s t i t u t i o n upon which i s p r i n t e d the f a c t t h a t your bank i s a msmber
of the F e d e r a l Reserve System and t h a t the check of that customer passes
c u r r e n t anywhere i n the United S t a t e s ?
You may, i f you p l e a s e , magnify some of the smaller l o s s e s or
charges t h a t you would have in j o i n i n g t h e system, but l e t me appeal t o
yo*
as I have
t r i e d to thus f a r , to get the l a r g e r viewpoint of your
949
-l6-
X-1J42
• l e a d e r s h i p as a banker and a s a leader in your community.
things f i r s t .
That you put f i r s t
Ycu may discover t h a t t h i s p r i n c i p l e when once worked out w i l l
be not u n l i k e the t i d e s of the ocean.
They come i n with u n f a i l i n g r e g u l a r i t y
and when they go out they take with them not Only the great war v e s s e l s , mer-*
chantmeh, but the l i t t l e aery and canoe are l i f t e d a l i k e upon the bosom of the
tide.
A well known philosopher ptiit ihe idea, something l i k e t h i s : "Just as i n
r e l i g i o u s h y s t e r i a a s i n g l e t e x t becomei a Whole creed, to the exclusion ef
every other t e x t , and i n s t e a d of being i t s e l f s u b j e c t to r a t i o n a l t e s t s i s made
the sole t e s t of the r a t i o n a l i t y of e v e r y t h i n g e l s e * "
I am c o n f i d e n t , Gentlemen, t h a t i f we would give more a t t e n t i o n to these
f i r s t t h i n g s , l i k e a l l our t r o u b l e s , the small ones would a l l recede and be
forgotten.
Besides the enlargement of your b u s i n e s s and the opportunity of service,
to say nothing about enhanced p r o f i t s as a member of the Federal Reserve System,
you would have the p r i v i l e g e of the rediscount a t the Federal Be serve Bank, to
care f o r a l l your needs with your customers engaged i n commerce and industry,
and with your farmer customers on paper taken f o r not to exceed s i x months,
r e p r e s e n t i n g the a c t u a l a c t i v i t y of a farmer in the operation of h i s business*
The need f o r e n l a r g i n g h i s operation i s so g r e a t and so immediate t h a t
there w i l l be no paper coming to the Federal Reseree System during the next
f i v e years that w i l l be regarded a s s a f e r , a s so fundamentally proper, a s t h i s
paper.
This may mean to you, Mr. Banker, t h a t you w i l l have to change some of
your methods in t a k i n g t h i s paper.
I t may be to your advantage to secure h i s
statement to h i s worth, b r i e f l y , i n a s k i n g
. X-17*42
-17-
for credit.
I t may become necessary f o r him to attend to h i s paper
more promptly a t maturity*
I t may become necessary f o r you t o change
your operations i n taking t h i s paper f o r s i x months instead of f o r a
year or more or upon demani.
your advantage,
But if so, t h i s w i l l be d i s t i n c t l y to
I have o f t e n wondered why i t was that State bankers
w i l l s i t back without any seeming concern, allow t h e i r competitor
, ,
align
perhaps i n the National baa king System t o
himself with t h i s
great jbafcerit i n s t i t u t i o n of power and s t r e n g t h and p o s i t i o n and go
a f t e r the business and get i t , when he could have the some advantage
t h a t every n a t i o n a l baa ker has and under the law a l l the e x i s t i n g
advantages t h a t he may enjoy as a State c h a r t e r e d i n s t i t u t i o n *
To be able t*a discount your customers 1 paper by sending the same
as you do your cash items to the Federal Reserve Bank i n proper form
t o receive c r e d i t immediately.
And also where the r a t e s of discount
are c e r t a i n l y always advantageous.
I am not making a p l e a here f o r the sake of g e t t i n g b u s i n e s s
but only of showing up the a c t u a l advantages t h a t would be d e r i v e d .
Do you understand t h a t what you would deposit with the Federal Reserve
Bank of your D i s t r i c t would be an actual reserve upon which you could
b u i l d c r e d i t necessary f o r your operations and which would never
be denied you.
As I s t a t e d p r e v i o u s l y , I believe i n the independent r e l a t i o n ship t h a t we have and p r i z e as bankers.
We can not t@lera.te a
branch bank system as i t i s h o s t i l e to the American i d e a .
X1 4
-%2
-is-'
This i s one wqy t o f o r t i f y your p o s i t i o n ; to use the F e d e r a l
Reserve
• as a r e s e r v e and t o understand t h a t your loans can
be taken t o t h i s e l d e r b r o t h e r i n the next room and t h a t you can
r e a l i z e same i n cash b y taking back with you good Federal Reserve
notes*
I appeal t o you, gentlemen, to give t h i s question of the
p r i v i l e g e of r e d i s c o u n t i n g i n the Federal Reserve System
more
than
s e r i o u s and c a r e f u l c o n s i d e r a t i o n
I f e e l you have given i t
thus f a r .
The p r o f i t t h a t you would moke s u r e l y would take up any
s l a c k t h a t you would lose because of the non-payment of i n t e r e s t
upon your b a l a n c e .
Again my X remind you t h a t your r e s e r v e i s not
only a r e s e r v e f o r the day of s t r e s s , b u t f o r increased opportunity.
I s h a l l not attempt to argue with you*
If experience has not
taught you t h i s i t w i l l be a waste of time f o r me to c o n t i n u e .
Again may I inform you t h a t you can ask f o r currency of the
or
r e s e r v e bank
the branch bank and same w i l l be shipped to you
without c o s t , f u l l y insured and express charges p a i d .
worth anything to you?
Is t h a t
951
X-17U2
-19-
'
IE also wish to remind, you that you can t r a n s f e r funds by
telegraph, without expense, to any p a r t of the country.
I t has been urged that you may be deprived of the exchange which
you have been accustomsd to on checks sent you f o r c o l l e c t i o n .
This
h a s been of course a knotty problem, but may I remind you of the
wording of the Act> which i s e x p l i c i t and i n f a c t mandatory and
hnder the r e c e n t r u l i n g of the Attorney General of the United States
the Federal Reserve Bank can do nothing e l s e but to see t h a t the checks
coming to i t are collected a t par
exchange.
.nd they - r e not permitted to pay
Your recourse, if any, i s to the Congress of the United
S t a t e s , and not in c r i t i c i s m of the Board or Banks.
May I r e f e r you again to Section 13 and ask f o r your serious
consideration and also Section l 6 .
The Federal Reserve Batiks are r e q u i r e d under Sections 13
and 16 of the Federal Reserve Act to receive from meober banks at par
deposits of current funds in l a w f u l money, national bank n o t e s , Federal
reserve notes, or checks and d r a f t s , payable upon p r e s e n t a t i o n , and
a l s o , f o r c o l l e c t i o n , maturing notes ~nd b i l l s .
There i s a proviso
to t h i s s e c t i o n which allows member and non-member banks to make
reasonable charges "to be determined and r e g u l a t e d by the Federal
Reserve Board, but i n no case to exceed 10 c e n t s per $100 or f r a c t i o n
t h e r e o f , based on the t o t a l of checks and d r a f t s presantfeddat any
one time, f o r c o l l e c t i o n or payment of checks and d r a f t s and remission
t h e r e f o r by exchange or otherwise; but no such charges s h a l l be
made against the Federal Reserve L&fBafe". The Attorney General of the
United States has construed t h i s as meaning t h a t a Federal Reserve
Bank cannot l e g a l l y pay any f e e to any member or non-member bank f o r
,
-20-
»
the c o l l e c t i o n and remittance of a check.
. 953
x-1742
I t follows t h e r e f o r e that
i f the Federal Reserve banks are to give the service r e q u i r e d of
them under the p r o v i s i o n s of Section 1J they must .i© cases where
banks r e f u s e to remit f o r t h e i r checks at p a r t use some o t h e r means
of c o l l e c t i o n no matter how expensive.
The a c t i o n of the v a r i o u s Federal Reserve banks i n
extending t h e i r p a r l i s t s has met with the approval of the Federal
Reserve Board, which holds the view t h a t u n l e s s the law should be
amended by Congress the Federal Reserve banks must use every e f f o r t
to c o l l e c t a l l bank Shocks r e c e i v e d from member banks, at p a r .
V
About 80 per cent of the banks of t h i s country, members
amd zaonznembers, arc now upon a p a r b a s i s .
I t w i l l not be long before
i t w i l l be 100 p e r cent
.nd t h e n I p r e d i c t t h a t we w i l l be asking
ourselves the question
"IThy d i d n ' t we do t h i s b e f o r e ;
why d i d we
stand i n our own l i g h t :.nd step on our own f e e t on so elementary a
proposition?"
F i n a l l y , l e t u s h..vc a f u l l understanding of the wonderful
o p p o r t u n i t i e s t h a t are b e f o r e us as business men not only to develop
our communities, increase the production upon those farms, to make
l i v i n g c o n d i t i o n s happier and our people more contented, but to enlarge
our v i s i o n as business men,for I am sure t h a t i n a few y e a r s hence we
w i l l f i n d our d e p o s i t s %nd our i n f l u e n c e doubled and quadrupled
b e c - u s J of t h i s l a r g e r a p p l i c a t i o n and r e l a t i o n s h i p .
You are a l l f a m i l i a r with the r u l e s of the Federal Reserve
System.
t
They - r e p r e c i s e , s h o r t and complete and to remind you that'
while there i s c r i t i c i s m h e r e , a n d t l u r e , as t h e r e
.Iways w i l l b e ,
954
# *
-21-
X-I7U2'
t h a t you have not seen the n a t i o n a l banks scrambling t o get out of
the system.
t
They f u l l y a p p r e c i a t e i t s b e n e f i t s and are r e a p i n g them
d a i l y while I f e a r many of our State bankers a r e sleeping a t the
switch.
I t has cost our country a great t r e a s u r e of blood and money
to have won t h i s world war.' You hbve a r i g h t to expect the s p i r i t u a l
b l e s s i n g s t h a t w i l l cone from t h i s s a c r i f i c i a l e f f o r t and we have
J u s t as much r i g h t to teap any economic rewards that may come.
let
us have an a p p r e c i a t i o n i n our conduct as stewards of the p e o p l e ' s
money f o r t h i s heritage*
A s h o r t time ago I went with my c h i l d r e n to the g r e a t •
Congressional l i b r a r y at Washington, the most b e a u t i f u l b u i l d i n g i n
c h i s e l e d on
a l l the world. Some great h e a r t and mind has caused to be
marble short mottoes to be t r e a s u r e d and never to be erased.
One,
my child wrote down, to my g r e a t p r i d e , which I would l i k e to pass
.
.«
•
on to you as a thought worth your note.
This i s i t :
"We t a s t e the
spices of Arabia; yet never f e e l the scorch of the sun t h a t brought
them f o r t h , "
Indeed i t has cost much to make t h i s Republic.
r
The man
of the Revolutionary and of the C i v i l Wars and of the g r e a t World
War have f e l t t h e heat of the sun, they have p a i d the pric.e.
To you
-nd your c h i l d r e n w i l l be the b l e s s i n g of ever t a s t i n g the f r u i t ,
us be worthy of t h i s h e r i t a g e .
let
*-1745
>
Ak
:
-
He adjustment of i n d u s t r y , "business and f i n a n c e t o a peace
"basis was t h e economic problem with, which the sudden t e r m i n a t i o n of
h o s t i l i t i e s a year ago confronted the United S t a t e s ,
On the whole,
the c l o s e of Hie year 1919 shows considerable progress toward the
s o l u t i o n cf the problem; indeed, i n sane important r e s p e c t s the year
has shown the problem t o "be l e s s d i f f i c u l t than was o r i g i n a l l y expected.
The year has been one of great a c t i v i t y i n i n d u s t r y , l i t t l e
embarrassment having b®en experienced b y the s o - c a l l e d war i n d u s t r i e s
i n making the s h i f t t o peace-time c o n d i t i o n s .
Unemployment, which
was widely dreaded a year ago as l i k e l y to be the most troublesome
f e a t u r e of the readjustment p r o c e s s , has f i e n d i t s n a t u r a l economic
c o r r e c t i v e i n the a c t i v e demand f o r products i n p r a c t i c a l l y every
f i e l d of industry*
There h a s , i n consequence, been a s c a r c i t y of
labor i n many l i n e s of i n d u s t r y throughout the l a r g e r p a r t of the
year, p a r t i c u l a r l y of u n s k i l l e d or common l a b o r , w i t h wages r u l i n g
h i g h and going h i g h e r .
Judged by most of the accepted, c r i t e r i a of
b u s i n e s s , the year has been a s u c c e s s f u l one, and from the p o i n t
of view of e a r n i n g s , a s a t i s f a c t o r y one.
There i s , n e v e r t h e l e s s , seme apprehension expressed as t#
the f u t u r e .
Conditions are not yet regarded, as s t a b i l i z e d upon a
a secure f o u n d a t i o n .
The one important
p a r t i c u l a r i n which no readjustment i s
shown f o r the year 1919> i s the p r i c e s i t u a t i o n *
R e c t i f i c a t i o n of the
p r i c e s i t u a t i o n was widely b e l i e v e d a year ago t o be the necessary
f o r e r u n n e r of any r e a l and l a s t i n g r e t u r n t o normal and s t a b l e conditions*.
x - W
-
2
-
This view i s s t i l l w i d e l y e n t e r t a i n e d ; i n d e e d , , r e c e n t e v e n t s have
confirmed many i n t h e opinion t h a t the c r u x of America 1$ a f t e r - w a r
problem i s t h e r e a d j u s t m e n t of p r i c e s ,
p r i c e s are s t i l l upon what
must be r e g a r d e d as a war l e v e l , w i t h a tendency t o r i s e r a t h e r t h a n
to f a l l .
L a t t e r l y , t h e most s e r i o u s a s p e c t of t h e p r i c e s i t u a t i o n h a s
been the aggravated c o s t of l i v i n g c o n d i t i o n .
j e c t of widespread complaint.
I t h a s >ecdooB t h e sub-
There*' i s l i t t l e re as or* t o doubt th&t
the i r r i t a t i o n caused b y the r i s i n g c o s t of l i v i n g i s the source of
much of t h e a c u t e i n d u s t r i a l and s o c i a l u n r e s t which i s b e i n g experienced,
i n the United S t a t e s ,
Were i t n o t f o r t h i s f a c t o r of the s i t u a t i o n i t i s pcobeble
t h a t l e s s a n x i e t y would be f e l t i n b u s i n e s s c i r c l e s over t h e h i g h
l e v e l of p r i c e s than a year ago, and t h e r e would be l e s s i m p a t i e n c e
f o r quick and l a r g e r e s u l t s „ f o r i t i s g e t t i n g t o be more g e n e r a l l y
a p p r e c i a t e d t h a t r e c t i f i c a t i o n of t h e p r i c e s i t u a t i o n ; and, i n g e n e r a l ,
a r e t u r n t o s t a b l e f i n a n c i a l c o n d i t i o n s i s going t o be a m a t t e r of
years i n s t e a d of a s was f i r s t expected, & m a t t e r of months.
Those who
took a sanguine view of the p r i c e o u t l o o k a year ago, and who expected
an e a r l y drop of p r i c e s , b e l i e v e d t h a t h i g h p r i c e s were due simply t o
t r a n s i t o r y c o n d i t i o n s , and the a c u t e demands f o r goods occasioned b y
the war — otherwise s t a t e d , to d i s t u r b e d c o n d i t i o n s of p r o d u c t i o n and
s h o r t a g e s of supply, b o t h of which c o n d i t i o n s were expected t o f i n d
s w i f t c o r r e c t i o n i n the course of the year 1919*
The f a c t t h a t p r i c e s have n o t d e c l i n e d d u r i n g the p a s t year
b u t , on t h e c o n t r a r y , have r i s e ® , i s l e a d i n g t o a c o n s i d e r a b l e r e v i s i o n
of American views of the fundamental f a c t o r s i n t h e p t i c e s i t u a t i o n .
. 957
m)-
X-1745
I t i s now g e t t i n g t o be more g e n e r a l l y a p p r e c i a t e d , and more f r e q u e n t l y
ly
admitted, however grudging/by some, t h a t the main f a c t o r i n p u t t i n g up and
keeping up p r i c e s to t h e i r e x i s t i n g unprecedented l e v e l s i n the United S t a t e s ,
has been the expanded s t a t e of banking c r e d i t .
That p r i c e s may be expected
t o continue h i g h u n t i l the volume of b r e d i t and currency i s m a t e r i a l l y reduced,
or production i s g r e a t l y i n c r e a s e d , i s coming to be the view of thoughtful
s t u d e n t s of post-war c o n d i t i o n s .
That both of these processes a r e l i k e l y at
b e s t to be slow, seems f a i r l y c e r t a i n ,
l i t i a l a b o r f u l l y employed, as i t i s ,
i n c r e a s e of production i n any l a r g e way could come only through increased
e f f i c i e n c y of l a b o r .
As regards the volume of c r e d i t , r e d u c t i o n might r e s u l t
d i t h e r from t h e l i q u i d a t i o n which would f o l l o w a JLet*-d.own of business and i n d u s t r i a l a c t i v i t y , or from increased saving and investment on the p a r t of those
c l a s s e s i n t h e community which have been the main b e n e f i c i a r i e s of high and
rising prices.
But t h e r e i s l i t t l e prospect of any of t h e s e t h i n g s occurring
go long as t h e present r e i g n of extravagant l i v i n g and spending continues.
The f a c t , however, t h a t p r i c e s f o r the most p a r t have r i s e n during the year 1919i
and the p r o s p e c t t h a t they w i l l continue to r i s e u n t i l the expansion of c r e d i t
i s brought under e f f e c t i v e control,makes the immediate problem of c r e d i t c o n t r o l *
i n the United S t a t e s not t h a t of c o n t r a c t i n g c r e d i t but t h a t of r e g u l a t i n g
i t s growth so a s t o prevent a f u r t h e r r i s e of p r i c e s and a f u r t h e r aggravation
of c o s t of l i v i n g c o n d i t i o n s .
Even thus the problem of c r e d i t c o n t r o l i n the United S t a t e s w i l l have
i t s s u f f i c i e n t d i f f i c u l t i e s , e s p e c i a l l y i n view of t h e undoubted l a r ^ d r a f t s
t h a t w i l l be made upon the c r e d i t resources of t h e country i n f i n a n c i a l support
of Europe*s needs.
X-17^5
- 4- -
C-r owing d i s c o n t e n t with r i s i n g p r i c e s , end p u b l i c r e c o g n i t i o n of, the
dependence of p r i c e s on c r e d i t , however, w i l l not much longer s a n c t i o n
an a t t i t u d e of h e s i t a t i o n on the p a r t of the agencies of banking c o n t r o l
i n the United S t a t e s ,
may he c o n t r o l l e d .
Credit must he c o n t r o l l e d i n order t h a t p r i c e s
This i s the legacy of 1919 to 1920.
The s t i l l un-
determined question i s t h e method of c o n t r o l which w i l l he t e s t adapted
to American c o n d i t i o n s , e s p e c i a l l y i n view of the e x i s t i n g unprecedented
and complex s i t u a t i o n .
The d a t a assembled i n the following t a b l e show the major changes
i n the banking s i t u a t i o n of the United S t a t e s since the beginning of the
European war.
The t a b l e shows under the heading of "Deposits" the increase
which h a s taken p l a c e i n the volume of c r e d i t extended b y the banks
( n a t i o n a l and s t a t e banks and t r u s t companies) and, under the headings
"loans and Discounts" and "Investments", the operations a g a i n s t which
the newly c r e a t e d c r e d i t was extended.
The d a t e s s e l e c t e d are (1) the
eve of the beginning of the Eur ope an war; (2) the eve of the e n t r y of
the United S t a t e s i n t o the war; (3) the a r m i s t i c e ; and (4) the most
recent d a t e f o r which d a t a are a v a i l a b l e :
'Gross Deposits
Date
1
::
Loans and Discounts :
Investments
June,
1914
(In m i l l i o n s of d o l l a r s )
12,259
16,264
March,
1917
24,86}
17,020
4,955
November 1, 1918
25,862
19,792
8,909
October,
33,159
22,275
9,751
1919
3,560
:
^
"
y u y
-5-
X-1745
The above f i g u r e s , which d i s c l o s e an expansion of bank c r e d i t s i n c e
June 1914, of over one—hundred p e r c e n t show t h a t the expansion of banking
c r e d i t d i d n o t coye t o a s t o p with the a r m i s t i c e .
a t an alarming r a t e s i n c e t h e n .
October 1919«
Expansion has c o n t i n u e d
Between the d a t e s of November 1, 1$ 18 and
4,297 m i l l i o n s of d o l l a r s of new c r e d i t have bean c r e a t e d ;
loans i n c r e a s e d 2,483 m i l l i o n s of d o l l a r s ; end investments 842 m i l l i o n s of
dollars.
This compares with an i n c r e a s e of 3,999 m i l l i o n s of d o l l a r s of
new banking c r e d i t i n the shape of d e p o s i t s between t h e d a t e s of March A917
and November 1, 1918.
S i m i l a r comparison f o r the item "Loans and Discounts"
shows t h a t between t h e same two d a t e s t h e r e was an i n c r e a s e of 2,772 m i l l i o n s
of d o l l a r s , and f o r the i t e m "Investments" f o r the same d a t e s , an i n c r e a s e
of 3*954 m i l l i o n s - or 79«& p e r c e n t ,
October 1919?
For the whole p e r i o d , March 1917 t o
8,296 m i l l i o n s of d o l l a r s of new banking c r e d i t had been
c r e a t e d , most of vtiiich i s undoubtedly t o be a t t r i b u t e d t o the e x i g e n c i e s of
government
financing.
I t w i l l be n o t e d t h a t t h e most s t r i k i n g r a t e of i n c r e a s e i s f o u n d i n
the i t e m "Investments" between the d a t e s March 1917 and November 1912*. This
was the p e r i o d when t h e Government x s g r e a t b o n d - i s s u i n g o p e r a t i o n s were a t
t h e i r h e i g h t : t h e banks were under p r e s s u r e t o make heavy investments cf
t h e i r c r e d i t i n s u b s c r i b i n g f o r government loans; they were a l s o e x t e n d i n g
c r e d i t acconancdation on l i b e r a l terms t o t h e i r customers f o r the l i k e purpose.
This was a l s o t h e p e r i o d when the t o t a l c u r r e n c y i n c i r c u l a t i o n was i n c r e a s i n g most r a p i d l y - the i n c r e a s e between March 1917 and November 1918 amounting t o over -1,250 m i l l i o n s of d o l l a r s *
I t has r e c e n t l y been e s t i m a t e d t h a t the banks of the c o u n t r y h o l d among
t h e i r i n v e s t m e n t s over f o u r b i l l i o n s of d o l l a r s of government war s e c u r i t i e s
( L i b e r t y bonds, V i c t o r y n o t e s or C e r t i f i c a t e s of i n d e b t e d n e s s ) end,
their .loans and discounts, two and a half billions or more representing loans
Digitized for made to customers
FRASER
secured by government obligations and made, presumably, for
the most p a r t * i n a i d of customers 1 s u b s c r i p t i o n s t o government loans#
Altogether t h e n , i t appears that the t a n k s are c a r r y i n g , d i r e c t l y or in*
d i r e c t l y , between s i x and seven ' b i l l i o n s of government war o b l i g a t i o n s against
which has been extended newly c r e a t e d c r e d i t i n the form of d e p o s i t s or
currency,
Oiie newly c r e a t e d c r e d i t , l i k e the new currency, c o n s t i t u t e s an addition
t o the supply of the country 1 ® purchasing media.
purposes t o be regarded as money*
payment.
It is for a l l practical
I t i s acceptable as means of purchase and
I t acta on p r i c e s s u b s t a n t i a l l y the same as money,
Jfofl i t i s thus
t h a t the matter of p r i c e s becomes a m a t t e r of c r e d i t , and ocredit c o n t r o l a
matter of urgency.
That the g r e a t expansion of c r e d i t which has oexurred i n the u n i t e d
S t a t e s has been p r o f i t a b l e t o t h e banks, and t h a t they may not be expected
t o pursue a p o l i c y of conserving the use of c r e d i t except as they are p u t
under p r e s s u r e t o do s o , i s a f a i r deduction from a r e c e n t statement of the
enormous i n c r e a s e i n the earnings of the n a t i o n a l banks during the p a s t f i v e
y e a r s , She i n c r e a s e from J u l y 1 T I91I*, t o J u l y 1, 1919, amounting t o over
90 m i l l i o n s of d o l l a r s y e a r l y , and b e i n g g r e a t e r t h a n f o r the e n t i r e f o r t y year p e r i o d p r i o r t e J u l y 1, 1914,
Borrowers, because of the e l e v a t i o n of p r i c e s t o t h e e x t e n t of one
^
,
now
hundred p e r c e n t or more, i n the p a s t f i v e y e a r s , a r e
obliged t o borrow
two d o l l a r s t o handle t h e same amount of p h y s i c a l turn-over i n t h e i r b u s i n e s s e s
t h a t f o r m e r l y r e q u i r e d b u t one d o l l a r .
The c o s t of c r e d i t i n handling a given
volume of p r o d u c t i o n , p h y s i c a l l y measured, i s , t h e r e f o r e , a much l a r g e r item
than i t was f o r m e r l y .
What i s c o s t t o t h e borrower i s gain t o the lender*
Money lending has consequently been a p r o f i t a b l e t r a f f i c even when a l l t h a t
the t r a f f i c would stand has n o t been charged, p a r t i c u l a r l y a s t h e banks i n
order t o supply the i n c r e a s e d c r e d i t are not. obliged t o incur commensurate
i n c r e a s e of expense.
-7-
X-l?45
Under the F e d e r a l Reserve System, t h e banks a r e indeed. I n an unique
and f a v o r e d p o s i t i o n .
There i s no hard and f a s t l i m i t upon the amount of
c r e d i t or c u r r e n c y which t h e y con supply t o t h e i r c u s t o m e r s .
The l i m i t a t i o n
upon t h e i r l o a n i n g and e a r n i n g power which was imposed upon the n a t i o n a l banks
"before the advent of the F e d e r a l Reserve System i n the shape of t h e r e q u i r e ment t h a t t h e banks must m a i n t a i n a c t u a l minimum c a s h r e s e r v e s , has given way
under the F e d e r a l Reserve System to the e a s y requirement of a r e s e r v e balance
maintained w i t h the F e d e r a l Reserve Bank.
This b a l a n c e i s only p a r t l y a
b a l a n c e c r e a t e d by a c t u a l d e p o s i t of c a s h ; f o r the r e s t i t i s a book-keeping
b a l a n c e b u i l t up and maintained through borrowing from t h e F e d e r a l Reserve
Bank.
A bank t h a t wishes to e n l a r g e i t s lending power, h a s , t h e r e f o r e , only
t o borrow from i t s F e d e r a l Reserve Bank t o b u i l d up i t s r e s e r v e b a l a n c e t o the
requisite extent.
Borrowing r e s e r v e c r e d i t from the r e s e r v e bank a t r a t e s
f i x e d a r t i f i c i a l l y low f o r t h e purposes of accommodating the f i n a n c i a l program
of the T r e a s u r y , the p r o c e s s of s a t i s f y i n g the ^American a p p e t i t e f o r c r e d i t ,
h a s , t h e r e f o r e , been simple and e a s y and h i g h l y p r o f i t a b l e t g the banks*
The e x t e n t t o which t h e r e s o u r c e s of the F e d e r a l Reserve System have been
drawn upon i s r e v e a l e d i n a comparison
of i t s d i s c o u n t s and advances, which
amounted t o 100 m i l l i o n s j u s t b e f o r e the United S t a t e s e n t e r e d t h e war i n
#
$ p r i l 1917i and t o over 2,700 m i l l i o n s at t h e end of November of t h i s y e a r .
That t h e r e s e r v e system was a b l e to respond t o t h e heavy demands of i t s
member banks f o r advances was due t o the enormous i n c r e a s e i n i t s gold r e s e r v e .
Between the d a t e s g i v e n above, the gold h o l d i n g s of the F e d e r a l Reserve System
r o s e from 9^3 m i l l i o n s t o 2,093 m i l l i o n s .
The twelve F e d e r a l Reserve Banks
now h o l d over t w o - t h i r d s of the t o t a l e s t i m a t e d monetary gold s t o c k of the
United S t a t e s , and t h e c o u n t r y ' s gold h o l d i n g s , i t w i l l be remembered, were
e n r i c h e d t o t h e e x t e n t of over 950 m i l l i o n s of d o l l a r s by t h e heavy i n f l o w of
gold t o
t h e United S t a t e s
beam, the /.nwsntrflt.i nn of
from Europe i n t h e years 1915 a a i 1916,
i t has
t h i n gold i n t h e Federal DARapva 'Ranks. aArietti tO
Xr.1745
9 6 2
the gold otherwise drawn from the channels of c i r c u l a t i o n , t h a t has made i t
p o s s i b l e f o r the Federal Reserve Banks to expand t h e i r c r e d i t t o the v a s t extent
thgy have since the United States
1
e n t r y i n t o the war without "bringing down
t h e i r r e s e r v e percentage t o a p o i n t c a l c u l a t e d t o e x c i t e apprehension.
The
r e s e r v e percentage of the twelve Federal Reserve Banks a g a i n s t combined deposit
and note l i a b i l i t i e s stands a l i t t l e above f o r t y - f i v e p e r c e n t toward the
c l o s e of the year 1919> as compared with f i f t y per cent at the close of the
year 1918, aad e i g h t y - f i v e per cent at t h e beginning of the war i n April 1917*
The embargo on gold exports which was l i f t e d June 10th of t h i s year, has
thus f a r cost the United S t a t e s 292 m i l l i o n s of exported gold,
But t h i s l o s s
has been o f f - s e t to the exteiit of f i f t y per cent tit more, by 135 m i l l i o n s of
%&
goto h e l d abroad and acquired from Germany, a % small imports c o n s t a n t l y
t r i c k l i n g i n t o the coiastry*
I t i s notable that n e i t h e r the l i f t i n g of the
gold embargo nor the enormous expansion of bank sredit- which has occurred i n
the l a s t two and a half yea*-s, has r e s u l t e d i n any r e a l impairment of the gold
b a s i s of the American c r e d i t s t r u c t u r e , judged by t h e standards of f i v e years#
or mote, ago.
Indeed, i t appears that the gold cover held a g a i n s t our g r e a t l y increased
volume of bank l i a b i l i t i e s owing to the public i s today considerably i n excess
of what i s was j u s t b e f o r e the outbreak of the war i n June 191%.
As n e a r l y
as the matter can be computed, there are held i n the banking r e s e r v e of the
United
S t a t e s (and t h i s means, except as t o an almost n e g l i g i b l e percentage,
i n the r e s e r v e s of the Federal Reserve Banks,) about seven d o l l a r s of gold
a g a i n s t each one hundred d o l l a r s of the t o t a l outstanding volume of BanK deposits
(exclusive of Federal Reserve Bank d e p o s i t s ) and Federal Reserve Notes i n cirfcwl a t i o n , whereas 4 . 8 d o l l a r s were so held i n 1914.
Bank l i a b i l i t i e s , as a whole,
are t h e r e f o r e about f i f t y per c e n t b e t t e r covered i n gold than was the case
some f i v e years ago.
s i t i o n i s
po
In a t e c h n i c a l sense, t h e r e f o r e , t h e Aaerie&&reserve
s t i l l altogether s a t i s f a c t o r y , thanks t o the large afco&ssious t *
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:
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9 6 3
our gold h o l d i n g s brought e a r l y i n t h e War, and since t h e n concentrated i n
the F e d e r a l Reserve Banks,
Indeed, much of the gold thus acquired and
brought under banking c o n t r o l might he p a r t e d with without any s e r i o u s impairment of our n e c e s s a r y reserve s t r e n g t h .
The apprehension r e c e n t l y expressed i n some q u a r t e r s because of the dec l i n e of the r e s e r v e percentage of the Federal Reserve System sinc e the
a r m i s t i c e from f i f t y per cent to f o r t y - f i v e per c e n t , i s not j u s t i f i e d by
any impending or t h r e a t e n i n g inadequacy of our gold r e s e r v e .
Strongly en-
trenched as the United S t a t e s i s by reason of the c r e d i t o r p o s i t i o n the
country has a t t a i n e d to i n the p a s t four years, t h e r e i s l i t t l e l i k e l i h o o d
of s e r i o u s impairment of our gold r e s e r v e through e x t e r n a l d r a i n . There w i l l
probably be l i t t l e or no occasion, t h e r e f o r e , f o r the F e d e r a l Reserve Banks
i n the near f u t u r e , to shape t h e i r discount p o l i c y f o r the purpose of p r o tecting their reserves,
i t isy
indeed, t h e i r v e r y secure p o s i t i o n i n t h i s
r e s p e c t t h a t may prove a source of embarrassment t o them i n undertaking
a
to s e t up an e f f e c t i v e c o n t r o l of c r e d i t by making i t d i f f i c u l t f o r them
i n the f a c e ' of r e l a t i v e l y high r e s e r v e s t o i n i t i a t e and pursue a d i s c o u n t
p o l i c y f o r the purpose of r e s t r a i n i n g the continued growth of the volume
of banking c r e d i t and the u n i n t e r r u p t e d use of the resources of the Federal
Reserve System f o r t h i s purpose.
With the Treasury f r e q u e n t l y i n the market during the year 1919, as a
large borrower, and with the p r o s p e c t t h a t the f i n a n c i a l s i t u a t i o n of the
Government w i l l , f o r a considerable time, n e c e s s i t a t e heavy borrowing from
the banks, there h a s been a n a t u r a l r e l u c t a n c e on the p a r t of the F e d e r a l
Reserve System t o advance d i s c o u n t r a t e s .
The f a v o r i t e form of borrowing
from F e d e r a l Reserve Banks during the p a s t two years and a h a l f h a s b e e n
member banks ' b i l l s payable c o l l a t e r a i l e d b y government s e c u r i t i e s , e s p e c i a l l y the s h o r t - d a t e d C e r t i f i c a t e s of Indebtedness. Out of a t o t a l of 2,710
l l s h e l d on November 28,1919, 1,736 m i l l i o n s c o n s i s t e d of
t o be
m i l l i o n s of b i
http://fraser.stlouisfed.org/
what h St. come
Federal Reserve Bank of a s Louis
by government securities. Preferential rates were established, by the reserve
batiks upon t h i s c l a s s of paper a s a g a i n s t o r d i n a r y commercial paper, e a r l y
i n t h e war, and -until v e r y r e c e n t l y t h i s paper a l s o enjoyed a s u b s t a n t i a l
d i f f e r e n t i a l under t h e r a t e borne by t h e government s e c u r i t y by which i t was
coilateralled.
T h i s p o l i c y which was adopted a t the b e g i n n i n g of the war f o r t h e purpose
p a r t i c u l a r l y of s t i m u l a t i n g s u b s c r i p t i o n s to the government*s s h o r t d a t e d
s e c u r i t i e s h a s been p r o v i n g i t s e l f a q u e s t i o n a b l e e x p e d i e n t i n r e c e n t months*
So long a s t h e government m a i n t a i n e d a p r e t t y e f f e c t i v e c o n t r o l over new
s e c u r i t y i s s u e s through i t s C a p i t a l I s s u e s Committee, and over p r o d u c t i o n
through t h e War I n d u s t r i e s Board, and so l o n g a s general c o n d i t i o n s gave
l i t t l e i n c e n t i v e to s p e c u l a t i o n and t o s p e c u l a t i v e b u s i n e s s e n t e r p r i s e , l i t t l e
harm f o l l o w e d p e r h a p s from r a t e s t h a t were purposely f i x e d a t a low l e v e l i n
ojrder to s t i m u l a t e i n t e r e s t i n government f i n a n c e and i n war p r o d u c t i o n .
But
the s i t u a t i o n h a s m a t e r i a l l y changed and t h e r e h a s been much evidence i n
r e c e n t months t h a t the f a c i l i t i e s of the Federal Reserve System which the
Federal Reserve Act t r i e d c a r e f u l l y t o p r o t e c t from being employed f o r specul a t i v e u s e s have been drawn i n i n c r e a s i n g volume i n t o the f i e l d of s p e c u l a t i o n i n s t o c k s , l a n d and commodities by r e a s o n of the easy a c c e s s given t o
F e d e r a l Reserve Bank f a c i l i t i e s , i n a i d of government f i n a n c i n g .
As a f i r s t s t e p i n t h e c o r r e c t i o n of t h i s c o n d i t i o n , r e s e r v e bank r a t e s
on war l o a n paper Jiave r e c e n t l y been advanced t o a p a r i t y w i t h r a t e s borne by
Treasury C e r t i f i c a t e s , t h e d i f f e r e n t i a l which was f o r m e r l y maintained between
them being e n t i r e l y removed.
At the sau-e time a p o l i c y of " d i r e c t a c t i o n *
s o - c a l l e d , i s b e i n g advocated by those who doubt t h e e f f i c a c y of c r e d i t
c o n t r o l by r a t e s under p r e s e n t anomalous c o n d i t i o n s , and who a l s o f e a r t h e
- • '
e f f e c t of any r a d i c a l d e p a r t u r e w i t h r e s p e c t t o d i s c o u n t r a t e s on t h e
T r e a s u r y ' s p o s i t i o n , so l o n g a s i t c o n t i n u e s to be a l a r g e b o r r o w e r .
direct #ction in present
By
•
•
•
elreixnetances i s meant a supervisory restriction of the w e of credit pa*v
ticularly for spetml&tive purposes through, close contact and cooperatien of
leading member banks with the policies end. purposes of their federal Reserve
Banks.
This method of control i s now being applied, and the experiment w i l l
be watched with interest*
It i s possible that direct action of the sort indicated above may succeed
as a method of controlling the excessive use of credit for stock speculation*
In the opinion of many, however, the existing credit situation in the United
States which c a l l s for correction i s not along the excessive use of credit in
speculation, but the excessive use of eredit in ordinary trade and industry*
The inflations produced by the war have given a speculative tinge to much
ordinary business and industrial enterprise.
Those who take this view of the
credit situation hold that the proper and primary method of control i s through
discount rates, aiti. they believe that the credit situation will not be brought
under effective control in the United States until ways are devised here of
mating reserve
bank rates "effective"in the sense which i s well understood
in Europe, particularly in Snglond where the dxssovnt rate has long been
successfully employed as an instrument of credit control and regulation*
It
i s probable that if the banking situation in the United States were not as
closely tied up as i t s t i l l i s , unfortunately, with the Treasury situation,
the year 1920 would see important steps taken by the Federal Reserve System
toward the development of a technique of control through rates*
In defect of
any considerable or important action along this line, there is likely to be
experimentation with direct action as a method of control, for the credit
situation can not any longer he l e f t to take i t s own course with the many incentives that post-bellum conditions are giving to the exploitation of bank
credit by financiers and traders and promotera of the inflationist type.
966
Kx OFFICIO MEMBERS
W . P . a . H A N D I N G . GOVERNOR
A L B E R T S T R A U S S . VICE GOVERNOR
CARTER C L A S S
S I D F T S T I m OF THE TREASURY
CHAIRMAN
ADOLPH C. MILLER
C H A R L E S 8. H A M L I N
FEDERAL RESERVE BOARD
J O H N SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
HENRY A. MOEHLENPAH
W . T . C H A P M A N . SECRETARY
R . G . E M E R S O N , ASSISTANT SECRETARY
ADDRESS REPLY TO
WASHINGTON
F E D E R A L R E S E R V E B O A R D
W . M. IMLAY, FISCAL AGENT
December 6,1919*
Dear S i r : Your a t t e n t i o n i s d e f e c t e d to the Board's
c i r c u l a r No, 21, S e r i e s of 191$, dated December 27,
1915, a copy of which i s herewith enclosed.
The p r o v i s i o n s of t h i s c i r c u l a r are s t i l l
in e f f e c t , and the Board d e s i r e s , i n order t h a t t h e r e
may be no misunderstandings, t h a t you b r i n g t h i s to
the a t t e n t i o n of each of your d i r e c t o r s *
Kindly acknowledge r e c e i p t *
Very t r u l y yours,
Enc.,
Governor*
To Chairmen of a l l F.R. Banks.
X-2746
967
%
»
X-1746 a
C i r c u l a r No< 21
Series of 19ig»
FEDERAL RESERVE BOARD.
Washington, December 27,1915.
E l i g i b i l i t y of Candidates f o r D i r e c t o r s h i p s .
The Federal Reserve Board has adopted under date of December 2} the
following r e s o l u t i o n :
Whereas, I t i s the opinion of the Federal Reserve Board t h a t persons
holding p o l i t i c a l or public o f f i c e i n the service of the United Spates, or of
any S t a t e , T e r r i t o r y , county, d i s t r i c t , p o l i t i c a l subdivision, or municipality
t h e r e o f , or a c t i n g as members of p o l i t i c a l p a r t y committees, can not c o n s i s t e n t l y with the s p i t i t and underlying p r i n c i p l e s of the Federal Reserve Act,
serve as d i r e c t o r s or o f f i c e r s of Federal Reserve Banks.
Resolved, That the Federal Reserve Board hereby expresses to the member
banks i t s opinion t h a t no such persons should henceforward be e l e c t e d or a c t
as d i r e c t o r s or o f f i c e r s of Federal Reserve Banks; and p r e s c r i b e # a s a cond i t i o n of e l i g i b i l i t y t h a t candidates f o r e l e c t i o n s h a l l comply with the
terms of t h i s r e s o l u t i o n .
Resolved f u r t h e r , That copies of t h i s r e s o l u t i o n be sent t o every member
bank and Federal Reserve Bank and t o a l l d i r e c t o r s of Federal Reserve Banks.
While the Board i s of the opinion t h a t the p o l i c y o u t l i n e d i n t h i s r e s o l u t i o n should become e f f e c t i v e a t once, d i r e c t o r s of Federal Reserve Banks
e l e c t e d p r i o r t o the date of i t s adoption w i l l not be r e q u i r e d to r e s i g n t h e i r
p o s i t i o n s a s such d i r e c t o r s u n t i l the end of the term f o r which they were
elected.
CHARLES S. HAMLIN,
Governor*
H, PARKER WILLIS,
Secretary.
968
FEDERAL
R E S £ B V£
BOARD
STATEMENT FOR THE PRESS*,
X-l?47
For immediate r e l e a s e *
Announcement was made today t h a t under arrangements made
between the Treasury and the Federal Reserve Board, standard s i l v e r
d o l l a r s t h a t ' a r e f r e e i n the Treasury w i l l u n t i l f u r t h e r n o t i c e be
d e l i v e r e d a g a i n s t other forms of money to the' Division of Foreign
Exchange of the Federal Reserve Board, which w i l l , through the
Federal Reserve Bank of New York, cooperating with the branches
of American banks i n the O r i e n t , employ such d o l l a r s in r e g u l a t i n g
our exchanges with s i l v e r standard c o u n t r i e s .
This arrangement does not, of course, a f f e c t the redemption
of o u t s t a n d i n g s i l v e r c e r t i f i c a t e s i n standard s i l v e r d o l l a r s .
December 6, 1919 -
t.
CARTER GLASS
FTLCFTLTAAT OF THE TREASURY
CHAIRMAN
J O H N SKELTOM WILLIAMS
COMPTROLLER OF THE CURRENCY
969
W. P . G . HARDING. GOVERNOR
ALBERT STRAUSS. VICE GOVERNOR
I X OFFICIO MEMBERS
ADOLPH C. MILLER
CHARLES S . HAMLIN
FEDERAL RESERVE BOARD
HENRY A MOEHLENPAH
W . T. CHAPMAN. SECRETARY
R. G . EMERSON. ASSISTANT SECRETARY
ADDRESS REPLY TO
FEDERAL RESERVE BOARD
WASHINGTON
w . M. IMLAY. FISCAL AGENT
X-17U8
I
Dear
Receipt i s acknowledged, of your l e t t e r of the
i n which you p r o t e s t a g a i n s t the p o l i c y which has been adopted, 'by the
Federal Reserve Banks w i t h the approval of the Federal Reserve Board
i n the m a t t e r of t h e c o l l e c t i o n of checks which a r e r e c e i v e d by Federal
Reserve Banks from t h e i r member barks or from non-member banks which
maintain c l e a r i n g or c o l l e c t i o n accounts w i t h them*
The B o a r d ' s a c t i o n i s based upon i t s conception of t h e v e r y evident
purposes off the F e d e r a l Reserve Act. Section 13 of t h e Act b e g i n s , as
f o l l o w s : "Any Federal Reserve Bank may r e c e i v e from any of i t s member
banks, and from t h e United S t a t e s , d e p o s i t s of c u r r e n t f u n d s i n l a w f u l
money, n a t i o n a l bank n o t e s , Federal Reserve n o t e s , or checks, and d r a f t s ,
payable upon p r e s e n t a t i o n , and a l s o , f o r c o l l e c t i o n , maturing n o t e s and
b i l l s . " Even t h o u ^ i the F e d e r a l Reserve Board h a s h e r e t o f o r e r u l e d t h a t
the p e r m i s s i v e "may" as used i n t h e f o r e g o i n g paragraph should n o t be
construed to mean t h e mandatory " s h a l l n n e v e r t h e l e s s i t i s c l e a r t h a t a
Federal Reserve Bank i n order to do any b u s i n e s s whatever must e x e r c i s e some
of the permissive powers a u t h o r i z e d by law. I t would be impossible o t h e r wise f o r a F e d e r a l Reserve Bank to a f f o r d to i t s member banks many of the
p r i v i l e g e s which t h e law c l e a r l y contemplates and to which t h e member batiks
a r e c l e a r l y e n t i t l e d . But independently of a d i s c u s s i o n of t h i s phase •*
the s i t u a t i o n , i t seems to the Board t h a t doubts upon t h i s q u e s t i o n a r e
r e # # l v e d upon a c o n s i d e r a t i o n of the p r o v i s i o n s of S e c t i o n 16. "Every
F e d e r a l Reserve Bank s h a l l r e c e i v e on d e p o s i t a t par from member banks or
y
from F e d e r a l Reserve Banks checks and d r a f t s drawn upon any of i t s d e p o s i t o r s .
I n t h i s c a s e , the o b l i g a t o r y " s h a l l " i s u s e d so t h a t t h e r e i s no o p t i o n i n
the Federal Reserve Bank so f a r as checks and d r a f t s upon i t s d e p o s i t o r s
a r e concerned. From t h i s i t may be argued t h a t a s the d e p o s i t o r s of a
Federal Reserve Bank a r e member banks t h e r e i s no o b l i g a t i o n upon the
F e d e r a l Reserve Bank to r e c e i v e on d e p o s i t a t p a r checks on non-member
banks, b u t even i f t h e language of Section 13 be c o n s t r u e d a s permissive
t h e r e seems t o be no q u e s t i o n t h a t t h e F e d e r a l Reserve Bank h a s the
to r e c e i v e on d e p o s i t from any of i t s member banks any c h e c k s o r d r a f t s
upon whomsoever drawn, p r o v i d e d they a r e payable upon p r e s e n t a t i o n . The
whole purpose of t h e Act demands t h a t i n j u s t i c e to member banks, they
should e x e r c i s e t h a t r i g f c t .
S e c t i o n 16 f u r t h e r p r o v i d e s t h a t t h e Federal Reserve Board "may
a t i t s d i s c r e t i o n e x e r c i s e the f u n c t i o n s of a c l e a r i n g house f o r such
F e d e r a l Reserve Banks *** and may a l s o r e q u i r e each such bank to e x e r c i s e
970
-2-
X-174S
the f u n c t i o n s of a c l e a r i n g house f o r i t s member b a n k s . 0 In accordance with
the purpose of t h i s paragraph, the Federal Reserve Board, with the view u l t i mately of e s t a b l i s h i n g a u n i v e r s a l or n a t i u n a l system 01 c l e a r i n g i n t e r s e c t i o n a l
balances as well a s bank checks and d r a f t s , has e s t a b l i s h e d a gola s e t t l e m e n t
fund through which d a i l y c l e a r i n g s between a l l Federal Eeserve Barks are
consummated and h a s a l s o required, each Federal Reserve Bank to e x e r c i s e the
f u n c t i o n s of a c l e a r i n g house f o r i t s member bariks. In order, however, t o make
f u l l y e f f e c t i v e i t s f a c i l i t i e s as a c l e a r i n g house i n accordance with the terms
of t h i s s e c t i o n , there does not seem to be any doubt t h a t the Federal Ee serve
Basak should not only e x e r c i s e i t s o b l i g a t o r y power t o r e c e i v e from member barks
checks and d r a f t s drawn upon other member banks, but t h a t i t should a l s o exer*c i s e i t s permissive power to r e c e i v e from member bariks any other checks and
d r a f t s upon whomsoever drawn, provided t h a t they are payable upon p r e s e n t a t i o n .
There are no doubt many non-member bariks without s u f f i c i e n t c a p i t a l i z a t i o n
to make them e l i g i b l e f o r membership i n t h e Federal Reserve System, but p r o v i sion i s made f o r such banks i n Section 13 by a u t h o r i z i n g t h e Federal Reserve
Banks, f o r purposes of exchange or of c o l l e c t i o n , to r e c e i v e d e p o s i t s from any
non-member bank or t r u s t company. But f o r the f a c t t h a t the small country barice
are able t o have t h e i r out of town items c r e d i t e d at par by some c i t y correspondent, there i s no doubt t h a t many more of them would a v a i l themselves of the
non-fcecber c o l l e c t i o n p r i v i l e g e than have done so.
There i s a proviso i n Section 13 which allows member and non-member banks
to make r e a s o n a b l e charges "to be determined and r e g u l a t e d by t h e Federal Reserve /
Board, but i n no case to exceed 10 c e n t s per $100 or f r a c t i o n t h e r e o f , based on
the t o t a l of checks and d r a f t s presented a t any one time, f o r c o l l e c t i o n or payment of checks and d r a f t s and remission t h e r e f o r by exchange or otherwise; b u t
no such charges s h a l l be maae a g a i n s t the Federal Reserve Banks." This has been
construed by the Attorney General of the United S t a t e s a s meaning t h a t a Federal
Reserve Bank cannot l e g a l l y pay. any f e e to a member or non-member bank f o r the
c o l l e c t i o n and remittance of a check. I t f o l l o w s , t h e r e f o r e , t h a t if the Federal
Reserve Banks a r e t o give the service r e q u i r e d of them under the p r o v i s i o n s of
Section 13 they must i n cases where barks r e f u s e t o remit f o r t h e i r checks a t
par use some other means of c o l l e c t i o n no matter how expensive.
The a c t i o n of the v a r i o u s Federal Reserve Banks i n extending t h e i r par l i s t s
has met with the c o r d i a l approval of the Federal Reserve Board, which holds the
view that under the terms of e x i s t i n g law, the Federal Reserve Banks must use
every e f f o r t to c o l l e c t a l l bank checks r e c e i v e d from member b a r k s a t p a r ,
Several of the Federal Reserve Bariks a r e now able t o c o l l e c t on a l l p o i n t s i n
t h e i r r e s p e c t i v e d i s t r i c t s a t par and new a d d i t i o n s t o the o t h e r par l i s t s a r e
b e i n g made every day. The Board sees no o b j e c t i o n to one bank charging another
bank o*. a f i r m or i n d i v i d u a l the f u l l amount provided i n Section 13 of the Fed*
e r a l Reserve Act ( l o c e n t s per $100) and has n o t undertaken to modify these
charges, but the Act e x p r e s s l y provides t h a t no such charge s h a l l be made a g a i n s t
the Federal Reserve Bariks.
X-17U8
I t i s the Board's duty to see t h a t the law i s administered f a i r l y
and without d i s c r i m i n a t i o n and t h a t i t a p p l i e s to a l l banks a l i k e , and i t
i s making an earnest endeavor to carry out the laws as construed by the
highest l e g a l a u t h o r i t y of the a d m i n i s t r a t i v e branch of the Government.
972
TREASURY DEBiRTMBNT
X-1749
WASHINGTON
November 29, 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 Auditor f o r t h e Treasury Department f o r settlement t h e account
of t h e Bureau of Engraving and ITiriting f o r p r e p a r i n g Federal Reserve notes
d u r i n g the period September 1 t o September 30, 1919, amounting t o 453.70, a s
follows:
FEDERAL RESERVE NOTES, 1918.
4500
jplOOO
Total
Boston*....
.....
300
300
Philadelphia.........
200
200
400
Minneapolis..........
500
—
gOO
700
500
1200
1200 sheets a t $44.75.
4-53.70
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 :
Sheets,
300
Philadelphia.,
400
Minneapol i s . . .
500
1200
i_V"
bu^i
• 'vfSt'
Compensation.
44.43
5.90
7.S7
U7.70
Bureau a p p r o p r i a t i o n s
•
Plate
I n c . CompenMinting. Materials, sation.
44.50
"Ti.OO
[l~e50
6.00
4.00
2,00
7.50
5.00
2-50
WIS .00
W.2.00
^6,00
Total
413.43
17.90
22.37
^53.>of
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
f 6 a P P r o P r i a ' f c * ' o n " R e p a r a t i o n and I s s u e of Federal Reserve Notes, Reim~
an<
*
* 9 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 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 .
TREASURY DEBjRTMENT
WASHINGTON
X-1748
November 29, 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 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 prejS-ring Federal Reserve n o t e s d u r i n g
t h e period September 1 t o September 30, 1919, amounting t o ^176,642.09 as follows;
M
mo '
Boston
136,000
359,000
He*. York
518,000
567,000
Philadelphia..,..
14,000
163,000
Cleveland.
11,000
43,000
Richmond
9,000
72,000
Atlanta..........
72,000
45,000
Chicago...403,000
342,000
S t . L o u i e . . . . . . . . 150,000
10,000
Minneapolis......
49,000
£0,000
Kansas C i t y . . . . . .
71,000
25,000
Dallas
- T—
San F r a n c i s c o
221*00q
95,000
2ul&§L^9 1.761.C00
M
43,000
99,000
59,000
67,000
53,000
MP.
2,000
18,000
88,000
40,000
10,000
11,000
4,000
2,000
- —45.000
14,000
57*000
530,000
8,000
3,992,000 s h e e t s a t #44.75
•
- —
1,000
,
- —1,000
- —
- —
- —
.2.000
Total
540,000
1,202,000
257,000
129,000
154,000
117,000
845,000
204,000
79,000
96,000
16,000
373.000
3.992.000
#178,642.00
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
540,000
New York
.1,202,000
H i i l a d e l p h i a . . 275,000
Cleveland
129,000
R i c h m o n d , . . . . . 134,000
Atlanta...
117,000
Chicago.
845,000
S t . Louis
204,000
M i n n e a p o l i s . . . 79,000
Kansas C i t y . . . 96,000
Dallas..
16,000
San F r a n c i s c o . 373.000
3.992.000
Bureau a p p r o p r i a t i o n s
CempenPlate
I n c . Cornsat ion.
P r i n t i n g . M a t e r i a l s , -pensation.
Total,
#7,965,00
#8,100.00 " #5,400.00
#2,700.00 #24,165.00
17,729.50
18,030.00 12,020.00
6,010.00
53,789.50
3,790.75
3,855.00
2,570.00
1,265,00
11,500.75
1,902.75
1,935.00
1,290.00
645.00
5,772.75
1,976.50
2,010.00
1,340.00
670.00
5,996.50
1,725.75
1,755.00
1,170.00
585.00
5,235.75
12,463.75
12,675.00
8,450.00
4,225.00
37,813.75
3,009.00
3,060.00
2,040.00
1,020,00
9,129.00
1,165.25
1,185.00
790.00
395.00
3,535.25
480.00
4,296.00
1,416.00
1,440.00
960.00
236.00
240.00
160.00
80.00
716.00
5.501.75
5,595.00
3.730.00
1.865.00
16.691.75
&58.882.00, #59.880,00 #39.920.00 #19.960.00 5,178.642.00
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 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 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 * Twa™
' 974
TREASURY DEBvHTMENT
X-1747
washington
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 Auditor f o r t h e 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 August 1 t o August 31, 1919, amounting t o *170,05, a s f o l l o w s :
FEDERAL RESERVE NOTES. 1918.
. .
^500
New Y o r k . . . . .
1,900
Cleveland
... *
100
Chicago............
100
2.100
klOOO
1,400
vlQuOO
300
1.400
300
3,800 sheets a t 1*44.75
Total
3,600
100
IQQ
3.000
4170.05
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 follows:
New York
Cleveland
Chicago
Sheets.
3,600
100
...
100
-£*800-
Compensation.
$53.10
1.48
1.47
ii?56.05
Bureau a p p r o p r i a t i o n s
Plate
I n c . ComBrinting. M a t e r i a ] a . p e n s a t i o n .
454.00
436.00
*18.00
I.5O
1.00
.50
I.hQ
U00
.60
*57.00
w38.00
$19,00
Total.
4161.10
4.48
<U4%
%170«05
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 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 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. 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 Treasury.
>
1
1
TREASURY DEBJtBiENT
WASHINGTON
*
X-1746
9 7 5
November 29, 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 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 prep&ring Federal Reserve n o t e s d u r i n g
t h e period August 1 t o August 31, 1919, amounting t o ^165,082.75, a s f o l l o w s .
M
1 10
B o s t o n . . . . . . . . . . . 169,000
82 fooo. 298,000
New York
642 ,000
131 ,000
B i i l a d e l p h i a . . . . . 420,000
26,000
126 ,000
8,000
Richmond, .*
26 ,000
100 ,000
9,000
Atlanta......
76 ,000
C h i c a g o . . . . . . . *. . 253,000
. 113,000
T9 ,000
S t . Louis.
24,000
26 ,000
43,000
15 ,000
.
16,000
1 ,000
85 ,000
. 164.000
San F r a n c i s c o . . .
1.543.000 ]L.3A9 .000
m
89,000
m
10.0U0
19,000
5,000
14,000
231,000
103,000
75,000
13,000
48,-000
36,000
61,000
«
mm
— —
2,000
—. — —
—
——•» —
—
— ——
5,000
2,000
1,000
1,000
-*
-•
—
—
—
2,000
•ii — »•
•
57.000
60 T 000
717,000
3,689,000 s h e e t s a t # 4 . 7 5
}.;.00
'
——
3,000
To t a l
350,000
1,190,000
661,000
241,000
47,000
157,000
370,000
236,000
50,000
59,000
19,000
309.000
3.689.000
.#165,082.75
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
350,000
New York
1,190,0U0
P h i l a d e l p h i a . . 661,000
C l e v e l a n d . . . . . 241,000
Richmond
47,000
A t l a n t a . . . . . . . 157,000
Chicago
370,000
S t . Louis
236,000
Minneapolis...
50,000
Kansas C i t y . . .
59,000
Dallas.
19,000
San F r a n c i s c o . 309.000
3.689.000
Bureau a p p r o p r i a t i o n s
ComrienHate
I n c . Corns a t P r i n t i n g . slateria3 s . laenaation.
Total
§5^162.50
#5,250.00 1 3 , 5 0 0 . 0 0 $1,750.00
^15,662.50
17,552.50
17,850.00 11,900.00
5,950.00
52,252.50
9,749.75
9,915.00
6,610.00
3,305.00
29,579.75
3,554.75
3,615.00
2,410.00
1,205.00
10,784.75
693.25
705.00
470.00
235.00
2,103.25
785.00
7,025.75
2,315.75
2,355.00
1,570.00
5,457.50
5,550.00
3,700.00
1,850.00
16,557.50
3,481.00
3,540.00
2,360.00
1,180.00
10,561.00
737,50
750.00
500.00
250.00
2,237.50
870.25
885.00
590.00
295.00
2,640.25
280.25
285.00
190.00
95.00
850.25
4.557.75
4.635.00
3.090.00
1.545.00
13.827.75
$54.412.75 $55.335.00 436.890.00 &18.445.00 &165.082.75
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 , Reimburs a b l e " , and i t i s r e q u e s t e d t h a t ycur 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 e be reimbursed in l i k e amount.
Respectfully,
R. C. L e f f i n g v . 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 .
976
TREASURY DEPARTMENT
WASHINGTON
X-i745
November 29, 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 the Department has r e f e r r e d t o t h e Auditor f o r the Treasury Department f o r settlement t h e account of
t h e Bureau of Engraving and P r i n t i n g f o r preparing Federal Reserve notes during
t h e period October 1 t o October 31, 1919, amounting t o $*98,45, a s follows:
FEDERAL RESERVE NOTES. 1918
$>500
1000
100
200
100
100
1500
Nev, York.
5,1000
100
100
200
Total
1100
200
400
100
400
2200
w w w
300 •
700
2200 sheets a t $44.75 ,
The charges a g a i n s t t h e several Federal Reserve Banks a r e a s f o l l o w s :
New York
Atlanta...
Chicago.......
Minneapolis...
San F r a n c i s c o .
Sheet s
1100
gOO
4Q0
100
400
&32.4S
2200
t
i
o
n
Bureau a p p r o p r i a t i o n s
Plate
I n c . CornP r i n t i n g Materials* p e n s a t i o n .
• 6-16.50
$>11.00
$5.50
3.00
2.00
1..00
6.00
4.00
2.00
1.50
1.00
.50
6.00
4.00
2.00
W3.00
*22.00
fell.
00
Compensation,.
$>16.23
2.95
5.90
1.47
5.90
B
o
a
r
d
c m s e
i n a e f i n i t e
Respectfully,
E. 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 Treasury.
Total
jfr.49.23
8.95
17,90
4.47
17.90
$98.45
977
« I
TREabURY DEjEkBTMENT
l.ASHINtiTOIT
X-1744
November 28, 1919.
'
The Governor,
Federal Reserve Board,
Sir:
By d i r e c t i o n of the S e c r e t a r y , you a r e advised t h a t the 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 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 J u l y 1 t o J u l y 31 f 1919, amounting t o 4pl02.93, as f o l l o w s :
FEDERAL RESERVE NOTES. 1918
New Y o r k . . . . . . . .
Philadelphia....
Cleveland.......
Chicago
San F r a n c i s c o . . .
i.,500
700
UOOO
400
200
200
100
300
200
w w w
4,5000
4,10000
«*
W* W «•#*•
W
100
* .
mm mm
1.200
J.00
900
W**
mm"
' 100
100
Total
1,100
200
600
300
100
2.300
2,300 sheets a t ^44.75.,
The charges 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 as f o l l o w s :
New York
Philadelphia..
Cleveland.....
Chicago
San F r a n c i s c o .
Sheet s
1,100
200
600
300
100
2.300
Compensation.
vl6,23
2.95
8,85
4.43
1.47
<*33.93
Bureau a p p r o p r i a t i o n s
Plate
Inc. ComP r i n t i n t r . M a t e r i a l s . pensation.
vll.00
tlb.50
^5.50
3.00
2.00
1.00
9.00
6.00
3.00
3.00
4.50
1.50
1.00
1.50
.50
*34.50
<•23.00
§11.50
Total
V49.23
8.95
26.85
13.43
4,47
*102.93
„
The Bureau a p p r o p r i a t i o n s v . i l l 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, Reimb u r s a b l e , " and i t i s requested t h a t your Board cause such i n d e f i n i t e appropriat i o n t o be reimbursed in 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 Treasury.
TRILSDRY DEZJtT-^T
• W-lSHHOl'ON
« Ir
978
X-1743
November 29, 1919.
The Governor,
Federal Reserve Board.
Sir:
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 the 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 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 J u l y 1 t o J u l y 31, 1919, amounting t o $158,862.50, a s follows;
Boston..........
New York
Philadelphia....
Cleveland
Richmond,.......
Atlanta
Chicago.........
S t . Louis
Minneapolis.....
Kansas C i t y . . . . .
Dallas..........
San F r a n c i s c o . . .
*50
mm
******
7,000
24,000
blOO
—
15 ,000
**
2,000
—
7,000
7,000
1 ,000
4
*
6,000
'm
—
mm
m *"
i
1 ,000
—
«»
3,550,000 s h e e t s a t ty44.75.
17
o
53.000
Total
518 ,000
816 ,000
452 ,000
68 ,000
105 ,0U0
208 ,000
601 ,000
227 ,000
54 ,000
202 ,000
59 ,000
240 .000
3.550
3
1
$20
20 *.000
185,000
127, ,000
15,000
2*000
91,000
194,000
12,000
2,000
1,000
1,000
54.000
704.000
o
'
*10
55,000
349,000
108,000
8,000
1,000
25,000
96,000
116,000
24,000
23,000
2,000
103.000
910.000
8
"
45
443,000
275,000
178,000
45,000
100,000
92,000
303,000
92,000
27,000
178,000
50,000
83.000
1.866.000
.*>158,862.50
The charges a g a i n s t t h e several Federal Reserve Banks a r e a s follows:
Boston
New Y o r k . . . .
Philadelphia
Cleveland..,
Richmond....
Atlanta
Chicago
St. Louis...
Minneapolis.
Kansas C i t y .
Dallas
San Francisco
A*
Sheets.
518,000
816,000
452,000
68,000
105,000
208,000
601,000
227,000
54,000
202,000
59,000
240.000
CompenI n c . ComHate
s a t i o n . 4* P r i n t i n g . M a t e r i a l s . p e n s a t i o n .
Total
$>7,770.00 &5,180.00 ^2,590.00
W,640.50/
$23,180.50
12,036.00
4,080.00
12,240.00
8,160.00
36,516.00
6,667.00
6,780.00
2,260.00
4,520.00
20,227.00
1,003.00
1,020.00
680.00
340.00
3,045.00
1,050.00
1,548.75
1,575.00
525.00
4,698.75
3,068.00
2,080.00
3,120.00
1,040.00
9,308.00
8,864.75
9,015.00
6,010.00
3,005,00
26,894.75
3,405.00
3,348.25
2,270.00
1,135.00
10,158.25
796.50
810.00
540.00
270.00
2,416.50
3,030.00
2,979.50
2,020.00
1,010.00
9,039.50
870.25
885,00
590.00
295.00
2,640.25
3.540.00
3.600.00
2.400.00
1.200.00
10.740.00
£52.362.50
&53.250.00 S35.S00.00. $,17.750.00 ^158.862.50
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 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 "ft-eparation and I s s u e of Federal Reserve Notes, Reimb u r s a b l e " , and i t i e requested 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 e be reimbursed in 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 Secretary of t h e Treasury
979
EX OFFICIO MEMBERS
—
CARTER GLASS
SECBLTMTT OF THE TREASURY
W. P. 6 . HARDING. GOVERNOR
ALBERT STRAUSS. VICE GOVERNOR
ADOLPH C. MILLER
CHARLES S.HAMLIN
FEDERAL RESERVE BOARD
WASHINGTON
%%%%
t i = R = — "
December 10,1919•
x-1751
Subject:
Federal Eeserve B u l l e t i n : Special r a t e to
.Examiners of S t a t e Banking Departments.
Dear Sir
With f u r t h e r r e f e r e n c e to the Board's l e t t e r
of December 22nd IglS (X-1335. copy attached) w i l l you .
p l e a s e send to- the Board a t your e a r l y convenience a l i s t
of the S t a t e Bank Jixaminers to whom you d e s i r e the Federal
Reserve B u l l e t i n sent during the year 1920»
The s u b s c r i p t i o n s
i n the names of the v a r i o u s S t a t e Bank Examiners expire with
the December i s s u e .
Very t r u l y yours,
Enclosure. .
Assistant Secretary.
To Chairmen of a l l F.R. Banks.
EX OFFICIO MEMBERS
W . P . 0 . HARDING, GOVERNOR
980
ALBERT S T R A U S S . VICE GOVERNOR
CARTER GLASS
SECRETARYiOFIHE TREASURY
LRYgOFTHE
CRAlffBA
ADOLPH C. MILLER
C H A R L E S S . HAMLIN
FEDERAL RESERVE BOARD
J O H N SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
<
ADDRESS REPLY TO
FEDERAL RESERVE BOARD
1
HENRY A. MOEHLENPAH
W . T. CHAPMAN, SECRETARY
R. G . E M E R S O N , ASSISTANT SECRETARY
WASHINGTON
W . M. IMLAY, FISCAL AGENT
December 27, 1918.
X-3 335
SUBJECT: F e d e r a l Reserve B u l l e t i n : Special r a t a t o
Examiners of S t a t s Banking Departments.
Dear S i r :
I t lias t e e n suggested t h a t i t w i l l perhaps f e s t e r a
s p i r i t of cooperation between the d i f f e r e n t S t a t e Banking
Departments and t h e Federal Reserve System, if t h e Federal Re*s e r v e B u l l e t i n was f u r n i s h e d r e g u l a r l y t o a l l t h e examiners in
those- d e p a r t m e n t s . The Board i s in accord w i t h t h i s view, and
in order t h a t each bank may take care of i t s own d i s t r i c t , the
Board w i l l accept s u b s c r i p t i o n s from t h e Federal Reserve Banks
a t t h e r a t e of one d o l l a r per annum f o r each naire. In sending
t h e names, p l e a s e i n d i c a t e t h a t they a r e examiners, and i n c l o s e
check t o c o v e r .
In t h e m a t t e r of divided S t a t e s , the Federal Reserve
a g e n t s of the r e s p e c t i v e d i s t r i c t s should agree a s t o who w i l l
t a k e care of t h e whole s t a t e ; — t h i s in order t o avoid d u p l i c a tion.
The p o l i c y of s t a t i n g t o the banking departments t h a t
you a r e w i l l i n g t o f u r n i s h t h e B u l l e t i n , or a r r a n g i n g i t so t h a t
t h e r e q u e s t w i l l come from t h e banking department, i s l e f t t o
your d i s c r e t i o n .
Kindly acknowledge r e c e i p t .
Very t r u l y yours,
The Chairman,
F e d e r a l Reserve Bank,
Secretary.
TREASURY DEBiRTMBNT.
WASHINGTON
.
XI751
9 8 1
December 1, 1919.
The Governor,
Federal Reserve Board.
Sir:
By d i r e c t i o n of t h e Secretary, you a r e advised t h a t the Department has r e f e r r e d t o the Auditor 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 October 1 t o October 31, 1919, amounting to ^128,656.25, a s follows:
Boston..«.«..»•
New York,
Biiladelphia...
Cleveland......
Richmond
Atlanta.
Chicago.
S t . XO X s •
jU
Minneapolis....
Kansas C i t y . . . .
Dallas
San F r a n c i s c o . .
..
..
..
..
45
337,000
86,000
169,000
55,000
4,000
8,000
77,000
165,000
242.000
1,143,000
Federal Reserve Notes. 1914.
gio
450
v20
3,000 < 3,000
353,000
6,000
20,000
342,000
ZC3,000
— —
145,000
17,000
1,000
3,000
— ———
2,000
81,000
— '
3,000
8,000
15,000
100,000
16,000
51,000
37,000
3,000
— ———
— ———
— —«—«•
2,000
16,000
———
5,000
150.000
137,000
41.000
1,21.5,000
471,000
I I — —»
—
uoo
2,000
— ———
1,000
— —— —
2,000
—
mm
wmmrnmm
5.000
Total
696,000
456,000
522,000
77,000
87,000
19,000
208,000
255,000
3,000
18,000
5,000
529.000
2.875.000
2,875,000 sheets a t %44.75 . .
.^128,656.25
The charges a g a i n s t t h e several Federal Reserve Banks a r e as follows;
Sheets.
Boston
696,000
Nev. Y o r k . . . . . 456,000
Philadelphia. 522,000
C l e v e l a n d . . . . 77,000
Richmond
87,000
A t l a n t a . . . . . . 19,000
C h i c a g o . . . . . . 208,000
S t . Loui s . . . . 255,000
3,000
Minneapolis..
Kansas C i t y . . 18,000
5,000
Dallas.......
San Francisco 529,000
zl ,875.000
Compensation.
*10,266.00
6,726.00
7,699.50
1,135.75
1,283.25
280.25
3,068.00
3,761.25
44.25
265.50
73.75
7.802.75
W2.406.25
Bureau annrocriat ions
Inc. ComHate
M a t e r i a l s . Tiensat ion.
Total
Print infi.
U0.440.00 % 6,960.00 *3,430.00
031,146.00
4,560.00
6,840.00
2,280.00
20,406.00
5,220.00
7,830.00
2,610.00
23,359.50
770.00
1,155.00
385.00
3,445.75
870.00
1,505.00
435.00
3,893.25
190.00
285.00
95.00
850.25
2,080.00
3,120.00
1,040.00
9,308.00
2,550.00
3,825.00
1,275.00
11,411.25
30.00
45.00
15.00
135.25
270.00
180.00
90.00
805.50
50.00
75.00
25.00
223.75
7.935.00
5.290.00
2.645.00
23.672.75
Vi2* 1 ^ , 0 0 . ^28.?50.00 U4.375.00 bl28.656.25
The Bureau appropriations 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 "Preparation 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 appropriat i o n t o be reimbursed in 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 Secretary of t h e Treasury.
$
EX OFFICIO MEMBERS
982
W . P . 6 . H A R D I N G , GOVERNOR
A L B E R T S T R A U S S . VICE GOVERNOR
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
ADOLPH C. MILLER
C H A R L E S S . HAMLIN
HENRY A. MOEHLENPAH
FEDERAL RESERVE BOARD
J O H N SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
W . T . C H A P M A N , SECRETARY
R . G . E M E R S O N , ASSISTANT SECRETARY
ADDRESS REPLY TO
WASHINGTON
FEDERAL RESERVE BOARD
W . M. IMLAY, FISCAL AGENT
December 11,1919*
Subject:
X-1752
Questions of La.v and Policy Involved, i n
Matter of C o l l e c t i n g a l l Checks a t P a r .
Dear Sir :*•
In view of complaints which are b e i n g made f r o a
time to t i n e concerning the p o l i c y of Federal Reserve Banks
i n collecting, checks dn a l l p o i n t s in t h e i r r e s p e c t i v e d i s t r i c t s a t p a r , there i s enclosed f o r your information- a copy
of a l e t t e r , which was sent t o a p r o t e s t i n g non-irdijjber bank
i n one of the d i s t r i c t s , which d e f i n e s the questions of law
ind p o l i c y involved.
Very t r u l y yours,
Governor.
To Chairmen and Governors of a l l F.R. banks.
983
x-nks
COPY
Dear
Receipt i s acknowledged of your l e t t e r of the
i n which you p r o t e s t a g a i n s t the p o l i c y which has been adopted by the
Federal Reserve Banks with the approval of the Federal Reserve Board
in the matter of t h e c o l l e c t i o n of checks which a r e r e c e i v e d by Federal
Reserve Banks from t h e i r member banks or from non-member banks which
maintain c l e a r i n g or c o l l e c t i o n accounts with them*
The B o a r d ' s a c t i o n i s based upon i t s conception of the very evident
purposes cff the Federal Reserve Act. Section 1J of the Act begins, as
f o l l o w s : "Any Federal Reserve Bank may r e c e i v e from any of i t s member
banks, and from t h e United S t a t e s , d e p o s i t s of c u r r e n t funds i n l a w f u l
money, n a t i o n a l bank notes, Federal Reserve n o t e s , or checks, and d r a f t s ,
payable upon p r e s e n t a t i o n , and a l s o , f o r c o l l e c t i o n , maturing notes and
b i l l s . " Even though the Federal Reserve Board has h e r e t o f o r e r u l e d t h a t
the permissive "may" as used i n the foregoing paragraph should not be
construed to mean the mandatory "shall n nevert,heless i t i s c l e a r t h a t a
Federal Reserve Bank i n o r d e r . t o do any business whatever must e x e r c i s e some
of the permissive powers authorized by law. I t would be impossible o t h e r wise f o r a Federal Reserve Bank to a f f o r d to i t s member banks many of the
p r i v i l e g e s which the law c l e a r l y contemplates and to which the member banks
a r e c l e a r l y e n t i t l e d . But independently of a d i s c u s s i o n of t h i s phase ef
the s i t u a t i o n , i t seems to the Board t h a t doubts upon t h i s q u e s t i o n are
received upon a c o n s i d e r a t i o n of the p r o v i s i o n s of Section 16. "Every
Federal Reserve Bank s h a l l r e c e i v e on d e p o s i t a t par from member banks or
from Federal Reserve Banks checks and d r a f t s drawn upon any of i t s depositors# 8
In t h i s case, the o b l i g a t o r y " s h a l l " i s used so t h a t t h e r e i s no option i n
the Federal Reserve Bank so f a r as checks and d r a f t s upon i t s d e p o s i t o r s
are concerned. From t h i s i t may be argued t h a t a s the d e p o s i t o r s of a
Federal Reserve Bank a r e member barks t h e r e i s no o b l i g a t i o n upon the
Federal Reserve Bank to r e c e i v e on deposit a t p a r checks on non—member
banks, but even if the language of Section 13 be construed as permissive
there seems t o be no question t h a t the Federal Reserve Bank has the r i g h t
to receive on d e p o s i t from any of i t s member banks any checks or d r a f t s
upon whomsoever drawn, provided they are payable upon p r e s e n t a t i o n . The
whole purpose of the Act demands that i n j u s t i c e to member banks, they
should e x e r c i s e t h a t r i ^ i t «
Section 16 f u r t h e r p r o v i d e s t h a t the Federal Reserve Board "may
a t i t s d i s c r e t i o n e x e r c i s e the f u n c t i o n s of a c l e a r i n g house f o r such
Federal Reserve Banks *** and may a l s o r e q u i r e each such bank to e x e r c i s e
[ 984
X.174S
the f u n c t i o n s of a c l e a r i n g house f o r i t s member b a n k s . " I n accordance with
the purpose of t h i s paragraph, tha Federal Reserve Board, with the view u l t i mately of e s t a b l i s h i n g a u n i v e r s a l or n a t i o n a l system of c l e a r i n g i n t e r s e c t i o n a l
balances as well a s bank checks and d r a f t s , has e s t a b l i s h e d a gol'ct s e t t l e m e n t
f u n d through which d a i l y c l e a r i n g s between a l l Federal Be serve Banks are
consummated and has a l s o r e q u i r e d each Federal Reserve Bank to e x e r c i s e t h e
f u n c t i o n s of a c l e a r i n g house f o r i t s member banks. In o r d e r , however, t o make
f u l l y e f f e c t i v e i t s f a c i l i t i e s as a c l e a r i n g house i n accordance with the. terms
of t h i s s e c t i o n , there does not seem to be any doubt t h a t the Federal Beserve
Basak should not only e x e r c i s e i t s o b l i g a t o r y power t o r e c e i v e from member banks
checks and d r a f t s drawn upon other member banks, but t h a t i t should a l s o e x e r c i s e i t s p e r m i s s i v e power t o r e c e i v e from member banks any o t h e r checks and
d r a f t s upon whomsoever drawn, provided t h a t they are payable upon p r e s e n t a t i o n .
There a r e no doubt many non-member banks w i t h o u t s u f f i c i e n t c a p i t a l i z a t i o n
to make them e l i g i b l e f o r membership i n the F e d e r a l Be serve System, but p r o v i sion i s made f o r such banks in Section 13 by a u t h o r i z i n g t h e Federal Beserve
Banks, f o r purposes of exchange or of c o l l e c t i o n , to r e c e i v e d e p o s i t s from any
non-member bank or t r u s t company. But f o r the f a c t t h a t t h e small country banks
are ab}e t o have t h e i r out of town items c r e d i t e d at par by some c i t y c o r r e s p o n dent, t h e r e I s no doubt t h a t many more of them would a v a i l themselves of the
non-ir.ec.ber c o l l e c t i o n p r i v i l e g e than have done so*
There i s a proviso i n Section 13 which a l l o c s member and non-member backs
to make r e a s o n a b l e charges " t o be determined and r e g u l a t e d by t h e Federal Reserve
Board, but i n no case to exceed 10 c e n t s per $100 or f r a c t i o n t h e r e o f , based on
the t o t a l of checks and d r a f t s p r e s e n t e d a t any one tiisy, f o r c o l l e c t i o n or payment of checks and d r a f t s and remission t h e r e f o r by exchange or otherwise; but
no such charges s h a l l be iraae a g a i n s t ' the .Federal Be servo Banks." This has been
construed by t h e Attorney General of the United S t a t e s a s meaning t h a t a F e d e r a l
Beserve Bank cannot l e g a l l y pay any f e e to a member or non-member bank f o r the
c o l l e c t i o n and r e m i t t a n c e of a check. I t f o l l o w s , t h e r e f o r e , t h a t i f the F e d e r a l
Reserve Banks a r e t o give the s e r v i c e r e q u i r e d of them under t h e p r o v i s i o n s of
Section 13 they must i n c a s e s where banks r e f u s e t o remit f o r t h e i r checks a t
p a r use some o t h e r means of c o l l e c t i o n no matter how expensive.
The a c t i o n of the v a r i o u s Federal Reserve Banks i n extending t h e i r par l i s t s
has met w i t h the c o r d i a l approval of the Federal Reserve Board, which h o l d s the
view t h a t under the terms of e x i s t i n g law, the Federal Beserve Banks must use
every e f f o r t t o c o l l e c t a l l bank checks r e c e i v e d from member banks a t p a r ,
Several of the F e d e r a l Reserve Banks a r e now able t o c o l l e c t on a l l p o i n t s i n
t h e i r r e s p e c t i v e d i s t r i c t s a t par and new a d d i t i o n s t o 'the o t h e r par l i s t s a r e
b e i n g made every day. The Board sees no o b j e c t i o n to one bank c h a r g i n g another
bank ot a f i r m or i n d i v i d u a l the f u l l amount provided i n S e c t i o n 13 of the Fede r a l Beserve Act ( l o c e n t s per $100) and has n o t undertaken to modify these
charges, but the Act e x p r e s s l y peovides t h a t no such charge s h a l l be made a g a i n s t
the Federal Reserve Banks.
-3-
x-iyUg
I
%• k
I t i s the Board*s duty to see t h a t the law i s administered f a i r l y
and without d i s c r i m i n a t i o n and t h a t i t a p p l i e s to a l l banks a l i k e , and i t
i s making an e a r n e s t endeavor to c a r r y out the laws as construed by the
highest l e g a l a u t h o r i t y of the a d m i n i s t r a t i v e branch of t h e Government.
986
FEDERAL
RESERVE
BOARD
&-1753
STATEMENT FOR THE PRESS
Release morning p a p e r s ,
December 12,1919«
The F e d e r a l Reserve Board has advised a l l F e d e r a l Reserve Banks which
have n o t y e t begun t h e i r b u i l d i n g o p e r a t i o n s to p e r f e c t t h e i r p l a n s i n
d e t a i l , b u t t o postpone f o r the p r e s e n t l e t t i n g c o n t r a c t s f o r c o n s t r u c t i o n ,
A c a r e f u l survey of b u i l d i n g c o n d i t i o n s has demonstrated the f a c t t h a t
b u i l d i n g m a t e r i a l s and c o n s t r u c t i o n c o s t s have r e c e n t l y advanced t o t o o
higja. a p o i n t t o j u s t i f y t h e Board i n a u t h o r i s i n g b u i l d i n g a t t h i s time.
I t i s impossible t o s a y when the b u i l d i n g o p e r a t i o n s of the F e d e r a l Reserve
Banks w i l l be begun as t h i s i s a m a t t e r which must be determined b y developments i n b u i l d i n g c o n d i t i o n s .
The Board h a s c o n s i s t e n t l y advised t h a t c a p i t a l , c r e d i t , l a b o r and
m a t e r i a l b e a p p l i e d as f a r as p o s s i b l e t o purposes of irarcediate urgency*
While t h e F e d e r a l Reserve Banks are i n need of permanent q u a r t e r s , t h e y
can p r o b a b l y manage t o get along w i t h t h e i r p r e s e n t accommodations f o r
sometime l o n g e r .
I t i s the view of the Board, t h e r e f o r e , t h a t i t would
be unwise i n the p r e s e n t circumstances t o have t h e banks add to the comp e t i t i o n f o r labor and m a t e r i a l .
Washington December 11,1919*
W . P . Q . H A R D I N G . GOVERNOR
EX OFFICIO M E M B E R S
A L B E R T S T R A U S S . VICE GOVERNOR
ADOLPH C. IIILLER
C A R TER 6 L A 6 $ > , SECRETARY OF THE TREASURY
M
CHAIRMAN
C H A R L E S S . HAMLIN
FEDERAL RESERVE BOARD
J O H N SKELTON WILLIAMS
COMPTROLLER OP THE CURRENCY
HENRY A. MOEHLENPAH
W . T . C H A P M A N . SECRETARY
R . 6 , E M E R S O N . ASSISTANT SECRETARY
A D D R E S S REPLY TO
FEDERAL RESERVE BOARD
W . M . I M L A Y . FISCAL AOENT
WASHINGTON
December 15,1919»
X-1754
Subject:
Acceptances of the Continental Guaranty
Corporation Banks.
Dear Sir
The Federal Reserve Bonrd has been cdvised t h a t the
Continental Guaranty Corporation of New York has widely c i r c u l a t e d
c i r c u l a r s and f eras r e l a t i n g to a plan which i t has devised to
finance the purchase of automobiles by l o c a l dealers from manufact u r e r s , and the Board has received from several of the Federal Reserve
Banks i n q u i r i e s not only as to the nature and scope of t h i s plan
but also as to whether or not paper drawn and accepted thereunder
i s e l i g i b l e f o r rediscount as a. bankers 1 acceptance.
The Board i s of the opinion that t e c h n i c a l l y the d r a f t s
described, when accepted by the Continental Guaranty Corporation,
coire within i t s d e f i n i t i o n of a bankers 1 acceptance s e t f o r t h in i t s
r e g u l a t i o n s and as such are t e c h n i c a l l y e l i g i b l e f o r discount provided
tiiat they comply i n other respects with the terms of the law aid the
r e g u l a t i o n s of the Federal Reserve Board.
The Board has been advised f u r t h e r that i t s l e t t e r of J u l y 2d,
1919, addressed to the Continental Guaranty Corporation, s t a t i n g t h a t
i t s acceptances of the kinds described would be e l i g i b l e f o r discount
provided, of course, t h a t they comply with the various terms ox the
Federal Reserve Act and the regulations of the Beard, has been widely
d i s t r i b u t e d with i t s other c i r c u l a r s and forms among banks and bani:ers
throughout the country. Because of the very general misunderstanding
which e v i d e n t l y has r e s u l t e d , the Board wishes to s t a t e t h a t t h i s l e t t e r
of J u l y 22, 1919, was not i n f a c t and should not in any way be construed
to be an expression of i t s approval of the merits or d e s i r a b i l i t y of the
paper as an investment e i t h e r by t h e . r e s e r v e banks or t h e i r iner.-foer banks,
X-1754
-2-
and the Board r e g r e t s that i t has been c i r c u l a r i z e d i n such a
manner as to give undue a d v e r t i s i n g value t o the p l a n of the
Continental Guaranty Corporation which i t accompaniesFederal Reserve Banks are, of course, aware that i t •
i s t h e i r r i g h t and duty c a r e f u l l y t o consider the merits or
bankable r i s k attached to any paper presented e i t h e r f o r r e discount or purchase and in t h e i r own d i s c r e t i o n t o accept or
r e f u s e the paper on the b a s i s of that c o n s i d e r a t i o n . The Board
b e l i e v e s , however, that many member banks may f a i l to appreciate
that t e c h n i c a l e l i g i b i l i t y does not of i t s e l f imply d e s i r a b i l i t y
and you are therefore requested, whenever opportunities a f f o r d
themselves, c a r e f u l l y to i n d i c a t e t h i s d i s t i n c t i o n t o member
banks i n t e r e s t e d with a view of c o r r e c t i n g what might otherwise
be a wrong impression of the purpose and e f f e c t of the Board's
l e t t e r r e f e r r e d to above.
Very t r u l y yours,
Governor.
Letter t o Chairmen and Governors of a l l F.R. Banks.
989
TREASURY DEBtoTllEira
WASHINGTON
The tiovernor,
Federal Reserve Board.
'
X-1755
Decanber 12, 1919.
Sir:
By d i r e c t i o n of the Secretary, you are advised that the Department has referred to the Auditor for the Treasury Department f o r settlement the account of
the Bureau of Engraving and Printing for preparing Federal Reserve notes during
the period November 1 t o November 30, 1919, amounting to *157,922.75, as f o l l o w s :
15.
Boston
30,000
Nev, York
216,000
Biiladelphia
163,000
Cleveland
106,000
Richmond
83,000
Atlanta
64,000
Chicago..
164,000
S t . Louis
290,000
M i n n e a p o l i s . . . . . . . 128,000
Kansas C i t y . » » . . . . 26,000
Dallas
6,000
San F r a n c i s c o . . * . * 83.000
1.359.000
' Federal Reserve Notes. 1914.
MO
iiO
^50
202,000
143,000
4,000
194,000
124,000
204,000
129,000
93,000
71,000
3,000
115,000
43,000
1,000
88,000
59,000
88,000
89,000
10,000
58,000
81,000
— —- —
— ——
—
— ——
—
•
6,000
74,000
117,000
1,000
66.000
lOU.OOO
1.182.000
962.000
19.000
3,529,000 sheets at V44.75
vlOO
6,000
1,000
—
7.000
Total
579,000
540,000*
496,000
274,000
242,000
211,000
351,000
429,000
—»
—
—
128,000
32,000
198,000
249.000
3.529.000
4157,922.75.
The charges against the several Federal Reserve Banks are as f o l l o w s :
Sheets.
379,000
540,000
496,000
274,000
242,000
811,000
351,000
429,000
128,000
32,000
198,000
San Francisco 249.000
3.529.000
Boston
Nev. York
Bliladelphia.
Cleveland....
Richmond
Atlanta
°hicago
S t . Louis
Minneapolis..
Kansas C i t y . .
Bureau a p p r o p r i a t i o n s
"
CompenHate
Inc. Comsation.
-Printing. Materials.
rensation.
Total.
v5,590.25 ^5,685.00 1*3,790.00
U , 895.00 U 6 . 9 6 0 . 2 5
7,965.00
8,100.00
5,400.00
2,700.00
24,165.007,316.00
7,440.00
4,960.00
2,480.00
22,196.00
4,041.50
4,110.00
2,740.00
1,370.00
12,261.50
3,569.50
3,630.00
2,420.00
1,210.00
10,829.50
3,112.25
3,165.00
2,110.00
1,055.00
9,442.25
5,177.25
5,265.00
3,510.00
l,755.uu
15,707.25
6,327.75
6,435.00
4,290.00
2,145.00
19,197.75
1,888.00
1,920.00
1,280.00
640.00
5 728.00
.
472.00
480.00
320.00
160.00
1*432 00
2,920.50
2,970.00
1,980.00
990.00
8*860!50
3.672.75
3.735.00
2.490.00
1.245.00
v52.052.75 ^52.935.00 L35.290.00
617.645.00 L1R7 922.75
The Bureau appropriations w i l l be reimbursed in the above amount from the
i n d e f i n i t e appropriation "Preparation and Issue of Federal Reserve Notes, Reimbursable", and i t i s requested that your Board cause such i n d e f i n i t e appropriat i o n to be reimbursed in l i k e amount.
Respectfully,
R. C. L e f f i n g v . e l l ,
A s s i s t a n t Secretary of the t r e a s u r y .
990
TREASURY DETRIMENT
2-1756
WASHINGTON
December 12, 1919.
The Governor,
Federal Reserve Board.
Sir:
t
By d i r e c t i o n 4>f the Secretary, you are advised that the 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 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 the Bureau of Engraving and Printing f o r preparing Federal Reserve notes
during t h e period November 1 t o November 3O, 1919* amounting t o ^44.75, as
follows;
Federal Reserve Notes. 1918
Cleveland....
Minneapolis..
.. . i , .
Total
200
100
100
400
260
1.000
&1000
&500
200
—— -
100
100
200
100
500
200
100,
500
1,000 sheets at $ 4 4 . 7 5 . . . . . . .
.#44.75
The charges against the several Federal Reserve Banks are as f o l l o w s :
Boston
Cleveland....
Richmond.....
Chicago......
Minneapolis..
Sheets.
. 200
100
100
400
200
1.000
Compensation.
• ¥2 .95
1 .48
1 .47
5 .90
2 .95
ti.4,75
Bureau armronriatitins
Inc. Coin1Hate
ErintinS. Materials. nensation.
VI.00
&2.00
$3.00
.50
1.00
1.50
.50
1.00
1.50
2.00
4.00
6.00
1.00
2.00
3.00
45.00
« <K .00
e,
O
4-15.00
Total. .
i$f8«95
4.48
4.47
17.90
8.95
8-44 „ 75
The Bureau appropriations w i l l be reimbursed in the above amount from the
i n d e f i n i t e appropriation "Preparation and Issue of Federal Reserve Notes, Reimbursable", and i t i s requested that your Board cause such i n d e f i n i t e appropriat i o n to be reimbursed in 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 Secretary of the Treasury.
FEDERAL
RESERVE
TELEGRAM
CONFIRMATION
Federal Reserve Bank,
B 0 J! E D
X-1757
December 16,1919,
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St.Louis
Minneapolis
Kansas City
Dallas
San Francisco
Referring to Board's telegram December 12th, 1918, Mail Insurance
Office advises today that they have arranged with Post O f f i c e
Department that beginning January 3.5th? 1$&Q, currency i n denom-r
i n a t i o n s of one d o l l a r , two d o l l a r s and f i v e d o l l a r s only may be
shipped by Federal Reserve Banks and their branches t>ct correspondents and to Washington by r e g i s t e r e d mail at parcel pOst r a t e s .
This does n o t , however, apply to shipments male by member banks
t o Federal Reserve Banks and branches.
Prior to January 15th
next Mail Insurance Office representative w i l l p e r s o n a l l y c a l l
on you to arrange d e t a i l s f o r insurance i n accordance with Board
telegram December 12th, 1918, and your r e p l y thereto.
HARDING.
B O a MM CM
X mo I B I
W P. 0. H R I G OVKO
.
A D , OKHt
N
f
e e e " " ™
—
federal reserve board
—
A D D R E S S REPLY TO
FEDERAL RESERVE BOARD
W . T . C H A P M A N , SECRETARY
R . G . E M E R S O N , ASSISTANT SECRETARY
WASHINGTON
w.
M. M L A Y , F I S C A L ABEHT
December 17,1919 »
x-1758
Subject;
Construction of Term "non-essential".
Dear Sir
There i s enclosed f o r your information a
copy of a c i r c u l a r which, has been sent t o a l l banks
and t r u s t companies i n Federal Reserve D i s t r i c t
Number 9 hy the Governor of the Federal Reserve Bank,
of Minneapolis. The, Board f e e l s that t h i s i s a timely
c i r c u l a r and that i t i s a good plan to explain net only
to the member banks but t o the non-member banks the
p o l i c i e s of the Federal Reserve System.
The Board would not, however, go go f a r as to
say that ""borrowing f o r n o n - e s s e n t i a l s should be v i g o r ously discouraged," The term "non-essential" does not
have the same s i g n i f i c a n c e now as i t did during the war.
Were the Federal Reserve Banks to undertake to pass
judgment upoti the e s s e n t i a l need f o r a given c r e d i t
r e g a r d l e s s of the e l i g i b i l i t y of the paper o f f e r e d , they
would f i n d i t necessary, i f they wish t o avoid the charge
of being unduly censorious and d i c t a t o r i a l , t o e x e r c i s e
a very d e l i c a t e d i s c r e t i o n i n their construction of the
term "non-essential".
Very t r u l y yours,
:
Enclosure.
Governor
Letter t o Chairmen of a l l F.R. Banks exce-pf I/P.nneapoii?
993
FEDERAL RESERVE BANK OF MINNEAPOLIS
X-1758
a
TO ALL BANKS & TRUST COMPANIES
IN FEDERAL RESERVE DISTRICT NO. 9 : The advance i n the discount r a t e s of the Federal Reserve Bank of Minneapolis
i s another warning t o bankers and the general public that the resources of the
Federal Reserve System are not unlimited. I t i s my sincere hope that the s i g n i f i c a n c e of t h i s a c t i o n w i l l be understood and that i t w i l l not be necessary
to again advance the r a t e s at a later date.
The f i r s t warning was issued i n October, l915» and has bean repeated a t
various i n t e r v a l s since that date, but the action taken by the Federal Reserve
Bank has not been given s u f f i c i e n t a t t e n t i o n or p o s s i b l y i t has not been properly
understood.
The resources of the Federal Reserve System were intended f o r the b e n e f i t
of commerce and industry*. I t was not the purpose that they be used to stimulate
the investment market or to encourage and support speculative movements* To
t h i s date commerce and industry hare received extensive b e n e f i t s , both d i r e c t
and i n d i r e c t , from the Federal Reserve Banks, which w i l l , of course, continue
their e s t a b l i s h e d p o l i c y and take care of a l l the l e g i t i m a t e and re&s.onable requirements of business, including a g r i c u l t u r e .
I t i s quite evident, that through the extravagances of individuals and the
indiscriminate extension of c r e d i t s by c e r t a i n banks f o r investments and speculat i v e purposes, the reserves held by the Federal Reserve Bancs have been used
through an indirect process for purposes other than those intended and authorized
by law. The extension of c r e d i t f o r speculative purposes i s not confined to
stocks and bonds alone, but s u b s t a n t i a l advances have been made to encourage the
movement of land, and f o r speculation i n commodities. The Federal Reserve Bank
of Minneapolis, in common with other Reserve Banks, has used every precaution to
eliminate such use of i t s f a c i l i t i e s , but i n d i r e c t l y these c r e d i t s have been extended, with the r e s u l t than an unwarranted over-extension of c r e d i t e x i s t s at
t h i s time over the country as a whole. If t h i s condition i s permitted t o continue
i t w i l l i n time work a severe hardship upon everyone*
Experienced bankers are cognizant of the r e a l s i t u a t i o n and are confining
their advances i n accordance with sound and prudent banking judgment. Certain
banks have not exercised proper discrimination and are accumulating loans that
do not help the general s i t u a t i o n . Su;h banks are depending on sources other
than the Federal Reserve Bank for a s s i s t a n c e i n the event of an emergency. Such
assistance i s , of course, secured i n d i r e c t l y through the Federal Reserve Bank
and t h i s warning i s issued p a r t i c u l a r l y t o banks that are f o l l o w i n g t h i s course
as a reminder to them of the unwisdom of depending upon the Federal Reserve Bank
f o r i n d i r e c t support that i t would not be permitted by law t o extend d i r e c t l y to
i t s own members.
994
X-1758 a
-2-
The Federal Reserve Bank w i l l thoroughly i n v e s t i g a t e a l l a p p l i c a t i o n s from
member banks. If the proceeds of such rediscounts are t o be used, e i t h e r
d i r e c t l y or i n d i r e c t l y , f o r purposes other than those intended by law, such
applications w i l l not r e c e i v e favorable action.
m
The Federal Reserve Bank i s compelled to consider not alone whether paper
o f f e r e d f o r rediscount i s e l i g i b l e , but whether the purposes behind the applies*,
t i o n f o r rediscount are i n conformity with the law and with i t s p u b l i c l y
announced p o l i c y . I t i s very desirable that a l l banks, both member and nonmember*
c a r e f u l l y analyze their loans and discriminate in the e x t e n s i o n of c r e d i t , d i s couraging borrowing f o r n o n - e s s e n t i a l s and requesting t h e i r customers po clean
up t h e i r old indebtedness before incurring new o b l i g a t i o n s . Many loans which
are not i n themselves objectionable w i l l be found upon a n a l y s i s to be unnecessary
at t h i s time, and while the s t r a i n upon c r e d i t continues, borrowing f o r such
n o n - e s s e n t i a l s should be vigorously discouraged*
^
A f a i l u r e t o f o l l o w t h i s p o l i c y i s v e r y l i k e l y t o r e s u l t i n p l a c i n g the
bank involved i n the embarrassing p o s i t i o n of b e i n g compelled t o e x p l a i n t o
borrowers who d e s i r e f u n d s f o r n e c e s s a r y commercial and i n d u s t r i a l purposes t h a t
- i t i s unable to a f f o r d them r e a s o n a b l e support because of the f a c t t h a t i t s
d e p o s i t s have been loaned i n too l a r g e a measure f or s p e c u l a t i v e p u r p o s e s .
<
The r i g i d r e s t r i c t i o n of loans t o those which are a c t u a l l y necessary i n
order to properly support commercial b u s i n e s s , industry aid agriculture of the
'
Ninth D i s t r i c t , can i n no wise harm any except those who by r e c k l e s s expenditure
of both t h e i r funds and t h e i r c r e d i t , have encouraged i n f l a t i o n . Such a p o l i c y
i s e s s e n t i a l and necessary i f the present s t r a i n on c r e d i t i s to be checked before
i t r e s u l t s i n wide-spread injury to a l l business and to i n d i v i d u a l s .
The Federal Reserve Bank, i s convinced of the absolute n e c e s s i t y of prudence*
Caution and wise discrimination i n both the e x t e n s i o n and the use of c r e d i t .
Yours r e s p e c t f u l l y ,
(signed) R.A. YOUNG.
Governor*
J
9
December 13,1919*
Circular No. 189
if
F E DE R AL RES EHBE
BOARD
STATEMENT FOR THE PRESS.
X-1759
Release Morning Papers,
December 18,1919.
The F e d e r a l Reserve Board, has authorized and d i r e c t e d the F e d e r a l Reserve
Bank of Sans E S City t o e s t a b l i s h a branch o f f i c e a t Oklahoma City i n o r d e r ,
L
p a r t i c u l a r l y , to expedite shipments o£ currency t o and from member batiks i n the
S t a t e of Oklahoma and t o provide b e t t e r f a c i l i t i e s f o r i n t r a n s t a t e c l e a r i n g of
checks.
As s e t f o r t h i n the Board's p r e l i m i n a r y statement of November 3 the
d i s c o u n t f a c i l i t i e s which have bean accorded by the F e d e r a l Reserve Bank of
Kansas City are regarded as ample.
The Branch w i l l be operated i n accordance with t h e p r o v i s i o n s of Section 3
of the F e d e r a l Reserve Act, under by-laws t o be framed b y the d i r e c t o r s of the
Federal Reserve Bank of Kansas City and approved b y the F e d e r a l Reserve Board.
There w i l l be f i v e d i r e c t o r s , three of whom w i l l be appointed b y t h e F e d e r a l
Reserve Bank of Kansas C i t y and two by t h e Federal Reserve Board,
The Board has
recommended t o the F e d e r a l Reserve Bank of Kansas C i t y t h a t the by-laws a s s i g n
as t e r r i t o r y f o r the Oklahoma C i t y Branch t h a t p o r t i o n of the S t a t e of Oklahoma
which i s not included i n the Eleventh F e d e r a l Reserve D i s t r i c t .
An o u t l i n e of
t h e powers and f u n c t i o n s t o be exercised by the b r a n c h as recommended by the
Board i s , as f o l l o w s :
The Branch bank w i l l r e c e i v e d e p o s i t s from member banks b u t w i l l c a r r y
no d e p o s i t a c c o u n t s .
A l l amounts r e c e i v e d on d e p o s i t w i l l be t r a n s m i t t e d d a i l y ,
b y t e l e g r a p h or o t h e r w i s e , to the F e d e r a l Reserve Bank of Kansas C i t y f o r c r e d i t
to the accounts of the d e p o s i t i n g banks, and each member bank i n the t e r r i t o r y
assigned t o the Branch, wherever l o c a t e d , may, a t i t s o p t i o n , make r e m i t t a n c e s
of c u r r e n c y and checks d i r e c t t o t h e F e d e r a l Reserve Bank of Kansas C i t y .
The
Branch w i l l c a r r y no Government d e p o s i t s , b u t w i l l redeem Treasury c e r t i f i c a t e s ?
-3'
*
x-1759
^
\
pay Government c h e c k s , and. w i l l c l o s e out b a l a n c e s d a l l y w i t h the head o f f i c e *
The Branch w i l l c a r r y no e a r n i n g a s s e t s ; a p p l i c a t i o n s fear loans or d i s c o u n t s from
member banks and o f f e r s f o r s a l e of m a i l t r a n s f e r s , b a n k e r s
1
acceptances and b i l l s
of exchange e l i g i b l e f o r purchase b y F e d e r a l Reserve Banks w i l l be t r a n s m i t t e d t o
the F e d e r a l Reserve Bank of Kansas C i t y f o r f i n a l a c t i o n *
Immediate c r e d i t , however*
may be g i v e n i n c a s e s where i t becomes n e c e s s a r y f o r member banks t o r e d i s c o u n t i n
order t o meet c l e a r i n g house d e b i t b a l a n c e s * unexpected d e f i c i e n c i e s i n r e s e r v e s ,
and any o t h e r case where quick arrangements a r e n e c e s s a r y , a l l a c t u a l r e d i s c o u n t i n g
o p e r a t i o n s , however, t o be made a t the head o f f i c e , i n t e r e s t b e i n g charged f r o m
t h e d a t e t h e n o t e s were r e c e i v e d b y the Branch#
In c a s e s where n o t e s are secured
b y United S t a t e s o b l i g a t i o n s , the Branch may, b y a u t h o r i t y of the F e d e r a l Reserve
Bark of Raises C i t y , h o l d t h e c o l l a t e r a l and forward t h e n o t e s t o t h e p a r e n t bank
w i t h t r u s t r e c e i p t s showing t h e amount and n a t u r e of c o l l a t e r a l h e l d .
the Branch bank t e r r i t o r y may d e a l d i r e c t l y w i t h the p a r e n t bank.
Banks i n
The p r i n c i p a l
f u n c t i o n s t o be e x e r c i s e d b y the Branch w i l l be the c l e a r i n g and c o l l e c t i o n of
checks and the
territory.
of shipments of c u r r e n c y to and from menfcer barucs i n i t s
A p r i v a t e wire w i l l be i n s t a l l e d between Kansas C i t y and Oklahoma C i t y
i n order t h a t t h e Branch may t e l e g r a p h d a i l y t o t h e p a r e n t bank t h e amounts of a l l
items r e c e i v e d f o r immediate c r e d i t or immediate d e b i t t o members or o t h e r F e d e r a l
Reserve Banks, a l s o amounts of c u r r e n c y d e p o s i t e d aid the d e t a i l s of o t h e r t r a n s actions.
This plan i s
the same as the one which governs t h e o p e r a t i o n s
of the b r a n c h banks a t C i n c i n n a t i , P i t t s b u r g , B u f f a l o end o t h e r c i t i e s .
The Board
has made a thorough s t u d y of the b r i e f s and arguments submitted b y r e p r e s e n t a t i v e s
of Afiahnma c i t y and T u l s a , and has t a k e n a p o l l of the member banks i n the S t a t e
of Oklahoma o u t s i d e of t h e two c i t i e s a p p l y i n g f o r t h e b r a n c h , the r e s u l t of which
shows a d e c i d e d p r e f e r e n c e f o r Oklahoma C i t y , b o t h as t o the number of banas and
a s t o banking r e s o u r c e s i n v o l v e d .
i n e a s t e r n
banks
I t was proved, however, beyond q u e s t i o n t h a t
Oklahoma have l a r g e volume of items which cannot be c o l l e c t e d
997
*-1759
through Oklahoma City without involving considerable l o s s of time, and owing
t o railroad schedules the same condition applies t o some banks i n the
western part of the Starts.
Under the plan adopted additional f a c i l i t i e s are given without a f f e c t i n g
the "business of any member bank and without f o r c i n g c o l l e c t i o n s i n t o a r t i f i c i a l
channels.
The Board reserves the r i g h t to authorize the discontinuance of the
Branch at any time i f i t s operation i s found u n s a t i s f a c t o r y *
December 17,1919-
998
W. P. 6 . HARDING, GOVERNOR
ALBERT STRAUSS, VICE GOVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
HENRY A. MOEHLENPAH
EX OFFICIO MEMBERS
CARTER GI,ASS
SECRETARY OF THE TREASURY
CHAIRMAN
FEDERAL RESERVE BOARD
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
R . G . E M E R S O N . ASSISTANT SECRETARY
A D D R E S S REPLY TO
FEDERAL RESERVE BOARD
W. M. IMLAY, FISCAL AGENT
WASHINGTON
December 18,1919*
Subject:
W. T. CHAPMAN. SECRETARY
3W760
Right of a Federal Reserve Bank t o
send Checks, which i t has r e c e i v e d
f o r c o l l e c t i o n , d i r e c t to drawee bank.
Dear S i r : ~
The question was r a i s e d by Governor Strong of the
Federal Reserve Bank of New York a once time ago as t o the l i a b i l i t y
which may be incurred by Federal Reserve Banks i n sending checks
f o r c o l l e c t i o n d i r e c t t o the bank upon which drawn. The matter
was r e f e r r e d t o the Board , s General Counsel, who has aubisitted
a memorandum, a copy of whibh i s t r a n s m i t t e d herewith*
I t i s suggested t h a t t h i s question be d i s c u s s e d by your
d i r e c t o r s and r e f e r r e d , i f they deem i t necessary* t o youls own
counsel. The Board would l i k e t o be advised of any conclusions
reached a s t o the proper course t o be pursued.
Very t r u l y y o u r s ,
Enclosure,
Governori
l e t t e r to Governors and Chairmen of a l l F.R« Banks#
I 989
Subjects
Right of a Federal Reserve Bank to send checks
which i t has r e c e i v e d f o r c o l l e c t i o n d i r e c t t o
drawee bank.
The q u e s t i o n has been r a i s e d whether a Federal Reserve Bank may
properly and without r i s k of l o s s forward checks which i t has r e c e i v e d
f o r c o l l e c t i o n d i r e c t t o the drawee bank.
The w e l l accepted p r i n c i p l e of law r e l a t i n g t o t h i s s p e c i f i c
question i s that a bank which sends a check which i t has r e c e i v e d f o r
c o l l e c t i o n d i r e c t to the drawee bank, without express a u t h o r i t y from
the p r i n c i p a l f o r whom i t i s making the c o l l e c t i o n , becomes l i a b l e f o r
any l o s s r e s u l t i n g because of the f a c t that the checic was sent d i r e c t to
the drawee bank. Even a general usage or custom of making c o l l e c t i o n s
i n t h i s manner does not r e l i e v e the c o l l e c t i n g ban# of r e s p o n s i b i l i t y
under the d e c i s i o n s of a majority of the courts.
The question at i s s u e , however, i s not whether a Federal Reserve
Bank may p r o p e r l y send an item d i r e c t t o the drawee bank without a u t h o r i t y
of i t s p r i n c i p a l , but whether the general p r o v i s i o n s contained i n the
c o l l e c t i o n c i r c u l a r of the Federal Reserve Bank of New York may be construed.
to be s u f f i c i e n t a u t h o r i t y t o p r o t e c t the Federal Reserve Ban& i n the
event of any l o s s caused by the f a c t that the check was forwarded d i r e c t
t o the drawee bank.
Circular No. 10) of the Federal Reserve Bank of New York dated June 1,
1918, provides that "Every member bank sending items t o us a f t e r the inauguration
of t h i s system w i l l be understood t o have agreed t o the terras
and c o n d i t i o n s s e t f o r t h i n t h i s c i r c u l a r and to have thereby
s p e c i f i c a l l y agreed t h a t in r e c e i v i n g such items the Federal
Reserve Bank cf New York w i l l a c t only as tne c o l l e c t i o n agent
of the sending bank, w i l l assume no r e s p o n s i b i l i t y other than
due d i l i g e n c e and care i n forwarding such items promptly, and
w i l l be authorized, t o send such items f o r payment d i r e c t t o the
bank on which they are drawn or t o another agent f o r c o l l e c t i o n ,
at i t s d i s c r e t i o n . "
Although a general agreement between a c o l l e c t i n g ban*, and i t s customer
that the c o l l e c t i n g bank w i l l not be l i a b l e f o r the n e g l i g e n c e or f a i l u r e
of the a^ent which i t s e l e c t s cannot be construed t o authorise the c o l l e c t ing bank t o sena the checK d i r e c t t o the drawee barm (See Mian. Sash & Duor
Co., v . Metropolitan Bern., 76 Minn, 13b ) n e v e r t h e l e s s an agreement s p e c i f i c a l l y
1000
——
2
X~ 17 60 a
authorizing the c o l l e c t i n g bank t o send the item d i r e c t to the drawee
bank i s g e n e r a l l y understood t o be v a l i d and i s s u f f i c i e n t to r e l i e v e
the c o l l e c t i n g bank from any l i a b i l i t y on account of a l o s s r e s u l t i n g
from the f a c t that the item was sent d i r e c t t o the drawee bank. (See
Chicago-First National Bank v . Citizens Savings Bank, 12) Mich. 336).
The question presents i t s e l f , therefore, whether the general
condition i n the terms of the New York c i r c u l a r quoted above can
be considered a s p e c i f i c . agreement between the Federal Reserve Bank
and i t s customers. There i s no doubt that the terms of tiae c i r c u l a i
i t s e l f are s u f f i c i e n t l y s p e c i f i c in the circumstances to p r o t e c t the
New York Bank, provided, that the customer of the bank may be said
to have n o t i c e of the provisions of that c i r c u l a r and t o have assented
thereto. I t i s probable that a court would protect the c o l l e c t i n g
reserve bank in such a case on the theory that the c i r c u l a r having
been sent t o the member bank, and the member bank having forwarded
items i n accordance with the terms of that c i r c u l a r , the member bank
may be presumed to have assented to the terms of the agreement. But
there may be some d i f f i c u l t y i n e s t a b l i s h i n g the f a c t that the member
bank a c t u a l l y had n o t i c e of the c i r c u l a r aid for that reason and i n
order t o remove any p o s s i b l e doubt I agree with the suggestion which
has been made that when the Reserve Bank i s s u e s i t s new circular outl i n i n g i t s c o l l e c t i o n f a c i l i t i e s , particular a t t e n t i o n be directed to
tae clause giving the Reserve Bank authority t o forward items d i r e c t
to the drawee bank, and that the member bank acknowledge r e c e i p t of
the c i r c u l a r containing that provision.
In t h i s connection, the Federal Reserve Bank of New York should,
of course, make sure that member banks of other d i s t r i c t s which forward
items d i r e c t t o the Federal Reserve Bank for c o l l e c t i o n agree to the
terms of the c i r c u l a r issued by the Federal Reserve Bank for the
p r i n c i p l e s discussed above apply with equal force to member banks outside the New York D i s t r i c t which are using the New Yoifck Bank as a
c o l l e c t i n g agency.
There i s a l s o presented the question whether the Federal Reserve
Bank would be l i a b l e even i n a case where there i s a s p e c i f i c agreement
authorizing i t to forward checks t o the drawee bank i f , as a matter of
f a c t , the Federal Reserve Bank had actual knowledge of f a c t s which
would lead i t to b e l i e v e that there would be a l o s s r e s u l t i n g i f the
checks were forwarded d i r e c t . I have been unable t o f i n d any c a s e s
d i s c u s s i n g t h i s particular phase of the question but i t sou Id appear
reasonable t o assume that the agreement would p r o t e c t the c o l l e c t i n g
bank unless i t had actual knowledge of f a c t s such as to make i t a breach
of good f a i t h t o forward the checks d i r e c t . This, however, i s a question
which would have t o be decided by the c o u r t s .
Very t r u l y yours,
(Signed)
GEORGE L. HARRISON.
General Counsel*
±001
EX OFFICIO MEMBERS
CARTER GLASS
S E C R E T A R Y j i U HE TREASURY
pE
CHATEMAI
WA
M
N
JOHN SKELTOH WILLIAMS
COMPTROLLER OF THE CURRENCY
FEDERAL RESERVE BOARD
W. P. G. HARDING. GOVERNOR
ALBERT STRAUSS. VICE GOVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
HENRY A. MOEHLENPAH
W . T . C H A P M A N . SECRETARY
R . G . E M E R S O N . ASSISTANT SECRETARY
ADDRESS REPLY TO
FEDERAL RESERVE BOARD
W . M. IMLAY. FISCAL AGENT
WASHINGTON
December 16,1^1$.
Subject:
X-1764
Usages of Trade i n Foreigp Countries.
Dear S i r s
«
Section 13 of the Federal Reserve Act provides t h a t
"any membarr bank may accept d r a f t s or t i l l s of exchange drawn
upon i t having not more than three months s i g h t t o run, e x c l u s i v e of days of grace, drawn, under r e g u l a t i o n s to be prescribed
by the Federal Reserve Board, by banks or bankers i n f o r e i g n
countries or dependencies or insular p o s s e s s i o n s of 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 as required
by the usages of trade i n the r e s p e c t i v e c o u n t r i e s , dependencies
or i n s u l a r p o s s e s s i o n s , 8
Under t h i s a u t h o r i t y the Board has from time t o time
determined that the usages of trade i n the c o u n t r i e s , dependencies
or insular p o s s e s s i o n s l i s t e d below require the granting of acceptance f a c i l i t i e s f o r the purpose of c r e a t i n g d o l l a r exchange.
The Board i s now engaged i n r e v i s i n g the l i s t .
As an i n s t i t u t i o n ^ f a m i l i a r w i t h the usages of trade i n
the r e s p e c t i v e c o u n t r i e s , dependencies and p o s s e s s i o n s , l i s t e d
below, the Federal Reserve Board would be glad t o r e c e i v e from you
such information as may be i n your p o s s e s s i o n as t o the usages of
trade i n each such country, so f a r as such usages may a f f e c t the
r u l i n g s of the Board i n r e s p e c t of d r a f t s drawn f o r the purpose of
f u r n i s h i n g d o l l a r exchange. The Board i s under the impression that
i n some of these c o u n t r i e s the usages of trade do n o t nov* require
the f a c i l i t i e s authorized by Section 1) f o r the purpose of f u r n i s
ing d o l l a r exchange, and t h a t the Regulations of the Board i n t h i s
r e s p e c t require c a r e f u l r e v i s i o n i n order that b i l l s drawn under
the s a i d p r o v i s i o n s of S e c t i o n 13 s h a l l not i n e f f e c t become mere
finance b i l l s .
-2»
' X-1764
As, b e a r i n g on the purpose of the quoted p r o v i s i o n s of S e c t i o n
^ | p 13 f your a t t e n t i o n i s d i r e c t e d t o pages 565 ana 666 of the F e d e r a l
Reserve B u l l e t i n of December 1, 1916, from which the f o l l o w i n g
q u o t a t i o n i s made:
1003
"The purpose of t h i s Act and the r e g u l a t i o n made
p u r s u a n t t h e r e t o was t o enable the American banks t o
p r o v i d e d o l l a r exchange i n c o u n t r i e s where the check
i s n o t the c u r r e n t means of r e m i t t a n c e i n payment of
f o r e i g n d e b t s , b u t where the t h r e e months 1 bankers *
d r a f t i s g e n e r a l l y used f o r t h a t purpose#
1 * * * * * * The Board i s informed t h a t the bankers 1
1
custom of s e l l i n g t h r e e months 1 d r a f t s i n p r e f e r e n c e
t o checks o r i g i n a t e d i n c o u n t r i e s where t h e m a i l
c o n n e c t i o n s were i r r e g u l a r and the f o r e i g n exchange
market was a l i m i t e d one, and where i t would have
been d i f f i c u l t f o r the drawing banker t o be c e r t a i n
t h a t he could f i n d a cover a g a i n s t the checks drawn
by him i n time t o forward i t b y the same m a i l , where a s , i n
drawing a t h r e e months ' d r a f t he would f e e l a s s u r e d
of b e i n g able t o forward r e m i t t a n c e s b e f o r e h i s
o b l i g a t i o n f e l l due,'!
The f o l l o w i n g i s a complete l i s t of a l l the c o u n t r i e s which have
been d e s i g n a t e d by the Board as c o u n t r i e s i n which banks or bankers
may draw d r a f t s or b i l l s of exchange on member banks approved by the
Board f o r t h e purpose of f u r n i s h i n g d o l l a r exchange;
SOUTH AMERICA
Argentina
Bolivia
Brazil
Chile
Peru
Venezuela
Uruguay
Costa Rica
Guatemala
Honduras
Colombia
Ecuador
Paraguay
B r i t i s h Guiana
Dutch Guiana
French Guiana
CENTRAL AMERICA
San Salvador
P o r t o Rico
Santo Domingo
B r i t i s h Honduras
Nicaragua
Panama
Trinidad
Cuba
I am,
Very t r u l y y o u r s ,
Governor*
Latter sent t o l i s t of banks engaged i n f o r e i g n business*
EX OFFICIO MEMBERS
W . P . 6 . H A R D I N G . GOVERNOR
A L B E R T S T R A U S S . VICE GOVERNOR
CARTER GLASS
SECHGTA&YIOF THE TREASURY
CHAIRMAN
FEDERAL RESERVE BOARD
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
ADOLPH C MILLER
CHARLES S. HAMLIN
HENRY A. MOEHLENPAH
W . T . C H A P M A N , SECRETARY
R . G . E M E R S O N , ASSISTANT SECRETARY
ADDRESS REPLY TO
W . M. IMLAY, FISCAL AGENT
WASHINGTON
FEDERAL RESERVE BOARD
X-176*
December 18, 1919.
SUBJECT:
ASSESSMENT FOR GEHERAL EXPENSES OF THE FEDERAL RESERVE
. BOARD, JANUARY I TO JUNE 2Q, 1 9 2 0 .
Bear S i r : -
'
There i s inclosed herewith f o r your information and uttentipn copy
of a r e s o l u t i o n adopted by the Federal Reserve Board at a meeting held on
December 17, 1919, levying an assessment upon the several Federal Reserve
Banks of an amount equal to twenty-five hundredths of one per cent ( ,0025)
of the t o t a l paid-in c a p i t a l stock «.nd surplus of such bunka-. to Jyfroy the'
estimated general expenses of the Federal' - Reserve Board from January 1 to
June 30, 1920. This assessment does not include the cost of engraving and
p r in tin g Federal Reserve n o t e s .
There i s a l s o i n c l o s e d a statement showing t h e b a s i s upon which
t h e assessment i s l e v i e d .
The assessment should be computed upon your p a i d - i n c a p i t a l and
s u r p l u s a s of c l o s e of b u s i n e s s December 31, 1919, t h a t i s , upon c a p i t a l
p a i d - i n a s shown by books on t h a t d a t e , and s u r p l u s a f t e r adjustment in a c cordance w i t h c i r c u l a r l e t t e r X-1741, dated December 3, 191y.
I have the honor t o request that you bring t h i s matter t o the
early a t t e n t i o n of the Board of Directors of your bank, and deposit one
half of the amount of your assessment in the General account, Treasurer,
U. S . , on your books on January 1, 1920, and sne-half on March 1, 1920, in
each instance i s s u i n g a C/d on Form 1, National Banks, f o r c r e d i t of "Sala r i e s and Expenses, Federal Reserve Board, Special Fund," assessment f o r
general expenses,
Kindly send duplicate C/D to Federal Reserve Board.
Very t r u l y yours,
Inclosures.
F i s c a l Agent.
L e t t e r s e n t t o Ghairman of Federal Reserve Banks,
X-1761
ESTIMATE FOR JANUaRY. 1920. ASSESSMENT
Average monthly encumbrance f o r period
July 1, 1919, t o Dec. SI, 1919
Estimated monthly requirements, Jan. t o
June, 1920, i n c l u s i v e . . .
Estimated monthly i n c r e a s e . . . . . . . . .
Estimated requirements, January to June,
1920, i n c l u s i v e . . .
. . . . .
Estimated unencumbered balance Jan. 1, 1919. . . . .
#8,566.59
67,260.00
38,792.00
525,000.00
10.000.00
515,000.00
Estimated p a i d - i n c a p i t a l and surplus of
Federal Reserve Banks, as of c l o s e of
business Dec, 31, 1919. . . . . . . . . . . . 206,000,000,00
An assessment of t w e n t y - f i v e hundredths
of one per cent (.0025) v . i l l produce. . . . . . . 515,000.00
I have the honor t o recommend, t h e r e f o r e , that
an assessment of t w e n t y - f i v e hundredths of
one per cent (.0025) be l e v i e d .
Vv'. M. Imlay
F i s c a l Agent.
X-1763
RESOLUTION LEVYING ASSESSMENT
Whereas, under s e c t i o n 10 of the a c t approved
December 23, 1913, and known as the Federal Reserve Act,
the Federal Reserve Board i s empowered t o l e v y semi-ann u a l l y upon the Federal Reserve Banks in proportion to
t h e i r c a p i t a l stock and surplus an assessment s u f f i c i e n t
t o pay i t s estimated expenses, including t h e s a l a r i e s of
i t s members, a s s i s t a n t s , a t t o r n e y s , e x p e r t s , and employees
f o r the h a l f year succeeding the l e v y i n g of such a s s e s s ment, t o g e t h e r with any d e f i c i t carried forward from the
preceding h a l f year; and
Whereas, i t appears from e s t i m a t e s submitted and
considered that i t i s necessary that a fund equal t o twent y - f i v e hundredths of one per cent (.0025) of the t o t a l
p a i d - i n c a p i t a l stock and surnlus of the Federal Reserve
Banks be created for the purpose hereinbefore d e s c r i b e d ,
e x c l u s i v e of the c o s t of engraving and p r i n t i n g of Federal
Reserve n o t e s ; Now, t h e r e f o r e ,
Be i t r e s o l v e d . That pursuant t o the authority
v e s t e d in i t by law, the Federal Reserve Board hereby
l e v i e s an assessment upon the several Federal Reserve
Banks of an amount equal t o t w e n t y - f i v e hundredths of one
•per cent (.0025) of the t o t a l p a i d - i n c a p i t a l and surplus
of such banks, and the FiscalAgent of the Board i s hereby
authorized t o c o l l e c t from s a i d banks such assessment and
e x e c u t e , in the name of the Board r e c e i p t s for payments
made. Such assessment w i l l be c o l l e c t e d in two i n s t a l l ments of one-half each; the f i r s t installment to be paid
on January 1, 1920, and the second half on March 1, 1920.
STATEMENT OF EXPENDITURES .aND -COMMITMENTS AS A
BASIS OF ESTIMATE.
X-1762
Estimated
monthly requirements ,
Jan. 1 to June
50. 1920.
Estimate
f o r Dcc.
1919.
46,641.14
4,242.59
2,591.48
6,188.70
5,161.40
1,539.59
788.89
5,417.66
863.74
96.00
V? ,210.00
4,615.00
2,566.67
6,501.66
5,340.03
1,891.09
888.89
6,276.66
948.34
96.00
V7.500.00
5,400.00
2,850.00
7,800.00
2,577,69
6,348,95
8,700.00
1,314.89
6,499.75
37,423.77
B3RS0NAL SERVICES:
. Board and i t s c l e r k s . . . . . . . .
Secretary's o f f i c e . . . . . . . . .
Counsel's o f f i c e . . .
Division of Operations and Examination
D i v i s i o n of Reports and S t a t i s t i c s .
D i v i s i o n of Analysis and Research. .
D i v i s i o n of Architecture
.
D i v i s i o n of Issue
.
Messengers
Charwomen.
. . . . . .
National Bank Redemption Agency. . .
(Estimate based on 100 c l e r k s ) . .
Board's Redemption D i v i s i o n
(Estimate based on 100 c l e r k s ) , ,
Contingent
Monthly average
July 1 t o Dec.
51 , 1919.
49,183.04
6,300.00
2,100.00
900.00
6,500.00
1,000.00
100.00
8,700.00
2.000.00
59,850,00
NON PERSONAL SERVICES:
Transportation and subsistence . . . .
3,124.57
. 3,061,25
3,500.00
Communication s e r v i c e (including t e l e phone, telegraph and p o s t a g e ) . . . .
508.09
508.66
575.00
Printing and binding, etc
2,682,98
2,500.00
3,500.00
Contract repairs . . . . . . . . . . .
34.73
30.00
50.00
E l e c t r i c i t y ( l i g h t and power). . . . .
35.20
35.20
40.00
Steam (heat)
15.45
30 . 90
20.00
Other nonpersonal s e r v i c e s . . . . . .
340>10
350^60
350.00
Supplies (including s t a t i o n e r y , periodi c a l s and other)
794.81
752.46
1,025.00
Equipment:
Furniture and O f f i c e . . . . . . . .
1,079.30
1,836.00
1,200.00
Books
.
46.82
50.00
50.00
Gold Settlement Fund (including
salaries)
933.92
954.14
1,200.00
Rent
802.06
814.56
1,000.00
Foreign Exchange (including s a l a r i e s ) .
746.79
—— —
—
—
— — —
— —
Contingencies (including t o t a l of (£75,000
for e r e c t i o n of a building f o r experimenting with and t e s t i n g vault construct i o n and material) . . . . . . . . .
15.000.00
TOTAL
^11,144.82
10,923.77
27,510.00
GRaND TOT-h-L.
48,568.59
60,106.81
87,360.00
Total expenditures and commitments
July 1 to December 31, 1919. . . . . . . . . . . . . . . . . .
291,411.54
Total estimate for next s i x months
525,000.00
1007
E x OFFICIO MEMBERS
W . P . 9. H A R D I N G , GOVERNOR
A L B 1 R T S T R A U S S . VICE GOVERNOR
CARTER GLASS
S E C R L W P T B R THE TREASURY
CHAIRMAN
ADOLPH C. MILLER
C H A R L E S S . HAMLIN
FEDERAL RESERVE BOARD
J O H N SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
HENRY A. MOEHLENPAH
W . T . C H A P M A N , SECRETARY
R . G . E M E R S O N , ASSISTANT SECRETARY
ADDRESS REPLY TO
WASHINGTON
FEDERAL RESERVE BOARD
W . M . IMLAY, FISCAL AGENT
Decenibe r 20 > 1919 •
X-l?66
Subject:
Method of Determining Required Reserves.
Dear S i r : You are advised t h a t the Federal Reserve Board has
r u l e d on advice of Counsel t h a t there i s no warrant i n law
f o r the F e d e r a l Reserve Banks i n making any deductions from
t h e i r gross d e p o s i t s i n determining the amount of the r e s e r v e s
r e q u i r e d t o be c a r r i e d under the terms of Section 16 of the
Federal Reserve Act.
The Board does n o t , of course, construe the law as
r e q u i r i n g t h a t a reserve be c a r r i e d a g a i n s t t r a n s i t items or
other d e f e r r e d a v a i l a b i l i t y c r e d i t s which r e p r e s e n t d e p o s i t s
not immediately a v a i l a b l e . I t r u l e s t h e r e f o r e t h a t the r e q u i r e d
r e s e r v e s are to be based only upon those d e p o s i t s which are
immediately a v a i l a b l e , A copy of Counsel's opinion on t h i s
s u b j e c t i s t r a n s m i t t e d herewith f o f your information, and the
Federal Reserve Banks are advised t h a t t h e y should apply the
new method of determining the r e s e r v e s oil and a f t e r January 2 , 19a).
Very t r u l y yours.
Enclosure.
Governor,
L e t t e r t o Governors and Chairmen of a l l F-R. Banks.
1008
X-l?66 a
Subject:
Deductions from Gross Deposits of F e d e r a l Reserve
Banks f o r the Purpose of Determining the Amount
of r e q u i r e d Reserve,
"This o f f i c e has beeh asked f o r an op i h i On on the q u e s t i o n whether
a Federal Reserve Bank uay, f o r the purpose of d e t e r m i n i n g t h e amount
of i t s r e q u i r e d r e s e r v e * deduct f f o n i t s g r b s s d e p o s i t s t h e amounts
'due from f o r e i g n governments' and 'due from f o r e i g n b a n k s ' * The S t a t i s t i c a l D i v i s i o n i s p r e p a r i n g a new form of balance s h e e t f o r F e d e r a l
Reserve Banks and a d e t e r m i n a t i o n of t h i s q u e s t i o n i s n e c e s s a r y b e f o r e
t h a t form i s f i n a l l y s e n t t o t h e p r i n t e r .
" I t appears t h a t a t the p r e s e n t time F e d e r a l Reserve Banks are d e d u c t i n g from t h e i r gross d e p o s i t s the f o l l o w i n g i t e m s :
DEDUCTIONS F O GROSS DEPOSITS:
RM
Branches or Head O f f i c e ,
Due from f o r e i g n governments,
Due from f o r e i g n banks
Uncollected items N a t i o n a l bank n o t e s . .
Bank n o t e s of o t h e r F.R. banks
F.R. n o t e s of o t h e r F.R. banks
Unassorted c u r r e n c y
Transit items
Checks and other cash i t e m s ,
Exchanges f o r Clearing House
Domestic t r a n s f e r s p u r c h a s e d .
"The q u e s t i o n p r e s e n t s i t s e l f not only a s t o the r i g h t of a F e d e r a l
Reserve Bank t o deduct t h e b a l a n c e s due from f o r e i g n governments and from
f o r e i g n banks, but a l s o a s t o i t s r i g h t t o deduct any of the items d e s c r i b e d
above.
"Under the terms of Section l b of the Federal Reserve Act, i t i s
provided that
•Tvery F e d e r a l Reserve Bank s h a l l m a i n t a i n
r e s e r v e s i n gold or l a w f u l money of n o t l e s s ^
^
t h a n t h i r t y f i v e p e r centum a g a i n s t i t s d e p o s i t s .
There does n o t appear t o be i n t h e law, any p r o v i s i o n e x p r e s s
and other member banks, i t i s provided i n S e c t i o n 19 t h a t
X-1766 a
1.009
m p
" I n e s t i m a t i n g the balances r e q u i r e d by t h i s
Act the n e t d i f f e r e n c e of amounts due t o arid
from other banks s h a l l be taken as the b a s i s
f o r a s c e r t a i n i n g the d e p o s i t s a g a i n s t which
r e q u i r e d b a l a n c e s w i t h Federal Reserve Banks
s h a l l be determined.."
The F e d e r a l Reserve Board i n c o n s t r u i n g t h i s p a r t i c u l a r p r o v i s i o n of
Section 19 has h e r e t o f o r e determined t h a t ( a ) exchanges f o r c l e a r i n g
house; (b) checks on other banks i n the same p l a c e ; and (c) items with
F e d e r a l Reserve Banks i n p r o c e s s of c o l l e c t i o n are t o be considered as
balances due from other banks i n e s t i m a t i n g the r e q u i r e d r e s e r v e balance
of member banks. These deductions, however, have been authorized by the
F e d e r a l Reserve Board s o l e l y because pf t h a t paragraph of Section ly
quoted above# There i s no other prdvisiori i n the law j u s t i f y i n g them*
n
In c o n s i d e r i n g the question of the amount §f r e s e r v e which must be
maintained by a F e d e r a l Reserve Bank a g a i n s t i t s d e p o s i t s , i t i s evident
t h a t Section 16 c o n t a i n s no such p r o v i s i o n as t h a t paragraph of Section
19, which d e l a t e s s o l e l y to the r e s e r v e s of membeir banks and which the
Board now c o n s i d e r s contrtolling i n determining what are the permissible
deductions by member banks. I f , as the Board has r u l e d , a n a t i o n a l bank
cannot be p e r m i t t e d to deduct cash on hand or balances due from f o r e i g n
banks or from f o r e i g n governments, F e d e r a l Reserve Banks c e r t a i n l y should
not be p e r m i t t e d t o do s o . With r e f e r e n c e t o the other deductions which
F e d e r a l Reserve Banks now make from their, gross d e p o s i t s , i n c l u d i n g
n a t i o n a l bank n o t e s , bank notes of other F e d e r a l Reserve Banks, F e d e r a l
r e s e r v e n o t e s of other F e d e r a l Reserve Banks, unassorted currency, t r a n s i t
items, checks and other cash items, exchanges f o r c l e a r i n g house and
domestic t r a n s f e r s purchased, i t i s b e l i e v e d t h a t t h e r e i s no more a u t h o r i t y
i n law than i n the case of cash on hand or of balances due from f o r e i g n
banks and b a l a n c e s due from f o r e i g n governments. Even though I t may be
contended with some f o r c e t h a t as a matter of p r i n c i p l e deductions of the
u n c o l l e c t e d items s p e c i f i e d should be p e r m i t t e d nevertheless that i s a
mooted q u e s t i o n and whether r i g h t or wrong cannot of i t s e l f be determinal
t i v e of the proper c o n s t r u c t i o n of an e x i s t i n g s t a t u t e . I t might be
proper t o place such an argument b e f o r e Congress w i t h the purpose of
procuring an amendment t o the law but there i s not i n the Federal Reserve
Act as i t reads a t the p r e s e n t time any express or implied a u t h o r i t y t o
make such deductions and i n the opinion of t h i s o f f i c e none should be
permitted.
"On the b a s i s of the e c n e o l i d a t e d statement of a l l F e d e r a l Reserve
Banks f o r November 28, 1919, i t appears t h a t t h e i r t o t a l gross
80# of the t o t a l d e d u c t i o n s . These t r a n s i t items r e p r e s e n t on e q u i v a l e n t
amount of d e p o s i t s b u t d e p o s i t s which are_not immediately a v a i l a b l e . I f ,
therefore, i n s t e a d of b a s i n g the r e q u i r e d r e s e r v e upon the amount of the
t o t a l g r o s s d e p o s i t s , ( i n c l u d i n g b o t h immediate and d e f e r r e d a v a i l a b i l i t y
c r e d i t s V the r e q u i r e d r e s e r v e were t o be based upon only those d e p o s i t s
whSh
M e d i a t e l y a v a i l a b l e , as I t h i n k i t should b e , the t o t a l gross
"#
1010
p
X-1766 a
-3
d e p o s i t s s u b j e c t t o r e s e r v e would be reduced by the amount of the t r a n s i t
items which as p r e v i o u s l y s t a t e d , form approximately 50$ of the p r e s e n t t o t a l
d e d u c t i o n s . If t h i s were done the r e s e r v e percentage would vary but
l i t t l e from the percentage obtained under the p r e s e n t r u l e and the method
of c a l c u l a t i o n would be s t r i c t l y i n accordance with b o t h the s p i r i t and
the l e t t e r of the law* I t i s evident not only that i t was n o t intended
by Congress t h a t deductions from gross d e p o s i t s should be made by F e d e r a l
Reserve Banks i n determining t h e amount of r e q u i r e d r e s e r v e but a l s o t h a t
i t was not contemplated t h a t items received f o r c o l l e c t i o n and d e f e r r e d
a v a i l a b i l i t y c r e d i t would b e i n c l u d e d i n t h e d e p o s i t s a g a i n s t whxch r e s e r v e
must be c a r r i e d * I t i s b e l i e v e d t h a t o b j e c t i o n s on both of these p o i n t s
would be overcome if r e s e r v e s are c a l c u l a t e d i n the manner suggested above*
*'Qn the b a s i s of the f i g u r e s as of November 2 8 t h , the r e s e r v e p e r centage of the F e d e r a l Reserve Banks was 45*5* This percentage was based
upon the t o t a l gross d e p o s i t s ( i n c l u d i n g b o t h immediate and d e f e r r e d availsa b i l i t y c r e d i t s ) l e s s a deduction of a l l those items d e f i n e d i n the b e ginning of t h i s memorandum* Haa the r e s e r v e percentage on November 28th
been e s t i m a t e d upon the b a s i s of only those d e p o s i t s which are immediately
a v a i l a b l e , allowing no deduction whatsoever, t h e percentage would have been
4 4 * 1 , a d i f f e r e n c e of only l i $ *
* I t may be contended t h a t t h i s d i f f e r e n c e i s a g r e a t d i f f e r e n c e when
*
r e s e r v e s of the F e d e r a l Reserve Banks are as near the minimum as they
are at the p r e s e n t time and f o r t h a t reason i t may be f e l t t h a t t h i s iB an
inopportune moment a t which to i n s t i t u t e a change i n the method of c a l c u l a t i n g r e q u i r e d r e s e r v e s , but i t is the b e l i e f of t h i s o f f i c e t h a t such a
change should be made and as soon as i t i s p o s s i b l e t o do so without causing
any c o n s i d e r a b l e d i s t u r b a n c e through even a s l i g h t lowering of the r e s e r v e
percentage of the F e d e r a l Reserve Banks. In any event i t i s oelxeved t h a t
the proper method of c a l c u l a t i n g the r e s e r v e s i n accordance w i t h the terms
of the law as i t now r e a d s i s t h a t o u t l i n e d above f t h a t i s , t o e s t i m a t e
the r e q u i r e d r e s e r v e on the b a s i s of those d e p o s i t s which a r e immediately^
a v a i l a b l e and t o permit no deductions whatsoever*
Respectfully,
(Signed)
GEORGE L, HARRISON.
General Counsel. *
1011
E x OFFICIO M I M B E R S
CARTER GLASS
J
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
FEDERAL RESERVE BOARD
ADDRESS REPLY TO
FEDERAL RESERVE BOARD
WASHINGTON
W. P. 6 . HARDING. GOVERNOR
ALBERT STRAUSS, VICE GOVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
HENRY A. MOEHLENPAH
W. T. CHAPMAN. SECRETARY
R. G. EMERSON. ASSISTANT SECRETARY
W. M. IMLAY. FISCAL AGENT
December 2o>1919«
Subject:
X-176T
Reserve f o r Federal Reserve Board Assessment*
Dear S i r
/
*
I t i s assumed that your bank has r e c e i v e d n o t i c e
from the F i s c a l Agent of the F e d e r a l Reserve Board of the
amount of the assessment a g a i n s t i t to meet i t s p r o p o r t i o n
of the Board's expenses f o r the s i x months p e r i o d January
1st t o June 301 1920*
You are authorized and requested t o charge t h i s
amount out of your undivided p r o f i t s on December 31st and
t o c a r r y i t as "Reserve f o r F e d e r a l Reserve Board Assessment".
Debits w i l l be made a g a i n s t t h i s r e s e r v e account and
f u n d s transmitted to the Board as c a l l e d f o r .
Very t r u l y yours,
Governor.
L e t t e r t o Chairmen of a l l F.R. Banks,
1012
W . P . 0 . H A R D I N G . GOVERNOR
g x OFFICIO
A L B E R T S T R A U S S , VICE 6 0 V E R N 0 R
ADOLPH C. MILLER
" h ^rr, l rcu„.h=,
federal reserve board
•
w.t.™.s,™
R . G . E M E R S O N . ASSISTANT SECRETARY
ADDR
FEDEMJRE8Erve BOARD
WASHINGTON
December 20,1919*
X-1766
Subject: Reports of Federal Reserve Agents on
Applications to organizeN ational Banks,
Dear Sir
Without making any suggestion as to the course you should
pursue but merely for your information, the Board transmits the tex
of a communication i t has received from the Comptroller of the Currency,
as follewst
" In considering an application to organize a National
Bank, it is customary for this office to obtain, in addition
to the reports of the Chief National Bank Examiner and the
field examiner, recommendations from the Congressman i or
the district, the Federal Reserve Agent of the Reserve
Bank of the district, and the Commissioner of Banking of
the State, and also from other available sources.
This office finds that the Federal Reserve Agent i n
many c a s e s communicates with the Commissioner of Banking
for the district, and his report is more or less a r e j e c t ion of the Commissioner's views.
Inasmuch as this office gets direct a report from the
Commissioner of Banking I a wondering if i t is worth whil
m
for the Federal Reserve Agent to w r i t e t o the Commissioner
for a recommendation, thus duplicating the report w ic
this office gets direct?
'„ •
„ .
Would i t not be well for the Federal Reserve Agent to
base his information upon authorities other than those which
are communicated with direct by this office?
Very truly yours,
Governor*.
letter to Chairmen of all F.R. Banks,
1013
W . P . 6 . H A R D I N G , GOVERNOR
E x OFFICIO MEMBERS
A L B E R T S T R A U S S . VICE GOVERNOR
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
J O H N SKELTOH WILLIAMS
COMPTROLLER OF THE CURRENCY
ADOLPH C. MILLER
C H A R L E S S . HAMLIN
FEDERAL RESERVE BOARD
HENRY A. MOEHLENPAH
W . T . C H A P M A N , SECRETARY
R . G . E M E R S O N . ASSISTANT SECRETARY
A D D R E S S REPLY TO
FEDERAL RESERVE BOARD
W . M . IMLAY, FISCAL AGENT
WASHINGTON
December 20,1919*
X-1769
Subject: Estimating Population of Toms and. Cities
in which State Banks applying for membership are located.
Dear S i r : -
In connection with your campaign for State Bank
memberships, i t may be of interest to you to know that the
Federal Reserve Board, in considering applications from
State Banks for membership in the Federal Reserve System
pursuant to the provisions of Section 9
the Federal
Reserve Act, has decided to accept estimates of the population of the towns or cities in which the applying banks
are located as shown by the last official ceneus, whether
national, State, county or municipal, unless there is good
reason to believe that the figures are incorrect, in which
event an estimate of the population will be made through
means of local data supported by affidavits, as heretofore.
Very truly yours,
Governor.
Letter to Chairmen of all F,R. Banks*
1014
I
F E D E R A L R E S E R V E BOARD
!
X-1771
S A E E T F R T E PRESS
T TMN O H
Release for morning papers,
Dec. 23, 1919,
/
„
The Federal Reserve Board, today announced the appointment of the
following directors of the Los Angeles Branch of the federal Reserve
Bank of San Franciscb:
Mr. l.B, Newton
Mr, H«M. Robinson
Mr. J.F. Sartori
M* Stoddard Jess
r
Mr. Ira Clerk
^
The first two gentlemen have been appointed by the Federal Reserve
Board, while the last three are the appointees of the Federal Reserve Bank
of San Francisco^
Mr. I-B, Newton, prominent merchant of Southern California, for many
years was a member of the firm of Harper & Reynolds Co„, wholesale hardware dealers of Los Angeles, H recently retired from active business.
e
During the war he served on the Los Angeles sub-committee of the Twelfth
District Committee on Capital Issues and is a director 01 the Farmers &
Merchants National Bank of Los Angeles.
Mr. Henry M Robinson is a well-known citizen of Southern. California
#
and retired frcom active business. W r activities brought him to Washington
a
when he served on the Shipping Board, at the end of the war going to Paris
as one of the Economics Committee of Five assisting the American Peace
Delegation. H was appointed by the President as a member of the Second
e
m
i
v
Industrial
Conference and,
more recently, as a member, representing the
public, of the commission to investigate wages and working conditions in
|
the coal -industry, -provided for in the strike settlement agreement,
.
•
1015
-2-
X-1771
Mr. J.F. Sartorx is President of the Secjarity Trust and Savings
Bank and President of the Security National Bank, both of Los Angeles.
Mr. Stoddard Jess is President of the First National Bank of
Los Angeles.
Mr. Ira Clerk is Assistant Deputy Governor of the Federal Reserve
Bank of SanErancisco, and has been appointed Manager of the Los Angeles
Branch*
December 22,1919*
1016
W . P . 6 . 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
CARTER GLASS
THE TREASURY
CHAIRMAN
J O H N SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
C H A R L E S S . HAMLIN
HENRY A. MOEHLENPAH
FEDERAL RESERVE BOARD
W . T . C H A P M A N , SECRETARY
R . 6 . E M E R S O N , ASSISTANT SECRETARY
A D D R E S S REPLY TO
FEDERAL RESERVE BOARD
W . M . I N L A Y . FISCAL AGENT
WASHINGTON
December 23,1919*
*-1773
Subject: Shipment of Currency by Registered
Mail at Parcel Post Bates.
Dear Sir
Referring to the Board's telegram of December l6> advising
that arrangements have been made with the Post Office Department that,
beginning January 15, 1920, currency in denominations of $1, $2 and
$5 may be shipped by Federal Reserve Banks and their Branches to
correspondents and to Washington by registered mail, at Parcel Post
rates, there follows a copy of the Post Office order, providing for
this service, together with a statement giving full information
concerning the manner of computing and paying postage on shipments
and other conditions applicable thereto.
"Parcels containing currency of one or two
dollar denomination or coin put up in fixed quantities as original sealed packages, offered for
mailing by the Treasury Department, or its field
service, or by Federal Reserve Banks or their
branches, shall, if insured at the ten cent rate
of insurance, be accepted at the fourth-class
rate of postage and accorded the same treatment
as registered mail. Similar parcels containing
currency of five dollar denomination shall be
given like treatment on payment of maximum insurance fee and the fourth-class rate of postage
"Both the inner and outer wrappers of the packages of currency may
be sealed when mailed at the fourth-class (parcel post) rates of postage
under the provisions of the foregoing Order. Each parcel, except when
sent under the conditions indicated in the next paragraph of this letter
must be stamped on the address side thereof "Insured", the number of the
parcel placed thereon, and notation made immediately under this endorsement to the effect that by direction of the Post Office Department these
articles are to be handled and accorded the same treatment as registered
Mail.
,
>
-2-
V" .
X-1773
1017
" O r i g i n a l sealed packages of currency of the one, two and. f i v e do llaj* denominations and coin mailed under the p r o v i s i o n s of Order
Ho. 373S, when sent "by the Treasury Department or i t s f i e l d s e r v i c e
t o the F e d e r a l Reserve Banks er t h e i r "branches, or by the Federal
Reserve Banks or t h e i r t r a n c h e s t o the Treasury Department or i t s
f i e l d s e r v i c e , or from one to the o t h e r , may, when the q u a n t i t y i s
s u f f i c i e n t t o warrant such procedure, be put up i n r o t a r y lock pouches
or sacks, provided postage and insurance f e e s a t the r a t e s prescrioed
by the Order are paid on the contents of each pouch, such charges to
be based on each u n i t of 70 or 50 pounds or f r a c t i o n t h e r e o f , according
t o the p a r c e l p o s t zone to which t h e shipments are addressed^ For
i n s t a n c e , i n the case of a pouch containing 95 pounds of currency of
the one or two--doliar denomination or coin going to the t h i r d zone,
postage a t the r a t e f o r that zone, namely s i x c e n t s f o r the f i r s t
pound and two cents f o r each a d d i t i o n a l pomd or f r a c t i o n t h e r e o f ,
would be paid on the equivalent of one 70-pound p a r c e l and one 25pound p a r c e l , making the t o t a l postage charge fox- the contents of
the pouch $1.98, The insurance f e e s thereon would amount t o 20
c e n t s , making the t o t a l charges on the pouch $2.18. Postage stamps
i n payment of these charges should he a f f i x e d to a tag cc l a b e l
s e c u r e l y attached to the pouch> The pouches or sacks i n which s^-ip~
ments are made to the Federal Reserve Banks or t h e i r branches shcu d
be closed with the ordinary domestic r o t a r y locks and n o t with T-locks,
as the Federal Reserve Banks and t h e i r branches have n o t been f u r b i s h e d
T - l o c k keys.
"The postmasters concerned w i l l be i n s t r u c t e d i n r e g a r d t o the
f o r e g o i n g . I t i s understood t h a t you d e s i r e t h i s t o go i n t o e f f e c t
on January 15,19^0, and t h i s w i l l be s a t i s f a c t o r y . "
Very t r u l y y o u r s ,
Secretary*
l e t t e r t o Governors of a l l F«R. Banks*
1018
W . P . 9. H A R D I N G . GOVERNOR
E x OFFICIO MEMBERS
A L B * S T S T R A U S S . VICE GOVERNOR
CARTER GLASS
SECRETARY OF THE TREASURY
1
CHAIRMAN
J O H N SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
ADOLPH C. MILLER
C H A R L E S S . HAMLIN
FEDERAL RESERVE BOARD
HENRY A. MOEHLENPAH
W . T . C H A P M A N . SECRETARY
R . G . E M E R S O N , ASSISTANT SECRETARY
A D D R E S S REPLY TO
FEDERAL RESERVE BOARD
WASHINGTON
December 2U,1919<
Subject:
W . M . 1MLAY. FISCAL AOEMT
X-177U
Loans a g a i n s t Live Stock
"Fully Covered by I n s u r a n c e . "
Dear S i r : The Comptroller of the Currency has i s s u e d the
f o l l o w i n g r u l i n g , c o n s t r u i n g t h a t p a r t of the p r o v i s i o n s
of Section $200 of the Revised S t a t u t e s a s amended, by the
Act of October 22, 1919, vdiich r e l a t e s to the insurance
of p r o p e r t y covered by shipping documents, warehouse r e c e i p t s or other such documents covering r e a d i l y marketable non-perishable staples, including l i v e stock.
"The phrase 'covered by insurance' when a p p l i e d
t o l i v e stock, i s h e l d by t h i s o f f i c e to mean the insurance
which i t i s usual under the circumstances to c a r r y on l i v e
stock i n the coranunity or s e c t i o n where the p r o p e r t y i s
l o c a t e d . I t i s e s s e n t i a l , i n a l l cases, t h a t the bank
making the loan r e q u i r e t h a t the p r o p e r t y pledged be i n sured f o r i t s f u l l value with t h a t c h a r a c t e r of insurance
which w i l l amply p r o t e c t i t . "
Very t r u l y yours,
V"
Governor.
L e t t e r to Governors and Chairmen of a l l F.R. Banks.
l x OFFICIO MEMBEM
W. P. G. HARDING, GOVERNOR
—
CARTER G L A S S
A L B E R T S T R A U S S , VICE GOVERNOR
^
A D O L P H C . MILLER
SECRETARY OF THE TREASURY
CHAIRMAN
T5S25SSR--,
——
A D D R E S S REPLY T O
FEDERAL RESERVE BOARD
CHARLES S. HAMLIN
FEDERAL RESERVE BOARD
WASHINGTON
December 2 7 , 1 9 1 9 .
Subject:
HENRY A . MOEHLENPAH
R . G . EMERSON. ASSISTANT SECRETARY
W. M. IMLAY, FISCAL AGENT
3H7T5
R e a d j u s t m e n t of. Rel&tiGD of l a t e r e s t
R a t e s o n Bank B a l a n c e s t o D i s c o u n t
Rates a t Federal Reserve Banks.
D e a r Sir:
E a r l y I n 1 9 1 8 , a s y o u may remember, t h e r e w a s a d i s p o s i t i o n
on t h e p a r t of l a r g e banks a l l over the c o u n t r y t o i n d u l g e i n s h a r p
c o m p e t i t i o n f o r t a n k b a l a n c e s and t o o f f e r inducements i n t h e way
o f i n c r e a s e d r a t e s o f i n t e r e s t . Some of t h e b a n k s i n Mew York w e r e
b i d d i n g a s h i g h a s t h r e e p e r c e n t f or b a l a n c e s of o t h e r banks payable
o n demand, s o d t h e r a t b s o f f e r e d f o r time d e p o s i t s were h i g h e r *
T h i s l e d t o r e p r i s a l s on t h e p a r t o f i n t e r i o r b a n k s , a n d t h e b i d d i n g
f o r "business b y marking up i n t e r e s t r a t e s on d e p o s i t s t h r e a t e n e d t o
I n t e r f e r e s e r i o u s l y w i t h t h e f i n a n c i a l o p e r a t i o n s of t h e Government*
F i n a l l y t h e C l e a r i n g House b a n k s o f Hew York a g r e e d t o f i x a r a t e
o f two a a d o n e - h a l f p e r c e n t o n b a n k b a l a n c e s p a y a b l e o n d e m a n d ,
w i t h the p r o v i s o t h a t the i n t e r e s t r a t e would b e a u t o m a t i c a l l y
a d v a n c e d o r r e d u c e d o n e - q u a r t e r o f one p e r c e n t w i t h e a c h a d v a n c e
o r d e c l i n e of o n e - h a l f o f one p e r c e n t i n t h e n i n e t y - d a y r a t e a t
t h e F e d e r a l R e s e r v e Bank o f Sew Y o r k . T h i s r a t e i a now f o u r a n d
t h r e e - q u a r t e r s p e r c e n t , and s h o u l d i t b e a d v a n c e d a t a n y t i m e t o
f i v e p e r c e n t , t h e r a t e o f i n t e r e s t p a i d b y New York b a n k s f o r
o u t - o f - t o w n bank b a l a n c e s would advance a u t o m a t i c a l l y t o two and
t h r e e - q u a r t e r s p e r c e n t , and a f i v e and o n e - h a l f p e r c e n t r a t e
a t t h e New York r e s e r v e b a n k w o u l d a d v a n c e t h e i n t e r e s t r a t e o n
bank b a l a n c e s a u t o m a t i c a l l y t o t h r e e p e r c e n t , and s o o n .
The B o a r d w i s h e s t o b e f r e e t o a p p r o v e s u c h d i s c o u n t
r a t e s a s i t m a y deem n e c e s s a r y t o b r i n g a b o u t a j p r o p e r c o n t r o l
-2~
t
o f c r e d i t s , t u t i t i s a n x i o u s a t t h e same t i m e t o a v o i d a
d i s t u r b a n c e of the whole banking s i t u a t i o n s u c h as would
most l i k e l y r e s u l t from an advance i n t h e i n t e r e s t r a t e
a l l o w e d o n o u t - o f - t o v m b a l a n c e s b y t h e New York C l e a r i n g
House b a n k s . The B o a r d h a s s o u n d e d o u t t h e New York
C l e a r i n g House Committee i n o r d e r t o a s c e r t a i n how i t f e e l s
r e g a r d i n g a m o d i f i c a t i o n o f t h e p r e s e n t r u l e , and i s i n f o r m e d
t h a t t h e C o m m i t t e e i s n o t d i s p o s e d t o a c t w i t h o u t some d e f i n i t e
knowledge a s t o the course which w i l l be pursued b y the banks
i n other important c e n t e r s .
The B o a r d h a s d e c i d e d , t h e r e f o r e , t o i n v i t e r e p r e s e n t e e
t i v e bankers from a l l p a r t s of t h e c o u n t r y to meet i n Washington
on Tuesday, January 6th, 1^20, f o r the purpose of d i s c u s s i n g t h i s
m a t t e r i n t h e h o p e t h a t some way w i l l b e f o u n d o f a b r o g a t i n g t h e
e x i s t i n g e n t a n g l i n g a l l i a n c e between Federal reserve bank discount
r a t e s and i n t e r e s t r a t e s o n d e p o s i t s w i t h o u t e n d a n g e r i n g e x i s t i n g
b a n k i n g r e l a t i o n s h i p s . You a r e r e q u e s t e d t o b r i n g t h i s t o t h e
a t t e n t i o n of the c l e a r i n g house a u t h o r i t i e s i n your c i t y as w e l l
a s a l l b r a n c h b a n k c i t i e s i n y o u r d i s t r i c t and t o i n v i t e e a c h
c l e a r i n g house a s s o c i a t i o n t o have a r e p r e s e n t a t i v e here on t h e
d a t e named.
Very t r u l y yours,
Governor,
l e t t e r t o Chairmen o f a l l F . R . B a n k s ,
1021
FEDERAL
"RESERVE
BOARD
STATEMENT FOR THE PRESS
X-I777
#
For immediate r e l e a s e in
morning papers, December 23 J. 1319.-
'•
The Board has today made p u b l i c the f o l l o w i n g l e t t e r
dated December 27, 1919, sent to the Chairmen of the
Federal Reserve Banks.
/
f
'
s
•
E a r l y i n 1918, as you may remember, there was a
d i s p o s i t i o n on the p a r t of large "banks a l l m e t the country
to indulge i n sharp competition f of "bank "balances and to
o f f e r inducements i n the way of increased r a t e s of i n t e r e s t .
Some of the banks i n Hew M k were bidding as h i g h as three
per cent f o r balances of other banks payable on demand, and
the r a t e s o f f e r e d f o r tim6 d e p o s i t s were h i g h e r . This led
t o r e p r i s a l s on the p a r t of i n t e r i o r banks, md the bidding
f o r business by marking up i n t e r e s t r a t e s on d e p o s i t s t h r e a t ened to i n t e r f e r e s e r i o u s l y with the f i n a n c i a l operations of
the Government. F i n a l l y the Clearing House banks of New York
agreed to f i x a r a t e of two and one-half per cent on bank,
balances payable on demand, with the proviso t h a t the i n t e r e s t
r a t e would be automatically advanced or reduced one-quarter
of one per c e n t with each advance or decline of one-half of
one per cent i n the n i n e t y - d a y r a t e at the Federal Reserve
Bank of New York. This r ? t e i s now four and t h r e e - q u a r t e r s
per c e n t , and should i t be advanced at any time to f i v e per
c e n t , the r a t e of i n t e r e s t paid by New York banks f o r outof-town bank balances would advance a utomatically to two and
t h r e e - q u a r t e r s per c e n t , and a f i v e and one-half per cent
r a t e at the New York reserve bank would advance the i n t e r e s t
r a t e on bank balances a u t o m a t i c a l l y to three per c e n t , end
so on,
•
The Board wishes %o be f r e e to approve such discount
r a t e s as i t may deem necessary to b r i n g about a proper c o n t r o l
- 2 -
X-I777
of c r e d i t s , b u t i t i s anxious a t t h e same time t o a v o i d a
d i s t u r b a n c e of t h e whole banking s i t u a t i o n such as would
most l i k e l y r e s u l t from an advance i n the i n t e r e s t r a t e allowed
on o u t - o f - t o w n b a l a n c e s b y t h e New Ycru*Cleaving House banks*
The Board h a s sounded out the N.BW York C l e a r i n g House Committee
i n o r d e r t o a s c e r t a i n how i t f e e l s r e g a r d i n g a m o d i f i c a t i o n
of t h e p r e s e n t r u l e , and i s i n f o r m e d t h a t t h e Committee i s
n o t d i s p o s e d t o a c t w i t h o u t some d e f i n i t e knowledge as to
the c o u r s e which w i l l be p u r s u e d b y the "banks i n o t h e r im~
portant centers.
The h o a r d h a s d e c i d e d , t h e r e f o r e , t o i n v i t e r e p r e s e n t a t i v e b a n k e r s f r o m a l l p a r t s of t h e c o u n t r y t o meet i n
Washington &n Tuesday, J a n u a r y 6 t h , 1920 > f o r t h e p u r p o s e of
d i s c u s s i n g t h i s m a t t e r in the hope t n a t some way w i l l be f c u r d
of a b r o g a t i n g the e x i s t i n g e n t a n g l i n g a l l i a n c e between F e d e r a l
r e s e r v e b a n k d i s c o u n t r a t e s and. i n t e r e s t r a t e s on d e p o s i t s
without endangering e x i s t i n g banking r e l a t i o n s h i p s ^
You a r e
r e q u e s t e d to b r i n g t h i s t o t h e a t t e n t i o n of the c l e a r i n g house
a u t h o r i t i e s i n your c i t y as w e l l as a l l b r a n c h b a n k c i t i e s i n
your d i s t r i c t and t o i n v i t e each c l e a r i n g house a s s o c i a t i o n
to have a r e p r e s e n t a t i v e h e r e on the d a t e named*
EX OFFICIO MEMBERS
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
w . P. 0 . HARDING, GOVERNOR
ALBERT STRAUSS, VICE GOVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
HENRY A. MOEHLENPAH
FEDERAL RESERVE BOARD
JOHN 3KELT0N WILLIAMS
COMPTROLLER OF THE CURRENCY
A D D R E S S REPLY TO
FEDERAL RESERVE BOARD
W. T. CHAPMAN, SECRETARY
R. G. EMERSON, ASSISTANT SECRETARY
W. M. INLAY, FISCAL AGENT
WASHINGTON
December
,1919-
3U1778
CONFIDENTIAL
Dear S i r
By d i r e c t i o n of the Federal Reserve Board,
I enclose f o r your information a statement c o n t a i n i n g
a l i s t of the n a t i o n a l banks i n your d i s t r i c t which
on November 17, 1919 were loaning funds i n New York
on stocks and bonds as c o l l a t e r a l d i r e c t l y and i n d i r e c t l y , The statement a l s o shows the amount, of
b i l l s payable and r e d i s c o u n t s with you, and b i l l s
payable with other banks as of the same date*
Very t r u l y yours,
Secretary.
L e t t e r to Chairmen of a l l F.R. Banks,
FEDERAL
RESERVE
BOARD
WASHINGTON
X-17&0
CONFIRMATION
Moras, Boston
Strong, Nsw York
Passmore, P h i l a d e l p h i a
Fancher, Cleveland
Seay, Richmond
Uellbom, A t l a n t a
McDougal, Chicago
Biggs, St.Louis
Young, Minneapolis
M i l l e r , Kansas City
Van Zandt, Dallas
Calkins, SanFrancisco
Los Angeles Branch of the Federal Reserve Bank
of San Francisco w i l l open f o r business January 2, 1920, and
w i l l commence s e t t l i n g with other F e d e r a l Reserve Banks and
d i r e c t s e t t l i n g branches through the Daily Gold Fund Clearing,
e f f e c t i v e , statements January 2, c l e a r i n g January 3» Please
f o l l o w same procedure given i n Board's wire November 21, 19I8,
s u b j e c t , Gold Settlement c l e a r i n g s by branches Federal Reserve
Bank of San Francisco. Kindly advise branches accordingly*
Please acknowledge r e c e i p t *
EMERSON*
FEDERAL
RESERVE
BOARD
STATEMENT FOR THE PRESS
X-17S1
Release f o r morning p a p e r s ,
D e c e m b e r 31» 1919 •
The F e d e r a l R e s e r v e Boaipd h a s t e l e g r a p h e d a l l
F e d e r a l R e s e r v e Banks t h a t i t w i l l approve a s c h e d u l e
of r a t e s d o i n g away w i t h the p r e f e r e n t i a l r a t e
here-
t o f o r e g i v e n t o paper secured b y c e r t i f i c a t e s of
i n d e b t e d n e s s , the d i f f e r e n t i a l s i n f a v o r of paper secured
"by o t h e r G o v e r n m e n t o b l i g a t i o n s h a v i n g b e e n a b o l i s h e d
b y a c t i o n t a k e n e a r l i e r i n t h e month*
December 3 0 , 1 9 1 9 *
FEDERAL
RESERVE
B 0 ARD
WASHINGTON
December 3%, 1919»
CONFIRMATION
X-1782
C u r t i s s , Boston
J a y , New York
Austin, P h i l a d e l p h i a
W i l l s , Cleveland
Hardy, Richmond
MsCord, A t l a n t a
Heath, Chicago
Martin, St.Louis
Rich, Minneapolis
Ramsay, Kansas City
Ramsey, D a l l a s
Federal Reserve Board today authorized F e d e r a l
Reserve Bank of San Francisco to use i t s d i s c r e t i o n
as t o date of making p u b l i c annual r e p o r t of t h a t
bank. This f o r your information*
CHAPMAN
1027
.FEDERAL
RESERVE
WASHINGTON
BOARD
x-1783
December 31»1919•
CONFIRMATION
C u r t i s s , Boston
J a y , New Yoik
Austin, Philadelphia
W i l l s , Cleveland
Hardy, Richmond
McCord, A t l a n t a
Heath, Chicago
Martin, St.Louis
Rich, Minneapolis
Ramsay, Kansas City
Ratisey, Dallas
P e r r i n , SanFrancisco
With f u r t h e r r e f e r e n c e t o Board's l e t t e r
December 20,1919• X-I766, Board r e q u e s t s t h a t
the new method of determining r e s e r v e s given
t h e r e i n be d e f e r r e d u n t i l February 12th, u n l e s s
otherwise i n d i c a t e d by the Board p r i o r to t h a t
time.
HARDING.
W. P. G. HARDING, GOVERNOR
ALBERT STRAUSS. VICE GOVERNOR
EX-OFFICIO MEMBERS
mi..,*,
CHAIRMAN
J O H N SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
RH
C L T t E fxAx L- L\EL OQ L L YDV /L-. R O AI X L/
f T EU l T D A I D C7 EE" \ C"
WASHINGTON
J u l y 2, 1919.
SUBJECT:
J . A . BRODERICK. SECRETARY
W. . T .CHAPMAN. ASSISTANT SECRETARY
W T. CHAPMAN. ASSISTANT SI
W. M. 1MLAY, FISCAL ASENT
ADDHESS REPLY TO
FEDERAL RESERVE BOARD
Monthly r e p o r t s of F - R .
n o t e s received, frcm and
r e t u r n e d t o o t h e r F- R .
banks (forms 381 and 3 8 1 a . )
Dear s i r ; I t h a s b e e n n o t e d t h a t o c c a s i o n a l l y the m o n t h l y r e p o r t s of F e d e r a l
Reserve n o t e s r e c e i v e d frcm and r e t u r n e d to o t h e r Reserve banks (fonas 381
a n d 381a) a r e c o n s i d e r a b l y d e l a y e d , due to t h e f a c t t h a t the T r e a s u r e r ' s
n o t i c e (form 6232RA) showing t h e number of n o t e s of e a c h d e n o m i n a t i o n r e deemed i s n o t a l w a y s p r o m p t l y r e c e i v e d .
m o r d e r t o o b v i a t e s u c h d e l a y i n f u t u r e , the B o a r d h a s d e c i d e d t h a t ,
so f a r a s f o a m s 3 8 1 a n d 3 8 1 a a r e c o n c e r n e d , t h e i n f o r m a t i o n c a l l e d f o r t h e r e on r e g a r d i n g t h e d e n o m i n a t i o n s of n o t e s r e c e i v e d f r o m o t h e r R e s e r v e b a n k s ,
may be c o m p i l e d f r o m t h e a d v i c e s w h i c h R e s e r v e b a n k s m a i l t o t h e i s s u i n g bank
when F e d e r a l 'Reserve n o t e s a r e f o r w a r d e d t o t h e U« S» T r e a s u r e r f o r r e d e m p t i o n .
Data r e g a r d i n g F e d e r a l Reserve n o t e s r e c e i v e d , i s s u e d t o bank, r e t u r n e d
to Comptroller, e t c . ,
a s c a l l e d f o r by f o r m 4 4 ,
f i n a l a d v i c e s r e c e i v e d f r o m t h e u» S* T r e a s u r e r .
s h o u l d c o n t i n u e t o be b a s e d on
I t may be s e v e r a l m o n t h s
b e f o r e t h o Redemption D i v i s i o n of t h e T r e a s u r y w i l l Ke a b l e t o m a i l f i n a l r e p o r t s showing d e n o m i n a t i o n s of n o t e s redeemed a n d d e l i v e r e d t o the c o m p t r o l l e r
of t h e c u r r e n c y f o r d e s t r u c t i o n , and i t w i l l be n e c e s s a r y f o r y o u t o d e l a y a c c o r d i n g l y t h e s u b m i s s i o n of y o u r m o n t h l y r e p o r t s f o z m 4 4 .
Yours v e r y t r u l y ,
Assistant Secretary.
S t . 469
±029
W. P. G. HARDING. GOVERNOR
ALBERT STRAUSS. VICE GOVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
EX-OFFICIO MEMBERS
C
ARTSR^S
S
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
FEDERAL RESERVE BOARD
WASHINGTON
J. A. BRODERICK, SECRETARY
W. T. CHAPMAN. ASSISTANT SECRETARY
W. M. IMLAY. FISCAL AGENT
ADDRESS REPLY TO
FEDERAL RESERVE BOARD
J u l y 12, 1519.
Subject:
S t a t i s t i c s r e l a t i n g to Statu
b a n k s and T r u s t ccmpanios e l i g i b l e ) f o r membership i n p . B.
System.
Boar S i r ; W i t h the viow of e n a b l i n g t h e Board, t o c o n t i n u e t h e p r e p a r a t i o n of t a b l a s simi l a r t o t h o s e a p p e a r i n g on p a g e s 26 a n d 27 of t h e I 9 I S a n n u a l r e p o r t , i t i s r e q m s t r s d t h a t you havo t h e f o l l o w i n g d a t a r e g a r d i n g S t a t e b a n k s a n d T r u s t ccmpenics i n
your d i s t r i c t c c m p i l b d f r e m t h e l a t e s t a v a i l a b l e r e p o r t s , a n d f o r w a r d e d t o t h e Board
a t your e a r l i e s t p r a c t i c a b l e convenience;
S t a t e Banks and T r u s t Companies w i t h C a p i t a l s t o c k
s u f f i c i e n t t o m e e t c a p i t a l r e q u i r e m e n t s f o r memb e r s h i p i n F e d e r a l Reserve system.
( i n t h o u s a n d s of d o l l a r s , i . o . , 000 e m i t t e d . )
Members of ]?. R* systooi
non-members of p . R i system
«
» Surplus »
ti i
1 surplus *
•
»
1exclusive f
'
'
'exclusive'
•Num-*Capital*
of
> Total
tHum-1Capital *
of
* Total
1
'bur t
'undivided resources'ber '
f u n d i v i d v d ' r e sourc e s
1
1
1
' profits »
profits'
'
'
1
State of
Date of report —
Banks with a canbine d capital
and surplus ofLess than
$1,000,000
Over $1,000,000
but le ss than
$5,000,000
$5,00Q 000" and ovsr
I n a d d i t i o n t o f u r n i s h i n g s e p a r a t e d a t a f o r e a c h S t a t e , i t w i l l be a p p r e c i a t e d
i f you w i l l g i v e t h e name a n d l o c a t i o n of e a c h non-member S t a t , , bank and T r u s t
*
m
1030
- 2 -
company i n your d i s t r i c t which has a combined c a p i t a l and s u r p l u s of $1,000,000
or o v e r .
In acknowledging r e c e i p t p l e a s e s t a t e the approximate date on which we may
expect to receive your r e p o r t .
yours very t r u l y ,
Secretary.
S t . Usi.
Copy of t h i s l e t t e r sent to Chairman of each p . R. Bunk.
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
July 1?, 1919.
.
st/kgg.
SUBJECT: V e r i f i c a t i o n of s t a t i s t i c s appearing
•in the Federal R e s e r v e Bulletins«
Dear S i r :
With t h e v i e w of i n s u r i n g a c c u r a c y i n t h e f i g u r e s p u b l i s n e d .
i n t h e Board* s an n u al R e p o r t s and of a v o i d i n g any i n c o n s i s t e n c i e s
"between f i g u r e s shown t h e r e i n and i n t h e r e p o r t s of t h e F e d e r a l
R e s e r v e A g e n t s , our S t a t i s t i c a l D i v i s i o n h a s been c a r e f u l l y comp a r i n g t h e f i g u r e s g i v e n i n t h o s e r e p o r t s "before sending t o t h e
p r i n t e r t h e m a n u s c r i p t of t h e s t a t i s t i c a l p o r t i o n 01 t h e -doard 1 s
r e p o r t . Owing to t h e l a r g e r volume of "business h a n d l e d d u r i n g
1318* and t o c e r t a i n c h a n g e s i n t h d method of p r e s e n t i n g s t a t i s t i c s ,
i t was f o u n d v e r y d i f f i c u l t t o r e c o n c i l e so Die of t h e f i g u r e s cont a i n e d i n t h e Agents 1 I 9 I 8 r e p o r t s v/ith t h o s e c o m p i l e d "by o u r S t a t i s t i c a l D i v i s i o n - T h i s c a u s e d c o n s i d e r a b l e c o r r e s p o n d e n c e and
d e l a y e d t h e f i n a l p r i n t i n g of t h e r e p o r t ,
I t i s t h e B o a r d ' s d e s i r e t o have i t s a n n u a l r e p o r t a p p e a r a t
t h e e a r l i e s t p r a c t i c a b l e d a t e a f t e r J a n u a r y 1 s t of each y e a r , and
w i t h t h e v i e w of a v o i d i n g t h e n e c e s s i t y of h a v i n g t o r e c o n c i l e
f i g u r e s c o v e r i n g 12 months 1 o p e r a t i o n s a f t e r t h e c l o s e of t h e y e a r ,
i t i s r e q u e s t e d t h a t your a c c o u n t i n g and s t a t i s t i c a l d e p a r t m e n t s
b e i n s t r u c t e d t o c h e c k a l l f i g u r e s a p p e a r i n g i n t h e monthly F e d e r a l
R e s e r v e B u l l e t i n s , so f a r a s t h e y r e l a t e to s t a t i s t i c a l m a t t e r
which i s b e i n g c u r r e n t l y c o m p i l e d by your b a n k o r which may b e comp i l e d f o r i n s e r t i o n i n y o u r I 9 1 9 a n n u a l r e p o r t * I n c a s e any i n a c c u r a c i e s a r e f o u n d i n t h e f i g u r e s shown i n t h e F e d e r a l R e s e r v e
B u l l e t i n s , t h e y s h o u l d b e c a l l e d i m m e d i a t e l y t o t h e a t t e n t i o n of
our S t a t i s t i c a l D i v i s i o n i n o r d e r t h a t i t s r e c o r d s may be c o r r e c t e d
a n d t h e n e c e s s a r y changes made i n t h e c u m u l a t i v e f i g u r e s which a r e
c a r r i e d f o r w a r d f r o m month t o month * L i k e w i s e , any e r r o r s i n f i g u r e s p u b l i s h e d i n t h e B u l l e t i n s , which a r e d i s c o v e r e d b y our S t a t i s t i c a l D i v i s i o n , w i l l b e b r o u g h t t o your a t t e n t i o n p r o m p t l y , i n
o r d e r t h a t p e r m a n e n t c o p i e s of t h e B u l l e t i n on f i l e a t your bank
may b e c o r r e c t e d to a g r e e w i t h t h e p e r m a n e n t r e c o r d s of t h e Board*
I f t h e above s u g g e s t i o n s a r e c a r e f u l l y c a r r i e d o u t , f i g u r e s
f o r t h e f i r s t e l e v e n months of t h e y e a r , a s shown i n y o u r 193-9
a n n u a l r e p o r t * s h o u l d be i n e x a c t agreement w i t h t h o s e c o m p i l e d b y
t h e Board f o r t h a t p e r i o d * T h i s w i l l l e a v e o n l y f i g u r e s f o r t h e
month of December to b e r e c o n c i l e d a t t h e c l o s e of t h e y e a r when
the. a n n u a l f i g u r e s a r e c o m p i l e d b y t h e Board#
st.U85
1033
'
CLASSIFICATION OF WAR PAPER - W i t h
u n i f o r m c l a s s i f i c a t i o n of wax p a p e r , i t
m e t h o d of c l a s s i f i c a t i o n a d o p t e d by o u r
w h i c h i s o u t l i n e d below, be f o l l o w e d by
t n e v i e w of s e c u r i n g
i s r e q u e s t e d t h a t the
s t a t i s t i c a l Division,
your bank;
I n c l a s s i f y i n g war p a p e r t h e s t a t i s t i c a l D i v i s i o n i n c l u d e s
o n l y c o l l a t e r a l n o t e s o r o t h e r d i s c o u n t s f u l l y s e c u r e d by war
o b l i g a t i o n s a n d d i s c o u n t e d a t r a t e s a p p r o v e d f o r war l o a n p a p e r *
p a p e r h a v i n g a m a t u r i t y i n e x c e s s of gO d a y s a t t h e t i m e of d i s c o u n t w i t h t h e F e d e r a l R e s e r v e bank, ( a g r i c u l t u r a l a n d l i v e s t o c k
p a p p r ) , even when f u l l y s e c u r e d b y war o b l i g a t i o n s , i s n o t i n c l u d e d w i t h war p a p e r , n e i t h e r do our figures i n c l u d e p a p e r o n l y
p a r t l y s e c u r e d by war o b l i g a t i o n s and d i s c o u n t e d a t r e g u l a r comm e r c i a l r a t e s , even t h o u g h t h e r a t e of d i s c o u n t may b e t h e same
a s t h a t c h a r g e d on war p a p e r *
Where c u s t o m e r s 1 p a p e r which i s f u l l y s e c u r e d by government
war o b l i g a t i o n s i s u s e d a s s e c u r i t y f o r member b a n k s ' c o l l a t e r a l
n o t e s , s u c h c o l l a t e r a l n o t e s a r e c l a s s e d a s war p a p e r * On t h e
o t h e r hand, where a p o r t i o n o f t h e c u s t o m e r s ' p a p e r u s e d a s s e c u r i t y
f o r c o l l a t e r a l n o t e s i s n o t f u l l y s u p p o r t e d by Government war o b l i g a t i o n s , t h e c o l l a t e r a l n o t e s a r e n o t c l a s s e d a s war p a p e r .
TOTAL INVESTMENT OPERATIONS - p a r t i c u l a r a t t e n t i o n i s c a l l e d
t o t n e f a c t t n a t f i g u r e s shown i n t h e t a b l e e n t i t l e d " T o t a l i n v e s t m e n t o p e r a t i o n s of e a c h F e d e r a l R e s e r v e Bank" (page 590
the
J u n e B u l l e t i n ) , r e p r e s e n t t h e i n v e s t m e n t s of e a c h F e d e r a l R e s e r v e
b a n k , e x c l u s i v e of p a p e r d i s c o u n t e d f o r o r p u r c h a s e d f r o m a n o t h e r
F e d e r a l R e s e r v e bank* T a b l e s showing r e d i s c o u n t s a n d s a l e s of d i s c o u n t e d and p u r c h a s e d p a p e r between pedera.1 Reserve b a n k s a r e p u b l i s h e d q u a r t e r l y , i n t h e F e b r u a r y , Hey, A u g u s t and November B u l l e t i n s - i t w o u l d seem d e s i r a b l e fx e a c h R e s e r v e bank t o s e t u p i n
s e p a r a t e columns i n t h e i r t a b l e s of i n v a s t ^ e n t o p e r a t i o n s f i g u r e s
showing t h e amounts of p a p e r d i s c o u n t e d f o x o r p u r c h a s e d f r o a o t h e r
F e d e r a l R e s e r v e b a n k s . T h i s w i l l b r i n g o u t more c l e a r l y t h e amount
o f a c c o m o d a t i o n e x t e n d e d t o member b a n k s i n your d i s t r i c t , a s w e l l
a s your open m a r k e t p u r e .oases of a c c e p t a n c e s .
F i g u r e s r e p r e s e n t i n g p u r c h a s e s of u . S . s e c u r i t i e s s h o u l d i n c l u d e o n l y s u c h s e c u r i t i e s a s become a p a r t of t h e b a n k ' s e a r n i n g
assets,
s e c u r i t i e s p u r c h a s e d f o r a l l o t m e n t t o s u b s c r i b e r s e n d imm e d i a t e l y d e l i v e r e d s h o u l d be e x c l u d e d a n d s h o u l d n o t be l i s t e d on
S c h e d u l e s 8 - 2 from w h i c h t h e B o a r d ' s s t a t i s t i c s a r e c o m p i l e d .
I t w i l l b e a p p r e c i a t e d i f you w i l l c a l l o u r a t t e n t i o n , a t your
e a r l i e s t c o n v e n i e n c e , t o any n e c e s s a r y c o r r e c t i o n s i n t h e figures
r e l a t i n g t o t h e i n v e s t m e n t o p e r a t i o n s of y o u r bank, a s p u b l i s h e d
i n t h e March, A p r i l , May, June e n d J u l y B u l l e t i n s -
http://fraser.stlouisfed.org/
(Copy of
Federal Reserve Bank of St. Louis
Yours v e r y t r u l y ,
Secretary,
;
t h i s l e t t e r sent to a l l chairmen.)
* •
*
1033
W . P . G . HARDING, GOVERNOR
ALBERT STRAUSS. VICE GOVERNOR
ADOLPH C . MILLER
C H A R L E S 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 . B R O D E R I C K , SECRETARY
W . T . CHAPMAN. ASSISTANT SECRETARY
w . M. IMLAY. FISCAL AGENT
ADDRESS REPLY TO
WASHINGTON
FEDERAL RESERVE BOARD
J u l y 15, 1319
S u b j e c t : Open market o p e r a t i o n s
of Federal Reserve
"branch banks.
Dear Sir
.An eicamination of r e p o r t a r e c e i v e d from Federal Reserve branch banks shows
t h a t v/hile come of them have been purchasing bankers* acceptances from member banks
and carrying thorn on t h e i r own books, o t h e r s have r ofr a i n e d from do i n s so f o r the
reason tSiat t h e i r by-lav/a have been i n t e r p r e t e d as p r o h i b i t i n g t h e carrying of
bankers' acceptances purchased from member banks on t h e books of the branches.
In t h i s connection, I may say t h a t the s e c t i o n in t h e by-laws of c e r t a i n
branches which provides that they s h a l l not engage f o r t h e i r o«m account in open
market t r a n s a c t i o n s , bankers' acceptances, e t c . , except upon the order and f o r t h e
account of the head o f f i c e , i s not construed by the Board as p r o h i b i t i n g board- of
d i r e c t o r s of Federal Reserve banks from a u t h o r i z i n g a branch t o purchase bankers'
acceptances f r o m member bonks and to c a r r y such acceptance's on t h e branch books.
T7i.ll you k i n d l y bring t h i s matter to t h e a t t e n t i o n of your Board of D i r e c t o r s ,
and o b l i g e ,
Yours very truly
/
Governor
S t . kSj
(Copy of .fcfcis l e t cer sent to : a l l Chairmen)
1AM4
W. P. G. HARDING, GOVERNOR
EX OFFICIO MEMBER*
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
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
FEDERAL RESERVE BOARD
WASHINGTON
w.
A
C^KUN^ASMMANT SECRETARY
W . M. I N L A Y . FISCAL AGENT
""""D^LREBERVEBOARD
J u l y 23, 1919
st,502
SUBJECT: C l a s s i f i c a t i o n of purchased, b i l l s
according t o endorsement.
Dear S i r :
An examination of forms 3& r e c e i v e d from the s e v e r a l F e d e r a l
Reserve banks and branches, shows t h a t some of the banks and branches
have been r e p o r t i n g a c c e p t a n c e s endorsed by the acceptor but toy no
o t h e r bank, a s "Acceptances n o t bearing t h e endorsement of any bank
or banker", w h i l e others, have been r e p o r t i n g such a c c e p t a n c e s among ~ ~
4
those bearing the endorsement of a member bank or of a non-member
bank or banker a s the case may b e .
Inasmuch as the endorsement of the a c c e p t o r does n o t add
anything to t h e q u a l i t y of t h e a c c e p t a n c e , except p o s s i b l y t h a t i t
guarantees p r i o r endorsements, our S t a t i s t i c a l D i v i s i o n h a s adopted
t h e r u l e t h a t the endorsement of the a c c e p t o r be d i s r e g a r d e d when
compiling d a t a f o r the monthly B u l l e t i n .
Accordingly we would r e -
quest t h a t your d i s c o u n t department r e p o r t acceptances b e a r i n g t h e
indorsement of the a c c e p t o r only, and of no o t h e r bank or banker, as
acceptances n o t b e a r i n g t h e -endorsement of any bank or b a n k e r .
Very t r u l y yours,
Assistant Secretary.
(Copy s e n t to Chairman of e a c h F e d e r a l Reserve Bank.)
.V
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
FEDERAL RESERVE BOARD
J O H N SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
J . A . BRODERICK, SECRETARY
W . T . CHAPMAN. ASSISTANT SECRETARY
W . M. I ML AY, FISCAL AGENT
WASHINGTON
ADDRESS REPLY TO
FEDERAL RESERVE BOARD
July 24, 1915.
St.505
SUBJECT: R e v i s i o n o f W e e k l y member bank c o n d i t i o n
staidmeni to provide for separate c l a s s i f i c a t i o n o f l o a n s s e c u r e d by s t o c k s azld
b o n d s , o t h e r t h a n U* $ • s e c u r i t i e s *
Dear S i r :
With the v i e w of enabling the Board t o f o l l o w more c l o s e l y
c h a n g e s i n t h e c h a r a c t e r o f t h e l o t o s a n d d i s c o u n t s o f member t a n k s ,
may w e r e q u e s t t h a t y o u i n s t r u c t a l l member baflXi s u b m i t t i n g w e e k l y
condition reports
( f o n t 51a)
to report separately, beginning with
t h e r e p o r t f o r A u g u s t 15# t h e a m o u n t o f t h e i r " L o a n s s e c u r e d Ty
s t o c k s a n d b o n d s , other* t h a n U n i t e d S t a t e s s e c u r i t i e s , "
Please re-
q u e s t a l s o a l l r e p o r t i n g member b a n k s t o i n c l u d e i n t h e f u t u r e u n d e r
caption "All other loans and investments", a l l loans and discounts,
( e x c l u s i v e o f t h o s e shown a g a i n s t i t e m s o a n d 7 o n form 51 i and o f
paper u n d e r r e d i s c o u n t ) ) a l s o a l l s t o c k s , b o n d s a n d m o r t g a g e s a c t u a l l y owned t y t h e bank whether pledged o r u n p l e d g e d ,
(exclusive
o f r e a l e s t a t e , b a n k i n g h o u s e , f u r n i t u r e a n d f i x t u r e s , and F e d e r a l
R e s e r v e Bank s t o c k * )
There a r e f o r w a r d e d h e r e w i t h 75 c o p i e s o f form S t . 5 1
( r e v i s e d ad o f J u l y 2 3 , 1 9 1 9 ) » f o r t h e u s e o f y o u r bank i n s u b mitting
f h a c o n s o l i d a t e d r e p o r t t o the Boards
http://fraser.stlouisfed.org/
(Copy s Louis
Federal Reserve Bank of St. e n t
Yours very t r u l y ,
Governor.
t o C h a i r m a n o f e a c h F e d e r a l R e s e r v e Ban$r.»)
1036
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
J O H N 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
August 2, # 1 9
st.517
SUBJECT: M o n t h l y R e p o r t o f f e d e r a l R e s e r v e
n o t e s r e c e i v e d from and r e t u r n e d t o
o t h e r F e d e r a l fieserve b a n k s , f o r m s
3 8 1 and 381a.
i t h** been brought t o the a t t e n t i o n o f t h e F e d e r a l Res e r v e B o a r d t h a t a number o f F e d e r a l R e s e r v e banks f r e q u e n t l y
; f ^ l tti show c o m p l e t e i n f o r t a a t l b n i n i h e i r a d v i c e s t o o t h e r
, % ^ r & l Reserve banks, regarding denctoinations df n o t e s f o r ..liahfed t o t h e U n i t e d S t a t e s Treasurer f o r Redemption.
I n a s m u c h a s t h e s e d a t a a r e now W e d i h t h e p r e p a r a t i o n
of t h e monthly r e p o r t s o f F e d e r a l Reserve d o t e # r e c e i v e d from
other F e d e r a l Reserve banks, (fotma
and | 8 l a ) i n a c c o r d a n c e w i t h t h e B o a r d ' s l e t t e r S i i U 6 9 d a t e d 4ti2y £ , i t i s e s s e n t i a l that complete details, r^gardirtgthedeftaniflatiotP of
a l l n o t e s r e t u r n e d t o t h e IreAtsurer f o r r e d e m p t i o n be g i v e n
i n s u c h a d v i c e s . W i l l y o u t h e j t o f e t e V o j f o b d e n o u g h to. h a v e
t M s matter brought to the a t t e n t i o n of the proper department, and oblige*
(Copy s e n t
Yours v e r y t r u l y ,
Acting Assistant Secretary.
t o Chairman e f e a c h F e d e r a l R e s e r v e b a n k , )
1037
E x 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
C H A R L E S S HAMLIN
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
FEDERAL RESERVE BOARD
J O H N SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
WASHINGTON
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 l l LAY, FISCAL AGENT
ADDRESS REPLY TO
FEDERAL RESERVE BOARD
August 9, 1519.
Subjects
Monthly r e p o r t of
c u r r e n t expenses,
form 96•
Dear S i r : Wq a r e forwarding t o you today under s e p a r a t e cover
copies
of monthly r e p o r t of c u r r e n t expenses, form 96, r e v i s e d as of July IS, 1919*
Item GILT "All Other S a l a r i e s " has been changed so as to provide
f o r showing s e p a r a t e l y e x t r a h e l p , overtime, and supper money« We have also
changed the heading of the l a s t column on the form to r e a d "Total since July
1, 1919"•
I t w i l l be s a t i s f a c t o r y to the Board i f you w i l l a l s o show, i n
the l a s t column on form 95, your t o t a l earnings s i n c e J u l y 1, 1919* i n s t e a d
of s in c e January 1, as has been the custom h e r e t o f o r e •
Kindly acknowledge l o c e i p t .
Very t r u l y yours',
Acting A s s i s t a n t S e c r e t a r y ,
S t , 531
Copy t o be s e n t t o Chairman of e a c h F e d e r a l R e s e r v e Bank
1038
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 HAMLIN
E x OFFICIO MEMBERS
CARTER GLASS
SECRETARY OF THE TREASURY "
CHAIRMAN
FEDERAL RESERVE BOARD
J O H N SKELTON WILLIAMS
COMPTROLLER o r 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. IMLAY, FISCAL AGENT
WASHINGTON
ADDRESS REPLY TO
FEDERAL RESERVE BOARD
August 19, 1919*
St.553
SUBJECT: Form 107a, S p e c i a l N o t i f i c a t i o n of
Dividends Declared by S t a t e
Bank and Trust -Company members.
<
Dear S i r :
There a r e being forwarded to you today under s e p a r a t e
cover
copies of new form 107a, "Special N o t i f i c a t i o n
of Dividends Declared," f o r t h e use of S t a t e bank and t r u s t
company members i n submitting r e p o r t s of n e t e a r n i n g s , dividend payments, e t c . , t o your bank.
Please i n s t r u c t each n o n - n a t i o n a l member bank i n your,
d i s t r i c t t o submit a r e p o r t i n d u p l i c a t e , on form 107a,
w i t h i n 10 days a f t e r each dividend d e c l a r a t i o n .
The o r i g -
i n a l copies of stich r e p o r t s should be forwarded to the Fede r a l Reserve Board, and the d u p l i c a t e copies r e t a i n e d f o r your
files.
Please acknowledge r e c e i p t .
Yours very t r u l y ,
Acting S e c r e t a r y .
(Copy s e n t to Chairman of each Federal Reserve Bank.)
1039
W . P . 6 . 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
C H A R L E S 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
W . T . C H A P M A N , ASSISTANT SECRETARY
W . M . I N L A Y , FISCAL AGENT
ADDRESS REPLY TO
WASHINGTON
FEDERAL RESERVE BOARD
Aug. 21, I919.
St.557
SUBJECT: Weekly r e p o r t covering s a l e s of
Government s e c u r i t i e s *
Dear S i r :
There a r e being forwarded, to you today under s e p a r a t e cover 50
copies each of forms St.550, 551 and 552 f o r the use of your bank in
submitting weekly r e p o r t s to the Federal Reserve Board covering s a l e s
of Government s e c u r i t i e s , including Victory n o t e s and C e r t i f i c a t e s of
Indebtedness, a l s o Treasury Savings C e r t i f i c a t e s , War Savings Stamps
and T h r i f t Stamps* I t i s r e q u e s t e d t h a t your f i r s t r e p o r t s on these
forms be submitted a s a t close of business on Friday, August 29•
Reports on forms 106 (War Savings and T h r i f t Stamps) and 132 ( F i f t h Libe r t y Loan) may be discontinued as of t h a t d a t e .
Reports on forms S t , 5 5 1 and 552 covering c e r t i f i c a t e of indebtedness o p e r a t i o n s should r e l a t e only to such c e r t i f i c a t e i s s u e s a s have
n o t matured on the date the r e p o r t i s rendered. To i l l u s t r a t e . Of the
ten i s s u e s of c e r t i f i c a t e s p l a c e d i n a n t i c i p a t i o n of the Victory Lean,
a l l but two have matured, and accordingly ycur r e p o r t f o r August
of c e r t i f i c a t e s i s s u e d in a n t i c i p a t i o n of the Victory loan should i n clude only t r a n s a c t i o n s under the two i s s u e s of c e r t i f i c a t e s maturing
on September 9 and October 7* Separate data should, be f u r n i s h e d f o r
each c e r t i f i c a t e i s s u e - Reports on form St.550 should cover Treasury
Savings C e r t i f i c a t e s , War Savings Stamps and T h r i f t Stamps of the I919
series only.
•
I t w i l l be a p p r e c i a t e d i f r e p o r t s on the new forms a r e submitted
as promptly as p r a c t i c a b l e a f t e r the close of business on each F r i d a y .
P l e a s e acknowledge r e c e i p t .
Very t r u l y yours,
Acting A s s i s t a n t S e c r e t a r y .
(COPY SENT TO CHAIRMAN OF EACH FEDERAL RESERVE BANK.)
W . P . 6 . 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 . 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 . B R O D E R I C K . SECRETARY
W . T. C H A P M A N , ASSISTANT SECRETARY
W . M. I N L A Y , FISCAL AGENT
WASHINGTON
A D D R E S S REPLY TO
FEDERAL RESERVE BOARD
September 8, 1919
St.582
SUBJECT: R e v i s i o n of form 3 8 , " D i s t r i b u t i o n ,
by c l a s s e s , of p a p e r and s h o r t - t e r m
investments held."
Dear S i r :
There a r e b e i n g f o r w a r d e d t o you t o d a y u n d e r s e p a r a t e c o v e r
c o p i e s o f f o r m 3 8 , r e v i s e d a s of August 20, 1 9 1 9 . S l i g h t c h a n g e s
have b e e n made i n t h e w o r d i n g of i t e m s u n d e r t h e h e a d " C l a s s i f i c a t i o n of p u r c h a s e d b i l l s a c c o r d i n g t o e n d o r s e m e n t * i n o r d e r t o a v o i d
any m i s u n d e r s t a n d i n g of t h e B o a r d ' s method of c l a s s i f y i n g e n d o r s e ments , a s o u t l i n e d i n o u r l e t t e r S t . 5 0 2 d a t e d J u l y 2 3 , 1919. A
n o t e h a s a l s o b e e n added
t h e b o t t o m o f t h e new form w i t h r e g a r d
t o " B i l l s d i s c o u n t e d f o r members and o t h e r F . R . b a n k s , o t h e r w i s e
s e c u r e d and u n s e c u r e d " a s r e p o r t e d a g a i n s t i t e m 'L• As no o t h e r
c h a n g e s h a v e been made i n t h e f o r m you may c o n t i n u e t o u s e t h e o l d
e d i t i o n ( r e v i s e d a s of A p r i l 12, .1919) u n t i l y o u r s u p p l y t h e r e o f
becom.es e x h a u s t e d .
B r a n c h e s w h i c h c a r r y e a r n i n g a s s e t s on t h e i r own books s h o u l d
be s u p p l i e d by t h e p a r e n t bank w i t h c o p i e s of t h e r e v i s e d f o r m .
P l e a s e acknowledge r e c e i p t .
Yours v e r y t r u l y ,
Acting Assistant Secretary
LETTER SENT TO CHAIRMEN OP ALL F. R. BAMS.
MW . P . 6 . 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 . HAMLIN
E x OFFICIO MEMBERS
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
FEDERAL RESERVE
J O H N 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. IMLAY, FISCAL AGENT
WASHINGTON
ADDRESS REPLY TO
FEDERAL RESERVE BOARD
St-559
SUBJECT:
Revision of form 44-a, Monthlyr e p o r t of F.R. notes o u t s t a n d ing and on hand, and funds h e l d
as s e c u r i t y .
Dear S i r :
There a r e enclosed herewith 50 copies of form 44-a
(Revised September 12, 1919) for
use
i n making f u t u r e
monthly r e p o r t s of Federal Reserve n o t e s o u t s t a n d i n g and
on hand a l s o funds h e l d as s e c u r i t y f o r o u t s t a n d i n g n o t e s .
The only changes i n the form are the a d d i t i o n of the words
"Gold Settlement Fund" a f t e r "Credit balance with Federal
Reserve Board"(item ROLF),
and the s u b s t i t u t i o n of the
code word RITT f o r BEET to designate Federal Reserve n o t e s
on hand, as w e l l as the a d d i t i o n of a note e x p l a i n i n g the
c h a r a c t e r of information to be reported a g a i n s t item RITT.
Kindly acknowledge r e c e i p t .
Yours very t r u l y ,
Acting Assistant Secretary.
(Enclosure)
LETTER SENT TO ALL FEDERAL RESERVE AGENTS
W. P. S . HARDING, GOVERNOR
ALBERT STRAUSS, VICE GOVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
e x OFFICIO MEMBERS
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
FEDERAL RESERVE BOARD
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
WASHINGTON
J . A. BRODERICK, SECRETARY
W. T. CHAPMAN, ASSISTANT SECRETARY
W. M. 1MLAY, FISCAL AGENT
A D D R E S S REPLY TO
FEDERAL RESERVE BOARD
September 20,1919«
St.b05
Subject;
Maturity c l a s s i f i c a t i o n of acceptances
purchased f o r account of or sold t o other
F.'R. Banks.
Dear Sir*
During the more recent period a number of Federal Reserve
Banks, i n telegraphing t h e i r weekly c o n d i t i o n r e p o r t form 3^ to the
Federal Reserve Board as a t close uf business each Friday n i g h t , have
f a i l e d t o c l a s s i f y by m a t u r i t i e s acceptances i n t r a n s i t purchased from
or through the Hew "York Bank, inasmuch as the law requires, the Federal
Reserve Board t o make p u b l i c a statement eacfc week showing the maturit i e s of a l l paper held by each Federal Reserve Bank, i t has been necessary f o r us t o obtain by wire the c o r r e c t maturity c l a s s i f i c a t i o n
of such acceptances from your bank, or e l s e t o request t.Lo purchasing
Reserve Bank t o a s c e r t a i n the m a t u r i t i e s and wire them t o us i n time
f o r i n c l u s i o n i n the Board's weekly statement.
With the view of enabling each Federal Reserve Bank to give
us the c o r r e c t maturity c l a s s i f i c a t i o n of i t s t o t a l acceptance holdings
as at close uf business each Friday, i t i s requested t h a t i n the f u t u r e ,
• when acceptances are purchased by yuur bank f o r the account of another
Reserve Bank, or when acceptances are sold to another Federal Reserve
Bank from your p o r t f o l i o , you wire the purchasing bank, i n addition
t o the information now f u r n i s h e d , also the u a t n r i t y c l a s s i f i c a t i o n of
the acceptances as of close of business on the following Friday, in
accordance with the c l a s s i f i c a t i o n appearing on the r e v e r s e side of
form 3^ (code items RIFE to TROT, i n c l u s i v e ) . In case acceptances are
purchased f o r the account of another Reserve Bank on Friday, the maturity
c l a s s i f i c a t i o n should of course be given as of close of business on the
date uf purchase,
A copy of t h i s l e t t e r has been f u r n i s h e d to each other Federal
Reserve Bank.
Kindly acknowledge r e c e i p t .
Yours very t r u l y ,
Mr. P i e r r e J a y ,
(Signed) R„G» EMERSON.
Chairman, Federal Reserve Bank,
New York, N- Y»
A s s i s t a n t Secretary*
JLV4M
W. F. « . HARPING, GOVERNOR
ALBERT STRAUSS, VICE GOVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
e x 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. 1MLAY, FISCAL AGENT
WASHINGTON
ADDRESS REPLY TO
FEDERAL RESERVE BOARD
September 20,1919*
S t . b05
Subject:
Maturity c l a s s i f i c a t i o n of
acceptances purchased from
or through other F.R. Banks,
Dear S i r There i s attached h e r e t o a copy of a l e t t e r
addressed t o the Chairman of the Board of D i r e c t o r s of
the F e d e r a l Reserve Bank of Mew Yurk r e g a r d i n g t h e m a t u r i t y
c l a s s i f i c a t i o n of acceptances purchased f o r the account of
other Reserve Banks.
In case of f u t u r e purchases of acceptances by your
Bank from or through another Federal Reserve Bank, p l e a s e
make, sure t h a t s u f f i c i e n t information i s obtained frum t h e
bank from or through which the acceptances are purchased,
t o enable you t o show i n your weekly c o n d i t i o n r e p o r t form 3^
t h e proper m a t u r i t y c l a s s i f i c a t i o n of such acceptances as
c a l l e d f o r on t h e r e v e r s e s i d e of form 34*
Kindly acknowledge r e c e i p t .
Very t r u l y yuurs,
Assistant Secretary.
(Enclosure)
1044
E x OFFICIO MEMBERS
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
W. P. G. HARDING. GOVERNOR
ALBERT STRAUSS. VICE GOVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
FEDERAL RESERVE BOARD
ADDRESS REPLY T O
FEDERAL RESERVE BOARD
WASHINGTON
W. T. CHAPMAN. SECRETARY
R.G. EMERSON, ASSISTANT SECRETARY
W. M. IMLAY, FISCAL AGENT
October 2, 1919s t . 623
SUBJECT: Outline of Federal Reserve
branch banks, covering powers
f u n c t i o n s , and c h a r a c t e r and.
volume of business handled*
Dear S i r :
There a r e enclosed, herewith „ copies of "Outline of Federal
Reserve Branch Banks, covering Powers, Functions, and Character and
Voluae of Business Handled. 0 . The o u t l i n e i s based on p e r i o d i c a l
and s p e c i a l r e p o r t s r e c e i v e d from the F e d e r a l Reserve banks land
branches during the f i r s t h a l f of the p r e s e n t y e a r , and oh informat i o n s u p p l i e d i n response to our l e t t e r of May 19 t r a n s m i t t i n g the
p r e l i m i n a r y o u t l i n e ( t o the F e d e r a l Reserve banks concerned) f o r
comments and s u g g e s t i o n s .
&ie purpose bf the o u t l i n e i s to p r e s e n t i n a uniform way, f o r
the information oif members and o f f i c e r s of the Federal Reserve Board
atid the o f f i c e r s of the F e d e r a l Reserve banks and branches, the method
of o p e r a t i o n o b t a i n i n g a t each branch bank, t t i s expected to r e v i s e
the statement from time to tiino, and with a view to keeping i t u p - t o date a s w e l l as of making any d e s i r a b l e improvements, i t w i l l be app r e c i a t e d i f you w i l l b r i n g to our a t t e n t i o n any suggestions tending
towards g r e a t e r u n i f o r m i t y in p r e s e n t a t i o n t h a t may occur to you, or
any a l t e r a t i o n s or r e v i s i o n s t h a t may be necessary because of changes
in the o r g a n i z a t i o n or o p e r a t i o n of branches.
Kindly acknowledge r e c e i p t .
Yours v e r y t r u l y ,
A s s i s t a n t Secretary.
(Enclosure)
LETTER SENT TO CHAIRMEN OF ALL F . R, BANKS.
t
W. P. 6 . HARDING, GOVERNOR
ALBERT STRAUSS, VICE GOVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
E x OFFICIO MEMBERS
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
FEDERAL RESERVE BOARD
ADDRESS REPLY TO
WASHINGTON
FEDERAL RESERVE BOARD
W. T. CHAPMAN, SECRETARY
R.G. EMERSON. ASSISTANT SECRETARY
W. M. 1MLAY, FISCAL AGENT
October 4, I919.
S t . 627
SUBJECT:
Debits to i n d i v i d u a l account
a t c l e a r i n g house banks •
Dear S i r ;
A comparison of the weekly f i g u r e s of d e b i t s to i n d i v i d u a l account, as r e p o r t e d to -the F e d e r a l Reserve Board
each week, Code I s h a , with t o t a l c l e a r i n g s f o r some of the
leading c l e a r i n g house c e n t e r s of the country shows t h a t i n
seme cases f i g u r e s of d e b i t s to i n d i v i d u a l account are f i v e
or s i x times as large as the c l e a r i n g f i g u r e s , while i n a
few i n s t a n c e s the c l e a r i n g house f i g u r e s are l a r g e r than the
f i g u r e s of d e b i t s t o i n d i v i d u a l account.
On the whole f i g u r e s
of d e b i t s t o i n d i v i d u a l account a r e somewhat l a r g e r than the
bank c l e a r i n g s .
By r e f e r r i n g to page 258 of the March 1919 F e d e r a l
Reserve B u l l e t i n you w i l l n o t e t h a t i n s t r u c t i o n s f o r the
guidance of c l e a r i n g house managers provide t h a t r e p o r t s of
d e b i t s t o i n d i v i d u a l account should be confined, to Hie banks
which a r e members of the l o c a l c l e a r i n g house or which c l e a r
through c l e a r i n g house members.
While most of the c l e a r i n g
house managers are complying with the above r e q u e s t i t a p pears from an a n a l y s i s of a v a i l a b l e f i g u r e s t h a t i n some cases
f i g u r e s of d e b i t s to i n d i v i d u a l account a r e given f o r banks
which are n o t members of the c l e a r i n g house and which do n o t
c l e a r through c l e a r i n g house members.
With a view, t h e r e f o r e , to a s c e r t a i n i n g whether or
n o t the f i g u r e s f o r a l l c l e a r i n g house c e n t e r s are compiled
on a "uniform b a s i s i t i s r e q u e s t e d t h a t you f u r n i s h the Fede r a l Be serve Board w i t h a statement showing the following i n formation f o r each c l e a r i n g house c e n t e r f o r which f i g u r e s of
d e b i t s to i n d i v i d u a l account are obtained:
1.
Number of c l e a r i n g house members.
2.
Number of c l e a r i n g house members
submitting weekly f i g u r e s of
d e b i t s to i n d i v i d u a l account.
3 • Number of c l e a r i n g non-members
( i . e . banks which c l e a r through
members of the c l e a r i n g house*)
4.
Humber of c l e a r i n g non-members subm i t t i n g weekly f i g u r e s of d e b i t s
to i n d i v i d u a l account.
Yours very t r u l y ,
Assistant Secretary.
Copy of t h i s l e t t e r s e n t to Chairman of each F.R. Bank.
1047
Kx OFFICIO MEMBERS
CARTER GLASS
SECRETARY OP THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
W. P. 6 . HARDING, GOVERNOR
ALBERT STRAUSS, VICE GOVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
FEDERAL RESERVE BOARD
ADDRESS REPLY T O
FEDERAL RESERVE BOARD
WASHINGTON
W. T, CHAPMAN, SECRETARY
R.G. EMERSON. ASSISTANT SECRETARY
W. M. IMLAY, FISCAL AGENT
October 7» 1919
S t . 635
SUBJECTS Abstract of Condition of
Member Banks a s of June
30, 1919.
Dear Sir*
We a r e forwarding t o you under s e p a r a t e cover
copies of the Board* s A b s t r a c t No. 7 showing condition, of
member banks a s a t close of busine ss on June 30, 1919*
P l e a s e forward, one copy of the a b s t r a c t to each. S t a t e
Bank and T r u s t Company member i n your d i s t r i c t .
Very t r u l y y o u r s ,
Assistant Secretary.
Mr.
Federal Reserve Bank,
Copy of t h i s l e t t e r forwarded to Chairman of each Federal Hes. Bank.
1048
E x OFFICIO MEMBERS
W. P. 6 . HARDING. GOVERNOR
ALBERT STRAUSS, VICE GOVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
CARTER CLASS
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
FEDERAL RESERVE BOARD
ADDRESS REPLY TO
FEDERAL RESERVE BOARD
WASHINGTON
November 3» 1919
S t . 680
Subject*
W. T. CHAPMAN, SECRETARY
R.G. EMERSON,ASSISTANT SECRETARY
W. M. 1MLAY, FISCAL AGENT
Revision of d a i l y balance
s h e e t , form 3 ^ .
Dear S i r :
Wo are enclosing herewith a copy of the 1919
e d i t i o n of form 3^, with c e r t a i n changes i n d i c a t e d there-,
on which i t i s proposed to incorporate i n the 1920 e d i t i o n .
The manuscript f o r the form i s being forwarded
t o the p r i n t e r today, as i t i s d e s i r e d to got the now form
out a t the e a r l i e s t date p r a c t i c a b l e i n order t h a t t h e
banks may proceed with the p r i n t i n g of t h e i r ledgers f o r
the forthcoming y e a r . I t w i l l be a p p r e c i a t e d , t h e r e f o r e ,
i f you w i l l advise us a t your e a r l y convenience of any
changes you may wish to suggest f o r i n c o r p o r a t i o n i n the
form; a l s o the number of copies, which your bank (and
branches, i f any) w i l l r e q u i r e f o r use during the calendar
y e a r 1920.
I n case i t i s d e s i r e d to haVo s p e c i a l headings
on the forms to be used by branches, the Board should bo
advised of t h e number to be p r i n t e d f o r each branch*
Very t r u l y yours,
Assistant Secretary.
(Enclosure)
L e t t e r s e n t to a l l Chairmen of F e d e r a l Reserve Banks
W. P. 6 . 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
ADDRESS REPLY TO
WASHINGTON
FEDERAL RESERVE BOARD
November
W. T. CHAPMAN. SECRETARY
R.G. EMERSON. ASSISTANT SECRETARY
W. M. IMLAY, FISCAL AGENT
iglg*
St* 6 Si
SUBJBGT:
Revision of weekly member
bank c o ndition r e p o r t
(fonn S t . 5 1 ) .
Dear Sir:
I n accordance w i t h our telegram of today, which i s quoted, below, wo
a r e e n c l o s i n g herewith 50 copies of form S t . $ 1 (revised. Novaabcr 3# *9^9) f o r
the use of your bank i n submitting the r e g u l a r weekly member bank c o n d i t i o n
report:
z
k
"Beginning w i t h member bank r e p o r t form S t . $ 1 f o r November l 4 p l e a s e wire
i n s u b s t i t u t i o n of item,. Loans secured by United S t a t e s war o b l i g a t i o n s , Oodes
HUNT, KUSE and PUBA,. the f o l l o w i n g items;
Loans s e c u r e d by L i b e r t y bonds, code HADD f o r banks i n Federal r e s e r v e
bank c i t i e s , coda KAPU f o r banks i n branch c i t i e s , coda PABU f o r a l l
s e l e c t e d "banks.•
Loans secured by Victory n o t e s , codes HULU, KINK and PEHK r e s p e c t i v e l y ,
Loans secured by Treasury c e r t i f i c a t e s , codes HXQP, K u N and POMP
OR
respectively.
"BetJised form S t . 5 1 being mailed t o d a y . Please acknowledge ty wire and
i n s t r u c t s e l e c t e d banks accordingly
I t i s suggested t h a t the form furnished, macaber tanks be m o d i f i e d t o
correspond w i t h form S t . 51 as r e v i s e d , and t h a t a new supply be forwarded to
each r e p o r t i n g bank.
Kindly acknowledge r e c e i p t .
Yours vtjry t r u l y ,
Assistant Secretary.
(Enclosure)
Sent t o
Letter
Chairmen of a l l I*. B. Banks i
Ex 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
W. P. G. HARDING. GOVERNOR
ALBERT STRAUSS, VICE GOVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
FEDERAL RESERVE BOARD
ADDRESS REPLY TO
FEDERAL RESERVE BOARD
WASHINGTON
W. T. CHAPMAN, SECRETARY
R.G. EMERSON,-ASSISTANT SECRETARY
W. M. IMLAY, FISCAL AGENT
November 6, 1919.
s t . 692
SUBJECT:
Revised, form 105, Condition
r e p o r t of S t a t e bank and
Trust company members.
Dear S i r : There a r e being forwarded to you today under s e p a r a t e
cover
copies of form 105, Beg or t of condition of S t a t e bank
and Crust company members (revised* Oct» 20, I919), t o g e t h e r w i t h
copies of our c i r c u l a r l e t t e r of June l 4 giving i n s t r u c t i o n s
r e g a r d i n g the p r e p a r a t i o n of condition r e p o r t s .
I t is requested t h a t throe copies of form 105 be s e n t to each. S t a t e bank and
Trust company member in your d i s t r i c t , w i t h i n s t r u c t i o n s t o hold
the blank forms pending r e c e i p t of a c a l l f o r condition r e p o r t ,
when they should be promptly f i l l e d out and two copies m a i l e d to
you — in no case l a t e r than ten days a f t e r r e c e i p t of the c a l l .
S t a t e banks and T r u s t company members who submitted cond i t i o n r e p o r t s as of June JO and were s u p p l i e d a t t h a t time with
a copy of the l e t t e r of i n s t r u c t i o n s above mentioned, should be
advised t h a t the general i n s t r u c t i o n s of June l 4 are a p p l i c a b l e
p r a c t i c a l l y i n t h e i r e n t i r e t y to the r e v i s e d form of r e p o r t .
M a t e r i a l changes in the l a t e s t e d i t i o n which should be brought
to the a t t e n t i o n of the banks are as f o l l o w s :
F i r s t , the two items formerly shown in the memorandum
a t the bottom of the fonn as contingent l i a b i l i t i e s — "Acceptances
of other banks payable a t f u t u r e date guaranteed ty t h i s bank by
endorsement or otherwise" and "Foreign b i l l s of exchange or d r a f t s
s o l d w i t h endorsement of t h i s bank" — are now t r e a t e d as deduct i o n s from item 1 - a , Loans and Discounts - gross#
Second, Among Contingent L i a b i l i t i e s we show now t h e f o l lowing t h r e e items a t the bottom of the form: (a) Documentary
l e t t e r s of c r e d i t issued but not tfsed or drawn agai&st; (b) Other
f o r e i g n c r e d i t s opened f o r customers but n o t used; and (c) Travele r s ' l e t t e r s of c r e d i t i s s u e d under guarantee or deposit of s e c u r i t y but n o t drawn a g a i n s t .
S t . 692
Third, A new schedule (4), Loans to banks, bankers and
Trust companies now appears on the roverse s i d e of tho r e p o r t *
The schedule of loans and discounts, f o r m e r l y numbered 4, i s now
numbered 5»
Fourth, Demand d e p o s i t s which were formerly shown as
item 32 now appear as item 33 •
I n s t i t u t i o n s which have j o i n e d tho system since Juno
30, 1919 should bo supplied w i t h a copy of the general instruct i o n s of June lU.
They should also bo advised of tho above
changes made i n form 105 since the p r e p a r a t i o n of the c i r c u l a r
l o t tor® of i n s t r u c t i o n s *
I t w i l l bo a p p r e c i a t e d i f , a f t e r c a l l i s made, you w i l l
make s p e c i a l e f f o r t s to see t h a t as f a r as p r a c t i c a b l e r e p o r t s
are r e c e i v e d and forwarded t o tho Board w i t h i n t e n days from
date of c a l l .
Vary t r u l y yours,
Assistant Secretary.
LETTER SENT TO CEAIBMMT OF EACH F . R. BMK.
1052
Ex OFFICIO MEMBERS
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
FEDERAL RESERVE BOARD
ADDRESS REPLY TO
FEDERAL, R E S E R V E B O A R D
WASHINGTON
W. P. 6 . HARDING. GOVERNOR
ALBERT STRAUSS. VICE GOVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
HENRY A. MOEHLENPAH
W.T. CHAPMAN. SECRETARY
R <T. EMERSON. ASSISTANT SECRETARY
W. M. IMLAY, FISCAL AGENT
November 22, i g i g .
St.716
SUBJECT;
Revision of Daily Balance
Sheet, form 3^.
Dear S i r :
We are enclosing herewith one copy of the f i n a l proof on
farm 34, r e v i s e d f o r use during the calendar year 1920.
The
r u l i n g on the new form w i l l be p r a c t i c a l l y i d e n t i c a l w i t h t h a t
on the form now i n u s e .
The 1920 e d i t i o n of the form w i l l be forwarded d i r e c t to
your bank by the Government P r i n t i n g O f f i c e , and should reach
you not l a t e r than December 20.
Very t r u l y yours,
Assistant Secretary.
Enclosure
LETTER SENT TO CHAIRMEN OF ALL F. R. BANKS EXCEPT CHICAGO
1053
E x OFFICIO MEMBERS
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
W. P. 6 . HARDING, GOVERNOR
ALBERT STRAUSS. VICE GOVERNOR
ADOLPH C. MILLER
CHARLES S . HAMLIN
HENRY A. MOEHLENPAH
FEDERAL RESERVE BOARD
W. T. CHAPMAN, SECRETARY
R. G. EMERSON. ASSISTANT SECRETARY
W. M. 1MLAY, FISCAL AOENT
A D D R E S S REPLY TO
FEDERAL RESERVE BOARD
WASHINGTON
November 26, 1919
s t . 719
SUBJECT: P r e p a r a t i o n of t a b l e s and.
charts for insertion in
1919 Annual Report.
Dear S i r :
To i n s u r e u n i f o r m i t y of p r e s e n t a t i o n , the Federal
Reserve Board w i l l have prepared f o r i n s e r t i o n i n the f o r t h coming Annual Report of each Federal Reserve Agent, t a b l e s
and c h a r t s r e l a t i n g to the movement of p r i n c i p a l earning
a s s e t s , of d e p o s i t and note l i a b i l i t i e s and of r e s e r v e s of
the r e s p e c t i v e Federal Reserve banks.
The t a b l e s w i l l be
s i m i l a r to those published on pages 285-288 of the Board's
191S Annual Report, though the c h a r t s w i l l be i n somewhat
d i f f e r e n t form.
Tables and c h a r t s w i l l be forwarded to you
a s soon a s completed.
(Copy
P l e a s e acknowledge r e c e i p t .
Very t r u l y yours,
Assistant Secretary.
of t h i s l e t t e r sent to Chairman of each F . R. bank.)
1054
E x OFFICIO MEMBERS
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
W. P. 6 . HARDING, GOVERNOR
ALBERT STRAUSS, VICE GOVERNOR
ADOLPH C. MILLER
CHARLES S . HAMLIN
HENRY A. MOEHLENPAH
FEDERAL RESERVE BOARD
JOHN SKELTOH WILLIAMS
COMPTROLLER OF THE CURRENCY
ADDRESS REPLY TO
W. T. CHAPMAN. SECRETARY
R. G. EMERSON, ASSISTANT SECRETARY
W. M. IMLAY, FISCAL AOENT
WASHINGTON
FEDERAL RESERVE BOARD
December Sr 193-9
St.743
SUBJECT: Loans of r e p o r t i n g member banks
secured by Government war o b l i gations .
Dear S i r :
.
There i s enclosed herewith a copy of the Board's weekly
statement showing, a s of November 21 and 28# 1919# loans of r e p o r t i n g member banks i n each Federal Reserve D i s t r i c t a s well a s
i n each Federal Reserve Bank c i t y , secured by
( l ) L i b e r t y bonds,
(2) Victory n o t e s , (3) Treasury c e r t i f i c a t e s .
This s e g r e g a t i o n of loans secured by Government War
o b l i g a t i o n s w i l l not be made i n the Board's weekly p r e s s statement,
and as you w i l l note from the statement i t s e l f , the f i g u r e s should
be regarded a s c o n f i d e n t i a l and not f o r p u b l i c a t i o n .
Copies of the new statement w i l l be mailed t o your bank
r e g u l a r l y each week.
Yours very t r u l y ,
Assistant Secretary
(Enclosure)
COPY OF THIS LETTER SENT TO CHAIRMAN OF EACH FEDERAL RESERVE BANK.
XUOD
EX OFFICIO MEMBERS
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
FEDERAL RESERVE BOARD
ADDRESS REPLY TO
WASHINGTON
FEDERAL RESERVE BOARD
December 16, I9I9•
s t . 763
SUBJECT:
Revision of Form FRA-5,
Daily Statement of Fede r a l Rsserve Agont, f o r
use during 1$20.
Dear S i r :
In accordance w i t h your t e l e g r a p h i c r e q u e s t ,
we have p l a c e d your order w i t h the p r i n t e r f o r
copies of the 1920 e d i t i o n of Form FRA-5, Daily S t a t e ment of Federal Reserve Agent to Federal Reserve Board.
The forms w i l l be forwarded to you d i r e c t from the Government P r i n t i n g O f f i c e , and i t i s expected t h a t they
w i l l r e a c h you on or about January 1.
The p r i n c i p a l changes i n the r e v i s e d form a r e
the e l i m i n a t i o n of item "Lawful money on hand" on the
Resource s i d e , and "Funds r e c e i v e d i n r e d u c t i o n of l i a b i l i t y f o r Federal Reserve n o t e s " on t h e L i a b i l i t y s i d e .
P r o v i s i o n has a l s o been made f o r the s i g n a t u r e of the
F e d e r a l Reserve Agent a t the bottom of the f o n a .
In case the supply of the r e v i s e d form does
n o t r e a c h you Ty January 1, you may continue to use the
p r e s e n t e d i t i o n pending r e c e i p t of new forms.
Yours very t r u l y ,
Assistant Secretary.
W. P. 6 . HARDING, GOVERNOR
ALBERT STRAUSS, VICE GOVERNOR
ADOLPH C. MILLER
CHARLES S . HAMLIN
HENRY A. MOEHLENPAH
W. T. CHAPMAN, SECRETARY
R. G. EMERSON. ASSISTANT SECRETARY
W. M. 1MLAY, FISCAL A6ENT
1056
Ex OFFICIO MEMBERS
—
CARTER GLASS
W. P. 6 . HARDING, GOVERNOR
ALBERT STRAUSS. VICE GOVERNOR
ADOLPH C. MILLER
SECRETARY OF THE TREASURY
C H A R L E S S . HAMLIN
FEDERAL RESERVE BOARD
WASHINGTON
HZEl'l
i
t
=
=
=
December 17» 1919•
St.770
SUBJECT: Reports cf earnings, expenses and
dividend, payments f o r 1919.
Dear S i r : '
P l e a s e be good enough to accompany your r e g u l a r earnings and expense r e p o r t s f o r the month of December with the following a d d i t i o n a l
d a t a f o r the p e r i o d January 1 to December 3 l , 1915;
( l ) Statement showing the following information:
(code)
iEACfi - Gross earning A
« . , . i » .
- Total c u r r e n t expenses
EARN Net earnings
ELBA - Net d e b i t or c r e d i t to P r o f i t and Loss
account during y e a r
- Net amount a v a i l a b l e f o r dividends, s u r p l u s and f r a n c h i s e tax
- Dividends p a i d
- I n t e r e s t p a i d on surrendered
s tock
EIRE - Total dividend payments
.
.
.
EVEN - Carried to s u r p l u s fund . . . . . .
EMET - Paid to Government as f r a n c h i s e tax
TOTAL
I t w i l l be a p p r e c i a t e d i f the amounts shown opposite items f o r
which code words have been supplied a r e telegraphed t o the Board n o t
l a t e r than January 7> 1920.
™
1057
St.770a
to
(2) Itemized statement showing i n d e t a i l a l l d e b i t s and c r e d i t s
P r o f i t and Loss account during the y e a r .
(3) Separate r e p o r t s on forms 95 and $6 s'.lowing, i n the second or
t o t a l columns, e a r n i n g s and expenses during tho e n t i r e y e a r . The regul a r monthly r e p o r t s on these forms should, of c o u r s e , show i n the second
columns the earnings and expenses of your bank from July 1 t o December
31, 1919.
Kindly acknowledge r e c e i p t .
Yours very t r u l y ,
Assistant Secretary.
(Copy o f - t h i s — l e t t e r - s e n t t o Chairman of each F t 11. Bank.)
1058
EX OFFICIO MEMBERS
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
F E D E R A L R E S E R V E BOARD
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
A D D R E S S REPLY TO
WASHINGTON
FEDERAL RESERVE BOARD
W. P. 6 . HARDING. GOVERNOR
ALBERT STRAUSS. VICE GOVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
HENRY A. MOEHLENPAH
W. T. CHAPMAN, SECRETARY
R. G. EMERSON. ASSISTANT SECRETARY
W. M. 1MLAY, FISCAL AGENT
December 19» 1919
st,776
SUBJECT: Revision of form ) l - b , Weekly
f e d e r a l Beserve hote r e p o r t •
Dear Sir:
There a r e being forwarded to ybti under separate cover 200 copies
of form 31-b, revised fbr use during the calendar year 1920* I t will
be noted t h a t a new item " E l i g i b l e paper pledged With Ft H* Agent",
has been added to the form.
This item should be telegraphed to the
Board r e g u l a r l y each week as a p a r t of your r e p o r t .
Accordingly, the
bank may d i s c o n t i n u e telegraphing the item as a p a r t of i t s Friday :
night r e p o r t , although i t should continue to show i t on the mail r e p o r t ,
form 34.
COPY
OF THIS
Very t r u l y yours,
Assistant Secretary.
LETTER SENT TO EACH FEDERAL DESERVE AGENT.
Ex OFFICIO MEMBERS
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
FEDERAL RESERVE BOARD
W P. a . HARDING, GOVERNOR
ALBERT STRAUSS. VICE GOVERNOR
AOOLPH C. MILLER
CHARLES S. HAMLIN
HENRY A. MOEHLENPAH
W. T. CHAPMAN. SECRETARY
R . G . E M E R S O N , ASSISTANT SECRETARY
A D D R E S S REPLY TO
FEDERAL RESERVE BOARD
W . M . I M L A Y . FISCAL AGENT
WASHINGTON
December 19, 1919*
St .77/
SUBJECT: Form 3** revised for use
during the calendar year 1920.
Dear Sir:
The revised edition of form
for use during the year 1920 will
be sent out by the Government Printing Office the latter part of this
month and should reach the banks in time to enable them to submit their
statements for January 2 on the new form, Changes In form of statement
relate chiefly to the Treasurer's General Account« The Board has also
ordered a change in the "feethod of calculating the reserve percentage to
Which your particular attention i s called.
»
ft
'
*
Treasurer's General Account: As stated in the Board1s l e t t e r
X-1725 of November 1% the Treasurer's General Account has been divided
into Collected Funds, code COPY, and Uncollected Funds, code CUJSZ. No
change in the meithod of crediting items to Government account i s Involved
in this 11 vision of the Treasurer's General Account, the purpose being
merely to show separately any uncollected funds for which immediate credit
has been given# Items for which the Government has been given deferred
credit should be reported against Government Transit Items, code CHAT, as
heretofore. In case the Government collected fund account, code COPY, i s
overdrawn, the overdraft should be shown in red* Uncollected item* credited to the Treasurer's General Account, code CUBS, should be shown gross,
regardless of any overdraft which may occur in the collection fund account,
The sum of the respective amounts reported against items C P and C R
OY
UE
should be extended into the long coluna as the actual balance in the Treasurer's General Account. In case the collected fund account i s overdrawn,
the balance to be extended i s , of course, the amount of uncollected items
credited (code CUBK) l e s s the overdraft in the collected fund account,
except when the overdraft in the collected fund account Is greater than
the amount shown in the uncollected fund account, in which case the resuiting overdraft should be shown on the resource side of the form against
code BOHE.
Deposits on which reserve i s computed: In accordance with a recent
opinion of counsel the Board has ruled that beginning with January 1, 1920,
the reserves required to be carried by Federal Reserve banks against deposits w i l l be computed against immediately available deposits only) i . e . ,
against code items COPY, CUBZ, CLAY, CHOP, CEDE, C»J0 and C R of the 1920
OA
edition of form 3U. Accordingly beginning with January 1, 1920, deferred
availability items on the l i a b i l i t y side and uncollected items on the resource side of form >4 will be disregarded in determining the deposit l i a b i l i t y on which reserve i s computed.
—2*
$
'
^ Changes i n Board*a Weekly Tank Statement: The following changes
w i l l a l s o be made i n the Board's weekly bank statement:
Caption "Uncollected items and other deductions from gross dep o s i t s " w i l l be changed to read "Uncollected items" and w i l l appear immediately below c a p t i o n "5$ redemption fund a g a i n s t F . E. Bank Notes."
Caption "All o t h e r resources" w i l l be changed to read "All o t h e r
r e s o u r c e s , including amounts due from f o r e i g n banks," and w i l l comprise
items BILL, BOBE, BADE, BUFF, BOLD, BOND, and BURS of form 3^*
Caption "Deferred a v a i l a b i l i t y items" w i l l be shown immediately
preceding "All o t h e r l i a b i l i t i e s . " The l a t t e r c a p t i o n w i l l be made up
of items TULE, CART, CURE, and BT%E of form 34.
Caption "Deposits on which reserve i s computed" w i l l be s u b s t i t u t e d
f o r c a p t i o n "Total gross deposits' 1 and the word "net" w i l l be eliminated
from the c a p t i o n of both memorandum items showing r e s e r v e r a t i o s .
In t h i s connection a t t e n t i o n i s i n v i t e d to Board's l e t t e r s S t . 118
of December IS, 1918, and X-I5U2 of May 20, 1$1$, i n which i t i s requested
t h a t i n f u t u r e p r e s s r e p o r t s showing the resources and l i a b i l i t i e s of your
bank you use the same captions and follow the same order of p r e s e n t a t i o n
as adopted by the Board i n i t s weekly p r e s s statement. In case you d e s i r e
to show items i n g r e a t e r d e t a i l than i n our weekly statement, there w i l l
be no o b j e c t i o n on the p a r t of the Board, provided you show the d e t a i l e d
items under sub-heads and give i n a d d i t i o n , t o t a l s a g a i n s t the same capt i o n s as a r e shown i n the Board 1 s weekly statement.
Very t r u l y yours,
Governor.
/
/
-Enclosures:
1. Skeleton of 1920 form of the Board's weekly Bank Statement.
2. Unruled copy of 1920 e d i t i o n of form 34.
COPY OF THIS LETTER SENT TO CHAIRMAN OF EACH F . B, BANK.
1061
Ex OFFICIO MEMBERS
w . P. 9 . HARDING. GOVERNOR
ALBERT STRAUSS, VICE 60VE8H0R
CARTER GLASS
S I C , ,
™:A
E
.
T , E A 8 U , , <
J H seW L M
O Ntn I I S
k LA
o
l
COMPTROLLER OF THE CURRENCY
Umf
I\
FEDERAL RESERVE BOARD
H
IN
I
1
T-I
A D D R E S S REPLY TO
ZA I
UIM
WL<
L J \ / U
U T
A
W. T. CHAPMAN. SECRETARY
G. EUERSON. ASSISTANT SECRETARY
WASHINGTON
FEDERAL RESERVE BOARD
HENRY A. MOEHLENPAH
L31 A
W. B. MLAY, FISCAL AOBHT
•December 23 > 1919
S t . 78k
SUBJECT: S t a t e Banks and T r u s t Companies
e l i g i b l e f a r membership.
Dear S i r :
There a r e enclosed h e r e w i t h f o r y c u r i n f o r m a t i o n
c o p i e s of t h r e e s t a t e m e n t s (St.702,- 717« 737^ r e l a t i n g to S t a t e
banks and T r u s t Companies, botbh members of t h e F e d e r a l Reserve
System and non-members e l i g i b l e f o r membership on the b a s i s of
capital requirements.
The d a t a r e l a t i n g to member banks were compiled from
the June 30» 1919» Condition Reports and t h a t r e l a t i n g to e l i g i b l e non-member banks and t r u s t companies from s p e c i a l r e p o r t s
f u r n i s h e d by the F e d e r a l Reserve banks i n accordance w i t h t h e
Board's l e t t e r of J u l y 12, 1919, ( S t . U g l ) .
I t i s suggested t h a t copies of the s t a t e m e n t s be f u r n i s h e d each of your b r a n c h e s .
Very t r u l y y o u r s ,
Assistant Secretary.
Enclosure.
COPY OF THIS LETTER SEHT TO CHAIRMAN OF EACH FEDERAL RESERVE BAHK.)
Ex o m c i o
1063
MEMBERS
CARTER CLASS
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
FEDERAL RESERVE BOARD
W. T. CHAPMAN, SECRETARY
R. G. EMERSON, ASSISTANT SECRETARY
w . M. INLAY, FISCAL AGENT
A D D R E S S REPLY TO
FEDERAL RESERVE BOARD
w . P. 6 . HARDING, GOVERNOR
^LBERT STRAUSS. Vice GOVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
HENRYA.MOEHLENPAH
WASHINGTON
December 23, 1919
St.793
SUBJECT: S t a t i s t i c s of F i s c a l Agency
operations.
Dear S i r :
For use i n connection with the Board's forthcoming annual r e p o r t ,
w i l l you kindly have a statement prepared showing the following s t a t i s t i c s
r e l a t i n g to f i s c a l agency operations of your bank during the calendar year
1919:
1.
Number of banks from or through which s u b s c r i p t i o n s
were received f o r Victory Loan n o t e s .
2.
Number of banks subscribing to c e r t i f i c a t e s of i n debtedness during year (no bank to be counted more
than once).
3*
Total amount of c e r t i f i c a t e s of indebtedness redeemed
during the y e a r .
4,
Number of s p e c i a l war-loan d e p o s i t a r i e s i n d i s t r i c t
a t end of y e a r .
5.
Amount of s e c u r i t i e s pledged a g a i n s t war loan d e p o s i t s ,
as of the end of each month.
6«
Number cf custodians of c o l l a t e r a l f o r war-loan deposits
a t beginning and end cf y e a r .
7»
Aggregate number and amount of Liberty and Victory Loan
coupons paid during y e a r .
I t w i l l be appreciated i f the above data a r e f u r n i s h e d a t the
e a r l i e s t p r a c t i c a b l e date a f t e r January 1.
Yours very t r u l y ,
Executive Secretary.
(LETTER SENT TO CHAI3MAN OF EACH F. R. BANK.)
1063
EX OFFICIO MEMBER*
CARTER GLASS
SECRETARY OF THE TREASURY
CHAIRMAN
FEDERAL RESERVE BOARD
JOHN SKELTON WILLIAMS
COMPTROLLER OF THE CURRENCY
A D D R E S S REPLY TO
WASHINGTON
F E D E R A L R E S E R V E B O A R D
W. P. 6 . HARDING, GOVERNOR
ALBERT STRAUSS. VICE GOVERNOR
ADOLPH C MILLER
CHARLES S. HAMLIN
HENRY A. MOEHLENPAH
W. T. CHAPMAN, SECRETARY
R G. EMERSON, ASSISTANT SECRETARY
W. M. IMLAY, FISCAL AGENT
December 26, 1919 •
S t . 799
SUBJECT:
Revision of Form S t . ^1,
Weekly Member Bank Cond i t i o n Report•
Dear S i r
There are being transmitted, to you today under separate cover
100 copies of form S t , $1, Weekly r e p o r t of p r i n c i p a l r e s o u r c e and lia^b i l i t y items of member banks i n s e l e c t e d c i t i e s .
The form has been
r e v i s e d to provide f o r the subdivision of items l 4 and 15, Member banks'
c o l l a t e r a l n o t e s and B i l l s discounted f o r member banks, so a s to show
s e p a r a t e l y paper secured ty war o b l i g a t i o n s and paper otherwise secured,
t h i s s e g r e g a t i o n having been requested i n our telegram of December 4 ,
I t w i l l be a p p r e c i a t e d i f you w i l l f u r n i s h t h e Board w i t h a
copy of t h e l a t e s t r e v i s i o n of form S t . $ l - a supplied Ty you to r e p o r t -
/
i n g member banks,
LETTER SENT
Yours very t r u l y ,
Assistant Secretary.
TO CHAIRMAN OF EACH F . R. E f f i ,
1064
E x OFFICIO MEMBERS
——•
CARTER GLASS
SECRETARY or THE TREASURY
CHAIRMAN
*
W. P. G. HARDING', GOVERNOR
ALBERT STRAUSS. VICE GOVERNOR
ADOLPH C. MILLER
CHARLES S. HAMLIN
FEDERAL RESERVE BOARD
A D D R E S S REPLY TO
F E D E R A L R E S E R V E B O A R D
—
* ' ! ' EMERenu' S ' C " T A R V
WASHINGTON
W.
Decanter 30, 1$1$.
St.810
SUBJECT: Earnings and Dividends r e p o r t s of
S t a t e bank and Trust company
members as of Dec. 31» 193-9-
Dear S i r :
There a r e being forwarded to you today under s e p a r a t e
cover
copies of form 107 f o r use of S t a t e bank and Trust
compare members i n submitting t h e i r semi-annual r e p o r t s of
earnings and d i v i d e n d s . No changes have been made on the
f a c e of the form, although Section 52OU of the Revised S t a t u t e s , which r e l a t e s to bad d e b t s , has bean p r i n t e d on the
reverse side.
P l e a s e advise the banks t h a t the r e p o r t i s to cover the
six-month p e r i o d ending December 31» 1919, i r r e s p e c t i v e of
whether or not they may have closed t h e i r books on t h a t d a t e ,
or whether any dividends t h a t may have been d e c l a r e d cover
that particular period.
The r e p o r t should bo submitted to you i n d u p l i c a t e w i t h i n
t e n days a f t e r r e c e i p t of the blank forms by r e p o r t i n g banks.
(COPY OF
Yours very t r u l y ,
Assistant Secretary.
THIS LETTER S U T TO CHAIRMAN OF EACH F . R. BANK.)
ET
@FedFRASER