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724
X-1530
FEDERAL RESERVE BOARD ANNOUNCEMENT
FOR THE WEEK ENDING JULY 1, 1921.
AD11ITTED TO THE FEDERAL
R"E~ERVE
SYSTEM:
Total
P:.:r:e.:.,.~_::g!':.L
DISTRICT NO. 7.
Blanchard State Bank,
Blanchard, Michig--d.Xl $25,000
$5,000
$212,905
2,000
96,564
DISTRICT NO. 9.
First State Bank of
Clyde Park, .Mont.
26,000
DISTRICT NO. 11.
The First State Bank of
Coahoma, Texas
Security State Bank,
Cooper , Texas
25,000
126,997
100,000
909,449
AUTHORIZED TO ACCEPT DRAFTS AND BILLS OF EXCHANGE
UP TO 100 PER CENT OF CAPITAL AND SURPLUS:
The City National Bank of Columbus,
Columbus, Ohio ..
PERMISSION GRANTED TO EXERCISE TRUST POWERS:
First Nati ona.l Bank in Wellington,
Wellington, Kansas.
X-1530
FEJ)EBAL RESF.JlVE BOARD ANNOUNCEMENT
EN'DING JULY 8, 1921.
FOR THE V\®EI{
AmHTTED TO THE F.EDRB.AL RESERVE SYSTEM:
Total
Capital
Surplus
Resou:r.-ces
$50,000
$12,000
$740,043
25,000
12,500
214,169
DISTRICT NO. 9 •
Kenyon State Bank,
Kenyon, Minnesota
DISTRICT NO. 12.
State Bank of Richmond,
Richmond, utah
VOLUNTARY LIQUIDATION:
The State Bank of Bloomington, Bloomington, Illinois.
(Absorbed by the First National Bank of Bloomington)
PERMISSION GRANTED TO EXERCISE TRUST PO\v.ERS:
The Peoples National Bank of Pulaski, Pulaski, Virginia.
7 0(·
~....)
X-15:30
FEDER~
RESERVE BOARD ANNOUNCEMENT
OOR THE \VEEK ENDING JULY 15, 1921.
ADMITTED TO THE FEDERAL RESERVE SYSTEM:
None admitted.
CHANGE OF N.A.M]f}:
The Bridgeport Bank & Trust Company, Bridgeport, Ohio •
to The Bridgeport Bank Company.
BANKS IN HANDS OF S'l!A.TE AUTHORITIES:
The Guaranty State Bank, T:rmup, Texas.
Soan dina vian-American Bank, Seattle , WashingtO-n.
A~ORIZED
TO
UP !I.Q 100
~
DRAFTS AND BILLS OF EXCHANGE
CENl' OF CAPU.iJ. .um SURPLUS.
ACC~T
?~
Bridgeport Trust Company, Bridgeport, Conn.
P.ERMISS!ON GRANTED TO EXERCISE TRUST.POWERS:
The Monroe County mat i onal Bank of East Stroudsburg, Penna .
The Secon4 National Bank of A.shl.sud, Ashland, Kentucky.
The Farmers' Deposit National Banko£ Pittsburgh, Penna.
The Griswold National Bank, Griswold, Iowa.
727
X-1530
FEDEBAL RESERVE :OOAF.D ANNOUNCEMENT
FOR THE WEEK ENDING JULY 22, 1921.
ADliiTTED
~10
THE FEDERaL RESERVE SYSTEM:
Capitc.l
Surplus
Total
Resou:rces
DISTRICT NO. 7.
South Side Trust & Savings Bank,
Chicago, Illinois.
$300,000
Farmers & Merchants Bta~e Bank,
Sebewaing, Michigan.
$100,000
25,000
6,250
348,632
25,000
5,700
199,456
100,000
5,000
506,733
30 ,OCJO
6,000
356,171
DISTRICT NO. 12.
Hazelton State Bank,
Hazelton., Idaho.
Steiwer & Carpenter Bank,
Fossil, Oregon.
Selah State Bank,
Selah, Washington.
PERMISSION GRANTED TO EXERCISE TRUST PO..VERS:
The Fall River National Bank,
The Ossining National Bank,
Fall River, Massachusetts.
Ossining, New York.
X-15W
FEDEBAI. P.F:SBPVE BQ/\F..D .tL'iNOUNCEMEN~
FOR THE w.:;;;:Kl{ El'f.l'ING JTJLY }29, l4Gl.
Toto.l
Be sources
Canit?.l
DISTRICT NO. 3.
Carlisle Trust Company,
Carlisle, :Penna.
$150,000
$15() ,000
$2,246,786
50,000
32,000
705,028
25,000
25,000
500,040
DISTRICT NO. 4.
The Dollar Savings Bank Co.,
St. Clairsville, Ohio
DISTRICT NO. 8.
Citizens Bank of Ca0oo1.,
Cabool, Missour j_
J... IQ,UIDATION:
McC6rnick & Company Banker!3, Salt J,ake City, Utah.
Scandinavian-American. Bank, S8attle, W8.shington.
Denison Bank & Trust Comp9:ny,Den.ison, Te:xa.:J.
PERMJ SSJ.ON GRANTED TC EXf,B.C'J Sx~ TB.UST
Flat Top Natior1al Bank 0f BJ.1J8fi~ld~
Citizens' National BanJc of Gr:i_rmell,
First National Bank of Do:rUn.gton,
First National Ba..'rlk of G::-eenwuor.l,
First National Bank in Bartlesville,
The
The
The
The
PC'Vf~BB:
West Virginia.
Iowa.
Wisconsin
Mississippi.
Oklahoma.
FEDERAL RESERVE BOARD
WASHINGTON
X-1530
FEDERAL RESERVE BOARD ANNOUNCEMENT
FOR THE
V~
ENDING AUGUST 5, 1921
ADMITTED TO THE FEDERAL BESF.RVF. SYSTEM:
None admitted
PEBMISS!ON GRANTED T( F.xBRClSE TRUST PQY®:J.ZS:
The National Bank of 0icney, S~dney, Iowa.
The First NationQl Balk of Breese, Breese, lllinois.
730
FEDERAL RESERVE BOARD
WASHINGTON
X-1530
DF.BAI, BRSERVE BOl!RD ANNOUNCEMENT
!t'OR THE \Y.EE..i{ :E:NJ\.\.NC'r ATTGUST ~ 2 , J. 92).
ADMITTED T0 THill
---------FED~Il/U, BESFRVF.·-- ..- ··- ·--- SYSTEM:
--·--·-~~-··
.....
Total
cl.);r)i t8l
f>U~..E._1_:1!§_
,!t~z.9:.1r.:~es
$501000
$10,.000
$SR6,412
50,000
30,000
263y716
200,000
50,000
250,000
25,000
459.,704
25,000
5,000
144,131
50,000
25,000
493,959
DISTRICT NO. 9.
Farmers State Bank of Rockham,
Rockham, Sou.th Dako·i;a.
25,000
10,000
503,069
DISTRICT NO. 11.
Hamilton Bank & Trust Co.,
Hamilton, Texas
50,000
50,000
362,046
DISTRICT NO. 12.
Grants Pass & Josephine Bank,
Grants Pass, Oregon
75,000
20,000
1,131,394
DISTRICT NO. 6.
Central Ba.nk & Trust Co .. ,
Jasper~ .A.la1n.rua
The Bank of He:.n.r y c ou.:r.:::ty,
McDonough, Ge·•rgi.a
Algiers Trust & S-'3-vings Ba"!lk,
New Orleans, Louisiana
DISTRICT NO. 7.
Hinckley State Bank,
Hinckley. Illinois
Farmerst Trust & Savings Bank,
Seneca, Ilhnois
State Bank of Seneca,
Seneca, Illinois
CIWJGFl_ OF
~AME..:...
The Union Trust & Savines Pank 9 F-ast St~ Louis, Illinois,
to Union Trust Company ,cf Fast St. !.r,tlis.
The Commercial Nathmn.l Bank 0f P..nu:tston, Anniston~ Alabama.
The Welcome National Bank, Welcome, Minnesota.
FEDERAL RESERVE BOARD
WASHINGTON
X-1530
FEDERAL RESE:HVE BO.l!RD .AJ.WOUNCEMENT
FOR THE VIEEK EJ::WlNG AUGUST 19, 1921.
ADMITTED TO THE FEDEBA..t @SERVE SYSTEM:
Cap:i.t~J.
DISTRICT NO. 6.
Marion County Banking Co.,
Guin, Alabama
Surplus
Total
Resources
$35,000
DISTRICT NO. 12.
The Community Bank of Whittier,
Whittier, California
Largilliere Company Bankers,
Soda Springs, Io~ho
$229,518
125,000
12,500
569,816
25,000
12,000
391,363
Peoples Bank of Floyd County, FloyQ, Virginia.
The Bixby State Barik, Bixby, Oklanoma.
CONVERSION:
The Dexter-Horton Trust & Savings Bank, Seattle, Washington, has
converted into The Horton National Trust & Savings Bank of Seattle.
AUTHORIZED TO ACCEPT DRAFTS .AND BILLS OF E.XCH.IiliGE
UP TO 100 PER CENT OF CAPITAL .AND SURI?LUS:
The Southwest National Bank of Dallas,
Dallas,
Texas.
PERMISSION GruNTED TO EXERCISE TRUST PO\VERS:
The Dr~ers & Mechanics' National B~k of Baltimorey uaryland,
The Merchants' National Bank of Bl.·ownsville, Texas.
The Horton National Trust & Savings Bank of Seattle, Yvashington.
FEDERAL RESERVE BOARD
WASHINGTON
X-1520
FEDERAL RESERVE BOARD AI.'INOUNCEivlENT
FOR THE WEEK ENDING AUGUST 26, 1921.
ADMITTED TO THE FEDERAl, RESERVE SYSTEM:
Total
.Q§,pi tal
SUrplus
~urces
$200,000
$50,000
$5,928,955
DISTRICT NO. 7,
Reliance State Bank,
Chicago, Illinois
DISTRICT NO. 11.
Penelope State Bank,
Penelope, Texas
·25,000
VOLUNTARY LIQUIDATION:
Guaranty Ba.nk and Trust Company, Seattle, Washington.
PERMISSION GRANTED TO EXERCISE TRUST PO.VERS:
The First National Bank of Bingha~ton, New York.
The Firat National Bank of Chico, California.
56,290
FEDERAL RESERVE BOARD
WASHINGTON
X-1530
FEiiERAL RESERVE BOARD ANNCUNC"E'r.'lENT
FOR TilE '\.'F..EK ENDING R:IIPT:E,Z.IBER 2~ 1921.
ADMITTED TO THE FEDERAL RF.SERVE SYfiTEM:
Total
Capital
Surplus
$25,000
$3,500
Res~urces
DISTRICT NO. 9.
Security State Bank~
Wolf :Point, Montana.
$231,826
Farmers & Merchants Bank, Boonton, New Jersey.
BANK CLOSED:
Union Central Bank, N..ay, Idaho,
CONSOLIDATIOH:
The American State Bank,
with a non-member bank.
Lin~oln,
Nebraska, has consolidated
P'ER!JJlSSION GRANTED TO EXERCISE TRUST POWERS:
The Pulaski N~tional Bank, Pulaski, Virginia.
The Central National B~k of Ricr~ond, Virginia~
The Exchange National Bank of Little Rock, Arkansas.
The Citizens• National Bank of Cameron, Texas.
734
X-1530
mDl!':RA.L RESERVE OO.ARD ANlfOUNCEMENT
PUR THE WEEK ENDING SEPTEMBER 9, 1921 ..
AIU!TTED TO THE FEDERAL RESERVE SYSTEM:
Capital
Surplus
DISTRICT NO. 4.
Tl.~.e I&inerva Banking 8o .. ,
Minerva, Ohio~
$50 ,000
First-Tyler Bank & Trust Co.,
Sistersville, W. Va. • 200,000
Total
Resources
$395,253
100,000
2,721,283
DISTRICT NO •. 6.
Citizens Batik of Claxton,
Claxton, Georgia.
30,000
3,000
134,759
DISTRICT NO. 7.
Victor Savings Bank,
Victor, Iowa.
50,000
30,000
520,256
BANK BE-OPENED:
The GuaJ:anty State Bank,
Troup,
Texas.
CHANGE OF NAME:
· Alameda. Savings Bank, Alameda, California,
to Bank of Alameda •
.l?EEMlSSION GRANTED TO EXERCISE TRUST POi'.'ER§:
The First National Bank. of Butler,
Butler, New Jersey.
The First National Bank o:f' Montpelier ,Montpelier. Indiana ...
The First National Bank of Blooming Pr~irie, Minnesota..
X-15~
FEDERAL RESERVE BOARD .ANNOUNCEMENT
FOR THE WEEK ENDING SE.PTEMBEH 16, 1921.
ADMITTED TO THE FEDERAL RESERV'"E
SYS~:'EM:
Surplus
Strawberry Point State Bank,
Strawberry Po~.nt, Iowa.
$50,000
$10,000
700,000
Total
Resources
$785,779
50,000
DI:.§TP;_ICT NO. J.2.
Commercial Bank of
San Luis Obispo, Calif.
The Farmers a1;ate Bank, Cozad,
Nebra.s~;;:a.
CONVEr:.SION;
The First State Bank, Oklahoma City, Oklahoma, has converted into a natic~al brn1r.
CONSOLIDATION:
The Stockgrowers State Banko .Pa·Nhnf'llra, 0Ir.Jaho:ma, has
consolidated with the Citizens National Bank of Pawhuska.
X-1530
FEDERAL RESERVE BOARD ANNOUNCEMENT
FOR THE VJEEK ENDING SUTRMBER 23, 1921.
ADJIITTED TO THE FEDERAL RESERVE SYSTEM:
Capital
Surplus
Total
Resources
Boonton Trust Company,
Boonton, Nevi .Tersey. $100,000
$50',000
$150,000
28,000
7,387,089
DIST.Rif&T NO. 2.
DISTRICT NO. 12.
Mission Savings Bank,
. San Francisco, Cal.
500,000
The First State Bank of Quinlan,
Quinlan, Texas.
PERMISSION GRANTED TO EXERCISE TRUST rOWERS:
The Suffolk County Katioual Bank of Riverhead, Nm7 York.
Seaboard National Bank of Seattle, Seattle, Washington.
X-1530
FEDERAL RESER. VB }J,(l_t, e.n AUNOUNCEMENT
FOR THE VlEEK ENDiNG B.&?TEl:;illER ~0, 192L
ADMITTEJ> TO THE F.EDJpRAI.
~SERVE
SYSTEM:
C9J?5.tal
Surplus
Total
Resources
'65,000
$100,000
$574,205
Dl1TRICT NO. 6•
. The Greenville BankL'1g Co.,
GreenvHle, Georgia.
Morgan Cc.unty Be.nk:~
Madison, GeoX"gi.a..
Rhine Banking Company,
Rhine, Georgia.
50,000
180,36~
25,000
98,186
])!STRICT NQ..!...l-.?....
Bank of Commerce,
Ore~n City, Oregon.
100,000
26,000
1,064,959
Wl TUDM.WAL:
The Citizens Ba.llk of Billings, Billings, Oklahoma.
CON1ERSION:
The Metropolitan Bank, New YGrk, N. Y., has converted
into a national bnnk.
PERMISSION GRANTED TO EXERCISE TEfJST POWERS:
The First National Bank of Attleboro, Massachusetts.
The Metropolitan National Bank, New York, N. Y.
738
x-:.t5ro
FEDERAL BESER VE PO.t!.RD AJ:-lUOUNCEME..~T
OOR THE WEEK: BNDING CCTOBER '1, 1921.
AmiTTED TO THE FEDEHb.L RESERVE SYSTEM:
Su.rplus
Carolina Banking & Trust Co.,
Elizabeth City, N. c.
The Merchants & Producers Bank,
Salem, West Virginia
~).02,142
Total
Rescurces
$102tl42·
50,000
32,000
875,757
200,000
20,000
1,331,845
75,000
10,000
472,331
DISTRICT NO. 7.
The Adams State Bank,
Chicago, Illinois.
Polo State Bank,
.Polo, Illinois
WITH:PBAWA.b.!_
The Farmers Equity' Bank, Brooksville, Kentucky.
CHANGE OF NAME:
First State Bank, Golden Valley, North Dakota,
to the
First American State Bank, Golden Valley, North D::lltota.
X-1530
FEDERAL RESERVE BOARD .ANIDUNCEMENT
FOR THE WEEK :ENDING OCTOBER 14, 1921.
AIW.T;ED TO THE FEDERAL RESERVE SYSTEM:
Capital
DISTRICT NO. 7.
The Pinney State Bank,
cass City, Michigan.
State Bank of Croswell,
Croswell, Michigan
SurplU!,_
Total
Resources
$50,000
60,000
DISTRICT NO. 8 ..
First State Bank of O'Fallcn,
O'Fallen, Illinois
$626,838
1,214,006
25,000
5,000
43,443
DISTRICT NO. 9.
Farmers & Merchants State Bank,
Menahga, Minnesota
25,000
5,000
198,065
32,000
1,399,552
DISTRICT NO. 12.
The Pioneer Bank,
Porterville, California
105,000
WITHD~:
Butler County State Bank, David City, Nebraska.
CONVERSICN:
The Mercaritile Bank & Trust Company, Savannah, Georgia,
has converted into a national bank.
PERMISSION GRANTED TO EXERCISE T.RUST l?C\VERS:
The Clark County National Bank of Winchester, Kentucky.
The Security National Bank 'Jf Fargo, Fargo, No.tth Dakota.
X-1530
FED:ERAL RESERVE BO..t\.RD .ANNOUNCEMENT
FOR THE WEEK ENDING OCTCBJ.iR 21, 1921.
ADMITTED 'TO THE FEDERAL RESERVE SYSTEM:
Surplus
DISTRICT NO. 6.
1'lerchant s & Farmers Bank,
Roanoke, Ala.
$125,000
Bank of Gra~~nt,
Graymont, Ga.
25,000
LISTRICT NO. 7.
Drexel State Bank of
Chicago , Ill.
350,000
Total
Resources
$ 82,500
~786,340
5,000
175,847
150,000
8,037~244
The Charles River Trust Company, Cambridge, L~ssachusetts,
has c~nsolidated with The Havard Trust Company, Cambridge, Mass.
PERYIISSION GRANTED TO EXERCISE TRUST POJEES:
The
The
The
The
Lincoln National Bank of :,vashington, ./ashington, D.. c.
Indiana Harbor National Bank of East Chicago,at Indiana Harbor, Ind.
First National Bank of El Dorado, El Dorado, Arkansas.
First National Bank of Carlyle, Carlyle, Illinois.
nDERilL REfiERVE BOmD .Alt.ilOtJ::jCEMEN:r
FOR THE WEEK :Er-!DJ.NG OCTOBER 2Cl, J92~.
Total
3~~'1.!~1!.
P-_ISTRIC!..]JO. I!..
The Eli.ssfieJ.d State Jlank,
Blissfield, Michig,n.
~50,000
$15,000
$ 733,001
DI8TRlCT NO. 11.
Citizens State Bank of
Greenville, Texas.
100,000
342,434
X-1530
FEDERAL RESERVE BOARD ANNOUNCEJVIENT
FOR THE WEEK ENDING NOVEMBER 4, 1921.
Capital
Su:r-plus
Total
Resources
$400,000
$100,000
$500,000
DISTRICT NO. § ._
Arkansas Bank & Trust Co.,
Newport. A>·k3nsas.
200,000
35,000
1,249,664
DISTRICT NO. 12.
The Valley Ban.k,
Fresno, California.
625~000
62,500
2,096,641
DISTRICT NO. 6.
Nevv OJ.· leans Bank & Trust Co. ,
New Orleans, Louisiana.
WI THDR.ti.WAL:
The First State Bank, North Bend, Nebraska.
BANKS CLOSED:
American Bank
Bellevue Bank
&
&
Trust C~mpany, Savannah, Georgia.
Trust Olmpany, Bellevue, Idahe.
AUTHORIZED TO ACCE?T DRAFTS .AND BI.T.LS OF EXCHANGE UP TO
100 .PER CENT OF CAPITAL .AND St.JR?J,US:
Merchants & Illinois National B~k, :Peoria, Illinois.
Peoples Savings B&~k & Trust Coopany, I'ine Bluff, Arkansas.
PERMISSION GRANTED TO EXERCISE TRUST
~0WEBS:
Citizens National Bank of Wellsville, Wellsville, N. Y.
The First National Bank .:>f Durham, Durham, N. c.
Indiana National Bank of Indianapolis, Indianapolis, Ind.
X-1530
FEDERAl:. RESERVE BOARD ANlWUNCU.ENT
FOR THE VffiEK ENDING NOVEi•lBER 11, 1921 •
.A!El'I'TED TO 'J'HE FEDERAL RESERVE SYSTEM:
None admitted.
PERMISSION GRANTED TO EXERCISE FIDUCIARY .PO','JERS;
The Riggs National Bank of \'/ashington, District of Columbia.
The National Bank of Gallup, New Llexico.
CONVERSION:
Alliance Bank Company, Alliance, Ohio, has converted into a
National bank.
X-1530
FEDER.4.L RESERVE BOARD
FOR THE WEEK EliDING
.A..~·WtJNCEMEN11
NC'il~mER
18, 1921.
A:W.ITTED TO TBE :E'.f.DERAL RESERVE SYSTEM:
Capital
Surplus
Total
Resm:rrces
$100,000
$25,000
$430,284
70,000
:tz,ooo
765,Z27
DISTRICT NO. 5 •.
Shenandoah Valley Bank & Trust Co.,
Martinsburg, West Virginia.
DI STR ~Q_T NO • 12 •
:Plumas County :Sauk,
Quincy, CaJ.ifo:rn.:i.a.
The .American State Bank, Okmt1.1gee, OkJ.alwma, has converted
into a national bank.
B.AN:Z: CL0SE!h
The Union State Bank, Nezperce, Idaho.
PERMISSION GRANTEJ) TO Ex.ImCISE TRU::;T POWERS:
The Farmers• National Bank of Allen't~wn, Allentown, New Jersey.
The Ashland National Bank, Ashland, :Pennsylvania.
X-1530
FEDERAL RESERVE BOABD ANNOUNCEMENT
FOR THE vVEEK ENDING NOVEMBER 25,1921.
AlliiTTED TO THE FEDERAL RESERVE SYSTEM:
Total
SU.rplus
Resources
$25,000
$35,000
$498,758
DISTRICT NO. 5 ..
The Pleasants County Bank,
St. Marys, West Virg-.inia
50,000
12,000
507 '922
DISTRICT NO. 12.
Ritzville State Bank,
Ritzville, Washington
25,000
2,500
27,500
DISTRICT NO. 4.
The Peoples Savings Bank Company,
Delta, Ohio
The
The
The
The
First State Bank, Clinten, Oklahoma, has converted into
Security National Bank of Clinton.
Guaranty State .Bank, Ardmore, Oklahoma, has converted into
.American National Bank of Ardmore.
WITHDRAWALS:
The Magna Banking Company, Mag:.r1a, Utah.
The Potlatch State Bank,
Potlatch, Idaho.
AUTHORIZED TO ACCEPT DRAFTS AND BILLS OF EXCHANGE
UP TO 100 PER CENT OF Cu!TAL AND SURPI,US:
New Orleans .Bank & Trust ComiQny, New Orleans, La.
PEPJMISSlON GRANTED TO EXERCISE TRUST POWERS:
The First National Bank of Murray,
Murray, Kentucky.
X-15'?.0
F.E.DEBU RESERV.J::J BO.AB.D .il.l'IJ.NOUNC:El','JENT
FOR THE V/EEK E.."i'DING DECEMBER 2 , 1921
iill.MITTED TO THE EEDEML BES.CP.VE SYSTELl:
Total
Resources
.,9apita.1
Stuplus
$100,000
$20,000
$1,854,861
100,000
100,000
957,913
100,000
20,000
518,014
DISTRICT NO. 3.
The 0 lyphant Bank,
Olyphant, Pennsylvania
DISTRICT NO. 5.
Farmers & Merchants Bank,
Salisbury, Maryland
DISTRICT NO. 6.
Citizens Banking Company,
Eastman, Georgia
VOLUNTARY LIQUIDaTION:
Great Lakes Trust Conpany, Chicago, Illinois
B.i:1NK C.LO SED:
Stockmens State Bank, BroV>Jning, Montana
PERMISSION G&NTED TO EX!mCISE TRUST pQ,/ERS:
The Millville National Bank, Millville, N. J.
X-15:30
FEDERAL RESERVE BOAHD .>.NN0 UNCEMENT
FOR THE '1EEK EhDING DGCJ.2iffiER 9, 1921.
ST..ti.TE B.<l.NKS
No changes in membership.
BATIONAL BANKS
No trust or acce:i_)tance ..;>0\iers granted.
X-15~
FEDERAL BE::>ERVE BOARD ANNOUNCE.l11ENT
FOR THE VfEEK ENDING DECEMBER 16, 1921.
ATh\UTTED TO THE l!"'EDERAL BESEUVE SYSTEM:
Capital
Surplus
American Bank and Trust Company,
Hazleton, Pennsylvania
$20U,OOO
Total
Resources
$100,000
DISTRICT NO. 3.
WITHDRAWAL:
Bellevue State Bank, Bellevue, Idaho.
BP. .NK Cl.O SED:
Bank of Jordan Valley, Jordan Valley, Oregon.
PERMISSION GRANTED TO EXERCISE TRUST .l?0\7ERS:
The National City Bank of New Rochelle, New York
The First National Bank of East Liverpool, Ohi~
The Farmers and Mechanics National Bank of Georgetown,
Washingtnn, District ~f Columbia.
Federal National Bank of Washington, District of Columbia
The First National Bank of Roanoke, Virginia.
X-15ZO
FEJ.lEBA~ ·RESERVE
BOARD ANNOUNCEMENT
FOR THE WEEK ENDING .DECEMBER 23 9 1921
~~TTlllD ~--':l'HE! FEDERAL ~SERVE
Capital
SYSTEM:
Surplus
Total
Resources
DISTRICT NO. 12.
Citizens State Bank,
Sawtelle, California
~100,000
$1,206.722
CONVERSIONS:
!rhe Cit bens State Bank, Kingfisher , Oklahon\a,
and
The State Bank & Trust Company, Houstont Te$as,
have converted into national banks.
PERMISSION GRANTED TO EXERCISE TRUST POWERS:
The
the
The
The
So'Uhega.n National Bank of Milford, New Hampshire.
Farmers National Bank of Shenandoah, Iowa.
First National Bank of Missoula, Montana.
Craig National Bank, Craig, Colorado.
X-1530
FEDERAL BESERVE BOARD ANNOUNCEMENT
FOR THE ~EK F..NDING LECEMIJEH 30 , 1921.
ADMITTED TO THE FEDE:RAL RESERVE SYSTEM:
SUrplus
Tcttal
Resogrces
$32,000
~1,077,817
25,000
10,000
266,571
. ··· · DISTRICT NO • 9 •
Farmers & Merchants State Bank,Inc.
Hutchins.on, Minnesota.
50 ,000
12,500
455,147
Capital
DIS'.miCT NO. 6.
Aiabama Bank & Trust 0012lp:~.ily •
Montgomery, Ala~atna.
Habersham Bank,
Cla.rkesvil.le, Georgia.
BANKS CLOSE,P:
First Guaranty State Banl~, Collinsville, Texas.
Merchants Bank of Montg,mery, Montg~ery, Alabama.
PERMISSION GRANTED TO EXERCISE TRUST
The
The
The
1'he
The
POWERS~
National Shoe and Leather Bank Gf Auburn, .Maine.
Hudson National Bank, Hud®n, Massachusetts.
Shelburne Falls National Bank, Shelburne Fails, ~~ss.
Norweod National Bank or Greenville. South Carolina.
American National Bank of Danville, Virginia.
f••
0
FEDERAL RESERVE·BOARD
WASHINGTON
X-2010
.July 18, 1921.
Subject:
.Expens0 VJairl Line, Leased Wire System,
for th(' Month of June, 1921.
Dear Sir;
Enclosed herewith you will find two mimeog~aph
X~2010a and 2010b, covering in detail operations
of the main line, Leased Wire System., during the month of
June, 1921.
statements
Please credit the amount 1'?8Yable by your :Banll: in
the general account, Treasurer U. S.. , on your books, and issue
C/D Form 1, National 'Bariks, for account of "Salaries and Expenses,
Federal Reserve Doard.~ Special :FUnd 11 t Les.sad Wire System, sanding
duplicate C/D to F•3daral Reserve l3oard.
·
Very truly yours,
Enclosures.
F:if!lcal 11.gen t.
TO GOVERNORS OF ALL F. R. BANKS EXCEPT CRICPGO-.
\_
-.;"·i
. -"
....
X-2010a
REPORT SHOWING CL.ASS1FlC.ATION ~ND NUMBER OF WORDS
TRI\NSMITTED OVER M~ilN LINE OF T3E FEDERJIL BESERVE
LEASED WIRE SYSTEM FOR TBE MONTH OF JUNE, 1921.
War
Per cent of
Total Bank
From
:Sank Business
Fiscal
Agency
Business(*}
Bu.siness Bu.Biness
'E'in.ance Corp.
Total
-----------------------------------------------------------------~-----------58~044
Boston
8,149
49,895
4.19
New York
133
196.570
170.086
26,296
14.30
'Phi adelphia
C1e-velanrj.
52,474
100,922
79.971
152, 20:i
132.227
89.267
43,466
94,342
74,197
150,539
Richmond
Atlanta
Chicago
St Louis
Minneapolis
Kansas City
Dallas
San Francisco
F. R.
Banks
Washington
1,139,591
_..£.83 2..3.:2
Grand Total
4.41
8.48
6.72
12 .. 79
11.12
7-51
3-65
7.93
6.24
9,010
16,840
4,791
19,904
4,339
9,333
7,321
9,199
12~66
1~ 1.5.§.5
145
5,867
61,484
117,907
84,762
172,109
136,566
98,605
50,787
103,541
80,064
129.lQl±
·rotal
333
.19.L
1,329, 543
1,477,g30
Percent of Total
Bank Business
Fiscal Agency
139,619
161,345
300,964
724
1, 779) 518
BJ . 05
16.91
.04
1
JOO.OO
1,477,630 words or 83.03
Business
3001964
Total-----------------
1,778,794
"
" 16.~2
100.0C%
(*) These percentages used in calculating the
pro rata share o! leasedwire expenses as Shown
. on the accompanying statement (X-2010b)
FEDERAL RESERVE :SOARD
WASHINGTON, D. C.
July 11, 1921 .•
449.975
a
~·
)_:~)
i·:~
REroRT OF EXPENSE
X-2010b
MAIN LINE
FEDF.R~L
"·•
... ~
RES!i:RVE LEASED WIRE SYSTEM JUNE, 1921.
--·--- ----------------------- -----------------------------------------------------------------------------------------------
..:'ia:-ce of Bank
Operators'
Salaries
Extra
Operators'
Overtime
Co.m~nsation
Wire
Rental
Total
Expense
Pro rata
Share of
Total
Expense
Payable to
Federal Reserve
Board
Credits
-----------------------------------------------------------------------------------------------------------------------$
$ 355· 20 $ 742.38 $ 355· 20 .:; $ 387.18
$
$
B·je:ton
$ 355.20
New York
861.64
Phil adelphi a
225.00
Cleveland
516.00
Richmond
300.00
Atlanta
240.00
Chicago
(1}4,965. 81
St. Louis
300.00
Minneapolis
258.84
Kansas City
290.00
Dallas
166.66
San Francisco
215.00
1.00
214.45
101.25
146.50
(*) 50.00
30h.20
9.00
232-50
151.60
7,834.63
Fed. Res. Board
1,077.09
326.25
664.50
350-00
544.20
4,974.81
300.00
491.34
441.60
166.66
215
2,533.66
781.36
1,502.48
1,190.64
2,266.12
1,970.23
1,330.61
646.70
1,405.03
1,105.60
2.243.09
1.077 ·09
326.25
664.50
350.00
544.20
4,974.81
300.00
491.34
441.60
166.66
215.00
1,456.57
455.11
837·98
84o.64
l, 721.92
( **)3 '004. 58
1,030.61
155·36
963.43
938.94
2,028.()9
7,834.63
-·----------------------------------------------------------------------------------------------------------------------$ 10.00
$1,152.50 $7,884.63 $17,741.28 $17,717.90 $9,906.65
$10,815.83
Total
·.
. 2}.38(&)
$17,717 ·90
3.004.58(.&)
$ 7,811.25
(#) Includes Salaries Washington operators.
(*) Cut-in at Washington on Richmond-Baltimore circuit.
(••) Credit.
(A) Amount reimbutsable to Chicago,
·
·
·. -.<>):
(&) Received from War Finance Corporation covering business for mon~h of ,.,; ..
FEDERAL liESERVE BOARD
WASHINGTON
JULY
18, 1921.
·.
~".';..-4
& ._·\.
FEDERAL RESERVE BOARD
WASHINGTON
.
I
X-2010
August 22, 1921.
Subject:
Expense Main Line, Leased Wire System,
for the Month of July, 1921
Dear Sir:
Enclosed herewith you will find two mimeograph
statements X-2010a and X-2010b, covering in detail operations
of the main line, Leased Wire System, during the month of
July, 1921.
Please credit the amo'\Ult payable by your bank in
the general acco,mt, Treasurer U. S., on your books, and issue
C/D Form 1, National Banks, for acco'\Ult of "Salaries and Expenses,
Federal Reserve Board, Special Fund", Leased Wire System, sending
duplicate C/D to Federal Reserve Board.
Very truly yours,
Enclosures.
TO GOVERNORS OF ALL BANKS EXCEPT CHICAGO.
Fiscal Agent.
X-2010a
'BEPORT
SHOWING CLASSIFICATION
AND NUMBER
OF WORDS
TRANSMIT'l!ED OVER MAIN LINE OF THE F.EDERAL. RESERVE
LEASED WinE SYSTEM FOR THE MONTH OF JULY, 1921.
From·
!ank Business
Per cent of
Total :Sank
Business(*)
Treasury
Dept.
Business
War
Finance Corp.
Business
Total
~~~------~-.~~~~-~-----~-~---------~------~-----------------------------------~-
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
56,227
147,152
55,611
79,048
73~646
141,033
143,029
82,081
45,061
81,496
66,4o5
125.885
Total F. R.
Banks
Washington
1,096,674
271.858
Grand Total
5-13
13 .. 42
5.07
7.21
6.72
12.86
13.04
7.48
1~.11
7.43
6.05
l1.l~g
..........,.__
5,404
9,761
5,133
7,280
5,437
6,767
6,168
6,807
4,269
6,055
4,087
16. 51±2
149
98
61,631
157,062
60,744
86,426
79,083
147,800
. 149,197
88,888
49,330
87,551
70,492
142.425
83,708
16.656
247
lQQ
1,180,62~
1,368,5.32
160 •.364
347
1, 529,243
89-49
10~49
.02
Percent of Total
100.00
:Bank Business
Treamry Business
1,368,5.32 words or 89.51~
f60, 364 It
It 10.4.9,%
Total~-~--~~----~
1,528,896
100•00~
· ( *) These percentages used in calculating the
pro rata Share of leased wire expenses as shown
on the accompanying statement (X-2010b).
FEDERAL RESERVE BOAIID
WASHINGTON, D. C.
August 20! 1~21 •
.
..-
348.61
BEFORT OF EXPENSE
MAIN LINE
FEDERAL RESERVE LEASED WIRE SYSTEM JULY, 1921
X-2010b
------------------------------------------------------------------------------------------------------------------------Payable to
Pro rata
Bame of Bank
Operators'
Salaries
O:perators'
Overtirr.e
Wire
Rental
Total
Ex:pense
Share of
Total
Expense
Credits
Federal
Reserve
Board
---------------------------------------------------~--------------------------------------------------------------------
Boston
New York
Philadel-phia
Cleveland
Richm:md
Atlanta
Chicago
st. Louis
Minneapolis
Kansas City
Dallas
San Francisco
24o.oo
S69.98
225.00
516,00
300.00
24o,oo
(1)4,821.98
300.00
275.00
310.00
170.00
215.00
$
Fed, Res. Board
$
$
66.00
-
(*)50.00
1.00
48.4o
•
15,540.73
$
24o.oo
935·98
225.00
516.00
350.00
240.00
4,822.98
300.00
275.00
358.4o
170.00
215.00
$ 1,240.46
3,245.01
1,225.95
1,743.41
1,624.92
3,1()9.60
3,153.13
1,808.69
993.82
1,796.6o
1,462.92
2, 775·91
$ · 24o.oo
935·98
225.00
516.00
350.00
2lio.oo
4,822.98
300.00
275.00
358.4o
170.00
215 .. 00
$ 1,000.46
2,309.03
1,000.95
l, 227 .. 41
1,274.92
2,869.60
(**)1,669.85
1,5()8.69
718.82
1,438.20
l, 292.92
2,56o .. 91
'
15, 54o.73
-----------------------------------------------------------------------------------------------------------------------Total
$15,590·73
$24,189·09
$24,180.42
8.67(&)
$24.180.42
(#) Includes salaries Washington Operators.
( *) Cut in at Washington on Richmond-Bal. timore circuit.
(a) Amount reimbursable to Chicago.
(&) Received from War Finance Corporation covering business for month of June.
( **) Credit.
FEDERAL RESERVE BOARD
WASHINGTON, D. C.
August 20, 1921.
$8,648.}6
$17,201.91
1, 669 .8~(a)
$15,532.0
·
.
.... r
Lof
'
X-3152
f":-.'·:~J.M-}
l· ' - '
(1
F E DE R AL R E S E R VE B 0 AR D
STATEMENT FOR THE PRESS
For Release in Morning
Friday> July lJ 1921.
Papers~
The follo;-~ing is a :review of gene.rc;.l buEiness and
f inanc:.a1. cc:n.di +.ions tl:.:rougrFJlJt ti~e several
Federc~.l Rr-;se':">T<'l D5 st!':i.cts d:u·i.ng the mo>:r~.h of
June) as •;onta.'.:r:.ed. in the forthccm:mg issue of
the Federal f1 1)sc;·vo Bulletin.
Conflicting economic tendencies have been at work during the month
of June.
Of these some have tended to lower the level of business activity
while others have tended to advance the movement of recovery which has set
in during the past few months,
The indications at the close of the month
are accordingly not as conclusive with respect to probable future developments as would othenvise be the case.
Good conditions have continued in
several branches of domestic trade 1 and in these such recession as has
occurred is evidently only seasonal.
The month of June is usually a period
of relative quiet and of temporary reaction marking the close of spring
demands while arrangements for ·the autumn trade have not yet been completed.
This has been true during the past month.
In sorae linGb of budness 1
however 1 it has become even more evident than heretofcre tn3.t the close of
. the readjustment period has not yet been reached and in ti1ese the recession
of business during June has been an actual decline and not merely a seasonal
fluctuation.
The best example of such industries is still found in the steel
and iron trade.
It ,is now generally believed that further readjustment of
wages and prices in that field is likely to occtlr and that increased activity in it will certainly not be noted before autumn.
Prices, whose movement has be·en watched with special interest for
some time
past~
had up to very recently given evidence of "stabilization."
The down#ard movement during May was the smallest since the decline first
began: - the index number of the Bureau of Labor Statistics showing a
-2-
X-3152
falling off of less than 2 per cent.
from 154 to 1)1.
Bradstreet's index has declined only
The index of the Federal Reserve Board 1 compiled for
u~e
in international comparisons, shewed a decline of onl..y one-half of 1 per
cent during May.
Current unofficial reports for the month of June, however,
indicate that there has been a ::ecent acceleration of the price decline.
falling off in the value of agrj. cl.JJ.tural commodities and non-ferrous metals 1
excepting coppe;r.
During June pr:i.ce recessir.ns in bituminous
coal,~
cotton,
wheat and grain rave been general_. whHe somewhat the same has been true
of corn1 rubber, and oils 1 but hides and leather have shown a slight upward movement and the same is true of some other
Unemployment continues practically
unch~nged
to betterment in some industries 1 particularly in
tendencies to increase here and
as iron and steel.
there.~
co~uodities.
with slight tendencies
agriculture.~
and with
especially in basic industries such
In the farming regions there is at this season always
a larger demand for labor and this demand is making itself felt on account
of the good crop outlook, although hampered by the necessity of more economic
production.
The agricultural prospect is
improving~
the composite condition
of all crops as of June l being 93 .. 2 compared with 94,8 a year ago.
Condi-
tions in the Northwest have been especially encouraging, with the spring
wheat crop probably larger than for four or five years past.
The cotton
crop outlook has been poor to date) while as is generally known a marKed
reduction in acreage has taken place.
It continues to be true that
there is hesitation in purchasing and
consequent lack of speedy distribution, retailers tending to buy only from
hand to moutn in order to avoid loss due to variation of prices.
This
prevents manufacturers from booking orders far in advance and tends to
prevent them from buying heavily of raw materials, their indifference accord
.
*3
"
ingly leaving the raw material market uncertain and depressed.
Little improvement in export conditions has been observed.
There has been
no marked advance in demand while foreign exchange has been as unsettled as herev~ofore and practically no relief has been obtained from the disturbances which
in South America and the East have prevented trade from going steadily forward.
Moratoria s.till exist in various countries and the oversupply of unsold goods at
various foreign ports has not been much reduced.
In banking there has been a steady growth of strength and liquidity.
The
reserve resources of the Federal Reserve Banks have been much enlarged through
the continuous addition of gold, while their outstanding liabilities have been
·reduced by the curtailment of bills held.
continued to shrink.
banks.
Federal Reserve notes outstanding have
These conditions are paral.lelled by the situation at member
Interest rates have become more moderate during the month and there is no
lack of a.ccomodation for ordinary business upon reasonable time.
Special arrange-
.ments have been made during the month for the relief of the livestock industry
·through ·the formation of a "cattle loan pool" to be used in making advances to
livestock' producers~
The question of relationship between wholesalers, retailers and the public
continues as a topic of .discussion but with the tendency strongly toward the eve]qing up of prices and toward the passing on of price reductions to the consumer
in the form of lower retail charges.
-While no general reduction has been made
iri the cost of transportation, modification of rates in specific instances is
progressing rapidly with the general result that actually lower costs of transportation are being gradually substituted for the levelo of the past season.
The situation may be surrineO. up by SaYing that the month of June has been a
period of transition with seasonal recession in many.industries and continued
downw~d
readjustment in others;
while with productive prospects favorable and
prices in some lines apparently reaching a condition of greater stability the
outlopk for the
autumn trade appears to be reasonably encouraging.
v:.',,:::r\
'
L
;
X-3152
.AGRICUI~.
.Agricultural conditions in all sections of the co1.mtry
have shown marked improvement during May and June.
The estimated total
production of all wheat arr.ounted to 830,000,000 br.. shels, as compared to
a production of 787,000,000 bushels in 1920.
A slight inc~ease in pro-
duction of rye is also indicated, but the estim&tes of production of oats
(Kansas City) repo-.:ts that very heavy rains rek:rdAd. farm work during
June, but have supplied. the moisture needed to ma"lre the whea.t, rye, barley, and oats crops.
9:':'1o total acreage of winter wheat in that District
is larger than in 1920, but the estimated production is considerably
lower, as the crop has suffered from frost, rust, and insects.
dition of spring wheat,
District No.
ry~
and corn is generally satisfactory.
The conIn
9 (Minneapolis) agricultural conditions are more favorable
than for a number. of years.
Although spring wheat
acreage in that
District is 6 per· cent less than in 1920, it is estimated that the production will show an increase of 36,000,000 bushels.
A decided improve-
ment in agricultural conditions has occurred in District No. 11 (Dallas),
although crops in southern Arizona and New Mexico have been injured by
drouth.
District No •. l2 (San Francisco) states that the wheat crop of
the Pacific Northwest promises to be the largest on record.
COTTON.
May 25 was
66,
The condition of the cotton crop
in
the United States on
per cent of a full normal, as compared with 62)+ per cent
a year ago, and a ten year average o£ 76.6 :per cent.
A comparison by
states shows that the May conr15. t~on of the cotton crop was lowest in
Alabama and Louisiana, and higbest in .Arizona.
1
The generally poor con-
di tion of the crop is due principally to the scanty use of fertilizers,
·~)\.;'
X-3152
# 5
:Reports also indicate that boll weevils are already active in Texas.
complete estimates of cotton acreage are not yet available, but large
reductions in acreage are reported from many sections.
District No. 8
(St. Louis) states that "acreap.ss,are universally under those of 1920,
recent reports placing the decrease from 20 to 40 per cent".
No.
District
6 (Atlanta) reports that in Qeorgia continuous cold weather in
A:Pril and May killed much of the young cotton and that some
fields are being planted
wit~
other crops.
of these
However, the Oklahoma crop
is in better condition than last year and District No. 11 ('Dallas )
reports that the Texas crop is growing vigorously as a result of excellent weather conditions prevailing since May
15.
The Department of
Agriculture estimated that world stocks of cotton on May 1 amounted to
9.200,689 bales in the United States and 4,647,304 bales in all other
countries.
Exports of raw cotton from the United States in May totaled
~77 ,000 bales, as compared with
320,000 bales in Jl_pril and 365,000
bales in May, 1920.
TOBACCO.
It was noted last month that in District No ... 8 (St .. Louis)
and in District No.
5
(Richmond), (with the exception of ~cuth carolina)1
the acreage has been reduced.
A similar situation is now reported with·
respect ~ the Burley tobacco section of District No.
4
(Cleveland).
The Kentucky crop is backward, both in the case of Burley end the western dark.
types.
planting of Burley has been delayed because of the absence of
favorable weather conditions.
The farmers are making an effort to improve
the quality of the present crop.
Planting of the 1921 crop has begun in
the i:,ancaster county cigar t~e section of District Noy
where the weather has been
tically all
ide~
3 (Philadelphia)
and the soil in good condition.... prac-
manufacturers of cigars in District No. 3 (Philadelphia) report
~-:,·.:-.:)
c
X-3152
a slight
im:p~ovement
in sales, a1 thou,:h they are still rmcl1 smaller
than at the same :period last year.
Factori82 in that District which
were closed are being reopened as sal8s increase and oJ d p tocks are
disposed of.
Operations throughout the industry a•rerc:.ge about BO per
cent of capacity.
]p.UI.1:,
fered widely.
The condition
of the various f-rl?H cro:;:s on June 1 dif-
Gra:r;>ef~ui t, lirr:,js, pineBpples, C£,,_":-·:.. C:tlcu.:pes,
And or?..YJ.,;es
showed a condition hie;her t:'1a.l1 t:r:e·Lr ten·-year ave: c.ge for fhat date;
while the condition of cherries, peaches, pears, apricots, and apples
was far below the ten--yeal' avere;ge.
Distdl:t No. 3
(·r>~1iladelphia)
re-
ports that the 1921 crops of cherries and plums were almost entirely
destroyed by frosts, ar.d that crops of apples and peaches are only about
20 :per cent as large as in 1920.
The st:cc.wherry crop matured early this
year and 890 carloads of strawberrtes were shipped frcm Delaware and
New Jersey during May, as corrjpared with 68 c&rloads in 1920.
crop in District
1920.
~c.
2
.~·:··;n
The apple
;:-(;:-'·:) is rm::.y j) psr cent as le.:t'ge as in
The comrr:ercial acreage of cantaloupes planted in ten early pro-
ducing states amounts to 39,595 acres in 1921. as compared with l~3.191
acres in 1920 and an average of 32,926 acres in the years 1917,1915, and
1919~
During May the Texas peach crop declined to 50 per cent of
norm~,
indicating a probable production of 1,421,000 bushels.
GRiiN MOVEMENTS:.
Movement of wheat to rrarket during May in the
country as a whole continued in about the same volume as in the three preceding months, while receiuts of corn and oats show an increas2 over the
April figure.
Receipts at the four leading markets of District No. 10
(Kansas City) were much heavier than in ~pril, amountin[ to 11,964,000
- .IP:.,.J
~~·,.' ..- . 1f'1'_.
L:
1
"_>t ~~
X-3152
#7
bushels, and were
62
per cent above the receipts for May, 1920.
The large
surplus of wheat on farms in that Dist:r.tct hes been materially reduced, and
with the continued liberal receipts
repo~ter'l.
d.<V'ing ;rune, it is :ind:i.cated that
by the time the new 1921 wheat begins to arrive, sto::ks of old wheat will
have been reduced to "lmt little above the normsl ca;:J7 over.
necei:pts of
wheat at MinneapoUr. an'i :on:';v.th d·trring M;zy- were however ·20.6 per cent less
than during .A:pril and 12,4 -per cent less than during May, 1920..
corn, oats and barley at these two c?nters d.u:r:.ng
figures;~
va..v
Receipts of
inc:t·eased over .April
and with the except::.on of oats, which shows a decrease of
per cent, were in excess of the May, 19?.0
at the four leading markets in
Dis,~ric t
:fj.g;~res.
5· ~
May receipts of oats
No. 10 (Kansas City) totaled
1,152,000 bushels, or 475,000 bushels less than in May, 1920.
StoCks of
all grains in terminal elevators in Minneapolis and Du.J.vth at the close
of May were 18 per cent less than at the close of A0ril, but were
cent larger than at the end of May, 1920.
33
per
This was d.u.e to the fa.ct that
Duluth stocks were nearly three times as large, al t:ho,lgr ur; rrneapolis stocks
were slightly smaller than in May, 1920.
The May ave:;.·aJ;e
J;:r~.ce
of wheat
and oats was considerably higher t.ha."l the ,April ave?"agc, al thu\.1.gh there was
a recession during J1.me.
The average for the first t::n.·ee weeks of June was
lower than the May figure, although still
higher than the
In the case of corn, however, the average for the
firs·~
~pril f1~lre.
o~ ,J,me
three weeks/-•vas in
excess of the May average, which in turn was in excess of the APril average.
£1QUR.
Wheat flour production dur5.ng May is G::ltimated at 8,L}C6,000
barrels, as compared with 9,3tS,OOO barrels in April, but was in excess
of the figure of 8,244,000 barrels for May, 1920.
Buyers in District
No. 8 (St. touis) "are disposed to hold off for arrival of the new wheat
X3152
crop", and while "there is a fair immediate business, virtually nothing is
being sold ahead.n
StoCks in all hands are stated to be very light, and the
present rate of production not such as to augment them rapidly.
fair export business in clears, but the
de~nd
There is a
for the better grades of flour
is slow, and foreign bu.yers still show a preference for wheat instead of the
milled product.
May exports ·of flour frl)m Minnec:polis mills were l~ per cent
greater than in APril, and for the first five months of 1921 f1uly 50 per
l,arger than exports during the cor't'esponding pel·iod in 1920,
c~nt
The influence of
a steady export demand in District No. 12 (San Francisco) has caused flour
prices to show a slight advance above eastern market quotations.
A decrease
in stoCks of wheat. on hand, reported by 19 of the largest mills in
~hat
..
District, from 1,060,505 bushels on May 1 to 818,314 bushels on June 1, as
compared with 1,886,661 bushels on June l, 1920, reflects the tendency to
export wheat rather than flour.
Flour prices have shown an .increase. The
was
May average was considerably above the .April average and the gain/further in·
creased during June, the average for the first three weeks being considerably
greater than that for May.
This is the case with lower grade flour such as
clears, as well as with patents.
LIVE STOCK. Live stoCk in general continues in good condition.
Meadows
and pastures in District No. 10 (Kansas City) are thriving, while as a result
of rains in Texas early in June ranges are new in fine condition in all sections of that state, with grazing greatly improved and cattle taking on weight.
In New Mexico recent rains have given grass a new start and improved the condi tion of live stoCk, although dl'cu.gh.t has continued in Arizona.
The loss of
lambs, calves and pigs has been small in District No. 10 {Kansas City) While
in District NO. 12 (San Francisco) exceptionally heavy yields of lambs are
)
.
,... ' ,.....
~-.,
__
(I
#9
X-3152
reported from all sections except Arizona.
conn~ction
•. ~_>~.~)
Of ir.terest in this general
is the :plan for a national :pool of $50,000,000, to assist in
financing the industry.
It is hoped in this manner to care for the needs
of the cattle and sheep raiser, and this in turn will aid the feeding districts· which finish the stoCks for the market.
three
pr~ncipal
Receipts of each of the
classes of live stoCk during May. show an increase over
receipts during A:pril, but in the case of
the May, 1920 figures.
~heap
alone are they greater than
Receipts of cattle and calves at 15 western markets
during May were 1,062,988 head, corresponding to an index number of 105,
. as compared' with 994,916 head during .APril, corresponding to an index number
of 99 and 1,209,656 head during March, corresponding to an index number of 120.
Receipts of hogs during May were 2,401,246 head, as compared with 2,279,495
head during APril and 3,128,249 head during Mayt
numbers were 109, 104 ~d 142.
1920~
The respective index
Receipts of sheep increased from 1,077,806
head in ,April to 1,097,976 head in May, as compared with 796,160 head in
May,
1920.
The respective index numbers were, 79, 80, and 58.
.
The average
.
prices of cattle and hogs during the first three weeks of June. were lower
than the average
for A:pril.
prices for May, which in turn were lower than the averages
The May average price for shee:p
however~was
slightly ·greater
t:P,an the APril figure, but a considerable fall was shown in the average for
the first three weeks of June.
prices of hogs in the pac~fic Northwest con-
tinue. to range above the prevailing prices in large middle western markets,
but show a slight decline as compared with ,April.
prices at Forth Worth during
May were more irregular than usual and at the close of the month were under
those at the opening, due to the falling of of outside buying,· as well as in
the ,case of calves to the fact that receipts were. the heaviest for that month
*
in any of tre past 18 years.
X-3152
10
some improvement in Mey in the :packing
incblstry in District No. 10 (Kansas City) is reported.
PE't'FO~Ul&:.
Production of :petrule"..l.rn in the couYltry as a whole continued
throughout May and the first two week3 of June at the record rate attair.ed
in March and April.
The average daily
ou~put
in District 17o. 12 {San
while the average daily out,put in District No. 11 (Dalla3)
386,249 barrels in April to 372,596 barrels in May.
dec1i.,__,~cl
from
These decreases were
more tl:an offset by an increase in tr,e aver age dc.ily :production of the
Kansas-Oklahoma fields from
barrels in May.
about 378,000 barrelS
in J~:pril to 402,000
Stocks of oil continue to increase and are necessitating
the construction of additional storage facilities.
District No. 12
(San Francisco) reports that, stocks at the close of May an;ounted to
28,054,710 barrels, as compc.red wi t}J. 25,356,769 barrels at the close of
APril.
Depi te this appa-rent
overprocluc~ion,
drilling operations duri-ng May.
there was an increase in
District No. 10 (Kansas City) reports
714 wens with a da,ily new :production of 87,461 barrels completed in
May,
as compared with 5?8 wells with a daily ou_tput of 65,147 barrels completed in APril.
Fifty-nine new California wells with an initial daily
production of 21,130 barrels were collll?leted in May, as compered with 58
wells wi~h a daily :production of 18,470 barrels in APril.
No, 11 (Dallas), on the other hand, only 192 wells with
In District
an initie.l daily
production of 75,574 barrels were completed in May, as compa-red with
256 wel.is with an initial daily output of 97,176 barrels in r,pril.
There
have been further reductions in prices of cn,de petrole,nn and of leading
refinery products during May and the earlY par+. of June.
pennsylvania
crude oil has declined from $6.10 per barrel ori January 1 to $2.75 per
~._' .~•f-".1
t,
X-3152
•.
#
11
barrel on June 14, and similar declines have occurred in the other producing fields.
prices of fuel oil, kerosene, and lubricating oil have
also declined sharply in recent months, while the price of gasoline has
receded more slowly.
_901~L...:.
Demand for bituminous coal is still very restricted,
Expor.ts
increased somewhat in May, as aresult of the British coal minerts strike,
but this EuroiJean dema"ld slackened during June.
~ounted
to 32,919,000 tons, as
38,993,000 tons in May, 1920.
105.
ccmp~red
production dtrring May
with 27,553,000 tons in APril and
The respec~ive index wwbers are 89, 74> and
Di. strict No. 3 ("Philadelphie) re-pcrts that pd ces have weakened
materially, and virtually all business is spot.
"Public utili ties have
taken advantage of the present low prices to increase their supplies considerably, but industrial consumers and railroads are buying only for immedate
re~uirements" • . District
No. 10 (K8Xlsas City) states that the railwads
show no disposi.tion to renew the contracts which expired on ,t.pril 1, but are
buying sufficient coal for their needs on the open maiket.
biturr1inous coal from Tenessee fields increased during May
The demand for
~~d
resulted in
an increase in the number of mines in operation and in the number of coal
cars loade-d.
,Anthracite production declined slightly in May and aJilOunted
to 7,668,009 tons, corresponding to an index number of 103-6, as compared
with 7,703,000 tons during APril, corresponding to an index number cf 104.1,
and 7.946~000 tons during May,. 1920, corresponding to an index number of 107.
District No- 3 (Philadelphia) reports that company mine prices of all sizes
have remained stationary and ·that most retail dealers have refrained from
announcing the usual monthly increase.
Demand for stearc: sizas is still
_)
f1
~
# 12
very slack.
't'ha beehive coke industry has reached a state of almost com-
ably higher rate than that of beehive, as a result of the demand for ga"s
and other by-products.
IRON .AND STEEL.
were at not over
During May operations in the iron and steel industry
25 to 30 per cent of capacity, and during June tbey show a
tendency to ta"f?er off still further.
District No. 3 (Philaaelphia) states
that "June has been the dullest month ever experienced in the history of
the industry."
pig iron production during May amm'l"'Jted. to 1,2?.1,221 t0ns,
corresponding to
an index nurnber of 53, as compared with 1 ,193,0n1 ·tons
during ,April, corresponding to an jndex number of 51, although the average
daily production showed a decrease.
A sjn;ilar situation was found in the
case of steel ingots, as production increased from 1,2l3,958 tons in APril
to 1,265,850 tons in MaY·
The respective index numbers were 52 and 54.
There was a net loss during May of six f1.trnaces in blast, so that 90 were
active on June 1.
The unfilled orders of the United States Steel Corpor-
ation showed a decrease for the tenth consecutive month. from 5,345·,224
tons at the close of APril, corresponding to an index number of 111, to
5,482,487 tons at the close of May, corresponding to an index number of
lo4.
Recent reductions in prices by the leading interest and readjustment by
the independent producers have not t\timu.lated purchasing and as competition
has grown keener, :price concessions have teen
facturer..
n:~de
by the individual manu-
At present they are found in the case of the }·arger as wall as
the smaller producers.
BUyers however continue to confine their :Purchases to
small lots for immediate needs.
On the otb.lo'lr :hand, st.Q.cks . .a,.~·not- accumu.-
~--·
. ,....
L
# 13
"",()
r:../
, _,
X-3152
1ating and neither producers' nor consumers• reserves are large.
Recently
some minor expansion of ra.Uroad buying has taken plac.e, and some inquiries
. which have been made have raised the quest:l on of the po::wHlli ty of increased business in conr:tection with
repai~
and. eq'.li.pment.
Some increase
in inquiries from oil i:nt.erests and for strtlctu..:-e1 steel is also reported,
though the actual
~::>J:u..1r.e
market opened for the
nf b1<Siness is small.
sea!3~n
under the 1920. schedule.
The Lake Superior iron ore
t::n J1.me 18, by ini tia.l sales at $1.00 per ton
This was the latest date in twenty years.
Move-
ment of ore from the docks to inted.Or:· furnaces is very light and stocks
at the lake front are much heavier than a year ago •
.Alftr2~:~'~Ik~~S.
May shipments of autc.mobiles by fact~ries producing three-
fonrths of the to-tal output of the country show a falling off from the
APril figures.
May shipments aznounted to 18, 608 carloads, as compared with
20,087 carloads during p~ril, although ~:iveaways increased from
machines in APril to 15,200 machines in May.
14,197
Thus. fa;r: this year carload.
shipnents have been greater than last year only during J!I•i:':i.l, but drivea'llays have been much less in every case and. during May
over 20 per cent of the May 1920 figure.
>:'l~re
cn.ly slightly
Manufacturers. of p01JU.lar stand~d
makes who build their own cars are able to make a fair profit and do a
good busineess at present prices, b1]:t a.ss~mblers, as well as some of the
smaller and weaker companies find their overhead increasing as competition
to supply the restricted demand becomes keener.
reduction is being watched with interest.
Thl? effect of recent price
X-3152
NONTI'llROUS ME't'ATJS.
Copper production duri.ng
.April have not yet resumed oper-a.t:lc;1s.
~85,
(Mim~e::;:poHs)
C::41 :pounds during 1\lfay, as com:2ared with
.April and 20, Sl7, 77 F pounds in Tl/fay 1
York, net refinerv) rose to
13
]
continued to
The O'lctput of rei'::.ned copper
by reporting companies in District No. 9
4,
M.a~r
920.
amountgd to
4,815,~33 poill1ds in
The price of copper (New
cents in the latter :part 0f 1\lfay as a
result of a number of foreign Orders, but a decline to 12.75 conts
occurred in the earlv part of June due to a cessation of export demand.
Lead and zinc prices also ieclined during June and are at present
quoted at about the same level.
Zinc production
dt~ring
May amounted
to 18,026 tons, as compared with 1~,550 tons in April and 45,415 tons
in May, 1920.
Stocks of zinc on
with 79.581 tons on April 30.
t~at
~.1ay
31 tote-lecl 83,721 tons, as compared
District No. 10 (Ifunsas City) reports
several properties which rrnne both
during
~.~ay.
shal~ow
and lead were reopened
S6me drilling is being done in that District to locate
deposits of lead
prices.
~inc
Ole
V\hich ci:m be mined. proi'itably at present
Gold, silver, and lead mines in District No. 12 (San Francisco)
report that they are operating at from 90 to 100 per cent of capacity.
CO"r'f!OO 'T'EX'T'ItFS.
The market for cotton textiles continues to
display the characteristics that have been so generally commented upon
during the past few months.
Certain kinds of goods, notably ginghams
and print cloths continue in active demand and manufacturers of sheetings
are refusing to promise ieliveries before August.
On the other hand other
gray goods, ducks and drills are in very slight demand.
The market for
yarns manifests no grPat activity and the demand for tire yarns is
reported by District No. l (Boston) to'be. especially weak due to the
# 15
X-3152
failure of the automobile indus try to sustain thE: increase in
that several combing yarn mills have recently closed down because of
a lack of sufficient orders, although on the whole, the demand for
combed yarns is greater than that for cardedyarns.
In the southern
districts mill activity appe3.rs to be great3r than in the northeastern sections of the
co-:..c:,~t:ry,
stoppages in District No.
although there have been some
5 (Richmond) due to lv.l;or troubles-
wise it is said, most of the Carolina mills are
time.
~Jnning
Other-
nearly full
Special reports from cotton goods mills located in District
No. 6 (.~tla.nta) show a slight in-:rease in the arnount of cloth produced
in May as compared with April, namely, 7.8 :per cent for lS concerns,
and an increase of 18.9 per cent in orders on hand at the end of
Production was however 57.8 per cent below that of ttay 1920.
~~ay.
Nine
rep·resentative yarn mills produced 41.4 per cent more yarn in May
than in April, with orders at the end of the month practically the
same as at the end of the preceding month.
The output was only
ll.6
per cent below that of a year ago.
Consumption of raw cotton during May amounted to 440,000 bales as
compared with 409,000 bales in April, a total of 19 per cent below that
of a year ago and 22 per cent below the average of the last five
ye~a·s.
Despite the steady, though not pronounced increase inconsumption, the
disturbed foreign situation, uncertainty as to the size· of the next
crop, and the
lu.r.z;e s~ocl::
an u~ward price movement.
already on hand are factors preventing
In
fact, the spot cotton market registered
sharp declines during June and New York spot cotton c lased at 10.85
'
'
# 16
X-3152
cents' per lb. on June 20, half a cent below the previous low record
of the
y~ar.
FINISgiNG OF carTON FftERICS.
Thirty-four of the 58 members of'
the National .Association of Finishers of C'otton Fabrics reported total
finished yards billed during the month at 91,033,535 yards, as compared with 86,311,438 yards in April.
The total average percentage of
capacity operated was 58 per cent for all reporting districts, as compared with 66 per cent during the preceding month.
The total gray
yardage of finishing orders received amounted to 86,754,055 as compared
with 92,920,824 in April.
The total average work ahead at the end of
the month amounted to 10 days for all reporting districts the same as
for the preceding month.
WOOtJThT TEX'fl!t11:S.
All reports indicate that the. market for
woolen textiles has been well sustained during the past month and that
woolen and worsted mills are operating at an increased percentage of
capacity.
This is evidenced by government statistics of activity
based on reports of 917
~~nufacturers,
which show that wide looms were
operated at 80 per cent of capacity during May, narrow looms at 70 per
cent; cards at 80 -per cent; combs at 98.6 per cent; woolen spindles at
81 per cent and worsted spindles, at 90 per cent. District No. 3
(Philadelphia) states that orders placed for woolen and worsted yan1s
are extremely conservative and in
~hny
cases purchases are made only
after they have been covered by sales.
Prices remain stable, except in
knitting yarns which have fallen 10 to
15 per cent from contract prices
made earlier in the year.
The result has been cancellation of orders
in cases where spinners have refused to make concessions.
Increased
manufacturing is reflected in the growth in total wool consumption as
reported b·vthe "Sureau of Markets for the first four months of 1921.
V"'" . '""
•<
"
1fo
17
X-3152
Each month has shown an increase,
April consumption amounting to
53,071,000 lbs. as compared with 47,181,000 lbs. in March.
During
the latter part of ~!fay, the :Boston wool market strengthened somewhat
but by the middle of June a downward tendency was again manifest.
The mills have of late not bought heav':t ly and i t is probable that
uncertainty as to prospective tariff duties is a factor in limiting
sales.
District No. 12 (San Francisco) reports that during Way
several sales of new clip wool were reade to buyers for eastern mills
at prices of 1~ cents to 18 cents a pound in the grease as compared
with 11 cents a pound in the grease a month ago in the Yakima.Valley.
It is said that "reduced rates by
wate~
from Pacific to Atlantic ports
through the Panama Canal have stimulated wool 'shipments from points
in Utah and Idaho by rail to Los Jngeles and thence by water to the
Ptlantic seaboard.
One hundred and fifty carloads have been dispatched
at San Pedro since January 1st, at a reported saving over railroad
rates of i3 to
~@l'S
~20
per ton. 11
r,tO'T'l:riNG . .A special investigation of the men •s clothing
industry in District No.7 (Chicago) shows in the case of 19 tailorsto-trade a reduction in orders for suits as
month a year ago of 28.5 per cent.
per cent in the number of suits
~~e
compar~d
with the same
There was a reduction of 20.1
during the month and of 23.1
per cent in the number of suits shipped.
In the case of nine whole-
sale clothing manufacturers, the orders for suits for fall from
January 1921 as compared with the same season of 1920 fell off 27 per
cent.
The number of suits made during the month of May as cornpe.red
with the same month a year ago were 52 per cent less and the same
percentage holds for shipments.
(it)
~!".· •t -"
!
X·- 3152
SITK,
Silk mills in District No. 2 (New York) report diminished
activity in June, as operations only averaged 54 per cent of capacity
as compared with c2 :per cent in
~~ay.
However, this reduction is no
doubt due to the fact that the present time is bet1veen seasons.
Spring
and summer business is about over and orders for the fall have not yet
been placed in any considerable quantity.
.Accoriing to the figures
compiled by the Silk Association of America, the consumption of raw
silk declined slightly from 28,900 bales in .April to 27,200 bales in
May.
Stocks in warehouses at the end of the month remained
unchanged.
virtually
Prices of raw silk have advanced somewhat, and District
No. 3 (Philadel~hia) reports that the thrown silk market has strengthened
since June l!:!t.
HOSI~Y.
~he
hosiery industry exhibits marked contrasts, with
practically no demand for certain lines while i..notber cases, notably
tbat of full fashioned silk hosiery, premiums have been offered for
immediate delivery.
The shortage in this grade of goods is due to the
long drawn out strike and many of the mills still operating are booked
to capacity tmtil the first of the year.
There is a demani for seamless
silk lines inconsequence, although orders are placed in very restricted
quanti ties for future delivery.
cotton hosiery, however.
Very slight interest is shown in staple
Reports from 24 hosiery firms selling to the
wholesale trade in District No. 3 (Philadelphia) show an increase in
the product manufactured during M:ay as compared with .April of 8.8 per
cent.
Finished product on hand May 31 had fallen 10.
9 per cent, while
orders booked during May increased 103.3 per cent, and unfilled orders
on hand May 31 were 39.8 per cent above those for the end of the
~receding
month.
Similar information for 8 firms selling to the retail
I-~
Ltl_
r~~r~-11'-
(.;
X-3152
# 19
trade show an increase in the product manufactured of
a decrease of finished product on hand of
19.5 per cent,
9·3 per cent, a diminution
in orders booked during May of 28.1 per cent and an increase in unfilled orders on hand of 16.1 per cent.
~m~AR~
Reports received from underwear mills located in
Distriet No. 3 (Philadelphia) indicate that production averaged only
4o
about
or 50 per eent of capacity and that orders received thus far
are only about one-third the amount that would usually be on hand at
this season.
The demand for light weight goods for immediate delivery
has been active but cancellations of orders have been frequent as a
result of delay in deliveries, and unwillingness of jobbers to risk
carrying such late deliveries until another season.
The 21 firms which
make regular reports to the Federal Reserve Bank of Philadelphia showed
a negligible increase in output during May of 1.7 per cent as compared
with the month of April, finished products on hand May
.·
by
3.:~
31 had increased
per cent, raw materials, however, had been reduced 39·9 per cent •
Both orders booked during May and unfilled orders on hand May 31 dec lined
by 15.6 per cent and 11.1 per cent respectively.
S'ROES AND t'EATliF.R.
Prices of leading classes of raw skins and
hides have increased somewhat further during June, after a rather sharp
advance in May.
District No. 3 (Philadelphia) states that tanners are
· fearful that a further advance in raw stocks would force such an increase
in leather prices as to retard trade.
Stoeks of goat, kid and cabretta
skins have shown a downward tendency since September, 1919 and are now
only about one half as large as at that time.
leathers was well maintained during June.
Demand for all upper
Export demand has not kept
( ~·~~
X-3152
4f 20
pace with domestic business. but a few foreign sales of patent side
leather and glazed kid have been made.
Demand for sole leather has
slackened somewhat during June, but the higher grades continue to be
sold in considerable volume.
Stocks of belting and harness leathers
are still large, and sales have been at a low level for many months.
Trunk and bag ma.nufacturers in District No. 3 {"Philadelphia) report
a steady improvement in volume of business, but at prices materially
lower than in 1920.
The upward tendency of the shoe industry which
was first noted in January continued without interruption throughout May
and the early :part of June.
Shoo fcctor·ics inDis'~:·:kt No. 1 (:Boston)
continued to operate at about 50 per cent of capacity during May for
the fourth successive month, but as a rule, shipments from factories
exceeded production and orders on the books on June 1 were considerably
higher than on
~ay
1. District No. 3 (Philadelphia) reports that shoe
. manufacturers have been kept busy filling late spring orders, as the
volume of spring business prbved much larger than was expected.
Many
orders for the fall trade have been received from retailers, but jobbers
are hesitant on account of their stocks of staple goods.
Both wholesale
and retail trade is reported good, and an increasing demand for black
shoes and patent leathers has been noted.
No.
Factory operation in District
8 (St. Louis) is at from 95 to 100 per cent of capacitv, and orders
booked in May for immediate shipment were from 90 to 105 per cent of
those in May, 1920.
Retail stocks in that District have been greatly
reduced, and the consumers 1 demand is greater than at any time since
last surrmer.
l
In District No.
7 {Chicago) factories are operating at
about 70 per cent of capacity and unfilled orders amount to about
we.eks production.
si~
l
.
·,
~1e··
·!' •.• ...,, ,
!..<
(
X-3152.
# 21
UJ'MB'F.'R. ·J,n increase in lumber output due to seasonal causes was
quite generally reported during May but orders had not in all cases
kept pace with the larger output.
Since June 1, yellow :pine sales have
fallen below current production as the dem8n1 for lumber for structural
purposes bas steadily fallen off.
In Dist~ict No. 6 (Atlanta) the 139
mills belonging to tbe Southern Pine Association repo~ted an average
production per mill for the week ending June 3 of 506,823 feet as co~
pared with 492,014 feet for the last week in April.· Shiprrents on the
other hand, fell from an average of 571,94o feet for the last week in
J.pril to 537.327 feet for the week ending June 3.
Similarly, orders for
the same dates dropped from an avera;e of 697,049 feet to 456,538 feet·
In District No. 11 (Dallas) the 32 reporting mills belonging to the
Southern Pine Association likewise showed an increase in production which
was onlv 27_ per cent below normal as compared with 39 per cent below
normal for the month of .April.
lumber cut
of
In District No. 9 (Minneapolis) the
25 reporting companies was 29,576,oco feet during the month
of May, an increase of 40 per cent as compared with April, and of 20
per cent as compared with the same month a year ago.
Shipments amounted
to 17,814,000 feet as compared ;vith 22,22~ 1 COO feet a year ago- a decided
improvement, as in recent months shipments have not been more than onehalf those of the preceding year.
'l'he four lumber associations in District
No. 12 (San Francisco) reported an increase in the May cut such as was to
be expected at this season.
Production during the four weeks ending IVAy
28th totalled 360,075,000 board feet, Which was 23.6 per cent above the
April figures.
Both·orders and shipments also increased in amount·but
.e
'·
.,
:/1:
22
X- 3152
fell behind the cut for the first time this year as shipments
only totalled 335,805,000 feet as compared with 334,199,000 feet
in April, while orders amounted to 342,724,000 feet.
s~ys
The report
that although inland mills showed renewed activity, "business
was curtailed at tidewater and river mills during the mooth, highwater in the Willamette and Columbia Rivers, and enforced inactivity
du• to strike conditions in the shipping and bu:ild5.ng trades, causing
the closing of a
northwest" •
~arge
percentage of river mills in the Pacific
X-3152.
I 23
BUILDI!m.
some
Building operations during Mayo show decreases from APril in
districts~:~t
AS a
in the majority of districts increases are shown.
whole, building has continued a.bo11t steady frort4 :lpril to May th:ts
.
'
~ar,
in
'
the face of a large drop J.ast year; and b&J t~s no";, bean affected by seasonal
developments.
The value
of cor.trACts awarded in Distti ct No•. 1
(Boston) during
May was about $18, 000, 000, a s 1.; g!tt ;.ncrease over the April figure.
$6,900,000 represented resident:tal constzuction.
.
In D:~strict No..
Of ~Qi s,
-a· (New
York)
the value of contt·~..cts awaJ::lvd <i~dng ifAY li~w.i.se inc::ea.-;ed, to $58,8w,OOO,
of which $37,000,000 was for resit~ntial construction,
(Phi~adelphia)
In Distrtct No. 3
an increase of over 50 per cent was shown, and the· May figure
.
'
stood at $23,400,000, of which $6,800,000 was for residential construction.
District No. 4
~alue
(Cl~vsla.."ld), ~ver,
showad a slight decrease in the to.tal
of contracts awarded, al.though those. for residential construction showed
a small increase.
Tlle two figures for May were respectively $33,900,000 and
$9,200,000.· District No. 5 (10ch'llond)
a.1c:<' c:'h.t.>ws A. de~raase
in the value ·of
contracts awarded, in partictil.a.r in the case of residential building.
!he
value of building permits showed little cllange in District No. 6 (Atlanta)~
~t ~ge
increases were recoro.ed in Atlanta and Birmingham.
Contracts
awarded in District No. 7 (Chica.Q;o) increased from .$53,700,000 in April to
$54,900,000 in May. but the value of residential contracts declined from
~13,QOO,OOO to $9,800,000.
In four reporting cities of District No. 8 (St.
LoUis) the value of building permits inoreased.from $2,403,557 in ,Aprtl to
$2,696,521 in f&l.y.
In District No. 9 (Minneapolis) excluding J4ontana., the
value of building contracts declined from $9,100,000 in April to
$8~800,000
in May, but residential. contracts increased from $2,000,000 to $2,300,000.
The value of permits in fourteen cities of District No. 10 (Kansas City)
increased from $5,167 , 969 in APril
'I
X-3152.
I'
to $6,096,407 in May.
Nine cities of District No. ll (Dallas) report 2,473
permits valued at $4,190,778 in May, as compared with 2,588 permits valued. at
I·
$5,633,649 in April.
The value of building permits in 20 cities of District
No. 12 (San Francisco) declined from $19,907,621 in April to $17,763,732 in
May.
This decline was due principally to a complete suspension of building
operations in San Francisco wnich has been caused by a strike in the
ElVIPJ.)OYMENT CONDITIONS.
industr~
Taking the country as a whole, unemployment in-
creased slightly during May.
Although in District No. 12 (San Francisco) the
reductions in numbers employed were attributed to strikes in the marine and
i
I
building trades, it ap,~ears that elsewhere such reductions are the
r$Sul t
·of
!
a further contraction of the scale of manufacturing operations.
The Massa·
chusetts Department of Labor and Industries, however, in its eurvey covering
192 representative manufacturing estabJ.ishrr.ents reported a slight increase
in numbers employed, the totals being 197, 000 (May 27) as compared with
192,000 on APril 30th.
In May the only increase in opportunities for employ-
ment was afforded by"'. gradually enlarging activity of the textile mills.
New Hampshire and Vermont, conditions were similar.
ing
establish~ents
In
Granite ru1d marble work-
in these states have greatly reduced their forces or have
close4 down entirely.
In Rhode Island and Connecticut unemployment is most
pronounced in the metal working trades
es~ecially
in brass production, macbi-
nery and tools in Connecticut, and tools and jewelry in Rhode Island.
In
both states increased demand for labor in textile industries bas to a certain
extent offset the unemployment occurring in other lines.
Tb.e New York State
Industrial ConnUssion reports a decline of 2 fer cent in numbers employed in
the factories of that State.
Iron, steel, machinery and automobile plants
reduced working forces because of a lack of new orders and the railroads also
cut
down forces
sc~ewhat.
There were no serious labor troubles during the
*·
#
.
'J:O:
'
.)
Following the settlement of tile
of conditions in the shipping inlustry.
strike in the
industry, the n1Luber
~lothing
tablishments increased.
decrease has set in.
in
employe~
usu~l
In tne case of women's clothing tb.e
It is
re~or+-ed
that
t~ere ~s
the _numbers employed in the buil.iing trades.
clothing es-
~en's
season::U
been little change in
A slight :increase has J<robably
occurred in New York City but in oi.her P<-'3.rts of tne state activity is at a
standstill.
The very restricted scale of operations in the iron and steel
industries wouJ.d. obviously result in wi..iesp:cea:i unemployment in certain parts
of District No. 3 (PhUaJ.elpl::..i.a) and No. 4 (Clevelcmd.).
Jist:tict lJo. 5
(Ricbmonl) reports that tDere was an increase in construction work, wbich
decreased the number of unemployed, especially in the case of unskilled
laborers.
On the other hand, a str;.ke centerinG in -v.w.e textile mills c::l.I'ouni
Charlotte and resulting from a proposed 22. 5 per cent reduction in wage rates
.
.
led· to an increase in numbers out of work in that section.
fa~
l~bor
obtained
at
ex~essive.
likewise continued to be
ret~rns
The supply of
District No. 7 (Chicago)
from 177 concerns, sho'.ving t.uat the total numbers employed
the end· of May, as compared witl.l tb.e .;:nd of the preceding month, fell 4
per cent, from 114,490 to 109,967.
Th~
ago amounted to 33.3 per cent.
amo~~t
The
reduction as
of the rJay pay roll was 6.5
cent below that of April and 40.4 per cent below
No. 8 (St .. Louis) says
tb~t
11
compared vnth a year
th~t
of
~1ay
1920.
~er
Di3trict
laror con.ii tions faUed. to show in:;rc-vdr:a:..._t
during the period under review.
11
Strikes in District No. 12 (San Fri::!Dcisco)
(in tue marine and building trades) and a slight reduction in nunbers in
manufacturing establishnents as recorded by tae United States
Service, account for tue increase in
unemplo~~ent
in May.
seasonal activities in lumbering and in agriculture
plus lab_or although the demand is below normal.
~ave
Emplo~nent
On the other hand,
taken off some sur-
~·~':
l·
#26
WHOLESAT.,E TRA.DE.
x-3Jj2
conditions in the wholesale grocery business remained
substc..ntially unchan>;ed durin!; Ma:y although the downward trend in sales was
arrested.
In all re·nortin,::. districts exce:9t District No.
5 (Richmond) slight
advances were recorded from the :oreceding r,ontr risinr· from 0. 6 per cen,t in
District No. 11 (Dallas), with ll firms re~Jortinr:, to
No. 6 (Ptlanta) witr 27 firms re-oorting.
ductions ranged from
per cent in
4 per cent in District
AS comr·ared with a year ago re-
~istrict
No. 11 (Dallas), ll firms re-
43.4 :per cent in District No.3 (Philadelphia) with 50 firn:s re-
porting, to
. porting.
33.8
In District NO. 11 (Dallas) there was a ne&ligible increase in the
amount of dry goods sales during May, and in District #7 {Chicago) an increase
of 4 ~)er cent in the se.les of nine reporting shoe firms, but otherwise all
districts making returns showed declines in dry goods, hardware, boots and
shoes, following upon very general sales reductions in APril.
In the case
of dry goods these declines ran§:·ed from 12-6 per cent in Tlistrict No. 6
(ptlanta), 15 firms reporting, to 17.4 per cent in District No. 12 (San
Francisco),
9 firms reporting.
amounted to
6.3
In hardware lines the
minirr~~
per cent in District No. 12 (San Francisco),
sales decrease
23
firms re~ort-
ing, and reacred a maximum decrease of 14.7 per cent in District No.3
(Philadelphia), 24 firms reporting.
In boots and sroes, declines varied from
6. 5 per cent in the case of District No. 6 (Atlanta}, with 7 firms reporting,
to 18.2 per cent in District No.
5 (Richmond), 8 firms reporting.
As compared
with May 1920, reductions in all lines were pronounced, ranging from
13.6
per cent in District No. 4 (Cleveland) to 38 per cent in District No. 12
(San Francis co) for dry goods; from 22 per cent in District No. 4 (Cleveland)
to 43.7 :per cent in District No. 6 {.Atlanta) for hardware; and from 7.3 per
cent in Dis tric:t Nc. 7 (Chicago) to 45.6 per cent in District No. 5 (Richmond)
for boots anci. shoes. The fact that the shoe sales for District #7 ( Ctice.go)
are only 7. 3 per cent below the totals for a year ago is attributed to the
g:Aat increase in the number of orders, resulting fro~ mark downs and also
from the necessity of retailers to replenish stoCks.
'
., }
• _),<'~;
J-<'1·1 ~~~~,~f)
"' . . _.h_l
I 27
RETAIL
to decline.
than in the
T~~E.
X-3152.
trdie, as measurei in
Ret~il
~ollar
values, continues
The v.Uue of net sales wg,s lower in every district during liifa.y
corres~onding
month a year ago,
value ap;ea,:r to be less tban
t~e
However, these declines in total
average decline in retail prices during the
past year, whlch shows taat the volume of trade :aas been •vell maintained.
Reporting department
~tores
snow a iecrease in net sales from tLe same month
a year ago of 4.5 per cent in district No. 1 (Boston), 10 per cent in District
No. 2 (New York), 7.8 per cent in District No. 3 (Pbiladelpnia), 5,5 per cent
in District No. 4 (Cleveland), 3 per cent in District No. 5 (Richmond), 16.8
per cent in District No. 6 (Atlanta), 12.5 per cent in District No. 7 (Cnicago),
l. 6 per cent in District No. 8 (St. Louis), ht~ 9 per cent in District N'o. 9
(Minneapolis), 5. 3 ]?er cent in District ~ro. 10 (~J.sas City), 17.4 per cent
in
District No. ll (Dallas), and4.l per cent in District No. 12 (San Fran-
cisco).
In eleven J.istricts t..::.ere
Wd.S
a decline of stocks on i::.and during rr.a.y.
Stocks at the end of May were lower t:c.an a year ago for every district.
Trese
declines varied from 11 per cent in D.istrict Ho. 8 (St. Louis L to 25. 8 per
cent in District No. 5 (Ricamond).
Consiiering tne decline in retail prices,
it .is doubtful whether there has been much change in tue
stocks.
p~ysical
volume of
Stock turnover continued at about tne same rate in !>/.fay as in April.
The percentage of outstanding .orders of retail merchants at the end of
}~y,
to total purchases during the calendar year, 1920, decreased in eight districts.
poli~y
Tills inJ..ico.tes t.nat retailers are continuing ti.l.e same
purc~ing
as heretofore, preferring to purchase gools in smaller amounts as
needed, rather than to make extensive future commitments.
Continued adherence
to this polic¥ will mean that purchasing for tne fall season will be conducted
'largely on tba.t basis.
.,
X-3152.
4f 28
·'
WHOU:SAIE_ rRT.CES.
During !"J.;y· wl:.ol..;sale
~.:.ri..;;es
in ge . 1eral concim..1.ed
to fall, but according to all inl:icaU.ons at a less ra.pid. rate tl:an at any
time since the downward movement began.
to have become more pronounced again.
In June, however, the decline seems
S:he index nun;ber of the 13uroau of
Labor Statistics for May shows a reduction of about 2 per cant as ccr.o:,:·ared
with 5 per cent in the precedi!lg month.
That of the FeJ.eral Reserve :Board,
constructed primarily for international comparison, declined only one-half
of one per cent during !J!ay as co::apared with a. 5 per cent decrease in April.,
and Bradstreet's and Dun's show tendencies
si~lar
to these.
The rise d.uring May in the price of a large number of important agricultural commodities, such as cotton, wheat, corn, oats, etc 1 ; non-ferrous
metals, coal, and raw hides, in part neutralized the effect of declines in
certain other raw materials and in manufactured goods.
AS a result, the
index numbers show raw materials as a wbole to heve· averaged the same or
somewhat higher than in the preceding month while manufactured goods continued to be reduced.
In June many of the important raw materials which had a&ranced in May
declined again, but in most cases not to the APril level.
Leading agricul-
tural commodities, except corn; bitt:rPinous coal, non-ferrouF meta.ls, with the
exception of copper, as well as live stock, petroleum, iron and steel products, and building materials, continued to be reduced.
A considerable
number of important food commodities such as dairy products, meats, etc. ,
were materially reduced during May, but reductions in finished textilvs &.nd
boots and shoes were not so general.
~<':(,,_! ..... ·~
C·
,.
X-3152.
SHIPPING.
The outstanding events in American shipping circ],os during
June were the appointment by Presiient Harding of the new Shipping Board, and
the settlement of
t~e
strike of tlie marine engineers wnich
gress ever since the first of
Ma~
ba~
been in pro-
The terms of the agreerr.ent signed by the
Shipping Board and the unions provide for a reduction of 15 per cent in wages
and the elimination of all overtime pay at sea.
The agreement, anno1mced
June 16, runs until January 1, 1922, during which time no further wage cuts
are to be made.
The movements of ocean freight rates during the month have been mixed.
At the beginning of June, with a reduction of about 30 per cent in grain rates
to the United Kingdom, the general tendency was distinctly toward lower levels.
Toward the middle of the month, hov,aver, French Atlantic rates were raised
about 10 per cent to the level of rates to other continental ports, and a
little later the extensive chartering of coal boats to the United Kingdom
brought about a decided advance in charter quotations.
Reports indicate that
at that time many coal buyers abroad placed orders in this country to fill
their immediate requirements
strike.
reg~rdless
of the outcome of the British coal
The fundamental conditions affecting the shipping and ship-building
industries are, ho'>i'ever, substantially the saJLe as reported ::or some months
past.
A:rterican shipyd.rds continue merely to complete tonnage already on the
ways, and no new orders of any size have been booked for montbs.
There can
obviously be no change in this situation until world trade revives sufficiently to absorb
~d
put into profitable
or~ration
now lying idl<3 in ports all over the world_
the vast fle.ets of vessels
,._....
,f:_;;-J
FEDERAL RESERVE BOARD
WASHINGTON
x-3153
July 1, 1921.
Dear
In accordance with the plan of classifying
and ratin& employees of the Board, made effective July
1, 1920, there is enclosed herewith a notice of your
rating and relative stanJ.ing in classification as based
upon this rating, and ycur salary as of July 1, 1921,
as,approved by the Federal Reserve Board.
very tn1ly yours,
R. G. Emerson,
ASsistant to Governor.
,...,,-,...,._1
X-3153a.
t.
(_j ,,-
July 1, 1921
TO THE EMPLOYEES OF TEE F.EDERP.L RESERVE BOJI.:RD;
on July 1 1 1920, the
~oard
announced to its employees,
effective as of that date, a plan of classification into grades
carrying sPecific salary ranges and :providing for increases of
33·1/3 per cent of the
erly.
The salary range
min~, each em~loyee to be rated quartap~roved
for each grade by the :Board on
July 1, 1920, was determined after careful consideration of the
salaries paid by the Government Departments and outside insti tutions for sim!ilar work, and the cost of living prevailine:- at that
time.,_
.As th-= cost of living is now on a somewhat lower scale
than it was at the time the salary classification was adopted,
the 1;1oard feels that it would not be warranted in approving for
certain of the employees who are entitled to adjustments in their
salaries at this time the entire amount of the increase provided
by their salary classification.
In view of the changing conditions, the Board has decided
not to make general modification in the salary ranges established
under the various grades in the plan at this time, believing that
it would be more satisfactory to await further readjustments in
the cost of living.
AS soon as it seems feasible to the Board,
howeter, revision of the classification plan and the salary ranges
thereunder will be made and the revised plan given to the employees.
Very truly yours,
R. G. Er.:erson,
.~ssistar.t -~o
Governor.
~
.. •--,n
L ,_'__, (~
c
0 p
y
X-3154
F.EDER.AL RESERVE BANK
OF ATLJ.NTA
June 25, 1921.
My dea:r Mr. - - -
I am in recei~t of your letter of June 24th, and
note that you have notified your customers, who are borrowing on
cotton, to sell some and pay their notes by JUly 1st.
Of course, you understand, thie is a matter with
which we have nothing to do. From our correspondence with your batik,
we have made no such demands, for it is not our policy to demand of
member baxks that any particular class of paper be liquidated and
the proceeds paid to us. It is a fact that some member ban'.:s are
borrowing very heavily from us, and, when their borrowings reach such
a great amount that we feel they should be more conservative and 40
banking in a safer way, then we call their attention to the fact that
we do not wish to extend further accommodations. It is then a mattet
between the member bank and their customers and there are WfJYS of
obtaining a liquidation of their paper other than forcing their customers
to sell their cotton.
we assume that a great many of your loans are made
to customers where there is no- cotton hypothecated as collateral.
probably the bulk of your loans are in that shape, and, while we are
not insisting that your bank pay off your borrowings in total, or
a1lY amount of it, we are merely admonishing you not to go to any greater
length on your borrowings which are already so high, being more than
two times greater than yr;u.r Capital and Surplus and more than six
times greater than your basic discount line.. we will continue to
carry for you your large line of rediscounts until business conditions
in your locality bring about a proper liquidation without .forcing
your customers to sell their cotton to liquidate.
Yours very truly,
(signed) M. B.
~ellborn
Governpr.
Mr..
, Cashier,
The First National :Sank,
- - - - - - - • AlabaJDa.
.~
~·
lt
c
0 p
y
X-3154-a
THE FIRST NATIONAL TIANK
-------------' Ala.
June 24, 1921.
Mr. M. B· wellborn, Governor,
Federal Reserve :Rank,
Atlanta, Ga.
Dear Sir:
on june 15th, we notified all customers who owed us
notes secured by warehouse receipts for cotton, that we would
expect them to sell cotton and pay their notes July lst. Since
that time cotton has declined 1 and they are teaming in to see
us begging more time.
vre are at a loss to know what to say to them until we
learn how you feel about what we ORe you.
We realize and appreciate the fact that you have been
exceedingly nice and goOd to us, and we do not feel warranted in
giving our customers, who are holding cotton, further extensions
unless it is perfectly satisfactory with you to give us extensions.
They all think, as they have been thinking since last
Fall that cotton will go up and that it will not be fair and just
to force them to sell on t~is down matket.
we have enough paper secured by cotton to
we owe you on rediscounts.
-pay
you all
Please advise us your wishes in the matter and your
opinion about cotton. ·
yours very truly,
( sie;ned) - - - - Cashier.
'
'
·-·-··c'
.:.~) ~)
..
FEDERAL RESERVE BOARD
WASHINGTON
July 2, 192l•·
X-3155
Subject:
Foreign and International Banking Institutions;
Report of Condition a.s of Close of Business June 30, 1921.
Dear Sir:
tmder authority of the a.greemen t entered into by your
corporation with the Federal Reserve Board, you are hereby respectfully
requested to furnish the Board with a. report of condition, as of close
of business June 30, 1921, giving in detail all assets and liabilities
of your corporation and the data asked for in the accompanying memorandum.
Kindly arrange to file the report of your Bead Office as
soon as possible. Separate reports of branches and affiliated banks
should be sent as soon as they are received by you. It will be a.ppre~
cia ted if, after the reports have been received from all of your
branches and affiliated banks, you will have prepared a consolidated
statement for your corporation to be sent to the Boatd.
While the Board has ruled that no specific reserve has to
be carried by foreign br~es or affiliated institutions of American
banking corporations against deposits abroad, it, nevertheless, wishes
to be advised as to·~the average reserve carried by all such branches and
affiliated institutions or corporations which are operating under agree~
ment with the Federal Reserve Board. You are, therefore. requested to
have each of your branches, agencies, offices and subsidiar,y banks furniah you, for transmission to the Boardt a report of the average reserye
carrieg during the month of June, 1921, against deposit liabilities in
the form shown in the accompanying memorandum.
Kindly acknowledge receipt.
Very truly yours,
.t
Enclosure.
Go v e r n o r.
-1-
X-3156
rro~Yself
In my remarks today I she.ll confine
mainly to a discuscion
I shall endeavor to lay be-
of some of our domestic economic problems.
fore you a. picture of .. condi tions as they exist today and to describe
some of the causes and events which have brought about these conditions,
and before closing shall take occasion to discuss the inequa.li ties in
the readjustment which has taken place.
tole,
r~cently
By way of illustration, I a:;J..s
by a. gentlerr:an from Oklahoma, whorr I met in Kansas City,
that he had just had a shave and a haircut,
He said that a year ago
when he was in Ka.nse.s City a shave and haircut cost him the equivalent
of one bushel of corn
ar~d
that yestr>rday his sb.e'l8 ,,_nCJ. haircut co.:;t :.tim
the equivalent of tl:ree bus'1.2ls of cern.
I rr.ay havs occasion .?lso in
the course of TT'Y remarks to say soa:ething about :profiteers.
years past and up to a few months a;o we
profiteers and profiteering.
profJ. teering.
he~r~
Put•lic officials
The public has winced under it.
For some
a gr?at deal about
~enerally
have denounced
Sometir.ces the stetemer.t
is maie that the Federal Reserve System is oren to the charge of rr-of:. V
ing.
~-r-
Such statements are based U!:On thE e~m.:::-:ss r.'adc •·y the Federal
Reserve Banks in the year ending
1920 'Nith respect to their
~aid
1919
and. !!'ere p.;"ticulerly in tr1e year
in capital, but critics disre;r,ard. the fact
~,,,~~.c~
~'
···2-
;jf.,j
X- 3156
'
that there are other factors besides the capital of the Federal Reserve
Banks which contribute to their earning power.
The average paid in capital
of the twelve Federal Reserve Banks combined during the year 1920 was about
$94,000,000, pr 3~ of the capital and surplus of all banks which are members of the Federal Reserve System ; and their average surplus, accumulated
as provided by law and accrued profits total $143,000,000.
Figured against
paid in capital alone the net earnings of the Federal Reserve Banks for
tho ye~r l920, $149,000,000, were 158.41-, but the ratio to combined average
capital and surplus was but 62.9%.
That, however, is not all.
relies upon its deposits fori ts earning pow""r.
Every bank
If banks had to depend upon
their capital stock and surplus alone for their earnings, banking would not
lie very profitable and there would be very few banks.
use for joint stock companies,
loan out his own capital.
There would be no
for an individual could as well himself
The Federal Reserve Banks during the yr:ar held
,, reserve del)esi''£ of their member banks averaging daily $1,835,000,000.
~very
bank which is a member of the Federal Reserve System is required
by law to carry
its
~ntire
legal reserve with the Federal Reserve Bank
of its· District in the fonn of a collected balance, and must under the
law, maintain its full reserve at· all times or else be subject to penalties.
lf we consider the net earnings of the Federal Re"'erve Banks for the year
1920 as related to the t.otal of capital, surplus and reserve deposits, we
will find they amount to but 7 per cent.
p·.. ·.'/"·',t~
~
·- .., ..
-z
There is, however, still another very
import~t
'.j,j.
factor contribut-
ing to the earnings of the Federal Reserve Banks - the Federal Reserve
notes·, obligations of the Crovernmsnt, of tho TJni+.ed States, whir..h the
Federal Reserve Banks are permitted to have the use of under certain
conditions.
A Federal Reserve ]ank can deposit with the Federal Reserve
Agent of its District eligible paper which has been discounted for member
banks or otherwise
ac~uired
them into circulation.
and receive Federal Reserve notes and
put
The law provides that a gold reserve of not less
than 40 per cent must be maintained by ]'ed·eral Reserve Banks against their
notes in actual circulation.
This privilege, it will be seen, adds very
gr-atly·to the earning power of the Reserve Banks and has w3de it possible
for them to extend. to the member banks and through them to the :public the
very large credit 'a.Ccol"'T!!odations which were granted during the year 1920;the largest in the history of the System.
In this _connection, I may say that the Federal Reserve note has
proved itself to be an elastic form of currenGy, expanding and contracting
with the needs and requi.rements of the nation's business.
The daily average
of amount of Federal Reserve notes in circulation for all twelve Federal
Reserve Banks during the year 1920 was i3,146,000;000.
If the net
earnings
of ~149 ,oooi OCO are considered in relation only to the average amount of
circulation outstanding, i t will be seen that they were but 4.7'% of that
amount.
The Federal Reserve l3oard. has the power under the law to
an interest charge on that portion
·or
i~ose
the Federal Reserve note circulation
which is not cov6red, dollar for clolla.r, by gold, the rate to be charged
to be determined by the Federal Reserve Board.
It is not mandatory, but
f•_ .• ,...-•. I
,
t.
-._.
4.'.
,.
X-3156
optional with the Board whethsr or not i"., "hell
rr.e:t<.3
such a charge and
it has always been the Board's poHcy in order not to discourage the free
circulation of needed currency to refrain f;,·om i!J7POsing such a charge.
No
injustice is do11e to the government because in the final ana.lysis, tne net
earnings of the Reserve "Banks after the payment of the 6'% dividend req_uired
by law, go to the Government, for after the banks have acc1.rrnulated a surplus of
100~ of their subscribr:d capital they ·can retain ·only 10% of their net earn-
ings and must pay the other"goS'b to the Gove.mrnent a.s a franchise tax.
On
the first day of last January·, the Federal Reserve BankS paid more than
$6o,OOOJOCO into the Treasury of the United States as a franchise tax.
Had
the Federal Reserve "Board imposed an interest charge against th5 Federal
Reserve Banks on the uncovered portion of their note circulation, the net
earnings might verywell have been reduced to the extent of
50
or fD
mil-
lions, but even in such an event the Government would not have been benefited
because the amount wh·ich the banks would have had. to :pay under the inpos it ion
of such a charge wou!·i have been paid in to the Treasury month by month
instead of being paid in as a franchise tax at the end of the year-. The
Federal Reserve Banks have accumulated a.reserve for franchise tax for the
current year of nearly
$4o,ooo,ooo,
and the sum that they will pay to the
Government as a franch1s e tax at the end of the year will no doubt be larger
than the arr:ount. paid at the close of the year 1920,- not because of grsa.ter
earnings, for the earnings will be less - but because of s1r.aller
for account of surplus.
~ions
The items· I have enumerated as contributi..ng to the
earnings of the Federal Reserve Banks total $5,218,000,000, and if we con-
sider U49-,000,000 of net earnings in relation to that total, it will be
seen that they are but 2.9 per cent.
I ask you is
tnax ~g?
When
f"'-~''
Lr
-5-
. . . ,._
·. :~ . ~;~}
X-3156
the Federal Reserve .Act was framed care was takc'n that the stockholding
member banks should not profiteer, for the Act provides that their di vi-
dends are limited to fit no matter what the pro.fi ts of the Reserve Bank
may be.
The charge has been made, however, that the Government itself
is profiteering and the foregoing facts have been called to your attention
in order to refute that ah arge.
Before discussing present conditions, I wish to point out some high
lights in the financial history of this country as seen by the Federal
Reserve Board from the first of January, 1919 up to last Wednesday night,
May 18th.
Whon the United States entered the World War, our Government became
the principal employer of labor, the chief borrower of money, and the grsat-
est consumer of goods.
All of our activities were readjusted with a view
of furnishing the services, material, and the credits necessary for the winning of the war and our people willingly submitted to restrictions and regulations which would be plainly out of place in ordinary times of peace.
With
the signing of the Armistice on November 11, 1918, the war was ended from a
rrili tary standpoint but not in a !inane :\,al sense, because we had a.b out two
million men in France and an equal number in the training camps at home ..
f.he troops abroad had to be brought back demobilized and disbanded, and the
men permitted to return to their accustomed avocations.
The business and
industry of the country had to readjust itself ag.qin - this time to a peace
f'''~'.r
(,
·~
{_)
-6basis.
The Government had large stocks of supplies on hand which bad
to be disposed of. and also a large undetermined li3.bility which had to
be ascertained and arranged for.
So in the early months of 1919 the
Victory Loan was flo::t ted and even wi tb the proceeds of that loan in hand.
the Government still had outstanding a large
flo~ting
debt, represented
by Treasury Certif ic::ttes of Indebtedness, amounting to about $4~ 000., 01)0, -:•v0
which'amount., however, has been reduced from time to time and now stands
:~.t
a ·col siderably smaller figure.
During the year 1919 the impression prevailed that there was a
world-wide shortage of goods.
The peoplc3 of the Old \'/orld and in A.nerica
had deprived themselves during the War of most luxuries and of many of
the necessities of life_
They had subscribed heavily for b9nds and
were saving and paying for them.
Oar Government issued obligations
amounting to over twenty-five billions of dollars within a period of
eighteen months.
The normal investment power of this country was es-
timated to be about six billion; dollars a year and it had become
sary., therefore., to expand credit.
People ·v-.:ere encouraged to
nece~-
b~y
bonds.
to make notes at the banks in order to carry them" the member banks
discounting the notes with the Federal Reserve Banks, and this together
with the burden which abnormal values placed upon our credit structure,
caused great expansion of credit.
Wages advmced.
Prices ::tdvanced and \iith raw materials advanc.ing
1nd wages advancing, the cost of production was greatly increased.
But
there was such an urgent world-wide demand for goods that even in Europe war torn and debt ridden -a very active demand for American supplies of
all kind sprang up.
Our large exportations to Europe during the flrst
half of the year 1919 were financed very largely out of
th~
unused
X-3156
-7-
balance of the $10., 0~:01 000,000 fund which Congreso authorized our
Government to lend to those n21.tions which 'NC're :~.ssociated Yvith us in tile
There remained over $2,500.0001 000 titill uneApende1 and available
war.
when the Armistice was signed .. and our large exportations to Eurore
most of the year of 1919 were paid for largely
o~t
durir~g
of funds advanced by
our own Treasury.
About the middle of September .. 1919. various influences v•ere at
work. which all combined, gave a tremendous impetus to production and to
commerce and business generally.
This impetus at first was
ju~tified;
but
the situation was soon afiected by speculation, and dangerous tendencies
developed •
. In the Fall of 1919 there was manifest a great wave of speculation.
It was not confined to any particular section, but it swept over the
country everywhere and over all countries.
People who had commodities
of all kinds to sell were in no hurry to place them on the market.
saw week by week prices rise and rise
They
a~in1
and they saw that as they
and
took this ~sa guarantee of the stability of prices, prices rose/costs
of production advanced also.
Mercrants thought it advisable to lay in
large stocks of goods in anticipation of future
requirements~
and many
of them were in no hurry to dispose of their goods at a reasonable profit 1
because it seemed that the longer they held their stocks the more valuable
they would bocome.
But there were dangers in the situation and not a f ow
were alive to those dangers.
Many, however failed to sense them.
1
were signs all over the world that a reaction was coming.
After
There
frequ~nt
warni.ng.. to which little heed was given 1 the Federal Reserve System took
action.
The discount rates of the Federal Reserve Banks which had been
advanced first to
4i'f
and
4l-%
were during the latter part of January
~fl.·.'~.--~\0
~
advanced to 67;.
·-· (_)
X-)1:56
-8-
The final advance to ]i:· did not come until abot.lt the
1st of June, 1920.
These rates \;er<J le s;:;~ however, than current
rates, and the banks having the
7~
marl~et
rate have recently reduced it, some
to 67;, and others to 61f,·.
On the 19th of September, 1919, the earning assets of the
Federal Reserve Banks amounted to about $2,350,000, 000.
By J.:lnuary 23,
1920, during a period of four months, they had increased by nearly one
billion dOllars.
Wha.t would have been the result if those who ha.d
charge of the administration of the Federal Reserve Banks had sat
supinely by and permitted this rate of expansion to continue?
If no
restraining measures had been taken1 if no warning sigruls had been
given, it is probable that this rapid and reckless pace might have
continued for perhaps two or tnree months longer,
would have been inevitable.
be done
of
whe~ a
collapse
It was highly desirable t~at nothing shoulJ
a sensational m.ture but/~l1fet unavoidable reaction should be
controlled and made as &radual and orderly as possible.
The effect of
advanced discount rates of the Federal Reserve Banks was merely to
slow down the rate of expansion.
There was no curtailment of credit
on the part of the Federal Reserve B::mks, nor w~s there any contraction
of the currency. As a matter of fact the loans and invested assets of
the Federal Reserve Banks increased from the middle of January, 19~0
until the 5th of November 1920~ a steady and gradual increase all the
way along by about $400,000,0CO~ The volume of Federal Reserve notes
in circulation increased during the same periodi from Jan~ry 16 1 1920
to December 24, 1920, from $2,80o,ooo,ooo to $3~4oo~ooo,oco, so that
during the most acute period of readjustment, when the sharpest react ions
were taking place, there was going on all the time a steady and gr:a.d,al
expansion both in Federal Reserve note issues and loans- $400,000,000
in loans and $600,000,000 in currency. A graat many people have been
deceived into thinking that the drastic reactions ;·1nich took place la.st
summer and fall resulted directly from some decree of some arbritrlry
power.
I',,~~(~
lo
-9-
I want
~--.
'1....!'
ou to kno·N tl:at the reaction which took place was
not decreed by any Govern;r,ental Board or by a:ny group of banks.
It
was decreed by the neor:le themselves, by the greatest of all forces popular sentiment.
people began to reduce the volume of their pur-
chases, becaree ·more economical and discriminating, and there resulted
a condition which is sometimes called t:re
11
buvers strike 11 •
prices began to decline about the middle of May 1920.
wtolesale
The wr.olesale
price index number on January 1, 1919 was 203 as com"T?ared wi trc the
wholesale price index number of 100 for 1913.
By the middle of May.
1920, the wholesale price index number reached 272 and stands new at
about
150.
It is interesting in this connection to note. again that
during 1920 when wholesale prices were falling tr.ere was practically
a steady increase in the volume of Federal reserve notes in circulation,
and in the loans and invested assets of the Federal Reserve
~ants.
The first manifestation of the changing condition was the break
in the silk market in Ma.rc:r 1920.
This precipitated a financial
crisis in Japan, involving the suspension of many batiks in that empire.
Next we had the break in the wool market about tre middle of May, 1920,
caused i?rimar:ily by an excessive supply of raw wool.
The War De<;lart-
ment tad large amounts of wool on hand, accumulated for war purposes
for which it had no need.
It undertock to sell at public auction in
the great wool market of Boston.
The sales were not satisfactory.
The British Government brought in wool from Australia and other
dependencies and attempted to sell it in the same way.
tions of wool were coming in from theCArgentine.
the western wool clip was ready for market.
Regular iroporta-
AbOUt the sarr.e tirLe
-10-
X-3156
/
Meanwhile it was evident that public O'!Jinicn all over the
world had undergone a change.
\
·.
For a wti.:.e back., :peOiJle did not see:m
to care 't)articula;rly what prices they pai,l. Tre r;::;.in ia.et:..
WE.S
to get
deliveries, and ·you will remerr:ber we had what is l:novvn as a sellers•
It was experienced in all business.
market.
Purchasers !:ad an id.ea
that ttere was a real shortage of almost everything and in some cases
there were actual
~d sho~tage
we
shcr~ages.
But after all this question of surplus
is merely a relative one.
may learn what the supply of a comr.~..odi t.J· is; t!:.at can be ascer-
tained or estimated with approxirr.ate accuracy, but no ma.h can state in
advance just what the demand for consll:nption is going to be,. oecause
that is a matter which depends largely upon sentiment.
It is almost
impossible to say what things and how n,uch ::oeo'l?le are going to require
or what they need, for while
actual human needs are very siiir?le. there
are a great ma:ny things people rave become accustomed to which they
regard as absolutely necessary.
Many a
man, I presun:e, has rLOre
clot't ing
than he really needs, and the depression in the textile trade was due
to the fact that :people realized tr..at they could do without new clothes
and that in large n:easure brou.&}lt about the demoralization of tl:e wool
market.
The retailers found that the;-/ had 1 i ttle or no demand for
woolen goods, and the tailors were not doing the usual business.
Tr"ey
did not order goods from the mills or they cancelled orders already·
placed.
The mills found, in the new circumstances. t·tat trev ':lad ax.t.9le
su:pplies of raw wool and
t:~.e
wool rr.ercr.ants called in their buyeTs from
the '.'Test and the price of wool droDT.Jed from about ?2 cents a pound do•vn
to 15 or 20 cents.
-11-
X-3156
Two or three months later the same experience >vas undergone in
the cotton market.
Of all Amarican products, cotton is probably the one
most dependent upon foreign rns.rkets and is most quickly affected by
conditions abroad.
People who ••ere engaged in the sugar trade iuagined.
that there was a great shortage in sugar.
Sky-rocketed up to
You will remember ho>; sue::1.r
25 or 26 cents a pound. There
seemed to be a shortage
of sugar, but there was much held off the market in order to be sold out
gradually at high prices, and then a situation developed) which seems
perfectly natural now v'Jhen we look backv;ard.
In view of the dep recia-
tion of foreign exchange, all other m.ticns vihich produced sugar,
attracted by the high price at which sugar could be sold in cur market,·
shipped sugar here and a great n:any nations which were not producers
of sugar but merely consumers 1 shipped sugar to us in order to get
dollar exchange - - in other words 1 they were perfectly ·willing to deprive themselves of sug3.r in order to get things they needed or desired
Consequently along in September there was a collapse in the sular
more.
market.
During all this time the
le~l
Feder~l
Reserve Blnks maintained their
reserves but they did it by means of inter-bank rediscounting.
There were 8 federal Reserve Barijcs at one time which were borro•;ing
$267 1 000.,000
from four Federal Reserve BJ.nks.
We had x.o financb.l p.::tnic,
the reserves of the Federal Reserve Banks were maintained in accordance
with the law 1 and there never was a time i.hen the Federal Ree.erve note
waz not redeem:lble in gold as required by law.
However1 since the first of January of thic year there has been
::~.
gradual change for the better in the position of the Federal
System.
Re~orve
The loans and earning assets of the 12 Federal Reserve Banks
-12X-3156
last l.ednesday night were
$2~314 1
point on October 15, 1920 of
$1~
000., 000~ a decline from the hibh
108 1 OCO, 000 1 Federal Reserve no~es
in circulation were $2,767,000, GOO, a decline;: since Christmas of
$637,000,000, total Cash f~Gerves have increased from~2 1 249 1 CCJ01 CCO
on December 30 to $2,549, ooo. OuO.
l'he Federal Reserve Banks are
strongj they hold today a gold reserve larger than that ever held
by any central banking institution in any country, an amount
eq~l
to more than one-fourth the entire known gold supply of the world.
The invested assets and loans of the Federal Reserve Banks
.have now declined to a point where they stood in September, 1::,19-
They
~re
about $300,000,000 less than their cash reservesi and
Federal Reserve notes outstanding have declined to an amount only
about $200~ 0001 000 greater than the total cash reserves.
Now-~ ··l'htm
any bank has more cash on hand than it has loans, it is in a pretty
strong position.
The Federal Reserve Banks 1 which are the ultimate fim.ncial
bulwark of all member ba rk:s and through them of the public are
nov1 in
a position better than ever before to extend to all legitimate businesb
the assistance needed and in adJition to having the ability 1 have the
disposition to do so.
There are no•·i no credit restrictions 1ilatev0r.
We must meet changed conditions.
VJc have a strong reserve.
lie have
had eJCperience and business is readjusting itself to the new levels.
There has been no
Federal Reserve System.
ch~ge
in principle in the policy of
th~
There nas n3ver been any change in the underlf•
ing principles of the Federal Reserve Syste,D and I hope there never will
be~
becausa the broad policies of the Federal Reserve Syste;n are based
-13upon the fundamental principles of
banking.
X-3156
~ound
finance
and
legitim~te
iTnile there has b_een no ch:1.uge in the principles of the
Federal Reserve System, varying conditions from time to time, 'however,
necessarily bring about changes in me3.sures and methods of applying
policies.
One thing that is holding back a revival of busir.es6 is the
disproportion and lack of uniformity in the readjustment process Y.hi.ch
is taking place.
for
instance~
There are some things, certain basic raw materials
prices for •• hich are very lo·,,-, belo•v the pre-war levels
and below cost of production, but there are other element::; ·.vhich
figure in production and distribution which are still high 1 which have
not been readjusted, so that somewhere in the process of distribution
between the primary producer and the ultimate consumer) there is a
hold-back.
The ultimate consumer is no·c getting prices in pror-orticr.
to what the primary producer is paid. One problem of the business
and industri~l world today is to iron out all these inconsistencies
and let the proper relationship betvveen one class of goods and anotner
class of goods and between goods-~nd services be restored.
It seems to me that this is one of the moct important of our
present domestic economic problems.
I take it that one problem of any
down
manufacturer or producer is to get his costs/in order
th~t
he .nay be
able to offer his products at fi~ures attractive to buyers, for the
sellers' market has now been replaced by the buyers' market.
The
farmer is in nard lines, and the farmer, as we knoi~, is a mcst important
element.
'
...
He constitutes a large perc10ntag_e of our population.
He ~s
the principal producer of the necessities Gf life, upon which the
industrial world depends for susteranca, and he is also the principal
..
.
r
eonsvmer of manufactured goods of every kind.
B04
Whenever any circum-
•tanees arise which impair tbe purchasing power of the farmer, the efis
feet/felt in eammereial and industrial centers everywhere.
·"
The reduction of over a billion dollars during the last four or
.
(
five months in loans and investments of the Federal Reserve
ed from liquidation
Ba~
has result-
tn the larger cities, in the financial centers and in the
manufacturing centers.
In no
a~recia.ble
in the agricultural dis'tdets.
degree has liq.uida.tion taken plaee
The Federal Reserve .Act :provides that all
paper discounted 'ri. th the Federal Reserve !anks must have a ma.turi ty af not
longer than 90 days, except agricultural paper or paper based on livestock.
which may have a reaturity as long as six months. 'l'he J'ederal Reserve :Banks
were carr,ving the first of
Mar of
8lld livestock paper, of maturities
<.
this year
$230,ooo.ooo
fr~m ~ree
of agricultural
to six 'YOnths.
On the first
of May~· '1920, they were careying *10~,ooo,oco of such paper and on the first ·
of May. 1919 they were carrying cnly
$66~oco,OOOw
Tbe Federal Reserve Banks have done a great deal to
sustain our basic
imustry Ul'On which so many other industries depend. !hrough rediScounts for
me~ber
banks they extended credits to farmers and livestock men during the
year 1920 aggregating three times the amount extended in
some people have that
i.a entirely erroneous.
the
19~9.
The idea. that
J'ederal Reserve Banks have been pressing the farmer
The Federal Reserve System is not operated with the
view of coercing, pressil'ls or oppressing anybody.
great safety valve of business.
It is designed to be the
It is the fil'lal reservoir of credit to be
resorted to in time of need and as such must be neither clogged nor del'leted.
The System has stood tbe tests of war and of the readjw;tment period
following lmd it finds itself now in a stronger position than it bas occu:pied
sinee the flotation of the Third Libert·y Loan.
.
"
,....
·
'f
..
-15-
X- 3156
'
The cash reserves of the twelve Federal Reserve :Banks last Wednesday
night, 'May lSth, were $2,5l~9 ,000,000 as against <1;2 ,080,.000,000 a year ago.
There is nothing as far as the banking position of the countr,r is concerned,
as reflected by the Federal Reserve Bank statements that cau.ses any ott.er
feeling than one of confidence.
I stand before you. today as a conservative ~d constructive optimist ..
The pessimist is with u.s and he has his uses, but the main fault I have to
find with the pessimist is that he operates at the wrong tirr.e.
The present
is no time for the pessimist,- .the time for him to have gotten in his work
was in the Fall of 1919.
I look for better conditions in the not distant futu.re~
an evsning
ei~her
up :process to go throu.gh with.
We have still
Things that are teo low rrus t
rise to the leVeil of those things that are higher, or those tl:ings
that are too high
~ust
come down to a lower level, or perhaps there will
be an average and we •till r: ach some l""vel half way betvle3n.
I think that we have passed through the most trying and dangerous
part of the readjustment period.
If
w~
can all get together and aid
the orderly processes of production and distribution and get the public out of the idea that things will go lower
~
lower indefinitely 1
than we will get same stability into the situation.
great deal of buying power left a.nd buying power
When one
i~ortant
industry resumes, others
The public has a
bege~e
buying power.
aut~tieally
revive.
In the changed conditions resulting from the wa.r we occupy a. new
~elationship
to the world.
We are no longer a debtor nation as we were in
1914 when we owed the rest of the world abov.t $4, 000., 000, 000..
world 1 s great creditor nation today.
The world owes us
We are the
$10,0001 000~000
on
account of advances made by our Government and owes us perhaps two billion
...
.
-16-
(it is impossible to ascertain th·· exact arr,ount) on private ?,ccount.
It is certain, however, that the lkite:i Stet·2s today is a grrat
creditor nation.
In order to maintei.n our rate of production, we must push
We produce more cotton, more foodstuffs, more of a grea.t
our foreign trade.
many things than we need for our own use.
with the uvorld.
We must reach out and do business
We must buy things from other nations which they can :produce
better and more cheaply then "ITe can, and exchange ccm1T'odities with them.
If
we dete!"!Tine to do business with end for ourselves alone, it seems to me ·in-
evi table that we must then reduce our production to meet merely Jlrr.erican noquireroents,
I know of no royal road back to business revival.
will test our :patience and
observe these sound
ener~.
~rinciples
but the process ·will be
wtich have stood. tb-:;
give and ta'k.o. live and let liv(}; giv() g,ood
W6 rec8iv~
and be content with moderate
L@t us
be~
morking
v~luG
t~sts
or
idt~as
to normal
exp-;;dited if ·Ne
of the agr::s - !.':'1:
s0n~~:G
fer -¥,hat
profits~
sane and reasonable - let us cast aside those
and got rich quick
ba.c~
spaculat.~'lJ
which w0re so prevalent eighteen months ago and
get down to hard work and solid business - th:m in dUEl
cours~
wo shall
return to more ordsrly and noi"I!JCtl conditions, and can d-3Volop not
3
fal#e and hectic prosperity such "'s was recontly exporiencod, but a
soundsr and more 0nduring era of good times than
W13-
havo evor had
08 tor;>.
'li"
X-3157
FEDERAL
RESERVE
BO.\RL'
S'l'A'I.'MN!' FOR THE "DRESS
. For Release in Morning pap~rs.r
Friday, July g) 1921~
I.
The following is a review ot the 13.X.}erience
and developmen~ of the Federal Reserve System
during the year ending June 30J 1921 . . which is
to appear in the forthcoming (July) Federal
Reserve Bulletin :1s part of the usual "mid·yaar
Statistical Review".
MID-YEAR STATISTIC4¥ ISSUE. For tha third successive saason the
Federal Reserve Board presents in the currant {July) isst.le of th~
Bulletin a mid·year statistic.al lll.lmber.
Th~ purpose. this year, a.s in
previous statistical numbers, is to continue the review of cu.rrent
financial history, bringing it down tc, June 30, 1921.
As notod on
former occasions; the annual tJport of th-:3 Board suppli~s a g~ner3.l
description and outline of existing ~ondi tione by calandar years. lt
has been thought best; however, to furnish a eriticu analysis from
the statistical standpoint, covering the intermediate p&riods ending
June
30.
The analyais published a ye!l.r ago m JW.y, ).920, revie••ed
the development of conditions up to
w~t
has since turned out to b&
ptac'tically the "peale" of the post-war e.<pansion in ba.nk.ing. currency 1
financs, and business.
Developments during the past ye:lr carry U1e
so-called "deflationt' movement to what seems to be pra.ctically :Us
limit, at least for the time, and exhibit in their full
effe~t
the
factors whose consequences were seen only in an imcomplete form at the
time of the Board's last annU3.l report..
The figures
here'<~ith
submitted
show the character of the conditions which ha·re developed during, the
past. year and illustrate the situation as affected by the process of
X-3157
-2restoring banking and financial soundness.
Five main periods in the history of the Federal Reserve System
were recognized at the outset of the last
November,~ 19llJ-December1 1916: Janllary 1
annu~l
statistic~l
review;
1917-April, 1917; M~y, 1917-
November 11., 1918; November 12) 1918- June, 1919; and July, 1919-June 1
1920..
The better perspective in which past events can now be viewed
would apparently indica.te that the last period should be merged with
the f earth or preceding epoch, rra.Jcing the dates November 12,~ 1918 1
to 1v.lay, 19201 while the .fifth period in the history of the system now
appears as
1920, to the present date 1 or later as subsequent events
June,~
may determine,
The fourth period is thus an "expansion" or "infla.tion11
:eeriod, within which my be recognized, if desired., certain subperiods
marking changes in credit control, while the fifth period is a time of
readjustment.
Characteristics of this latest period have
been~
on
the banking side, red!lction of loans and bills held., retiren:ent of r.ote
Circulation~
~in
ingold1 and liquidation of investments; while on the
business side they have been lowering of production, growth of ur.employment,
falling off of foreign trade. and reaction of prices.
A TURNING POINT IN TRADE AND INDUSTRY.
Although the fact
w~s
not
at the time realized in its full significance, prices, phyaical volume of
production trade and. business in general had reached their peak during
1
May and June, 1920.
As is usually the case, the l1igh point in banking
accommodation came somewhat later.
divided into three
subperiods~
middle of 1920 to early autumn.
the
The year 1920... 21 may, in fact, be
fir~t
extending from shortly before the
During these months there was hes.Ltation,
reluctance to recogniae the fact that a time of recession had a.rrived 1 and
-3-
X-3157
a strong effort to hold prices .. wages, a.nd values in general at the
level which had then been reached.
From early autumn until practica.lly
the opening of spring (1921) there was a steady recession of prices 1
values and wagesl and a period of corresponding readjustment throughout
almost all branches of industry and in almost all countries of the world.
In fact, the downward movement had set in earlier in some foreign coun·
tries than in the United States, many persons re§lrding Japan as having
been the first country to feel the effect of the new business factor$
which were later to make themselves felt elsewhere.
The spring m011ths
of 1921 would seem, in the light of inf oma tion now availa ble 1 to be a
period of approach to equilibrium in certain lines of business and of
preparation for recovery from the
depr~ssed
conditions that had developed.
The changes referred to have# in fact, been practically world wide.
If
anything, they have been less extreme or violent in the United States
than elsewhere 1 not only in
trade generally.
~nking
and credit 6 but in production and
The year 1920-21 has been a period of reorganization.
This reorganization, with its effects, has, like all great business changes,
been dir$ctly reflected in our banking position and in the corresponding
position of banking systems the world over.
While it would appear at the
present time that the period of readjustment is drawing to a close, this
does not necessarily mean that there will be no further movement or recession or that the readjustment process has completed itself.
On the
contn.ry, there are xuany' factors which seem to ll".ake it sure that still
further work in the direction of readjustment must be accomplished before
even
approximat~ ~tability
can be arrived at.
The facts now available,
hcwever. would indica:ta that the main elsments in business and industrial
rece~sion
have made their effects manifest, and that there have been in
810
-4the majority of lines fairly
X-3157
ext~nsive
realignmonts of relationships.
In all this process there has been nothing more m;oteworthy than th.::
effect of readjustment upon our banking institutions.
CHANGE IN RESOURCES..
Comparison betwe;en conditions e.dstir.g during
1920 with those which have been attained at the close of JuneJ 1~21 1
exhlbit the following results:
·Reserves, earning assets, and total resources of Federal Resorve
Banks .
.
(In thousand~ o! dollars)
June 25,
1920.
Oct. 15,
I
I
June 29,
I
1920. - L:_921.
Total reserves I 2,108,605 2,154,911 21 625,458
Total earning
assets....... ),183, 275 3, 421; 976 2~ o6o, 495
Total resourees 6,074,713 6,610,250 5,242,041 ,
Percen~ge change.
June
251
Oct. 15,
Oct. 15,
19201920.
June 29~
--------~ ~19~21~·----+2.2
+24.5
+7.5
-35·3
-13.7
+8.8
As stated a year ago, the capital of the FGderal Rosarve Banks
was figured. as $94,500,000 and total resources as $6, 075~ 000,.000, wheNas
at the present time the corresponding figurJs are $102,l84,000 and
$5,242,041,000.
The change in capita.l for the year has th\.\6 amounted
to S per cent, reckoning the condition at the close of June 1 1920, as a
~sis, whil~
per cent.
tho grad.ual
the aggregate of resources has fallen by
The advance in capital has, as in former years, b0en due to
1
growth of the actual capitalization of the
F.$deral Reserve System already
of new mombers into the system.
admitt~d,
memb~rs
of the
and in part to the movcmJnt
The n3t numbor of new m.tiona.l-bank
·•OIIl>ars admitted during th3 y;,ar endin&
appro~imatelil4
June~
192l, has b(.)en appro.daately
-5251) while their contribution to capital stock may
$813#050.
1'o this
may
b~
Iigur3d as
bo aad.::.d the sum of t1~11~: .. 900 5 abscriL.:l
;.n'>l
i:y
268. . newly admitted State bank and trust company membora, th0 r.:nn::linJ,~r
of the increase in capital of Federal Reserve Banks being due to the
a~tgmatic
enlargement of the stock ownership of former members
du~
to
additions to their capital stock and surplus.
The fact that the system
~s
steadily incr3ased in
numbe~s
and
in strength is in striking contrast with the decline in total resources
which, although moderate, shows, as already remarked}
the peak level.
This decline in rosources has
reduction of the amount of reserve bank
b~~n
adv~nces
th~
raaction from
dl.le to the gradual
and is bsst
refle~tod
in the change in the item of total earning assots, which was roportGd
at the clase of June, 1920, as $3,183 1 275,000, a figure whieh must bo
compared with a figure at the present time of approximately $2,CS0~495 . . ~~0.
The decline of approxi.zrately $1,120,000,000, thus reflected as th0
outgrowth of the year's operations in connection with earning assets
shoUld be compared with the increase in the same item during the year
~nded
June 30, 1920, amounting to $8291 000,000.
The volume of earning
asset$ is therefore now very little less than it was at the close ·of
June,
1919. It is an interesting fact that the rate of reduction during
the second half of the two-year period in question has been fi>O neady.
of the p3riod
identical with the rata of expansion during the first hal~. The pos~tion
of the system pas 'thus been brought well back toward the point at which
it stood ·when the war restrictions upon financial and productive activity
be~n
to be eliminated, not long after the armistice.
in this connection i5 the fact 1 to be
mor~
fully referred to
point, that the redlolction in the amol.lnt of bills held
Of special
bY,·tbe
~t
a
int~rJst
l~ter
Federal
-6Reserve System has been so noteworthy.
X-3157
Bill holdings at tha
clos~
oi
June} 1920~ were not far from $3,000,000,000, while the situation ~t.
the close of June, 1921, showed slightly more than $1 1 800,000,0CO in
A falling"off in round numbers of over one-thir~, or
held
$1,200,000,000, in bills/represents the results of operations during
bills on hand.
the past year.
Included in this reduction 1 it should be noted, has
been a decline in the bills secured by Government obligations, wh1ch
have fallen from approximately $1 1 3001 000,000 at the close of Jun3,
1920, to approximately $648,000,000 a year later:
Other bills dis-
counted amount, at the present moment, to a little less than they
did a year ago, the net conclusion being, therefore, trat to date
tbe process of credit accammodation, so far as the Federal Reserve
Ba.nks are . concerned, has al t.ered but little the amount of commercial
paper discounted, but has taken effect primarily in the restriction
of the loans collateralled by
Gove~ent
war
obli~tions.
X-3157
-7NOTES JND DEPOSITS.
C' .;, "'
t_;_x_r}
Of special interest to the general student
of banking in connection with the operations of the Federal Reserve
System during the past year are the changes in the volume of outstanding Federal Reserve notes as contrasted with changes in the deposit
liabilities of the Federal Reserve Janks.
Comparing the figures given
a year ago with those now corr.piled, it will be found that whereas at the
end of June
1920,
a~proximately
proximately
of over
the volume of Federal Reserve notes in circulation, wa3
$3,117,0CO,OCO, the total now in actual circulation is ap-
t2,634,coo,ooo-
~48o,ooo,oco.
a falling off in round numbers, therefore,
As contrasted with this reduction in the airculat-
ing currency of the system is to be noted a fall in total deposits from
auproximately
1921.
$1,916,oco,ooo
a year ago to
$1,686,oco,ooo
on June
29,
Since there has been but l1 ttle change in the volume of Government
deposits during the year, the reduction which is thus shown to have occurred has taken place priiTArily in member bank reserve deposits and may
be regarded
as
~ounting
to about
~l9l,OOO,OCO.
The remainder of the
decrease is partly due to the withdrawal of foreign government deposits.
This should be contrasted with a growth
in deposits during the precedine
year amounting to about $14,000,000 and a growth in notes of
~617,000,000.
approxim~tely
Attention was called a year ago to the faet that the i~
mense increase in the note circulation during the year 1919-1920 was un·
doubtedly due in some
mea~ure
to the fact that a larger amount of circu-
lating currency was required because of the gr~at advance in prices and
the
~onsequent
necessity of carrying a larger supply of money in pocket
"lith which to meet ordinary requirements.
~ount
of notes in circulation may be
:parallel but opposite in direct.ion.
The recession in the total
~scribed
to a movement exactly
/Is :prices have fallen the factors
alre8.dy referred to have lost in intensity. while other factors '~r-.ichhad
X... 3157
tended to enlarge the circulation of Federal Reserve notes • such as the
them in large
a~ounts
procesa of substituting them for gold and silver and exporttns/to South
~merican and
West Indian countries - have ceased to operate.
same cases the reverse flow has doubtless $et in.
Indeed, in
The significance, there-
fore of the situation is found in the fact that the reduction in 0\lhta.nd..
ing circulation which has occurred represents a correspond.ing change
the aetuel-1 use of notes by the public.
in
The movement of the items "notes"
and "deposits" may be followed to good advantage in the brief table wh'ich
is herewith submitted.
(In thousands of dollars.)
Federal
Reserve
notes in
Dates.
actual
circulation
Total
deposit& of
Federal
Reserve
:Banks.
Net
demand
de:posit$ of
reporting
membet
banks,:__
June 25, 1920 ••
Oct. 22, l920 * •
June 29, 1921 ••
.
.
.,
..
3 116,718
3 356,199
1,91f;, os6
1,816,289
11,347,0111
ll.240,5SS
1, 685,788
9,9S9, 313
J
f
2, ~34.4i5
.Althcugh tendencies in trade and prica·.;
:::'~
foreign countries have been in many respects parallel to those which haw
been observed in the United States, the situation
in respect to banking and credit.
t~s
been widely different
Foreign banking institutions have nQt
•.
shown the reduction either in notes or in deposits which has been Observed.
in the United
States, a.nd such changes as have occurred have apparently
been sporadic and in- a. far less degree governed by
def~ite
influences.
This is probably due to the fact that in many EuroJ>em•-eourttrles 1. t ha.s
been necessary for the Governments to rely far more steadily and rnore largely
on banki~ aid then haa been true in the United StateG, so that the cond.it.i~
r . . ·'" ,.__.. .
{~. ~ ":'-_:, -}
-9prevailing in the c.entral banks of those c ountrie~ have not, as in this
country, directly reflected the condition and needs of
b~siness.
The
two items Which stand out in foreign bank reports as of special interest
to observers in trds country are those of notes and deposits.
The considerable reduction in the circulation of bank notes amounting
to more than 15 per cent in the case of Federal Reserve notes between
June ?5, 1920, and June 29, 1921 , already observed has not been paralleled
abroad.
In England, currency notes to the extent of some t 15,0CO,OCO
have been withdrawn in the course of the year. but bank notes have been
increased
by~
5,000,000, with a resulting net
2 per cent in the total
pa~r
circulation.
decreas~
of ; 10,000,000, or
In France and ttaly there has
been an increase in the circulation during the year, amounting to g per cent
in the first-named and 11 per cent in the last-named country.
In
~rmany
the total of Reiohs-und-Darlehnska.ssensche'lne in circulation amounted to
~3,600,000,000 marks at the end of ~~ay, 1920, and 80,900,0CO,OOO marks on
~ay2S,
1921, or an increase of 27 per
c~t
for the year.
Note circulation- England, France, Italy, Germany.
---------------------·---------·-·,-~
End of-
l1J!!land
:Currency
:and Bank
~of Eng-
. land
Ita}.y
Fra~ ~---..e...::.=.=:.t.---=----.:::-"'Ge· rrr&tiL--:
Notes of
Bank of
France
three
:··.
: notes
:OOO,OCO 1.: 000,000
francs
:
May, 1920 • . · • • • · ·
•·
Ma:y, 1921 . . • · • • • • • · ·
452
442
37,915
'Reiehs··
Notes of
und-Dar~
banks of
issue.
lehnskiis~
senscheine ..
-ooo,oco-~·
oco,coo
:
lire
16,861
marks
:
63 ,5Bl~
:_} s ,213_.;_:-----.;lS=-',_,_765~<*""-l)~:_ _o.so=-'.,__3.;c.;.82- - · -
X- 3157
-10-
The note circulation is a more significant factor in the study of
credit conditions on the Continent than in England or the United States.
During the past year deposits of member banks reporting to the Federal
Reserve
Boa~ have decreased almost 12 per
the Federal Reserve Banks 35 per cent.
cent and earning assets of
In England no reduction is
shown betwe~n the end of May, 1920, and W~, 1921, in the deposits at the
Pank of England, while governmem. and other securities held have been
inereased by almost
De~osits
~
ll,OOO,OCO-
- England, France, Italy, Germany.
Eng-
land.l
Tle-nosi ts
""""'~
t:~'f
wi.tb
-
GerFrancel
'De~osi ts
with
1Ja,..,1< oi"
o""
l:l::~nl.,..
l
1"n <Z1 ~nd •
I
Italy
ne'T'Osi ts
wit"h 3
r.a,..,ks of
,,.,.,.,. ,
Uav~
(1)
(*)
-
,
-
oco,ooo
ooo,oco
lire.
3,751
2,2!.~
I? J 4~1
'Reict> sn:mk.
000,000
rrarks.
-
... . --. .
. . .
...
1C!21 ... •
1021"'
is~ue-
francs ..
:t
~"00,0('"
.-
"'"'-·----~·---
M'rl!nce.
1
many.
De-nosi ts
wi t'l-t the
118
»
~.041
12~
·..
17,024
1!:_, 09~--'"-
bclul'tes Govcrnrrent and privc>.te de-c-osits
End of ~!arch, 1921
DISCOTM OF wJ\R "Pf.Plffi,
P.s alna.dy observed, :'erha:cs tt.e
rros t int ""resting elerrant of change in the portfGlios o! reserve banKs
i·uring the ::92-st year has been the lessening of
v- e volu..,e
of vva.r ;.:Japer'
or. to u;:;e t:'le tect.nical ex:·pression, "bills discounted secured "ty Uni t:c',
Stetes Governrrent
obliga.ticns~"
These, as alr·cady seen, have fallsn
off to a·t-proxima.tely iF4S,OC;C,OOO.
I
c:,ratifyin.; fe~ture of the :cost-'':s.r
development of the nation's invest-rrent ?end fi.nanc ial rr.ecLanisD"' has b2sn the
ability
t•~at
he.s been shown on -the yart of the put lie to absorb the out-
sta.r"ding obli~:otions
of the nation,
t
oth in s1-,ort and len=- term ferro.
r
X-3157
-11 ...
The existence of substantial investm0nt capacity has laid the foundation"for the absorption of Government bonds and certificates~ while the
policy
of the Treasury Dopartmont in meeting market rates of intorest
has &nabled both member and reserva bants, which had become large holders
of "war
paper"~
ial degree.
to reduce this element ot their portfolios in very mater-
The situation has been well
illustr~ted by
the statement
made by the Secretary of the treasury on Juno g in which he
sh~tad
trat
the amo'Ullt of Treasury certificatee pledged vfith Federal Reserve Banks
was only $55,000,0COJ
while of a tota-l oi
over· $4,000,000,000 of Victory
notes only $1881 000., 000 were in the hands of member banks in leading
cities.
The wholesale transfer of the evidences of Government indebted-
ness from the banks to the people has b3en aided by the Federal Reserve
System, which no longer encourages th& carrying of such paper by
ontial treatment of loans collater.aled by public
obii~tions.
prefer~
During the
year such preference_, originally granted in aid of the placement of Liberty bonds_, has practically disappeared.
The
d.i~position
of investors to absorb and lldigest" Government
obligations. taken in conjunction with the policy of the Federal Reserve
Syst•m already referred to, has tended strongly to curtail the large holdings of paper collateraled by Government obligations which had been built
up
during the war and post-war expansion period in the Federal Reserve Banks.
!'be progress during the year 1920-21 may be contrasted with cb;inges during
the year 1919-20.
At the close of June, 1919,
tn~
total ??lume of paper
secured by Government war obligations held by Federal Reserve Banks was about
$1,.573.~
0001 000_, and operations during the following year had reduced the
amcunt 'by only $300, 000, 000..
mor-e than twice as rapid.
Progress during the past year has thus 'been
The situation is reflected in
·
141
'----'-;
the following table:
X- 3157
-12-
Holdings of :Bills Discounted by Fede!'al neserve Eanks.
(In thousands of dollars}
June 25,
1920.
Secured by Governl'!"ent war o~ligations •...........• 1,277,950
All other
1,153,814
••••
l From Sept ..
#
•••
3.
Sept. 3.
1920.
Dec.
1,332,892
1,412,035
1,160, 685
647 '761 .2 51.4
1, 616,116 1,123. 80lt
3G·5
1920.
June 29, 1 'Pe rctm tA.ge dec rea.se
1921.
l
·---------
J ..
2 From Dec. 3
RESERVE CH.PN<gi$. As during the year 1913-20, so during the :past
year, the primar.y changes in the reserve situation of the United States
have been due to alterations in gold holdings.
The s trildng feature of
the year has been the resumption of gold movement into this country,
·~ith
the result that the gold reserves of Federal Reserve Banks have
been increased to the extent of about
~493,000,000.
The following brief
table shows the movement of reserves as between the close of June, 1921,
and the
corresponding date a year eatlier.
(CCC omitted)
June 2.9,
121.
Total gold reserves...........
$2, 1,931
-L~e~a~l~t~e~n;d~e~r~n~o~t~e~s~~~~~~~~~~~~----1~6~3~--
Per eent of
increase.
25-0
17-5
-..-
Changes in the gold position of the United States were of such
significant importance as to call for special review in the June. 1921,
issue of the Bulletin, where they were fully set forth, and they n;ed
receive only brief trea.tn:ent at this point.
specie history of the United States
As was then explained, the
since the end of November. 1916,
approximately the date of the armistice, may be divided into two periods,
the first extending from that date through August, 1920; the seeond frcm
the close of August, 1920, to approximately the present
titt~.
During the
.
.
X- 31'57
-13first of these periods gold was moving
~argely
out of the United
States, although from April to .August, 1920, the mo•1ement was sorH!...
what irregular, while during the second of the periods the movement
has been reversed.
Roughly speaking, therefore, the year now under
consideration coincides with the dates within which the reversal of
this gold movettsnt has occurred.
The total net importations of
gold from the close of June, 1920, to June 10, 1921, may be stated
as
$483,6o7,Z13.
Imports and
Ex~orts
of Gold.
E'.xports
Imports
-Excess of~exports (-} o:r
importsj_-1-).
-~315,880,40b
July 1. 1919-June 30, 1920
July 1 1 20-June 10 1 21
Corrected to June 10, 1921.
+ 483 6cih?JJ._
1
Speaking of the entire period since the arrristice, the survey in
the June issue of the Bulletin stated the situation as follows:
For the ~eriod as a whole, the United States imported ~744,oco,ooo
of gold and exported $700,000,0CO, so ·that the net adiition to the
country's stock of gold is
$44,coo,oco.
It should be noted that this is
a COTI'l.Paratively small amount; that the gains in gold since the recent
gold movement set in have not much more than offset the losses of gold
be.tween the removal of the gold embargo in June, 193.9, and September,
1920.
It should further be noted that imports of gold: have come from
one group of countries, while exports have gone to another group.
the armistice tc· August, 1920,
~375,0CO,OOO
From
of gold (net) left t,he United.
States, going largely to Japan, ftrgentina., China, British India, Hongkon.;,
\~exieo.
Spain, and
(net) was
i~crted,
From September, 1920, to the present time, $.419 ,OOO,OCO
largely from England, France. Sweden, and Canada.
. ..
r..,,-..
t:
~'--..
:"";~)
X-3157
These figures require some modHication 1 due to the !act that two
!llonths have elapsed since the fin:tl data to which they refer..
Making
this allowance, it n;,ay J:,e said that the net 21.ddi tion to the countrY 1 s
of gold from the armistice to June
10~
stoc~
1921, is approximS~.tely $120, 000,. C'CO.
As will be seen from comparison wlth figurzs alreaC.y given, the bulk c.f the
importation of gold during the past year has been added to the re.server;:; oi
the Federal Re$erve Banks, and since the:.:e has been but little demand
f.:l~~
geld for actual circ'!.UatiOn1 it has re.rrajned there.
The great shipments of gold to the United States have been the result
of the slackening and disorganization of trade anJ
ancial relationships.
-~he
disturbance of fin-
In consequence of these influences it has been neccs-
sary to find some means of making settlement for the most necessary ship-
ments of commodities, and gold shipments have proved to be the most available method of liquidating a part at least of current obligations.
tba inward gold movement will go can not now be
predicted~
How far
but it should be
noted t.hat such iinportations, even when entirely de:.,osi ted in the FederJ..l
Reserve Banks} are by no means the sole maasure of their increasing liquidl t}'.
The improvement in the reserve ratio resulting !rom such deposits ot
shows a technical increase in banking strength} since it results in
largement
~old
th~
en-·
of the supply of specie available for maeting, any demands that
my be brought ·.to bear upon the reserve b::1nks..
In the following table are
shown the average monthly reserve r,=ttios during tha last six months of 1920
and the first six months cf 19Zl,. with figures computed for
parison an<i !fesigned to show. the
move~ent
of com·-
of the ratio as it viould have been
had no increase in reserves taken place since June 25, 1920:
~urposas
"
.
X-3157
-15-
Average Monthly Reserve Patio.
Actual
1920
O~tober
43.7
43.7
43 .. 3
43 .. 1
November
43·7
J~y
August
September
43 .. 5
43.3
42.7
42t0
42.2
. 1921
Ja.rnary
February
March
April
44.7
42.5
47.5
December
43.8
44.6
44,.0
49.6
50.2
53.6
45.6
56.4
'·~6.:'8
59-1
May
June
(*)
HYPothetical { *)
47 .. 9
With reserves remaining uneha..JlB,ed. at the June
total of $2#1 08., 605, 000.
25, 1920
.....
-::.....--,(~
Li:.;..r-~
FEDERAL RESERVE BOARD
WASHINGTON
X-3158
July 7, 1921.
Dea.r Sir:
In accordance with the arrangement which has been entered
into with the Treasury Department with respect to the redemption of incomplete Federal Reserve notes and Federal Reserve Bank notes up to an
aggregate amount ot $20tOOO, as set forth in Board's letter of June 10,
1921 (X-3140), I beg to advise that the Treasurer ot the United States
has delivered to the Federal Reserve Board notes ot this kind amounting to $5,337.50, and that the Federal Reserve Board has reimbursed
the Treasurer in like amount.
The said notes are more particularly
described as follows:-
FEDERAL RESERVE NOTES
F. R. Bank
Boston
Denom:lnation
$5
Number of Notes
1
Total Amount
$ 5.00
20
New York
Philadelphia
Cleveland
38
760.00 $765.00
5
10
20
10
28
50.00
280.00
780 .. 00 1'.110.00
5
10
20
11
l
5
"10
20
39
12
3
2
55.00
10.00
240.00
305.00
15.00
Atlanta
295.00
110.00
240.00
350.00
35.00
420.00
60.00
515.00
20
Richmond
20.00
260.00
3
32
20.00
30.00
640.00
690.00
5
1
5.00
5.00
10
20
13
11
12
St. Louis.
Dallas
7
42
20
Chicago
5
10
3
5
10
4
5
10
20
1-1/2
4
5
7.50
40 .. 00
60.00
107.50
X-Zl58
;,~-:·.~'\0
Lir:;...t.)
- 2-
F. R.
B~
San Froncisco
Denomination
$ 5
10
20
Total
5
10
20
Number of Notes
Total Amount
2
1
. $ 10.00
39
780 .0~
40-l/2
202.50
920 .oo
10.00
92
191
$800.00
~.820.00
4,942.50
FEDERAL BESERVE BANK NOTES
Richmond
5
77
385.00
385.00
St. Louis
5
2
10.00
10.00
Total
5
79
395.00
395.00
Total Federal Reserve· notes and Federal Reserve Bonk notes, $5,337.50
I am directed by the Board to request proportionate reimbursement from all Federal Reserve Banks based upon paid-in capital and surplus as of July 1, 1921. Under this arrangement the amount chargeable
to your bank is $
which please credit the general account,
Treasurer U. s., on your books in the usual manner for account of "Salaries
and Expenses Federal Reserve Board, Special Fund", redemption of inco~
plete notes, and send duplicate C/D to the undersigned.
Very truly yours,
Fiscal Agent.
{To Governors of all Federal Reserve Banks)
c,: .~'"""~\ /~
L ... r<;v~~~i
FEDERAL RESERVE BOARD
WASHINGTON
X-3159
July 7J 1921.._
SUBJECT:
Cost of New Federal Reserve Telegraphic Code.
Dear Sir:
The Chairman of the Leased Wire Committee has
advised the Board that the co.st of preparing the new
Federal Reserve telegrap~ic code authorized by the conference of Federal Reserve Bank governors held in November,
1919, amounts to $41 912.17 1 and tl'at tha.t sum has been
advanced by the Federal Reserve Bank of New York in settlement of costs.
Approval having been given by the Board to the
recommendation made by the Committee trAt the cost of preparing the code be borne equally by the Federal Reserve
Banks1 you are requested to reimburse the Federal Reser~
Bank of New York in the amount of ycur pro-rata share,
which is
Very truly yours,
Go v e r n o r.
To the Governors of all Federal Reserve Banks. except New York.
r ..
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(__. > ~-1
~~;
FEDERAL RESERVE BOARD
WASHINGTON
.
-·
Jul;r 8, 1921.
SUBJECT:
Assessment on Account of Redemotion of
Incomplete Federal Reserve Notes and
Federal Reserve Parik notes.
Deer Sir:
In accordance with the procedure outlined in
the Board's letter of June 10, 1921, (X-314o), to all
Federal Reserve Banks, an assessment has been levied
upon tr.e Federal Reserve Bariks in tte usual way
(:Pro-rated on the basis of capital and surplus) to
reimburse the Board for pa.,j'l'Ilen t of $5,33 7. 50 made to the
Treasurer of the United States upon delivery to the
Board of unsealed and unnumbered Federal Reserve notes
and Federal Reserve Pank notes.
In agreeing to redeem in an amount no-t to
exceed in the eggTegate $20,000 incomplete Federal Reserve
notes and Federal Reserve Bank notes wn~ch find their way
into the _Treasurer's cash, the Federal Reser11e Banks do
so with the understanding that they admit of no liability
in connection with the circulation of incomplete notes
and that they expect to be reimbursed ultimately by the
Government ..
In view of the small amount involved, however,
and uncertainty as to the time wren the banks may expect
reimbursement, the Board believes that the Federal Reserve
Banks sr.ould charge the amount of this particular assessment. and any .subse~ent assessments made for this purpose.
to Profit an(l Lose .Account _in accordance with the Board's
General Instructions.(June 20, 1921) covering the Preparation of Reports of Earnings and Expenses of Fedetal Reserve
BaJlks.
'
Very trul. Y' youra,
G o v e r n o r.
To the Governors
o~
all Federal Reserve Banks.
...
'.
FEDERAL RESERVE BOARD
WASHINGTON
i-3161
July 8, 1921.
SUBJECT: Pension Plan.
Dear Sir:
The Federal Reserve Board is advised that Mr. E. R.
Kenzel, of the.Federal Reserve Sank of New York 1 who is
Chairman of the Committee on Pensions, is addressing a letter
to you a skin~ for the cooperation of. your board of directors
in the plans which have been formulated by the Committee and
calling attention also to the efforts which are being rrade to
have the necessary legislation passed by Congress.
For your further information, I enclose herewith
copy of a letter which was addressed by Vice Governor Platt,
under authority of the Board, on June 10, 1921, to Senator
Smoot 1 who, the Board understands, has consented to sponsor
\he bill in the Senate.
Very truly yours,
(Enclosure)
Governors of all F.R.Banks.
G o v e r n o r.
r;:'j~~-·
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0 p
(_;,,::..~
y
·i
X-3161a
10~ 1921.
June
Hon. Reed Smoot,
U. S.. Senator,
Washington, D. C.
· Dear Sana.tor Smoot:·; I take pleasure in forwarding herewith several
printed copies of the proposed bill to incorporate the Federal
Reserve Pension Fund in connection with the proposed plan for
pensioning Fede~l Reserve Bank employes. This bill has been
carefully revised since the last conference which Governor Harding
and the members of the committee working on the plan had with you,
and, I believe, contains all the changes which· you deemed to be
necessary or desirable.
The bill itself has been given careful study by
the Federal Reserve Board and its general details have been approved by the Board, and is forwarded to you with the request that
it be enacted into law as early as practicable.
In order to acquaint you with the history of this
matter it perhaps should be stated that a commdttee composed of the
Governors of the Federal Reserve Banks of Chicago and Cleveland
and the Deputy Governor of the Federal Reserve Bank of New York 1
assisted by a committee of actuaries and pension experts and by
counsel, have been at work upon the proposed plan for providing
pensions for the employes of Federal Reserve Banks for more than
eighteen months. The committee of experts 1 in the judgment of
the Board, contains the men best qualified in these matters that
can be found in the country.
As a result of their investigp.tions the committee
has unanimously recommended that the pension system be placed in operation through the instrumentality of a separate corporation chartered by Congress and the proposed bill is the medium suggested
for carrying this recommendation into effect.
The bill itself
provides that the ·~Governors of the Federal Reserve Banks~ together
with the Governor of the Federal Reserve Board, shall be the incorporators and that the trustees of the corporation, who are to
have the management and control thereof, are to be elected, onehalf by the banks and by the Board, and one-half by the employes
of the banks and the Bc:a.rd. The corporation itself is to be supported on the contributory basis~ i.e., a portion of the funds out
of which the pensions or other forms of support are to be paid will
be supplied by the banks and a. portion by the individual employes.
...
.
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t;: ....
X-3161a
-2-
The corporation is to conduct its affairs without profit and its
benefits may be extended1 under terms and mnditions prescribed by
it 1 to the employes of banks that are members of the Federal Reserve
System, upon request from such institutions.
lt should be noted that no plan of operation of the proposed
fund can be inaugurated without the prior written approval of the
Federal Reserve Board, and also that the corporation is required to
render an annual report to the Board and to be subj.act to its examination.
The Board is deeply impressed with the advisability of providing a scientific and comprehensive pension system for the employe;s of the Federal Reserve Banks. It is most desirable that such a
system shall be uniform for all the banks and shall be conducted at
a minimum cost. In order to achieve these results the or~nization
of the proposed corporation is recommended. The establishment of
the system will not only place the employes of the Federal Reserve
Banks upon a parity with 'the employes of the more enlightened banking institutions of the country, so far as pensions are concerned,
but ~ill also, as we are convinced~ provide a model pension system
which might well be copied in other forms of industry, and which~
if extended to and used by the member banks of the system1 will be
of andoubted be:nefi t to the banking commmi ty as a whole.
You will notice that the draft of bill contains a provision
that the corporation may afford life insurance among other forms of
support. The committee of experts are unanimously in favor of this
provision..
The Federal Reserve Board leaves this qu.estion open, as
a number of members are not prepared, as at present advised, to
approve it ..
Very truly yours.,
(Signed) Edmund Platt,
Vice Governor.
:--~.,
FEDERAL RESERVE BOARD
CIRCULATION DIVISION
tAlLY STATEMENT
U. S. PAPER CURRENCY
----------~~192
UNITED STATES
NOTES
SILVER
CERTIFICATES
One.s .. ............... "' .... " .
·Twos .•..•...........•..• ·
Fives .....•.............•
Tens ................... .
Twenties ..............••
Fifties •................
Total
TREASURER'S RESERVE SUPPLY:
On.e s. . . , . . . . . ~ . . . . . . . . . •
Twos ••.•••••.....•..•.••
Fives .................. .
' Tens . ............................ . .
Twenties •...............
Fifties1 • • • • • • • • • • . • • • • •
---------------
Total
AMOUNT
.
AVAILABLE FOR SHIPMENT:
Ones •...................
Twos •............. · · · · · ·
Fives .............. · ... ·
Tens •...........-··, .•...•.
Twenties •.......••....• ."
Fifties ................ .
Total
U.S. CURRENCY DFtiVERED FOR DESTRUCTION ....
f
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L.:'--';~~-_,
FEDERAL RESERVE BOARD
WASHINGTON
July ll, 1921.
SUBJECT: Correction in New Federal Reserve
TelegraPh Code Book.
Dear Sir:
Your attention is called to the fact that the
:phrase for which the cede word "Duplicity" ( .'Page 60
of the new Federal Reserve Code book) stands, should
read "Your gold redemption fund has been debited and
your 5~ redemption fund against Federal Reserve ~
notes credited as req_ues ted in your telegram dated----".
The word "bank" he.s been omit ted from the :phrase
as it a::p::pears in· the code. book and ycu are requested
to have that word inserted between the words n~eserve"
and "notes" ..
Very truly yours,
We.l te r t. E'ddy,
Assistant Secretary.
To the Chairmen of all Federal Reserve Banks.
TREASURY IEPARTlJENT
.
x.. 3164'
WASHINGTON
":'
~,
June 25, 1921.
The Governo;r,
Federal Reserve Board.
Sir: .
By direction of the Secretary, you are advised tbat 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 1 to June 20, 1921, amounting to $244,690,15, as follows:Federal Beserve Notes, 1914 •
.tl2....
$20
$50
$100
Total
Boston
144,000 190,000
7,000
341,000
New YOrk
720,000
348,000 101;000 2,000
2,000 1,163,000
Philadelphia 215,000 155,000 31,000 22,000
423,000
Cleveland
52,000
65,000 39,000 4,000
160,000
Richmond
231,000
65,000 49,000 19,000
364,000
Atlanta
88,000
36,000
2,000 1,000
127,000
Chicago
976,000 346,000 215,000 16,000
1,553,000
St. Louis
246,000
67,000
3,000 1,000
317,000
Minneapolis
93,000
25,000
2,000
120,000
Kansas City
49,000
12,000
3,000
3,000
4,000
71,000
Dallas
13,000
11,000
24,000
San Francisco 133,000
6,000
4,000 1,000
4,000
148,000
2,9'10,000 1,326,000 456,000 69,000 '10, 000 4,831,000
4,831,000 sheets at $50.65 ••.....• $244,690.15
The charges against the several Federal Reserve Banks are as
follows:Ino.ComCampen- Plate
. Sheets sation PrintinS Materials J?!nsation
Total
Boston
3&1~
New York 1,183,000
Philadelphia 423,000
Cleveland
160,000
Ricbmond
364,000
Atlanta
127,000
Chicago
1,553.000
St. LoUis
317,000
Minneapolis 120,000
Kansas City 71,000
Dallas
24,000
Sanl!t'&Jaciii:Jo 148,000
4,631,000
$5,726.80
19,674.40
7,106.40
2,688.00
6,115.20
2,133.60
26,090.40
5,325.60
2,016.00
1,192.80
403.20
2,486.40
81,160.60
$5,353.70
16,573.10
6,641.10
2,512.00
5,714.60
1,993.90
24,382.10
4,~76.90
1,684.00
1,114.70
376.80
2,323.60
75,846.70
$4,641.01 $1,548.14 $17,271.55
16,100.63 5,370.62 59,918.95
5,757.03 1,926.42 21,424.95
2,177.60
726.40 6,104.00
4,954.04 1,652.56 18,436.60
1,728.47
576.58 6,432.55
21,136.33 7,050.62 78,659.45
4,314.37 1,439.18 16,056.05
1,633.20
544.60 6,078.00
966.31
322.34 3,596.15
326.64
108.96 1,215.60
2,014.28
671.92 7 ,496.20.
65,749.91 21,932.74 244,690.15
!he 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 cause
such 1ndefini te appropriation to be :reimbursed in like amount.
RespectfUlly,
s. P. Gilbert,Jr ••
Assistant Secretazoy of the Treasury.
-r.
L-~~L
TREASURY DEPARTMENT
WASHINGTON
July 7, 1 921.
'l'he Governor,
Federal Reserve Board.
Sir:
By direction of the Secretary, you are advised that the Department has
referred to the Comptroller General of the United States, Treasury Department
Division, for settlement, the account of the Bureau of Engraving and Printing
for preparing Federal Reserve notes during the period June 21 to June Z0,1921~
inclusive, amounting to $114,418.35, as follows:-
!§.
BQston
New York
286,000
Philadelphia 92,000
Cleveland
Richmond
75,000
Atlanta.
327,000
Chicago
69,000
St. Louis
Minneapolis
Dallas
San Francisco 93,000
Federal Reserve Notes 2 1914
_ilO
.@
$100
~
74,000 34,000
163,0QO 74,000
112,000 46,000
17,000
7,000
163,000 46,000
37,000 4,000
176,000 140 ,000
15,000
78,000
52!000 552000
887,000 406,000
942,000
2,259,000 sheets at
$50~65
1,000
7,000
2,000
2.ooo
3,000
5,000
1,000
3 1ooo
7,000
17,000
••••••• $114,418.35
The charges against the several Federal Reserve
CompenSheets sation
Boston
109,000
523.000
Philadelphia 257,000
Cleveland
26,000
Richmond
286,000
Atlant~
44,000
.Chicago
648,000
St. Louis
84,000
Minneapolis
78,000
Dallas
1,000
San Francisco 203,000
2,259.000
New York
$1,831.20
8,786.40
4,317.60
436.80
4.804.80
739.20
10,886 .. 40
1,411.20
1,310.40
16.80
3 7 410.40
37,951.20
Total
Plate
Printing
$1,711.30
8,211.10
4,034.90
408.20
4,490.20
690.80
10.173.. 60
1,318.80
1,224.60
15.70
~87.10
35,466.~
Materials
B~
109,000
523,000
257,000
26,000
286,000
44,000
648,000
84,,000
78,000
1,000
203.000
2,259,000
are as follows:-
Inc.Compensation
Total
#1,483.49
i 494.86 $ 5,520.85
7,118~03
2,374.42
26,489.95
1,166.78
13,017.05
118.04
1,316.90
1;298.44 14, 485.90
199.76
2,228.60
2,941.92
32,821.20
4,254.60
381.36
354.12
3,950.70
4.54
50.65
3,497.77
353.86
3,892.46
598.84
8,819.28
1,143.24
1,061.58
13.61
2,762.83
30,744 .. 99
~~92=1.62
10,2~1.95
10,255.86 114,418.35
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 cause such indefinite appropriation to be reimbursed in like omount.
Respectfully.,
s. P. Gilbert, Jr.,
.: . . -Uzadtt~ ~ Secretary
r-- _,
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c _.'(~'·
.
COPY
X- 3166
My dear Sena. tor~
Referring ::~.gain t:o o•.tr telephone c'mversation on
Sa.turda.y1 I would state that some of the c}'l.a.rgcs which have
been zrade a.gp..inst tho t'edaral Re~orve Board and against its
members personally) which have appeared in c~.rtain papers
and in some public speeches1 do not appear to me to be susceptible to argumentative reply. Tl:.~y are made without giving any facts to su~por.t them and ehow either total ignorance
of the subject on t~e part of the ;Jl"Oponents or else wanton
disregard of actual facts. Some) such as those made in the
newspaper which 1 a.m enclofling wj th this letter1 are libelous
and the best reply to them is to bra.nd them with the short
and ugly word •
I enclose copy of an address which I made before the
Cleveland (Ohio) Chamber of 0ommerce on the 16th of September
last~ which explains fully the Boa~d's attitude at trat time.
Perr...:a.ps you may not have tlme to read all of thi.s addr.ess but
I hope that you will find tims to r~ad pages 5 to A4.
Owing to the exigencies o:: Treasury financing) the war
time Federal Reserve rata of 4~ wa~ not advanced until December,
l9l9J although after the first of July J 1919J there was a rapid
advance in the rra.rket rate for money and the best grades of commercial paper sold in the oyen market at from 7% to 8%. The
customers of the member banta were willing to pay full rates for
accommodation and urged upon the ban~s as a reason for easy credits that they were willing to pay high rates and the banks in
turn could rediscount with the Fed~raJ. Reserve Banks at a very
substantial profit. On or about September 15, 1919 1 the total
amount of invested assets of the Fed.era.l Reserve Banks, including
bills rediscounted for memb~r banks) acce!lt.ances bought in the
Open market and Government obligations held) amounted to about
$2~ 350., 000., 000.. An expansion of bank credits was going on alJ.
the time at a rate which has never been equaled in the history
of the country and far in excess of any war time expansion.
Federal Reserve Bank rates were advanced to 4i~ early in December., 1919., but the advance was negligible and had no effect.
The latter part of January 1 1920, rates were advanced to 6%. On
the 23rd of January1 1920, the total rediscounts and earning
.
assets of the Federal Reserve.Ba.nks amounted to about $3 1 300,000_.000)
an increase since September 15, 19191 of $950~ C001 000. The rate
of expansion for that period was nearly 50%. At the same time the
reserves of the Federal Reserve Banks had declined to about
$2, ooo. . ooo.. 000, of which only about $1 1 9201 0001 COO, were gold reserves.
},-3166
.-2-
The pyramiding of credits was proceeding at an alarming degree
and it was evident that if exp::1.nsion should continue to procas::.
at such a rapid ra te 1 it would bo me :rely a qu.estion of time until the credit structura of tho country would explode.
It should be noted that ?Vcm :3fter the rates wer.e increased and after ths statement of May., 1920 we.s nade 1 whi~h
atatement appears in my Cleveland speoch and is the basis for
most of the a tta.cks which are roade wo c'n tl:e Board, although H
is rarely quot~d., the expansion of loans and curr0ncy contin1
1Gd
in a more moderato degree. On the 15th of January 1 19201 ths
total loans and earning assets of the Federal Reserve Bank~ amounted to about $3.-0001 000,000. These incrsased gradually and
steadily until the 5th of Novombor, wh.:::n they amounted to
$3 1 400,0001 000 .. On Ja:wary 15th, 1920, the volume of Federal
Reserve notes outstanding was about $2J 800.~~ 0001 000 and this note
issue also increased steadily until it reached the peak on December 24, 1920 of $3,400Jooo,ooo. You will remember that the gr~at
price reactions which t:o<:Jk p:'.a.;o aJ.l occ1;.rcd before the 5th of
November or ths 24th of December. Uholesal3 prices reached
thair peak a.'bcut the middle of May, 1920, being at trat time about
272 as against 100 for ths year 1913~ AftJr the middle of May
wholesale prices declined steadily, although tho loans of the Federal Reserve Banks and Federal Reserve note issues increased until
November 5th and Deceml)er 24th rGspectively.
Since the close of the year 1920 tJ.el":::. has been a marked
reduction in the loans and note issues of the Federal ReservJ Banks
combined} although th~.s reduction has been by no means uniform at
all the banks. As a matter of fact the liquidation in the NBW York
district has been about equal to that in all other districts combined_
The rediscounts and advances of the Federal Reserve Bank of NGw York1
a.t the close of business on June 30th, 1921, were 1 ower than they
had been since July 101 1918. 1 enclose herewith copies of the
weekly statement of condition of all Federal Reserve Banks for
July 9th, 1920 a.nd July 6th, 1921 and would call your attention to
the fact that on the earlier date the Fed.eral Reserve Bank of Naw
York had total bills discounted and bought amounting to $1,001 1 664,000,
while on July 6th, 1921, total bills held at the Federal Reserve
Bank of New York were $461,535 1 000, a reduction of $540,2791 000.
If comparison should be made a week earlier in each case~ it would
be sean that a reduction took place of $566 1 660,000. Bills held at
the Federal Reserve Bank of. New York increased from June 29th, 1921
to July 6th, 1921 from $423,169,000 to $461,565,0CO, a n~t increase
for the week of $36,416,000. The detail is as follows:
Ju..ly 9. 1920
Secured by u. S. Bonds and
certificates
Commercial paper, etc.
Bills bought in open market
$544,229>000
303, 454, 000
154.131 000
$1,001,864,000
p
July 6, 1921
$212, 999.. 000
236 J 970, 000
11,616,000
$461, 535, 000
r ... ........ "'-"'
-3-
X-3166
L.
_.},__A
Some of those who have complained of the curtailment o!
credit live in the Richmond and Atlanta district~ and it may be
interesting, therefore, to ascertain just wrat the Federal Reserve
Sanks in those districts are doing. The enclosed s1ataments show
that on July 6th, 1921 1 the Fede~al Reserve Bank of Richmond had
total bills on hand amounting to $105,974~ 000, against $110,0521 000
on July 9thJ 19201 but there was a reduction between these dates
of $15,8301 000 in the amount of notes secured by Government obli~
tionsJ which probably represents sales of bonds and certificates,
while lo&ns on commercial and agricultural paper increased from
$58,344,000 on July 9th, 1920 to $74,280,000 on July 6th, 1921.
The Federal Reserve Bank of Atlanta shows between July 9th}
.1920 and July 6th, 1921, an apparent reduction in total loans of
about $17,0001 0001 but you will notice that commercial and agricultural paper increased from $61,611,000 on July 9th1 1920 to
$65, 754, 000 on JUly 6th, 1921. When the difference in the value
of cotton is considered it is evident tmt the real amount·of accommodation given is considerably greater now than was the case a year
ago. It should be noted1 however, that the decrease in the total
loans of the Federal Reserve Bank ~f Atlanta i·s not as graat as it
appears~ for the bank on July 6th 1 1921 reports United States Bonds
and Notes owned amounting to $101 1421 000 against $117; 000 on July
9th~ 1920.
This increase represents bonds and notes purchased under
resale agreemen.t from certain member banks which had previously been
using the bonds as collateral for loans with the Federal Reserve Bank
ot Atlanta, so the actual reduction in the amount of the Bank's total
loans .is only a bout $7 1 0001 000 instead of $17 iOOO, 000..
.
As your state is in the Sa.n Francisco district some figures
relating to the Federal Reserve Bank of San Francisco may be of
interest to you. The total loans of the Federai Reserve Bank ot
San Francisco. on July 6th) 1921 amounted to $1&1, 203, 000 as against
$199,003~000 ¢n July 9th1 1920. This reduction, however, is made up as
follows: a decrease of $4J446,ooo in the amqunt of paper sec~red by
Government obligations and. a decrease of $44,687,000 in the amount of
bills and acceptances bought in the open narket •. Commercial and agricultural paper.under rediscount for mamber banks amounted on.July 61
1921 to $114~623, 000 against $1031 2901 000 on July 9th_, 1920, an increase
in eoliCercial,; a.gricul tura.l and livestock l oa.ns. of $11,333., 000.
.
Let us now consider the figures for the system as a whole. On
July 9th} 1920 the total bills on hand at a.ll Federal Reserve Sanks
~ounted to $2 1 934,;184., COO.
On July 6th1 1921 this total amounted to
$1~832 1 :4991 000"' a de.crea.se of $1 1 1011 685,000.. The deta.U o.f this decrease is as follows: On paper secured by Government obligations,
$621~ 973., 000 (which can be accounted for in part by Government red$mptionG of bends and. Treasury certificates and private purchases
for investment account); in bills boug)lt in the open narket}
$341,455,000. {While the volume of the acceptance business has decline~·auring the past twelve· months, this decrease is accounted for
principally by the greater demand for first class accspt~nceson the
part of member and non~ember banks and trust companies), The tot~l
r"""_
(~_
.
-4-
r-,, ,.....,.
·._Ji_.l
X-3166
of agricultural, commercial and livestock paper on hand, rediscounted
for member banks; or. .;;:ly 6th 1 l921 >vas $l 1 J.26,96b 1 0001 as against
a total of $1#265, 243.7 000 on July ~~t.h" 1920., a decrease of on1y
$136,257,0001 which is rrore than acco·wnted !or by the decrease in
the holdings of paper of t:bJ.s kind b~ the Federal Resarve B.'tnks of
Boston, New York and Chicag'>.
The Federal Reserve Board has made no suggestion whatever that
any Federal Reserve Bank should unde:o·take to force farmers to sell
their cotton before the new crop CClmeG in and telegraphj.c inqu.iry
made of the Federal Reserve Banks in the cotton producing districts
shows that no such restrictions have been made by the Federal Reserve
Banks. I enclose copy of a statement by the Board which appeared in
the papers on the morning of June 6th, 1921 and would call your attention to the last paragraph of that statement. This is the only
statement which the Board has given out which relates in any way to
loans on cotton or other farm products.
I also enclose mimeographed copy of recent correspondence between
the Federal Reserve Bank of At1anta. a.nd one of its member banksJ from
which yo~ will see that the Governor of the Federal Reserve Bank calls
the attention of his correspondent bank1 which writes that it has notified ·its customers who are borrowing on cotton to sell it and pay their
notes by July 1st, to the fact that this is a matter which the Federal
Reserve Bank has nothing to do with ani tmt it ha,s made no such dema.nds.
!.also enclose copy of a letter written by the Governor of the Feder'l-1
Reserve Bank of Atlanta to the Commissioner of Agriculture of the State
of GeorgiaJ dated September 17~ 1920~ in which he states what the Bank's
policy will be regarding loans on cotton.
.
The Comptroller's abstract No. 130~ ma.de. up from reports rendered
as of April 26' 1921, shmvs that the total rediscounts with the Federal
Reserve Bank of· Richmond by national banks in South Carolina on tl'Bt
date were $12,506, OOOJ. while total loans and discounts of the South
Carolina. national banks on the same date, exclusive of the amounts re.discounted, amounted to $75,206} 000. Adding these two items together,
· we find t.ha t the South Carolina national banks had total loans and discounts on Aprll 28~ 1921 of $87,714,000 and of this amount they had redi~cou.nted with the Federal Reserve Bank $J.21 5o6, 000., or 14.31£ of their
total loans. At the same time the total reserves carried .by all national banks in South Carolina with the Federal Reserve Bank of Richmond
Deducting the loans to· state member banks,
amounted to $3 1 829 1 000.
$2,285,000, the loans of the Federal Reserve Bank of Richmond to
national banks in South C:lrolina on June 30th, 1921, amounted to
$18,820,0001 an incraase of $6, 314., 000 since April 29th 1 "l.nd the total
loans to all member banks in South Carolira. on June 30th, 1921 by the
Federal Reserve Bank of Richmond amourited to $21,105,000, against
$17, 316., 000 on June 30th, 1920., and yet the Federal Reserve Bank of
Richmond is charged vdth restricting.,loans :\.n South Carolina. I may
add that the Federal Reserve Bank~ of Richmond and Atlanta were both
heavy borrowers during the latter half of 1920 from other Federal
Reserve Banks and the Federal Reserve Bank of Richmond. ha.s recently
shown loans as high as $251 000,000 from the Federal Reserve Bank of
New York. lt is worthy of note also that the Federal Reaerve Bank of
(_-. -··\--t'·J
c_._. i
4
-5-
X-3166
Richmond has never had the progressive rate and has never
had a higher rate than 6%. The le~l rate of interest in
South Carolina is s%. So you ca.n see that there is a margin
of profit to member banks in that state of two full points or
33 1/3 per cent in their rediscount transactions with the Federal Reserve Bank.
·
In conclusion I wish to say that the attitude of the
Federal Reserve Board toward agriculture has been greatly misunderstood and grossly misrepresented. The Board has always
advocated as liberal a policy as possible, consistent vii th the
terms of the Federal Reserve Act and with reasonable banking
prudence toward agricul ture 1 which it recognizes as the basic
industry of the country and the foundation upon v;hi ch all other
industries necessarily rest. The trouble is that the loans wade
by the member and non-member banks throughout the country are not
well distributed and in a munber of cases have rot been judiciously made. Something over a third of all member banks are not borrowing from the Federal Reserve Banks at all :md of the tv1o-tnirds
v1hi ch are borro•dng, more than one-half are borrowing very large
amounts. Many of these banks have extended themselves so far that
they do not feel warranted in making any new loans, reg::trdless of
the disposition of the Federal Reserve Ba••ks to rediscount the
paper. They do not want their names on any more paper than they
already have. They do not like the idea of increaang their contingent liability. In view of the fact tl:a t the twelve Federal
Reserve Banks are independent bodies corporate and are controlled
and directed each by its own board of directors, subject only to
the general supervision of the Federal Reserve Board, whoae authority with respect to discount is confined principally to defining
eligible paper in accordance 'Nith the terms of Section 13 of the
Federal Reserve Act 1 it seems to me that the st~tement which manyJ
both in Congress and on the outside 1 urge be issued by ~he Federal
Reserve Board) stating that the Federal Reserve Banks will adopt
certain policies in connection with the rediscounting of agricultural paper 1 would have to be :rra.de by the Federal Reserve Banks
themselves. The Federal Reserve Board ms no pow~r to interfere
with the discretion given or the responsibility imposed by law upon the directors of a Federal Reserve Bank with respect to passing
upon the merits of eligible paper offere4 for discount.
Congress did not establish a central bank in this country.
It established twelve banks under the general supervision of the
Federal Reserve Board, which does not exercise banking functions.
These functions are exercised exclusively by the Federal Reserve
Banks. The Board has taken up repeatedly vii th the various Federal
Reserve Banks complaints of a gener.al ~ture regarding the restriction
of agricultural credits and the banks have always rrade a good showing
of what they l':a. ve done for agriculture. Very few specific cases have
been brou~ht to the attention of the Board where eligible agricultural
•
•
..6-
X-3166
paper has been refused for rediscount and in those ca~es
it seems that the management of the Federal Reserve Banks
have justified themselves in the refusal.
In some agricul t1ual states there waa two years ago
. unfortunately great speculation in ia.rm lands and member and nonmember banks in those localities loaded themselves up with a
l~rge volume of real estate mortgages, which paper is not eligible for discount under the terms of the Federal Reserve Act,
and many of them have sustained losses in deposits. In the present circumstances, they are endea vol~ing to work out from under
the tremendous load which they oughli never to have taken on and
do not feel able or else are indisposed to extend accommodations
for agricul tura.l purposes ·which ordJ.na.rily they would be glad to
do. ·In almost every state, howeyor 1 there a:-e a number of ultraconser.vative banks. which have strong reserves wnich are not borrO'i1ing and which ought to do their part in assisting agriculture at
the present time.
In ·the present condition of .the country it seems to me that
the strong position of the Federal Reserve Banks should be a source
of comfort rather than the cause of so much reckless criticism.
The Fed~ral· Rese·rve Banks cannot be expected to encourage their
m=ber banks to make loans to the public on the b:l.sis of V3.lues
which obtained eighteen months ago. The inability of 3.ny banking
system to maintain values in the face of a world-wide decline is
.evidenced ·by the plight of the· banks in Cuba which were heavily
loaded Up with loans on sugp.r at high prices. Surely., the return
of bet.ter conditions in this country would mt be expedited by
having· American banks in the same condition trat Cuban banks are
. in today.
.
By way of· summary .. let me state that while the Federal·
Reser.ve Act imposes a general limitation upon the maturity of
paper ·eligible for discount of three months, it is provided in
S~ction 13 "That notes, dra.f ts and bills drawn or is sued for a.gricW. tu.ra.l purposes or based on live stock and having a. maturity not
·exceeding six months, exclusive .of days of grace~ may be discounted
in an amount to be limited t~
percentage of the assets of the Federal Reeerve:Bank, to be ascertained and fixed by the Federal Reserve
·B~rd 11 • Had the Board been: unfriendly· to agriculture, as many of
it.s ·critics claim it has been1 i t could easily have limited the
amount of . six months agricultural. paper ••hi ch could be disc'ounted .
by a Federal Reserve Bank to a very small perc~ntage of its total
assets. But in order to offer the fullest possible accommodations
to agriculture~ the Board more than five years ago fiAed this percentage at 9~ and ha.e never changed it. lt has already .been pointed
out that the decrease of more than $1,100~ 0001 000 which has t..a.ken.
place in the loans ~nd e~rning assets of the Federal Beserve Banks.
is represented maioly by a. reduction in loans secured by Government
obligations a:nd by bills and acceptances bought on the open market.·
a
~
... .-.. (
'--·
X-3166
-7-
The actual reduction in cox.!li'Ilerc~.a.l .• agricultural and live
stock paper) red. is counted i or memoox- balfrsJ from July 9th; 1920 to
July 6th1 1921, was $133,257}000. This reduction is more than
accounted for by the decrea.se of pap,:;)r reclisco1.1nted by ba.nks in
Boston, New York and Chicag~. The b~nk liquidation which ha~
taken pla.c~ has been maidy in finandal and industrial centers
and the figures of the Fe~e~.l Reser.ve Be~~s do not indicate that
there has during the past twelve months teen any decrease in
iederal Reserve· acco~~odations to banks in the agricultural
and live stock districts, but on the controry there has been a.
considerable increase) as ycu will sea from the official Qtatements encloae~ herewith.
I enclose ed.i torial f~'ljm the Mewo~~is Commercial Appeal,
which I recei vel! this mo!'Iling1 which takes issue with scme of
the sta.temant·s which have recently been made on the floor of the
Senate.
Very truly yolArs,
W. P. G. HARDING
G o v e r n o r ..
(COpy)
........ )
j','
l¢f'" .·
. \;
l·~~aseO.
'
..
for publication Sunday morning, July
Federal Reserve :Bank of
. Gold and gold certificates
Gold Settlement Fund - F. R. :Board
Gold with foreign agencies
'l'otal gold hel4 by banks
Gold with F. R. ,Agents
Gold redemption fund
Total gold reserves
Legal tender notes, silver, etc.
Total reserves·
:Bills discounted: (a)
Secured by Govt. war ·o:W.igations
All other
:Bills bought in open market lb)
To tal bill.s on hand.
tJ. S. Government boilds
u. S, Victory notes
U. s .. Certifi.ea~:s of .indebtedness
Total earning assets
· »an1t premises
Un.eollected items and otbar deductions tram gross deposits
~ Redanption fund against F • R.
:Bank notes
All other resources
TOTAL RESOURCES
(a}. Inclules bills discounted for
other F. R. :Banks, viz:
.
(b) Inclu.des bankers' acceptances
bought from other F. R. :Banks:
Without their endorsement
~·.·
11, 192.0;
st. 1276b
not earlier.
Total
168, 9J9
402,76o
111, i
45,488 52,959 118,911 49,243
S,OJl
70,418
9. 5
9
24,~?
.
61,825 44,650 4o,J01
.
1,072
3,101 1,300
871
451
573 1,820
523
416
916
586
6b5
12,293
282
1,422
194
145
187
100
461
282·
.· 51
201
171
326
3,822
496,149 1,884,413 46o,618 569.122 262,385 239.904 964,114 254,486 162,594 272,133 185,84o 426,619 6,178,377
4
35,99.
4,918
.
36,096
54,494 .
10,014
126,584
-·
10,008
24,94o
~~;~- ~~
"*
' ' '
, .
.
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.
..
St. 1276c
Released for publication Sunday morning, July 11, 19m; not earlier .. ·
t"'-"
RESOURCES .AND LI.ABILinES OF THE F.E.DERAL RESERVE BANKS AT CLOSE OF :BUSINESS JULY 9, 1920 •
("In. thousands of doliars)
LIABILITIES
Federal Reserve :Bank
. Capital paid-in
SUrplus
Government deposits
nue· to manbers - Reserve account
Deferred availability items
Otber d~osits, including foreign
.government ce~di: ts
10tal gross deposits
F. R. notes in actual. cir~ulation
I'. R.,. Bank notes in circulation net liability
·.All other ·liabilities
.l!'OT.AL LIABILITIES
Total
Boston New York Phila. Clevel. Ricbn. Atlanta Chicago St.Louis Minn .. Kans.c.. Dallas San Fi-an.
7, 532
24,675
8,326 .,..10,~161 4,873
3. 788 13,290 4~257 3:279 4~312
3~ 757
6~389
94,639
12,351
51,308 13,o69 13,712 8,o67
1,050 23,917 5,884 5,178 8,395 4,152 11,662 164 745
52
612 3)691 · 295 3,4o4
882
750 · 1,011
4lo
1,281 1,o6o
2,471
15' 919
118,186
738,232 106,197 143,114.59,876 49,837 261,308 63,598 46,169 82,481 57,343 113,363 1,839,7o4
113,276 52,646 59,395 47,219 23,334 73,863 39,233 18,599 58,143 27,966 28, 1&;) . 594:434
52,56o
2t, 974
Ratio of total reserves to net deposit snd
F.R..note liabilities canbined,per cent 51 ..1
3, ~4
2,949
1,6 73
1,265
5. 799
1, 841
1,212
2,22~
1.132
l.IG.o
6, 993
55, ltt
48.4
MEMORANDA
cOnt:ingent liability as endorser on Discounted paper rediscounted with
other F. R.. :Sanks
126,584
COnting~t iiability on bills purchased for foreign correspondents
1,168
J'. R.. ·notes outstanding
F ~ It. ::notes held by banks
·F.:..11.. notes ~ actual circulation
1,280
"1,312
DISTRI:BUTION OF :BILLS AND U..
>f.l)ill:s discounted
2 llills bought in open market
"u. s. certificates of indebtedness
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Federal Reserve Bank of St. Louis
Within 15 days
l, 43 7J 411
105,303
26,705
16 to 30 days
285,693
67.968
6,6oo
752
768
416
297,607
10.215
287,332
6,089
s. CERTIFICAn:S OF INDE:BTEDNESS :BY MATURITIES
31 to 60 days
61 to 90 days
Over 90 days.
To"bal
486, 6o3
272, 743
79, 143
. 2, 561, 593
16}, 173
36,147
372, 59~
19,4oo
36.533
. 192, 7o4
281,942
16,217
;?'~;,·
~
00
.
Re1ea.sed for publication Friday morning, J~ly 8, 1921; nOt earlier.
.
.
. ~,, ·
RESOURCES M'D LlABILITIES OF THE F.EDEHAL BESERVE BANKS AT CLOSE OF BUSINESS JlJLY 6, 1921.
St.2l07b.
R E S 0 U R CE S
(In thousands of dollars)
Total.
Boston New York Phila. Clevel. Riehm. Atlanta Chicago St.Louis Minn. Kans.Cy. Dallas San Fran.
Federal Reserve Bank of
Gold and gold certificates
2,703 4,586 20,578 2,798 8,377 2,110 8,674 19,673 338,957
253,815 1,793 6,029
7,821
Gold settlement fund- F.R.Board
32.943 57,397 58,446 20,046 9.471 71.395 17.192 7.734 35.§93 3.312 33.965 4o3,146
55.552
Total gold held by banks
63,373 286,758 ·59,190 64,475 22,749 14,057 91,973 19,990 16,111 ·37,&>3 11,986 53.638 742,103
Gold with F. R. Agents
181,044 509,0)8 134,428 185,6o4 38,023 59,832 230,213 48,572 20,031 33,6o7 14,751 142,862 1,598,265
36.000 9.631 4.514 § ... 253 5.589 35.?32 3.820 3.258 3.317 2.691 9.418. 137.438
Gold ~tion fUnd
15.655
Total gold reserves
260,072 832,056 203,249 251+,593 69,025 79,478 }57,478 72,3S2 39,400 74,727 29,428 205,918 2,477,806
Legal tender notes, silver, etc.
12.921
3.118 6,233. 4,424 1.008 16.803 12,699
903 3.967 5.772 3.032 . 153.4o5
16.525
Total reserves
276,597 9o4,977 206,367 26o,s26 73,449 86,486 374,281 85,081 40,303 78,694 35,200 208,950 2,631,211
Bills discounted: (a)
Secured by u.s.Gov't. obligations 31,9o4 212,999 84,o43 54,259 29,658 35,063 106,366 32,556 7.757 24,181 10,470 45,121 674,377
All other
53,935 236,970 39,317 98~005 74,280 65,754 218~535 54,597 65,977 55,319 49,674 114,623 1,126,986
Bills bought in open ~ket
7.905
11.616. 3.390 1.228 2.036
962 2,306
104
- :.~;
.,ZZ •.. Uq 1,459
31.136
Total bills on hand
93,744 461,585126,750153,492105,974101,779 327,2.07 87,257 73,734 79,520 6o,254 161,2031,832,499
u.s. bonds and notes
555
3,270 1,627
843 · 1,233 10,142 4,490 1,153
145 8,86g 3,979
305
36,610
U. S. Certificates of indebtedness:
One-year certificates (Pittman Act) 18,936
52,776 26,780 21 1799 7, 26o 14,564 36,112 11,568 5,4&> 8,320 2,4oo . 91 8&> 215,875
All other
36 . 9,531
612
13
1
55
225
51
26
1
10.'5'51
To'tal earning assets
113,271 527,162 155,769 176,147 114,467 126,486 3671864 100,203 79,410 96,734 66,633 171,389 2,095,535
Ba..'1k premises
3, 716
5,375
529
2,174 2,051
752 3,878
627
657 2,659 1,883
56o
24,861
5~ Redemption fund against
·'F. R. Bank notes
772
1,864
700 1,239
363
511 1,786
523
275
916
236
494
9,679
. Uncollected items
50,190 141,927 45 1878 50,808 43,379 19,280 66,642 · 28,978 15,119 38,728 21,848 34,385 557,162
All other-resources
377
2,587
25G
777
447
- 680 1.gqo
495
111
491 2,554 2,420
1),088
TOTAL RESOURCES
{a) lneludss bills discounted for
other F. R. Banks, viz:
444,923 1,583,892 4Q9,502 491,971 234,156 234,195 816,341 215,907 135,875 218,222 128,354 418,198 5,331,536
10,450
31,015
41,465
~
~
. 00
jteleased.
-
for pu.b1ication Fridtq morning, July 8, 1921; not earlier.
~·· ~-l:¥1;
.
RESOURCES AND LIAIUL:rliES OF THE·FEDEBAL RESERVE B.A..~ AT CLOSE OF 130SINESS JULY 6, 1921.
St.2107c.
(In thousands of dollars)'
LIABILITIES
:Boston New York Phila. ClE~vel. Riclm. Atlanta.\ Chicago St~Louis Minn. Kans.cy •. Dallas Sa.n Fran.
Total
r: . ~ral Res~rve l3a.nk
::C&J)J. tal. pa.id 1n
7,.911
26,896 8,613 ll,o47 5.322 4,097 14,259 4,512 3.553 4,346 4,222 7.325 102,103
t$arplus
16,342
59..318 11.564 aa.~63 11,026 8, 708 30,536 9,114 1,303 9.330 1,113 15,207, 213,824
\Reserved for Govt. franchise tax
2,272
17,100 2.737 1·,633 1,679' 2,584 8,011
982 1,335 1,587
...
2,145
42,065
~ n.posits:
· ~ernnent
856 1,873 6,62~ 1,623 1,844 2,615 1.867 1,7}4
}4,024
2,006
7.4o9 1,923 3,652
llanber ba.nk - reserve account
109.74o 651.727 100,065136.991 54.176 43,807 229.515 6o.952 41,929 71,455 42,312109,0881,651.757
All other
1,122. 11,907 1,230
775
462
355 2,253
782
&>5
522
378 6,965
27.371
Total deposits
112,868 67l,o43 103,218 141,418 55.501 46,035 238.390 63.358 44,378 74,599 44,557 117.787 1. 713,15?
F. R. notes in act'Ual circula-tion
254,169 684,615 224,513 254,854 120,202 149,636 454.379 lo4, 739 59,613 78,633 45,}98 241,165 2, 671,916
'
. J'. a. knk notes in circulation net liability
9.509
28,096 9.827 16,133 5,6o6 9.438 17,450 6,370 5.364 14,518 4,362 6.6}0 133.303.
. Deferred a~ilabili ty i t~s
4o,901
93,662 42.370 43,711 33,82S 12,977 50.190 25.975 1},087 33.956 21,569 26,229 438,455
. All other liabilities
. 951
3,162
66o
91?
992
720 3,126
857 1,242 1,253 1,13] 1, 710
16,718
444,923 1,58),892 4o9,5Q2 491,971 234,156 234,195 816,}41 215,907 135,875 218,222 128,354 418,198 5.331,536
TOTAL LlniLITIES
MEMORANDA
Batio of total reserves to deposit and F .R.
66.8
110te 1ia.bili ties ccmbi.n£3~ per cent 75-4
63-0
&>.o
54-0
Contingent liability as ~ndorser on
discounted paper rediscounte4 with
other F. R. :Banks
Co,ntingent liability on hills purchased
-tor foreign correspondents
2,336
19,875
ll,14o
10,4fP
864
832
41,465
1,472
J'. R. notes outstanding
F .. R. notes held by banks
F. :a. notes in actual circulation
~l!llla
discounted
· Bills bought. in open market
U. S. Certificates of indebtedness
Total
1,801,363
}1,136
226,426
""
~.,
()
·~--- ---~ f-,,_1
FEDERAL RESERVE BOARD
WASHINGTON
X-3167
July 12; 1921.
SUBJECT:
Policy of Federal Re·serve Banks- with Respect to
Loans on Cotton.
Dear Sir:·
I transmit herewith for your information copy of a
letter r.eceived from Hbn. H. P. Fulmer 1 a Representative in
Congress from SoJ!.th Carolina., and copy of my reply thereto.
You are requested to transmit to the Board at your early convenience a statement regarding the attitude of your bank
toward cotton loans. This correspondence is being sent to
the Chairmen and Governors of the Federal Reserve Banks of
Richmond~ Atlanta~ St. Louis 1 Kansas City and Dallas and each
; recipient_ of this letter. j s requested to forward to the corresponding officer of each of the four other banks named 1 a ~opy_
of his reply to the Board. !f the atti_tude of .each of the
Federal Reserve Banks to ~ovhich this letter i's addressed is
substantially the same.t the Board would suggest that an appropriate public statement be made by the Governor of each bank
loc~ted in the ~otton sections.
Very truly yours,
(Enclosures)
Governor.
Governors and Chairmen oi F.R.Banks of
Richmond, Atlanta, St. Loui.s) Kansas City and
Dallas. (originals to each) ..
,r'""
..,.
r~
.. _.. -·- { -~·
~
Copy
July 12 J 1921.
Dear Congressman Fulmer:
I aCknowledge receipt of your letter of the 11th inst~t,
in which you suggest as a means of relieving the present distressing situation in the South, the authorization of a loan of
$100,000,000 through the Federal Reserve Bariks to the bariks of
the Cotton St ctes, upon customers' paper secured -by warehouse
receipts for cotton properly insur~d at, say, 80% of its market
value, or upon cotton manufacturers' acceptances of drafts against
shipments of cotton for consumption in their mills, the paper to
run from thirtv to ninety days, renewable during 1921, or until
the markets are o:9ened.. You suggest further that there should be
a distinct :understandin.g that these discounts will not have any
bearing upon the ordinary accommodations by the Federal Reserve
Batiks to their member bariks, stating that without such an understanding the loans would prove of no benefit, as the Southern
banks are so tied up with loans carried over from last year that
they are unable to function in their usual rr,armer and make loans
for current business out of their present resources.
In reply, I would advise you the t such 1 oans are already
authorized end all Federal Reserve Banks in the cotton sections
are carrying paper· of this cl:aracter for their member banks and
have been doing so for wany months past., There is no question
of the ability of the Federal Reserve banks to rediscount paper to the
amaunt named, or more, if necessary, under the terms prescribed
by the Federal Reserve Act.. Vihile the Federal Reserve Banks of
Richmond and Dallas would be considerably below t·r.eir required
reserves- today if put upqn their own footing, they are maintaining
them by rediscounting with other Federal Reserve E'a.nks and will
have no difficulty in rediscounting such additional amounts. as
may be needed. The Federal Reserve Bank of Atlanta has for sorr.e
time past main~ained its required reserve without rediscounting
with other Federal Reserve Banks. although it is $ite likely
that it will be rediscounting in a short while. ~e Federal Reserve Bank of St. Louis has a stronger reserve than any of the
other Banks in the cotton sections and does not anticipate 'any
difficulty in meeting ?11 legitimate demands out of its own resources. The Federal Reserve Bank of K2nsas City also has a strong
reserve, which stands but a few points below trat of the St. Louis
Bank.. The Federal Reserve Banks of Richmond, .Atlanta, St. Louis
and Dallas all have a flat rate of 6%. T.ne only b~a:nk ·in the system
wrich still maintains t11e progressive rate is the l.Federal Reserve
Bank of Kansas City, which has a normal rate· of 6%, an intermediate
-2-
X-3167-~
rate of 7% al!ld a ma.xlmum rate of 8%.
There seems to be a good deal of misapprehension and
confusion as to the functions and powers of the Federal Reserve
.Board and t~he Federal Reserve Banks. s·ome people seem to be
under the impression that we have a central bailk in this country.
This is not tte case. The powers of the directors of the Federal·
Reserve Banks are defined in Section 4 of the Federal Reserve Act.
while those of t'he Federal Reserve Board are defined specifically
in _Section 11. Section 13 gives the Board the right to determine
or define the character of paper eligible for rediscount within
the· meaning of the Act and the limitation. of that Section. The
directors ·of tbe Federal Reserve :Banks are charged with the .administration of their respective institutions. They have the
sole power to pass upon eligible paper. offered treir respective
banks for rediscount and the Board cannot force tbem to. take
. paper w'hich may be in the:i.r opinion unsafe or uno.esi.rable. The
lending power is in the hands of the banks and not of the Board.
Each Federal Reserve Bank is a body corporate and as such each
bank, among other things~ is authorized "·~o exerdse by its board
. of directors or duly authorized officers or agents, all powers
. specifically granted by the provisions of this.Act and such incidental powers as shall be necessary to carry on the husiness of
banking within the limitations prescribed by this Act 11 • "Every
Federal Reserve Bank shall be conducted under the. supervision
control of a Board of directors. The Board of directors
shall perform the duties usually appertaining to ·the office .of
directors of banking associations and all such duties as are
prescribed by law." No where in the Act is the Federal Reserve
Board given pqwer to pass on credits and the Board maintains no
· credit files. The Board itself is not organized as a banking
institution· but merely as a supervisory body; having general
supervision subject to the expr"ss reservations in Section 4
of the Fedetal Reserve Act.
and
In your letter you touch upon one of the difficulties in
the present situation. You SaY that "the Southern banks are
so tied up with loans carried over from last year that they
are unable to function in their usual mannex· and make loans
for current business ~t of their present resources". A considerable number of the mem'ter banks in the cotton districts
are not rediscounting at all :md of those that are redisco,mting, more than one-half are rediscounting very heavily. Many
member banks are carrying loans in larger volurr.e, no doubt,
than their onn directors would like to have them carry and I
know of some member banks wtich are very reluctant to add to their
contingent liability as endorser on any terms.
-3-
X-3167-a
While the· suggestion made in your letter raises a ('uestion of
banking policy which should be determined by the Federal Reserve
Ba.m:s tl:emselves, rather than the Federal Reserve Board, 1 ma:r
say that I do not believe any advantage would be gained in having
an understanding that any rew loans will not be counted as part
of the bank 1 s regular line. No loans can be made by any Federal
Reserve Bank except wi tl: the endorsement of a member bank and the
endorsing "bank's liability is there whether i t is regarded as part
of its regular line or not.
With the concurrence of other members of the Board, I am sending cop:tes of your letter to the Governors of the Federal Reserve
Banks of Richmond, Atlanta, St. L6uis, Kansas City and Dallas, with
the reauest that it be brought to the attention of their respective
boards of directors and suggesting that each bank, as promptly as
possible, make a public announcement of its policy regarding cotton
loans.. It is the Board's view, and the Board has so advised the
banks, that it is the duty of the directors of each Federal Reserve
Bank to give consideration to all applications for rediscount of
eligible paper and that the directors of each Federal Reserve Bank
or its duly authorized officers must be tte sole judges of the soundness and desirabil:i. ty of paper offered for rediscount.
The Board feels assured that the Federal Reserve Banks are
fully informed of the conditions in treir resuective districts and
t"hat they will adopt a broad and liJ,eral polic;yr in assisting their
member banks to meet the requirements of the si~1ation.
Very truly yours,
(Signed) W. P. G. Tiarding
G o v e r n o r.
Eon. R. P. Fulmer,
House of Representatives.
c0
'P
y
HOUSE OF REPRZSENTATIVES U. S·
Washington 1 D.C.
X•3167b
JUly 11, 1921.
Hon. Wm. p. G. Harding~
Federal Reserve Board~
Washington1 D. C.
Governor~
My dear Mr. Harding:
I wish to call to your attention, for as earnest consideration and quick action as you may find possibleJ a plan just
proposed by Mr- J. Skottowe Wanramaker, President of the American
Cotton Association, for the relief of the present distressing
situation in the South. It is this:
THE RE-DISCOUNTING OF PAPER SECURED BY COTTONAuthorize the loan of $100,000,000 through the Federal Reserve Banks
to the banks of the Cotton States1 upon customers 1 paper secured by
warehouse receipts for cotton properly insured at 1 say} goro of its
market valueJ or upon cotton manufacturers' acceptances of drafts
a~inst shipments of cotton for consumption in their mills.
Paper
to run from 30 to 90 days~ renewable during 1921, or until the markets
are opened. The distinct under.standing being t.ha t these discounts
are not to have any bearing upon the ordinary acc9mmodations by the
Federal Reserve Banks to their member banks; Without this understanding the loans would prove of no benefit, as the Southern banks are so
tied up with loans carried over from last year that they are unable
to function in their usual manner and make loans for current business
out of their present resources.
Leading lankers 1 merchants, business men and farmers have
expressed the firm belief that this loan would accomplish the purpose
of relieving conditions and restoring some measure of normal business.
Business is now shrinking from day to day and distress is becoming more
acute. Confidence MUST be restored promptly.
I tperefore ask that you take immediate cognizance of this
proposition. As I see it~ if assistance is not forthcoming at once
conditions will become so acute that it will take years to overcome
the disastrous effect. This rratter ha.s received the marked attention
of leaders in business and agriculture~ and I have assured them tnat I
would immediately lay the matter before you and' request your prompt
and favorable action.
Very sincerely yours,
(Signed) H. P. Fulmer
M. C.
...
"'· ,
~-:l_f
FEDERAL RESERVE BOARD
WASHINGTON
X- 3169
July 18, 1921.
STJBJECT:
Remarks of Bank Official .Against Wisconsin
Non-Par BilL
Dear Sir:
I enclose herewith for your information mimeographed copy of a portion of the remarks made by the
Cashier of a state bank in Wisconsin before a joint committee of the Wisconsin Legislature, against a bill
seeking to provide for the pavment of exchange on checks
and prohibiting notaries from protesting for non-payment
in cash checks presented by agents of the Federal Reserve
Banks. This bill was defeated in the Wisconsin Legislature.
Very truly yours,
(Enclosures)
TO ~1,1, F .R. AGEN'T'S.,. \
G o v e r n o r.
.• t,
847
EXCERPTS FROM ./IRGT.J¥FNT U.ADE 'BY W R.. DOTtE, C~SHIER
..
ST./ITE BJNK OF Pt.aTTr.VI~t'F, WIS. :BEFORE TH'E JOINT COJAtrlTTEE OF
THE WISCONSIW t~GIStATUR~ AG.aiNST AN FXCR•NGE Bitt KNOWN AS
f 375
s.
Mr. Chairma.il and Gentlemen of the Comnittee:This bill is one of the most contemptible m~asures
that has come before this session of the legislature in that it at...
~tempts by law to do the following things~
To secure a tariff. or a redemption fee on checks;
monetary value;
To demonetize bank checks of a portion of their
To repudiate cash payment of checks;
To destroy their negotiability;
To ex:ac t tribute from innocent holders of checks;
/
.
To make 1 t a misderooanor punishable by fine or
iq>riscnment for noting on such i terns the fact of their repudiation;
To make it impossible for a right of action. either in
law or in equity, to be TI"Aintained against any bank that refuses to pay
its obligations, except in exchange, and for a sti:pula.ted fee, if presented thrcugh the Federal Reserve Banks or its agents.
In addition to this bill of particulars I charge that
it is en at·tempt to defeat, to _di,scredit and to nullify, in ltO ·far as it
1s possible, the operation of the Federal Reserve Check Collection System.
The men who have appeared here today for .this bill are
clamortng for the Legislature to give their ideas on these matters the
sanetion of law. The q,uestion at issue in this bill is whether .or not .
a certain coterie of :Bankers in this country - for their own private gain.
to be derived from the continued penalization of bank checks offered for
redemption by helpless and innocent holders thereof, shall be able to defeat and undo a great nation-wide system .ot check clearance inaugurated
by the Federal Reserve Panks --devised not only to give us the· most perfect currency in existence, but also ~o provide for its eltpeditious and
econ01n1c redemption. We talk about service to depositors of banks -- there
is no service that we can possibly give them that can be of greater usefu~
ness than the means whereby the~r personal cheeks can circulate freely
-2-
thruout the length and breadth of this country without deduction for
for redemption-- and that necessarily means without deduction for
exchange by drawee banks. It should be conceded by all fair minded
men -- by men with any regard for economic law-- that the facilities
for the transportation of credit, and for its redemption should be
the very best obtainable~ No one will question the need of converting
the great mass of check liabilities always existent in this country,
into servic~ as bank reserves in the shortest possible time. No, one
should contend that this great rrass of credit should be penalized for
the privilege of circulating thruout the confines of this nation ·- and
least of all should the punishment be inflicted by the drawee banks who
have profited most by reason of its circulation. If our commerce is entit.led to freedom of the seas -- then bank checks, which constitute 95%
of the circulating medium of the country, should enjoy the right and
privilege of sailing the high seas of trade and commeree without being
demonetized of a portion of their value for that privilege. An exchange
charge by a drawee bank on e. check coming hOrr.e to it for redemption,
filches in the last moment of that Check's existence, a portion of its
value that the drawee bank never warned its community it should suffer
if it dared to de-part from the community on a mission of service for its
maker. There is no more justification for subjecting the Bank Check
Circulation of this country to a cha~ for redemption than there is justification for subjecting the Bank Note circulation to a redemption charge -indeed, there is less reason -- fo,r is it not an undeniable fact that
cheCks are an economic necessity in this day and age of our development;
··is it not an indisputable fact that they ar~ the greatest economizers
of credit which human ingenuity have devised -- p~rforro.ing a service
that cannot by any stretch of the imagination be performed by :Sank Notes,
coin or currency? Notwithstanding the fact that checks in this country
have reached a greater developrr.ent than anywhere else in the world, constituting as they do a circulating medium that transacts· 951· of the business and commercial transactions of the country, rendering in that degree
a greater economic service than any bank note circulation could possibly
provide, effecting, daily, an'economy of credit impossible to compute,
functioning wr~re·currency or coin could not be provided or accepted-in the face of these undeniable economic truths, tbere has developed a
school of thought propounding the idea or propaganda that the Federal
ResePVe System has no business to be concerned about the check collection
system of this country; that the scientific collection of bank meeks, the::
economic redemption and the price paid for the privilege of having them
redeemed, is an unnecessary function of any reser~e system and should be
outside and beyond the control and juriSdiction of that system.
X-3169 a
-3~
The doctrine is advanced that the Federal Reserve Bank:
shall be denied the right to accept from its member banks, either for
deposit or collection, checks on any non.member bank, (Gentlemen; I
want you to note that). Whatever a few individual banks rray think about
it, the .fact remains that the Federal Reserve System was established
that we might have a n:onetary system dedicated to the interest of the
general public~ a sys tern that should provide us with an elastic currency;
a system that should create and s~on credit not only into being but
into service-- provide for its mobility-- control its redemption and
provide for its retirement. These were the aims and objectives of the
greatest piece of financial legislation over enacted in the public
interest.
Shall the non-'l'r'ember state Danks be placed in the inconsistent
position of holding the Reserve System to a strict accountability for an
inexhaustible supplv of currency to meet the nation 1s requirements -for a volume of bank credit that shall. sustain the entire credit structureand at the same time contend that these same Federal Reserve Banks shall
by law be prohibited from handling for collection or deposit from its
member banks any checks re-nresenting funds on non-member banks, thereby ·
effectively preventing them from converting a great mass of memberbanks t funds into Bank Reserves? Think of such a preposterous, monstrous
proposition and ask yourselves whether or not the great progressive
State of Wisconsin should lend itself to any such infamous cause or aid
its advancement by the enactn:ent of this vicious bill known as 375 S •
Every Bank's check l~abilities. which we n:ust not forget are the
li~bilities that we have prayed for and worked for -- should by every
inherent right and act of justice -- be redemrr.ed. at 100 cents on the
dollar. We who have profited and prospered thn.l efforts to rropularis.e
the use of checks -- we who have coveted these lia"bili ties and have risen
to strength and power in our communities as their volume increased -shall prove ourselves ungrateful beneficiaries if we insist on a system
of check clearance that shall ~ake it possible for Banks tc exact tribute
from the innocent holders of these items •. It is unthinkable that Bankers
should desire to perpetuate a system of check clearance that rr-ay levy
such tribute and thereby discredit 'the country bank circulation of this land.
Why should the country bank check circul~.tion of this country be
denied the privilege of discharging debts and commercial obligation as effectively as City Che drs? P.re the country bankers going to permit that
injustice and discrimination to be practiced against their checks? Are .
the country banks willing to see their checking accounts flow into the c1.ty
banks ~~here this par service reay be.available?
The Country ~ankers are the
men who should decry the infamies of the old exchange sustem which the defenders of this bill are trying to resurrect.
.
)
r-,.
-4-
X 3169-a
The intradistrict clearings of the Federal Reserve Bank
last year (1920), without dup1ication,amounted to ~157,000,0CO.OO.
If the theory of the de:(enders of this bill is correct and just. then
this plan ought to be 'Qniversally adopted; we ought to abandon the
present par clearance or nation-wide clearance program for all banks
and ina~rate their system allowing all ba~ to reap the benefits
of this 1/10 of 1% for the service of clearing checks. If a fee
of l/10 of 1~ had been ap-plied to the 1920 intred.istrict clearings of
the Federal Rese~ve Eanks alons 1 it would have cost the public and the
business interests of this country $"157 1 000 .. 00 for exchange on those
items alone, not to say anything of what it would have cost for the
i terns that were cleared o·utside of these banks. They handled 450,000,000
checks aggregating this vast sum for the benefit of menber and nonmember banks without. the cost of a dollar to any bank or the general
public· If the Federal Reserve Benks had b'een obliged to pay every
bank 1/10 of 1~ on this emount of clearings, their entire earnings from
every source, would have been insufficient ot cover this exchange item
alone~ If the ~resent system of clearance and collection is abolished,
then the public is confronted with the duty of a.b sorbing a tax of a:p~roximately ~250,000,000 as has been estimated. Who shall provide
the clearance system when you have destroyed the Reserve system of
clearance now operated by the Reserve 13anks without cost to the Banks
or the public? The City correspondent banks will be expected to provide
free par facilities for all batiks including these men who are here today
clamoring for exchange. The Ci tyl3anks camot -- will not. -- and should
not be expected to render this service without cost, and the result
will be that city banks will require a. collection f~e on every check
they collect, and every bank will be obliged to ~ssess their customers
and all depositors with a fee for every check collected o:o an outside
point. Thus, the usefulness of bank checks as a circulating medium
will have been materially destroyed4 No business concern outside
your community will accept, if this bill goes into effect, a Wisconsin
Check because of the fact that its negotiability will have been
pra.c t i ca.lly destroyed. Who would accept a check the. t may be repudiated and which by statutory law has been robbed of the rights of a
negotiable instrument? The result would be confusion in the business
world -- the return of checks ·- great embarrassment to the drawers
of checks, the business houses whq acce~ted them and the ]anks who
attempted their negotiation. Jllhey passed this infamous bill in North
Carolina recently and the 'Banks in the Clearing House ce:..1.ters are · .
refusing to accept items drawn on banks in North CaroHna that cannot
be collected thru the ~ederal Reserve ]~nks. 13usiness ho,~es in that
territory are refusing to accept cheeks, at all, and are de~anding
~ayment in Post Office Money Orders, Express Orders and drafts that
Will not be penalized, repudiated and subjected to the infamies of suCh
a law as this Committee is asked to recommend for enactment ..
.
..-·-
,__.,
.;.
(_ ··~· .'_)~
..-5-
Its defenders would have you believe that they are the
victims of injustice at the hands of the Federal Reserve Banks, yet
they do not hesitate to resort to policies of reprisal which would
subject the general public and the business interests of this country
to the grossest kind of injustice. They are clamoring for special
and autocratic pri•rileges
Pt the present time, they ic not want to
pay their checks in exchange;they do not want to pay them by shipping
currency without cost; the;r do not want to pay them over their counters
in cash , when received from the Federal R~se rve B·anks ~ Since when has
it become a crime or illegal for any holder of checks to present them
for redemption in cash at the counters of a bank? They would like to
adopt a scheme that would have the color and sanction of law to enable
them to carry their contemptible theories into practice; they ask the
cooperation of the legislature in assisting them to defeat the payment
of checks in currFncy when presented by the Federal Reserve Banks or
their agents. They seem to think it would be ethical, economic and
constructive banking if the Legislature would lend itself to this
scheme for repudiating cash payments on checks payable on demand in
the hands of innocent hoLlers. They would go a step farther and ask
the legislature not only to legalize the suspension of cash payments
in such instances, but to legalize the exchange penalty they would exact
from the victims who, ur~er the guise of law, would be compelled to
accept exchange instead of caSh. Realizing that their ~lans wmuld run
counter to the Negotiable Instruments taw, they do not hesitate to ask
you to suspend the operation of that law as it relates to the protesting of checks for non-payment, taking it for gr&nted that you will
allow no such insignificant thing as the Negotiable Instruments taw to
stand in their way in th enforcement of this ingenious clearance
Jugglery. They have the audacity to ask you to oblige them in making
it a misdemeanor, punishable by a fine of not less than ~200 or 30
days imprisonment in the County Jail for anyone indiscreet or bold
enough to indicate in words on the repudiated instruments the fact of
their repudiation. To exempt themselves from all liability in the
exercise of these autocratic powers they appeal to you to protect them
by law from aey action, either in law or equity, that might develop
as a result of such high-handed tactics.
w
Under the Federal Reserve Par Clearance ~lan, millions of
dollars in the form of checks t that formerly cavorted around the countrythat were constantly being shifted from one side of the continent to the
other -- North-- South-- Fast -- West -- thru every conceivable channel
to escape the deadly exchange tolls to which they ·.vere subjected under
the old system, are now being expeditiously liquidated into credit and
rrade available for service as bank reserves in one-half the time required under the old method of clea~ce. Is it an abuse of power to
-t'i
(~ ~--~·)(.:::)
-6-
X-316:9 a
make available for commercial uses these tremendous sums that under the
old Check clearance system performed no such meritorious service, but
on the other hand were res~psible for a fictitious, padded, pyramided
and dangerous reserve? They tell us that it is a usurpation of authority
and an abuse of power on the part of the Federal Reserve Banks to compel
us to remit in exchange at par! Uniform and Universal par Clearance can
only be brought about by the redemption of checks in Exchange at par, or
currency. No non-member bank has been conpelled by the Federal Reserve
Banks to remit in exchange at par.. Every bank has been given the option
of rerrdtting for its own checks in exchange at par or currency. No par
clearance system can be made effective or possible without these requirements. Is it a usurpation of authority or an abuse of power on the
part of any bank to require redemption of checks in currency? If we
raise our puny hands and refuse to serve in making natio~wide clearance
possible, then we desire to bear in silence and alone any grief or
anguish suffered in redeeming checks in currency over our counters.
Is it an abuse of power for the Federal Reserve Banks at great expense
to themselves, to place this e~uitable, this reciprocal. this nation-wide
service at the disposal of both member and non-member banks alike, without cost, giving them the option of remitting in exchange or currency?
Is it an abuse of power to perform tllis economic service which enables
the General public as 1~Vell as Banks, to participate in its benefits~
and that enables the drawer of every good check to know that the check
of his bank is wort"h its f~ce value anywhere in the discharge of debts
and commercial ob lig;a tions? I ask, will not that service -- made
possible only thru the cooperation of all banks -- give checks on
banking institutions an appeal they have never heretofore enjoyed? ls
not that a service that will redound to the benefit of every bank? Is
it not a service that will reflect credit on every bank whose cooperation
made it possible? Facing a period of reconstruction in the world's
finances when the observances of economic law is the bom1den duty and
obligation of every banker; when every ounce of our great banking power
must be made available for the 'l;\ighest degree of service and the greatest
possible usefulness, it ill becomes a minority body of Bankers to band
together for the purpose of resisting and defeating the operation of an
e~uitable, scientific, constructive and economic check clearance system,
designed to serve as a unified transportation system in the mobilization
of credit and bariking reserves thruout the nation. There never was a
time when sound methods and correct banking practices were so necessary.
If bankers will not in these perilous times of reconstruction and re~
justment, stand for the enactment and enforcement of economic laws; 1.f
they will not rrake some contributions to a system of banking inaugu:ated
to elininate economic wrongs, and to eradicate unsound and indefe~sl.b~e
banking methods and practices, then they have defaulted in an obl1.gat1.on
to their countr;r and to their profession.
~.;-p.
c;._,,:;,
-7;_
X-3169•a.
It took a world ettuation to demo~trate the worth and
saving grace of the Federal Reserve ~ct. No one will attempt to deny that
the commerc~al and industrial stability of the nation and 1 ts banks
was preserved by the Federal Reserve Banking System, and that witlDu t
it there would have been panic and disaster thruout the land, from which
no bank could. have escaped, and yet, notwithstanding the great service
that the system rendered every 'bank, we witness the refusal of a relatively few banks (and let that be thankfully said) who are seeking
to discredit, to obstruct and embarrass by every conceivable uethod.,
the system that in the hour of peril saved them from destruction•
Why this sudden exhibition of ingratitud_e? -- Sinply because the 'Federal
Reserve Ea.nks have asked them to remit in Exchange at par, or currency,
for their own items only. Refusing to give their cooperation to~
method of check clearance which will make it possible to redeem checks
everyWhere at 100 cents on the dollar, and by their refusal to cooperate,
:putting themselves on record as being opposed to the redentPtion of their
own checks at par - at the same time asking and corrpelling correspondent
banks to provide :par facilities for their own selfish use, this same
rrdnority body of bankers ·ask that an indictment be drawn against the
Federal Reserve Banks for usurpation of authority and abuse of power.
I ask you, gentlemen, against whom should the indictment be drawnthe accusers or the acrused?
.. _,...
~
This bill is the old, old question of selfish and :personal
interest exemplified. Eeonondc ~lans and scientific systems, sound
pFinci~les and safe banking ~ractices, always have and always will
be op~osed by those who think their own selfish interests may be
affected by new or modernized trethods.. lvTust banking evils be tolerated;.
must the expeditious transportation and redemption of vast sums represented by bank checks be impeded and delayed; must checks be denied
the right of travel thru all the avenues of commerce, without being
scalped of a portion of their value for that privilege; must the
public forego and be denied the incalculable benefits which par
clearance would give us, in order that the selfish, private gain, the
personal interests of a few banks may be :perpetuated? If we believe
that the rights and interests of the greatest number are ~aramount,
we cannot fail to endorse the ~ar clearance plan of the Federal Reserve
Banks. If we feel that we are under no obligat5.ons to rrake any contribution to plans inaugurated to give our country every banking facility
possible underrmodemized methods -- if we maintain that we are under
no obligation to eradicate indefensible banking methods, and dangerous
banking practises, then, indeed, lindted is our conception of the duty
we owe the public .and the Banking ~rofession.
l' ... ........ /!"
I
FEDERAL RESERVE BOARD
WASHINGTON
X-3170
July 18, 1921.
SUBJEC~:
Correspondence Regarding Decline of Prices
of Agricultural Commodities.
Dear Sir:
There are enclosed herewith for your information copies of correspondence between the Governor of
the Federal Reserve Bank of Richmond and an official of
a mercantile company in South Carolina. In his letter
Governor Seay discusses the Charge that the credit
policies of the Federal Reserve Banks have been the
direct cause of the deflation or decline of prices of
agricultural ccmmodities.
Very truly yours,
(Enclosures)
G c v e r n o r.
Governors of all F.R.Bs. except Richmond
copies to Chairmen.
~-
iCt
(COPY)
( __ .
X-)J. 70-a
July
2~
1921.
Dear Sir:
Your letter of June 30th in which you ask for a brief report
from us as to conditions in our particular line, also any other lines
as far as they - incidental to our operations - come under our observation.
The purchasing and debt-paying power of a large portion of
our population has absolutely been destroyed 1 as a result of the de1Jation policy of the Federal Reserve System. This policy has paralyze:i
our agriculture and stagnated our comrnerce, and, unless relieved,
event·IA3-lly the consumers will pay a fearful penalty. Tne policy has
of course resulted in forcing down prices of agr.ic1tl tural products.
This has always been the Co,se; fnllowing great wars in which we always
have great inflation. Where credits have been restricted and rates of
discount raised it has always rAsulted in bringing about artificial
deflation and forcing down prices, and has brought tremendous losses.
As the result of cJosA study of the situation, we find that
throughout the agricultural sections of the South) practically the same
conditions exist. The farr:.ers Jx·e t:n.?,hJ.e to secv.rFl crecl5ts of either
money or goods with which to produce, except in a limited way. They are
loaded with debts which were incnrred on the peak of inflation in the
spring of 1920 for the production of that crop~ We had eighteen months
of prosperity and business activHy, 'following the cessation of hostilities, and the present distressing fi~n~ial conditions, therefore, are
certainly not the natural aftermath of the World War, but the result of
the deflation policy as outlined above.
Millions of people in Europe and Asia who own lands, forests,
mines and factories and who are an industriuus people, are in desperate
need of our raw products, while on our side, as a result of this policy,
we are being smothered by the very products which they are needing so
badly. We are suffering, not from over-production but from underconsumption. There are no markets for staple products, except in a very
limited way and at prices Of less than 0Df3·-third the COSt Of product;.::n.
Uruess these conditions are relieved, through a lowering
of the re-discount rate to say 4 per cent. on bonds, (this being the
understanding of the people who purchased the bonds) 1 and 4W'o on agricultural and commercial paper, through a renewal of ag,ricul tural loans
~ntil markets can be opened and confidence restored, and througn more
liberal extensions of creditsJ conditions will grow steadily worse·
and a large portion of the agricultural sedtion of the nation will face
universal bankruptcy.
-.~
';j
r:-'"- .....
X-3170-a
-2-
In our imlllediate section, there has been a drastic reduction
in cotton acreagej in fact, in all agricultural production. We find
that the same condition exists throughout the State. The report just
issued by the U. S. Agricultural Department shows a reduction in cotton
acreage of 2g.4 per cent. and a drastic reduction in the use of fertilizers, showing that the cotton yield of this year's crop will be
the smallest in t.1e last twenty-five years. In fact, even with ideal
weather conditions, we cannot expect it to be otherwise, due not only
to the reduction in acreage, but also, on account of the distressing
financial cond.it ions, of the fertilizers used, tnere was ;:1ot only a
drastic reduction in tonrage, but only the cneapest material was purchased by the farmer.
In my humble judgment, confidence can cnly be restorad and the
present conditions remedied, by an immediate reversal of the policy
which created them. A lowering of tha re-discount rate cnarged by the
Federal Reserve Board to 4 per cent on bonds and to 4t per cent on
agricultural and cc.mmer cial paper, renewal of agricultural loans until
confidence can be restored and markets opened; e . dension of credits
based upon credits justified by the gold reserve; we view as a worldwide necessity.
We beg to remain,
Very respectfully,
Vice-Ptesident.
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X-3170b
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FEDERAL RESERVE BANK OF RICHMONt
July ll, 1921.
My dear Si•:
Your letter of the 2d 1 written in reply to our request for
a brief report from you as to conditions in your line and locality,
for the' purpose of incorporation in our monthly report on trade and
financial conditions, has come to my attention.
Your letter is a very interesting one, and your op~n~ons,
whether we may be able to agree with them or not, are welcomed and
encouraged, because they are needed to make up that composite viewpoint
which alone can truly depict conditions as reflected by actual physical
circumstances and the mental attitude of the people of a locality or
district.
I am going to taKe t.1e liberty Of analyzing and commenting
upon several of your statements, in the hope that it may be profitable
to both of us. First, you state that -"The purchasing and debt-paying power of a
large portion of our population has absolutely
been destroyed as the result of the deflation
policy of the Federal Reserve System."
By this I assume you mean that the credit policy or prac ~ice of the
Federal Reserve Banks has been the dire·ct cause of th..; 11 o.efla tionn or
decline in the prices of commodi ties 1 particularly cf ag,.:5.Cl4l tural
commodities. Of course 1 it must be admitted that anyor.e who incurs
obligations based upon high-priced commodities1 or lab0r, or. securities,
or real estate, or anything else 1 is seriously handic~pped iu his ability
to pay by a drastic decline in the price of any of these things. That
has always been the case and always will bej it is axiomatic. As to
the cause of these severe declines inprices 1 there you will find a very
great divergence of opinio~. First and foremost must always be taken
into account tbe antecedent rise 1 the natural law that what goes up is
bound to come down -- no matter what sends it up. As opp~sed to your
opinion 1 I beld the view that the action of the Federal Reserve Banks
in protection of their reserves, wh1ch were being rapidly exhausted, -exhaustion of which would have caused collapse and ruin entailing universal disaster, from which there could have been no recovery except by
the long, tedious patient, toiling process of building up after destruction, ~was , no more responsible for what you call the 1I def l a t. II
1.0n
of prices than you are responsible for the action of the law of
gravitation.
This "deflation" or decline in prices was not peculiar to our
own country, and to attribute such declines here or in other countries
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to the policy of the Federal Reserve System is arbitrarily to assign
it to an influence which it does not and cannot exercise but which is
the result of those laws of action and reaction which have been at work
from tne beginning of things.
The first ·eerious shock which the business world received} as
a forewarning of what was likely to happen everywhere in the world 1 was
the sudden. and violent decline in the silk market in Japan and the demoralization of business and finance there. The significance of that
decline was not grasped at the time. Then came along an equally violent
decline in wool prices; the market simply disappeared overnight. Then
ca)'ne declines in sugar prices and in cotton prices} in copper) rubber 1
anda wide range of staple commodities. You might go around the world
and in every land you would find a parallel.
This country waked up to the fact that the power to buy tbin~s
at very high prices was limited by the income alid disposition of a very
large proportion of its population. The governments of the world were
no longer buying goods in unlimited quantities for war purposes, and the
peoples of exhausted countries had not the means to buy them# whatever
tneir needs. Moreover the capacity for production~ stimulated by the
urgent demand of war and the consequent high prices} was tremendously
increased. It gradually became app~rent that the supply of raw products
and the manufacturing capacity were both greater than the people were able
to absorb. What was bound to be the result? Credit was powarless to
sustain prices- From that time on it became, day by day, increasingly
apparent that the supply of things which the peoples of the world were
bound to have was greater than was supposed} and greater than their incomes would enable them to purchase at the prices exacted. A very large
proportion of the world had little or no income with wh~.cn to purchase
~nything> even the bare necessities of life, and hun~rsds of millions of
dqllars were contributed by charity in this country to meet the needs
of such people.
Surely no man can contend, with any show of reason that. these
things were brought about by the policy of the Federal Reserve System
and b~r interest rates established by Federal Reserve Banks, which r::ttes
at no time ware really very high, and which were never as high as the rates
charged by private owners of capital,
In one paragraph of your letter you state:
"The policy has, of course) rasul ted in forcing
T~1is has always been the case following great wars, in which we
always have great inflation."
dcvm prices of agricultural products.
In another paragraph of your letter you say:
had 16 months of prosperity and business activity fallowing the cessation d1 hostili ties1 and
the present distress~ng financial conditions;' therefore are certainly not the natural afte~th of the
World i.far but the result of TDa u.efla tio~. policy as
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X-3170b
outlined above."
There seems to be an inconsistency and even a contraditi on between
these statements. It was during the period of 11 16 months of prosperity
and business activity" to which you allude that the extraordinary
expansion or inflation of bank credit took place 1 until it reached a
dangerous point beycnd which it could not have gone much further without
an inevitable, sudden and violent collapse. It was during this period
of what you call "prosperity" that the production of commodities, and
particularly m::;.nufactured products of a peace-time nature) was stimul:1ted
and competition in the purchase of such commodities1 under the cultivated
be~ief that they would g,o still higher 1 resulted in rapidly rising
pr1ces requiring more and yet more credit to finance transactions~
Moreover this should be taken into account 1 and it is an extremely important factor in considering business activity and the course of prices
during the period to which you refer: After the armistice there re.JJB.ined
about $2,500JOOO.,OOO of loans to foreign countr:ies une.Jtpe:aded and available, and our large exports to Europe in 1919 were paid for very largely
out of this fund, provided by the people in this country through Treasury
loans. That situation in itself would have served to keep business
active for a time.
For the full period of a year, the attention of the whole
country was called to these conditions and the inevitable cor.sequences.
Rates of discount at Federal Reserve Banks were gradually raised, and
warnings were given people to exercise restraint in tne use of credit~
But notwithstanding these warnings and increases of the discount rate,
rcany writers who should have known better bitterly scored wba t they
termed restrictions of creditwhen, as a matter of fact, credit was being
continuously expanded. During the most violent stages of price adjusta.ent, cr~dit was being expanded 1 not contracted. Ncbody woW.d heed the
warnings. The individual banks the country over lent 0ut all of the±r
reserves -- every dollar and more, too, -- and borrowed from Federal
Reserve Banks to recreate or replace their reserves. It did not take
long to discover that credit obtained agp.inst commodities and 6 oods at
high prices was being used to hold them off the market and create a
belief in scarcity and force up the price. When this became well understood, the game was up.
You further state:.
"Millions of people in Europe and Asia who own
lands, forests~ mines and factories and who are industrious people are in desperate need of raw products 1
wh~le on our side, as a result of this policy, we are
belngsmothered by the very products which they are
need1ng so badly.
We are suffering not from overproduction but from under-consumption."
Can anyone explain how these millions of peoples in Europe and Asia
who own lands, f crests, mines and factories can use them in paying you
for your raw products? Raw products are not usually paid for in any such
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X-3170b
way. The best thought of this country has been vainly· searching for a
way by which the people who have no liquid capital and little credit can
buy our goods and by which we can safely sell the~ our goods under such
conditions.
What has been done already in the way of granting them credit?
Your statement appears to imply that there is some easy way of continuing
it, and even that the Federal Reserve System has the power of doin5 it.
These countries to .,i.hich you allude already owe us the incredible sum of
about 18 billion dollars, wade up about as follows:
Advances _for iiar ~09-ns .......................... $10,0001 000,000
Surplus ~1:~.r Matena.L sold Abroad • .. . . . . . . . . . . . . . 3, 0001 000,000
Due to America.n Exporters and. Manufact ..A.rers . . . . . 3, 0001 000, 000
Due to American Investors, etc .....•.••...•...... 2,000.0QO,OOO
Total .••......•..... $131 000,000,0CO
There is a limit to this thing. Corporations have been formed for the
purpose of aidir..g exportei.~s to do more business with these foreigners
described by you~ but a very small amount of business has resulted, because no way has yet been found by which credit can safely be extended in
large volume to people who c:t rLot pay 1 or if they can pay at all can only
pay by slow degrees as they accumulate capital. Our merchants are slow
to take further ris~s. Doubtless you know that hundreds of millions of
dollars in goods were repudi~ted by foreign buyers1 and were left on docks
unclaimed.
The Englieh government agreed to assume 85% of the risk of its
manufacturers in selling to these people whom you describe, but I am informed by very competent authority that comparatively little business has
been done under that guarantee 1 because the English merchants are un-·
willing to assume the balance of 15% of the risk 1 and have found that
the :e,e9~Je ha~e frothing available as a basis of cradi t and that they cannot ~~~~cr:H. ex eRs to nunderconsumption" 1 it has always 1 everyw.nere been
demor.strated that people under stress of circumstances can and will govern
their consuming capacity, and that without material distress.
The
difference between extravagant and fru~l consumption in this country
alone 1 is sufficient to bring about temporary depression.
Is the Federal Reserve System to blame for these conditions?
You say:
"Unless these conditions are relieved through a
lowering of the rediscount rate to 1 say 1 4% on bor.ds
and 4i% on agricultural and commercial paper~ th~ough
a renewal of agricultural loans until markets can be
opened and oonfidence restored 1 and through m~ib
eral exten@ion of credits, conditions will g~ow steadily worse and a large portion of the agricul tun.l section of the nation willface universal bankruptcy. 11
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X-3170b
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Loans are being constantly renewed. In your State particul3.rly 1
there has been practically no liquidation for a year. I 3.lll wondering
what you mean by a more liberal extension of credits. There are 99
member banks in South Carolina 1 91 of whj ch a;:e borrowing from us.
(The 8 banks which are .not borrowing, amount to a small sum in resources.) This b":tnk is lending those 91 banks }081o of the amount
which they contribute to the lending power of the Federal Reserve
System. This is oetween five and six times the amount of the reserve deposits of those banks in the Federal Reserve B~nk of Richmond.
Take the hiO men,ber banKs in your city by way of illustradon: We
are lending to th%e tJJO banks ten times the amount of their reserve
deposits. Wo~ld you contend for a more liberal grant of credit than
this? In some cases in South Caroli~a -- principally the cases of
sn:all banks --we are landing ten to fifteen times t.tle amount contributed by those banks to the lending power of tne Federal Reserve
&nk of Richmond~
Re are lending to the bani..s of North and South
Carolina 47 mill;on dollars., which is practicallJ one-half of the
largest amount ever borrowed at any one time by tne national banks of
the country prior to 1913~ or before the establishmer.t of the Federal
Reserve System. Besides 1 the member banks of your State are borroviing
between six and seven million dollars from other banks 1 which get the
funds from the Federal Reserve System.
We often hear that the farmers cannot obtain credit from
their local banks. what is the reason when tne Federal Reserve Bank
is lending its member banks so freely? As I nave stated 1 the Reserve
Bank is lending to some cf these banks beyond all reason 1 and to all
of them with the utmost liberality cvnsistent witn pr~dence·.
If~
then~ the banks1 11otwi thstanding1 are not in a pwsi tion to lend to
their agricultural custcmers as may be needed, i~ is Jue t.o one of
two causes: First., a lack of capital in the cor:orm.mlty; or 1 second,
to the management of the banks in placing their loans. In a very
large number of cases1 the banks·bave so loaned their f~ds that they
have become tied up and they can do no more tn~n renew tne loans time
after time. He, of c.ourse 1 have access to the sta ternents of all
member banks 1 ar.d I feel that I am wholly justified in making the
statement that the inability of banks to make temporary loans is due
to the fact that they have so managed their funds as to allow them to
become tied up. Sometimes t.he causes of this are beyond their control~
but far more often indeed, due to the nature of the loans themselves.
The experience of banking everywhere is that there is d~nger in heavy
borrowing by banks.t and the safety of the Na ti o.oa.l Banking System was
foWlded upon two principles: First: that no bank shonld become
liable in an amount gre.:t ter tran its capital stock; anJ. 1 second 1 in the
limitation that Vias placed by the law upon the a.w.ount v.nich a national
bank could lend to one borrovver.
This week I partic}.pited in a conference v~ith cotton .nen from
the far South 1 or men ir:..terested in the cotton busines;;., some of them
bankers. One of them stated that he was lending to his co:tton borrowers
all that he was willing to lend 1 which illustntes tne principle which
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I have enunciated above. These men appeared to have no delusion as
to the causes of the decline of cotton prices 1 and stated that they)
and many others whom they knew 1 more th:m a year ago when many people
were advocating the holding of cotton for 40 cents 1 were selline their
cotton as fast as they could and as fast as the market would take it 1
knowing what would come~
As soon as capital becomes sufficiently plentiful 1 the natural
course of interest rates wUl be to decline. Nobody can say at this
time that capital is plentiful. Then why should it be made artifically
cheap?- look at the rates which cities1 counties, and towns have to pay
for their funds; Lock at the rates which railroads and great manufacturing corporations have to pay for large loansj Look at the rates which
governments) both foreigr. and domestic 1 have to pay for large loansj
Capital can only be called abundant when banks have surplus funds of their
own which they are anxious to place. It cannot be abundant when they
are forced to borrovv from other banks or !rom Federal Reserve Banks for
the purpose of lending. It would~ tnerefore~ serve no good purpose for
Federal Reserve Banks to lower their rates 1 but 1 on the contrary, would.
give a false impression as to the supply of ~pital. Ban~ing institutions
are not borrowing iDsti tutions; they arelenders~ and the sound opinion
ever~vhere is th1t banks should be borrowers only for seasonal oper~tiona
which demand greater use of capital 1 or for extraordinary emergencies
to tide over difficulties in individual cases. For banks to borrow in
order to lend at a profit has been everyv•here 1 at all times recogniz e.d
to be an unsound practice. No bank can absolutely control the use of
funds which it lends. Particularly is tnis true in the cases of large
cities and large banking institutions. In my judgment, to lower the
interest rate to any such figures as you specify would not only be re~ponsible for a false idea as to the abundance of capit3l but would result
1n stimulating the use of liquid capital 3.n directi.o11s in •lhich by no
m~ans it ought to go under existing ronditions 1 and wculd make the
s~tuation worse instead of better.
We are advised that your State Bankers' Association at their
recent Convention unanimously rejected a resolution that tne Reserve
Bank rates should be reduced to the figures specified by you.
As for this bank, it is lending as liber.ally to its member banks
particularly in South Carolina -- as any borrowers have the right to expect 1
and further "liberal e;ctension of credits" i~. such cases could 110t possibly
be allowed with prudence. When either banks or individuals are already
borrowing more than their equitable proportion~ of available funds, and.:.
in many cases beyond the limits dictated by experience,. prudence and
safety, how can there be talk of still more liberal exter.sion o£ credits'?
The trouble 1 ies deeper than this, and it can only be Cllred by time and
the reaccumula tion of capital by the slow process of saving and the discharge of debts by the products of labor. There is no universal remedy,
nor is there any specific cause for the declines of ·~vhich you complain1
but rather a cause complicated by and embracing the operations of all
natural and economic laws.
Yours very truly~
(Signed) GEO. J. SElY,
'Governor.
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FEDERAL
RESERVE
BOARD
STATEii;JENT FOR TilE 'PRESS
X-3171
For release in Mnrning papers,
Wednesday, July 20, 1921.
In view of the vi tal importance of the problems incident
to the harvesting and marketing of the coming cotton crop, the
Federal Reserve Board today held a conference with the governors of
the Federal Reserve Banks of Richmond, Atlanta, St. Louis, Kansas
Ci tv and Dallas, the banks located in or brou~.bt in closest touch
with the member bariks in the cotton states, for the purpose of reviewing the credit situation in these states, and determining what
further credit will be needed to facilitate tte harvesting and
orderly marketing of this crop.
At the present tirr.e the five Reserve Banks in question are
lending to their members $457,000,000, or more than 26% of the loans
of the entire system, the Richmond Barik borrowing from other Reserve
Banks $20,000,000 and the Dallas Bank borrowing $16,000,000 for that
purpose. The total loans of these five Reserve Banks to their member
banks exceed their reserve deposits by $192,000,000, wnereas the
reserve deposits of the other seven Reserve Batiks exceed their loans
to their members by $118,000,000.
T'ne amount now loaned by these Reserve Banks to their members is
four and one-half times the amount borrowed at any one time by all the
national banks of the country prior to 1914, or before the· establishIT$nt of the Federal Reserve System.
The Federal Reserve Board and the Governors of the Federal
Reserve Banks announce tr at the Federal Reserve Bank~?, in addition to
credits already extended, are able and stand ready to extend further
credit for the purpose of harvesting and marketing the coming crop, in
whatever smount may legitimately be reouired, either directly to their
member banks or, under a ruling now issued by the Federal Reserve Board,
indirectly to non-member banks acting through the agency and with the
endorsement of a rr.ember bank. These loans will be made by the Federal
Reserve Bar.ilrs upon notes, drafts and bills of exchange issued or drawn
in accordance with the terms of the Federal Reserve Act and the regulations of the Federal Reserve Board, for tl:e harvesting or orderly
marketing of the coming cotton crop.
·
In order, however, that these rediscount facilities of the
Federal Reserve Ban1 s may be made fully effective it wL l be necessary
that member banks in the cotton states place t}1eir loaning facilities
freely at the disposal of cotton producer~ and dealers in their respective localities with the knowledge and assurance that the Federal Reserve
Board and the Federal Reserve Banks recognize t:1e urgen,cy of rendering
all proper assistance to these important interests during such abnormal
times.
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X-3171
~r. ~eyer, ~~naging Director of tbe War Finance Corporation, Who
attended the conference, reviewed the activities of the War Finance
Corporation in making loans for financing cotton for immediate and
future export. Governor Strong, of the Federal Reserve Bank of New
York, and representatives of certain New York member banks were also
·invited to the conference to discuss the necessity or advisability
of having various commercial banks through the countr,y establish a
fund for the purpose of making loans upon cotton. In view of the
conclQsions reached by the conference as to the ability of the Federal Reserve Banks effectively to take care of all of the legitimate
re~uirements of the cotton interests, it was felt that the establishment of such a fund at this time is neither necessary nor advisable.
Governor Strong stated, however, that he had received assurances from
a number of important banking institutions in New York City that if
the facilities now offered by the 1i'ederal Reserve Banks and the War
·Finance Corporation should prove to be inadequate, they will co-operate .in the establishment of a cottoa loan fund in whatever amount
the situation might demand..
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Washington, D. C..
July 19 t 1921_.
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FEDERAL RESERVE BOARD
WASHINGTON
X-3172
July 21, 1921.
SUBJECT:
Confidential Report.
Dear Sir:
For the inforrnation of yourself, your Executive Committee
and your Board of Directors) I am transmitting the following report
which has been received fl"om confidential s ourcE::s:
nThis morning. f~ro:::n a c:J:nfideDti.'.lJ. source w'hic'h has
on many occasion•3 pcove''I. to be :r:olJ~,."t,J.8J; 1. received information that the ~o~r:IL'Jtr'L-: t p::cr·(.:r ::n ~J'1e (i;'jHed States,
wo:rkin~ ur..der i:r.~·!:r-us 1.:.\ ::nn :f.':."~.E1 F11s ~,;5E1.'J 'hA"l:3'p~a,:·te:rs~ is
w.aking concerted effo:,·t.~ to b:ceak down the banking system
in the United ~:;tq,tcs b.:.:· ~ (.s.r l;i:r:.g r.' 1.lmcrs that certain banks
are unsafe. 'l'h:l.s re.ro- i·. is cqrl!~:l.rmed to a certain extent
by the his tory of a :r c.:en t r·i.l.'1 on the -~
Ba.n'k of
and one whL~:l \l'.:(.l;;:;.":..'ed during the present Week
on the _______ Be:tu of··------"After receiving this in.forrr....ation I talked with the
manager of the local brF...nch of the Federal Reserve Bank,
who states that during the rur: on the Bank of - - - - and the Eank of
: munero,ls depositors were
called up by phone and told to withdraw their money from
these banks as they were on the ve~ge of failure. Sorre
of these depositors were given the exact total of t!:eir
balance in the bank over the +;ele:ohone, from the parties
who advised them to withdraw their money. This giving
of exact amourltS of various depositors tends to confirm
the statement rr:ade by my informant that the Comrnunist
party had members in the employee of many of the private
banks in the United States, also in the Federal Reserve
Barili and its various branches. IA'y inforxoo.nt also stated
that many of the robberies of bank messengers which have
occurred in the United States recently were perpetrated
by mn:nbers of the Co:rJJTU.nist party and that the money
thus obtained is being used largely to spread ComiLunist
pro-ooganda. "
Very truly yours,
Go v e r n o r.
CHAIR' '!EN OF ALL F. R. BANKS.
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X-3174
DISCOUNT RATES IN EFFECT AT FEDERAL RESERVE BANKS,
Federal
Reserve
Discounted bills ITaturing within 90 days
(Including member bariks 1 15-day collateral
Bankers
Trade
Agricultural
acceptances
: __ _t1() ~:.;~-~2-;;p.red by
_
acceptances
and livestock
Bank of
• paper maturing
dio;ct)unted
'I'rs881'J:'Y cerLiberty bonds
Otherwise
maturing
:
tificaces of
&nC'..
secured and
for mcr..ber
within 90
to 180
91
ba1iks
davs
davs
-------"----'i=ndAb tc::d7le s s : Vi.£i2£Y-1' ~.1!2 s ~-un=s;:;..e;;..c::;.u;;;;;r=.P..:.·d;:;:.......;.____-=.;=::;.;:;.----~----==~=----....:..---=.z...::::.---
.
9.
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.
Boston
New
York
Philadelphia
Cleveland
Richmond
.Atla:!1ta
Chicago
St. Louis
Minnea:pol is
Kansas City
Dallas
San Francisco
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FEDERAL RESERVE BOARD
WASHINGTON
X-3175
July 27. 1921.
SUBJECT;
Banksrs• acceptances drawn by cooperative
rrarksting associations against warehouse receipts covering agricultural corr~.oditics
Dear Sir:
For your information, there is enclosed herewith a copy of a ruling reeently issued by the Federal
Reserve Board with respect to bankers' acceptances drawn
by cooperative marketing associations against warehouse
receipts covering non-perishable agricultural commodities.·
Yours very truly,
(Enclosure)
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'ID GOVERNORS AND F. R. AGENTS •
G o v e r n o r.
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X-3l75a
July 20, 1921.
SUBJECT:
Bankers' acceptances drawn by cooperative marketing
associations against warehouse receipts covering
agricultural corr~odities.
Dear Sir;
The Federal Reserve Board has considered the ouestion presented by you as to the eligiblli ty of bankers' acceptances drawn by
cooperative marketing associations against warehouse receipts covering non-perishable agricultural comnodi ties. Tte Board understands
the facts upon w~ich your request for a ruling is predicated to be as
follows:
Each association is a corporation organized without capital,
and its members consist exclusively of producers of the particular
,crop which the association is organized to market. Each producert as
a condition of membership in the association, signs a standar1 form
of agreement upder the tern1s of which he agrees to sell and deliver
his cron to the association. This agreement provides in substan~e
that title to the commodity so delivered shall pass to the assoclation at the tin.c of delivery, that the transaction between the producer and the association is a sale, and ti:at the association shall
have absolute control over the comrr.odities celiver<?d with the unqualified right to re-sell or hypothecate. The price at which the
corrmodi ty is sold by the producer to the association is not fixed at
the time of that sale, but the agreerr.ent provides trat all of the
commodities delivered to the association shall be pooled according
to grades and re-sold, and t"lJe association agrees to -pay to each producer the average price realiaed by the association upon the re-sale
of the commodity in the·pool to which the producer has contributed,
less a pronortionate part of the association's ~xpenses. Th~ corrmodities are to be stored in warehouse~s in·.lep:mucnt of th8 association
and negotiable warehouse receipts is~lJ.Gd th-:Jr.ofor. l'lP question -presented to the Federal Reserve Board for a ruling is wheth(:!r drafts
drawn by such associations against these warehouse receipts will be
eligible for acceptance by member bariks and whether after acceptance
the drafts will be eligible for rediscount by Federal Reserve Banks.
Section
••
13 of the Federal Reserve Act provides that:
".Any Federal Reserve Bank rr.ay discount acceptances of the
kinds hereinafter described, which have a ~.aturity at the time
of discount of not more than three months sight, exclusive of
days of grace. which are endQrsed by at least one member bank."
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X-3175a
"Any member bank may accept drafts ot·bills of exchange
drawn upon it having not more than six months sight to run,
exclusive of days of grace, * * * which grow out of transactions involving the domestic shipment of goods, provided
ship~ing documents conveying or securing title are attached
at the time of acceptance; or which are secured at the time
of acceptance by warehouse receipt or other such document
conveying or securing title covering readily marketable
staples."
The Federal Reserve Board is of the op1n1on ttat a draft drawn
by an association operc.ting under the plan described above is eligible
for acceptance by msm~er banks when secured at the time of acceptance
by a warehouse receint of t:1e kind referred to in tr.P. above .statement
of facts, and that after acceptance such
a draft . will be eligi!Jle.
for rediscount 1)Y Federal Reserve Batiks provid3d it complies in all
respGcts with the regulations of the Federal Reserve Board.
The law requires that a warehouse receipt, in order to be the basis
of an eligible tankers' acceptance, stall be a document "conveying or
securing title covering readily rrarketable staples." There is no
question but that the warehouse receipts described in the above statement of facts comply with this requirement of the law, since according
to that statement, they are negotiatle warehousG receipts covering
readily marketable staples, the absolute and unqualified ownership of
which has been conveyed to the association. The Board has not, however,
undertaken to examine t~e forrr1s of agreements entered into between the
associations in cuestion and their members but assumes that these
agreements. have the legal effect which they are stated to have. If, ·
in a particular case, any ~uestion should arise as to the proper construction of t:tese or other agreements, that question would be prin:.llrily
fbr the determiru...tion of the banks u.gainst which the dr:...fts :...re dr.:...wn
nnd the Federal Reserve Bz:~.nks to which the ncceptc..nce s nre offered for
rediscount.
In your letter you st<lte that 11 The accept ....nces will probaoly be
ninety duy acceptances with an ~greement for one or possibly two renewuls, depending upon the cor:nn;odity." A member bi.lnk cannot <lccept an
original or renew~l draft unless it is drawn in corrmliance witT the
terms of Section 13 of the Federal Reserve Act ~nd conseQuently ~ member bank cannot agree unconditionally to accept a renew~.l draft but can
only agree to accept in the event that the renewal draft is eligible
for acceptance under tre terms of the law.
Furthermore, tte Bo:.:.rd has ruled thc..t w:tere it is kno;vn that a
six months credit is reQtlirad it is irnpro"Oer to dri.lW two ninety d..J.y
acceptances in order to tr~e them at all ~times eligible for reciiscount
by Federal Reserve Banks, and that in such a case the orie;inal acceptance should be drawn for the full six months y.,eriod. If, hcwever, at
tre time the original acceptance is drawn it is rec.sonable to e:.ntici:pate that the transaction will be liquidated within a period of three
.
)
")
t:""·!
·"',I,..-..
'-.." . ,__ 1
-3-
X-3175a.
months, a. ninety day acceptance may be issued in the first instance,
and u renewal acceptance may be issued at the end of the oinety day
period, if, because of abnormal or unforseen developments, li~uida
tion has not been completed at tbat time. The Board understands that
it is reasonable to anticipate that the sale and liquidation of tJ::e
corrmodities held by the assoc5.~Uons at any given tin;e will be completed within ninety days from that time. If thjs is so, there is no
objection to tte issuance of ninety day acceptances in the first instance.
There 1 s enclosed herewith a ccpy of the Board's regulations.Section B of Regulation A deals with the el) gibil:i. ty of bamersr acceptances for rediscount by Fecie:r::~.l pc_,,~,.. cr, '3'.1rks and your particular
attention is directed to subdiv:!.sion (b)(5) of that section.
This
subdivision relates to acceptances age..~ 1;;0 v.a:::-ehrc'~se receipts and other
simile.r documents covering readily rr.e.f.r;eta~le staples, and prescribes
under what circumstances it is proper ;.';:!: the accepting bank tore·
lease the origine~ documents.
It should be understood, of course, that a Federal Reserve
Batik is under no ooligation to rediscoU+~t ~n acceptance offered to it,
even though the acceptance is technically eligible for rediscount. It
is the function of a Federal Reserve Bank, when eligible pa.per is offered to it, to determine in the exercise of its sound discretion
whether the paper is desirable as an investment for the barik.
Yours very truly,
(Signed) W. P. G. HARDING,
G o v e r n or •
..
FEDERAL RESERVE BOARD
WASHINGTON
July 27. 1921.
X-3176
SUBJECT!
Pennission granted to member banks to a.pply for
discounts of eligible paper acquired from non-
member banks.
Dear Sir:
As you know, Section 19 of the Federal Reserve Act provides
·in part that ...
"No member bank shall act as the medium
nonmember batik in applying for or receiving
a Federal Reserva Bank under tha provisions
except by permission of the Federal Reserve
or agent of a
discounts from
of this Act,
Board".
This letter is to advise you th<:.l.t thg Fedsral Reserve Board
has gi•en general authority to member ba.iks to apply to their r::;spective
Federal Reserve :Banks for discounts of eligible paper acquired by such
menber bat:ks from nonmember banks, such authority to be effective until
withdrawn by the Federal Reserve Board.
The extent to which the re-
.speetive Federal Reserve Barks will entertain such applications is, of
course, a ma.tter of policy for the determination of the officers of each
bam.
Very truly yours,
G o v e r n
TO OOVEBNO.RS AND :FEDEBAt RESERVE AGENTS.
o r.
C.""·.!:·~!()
L.. ,. (...;
FEDERAL
RESERVE
BOARD
X-3177
STA'rEMENT FOR THE PRESS
For Release in Morning Papers,
Monday, August 1, 1921.
The following is a review of general business and
financial conditions t}-,roughout .the several
Federal Reserve Districts during the month of
July, as contained in the forthcoming issue of
the Federal Reserve Bulletin.
Seasonal d-.:ll.lness in practically all lines of trada has :prevented general business conditions from snowing a material alteration
during the month of July.
Both in volume of business, extent of unem-
:ployment, and depression of :production, the month still reflects a
condition of business reaction in basic lines of ir:dustry.
In this
connection may be especially mentioned the position of two of the nonferrous metals, copper and zinc, wr.ich continue to suffer from laCk
of demand and extreme depression of prices.
It should, however, be
note.d that in some basic lines of production, in wrich demand is
subject to special conditions, there has been a noticeable improvement.
This is true of cement production and structural steel, d:;mand for
which has been substantially increased as a result of tl.e growth which
had been noted in bUilding operations.·
On the other hand, consumerst den.and, as reflected in the
volume of retail trade, (with due allowance for price declines), continues as good as or better than at this time last year.
The improved
conditions noted during the past month or two as affecting the textiles, boots and sr.oes, and otr.er lines of business producing immediately
consummable commodities, have been maintained.
Due to the shortage of
stocks on the shelves, midsummer retail business has been in some few
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X-3177
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directions better than usual.
In·a number of lines, such as knit goods,
cotton textiles, and others, the forecasts for a satisfactory autumn
business furnished by trade a.uthori ties are decidedly encouraging.
Probably the most hopeful feature in the outlook is, however,
the continuing prospect of excellent food crop returns.
In cotton
there has been little or no change from the prospect of former months,
the
outlo~
indicating about two•thirds of last year's production,
due both to reduced acreage and to the poor condition of the crop.
This reduced prospect holds true also for tobacco and in a lesser
degree for other important money crops.
•
Unu.sually poor returns from
the deciduous fruit crop are reported from a nwnber of irr1portant producing centers in the east and middle west.
Price changes have shown no pronounced tendencies. The Federal
Reserve Board• s index corrrpiled for ir:.ternational comparisons shows a
recession of 3 points during June, while conflicting movements are
manifest during July.
Greater stability is manifest in the textile
and boot and shoe industries, while on the other hand, important declines have taken place in other industries, as e.g. in izon'and steel.
Automobile prices constitute a striking example of reduction among the
highly manufactured commodities.
Practically no change has occurred in the employment situation
and labor authorities report that the savings of men who have been for
sorr.e time out of work, as well as unemployment funds of trade unions.
are becoming seriously depleted.
T,he desire to see a resumption of
full production has become very acute in not a few districts and has
apparently led to some operation of pl~nts 0~
a non-profit making basis
((c)
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X~-3177
but with wage scales correspondingly reduced or employees working on
part time.
In the. financial field money rates have become distinctly easier.
Areduction
in the rediscount rates at several Federal Reserve Banks
has placed the charge for all classes of paper at 5~ per cent, while
some softening of rates to direct borrowers of barks has been.reported
from the financial centers.
pap~r
Fairly satisfactory demand far commercial
and for bankers acceptances continues to make itself felt.
FluctUa.tions in exchange and unstable financial conditions in foreign
countries have prevented any material improvement in the financing of
export products, and foreign trade conditions continue to show com·
paratively little advance frCJn that of recent n1onths, although heavy
s·easonal e:xports of cotton and grain have slightly increased our trade
balance as shown by the most recent figures.
AGRICULTURE.
States
The composite condition of all crops of the United
an July 1 was 96.4 per cent of their average condition on that
date during the past ten 'years.
There was some decline in tbe condition
of all _the leading grain :crops during June, and the indicated production
of wheat en July 1 was fS09,412,000 bushels, as compared with an estimated
production of 829,631,000 bushels on June 1 and an actual production of
787,128.000 bushels in 1920.
Harvesting of winter wheat was completed
early in July and the harvesting of spring wheat has commenced.
Di~trict
No. 10 (Kansas City) states that the wheat yield was better than has
been anticipated, but the prolonged period of hot weather has left the
wheat and other small grain crops of District No. 9 (Minneapolis) in a
spotted condition.
The acreage and condition of corn an July 1 indicated
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X-3177
a yield of 3,123,139,000 bushels for the 1921 crop, as compared with
a yield of 3,232,367,000 bushels in 1920 and an average production of
five
2~797~625,000 bushels during the previous/years. The heavy rains in
June and warm, dry weather in July have combined to improve crop prospects through~t most of the corn belt.
District No.
9 (Minneapolis)
states that, unless unfavorable conditions develop before the harvest,
the corn crop should be the largest that that District has ever produced.
Reports indicate that the acreage planted to corn in Districts No. 6
(Atlanta) and No. 11 (Dallas), has been largely increased as a
of the reduction in cotton planting.
re~lt
The estimated production of sugar
Jeets on July 1 was 8,012,000 tons, as coq>ared with 8,546,000 tons in
1
1920 and an average production of 6t218,000 tons in the previous five
years.
District No. 12 {San Francisco) states that sugar beets in
California, Utah, Idaho, and Washington are well above the average condition, while the acreage is only slightly smaller than in 1920.
The deciduous fruit crops showed sooce further deterioration
during June and the indicated yield is very low in all sections of the
United States.
The indicatedproduction of apples on July 1 amounted to
102,190,000 cushels, as ccropared with 240,442,000 bushels in 1920 and
an average production of 182,706,000 bushels during the pr.eviou.s five
years.
On July l the condition of each of the citrus fruit crops -
oranges, grapefruit, lemons, and limes - was
average condition on that date.
~igher
than the ten year
Shipments of all citrus fruits from
California during June amo~ted to 7858 carloads as compared with 5960
carloads in May and 4670 carloads in June, 1920.
The hot weather has
caused a large increase in the demand for lemons which has resulted in
;j)
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X-3177
-5-
'I
a sharp rise in their price.
Canners in District No. 12 (San Francisco)
are planning to curtail their -pack of canned fruit, as distributors
have been placing few orders for future delivery.
COTTON.
The condition of the United States cotton crop on June
25 was 69.2 per cent of a full
noru~l,
as co~ared with 70.7 per cent a
year ago, and an average condition of 76.8 per cent for the past ten
years on that date.
The area of cotton under clutivation amounts to
26,519,000 acres, as compared with 37,043,000 acres a year ago, while
the estimated total production for 1921 is 6,433,000 bales, as compared
with an actual production of 13,365,754 bales in 1920.
The reduction
in acreage amounts to at l.east 25 per cent in each of the states where
cotton is cultivated.
District No. 5 (Richmond) reports a generally
poor condition of the cotton crop due to late frosts, boll weevil
activity, and a reduction of about one-third in the quantity of fertilizer used.
In District No. 6 (Atlanta) there has been considerable
abandonment of acreage planted to cotton.
Large numbers of boll weevils
have appeared, but their activities have been so~ewhat checked by the
ho~ dFy weather.
Reports from Alabama and Georgia indicate that the
average quality of fertilizer used on the acreage planted to cotton was
unusually poor.
District No. 11 (Dallas) states that the condition of
Texas cotton is
11
from about the average to very good", except in East
Texas, although the season has been too wet to secure the best progress
for the plant.
crop
in
Weather conditions have also hampered the growth of the
District No. 6 (St. Louis) and it has been seriously ;njured
oy
the ravages of the boll weevil.
TOBACCO.
The production of tobacco this year on t:r.e whole has been
greatly reduced.
The total acreage is reported as (0.6 per cent of that
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X-31177
-6-
in 1920, while the condition on July l was only 71.9 per cent as compared with 84.3 per cent on July 1, 1920 and 82.1 per cent for the
July 1 ten year average.
Accordingly the estimated yield is 932,157,000
pounds, as compared with the December, 1920 est~te of 1,508,064,000
pounds last year.
The reduction is especially marked in the Southern
states wrich grow the manufactured and export types.
On the other
hand, in the cigar type states acreage in general has been but little
reduced from last year, and the condition is mu.ch nearer the ten year
a:verage, so that the falling off in estimated production has been much
less than in the case of the other types.
In District No. 5 (Richmond)
the South Carolina crap has been made, and the markets open there this
month.
Growth has been slow in. District No. 8, (St. Louis) and the
Burley crop in District No. 4 (Cleveland) ras been "hit hard" by
drought, while in District No. 3 (Philadelphia) the Lancaster County
crop is also not very far advanced, as it was retarded by the June
drought, although it has been aided by recent rains.
'lhe cigar industry
in District No. 3 (Philadelphia) has recently experienced a
~neral
improvement, but while operations have been increased in wany factories
~roduction
is being regulated by sales so that stoCks will not accumulate.
GRAIN MOVEMENrS.
Receipts of grain at primary markets increased
considerably during June, as compared with May, and also
crease over receipts in June, 1920.
sh~ved
an in-
Wheat receipts at the four leading
markets of District No. 10 (Kansas City), however, amounted to ll,034,4oO
bushels in June, as compared with 111964,000 bushels in May and 7.570,100
bushels in June, 1920.
Receipts of wheat at Minneapolis and Duluth
totalled 12,599,842 bushels in June[ an increase of 57 per cent over
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X-3177
-7-
the receipts for May, and of 42 per cent over the receipts for June, 1920.
The June receipts of corn, oats, and barley at these two centers showed
even greater increases in comparison to the receipts during May and during
June, 1920~
In the four reporting centers of District No. 10 (Kansas
City) 1 however, receipts of corn during June were appreciably lower than
in
June, 1920.
About
54~435,000
bushels, or 6.9 per cent, of the 1920
wheat crop still remained on the farms on July 1, as compared with 47~620,000
bushels on July l, 1920, and average stocks of 29,328,000 bushels for that
Stocks of grain in terminal elevators
date in the five preceding years.
at Minneapolis and Duluth amounted to 21,869,196 bushels on June 30, an
increase of 19 per cent over the stocks on
¥~y 31.
Stocks of corn nearly
doubled during June and there was an increase in stocks of all grains
except rye.
Comparisons with a year ago at these centers show a par-
ticularly large increase in stocks of oats from 516,513 bushels on June
30, 1920, to 15,016,996 bushels_ on June 30, 1921 ..
FLQUR.
Business of flour millers continues well under normal,
but, states District No. 8 (St. Louis), twelve reporting firms give
sales during the past thirty days (up to about July 20) as the best in
several months.
"The domestie trade has picked up, and export buying
has been on a larger scale". Operations in that District have been at
40 to 50 per cent of capacity.
Increased milling activity during the
latter part of June and the first half of July is also reported in District
No. 10 (Kansas City), where June output of reporting mills amounted to
1,433,804 barrels.
Flour mills in District No. 9 (Minneapolis), however,
operated at about 39 per eent of capacity during the four weeks ending
July 2 as compared with 41 per cent during the four weeks ending June 4,
The output of mills representing about 75 per cent of the total production
of the District, on the other hand,
~ncreased
1.7 per cent, from 1,626,830
C'!·-'.1("'!
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X-3177
-8barrels to 1,651,175 barrels.
tions in District
No~
An increase in the percentage of opera-
12 (San Francisco) 1 from 34 per cent of capacity in
May to 42 per cent of capacity in June, was due entirely to increased
activity by California millers.
Seventy-six mills produced
623~134
barrels during JuneJ while 72 mills produced 525,392 barrels during MayFlour prices receded
sharp~t
during June, although they showed a con-
siderable advance again at the middle of July.
1!YE STOCK. Range conditions continue good in practically all
sections except Arizona and Southern Utah, where there has been de!icient
rainfall for some time.
in
There is, however; a shortage of beef cattle
the range country of District No. 12 {San Francisco), as a larger
proportion than usual of the herds were sold last fall in order to meet
maturing obligations.
The spring lamb crop in the District is reported the
best in several years.
June movement to markets of each of the three principal classes of
live stock has been heavier than in May, although less than during June,
1920, except in the ease of sheep.
Receipts of cattle and calves at
15 western markets during June were
1,117~111
head, as compared with
1,062,988 head during May and 1,282,294 head during June, 1920.
respective index numbers were 111, 105 and 127.
The
June receipts of hogs
were 2,671,462 head, corresponding to an index number of 122, as compared
with 2,401,246 head during May, corresponding to an index number of 109
and 2,695J660 head during June, 1920, corresponding to an index number
of 123r
Receipts of sheep during June were 1,130,874 head as compared
with 1,097,976 head during May and 1,005,790 head during June,
The respective index numbers were 83, 80 and 74.
1920~
Prices of these three
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X-3177
classes of live stock have been higher in July than in June, and
the advance has been particularly marked in the increase of hogs.
Dressed hogs on July 15 likewise were two cents a pound higher
at Chicago than on June 15, and similar increases were shown for
the various pork products.
demand~
These are attributed to improved export
in particular from England..
Warm weather at the end of
June hurt the beef trade in District No. 10 (Kansas City), which had
slackened as far back as the latter part of May, although there
was an excellent demand for lamb during the first half of June.
'.
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pETROLEUM.
I-3177
The petroleum industry during the
characterized by continued production in eAcess of
further price cuts
fined products.
rangin~
~ont~
of June was
requirements~
and by
from 2 per cent to 19 per cent for all re-
California showed the greatest inctease in production.
The average daily production wa~ 337 ~ 625 barrels~ an increas.e of 641 556
barrels as compared with June, 1920, and of 524 barrels as compared with
May, 1921.
Production was greater than consumption, and at the end of
June the stored stocks of 29,768,643 barrels represented an increase of
1, 713,933 barrels over those at the close of May.
Seventy-six new wells
were Opened with a dally .production of 19,965 bar1·e1s.
·In District No.
11 (Dallas), the average daily output was 380,171 barrels as compared with
372,596 b'rrels for the preceding ~onth~
A total of 26~ new •ells, .which
had an initial production of 73,o62 barrels, were completed in.June, as
compared with 278 new wells, with an average daily production of 75,574
barrels, for the month of May.
Preliminary estimates of· the production
of crude oil in the three states of Kansas,
Oklato~a,
and Wyoming
indica~e
a total production of 14,850, 000 barrels for tbe 30 d a7s of June as compared with 15,412,000 barrels for the
31 days of May.
Re:r-orts for the
first two weeks of July, however, showed a considerable reduction in output with indications that feWer new wells will be completed in July than
in any month since February, 1920.
In this District, 733 new wells were
completed in June with 71 1 890 barrels daily new production as compared
to 714 wells with 87,461 barrels daily new
productio~
for the month of
May, and 1,135 wells with lc6, 970 barrels daily new production in June,
1920.
In all Districts, there were further pronounced reductions during
June in the prices of crude
petrole~
and its refined products, because
of decreasing consumption and increasing stored stocks.
In the Texas,
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X-3177
-11-
Kansas, Oklahoma, and Wyoming fields crude oil is quoted at $1.00 per
barrel while in the California district $L35 is the present price.
COAL.
Demand for bituminous coal is very slack and movement of
coal to the lake ports is sluggish.
Railroads and public utilities
are placing the largest orders, but are not making future contracts.
Production of bituminous coal in the United States during the first
six months of 1921 amounted to
196,000.~000
tons which is smaller than
in any similar period since 1915, and is 66,000,000 tons less than the
production for the corresponding six months of 1920.
was
33,852~000
June production
tons as comrared with 33,330,000 tons for May and with
The respective index numbers are 91,
90 and 122.
of normal.
District No.
3 (Philadelphia), reports output 60 per cent
Operations are declining and many mines are closing for the.
summer months.
The mines of Colorado and Wyoming were operated at ap-
proximately 50 per cent of capacity as a result of the reduced demand.
June production .of anthracite coal totaled
71 786.,000 tons corresponding
to an index number of 105, as compared with 7.,497,000
tons.~
corresponding
to an index number of 101, for the preceding month1 and with 81 1581 000
tons, corresponding to an index number of 110, for the corresponding
month of 1920.
District No. 3
A
generally dUll anthracite market is reported.
(Philadelphia)~
In
production continued at the same rate as
heretofore 1 but greater amounts of domestic sizes are being stored by
dealers who are laying in winter supplies.
sizes are being stored at the mines.
On the other hand, steam
Retail prices were advanced the
usual lO cents per ton on July first with an additional 15 cents per ton
for the new Pennsylvania state tax.
Beehive coke production continued
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X-3177
-12-
I
to decline during June, with present output in District No. 3
(Philadelphia) only 11.7 per cent of that reported a year ago.
By-product coke is being produced at less than 50 percent of the
normal
rate~
but it remains practically unchanged in price.
IRON AND STEEL.
tinue at a low level.
Operations in the iron and steel
in~ustry
con-
Pig iron production during June was l 1 C64,633
tons corresponding to an index number of 46, compared with 1,221,221
tons during May1 corresponding to an index number of
production was the lowest since January, 1908.
53.
Daily average
•
Steel ingot production
declined similarly, from 1;'3.65, 850 tons during May to 1, 003., 406 tons
during June.
The respective index numbers were 54 and 43.
T:ne un-
filled orders of the United States Steel Corporation likewise declined,
from
5~482,487
tons at the close of lvlay, corresponding to an index number
of 104, to 5)117,868 tons at the close of
number of 91·
from 90 to 76.
June~
corresponding to an index
The number of active blast furnaces decreased during June
Present production is stated to be at a rate not more
than sufficient to meet current demands 1 and manufacturers are not accumulating
stocks~
except when the operation of the by-product ovens makes
it profitable to consume the coke produced in the manufacturing of pig
iron..
Consumers' stocks are stated to have been steadily decreasing
during past months
1
but no attempt is being made to replenish them.
The
large manufacturers, on the other hand, appear to have in general adopted
the policy of shutting down plants or curtailing operations rather than
attempting to force their goods upon the market irrespective of prices.
New price levels wer,e established early in the month, which represented a
formal recognition of the levels previously reached through sl1ad.ing t::_:_:
t; ..... ,--.') ..........
L:C:.)I.)
("\- .""""'\ .J;
-13-
L'·r..~_)Li,t
X-3177
schedule of prices announced on April 131 rather tnan a new development in themselves.
Some of the smaller companies in fact are already
stated to have shaded the new levels.
In spite of the reductions1
the volume of new business on the whole
continue~
small.
Some firms
in District No. 3 (Philadelphia) report a iew inquiries from automobile
and oil tank manufacturers, while in District No. 4 (Cleveland), there
have been an increasing number of requests from railroads for material
A few inquiries and pur- .
building .
With increased act~v~ty
chases of new equipment have also developed.
for repairs and some buying has resulted.
in recent months there has been increased purchasing of structural steel.
Price reductions have been made by
.AlJTOMOBILES,
72 out of about
90 large automobile maunfacturers in the country 1 while four have in-
creased the price •.
Reductions have been comparatively fewer on the
higher priced cars1 and the percentage reductions are also stated to
have been less ..
The reductions range from 5 to 34 per cent, the av-
erage decrease announced by 45 companies bein6 14.8 per cent.
There
has been some revival of sales in consequencs, but tnis is now subsiding,
''
and it is stated from District No.J (Philadelphia) that "the midsummer
season bids fair to be duller than usual."
Greater economy in pur-
chasing by consumers is evidenced by the relatively better demand for the
lower priced cars and for used cars of all types, as well as by an exceptionally good demand for accessories and parts.
A conspicuous ex-
ception is afforded by a leading make of low priced car, which is stated
to be selling in record
quantities~
Manufacturers in general are keep-
ing production close to existing demands in order to prevent accumulation
of cars.
Shipments of automobiles reflect the situation just indicated.
June shipments are estimated at 191 200 carloads, as compared with 18,608
r ...
X-3177
-14-
,.---~
carloads during May 1 while driveaways during June were 18 1 000 cars as
compared with 15.,193 in May .. and June boat. shipments are estimated at
3 1 700 cars as compared with 2 1 881 cars during May.
HETAL HANUFACTURING ..
The .metal working industry of New England
is operating at approximately one-third capacity1 with rather more firms
below this average than above ..
Producers of machinery are confronted
with a considerable quantity of second-hand machinery on the market that
must be absorbed before substantial orders can be expected.
of orders on hand is extremely
snall.,~
The quantity
and the fir:.1 with a volume of ad ..
vanced business equivalent to whole time operation for even a week or two
· is the exception.
Companies have frequently been asked to suspend shiP-
ments of goods ordered until business conditions improve.
While jobbers
and dealers stocks are not considered large 1 buying continues on a handto- mouth basis.
NONFERROUS HETALS.
Production of the nonferrous metals has been
very inactive during June and the early part of July, and there has been
''
very little demand for either copper .. lead or zinc.
It has been stated
by leaders in the copper industry that June marked the slowest month since
June.,
ing..
1908~
but towards the middle of July conditions became more encourag-
The output of refined copper by reporting
No. 9 (Minneapolis)
..
pounds in
Hay~
in District
amounted to 51 790 1 145 pounds as compared with 5.,927 .,881
but was only 22,.6 per cent of that produced during the same
period last year.
co1~panies
The quoted price of refined copper (New York) during
.,;,
Lo:'-._):_}
,. ..... ,..-
X-3177
-15-
this period ranged from 12.675 cents to 12.25 cents per pound.
The
larger producers are doing practically no business., as they are unwilling to sell) even to favored customers, for less than 13 cents
delivered ..
Export demand has continued weak•
Production of zinc
during June amounted to 19,443 ton~ as compared with 18,~026 tone Jor
Hay., and stocks increased from 83,721 tons at the close of May to
89,889 tons at the close of JunJ ..
The zinc market registered still
furthar pric o d'Jclinos and in thG early part of July zinc was quoted
at 4.20 cents per pound.
Due to the increased amounts of stocks ..
producors are taking stops to curtail production in order to permit the
disposal of some of the accumulations#
District No. 10 (Kansas City)
reports that stocks of zinc ores held in tha bins of the ore producers
and unsold were estimated at 71.,000 tons at the Gnd of June~ 1921, as
cornparad uith 28~000 tons at the end of June, 1920, whilo the average price
for zinc blende ore this year shewed a decro3.sc; of ':..::. per cent whan
.
•
compared with the sarne period last year •
The price oi lead fluctuated
but little 1 the majority of the producers asking 4,40 cents.
The stiff-
off
ening in lead prices is r,e~orted to be due more to holding/on the part
of the sellers than to increased demand.
District No. 12 {San Francisco)
reports that gold, silver and lead mines are still operating at 100 per
cent capacity.
COTTON TEXTILES.
Increased activity in the market for cotton tex-
,<
tiles is evidenced in the greater consumption of,raw cotton reported for
...
~
~---··, __ :(}
__
- 16-
the month of June.
The total amount entering into consumption was
greater by 22,000 bales than during the preceding month, but it was
still 17 pe:r cent below the figure for the corresponding month a year
ag9.
Prices for raw cotton had advanced somewhat at the date of
writing 1 principally because of the unfavorable crop reports.
The
greater part of the increase in consumption is no doubt to be traced
to the enlargement of demand in the New England districts.
It is
stated, however} in the report from District No. l (Boston) that
"competition is so keen that profits are not keeping pace with the
volume of business and fear is felt that the lower wage scale maintained in southern mills endangers the stability of that prevailing
in New England. 11
District
No~
Reports both from District No. 1 (Boston) and
3 (Philadelphia) indicate the prevalence of the demand
for special kinds of dress fabrics such as ginghams, while the demand
for fabrics needed primarily for industrial uses such as ducks and
denims is still weak.
The activity in the cotton goods market has
'
'
not been paralleled by a similar revival in the case of the yarn mills.
Large stocks of yarn are still hel& by manufacturers and are only taken
as needed in small quantities.
Reports rnade to the Federal Reserve Bank of District No .. 6
(Atlanta) by 20 mills engaged in the manufacture of cotton cloth show
an increase of 14.4 per cent in yardage as compared with the preceding
..
month and an increase of 14.5 per cent in shipments •
Orders on hand,
however, had declined 16 .. 7 per cent as compared >lith the end of May and
,,
r-,-"~-'
(_)
;
X-3177
X-3177
- 17-
were 76.2 per cant below the totals for a year ago.
The dullness
prevailing in the market for cotton yarn in Districts No. 1 (Boston}
and No. 3 (Philadelphia) also exists in District No~ 6 (Atlanta) according to the reports received from 28 mills which show a reduction
of 2.2 per cent as conpared·With the preceding month and 20.2 per cent
as compared
~ith
a year ago.
Orders on hand, likewise decreased 10.2
per cent as coupared with the end of May.
The reports furnished by the members of the National Association
of Finishers of Cotton Fabrics reflect with a high degree of accuracy
the condi tioll3 that have prevailed within the cotton textile industry for a
number of 1nonths.
'
There has
~een
a steady increase in output of finished
goods as current orders have improvedJ and the average percentage of plant
capacity in operation advanced to 74 per cent in June as compared with 66
per cent in April., and 68 per cent in Hay.
Notwithstanding this fact, the
total average number of days of work ahead at the e.:.d of the month has shown
practically no change indicating that the demand is of an immediate character.
The following figures present the situation in the finishing industry in more
detailt
~ ~34
firms representing approximately 72 per cent of the industry ir,
the case of uhi te goods, 62 per cent in the case of dyed goods and 30 per
,.
cent for printed goods state that the total number of finished yards billed
during the month of June amounted to 99,929,456 yards as compared with
91,033, 53 5 yards in Hay.
The total grey yardage of finishing orders received in June was 96,828,994 as compared with 86,754,055 in the preceding
month. The total average percentage of capacity operated was as previously
statedl 74 per cent and 68 per cent respectiTely.
The total average work
ahead at the end of the month amounted to 9.1 days for June a.s compared with
10 days for May.
..
- 18-
WOOLFN TEXTILES:
X-3177
The belief that the woolen and worsted industry
has reached a fair degree of stability has received additional confirmation from the result of the opening of the spring lines by the Jrnerican
Woolen Company on July 26.
There was a large attendance of buyers and it
is stated that orders in some cases booked the entire production of certain
mills.
Most significant was the fact that the prices quoted on men 1s wear
fabrics were either about the same or slig;htly higher than quotations for
fall made last February, while there was a general advance of about
7!
cents
on woolen goods for women's wear and practically no change in the prices of
worsteds.
During the month the mills have largely been working on past
ord.ers, as business for fall and winter gC?ods previously had been placed
and the spring season openings still in prospect.
The activity of the
industry is shown by the fact that woolen and worsted machinery has been
en;ployed from 74 per cent of ea:paei ty upwards during June, and wool conbing machinery has run at about 96 per cent of capacity.
Notwithstanding
the favorable outlook, it still remains true that there is a very restricted market for raw wools and that prices both of wools and of tops
have suffered further reductions..
It is said that "Prices for raw wool
are about the same as they were during the first half of 1916 while tops
~re
selling at about the same prices as those that prevailed during the
last half of 1916."
The demand for finer counts of yarn is strong.
The
available supply is small and the outlook promising for spinners able to
produce theae better grades •. Nevertheless the market for woolen and
worsted yarn generally &peaking is not very active.
quantities merely to fill in depleted stocks.
Orders are in small
It is stated, however, from
District No. 3 (Philadelphia) that the demand from the knitting trade has
"developed bey-ond expectations" and that there has been some difficulty
...
- 1- -
.
'
in securing sui table yarns.
Slight improverr.ent in the business in hosieJ:y
and underwear yarns is also noted although dullness still prevails.
The
demand for carpet and rug yarns is somewhat greater.
SILK
TEXTILES~
The prospects in the silk iiXh.lstry are fairly favor-
able at the prssent time as witnesse~ by the fact that the consumption of
raw silk during June amounted to 33;846 bales as compared with only 27,209
bales in
M~.
month of 1919.
In fact the
l~tJPOrts
tota~
was as great as the amount consumed in any
during the month of June amounted to 28,857 bales,
a slight increase over the
~
totals.
As a result of the increase in con-
sumption, however, the amount in storage at the end of the
mont~
fell to
15.552 bales as oonpared with 20,541 bales held at the end of May. The
latest reports from the district in and about Paterson indicate that the
percentage of operations to maximum capacity is about 45 per cent which
is somewhat below the estimates for a month ago.
attributed to seasonal influences.
The drop can probably be
Reports from District No. 3 (Philadelphia)
are particularly encouraging and it is stated that one important ftrm
re-
ports a. larger business for the first six months of 1921 than for any
similar period in its history.
The trade reports generally note that Canton
prices are advancing, and that the Italian market has also received good
advance orders ..
HOSIERY:
The conditions in the hosiery trade remained substantially
as they were a month ago.
The long drawn out strike in the full-fashioned
silk hosiery mills has persisted with the result that the scarcity of goods
has become so great as to encourage importations from abroad.
There has
been a slight increase in demand for better grades of lisle hosiery and
cotton hosiery has also been taken in somewhat greater quantities but only
X-3177
- 20-
Where price reductions have been made.
In District No. 3 (Philadelphia)
24 firms selling to the wholesale trade report an increase of 17.3 per cent
in product manufactured during June as compared with Ma.y. Orders booked,
however, dropped
42~7
per cent and unfilled orders on hand on June 30,
were 13.4 per cent less than during the preceding month.
On the other
hand seven firms selling to the retail trade not· only showed an inc~ease
in product manufactured during June of 26.7 per cent, but also in orders
booked and unfilled orders on hand on June 30, with percentages of 65 and
4o respectively.
UNDERWEAR:
There were indications of improvement in the maeket for
knit goods during June.
It was reported from District No. 3 (Philadelphia)
that a fair number of orders had been received for the late spring trade
in underwear and operations were at 75 per cent of capacity, and in some
cases even more, for the majority of reporting firms.
increased as compared with
~ay,
Production had also
and 20 firms reporting to the Federal Re-
serve Bank of PhiladelJ:hia. showed an. increase in th0
;~~od.uct
manufactured
of 13.2 per cent as compared with May, although the totals were 31·7 per
cent below those of a year ago.
Orders booked during the month increased
43.9 per cent while unfilled orders on hand at the end of June had been
reduced 22.9 per cent.
Orders for the fall trade have been so sligpt,
however, that unless the next few weeks show a very decided ioorease in
demand it will not be possible for manufacturers to fill any subsequent
o~ers
within the limited time available.
It is estimated by some firms
that the production of woolen and cotton ribbed underwear has not amounted
to more than
15 per cent of normal sii'lCe last December. The improvement
noted in yhe report from District No. 3 (Philadelphia) is also evidenced
by the returns received from
uers
of .America..
62 mills reporting to the Knit Goods Manufact-
The production of summer underwear during June amounted
"-'""'col
L,_ . '-L
CVj{)
v
- 21 ...
'.
'-·'~'.;)
77
.... _ ....J
_,., .)· • I
'
to
65.98
per cent of normal as compared with
63.6
per cent during the
month of May, while the :product~ on of wi.:1te:- und.e!'Wea:i: rose to 6~.. j2 1-;;,;r
cent of normal as compareiwith only
SHOES AND LEATHER:
during July.
48.5
per cent during the preceding month.
Prices of hides and skins have shown little change
District No, 3 (Philadelphia) states that calf skL'"ls have hel4.
steady at 18 cents and that considerable sales have been made at that price.
The price of goat skins has shown a slight increase, while the price of
cattle bides has tended to decline.
well maintained.
Demand for upper leathers has been
There is a fair amount of business in calf leather and
some export orders for suede calf have been booked.
A considerable export
business in patent leather has developed, and the foreign demand for glazed
kid has recently shown a marked growth.
The output of glazed kid is in-
creasing, but manufacturers are selling more than they are producing..
District No.
3
(Philadelphia) reports that sales of sole leather declined
during July, but the prices showed little change.
Sales of hat leather
have recently been very satisfactory, but trade in belting leather and
glove leather is very stagnant.
Shoe production in New England showed a
marked increase d'U.l'i:ng June, and a.{llounted to over
compared
with about
50 per cent
60 per cent of capacity,as
in April and Ma.y.
The June output
eight representative shoe manufacturers in District No. l
(~ostonO
of
was about
24 per cent h:lgher than that of Vay, and more than twice as great as that
r:
of November, 1920.
District No. 3 (Philadelphia) states that manufacturers
are for the most part well supplied with business, and that prices as a rule
have been
fir~y
maintained.
Manufacturers of women's shoes in that
Di~trict
report that high shoes are ordered in smaller quantities than low shoes, and
k.
that calf' and kid leather& are in largest demand..
In District No .. 8 (St.Lo11is)
<:'· ,...,: r;-
L--.U>
X-3177
-22-
factory operation has continued at fram 90 to 100 per cent of capacity
according to the reports received fran 11 firms, but now orders have
shown a perceptible decline since July l.
Sales of reporting wholesale
shoe dealers in District No. 7 (Chicago) during June showed an increase
of 4.4 per cent, as compared with June, 1920,
LUMBER:
Demand for lumber declined somewhat during June..
No. 12 (San Francisco): reports
11
District
extreme quiet in lumber production" which
is expected to change when new freight rates to eastern points became effective.
Seventy-five per cent of the logging camps are reported closed
and will remain so until lumber derrand improves.
The dema.nd for spruce,
however, is greater due to increasing orders from fruit growers and packers.
The four lumber associations of the District report a June production of
377,605,000 feet, the highest figure reached during the current year, and
4.8 per cent greater than the May cut.
525,630,000 feet.
During June,- 1920, production was
Neither shipmen-nor orders increased in proportion to
the increase in cut, and both were lessthan in both IV:ay, 1921 and June, 1920.
Shipments were 318,697,000 feet, a 4,. 7 per cent decrease from the
and were 15.6 per cent less than the June cut.
· creased accordingly.
compared 'I; to Mq.
r~y
figure,
Mill stocks have been in-
June orders show a decrease of 14.7 per cent when
The large part of these orders call for mixed carload
lots, an indication that purchases are only being made to meet current needs.
Reports from 33 southern pine mills in District No .. ll (D9.lla.s) show a
decline in demand for lumber during June as compared to May.
Orders booked
in June represented 66 per cent of normal monthly production, whereas orders
r
booked in May represented 75 per cent.
Actual production of the 33 mills
X-3177
is reported as 29 per cent below normal, and 5 per cent above shipments.
In the week ending July 1, average production of 138 members of the
Southern Pine Association reporting in District No. 6 (Atlanta) was
greater than for the preceding week but less than for any other week since
that ending April 22nd.
Orders received during the same week, were 6.54
per cent greater than actual production, but 20.,8 per cent less than norn:al
production.
These same mills report "a moderate volume of lumber moving in-
to construction
lots*
channels", with retailers buying chiefly in mixed carload
Prices remained fairly stable.
June lumber cut was
than in J'Wle, 1920.
5 per
In District No. 9 (Minneapolis) the
cent greater than in May but 28 per cent less
The stocks of lumber m.anufacturers increased 2 per
cent over the close of May and were 50 per cent greater than at the close
of June, 1920..
Orders were reported to be 3 per cent greater than in May,
but 18 per cent lower than in June, 1920.
si~
The total orders for the first
months of 1921 were less than one half of those during the same period
last year.
Retail lumber sales in the District increased 20 per cent in
June as Cotap:l.red with bi.B.y, but were 12 per cent lower than in June,. 1920.
BUILDING:
The building contract figures (compiled by F.,W. Dodge
Company) show a decrease in the value of contracts awarded in June as
compared with May.
Both contract and pertni t figures, however, indicate
that building activity this June is greater than is normal for this season
of the year..
Five of the seven Districts for which contract figures are
available show a decrease in activity since May, while Districts No. 2
(New York) and No. 4 (Cleveland) show an increased activity.
Contracts
awarded in District No. l (Bcston) amounted to $15,308,072 as comrared
with $17,954,234 during May.
About $6,531,152 of the June total was for
0.,-..,.,.~
c.:· ,./:_•
- 24·-
X-3177
resideniial purposes as compared with $6,933,658 for May.
In District
No. 2 (New York) contracts awarded during June · totaled "$63 ,561,928 as
compared with May contr.act figures of $58.816,766, and residential building amounted to $34,355,o4S in June as compared with $36,963,442 in May.
Contracts for District No. 3 (Philadelphia) totaled $14,796,800 for June
and $23,373,200 for May.
figures and $6.,81.16,800 in
Of these $3,543.700 in June were residential
May..
In District No. 4 (Cleveland) total con-
tracts for June were $39,928,314 as compared with $33,915,207 in~. while
$8,198,377 of the June total were for residential purposes as compared to
$9,188,212 inMay.
Contracts for District No.5 (RiChmond) totaled $20,-
428,761 for June and $23,023,500 for Mi.y.
Of these contracts there were
residential contracts to the amount of $4,090,859 in June and $6,961,450
in May.
Permits for buildings in 15 cities of District No. 6 (Atlanta)
indicate a decrease of about 20 per cent as compared with May and a decrease
or about 27 per cent as compared with June, 1920.
Contract figures for
District No. 7 (Chicago) totaled $45,199,007 for June and $54,867,976 for
May,
Residential cont~cts amounted to $9,880,273 in June and $9,779,947
in May.
In five reporting cities of District No. 8 (St. Louis) there was an
increase of about 70 per cent since
since June, 1920.
I[
~
and an increase of about 20 per cent
In District No. 9 (Minneapolis) contracts which totaled
$8,762,123. were awarded in June in comparison to $8,841,467 in May. Of these
$2,554,420 in June were for residential purposes and ~2,323 ,2Q2 in May.
District No. 10 (Kanaas City) reports 2,336 permits val11ed at $5,809.297 for
June, 1921 and 1,564 permits valued at $5,993,491 for June, 1920. Nine cities
in District No. 11 (Dallas) report 2,617 permits valued at $4,155,74o for
June as compared with 1,629 permits valued at $2,781,222 for June, 1920.
The value of building permits for 20 cities of District No. 12 (San Francisco)
amounted to $15,450,694 in June as compared with $16,101,689 last June.
7
-25-
j
X-3171
t;....,, ~\.(~
<L-' ,_/~~1
Reports dealing with employment conditions in the
LABOR.
several Federal Reserve Districts show that few changes of importance
\
have occurred during the past month.
This is not surprising in view
of the faet that the industries which are now experiencing a fair
degree of activity recruited their forces some months ago.
On the
other hand, the demand for agricultural labor has already reached the
peak in certain parts of the country, so that it offers less opportunity
for further absorption of excess labor.
The building trades and
metal industries are offering even less opportunity for employment
than during the preceding month.
In District No. 1 (Boston) reports
from the Massachusetts Public Employment offices indicate that during
the first half of July the demand for workers showed a decrease as
coffipared with the same period in June.
Reports from individual
cities such as Worcester and Springfield also indicated a pronounced
drop in the demand for workers.
Worcester, for
example~
showed a
falling off of about 10 per cent inapplications from employers as
compared with the preceding 1;.onth, and 30 per cent as compared with
•
a year ago.
The Springfield office stated that during the period from
June 16th to July 15th 1 10,086 persons applied for work while only
1,078 requests for help came from employers.
.,
The New York State In-
dustrial Commission reported a decrease of 2 per cent between May 15
and June 15 in the number of persons emp1oyed in ~dustrial establish'1
menta in that state.
As in New England 1 the principal declines in
numbers employed were in the iron and steel and metal working industries,
while there ware increases in textile and clothing lines and in
establishments engaged in the manufacture of food products.
A special
survey of labor conditions in District No. 3 (Philadelphia} furnishes
7
r.:.--..1,........\,...,..,J
G_., ""-..·>· ·;;·
••.
- 26 -
X-3177
a comprehensive picture of the existing state of employment in that
District.
Returns from 496 firms show that the total number of men
on the payrolls on June 30 of this year was 29.9 per cent less than
the number employed on the same date in 1920 and 6.7 per cent less
than the number employed on January first.
The decrease is stated to
be accounted for largely by the drop in activity since those dates in
the iron and steel, printing 1 and publishing and tobacco industries,
On the other hand, there has been an increase in the number of employees
in the textile industries.
Not only did the metal trades show great
decreases in numbers of workers but the replies to questionnaires likewise indicated that only 36.2 per cent of those employed were working
at full time while 42.7 per cent were working under a half time arrangement and 21.1 per cent at less than half time.
In the textile industries
94.2 per cent of the workers were on a full time basis and only a fraction
of
1
per cent were engaged at less than half time.
The continuance of
a number of long-drawn-out-strikes in the full fashioned hosiery 1 carpet
and rug industries in District No. 3 {Philadelphia) is reported with no
indications of a speedy settlement.
In District No. 5 (Richmond) some
slight improvement in the labor situation is noted and although the
.
'
strike of textile workers at Charlotte eontinues 1 it has not spread to
mills in other sections.
In District No. 7 (Chicago) the regular monthly
inquiry into employment conditions which is made by the Federal Reserve
Bank resulted in the receipt of returns f1·om 144 firms employing 91;826
persons on June 30, 19Zl.
It appears that the numbers employed had
decreased slightly~ that is 1 1.7 per cent 1 as compared with a month
ago and 38.7 per cent as compared with the same month a year ag?
..
The
- 27 -
X-3177
amount of the pay roll showed st:i.ll sharper reductions of 6.0 per
cent and 50.1 per cent respectively.
In some few industries1 increases
in employment were shown 1 the most noticeable being in the contracting
and building trades where it is said that, following a decline of 19
per eent in May, an increase of 40 per cent took place in June.
There
were also slight gains in numbers employed in clothing 1 knit goods and
shoe manufacturing establishments.
In District No. 8 (St. Louis}
there was likewise an increase in unemployment estimated to amount to
from 8 to 12 per cent in the course of the month.
been a continuous absorption of workers by the
Although there had
de~and
from the country
districts, it was not sufficient to prevent the falling off in total
numbers employed.
District No. 9 (Minneapolis) stated that lumber
manufacturers were employing 1 per cent fewer men in June than in May
and 34 per cent fewer than in June of the preceding year.
In the copper
and iron mines only a small fraction of those employed last year are
working at the present time.
The Department of Labor reports a decrease
of 2 per cent in the case of fi~s employing over 500 men.
ll
The continued
lack of activit¥ in the mining sections of District No. 10 (Kansas City}
has inevitably resulted in a high degree of unemployment although it
is stated that "the effect of these conditions upon the labor market is
.
'
not as marked as would be anticipated"..
Much of the labor employed in
mining has either gone into agricultural work, or is seeking employment
I
'
elsewhere, as there is no immediate likelihood of a resumption of
activity in the mining districts.
In District No. 12 (San Francisco),
employment conditions in the principal cities improved during the month.
In the ei ties o.f Los Angeles 1 Portland, and Seattle, there was a slight
increase in numbers employed as compared with May and the large reduction
- 28 of 25 per eent in San Francisco is in great part aecotmted for by
the strike in the building trades.
In the coastal regions of the
Pacific northwest, the curtailment of operations in the fishing and
lumbering industries and the closing down of shipyards has increased
unemplqrment and in the mining sections there has been no revival of
activity.
Some absorption of the unemployed has taken place in the
agricultural sections.
WHOLESALE TRADE.
It is difficult to generalize concerning the
state of wholesale trade activity during the month of June on the
basis of the reports received, but on the whole it appears that in
view of the natural slackening in business activity which is to be
expected during the sumn,er months 1 sales have held up fairly well ..
In fact~ in the ease of reporting hardware firms in several districts~
increases over May figures are recorded.
For example 1 25 reporting
firms in District No. 3 (Philadelphia) show a slight advance of 1.2
per cent in volume of sales 1 while in District No. 10 (Kansas City) with
, r
three~ firms reporting 1 there has been an increase of 15.1 per cent in
the volume of sales and in District No .. 12 (San Francisco) 1 23 firms
reporting 1 an advance of 7.7 per cent.
''
In two other Districts, namelY 1
in District No. 5 (Richmond) 1 nine firms reporting~ in District No. 6
(Atlanta) 1 14 firms reporting 1 changes from the preceding month have
been insignificant 1 while in District No. 11 (Dallas) 1 three firms
reporting 1 there was a drop of 6.0 per cent.
Hardware sales are, however 1
far below the totals for Jun~ a year ago and as price reductions have
not been so far reaching as in other lines of wholesale trade 1 it is
evident that the dullness which has been characteristic of the preceding
Q'':(':!
........
'-·/
X-3177
-29-
months still prevails.
'-.-~
Several Districts report a slight strengthen-
ing of the demand for groceries~ notably Digtrict No. 3 (PhiJ.adelphia)
with 50 firms reporting an average advance of 4.7 per cent, and
'
District No. 5 (Richmond), with nine firn.s reporting an average advance
'
of 2.9 per cent.
Elsewhere decreases have occurred amounting to 3.2
per cent in the case of District No. ll (Dallas) 12 firms reporting;
3.9 per cent in the case of District No. 12 (San Francisco), 31 firms
reporting; and 12.3 per cent in District No. 6 (Atlanta)J 21 firms reporting.
On the whole, a greater degree of stability appears to exist
in grocery lines, and expressions of optimiBffi concerning the future
outlook are general.
As might be expected at this season, with one
exception, no important changes have occurred in the sales of dry
goods concerns during the month.
In District No. 10 (Kansas City)J however,
three reporting firms record a quite marked increase of 14.9 per cent
over the preceding month and this unusually pronounced advance is
attributed to the fact that retail merchants
possible moment to make their purchases.
~aited
until the last
Elsewhere minor declines
are recorded except in the case of District No* 5 (Richmond) 1 where
nine reporting firms showed an average increase of 1.3 per cent.
In
District No. 5 (Richmond) and District No. 6 (Atlanta) reporting shoe
.
firms have shown increases amounting to 15.2 per
cent~
ei~ht
·/firms report-
: t
ing, and 5.7 per cent 1 six firms
reporting~
respectively.
In District
No. lZ (San Francisco) 1 15 firms reporting~ a negligible decrease of
0.3 per cent was recorded.
In all districts decreases in the sales
of shoe firms were marked as compared with a year ago except in the
t
I
(>,''1.-/.
.::;
'-··~;_
X-3177
-30-
case of District No. 7 (Chicago)~ where seven shoe firms reported
an increase of 4.4 per cent.
It appears that the mark-downs that
have occurred in this District have resulted in unusually heavy
sales for the season. . In none of the four lines covered do reports
.'
indicate any feeling of certainty as to subsequent developments
sufficient to induce retailers to place any substantial orders for
future delivery.
As has been the case for months
past~
buying is
only in small lots for immediate delivery.
Retail trade continues to be cpnsiderably less
in value than in the corresponding period of 1920., but in view of the
fact that prices are noticeably lower the present volume of trade is
probably a little greater than in 1920.
demand for medium
price~
There seems to be a continuing
goods, and several stores report that high
priced goods sell very poorly.
The volume of trade during June has
been increased considerably by profitable ttsales" of seasonable
merchandise which sold readily because of the extremely hot weather.
>'
There is a decided falling off of trade in the furniture and household
furnishings departments.J as a resu.l t of the shortage of res:i.dential
building.
Reports from representative department stores show a de-
crease in all districts in net sales for June from the same month a
year ago.
7~1
This amounted to 3.1 per cent in District No. l (Boston),
per cent in District No. 2 (New York) 1 7.3 per cent in District
No. 3 (Philadelphia), 14.1 per cent in District No. 4
• !
'
(Cleveland),
4.2 per cent in District No. 5 (Richmond)~ 17.0 per cent inDistrict
No. 6 (Atlanta), 17.5 per cent in District No. 7 (Chicago), 7.9 per
'
r
cent in District No. 8 (St. Louis), 16.8 per cent in District No. 9
(Minneapolis)~ 10.8 per cent in District No. 10 (Kansas City)., 17.4
r
'
...
C/"'t:..':i
:1..,/i_....rf~
X-3177
-31-
per cent in District No. 11 (Dallas), and 7.8 per cent in District
No. 12 (San Francisco).
Reports of all the districts show a large
decrease in stocks on hand as compared with those at the close of
June 1 1920, as well as a slight decrease from the stocks at the
close of May.
The rate of stock
turn~over
has changed little since
last month 1 although it has shown a slight tendency to become
slo~er.
Orders at the close of June show an increase as compared with a
month ago 1 but merchants are still buying very conservatively#
PRICES.
During
~-June
and July price recessions have continued,
but in the same uneven fashion as heretofore.
While comparative
stability seems to have been obtained in cotton manufacturers and the
boot and shoe industry, the reverse is the case in the iron and steel
industry, and irregularity marks agricultural prices.
In contrast
with the situation in May but similar to the case in earlier months
the recessions in June appeat to have been greatest in raw materials
and least in finished commodities for personal consumption.
'
(
Retail
prices of food continue to decline only very gradually, the index
number for May registering 145 (as compared with 1913 ... 100) and that
for June 144.
No statistics are available showing the retail prices
of other consumable goods but indications point to a slackened rate
of decline or advance in these lines also~
•
The all commodities index number of the Bureau,of Labor Statistics,
:/
based upon the prices of over 300 commodities, stood at 148 in June
as compared with 151 in May 1 while that of the Federal Reserve Board
based upon 90 price quotations stood at 139 and 142 during the same
,r
months.
Dun's index showed similar changes between June 1 and July l
but Bradstreet's registered a slight inerease.
~·
j
r '', ....
~.i1\../(j;-
X-3177
-32-
The individual price changes which produced this relatively
small decline in June ruay be sumlliarized as follows: - Agricultural
commodities, such as cereals and cotton after advancing somewhat
·,
in May declined quite materially in Junei at the same time live
stock continued to decline ao well as the leading minerals (excepting
anthracite coal).
N:eanwhile a certain number of building
materials~
such as brick cement and some types of lumber remained unchanged in
price 1 (as did finished woolen goods).
commodities in the
"pr~visions"
Cotton goods, raw silk, and
category rose.
During the first half of July, the tendencies in agricultural
prices appear to have shifted again, live stock as well as leading
cereals and cottcn advancing.
At the same time the trend in other
commodities has not been materially changed.
Yarns and cloth in the
cotton and woolen industry have continued relatively
stable~
iron and
steel products as well as the non-ferrous n:.etals Lco:·re tended to decline
while lard, butter, cheese, etc. have increased.
'8i . ·;:~J.:rms coal con-
tinues to decline while anthracite advances.
FOREIGN TRADE. Statistics for total imports ane exports during
June differ but little from the figures for May and disclose no new
tendencies in the general foreign trade situation.
Imports were
valued at $198#000,000, whieh.represents a decline of 64 per cent from
.t
their peak value in June~ 1920.
June exports amounted to $340,000,000
a drop of about 46 per cent from the total for the corresponding month
in 1920 and of 63 per cent from the peak value which was reached in June,
1919.
now
As a part of the decline must be attributed to the lower prices
prevailing~
the Board's foreign trade index is significant, showing
as it does trade movements with
fluctuations
due to prices eliminated.
X-3177
-33-
Total imports for the fiscal year 1920-21 amount to $3.,667 ,000,000,
while exports were $6.,519.,000.,000.
These figures were lower than
the higher records of the previous fiscal
per cent respectively.
yea~
by 30 per cent and 20
The declines would have been greater but for
the influence of the earlier months before the contraction of trade
set in.
However, unless there is a marked revival of our foreign
trade in the remaining n.onths of the present calendar year .. the calendar
year 1921 will show a far greater falling off from 1920 than is indicated by the figures given above for the fiscal years.
There is,
however, a decrease of less than l per cent in the commodity balance
of trade, excess exports falling from
~2,871,000,000
for the fiscal
year 1919-20, to $2,853,000 1 000 for the fiscal year 1920-21.
/1/
Coincident 'Tdth the decline in foreign trade, there has been
a falling off in the proportion of our commerce transported in
American vessels and a corresponding increase in
in foreign bottoms.
l
tr.~eJ
pt·oportion carried
X- 3178
PtCtRAL
RESERVE
BOARD
S!AT!ti!;Nf FOR THE PlESS
.Por release in motni:DJ papets,
Wednesday, Augvat·a,· 1921.·
ftie 'te<leral R~eerve B,U,ks report the condition of the acceptance
market i,n their
~espective Distr~cts
follo1rs~c
as
l1lf:ltli'\ It· .~ (ht$9») .·
.
.· .•
fhe SfCC"f._nc• ..-ket may be cles~ri'bed. aa quiet .b\lt steady· the
· · ·.•.:
excellel':lt tiemand for bills which prevailed at the close of the period:
)~~<;1; ,1
<
,;•·A-·,-;;
~~·:: ~:. fa~r
del$ntl
%~/'
;;::
t.r
acceptuces uatil within a
few clays of Jul:y•l.
Jto.t-
"Withstandial ttltk)UD&ll u-.d that baa since existeo, more billa 1fere
~::~
;:>,
..old in this Dietrict than wets made.
Dealers anticipated that July ·
I
disbursemelltJ would cause a alackeniag in demaml in lew York, !Dfluenced
J~Qney
by· higher call
buying
agai~
After the first. of the month in•·astmentf;
rates.
developed., money became somewhat easier and bills moved
.reasor.u.lbly well.
As the month adunced, toward tbe 15th, sales slack-
. ened conaiterably and dealers' holcli.. ~ increased somewhat, but C)wing
•
•
'
'
- '
.. !._
-
'
-:~-~;, ·2;"'·'-:i:.-:,. ·,
..
tO the --.11 Dtaber Oil bUls being mad•,~ft:here was ao large volume in
U~doubte<lly
c
tbe open market on eertUicates of ~iJ'ldebtedness
.
.
.
'
.
.competes with the acceptance market but· the scarcity of certificates
and the fact that all isS\les are now selling at a premi\ml has, at
least in some ins'(ances, reacted to the benefit of the acceptance
market.
Instances are known of banks advising customers to buy
short tune bills to mature about the time the nett certificate issues
are anticipated ana this advice bas undoubtedly been foilowea.
JUymg rates for about two weeks previous to July 23 were very
generally 5 3/8 per cent for 9G-4ay- bills, although there has been
some buying at
Dtstwi
'lhe
st per
cent.
*' ·2 Uta .%2tkl rates for prime unindorsed 90-day bills
.
4-lera• offering
in the New. York market bec.ame U.rmly .established at
early in. July.
sf
per. c_ent
Deapite fluctuations in the demand for bills and
in the 8\lpply of funds with which to finance PQrtfolios., the deal'
ers were able to maintain offerings at this rate throughout the month•
Shorter maturities were sold at 5 l/8: per cent, during the period
while four and six months bills were .offered at 5 3/8 and
·st
per cent ..
Bills covering the importation of raw silk and raw sugar were
mwerous.
The portfelios o.f several
blpor~t
dealers were composed
largely Of bills dratm un4er recent SU.p.r import credits and these
dealers had difficulty at times in filling orders for bills on other
conr.oditiea·.
!here appeared to be sot'le increase in th& volume of
grain and cotton
export bills d.urtng the month..
'
there ha.s been con•
tinuin.g lack of aecepta.nces drawn overseas in _finarlcing foreign t~e
j
..;. 3-
'lhe bS.fl ma.rket, a.a a. whOle.; has .. 'broa.clsed ma.teria.lly in the past.·
J
•'
•
two months and offerings' of bills to the Pederal:Jleaerve Bank both by
'
dealers and by me111ber blinks have Stea.clily decl;necl.
.
At .the end of
I
· .· July the bill ·holdin$8 o# ·the· hcleral Relerve. Bank were tbe smallest
v in severlLl years, agtepthg ·$5,74'1,000 on July 20,. as apinst a
(
'
'
ma:x:imam of $2311 25'1,000 (in :rebruary a year ago.) · Purcbasea 'by this
..... ,,
bank for the account of its foreifll correspotlctents were an· J.mportant.
factor in. maintaining market activity•
.. m.umt No.a a ''"le 4 a~»A\\LJune in the
A further d~liDe luring
)•• 'been repoJ'tecl _,by ctealera.
aale of bankers'
a~ceptancea
Five dealers bacl · aales totaling
I'>,,
. $6,355,000 in June., as compared with $13,185,000 1n :flay, a dec-rease of
'
1...
53 'J)er
cent.
'
(]
•
As a result of the decline in foreign trade, ·the volume
\'
/.of prime baltksrs" billa is not large, ancl dema.ncl is in excess of SUPPlY•
.
I~rt
.
.
and export transactions 1n Sl.lp.r, cotton, wool, silk, 1md grain
· are lately the principal sources of acceptances.
outstanding on July 10 than on Jws lO., alt~ for this ~th they
report a aaU increase in the.amount sJuscute4.
f.or ,these
~ks
Coaparative fipre,
,
,
ai"e given below:
lm·
~
b•••·' t1ur~1 · outmmUna on
s)ato suep,
,, P£Me4in& Mlill
Ma.rcltlQ•·· ..•••. : ............. $5,828,000
April 10••••••••..•• • ••••••••• 4., 558.,000
May lO......................... 5.611.,000
June 10.,. .•.• ~ •• ~ " .••.•• ·• •• ·. ~: •••. ·a.
.,y9,,,~
· l\Al.y . . ~.~.~ . ~. ~· ··.~:· ·~· · · · .;::.:.:;;•••;~r .·~······~·::·:.·~~.~:~~~s:.··.·~····
· $14,12'1.000
13,2$4.,000
12.,892,000
;~.~
10/198~ ....· .... ' :>'}~~~t
· ·:!~~j;1;.;~:.•.:.t,··~l.~,,~g;:~~
.
X-3178
- 4 ...
National banks were empowered to accept by the Federal Reserve
Act~
but did not make active use of this privilege until 1916 and 1917.
Data which appear in the Comptroller's call reports 1 though not
very recent 1 show the trend
clearly~
The highest amount of accept-
ances outstanding on any call date thus far was $438 1 430 1 000 on
}.!ay 4~ 1929.
The decline since that time has been steady -
Selling rates declined further during the month 1 in keeping
~ith
the general lowering of
eligible
member~'
Uaturity.
30 days
60 days
90 days
6 months
bills
~oney
rates.
Comparative rates for
follo~s:
5-1/2 - 5/8%
5-1/2 - 5/8%
5-1/2 - 5/8%
April
5-1/2 - 5/8%
~1/2 - 5/8%
5-5/8 - 3/4% 5-1/2 - 3/4%
5-5/8 - 7/8% fP-5/8 - 3/4%
5-3/4 - 6% .
July
5-1/8 - 1/4%
5-1/8 - 1/4%
5-1/4 - 3/8%
5-3/8 - 1/2%
------------ ------------
~
Max
District No .. 4 (Cleveland)
-~he continuing general inactivity of industry and commerce_.
both domestic and
foreign~
was a@ain very perceptibly reflected
in the a{:ceptance market.
Fewer bills were created than in the pre-
·-.
vious month 1 and only a
feiT_ne~
names appeared among the makers.
Host of the paper n9• offered is a continuation of previously
arranged acceptance syndicates., and is r.1ade by manufacturers producing absolute
necessities~
volume of foreign
bills~
Little change is noticed in the
either against imports or exports.
\
Thera
;r·
I
X-3178
... 5 -
was littleJincrease in domestic bills drawn against shipments.
The demand for prime bills, in comparison to the available
supply, is much improved over some months past.
The information
that the Governn,ent would not issue another series of Certificates
of Indebtedness to replace the maturing Certificates of Indebtedness, brought into the market many banks that were not previously
found among the brokers' consistent customers.
Corporations and
individuals also bought more heavily than during the previous month.
There is larger demand for the shorter time bills, inasmuch as
it is expected that funds will again be in demand for industrial
purposes in September.
around
6% and
The New York call money rates fluctuated
the demand for prime bills exceeded the supply.
Rates for eligible bills ranged from 5-3/8 to 6-l/8 for thirty
day bills, 5-3/8 to 6-1/4 for 60 day bills, and 5-1/2 to 6-1/2 for
ninety day bills.
Of a total of twenty-one accepting banks in this District,
nine reported the executing of acceptances for customers to the
total volume of $3,445,295.
and oil.
The bulk of these bills covered sugar
The amount of acceptances reported as paid by those in-
stitutions was $3,371,003.
Acceptances bought by the Federal Re-
serve Bank of Cleveland during the month of June were $3,233,045.85
and acceptances paid, $6,953 1 342.79.
pistrict No. 6 (Atlanta)
A questionnaire regarding acceptancefoperations and market con•
ditioos for June was sent to accepting member banks in the Sixth
Federal Reserve District, and thirteen replies
of
wer~
received.
Teo
these replies showed no dealings of any kind in acceptances during
June.
.
X-3178
- 6 -
Aceording to three other
reports~
domestic acceptances ex-
ecuted during June were approximately 2! per cent less than those
executed during the preceding month of
May~
less than were executed during June 1920.
and about 22 per cent
As reported by only one
bank, foreign acceptances executed in June were.3Sf per cent less
than in May, and about 50 per cent less than in June 1920.
Acceptances sold
by~rawers
to other than Federal Reserve
j
Banks were approximately 25 per cent less in June' than in May, but
about 50 per cent more than in June 1920.
the Bank's own portfolios and not
June as for May.
sold~
Acceptances held in
were reported the same for
No figures are available for June of last
year~
The amount of acceptances purchased in the open market during
June by the Federal Reserve Bank of Atlanta, including the New Orleans Branch, was 41.2 per cent greater than during May, but considerably less than in April.
District No. 7 (Qhicagol
Reports from Banks in the Seventh Federal Reserve District
show an increase in purchaees of acceptances during the month of
June, although dealers' purchases show a decrease.
sales showed a marked decrease.
In both cases
Country banks are reported to have
purchased lese, the demand coming from corporations and small buyers.
The maturities of bills purchased were divided as follows:
30 day
60 day
90 day
180 day
13.3
18.8
65.6
2.3
per
per
per
per
cent
cent
cent
eent
Classification of practically all purchases shows that 68 per
cent of bills purchased were based on transactions involving importation.i
X-3178
..
'I''
..
- 7
I
Yt"
r··. -~ .-(,
V'_lL_.L
or exportation of goods.
Comparison of returns froffi 29 banks shows an increase of 22.3
per cent in bills bought; of 75.4 per cent in bills held at the
Bills
close of the month; and of 4.2 per cent in bills accepted.
sold decreased 17.5 per cent.
Reporting dealers
sho~
decrease in
all the items; 27.3 per cent in bills bought; 52.2 per cent in bills
sold, and 15#6 per cent in bills held at the close of the month.
Co~parative figures for May and June transactions are given below:
{l!Ltho usa::;:n~d~s~g:.Af__;:.:do~l~l::.::a:::r..:.:.s)
Bills Bought
Bills Sold
Held at 61ose of Month
Amount Accepted
June
29 Banr;-3 Dealers
14 1 911
'7! I 978
13,671
6,743
5,734
2,872
16,821
29 Banks
12,188
16,~579
3,270
16,140
May
3 Dealer§
10,967
14,108
3,402
Statistics on Bankers Acceptances at the Federal Reserve Bank of
Chicago for June are as follows:
DURING. MONTH
June
Bankers Acceptances Rediscounted •..... $ 578,281
*Bankers Acceptances Bought ............ 8,331,600
Bankers Acceptances Sold from Holdings
199,156
May
$ 60,000
10,997,981
2/331,162
HELD AT CLOSE OF MONTH
6,500
4,821_.453
Bankers Acceptances Rediscounted ..... .
*Bankers Acceptances Bought ••.•........
•
Included in Acceptances Bought but not in Acceptances Sold, are
and those bought with agreement by the seller to repurchase
within 15 days.
District No. 8 (St. Louis)
There has been little change in the market for bankers• acceptances in this District during the last thirty days.
The volume of
such bills purchased by member banks has been amall 1 and few, if any,
bills have originated in this District.
Scattering purchases have
been made by city banks but the volume has been nominal and the market
c- ,• (_)
~1/~;_.f,·;::J
X-3178
- 8 -
dull.
st. Louis
Louisville
Bankers' Acceptances of 60 to 90 days.
--t .-5-i 5!
Endorsed •.......••.....••.•
Unendorsed ••.•.•..••...••.•
5!
D~striet
No. 9 (Minneapolis)
During the month of June no bankers or trade acceptances or
dollar exchange was purchased by the Minneapolis Federal Reserve
Bank although acceptances were discounted to the amount of $313,000,
of which $50,000 were bankers acceptances.
The amount of accept-
ances discounted in June shows an increase of $106,000 over the
arroun t discounted in ~':ay 1 when there were $207,000 worth of trade
acceptances and no bankers acceptances discounted.
were no purchases of acceptances.
In May there
Last year in June, discounts
of trade acceptances amounted to f375,000 and there were purchases
of bankers acceptances of
~1,425,000.
for acceptances ren.ained unchanged at
Discount rates of this bank
ot per
cent for trade accept-
ances and 6 per cent for bankers acceptances.
District No. 10 (Kansas Ci tvl
The new regualtion of the Federal Reserve Board doubling the
maturity period of eligible bankers' acceptances as a means of facilitating the financing of export trade has awakened iuterest among
Western Bankers.
At this time , however, the acceptance activities
of the large banks of this District are confined to customers' paper
on grain and flour for export.
This is now assuming considerable
volume, one Kansas City bank reporting $2,000 1 000 of acceptances on
wheat for European Governllient account and another $968,000 on flour
for export to Europe.
'""
·'
i...l-'- ~~-' _:,
("""\
X-3178
- 9 -
District No. 11 (Dallas)
There was no perceptible activity in the District's acceptance
market during the month just past.
The estimated volwne of bills
created in this District and outstanding on June 30th was $1,341~000.
of which approximately $856.,000
was based on domestic shipment and
storage of goods, the remainder representing import and export transactions.
Reports from accepting banks indicate a slight reduction
in their aggregate outstanding liability as acceptors since the close
of the preceding month.
gregated only $150,000;
Our own holdings of bills on June 30th agall of which were executed but not endorsed
by banks in this District.
District No.· 12.(San Francisco)
Demand for bankers' acceptances has been uneven during the month
ending July 15.
Just previous to July 1, buying fell off
but since then there has been a brisk movement of
those with longer maturities.
bills~
materially~
especially
Buying has been fairly well distributed
over the whole coast, although the bulk of the demand has come from
Cal if.ornia banks.
Prime bills are still scarce and are absorbed by
the market immediately upon their appearance.
The rate for prime 90's continued to drop during the month due to
the easy condition of the call money market.
On
June 29, this basic
rate fell to 5 3/8 per cent, followed by another drop on July 8 to a
5 1/4 basis, where it has remained up to July 15.
Attention of bankers
and others is being directed to the advantage of this form of investment
for deposited funds which may be subject to withdrawal independently of
the norrral industrial or agricultural liquidation in a
c~mmunity.
amples of such funds are county 1 state, and municipal deposits.
Ex-
FEDERAL RESERVE BOARD
WASHINGTON
SUBJECT:
Index Digest
Dear Sir:
The
Ind~
Bulletins, bas been
Digest of the Federal Reser'\l"e
~iled
today, in accordance
with your order.
Very truly yov.rs ,
%\LTEP L. EDDY
Assistant Secretary.
!
FEDERAL RESERVE BOARD
WASHINGTON
x-3180
J.ugus t 4.
1
SUBJECT:
::J.921.
Cireul&l"s ot Federal Reserve Banks.
Dear Sir:
By direct4.on of the Federal Reserve Board,
I would request that you issue instructions to the
proper depa.rtment or dtvision of your bank that there
be assembled and forwarded to the Board six copies
of the cu~rent set of circular letters addressed by
your bank to its member bat:.ks during the period January
1, 1920, to date; and a.ho thst instructien.s be given
that hereafter there be forwa~ded to the Board as
iss~ed six copies of all new circular letters addressed
to member banks.. If your bank supplies :i.ts member
banks with b~nders for circular letters issued, it is
requested tlla.t the necessary number of binders to contain two complete sets of the circulars be sent to the
Board.
Very truly yours,
Walter L. Eddy •
Assistant Seeretary.
TO GOVERNOBS OF ALL F .R.:BANKS.
FEDERAL RESERVE BOARD
WASHINGTON
X-3181
AUIUSt
SUBJECT:
9.. 1921.
Destruction of "punchings", cancelled paper
currency~
. ·Dear ·Sir:
...
The Treasury Department advises the Board that on
several occasions recently there have been sent in to the
Department for .redemption ·by in:iividuals residing in Federal
·Reserve Bank cities packages containing a quantity of pieces
known _as "p~chings" cut from notes by cancelling machines.
This would. indicate that all of the Federal Reserve
Banks are not exercising due care in the matter of destroying 11 punchings" from notes that have passed through the
cancelling machines. The suggestion is made by an official
·of the Treasury Department that all "punehings" should be
gathered up and burned each day.
Thi.s matter should have
the attention of the officer of your bank who has supervision
of this work.
·
Very truly yours,
G o v e r n o r.
TO THE GOVERNORS OF ALL FEDERAL RESERVE BANKS.
'~
I
FEDERAL RESERVE BOARD
WASHINGTON
X-3182
August 16~ 1921.
SUBJECT:
!xpense Main Line~· Leased Wire System.
Dear Sir:Under the new form of contract (effective July 1, 1921)
entered into with the American Telephone and Telegraph Company 1
the charge for the main line wires of the Federal Reserve
This means
Leased Wire System will be at the commercial rate.
that the cost of the service has been more than doubled.
The American Telephone and Telegraph Company will continue
to render its monthly bills to the Board and payment thereof
will be made by the Board4
Each Federal Reserve Bank will
reimburse the Board monthly for the total expense of the operation of the Main Lines of the Federal Reserve Leased Wire Sy~
tem, in the proportion that the number of words sent by it ·
bears to the aggregate of words sent by all Federal Reserve
Banks1 exception being made 1 however 1 of messages transmitted
to Washington over the Leased Wires in connection with Treasury
business.
Arrar.gements have been made whereby the Board will
hereafter·bill the Treasury Department direct for all messages
sent to and from Washington over the Leased Wires in connection
with Treasury business.
Each Federal Reserve Bank will continue to send in the
Monthly Report on Form 30C6-A, and deduction will be allowed for
salaries of operators as indicated in the Board's letter of
May 12, 1921, X-1923.
Very truly yours,
Walter L. Eddy 1
Assistant Secretary.
TO CHAIRMEN OF ALL F. R. BANKS.
("\ .~ ~~
V.J.!.. ~~
TREASURY DEPJJ.iTMENT
WASHINGTON
August 11, 1921..
The Governor,
Federal Reserve Board.
Sir:
You are ad. vi sed that the Department has referred to the Comptroller
General of the United States 1 Treasury Department Division, for settlement
the account of the Bureau of Engraving and Printing for preparing Fed.eral Reserve notes during the period July 1 ·to July 31, 1921, amounting to $256,576.50,
as follows:
Reserve Nqtes ._~
~1.9..
~-~Q
~50
$100
T,gt_al
65,ooo
14,000
Z4i,ooo
147,000
94,000
696,000
44,000
47,000 25POOO
447,000
48,000
35,000
200:000
266,000
77,000
9,000
559,000
43,000, 10,000
I71,000
481,000 374,000 13,000
1,892,000
36,000
1,000
251,000
193,000
299,000
2, 000
·-2 , 000
SanFrancisco.~g"?.OOO_l24£QQ.
63,0QO
3,000
....:::.::..
417,000
2,961,000 1:449,000 714,000 51,000
5,175,000
5,175,000 sheets at $49.58 ••.......•..... $256,576.50
The charges against the several Federal Reserve Banks are as follows:
~
Boston••••• - •• 162,000
New York •...•• 455,000
Philadelphia... 331,000
Cleveland ••.•• 117,000
Richmond ••..•• 207,000
Atlanta •..••.• 118,000
Chicago ••••••• l,024,000
• St. Louis •••• ~ 214,000
Minneapolis ••• 106,000
Kansas City. . •
F~r2l
Co,!rmen•
Piat~
Inc. ComSheets
sation
Printirl& Mat.el'ials
p~_l}2_~tion
Total
Boston........ 241,000 $4,012.65 $3,848.77 $2.,942.6"1 $ 1,144.75 $11,948 .. 78
New York ••.••• 696,000 11,588.40
11,115.12
8,498.16
3,306.00
34,507.68
Philadelphia.. 447,000
7,442.55
7,138.59
5,457 .. 87
2,123.25
22,162,26
Cleveland ••••• 200,000
3,330.00
3,194.00
2,442.00
950.00
9,916.00
Richmond.: ...•• 559,000
9 1 307 .. 35
8,927.23
6,825 .. 39
2,655.25
27,715.22
Atlanta •••..•• 171,000
2,847.15
2,730.87
2,087.91
812.25
8,478.18
Chicago •••.••• 1,892,000 31,50:1..80
30,215.24
23,101.32
8,987.00
93,805.36
St. Louis ...... 251,000
4,179.15
4,008 ..47
3,064.71
1,192.25
12,444.58
Minneapolis... 299,000
4,978.35
4,7?5.03
3,650-79
1,420 .. 25
14,824.42
Kansas City...
2,000
33,30
31.94
~ . 24.42
9.50
99.16
San Francisco. 417,.Q9.Q _§....g1~.~Q.Ii _6.6§~::jW.
5,09.h§.Z _j.4 980 .. 7_1?_ __ 20.674.8~
5,175,000 $85).63~75 $82,644.?5 $63,186 .. 75 $24,581.25 $256,576.50
The Bureau appropriations will be reimbursed in the above amount from
the indefinite appropriation "Prepara.t ion and Issue of Federal Reserve Notes,
Reimbursable", and it is requested that your Board cause such indefinite appropriation to be reimbursed in like amount.
·
By direction of the Secretary;
Respectfully,
Eliot Wadsworth,
Assistant Secretary of the Treasury.
c, .r
r-:
,::_,- - · ' - - 11__,.
TREASURY DEPART:,1ENI'
WASHINGTmJ
X-3184
August 11, 1921.
The Governor,
Federal Reserve Board.
Sir:
You are advised that the Department has referred co the Comptroller
General of the United States, Treasury Departr;>ent DiVision, for settlement
the account of the :Bureau of Engraving and Printing for prep-.~.ring Federal Reserve notes during the period July 1 to July 31, 1921, amo1mting to $128.91,
as follows~
Federetl Reserve Notes a 1918.
$500
New York ............
Atlanta .............
Chicago .............
St. Louis ...........
$1000
$10000
800
300
__g_oo
1,300
Total
800
1,000
500
300
2,600
·--100
1,000
100
_];:.DO
1,200
100
2,600 sheets at $49.58- ....•....... $128.91
The charges against the several Federal Reserve Banks are as follows:
Sheets
New York .......
800
Atlanta .......• 1,000
Chicago ........
500
St. Louis ......
300
2,600
Com12ensat ion
Plate
Printing
$ 13-32
$12.77
15.97
7.99
4.79
$41-52
16 .. 65
8-32
5.00
$ 43-29
Inc. CeoMaterials
~nsation
Total
$ 9.77
$ 3-80·
$ 39.66
12.21
6.10
3.66
$ 31.74
4.75
2.38
l.L~3
$ 12.36-
49-58
24.79
14-88
$128.91
The Bureau appropriations will be reimbursed ih the above amount from
the indefinite appropriation "Prepd.ration and Issue of Federal Reserve Notes,
Reimbursable", and it is rec:t.uested that ycur .::o..J.rd cause such indefinite aH ropriat ion to be reimbursed in like amount.
By direction of the Secretary:
Respectfully,
Eliot Wadsworth,
Assistant Secretary of the Treasury.
1
,--.,_(-.l.t' ......
_.
v-!,<~\ 1
FEDERAL RESERVE BOARD
WASHINGTON
X-3185
August 18, 1921.
SUJ3JECT:
Joint r.onference of Federal Reserve Agents
and Governors.
Dear Sir:
The :Board has designated Tuesday, October 25th, as the
opening date for the annual joint conference of Foderal
Reserve .Agents and Governors of Fed.eral Reserve Banks.
It
is the Board's desire that this conference be conducted in
the sarr.e ma."lner as last year and that both joint a.T'd
separate sessions be helu.
It is suggeBted that the
presiding officer of each body be conl"ti +,uted a conmi ttee
of one to a-.:-range a Hst of topics for separate discussion
and that they act tcgother in arranging the urogram for
the joint meeting.
The Board in due course will prepare
a list of topics which it desires to have cc.ns:'i.d:i.lred and
it is hoped that the program can be compls·c.ed and a copy
placed in the hands of each Federal Reserve Agent and. \lovernor
not later than October 15th.
Go v e r n o r.
TO ALL FEDERAL BESERVE AGENTS
JI..ND GOVERNORS.
("'-,-~~~4
'l..?-{··:·}~
FEDERAL RESERVE BOARD
WASHINGTON
X-3186
August 18, 1921.
SUBJECT!
Payment of Dtvidends to
Liquidating Member Bank.
Dear Sir:
The attention of the Federal Reserve Board has been
called to the fact that the practice of the various Federal
Reserve Banks with reference to the payment of dividends upon
surrendered Federal Reserve Barik stock is not uniform. It appears that in the case of insolvency or voluntary liquidation
of a member bank it is the practice of some Federal Reserve
Batiks to pay dividends on the stock held by such member bank
only up to and including the date on which a liquidating agent
or receiver is appointed, but that other Federal Reserve Banks
allow a reasonable time for the adjustment of accounts between
the liquidating bank and the Federal Reserve Bank and, if application for surrender of the stock of the Federal Reserve
Bank held by the liquidating bank is made within a reasonable
time after the appointment of the receiver or liquidating agent,
dividends are paid on such stock up to the time the stock is.
actually surrendered.
The Board has thoroughly considered this
subject and wishes to communicate its conclusions to all Federal
Reserve Banks in order that their practice in such cases may be
uniform.
Neither the Federal Reserve Act nor the regulations of the
Board prescribe the exact time when a bank in liquidation must
surrender its stock in the Federal Reserve Bank.
It is true
that the Federal Reserve Act provides that when a member bank
voluntarily liquidates, or when it is declared insolvent and a
receiver is appointed, the stock held by it in the Federal Reserve
B_ank must be surrendered for cancellation.
The Act does not pro-
tt',r'\()
0(-,-~lf...,J
X-3186
- 2-
vide that it must be immediately surrendered for cancellation,
however, and it must be contemplated that such stock should be
surrendered as soon as the acco'lmts between the lifluidating bBilk
and the Federal Reserve Bank can be reasonably adjusted.
The
Board is of the opinion, therefore, that a Federal Reserve Bank
is authori£ed to pay dividends to the liquidating agent or receiver of a member bank for such time after the member bank goes
into liquidation or the receiver is appointed as is reasonably
re~ired for the adjustment of these accounts.
It is suggested,
however, that should the liquidating agent or receiver fail or
refuse to file an aT,~plication for the surrender of stock in a
Federal Reserve Bank after allowing a reasonable time for the
adjustment of accounts, the Federal Reserve Bank should make a
tender of the amount due the member bank and should pay no dividends for the period subsequent to such tender.
This letter supersedes any former rulings of the Board,
including the informal ruling published on page 457 of the June
1917 Bulletin, in so far as those former rulings are in conflict
with this letter.
Very truly yours,
Go v e r n o r.
To Governors and Agents.
('· r'-.
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FEDERAL RESERVE BOARD
WASHINGTON
X-3187
August 19, 1921.
CONFIDENT I!L
SUBJECT!.
Farm Products Paper.
Dear Sir:As you may know, there is very strong pressure here, both in Congres·sional and Administrative circles, to do something for the !'arming intei'ests
of the country.
All manner of unsound plans have been pressed upon the
attention of the :Board, which h"'s, however, consistently taken the view
that discount rates of Feder~1 Reserve Banks ought normally to be somewhat
higher th~tl durrent r"tes.
The reply is made, however, that times are not
normai and thai they cannot become normal until the farmer becomes more
prosperous.
One plan which has been suggested, and in fact has been voted on fav. orably by the directors of one of the Federal Reserve Barikst is that a low
rate be established on paper secured by agricultural products, to be effective only in cases where the member banks will sign a certificate that the
money has been loaned to producers or merchants at a rate not more than
2% higher than the s:t:ecial discount rate offered.
The :Board thinks that
this plan is absolutely unsound and I do not think that it would ever consent to any such arrangement.
The plan which has been suggested would
give a profit of 40% to borrowin~ banks on each such transaction, and would
commit the Board to the principl; that a borrowing bank is entitled to a
profit in its rediscount transactions.
I enclose an alternative plen which I have wo.rked out and which is
submitted to you for your consideration and frank cotlll'tent..
I may say that
it meets with the favor of some members of the :Board, although it seems to
me that in ordinary circumstances it is one which should not be considered.
However, with the limitations provided it appears that there is nothing
particularly harmful about it, for if the plan should be adopted and the
statement, which 'is ·now submitted to you, given tc the public, it would
show on its fece that it is offered in order to facilitate orderly marketing and a definite time limit is set for its operation.
It might open
the we.y for Federal Reserve Banks· to relieve themselves of farm pressure
wa\hout making any drastic ch~nges in their general discount schedules.
It would leave the rate to the borrower as a ttatter to be deterrrined
between him and the bank to which he applies for a loan.
C"-.,r--:~~
v[~:.., .
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X-3187
-2-
If the Boa~ should decide to make the announcement outlined,
lach Federal Reserve Bank could determine for itself whether or not
it desired to establish a special seasonal rate on farm products paper
end if so, eech bank could establish for itself its own rate, subject
to the approval of the Federal Reserve Board.
I would appreciate an
early reply, giving 10ur candid opinion as to the advisability of
such a statement being issued by the Board.
Very truly yours,
G 0 V ERN 0 R.
FOLLOWING iEDERftL RESFRVE .AGENTS
NO COPIES TO ANY OI'HERS
Caldwell Hardy. Richmond
~- Heath, Chicago.
John H. Rich, Minneapolis
W. McC. Martini St. Louis
Asa E. Ramsay, Kansas City
W. F. Ramsey, Dallas
Joseph A. MCCord, Atlanta
John Perrin, San Frencisco
w.
.,
.
.. r·.
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·~
,.j-';:,;; J
X-3187-a
TENTATIVE REGULATION
-
S~IQTLY
CONFIDENTIAL
FARM PRODUCTS PAPER!
ln order to aid in the orderly marketing of the major crops
of the country, the Federal Reserve Board has authorized all Federal
Reserve Banks to establish a special seasonal rate on Farm Products
'aper, which is defined as follows: notes, drafts and bllls having
a maturity not exceeding ninety days, exclusive of days of grace~
adequately secured by shipping documents, warehouse~ compress or
terminal receipts, or other such documents,conveying security title,
covering readily ·marketable agricultural staples of the new crop.
Authority is given Federal Reserve Banke to establish this special
seasonal rate on Farm Products Paper, as above defined, with the
expectation that the benefit of tbe rate will be passedalong by
nsmber banks to the borrower or primary producer. Any renewals
after Dinety days wUl be made at the regular rate and notice is
given that this special seasonal rate will lapse after January 31.
1922,· after which time all offerings of Farm Products Paper, as
above defined, will be subject to the rate then prevailing for
commercial paper.
tbe Board has consistently advocated the policy of orderly
marketing, for any undue rush of staple products to market results
in congestion of transportation facilities, in a strain upon the
banks 8lld usually in a temporary depression in prices, which,
without benefiting the ultimate consumer, works a hardship upon
the producer.
8/19/2l.
FEDERAL RESERVE BOARD
WASHINGTON
August 22, 1921.
X-3188
SUBJECT:
Monthly Report Leased Wire
~erations.
Dear Sir:
As you have already been advised 1 the Treasury Department
will hereafter reimburse the Board dil·ec·c for all messages trans-mitted to and from Washington on Trft~?-_sur.v.:. bus;ipess. Please direct,
therefore, that hereafter there be reported to the Board monthly
(Form X-3006a)., under the caption "Fiscal Agency business"_, the
total number of words contained in all messages d.5..spatched from
your bank to the Treasury Department at Wasnington whether or not
in connection with fiscal agency business.
The reports rendered by the banks for July (Form X-3006a),
show only the number of words contained in messages transmitted on
fiscal agency business. TheRe reports have been adjusted here on
the basis of count made in "this office of the words contained in
mesa ages to and from the banks and the Treasury Department on all
character of Treasury business.
You will note from the enclosed statement that each bank
is being assessed its proportionate share of the entire cost of the
service on the basis of the number of words contained in all messages
dispatched and received by it (on both bank and Treasury business).
Credit for the amount due from the Treasur.y Department on account
of business handled for it during the month of July will be gLven
the banks on statement of August business when rendered.
· Very truly yours,
Walter L. Eddy.,
Assistant Secretary.
Enclosure.
CHAIRMEN OF ALL FEDERAL RESERVE BP.NKS.
,..\ ,.; ,
V'r<.;,
............ ......
FEDERAL RESERVE BOARD
.'\
WASHINGTON
X-3191
August 25, 1921.
SUBJECT: Extension of Maturity Dates an 2% Certificates
of Indebtedness ~ledged to Secure Federal
Reserve Bank Note Circulation.
Dear Sir:
As you. have been advised by the Secretary of the
Treasury, the maturity date of all 2% certificates of indebtedness deyosited by the Federal reserve banks with the
Treasurer, of the United States to secure Federal reserve
bank note circulation maturing on .or after August 20, 1921,
and :prior to August 20, 1922, has been extended one year.
For your information, :proper notation of this
extension has been made by the Treasurer of the United
States on the receipts given by that officer and held by
the Board in trust for your bank covering certificates
de:posi ted to secure your bank note circulation~
Very truly yours,
Walter L. Eddy,
Assistant Secretary.
.
TO THE GOVEENORS OF ALL FEDEBAL RESERVE BANKS.
'
<'':~·"'
~f'-.,I(J
X-..$192
FEDERAL RESERVE
BOARD
STATEMEN~ FOR THE PRESS
For Release in Morning Papers1
Thursday, September1 11 1921.
The following is a vreview of general business and
financial conditions throughout the several Federal
Reserve Districts during the month of August, as
contained in the forthcoming issue of the Federal
Reserve Bulletin.
Heavy movement of agricultural products to market has been the outstanding economic activity of the country during the month of August.
There has been a tendency to unusually early marketing and the revival
of fair export demand in certain agricultural lines has operated to
hasten the movement of crops away from the farm.
Deterioration of
some elements of the agricultural output, notably cotton has tended
to modify the previously existing agricultural outlook.
Readjustment
of costs in many agricultural lines is approaching a point where it is
probable that 1 even at present prices, some crops will show good returns.
This early movement of crops to market has resulted in the liquidation
of some outstanding indebtedness even in Districts where the carry-over
from last year's crop was greatest.
As a result it has lessened .the
intensity of the credit demands which might otherwise be expected to occur
during the marketing season.
This has enabled member banks in not a
few places to strengthen their position and to lessen their obligations
to Federal Reserve Banks.
These factors have on the whole been favorable
to .Pthe general credit situation) and rates of interest have been
moderate.
(""'~ r-o:·
()
!&.,..J-' :~~ .. )4\....."
X-3192
- 2 -
The manufacturing outlook continues to be decidedly irregular
and "spotty" due to the fact that there has bean greater progress
in some lines than in
others~
The decline in iron and steel activity
continues although some increase in orders has taken place since the
end of July.
In various textile and leather lines business continues
to show indications of much greater activity~many mills being "booked
up" further ahead than at any time for many months past.
It is true
that July production showed a falling off in some lines especially
certain branches of the textile industry, a factor attributed to
seasonal dullness, but future orders are almost uniformly reported
as very p·romising.
Flour milling, as a result of heavy wheat move-
ment has likewise been exceptionally active.
Little improvement
has been mnoted in machine industries and in the engineering
Businesses which consume
non-f~rrous
trades~
metals have been notably inactive.
Price movements have been on the whole limited., but with >.a slight
upward tendency in the case of some groups.
The Federal Reserve Board
index prepared for international comparisons shows an increase of two
points to 141.
for July was
The index number of the Bureau of Labor-Statistics
148~
the same as during June.
The current price reports
for the early part of August indicate if anything, a strengthening
of prices in some lines.
A striking factor in the developments of the past month has
been afforded by the shrinkage in retail trade.
During most
periods of business transition such shrinkage nas been somewhat belated.
C'\.t"'J0
v
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X-3192
- 3Postponement of reduction in retail activity is due to the fact
that a curtailment of consumption usually takes place only when
accumulated purchasing power is reduced.
During the past
year the maintenance ot the activity of retail trade has been
noteworthy, and only during the past few weeks has a reduction
paralleling the falling off previously noted in manufacturing
been observed.
The fact that advance orders are being undoubtedly
placed owing to exhaustion of stocks is reflected in an improvement in the wholesale dry goods trade during July.
A
tendency
towards closer adjustment of retail to wholesale prices is also
noted although there are still many outstanding discrepancies.
Large
fi~res
for unemployment have been transmitted to
Congress) but it should be remembered that these figures are
based on comparisons with peak periods of employment in 1920.
There are indications of increasing employment in various
manufacturing industries, but taken as a whole the employment
situtation for the month of August appears to show but little
change from the preceding month ..
Slight improvement in
so~e
branches of foreign trade 1 fairly
good agricultural yields and enlargement of manufacturing demand
seem to point to a more favorable autumn season1 but the situation
is not such as to forecast any extensive or immediate reviv.al
of business in a large sense.
<:_.)\)
X-3192
- 4 AGRICULTURE:
Weather conditions during July resulted in a serious
deterior~tion
of crops throughout the United States.
The composite
condition of all crops on August l was 93 per cent of their average
condition on that date during the last ten years, as compared with a
composite condition of 96.4 per cent on July 1.
tion of wheat on August 1 amounted to
757 ,000,000
The indicated producbushels, which is
52,000,000 bushels less than the fotecast on July 1 and 67,000,000
bushels less than the average production for the past six years.
The
wheat crop is estimated to be unusually large throughout the Pacific
Northwest, and in the States of Kansas and Nebraska, but is below the
average for the years 1915 to 1920 in all other States.
There was some
deterioration of the corn crop during July, but the estimate of produc. tion on August 1 was 3,0)2,000,000 bushels, which is about 162,000,000
bushels greater than the average production in the last six years.
The
estimates of corn production in the States of Iowa, Illinois, Indiana,
Ohio, Kentucky and Minnesota on August 1 were considerably lower than
on July 1, but this was partly counterbalanced by increases in the
estimates for Oklahoma, Kansas and Mississippi.
Reports from District
No. 8 (St. Louis) state that recent rains have been of cincalculable
benefit to the corn crop.
The oats crop suffered more serious damage
in July than any other grain crop 1 and the estimated production on
August 1 was only 1,137,000,000 bushels, as compared with an actual
production of 1,526,000,000 bushels in 1920, and an average production
of 1,433,000,000 buShels for the years 1915 to 1919.
The crop was muCh
damaged by green bugs and by rains during the period of threshing.
The production of sugar beets was estimated on Augu.st 1 to amount to
8,000,000 tons which is 550,000 tons lower than in 1920, but 1, 780,000
- 5
tans greater than the average production for the years 1915 to 19194
District No. 6 (Atlanta) states that the sugar cane crop is in good
condition and estimates that 549.900 acres were planted to cane in 1921,
as compared with 505,200 acres in 1920.
The white potato crop deteriorated
seriously during July and the production forecasted on August 1 was only
316JOOO,OOO bushels, as compared with a production of 428,000,000 bushels
in 1920 and an average production of 371,000,000 during the pre·'1ious five
years.
COTTON:
The cotton crop showed some further deterioration during
July and the early part of Augu.st, as a result of excessive moisture,
which caused
On
~st
and encouraged the activities of the boll
weevil~
July 2? the condition of the United States cotton crop was 64.7 per
cent of a full normal, ·as compared with 69.2 per cent on June 25, 1921,
. and 74.1 per cent on July 25, 1920.
The estimated total cotton producbased on estimates of July 25~
tion/is 8,203,000 bales which is 5,16),000 bales less than the production
in 1920, and is the smallest cotton outtu:rn since 1895·
District No. 5
(Richmond) states that the cotton crop in South Carolina, except in the
Piedmont counties, has been seriously damaged by rain and the ravages of
the boll weevil, whereas the crops of Virginia and North Carolina are
in reasonably good condition.
The boll weevil is active in practically
every part of District No. 6 (Atlanta).
The season is about twoW9eks
..
late in Georgia and Louisiana and the crop is undersized wherever
fertilizer has not been used.
In
Dis~rict
No. 11 (Dallas) there has
been a rather serious deterioration in the cotton plant, as a result
of hot, dry weather in certain sections and of extensive depredations
of the boll weevil in other localities.
District No. 8 (St. Louis)
reports that the cotton plant is fruiting, but in many sections is showing the lack of fertilizers on thin soils.
X-3192'
- 6TOBACCO:
r...,~""
,U,<i_;H)
A further decrease in the condition of tobacco is reported,
and consequently a lower indicated yield.
The condition of the crop on
August 1 was 66.6 per cent as compared with 71.9 per ~ent on July l and
79.1 per cent for the August 1 ten year average conditionyield has accordingly declined from 932,000,000 pounds
pounds.
The estimated
to 889,000,000
The Pennsylvania crop of cigar tobacco suffered a material
setback in July, as did also the Ohio crop, the condition in the two
sections declining respectively from July 1 to August 1 from 84 to 76
per cent ..
and from 76 to 57f In the case of the manufactured and export types
of tobacco, the Virginia crop has been seriously damaged by dry weather,
but tobacco in District No. 8 (St. Louis) "in the immediate past has
responded to the mo.re favorable weather conditions."
The Burley crop has
been severely damaged by drought, but there is still mu.ch of the crop
that will make a fair yield if given good weather.
The South Carolina
markets opened shortly after the middle of July, but most of the early
offerings were of low grade and prices offered were unsatisfactory to
producers.
The monthly average price paid was only 8 cents per pound
as against an average of 22.4 cents in July last year.
It appears,
however, that there is a fairly active demand for good tobacco and at
satisfactory prices.
In District No. 3 (Philadelphia) the demand for cigars and cigarettes
appears to be improving.
The opinion seems to be quite general that
there has been a further improvement in the ind.ustr7 in Augu.st. Operations,
though less than at this time last year, are steadily increasing. Finished
stocks which manufacturers may have had some months ago have been largely
disposed of, but there is a determination in the industry to adjust operations so tnat any accumulation in the future will be impossible.
r·~·!f(
i;; --~:_,;/·.·2:.
- 7FRUIT:
citrus and
There was some improven:ent in the condition of both the
deciduou~
fruit crops during July.
On August 1 the production
of apples was estimated at 103,000,000 bushels, as compared with a. forecast of 104,000,000 bushels on July l and an actual yield of 244,000,000
bushels in 1920.
District No.
6
(Atlanta) states that shipments of both
peaches and watermelons from Georgia during 1921 have exceeded the records
of all pre•ious years.
The Florida citrus crops are developing well,
except on the lower east coast, \vhich is suffering from drought..
Reports
indicate that crops of peaches and pears in District No. 12 (San Francisco)
will be somewhat smaller in 1921 than in 1920, but that the apple crop
will be larger.
There has recently been an increased demand for canned
fruit, but it is estimated that the 1921 pack of California fruit canneries
will be
35 per cent less
than that of 1920.
Shipments of citrus fruits
from California. amounted to 5,308 cars in July, as compared with 1,858
cars in June, while shipments of deciduous fruits from that State totaled.
3, 439 cars in July, as compared with 2, 200 cars in June.
·-
GRAIN MOVEMENTS:
Receipts of grain at primacy marlrets during July
were much higher than in June, and were in fact larger than in any month
since Se:ptember, 1919.
This was chiefly due to the exceptionally large
wheat receipts a.t Kansas City, Chicago, St. Louis, Omaha and Wichita.
Wheat receipts at the four leading markets of District No. 10 (Kansas City)
in July were over 30 per cent greater than in the largest previous month
on record, and amounted to 32,789, 4oo bushels in comparison with 11,034,
400 bushels received in June and 12,001,650 bushels received in July, 1920.
Receipts of wheat at Chicago totaled 14,070,000 bushels in July, as compared
'with 2,511,000 bushels in Jure and 2,562,000 bushels in July, 1920.
Wheat receipts at Minneapolis and Duluth, however, only amounted t"''
X-3192
r -\ ·c:...,,'\__.); J
- 8 -
11,261,947 bushels in July, as compared with 12,599,842 bushels in June
and 9,817,057 bushels in July, 1920.
The total receipts of corn, oats,
and barley at these two cen-ters were considerably smaller in July than
in June, but were almost t·.vice as great as the receipts in July, 1920.
In the four leading centers of District No. 10 (Kansas City) corn receipts
were materially larger in July, 1921 than in July, 1920, but there was a
slight decline ln the receipts of oats and barley.
Stocks of grain and
flax in term:tnal elevators at Minneapolis and·Duluth amo'Uilted to 21,098,-
788 bushels on
.:hJ~Y
31, a decrease of 3.6 per cent from the stocks on
June 30, but an increase of 366.3 per cent over the stocks on July 31,
1920.
Stocks of oats in these elevators continued to increase during
July and amo'Uilted to 15,919,084 bushels on July 31, 1921, as compared
with 300,129 bushels on Jv~y 31, 1920.
About 166,199,000 bushels of
oats, approximately 10.6 per cent of the 1920 crop, ~till remained on
the farms on August 1, which compare& with 56,128,000 bushels on August
1, 1920, and. average stocks of 78,328,000 bushels for that date during
the five preceding years.
FL()'!JR:
No.
There has been an increase in flo1.U" production.
In District
9 (Minneapolis) the JTlly output of mills lJl'Oducing sbuut 75 per cent
of the flour milled in the District increased 13 per cent over June, and
3 per cent over July, 1920. The production during the four weeks ending
July 30, 1921 amounted to 1,871,265 barrels.
Mills operated at 47 per
cent of capacity as compared with 39 per cent in Jlme, and 39 per cent
a year agp.
Production at milling centers in District No. 10 (Kansas
City) is "the largest on record for this time of the year, due to an
exceptional.ly
large demand for immediate shipment."
July output of
reporting mills was 1,902,527 barrels. an increase of 76 per cent over
X-3192
- 9-
the July, 1920 figuke, and operations were at 92 per cent of capacity
--
for the week endinlt·Augu.st 6.
Practically all local 1nills and many·
of the country plant~ :re;orUng in Missouri, !"..ansas, Nebraska and
Oklahoma ere sold up:· for August shiprrent and are booking or~.ers for
September delivery,:.al.though little buying appears for long deferred
shipment.
The libe-ral demand from nearly all sections of the country
is believed to indfcate that bakers' and dealers• stocks of flour are
low.
:Export trade is fairly active, but indicates no great revival of.
foreign buying up to this time.
In District No. 12 (San Francisco),
however, production o£ reporting mills was approximately the same during
July as during June, operations being at 41.2 per cent of capacity, as
compared with 41.7 per cent in June, and 38 per cent in July, 1920.
The July average price of flour was lower than for June, and a further
decrease occurred during
LIVESTO~:.
Au~t.
Live stock on farms and ranges generally continues
in good condition, and ranges and pastures in general are excellent.
While there has been continued drought and hot weather in Southwestern
Texas, range.s in New
i.1c~ico
and Ariz;-:.na 3re -r.ow wAll
moisture as a result of rains
stock to market was light.
._:,d:'~L"":"ing
J·llly.
~,:nrlied
with
The July movement of live
Receipts of cattle and calves at
15 western
markets during the month were 94o,l73 head, corresponding to an index
number of 93, as compared wi trh l, 117,111 head during June, corresponding
to an index number of 111 and 1,180, 789 head during .July, 1920, corresponding to an index num1:er of 117..
Receir.ts of hogs likewise declined
from 2, 671,462 head during June to 2, 021, 263 head during July, as compared
with 2,007.332 head during July, 1920.
The respective index numbers
..
,
•
r·,r, ..... ,
L
- 10 ...
were 122, 92, and 91.
Sheep receipts shcmed a smaller decrease from
the June figure, being 1,035,674 head as compared with 1,130,874 head
during June and 1,300,881 head during July, 1920.
numbers were 76, 83, and 95.
The respective index
Au~st cattle receipts, hcwever, have been
especially heavy, and Kansas City receipts for the week ending August
20, were the largest since the third week of November, 1920. Considerable interest was manifested in feeder cattle during July in some leading markets.
A favorable factor in cannec~ion with the industry has
been the live stoCk pool recently organized.
Cattle prices commenced
to increase at the close of July, and the increase continued in the
first half of . .August.
Hog prices. a.f'ter advancing throughout July,
declined continuously until the third week in August.
At the middle of
the month :Lcattle prices declined sharply, this being ascribed by
District No. 7 (Chicago) chiefly to market conditions in the east.
While good com fed cattle have been finding a ready market, states
that District, the spread bebV'eeu corn :fed and grass fed stock has
increased, and there has been some difficulty in finding a ready
market for the grass fed stock.
The latter has been especially
affected by the recent price declines, and comnon grass steers were
down to the season's lowest price at Kansas City during the week ending
August 20. Hog prices in general, however, showed a slight increase.
The revival of the export trade in meat which set in a. month ago has
increased in volume..
No ..
Bu.siness in pork and pork products, states District
7 (Chicago) has been far beyond expectations. The cooler August
weather has also improved domestic sales, both wholesale and retail,
which had been retarded by the extremely hot July weather.
. . ; ,;
~- ._
X-3192
- 11--
COAL:
Prodnotion of bitundnous coal has been steadily declining.
The end of the British strike has caused a noticeable slowing up of
the export trade; as American coal is no longer able to compete in
European markets.
Another factor has been the slackening of demand
in the Duluth-Superior region.
As a result, July production amounted
to only 30,394,000 tons as compared with a. production of 33,852,000
tons in June and of 45,009,000 tons in July, 1920, the respective
index numbers are 82, 91 and 121.
The stocks of bituminous coal: are
unusually large and many small operators are reported to have been
forced to close down, due to lack of storage facilities.
District
No. 3 (Hliladelphia) reports that there is a better sentiment in the
trade, but that orders seem to have remained practically the same,
except in a few cases where they have declined.
MOst of the orders
are for spot delivery or prompt shipment. .In general, prices remain
about the same..
In District No. 5 (Richmond) consumption about equals
production, while in. District No.
expected.
6
(Atlanta) recovery has not come as
Prices in that District have been reduced as the result
of a reduction in wages.
Mines in D~strict No.
10 (Kansas City) are
operating at 50 per cent of capacity, due to the fact that there is
no market.
Anthracite production also showa a falling off.
July production
was 7, 050, 000 tons as compared with 7, 786,000 tons in June and
8,247,000 in July, 1920.
The respective index numbers are 95, 105 and 111.
C';~--cj
i_:.. ;_.) .,.,~
- 12-
These figu.res indicate that anthracite production has not fallen
as greatly as bituminous prodnction.
quite readily.
Domestic stove sizes move
In District No. 3 (Philadelphia) the demand for
other sizes has slowed down until it is now as small as for the
steam sizes.
Independent operators have reduced prices steadily
until they now almost equal company prices on domestic coal,
and are
so~hat
lower on steam sizes.
have decreased considerably since June.
J3eehive coke prices
Production is at only
7 per cent of normal, although the outpnt of by-product coke
is 146 per cent of normal.
District No. 3 (Philadelphia)
reports a slight improvement in the o"?-tPilt of beehive coke.
"Sentiment in the trade", states that District,
0
is mch more
buoyant than i t was last month. and many operators believe
that production and prices have both passed the lowest point
and will henceforth steadily improve."
- 13 ..
X-3192
PETROLEUM
While production of crude petroleum during the month of July
continued in excess of consumption, a slight but gradual decline
was noticeable.
This decrease in production togethsr with the halt
in the tendency toward lower prices in the petroleum industry are
considered as encouraging factors by the producers.
The fall in prices
duripgJuly averaged 12 per cent for crude petroleum and 5 per cent for
leading refined petroleum products.
Since the peak was reacned last
October1 the average price of crude petroleum in the United States has
receded
64 per cent.
A
very favorable feature in the oil situation
has been the good demand for gasoline, which has been running about
10 ~ cent in excess of the requirements during the .corresponding
period last year.
However, it must be remembered that this is the
season for the greatest consumption of gasoline.
Production figures
compiled by the United States Geological Survey shmv that production
of cruJe petroleum in the United States for the month of July is
105
per cent of that for July a year ago or 401 228,000 barrels as compared
to
36,~203,~000
barrels.
The number of oil wells completed in July, how-
ever1 showed a drop of 74S wells as compared with July .. 1920.
District
No. 12 (California) reports that 76 new wella with an initial daily production of 19,675 barrels were completed during the month of July, but
five wells were abandoned.
California reports an average daily output
of 331~252 barrels of crude petroleum for July as ~ompared with 337,625
barrles in June and 279,169 barrels in July, 1920.
District No. 10
(Kansas City) states that production of crude oil in the Kansas-Oklahoma
and Wyoming region showed a daily average production of 419 6 250 barrels
m July in comparison to 3941 000 barrels daily production in July a year
··~
- 14-
X-3192
ago while production in Wyoming alone haG been reduced to less than
50#000 barrels per day.
District was only about
1920.
The nwmer of new wells completed in the
56
per cent of those completed during July,
ThEr --~dcontinent field exceeded all previous records, with
a total production
ot 25,594,982
barrels~
althougn a decrease in
monthly yield and daily average was registered by all Texas fields
with the exception of the North Texas group.
In this district only
251 new wells were completed during the month in c~mparison with 868
.
.
wells in July, 1920.. With the price of oil at the present low point,
the cost of drilling deep wells., particularly those of low productivity
.is almost prohibitive..
In nearly all the oU fiel.ds the outstan\iing
feature is the continued increase in stored stocks . of ·petroleum.
ln
California on July 31 the stored stocks amounted~? )1,634,179 barrels as
comp:red. with 24., 406,753 barrels on the same date last year.
This repre-
sents the largest amount of stocks of petroleum in storage in
since
October~
California
1919.
IRON AND STEEL.
A further decrease in iron and
ported for July from the already low June level.
clined from llo64,833 tonsl corresponding to
an
s.~eel
output was re-
Pig ],ron production deindex number of 47,to
864J 555 tons corresponding to an index· number of 38, ••hile steel ingot
production declined from l,003,4o6 tons, corresponding to an index number of ~3) to 8031
376
tons1 corresponding to an index number of
pig iron tonnage is the lowest produced in any month since
35.
December~
The
1903 ..
r~
" . . ..,
4.,...<' '::;_,:,.«,;:~
- 15 X-3192
There waa a further net loea of 7 active furnaces during July,. only
69 being in blast on
Au~st 1.
The unfilled orders of the United
States Steel Corporation also declined somewhat during the month
of July., from 5.,117,868 tons to 4,830,324 tons.
inde~
numbers were
97
The respective
and 92.
Since the .latter part of July 1 1however., there has been some
increase in inquiries and in the volume of orders, although this
has been eccompanied by continued price cutting in nearly all lines.
Sentiment haa improved considerably in the trade, in spite of the
fact that present business represents largely an acc'iJmulati on of
orders, generally for smcill lots and for immediate delivery 1 which
had awaited the arrival of satisfactory prices..
Pig iron, sheet$
and plates are stated to have perhaps been most affected by price
cutting..
Railroads in the central ·West have recently let a few
large contracts for car repair work, although little or no increase
in their purchases is reported in District No. 3 (Philadel~hia).
Operations in that district have improved little if
a~,
but con-
ditions in District No. 4 (Cleveland) are somewhat better1 and increased demand has actually ca.aed a number of mills to be reopened.
Accompanying the price reductons and low §Cale of operations have
been further reductions
inw~ges.
The leading interest has announced
a reduction in the wages of unskilled labor from 37 to 30 cents an
hour, effective August 29.
n"
~~
v'XI.!i
-16-
AUTQMOBILES.
July shipments of automobiles by manufacturers
were tJOmewhat less t.ha.n in JW'le.
Carload shipments were 19,470
carloads as compared with 201 269 in June and 23,082 in July, 1920,
while driveways likewise declined from
i~JUly" as compared with
1~834
machines in June to 15,320
52,342 in July, 1920. Price reductions
announced in July on cars selling at between $1.000 and. $2,000 averaged
13.7 per cent.
Price reductions are reported to have stimulated sales.
Passenger ears sold during the second quarter· of 1921 equalled
57 per
cant of those sold during the same period of 1920, while for the first
quarter they were only 28 per cent of the number a year ago.
NON-FERROUS METALS :There was 1 it tle change in the demand for
nonferrous metals during July.
On account of the seasonal dullness
and the desire on the paz:t of small producers to dispose of part of
their stocks prices for all the important metals receded further toward the encl of JW.y and early part of Aug,ust..
Although the price of
copper was at a very low level, being offered at ll 7/8 cents f.o.b. 1
warehouse,- consumers held off in the hope that tbe market would go
lower.
In spite o! this situation, domestic and foreign sales for
July were estimated at about 70f000,000 pounds, which represented a
gain of 20,000,000 pounds over June, but was considerably below the
figure reached in May.
contract shipments of
'(
Export demand continued weak, although regular
co~~er
equivalent to those here.
were made to European countries at prices
are
It is very 8.J?parent that buyers/ providing
merely for their immediate
nee~s,
since quantities as low ae 25 tons are
:~·
t
-17-
i..
c; . ~_.d.
X-3192
bougJ-lt by those who formerly purchased 500 to 1, 000 tons.
District
No. 12 (California) reports that copper mines are operating at 66
per cent of capacity.
tr~ct
The output of 12 mines reporting in that Dis-
show that production during June was considerabl7 less than in
-May and in June, 1920.
reductio~
The
in freight rates on ore and
bullion and the lower wages for mille labor are favorable features
in the present situation.
Lead continues to hold the strongest position
of all the metals,. although saes in general are limited to carload lots.
DjSrict No. 10 {Kar.sas City) reports that shipments of lead ore in
July averas,ed 1,.201 tons per week, with an average price for the,nmonth
of $43.44 per ton., in comparison to shipments of 1,482 tons per week
with an average price of
$94.10 per ton in July, 1920..
Producers of
zinc are taking steps to dispoae of the stocks on hand by curtailing
production.
Production of zinc during July amounted to 15,495 tons as
compared to 40,194 tons in July, 1920, while stocks at the close of the
month totaled 92,. 408 tons..
District No .. 12 {Calif omia) reports an
inrease in the output of both gold and silver with the mines operating
at maximum capacity.
COTTON
A~ID
TEXTILES. Consumption
of
raw cotton showed a reduction
from 510,339 bales in June to 4601 139 bales in July..
This decrease oc·
cured not only in New England but also in other parts of the country and
in District No. ,·6 (Atlanta) is reflected in the reports showing the production of specific mills which regularly report to the Federal Reserve
'I
~ank.
Notwithstanding the facts noted the reports for July unite in
stating that the
i~ustry ~s
in a
str~g
position and the presence of
~
r ...
,'"I
.. -
~'·=.:..~)
- 18 -
X-3192
a good buying demand is evidenced by price advances in a number of
linea such as print clothsJ drills and brown sheetings.
District No. 1
(Boston) says that ttaoc.etruct,ive features in the New England cotton
goods situation during the first three weeks of .Aue,ust included a
considerable increase in the scale of mill operation; larger sales of
,rint cloth in Fall River, and an improvement in the demand for both
combed and carded yarns_. with higher quotations for the latter.•' This
testimony is further supported by expressions of opinion coming from
District No. 3 (Philadelphia) "different classes of gcods vary in
•
activity~
it is true, but
~;:enerally
speaking
t~.e
entire market is in
better condition than it has been at any time during the current year.
Reports emanating from both the retail and wholesale trade are all
to the effect that business is satisfactory.
This is particularly
.true in the ginghams 1 some mills being sold up for six months in
advance."
The market for cotton yarns also shows signs of greater ac-
tivity in District No. 3 (Phi~elphia) as well as in listrict No. 1
(Boston), but uncertainty as to .ultimate price levals restricts sales
to the present or the i:rnmadiate future as buyers are net willing to
risk long tima commitments.
nitrict No. 5 (Richmond) says that practical-
ly all the mills are running full time and that although their product
is not sold far ahead, they are receiving sufficient orders to take care
of present output wnile new orders are steadily increasing..
of giny.ams and denims are sold ahead for several months.
Manufacturers
The special
·•;
- 19 X-3192
reports on productive output received from 26 manufacturers of
6 (Atlanta) show a decrease of 9.4
cotton cloth ia District No.
per cent in amounts produced in July as compared with June and a.
falling off in orders on
~and
amoWlting to 7. 7 per cent..
However,
'
.
although the average of unfilled orders was lower than for the preceding
some of the individual mills report a larger volume of
month~
orders while
of the mills report their .production sold to the
tw~
beginning of next year.
Moreover, orily two mills report a surplus
of manufactured cloth on hand.
In the case of 28 cotton yarn mills
there was a decrease in output in July as compared with the preceding
month of 8.2 per
cen~,
but orders on hand at the end of the month were
8.1 per cent in excess of those of the preceding month.
FINISHERS OF COTTON FABRICS.
The reports received from the
Association of Finishers of Cotton Fabrics shew a reduction in the
totel number of finished yards billed during the month of July when
the output amount3d to
yards in June..
851 323,724 yards as compared with 99,929,456
The average percentage of capacity for all· reporting
Districts drepped from 74 per cent to 62 per cent.
yardage of finishing orders received fell from
82, 734, 438 yards.
96, 828,. 994 yards to
The average number of days of work ahead at the end
of the month dropped slirjltly from 9.i to 8.. 9 days..
The total gray
....
(''",
-20-
X-3192
WOOLEN TEXTILES.
-·
The movement of the
19~1 wool~
clip to market
has been surprisingly rapid and sales }l1ve been unusually heavy.
Ths
reports from District No. 12 (San Franciftco) state that although. "final
figures on the 1921 wool::clip are not
available~.
it is estimated that
it amounted to approximately 90 per cent of the 1920 clip of
pounds."
Reports
indicat~d
81,000~000
tl:lat 75 per cent of the new product had been
sold outright to mill buyers and that wool dealers having purchased
all the desirable wool that growers were willing to offer had temporarily retired.
At the beginning of the season about 75 per cent of
the old clip remained \mmarketed and is apparently still largely
held.
Small lots have been sold from time· .to time but manufacturers
have been buying the new output.
Prices paid to producers have been
about the ·same as those ruling in 1915.
To quote the report from
District No. 12 "There have been numerous sales at prices rang!lng
between 12 and 18 cents a pound, depending upon the grade and fineness
of the wool and the financial necessities of the seller.
Because of the
necessity of adjusting woolgrowers' overdrafts on thair consignments
of last year's clip, many sales of this year's wool have resulted in
actual payment to the grower of less tan 15 cents per pound."
Shipments
of wool to the east have been made in great part via the Panama Canal.
Such price advances as have oe curred in the raw wool market have been
confined to the higher grades.
"'1
~-'.:.,:
The Botiton market showed a distinct im-
~..,.,_,
.;
X-3192
- 21 -
provement in August in volume of sales but in view of the large holdover it is not surprising that prices have not advanced except in
the case of special grades of which there is a relative scarcity.
regards the
manufactur~ng
As
end of the industry the outlook is exceedingly
favorable, many mills are operating close to capacity and the consumption
of raw wool in June amounted to 59,592,000 pounds which was in excess of
that of any month since April 1920.
The reports published by the Depart-
ment of Commerce showing the idle loom hours indicate that on August
first woolen spindles were idle 20 per cent of the time, worsted spindles
14.. 3 per cent and co~bs 12.6 ~ cent..
The percentages for looms wider
. than 50 inches and 50 inches or less were 20.8 per cent and 29.,6 per cent
respectively.
American Woolen
Following the successful opening of spring lines by the
~ompany
several manufacturers have also held openings.
It is reporteci f.rom District No. 1 (Boston) that abundant orders were
received·and that the production of certain fabrics had to be allotted.
Dist"rict No. 3 (Philadelphia) likewise reports sufficient orders taken
during the first week in August to insure extensive operations until the
beginning of the year for some mills.
There have been no new developments
in the market for woolen and worsted yarns although certain finer counts
are in good demand.
1'he business done is not on the whole of large amount
and ord_ers are being placed for delivery within a limited period.
case of the finer yarns, prices have advanced slightly.
In the
o~.q
V"~"',..•
~
22 -
X-3192
CLOTHING. Special reports from seven manufacturers of wholesale
clothing in District No. 7 (Chicago) give evidence of the lateness
of the season as orders booked during the earlier months of the year were
considerably below those of 1920 while by the end of July the difference
for the season was not more than
7.6 per cent. In July alone orders were
14 per cent greater than in July of the preceding year.
In the case of
the tailors-to-the-trade (14 firms reporting) end the cut-trim-make
(4 firms reporting), industry, orders, production and shipments were all
approximate'ly 35 per cent belON those of last year.
In District No. 8
(St. Louis) improving business was reported by all but three of the 16
r,orting clothing
fi~s.
Sales in July were from 4 per cant less to
20 per cent heavier thann June; orders. however1 were mainly for immediate shipment but there was a slight increaee in future buying
about the middle of the month.
SILK.
Optimistic expressions of opinion concerning the outlook
in the silk industry have not been sustained by subsequent developments.
As a matter of fact there has been a considerable falling off both in
wholesale and in retail buying of silk goods,and: District No.
3 {Phila-
d~lphia) statee that buying of broad silks is almost entirely restricted
·to staples.
No special improvement has been noted in the market for nar-
/raw silks where dull conditions have been prevalent for a lQng period of
time ..
- 23 -
X-3192
Reports from Paterson1
N.J.~
show that during the two weeks
ending August 13J there was a reduction in the number of loom
hours worked from 261~4l.J.4 to 208,500~
dropped therefore from
The percentage of loom activity
39.. 6 to 32.3..
In North Hudson} N.. Y... reports
covering 4)670 looms show that for the two weeks ending August 15,
there was an increase in activity, the peree:1tagas rising from 57 .. 7
on July 30, to 61 per cent on August 15.
cover 15,000 looms
however~
As the Paterson figures
it is evident that for
t~e
District as
a whole there was a fairly pronounced drop in number of hours worked.
In the raw silk markets no particular changes hav5 occurred during
the past month.
Imports of raw silk for July were 8, 500 ba1es
in excess of those for June and during the same period there was an
increase in consumption of 1,100 bales •
.....
.. . :.:...... . .
("\ ·-, ·4
~
- e4 -
....
~·-·)_..(__
X3192
HOSIERY.
Twenty-nine firms manufacturing hosiery reported to
the Federal Reserve Bank of
Philadel~hia
for the month of July.
The
firms selling to the wholesale tra·ie showed reduc+ions in product manufactured during the rronth of
booked fell
4.4 -per cent ss cO"J?ared with June, criers
37.4 r.er cent and
unfi~1ed orders on hand July
per cent lower than at the end of the precedinj;!
hand, the firns sellin? to the
o~erations
during July,
re~ail
produei~g
rronth~
On
31 were 4.8
the other
tra:-'l.e increl'>sed the scr.tle of their
a.9.S per cent larger output and having
unfilled orders on hand at the end of the rronth 18.5 per cent in excess
~ut,
of those at the end of the preceding month.
other firms, orders booked during the month
with June, the drop amounting to
as in the case of the
dtoppe~
sharply as compared
33 per cent. As has been frequently
mentioned .in many quarters of late tr.onths the demand for cotton hosiery
remains very poor although lately there has been a sli@ht improvement
in market conditions for this class of goods.
Silm hosiery, however,
continues to be in demand and the shortage due to the long-drewn-out
strike in the full fashioned hosiery mills has been a feature in creating active business for those mills able to operate.
The rerorts from
Distpict No.3 (Philadelphia) state that conditions in the mills where
the strike "has been in progress are improving and that they are able to
work at
25 per cent of capacity or better in some cases. One of the largest
rrills, indeed, is now eb le to work on alrrost normal basis, but the lack
of suita'ble labor and the difficulties connected with teaching new hands
h"Ve 'been very great,
mills '"'ere
operatin~
In District No. 6 (Atlanta) the· cotton hosiery
at froT'f' 60 to SO per cent of capacity in July, but
the amount manufactured was stated by reporting
~ills
to be slightly less
(".
·~,()
<V •:_
... 25 ..
X3192
than during June and from 20 to 50 per cent below the output for July
1920.
During July the business done ty reporting underwear manufacturers showed a falling off as compared with June but the situation is perfectly understan1able in view of the fact that bUsiness is
being done from hand to mouth and while under ordinar,r conditions at the
end of the summer season contracts for the next summer would normally be
ml'ld.e, there are at present
fe.~'
forward business
Turch~-'>ses.
P.s a result,
the lessening in production in the surnrrer underwear mills is inevitable
for the three rronths following July.
It is probabl~,·however, that there
will be a. strong and steady increase in the production of winter underwea"r from now until the end of the year.
rranufacturers in District NG3
The r-sports received from 19
(?hiladel~hia)
showed
~
falling off in the
product roanufactured during July arr.ounting to 21.5 per cent.
during the month were 27.1 per cent below those of the
unfilled orders on hand July 31 "ITere 2.4 per cent less.
Orders booked
~receding
rr.onth and
The statistics
·received from reporting members of the Association of Knit Goods Manufacturers similarly
month of July.
indic~te
a rather pronounced drop in output during the
Fifty-six mills ret'orted the,t they were working on the
average at 52.2 per cent of normal capaeity whereas in June the reporting
·firms· ( fiJ
65.5 per cent of capacity.
in number) were orereting at
the case of 38 mills
re~orting
In
for both June and July production dropped
from 397,582 dozens to 323,745 dozens or a
decr~ese
of 18.6 percent.
·New orders received during the month fell fr6m 374,625 dozens to 267,362
dozens or a decrease of 28.6 per cent.
~
'f'd
('"'
X3192
Prices of hides
~nd
skins
incre~sed
consid-
erable towards the end of July and were firmly maintained during the
District No. 3 (Philadelphia) re:rorts a.
first three weeks of August.
p~rticularly
large demand for goat skins, whereas the prices of sheep
skins have eased somewhat.
Leather prices, es a whole, htwe been well
maintained during August, but they are still at
level reached this year.
that
u~cer
Re~orts
leather plants are
a~rroximately
the lowest
from District No.7 (Chicago) indicate
o~erating
at 70 per cent and cutstock plants
at 4o -per cent of a full capacity, while the oT.'era.tions of sole leather
tanneries are p:rea.tly curtailed.
and side leathers ere being
belti~
butts
~nd
leather
m~rket
In District No.3 (Philadel-phia) calf
bou~ht
in
l~rge
quantities, but sales of
of glove leather e.re still very small.
The Boston
contir.ues to be quiet, despite the recent increase in
the output of shoes.
District No.1 (Boston) states that the New England
boot and shoe industry is incre"lsing production at a rapid rate.
July output of nine leading shoe
manuf~'>cturers
The
in that section was 92
per cent of their average monthly production during 1920.
Six of these
concerns had more orders on their books on August 1, 1921, than on J..ugust 1, 1920.
The plants of the largest sho• concern in District No.2
(New York) are now operating at 100 per cent of capacity, and are being
enl~rged
in order to perrr.it of increased production.
Business of shoe
manufacturers in District No.3 (Philadelphia) is improving, and factories
which make shoes for girls of school age are
with orders.
p~rticularly
·nell
sup~lied
Jobbers have increesed the volume of their rurchases and
are buying la.rge quantities of low shoes.
..• ,...._
~-''~.\· :._~.
-26-
District No.7 (Chicago') reports
(\'",'I
~p,., __
-27-
that ehoe production in July wae 11~2 par cent less 1 than in
..
and l. 4 per cent less than in July) ·1920.
JUne .
Unfilled orders incteas~d
16 per cent over June arui were nea~ly . three•' times as large as in
July~
1920.
Shoe factories in District No. 8 (St. _Louis) continue
to be operated at from
90 to 100 per cent of capacity,
and shipments
are restricted bJ inability to obtain sufficient goods..
I&MBER.
The output _of lumber during July was restricted
dt.e to a continued decline in the demand.
However, the sentiment
in some sections of the country looks .toward an improvement in
market. conditi<:?ns in the near future •. District No. 12 -(San Francisco)
reports· a· f~vorable outlook for the industry due to several factors;
the reduced frei~t rate to markets east of the Mississippi;_. the
anticipated res~tion of buying by the railroads; the low stocks
of lUmber n~lllftld by distributors; and. the increasing demand for
Arre
rican lumber on the part of Japan, China and Australia..
The
lumber production in that District-which had been increasing steadily
since January: 1 declined slightly during July.
in the District report
a cut
Four lumber association&
for July of 329~343,000 feet 1 which was 12.7
(.i:.
.••.
X-3192
per cent less than the June
op2rating at approximately
cut, and estimate that mills are
65 per
cent .of normal•
tn comparison
with last month, both orders and shipments show a decline due to
the fact that buying has been held in cheek awaiting the freight
reductions .announced on July 11, but not yet effective.
Orders1
du- ing J'~y 1 1921 totaled 263,416 1 000 feet, a decline of 9· 5 per
cent when compared with the previout; month, while shipments. amounted
to 286,727i000 feet in July, a
No. 11 (Dallas)
de~line
of 10 per cent.
In District
35 mills reported a July production which was 31
per cent below normal.
Orders booked during the month were 66 per cent
of the normal monthly production - about the
in the preceding month.
s~
percentage as
The report of 134 mills of ,the Southern
Pine Association in District No. 6 (Atlanta) showed lumber production
for the week ending July 29 to be 22.4 per cent below normal 1 while
shipments and orders were both about 22.6 per cent below nonnal.
The
lumber cut of reporting mills in District No. 9 (Minneapolis) totaled
15,319,~16
feet - a 2 per cent decline from the June cut and a 44
per cent decline from the cut of July 1 1920.
the month show a
The orders booked during
6 per cent increase over !une, but were only 77.2 per
cent as large as the orders received during July, 1920.
-2~-
BUILDI"\TG.
X3192
The building situation generally continued
dull during July, with few new enterprises undertaken.
The reports
from all Districts show that the construction of rr.oierate priced
homes and dwellings constitutes a large part of
activity~
pres~nt
building
while construction of business and industrial struc-
tures is practically negligible.
District No.1 (Boston) and
District No. 9 {Minneapolis) were the only Districts which showed
incrGeses in total 'building contracts aW'l.rded, (statistics of which
are compiled for seven Districts by the F.W.Dodge Company).
In
District No.1 (Boston) contracts ~warded amounted to $19,298,334
~s comp~red
i~tely
with $15,308,072 during June.
Of this total, a.pprox-
$6,675,000 was for residential purposes as compared with
1!6,530,000 in June.
In District No.2 (New York) contracts awarded
during July totaled $54,500,566 in comparison ..vith $63,561,926'd"Q:ring June, and residential 'building for this District totaled
$22,546,142 as co:rrp('\red with $34,355,048 during June.
tracts awarded in District No.3
$13,563,100 in July,
~~d
(Philadel~hia) ~mounted
$14,796,800 in June.
to
Residential contracts
totaled ¢2,97l,9CO in July and $3,543,700 in June.
Total con-
In District No.4
•·····,1->
'-~-~
-30-
X3192
(Cleveland) the total arrount of building contrects awarded was
$35,6F9,377 as comp~red with $39,928,314 for June.
Of these,
$8,319,248 were for residential 'urposes as compared with
$8,198,377 during June.
Contrects for District No.5 (Richmond)
amounted to ~16,026,969 in July as corq:>ared with $20,428,761
in June, while $5,335,545 of the July total were for residential
~urnoses
as
corop~red
with
~4,090,859
for June.
In District No.7
(Chicago) building contracts totaled $41,119,866 dur~g July as
cornp~red
with $45,199,007 in June.
Permits for new construction issued in twenty-three of the
larger cities of District No.5 (Richreond) during July totaled
1,442 as compared with 1,137 issued in July, 1920, a ~ain this
year of 26.8 -per cent..
The total valuation for new work in
July, 1921 ~unted to $4,529,261 as compared with $5,799,171
for July, 1920.
Due to the decr9ases in costs of building oper-
ations
the past year, the number of
throu~hout
any District, is more indicative of the
tion than Fire the dollar errounts.
total permits issued in Atlanta
rronth in all previous years.
issued in
volume of construe-
In District No.6 (.Atlanta) the
durin~
In
~ctual
pe~its
July exceeded those for thBt
N~shville
the July total for
pennits was larger than for P.n.y -previous month.
District No. 8
(St.Louis) reported thPt building permits issued in the five
princi'Pal cities
durin~
July showed a sliPht increPse over the
June total, but a decregse of
,•
month l~st year.
~587,000
under the corresponding
Nine cities of District No.9 (Minneapolis)
issued 1,753 permits during July valued at
~3,906,381
as compared
--·
f
(
~ ~-~
r.',
._.,.,~ ' ( j
... 31-
X3192
with 1,971 pennits valued et $5,602,586 during June.
This
District reported that the permits granted durin@: July were
alrr.ost all for the smaller types of construction.
fourteen cities in District No.lO
(~nses
Reports for
City) showed a total
of 2,24o permits issued in July as compared with 2,166 in June.
ln District No.l2 (San Francisco) twenty cities reported 7,925
permits granted valued at $15,298,705 in comparison with 8,199
permits valued at $15,450,694 in June~
Building activities in
San Francisco and vicinity are still curtailed due to strike
conditions in the building trades •
.As there "Mve been no pronounced changes
in industrial activity during the past month it is not surprising that the employment situation shculd also
substantially the
same..
On
h~ve
remained
the whole there was probably a neg-
ligible decre8se in numbers employed during July as compared
with the
pr~eding
month, as the monthly industrial survey of
the United States Emnloyment Service shows that 1,428 firms
usually employing 500 or more
~ersons
located in
65
princi~al
industrial centers of the United States were employing only
1,510.210 workers on July 31, 1921 es compared with 1,527,124
on .June 30, 1921, a decrease of 1.1 per cent.
In New England,for example, the leading industries which
ere fairly active at the present time are not taking on any
more employees and the metal trades continue to be as dull as
during the preceding rr:onth..
The Boston Public l!mployment Office
reports that during the first twelv~ working.days in August.
r··. ···.c~
.;,_.!..C'.._. "..,""
-32-
X3192
nine per cent fewer persons were wanted by employers than during the corresnonding :period of the previous rr:onth, while during the n:onth of July, 26 per cent few·er workers were ce.lled
for than in June.
The derrand for skilled w·orkers hes teen lerge-
ly confined to the building trades end requests from those who
ren~ir
wanted to do
1MOrk.
There have been practically no
tions f~om persons looking for unskilled labor.
Public
E~loyrrent
appli~a-
The Worcester
Office noted no improvement in the deroznd
from the metal tra1es and 14 per cent fewer workers were wanted
for the month ending ftugust
15
rronth; while
15,
than during the preceding
:per cent fewer :positions were filled ..
In District No. 2 (New Y9rk) slight gains in numbers
employed in some districts were just about counterbalanced by
loss?s in the case of others.
In africultural sections there
was a decided drop in the demand for farm labor in the eatly
p.'lrt of August, and employment Agencies throughout the state
report that
11
there heve been rrore ar"Olicetions for positions
and fewer requests for workers during .August then tH an;r time
since the recession in business set inn.
In District No.3 (~hiladelphia) there was a slight diminution of unemployment in the six cities of ftltoone, Harrisburg: ,
Johnstown, Philadelphia,
Scr~ton
first two weeks in August.
~mounted to
1.6
1'he decree se in n'lmlbers of unemplgyed
per cent AS compared with estimates for July
later reports from individual
and Williamsport during the
'!'l'2.nuf~?cturers
•
indicate further
30.
. .-.0
r•\:;_
"
"--" '<._)
X3192
-33improverrent in the
emplo~ent situ~tion,
but in the iron
ana
steel and alliQd industries there has been no 1"8 rticular change.
In District No.5 (Richmond) there has been some demand for unskilled workers
for road
~nd
street improvement and
incre~sed
activity in building trades has likewise provided work .for a few.
!t is stated that the textile mills in the neighborhood of
Ch~rlottet
North CP-rolina whose operatives have been on strike
from June 1,
~re
now resuming o-perations and that the textile
On the other hand
mills in general a,re adding to their forces.
m~y
railrOP.d emplo+ees, ship yard and dock workers remain idle.
'Tihe demand ·for wo!I'en workers Ms
f~llen
off preatly and farm
labor is in excess of derrP.nd.
In District No-6 (Atlanta) unem'9lo~ent is especially pro-
nounced in the iron and steel district. and in coal mining sections.
New Orleans un.emt'loyrnent is considerab'le in the building
end metal tracles and sugar refineries.
Stathties COmt'iled by
the United States Employment Service for June show a deerease of
2 per cent for New Orleans while increases were recorded at
Atlanta, EirninghElm
.6 per eent
~md
Chattanooga amounting to 16.7, 1.1 and
res~ectively.
The results from the labor questionnaire
by the Federal Reserve Bank in District No.
7
re~ularly
issued
(Chicago) show
practieally no change in nunters emrloyed during July as compared
with the preceding month.
per cent in the
c~se
~s
the
decre~se
was less tban .1 of one
of 181 reporting firms employing 113,668
. '.
..,
I
-34persons.
X3192
The steel and iron industries in the District are ,how-
ever,still reducing their forces.
Forty•five concerns
~roploy~g
25,970 men reported a decre'9.se d 5.6 per cent in July as compared with June.
Structural steel and iron however improved slight-
ly and railway equipment sho{ls increased the number of men employed by 8.S per cent.
Reports from the Employers Association of
Detroit continue to show a slight increase in numbers employed
in the automobile industry.
Reports from District No.S {St.Louis) show a further
crease in unemployment estimated from 6.5 to 10 per cent.
i~
The
losses are attributable to the lack of demand for workers in
steel and iron and building trades.
A surplus of
agricul~ural
labor likewise exists.
conditi=s
ln District No.9 (Minneapolis) employmen!/showed a seasonal
improvereent .in July
~s
a result of harvesting requirements and
highwa, improvement work.
In the lumber ind.ustry
more men were employed in July than in June,_ but
~1
tr~
per cent
totals were
34 per cent below those for last year.
No particular change in the employment situation was recorded in District No.l2 (San Francisco) during July.
It was s.tated
that the increased demands for labor from agricultural areas were
largely offset by the reduced numbers employed in ndning, lumbering, fishing and shipbuilding
industries~
Although
cro~s
have been
'l.bundant, harvesting operations have been carried on with the aid
of less labor than
hE~s
usually been taken on in :rest years.
Outside
c-..····-/.,.~
\l...r';;._)-t~
-":'""'
X-3192
I
('\, --~- <'..,
......, ·._..if·d
- 35 of San Francisco where strikes are still in progress, there was a slight
improvement in employment conditions in the building trades of the large
cities, and the monthly report of the United States Employment Service
also shows that in the case of firms employing
500
men or over, increases
were recorded for Seattle, tos Angeles and Portland.
These increases
were negligible in the two former cases, but alOOunted to 14.7 per cent
in the case of Portland.
WHOLESALE
TBAPE:
Sales of wholesale hardware ."'and of boots and
shoes show fairly pronounced declines in all reporting Districts for
the month of July as compard with June, following slight increases in the
former month as compared with May.
from
8.5
The recession in hardware. sales ranges
per cent in District No. 11 (Dallas) with six firms reporting, to
17.8 per cent in District No. 3 (Philadelphia) with 25 firms reporting. In
the majority of Districts represented, decreases are in excess of 10 per
cent, but as compared with the amount of total sales recorded a year ago,
are not so great as in other lines, chiefly, no doubt, because price reductions have been less extensive.
However, decreases vary from 15.8 per
cent in District No. 10 (Kansas City), four firms reporting~ to 49 .. 8 per
cent in District No,. 6 (Atlanta), 14 firms reporting.
In the other five
reporting Districts. the decreases are between 30 and 40 per cent.
In
District No. 3 (Philadelphia) hesitancy in placing orders for fall trade
· wascommented upon.
De!I".and for mill supplies and builders' hardware was
stated to be especially poor.
Unstaple prices and belief in further re-
ductions have preYented the placing of future contracts.
District No. 10
(Kansas City)notes that hardware sales improved towards the end of the month
as
r··,
n
i.,.\_)f J
-36returns from crops began to come in.
X3192
The decline in mid-sumrrer demand
for boots and shoes hP s been quite hePvy ,awounting to 16.9' :rer cent
in the c~se of District No.l2 (S~n ~r~ncisco) 15 firms reporting; 22.2
per cent in District No.5 (Richmond); 8 firms reporting; and 23.4 per
cent in District No.6 (fttlarita), 9 firms reporting.
sales as compared with a year ago
no doubt,
~s
~re
The reductions in
in all ceses very beavy,prirrPrily,
a result of the drastic cuts in prices that have occurred
in the interval.
The ra!lfe is from 34.2 per cent in the
c~se
of Dis-
trict No. 7 (Chicago), 9 firms reporting, to 69·9 per cent in the
case of District NQ.12 (San Francisco), l2 firms reporting.
In this
l"'st mentioned case, it looks es if tbe drop were a somewhat belated
reduction that brought the returns more in line with those for other
Districts as sales
comp~red
with July 1920, show a drop of 50.1 per
cent, while in five other Districts the reduction es compared with a
year ago hes been from 52.3
~er
cent in District No.7 (Chicago), 9
firms re1:1ort1ng, to 57 ·5 p·~r cent in District No.ll (Dallss), 9 firms
re~orting.
In only one case, District No.4 (Cleveland), hes the re-
duction been under 50 per cent, namely 35·5 per cent for three reporting firms.
The
incrl3~ses
during the current month are attributable
to retail buying for the fall trade.
Stocks are low and in the agri-
cultural sections of the country after-h,.rvesting demand he.s to be met.
Grocery sales have held U'P fairly well end in three out of six reporting
Districts increases occurred tn July as corrpared with June,
arr~unting
to 1.2 per cent, 13 firms re-porting; in District No. 11 (Dalla.s); 12
per cent in District No.l2 (San Franciseo), 28 firms reporting; 17.F
per cent in District No.lO (Kansas City),
5 firms
re~orting.
Losses as
,~,
I
'•
- 37 compared with a year ago vary unevenly from District to District,
13.6
amounting to
44.9
rising to
per cent in District No. 10 (Kansas City) and
per cent in District No.
3
(Philadelphia).
Decreases
in sales. are in part accounted for by the drop in the price of sugar
and the diminished tonnage of sugar sales following
heavy distribution of a year ago.
t~e
abnormallf
District No. 3 (PhiladelPhia) reports
prices firmer and a better feeling, although July sales are slightly
below those for June, the average drop .being 2. 6 per cent for 4S reporting firms.
Negligible decreases were also found in District No. 5
(Riclur.ond), nine firms reporting a loss of ,6 of one per cent, and
in District No.
6
(Atlanta) in WhiCh 24 firms reported a reductio.n
of 5·9 per cent in July sales.
RETAIL TRADE:
The retail trade situation during the month· of
July was very quiet and inactive..
This is, however, the period of
normal mid-sumner dullness, and fall purchases do not generally begin
until August.
The sumner clearance sales were inaugurated in June
this year and the natural result was a lull in the July business.
Many stores report intensive "shopping" in order to secure maximum
values.
Reports from representative department stores show a
decrease in all Districts in net sales tor July from the sarxe month
a year ago.
This amounted to 12.3 per cent in District No. 1 (Bosto.n),
where it is reported that sales of stores in larger cities are less
than sales of stores in smaller cities.
No. 2 (New York)is 11.5 per cent.
sales decreased ll.SS per
~ent,
The decrease in District
In District No. 3 (Philadelphia)
which was
partly due
to
f">. r·.~. ··~
i.7._1d
-3~
X3192
the continued widespread depression in the iron
tries.
~nd
steel indus•
Sales in District No.4 (ClevelAnd) decreased 21.4 per cent,
11.7 per cent in District No.5 (Ric~ond), 21.7 per cent in District No• 6 (Atlanta) end 14.7 per cent in District No.7 (Chicago).
District No. 7 (ChicPgo) reports tllF!t prices he~ been reduced
further in order to
liquid~te
stocks on hand.
The decrease in sPles
in District No.8 (St.Louis) ~wounted to 16.5 per cent; in District
No. 9 ('Minneapolis) 21.8 per cent; in District No.lO (Kansas City)
10.9 per cent; in District No.ll (Dallas) 22.1 per cent and in
District No. 12 (San Francisco) 12.9 ~er cent.
able increase of the percentage of stocks to
se~sonel
dullness.
chandise actually needed in the stores
indicate that
s~les
due to the
OutstAnding orders incre~sed during July, espec-
ia.lly in the letter pert of tm month.
itedium-priced goods.
There is a notice-
These orders are for mer~nd
are principally for
"r'he increase in outstanding orders seems to
ret~ilers
anticipate a good demend for fall goods.
I
-39PRICES:
X-3192
As has been the case during the :past six months, the
August :price situation shows conflicting tendencies.
Prices of leading
agricultural commoditlt,s, such as wheat, com, oats, rye and hogs have
consistently declined 1 cotton has advanced, while cattle after advancing
during the early -portion of the month, showed :price recessions at the
end.
In the metal and mineral industria s, there were further :price
reductions, bituminous coal, petroleum, and the nan-ferrous metals all
showing declines.
Toward the end of the month pig iron :prices were
reported to be somewhat stronger than they had been for some time in
the past.
Ride and leather and cotton prices showed perhaps the
greatest strength of .atlY of the different lines, although finished
woolen goods were likewise reported to be strong.
On the whole it is
impossible to forecast the general trend of prices during the month.
Manufactured goods have probably held relatively firm, but as has been
indicated above, many important raw materials have declined.
Prices in general during the past three or four months have become
somewhat more stabilized than they were in the early spring, but
whether this period of relative stability will continue, whether prices
will rise appreciably, or fall is a matter for speculation.
A continua-
tion of relative stability in the price level as a whole might be
marked by more or less extrene variations in the prices of individual
colllTtodi ties if the variations cancelled one another.
For instance,
increases which might occur in the :prices of cornrnodi ties which have
been
11
liquidated" or reduced to approximately pre-war levels might be
accompanied by reductions in the prices of commodities whiCh are still
far above the :pre-war level.
This is closely related to the theory
which seems to be held by a number of ecanorrdsts who emphasize the fact
T
X-3192
-4o-
(''•. r"'""'-'
~;~ . _) ·i
I
'·
that the various elerr.ents of the price system are out of harmony one
with another (some being at twice the pre-war level while others are
below it) and that there is fair reason to expect commodity prices to
bear approximately the same ratio to one another as they did before
the war.
At the same time, other students of the price problem lay
greater stress on the supply situation in the individual commodity
lines than upon the interrelationship of prices in different lines.
Both factors probably plq a part in the making of prices.
What is
difficult to measure is the importance of the several factors
C'\(
the
price level as a whole.
During July, the index nambers of wholesale prices compiled by
the Federal Reserve Board, Dun, and Bradstreet indicated a rise.in ·
prices, while that o·r the Bureau of Labor Statistics !bowed no change
from the June level.
The Federal Reserve Board indexa constructed
primarily for international comparisons 1 stood at 141 in July (with
the 1913 level taken as 100) as compared with 139 in June4
of the Bureau of Labor Statistics registered
on the same basis.
The index
148 in both June and
July.
'l'he important changes during the month were further
reductions in the prices of producers' goods (in which the equipment
materials figure largely) and the comparative strength of raw materials
and consumers' goods.
Retail prices of foods increased for the first
tin:e since June, 1920..
The increase between June and July. 1921
amounted to a little under 3 per cent.
SHIPPING:
Little change is to 'be noted in the shipping s1 tua.tion
during August as compared with the last few months previous..
American
ships continued to carry but little more than one-third of our imports
and exports
me~sured
in terms of value.
This proportion is far 'below
What would be expected of a fleet as large as that belonging to this
country.
The figures of IJ.oyd' s Register of Shipping on the size of
the merchant fleets of the different countries, recently made public,
show that, on June 30, 1921, the United States had ships aggregating
17,026,002 gross tons out of a world total of 61.974,653 tons.
'!he
United Kingdom slightly surpassed the United States wltl. .a fleet of
19,571,554 tons, but France Which is third in rank had only3,652,249
tons.
Japan, Italy, Norwq and Holland follow in the order named with
merchant fleets ranging from about 3,350,000 tons down to 2,225,000
tons.
If sailing veesels are disregarded and only steamers and motor
vessels are considered, the United States on June 30 had a merchant marine
of 15,746,384 tons out of a world total of 58,846,325 tons or 26 .. 8 per
cent cf the world's steam and motor shipping.
In 1914 the world•s steam
tonnage was 45,140),817 tons and the share of the United States was only
4,330,078 tons or 9.6 per cent of the total.
roBEJGN TJWlE: The July
forei~
trade totals are sli@)l.tly lower
than for June, continuing the declines which set in at the beginning
of 1921 in the case of exports, and some months earlier in the case of
i~orts.
Exports were valued at $321,000,000 and tmports at $179,000,000,
the excess of exports being $142,000,000.
At the same time
forei~
countries continued to send us gold in large vol'UDlB, resulting in a
net inWard movement for July of $60,000,000.
The Bureau of Foreif?P
and Domestic Conrnerce has made an analysis of our foreign trade for
the fiscal year 1921, which shows that lower prices rather than
•
~
;
X-3192
f'' ''r')
:t.."
-42-
diminished quantities are responsible for the reduction in our
trade totals as compared with the preceding fiscal year.
forming
69
Cotmr.odi ties
per cent of the value of domestic exports in the fiscal
year 1921 show a. decrease in value of 19 per cent, but an increase
in weight of 23 per cent over the fiscal year 1920.
The group
of raw materials in the same compilation, shows a weight increase
of 34 per cent, and ~ group of foodstaffs a weight increase of
37 per een t.
A limited group of partly or wholly manufactured
comnodi ties shows a. decrease in weilbt of 4 per cent.
'lhese
results are notewortey as showing how the volume of our trade
has been maintained until recently, and that the falling off in tbe
quantities of exports which has been observable in the earlier
months of 1921 has not offset the large movements of goods in the
previous months of the ·fiscal year.
'lhese facts are in agreemmt
also With the showing of the Board's foreign trade index, which
disclosed relatively small declines in the volume of exports
in February, March and April, and a substantial recoveey in
flay and Jwle.
_.}l'l:~,'
X-3193
FEDERAL
RESERVE
BOARD
STATEMENT FOR THE PRESS
For release in afternoon papers,
Friday, September 2, 1921.
CONDITION OF THE ACCEPTANCE MPRKET
The Federal Reserve Banks report the condition of the acceptance
market in their respective Districts as follows:
DISTRICT NO. l (BOSTON)
The period July 21 to August 19 opened with a distinct scarcity of
prime Boston names 1 particularly on 90 day paper.
and orders were filled only by bringing
ir.
Demand was excellent
bills from other Districts.
Country banks were good buyers of 60 and 90 day bills.
Rates moved
back from 5i per cent to 5 3/8 per cent bid and bills were eagerly sought
at ,those prices.
Because of the excellent demand and the fact that the
supply of 90 day bills was small 1 the rates dropped toward the end of
July to 5 l/8 per cent bid.
The market activity ceased following the
first of August and there was general apathy in the bill market until
about the fifteenth when there seemed to be a spurt in buying.
The de-
mand quickly slackened and the close of the period finds the market ex ...
ceedingly dull.
There seemed to be a steady deme.nd from country banks
and, in fact 1 these would appear to be the mainstay of the market at the
'!'
I
X-3193
r·<-·., ..,~
li,..F
- 2 -
present time. although the corporations have been fair buyers.
Quite
a few bills have been made in Boston covering the importations of tobacco
and a fair supply on burlaps.
It is apparent that the demand fdr ac-
commodation through acceptances is not active and good Boston names are
snapped up very quickly, even in the dull market.
The Federal Reserve
Bank of Boston in receiving heavier demands from dealers for accommodation on short term repurchase agreements on acceptances, probably due to
the lack of an active call money market on bills in Boston and the fact
that brokers are obliged.to pay the going call rate of 6 per cent 1 whereas
the Boston Reserve Bank's carrying rate has been 5 pew cent for the greater part of the period.
DISTRICT NO- 2 (NEW YORK)
The last week in July dealers' offering rates for prime bankers
acceptances declined from 5 1/8 and 5 1/4 to 5 per cent. for all maturities up to three months.
The lower rates were due to an increased de-
mand for bills which accompanied a temporarily larger supply of funds at
this center and levier call money rates.
The low bill rate has been main-
tained during August in spite of firmer money rates around the middle of
the month.
Dealers report continued sales to out-of-town banks in fairly
large volume and broadly distributed, but New York City demand has
bee~
more restricted and purchases have been confined mainly to the shorter
·,;
maturities, 30 and 60 days.
Bill dealers whose portfolios have incraased materially found substantial amounts of time money at their disposal which also conduced to
the easier discount rate during the month.
'
i,!
'.!
....:Li-
("'·'~.It)
i,_, j. fvJ
X-3193
... 3 -
The volume of grain and cotton export bills increased steadily during August and constituted the major portion of new offerings.
,,
For sev-
eral weeks 1 however, purchases of bills covering the importation of raw
sugar and raw silk were fairly heavy.
The amount of bills drawn to
furnish dollar exchange continued to decline.
DISTRICT NO. 3 (PHILADELPHIA)
During July another heavy decline in the sales of bankers' accept-
.•
The sales of five dealers
ances in this District was reported b)' dealers.
totaled only $3,813,000 as against $6,355,000 in June and $13,315,000 in
May.
In
The decrease in sales as compared with June was 40 per cent.
July, 1920, only four of these dealers were selling in this District.
sales for July, 1921, as compared with 1920, show an increase of
cent.
67
The
per
The continued falling off in our foreign trade has been the lead-
ing cause in the diminution in supply of bankers' bills.
In the early
part of July the demand was in excese of the supply, and this, together
with the ease in money, caused rates to fall somewhat.
Later in the month
the demand for bills fell off, and since then the supply in most cases, has
been found adequate, and rates have remained
Most of the accept-
s~ady.
ances issued covered foreign transactions, the
export~
of grain and cotton
and the imports of sugar being the largest items of this class# and the
warehousing of staple
commodities and domestic trade making up the balance.
As usual, commercial banks are the principal buyers, but industrial firms
have bought a considerable amount.
The report of twelve member banks in
this District shuw an increase in bills executed, but a decrease in those
outstanding, as compared with the previous month.
banks is summarized as follows:
The report of th:"se
•
X-3193
- 4
1921 March 10 ••••• , .•••••••.••••.
April 10,. .................. .
May
10 •............•......
June l 0........ , , ~ ....... ·• , ...
July ·; lO ................. ...
August 10 ••.................
II
. . . . . . .•
...
Executed during
preceding month
$5,325,000
4,558, 000
5,611, 000
2, 795,000
3,121, 000
4, 852,031
('"''•<-···.-..
,.::;. ·~ !)
Outstanding on
date given
$14,127,000
13,234,000
12,392.,000
10,798,000
9,286, 000
8, 756, 973
· Foreign transactions are responsible for the great majority of acceptances
In addtition to sugar 6 grain
issued by the Philadelphia reporting banks.
and cotton, some of the articles covered are hides and 84,ins, oilj silk
and
tobacco~
Selling rates are at the present writing as follovvs:
30
6o
days
Eligible members
b 111 s. . . . . . . . . . .
5- 5
Eligible nonmembers bills...
5 1/8 - 5 1/4
1 I ro
90 de;va
5 - 5 1/8
?
1/8 - 5 l/4
180 days
5 - 5 1/8
dayp
5 - 5 1/4
5 1/8 - 5 1/4
5 1/4 -
5 l/2
DISTRICT NO, 4 (CLEVELAND}
Twenty-two accepting banks report acceptances e.<;.ecuted for customers
during the month of July at $3,124,314 and acceptances paid during the
same period
$3., 913., 792.
The predomincting classifications are tractors
for domestic shipffient, oil and sugar •
.A sllght imrrovement was noticeable in the general con..;.i tion. of the
acceptance market over the previous month.
Rates remained practically
.the same with only momentary variations caused by supply and demand.
The erratic character of the foreign exchange market and the decided
decline in some currency affected the supply of export bills.
in _the market.
with a
s$.e~y
However, the usu.al supply of import bills was available
increase in domestic shipment bills a.nd paper drawn against
warehouse receipts.
Few appeared
The annual supply of bills drawn against grain appeared
•
X-3193
in the market for the first time this year.
r-....,, . .,,1/f,
iY t:·
'-.~.±_
This improved the variety
of names and a few new names of banks, not formerly acc$pting, were offered.
More bills drawn against coal shipments and warehouse receipts
of coal have been drawn in this District than ever before,
At present
a number of syndicates have been arranged to originate bills of this
'
character.
The
dem~nd
for prime bUla has exceeded the supply.
Country banks
and ccrporatione have pu.rchued steadily, but in smaller amounts, and
have shown decided preference to the shorter maturity.
In the agri-
cultural section of the southern 4.istrict, the demand for short time
securities has appeared for the first time in some months._
is a deoppin& off in the demand by banks in the strictly manufacturing
centers.
Indications show money is now being used in opening u.p busi-
nesC) and preparing for a renewal of activity-
Rates on bankers' acceptances are as follows:
Spot Delivery
5 1/4 to 5
5 1/8 to 5
5 1/8 to 5
90 days
60 "
30 "
For Delivery in 30 4aya
5 1/4
Eligible member banka
Eligible non,-;1ember banks
Non-eligible bllla
wo. 6 (ATLANTA)
Responsea.were received
PI3TRICT
fro~
5 'J/4
5 3/4
sixteen member banks in the District to
our questionnaire in regard to acceptance market conditions in July, sent
to all accepting banks.
Twelve of the reports showed tha.t these bankt
had no tranaactions in acceptances during the
mo~th,
while only one report
X-3193
- 6 ~
showed any substantial amount of acceptances executed.
.7"
r-!·r-...J·-
f
~·-
While three of
the reports show acceptances disposed of, the purchase of paper is indicated in only one report and the amount is small.
Banks generally
have no great amount of money at this season of the year to invest.
Many farmers, if not a majority, still owe a large part of their 1920
indebtedness.
The amount of acceptances purchased in the open market by the Federal Reserve Bank of Atlanta during July was 0,. 9 per cent larger than
during June, and with the exception of April, was
~e
largest since Jan-
uarr.
DISTRICT
•o.
7 (CHICPGO)
July reports from 29 banks in the Seventh Federal Reserve District
show a notable increaso in bills accepted, and a decrease in bills held.
A continued demand from corporations and small buyers is reported.
Ma-
turities of bills purchased in July were divided as follows: 30 day,
9.6
per cent; 60 day 10.4 per cent; 90 day 60.1 per cent, and 180 day 19.9
per cent.
.
The classification of purchases shows 87.7 per cent of bills bought
'
were based on transactions involving importation or exportation of goods.
A comparison of returns from 29 banks shows an increase of
bills bought;
4 per cent in
9 per cent in bills sold; 25.1 per cent in bills accepted
and a decrease of 14.6 per cent in bills held at close of month.
The
compe.rison of acceptance transactions reported by banks for July and June
follows:
29 Panks
July
June
(lz:c-thousands of dollars)
Bills bought ••••••.••••.•.....••. 15,500
Bills sold •.•••...•.......••...•. 17,101
Held at close of month •••••.•.•.• 4,899
Amount accepted •.•.•.•....•....... 221 651
14,911
13,671
5, 734
16,821
.; ; J:
X-3193
- 7...
DISTRICT NO. 8 (ST. LOUIS)
The market for bankers' acceptances in this District during the past
thirty days was inert and featureless.
ginated in this
insignificant.
District~
Scarcely any such bills have ori-
and the volume taken by member banks has been
From time to time the city banks have purchased, but the
aggregate of this buying make a light showing.
DISTRICT NO._ iJM.IN"f>lEAPQLISl
No acceptances were purchased by the
during
July~
Minr~eapolis
Federal Reserve Bank
following the policy of this Bank for the past four months ..
Last year in July this Bank purchased
ances and $100~ 000 in dollar exchange..
$2l674~000
worth of bankers' accept-
No.; bankers acceptances were dis-
counted by this Bank during July and none in July last year, although there
were discount$ of bankers acceptances to the extent of $;0,000 in June
this year.
Discounts of trade acceptances in July this year show the
smallest total of any- month since February, amounting to only $173,529, as
compared with discounts of trade acceptances of $263,252 in June and
$336,000 in July last year.
Discount rates for acceptances remained un-
changed during July.
DISTRICT NO. 11 (DALLPS)
July reports show a further reduction in the volume of outstanding
acceptances created. in this District, the total on July 31 1 being $823,000.
which compares with $1,341,000,
on June 30th.
Approximately $500,000.
of these bills, were used to finance the domestic shipment and storage of
goods1 while the remainder covered import and export
tr~actions.
The
Federal Reserve Bank of Dallas at the close of the month had only $100,000
invested in bankers' acceptances, of which about one-half consisted of
bills executed by banks in other Districts.
As has been previously re-
f
,.
- g portedj the banks of this District are carrying such a large amount o!
farmers' loans carried over from 1920 that they have practically no surplus funds available for the purchase of acceptances or other investment
paper orlginating outside of this District1 and no important change is
expected to occur in this condition until after the harvesting and marketing of the cotton crop.
Even then the margin of profit on the crop is
expected to be so narr~w.that is does net seem likely that the Dallas
District will develop a bread demand for this class of paper untlJ. at least
another year has passed.
DISTRICT NO. 12 (SftN FRANCISCO)
Improvement in general credit conditions and the ar-pearance of funds
from the marketing of crops have been reflected during the month ending
August 15th by a steadily increasing deme.nd for acceptances., especially
from banks in the agricultural district which have already moved their products ..
It is apparent that the idea of including a certain proportion of
acce;:>tances in the secondary reaerve of banks is meeting ·with wider favor.
Demand from country banks has so far been most active in California~ although
there is a growing interest in the
northwest~
The supply rof bllls has been somewhat larger, due in part to the x:enawal
of a large block of sugar bills.
As is natural at this season, canned goods
have also been the basis of many acceptance transactions.
Bills drarm for
the purpose of creating dollar exchange have not been a factor in this
mar~et,
The gradual decline in the bill rate which began in June continued during July and early August, being accelerated by the lowering of the Federal
Reserve Bank's rediscount rate an July 25th to 5 1/2 per cent.
Two cays
later the basic rate on prime ninety day bills dropped to 5 l/8 per cent and
on July 29th it was again z·educed to 5 per cent., at which rate it now stands
for 811 matutities under 90 davs.
(The rate for eligible non-member bills
is 5 l/4 per cent).
The bill \rate also reflects the extreme ease of the
money market in Eastern centers which prevailed towards the close of July,
but the subsequent stiffening there has as yet had no effect on the bill
market here.
("'-'·'·'!;:"
•.> c (j
FEDERAL RESERVE BOARD
WASHINGTON
/
X-3195
September 8, 1921.
SUBJECT:
Na-r.~.on<~ Lan:!.::.s not required to a.p~ly fo;.•
to pu:-t;ha~;Se stock in Edge Corpora·l.ions.
permission
Dear Sir:
The Board has ~ed heret.ofore that any national
bank which desires to invest in the stock of a corporation
organized under the provisions of Section 25(a) of the Federal Reserve Act must make application to the Board for permission to subscribe to such stock. That rW.ing waa not intended aa an interpretation of the law but was promulgated aa
a •tter of regulation based upon pract;ical consideratio~.
Upon careful consideration of the practical value of this requirement in the light of. experience, the Board baa decided
to withdraw this ruling and wUl no longer require national
banks to obtain the Board's permission before purchasing stock
in Edge Corporations. It should be remembered, however, that
national banks are required by the terms of Section 25 to
apply >for and obtain permission of the Federal Reserve Board
before investing in the stock of international banking or
financial corporations organized under State law; ~ that
the aggregate amount of stock held by any national bank in all
corporations engaged in business of the kind described in
Sections 25 and 25(a) of the Federal Reserve Act must not exceed 1~ of the subscribing bank's capital and surplus.
Very truly yours,
G
o v e r n o r.
To Governors and Chairmen of all F.R.Banks.
\
FEDERAL RESERVE BOARD
WASHINGTON
~
CONFIDENTIAL.
I
SUBJECT:
X-3196
September 8, 1921.
Regulation of· charges by member banks against
customers on checks cleared through Federal
Reserve Banks.
Dear Sir:
Section 16 of the Federal Reserve Act provides in part
that "The Federal Reserve Board shall_, by rule, fix the charges
to be collected by the member banks from jts patrons wbnse checks
are cleared through the Federal Reserve Bank and the charge which
may be iznposed for the service of clearing or collection rendered
by the Federal Reserve Bank" ..
·Pursuant to the authority of this prov~s1.on, the Federal
Reserve Board has already ruled that no charges will be made by
Federal Reserve Banks for the service of clearing or collection.
The Board now has under consideration the fixing of charges to be
collected by member banks from their customers on checks deposited
by the customers and cleared through the Federal Reserve Banks.
The charges which the Board proposes to fix will be
optional, that is, they may or may not be imposed . . at the discretion
of each member bank, but no member ~ank will be permitted to imp.ose
a charge hig.i.er than th<::t fi:x:od by the Bca:-d. The Board proposes
that the maximum charges allowed shall not be in excess of a reasonable· interest charge upon the amount of ee.ch· check for the period
required for collection~ This period will be the period for which
credit is .deferred according to the time schedule of the Federal
Reserve Bank of the district in which the memb?r bank is located,
plus the period required for transit from the member bank to the
Federal Reserve Bank. In no event are charges to exceed ten cents
per $100, or fraction thereof 1 of the total amount of checks
deposited at any one time.
It is not the Board's intention at the present time to
prepare a schedule of the maximum charges allowed. Each member bank
now has the time schedule of its Federal Reserve Bank and by adding
to the period during which credit is deferred according to this
schedule the perio1 required for items to travel f:.~crn the member ban'!t
to the Federal Reserve Bank, it should be easy to determine the
period upon which a member bank may base its charge in each case.
The regulation referred to in ~his letter has not yet
been.issued by the Federal Reserve Board. This letter is intended
merely to advise the Federal Reserve Banks of the terms of the regu
r
X-3196
-2-
~
'
0.:-,~-~
<1.> l,_),_<
lation which the Board contemplates issuing in the near future.
Before issuing the regulation~ however., the Board wishes to give
the officers of the Federal Reserve Banks an opportunity to make
such comments and suggestions as they desire. The Board also
wishes to receive from each Federal Reserve Bank a statement of
any charges which clearing houses in its district require their
members to make, together with copies of the clearing house circulars setting forth such charges and analyses showing, as far
as possible, at what rate of interest the charges are equivalent
to interest charges for the periods required for collection of
items through the Federal Reserve Bank. For the Board's convenience,
each Federal Reserve Bank is also requested to send a copy of its
effective time schedUle.
The Board desires, as far as possible, to avoid conflicts
between its regulation and the rules prescribed by various clearing
houses, and there will be no such con::licts unless it appears that
some clearing houses prescribe charges which are excessive as interest charges for the periods required for collection of items through
Federal Reserve Banks. Where the minimum charges prescribed by a
clearing house are less than the maximum charges permitted by the
Board •s regulation there will be no conflict, of course, and no
occasion for any change in the clearing house rules. The Board proposes to make its regulation as elastic as possible~ consistent with
the general principles upon which it believes the amount of the
charges should be fixed, so that the established practices of clearing houses. and other local conditions may be given due consideration
in determining what is fair to all parties interested.
Please acknowledge receipt of this letter.
Very truly yours,
G o v e r n o r.
To Gcvernors and Chairmen of all F.R.Banks.
r
FEDERAL RESERVE BOARD
WASHINGTON
X- 3197
September
SUBJECT:
Departmental Costs of Operation
Banks.
9~ 19~1.
in Federal Reserve
Dear Sir:
In order that the Board may have a better understanding
of the cost of operating the various departments of the banks, and
especially to what extent, if any, the expenses of tl1e several
departments are increasing, .nay I ask that you kin:ily bring to the
Conference of Governors and Agents to be held in 7~ashington on
October 25, 1921 1 a statement showing the nulliber of officers and
employees and the salaries paid, as well as other current expenses
properly chargeable tothe several depart:nents listed on the
attached form for each sig-month pariod since January 1919. It
will be noted that two forms are prcvided 1 one for use in showing
overhead salaries, and the other to be used in sh·oi~ing both salaries
and other current expenses of certain departments of the bank.
Federal Reserve Backs with branches should prepare separate reports
for each branch and the head office 1 in addition to the consolidated
statement for the parent bank a1~ branches. If practicable a copy
ofthe complete report should be furnished the Board in advance of
the Conference.
It is recognized that the functions performed by the
various departments are not unif onn in all banks 1 also that in
certain of the banks more than one o{ the functions listed may be
perf armed by a single department,~ in which case, of course 1 combined
figures should be given,
It will be appreciated if you will also outline briefly
the functions performed by such depC!-rtments as the transit and
currency departments in order that it may be clear to the Board
whether or not the figures of different banks are compiled on a coJnparable basis,
Very truly
yours~
Enclosure
G o v a r n o r.
To all Chairmen.
Copy to all Governors.
X-3197a.
FEDERAL RESERVE BANK O F - - - - - - - Comparative Statement of Departmental Personnel and Expenses
by six-month pel'iods frc~:a Janu.:u·y l)l9 to Jm~~ :921.
Table No. 1
:
6-month :period
:
Jan. - June, 1919
July- Dec., 1919
Jan .. - Junet 1920
July - Dec. , 1920
Jan. -.June, 1921
.
OVERHEAD SAL.Al.~~I:.:::E~S----------.----Persoimel :
Salaries, including extra.
Average num~ O:.;:f_ _ _ _ -:_ _ _ _ _("~~i)2~1~.:.:::·o::.:n:...._._ __
Officers
Emplo~es
:
Officer::;*
:
Employees
*The following staterrent showc the number of officers of each
, grade or title included in the several ~riods~
Jan. to J'Ulle July to Dee.
1919
1919
J <:rn~
&11
,.June
- _l91Q__
July to Dee
1920
Jan. to J·une
1921 -~-
'
....
,.
.
..
i ("
X-3197b
Table No
.
2 - -
DEPARTMENT
Expense A
Personnel Average number
Salaries incl~ding Other
extra comnenAation
current
of
expenses
Officers I E!Di:)lovees Officers lEmolovees
6-month period
Jan. - JuneJ
July - Dec. J
Jan. ·- June,
July -Dec.,
Jan. - June.,
Total
current
expenses
1919
1919
1920
1920
1921
A statement in the above form should be prepared for each
of the following departmeuts:
FEDEIU L RESERVE BANK -
!.
''
·r
1. Transit
2. Currency, incoming and outgoing
3· Custodies
4. Loans and investments
5. Auditing
6. Accounting
FEDERAL RESERVE AGENT 1. Examination
2. Reporting Business Conditions
). Member Bank Relations
4. Statistics
5. Federal Reserve Note Issues
FISCAL AGENCY DEPARTMENT
...
-
.
j
X-3197c
SALARIES PAID OFFICERS AND EMPLOYEES OF
THE F!DERAL RESERVE BANK OF
BY SIX-MONTH PERIODS
FROM JANUARY. 1919 TO JUNE~ 1921 .•
(In ~housands of dollars)
1919
1919
Jan-June July-Dec.
·'f
1920
1920
Jan-June July-Dec.
1921
Jan-June
---------------------------------------------------------------------~
Officers
Employees
-~------------------------------~~~-----~~-~--~-~~~--~--~---~·-~-
:Total
c....,,"
"4.~:~._)~ _.~
FEDERAL RESERVE BOARD
WASHINGTON
(
X-3199
Sep.tember 17} 1921. .
,I
SUBJECT:
Correspondence with Governor of Nebraska.
Dear Sir:
The enclosed copy of a letter received from
the Governor of the State of Nebraska and copy of my
v
reply thereto 1 are self-explanatory and are sent to
you for your information.
Very truly yours,
G o v e r n o r.
Encls.
~3198
& X-3198a
GOVEF\ti'OBS OF .ALL F.R,BANKS.
·copy
X-3198
September
15~
1921.
('
My dear Sir!
I acknowledge receipt of your letter of the 12th instant,
and thank you for the information given regarding financial conditions
in your State.
The Federal Reser~e Board ha.s always stressed the importance
of sustaining the agricultural and live stock interests of the country
and its policies have always been shaped with a view of encouraging
member banks t~ extend all reasonable accommodations to those engaged
in these vital industries. I am sending you under separate cover a
copy of the Federal Reserve Bulletin for .August, 1921 and would invite
your attention to a letter which I addressed some time ago to Hon. Read
Smoot, United States Senator from Utah, which appears on the first and
succeeding pages of that publication.
_l
··.
t
The liquidation which has taken place 1 at least so far as
this liquidation is reflected in the statements of the Federal Reserve
Banks, shows that the reduction in loans has been mainly in the large
cities and in industrial centers. Federal Reserve Banks are not per~
mitted by law to make loans direct to individuals 1 firms or corporations
and they can rediseount only paper which bears the endorsement of a
member bank. Consequently, in order for a Federal.Reserve Bank to
render financial assistance to those engaged in agriculture or the raising of live stock, it is necessary'".that the loans first be negotiated
with member banks, Neither the Federal Reserve Bank nor the Federal
Reserve Board has any control over the loan policy of any member bank.
We can not compel a member bank to make a loan which it does not desire
to make nor can we restrain it from making a loan whi-ch is not forbid len by law.
About one-third of the member banks in the Kansas City
District have been very heavy borrowers during the past year, another
one-third have bean only moderate borrowers, vihile the remainder have
not borrowed at all. It is po£1sible that the Federal Reserve Bank may
have called the attention of some of the larger borrowers to the advisability of reducing their discount lines at the Federal-Reserve Bank,
but in no case has the Federal_Reserve Bank undertaken to say to a
member bank just what particular loans it should call or ask be reduced.
I was formerly in the banking business myself and know something of banking psychology. Banks as a rule to not like to admit to
customers that they are short of loanable funds nor do they like to
stir up enmity in declining to make loans or in asking for reductions.
I know that in many cases they have found the Federal Reserve Bank or
the Federal Reserve Board a convenient buffer and have stated to
X-3193
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borrowers or i. ould-be borrowers that they would 1 ike to grant extensions
asked for or to make 1 oans desired, but that the Federal Reserve would
not permit it, Such a procedure has a tendency to relieve the situation
as far as the local bank is concerned b.t it is not altogether fair
to the Federal Reserve System. The Federal Reserve Board has rapeatedly
issued public statements calling the attention. of the banks of the
country to the importance of granting adequate credits to farmers and
cattle men, and while the Federal Reserve Board is not a central bank
and can not discount any paper itself, it is assured by all Federal
Reserve Banks that they are ready to extend liberal accommodations to
all member banks in the way of rediscounting eligible paper.
The function::h of the Federal Reserve Board is to define eligible
paper in accordance with the terms of Section 13 of the Federal Reserve
Act} but the question of determining the goodness of paper offered for
discount rests entirely ~ith the directors of the Federal Reserve Bank.
I am sending a copy of your letter to the Governor of the Federal
Reserve Bru1k of Kansas City and have called his attention particularly
to ycur statement that your last Legislature passed a grain warehouse
law v>hich prov.ides for the taking of receipts for grain that is housed
on the farm. You ask if those receipts may not be used as a basis
for credit to farmers in Nebraska. The use of such receipts does not
affect in any way the eligibility of paper offered for discount and
v•hile the usual banking custom in making loans on warehouse receipts
is to require that the receipt be issued by some warehouseman entirely
independent 9f the borrower 1 the question of using farmers' own
receipts is one primarily for determination by the bank to which the
farmer applies for a loan and secondarily, in case the paper is offered
for rediscount to a Federal Reserve Bank~ bythe officers and directors
of the Reserve Bank,
You call attention to the desirability of aiding and encouraging
the farmer in the successful conduct of his business through the extension of reasonable credit at a rate of interest that he can afford
to pay. The Governor of toe Federal R~serve Bank of Kansas City will,
I am sure, inform you that the Kansas City Bank is ready to rediscount
good and eligible paper for member banks, but neither the Kansas City
Bank nor the Federal Reserve Board can require any member bank t o
make a loan which it does not wish to make and neither the reserve bankl
the Federal Reserve Board nor the Comptroller of the Currency has control
over the rate of interest charged, providsd it is not in excess of the
maximum rate authorized by the laws of the State in which the lending
bank is located.
I understand that the laws of Nebraska authorize a maximum
interest rate cof ten per cent per annum, The progressive rate which prevailed for some months at the Federal Reserve Bank of Kansas City was
abrogated last June and all rediscounts madeby that bank are now at a
flat rate of six per cent per annum, regardless of the amount of accommodation e.~Ctended to the borrowing, member bank, I have before me a
report of bills discounted for member banks by the Omaha Branch of the
Federal Reserve Banko£ Kansas City on September 9,. 1921. This report
shows that lll notes, aggregating $1,031 1 6)5.09, were discounted for
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X-3198
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twenty-one member banks, by. the Omaha Branch Ban~ on that date, all at
the rate of six per cent per annum. The report shows also the rate of
interest charged the customer~ by the borrovv ing member banks. This
report shows that in the caee of 52 notes the bcrrov-ving banks charged
their customers 1~, on 21 notes they charged 9% 1 on 2 notes 8~% 1 on
14 notes 6%, on 13 notes 7-z%, on 5 notes 7%, on 2 notes 6a% and on 2
notes 6%.
Under an neal operation of the Federal Reserve System, it is
not intended that a member bank should make a profit on its rediscount
transactions with the Federal Reserve Bank. The object of the Federal
Reserve System is to afford a ready discount market but member banks
generally, especially in the West and South, seem to have an idea that
they should make a profit on such transactions. In some states where
the maximum legal rate of interest is six per cent and the Federal
Reserve rate ie also six per cent, no profit is possible, but in states
where the laws permit of rates as high as ten and tvvelve per cent,
there is, of course 1 an opportunity for a very substantial profit. For
example, where a bank in Nebraska is able to rediscount at the Federal
Reserve Bank at six per cent per annum paper which it has taken from
its customer at ten per cent) the profit is 66 2/3 per cent.
If the
paper is taken at nine per cent, the profit is 50%, or if at eight per
cent, the profit is 33 1/3 per cent.
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I sincerely hope that banks generally will recognize the fact
that by charging lower rates of interest they would be building up their
own communities and would in the long run reap greater profit themselves 1
than would be the case if they should continue to charge all the law
allows or all the traffic will bear.
The abrogation of the progressive rate has made it possible
for banks in Ne~raska to make a large percentage of profit on their
rediscount transactions with the Federal Reserve Bank 1 but the daily
statements made to the Board do not indicate that the Nebraska banks,
as a rule 1 have shared thi.s advantage with their borrowers. Is there
any reason to believe that in case the discount rate at the Federal
Reserve Bank of Kansas City should be still further reduced the
Nebraska banks would give their customers lower rates than they do
at ·present 1
Very truly yours,
(Signed) W G, HARDING
.P.
G o v e r n o r.
Hon. Samuel R, McKelvie,
Governor of Ne~raaka 1
Lincoln1 Nebraska.
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COPY
STftTE OF NEBRASKA
EXECUTIVE OFFICE
X-3198a
Lincoln
September 12, 1921.
Ron. W.P.G, Harding,
Governor of Federal Reserve Bank
Washington, D. C.
My dear Sir:
•
As the result of an inquiry that I have just concluded among Nebraska bankers, I am convinced that financial and
business conditions are improving throughout this State, but I
am also convinced that there is need for credit relief for the
farmers and cattlemen in this territory n~i 1 and it is regarding
this situation that I address you •
The simple fact is that the urgent demand for liquidation and the contraction of credit during the past twelve months
has imposed unusual and extraordinary ha:rdshlps upon the farmers
and cattlemen, In order that these demands could be met, the
farmer has taken heavy losses in the sale of g.ra~.n and livestock.
It is true that bank deposits and reserves t.ave im~roved during
tnis period, but this improvement has heen accomplished at the
expense of interests that should have been protected and conserved.
The qaestion now is whether this policy of enforced
liquidation is to be continued, or whether the farmer is going to
be aided and encouraged in the successful conduct of his business
through the extension of reasonable credit at a rate of interest
that he can afford to pay. You will bear with me, I am sure,
while I point out some of the tangible results of the system that
has been invoked during tne past tVHi'lve months.
The losses that have been taken by cattlemen during
this twelve months have represente4 actual financial ruin to many 1
and the permanence of the oattle breeding and feeding industry in
thia territory is actually menaced nmv. In addition to the
r~inous losses that have been taken on stock that was properly
fitted for market .. tnere has been a very large disposition of
partially finished stock: of breeding stock and of young stock
that snould never have gone to market at all. The injury to the
cattle industry from this source will be felt for years to come
and something should be done to encourage this industry. As it
·is now, cattlemen are actually being forced out of business, in
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X-3198a
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-2order that they may meet their obligations. Nor does this include
merely the speculator or the one who used bad judgment in his operations. It includes the most substantial and forehanded breeders
and feeders that we have in this section.
The grain gr~1ers have been affected similarly. For instance
more than half of this year's wheat crop has been marketed. The
price has been around $1.00 per bushel 1 al1.d while this would hardly
remunerate the farmer for the cost of production, there has been no
general complaint against the price. Now the terminal markets are
congested and the farmers are being counselled by no less an authority
than Hon. Herbert Hoover 1 Secretary of the Department of Commerce)
to withhold shipments. This counsel, however good it may be, could
not have been fallowed had it come even before the wheat crop was
harvested, for a very large number of ~farmers were compelled to sell
in order that they could meet pressing obligations. The danger that
lurks in this situation is not that the fanner has sold at a price
that was not entirely satisfactory, or that the terminal markets
have been f loaded, but that there is the strong probability of a
higher price for wheat before another cro1) is grown., and should this
condition obtain1 it is quite apparent that the fanner is not the
one who will receive the benefit.
.It
The corn crop in this territory is unusually large, and there
is a very considerable percentage of last year's corn crop still on
hand. The price ranges around 30~ per bushel at country elevators.
This price is so far below the cost of production that the returns
from this year's cop will scarcely maintainthe operations of the
farmer, to ·say nothing of meeting the obligations that he is now
being pres sed to pay. · If this corn a:rop must be forced up on the
market as the wheat crop has been, then the pri~e •vill probably go
still lower•
Much of the corn crop will be fed to hogs. If prices continue
at a fair level this will afford a source of very satisfactory relief.
Some of it will be fed to Dattle andthis 1 too, will prove profitable
if present prices prevail, but it will take ti:ne and cre~it encouragement to enable this 1 and I believe that the farming interests of this
country have a right to look to the Federal Reserve Bank System for
this encouragement.
I am not unmindful of the relief that is being offered now
through certain private banking sources, as well as from the War
Finance Corporation. These are good and the work that is being done
by them should not in any sense be disparaged 1 but with the Federal
Reserve Banks holding 7o% of the reserves., it seems apparent that
here lies the medium through which additional credit may be afforded
at a much more reasonable rate of interest than is now required.
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X-319e'a
Especial consideration should be shown to the cattle interests1
both to breeders and feeders. If this is done, i t will also greatly
aid the grain growers, for it will afford a profitable outlet for
a product that must otherwise be sold at a loss,
·
Our last Legislature passed the Grain Warehouse Law 1 which
provides for the taking of receipts for grain that is housed on the
farm. I am wondering if these receipts may not be used.as the basis
for credit to farmers in this State.
I do not want to burden you with a further enumeration of these
facts, though I may say that I have only touched the high spots.
Nor would I have you believe for a moment that I would have the
Federal Reserve Bank System encourage an extension ofcredit that
would result in unwise inflation or speculation. Too much of that
has been done already. But I would like to see the Federal Reserve
System operate as an agency for financial. :relief at a time when it
is most urgently needed, May I be advised of anything that you think
may be done to help us out?
Very truly youre 1
(Signed) Samuel R. McKelvie .
•
Governor •
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FEDERAL RESERVE BOARD
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WASHINGTON
September 23 1 1921.
X-3ZOO
Deat:- Sir:
Your name appears on our mailing list to receive
regularly, as issued 1 statements similar to the one enclosed
herewith.
The mailing list is being revised and you are
requested to indicate in the space provided below whether
or not you wish your name continued thereon for statements
issued subsequent to October lst. In the event advice is
not received from you 1 as requested 1 it will be assumed that
you do no\ desire to have your naxne continued on the mailing
list.
Very truly yours,
Walter L. Eddy 1
Assistant Secretary,
To the Federal Reserve Board:
I (do not) desire to have my name continued on tne
mailing list above referred to.
Name
Address -----------------------Representing --------~--
Key 812
Date ____ 1921.
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- For releci.se in morning papars
Frida.y, Saptember 23, l9Zl.
•
. "THE t.ED'ERAL ni;SERVE SYSTEM ... WHAT IT IS Aln> WHAT I'l IS NOT."
·Address by
W. P. G..
HARDL~
. GOVERNOR~ FEDERAL RESERVE BOARD
at the
"MADE-IN-QAROLlNAS 11 EXPOSITIOU
at
CHARLOTTE, N.. C•
.September
2~,
1921.
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THE J'ED.IRAL RIS!RVi S'fSTEM -
IHAT IT IS AND WHAT IT IS NOT.
Nearly aeYen years have elapsed since the establishment of the
Federal Res..
ve Banks ani
yet there is still a surprising lack of
knowledge of what they really are and of wbat their proper functions
are, not only on the part of the public but among bankers as well •
•
Much has been said and writteJl reaardin& them~ which 1$ oalc'l.lla.ted to
create entirely wrong iDtreseiona and .while it ia
1~~pose1ble,
in the
brief space of time whioa can properly be allotted to a public address,
to enter into an elaborate 4iecusaion of the subject, I shall endeavor
this afternoon to describe concisely the character aDd some of the 4ia:tinctive
tunctioua ·of the Federal Reserve Banks 'and of the Federal
Reserve System.
The Federal Reaerve Act,
~hiob
is responsible for the existence of
the Fe4eral ReseJ"Ye Board and the Fe4eral Reserve Banke, was approved
on December 2J,
Congress.
1913;
and;
has, at variou• times since, been amended bf
The qenc1J3nts, lor the .m.ost part, haYe been the result of
. suggestions made by the Federal Reserve Board and were designed to render
the Act more effective,
The general purpoaea of the Act are outlined in its caption or
short title, which is as followa:
"An Act 'to prGvide for the establishment of
Federal reserve banke, to furniah an elastio currency1 to affor4 meana of rediscounting commercial
paper, to establish a more effective supervision of
banking in the United States, apd for other purposes."
X-3202
- 2 The need for a more efficient banking system in the United States
had been felt for many years.
Ever
sin~e
the year 1890 the subject was
one which was discussed frequently at bankers' conventions and at gatharings of commercial bodies, but the event which gave great
movement for banking reform along constructive lines was
1907.
imp~tus
th~
to the
panic of
The following year Congress created a Monetary CommissionJ wllich
after a long and thorough study of the banking systems of the world nubmitted an exhaustive report.
During the years 1911 and 1912 a committea
of the House of Representatives 1 commonly known as the
11
Pujo Cornmittee" 1
investigated banking methode in this country and submitted a report.
With this wealth of information in hand 1 Congress. early in the year
1913 took up the matter of banking reform in earnest and the Federal
Reserve Act was put upon the statute books before the close of the year.
This Act is universally admitted to be a great constructive piece
of legislation and is applauded b9th by friends and critics of t_he
Federal Reserve System, by those who understand the Act as well as
those who do not.
It is,because so many have no real conception of the
purposes or meaning of the Act that there has been eo much criticism
of its administration.
The Federal Reserve Act did not estab+ish a central bank.
contrary~
On the
it made possible the establishment of as many as twelve Federal
Reserve Banks1 each almost wholly independent of the others in operationJ
as well as in local policies.
From a legal standpoint these banks are
private corporations, organized under a special act of Congress, namelyJ
the Federal Reserve Act.
They are not in the strict sense of the word
Government banks 1 but are only quasi-Governmental institutions 1 in that
... 3 they are under the general supervision of the Federal Reserve B':lar:! a:1d
have on their boards of directors three men, representing the Gvvem'illln't,
who are
a~pointed
by the Federal Reserve Board.
Eaah bank has nine directors and the other six are choson by the
member banks, which are the sole stockholders of the Federel
Bank.
The law does not permit the Federal Reserve Banks to
P~£~rve
ccmpet~
f o1·
business with each other or with the national banta, state banks
&~
trust companies of the country.
depos~.ts
They are not allowed to receive
from. the public and can accept deposits only from their
~mber banks~
from the United States Government and, solely for the purposes of exchange
or collection, from non-member banks or trust
companies~
They are not
allowed to make loans or advances direct to the public, but can ler.d only
to the United States, to their member banks and, subject to certain
~onditions,
for periods not exceeding six months, in anticipation of
the collection of taxes or the receipt of assured revenues, to states#
counties~
municipalities and other political subdivisions in the
United States.
rn lending to their UBmber banks Federal Reserve Banks are not
permitted by law to use the same discretion that is allowed national banks,
state banks and trust companies, but they must observe the limitations
prescribed by law as to the character and maturity of the notes offered
them by member banks for discount.
Except as to notes, drafts and bills,
drawn or issued for agricultural purposes or baaed an live stock,
~hich
a Federal Reserve Bank may discount for a member bank if the maturity
does not exceed six months, a Federal Reserve Bank can not discount any
paper which has longer than three months to run, exclusive of days Pi
grace,
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X-3202
- 4The law puts a limitation also upon the character of, a note which
a Federal Reserve Bank may discount for a member bank.
A Federal Reserve
bank may make advances to its member banks on their promissory notes.,
for a period not exceeding fifteen days, provided, such promissory notes
are secured by the deposit or pledge of bonds or notes of the United States 1
or by notes, drafts and bills of exchange or bankers• ccceptances which
are themselves eligible for rediscount or purchase by a Federal Reserve
Bank.
To be technically eligible for rediscount a note must be endorsed
by a member bank, its maturity must be withint the time limit prescribed
by law and it must have been issued or drawn for agricultural, industrial
or commercial purposes, and it must also be shewn that the proceeds of
the note have been used or are to be used for such purposes.
Federal Reserve Banks are forbidden by law from discounting notes,
drafts or bills, covering merely investments, or issued or drawn for the
purpose of carrying or trading in stocks, bonds or other investment
securities, except bonds and notes of the Government of the United States.
The Federal Reserve Act, as amended, has changed both the amount
and character of the reserves which all national banks and state member
banks must carry against their deposit liabilities.
of
years~
For a long period
it has beenthe practice of American banks to carry as a reserve
in cash and on deposit with other banks, a certain prop·ortion of their
deposits.
Before the passage of the Federal Reserve Act, the national
banks in the three central reserve ei ties were required to keep in their
own vaUlts as reserve in gold or lawful money an amount equal to 2'5% of
their net deposits 1 and in other cities and towns they were required to
keep a part of their required reserves in cash in their own vau1 ts
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X-J202
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a. pArt on deposit with other banka.
!'be laws regarding the reaerfM
of state banks varied in the different states.
Under the FederEU. Reserve
Act the percentage of reserve required has been substantially reduced~ and
iu6mber
as amended 1 no national bank and no stat~bank is required to keep any
definite amount of cash in its own vaults and whatever amount of cash is
kept on hand by 1be member banks6 as deemed necessary by the judgment and
experience of their
officers~
does not count as part of the banks 1 lawful
reserve.
The entire legal reserves of all member banks must be kept on deposit
with the Federal Reserve Banks.
As a consequence 1 the cash resources of
the Federal Reserve Banks are necessarily very· large and their holdings of
gold 1 in particular, constitute a very large proportion of all the gold tn
the country.
The gold held by the Federal Reserve Banks is equal substan-
tially to all the gold that might have been held by all the banks throughout the country if there had been no Federal Reserve Banks established.
As the Federal· Reserve Banks are made
the sole custodians of the legal
reserves of all member banks; the object of Coxtgress in throwing safeguards
and limitations around "their loan transactions is evident.
It is necessary
that Federal Reserve Banks should keep themselves in a "liquidtt
position~
that is, their bills discounted must be of short maturity and should be
readily collectible.
The strength of the entire banking system of the
United Stater:s ia directly related to the strength of the Federal Reserve
Banks.
If a Federal Reserve Bank should find itself in a
weak~
over-
extended or unsafe position1 all its member banka would be directly affected •
.,.lac~:i
While Congress has--- · ·--- upon the Federal Reserve Board the responsibility of defining eligible paper 1 within the
mean~1g
of the Federal
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X-32Cl2
- 6 Reserve Act, it has entrusted the management of the Federal Reserve Banks,
under the general supervision of the Federal Reserve Board, to their own
directors.
Ea~h
FederaReserve Bank has power to appoint1 by its board
of directors, such officers ar.d employees as are not otherwise provided
for in the Federal Reseri/'e Act ani to define their duties, to prescribe
by-laws, not inconsistent with the law, regulating the manner in which its
general busiressmay be conducted, and to exercise, by its board of directors,
or duly authorized officers or agents, all powers specifically granted by
law and such incidental .powers as may be necessary to carry on the bus5.ness
of banking within the limitations prescribed by law.
Each Federal Reserve Bank is conducted under the supervision and
control of its board of directors, who are charged by law to perform the
duties usually appertaining to the office of directors of banking associations and to administer the affairs of the bank fairly and impartially and
without discrimination in favor of or against any member bank or banks and,
subject to the provisions of law and the orders of the Federal Reserve Board,
to extend to each member bank such discounts, advancements and accommodations
as may be safely and reasonably made with due regard for the claims and
demands of other member banks.
The Federal Rese1·ve Board does not appear to be authorized by law to
pass upon the paper which is offered for discount to Federal Reserve Banks.
This is a function which must be exercised by the directors of the Federal
Reserve Bank or by their duly authorl.zed officers or agents.
While the
law ·does not prescribe any fixed limit as to the amount of loans that a
Federal Re·serve Bank may make to a member bank, it does require that due
regard must be given to the claims and demar.ds of other member banks, that
- 7 is~
to their possible needs for credit
acco~nodation.
It also provides
that a Federal Reserve Bank must extend to each member bank such discounts
and accommodations as may bs "safely and reasonably made" ... This means
that the directors of a Federal Reserve Bank ani the officers appointed
by them must exercise their best judgment in granting discount a.ccon:rro'dations.
They must assure themselves that the discounts
are such as
can be safely made., and reasonably made., with duEJ regard to •the pO!:;sible
requirements of other member
ban~s
which may ask for accommodations
later on.
This discretion is not vested in the Federal Reserve Board and the
reason for this is probably tv.-o-f old.
is not a central bank.
First: the Federal Reserve System
It is a regional system comprising twelve banks.
Congress did not intend that there should be a centralized control of
credits.
Second:
in a country embrasing so vast an area as the United
States., it would be a very difficult task, if not an
impossibility.~
for
a central Board to pass intelligently upon the security of the paper
offered ior discount, which must necessarily come from all sections
of the
~ountry.
I have already called yourattention to the fact that Federal Ro:::.wve
Banks are not permitted by law to make loans direct to individuals, L
or corporations, and that they can only rediscount paper which bears
endorsement of a member bank.
c~:.u
~he
It is evident) therefore) that in orde;:·
for a Federal Reserve Bank to render financial assistance to those
engaged in commerce or indus-.:. ry., in agriculture or in the raising of
live stock, the loans must first be negotiated with member banks. There
are· many loans1 however, which member banks may legally and properly
make >Yhi ch can not be rediscounted with Federal Reserve Batl}(s for the
- g ...
reason that the
as
eligible.
l~w
does not edmit of the classification of such
p~rer
A Federal Reserve Barik, therefore, can not disCOU"l.t any paper
..
however good it may be, which is not technically eligible under the
terms of the Federal Reserve Act. and, on the other hand, it is entirely
within its rights in declining to discount notes which, even-though
.
technicall7 eligible, are not satisfactory from a credit standpoint •
While the Federal Reserve
~ct
was intended to strengthen the bank-
ing system of the United StJ:Otes and to provide ready means of rediscountin!Z certain classes of paper., it is e.lso the evident intention of the
Act to disturb as little as possible the business of the member and
non-member banks, or their
deelin~
with their customers.
There is nothing
in the Federal Reserve Act which gives either the Federal Reserve
Board or a Federal Reserve Bank eny control over the loan polieyrof
any rr.ember bank.
A Reserve Bank cannot compel a merriber bank to make
a loan which it does not desire to make nor restrain it from making a
loan which it wishes to make even though it is forbidden by law.
I have already explained that a Federal Reserve Bank cannot lend
directly to the customers of· a member bank, nor does it, in fact. take
the initiative in making loans to a member bank for the purpose of
enabling the member bank to distribute the funds so advanced to its
customers.
The Federal Reserve Bank lends to the member bank against
trans.actions alreedy made, for the purpose of enablin~ the member bank
to restore its reserva to the legal requirement, after the reserve has
been impaired or is about to be impaired because of increased loans
and deposits.
I know that there is a very general popular udsconception regarding•
X-3032
- 9this and I think that some of the n:ember banks are responsible for this
misunderstanding, although~ I am sure~ they ha.Ye not been actuated ,by
'
malicious motives.
I have been in the banking business myself and I
think that I know something of banking psychology.
~mit
do not like to
Banks.. as a rule.
to customers that they are short of loanable funds
nor do they like to arouse
e~ty
in declining to make loant or in asking
for a reduction of a. loan e.lready ma.de.
I know thPt there are some bank officers w·ho are able frankly to ·
decline an e:ppltcation for a loan in a way which leaves no sting, but
which on the contrary gives-the applic~nt the impression that therejection of his application is a f~vor to him.
ha.ve such tact.
"But not
I? 11
bank•. officers
Some are frl?nk enough but their bluntness hurts the
feelings of the would-be borrower.
It is not unusual, therefore, for
bank officers in declining loans to look for .,a buffer, or some one to
whom they can "pass the
buc~.
~s ~ede
e~pacity.
useful in this
In the old days, the board of directors
By way of illustration I
~
going to
tell you a story which~ told me by ~naative of North Carolina and who,
by the wey., was one of the best citizens that the Old North State ever
ga.ve to /llabama, the
Honor~.ble
Joseph F. Johnston, who we.s Governor of
.Alabama for two terms and who died some years ago while he was a Senator
of the United States.
He w~:~s formerly president of a bank in Birmingham and he used to
enjoy telling this joke on himself.
It seems that one day a man, who.m I
shall call Jones, who had no credit res-ponsibility and no·.-v:isible means
of sup-port, but who was an all-around good fellow end had some little
:politiGJal influence in local elections* came into the bank and wanted to
borrow ~300.
Governor Johnston asked him whet collateral he had.
X-3202
- 10-
"Well", said Jones,
11
1 haven't got any.
If I had any collateral I
would sell it end I would not wtmt to borrow r=>.ny money".
"Well a, Governor Jomston said, "Who is going to endorse your paper
for you't"
Jones replied, "I do not know anybody who will endorse my paper.
I
want to borrow it on my own name·"
Governor Johnston wa.s
wr
the
will tell you
money~
wh~t
~nxious
I will do.
not to offend the fellow, so he said,
I cannot promise offhand to let you have
but I Hill see our directors about it end if they approve the
loan I will be verv g:lad to rtr-lke it for you".
directors ?nd they all
so Jones got busy
~nd
~d
offices in the business section of the town,
went ero,·nd and sew each one of the directors of the
bank and he ascertained <:!lso
~he
-
There were only seven
v.
'r
'-he next directors' rr:eeting would be held ..
day following the (irectors' meeting Jones came in with his note all
filled out Pnd said:
"ftll rig~, here ~ is my note.
Let me have the rr.oney".
Governor Johnston seid, "I ron very sorry, my- friend, I cannot make the
loan; the directors turned it down".
"WhPt", Jones exclaimed, "Did they turn thr=>t loan down"7
"Yes, they did".
"Well", s::>id Jones, "Th~t is very queer.
I saw Mr• .A and Mr. I:; I
sew evary one of the directors, and they all s2id I could have the money.
All of them were in favor of it".
~.Well", Governor Johnston s 2id, "I cannot hel:P what they told yoo;. I
brought the matter up at the ali rectors
1
meeting and they all voted to turn
it down".
"Well", Jones replied, "ftll I have to
s~y,
Governor Johnston. is that
personally and seperatsly you: directors are a very clever set of men. but
collectively they are the bigpest liars in Dirminghe.nl'-
- 11 X-3202
In these days, however, banlz- officers find in the Federal
R.eserve Board or the
Federa~.
""'"' rve Bank a rr,uch more satisfactory
buffer than a local board of directors.
wr :r:?
1 mow of Tany cas :,s
banks have found it very convenient to uass the buck to the F3dera1
Reserve Bank or the Feaeral Reserve Board, and rave stated to a
borrower or would-be borrower that they
asked f u.:
~ermit
01
it.
wouldp.l~s
to grant the extension
make the loan desired, but the Federal Tie serve would not
Such a procedure has a tendency to relieve the situation
as far as the local barik is concerned but it is certainly unfair to
the Federal Reserve System.
This evasion of responsibility ras
subjected the Federal Reserve Banks to augreat amount of unjust
criticism and has given the public a wrong impression of the authority
and attitude of the Federal Reserve Banks and the Federal ~eserve Board.
It has aroused indignation ·which is entirely natural. in the circurr:-
stances and has caused rnuch correspondence with the Federal Reserve
Board direct and with Congressmen and United States Senators, whose
ire has been aroused because of these
alleb~d
arbitrary methods.
It is entirely true trat a Federal Reserve Barik, mindful of its
resvonsibility under the law and acting in accordance with the dictates
of ordinary banking prudence, rray have bad occasion to call the attention of some of its larger
··oorrow·ing banks to their ~. . . . . .
''
discount lines, which have run in some cases over
<
without. being reduced, and have cc:~.lleci
:.
.
.
banks.to. the necessity
-
th,e
'.
1
a.c,' "~tioi of y;:Q.rs,
,--;··-
t
ditton~ion
1
cil wdtlung th~msul\tos in\o
&
of t~ borro;Jing
strongor position
But in no cd.SJ wttt.iu d:e k1o·vl0dg0 of ·t..l<.~ :F..t.;...H'd.l Reserve Boar<l has
any F~ieral Res.fr·le; Bd:.k u:':..ic:ttakm to ~·dy
pc:~.rticular
~0 a tiiefubJt bank wba.t
loans it should call or ask to ~vo l'J~UCoi.
~
- 12 X-3202.
I will give you a concrete example.
In anotaer state, not in
,,
this Federal Reserve District, there is a national bank \vb.ich has
for a long time beun a large and continuous borrower at the Federal
Reserve
B~,
the amount of its red.iseounts being several times greater
than its capital stock and. its fair proportion of the loanable funds
of tb.e Reserve Bank.
It sec ..s that this bank has made frequent
promises to roduco its discount line to a more reasonable sum, but as
it collected notes it would cons'tantly send in otllers for rediscount.
t~t
I hold in my band a notice
this bank appears to have beJn
senling to soma of its borrowing customers, which roals as follows:
"Your note for $_ _ _falls d.U:o - - - - ·"OUr FEDERAL RESERVE BANK owns this noto, having rediscountoJ.
it for us,
As i t has bo.;n r(.)ruwod several times, t.uoy are INSISTING ON
A PAYMENT of $____ or more.
It is A.BSOLUTELY NECESSARY to arrange
this note on th0 day of its maturity.
Yours truly.
Casi:l.L1r.
11
The Casaior of this Bc:l.nk recently wrote the Federal Rcsorvu
Bar~~~
as follows:
"We wish to assure you that we appruciate your help an-i could not
have gotten along without it.
t.uan you are to have us io it,
we
are more anxious to reduce our line
To show you howmiesirous we arc to get
our line d.oNn I wn enclosing a. notice w.uicb. we have lately gotten out
anJ.
whlch is proiucing exccller. . li results. ---- Now be patient with us
just a little
long~r
and we will show you
to a Nspectabla size,
th~t
we can reduce our lino
we thank you just the same.
11
To this the Fedoral Reserve Bank replied promptly:
"We aro plaa.sed to note froo your letter of. Septeober 9th that
you anticipate
bcin~
ablo before very long to materially
redu~o
your
- 13 X-3202
large borrowings from us
t~t
a
inj;rc;~.d.u.:a.l
you are justifiad in son1ing a
w~
I'OCinniJr.
notic~
do not, b.ow;;ver,
f.;~l
to borrowing customers
as per the form which you onclosod, as it makes sta.tuments that ar.J
entirely uncalled for.
with us and which
The
~:apors
acc~pt..:c'
w0
that you hl::l.vo bad under Ndi$count
'""'; being 3ligi ble in oricr to extend
to you nvc·_:ei c;;a.iii, NpNs.3nt +oa.ns
t~t t~
officurs of your oanl;:
h.:a.ve passed upon from the stcl.nipoint of the ere-lit worth involvel,
an.l, no douct, witil
W.C.Cn
~Ue,
t~e
considerc;o.tion as to t.c.eir collactib.ility
and, therefore, Wh3n t.c.e timo
CO~CS
for making colluction,
it would souc that, ooing conversant wit.c. local conditions, w.:a.ys
and moans for
~kin3
colliJction coull ba
devise~
by the same
officors wi tnout laying t.c.c. buru.on upon tho FJicr<.<.l Rosorvo B.::..nk.
This Bank has nover sot forth to your institution whd.t loans it
shoula or should not make, nor has it stated
t~t anyparticul~r
nota or notes tllat it bas held under ro.iiscount from your bank should
oc collected.
purio~
Wa havo
ext~nded acco~dation
which, in our opinion, was the timo
order to aid your
c~tomcrs
in
th~ir
to you over a long
wh~n
credit was needed
i~
commercial, iniustria.l a.nd
agricultural operc:Ltions. b' - w.b.an the b.d.rvesting and marketing period
arrived a.nd t.c.ere sccmod to
ings, w..;
d.;;:.n:n~d
~
_ 1.i ttlc or no reduction in your borrow-
it a.dvisa.ble to bring to your d.tt;;.;ntion tu.;;
d~:sLci.-
bility of efforts oeing made to get out from your seriously c::.ct.3ndcl
position.
Tho dJsirod
your
iniivid~l
your
dir~ctors
~unt
customers is
of
curt~ilmont
~matter
tbat should be
wor~d
out oy
and officers, they bearing in mind tho oxtcnded
position of your institution and its safety.
tlld.t you discontinue
in tho indcbtJdnoss of
c~.t
W+J would. ask t.uorcforo
once using t.ll.c fon:. of notice :t;ofcrr;.;c.l. to
- 14 X-3;;;02
and tbd.t
yo,~
also rocall the noticos. of a similar tenor that have
a.lr,;Ji:Ld.y oevn sont to your customers."
To this tho meteor
oa~k
replied:
"Your lott0r of tno lOth instant wa.s received this morning.
~ny
Fortunately wo had not issued
~v0
of the notices in question and
dustroyc:i tno entire su}ply.
.AJn sorry the incidGnt occurrod.
11
No J.ouJt tn:.! Fc:iera.l R.:;serve Board. will receive many complaints
growing out of tills incidJnt.
Tr..ere is
por~ps
even
gre.;~.ter
confusion in t.h3 public mind
rog.;;.rdiu§; the issuu of FvJ.erd.l Reserve Notes tl4m tr..ere is regarding
the rediscounting functions of tne FeJ.eral Reserve Banks.
T~e
im-
pression seews to prevd.il very generally that the Federal R0scrve Board
~s
poNor to expd.Ud or contract the currency of tne country at will
and
so~e
oelieve that it
aroitrary manner.
3o61.rJ.
s~ll ~ve
.!lciS
exercised this powor in a.
Wnile th3 law prescribes
th~t
r~ckloss
and
tne Federal Reserve
the right, cl.Ctin g through the Federal Reserve Agent,
to grdnt in whold or in part or to reject entirely the application of
ar1y
Fed3ral Reserve
B~
0xercis3l this right.
for Federal Reserve Notes, it bas never
on the contrd.ry, it hcls always approved
prorr.ptly ev.;;ry appliccl.tion wnicn has been :rrJa.J.o for th() issue of
Federal Reserve Notes.
on~
of the p,brposes of the Federal Reserve
Act, as stdtcd in its caption, is to furnis.u an elastic cur runcy'. out
there ar8 ffidnyWhose idea of oldsticity is continuous stretching.
Currency to be really elastic
must be susceptiole of expar1sion
or t:ae reverse. as t:Oe needs of industry ar1d. com:nerco IDi::l.Y require.
Many believe t.c.at there was
d.
preordained contrd.ction of the currency
luring the y.aar 1920, determined upon in order to reduce ];:rices.
- 15 X-3202
The
f~cts,
wnich cct.rt oe readily
ascertGin~d
from the figures which
were puolisned every we0k during the year 1920,
impression is
~osolut~ly
unwarranted.
s~ow t~t t~is
·
Tliw Federal Reserve Boari
said in its Anrruct.l Report for 1919:
11
Tnc expansion of credit set ill ruotior;. oy tr..e war must oe
checked.
cr~ait
must be brought undor effective control and its
flow be once more regulated and governed with caruful regard to tho
econorrdc welfare of the country and the needs of its producing
inJ::.:;.s tries.
and
ct.
Defla.tion, however, merely for the so.k.3 of deflation
speeJ.y return to
11
noi'l1ld.l" - deflation merel;)' for the sake of
r.astoring security Vct.lu-3s "' .d. cnr.:unodi ty pric0s to their prewar
levels without regard to other consequences, would bo an insensate
procee;iing in tile existing posture of nation.:.l cmd world affct.irs.
It said also
i~
11
tDat report:
"It must never bo forgotten toot productive industry is profoundly affected by cNdi t conditions.
credit.
one of its lifo-giving
MoJ.ern business is do:1e on
principl~s
is credit.
T~
mood
and tempt::r of t.ue businuss cormnuni ty ar.: deeply c.tffected by
state of credit and mct.y edsily be
d~sturbed
t~e
by ill-considered or
precipi. tate action.-.. ,Too ra-pid or too drastic defla.tion would J._;i vat
the very purpose of
ct. well-r~gulated
credit system oy the needlGss
unsettlement of mind it would produce and the disdstrous reaction
that such unsGttlement would have uponFroJuctive
and drastic deflation is not, therafore,
a policy of further u.Xpdnsion.
only to disaster .;1nd must
L
industr~
Radicdl
"in contempld.tion, nor is
Either course would in the 0nd lead
c be pormittad. to develop.
our economic
-16X-3202
and financial position is essentially strong.
There need oe no
occasion for apprehension as to our ability to effect the transition
from war-time to peace-time conditions if reasonable safeguards
against the abuse of credit ar0 respected,
Tnero is, however, no
need for precipitate action or extreme measures.
Extremes must be
avoided, t.b.\3 process of adjusting the volume of credit to a no:I'IIl.ll
basis should bo effected in an orderly manner, and its rapidity must
be governed by conditions and circumstances as they develop.
Much
,will depend upon the cooperation of t:O.c business and general comrnunity.
Indeed without such cooporation progress can be nei thor rapid nor sub;stantial.
Much will depend also upon the rapidity with which t:O.O
unabsorbed portion of the outstanding issues of war securities passes
into
th~
hands of pCFillancnt holders.
As the national debt is tbus
absorbed and as it is reduced tnrough toe operation of the sinking
fund, t.u.e loan accounts of too banks SL.Ould be reduced corNspond.ingly
until t:U.e proper balance betwecin t.lle volume of crcdi t and tue volume
of concrete things, whic.ll crodi t h13lps to produce and whico. aro thu
normal basis of credit, is NstorocL
Tnis equilibrium, it cannot
be too frequently or too emphGtically stated, .can be restored only
by speeding up the processes of production, by the orderly J.istribu-
tion of goods, by the avoidance of wasteful consumption, and by the
increas~d accumul~tion
process0s upon which
B~nks
rr:rust depend.
tuos~
procssscs
Effic~cious
~t
of savings.
th~
TnosG arc
tn~ fund~£ntal
proper functioning of tnc Federal Reserve
The Federal Reserve System
it can not of itself and
action along
economic
th~se
Ccln
~lone
do ruucb. to assist
compel them.
lines involves the intelligent ani
- 17 X-320t:earnest cooperation of t:U.J
tho Fuderal Reserve
,simss and general community.
Bo~rd wil~ ~lways
deponlence of credit
~•d
\Vnile
oe mindful of tile inter-
industry and of tile influence axerted on
prices by tne general volume of credit, tnu Board nevertheless CaQ
not assume to oe an arbiter of industry or prices.
as t.n.:l
i,~rdian
Its
prir~ry
duty.
of t.ne Nation's ultimate be:alking reserve, is to see
tb.d.t tnG bi:l.l'1ks under its supervision function eff\Jctivcly ani :properlyas reserve banks."
It is not tne function of
t~
Federal Reserve System or of
any banking system to atter.1pt to fix or control prices.
B:.il'lks ar..;
conc;,;rned vvi t.l:l prices only in so fa..r a..s the security of tJ.leir loans
lilcl.Y be involved, and t:aey are interested more in the sta.bi.lity of
prices and tueir margin of collateral than in t.lle' price level itself.
Banks do not create general conu.i tions, but
t~y
must adjust t.J.emsclves
to clld.nging conditions, wnich, in the recent ev .mtful ::;onths, .ilave
been brougnt about by til.; ir _Jsis tible force of popular sentir.::ent
throughout tne world.
Tnere wa.s mt only no
d~ring
the year 1920
contr~ction
but on
tr.~
in Federal Resdrvv Note currency
ot!ler .hd.ni
th~
total voluw·J
of Federal Reserve Not0s Ll' c.trcula.tion silows an -...lmost continuous
upward trend during tJ.Jo.t y0ar, rising frorr. $£:,
to $3,404,000,000
time
t J....;
~n
8~:t4,
000,000 on J'-'r.!U.6.ry 23rd,
December 23rd, a Ncord high r.kl.rk.
Sincu t.u.a.t
volume of F.Jderet.l Reserve Not;:;s in circul.:.tion ila.s been
gred.tly reduced, until on Szpt<Jmb::;r 14, 19-dl it stood a.t $2,491,651,000.
I wisil to rei terdte that n3i t.a.ar tee increaso r,or t:.o .i0cre.::1so in
volume of Fadoral R3survo Not0s outstanding is tu~ r0sult of any
·~L....;
- 18 -
X-3202
preordained policy or premeditated d0sign, for tho volume of Federal
Rcservo Notes in circulation
d.cp~nd.s
ontirely upon the activity of
business, and upont.aa kind of activityw.uic:O. calls for currency
ratuer than book credits.
As I
dlrGady stat0d. one of, the
~ve
purposes of t:ne ]\;deral Reserve Act was to provide a3:1 elastic
curr~nc~
Unit0d States notes, or legal tenders. are required by
law to remain at
d
fixed amount, $346,681,016.
are secured by Government bonas and
qualities of elastic
currenc~
t~ese
T:O.eir
National Bank note$
notes do not
vol~
:aas
n~var
~ve
the
depended upon
the actual need for currency so much as upon tue price of Government
bonds wn.ic.o. .aave tne circulation privilege and the.rc .aas been only a
moderd.te cbd.nge in t..a.e volume of National Bank Notes outstanding for
severd.l years past.
Federal Reserve Notes, on the contrary, are
distinctly elastic.
T.a.cy may be issued to Federal Reserve Banks
against collateral in an amount equal to the sum of the Federal Reservo Notes applied for, w..a.ic.o. collateral security is
requir~d
to
be notes and bills discounted or acquired by the banks, or gold or
gold certificates.
The
lawprovid~s
furt:nor that eacn FedvrGl
R~serve
Bcink snall maintain a reserve of forty per cent in gold against its
Federal Reserve Notes in actUcll circulation.
As
~1 evid~ncc
of
tn~
eld.S tic qu.:Ui ty of Federal Reserve Notes rna.y be cited the fact that
on April 1, 19l'i tne tot02.l outstanding was
$357,239,000; on August 1,
1919 t~e total amount outstanding LGd increased tv· $2,506,820,000 and,
as
nas
just been stated, tae rnaximum amount ever in
$3,404,000,0001 was rcac.aed
Oll
December 23, 1920, altnoug.o. :pric3S i:J.aJ.
dlready begun to decline several montns before
circulation~
t~t
dd.te.
-lSX-3202
Since the first of the present year t.u.e loans of the Federal
Reserve B~nks to tneir membJr banks decreosed
~
a.•JOUt
~d as the notes discounted witn Feieral Reserve
$1 1 200 , 000 , 000
Bru~
up to September 1st
nave been paid off Federal Reserve Note currency nas come
of.~
back to the banks and in tne absence
been reissued.
U,pon
deposited to secure
p~ymen~
co~~rci~l
of
Federa~ :P:"'~
2rve
ei tner an imr:ncdiate return of an
bank or an dUtowatic
de4dnd for it, has not
~fotes,
equiv<;~lent
increase in t.ue
av...ilable for tL,;,eir reJemption..
paper which nas been ·
t.uere necessarily results
ar.aount of notJs to tn,:;
percent~ge
of golJ reserve
Federal Reserve Notes are not legal
tender, nor J.o t.u.ey count as reserve moriey for member banks.
are issued only as .... need. for tc.em develops and
Q.S
they
Tc.ey
becor~e
rc-
dundc:mt in any locality t.aey are ret'J.rned for creJ.i t or for rau.emption
to t.ue Federal Reserve Banks or to t.ue Treasury o.t Was.nL1c;;ton.
t~ere
tl.4i:in
ru~d
T.._us,
cannot be at any time more Fed.er<.il Reserve Notes in circul ..... tio."
t.ue needs of tne country C:!-t tne prevailin€; level of prices
wa3es
stan~ing
re~uire,
and as
t~e
deillcind abates tna volume of notes out-
will be corraspondingly reduced tnrougu
reJ.emptio~
T~e
iucredsed volume of F3d3ral Reserve Notes in ci:r:-cula.tion from 1917
to the end of t.ue yea_r 1':320
w~s,
in so far
<;~,S
it
Wd.S
not t.ue result
of direct excnanges for gold and gold certificdtes, tne effect of
as
advanging wages and prices , :.J. DOt t.ueir cause, just
t.ae reduction
wJ::Ucll .na.s taken pl<.ice during t.ne present
;yec:~.r
is t.ue result of lo·'iur
prices. ~•~l s;na,ller volur..:e of business, rCA.t.G.er t.:..:m t.ueir ccms.:;.
more fu.lly employed c:.nl as productioa increases
~nd
d.istribution
1Ci3
X-3202
becomes more active, tbare follows a demand for greater discount
accoilJlJ::;Odations and a. need for more currency, dlld t.l:le incred.sed volume
of discounts furnisnes a means of providing t~~ increased vol~ of
currency required..
As long as Fe.iaral Res~rve notes c;a.re r3del.3mable ;in gold .:and t:O.e
ID4intGined~
r0quired reserves are
it is difficult to
s~e ~w
tnere
can be any inflc;a.tion of tue currency growing out of tne issue of
F-3derc;a.l Reserve HotcJs.
Tne .notes
Cl;a!l
only be issued in exc£iange for
gold or gold certificates or against t40 security of commercial paper
w.nicn
first
A;i.S
inflC~.tion
J.iscount0a. wi t.h some
be~n
w.aich now axis ts L
a.~
tuis country during
memb~Jr
bank.
T.ue cur;rency
ot.uer countries. a.nd wmc.u cxis ted in
after t.ue Civil War, is due, first: to the
suspension of gold. payments• second:; to an unba.lal ced budget, tl::c..t is,
insufficient revcnuJs to . mablo til<.: Gove.rru:lent to pay its currerJ.t
expenses, and t.w.irJ.: to t.u.e iSS'.le of irredeamd.ble
pc;~.per
currency
ei tuer by tile Governm.mt direct or by a centr.:l.l bank agc;:a.inst Gova:mment
s~curities,
cind
of Government
t~e
forcing of sucn notes into
obli~tions
c;:a.nJ private
circul~tion
in
inJebt~dn0ss.
T.c.e most conspicuous examples to..ka.y of countries uc.tving
Here i:-.
t~c
Sout.w., we
in t.L:ie price of cotton.
loc;i.l'ls of tAle FoJlare:.l
c;~.rf;;l
infla.t~i
ctll rejoicing over t.L:ie recent ca.dvd.l:.<ce
T~is d.livance is not ..iue to
Rl)s~rve
p~~1m~t
Ba.nks or to
ciJ:ly increca.se in
t.n~
any expansion of t..o.e currency.
As a. matter of fact, t.i:l.l amount of FGd.er.,.l Res.Jrvcl Notes in circula.tic"'
today
is
<:~.bout $500,000,000 less tw.n w.aJn cotton r<Ja.c.c.Gd. its lo-.-o~est
point last spring.
T.a~
eoonondc causss, to t.aa
a.dvar._J in t.::. e price of cotton is due to
opor~tion
of tue inevita.olo law of supply
X-3202
-.Gl-
and demand.
Aft.-;r tna lct.st roport of tnc Department of Agriculturat
to t~o fact tnat the prasont crop is abnormcilly
the world awakened
small and tnat probably loss tnan
s~vcn
million bales will be produced.
In ordinary circumstar.ces a partial crop failure of tnis kind would
havJ been calamity to tne Soutn, but owing to tDc large dffiount of
cotton left in the .oands of prod:uc<:>rs from last s..;ason, i t will be a
benefit
becau~o
a more
non~~
equilibrium of tha mark0t will ba re-
stored and t.aeroforG tne debt-paying and purc.Jasing power of tile Sout.o.
tllis fall will ba far graa.tor tnan bad boan anticipated.
I wish to empnclsizu, however, the fct.ct that this nappy result
is due, not to CNdit or currency expansion but rather to the defla-
•
tion of t.ne anticipated supply of cotton.
Touc.ning aga.in upon the crvdit policies of the Foderal Reserve
Banks during the -year J920 and at t.ae present time, 1 wish to remind
you tho.t a cn.:..nge_ in t.ae discount ra.to is not nucossarily a c:t..a.nge in
policy.
Centrd.l banks in for0ign countries nave been accustomed for
generations to
ad:v:a.~•ce
or reduce t.aeir rd.tas of discount in e:.ccorddnc..:;
wi t.a cbd.l1.3:ing concl..i tions L1. t.u.eir money markets and. t.c.dr action is.
d.CCepte:i wi t.c..out populd.r protest.
.
T~e
discount rd.tGs of
yed.r 1919 were below tne
t~c
Federal Reserve Banks Quring the
~rkot r~tos,
as Wd.S tue
gred.ter part of tue period wnen tno country Wd.S d.t
CciS0
war.
during tho
T.ue war
did not endt however, in a find.nci""l s;:msej'Ni. tu the siguing of the
armistice
cinQ t~
exigencies of tnc
Tr~asury
scomod to
ra~uire
a
continuance for sm:.:.0 mont.as of tee Fed0ra.l Reserve discount ratos
v1.aicn prava.ilcd during thG war.
""C··~
_._
X-3~0Z
-22In January, 1920, howevor,
Resurvc
·Fed~ral
rat~s
were advdnCed
generally to six pGr cont, wllicn, by taa way, is the bighest rate that
bas ever been cnarged by tJl::: Federal Reservo Banko f Richmond-
This
advance in ratos took place a.t a. timo when there !lad bC3en ample opportuni ty to market t.nc crops of 1919 and before preparations weN rna.d.o
for planting
T~c
t~c
crops of
1~.
effect of tais .increase in discount rates at tae
serve Banks was to
Feder~!
Rc-
tae degree of expansion of their loans, al-
r~ducc
thougJl tnc volume of ~deral Reserve discounts ·still continued to she~
a teniency to increa.se.
assets of
t~e
At tl:J.e end of JanUd.ry, 1 920, t.ac tot.;..l <Ja.m,ing
Federal RJscrve Banks, wl:J.ica
member banks, 4mountJd to $3,039,191,000,
at tnc enj of
octob~r,
1930.
D~ring
~s
compared
tnis period
prices l:J.ci.d. already set in._ alt.c..o-u;;.a. t.aere
rediscounts for
inclu~c
~c;i.d
tn~
wit~ $3.396,0~3,000
drastic doclinJ
i~
·ocon a very substdlltial.
.
increase botJl in t.ae volume of rediscounts of tne Federal Reserve Banks
and in tJle amount of t.c..vir Federal Reserve Notes in circulation.
T~ere
is no occdSion for rue to say that tno year 1920 was a
criticdl and disastrous
stat~
who
Cdn
on~~
T~er~ cir~ tuous~~s
bear witness to tnis out of
of pcopl0 in tJlis
t~ir ~in ~1owl0Jg~ ar~
0xperience, -.,ut t.ara orded.l t.arough w.i:lic.u you
.i:lo.v~ pass~.i
ord·J~l
by ;people in all otl:J.er
w.aich was
undergon~
g.t .tho same timo
is the same
statas in this country and by millions of people throughout the
civilized world.
brought about by
Tho reaction, when it
world-wid~
was overdue and was
oconorudc causes, wbicn wore cntirwly
beyond tne control of any group of
Government.
cam~,
ba1~,
of any Board or of any
,. .
; _li_ f
-·
X-3202
-23-
fM President of the United States in en address to the Sena.t• le.&\
July ea1d: "Our land has its share of the financial chaos and the indust-
rial depression of the world.
We little heeded the growth of indebtedness
or the limits of expenditure during the wa.r because we could not stop to
count the cost.
Our one thot,ght then was the winning of the war and the
survival of the Nation.
V:e borrowed and loaned - indiViduals to the Na-
tion and the Government to other Governments, and to those who served the
Nation, with little thought of settlement.
because nat1onai .life was at stake•
It was relatively easy then,
In the sober aftermath we face the
order of reason, rather than act amid the passions of war, a.nd our own
land and the world are feeing problems never solved before.
There can be
no solution unless we face the grim truths and seek to solve them in
resolute devotion to duty .. ,, •..• It is unthinkable to expect a business
revival and the resumption of the normal ways of peace while maintaining
the excessive taxes of war .•..• The slump which is now upon us is an inevitable part of war's aftermath.
since the world began.
It has followed in the wake of war
There was the unavoidable readjustment, the inev..
itable charge-off, the unfailing attendance of losses in the wake of bigh
prices, the inexorable deflation which inflation had preceded.
been wholly proper to seek to apply Gover-nment relief to
It has
~nimize
the
hardships and the Government has aided wherever possible, and is aiding
now, but all the special acts ever dreamed of 1 all the particular favors
ever conceived will not avoid all the distresses nor ward off a.ll the
losses.
The
pro~er
mentPl state of our people will commit us resolutely
and confidently. to .:·Our ta.ks, and definite assurances as to taxation and
expenditure will contribute to tha.t helpful mental order.
Tbe only sure
X- 3?02
- 24 -
man experience."
When things go wrong, e•pecially in matters pertaining to economics
tmd fina"lcet there are elwl".ys many people who are unwilling to c(,....,s!' r
abstract cemses, but prefer to seek the concrete and the personal.
demand a personal scapegoat.
t}.-'
They
Some people have made it their business to
chBrge, end may have deluded others into believing, that the Federal Re·
serve Banks and the Federal Reserve Board, particularly, have caused a
great economic crisis, which was foreseen by those responsible for the
management of the Federal Reserve System, but which was most certainly
not brought about by them.
On
the other ha"ld they did everything within
the bounds of reason and the limitations of lew to relieve the crisis
and. to avert a. financial panic, which everyone will now acln:it h:::.-s been
averted, whether the Federal Reserve System be commended or criticized
for the part it played in the drama) which but for its existence would
have developed into the
gre~test
financial
tra~edy
of modern times.
I wish now to introduce the testimony of one who is at present
th'~'
star witness of those who seek to hold the administration of the Federal
Reserve System responsible for the financial and economic ills which efflict the country.
I hold in my hand the report of the Comptroller of the Currency for
the yePr 1920.
This report is dated December 6. 1920 but was actually
sent to Congress in page proof form on February
.
,
7, 1921.
i
There is .nothir.g in this report which reflects in any way upon the
administration of the Federal Reserve System nor is there enyNh6re a auggesti6n that the precipitate decline in prices and the general depression
-25-
X-3202
whiCh set in during the last half of the year was due in any respect
to the policies or operl'tting methods of the Federal Reserve System.
On the Contrary several pages are devoted to a discuss ion of the world-
wide economic c9.uses which brou9ht about the drastic reaction, and I
sh~ 11
now read to you
sever~l
:passages in the report which refer to th:.
Federal Reserve System.
From page
6: "The story of Japan•s industrial and financial exper-
ience is largely similar to the experience of South American and European countries - s.on:e of them our allies 1 and others neutral.
Some of
these countries are now going through a b~siness cataclysm similar to.
that through which Jap~ bas so recently passed.
In our own country
we have been thus far fort'lmate enough'- thanks largely to the splendid
efficiency end stabilizing influence of the Federal Raserve System- to
avoid the financi~l crises end complete disorgani~ation which have ~ade
h~voc
elsewhere.
We have passed with coWParative safety through exceed-
in~ly troubled and nerve-racking times; but difficult and dgn£erous problen:s
remain to be solved, the solution of which will demand clear heads and
steady nerves."
From page 11:
•The deflation which at that time
(1919) was obviously
inevitable has corr-e, and tt~ co~try is now in many respects on a sounder
basis, econorrdcally, than it hes been for yeers."
From page 52:
"Largely through the a.id and excellent functioning
of the Federal Reserve System. the business and ba~ing interests of the
country have passed
succe~sfully
through the
~erils
of inflation and the
strain end losses of deflation without panic end without the demoralization which has been produced in the past at various times from far less.
X-3202
serious 8nd
r~ckin~
c;>uses.
'l'hose banking and other interests which at the
outset so Vi§'orously opposed the Federal Reserve Sys tern are now among its ' .warmest advocates.n
Fron; page 291: "The past seven
~e8rs
have been, in numbers of persons
and extent of interests involved, the most momentous and critical in the
history of this Republic.
We have had to fpce and solve gigantic and un-
p.recedented p.t ob:i.err's, and the banking and financial rna.chi:aery of the country
•
·has been subjected to a. test 8-nd strain unrarallelled.
the duty of our country very largely to
fin~nce
It has been
the world, and in cl'lrry-
1ng out .the program which fate imposed upon us we have overcome successth~t
fully difficulties
met every righteous
at tirees seerred alrrost insurmountable and we have
derr~nd
mede upon us.
Our Federal Reserve financial
~md banking sys tern, inaugur~ted in 1914, has been of inestimable value;
qnd without its aid, tr->sks which we have so successfully accomplished
would have been impossible.ft
I fee 1 th?t I should not close without saying something about present
conditions and future prospects.
The banking
sit~~tion
has &reatly
iiT~
proved· and. with respect to it the gloomy forebodin;;zs of last Ninter are
no longer justified
~nd
can be dismissed.
The process of reedjustment
bPs not yet been completed but evidences are multiplying
~s
been turned and th-'='t
hq.vc
•vefp~ssed
the most "!.CUte stage
th~.t
of
the corner
the readjust-
rnent period.
Mu,ch will depend Ul'On developments in the tCJgricultur"-'1 sections of
the country end upon the rn.an.."ler in which the crops are marketed.
all sections
h?~e
While
suffered, the burden of debt Rnd the lack of buying
po•ver is felt more keenly in the
fermin~
districts "nd no sust,ined for-
ward movement in commerce and industry ean be expected unless en improve
X-3032
-27-
ment is seen and felt in these districts, in which normally so large a
part of the country's
power lies.
purchasin~
With preFer cooperation
on the part of merchents P.nd bankers, those engaged in agriculture have
op~ortunities
now
it~s
ago and
P.nd prospects which were not anticipated a fe• months
of vital importance that this
It should be remembered, also)
th~t
cooper~tian
in order to
proiuction we must push our foreign tr!3.d.e.
th"n
Re
need for our own use.
maint~in
articles of great variety
In the chenged conditions resultine from the
war, Pmerice occuries ::. new re latianship to the world.
~debtor
our rQte of
We produce more cotton, more
manuf~ctured
fot2dstuffs, more copper and more
be given.
We 8I"e no longer
nation, as we were in 1914, but today Ne are the world's great
creditor nation..
We h2ve l"n enonnous stock of gold, much of which has
come to ua during recent months from ell q,uarters of the globe in pasnnent
of corrrr.odities
purch~sed
We cannot forever
from us.
rnaint~in
our
forei~
of the gold stock of other nations.
trade, however, on the
Some memns must be devised for ex-
tending long time credits abroAd or of interestin§
forei~n
so
properties
he~vilv ~~?inst
"'!ld.
b~sis
Arneric~n
investors in
securities, in or:der thet the exch!"'n2e which now runs
other nations
rr.a~
be corrected.
We rrust contimue to buy from foreign countries those things which they
can
pr~uce
'Ni th t 1-.e,-.
better or more cheaply then we can and exchange commodities
If we deterroine to do business with and for ourselves alone,
i t seems inevitable thPt ·ve must reduce our production to meet merely
Pmerican requirements.
One word more about the Federal Reserve System.
do the impossible.
~'1d it c~?n.'lot.
Do not expect it to
It is not & panacea for all economic and financial ills
however skillful its administration rr:ay be., pra\Yent periods
.i
-28-
Y.-3?.02
of depression in the future, although it can do nuch to mod,ffy them.
Other nations, such as Great Britain and France, with thetr great
central banking institutions, have always had their years of prosperity
and their periods of depression, although they have been free from the
money :panics which we formerly had in this country as a result of our
inade~uate
~11
bankin? system.
history shol"Ts that -reriods of
prosp~rlty
Pnd
de:prer-sio~
come
~in
cycles, the rotation being about as follows: (l) Prosperity, (.!!) ti~uid.ation,
(3) Stagnation, and (4) Revival~
flt the present time the Frocess of liquid·
ation is well advanced and the end of stagnation and the beginning of the
period of revival seem now to depend upon certain tbings which are susceptible of. accomplishment in the near future, among which may be enumerated
the financial rehabilitation of our great transportation
detennination
syste~s
and the
of the policy of the Governrrent with respect to revenues
and the tariff.
When the period of revival does definitely set in, to be followed by
a new -era of prosperity, let us remember that the greater the wave of pros. peri ty and the more unrest rained the exp-"'nsion and the speculation accompanyin? it, the sm>rper will be the depression thB.t will follow.
the lessons of the past
v•o
If, however,
years are remembered, the next period of pros-
parity will be of longer dura.tion than any we bave had before and the subsequent reaction will be far less severe •
• .
}:·J
·\
.
·.
·.
/
X-3205
TREASURY DEPARTMENT
WASHINGTON, .D. C.
September 14, 1921.
The Governor,
Federal Reserve Board.
S 1 r:
You are advised that the Department has referred to the Comptroller
General of the United States, Treasury Department Division, for settlement the
account of the Bureau of Engraving and Printing r•r preparing Federal Reserve
notes during the period August 1 to A.ugu.st 31, 1921, amounting to $272,342,94,
as follows:
Federal Reserve Notes 1 1914
Total
$50
$100
!§_
i)lO
~
Boston ••••••••••••••
294,000
562,000
2ZD,OOO
38«000
576,000
1,000
New York ••••••••••••
100,000
360,000
95,000
561,000
379,000
4,000
Philadelphia ••••••••
122,000
41,000. 15,000
zs,ooo
267,000
41,000
Cleveland •••••••••••
166,000
310,000
Richmond ••••••••••••
221,000
2,000
3,000
45,000
39,000
225,000
Atlanta •••••••••••••
176,000
36,000
11,000
2,000
871,000
307 ,ooo
7,000
3,000 1,333,000
145,000
Chicago •••••••••••••
34,000 .
206,000
171,000
1,000
St. Louis •••••••••••
Minneapolis •••••••••
152,000
19.,000
171,000
22,000
22,000
Kansas City •••••••••
.Da.llas ...............
1,000
1,000
74o.ooo
356.000
146.000
15.000 1.259.000
San Francisco •••••••
3,292,000 1,432,000
715,000
24,000
30,000 5,493,000
5,493.000 sheets at $49.58 •••••••••••••••• $272,342.94
The charges against the several Federal Reserve Banks are as follows:
CompensaPlate
Inc,ComSheets
tion
Printing Uateria1s pensation
Boston ••••••• 562,000 $ 9,357.30 $ 8,975.14 ~ 6,862.02 j2,669.50
New York ••••• 576,000
9,590.40
9,198.72
7,032.96 2,736.00
Philadelphia •• 561,000
9,340.65 8,959.17
6,849.81
2,664.75
Cleveland •••• 267,000
4,445.55
4,263.99
3,260.07
1,266.25
Richmond ••••• 310,000
5,161.50
4,950.70
3,765.10
1,472.50
Atlanta •••••• 225,000
3,746~25
3,593.25
2,747.25 1,068.75
Chicago ••••• 1,333,000 22,194.45 21,268,01
16,275.93
6,331.75
St• Louis •••• 206 9 000
3,429.90
3,289.82
2,515.26
978.50
2,847.15 2,730.87
2,067.91
612.25
Minneapolis •• 171,000
X&nsas City •• 22,000
366.30
351.34
268.62
104.50
Dallas •••••••
1,000
16.65
15.97
12.21
4.75
San Francieco;L259,000
20,962.35 20,106.23 15,372.39
5.980.25
5,493,000 i91,456.45 ~87,723,21 $67,069.53.26,091.75
-~
~27,663.96
28,558,08
27,814.38
13,237.86
1511369.80
11,155.50
66,090.14
10,213.46
8,478.18
1,090.76
49.58
62,421.22
$272,342.94
The Buaeau appropriations will be retmburaed in the above amount from the
indefinite appropriation "Preparation and Issue of Federal Reserve Notes, Reimbursable", and it is requested that your Board cause such indefinite appropriation
to be reimbursed in like amount.
By direction of the Secretary:
Respectfully,
s. P. Gilbert,Jr.,
Under Secretary.
FEDERAL RESERVE BOARD
WASHINGTON
X-32o6
September
20~
1921
Dear Sir:
There is enclosed herewith, for your
~nformation,
advance copy of an address - "The Federal Reserve
System - What It Is And What It Is Not" - which I shall
deliver on Thursday, the 22nd instant, at the "MadeIn-Carolinas" Exposition1 at Charlotte, North, -9arolina.
Very truly yours,
Enol. X-3202
GOVERNORS OF JLL F.R.BKS.
G o v e r n o r.
L
w
FEDERAL RESERVE BOARD
WASHINGTON
\
X-3207
September 20, 1921.
SUBJECT: Rates charged by Membdr Banks to their Cv.stomers upon
paper offered to the Federal Reserve Banks.
Dear Sir:There is attached hereto a copy ot the Board's circular letter
X-11901 dated September 11, 1918, requesting the Federal Reserve Banks
to report, on Schedule B.D.41 the rate charged by member banks against
their customers upon each item offered to the Federal Reserve Bank for
discount, This circular was issued during a Liberty Loan campaign and
some of the Banks raised objection at that time, on account of the heavy
pressure of Government business. The Federal Reserve Board recognized
the validity of this objection and postponed compliance with the rv.ling
until after the terminetion of the Liberty Loan campaign then current.
It has been brought to the attention of the Board that some of the Federal Reserve Banks are furnishing the desired information, both for the
head offices and for the br?nches, some are furnishing it for the head
office and n:ot for the branches) and some are not furnishing it at all.
The Board noo desires all the Federal Reserve Banks to report on
Form B,D,4 the rates of interest charged by the member banks to their
customers on all paper offered for discount. The Board desires to have
this information continously furnisheli for the light it thr·ows upon the
reletion of Felieral Reserve Bank rates to rates upon bank loans obtained
by the pv.bl i c.
Very truly
yours~
G o v e r n o r.
Enclosure, X-1190.
TO ALL CHAIRMEN,
FEDERAL RESERVE BOARD
WASHINGTON
September 11,1918.
X-1190
. Dear Sir:
The Board :i.s anxious to obtain all infom.ation possible as
to interest and discnunt rates throu;;hout the cou::1try, ar.O. requests
that you ask your rr.ember bauks to indicate on thei.r rediscount
application blanks the rate of interest or discou~t charged by
therr. on each no-te or bHl offered for rec.iscount ·;fith a :&'eJ.era1
Reserve bank; or 1 ir: the case of purchased paper, exclusive of
acceptances, the rate at which the pv.rchase has been rr.ade by the
rr.ember bank.
For the info~~tion of the Board you are requested to
give instruc~:i.ons tJ.;at there be repor-ted on Schedule B-D. 4, the
customer's rate on notes discounted, e.g.,
Rate
4=1
/2)
the first fi:;ures being the reserve bank rate ft.nd the .second (in
parenthesis) the r~te charged by the member c~uk. tn case there
is not room on the f om to insert the ct.:.st orr.sr 1 s rate in the
order indicated, it rr.ay be inserted anywhere else on the Lne ..
72"-(5'-l
In order to provide ample time for con.nunicatio.... with
member banks, it is su;gested that they be asked to furn\"n this
additional infomation on their application blanks bagi.""l:r'!ing
Monday, Septerr.ber 23,1~18&
Your compliance with this request will be greatly
appreciated by the Board.
Very truly yours,
-~-Governor.
. ..
FEDERAL RESERVE BOARD
WASHINGTON
X-3208
, September 24, J 921.
Letters from Treasury Department Regarding
Currency Operations of Federal Reserve Banks.
SUJ3JECT:
Dear Sir:
I am transmitting r.erewi th, for your information and
attention, copies of two letters received from the Under Secretary
of the Treasury, both dated September 22, 1921. Que of these
letters relates to the withdrawal of Federal :Reserve Bank Notes
from circulation and points out the inconvenience to which the
Treasury is subjected by reason of the withdrawal of Federal Reserve Bank Notes from circulation in amounts greatly exceeding
the coinage of ~ilver dollars. The O\her letter relates to the
practice of some of the Federal Reserve Banks to forward to the
Treasury for redemption all National Bank Notes received for redemption or deposit, whether fit or unfit.
The matters referred to in these letters will be brought
up for further consideration at the conference beginning October
25th, but in the meanwhile the Board suggests _that the Federal Reserve Banks, which are now performing the functions of sub-treasuries,
do all in their power to comply with the views of Treasury officials.
Very truly yours,
Enclosures.
GOVEr~P.S
AND AGENTS - ALL F.R.BANKS.
Go v e r n o r.
c0
"P
y
X-3208a
Washington
September 22, 1921.
My dear Governor:
I think that there has in recent mon t:t.s been some tendency
upon the part of the Federal Reserve Banks to hasten too much the
withdrawal of Federal reserve bank notes from circulation. This
has resulted in some disturbance to the Treasury's program for the
printing and distribution of p:>per currency, and I am therefore
calling the facts to your attention in order that appropriate action
may be taken, wt.erever necessary, by the Federal Reserve Banks.
On February 1, 1921, there were de1)osi ted with the Treasurer
of the United States as security for issues of Federal reserve barik
notes $259,375,000 of Pittman Act certificates and $14,730,200 of
Uhited States bonds, a total ·of $274,105,200. On ~~e same date there
were $220,911,066 of Federal reserve bank notes in circulation and
$5,027,334 in the Trea~·y, a total circulation stock of $225,938,400.
On September 1, 1921, $193,875,000 of Pittman Act certificates and
$14,480,200 of United States bonds, a total of $208,355,200 were deposited with the Treasurer of the United States to secure Federal reserve bank note circulation, and $119,172,892 Federal reserve bank
notes were in circulation, while $2,593,508 were in the Treasury, a
total of $121,766,400. From these figures it will be seen that during
the period in question $65,500,000 of Pittman Act certificates were retired and $250,000 of United States bonds were withdrawn from deposit
with the Treasurer, making a total decrease in securities deposited
of $65,750, 000; while, on the other hand, circulation of Federal
reserve bank notes decreased $104,172,000, the difference between the
authorized and the actual circulation on Febraary 1st being $48,166,800
and on September 1st $85,588,8004
The Treasury's policy with respect to the retirement of
Pittman Act certificates was announced in t~e letter to you under date
of February 21st, on the occasion of the first deliveries into the
general fund of standard silver dollars recoined under the terms of
tre Pittman .ll.ct, and has contemplated that retirements would be made
at suCh rate as standard silver dollars are recoined and paid into
the general fund, and at the further rate of $5,000,000 per month out
1C;J[.
-2-
X-.3208a
of the general fund until the difference between the amount of
certificates outstanding and the amount of circulation secured thereby
should be eliminated. It will be noted that the amount of this
difference on February 1st was $48,166,800 which includes a certain
amount of bank notes secured by United States bonds. The exact amount
is not material, but the important point to note is that the difference
shows a great increase on the same basis, standing at $86,588,800 on
September 1st, notwithstanding the monthly redemptions of $5,000,000
of certificates out of the general fund. As a matter of fact, the
difference should have been decreased rather than increased in view
of tre amount of certificates thus redeemed - so~e $35,000,000.
The conclusion is inevitable that the circulation of Federal
reserve bank notes is not being waintained. If, for example, the
actual circulation had been ma.intained, except as diminished from
time to time throug-,h payment into the general fund of standard silver
· dollars coined and the retirement of an enual par amount of certificates, the amount of bank notes outstanding on September 1st would
have been something over $190,000,000 instead of some $120,000,000.
The understanding reached at the April conference of Governors
of the Federal Reserve Banks, and approved, as I understand it, by
the Federal Reserve Board, was that so far as possible Federal reserve
bank notes would be continued in circulation pending replacement by
silver certificates issued against standard silver dollars recoined
pursuant to the operation of the Pittman Act, retirements of bank
notes to keep pace with new issues of silver certificates. At the
present time, however, barur. notes a=e being retired several times as
fast as new silver certifi.cates are being issued. I wish, therefore,
that you would cause the whole situation to be investigated, with a
view to determining the difficulty and correcting it so far as possible. It seems to me important from every point of view that the
contraction in Federal reserve bank note circulation should not be
so abrupt, if for no other reason thaa to avoid waste in printing.
Federal reserve bank notes are available in reserve here at vrashington
and at Federal Reserve Ea~s in lar~ amounts, (over $30,000,000 in
l's and $19,000,000 in 2 1 s at Washington, and over $6,000,000 in 1 1 s
and $.3,000,000 in 2 1 s at the Federal Reserve Eariks). The contraction
of this form of currency, moreover, leads to additional demands upon
the Treasurer to supply otter kinds of currency in corresponding
amounts where needed, and even now the Treasury is under great pressure
to supply the necessary amounts of silver certificates and legal
tender notes. Redemptions of Federal reserve bank notes have been
quite disproportionate to new issues in recent months. For example,
it is noted that during July, 1921, $12,616,000 Federal reserve bank
notes of the $1 denomination were redeemed and only $3,220,000 were
issued; during the following month, Au~st, $1.3,416,000 were redeemed
and only $2,.300,000 issued.
f
. ..,
-3-
X-3208a.
I should be glad if you could consider at the same time one
further matter connected with the currency supply. It is the policy
of the Treasury Department to issue silver certificates for the roost
part in the denomination of $1, with occasional issues in denominations of $5 and over to use up accumulated stocks. In due course,
however, after all standard silver dollars have been recoined and
the Pittman Act certificates and ~~ Federal reserve bank notes secured thereby retired, practically all the $1 notes in circulation will
be silver certificates, to be supplemented, when and as necessary,
by such issues of United States notes in the $1 denomination as may
be re~ired. This policy will require that payments be made in
United States notes in denordnations of $2, $5, $10 and $20. This
situation exists to sorre extent even now. and I understand that same
difficulty is being experienced 'Ni th some Federal Reserve Banks who
~bject to the acceptance of shipffients of United States notes from the
Treasury in the higher denominations; ! think it shouJ.d be definite:}.y
understood that the Federal Reserve Banks will be expected to receive
United States notes evert in the higher denominations for credit in
the Treasurer's account or othernise for Treasury account. United
States notes are legal tender and tL~der the law it is necessary to
maintain in circulation some $346,000,000 aggregate amount. The only
way in which this circulation can be maintained is through payments
in acceptable denominations, and the acceptable denominaUons ul t:imately
will not include the $1 denomination in any great amount. It will be
necessary, therefore, for Federal Reserve Banks from time to time to
accept United States notes in available denominations abov~ $1 and
to make pa;yments therein on account of redempUons or for other accounts. Otherwise it will be necessary for the Treasury to discontinu9
the currency distribution system now in effect and to resort to actual
payments on redemption and exc~ange accounts at the Treasury in Washington and perhaps other Treasury offices throughout the country.
I shall be glad to have your comments on the situation and to
be advised of any corrective measures which may be taken.
Very truly yours,
(Signed) S. P. Gilbert, Jr.
Onder Secretary.
Hon. VJ. P. G. Barding,
Governor, Federal Reserve Board.
•
""t
CO"?Y.
THE UNDER SECRET.AJW OF THE TREASURY
Washington
X-3208b
September 22, 1921.
Dear Governor Harding:
There has been 1fvi thin the past few n:.onths a marked acceleration of redemptions of national bank notes, which is doubtless due
in large part to the decreased demand for currency and the improved
standards implied to the money in circulation. I am inclined to
believe, however, that these circumstances do not fully account for
the increased redem~tions, and I am accordingly writing to aSk i£ you
could ascertain to what extent the change may be due to the policy
which has been adopted by sorr:e of tbe Federal Reserve Banks of refusing
to pay out national bank notes. Many of the Federal Reserve Banks, as,
for example, the Federal Bank of New York, pay out in ordinar.y course
all fit national bank notes received. Other Federal Reserve Banks,
as for example, the Federal Reserve Bank of Richmond, and, I think,
the Federal Reserve Bank of Dallas, forward to the Treasury for redemption all national bank notes received for redemption or on deposit,
whether fit or unfit. This practice throws extra burdens on the
National Bank Redemption Agency, increases the turnover of national
bank notes, and occasionally results in the redemption of absolutely
new national bank notes received by the Federal Reserve Banks for deposit. This lack of uniformity on the part of the Federal Reserve
Banks in the matter of payments of national bank notes is of long
standing, but it has becon:e more important with the abolition of the
sub-treasuries and the concentration of currency functions in the
Federal neserve Banks and branches.
The question of the policy to
be followedwas considered at some len~th at the April, 1921, conference
of the Governors, but without reaching uniformity. A resolution was
there ado~ted to the effect that while it was desirable that Federal
~eserve Barurs should receive for credit and redemption by the Treasury
Department unfit national bank notes, tr..e practice of receiving national
bank notes on deposit should be left to the several Federal Reserve
Sor:·e Federal D.eserve Banks, as I understand it, took the
Banks.
~osition that to pay out national bank notes rather than their own
Federal Reserve notes would involve some ioss to the Federal Reserve
Bank, though it has seemed to me difficult to demonstrate that in the
present position of the Federal Tieserve System there would be any loss
involved.
It seems to n:e that the question of policy is of sufficient
importance, both from the point of view of the Treasury and the point of
view of the Federal Reserve System, to have consideration by the Federal
Reserve Board, and perhaps that some investigation should be made by the
Board into the existing situation. I should be glad to know the views
of the Board in the matter, and the results of any investigation that
may be made.
Very truly yours,
(Signed) S. P. GILBERT, JR.
Han. W. P. G. Harding,
Governor, Federal Reserve Board.
FEDERJIL
RESERVE 'BO.ARD
STftTEMENT FOR THE PRESS
X-3210
For Release in Morning Papers,
Saturday, October 1, 1921.
The fallowing is a review of general business and
financial conditions throughout the several Federal
Reserve Districts during the month of September, as
contained in the forthcoming issue of the Federal
Reserve Bulletin.
Further decided imp1·ovement in the credit situation
has been the noteworthy feature of business during the month of
September.
In the cotton regions liquidation of credit has been
rendered possible in consequence of the marked advance in the
price of cotton which has carried practically all contracts
·above 20 cents a pound.
At the same time Jlmprovement in
~vhole-
sale and'retail trade has been expected as a result of the
increase in the ability of the farmer to settle his accounts
both with banks and with dealers.
The greater abundance of
funds in the cotton raising districts is reported as having been
reflected in larger wholesale trade.
The effects of liquidation
expected from the advance in the price of cotton have not as yet
had time to appear in the condition statements of Federal Reserve
I
Banks.
On the other
hand~
the advance in prices not only of
cotton, but of other agricultural products has had certain indirect
results.
The textile industry has not vet
bou~~t
freely of cotton at
...
'
\
X-3210
-2-
the new price level which has been established but such mills as
possessed a stock of
volume of orders.
l~v
priced cotton have attracted a considerable
In the grain growing districts, the output has
continued to move steadily to distributing points and has also gone
abroad in considerable amounts.
This grain movement bas been
practically the heaviest on record.
Heavy movemsnt of live-stock
has also been noted and prices have weakened.
While attention has been largely concentrated on the
agricultural side of business development during the month, manufacturing has also continued to sha# a wholesome improvement in
many lines.
The advance in the iron and steel trade first noted
in August has been sustained during the month of September in
certain l1nes 1 notably
~n
pig iron and light products such as wire
and sheets, in which price· advances have occurred.
Although orders
fell in .August an advance has occurred since that time.
increase in the numbers of men ernployed has taken place.
Steady
In this
connection should also be noted the improvement of the railway
industry.
The net earnings of Class I railways for August were
about $70,000,000 and on many lines the rate of earnings is near
the level taken as a standard in the Transportation Act.
Textile
zilanufacturing has been well sustained during the month, and the
boot and shoe industry has been notably active in Districts No. l,
11 and· 8.
There is still, however, hesitancy on the part of dis-
tributors to place f oNard orders al thougn a large seasonal increase
-3,-
X-3210
in certain lines of wholesa+e trade coupled with replacement ·
orders have resulted in advances.
Prices continued to adyance during J'ugust.
The index
compiled by the Federal Reserve Board for international comparisons registered an increase of two points over the July figure,
while the trend during September also appears to have been upward.
Declines in particular lines of business such as live-
stock are due to local marketing condi tiona.
Employment on the
other hand has increased only slightly although the situation is
better than at the end of August.
The end of the harvesting and
crop-moving season may tend tc increase the number of unemployed
but such tendency is likely to be offset bY growth in demand on
the part of manufacturing industries.
Railroads have begun to
increase the number of their employees to some extent.
especially noteworthy ,
This is
in the far vv est and is emphasized in the
reports received from District No. 12 (San Francisco)
•~here
holds true also of general rublic utility undertakings.
it
The fact
that building contracts have reached a record figure for this year
promises larger employment in that direction during the
autumn~
Financially the month has been notable for the decided fall
in German exchange, the mark at one tia:e going below .9 Of one cent.
Easier money conditions have grown out of the gradual liquidation in
the east and south and two Federal Reserve Banks have reduced their
discount rate to 5 per cent.
The shrinkage of bills held has been
a natural outgrowth of the credit situation.
Call
~oney
as well as
commercial paper rates have tended low:3r.
Taken all in all~ the month
has been in the main a period of distinctt. encourag~li'Jentand gives
promise of better conditions as the autumn and ~~inter advance.
-4.AGRICULTURE.
was
92.9
X-3210
The composite condition of all crops on September l
per cent of their average condition on that date during the
last ten years) as compared with a composite condition of 93 per cent
on August 1.
There was a serious deterioration in the crops of cotton
and oats during August., but this was largely counterbalanced by a
marked improvement in the condition of the corn and tobacco crops.
The production of corn forecasted on September l amounted to
3.166Jooo,ooo bushels., which is 154.ooo.ooo bushels greater than the
forecast of August 1 and 316.ooo,oco bushels greater than the average
production for the last six years.
(Minneapolis) is about
the largest on record.
6
The corn crop in District No.
9
per cent greater than that of 1920. and is
In District No. 10 (Kansas City) there was
also a considerable improvement in
~he
condition of corn during August.,
but hot weather and lack of moisture caused considerable damage in
Nebraska and Oklahoma,
The indicated production of wheat was 754.000.000
bushels on September 1., as compared with a forecast of 757,000"000
bushels on August 1, and an average production of 824,0C9.000 bushels
during the last six years.
However, District No.
9
(Minneapolis)
stat3s that the spring wheat crop is superior to any crop in a generation
from a milling and baking standpoint., and estimates that the gluten
content will average 2 per cent higher than that of the 1920 crop.
The
white-potato crop improved somewhat during August, but the estimated
production on September l was only 323, coo. 000 bushels) in cc.nparison
>vith an average production of 3601 000 1 000 bushels during the previous
six years·.
District No. 6 (.Atlanta) reports that the condition oi the
cane sugar crop in Louisiana om September 1 indicated a production of
222,527 t'ons of sugar, as compared with a production of 169) 127 tons in 1920.
-5out the cotton bslt.
Since the issuance of.
X-.3210
t~e
condition report of
.August 25, the cotton crop in District No. 1.1 (Da:'.lad has suffered
serious damage from a t:-opical storm which swept twenty colillties of
Texas.
District No. 6 (Atlanta) states that boll weevils have continued
to be very active throughout Gecrgia1 ru1d 1 as a result, the crop in
thirty-two counties is estimated to be less than 30 per cent of normal.
The Alabama crop, on the other hand, showed some improvement during
the past month.
Reports from Di,"ltrict No, 10 U~ansas City) indicate
that the Oklahoma crop has been seriously damaged by hot weather and
drought, and has also suffered during Septemoer from the continued
activities of the boll weevil, the boll worm 1 and the army worm.
District No. 6 (St. Louj.s) reports that the depredations of the boll
weevil continued unchecked during September, and that the crop has
continued to deteriorate at quite as disastrous a pace as in August.
The adverse news concerning the condition of the cotton crop resulted
in an increase in the price of cotton at New
Orle~s
from 12 cents
per pound on August 16,to 19 cents per pound on September 16.
grol'~ers
Cotton
in general seem to consider that this appreciation in cotton
values more than compensates them for the reduction in the volume of
their crop.
TO]}CCO.
As a result of favor·able weather conditions during
August, the average condition of the tobacco crop increased from 67
per ·cent· on August 1 to 71 per cent on September 1~ and the estimated
production on the latter date was 948,324, OCO po1mds.
The increase
was found in both the cigar and manufactured and export types.
The
North Carolina and Virginia crops are far below last year, the second
-6-
X-3210
being estimated as the smallest since 1907, and on account of unfavorable weather much of the crop is of poor grade.
in progress in general during September and has
some sections.
b~~m
Harvesting was
completed in
The South Carolina markets have closed, the crop
having been short and on the whole of unsatisfactory quality,
Good
tobacco brought satisfactory prices, but low grades ·were difficult to
sell at any price.
The eastern North Carolina markets opened early
in September and repeated the situation found earlier in South ,
Carolina.
The demand for cigars and cigarettes in District No.
(Philadelphia) apparently shm·;s !urtte.r imprvve:nent.
urers in general report
increa~ed
sales since JLlne.
cent cigars continue to be the best oellers.
3
Ci~ar manufact-
Eight and ten
Oporations are still
less than at this· time last year but they are steadily increasing.
FRtTIT.
There was
lit~le
change in the condit:! on of the deciduous
and citrus fruit crops during .August.
year are the smallest in a generation.
of apples was estimated at 107,000,000
The
decid\~ous
fruit crops this
On Septemt1r 1 the production
bushels~
as compared with a
forecast of 109,000,000 bushels ori August 1, and an average production
of 193,000,000 during the last six years.
crop since 1890.
This is the smallest apple
The forecasted production of peaches was 33, 000, 000
bushels, a decline of 13,100,000 bushels from the average production
of the years 1915 to 1920 inclusive.
It is estimated that the pear
.
crop will amount to 9,475,000 bushels, as compared with 17,27:;,000
bushels. in 1920.
The condition of the watermelon crop is the best of
any crop planted this year, and is 121.7 per cent of its average
-7-
X-3210
condition during the last ten yearsw
District
No~
6 (Atlanta) reports
that there have been large yields of watermelons in Mississippi and
Tennessee.
The .Florida crop of citrus fruit is estimated to amount to
13,600, 000 boxes 1 as compared with 131 200, 000 boxes in 1920..
The ·
yield of grap-efruit in that state will be exceptionally large,
~vhile
the crops of limes and tangerines ;will be below normal.
GRAIN
MOVEME~TS.
Receipts of grain at primary markets were
greater in August than in July and exceeded the receipts in any other
month on record.
This was due mainly to the large receipts of winter
and spring wheat.
Receipts of wheat at 1hnneapolis and Duluth during
August totaled 21,911,320 bushels, as compared with 11,261 1 947 bushels
in July and 9,297 1 300 bushels in August, 1920..
Wheat receipts at the
four leading markets of District No. 10 (Kru1sas City) amounted to
29,955,300 bushels in August, as compared with 32,7 89 1 400 bushels- in
July_, and 15,942) 000 bushels in A1.1g.ust, 1920.
oats also showed large increases in
Au~ust.
Receipts of corn ru1d
At Chicago 16 1 810,000 bushels
of corn and 16 1 7221 000 bushels of oats were received during J\ugust 1 as
compared with 81 954,000 bushels of corn and 101 722,000 bushels of oats in
July~
The August movement of corn to the four leading
~arkets
of District
No. 10 (Kansas City) was 96.3 per cent greater than that a year ago 1
while the volume of oats marketed was
1920.
36.8 per cent larger than in August,
'
Stocks of grain at interior centers also increased, except in the
case of corn.
.
stocks ~f
Terminal elevators at Minneapolis and Duluth reported that
:·
grain and flax amcunted to 31,056,927 bushels on August 31 1
·,
1921, . an increase of 47 per cent over the st.ocks on July
•
30,
1921~
and
an increase of about 670 per cent over the stocks reported on Aubust 31,
X-3210
-8-
1920.
Stocks of oats in these elevators
have shown
a particularly
large increase and amounted to 21 1 567, ?59 bushels on August 31;· as
compared with 151 9191 084 bushels on July 30 and 1)228,383 bushels on
.Augu.st 31, 1920.
FLOUR.
Production of flour has been maintained at a high rate.
The output of mills producing 75 per cent of the total production of
District No.
9 (Minneapolis) during the four weeks ending August 27
was 2,289,335 barrels, an increase of 22 per cent over the output of
1, 871) 265 barrels during the four weeks ending July
3 0.
Rep orting
mills in District No. 10 (Kansas City) show an output of 2,482,618
barrels during August, which was 31 per cent greater than the July
output of 1,902,527 barrels.
Average production in District No. 12
(San Francisco) was 662 1 190 barrels for 70 millers as compared with _
598,615 barrels for 72 millers in July.
In considering these figures,
it should be remembered however, that for the United States as a whole,
'
average August production for the seven years 1914 - 1920 inclusive
was 32.8 per cent in excess of July production.
present year is ,however; 29 per cent in
exc~ss
The output during the
of production during
August 1920 in District No. 9 (Minneapolis) and 72 per cent greater
irt
District No. 10 (Kansas City).
Flour shipments from Minneapolis
and Duluth during August were 24 per cent greater than during July
and 14 per cent greater than during August 1 1920,.V'l.hile August shipments
from Kansas City were 29 per cent greater than during July, and 61
cent greater than in Aug,ust 1 1920. The milling situation in the
..
southwect has very materially improved, while "the unanimous comraent
p~::r:
of twelve reporting mills" in District No. 6 (St. Lcuis)" "is that
X-3210
-9-
business during the past two months has undergone a marked change for
the better".
Export inquiry holds up excellently in that District~
and the demand for domestic consu..mpHon, especially frQm the South,
has been better than at any time in more than a year.
A moderate
export movement of clears is reported in District No. 10 (Kanaas City),
and a fairly heavy demand from nearly all sections of this country.
'iiheat flour prices were lower at the
ope~ing
of September than they
ilere a month earlier, but subseq,lently in(:reased again.
LIVE STOCK.
Live stock on farms and ranges in general continues
in good condition, although some sections in District No. 11 (Dallas)
have been adversely affected by drought and heat.
Movement to market
has been very heavy, and efforts to hold it in check were not wholly
satisfactory.
Receipts of cattle and calves at 15 vv estern markets
during August were 1,418,237 head, corresponding to an index number of
141, as compared with 940,173 head during July, corre.sponding to an
index number of 93·
Recetpts of sheep increased from 1,035,674 head
during July to 1,56$,584 head during August 1
numbers are 76 and 115.
The respective index
Receipts of hogs hov.-ever decreased from
2,021 1 268 head during July} corresponding to an index number of 92, to
lJ 919,514 head during August, corresponding to an index number of 87.
The movement of cattle and calves and of sheep was, however, smaller
than a year ago, although that of hogs was larger.
receipts> of cattle and calves were 1,451,985 head, of hogs lJ 754}209
·;
head and of sheep 1,687, 787 head, while the respective ir.dex numbers
were 144; 81 and 124.
A feature of the situation, states District
No. 10 ('Kansas City), is the dearth of geed corn fed cattle, and the
-10-
X-3210
greater volume of receipts have been light grass-fed stock.
There
is however a shortage of cattle in ti:le west and the delay in the
feeder movement this year has resulted in a large number of good
western cattle going to slaughter instead of back to the farms.
In-
crease of the feeder movement in August has been noted, and feeder
shipments of cattle and calves from 34 markets increased from
120,429 head in_July to 353 .. 619 head in August, vihile shipments of
sheep increased correspondingly from 138,414 head to 367,042 head.
As a result of the heavy movement, cattle prices in general
fell, and at Chicago even affected some of the corn fed grades of
cattle.
Similar changes were noted in the case of hogs and sheep.
Thirteen rErporting packers in District No, 7 {Chicago) show decreases
of 13.5 per cent in dollar sales in August as compared with July, and
35.2 per cent as compared with August, 19?.0, due in part to the decline in prices.
A
gradual improvement in the demand for fresh meats
was in evidence in that District from the middle of .August to the
middle of September., but some surplus found its way into the freezers.
Wholesale prices
ho\~ever
in general declined.
Stocks of fresh and
cured meat• declined somew-what during August.
~.
Production of bituminous coal increased somewhat during
AugustJ but was still far under the normal figure for that month.
It
was 34,538,000 tons, corresponding to an index number of 93. as compared with
30~3941 000
tons, corresponding to an index number of 82.
Compared with the average for the eight years preceding, 1921 production
is 62,000,000 tons in arreacs and is steadily falling still further
behind.
Purchasing has increased somewhat in DiGtrict No. 3 {Philadelphia}..
but domestic buying continues to be almost entirely for spot coal.
X-3210
-11Exr brt demand is reported very small.
Retailers'- yards in Districts No.
5 (Richmond) and No. 6 (Atlanta) are well stocked, and consumers -have been
slow in placing orders.
District No.
7
An increase in the
dem~~d
for domestic sizes in
(Chicago) is reported and the scale of operations in
Illinois and Indiana has accor1ingly increased somevvhat.
ditions in District No. 10
and
dur~ng
(K~~sas
Operating con-
City) show no material improvement,
September there has been a further slow·ing down of operations.
Although spot prices of certain grades have fluctua-r.ed considerably, the
average price remains practically unchanged.
Future quotations, states
District No. 3 (P-hiladelphia) are much higher, but consumers sho;-; little
interest in the contract market.
During the past few weeks the consumer has displayed more interest
in purchasing
anth~acite
Dem~•d
coal.
for the most popular size, stove
coal> has increased to such an extent in District No. 3 (Philadelphia)
that dealers
are having difficulty in filling orders promptly.
for other sizes have also increased.
August production increased to
7,196,000 tons, as compared with r,050... 000 tons in July.
index numbers are
97
and
95.
Orders
The respective
The larger companies made the usual ten cents
per ton advance on mine prices on September 1.
Independent operatorsJ
many of whom underbid the companies during the slack summer periodJ have
again advanced quotationsJ which are now 10 to 40 cents per ton higher
for prepared sizes than the company levels.
The continued sluggishness
of the small sizes, however 1 combined ••ith lack of storage facilities,
has._ forced them to dispose of these grades at prices considerably lower
than those of the companies.
Some of the independent mines w nich were
closep. on· account of the slack demand during the early part of .August,
have lat~iy resumed operations.
The output of beehive c=oke, although -ahow-
ing an appreciable increase, is still less than
15
per cent of normal, but
I
x
X-3210
-12the output of by-product coke is from
40 - 50
per cent of normal.
Producers
stocks have decreased as a rasul t of renevted demands from iron and steel
manufacturers, and spot prices in District l•Jo. 3 (Philadelphia) have
stiffened
materially.
E.'E.TRQ1E!IM.
The decline in pet'roleum production which commenced in
July continued at a somewhat accelerated rate during August.
This was
largely due to a marked curtailment in drilling operations.
Demand for
both crude and refined oils sho·Ned some improvement during August., but prices
of most refined petroleum products continued to declir.:.e on account of the
large stocks on hand.
Prices of fuel oil, ha11ever, showed a slight increase
during the early part of September.
District No. 10 (Kansas City) reports that development operations
have been curtailed in recent months to a point where fewer wells are nov•
being drilled than at any other time in the last three years.
Only 480
wells with an initial daily production of 69,787 barrels were completed in
August, as compared with 640 wells with an initial daily production of
77,997 barrels in July.
The total output of crude petroleum in Kansas
and Oklahoma amounted to about 13, 000,000 barrels in August, as compared
with
13., 598,000 barrels in July.
Production of crude oil in District No.
11 (Dallas) totaled 10,538, g93 barrels during August., a decline o{ 127,453
in comparison with the July output.
In this District only 223
ne~
wells
with an initial daily production of 27,302 barrels were completed in .Aug·1.1st,
as compared >>'ith 251 wells with an initi~ flow of 606 810 barrels in July.
Average daily California production declined from 331,252 barrels in July.
to 323,676 barrels in August, but consumption decreased even more and stored
stocks at the end of the month therefore increased to 33,329,725
barr~ls
Eighty-three new wells were completed, with an initial daily new production
of 20, g95 barrels as compared ..-dth seventy-six new wells producing 19,675
barrels in July.
-13-
lpoN
AND ST})£~.
X-3210
After a continuous decline since October,
pig iron proiuction showed an increase 'luring Aug-ns·t.
that month arr~unted to
July·
954,193
Tl:.e outnu.t during
tons, as compared with 864,555 tons during
T:r..e respecthye index numbers were
in blast remained ~~changed.
41
and 37.
The nurrbe:r of furnaces
Steel ir.got production showed a smnewhat
greater increase~ from 803,-376 tons to 1 1 138,071 tc..ns.
index numbers were 35 and
49.
1920,
This increase in
The respective
output was not however
accorrroanied by a similar increase in orders for adv~~ced delivery,~as the
unfilled orders of the United States Steel Corporation declined from
4,830,324 tons at tre close of July, corresponding to an index number of
92,
to
4,531.926
tons at the close of August. corresponding to an index
number of 86.
There is now a generally stt'onger tone in the indv.stry.
The improve-
ment which made its arypeerance in Au@U.st has become somewhat more marked.
This is notice8ble in the case both of pig iron and of certain finished
~roducts.
The demand for pig iron has broadened to some extent and more
interest is disp1a.._ved in contracting 'for future deliv'3ry.
Total sales in
Augu.st were the best of the year by a substantial margin and shipnents in
an even greater proportion.
'Prices hardened considerably during the latter
part of August after having dropped to low levels earlier in the month, and
some Jnc.reases are reported during the
p~esent
month.
Whereas the g-ain in
steel wo:t"ks
.August -pig iron T,>roduction was due 1?rinci,;:slly to the ~erations of/
stacks several merchant furnaces have heen blonrn in since the first of
,
-14-
September.
X-3210
The situation with respect to finished steel products however
is still uneven and conditions are unsettled.
Manu1'acturers of certain
of the lig"hter products, notably wire and sheets, have booked considerable
tonnage and have advanced prices.
In othe:.." lines, however, particularly
shapes and bars, further price reductio•1S h.::we be em made, and buyers in
th8se lines still are unwilling to
ATJT9~~_9~JLES.
~lace
orders for
fut~re
delivery.
August shipments of auto:rr:obile manufacturers showed
some increase over the July figures.
Carload
shi~ments
were 20,350 car-
loads, as compared with 19,470 in J"u.ly and 23,386 in August, 1920.
Drive-
ways, however, decreased somewhat and were about half those in .August,
1920, and the same is true of 0oat shipments.
Keen competition continues
among manufacturers, and further cuts have been made on certain cars.
In
spite of those reductions, reports from representative manufacturers, it
is stated from District No. 7,
(Chica~o)
seem to indicate that any increases
in sales by individual manufacturers have been at the expense of other
manufacturers, rather than a result of the develonment of new demand. ··The
condition of truCk manufacturers has been less favorable than that of manufacturers of
pa~senger
cars.
No. 4, (Cleveland) are at low
Immediate orders, it is stated from District
eb~, out inquiries have recently been in-
creasing.
NONFERROUS MET.ALSr
There was a slight irnproveoent in the demand for
nonferrous metals in the early part of Septemr,er.
York, net refinery) was
11-7/8 cents
T'.re price of copper (l~w
~er pour~d on September
14, as compared
with ll-3/4 cents per po1md on September 1, while the price of lead at New
York increased from
4.4 cents
~er p~xnd on September 1 to
4.6 cents
~r
X-3210
pound on September 14.
The demand for zinc continued to be very light
and the price at District No. 8 (St. Louis) remained practically unchanged during the last month.
Copner production in .Au.13Ust amounted to
20,019,000 yaunds, in comparison with
in July.
a production of 16,390,000 pounds
There was a further curtailment of zinc
tons in July to 14,621 tons in
a considerable increass in
Au~st.
Au~st
~reduction
from 15,495
Shipments of zinc, however, showed
which resulted in reducing the
sto~s
on hand from 92,408 tons on .Au~ru.st 1 to s6 ,549 tons on August 31.
This
stock of zinc is not regarded as excessive, as it represents no more
than three months 1 normal conSUJilption.
Only about 3,000 :miners were work-
ing underground in zinc and. lead mines of District No. 10 (Kansas City)
at the end of Auwst, as compared with 12,000 to 15,000 1uring the years
1915 to 1917 incl,usive.
The demand for both zinc and lead ores from that
District continued to be restricted, but there was an advance of $2.50 per
ton in the price of lead ore durinli!
Au,~s t ..
COTTON TEXTILES. The unexpectedly rapid advance in the price of. raw
cotton has introduced such an element of uncertainty into all branches of
the cotton textile industry that it has been
"mark time" and to await developments.
necessa~J
for many interests to
There appears to be a great difference
I
of opinion concerning the future
consequently there is a
~neral
chan~es
cotton and
unwillinmness to enter into contracts for
future delivery based on present prices of cotton.
As many mills have been
carrying stocks which are below normal, they are not in a
into new contracts unless account is taken of recent
~aw
in the rr.arket for
~osition
~rice
to enter
increases.
Dis-
'
X-3210
tributors, on the other hand, fear that attempts to pass on price advances
will cause undue restriction of demand on the "Oart of the consuming pub·
lie.
As a result, both distributors a.YJ.d manufacturers have in many instance,;
withdrawn lines until a greater measure of stability in the cotton rrarket
can be counted upon to afford a basis for safe calculation.
Yarn prices
have advanced with the increase in the price of the raw material and have
been especially heavy in lon~ staple yarns.
In tr.e yarn market likewise
there are practically no future contracts being entered into.·
No.
In District
6. (Atlanta) reports from 34 representative yarn mills showed a decided.
3.d.vance in production during the m.cnth of Aurust of _14.4 -per cent as
measured in pounds while totals were only g# 7 "Oer cent· below the figures
for a year ago.
Orders at the end of Aurust were 56.4 per cent above those
on hand at the end of the preceding month while shipments during the month
advanced 36.9 per cent.
Thirty-three representative cotton cloth mills
in the District were producing a yardage 7.2 ~r cent greater in Aurust
than .in July, but the· figures were 39. g per
1920.
cen~
below those for Purust
Orders on hand at the end of August were 7.8 per cent aho'le those
for the end of July.
ln District No. 5 (Richmond) it was ~~orted
at
the date of writing that mills were running "on approximately full tirr.e 11
and that many of them had sold out their -products for several months ahead.
In this District too, some of the textile mills, since the rise in the
price of cotton, have withdrawn goods not previously contracted for and it
rerr:ains to be seen ho ·· much bu,ving will be done When these
fered at an advance in ,"Orice.
fSOOds are of-
The a'1'lount of raw cotton consumed during
X-3210
August amounted to 467,103 bales as compared with 410,120 bales in
July,
The total
amounted to
w~s
slightly below consumption of .Jlurrust 1920 which
483, 560 bales.
the National Associ3.tion of J:j'inishers of Cotton Fabrics showed a large
increase in the total gray yarda?-e of finishing orders received during
the month.
The output rose f!·om 82,734,438 yards to 101,741.412 yards.
The total finished yards billed during Au!'?:u.st amounted to 95,915,235 as
compared with 85.233,724.
T'ne total averaf<e percenta!ee of capacity O"Oerated
durinq the month of Au211st rose to 71 from a!·1 average of 62 in July.
increase in the average work ahead at the end of the month was
The
s1i~t,amount-
ing to 9~6 days as comparad with 8.9 at the end of July.
WOOLEN TEX~·II.E~.
The woolen industry in New England continues to
maintain a high degree of activity and woolen and worsted mills are
at about 80 uer cent of. cauacity at the
·nr~sent
time.
operating
The rnbnthly consump-
tion of wool which was on1y slightly above 12,000,000 pounds last December
(grease equivalent basis) has risen to.about 35,000,000 pounds in the New
England section.
District No. 1 {Boston) reports that the Boston wool market n()or.. tinued
to be moderately active during Sentember and ~rices naid for finer grades
were firm".
In District No. 3 (Philadelphia) carps t wools.
because of the strike of carpet and
ru~
lon~<
inactive
weavers, are now in demand.
There
X-3210
-18-
has been some shift of demand from woolen to worsted goods and conse~uently
production of the latter has increased ''Vhile there has been a slight
falling off in the pr<tluction cf woolens.
Du'!'licate orders for the heavy
weight fall season of 1921 and b'zying for the sprinP-: of 1922 is at the
present time much less active than it was earlier in the present season.
The special inquiry into the clothing
ind11~try
which is made each
month by District No. 7 (Chicago) indicates trat there was not much
in general conditions during the month of
Au~st.
chan~
The nurfiber of suits made
by reporting wholesale clothiers increased somewhat during August as compared with July and was·-.about e(1Ual to the output during Au,QU.st 1920 except
in the case of one concern which showed a large increase.
firms
re~resenting
The 13 reporting
tailors-to-the-trade showed an output for August
substan~
tially the same as for July a1 though the number of suits made during the
month was 42.8 per cent below the totals for August 1920.
Replies to
questionnaires sent to 23 leading clothing firms by District No. 6 (St.
Louis) indicated a fairly steady improvement in demand.
The reporting
establishments in that District were stated to be sold up for the next
two months with excellent innuiry for fall and winter goods, and marked
improvement in orders from the south for the fall.
SILK. The silk industry in the Paterson and North Hudson section showed lessened activity during the two weeks en1ing September 12 as compared
with tbe preceding period of two weeks.
In the Nortb Hudson section
2,848 looms were pro'iucing out of a total of 4,670 '"':rich was a slight
increase over the number re-oorted for the previous two weeks• period of
:..19-
X-3210
2,812. but the percentage of loom hours to the total possible ·~as only
47.1 per cent as compared with 60:3 "9er cent during the preceding period.
Only 4,002 out of a total of 15,000 looms were ~reducing in Paterson,
a drop from
4,447 for the preceding two weeks.
The percentage of loom
'hours also fell from 27.5 per cent to 22.9 per cent.
District No. 3
(Philadelphia) reports a falling off in dewand for broad silk and silk
rib~ons.
Mills in the District state that ~reduction is still curtailed
and they are operating at about 70 to
some firms say that stocks are
11
85
per cent of capacity.
gradually accumulating".
Even so,
It is said that
"conditions prevailing in the si)Jt goods trade are reflected in the thrown
silk
ma.rket~
Operations have been reduced by many throwsters to only 50 per
cent of capacity.
Prices remain at about the same level as last month, but
they are considerably lower than were those of 1920. 11
There is little de-
mand for raw silk at the ~rBsent time but hoth consumption and imports
showed a m~rked increase as compared with August a year ago.
In Au~st
of last year, imports of raw silk amounted to 16,106 bales, and consumption
to 17,241 bales, while tris year imports totaled 33,823 bales, and consumption 32,790 bales.
HOSlli:RY AND UNDERWEAR. Business in knit goods lines and in hosiel"'J
has felt seriously the effect of the rise in the price of cotton yarns.
District No. 3 (Phila.del-;hia) states that activity in cotton and mercerized
hosiery has come almost to a standstill while conditions in the underwza.r
trade nc..re such as to force the lT'ajority of manufacturers into the position
of me.re on-lookers waiting for a stabilization in nrices.
11
The business in
silk hosiery continues to be good and mills makinp, full fashioned hosiery
X-3210
-20in District No. 3 (P'niladelphia) are runnins at full ca:9aci ty.
August,
25 firms selling to the wholesale trade stated that there wae an
increase of
and of
During
14 .. 2 per cent in -product manufactured as compared with July
31.7 per cent as com?ared with August 1920. Orders booked during
Au?Ust were, however,
31.9 per cent below those for July although 56.1
per cent in excess of those received during
at the end of
.llu~st
I'ITere
Au~st
1920. Unfilled orders
17.1 per cent less than at the end of July but
24.4 per cent above those of August 1920. In the case of nine firms selling to the retail trade the product manufactured declined slightly during
August by
0.4 per cent as compared
with July, orders booked were
38.4
:per cent less during Jl.uP_Ust; unfilled orders on hand declined 23.9 per
cent and were
26.1 per cent below those for the end of August 1920. The
reports received from
41 members of the Knit Goods Manufacturers of .Amer-
ica engaged in producin? underwear, showed subst2.ntial
output
durin~
August as compared with July.
dozens in July had an output of
per cent.
im-~)rovement
Mills producing
in
255,829
279t600 dozens in August, a gain of 9
Unfilled orders the first of July amounted to
372,514 dozens
and had risen to
395,902 dozens on August first or 6 per cent. New
orders rose from
2}8 ,258 dozens in July to 444,243 dozens in August,
or
9 per cent.
in
Augu~t
Shipments also increased from
or 5 per cent.
233,972 in July to 360,787
X-3210
-21-
SHOJ!:S -~ND LE.~-~THER. Prices of green hides registered little change
durin~ the first three weeks of September.
Lamb Skins have increased some-
what in i)rice, wrile calf skins have shown "'- slight decline.
Production
of green cattle hides increased during Au~st, but showed a moderate decline
in the early part of September.
7
District No.
(~icago) reverts that trad-
ing in packer hides has been very active at Chicc.go, whereas the rrarliet for
country hides has been very quiet.
Tanneri8s in District No.
7
(Chicago)
report an increase in volurne of sales of leather during the first two wee:.rs
of September.
between
75 and
O'perations of u-'1·;er leather tanneries on September 10 were
80 ·1er cent of normal.
District No.
3 (l?hil.e.del-r?hia) states
that upper leathers were less active in Sentember than August.
however, has been in
P-:Ood
Sole leather,
rierr.and, and there has been a substantial increase
There has been a slight iM~rovement in
in orders from the re"9air trade.
sales of belting leather, but no price chanq:es have been reported.
The
activity of the boot and shoe industry contilllled to incrG<:-se during A.uc:ust
for the ninth successive month.
The August ~reduction of nine l2ading shoe
manufacturers in District No. 1 (Boston) 'Nas 13.4 per cent greater tioan in
July, while shi:'9ffients increased
what ::luring
1920.
Au~st,
27.5
~)er
cent.
Unfilled orders declined sorr:e-·
but the volu.'11e of new orders was larger ttan in A.urust,
Shipments by eleven re"!)ortin!r manufacturers in District No. 3 (St.
Louis) during A.urust ramr,ed from 20 to 40 1Jer cent larr:rer t1~an in Aurust,
,
1920. Four of the largest interests in that District ar3 now producing
more goods than at any time in the past.
.~ue>Ust
No.
7 (Chicago) produced in
and
15.9 per cent more shoes than in
Fourteen manufacturers in District
19.5 per cent more shoes than
Au~st,
1920.
in July,
Shipments by these
manufacturers were 24, 7 ~reater than in July, and 34 .. 5·"'per cent &rr2ater
than in August, 1920. ./\11 Chicago factori~s ·re-port an im:nroverrent in the
demand for men's shoes, but some recession in th~ demand for wo~en 1 s shoes.
-22LUMBER.
X-3210
Reports from the several lwrber districts indicate •
improving conditions
lumber trade.
~nd
a more optireistic attitude generally in the
District No-
12
(S~n
Francisco) reports that there has
been some imrrovement in the District for upper grades of Douglas fir
during September; spot prices of
C~lifornia
redwood, white pine and
sugar pine have remained stationar.r or receded.
in
~hat
District report a cut of
35~,233,000
Four lumber "associations
feet for the four weeks
ending Pugust 27, which was 81 per cent greater than during the four weeKs
ending July
30. New orders increased from' 263,416,000 feet in July to
331,31h,000 feet in August. About 75 per cent of the lumber mills capacity
'
in the Pacific Northwest. eni 6o per cent in the Inland Empire is reported
as heing in opention, while loeging operations are only 4o per cent of
nonnal.
In District No. 11 (Dalles)
in derr"!nd in
Pu~ust.
3h pine mills report an improverrent
Orders received by these mills ;iurin& the month
were 88 per cent of the normal monthly production while orders booked during July reprexented but 66 per cent of the nonnal monthly production.
Orders received from
r<>ilw~ys
greater proportion of this
for car repair materials account for the
In District No. 6 (Ptlanta) 130 mills,
incre~se.
members of the Southern Pine Association, report orders received during
.ftugust to be
5·7 per cent
./lctuel production was
normal.
gre~ter th~n
the normal production of these mills •
E7 ,7c~,786 feet, aprroximately 24.3 J)er cent less than
The shipnents showed an increase each week and totaled 7'8, 454.426
feet for the month, which is but
9·7
per cent below normal production.
This District reports the reopening of some mills which had been closed
durin!? July.
Present -rrices ere rruch lower tht'in those which prevailed a
yeer efo, but the rrarket is reported to be considerably stronger
th~n
it was •
-23during July.
X-3210
District No. 8 (St. Lon is) reports an increasing derra.nd
for yellow pine, but a q_uiet hardwood market.
Production of hardwood
remeins at a very lo•.v level due to low prices and the present high freight
In District No. 9 {'Minne:>polis) the reported .flu~_ust lumber cut
fflet
totaled 12,549,909/w~ich was about 5 per cent less then in July which
rates.
wes 56 per cent less th:m in ~U!2Utlt of last yet::J r.
The stacks of lumber
manufactureres showed less than one per cent decreasre
from the total at
the close of July, and a 29 per cent increase over the stocks on nana
on August 31, 1920.
Lumber shipments in this District durin~ August
increased 24 per cent over the July figure in contrast with declines in
August shipments in both 1919 and 1920.
BUitDI~G.
The total value of contracts awarded, (compiled by the
F. W. Dodge Co.) indicate an increese during .August as comrared with
July, and as compared with .August of last year.
Four of the seven
Districts for which contrect fisures are available show a considerable
increase over July, while Districts No. 4 ¢Cleveland) and No. 9 (Minneapolis) show decided decreases.
Contracts awarded during ftugust in
District No. 1 (Boston) amounted to $19,276,295 as compared with
~19,298,334 durin? ~uly,
.About $6,702,583 of this total was for res-
idential purposes, as compared with $6,672,758 during July.
In District
No~ 2 (New York) contrac.ts awarded t.ot:'lled $62,043,905 as conrrared with
July contract fieures of ~54,500,566, and residential building amounted
to $3f;,061,717 as compared with ~22,54f,l42 during July.
Contracts for
District No. 3 {Philadel~hia) amounted to $22,350,5CO as com~ared with
$13J563Jl00 during July.
Of this tot~l, $5,331,500 was for residential
1c.·~·rlf
,. )L~::'-•
X-3210 ·
-24building as co~ared with $2,971,900 during July.
In District No. 4
(Cleveland) total contracts fo:r Pugust were $26,665,555 in comparison
'IV'ith ~35,669,377 for Ju+y.
Of tr.ese, resid.entiel"contracts amounted
to $8,209,645. in CC'mparison with ~8.319,248 during July.
Total con-
tracts for District No. 5 (W.ch;:lonG.) tnta.led $17,337, 62l~ during August
as compared with $16,026,969 duri"lg July.
to
$5,938,417
trict No.
7
in Au~st as comp~red with
Resl.dential building amounted
$5,335,545
in July.
In Dis~
(Chicago} total contracts awarded amounted to $44.680,034
during llu~st in corr:pa.rison with
t41,113;866
during July, and residential
building amounted to ~~-0, D2 4, 029 in corr.pari son with $7,382,427 during
Contracts for Distriet No. S~(l.iinnea:polis) tota.lP-d 1:9,173,552 in
July.
August as compared with ~12,651,00"( in July.
Of this arr.ount, ~,975,503
was for residential pl.lrp:)ses as compared with $3,758:504 in July.
In District No., 2 (New York) 8,188 permits were issued during August valued at ~55~534,223 as cor11pared with 5,071 perrilits '\talued at
$35 ~952 ,930 du.ring August ,1920.
Permits granted in 19 cities of District
No. 7 (Chi&ago) numbered 6,157 v.e~lned a.t $25,578)330 a.s con:pared with
5,346
permits valu~d at il5,~39,0"T7 granted during the corresponding
month of last year.
The munber and val uo.tion cf building permits issued
during flugust in 9 cities of District No. 9 (M'inn13apolis) increased 27
. and
34
per cent respectively, as compared with the July fi~ures •
In the Districts for which no contract fi~ures are prepal;"ed, }')is trict
.
;
Ng
6
(Atlanta) reports the nurr~er of permits grcnted in 14 cities during
August totaled 3,437 valued at ~5.304~592 as comparad with 2,007 pennits
valued at $4,057,181 gr-anted during ~ugust, 1920.
In four cities of Dis-
trict No. 8 (St. Louis) 1971 permits valued at t),325,79l were issued
-
-25-
X- 3210
during .August in comparison with 1,302 nerm.its valued at $2,751,677
issued during the corresponding month of 1920.
of District No. 10 (Kansas City) for .Aug.ust show
Reports from 16 cities
rt
gain of 54 .. 6 par cent
in the number of permits granted and 93-6 per cent in the estimated cost
as compared with .August, 1920.
This is the la.r·gest percentage of gain that
has been shown in any month this ye13·; over the corresponding month last ·
year.
In nine cities of DiRtrict No. 11 (Dallas) 2,el4 permits valued
at <t:6.4ol,268 were issued d1.:ring .1\ugust in comparison ·nith 1,548 permits
valued at ~2,950,694 issued d'lring AuguE..'t, 1920.
The value of building
permits for 20 cities of District No. 12 {San Frencisco) amounted to
$17,126,365 in .August as corepared with ~15,030,736 in llu;mst of last·
year. and the number issued increased from 7~ 577 to 10" Ogb.
EMPLOYMENT.
There were no noteworthy changes in the errployment
situation during the rronth of .August, the "Deriod covered by the latest
report of the United States Department of tabor.
Decre~ses
were recorded
in five of the fourteen reporting industries but it is noticeable that
in two of these five industriest namely, woolen textile and cigar manufacturing, the number employed in ./lugust were 114 per cent and 4.5 per cent
respectively above those employed during Aufust 1920. while in the case
of the silk industry ' the emrloyment figures were only 2.2 per cent below
those given for a year ago.
There was an increase of 4.9 per cent in
numbers employed in the iron "'nd stea'; in1ustry during the month as compared with the July figures.
On the other hand. there was a slight deeline
for bituminous coal ITinin~ of 1.6 per cent.
'
The speeial report on
employment conditions which. is regularly made by District No. 7 (Chicago)
covers 237 manufacturing concerns employing at the present time 138,237 men.
1CD6
-26-
X-3210
The employment in these factories increased 1-4 per cent in
~ugust
for
the District as a whole ·and 1.2 per cent for the establishments located
in Chicago.
These figures
co~1cide
very closely with those for the gen-
eral survey of the Department of Labor which showed an increase of 1.08
:per cent
in numbers eTI!T1l('lyed for the indust:t"ies covered.
District
No. 8 (St. Louis) likewise mvd.e s;pecia.l inquir;J in regard to the employ--
ment conditions in the 21 largest cities of that District, and reports
thE~t
in establishments with a nornal complement of 215,784 workers,
numbers employed August 1, 1921 were
as COlJ1Ila.red with .August 1, 1920.
165~874,
a decreese of 21.3 per cent
Reports made by various state depart-
ments of labor indicate a slight improvement in conditions during tbe
month of .August.
In rennsy.lvm1ia, the State
mates that unemployment·
tewn, 'Philadelphia,
i~
D~partment
of Labor esti-
the six cities of Alto?na, Harrisburg,
Scr~nton
John~
and WilliaiWport has steadily declined since
August 15, the figures for September 15
of numbers employed being 3.8
:per cent below those of Au12uc:;t 31 which in turn were 2.5 per cent under
~ugust
returns for
15.
In District No. 5 (Ricbmorid)
co~ditions
were re-
ported to be less favorable for '-"T.lcskilled workers but 1;.h9y .bad improved
in the building trades, the textile mills and in
strike in the mills around Charlotte
.h~s
a resumption of act:i.vity in tlwt region.
railro~d· work~·
The
been settled end there·. has .been
In Dist~~ict No. 10 (Ksnsas
City) operating conditions in the mining sections showed no material
improvement..
~
survey- of labor conditions disclosed the feet that in
Missouri in the zinc and le~d minin~ districts
11
there were only 270 miners
working underground, while there were 800 in Kansas and 2,200 in Oklahoma.,
a total of
sli~htly ~ver
3,000 men, es compared with 12.000 to 15,000
X-3210
-27
1915 to 1917. There were but 35 mills working out
during the periodnof
of 208 in the District, which is another criterion of the inactivity now
prevailinF. in the zinc industry es co!llT'ared with previous years."
Although
in District No. 12 (san Francisco) there hes been a slight increase in e~
ployment in Oregon Bnd Washington due to seasonal aetiv.ities and public
work, the situation
1~ c~Hfornii'!l.
workers from outside points.
unemployed in that state.
has become aggravated by an influx of
Reports indicate that about 45,0CO are
There has been no increase in the activity in
the metal mining in Prizona, Nevada, and Utah, but nevertheless· some decrease in unemployment has resulted from greater building activity and
increased work on public improverr.ents tmd for railroads.
1 ~1HOtESHE
rrR.ADE.
Sales of
re:rortin~
wholessle firms in three lines,
hardware, dry goods end boots and shoes, showed Pn
ust as compared with July·for every District.
avera.~e
advance in
.Aug-
Increases in wholesale gro-
eery sales also occurred in District No. 3 (Philadelphia), NQ 6 (Atlanta),
No.7 (Chicago), and No. 11 (Dallas).
In District No. 5 (Richmcd), Dis-
trict No. 10 (Kansas City) end District No. 12 (San Francisco), however,
decreases were recorded amounting to 0.4 per cent with eieht firms reporting, 7.2 per cent, with four firms
-reportin~
and 9•8 per cent with twenty-
nine firms reporting, for the respective Districts.
Apparently the need
of replenishing retail stocks allowed to run down during the summer largely
explains the increases in grocer.y sales.
District No.
3 (Philadelphia)
with an increase of 10.4 per cent for forty-eight reporting grocery firms
states that there is comparatively little tendency to buy for the future,
and this testimony is corroborated by similer
st~tenents
from other
Districts~
rr:'he fell de!T'end for dry goods and boots and shoes bas resulted in especially
heavy advances in these two lines.
In three Districts, namely, District
•
.
:1;--, . 0
~
c~_)o
X-3210
-28-
No. 5 {Richmond)w No. 9 (MinnMpolis), and No~ 11 (Dallas) there were
increases in dry
~oods
sales in excess of 50 per cent,
.
.
ran~in~
from 50.6
per cent for District tlo. 5 (Ric:b..rhond), with eight finns reporting,· to ...
5442 per cent fer District No. ll (D~llas) with eight finns reportinp.
In District No. 7
(~hicago),
wHh six finns reporting., dry goods sales
increased 43.1 per cent-and in District No. 6 (Atlanta.), 45·5 per cent,
eighteen finns reporting.
The
mini~~
increase occurred in District No.
12 (San Franci-sco), with ten firms, recording an advance of 29.0 per cent.
In the case of boots and shoes, f9Ur ~eporting Districts~ No. 5 (Richmond),
No. 6 (.Atlante), No. 7 {Chicago) and No. 12 (San l!'rancisco) showed increases
ranging from 29.8 per cent for thirteen reporting fir.ms in District No. 12
(Sam Francispo) to 84.3 per cent for the eight reporting firms in D"istrict
No. 5 (Richmond).
The increa~~s in sales of wholesale hardware have been
much less pronounced, the
i~
~~imum
advance being 3.1 per cent for 25 firms
District No. 3 (Philadelphia.), the maximum 18.4 per cent far
eleven fir.ms in District No. 11 (Dallas).
Notwithstanding these heavy
seasonal increases in sales, sales expressed in terms of value are sti·11
far below the figures for Jlugust 1920, althol.lgh in the majority of cases,
the volume of sales compares favorablywith the returns for a,year ago,
generally being as large or in some instPnces larger then in Jlugust 1920
except in the case of hardware lines.
Caution in placinr- orders and un-
willingness to make extensive cornmittments for the future continue to
characterize the attitude of the retailer, despite the fact of general
improvement in current business.
~~It ~R~DE.
The value of sales for retail trade in ftugust continued
to be less th"'n last yer>r.
The fact tr..at price reductions have been
•
10D9
X-3210
-29-
relatively greater thPn·reductions in value of sales would seem to indicate that the
in August 1920-
p~sical
1he commodities which seem to be selling best are fum-
i ture, knitting yarns,
departme~t
•
vnlume of retail trade was actually larger than
and cotton piece goo:is.
.AU@ust reports for
330
stores throughout the. United States show a moderate improve-
ment over those for July.
cent less than
~n
Average sales for these stores were 11.9 per
August 1920 whereas average sales for July were 15.1
per cent less than in July
1920~
The improvement seems to be mostly
confined to the e~st,. as District No.
7
(Chicag~) and No. 11 (Dallas)
show a decrease from last month and other western Districts still show
a
lar~e
decrease compared with last year.
Reports of these
330 repre-
sentative department stores show a decrease from .August 1920 amounting
to 4.5 per cent in District No. 1 (Boston), 5~2 per cent in ~istrict
No. 2 (New York)", 4~0 per cent in District No. 3 (Philadelph~a) 21.0
per cent in District No. 4 (Cleveland),
5 (Richmond),
9~8
per cent in District No.
31.3 per cent in District No. 6 (Atle.ntP), 18.8 per cent
in District No.7 (Chicago), 11.7 per cent in District. No. 8 (St. Louis),
.
11.0 per cent in District No. 9 (Minneapolis), 8.9 per cent in District
No • 10 (Kansas City), 23 ·3 per cent in District No. 11 (Dallas) t and 6.2
per cent in District No. 12 (San Francisco).
The stocks on hand at the
end of August were very much lower than a year ago but were slightly
greater than at the end of July.
~e
rate of stock
tu~over
little although it shows a slight tendency to decline.
has changed
Orders in Auwust
continued at about the same high level as in July.
~RICES.
During the first three weeks of September. prices of most
basic commodities advanced or showed little
ch~nge
from the August level.
•
...
reve~e,
In the case of livestock the tendency was the
hogs showing partie-
ull3.r weakness, but certain other agricultural comnodities such as cotton.
wheat, oats end wool advanced,
The 50 per cent increase in the price of
cotton during the course of the month led t'o large nominal advances in
yarn and cloth prices and stirm:';r:tt~~d demand for allied commodities.
the woolen industry, raw materia)s
we~e
In
firm and showed a tendency to ad-
vance in the middle of the month, while yam and cloth prices in general
remained unchanged.
prices.
No important fluctuations occurred in. hide and leather
The September quotations are approximately the same as those for
Aup us t.
Pricew of pig iron are slightly higher than a month ago while sendfinished steel products with some exceptions are lower.
Large price cuts
. in the steel industry, however, appear to have come to a haltnonferrous metals advanced during the month.
Prices of.
No important change~ occurred
in the prices of building materials while there was a hardening tendency
in anthracite coal end oil prices.
Wholesale index numbers arG not yet available for September, but the
August figures for all comrrodities show small increases over the July averages~
The index number of the Fe.dera.l Reserve Board, constructed primarily
for international comparisons and corr~uted with prices in
an average of 143 in .August as compared with 141 in July.
ant increases occurred in consumers
were registered in producers
1
t
as 100, gives
The most import-
or highly matl.i.:factu~ed goods.
or semi-finished
remained pre.ctice.lly unchanged.
1913
Decreases
goods, while raw materials
Retail prices of foods continued to e.dvancet
the index number of the Bureau of L~.bor Statistics for .August showing an··
increB.s·e of approxim~tely
5
per cent over July ..
~.
.
•
X-3210
-31-
SHIPPING. Durin9
amount of
cer~o
Sept~~ber
sowe improvewent was .noticeable in the
offered for shinrr.ent to foreign parts..
The available
steam tonnage remains, however., greatly in excess of shippers
1
require-
mentss with the result that ocet>n frei§'ht rates continued merely steady
and substentially unch<>n;'ed from the levels ·Nhich were reached last June.
An important factor contributinc; toward the steadiness of rates in recent
weeks hs.s been the lar€e volume of frain shi-pped throughout the sun:mer,
thus keeping many ships in consttnt service.
CN,ners of vessels are able
to do little mare than meet expenses 'Vith rates at current levels, and
in many cases have
:9referr~d
such partial cargoes as have
to J.ay·u:p their ships rather than accept
offered~
The reluctance of shipowners to
enter into contracts at a time when the outlook for profits is by no
means bright
~nd
tre chances for loss in making a voyage are consider-
able; expla.ins also why the decline in ocean freight rates has not proceeded further.
FOREIGN TRPDE.
The value of our foreign trade in Aueust is reported
as ~375.000.000 for exports and $194,ooo,oco for imports. leaving an export balance of
~181,000,000,
which was only partil"'lly offset by net
im:portAtions of gold to the amount of $66?000,000.
imports 8nd exports show geins over
ant month since March.
J~ly,
The values of both
exports being higher than in
Comparisons between the
~onths
of this year and
similar periods last year are apt to be misleading on account of the far
hi~her
level of prices which then prevailed, so thet
wr~le
the reported
value of exports in the last few months has been ?nly half as much as in
the same months of 1920, the volume of exports stated in
terms
b~s
actually
~een
greater than
A
ye8r
a~o.
quantitative
This meens that the
X-3210
-32-
prices upon which the export
va.ltlati':lu~
ere besed have declined more rap-
idly then have exports stA.ted in te:rrrs of dollal"s.
In substantiation of
these facts it may be pointed cet thet the Boar& 's forei@n trade index, in
which the effects of price cLen;,.:e:; bave been el:iminat;ed, stands at 112.5
for exports in July, 1921, corr,pf'\rad ·vith :!..01.3 in July, 1920, and a monthly
average during 1920 of 107 •7.
The ind.8x. m~m1)er for July, 1913, is 70.6,
the 1913 monthly avera.ge be1ng 100..
~~he
conclasion is therefore to be
drawn that in volume our export t~ade is now larger than in 1920 or in the
months shortly preceding the war.
X-3211
FEDERAL
RESERVE
STATEMENT
FOR THE
BOARD
'PRESS
For release in afternoon papers,
October 3, 1921.
Mond~,
CONDITION OF TF.E ACCEPTANCE MABKET
The following reports have been received from the Federal
Reserve Banks concerning the condition of the acceptance market
in their respective Districts:
The demand for cowrr,ercial paper from the banks outside of
Boston has been steadily increasing during the month and brokers•
portfolios are fairly bare of the highest pTade names.
While these '
are quoted at 5 per cent, that rate is hard to maintain and choicest
names
ha~e
a tendency toward shading downward.
The acceptance ll'ar-
ke t has been rather dull, fewer bills being made and brokers carrying fairly large portfolios in anticipation of a falling rate. While
there has been a fairly active demand for bills at
5
to
5-1/e
~er
cent, dealers• listb a:!)::Jear on the market offering from 1 to 90 days
bills at
4-7/8 and one dealer as low as 4-3/4. There has also been
evidence that new funds have been turned into acceptances, when it
has be3n founi impossible to invest them in the new Tre::.sury -03rti-
t.
- 2 X-3211
ficates, the offering of which on September 15th was oversubscribed.
Offerings of
acce~tances
to the Reserve Bank have been very light
and the Bank's holdings, including those carried for dealers, are
at a low point, indicating the wide distribution of acceptances
in the District.
During the first two weeks of Septamber two of the dealers
reduced their sellinq rates for prime bills of 30 to 90 d;,:::ys
maturities 1/8 of one per cent, to 4-7/8 per cent ..
As a result,
chiefly, of these reductions the remaining dealers the following
week made
corres~jonding
adjustments in their rates, and one dealer
made a further reduction U1 his selling rate to 4-1/4 per cent.
The ne«r level of sellin<I rates on Septer:ber 21 w2,s, therefore,
4-3/4 to 4-7/8 per cent, for all maturities up to four months.
Dealers' buying rates for bills of these maturities ranged 1/8 of
one ?er cent, hi!2h_er..
There were few six-roon ths bills in the mar-
ket, due to quiet conditions in foreign trade.
The lower bill rates were the reflection of generally easier
money conditions rather than of an active demand for bills.
Deal-
ers reported that buying of bills was slow, but that the supply
of bills was so
li~ht
that their portfolios were small.
Dealers
continued to find a steadier market with the country banks than
with the banks in this city, and they cont:inu.ed to get new customers
outside the city.
ic,'~;-'
- .J
- 3X-3211
Of bills purchased by the dealers, sugar, grain, cotton, and
dollar
exchan~e
bills preponderated.
Offerings of grain bills con-
tinued comparatively heavy, as in August and July, but there was
some decrease in offe:r-inQ's of sugar end cotton bHls, and a fUt'ther
decline in the volume of dollar exchange bills.
Silk bills were
also much less frequently offered.
DISTiliCT NO. 3 (PHILAJ)!:_I,PEIA)
The increase in foreign trade during August. in both exports
and imports, is reflected in ·the total of acce~tances sold and in
the total of those
that period.
exec~ted
by the banks in this District during
Four dealers, operating in this District, sold
$8,149,000 as against $3.445,000 in July, an increase of 236 per
cent.
In August, 1920, although•.only some of these dealers were
selling acceptances here at that time, the sales were $9,551,000.
It should be noted, however, that the purchases of the Federal Reserve Bank of Philadelphia in that month, as shown by the table below,
increased enormously, and in fact were far larger than ever before.
Most of the acceptances sold by these dealers covered exports and
imports of staple corrc.odi ties, chief a!'!1ong which were grain, cotton
and sugar, in the order named.
Warehousing transactions were next
in importance.
Rates were slightly easier, and owing to this, the demand has
slackened and the supply has been adequate.
Bank was by far the heaviest
buyer~
This Federal neserve
Comparison of its purchases for
the past three months and for the corresponding months of 1919 and
-4X-3211
1920 is shown in the following table:
1920
1921
$1,033,000
616,000
8,058,000
$4,000,000
1,4o3,000
4,303 .ooo
1919
June ••
... $135,000
July • • • • • • • 279,000
August
• •
510,000
'1\Velve banks executing acce:ptaYJ.ccs in this District report an
increase both in bills issued and in bills outstanding, as compared
with the previous month.
The following figures give the totals;
for the past six months:
Executed during
preceding month
1921
$ 4,558,000
April
May
June
July
Outstanding on
date given
$13,234,000
12,892}000
10,793,000
9,286,000
8,757,000
9,009,058
5,611,000
2, 795,000
3,121,000
4,852,000
5,312,000
l;;~.:..gi1St
September
Of twenty-three reporting acce:pting banks, fourteen report acceptances executed for customers tc the amount of $5,416,1339 and the amount
paid $5,999,443.
The Federal Reserve Bank bought acceptances during
August, 1921 amounting to $3,482,056; paid $2,886,966.
During the past month there has been a decided improvement in the
acceptance market, it being much the best month since February.
The
rates have remained stationary until the past few days when they dropped
1/8 of 1 per cent on all bills.
The continued erratic character of the foreign exchange market
and the further decline in some currencies was very noticeable in the
supply of export bills.
Of these, practically all were drawn against
the exportation of motors and a very few arose out of the exportation
- 5 -
X-3211
of oils, tires and rr.achinery tools.
By far the largest sup:oly of bills
were drawn against domestic ship.nents of tractors and coal.
An apprec-
iable increase is noticed in :paper drawn against warehouse receipts.
The
sup~ly
of such bills available were in the following order:
coal,
canned vegetables, wheat, evaporated milk, flour and oil with almost
a third of these beinp coal bills.
A lar?3r number of imnort bills
were also available, all of which were drawn
of paints and oils.
a~ainst
the importation
The r;aturi ty of the bill has played little part
in the usual demand during the past month.
During the first two weeks of the month there was a greater demand
for short time bills, but latar bills of
posed of just as readily.
lon~er
maturities were dis-
There has been a greater demend on the part
of ¢ity banks and corporations, but at the same time the comtry banks,
especially in the southern part of the District, have been heavy buyers
in the acceptance market.
.At times sufficient bills could not be
secured to meet the demand which arose
s~ltaneously
from all classes
of banks, as well as from all parts of the District.
The dealers rates on prime bills are now
4-7/8
per cent on both
short and long time maturities, and on other bills from 5 per cent to
5-1/8 per cent.
5
The fact that prime bills are now offered at less than
per cent has brought about a noticeable decrease in the demand, and at
the same time
ve~
few bills are being originated.
Jrr§TiiiCT NO. 6 (.ATLA}\IT.A}
Little activity was reported in acceptance market conditions in this
District during AuRUst.
Thirteen accepting member banks replied to the
- 6X-3211
monthly questionnaire for Au.c_'!l.l.s-1;, and most of these banks reported
no dealings of any kind in accel_Jtances~
ances held
un~:~old
Four banks reported accept-
in their own portfolios in amo'Wlts approximately
the same, in the aggregate, as for the preceding month, while only
two banks reported domestic acceptances executed during August, and
three
re~rts
!
showed foreign acceptances executed during the month.
The moving of agricu.l tural crops prevents the investment of large
sums in acceptances or co!mlercial paper generally, except such paper
as may be executed in connection with the marketing of cotton or
other products.
Open market purchases by the Federal Reserve Bank of Atlanta
during .August were about 12 ;per cent less than in July and approximately
35 per cent less than
in August 1920.
DISTFICT NO. 7 ( CRICliGO)
August reports from twenty-nine banks in the Seventh Fede:ral Reserve District, Show a marked increase over July in bills sold, and
in bills held at the close of the month.
A continued demand from corporations and individuals is repo:rted.
Maturities of bills purchased in .August were divided as follows:
30
da.v, 24.9 per cent; 6o day, 12.4 per cent; 90 day, 60.9 per cent; 120
day, 0.4 per cent; and 180 day, 1.4 per cent.
A comparison of returns shows an increase for Augu.st, as compared
with July, of 21.8 per cent in bills bought; 42.7 per cent in bills
sold;
80.5
per cent in bills held; and a decrease of
bills accepted.
8.5
per cent in
The greater part of the accoytances were drawn
a~ainst
•
•
- 1 -
X-3211
meats, grain, and cotton.
gg
Banks
Detailed comparisons f9llow:
(In Thousands of Dollars)
A:u.gus t
July
Bills bought •••••................
Bills sold•••••••...•.....•...•.•
Held at close of nxmth ••........•
.Amount accepted ••••• ·.••.........•
$ 18,886
24,412
8,843
20,729
$
15~500
17,101
4,899
22,651
Comparison of statistics of Bankers Acceptances at the Federal
Reserve Batik of Chicago for July and August follows:
During Month
Au.gu.st
Bankers acceptances rediscounted
*Bankers acceptances bought ••••.•
Bankers acceptances sold from
holdin.gs •. ....... ·........... .
9,614,864
$ 5,000
None
$7' ~55, 1CJ)
125,000
70,000
j
Held at Clos~·ot Month
Bankers acceptanc3s rediscounted
*Bankers acceptances bo~t ••••.•
2,314
2,315,368
*Included in acceptances bought but not in acceptances sold, are
those bought w1 th agree-.c.:ent by the sellers to repurchase within
fifteen days. .
..
DISTRICT NO. 8 (ST. LOUIS)
The market for ,bankers• acceptances during the period under review
developed a little more life than noted since the beginning of the sum-
mer.
While no such bills are originating in this District, a fair
volume from the Eastem centers have been traded in by bal'lks in the St.
Louis distr~ct.
Quotable rates range between 5 and 6 per cent.
DISTRICT NO. 9 (lVIINNE~POLIS)
Bettfeen July and August, this Federal Reserve Bank increased its
discounts of trada acceptances from $178,000 to $329,000.
in .August
A year ago
$289,000 of trade acceptances were discounted. No trade
·'
..
X-3211
- g-
acceptances have been purchased by this Bank this year or last.
No bankers acceptances were discounted by this Bank in August or
July or in August a yeax ago, and no bankers acceptances or dollar exchange was purchased this year in August or July, but last year in
August there were purchases of bankers acceptances to the amount of
$475,000 and of dollar exchange to the amount of $50,000.
The discount
rates of this Bank for acceptances remained unchanged during August.
DISTRICT NO- 11
(DALT~S}
Outstsn1ing acce'lta."l.ces originating in the Eleventh District
amounted to $956,751.39 on August 31st, a slight increase over the
previous month.
The transactions against which tl:ese
acce~Jtances
were draw.n were about evenly divided between foreign and domestic
trade.
There is still very little demand in this District for accept-
ances as an investment rrediuro.
It is believed, however, that the
COITiing winter will see a material broadening in the local demand for
this class of paper, especially if the recent improvement in the cotton market is maintained.
DISTniCT NO .. 12 (SAN FHANCISCO)
The improverr:ent ncted in the discount rr:arket for acceptance's
last month has continued during the conth ending September 15th.
This has been reflected not so much in a larger volume of sales as in
a general broadening of the demand, which has spread slightly more
in the Northwest.
The southern section of California with a few not-
able exceptions is still generally out of the market.
With a slight revival of foreimn trade and the necessity for
.r
~oving Coast cro:ps, the supply of bills originating in this ·District
has l:lecoroe lar_crer..
This supnly has by no means, however, reached a
"'
..
- 9 -
I
iC'"''•• ..,.
_L.
X-3211
point sufficient to S'Uflply even a majority of the Coast demand for
acceptances.
Bills of four, five and six months duration are beginning to make
their appearance in increasing n'Urnoers.
After a. slight hesitancy, the
market has begun to absorb this new type of acceptance with increasing
feadiness, especially bills with a maturity of around 120 days ..
The decline in the open market rate which started early in June has
been arrested, at least terr.:porari\Y, and rates have been steady during
the whole month at the following figures:
20
days
6o
days
~9
da,ys
Eligible member banks
5%
5%
Eligible non-members
5~
5~
ne~o~ts
from
show a total of
37
of the principal accepting banks of the District
$3t377 )000
of bills accepted during August, $2,996,000
of acceptances purchased, and a total in portfolios at the end of the
month of
$4,075,000.
Their re:9orts indicate that canned goods were the
principal coi!Wio.di ty upon which acceptance transactions
follow~d by
were~ased,
sugar, grains and miscellaneous import commodities from the
Orient and Central Arne¢ca, chief among which was silk..
Six firms are
reported to have drawn acceptances for the first time during the month.
FEDERAL RESERVE BOARD
WASHINGTON
X-3212
September 28• .192.1-,
Subject:
"i!
Expense Main Line • Lee sed Wire System,
for the Month of August, 1921.
Dear Sir:
Enclosed herewith you will find two mimeograph
statements X-3212a and X-3212b, covering in detail operations
of the main line, Leased Wire Syotem, during the month of
August 1921.
You will note that statement X-3212b shows no credit
covering payment by the Treasury Department for its proportion
of expense for the month of J~lly. This payment has not been
received by the Board and credit will be shown on a subsequent
statement after reimbursement has been received.
Please credit the amount payable by your bank in the
general account) Treasurer u.s., on your books, and issue
C/D Form 1 1 National Banks, for account of "Salaries and Expenses,
Federal Reserve Board, Special Fund", Leased Wire System, sending
duplicate C/D to Federal Reserve Board.
Very
Enclosures.
truly yourE!,
Fiscal Agent.
TO GOVERNORS OF ALL BANKS EXCP.PT CHICAGO.
I
.
X-3212 a
RE'PORT SHOWING CLASSIFICATION AND NUMBER OF WORDS
TRANSMITTED . OVER MAIN L~NE OF THE FEDERAL RESERVE
LEASED WIRE SYSTEM FOR THE MONTH OF AUGUST, 1921.
From
Dank
Business
Per cent of
Total Bank
Business ( •)
Treasury
Dept.
Business
War.
Finance Corp.
Business
.TGtal
Total
-----------------------------------------------------------------------------------~
Boston
52,248
45,813
6,435
3·79
New York
184,852
174,362
10,490
14.43
Philadelphia
71,287
6,150
65,137
5·39
Cleveland
92,868
84,543
7.00
8,325
Richmond
82,668
72
6.36
5.. 692
J6, 904
Atlanta
61&2
l 6,193
13.75
174,rf
l,551
. 160, 4
Chicago
154,113
12.75
,351
St. Louis
88,105
80,617
6.67
7,488
Minneapolis
52.,656
4.02
48,599
72
3,985
Kansas City
100.,025
94.~4c6
47
5,572
Dallas
122.
82,045
5,112
8711279
·19
San Francisco
11.$
151.422
135,196.
1S,Jl5
~
l•Sl
Total F. R.
Banks
Washington
Grand
Total
88., 466
1,271
89.9Slf
~.. !!25
1,298,265
31$3,310
1,499,489
178,450
3,696
1,681,635
89.1~
10.61~
1.. 208,528
290.9(>1
Per cent of Total
100.00
Bank Business
Treasury Business
1,499,489 words or 89.36~
176, 450 If ft 10.64
TOTAL------·----·
1.,6771939
lOO.. oc$
(•) These percentages used in calculating the
pro rata share of leased wire expenses as shown
on the accompanying statement (X-3212 b).
FEDERAL RESERVE BOARD
WASHINGTON, D. C.
SEPTEMBER 28.,. l92J..
.~
.REPOOT OF EXPENSE
MAIN LINE
FEDERAL RESERVE LEASED WIRE SYSTEM AUGUST 1 1921.
X-3212 b
-----------------------------------------------------------------------------------------------------·----------------Payable to
Pro rata
Name of Bank
Operators 1
Salaries
Operators'
Overtime
Wire
Rental
Total
Expense
Share of
Total
Expense
Credits
Federal
Reserve
Board
-----------------------------------------------------------------------------------------------------------------------~
$
$ 240.00
$
$
Boston
240.00
$
$ 672.52
912,52
$ 240.00
150.00
New York
789.98
2,534.}4
3, 474.32
939~98
939·98
Philadelphia
225.00
225.00
225.00
11297· 75
1, Ol2• 75
524.00
Cleveland
524.00
524.00
1,685.39
1,1 1.39
300,00
(*)50. 00
Richmond
350.00
1,181,30
350.00
1,531.~0
240.00
Atlanta
240.00
24e,OO
31310. 0
3, 070.60
(f)4J 764,67
Chicago
4, 764.67
4,764,67 ( **)1,694,35
3, Cb9. 82
St, Lcuis
300.00
300.00
1,605.94
300,00
1, 305.94
Minneapolis
275.00
275.00
275.00
967.90
692.90
310.00
Kansas City
'310.00
l, 880.42
310.00
1, 570.42
170,00
Dallas
170.00
1,634.83
170,00
1, 464.83
215.0C
San Francisco
215.00
2.,7~.26
215.00
2, 491.26
-
Fed. Res. Board
..
15,526.38
15J 526.38
------~-------------------------~----------------------------------------------------------------------~---------------
$150.00
Total
(#) Includes salaries Washington Operators.
(•)
Cut in at Washington on Richmond-Baltimore Circuit.
(&) Amount reimbursable to Chicago,
(a) Received from War Finance Corporation covering business for month t6f July.
(u) Credit.
FEDERAL RESERVE BOARD
WASHINGTON, D. C.
SEPTEMBER 28, 1921,
$8,553.65
FEDERAL RESERVE BOARD
WASHINGTON
X-3213
September 23, 1921.
SUBJECT:
Election of Class
11 A11
and 11] 11 Directors.
Dear Sir:
This will confirm n,y telegram to you of
this date advising that tl1e electoral groups of
member banks for the election of Class
11.A 11
and "B"
directors this year will be on the same basis as
prescribed by the Board 1:..1 its letter of October
3,
1918, X-l24o, and that the Board has designated
Thursday,
Noven~ber
17, 1921 as the date for opening
the polls.
Very truly yours,
Secretary.
TO
CT-r.AI:R~i!EN
.
OF AtTJ
F.F.B~.NKS •
FEDERAL RESERVE BOARD
WASHINGTON
X- 3214
(Superseding X-3119)
~RANDOM
OF INFORMti"PION DESIRED BY THE FEDERAL RESERVE EXAMINER.
~----~~------------' Auditor,
Federal Reserve
:Bark~
Dear Sir:
In connection with the current exarninat ion of the Federal
Reserve :Sank of
, it is requested that you kindly
furnish theSollowing lists and reports:
R8J?ort of earnings and expenses, Forms 95 and 96, for the
yr:=ar
Report of earnings and expenses, Forms 95 and 96, for the
period
to
Proof of expenses paid in advance and of other deferred
accounts,
A list of all outstanding checks.
Very truly yours,
Federal Reserve Exandner.
FEDERAL RESERVE BOARD
WASHINGTON
September 30, 1921.
X-3215
SUBJECT:
Program for Joint Conference of Governors
and Federal Reserve Agents~ October 25th-28th.
Dear Sir:
There is encloBed here~iith program for conference
Governors and Federal Reserve Agents 1 O~tober 25th-28th.
The topics· for the separate conferences will be transmitted
later by the Program Committees of the Governors and Federal
Reserve Agents. The discussion of the subjects on the program
for the joint conference on October 25th will be opened by
members of the Federal Reserve Board and will be followed
by a general discussion by such members of the conference
as may desire to participate.
of
Very truly
yours~
'F.nc losure
.G o v e r n o r.
GOVERNORS AND F.R,AGENTS OF ALL F.R.BANKS.
X--32153.
PROGHM·~
FOR
CONFERENCES \liTH GOVEr1t:"ORE AND FEDERPL RESERVE AGENTS
OCTOBER
25-28~
1921
Tuesday, October 25th:
l 0:00 A. M •
.
SUBJECTS:
Joint Conference of Federal Reserve Board Federal
~eserve .A.ge11ts and Governors of Federal R~serve Banks,
~n Asse.ably Boom# NaUon-c_l Metropolitan Bank Dl.lildi;ag.
(1)
Zff i ciency and economy in admini strati on of Federal
Resel:"ve Danks.
(2)
Re:::ent Developments in tile par clearance system and
suggested changes in methods.
(3)
Principles governing the discount rate.
8:00 P.• •'~~·
Dinner at ..IJ!etropolitan Club.
·.,ednesday. October 26th:
Separate Conferences
Federal Reserve Agents vwill meet at 10:00 A.1.1. in the
Federal Reserve Board 1 s Asse,nbl y Room,· 7th Floor,
National Metropolitan Banis: B:.J.ilding.
Governors will meet at time and place to be arrar.. ged
by them.
Each body \/ill consider its o•vn prepared list of topics.
Thursday. October 27th:
Separate Conferences Continued:
2:30 P. ;11, -
The Federal Reserve Board will meet with the Federal
Reserve Agents in the Assembly Room.
Friday. October 26th:
10:00 A. M. 2~30
P. M. -
Federal Reserve Board .vill meet
at place to be announced.
i'li th
the Governors
Joint Conference of Fejeral Reserve Board vvith Fedaral.
Reserve Agents and Governors.
FEDERAL RESERVE BOARD
WASHINGTON
September 301 1921.
X-3216
SUBJECT:
Salaries in Federal Reserve Agents' Departments.
Dear Sir:
In order that the salaries paid by the Federal Reser~e
Banks to the assistants to the Federal Reserve Agents# and to all
persons employed in the Federlti Reserve Agents' Departments 1 may
be fixed upon the same basis :iS salaries for work of corresponding
importance in the other depa:r·i;ments of the Federal Reserve Banks1
the Board requests that every salary recommendation made by a
Federal Reserve Agent shall, before being for~arded to the Federal
Reserve Board for approval, be submitted to the Board of Directors
of the Federal Reserve Bank# or to the appropriate com'l~i ttee v.-hich
customarily represents the Board of Directors in passing upon such
matters 1 for concurrence or for such independent recommendation as
the Board of Directors or the committee may care to make to the
Federal Reserve Board. This procedure should be followed with
respect to recommendations as to the salaries of all persons in the
Federal Reserve Agents' Departments~ except the Federal Reserve
Agents themselves.
You are requested to act in conformity with this letter
as to all future recommendations regarding salaries in your departments and to bring this letter to the attention of the Board of
Directors.
Yours very truly,
G o v e r n o r.
TO F.R,AGENTS
FEDERAL RESERVE BOARD
WASHINGTON
October 1, 1921.
X-3217
SUBJECT:
F u r t h e r Correspondence w i t h Governor of
Nebraska.
Dear S i r :
On September 1 7 t h I s e n t you copy of c o r r e s pondence w i t h t h e Governor of Nebraska.
I now e n c l o s e
f o r y o u r i n f o r m a t i o n copy of r e p l y which h a s been r e c e i v e d from Governor McKelvie and copy of my answer
thereto.
Very t r u l y y o u r s ,
Enclosure.
Governors of a l l F.R.Banks.
G o v e
r n 0 r.
x-32r?a
September 29. 1921.
Dear Governor McKelvie:
Last Saturday I acknowledged r e c e i p t of your l e t t e r of t ' e 22nd
i n s t a n t and i n r e p l y i n g to i t now a t g r e a t e r l e n g t h I wish t o i n v i t e
your a t t e n t i o n t o some of the u n d e r l y i n g p r i n c i p l e s of the F e d e r a l
Reserve Act which govern the o p e r a t i o n s of t h e F e d e r a l "reserve "banks,
Following t h a t I w i l l submit some f a c t s r e l a t i n g t o t h e o p e r a t i o n s of
the Branch of t h e F e d e r a l Reserve Bank: of Kansas City a t Omaha, i n which
you and your p e o p l e a r e p a r t i c u l a r l y i n t e r e s t e d .
( 1 ) - The law does n o t p e r m i t F e d e r a l r e s e r v e banks to compete
f o r b u s i n e s s w i t h each o t h e r or w i t h the n a t i o n a l banks, s t a t e banks and
t r u s t companies of the c o u n t r y . They a r e n o t allowed to r e c e i v e d e p o s i t s
from the p u b l i c nor a r e they p e r m i t t e d to make l o a n s or advances d i r e c t
to i n d i v i d u a l s , f i r m s o r c o r p o r a t i o n s . In th@r r e d i s c o u n t o p e r a t i o n s they
a r e l i m i t e d to n o t e s and b i l l s d e f i n e d as " e l i g i b l e " which b e a r the e n d o r s e ment of a member bank.',,: I t f o l l o w s , t h e r e f o r e , t h a t F e d e r a l r e s e r v e banks
cannot extend any d i s c o u n t accommodations t o the p u b l i c e x c e p t through the
medium of a member bank, w i t h which i n s t i t u t i o n s the l o a n s mast f i r s t be
n e g o t i a t e d . F e d e r a l r e s e r v e banks have no f u n d s t o l e n d the p u b l i c through
the i n s t r u m e n t a l i t y of member banks a c t i n g a s b r o k e r s . A F e d e r a l r e s e r v e
bank does n o t t a k e the i n i t i a t i v e i n making l o a n s t o a member bank f o r the
purpose of e n a b l i n g the member bank to d i s t r i b u t e the f u n d s so advanced to
i t s customers. The Federal r e s e r v e bank l e n d s to the member "bank a g a i n s t
t r a n s a c t i o n s a l r e a d y made f o r the puroose of e n a b l i n g the member bank to
r e s t o r e i t s r e s e r v e to the l e g a l r e q u i r e m e n t , a f t e r t h e r e s e r v e h a s been
impaired or i s about to be impaired because of i n c r e a s e d l o a n s and d e p o s i t s .
(2)
- I have a l r e a d y c a l l e d your a t t e n t i o n t o the f a c t t h a t the
F e d e r a l r e s e r v e bank i s given no c o n t r o l over the p o l i c y of i t s member banks
w i t h r e s p e c t t o l o a n s b u t t h a t i t cannot compel a member bank to make a l o a n
which i t does n o t d e s i r e to nake n o r p r e v e n t i t from making one which i t
wishes to make. N e i t h e r can a F e d e r a l r e s e r v e bank c o n t r o l the r a t e of
i n t e r e s t charged by member b a n k s . In c a s e of i s t a t e banks the i n t e r e s t r a t e
i s r e g u l a t e d by the laws of the r e s p e c t i v e s t a t e s and i n the case of n a t i o n a l
banks the F e d e r a l law p e r m i t s those i n s t i t u t i o n s to charge up to the maximum
r a t e s p e r m i t t e d i n the s t a t e s i n which they a r e l o c a t e d .
(3)
- No F e d e r a l r e s e r v e hank can r e d i s c o u n t p a p e r f o r member
banks o u t s i d e of i t s own F e d e r a l Reserve D i s t r i c t . I t s r e d i s c o u n t t r a n s a c t i o n s a r e l i m i t e d t o d e a l i n g s w i t h i t s own member banks. The F e d e r a l Reserve
Act does n o t r e q u i r e r a t e s of d i s c o u n t to be u n i f o r m i n a l l d i s t r i c t s . Each
F e d e r a l r e s e r v e bank i s a u t h o r i z e d by p a r a g r a p h ( d ) of S e c t i o n lU of the
X-32l7a
F e d e r a l Reserve Act " t o e s t a b l i s h from time to t i m e , s u b j e c t t o r e v i e w
and d e t e r m i n a t i o n of the F e d e r a l Reserve Board, r a t e s of d i s c o u n t to be
charged by the F e d e r a l r e s e r v e bank f o r each c l a s s of p a p e r , which s h a l l
be f i x e d w i t h a view of accommodating commerce and b u s i n e s s and which,
s u b j e c t t o t h e a p p r o v a l , review and d e t e r m i n a t i o n of the F e d e r a l Reserve
Board, may be graduated or p r o g r e s s e d on the b a s i s of t h e amount of the
advance# and d i s c o u n t accommodations extended by t h e F e d e r a l r e s e r v e bank
to the borrowing bank". The l a s t sentence of t h e p a r a g r a p h ouoted above
r e l a t e s t o what i s k n o m a s the " p r o g r e s s i v e r a t e " , which h a s now been
a b o l i s h e d i n t h e . f o u r Federal Reserve D i s t r i c t s i n which i t was f o r m e r l y
effective.
One of t h e e a r l y d r a f t s of the F e d e r a l Reserve B i l l which was cons i d e r e d by Congress i n 1913 provided t h a t the F e d e r a l Reserve Board should
each week f i x the r a t e s of d i s c o u n t to be charged by the r e s p e c t i v e Fede r a l r e s e r v e banks and t h a t i t should n o t i f y each F e d e r a l r e s e r v e bank what
i t s d i s c o u n t r a t e s would be f o r the ensuing week. This p r o v i s i o n was
s t r i c k e n out i n a l a t e r d r a f t of the b i l l and the Act as . f i n a l l y p a s s e d
c o n t a i n s the language above m o t e d . I t seems, t h e r e f o r e , to be the i n t e n t
of Congress t h a t the d i s c o u n t r a t e s s h a l l n o t o r d i n a r i l y be i n i t i a t e d by
the F e d e r a l Reserve Board b u t by the d i r e c t o r s of the r e s p e c t i v e F e d e r a l
r e s e r v e banks. This i s c o n s i s t e n t with the theory of t h e Act which does
n o t c r e a t e a c e n t r a l bank b u t a r e g i o n a l ..banking system, comprised of
twelve independent u n i t s . This theory i s based upon the presumption t h a t
the d i r e c t o r s of a F e d e r a l r e s e r v e bank a r e more c o n v e r s a n t w i t h c r e d i t
c o n d i t i o n s and c u r r e n t r a t e s f o r money 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 than
the F e d e r a l Reserve Board in " a s h i n g t o n can be expected to b e . , ? ! hile the
F e d e r a l Reserve Board undoubtedly h a s power to d i r e c t any F e d e r a l r e s e r v e
bank which p e r s i s t s i n m a i n t a i n i n g a d i s c o u n t r a t e which i s c l e a r l y n o t
w a r r a n t e d by g e n e r a l c o n d i t i o n s to change t h a t r a t e , the Board so f a r has
had no o c c a s i o n t o i n i t i a t e a r a t e f o r any F e d e r a l r e s e r v e bank.
In c o n s i d e r i n g the p r o p e r l e v e l of d i s c o u n t r a t e s , t h e d i r e c t o r s of
the F e d e r a l r e s e r v e banks have taken i n t o c o n s i d e r a t i o n n o t only the
r e s e r v e p o s i t i o n of t h e bank b u t a l s o c u r r e n t l o c a l r a t e s f o r money. I t irs
the purpose of t h e F e d e r a l r e s e r v e b=nks to a f f o r d a ready means of r e d i s c o u n t i n g p a p e r f o r member banks b u t i f a r t i f i c i a l l y low r a t e s should be
e s t a b l i s h e d the r e s u l t would p r o b a b l y be an u n h e a l t h y s t i m u l a t i o n of l o a n s
by member banks, which, I u n d e r s t a n d from your l e t t e r of September 1 2 t h , i s
something t h a t you do n o t d e s i r e , f o r you say in t h a t l e t t e r "Nor -ould I
have you b e l i e v e f o r a moment t h a t I would have t h e F e d e r a l Reserve Bank
System encourage an e x t e n s i o n of c r e d i t t h a t would r e s u l t i n unwise i n f l a t i o n o r s p e c u l a t i o n " . The Board i s e n t i r e l y i n accord " i t h your d e s i r e to
1033
-3-
X-3217a
see t h e F e d e r a l Reserve System o p e r a t e as an agency f o r f i n a n c i a l r e l i e f
a t a time when i t i s most u r g e n t l y needed, and i n o r d e r to k e e p t h e F e d e r a l
r e s e r v e banks i n p o s i t i o n to extend such r e l i e f i t i s n e c e s s a r y t h a t a
p o l i c y he adopted which w i l l n o t encourage an undue expansion of l o a n s made
f o r the sake of t h e p r o f i t t o be d e r i v e d by r e d i s c o u n t i n g w i t h the F e d e r a l
r e s e r v e bank.
I n your l e t t e r of the 22nd i n s t a n t you say t h a t you a r e a l t o g e t h e r
convinced t h a t t h e F e d e r a l Reserve System i s n o t f u n c t i o n i n g a s i t should
i n y o u r d i s t r i c t . You say t h a t you a r e informed t h a t the banks i n your
d i s t r i c t a r e n o t g e n e r a l l y p a t r o n i z i n g the F e d e r a l Reserve System. I t
i s t r u e t h a t a l a r g e m a j o r i t y of s t a t e banks, f o r r e a s o n s s a t i s f a c t o r y
t o themselves, have n o t deemed i t a d v i s a b l e t o apply f o r membership i n
the F e d e r a l Reserve System and t h e r e are a l s o a c o n s i d e r a b l e number of
taember banks which have had no o c c a s i o n u p t o t h i s time t o r e d i s c o u n t
w i t h the F e d e r a l r e s e r v e bank. Many of the non-member s t a t e b a n k s ,
however, have borrowed money from t h e i r c o r r e s p o n d e n t s i n Omaha, Kansas
City and o t h e r c i t i e s and t h e s e banks i n t u r n have r e d i s c o u n t e d w i t h the
F e d e r a l r e s e r v e b a n k s . Nor i s i t to be doubted t h a t the member banks
which have n o t r e d i s c o u n t e d w i t h t h e F e d e r a l r e s e r v e bank would h e s i t a t e
t o do so should occasion a r i s e .
x
On August 31, 1921 t h e r e were 203 member banks in Nebraska. At t h a t
time 7*4- of t h e s e banks were not borrowing from t h e F e d e r a l Reserve Bank.
129 Nebraska member banks were a t t h a t time r e d i s c o u n t i n g t o the e x t e n t
of $11,263,3^5. On June 3 , 1920, 135 Nebraska banks were borrowing from
the F e d e r a l Reserve Bank $30,068,992 and on October 3 0 , 1920, 168 Nebraska
members were borrowing $38,294,175. When i t i s remembered t h a t the t o t a l
r e d i s c o u n t s and b i l l s payable of a l l n a t i o n a l banks i n t h e U n i t e d S t a t e s ,
a s shown by the o f f i c i a l r e p o r t of the C o m p t r o l l e r of the Currency, OB
August 22, 1907 amounted t o $59,177,000, itwwould seem t h a t t h e advances
l a s t October of over $38,000,000 by the Kansas C i t y bank to member banks
i n Nebraska alone would i n d i c a t e v e r y e f f e c t i v e f u n c t i o n i n g on t h e p a r t
of t h a t bank. You w i l l r r e c a l l the s e v e r e "oanic which o c c u r r e d i n the
1CC4
-4-
X-32i?a
f a l l of 1907, and f o r s e v e r a l weeks# b e f o r e t h e p a n i c develcoed
c r e d i t c o n d i t i o n s were as s t r i n g e n t a s they have e v e r been i n t h i s
country.
I t i s t r u e t h a t the l o a n s of t h e F e d e r a l Reserve Bank of Kansas
City to member banks i n Nebraska a r e now o n l y about e l e v e n and a
m i a r t e r m i l l i o n d o l l a r s a s a g a i n s t t h i r t y - e i g h t and a q u a r t e r m i l l i o n s
l a s t October, b u t i t does n o t f o l l o w n e c e s s a r i l y t h a t t h i s h a s been
the r e s u l t of h a r s h demands f o r l i q u i d a t i o n on the p a r t of the F e d e r a l
Reserve Bank of Kansas C i t y . I{s i t n o t p o s s i b l e t h a t t h e r e h a s been
a g r e a t d e a l of v o l u n t a r y l i q u i d a t i o n , made p o s s i b l e by s a l e s of f&rm
p r o d u c t s o r by i n c r e a s e d d e p o s i t s ? C e r t a i n l y c r e d i t c o n d i t i o n s g e n e r a l l y
a-re by no means a s s t r i n g e n t now-as they were l a s t October. While i t
may be t r u e t h a t the F e d e r a l Reserve Bank of Kansas C i t y , m i n d f u l of
i t s r e s p o n s i b i l i t y u n d e r the law and a c t i n g in accordance w i t h the d i c t a t e s of o r d i n a r y b a n k i n g prudence, may have had o c c a s i o n a t times to
c a l l the a t t e n t i o n of some of t h e l a r g e r borrowing banks t o the n e c e s s i t y of working themselves i n t o a s t r o n g e r p o s i t i o n , the F e d e r a l Reserve
Board h a s y e t to be shown t h a t t h e F e d e r a l Reserve Bank h a s e v e r u n d e r t a k e n t o say t o a member bank what p a r t i c u l a r l o a n s i t should r e q u i r e
to be p a i d o r ask t o have r e d u c e d .
At zqy r e q u e s t the B o a r d ' s D i v i s i o n of R e p o r t s and S t a t i s t i c s h a s
p r e p a r e d Wo t a b l e s which r e l a t e to the d i s c o u n t t r a n s a c t i o n s by the
Omaha Branch of the F e d e r a l Reserve Bank of Kansas City d u r i n g October,
1920 and Augtist, 1921. One t a b l e shows the t o t a l amount of b i l l s
d i s c o u n t e d f o r member banks d u r i n g t h e s e months, t h e r a t e of i n t e r e s t
charged the borrowing customers by the r e d i s c o u n t i n g member b a n k s ,
the amount a t each r a t e and the p e r c e n t a g e of p a p e r taken a t each r a t e
t o the t o t a l amount. You w i l l u n d e r s t a n d , of c o u r s e , t h a t t h i s r e l a t e s
only to the r a t e s of i n t e r e s t charged by member banks on the p a r t i c u l a r n o t e s which they i n t u r n r e d i s c o u n t e d with the F e d e r a l Reserve
Bank Branch a t Omaha. I haves no i n f o r m a t i o n as to the r a t e s charged
by the n? ember banks on t h e i r e n t i r e volume of l o a n s to c u s t o m e r s . The
o t h e r t a b l e shows t h e number of s e p a r a t e n o t e s or p i e c e s of t>aper d i s counted by the Omaha Branch d u r i n g the same months and the r a t e charged
customersaby the borrowing bank i n each c a s e .
-5-
X-3217a
TABLE A
BILLS DISCOUNTED FOR MEMBER BANKS BY THE
OMAH4 BRANCH OF THE KANSAS CITY FEDERAL RESERVE BANK
DURING OCTOBER i g 2 0 AND AUGUST 1921
Amount of p a p e r d i s c o u n t e d :
Member b a n k s ' c o l l a t e r a l n o t e s :
Customers' b i l l s and n o t e s : TOTAL -
October 1420
August 1421
$16,058,636
16.800.179
$32,858,865
$6,562,655
7.108.201
$13,870,868
442
1,647
4,089
255
J331,988
179
145
7-lOfr
6.0#
Number of p i e c e s of paper d i s c o u n t e d :
Member b a n k s ' c o l l a t e r a l n o t e s : Customers' b i l l s and n o t e s : TOTAL Number of member banks accommodated:
Average r a t e of d i s c o u n t charged member
banks by Omaha Branch -
Amount of p a p e r d i s c o u n t e d by Omaha Branch
on which d i s c o u n t i n g member banks
charged t h e i r customers a r a t e o f : August 1421
October IQ20
Per c e n t
Per cent
Amount
of t o t a l Amount
of t o t a l
5i
6
6f
6f
7
7i
8
85
8f
9
-
Si -
10
12
-
$
19,700
150,200
85,000
6,100
1,825, 800
2,576,600
9,154,100
30,000
528,200
1,077,500
130,300
1,192,900
21. 800
$16,800,200
.12 $
.89
546,100
• 51
.04
1,650,100
10.87
1,977,400
15.34
1,870,400
54.49
— —
.13
400
3.14
6.41
460,900
— —
.77
796, 300
7,10
6.100
,14.
1 00.00# $ 7 , 3 0 8 , 2 0 0
—
—
—
-»
—
-
—
-
-
7.47
— -
22.58
27. C6
25.59
-
-
.01
6.31
-
-
10.90
.03
lOO.OCfib
1CGG
X-3217a
TABLE B
NUMBER OF PIECSS "OF p/PER DISCOUNT EC BY OM/H/ BRANCH
ON WHICH DISCOUNTING MEMBER BJINKS CEflRGEDTHElR
CUSTOMERS A RATE OF: -
SATE
5i
6
u
October 1Q2Q
Par cent
Number
-Si.
August 1921
Per cent
Number
9t
10
12
3
20
9
l
237
229
2,022
2
111
199
11
800
3
.08
.55
.25
,.C3
b.50
6.28
55.44
.05
3.04
5.46
.30
21.94
.08
913
11
52.6b
.64
Total
3,64?
100.00
1,733
100.00
7
7i
g
84
84
9
—
mm-
26
1.50
—
67
95
46 s
mm
mm
1
152
-»
3.67
5- 48
27.00
mm
. Ob
6.77
—
I t should be borne i n mind t h a t due t o t h e o p e r a t i o n of the
p r o g r e s s i v e r a t e l a s t October t h e average r a t e of d i s c o u n t which t h e
borrowing member banks paid t h e Omaha Branch d u r i n g t h a t month was
7-10%, while i n August 1921, t h e p r o g r e s s i v e r a t e h a v i n g been
a b o l i s h e d , t h e discount r a t e p a i d i n a l l cases was 6$.
I t i s i n t e r e s t i n g t o note the changes i n t h e p e r c e n t a g e s of
r e d i s c o u n t e d paper which had been taken a t varying r a t e s of i n t e r e s t
by t h e borrowing member banks. In October 1920 the p e r c e n t a g e of
V> paper discounted by t h e member banks was 10.87 a g a i n s t 22.38 i n
August 1921. The percentage of
paper was 15.34 a g a i n s t 27.c6
and the p e r c e n t a g e of 8% paper was 54.49 a g a i n s t 25.59. The p e r centage of 9% paper was 6 . 4 1 a g a i n s t 6 . 3 1 . The percentage of
10/6 p a p e r , which was ~1,1Q i n October l/>20# i n c r e a s e d , however, t o
10,90 p e r c e n t i n August 1921. Looking at Table "B", which r e l a t e s
to t h e number of p i e c e s of paper d i s c o u n t e d , you w i l l see t h a t i n
October 1920 t h e p e r c e n t a g e of r e d i s c o u n t e d paper t a k e n by the '
member banks a t 8$ was 55*44 a g a i n s t 27.00 i n August 1921, 9%. 5.45
a g a i n s t 8.77 and 10$ paper 21.94 a g a i n s t $2.68.
A A 'S>*V»
-7-
X-32l7a
C a r r y i n g t h e a n a l y s i s f u r t h e r wa w i l l see t h a t of t h e
t o t a l of $7/306,200 which was r e d i s c o u n t e d by t h e Omaha Branch
f o r Nebraska member banks d u r i n g August 1$21, only $79^*800 was
t a k e n by t h e borrowing banks from t h e i r customers a t a 10$ r a t e ,
but t h i s amount was made up of 9^3 s e p a r a t e p i e c e s of p a p e r , more
t h a n o n e - h a l f of t h e t o t a l number of n o t e s t a k e n d u r i n g t h e
month. The average amount of t h e r e d i s c o u n t e d n o t e s on which
customers had been charged 10$ was i n October 1$20 about $1,490
and i n August 1921 about $870. The average amount of t h e r e d i s c o u n t e d n o t e s on which Customers had b e e n charged 8% was i n
October 1920 about $4,520 and i n August l g 2 1 about $4,000, and
t h e a v e r a g e of 7% n o t e s was i n October 1920 about $7#700 and i n
August 1921 about $24,62$.
A l l t h i s would i n d i c a t e , a t l e a s t so f a r a s t h e r e d i s c o u n t e d
n o t e s a r e concerned, t h a t t h e l a r g e r borrowers a r e g e t t i n g a
s l i g h t r e d u c t i o n i n r a t e but t h e r e i s n o t h i n g t o show t h a t t h e
s m a l l e r borrowers a r e , f o r n o t w i t h s t a n d i n g t h e reduced volume
of l o a n s t h e number of t r a n s a c t i o n s at3.0^ was g r e a t e r i n August
1921 t h a n i n October 1920,
There i s n o t h i n g i n t h i s l e t t e r or i n my l e t t e r of September
15th which i s i n t e n d e d a s a r e f l e c t i o n upon or a c r i t i c i s m of t h e
banks of Nebraska. I n common w i t h t h e r e s t of t h e banks of t h e
c o u n t r y , t h e y have had v e r y s e r i o u s problems t o contend w i t h and they
a r e E n t i t l e d t o g r e a t c r e d i t f o r t h e manner i n which they have met
t h e s t r a i n which has been imposed upon them, but I wish t o c a l l
your a t t e n t i o n t o t h e f a c t t h a t t h e F e d e r a l Reserve Bank, of Kansas
C i t y , l i k e a l l o t h e r banks has had i t s problems too and i t s r e d i s count f a c i l i t i e s have c e r t a i n l y been of g r e a t a s s i s t a n c e t o t h e
banking community and through t h e banks t o t h e p u b l i c . The Federal
Reserve Board i s watching t h e r a t e s i t u a t i o n c l o s e l y and i s anxious
t o have t h e r a t e s of each Federal r e s e r v e bank bear t h e p r o p e r
relationship to current rates i n the respective d i s t r i c t s .
I i n q u i r e d i n my p r e v i o u s l e t t e r whether you thought a r e d u c t i o n i n t h e d i s c o u n t r a t e of t h e Federal Reserve Bank of Kansas
City would r e s u l t i n a lower l e v e l of i n t e r e s t r a t e s t o t h e p u b l i c ,
I see n o t h i n g , however, i n your l e t t e r of September 22nd which b e a r s
on t h i s i n q u i r y and I w i l l now withdraw t h a t q u e s t i o n and ask i n s t e a d
whether you t h i n k c o n d i t i o n s i n your S t a t e w i l l be improved by a
r e d u c t i o n i n t h e Federal Reserve Bank r a t e and I would a p p r e c i a t e
a f r a n k e x p r e s s i o n of your v i e w s .
I am informed by t h e Governor of t h e Federal Reserve Bank of
Kansas City t h a t t n e r e c o r d s of t h e Omaha Branch w i l l show t h a t no
member bank has been urged t o l i q u i d a t e r a p i d l y i t s d i s c o u n t l i n e
and t h a t n e i t h e r t h e head o f f i c e nor the Branch h a s e v e r suggested
t o a member bank what p o l i c y i t should adopt towards r e q u i r i n g i t s
customers t o l i q u i d a t e . Between October 30, 1920 and June 30, 1921
t h e member banks i n Nebraska have reduced t h e i r l o a n s from t h e
Federal Reserve Bank by about $25,000,000 but of t h i s amount
- 1038
-8-
X-32172
X-3217a
approximately $1g,000,000 was l i q u i d a t e d by banks i n Omaha and
Lincoln, while t h e l o a n s of a l l o t h e r member banks i n Nebraska were
reduced only by about $b,jOO,OOG.
Whatever impressions may e x i s t t o t h e c o n t r a r y , i t i s a
f a c t t h a t t h e Federal Reserve Board h a s always been keenly d e s i r o u s
t o have Federal r e s e r v e banks do a l l they could l e g i t i m a t e l y t o a i d
t h e member banks i n meeting t h e c r e d i t requirements of t n o s e engaged
i n a g r i c u l t u r e and t h e r a i s i n g of l i v e s t o c k . The t r o u b l e , however,
l i e s l a r g e l y i n t h e f a c t t h a t the l a r g e r o p e r a t i o n s i n farming and
c a t t l e r a i s i n g are c a r r i e d on i n s e c t i o n s where the d e p o s i t s a r e
seasonal and where the l e n d i n g a b i l i t y of the banks out of t h e i r
own r e s o u r c e s i s l i m i t e d . Tnen again, many banks do not l i k e t o
lend t h e i r money f o r a s l o n g a term as i t i s needed i n c a t t l e
r a i s i n g and i n c e r t a i n farming o p e r a t i o n s
The J o i n t Commission of Congress of A g r i c u l t u r a l Inquiry
has been f o r some months p a s t i n v e s t i g a t i n g thoroughly t h e c r e d i t
s i t u a t i o n a s r e l a t e d t o t h e farming and l i v e stock i n d u s t r i e s and
I am informed t h a t i t s r e p o r t w i l l be made p u b l i c b e f o r e very l o n g .
I am s u r e i t w i l l be most i n t e r e s t i n g and i l l u m i n a t i n g and w i l l no
doubt c o n t a i n some c o n s t r u c t i v e s u g g e s t i o n s .
I am s e n d i n g you with t h i s l e t t e r a copy of B u l l e t i n No.
999, e n t i t l e d " P r i c e s of Fara Products i n t h e United S t a t e s " ,
r e c e n t l y i s s u e d by t h e Department of A g r i c u l t u r e , which c o n t a i n s a
&reat d e a l of i n f o r m a t i o n of v i t a l i n t e r e s t to farmers and t o a l l
who l i v e i n a g r i c u l t u r a l s t a t e s .
I wish i n conclusion t o thank you f o r t h e l e t t e r s you have
w r i t t e n me and t o say t h a t I have r e p l i e d to them i n no c o n t r o v e r s i a l
s p i r i t whatever. I am sure t h a t we have a common purpose and I hope
t h a t you w i l l have an o p p o r t u n i t y sometime of t a l k i n g with tne o f f i c e r s
and d i r e c t o r s of the Federal Reserve Bank of Kansas City, who a r e
more d i r e c t l y r e s p o n s i b l e f o r t h e p o l i c i e s and o p e r a t i o n s of the
Federal Reserve Bank t h a n t h e Federal Reserve Board i s . I t i s d i f f i c u l t
f o r t h e Board t o admonish t h e o f f i c e r s and d i r e c t o r s of a Federal r e s e r v e
bank a s t o t h e i r proper p o l i c i e s and conduct as l o n g a s complaints a r e
merely general i n t h e i r n a t u r e . I t i s t h e e a r n e s t d e s i r e of t h e Federal
Reserve Board t h a t a l l Federal r e s e r v e banks should f u n c t i o n a s they
a r e intended by law and if you w i l l l e t me know j u s t i n what r e s p e c t s
t h e Omaha Branch or t h e Federal Reserve Bank of Kansas City i s not
f u n c t i o n i n g p r o p e r l y , t h e i n f o r m a t i o n w i l l be a p p r e c i a t e d .
I have s e n t a copy of t h i s l e t t e r t o t h e Chairman of t h e Board
of d i r e c t o r s of t h e Federal Reserve Bank of Kansas City, w i t h the r e q u e s t
t h a t i t be read t o t h e d i r e c t o r s a t t h e i r next meeting.
Very t r u l y yours,
Hon. Samuel R. McKelvie,
Governor of Nebraska,
Lincoln, Nebraska.
Governor.
1009
STATE OF KEBRASKA
EXECUTIVE OFFICE
LINCOLN
S e p t . 22, 1921;.
X-J217b
Hon. W, P. G.Harding,
Governor, F e d e r a l Reserve Board,
Washington, D.C.
My d e a r Governor H a r d i n g : I am g r e a t l y o b l i g e d t o you f o r t h e i n f o r m a t i o n
contained i n your l e t t e r of September f i f t e e n .
The f a c t s which you s e t out a r e of such v i t a l
importance and suggest o t h e r l e a d s of even equal or g r e a t e r
importance, t h a t I have c a l l e d a c o n f e r e n c e of t h e Council
of t h e Nebraska Bankers' A s s o c i a t i o n and t h e o f f i c i a l s of
c e r t a i n Federal and p r i v a t e f i n a n c i n g a g e n c i e s t o be h e l d
i n Omaha a t 7 : 3 0 P.M., September t w e n t y - s i x . The p u r p o s e
of t h i s c o n f e r e n c e w i l l be t o d i s c u s s t h e s e q u e s t i o n s i n
d e t a i l and t o determine what may be done t o e f f e c t a source
of r e a s o n a b l e c r e d i t t o t h e farmer at a r a t e of i n t e r e s t
t h a t be can a f f o r d t o pay, I have i n v i t e d Governor M i l l e r
of t h e Kansas City F e d e r a l Reserve Bank and Mr.Ramsay,
Chairman of t h e Board of D i r e c t o r s of t h a t bank. I wish
t h a t you might a l s o be p r e s e n t .
The f a c t s t h a t you give r e g a r d i n g t h e r a t e of
i n t e r e s t t h a t i s being charged by correspondent banks on
l o a n s t h a t a r e r e d i s c o u n t e d through t h e F e d e r a l Reserve Bank
are intensely interesting,
I am not p r e p a r e d t o say t h a t
t h e s e margins have g i v e n any unusual p r o f i t t o t h e banks
t h a t have been p a t r o n i z i n g t h e Federal Reserve System, but
I do f e e l t h a t t h e r e i s something r a d i c a l l y wrong w i t h a
system which r e q u i r e s such wide m a r g i n s . Alsc, I am
convinced t h a t t h i s and o t h e r hampering i n f l u e n c e s must be
remedied b e f o r e t h e system w i l l be v e r y u s e f u l t o a g r i c u l t u r a l borrowers h e r e .
I am f u r t h e r informed t h a t t h e banks i n t h i s
d i s t r i c t a r e not g e n e r a l l y p a t r o n i z i n g t h e F e d e r a l Reserve
System. I t would seem t h a t if the margins i n d i c a t e d i n
your l e t t e r a r e p r o f i t a b l e t o t h e c o r r e s p o n d e n t banks,
t h e r e would be a more g e n e r a l p a t r o n a g e of t h e F e d e r a l
P/3 serve Bank. Tne answer t o t h i s seems t o be i n d i c a t e d
i n a t e l e g r a m t h a t I have j u s t r e c e i v e d from a member bank a t
Genoa, Nebraska, as f o l l o w s :
X-J2l7b
-2-
"The Farmers S t a t e Bank j oined t h e
Federal Reserve Bank two y e a r s ego and f o r
t h e p a s t s i x months has r e d i s c o u n t e d 10$
i n t e r e s t - b e a r i n g n o t e s . Cur r e c o r d s j u s t i f y
me i n s a y i n g t h a t we have made no p r o f i t s
owing t o t h e i r changes of r u l e s and r e d i s c o u n t
rates.11
I am a l s o informed t h a t c e r t a i n banks i n t h i s
t e r r i t o r y have, w i t h i n t h e l a s t s i x t y days, withdrawn
from membership i n the Federal Reserve system.
From i n f o r m a t i o n t h a t I have, I a m • a l t o g e t h e r
convinced t h a t t h e Federal Reserve system i s not f u n c t i o n i n g a s i t should i n t h i s d i s t r i c t . The demands f o r
l i q u i d a t i o n were h a r s h i n t h e extreme, i n view of t h e
f a c t t h a t t h i s i s an a g r i c u l t u r a l r e g i o n and t h e borrowers
h e r e could not e a s i l y conform t o t h e same r e q u i r e m e n t s
t h a t were imposed upon s e m i - a g r i c u l t u r a l or n o n - a g r i c u l tural regions.
In c o n c l u s i o n I d e s i r e t o suggest t h e d e s i r a b i l i t y
of a c l o s e c o o p e r a t i o n among a l l of t h e a g e n c i e s t h a t have
a c o n t r o l i n g i n f l u e n c e over t h e h a n d l i n g of Federal Reserve
f u n d s i n t h i s d i s t r i c t . This i s not t h e c o n d i t i o n t h a t
o b t a i n s now, and I am s i n c e r e l y h o p e f u l t h a t something w i l l
be done t o b r i n g i t about. May I a n t i c i p a t e your h e a r t y
interest in that direction?
Very t r u l y y o u r s ,
Samuel B. McKelvie
Governor.
FEDERAL RESERVE BOARD
WASHINGTON
X-3218
October 1, 1$21.
•SUBJECT:
N o t i c e of D i s c o n t i n u a n c e of Bonus Payments s e n t
t o Employees of F e d e r a l Reserve Bank of Mew York
Dear S i r :
For t h e i n f o r m a t i o n of t h e o f f i c e r s and
d i r e c t o r s of your bank, I am e n c l o s i n g h e r e w i t h copy
of a l e t t e r which was r e c e n t l y a d d r e s s e d t o t h e
employees of t h e F e d e r a l Reserve Bank of New York by
t h e Governors of t h e bank.
Very t r u l y y o u r s ,
Enclosure
G o v e r n o r .
CH/IRMEN ALL BJ5NKS EXCEPT N W YORK.
E
COPY
FEDERAL RESERVE BANK
OF N W YORK
E
X-321Sa
September 30, 1921.
TO THE EMPLOYES:
I t w i l l be r e c a l l e d t h a t when t h e payment of e x t r a compens a t i o n was made on June JO, you were informed t h a t t h e d e c r e a s e
i n t h e c o s t of l i v i n g up t o t h a t time j u s t i f i e d a s u b s t a n t i a l
r e d u c t i o n i n t h e r a t e s of e x t r a compensation f o r t h e second
q u a r t e r of t h i s y e a r . While you were then advised t h a t t h e r a t e
would, a t t h a t time, be reduced only 50^, you were informed
t h a t " i n view of t h e p r e s e n t t r e n d of p r i c e s , i t i s l i k e l y t h a t
t h e e x t r a compensation f o r t h e next q u a r t e r w i l l be even more
s u b s t a n t i a l l y reduced, or e n t i r e l y e l i m i n a t e d . "
The o f f i c e r s and d i r e c t o r s of t h e bank have given very c a r e f u l c o n s i d e r a t i o n t o t h e r e l a t i o n between g e n e r a l b u s i n e s s and
l i v i n g c o n d i t i o n s and t h e w e l f a r e ci our s t a f f , and i t a p p e a r s
t h a t a continuance of q u a r t e r l y payments of e x t r a compensation
i s no l o n g e r j u s t i f i e d . You a r e a d v i s e d , t h e r e f o r e , t h a t such
payments a r e now d i s c o n t i n u e d and t h a t no payment f o r t h a t
purpose w i l l be made f o r t h e q u a r t e r ending September 30, 1^21.
The a c t i o n announced above i s t h e i n e v i t a b l e consequence
of g e n e r a l economic developments d u r i n g t h e p a s t months, w i t h
which a l l of t h e employes a r e f a m i l i a r . This p o l i c y , however,
i n d i c a t e s no l a c k of a p p r e c i a t i o n by t h e d i r e c t o r s and o f f i c e r s
of t h e bank of the s p l e n d i d s e r v i c e s which have been performed
by a l l t h e members of t h e o r g a n i z a t i o n .
Very t r u l y y o u r s ,
BEN J , STRONG,
Governor,
FEDERAL RESERVE BOARD
WASHINGTON
O c t o b e r 3 , 1921.
X-3219
SUBJECT:
L e t t e r from T r e a s u r y Department R e g a r d i n g C i r c u l a t i o n of S i l v e r C e r t i f i c a t e s and Legal Tender
Notes Now Held i n R e s e r v e .
Dear S i r :
I e n c l o s e h e r e w i t h , f o r y o u r i n f o r m a t i o n , copy of
l e t t e r r e c e i v e d from t h e U n d e r s e c r e t a r y of t h e T r e a s u r y ,
commenting on t h e volume of s i l v e r c e r t i f i c a t e s and U n i t e d
S t a t e s Notes h e l d b y t h e v a r i o u s F e d e r a l R e s e r v e Banks a s
r e s e r v e and s u g g e s t i n g t h a t i t would be good p o l i c y t o pay
out t h e s e c e r t i f i c a t e s and n o t e s . The Board would be g l a d
t o have a n e x p r e s s i o n of your views on t}ie s u b j e c t of Mr.
G i l b e r t ' s l e t t e r and I would c a l l y o u r a t t e n t i o n t o t h e
f a c t t h a t seme time ago the Board e x p r e s s e d t h e hope t h a t
F e d e r a l Reserve Banks c o u l d pay out t h e i r l e g a l s and s i l v e r
c e r t i f i c a t e s i n o r d e r t o r e d u c e t h e r e s e r v e s of t h e system
t o purely a gold b a s i s .
Very t r u l y y o u r s ,
Enclosure.
GOVERNORS OF ALL F.R.BANKS.
G o v e r n o r .
COPY
i c :
THE UNDERSECRETARY OF THE TREASURY
Washington
October 1, 1921.
X-3219a
Dear Governor Harding:
I n o t i c e t h a t a c c o r d i n g t o the F e d e r a l Reserve B o a r d ' s
s t a t e m e n t of t h e c o n d i t i o n of t h e F e d e r a l Reserve Banks a s a t t h e
c l o s e of b u s i n e s s September 28, 1921, the F e d e r a l Reserve Banks
s t i l l h o l d s i l v e r c e r t i f i c a t e s and United S t a t e s n o t e s t o the
amount of $1$2,719,030, of which over $61,000,000 appear t o be
h e l d by t h e F e d e r a l Reserve Bank of New York, over $15,000,000 by
t h e F e d e r a l Reserve Bank of Boston, over $20,000,000 by t h e
F e d e r a l Reserve Bank of Chicago, and almost $15,000,000 by the
F e d e r a l Reserve Bank of S t . Louis. I t i s my u n d e r s t a n d i n g t h a t
t h e s e h o l d i n g s of s i l v e r c e r t i f i c a t e s and U n i t e d S t a t e s n o t e s a r e
l a r g e l y i n t h e form of new c u r r e n c y . With the combined r e s e r v e
r a t i o of the F e d e r a l Reserve Banks a t 69 p e r c e n t t h e r e would
seem t o be no l o n g e r any o c c a s i o n f o r h o l d i n g such a g r e a t amount
of l a w f u l money i n the r e s e r v e s of t h e F e d e r a l Reserve System,
As a m a t t e r of f a c t , i t woul d be a h e l p f u l t h i n g t o e l i m i n a t e
t h e s e s i l v e r c e r t i f i c a t e s and l e g a l s from t h e r e s e r v e s and p u t
t h e system on a s t r a i g h t out gold b a s i s . I t would a l s o be h e l p f u l from the p o i n t of view of the c o n d i t i o n of t h e c u r r e n c y to
pay b u t t h e s e new n o t e s which a r e now impounded by t h e F e d e r a l
Reserve Banks.
You w i l l d o u b t l e s s r e c a l l t h a t t h i s q u e s t i o n h a s a r i s e n i n
p r e v i o u s correspondence between the Treasury and the F e d e r a l Reserve
Board and t h a t i t was b r o u g h t t o your a t t e n t i o n i n my memorandum of
March 3 0 t h and t h e a t t a c h e d l e t t e r of t h a t d a t e to Deputy Governor
Case of t h e F e d e r a l Reserve Bank of New York. There has been a
marked improvement in the s i t u a t i o n s i n c e t h a t d a t e , p a r t i c u l a r l y
i n the h o l d i n g s of t h e F e d e r a l Reserve Bank of New York which then
amounted t o over $151,000,000 a s compared to $61,000,000 a t the
p r e s e n t t i m e . Even t h e reduced amount, however, would seem t o be
e x c e s s i v e f o r one F e d e r a l Reserve Bank. In the o t h e r F e d e r a l Reserve
d i s t r i c t s the tendency seems to have been to accumulate s i l v e r c e r t i f i c a t e s and l e g a l t e n d e r n o t e s i n the p a s t s i x months, f o r t h e i r
combined h o l d i n g s now a g g r e g a t e about $90,000,000 as compared with
about $60,000,000 s i x months ago.
I t h i n k i t would be h e l p f u l i n d e v e l o p i n g t h e c u r r e n c y
program of the Treasury and a t the same time good p o l i c y from the
p o i n t of view of t h e F e d e r a l Reserve System to take d e f i n i t e s t e p s
t o see t h a t F e d e r a l Reserve Banks pay out t h e s i l v e r c e r t i f i c a t e s
and l e g a l t e n d e r n o t e s which they a r e now h o a r d i n g .
Very t r u l y y o u r s ,
Hon. W. P. 0. Harding,
Governor, F e d e r a l Reserve Board,
Washington, D. C.
( S i g a M )
G U b e r t
,
' "
FEDERAL RESERVE BOARD
WASHINGTON
X-3221
October b , 1921.
SUBJECT:
L e t t e r from Commissioner of I n t e r n a l Revenue
Dear S i r :
I e n c l o s e h e r e w i t h copy of a l e t t e r r e c e i v e d
from t h e Commissioner of I n t e r n a l Revenue> which e x p l a i n s
itself.
The Board would r e q u e s t t h a t you t r a n s m i t t o
t h e s t a t e member banks i n your d i s t r i c t t h e i n q u i r y of
t h e Commissioner and t h a t you a d v i s e them t o t r a n s m i t
t h e i n f o r m a t i o n , i n t h e form i n which i t i s d e s i r e d ,
direct to his Office.
Very t r u l y y o u r s .
Enclosure
GOVERNORS OF ALL F.R.BANKS
G o v e r n o r .
COPY
TREASURY DEPARTMENT
Washington
X-3221a
October 4, 1921
O f f i c e of
Commissioner of I n t e r n a l Revenue
The Governor,
F e d e r a l Reserve Board,
My d e a r Governor Harding:
I have t h e honor t o r e q u e s t t h a t you ask a l l member
banks, w i t h t h e e x c e p t i o n cf t h e N a t i o n a l Banks, t o f u r n i s h
t h i s Bureau, through your Board, w i t h l i s t s shewing a l l p o l i c i e s of i n s u r a n c e and guaranty t a k e n out by or through them
w i t h London Lloyds, on which documentary stamps have n o t
been a f f i x e d , i n payment of stamp t a x e s imposed under
Schedules A-15 and A-2 of t h e Revenue Act of 191S.
I t i s desired that these l i s t s contain the following
information:
Name of i n s u r e d ; a d d r e s s .
Amount of p o l i c y of i n s u r a n c e or g u a r a n t y .
Amount of premium p a i d .
Date of p o l i c y .
Respectfully,
(Signed) D. A. BLAIR,
Commissioner.
FEDERAL RESERVE BOARD
WASHINGTON
' X-3222
October 7, 1921.
SUBJECT:
Supplementary l i s t of t o p i c s f o r d i s c u s s i o n and
c o n s i d e r a t i o n a t J o i n t Conference w i t h Governors
and F e d e r a l Reserve Agents, October 25-28, 1921.
Dear S i r :
I e n c l o s e h e r e w i t h f o r your i n f o r m a t i o n s u p p l e m e n t a r y
l i s t of t o p i c s t o be c o n s i d e r e d a t t h e a p p r o a c h i n g c o n f e r e n c e .
These t o p i c s a r e s u b m i t t e d a t t h i s time w i t h o u t recommendation
and i t i s hoped t h a t each'member of t h e c o n f e r e n c e w i l l g i v e
them h i s c a r e f u l c o n s i d e r a t i o n and w i l l come p r e p a r e d t o
e x p r e s s h i s own c o n v i c t i o n s on t h e feubjects s p e c i f i e d . The
B o a r d ' s v i e w p o i n t w i l l be announced i n t h e opening a d d r e s s
on October 2 5 t h .
Very t r u l y y o u r s ,
G o v e r n o r .
(Enclosure)
GOVERNORS AND /GENTS OF PU, BANKS.
• ICS
X~3222a
SUPPLEMENTARY LIST OF TOPICS FOR DISCUSSION AND
CONSIDERATION AT JOINT CONFERENCE WITH GOVERNORS AND FEDERAL RESERVE AGENTS
OCTOBER 25-28, 192.1.
These t o p i c s a r e t o be considered s e p a r a t e l y by t h e Governors and
F e d e r a l Reserve Agents on Wednesday or Thursday. October 26th and 27th, a s
they may e l e c t . They w i l l be d i s c u s s e d by t h e F e d e r a l Reserve Board and t h e
Federal Reserve Agents a t t h e i r conference on Thursday a f t e r n o o n , October 27th
by t h e F e d e r a l Reserve Board and t h e Governors on Friday morning, October 28th
and w i l l be d i s c u s s e d f i n a l l y on Friday a f t e r n o o n , October 2Sth,. a t t h e j o i n t
conference of t h e F e d e r a l Reserve Board with t h e F e d e r a l Reserve Agents and
Governors,
( 1 ) P r a c t i c a b i l i t y of p u t t i n g i n t o c i r c u l a t i o n t h e s i l v e r c e r t i f i c a t e s and l e g a l t e n d e r n o t e s now
h e l d by F e d e r a l r e s e r v e banks so a s t o p u t t h e r e s e r v e s
e n t i r e l y on a gold b a s i s .
(2) D e s i r a b i l i t y of r e s t o r i n g some gold c e r t i f i c a t e s t o c i r c u l a t i o n by having F e d e r a l r e s e r v e banks
pay them o u t .
(3) Expediency of a u t h o r i z i n g F e d e r a l r e s e r v e banks
t o p u r c h a s e i n each c a l e n d a r y e a r t h e maximum amount p e r m i t t e d under S e c t i o n 18 of t h e F e d e r a l Reserve Act
($25,000,000) of United S t a t e s bonds e l i g i b l e a s s e c u r i t y f o r bank note c i r c u l a t i o n .
FEDERAL RESERVE BOARD
WASHINGTON
X-3223
O c t o b e r 11,. 1921.
SUBJECT:
Topics Suggested by Treasury Department f o r
Consideration a t J o i n t Conference.
Dear S i r :
I e n c l o s e f o r your i n f o r m a t i o n copy of a l e t t e r
r e c e i v e d from t h e U n d e r s e c r e t a r y of t h e T r e a s u r y .
The
Board s u g g e s t s t h a t t h e m a t t e r s r e f e r r e d t o i n Mr. G i l b e r t 1
l e t t e r be added to. t h e l i s t of t o p i c s f o r d i s c u s s i o n a t
t h e s e p a r a t e c o n f e r e n c e s of Governors and F e d e r a l R e s e r v e
Agents, i n o r d e r t h a t c o n c l u s i o n s may be r e a c h e d a t t h e
f i n a l j o i n t c o n f e r e n c e w i t h t h e F e d e r a l Reserve Board.
Very t r u l y y o u r s ,
Enclosure
ALL GOVERNORS AND AGENTS
G o v e r n o r .
c o p y
U - 0 0
THE UNDER SECRETARY OF THE TREASURY
Washington
X-3223a
October 6, 1921,
My d e a r Governor Harding:
In accordance w i t h your s u g g e s t i o n , I am t r a n s m i t t i n g
h e r e w i t h s e v e r a l s u g g e s t i o n s a s t o s u b j e c t s which t h e Treasury
would l i k e t o have brought up f o r d i s c u s s i o n a t t h e approaching
c o n f e r e n c e of t h e Governors and Chairmen of t h e Federal Reserve
Banks. One s u b j e c t , namely, t h e q u e s t i o n a s t o what p o l i c y should
be followed w i t h r e g a r d t o gold payments, h a s a l r e a d y been sugg e s t e d by t h e S e c r e t a r y ' s l e t t e r of October 4 t h , and w i l l , I
assume, have t o be considered by t h e j o i n t c o n f e r e n c e of t h e
Governors and Chairmen. I have t h e r e f o r e n o t r e p e a t e d i t i n
t h e s u b j e c t s enumerated i n t h i s l e t t e r *
There a r e s e v e r a l o t h e r t o p i c s a f f e c t i n g t h e currency
which should have c o n s i d e r a t i o n , p e r h a p s by t h e j o i n t c o n f e r e n c e
of t h e Governors and Chairmen, inasmuch a s t h e currency q u e s t i o n s
a r e a l l c l o s e l y r e l a t e d t o each o t h e r and t o t h e gold p o l i c y . The
following s p e c i f i c t o p i c s are suggested:
(1) F u r t h e r d i s c u s s i o n of t h e new d e s i g n s f o r paper
currency, w i t h p a r t i c u l a r r e f e r e n c e t o r e d u c t i o n i n s i z e and t h e
new models which have been sent out t o t h e s e v e r a l F e d e r a l Reserve
Banks.
(2) The c i r c u l a t i o n of n a t i o n a l Bank n o t e s , w i t h p a r t i c u l a r r e f e r e n c e t o t h e assortment of u n f i t n o t e s and t h e payment of
f i t n o t e s by F e d e r a l Reserve Banks. This q u e s t i o n h a s a l r e a d y been
suggested by my l e t t e r t o you of September 22nd and i s h a v i n g t h e
c o n s i d e r a t i o n of t h e Governors. I t s u g g e s t s a broader q u e s t i o n
which should a l s o have c o n s i d e r a t i o n a t t h e c o n f e r e n c e , namely, a s
t o what g e n e r a l p o l i c y should be pursued by t h e Treasury and t h e
Federal Reserve System a s t o t h e continued c i r c u l a t i o n of n a t i o n a l
bank n o t e s , w i t h p a r t i c u l a r r e f e r e n c e t o t h e q u e s t i o n whether any
a c t i o n should be t a k e n , e i t h e r t h r o u g h new l e g i s l a t i o n o r through
t h e c u r r e n c y p o l i c y of t h e Federal Reserve Banks, to encourage t h e
r e t i r e m e n t of n a t i o n a l bank n o t e s from c i r c u l a t i o n .
(3) The s t a n d a r d of currency t o be a p p l i e d by t h e Treasury
and t h e F e d e r a l Reserve Banks, w i t h p a r t i c u l a r r e f e r e n c e t o United
S t a t e s p a p e r c u r r e n c y , Federal Reserve Bank n o t e s and n a t i o n a l bank
notes.
The a p p r o p r i a t i o n f o r d i s t i n c t i v e p a p e r and f o r engraving
and p r i n t i n g United S t a t e s p a p e r c u r r e n c y and bank n o t e s i s l i m i t e d ,
and t h e r e w i l l be danger of a d e f i c i e n c y toward t h e end of t h e year
if t o o h i g h a s t a n d a r d i s a p p l i e d a t t h e p r e s e n t t i m e .
-2-
X-3223a
(4) Establishment of a c e n t r a l i z e d c o n t r o l , of t h e d i s t r i b u t i o n of currency through r e p r e s e n t a t i v e s of t h e Treasury and t h e
Federal Reserve Board i n Washington. In order t h a t t h e supply of
currency may be conserved and t h e a c t u a l c i r c u l a t i o n r e q u i r e m e n t s
of t h e s e v e r a l Federal Reserve D i s t r i c t s met, i t i s important t o
s u p e r v i s e t h e i s s u e and d i s t r i b u t i o n of new currency through some
ceintral o r g a n i z a t i o n i n Washington which w i l l c o n s t a n t l y keep i n
touch w i t h t h e currency demands of t h e country and t h e s u p p l i e s of
currency on hand, i n r e s e r v e or i n p r o s p e c t and see t o i t t h a t a
p r o p e r l y coordinated currency program i s c a r r i e d o u t .
(5) An u n d e r s t a n d i n g should be reached a s t o what k i n d s of
currency should be paid out, and i n what denominations. This i n v o l v e s , among other t h i n g s , t h e q u e s t i o n s a s t o t h e c i r c u l a t i o n of
Federal Reserve Bank n o t e s and s i l v e r c e r t i f i c a t e s suggested i n my
l e t t e r of September 22nd, and perhaps f u r t h e r q u e s t i o n s as t o t h e
c i r c u l a t i o n of United S t a t e s n o t e s and gold c e r t i f i c a t e s i n t h e
h i g h e r denominations.
suggest:
On f i s c a l agency m a t t e r s I have t h e f o l l o w i n g t o p i c s t o
( l ) The q u e s t i o n whether f i s c a l agency expenses w i l l cont i n u e t o be absorbed by t h e Federal Reserve Banks on t h e p r e s e n t
b a s i s a f t e r t h e end of t h e c u r r e n t f i s c a l year, should have cons i d e r a t i o n by t h e c o n f e r e n c e . Even t h i s year t h e Treasury h a s not
c a l l e d on t h e Federal Reserve Banks t o absorb a l l f i s c a l agency
expenses# inasmuch a s i t makes reimbursement f o r expenses r e l a t e d
t o new i s s u e s of s e c u r i t i e s and f o r c e r t a i n o t h e r s p e c i f i e d items.
The T r e a s u r y ' s e s t i m a t e s f o r next y e a r ' s budget do n o t cover t h e
reimbursement of Federal Reserve Banks f o r general f i s c a l agency
expenses, though i t i s expected t h a t reimbursement w i l l continue t o
be made out of t h e extended a p p r o p r i a t i o n f o r Expenses of Loans f o r
Expenses r e l a t e d t o new i s s u e s on s u b s t a n t i a l l y t h e same b a s i s as
during the current year.
(2) The 1922 program f o r t h e i s s u e of Government Savings
s e c u r i t i e s should have some c o n s i d e r a t i o n by t h e Governors c o n f e r ence. The Treasury p l a n s t o d i s c o n t i n u e t h e e x i s t i n g T h r i f t Stamps
and War-Savings Stamps, but t o i s s u e l a r g e r denomination s e c u r i t i e s
i n s u b s t a n t i a l l y t h e form of t h e p r e s e n t Treasury Savings c e r t i f i cates.
Several important changes w i l l be made i n t h e form and
terms of t h e c e r t i f i c a t e s , and i t i s expected t h e movement w i l l
depend l a r g e l y on t h e c o o p e r a t i o n r e c e i v e d from t h e Postmaster
General, though t h e Treasury w i l l probably wish t o c o n t i n u e , a t
l e a s t through t h e f i r s t half of t h e c a l e n d a r year 1922, t h e s k e l e t o n
Savings o r g a n i z a t i o n s now maintained a t the Federal Reserve Banks.
X-322Ja
(3) I should l i k e t o d i s c u s s b r i e f l y t h e q u e s t i o n of
methods of a l l o t m e n t on s u b s c r i p t i o n s f o r Treasury n o t e s and
Treasury c e r t i f i c a t e s , w i t h p a r t i c u l a r r e f e r e n c e t o t h e q u e s t i o n
w h e t h e r i t w i l l be f e a s i b l e t o a u t h o r i z e a l l o t m e n t s i n f u l l on
small s u b s c r i p t i o n s . This i s a q u e s t i o n which has been cons i d e r e d from time t o time i n t e l e g r a m s and correspondence between
t h e Treasury and t h e Federal Reserve Banks, and w i t h which t h e
Governors a r e a l r e a d y f a m i l i a r .
There i s one important q u e s t i o n a s t o t h e T r e a s u r e r ' s
account which I t h i n k should a l s o have c o n s i d e r a t i o n a t t h e
c o n f e r e n c e , namely,- as t o t h e p r a c t i c e f o l l o w e d by t h e Federal
Reserve Banks upon d e p o s i t s of checks f o r c r e d i t t o t h e
T r e a s u r e r ' s account when t h e checks a r e on o u t - o f - t o w n a c c o u n t s
and a r e not s o r t e d b e f o r e d e p o s i t i n accordance w i t h t h e t i m e
s c h e d u l e s i n e f f e c t a t t h e F e d e r a l Reserve Bank. I t i s important
f o r t h e Treasury t o know, f o r example, whether t h e F e d e r a l Res e r v e Banks withhold c r e d i t i n t h e T r e a s u r e r ' s account and i s s u e
no c e r t i f i c a t e of d e p o s i t u n t i l t h e l a s t item among t h e checks
d e p o s i t e d i s c o l l e c t e d , or i t i s the p r a c t i c e t o average t h e
time and i s s u e a c e r t i f i c a t e of d e p o s i t a s of t h e average
c o l l e c t i o n d a t e f o r t h e items d e p o s i t e d . I t would be h e l p f u l ,
so f a r a s p o s s i b l e , t o have a uniform p o l i c y a d o p t e d .
Very t r u l y y o u r s ,
(Signed) S. P. GILBERT, JR.
Hon. W, p . G. Harding,
Governor, F e d e r a l Reserve Board,
Washington, D. C.
'110,3
FEDERAL RESERVE BOARD
WASHINGTON
X-3224
October 12, 1921.
SUBJECT:
Q u e s t i o n n a i r e r e e x e r c i s e of t r u s t powers bynational banks.
Dear S i r :
The F e d e r a l Reserve Board h a s d e c i d e d t o send t o
a l l n a t i o n a l banks which have been g r a n t e d p e r m i t s t o a c t i n
f i d u c i a r y c a p a c i t i e s a q u e s t i o n n a i r e designed t o e l i c i t i n f o r m a t i o n a s t o t h e d e g r e e of s u c c e s s which t h e y a r e a t t a i n i n g
i n t h e o p e r a t i o n of t h e i r t r u s t d e p a r t m e n t s and a s t o t h e
n a t u r e of t h e d i f f i c u l t i e s which t h e y a r e e n c o u n t e r i n g .
A supply of such q u e s t i o n n a i r e s i s b e i n g s e n t t o
you under s e p a r a t e c o v e r , and 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 k i n d l y have one of them mailed t o each of t h e n a t i o n a l
banks i n y o u r d i s t r i c t which has been g r a n t e d f i d u c i a r y powers.
A complete l i s t of n a t i o n a l banks which have been g r a n t e d such
powers was p u b l i s h e d i n t h e B o a r d ' s l a s t a n n u a l r e p o r t , and
t h e names of t h o s e banks which have been g r a n t e d such p e r m i t s
d u r i n g t h e c u r r e n t y e a r have been p r i n t e d from t i m e t o t i m e
i n t h e F e d e r a l Reserve B u l l e t i n , so t h a t i t w i l l be a s i m p l e
m a t t e r t o compile a complete l i s t of a l l t h o s e banks i n your
d i s t r i c t which have o b t a i n e d such powers. When r e p l i e s t o
t h e s e q u e s t i o n n a i r e s have been r e c e i v e d , you a r e r e q u e s t e d t o
forward t h e o r i g i n a l r e p l i e s i n a l o t t o t h e F e d e r a l Reserve
Board,
You can a s s u r e t h e n a t i o n a l banks t o which you send
t h e q u e s t i o n n a i r e s t h a t t h e s o u r c e s of i n f o r m a t i o n r e c e i v e d
w i l l n o t be r e v e a l e d and t h a t i f a r e p o r t of t h e r e s u l t s of
t h e s e q u e s t i o n n a i r e s i s p u b l i s n e d i t w i l l be i n t h e n a t u r e of
a g e n e r a l summary which w i l l not d i s c l o s e t h e i d e n t i t y of t h e
p a r t i c u l a r banks f u r n i s h i n g t h e i n f o r m a t i o n .
Very t r u l y y o u r s ,
Secretary.
To C^AIP'iW OV ALT F.P.BANKS
1 1 0 4
X-3224-a
FEDERAL HESEP7E BOAFD QUESTIONNAIRE.
RE: EXERCISE OF FIDUCIARY PQ'"EP3 BY NATIONAL BANKS.
Bank
City o r Town . .
State
NOTE: ""lease answer a l l q u e s t i o n s c o n c i s e l y i n the "blank snace p r o v i d e d f o r t h a t purpose and r e t u r n the q u e s t i o n n a i r e t o t h e F e d e r a l
Reserve Bank of Which you a r e a member, You jkte i n v i t e d t o add on a
s e p a r a t e s h e e t any remarks or s u g g e s t i o n s n o t c a l l e d f o r by any q u e s t i o n b u t which you t h i n k might be of i n t e r e s t or a s s i s t a n c e to the
F e d e r a l Reserve Board in d e a l i n g w i t h t h i s s u b j e c t , such a s a g e n e r a l
d e s c r i p t i o n of t h e p l a n of o r g a n i z a t i o n and o p e r a t i o n of your t r u s t
department.
1.
Have you a d v e r t i s e d f o r or i n any way s o l i c i t e d t r u s t b u s i n e s s ?
2.
I n g e n e r a l terms what s u c c e s s have you had i n t h e o p e r a t i o n of
your T r u s t Department?
1105
X.-322Ua
-2-
3«
In how many i n s t a n c e s have yon a c t e d i n any of the f o l l o w i n g c a p a c i t i e s :
Number of times e x e r c i s e d .
(a)Trustee..
.
(b)Executor .
( c ) Admini s t r a t or
...
( d ) E e g i s t r a r of stocks and "bonds
(e)Guardian of e s t a t e s .
( f ) A s s i g n ee
(g)BSceive r
(h)Committee of e s t a t e s of l u n a t i c s . 1
In general terms,what a d d i t i o n a l b u s i n e s s of t h i s c h a r a c t e r i s i n
•Drosnect f o r your i n s t i t u t i o n ?
5*
^ l e a s e i n d i c a t e f o r your "bank the f o l l o w i n g d a t a as of any r e c e n t d a t e :
Total amount of t r u s t fun us h e l d "by your bank
(mortgages, investments, and cash)
$
Total amount of c o l l a t e r a l t r u s t bonds o u t s t a n d i n g where bank a c t s as t r u s t e e .
$
Total amount of o t h e r bonds, e t c . , o u t s t a n d i n g under
deeds of t r u s t or mortgages t o bank as t r u s t e e . . . . . . $
Estimated t o t a l v a l u e of e s t a t e s of which you have
been named as executor i n w i l l s of p e r s o n s s t i l l
living
6.
$
In your o p i n i o n does the T r u s t Department b r i n g new b u s i n e s s i n t o the
v
bank?
X-3224a
-37»
I n your o p i n i o n i s i t v a l u a b l e i n a s s i s t i n g you t o r e t a i n t h e
a c c o u n t s of your bank customers which o t h e r w i s e might be d i v e r t e d
t o competing t r u s t companies?
8.
Do your customers seem t o a p p r e c i a t e and v a l u e t h e a d d i t i o n a l
f a c i l i t i e s o f f e r e d them through your Trust Department?
9-
tiihat, if any, d i f f i c u l t y have you had w i t h t h e c o u r t s i n r e c e i v i n g
p e r m i t s t o a c t i n f i d u c i a r y c a p a c i t i e s and i n q u a l i f y i n g under
appointments made by i n d i v i d u a l s ?
1 0 . What o t h e r d i f f i c u l t i e s , if any, have you encountered i n the
o p e r a t i o n of your t r u s t department?
Submitted by
Dated
1921.
(Name of Bank)
(Sitle)
1107
COPT
FEDERAL RESERVE BANK
X--J226
OF
KANSAS CITY
October 4th, 1921.
Farmers State Bank,
Genoa, Nebraska.
Gentlemen*
<
•
In the recent correspondence between Governor McKelvie
of Nebraska and Governor Harding of the Federal Reserve Board,
r e f e r e n c e i s made t o a telegram from you t o Governor McKelvie,
reading as f o l l o w s :
"The Farmers State Bank joined the
Federal Reserve Bank two y e a r s ago and
f o r the past s i x months, has rediscounted 1C$ i n t e r e s t - b e a r i n g n o t e s . Our records j u s t i f y me i n
saying that we have made no p r o f i t s owing t o
t h e i r changes of r u l e s and rediscount r a t e s . "
Without reference t o p r o f i t s which your bank may or may
not have received by reason of discounts placed w i t h t h e Omaha Branch,
we are desirous t o have you w r i t e us t o what "changes of r u l e s and
rediscount rates" you referred, which prevented you from p r o f i t i n g
by discounting with us and lending t o your customers at the r a t e you
named - 10$t
Please a l s o advise us what d i f f i c u l t y * i f any, your bank
has experienced i n rediscounting paper with the Omaha Branch, and what
r u l e s caused you any inconvenience with which t o comply.
We are asking t h i s i n good f a i t h , w i t h the purpose of
b e t t e r i n g our s e r v i c e to member banks and your compliance w i t h
our request w i l l be an evidence of your w i l l i n g n e s s t o co-operate
w i t h u s i n that e f f o r t .
Tours t r u l y ,
(s)
J . Z. M i l l e r , J r . ,
G o v e r n o r .
C 0 V Y
FARMERS STATE BANK
Genoa, Hebr,
19211
Mr. J . Z« M i l l e r , J r . ,
Federal Reserve Bank,
Kansas City, Mo.
Dear Governor:
Replying t o your favor of the lUth I n s t , , we s h a l l
endeavor to show In d e t a i l why we have not been p r o f i t i n g and
what rules' and rediscount r a t e s have inconvenient us, with the
hisee that same may be f o r our mutual b e n e f i t .
Shortly a f t e r we became members un t o October 1 s t ,
1919 t h i s bank never had any rediscount and i n reply t o our
question as t o hew much t h i s bank could borrow and rediscount,
we on Oct. 2nd, 1919 received a reply s t a t i n g : "You may be a s sured, df our e n t i r e w i l l i n g n e s s to a s s i s t you i n meeting the
l e g i t i m a t e needs of your regular customers to enable them t o
carry on t h e i r current operations*" This together with s e e i n g
t h a t other banks about our s i z e carried up t o $100,000.00 worth
o f rediscount Induced u s t o continue making l o a n s t o the farmers
even thougi with a low cadi r e s e r v e . When we reached $33,000.00
rediscount the b a s i c l i n e rule,, was placed i n t o e f f e c t so we were
n o t i f i e d that we had oversteoned our c r e d i t l i n e . We could not
then, nor can we now, increase our l i n e but our paper sent i n ,
was and i s new h e l d to meat maturing n o t e s .
In 1919 the corn crop of t h i s v i c i n i t y was almost
a drouth f a i l u r e , farmers had tb buy h i $ i p r i c e d c o m t o carry on
t h e i r wotir and they could not l i q u i d a t e and but d e p o s i t s weht
down day by day and owing t o the r u l e as mentioned we were com- »
p e l l e A t o go t o our correspondent bank f o r h e l p and obtain cons i d e r a b l e money and pay as high as 9 $ i n t e r e s t .
In 1920 about one h a l f of our farmer customers were
h a i l e d out and a s a consequence f o r nearly two y e a r s we have had
t o pay a h i g i r a t e of i n t e r e s t on account of the b a s i c , l i n e r a l e .
At the time t h i s bank became a member we never had
any 'borrowed money. Our d i r e c t o r s decided t o s e l l our $17,000.00
worth of U. S. Bonds. The
i n t e r e s t together with advice from
one of your Omaha o f f i c i a l s to not s e l l them changed our mind so
we borrowed, g i v i n g the bonds as c o l l a t e r a l . The change of
i n t e r e s t r a t e s as w e l l as the drop of market p r i c e on bonds has
caused u s considerable l o s s . w hen the r u l e that only 85$ of f a c e
v a l u e could be borrowed on the bonds i t compelled u s t o borrow
$2500.00 from our correspondent a t 9^ i n t e r e s t on which we are
today -oaying
11
•2-
X^226 — .
Q
From the time t h i s bank was chartered u n t i l about s i x months
ago i t has only charged i t s customers 7% and 8$> i n t e r e s t , even
though we paid an i n t e r e s t r a t e of from g$6 to9i$« We r a i s e d
our i n t e r e s t r a t e s about the same time other surrounding banks
raised.
Perhaps you w i l l say t h a i we have misused our credit# which i s
t r u e , we should have known b e t t e r than t o have went i n s o deep. If
we could have f o r e s e e n what was coming, namelyj part crop f a i l u r e s
and a money depression we would have done d i f f e r e n t 4 However, the
f a c t i s t h a t the farmers needed the loans# and i f we had not of
supplied our customers some other bank would.
, Since then, ones
banks customers can not go t o another bank and borrow. Had we of
enforced l i q u i d a t i o n , or i f we should enforce i t now, many farmers
would be compelled t o cease operation*
Our reason f o r sending t h e telegram t o Governor McKelvey was
simply t o o f f s e t the charge t h a t bankers were p r o f i t e e r i n g by
rediscounting 10# i n t e r e s t bearing n o t e s with the Federal Reserve
Bank. The charge as printed i n t h e newspapers aroused the p u b l i c ,
and a few of our customers accused u s as p r o f i t e e r s on account of
charging them 10$.
We have had very l i t t l e d i f f i c u l t y i n g e t t i n g our rediscount
approved, and what d i f f i c u l t y we have had has been our own f a u l t
Our d e a l i n g s with t h e Ctoaha Branch o f f i c i a l s has been very s a t i s f a c t o r y
i n so f a r a s the common run of b u s i n e s s g o e s . Under the r u l e s , a s
layed before them they have been l e n i e n t t o us and we can say nothing
but p r a i s e f o r the Omaha Branch O f f i c i a l s *
We have made no complaint nor given any d e t a i l s t o anyone accept
t o the Omaha Branch O f f i c i a l s and we s i n c e r e l y hope t h a t our telegram
or t h i s l e t t e r has not and w i l l not p l a c e us i n bad. We are proud of
being members of t h e Federal Reserve System and w h i l e w# f e e l as though
i t could be improved f o r the b e n e f i t of the a g r i c u l t u r a l d i s t r i c t s we
f e e l equally c e r t a i n that such improvements w i l l be made and e v e n t u a l l y
work o u t .
We have not been knockers, nor are we now, we are b o o s t e r s . This
lengthy l e t t e r i s not w r i t t e n f o r being a c o n p l a i n t . I t i s w r i t t e n with
the hope t h a t some point may be brought f o r t h t o g i v e an i n k l i n g f o r
the b e t t e r of our good Federal Ressrve Bank,
We thank you f o r your l e t t e r and f o r the s p i r i t i n which i t was
w r i t t e n and i f there i s anything we can say or do we s h a l l be p l e a s e d
t o co-operate with you.
Yours very t r u l y ,
(s)
K. C. Knudson,
Pres.
X-3227
*
i x U
TREASURY DEPARTMENT
WASHINGTON.
.»
October 8 , 1921.
The Governor
Federal Beserve Board,
Sir:
You are advised that the Department has r e f e r r e d t o the Comptroller
General of t h e United S t a t e s , Treasury Department D i v i s i o n , f o r settlement the
account of t h e Bureau of Engraving and P r i n t i n g f o r preparing Federal Reserve
n o t e s during t h e period September 1 t o September 30, 1921, amounting t o
$250,676.48, as follows:
Federal Reserve Notes. 1914
|20
i5
O
8
£
&
M
189,000
New York . . . . .
553,000
99,000
Philadelphia .
45,000
63,000
3,000
141,000
41,000
43,000
35,000
374.000
San Francisco . . . . 893.000
1,586,000
49,000
134,000
41,000
40,000
34,000
6,000
155,000
12,000
14,000
10,000
221.000
716,000
5,056,000 s h e e t s a t #49.58
#100
8,000
—
2,000
1,000
1,000
12,000
—
—
—
—
——
——
——
H '•»
I
—
13,000
11,000
TOTAL
483,000
951,000
482,000
303,000
271,000
137,000
608,000
144,000
144,000
45,000
1.488.000
5,056,000
$250,676.48
The charges against the s e v e r a l Federal Reserve Banks are a s f o l l o w s :
Total
Inc. CcmPlate
CompenMaterials
Printing
sation
$
Boston
$ 5 , 8 9 7 . 4 3 $ 2 , 2 9 4 . 2 5 i 23,947.14
483,000 $8,041.95 #7,713.51
47,150.58
4,517.25
New York . . . ^
11,611.71
951,000 15,834.15 15,187.47
23,897.56
2,289.50
Philadelphia.
5,885.22
462,000
8,025.30
7,697.54
15,022.74
1,439.25
3*699.63
Cleveland."...
303,000
4,838.91
5,044.95
13,436.18
1*287.25
3,308.91
Rltihmond**..*
271,000
4*327.87
4,512.15
6,?92.46
650.75
1,672.77
Atlanta
137,000
£,187.89
2,281.05
30,144.64
2,888.00
7,423.68
608,000 10,123.20
9,709.76
Chicago
7,139.52
684.00
1,758.24
2,299.68
St# I i o u i s . . . .
144,000
2,397.60
7,139.52
684.00
1,758.24
Minneapolis..
144,000
2,299.66
2,397.60
2,231.10
213.75
549.45
Kansas City.#
718.65
45,000
749.25
73.775.04
7.068.00
18.168.48
San Francisco 1 . 4 8 8 . 0 0 0 24.775.20 23.763.36
24,016.00 250,676.48
61,733.76
5,056,000 8 4 , 1 8 2 . 4 0 80,744.32
toe Bureau appropriations w i l l be reimbursed i n the above amount from the
i n d e f i n i t e appropriation "Preparation and Issue of Federal Reserve N o t e s , Reimbursable", and i t i s requested that your Board cause such i n d e f i n i t e appropriation
t o be reimbursed i n l i k e amount.
Sheets
By d i r e c t i o n of the Secretary:
Respectfully,
S. P. Gilbert,
Under S e c r e t a r y .
Z-3%27a
LLL
TREASURY JEPAETMQiT
WASHINGTON
October 8 , 1921.
The Governor
Federal Reserve Board.
Sir:
You are advised that the Department has r e f e r r e d t o the Compt r o l l e r General of t h e United S t a t e s , Treasury Department D i v i s i o n , f o r
settlement the account of the Bureau of Engraving and P r i n t i n g f o r p r e paring Federal Reserve n o t e s during the period September 1 t e September
30, 1921, amounting t o $14,87 as f o l l t w s :
Federal Reserve Notes 3.918
$>500
Philadelphia. .
Chicago
$1000
100
JLOO
200
100
_r_
100
300 s h e e t s a t $49.58
Total
$14.87
The charges against t h e several Federal Reserve Banks are
as follows;
Compen- P l a t e
Inc.ComSheets s a t i o n
Printing
Materiais s e n s a t i o n
Total
Philadelphia
200
$3.33
$3.19
$2.44
$ .95
$9.91
Chicago
100
1.67
1^60
1.22
,47
4.96
300
6.00
4.79
3.66
1.42
14.87
The Bureau appropriations w i l l be reimbursed ih the above amount
from the i n d e f i n i t e appropriation "Preparation and I s s u e of Federal Reserve
N o t e s , Reimbursable", and i t i s requested that your Board cause such i n d e f i n i t e appropriation t o be reimbursed i n l i k e amount.
By d i r e c t i o n of t h e Secretary;
Respectfully,
S. P. G i l b e r t , J r . ,
Under Secretary.
i a
FEDERAL RESERVE BOARD
WASHINGTON
October 17, 1921.
X-3229
SUBJECT:
L e t t e r t o J o i n t Commission of Congress of
A g r i c u l t u r a l Inquiry Regarding Alleged E x t r a v agance in Operations of Federal Reserve System.
Dear S i r :
There i s enclosed herewith f o r your i n f o r m a t i o n
cony of a l e t t e r addressed, under date of October 11,
1921, to the Chairman of the J o i n t Commission of Congress
of A g r i c u l t u r a l Inquiry, r e g a r d i n g a l l e g a t i o n s made by
a former Comptroller of the Currency and e x - o f f i c i o member
of the Federal Beserve Board t h a t the Board h a s approved
or p e r m i t t e d r e c k l e s s waste of money i n the o p e r a t i o n s of
the F e d e r a l Reserve Banks.
Very t r u l y yours,
Enclosure
, X-3228
TO GOVERNORS AND CHAIRMEN.
G o v e r n o r .
o
X-3228
COPY
October 11, 1921*
Dear Mr. Chairman:
In the record of the statements made by a former Comptroller
of the Currency and e x - o f f i c i o merriber of the Federal Reserve Board
to the Commission on August 2nd and j r d , there are included two
addresses made by him, one i n Washington on April 15, 1921 and
the other in Augusta, Georgia, on J u l y l 4 , 1921, i n which c e r t a i n
a l l e g a t i o n s are made r e f l e c t i n g upon the i n t e l l i g e n c e and e f f i c i e n c y ,
and, by innuendo, upon the probity of members of the Federal Reserve
Board, Other statements with which the Board takes i s s u e appear
i n v a r i o u s communications to the Board which the former Comptroller
introduced i n h i s testimony*
Many of these a l l e g a t i o n s are s o t r i v i a l and i r r e l e v a n t as
to be unworthy of n o t i c e , and others, p a r t i c u l a r l y those which
r e l a t e to c r e d i t p o l i c i e s , i t i s b e l i e v e d have bee® f u l l y
answered i n the statements made by Governor Strang and myself
b e f o r e your Commission on August 4th and subsequent days, and i n
l e t t e r s which have been introduced i n the record. Having i n mind
the d e s i r e of the Commission to assemble as promptly as p o s s i b l e
f a c t s more d i r e c t l y r e l a t e d to the purposes f o r which i t was
organized, I did not deem i t opportune when I was b e f o r e the
Commission to take up i t s time i n answering the general charges
made by the former Comptroller that the Board had approved or
permitted r e c k l e s s waste of money i n the operations of the Federal
Reserve Banks, p a r t i c u l a r l y with r e s p e c t t o the b u i l d i n g of the
Federal Reserve Bank of New York, now i n course of construction,
and t o the s a l a r i e s paid to t h e o f f i c e r s of the Federal Reserve
Bank of New York.
In each Annual Report of the Federal Reserve Board to Congress
an e x h i b i t has been made of the number of o f f i c e r s and employees
of a l l Federal Reserve Banks and of t h e i r s a l a r i e s .
In i t s Annual Report f o r the year 19I8, the Board c a l l e d the
a t t e n t i o n of Congress to the n e c e s s i t y of providing adequate
quarters f o r the Federal Reserve Banks and reported purchases of
b u i l d i n g s i t e s which had been made by ten of the twelve Banks.
In each subsequent report a frank statement has been made t o Congress
of the progress of the b u i l d i n g operations by the r e s p e c t i v e Banks.
X-3228
i-i-1-4
-2-
When t h e Committees on Banking and Currency of the Senate
and House of R e p r e s e n t a t i v e s were c o n s i d e r i n g , e a r l y i n the y e a r 1919,
t h e B o a r d ' s recommendation t h a t S e c t i o n 7 of t h e F e d e r a l Reserve Act
he amended b y p e r m i t t i n g the banks t o c r e a t e a maximum s u r p l u s out of
e a r n i n g s e q u a l t o 100$ of t h e i r p a i d - i n c a p i t a l , i n s t e a d of UCffo as
p r e v i o u s l y p r o v i d e d , I c a l l e d the a t t e n t i o n of t h e Committees t o the
f a c t t h a t a l l F e d e r a l r e s e r v e banks would be o b l i g e d to c o n s t r u c t
t h e i r own b u i l d i n g s a s i t was n o t p r a c t i c a b l e to l e a s e adequate
q u a r t e r s and o t h e r w i s e t o p r o v i d e s u i t a b l e v a u l t s f o r the c u s t o d y of
the l a r g e amounts of c a s h and s e c u r i t i e s h e l d by the b a n k s . I c a l l e d
a t t e n t i o n a l s o t o the l a r g e e x p e n d i t u r e s which would have to be made
i n t h e s e b u i l d i n g o p e r a t i o n s , and urged t h a t t h e banks be p e r m i t t e d
to i n c r e a s e t h e i r s u r p l u s i n o r d e r to reduce the p r o p o r t i o n of f i x e d
a s s e t s r e p r e s e n t e d by the b u i l d i n g s t o t h e i r c a p i t a l a c c o u n t . The
Committees appeared to be impressed w i t h t h i s argument f o r t h e Act
of March 3, 1919, went beyond the Board 's recommendations and p r o vided t h a t F e d e r a l r e s e r v e banks might c r e a t e a s u r p l u s out of
e a r n i n g s e q u a l t o 100$ of t h e i r s u b s c r i b e d c a p i t a l , p l u s 10$ of n e t
e a r n i n g s a n n u a l l y , a f t e r such a s u r p l u s had been c r e a t e d .
As no c r i t i c i s m has been made t o t h e Commission by the
f o r m e r C o m p t r o l l e r , however, of any of the F e d e r a l r e s e r v e bank
b u i l d i n g s except t h a t of the F e d e r a l Reserve Bank of New York, i t
seems u n n e c e s s a r y a t t h i s time t o p r e s e n t f u r t h e r d a t a r e l a t i n g
t o any of them e x c e p t the one i n New York. The Board u n d e r s t a n d s
t h a t the Governor of t h e F e d e r a l Reserve Bank of New York has s u b - .
m i t t e d t o the Commission a f u l l s t a t e m e n t r e g a r d i n g t h e b u i l d i n g
o p e r a t i o n s of t h a t bank, every important d e t a i l of which has beep
submitted from time t o time to t h e F e d e r a l Reserve B o a r d .
Since he appeared b e f o r e t h e Commission, t h e f o r m e r
C o m p t r o l l e r has given t o t h e p r e s s a l e t t e r d i r e c t i n g h i s c r i t i c i s m
e s p e c i a l l y t o t h e s a l a r i e s p a i d t o o f f i c e r s and employees of t h e
F e d e r a l Reserve Bank of New York, and t h i s l e t t e r h a s r e c e n t l y been
i n s e r t e d i n the C o n g r e s s i o n a l Record.
Each F e d e r a l r e s e r v e bank i s by law p l a c e d u n d e r the
s u p e r v i s i o n and c o n t r o l of a board of d i r e c t o r s who a r e a u t h o r i z e d
t o a p p o i n t such o f f i c e r s and employees as a r e n o t o t h e r w i s e p r o v i d e d f o r i n the F e d e r a l Reserve Act and t o d e f i n e t h e i r d u t i e s .
The law a l s o r e q u i r e s t h a t any compensation t h a t may b e p r o v i d e d
by the board of d i r e c t o r s of a F e d e r a l r e s e r v e bank f o r d i r e c t o r s ,
o f f i c e r s o r employees s h a l l be s u b j e c t t o the a p p r o v a l of t h e
F e d e r a l Reserve Board.
I t r a n s m i t h e r e w i t h copy of a l e t t e r , d a t e d October 6,
1921, from t h e Governor of t h e F e d e r a l Reserve Bank of New York, i n
which he d i s c u s s e s not <bly t h e s a l a r i e s of o f f i c e r s which have been
s p e c i f i c a l l y c r i t i c i s e d by t h e f o r m e r C o m p t r o l l e r , w i t h the e x c e p t i o n
of h i s own and t h a t of t h e F e d e r a l Reserve Agent, but a l s o t h e i n c r e a s e i n t h e number of enroloyees and i n t h e i r compensation. The
Board h a s , i n approving s a l a r i e s and i n c r e a s e s i n s a l a r i e s f r o m time
to t i m e , been advised of a l l t h e f a c t s s e t f o r t h i n t h i s l e t t e r and
i t s a p p r o v a l of t h e s a l a r i e s proposed by the d i r e c t o r s has been based
- 3-
X-3228
upon an a p p r e c i a t i o n of these f a c t s . This l e t t e r c o n t a i n s a d e t a i l e d
review of the p r i n c i p l e s governing the s a l a r y p o l i c i e s of the F e d e r a l
Reserve Bank of New York, the a p p r o v a l of which "by the members of the
F e d e r a l Reserve Board i s evidenced by t h e i r a c t i o n i n approving from time
t o time s p e c i f i c s a l a r i e s and i n c r e a s e s voted "by the b a n k ' s d i r e c t o r s .
Inasmuch as Governor S t r o n g ' s sense of p r o p r i e t y does n o t p e r m i t him
t o d i s c u s s i n h i s l e t t e r the s a l a r i e s p a i d the F e d e r a l Reserve Agent
and h i m s e l f , p a r t i c u l a r r e f e r e n c e w i l l be trade t o t h e s e s a l a r i e s i n
t h i s comrunication.
The F e d e r a l Reserve / g e n t i s appointed b y the F e d e r a l Reserve
Board and h i s s a l a r y i s f i x e d by t h e Board. A l l o t h e r o f f i c e r s and
employees of t h e F e d e r a l Reserve Bank, except t h o s e i n the F e d e r a l
Reserve / g e n t ' s Department, a r e appointed by the b o a r d of d i r e c t o r s
and the s a l a r i e s f i x e d by them, s u b j e c t to the a p p r o v a l of the F e d e r a l
Reserve Board.
The o f f i c e r s of F e d e r a l r e s e r v e banks a r e n o t o f f i c e r s of t h e
United S t a t e s . They a r e p r i v a t e c i t i z e n s , j u s t a s o f f i c e r s of n a t i o n a l
b a n k s , which a r e , l i k e F e d e r a l r e s e r v e banks, c h a r t e r e d under an a c t
of Congress, a r e p r i v a t e c i t i s e n s .
The conduct of t h e b u s i n e s s of a F e d e r a l r e s e r v e bank, and of the
F e d e r a l Reserve Bank of New York e s p e c i a l l y , which i s now the l a r g e s t
banking i n s t i t u t i o n i n the c o u n t r y , w i t h t r a n s a c t i o n s many times g r e a t e r
than those of the l a r g e s t member b a n k s , w i t h g r e a t r e s p o n s i b i l i t i e s t o
i t s member b a n k s , t o t h e p u b l i c , and t o the T r e a s u r y of the United
S t a t e s , r e q u i r e s t h e s e r v i c e s i n e x e c u t i v e and o t h e r c a p a c i t i e s of
t r a i n e d o f f i c i a l s and e x p e r t s who w i l l d e v o t e a l l of t h e i r time t o t h e
work of t h e b a n k , n o t only i n the o r d i n a r y r o u t i n e b u t i n the s t u d y of
a g r e a t v a r i e t y of t e c h n i c a l s u b j e c t s , and i t i s h i g h l y d e s i r a b l e t h a t
men be o b t a i n e d who can always be r e l i e d upon t o show good judgment and
a l l other necessary q u a l i f i c a t i o n s .
These o f f i c e r s a r e not p e r m i t t e d t o engage i n any o t h e r b u s i n e s s o r
i n p o l i t i c a l a c t i v i t i e s o r to hold p u b l i c o f f i c e . T h e i r s e r v i c e i n the
F e d e r a l Reserve Bank i s not a s t e p p i n g s t o n e to a p o l i t i c a l c a r e e r nor
does i t a f f o r d means of o u t s i d e f i n a n c i a l p r o f i t . I t would b e i m p o s s i b l e
t o s e c u r e the s e r v i c e s of competent ^and e f f i c i e n t o f f i c i a l s f o r the
F e d e r a l r e s e r v e b a n k s , were t h e i r s a l a r i e s to b e measured b y the s a l a r i e s
p a i d to the p o l i t i c a l o f f i c e r s of the Government.
I n the f o r m e r C o m p t r o l l e r ' s l e t t e r , above r e f e r r e d t o , and i n
h i s Augusta speech which i s a p a r t of the r e c o r d of the Commission,
he appears t o t a k e the p o s i t i o n t h a t t h e s a l a r y of a United S t a t e s
S e n a t o r i s the s t a n d a r d uoon which s a l a r i e s of F e d e r a l r e s e r v e bank
o f f i c i a l s should be based". He d i d n o t h i m s e l f , however, w h i l e he was
i n o f f i c e , observe t h i s p r i n c i p l e , b u t on t h e c o n t r a r y recognized t h e
- 4 -
X-3228
f a c t t h a t i n o r d e r t o o b t a i n competent nation-->1 bank examiners, who,
by the way, a r e o f f i c e r s of the Government, he .vould be o b l i g e d t o
pay r e g a r d to the t e c h n i c a l s k i l l and a b i l i t y of t h e s e men and t o whet
they could e a r n i n t h e s^rrley of p r i v s t e banking i n s t i t u t i o n s and
corporations.
These examiners a r e appointed by the C o m p t r o l l e r of the Currency,
w i t h t h e approval of the S e c r e t a r y of the T r e a s u r y , and t h e i r s a l a r i e s
a r e f i x e d b y the F e d e r a l Reserve Bo^rd "upon the recororrendations of the
Comptroller of the Currency". The Board does n o t regard t h e s e s a l a r i e s
a s e x c e s s i v e and i n what follo-vs no such i n f e r e n c e should be drawn.
The r e p o r t of the Comptroller of the Currency f o r 1920 g i v e s i n
one item (page 22, second volume) the t o t a l of the "Expenses on Account
of the N a t i o n a l Bank Examining S e r v i c e " , which i n c l u d e s s a l a r i e s and
o t h e r expenses i n c u r r e d i n making e x a m i n a t i o n s , i n c l u d i n g t r a v e l i n g expenses, but does n o t g i v e any s t a t e m e n t , e i t h e r i n d e t a i l or i n t
- - r e g a t e , of s a l a r i e s paid n a t i o n a l bank examiners. The r e p o r t oi
The F e d e r a l Reserve B o a r d . f o r the same y e a r , however, gives a comp e t
d e t a i l e d l i s t of s a l a r i e s paid n a t i o n a l bank examiners (pages 27 These s a l a r i e s were i n i t i a t e d and recommended, i n each i n s t a n c e , oy
mm
X:
X-3228
*It is evident that the Federal Reserve Banks, in order to insure •
the proper conduct of their business and to protect the interests of the
Government, the member banks, and the public, must employ men;* of exceptional experience and ability* Experience has shown that the larger member
banks are disposed to draw upon the Federal Reserve Banks for men t o , f i l l
high o f f i c i a l positions, and in order to retain the services of of fibers
who are constantly being tempted with outside offers at high salaries,
it has become necessary to recognize this competition* While the Board
has in no case approved salaries for Federal Reserve Bank officers.as high
as those paid officers of similar rank by the larger member banks in the
various Federal Reserve cities,* i t has approved salaries approximating
the average salaries paid* by the larger local banks. In the case of junior
officers, heads of ^.divisions, and clerks, the Board has recognized from
the outset that tne compensation paid them tausrt be in line with that paid
by the larger member banks. The Board does not believe that the Federal
Reserve Banks should become training schools for future officers of
member banks; i t feels, on the contrary, that sufficient inducements should
be offered by the Federal Reserve Banks to make service with them attractive
as a career*"
During the past seven years f cur Grove mors of Federal reserve banks
have resigned in order to accept executive positions with other banking
institutions at much higher salaries, and the same is true with respect
to a considerable number of Deputy Governors and junior officers.
The Board does not regard the salaries paid the Governor of the
Federal Reserve Bank of N w York and the Federal Reserve Agent as being
e
excessive* No one who is familiar with the qualifications of these
gentlemen, their long experience in banking, their established position
in the banking community before the Federal Reserve Bank was organized,
the magnitude of their responsibilities, and the opportunities which are
constantly afforded them to make other and more profitable engagements,
would assert for a moment that they are being paid more than they are
worth,
The only question, therefore, to be considered is - Does the business
of the Federal Reserve Bank of N w York require the services as i t s two
e
senior officers, of men of their type? The Board believes that i t does,
and it believes furthermore, that i t would be false economy to depend upon
less able and experienced men*
I a enclosing for the information of the Commission copy of a letter
m
from Governor Strong, which outlines the history of his connection with
the Federal Reserve Bank of N w York* The statements made therein were
e
already familiar to some emembers of the Board who have served continously
since 1914*
J
11:18
^ «•
*
X-3228
The d i r e c t o r s of t h e F e d e r a l Reserve Bank of New York v o t e d i n
September, 191?, t o i n c r e a s e t h e G o v e r n o r ' s s a l a r y from $ 3 0 , 0 0 0 t o $50,000
p e r annum, and t h e q u e s t i o n of a p p r o v a l was c o n s i d e r e d by t h e F e d e r a l
R e s e r v e Board. Upon b e i n g i n f o r m e d , however, t h a t Mr* S t r o n g would n o t
t h e n a c c e p t t h i s i n c r e a s e , and i n view of t h e f a c t t h a t t h e c o u n t r y was
a t war, t h e Board took no a c t i o n . The r e c o r d s of t h e T r e a s u r y Department
w i l l show what was done by t h e L i b e r t y Loan O r g a n i z a t i o n of t h e F e d e r a l
R e s e r v e Bank of New York, under t h e l e a d e r s h i p and s u p e r v i s i o n of Governor
S t r o n g , i n t h e p l a c i n g of Government s e c u r i t i e s d u r i n g and a f t e r t h e war,
I n t h e p r o s e c u t i o n of t h i s work, i n c o n n e c t i o n w i t h h i s o t h e r d u t i e s ,
h i s h e a l t h broke down and n e c e s s i t a t e d h i s abgence from t h e banx d u r i n g
t h e y e a r 1920, t o which r e f e r e n c e i s made i n h i s l e t t e r .
I n December 1918, t h e d i r e c t o r s of t h e F e d e r a l R e s e r v e Bank of New
York a g a i n v o t e d t o i n c r e a s e t h e s a l a r y of Governor S t r o n g t o $50, 0C0
p e r annum* The f o l l o w i n g i s an e x t r a c t from t h e m i n u t e s of t h e m e e t i n g
of t h e F e d e r a l R e s e r v e Board on December 14, 1918:
The Chairman (Mr, McAdoo)
The Governor
Mr, S t r a u s s
Mr* M i l l e r
Mr. Hamlin
Mr* Williams
Mr* B r o d e r i c k , S e c r e t a r y .
*Mr* S t r a u s s s t a t e d t h a t he had reviewed t h e recommendations of t h e
F e d e r a l R e s e r v e Bank of New York of i n c r e a s e s i n s a l a r i e s of and bonuses
t o i t s o f f i c e r s and employees, and s u b m i t t e d t h e f o l l o w i n g r e p o r t , which
# a s o r d e r e d spread upon t h e m i n u t e s of t h e m e e t i n g :
(Here f o l l o w s r e p o r t of Mr, S t r a u s s on a l e t t e r f r o m Mr, George F.
Peabody, Deputy Chairman of t h e Board of D i r e c t o r s of t h e F e d e r a l Reserve
Bank of New York, on t h e s u b j e c t of i n c r e a s e d com pensation f o r employees
of t h e bank)*
"The Chairman e x p r e s s e d himself a s h e a r t i l y i n a c c o r d w i t h t h e p r i n c i p l e s proponodad by Mr. S t r a u s s . He t h e n e x p l a i n e d t o t h e Board h i s views
a s t o t h e p r i n c i p l e s t h a t should be observed i n d e t e r m i n i n g compensation
t o o f f i c e r s of F e d e r a l Reserve Banks* He s t a t e d t h a t h i s a t t i t u d e had been
t h a t i n t h e b e g i n n i n g and d u r i n g t h e f o r m a t i v e p e r i o d of t h e System he
a d v o c a t e d c o m p a r a t i v e l y l o w . s a l a r i e s u n t i l t h e b u s i n e s s of t h e banks could
be e s t a b l i s h e d , and a f a i r measure o b t a i n e d of t h e i r o p e r a t i o n s and a more
a c c u r a t e r e a l i z a t i o n r e a c h e d of t h e d i m e n s i o n s of t h e problems and r e s p o n s i b i l i t i e s of t h e b a n k s 1 o f f i c e r s , a d d i n g t h a t l a s t y e a r he had opposed a#
i n c r e a s e i n t h e s a l a r y of t h e Governor of t h e F e d e r a l Reserve Bank of New
York only b e c a u s e t h e c o u n t r y was a t w a r . He s a i d , now t h a t t h e b u s i n e s s
"PRESENT:
x-322s
~ 7 °of the banks had been well established and they were making large earnings
for the Government, the time had come when the office: of,governor of a
Federal Reserve Bank should command on i t s merits a fair and just compensation, and that he would vote to fix the salary of the Governor of the
Federal Reserve Bank of N w York at $$0,000 per annum, this salary.to prevail
e
not only for the present incumbent, but for his successors* The Chairman
stated i t as his view that the principle governing the fixing of salaries
of officers of Federal Reserve Banks should be that the salary be made
sufficiently attractive to make a man willing to adopt the Federal Reserve
System as a permanent career, having i t s rewards in the way of promotion like
any other institution* He opposed the view that the office of head of a
Federal Reserve Bank should be considered on a parity with- high Government
office, stating that heads of Federal Reserve Ban&s could net be said to
enjoy that magnitude of power and prestige pertaining to high Government
office, while the bank officers were yetnplaced in a different position from
those engaged in private institutions in that they were affected by the
mutations of public lif.e and controlled by a changing public Board.
n
The chairman stated that he had conferred with the Secretary of the
Treasury-elect, M* Carter Gl&as, who concurred in the substance of the
r
principles recited by him, leaving it to the Board, of course, to make,
under such principles, reasonable adjustments of salaries throughout the
System in i t s discretion.
"The Chairman stated as a further principle that the salary of a
Federal Reserve Agent should be at least as high as that of any Deputy
Governor of the Federal Reserve Bank of which such Agent m y be Chairman*
a
•Mr* Miller pointed out that the tremendous earnings of the Federal
Reserve Banks had accrued this year largely out of Government business, and
asked the Chairman if he had
that factor in mind in expressing his opinion
on the question.
"The Chairman replied that he did not think the percentage basis of
earnings of banks is a fair guide for the measure of compensation to be
paid, stating i t as his judgment that the questions of salaries at the
several banks should be dealt with each on i t s own merits with respect to
the responsibility assumed by the Governor when taking office»
* r Strauss stated that the Board should not consider the earnings
M»
of a bank in fixing compensation; that at future periods i t might well be
the business of the banks not to make money.
1
1
The Chairman concurred in this view, stating that it might be necessary
to operate a banket a loss aa a result of a general plan of combining the
resources of all banks as a common fund, in which event, the responsibilities
of the Governor of a bank forced to operate at a loss would be even greater
than when large earnings were accruing. H said the problem was to ascertain
e
what is a just compensation, taking into consideration a l l the elements of
the problem - the size of t#bank, the cost of living in the community,
and the responsibility assumed by the chief executive officer of the bank.
X-3328
1120
- g "Mr. Williams p o i n t e d out t h a t t h e r e were c e r t a i n Governors of F e d e r a l
Reserve Banks whom t h e Board f e l t ware not t h e s t r o n g e s t men f o r t h e i r p o sitions.
"The Chairman s t a t e d t h a t i f t h e Board undertook t h e r e p o n s i b i l i t y of
k e e p i n g i n o f f i c e incompetent men a s Governors of F e d e r a l Reserve Banks t h e
s a l a r i e s of such Governors should n e v e r t h e l e s s have a r e l a t i o n to t h e responsi
b i l i t y assumed,
"On motion duly seconded, i t was voted unanimously t h a t t h e s a l a r y
of t h e Governor of t h e Federal Reserve Bank of New York f o r t h e ensuing
year be approved i f f i x e d a t $50, 000 p e r annum, and t h a t the recommendations of t h e Board of D i r e c t o r s of t h e F e d e r a l Reserve Bank of New
York, as submitted by Deputy Chairman Peabody i n h i s l e t t e r of December
11, 191S, s s modified i n p r i n c i p l e s by t h e memorandum submitted by Mr.
S t r a u s s , above, be approved w i t h t h e u n d e r s t a n d i n g t h a t t h e Beard w i l l
review same i n d e t a i l and make such a d j u s t m e n t s a s may be n e c e s s a r y a t
i t s meeting on Monday, December l 6 t h »
"At t h i s p o i n t t h e Chairman (Mr* McAdoo) s t a t e d t h a t i t was n e c e s s a r y f o r
him t o withdraw from t h i s , t h e l a s t meeting of t h e F e d e r a l Reserve Board which
he would a t t e n d , and expressed t o t h e members of t h e Board h i s a p p r e c i a t i o n of
the work they had done d u r i n g h i s incumbency of t h e o f f i c e of Chairman, statwi n g t h a t he would always have a keen i n t e r e s t i n t h e p e r s o n a l w e l f a r e of memb e r s of t h e B o a r d , a s w e l l as i n t h e i r o f f i c i a l work*"
For t h e f u r t h e r i n f o r m a t i o n of t h e Commission, and i n order t h a t i t may
b e t t e r determine what w e i g h t , if any, should be given t o the. c r i t i c i s m s made
by t h e former Comptroller of t h e s a l a r i e s p a i d by t h e F e d e r a l Reserve Bank of
New York, I t r a n s m i t a memorandum made up from the minutes of t h e F e d e r a l Reserve Board showing t h e d a t e s of t h e v a r i o u s meeting a t which i n c r e a s e s i n
s a l a r i e s of o f f i c e r s and employees of t h e F e d e r a l Reserve Bank of New York
were c o n s i d e r e d , and t h e vote of t h e Comptroller on t h e s e p r o p o s a l s . I t w i l l
be noted t h a t t h e minutes show^that he voted a f f i r m a t i v e l y on e i g h t y p e r c e n t
of t h e s a l a r y i n c r e a s e s , i n c l u d i n g t h o s e which he now c r i t i c i s e s , t h a t he
did n o t v o t e a g a i n s t any of them, but was absent from meetings a t which t h e
o t h e r twenty p e r c e n t were c o n s i d e r e d .
The Board r e q u e s t s t h a t t h i s l e t t e r and t h e memorandum a t t a c h e d be made
a p a r t of t h e r e c o r d of t h e Commission, If t h e Commission d e s i r e s any f u r t h e r
s t a t e m e n t r e g a r d i n g any other a l l e g a t i o n made by t h e former Comptroller, which
appears i n t h e r e c o r d , t h e Board w i l l be p l e a s e d t o f u r n i s h i t w i t h o u t d e l a y .
In view of t h e f a c t t h a t t h e a l l e g a t i o n s made by t h e former Comptroller
a r e a p a r t of t h e o f f i c i a l r e c o r d of t h e Commission and a r e b e i n g c o n s t a n t l y
r e i t e r a t e d by him, t h e Board r e s p e c t f u l l y r e q u e s t s t h a t t h e Commission make
p u b l i c i t s f i n d i n g s r e g a r d i n g them.
Very t r u l y yours,
Hon. Sydney Anderson, Chairman,
J o i n t Commission of A g r i c u l t u r a l I n q u i r y ,
United S t a t e s Congress,
Room 70 C a p i t o l .
(Signed) W. P . G. Harding
G o v e r n o r .
FEDERAL RESERVE BOARD
WASHINGTON
X-3230
October IS, 1921.
SUBJECT:
T r e a s u r y Checks s t o l e n f r o m t h e F e d e r a l
•Prison a t Leavenworth, Kansas,
Dear S i r :
For y o u r i n f o r m a t i o n t h e r e i s e n c l o s e d
h e r e w i t h copy of a memorandum a d d r e s s e d t o t h e Board
by t h e Chief of t h e S e c r e t S e r v i c e D i v i s i o n , T r e a s u r y
Department, which i s s e l f e x p l a n a t o r y .
Very t r u l y y o u r s ,
Enclosure
W a i t e r L. Eddy,
Assistant Secretary.
TO GOVEFNOPS OF ALT, F.F.BANKS.
4
-ji-1"--J f~<ss)
0 o ? T
TPEASUPY DEpAPTA/rENT
X"3230a
-J
OFFICE OF T E SFCBETAPY
Washington
Secret Service Division
W/b
October 17, 1921.
Memorandum f o r the F e d e r a l Psserve Board:
( A t t e n t i o n Mr. Eddy, S e c r e t a r y )
.About a month ago you were good enough t o n o t i f y t h e
banks of the country through the F e d e r a l Reserve system of the
t h e f t of 155 United S t a t e s t r e a s u r y checks from t h e f e d e r a l
p r i s o n a t Leavenworth, Kansas, and t h e i r c i r c u l a t i o n , a f t e r
f o r g e r y , i n the name of George E. B a t e s , by a man who r e p r e s e n t e d
h i m s e l f t o be a p r i s o n guard, wearing a badge, and c a r r y i n g a
f o r g e d l e t t e r of i d e n t i f i c a t i o n .
I am now glad to inform you t h a t two men r e s p o n s i b l e
f o r the f o r g i n g and c a s h i n g of t h e s e checks have been a r r e s t e d
a t T u l s a , Oklahoma, and 130 b l a n k checks i n t h e i r p o s s e s s i o n
recovered.
I am a l s o p l e a s e d to advise you t h a t the man r e s p o n s i b l e
f o r the c i r c u l a t i o n of checks p u r p o r t i n g t o have been i s s u e d by
an o f f i c e r of the Department of the I n t e r i o r , Bureau of Claims,
drawn on t h e T r e a s u r e r of the United S t a t e s , and p a y a b l e , i n most
i n s t a n c e s , t o George I . M i t c h e l l , h a s been d i s c o v e r e d , and no
f u r t h e r danger from t h e s e checks need be apprehended. These checks
were the s u b j e c t of warning c i r c u l a r s from t h e F e d e r a l Reserve
banks i n t h e l a s t p a r t of September.
I thought p e r h a p s t h i s i n f o r m a t i o n mig^t b e v a l u a b l e
t o the banks, i n view of t h e i r c o o p e r a t i o n with t h i s S e r v i c e , as
I am convinced t h a t i t was because of t h i s c o o p e r a t i o n t h a t the
men were apprehended.
(Signed) W. H. MOBAN
Chief.
x-3231
REMARKS OF
W„ p . G. HARDING
AT THE OPENING SESSION OF THE
JOINT CONFERENCE OF THE FEDERAL RESERVE BOARD
WITH THE FEDERAL RESERVE AGENTS AND GOVERNORS OF FEDERAL RESERVE BANKS
HELD AT WASHINGTON, D. C.
OCTOBER 25-28, 1921.
JLJu'.
X-3231
EFFICIENCY AND ECONOMY IN ADMINISTRATION OF
FEDERAL RESERVE BANKS,
r
In t h e program f o r t h i s Conference, which was sent out about a
month ago, t h e f i r s t s u b j e c t l i s t e d f o r d i s c u s s i o n i s " E f f i c i e n c y and
Economy i n A d m i n i s t r a t i o n of F e d e r a l Reserve Banks*'.
This s u b j e c t ,
always an important one, h a s added s i g n i f i c a n c e a t t h i s time because of
charges which have been g i v e n wide c i r c u l a t i o n and p u b l i c i t y t h a t t h e r e
h a s been an amazing w a s t e of p u b l i c money i n t h e i n c r e a s e of s a l a r i e s and
i n t h e e x p e n d i t u r e s of t h e Federal Reserve Banks.
These c h a r g e s a r e , no
doubt, r e s p o n s i b l e f o r t h e r e s o l u t i o n r e c e n t l y adopted by t h e United S t a t e s
S e n a t e , d i r e c t i n g t h e Federal Reserve Board t o i n f o r m t h e Senate of t h e
number of o f f i c e r s and employees, t o g e t h e r w i t h t h e i r r e s p e c t i v e s a l a r i e s ,
of t h e F e d e r a l Reserve Bank of New York, a s w e l l &s of t h e o t h e r F e d e r a l
Reserve Banks, and t h e e x p e n d i t u r e s made by each ^Branch Bank11 i n t h e
e r e c t i o n of p u b l i c b u i l d i n g s and t h e g e n e r a l e x p e n s e s i n the a d m i n i s t r a t i o n of each F e d e r a l Reserve Bank, and how much of the n e t e a r n i n g s have
been p a i d t o t h e United S t a t e s a s a f r a n c h i s e tax*
I n t h e o p i n i o n of t h e Board i t i s u n f o r t u n a t e t h a t m a t t e r s of
this
kind should assume a p o l i t i c a l a s p e c t or t h a t t h e y should become t h e
s u b j e c t of a Congressional r e s o l u t i o n ,
The Board h a s kept Congress
informed of t h e s e m a t t e r s ever s i n c e t h e Banks were organized l a t e i n
t h e y e a r 1914*
I n each Annual Report i n f o r m a t i o n r e g a r d i n g s a l a r i e s h a s
been g i v e n i n d e t a i l , names only b e i n g omitted•
An e x h i b i t h a s been made
f o r each Federal Reserve Bank, showing t h e number of o f f i c e r s by g r a d e s ,
x-3231
-
2
-
s a l a r i e s p a i d t o each, t h e t o t a l number of e n p l o y e e s , t h e a v e r a g e s a l a r y
and t h e a g g r e g a t e of a l l s a l a r i e s p a i d .
I n f o r m a t i o n e q u a l l y e x p l i c i t has
been g i v e n from y e a r t o y e a r r e g a r d i n g t h e b u i l d i n g o p e r a t i o n s of t h e s e v e r a l
F e d e r a l Reserve Banks.
The Board h a s endeavored t o make c l e a r t h e
c h a r a c t e r and f u n c t i o n s of t h e F e d e r a l Reserve Banks and t o d i s t i n g u i s h
between m a t t e r s which come under t h e s u p e r v i s i o n and c o n t r o l of t h e
r e s p e c t i v e b o a r d s of d i r e c t o r s and under t h e g e n e r a l s u p e r v i s i o n of t h e
F e d e r a l Reserve Board.
For some t i m e p a s t , a p e r s i s t e n t propaganda h a s been conducted, which
i s c a l c u l a t e d t o mislead t h e p u b l i c and which a p p a r e n t l y i s d e s i g n e d t o
b r i n g t h e System and i t s management i n t o d i s r e p u t e .
The powers and d u t i e s
of t h e d i r e c t o r s of F e d e r a l Reserve Banks a r e d e f i n e d i n S e c t i o n 4 of t h e
F e d e r a l Reserve A c t .
R e s p o n s i b i l i t y f o r t h e management of t h e s e Banks
r e s t s p r i m a r i l y and d i r e c t l y upon them and upon t h e i r duly a p p o i n t e d
o f f i c e r s and a g e n t s .
The law r e q u i r e s t h a t any compensation t h a t may be
p r o v i d e d by b o a r d s of d i r e c t o r s
f o r d i r e c t o r s , o f f i c e r s or employees
s h a l l be s u b j e c t t o t h e approval of t h e F e d e r a l Reserve Board.
The Board
h a s n o t i n a l l c a s e s approved s a l a r i e s which have been voted by d i r e c t o r s
of F e d e r a l Reserve Banks, but a s a r u l e t h e recommendations of t h e
d i r e c t o r s w i t h r e s p e c t t o s a l a r i e s have been approved by t h e Board, somet i m e s , p e r h a p s , w i t h some r e l u c t a n c e .
The Board h a s t a k e n t h e p o s i t i o n , however, t h a t a s t h e d i r e c t o r s a r e
p r i m a r i l y r e s p o n s i b l e f o r t h e a d m i n i s t r a t i o n of t h e Banks, much c o n s i d e r a t i o n should be g i v e n t o t h e i r views a s t o t h e r a t e of compensation n e c e s s a r y
t o s e c u r e h o n e s t , e f f i c i e n t and c a r e f u l management.
In i t s Annual Report
f o r t h e year I 9 I 8 , t h e Board p o i n t e d out t h a t p a r t i c u l a r l y w i t h r e s p e c t
t o j u n i o r o f f i c e r s and employees s a l a r i e s must be p a i d a p p r o x i m a t i n g
-3-
x-3231
t h e s a l a r i e s paid by l a r g e member banks i n t h e c i t i e s where t h e
F e d e r a l Reserve banks a r e l o c a t e d .
I f , i n o r d e r t o reduce expenses,
t h e p o l i c y should be adopted of making t h e F e d e r a l Reserve banks
mere t r a i n i n g schools f o r bank o f f i c e r s , i t i s h a r d l y p o s s i b l e ,
because of t h e f r e q u e n t changes i n v o l v e d , t h a t the banks would have
the degree of e f f i c i e n c y i n a d m i n i s t r a t i o n and smoothness of o p e r a t i o n
which t h e y would have i f the compensation p=id be s u f f i c i e n t l y l i b e r a l
t o " r e t a i n t h e s e r v i c e s of t r a i n e d and c a p a b l e t e n .
The Board does n o t f o r a moment b e l i e v e t h a t the d i r e c t o r s of
any F e d e r a l Reserve bank i n f i x i n g s a l a r i e s o r i n a u t h o r i z i n g expendit u r e s i n developing the b u s i n e s s have been a c t u a t e d by any d e s i r e t o
d e p r i v e the Government of the revenue which i t i s e n t i t l e d t o r e c e i v e
u n d e r the terms of S e c t i o n 7 of t h e F e d e r a l Reserve Act, and most
a s s u r e d l y t h e F e d e r a l Reserve Board would n o t b e a p a r t y t o any such
undertaking.
F e d e r a l Reserve banks a r e n o t , s t r i c t l y speaking, Government
institutions.
The government owns no s t o c k in them, they a r e n o t
supported b y a p p r o p r i a t i o n s made by Congress, t h e y a r e s u b j e c t t o
l o c a l t a x a t i o n on t h e i r r e a l e s t a t e j u s t as n a t i o n a l b a n k s a r e and
t h e i r payments out of e a r n i n g s t o t h e Government as a f r a n c h i s e tax
a t t i m e s g r e a t l y exceed a l l t a x e s p a i d by an e q u a l number of the
l a r g e s t n a t i o n a l banks, s t a t e banks and t r u s t companies i n the United
States.
The d i r e c t o r s of F e d e r a l Reserve banks a r e given such i n -
c i d e n t a l powers as s h a l l b e n e c e s s a r y t o c a r r y on the b u s i n e s s of
banking w i t h i n t h e l i m i t a t i o n s p r e s c r i b e d by t h e F e d e r a l Reserve .Act
1126
X
. 4 .
"3231
and " s h a l l p e r f o r m the d u t i e s u s u a l l y a p p e r t a i n i n g to t h e o f f i c e of
d i r e c t o r s of "banking a s s o c i a t i o n s and a l l such d u t i e s as a r e p r e s c r i b e d by law" .
? h e r e c a n be no q u e s t i o n , t h e r e f o r e , as t o the a u t h o r i t y of
d i r e c t o r s of F e d e r a l Reserve banks t o p r o v i d e t h e i r i n s t i t u t i o n s w i t h
s u i t a b l e banking q u a r t e r s .
As h a s been r e p e a t e d l y p o i n t e d out t o
Congress, i t has been i m p o s s i b l e t o l e a s e adequate q u a r t e r s , end
b u i l d i n g o p e r a t i o n s hpve, t h e r e f o r e , become n e c e s s a r y .
The Senate
r e s o l u t i o n , t o which a l l u s i o n has been lmde, r e f e r s t o t h e F e d e r a l
d e s e r v e banks as " b r a n c h e s " .
The F e d e r a l Reserve Act, however,
makes i t v e r y p l a i n t h a t t h e s e banks a r e n o t branches4 T h e i r i n dependent powers a r e d e f i n e d i n S e c t i o n 4 and a u t h o r i t y t o e s t a b l i s h
branches of t h e i r own i s g i v e n them i n S e c t i o n 3*
The b u i l d i n g s acquired or c o n s t r u c t e d by F e d e r a l r e s e r v e
banks a r e i n no sense p u b l i c b u i l d i n g s . The f u n d s n e c e s s a r y f o r
t h e i r a c q u i s i t i o n or c o n s t r u c t i o n were n o t a p p r o p r i a t e d by Congress,
the t i t l e i s n o t v e s t e d i n t h e United S t a t e s b u t i n the F e d e r a l r e s e r v e
bank, and they a r e not exempt from t a x a t i o n as a l l p u b l i c b u i l d i n g s
a r e , b u t a r e e x p r e s s l y made l i a b l e t o s t a t e and l o c a l t a x a t i o n .
The
o f f i c e r s of F e d e r a l r e s e r v e banks a r e n o t o f f i c e r s of t h e United S t a t e s
and a r e n o t p u b l i c o f f i c i a l s any more than o f f i c e r s of n a t i o n a l banks
are p u b l i c o f f i c i a l s .
Federal reserve banks, l i k e n a t i o n a l banks, are
organized u n d e r t h e laws cf t h e United S t a t e s and e a c h a r e s u p e r v i s e d
b y p u b l i c o f f i c i a l s ; t h e F e d e r a l r e s e r v e banks by t h e F e d e r a l Reserve
Board and t h e n a t i o n a l banks b y t h e C o m p t r o l l e r of t h e Currency.
- 5-
x-3231.1128
Both c l a s s e s a r e impressed w i t h d u t i e s t o t h e p u b l i c , "but i t i s t r u e
t h a t F e d e r a l r e s e r v e banks, by r e a s o n of t h e i r s u p e r v i s o r y powers over
t h e member banks and t h e n a t u r e of t h e i r b u s i n e s s , and by r e a s o n of the
e l i m i n a t i o n of t h e element of c o m p e t i t i o n , have more of t h e a t t r i b u t e s of
governmental i n s t i t u t i o n s than n a t i o n a l b a n k s .
I n o r d e r t o r e n d e r e f f i c i e n t s e r v i c e t o the member banks and through
them t o . the p u b l i c and t o p e r f o r m t h e f u n c t i o n s imposed upon them by t h e
.Act, F e d e r a l r e s e r v e banks are obliged t o make l a r g e e x p e n d i t u r e s which
a r e n o t imposed upon n a t i o n a l b a n k s , s t a t e banks and t r u s t coprpanies.
Board
The /does n o t w i s h to i m p a i r i n any degree the e f f i c i e n c y of the F e d e r a l
r e s e r v e b a n k s , b u t deems i t i m p o r t a n t , n e v e r t h e l e s s , t o c a l l y o u r
a t t e n t i o n t o the r e a c t i o n which h&s t a k e n p l a c e d u r i n g t h e p a s t e i g h t e e n
months, t o t h e g e n e r a l b u s i n e s s d e p r e s s i o n now p r e v a i l i n g throughout t h e
c o u n t r y , t o t h e s m a l l e r volume of e a r n i n g a s s e t s now c a r r i e d by the
F e d e r a l r e s e r v e banks and t h e consequent r e d u c t i o n i t i the e a r n i n g s , and
t o the change i n p u b l i c s e n t i m e n t w i t h regard t o l a r g e e x p e n d i t u r e s .
The Board u r g e s you, t h e r e f o r e , t o do a l l i n y o u r power t o e l i m i n a t e
u n n e c e s s a r y expense and t o conduct the b u s i n e s s of y o u r r e s p e c t i v e
i n s t i t u t i o n s i n such a manner as t o g i v e no r e a s o n a b l e grounds f o r any
charge of e x t r a v a g a n c e and w a s t e .
Recent Developments i n t h e Par Clearance System and
Suggested Changes i n Methods.
The Board d e s i r e s t o c ^ l l your a t t e n t i o n t o the p e r s i s t e n t
o p p o s i t i o n on t h e p a r t of a l a r g e number of non-member banks of t h e
c o u n t r y t o t h e F e d e r a l r e s e r v e p a r c l e a r a n c e system and t o t h e i m p e d i ments which have b e e n thrown i n the way of making t h i s system u n i v e r s a l
in i t s scope.
1129
X-323-.
- 6 —
The i n j u n c t i o n which was obtained some e i g h t e e n months ago by
s t a t e banks i n Georgia a g a i n s t t h e F e d e r a l IVeserve B ank of A t l a n t a i s
s t i l l in e f f e c t .
The F e d e r a l r e s e r v e bank was s u c c e s s f u l i n removing
the c a s e f r o m t h e s t a t e c o u r t t o t h e United S t a t e s D i s t r i c t Court and
won a c l e a r c u t d e c i s i o n i n t h a t c o u r t .
I t won a l s o i n thS United S t a t e s
C i r c u i t Court of .Appeals, b u t the d e c i s i o n of t h e United S t a t e s Supreme
Court was t o the e f f e c t t h a t i f the a l l e g a t i o n s made by t h e complainants
could t»e s u s t a i n e d they would b e e n t i t l e d t o r e l i e f .
By r e a s o n of t h e
language used i n the o p i n i o n of t h e Supreme Court t h i s d e c i s i o n h a s been
represented
t o the p u b l i c as a sweeping v i c t o r y f o r t h e c o m p l a i n a n t s
and as a condemnation by the h i g h e s t c o u r t of t h e l a n d of t h e p o l i c y of
t h e F e d e r a l r e s e r v e banks w i t h r e s p e c t to c o l l e c t i o n s .
As a m a t t e r of f a c t , however, t h e c a s e has m e r e l y b e e n remanded t o
t h e United S t a t e s D i s t r i c t Court i n Georgia f o r t r i a l on i t s m e r i t s , and
a f a v o r a b l e outcome i s a n t i c i p a t e d by t h e b a n k t s Counsel, w i t h whom i s
a s s o c i a t e d Hon. John W, D a v i s , f o r m e r S o l i c i t o r General of the United
S t a t e s and more r e c e n t l y United S t a t e s Ambassador t o G r e a t B r i t a i n .
This
c a s e w i l l d o u b t l e s s come a g a i n b e f o r e t h e Supreme Court of t h e United
S t a t e s i n r e g u l a r c o u r s e a f t e r i t has b e e n d e c i d e d b y t h e United S t a t e s
Circuit
D i s t r i c t Court and the United S t a t e s / C o u r t of Appeals.
I t i s n e c e s s a r y , however, t o c a l l y o u r a t t e n t i o n t o t h e f a c t t h a t
the l e g i s l a t u r e s of t h e S t a t e s of L o u i s i a n a , M i s s i s s i p p i , Alabama,
Tennessee, Georgia, F l o r i d a and North C a r o l i n a have e n a c t e d laws which
w i l l make i t d i f f i c u l t , i f n o t i m p o s s i b l e , t o o b l i g e non-member banks t o
r e m i t a t p a r , and w h i l e t h e r e i s doubt as t o t h e c o n s t i t u t i o n a l i t y of
t h e s e laws, a s e p a r a t e t e s t w i l l have t o be made i n e a c h i n s t a n c e .
x-3"! ii;;;o
- 7 T h i s w i l l i n v o l v e g r e a t expense and p e r h a p s many y e a r s w i l l e l a p s e b e f o r e
a l l t h e c a s e s can be decided f i n a l l y .
I t i s not t h e purpose of t h e Board t o recommend any immediate change
i n p o l i c y , f o r Counsel i s anxious t h a t n o t h i n g be done t o c o n f u s e t h e
i s s u e s ae t h e v have a l r e a d y been d e f i n e d i n t h e case now pending i n t h e
United S t a t e s D i s t r i c t Court i n Georgia, but a f t e r t h a t court h a s
decided
t h e case t h e Board may suggest a m o d i f i c a t i o n of t h e p r e s e n t p l a n .
It
seems opportune, t h e r e f o r e , t o d i s c u s s t h i s q u e s t i o n on t h e p r e s e n t
o c c a s i o n and r e q u e s t t h e Federal H*eserve A g e n t s and G o v e r n o r s of t h e banks
at
t h e i r s e p a r a t e m e e t i n g s t o devote such time a s may be n e c e s s a r y f o r
a full
discussion
,of t h i s s u b j e c t .
Section l6 of t h e Federal Reserve Act a u t h o r i z e s t h e F e d e r a l Reserve
Board
to exercise 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 t h e F e d e r a l
Reserve banks o r t o d e s i g n a t e a F e d e r a l r e s e r v e bank t o e x e r c i s e such
f u n c t i o n s , and a l s o t o r e q u i r e each such bank t o 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 t h e development of t h e p r e s e n t
system t h e Board h a s attempted t o e s t a b l i s h such a c l e a r i n g house i n each
Distriet.
In many of t h e l a r g e c i t i e s t h e r e a r e banks which a r e not members of
t h e l o c a l c l e a r i n g house, but which a r e p e r m i t t e d t o use some c l e a r i n g
house member bank a s a c l e a r i n g a g e n t .
Such banks a r e , however, obliged
t o conform t o a l l t h e r u l e s and r e g u l a t i o n s which govern c l e a r i n g house
member banks.
Non-member banks which r e f u s e t o r e m i t a t p a r f o r checks
drawn on them have been a v a i l i n g t h e m s e l v e s of t h e f a c i l i t i e s of t h e
F e d e r a l r e s e r v e p a r c l e a r a n c e system through t h e i r member bank correspondents
I t has been suggested t o t h e Board by t h e Governors of two F e d e r a l r e s e r v e
banks t h a t i n view of t h e l e g i s l a t i o n i n t h e s t a t e s above named and of
. g -
X-3231
XJ
p o s s i b l e s i m i l a r l e g i s l a t i o n i.i e t h e r s t a t e s , i t ,/ould be w e l l t o t&':3
advantage of a n o t h e r p r o v i s i o n - i n S e c t i o n l 6 , which a u t h o r i z e s t h e
F e d e r a l Reserve Board t o f i x t h e charge which may be imposed f o r t h e
s e r v i c e of c l e a r i n g or c o l l e c t i o n rendered by t h e F e d e r a l r e s e r v e bank,
by a u t h o r i z i n g F e d e r a l r e s e r v e banks t o a d v i s e t h e i r member banks t h a t
on and a f t e r a c e r t a i n d a t e a compensatory charge of so much p e r one
hundred d o l l a r s w i l l be imposed a g a i n s t t h e member banks on a l l checks
endorsed by or o r i g i n a t i n g with a non-member bank whose name i s n o t on
the par l i s t .
Under such a r e g u l a t i o n non-member banks which r e f u s e t o l e n d t h e i r
c o o p e r a t i o n t o t h e F e d e r a l r e s e r v e c o l l e c t i o n system would have t o pay
f o r t h e b e n e f i t s d e r i v e d by them from t h a t c o l l e c t i o n system, f o r member
banks would h a r d l y be w i l l i n g t o c o l l e c t checks f o r such non-member banka
u n l e s s p a i d f o r doing so a t r a t e s e q u a l t o t h o s e charged by t h e F e d e r a l
r e s e r v e banks.
The Board r e q u e s t s t h a t the g o v e r n o r s and F e d e r a l Reserve Agents i n
t h e i r separate sessions discuss t h i s proposition i n a l l i t s bearings.
P r i n c i p l e s Governing t h e Discount R a t e .
Control over d i s c o u n t r a t e s , a s e x e r c i s e d by t h e F e d e r a l r e s e r v e
banks and t h e F e d e r a l Reserve Board, i s one of t h e most i m p o r t a n t and
f a r - r e a c h i n g powers ever d e l e g a t e d by Congress t o a n o t h e r i n s t r u m e n t a l i t y .
The g r a n t ranks w i t h t h e power g i v e n t h e I n t e r s t a t e Commerce Commission
to regelate railroad rates.
While i t i s n e c e s s a r y t h a t powers of t h i s
kind should be v e s t e d i n a few hands t h e y should be used w i t h d i s c r e t i o n
and t h e e f f e c t of a change i n r a t e should be c a r e f u l l y c o n s i d e r e d b e f o r e
t h e change i s made.
The p r i n c i p l e i s w e l l e s t a b l i s h e d t h a t i n t h e o r y t h e F e d e r a l
r e s e r v e bank d i s c o u n t r a t e should be s l i g h t l y i n e x c e s s of c u r r e n t
rates-
There has been much d i s c u s s i o n of t h e r e d u c t i o n s which have
been made i n d i s c o u n t r a t e s d u r i n g t h e l a s t s i x months and d i s r e g a r d i n g
o p i n i o n s of t h e p r e j u d i c e d and t h e uninformed, l e t u s c o n s i d e r t h e
c o n f l i c t i n g views of some whose o p i n i o n s a r e worthy of a t t e n t i o n and
respect.
The q u o t a t i o n s which follow a r e from a symposium r e c e n t l y
published i n a f i n a n c i a l journal.
A New York banker and an E a s t e r n economist e x p r e s s e d themselves
t h e r e i n , as follows"
"The b a s i c i d e a i n t h i s p o l i c y of keeping t h e
r e d i s c o u n t r a t e above t h e market i s t h a t r e s e r v e bank money i s f o r
e x c e p t i o n a l and unusual u s e - t h a t i t i s not t h e p r o v i n c e of a r e s e r v e
bank t o s u p p l y a s u b s t a n t i a l p a r t of t h e o r d i n a r y f u n i s employed i n t h e
market i n o r d i n a r y t i m e s .
Of course, i t i s expected t h a t a r e s e r v e bank
s h a l l make money f o r i t s s t o c k h o l d e r s and s h a l l employ such of i t s f u n d s a s
may be n e c e s s a r y t o meet expenses and t o pay d i v i d e n d s .
One p r o v i s i o n of
t h e F e d e r a l Reserve Act, p e r m i t t i n g open market o p e r a t i o n s on t h e p a r t of
t h e F e d e r a l r e s e r v e banks, was designed t o give them d i s c r e t i o n i n t h i s
m a t t e r , whether t h e member banks should r e d i s c o u n t w i t h them or n o t . But
t h e p o s i t i o n of a r e s e r v e bank i s a v e r y p e c u l i a r one.
If an o r d i n a r y bank
makes a l o a n , checks come i n a g a i n s t i t , a s a consequence of t h e l o a n , which
i t must meet out of i t s r e s e r v e u n l e s s i t should happen t h a t s i m u l t a n e o u s l y
new d e p o s i t s a r e made w i t h i t of checks drawn on o t h e r banks.
Loans made
by a r e s e r v e bank, however, need n o t l e a d t o d r a i n s on i t s r e s e r v e .
When,
i n making a l o a n , i t i s s u e s i t s n o t e s o r g i v e s a d e p o s i t c r e d i t t o a r e d i s c o u n t i n g bank, t h a t note o r a t r a n s f e r of t h a t d e p o s i t c r e d i t w i l l be
a c c e p t e d a s u l t i m a t e payment by some o t h e r i n s t i t u t i o n .
The d e p o s i t
x-3231
113
- 10 -
l i a b i l i t i e s of t h e r e s e r v e bank count a s u l t i m a t e r e s e r v e f o r t h e o t h e r
banks of t h e country, and t h e volume of r e s e r v e money i s consequently
i n c r e a s e d through a mere i n c r e a s e i n t h e d e p o s i t l i a b i l i t i e s of t h e
r e s e r v e bank.
With an i n c r e a s e i n t h e volume of r e s e r v e s of t h e member
banks, t h e r e i s an immediate tendency t o a r e d u c t i o n i n t h e g e n e r a l
l e v e l of discount r a t e s throughout t h e country, p l a c i n g them below t h e
l e v e l which open market c o n d i t i o n s would otherwise c a l l f o r and c r e a t i n g
a t e m p t a t i o n f o r t h e uneconomical use of bank f u n d s .
There i s p a r t i - -
c u l a r l y a t e m p t a t i o n t o use bank funds i n an e x c e s s i v e degree f o r c a p i t a l
p u r p o s e s , and f o r t h e ordinary banks of the country, misled by ithe
a r t i f i c i a l excess of l i q u i d cash, t o t i e up t o o g r e a t a p a r t of t h e i r
assets in
n o n - l i q u i d form.
The r e s e r v e bank which makes r e d i s c o u n t
r a t e s t o o low, t h e r e f o r e , i n s t e a d of performing i t s f u n c t i o n of i n c r e a s J
i n g t h e l i q u i d i t y of t h e banking system, t e n d s r a t h e r t o d e s t r o y l i q u i d i t y ,
A Chicago banker r e i t e r a t e s t h e opinion expressed by him s e v e r a l
times t h a t t h e Federal r e s e r v e banks and t h e F e d e r a l Reserve Board ought
t o proceed very slowly i n lowering t h e p r e s e n t r a t e s .
He a n t i c i p a t e s
t h a t t h e r e i s c o n s i d e r a b l e danger, i n case t h e r a t e s a r e lowered
p r e c i p i t a t e l y , of a renewed i n f l a t i o n , w i t h a consequent r e a c t i o n more
v i o l e n t t h a n t h e one through which we a r e now p a s s i n g .
He t a k e s t h e
view t h a t i n g e n e r a l i t i s a complete mistake t o have t h e r e d i s c o u n t
r a t e s lower t h a n t h e p r e v a i l i n g market r a t e s f o r commercial l o a n s , f o r
i f banks a r e enabled t o r e d i s c o u n t t h e i r paper a t a lower r a t e t h a n they
themselves r e c e i v e , obviously a continued i n f l a t i o n i s p r o f i t a b l e t o them
His o p i n i o n c o i n c i d e s w i t h t h e views of t h e E a s t e r n banker and t h e
economist above quoted and he s t r e s s e s t h e p o i n t t h a t o w l a r g e gold
r e s e r v e i s , a f t e r a l l , due only t o t h e f a c t t h a t gold i s not b&ing
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- 11 -
c i r c u l a t e d a t t h e p r e s e n t moment and t h a t much of t h i s gold i s l i k e l y t o
flow out of t h e country a s soon a s t h e r e i s a change i n t h e b a l a n c e s of
trade«
He concurs, a l s o , i n the view t h a t a c e r t a i n amount of t h e gold
which t h e Federal r e s e r v e banks have a t p r e s e n t i s merely h e l d , i n a sense,
i n t r u s t f o r Europe*
He r e g a r d s a s e n t i r e l y f a l l a c i o u s t h e argument made
by a d h e r e n t s of a p o l i c y of l o w e r i n g r e d i s c o u n t r a t e s t h a t such a c t i o n i s
d e s i r a b l e because t h e r e s e r v e r a t i a
and gold a c c u m u l a t i o n s of. t h e Federal
r e s e r v e banks j u s t i f y a r e l a x a t i o n of the o f f i c i a l r a t e s *
A Milwaukee banker who contends t h a t t h e p o l i c y should be i n accord
w i t h t h e money market tendency, s t a t e s t h a t
tf
i
The main p o i n t made by those
opposed t o t h e l o w e r i n g of Federal r e s e r v e d i s c o u n t r a t e s i s t h a t t h e r e d i s c o u n t r a t e should always be above t h e market r a t e .
This i s l a i d down
a s a g e n e r a l p r i n c i p l e t o which t h e r e a r e no e x c e p t i o n s .
Federal reserve
f u n d s a r e only emergency funds, i t i s s a i d , and i t should not be p o s s i b l e
f o r banks t o make a p r o f i t by r e d i s c o u n t i n g a t a lower r a t e t h a n t h e marketV
He c a l l s a t t e n t i o n t o t h e f a c t t h a t "When t h e demand f o r c r e d i t i s e x c e s s i v e
and i n c r e a s i n g , t h e r e s e r v e banks should move i n t o a dominating p o s i t i o n by
r a i s i n g t h e i r r a t e s above t h e market r a t e s f o r money.
s i t y f o r discouraging r e s o r t t o Federal
But t h e same n e c e s -
r e s e r v e banks does n o t e x i s t when
t h e demand f o r c r e d i t slows down, l o a n s a r e b e i n g p a i d off and r e s e r v e s
a r e accumulating*
What h a s
rediscount rates?
Has i t r e s u l t e d i n an expansion of l o a n s or r e i n f l a t i o n ?
Not a t a l l .
happened a s a r e s u l t of t h e r e c e n t l o w e r i n g of
On t h e o t h e r hand, t h e p u b l i s h e d r e c o r d s show t h a t member banks
have continued t o reduce t h e i r r e d i s c o u n t s and borrowings and t o do t h i s
have brought p r e s s u r e upon t h e i r customers t o l i q u i d a t e .
Customers who
have v o l u n t a r i l y l i q u i d a t e d and got t h e m s e l v e s back i n t o good f i n a n c i a l
c o n d i t i o n a r e o f f e r e d lower r a t e s on new loans*
T h i s , of c o u r s e , i s an
i n c e n t i v e t o t h o s e who have not done so t o l i q u i d a t e •
This i s the
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- 12 -
p r a c t i c a l way i n which t h e l e a d e r s h i p of t h e F e d e r a l r e s e r v e banks i n r e d u c i n g
t h e i r r a t e s h a s worked.
newed i n f l a t i o n .
There h a s not been t h e s l i g h t e s t tendency toward r e -
R a t h e r t h e tendency h a s been t o f u r t h e r l i q u i d a t i o n * * This
*
banker a g r e e s t h a t "The g e n e r a l p r i n c i p l e of k e e p i n g Federal r e s e r v e
r e d i s c o u n t r a t e s above
t h e market r a t e f o r money i s sound,but i t does admit
of e x c e p t i o n s a s i n t h e p r e s e n t c o n d i t i o n of things#
The p r e s e n t Federal r e -
s e r v e p o l i c y i s i n accord w i t h t h e tendency of t h e money market and i t i s
any
h a r d t o s e e how i t h a s had or w i l l have f
but a wholesome and c o n s t r u c t i v e
effect.
I n a r e c e n t p u b l i c a t i o n a well-known banker and economist h a s a s -
s e r t e d t h a t t h e b e s t index of t h e money market i n t h i s country i s
the rate
on l i n e - o f - c r e d i t l o a n s t o borrowers from two o r more banks, and not t h e r a t e
on bank a c c e p t a n c e s , a s i n England»
The volume of l i n e - o f - c r e d i t l o a n s i n
t h i s country i s f a r l a r g e r t h a n t h e volume of bank a c c e p t a n c e c r e d i t s , but i t
may be doubted whether t h e r a t e s on such l o a n s a r e a s c o m p e t i t i v e a s bank
a c c e p t a n c e r a t e s . Bank a c c e p t a n c e r a t e s a r e f i x e d i n t h e open market and
are
p u b l i s h e d * L i n e - o f - c r e d i t l o a n s have no open market and t h e r e a r e no
published rates*
seeau
L i n e - o f - c r e d i t l o a n s a r e not a s c o m p e t i t i v e a s they may
A small f i r m commonly m a i n t a i n s a l i n e of c r e d i t only a t i t s own bank*
Large c o r p o r a t i o n s u s u a l l y have l i n e s of c r e d i t n o t only w i t h t h e i r home banks
but w i t h l a r g e banks i n f i n a n c i a l c e n t e r s , not n e c e s s a r i l y because t h e y can
s e c u r e lower r a t e s , b u t because no one bank wants t o t a k e care of . t h e i r f u l l
needs.
For t h e s e r e a s o n s i t i s t o be doubted whether l i n e - o f - c r e d i t l o a n s
a f f o r 4 1 a s good an i n d e x of money market t e n d e n c i e s a s t h e bank a c c e p t a n c e
r a t e s * The l a t t e r r e p r e s e n t t h e minimum r a t e s f o r t h e b e s t c l a s s of paper
and because t h i s i s so, t h e y i n d i c a t e f a r bey owl t h e i r a c t u a l money volume
t h e d r i f t of t h e m a r k e t . The p r e s e n t r a t e on e l i g i b l e bank acceptance.6 of
5 - 1 / S t o 5 p e r cent i s a b e t t e r i n d i c a t i o n of what i s t a k i n g p l a c e and what
may be expected i n t h e open money market t h a n r a t e s on l i n e - o f - c r e d i t
l o a n s which r e f l e c t market c o n d i t i o n more s l o w l y , *
- 13 -
x-3231
Another Chicago "banker t a k e s an e x t r e m e l y c o n s e r v a t i v e v i e w .
He
would l i k e t o see many of t h e s o - c a l l e d "war amendments" t o t h e F e d e r a l
Reserve Act r e p e a l e d and s t a t e s t h a t as the law s t a n d s , " n o t h i n g "but the
courage and wisdom of the management p r e v e n t s i f from becoming a d i s a s t r o u s
engine of i n f l a t i o n " .
He o b j e c t s p a r t i c u l a r l y t o the amendment which f o r c e s
member banks t o c a r r y t h e i r e n t i r e l a w f u l r e s e r v e s i n the form of c o l l e c t e d
b a l a n c e s w i t h the F e d e r a l r e s e r v e banks and b e l i e v e s t h e t t h i s amendment,
which he r e g a r d s as p r a c t i c a l l y demonetising g o l d , i s most dangerous i n
normal t i m e s .
R e f e r r i n g t o the complaints which have b e e n made t h a t t h e
a g r i c u l t u r a l d i s t r i c t s have b e e n d i s c r i m i n a t e d a g a i n s t , he b e l i e v e s t h a t
e x a c t l y the o p p o s i t e i s the c a s e and a p p e a r s t o b e l i e v e a l s o t h a t the
F e d e r a l Reserve System has worked a g r e a t i n j u r y t o the c o u n t r y as w e l l
as i n e s t i m a b l e b e n e f i t s .
He s t a t e s " I n a time of i n f l a t i o n such as we had
a y e a r ago, i t n u l l i f i e s the o p e r a t i o n of t h e u s u a l normal remedies' f o r
such c o n d i t i o n s .
If i t had not been f o r t h e F e d e r a l r e s e r v e banks, f a r m e r s
g e n e r a l l y would have been compelled to s e l l t h e i r c r o p s a y e a r ago and
pay t h e i r d e b t s .
This would have saved them and the c o u n t r y f r a n t h e d i s -
a s t e r t h a t h a s overtaken them.
Also, had i t n o t been f o r the F e d e r a l
r e s e r v e b a n k s , m a n u f a c t u r e r s and merchants would have b e e n unable t o a c cumulate o r c a r r y t h e heavy i n v e n t o r i e s e n t a i l i n g l o s s e s i n a s i n g l e y e a r
which i t w i l l t a k e a g e n e r a t i o n t o r e p l a c e H e b e l i e v e s t h a t "The
s o l u t i o n t o t h i s i s t o keep the F e d e r a l r e s e r v e d i s c o u n t r a t e s above
l i o T
- 14 -
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c u r r e n t market r a t e s , s o t h a t t h e r e w i l l be no t e m p t a t i o n on t h e p a r t of
t h e member "banks t o p r o f i t e e r through the F e d e r a l r e s e r v e banks*
So long
as t h e F e d e r a l r e s e r v e r a t e s are kept below c u r r e n t r a t e s > t h e r e i s , xn ray
judgment,
way i n which t h i s kind of i n f l a t i o n can b e p r e v e n t e d *
On the
o t h e r hand, i f b o r r o w e r s compel t h e i r banks t o r e d i s c o u n t i n o r d e r t o ena b l e them t o c a r r y crops o r goods f o r h i g h e r p r i c e s , they a r e p u t on n o t i c e
t h a t t h e y a r e a c t i n g a g a i n s t the g e n e r a l judgment#
I n normal times member
banks should u n d e r s t a n d t h a t t h e y are n o t expected t o borrow except t o meet
emergencies, and t h e y should be made t o f e e l t h a t borrowing a t sucn times
i s an i n d i c a t i o n of weakness and needs e x p l a n a t i o n # *
He e x p r e s s e s t h e hope
t h ? t the F e d e r a l Reserve Board w i l l make a p u b l i c s t a t e m e n t of what i t s
f u t u r e p o l i c y w i l l be r e g a r d i n g r a t e s and e x p r e s s e s t h e b e l i e f t h a t the conf i d e n c e of the c o u n t r y i $ the Board i s such t h a t any c l e a r s t a t e m e n t of
f u n d a m e n t a l p r i n c i p l e s made b y i t would be acquiesced in#
Another New York b a n k e r while convinced t h a t u n d e r normal c o n d i t i o n s
i t i s l o g i c a l t h a t the F e d e r a l r e s e r v e r a t e should be h i g h e r t h a t the p r e v a i l i n g commercial r a t e , b e l i e v e s t h a t i n view of the world-wide c o n d i t i o n s
t h ^ t e x i s t t o d a y , the a d o p t i o n , a t t h i s time, of a r t i f i c i a l means t o a c c e l e r a t e the p r o c e s s of r e a d j u s t m e n t would be a dangerous c o u r s e t o pursue * He
states
n
C o n s i d e r i n g the e x t e n t t o which c r e d i t f o r s p e c u l a t i v e purposes nus
been l i q u i d a t e d , and a l s o taking i n t o c o n s i d e r a t i o n the p r e s e n t r e s e r v e and
s o l d p o s i t i o n of the Reserve b a n k s , . i t would seem t h a t the r e d u c t i o n i n r a t e
i s f u l l y j u s t i f i e d . . Furthermore, I do n o t b e l i e v e t h e r e d u c t i o n a t t h i s time
i n the r a t e w i l l a p p r e c i a b l y encourage a tendency toward renewed c r e d i t
inflation.
The q u e s t i o n of r a t e s h a s , on t h e whole, b e e n a b l y and c o u r -
- 15 -
X-3231
a g e o u s l y handled, "by the F e d e r a l r e s e r v e "banks and the F e d e r a l Reserve Board."
He says t h a t i f he were t o o f f e r a c r i t i c a l o b s e r v a t i o n , i t would b e t o r e mark upon the " s a l u t a r y m o d i f i c a t i o n of t h e need f o r d e f l a t i o n t h a t would hav=
r e s u i t e d had the high r a t e s b e e n p u t i n t o !ef f e e t i n t h e s p r i n g of 1919 i n s t e a d
of the summer of 1920".
A Boston "banker takes the view t h a t t h e F e d e r a l Reserve System was
organized f o r the purpose of f u r n i s h i n g c r e d i t ."by means of red i s c ount i n g , t o
the commercial banks of t h e c o u n t r y .
He says " I n a g e n e r a l way the time
when t & i s c r e d i t i s needed i s j u s t b e f o r e , d u r i n g and immediately a f t e r a
c r e d i t c r i s i s , or c r e d i t p i n c h , and i t seems c l e a r t h a t a t such tune the
r a t e charged f o r red i s c oun t i n g should be a t about the c u r r e n t market r a t e
charged "by the commercial banks t o t h e i r c u s t o m e r s .
To make the r a t e h i g h e r
than the p r e v a i l i n g r a t e would tend t o r e s t r i c t the g r a n t i n g of n e c e s s a r y
c r e d i t s t o merchants and s i m i l a r borrowers*
To make the r e d i s c o u n t r a t e much
lower t h a n t h e p r e v a i l i n g r a t e would tend t o encourage over l o a n i n g b y t h e
commercial b a n k s .
In f i x i n g the r e d i s c o u n t r a t e s , the managers of the Vedera i.
r e s e r v e banks should t r y , so f a r as p o s s i b l e , t o keep t h e i r minds f r e e f r o m
i n f l u e n c e s o t h e r than those which d i r e c t l y c o n c e r n ' t h e p r e v a i l i n g r a t e s of
money, b u t t h e y c e r t a i n l y a r e j u s t i f i e d , when f i x i n g t h e r e d i s c o u n t r a t e ,
i n b e i n g i n f l u e n c e d by motives of t h e s a f e t y of t h e F e d e r a l r e s e r v e banks
themselves» and when t h e r e d i s c o u n t s a p p e a r t o be approaching a dangerous
t o t a l , they should use t h e i r r a t e - f i x i n g power t o c h e c k s p e c u l a t i o n and t o
p r e v e n t any p o s s i b l e danger t o t h e F e d e r a l r e s e r v e b a n k s , which a r e the
f o u n d a t i o n of our whole banking*sy6t®nu
I t was n e v e r i n t e n d e d and n e v e r
shfculd b e i n t e n d e d that t h e F e d e r a l r e s e r v e banks c o n s c i o u s l y use t h e i r
x-3231
— 16 —
power and a u t h o r i t y e i t h e r to encourage or t o d i s c o u r a g e b u s i n e s s .
Their
c h i e f purpose should he t o a s s i s t comrrercial banks and to f i x the r a t e s of
r e d i s c o u n t so a s to b e s t accomplish t h i s , and a t t h e same time t o p r o t e c t
t h e i r own p o s i t i o n from any p o s s i b l e o v e r s t r a i n . "
He r e g a r d s as one of the
g r e a t e s t dangers the F e d e r a l Beserve System can be s u b j e c t e d to would be
the a t t a c k s and manoeuverings of p o l i t i c i a n s , i n o r d e r t o make the system
serve p o l i t i c a l ends.
Another l e a d i n g banker does n o t b e l i e v e t h a t t h e time h a s y e t a r r i v e d
when d i s c o u n t r a t s s should be held uo t o a p o i n t above t h e r a t e s f o r comm e r c i a l paper because the c o n d i t i o n s of b u s i n e s s a r e n o t y e t on q u i t e a
normal b a s i s .
He says t h a t i t h a s been the h a b i t of commercial bankers to
argue w i t h t h e i r commercial customers t h a t t h e i r rate,J t o t h e i r customers i s
based on t h e F e d e r a l r e s e r v e bank d i s c o u n t r a t e and t h a t i t should ,be enough
h i g h e r than the d i s c o u n t r a t e so t h a t t h e r e would be a p r o f i t t o the banker
between the d i s c o u n t r a t e and h i s r a t e t o h i s customers.
He says f u r t h e r
"There i s y e t i n our banks a l a r g e amount of s o - c a l l e d f r o z e n l o a n s which
may be d e s c r i b e d a s l o a n s which a r e probably good b u t which t h e borrowers
a r e n o t i n a p o s i t i o n to pay o f f a t the p r e s e n t time.
Therefore, they are not
i n a p o s i t i o n t o t r a d e on market r a t e s on an even b a s i s with the b a n k e r .
Under t h e s e c o n d i t i o n s , a high d i s c o u n t r a t e of t h e F e d e r a l r e s e r v e banks
simply has h e l p e d the commercial banker to g e t h i g h e r r a t e s from h i s c u s tomers than a r e j u s t i f i e d by the c o n d i t i o n s of c r e d i t .
T h e r e f o r e , i t was
d e s i r a b l e and n e c e s s a r y f o r t h e F e d e r a l r e s e r v e banks t o reduce t h e i r
d i s c o u n t r a t e s from 6 o r 7 p e r c e n t , t o
p e r cent, i n order to inform
ii-iO
x-3231
- 17'—
the commercial conmanity t h a t the c r e i i t s i t u a t i o n no longer demanded
these high rates* "
He t a k e s the view t h a t ^Federal r e s e r v e bank d i s -
count r a t e s should n o t be made with the i d e a of c o n t r o l l i n g b u s i n e s s
or market p r i c e s of commodities*,but t h a t "They should be i n d i c a t i o n s
of the e f f e c t t h a t the p r e s e n t b u s i n e s s i s having on the suoply of
c r e d i t and of a n t i c i p a t e d c o n d i t i o n s t h a t w i l l a f f e c t the supply of c r e d i t
i n the n e a r f u t u r e , *
He b e l i e v e s t h a t *#ien the b u s i n e s s community h a s
become t r a i n e d t o the p o i n t of watching the r e s e r v e P o s i t i o n and d i s count r a t e s of the Federal r e s e r v e banks and has come to ani u n d e r s t a n d i n g of what t h e s e f i g u r e s mean ** they w i l l be helned very much by
studying the published c o n d i t i o n s of the Federal r e s e r v e b a n k s and w i l l
a p p r e c i a t e what a change i n i i s c c u n t r a t e s means, provided of course
t h a t the o f i i c e r s and d i r e c t o r s of t h e Federal r e s e r v e banks a r e n o t
hampered i n
u s i n g t h e i r judgment in these m a t t e r s by o u t s i d e i n f l u e n c e s
A Chicago r e r c h a n t n o t e s the d i f f e r e n c e of opinion among
e x p e r t s as to the proper time f o r r a i s i n g or lowering the Federal
r e s e r v e r e d i s c o u n t r a t e s * He points' out t h a t n e i t h e r the Federal
nor
Reserve Systems/ any p a r t of i t can be run on any formula, and t h a t
i f i t could v e r y l i t t l e b r a i n s would be r e q u i r e d f o r t h a t p a r t a f t e r
the formula had been found.
He b e l i e v e s t h a t "If we a r e to be a world
power in commerce, a s we may b e , we s h a l l have t o make the New York
or some other d i s t r i c t r a t e a t t r a c t i v e f o r t h e d i s c o u n t of the world* s
import and e x p o r t b i l l s .
We might, of course, be above the E n g l i s h r a t e
f o r a s h o r t time, f o r adjustment or o t h e r p u r p o s e s , b u t i f we make a r u l e
±1
-
18 -
x-3231
to have the r a t e always above the commercial paper r a t e i n New
York, our ambition to be the w o r l d ' s bankers, or t o compete with
England i n commerce and f i n a n c e , w i l l vanish i n t o t h i n a i r . a
He
takes the view t h a t in c r i s e s and e x t r a o r d i n a r y emergencies a Reserve
bank may well be j u s t i f i e d i n v i o l a t i n g temporarily the ordinary
canons of sound f i n a n c e , b u t emphasizes t h a t under normal condit i o n s and under conditions when i t i s p o s s i b l e to take a long run
view, the well e s t a b l i s h e d t r a d i t i o n s covering a Reserve b a n k ' s
operations must be followed.
The chief of these canons i s t h a t
the rediscount r a t e of Reserve banks should be kept above the market.
The Federal Advisory Council, a t i t s l a s t meeting, on Septemb e r 20th, expressed i t s b e l i e f t h a t r a t e s should b e a r a d i r e c t r e l a t i o n t # a Federal reserve b a n k ' s reserve and to the general money
market, and t h a t in a d d i t i o n consideration should be given to the
items enumerated i n the Council's recommendation of May 17, 1921, a s
follows:
1.
The r e s e r v e s of the Federal Reserve System as a whole.
2. The r e s e r v e p o s i t i o n of the Federal r e s e r v e bank whose
r a t e i t i s contemplated to change.
3* The condition of a l l the banks of the country as a
whole, and of the several Federal reserve d i s t r i c t s .
4.
The economic and f i n a n c i a l c o n d i t i o n of t h i s country.
5»
World c o n d i t i o n s , both economic and p o l i t i c a l .
6. The eventual establishment of a c r e d i t r a t e p o l i c y
f o r the Federal r e s e r v e banks by which the r e d i s c o u n t
r a t e to member bank's i s higher than the p r e v a i l i n g com-
- 19 -
X-3231
m e r c i a l r a t e , t a k i n g due c o n s i d e r a t i o n of the p r e v a i l i n g
open market r a t e s f o r v a r i o u s c l a s s e s of l o a n s b o t h i n
t h i s country and abroad,
7. Uniformity of r a t e s , while a t times p r a c t i c a b l e and
d e s i r a b l e , should n o t be adopted as a f i x e d p o l i c y , the
System b e i n g p r e d i c a t e d upon the p r i n c i p l e t h a t v a r y i n g
c o n d i t i o n s might e x i s t in d i f f e r e n t s e c t i o n s of t h e
country.
With r e f e r e n c e to the g e n e r a l money market the f o l l o w i n g f a c t o r s were
suggested by t h e Board as ones which should be considered i n a r r i v i n g
a t a c o n c l u s i o n as t o what i s the c u r r e n t r a t e f o r money,
1.
2.
3.
4.
Hates charged by banks t o t h e i r r e g u l a r customers*
Rates f o r one-name paper bought through n&te b r o k e r s .
Onen market r a t e s on bankers a c c e p t a n c e s , and
Rates on Treasury C e r t i f i c a t e s .
The Board asked the Council f o r i t s views as to t h e r e l a t i v e importance of
each of these f a c t o r s and the council expressed the view t h a t a l l f o u r
items mentioned are important i n determining the money market b u t t h e r e
may be o t h e r f a c t o r s which should l i k e w i s e be given c o n s i d e r a t i o n , such as
general b u s i n e s s c o n d i t i o n s and the r e s e r v e p o s i t i o n of a Federal r e s e r v e
bank.
I t was the view of the Council t h a t t h e r u l i n g r a t e f o r money
i n a d i s t r i c t w i l l a d j u s t i t s e l f a u t o m a t i c a l l y to t h e s e c o n d i t i o n s .
The Council expressed the view a l s o t h a t a F e d e r a l r e s e r v e bank
while i t i s borrowing should n o t lower i t s r a t e , b u t s t a t e s t h a t s p e c i a l
c o n d i t i o n s -might e x i s t i n a d i s t r i c t which would m a k e / r e d u c t i o n s d e s i r a b l e and would j u s t i f y such a c o u r s e .
. >
lii.l
- 20 -
X-3231
I t seems c l e a r t o the Board t h a t i t i s n o t p r a c t i c a b l e i n t h i s
country f o r F e d e r a l r e s e r v e banks to m a i n t a i n r a t e s
of d i s c o u n t h i g h e r
than c u r r e n t market r a t e s i f l i n e - o f - c r e d i t l o a n s a r e to be accepted
a s the c r i t e r i o n .
The r a t e s of i n t e r e s t p e r m i t t e d in many s t a t e s a r e
so h i g h as t o n re elude t h i s as a p o s s i b i l i t y .
In o r d i n a r y circum-
s t a n c e s when the c r e d i t r i s k i s a t a minimum the r a t e s p a i l f o r h i g h
grade commercial -papdr sold i n the open market may be regarded as a
measure of the market r a t e f o r money, b u t i t i s e v i d e n t t h a t a t p r e s e n t
t h e r e i s much c o n s i d e r a t i o n t o be given to the b a s i s on which s h o r t
time o b l i g a t i o n s of the Treasury a r e sold and to"market rates f o r prime
bankers 1 a c c e p t a n c e s .
The problem, therefore,3,s more simple a t t h i s
time i n d i s t r i c t s l i k e New York, Chicago and P h i l a d e l p h i a , where the
Federal r e s e r v e c i t i e s a r e dominant i n t h e i r d i s t r i c t s , b u t i n o t h e r
d i s t r i c t s which cover a l a r g e r t e r r i t o r y and where the b u s i n e s s i s more
d i s t r i b u t e d and d i v e r s i f i e d , the problem i s more d i f f i c u l t .
At the
p r e s e n t time f o u r Federal r e s e r v e banks a r e r e d i s c o u n t i n g about $ 4 ^ 0 0 0 , 0 0 0
with t h r e e o t h e r Federal r e s e r v e banks.
The d i r e c t o r s of one of these
borrowing banks more than a iponth ago voted to reduce t h e i r - d i s c o u n t
r a t e from 6 p e r c e n t , t o 5s p e r c e n t , on a l l c l a s s e s of p a p e r , b u t the
F e d e r a l Reserve Board h a s n o t yet approved the r e d u c t i o n .
No evidence
has been p r e s e n t e d t o show t h a t c u r r e n t r a t e s f o r barik accomodations a r e
l e s s t h a n t h e F e d e r a l r e s e r v e bank r a t e , or t h a t c u r r e n t r a t e s would be
reduced by l o w e r i n g the r e s e r v e bank r a t e , b u t the d i r e c t o r s argue t h a t
the c o n s o l i d a t e d r e s e r v e p o s i t i o n of the system j u s t i f i e s a lower r a t e .
The Board d e s i r e s to have the views of members of t h i s c o n f e r e n c e as to
the a d v i s a b i l i t y of p e r m i t t i n g any Federal r e s e r v e bank t o reduce i t s
Of
1144
- 21 -
X-3231
p r e s e n t d i s c o u n t r a t e •until i t s own r e s e r v e s have i n c r e a s e d to a p o i n t to
make i t u n n e c e s s a r y f o r i t to r e d i s c o u n t w i t h other F e d e r a l r e s e r v e hanks.
The Board h a s besn i n c l i n e d to the view t h a t the r e s e r v e p e r c e n t a g e of
each F e d e r a l r e s e r v e bank, as well as t h a t of the System, should be taken
i n t o c o n s i d e r a t i o n a s one of the determining f a c t o r s i n f i x i n g the d i s c o u n t
rate.
I f the F e d e r a l 8e serve Bank of Chicago, w i t h a r e s e r v e of around 70
p e r c e n t , and t h e F e d e r a l Reserve Bank of S t . Louis, w i t h a r e s e r v e of
# # 63 p e r c e n t , do n o t f e e l j u s t i f i e d i n r e d u c i n g t h e i r d i s c o u n t r a t e s
below the p r e s e n t l e v e l of 6 p e r c e n t , what argument i s t h e r e f o r a borrowi n g bank, l i k e A t l a n t a , having a r e s e r v e w i t h o u t r e d i s c o u n t s of only 32
p e r c e n t . , to have a 5^ p e r c e n t , r a t e ?
On the o t h e r hand, what a r e the
arguments a g a i n s t a r e d u c t i o n i n d i s t r i c t s which have so h i g h a p e r c e n t a g e
of r e s e r v e ?
The Board r e q u e s t s the members of t h i s Conference t o d i s c u s s a l l these
q u e s t i o n s i n v o l v i n g p r i n c i p l e s of the d i s c o u n t r a t e f r a n k l y and f u l l y and
to r e p o r t t h e i r conclusions b e f o r e t h e c l o s e of the Conference,
I t seems
d e s i r a b l e , i f p o s s i b l e , t o f o r m u l a t e a general p o l i c y r e g a r d i n g "rates of
d i s c o u n t , from which t h e r e would be no divergence e x c e p t i n unusual or
emergency c a s e s .
FEDERAL RESERVE BOARD
WASHINGTON
X-3232
Tentative draft for information of Conference of Governors and
Federal Reserve .Agents, October 25, 1921.
Subject:
Ruling as t o i n t e r e s t charges "by member banks
a g a i n s t c u s t o v e r s on checks c l e a r e d through
F e d e r a l Reserve Banks.
Beer Sir:
Under ahthority of th»t part of Section 16 of the
Federal Reserve .Act which provides that the Federal Reserve Board
shall, by rule, f i x the charges to be collected by member banks
from their patrons whose checks are cleared through the Federal
Reserve Banks, the Board rules that no member bank shall collect
from its patrons any charge by way of interest on account of any
check deposited with it and cleared through a Federal Reserve Bank
in excess of 10^ per $100, or fraction thereof, on the amount of
such check. The interest charges authorized by the Board, equal
to or less than 1 & per $100 or fraction thereof, are, o? course
0
optional, that i s , they rray or may not be imposed at the discretion
of each member "hank.
In order to avoid unnecessary conflicts with the rules
and regulations of various local clearing houses, the Board has not
attempted in i t s ruling to do more than prescribe the maximum
charge that may be imposed in any event, regardless of the time
required for the collection of the check on account of which the
charee i s made. The Board desires to point out# however', that
interest charges on account of checks credited to depositors'
accounts in advance of collection, are justified only when they
are bona fide interest charges, at reasonable rates, upon the
float actually carried by the charging banks as a result of giving
such credits• In other words, if immediate credit is given to a
depositor on a check which will require a certain length of time
for collection, the interest charge, if any, imposed by the bank
against the depositor should not be in excess of an interest charge
at a reasonable rate upon the amount of the check for the period
required for i t s collection. This period, so far as concerns
checks cleared through a Federal Reserve Bank, is, of course, the
period for which available credit is deferred on the books of the
Federal Reserve Bank according to that bank's time schedule, plus
the period required for transit from the member bank to the Federal
Reserve Bank. Consequently, in the absence of special circumstances
X-3232
-2-
interest charges on checks for which member "banks receive available credits on the books of the Federal Reserve Bank after the
lapse of short periods should, if made at a l l , be less than the
maximum of 10j£ per $100, and should vary according to the length
of time the available credits are thus deferred.
The Federal Reserve Board has been led to issue this ruling
because i t s attention has been called to the fact that in some
Federal Reserve Districts banks are exacting unreasonable charges
from their depositors. There have been no complaints, however,
with regard to banks in the majority of Federal Reserve Districts.
For this reason the Board desires to leave i t to the discretion
of each Federal Reserve Bank as to whether and to what extent i t
is necessary or desirable to call this ruling to the attention
of member banks.
Very truly yours,
Governor.
T G V R O S » D F.R./SGWPS
O OENR N
FEDERAL RESERVE BOARD
WASHINGTON
X-3234
O c t o b e r 25, 1921.
Subject:
Expense Main L i n e , Learned Wire System
f o r t h e Month of September, X$21,
Dear S i r s
Enclosed herewith you w i l l f i n d two mimeograph
s t a t e m e n t s X-.3p.3lia and X-3234b, covering i n d e t a i l o p e r a t i o n s
of t h e main l i n e . Leased Wire System, during the month of
September, 1$21.
P l e a s e c r e d i t t h e amount payable by your bank i n t h e
g e n e r a l account, Treasurer U. S . , on your books, and i s s u e
C/D Form 1 , National Banks, f o r account of " S a l a r i e s and Expenses,
F e d e r a l Reserve Board, S p e c i a l Fund", Leased Wire System, sending
d u p l i c a t e C/D t o Federal Reserve Board,
Very t r u l y y o u r s ,
Enclosures.
F i s c a l Agent,
1 0 GOVERNORS OF ALL BANKS EXCEPT CHICAGO.
X-3234a
RBfuRl' SHOWING CLASSIFICATION AND NUMBER OF WORDS
TRANSMITTED OVER MAIN LINE OF THE FEDERAL RESERVE
LEASED WIRE SYSTEM FOR THE MONTH OF SEPTEMBER, 1$21,
From
Bank Business
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
S t , Louis
Minneapolis
Kansas City
Dallas
San F r a n c i s c o
4.94
14.25
5.46
7.99
6.76
7.55
12.53
7.45
4.22
8.57
8.06
12.22
T o t a l F, R.
Banks
Washington
1,064,249
275,066
. 100.00
Grand Total
1,339,315
...
59* 844
168,241
66,898
98,094
80,715
96,772
142,053
92,099
49,970
101,093
93,097
152,304
103
118
349
418
1,409
131,421
130,686
5,510
7,982
1,201,180
13,492
1,614,914
16.23%
82.93#
l , 3 3 9 ; j l 5 words or 83.63$
262,107
*
• 16.37%
TOTAL
1,601,422
100.00$
(*) These p e r c e n t a g e s used i n c a l c u l a t i n g t h e
pro r a t a share of l e a s e d w i r e expenses as shown
on t h e accompanying statement (X-3234b).
Total
7,282
15,984
8,799
13,072
8,573
14,178
8,699
12,743
4,892
9,559
6,844
20J96
Bank Business
Treasury Business
FEDERAL RESERVE BOARD
WASHINGTON, D. C.
OCTOBER 25, 1921.
War
Finance Corp
Business
262,107
52,562
151,620
58,099
84,989
71,969
80,324
133,354
79,253
44,960
91,185
85,835
13P.Q39
Per cent of T o tal
Treasury
Dept.
Business
Per cent of
Total Bank
Business(*)
637
33
173
2,270
.84$
413,734
1
c
REPORT OF EXPENSE
MAIN LINE
FEDERAL RESERVE LEASED WIRE SYSTEM SEPTEMBER, 1921.
Name of Bank
Operators'
Salaries
Boston
$
240.00
New York
789.98
Philadelphia
225,00
Cleveland
524.00
Richmond
300.00
Atlanta
240,00
Chicago
(#)4,555.02
St. Louis
100,00
Minneapolis
275,00
Kansas City
310.00
Dallas
3.70.00
Sen F r a n c i s c o
395*00
Operators'
Overtime
$
-
36,00
Extra
Compensation
$
w
$
—
-
122*50
-
*
(*>•50.00
mm
t
w
«*
*-
m
-
-
•
Fed. Res. Board
Total
Wire
Rental
15,542.15
$ 8,324.00
$ 36.00
$
122.50
Total
Expense
Pro r a t a
Share of
Total
Expense
$240.00
825.98
225.00
646.50
350.00
240.00
4,555.02
300.00
275,00
310.00
170.00
395.00
$ 1,186.43
3,422.40
1,311.32
1,918.94
1,623.54
1,813.27
3,009.31
1,789.25
1,013.51
.2,058,24
1,935.75
2,934.65
$15,592.15 $24,074.65 . $24,016.81
57.84(a)
I n c l u d e s S a l a r i e s Washington O p e r a t o r s .
Cut i n a t Washington on Richmond-Baltimore C i r c u i t .
Amount reimbursable t o Chicago.
Received from War Finance C o r p o r a t i o n c o v e r i n g b u s i n e s s f o r month of August.
Credit.
FEDERAL RESERVE BOARD
WASHINGTON, D. C.
OCTOBER 25, 1 9 a .
Credits
$
240.00
825.98
225.00
646.50
350.00
240.00
4*555.02
300.00
275.00
310.00
170.00
395.00
Payable t o
Federal
Reserve
Board
$
946.43
2,596.42
1,086.32
1,272.44
1,273.54
, •1,573.27
(**)1,545.71
1,489.25
738.51
1,748.24
1,765.75
2,539-85
15,542.15
$24,016.81
(#)
(*)
(&)
(a)
(**)
,0,h.
X-3234b
Y
$8,532.50
$ 17,030.02
1,545.71(6)
$ 15,484.31
FEDERAL
RESERVE
B O H I
STATEMENT FOR THE PRESS
X-3235
For Release i n Morning P a p e r s ,
Tuesday, November 1, 1921.
The f o l l o w i n g 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 c o n d i t i o n s 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 d u r i n g the month of October, as
c o n t a i n e d i n the forthcoming i s s u e of the F e d e r a l
Reserve B u l l e t i n .
Marketing of a g r i c u l t u r a l p r o d u c t s has proceeded r a p i d l y
d u r i n g the month of October.
This has had a b e n e f i c i a l i n f l u e n c e
i n s t i m u l a t i n g t h e a c t i v i t y of important l i n e s of i n d u s t r y and t r a d e .
The h i g h e r p r i c e s r e a l i z e d by t h e f a r m e r f o r tobacco and c o t t o n , and
from heavy s a l e s abroad of c e r e a l s have g i v e n him ready c a s h and have
brought him i n t o t h e market f o r p u r c h a s e s of s e a s o n a b l e goods w i t h
c o r r e s p o n d i n g b e n e f i t to t r a d e i n the producing r e g i o n s .
Improved
c o l l e c t i o n s and the r e d u c t i o n of o u t s t a n d i n g l o a n accounts have
followed i n the t r a i n of t h i s renewed a c t i v i t y .
The b e g i n n i n g s of
improvement a r e n o t i c e a b l e , even i n p o r t i o n s of the c o u n t r y s u c h as
some of the s o u t h e r n and s o u t h w e s t e r n d i s t r i c t s where c r e d i t c o n d i t i o n s
have been more s e r i o u s t h a n g e n e r a l l y .
Some d i s t i n c t l y encouraging elements i n t h e g e n e r a l b u s i n e s s
s i t u a t i o n are t o be n o t e d .
among t h e s e .
The outlook i n t h e t e x t i l e i n d u s t r i e s i s
There has b e e n a more a c t i v e demand f o r raw wool,
e s p e c i a l l y of t h e medium g r a d e s h e r e t o f o r e i n s m a l l e r demand.
While
i t i s t r u e t h a t u n c e r t a i n t y of the f u t u r e of c o t t o n p r i c e s has l e d some
x-3235
^
2
t e x t i l e manufacturers to hold off , the d i s p o s i t i o n to buy has been
Tnuch more pronounced during the p a s t few weeks.
Consumption of raw
m a t e r i a l s Continues a t a high f i g u r e and the t o t a l used in September
was i n e x c e s s of that reported f o r September, 1920.
B a s i c m a n u f a c t u r i n g and s t r u c t u r a l i n d u s t r i e s have n o t y e t shown
t h e i n f l u e n c e of r e v i v i n g demand except i n a l i m i t e d d e g r e e .
There has
been some i n c r e a s e i n a c t i v i t y , a l t h o u g h t h e e x t e n t of i t has v a r i e d
q u i t e m a t e r i a l l y a s between i n d u s t r i e s -
I n i r o n and s t e e l an i n c r e a s e
b o t h i n p r o d u c t i o n and i n u n f i l l e d o r d e r s has t ak en p l a c e which, a l though l i m i t e d i n amount, i s regarded as of f i r s t r a t e importance as
marking t h e t u r n from the low p o i n t -
Conditions s u r r o u n d i n g the p r o -
d u c t i o n and s a l e of n o n - f e r r o u s m e t a l s a r e m a t e r i a l l y improved i n t h e
s o u t h w e s t e r n mining d i s t r i c t s , and bituminous c o a l p r o d u c t i o n has shown
a substantial increase.
B e t t e r c o n d i t i o n s a r e a l s o r e p o r t e d i n the
limber i n d u s t r y , one or two D i s t r i c t s , n o t a b l y M i n n e a p o l i s , however,
f u r n i s h i n g an e x c e p t i o n .
The a c t i v i t y of b u i l d i n g has b e e n p a r t i c u l a r l y
noteworthy b e c a u s e of i t s c o n t i n u a n c e beyond t h e time when a s e a s o n a l
r e a c t i o n would o r d i n a r i l y o c c u r .
The b e t t e r c o n d i t i o n s i n the a g r i c u l t u r a l d i s t r i c t s , accompanied
b y improved b u y i n g demand and t h e e n l a r g e d a c t i v i t y i n m a n u f a c t u r i n g ,
have n a t u r a l l y been, r e f l e c t e d i n i n c r e a s e d a c t i v i t y of w h o l e s a l e t r a d e .
An improvement has b e e n noted i n the m a j o r i t y of c a s e s f o r f o u r l e a d i n g
r e p o r t i n g l i n e s , a l t h o u g h i n t h e c a s e , o f w h o l e s a l e g r o c e r i e s t h e r e has
b e e n r e a c t i o n i n a few i n s t a n c e s .
The s a l e of c e r t a i n s e a s o n a l a r t i c l e s
which would o r d i n a r i l y show an i n c r e a s e a t t h i s p e r i o d of t h e y e a r , h a s
i n some c a s e s f a i l e d t o do so owing t o t h e m i l d w e a t h e r .
has b e e n w e l l m a i n t a i n e d i n most p a r t s of t h e c o u n t r y .
Retail trade
x-3235 -1JL
- 3 _
Index numbers of p r i c e s appear t o show t h a t t h e p r i c e l e v e l has
a t t a i n e d a s u b s t a n t i a l degree of s t a b i l i t y .
The index number of the
F e d e r a l Reserve Board shows no change d u r i n g t h e month of September,
w h i l e commercial index numbers r e f l e c t t e n d e n c i e s t o s l i g h t l y h i g h e r
prices.
P r i c e s a r e g e n e r a l l y i n b e t t e r r e l a t i o n t o one a n o t h e r than
a t any time d u r i n g the p a s t e i g h t e e n months-
I n f o r e i g n c o u n t r i e s the
same degree of s t a b i l i t y h a s , of c o u r s e , n o t been a t t a i n e d , b u t i n d i c a t i o n s i n some p o i n t t o the b e l i e f t h a t t h e bottom has b e e n r e a c h e d .
Although unemployment continued to b e a s e r i o u s element i n t h e
e x i s t i n g i n d u s t r i a l s i t u a t i o n , t h e r e has been a f a i r l y g e n e r a l i n c r e a s e
i n the number of men employed.
Relatively l i t t l e labor unrest exists at
t h e p r e s e n t time, but the announcement of a c a l l f o r a n a t i o n w i d e r a i l road s t r i k e has
produced, i n some D i s t r i c t s , a t l e a s t , an e f f o r t t o
speed up i n d u s t r i a l a c t i v i t i e s i n o r d e r t o r e n d e r p o s s i b l e l a r g e r r a i l
shipments i n a n t i c i p a t i o n of a p o s s i b l e c r i p p l i n g of t h e t r a n s p o r t system.
The p o s s i b i l i t y of such a s t r i k e has a p p a r e n t l y b e e n r e f l e c t e d only t o a
s l i g h t d e g r e e i n o t h e r branches of i n d u s t r i a l a c t i v i t y d u r i n g the month,
p o s s i b l y owing t o the b e l i e f t h a t an accommodation d e s i g n e d t o p r e v e n t
t h e occurrence of a s t r i k e would be a r r i v e d a t .
Steady l i q u i d a t i o n of c r e d i t , i n c r e a s e s i n r e s e r v e s t r e n g t h and of
r e s e r v e r a t i o s , and some d e c l i n e i n b i l l s held by F e d e r a l Reserve Banks,
have been the c h a r a c t e r i s t i c f e a t u r e s of t h e month from t h e banking s t a n d point.
F i n a n c i a l l y the o u t s t a n d i n g occurrence h a s been the marked i n c r e a s e
i n the p r i c e s of s t a n d a r d b o n d s , p a r t i c u l a r l y of L i b e r t y b o n d s , and the
l i m i t e d d e c l i n e i n r a t e s of i n t e r e s t .
great
F o r e i g n exchange, however, h a s shown
j , i n s t a b i l i t y l a r g e l y due t o d i s t u r b e d p o l i t i c a l c o n d i t i o n s i n f o r e i g n
c o u n t r i e s and c o n t i n u e d d i f f i c u l t y of d e v i s i n g any system of i n t e r n a t i o n a l
financing.
- u•AGRICUI/TURE:
x-3235 1 1 / 3 8
>.
The average c o n d i t i o n of a l l c r o p s i n t h e United S t a t e s
continued t o d e c l i n e d u r i n g September and t h e compoaite c o n d i t i o n on
October 1 , was $ 1 . 1 p e r c e n t of t h e i r t e n - y e a r average c o n d i t i o n on t h a t
date.
The aggregate c r o p p r o d u c t i o n t h i s y e a r i s e s t i m a t e d t o be 16-9
p e r c e n t lower than l a s t y e a r .
The tobacco and p o t a t o c r o p s showed n o t a b l e
improvement d u r i n g September, b u t t h i s was more than counterbalanced by
f u r t h e r d e t e r i o r a t i o n of the c o t t o n and g r a i n c r o p s .
The p r o d u c t i o n of
c o m was f o r e c a s t e d on October 1 t o amount t o 3»163,063,000 b u s h e l s , an
i n c r e a s e of 12 p e r cent over the average p r o d u c t i o n of the p a s t t e n y e a r s .
D i s t r i c t No. 7 (Chicago) s t a t e s t h a t the g e n e r a l q u a l i t y of the corn crop
i s good, a l t h o u g h t h e r e has been c o n s i d e r a b l e damage from worms and mold.
The c o n d i t i o n of corn i n D i s t r i c t No. 9 (Minneapolis) improved d u r i n g
September and t h e e s t i m a t e d p r o d u c t i o n i s 9 per, 'cent g r e a t e r than i n 1920.
Production i n D i s t r i c t No. 8 (St* Louis) i s a l s o l a r g e r than i n 1920, b u t
the q u a l i t y i s d i s a p p o i n t i n g on account of damage from e a r worms and c o r n
borers.
The c o n d i t i o n
of t h e white p o t a t o c r o p has shown marked improve-
ment d u r i n g t h e p a s t two months.
totaled
The e s t i m a t e d p r o d u c t i o n on October 1
345,844,000 b u s h e l s , as compared w i t h 322,985,000 b u s h e l s on
September 1 .
D i s t r i c t No. 9 (Minneapolis) r e p o r t s an e s t i m a t e d p r o d u c t i o n
of 43,146,000 b u s h e l s of p o t a t o e s on October 1, an i n c r e a s e of 13,2 p e r
c e n t over t h e e s t i m a t e of September 1«
excellent progress.
Seeding of w i n t e r wheat i s making
D i s t r i c t s No. 10 (Kansas City) and No. 8 ( S t .
Louis),
b o t h r e p o r t ' t h a t c e r e i s being taken to seed the wheat l a t e enough t o
avoid th# i n f e c t i o n of the Hessian f l y .
An i n c r e a s e d acreage of w i n t e r
wheat i s i n d i c a t e d i n D i s t r i c t No. 8 ( S t . Louis) , b u t no a c r e a g e r e p o r t s
have y e t been r e c e i v e d i n D i s t r i c t No. 10 (Kansas C i t y ) .
x-3235
- 5 COTTON:
I i ""Vi
The c o n d i t i o n of the c o t t o n c r o p on September 24, was
M2.2 p e r c e n t , which f o r e c a s t s a p r o d u c t i o n of about 6,537,000 b a l e s *
During t h e c u r r e n t season, h e a t and drought f o r c e d e a r l y m a t u r i t y of c o t t o n ,
while l a c k of f e r t i l i z e r and e x t e n s i v e b o l l weevil a c t i v i t y combined to
lower the q u a l i t y and y i e l d .
D i s t r i c t No« 11 ( D a l l a s ) r e p o r t s t h a t t h e r e
has been no improvement i n the crop s i n c e September 25 i n any of the
D i s t r i c t s which were i n f e c t e d with b o l l weevils•
except i n the northwestern p a r t of Texas.
Picking i s completed
Reports from D i s t r i c t No- 6
( A t l a n t a ) s t a t e t h a t unfavorable weather, l a t e p l a n t i n g , s t i n t e d use of
f e r t i l i z e r , and b o l l weevil ravages w i l l r e s u l t i n the s h o r t e s t c o t t o n
crop Georgia*^ has had f o r over f o r t y y e a r s .
The army worm has spread over
the f i e l d s of M i s s i s s i p p i and Tennessee d u r i n g the p a s t month, awl has
destroyed a l l the f o l i a g e .
much shedding.
This has• damaged young b o l l s and r e s u l t e d i n
I n F l o r i d a t h e c r o p i s p r a c t i c a l l y a l l picked and ginned.
D i s t r i c t No. 5 (Richmond) s t a t e s t h a t c o t t o n i s opening r a p i d l y and t h a t
most of i t w i l l be picked by November 1 .
Farmers appear t o s e l l c o t t o n
f r e e l y , whenever the market p r i c e i s h i g h e r than twenty c e n t s a pound, b u t
seem r e l u c t a n t t o s e l l a t lower l e v e l s •
TOBACCO:
Favorable weather c o n d i t i o n s i n c e r t a i n D i s t r i c t s led t o an
i n c r e a s e i n the estimated p r o d u c t i o n of tobacco, the f i g u r e f o r October 1 ,
b e i n g 991,564,000 pounds.
The q u a l i t y of the c r o p i n D i s t r i c t No. 3
( P h i l a d e l p h i a ) i s e x c e l l e n t , while i t i s r e p o r t e d from D i s t r i c t No. 8
( S t . Douis) t h a t the Bur l e y crop w i l l c o n t a i n a h i g h p e r c e n t a g e of the b e s t
grades and t h a t the crop i n the western d a r k d i s t r i c t s i s among the f i n e s t
ever r a i s e d .
B r i g h t tobacco i s being marketed s t e a d i l y on the North
C a r o l i n a and V i r g i n i a markets, and p r i c e s seem t o be f a i r l y s a t i s f a c t o r y
to the growers.
As the season has advanced, p r i c e s have tended t o rise.,
x-3235
-
JJ
-
6 -
due l a r g e l y t o b e t t e r g r a d e s coming on the f l o o r .
Medium t o f i n e g r a d e s
are "bought e a g e r l y , b u t the p r i c e s o f f e r e d f o r common t o b a c c o have cont i n u e d low.
Leaf d e a l e r s i n t h a t d i s t r i c t r e p o r t an r c t i v e b u s i n e s s ,
e s p e c i a l l y f o r c i g a r e t t e and smoking tobacco, b u t i n D i s t r i c t No. 3
(Philadelphia) business is
s t i l l d u l l , as c i g a r m a n u f a c t u r e r s seem t o
have s u f f i c i e n t tobacco f o r t h e i r p r e s e n t n e e d s .
Sales of c i g a r s i n t h a t
D i s t r i c t c o n t i n u e a t about t h e same l e v e l as d u r i n g September.
This i s
due i n p a r t t o the r e c e i p t of Christmas o r d e r s , a l t h o u g h t h e s e are not i n
as g r e a t volun;e as i n normal y e a r s .
Manufacturers i n D i s t r i c t No. 5
(Richmond) a r e r e c e i v i n g t h e i r u s u a l b u s i n e s s f o r domestic consumption
b u t are as y e t doing l i t t l e f o r e i g n b u s i n e s s .
/• tendency towards lower
p r i c e s i s r e p o r t e d , c h i e f l y through the i n t r o d u c t i o n of new brands of
c i g a r s and c i p a r e t t e s .
FRUIT:
Deciduous f r u i t s showed a moderate improvement i n p r o s p e c t s
d u r i n g September, while c i t r u s f r u i t s r e g i s t e r e d c o n s i d e r a b l e d e t e r i o r a t i o n .
The apple c r o p i n the United S t a t e s i s only 57 *8 p e r c e n t of the t e n - y e a r
average , b u t a record crop has been h a r v e s t e d i n the P a c i f i c Northwest»
•Apple shipments f o r the season t o October 8, 1921, from Idaho, Oregon
and Washington
t o t a l e d 8,491 c a r l o a d s , an i n c r e a s e of 209 p e r c e n t over
shipments i n the c o r r e s p o n d i n g p e r i o d of 1920.
C a l i f o r n i a g r a p e shipments
p r i o r t o October 8, amounted t o 19,658 c a r s , an i n c r e a s e of 12 p e r c e n t
over 1920.
The 1921 crop of r a i s i n s i n C a l i f o r n i a , however, w i l l only
amount t o about 125,000 t o n s , a d e c l i n e of 31 p e r c e n t f r o m t h e p r o d u c t i o n
i n 192C;
D i s t r i c t No. 6 (.Atlanta) r e p o r t s t h a t the F l o r i d a c i t r u s f r u i t s have
s u f f e r e d from d r y weather and t h a t the c o n d i t i o n of oranges i s lower than
i n t h e . ^ a s t three years
G r a p e f r u i t a l s o d e t e r i o r a t e d d u r i n g September,
X-3235
- 7 b u t limes showed l i t t l e change, as t h e h u l k of the lime c r o p had a l r e a d y
"been h a r v e s t e d .
The Georgia watermelon crop i s b e l i e v e d t o have been
the l a r g e s t ever h a r v e s t e d , and shipments reached t h e record t o t a l of
15,791 c a r s .
GRAIN MOVEMENTS:
Grain r e c e i p t s contineud on an u n u s u a l l y l a r g e s c a l e
throughout September, although t h e r e was some r e c e s s i o n from the record
movements of August.
Wheat r e c e i p t s a t Minneapolis and Duluth t o t a l e d
32,108,426 b u s h e l s d u r i n g September, as compared w i t h 21,911,320 bushels
i n -August and 22,698,772 b u s h e l s i n September, 1920-
At the f o u r p r i n c i p a l
markets of D i s t r i c t No. 10 (Kansas City) 21,981,400 b u s h e l s of wheat were
received d u r i n g September, as compared w i t h 29,955,300 b u s h e l s i n August
and 13,179»200 b u s h e l s in September, 1920.
I t i s e s t i m a t e d t h a t 66 p e r c e n t
of the Kansas wheat crop of 1921 had passed i n t o t r a d e channels by October 1 .
Receipts of c o m a t Chicago t o t a l e d 23,406,000 b u s h e l s i n September, as
compared w i t h 16,810,000 b u s h e l s i n August and 12,061,000 b u s h e l s i n
September,. 1920.
Com r e c e i p t s a t the f o u r l e a d i n g markets of D i s t r i c t
No. 10 (Kansas City) were 15 p e r c e n t g r e a t e r i n September t h a n i n September,
1920, while r e c e i p t s of oats were about 6 p e r cent s m a l l e r .
Oat r e c e i p t s a t
Chicago d e c l i n e d from 16,722,000 bushels i n August to 6,306,000 b u s h e l s i n
September.
Stocks of g r a i n a t i n t e r i o r c e n t e r s showed a marked i n c r e a s e
d u r i n g September, a l t h o u g h t h e r e was a s l i g h t d e c l i n e i n the s t o c k of r y e .
Stocks .of oats a r e s t i l l accumulating i n t e r m i n a l e l e v a t o r s a t Minneapolis
and amounted t o 18,114,082 b u s h e l s a t the end of September, as compared w i t h
3,^991862 b u s h e l s on the same d a t e i n 1920.
x-3235
- 5 •
I I
"FLOUR: l U r t h e r i n c r e a s e occurred i n f l o u r p r o d u c t i o n d u r i n g September
R e p o r t i n g m i l l s i n D i s t r i c t No. 9 (Minneapolis)produced 3 » 2 4 l , 9 2 6 b a r r e l s
d u r i n g the f i v e weeks ending October 1, 1921, and i n c r e a s e of 16 p e r c e n t
over t h e f i g u r e of 2,797*170 b a r r e l s d u r i n g t h e p r e c e d i n g f i v e weeks, and
U) p e r c e n t over t h e o u t p u t of 2,265»530 b a r r e l s d u r i n g the c o r r e s p o n d i n g
period l a s t year.
The o u t p u t of r e p o r t i n g m i l l s i n D i s t r i c t No. 10
(Kansas C i t y ) was 2,195,900 b a r r e l s d u r i n g t h e f o u r weeks ending October 1
an i n c r e a s e of 57 P e r csent over the f i g u r e f o r the c o r r e s p o n d i n g p e r i o d
of 1920.
I n D i s t r i c t No. 12 (San F r a n c i s c o ) s i x t y - f o u r m i l l s produced
970,632 b a r r e l s d u r i n g September, as compared w i t h 662,190 b a r r e l s b y
70 m i l l s i n August, an i n c r e a s e of 46 p e r c e n t *
Since the end of
September, however, b u s i n e s s i n D i s t r i c t No. 8 ( S t . Louis) has dropped
o f f , due l a r g e l y t o the d e c l i n e i n wheat p r i c e s which u p s e t c o n f i d e n c e
i n f l o u r p r i c e s and
caused p u r c h a s e r s t o d e f e r p l a c i n g q u a n t i t y o r d e r s
or orders f o r f u t u r e d e l i v e r y .
I n t e r i o r Kansas m i l l e r s complain t h a t
they a r e b e i n g h e a v i l y handicapped by the v e r y h i g h permiums on good
m i l l i n g wheat c r e a t e d by t h e buying of o u t s i d e m i l l s .
Some e x p o r t demand,
c e n t e r i n g i n the lower g r a d e s , has appeared i n D i s t r i c t No. 8 ( S t . L o u i s ) ,
w h i l e t h e r e was an i n c r e a s e d volume of b o t h f o r e i g n and domestic b u s i n e s s
i n D i s t r i c t No. 12 (San F r a n c i s c o ) d u r i n g September.
Trade w i t h the
O r i e n t h a s b e e n hampered b y i n a b i l i t y t o o b t a i n s u f f i c i e n t c a r g o space
f o r immediate shipmentLIVESTOCK:
L i v e s t o c k i s g e n e r a l l y i n good c o n d i t i o n , and w i n t e r
ranges on t i e whole a r e e x c e l l e n t .
Movement of c a t t l e and c a l v e s t o
market has c o n t i n u e d a t about t h e same l e v e l , September r e c e i p t s a t
15 w e s t e r n markets b e i n g 1,417,259 head, as compared w i t h 1,418,237 head
d u r i n g August and 1>737»469 bead d u r i n g September, 1920.
index numbers were l 4 l , l 4 l , and 1J2.
The r e s p e c t i v e
R e c e i p t s of h o g s , however, d e -
c r e a s e d f r o m 1 , 9 1 9 , 5 1 4 head d u r i n g August, c o r r e s p o n d i n g t o an index
number of 87, t o 1,7831827 head d u r i n g September, c o r r e s p o n d i n g to an
index number of 81, as compared w i t h 1,545*842 head d u r i n g September, 1920,
c o r r e s p o n d i n g t o an index number of 70*
Sheep r e c e i p t s , on t h e o t h e r hand,
i n c r e a s e d from 1 , 5 6 8 , 5 8 4 head d u r i n g August t o 1,651,659 head d u r i n g
September, as compared w i t h 1,892,327 head d u r i n g September, 1920.
r e s p e c t i v e index numbers were 115, 121, and 13S.
The
The lower m a r k e t s i n
e a r l y October s t i m u l a t e d p u r c h a s i n g of f e e d e r c a t t l e a t Chicago, while
more c o u n t r y b u y e r s were a t the markets of D i s t r i c t Ho. 10 (Kansas City)
a t t h e b e g i n n i n g of the t h i r d week i n October than f o r many months, due
t o the abundance of f e e d i n the c o u n t r y and lower p r i c e s of s t o c k e r s and
feeders.
The f e a t u r e d u r i n g September a t F o r t Worth was the s t r o n g
c o m p e t i t i o n g i v e n t h e packers by the o u t s i d e b u y e r s .
Chicago l i v e c a t t l e p r i c e s d e c l i n e d as a r u l e throughout September,
b u t s t r e n g t h e n e d i n e a r l y October.
Twenty-four r e p r e s e n t a t i v e packers
r e p o r t an i n c r e a s e of 0«l4 p e r c e n t i n September s a l e s (measured i n d o l l a r s )
over t h o s e d u r i n g August, b u t a d e c r e a s e of 36«5 p e r c e n t f r o m September,
1920 s a l e s .
Operations a t t h e l a r g e packing c e n t e r s of D i s t r i c t No. 10
(Kansas C i t y ) d u r i n g September showed a s l i g h t f a l l i n g o f f as compared
w i t h August, b u t when compared w i t h a y e a r ago showed an i n c r e a s e f o r hogs
and sheep and a pronounced d e c r e a s e f o r c a t t l e and c a l v e s .
Stocks of meat
i n s t o r e a t t h e end of September were c o n s i d e r a b l y l e s s t h a n a t t h e end
of August-
The consuming p u b l i c d u r i n g the month c o n t i n u e d t o p r e f e r the
more expensive m e a t s , while t h e r e was a s l a c k e n i n g of e x p o r t t r a d e .
x-3235
-
COAL:
10 -
There was a s l i g h t i n c r e a s e i n the p r o d u c t i o n of bituminous
c o a l f o r t h e month of September.
The o u t p u t was 35?105»000 t o n s , c o r -
responding t o an index number of 95 • as compared w i t h 3 4 , 5 3 ^ , 0 0 0 t o n s ,
c o r r e s p o n d i n g t o an index number of 93 d u r i n g August*
This i n c r e a s e was
found i n s p i t e of t h e f a c t t h a t p r o d u c t i o n d u r i n g the f i r s t h a l f of t h e
month was a t a r e l a t i v e l y low l e v e l , due t o a v a r i e t y of c a u s e s .
The
output i s s t i l l c o n s i d e r a b l y below t h e September, 1920, f i g u r e of
49,172,000 t o n s ,
D i s t r i c t No. 3 ( P h i l a d e l p h i a ) b e l i e v e s t h a t undoubtedly
a p a r t of t h e i n c r e a s e d September tonnage i s b e i n g s t o c k e d b u t t h a t i t
n e v e r t h e l e s s r e p r e s e n t s an a c t u a l resumption of i n d u s t r i a l a c t i v i t y P r i c e s , however, have not i n c r e a s e d , b u t on t h e c o n t r a r y q u o t a t i o n s on
many grades are lower than t h e y were a month ago.
D i s t r i c t s Nosi
4,
( C l e v e l a n d ) , No. 5 (Richmond), and No* 6 (.Atlanta) r e p o r t an improvement
i n the demand f o r p r e p a r e d s i z e s f o r domestic u s e , b u t s t a t e t h a t as
i n d u s t r i a l consumers are s t i l l o r d e r i n g i n s m a l l q u a n t i t i e s , steam s i z e s
move slowly and i t i s d i f f i c u l t t o f i l l t h e demand f o r the p r e p a r e d s i z e s .
September a n t h r a c i t e p r o d u c t i o n d e c r e a s e d t o 7»124,000 tons from the
August f i g u r e of 7,196,000 t o n s .
97•
The r e s p e c t i v e index numbers were 96 and
B u s i n e s s i n g e n e r a l i s s t i l l i n small l o t s f o r immediate n e e d s , b u t
t h e market f o r t h e steam s i z e s i n D i s t r i c t No. 3 ( P h i l a d e l p h i a ) i s improving
somewhat.
Company p r i c e s remain approximately the same on b o t h steam and
p r e p a r e d s i z e s , while some of t h e independent p r o d u c e r s have advanced t h e i r
q u o t a t i o n s , n o t only on stove and c h e s t n u t
~ ibut on f i n e s i z e s also,,
I n c r e a s e d a c t i v i t y i n t h e i r o n and s t e e l i n d u s t r y has been r e f l e c t e d
by an i n c r e a s e i n b o t h b e e h i v e and b y - p r o d u c t coke p r o d u c t i o n during 1
September.
Beehive coke p r o d u c t i o n i n c r e a s e d from 248,000 t o n s d u r i n g
• XI August t o 289,000 tons d u r i n g September, b u t w i t h t h i s i s t o be c o n t r a s t e d
an o u t p u t of 1,757,667 tons d u r i n g September, 1920.
numbers a r e 9*5, 11, and 67.
The r e s p e c t i v e index
By-product coke p r o d u c t i o n i n c r e a s e d from
1,402,000 tons i n August t o 1,423,000 t o n s i n September, the r e s p e c t i v e
index numbers b e i n g 159 and l 6 l .
According t o r e p o r t s f r o m t h e v a r i o u s f i e l d s p r o d u c t i o n
PETROLEUM:
of crude p e t r o l e u m i n September was much c u r t a i l e d a s compared w i t h August.
In C a l i f o r n i a t h i s was t h e r e s u l t of a s t r i k e of o i l f i e l d employees i n one
of t h e h e a v i e s t producing s e c t i o n s of t h e S t a t e .
D a i l y average p r o d u c t i o n
was 264,314 b a r r e l s , the s m a l l e s t r e p o r t e d i n the p a s t two and one h a l f y e a r s ,
and was only 8 1 . 6 p e r c e n t of t h e amount produced i n August, 1921. Consumpt i o n d u r i n g September exceeded t h i s c u r t a i l e d p r o d u c t i o n by 5 , 2 7 4 b a r r e l s
d a i l y , and thus f o r the f i r s t time i n many months s t o r e d s t o c k s were drawn
upon,
September 30, t h e s e s t o c k s stood a t 33>671,495 b a r r e l s as compared
w i t h 33.829,725 b a r r e l s on August 3 1 , 1921*
I n t h i s f i e l d , 47 new w e l l s
were opened d u r i n g the month w i t h an i n i t i a l d a i l y p r o d u c t i o n of 8,690
b a s f r e l s as compared w i t h 83 w e l l s i n August w i t h a d a i l y p r o d u c t i o n of
20,895 b a r r e l s .
In. the Kansas-Oklahoma f i e l d , p r o d u c t i o n d e c l i n e d about
1,000,000 b a r r e l s f o r September as compared w i t h August, b u t was 500,500
b a r r e l s i n e x c e s s of the September, 1920 f i g u r e .
have i n c r e a s e d .
Stocks a r e r e p o r t e d t o
D r i l l i n g o p e r a t i o n i n Kansas,Oklahoma and Wyoming c o n t i n u e d
t o be somewhat c u r t a i l e d , 403 w e l l s b e i n g completed w i t h a d a i l y p r o d u c t i o n
of 53,901 b a r r e l s *
That t h e number of w e l l s completed i s n o t always i n d i c a -
t i v e of t h e amount of new p r o d u c t i o n i s shown by t h e f i g u r e s f o r September,
1920, when 1,048 w e l l s were completed w i t h a d a i l y average of only 83,917
barrels•
According t o u n o f f i c i a l r e p o r t s , p r o d u c t i o n of c r u d e o i l f o r t h a t
d i s t r i c t d u r i n g September amounted t o a p p r o x i m a t e l y 12,528,750 b a r r e l s .
1161
x-3235
» 12 -
D i s t r i c t No. 11 (Dallas) a l s o reported decreased production i n September
with the exception of the Texas Coastal Zone, while 171 w e l l s were completed
during September as compared with 223 during August*
i s r e p o r t e d , from $1.00 p e r b a r r e l t o $1.75*
An advance i n p r i c e
This i n c r e a s e apparently has
had no e f f e c t on the demand, which has grown s t e a d i l y s t r o n g e r .
IRON ftM) STEEL:
A c o n t i n u a t i o n during thb f i r s t h a l f of October of
the improvement noted i n the i r o n and s t e e l i n d u s t r y during September i s
reported.
Pig i r o n production during the l a t t e r month amounted t o 985»529
tons, corresponding to an index number of 4}# as compared w i t h 954,193 tons
during August, corresponding to an index number of 4 l , and t h e r e was a n e t
gain of 12 i n the number of f u r n a c e s i n b l a s t .
showed
S t e e l ingot production
s i m i l a r i n c r e a s e , f r a n 1,138,071 tons during August t o 1,174,740
tons during September.
The r e s p e c t i v e index numbers were 49 and 51*
The
increased volume of business was r e f l e c t e d i n an i n c r e a s e , the f i r s t since
J u l y , 1920 in 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,
frem 4,531,926 tons at the c l o s e of August, corresponding to an index
number of 86, to 4,560,670 tons a t the c l o s e of September, corresponding
to an index number of 87*
As a r e s u l t of increased o r d e r s , and more f r e e
s p e c i f i c a t i o n by consumers a g a i n s t old o r d e r s , production has i n c r e a s e d .
•i A ,.f •>
X-3235 -k--i
- 13 The l i g h t e r p r o d u c t s , such as s h e e t s , t i n p l a t e and w i r e
a r e making the b e s t showing, and s h e e t p r i c e s have b e e n advanced.
v •
The September ingot p r o d u c t i o n f i g u r e g i v e n above i s s a i d t o be
h a r d l y a c r i t e r i o n of s t e e l making a c t i v i t y , a s t h e s e l i g h t e r
p r o d u c t s c o n s t i t u t e d most of t h e o u t p u t , and m i l l s f r e q u e n t l y
had s u f f i c i e n t s t o c k s of raw m a t e r i a l on hand.
The h e a v i e r
m a t e r i a l s i n g e n e r a l have continued t o be s l u g g i s h i n D i s t r i c t
No. 4 ( C l e v e l a n d ) .
The r e d u c t i o n of 28 p e r c e n t i n r a i l r o a d f r e i g h t r a t e s on
Lake o r e , e f f e c t i v e October 20, has b r o u g h t t h e q u e s t i o n c£ a
g e n e r a l r e d u c t i o n i n i r o n and s t e e l f r e i g h t r a t e s p r o m i n e n t l y
before the industry.
P r i c e s themselves a r e riot v e r y f i r m l y
e s t a b l i s h e d , even w i t h o u t t h i s a d d i t i o n a l f a c t o r , and t h e market
has been c h a r a c t e r i z e d a s " s p o t t y and uneven" .
New b u s i n e s s
i n t h e i n d u s t r y as a whole has been l i g h t e r s i n c e about t h e
middle of t h e month, while l i t t l e a t t e n t i o n i n g e n e r a l has b e e n
p a i d by e i t h e r p r o d u c e r s or consumers t o t h e p o s s i b i l i t y of a
t i e - u p of t r a n s p o r t a t i o n , a l t h o u g h some consumers have endeavored
t o h u r r y shipments i n o r d e r t o accumulate some s t o c k s .
i l u
-14"
AUTOMOBILES.
x-3235
September shipments of automobile m a n u f a c t u r e r s
d e c r e a s e d somewhat from t h e August f i g u r e s .
Carload shipments were
2 0 , 1 5 0 c a r l o a d s , a s compared w i t h 20,758 i n August and 20, 804 i n
September, 1920.
Driveaways and boat shipments a l s o d e c r e a s e d
and were roughly t w o - t h i r d s of t h o s e i n September, l g 2 0 .
Little
change i n c o n d i t i o n s i n t h e i n d u s t r y on the whole i s r e p o r t e d .
P r i c e r e d u c t i o n s a l o n e have f r e q u e n t l y proved i n e f f e c t u a l i n s t i m ulating sales.
Purchasers are exercising great discrimination,
and t h e m a j o r i t y of o r d e r s a r e s t a t e d t o have been f o r a few s t a n d a r d
makes.
M a n u f a c t u r e r s of such c a r e have had s a l e s i n e x c e s s of l a s t
y e a r , but i n g e n e r a l t h e b u s i n e s s done h a s n o t been more t h a n h a l f
t h a t of t h e same p e r i o d l a s t y e a r , and f o r t r u c k s not over 35 t o 40
per cent.
M a n u f a c t u r e r s ' and d e a l e r s ' s t o c k s of f i n i s h e d c a r s ,
however, a r e n o t l a r g e .
Seasonal a d j u s t m e n t s of p r o d u c t i o n a r e b e i n g
made, t o correspond w i t h t h e n a t u r a l d e c l i n e i n buying a t t h i s time
of t h e y e a r .
NONFERROUS METALS.
The l a t t e r p a r t of September and f i r s t p a r t
of October showed an i n c r e a s e i n t h e demand f o r t h e n o n f e r r o u s m e t a l s .
The p r i c e of copper (New York, n e t r e f i n e r y ) was 12.75 c e n t s p e r
pound on October 15 a s compared w i t h 1 2 . 2 5 c a n t s on October 1, but t h e
p r i c e of l e a d remained s t a t i o n a r y a t 4 . 7 0 c e n t s p e r pound.
While
copper and z i n c remain t h e most a c t i v e m e t a l s , t h e r e h a s a l s o been a
s l i g h t i n c r e a s e i n t h e p r i c e of z i n c .
Copper p r o d u c t i o n i n September
amounted t o 1 $ , 6 8 2 , 5 5 4 pounds, i n comparison w i t h a p r o d u c t i o n of
20, 013/ 569 pounds i n August, or a d e c r e a s e of 331,015 pounds*
Zinc
x-3235
p r o d u c t i o n amounted t o 14,367 t o n s , which was l e s s t h a n 40 p e r cent
of t h e September, 1920, f i g u r e .
D i s t r i c t No. 12 (San F r a n c i s c o ) r e p o r t s t h a t t e n mines engaged
i n t h e p r o d u c t i o n of gold, s i l v e r and l e a d show an i n c r e a s e d output
d u r i n g -August, 1921, both a s compared w i t h J u l y , 1921, and August,
1920.
Many of t h e mines a r e s t i l l shut down because of u n s a t i s f a c t o r y
market p r i c e s f o r t h e i r p r o d u c t s .
D i s t r i c t No. 10 (Kansas C i t y )
r e p o r t s t h a t o p e r a t o r s of t h e z i n c and l e a d mines i n t h e M i s s o u r i Kansas-Oklahoma D i s t r i c t were more o p t i m i s t i c a t t h e end of September
t h a n they had been f o r s e v e r a l months.
September shipments of z i n c
ore from t h e D i s t r i c t amounted t o 1$,97& t o n s , w i t h p r i c e s r a n g i n g
from $20 pet* t o n a t t h e b e g i n n i n g t o $21 a t t h e end of t h e f o u r week
period.
S u r p l u s s t o c k s show a s l i g h t i n c r e a s e f o r t h e month.
COTTON TEXTILES.
During t h e p a s t month t h e r e have been no
changes of moment t o r e c o r d i n t h e c o t t o n t e x t i l e i n d u s t r y .
Stab-
i l i z a t i o n of p r i c e s has not y e t been achieved but f l u c t u a t i o n s a r e
l e s s extreme and t h e r e i s a growing d i s p o s i t i o n t o b e l i e v e t h a t t h e
t i m e i s n o t f a r d i s t a n t when o r d e r s f o r f u t u r e d e l i v e r y can a g a i n be
p l a c e d w i t h some measure of c o n f i d e n c e .
Current demands from p u r -
c h a s e r s , i n combination w i t h o r d e r s p l a c e d b e f o r e r e c e n t p r i c e
advances, have enabled m i l l s t o m a i n t a i n a h i g h d e g r e e of a c t i v i t y , "•
and a s a m a t t e r of f a c t , c o t t o n consumption i n September was i n
e x c e s s of t h a t f o r September, 1920, and l i k e w i s e g r e a t e r t h a n d u r i n g
t h e p r e c e d i n g August.
The Census Bureau r e p o r t e d t h a t 484,647 b a l e s
of l i n t c o t t o n were consumed i n t h e United S t a t e s d u r i n g September
a s coup ared w i t h 457,64? b a l e s i n September, i g 2 0 and 4 6 ? , 1 0 ] b a l e s
i n August of t h i s y e a r .
the
11
D i s t r i c t No. 3 ( P h i l a d e l p h i a ) s t a t e s t h a t
grey goods market i s q u i e t and p r a c t i c a l l y f r e e from t h e
s p e c u l a t i v e element".
The market i s r e p o r t e d t o be w e l l s o l d up
f o r a month o r s i x weeks.
The demand i s almost wholly of domestic
o r i g i n and w h i l e buying i s widely d i s t r i b u t e d , o r d e r s a r e small and
f o r immediate shipment.
Many gingham m i l l s have t h e i r o u t p u t sold
up t o -April o r May and a few m i l l s not s o l d up have advanced p r i c e s
on an average about 10 p e r cent above J u l y q u o t a t i o n s .
In t h e market
f o r c o t t o n y a r n s , buying, though s t e a d y , i s i n l i m i t e d volume.
Some
m a n u f a c t u r e r s i n D i s t r i c t Ho. 3 ( P h i l a d e l p h i a ) r e p o r t t h a t t h e i r
p r o d u c t i o n i s s o l d ahead well up t o t h e f i r s t of t h e y e a r , but o t h e r s
w i l l r e q u i r e new o r d e r s if t h e i r m i l l s a r e t o m a i n t a i n t h e p r e s e n t
schedule of o p e r a t i o n .
B u s i n e s s i s s a i d t o be about evenly d i v i d e d
between weaving and k n i t t i n g y a r n s w i t h an i n c r e a s e i n i n q u i r i e s from
k n i t t i n g m i l l s , however.
The r e p o r t of D i s t r i c t No. 3 ( P h i l a d e l p h i a )
n o t e s t h a t t h e r e i s a l a r g e movement i n t o t r a d e c h a n n e l s of y a r n
s t o c k s purchased a t t h e high p r i c e s p r e v a i l i n g l a s t y e a r b u t now
s e l l i n g a t p r i c e s below t h o s e t h a t would be quoted by a s p i n n e r f o r
t h e same counts t o d a y .
Many of t h e s e y a r n s have been h e l d by com-
m i s s i o n houses which have marked down t h e i r i n v e n t o r i e s .
In D i s t r i c t
No. 5 (Richmond) h i g h e r p r i c e s s e t by t h e m i l l s have checked buying
somewhat, but o r d e r s a r e s u f f i c i e n t t o keep them r u n n i n g f u l l time
and many a r e s o l d out f o r s e v e r a l months ahead.
One l a r g e m i l l i n
t h e D i s t r i c t m a n u f a c t u r i n g t i r e y a r n s and f a b r i c s i n c r e a s e d i t s
b u s i n e s s 50 p e r cent d u r i n g t h e p a s t month w h i l e a n o t h e r c h a i n of
11GG
-17-
X-3235
m i l l s r e p o r t e d t h a t t h e y were not q u o t i n g f o r d e l i v e r i e s beyond 1$21.
In D i s t r i c t No. 6 ( A t l a n t a ) c o t t o n m i l l s a r e g e n e r a l l y s p e a k i n g
o p e r a t i n g a t f u l l c a p a c i t y and some of t h e m i l l s have even found i t
necessary to i n s t a l l night s h i f t s .
The 3^ r e p r e s e n t a t i v e c o t t o n
c l o t h m i l l s which make r e g u l a r r e p o r t s t o t h e A t l a n t a Federal Reserve
Bank produced 6 . 7 p e r cent more c l o t h i n September of t h i s y e a r t h a n
a y e a r ago, a l t h o u g h t h e September average was 6 . 1 p e r cent below
t h a t f o r August of t h i s y e a r .
However, t h i s d e c r e a s e does not q u i t e
equal t h e advance i n p r o d u c t i o n t h a t occurred d u r i n g August.
Orders
on hand a t t h e end of t h e month i n c r e a s e d 8 . 9 p e r cent a s compared
w i t h t h e end of August although t h e y were 2 8 . 4 p e r cent below t h e
o u t s t a n d i n g o r d e r s f o r a year ago*
The y a r n p r o d u c t i o n r e p o r t e d by
39 m i l l s i n t h e D i s t r i c t showed a s l i g h t d e c r e a s e , both a s compared
w i t h September, 1920 and w i t h t h e p r e c e d i n g August, t h e r e s p e c t i v e
t
p e r c e n t a g e s b e i n g 4 , 2 and 8 . 0 .
Orders on hand a t t h e end of t h e
month were, however, 3 - 0 p e r cent above t h o s e on hand a t t h e end
of August and 2 8 . 8 p e r cent above t h o s e on hand a t t h e end of
September, 1920.
FINISHERS OF COTTON FABRICS.
The 3^ m i l l s r e p o r t i n g t o t h e
N a t i o n a l A s s o c i a t i o n of F i n i s h e r s of Cotton F a b r i c s showed a f u r t h e r
i n c r e a s e of a c t i v i t y d u r i n g September f o l l o w i n g a pronounced advance
which o c c u r r e d i n August.
The t o t a l number of f i n i s h e d y a r d s b i l l e d
d u r i n g t h e month r o s e from 95,915,235 y a r d s t o 101,824,795 y a r d s !
The t o t a l grey yardage of f i n i s h i n g o r d e r s r e c e i v e d i n c r e a s e d from
101, 74l, 4 l 2 y a r d s i n August t o 107,33^,429 y a r d s i n September.
1107
-18-
X-3235
The average p e r c e n t a g e of c a p a c i t y o p e r a t e d i n c r e a s e d from 71 p e r
c e n t t o 75
c e n t , w h i l e t h e t o t a l average work ahead a t t h e end
of t h e month r o s e somewhat from an a v e r a g e of 9.6 days t o an average
of 11 d a y s .
WOOLEN TEXTILES. A r e c e n t development of s i g n i f i c a n c e f o r t h e
woolen i n d u s t r y h a s been t h e growth of a c t i v i t y i n t h e raw wool
market, and t h e appearance of a demand f o r medium and low-grade wools.
Ths Government a u c t i o n of c a r p e t wools held October 6 was q u i t e
s u c c e s s f u l a s p r a c t i c a l l y a l l of t h e wool was disposed o f .
In the
r e p o r t from D i s t r i c t No. 1 (Boston) s e v e r a l s u g g e s t i o n s a r e o f f e r e d
a s p a r t i a l e x p l a n a t i o n of t h e r e c e n t i n c r e a s e i n buying; "such a s
t h e assumption t h a t t h e emergency t a r i f f w i l l be extended, a growing
r e a l i z a t i o n t h a t a v a i l a b l e s t o c k s of b e t t e r g r a i e s of wool i n t h i s
country a r e b e i n g reduced f a s t e r t h a n i t a p p e a r s they a r e b e i n g
r e p l e n i s h e d , and sympathy w i t h h i g h e r p r i c e s and a c t i v e buying i n
the foreign markets".
There has bean p r a c t i c a l l y no change i n t h e
p e r c e n t a g e of o p e r a t i n g a c t i v i t y f o r t h e woolen and worsted m i l l s
of New England s i n c e l a s t June,
O p e r a t i o n s continue t o be a t
approximately 80 p e r c e n t of maximum c a p a c i t y .
D i s t r i c t No. 3
( P h i l a d e l p h i a ) r e p o r t s a good demand f o r y a r n s , which i s e s p e c i a l l y
s t r o n g i n t h e c a s e of k n i t t i n g y a r n s .
The r e s u l t i s t h a t t h e
m a j o r i t y of s p i n n e r s have many c o n t r a c t s f o r forward d e l i v e r y so
t h a t t h e y can t a k e very few o r d e r s t o cover immediate n e e d s .
The r e p o r t s p u b l i s h e d by t h e Bureau of t h e Census showing
a c t i v i t y i n woolen and worsted machinery i n d i c a t e t h a t t h e r e h a s been
a s l i g h t i n c r e a s e i n g e n e r a l a c t i v i t y , a s t h e p e r c e n t a g e of i d l e hours
11/
-19X-3235
r e p o r t e d on October 1 had d e c l i n e d i n a l l c a s e s except f o r looms
wider t h a n $0 inch reed s p a c e .
The p e r c e n t a g e of i d l e hours r e -
p o r t e d f o r woolen s p i n d l e s was 2 0 . 9 P e r cent on October
f i r s t as
compared w i t h 2 1 . 2 p e r cent on September f i r s t and f o r worsted
s p i n d l e s t h e p e r c e n t a g e s were 7*8 and 1 1 . 5 respectively*.
CLOTHING.
The seven w h o l e s a l e m a n u f a c t u r e r s of men's c l o t h i n g
who r e g u l a r l y r e p o r t t o the Federal Reserve Bank of Chicago showed
an i n c r e a s e i n t h e number of s u i t s made a s compared with September
1920 of 14 p e r c e n t .
The number of s u i t s shipped were 3 . 4 p e r cent
l e s s t h a n shipments d u r i n g t h e same p e r i o d a y e a r ago.
Few a d d i t i o n a l
o r d e r s a r e r e p o r t e d a s t h e s e l l i n g season i s about over, but t h e
i n c r e a s e i n September p r o d u c t i o n as compared w i t h l a s t year was due
t o t h e f a c t t h a t t h e season l a s t e d r e l a t i v e l y l a t e .
O p e r a t i o n s of
15 r e p o r t i n g t a i l o r s - t o - t h e - t r a d e a r e s t i l l g r e a t l y below t h o s e of
t h e c o r r e s p o n d i n g p e r i o d f o r l a s t y e a r , a s t h e numbed of s u i t s made
was 25.6 p e r cent l e s s t h a n f o r September 1920; shipments were 27-3
p e r cent lower; and o r d e r s were 2 8 . 5 p e r cent below t h o s e r e c e i v e d
l a s t year.
However, some improvement occurred d u r i n g t h e month, a s
t h e J u l y and August f i g u r e s were even f u r t h e r behind t h o s e of l a s t
year.
In D i s t r i c t No. 2 (New York) 11 w h o l e s a l e c l o t h i n g f i r m s
r e p o r t e d s a l e s of c l o t h i n g , both men's and women's, t o be 2 5 . 4 p e r
cent below August s a l e s and 6 5 . 1 p e r cent below t h o s e of September
1920.
SILK.
Heavy i m p o r t a t i o n s of raw s i l k i n September and. a
consumption f o r t h a t month above t h e average f o r t h e p r e c e d i n g s i x
months' p e r i o d c o i n c i d e d c u r i o u s l y enough w i t h a c u r t a i l m e n t of
-20-
o p e r a t i o n s i n t h e broad s i l k i n d u s t r y .
x-3235
D i s t r i c t No. 3 ( P h i l a d e l p h i a )
a t t r i b u t e s t h e maintenance of demand f o r t h e raw m a t e r i a l t o p u r chasing by h o s i e r y and k n i t goods m i l l s .
The a c t u a l i m p o r t a t i o n
f o r September was 35/366 b a l e s and the average monthly i m p o r t a t i o n
over a p e r i o d of s i x months was 31,7^6 b a l e s .
Consumption i n
September amounted t o 31,229 b a l e s , as compared w i t h an average f o r
t h e s i x months* p e r i o d of 30,607 b a l e s -
Recent i n c r e a s e s i n t h e
s a l e s of broad s i l k s have reduced r e t a i l e r s ' s t o c k s causing manufactu r e r s t o hope t h a t t h e i r accumulated h o l d i n g s w i l l be e v e n t u a l l y
absorbed.
Meantime, a c t i v i t y i n t h e goods m i l l s i s a t low ebb; t h e
l a t e s t r e p o r t s from P a t e r s o n f o r October 8 c o v e r i n g a t o t a l of
15,000 looms, s t a t e d t h a t only 3*696 of those looms were producing.
Of t h e t o t a l loom hours a v a i l a b l e , about 24 p e r cent were b e i n g
utilized.
A c t i v i t y was much g r e a t e r i n t h e North Hudson S e c t i o n
where 2,910 looms out of a t o t a l of 4,665 were i n o p e r a t i o n and t h e
loom hour a c t i v i t y was over
HOSIERY.
62 p e r c e n t .
The shortage of f u l l - f a s h i o n e d s i l k h o s i e r y so
f r e q u e n t l y r e f e r r e d t o in former r e p o r t s , has not yet been overcome
and D i s t r i c t No. 3 ( P h i l a d e l p h i a ) says t h a t " e f f o r t s t o i n c r e a s e
p r o d u c t i o n i n m i l l s a f f e c t e d by t h e s t r i k e have met w i t h only f a i r
success."
The supply of seamless and mock-fashioned s i l k h o s i e r y
i s , however, s u f f i c i e n t , b a r r i n g a few e x c e p t i o n s .
In c o t t o n and
mercerized h o s i e r y t h e demand h a s increased s l i g h t l y but j o b b e r s
a r e making p u r c h a s e s only i n small amounts and f o r immediate
d e l i v e r y , i n view of p r i c e u n c e r t a i n t i e s *
The 25 h o s i e r y f i r m s
-21-
X-3235
s e l l i n g t o t h e w h o l e s a l e t r a d e which r e g u l a r l y r e p o r t t o t h e Federal
Reserve Bank of P h i l a d e l p h i a showed a s l i g h t f a l l i n g off i n t h e
p r o d u c t manufactured d u r i n g September, a m o u n t m g t o 0, S p e r c e n t ,
but t h e output was 1 3 1 . 9 p e r cent i n excess of t h a t f o r a y e a r ago.
Orders booked d u r i n g September advanced 126,3 p e r c e n t a s compared
w i t h t h e p r e c e d i n g month and were 344,9 p e r c e n t above t h o s e f o r
September, 1920.
U n f i l l e d o r d e r s on hand September 30 were 4 . 7 p e r
c e n t g r e a t e r t h a n a t t h e end of August and 57*9 P e r c e n t above t h o s e
on hand a t t h e end of September, 1S20.
The n i n e h o s i e r y f i r m s
s e l l i n g t o t h e r e t a i l t r a d e r e p o r t e d a heavy i n c r e a s e i n p r o d u c t
manufactured d u r i n g t h e month of 6 7 . 9 p e r c e n t , but t h e i r o u t p u t was
only 7 . 1 p e r c e n t above t h e r e t u r n s f o r September a y e a r a g o .
Orders
booked d u r i n g September were $ . 8 p e r c e n t above t h o s e r e c e i v e d d u r i n g
August and 261,6 p e r cent above t h e f i g u r e s f o r September, 1920.
U n f i l l e d o r d e r s on hand September 30 were 1 3 - 4 p e r c e n t below t h o s e
f o r t h e p r e c e d i n g month, b u t were 4 , 3 p e r c e n t above t h o s e on hand
September 30, 1920.
M i l l s m a n u f a c t u r i n g c o t t o n h o s i e r y i n t h e southern
d i s t r i c t s r e p o r t e d a h i g h degree of a c t i v i t y .
In C i ^ t r . c t No, 5
(Richmond) t h e volume of b u s i n e s s was s a i d t o be s u f f i c i e n t t o enable
many m i l l s t o keep r u n n i n g f u l l time and t h i s was p a r t i c u l a r l y t r u e
i n t h e case of t h o s e m i l l s which had only s l i g h t l y advanced t h e i r
p r i c e s , f o l l o w i n g t h e r i s e i n the p r i c e of raw c o t t o n .
In D i s t r i c t
No. 6 ( A t l a n t a ) t h e m a n u f a c t u r e r s of c o t t o n h o s i e r y r e p o r t i n g t o t h e
Federal Reserve Bank were o p e r a t i n g a t from 80 t o 90 p e r c e n t of
capacity.
During t h e month t h e r e Were i n c r e a s e s i n u n f i l l e d o r d e r s
1-4 "8 '-it- '
•?
-22-
X-3235
and s t o c k s on hand a s w e l l a s i n t h e amount of t h e p r o d u c t manuf a c t u r e d by t h e s e m i l l s .
Slight increases in p r i c e s occurred,
a l t h o u g h i t was s a i d t h a t p r e s e n t p r i c e s were approximately $0 p e r
c e n t lower t h a n t h o s e p r e v a i l i n g a y e a r a g o .
UNDERWEAR.
The r e p o r t s r e c e i v e d from 35 members of t h e Knit
Goods M a n u f a c t u r e r s of America engaged i n p r o d u c i n g underwear
showed s u b s t a n t i a l improvement i n September a s compared w i t h August,
M i l l s p r o d u c i n g 303,7^8 dozen i n August had an output i n September
of 352,243 dozen, a g a i n of 14 p e r c e n t .
U n f i l l e d o r d e r s r o s e frem
437, <s66 dozen i n August t o 509/851 dozen i n September o r 14 p e r c e n t .
New o r d e r s i n c r e a s e d from 4 5 6 , 1 3 5 / i a ^ u g u s t t o 763# 9&6 dozen i n
September, a g a i n of 40 p e r c e n t .
Shipments d e c r e a s e d from 3 9 ^ 7 8 3
dozen i n August t o 3^3,145 dozen i n September, a d e c r e a s e of 14 p e r
cent.
T h i r t y - n i n e m i l l s r e p o r t i n g whose normal p r o d u c t i o n i s
567,501 dozen monthly showed u n f i l l e d o r d e r s on hand of 1 , 0 8 8 , 6 8 6
dozen or n e a r l y two months' p r o d u c t i o n a t normal o r two and a h a l f
months a t p r e s e n t r a t e of a c t u a l p r o d u c t i o n .
The d i s t r i b u t i o n of
w i n t e r underwear i s i n c r e a s i n g and s t o c k s of many i t e m s a r e b e i n g
d e p l e t e d , but, t o quote t h e s t a t e m e n t from D i s t r i c t Do. 3 ( P h i l a d e l p h i a )
"Cooler w e a t h e r would undoubtedly be conducive t o more s u b s t a n t i a l
buying of w i n t e r underwear by both t h e j o b b i n g and r e t a i l t r a d e .
J o b b e r s ' s t o c k s a r e h e a v i e r t h a n u s u a l because of t h e l a r g e c a r r y over from t h e mild season of l a s t w i n t e r .
D e l i v e r i e s a r e b e i n g made
from t h e s e s t o c k s now, and t h e r e f o r e m a n u f a c t u r e r s have l i t t l e
p r o s p e c t of b e i n g a b l e t o i n c r e a s e m i l l o p e r a t i o n s .
The p r i c e of
i -4 "; ' 0
*
2 >
X.3235
heavyweight underwear has been r a i s e d i n accord w i t h t h e h i g h e r
c o t t o n and wool-yarn p r i c e s , and t c some e x t e n t t h i s a l s o h a s r e t a r d e d buying",
Spring l i n e s continue to s e l l a t higher p r i c e
l e v e l s equal t o t h e i n c r e a s e i n c o t t o n and t h e i n d i c a t i o n s of a
r e t u r n t o normal seasonal c h a n n e l s of d i s t r i b u t i o n a r e s t r o n g e r ,
SHOES AND LEATHER.
The market f o r h i d e s and s k i n s was a c t i v e
d u r i n g September and t h e f i r s t two weeks of October, and p r i c e s of
both p a c k e r h i d e s and country h i d e s have advanced.
Net shipments of
green h i d e s from Chicago d u r i n g September exceeded t h o s e i n August
by 91.6 p e r c e n t .
D i s t r i c t No. 7 (Chicago) n o t e s a decided improve-
ment i n demand f o r t h e cheaper grades of l e a t h e r and work shoe
l e a t h e r i n September, w h i l e D i s t r i c t . N o . 3 ( P h i l a d e l p h i a ) s t a t e s
t h a t " s o l e l e a t h e r i s t h e f e a t u r e of t h e l e a t h e r m a r k e t " .
The
upper l e a t h e r market i s r a t h e r q u i e t , a l t h o u g h s a l e s of upper l e a t h e r
were l a r g e r i n September than i n August,
S a l e s of b e l t i n g l e a t h e r
c o n t i n u e t o be much r e s t r i c t e d due t o t h e reduced o p e r a t i o n s of most manufacturing i n d u s t r i e s .
E x p o r t s of both upper and s o l e l e a t h e r
were s l i g h t l y l a r g e r i n September t h a n i n August.
Demand f o r shoes,
c o n t i n u e s t o be very s a t i s f a c t o r y , a l t h o u g h i t has s h i f t e d somewhat
from f a n c y grades t o more s t a p l e l i n e s .
During September t h e p r o ^
Auction of s i x l a r g e shoe concerns i n D i s t r i c t No. 1 (Boston) d e c r e a s e d 20/2 p e r cent from t h a t of August, but exceeded by 2 0 . 4 p e r
cent t h e p r o d u c t i o n i n September, 1920.
Shipments were 1 2 . 6 p e r c e n t
l e s s t h a n i n August, but 19 p a r cent more o r d e r s were booked.
Reports
from 45 shoe f i r m s i n D i s t r i c t No. 3 ( P h i l a d e l p h i a ) show a p r o d u c t i o n
i n September which was 2 . 4 p e r cent g r e a t e r t h a n i n August, and 39*^
p e r cent g r e a t e r t h a n i n September, 1$20.
Shipments were 1 1 . 4 p e r cent
l e s s i n September t h a n i n August, b u t t h e number of new o r d e r s i n c r e a s e d
48 p e r c e n t .
"Some of t h e l a r g e p l a n t s a r e o p e r a t i n g on f u l l time and
a r e booking l a r g e o r d e r s f o r January and A p r i l d e l i v e r y " .
District
Mo. 7 (Chicago) s t a t e s t h a t t h e p r o d u c t i o n of 21 r e p o r t i n g shoe conc e r n s i n September was 3 p e r cent g r e a t e r t h a n i n August and 2 6 . 5 p e r
cent g r e a t e r t h a n i n September, 1$20.
Shipments i n c r e a s e d 7*3 p e r cent
and u n f i l l e d o r d e r s i n c r e a s e d 7 - 2 p e r cent d u r i n g September, w h i l e
s t o c k s a t t h e c l o s e of t h e month were 2 5 . 8 p e r c e n t s m a l l e r t h a n a t t h e
c l o s e of August.
In t h e a g g r e g a t e m a n u f a c t u r e r s ' s t o c k s i n t h a t D i s t r i c t
amount t o l e s s t h a n two weeks' p r o d u c t i o n .
There have been many small
o r d e r s , and much demand f o r immediate shipment, which i n d i c a t e t h a t
d e a l e r s a r e buying c a u t i o u s l y .
R e p o r t s from 11 l e a d i n g shoe i n t e r e s t s
i n D i s t r i c t No. 8 ( S t . Louis) i n d i c a t e t h a t shipments i n September were
from 10 t o 40 p e r c e n t l a r g e r t h a n i n September, 1$20.
"Production i s
a t a h i g h e r r a t e t h a n a t any time i n the p a s t , " and " a l l r e p o r t i n g p l a n t s
have sold t h e i r o u t p u t f o r s i x t y days ahead".
P r i c e s were reduced about
5 p e r cent e a r l y i n October.
LUMBER.
An i n c r e a s i n g l y a c t i v e demand f o r lumber and s u b s t a n t i a l
advances i n p r i c e s of upper g r a d e s w i t h s m a l l e r advances i n common items
d u r i n g September a r e i n d i c a t e d by r e p o r t s from t h e s e v e r a l d i s t r i c t s .
A c t u a l p r o d u c t i o n shows l i t t l e i n c r e a s e but m a n u f a c t u r e r s ' s t o c k s a r e declining materially.
Demand i s c h i e f l y f o r upper g r a d e s of lumber due, i t
i s s a i d , t o t h e h i g h f r e i g h t r a t e s which o p e r a t e a g a i n s t shipment of low
grade s t o c k .
D i s t r i c t No. 12 (San F r a n c i s c o ) r e p o r t s t h a t t h e l a t e
September s t a t e m e n t s of t h e f o u r lumber a s s o c i a t i o n s of t h a t D i s t r i c t r e f l e c t t h e cumulative e f f e c t of s e v e r a l f a v o r a b l e f a c t o r s which have been
x-3235
i n c r e a s i n g l y apparent i n t h e lumber s i t u a t i o n .
Due t o a c t i v e cargo
buying and l a r g e seasonal buying by domestic d i s t r i b u t o r s , o r d e r s placed
d u r i n g September t o t a l e d 369#093#000 f e e t , t h e h i g h e s t p o i n t reached
s i n c e May, 1920.
This f i g u r e i s 19 p e r cent g r e a t e r t h a n f o r August and
3 1 . 4 p e r cent g r e a t e r t h a n f o r September, 1920.
The f o u r a s s o c i a t i o n s
of t h e D i s t r i c t r e p o r t a t o t a l cut f o r September of 3^6#719# 000 f e e t ,
a d e c r e a s e of 2 . 3 p e r cent from t h e p r o d u c t i o n f o r August and of 2 4 , 0
p e r cent from t h a t f o r t h e corresponding p e r i o d l a s t y e a r .
Shipments
d e c l i n e d from 341,906,000 f e e t i n August to. 320,986, 000 f e e t i n
September.
Logging o p e r a t i o n s a r e proceeding a t approximately 75 P e r
cent of c a p a c i t y , which i s a decided improvement over l a s t month.
Thirty-two p i n e m i l l s i n D i s t r i c t No. 11 ( D a l l a s ) r e p o r t a
September production which was 33 per cent below normal, and 19 per cent
below shipments.
production.
New o r d e r s r e c e i v e d were 88 p e r cent of normal monthly
M i l l p r i c e s have tended upward during t h e month, e s p e c i a l l y
i n t h e lower lumber grades, where No. 2 and No. 3 southern p i n e advanced
about t h r e e d o l l a r s p e r thousand.
In D i s t r i c t No. 6 ( A t l a n t a ) r e p o r t s
i n d i c a t e an i n c r e a s e i n t h e demand f o r lumber and some advance i n p r i c e s
of both h i g h e r and lower g r a d e s .
The Southern Pine
Association's
September statement, covering 133 member mills, shows actual production
to be 22.23 p e r cent below normal and shipments t o be 15,6 p e r cent above
actual production.
The lumber cut of r e p o r t i n g m i l l s i n D i s t r i c t No. 9
(Minneapolis) t o t a l e d 14,089,436 f e e ^ which was 20 p e r cent below t h e August
cut and 40 p e r cent below t h e cut of September l a s t y e a r . Orders booked
d u r i n g the month, however, were 15 p e r cent g r e a t e r i n volume t h a n t h o s e
f o r August and 50 p e r cent g r e a t e r t h a n t h o s e f o r t h e corresponding period
i n 1920. D i s t r i c t No. 8 ( S t , Louis) r e p o r t s sharp advances i n upper grades
of yellow p i n e d u r i n g September, w i t h only a s l i g h t i n c r e a s e i n p r o d u c t i o n
but w i t h heavy shipments. In t h i s D i s t r i c t t h e hardwood s i t u a t i o n has
improved and demand i s i n c r e a s i n g .
I IT
- 26 BUILDING.
7-3235
As a whole, b u i l d i n g continued to be w e l l s u s t a i n e d d u r i n g
September b u t improvement was e v i d e n t c h i e f l y i n r e s i d e n t i a l c o n s t r u c t i o n s .
The - t o t a l v a l u e of c o n t r a c t s awarded i n the seven D i s t r i c t s f o r which s t a t i s t i c s a r e compiled by the F. W, Dodge Company shows an i n c r e a s e d u r i n g
September as compared w i t h August and as compared w i t h September, 1920.
The i n c r e a s e from August to September was due e n t i r e l y t o D i s t r i c t s No. 2
(New York), No. & ( C l e v e l a n d ) , and No. 5 (Richmond), a s they alone showed
increases.
All D i s t r i c t s except No. 1 (Boston) and No. 9 (Minneapolis)
showed i n c r e a s e s i n r e s i d e n t i a l c o n t r a c t s .
I n D i s t r i c t No. 1 (Boston) con-
t r a c t s amounted t o $15,282,766 as compared w i t h $19,276,295 d u r i n g August.
Of t h i s t o t a l approximately $6,548,000 was f o r r e s i d e n t i a l purposes as compared with $6,703,000 i n August..
In D i s t r i c t No. 2 (New York) c o n t r a c t s
awarded d u r i n g September t o t a l l e d $90,730,13'+ in comparison w i t h $62,043,905
d u r i n g August, and r e s i d e n t i a l b u i l d i n g t o t a l l e d $45,789,646 as compared w i t h
$36,061,717.
T o t a l c o n t r a c t s awarded in D i s t r i c t No. 3 ( P h i l a d e l p h i a )
amounted t o $16,197,500 i n September and $22,350,500 i n August.
Residen-
t i a l c o n t r a c t s t o t a l l e d $5,526,400 i n September and $5,331,500 in August.
In D i s t r i c t No. 4 (Cleveland) the t o t a l amount of c o n t r a c t s awarded was
$36,041,601 a s compared w i t h $26,665,555 f o r August.
Of t h e s e $8,987,610
were f o r r e s i d e n t i a l purposes as compared with $8,209,645 d u r i n g August.
C o n t r a c t s f o r D i s t r i c t No. 5 (Richmond) amounted to $19,597,191 i n September,
as compared w i t h $17,337,624 in August, w h i l e $6,171,436 of the September
t o t a l were f o r r e s i d e n t i a l -purposes as compared w i t h $5,938,417 f o r August.
In D i s t r i c t No. 7 (Chicago) b u i l d i n g c o n t r a c t s t o t a l l e d $4l,461,283 during
September a s ccmpared with $44,680,034 d u r i n g August.
T o t a l b u i l d i n g con-
t r a c t s awarded i n D i s t r i c t No. 9 (Minneapolis) amounted to $8,162,640 as
•
-4 -i
JLJL f" O
t
-
27
"
x-3235
compared with $9,173,552 during August.
In D i s t r i c t No. 1 (Boston) 2,407 b u i l d i n g permits were issued during
September, valued a t $5,655,3)5, as compared with 1,715 permits valued a t
$4,868,873 issued during September,1920.
Permits granted in 22 c i t i e s of
D i s t r i c t No. 2 (New York) numbered 7,709 with a v a l u a t i o n of $47,232,953
as compared with 4,779 permits with a valuation of' $22,224,669 during
September l a s t y e a r .
In D i s t r i c t No. 3 (Philadelphia) 2,990 permits were
issued during September in comparison with 1,943 permits during September,
1920.
D i s t r i c t No. 4 (Cleveland) r e p o r t s t h a t the v a l u a t i o n of permits
issued in 13 l e a d i n g c i t i e s during September shows a gain of 21.4 per cent
over September l a s t y e a r .
In D i s t r i c t No. 5 (Richmond) t o t a l permits issued
in 15 c i t i e s numbered 3,389, valued at $9,284,277 i n comparison with 2,497
permits valued a t $5,860,033 during September, 1920.
D i s t r i c t No. 6 (Atlanta)
r e p o r t s t h a t in l 4 important c i t i e s 2,847 permits were issued, valued a t
$5,150,280 as comapred with 2,255, valued at $4,243,928, during the corresponding period l a s t y e a r .
D i s t r i c t No. 7 (Chicago) r e p o r t s 5,^66 permits valued
a t $23,080,016 granted in 19 c i t i e s as compared with 5,003 P e r m i * s valued a t
$16,405,747 granted during September, 1920.
Building permits issued in the
f i v e l a r g e s t c i t i e s of D i s t r i c t No. 8 ( S t . Louis) show a marked gain, in both
number and expenditure, over those issued in August, and also over Se-rtembey,
1920.
The number and valuation of b u i l d i n g permits issued during September
in nine c i t i e s of D i s t r i c t No. 9 (Minneapolis) decreased 17.4 and 26.3 P e r
cent r e s p e c t i v e l y , a s compared with the August f i g u r e s .
September r e p o r t s
from 19 c i t i e s of D i s t r i c t No. 10 (Kansas City) show an increase f o r the month
under review over the corresponding period l a s t year of 71«2 per cent in the
number of permits and 106.9 per cent in t h e i r v a l u a t i o n .
In 9 c i t i e s of
• ±±77
"
- 25 -
X-3235
D i s t r i c t No. 11 ( D a l l a s )2, 598 p e r m i t s v a l u e d a t #5,680,962 were i s s u e d d u r i n g
September a s ccmpared w i t h 1 , 8 6 4 p e r m i t s valued a t $ 3 , 2 8 4 , 8 4 l i s s u e d d u r i n g
September, 1920.
I n D i s t r i c t No. 12 (San F r a n c i s c o ) "September b u i l d i n g
r e t u r n s reached the h i g h e s t p o i n t ever touched"-
P e r m i t s g r a n t e d i n 20
c i t i e s of the D i s t r i c t number 11,169, w i t h a v a l u a t i o n of $20,134,993
as
compared w i t h 9*322, w i t h a v a l u a t i o n of $17,117,294, g r a n t e d d u r i n g September l a s t year.
EMPLOYMENT.
The l a t e s t r e p o r t on employment i n s e l e c t e d i n d u s t r i e s
made by the United S t a t e s Department of Labor showed t h a t d u r i n g the month
of September t h e r e were i n c r e a s e s i n numbers on the p a y r o l l as compared v i t h
August i n 11 of the 14 i n d u s t r i e s covered, the advances r a n g i n g from 0 . 2
p e r c e n t i n the c a s e of the s i l k i n d u s t r y t o 4 . 8 p e r c e n t f o r h o s i e r y and
underwear and f o r c i g a r m a u n f a c t u r i n g .
Only men's ready made c l o t h i n g , c u t c a p -
b i l e s , b o o t s and shoes,showed d e c r e a s e s of 0 . 9 p e r c e n t , 0 . 7 p e r c e n t and
0.3 per cent r e s p e c t i v e l y .
showed i n c r e a s e s
As compared w i t h September, 1920, 8 i n d u s t r i e s
6 decreases.
The maximum i n c r e a s e of 59*2 p e r c e n t
was found i n the woolen i n d u s t r y w h i l e t h e r e was an i n c r e a s e of 1 8 . 4 p e r c e n t
i n b o o t s and shoes and of 13.9 p e r c e n t f o r c o t t o n f i n i s h i n g .
The most
pronounced d e c r e a s e occurred i n i r o n and s t e e l , w i t h a drop of 42 p e r c e n t
i n numbers employed; t h e r e was a 35 P e r c e n t d e c r e a s e i n c a r b u i l d i n g and
r e p a i r i n g ; and a 3 1 - 6 p e r c e n t r e d u c t i o n i n p a p e r making.
Judging from such
l o c a l r e p o r t s as a r e a v a i l a b l e f o r the p e r i o d i n q u e s t i o n and l i k e w i s e f o r
a l a t e r d a t e , the s t a t i s t i c s given n o t only r e f l e c t g e n e r a l c o n d i t i o n s b u t
i n d i c a t e a tendency which h a s been s u s t a i n e d d u r i n g the p a s t few weeks.
The
l a t e s t r e t u r n s t o the Massachusetts Department of Labor and I n d u s t r i e s showed
t h a t the s i t u a t i o n i n t h a t s t a t e was s t i l l s e r i o u s on October 1 w i t h l 4 . 6
p e r c e n t of the membership of r e p o r t i n g l a b o r o r g a n i z a t i o n s i d l e as a r e s u l t of the l a c k of demand, f o r t h e i r s e r v i c e s , e x c l u s i v e of o t h e r c a u s e s .
N e v e r t h e l e s s , t h e showing was much b e t t e r than a t the time of the p r e c e d i n g
q u a r t e r l y 1 I n q u i r y when 20 p e r c e n t of the workers b e l o n g i n g to t h e s e unions
were u n a b l e to f i n d employment.
The t h r e e M a s s a c h u s e t t s p u b l i c employment
o f f i c e s showed, f o r the f o u r weeks ending October 15, a' r a t i o .of about 12
p e r s o n s a p p l y i n g f o r p o s i t i o n s t o every one asked f o r .
was approximately 19 t o 1.
L a s t May the r a t i o
The e f f e c t s of p a r t time employment i n some
s e c t i o n s , e s p e c i a l l y i n the m e t a l , machinery and t o o l making i n d u s t r i e s of
s o u t h e r n New England, a r e s a i d to c o n s t i t u t e a problem almost as s e r i o u s as
the complete unemployment.
In New York S t a t e , the Department of Labor r e -
p o r t e d an i n c r e a s e of 3 . 5 P e r c e n t i n the number of f a c t o r y workers employed
i n the p e r i o d from August 15 to September 15-
The p r i n c i p a l changes occured
i n t e x t i l e and c l o t h i n g f a c t o r i e s w h i l e some s t e e l p l a n t s i n the B u f f a l o
d i s t r i c t likewise increased t h e i r forces.
P r e l i m i n a r y r e p o r t s f o r October
i n d i c a t e d t h a t t h e r e would be a f u r t h e r d i m i n u t i o n i n f a c t o r y unemployment
i n the S t a t e .
I n D i s t r i c t Nc. J ( P h i l a d e l p h i a ) , on the o t h e r hand, the r e -
p o r t s t o the P e n n s y l v a n i a S t a t e Department of Labor shewed a s l i g h t i n c r e a s e
i n numbers unemployed f o r the p e r i o d from September 30 t o October 15 f o r the
s i x c i t i e s of Jiltoon>a, H a r r i s b u r g , Johnstown, P h i l a d e l p h i a , Scrantcn and
T
i l l i a m s p o r t , b u t d u r i n g the p r e c e d i n g two weeks* p e r i o d t h e r e had been a
r e d u c t i o n of 1 p e r c e n t i n t h e numbers of unemployed.
T o t a l unemployment
f o r t h e s e c i t i e s on October 15 was e s t i m a t e d a t 202,185.
In D i s t r i c t No. 5
(Richmond) the s i t u a t i o n remained s u b s t a n t i a l l y unchanged d u r i n g the month.
In t h e West V i r g i n i a c o a l mining r e g i o n unemployment c o n t i n u e d to be widespread and those miners t h a t were a t work were a v e r a g i n g only two t o f o u r
. 30 days p e r week.
X-3235
In g e n e r a l , the small towns were s u f f e r i n g l e s s than the
l a r g e r c i t i e s of the d i s t r i c t .
For 221 f i r m s i n D i s t r i c t No* 7 (Chicago)
employing 135,182 p e r s o n s on September 30, 1921 t h e r e was a n e g l i g i b l e dec r e a s e i n numbers on the p a y r o l l as compared w i t h jkigust 31 and a decrease
of 28* 7 p e r c e n t as compared with September 30, 1920*
The decreases occurred
p r i n c i p a l l y i n the i n d u s t r i e s engaged i n the p r o d u c t i o n of i r o n and s t e e l
p r o d u c t s such as a g r i c u l t u r a l implements and railway equipment, w h i l e f dod,
c l o t h i n g , l e a t h e r and shoes showed gains*
Reports from 10 f i r m s engaged in
c o n s t r u c t i o n and b u i l d i n g work showed a r e d u c t i o n of 26.8 p e r c e n t i n numbers
employed i n September a s compared w i t h the p r e c e d i n g month and s i x automob i l e and accessory p l a n t s o u t s i d e D e t r o i t employed 8*5 p e r c e n t fewer men
i n September*
In D i s t r i c t No* 12 (San F r a n c i s c o ) , i n c r e a s e s and d e c r e a s e s
i n numbers employed in v a r i o u s i n d u s t r i e s "about o f f s e t one a n o t h e r , l e a v i n g
t h e t o t a l number of men engaged in g a i n f u l occupation a t the end of the month
approximately unchanged#
The c l o s e of the f i s h i n g season caused heavy r e -
d u c t i o n s i n numbers employed and f u r t h e r d e c l i n e s occurred in the s h i p b u i l d ing industry*
On the o t h e r hand, demand from t h e l i m b e r i n g r e g i o n s of
Oregon and Washington improved and the coal mines of Washington a l s o r e sumed o p e r a t i o n s .
In C a l i f o r n i a t h e r e was a heavy demand f o r u n s k i l l e d l a b o r
to h a r v e s t the l a t e r c r o p s .
S l i g h t l y b e t t e r c o n d i t i o n s were r e p o r t e d i n the
mining d i s t r i c t s of Utah, Nevada and Arizona and t h e r e was an i n c r e a s e d d e mand f o r h a r v e s t l a b o r i n Idaho where r a i l r o a d c o n s t r u c t i o n work was a l s o
b e g i n n i n g to be undertaken.
The demand f o r s k i l l e d l a b o r i n the b u i l d i n g
t r a d e s was g r e a t e r i n p r a c t i c a l l y a l l c i t i e s throughout t h e D i s t r i c t as a
r e s u l t of the q u i t e general 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 .
WHOLESALE TRADE.
With few e x c e p t i o n s s a l e s of r e p o r t i n g wholesale
'
- 31 -
x-3235
1180
hardware and d r y goods f i r m s i n t h e s e v e r a l D i s t r i c t s i n c r e a s e d d u r i n g
September a s compared w i t h August.
These i n c r e a s e s were e x c e p t i o n a l l y
heavy i n b o t h hardware and dry goods i n D i s t r i c t No. 6 (Atlanta*). F a l l
b u y i n g on the p a r t of r e t a i l e r s i n t h a t s e c t i o n of t h e c o u n t r y , delayed
beyond the u s u a l p e r i o d , r e c e i v e d a d d i t i o n a l - e m p h a s i s as a r e s u l t of the
h e i g h t e n e d p u b l i c demand t h a t f o l l o w e d upon c r o p s a l e s .
For a l l r e p o r t i n g
D i s t r i c t s , the i n c r e a s e s i n hardware v a r i e d frcm the minimum of 5*5 P e r
c e n t (24 f i r m s r e p o r t i n g ) i n D i s t r i c t No, 3 ( P h i l a d e l p h i a ) t o a maximum of
l6»2 p e r cent
( 2 1 f i r m s r e p o r t i n g ) i n D i s t r i c t No. 6 ( A t l a n t a ) , w h i l e d e -
c r e a s e s were recorded i n D i s t r i c t No. 9 (Minneapolis) and D i s t r i c t No. 11
( D a l l a s ) amounting
t o 1 1 , 8 p e r c e n t (7 f i r m s r e p o r t i n g ) and 7 , 0 p e r c e n t
(11 f i r m s r e p o r t i n g ) r e s p e c t i v e l y .
D i s t r i c t No. 11 ( D a l l a s ) e x p l a i n s the
d e c r e a s e i n s a l e s by s t a t i n g t h a t the demand f r o b c o u n t r y b u y e r s h a s been
poor a l t h o u g h i t h a s remained f a i r l y good i n the c i t i e s .
I n . D i s t r i c t No. 9
(Minneapolis) the s t i m u l a t i n g e f f e c t of crop l i q u i d a t i o n would undoubtedly
be f e l t somewhat l a t e r t h a n i n o t h e r p a r t s of the c o u n t r y , b u t n e v e r t h e l e s s ,
a s the c r o p s went t o market e a r l i e r than u s u a l t h i s y e a r , the e x p l a n a t i o n i s
h a r d l y adequate to a c c o u n t f o r a downward t r e n d i n September s a l e s .
In
D i s t r i c t No. 3 ( B i i l a d e l p h i a ) t h e 2U f i r m s from which r e t u r n s h a v e b e e n
r e c e i v e d s t a t e d t h a t the i n c r e a s e i n s a l e s c o n s i s t e d " a l m o s t e n t i r e l y of
o r d e r s f o r r u s h shipments f o r the r e p l e n i s h m e n t of s t o c k s . "
Wholesalers
were s a i d t o be n e i t h e r buying n o r s e l l i n g s p r i n g goods to any e x t e n t .
In the case of dry goods, advances i n the p r i c e of c o t t o n goods may i n
some c a s e s h a r e a c c e l e r a t e d the s e a s o n a l upward movement of s a l e s which
o c c u r r e d i n a l l r e p o r t i n g D i s t r i c t s e x c e p t D i s t r i c t No. 2 (New York) i n
which t h r e e f i r m s showed an average d e c l i n e of 0 . 7 p e r c e n t , and D i s t r i c t
x
- 32 -
-3235
JL^O.
No. 9 (Minneapolis) i n which f i v e f i r m s showed an average d e c l i n e of 20
p e r cent d u r i n g the month.
The advances ranged from 8 . 1 p e r c e n t i n Dis-
t r i c t No. 5 (Richmond) w i t h s e f e n f i r m s r e p o r t i n g up to 33»9 P e r cent i n
D i s t r i c t No. 6 ( A t l a n t a ) with 18 f i r m s r e p o r t i n g .
I n the case of whole-
s a l e g r o c e r i e s , t h e upward movement of s a l e s was by no means as general as
i t was i n the case of hardware and dry goods.
U s u a l l y September marks the
b e g i n n i n g of f a l l buying a c t i v i t y but i n t h r e e D i s t r i c t s , namely D i s t r i c t
No. 2 (New York), No, 3 ( P h i l a d e l p h i a ) and No. 7 (Chicago), d e c l i n e s in
s a l e s occurred during the month amounting t o 5»9 P 0 r c e n t (9 f i r m s r e p o r t i n g ) , 6 , 1 p e r c e n t (48 f i r m s r e p o r t i n g ) and 6,8 p e r c e n t (23 f i r m s r e p o r t i n g )
f o r the D i s t r i c t s i n Question.
I t w i l l be noted f u r t h e r m o r e t h a t these
averages cover almost 50 p e r c e n t of a l l r e p o r t i n g f i r m s , as r e t u r n s f o r the
country as a whole comprise only 163 wholesale grocery f i r m s .
D i s t r i c t No.
3 ( P h i l a d e l p h i a ) gave as a reason f o r the s a l e s d e c l i n e the u n w i l l i n g n e s s
of r e t a i l e r s to p l a g e o r d e r s f o r f u t u r e d e l i v e r y .
In D i s t r i c t No. 6
( A t l a n t a ) , however, r e t a i l e r s were r e p o r t e d to have purchased more l i b e r a l l y
and D i s t r i c t No. 11 ( D a l l a s ) s t a t e d t h a t although t h e buying was c a u t i o n s ,
i t showed improvement e s p e c i a l l y i n the L o u i s i a n a s e c t i o n where the i n c r e a s e
i n the p r i c e of c o t t o n and the renewed a c t i v i t y i n the o i l i n d u s t r y had p r o duced f a v o r a b l e r e s u l t s .
In the case of boots and shoes, the s a l e s move-
ment m a n i f e s t e d l a c k of u n i f o r m i t y w i t h i n the s e v e r a l D i s t r i c t s .
In D i s t r i c t
No. 2 (New York) and No. 5 (Richmond) d e c l i n e s occurred amounting t o 7»5
p e r cent ( seven f i r m s r e p o r t i n g ) and 0 . 5 p e r c e n t ( e i g h t f i r m s r e p o r t i n g )
respectively.
On the o t h e r hand e x t r a o r d i n a r i l y heavy i n c r e a s e s took p l a c e
i n D i s t r i c t No. 6 ( A t l a n t a ) and i n D i s t r i c t No. 12 fSan F r a n c i s c o ) .
For
the former D i s t r i c t n i n e f i r m s r e p o r t i n g an average i n c r e a s e i n s a l e s of
t
\
- 33 -
x-3235
35-T per cent while for the latter District 16 firms reported, an advance of
29.2 per cent in sales.
In the only other District from which reports have
been received, namely District No. 7 (Chicago), nine firms showed an average
advance in sales of 7.8 per cent.
RETA It. TP APE.
While September r e t a i l t r a d e as shown b y s a l e s of r e p r e -
s e n t a t i v e department s t o r e s i s i n excess of the August f i g u r e s , i t has been
r e t a r d e d somewhat by t h e u n s e a s o n a b l y warm w e a t h e r which p r e v a i l e d d u r i n g the
f i r s t p a r t of t h e month.
The l a r g e amount of unemployment p r e v a i l i n g has a l s o
forced people to confine t h e i r purchasing r a t h e r to e s s e n t i a l s .
Demand a c c o r d -
i n g l y seems to be g r e a t e s t f o r c a r p e t s , r u g s , y a r d goods, and medium p t i c e d
r e a d y - t o - w e a r c l o t h i n g , whereas items l i k e p i a n o s , phonographs, and c o n f e c tionery are s e l l i n g poorly.
S a l e s of 3^2 r e p r e s e n t a t i v e department s t o r e s
throughout t h e United S t a t e s , w h i l e showing an i n c r e a s e over August, were
n e v e r t h e l e s s 1 5 . 1 p e r c e n t below t h e September, 1920, f i g u r e s .
In t h i s con-
n e c t i o n should be k e p t i n mind the d e c r e a s e i n p r i c e s which h a s taken p l a c e
between t h e two d a t e s , so t h a t i f allowance i s made f o r t h e s e p r i c e changes the
a c t u a l volume of goods would p r o b a b l y be i n e x c e s s of t h a t s o l d a y e a r ago.
In the s e v e r a l D i s t r i c t s , d e c r e a s e s from September, 1920, a r e shorn amounting t o
9.9
P e r c e n t i n D i s t r i c t No. 1 ( B o s t o n ) , g.O p e r c e n t i n D i s t r i c t , No. 2 '
(New York), 15.3 p e r c e n t i n D i s t r i c t No. 3 ( P h i l a d e l p h i a ) , 2 3 . 6 p e r c e n t i n
D i s t r i c t No. 4 ( C l e v e l a n d ) 1 6 . 2 p e r c e n t in D i s t r i c t No. 5 (Richmond), 22.9
p e r c e n t i n D i s t r i c t No. 6 ( A t l a n t a ) , 15.3 p e r c e n t i n D i s t r i c t No. 7 (Chicago),
1 8 . 2 p e r c e n t i n D i s t r i c t No. 8 ( S t . L o u i s ) , 17.8 p e r c e n t i n D i s t r i c t No. 9
( M i n n e a p o l i s ) , 1 3 . 8 p e r c e n t i n D i s t r i c t No. 10 (Kansas C i t y ) , 22.7 p e r c e n t
i n D i s t r i c t No, 11 ( D a l l a s ) , and 8 . 7 p e r c e n t i n D i s t r i c t No. 12 (San F r a n cisco).
'
s
11.33
- 34 .
Although s t o c k s which the department s t o r e s have on hand a r e lower than
they were l a s t y e a r , they showed a c o n s i d e r a b l e i n c r e a s e d u r i n g t h e month of
September.
This would seem to i n d i c a t e t h a t r e t a i l e r s a r e d i s p l a y i n g g r e a t e r
c o n f i d e n c e i n the s t a b i l i t y of p r i c e s and t h e r e f o r e g r a d u a l l y i n c r e a s i n g stocks
froir the low p o i n t reached l a s t s p r i n g .
The r a t e of t u r n o v e r c o n t i n u e s
approximately the saire, and t h i s i s t r u e l i k e w i s e of o u t s t a n d i n g o r d e r s .
"PRICES,
During the f i r s t t h r e e weeks of October p r i c e s of l e a d i n g farm
p r o d u c t s d e c l i n e d from t h e September average e x c e p t i n t h e c a s e of c e r t a i n
c l a s s e s of l i v e s t o c k such as c a t t l e and sheep.
Wheat, o a t s , c o m , c o t t o n ,
and hogs were a l l a p p r e c i a b l y lower a t the l a t e r d a t e .
In the metal i n d u s t r i e s ,
on the o t h e r h a n d , p r i c e s were r e l a t i v e l y s t a b l e , t h e non f e r r o u s m e t a l s
showing i n c r e a s e s , and s t e e l p r o d u c t s showing v e r y l i t t l e change.
Spot p r i c e s
of bituminous c o a l were about the same i n the two months.
P r i c e s i n t h e l e a t h e r i n d u s t r y were p r a c t i c a l l y t h e same i n October as i n
September a l t h o u g h t h e raw m a t e r i a l advanced.
Cotton y a r n s and c l o t h a l s o
i n c r e a s e d and wool m a n u f a c t u r e s were f i r m # ;
The w h o l e s a l e p r i c e indexes of both the Bureau of Labor S t a t i s t i c s and
of the F e d e r a l Reserve "Board showed no change between August and September
f o r a l l commodities, b u t t h e r e were wide f l u c t u a t i o n s b o t h u p and down in
the p r i c e s of i n d i v i d u a l commodities.
Raw m a t e r i a l s a s a whole advanced, i n
s p i t e of t h e d e c l i n e in l i v e s t o c k p r i c e s .
Consumers' goods, on t h e o t h e r
hand, d e c l i n e d , the r e d u c t i o n i n food p r i c e s b e i n g most i m p o r t a n t .
goods showed very l i t t l e change.
"Producers'
I n the c l a s s i f i c a t i o n of t h e commodities
i n the F e d e r a l Reserve Board index a s (1) goods
of domestic p r o d u c t i o n ,
(2) goods imported and ( 3 ) goods e x p o r t e d , i t a p p e a r s t h a t goods of domestic
o r i g i n averaged the same i n the two months, p r i c e s of imported goods were
-35-
X-3235
s l i g h t l y h i g h e r in September t h a n in August, w h i l e p r i c e s of e x p o r t e d
commodities were r a d i c a l l y h i g h e r , due t o t h e advance i n the p r i c e of raw
cot ton.
A survey of the c o s t of l i v i n g In 32 c i t i e s i n the United S t a t e s made by
the Bureau of Labor S t a t i s t i c s f o r September shews than between June, 1920,
and September, 1921, t h e r e had been a decrease of 18 p e r c e n t on an average.
Most of t b f e decrease occurred p r i o r t o .May, 1921, however, the d e c r e a s e since
t h a t time amounting t o o n l y 1 . 7 p e r c e n t .
Be t a i l p r i c e s of food i n the one
month of September showed a small d e c r e a s e , t h e index of the Bureau of Labor
S t a t i s t i c s moving from 155 i n August to 155 i n September.
SHIPPING.
F u r t h e r r e d u c t i o n s i n ocean f r e i g h t r a t e s took p l a c e i n
October, thus b r i n g i n g r a t e s on the p r i n c i p a l commodities more g e n e r a l l y i n t o
l i n e w i t h t h e lower q u o t a t i o n s on g r a i n which were announced the l a s t week of
September.
The c h a r t e r market f o r f u l l cargo steamers c o n t i n u e s slow w i t h
moderate r e c e s s i o n s from r a t e s p r e v i o u s l y quoted." From the s t a n d p o i n t of
American steamship companies t h e u n p r o f i t a b l e n e s s of o p e r a t i n g v e s s e l s a t
c u r r e n t r a t e s i s a c c e n t u a t e d by the d i f f i c u l t y i n a r r a n g i n g f o r inward cargoes
on r e t u r n voyage.
This s i t u a t i o n i s emphasized by the f i g u r e s r e c e n t l y made
p u b l i c by t h e Shipping Board on the tonnage of American imports and e x p o r t s .
For the f i s c a l y e a r ended June 30, 1921, e x p o r t s a r e given as 59»205,050
l o n g t o n s , while imports were l i t t l e more than h a l f as much, b e i n g r e p o r t e d
a t only 36,879»532 long tons in the same months.
FOREIGN TRADE.
Both e x p o r t s and imports d e c l i n e d i n September, a f t e r t h e
i n c r e a s e s recorded f o r August, t o about t h e l e v e l of J u l y . For s i m i l a r l y low
jscnthly t o t a l s we :aust go back t o 1^15 and e a r l i e r . S p e c i f i c a l l y , e x p o r t s d u r i n g
September were valued a t $3^5# 000,000 while i&ports t o t a l e d $180,000,000.
The corresponding v a l u e s of e x p o r t s and imports a y e a r ago were $605,OCC,0G0
- 36 -
x-3235
and $363,000»000 r e s p e c t i v e l y , although much of t h e s i g n i f i c a n c e i n such a
comparison i s l o s t by r e a s o n of the p r i c e d e c l i n e s which have o c c u r r e d during
t h e p a s t year*
A t r u e r i d e a of the t r e n d of our f o r e i g n t r a d e from the s t a n d -
p o i n t of the volume or q u a n t i t y of goods shipped i n and o u t i s a f f o r d e d by
the B o a r d ' s f o r e i g n t r a d e index i n which the e f f e c t of p r i c e changes h a s been
eliminated.
The e x p o r t index s t a n d s a t 119»9 and the import index a t 11*4.6
f o r September, compared r e s p e c t i v e l y w i t h 8 8 . 6 and 129 a y e a r ago.
I t is
e v i d e n t t h a t average p r i c e s or v a l u a t i o n s of t h e v a r i o u s commodities mast
have a l t e r e d r a d i c a l l y / a n ^ q u a ! o r g r e a t e r q u a n t i t y of goods t h i s y e a r of
only m e - h a l f the v a l u e r e p o r t e d f o r t h e same month l a s t y e a r .
These f a c t s
a r e borne out a l s o by a d e t a i l e d c o n s i d e r a t i o n of t h e average v a l u a t i o n of
i n d i v i d u a l commodities, p u b l i s h e d by the Department of Commerce, which show
i n many c a s e s p r i c e r e d u c t i o n s d u r i n g t h i s p e r i o d of 50 p e r c e n t and more.
v
h e n t h e s e f a c t o r s a r e taken i n t o c o n s i d e r a t i o n , the f o r e i g n t r a d e t o t a l s
r e p o r t e d f o r r e c e n t months assume a l e s s s e r i o u s a s p e c t and i n d i c a t e r a t h e r
the resumption and continuance of b u s i n e s s a t a lower l e v e l of p r i c e s .
X-3236
FEDERAL
RESERVE
BOARD
STATEMENT FOR TEE PRESS
For r e l e a s e i n a f t e r n o o n p a p e r s ,
Wednesday, November 2, 1921.
CONDITION OF THE ACCEPTANCE MARKET
The f o l l o w i n g r e p o r t s have "been r e c e i v e d from t h e F e d e r a l Res e r v e Banks c o n c e r n i n g the c o n d i t i o n of the a c c e p t a n c e market i n
their respective Districts:
DISTRICT NO. 1 (BOSTON)
The r a t e b a s i s a t which Bankers' Acceptances s e l l r e f l e c t s a
f u r t h e r s o f t e n i n g of the market, the r u l i n g r a t e f o r prime 90-day
unendorsed a c c e p t a n c e s now b e i n g 4^ p e r c e n t .
Active demand h a s
sprung up f o r t h i s c l a s s of p a p e r , corporations' 1 w i t h i d l e money,
owing t o b u s i n e s s s t a g n a t i o n , b e i n g l a r g e b y e r s .
For such, bank-
e r s ' a c c e p t a n c e s o f f e r an e x c e l l e n t form of l i q u i d investment
pending business r e v i v a l .
X-3236
11
g
DISTRICT NO. 2 (NEW YORK)
D e a l e r s ' "bid r a t e s f o r priire b i l l s were lowered l / 4 of one
p e r c e n t t o 4 5/8 p e r cent e a r l y i n October r e f l e c t i n g e a s i e r t e n d e n c i e s i n money markets, i n c r e a s e d investment demand and moderate
supply.
D e a l e r s 1 s e l l i n g r a t e s were lowered i n p r o p o r t i o n and prime
b i l l s from 30 t o 120 days m a t u r i t y s o l d a t 4 l / 2 p e r c e n t d u r i n g the
l a s t t h r e e weeks of October, a s compared w i t h 4 3 / 4 p e r cent a month
ago.
Pruchases by i n t e r i o r banks were somewhat r e s t r i c t e d because of
the lower r a t e b u t s a l e s to these banks and f o r f o r e i g n account cont i n u e d t o c o n s t i t u t e a s u b s t a n t i a l p o r t i o n of t o t a l s a l e s .
Large
New York banks purchased f a i r amounts of b i l l s g i v i n g p r e f e r e n c e i n
some c a s e s t o the s h o r t e r m a t u r i t i e s .
B i l l s drawn a g a i n s t export shipments of c o t t o n and g r a i n were,
a s l a s t month, the most numerous of t h e new o f f e r i n g s , w i t h c o t t o n
b i l l s i n c r e a s i n g s l i g h t l y d u r i n g October.
B i l l s c o v e r i n g imports
of raw sugar mainly of 30 t o 60 day m a t u r i t y , were n e x t i n importance, and because of t h e e a r l y m a t u r i t y were i n good demand.
Dealers
r e p o r t e d somewhat l a r g e r supply of b i l l s drawn 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.
The number of i n v e s t o r s i n b i l l s continued to expand.
Two
d e a l e r s who maintained r e c o r d s of new names added to t h e i r l i s t s of
acceptance b u y e r s r e p o r t e d 24 a d d i t i o n a l p u r c h a s e r s w i t h i n a p e r i o d
of t h r e e weeks.
lias
- 3-
x-3236
DISTRICT NO. 3 (PHILADELPHIA)
fi further easing in the selling rates of bankers 1 acceptances has been
noted during the past month, and rates novv average l / 4 per cent lower.
Rates
on prime b i l l s of member banks are 4g per cent for maturities up to 90 days,
and 4-5/8 per cent for ISO days.
cent above these rates.
Non members 1 "bills as a rule are l / 4 per
The general improvement in monetary conditions is
said to be mainly responsible for this change.
One dealer makes the follow-
ing comment: "The lowering of the discount rate by several of the Federal
Reserve Banks has confirmed the tendency toward lower rates for acceptances
in the open market rather than served as a factor in causing such decline.
The decline in rates has been brought about primarily by the easing money
situation and the decreased supply of b i l l s . "
Other letters lend support
to this view, and i t i s further stated that the security market has not been
sufficiently active to absorb the large amounts of money that have been loanable on c a l l .
The issues of United States certificates of indebtedness combining a
slightly higher yield with the unquestioned security of the Government have
tended to restrict sales of acceptances, but judging by the enormous oversubscriptions to such issues, they have evidently not absorbed the entire available supply of short-term investment funds. Bankers' acceptances are finding
a ready market; in fact, dealers state that they are not available in s u f f i c i ent
amounts to satisfy the demand.
Sales by four dealers in this District
during September were 16 per cent below those of .August.
principal purchasers.
City banks are the
A large amount of buying for foreign account is also
reported, and this i s being handled through private banking houses and the
Federal Reserve Bank of New York.
1189
- k
x-3236
-
#
•
The f i n a n c i n g of f o r e i g n t r a d e i s r e s p o n s i b l e f o r t h e h u l k of the acc e p t a n c e s executed l a t e l y , h u t no a u t h o r i t a t i v e d a t a a r e y e t a v a i l a b l e r e g a r d i n g the d i s t r i b u t i o n of t h e s e r i n s t r u m e n t s over the v a r i o u s c l a s s e s of
t r a n s a c t i o n s - f o r e i g n t r a d e , d o l l a r exchange, warehousing, and domestic
shipments#
I t i s s t a t e d , however, t h a t warehousing b i l l s have remained p r a c -
t i c a l l y unchanged i n volume.
Cotton, g r a i n , tobacco and s u g a r b i l l s have
>
formed a l a r g e p a r t of r e c e n t t r a n s a c t i o n s covered b y a c c e p t a n c e s .
Reports f r o m twelve member banks i n t h i s F e d e r a l Reserve D i s t r i c t show
a d e c r e a s e i n the volume of a c c e p t a n c e s executed d u r i n g t h e month ending Oct o b e r 10, b u t a c o n s i d e r a b l e g a i n i n the amount o u t s t a n d i n g over t h a t of the
p r e c e d i n g month:
Executed d u r i n g
•preceding month
1921 - March 10
.April 10
May 10
June 10
J u l y 10
August 10
September 10
October 10
Outstanding on
d a t e given
$5,325,000
4,558,000
5,611,000
2,795,000
3,121,000
4,852,000
5,312,000
4,507,000
$14,127,000
13,234,000
12,892,000
10,798,000
9,286,000
8,756,000
9,009,000
9,902,000
DISTRICT TfQ« 4 (CLEVELAND)
Of twenty r e p o r t i n g a c c e p t i n g b a n k s , seven i n d i c a t e a c c e p t a n c e s executed
f o r customers d u r i n g September, $2,865,122, and e l e v e n banks r e p o r t acceptances
p a i d d u r i n g the same:period, $3*561,964.
Predominating c l a s s i f i c a t i o n s a r e
c o a l , o i l , and t r a c t o r s f o r domestic shipment*
B a n k e r s 1 a c c e p t a n c e s bought by
the F e d e r a l Reserve Bank of Cleveland d u r i n g September, 1921, amount t o
$3,168,127, and the amount p a i d t o $2,808,507«
The a c c e p t a n c e market was i n a c t i v e throughout t h e month.
B i l l s were
s c a r c e , and t h e r a t e s s t e a d i l y d e c l i n e d to t h e i r p r e s e n t l e v e l of 4g p e r cent*
11G
. 5 .
T-3236
This was p a r t l y due t o the s c a r c i t y of b i l l s and t o the lower l e v e l of c a l l
money r a t e s i n New York.
I n d i c a t i o n s through t h i s c r e d i t i n s t r u m e n t show a
g e n e r a l l i q u i d a t i o n of f r o z e n c r e d i t s w i t h domestic shipments b e i n g s o l d i n
11
spot" and otherwise being taken c a r e of through the c h a n n e l s of s t r a i g h t l o a n
Few b i l l s o r i g i n a t e d a g a i n s t domestic shipments and on warehouse r e c e i p t s
The m a j o r i t y of b i l l s , accepted by the banks i n the D i s t r i c t , were p a r t i c i p a t i o n s of old s y n d i c a t e s and a few b i l l s a g a i n s t f o r e i g n t r a n s a c t i o n s *
The demand throughout the month has remained p r a c t i c a l l y t h e same as i n
t h e p r e v i o u s month.
f a l l , t h e r e was
a
moi
In the f i r s t
55ntarv
week o r so, when the r a t e s f i r s t began t o
"but as the month p r o g r e s s e d and i d l e funds
accumulated, the c a l l f o r b i l l s became strong*
As the market could n o t supply
t h e need f o r prime b i l l s , t e m p o r a r i l y i d l e f u n d s were d i v e r t e d i n t o o t h e r
channels.
The r a t e s f o r prime e l i g i b l e b i l l s a r e as f o l l o w s :
Under 30 days
30 t o 60 days
60 t o 90 days
4il t o 41 p e r c e n t
4 i t o 4§ p e r c e n t
4 i t o 4% p e r c e n t
d i s t r i c t #0. 6 (atlawt.a)
Reports from a c c e p t i n g member banks i n t h e D i s t r i c t r e f l e c t l i t t l e a c t i v i t y i n acceptance market c o n d i t i o n s .
acceptances *
Most of t h e banks r e p o r t no d e a l i n g s i n
A few of the r e p o r t s show domestic a c c e p t a n c e s executed d u r i n g
September t o b e somewhat l a r g e r than during August, w h i l e f o r e i g n a c c e p t a n c e s
executed d u r i n g September were, i n the a g g r e g a t e , about t h r e e tiroes t h e amount
d u r i n g the p r e c e d i n g month.
Acceptances purchased i n the open market b y the F e d e r a l Reserve Bank
d u r i n g September> however, were approximately 577 P e r
cent
l a r g e r than d u r i n g
August, and i n t u r n were l a r g e r than f o r any month s i n c e F e b r u a r y 1920
~6 -
X-3236
DISTRICT NO. 7 (CHICAGO)
Revised s t a t i s t i c s , comriled so t h a t banks do n o t i n c l u d e i n p u r c h a s e s
b i l l s which t h e y themselves have a c c e p t e d , n<r p u r c h a s e s and s a l e s of b i l l s
f o r account of s p e c i f i c c u s t o m s r s , a r e a s f o l l o w s :
( I n Thousands of D o l l a r s )
Twenty-nine banks
September
B i l l s bought
B i l l s sold . .
Held a t c l o s e of month . . . .
Amount a c c e p t e d . . - . . . . . .
August
July
7,858
16,525
6,728
11,800
8,685
23,763
5»77^
20,729
11,847
24,571
22,651
Included i n t h e s t a t i s t i c s a r e t h e s e of -one bank which does a l a r g e
brokerage business in bankers' acceptances.
These r e p o r t s from banks i n the Seventh F e d e r a l Reserve D i s t r i c t show a
c o n t i n u e d d e c r e a s e s i n c e J u l y 1, i n b i l l s a c c e p t e d , bought and s o l d .
The only
item t o show i n c r e a s e i s b i l l s h e l d a t the c l o s e of t h e month.
DISTRICT NO. g (ST. LOUIS)
During t h e p a s t t h i r t y days the acceptance market has b e e n c o n s i d e r a b l y
more a c t i v e than f o r some time p r e v i o u s -
The l a r g e r banks of t h e D i s t r i c t
have d i s p l a y e d more i n t e r e s t , i n v e s t i n g r a t h e r f r e e l y and r a t e s of d i s c o u n t
have d e c l i n e d .
Prime unendorsed b i l l s a r e now s e l l i n g a t about 4^ p e r c e n t ,
which i s the l o w e s t q u o t a t i o n f o r many months.
DISTRICT NO. 9 (MIMMPOTIS)
During t h e month of September more than $169,OCX) w o r t h of t r a d e a c c e p t ances were d i s c o u n t e d by t h e Minneapolis F e d e r a l Reserve Bank;«
This i s i n
c o n t r a s t w i t h t h e t o t a l of $329,000 i n t r a d e a c c e p t a n c e s d i s c o u n t e d d u r i n g
•
the month of August.
Last y e a r between .August and September, t h e r e was a l s o
a d e c l i n e i n the amount of t r a d e acceptances d i s c o u n t e d from $289,000 to
$166,000
1 1 9 0
- 7 -
7s.-y.jjG
During September, t h i s bank d i s c o u n t e d more than $10,000 w o r t h of bankers ' acceptances.
September was t h e f i r s t month s i n c e June i n which t h i s
Bank d i s c o u n t e d any b a n k e r s ' a c c e p t a n c e s d u r i n g 1921.
There were no purchases durinp September of b a n k e r s ' a c c e p t a n c e s , t r a d e
a c c e p t a n c e s , or d o l l a r exchange.-
The r a t e s f o r the d i s c mint and purchase of
a c c e p t a n c e s remained unchanged d u r i n g September.
DISTRICT WO* 10 (KANSAS CITY)
During the p a s t 10 t o 60 d&y$ the acceptance market i n t h i s D i s t r i c t has been
q u i e t , due l a r g e l y t o the d e c l i n e i n f o r e i g n t r s i e a c t i v i t y *
The F e d e r a l Re-
s e r v e Bank i s c a r r y i n g something over $1,000,000 of bank a c c e p t a n c e s based
on Oklahoma c o t t o n , b u t a t t h i s d a t e i n October i s c a r r y i n g p r a c t i c a l l y no
a c c e p t a n c e s b a s e d on wheat and f l o u r f o r e x p o r t DISTRICT NO. 11 (DIT.TJR1
I n q u i r i e s d i r e c t e d t o a c c e p t i n g banks d e v e l o p the f a c t t h a t t h e r e was a.
s u b s t a n t i a l i n c r e a s e i n September of o u t s t a n d i n g a c c e p t a n c e s c r e a t e d i n t h i s
D i s t r i c t , the t o t a l on September 30th b e i n g $2,486,000.
an i n c r e a s e of $1,530,000 s i n c e August 31st*
which r e p r e s e n t s
Most of t h e s e a c c e p t a n c e s were
based on domestic shipments and s t o r a g e of goods.
DISTRICT NO. 12 (SAN FRANCISCO)
The noteworthy f e a t u r e of t h e san F r a n c i s c o b i l l market d u r i n g the month
ending October 1 0 t h was the s t e a d y d e c l i n e i n r a t e s -
From 5$> a t which f i g u r e
i t had remained f o r ove r a month, t h e r a t e f e l l s u c c e s s i v e l y t o 4 - 7 / 8 $ , 4 - 3 / 4 $
4 - 5 / 8 $ , and f i n a l l y 4 - 1 / 2 $ on October 1 1 t h .
This decline i s a t t r i b u t e d to the
pronounced e a s i n g of t h e c a l l money and b i l l r a t e s i n the E a s t .
In s p i t e of
%
t h i s d i m i n u t i o n of r e t u r n on a c c e p t a n c e s , demand i s r e p o r t e d t o have been f a i r l y w e l l m a i n t a i n e d throughout the month.
N o r t h e r n C a l i f o r n i a and t h e P a c i f i c
Northwest c o n t i n u e t o accept over 90$ of the b i l l s drawn i n t h i s D i s t r i c t , and
* >
• 1133
—
&—
t o buy 80# of a l l acceptances sold h e r e .
X-5336
B i l l s of 120 and 150 day m a t u r i t i e s
have become more p o p u l a r , d o u b t l e s s due t o a n t i c i p a t i o n of f u r t h e r r a t e dec l i n e s i n the immediate f u t u r e .
M a t u r i t i e s of b i l l s purchased d u r i n g the
month ending October 11th were d i v i d e d roughly as f o l l o w s :
30
60
90
120
150
day
day
day
day
day
- 26.0#
- 25-0#
- *42 *5#
- 6.0#
- 0.5#
B i l l s o r i g i n a t i n g i n t h i s D i s t r i c t a r e s t i l l somewhat l a r g e r i n
t o t a l amount than they were during the summer months, d o u b t l e s s due t o cont i n u a t i o n of crop m a r k e t i n g .
The t h i r t y - s e v e n p r i n c i p a l a c c e p t i n g banks
of the D i s t r i c t r e p o r t e d t o t a l September purchases of a c c e p t a n c e s of $5 »99^»OCO
compared w i t h $2,996,000 i n August*
Of the $ 5 » 9 9 0 0 0 p u r c h a s e d , $2,118,000
r e p r e s e n t e d b i l l s drawn i n t h i s D i s t r i c t , based p r i m a r i l y upon canned goods,
wheat, s u g a r , and c o f f e e .
These t h i r t y - s e v e n banks r e p o r t e d a t o t a l of
$11,480,000 acceptances held a t t h e c l o s e of September compared w i t h $4,075,000
on hand at the end of August.
Rates i n the open d i s c o u n t market at the end of the p e r i o d were as
follows:
E l i g i b l e member banks
E l i g i b l e non-members
30 days
4-1/2#
4-3/4#
60 days
4-1/2#
4-3/^#
90 days
4-1/2#
4-3/^
FEDERAL RESERVE BOARD
WASHINGTON
November 1,. 1$21
X-3237
SUBJECT:
Reply of F e d e r a l Reserve Board t o S e n a t e R e s o l u t i o n 153
Dear S i r !
There i s e n c l o s e d h e r e w i t h , f o r your i n f o r m a t i o n ,
copy of l e t t e r addressed by the Federal Reserve Board, under
date of October 31> 1921, to the President of the Senate, in
response to Senate Resolution 153> directing the Board to
furnish the Senate with information regarding the alleged
waste of money in increase of salaries of officers and employees and in the erection of buildings, and the general
expenses of the Federal Reserve Banks.
Very t r u l y y o u r s ,
W. P . G. HARDING,
(Enclosure)
G o v e r n o r
TO GOVERNORS AND AGENTS OF ALL F.R.BANKS.
X-3237a
4 i Qr-
COPY
October 31, 1 9 a .
SUBJECT:
Response t o S. Res. 153-
Sir:
On October 18, 1921 t h e F e d e r a l Reserve Board r e c e i v e d from t h e
S e c r e t a r y of t h e Senate a r e s o l u t i o n of t h e Senate (S. R e s . l 5 3 X dated
October 14, 1921, r e a d i n g a s f o l l o w s :
"Whereas, i t i s charged i n t h e p u b l i c p r e s s of t h e country and
upon t h e f l o o r of t h e Senate t h a t t h e Federal Reserve Board h a s been
g u i l t y of an amazing waste of p u b l i c money i n i n c r e a s e of s a l a r i e s t o
o f f i c e r s and employees of the Hew York Federal Reserve Bank; and
"Whereas, s i n c e 1918 i n t h e New Ycrk branch a l o n e they have i n creased t h e number of o f f i c e r s and employees 279/ o r about 10 p e r c e n t ,
w h i l e they have i n c r e a s e d t h e s a l a r i e s about $0 p e r c e n t , p a y i n g i t s
o f f i c e r s and employees a l l t h e way from $10,000.00, $12,000* 00, $25,000*00,
$30,000.00 and one a s high a s $$0,000.CO, and t h a t p r i o r t o 19I8 s i x t y
p e r cent of t h e s e o f f i c e r s never received, over $1500.00 t o $2500.00,
but a r e now drawing s a l a r i e s a s h i g h a s $10,000.00; and
"Whereas, t h e o f f i c i a l r e p o r t s of t h e F e d e r a l Reserve Board show
t h a t i n t h e c a l e n d a r year of 192O t h e Federal Reserve Bank of New Y o r k ' s
p a y r o l l amounted t o $4,639*273* and f o r t h e c a l e n d a r y e a r 19IS t h e p a y r o l l was $3,104,830, showing an a c t u a l i n c r e a s e i n p a y r o l l s i n c e t h e
c l o s e of t h e war of $1,534,443-00; and
"Whereas, i t i s charged t h a t t h e Governor of t h e F e d e r a l Reserve
Board h a s s t a t e d t h a t t h e employees of t h e F e d e r a l Reserve Banks a r e not
p a i d by t h e Government n o r p a i d out of revenue d e r i v e d from t a x a t i o n , but
a r e p r i v a t e b u s i n e s s ogn and i n t h e banking b u s i n e s s t o make money; and
"Whereas, under t h e p r o v i s i o n s of S e c t i o n 7 of t h e F e d e r a l Reserve
Act a l a r g e p e r cent of t h e n e t r e c e i p t s made and saved by t h e F e d e r a l
Board s h a l l be p a i d i n t o t h e Federal Treasury, and i f t h e a l l e g a t i o n s
h e r e i n made a r e t r u e t h e Treasury of t h e United S t a t e s h a s been deprived
of a v a s t sum of money; T h e r e f o r e be i t
"Resolved, That t h e Federal Reserve Board, a s e a r l y a s p r a c t i c a b l e ,
be, and i t i s hereby, d i r e c t e d t o f u r n i s h t o t h e Senate t h e number of
employees, t o g e t h e r w i t h t h e i r r e s p e c t i v e s a l a r i e s , employed by t h e Fede r a l Reserve Bank i n New York,as w e l l a s i n t h e o t h e r F e d e r a l Reserve Banks
i n t h e c o u n t r y , a n d t h e e x p e n d i t u r e s made by each branch bank i n t h e e r e c t i o n
1196
-2~
X-323?a
"of p u b l i c b u i l d i n g s and t h e g e n e r a l expenses i n t h e a d m i n i s t r a t i o n of each
Federal Reserve Bank, and how much of t h e n e t e a r n i n g s have been p a i d t o
t h e United S t a t e s a s a f r a n c h i s e t a x . "
The Board begs l e a v e t o c a l l a t t e n t i o n t o a c l a u s e i n S e c t i o n 10 of t h e
F e d e r a l Reserve Act, which r e a d s - "The Federal Reserve Board s h a l l a n n u a l l y
make a f u l l r e p o r t of . i t s o p e r a t i o n s t o t h e Speaker of t h e House of R e p r e s e n t a t i v e s , who s h a l l cause t h e same t o be p r i n t e d f o r t h e i n f o r m a t i o n of t h e
Congress",
In compliance w i t h t h e law t h e F e d e r a l Reserve Board h a s submitted r e p o r t s
f o r t h e y e a r s 1914 t o 1920, both i n c l u s i v e . These r e p o r t s have d e s c r i b e d i n
d e t a i l and a t g r e a t l e n g t h t h e o p e r a t i o n s of t h e F e d e r a l Reserve Banks, and
t h e r e have been t r a n s m i t t e d w i t h them e x h i b i t s showing t h e salaries, p a i d by t h e
s e v e r a l F e d e r a l Reserve Banks t o o f f i c e r s and employees, except t h a t t h e r e p o r t
f o r I91U shows t h e s a l a r i e s p a i d s e n i o r o f f i c e r s o n l y . I n t h a t r e p o r t (page
I 9 0 ) t h e Board s t a t e d t h a t w h i l e i t had i n a few c a s e s approved t h e s a l a r i e s
f i x e d by banks f o r o f f i c e r s o t h e r t h a n t h e Governor, a s t h e banks i n s e v e r a l
d i s t r i c t s had not yet completed t h e i r o r g a n i z a t i o n s , i t was "not deemed a d v i s a b l e t o g i v e , a t t h i s time, a l i s t , which would n e c e s s a r i l y be incomplete
of t h e s a l a r i e s p a i d t o t h e s u b o r d i n a t e o f f i c i a l s of a l l t h e banks".
In t h e r e p o r t f o r t h e year 1915 a d e t a i l e d l i s t of t h e s a l a r i e s of a l l
o f f i c e r s and employees, names omitted, i s g i v e n f o r each of t h e Federal Reserve
Banks a s E x h i b i t J on pages 97 t o 99* * n t h e r e p o r t f o r t h e year 1916 t h i s
i n f o r m a t i o n a p p e a r s a s E x h i b i t N on pages 182 t o 164. In t h e r e p o r t f o r 1917
i t a p p e a r s a s E x h i b i t N on pages 194 t o 196. I t a p p e a r s i n t h e r e p o r t f o r 19IS
a s E x h i b i t N oh pages 244 t o 246. In t h e t e x t of t h e r e p o r t f o r t h a t year
(page 29) a t t e n t i o n was c a l l e d t o t h e g r e a t expansion of t h e b u s i n e s s of t h e
Federal Reserve Banks w i t h t h e consequent n e c e s s i t y of making l a r g e a d d i t i o n s
t o t h e i r working f o r c e s . The number of o f f i c e r s and employees i n a l l d e p a r t ments &i each of t h e Federal Reserve Banks a t t h e c l o s e of t h e year was summarized on t h e same p a g e . In t h e r e p o r t f o r the year 1919 a s t a t e m e n t of
p e r s o n n e l and s a l a r i e s a t a l l Federal Reserve Banks appeared a s E x h i b i t M on
pages 274 t o 277. In t h e t e x t of t h a t r e p o r t , on page ] 4 , a t a b l e was g i v e n
showing t h e number of o f f i c e r s and employees a t each F e d e r a l Reserve Bank a t
t h e c l o s e of t h e year 1919 a s compared w i t h t h e number a t t h e end of t h e
p r e v i o u s y e a r , and a t t e n t i o n was c a l l e d a l s o t o t h e a v e r a g e s a l a r y p a i d o f f i c e r s and employees by each Federal Reserve Bank (pafee 35)* The r e p o r t f o r
t h e y e a r 1920 shows t h e s a l a r i e s of o f f i c e r s and employees of t h e Federal
Reserve Banks, a s of December 31, 1920, on pages 272 t o 274. These t a b l e s
have, i n each i n s t a n c e , s i n c e t h e e s t a b l i s h m e n t of b r a n c h e s of Federal Reserve
Banks, i n c l u d e d t h e s a l a r i e s p a i d a t t h e b r a n c h e s .
I n i t s annual r e p o r t f o r t h e year I 9 I 6 (pages 3O-3I), t h e Beard c a l l e d a t t e n t i o n t o t h e f a c t t h a t t h e g r e a t i n c r e a s e i n volume of b u s i n e s s nad rendered
i t n e c e s s a r y f o r a l l Federal Reserve Banks t o a r r a n g e f o r t n e a c q u i s i t i o n of
permanent q u a r t e r s and gave i n d e t a i l t h e e x p e n d i t u r e s t h a t had been made by
s e v e r a l of t h e banks f o r b u i l d i n g s i t e s and t h e e r e c t i o n of b u i l d i n g s . S i m i l a r
i n f o r m a t i o n was given i n t h e r e p o r t f o r 1919 (pages 37-33) and i n t h e r e p o r t
f o r 1920 (pages 93-96)* I n a d d i t i o n t o t h i s t h e sum t o t a l of t h e s e i n v e s t m e n t s
a s c a r r i e d on t h e books of a l l Federal Reserve Banks, c o v e r i n g both t h e i r head
-3-
X-3237a
o f f i c e s and t h e i r branches, appears i n t h e s t a t e m e n t which t h e Federal Reserve
Board p u b l i s h e s each week f *,r t h e twelve F e d e r a l Reserve Banks combined. This
item a p p e a r s a l s o each week i n t h e s e p a r a t e s t a t e m e n t s p u b l i s h e d by each
Federal Reserve Bank.
AUTHORITY OF DIRECTORS OF FEDERAL RESERVE BANKS AND
SUPERVISORY POWERS OF FEDERAL RESERVE BOARD.
Inasmuch a s t h e R e s o l u t i o n of t h e Senate r e f e r s t o t h e "New York Branch"
and t o " t h e e x p e n d i t u r e s made by each branch bank i n t h e e r e c t i o n of p u b l i c
b u i l d i n g s " , t h e Board r e s p e c t f u l l y submits a b r i e f s t a t e m e n t r e g a r d i n g tne
c h a r a c t e r of t h e Federal Reserve Banks. In doing so t h e Board d i s c l a i m s any
i n t e n t i o n of s e e k i n g t o evade r e s p o n s i b i l i t y i n t h e m a t t e r s r e f e r r e d t o in
t h e R e s o l u t i o n of t h e Senate, but merely d e s i r e s t o a v o i d any p o s s i b l e grounds
f o r m i s u n d e r s t a n d i n g t h e n a t u r e of i t s r e s p o n s i b i l i t y .
The Federal Reserve Act d i d not e s t a b l i s h a c e n t r a l bank. On t h e cont r a r y , i t made p o s s i b l e t h e e s t a b l i s h m e n t of a s many a s twelve Federal Reserve
Banks, each almost wholly independent of t h e o t h e r s i n o p e r a t i o n , a s well as
i n l o c a l p o l i c i e s . From a l e g a l s t a n d p o i n t t h e s e banks a r e p r i v a t e c o r p o r a t i o n s , or ganize d under a s p e c i a l a c t of Congress, namely, t h e Federal Reserve
Act. They a r e n o t i n a s t r i c t sense of t h e word Government banks, b u t a r e
only quasi-Governmental i n s t i t u t i o n s , i n t h a t they a r e under t h e general
s u p e r v i s i o n of t h e Federal Reserve Board and have on t h e i r boards of d i r e c t o r s
t h r e e men, r e p r e s e n t i n g t h e Government, who a r e appointed by t h e F e d e r a l Reserve Board.
Each bank has n i n e d i r e c t o r s and t h e o t h e r s i x a r e chosen by t h e member
banks, which a r e t h e s o l e s t o c k h o l d e r s of t h e Federal Reserve Bank. S e c t i o n
4 of t h e Federal Reserve Act p r o v i d e s t h a t each Federal Reserve Bank, a f t e r
r e c e i v i n g i t s c h a r t e r from t h e Comptroller of the Currency " s h a l l become a
body c o r p o r a t e and a s such ** s h a l l have power*
" F i r s t . To adopt and use a c o r p o r a t e s e a l .
"Second. To have s u c c e s s i o n f o r a p e r i o d of twenty y e a r s from i t s
o r g a n i z a t i o n u n l e s s i t i s sooner d i s s o l v e d by an Act of Congress,
or u n l e s s i t s f r a n c h i s e becomes f o r f e i t e d by some v i o l a t i o n of l a w ,
" T h i r d . To make c o n t r a c t s .
" F o u r t h . To sue and be sued, complain^and defend, i n any court oflaw or e q u i t y .
" F i f t h . To a p p o i n t by i t s board of d i r e c t o r s such o f f i c e r s and
employees a s a r e not o t h e r w i s e provided f o r i n t h i s Act, t o d e f i n e
t h e i r d u t i e s , r e q u i r e bonds of them and f i x t h e p e n a l t y t h e r e o f , and
t o d i s m i s s a t p l e a s u r e such o f f i c e r s or employees.
" S i x t h . To p r e s c r i b e by i t s board of d i r e c t o r s , by-laws not i n c o n s i s t e n t w i t h law, r e g u l a t i n g t h e manner i n which i t s g e n e r a l
b u s i n e s s may be conducted, and t h e p r i v i l e g e s g r a n t e d t o i t by law
may be e x e r c i s e d and e n j o y e d .
"Seventh. To e x e r c i s e by i t s board of d i r e c t o r s , o r duly a u t h o r ized o f f i c e r s or a g e n t s , a l l powers s p e c i f i c a l l y g r a n t e d by t h e p r o v i s i o n s of t h i s Act and such i n c i d e n t a l powers a s s h a l l be n e c e s s a r y
t o c a r r y on t h e b u s i n e s s of banking w i t h i n t h e l i m i t a t i o n s p r e s c r i b e d
by t h i s A c t . "
- 4 -
X-3237a
S e c t i o n 4 f u r t h e r p r o v i d e s t h a t "Every F e d e r a l Reserve Bank s h a l l "be
conducted under t h e s u p e r v i s i o n and c o n t r o l of a b o a r d of d i r e c t o r s . The
"board of d i r e c t o r s s h a l l p e r f o r m the d u t i e s u s u a l l y a p p e r t a i n i n g t o t h e
o f f i c e of d i r e c t o r s of banking a s s o c i a t i o n s and a l l such d u t i e s as a r e
p r e s c r i b e d by law". I t i s a l s o provided i n S e c t i o n 4 t h a t "-Any compensation
t h a t may be provided b y b o a r d s of d i r e c t o r s of F e d e r a l Reserve Banks f o r
d i r e c t o r s , o f f i c e r s or employees s h a l l be s u b j e c t t o the approval of t h e
F e d e r a l Reserve Board."
S e c t i o n 11 of the F e d e r a l Reserve Act a u t h o r i z e s and empowers the
Federal Reserve Board
"(f) To suspend or remove any o f f i c e r or director cf azgr Federal
Reserve Bank, the cause of such removal to be forthwith communicated
i n w r i t i n g b y the F e d e r a l Reserve Board t o the removed o f f i c e r or
d i r e c t o r and t o s a i d Bank*
(g) To r e q u i r e the w r i t i n g off of d o u b t f u l o r w o r t h l e s s a s s e t s
upon the books and b a l a n c e s h e e t s of F e d e r a l Reserve Banks*
" (h) To suspend, f o r the v i o l a t i o n of any of the p r o v i s i o n s of t h i s
-Act* the o p e r a t i o n s of any F e d e r a l Reserve Bank, t o t a k e p o s s e s s i o n
t h e r e o f , a d m i n i s t e r t h e same during the p e r i o d of s u s p e n s i o n , and,
&88iBed a d v i s a b l e , to l i q u i d a t e or r e o r g a n i z e such bank*
v j ) To e x e r c i s e g e n e r a l s u p e r v i s i o n over s a i d F e d e r a l Reserve Banks.*
S e c t i o n 21 of the Federal Reserve Act p r e s c r i b e s t h a t "The F e d e r a l
e serve Board s h a l l , a t l e a s t once each y e a r , order an examination of each
e e r a ! Reserve Bank, and upon j o i n t a p p l i c a t i o n of t e n member banks the
e e r a l Reserve Board s h a l l order a s p e c i a l examination and r e p o r t of the
c o n d i t i o n of any F e d e r a l Reserve Bank."
Other s e c t i o n s of the Act empower the F e d e r a l Reserve Board t o p r e s c r i b e r u l e s and r e g u l a t i o n s governing v a r i o u s t r a n s a c t i o n s which may be
engaged in by Federal Reserve Banks, b u t the f o r e g o i n g q u o t a t i o n s embody
a 1 t h e a u t h o r i t y which has been given the Board over the r o u t i n e b u s i n e s s
and the a d m i n i s t r a t i o n of the Banks * The Board i s n o t empowered t o s e l e c t
t
o f f i c e r s and employees of the Federal Reserve Banks, f o r i t can appoint
only the F e d e r a l Reserve Agent and h i s a s s i s t a n t s , n o r does i t i n i t i a t e the
s a l a r i e s p a i d the o f f i c e r s and employees of the F e d e r a l Reserve Banks *
These are m a t t e r s which come w i t h i n the scope of t h e a u t h o r i t y d e l e g a t e d t o
the d i r e c t o r s of the F e d e r a l Reserve Banks i n S e c t i o n 4 of the Act*
The law-makes i t c l e a r t h a t i n approving compensation proposed by the
d i r e c t o r s , < ^ the Board must n e c e s s a r i l y be governed i n l a r g e measure b y t h e i r
r e p r e s e n t a t i o n s » The d i r e c t o r s a r e Immediately r e s p o n s i b l e f o r the a d m i n i s t r a t i o n of t h e Bank and a r e f a m i l i a r wi t h the requirements f o r i t s e f f i c i e n t
o p e r a t i o n , w i t h the q u a l i f i c a t i o n s of the o f f i c e r s and employees, w i t h l o c a l
c o n d i t i o n s , such as c o s t of l i v i n g , c o m p e t i t i o n f o r s e r v i c e s by member and
o t h e r banks of the community, and the f a i r v a l u e of t h e s e r v i c e s r e n d e r e d .
The d u t y of the d i r e c t o r s as t o the management of a F e d e r a l Reserve Bank
i s q u i t e analogous t o t h a t of d i r e c t o r s of n a t i o n a l banks w i t h r e s p e c t
t o those, i n s t i t u t i o n s »
The Federal Reserve Board has n o t
approved, i.n a p e r f u n c t o r y
way
salaries
proposed
by
Federal
-5-
X-3237&
Reserve Bank directors, but has always called for f u l l information before
taking action. In some cases i t has withheld approval pending the personal
presentation of the matter by a committee of tne directors and in other
instances i t has declined to approve compensation proposed. But the Board
has taken the position generally that as the directors are primarily responsible for the operation of the banks, great weight must be given to their
representations, There is appended, as Exhibit A, a l i s t of the directors
of all Federal Reserve Banks and branches.
FEDERAL RESERVE BANK BUILDINGS.
The buildings owned by the Federal Reserve Banks, or which are now in
course of construction, are not, in the view of the Board, "public buildings".
They constitute a part of the invested assets of the respective banks, the
funds for their acquisition or construction were not provided by a Congressional appropriation, the t i t l e i<s vested in the Federal Reserve Bank and not
in the United States, and they are subject to state and local taxation.
("Federal reserve banks, including the capital stock and surplus therein, and
the income derived therefrom shall be exempt from Federal, State and local
taxation, except taxes upon real estate". Sec. '()
At the instance of the Federal Reserve Board a b i l l was introduced during the third session of the 65th Congress to amend Section 7 of the Federal
Reserve Act by permitting Federal Reserve Banks to create a maximum surplus .
•out of earnings equal to 100$ of their paid-in capital, instead of U $ as
Q>
originally provided, When the Committees on Banking and Currency of the
Senate and House of Representatives were considering this b i l l early in the
year 1919/ the Governor of the Federal Reserve Board called the attention of
the Committees to the fact tjiat all Federal Reserve Banks would be obliged
to acquire or construct their own buildings as i t was not practicable to lease
adequate quarters and otherwise provide suitable vaults for the custody of the
large amounts of cash and securities held by the banks. Especial attention was
called to the large expenditures which would have to be made in providing
buildings and one argument made in favor of the b i l l was that the banks should
be permitted to increase their surplus in order to reduce the proportion to
the banks1 capital account of the fixed assets represented by the buildings.
The Committees were so impressed with this argument that the b i l l as reported,
which became the Act of March 3* 1$19, amending Section "J, went beyond the
Board's recommendations and provided that Federal Reserve Banks might create
a surplus out of earnings equal to 100% of their subscribed capital, plus
10% of the net earnings annually, after such a surplus had been created.
There does not appear to be any specific requirement anywhere in the
Federal Reserve Act that the Board should approve the expenditures made by the
Federal Reserve Banks in their building operations, but under i t s power of
general supervision tne Board informed tne brinks tnat they would be required
to suomit for tne consideration of the Board all options for the purchase of
real estate, all plans and specifications for buildings and vaults, and that
they snould not enter into any contracts involving expenditures for these
purposes until authorized to do so by the Board.
In order that the Board might be in position more intelligently to pass
-
6 -
X-3237a
upon these various mattersp i t decided to employ a consulting architect who
should devote his entire time to Federal Reserve Building projects*
In the
interest of economy i t was determined to engage as consultant the same
architect who had already been employed in a similar capacity by the Federal
Reserve Bank of New York.
Mr, Alexander B, Trowbridge, of the firm of
Livingston and $rowbridge, Architects, of New York City, was induced to sever
his connection with his firm and to enter into the employ of the Federal
Reserve Board as Consulting Architect, at an annual salary of $6,666.66,
which has not been increased. This i s one-third of his total salary of
$20,000, the other two-thirds being paid by the Federal Reserve Bank of New
York*
He began his work in April 1919* At that time only one Federal Reserve
bank building - that at Atlanta - had been completed (page 38 annual report
for 1919)*and the working plans and specifications for the Richmond and Dallas
buildings were finished* Since then, the Consulting Architect has appeared
as consultant in connection with the projects for New York, Boston, Chicago,
Kansas City, Cleveland, San Francisco, Minneapolis and St* Louis, and with
the new vault at Pb.iladelphia, the bank there being the only one which i s
housed in a purchased building. He has also been consult##' in connection with
the additions to the Atlanta bank, the Annex buildings in Richmond and New York,
and with branch banks in Buffalo, New Orleans, El Paso, Houston, Louisville,
Nashville and Oklahoma City.
Consulting Architect he has
(1) Discussed with bank officers the property under consideration for
purchase, and advised as to i t s advantages and disadvantages*
(2) Advised bank officers in the matter of selecting an architect,
(3) Consulted with the banks and their architects as to the size, design
and planning of the proposed buildings, during the preliminary stages.
(4) When working drawings and specifications were completed, examined
then for the purpose of detecting and having eliminated any wasteful or
extravagant features*
(5) Advised the banks and their architects as to the best methods of
vault construction, so as to obtain the maximum amount of protection for the
money expended.
(6) Consulted with and advised the banks in connection with the selection
of contractors.
(7) Assisted the banks in drawing up contracts, both by preparing contracts and by studying and analyzing contracts prepared by others for the
signatures of the banks,
(8) Acted as arbiter in case of disputes where contractors claimed extras
which the barfks did not consider justified*
(9) Advised as to the necessity for changes, additions and omissions
during the course of construction of the buildings*
(10) Reported to the Federal Reserve Board from time to time, in connection
with the &bove activities*
There *h^s been no attempt to exercise centralized, control* • * ''The services
have been advisory dnd not mandatory in character. It has been possible through
a tactful presentation, to apprise the bank officers and their architects
- 7 -
X-3237a
of the wishes of the F e d e r a l Reserve Board t o keep d e s i g n s simple and t o
avoid t h e use of meaningless ornament and c o s t l y m a t e r i a l - Good m a t e r i a l
simply d e s i g n e d and d e t a i l e d has been reconanended• The u n d e r l y i n g purpose
of the Board i n the employment of a Consulting A r c h i t e c t has been to s e c u r e
w e l l c o n s t r u c t e d , s e r v i c e a b l e b u i l d i n g s of d i g n i f i e d a s p e c t b u t w i t h o u t any
d i s p l a y of c o s t l y f i n i s h which i s u n n e c e s s a r y and i n q u e s t i o n a b l e t a s t e .
The Board has recognized the n e c e s s i t y of adequate p r o v i s i o n f o r f u t u r e
growth and can c i t e numerous i n s t a n c e s i n growing c i t i e s where g r e a t expense
has been i n c u r r e d b e c a u s e of s h o r t - s i g h t e d n e s s i n o m i t t i n g p r e p a r a t i o n of
t h i s k i n d . The o f f i c e of t h e Consulting A r c h i t e c t has a t a l l times b e e n open
t o Bank o f f i c e r s and t h e i r a r c h i t e c t s - A g r e a t many c o n f e r e n c e s of i m p o r t ance have taken p l a c e t h e r e and the C o n s u l t i n g A r c h i t e c t has p e r s o n a l l y
v i s i t e d a number of the Banks and has c o n f e r r e d w i t h B u i l d i n g Committees
i n t h e i r own c i t i e s *
All of t h i s has been dene a t a very s m a l l expense t o t h e F e d e r a l Reserve System. The Consulting A r c h i t e c t has given up h i s p r i v a t e p r a c t i c e
and has devoted a l l of h i s time to the work of the Board< His s t a f f c o n s i s t s
of one a s s i s t a n t , h i s s e c r e t a r y and s t e n o g r a p h e r , w i t h o c c a s i o n a l h e l p from
a draughtsman who i s i n t h e employ of the F e d e r a l Reserve Bank of New York.
I t i s e s t i m a t e d t h a t , t h e t o t a l sum p a i d i n s a l a r i e s t o t h e Consulting
A r c h i t e c t and h i s s t a f f during the two and one-half y e a r s he has been i n the
Board's s e r v i c e amounts t o o n e - t w e n t i e t h of one p e r c e n t of t h e approximate
amount of a l l sums s e t a p a r t f o r F e d e r a l Reserve Bank b u i l d i n g s d u r i n g t h a t
. period.
There a r e a t t a c h e d h e r e t o ( E x h i b i t B) t a b l e s r e l a t i n g t o the r e a l
e s t a t e purchased by t h e F e d e r a l Reserve Banks and t h e b u i l d i n g o p e r a t i o n s
which have been engaged i n . These t a b l e s show f o r e a c h F e d e r a l Reserve Bank
the o r i g i n a l investment i n p r o p e r t y p u r c h a s e d , the amount expended i n r e modeling and i n the c o n s t r u c t i o n of new b u i l d i n g s , t h e amounts charged off
on account of d e p r e c i a t i o n and a m o r t i z a t i o n and the book v a l u e of bank
premises a c c o u n t s as of September 30, 1921. E x p l a n a t o r y d a t a have a l s o been
added showing the d a t e s on which r e a l e s t a t e was purchased b y each F e d e r a l
Reserve Bank, the number of square f e e t of ground p u r c h a s e d , amounts p a i d
t h e r e f o r , the c o s t of b u i l d i n g o p e r a t i o n s t o d a t e , and t h e e s t i m a t e d c o s t
t o complete b u i l d i n g s i n course of c o n s t r u c t i o n . I t w i l l be n o t e d f r o m t h e s e
t a b l e s t h a t t h e t o t a l amount e x p e n d e d ' f o r banking houses by a l l F e d e r a l Reserve Banks and Branches t o the end of September, 1921 was $36,158,000, o r
about 60% of t h e amount of f r a n c h i s e t a x e s p a i d t o t h e Government a t t h e
end of 1920 and about the same p r o p o r t i o n of the amount which i t i s
e s t i m a t e d w i l l be p a i d t o t h e Government a t the end of t h e y e a r 1921.
I t should be borne i n mind, however, i n c o n s i d e r i n g b u i l d i n g o p e r a t i o n s
t h a t the F e d e r a l Reserve Banks i n a c q u i r i n g b u i l d i n g s i t e s and cons t r u e t-.i
ing bank b u i l d i n g s a r e making c a p i t a l e x p e n d i t u r e s and c o n s e q u e n t l y
t h e s e o p e r a t i o n s do n o t d i m i n i s h i n any way t h e amount of f r a n c h i s e
taxes payable t o the United S t a t e s Government. The amount of t h e f r a n c h i s e
tax i s a d v e r s e l y a f f e c t e d only t o the e x t e n t t h a t t h e F e d e r a l Reserve
Banks a r e a u t h o r i z e d t o charge d e p r e c i a t i o n and a m o r t i z a t i o n
allowances
on t h e i r bank p r e m i s e s
to current
net earnings.
i
——
8
X-3237B
•As t h e F e d e r a l Reserve Bank of New York h a s engaged i n t h e l a r g e s t and most
expensive of a l l t h e b u i l d i n g p r o j e c t s , and a s i t h a s been made t h e s u b j e c t of
e s p e c i a l c r i t i c i s m , t h e Board submits h e r e w i t h ( E x h i b i t C) copy of a statement
which h a s a l r e a d y been submitted by t h e Governor of t h a t bank t o t h e J o i n t
Commission of A g r i c u l t u r a l I n q u i r y of Congress. This s t a t e m e n t s e t s f o r t h i n
minute d e t a i l a l l f a c t s r e g a r d i n g t h e a c q u i s i t i o n of t h e r e a l e s t a t e , employment of a r c h i t e c t s , p r e p a r a t i o n ot p l a n s and s p e c i f i c a t i o n s , l e t t i n g of cont r a c t s , and scope of t h e b u i l d i n g . There a r e appended a l s o t a b l e s showing t h e
l a r g e volume of r o u t i n e o p e r a t i o n s of t h e bank, which c a l l f o r t h e employment
of a l a r g e f o r c e of employees, whose number i n t u r n r e n d e r s a l a r g e b u i l d i n g
necessary.
The Board w i s h e s t o add t h a t l i k e c a r e h a s been t a k e n i n t h e p r e p a r a t i o n of
p l a n s and s p e c i f i c a t i o n s f o r a l l o t h e r Federal Reserve Bank b u i l d i n g s , but e l a b o r a t e s t a t e m e n t s g i v i n g d e t a i l s of a l l Federal Reserve Bank b u i l d i n g s a r e not
i n c l u d e d i n t h i s r e s p o n s e t o t h e Senate because of t h e added l e n g t h such s t a t e ments would g i v e t o t h i s communication*
SALARY POLICY OF FEDERAL RESERVE BANKSThere have been p r e p a r e d f o r use i n t h i s communication c e r t a i n t a b l e s which
appear a s E x h i b i t D. These t a b l e s show t h e number of o f f i c e r s and employees of
a l l F e d e r a l Reserve Banks, w i t h o f f i c e r s ' s a l a r i e s i n d e t a i l and employees 1
s a l a r i e s i n t h e a g g r e g a t e , and, i n a d d i t i o n , t h e g e n e r a l e x p e n s e s i n t h e a d m i n i s t r a t i o n of each Federal Reserve Bank. They a l s o give f o r p u r p o s e s of comp a r i s o n , d a t a a s t o t h e i n c r e a s e i n t h e r o u t i n e o p e r a t i o n s of t h e banks. In
c o n n e c t i o n w i t h t h e s e t a b l e s , t h e Board begs t o remark t h a t t h e o f f i c e r s of
Federal Reserve Banks a r e not o f f i c e r s of t h e United S t a t e s Government o r of any
of i t s d e p a r t m e n t s . Each Federal Reserve Bank i s now t h e l a r g e s t banking i n s t i t u t i o n i n i t s d i s t r i c t and t h e conduct of t h e b u s i n e s s of a F e d e r a l Reserve Bank
which has t r a n s a c t i o n s many t i m e s g r e a t e r t h a n t h o s e of t h e l a r g e s t of i t s
member banks, w i t h . g r e a t r e s p o n s i b i l i t i e s t o t h e member banks, t o t h e p u b l i c ,
and t o t h e Treasury of t h e United S t a t e s , r e q u i r e s t h e s e r v i c e s i n e x e c u t i v e
and o t h e r c a p a c i t i e s of t r a i n e d and competent o f f i c i a l s , who w i l l d e v o t e a l l
of t h e i r time t o t h e work of t h e bank, n o t only i n t h e o r d i n a r y r o u t i n e b u t i n
t h e study of a g r e a t v a r i e t y of t e c h n i c a l s u b j e c t s . I t i s e s s e n t i a l t h a t t h e
s e r v i c e s be o b t a i n e d of menwho can be r e l i e d upon t o measure Up t o t h e i r d u t i e s
and r e s p o n s i b i l i t i e s .
The o f f i c e r s and employees of Federal Reserve Banks a r e not p e r m i t t e d t o
engage i n any o t h e r b u s i n e s s , t o t a k e p a r t i n p o l i t i c a l a c t i v i t i e s nor t o hold
p u b l i c o f f i c e . Their s e r v i c e i n t h e Federal Reserve Bank i s not a s t e p p i n g s t o n e t o a p o l i t i c a l c a r e e r n o r does i t a f f o r d means of o u t s i d e f i n a n c i a l
p r o f i t . The d i r e c t o r s of F e d e r a l Reserve Banks have r e p e a t e d l y p o i n t e d out
t o t h e Board t h a t i t would be i m p o s s i b l e t o s e c u r e t h e s e r v i c e s of competent and
e f f i c i e n t o f f i c i a l s f o r the Federal Reserve Banks w e r e t h e i r s a l a r i e s t o be
measured by t h e s a l a r i e s p a i d t o t h e p o l i t i c a l o f f i c e r s of t h e Government.
With few e x c e p t i o n s , a l l o f f i c e r s and employees of t h e F e d e r a l Reserve
Banks a r e dependent upon t h e i r s a l a r i e s f o r l i v e l i h o o d . During t h e y e a r 1919
t h e r a t e of compensation a t Federal Reserve Banks was g e n e r a l l y advanced, both
a s t o o f f i c e r s and employees. This was due t o g r e a t e r c o m p e t i t i o n f a r s e r v i c e s ,
i n c r e a s e d c o s t of l i v i n g and t o a very g r e a t i n c r e a s e i n t h e volume of t r a n s actions.
I n i t s annual r e p o r t f o r 1 9 I 6 (page 29) t h e Board d i s c u s s e d
1203
-9-
X-323?a
t h e n e c e s s i t y , p a r t i c u l a r l y w i t h r e s p e c t t o j u n i o r o f f i c e r s and employees, of
paying s a l a r i e s approximating t h e s a l a r i e s p a i d by t h e l a r g e member banks i n
t h e c i t i e s where t h e Federal Reserve Banks a r e l o c a t e d . E x p e r i e n c e h a s shown
t h a t many of t h e l a r g e r member banks a r e d i s p o s e d t o draw upon t h e Federal
Reserve Banks f o r men t o f i l l high o f f i c i a l p o s i t i o n s . During t h e p a s t s i x
y e a r s f i v e Governors of Federal Reserve Banks have r e s i g n e d i n o r d e r t o a c cept e x e c u t i v e p o s i t i o n s w i t h o t h e r banking i n s t i t u t i o n s a t much h i g h e r s a l a r i e s
t h a n they were r e c e i v i n g a t t h e Federal Reserve Banks and t h e same i s t r u e w i t h
r e s p e c t t o a c o n s i d e r a b l e number of Deputy Governors and j u n i o r o f f i c e r s . In
o r d e r t o r e t a i n t h e s e r v i c e s of o f f i c e r s who a r e c o n s t a n t l y b e i n g tempted w i t h
o u t s i d e o f f e r s a t h i g h s a l a r i e s , i t h a s become n e c e s s a r y t o r e c o g n i z e t h i s comp e t i t i o n , and w h i l e t h e Board h a s i n no case approved s a l a r i e s f o r s e n i o r o f f i c e r s of F e d e r a l Reserve Banks a s h i g h a s t h o s e p a i d o f f i c e r s of s i m i l a r rank
by t h e l a r g e r member banks i n t h e p r i n c i p a l c i t i e s of t h e c o u n t r y , i t has r e c o g nized from t h e o u t s e t t h a t the s a l a r i e s paid j u n i o r o f f i c e r s , heads of d e p a r t ments and c l e r k s must be i n l i n e w i t h t h o s e p a i d by t h e l a r g e r member banks i n
t h e v a r i o u s Federal Reserve c i t i e s . I f , i n o r d e r t o reduce e x p e n s e s , t h e p o l i c y
should be adopted of making t h e Federal Reserve Banks mere t r a i n i n g schools f o r
bank o f f i c e r s , i t does not seem p o s s i b l e , because of t h e f r e q u e n t changes i n volved, t h a t t h e banks would have t h e degree of e f f i c i e n c y i n a d m i n i s t r a t i o n and
smoothness of o p e r a t i o n which they would have if t h e compensation p a i d be s u f f i c i e n t l y l i b e r a l t o r e t a i n t h e s e r v i c e s of t r a i n e d and c a p a b l e men.
The Board does n o t f o r a moment b e l i e v e t h a t t h e d i r e c t o r s of any Federal
Reserve Bank, i n f i x i n g s a l a r i e s or i n a u t h o r i z i n g e x p e n d i t u r e s i n developing
t h e b u s i n e s s , have been a c t u a t e d by t h e s l i g h t e s t d e s i r e t o d e p r i v e t h e
Government of t h e revenue which i t i s e n t i t l e d t o r e c e i v e under t h e terms of
S e c t i o n 7 of t h e Federal Reserve Act, and most a s s u r e d l y t h e F e d e r a l Reserve
Board would not be a p a r t y t o any such u n d e r t a k i n g .
In t h i s connection t h e Board i n v i t e s a t t e n t i o n t o t h e views of a former
S e c r e t a r y of t h e Treasury, and e x - o f f i c i o chairman of t h e F e d e r a l Reserve Board,
Hon. W. G. McAdoo, At a meeting of t h e Federal Reserve Board on December 14,
1915, he advocated approval of a s a l a r y of $50, 000 p e r annum which t h e d i r e c t o r s
of the Federal Reserve Bank of New York had voted f o r t h e Governor of t h a t i n s t i t u t i o n and s t a t e d t h a t h i s a t t i t u d e had been t h a t d u r i n g t h e f o r m a t i v e
p e r i o d of t h e Federal Reserve System comparatively low s a l a r i e s should be p a i d
u n t i l t h e b u s i n e s s of t h e banks could be e s t a b l i s h e d and a f a i r pleasure obtained
of t h e i r o p e r a t i o n s and a more a c c u r a t e r e a l i z a t i o n reached of t h e dimensions
of t h e problems and r e s p o n s i b i l i t i e s of t h e banks 1 o f f i c e r s , s t a t i n g t h a t p r e v i o u s l y he had opposed an i n c r e a s e i n t h e s a l a r y under c o n s i d e r a t i o n only because
t h e country was a t war. He s a i d , now t h a t t h e b u s i n e s s of t h e banks had been
well e s t a b l i s h e d and t h e y were making l a r g e e a r n i n g s f o r t h e Government, t h e
time had come when t h e o f f i c e of Governor of a Federal Reserve Bank should
command on i t s m e r i t s a f a i r and j u s t compensation, and t h a t he would v o t e t o
f i x t h e s a l a r y of the Governor of t h e Federal Reserve Bank of New York a t t h e
amount proposed by t h e d i r e c t o r s of t h e bank, t o w i t , $50,000 p e r annum. He
s t a t e d i t a s h i s view t h a t t h e p r i n c i p l e governing t h e f i x i n g of s a l a r i e s of
o f f i c e r s of Federal Reserve Banks shouldbe t h a t t h e s a l a r y be made s u f f i c i e n t l y
a t t r a c t i v e t o make a man w i l l i n g t o adopt t h e Federal Reserve System a s a
1204
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X-3237a
permanent c a r e e r , having i t s rewards i n t h e way of promotion l i k e any o t h e r
i n s t i t u t i o n * He opposed, t h e view t h a t t h e o f f i c e of head of a F e d e r a l Reserve
Bank should be considered on a p a r i t y w i t h high Government o f f i c e , s t a t i n g
t h a t heads of F e d e r a l Reserve Banks could n o t he s a i d t o e n j o y t h a t magnitude
of power and p r e s t i g e p e r t a i n i n g t o h i g h Government o f f i c e , while the hank
o f f i c e r s were y e t p l a c e d i n a d i f f e r e n t p o s i t i o n from those engaged i n p r i v a t e
i n s t i t u t i o n s i n t h a t they were a f f e c t e d by the mutations of p u b l i c l i f e and
c o n t r o l l e d b y a changing p u b l i c Board.
There i s t r a n s m i t t e d herewith as E x h i b i t E, copy of a l e t t e r , d a t e d
October 11, 1921, touching upon the s u b j e c t of s a l a r i e s , which was addressed
by the Governor of the F e d e r a l Reserve Board t o t h e Chairman of t h e J o i n t
Commission of A g r i c u l t u r a l I n q u i r y
the United S t a t e s Congress.
Since the c l o s e of t h e y e a r 1918, t h r e e o t h e r d i s t i n g u i s h e d men have f i l l e d
the ^ o f f i c e of S e c r e t a r y of the Treasury. I n view of t h e i r v o t e s and expressed
opinions on q u e s t i o n s r e l a t i n g to the s a l a r i e s p a i d o f f i c e r s of F e d e r a l Reserve
Banks the Board has no reason to b e l i e v e t h a t they t a k e the view t h a t t h e r e
has been "an amazing waste of p u b l i c money" i n the i n c r e a s e of s a l a r i e s t o
o f f i c e r s and employees of Federal Reserve Banks or t h a t by reason of such i n crease* " t h e Treasury of t h e United S t a t e s h a s been d e p r i v e d of a v a s t sum of
money
I t w i l l be noted from the t a b l e s above r e f e r r e d t o ( E x h i b i t D) t h a t the
s a l a r i e s of the P r e s i d e n t s of the l a r g e r banks i n New York C i t y a r e i n s e v e r a l
cases from 75$ to 100$ i n excess of the s a l a r y p a i d the Gbvernor of the Federal
Reserve Bank and t h a t i n the case of t h r e e of t h e s e banks t h e r e i s a Vice
P r e s i d e n t whose s a l a r y exceeds t h a t of the Governor of t h e F e d e r a l Reserve Bank
of New York. I t i s proper t o s t a t e t h ? t while t h e s e n i o r o f f i c e r s of t h e
Federal Reserve Bank have never received any e x t r a compensation o r bonuses,
very s u b s t a n t i a l bonuses have been p a i d t o the h i g h e r o f f i c e r s b y some of the
n a t i o n a l banks i n v a r i o u s p a r t s of the c o u n t r y . For example, the examination
r e p o r t f o r 1920 of Bank "A" of New York City shows t h a t the Chairman of t h e
Board received a bonus of $35*000, the P r e s i d e n t a bonus of $30,000, one of
the Vice P r e s i d e n t s a bonus of $25,000, and o t h e r o f f i c e r s r e c e i v e d s m a l l e r
amounts i n p r o p o r t i o n t o s a l a r i e s p a i d , while a l l the s e n i o r o f f i c e r s of Bank
"F" received a bonus equal t o 25$ of t h e i r annual s a l a r i e s .
The s a l a r i e s p a i d Vice P r e s i d e n t s of the l a r g e r n a t i o n a l banks and t r u s t
companies i n New York City 6re much i n excess of those p a i d t o t h e Deputy
Governors and C o n t r o l l e r s of the F e d e r a l Reserve Bank of New York, t h e h i g h e s t
s a l a i y paid t o a Deputy Governor of t h e F e d e r a l Reserve Bank of New York b e i n g
$30,000, while the s a l a r i e s of Vice P r e s i d e n t s of t h e s i x New York C i t y banks
l i s t e d i n E x h i b i t D range from $30,000 t o $75,000 p e r annum.
If t h e average annual s a l a r i e s p a i d a r e c o n s i d e r e d , i t w i l l b e found t h a t
the Federal Reserve Bank of New York, w i t h *40 o f f i c e r s and w i t h a t o t a l o f f i c i a l
p a y r o l l as of October 1, 1921 of $509»800 p e r annum, p a i d i t s o f f i c e r s an
average annual s a l a r y of $12,745, while t h e average annual s a l a r y p a i d to
o f f i c e r s of t h e s i x N a t i o n a l banks l i s t e d i n E x h i b i t D, some w i t h & l a r g e r and
others with a s m a l l e r number of o f f i c e r s than t h e F e d e r a l Reserve Bank, ranged
from $11,466 t o $28,792, the average annual s a l a r y p a i d b y Bank "E" b e i n g
1205
-ii-
X-3237a
c o n s i d e r a b l y more than twice t h a t paid by t h e Federal Reserve Bank of New York.
While t h e average annual s a l a r y paid by Bank "A" a p p e a r s a s $11,466, or
s l i g h t l y l e s s t h a n t h a t paid by t h e Federal Reserve Bank, i t w i l l be found,
a s above s t a t e d , t h a t t h e Chairman of t h e Board of t h a t bank r e c e i v e d a bonus
of $35# 000, b r i n g i n g h i s t o t a l compensation f o r the year up t o $100,000; the
p r e s i d e n t , a bonus of $30,000; one Vice P r e s i d e n t , a bonus of $25,000; and
o t h e r o f f i c e r s s m a l l e r amounts i n p r o p o r t i o n t o t h e i r s a l a r i e s . If bonus p a y ments were included i n a r r i v i n g S t average annual s a l a r i e s , t n e average s a l a r y
paid by Bank "A" would be m a t e r i a l l y i n excess of t h a t p a i d by t h e Federal
Reserve Bank of New York.
As w i l l b e seen from t h e t a b l e s included i n E x h i b i t D, e x t r a compensation
or bonus payments made by t h e Federal Reserve Banks nave i n most c a s e s been
l i m i t e d t o o f f i c e r s and employees r e c e i v i n g $5,000 p e r annum or l e s s . In a few
c a s e s bonuses have been paid t o o f f i c e r s r e c e i v i n g somewhat h i g h e r s a l a r i e s ,
but i n only two i n s t a n c e s have bonuses been p a i d t o o f f i c e r s r e c e i v i n g more
t h a n $7,500 p e r annum. I t i s proper t o s t a t e t h a t t h e bonuses which have been
paid t o j u n i o r o f f i c e r s and employees have been approved by t h e Board upon
r e p r e s e n t a t i o n s from the r e s p e c t i v e boards of d i r e c t o r s of Federal Reserve Banks
t h a t t h e i r o b j e c t i n recommending t h e bonuses was t o enable t h e r e c i p i e n t s
t o meet abnormal c o s t s of l i v i n g # without making s p e c i f i c i n c r e a s e s i n s a l a r y .
Bonuses have been p a i d w i t h t h e understanding t h a t such p o l i c y was temporary
only and t h a t t h e payment of bonuses would e v e n t u a l l y be d i s c o n t i n u e d . During
t h e p r e s e n t y e a r they have a l l been m a t e r i a l l y reduced and i n some cases
abolished e n t i r e l y .
The f o l l o w i n g t a b l e b r i n g s out c l e a r l y t h e d i f f e r e n c e i n the average
s a l a r i e s , e x c l u s i v e of bonuses, paid by t h e Federal Reserve Banks and by t h e
l a r g e r member banks i n t h e Federal Reserve Bank c i t i e s :
Average Annual S a l a r i e s Paid t o O f f i c e r s by Each Federal Reserve
Bank and by Three of t h e Larger Member Banks i n Each Fede r a l Reserve Bank City a s of October, 1$21.
(Bonus excluded)
Federal Reserve D i s t r i c t F,R.Bank
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
S t . Louis
Minneapolis
Kansas City
Dallas
San F r a n c i s c o
System
$ 9,679
12,745
10,125
(*) Six National Banks.
5,677
7,934
7,078
6,478
6,147
5,512
6,459
7,743
Member Bank
$14,7^5
17,331*
15,733
10,061
6,473
7,825
15,440
11,675
10,621
10,313
5,767
11, 409
13,092
^
X-]2)Ta
I t w i l l be seen from t h i s t a b l e t h a t t h e average s a l a r y of o f f i c e r s i n
a l l Federal Reserve Banks i s $7#743, w h i l e t h e a v e r a g e s a l a r y p a i d by t h e
l a r g e r member banks i n Federal Reserve Bank c i t i e s i s $13* 092, o r 69 p e r c e n t ,
i n e x c e s s of t h a t paid by t h e Federal Reserve Banks.
With r e f e r e n c e t o t h e s t a t e m e n t f r e q u e n t l y made t h a t s a l a r i e s p a i d by
t h e Federal Reserve Bank of New York i n c r e a s e d $0 p'er cent between t h e y e a r s
191S and 1920, w h i l e a t t h e same time t h e number of o f f i c e r s and employees
i n c r e a s e d only 1 0 p e r c e n t , t h e Board would s t a t e t h a t d u r i n g t h i s p e r i o d
t h e t o t a l s a l a r i e s of o f f i c e r s and employees i n c r e a s e d by $1,534,443, of which
amount $1,336,443 r e p r e s e n t e d t h e i n c r e a s e i n s a l a r i e s p a i d t o employees and
only $19S,0C0 t h e i n c r e a s e i n s a l a r i e s paid t o o f f i c e r s . In e x p l a n a t i o n of
t h e h i g h e r a g g r e g a t e s a l a r i e s p a i d t o employees of t h e Federal Reserve Ban*, of
New York, whicn i n c r e a s e d 47 p e r c e n t « d u r i n g t h e two y e a r s a s compared w i t h
an i n c r e a s e i n number of only 10 p e r c e n t , t h e r e i s g i v e n below a t a b l e
showing t h e average annual s a l a r y p a i d t o employees by t h a t bank, a s of t h e
l a s t day of December of each year from 1915 t o 1920, b o t h i n c l u s i v e , and a s
of July 1 , 1921, a s w e l l a s by each other Federal Reserve Bank.
AVERAGE SALARIES fAID TO EMPLOYEES OF EACH FEDERAL RESERVE BANK
(including branches)
BANK
1415
$1,086
Boston
New York
1,152
Philadelphia
1,000
1,242
Cleveland
1,044
Richmond
Atlanta
1,005
1,142
Chicago
1,068
S t . Louis
1,289
Minneapolis
Kansas City
936
1,382
Dallas
San F r a n c i s c o L.496
SYSTEM - $ 1 , 1 2 3
(Bonus excluded)
D e c e m b e r
1 1
1416
iqib
1417
$
$ 929
$ 991
935
1, 095
1,003
934
983
838
796
1, 183
1,020
335
99b
691
794
993
1,053
869
1 , 094
1,120
949
1, 028
986
953
646
661
942
1, 024
1,063
961
1, 110
1,017
919
9,25 . , 1 , 1 4 4 , — i . 227
$: .. 912
$1,004
$1,062
1419
1Q20
$1,164
$1,271
1,456
1,253
1,206
1A33
1,206
1,030
1,054
1,115
1,051
1,091
1,194
l,lb3
1.263
$l,lb3
1,360
1,190
1,149
1,310
1,214
July 1
1421
$1,401
i :tll
1,353
1,233
1,281
1.160
1,408
- 1,32b
1, 2qS
1,442
1,447
1.521,,
$1,319
$1,402
1,262
1,209
1,270
I t w i l l be observed t h a t t h e average s a l a r y p a i d t o employees by t h e
Federal Reserve Banks was very low i n 1913, being p r a c t i c a l l y on a l e v e l w i t h
s a l a r i e s p a i d bank employees p r i o r t o t h e War, when p r i c e s were about one-half
of what they were i n 1919 and 1920 when t h e i n c r e a s e i n t h e average s a l a r y paid
t o employees took p l a c e .
.
An i n v e s t i g a t i o n made by t h e Federal Reserve Bank of New York i n 1919
showed t h a t the average annual s a l a r y , i n c l u d i n g bonus, p a i d t o employees by
t h e bank was $1,440, w h i l e t h e average annual s a l a r y , i n c l u d i n g bonus, p a i d t o
ic*.'
• '^
X- </F7
X-3237a
- 13 -
employees by t e n of the l a r g e New York C i t y banks ranged from $1,620 t o
$2,265. In f a c t , i t was found t h a t i n s i x of t h e banks t h e average s a l a r y _
p a i d employees was i n excess of $ 2 , 1 0 0 . I t was r e p r e s e n t e d t o t h e Boar t »
i f t h e F e d e r a l Reserve Bank of New York was t o r e t a i n i t s employees i t would
have t o i n c r e a s e s a l a r i e s t o a l e v e l more n e a r l y a p p r o a c h i n g s a l a r i e s p a i
f o r s i m i l a r work b y o t h e r banks i n New York C i t y . The f a c t t h a t t h e average
s a l a r y p a i d employees b y t h e F e d e r a l Reserve Bank a t t h e end of 1915 was on y
$ 1 , 0 9 5 , when t h e c o s t of l i v i n g index as p u b l i s h e d b y t h e Bureau of Labor
S t a t i s t i c s of t h e Department of Labor was 77 p e r c e n t s h ° v e t h e p r e - w a r eve ,
g r a d u a l l y i n c r e a s i n g t o 119 p e r c e n t i n December 1920, would seem
the i n c r e a s e i n s a l a r i e s g r a n t e d employees d u r i n g t h e y e a r s , 1919 and
I n o r d e r t h a t the Senate may be informed a s t o whether t h e number 01
o f f i c e r s of F e d e r a l Reserve Banks h a s i n c r e a s e d r e l a t i v e l y more t h a n the
number of employees, and w h e t h e r t h e number and s a l a r i e s of o f f i c e r s and
employees of t h e F e d e r a l Reserve Banks have i n c r e a s e d more r a p i d l y than
volume of b u s i n e s s , and r o u t i n e o p e r a t i o n s of those b a n k s , the f o l l o w i n g
t a b l e i s s u b m i t t e d showing t h e changes i n p e r s o n n e l and s a l a r i e s , t h e growtn
i n t h e p r i n c i p a l items of a s s e t s and l i a b i l i t i e s of t h e Banks and t
inc
i n t h e volume of t h e i r o p e r a t i o n s b y y e a r s f r o m 1915 t o 1920.
INDEX OF GROWTH, 1915-1920, IN NUMBER A D SALARIES OF OFFICERS
N
AND EMPLOYEES, A D IN BUSINESS TRANSACTED, FOR EACH F . R . BANS
N
Federal
Reserve
Bank
:Volume :of d i s - :
count
:
Number S a l - ^Earning : ? . R. :and open ;
a r i e s ': Assets m o t e s i n : m a r k e t :
: c i r c u l a - : opera- :
tion t i o n s
:
Officers
Number
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
S t . Louis
Minneapolis
Kansas C i t y
Dallas
SanFrancisco
SYSTEM
(1915 = 1)
O f f i c e r s and : A s s e t s and
Employees : l i a b i l i t i e s
Salaries
4
5
3
U
5
4
5
3
3
5
4
5
3
5
3
5
5
4
9
5
3
7
5
8
:
5
:
4
:
'
28
20
95
35
39
17
18
47
42
23
21
14
93
21
29
15
21
l"6
9
25
14
13
20
*13
26
39
4o
19
31
22
11
35
22
23
22
20
51
:
20
:
39
31
12
32
33
10
10
203
17
6
11
5
53
::
18
•
:
225
989
2S1
244
77
66
281
224
107
113
53
263
314
Transactions
through
Gold
Settlement
Fund
37
88
38
238
60
41
45
36
111
70
63
74
:
50
i £ O S
- l4 -
X-323|a
From t h i s t a b l e i t w i l l "be s e e n t h a t w h i l e b o t h t h e number and. s a l a r i e s
of o f f i c e r s of t h e New York F e d e r a l R e s e r v e Bank were f i v e times as l a r g e i n
1920 as t h e y were i n 1915, t h e number of o f f i c e r s and employees combined was
*40 t i m e s as l a r g e and t h e a g g r e g a t e s a l a r i e s p a i d o f f i c e r s and employees 29
times a s l a r g e i n 1920 a s t h e y were i n 1915. thus i n d i c a t i n g t h a t t h e number
of o f f i c e r s i n c r e a s e d r e l a t i v e l y much l e s s t h a n t h e number o'f employees and
t h a t i n consequence of t h e d e c r e a s e i n t h e r a t i o of o f f i c e r s t o employees t h e
a g g r e g a t e s a l a r i e s p a i d t o o f f i c e r s and employees i n c r e a s e d much l e s s r e l a t i v e l y
than t h e i r number.
The t a b l e below shows the g r a d u a l i n c r e a s e i n t h e a v e r a g e number of
employees p e r o f f i c e r f o r each F e d e r a l R e s e r v e Bank.
AVERAGE NUMBER OF EMPLOYEES PER OFFICER FOR EACH
FEDERAL RESERVE BANK (INCLUDING BRANCHES)
;
:
D e c e m b e r
: 1915 : 1916 :
Federal
Reserve
Bank
1917 :
'4
10
14
7
Boston
New York
Philadelphia
Cleveland
Riclanond
.Atlanta
Chicago
S t - Louis
Minneapolis
Kansas C i t y
Dallas
San F r a n c i s c o
12
SYSTEM
13
18
21
34
68
31
25
17
25
39
17
24
24
1912
52
31
:
1919
62
92
46
44
31
19
40
25
32
33
39
47
9
21
12
7
5
11
27
22
26
8
15
31
45
44
6
6
6
12
17
12
12
1920
•59
78
83
47
36
18
47
42
45
38
31
36
115
58
4l
30
18
44
33
40
33
29
22
12
15
10
:
•
:July 1,
: I92I
51
76
85
39
36
23
39
38
38
36
27
38
44
The e a r n i n g a s s e t s of t h e F e d e r a l Reserve Bank of New York, composed
l a r g e l y of b i l l s d i s c o u n t e d f o r member "banks, were 95 t i m e s a s l a r g e i n 1920 as
i n 1915; F e d e r a l Reserve c i r c u l a t i o n 12 times as l a r g e ; t h e volume of d i s c o u n t
and open-market o p e r a t i o n s , which were v e r y heavy i n 1919 and 1920, - 9&9 times
as l a r g e ; and t r a n s a c t i o n s t h r o u g h t h e Gold S e t t l e m e n t Fund, m a i n t a i n e d i n
Washington b y t h e F e d e r a l Reserve Board f o r t h e p u r p o s e of s e t t l i n g i n t e r - b a n k
t r a n s a c t i o n s , - 88 times a s l a r g e . F o r a l l F e d e r a l Reserve Banks combined, t o t a l
e a r n i n g a s s e t s were 39 t i m e s as l a r g e i n 1920 as i© 1915) F e d e r a l Reserve
c i r c u l a t i o n 18 times a s l a r g e ; t o t a l ix&caurit and open-market o p e r a t i o n s , 31^
times as l a r g e , and t r a n s a c t i o n s t h r o u g h t h e Gold S e t t l e m e n t Fund, $0 times aa
l a r g e , w h i l e t h e number of b f f l e e r s was 5 t i m e s and t h e i r a g g r e g a t e s a l a r i e s
f o u r times as l a r g e a t t h e c l o s e of 1920 as t h e y were a t t h e end of 1915;
and t h e number of o f f i o e r s and
X-3237a
- 15 -
employees combined, 28 t i m e s and t h e s a l a r i e s of a l l o f f i c e r s and employees
combined, 20 t i m e s a s l a r g e .
The t a b l e g i v e n below shows t h a t t h e average number of employees p e r
o f f i c e r i n s i x New York City banks ranged from 14 t o 57# w h i l e t h e number of
employees per o f f i c e r i n t h e F e d e r a l Reserve Bank of New York, e x c l u s i v e of
t h e B u f f a l o Branch, was 80. The p r o p o r t i o n of t h e t o t a l p a y r o l l r e p r e s e n t e d
by o f f i c e r s 1 s a l a r i e s i n t h e s i x member banks ranged from 20 p e r cent t o 38
p e r c e n t , w h i l e t h e p r o p o r t i o n o b t a i n i n g a t t h e F e d e r a l Reserve Bank of
New York was 10 p e r c e n t . I t w i l l be noted a l s o from t h i s t a b l e t h a t i f
o f f i c e r s ' s a l a r i e s are related to t o t a l resources, the proportion for the
l a r g e r New York C i t y member banks ranges from about 3 t o 15 t i m e s a s high a s
t h a t o b t a i n i n g a t t h e F e d e r a l Reserve Bank.
COMPARISON OF PERSONNEL OF FEDERAL RESERVE BANK OF
N W YORK m TH PERSONNEL OF SIX OF THE LARGE N W
E
E
YORK CITY MEMBER BANKS ABOUT THE END OF 1920.
u
0
Federal Reserve Bank
34
(Excluding B u f f a l o Branch)
Bank 1
74
Bank 2
122
Bank 3
32
Bank 4
14
Bank 5
37
Bank 6
73
<D
1
:Average : P e r c e n t of : P e r c e n t of
Number of
:number o f z t o t a l p a y - : o f f i c e r s *
o f f i c e r s employees : e m p l o y e e s : r e l l r e p - : s a l a r i e s
:per o f - ire sented by:to t o t a l
: o f f i c e r s 1 :resources
ficer
.•salaries
2,734
go
10
.024
4,259
3,222
946
57
26
29
51
29
14
25
21
38
20
30
32
.36
.22
.27
,068
.15
.29
726
1,093
1,054
If t h e r a t i o of t o t a l s a l a r y payments t o t o t a l r e s o u r c e s of each Fede r a l Reserve Bank be compared w i t h c o r r e s p o n d i n g p e r c e n t a g e s f o r a l l N a t i o n a l
banks i n each Federal Reserve D i s t r i c t , i t w i l l be found t h a t t h e p e r c e n t a g e s
f o r t h e Federal Reserve Banks a r e m a t e r i a l l y l e s s t h a n t h o s e f o r t h e N a t i o n a l
banks, a s w i l l be seen from t h e f o l l o w i n g t a b l e :
RATIO OF TOTAL SALARY PAYMENTS TO TOTAL RESOURCES AT FEDERAL RESERVE BANKS
AND AT ALL NATIONAL BANKS
Federal Reserve D i s t r i c t :
Boston
New York
Philadelphia
Cleveland
Federal Reserve Bank
p e r <?9Qt
.19
.23
.24
.21
N a t i o n a l Banks
per cent
.71
*6?
.72
1210
<
-16-
X-3237a
Continued:
RATIO OF TOTAL SALARY PAYMENTS TO TOTAL RESOURCES AT FEDERAL RESERVE BANKS
AND AT ALL NATIONAL BANKS
F e d e r a l Reserve D i s t r i c t
:
•
-
Federal Reserve Bank :
per cent. T :
Richmond
Atlanta
Chicago
S t . Louis
Minneapolis
Kansas City
Dallas
San F r a n c i s c o
TOTAL
N a t i o n a l Banks
per cent.
• 31
.26
.23
.37
•30
.36
.47
.31
• .82
1.00
• 77
.90
1.03
1.08
1.18
1.00
.25
•79
NOTE: Based on s a l a r i e s p a i d by Federal Reserve Banks
during 1920 a s r e l a t e d t o t h e i r c o n d i t i o n on June 25,
1920; and on s a l a r i e s paid by n a t i o n a l banks d u r i n g
t h e year ended June 30, 1$20 a s r e l a t e d t o t h e i r r e s o u r c e s on June 30, 1$20. F i g u r e s f or Federal Reserve
Banks i n c l u d e head o f f i c e and b r a n c h e s .
The F i s c a l Agency work of the Federal Reserve Banks assumed very l a r g e p r o p o r t i o n s d u r i n g t h e war and has continued on a l a r g e s c a l e s i n c e . As an example
of t h e volume of such t r a n s a c t i o n s by t h e F e d e r a l Reserve Banks, i t may be s t a t e d
t h a t d u r i n g t h e f o u r yeais ended December, 1920 t h e Federal Reserve Bank of New
York a l o n e p a i d 37, 8l6, OCO Government checks and w a r r a n t s , handled 159# 530* 000
p i e c e s of L i b e r t y Bonds, coupons, and t h r i f t s e c u r i t i e s i n i t s Government bond
department, r e c e i v e d over 90,000,00G payments on L i b e r t y Bonds s o l d , i s s u e d and
redeemed $27,238,000,000 of 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 handled
$ 4 9 , 3 9 4 , 0 0 0 , 0 0 0 of d e p o s i t s and w i t h d r a w a l s of c o l l a t e r a l pledged a s s e c u r i t y
f o r Government war l o a n d e p o s i t s with d e p o s i t a r y banks. The s t a t e m e n t given
below, which i s t a k e n from t n e r e c o r d s of t h e Treasury Department, shows t h a t
f o r t h e p e r i o d b e g i n n i n g w i t h t h e f i r s t L i b e r t y l o a n i n 1917 and ending June
30, 1921, t h e twelve Federal Reserve Banks, i n t h e d i s c h a r g e of t h e i r f i s c a l
agency f u n c t i o n s , handled n e a r l y one b i l l i o n p i e c e s of Government s e c u r i t i e s
valued a t more t h a n $286, 000, 000,000.
LIBERTY BONDS, VICTORY NOTES; CERTIFICATES OF INDEBTEDNESS, TREASURY
NOTES AND W R SAVINGS SECURITIES HANDLED BY THE TWELVE FEDERAL RESERVE
A
BANKS, APRIL, 1917 t o JUNE 30, 1921.
Stock shipped t o F.R.Banks by
Treasury Department
Stock r e t u r n e d by F.R.Banks u n i s s u e d
Delivered t o p u b l i c
NUMBER OF PIECES
332,492, 222
39,404,439
235,946,770
:
AMOUNT
86,864,790,706 .
7,117,492,880
79,594,958,704
-17Continued:
LIBERTY BONDS, VICTORY NOTES, CERTIFICATES OF INDEBTEDNESS, TREASURY
NOTES AND W R SAVINGS SECURITIES HANDLED BY THE TWELVE FEDERAL RESERVE
A
BANKS, APRIL, 1917 TO JUNE 30. 1921.
Number of p i e c e s
:
Amount
Received from p u b l i c f o r excnange,
c o n v e r s i o n , redemption, e t c ,
144,202,924
57,494,860,598
Returned t o T r e a s u r y Department c a n c e l l e d , account exchanges, c o n v e r s i o n s
133,602,847
55,041,636.342
TOTALS
935,649,202
286,113,739,230
Tne Board t r a n s m i t s nere-vitn a s E x h i b i t F copy of a l e t t e r a d d r e s s e d t o i t
by t n e Governor of t n e F e d e r a l Reserve Bank of New York, u n d e r d a t e of October
6, 1921, i n wnicti he d i s c u s s e s i n d e t a i l some of tne o p e r a t i o n s of t n e bank and
t h e r e a s o n s wnicn a c t u a t e d tne d i r e c t o r s i n v o t i n g t h e i n c r e a s e s i n s a l a r y f o r
o f f i c e r s and employees which nave been approved by t h e Board.
Much p u b l i c i t y
has been given r e c e n t l y t o a s t a t e m e n t p u r p o r t i n g t o snow the p r e s e n t s a l a r i e s
of c e r t a i n o f f i c e r s of t h e F e d e r a l Reserve Bank of New York as compared w i t h
t h e i r i n i t i a l s a l a r i e s a t t n e time of employment and w i t h s a l a r i e s o b t a i n e d b y
tnem p r e v i o u s t o t h e i r engagement by t h e Federal Reserve Bank.
Tne Board i n v i t e s p a r t i c u l a r a t t e n t i o n t o tne d i s c u s s i o n of t h i s m a t t e r i n
E x n i b i t F and d e s i r e s t o p o i n t out t n a t i n t n e c a s e of n i n e of t n e s e o f f i c e r s
whose s a l a r i e s nave been e s p e c i a l l y c r i t i c i z e d t h e i r c o n n e c t i o n w i t n the F e d e r a l
Reserve Bank of New York has extended over a p e r i o d of seven y e a r s , two of them
xiave oeen w i t h tne bank s i x y e a r s , s i x — f o u r y e a r s , one — t n r e e y e a r s , f o u r —
two years and two f o r one year.
Seven of t h e s e men wno e n t e r e d tne s e r v i c e of
t h e Bank seven years ago a t s a l a r i e s ranging from $1,500 t o $6,000 p e r annum
nave been advanced from time t o time on t h e i r m e r i t s and a r e now r e c e i v i n g
s a l a r i e s ranging from $8,000 t o $22,000 p e r annum.
In a l l o t n e r F e d e r a l Reserve Banks t h e r e have been s i m i l a r i n s t a n c e s of
deserved promotion.
I t seems t o the Board t h a t the d i r e c t o r s of the F e d e r a l
Reserve Banks should be commended r a t h e r than condemned f o r a p o l i c y which r e c o g n i z e s m e r i t and promotes l o y a l and e f f i c i e n t employees.
There i s a l s o t r a n s m i t t e d , a s E x h i b i t G, copy off a l e t t e r , d a t e d October 26,
1921, signed by each of t n e n i n e d i r e c t o r s of the F e d e r a l Reserve Bank of New York
which p r e s e n t s the views of t h e s e d i r e c t o r s <*s t o t h e i r d u t i e s and r e s p o n s i b i l i t i e s and reviews the s a l a r y p o l i c y of t h a t b a n k
FRANCHISE TAXES PAID TO THE UNITED STATES.
I n r e p l y t o t n a t p a r t of t h e R e s o l u t i o n of tha Senate which c a l l s f o r i n f o r m a t i o n a s t o "how much of the n e t e a r n i n g s have been p a i d t o t n e United S t a t e s a s a
f r a n c h i s e t a x " , t h e Board would s t a t e t h a t u n t i l March 3 , 1919 S e c t i o n 7 of t h e
F e d e r a l Reserve Act p r o v i d e d t h a t " a f t e r a l l n e c e s s a r y expenses of a F e d e r a l
R e s e r v e bank have been p a i d or p r o v i d e d f o r , t h e s t o c k h o l d e r s s n a i l be e n t i t l e d
t o r e c e i v e an a n n u a l d i v i d e n d of s i x pe r centum on t n e p a i d - i n c a p i t a l s t o c k ,
which d i v i d e n d s h a l l be c u m u l a t i v e .
A f t e r the a f o r e s a i d d i v i d e n d claims have
been f u l l y m e t , a l l the n e t e a r n i n g s s h a l l be p a i d t o t h e United S t a t e s a s a
f r a n c n i s e t a x , except t n a t o n e - h a l f of Such n e t e a r n i n g s s n a i l be p a i d i n t o "a
s u r p l u s f u n d u n t i l i t s h a l l amount t o f o r t y p e r centum of t h e p a i d - i n c a p i t a l
s t o c k of such bank"*
^L fO f #Ss4
o
J
* -M._
- 18 -
X-3237a
U n t i l t h e y e a r 1917 t h e e a r n i n g s of t h e F e d e r a l Reserve Banks were
c o m p a r a t i v e l y small and i t was n o t u n t i l June 30, 1918 t h a t a l l a c c r u e d
d i v i d e n d s had been p a i d "by a l l Banks. As the n e t e a r n i n g s of the F e d e r a l Res e r v e Banks were n o t s u f f i c i e n t d u r i n g 1914, 1915 and 1916 t o e n a b l e them to
pay a l l accrued d i v i d e n d s no f r a n c h i s e t a x e s were p a i d t o t h e United S t a t e s
f o r t h o s e y e a r s « During t h e y e a r 1917» however, s i x of the F e d e r a l Reserve
Banks had e a r n i n g s s u f f i c i e n t t o pay a l l accrued d i v i d e n d s and t h e y p a i d a
f r a n c h i s e t a x t o t h e Government a t t h e end of the y e a r amounting t o $1,134,234
and c a r r i e d a l i k e amount t o t h e i r s u r p l u s a c c o u n t s ( a n n u a l p r e p o r t f o r 1917'page 2 8 ) . At the end of the y e a r 1918, a l l accrued d i v i d e n d s having been p a i d ,
a l l the F e d e r a l Reserve Banks were p r e p a r e d t o pay f r a n c h i s e taxes t o the
United S t a t e s amounting i n t h e a g g r e g a t e t o $26,728,440 ( a n n u a l r e p o r t f o r
1918 - page 29) b u t i n view of l e g i s l a t i o n then pending the Treasury Department
agreed t o w i t h h o l d demand f o r t h e s e f r a n c h i s e t a x e s u n t i l t h e adjournment of
Congress on March 4 f h . The Act of March 3» 1919 amended S e c t i o n 7 of t h e
F e d e r a l Reserve Act so t h a t i t now r e a d s : " A f t e r t h e a f o r e s a i d d i v i d e n d claims
have been f u l l y m e t , t h e n e t e a r n i n g s s h a l l be p a i d t o t h e United S t a t e s as a
f r a n c h i s e t a x except t h a t the whole of such n e t e a r n i n g s , i n c l u d i n g t h o s e f o r
the y e a r ending Decenber t h i r t y - f i r s t , n i n e t e e n hundred and e i g h t e e n , s h a l l
b e p a i d i n t o a s u r p l u s f i n d u n t i l i t s h a l l amount t o one hundred p e r centum
of t h e s u b s c r i b e d c a p i t a l s t o c k of such bank, and t h a t t h e r e a f t e r ten p e r
centum of such n e t e a r n i n g s s h a l l be p a i d i n t o t h e s u r p l u s " « I n c o n f o r m i t y
w i t h t h e law a s thus amended, t h e F e d e r a l Reserve Bank of New York p a i d i n t o
t h e T r e a s u r y a t the end of the y e a r 1919 as i t s f r a n c h i s e t a x the sum of
$2,703,894 ( a n n u a l r e p o r t f o r 1919 - page 3 7 ) • The o t h e r F e d e r a l Reserve Banks
p a i d no t a x as t h e y had n o t t h e n accumulated t h e maximum s u r p l u s allowed by
law. At the end of the y e a r I92O n i n e I n d e r a l Reserve Banks p a i d t o t h e
United S t a t e s as a f r a n c h i s e t a x the sum of $60,724,742 ( a n n u a l r e p o r t f o r
1920 — page 9 0 ) • The F e d e r a l Reserve Banks of C l e v e l a n d , St* Louis and D a l l a s
p a i d no t a x as they had n o t y e t accumulated the maximum s u r p l u s »
The f o l l o w i n g t a b l e shows the amount of f r a n c h i s e t a x e s p a i d t o the
Waited S t a t e s by e a c h F e d e r a l Reserve Bank as of December 3 1 , 1917 > 1919 and 1920*
ffWCHISE TAXES PAID TO THE UNITED STAVES GOVERNMENT
Bsderal Reserve :
Bank
Boston
New York
Philadelphia
Richmond
Atlanta
Chicago
Minneapolis
Kansas C i t y
San F r a n c i s c o
TOTAL
C
1917
: $
:
75.000
648,363
116,472
40,000
215,799
37,500
r
1919
2,703.894
•
-
-
$1,134,234
—
$2,703,894
:
1920
:
TOTAL
$ 2,473,499
$39,318,511
363,662
204,585
2,136,288
10,394,480
524,234
2,240,228
3,069,255 -
$ 2,548,599
42,671,768
363,662
321,057
2,176,288
10,610,279
561,734
2,240,228
3.069,255
$60,724,742
$64,562,870
± 2 1
-19-
X-32}7a
During t h e p a s t y e a r t h e Federal Reserve Banks have s e t up a r e s e r v e
f o r f r a n c h i s e t a x , the t o t a l of which was on October 27, 1921 $53,93^,000
(weekly s t a t e m e n t Federal Reserve Banks combined, October 27, 1 5 2 1 ) .
This t a x r e s e r v e i d a d j u s t e d weekly and t h e t o t a l amount shown t o be due
t h e Government at t h e c l o s e of b u s i n e s s December 31, 1921 w i l l be p a i d t o
t h e Treasury on January 2, 1922*
The Board t r u s t s t h a t t h i s communication c o n t a i n s t h e i n f o r m a t i o n d e s i r e d and w i l l c h e e r f u l l y f u r n i s h a t any time any a d d i t i o n a l f a c t s which
may be c a l l e d f o r by the Senate.
Respectfully submitted,
W. P . G. HARDING,
G o v e r n o r .
The P r e s i d e n t of t h e Senate,
J L t
FEDERAL RESERVE BOARD
WASHINGTON
. X-3233
•November ? , 1921.
St)BJECT:
A p p l i c a t i o n s f o r Membership by Newly Organized.
N a t i o n a l Banks.
Dear S i r :
There i s e n c l o s e d h e r e w i t h f o r your i n f o r m a t i o n a
copy of a l e t t e r which t h e Board r e c e n t l y a d d r e s s e d t o t h e
C o m p t r o l l e r of t h e Currency s u g g e s t i n g t h a t t h e C o m p t r o l l e r
make i t a c o n d i t i o n p r e c e d e n t t o p e r m i t t i n g newly o r g a n i z e d
n a t i o n a l banks t o open f o r b u s i n e s s t h a t t h e y s u b s c r i b e t o
and pay f o r t h e p r e s c r i b e d amount of s t o c k i n t h e F e d e r a l Res e r v e Bank. There i s e n c l o s e d a l s o a copy of t h e C o m p t r o l l e r ' s
reply.
You w i l l o b s e r v e t h a t t h e C o m p t r o l l e r h a s a c c e p t e d
t h e B o a r d ' s s u g g e s t i o n and h a s agreed t o f o l l o w s u b s t a n t i a l l y
the procedure outlined i n the Board's l e t t e r .
This requirement,
however, i s i n a p p l i c a b l e t o S t a t e member banks c o n v e r g i n g i n t o
n a t i o n a l banks, s i n c e t h e y a r e a l r e a d y members of t h e System and
i t i s n o t n e c e s s a r y f o r them t o make new a p p l i c a t i o n s f o r membership .
You a r e r e q u e s t e d t o f onvard a l l such a p p l i c a t i o n s t o
t h e Board a s promptly a s p o s s i b l e and jto a d v i s e t h e Board by
t e l e g r a p h a s soon a s t h e n e c e s s a r y payments a r e r e c e i v e d , i n
o r d e r t o a v o i d t h e p o s s i b i l i t y of t h i s p r a c t i c e r e s u l t i n g i n any
u n n e c e s s a r y d e l a y i n t h e g r a n t i n g of t h e C o m p t r o l l e r ' s a u t h o r i t y
f o r newly o r g a n i z e d n a t i o n a l banks t o open f or b u s i n e s s .
You a r e a l s o r e q u e s t e d t o comply w i t h t h e s u g g e s t i o n
c o n t a i n e d i n t h e l a s t p a r a g r a p h of t h e C o m p t r o l l e r ' s l e t t e r .
In
o r d e r t o c a r r y out t h e s e s u g g e s t i o n s , t h e Board w i l l make i t s
a p p r o v a l of a l l such a p p l i c a t i o n s of newly o r g a n i z e d n a t i o n a l
banks c o n d i t i o n a l on t h e i s s u a n c e of t h e C o m p t r o l l e r ' s c e r t i f i c a t e
of a u t h o r i t y t o commence b u s i n e s s . The p r o c e d u r e , t h e r e f o r e , w i l l
be a s f o l l o w s :
—2-
X-3236
1 . Upon r e c e i p t of an a p p l i c a t i o n of a newly o rg an i zed n a t i o n a l
bank, t h e Board w i l l approve i t , e f f e c t i v e i f and when t h e
Comptroller i s s u e s h i s c e r t i f i c a t e of a u t h o r i t y t o commence
business.
2„ Thereupon t h e n a t i o n a l bank w i l l make t h e n e c e s s a r y cash payment t o t h e Federal Reserve Bank and t h e Federal Reserve Bank
w i l l i s s u e a r e c e i p t t h e r e f o r , p l a c i n g t h e amount i n a suspense
account and w i r i n g t h e Board t h a t such payment has been r e ceived.
3. When a l l o t h e r r e q u i r e m e n t s have been complied w i t h t h e Comptroll e r w i l l i s s u e h i s c e r t i f i c a t e of a u t h o r i t y t o commence b u s i n e s s .
4. Thereupon t h e Federal Reserve Bank w i l l i s s u e a stock c e r t i f i c a t e
t o t h e n a t i o n a l bank. The c a p i t a l s t o c k of t h e F e d e r a l Reserve
Bank should be considered i s s u e d a s of t h e d a t e upon which t h e
Comptroller i s s u e s h i s c e r t i f i c a t e of a u t h o r i t y t o commence
b u s i n e s s , and t h e q u a r t e r l y c e r t i f i c a t e s made by F e d e r a l Reserve
Banks t o t h e Comptroller on FRB Form 58 r e q u i r e d by S e c t i o n 5 of
t h e F e d e r a l Reserve Act and paragraph 5 of P a r t I of R e g u l a t i o n
I , S e r i e s of 1920, should not show a s i n c r e a s e s of t h e c a p i t a l
stock of Federal Reserve Banks payments made by newly organized
n a t i o n a l banks t o which c e r t i f i c a t e s of a u t h o r i t y t o commence
b u s i n e s s have not y e t been i s s u e d .
Very t r u l y y o u r s ,
(Enclosures)
G 0 v e r n 0 r.
TO ALL GOVERNORS AND FEDERAL RESERVE AGENTS.
- ' o ^ /-*
JLr^JLO
COPY
TREASURY DEPARTMENT
Washington
November 2, 1921.
X-3236a
O f f i c e of
Comptroller of t h e Currency
Hon. W. P. G. Harding,
Governor, Federal Reserve Board,
Washington, D. C,
My d e a r Governor:
In compliance w i t h r e q u e s t c o n t a i n e d i n your l e t t e r of October
26, I w i s h t o a d v i s e you t h a t on October 29 a l e t t e r , (copy of which
i s a t t a c h e d ) was s e n t t o t h e o r g a n i z e r s i n a l l c a s e s where an a p p l i c a t i o n has been approved t o organize a n a t i o n a l bank, and t o t h e r e p r e s e n t a t i v e s of s t a t e banks i n a l l c a s e s where tiie a p p l i c a t i o n has been
approved t o convert a s t a t e bank i n t o a n a t i o n a l bank, a d v i s i n g t h a t
i t would be n e c e s s a r y f o r them t o s u b s c r i b e and pay f o r t h e i r stock
i n t h e Federal Reserve Bank of t h e i r d i s t r i c t b e f o r e t h e Comptroller
would i s s u e h i s c e r t i f i c a t e a u t h o r i z i n g t h e commencement of b u s i n e s s
a s a n a t i o n a l bank.
I t i s r e q u e s t e d t h a t t h e Federal Reserve Banks be d i r e c t e d t o
a c t very promptly i n t h e s e m a t t e r s so a s not t o delay t h e i s s u a n c e
of c e r t i f i c a t e a f t e r a l l o t h e r c o n d i t i o n s have been complied w i t h .
The Federal Reserve Banks should be d i r e c t e d from your o f f i c e
t o c a r r y t h e amount p a i d i n on account of t h i s c a p i t a l stock i n a
suspense account and n o t i n t h e c a p i t a l stock account u n t i l such time
a s c e r t i f i c a t e i s i s s u e d by t h e Comptroller a u t h o r i z i n g t h e commencement of b u s i n e s s a s a n a t i o n a l bank. The c e r t i f i c a t e covering payment
of c a p i t a l s t o c k which t h e Federal Reserve Bank i s r e q u i r e d t o make
t o t h e Comptroller of t h e Currency under p r o v i s i o n s of S e c t i o n p of
t h e F e d e r a l Reserve Act, should not be executed u n t i l a f t e r a d v i c e of
t h e i s s u a n c e of t h e C o m p t r o l l e r ' s c e r t i f i c a t e a u t h o r i z i n g t n e commencement of b u s i n e s s h a s been r e c e i v e d , i t b e i n g p o s s i b l e t h a t t h e
Comptroller might see f i t t o deny t h e a s s o c i a t i o n t h e r i g h t t o
commence b u s i n e s s owing t o a change i n c o n d i t i o n s .
Very t r u l y yours,
(Signed) D. R . C r i s s i n g e r , J r .
Incl.
Comptroller
1 8 jw
X-323Sb
On
t h e a p p l i c a t i o n signed by you and o t h e r s t o o r g a n i z e The
N a t i o n a l Bank was approved and a l l p a p e r s were
furnished, together with f u l l i n s t r u c t i o n s as to t h e i r execution.
You a r e now a d v i s e d t h a t b e f o r e t h e Comptroller w i l l i s s u e h i s
c e r t i f i c a t e a u t h o r i z i n g t h e commencement of b u s i n e s s a s a n a t i o n a l bank,
i t w i l l b e n e c e s s a r y f o r you t o s u b s c r i b e t o . c a p i t a l s t o c k i n t h e
Federal Reserve Bank of .
i n an amount a t l e a s t
equal t o 6 p e r cent of t h e amount of t h e c a p i t a l and s u r p l u s of your4
bank, which w i l l be paid i n a t the time you open f o r b u s i n e s s . I t
w i l l a l s o be n e c e s s a r y f o r you t o pay t o . s a i d Federal Reserve Bank an
amount equal t o one-half of your s u b s c r i p t i o n .
In o r d e r t o avoid t h e n e c e s s i t y of making a p p l i c a t i o n s f o r a d d i t i o n a l stock i n t h e Federal Reserve Bank, a s a d d i t i o n a l i n s t a l l m e n t s
of your c a p i t a l stock a r e p a i d i n , you may, i f you d e s i r e , apply t o
t h e Federal Reserve Bank f o r stock i n an amount equal t o 6 p e r cent
of your a u t h o r i z e d c a p i t a l stock p l u s . 6 p e r c e n t of. t h e amount of s u r p l u s , i f any, which t h e s u b s c r i b e r s t o your c a p i t a l , s t o c k have agreed
t o pay in*
You w i l l f i n d i n c l o s e d t h r e e blank a p p l i c a t i o n s f o r s t o c k i n t h e
Federal Reserve Bank of ,
•
A meeting of t h e d i r e c t o r s
should be c a l l e d and a r e s o l u t i o n adopted a s provided i n t h i s form
a u t h o r i z i n g t h e P r e s i d e n t or V i c e - P r e s i d e n t and Cashier t o apply f o r
such stock* This a p p l i c a t i o n should be executed i n t r i p l i c a t e , one
copy t o be r e t a i n e d f o r your f i l e s and two c o p i e s t o b e forwarded t o
t h e Federal Reserve Bank f o r t r a n s m i s s i o n t o t h e F e d e r a l Reserve
Board* when t h i s a p p l i c a t i o n h a s been approved by t h e Federal Reserve
Board, you w i l l be n o t i f i e d , whereupon you should immediately r e m i t
one-half of t h e amount of your s u b s c r i p t i o n i n cash t o t h e Federal
Reserve Bank i n p a r t payment f o r your s t o c k .
4
o
COPY
October 26, 1921.
X-3238C
Hon. D. R. C r i s s i n g e r ,
Comptroller of t h e Currency,
Washington, B.C.
My d e a r Mr. C o m p t r o l l e r :
On or about J u l y 14, 1920, t h e o f f i c e of t h e Comptroller
of t h e Currency, upon t h e s u g g e s t i o n of t h e Federal Reserve Board,
agreed i n f o r m a l l y t o make i t a c o n d i t i o n p r e c e d e n t t o p e r m i t t i n g ,
a n a t i o n a l bank t o open f o r b u s i n e s s t h a t i t s u b s c r i b e f o r and pay
i n t h e amount of s t o c k i n t h e Federal r e s e r v e bank p r e s c r i b e d by l a * .
I t r e c e n t l y has come t o the a t t e n t i o n of t h e Federal Reserve Board,
however, t h a t such p r a c t i c e was never put i n t o e f f e c t i n t h e
C o m p t r o l l e r ' s o f f i c e and t h e Beard d e s i r e s t o renew t h e s u g g e s t i o n .
The n e c e s s i t y f o r such a requirement was i l l u s t r a t e d by
t h e case of t h e P u l c h e r National Bank of P u l c h e r , Oklahoma, which
opened f o r b u s i n e s s on March 5, l$-?0, but which, a l t h o u g h r e p e a t e d l y
r e q u e s t e d t o do so, did not make a p p l i c a t i o n f o r stock i n t h e Federal
Reserve Bank of Kansas City u n t i l about J u l y 1, 1$20, and f i n a l l y
f a i l e d , on o r about J u l y 14, 1920, w i t h o u t ever m a i n t a i n i n g any r e s e r v e s w i t h t h e Federal r e s e r v e bank. In o t h e r words, i t r e c e i v e d
d e p o s i t s d u r i n g t h e whole of i t s b r i e f e x i s t e n c e , w i t h o u t e v e r
m a i n t a i n i n g any l e g e l r e s e r v e s w h a t s o e v e r . I t i s c l e a r t h a t t h e
r e c u r r e n c e of such an i n c i d e n t should be prevented i f p o s s i b l e .
S e c t i o n 2 of t h e Federal Reserve Act e x p r e s s l y r e q u i r e s
a l l n a t i o n a l banks organized a t the time t h e Act was approved t o
j o i n t h e F e d e r a l Reserve Systea, but i t i s s i l e n t a s t o n a t i o n a l banks
organized s i n c e t h e p a s s a g e of the Act. There can be no q u e s t i o n ,
however, t h a t t h e law contemplates t h a t such banks must become member
banks upon t h e i r o r g a n i z a t i o n . This i s implied not only by t h e
p r o v i s i o n s i n S e c t i o n 2 w i t h regard t o e x i s t i n g n a t i o n a l banks but
a l s o by t h e p r o v i s i o n i n S e c t i o n 19 t o t h e e f f e c t t h a t n a t i o n a l banks
l o c a t e d i n Alaska and i n t h e i n s u l a r p o s s e s s i o n s of t h e United S t a t e s
may remain nonmember banks. I t would seem, t h e r e f o r e , t h a t every
n a t i o n a l bank organized subsequent t o t h e o r g a n i z a t i o n of t h e F e d e r a l
Reserve System and l o c a t e d i n t h e c o n t i n e n t a l United S t a t e s should be
a member of t h e F e d e r a l Reserve System when i t opens i t s doors f o r
business.
S e c t i o n 5169 of t h e Revised S t a t u t e s p r o v i d e s t h a t " I f , upon a c a r e f u l examination of t h e f a c t s so r e p o r t e d ,
and of any o t h e r f a c t s which may come t o t h e knowledge of t h e
Comptroller, whether by means of a s p e c i a l commission appointed
by him f o r t h e purpose of i n q u i r i n g i n t o t h e c o n d i t i o n of such
6
_L
- d -
X-323SC
a s s o c i a t i o n , or o t h e r w i s e , i t a p p e a r s t h a t such a s s o c i a t i o n
i s l a w f u l l y e n t i t l e d t o commence t h e b u s i n e s s of banking, t h e
Comptroller s h a l l give t o such a s s o c i a t i o n a c e r t i f i c a t e ,
under h i s hand and o f f i c i a l s e a l , t h a t such a s s o c i a t i o n h a s
complied w i t h a l l t h e p r o v i s i o n s r e q u i r e d t o be complied
w i t h b e f o r e commencing t h e b u s i n e s s of banking, and t h a t such
a s s o c i a t i o n i s a u t h o r i z e d t c commence such b u s i n e s s . But t h e
Comptroller may withhold from an a s s o c i a t i o n , h i s c e r t i f i c a t e
a u t h o r i z i n g t h e commencement of b u s i n e s s , whenever he has
r e a s o n t o suppose t h a t t h e s h a r e h o l d e r s have formed t h e same
fot any o t h e r t h a n t h e l e g i t i m a t e o b j e c t s contemplated by
this t i t l e . "
Inasmuch a s t h e Federal Reserve Act c l e a r l y c o n t e m p l a t e s
t h a t every n a t i o n a l bank i n t h e c o n t i n e n t a l United S t a t e s s h a l l be a
member of t h e Federal Reserve System, i t would seem t h a t t h e Comptroller
of t h e Currency has a u t h o r i t y under t h a t S e c t i o n t o w i t h h o l d h i s c e r t i f i c a t e of a u t h o r i t y t o commence b u s i n e s s u n t i l each newly organized
n a t i o n a l bank has s u b s c r i b e d t o and p a i d f o r t h e c a p i t a l s t o c k of t h e
Federal Reserve Bank of t h e d i s t r i c t i n which i t i s l o c a t e d .
I t i s suggested, t h e r e f o r e , t h a t t n e Comptroller of t h e
Currency r e q u i r e each newly organ i zed n a t i o n a l bank l o c a t e d i n t h e
c o n t i n e n t a l United S t a t e s t o s u b s c r i b e f o r and pay i n t h e p r e s c r i b e d
amount of stock i n t h e F e d e r a l r e s e r v e bank of i t s d i s t r i c t b e f o r e he
i s s u e s a c e r t i f i c a t e of a u t h o r i t y f o r i t t o commence b u s i n e s s . In
order t o a t t a i n t h i s r e s u l t the following procedure i s suggested:
(1)
That t h e C o m p t r o l l e r ' s o f f i c e f o r w a r d , w i t h t h e u s u a l
blank forms f o r use i n connection w i t h t h e o r g a n i z a t i o n of a n a t i o n a l
bank, t h r e e c o p i e s of FederaJ. Reserve Board Form No. 3C> which i s t h e
B o a r d ' s form of a p p l i c a t i o n f o r stock i n a Federal r e s e r v e bank.
(2)
That t h e o r g a n i z e r s of t h e new n a t i o n a l bank be i n s t r u c t e d
t o have such a p p l i c a t i o n executed i n t r i p l i c a t e a t t h e same meeting a t
which t h e o r g a n i z a t i o n c e r t i f i c a t e i s e x e c u t e d , r e t a i n i n g one copy f o r
t h e f i l e s of t h e bank and f o r w a r d i n g t h e o t h e r two c o p i e s t o t h e Federal
r e s e r v e bank of t h e d i s t r i c t i n which t h e new n a t i o n a l bank w i l l be
located.
(3)
That t h e Federal r e s e r v e bank a t t a c h i t s recommendation and
forward such a p p l i c a t i o n promptly t o t h e F e d e r a l Reserve Board.
(4)
That t h e Board approve t h e a p p l i c a t i o n promptly and
n o t i f y t h e Federal r e s e r v e bank and t h e Comptroller of t h e Currency.
(5)
That a t or b e f o r e t h e time when t h e new n a t i o n a l bank
e x e c u t e s i t s c e r t i f i c a t e of payment of c a p i t a l stock and of compliance
w i t h l e g a l r e q u i r e m e n t s i t should r e m i t t h e amount of i t s . s u b s c r i p t i o n
t o t h e Federal r e s e r v e bank.
X-323SC
(6)
That t h e Federal r e s e r v e bank n o t i f y t h e F e d e r a l Reserve
Board promptly of t h e r e c e i p t of such r e m i t t a n c e and t h e F e d e r a l Reserve
Board immediately n o t i f y t h e C o m p t r o l l e r .
(?)
That t h e Comptroller w i t h h o l d h i s c e r t i f i c a t e of a u t h o r i t y
t o commence b u s i n e s s u n t i l he has been n o t i f i e d by t h e F e d e r a l Reserve
Board t h a t the n a t i o n a l bank h a s s u b s c r i b e d t o and p a i d f o r s t o c k i n
t h e Federal r e s e r v e bank.
Inasmuch a s t h e c o r p o r a t e e x i s t e n c e of a n a t i o n a l bank
begins a s soon a s t h e a r t i c l e s of i n c o r p o r a t i o n and o r g a n i z a t i o n
c e r t i f i c a t e have been executed, and i t , thereupon, h a s power t o
t r a n s a c t such b u s i n e s s a s i s " i n c i d e n t a l and n e c e s s a r i l y p r e l i m i n a r y
t o i t s o r g a n i z a t i o n , " (Sec. 513^, A. S . ) and inasmuch &s every n a t i o n a l
bank ought t o be a member of t h e Federal Reserve System a t t h e time i t
opens f o r b u s i n e s s , i t seems c l e a r t h a t i t h a s a u t h o r i t y t o s u b s c r i b e
and pay f o r stock i n t h e Federal r e s e r v e bank a s soon a s i t s o r g a n i z a t i o n c e r t i f i c a t e i s executed.
With r e f e r e n c e t o t h e amount of c a p i t a l s t o c k i n t h e
Federal r e s e r v e bank which a newly organized n a t i o n a l bank should
apply f o r , i t would seem t h a t , inasmuch a s t h e Federal Reserve Act
r e q u i r e s banks a p p l y i n g f o r membership t o s u b s c r i b e t o t h e c a p i t a l
stock of the Federal r e s e r v e bank " i n a sum'equal t o s i x p e r centum
of t h e paid-up c a p i t a l stock and s u r p l u s of such bank", i t should
s u b s c r i b e f o r an amount equal t o s i x p e r centum of t h e amount of
c a p i t a l stock and s u r p l u s , -which i t i s contemplated w i l l be p a i d i n
a t t h e time i t opens f o r b u s i n e s s . -Applications f o r a d d i t i o n a l stock
can t h e n be made a s a d d i t i o n a l c a p i t a l i s p a i d i n and a s t h e s u r p l u s
i s i n c r e a s e d . For t h e convenience of t h e s u b s c r i b i n g baxiks and i n
o r d e r t o avoid a m u l t i p l i c i t y of a p p l i c a t i o n s , t h e Federal Reserve
Board h a s a c c e p t e d , and w i l l continue t o a c c e p t , a p p l i c a t i o n s by
newly organized n a t i o n a l banks f o r an amount of. F e d e r a l r e s e r v e bank
stock equal t o s i x p e r centum of t h e f u l l amount of t h e c a p i t a l and
s u r p l u s which t h e s u b s c r i b i n g bank" w i l l have a f t e r a l l of i t s c a p i t a l
s t o c k has been p a i d i n a t t h e s u b s c r i p t i o n p r i c e .
Very t r u l y y o u r s ,
W. P. G. Harding,
WW:B
G o v e r n o r .
FEDERAL RESERVE BOARD
WASHINGTON
X-3239
November 5> 1321.
SUBJECT:
Code words t o be used i n c o n n e c t i o n w i t h t e l e g r a p h i c
r e q u e s t s f o r new c u r r e n c y .
De&r S i r :
The Board h a s adopted t h e code words shown below t o
be used i n c o n n e c t i o n w i t h t e l e g r a p h i c r e q u e s t s f.or new c u r r e n c y
and r e q u e s t s t h a t t h e y be made e f f e c t i v e a s of November 15> 1921.
These code words should be added t o t h e bottom of page 43 of t h e
new code book f o l l o w i n g t h e word "CL/V/LE".
( a ) To be used by Reserve Banks i n making r e q u e s t s of
t h e Board f o r shipments of new United S t a t e s c u r r e n c y :
CL/V/TION: P l e a s e r e q u e s t T r e a s u r e r , U, S . , t o s h i p
(name of bank o r b r a n c h ) (amount) (denomin a t i o n ) a g a i n s t c a n c e l l e d n o t e s forwarded
t o T r e a s u r e r f o r r e d e m p t i o n under new r e g u l a t i o n s , p a r a g r a p h 12.
(b) To be used by Board i n a d v i s i n g R e s e r v e Banks of
s h i p m e n t s of new United S t a t e s c u r r e n c y :
*
CLAVICLE;
T r e a s u r e r , U. S . , r e q u e s t e d t o s h i p immediately
t o (name of bank or b r a n c h ) (amount) (denomin a t i o n ) (kind of c u r r e n c y ) a g a i n s t c a n c e l l e d
n o t e s forwarded t o T r e a s u r e r U. S . , f o r redempt i o n under new r e g u l a t i o n s p a r a g r a p h 12. P l e a s e
c r e d i t T r e a s u r e r , U. S., a s t r a n s f e r of f u n d s
upon r e c e i p t .
( c ) To be used by Reserve Banks i n making r e q u e s t s of t h e
Board f o r shipments of F e d e r a l Reserve Bank n o t e s :
CLAWED:
P l e a s e r e q u e s t C o m p t r o l l e r of Currency t o s n i p
(name of bank o r b r a n c h ) (amount) F e d e r a l
Reserve Bank n o t e s ( d e n o m i n a t i o n ) from b a l a n c e
due t h i s bank a g a i n s t r e d e m p t i o n o u r bank n o t e s .
-At- f>ar / '"-s-V (>#
*3
-2-
X-3239
The Board w i l l use t h e code word "C/K/RDER", which appears
on page 40 of t h e new code book, i n a d v i s i n g Federal Reserve Banks
of shipments of Federal Reserve Bank n o t e s .
(d) To be used by Board i n making r e q u e s t s of Federal Reserve Banks f o r i s s u e of Federal Reserve n o t e s t o t h e T r e a s u r e r
V,S., f o r making disbursements i n Washington:
CLAYB.fiHK: T r e a s u r e r , U.S., d e s i r e s t o o b t a i n your Federal
Reserve n o t e s (amount) (denomination). If you
can accommodate him p l e a s e a r r a n g e w i t h Agent
your bank t o wire Board today i n s t r u c t i o n s t o
d e l i v e r your Federal Reserve n o t e s t o T r e a s u r e r
on ( d a t e ) , t a k i n g c r e d i t i n T r e a s u r e r ' s g e n e r a l
account same d a t e .
Very t r u l y y o u r s .
Walter L. Eddy,
Assistant Secretary.
To a l l Chairmen of a l l F.R.Banks.
-3 - i^'rr1.fti
FEDERAL RESERVE BOARD
WASHINGTON
X-3240
November 5* 1921.
SUBJECT:
Code words t o be used i n c o n n e c t i o n w i t h t e l e g r a p h i c
r e q u e s t s f o r new F e d e r a l Reserve N o t e s .
Dear S i r !
The Board h a s adopted t h e code w o r d s shown below t o be
used i n c o n n e c t i o n w i t h t e l e g r a p h i c r e q u e s t s f o r new F e d e r a l R e s e r v e
n o t e s , and r e q u e s t s t h a t t h e y be made e f f e c t i v e a s of November 15,
1921.
These code words should be added t o t h e bottom of page 49 of
t h e new code bock f o l l o w i n g t h e word ''CL/.YBANK" a s shown i n t h e B o a r d ' s
l e t t e r of November
1921,
(X-323S).
( a ) To be used by F e d e r a l Reserve Agents i n w i r i n g
a u t h o r i t y t o t h e Board t o d e l i v e r F e d e r a l R e s e r v e
n o t e s t o t h e T r e a s u r e r , U. S . :
CWYKILN: C o l l a t e r a l h a v i n g been d e p o s i t e d w i t h me t o
cover i s s u e , p l e a s e r e q u e s t C o m p t r o l l e r t o
d e l i v e r t q T r e a s u r e r , U. S . , ( d a t e ) (amount)
( d e n o m i n a t i o n ) F e d e r a l Reserve n o t e s of t h i s
bank. General a c c o u n t of T r e a s u r e r , U, S . ,
w i l l be charged same d a t e .
(b) To be used by F e d e r a i R e s e r v e Agents i n making r e q u e s t s of t h e Board f o r s h i p m e n t s of F e d e r a l Reserve n o t e s :
CLAYMORE: P l e a s e r e q u e s t C o m p t r o l l e r of Currency t o s h i p
( A s s i s t a n t ) F e d e r a l Reserve Agent (bank or
b r a n c h ) F e d e r a l Reserve n o t e s a s f o l l o w s :
(amount) ( d e n o m i n a t i o n ) . C o n f i r m a t i o n i s b e i n g
forwarded by mail t o d a y .
Very t r u l y y o u r s ,
W a l t e r L. Eddy,
Assistant Secretary.
To a l l F e d e r a l R e s e r v e Agents.
f JP
FEDERAL RESERVE BOARD
WASHINGTON
November 5/ 1921.
X-32U1
SUBJECT:
Code words t o be used i n c o n n e c t i o n w i t h t h e r e d e m p t i o n
of United S t a t e s S p e c i a l 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
d e p o s i t e d t o s e c u r e F e d e r a l Reserve Bank n o t e c i r c u l a t i o n .
Dear S i r :
I n c o n n e c t i o n w i t h t h e r e d e m p t i o n of United S t a t e s
S p e c i a l 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 d e p o s i t e d by F e d e r a l Reserve
Banks w i t h t h e T r e a s u r e r of t h e United S t a t e s t o s e c u r e F e d e r a l
Reserve Bank n e t 6 c i r c u l a t i o n , t h e Board h a s adopted t h e code words
shown below and r e q u e s t s t h a t t h e y be made e f f e c t i v e a s of November
15> 1921.
These code words s h o u l d be added t o t h e bottom of page 25
of the new code book f o l l o w i n g t h e word "BELLOWING",
( a ) To be s e n t by Board t o F e d e r a l R e s e r v e Banks i n
c o n n e c t i o n w i t h t h e r e t i r e m e n t of c e r t i f i c a t e s a g a i n s t which
no c i r c u l a t i o n i s o u t s t a n d i n g :
BELLOWS:
*
S e c r e t a r y of t h e Treasury a d v i s e s he w i l l redeem on
( d a t e ) your s p e c i a l 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
(number of c e r t i f i c a t e s ) f o r (amount) p l e d g e d t o s e c u r e
F e d e r a l Reserve Bank n o t e c i r c u l a t i o n but a g a i n s t which
no c i r c u l a t i o n i s o u t s t a n d i n g . I n a c c o r d a n c e w i t h
r e s o l u t i o n your Board of D i r e c t o r s p a s s e d
p l e a s e forward immediately t h e n e c e s s a r y r e q u e s t by an
o f f i c e r of your Bank f o r t h e w i t h d r a w a l of t h e c e r t i f i c a t e ' s t o be redeemed. Payment on d a t e of r e d e m p t i o n
w i l l be made by t h e T r e a s u r e r , U. S . , a s o u t l i n e d i n
B o a r d ' s l e t t e r March 2, 1921, (X-3058),
YL-y.ki
l Sr f *
i J' .
_
— (j W <
- 2 «
*
(b) To be s e n t by Reserve Banks t o Board, i n c o n n e c t i o n
w i t h the r e t i r e m e n t of c e r t i f i c a t e s a g a i n s t which no c i r c u l a tion is outstanding:
BELLPULL:
In accordance w i t h a u t h o r i t y c o n t a i n e d i n
r e s o l u t i o n of Board of D i r e c t o r s of t h i s Bank
passed
t h e F e d e r a l Reserve Board,
through i t s d u l y authorized, o f f i c e r , i s authorized,
t o r e q u e s t the Comptroller of t h e Currency t o
withdraw s p e c i a l 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
(number) (amount) d e p o s i t e d by t h i s Bank w i t h t h e
T r e a s u r e r , U. 5 . , t o secure F e d e r a l Reserve Bank
n o t e c i r c u l a t i o n , b u t agiainst which no c i r c u l a t i o n
i s o u t s t a n d i n g , and t r a n s f e r same t o t h e S e c r e t a r y
of the T r s a s u r y f o r redemption on ( d a t e ) . Upon
r e c e i p t of telegram from T r e a s u r e r we w i l l charge
T r e a s u r e r ' s account w i t h p r i n c i p a l and accrued
i n t e r e s t and forward s c h e d u l e , Form 912, c o v e r i n g
the redemption of the c e r t i f i c a t e - s •
( c ) To be s e n t by Board t o Reserve Banks i n c o n n e c t i o n w i t h
t h e redemption of c e r t i f i c a t e s , and t h e r e t i r e m e n t of a l i k e
amount of F e d e r a l Reserve Bank n o t e c i r c u l a t i o n :
BELONG:
S e c r e t a r y of T r e a s u r y d e s i r e s t o r e t i r e (amount) your
F e d e r a l Reserve B&nk n o t e c i r c u l a t i o n under p r o v i s i o n s
of the P i t t m a n .Act- Be w i l l redeem on ( d a t e ) your
s p e c i a l 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 (number of c e r t i f i c a t e ) f o r (amount). In accordance w i t h r e s o l u t i o n your Board of D i r e c t o r s p a s s e d
p l e a s e wire immediately n e c e s s a r y r e q u e s t by. an
o f f i c e r of your bank f o r t h e w i t h d r a w a l of the 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 t o be rede erred and i n s t r u c t i o n s t o d e p o s i t with T r e a s u r e r , U. S . , f a c e
amount of the above 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
as a d e p o s i t f o r the r e t i r e m e n t of your F e d e r a l
Reserve Bank n o t e s . When d e p o s i t h a s been made .
your bank w i l l reduce i t s l i a b i l i t y a g a i n s t F e d e r a l
Reserve Bank n o t e s a s t h i s l i a b i l i t y i s assumed
b y the United S t a t e s . You w i l l be g i v e n c r e d i t i n
T r e a s u r e r ' s g e n e r a l account f o r accrued i n t e r e s t ,
amount of which w i l l be a d v i s e d i n w i r e from Treasurer;
U. S.
(d) To be s e n t by Reserve Banks t o Board i n c o n n e c t i o n w i t h the
redemption of c e r t i f i c a t e s , and the r e t i r e m e n t of a l i k e amount of
F e d e r a l Reserve Bank n o t e c i r c u l a t i o n :
BFLOVF:
In accordance w i t h a u t h o r i t y c o n t a i n e d i n
r e s o l u t i o n of t h e Board of D i r e c t o r s of t h i s
bank p a s s e d
the Federal
Reserve Board, t h r o u g h i t s d u l y a u t h o r i z e d
X-3241
-3-
o f f i c e r , i s a u t h o r i z e d t o r e q u e s t t h e C o m p t r o l l e r of
the Currency t o withdraw s p e c i a l 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 (number) (amount) d e p o s i t e d by t h i s b a n k
w i t h the T r e a s u r e r , U . S . , t o socvre F e d e r a l Reserve
Bank n o t e c i r c u l a t i o n , and d e l i v e r same t o t h e
S e c r e t a r y of t h e Treasury f o r redemption ( d a t e ) .
P l e a s e r e q u e s t t h a t f a c e amount of c e r t i f i c a t e - s
so redeemed be d e p o s i t e d w i t h T r e a s u r e r , U. S . ,
f o r r e t i r e m e n t of e q u a l amount of F e d e r a l Reserve
Bank n o t e c i r c u l a t i o n of t h i s b a n k . Upon r e c e i p t
of t e l e g r a m from T r e a s u r e r we w i l l charge
T r e a s u r e r ' s g e n e r a l account w i t h accrued i n t e r e s t
and f o r w a r d s c h e d u l e , Form 912, c o v e r i n g the r e demption of t h e c e r t if i c a t e - s .
Very t r u l y y o u r s ,
W a l t e r L. Eddy,
.Assistant S e c r e t a r y .
TO CHAIRMAN OF /LL FEDERAL RESERVE BASKS
Uk-fs«'
FEDERAL RESERVE BOARD
WASHINGTON
X-3242
November 9, 1$21.
SUBJECT:
P u r c h a s e of United S t a t e s Bonds B e a r i n g C i r c u l a t i o n
Privilege.
Dear S i r :
S e c t i o n I d of t h e F e d e r a l R e s e r v e Act p r o v i d e s f o r t h e
g r a d u a l r e t i r e m e n t of N a t i o n a l Bank n o t e s and r e q u i r e s t h e United
S t a t e s T r e a s u r e r t o f u r n i s h t h e F e d e r a l R e s e r v e Board, a t t h e end
of each q u a r t e r l y p e r i o d , a l i s t of a p p l i c a t i o n s from n a t i o n a l b a n k s
t o s e l l , a t p a r and a c c r u e d i n t e r e s t . United S t a t e s bonds s e c u r i n g
circulation.
S e c t i o n 18 a u t h o r i z e s t h e Board t o r e q u i r e F e d e r a l
Reserve Banks t o p u r c h a s e such bonds, p r o v i d e d t h a t t h e t o t a l amount
p u r c h a s e d by a l l F e d e r a l Reserve Banks i n any one y e a r s h a l l n o t e x ceed $ 2 5 , 0 0 0 , 0 0 0 , which amount s h a l l i n c l u d e bonds a c q u i r e d under
S e c t i o n 4 of t h e F e d e r a l Reserve Act by t h e F e d e r a l R e s e r v e Banks.
P r o v i s i o n i s a l s o made i n S e c t i o n I d f o r t h e exchange of United
S t a t e s 2 p e r c e n t Consols w i t h t h e T r e a s u r y f o r 3 P e r c e n t gold
notes without the c i r c u l a t i o n p r i v i l e g e .
For t h e r e a s o n t h a t t h e s e n o t e s could n o t be s o l d a t p a r , t h e
Board h a s not f o r some y e a r s p a s t r e q u i r e d t h e F e d e r a l Reserve Banks t o
p u r c h a s e 2 p e r cent Consols o f f e r e d by n a t i o n a l banks. The Board now
d e s i r e s , however, t o e x p r e s s t o t h e F e d e r a l Reserve Banks i t s w i l l i n g n e s s t o have them p u r c h a s e on t h e open market a t p a r and a c c r u e d
i n t e r e s t United S t a t e s 2 p e r cent bonds b e a r i n g t h e c i r c u l a r ! o n p r i v i l e g e . The amount t h a t may be p u r c h a s e d d u r i n g t h e r e m a i n d e r of t h e
p r e s e n t c a l e n d a r y e a r i s $25,000,000, l e s s any bonds which may have
been a c q u i r e d under S e c t i o n 4 of t h e Act. I t i s s u g g e s t e d , however,
t h a t no F e d e r a l R e s e r v e Bank s h a l l p u r c h a s e , w i t h o u t f u r t h e r r e f e r e n c e
t o t h e Board, a n amount i n e x c e s s of i t s a l l o t m e n t on t h e b a s i s of
c a p i t a l and s u r p l u s . The amount a l l o t t e d t o each F e d e r a l Reserve Bank
on t h i s b a s i s i s a s f o l l o w s '
P e r c e n t of T o t a l
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San F r a n c i s c o
• Amount
7.66
27.27
2.28
10.53
5.19
4.C6
14,18
4.32
3.43
4.37
3-57
7.14
$1,915,000
6,317,500
2,070,000
2,632,500
1,297,500
1,015,000
3 , 5 4 5 , ooo
1,050.000
857,500
1,092,500
392,500
1,755,000
X-3142
I t a p p e a r s from t h e S e c r e t a r y ' s m i n u t e s of t h e Conference
of Governors of Federal Reserve Banics h e l d r e c e n t l y t h a t i t was
t h e sense of t h e Conference t h a t Federal Reserve Banks should
be a u t h o r i z e d t o purchase i n eacn c a l e n d a r year t h e maximum
amount p e r m i t t e d under S e c t i o n 18, a t not more t h a n p a r and
accrued i n t e r e s t .
Very t r u l y y o u r s ,
G o v e r n o r .
GOVERNORS ALL FEDERAL RESERVE BANKS
COPIES TO CHAIRMEN
_ L f-v
1
FEDERAL RESERVE BOARD
WASHINGTON
X-3243
November 9, 1921.
SUBJECT:
Removal of L i m i t a t i o n on F e d e r a l Reserve Exchange
Drafts.
Dear S i r :
I n A p r i l , 191? t h e F e d e r a l R e s e r v e Board e x t e n d e d t o
member banks t h e p r i v i l e g e of u s i n g two k i n d s of d r a f t s ; one
known a s t h e " F e d e r a l Reserve Exchange D r a f t " and t h e o t h e r a s
t h e " F e d e r a l Reserve T r a n s f e r D r a f t " . The F e d e r a l R e s e r v e Exchange D r a f t i s a check drawn by a member bank on i t s own F e d e r a l
R e s e r v e Bank and made r e c e i v a b l e f o r immediate a v a i l a b i l i t y a t
p a r a t any F e d e r a l Reserve Bank, b u t a c t u a l l y p a y a b l e only by t h e
drawee F e d e r a l Reserve Bank. The F e d e r a l Reserve T r a n s f e r D r a f t
i s a check drawn by a member bank on i t s - own F e d e r a l R e s e r v e Bank
and made p a y a b l e upon a d v i c e of t h e drawee a t any F e d e r a l Reserve
Bank s p e c i f i e d i n t h e d r a f t .
Undeir t h e tei'ms of t h e o r i g i n a l c i r c u l a r b o t h forms of
d r a f t s were l i m i t e d t o $250.
This l e t t e r h a s r e f e r e n c e , however,
only t o t h e F e d e r a l Reserve Exchange D r a f t , f o r i t a p p e a r s t h a t t h e
Federal Reserve Transfer D r a f t has been but l i t t l e used.
B e f o r e t h e e s t a b l i s h m e n t of t h e F e d e r a l R e s e r v e System,
banks were accustomed t o draw t h e i r d r a f t s on c o r r e s p o n d e n t s i n
r e s e r v e c i t i e s and t o have them become immediately a v a i l a b l e a t
p a r . On August 12, i g i d t h e F e d e r a l Reserve Board, a t t h e s u g g e s t i o n of an i n f o r m a l c o n f e r e n c e h e l d between r e p r e s e n t a t i v e s of t h e
F e d e r a l Reserve Banks of C l e v e l a n d , New York, Chicago, P h i l a d e l p h i a
and Boston, i s s u e d a c i r c u l a r , e f f e c t i v e September 3>
inc r e a s i n g t h e l i m i t of d r a w i n g s of F e d e r a l Reserve Exchange D r a f t s
from $250 t o $5000. On November 15, 1919 t h e Board i s s u e d a
c i r c u l a r commenting upon t h e a c t i o n t a k e n by a C o n f e r e n c e of
T r a n s i t Managers and A u d i t o r s , h e l d i n C l e v e l a n d June 23rd and
2 5 t h , 1919. T h i s Conference v o t e d t h a t t h e l i m i t on exchange
d r a f t s be removed, and t h e B o a r d ' s r e p l y , a f t e r h e a r i n g from a l l
F e d e r a l Reserve Banks, was a d i s a p p r o v a l of t h i s recommendation
of t h e T r a n s i t C o n f e r e n c e . The r e c o r d s show t h a t t h e F e d e r a l Res e r v e Banks of New York and Chicago were n o t i n f a v o r of removing
t h e l i m i t , w h i l e t h o s e of C l e v e l a n d , Richmond, San F r a n c i s c o and
S t . Louis were d e c i d e d l y i n f a v o r of such a c t i o n . Other F e d e r a l
Reserve Banks e x p r e s s e d no o b j e c t i o n b u t a p p e a r e d t o a c q u i e s c e i n
t h e recommendation of t h e T r a n s i t Conference above r e f e r r e d t o .
This s u b j e c t has been f r e q u e n t l y d i s c u s s e d a t group c o n f e r e n c e s
and a t c o n f e r e n c e s of t h e Governors. Some of t h e group c o n f e r e n c e s
have urged t h a t t h e l i m i t a t i o n be removed b u t no unanimous a c t i o n
a p p e a r s t o have been reached a t any c o n f e r e n c e of t h e Governors of
Federal Reserve Banks. I t a p p e a r s from t h e m i n u t e s of t h e c o n f e r e n c e
h e l d h e r e s e v e r a l days ago t h a t t h i s q u e s t i o n was b r o u g h t up but i t
was v o t e d t h a t c o n s i d e r a t i o n be postponed u n t i l a n o t h e r c o n f e r e n c e
of Governors, i n o r d e r t h a t t h e s e v e r a l Governors might have an
o p p o r t u n i t y i n t h e meantime t o s t u d y i t a©d be p r e p a r e d t o r e p o r t
back a t t h e n e x t c o n f e r e n c e . This means f u r t h e r d e l a y .
The Board i s anxious t h a t member banks should have u n r e s t r i c t e d
use of t h e i r e x c e s s b a l a n c e s w i t h Federal Reserve Banks and b e l i e v e s
t h a t t h e time i s opportune f o r removing t h e l i m i t a t i o n s which now
e x i s t . I t has been i n t i m a t e d t h a t c e r t a i n l a r g e member banks, which
do a country-wide b u s i n e s s , a r e not i n f a v o r of t h i s a c t i o n . The
Board does not know whether t h i s i s t r u e or n o t , b u t i n view of t h e
f a c t t h a t Federal Reserve Banks pay no i n t e r e s t on d e p o s i t s , wh.ila
t h e l a r g e member banks do pay i n t e r e s t on bank d e p o s i t s , i t does not
appear t h a t t h e b u s i n e s s of t h e member banks i n l a r g e c i t i e s would
be a d v e r s e l y a f f e c t e d should t h e l i m i t a t i o n on F e d e r a l Reserve Exchange D r a f t s be removed. Even i n t h e f a c e of o p p o s i t i o n on t h e
p a r t of l a r g e member banks t h e Board would s t i l l f e e l t h a t t h i s
a c t i o n should be t a k e n , u n l e s s more v a l i d o b j e c t i o n s can be r a i s e d .
You a r e r e q u e s t e d , t h e r e f o r e , to c o n s i d e r t h e m a t t e r and t o
a d v i s e t h e Board a s promptly a s p o s s i b l e of t h e a t t i t u d e of your bank
w i t h r e s p e c t t o t h e p r o p o s i t i o n , and what p r a c t i c a l o b j e c t i o n , if any,
ycu see t o i t . M a t t e r s of t h i s k i n d , which r e l a t e t o i n t e r - b a n k
t r a n s a c t i o n s , a r e c l e a r l y w i t h i n t h e scope of t h e B o a r d ' s j u r i s d i c t i o n
and i t i s i m p o r t a n t , t h e r e f o r e , t h a t a f t e r a l l arguments f o r and
a g a i n s t t h e p r o p o s i t i o n have been p r e s e n t e d t h e Board should g i v e
the m a t t e r c o n s i d e r a t i o n and determine t h e p o l i c y t o be p u r s u e d .
Very t r u l y y o u r s ,
G o v e r n o r .
GOVERNORS OF ALL FEDERAL RESERVE BANKS
(COPIES TO FEDERAL RESERVE AGENTS).
-m
JLfS-r vJ* Ji_
COPY
X-3S44
November 1C, lyZL.
Dear Mr. H a r r i s o n :
I e n c l o s e h e r e w i t h copy of c i r c u l a r l e t t e r which I am
s e n d i n g o u t , by d i r e c t i o n of t h e Board, t o t h e Governors of a l l
Federal Reserve banks. This l e t t e r i s i n t e n d e d t o g i v e t h e f o r c e
and e f f e c t of a r u l i n g by t h e Board on v a r i o u s m a t t e r s which your
minutes show were agreed t o by t h e Governors a t t h e c o n f e r e n c e .
The Board d e s i r e s a d d i t i o n a l i n f o r m a t i o n on t h e f o l l o w i n g
point s:
Topic 1 - 3 - 1 . Scope of E l i g i b i l i t y Committee. I t a p p e a r s from t h e
minutes t h a t i t was voted by t h e c o n f e r e n c e t h a t t h e f u n c t i o n of
t h e E l i g i b i l i t y Committee of each Federal Reserve bank should be
( l ) t o p a s s upon t h e t e c h n i c a l e l i g i b i l i t y of p a p e r p r e s e n t e d f o r
d i s c o u n t , and (2) t o p a s s upon tne d e s i r a b i l i t y of such p a p e r from
a c r e d i t s t a n d p o i n t . I s i t i n t e n d e d t h a t t h e E l i g i b i l i t y Committee
should supersede t h e Discount or Executive Committee, or i s i t
one and t h e same t h i n g ?
Topic I-E. R e d i s c o u n t i n e Non-ne&otiable n o t e s . The m i n u t e s show
t h a t i t was t h e sense of t h e Conference t h a t Governor C a l k i n s should
o b t a i n an o p i n i o n from h i s a t t o r n e y a s t o t h e n e g o t i a b i l i t y of a
n o t e which b e a r s evidence t h a t i t is. s e c u r e d by a c h a t t e l or o t h e r
mortgage, and t h a t Governor Calkins should p r e p a r e d r a f t of a
c i r c u l a r , based on t h a t opinion, t o be forwarded by a l l Federal
Reserve banks t o t h e i r members. The Board would l i k e t o have a
copy of t h e proposed c i r c u l a r f o r submission t o i t s Counsel b e f o r e
i t i s sent out by t h e Banks.
Topic I I - A . Report of C o l l e c t i o n Committee. The Board d e s i r e s t h a t
t h i s r e p o r t , when complete, be submitted t o i t f o r c o n s i d e r a t i o n and
if approved a formal r u l i n g w i l l be made g i v i n g e f f e c t t o t h e r e commendations.
Topic I-A-U. Uniform P r a c t i c e i n h a n d l i n g b a n k e r s ' a c c e p t a n c e s t a k e n
from b r o k e r s under r e p u r c n a s e a g r e e m e n t s . The Board
has some doubts a s t o t h e p r o p r i e t y of a c o n t i n u a n c e of t h e p r e s e n t
p r a c t i c e and w i s h e s t o c o n s i d e r t h e m a t t e r from a l e g a l s t a n d p o i n t ,
a s w e l l a s one of p o l i c y . I t would, t h e r e f o r e , a p p r e c i a t e h a v i n g
c o p i e s of Governor S t r o n g ' s correspondence w i t h t h e F e d e r a l Reserve
Banks of S t . Louis, Boston, San F r a n c i s c o , Chicago and Cleveland, on
this subject.
Topic VI-D- S e c u r i t i e s l e f t i n custody.The Board r e q u e s t s t h a t i t
be f u r n i s h e d w i t h a copy of Mr. H a r t ' s r e p o r t on t h i s s u b j e c t .
:
-a
•
JL r ^ r' ''l.Jff-tj
*xi
-2-
X-3244
The Board r e q u e s t s t h a t t h e c i r c u l a r t o be p r e p a r e d by t h e
Leased Wire Committee, g i v i n g i n s t r u c t i o n s t o a l l F e d e r a l Reserve
banks w i t h r e f e r e n c e t o t h e method of h a n d l i n g t e l e g r a p h i c t r a n s f e r s and t h e r e p o r t of t h e Committee r e v i e w i n g c i r c u l a r s which
have a l r e a d y been i s s u e d by t h e F e d e r a l Reserve banks on t h e
q u e s t i o n of l i a b i l i t y f o r w i r e t r a n s f e r s be sent t o t h e Board f o r
review b e f o r e b e i n g t r a n s m i t t e d t o t h e b a n k s .
The Board has taken no a c t i o n on tne p r o p o s i t i o n (page 41 of
t h e minutes) t h a t a general committee of twelve should be a p p o i n t e d ,
one from each Federal Reserve bank, which " s h a l l meet as o f t e n and
f o r a s long a s may be n e c e s s a r y t o work out a g e n e r a l program, which
s h a l l be r e p o r t e d t o t h e Governors f o r t h e i r a d o p t i o n . " Action on
t h i s w i l l be d e f e r r e d u n t i l t h e f i r s t meeting of t h e B o a r d ' s
E f f i c i e n c y Committee w i t h the supplementary committee c o n s i s t i n g
of Chairman W i l l s , of t h e Federal Reserve Bank of Cleveland, and
Governors Morris and Calkins, The Board i s anxious t h a t p l a n s f o r
e f f i c i e n c y i n t h e conduct of i n t e r - b a n k o p e r a t i o n s of t h e Federal
Reserve banks should not be complicated with too much machinery
and deems i t important t h a t a l l t h e s e p l a n s be c o o r d i n a t e d w i t h
c e r t a i n g e n e r a l p l a n s which t h e Board i s working o u t , of whicn due
n o t i c e w i l l be g i v e n .
Very t r u l y y o u r s ,
(Signed) W. P. G. HARDING,
G o v e r n o r .
Mr. George L. H a r r i s o n , S e c r e t a r y ,
Governors 1 Conf erence,
Federal Reserve Bank,
New York, N„ Y.
(COPY TO ALL GOVERNORS)
FEDERAL RESERVE BOARD
WASHINGTON
X-3245
November 10, 1$21.
SUBJECT:
Approval of F e d e r a l Reserve Board of c e r t a i n p r o p o s i t i o n s
agreed t o a t r e c e n t Governors' C o n f e r e n c e .
Dear S i r :
The F e d e r a l Reserve Board h a s c o n s i d e r e d t h e S e c r e t a r y ' s
m i n u t e s of t h e Conference of F e d e r a l Reserve Bank G-overnors, which A a s
h e l d i n t h i s c i t y October 2 5 t h - 2 g t h , and d e s i r e s t o g i v e i t s formal
a p p r o v a l , which s h a l l have t h e f o r c e and e f f e c t of a r u l i n g by t h e
• Board, t o c e r t a i n p r o p o s i t i o n s which t h e m i n u t e s show were agreed t o
by t h e Governors a t t h e i r C o n f e r e n c e .
Topic I-G. Federal Reserve Banks s h a l l n o t f u r n i s h c r e d i t i n f o r m a t i o n
t o member banks o r to any o t h e r bank, except F e d e r a l Reserve Banks,
t h e War Finance C o r p o r a t i o n , and t h e F e d e r a l Reserve Board.
Topic I I - B - 2 . The Board concurs i n t h e view of t h e Governors t h a t a l l
Federal Reserve Banks should d i s c o n t i n u e t h e use of n o n - r e s p o n s i b i l i t y
c l a u s e s upon b i l l s of l a d i n g a t t a c n e d t o d r a f t s h a n d l e d f o r c o l l e c t i o n .
Topic 1I-B-6. The Board c o n c u r s i n t h e o p i n i o n t h a t exchange should
not be deducted by t h e drawee bank on checks p r o t e s t e d and r e t u r n e d f o r
non-payment, even though t h e y be handled a s c o l l e c t i o n items*
Tonic I I - C - 6 . The Board c o n c u r s i n t h e view of t h e Conference t h a t
immediate c r e d i t should be g i v e n f o r " o f f i c e r s ' checks'* i s s u e d by F e d e r a l
Reserve Banks, The Board assumes t h a t t h e term " o f f i c e r s ' checks" i s
synonymous w i t h C a s h i e r s ' cnecks i s s u e d by member b a n k s .
Topic Supplement I I - Treasury Proaram. The Board h a s agreed t o the
p r o p o s i t i o n t h a t t h e r e be appointed by the Treasury Department and t h e
ifederal Reserve Board a permanent Currency Committee, composed of t n r e e
r e p r e s e n t a t i v e s of t h e Treasury and two of t h e F e d e r a l Reserve Board.
The Board h a s a p p o i n t e d a s i t s r e p r e s e n t a t i v e s Mr.
L.Eddy, A s s i s t a n t
S e c r e t a r y , and Mr. W . E. B u e l l , Chief of t h e F e d e r a l Reserve I s s u e and
Redemption D i v i s i o n , As soon a s t h e Treasury makes i t s a p p o i n t m e n t s , t h e
Committee w i l l be o r g a n i z e d and proceed w i t h i t s work.
GOVERNORS OF ALL
COPIES
http://fraser.stlouisfed.org/ TO AGENTS
Federal Reserve Bank of St. Louis
Very t r u l y y o u r s ,
G o v e r n o r .
F.R.BANKS
1554
FEDERAL RESERVE BOARD
WASHINGTON
November 10, 1921.
X-3346.
SUBJECT:
M a t t e r s a f f e c t i n g o p e r a t i o n of F e d e r a l Beserve
System d u r i n g t h e y e a r 1^22.
Dear S i r :
By d i r e c t i o n of the F e d e r a l Reserve Board,
I t r a n s m i t herewith f o r your information a c i r c u l a r
b e a r i n g upon c e r t a i n m a t t e r s a f f e c t i n g t h e o p e r a t i o n
of t h e F e d e r a l
Beserve System d u r i n g t h e y e a r 1922.
Very t r u l y y o u r s ,
G 0 v e r n 0 r.
LETTER SENT TO GOVERNORS AND AGENT OF ALL F. P. BANKS.
*
X-3E46a
MATTERS AFFECTING OPERATION OF FEDERAL RESERVE SYSTEM
"DURING THE! YEAR 1922.
1 O
Jus^o»J
I.
The Board h a s d i s c o n t i n u e d the f o u r groups of F e d e r a l Reserve Banks
which were e s t a b l i s h e d l a s t y e a r , and h a s d i v i d e d t h e System f o r the y e a r
1922 i n t o t h r e e groups, as f o l l o w s :
( 1 ) New York » Chicagd - S t . t>ouis - San F r a n c i s c o .
(2) Boston - P h i l a d e l p h i a - Richmond - A t l a n t a .
( 3 ) Cleveland - Minneapolis - Kansas C i t y - D a l l a s ,
There w i l l be two meetings i n each group d u r i n g t h e y e a r , a t times and
p l a c e s t o be announced by the F e d e r a l Reserve Board. At l e a s t one member
of the F e d e r a l Reserve Board i s e x p e c t e d t o h e p r e s e n t a t e a c h group meeting.
II.
Board h a s appointed two of i t s members, Messrs. M i l l e r and M i t c h e l l ,
a s a s t a n d i n g Committee on Economy and E f f i c i e n c y and h a s formed a s u p p l e mentary committee t o a c t w i t h t h i s Committee of the Board, c o n s i s t i n g of
Mr. D. C. W i l i s , Chairman and F e d e r a l Reserve Agent of the F e d e r a l Reserve
Bank of Cleveland, Mr. George W. N o r r i s , Governor of t h e F e d e r a l Reserve
Bank of P h i l a d e l p h i a , and Mr. J o h n U . C a l k i n s , Governor of the F e d e r a l
Reserve Bank of San F r a n c i s c o .
III.
The Board w i l l d u r i n g t h e y e a r S a i l two c o n f e r e n c e s of t h e Governors of
the F e d e r a l Reserve Banks a t Washington and one c o n f e r e n c e of t h e F e d e r a l
Reserve Agents. S p e c i a l c o n f e r e n c e s w i l l be c a l l e d i f deemed a d v i s a b l e .
IV.
Having taken i n t o c o n s i d e r a t i o n t h e time i n v o l v e d i n h o l d i n g f u l l
c o n f e r e n c e s and the d i f f i c u l t y which i s l i a b l e t o be e x p e r i e n c e d i n r e a c h i n g c o n c l u s i o n s a t a l a r g e c o n f e r e n c e , t h e Board h a s d e c i d e d t o r e q u e s t f i v e
Governors of F e d e r a l Reserve Banks t o a c t a s a d v i s o r s t o t h e Governor of
the F e d e r a l Reserve Board, who i s i t s Executive O f f i c e r , i n a l l m a t t e r s
p e r t a i n i n g t o t h e r o u t i n e o p e r a t i o n s of the System a s a whole. I t i s
expected t h a t t h i s Committee w i l l be c a l l e d i n t o c o n s u l t a t i o n f r e q u e n t l y ,
e i t h e r i n Washington o r a t such o t h e r p l a c e a s t h e Governor of t h e Board
may s e l e c t , and i n o r d e r t h a t the Advisory Committee may be a s r e p r e s e n t a t i v e as p o s s i b l e of a l l s e c t i o n s of the country and a t t h e same time be
w i t h i n quick c a l l the Board h a s r e q u e s t e d the f o l l o w i n g Governors t o serve
as the Advisory Committee: Messrs. S t r o n g of New York, N o r r i s of P h i l a d e l p h i a ,
Fancher of Cleveland, Seay of Richmond, and McDougal of Chicago.
ATTEST:
Secretary.
Governor.
TREASURY ^DEPARTMENT
WASHINGTON
X-3t47.
November 7 , 1921,
The Governor
F e d e r a l R e s e r v e Board.
Sir:
Tou a r e a d v i s e d t h a t t h e Department h a s r e f e r r e d t o t h e C o m p t r o l l e r
G e n e r a l of t h e U n i t e d S t a t e s , T r e a s u r y Department D i v i s i o n , f o r s e t t l e m e n t
t h e a c c o u n t of* t h e Bureau of E n g r a v i n g and P r i n t i n g f o r p r e p a r i n g F e d e r a l Res e r v e n o t e s d u r i n g t h e p e r i o d October 1 t o October 3 1 , 1921, amounting t o
4272,342.94, as f o l l o w s : - F e d e r a l Reserve N o t e s 1914
Total
$100
f>20
£50
M
529,000
—
60,000
Boston . . . . . . . .
235,000
234,000
4,000 1,813,000
313,000
945,000
New York . . . . . .
551,000
432,000
2,000
9,000
76,000
182,000
163,000
Philadelphia...
263,000
——
2,000
50,000
61,000
150,000
Cleveland . . . . .
130,000
1,000
30,000
27,000
72,000
144,000
1,000
18,000
83,000
42,000
Atlanta . . . . . . .
473,000
4,000
12,000
• 65,000
167,000
225,000
298,000
—
2,000
22,000
58,000
216,000
161,000
—
8,000
—"
40,000
113,000
Minneapolis
61,000
——
23,000
37,000
1,000
Kansas C i t y
21,000
—
——
——
21,000
Dallas . . . . . . . .
1.168.000
—349.000
191.000
628,000
San F r a n c i s c o . .
1 1 , 0 0 0 5,493,000
26,000
1,014,000
1,985,000
2,457,000
-
—
5,457,000 s h e e t s a t $ 4 9 . 5 8
^272,342.94.
The c h a r g e s a g a i n s t t h e s e v e r a l F e d e r a l R e s e r v e Banks a r e a s f o l l o w s : -
Boston . . . . . .
New York
Philadelphia.
Cleveland . . .
Richmond . . . .
Atlanta . . . . .
Chicago . . . . .
St, Louis
Minneapolis.,
Kansas C i t y . .
Dallas . . . . . .
San F r a n c i s o o
Compensation.
Sheets
529,000 $ 8 , 8 0 7 . 8 5
1,813,000 30,186.45
7,192.80
432,000
4,378.95
263,000
2,164.50
130,000
2,397.60
144,000
7,875.45
473,000
4,961,70
298,000
161,000 . 2 , 6 8 0 . 6 5
1,015.65
61,000
349.65
21,000
1.168.000 19.447.20
5,493,000 91,458.45
Plate
Printing
$8,448.13
28,953.61
6,899.04
4,200.11
2,076.10
2,299.68
7,553.81
4,759.06
2,571.17
974.17
335.37
18.652.96
07,723.21
Materials
#6,459,09
22,136.73
5,274.72
3,211.23
1,587.20
1,758.24
5,775.33
3,638.58
1,965.81
744.81
256.41
14.261.28
67 , 0 6 9 . 5 3
Inc.Compensation
Total
$2,512.75 $ 26,227.82
89,888.54
8,611.75
21,418,56
2,052.00
13,039.54
1,249.25
6,445.40
617.50
7,139.52
684.00
23,451.34
2,246.75
14 ,*74.14
1,415.50
7,982.38
764.75
3,024.38
289.75
1,041.18
99.75
57.909.44
5.540.00
2 6 , 0 9 1 . 7 5 272,342.94
Trie JBureau a p p r o p r i a t i o n s wjljljl
***
%
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 R e s e r v e N o t e s Reim u
a b l e " , and i t i s r e q u e s t e d that y o u r Board c a u s e s u c h i n d e f i n i t e appropriation
be r e i m b u r s e d i n l i k e amount.
By d i r e c t i o n of t h e S e c r e t a r y :
Respectfully,
S. P . G i l b e r t , J r .
Under S e c r e t a r y .
-
^ (H- f
TREASURY me&HMME
WASHINGTON
X-3247a
November 7, 1921.
The Governor
'Federal Reserve Board.
Sir:
You a r e a d v i s e d t h a t t h e Department has r e f e r r e d t o t h e Comptroller
General of t h e U n i t e d S t a t e s , Treasury Department D i v i s i o n f o r s e t t l e m e n t t h e
account of t h e Bureau of Engraving and P r i n t i n g f o r p r e p a r i n g F e d e r a l Reserve
n o t e s d u r i n g t h e p e r i o d October 1 t o October 31, 1921, amounting t o $ 1 9 . 8 3 ,
as follows;
Federal Reserve Notes 1918
4>500
Richmond
Chicago . . . . . . . . . . .
61000
Total
- 200
200
200
200
200
200
400
400 s h e e t s a t $49.58
#19.83
The c h a r g e s a g a i n s t t h e s e v e r a l F e d e r a l Reserve Banks a r e a s f o l l o w s :
Sheets
Richmond
Chicago
200
200
400
Conrpensation
$3.33
3.33
6.66
Plate
Printing
&3.19
3.20
6.39
Materials
$2.44
2.44
4.88
lnc.Com-pensation
$ .95
. 95
1.90
Total
$9.91
9.92
19.83
The Bureau a p p r o p r i a t i o n s w i l l be r e i m b u r s e d i n t h e above amount from
the i n d e f i n i t e a p p r o p r i a t i o n " P r e p a r a t i o n and I s s u e of F e d e r a l Reserve N o t e s ,
Reimbursable", and i t i s r e q u e s t e d t h a t your Board cause such i n d e f i n i t e a p p r o p r i a t i o n t o be reimbursed in l i k e amount.
By d i r e c t i o n of t h e S e c r e t a r y :
Respectfully,
S. P . G i l b e r t , J r . ,
Under S e c r e t a r y .
•'
^
"
FEDERAL RESERVE BOARD
WASHINGTON
X-3248
November 10, 1921,
SUBJECT:
F e d e r a l Reserve B u l l e t i n : S p e c i a l Rate t o
Examiners of S t a t e Banking D e p a r t m e n t s .
Dear S i r :
In accordance w i t h t h e p r a c t i c e p r e v a i l i n g
d u r i n g t h e p a s t t h r e e y e a r s , whereby t h e F e d e r a l Res e r v e Banks have u n d e r t a k e n t o s u p p l y examiners of
S t a t e banking d e p a r t m e n t s l o c a t e d i n t h e i r D i s t r i c t s
w i t h Federal Reserve B u l l e t i n s , t h e Board b e l i e v e s
t h a t i t ' would be w e l l t o c o n t i n u e t h e same p o l i c y
with respect t o furnishing Bulletins issued during
t h e y e a r 1322, and h a s a c c o r d i n g l y f i x e d a s p e c i a l
r a t e f o r such s u b s c r i p t i o n s by F e d e r a l Reserve Banks
a t $ 2 . 0 0 p e r annum.
P l e a s e send t o t h e Board not l a t e r t h a n
December 1 5 t h , a l i s t of t h e S t a t e bank examiners t o
whom you d e s i r e t h e B u l l e t i n s e n t d u r i n g t h e e n s u i n g
year, as a l l subscriptions t o the B u l l e t i n expire with
t h e December i s s u e .
Very t r u l y y o u r s ,
Walter L< Eddy,
Assistant Secretary.
To Chairmen of a l l F.R.Banks.
Q
FEDERAL RESERVE BOARD
WASHINGTON
X-3249
November 10, 1921.
• SUBJECT:
C o n f i r m a t i o n of t e l e g r a p h i c r e q u e s t s f o r Fede r a l reserve notes.
Dear S i r :
There i s e n c l o s e d h e r e w i t h a s u p p l y of Form
No. 45 w i t h t h e word, " C o n f i r m a t i o n " stamped t h e r e o n .
I t i s r e q u e s t e d t h a t t h e s e stamped forms "be u s e d i n conf i r m i n g a l l t e l e g r a p h i c r e q u e s t s f o r s h i p m e n t s of Fed"
eral reserve notes.
An a d d i t i o n a l supply of stamped
f o r m s w i l l "be s e n t you a t any time upon r e c e i p t of y o u r
request t h e r e f o r .
Very t r u l y y o u r s ,
W a l t e r L. Eddy,
Assistant Secretary.
Enclosures-
TO ALL FEDERAL RESERVE AGENTS.
GOLD
FEDERAL RESERVE BOARD
S E T T L E M E N T FUND
1-3251
Washington, D. C.
November 18. 1921.
Summary of t r a n s a c t i o n s f o r p e r i o d ending, November 17. 1921.
Federal
Balance l a s t
Gold
Gold
Reserve
statement
Bank of
Nov. 10,1921
Withdrawals
Deposits
(CONFIDENTIAL)
Aggregate
Aggregate
withdrawals
d e p o s i t s and
and t r a n s f e r s
t r a n s f e r s from
t o A&ent'8 fund
Agent*s fund
Boston
$ 34,437,991.64
729,730.00
»
729,730.00
New York
91,991,861.55
2,082,177.50
3,583,600.00
52,082,177.50
3,583,800.00
Philadelphia
59,744,874.65
2,000,000.00
973,150.00
2,000,000,00
8,973,150.00
-Cleveland
45,530,063.57
1,274,680.06
1,400,00
1,274,6*0.06
1,400.00
Richmond
21,940,205.43
887,350.00
500.00
500.00
3,397,157.90
Atlanta
5,560,178.71
615,750.00
1, 500,000.00
1,70% 000.00
615,750.00
Chicago
107,430,585.34
1,198,355.00
700.00
700.00
1,198,355.00
S t , Louis
2 7 , 5 7 5 , 4 a . 42
784,300,00
734,300.00
Minneapolis
,200.00
19,057,910.91
500.00
319,200.00
500.00
Kansas City
23,851,470.27
,686.60
636,686,60
3,500,000.00
3,500,000.00
Dallas
4,597,736.89
990,930.00
1,502,700.00
1,502,700.00
990,930.00
San Francisco
49,083,886.72
1,133.930,00
6,500,000,00
g. 551,500.00
31,133,930,00
tfital.
li^90,B0e*187*60-„ t ——11*6S6*§39*1^—.$— _lg»5S9i&O0i00__m02A3LObZ,.G&__l $..20*§liUlQQ t fiQ.
Federal
S e t t l e m e n t s from November 1$, 1921 t o November 17, 1921
Balance i n
Reserve
inclusive.
fund a t c l o s e
Bank of
of b u s i n e s s
Net
Total
To t a l
Net
Nov. 17, 1921.
Debits
Debits
Credits
Credits
Boston
103.504.649.56
106,103,771.85
$ 38, 434, £83.97
$ 2,599,122.29
New York
344,541,764.80
4,839,432.41
349,381,197.21
49.332.916.46
Philadelphia
3,148,214.62
126,547,386.19
123.399.171.57
55,919,939.27
Cleveland
94,804,867,92
43,049,843,04
95,857,927.45
1,053,059.53
Richmond
104,687,943.41
3,335,636.06
15.207.911.47
101,352,307.35
Atlanta
1,009,933.94
5,744,585.18
38,719,896.87
37,709,962.93
Chicago
12,575,642.70
160,870,103.58
173,445,746.28
93,657,288.14
S t . Louis
4,513,260.55
22,272,920.87
91,434.023.85
86,915,763.30
Minneapolis
26,962,656.90
19,612,632.50
27,836,078.49
873,421.59
2ansas City
2,255,666.94
66,844,404.55
28, 970,450.61
69.100.071.49
Dallas
1,074,664,45
36,472,626.65
3,207,180.89
37,547,291.10
San Francisco
48.093.008.50
4?< 497,117.08
34,097,288.14
Total
$ 409,507,240.54
$ 21,439,473.25
$ 1,247,314,869.44 $ 1 , 2 4 ? , 3 1 4 , 6 6 9 . 4 4
$ 21,439,473.25
w
TRANSFERS
Debits
3,500,000,00
5,000,000.00
Credits
$ 5,626,900,04
2,500,000.00
5,000,000.00
240,000.00
5,000,000.00
500,000.00
5,476,990,45
$
2, 500, 000. 00
2,000,000.00
339,909.59
6,000,000.00
l.2U5^9QQ^Cti-lS2L.8^.9QQtQ4_.
Summary of changes i n owners h i p of gold by banks through
t r a n s f e r s and s e t t l e m e n t s .
w
Decrease
1,206,940.4
3,335,636.
899,843.53
12,575,642.70
4,518,260.55
1,902,326.00
$24,438,649.31
Increase
$ 4,726,022.33
5,819,432.41
3,148,214.62
873,421.59
2,255,666,94
7.995.891.42
424,438,649.31
H-
l
FEDERAL
RESERVE
Svmaarv of t r a n s a c t i o n s f o r p e r i o d ending November 17. 1P21
Federal
Gold
Balance l a s t
Gold
Reserve
statement
Agent a t
Nov. 10,1921.
Withdrawals
Deposits
AGENTS'
Withdrawals
for
transfers
t o bank
FUND
Deposits
through
transfers
from bank
X-3251a
Washington, D. C.
4— *
,* »
Total
Balance a t
c l o s e of
Deposits
business
Nov.17.1921.
Total
*
Withdrawals
Boston
1$
160,000,000 | $
-
New York
1
121,000,000 1
-
1 50,000,000.00 1
—
1
50,000,000
I
171,000,000
Philadelphia
1
132,389,260 1
5,000,000
1 8,000,000.00 1
5,000,000
I
8,000,000
I
135,389,260
Cleveland
\
135,009, oco 1
|
135,000,000
Richmond
1
24,500,000 }
3,000, 000
1 7# 585,192.10 |
10,095,000
1
31,595,000
Atlanta
1
39.509,000 |
3,500,000
j 2,000,000.00 |
2,000, 00C
I
37,800,000
Chicago
1
294,644,500 1
5,000,000
-
1
289,644,500
S t . Louie
1
57,230,600 ]
2, 000, 000
2,000,000
|
57,230,600
Minneapolis
I
2,200,000 |
|
2,200,000
Kansas City
1
26,360,000 I
Dallas
1
2,234,000 |
San Francisco 1
Total
179,427,500 1
-
1$
1$
1
200,000
2,000,000.00 1
3,000,000
1
3,700,000
I
|
I 2,509,807.90 1
5,000,000
1
2,000,000
1
1
1
—
-
-
7,000,000
I
S
1$
1
-
I $1,174, 485, 860 1$ 25,500,000
I
1 2,051,500
| $11,585,192.10 |$ 2 , 2 5 1 , 5 0 0
1 30,000,000.00 !
($90,509,807,90 ($
9,051,500
27,751,500
1
1
I
1
1
1
1
1
-
'
-
1$ 160,000,000
-?
I
26,360,000
-
I
2,234,000
30,000,000
|
!$ 102, 095, 000
200,376,000
($1,248,829,360
1241
1$
FEDERAL RESERVE BOARD
WASHINGTON
X-3252
November 18, 1921.
SUBJECT:
Code Words t o be u s e d i n t e l e g r a p h i c a d v i c e s r e l a t i v e t o
a p p l i c a t i o n s f o r s t o c k by newly o r g a n i z e d n a t i o n a l b a n k s .
Dear S i r :
The B o a r d ' s l e t t e r of November 7 , 1921, (X-3238) p r o v i d e s
t h a t upon r e c e i p t by the Board of an a p p l i c a t i o n of a newly o r g a n i z e d
n a t i o n a l bank f o r s t o c k i n a F e d e r a l Reserve Bank the Board w i l l approve
the a p p l i c a t i o n e f f e c t i v e i f and when t h e C o m p t r o l l e r of t h e Currency
i s s u e s a c e r t i f i c a t e of a u t h o r i t y f o r the n a t i o n a l bank t o commence
b u s i n e s s . The f o l l o w i n g code word w i l l be used by t h e Board, i n t e l e g r a p h i c a d v i c e of i t s a p p r o v a l :
BEFOOL
A p p l i c a t i o n of (name and l o c a t i o n of bank) f o r o r i g i n a l
s t o c k h a s been approved b y t h e F e d e r a l Reserve Board
e f f e c t i v e i f and when b a n k i s a u t h o r i s e d by t h e C o m p t r o l l e r
of the Currency to commence b u s i n e s s .
In t h e B o a r d ' s l e t t e r above r e f e r r e d t o i t i s p r o v i d e d t h a t
F e d e r a l Reserve Banks s h a l l a d v i s e t h e Board by t e l e g r a p h when payment
f o r s t o c k h a s b e e n made by a newly o r g a n i z e d n a t i o n a l b a n k . In a d v i s i n g
t h e F e d e r a l Reserve Board t h e F e d e r a l Reserve Banks a r e r e q u e s t e d t o
use t h e f o l l o w i n g code word:
BEFRIEND
(Name and l o c a t i o n of n a t i o n a l bank) h a s t o d a y made
r e q u i r e d payment on account of s u b s c r i p t i o n t o s t o c k
of t h i s b a n k ,
The C o m p t r o l l e r of t h e Currency has a d v i s e d t h e Board t h a t
upon i s s u a n c e by him of c e r t i f i c a t e t o a n a t i o n a l b a n k a u t h o r i z i n g i t
t o commence b u s i n e s s he w i l l on t h e d a t e c e r t i f i c a t e i s i s s u e d a d v i s e
t h e F e d e r a l Reserve Bank concerned u s i n g t h e f o l l o w i n g code word:
BEGET
The C o m p t r o l l e r of t h e Currency has t o d a y i s s u e d
c e r t i f i c a t e of a u t h o r i t y t o (name and l o c a t i o n of bank)
t o commence b u s i n e s s .
The above code words s h o u l d b e i n s e r t e d a t t h e bottom of
Page 24 of t h e " F e d e r a l Reserve T e l e g r a p h CO&B", f o l l o w i n g the code word
"BEFOMf .
Very t r u l y y o u r s ,
&LL GOVERNORS
TO
Wm. W. Boxton,
S e c r e t a r y .
A D FEDERAL RESERVE AGENTS.
N
FEDERAL RESERVE BOARD
WASHINGTON
November 22, 1921.
X-3253
SUBJECT:
Record of R o t a r y R e g i s t r y Lock Keys h e l d byFederal Reserve Banks and B r a n c h e s .
Dear S i r :
R e c e n t l y one of t h e Branch F e d e r a l R e s e r v e
Banks r e p o r t e d t o t h e Post O f f i c e Department t h e l o s s of
a r o t a r y r e g i s t r y l o c k key. I n v e s t i g a t i o n of t h e m a t t e r
was made by t h e p r o p e r p o s t a l a u t h o r i t i e s and t h e P o s t
O f f i c e I n s p e c t o r r e p o r t e d t h a t t h e r e was no r e c o r d kept
by t h e Branch Bank of t h e numbers of the keys i n i t s
c u s t o d y and t h a t t h e keys were n o t s a f e - g u a r d e d i n a
s a t i s f a c t o r y manner t o p r e v e n t p o s s i b i l i t y of t h e i r b e i n g
l o s t , s t o l e n o r put t o an .improper u s e .
This m a t t e r i s b e i n g b r o u g h t t o t h e a t t e n t i o n
of a l l Governors and F e d e r a l Reserve Agents i n o r d e r t h a t
t h e r o t a r y r e g i s t r y l o c k k e y s f u r n i s h e d t h e F e d e r a l Res e r v e Banks and Branch F e d e r a l R e s e r v e Banks may be
properly safe-guarded.
Very t r u l y y o u r s ,
G o v e r n o r .
TO THE GOVERNORS AND P.R.AGENTS OF ALL F.R.BANKS.
FEDERAL RESERVE BOARD
WASHINGTON
X-3254
November 2 5 , 1921.
SUBJECT:
Expense Main Line, Leased. Wire System, O c t o b e r , 1921.
Bear S i r :
Enclosed h e r e w i t h you w i l l f i n d two mimeograph
s t a t e m e n t s X-3254a and X-3254b, c o v e r i n g i n d e t a i l o p e r a t i o n s
of t h e main l i n e , Leased Wire System, d u r i n g t h e month of
O c t o b e r , 1921,
P l e a s e c r e d i t the amount p a y a b l e by y o u r b a n k i n t h e
r/t?6t
a c c o u n t , ' T r e a s u r e r U. S . , on y o u r b o o k s , and i s s u e
C/D Form 1, N a t i o n a l Banks, f o r account of " S a l a r i e s and Expenses,
F e d e r a l Reserve Board, S p e c i a l Fund", Leased Wire System, s e n d i n g
d u p l i c a t e C/D t o F e d e r a l Reserve Board•
Very t r u l y y o u r s ,
F i s c a l Agent.
Enclosures«
TO GOVERNORS OF ALL BANKS EXCEPT CHICAGO.
X-3254a
REPORT SHOWING CLASSIFICATION AND 1 O B R OF WORDS
TME
TRANSMITTED OVER MAIN LINE OF THE FEDERAL RESERVE
LEASED WIRE SYfTEl FOR THE MONTH OF OCTOBER, 1$21.
From
Bank B u s i n e s s
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
S t . Louis
Minneapolis
Kansas City
Dallas
San F r a n c i s c o
58,658
183,334
59,891
85,414
78,161
84,660
141,947
86,643
46,942
98,104
87,035
Total F. R.
Banks
Washington
1,150,714
269,160
Grand Total
Per cent of
Total Bank
Business(*)
5.10
15-93
5.20
7.42
6.79
7.36
12.34
7.53
4.03
3.53
7.56
12.16
5,975
14,105
7,198
9,427
6,007
8,333
7,542
7,253
3,916
7,039
4,152
14,191
100.00
57-59%
64,036
197,92s
67,0-59
1,149
5,251
715
598
670
1,538
94,841
85,317
98,244
150,204
94,499
51,528
106,081
520
91,707
155,o99
95,146
79,503
12, 513
8,125
1,258,373
357,143
20,698
1,615,521
10.83%
1 , 4 1 9 , 8 7 4 words or 89.03$
174.Q4Q
«
" 1Q.Q7&
TOTAL
1,594,823
100.0C%
(*) These p e r c e n t a g e s used i n c a l c u l a t i n g t h e
p r o r a t a s h a r e of l e a s e d w i r e expenses a s shown
on t h e accompanying s t a t e m e n t (X-3254b).
469
Total
lf%T
Bank B u s i n e s s
Treasury B u s i n e s s
FEDERAL RESERVE BOARD
WASHINGTON, D. C.
NOVEMBER 25, 1921.
War
Finance Corp,
B u s i n es s
174,949
1,419,874
Per cent of Total
Treasury
Dept.
Business
1.28%
»
REPORT. OF EXPENSE
MA I N L I N E
FEDERAL RESERVE L E A S E D W I R E SYSTEM OCTOBER,
Onorators'
Salaries
Name of Bank
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
S t . Louis
Minneapolis
Kansas City
Dallas
San F r a n c i s c o
$
240.00
789.98
225.00
Operators 1
Overtime
$
-
Wire
Rental
$
72.00
-
-
Total
Expense
$
240.00
861.98
-
-
225.00
—
524.00
300.00
-
524.00
-
(*)
50.00
-
350.00
-
240.00
4,606 . 28
300.00
-
300.00
275.00
-
240.00
-
(#) 4,606.28
•M
310.00
170.00
W
395.00
Fed. Res, Board
Total
310.00
-
-
-
15,433.60
$ 8,375.26
$
72.00
275.00
$15,533.bO
170.00
395.00
Pro r a t a
Share of
Total
Expense
$ 1,080.53
3,375.08
1,101.72
1,57^.07
1,432.59
l,559.3b
2,614.47
1,595.37
864.43
1,807.24
1,601.73
2,57,6.33
Credits
$
240.OC
861.98
225.00
524.00
350.00
Payable t o
Federal
Reserve
Board
$
84o. 5 3
2,513.10
876.72
1,048.07
1,088.59
240.00
1.319.36
4 , 6 c 6 . 2 8 (**)1,991.82
300.00
275.00
310.00
170.00
395.00
1.295.37
569.%3
1,497.24
l>31.73
2,161.34
15,483.60
$23,980.86
$21,186.92
2,793,M»)
$21,126.92
(#)
(*)
(&)
(a)
X-3~54b
1321.
$8,497.26
$14,681.48
I,m,g2(4)
$12,689.66
I n c l u d e s S a l a r i e s Washington O p e r a t o r s .
Cut i n a t Washington on Richmond-Baltimore C i r c u i t .
Amount reimbursable t o Chicago.
Received $2,535-69 from Treasury Department and $253.25 from War Finance Corporation covering b u s i n e s s
* t o r months of J u l y and September,, r e s p e c t i v e l y .
(**)Credit.
FEDERAL RESERVE BO/RD
WASHINGTON," D . C .
NOVEMBER 2 5 ,
1921,
GOLD
Smmarv of
Bal an ci l a s t
alanca
statement
Nov. 17, 19a,
]4,997,m,j4
MJfcsalsss.
Total
Federal
Reserve
B#nk of
Sotu
r
124.28
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
1,332,913.76
i
500.88
5,99fti.jflOtPP,
Total
Mm
J&SA
85,397,5^5.15
90,2^,235.13
328,203,487.86
з а , 260,363.58
1^,255,594.11
116,610,198.79
95,960.938.12
37,772,304.46
164,422,869.65
#,275,384.85
96,107, a 4 . 4 2
37,063,058.18
166,537.501.43
85,484,6*6.73
26,115,730.17
•
43,957,232,1%
$1,181,873,860.29
Net
nrX^:
98
20,.393,431.44
m
709.846.28
.
66,538,430.3=
зб,293,r
36,293,832.
49,M,3%,^
m :
Create
$ 5,000,000.00 $ 2,113,092.42
600. (
>00.00
3,027,550.00
8,000,000.00
5,000,000.00
1,727,443.99
600,00
400.00
1,000,600.00
2,500,000.00
6,798,930,99
Balance in
fund at close
of business
Nov. 23, 1921.
7, Vjj, 796»86
•5,084,428.42
60,497,671.92
62,713,314.80
21,277,922,53
6,207,607.47
94,024,206.36
I l , i a , 873,860.29 !* 25,951,347.70
|
r
,70
Summary of changes in ownership of gold by banks through
transfers and settlements.
Decrease
5,943,124.28
2,650,500.88
18,197»71
114,631.78
2.709.241.88
15,580,532.61
28, 520,113,87
2,156,251.01
1425/
2*000,000.00
SSL
1*,996,503* 82
I
1,622,579.61
5,000,000.00
1,000,000.00
2,000,000.00
2,008,228.04
1,380,000.00
6,000,000.00
1,000,000.00
2,003,500.00
1,000,000.00
1
22,676,510.28
67,524,967,09
39,359,814.80
25,951
600.00
400.00
1,000,600.00
2,500,000.00
I R K S
2,114,631,78
2,709,541.88
3,439,ai
$
1.000,000.00
1,380,000.00
T a AN S F E R s
rJEsaslla.
771,766.47
1,352,539.29
787,212.64
518,780.00
898,4*50.00
567,775.17
593,280.00
514,400.00
476,720.00
,777,550,09
2,005,500.00
total
Aggregate
deposits and
t r a n s f e r s from
1,332,913476
800000
,0,0.0
771,766.47
1,352,559.29
787,212.64
518,780,00
898,450.00
567,775.17
593,280.00
514,400.00
476,720.00
,680.00
nts from November 18, 1 9 a to November 23, 1921
inclusive.
146,276.30
Richmond
Total
6,
600.00
3,027,550.00
777,M9,W
Net
2,
796,849.51
Washington, D, C,
November 25. i q a
(CONFIDENTIAL)
Aggregate
withdrawals
and transfers
to Agent's fund
750,849.51
Depoeite
Withdrawal®
Boston
*
1
New York
"5555:8
Philadelphia
Cleveland
m . .
Richmond
15,207,911.47
Atlanta
5,744,585.18
Chicago
93,657,288.14
St. Louie
22,272,920.87
Minneapolis
19,612,632,50
Kansas City
28,970,450.61
Dallas
3,207,180.89
fan
X-3255
f a r period tndlnttNotember g v
Stoderial
Reserve
Bank; of
Boston
New York
Philadelphia
Cleveland
FEDERAL RESERVE BOARD
S E T T L E M E N T FORD
&
Increase
1,961,762.40
21,016,011.05
4,853,723.70
3.439.214.89
9§6,536. 74^
3,074,209.88
F
J I S A &
$ 27,831,497.15
$27,831,497.15 g
' F E D E R A L R E S E R V E AGENTS* FUND
Summary of t r a n s a c t i o n s f o r p e r i o d ending November 2]. 1921.
Gold
Geld
Balance l a s t
Federal
statement
Reserve
Deposits
Withdrawals
Nov. 17, 1921
Agent a t
Boston
$
160, O X, 000 $
C)
Withdrawals
for
transfers
t o bank
X-3255a
Washington, D.C.
November 25 f 1921,
'Balance a t
Total
Total
' c l o s e of
!business
Deposits
Withdrawals
[Nov. 21.1921.
(CONFIDENTIAL)
Deposits
through
transfers
from bank
160,000,000
$
$
171,000,000
New York
171,000,000
Philadelphia
135,389,260
Cleveland
135,000,000
135,000,000
Richmond
31,595,000
31,595,000
Atlanta
37,800,000
Chicago
289,644,500
7,000,000
10,000,000
57,230,600
2,000,000
1,800,000
S t . Louie
Minneapolis
26,360,000
1,500,000
39,300,000
7,000,000
10,000,000
292,644,500
2,000,000
1,800,000
57,030,600
1,500,000
2,200,000
2,200,000
Kansas C i t y
130,389,260
5,000,000
5,000,000
Dallas
2,000,000
4,000,000
2,234,000
San Francisco |
20p,376,OOC
Total
| $1,243,829,36C
2,000,000
$ 16,000,000
I 1,799,500
$ 17,300,000 t $ 1,798, 500
|$
$
1,793,500
17,793,500
4,000,000
&
|$
17,300,000
28,360,000
2,234,000
198,577,590
| $1,243,330,860
H-
00
FEDERAL
RESERVE
BOARD
STATEMENT FOR THE P R E S S
X-3256
For R e l e a s e i n Morning Papers,
Thursday, December 1, 1 9 2 1 .
The f o l l o w i n g 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 c o n d i t i o n s t h r o u g h o u t t h e s e v e r a l Federal
Reserve D i s t r i c t s d u r i n g t h e month of November, a s
contained i n t h e forthcoming i s s u e of t h e Federal
Reserve B u l l e t i n .
Improvement i n b u s i n e s s c o n d i t i o n s i n November h a s not been
a s pronounced a s d u r i n g t h e p r e c e d i n g two months.
Several f a c t o r s
a r e r e s p o n s i b l e f o r t h i s r e l a t i v e "slowing down".
The seasonal
peak of demand h a s , f o r t h e time being, been reached and p a s s e d .
U n c e r t a i n t y r e g a r d i n g p r i c e s of s t a p l e s , p a r t i c u l a r l y of c o t t o n ,
h a s i n t e r f e r e d somewhat w i t h t r a d e buying, w h i l e t h e p o s s i b i l i t y
of f u r t h e r r e d u c t i o n s of f r e i g h t r a t e s h a s a p p a r e n t l y tended t o
u n s e t t l e p r i c e s and t o r e t a r d t h e a c t i v i t y of i n d u s t r y i n some
of t h e chief m a n u f a c t u r i n g s e c t i o n s .
Recovery i n t h e s t e e l and
i r o n t r a d e has come t o a h a l t f o r t h e t i m e b e i n g , and s t a b i l i t y
has not y e t been achieved i n t h a t branch of p r o d u c t i o n .
N e v e r t h e l e s s , t h e p r o g r e s s toward normal c o n d i t i o n s achieved
d u r i n g November has been c o n t i n u o u s , a s may be s e e n by a comparison
w i t h t h e c o r r e s p o n d i n g month of a y e a r ago, or w i t h t h e g e n e r a l
movement of economic c o n d i t i o n s s i n c e t h e b e g i n n i n g of t h i s y e a r .
x-3256
-2-
Cotton and woolen t e x t i l e s i n some of t h e p r i n c i p a l p r o d u c i n g d i s t r i c t s a r e almost on a normal b a s i s .
S t e e l and i r o n , w h i l e working
a t about f i f t y p e r cent 'of c a p a c i t y , a r e i n much b e t t e r c o n d i t i o n
t h a n was t r u e a few months ago*
In soma i n d u s t r i e s which had a c -
cumulated l a r g e s u r p l u s s t o c k s , such a s z i n c , demand h a s been
s u f f i c i e n t t o c a r r y off a p a r t of t h e oversupply#
at l e a s t s l i g h t l y decreased.
Unemployment h a s
Export t r a d e c o n t i n u e s i n s u b s t a n t i a l
volume, showing an i n c r e a s e over October, and w h i l e l a b o r i n g under
many h a n d i c a p s due t o u n s e t t l e d exchanges, shows t h e r e s u l t of s t r o n g
foreign demand,especially f o r s t a p l e s .
This i s p a r t i c u l a r l y n o t e -
worthy when i t i s remembered t h a t t h e p r i c e s a t which c o t t o n and
c e r e a l s a r e now b e i n g shipped a r e so much lower t h a n t h o s e of a
year ago.
Banking c o n d i t i o n s a r e r e p o r t e d s l i g h t l y improved
p r a c t i c a l l y throughout t h e United S t a t e s .
Reduction of p r i c e s f o r c e r e a l s , and f a i l u r e of c o t t o n t o
m a i n t a i n a s high a l e v e l a s had been expected d u r i n g October have
proven a s e r i o u s handicap to farming i n t e r e s t s .
R e s u l t s of t h i s r e l -
a t i v e l y low r e t u r n f o r output have been a r e d u c t i o n i n t h e demand of
f a r m i n g communities i n some p a r t s of t h e country f o r consumable goods
and a simultaneous tendency t o check somewhat t h e p r o c e s s of l i q u i d a t i n g l o a n s a t banks,
Nevertheless, r e t a i l business continues to
improve, t a k i n g t h e country a s a whole, and has been m a t e r i a l l y helped
by t h e improvement which h a s t a k e n p l a c e i n employment c o n d i t i o n s
d u r i n g t h e p a s t few months.
Improvement i s a l s o o b s e r v a b l e i n w h o l e -
s a l e t r a d e , s a l e s comparing f a v o r a b l y w i t h a y e a r ago.
P r i c e s continue
-3-
X-3256
to maintain a s u b s t a n t i a l l y s t a b l e p o s i t i o n ,
Tne F e d e r a l Reserve
Board*s index f o r October shows a r e c e s s i o n of l e s s t h a n two p o i n t s ,
and i t i s e v i d e n t t h a t t h e p r i c e changes which a r e now o c c u r r i n g
do not r e p r e s e n t any e x t e n s i v e movement toward m o d i f i c a t i o n of t h e
average level*
Important f i n a n c i a l developments have t a k e n p l a c e d u r i n g t h e
month.
I n a d d i t i o n t o a general r e d u c t i o n of F e d e r a l Reserve d i s c o u n t
r a t e s , t h e r e h a s been a d i s t i n c t tendency toward d e c l i n e i n t h e l e v e l
of market r a t e s both f o r s h o r t and l o n g t e r m f u n d s .
This h a s been
accompanied by a decided advance i n t h e p r i c e s of bonds, and p a r t i c u l a r l y of s t a n d a r d s e c u r i t i e s *
New o f f e r i n g s of c a p i t a l i s s u e s have,
i n many c a s e s , been r e a d i l y absorbed, and t h e g e n e r a l c o n d i t i o n of
c r e d i t h a s become e a s i e r .
The one p o i n t a t which f i n a n c i a l c o n d i t i o n s
have shown l i t t l e or no improvement i s i n f o r e i g n exchange, where t h e
German mark has continued i t s downward movement w h i l e o t h e r European
c u r r e n c i e s have been g e n e r a l l y u n s e t t l e d w i t h only s p o r a d i c tendency
t o improvement.
The g e n e r a l s i t u a t i o n of t r a d e and i n d u s t r y i s unmistakably more
h o p e f u l , and i s improving a s s t e a d i l y a s can be e x p e c t e d i n view of
t h e slowness of economic p r o g r e s s i n o t h e r p a r t s of t h e world, p a r t i c u l a r l y i n Western Europe.
Another handicap t o complete r e a d j u s t m e n t
c o n t i n u e s t o be t h e f a i l u r e t o b r i n g about a p r o p e r c o - o r d i n a t i o n and
mutual r e l a t i o n s h i p of p r i c e s *
This i s r e s p o n s i b l e f o r no small p a r t
of t h e slowness of economic recovery i n c e r t a i n b r a n c h e s of b u s i n e s s *
On t h e whole, t h e b e s t opinion now l o o k s t o a s t e a d y , even if l o c a l l y
i n t e r r u p t e d , p r o g r e s s back t o normal c o n d i t i o n s , a l t h o u g h no immediate
or sudden expansion
or"boom" i s now i n sight*
-4•AGRICULTURE.
X-J256
The p r e l i m i n a r y e s t i m a t e s f o r t h e crops of 1921,
i s s u e d a s of November 1, i n d i c a t e t h a t t o t a l a g r i c u l t u r a l p r o d u c t i o n
i n 1921 w i l l be much lower t h a n i n 1920, and a l s o c o n s i d e r a b l y l e s s
than t h e average p r o d u c t i o n i n t h e y e a r s 1915 t o 1919-
The e s t i m a t e d
volume of every i m p o r t a n t crop i s s m a l l e r f o r 1921 than t h a t of 1920,
but t h e 1921 p r o d u c t i o n of corn, sugar b e e t s , sweet p o t a t o e s , and
k a f i r s exceeds t h e average p r o d u c t i o n i n t h e p r e c e d i n g f i v e - y e a r
period.
The p r e l i m i n a r y e s t i m a t e f o r corn p r o d u c t i o n i s 3,151,&98,000
b u s h e l s which i s 2 . 5 p e r c e n t l e s s t h a n t h e crop of 1920, but 12.u
p e r c e n t g r e a t e r t h a n t h e average o u t t u r n i n t h e y e a r s 1915 t o 1919Both D i s t r i c t No. 10 (Kansas C i t y ) and D i s t r i c t No. 8 ( S t . Louis)
r e p o r t t h a t corn h u s k i n g has made r a p i d p r o g r e s s and t h a t a c o n s i d e r a b l e
p o r t i o n of t h e crop has been c r i b b e d .
Reports from D i s t r i c t No. 8
( S t . Louis) i n d i c a t e t h a t corn i s w e l l matured and t h e y i e l d f o r
both s i l a g e
and g r a i n i s good.
The stock of old corn on f a r x s i n
tne United S t a t e s was e s t i m a t e d a t 281,4^2,000 b u s h e l s on November 1
which i s over t h r e e t i m e s the average h o l d - o v e r d u r i n g t h e p a s t f i v e
years.
The c o n d i t i o n of t h e white p o t a t o crop continued t o improve
d u r i n g October, but t h e e s t i m a t e d p r o d u c t i o n on November 1 was 1 6 . 9 p e r
cent s m a l l e r t h a n t h e crop of 1920 and 4 . 1 p e r cent l e s s t h a n t h e
average t o t a l
y i e l d i n t h e y e a r s 1915 t o 1919-
D i s t r i c t No. 9
(Minneapolis) s t a t e s t h a t over 60 p e r c e n t of t h e c u r r e n t p o t a t o crop
was shipped from t h e farms by t h e end of October, whereas oiJLy 28 p e r
cent of l a s t y e a r ' s crop was marketed a t t h e c o r r e s p o n d i n g d a t e i n
1920.
R e p o r t s from D i s t r i c t No. 7 (Chicago), on t h e o t h e r nand, i n d i c a t e
t h a t a l a r g e p o r t i o n of t h e Wisconsin p o t a t o crop i s being s t o r e d .
- 5 -
x-3256
The e s t i m a t e d p r o d u c t i o n of sugar b e e t s on November 1, amounted t o
7,480,000 t o n s which was 1 2 . 5 P e r cent l e s s t h a n i n 1920, but 20,3 P e r
cent more than the average p r o d u c t i o n i n the p r e v i o u s f i v e y e a r s .
Reports from D i s t r i c t No. 6 ( A t l a n t a ) i n d i c a t e t h a t t h e L o u i s i a n a
cane sugar y i e l d w i l l amount to about 223,000 tons, a s compared w i t h
a p r o d u c t i o n of 169,127 t o n s i n 1920.
The new w i n t e r wheat crop h a s
made good p r o g r e s s i n most s e c t i o n s , but has s u f f e r e d from a l a c k of
r a i n i n Kansas, Nebraska, Oklahoma, and Colorado,
D i s t r i c t No. 8
( S t . Louis) s t a t e s t h a t w i n t e r wheat i s i n prime c o n d i t i o n t o e n t e r
cold weather, although u n o f f i c i a l r e p o r t s i n d i c a t e t h a t t h e acreage
w i l l be s l i g h t l y l e s s t h a n l a s t y e a r .
The w i n t e r wheat and rye crops
a r e w e l l advanced i n D i s t r i c t No, J (Chicago), and i t i s r e p o r t e d t h a t
a l a r g e r acreage has been sown i n Wisconsin t h a n i n 1920.
COTTON:
Cotton ginned p r i o r t o November 14, amounted t o
7,270,575 b a l e s , a s compared with 8,914,642 b a l e s i n t h e corresponding
p e r i o d of 1920.
This i n d i c a t e s t h a t t h e c o t t o n crop of 1921 w i l l
probably exceed 8,000,000 b a l e s , whereas t h e l a s t Government e s t i m a t e ,
a s of September 25, p r e d i c t e d a crop of 6,537#000 b a l e s .
As a r e s u l t
of t h i s i n c r e a s e i n the known supply of c o t t o n , the p r i c e of spot
c o t t o n a t New York has d e c l i n e d from over 20 c e n t s i n September t o
18.4- c e n t s on November 23, but i s s t i l l about 50 p e r cent h i g h e r t h a n
t h e p r i c e s p r e v a i l i n g i n August.
D i s t r i c t No. 5 (Richmond) s t a t e s
t h a t t h e crop i n t h e s o u t h e r n half of South C a r o l i n a was p r a c t i c a l l y
a f a i l u r e , whereas a f a i r crop was gathered i n the s e c t i o n n o r t h of
Solumbia and i n North C a r o l i n a .
Reports from D i s t r i c t No. 6 (Atlanta,?
i n d i c a t e t h a t c o t t o n c u l t i v a t i o n d u r i n g t h e p a s t season was r e l a t i v e l y
-6-
X-3256
much more s u c c e s s f u l in M i s s i s s i p p i , Alabama, and Tennessee t h a n i n
t h e e a s t e r n s e c t i o n of t h e D i s t r i c t .
Continued dry weather has been
f a v o r a b l e t o t h e h a r v e s t i n g of the c o t t o n crop i n D i s t r i c t No, 11
( D a l l a s ) and very l i t t l e c o t t o n remains t o be picked i n any p a r t of
that District.
TQBACCO,
The November 1 e s t i m a t e f o r tobacco showed an i n c r e a s e
t o 1 , 0 2 0 / 3 7 4 , 0 0 0 pounds, b u t t h e crop i s s t i l l only about t w o - t h i r d s
t h a t of l a s t year, t h e r e d u c t i o n being found v e r y l a r g e l y i n t h e
manufactured and export t y p e s .
The markets of North C a r o l i n a and
V i r g i n i a were a c t i v e during October, but s t i l l l a r g e r s a l e s were
w i t n e s s e d d u r i n g the f i r s t two weeks of November because of b e t t e r
weather f o r t h e p r e p a r a t i o n of l e a f f o r market.
averaging
$30,87
par
100
Better prices,
pounds, were r e a l i z e d d u r i n g October t h a n
d u r i n g e i t h e r September, lg21 o r October, 1$20, and g r a d e s coming on
the market d u r i n g November have shown soms f u r t h e r improvement, so
t h a t s t i l l b e t t e r p r i c e s have been r e a l i z e d .
Medium and f i n e grades
are advancing s t e a d i l y , and buyers appear t o be anxious t o secure
a l l good leaf o f f e r e d , but t h e demand c o n t i n u e s poor f o r low grade
tobacco, which comprises a l a r g e p a r t of t h i s y e a r ' s crop.
In t h e
w e s t e r n d i s t r i c t s of Kentucky-Tennessee, whose tobacco moves t o market
l a t e r t h a n i n t h e e a s t , t h e o u t s t a n d i n g f e a t u r e h a s been t h e announcement t h a t t h e Burley Tobacco Growers Cooperative A s s o c i a t i o n h a s signed
up about 85 p e r cent of t h i s y e a r ' s crop and can now proceed w i t h
marketing arrangements.
The c i g a r l e a f tobacco market i n D i s t r i c t
No. 3 ( P h i l a d e l p h i a ) has had the d u l l e s t f a l l i t h a s experienced f o r
y e a r s , and the q u e s t i o n of p r i c e s i s a stumbling block t o recovery.
—7~
X—3 256
October was t h e b e s t month experienced t h i s y e a r by the c i g a r manuf a c t u r i n g i n d u s t r y i n t h a t D i s t r i c t , but t h e r e a r e now some evidences
of d i m i n i s h i n g demand, although the m a j o r i t y of m a n u f a c t u r e r s c o n t i n u e
t o r e c e i v e o r d e r s f a s t e r t h a n they can f i l l them.
The demand f o r
manufactured tobacco i n D i s t r i c t No. 5 (Richmond) has been a s s t r o n g
d u r i n g October a s d u r i n g any e a r l i e r month t h i s y e a r , although export
t r a d e c o n t i n u e s l i g h t , most of t h e o r d e r s coming from L a t i n America,
In both c i g a r s and manufactured p r o d u c t s , t h e o f f e r i n g of new brands
a t p r i c e s lower t h a n t h o s e f o r e s t a b l i s h e d goods c o n t i n u e s .
FRUIT. The a p p l e crop continued t o d e t e r i o r a t e d u r i n g October
and t h e estimated p r o d u c t i o n i s only 102,290,000 b u s n e l s , which i s
p e r cent l e s s t h a n t h e p r o d u c t i o n i n 1920.
The crop h a s been a f a i l u r e
i n almost a l l s t a t e s e a s t of t h e Rocky Mountains, wnereas apple p r o d u c t i o n
i n s t a t e s west of t h e Rocky Mountains w i l l amount t o about k l , 3 9 2 , 0 0 0
b u s h e l s i n 1921, a s compared w i t h 30,952,000 b u s h e l s i n I92O,
Apples
matured so r a p i d l y i n D i s t r i c t Bo. 12 (San F r a n c i s c o ) t h a t s t o r a g e
f a c i l i t i e s were i n a d e q u a t e , and a temporary g l u t of t n e market ensued.
Total p r o d u c t i o n of c i t r u s f r u i t s i n 1921 w i l l probably be c o n s i d e r a b l y
l a r g e r t h a n i n 1920, d e s p i t e the d e s t r u c t i o n of about 10 p e r c e n t of
t h e F l o r i d a crops by a r e c e n t storm.
D i s t r i c t No. 6 ( A t l a n t a ) r e p o r t s
t h a t more g r a p e f r u i t w i l l be shipped from F l o r i d a t h i s year t h a n l a s t
y e a r , b u t t h e r e may be some diminution i n the shipments of o r a n g e s .
R e p o r t s from D i s t r i c t No. 12 (San F r a n c i s c o ) i n d i c a t e t h a t shipments of
t h e new crop of oranges and lemons from C a l i f o r n i a should be l a r g e r
during t h e crop year ending October 31»
P r i c e s of between $6 and $7 a
box a r e being paid f o r t h e b e t t e r grades of F l o r i d a oranges, w n i l e small
-8-
X-325b
&nd p o o r l y colored f r u i t h a r d l y f e t c h e s a s u f f i c i e n t p r i c e t o c o v e r
f r e i g h t charges.
P r o d u c t i o n of wine and t a b l e g r a p e s in C a l i f o r n i a
only amounted t o about 388,000 t o n s d u r i n g 1921, a s compared w i t h
540,000 t o n s i n 1920, but shipments t o t a l e d 2$,$1$ c a r s up t o November
5, a s compared w i t h 25,309 c a r s i n t h e c o r r e s p o n d i n g p e r i o d of 1920.
The C a l i f o r n i a p r o d u c t i o n of r a i s i n s was a l s o u n u s u a l l y l i g h t d u r i n g
1921, but t h e q u a l i t y i s e x c e p t i o n a l l y good, due t o a f a v o r a b l e d r y i n g
season.
GRAIN MOVEMENTS.
The volume oL g r a i n movements showed some
f u r t h e r c u r t a i l m e n t d u r i n g October, but t o t a l shipments of 1921 c r o p s
from t h e farms have been very heavy.
Wheat r e c e i p t s a t l e a d i n g primary
m a r k e t s i n October were s m a l l e r t h a n i n September, but were s l i g h t l y
l a r g e r t h a n i n October, 1920.
R e c e i p t s of wheat a t Minneapolis and
Duluth amounted t o 27,744,836 b u s h e l s i n October, a s compared w i t h
32,108,426 b u s h e l s i n September and 26,278,983 b u s h e l s i n October, 1920.
In t h e f o u r p r i n c i p a l markets of D i s t r i c t No. 10 (Kansas C i t y )
12,653#800 b u s h e l s of wheat were r e c e i v e d i n October i n comparison w i t h
21,981,400 b u s h e l s i n September and 1 2 , 3 9 4 , 1 5 0 b u s h e l s i n October, 1520.
R e c e i p t s a t t h e s e f o u r markets from J u l y 1 t o October 31 were about
82 p e r cent g r e a t e r t h a n i n the c o r r e s p o n d i n g p e r i o d of 1920, Corn
r e c e i p t s showed a s l i g h t d e c l i n e i n October, b u t were very much l a r g e r
t h a n i n October, 1$20.
D i s t r i c t No. 1 0 (Kansas C i t y ) r e p o r t s t h a t new
corn i s b e g i n n i n g t o move t o t h e markets, but t h a t r e c e i p t s c o n t i n u e
l i g h t due t o t h e low p r i c e a t which i t has been s e l l i n g .
Movement of
o t h e r i m p o r t a n t g r a i n s was a l s o somewhat abated i n October,
Stocks of
gi-a-in a t 11 i n t e r i o r c e n t e r s were, however, f u r t h e r augmented d u r i n g
-9the month-
X-3256
At Minneapolis and Duluth stocks of wheat increased 43
per cent, corn 124 per cent, c a t s 15 per cent, barley 13 p e r cent, and
rye 21 per c e n t .
The most noteworthy change i n volume of g r a i n stocks
at eight seaboard c e n t e r s was an increase of 73 per cent i n the stocks
of corn.
SiQJIE,
Output of m i l l s r e p r e s e n t i n g 75 per cent of t o t a l pro-
Auction i n D i s t r i c t No. 9 (Minneapolis) was 2,969,0o9 b a r r e l s during
October, an increase of 7 per cent as compared with 2, 66,421 b a r r e l s
during September, and an increase cof 23 per cent as compared with
2,427, 749 b a r r e l s during October, 1920.
Production of m i l l s in
D i s t r i c t $0. 10 (Kansas City) r e p r e s e n t i n g 6$ p e r cent of the t o t a l
output of t h a t D i s t r i c t , amounted during October t o 2,295/7*9 b a r r e l s ,
an i n c r e a s e of 53 per cent over the October, 1920 f i g u r e of 1,502,721
barrels.
In D i s t r i c t No, 12 (San Francisco), production of 63 m i l l s
during October was 997/325 b a r r e l s , an i n c r e a s e of 2,6 per cent over
the September f i g u r e of 970,632 b a r r e l s for 64 m i l l s .
Price declines
were reported on a l l grades of f l o u r during October, but a p a r t i a l
recovery was noted during November.
The t r a d e i s s t a t e d t o have been
somewhat depressed by the d e c l i n e i n wheat p r i c e s .
This was evidenced
i n D i s t r i c t No. 10 (Kansas City) by r e p o r t s of curtailment of shipping
i n s t r u c t i o n s on old orders, as well as bytthe slowing down of new
orders.
Business i n D i s t r i c t No. 8 ( S t . Louis) has been i r r e g u l a r
and u n s a t i s f a c t o r y to the s e l l e r .
Domestic demand continues i n f a i r
volume, but i s on a hand t o mouth b a s i s .
Some export business i s r e -
ported in t h e D i s t r i c t , mainly to western Europe, but export demand
i n D i s t r i c t No, 12 (San Francisco) dwindled to small p r o p o r t i o n s in
-10October,
x-325b
M i l l e r s i n t h a t s e c t i o n a r e r e p o r t e d t o be a w a i t i n g
f u r t h e r developments i n t h e wheat market b e f o r e buying s t o c k s of
wheat and expanding o p e r a t i o n s .
LIVE
STOCK.
Heavy movement of l i v e stock t o market was r e -
p o r t e d d u r i n g October*
R e c e i p t s of c a t t l e and c a l v e s a t 15 w e s t e r n
m a r k e t s d u r i n g t h a t month were 1, J12,917 head, c o r r e s p o n d i n g t o a n
index number of 170, a s compared w i t h 1 , 4 1 7 , 2 5 9 head d u r i n g September,
c o r r e s p o n d i n g t o an index number of 141, and 1 , 6 2 1 , 2 9 5 head d u r i n g
October, 1920, corresponding t o a n index number of l 6 l _
Receipts
of hogs i n c r e a s e d from 1,733,827 head d u r i n g September t o 2,057* 231
head d u r i n g October, a s compared w i t h 1 , 7 9 1 , 8 8 1 head d u r i n g October,
1920, t h e r e s p e c t i v e index numbers b e i n g 81, 9^ and 82.
October
r e c e i p t s of sheep were 1 , 5 4 2 , 1 4 3 head, as compared w i t h 1 , 6 5 1 , 6 5 9
head d u r i n g September and 1 , 8 6 4 , 7 2 8 head d u r i n g October, 1920, t h e
r e s p e c t i v e index numbers b e i n g 13$, 121, and 136.
October shipments
of s t o c k e r and f e e d e r c a t t l e and c a l v e s from 34 m a r k e t s were 57 p e r
c e n t l a r g e r t h a n d u r i n g September, a l t h o u g h shipments of sheep and
lambs were s l i g h t l y l e s s , but i n both c a s e s t h e f i g u r e s were very
much l e s s t h a n a y e a r a g o .
Southern c a t t l e have been shipped t o
Montana t h i s f a l l f o r w i n t e r f e e d i n g , due t o the abundance of good
w i n t e r range and t h e l a r g e f o r a g e supply of h i g h q u a l i t y hay.
P r a c t i c a l l y a l l c a t t l e and sheep i n D i s t r i c t No. 11 ( D a l l a s ) have
been d r i v e n t o w i n t e r r a n g e s and g r a z i n g c o n d i t i o n s a r e r e p o r t e d above
normal, although r a i n f a l l i s now needed t o s t a r t growth of w i n t e r and
spring
feed.
The a c t i v i t i e s of t h e War Finance C o r p o r a t i o n i n t h a t
D i s t r i c t have engendered b e t t e r f e e l i n g among c a t t l e m e n .
—3.1. —
X-3250
Twenty-five r e p r e s e n t a t i v e p a c k e r s r e p o r t an i n c r e a s e of
6 % 3 p e r - c e n t i n October s a l e s (measured i n d o l l a r s ) over t h o s e
d u r i n g September, but a d e c l i n e of 2$.6 p e r c e n t a s compared w i t h
October, 1920.
Fresh meats and l a r d f o r domestic t r a d e have been
moving w e l l and t h e r e h a s been an improvement i n t h e demand f o r
cheaper c u t s of beef and pork i n many l o c a l i t i e s *
There was
improvement i n November i n t h e demand from Great B r i t a i n and
t>jie Continent f o r p a c k i n g house p r o d u c t s .
The f r e s h meat t r a d e
was r e p o r t e d g e n e r a l l y slow d u r i n g October i n D i s t r i c t No. 10
(Kansas C i t y ) , and c o n d i t i o n s were more s t a b l e t h a n i n September,
a l t h o g g h r e t a i l e r s bought only f o r t h e immediate r e q u i r e m e n t s of
their trade.
P r o d u c t i o n of bituminous coal i n October was l a r g e r t h a n
d u r i n g any month of t h e c u r r e n t y e a r .
The s t e a d y improvement
e v i d e n t d u r i n g September and October was m a t e r i a l l y a c c e l e r a t e d
d u r i n g t h e l a s t t e n days of October, when, under t h e t h r e a t of t h e
s t r i k e , heavy demands f o r spot d e l i v e r i e s a p p e a r e d .
After the
s t r i k e c a l l was r e s c i n d e d , a c t i v i t y i n t h e market ceased*
Pro-
d u c t i o n i n c r e a s e d from 35,105,000 t o n s i n September t o 43,741,000
t o n s i n October, which was, however, below t h e October, 1920
p r o d u c t i o n of 52,144,000 t o n s .
95, 113, and 14.
The r e s p e c t i v e index numbers a r e
D i s t r i c t No. 3 ( P h i l a d e l p h i a ) r e p o r t s t h a t
a l t h o u g h p r i c e s r o s e somewhat when t h e s t r i k e t h r e a t e n e d , they
-12-
X-3256
have g r a d u a l l y r e a c t e d and a r e now a t t h e l e v e l s p r e v a i l i n g d u r i n g e a r l y
October.
D i s t r i c t No. 7 (Chicago) r e p o r t s t h a t t h e r e d u c t i o n i n th-e p r o -
d u c t i o n of domestic s i z e s has caused a d ecreas e i n t h e amount of s c r e e n i n g s
i n t h e hands of o p e r a t o r s , so t h a t t h e p r i c e i n t h e open market h a s r e mained throughout October a t a l e v e l h i g h e r t h a n d u r i n g September.
Dis-
t r i c t No. 1 0 (Kansas C i t y ) s t a t e s t h a t g e n e r a l l y t h e coal s i t u a t i o n i s
c o n s i d e r e d d u l l , a l t h o u g h t h e October p e r c e n t a g e of l o s s of a c t i v i t y a t
t h e mines on account of "no market" was very m a t e r i a l l y reduced i n Colorado,
M i s s o u r i , and Oklahoma, a s compared w i t h t h e month of September.
The i n c r e a s e d p r o d u c t i o n of a n t h r a c i t e coal d u r i n g October was no
doubt caused by t h e s p e e d i n g up a t t h e time of t h e t h r e a t e n e d r a i l r o a d
strike.
P r o d u c t i o n was lower, however, t h a n i n any month of October f o r
the l a s t eight years.
The output t h i s October was 7> 530,000 t o n s a s com-
pared w i t h t h e September f i g u r e of 7 , 1 2 4 , 0 0 0 t o n s .
numbers a r e 102 and $6.
The r e s p e c t i v e index
Although t h e demand was s t i m u l a t e d t e m p o r a r i l y
consumers a r e now w i l l i n g t o purchase only i n small l o t s .
D i s t r i c t No. 3
( P h i l a d e l p h i a ) r e p o r t s t h a t t h e demand f o r steam coal i s g r e a t e r than i t
was i n t h e summer, but o r d e r s a r e small and due t o t h e i n s t a l l a t i o n of o i l
h e a t i n g p l a n t s i n many h o t e l s and o f f i c e b u i l d i n g s , t h e market may be p e r manently narrowed.
The improvement i n t h e i r o n and s t e e l i n d u s t r y i n September and
October continued t o be r e f l e c t e d i n an i n c r e a s e d p r o d u c t i o n of coke. Beeh i v e coke p r o d u c t i o n i n c r e a s e d from 289,000 t o n s i n September, c o r r e s p o n d i n g
t o an index number of 11, t o 4 l 6 , 0 0 0 t o n s i n October, c o r r e s p o n d i n g t o an
index number of 16.
By-product coke p r o d u c t i o n i n c r e a s e d s i m i l a r l y from
1,423, 000 t o n s i n September t o 1 , 7 3 4 , 0 0 0 t o n s i n October, t h e r e s p e c t i v e
in*ax numbers b e i n g l 6 l and 197.
- 13 p
£TROTJSUM:
x-3256
During October t h e r e was a f u r t h e r n a r r o w i n g of t h e s l i g h t
margin between d o m e s t i c p r o d u c t i o n of crude o i l and i t s consumption. Beports
f o r the several important o i l f i e l d s i n d i c a t e t h a t output i s s t i l l c u r t a i l e d .
I t i s r e p o r t e d t h a t t h e demand f o r and p r i c e of g a s o l i n e weakened c o n s i d e r a b l y , due m o s t l y t o t h e "bad weather p r e v a i l i n g i n t h e norbh and north-vest
and t h e normal f a l l i n g o f f of consumption a t t h i s time of t h e y e a r .
The
p r i c e of c r u d e p e t r o l e u m advanced i n p r a c t i c a l l y a l l f i e l d s .
D i s t r i c t No. 10 (Kansas C i t y ) r e p o r t s t h a t October development o p e r a t i o n s show a s l i g h t d e c r e a s e i n t h e number of w e l l s completed and a l s o i n
t h e number of b a r r e l s d a i l y new p r o d u c t i o n a s c o i r p a r s i w i t h September, while
d r i l l i n g o p e r a t i o n s d u r i n g October show a g a i n of
36 new r i g s a s compared
w i t h September, b u t were 35 p e r c e n t l e s s than a y e a r a g o .
Stock of crude
o i l h e l d i n Kansas and Oklahoma a g g r e g a t e d 6 5 , 9 3 6 , l 4 s b a r r e l s a t the end
of September, an i n c r e a s e of 1 , 0 9 7 , 6 4 3 b a r r e l s d u r i n g t h e month.
P r o d u c t i o n of p e t r o l e u m i n Kansas and Oklahoma d u r i n g the month of October '
averaged a p p r o x i m a t e l y UoU,125 b a r r e l s d a i l y , a c c o r d i n g t o u n o f f i c i a l
reports.
As compared w i t h a y e a r ago t h i s i n d i c a t e s a r e d u c t i o n of 7,750
b a r r e l s i n average d a i l y p r o d u c t i o n and a t o t a l d e c r e a s e of 240,250 b a r r e l s
f o r t h e month.
P r o d u c t i o n of c r u d e p e t r o l e u m i n D i s t r i c t No. 11 ( D a l l a s ) c o n t i n u e d t o
decrease.
Hie t o t a l o u t p u t d u r i n g October was 9 , 9 ^ 1 , 7 4 8 b a r r e l s which
r e p r e s e n t e d a 20,282 b a r r e l d e c r e a s e from September p r o d u c t i o n -
New
c o m p l e t i o n s i n t h i s D i s t r i c t numbered 192 w e l l s , o n l y Q2 of which were
p r o d u c e r s , a s compared w i t h l l 6 p r o d u c e r s out of 171 c o m p l e t i o n s f o r
September.
Due t o t h e r i s e i n p r i c e s t h e r e h a s been a r e s u m p t i o n of d r i l l -
ing in t h i s section.
A f t e r n e a r l y two months of d i s p u t e over wage a i , i u s t -
ments and working r u l e s i n the C a l i f o r n i a f i e l d s , a s e t t l e m e n t h a s b e e n
— 14
1
o b t a i n e d and work h a s been resumed on a l l l e a s e s .
y-3256
On account of the s t r i k e
the low f i g u r e of 227,957 b a r r e l s of average d a i l y p r o d u c t i o n was r e p o r t e d *
Although consumption d u r i n g October decreased i t was s t i l l c o n s i d e r a b l y
i n e x c e s s of o u t p u t , and s t o r e d s t o c k s were f u r t h e r reduced by 555,039
b a r r e l s , only 33,116,456 b a r r e l s b e i n g h e l d a t the end of October,
Thirty-
two new w e l l s , w i t h an i n i t i a l d a i l y p r o d u c t i o n of 14,825 b a r r e l s , were
completed d u r i n g the month*
IBON AND STffBL;
During October d i s t i n c t improvement was e v i d e n t i n
the i r o n and s t e e l i n d u s t r y *
P i g i r o n p r o d u c t i o n d u r i n g t h a t month amour)ted
to 1,233,232 t o n s , c o r r e s p o n d i n g to an index number of 53> as compared wi t h
9^5>529 t o n s d u r i n g September, c o r r e s p o n d i n g to an index number of 43+ S t e e l
i n g o t p r o d u c t i o n showed a somewhat g r e a t e r i n c r e a s e , from 1*174,740 cons
d u r i n g September t o 1,616,810 t o n s d u r i n g October, the r e s p e c t i v e index
numbers b e i n g 51 and 70*
On November 1, 95 f u r n a c e s were i n b l a s t , as
compared w i t h 84 on October ! •
The u n f i l l e d o r d e r s of the United S t a t e s
S t e e l C o r p o r a t i o n , however, n o t o n l y f a i l e d t o respond, b u t a c t u a l l y showed
a d e c r e a s e , from 4,560,670 tons a t t h e c l o s e of September to 4,286,829 t o n s
a t the c l o s e of October, the r e s p e c t i v e index numbers b e i n g 87 and 81, the
lowest s i n c e May 31 > 1919»
November doe£ n o t show a c o n t i n u a n c e of t h e
improvement d u r i n g the p r e v i o u s month, b u t i n d i c a t e s t h a t c o n d i t i o n s a t
b e s t a r e merely h o l d i n g t h e i r own.
In f a c t , D i s t r i c t No. 3 ("Philadelphia)
r e p o r t s "a d i s t i n c t , though s l i g h t , r e a c t i o n from t h e s t e a d i l y i n c r e a s i n g
a c t i v i t y t h a t o c c u r r e d d u r i n g September and O c t o b e r P r i c e s r e f l e c t the
s l a c k e n i n g of demand•
A f t e r a s p i r i t e d advance d u r i n g September and October,
t h e y have again weakened cn p r a c t i c a l l y a l l p r o d u c t s .
The advance of $5*00
on s h e e t s which was made some time ago has been l o s t , and the lower f i g u r e
i t s e l f h a s been shaded.
Lessening of demand h a s been most conspicuous in
the l i g h t e r p r o d u c t s , such a s s h e e t s and w i r e , which c o n t r i b u t e d g r e a t l y
- 15 -
X-3256
t o the r e c e n t i n c r e a s e i n s t e e l p r o d u c t i o n .
The h e a v i e r p r o d u c t s which
have "been l a g g i n g up t o t h i s time a r e r e p o r t e d from D i s t r i c t No. 4 (Cleveland)
t o be making a b e t t e r showing under demands o r i g i n a t i n g w i t h some i n c r e a s e
of g e n e r a l b u s i n e s s c o n s t r u c t i o n , o i l f i e l d work and r a i l r o a d b u y i n g , both
f o r c a r r e p a i r s and r a i l s .
In D i s t r i c t No. 3 ( P h i l a d e l p h i a ) o u t p u t a t
p r e s e n t i s somewhat i n excess of c u r r e n t d e l i v e r i e s .
The p o l i c y of p u r -
c h a s e r s i s t o c a r r y a s l i t t l e m a t e r i a l as p o s s i b l e i n t o t h e new y e a r , as
lower f r e i g h t r a t e s and p r o d u c t i o n c o s t s would n e c e s s i t a t e w r i t i n g o f f
inventories.
Matty i n q u i r i e s f o r 1922 d e l i v e r y a r e however b e i n g r e c e i v e d .
AUTOMOBILES: Some of the l a r g e r m a n u f a c t u r e r s of automobiles i n D i s t r i c t
No. 7 (Chicago) f u r t h e r c u r t a i l e d p r o d u c t i o n d u r i n g the l a t t e r p a r t of
October, when t h e y d i s c o v e r e d c a r s p i l i n g up i n t h e hands of d i s t r i b u t o r s
and d e a l e r s , pending the p r e s e n t a t i o n of new models.
In f a c t , reduction
of p r o d u c t i o n schedules to conform to approaching w i n t e r c o n d i t i o n s , w i t h
t h e i r l e s s e n e d s a l e s , h a s been g e n e r a l .
M a n u f a c t u r e r s ' iiipments d u r i n g
October were 17,323 c a r l o a d s , a s compared w i t h 19,002 c a r l o a d s d u r i n g
September, b u t were s l i g h t l y i n excess of t h e O c t o b e r , 1920 f i g u r e .
October d r i v e away s were 11,257 machines, a s compared w i t h 13.840 machines
d u r i n g September.
B usiness i n t r u c k s d u r i n g the p a s t few months has n o t
been r e l a t i v e l y a s l a r g e as in p a s s e n g e r c a r s ,
NONFEPFOUS METALS:
The n o n f e r r o u s metal markets a r e g e n e r a l l y q u i e t ,
w i t h no unusual demand expected f o r t h e remainder of t h e y e a r .
The October
average p r i c e s show uniform advances over t h e f i g u r e s f o r September, and
l e a d , z i n c and t i n averages were the h i g h e s t s i n c e May or June*
The p r i c e
of copper (New York, n e t r e f i n e r y ) was 13 c e n t s p e r pound on November l 6 , a s
conpared w i t h 12-75 c e n t s p e r pound on November 1, w h i l e the p r i c e of l e a d
a t New York remained a t 4 . 6 5 c e n t s throughout t h e l a t t e r p a r t of October to
the middle of
November.
The demand f o r zinc h a s shown l i t t l e improvement
-
16
x
-
and the p r i c e of 4 . 7 0 c e n t s a t S t . Louis h a s been
month.
"
3 2 5 6
m a i n t a i n e d d u r i n g the
Copper p r o d u c t i o n i n October amounted t o 2'1>157>75^ pounds i n
comparison w i t h a p r o d u c t i o n of 20,926,55**
pounds i n September, October
p r o d u c t i o n of copper i n D i s t r i c t No. 9 (Minneapolis) a s i n d i c a t e d by the
f i g u r e s of companies p r o d u c i n g about 75 P® r c e n t of t h e r e f i n e d copper i n
t h a t D i s t r i c t remained a t the same low l e v e l which h a s p r e v a i l e d s i n c e the
s p r i n g of 1921,
Zinc p r o d u c t i o n d u r i n g October remained a t almost the same
f i g u r e a s f o r September,
Shipments of zinc f o r October were 10,311 tons
more than the amount produced, so t h a t s t o c k s on hand were reduced from
81,135 tons a t the b e g i n n i n g of the month to 70,824 tons on October 31«
D i s t r i c t No, 10 (Kansas C i t y ) r e p o r t s t h a t t h e r e was heavy shipment of zinc
o r e s d u r i n g October, due in some measure t o a r a d i c a l i n c r e a s e i n t h e value
of the o r e ,
A comparison of s t a t i s t i c s f o r 1921 t o t h e end of October with
the same p e r i o d i n 1920 r e v e a l s t h a t shipments of z i n c o r e s have been about
o n e - h a l f i n amount and l e s s than o n e - t h i r d i n v a l u e , w h i l e l e a d ore s h i p ments have d e c r e a s e d a p p r o x i m a t e l y o n e - t h i r d i n amount and t w o - t h i r d s i n
talus.
D i s t r i c t No. 12 (San F r a n c i s c o ) s t a t e s t h a t no f u r t h e r improvement
i n the gold and s i l v e r mining i n d u s t r i e s was r e p o r t e d d u r i n g October and
the copper mining i n d u s t r y c o n t i n u e s g r e a t l y d e p r e s s e d .
The l e a d mines of
Utah and Idaho, which produce approximately 50 p e r c e n t of t h e United S t a t e s
p r o d u c t i o n of l e a d , a r e o p e r a t i n g a t f u l l c a p a c i t y .
In t h i s D i s t r i c t the
demand f o r l e a d i s s t r o n g , consumption o u t r u n n i n g p r o d u c t i o n .
C T O TEXTILES; The u n s e t t l i n g e f f e c t of a d r o p i n t h e p r i c e of raw
OT N
c o t t o n f o l l o w i n g upon the i n i t i a t i o n of new p r i c e a d j u s t m e n t s growing out
of t h e p r e v i o u s advance has r e s u l t e d i n a s l i g h t l y l e s s e n e d a c t i v i t y in the
i n d u s t r y d u r i n g October.
in a
h e s i t a n c y
The u n c e r t a i n t y m a n i f e s t e d i t s e l f , however, r a t h e r
on the p a r t of buyers t o p l a c e new o r d e r s t h a n i n any
- i? immediate c u r t a i l m e n t of m i l l a c t i v i t y .
X-3255
An e x a m i n a t i o n of c o t t o n s t a t i s t i c s
makes i t a p p a r e n t t h a t m i l l a c t i v i t y was s u s t a i n e d d u r i n g the month a s
consumption amounted t o 434,745 b a l e s i n October, an
advance of
almost 25 p e r c e n t over the October f i g u r e s of the p r e c e d i n g y e a r ,
In
New England, consumption was s t a t e d t o be l a r g e r i n October than a t any
time d u r i n g t h e
past year.
At p r e s e n t m i l l s i n t h a t s e c t i o n a r e o p e r a t i n g
a t about 80 p e r c e n t of c a p a c i t y , w h i l e i n D i s t r i c t No. 3 ( E h i l a d e l p h i a )
the goods m i l l s shew a l e s s e r degree of a c t i v i t y , e s t i m a t e d a t from 60 to
65 p e r c e n t .
Orders i n most c a s e s a r e s a i d t o be no more t h a n s u f f i c i e n t
t o cover s i x w e e k ' s o p e r a t i o n s on the p r e s e n t r u n n i n g b a s i s in the c a s e of
the m i l l s i n the P h i l a d e l p h i a D i s t r i c t .
But s p r i n g b u s i n e s s in ginghams
and f a n c y f a b r i c s o f f e r s a c o n t r a s t t o the g e n e r a l market and i s r e p o r t e d
t o be e x c e l l e n t .
Yarn p r i c e s have f a l l e n somewhat s i n c e weavers and
very
k n i t t e r s covered t h e i r r e q u i r e m e n t s / l a r g e l y i n September and few new o r d e r s
a r e b e i n g p l a c e d a t the p r e s e n t time.
The yarn m i l l s i n D i s t r i c t No. 3
( P h i l a d e l p h i a ) showed a s l i g h t r e d u c t i o n i n a c t i v i t y , o p e r a t i n g a t about
65 p e r c e n t of c a p a c i t y .
As o r d e r s booked w i l l be f i l l e d w i t h i n the n e x t
s i x weeks , r e d u c t i o n i n the s c a l e of o p e r a t i o n s i s b e i n g contemplated by
manufacturers.
A c t i v i t y i n the southern m i l l s c o n t i n u e s t o be g r e a t e r than i n o t h e r
s e c t i o n s of the c o u n t r y .
In D i s t r i c t No. 6 ( A t l a n t a ) m i l l s g e n e r a l l y
throughout the D i s t r i c t are o p e r a t i n g on f u l l time and some a r e running
night s h i f t s .
Cloth p r o d u c t i o n of 48 m i l l s r e p o r t i n g t o t h e F e d e r a l Reserve
Bank of A t l a n t a showed an i n c r e a s e of 3 - 5 P e r c e n t i n yardage i n October
a s compared w i t h September and of 1 7 . 4 p e r c e n t as compared w i t h Octooer,
1920.
C l o t h shipments i n c r e a s e d 7-5 p e r c e n t f o r t h e month and 73-2 P fcr
c e n t over those f o r a y e a r ago.
Orders en hand a t t h e end of the month
- ig .
X-3256
had d e c l i n e d 5*2 p e r c e n t "but were 2 8 . 4 p e r c e n t above t h o s e f o r t h e end
of O c t o b e r , 1920.
A m a j o r i t y of y a r n a s w e l l a s c l o t h m i l l s a r e o p e r a t i n g
a t f u l l c a p a c i t y or even running overtime, a l t h o u g h r e p o r t i n g e s t a b l i s h ments s a i d t h a t a c e s s a t i o n of o r d e r s had f o l l o w e d the r e c e n t d r o p i n
cotton prices.
Yam;~production i n pounds f o r
m i l l s was 1 . 6 p e r c e n t l e s s
in October than i n September, b u t 33-6 p e r c e n t a>ove the o u t p u t d u r i n g
October, 1920.
Y&m shipments advanced 12.9 p e r c e n t and 6 2 . 1 p e r c e n t
r e s p e c t i v e l y a s compared with t h e p r e c e d i n g month and w i t h t h e same month
a y e a r ago.
O r d e r s on hand were $ . 4 p e r c e n t above t h o s e f o r t h e end of
of September and 85*8 p e r c e n t above t h e t o t a l s f o r t h e end of October,1920.
COTTON FINISHING:
Reports from 35 of t h e 58 members b e l o n g i n g t o
t h e N a t i o n a l A s s o c i a t i o n of F i n i s h e r s of Cotton F a b r i c s show t h a t d u r i n g
t h e month of October t h e r e was an i n c r e a s e i n f i n i s h e d y a r d s b i l l e d , the
t o t a l amounting t o 1 0 5 , 2 g 6 , 4 l 4 a s compared, w i t h 101,824,795 f o r September.
However, a drop i n f i n i s h i n g o r d e r s r e c e i v e d d u r i n g t h e month was r e c o r d e d ,
t h e f i g u r e f o r October b e i n g 100,909,9^5
the p r e c e d i n g month.
a s
compared w i t h 107,336,42? f o r
The p e r c e n t a g e of average c a p a c i t y i n o p e r a t i o n rose
s l i g i t l y from 73 t o 77 f o r a l l D i s t r i c t s .
The a v e r a g e work ahead a t t h e end
of t h e month f e l l from 11 t o 10 days.
WQQLEN TEXTILES:
The s t r i k e of t h e New York garment workers came a t
the end of t h e p e r i o d covered by t h e r e p o r t s and i t s e f f e c t upon t h e
a c t i v i t y of t h e m i l l s m a n u f a c t u r i n g d r e s s goods could n o t t h e r e f o r e be gauged.
I n New England the woolen and worsted i n d u s t r y h a s been r u n n i n g on a normal
b a s i s i n s p i t e of the f a c t t h a t t h e goods market a t t h e p r e s e n t time i s d u l l .
In D i s t r i c t No, 3 ( P h i l a d e l p h i a ) d r e s s goods m i l l s have been o p e r a t i n g a t
about 80 p e r c e n t of c a p a c i t y .
The m a n u f a c t u r e r s of k n i t t i n g y a r n s i n
»
X-3256
— 1^ —
D i s t r i c t No. 3 ( P h i l a d e l p h i a ) continue to do a good b u s i n e s s and many of
them have o r d e r s s u f f i c i e n t t o enfeb.le them t o run a t f u l l c a p a c i t y w e l l
i n t o 1922*
In D i s t r i c t No. 4 ( C l e v e l a n d ) r e p o r t i n g t e x t i l e m i l l s have
n o t had a s good b u s i n e s s i n October a s i n September.
I n the f o r m e r month
they were o p e r a t i n g n e a r c a p a c i t y b u t s i n c e then o r d e r s have f a l l e n off and
in
October o p e r a t i o n s averaged only about 70 p e r c e n t of normal,
The
Census f i g u r e showing the p e r c e n t a g e of i d l e machine h o u r s t o t h e t o t a l hours
r e p o r t e d i n d i c a t e d a s l i g h t improvement f o r t h e month of October a s compared
w i t h September,
On November 1, f o r example, the p e r c e n t a g e of i d l e h o u r s
f o r looms wider than 50" reed space had dropped to 24-9 p e r c e n t a s compared
w i t h 25.8 p e r cent f o r October 1.
The c o r r e s p o n d i n g f i g u r e s f o r looms f o r
50" r e e d space or l e s s were 27.0 p e r c e n t and 27-5 P e r c e n t r e s p e c t i v e l y .
The p e r c e n t a g e of i d l e hours i n the c a s e of woolen s p i n d l e s dropped from
20.9 P e r c e n t to
18.3 p e r c e n t and t h e f i g u r e f o r w o r s t e d s p i n d l e s showed a
s l i g h t i n c r e a s e from 7 - 8 p e r c e n t t o 8 . 1 p e r c e n t .
wool showed an upward t e n d e n c y w i t h a s l i g h t
during the p e r i o d covered by the report.
The market f o r raw
i n c r e a s e i n volume o f s a l e s
D i s t r i c t No. 1 ( B o s t o n )
says
t h a t " D e a l e r s r e p o r t t h a t t h e r e h a s b e e n an a p p r e c i a b l e r e d u c t i o n i n the
s t o c k s o f the more p o p u l a r w o o l s and t h a t i t i s sometimes d i f f i c u l t t o buy
l a r g e q u a n t i t i e s of t h e k i n d s d e s i r e d w i t h o u t c a u s i n g t h e p r i c e s t o advance. ™
CLOTHING-:
Ladies'
The s t r i k e of a p p r o x i m a t e l y 5 0 , 0 0 0 members o f t h e I n t e r n a t i o n a l
Garment Workers' Hhiton which b e g a n November ity-, h a s w h o l l y t i e d up
some o f t h e l a r g e r women's a p p a r e l f a c t o r i e s of New York a l t h o u g h numbers
of t h e s m a l l e r m a n u f a c t u r e r s have s i g n e d c o n t r a c t s w i t h t h e u n i o n and are
beginning to operate again.
The s t r i k e o c c u r s b e t w e e n s e a s o n s and a speedy
-20-
x-3256
s e t t l e m e n t would, mean t h a t output would c o n s e q u e n t l y be only s l i g h t l y
a f f e c t e d so f a r as l o s s of t i m e i s concerned.
S t a t i s t i c s of p r o d u c t i o n f o r
men's c l o t h i n g from D i s t r i c t Bo. 7 (Chicago) and w n o l e s a l e s a l e s of both
men's and women's c l o t h i n g i n D i s t r i c t s Bo. 2 (Bew York) and Bo. 8 ( S t . L o u i s )
i n d i c a t e t h a t c o n d i t i o n s i n t h e i n d u s t r y were f a v o r a b l e d u r i n g October. In
D i s t r i c t Bo. 7 (Chicago) r e t u r n s from s i x l a r g e m a n u f a c t u r e r s of men's
c l o t h i n g showed t h a t p r o d u c t i o n and shipments had f a l l e n o f f l b , 4 per cent
and 38*5 p e r cent r e s p e c t i v e l y a s compared w i t h September but as a r e s u l t
of t h e v e r y l a t e season, t h e p r o d u c t i o n f i g u r e s were 45-5 p e r cent ahead of
t h o s e f o r l a s t y e a r and shipments were 30-2 p e r cent i n e x c e s s .
Orders
p l a c e d f o r s p r i n g from t h e opening of the season t o d a t e were 4 l . g per cent
g r e a t e r t h a n f o r t h e corresponding p e r i o d i n 1$20.
In t h e case of 1 )
t a i l o r s - t o - t h e - t r a d e , t h e number of s u i t s made i n October a s compared w i t h
September i n c r e a s e d 29 p e r c e n t , but t o t a l s were 1 . 7 p e r cent below t h o s e
f o r October, 1$20.
Shipments rose 2 6 . 5 p e r cent a s compared w i t h September,
but were 7-9 p e r cent below l a s t y e a r .
Orders were 27.4 p e r cent g r e a t e r i n
October t h a n i n September and . 8 of 1 p e r cent below t h o s e f o r October,
1920.
The f i g u r e s f o r t h e f i v e l a r g e cut-trim-make concerns show t h e
same t r e n d but " t h e improvement h e r e i s l e s s marked t h a n i t i s i n t h e o t h e r
branches of t h e c l o t h i n g i n d u s t r y " .
The f i g u r e s a r e a s f e l l o w s : f o r number
of s u i t s o r d e r e d , an i n c r e a s e of l b . 3 p e r c e n t a s compared w i t h September
and a d e c r e a s e of 1 0 . 5 p e r cent a s compared w i t h October, 1920; f o r number
of s u i t s made, an i n c r e a s e of 1 9 . 7 p e r c e n t a s compared w i t h September and
a d e c r e a s e of 7*9 P d r cent a s compared w i t h October, 1920; f o r number of
s u i t s shipped, an i n c r e a s e of 1 6 . 8 p e r c e n t a s compared w i t h September and a
d e c r e a s e of 8 . 5 p e r cent a s compared w i t h October, 1920.
S a l e s of 11
- 2i -
•
x-3?5o
r e p o r t i n g wholesale c l o t h i n g f i r m i n D i s t r i c t No. 2 (New f o r k ) showed an
advance of 44.3 PGi~ c e n t i n October am compared w i t h September ana of 5*3
p e r c e n t a s compared w i t h October of t h e p r e c e d i n g y e a r .
In D i s t r i c t No. 8
( S t . Lords) s a l e s of 2J l e a d i n g c l o t h i n g f i r m s were f r o m 4 to 12. £ p e r c e n t
g r e a t e r than i n September and from "( to 3.6 p e r c e n t above s a l e s f o r a year
ago.
I t was
early part
s e a t e d , however, t h a t buying i n t h a t D i s t r i c t ' w a s dull i n the
of November.
SILK: Peports from the different sections in which silk mills are
located
t e s t i f i e d to a surprising degree of unevenness withine the industry.
In Paters on, N. J., as in previous months, operations remained at low ebb.
The percentage of active loom hours to total available was only IS.5 per cent
as compared with 24 per cent on October 8.
In North Hudson, the correspond-
ing figure for November was 50.8 per cent, which contrasts unfavorably with
the October figure of somewhat more than 62 per cent.
Returns made by l6
manufacturers of broad silk located in District No. 3 (Philadelphia) are of
a conflicting nature, although decidedly greater activity i s indicated
than that prevailing in the centers just mentioned.
Half of the manufacturers
state that business is poor and demand decreasing, while the others assert
that the reverse is true.
The former group are averaging about 5 P s r cent
&
of operating capacity; the latter, 6? per cent.
Prices of raw silk have
advanced, creating a considerable amount of indecision among prospective
buyers.
Imports f e l l from 4,597*642 pounds in September to 3,1^0,516 pounds
in October.
R3SIEBY:
M a n u f a c t u r e r s of s i l k h o s i e r y i n D i s t r i c t No. 3 ( P h i l a d e l p h i a )
c o n t i n u e d t o do an e x c e l l e n t b u s i n e s s and p r a c t i c a l l y a l l t h e m i l l s a r e sold
ahead f o r two o r t h r e e months.
There i s a demand f o r n o v e l t y l i n e s f o r the
h o l i d a y t r a d e b u t fewer i n q u i r i e s f o r m e r c e r i z e d h o s i e r y have been made
*
x-3256
-
m
f o l l o w i n g p r i c e advances.
22 -
Twenty-five f i r m s i n D i s t r i c t No. 3 ( P h i l a d e l p h i a ;
which s e l l t o the w h o l e s a l e t r a d e showed an i n c r e a s e i n r.urnber of p a i r s of
h o s e m anuf actured d u r i n g October of l 6 . 8 p e r c e n t as compared wi t h September,
Shipments d u r i n g the month i n c r e a s e d l U , 7 p e r c e n t and u n f i l l e d o r d e r s a t
the end of the menth were 27*1 p e r cc-nb above t h o s e on hand a t the end of
September*
The n i n e r e p o r t i n g f i r m s which s e l l to the r e t a i l t r a d e produced
4 p e r c e n t l e s s i n October than during the p r e c e d i n g month and shipments
and u n f i l l e d o r d e r s a l s o f e l l o f f by 1 2 . 1 p e r c e n t and 2.8 p a r c e n t r e s p e c t
tively*
There h a s been f u r t h e r improvement in the manufacture of c o t t o n
h o s i e r y i n D i s t r i c t No„ 6 ( A t l a n t a ) where r e p o r t i n g m i l l s a r e o p e r a t i n g
a t the r a t e of 80 to 100 p e r c e n t of c a p a c i t y .
i s l a r g e r than f o r the same p e i i o d in 1$20»
The o u t p u t of t h e s e m i l l s
There h a s been a d e c r e a s e in
s t o c k s on hand and an i n c r e a s e of u n f i l l e d orders*
UNDEBWE^B:
The comparative r e p o r t s r e c e i v e d from
m i l l s engaged in
p r o d u c i n g underwear c o n t i n u e to show marked improvement f o r October a s
compared w i t h the September r e t u r n s f o r the same m i l l s -
Production rose
from 445,825 dozens i n September to 487,99^ dozens i n October, a gain of
9*5 p e r cent»
U n f i l l e d o r d e r s r o s e from 809-996 dozens September 1 to
1»171,960 dozens October 1, a gain of 44*7 p e r c e n t .
New o r d e r s f e l l o f f
from 865,492 dozens r e c e i v e d d u r i n g September to 537,928 dozens f o r October,
a l o s s of 37*8 p e r c e n t .
Shipments d e c r e a s e d from 497*854 dozens
in
September to 477,810 dozens in October, a l o s s of 4*0 p e r c e n t .
Fortjjr-one m i l l s showing an a c t u a l p r o d u c t i o n of 513,264 dozens f o r the
month of October r e p o r t u n f i l l e d o r d e r s on hand of 1,284,718 dozens on
November 1 , or n e a r l y two months actuWb
p r o d u c t ' s o l d , the amount of u n f i l l e d
o r d e r s h a v i n g r i s e n from 1*191,688 dozens on October 1 , a gain of 7-8 p e r c e n t .
- 23 -
X-J256
Shipments r o s e from Ul8,258 dozens i n September to 503*2 6l dozens i n October,
The a c t u a l p r o d u c t i o n of 56 m i l l s r e p o r t i n g f o r October amounted to 675,205
dozens of 87*3 p e r c e n t of normal, as compared w i t h 84*4 p e r c e n t of normal
p r o d u c t i o n f o r the 55 m z l l s t h a t r e p o r t e d i n t h e p r e c e d i n g month, and 50-^
p e r c e n t f o r t h e 6 l m i l l s t h a t r e p o r t e d in October, 1320,
up i n October, l e a v i n g f o u r m i l l s s t i l l c l o s e d .
One m i l l opened
P r o d u c t i o n c o n t i n u e s to
i n c r e a s e slowly d e s p i t e the h i g h e r p r i c e s due t o advances i n c o t t o n , and the
f a c t t h a t t h e r e h a s been l i t t l e o r no r e d u c t i o n i n l a b o r costs*
SHOES AND LEATHER:
Sales of h i d e s and s k i n s d e c l i n e d somewhat d u r i n g
October, although p r i c e s were w e l l m a i n t a i n e d .
The market f o r p a c k e r h i d e s
became v e r y a c t i v e i n the t h i r d week of November, and p r i c e s r e g i s t e r e d a
s l i g h t advance *
This a c t i v i t y h a s n o t as y e t been r e f l e c t e d in the market
f o r country hides*
Demand f o r heavy l e a t h e r c o n t i n u e d to improve d u r i n g the
f i r s t t h r e e weeks of November, and q u o t a t i o n s f o r heavy backs i n c r e a s e d a t
b o t h New York and Chicago,
D i s t r i c t No, 3 ( P h i l a d e l p h i a ) r e p o r t s t h a t the
upper l e a t h e r market i s more a c t i v e than i t h a s been, the b u s i n e s s b e i n g
c h i e f l y i n medium and lower grades.
Exports a r e s t e a d i l y i n c r e a s i n g , due t o
i n c r e a s e d p u r c h a s e s by Great B r i t a i n , Spain and Japan#
A s l i g h t improvement
i n demand f o r l e a t h e r b e l t i n g i s r e p o r t e d from b o t h D i s t r i c t No. 3 ( P h i l a d e l p h i a ) and D i s t r i c t No. 7 (Chicago),
Shoe m a n u f a c t u r i n g continued on a l a r g e s c a l e d u r i n g October, a l t h o u g h
a c t i v i t y s t i l l appears to be more g e n e r a l i n the West than i n the East*
October p r o d u c t i o n was g r e a t l y i n excess of October, 1920, b u t t h a t was a
month of extreme d e p r e s s i o n iji the shoe i n d u s t r y .
The output of shoes d u r i n g
October r e p o r t e d by n i n e l a r g e m a n u f a c t u r e r s i n D i s t r i c t No, 1 (Boston) was
5*7 p e r c e n t l e s s than i n September, b u t SO p e r c e n t g r e a t e r than in
October, 1920.
New o r d e r s were about 15 p e r cent i n e x c e s s of these
received in
September, and 13 p e r c e n t l a r g e r than i n October, 1920-
The s l i g h t
s l a c k e n i n g of a c t i v i t y i n p r o d u c t i o n i s a s c r i b e d t o the change i n seasons.
F o r t y - f i v e r e p o r t i n g f i r m s i n D i s t r i c t No* 3 ( P h i l a d e l p h i a ) produced 2+7
p e r c e n t l e s s shoes i n October than i n September, w h i l e shipments d e c l i n e d
Orders booked i n c r e a s e d 28»7 p e r c e n t , afid were 60*5 P e r
1.6 per cent.
c e n t i n e x c e s s of the o r d e r s booked i n October, 1920*
Although a few l a r g e
p l a n t s have booked o r d e r s fc.r r-pr 4 ng de?.ivery ; most shoe mar,v.facturers are
working on o r d e r s f o r immediate shipment.
D i s t r i c t No, 7 (Chicago)
d u r i n g October*
Reports from 27 m a n u f a c t u r e r s in
show an i n c r e a s e of 5*9 P e r c e n t i n p r o d u c t i o n
U n f i l l e d o r d e r s a t the end of the month were 1 1 . 1 p e r cent
g r e a t e r than a t t h e c l o s e of September and $ 8 . 2 p e r c e n t g r e a t e r than a t
the c l o s e of October, 1920*
Eleven f i r m s in D i s t r i c t No. 8 (St* Louis)
r e p o r t s a l e s r a n g i n g from 32 to 40 p e r c e n t l a r g e r t h a n a y e a r ago. Demand
c e n t e r s p r i n c i p a l l y on moderate and l o w - p r i c e shoes, and f a c t o r i e s i n
D i s t r i c t J 8 0 . 8 ( S t . Louis) p r o d u c i n g such grades a r e o p e r a t i n g a t c a p a c i t y .
Shoes p r i c e s were unchanged d u r i n g October, b u t were from 3 5 to ^5 P e r cent
l e s s t h a n i n October, 1920,
LUMBER:
A marked improvement i n demand, p a r t i c u l a r l y f o r upper grades
of l u m b e r , i s i n d i c a t e d by the r e p o r t s f o r October from the v a r i o u s D i s t r i c t s »
D i s t r i c t No# 6 ( A t l a n t a ) r e p o r t s some i r r e g u l a r improvement d u r i n g t h e month
w i t h only a s l i g h t i n c r e a s e over t h e September t o t a l i n p r o d u c t i o n f o r the
D i s t r i c t as a whole.
The t h r e a t e n e d s t r i k e caused b o t h o r d e r s and production
t o d e c l i n e toward the end of t h e month.
The s t a t e m e n t of t h e Southern Pine
A s s o c i a t i o n f o r the week ending October 28, showed a c t u a l p r o d u c t i o n of the
130 r e p o r t i n g m i l l s to be 2 0 . 5 p e r c e n t below normal production*
Stocks
a t m i l l s a r e low and b a d l y broken and b u y e r s f i n d i t d i f f i c u l t t o cover
t h e i r r e q u i r e m e n t s i n h i g h grade f i n i s h and f l o o r i n g * and as to dimension*
P r i c e s c o n t i n u e t o r i s e d e s p i t e the numerous r e c e n t advances.
- 25 -
x-3256
O p e r a t i o n s of t h e Northern Hemlock and Hardwood M a n u f a c t u r e r s '
A s s o c i a t i o n , most of whose members a r e l o c a t e d i n D i s t r i c t No. 7 (Chicago),
show t h a t f o r October shipments were 2 l 4 p e r c e n t and t h a t o r d e r s were 219
p e r c e n t of p r o d u c t i o n .
Reports from D i s t r i c t No. 8 ( S t . Louis) i n d i c a t e
a heavy demand f o r hardwoods and f o r s t r u c t u r a l lumber, advancing p r i c e s ,
heavy shipments, and d e p l e t e d s t o c k s .
The g e n e r a l p r i c e l e v e l of y e l l o w
p i n e showed a g a i n of approximately 25 p e r c e n t d u r i n g t h e month.
volume of yard buying diminished b u t demand on the p a r t of
The
.railways f o r
c a r r e p a i r m a t e r i a l s and the wood consuming i n d u s t r i e s i n c r e a s e d .
In
D i s t r i c t No. 9 (Minneapolis) the October lumber c u t of 8 , 9 3 0 , f e e t was
17 p s r c e n t l e s s than i n September and 53 p e r c e n t l e s s than i n October,1920.
October shipments t o t a l e d 15,699,808 f e e t , a b o u t t h e same a s the September
f i g u r e , b u t o r d e r s booked d u r i n g the month were 20 p e r c e n t l a r g e r than the
September t o t a l and 35 p e r c e n t l a r g e r than i n October l a s t y e a r . T h i r t y - f i v e
m i l l s i n D i s t r i c t No, 11 ( D a l l a s ) r e p o r t an average weekly p r o d u c t i o n of
13,577,^80 f e e t which was 32 p e r c e n t below normal.
amounted t o 18,329,625 f e e t .
Average weekly shipments
In p r o d u c t i o n no n o t i c e a b l e i n c r e a s e over the
September t o t a l i s shown b u t shipments have i n c r e a s e d i n volume.
P r i c e s of
low grade lumber have been s t e a d i l y i n c r e a s i n g w h i l e p r i c e s of upper grades
remained f a i r l y c o n s t a n t .
In D i s t r i c t No. 12 (San F r a n c i s c o ) the demand f o r lumber c o n t i n u e d to
s t r e n g t h e n d u r i n g October and showed a marked i n c r e a s e over t h e p r e v i o u s
months of the y e a r .
P r i c e advances were g e n e r a l l y m a i n t a i n e d .
Four f a c t o r s
c o n t r i b u t e d t o t h e s t r e n g t h of t h e October lumber market - an expansion of
demand i n the wood working i n d u s t r i e s , l a r g e r b u y i n g of c a r m a t e r i a l f o r
r e p a i r s , i n c r e a s e d y a r d buying, s u s t a i n e d by an a c t i t e demand f o r b u i l d i n g
-26-
X-3256
m a t e r i a l s , and i n c r e a s e d export shipments t o Japan.
Statistical
s t a t e m e n t s of the f o u r lumber a s s o c i a t i o n s of t h i s D i s t r i c t show a
volume of o r d e r s r e c e i v e d d u r i n g October which was 1 8 , 9 p e r cent g r e a t e r
t h a n a c t u a l p r o d u c t i o n , and 1 2 . 2 p e r cent i n e x c e s s of shipments, and
which r e p r e s e n t s t h e l a r g e s t amount of b u s i n e s s booked i n any month
s i n c e March, I92O.
The October cut of t h e l 6 l r e p o r t i n g m i l l s was
3SO,4c6, 000 f e e t and shipments amounted t o 392>9?0#000 f e e t , Production,
which i n September was 75 p e r cent of normal, i s now e s t i m a t e d a s 85 per
cent of normal.
From 75 p s r cent t o 80 p e r cent of t h e normal output
of l o g s i s b e i n g produced and i t i s expected t h a t a l l a v a i l a b l e r a f t s
of l o g s w i l l be sold b e f o r e camps c l o s e .
Curtailment of p r o d u c t i o n i s
reported in the shingle industry.
BUILDINS,
During t h e month of October t h e v a l u a t i o n of b u i l d i n g
p e r m i t s i s s u e d i n 166 s e l e c t e d c i t i e s showed a s l i g h t i n c r e a s e over
September i n D i s t r i c t g N o . 1 (Boston), No, 6 ( A t l a n t a ) , Mo. 7 (Chicago),
and No. 9 (Minneapolis) and a s u b s t a n t i a l i n c r e a s e i n D i s t r i c t s No. 2
(New York), No. 3 ( P h i l a d e l p h i a ) , No. 4 ( C l e v e l a n d ) , No. 10 (Kansas C i t y ) ,
and No, 12 (San F r a n c i s c o ) .
The p e r c e n t a g e of i n c r e a s e ranged from . 4
p e r cent i n D i s t r i c t No, 6 ( A t l a n t a ) t o 33-3 P e r cent i n D i s t r i c t No. 2
(New York).
Decreases from t h e September t o t a l s occurred only i n
D i s t r i c t s No. 5 (Richmond), No.36 ( S t . Louis) and No. 11 ( D a l l a s ) .
These d e c r e a s e s were 1 1 . 4 p e r c e n t , 3 8 . 5 p e r cent and 36.7 p e r c e n t ,
respectively.
In comparison w i t h t h e c o r r e s p o n d i n g p e r i o d of 1920
t h e October s t a t i s t i c s showed i n c r e a s e s i n D i s t r i c t s No. 2 (New York^
No. 3 ( P h i l a d e l p h i a ) , No. 4 (Cleveland) No. 5 (Richmond), No. 7
-27-
X-3256
(Chicago), No. 8 ( S t . L o u i s ) , No. 9 (M i n n eap o l i s ), No. 10 (Kansas C i t y ) ,
No. 11 ( D a l l a s ) and No. 12 (San F r a n c i s c o ) .
These i n c r e a s e s vary from
2 7 . I p e r cent i n D i s t r i c t No, 9 (Minneapolis) t o 230.5 p e r cent i n
D i s t r i c t No. 2 (New York).
D i s t r i c t s No. 1 (Boston) and No. 6 ( A t l a n t a )
show d e c r e a s e s from October l a s t year of 37-*+ p e r cent and 25-5 per cent,
respectively.
While t n e t o t a l v a l u a t i o n of p e r m i t s i s s u e d thus i n c r e a s e d from
$151,97^*000 t o $ 1 / 2 , 2 0 4 , 0 0 0 , t h e v a l u e of c o n t r a c t s l e t i n seven
Federal Reserve D i s t r i c t s ; p r e p a r e d by t h e F. W. Dodge Company, decreased
from $227,473,000 i n September t o $203, 95*+» 000 i n October.
Increases
were shown i n D i s t r i c t s Nos. 1 and 3, w h i l e t h e f i g u r e s were p r a c t i c a l l y
unchanged i n D i s t r i c t s Nos. 5 and 9# and d e c r e a s e d c o n s i d e r a b l y i n
D i s t r i c t s Nos. 2 (New York), 4 (Cleveland), and 7 (Chicago).
D i s t r i c t No. 3 ( P h i l a d e l p h i a ) r e p o r t s t h a t b u i l d i n g o p e r a t i o n s
a r e not so e x t e n s i v e as t h e number of p e r m i t s g r a n t e d would i n d i c a t e ,
and t h a t t h e volume of c o n t r a c t s l e t has not i n c r e a s e d c o r r e s p o n d i n g l y .
The r e d u c t i o n i n wages and c o s t s of some m a t e r i a l s has r e s u l t e d i n i n creased b u i l d i n g of r e s i d e n c e s i n D i s t r i c t No, 4 ( C l e v e l a n d ) .
All
s t a t e s of D i s t r i c t No. 7 (Chicago) and most of t h e c i t i e s p a r t i c i p a t e d
i n t h e i n c r e a s e of t h e number of p e r m i t s g r a n t e d i n t h a t D i s t r i c t , and
a l l of the s t a t e s except Michigan showed an i n c r e a s e i n e s t i m a t e d c o s t .
In D i s t r i c t No. 3 ( S t . Louis) t h e r e h a s been c o n s i d e r a b l e growth i n the
c o n s t r u c t i o n of d w e l l i n g s .
The r u r a l d i s t r i c t s and s m a l l e r towns have
taken a much more important p a r t i n t h i s development.
r e d u c t i o n s a r e r e p o r t e d i n c o s t s of clay p r o d u c t s ,
w h i l e lumber p r i c e s have advanced.
F u r t h e r minor
cement and metal goods,
Construction a c t i v i t i e s i n D i s t r i c t
-28-
X-3256
No. 12 (San F r a n c i s c o ) surpassed a l l r e c o r d s , both i n t h e number and
value of p e r m i t s granted d u r i n g October.
This was- due c h i e f l y t o the
d e c l i n i n g p r i c e s of many b u i l d i n g m a t e r i a l s and t h e reduced l a b o r
costs.
E P O M N . The United S t a t e s Employment Service r e p o r t s an
ML Y E T
i n c r e a s e of 1 . 6 p e r cent i n numbers employed i n 14 s e l e c t e d i n d u s t r i e s
of t h e United S t a t e s i n October.
Such l o c a l r e p o r t s as a r e a v a i l a b l e
i n d i c a t e t h a t i n c r e a s e s i n numbers employed a r e s l i g h t l y i n excess of
decreases.
G e n e r a l i z a t i o n s a r e however, d i f f i c u l t because of t h e
marked v a r i a t i o n s i n employment c o n d i t i o n s w i t h i n t h e same community
a s w e l l a s between d i f f e r e n t r e g i o n s , which grow out of t h e unequal
degrees of a c t i v i t y p r e v a i l i n g i n t h e s e v e r a l i n d u s t r i e s .
For example,
D i s t r i c t No. 1 (Boston) r e p o r t s t h a t unemployment i s s e r i o u s i n t h e
shoe i n d u s t r y i n Lynn and H a v e r h i l l and a l s o i n the c e n t e r s of t h e
jewelry and of the metal i n d u s t r i e s .
Reports from metal goods c e n t e r s
a r e s a i d t o show a decrease of n e a r l y $0 p e r cent i n numbers employed
a s compared w i t h a year ago.
On t h e other hand, t h e s i t u a t i o n i n t h e
c o t t o n and woolen t e x t i l e i n d u s t r i e s i s good and probably t h e r e has
been a moderate i n c r e a s e i n t h e number of employees i n most New England
industries.
Tne New York S t a t e Department of Labor r e p o r t s a gain of
2 . 5 p e r cent i n numbers employed i n f a c t o r i e s i n October.
Moderate
g a i n s i n employment i n t e x t i l e m i l l s were counterbalanced by l o s s e s
i n t h e manufacture of c l o t h i n g , but r a i l r o a d c a r b u i l d i n g and r e p a i r
shops and r a i l r o a d equipment f a c t o r i e s took on a l a r g e r number of workers.
In D i s t r i c t No. 3 ( P h i l a d e l p h i a ) t h e Pennsylvania S t a t e Department of
Labor r e p o r t e d s l i g h t i n c r e a s e s i n t h e numbers employed i n t h e s i x
c i t i e s of Altoona, H a r r i s b u r g , Johnstown, P h i l a d e l p h i a , Scranton, and
i
f
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x-3256
Williamsport.
Reports from other parts of the District also indicated improve> merit in employment conditions.
In District Bo. 5 (Richmond) a slignt
increase in numbers unemployed was noted in the c i t i e s but in the
rural sections of tne Carolines, the demand for labor strengthened
with tne resumption of a number of important lumber plants and other
establishments*
In District No, 7 (Chicago) 2J1 firms employing
150,607 persons at the end of October reported an increase of 2*5
per cent in numbers of employees as compared with the preceding month.
The most conspicuous increases took place in iron and steel, railway
repair shops and in the factories producing boxes and containers.
The chief decreases were in construction work and in automobile and
automobile accessory plants. While tne United States employment service figures revealed some improvement for the firms employing over
500 men in Minneapolis and St. Paul, i t i s stated in the report from
District No. 9 (Minneapolis) that clerical and domestic workers and
those engaged in other lines of employment are idle in increasing
numbers.
Outside of tne c i t i e s and larger, towns, unemployment is also
growing following tne completion of harvesting.
In Montana, coal mining
and lumbering operations are more active but in copper mining and
allied industries depression exists*
In District No. 12 (San Francisco)
the completion of harvesting and cessation of work on highways and
public improvements in October has resulted in increasing unemployment
among unskilled workers in certain sections.
O the other hand, there
n
have been increases in numbers employed in the manufacturing and building
trades.
-30W O E A E TR/DE.
H LS L
X-3256
Seasonal factors are in large part respon-
sible net only for the quite general reduction in the sales of
wholesale dry goods during October, but also for the equally pronounced increase in the sales of hardware*
In tne case of dry
goods i t i s a striking fact that the value of sales was above that
of October 1920 in seven of the nine reporting Districts, ranging
from a minimum increase of 7*3 P 8 r cent in District No. 4 (Cleveland)
with five firms reporting to 25.5 per cent in District No. 5
(Richmond) with 18 firms reporting.
In District No. 9 (Minneapolis)
and District No. 1 2 (San Francisco) sales were s t i l l below the
levels of a year ago, with decreases of 20.8 per cent with five
firms reporting, and 3*3 P©r cent with 11 firms reporting respectively.
As compared with September, however, a seasonal falling
off in demand brought about a drop in sales in seven out of nine
Districts,
Decreases ranged from 3*7 per cent in District No* 2
(New York) with three firms reporting, to 2 0 . 3 per cent in District
No. 9 (Minneapolis) with five firms reporting.
District No* 11
(Dallas) showed a slight increase of 1 per cent in sales for 12
reporting firms.
Hardware sales increased in October as compared with September
in eight of the ten reporting Districts.
Advances varied from 1*6
per cent in District No* 10 (Kansas City) with five firms reporting to 21.9 per cent in District No. 11 (Dallas) with ten firms
reporting.
District No. 11 (Dallas) states tnat tne demand for small
X-3256
-31-
b u i l d i n g hardware and f o r automobile a c c e s s o r i e s was p a r t i c u l a r l y
strong.
City s a l e s have been heavy, but country buying q u i t e l i m i t e d
i n amount.
D i s t r i c t Mo, 3 ( P h i l a d e l p h i a ) a l s o c a l l s a t t e n t i o n t o
t h e f a c t t h a t automobile a c c e s s o r i e s and e l e c t r i c and h e a t i n g supp l i e s have been s e l l i n g w e l l , but s t a t e s t h a t b u i l d e r s ' hardware
has been i n l e s s e r demand.
In D i s t r i c t No. 7 (Chicago) t h e r e was
a s l i g h t i n c r e a s e i n i n q u i r i e s f o r b u i l d e r s 1 hardware and i n D i s t r i c t
No. 8 ( S t . Louis) t h i s was a l s o t h e case.
The d e c r e a s e s
i n s a l e s i n D i s t r i c t No. 9 (Minneapolis) and No. 12 (San Francisco)
were n e g l i g i b l e , being only . 4 p e r cent i n t h e former case w i t h 11
f i r m s r e p o r t i n g and .7 per cent i n t h e l a t t e r case w i t h 23 f i r m s
reporting.
Wholesale grocery s a l e s remained r e l a t i v e l y steady d u r i n g
October, w i t h s l i g h t advances i n a l l r e p o r t i n g d i s t r i c t s except
D i s t r i c t No. 7 (Chicago), i n which 26 r e p o r t i n g f i r m s showed an
average d e c r e a s e of 1 , 1 per c e n t .
I n c r e a s e s ranged from .6 p e r
cent i n D i s t r i c t No. 6 (.Atlanta) with 29 f i r m s r e p o r t i n g t o 17-3
p e r cent i n D i s t r i c t No. 2 (New York) with nine f i r m s r e p o r t i n g .
Making due allowance f o r p r i c e d i f f e r e n c e s , s a l e s compared f a v o r ably w i t h t h o s e f o r October, 1$20, t h e maximum r e d u c t i o n b e i n g
31.6 p e r cent i n D i s t r i c t No. 6 ( A t l a n t a ) w i t h 29 f i r m s r e p o r t i n g .
That D i s t r i c t s t a t e s t h a t September b u s i n e s s was s t i m u l a t e d by
t h e i n f l u e n c e of a s u b s t a n t i a l r i s e i n t h e p r i c e of cotton, f o l -
X-3256
lowed by a p r i c e sag i n October which, t o g e t h e r w i t h two o r t h r e e
weeks of warm weather, "caused b u s i n e s s to d r a g " .
A f a i r l y sub-
s t a n t i a l advance i n s a l e s occurred i n t h e two o t h e r s o u t h e r n
D i s t r i c t s , D i s t r i c t No. 5 (Richmond) r e p o r t i n g an i n c r e a s e of
2 . 2 p e r cent w i t h 57 f i r m s r e p o r t i n g , and D i s t r i c t No. 11 ( D a l l a s )
an i n c r e a s e of 3>4 p e r cent w i t h 14 f i r m s r e p o r t i n g .
D i s t r i c t No.
11 ( D a l l a s ) says t h a t b u s i n e s s has been very uneven, d e c r e a s e s
having occurred i n s e c t i o n s where t h e c o t t o n y i e l d has been poor,
while i n r e g i o n s where o i l a c t i v i t y has been renewed, b u s i n e s s i s
excellent.
City s a l e s i n t h i s D i s t r i c t have remained f a i r l y con-
stant.
In D i s t r i c t s Nos. 2 (New York), 5 (Richmond), 6 ( A t l a n t a )
and 7 (Chicago) i n c r e a s e s i n w h o l e s a l e s a l e s of boots and shoes
have taken p l a c e , t h e p e r c e n t a g e s of i n c r e a s e beginning w i t h 1 . 7
p e r cent i n D i s t r i c t No. 2 (New York) with e i g h t f i r m s r e p o r t i n g ,
and r i s i n g t o 13»3 p e r cent i n D i s t r i c t No. 6 ( A t l a n t a ) w i t h 11
firms reporting.
In D i s t r i c t No. 12 (San F r a n c i s c o ) , on t h e o t h e r
hand, a d e c r e a s e of 7-& p e r cent was recorded w i t h 17 f i r m s r e p o r t i n g .
In every D i s t r i c t f o r which r e c o r d s ace a v a i l a b l e f o r a year ago, s a l e s
were above t h e t o t a l s f o r October, 1520, w i t h t h e e x c e p t i o n of D i s t r i c t
No. 12 (San F r a n c i s c o ) , i n which t h e s a l e s - a v e r a g e d 9 . 1 p e r cent l e s s
with 17 f i r m s r e p o r t i n g . However, t h e r e was a s u b s t a n t i a l advance of
n e a r l y 30 p e r cent i n September s a l e s i n D i s t r i c t No. 12 (San F r a n c i s c o )
a s compared w i t h August, a f a c t which would help t o e x p l a i n t h e drop
i n October s a l e s . Actual i n c r e a s e s ranged from 2 . 1 p e r cent i n
D i s t r i c t No. 7 (Chicago) w i t h n i n e f i r m s r e p o r t i n g t o 4 4 . 2 p e r cent
i n D i s t r i c t No. 5 (Richmond) with I S f i r m s r e p o r t i n g .
-33RETAIL TRADE:
X-3256
R e t a i l t r a d e as shown by s a l e s of 3&5 r e p r e s e n t a t i v e d e -
partment s t o r e s throughout the c o u n t r y showed a s u b s t a n t i a l improvement i n n
October as compared w i t h t h e p r e v i o u s month.
The change i s , however, l e s s
n o t i c e a b l e i n the Southern s e c t i o n s of the c o u n t r y , and D i s t r i c t No. 8 ( S t .
Louis) r e p o r t s t h a t " i n the Southern s e c t i o n s the a c t i v i t y i n r e t a i l t r a d e wh
which accompanied the r i s e i n raw c o t t o n p r i c e s has subsided i n a n o t i c e a b l e
degree."
When compared with the October, 1920 f i g u r e s , s a l e s f o r the country
as a whole showed a d e c r e a s e
of 6 . 7 p e r c e n t .
In D i s t r i c t s No. 1 (Boston)
and 2 (New York), i n c r e a s e s amounting r e s p e c t i v e l y t o 4 - 4 p e r c e n t and 2 . 8
p e r c e n t were, however, shown, but t h e s e were more than o f f s e t b y d e c r e a s e s
of 3-2 p e r c e n t i n D i s t r i c t No. 3 ( P h i l a d e l p h i a ) , 1$.2 p e r cent i n D i s t r i c t
No. 4 ( C l e v e l a n d ) , 5 - 6 p e r c e n t i n D i s t r i c t No. 5 (Richmond), 15*1 p e r c e n t
in D i s t r i c t No. 6 ( A t l a n t a ) , 9*9 p e r cent i n D i s t r i c t No. 7 (Chicago), 8 . 7
p e r c e n t i n D i s t r i c t No. 8 (St.. L o u i s ) , 12.8 p e r c e n t in D i s t r i c t No. 9QWinne a p o l i s ) , 7 . 4 p e r cent i n D i s t r i c t No. 10 (Kansas C i t y ) , 1 6 . 7 p e r c e n t i n
D i s t r i c t No. 11 ( D a l l a s ) and 6 . 3 p e r c e n t i n D i s t r i c t No. 12 (San F r a n c i s c o ) .
A l l D i s t r i c t s r e p o r t t h a t demand c o n t i n u e s to be c o n f i n e d t o a c t u a l n e c e s s i ties.
Accordingly r e a d y - t o - w e a r c l o t h i n g , c o t t o n f a b r i c s and trimmings are
i n most a c t i v e demand, while the movement of heavy k n i t goods h a s been unexp e c t e d l y slow, due t o the c o n t i n u e d warm w e a t h e r .
Although s t o c k s on hand are
lower t h a n a y e a r ago, t h e y show a s l i g h t i n c r e a s e over s t o c k s a t t h e c l o s e of
September.
The amount of o u t s t a n d i n g o r d e r s i s , however, s l i g h t l y lower than
a month ago, w h i l e the same i s t r u e of the r a t e of stock t u r n o v e r .
PRICES:
i n September.
P r i c e s i n the United S t a t e s were s l i g h t l y lower i n October than
The index of t h e F e d e r a l Reserve Board, c o n s t r u c t e d p r i m a r i l y
x-3256
f br i n t e r n a t i o n a l comparisons, showed a drop of 2 p o i n t s from 143 t o 141 (with
p r i c e s i n 1913 c o n s i d e r e d as ICO) w h i l e the index of the Bureau of Labor S t a t i s t i c s showed a s i m i l a r change from 152 t o 150.
There were a p p r e c i a b l e dec rear."
i n the p r i c e s of l e a d i n g a g r i c u l t u r a l commodities w i t h the e x c e p t i o n of sheep,
c a t t l e , d a i r y ' p r o d u c t s , and wool.
Lumber p r i c e s were only v e r y s l i g h t l y lower,
and m i n e r a l s and m e t a l s h i g h e r .
During the f i r s t t h r e e weeks of November, p r i c e s of many l e a d i n g commodit i e s continued t o d e c l i n e , although the n o n f e r r o u s m e t a l s , c o r n , o a t s , wo6l,
and some g r a d e s of c a t t l e h i d e s showed small i n c r e a s e s :
I t seems p r o b a b l e ,
however, t h a t an average of p r i c e s d u r i n g t h i s p e r i o d would show a r e d u c t i o n
f r o m the October l e v e l .
In the c e r e a l group, wheat averaged lower than i n Oc-
t o b e r b u t was s l i g h t l y h i g h e r i n the t h i r d week of November than i n the f i r s t ;
c o r n and o a t s showed s l i g h t gains over the October average^
Cotton has r e a c t e d
downward from t h e September and October l e v e l s b u t i s s t i l l approximately 5 c e n t s
h i g h e r than i n August, t h e average of upland middling a t New Orleans being 173
c e n t s a pound i n t h e f i r s t t h r e e weeks of November as compared w i t h 12* c e n t s i n
August.
Sheep and hogs a l s o d e c l i n e d h e a v i l y d u r i n g the e a r l y weeks of November
h u t s t e w s have been quoted s l i g h t l y h i g h e r than i n O c t o b e r .
Cotton yarns and c l o t h have f o l l o w e d the t r e n d of t h e raw m a t e r i a l and were
quoted i n many c a s e s a t ah out the same p o i n t as d u r i n g September.
In s p i t e of
the r e l a t i v e s t r e n g t h of raw wool p r i c e s , y a r n s have n o t advanced d u r i n g November.
An average of t h e p r i c e s of s e v e r a l types of s t e e l p r o d u c t s works out somewhat lower f o r t h e t h i r d week i n November t h a n f o r October.
a l s o been r e d u c e d .
S t e e l b i l l e t s have
The n o n f e r r o u s m e t a l s , on the o t h e r hand, i n c l u d i n g copper,
t i n , and z i n c have b e e n r i s i n g i n p r i c e f o r the p a s t s e v e r a l months.
Bituminous
X
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"3256
coal i s practically unchanged, from the September and October quotations.
Retail price s t a t i s t i c s are not yet available for November. During October, however, the retail food index of the Bureau of Labor Statistics showed
practically no change (0.3 per cent decrease) from the September average.
SHIPPING: The ocean freight market displayed distinctly firmer tendencies
in November, the demand from charterers foe steamers in the West Indian and
Mediterranean trades being particularly active.
At the same time, the rates on
a number of commodities including grain and cotton, were reduced during the
month to bring them into line with lower quotations on other goods which had
previously been announced.
American ships have been carrying in recent months
a smaller proportion of our foreign trade - whether this i s measured in terms
of value or weight - thai was the case a year ago.
According to the records of
the United States Shipping Board, in September, 1920, American vessels carried
4l per cent of this country's seaborne exports and 59 P e r cent of our
seaborne imports, by weight.
In September of the present year, our ships car-
ried tut 33 per cent of our seaborne exports and 4o per cent of our seaborne
imports, foreign ships carrying the remainder.
in "bulk are not included.
In these figures cargoes of oil
Much the same story i s told by the value statistics
of the Department of Commerce, according to which American ships are credited
with carrying 38.6 per cent of our exports and 31*6 per cent of our imports in
September, 1921, compared with 41-7 per cent and 42.7 per cent respectively a
year ago.
FOREIGN TRADE: Small increases in the value of both exports and imports
are recorded for October as compared with September.
The increased value of
exports i s more than accounted for by an expansion of cotton shipments from
-36-
X-3256
522,000 bales in September to 875>000 bales in October, the value of cotton
exports rising by almost $50*090,000 in the latter month, while exports of all
commodities rose only $20,000,000 to a total of ^346,000,000-
Total imports in
October were valued at $123,000,000 an increase of $4,000,000 over the month
preceding.
Both imports and exports, however, show very decided declines in
value as compared with a year ago-
This i s due in no small measure to the
lowered prices of practically every commodity entering into our foreign trade,
although contractions in the actual quantities of merchandise shipped have also
had their effect*
- s an indication of the volume of our foreign trade in recent months
A
compared with the same months a year ago, reference may be made to the statistics now compiled by the United States Shipping Board on the actual weight in
long tons of our water-borne commerce»
According to these figures, in the
three months ending September, 1920, total water-bonre imports to the United
States amounted to 8,996,383 tons, while in the same three months of the present
year they were 5*484,908 tons* a decline iti weight of 39 per cent*
The weight
of water-borne exports declined in the same months from 16,778,124 tons to
13»513»269 tons, a reduction of 20 per cent-
If shipments of oil in bulk and
Great Lakes cargoes are omitted from the comparison, the remaining sea-borne
cargoes show a far greater contraction in the last few months than do the
foregoing totals•
The figures for imports then become 5>081,095 tons in the
third quarter, 1920, and 2,346,998 tons in the same quarter of 1921, a decline
of 54 per cent-
Seaborne exports, excluding oil in bulk, are given as
15,530,787 tons in the third quarter ofx1920, compared with 8,152,327 tons in
the same period this year, the decline in the weight of these experts being
-37t h e r e f o r e 4 j p e r cent*
A
x-3256
S i m i l a r f i g u r e s f o r p r e w a r months a r e n o t a v a i l a b l e .
of the weights of t h e p r i n c i p a l commodities imported and exported
i n 1913 seems, however, t o j u s t i f y t h e c o n c l u s i o n t h a t e x p o r t s i n r e c e n t months
have been s u b s t a n t i a l l y g r e a t e r t h a n i n t h e same months of 1913, w h i l e imports
have been c l o s e t o the prewar l e v e l *
I f o i l i s d i s r e g a r d e d , however, the
p r e s e n t l e v e l of a l l o t h e r imports i s m a t e r i a l l y l e s s than i n t h e corresponding
p r e w a r months.
X-3257
F F D E R 6 T. R F S ^ P 7 E
BOARD
STATEMENT FOR THE PRESS
For r e l e a s e i n a f t e r n o o n p a p e r s ,
F r i d a y , December 2 , 1921.
CONDITION OF THE ACCEPTANCE MARKET
The f o l l o w i n g r e p o r t s have been r e c e i v e d from t h e F e d e r a l Reserve
Banks, concerning t h e c o n d i t i o n of the acceptance market i n t h e i r r e spective D i s t r i c t s :
DISTRICT NO- 1 (BOSTON)
Another r e f l e c t i o n of t h e s e e a s i n g t e n d e n c i e s i n the money market
i s v i s i b l e i n the unabated demand f o r b a n k e r s
1
acceptances, especially
by i n s t i t u t i o n s and c o r p o r a t i o n s which are t e m p o r a r i l y i n f u n d s seeking
l i q u i d investments.
The 30 day m a t u r i t y i s sought p r i n c i p a l l y .
The
demand f o r t h i s c l a s s of a c c e p t a n c e s i s f r e q u e n t l y g r e a t e r t h a n the supply.
Following the almost simultaneous r e d u c t i o n i n t h e d i s c o u n t r a t e
of a l l
of the F e d e r a l Reserve Banks e a r l y i n November, the going r a t e
on prime b a n k e r s 1 a c c e p t a n c e s promptly f e l l t o 4 - 3 / 8 p e r c e n t or l / 8 p e r
c e n t below the d i s c o u n t r a t e o b t a i n i n g at t h e F e d e r a l Reserve Banks of
Boston, New York and P h i l a d e l p h i a .
- 2 -
X-J257
The l a s t 10 days i n October show t h e l a r g e s t amount of s a l e s of 30
day " b i l l s recorded i n t h i s D i s t r i c t f o r over a y e a r , t h i s p e r i o d b e i n g
a l s o marked b y t h e i s s u a n c e of a f a i r amount ot 15 day b i l l s c o v e r i n g
sugar i m p o r t a t i o n s from Cuba*
Following November 1, t h e demand is goou.
w i t h numerous i n q u i r i e s f r o m c o r p o r a t i o n s and c o u n t r y banks*
banks appeared in the market f o r moderate amounts of b i l l s *
Savings
The e x c e l -
l e n t market c o n d i t i o n s prompted d e a l e r s t o c a r r y l a r g e r p o r t f o l i o s i n
Boston, drawing on the s u r p l u s of b i l l s which were b e i n g c a r r i e d by t h e i r
New York o f f i c e s , the i n c r e a s e of b i l l s being r e q u i r e d t o meet the q u i c k
demand of the p u r c h a s e r s *
At t h i s w r i t i n g (November 18) the supply of
b i l l s s l i g h t l y exceeds t h e demand w i t h s a l e s somewhat l e s s t h a n d u r i n g
t h e p r e c e d i n g week and the trend running more t o the c i t y banks»
i s a l s o a n o t i c e a b l e i n c r e a s e i n the holdings of t h e d e a l e r s .
There
It is re-
corded t h a t Boston banks have reduced t h e i r p a r r a t e s on n o t e s secured
by a c c e p t a n c e s f r a n 5 ~ l / 2 t o 5 p e r c e n t * This a p p e a r s t o r e f l e c t i t s e l f
i n the s m a l l e r number of b i l l s which the F e d e r a l Reserve Bank of Bostpn
i s c a l l e d upon b y the d e a l e r s t o c a r r y .
The b i d r a t e s b y a l l d e a l e r s i n
Boston f o r prime b i l l s a r e now 4 - 3 / 8 and the o f f e r i n g r a t e s 4 - 1 / 4 p e r cent
There seems t o be an o v e r - s u p p l y of c a l l money f o r g e n e r a l s t o c k exchange
c o l l a t e r a l which may r e f l e c t i t s e l f i n an i n c r e a s e d demand f o r b i l l s Our own p o r t f o l i o , while i t has been a t a h i g h e r p o i n t than d u r i n g the
p r e v i o u s ironth, i s now a t about the p o i n t where t h e month opened.
We are
c a l l e d upon t o make b u t few p u r c h a s e s on our own account a s our r a t e s
have been s l i g h t l y l e s s f a v o r a b l e t o the s e l l e r than could be o b t a i n e d
t h r o u g h the d e a l e r s *
- 3 -
X-3257
DISTRICT NO. 2 (HEW YORK)
During November, d e a l e r s found i t n e c e s s a r y to lower b i d r a t e s "by
s u c c e s s i v e s t a g e s from U—3/^ t o
f i c i e n t supply of b i l l s .
p e r cent i n order t o o b t a i n a s u f -
S e l l i n g r a t e s were lowered i n p r o p o r t i o n and by the
middle of t h e month were 4 - l / 4 p e r cent f o r a l l m a t u r i t i e s up t o f o u r months,
as compared w i t h * 1 / 2 p e r c e n t a t the c l o s e of October»
!
—
Demand f o r b i l l s
i n c r e a s e d m a t e r i a l l y f o l l o w i n g the r e d u c t i o n i n F e d e r a l Reserve d i s c o u n t
rates•
I n t e r i o r banks bought i n s u b s t a n t i a l volume and p u r c h a s e s by New
York banks and l a r g e c o r p o r a t i o n s were g r e a t e r than in October.
Demand was
most a c t i v e f o r b i l l s which would mature b e f o r e the end of the year#
supply of b a n k e r s
1
The
b i l l s o f f e r e d i n New York i n c r e a s e d somewhat e a r l y in the
month as a r e s u l t of s e v e r a l l a r g e o f f e r i n g s of sugar import s y n d i c a t e paper*
These o f f e r i n g s , coming when the demand was p a r t i c u l a r l y good, were q u i c k l y
absorbed b y i n v e s t o r s and l a t e r in the month the supply of b i l l s was i n s u f f i c i e n t t o meet the demand.
Cotton, g r a i n , and s i l k b i l l s were n e x t t o sugar
b i l l s i n o r d e r of importance i n the month's n e w - o f f e r i n g s .
DISTRICT NO- 3 (PHILADELPHIA
Ai i n c r e a s e i n t h e supply of b a n k e r s * a c c e p t a n c e s has served to make i t
more n e a r l y e q u a l t o t the demand.
S a l e s of f o u r d e a l e r s d u r i n g October to
banks i n the Third F e d e r a l Reserve D i s t r i c t i n c r e a s e d 45 p e r c e n t over those
of September, b u t s a l e s of t h r e e d e a l e r s d i s t r i b u t e d t h r o u g h o u t the country
declined slightly*
I m p o r t a t i o n of s u g a r , e x p o r t a t i o n of c o t t o n and f o o d s t u f f s ,
and warehousing of s u g a r , c o t t o n and tobacco were the t r a n s a c t i o n s which gave
r i s e t o a l a r g e p r o p o r t i o n of the b i l l s executed l a t e l y *
The t o t a l s f o r 12
banks l o c a t e d i n t h i s D i s t r i c t show an i n c r e a s e i n the a^iouut of b i l l s accepted
and b i l l s o u t s t a n d i n g *
The amounts executed a r e l a r g e r t h a n t h e y have been
x-3257
- 4 a t any time s i n c e our r e p o r t s were s t a r t e d l a s t March.
B a n k e r s ' .Acceptances Executed.
Executed d u r i n g
p r e c e d i n g month
$6,325,000
1921 - November 10
October 1 0 . .
September 10
iugus t 10.
J u l y 10.
June 10.
Outstanding on
date given.
$11,224,000
4,507,000
5,312,000
4,852,000
3,121,000
2,795,000
9,902,000,,
9,009,000
8,756,000
9,286,000
10,798,000
The lowering in t h e d i s c o u n t r a t e s of t r e F e d e r a l Reserve Banc:s and t h e lowe r y i e l d of r e c e n t i s s u e s of Government c e r t i f i c a t e s have been leading f a c t o r s i n b r i n g i n g down the r a t e s f o r a c c e p t a n c e s .
The s e l l i n g r a t e on e l i g -
i b l e members' b i l l s i s now 4 ~ l / 4 p e r c e n t , as compared w i t h 4 - l / 2 p e r cent
l a s t month; and f o r non-members, 4 - 3 / g p e r c e n t as a g a i n s t 4 - 5 / 8 a t t h a t
t ime.
DISTRICT NO. 4 (CLEVELAND)
Bankers
1
•
acceptances bought by the Federal Reserve Bank of Cleveland
d u r i n g October, 1921,.amount t o $ 4 , 4 8 3 , 3 ^ * and those maturing and p a i d ,
t o t a l $3,209,471.
Nineteen a c c e p t i n g banks i n the Fourth D i s t r i c t r e p o r t
a c c e p t a n c e s executed d u r i n g October as $3»6l4,903, and a c c e p t a n c e s p a i d ,
as *4,760,553-
The undertone of t h e acceptance market f o r the f i r s t h a l f
of the p a s t month was somewhat b e t t e r w i t h s l i g h t improvement i n the t u r n over i n comparison w i t h t h e p r e v i o u s month.
were b u y e r s .
sources.
Country banks i n some s e c t i o n s
There was a l s o some demand from c o r p o r a t e and i n d i v i d u a l
Rates have tended t o d e c l i n e throughout the month i n sympathy
w i t h t h e e a s i e r c a l l money r a t e s and the i n c r e a s i n g supply of s h o r t time
demand f u n d s .
The g e n e r a l i n a c t i v i t y of the acceptance market i n the p a s t
months and the supply and demand of prime b i l l s have had l i t t l e e f f e c t in
- 5 t h e s e t t l i n g of the hank acceptance r a t e s «
X-3257
The r a t e s have t e e n determined,
r a t h e r by r a t e s on s h o r t time f u n d s i n the o t h e r m a r k e t s .
inated in this District*
Few b i l l s o r i g -
Much of the supply o f f e r e d by t h e b r o k e r s was
p a r t i c i p a t e d i n by banks f r c e ^ t s m s y n d i c a t e s .
No n o t i c e a b l e improve-
ment appeared i n t h e supply of b i l l s drawn a g a i n s t f o r e i g n t r a n s a c t i o n s .
However, t h e r e was a s l i g h t improvement i n the s u p p l y of p a p e r drawn a g a i n s t
domestic shipment.
As i n the p r e v i o u s month, t h e r e was a g e n e r a l d e c r e a s e
i n b i l l s drawn a g a i n s t warehouse r e c e i p t s -
The p r e s e n t r a t e s f o r prime
b i l l s , e l i g i b l e f o r r e d i s c o u n t by the F e d e r a l Reserve Banks, a r e as f o l l o w s %
Under 30 days
30 t o 60 days
GO t o 90 days
4 - l / 4 t o 4-1/2
4 - 1 / 4 t o ,ty-l/2
4 - l / 4 to 4-1/2
DISTRICT NO. 6 (ATLWrfl)
E i g h t e e n r e p o r t s r e g a r d i n g a c c e p t a n c e t r a n s a c t i o n s d u r i n g October 1921,
member
were r e c e i v e d from a c c e p t i n g / b a n k s i n the S i x t h D i s t r i c t , t e n of which i n d i c a t e d no t r a n s a c t i o n s of any kind d u r i n g t h e month.
Domestic acceptances
e x e c u t e d d u r i n g October were 15-9 p e r c e n t l e s s than were executed d u r i n g
September, b u t 56.0 p e r c e n t more than d u r i n g October 1920.
Foreign accept-
ances executed d u r i n g October were 26-3 p e r c e n t l e s s than d u r i n g September,
and 3 0 . 1 p e r c e n t l e s s than October 1920.
Acceptances purchased i n t h e op°n
market by t h e F e d e r a l Reserve Bank d u r i n g October were about 2 4 . 3 p e r c e n t
l e s s than d u r i n g the p r e c e d i n g month, b u t were 3 0 . 9 p e r c e n t g r e a t e r than
were bought i n October 1920.
With the e x c e p t i o n of September, t h i s item
was l a r g e r i n October than d u r i n g t h e p a s t n i n e t e e n months.
DISTRICT WO. 7 (CHICAGO)
R e t u r n s from r e p o r t i n g banks i n the Seventh F e d e r a l Reserve D i s t r i c t
- 6 -
x-3257
show i n c r e a s e s i n b i l l s accepted, and b i l l s s o l d f o r October, as compared
w i t h September,
The g r e a t e r i n c r e a s e was i n b i l l s accepted which was
^3»1 P e r c e n t * Decreases are shown i n b i l l s bought and i n b i l l s h e l d a t
t h e c l o s e of t h e month.
During the two p r e c e d i n g months t h e r e were de-
c r e a s e s i n b i l l s b o u g h t , s o l d , and a c c e p t e d , and i n c r e a s e s i n b i l l s h e l d
a t the c l o s e of t h e month.
Purchase r a t e s f o r October were r e p o r t e d as
r a n g i n g from U-l/2 t o 6 p e r c e n t , a l t h o u g h most of t h e r a t e s r e p o r t e d were
l e s s than 5 per c e n t .
The m a t u r i t i e s of b i l l s p u r c h a s e s were d i v i d e d a s
f o l l o w s : 3 0 - d a y , 1«9 p e r c e n t ; 60~day, 9 - 6 p e r c e n t ; 90-day, 8 6 . 1 p e r c e n t ;
and ISO-day, 2 . 4 pei* c e n t .
The g r e a t e r p a r t of t h e b i l l s was r e p o r t e d
drawn a g a i n s t meats'; wheat, and c o t t o n .
A d e t a i l e d sum-nary of t h e r e t u r n s
of 29 r e p o r t i n g banks i s as f o l l o w s :
• B i l l s bought."
••Bills sold..
B i l l s h e l d a t c l o s e of month
Amount accepted
October
$6,905,000
11,699.000
6,551,000
16.S65.000
September
$7,858,000
16,525,000
6,728,000
11,800,000
* E x c l u s i v e of b i l l s purchased by t h e a c c e p t i n g b a n k s , and of
p u r c h a s e s f o r the account of s p e c i f i c c u s t o m e r s .
** E x c l u s i v e of b i l l s purchased f o r the account o f , and s o l d t o ,
s p e c i f i c customers.
One b r o k e r r e p o r t s t h e buying demand as s l u g g i s h , due t o low r a t e s of r e t u r n
a s opposed t o prime commercial p a p e r .
One l a r g e r e p o r t i n g bank s t a t e s t h a t
the d i s c o u n t market i s working more e a s i l y , w i t h no s u r p l u s f u n d s y e t a v a i l a b l e f r o m b a n k s , c o r p o r a t i o n s , and i n d i v i d u a l s f o r investment i n a c c e p t a n c e s .
Comparison of s t a t i s t i c s on b a n k e r s ' a c c e p t a n c e s a t t h e F e d e r a l Reserve Bank
of Chicago f o r September and October f o l l o w s :
- 7Bankers Acceptances re&iscountecL . *
•Bankers Acceptances "bought - . . . . . .
Bankers -Acceptances sold from h o l d i n g s . * .
X-3257
$
September
None
October
175,000
$6,665,112
10,626,197
25,coo
270,000
Held a t c l o s e of month
Bankers Acceptances r e d i s c o u n t e d
•Bankers Acceptances "bought
None
None
$2,849,396
$ 3,427,354
* Included i n Acceptances Bought, b u t n o t i n Acceptances Sold, a r e those
bought w i t h agreement by the s e l l e r s t o r e p u r c h a s e w i t h i n f i f t e e n days*
DISTRICT NO, 8 (ST. LOUIS)
The market f o r b a n k e r s ' a c c e p t a n c e s d u r i n g the p a s t t h i r t y days has
developed, more a c t i v i t y than f o r the l a s t few months.
Corporations hold-
i n g i d l e money and d e s i r i n g a q u i c k l y c o n v e r t i b l e i n v e s t m e n t , have p u r chased f a i r arr.outnts, and c i t y banks have a l s o f i g u r e d as b u y e r s .
Virtually
a l l the b i l l s i n c l u d e d i n t h e s e t r a n s a c t i o n s have emanated from o u t s i d e the
District.
Rates on a c c e p t a n c e s r e f l e c t the g e n e r a l l y e a s i e r tendency of
money, ranging from 4 - 3 / 8 t o 4 - 5 / 6 p e r c e n t .
DISTRICT NO. 9 (MINNEAPOLIS)
During the month of October no d o l l a r exchange, b a n k e r s ' or t r a d e
a c c e p t a n c e s were purchased by t h e Minneapolis F e d e r a l Reserve Bank, b u t
t h e r e were p u r c h a s e s of w a r r a n t s t o the amount of $ 9 , 6 0 8 . 5 0 .
During t h e
month of September no p a p e r was p u r c h a s e d , b u t i n October a y e a r ago,
$483,000 w o r t h of b a n k e r s ' acceptances were purchased by t h i s b a n k .
October t h e r e were d i s c o u n t s of $75,000 i n bankers
1
During
a c c e p t a n c e s as compared
w i t h $10,724 i n September and none i n October a y e a r ago.
Trade acceptances
t o t h e amount of $259,$48 were d i s c o u n t e d i n October as compared w i t h
$187,763 in September and $222,000 i n October l a s t y e a r .
The r a t e s on a l l
c l a s s e s of p a p e r were lowered t o 5 - 1 / 2 p e r c e n t on November 5 t h .
- g-
x-3257
1293
DISTRICT NO, 11 (DALIES)
October r e p o r t s i n d i c a t e t h a t t h e a c c e p t i n g banks of t h i s D i s t r i c t
c r e a t e d a c c e p t a n c e s amounting t o $3,691,580*74,
ing on September 3 0 t h was $ 2 , 4 8 6 , 0 0 0 .
The t o t a l amount o u t s t a n d -
Of t h e amount c r e a t e d $2,325>659* 12
r e p r e s e n t e d domestic shipments and s t o r a g e of goods, w h i l e $1,365,921.62 was
b a s e d on import and e x p o r t t r a n s a c t i o n s .
The t o t a l amount of b a n k e r s ' a c c e p t -
ances held b y t h i s Bank a& October 3 1 s t was $205,000, an i n c r e a s e d u r i n g the
month, as $70,000 was the amount h e l d cm September 3 0 t h ,
All acceptances
h e l d were executed b u t n o t endorsed b y banks of t h i s D i s t r i c t .
DISTRICT NO. 12 (SAN fRMCISCO)
The r a t e on prime b i l l s i n t h e acceptance market i s now 4 - 3 / 8 p e r c e n t
a s compared w i t h 4 - 1 / 2 p e r c e n t a month ago.
The o f f e r i n g of United S t a t e s
T r e a s u r y c e r t i f i c a t e s of s i x months 1 m a t u r i t y a t 4 - l / 4 p e r c e n t on November
1, and t h e lowering b y l / 2 p e r c e n t of r e d i s c o u n t r a t e s a t t e n of the
F e d e r a l Reserve Banks and of 1 p e r c e n t a t t h e o t h e r two Banks on November 3 ,
were a l l e x p r e s s i o n s of a tendency toward e a s i e r money r a t e s .
This tendency
was r e f l e c t e d i n t h e a c c e p t a n c e market by a r e d u c t i o n of the s e l l i n g p r i c e
of prime b i l l s t o a 4—3/S b a s i s , the r u l i n g r a t e t o d a y , November 17th, as
compared w i t h 4 - 1 / 2 p e r c e n t on October 15th,
Up t o t h e time of change i n
r a t e s , t h e b i l l market showed u n u s u a l a c t i v i t y b o t h i n s t r e n g t h and b r e a d t h
of the demand.
T h i s a c t i v i t y was h a l t e d a b r u p t l y b y t h e d e c r e a s e i n the
y i e l d of a c c e p t a n c e s and has n o t resumed i t s f o r m e r p r o p o r t i o n s , a l t h o u g h the
i n c r e a s i n g amount of i d l e f u n d s has caused a f i r m e r f e e l i n g and i n c r e a s i n g
sales.
The l a r g e s t d e a l e r on the Coast r e p o r t s t h a t a rough c l a s s i f i c a t i o n
of b i l l s marketed d u r i n g the p a s t month would show a d i s t i n c t p r e f e r e n c e f o r
90 day a c c e p t a n c e s .
His f i g u r e s a r e a s f o l l o w s :
rf
CD
02
- 9 -
r i
Maturity
"
"
"
*
x-3257
of 30 days
"
60 dayy
"
9C days
" 120 days
" 150 days
9*0#
10.5^
7-4.5$
5-0#
i.c#
As was t h e c a s e l a s t month the b i l l s drawn i n t h i s D i s t r i c t were based p r i m a r i l y
upon wheat, canned f r u i t s , sugar and c - f f e e , w i t h an appearance d u r i n g October
of some c o t t o n b i l l s * D e t a i l s of purchases and h o l d i n g s of acceptances b y the
36 p r i n c i p a l a c c e p t i n g banks i n the D i s t r i c t appear i n the f o l l o w i n g tab lei
Acceptances of 36 Reporting Banks.
Amount Bought
Amount held
:
Creates, in
All o t h e r
At Close of Month
Total
,
Amount Accepted :12th i'ed.Res - B i s t .
September Oct ob e r
Sep tetnbe r October
September
October
Sovtc^ber: Cstdbor September Oct ob e 0 2 5 ^ 7 0 IT77527224T6,52^,351
?ac Northwest <J i 7 i I i b ; i 9 9 l ! i , 1 i n / & 9 : $ ~ 2 7 c 7 o 3 l T & 5 , S S f $276oiT^OI ,329,503
Northern Gal.. .
""Southern Cal.
•
3^80,105
539,005
2,555.132:'2,072,211
160,000:
172,041
254,000
937.6f4
1,336,304
3,015,275
2,190,304
3,109,149
3,595,333
627,922
1,332,532
150,412
1,504,573
772,346
2,057,149
1,300,379
OtLsr D i s t r i c t s
Total
$5,259,309
$4,026;311:$2,520,333$2117,395:$4,27&,022 $2,27 6,225 :$7,392,415 $4,994,120:12,919,122 11,420,070
* One bank i n Lcs Angeles, r e p o r t i n g $336,505 as amount accepted i n October,
d i d a c t r e p o r t i n September.
FEDERAL RESERVE BOARD
WASHINGTON
November
X-325s
SUBJECT:
igSl.
D e p r e c i a t i o n -Allowances f o r F e d e r a l Reserve Bank B u i l d i n g s .
Dear S i r :
The Board h a s had under c o n s i d e r a t i o n f o r some t i m e p a s t t h e
q u e s t i o n of d e p r e c i a t i o n a l l o w a n c e s f o r t h e b u i l d i n g s of F e d e r a l Reserve
Banks, T h i s m a t t e r has a l s o been t h e s u b j e c t of c o r r e s p o n d e n c e and conv e r s a t i o n s between members of t h e Board and t h e Governors of s e v e r a l of
t h e F e d e r a l Reserve Banks.
The b u i l d i n g o p e r a t i o n s which have been engaged i n have a l l
involved h i g h e r c o n s t r u c t i o n c o s t s t h a n a r e r e g a r d e d a s normal, and t h e
Board r e c o g n i z e s t h e f o r c e of t h e argument which h a s b e e n made i n f a v o r
of s e t t i n g up r e s e r v e s d u r i n g t h e t i m e t h a t t h e b u i l d i n g s a r e i n course
of c o n s t r u c t i o n , i n o r d e r t o r e d u c e t h e a c t u a l c o n s t r u c t i o n c o s t t o a
f i g u r e which upon completion of t h e work w i l l approximate t h e mean
between t h e p r e s e n t and p r e - w a r c o s t s .
I n a n t i c i p a t i o n of a p o s s i b l e prolonged p e r i o d of s m a l l e r
e a r n i n g s , F e d e r a l Reserve Banks g e n e r a l l y have evinced a d e s i r e t o charge
off c o m p a r a t i v e l y l a r g e amounts a g a i n s t t h e i r b u i l d i n g s a t t h e c l o s e of
t h e p r e s e n t y e a r . The Board t a k e s t h e view t h a t i t i s d e s i r a b l e t h a t
b u i l d i n g s be c a r r i e d on t h e books of t h e banks a t a r e a s o n a b l e v a l u a t i o n ,
but i t must t a k e i n t o c o n s i d e r a t i o n t h e p r o p r i e t y of p e r m i t t i n g F e d e r a l
Reserve Banks t o charge off t h e s e amounts out of c u r r e n t n e t e a r n i n g s ,
thus, d e p r i v i n g t h e Treasury of t h e United S t a t e s of sums which would
o t h e r w i s e be p a i d t o i t a s f r a n c h i s e t a x e s .
The Board h a s reached t h e c o n c l u s i o n t h a t i t would be p r o p e r
f o r F e d e r a l Reserve Banks t o charge o f f out of c u r r e n t n e t e a r n i n g s each
y e a r an amount not i n e x c e s s of two p e r cent of t h e book v a l u e of t h e i r
b u i l d i n g s , b u t i f i t i s d e s i r e d by any F e d e r a l Reserve Bank t o charge off
an a d d i t i o n a l sum or t o p r o v i d e a r e s e r v e f o r d e p r e c i a t i o n , t h e charge
should be made not a g a i n s t c u r r e n t n e t e a r n i n g s but a g a i n s t t h e s u p e r s u r p l u s f u n d . I n p r a c t i c a l l y a l l c a s e s , t h e s u p e r - s u r p l u s a t t h e end
of t h i s y e a r w i l l be l a r g e enough t o e n a b l e t h e F e d e r a l Reserve Banks t o
e s t a b l i s h a r e s e r v e f o r d e p r e c i a t i o n or t o make t h e d e s i r e d r e d u c t i o n
i n t h e i r b u i l d i n g a c c o u n t s w i t h o u t d i m i n i s h i n g t h e i r payments t o t h e
Government on account of f r a n c h i s e t a x e s .
You a r e r e q u e s t e d t o a d v i s e t h e Board b e f o r e t h e end of t h e
y e a r of t h e amount t h a t y=ur d i r e c t o r s may d e s i r e t o s e t up a s d e p r e c i a t i o n
r e s e r v e or t o charge o f f f o r p r e s e n t or a n t i c i p a t e d d e p r e c i a t i o n of
buildings.
Very t r u l y y o u r s ,
CHAIRMEN OF ALL F.R.BANKS
http://fraser.stlouisfed.org/
COPIES TO GOVERNORS.
Federal Reserve Bank of St. Louis
G o v e r n o r .
GOLD
Summary of t r a n s a c t i o n s f o r p e r i o d ending December 1
Federal
Balance l a s t
Gold
Reserve
statement
Bank of
Nov, 23, 1921,
•Withdrawals
Boston
New York
Hiiladel£hia
Cleveland
Richmond
Atlanta
Chicago
St* Louis
Minneapolis
Kansas C i t y
Dallas
San F r a n c i s c o
Total
$
39,599, 796.26
45,084, 428.42
4 0 , 4 9 7 , 671,92
62,713, 314.80
21,277,
6.207,
94,024, 206.3
13,996, 503.82
15,580. 532.61
113,87
251.01
- 2 L 1 Z 2 , 134.03
* 425,831,483.70 |$
Federal
Reserve
Bank of
(CONFIDENTIAL)
Aggregate
Aggregate
d e p o s i t s end
withdrawals
t r a n s f e r s from
and t r a n s f e r s
Agent's fund
t o A g e n t ' s fund
Gold
Deposits
15,003,200.00
642,372.72
1,624,027.29
976,864,89
1,134,696.88
776,699,68
*06,551,79
1,307,375.81
862,269.99
559,450.00
18*351,800,00
2,000,806.00
71,000,00
1,000,000.00
3,003,000,00
1,000,000.00
887,100,00
903,064,45
1,154.27^,31
11,654,751,81 $
1,004,299.10
500,000.00
3.000.900.00
44,935,005.10
X-3259
642 ,372.72
1,624 ,027,29
976 ,864.89
1,134 ,696.88
,699.68
1 . S t ,551.79
X
,375.81
>1%
#269.99
559,450,00
887 ,100.00
H064.45
1,154 278.31
1$ 11,934,751.81 1$
f
Net
Debits
7,014,033-24
4,393,346,65
3,123,063.04
2,347,876.56
974,154.42
6,261,919.97
428,407.03
$
Total
Debits
111,994,561*61
1*00,308,256.56
140,086,445.85
104,029,589.37
115,436,258,72
44,890,156,84
192,360,757.32
95,780,414,00
27,733,387.25
77,246,523.20
45,603,945.58
55,702,728.71
$
Total
Credits .
104,980,528,37
$
108,324,008.23
118,522,600.45
41,767,093.80
190*012,880,76
94,806,259-58
31,443.557.62
70,984,603.23
aa&asa
24,542,800.91 ($1,411,173,035.01 1$ 1,411,173,035.01 1$
Net
Credits
-
25,003,200,00
18,351,800.00
2,000,806.00
71,000.00
2,100,000.00
3,003,000,00
1,000,000,00
1,004,299,10
500,000,00
$
4,080,062.26
4,294,418,86
3,086,341.73
3,710,170.37
9,371,807.69
24,542,800,91 | $
Washington, D, C.
December 2. 1921.
T R A N S F E R S
Debits
e m i t *
11,000,000.00 $ 5,*375,932.23
10,675,216.60
5,000,000.00
292,700.17
10,675,216.60
1,684,481,54
8,000,000,00
2,000,000,00
3,984,150.86
6,000,000,00
$,155,990.00
58,190,005,10 1$ 32,343,8^9.00 1$ 32,343,849,00
Balance in
fund at close
of business
Dec. 1, 1921.
Settlements from November 25, 1921 to December 1, 1921
inclusive.
Boston
4
New Yoric
Philadelphia
Clevelend
Richmond
Atlanta
Chicago
St. Louie
Minneapolis
Kansas City
Dallas
San Francisco
Total
1921,
FEDERAL RESERVE BOARD
S E T T L E M E N T FUND
51,322,523.13
63,094,071.08
65,601,675.29
66,165,736.95
20.983.347.98
4,393,511.10
93.371.953.99
18,160,079.41
18,731,252,98
22,375,393.00
Stannary of changes in ownership of gold by banks through
transfers and settlements.
Decrease
$ 12,638,101.01
2,807,544.58
2,347,876,56
974,154,42
6,061,919.97
$
Increase
1,281,869.95
4,080,062,as
4,587,119.03
411,125.13
3,710,170.37
1,5*7,442,11
9,371,807,69
472,066,736.99 |$ 25,029,596.54 | $ 25,029.596.54
96ST
P I J> E B A I
F
RESERVE
Summary of t r a n s a c t i o n s f o r p e r i o d ending Ttecemher 1. 1921.
Federal
Gold
Balance l a s t
Gold
Reserve
statement
Deposi t s
Agent a t
Withdrawals
Nov. 2 3 , 1921.
Boston
|$
160,000,000 |$ 10,000,000
1$
New York
|
171,000,000
1
130,389,260
1
Cleveland
I
135,000,000
1
3*,595,000
t
3,000,000
1
Atlanta
1
39,300,000
1
3,300,000
I
Chicago
1
292,644,500
I
7,000,000
I
57,030,600
1
2,000,000 1
Minneapolis
|
4,200,000
Kansas C i t y
|
2i,360,000
Dallas
|
2,234,000
•
196,577,500
San F r a n c i s c o
i
'
Total
'"4
|
2,000,000
1
7,000,000
-
Deposits
Withdrawals
1$
1$
140,000,000
1
1
171,000,000
1
1
130,389*260
1
t
135,000,000
1
I
28,595,000
4,400,000
1
I
36,700,000
1
1
285,644,500
2,000,000
1
1
57,430,600
1
2,200,000
1
27,360,000
1
-
1
2,234,000
I:
1
$ 20,000,000
-
-
-
-
-
1,500,000
1
1,100,000
1
300,000
2/400,000
-
1
w
I#
-
w
1,000,000
I
Total
2,000,000
•
w
I
J
2,155,000
9,155,000
j
1,BOO,000
2,400,000
I
1
1,000,000
- • ••
IS 1,24*, 330,860
1
(CONFIDENTIAL)
Total
1$ 34,300,000
X-3259a
Washington, D* C.
December 2 . 1921*
Balance a t
c l o s e of
business
Dec. 1 . 1921,
7,000,000
|$
1
S t . Louis
FUND
3,000,000
|$ 10,000,000
1
Richmond
Deposits
through
transfers
from bank
Withdrawals
for
transfers
to bank
I
"Philadelphia
AGENTS'
1$ 4,900,000
|$ 13,255,000
I
M
300,000
1$
1 47,555,000
1$
5,200,000
189,422,500
U
M , 205,975,860
1
10
I
CD.
•NE
FEDERAL RESERVE BOARD
WASHINGTON
December 6, 1921.
X-3261
SUBJECT:
R e v i s e d S t a t e m e n t s of Expense F e d e r a l R e s e r v e Leased
Wire System, J a n u a r y t o August, i n c l u s i v e , 1 9 2 1 .
Dear S i r :
The F e d e r a l " R e s e r v e Board h a s b e e n a d v i s e d by t h e F e d e r a l
Reserve Bank of A t l a n t a t h a t i n t h e B a n k ' s r e p o r t s t© t h e Board
(Form 30C6-a), " S t a t e m e n t of Expense, Leased Wire S y s t e m , " f o r t h e
months of J a n u a r y t o August, i n c l u s i v e , 1921# i t h a s been r e p o r t i n g a s
main l i n e b u s i n e s s a c o n s i d e r a b l e volume of b u s i n e s s each month which
vvaa n o t h a n d l e d over t h e main l i n e , b u t e x c l u s i v e l y on b r a n c h l i n e w i r e s .
I t i s on t h e b a s i s of t h e Banks' r e p o r t s of t h e i r volume of main l i n e
b u s i n e s s t h a t a s s e s s m e n t i s made Upon them each month by t h e Board t o
c o v e r expense of o p e r a t i n g t h e main l i n e l e a s e d w i r e s y s t e m . A$ a r e s u l t
of t h e e r r o n e o u s r e p o r t s r e n d e r e d by t h e A t l a n t a Bank, t h e a s s e s s m e n t s
made by t h e Board f o t t h e months of J a n u a r y t o August, i n c l u s i v e , were
n o t computed on t h e t r u e b a s i s - A t l a n t a * s p r o r a t a payments b e i n g g r e a t e r
t h a n would have been t h e case had i t been a s s e s s e d on i t s a c t u a l main l i n e
b u s i n e s s , and t h e amounts p a i d by t h e o t h e r Banks c o r r e s p o n d i n g l y l e s s .
C o r r e c t e d r e p o r t s f o r t h e p e r i o d have been f u r n i s h e d by t h e
F e d e r a l R e s e r v e bank of A t l a n t a and t h e Board h a s re-figuredk i t s a s s e s s ments and i s e n c l o s i n g c o r r e c t e d s t a t e m e n t s h e r e w i t h , ( X - 3 2 6 l a and X~32olb).
I n o r d e r t h a t t h e F e d e r a l R e s e r v e Bank of A t l a n t a may be reimbursed i n t h e
amount of i t s over-payments, a l l o t h e r F e d e r a l Reserve Banks a r e b e i n g
r e q u e s t e d t o r e m i t d i r e c t t o t h e A t l a n t a Bank t h e d i f f e r e n c e between t h e
amounts p a i d by them a s t h e i r p r o r a t a s h a r e s of t h e c o s t of t h e o p e r a t i o n
of t h e m a i n l i n e l e a s e d w i r e system f o r t h e months of J a n u a r y t o August,
i n c l u s i v e , and t h e amounts of t h e i r p r o r a t a s h a r e s a s shown by t h e e f i c l o s e d
corrected statements.
The t o t a l amount due from your Bank i s $
which
s h o u l d be r e m i t t e d d i r e c t t o t h e F e d e r a l R e s e r v e Bank of A t l a n t a , a d v i c e
of t h e r e m i t t a n c e b e i n g s e n t t o t h e Board.
Very t r u l y y o u r s ,
G o v e r n o r .
SENT ALL GOVERNORS OF F . R. BANKS
EXCEPT ATLANTA.
Enclosures.
X-326l-a
REVISED KERDET SHOWING CLASSIFICATION AND NUMBER OF WORDS
TRANSMITTED OVER MAIN LINE OF THE FEDERAL RESERVE
LEASED WIRE SYSTEM DURING THE MONTH OF JANUARY 1921.
Bank Business
From
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
**9,153
194,038
5%,823
108,004
103,758
125,Ug2
197,966
107,571
54,615
114,480
113,475
189,551
Per c e n t of
Total Bank
Business( *)
3.48
13.74
3.88
7.64
7.34
8.88
Fiscal
Agency
Business
7,558
33,667
6,155
15,766
3,326
8,856
War
Finance Corp.
Business
227
75
135,543
150,664
559
1,207
1,549,016
414,429
1,963.447
257
1,675,474
286,207
1,766
85.33
14.58
.09
Bank Business
F i s c a l Agency Business
1,675,474 words or 8 5 . 4 l #
286,207
"
" 14.59
Total
1,961,681
100.00#
These p e r c e n t a g e s used i n c a l c u l a t i n g the
p r o r a t a share of l e a s e d w i r e expense a s shown
on t h e accompanying statement
212,106
113,207
63,273
122,969
119,173
207.403
100.00%
8.03
13.42
Grand T o t a l
FEDERAL RESERVE BOARD
WASHINGTON, D. C.
134,413
7.61
3-86
8.10
1,412,916
262.558
{*)
56,711
227,932
60.973
123,770
107,083
l4,l4o
5,636
8,658
8,489
5,441
17,852
14.02
Total F . R.
Banks
Washington
"Per c e n t of Total
To t a l
X-326l-a
REVISED REPORT SHOWING CLASSIFICATION AND NUMBER OF WORDS
TRANSMITTED OVER MAIN LINE OF THE FEDERAL RESERVE
LEASED WIRE SYSTEM DURING THE MONTH OF FEBRUARY 1921.
From
Bank Business
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
44,351
179,85*
4s,?47
94,264
87,632
102,-*64
167,706
95,113
4o,867
39,665
85,226
156,288
Per cent of
Total Bank
Business (*)
3-70
15.02
4.03
7.87
7.32
3.55
i4.oo
7-94
3.9i
7.49
7.12
13.05
Fiscal
Agency
Business
War
Finance Corp.
Business
5,923
21,124
5,272
96
4,089
2g
11,196
6,663
4,230
3,011
10,119
92
• 86,758
93,619
1,197,581
252,317
Grand T o t a l
1,449,898
180,377
542
88.91
11.06
'03
Per c e n t of T o ta l
Bank Business
F i s c a l Agency Business
1,449,898 words or 88.94$
180,377
"
" 11.06
Total
1,630,275
(•)
100.00#
These p e r c e n t a g e s used i n c a l c u l a t i n g the
p r o r a t e share of l e a s e d wire expense as shown
on the accompanying s t a t e m e n t .
FEDERAL RESERVE BOARD
WASHINGTON, D. C„
95,111
216
326
Total F. R.
Banks
Washington
100.00#
50,274
201,07S
53,519
105,460
91,74?
173:639
98,865
51,097
5,933
3,752
5,446
Total
88,329
166,407
1,630,817
X-3261-a
REVISED REPORT SHOWING CLASSIFICATION AND NUMBER OF WORDS
TRANSMITTED OVER MAIN LINE OF THE FEDERAL RESERVE
LEASED WIRE SYSTEM DURING THE MONTH OF MARCH 1921.
From
Batik Business
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
46,745
206,827
55,247
101,501
90,456
87,428
210,372
107,922
47,794
100,959
89,156
180,541
T ot al F. R.
Banks
Washington
1,324,948
319,007
Grand T o t a l
Per c e n t of
Total Bank
Business (*)
3.53
15.61
4.17
7.66
6.53
6.60
15.88
8.14
3,60
7.62
6.73
13-63
Fiscal
Agency
Business
7,057
19,715
53,802
76
8 294
19,498
3,494
12,154
4,651
226,618
63,541
120,999
93,950
99,582
215,023
113,441
54,281
111,490
95,414
200,402
2:8?
10,531
6,25s
19,861
76
688
1,448,543
444,854
1,643,955
248,678
764
1,893,397
86.83
13.13
.04
100.
Bank B u s i n e s s
F i s c a l Agency B u s i n e s s
1,643,955 words or 86.86$
248,678
•
" 13.14#
Total
1,892,633
100.00#
These p e r c e n t a g e s u s e d i n c a l c u l a t i n g the
p r o r a t a share of l e a s e d wire expense a s shown
on t h e accompanying s t a t e m e n t .
FEDERAL RESERVE BOARD
WASHINGTON, D. C.
Total
123,519
125,159
Per c e n t of T o t a l
(*)
War
Finance Corp.
Business
:
X-326l-a
REVISED REPORT SHOWING CLASSIFICATION AND NUMBER OF WORDS
TRANSMITTED OVER MAIN LINE OF THE FEDERAL RESERVE
LEASED WIRE SYSTEM DURING THE MONTH OF APRIL 1921.
From
Bank B u s i n e s s
Per c e n t of
Total Bank
Business ( • )
Fiscal
Agency
Business
47,223
188,265
51,360
97,078
80,152
76,061
151,642
88,653
41,756
95,933
75,904
151,187
4.12
16.44
4.48
8,48
7.00
6.64
13.24
7.74
3.65
T o t a l F* R»
Banks
Washington
1,145,214
100.00
299,828
84,183
86,512
Grand T o tal
1,445,042
170,b95
89.433
10.564
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
S t . Louis
Minneapolis
Kansas City
Dallas
San F r a n c i s c o
Per c e n t of T o ta l
13.20
1,445,042
Total
1,615,737
(*)
170,695
"
10.56$
100.00#
These p e r c e n t a g e s used i n c a l c u l a t i n g the
p r o r a t a share of l e a s e d wire expense a s shown
on t h e accompanying statement
FEDERAL RESERVE BOARD
WASHINGTON, D* C.
Total
52,492
5,269
17,018
7,990
13,530
2,684
5-804
3,265
4,271
4,108
5,429
3,169
11,646
8.38
6.63
Bank B u s i n e s s
F i s c a l Agency Business
War
Finance Corp.
Business
205,283
59,350
110,608
82,836
81,865
154,907
92,924
45,864
101,362
79,073
162,833
50
50
.003
1,229,397
386,390
1,615,787
X-326l-a
REVISED REPORT SHOWING CLASSIFICATION A D NUMBER OF WORDS
M
TRANSMITTED OVER MAIN LINE OF THE FEDERAL RESERVE
LEASED WIRE SYSTEM DURING THE MONTH OF MAY 1921.
From
Bank Business
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
43,414
156,475
48,969
95,880
70,492
79,976
133,658
82,375
40,419
90,739
75,299
136,950
T ot al F. R.
Banks
Washington
1,054,646
Grand T o t a l
Per c e n t of
T o t a l Bank
B u s i n e s s (*)
4.12
14.84
4.64
9.09
6.69
7-58
12.67
7.81
3-83
8.60
7.14
12.99
100.00
Fiscal
Agency
Business
5,149
13,622
2,107
10,485
2,777
6,145
3,430
4,086
3,459
5,93§
2,976
10,245
48,563
507
170,6o4
21
106,386
51,076
73,269
86,121
137,088
86,461
43,878
44
96,675
78,319
147.195
572
1,183
1,125.635
1,333,5#
162,523
1,755
l,*197,864
89.03
10.85
.12
Bank B u s i n e s s
F i s c a l Agency Business
1,333,586 words or 89.14%
162,523 « " 10.86%
Total
1,496,109
100.00#
These p e r c e n t a g e s used i n c a l c u l a t i n g t h e
p r o r a t a share of l e a s e d wire expense a s shown
on t h e accompanying statement
FEDERAL RESERVE BOARD
WASHINGTON, D. C.
Total
70,417
92,106
278,940
Per c e n t of T o t a l
(•)
War
Finance Corp.
Business
372,229
X,326l-a
REVISED EETPOBT SHOWING CLASSIFICATION AND NUMBER OF WORDS
TRANSMITTED OVER MAIN LINE OF THE FEDERAL RESERVE
LEASED WIRE SYSTEM DURING THE MONTH OF JUNE 1921.
From
Bank B u s i n e s s
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
49,895
170,086
52,4?U
100,922
79,971
82,393
132,227
89,267
43,466
94,342
74,197
150,539
T o t a l F, R.
Banks
Washington
1,119,779
Grand T o t a l
Per c e n t of
T o t a l Bank
Business (*)
4.46
^69
9.01
7.14
7.36
11.81
7.97
Per c e n t of T o tal
8 , ! 49
26,296
9,010
16,840
4,791
11,571
136,566
18,565
100.00
131,286
333
391
1,251,398
449,975
292,631
17.20
724-
1,701,373
82.76
98,605
50,787
103,541
80,064
5,86?
161,345
Total
1,700.649
100.
These p e r c e n t a g e s u s e d i n c a l c u l a t i n g the
p r o r a t a share of l e a s e d w i r e expense a s shown
on t h e accompanying statement
145
58,044
196,570
61,484
117,907
84,762
93,964
13.44
. 6.63
1,408,018 words or 82.79$
292,631
"
"-17.21%
FEDERAL RESERVE BOARD
WASHINGTON, D. C.
188
To t a l
8.42
3.88
Bank Business
F i s c a l Agency B u s i n e s s
(*)
War
Finance Corp.
Business
U.339
9,338
7,321
9,199
1,408,018
288,239
Fiscal
Agency
Business
169,104
.04
X-3261-a
REVISED REPORT SHOWING CLASSIFICATION AND NUMBER OF WORDS
TRANSMITTED OVER MAIN LINE OF THE FEDERAL RESERVE
LEASED WIRE SYSTEM DURING- THE MONTH OF JULY 1921.
From
Bank Business
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas C i t y
Dallas
San Francisco
56,227
147,152
55,611
79,048
73,646
69,254
143,029
82,081
45,061
81,496
66,405
125,885
Total F.R;
Banks
Washington
1,024,895
271,858
Grand Total
Per cent of
Total Bank
Business (*)
Treasury
Dept.
Business
8.01
4.39
5,404
9,761
5.133
7,280
5,437
5,526
6,168
6,807
4,269
12.28
4,087
16,540
5.49
14,36
5.43
7.71
7.18
6.76
13.96
100.00
98
61,631
157,062
60,7^4
86,426
79,083
74,780
149,197
88,888
49,330
87,551
70,492
142,425
6,055
247
100
1,107,609
348,614
1,296,753
159,123
347
1,456,223
89.05
10.93
.02
Bank Business
Treasury Business
1,296,753 words or 89.07#
159,123
"
" 10.93#
Total
1,455,876
100.00#
These percentages used i n c a l c u l a t i n g the
pro r a t a share of leased wire expense a s shewn
on the accompanying statement
FEDERAL RESERVE BOARD
WASHINGTON, D. C.
149
Total
82,467
76,656
Per cent of Total
(*)
War
Finance Corp.
Business
X-3261-a
REVISED REPORT SHOEING CLASSIFICATION AND NUMBER OF WORDS
TRANSMITTED OVER M/iIN LINE OF THE FEDERAL RESERVE
~ LEASED WIRE SYSTEM DURING THE MONTH OF AUGUST 1921.
From
Bank Business
Boston
New York
"Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St* Louis
Minneapolis
Kansas C i t y
Dallas
San F r a n c i s c o
45.813
17^,362
65,137
8k,5*3
76,90k
76,785
154,113
SO,617
Per c e n t of
T o t a l Bank
B u s i n e s s (*)
4.09
15.58
5-82
7.56
6.87
6.86
13-77
7.20
4.34
8.44
7.33
12.14
Total F. R.
Banks
Washington
1,119,120
290,961
100.00
Grand T o t a l
1,410,081
6,435
10,490
6,150
8,325
5,692
7,605
6,351
7,488
3,985
5,572
5,U2
15,315
160,464
88,105
316
87,279
151,427
89,984
88,520
1,271
2,425
1,208,911
383,370
3.696
1,592,281
11.21
88.55
T ot al
1,588,585
100.00$
These p e r c e n t a g e s u s e d i n c a l c u l a t i n g the
p r o r a t a share of l e a s e d wire expenses a s shorn
an the accompanying statement
52,248
184,8§2
71,287
92,868
82,668
85,032
52,656
100,025
1,410,081 words or 88.76#
178,504
"
« 11.24$
FEDERAL RESERVE BOARD
WASHINGTON, D. C.
72
642
To t a l
72
47
122
Bank Business
Treasury Business
(*)
War
Finance Corp.
Business
178,504
kg 599
94,4o6
82,045
135,796
Per c e n t of T o ta l
Treasury
Dept.
Business
.24
REVISED REPORT OF EXPENSE
MAIN LINE
FEDERAL RESERVE LEASED WIRE SYSTEM JANUARY, 1921.
Name of Bank
Operators'
Salaries
Boston
$ 240.00
New York
700.00
Philadelphia
225.00
Cleveland
500.00
Richmond
295.00
240.00
Atlanta
Chi cago
(#)4,514.58
St, Louis
300.00
Minneapolis
258.34
Kansas City
215.00
166,66
Dallas
Ban F r a n c i s c o
215.00
Operators
Overtime
$
.
_
«•»
»
3.00
-
2.67
7.75
Wire
Rental
$
-
(*>50.00
-
-
-
-
-
7,693.63
Fed, Res. Board
Total
1
$7,869.58
$13.42
$7,743.63
Total
Expense
Pro r a t a
Share of
Total
Expense
Credits
r
$
$
240.00
700.00
225.00
500.00
345.00
240.00
4,517.58
300.00
258.34
217.67
174.41
215.00
543.66
2.146.50
606.15
1,193.54
1,146,66
2,190.25
345.00
240.00
4,517.58
1,265.41
1,254,47
258.34
217.67
174.41
1,387.26
1,188.86
603.02
300.00
215.00
2.096.51
(&)4.32
$7,933.00
I n c l u d e s S a l a r i e s Washington O p e r a t o r s .
C u t - i n a t Washington on Richmond-Baltimore c i r c u i t .
(A) Amount r e i m b u r s a b l e t o Chicago.
(&) Received from War Finance C o r p o r a t i o n c o v e r i n g b u s i n e s s f o r month of December,
(**) C r e d i t .
FEDERAL RESERVE BOARD
WASHINGTON,
Payable t o
Federal Reserve
Board
$
303.66
1.446.50
381.15
693.54
801.68
1,147.26
2,327.33(**)
888.86
344.68
1,047.74
1, 080. C6
1.881.51
7,693.63
$15,622.31
(#)
240.00
700.00
225.00
500.00
X-3261-13
$10,016.64
2,327.33(4)
$ 7,689.31
REVISED REPORT OF EXPENSE
MAIN LINE
FEDERAL RESERVE LEASED WIRE SYSTEM FEBRUARY, 1921.
Name of Bank
Operators 1
Salaries
Boston
$ 240.00
New York
692.33
Philadelphia
225.00
Cleveland
500.00
Richmond
300,00
Atlanta
240.00
Chicago
(#84,640.34
S t , Louis
300,00
Minneapolis
256.34
Kansas City
320.00
Dallas
166,66
San F r a n c i s c o
215.00
Operators'
Overtime
$ 20.00
Total
Expense
240.00
712.33
(*)50.00
225.00
500.00
350.00
240.00
4,640.34
300.00
258.3%
320.00
168.63
1,97
Fed. Res, Board
Total
Wire
Rental
215.00
7,846.58
$8,097,67
$21.97
$16, 016.22
(6)24.71
$
Credits
591.69
2,401.92
644.46
1,258.53
1,170.58
l,3b7.27
& 240.00
712.33
1,269.73
625.27
f.
1,197. 76
300.00
225.00
500.00
350.00
240.00
4,640.34
2,238.81
258.34
320.00
1,138.60
2,086.89
168.63
215.00
$15, 991.51
$8,169.64
$15,991.51
(#)
(*)
(A)
(&)
(**)
I n c l u d e s s a l a r i e s Washington o p e r a t o r s .
C u t - i n a t Washington on Richmond-Baltimore c i r c u i t .
Amount r e i m b u r s a b l e t o Chicago.
Received from War Finance Corporation covering b u s i n e s s f o r month of January.
Creitt.
FEDERAL RESERVE BOARD
W/SHINGTON, D. C.
Payable t o
Federal Reserve
Board
$
351.69
1,689.59
419.46
758.53
820.58
1,127.27
1,401.53 (**)
969.73
666.93
877.76
969.97
671.89
7,846.58
$7,896.58
pro r a t a
Share of
Total
Expense
t-32 6l-b
$9,223.40
1,401.53(A)
$7,821.87
REVISED REPORT OF EXPENSE
MAIN LINE
FEDERAL RESERVE LEASED WIRE SYSTEM MARCH, 1921.
Name of Bank
Operators1
Salaries
$ 240.00
Boston
New York
868.30
Philadelphia
225.00
Cleveland
500.00
Richmond
300.00
Atlanta
240.00
Chicago
(#>4,659.54
S t . Louis
300.00
Minneapolis
258.34
Kansas C i t y
290.00
166.66
Dallas
San Francisco
215.00
Extra
compensation
Operators'
Overtime
$
$
—
—
402.75
198,00
«.
-
(*)50.00
-
-
-
-
.85
-
7,834.63
$8,262.84
$ .85
$600.75
$
240.00
1,271.05
225.00
698.00
350.00
240.00
4,659.54
300.00
-
Fed. Res. Board
Total
Wire
Rental
-
-
$
Pro r a t a
Share of
Total Total
Ejcptifcee Expense
258.34
290.00
1&7.51
$
590.89
2,612.96
698.02
1,282.20
1,143.27
1,104.77
2,658.15
1,362.55
602,60
$
240,00
1,271.05
225,00
698.OO
350.00
240.00
4,659.54
300,00
258.34
290.00
I67.5I
. 07 $16,738.97
(&)10.10
$8,914.44
215.00
2.281.52
215.00
Payable t o
Federal
Reserve
Board
$
350.89
1,341.91
473.02
584.20
793.27
864.77
2,00l.39(*»)
985.51
• 959.ce
2,066,52
7,834.63
I n c l u d e s s a l a r i e s Washington o p e r a t o r s .
C u t - i n a t Washington on Richmond-Baltimore c i r c u i t .
Amount r e i m b u r s a b l e t o Chicago.
Received from War Finance Corporation covering b u s i n e s s f o r month of February.
Credit.
FEDERAL RESERVE BOARD
WASHINGTON, D. C.
Credits
1.275.51
1,126.53
$16,738.97
(#)
(*)
(A)
(&•)
(**)
x~326l-t
$9,825.92
2,001.39(A)
$7,824.53
REVISED REPORT OF EXPENSE;
MAIN LINE
FEDERAL RESERVE LEASED WIRE SYSTEM APRIL 1921.
Name of Bank
Operators'
Salaries
Boston
$ 240.00
New York
889.30
Philadelphia
225.00
Cleveland
508.00
Ri chmond
300.00
Atlanta
240.00
Chicago
(#)4,858.22
S t . Louis
300.00
Minneapolis
258.34
Kansas City
290.00
Dallas
166,66
San F r a n c i s c o
215.00
Operators'
Overtime
Wire
Rental
Total
Expense
Pro r a t a
Share of
lotal
Expense
$
$
$
$
-
—
-
«*
*
(*)50.00
—
-
—
-
W
-
-
-
m.
• 28
-
-
-
Fed, Res, Board
Total
-
-
240.00
889.30
225.00
508.00
350.00
240.00
4,858.22
300.00
258.34
290.00
166.94
215.00
7,834.63
$8,490.52
$
.28
$16,375.43
$16,368.11
$16,368.11
(#)
(*)
(A)
(&)
(**)
I n c l u d e s s a l a r i e s Washington o p e r a t o r s .
C u t - i n a t Washington on Richmond•Baltimore c i r c u i t ,
Amount reimbursable t o Chicago,
Received from War Finance Corporation covering b u s i n e s s f o r month of March.
Credit.
FEDERAL RESERVE BOARD
WASHINGTON, D. C.
Credits
Payable t o
Federal
Reserve
Board
$
$
240.00
889.30
225.00
508.00
. 350.00
• 240.00
4,858.22
300.00
258.34
290.00
. 166,94
215.00
434.37
1,801.62
508.29
880.01
795.77
846.84
2,691.08(**)
966.89
339.10
1, 081.65
918.26
1,945,59
7,834.63
$7,884.63
674.37
2,690.92
733.29
1,388.01
1,145.77
1,086.84
2,167.14.
1,266.89
597.44
1,371.65
1,085.20
2,160.59
X-326l-b
$8,540.80
$10,518.39 '
$ 7,827.31
REVISED REPORT OF EXPENSE
MAIN LINE
FEDERAL RESERVE LEASED WIRE SYSTEM MAY, 1921,
Name of Bank
Operators'
Salaries
Boston
$ 240.00
New York
942.97
Philadelphia
225.00
Cleveland
508.00
Richmond
300,00
Atlanta
240.00
Chicago
(#)4,914.51
St. Louis
300,00
Minneapolis
258.34
Kansas City
290.00
Dallas
166,66
£>an Francisco
215.00
Operators'
Overtime
Tire
Rental
$
$ -
-
111.00
w
mm
(*)50,00
—
w
w
w
2.50
(#)
(*)
(A)
(&)
(•*)
w,
«»
w
7,834.63
$8,600.48
$113.50
240*00
1,053.97
225.00
508.00
350.00
240.00
4,914,51
300.00
258.34
292,50
166.66
215.00
-
Fed. Res. Board
Total
-
Total
Expense
$7,884,63
Pro r a t a
Share of
Total
Expense
Credits
$
$
683.84
2,463,15
770.15
1,508.76
1,110.41
1,258.13
2,102.98
1,296.31
635.71
1,427.44
1,185.10
2,156.09
225.00
508.00
350.00
240.00
4,914.51
300,00
258.34
292.50
166.66
215.00
Payable t o
Federal
Reserve
Board
443.84
1,409.18
545.15
1,000.76
760,41
1,018,13
2,811.53(**)
996.31
377.37
1,134.94
1,018.44
1,941,09
7,834,63
,54(&)
$16,598.07
Includes s a l a r i e s Washington o p e r a t o r s .
C u t - i n a t Washington on Richmond-Baltimore c i r c u i t *
Amount reimbursable t o Chicago.
Received from War Finance Corporation covering b u s i n e s s f o r month of A p r i l .
Credit4
FEDERAL RESERVE BOARD
WASHINGTON, D. C.
240.00
1,053.97
X-3261-la
$10,645.62
2,811.53 U )
$ 7,834*09
fx
REVISED REPORT OF EXPENSE
MAIN LIME
FEDERAL RESERVE LEASED WIRE SYSTEM JUNE, 1921.
J
•
Name of Bank
Operators1
Salaries
Boston
$ 355.20
New York
861.64
Philadelphia
225.00
Cleveland
516,00
Richmond
300.00
Atlanta
240.00
Chicago
(#)4,965.8!
S t . Louis
300,00
Minneapolis
258.84
Kansas City
290.00
Dallas
166,66
San Francisco
215.00
Operators'
Overtime
$
1.00
9.00
214.45
101.25
148.50
Wire
Rental
$
Total
Expense
~
(*)50.oo
304.20
232,50
151.60
Fed. Res. Board
Total
Extra
•-hoop e n sation-
7,834.63
$8,694.1?
$10,00
$
750.22
2,691.35
830.97
1,596.38
1,265.06
1,304.04
2,092.48
1,412.12
687.45
1,491.85
1,174.70
2,381.28
$ 355.20
1,077.09
326.25
664.50
350.00
544.20
4,974.81
300.00
491.34
441$60
166.66
215.00
$17,717.90
$9,906.65
$17,717.90
I n c l u d e s s a l a r i e s Washington o p e r a t o r s ,
C u t - i n a t Washington on Richmond-Baltimore c i r c u i t .
Amount reimbursable t o Chicago.
Received from War Finance Corporation c o v e r i n g b u s i n e s s f o r month of May.
Credit,
FEDERAL RESERVE BOARD
WASHINGTON, D, C.
Credits
Payable t o
Federal
Reserve
Board
435.02
1,614,26
504,72
931.88
915.06
759.84
2,882.33(**)
1,112.12
i96.ll
1,050.25
1,008.04
2,166.28
7,834,63
$ 1 , 1 5 2 . 5 0 $7,884.63 $17,741.28
(&)23.38
.
(#)
(*)
(A)
(&)
(**)
355.20
1,077.09
326.25
664.50
350.00
544.20
4,974.81
300.00
491.34
441.60
166.66
215.00
Pro r a t a
Share of
Total
Expense
X-32 61-1)
$10,693.58
2,882,33(^)
$ 7,811.25
REVISED REPORT OF EXPENSE
MAIN LINE
FEDERAL RESERVE LEASED WIRE SYSTEM JULY, 1921.
Name of Bank
Operators'
Salaries
Boston
$ 240.00
New York
869.98
Philadelphia
225.00
Cleveland
516.00
Richmond
300.00
Atlanta
240.00
Chicago
(#>4,821.98
S t . Louis
300.00
Minneapolis
275.00
Kansas City
310.00
Dallas
170.00
San F r a n c i s c o
215.00
Operators 1
Overtime
$
(*>50.00
(#)
(*)
(a)
(&)
(**)
240.00
935.98
225,00
516.00
350.00
1.00
240.00
4,822.98
48.40
275.00
358 > 0
300.00
170.00
215,00
15,540.73
$8,482,96
Total
Expense
$
66.00
Fed. Res. Board
Total
Wire
Rental
$115.40
$15,590.73
Pro r a t a
Share of
Total
Expense
$ 1,327.51
3,472.31
1,313.00
1,864.31
1,736.15
1,634,60
3,375.59
1.936.85
1,061.52
1.922.34
1,566.89
2.969.35
Credits
$
240.00
935-98
225.00
516.00
350.00
240.00
4,822.98
300.00
275.00
358.40
170.00
215.00
Payable to
Federal
Reserve
Board
$ 1,087.51
2,536.33
1,088.00
1,348.31
1,386.15
1,394.60
1,447.39(**)
1,636.85
786,52
1.563.94
1,396.89
2,754.35
15,540.73
$24,189.09
$24,180.42
8.67(&)
$24,180.42
Includes s a l a r i e s Washington Operators.
C u t - i n a t Washington on Richmond-Baltimore C i r c u i t .
Amount reimbursable to Chicago.
Received from War Finance Corporation covering b u s i n e s s f o r month of June,
Credit,
FEDERAL RESERVE BOARD
WASHINGTON, D. C.
X-326l-b
$8,648.36
$16,979.45
1.447.39(a)
$15,532.06
HEVISED REPORT OF EXPENSE
MAIN LINE
FEDERAL RESERVE LEASED WIRE SYSTEM AUGUST, 1921.
Name of Bank
Operators'
Salaries
Boston
$ 240.00
New York
789-98
Riiladelphia
225.00
Cleveland
524.00
Richmond
300.00
Atlanta
240.00
Chicago
(#>4,764.67
S t . Louis
300.00
Minneapolis
275.00
Kansas City
310.00
Dallas
170.00
San F r a n c i s c o
215.00
Operators 1
Overtime
$ 150.00
(#)
(*)
(&)
(a)
(**)
$
-
—
(*)50.00
—
-
-
-
-
-
-
—
w
-
Fed. Res. Board
Total
Wire
Rental
15,526.38
$8,353.65
$150.00
$15,576.38
Total
Expense
Pro r a t a
Share of
Total
Expense
$
$
240.00
939-98
225.00
524.00
350.00
240.00
4,764.67
300.00
275.00
310.00
170.00
215.00
984.75
3,751.21
1,401.28
1,820,23
1,654.09
1,651.69
3,315-41
1,733.55
1,0M4.94
2,032.10
1,764.85
2,922.95
Credits
Payable to
Federal
Reserve
Board
$
$
240.00
939.98
225.00
524.00
350.00
240.00
4,764.6?
300.00
275.00
310.00
170.00
215.00
744.75
2,811.23
1,176.28
1,296.23
1,304.09
1,411.69
(**>1,449.26
1,433.55
769.9%
1,722.10
1,59^.85
2,707.95
15,526.38
$24,080.03
$24,077.05
2.98(a)
$24,077.05
I n c l u d e s s a l a r i e s Washington O p e r a t o r s .
C u t - i n a t Washington on Richmond-Bdl time re C i r c u i t ,
Amount r e i m b u r s a b l e to Chicago.
Received from War Finance Corporation c o v e r i n g b u s i n e s s f o r month of J u l y .
Credit.
FEDERAL RESERVE BOARD
WASHINGTON, D. C.
X-326l-b
$8,553.65
$16,972.66
1.449,2b(&)
$15,523.40
FEDERAL RESERVE BOARD
WASHINGTON
X-3262
December 19, 1921,
SUBJECT:
BILL OF STENOGRAPHER FOR REPORTING CONFERENCE.
Dear S i r :
The
f e r e n c e of t h e
Agents and t h e
25 t o 29, l a s t ,
by t h e Board.
b i l l of t h e stenographer f o r r e p o r t i n g t h e conFederal Reserve Board w i t h Federal Reserve
Governors of Federal Reserve Banks on October
amounting t o $2,300.20, has been r e c e i v e d
The items making up t h e b i l l a r e a s f o l l o w s :
1,41*6 pages a t 25#5 p e r page, $ 361,50
1 copy,
1,735.20
12 c o p i e s , 17,352 pages a t 10^ p e r page,
163.50
3 , 2 7 0 a d d i t i o n a l pages a t 5 / p e r page,
40.00
Corrections
T o t a l . , • « « $2,300.20
D i v i d i n g t h e t o t a l amount e q u a l l y among t h e Federal
Reserve Banks and t h e Board, t h e amount chargeable t o each i s
$176,94, which kindly d e p o s i t t o t h e c r e d i t of the Board i n
t h e usual manner and send d u p l i c a t e C/D t o t h e u n d e r s i g n e d .
Very t r u l y yours,
F i s c a l Agent.
To a l l Federal Reserve Agents.
FEDERAL RESERVE BOARD
WASHINGTON
December 7* 1$21.
X-3263
SUBJECT:
D o l l a r Exchange, French West I n d i e s .
Dear S i r :
Under t h e p r o v i s i o n s of S e c t i o n 13 of t h e
Federal Reserve Act, which p r o v i d e s t h a t member banks,
w i t h t h e approval of t h e Federal Reserve Board, may
accept d r a f t s 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, drawn upon them by banks or bankers l o c a t e d
i n f o r e i g n c o u n t r i e s or dependencies, or i n s u l a r
p o s s e s s i o n s of t h e United S t a t e s i n which i t i s d e termined t h a t t h e usages of t r a d e r e q u i r e such
acceptance f a c i l i t i e s , t h e Board has d e s i g n a t e d a s
such t h e French West I n d i e s i n a d d i t i o n t o t h o s e
previously designated.
Very t r u l y yours,
Wm; W. Hoxton,
Secretary.
To Chairmen of All Federal Reserve Banks.
•
FEDERAL RESERVE BOARD
WASHINGTON
December 8, 1$21.
X-326U
CONFIDENTIAL
SUBJECT-'
Payment of F r a n c h i s e Taxes f o r 1921 i n V i c t o r y Notes
Dear S i r :
At a m e e t i n g of a sub-committee of t h e Governors, h e l d
i n New York on November 30th l a s t , a p l a n was d i s c u s s e d whereby
each F e d e r a l Reserve Bank should i n v e s t i n V i c t o r y n o t e s up t o
t h e e s t i m a t e d amount of i t s f r a n c h i s e t a x payment due December
3 1 s t , 1921, a t n o t above p a r , w i t h t h e u n d e r s t a n d i n g t h a t t h e
T r e a s u r y would t a k e over from t h e banks a t t h e end of t h e y e a r
such n o t e s a s they had purchased a t t h e market p r i c e (not e x c e e d i n g p a r ) , p l u s commissions and a c c r u e d i n t e r e s t t o t h e d a t e
of t h e i r b e i n g t a k e n over by t h e T r e a s u r y . The Under S e c r e t a r y
of t h e T r e a s u r y , who was a t t h e .meeting, s t a t e d t h a t such a
p l a n would meet w i t h t h e approval of t h e T r e a s u r y , and t h e y
would r e t i r e and c a n c e l t h e n o t e s so o b t a i n e d i n t h e same manner
a s t h o s e now purchased f o r t h e S i n k i n g Fund. The Governors of
t h e sub-committee f u r t h e r s u g g e s t e d t h a t f o r o b v i o u s r e a s o n s i t
might be b e t t e r t o have t h e buying f o r a l l t h e F e d e r a l Reserve
Banks c e n t e r e d i n New York.
This m a t t e r was brought up f o r c o n s i d e r a t i o n a t t h e
m e e t i n g of t h e F e d e r a l Reserve Board y e s t e r d a y and i t was t h e
sense of t h e Board t h a t t h e p l a n s u g g e s t e d was p r o p e r and d e s i r a b l e and t h e Board s u g g e s t s t h a t i f your bank d e s i r e s t o
p a r t i c i p a t e t h a t you i n s t r u c t t h e F e d e r a l Reserve Bank of New
York t o make t h e p u r c h a s e s , charge your a c c o u n t , h o l d t h e n o t e s
f o r you and send t h e i r t r u s t r e c e i p t i n t h e same manner t h a t
t h e y have p r e v i o u s l y done when making p u r c h a s e s f o r o t h e r
F e d e r a l Reserve Banks.
Very t r u l y y c u r s ,
G o v e r n o r .
GOVERNORS OF ALL F.R.BANKS
TO CHAIRMEN
http://fraser.stlouisfed.org/ COPIES
Federal Reserve Bank of St. Louis
I
FI D R L
JT E A
^
GOLD
SETTLEMENT
S'jTmary of t r a n s a c t i o n s f o r p e r i o d ending December 8, 1921.
Federal
Balance l a s t
Gold
Cold
Reserve
statement
Bank of
withdrawals
Dec. 1 , 1921.
Deposits
Boston
New York
•Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St« Louis
Minneapolis
Kansas City
Dallas
San Francisco
Total
$ 51,322,523.13
63,094,071.08
65,601,675.29
66,165,736.95
20.983.347.98
U, 393,511.10
93.371.953.99
18,160,079.41
18,731,252.98
22,375,393.00
3,340,628.67
44.546.563.41
$472,086,736.99
Federal
Reserve
Bank of
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
Total
$
$
10,706,392.08
1,690,148.53
1,082,533t19
1,411,526.83
934,960.66
605,336.31
925,750.00
630,391.23
295,650.00
191,367.16
499,415.00
1,006.705.99
20,180,176.98
$
$
56,272,900.00
6,504,200,00
3,000,000.00
1,500,600.00
3,700.00
1,700.00
500,000.00
3,300.00
2,000,000,00
8.000.000.00
77,786,400.00
FUND
(COl-JFirFFTIAL)
Aggregate
withdrawals
and t r a n s f e r s
t o A g e n t ' s fund
$ 10,706.392.08
1,690,143.53
1,082,533.19
11,411,526.83
934,960.66
1,105,336.31
925,750.00
630,391.23
295,650.00
391,367.16
499,415.00
21.006.705.99
$ 50,680,176.98
$
$
S e t t l e m e n t s from December 2, 1921 t o December 8 , 1921
inclusive.
Net
Debits
1|
—
42,363,873.98
2,116,809.85
$
562,804.87
237.276.11
| $ 45,280,765.01 | $
Total
Debits
94,407,080.86 $
394,494,592.15
139,577,778.22 .
96,539,257.33
107,844,759.85
37,796,869.19
167,978,830.06
87,474,452.39
23,420,083.98
68,683,329.93
40,102,674.78
51.261.408.56
Total
Credits
109,469,322.24
352,110,718.17
137,460,968.37
102,542,488.89
107,281,954.98
43,671,251.87
171,362,411.93
91,910,054.59
29,464,072.56
71,196,879.18
42,066,862.27
51.026.112.25
X-3265
Washington, D. C*
December 9 . 1921*
$
1,309,583,117.30 1$ 1 , 3 0 9 , 5 8 3 , 1 1 7 . 3 0 | $
Net
Credits
15,062,241.38
6,003,231.56
5,874,382.68
3,383,581.87
4,435,602.20
6,043,988,58
2,513,549.25
1,964,187.49
Aggregate
d e p o s i t s and
t r a n s f e r s from
A g e n t ' s fund
TRANS FEES
$
56,272,900.00
6,504,200.00
3,000,000.00
1,500,600.00
3,700.00
1,700.00
500,000.00
3,300.00
2,000,000.00
10.472.000.00
80,258,400.00
2,000,000.00
• 4,324,250.00
5,673,087.48
4,318,787.66
$
55,428,607.73
79,637,198.57
71,906,532,25
58,999,081.52
19,161,332.45
6,490,069.99
95,833,485.86
22,966,990.38
25,979,591.56
25,500,875.09
3,986,613.50
75,774,581,1:
26,316,125.14
$
Credits
9,750,235.30
4,324,250.00
3,000,000.00
241,639.84
1,000,000,00
1,500,000,00
•
1,000,000.00
1,000,000.00
1,000,000,00 •
1,500,000.00
2.000,000.00
$ 26,316,125.14
Summary of changes i n owners h i p of gold by banks through
t r a n s f e r s and s e t t l e m e n t s .
Balance i n
fund a t close
of b u s i n e s s
Dec. 8 , 1921.
$
Debits
10,000,000.00
Decrease
$
4 5 , 2 8 0 , 7 6 5 . 0 1 | $ 501,664,960,01 | $
38,039,623.98
3,887,054.87
854,600.17
Increase
$ 14,812,476,68
883,190.15
4,244,871.40
1,701,295,20
3,383,581.157
5,435,602,20
7,043,988,58
3,513,549,25
:,762J2),69
„
42,781,279.02 | $ 4 2 , 7 8 1 , 2 7 9 . 0 2
H"
00
F E P E B AL
EE S 3 R VE
A •'* E N T S.«
Wi thdrawals
for
transfers
t o bank
DepoaHs
through
transfers
from t a n k
Summary of t r a n s a c t i o n s f o r neriod ending "December 8, 1921,
federal
Gold
Balance l a s t
Gold
Reserve
statement
Deposits
Agent a t
Withdrawals
*96, 1, 1921.
Boston
$ lUo.000,000
$ 10,000,000
$15,000,000
FONT*
(CONFIPENTIA 1
Total
Total
deposits
Withdrawals
$ 10,000,000
1$
X-3265 a
Washington, D. C.
December 9 . 1921,
Balance a t
c l o s e of
bus i n e s s
Dec. 8 . 1921.
|$
$
15,000,000
171,000,000
New York
171,000,000
Philadelphia
130,389,260
Cleveland
135,000,000
Richmond
28,595,000
3,000,000
Atlanta
36,700,000
3,700,000
1,500,000
Chicago
285,644,500
9,000,000
57,430,600
2,000,000
S t . Louis
Minneapolis
27,360,000
125,389,260
5,000,000
5,000,000
10,000,000
10,000,000
145,000,000
25,595,000
3,000,000
3,700,000
2,000,000
35,000,000
10,000,000
9,000,000
10,000,000
286,644,500
1,069,400
2,000,000
1,069,400
56,500,000
500,000
2,200,000
Kansas C i t y
Dallas
San Francisco
T ot a l
2,200,000
2,000,000
1,000,000
1,000,000
2,000,000
26,360,000
2,234,000
2,234,000
189,422,500
$1,205,975,860
145,000,000
2,472,000
j $ 34,700,000
| $ 28,569^400
|$
I 20,000,000
2,472,000
I$30,500,000
j $ 37,172,000
20,000,000
2,472,000
1$
I
59,069,400
|$ 1,227,873,260
206,950,500
CO
FEDERAL RESERVE BOARD
WASHINGTON
X-3266
Dear S i r :
The F e d e r a l R e s erv e Board h a s approved y o u r a p p l i c a t i o n f o r p e r m i s s i o n t o eprve a t t h e same t i m e a s
of t h e
of
and a s
of t h e
of
Enclosed f i n d formal c e r t i f i c a t e of c o n s e n t of
t h e Board.
Yours very t r u l y ,
W. 1 . H ox t o n .
Secretary.
Enclosure.
"THE FEDERAL RESERVE SYSTEM AS RELATED TO AMERICAN BUSINESS"
Address by
W. p , . G . HARDING'
GOVERNOR, FEDERAL RESERVE BOARD
b e f o r e the
WASHINGTON CHAMBER OF COMMERCE
December 13, 1921
For r e l e a s e in rrrr-^n?
-nepers,
Wednesday, December 14, 1921.
x-3267
x-3267
"THE FEDERAL RESERVE SYSTEM AS RELATED TO AMERICAN BUSINESS11
Although more than seven y e a r s have elapsed s i n c e t h e e s t a b lishment of the Federal Reserve Banks, t h e r e i s s t i l l a s u r p r i s i n g
lack of knowledge of what they r e a l l y a r e and of what t h e i r proper
f u n c t i o n s a r e , not only on the p a r t of t h e p u b l i c a t l a r g e but
among b u s i n e s s men and bankers as wel1*
Much has been said and
w r i t t e n r e g a r d i n g the Federal Reserve System, which i s c a l c u l a t e d
to c r e a t e e n t i r e l y f a l s e impressions, and i n order t o p r e s e n t the
s u b j e c t i n a f a i r and proper l i g h t , an e f f o r t w i l l be made t o d e s c r i b e c o n c i s e l y t h e fundamental c h a r a c t e r and some of t h e d i s t i n c t i v e
f u n c t i o n s of the Federal Reserve Banks and t h e Federal Reserve
System,
The Federal Reserve Act, which i s r e s p o n s i b l e f o r the exi s t e n c e of t h e Federal Reserve Board and t h e Federal Reserve Banks,
was approved on December 23, 1913> and has, a t v a r i o u s times s i n c e ,
been amended by Congress,
The amendments, f o r the most p a r t , have
been t h e r e s u l t of s u g g e s t i o n s made by the Federal Reserve Board
and were designed t o r e n d e r the Act more e f f e c t i v e .
The general purposes of t h e Act a r e o u t l i n e d i n i t s caption
or short t i t l e , which i s as f o l l o w s :
H
An Act t o provide f o r t h e e s t a b l i s h m e n t of Federal
r e s e r v e banks, t o 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 paper, to 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 in the United S t a t e s ,
and f o r o t h e r p u r p o s e s . "
'
- ft.
X-32G7
The need f o r a more e f f i c i e n t banking system in t h e United S t a t e s
had been f e l t for many y e a r s .
Ever s i n c e t h e year IS90 the s u b j e c t was
one which was discussed f r e q u e n t l y a t b a n k e r s 1 conventions and a t
g a t h e r i n g s of commercial'bodies, but t h e event which gave g r e a t impetus
t o the movement f o r banking reform along c o n s t r u c t i v e l i n e s was the
p a n i c of 1907*
The f o l l o w i n g year Congress c r e a t e d a Monetary Com-
mission, which a f t e r a l o n g and thorough study of t h e banking systems
of t h e world submitted an exhaustive r e p o r t -
During t h e y e a r s 1911
and 1912 a committee of t h e House of R e p r e s e n t a t i v e s , commonly known
as the "Pujo Committee, n i n v e s t i g a t e d banking methods i n t h i s country
and submitted a r e p o r t .
With t h i s wealth of i n f o r m a t i o n i n hand, Congress e a r l y i n the
year I913 took up the m a t t e r of banking reform i n e a r n e s t and the
Federal Reserve Act was put upon the s t a t u t e books b e f o r e the close of
the year,
^This Act i s very g e n e r a l l y admitted t o be a g r e a t c o n s t r u c t i v e
p i e c e of l e g i s l a t i o n and i s p r a i s e d both by f r i e n d s and c r i t i c s of the
Federal Reserve System; f r e q u e n t l y by those who do not understand t h e
Act, as well as by those who do*
I t i s because so many have no r e a l
conception of t h e purposes or meaning of t h e Act t h a t much of t h e
c r i t i c i s m which has been d i r e c t e d a g a i n s t i t s a d m i n i s t r a t i o n has oeen
given a c o n s i d e r a t i o n e n t i r e l y unwarranted by the a c t u a l f a c t s .
The Federal Reserve Act did not e s t a b l i s h a c e n t r a l bank.
On
t h e c o n t r a r y , i t made p o s s i b l e t h e e s t a b l i s h m e n t of as many as twelve
Federal Reserve Banks, each almost wholly independent of t h e o t h e r s i n
o p e r a t i o n , as w e l l as i n l o c a l p o l i c i e s *
From a l e g a l standpoint t h e s e
-3-
X-3267
banks are p r i v a t e corporations, organized under a special act of
Congress, namely, the Federal Reserve Act.
They are not i n the s t r i c t
sense of the word Government banks, but are only quasi-Government i n s t i t u t i o n s , in t h a t they are under the general supervision of the
Federal Reserve Board and have on t h e i r boards of d i r e c t o r s three men,
representing the public, who are appointed by the Federal Reserve
Board,
Each bank has nine d i r e c t o r s and the other six are chosen by
the member banks, which are the sole stockholders of the Federal Rcjer* 3
Bank.
The law does not contemplate a c t i v e competition by the Federal
Reserve Banks f o r business with each other or with National banks, s t a t e
banks, t r u s t companies and savings banks.
Federal Reserve ^Banks are
not allowed to receive deposits from the public and can accept deposits
only from t h e i r member banks, from the United States Government and,
solely for the purposes of exchange or c o l l e c t i o n , from non-member banks
or t r u s t companies.
They are not allowed to make loans or advances
d i r e c t t o tne public, but can lend only t o the United S t a t e s , t o t h e i r
member banks and, subject to c e r t a i n conditions, f o r p e r i o d s not exceeding six months, i n a n t i c i p a t i o n of the c o l l e c t i o n of taxes or the r e c e i p t
of assured revenues, to s t a t e s , counties, m u n i c i p a l i t i e s and other
p o l i t i c a l subdivisions in the United S t a t e s .
The Federal Reserve Banks are not permitted by law to make loans
d i r e c t to i n d i v i d u a l s , firms and corporations, and while they can, under
c e r t a i n r e s t r i c t i o n s , purchase b i l l s of exchange and bankers acceptances
in t h e open market, t h e i r dealings with the public in the matter of.loans
are limited to the discounting of notes, d r a f t s , and b i l l s of exchange for
-4X-3267
member banks, a l l such paper to be indorsed by the member bank o f f e r i n g
it,
In l e n d i n g in t h i s way t o t h e i r member banks, t h e Federal Reserve
Banks are not authorized by l a w . t o use t h e same d i s c r e t i o n and freedom
of a c t i o n t h a t a r e allowed n a t i o n a l banks, s t a t e banks and t r u s t
companies, but they must observe the l i m i t a t i o n s p r e s c r i b e d by law
as t o t h e c h a r a c t e r and m a t u r i t y of the n o t e s o f f e r e d them by member
banks f o r d i s c o u n t , except as t o n o t e s , d r a f t s and b i l l s drawn or
i s s u e d f o r a g r i c u l t u r a l purposes or based on l i v e stock, which a
Federal Reserve Bank may discount f o r a member bank if t h e maturity
does not exceed s i x months*, a
Federal Reserve Bank cannot discount
any paper f o r a member bank which has l o n g e r than t h r e e months to run,
e x c l u s i v e of days of grace.
The law p u t s a l i m i t a t i o n a l s o upon the c h a r a c t e r of a note which
a Federal Reserve Bank may discount for a member bank.
A Federal Re-
serve Bank may make advances t o i t s member banks on t n c i r piomjcsory
n o t e s f o r a p e r i o d not exceeding f i f t e e n days, provided, such promissory
n o t e s are secured by the d e p o s i t or pledge of bonds or n o t e s of t h e
United S t a t e s , or by notes, d r a f t s and b i l l s of exchange or b a n k e r s '
acceptances which a r e themselves e l i g i b l e f o r r e d i s c o u n t or purchase by
a Federal Reserve Bank.
To be t e c h n i c a l l y e l i g i b l e f o r r e d i s c o u n t a
note must be endorsed by a member bank, i t s m a t u r i t y must be w i t h i n the
time l i m i t p r e s c r i b e d by law and i t must have been i s s u e d 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, and i t must a l s o be
shoarn t h a t the proceeds of t h e note have been used or a r e t o be used
f o r such p u r p o s e s .
As Federal Reserve Banks are not p e r m i t t e d by law t o r e d i s c o u n t
any paper which does not bear t h e endorsement of a member bank, i t As
-5-
X-3267
c l e a r t h a t in order f o r a Federal Reserve Bank t o render f i n a n c i a l
a s s i s t a n c e to t h o s e engaged i n commerce and i n d u s t r y , i n a g r i c u l t u r e
or i n the r a i s i n g of l i v e stock, the loans must f i r s t be n e g o t i a t e d
with member banks.
There are many loans, however, which member banks
may l e g a l l y and properly make which cannot be rediscounted with Federal
Reserve Banks f o r t h e reason t h a t the law does not admit of t h e c l a s s i f i c a t i o n of such paper as e l i g i b l e .
A Federal Reserve Bank, t h e r e f o r e ,
cannot discount any paper, however good i t may be, which i s net t e c h n i c a l l y e l i g i b l e under the terms of the Federal Reserve Act; and, on
the other hand, i t i s e n t i r e l y w i t h i n i t s r i g h t i n d e c l i n i n g to discount
n o t e s which, even though t e c h n i c a l l y e l i g i b l e , are not s a t i s f a c t o r y from
a credit standpoint.
Federal Reserve Banks are forbidden by law from d i s c o u n t i n g notes,
d r a f t s or b i l l s ,
covering merely investments, or 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 i n stocks, bonds or other investment
s e c u r i t i e s , except bonds and notes of the Government of t h e United S t a t e s
The Federal Reserve Act, as amended, has changed both t h e amount
and c h a r a c t e r of t h e r e s e r v e s which a l l n a t i o n a l banks and s t a t e member
banks must carry against t h e i r deposit l i a b i l i t i e s .
For a long period
of years, i t has been the p r a c t i c e of American banks t o carry as a r e serve in cash and on deposit with other banks, a c e r t a i n proportion of
their deposits.
Before t h e passage of the Federal Reserve Act, t h e
n a t i o n a l banks in the t h r e e c e n t r a l r e s e r v e c i t i e s were required to
keep i n t h e i r own v a u l t s as reserve in gold or lawful money an amount
equal to 25% of t h e i r net d e p o s i t s , and i n other c i t i e s and towns they
were r e q u i r e d t o keep a p a r t of t h e i r r e q u i r e d r e s e r v e s i n cash in t h e i r
X-3267
ovm v a u l t s and a p a r t on deposit with other banks.
The laws regard-
ing the r e s e r v e s of s t a t e banks v a r i e d in t h e d i f f e r e n t s t a t e s .
Under
the Federal Reserve Act t h e percentage of r e s e r v e required has been
s u b s t a n t i a l l y reduced, and a s amended, no n a t i o n a l bank and no s t a t e
member bank i s required to keep any d e f i n i t e amount of cash in i t s
own v a u l t s and whatever amount of cash i s kept on hand by the member
banks, as deemed necessary by the judgment and experience of t h e i r
o f f i c e r s , does not count as p a r t of the banks' l a w f u l r e s e r v e .
The e n t i r e l e g a l r e s e r v e s of a l l member banks must be kept
on deposit with the Federal Reserve Banks.
f
As a consequence, the cash
r e s o u r c e s of the Federal.Reserve Banks a r e n e c e s s a r i l y very l a r g e and
t h e i r holdings of gold, i n p a r t i c u l a r , c o n s t i t u t e a very l a r g e proport i o n of a l l the gold in the country.
The gold neld by the Federal
Reserve Banks i s equal s u b s t a n t i a l l y to a l l the gold t h a t might have .
been held by a l l the banks throughout the country if t h e r e had been
no Federal Reserve Banks e s t a b l i s h e d .
As the Federal Reserve Banks are made t h e sole custodians of
t h e l e g a l r e s e r v e s of a l l member banks, t h e o b j e c t of Congress in
throwing s a f e g u a r d s and l i m i t a t i o n s around t h e i r loan t r a n s a c t i o n s i s
evident.
I t i s necessary t h a t Federal Reserve Banks should keep
themselves i n a " l i q u i d " p o s i t i o n , t h a t i s , t n e i r b i l l s discounted
must be of short maturity and should be r e a d i l y c o l l e c t i b l e .
The
s t r e n g t h of t h e e n t i r e banking system of the United S t a t e s i s d i r e c t l y
r e l a t e d t o the s t r e n g t h of the Federal Reserve Banks. If the Federal
Reserve Banks should allow themselves t o get i n t o a weak, over-extended
and unsafe p o s i t i o n , a l l member and non-member banks would be seriously
affected.
-7-
X—3267
while Congress has placed upon the Federal Reserve Board t h e
r e s p o n s i b i l i t y of d e f i n i n g e l i g i b l e paper, w i t h i n the meaning of t h e
Federal Reserve Act, i t has entrusted t h e management of the Federal
Reserve Banks, under the general supervision of the Federal Reserve
Board, to t h e i r own d i r e c t o r s .
Each Federal Reserve Bank has power
to appoint> by i t s board of d i r e c t o r s , such o f f i c e r s and employees
as are not otherwise provided f o r i n the Federal Reserve Act and t o
d e f i n e t h e i r d u t i e s , to p r e s c r i b e by-laws, not i n c o n s i s t e n t with the
law, r e g u l a t i n g t h e manner in which i t s general business may be conducted, and t o exercise, by i t s board of d i r e c t o r s , or duly authorized
o f f i c e r s or agents, a l l powers s p e c i f i c a l l y granted by law and such
i n c i d e n t a l powers as may be necessary t o c a r r y on the business of
banking w i t h i n the l i m i t a t i o n s p r e s c r i b e d by law.
Each Federal Reserve Bank i s conducted under the supervision
and control of i t s board of d i r e c t o r s , who are charged by law t o p e r form the d u t i e s usually a p p e r t a i n i n g t o the o f f i c e of d i r e c t o r s of
banking a s s o c i a t i o n s and t o administer the a f f a i r s of t h e 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 a g a i n s t my
member bank or banks and, subject t o t h e p r o v i s i o n s of law and the
orders of t h e Federal Reserve Board, to extend to each member bank
such d i s c o u n t s , 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 banks.
The Federal Reserve Board i s not authorized by law t o pass upon
the paper which i s o f f e r e d f o r discount t o Federal Reserve Banks.
This
«r3~
X—3267
i s a f u n c t i o n which must be exercised by t h e d i r e c t o r s of t h e
Federal Reserve Bank or by t h e i r duly a u t h o r i z e d o f f i c e r s or agents*
While the law does not p r e s c r i b e any f i x e d l i m i t as t o t h e amount of
l o a n s t h a t a Federal Reserve Sank may make t o a member bank, i t does
r e q u i r e t h a t due regard must be given t o the claims and demands of
other member banks, t h a t i s , t o t h e i r p o s s i b l e needs f o r c r e d i t a c commodation*
I t a l s o p r o v i d e s t h a t a Federal Reserve Bank must extend
to each member bank such d i s c o u n t s and accommodations a s may be " s a f e l y
and reasonably made".
This means t h a t t h e d i r e c t o r s of a Federal Re-
serve Bank and the o f f i c e r s appointed by them must e x e r c i s e t h e i r best
judgment i n g r a n t i n g d i s c o u n t accommodations-
They must assiire them?
s e l v e s t h a t t h e d i s c o u n t s are such as can be s a f e l y made, and reasonably
made, w i t h due regard t o the p o s s i b l e requirements of o t h e r member banks
which may ask f o r accommodations l a t e r on.
The l e n d i n g power i s not vested i n the Federal Reserve Board and
the reason f o r t h i s i s probably t w o - f o l d .
System i s not a c e n t r a l bank.
banks*
First:
the Federal Reserve
I t i s a r e g i o n a l system comprising twelve
Congress did not intend t h a t t h e r e should be a c e n t r a l i z e d
control of c r e d i t s .
Second: i n a country embracing so v a s t an area as
the United S t a t e s , i t would be a very d i f f i c u l t t a s k , i f not an imp o s s i b i l i t y , f o r a c e n t r a l Board t o p a s s i n t e l l i g e n t l y upon t h e
s e c u r i t y of t h e paper o f f e r e d f o r d i s c o u n t , which must n e c e s s a r i l y
come from a l l s e c t i o n s of the country.
While t h e Federal Reserve Act was intended t o s t r e n g t h e n the
banking system of the United S t a t e s and t o provide ready meand of r e d i s c o u n t i n g c e r t a i n c l a s s e s of paper, i t i s a l s o t h e evident i n t e n t i o n
- 9 -
X-3267
of the Act to d i s t u r b as l i t t l e as p o s s i b l e the b u s i n e s s of t h e member and
non-member banks, or t h e i r 1 d e a l i n g s w i t h t h e i r customers * There is nothing
i n the F e d e r a l Reserve Act which gives either* the Federal Reserve Board or a
Federal' Reserve Bank any c o n t r o l over the loan p o l i c y of any member bank#
A Federal Reserve Bank can not compel a member bank t o make a loan which i t
does not d e s i r e to make, nor r e s t r a i n i t from making a l o a n which i t wishes
t o make even though i t i s f o r b i d d e n by law4
A F e d e r a l Reserve B^nk c^n not lend d i r e c t l y t o the customers of a
member bank, n o r does i t , in f a c t , take the i n i t i a t i v e in making loans to a
member bank f o r the purpose of enabling the member bank ti> d i s t r i b u t e the
funds so advanced t o i t s customers *
The F e d e r a l Reserve Bank lends t o the
member bank a g a i n s t t r a n s a c t i o n s a l r e a d y m^de, f o r the purpose of enabling
the member bank t o r e s t o r e i t s r e s e r v e to the l e g a l r e q u i r e m e n t , a f t e r the
r e s e r v e has been impaired or i s about t o be itnp&ired b e c a u s e of i n c r e a s e d
loans and d e p o s i t s ,
There i s a very g e n e r a l popular misconception r e g a r d i n g t h i s and i t may
be t h a t some of the member banks are r e s p o n s i b l e f o r
without being a c t u a t e d , however, by s i n i s t e r motives«
this
misunderstanding
Banks, as a ru^e, do
not l i k e t o admit t o customers t h a t they are s h o r t of l o a n a b l e funds n o r G
O
they wish to arouse enmity i n d e c l i n i n g to make loans or i n asking f o r a
r e d u c t i o n of a loan alreadymmade.
She re are some b n n k o f f i c e r s who are a b l e f r a n k l y t o d e c l i n e an
a p p l i c a t i o n f o r a loan i n a way which leaves no s t i n g , but which on the
c o n t r a r y g i v e s the a p p l i c a n t the impression t h a t the r e j e c t i o n of h i s
a p p l i c a t i o n i s a f a v o r t o him.
But not a l l bank o f f i c e r s have such t a c t *
Some a r e f r a n k enough but t h e i r b l u n t n e s s h u r t s the f e e l i n g s of the would-be
-i0—
borrower*
X-3 267
I t i s not unusual, t h e r e f o r e , f o r bank o f f i c e r s i n d e c l i n i n g
loans to look for a b u f f e r , or some one t o whom they can "pass t h e buck,f
In the old days, the board of d i r e c t o r s was made u s e f u l i n t h i s capacity
Nowadays, however, bank o f f i c e r s f i n d i n the Federal Reserve
Board or the Federal Reserve Bank a much more s a t i s f a c t o r y b u f f e r than
a l o c a l board of d i r e c t o r s .
In many cases, i n a g r i c u l t u r a l s e c t i o n s
p a r t i c u l a r l y , banks have found i t very convenient to "pass t h e buck", t o
the Federal Reserve Bank or thd Federal Reserve Board, and have stated
to a borrower or would-be borrower that they would l i k e t o grant the
extension asked f o r or make the loan desired, but the Federal Reserve
would not permit it*
Such a procedure has a tendency to r e l i e v e the
s i t u a t i o n as f a r as the l o c a l bank i s concerned but i t i s c e r t a i n l y
u n f a i r to t h e Federal Reserve System.
This evasion of r e s p o n s i b i l i t y
has subjected the Federal Reserve Banks to a great amount of u n j u s t
c r i t i c i s m and has given t h e p u b l i c a wrong impression of the a u t h o r i t y
and a t t i t u d e of t h e Federal Reserve Banks and the Federal Reserve Board,
I t has aroused i n d i g n a t i o n which i s e n t i r e l y n a t u r a l i n the circumstances and has caused much correspondence with the Federal Reserve
Board d i r e c t and with Congressmen and United S t a t e s Senators, whose i r e
has been aroused because of t h e se alleged a r b i t r a r y methods.
I t i s e n t i r e l y t r u e t h a t a Federal Reserve Bank, mindful of i t s
r e s p o n s i b i l i t y under the law and a c t i n g in accordance with t h e d i c t a t e s
of ordinary banking prudence, may have had occasion to c a l l the a t t e n t i o n
of some of i t s l a r g e r borrowing banks t o t h e i r l a r g e discount l i n e s ,
which have run in some cases over a period of years,, without being r e duced, and have c a l l e d t h e a t t e n t i o n of t h e borrowing banks t o the
n e c e s s i t y of working themselves i n t o a stronger p o s i t i o n .
But in no
cace w i t h i n t h s knowledge of the Federal Reserve Board has any Federal
Reserve Bank undertaken to say to a member bank what p a r t i c u l a r loans
i t should c a l l or ask to have reduced.
I w i l l give you a concrete example.
In a southern s t a t e , thc^e
i s a n a t i o n a l bank which has f o r aMong time been a l a r g e and ccnttuvous
borrower at t h e Federal Reserve Bank, t h e amount of i t s r e d i s c o u n t s
being several times g r e a t e r than i t s c a p i t a l stock and i t s f a i r proport i o n of t h e l o a n a b l e funds of the ^Reserve Bank.
I t seems t h a t t h i s
bank has made frequent promises t o reduce i t s discount l i n e to a more
reasonable sum, but a s i t c o l l e c t e d n o t e s i t would c o n s t a n t l y send i n
others for rediscount.
Here i s a n o t i c e t h a t t h i s bank appears t o have been sending t o
some of i t s borrowing customers, which reads as f o l l o w s :
"Your note f o r $.
. . f a l l s due
"Our FEDERAL RESERVE BANK owns t h i s note, having rediscounted i t
for us.
As i t has been rene.ved several times, they a r e I5SIGTI2.G O A
N
P/YMENT of $
or more.
It is
arrange t h i s note on the day of i t s maturity.
to
Yours truxy
Cashier."
when the Federal Reserve Bank was informed t n a t these n o t i c e s
were being sent out, i t immediately c a l l e d the a t t e n t i o n of t h e member
bank to t h e f a c t t h a t i t had not i n s i s t e d upon the payment of any p a r t i c u l a r note and d i r e c t e d t h a t t h i s form of n o t i c e be discontinued.
The
Federal Reserve Board has received many complaints growing out of i n c i dents of t h i s kind.
I t i s g r a t i f y i n g , however, t o know t h a t the general sentiment
toward the Federal Reserve System i s ^ot moulded by ignorant or prejudiced
-12-
X-32&7
c r i t i c s , but t h a t t h e r e i s throughout the country a high a p p r e c i a t i o n
of t h e splendid s e r v i c e i t has rendered d u r i n g the t r y i n g times through
which we have p a s s e d .
I wish t o a v a i l myself of t h i s opportunity t o say
a word of commendation of the manner in which the o f f i c e r s and d i r e c t o r s
of the twelve Federal Reserve Banks have performed t h e i r arduous d u t i e s
and of t h e i r s k i l l and courage i n d e a l i n g w i t h the many grave and complex
problems, some l o c a l , o t h e r s n a t i o n a l i n scope, w i t h which they have
been confronted d u r i n g t h e a c u t e world c r i s i s , which h a p p i l y i s now a
t h i n g of t h e p a s t a s f a r a s t h i s country i s concerned.
I t i s my sober c o n v i c t i o n t h a t b a s i c f i n a n c i a l c o n d i t i o n s i n
t h i s country are very much b e t t e r than they were twelve months ago.
There a r e many s u r f a c e i n d i c a t i o n s which bear out t h i s statement and
those who know t h e general s i t u a t i o n a p p r e c i a t e t h i s f a c t .
Business has passed through t h e primary s t a g e , t h e acute p e r i o d
of r e a c t i o n , but we have not y e t reached "normalcy" f o r t h e r e a d j u s t m e n t
has not been uniform and t h e r e i s not y e t e s t a b l i s h e d a n a t u r a l and
e q u i t a b l e b a s i s f o r the exchange of goods f o r goods or goods f o r s e r v i c e s .
For example, farm p r o d u c t s i n many cases a r e now below t h e pre-war leve^.
and i n some i n s t a n c e s below t h e cost of p r o d u c t i o n .
P r i c e s of some
manufactured goods have d e c l i n e d s h a r p l y , while o t h e r s have n o t , and
general p r i c e index and t h e cost of l i v i n g a r e s t i l l much above the 1 ^ 3
level.
Manufacturers and merchants a r e v i t a l l y i n t e r e s t e d i n c o n d i t i o n s
i n the a g r i c u l t u r a l s e c t i o n s .
f a c t u r e d goods.
The farmer i s t h e g r e a t consumer of manu-
His p u r c h a s i n g power a t p r e s e n t i s much impaired, p a r t l y
because of t h e lower exchange value of h i s p r o d u c t s and p a r t l y because
of u n l i q u i d a t e d indebtedness#
U n t i l t h e p u r c h a s i n g power of t h e farmer
-13-
X-32S7
improves i t w i l l , of course, be i d l e t o look f o r any rapid or substantia
improvement i n domestic t r a d e ,
I t h i n k , however, t h a t the outlook for t h e farmers i s more
hopeful.
They have, no doubt, been b e n e f i t e d through t h e a c t i v i t i e s of
the War Finance Corporation which, although i t cannot make d i r e c t ]oans
t p i n d i v i d u a l s , i s r e d i s c o u n t i n g paper for banks which because of long
maturity i s not e l i g i b l e f o r rediscount with the Federal Reserve Banks.
While the a g r i c u l t u r a l s i t u a t i o n i s a most important f a c t o r i n our
domestic t r a d e , t n e r e are other things which must be taken i n t o account.
The d e c l i n e i n p r i c e s of manufactured goods has not been as great as
the shrinkage i n value of raw m a t e r i a l s , and the r e t a i l p r i c e index does
not show a drop corresponding to t h a t of the wholesale p r i c e index.
This
i n d i c a t e s t h a t manufacturing c o s t s have not declined i n p r o p o r t i o n t o
primary p r o d u c t i o n costs and t h a t the c o s t s of d i s t r i b u t i o n and of doing
business are d i s p r o p o r t i o n a t e l y high.
The remuneration of farm l a b o r depends mainly upon t h e p r i c e of
farm products, but i n manufacturing i n d u s t r i e s labor c o s t s are not always
immediately r e l a t e d to t h e cost of the raw m a t e r i a l used in those indust r i e s nor, indeed, t o the p r i c e of the f i n i s h e d product.
elements of cost are t a x e s , f r e i g h t r a t e s , r e n t s and f u e l ,
Other important
The Federal
Government must n e c e s s a r i l y r a i s e l a r g e revenues i n order t o meet o b l i gations incurred a s a r e s u l t of the war and our system of t a x a t i o n i s
designed t o levy the highest r a t e s on l a r g e incomes.
This t a x a t i o n can be escaped a l t o g e t h e r or i n p a r t by i n v e s t i n g i n
State and municipal bonds, which are exempt from the income tax, and tne
a b i l i t y of m u n i c i p a l i t i e s t o s e l l t h e i r o b l i g a t i o n s more r e a d i l y oecauss
-14-
X-32&7
of t h i s f a c t has had a tendency t o i n c r e a s e t h e volume of
t h e i r indebtedness.
Consequently l o c a l t a x a t i o n h a s i n c r e a s e d
m a t e r i a l l y , and u n l e s s t h e i s s u e of t a x exempt o b l i g a t i o n s i s
checked, t h e u l t i m a t e r e s u l t s a r e l i k e l y t o be serious*
Operating c o s t s of the r a i l r o a d s a r e much above normal and
t r a n s p o r t a t i o n r a t e s have been i n c r e a s e d a s an o f f s e t .
Rents are hi^h because of i n c r e a s e d t a x e s , h i g h e r up-keep
c o s t s and t h e inadequate supply of houses occasioned by t h e r e duced b u i l d i n g o p e r a t i o n s d u r i n g the p a s t f o u r or f i v e y e a r s .
Fuel i s high, due p a r t l y t o i n c r e a s e d t a x e s , h i g h e r c o s t s of
p r o d u c t i o n and increased c o s t s of t r a n s p o r t a t i o n and d i s t r i b u t i o n *
The r e s t o r a t i o n of normal c o n d i t i o n s i n a g r i c u l t u r e , commerce and i n d u s t r y depends t o a g r e a t e x t e n t upon t h e r e d u c t i o n of
t h e s e e s s e n t i a l items of expense.
Much depends a l s o upon the r e s u l t s of t h e Conference f o r
L i m i t a t i o n of Armaments now b e i n g held i n t h i s c i t y .
This Conf e* e<.-.e
i s t h e most important which has ever been h e l d i n t h i s country ana the program submitted by t h e Secretary of S t a t e i s adopted
have a profound e f f e c t upon the f i n a n c e s of t h e world.
In f a c t t h e
p r o c e e d i n g s of the Conference up t o t h i s time and t h e proposed t r e a t y
between t h e f o u r great powers which c o n t r o l t h e P a c i f i c a r e accepted
as h a r b i n g e r s of peace and have had a l r e a d y a s t a b i l i z i n g e f i e c t . The
n o t a b l e advance i n s t e r l i n g exchange, which began w i t h t h e assembling
of t h e Conference, i s not a mere c o i n c i d e n c e .
-15-
2-3267
When g r e a t n a t i o n s e n t e r i n t o c o m p e t i t i o n w i t h each o t h e r i n t h e e x t e n s i o n
of huge naval and m i l i t a r y e s t a b l i s h m e n t s , t h e l a r g e sums n e c e s s a r y ; f o r
t h e s e a d d i t i o n s and maintenance must be met by t a x a t i o n i n some form or
other.
Money expended f o r armament i s devoted t o n o n - p r o d u c t i v e and d e -
structive purposes.
These sums r e l e a s e d f o r c o n s t r u c t i v e or p r o d u c t i v e
use i n t h e c r e a t i o n of new w e a l t h w i l l s t i m u l a t e t h e r e v i v a l of b u s i n e s s
activity.
The p o s i t i o n of t h e United S t a t e s w i t h r e s p e c t t o world a f f a i r s
we
h a s e n t i r e l y changed s i n c e l ^ l U . Up t o t h a t t i m e / w e r e a d e b t o r n a t i o n .
When t h e war broke out i n Europe the United S t a t e s was a d e b t o r on t h e
w o r l d ' s b a l a n c e sheet t o t h e e x t e n t of probably f o u r b i l l i o n d o l l a r s ,
r e p r e s e n t i n g amounts due on c u r r e n t a c c o u n t p l u s f o r e i g n i n v e s t m e n t s i n
t h i s country.
Now we a r e a, c r e d i t o r n a t i o n i n a l a r g e amount.
Besides
t h e sum of t e n b i l l i o n d o l l a r s advanced by t h e United S t a t e s t o n a t i o n s
a s s o c i a t e d w i t h lis i n t h e war, t h e r e i s a l a r g e b a l a n c e due t h i s country
a s a r e s u l t of p r i v a t e t r a d e t r a n s a c t i o n s , which has been v a r i o u s l y e s t i m a t e d fromr.a b i l l i o n and a half t o t h r e e and one-half b i l l i o n d o l l a r s .
A g r i c u l t u r e , i n d u s t r y and commerce i n t h e United S t a t e s a l l have a
v i t a l interest in foreign trade.
We produce a l a r g e e x p o r t a b l e s u r p l u s of
farm p r o d u c t s and of manufactured goods and any c u r t a i l m e n t i n t h e f o r e i g n
demand f o r t h e s e p r o d u c t s i s immediately r e f l e c t e d i n our domestic t r a d e .
During t h e p a s t y e a r we have r e c e i v e d l a r g e a d d i t i o n s t o our stock
of gold by r e a s o n of i m p o r t a t i o n s from f o r e i g n c o u n t r i e s .
These i m p o r t a t i o n s
do not r e p r e s e n t sums f o r account of c e n t r a l banks, which have a s a r u l e
i n c r e a s e d t h e i r gold f o l d i n g s s i n c e t h e outbreak of t h e war, b u t t h e y r e p r e s e n t widely s c a t t e r e d h o l d i n g s from p r a c t i c a l l y a l l c o u n t r i e s which have
been s e n t h e r e i n payment of p r e s s i n g o b l i g a t i o n s or f o r t h e p u r c h a s e of
s u p p l i e s u r g e n t l y needed.
'
16
-
Jt-52 65
I t i s e v i d e n t , however, t h a t a normal volume of f o r e i g n t r a d e can n o t
be s u p p o r t e d by shipments of gold from abroad.
In o r d i n a r y c i r c u m s t a n c e s
i n t e r n a t i o n a l t r a d e i s bs&ed upon the exchange of goods and s e r v i c e s ,
a c t u a l t r a n s f e r s of gold r e p r e s e n t i n g only a very small p r o p o r t i o n of the
t o t a l volume of b u s i n e s s and being made merely f o r t h e p u r p o s e of s t a b i l i z i n g
the exchanges,
Most of the b u s i n e s s t r o u b l e s t h r o u g h which we have p a s s e d and which
s t i l l c o n f r o n t us today can be a t t r i b u t e d e i t h e r t o the war o r t o the
course of events d u r i n g the y e a r 1319*
I t was r e a l i z e d t h a t t h e s i g n i n g of
the .Armistice which ended the war from a m i l i t a r y s t a n d p o i n t d i d n o t end i t
i n a f i n a n c i a l sense and d u r i n g the
e a r l y months of t h e y e a r 1919 t h e r e
was a l u l l and much h e s i t a t i o n i n b u s i n e s s .
The s u c c e s s f u l f l o t a t i o n , how-
e v e r , of the V i c t o r y Loan i n May of t h a t y e a r was reg ard ed as t h e end of t h e
war i n a f i n a n c i a l s e n s e and a p e r i o d of g r e a t a c t i v i t y s e t i n .
I t was e v i d e n t t h a t f o u r years of war had g r e a t l y impaired the product i v e c a p a c i t y of Europe and had reduced, a l m o s t t o t h e v a n i s h i n g p o i n t , s t o c k s
of goods and s u p p l i e s of a l l k i n d s .
There was a g e n e r a l i m p r e s s i o n t h a t
t h e r e was a world-wide s h o r t a g e of goods and t h a t Europe i n r e p l e n i s h i n g h e r
s u p p l i e s must c o n t i n u e to draw h e a v i l y upon t h e p r o d u c t i v e c a p a c i t y of the
United S t a t e s , j u s t as had been the c a s e e v e r s i n c e the y e a r 1915•
This
i m p r e s s i o n was d e e p l y e n g r a f t e d upon t h e minds of t h e p u b l i c and f o r a
that
European needs were so u r g e n t / t h e y had t o be s u p p l i e d a t any s a c r i f i c e .
At the same time a s u b s t a n t i a l p a r t of the sum which d u r i n g t h e war t h e
United S t a t e s had agreed t o advance t o f o r e i g n n a t i o n s was s t i l l unexpended
and t h e s e f u n d s were used d u r i n g the y e a r 1 9 1 9 . i n payment of goods exported
t o Europe«
-
17
-
X-3267
Many shrewd business men looked forward c o n f i d e n t l y to several years
of commercial and i n d u s t r i a l a c t i v i t y and made t h e i r plans upon the asumption
t h a t p r i c e s would e i t h e r advance or remain s t a b l e and t h a t a r e t u r n to the
pre-war l e v e l or a s e r i o u s decline in the immediate f u t u r e was most improbable
Farmers incurred o b l i g a t i o n s f o r a d d i t i o n a l land a t a v a l u a t i o n based upon
the commodity -orices then e x i s t i n g , merchants extended t h e i r business and manu f a c t u r e r s prepared to increase t h e i r productive capacity by making a d d i t i o n s
to t h e i r p l a n t s , r e g a r d l e s s of the f a c t t h a t such a d d i t i o n s could be made
only a t c o s t s much h i sher than normal.
The consensus of p u b l i c opinion was t h a t we had entered i n t o an era of
h i eh -orices and t> a t t h e r e would be f o r some time a s e r i o u s shortage of goods,
Many jobbers c a l l e d in t h e i r salesmen and were obliged to scale down the orders which poured in by every mail.
Prices advanced week by week and many
producers and merchants were r e l u c t a n t to s e l l , f o r advancing p r i c e s were
accompanied by higher wages and g r e a t e r production c o s t s .
Credit was f r e e l y used, not only in production a t high cost but in withholding goods from the market, and i n v e n t o r i e s and bank statements everywhere
showed an expanded condition which would have been regarded as unthinkable a
few y e a r s b e f o r e .
Looking backward i t i s easy to p o i n t out the
essential* a ^-^ a c -7
the
p o s i t i o n which was taken and to explain the l o g i c a l and i n e v i t a b l e r e a c t i o n
which took p l a c e , a r e a c t i o n , however, which many did n o t foresee u n t i l
too l a t e .
goods*
This f a l l a c y lay in the i n c o r r e c t estimate of the shortage of
The normal r e l a t i o n s h i p between production end consumption was
accepted a t a time when conditions were anything b u t normal.
There was, .
indeed, no question -as to the desperate need of Europe f o r American goods
"
15
"
A- 32 67
and s u p p l i e s b u t proper c o n s i d e r a t i o n was not given to the f?.ex.Voi"'i by of
consumptive requirements.
Whet a man can n o t get a t a l l he mis L do w i t h -
o u t , and when he can n o t o b t a i n a l l t h a t he needs he must be s a t i s f i e d
with a moiety.
The mere need f o r goods, however u r g e n t , does n o t c r e a t e
an economic demand.
There must be an a b i l i t y on the p a r t of those need-
ing goods t o s a t i s f y the need, e i t h e r by exchanging o t h e r goods, by
r e n d e r i n g s e r v i c e , by paying cash or by tendering some a c c e p t a b l e form
of c r e d i t o b l i g a t i o n .
M i l l i o n s of people i n Europe were obliged t o deny themselves a p a r t
of t h e i r accustomed food supply, to f o r e g o purchases of c l o t h i n g and
o t h e r t h i n g s which o r d i n a r i l y would be regarded as a b s o l u t e l y necessary«
Luxuries were impossible and i n many c a s e s a r t i c l e s so c l a s s e d were
s a c r i f i c e d i n order to provide n e c e s s i t i e s .
The e f f e c t of h i g h p r i c e s i n t h i s country was r e f l e c t e d f i n a l l y
i n reduced consumption and i n the l a t t e r p a r t of March, 1920 those who
had dreams of a long continuance of the c o n d i t i o n s wldch had e x i s t e d up
to t h a t time were rudely awakened by the c o l l a p s e of the s i l k market in
Japan-
P u b l i c opinion began t o undergo a change and p u b l i c opinion i s a
powerful f o r c e , m o r s
p o t e n t t h a n banking b o a r d s , than " l e g i s l a t i v e b o d i e s
and Government i t s e l f .
The c u r t a i l m e n t of btitying became more and more
noticeable.
What has s i n c e been r e f e r r e d t o as the " b u y e r s ' s t r i k e "
m a n i f e s t e d i t s e l f throughout the country and i n quick s u c c e s s i o n the
d r a s t i c r e a c t i o n s i n commodity p r i c e s began t o take p l a c e .
Many who had
been e a g e r t o buy withdrew from the market and many who had. been r e l u c t a n t
t o s e l l became anxious to disjpose of t h e i r goods.
Banks began t o f i n d t h a t loans which they had t h c i g h t could be repaid
a t any time d e s i r e d could not be c o l l e c t e d i n the new circumstances and
must be c a r r i e d a l o n g .
Recourse was had i n i n c r e a s i n g degree to t h e
Federal Reserve System, which responded t o a l l l e g i t i m a t e demaads and
which should he c r e d i t e d with preventing what would otherwise have
developed i n t o a most d i s a s t r o u s money p a n i c .
During the year 1920, when these d r a s t i c changes i n p r i c e l e v e l s
were taking p l a c e , the t o t a l earning a s s e t s of the Federal Reserve Banks,
which include rediscounts f o r member "banks, increased from $3,039)000,000
at the end of January to $3,39
000,000 at the end of October.
At the
same time there was not only no c o n t r a c t i o n i n Federal Reserve note c u r rency, but on the c o n t r a r y there was an almost continuous increase i n
the volume of Federal Reserve notes i n c i r c u l a t i o n , the amount i n c r e a s i n g
from $2,844,000,000 on January 23%"d to $3 > 404,000,000 on December 23rd,
1920, a record high m=>rk.
These f i g u r e s should be impressed upon the minds of the p u b l i c , f o r
the r e c k l e s s and unwarranted statement i s o f t e n made t h a t the Federal Reserve a u t h o r i t i e s d e l i b e r a t e l y set out to b r i n g about
d e f l a t i o n and to
accomplish t h i s purpose caused sharp curtailment of cjreciit and d r a s t i c
c o n t r a c t i o n of the currency.
The events of the p a s t two years have demonstrated the f a c t t h a t
_there is no u n a l t e r a b l e r e l a t i o n s h i p between commodity p r i c e s and the
volume of c r e d i t and currency.
I t i s not the f u n c t i o n of the Federal
Reserve System nor of any banking system to attempt t o f i x or c o n t r o l
p r i c e s and Federal Reserve discount r a t e s hsve never been e s t a b l i s h e d
with t h a t i d e a in view.
Banks should be concerned with p r i c e s only in
so f a r as the s e c u r i t y of t h e i r loans may be involved and they are
i n t e r e s t e d more in the s t a b i l i t y of p r i c e s and t h e i r margin of c o l l a t e r a l
than i n the p r i c e l e v e l i t s e l f .
Banks do not c r e a t e general c o n d i t i o n s ,
b u t they must a d j u s t themselves to changing c o n d i t i o n s , which, in recent
-20-
X-326?
e v e n t f u l months, have been brougjtit about by unseen and i r r e s i s t i b l e
f o r c e s throughout the world.
Early in September t h e r e was much r e j o i c i n g throughout the Southern
S t a t e s because of the marked advance i n t h e p r i c e of c o t t o n .
This advance
i s ntit due t o any i n c r e a s e i n the loans of t h e Federal Reserve Banks nor
to any expansion of t h e currency.
-As a m a t t e r of f a c t t h e amount of
Federal Reserve n o t e s i n c i r c u l a t i o n on September 15* when c o t t o n w&a
s e l l i n g a t about 21 c e n t s a pound, was about $500,000,000 l e s s than when
cotton was s e l l i n g a t 11 c e n t s a pound e a r l y l a s t Spring.
Tue advance
in t h e p r i c e of c o t t o n was due t o economic causes and t o the o p e r a t i o n
of the i n e v i t a b l e law of supply and demand,
A f t e r t h e r e p o r t of t h e
Department of A g r i c u l t u r e e a r l y i n September, t h e world awakened t o t h e
f a c t t h a t t h e p r e s e n t c o t t o n crop i s abnormally small, and i t was
thought a t one time t h a t l e s s t h a n seven m i l l i o n b a l e s would be p r o duced.
As t h e ginners* r e p o r t s were made, i t became e v i d e n t t h a t t h e
Department of A g r i c u l t u r e had under-estimated t h e s i z e of t h e p r e s e n t
crop of c o t t o n and the p r i c e declined f o u r or f i v e c e n t s a pound.
This d e c l i n e took p l a c e n o t w i t h s t a n d i n g the r e d u c t i o n which was made
about t h e same time i n t h e discount r a t e s of a l l Federal Reserve Banks,
i n c l u d i n g t h o s e i n t h e South.
The f a c t should be emphasized t h a t t h e
net advance which has t a k e n p l a c e i n t h e p r i c e of c o t t o n has been due no».
t o c r e d i t or currency expansion but r a t h e r t o the d e f l a t i o n of t h e a n t i c i pated supply of c o t t o n and t o the p r o b a b i l i t y of i n c r e a s e d consumption.
There i s perhaps even g r e a t e r confvsi
in the p u b l i c * r r d r -C-
the i s s u e of Federal Reserve n o t e s t h a n t h e r e i s r e g a r d i n g t h e r e d i s c o u n t ing f u n c t i o n s of the Federal Reserve Banks.
There a r e some who appear t o
have an impression t h a t t h e Federal Reserve Board has power t o expand or
- 21 -
X-3^67
c o n t r a c t the c u r r e n c y of t h e c o u n t r y a t w i l l and t h a t i t has e x e r c i s e d iiiis
power i n a r e c k l e s s and a r b i t r a r y manner.
While the law p r e s c r i b e s t h a t
the F e d e r a l Reserve Board s h a l l have the r i g h t , a c t i n g through the Federal
Reserve Agent,
to g r a n t in whole or i n p a r t or to r e j e c t e n t i r e l y the
a p p l i c a t i o n of any F e d e r a l Reserve B^nk f o r Federal Reserve n o t e s , i t has
never,exercised this right•
On the c o n t r a r y , i t has always approved promptly
every a p p l i c a t i o n which has been made f o r the i s s u e of F e d e r a l Reserve notes*
One of the purposes of the Federal Reserve Act, as s t a t e d i n i t s c a p t i o n , i s
to f u r n i s h an e l a s t i c c u r r e n c y , but t h e r e are many whose i d e a of e l a s t i c i t y
i s continuous s t r e t c h i n g .
Currency t o be r e a l l y e l a s t i c must be s u s c e p t i b l e of expansion or the
r e v e r s e , as the needs of i n d u s t r y and commerce may r e q u i r e * Many b e l i e v e
t h a t t h e r e was a p r e o r d a i n e d c o n t r a c t i o n of the currency d u r i n g the y e a r 1920,
determined upon i n order t o reduce p r i c e s .
The expansion of n e a r l y
$600,C00,CC0 Li Federal Reserve note c i r c u l a t i o n which a c t u a l l y too^ p . ^ c e
during t h a t year shows t h a t the impression i s a b s o l u t e l y unwarranted*
An i n c r e a s e or d e c r e a s e i n the volume of Federal Reserve n o t e s o u t s t a n d ing i s not the r e s u l t of any preordained p o l i c y or p r e m e d i t a t e d d e s i g n , f o r
the volume of Federal Reserve notes i n c i r c u l a t i o n depends e n t i r e l y upon the
a c t i v i t y of b u s i n e s s or upon the kind of a c t i v i t y which c a l l s f o r currency
r a t h e r than book c r e d i t s .
F e d e r a l Reserve notes c°n be issued only a g a i n s t c o l l a t e r a l i n an
amount equal t o the sum of t h e Federal Reserve n o t e s a p p l i e d f o r , which
c o l l a t e r a l s e c u r i t y must be n o t e s and b i l l s d i s c o u n t e d or acquired by the
banks or gold or gold c e r t i f i c a t e s .
The law re qui res each Federal Reserve
Bank to m a i n t a i n a r e s e r v e of 40 p e r cent i n gold a g a i n s t i t s Federal Reserve
notes i n a c t u a l c i r c u l a t i o n .
During the p r e s e n t yemr the loons of the Federal Reserve Banks t o
t h e i r member banks have decreased by about $1,550,OOC,CCO tmd aa the notes
discounted with Federal Reserve B&nks have been paid off Federal Reserve
note currency has come back t o the Banks and in the absence of a demand
f o r i t , has not been reissued-
Upon payment of commercial paper which
has been deposited to secure Federal Reserve n o t e s , t h e r e n e c e s s a r i l y
r e s u l t s e i t h e r an immediate r e t u r n of an equivalent amount of notes to
the Bank or an automatic increase in the percentage of gold reserve,
able f o r t h e i r redemption.
avail-
Federal Reserve notes are not l e g a l tender,
nor do they count as reserve money f o r member banks.
They are issued only
as a need f o r them develops and as they become redundant i n any l o c a l i t y
they are returned f o r c r e d i t or f o r redemption to the Federal Reserve Banks
or to the Treasury a t
Washington.
Thus, there can not be a t any time
more Federal Reserve notes in c i r c u l a t i o n than the needs of the country at
the p r e v a i l i n g level of p r i c e s and wages r e q u i r e , and as t h e demand abates
the volume of n o t e s outstanding w i l l be correspondingly reduced through
redemption-
The increased volume of Federal Reserve notes in c i r c u l a t i o n
from 1917 t o the end of t h e year 1$20 was, i n so f a r as i t was not the
r e s u l t of d i r e c t exchanges f o r gold and gold c e r t i f i c a t e s , the e f f e c t of
advancing wages and p r i c e s and not t h e i r cause, j u s t as the reduction
which has taken place during the p r e s e n t year i s the r e s u l t of lower
p r i c e s and smaller volume of b u s i n e s s , r a t h e r than t h e i r c a u s e .
Under the Federal Reserve System, as business expands, as labor i s
more f u l l y employed and as production increases and d i s t r i b u t i o n becomes
more a c t i v e , t h e r e follows a demand f o r g r e a t e r discount accommodations
and a need f o r more currency, and the increased volume of d i s c o u n t s f u r * i
nishes a means of providing the increased volume of currency r e q u i r e d .
The Federal Reserve Banks hold today a gold reserve of about
$2,850,000,000 and a combined reserve a g a i n s t member b a n k s ' d e p o s i t s end
note i s s u e s of s l i g h t l y more t h m 73 per cent-
Or i f the l e g a l minimum
r e s e r v e of 35 p e r cent be s e t up a g a i n s t d e p o s i t s , t h e r e would remain a gold
r e s e r v e of s l i g h t l y more than 100 p e r cent a g a i n s t Federal Reserve notes
outstanding.
For some months p a s t t h e r e has been a marked easing i n domestic r a t e s
of i n t e r e s t -
Notwithstanding unfavorable f e a t u r e s in our revenue laws, the
investment market i s now absorbing s e c u r i t i e s a t reasonable r a t e s which
could n o t have been considered a few months ago.
Market q u o t a t i o n s of
Liberty Bonds have s t e a d i l y advanced u n t i l they are now approaching p a r .
Good r a i l r o a d and i n d u s t r i a l bonds have a l s o appreciated and t h e r e have been
some n o t i c e a b l e advances in standard s t o c k s .
In h i s annual r e p o r t j u s t sent t o Congress, the S e c r e t a r y of t h e
Treasury remarks t h a t the advance i n the p r i c e of L i b e r t y Bonds and Victory
Notes i s i n p a r t a r e f l e c t i o n of e a s i e r c r e d i t c o n d i t i o n s and lower i n t e r e s t
r a t e s , though increased buying on the p a r t of i n v e s t o r s and b e t t e r d i s t r i b u t i o n of the p u b l i c debt doubtless account f o r much of the improvement• High
commodity p r i c e s and g r e a t b u s i n e s s a c t i v i t y u s u a l l y mean, lower p r i c e s f o r
bonds and other s e c u r i t i e s y i e l d i n g a f i x e d income, while reduced commodity
p r i c e s and lower money r a t e s b r i n g higher market p r i c e s f o r bonds.
The q u e s t i o n i s o f t e n asked - why in view of our enormous stock of
gold -American bankers do not a v a i l themselves of the opportunity of making
the United States the w o r l d ' s banker.
There is no q u e s t i o n t h a t our p r e s e n t
gold supply i s f a r beyond our domestic requirements, nor i s there any doubt
t h a t a g r e a t stimulus would be given to our f o r e i g n trade were i t p r a c t i c a b l e
f o r American bankers t o engage in world f i n a n c e i n a l a r g e way.
x-1267'
As high grade American s e c u r i t i e s y i e l d a lower income r a t e , the
a t t e n t i o n of i n v e s t o r s w i l l he d i r e c t e d more toward European s e c u r i t i e s .
Investments in f o r e i g n p r o p e r t i e s and s e c u r i t i e s and l o n g time l o a n s abroad
w i l l improve f o r e i g n exchange c o n d i t i o n s , b u t b e f o r e such investments or
l o a n s w i l l be made in very l a r g e volume i t w i l l be n e c e s s a r y t o i n s p i r e Ameri c a n i n v e s t o r s with confidence i n the p o l i t i c a l and economic s t a b i l i t y of
Europe.
A s u c c e s s f u l outcome of the Conference f o r the L i m i t a t i o n of Armaments
should do much t o i n s p i r e confidence in the p o l i t i c a l s t a b i l i t y of the
^ o r l d and when the Governments of the v a r i o u s c o u n t r i e s i n Europe b a l a n c e
t h e i r b u d g e t s by l i m i t i n g the amount of t h e i r e x p e n d i t u r e s t o the revenues
r e c e i v e d from t a x a t i o n and other sources, and d i s c o n t i n u e the
emission of
new i s s u e s of uncovered paper money, t h e r e should f o l l o w a r e s t o r a t i o n of
c o n f i d e n c e i n the economic and f i n a n c i a l c o n d i t i o n of Europe,
Judging from
our own h i s t o r y a f t e r the C i v i l "far, many y e a r s w i l l d o u b t l e s s e l a p s e b e f o r e
some European c o u n t r i e s can r e s t o r e the normal value of t h e i r c u r r e n c i e s , b u t
i f the v i o l e n t f l u c t u a t i o n s in exchange which have marked the p a s t two y e a r s
can be Prevented in f u t u r e and a s t a b i l i z a t i o n en some b a s i s accomplished, i t
w i l l be p o s s i b l e t o engage in commercial and f i n a n c i a l t r a n s a c t i o n s with
Europe on a much l a r g e r s c a l e than a t p r e s e n t .
I f we wish t o s e l l our s u r p l u s
p r o d u c t s abroad, i t i s e v i d e n t t h a t we must continue t o exchange commodities
with f o r e i g n c o u n t r i e s , f o r where we s e l l we must buy,
A c u r t a i l m e n t of p r o -
duction to meet merely American reouirements would involve wide-spread unemployment and would i n v i t e d i s a s t e r .
On the other hand, because of the great
foreign
d e p r e c i a t i o n i n the c u r r e n c i e s of many/countries t h e i r l a b o r c o s t s a r e much
l e s s than ours and p a r t l y because of t h i s f a c t and p a r t l y because of the
- 25 »
'
' ^
x-3267
high premium on d o l l a r exchange, they are able to u n d e r s e l l u s i n our own
markets.
One of the great problems of our n a t i o n a l l e g i s l a t o r s today i s
to frame a t a r i f f which w i l l prevent the durrroing upon our markets of f o r e i g n
-oods, without a t the same time e r e c t i n g a t a r i f f wall so hidh t h a t our . ^
exports w i l l be g r e a t l y reduced because of the i n a b i l i t y of f o r e i g n n a t i o n s
to t r a d e with u s .
In conclusion, a word more may be added concerning the Federal Reserve
System,
bank.
A Federal Beserve Bank i s what i t s name implies*
I t i s a reserve
I t holds on d e p o s i t the e n t i r e l e g a l reserve of i t s member banks#
It
i s not authorized by law to receive d e p o s i t s from the p u b l i c , nor to lend
d i r e c t l y t o i n d i v i d u a l s , firms or c o r p o r a t i o n s .
I t can rediscount paper of
short m a t u r i t y f o r member ban>s with t h e i r endorsement, t h a t i s , n o t e s , dr^f•
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 cornier
c i a l purposes, or the proceeds of which have been used or a r e to be used f o r
such purposes*
Based in p a r t on the s e c u r i t y of such paper, i t can put in
c i r c u l a t i o n Federal Reserve notes in s u f f i c i e n t volume to meet the r e q u i r e ments of ordinary business t r a n s a c t i o n s or of an acute emergency.
But the Federal Reserve System should not be expected to accomplish
the impossible.
I t i s n o t a panacea f o r a l l economic and f i n a n c i a l i l l s and
i t cannot, however
s k i l l f u l i t s a d m i n i s t r a t i o n may be, prevent Periods of
degression in the f u t u r e , although i t can do much to modify them*
Other
n a t i o n s , such as Great B r i t a i n and France, with t h e i r g r e a t c e n t r a l banking
i n s t i t u t i o n s , have always had t h e i r years of p r o s p e r i t y and t h e i r periods of
depression, although they have been f r e e frem the money panicsywe^forrrerly
had in t h i s country as a r e s u l t of our inadequate banking system and which
we would, no doubt, have had In3 the most aggravated degree a year or so aeo
X-32b7
"but f o r t h e e f f i c i e n c y and s t a b i l i z i n g i n f l u e n c e of t h e F e d e r a l Reserve
System.
There a r e w e l l d e f i n e d c y c l e s i n "business*
We have t h e s h o r t and
f r e q u e n t l y r e c u r r i n g c y c l e s i n c i d e n t to t h e changes of t h e s e a s o n s and a l l
h i s t o r y shows t h a t t h e r e a r e l o n g e r swings or p e r i o d s of p r o s p e r i t y and
d e g r e s s i o n , the r o t a t i o n b e i n g about a s f o l l o w s : ( l ) B u s i n e s s a c t i v i t y and
i n c r e a s i n g p r o d u c t i o n , (8) E x c e s s i v e ex-oansion and s p e c u l a t i o n , f o l l o w e d
h i t h e r t o by p a n i c and f o r c e d l i q u i d a t i o n , ( 3 ) A l o n g p e r i o d of slow l i q u i d a t i o n , b u s i n e s s d e p r e s s i o n and s t a g n a t i o n , and ( 4 ) R e v i v a l .
There a r e many i n d i c a t i o n s t h a t t h e b e g i n n i n g of r e v i v a l i s n o t f a r
distant*
When i t does d e f i n i t e l y s e t i n , i t w i l l be f o l l o w e d i n due course
by a new e r a of p r o s p e r i t y ,
^ h i l e the l o s s e s d u r i n g the p a t t two y e a r s
have been g r e a t much experience h a s been gained and w h i l e e x p e r i e n c e i s n o t
t r a n s f e r a b l e , except p e r h a p s t o a l i m i t e d e x t e n t , the p r e s e n t g e n e r a t i o n of
b u s i n e s s men has s e v e r a l y e a r s of b u s i n e s s a c t i v i t y ahead of i t .
In the l i g h t of t h i s e x p e r i e n c e , we should remember, when we again e n full
t e r i n t o a p e r i o d o f / n r o s p e r i t y t h a t a r e a c t i o n w i l l f o l l o w sooner or l a t e r
and i f t h e f l o w of t h e incoming t i d e can b e c o n t r o l l e d so t h a t t h e c r e s t may
n o t be reached too r a p i d l y n o r r i s e too h i g h , the subsequent r e a c t i o n w i l l
be l e s s s e v e r e and t h e n e x t p e r i o d of i n d u s t r i a l and commercial a c t i v i t y and
g e n e r a l p r o s p e r i t y w i l l be marked by s a n e r methods, g r e a t e r achievement alon^
c o n s t r u c t i v e l i n e s and by a l o n g e r d u r a t i o n than any which we h a v e had b e f o r e .
w
e should n o t f o r g e t t h a t the ebb of the t i d e i s always equal t o the flow and
t h a t the ebb i n the Bay of Fundy, where t h e t i d e r i s e s h i g h e s t , i s f a r g r e a t e r
than i n s a f e r h a r b o r s where the t i d a l f l u c t u a t i o n s a r e more moderate*
X-3270
CURVES OF EXPANSION AND CONTRACTION, 1919 - 1921.
by
A. C. MILLER
Member, F e d e r a l Heserve Board
To a p p e a r i n t h e forthcoming (January, 1922) number of t h e ANNALS
OF THE AMERICAN ACADEMY OF POLITICAL AND SOCIAL SCIENCE, e n t i t l e d
"The Rise of t h e F e d e r a l Reserve System".
X-j27C
CURVES OF EXPANSION
CONTRACTION, 1919 - 1921.
The economic v i c i s s i t u d e s through which the country has passed
during t h e p a s t year have brought t o everyone a v i v i d and memorable
experience of the a c t u a l i t i e s of expansion and c o n t r a c t i o n and have
made t h e study of t h e c o n d i t i o n s which eventuate i n t h e s e v i o l e n t
a l t e r n a t i o n s o f . t h e curves of b u s i n e s s and c r e d i t , a m a t t e r of profound
p r a c t i c a l importance.
^ a r , and i t s immediate a f t e r m a t h of b u s i n e s s i n f l a t i o n s , made t h e
c r e d i t expansion.
After-war r e a d j u s t m e n t , with i t s i n e v i t a b l e l i q u i d a -
t i o n , has made the c r e d i t c o n t r a c t i o n .
So much i s a l r e a d y c l e a r from
the o u t s i d e p o i n t of view and i s now admitted by most f a i r - m i n d e d p e o p l e .
But what i s f u r t h e r revealed and how does the m a t t e r look when t h e
o p e r a t i o n s of t h e banking system are viewed from t h e nearby or Federal
Reserve p o i n t of view?
For t h i s whole r e c e n t experience r a i s e s some
q u e s t i o n s of g r e a t moment with regard t o the f u n c t i o n i n g of the c o u n t r y ' s
new c r e d i t mechanism.
I t i s not t h e purpose of t h i s d i s c u s s i o n t o go i n t o t h e economics
of t h e expansion and c o n t r a c t i o n of l g l $ - l $ 2 1 .
cerned w i t h q u e s t i o n s of economic c a u s a t i o n .
I t i s not a t a l l conNo attempt w i l l be made
t o determine whether expansion or c o n t r a c t i o n of c r e d i t caused expansion
or c o n t r a c t i o n of b u s i n e s s and t h e r i s e and f a l l of p r i c e s , or whether
t h e movement of c r e d i t was determined by t h e movements of b u s i n e s s and
prices.
The c o r r e l a t i o n of the b u s i n e s s and f i n a n c i a l f a c t o r s involved
i n t h e economic developments of t h e p a s t t h r e e y e a r s p r e s e n t s too complex
a problem t o be undertaken w i t h i n t h e l i m i t s of t h i s paper•
For t h e
a s s i s t a n c e of any who a r e ambitious t o p e n e t r a t e t h e economic m y s t e r i e s
-2-
X-327O
of recent expansion and contraction, there i s nevertheless appended
to this article a collection of data covering most of the determinable
factors involved in the problem.
In order to make the fluctuations
in the different items comparable, they are expressed in the form of
index numbers based on the I919 average.
A second table shows the
absolute figures upon which the index numbers of banking are based.
M AU E E T O E P N I N mD C N R C I N
E S R M N F X A SO
O T A TO .
The object of the present discussion i s to ascertain what light
recent experience throws on the question as to whether the Reserve
System possesses a sensitive and accurate indicator of changes in the
credit and business situaiioil - ei\, l e t us say, of expansion and contraction.
The accompanying chart brings out the essential developments
for this purpose.
The two curves of credit on the chart show,
respectively, changes in the bill holdings of the Federal Reserve Banks
and changes in the loans and investments of the reporting member banks-*1.
The third curve shows changes in the gold holdings of the Federal Reserve Banks, and the fourth, changes in the volume of the country's
business™.
The volume of business in general depends on four factors, or,
in mathematical language, i s a function of four variables: (l) physical
1- Consisting of some 800 of the largest banks of the country which report
weekly to the Federal Reserve Board, These banks represent about 40 per cent
of the banking resources of the country, and changes in their condition m y
a
be taken as typical of changes inthe banking situation in general.
d
*
measured by debits to individual accounts in banks in about 150 leading clearing-house centers. In order to eliminate short-time fluctuations due
to the difference in the number of business days in a month, to mid-month and
end of the month payments, and to Treasury operations in connection with the
quarterly installment of income taxes, the volume of business curve on the
chart has been smoothed by means of a moving average which shows for each
month the average volume of business for the month and the two preceding
months.
-3-
X-3270
volume of production; ( 2 ) price level; ( 3 ) activity of trade (rapidity
of turnover); and (4) speculative and other transactions in securities,
exchange, etc,
A change in any one of these factors affects the total
volume of business, and this, in turn, affects the total volume of
credit required.
In any exhaustive analysis of the business or
economic situation to ascertain what factors are affecting the demand
f©r credit f a c i l i t i e s , or, l e t us say, the expansion or contraction
of credit, careful attention must always, of course, be given to
variations in any of the elements affecting the volume of business.
C / O S IN T E BUSINESS SITUATION. 191Q - 1920.
HN E
H
Beginning about midyear, 1$1$, and extending to the end of the
year, there was a pronounced expansion of business accompanied by
great speculative activity involving commodities as well as securities.
Increased activity of business (rapidity of turnover) and rise of
prices were the important factors in this development.
The index of
the physical volume of production (for manufactures) shews no noteworthy change during this interval.
Economic reaction set in early in 1$2C, and continued throughout
the year.
Business recession was much in evidence and gained in
momentum after midsummer, 1$20,
In the f i r s t quarter of 15-1 the re-
action reached the stage of acute liquidation.
pursued a steadier course.
Thereafter business
This period of reaction and liquidation
was marked by diminished physical volume of production (for manufactures)
after midsummer, 1520, and by the drop of wholesale prices.
index for manufactures declined from 102.3 in July to 77»9 i n
The
-4-
X-3270
December, 1^20, and to b3.5 i n July, 1921.
The price index declined
from 123.6 in July to 8$.2 in December, 1920, and 6 9 . 8 in July, 1921.
These changes in the business situation, 1919-1921 - that is, the
rise and the fall in the volume of business transactions - are
clearly reflected in the curve of business.
Its trends are unmistak-
able.
H w well are tnese changes in the business situation - in brief,
o
the expansion and contraction of the volume of business - reflected in
the curves of credit, first that of the member banks, and second, that
of the Federal Reserve Banks?
M M E BN C E I C R E O E P N I N A D C N R C I N
E B R I K R DT U V F X A SO
N O T A TO .
The member bank credit curve reflects pretty faithfully the
business expansion which went on in the second half of the year 1919,
and again, the liquidation which was in process in the early part of
the year 1921.
It will be noticed that tne liquidation of the loan
account of the reporting member banks in the f i r s t six months of the
year iy21 approximately cancels the expansion of the loan account of
these banks in the second six months of the year 1919-
Through the
year 192O, however, i t will be noticed that the curve of credit of the
member banks shows a different trend from the curve of business.
The
business recession which was in process in 1920 i s not at all reflected
in the member bank curve of credit.
There was no contraction of credit
until the last quarter of the year.
O the contrary, the banks were
n
expanding their accommodation throughout the year and until after the
crop-moving season was over.
Agriculture was in distress, while
business was in the midst of the crisis of readjustment and needed
;
-5-
X-3270
assistance in effecting the transition from the period of expansion
through the psriod of liquidation.
That assistance was being ex-
tended by the banks, as both of the curves of credit clearly indicate,
and thus was liquidation of business moderated and kept orderly by :
comparison with what it would have been, had i t not been for the
steadying and easing influence of our new credit machinery.
T E R S R E B N C R E O CREDIT,
H EE V AK U V F
Turning to the Reserve Bank curve of credit, i t appears that
the curve of credit of the Federal Reserve Banks parallels the curve of
business more closely than does the curve of credit of the member banks,
both in the period of rapid expansion in 1919 and in the period of acute
liquidation in 1921.
It will be noticed on the chart that the Reserve
Bank curve of credit in the period under review twice cuts through the
member bank curve of credit - once in October, 1913J on the upward
swing of business, and again in April, 192I, on the downward string of
business.
By comparison with the member bank curve, the ascent of the
Reserve Bank curve was more pronounced on the rise, as was also i t s
descent on the f a l l .
O the other hand, throughout nearly the whole of
n
1920, when the business curve was showing a decided downward trend
(until the l a s t quarter, when a slight rise i s shown due to seasonal
influences) the Reserve Bank curve of credit showed an opposite, or
upward trend.
Both curves of credit in the critical year 19-0, therefore,
followed a different trend from the curve of business, but i t i s noteworthy that the difference i s much more pronounced in. the Reserve Banks'
curve than in the member banks' curve.
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X-3270
T E G L I F U A D R S R E BI K C E I C R E
H OD N L X N
EE V ^
M R DT U V ,
There s t i l l remains to be considered the curve of gold reserves*
The sharp and prolonged drop in the Reserve Bank curve of credit through
the year 1921 and the liquidation which i t reflects cannot be understood
without reference to the great influx of gold into the country and into
the Federal Reserve Banks, which has been in process during the past
twelve months.
Reference to the chart brings out the opposite move*
ments in these two significant and related curves.
Reference to the
index numbers shows that the index of the Federal Reserve System's gold
holdings rose from 94 in October, lgSO, to 130 in October, 1921, while
the index of b i l l holdings declined from 137 in October, 1$20, to 63 in
October, 1921.
Over 45 per cent of the liquidation of the loan account
of the Federal Reserve System, i t appears, m y be attributed to the ina
crease of i t s gold holdings.
The influence to be attributed to the gold
factor in Federal Reserve Bank liquidation i s s t i l l greater in the case
e
of the Federal Reserve Bank of N w York, which has been the chief
recipient of the gold flowing from Europe to our shores-
The index of
bill holdings for that bank f e l l from 126 in October, 1 9 2 0 , to 37 in
October, 1921,
to l$o.
Its gold index for the same period shows a rise from 74
The gold factor i s thus seen to account for over 73 per cent of
the liquidation experienced by the loan account of the Federal Reserve
Bank of N w York*
e
The great stream of gold which has poured into the United States
from Europe during the past year has come in liquidation of foreign
indebtedness to us, and has been turned over by member banks to the
Federal Reserve Banks in liquidation of their own indebtedness.
The
pronounced and continuous downward trend of the Reserve Bank loan curve
during the past year i s therefore seen to be due largely to foreign
liquidation.
The course of business shows considerable steadiness after
the f i r s t quarter of ig21,_ and the member bank curve of credit,, after the
second quarter; but the Reserve Bank curve of credit continues i t s downward course in 1921- without abatement in quick and close response to
the continuously upward course of the curve of gold reserves.
As an
indicator of the degree and rapidity of domestic liquidation, the
Reserve Bank curve of credit i s misleading, owing to the disturbing
influence of the gold factor,
T ER S R EBN CREO C E I
H E E V A K U V F R DT
T E M R SENSITIVE I DC T R O C E I C A G
H OE
NIAO
F R DT H N E
Comparing the two curves of credit with one another, i t i s clear
that while both curves are influenced by the same changes in the business
situation, their response i s not the same.
A glance at the chart brings
out the fact that the Reserve Bank curve moves very much more readily
and markedly than the member bank curve.
The member bank curve appears
flat by comparison with the Reserve Bank curve, and gives a less lively
impression of the business and credit developments and changes which
were in process,
what i s the explanation of the difference, and which
of the two curves i s the better index of expansion and contraction?
The relative flatness of the member bank credit curve during the
year 1920 as compared with the Reserve Bank curve i s due to several circumstances, some transitory in character.
It will be recalled that the
loan and investment account of the banks of the country was greatly
swollen during the W r by heavy investments in Liberty bonds and
a
-8-
X-32?0
Certificates of Indebtedness, and by accomodation granted subscribers
to government- war loan issues.
After the War, the process was reversed,
There has been constant liquidation of bank holdings of government securities and of loans collateraled by such securities.
Reporting member
banks' holdings of government securities dropped from 3 0 > millions in
> S3
May, 1919* to 1,933 millions in January, 1920, and 1,318 millions in
January, 1951,
Figures of holdings of paper secured by government
securities are not available until December, 1919* when they amounted
to 1,337 millions.
From this point they declined to 899 millions in
December, 1920> and 577 millions in October, I92I+
The liquidation in
the loan and investment account of the member banks from these sources
has tnerefore been very considerable.
But i t does not appear to be
reflected in the movement of the member bank curve of credit in 1920.
That curve was ascending in spite of liquidation from these sources. But
had i t not been for this liquidation, i t i s altogether reasonable to assume
that i t would have ascended s t i l l more.
The credit thus released by liqui-
dation of warloan securities and paper was apparently being used to expand
the commercial and speculative loan accounts of the banks.^
v h n we come to the period of liquidation in the autumn of 1920
Ve
and the following winter, there appeared an influence of an opposite
character to that just described - namely, the so-called "frozen credit".
By "frozen credit11 i s meant credit that has continued i t s existence beyond
3. Something similar occurred in the early autumn of 19^9> when i t will be
noticed the member bank curve was rising, while the Reserve curve was
declining, the banking expansion then in process being able to proceed
without increased borrowings from Federal Reserve Banks, This i s explained
by the fact that the floating debt of the government was reduced at this
time by almost $00 millions of dollars, the banks using the funds thus
made available to then for the expansion of their commercial loans.
-9-
x-3270
the time when the transactions which gave rise to the credit should
normally have liquidated themselves.
It i s made up of credits which
have not been liquidated because the transactions underlying the
credits have not been able to "run their course and liquidate themselves.
It is well known that large volumes of goods produced last
year have been carried by the producers for lack of satisfactory
markets.
Prices were falling, markets were collapsing, and there
was congestion of goods at points of primary production and distribution.
The owners of these goods had to be "carried".
There i s no
means of approximating the amount of tnese frozen credits, but there
i s reason to believe that they constitute a very substantial fraction
of the total loans and discounts carried by the commercial banks of
the country.
The nember bank loan curve snows resistance to the forces of
liquidation.
It was this retarded " r "orderly" liquidation which
o
kept the curve from descending as swiftly as i t otherwise would have
if i t had been influenced merely by the volume of current business
transactions.
Moreover, the liquidating power of a dollar paid in by
a member bank to i t s Reserve Bank in a period of liquidation appears,
on the basis of the past two years, to be very much l e s s than the
credit-supporting power of a dollar loaned by a Federal Reserve Bank
-10-
X-3270
to a member bank in a period of active expansion.
And furthermore,
the Federal Reserve Bank loan curve, as has already been pointed out,
represents in a peculiar degree the liquidating effect on the Federal
Reserve loan account of the huge influx of gold which has been continuous during the past twelve months.
Besides these transitory
influences which have helped to give the member bank loan curve a
relatively flat character, there i s the additional important and
regular influence exercised by the far greater volume of member bank
loans compared with Reserve Bank loans.
Owing to the fact that the
base figure i s much larger for member banks than for Reserve Banks,
the same change in absolute amounts will result in a much larger
percentage change and, consequently, in a much steeper movement in a
reserve bank curve than in a member bank curve.
fact does not fully explain the discrepancy.
But this arithmetical
There i s a further reason
of an economic character to be noted in a study of the curves of expansion and contraction.
The great bulk of the loans of the member banks at any time
represents loans incident to the ordinary volume and requirements of
During the period of expansion between 1919 and 1^20 (dates for wnich information i s available being June 27, 1919, June- 25> 1920* and June 29, 1921)
the increase in the loans of the* member banks was 6*7 times as great as the
increase in the discdunts of the Federal Reserve Banks, while during the
following year the decrease in the loans was only 2*3 times as large as the
decrease in Federal Reserve Bank discounts. For the reporting member banks,
for which data on more significant dates are available (July 25, 193*9/before
the speculative expansion began, October 15, 1920, when the peak was reached,
and November 2, 1921, the latest date for which data are available) tneir
investment and loan account increased 3*2 times as fast during the period of
expansion as their borrowings from the Federal Reserve Banks, while during
the period of liquidation the reduction in the investment and loan account of
the reporting member banks is 1,6 times as large as the corresponding reduction in their borrowings from Federal Reserve Banks*
-li-
x-3270
business, and exercises, even in times of marked changes in the business
situation, a steadying influence on the member bank credit curve.
situation of the Reserve Banks i s different.
Their loan account does
not reflect the normal volume of credit in use.
their operations are not large.
The
Under normal conditions,
It is not the absolute amount of credit
in use, but the ebb and flow of credit, which affects the loan account
ef the Federal Reserve Bank.
The Federal Reserve Bank has l i t t l e part
in the ordinary credit business of the country.
business borrowers directly.
It does not deal with
The relations of the business man are with
his member bank, the member bank in turn dealing with the Reserve Bank
as occasion m y necessitate.
a
The Federal Reserve loan is not the f i r s t
line of credit, but the second line of credit.
The expansion and con-
traction of the Reserve Bank loan account are twice removed from the
expansion and contraction of the volume of business as reflected in
commercial bank loans.
The Federal Reserve i s called into activity when the supply of
ordinary credit f a c i l i t i e s i s inadequate.
of i t s members.
It supplements tne resources
-It is, so to speak, the increments and decrements in
the country's credit requirements that are reflected in the upward and
downward movement of the Federal Reserve loan account.
It i s when
business i s speeding up beyond their normal credit capacity that the
commercial "banks must resort to the Federal Reserve Banks for accomodation.
W e business i s receding and liquidating in a period of
hn
economic reaction, slackening of credit requirements will result in a
marked reduction of borrowings from Federal Reserve Banks.
Tne Reserve
Bank curve consequently reflects movement, cnange - the more or less of
- 12 -
X-3270
credit required, - and not the actual total volume of credit in
use by business.
O a relative basis the Reserve Bank curve hag a
n
tendency to magnify what i s in process in times either of rapid
expansion or of acute liquidation; in other words, to give an
exaggerated or heightened impression of these movements,
A G I E T C E I P LC
UD O R DT O I Y
Therein consists i t s importance as an administrative guide.
While i t m y be faulty as a guage of the degree of credit expansion or
a
contraction, i t s very sensitiveness gives i t a peculiar value as a quick
indicator of what changes in the business and credit situation are in
process or even impending.
For while the Reserve Bank curve, during the
period under review, has been oversensitive and gives an exaggerated
impression of credit developments, the member bank curve, for reasons
already discussed and primarily because, at any moment, i t i s more
influenced by what has taken place than by what i s taking place, tends
to give an inadequate impression of changes which are in process, at
least so far as they affect the credit situation.
In times of rapid
expansion or contraction, i t i s not the total volume of outstanding
bsnk loans which i s significant, but additions to that volume, or
reductions in i t ,
From this point of view, the Reserve Bank curve i s
a truer index of business and credit development than the member bank
curve, and a better guide to credit policy.
FEDERAL RESERVE BOARD
S E T T L E M E N T FUND
GOLD
Summary of t r a n s a c t i o n s f o r peri Lod ending December ]15, 1921.
Federal
Gold
Balance l a s t
Gold
Reserve
statement
Withdrawals
Bank of
Dec. 8 , I 9 2 I .
Deposits
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chigago
St« Louis
Minneapolis
Kans as City
Dallas
San F r a n c i s c o
Total
? 55,428,607.73 $
79,637.198.57 :
71,906,532.25 ,
6,490,069.99 f
95,833,485.86
22,966,990.38 ,
25,979,591.56 1
25,500,875.09
Total
$
858,571.00
698,872.23
1,072,805.86
711,266.41
556,617.11
1*501,664,960.01 ]*
1 1 , 0 9 7 , 0 7 9 . 6 7 1$
$
711,266,41
556,617.11
598,365.64
795,359.68
709,155.45
2,002,166.36
9,505,000.00
3^493,693.06
f CONFIDENT 61)
Aggregate
d e p o s i t s and
tr&nsfers from
Agent *9 f u n d
1,098,872.23
1,072,205.86
1,000,300.00
4,500,300.00
1,000,000.00
35,774,581.11
3,986,613,50
7,479,100.00
4,002,582.00
1,001,200.00
2,503,044.70
1,500,000.00
598,365.64
795,359.68
709,155.45
Federal
Reserve
Bank of
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
884,459.67
1,661,063.02
1,035.143.17
1,515,400.43
Aggregate
withdrawals
and t r a n s f e r s
t o Agent 's f u n d
$
10,884,459.67
1,661,063.02
11,035,143.17
1,515,400.43
858,571.00
($
31,497,079.67
$
4,540,089.63
1,047,055-95
2,291,095.14
330,735,88
770,937.22
|#
$
Total
Debits
108,191,939.96
365,613,131.79
124,822,016.31
95,117,362.50
107,121,919.11
39,172,259.59
167,781,158.24
90,745,610.21
28,418,850.98
72,287,393.79
39,709,312.88
47,375,195.32
Total
Credits
$
101,081,133.50
361,037,663.65
120,695,155.59
90,577,272.87
107,845,578.86
43,559,473.42
184,407,531.53
89,698,554.26
26,127,755.84
7l,956,657'9l
38,938,375.66
$
TRANSFERS
$
7,479,100.00
4,002,582,00
1,001,200.00
2,503,044.70
1,500,000.00
,$
5,000,000.00
|$
36,632,693,06
1,000,000.00
1,000.000.00
41,390,
77
1$
20,957,281.17
1$ 2 0 , 9 5 7 , 2 8 1 . 1 7
Summary of changes i n owners h i p of gold b y banks through
t r a n s f e r s and s e t t l e m e n t s .
Decrease
$
1
723,659.75 '
1,000,000.00
1,000,000.00
1,675,885.61
10,000,000.00
B a i l e e in
fund at close
of b u s i n e s s
Dec. 15, 1921.
$
3,153,525.29
$
424,531.86
53,944,791.46
23,529,465.90
7,997,016.03
112,387,053.29
2,723,659.75
1,105,818.27
17,626,373.29
47,055.95
2,291,095.14
669,264.12
26,571,773.57
3.055.802.27
24,793,049.14 |$ 1,226,356,153.68 |$ 1,286,356,153.68
24,793,049.14
Increase
4,1267860.72
4,540,089.63
23,208,968.02
27,632,179.31
50,431,000.59
Credits
4,957,281.17
10,000,000,00
2,000,000.00
3,281,395.56
4,500,300.00
1,000,000.00
2,002,166,36
11,644,000.00
Net
Credits
4,387,213.83
16,626,373.29
Debits
1,000,000.00
1,000,300.00
S e t t l e m e n t s from December 9 , 1921 t o December 15. 1921
inclusive.
Net
Debits
7,110,806.46
4,575,468.14
4,126,860.72
-
X-3271
Washington, D. C.
December 16, 1921,
506,800,573.to
|$
22,549,647.29
|*
22,549,647.2^
FEDE RJ t
RESERVE
A GENTS' FUND
X-3271 a
Summary of transactions for per!Led ending December 15, 1921.
Gold
Gold
Federal
Balance last
Withdrawals
Deposits
Reserve
statement
Dec, 8, 1921.
Agent at
Boston
$ i45.ooo.ooo
$
-
*
-
Withdrawals
for
transfers
to bank
$
(CORFUDEWIflL)
Deposits
Total
through
Withdrawals
transfers
from hank
$ 10,000,000
-
-
-
-
-
171,000,000
Philadelphia
125,389,260
Cleveland
145,000,000
Richmond
25,595,000
Atlanta
35,000,000
Chicago
286,644,500
7,000,000
10,000,000
-
56,500,000
4,000,000
2,500,000
w
St. Xouis
-
5,000,000
9,000,000
2,200,000
-
Kansas City
26,360,000
—
5,000,000
*•
-
130,389,260
34,595,000
400,000
35,400,000
.7,000,000
10,000,000
289,644,500
4,000,000
2,500,000
55,000,000
400,000
-
2,200,000
2,139,000
2,139,000
155*000,000
9,000,000
-
|$
$
145,000,000
1,000,000
*•
1$ 22,500,000
10,000,000
-
-
1*1,227,873,260 I* 16,000,000
10,000,000
1,000,000
206,950,500
San Francisco
Total
-
2,234,000
Dallas
-
$ 10,000,000
171,000,000
-
-
Minneapolis
-
-
-
New York
$
Total
Deposits
Washington, D. C»
IDecember 16, 1921.
Balance at
close of
business
Dec. 15. 1921.
-
|* 18,139,000
2,234,000
204,811,500
2,139,000
|* 20,400,000
27,360,000
| * 42,900,000
"
| $ 1,252,634,260
g
CO
FEDERAL RESERVE BOARD
WASHINGTON
X-3273
December 1 9 , 1921.
SUBJECT:
I n s t r w t i c n s f o r F r a n c h i s e Tax Payments, December 3 1 , 1 9 2 1 .
Dear S i r :
The F e d e r a l Reserve Board d i r e c t s e a c h F e d e r a l R e s e r v e
Bank t o c r e d i t t h e account of t h e T r e a s u r e r of t h e U n i t e d S t a t e s a t
c l o s e of b u s i n e s s December 31» 1921 w i t h t h e amount due on a c c o u n t of
i t s f r a n c h i s e t a x payment, i s s u i n g a c e r t i f i c a t e of d e p o s i t t h e r e f o r
on Form 1, N a t i o n a l Banks, i n the name of t h e d e p o s i t i n g F e d e r a l Res e r v e Bank and on account of h F r a n c h i s e t a x r e c e i p t s f o r t h e c a l e n d a r
y e a r 1921."
P l e a s e w i r e the T r e a s u r y a t l e a s t one d a y i n advance of t h e
e s t i m a t e d amount of y o u r payment and wire t h e Under S e c r e t a r y of t h e
T r e a s u r y n o t l a t e r t h a n a t c l o s e of b u s i n e s s December 3 1 s t of t h e
amount of c r e d i t a c t u a l l y made on account of f r a n c h i s e t a x e s * Wire
t h e Under S e c r e t a r y n o t l a t e r t h a n noon, your t i m e , S a t u r d a y , December
3 1 s t , t h e t o t a l f a c e amount of V i c t o r y Notes to b e t e n d e r e d t o t h e
T r e a s u r y on t h i s account and s t a t e i n your t e l e g r a m w h e t h e r t h e n o t e s
a
r e t e n d e r e d d i r e c t or t h r o u g h t h e F e d e r a l Reserve Bank of New York,
t o g e t h e r w i t h t h e amount p a i d f o r p r i n c i p a l , t h e amount cf commissions,
i f any, and the a c c r u e d i n t e r e s t t o December 3 1 s t . The T r e a s u r y d e s i r e s ,
as f a r as p o s s i b l e , t o c e n t r a l i z e t h e s e t e n d e r s a t t h e F e d e r a l Reserve
Bank of New York.
The T r e a s u r y w i l l g i v e f u r t h e r i n s t r u c t i o n s d i r e c t t o t h e
F e d e r a l Reserve Banks concerned n o t l a t e r t h a n noon, December 3 1 s t ,
as t o t h e manner i n which s e t t l e m e n t w i l l b e made, t h r o u g h c h a r g e s
i n the T r e a s u r e r ' s account, f o r the notes to be t e n d e r e d .
Very t r u l y y o u r s ,
G o v e r n o r .
CHAIRMEN OF AIL F . R . B-ABKB
COPY TO GOVERNORS.
FEDERAL RESERVE BOARD
WASHINGTON
December 19, 1921.
X-327U
Subject:
E x h i b i t s f o r 1921 Annual Report
" P e r s o n n e l and S a l a r i e s "
" O f f i c e r s and D i r e c t o r s "
Dear S i r :
The Board r e q u e s t s t h a t you f u r n i s h a s p r o m p t l y a s p o s s i b l e
f o r i t s Annual Report f o r 1921, i n f o r m a t i o n i n t h e form i n d i c a t e d below
f o r t h e y e a r s 1920 and 1921:
PERSONNEL AND SALARIES
Departments
(*)
O f f i c e r s and Employees
Number
Salaries
1920_
1920
1221
Chairman and F e d e r a l R e s e r v e Agent
Governor
Deputy Governor
A s s i s t a n t F e d e r a l Reserve Agent
Other O f f i c e r s
Banking Department
F e d e r a l Reserve A g e n t ' s Department
A u d i t i n g Department
f i s c a l _ A g e n c % Department
T o t a l
I n c o n n e c t i o n w i t h t h e f o r e g o i n g , t h e f i g u r e s should cover
annual s a l a r i e s p a y a b l e a s of December 3 1 s t , 1$21, e x c l u s i v e of any
e x t r a compensation.
Under t h e c a p t i o n "Other O f f i c e r s " you a r e r e q u e s t e d t o i n c l u d e a l l o f f i c e r s of t h e Banking and F i s c a l Agency Departments f o r
which s p e c i f i c c a p t i o n s a r e n o t p r o v i d e d .
Under t h e c a p t i o n "Banking Department" s h o u l d be i n c l u d e d
a l l employees of tne Bank n o t l i s t e d u n d e r t h e o t h e r c a p t i o n s p r o v i d e d
i n t h e above f o r m .
*)
I n c l u d i n g Head O f f i c e and B r a n c h e s .
X-32?4
-2-
You a r e a l s o r e q u e s t e d t o forward a l i s t of d i r e c t o r s of
your i n s t i t u t i o n , g i v i n g t h e p l a c e of r e s i d e n c e of each and d a t e
of e x p i r a t i o n of t h e i r t e r m s of o f f i c e , t h e l i s t t o i n c l u d e only
t h e d i r e c t o r s who a r e t o s e r v e f o r the e n s u i n g y e a r .
In c a s e any changes should occur i n t h e s e r e p o r t s a f t e r t h e y
have been forwarded t o t h e Board, a d v i c e should be given promptly,
i n o r d e r t h a t we may r e v i s e our copy.
Very t r u l y y o u r s ,
Walter L„ Eddy,
Assistant Secretary,
TO CHAIRMEN OF ALL F.R.BANKS.
FEDERAL RESERVE BOARD
WASHINGTON
£-3275
December 20, 1$21.
SUBJECT;
Expense Main Line, Leased wire System, November, 1921,
Dear S i r :
Enclosed h e r e w i t h you w i l l f i n d two mimeograph
s t a t e m e n t s X-3275 a and X-3275 b, c o v e r i n g i n d e t a i l o p e r a t i o n s
of t h e main l i n e , Leased wire System, d u r i n g t h e month tsf
November, 1 9 2 1 .
P l e a s e c r e d i t t h e amount p a y a b l e by your bank i n t h e
g e n e r a l a c c o u n t , T r e a s u r e r U. S„, on your books, and i s s u e
'C/D Form 1, N a t i o n a l Banks, f o r account of " S a l a r i e s and Expenses,
F e d e r a l R e s e r v e Board, S p e c i a l Fund", Leased Wire System, s e n d i n g
d u p l i c a t e C/D t o F e d e r a l Reserve Board.
Very t r u l y y o u r s ,
F i s c a l Agent,
Enclosures.
TO GOVERNORS OF ALL BANKS EXCEPT CHICAGO*
X-3275 a
REPORT SHOEING CLASSIFICATION A D NUMBER OF WORDS
N
TRANSMITTED OVER MAIN LINE OF THE FEDERAL RESERVE
LEASED WIRE SYSTEM FOR THE MONTH OF NOVEMBER, I921.
Bank B usine ss
From
Per cent of
T o t a l Bank
Business(*)
48,853
170,126
56,533
4.39
15.28
5.08
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chi cago
S t , Louis
Minneapolis
Kansas City
Dallas
San F r a n c i s c o
83,312
76,244
79,731
138,790
80,738
43,858
95,978
81,915
157,563
Total F» R.
Banks
Washington
1,113,64!
257,827
Grand T o t a l
7.45
6.84
7.16
12.46
7.25
3.94
8.62
7.35
14,15
Business
4,936
8,390
5,902
7,088
4,374
7,405
6,576
6,673
3,926
100.00
84,69$
527
-
4,315
88,545
174,713
79,127
81,721
44,602
42,443
1,237,370
381,991
87,045
1,619,361
9' 93$
TOTAL
1,532,316
100. oc#
These p e r c e n t a g e s used i n c a l c u l a t i n g t h e
p r o r a t a s h a r e of l e a s e d w i r e expenses a s shown
on t h e accompanying statement (X-3273
-
195
3,108
7,464
4,339
1,338
14,635
53,789
179,543
62,435
90,595
S3,726
94,600
149,705
88,749
62,419
—
108, 551
1,371,46s words or 89.5C0
160,848 "
" 10.5$
FEDERAL RESERVE BOARD
WASHINGTON, D, C.
DECEMBER 20, 1921.
Total
7,029
1,652
5,544
4,978
12,835
Bank Bus ines s
Treasury Bus iness
fh
(*)
War
Finance Corp,
Busine s s
160, 848
1,371,46s
P e r cent of T o t a l
Treasury
5.380
} REPORT OF*EXPENSE
MAIN LINE
FEDERAL RESERVE LEASED WIRE SYSTEM NOVEMBER, 1921,
Operators'
Salaries
Name of Bank
Boston
Nev7 York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St« Louis
Minneapolis
Kansas City
Dallas
San F r a n c i s c o
240,00
789.98
225*00
524,00
300,00
240.00
(#>4,690.33
300,00
275,CO
310.00
170,00
395.00
$
F e d e r a l Reserve Board
Total
(#)
(&)
(*)
(**)
(a)
$8, 459.31
Wire
Rental
$
-
(*)50.00
15,537.37
$15,537.37
Total
Expense
$
240,00
759.98
225.00
524.00
350.00
240. 00
4,690,33
300.00
275.00
310,00
170,00
395.00
X-3275 b
Pro r a t a
Share of
Total
Exp ense
Credits
240.00
789.98
225.00
524.00
• 350,00
240.00
4,690.33
300.00
275.00
310.00
170.00
395.00
$ 1,038.82
3,615.74
1,202,09
1,770.01
1,618.57
1,694.29
2,948,44
1,715.58
932.33
2,039.77
1,739.25
3,348.35
$
$23,663.24
$8,509.31
$
798.82
2.825.76
977.09 '
1,246.01
1.268.57
1,454.29
( * * ) l , 741.89
1.415.58
657.33
1.729.77
1,569.25
2,953.35
15,537.37
$24,046,68
383.44(a)
$23,663.24
I n c l u d e s s a l a r i e s Washington O p e r a t o r s .
Amount r e i m b u r s a b l e t o Chicago,
C u t - i n a t Washington on Richmond-Baltimore C i r c u i t ,
Credit.
Received $383»44 from War Finance C o r p o r a t i o n c o v e r i n g b u s i n e s s f o r month of O c t o b e r .
FEDERAL RESERVE BOARD
WASHINGTON, D. C.
DECEMBER 20, I 9 2 I .
Payable t o
Federal
Reserve
Board.
$l6,895-82
1,74l,89(&)
$15,153.93
FEDERAL RESERVE BOARD
WASHINGTON
X-3277-a
December 2 0 , 1921.
SUBJECT:
ASSESSMENT FOR GENERAL EXPENSES OF THE FEDERAL RESERVE
board, January i to.june 20, 1922.
Dear S i r :
There i s e n c l o s e d h e r e w i t h f o r your i n f o r m a t i o n and a t t e n t i o n copy of a r e s o l u t i o n a d o p t e d by t h e F e d e r a l R e s e r v e Board
a t a m e e t i n g h e l d on December 20, 1921, l e v y i n g a n a s s e s s m e n t u p on t h e s e v e r a l F e d e r a l Reserve Banks of an amount e q u a l t o one
hundred f o u r t h o u s a n d t h s of one p e r c e n t (,00104) of t h e t o t a l
p a i d - i n c a p i t a l s t o c k and s u r p l u s of such banks t o d e f r a y t h e e s t i m a t e d g e n e r a l expenses of t h e F e d e r a l R e s e r v e Board from J a n u a r y
1 t o June 30, 1922,
There i s a l s o e n c l o s e d a s t a t e m e n t showing t h e b a s i s
upon which t h e a s s e s s m e n t i s l e v i e d .
Th& a s s e s s m e n t 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 , i n c l u d i n g s u p e r - 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, 1921, t h a t i s , upon c a p i t a l p a i d - i n ae
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 a d j u s t m e n t ,
I have t h e honor t o r e q u e s t t h a t you b r i n g t h i s m a t t e r
t o t h e e a r l y a t t e n t i o n of t h e Board of D i r e c t o r s of y o u r b a n k ,
and d e p o s i t o n e - h a l f of t h e amount of y o u r a s s e s s m e n t i n t h e
G e n e r a l Ac c o u n t , T r e a s u r e r , U, S - , on your books on J a n u a r y 1 ,
1922, and o n e - h a l f on March 1 , 1922, i n e a c h i n s t a n c e i s s u i n g a
C/D on Form 1 , N a t i o n a l Banks, f o r c r e d i t of " S a l a r i e s and E x p e n s e s , F e d e r a l R e s e r v e Board, S p e c i a l Fund", a s s e s s m e n t f o r
general expenses.
K i n d l y send d u p l i c a t e C/D t o F e d e r a l R e s e r v e B o a r d .
Very t r u l y y o u r s ,
Enclosures-
(Sent
F i s c a l Agent.
t o Chairman of e a c h F e d e r a l R e s e r v e Bank)
X-3276
E T J T F R J N A Y 1922 A S S M N .
S HA E O A U R
SES E T
Average monthly encumbrance for period
July 1, 1921, to December 31, 1921:
Personal services
Mon-personal services . .
, .
§ 46,834.74
>
12,703.67
$ 59,536-.41
50,000.GO
16.450.00
66,450*00
Estimated monthly requirements,
January to June, 1922:
Personal services . . . . .
Non-personal services
. . .
. . . . .
Estimated monthly increase . .
Total estimated requirements,
January to June, 1922, inclusive, . . . . . .
Estimated unencumbered balance, December 31, 1921
Amount to be raised by assessment,
Estimated paid-in capital and surplus of
Federal Reserve Banks as of December 31,1921,
An assessment of one hundred four thousandths of
one per cent (.00104) will produce, . . . . „
6,912.00
396,700.00
70.000,00
328,700.00
317,000,000,(^0
329,680 . O
C
X-3277
RESOLUTION LEVYING ASSESSMENT
Whereas, under S e c t i o n 10 of t h e a c t approved
December 23, 1913, and known a s t h e F e d e r a l Reserve A c t ,
t h e F e d e r a l Reserve Board i s empowered t o l e v y semia n n u a l l y upon t h e Federal Reserve Banks i n p r o p o r t i o n t o
t h e i r c a p i t a l s t o c k and s u r p l u s an a s s e s s m e n t s u f f i c i e n t
t # pay i t s e s t i m a t e d e x p e n s e s , i n c l u d i n g 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 a r t h e h a l f - y e a r succeeding t h e l e v y i n g of such a s s e s s ment , t o g e t h e r w i t h any d e f i c i t c a r r i e d forward from t h e
p r e c e d i n g h a l f - y e a r ; and
Whereas, i t appears from e s t i m a t e s s u b m i t t e d
and c o n s i d e r e d t h a t i t i s n e c e s s a r y t h a t a f u n d e q u a l t o
one hundred f o u r t h o u s a n d t h s of one p e r cent (.00104) of
t h e t o t a l p a i d - i n c a p i t a l s t o c k and s u r p l u s of t h e Fede r a l Reserve Banks he c r e a t e d for t h e purpose h e r e i n b e f o r e
d e s c r i b e d , e x c l u s i v e ofl t h e c o s t of e n g r a v i n g aed p r i n t i n g
of F e d e r a l 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 p u r s u a n t t o t h e a u t h o r i t y
v e s t e d i n i t by law, t h e F e d e r a l Reserve Board
hereby
l e v i e s an assessment upon t h e s e v e r a l F e d e r a l
Reserve
Banks of an amount equal t o one hundred f o u r t h o u s a n d t h s
of one p e r c e n t (*00104) of t h e t o t a l p a i d - i n c a p i t a l and
s u r p l u s of such banks a s of December 31, 1921, and t h e
F i s c a l Agent of t h e Board i s hereby a u t h o r i z e d 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 , i n t h e
name of t h e Board, r e c e i p t s f o r payments made.
Sfuth
a s s e s s m e n t w i l l be c o l l e c t e d i n two i n s t a l l m e n t s of oneh a l f each; t h e f i r s t i n s t a l l m e n t t o be p a i d on J a n u a r y
1, 1922, and t h e second h a l f on March 1 , 1922.
FEDERAL RESERVE BOARD
WASHINGTON
X-3276
December 21, 1$21.
SUBJECT: Distribution of Operating Expenses,
Dear Sir:
In accordance with the announcement made on behalf of the
Board to the Joint Conference of Governors and Chairmen and Federal
Reserve -Agents at the recent October meeting, there has been constituted an Auxiliary Committee of the banks to assist the Board's
Committee on Internal Economy and Comparative Efficiency of the
Federal Reserve Banks, The members of the Auxiliary Committee are
Messrs. Norris and Calkins, Governors respectively of the Federal
Reserve Banks of Philadelphia and San Francisco, and Mr* wills,
Chairman and Federal Reserve Agent of the Federal Reserve Bank of
Cleveland* This Committee held i t s f i r s t conference with the
Board 1 s Committee on December yth, all members being present except
Mr. Calkins,
In order to get a satisfactory basis for studying the
operations of the Reserve Banks from the viewpoint of economy and
comparative efficiency, the Committee requires information showing
the operating expenses of the Federal Reserve Banks so distributed
as to be in comparable form. For this purpose, schedules have been
drawn up, copies of which are being transmitted to you under
separate cover, registered. It i s appreciated, of course, that
the forms of accounting are not in all respects uniform in the
twelve Federal Reserve Banks, and that difficulty may be encountered
in some cases in assembling tne i nf or mat ion-asked for segregated
according to the captions used in the schedules. It is, however,
so necessary for the purposes of the study being made by the
Committee to have information on expenditures from the twelve banks
in a form as nearly comparable as possible, that every effort should
be made to follow the captions of the schedules as closely as
possible.
The following further suggestions are made with respect to
the schedules:
(l) Under the caption "Executive Officers", include only
the number and salaries of such senior officers as are not specifically assigned to the supervision of a department. Where an
executive officer i s assigned specifically to a given department,
his salary should be charged to that department.
X—2 Y S
—2~
(2) In c a s e s where c a p t i o n s a p p e a r i n g on Schedule 1 embrace
more t h a n one d i v i s i o n of your o r g a n i z a t i o n , you a r e r e q u e s t e d t o make
t h e n e c e s s a r y s e g r e g a t i o n of expenses i n c o n f o r m i t y t o t h e s c h e d u l e ,
(3) Should t h e r e be d i v i s i o n s of your o r g a n i z a t i o n not covered
by any of t h e c a p t i o n s , they should be s e t up following, t h e c a p t i o n
"All Other".
(4) A s t a t e m e n t i n d e t a i l covering i t e m s i n c l u d e d under t h e
c a p t i o n s "All Other" should be f u r n i s h e d .
(5) In d i s t r i c t s where b r a n c h e s or a g e n c i e s a r e o p e r a t e d ,
s c h e d u l e s should be f i l l e d out t o c o v e r :
1.
2.
3.
Head O f f i c e .
Each branch or agency s e p a r a t e l y ,
Consolidated f i g u r e s f o r t h e d i s t r i c t .
(6) The a l l o c a t i o n of t h e c o s t of p r i n t i n g and s t a t i o n e r y t o
each department w i l l probably be d i f f i c u l t and i f t h e e x a c t amount i s
not a v a i l a b l e a r e a s o n a b l e approximation w i l l s e r v e .
(?) I n f o r m a t i o n r e q u e s t e d under t h e h e a d i n g on Schedule 1 " T o t a l u n i t s handled" need be f u r n i s h e d f o r t h e .following c a p t i o n s only:
1.
2.
3.
4.
5.
Collateral.
Coupon.
Disc ount.
Sorting (currency).
Transit.
( s ) The d i s t r i b u t i o n of expenses on Schedule 2 f o l l o w s f o r t h e
most p a r t t h e form used i n r e p o r t i n g t h e s e items t o t h e Board and t h e
g e n e r a l i n s t r u c t i o n s governing t h e p r e p a r a t i o n of r e p o r t s of expenses
should m a i n t a i n .
I t i s d e s i r e d t h a t t h e s c h e d u l e s be completed a s soon a f t e r t h e
f i r s t of t h e year as p o s s i b l e and forwarded t o t h e Board so a s t o be
a v a i l a b l e on or b e f o r e January 15, 1922.
Very t r u l y y o u r s ,
G o v e r n o r .
TO GOVERNORS OF ALL FEDERAL RESERVE BANKS.
COPIES TO AGENTS.
FEDERAL RESERVE BOARD
WASHINGTON
December 22, 1921.
X-3279
SUBJECTt
Shipments by Federal Reserve Banks of Fit and
Unfit Federal Reserve Notes
Dear Sir:
At the recent Governors* Conference i t was voted
that each Federal Reserve Bank should absorb the cost of
shipments of f i t as well as unfit Federal Reserve notes of
other Federal Reserve Banks, except the cost of insurance.
The Board approves and suggests that banks begin as of
January 1, 1$22 to absorb the costs of such shipments.
The Conference also voted to submit to the Board
for i t s approval the matter of the Federal Reserve Banks
settling shipments of uother,f Federal Reserve notes through
the Federal Reserve Board in a manner similar to the
present daily settlement of collected funds through the
gold settlement fund* The Governor of the Federal Reserve
Bank of Chicago was authorized by the Conference to work.,
out and submit to the Board for i t s approval a plan by
which such settlement could be. effected. The plan submitted by Governor McDougal appears to be satisfactory and
in the course of the next few days all Federal Reserve
Banks will be advised as to the details thereof and advice
will be given also of the date upon which the Board w i l l be
ready to begin handling the settlements*
Very truly yours,
Governor,
To the Governors of a l l Federal Reserve Banks*
GO.t.D
Federal
Reset
Bank of
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St* L o u i s
Minneapolis
Kansas C i t y
Dallas
Sen F r a n c i s c o
Total
Balance l a s t
statement
Dec. 15, 1921.
$ 41,390,622.77
85,879,767.41
60,747,110.36
53,944,791.46
23,529,465.90
7,997,0016.03
112,387,053-29
23, 206, 968. 02
27,632,179.31
26,571,773.57
3,746,597-35
39.765.227.93
Gold
$
Gold
Withdrawals
1*506,800,573.401*
federal
Reserve
Bank of
FEDERAL RESERVE BOARD
S E T T L E M E N T FO ND
Deposits
800,642.84' $
1,964,400.42
1,144,961.15
1,342,881.90
1,190,889.06
869,343.78
1,255,530.53
627,768.69
413,304.81
696,246.56
876,022.07
1.063.374.02
12,285,385-83 |$
,
1,000,000.00
57,377,600.00
12,500,000.30
2,300.00
1,015,000.00
500,000.00
1,000,045.68
1,000,000.00
1,111.81
1,008,900,00
2,001,500.00
Aggregate
withdrawals
and t r a n s f e r s
t o Agent's fund
$
800,b42.64
: 1,964,400.42
11,144,961.15
1,342,881.90
1,190,889.06
3,389,343.78
1,255,530.53
627,788^69
413,304.61
696,246.56
,#,9ee.(9
11,083,374.02
77,406,457,79 |$
$
Net
Debits
34,785,365.# |$
Net
Credits
14,247,159.63
T R A N S F E R S
$
$
1,68% 422.18
5>171,587.33
7,666,287.96
'
68.819.577.00 |$
$
Credits
-
91,000,000.00
1,000,000.00
1,000,000.00
1,000,000.00
4,000,000.00
2,000,006.00
f
'
1,000,000.00
2,000,000.00
79,531,457.79 | $
34,837,139.56
172,786,750.50
55,357,162.61
48,3*3,154.48
22.875.360.05
9,048,976.95
90,963,609.83
18,116,730.25
26,899,296.66
29,048,226.15
11,545,763.24
J *1 . 7 0 4 . 4 7 5 . 0 6
3»
Debits
a , 000,000.00
5,000,000.00
19,000,000.00
7,000,000.00
3,000,000.00
32,000,000.00
Balance i n
. fund a t close
of b u s i n e s s
Dec. 2 2 , 1 9 2 1 .
14,758,944.92
6,52l,783.a
6,941,304.70
11,832,087.07
-»
Aggregate
d e p o s i t s and
transfers from
Agent's fund
1,000,000.00
57,377,600.00
12,500,000.30
2,300.00
1,015,000.00
500,000.00
1,000,045.68
1,000,000.00
1,111.81
1 , 008> 900. 0 0
4,126,500.00
S e t t l e m e n t s f r o m Decen&er 16, 1921 t o December 2 2 , 1921
inclusive.
.
Total
Total
Debits
Credits
Boston
$
112,575,541.10 $
$
98,328,381.47 $
New York
385,640,903.49
445,147,119.98
59,506,216.49
Philadelphia
142,626,673.91
145,373,660.81
2,744,936.90
Cleveland
122,345,877.58
107,586,932.66
Richmond
136, 4 1 6 , 7 2 8 ; 99
129,894,945.78
Atlanta
48,399,418.55
41,458,113,85
Chicago
203,462,631.29
191,630,544.22
St* Louis
6,464,494.76
95,067,078.74
101,551,573.50
Minneapolis
27, 8 0 5 , 4 2 0 . 1 7
26,124,997.99
Kansas C i t y
83,244,121.98
78,072,534.65
Dallas
54,563,629.14
46,897,341.18
San F r a n c i s c o I
OfO O
"P' < A H .U I
. H « ' m H f 0 3335 , 6 6 ^
53. T
8 » 22
1 0 3 , 6 7 8 ,-8 1I. . 1
5 4 , 0 9 7r, 7 1 4 - 0 7 1
$
Total
I * 6 8 . 3 1 9 , 5 7 7 . 0 0 l l , U 6 6 . l 6 3 . 8 6 0 . 1 6 | * 1.1166,163.860.16 | *
X.328O
Washington, D. C.
9 5 , 0 0 0 , 0 0 0 . 0 0 {$ 9 5 , 0 0 0 , 0 0 0 . 0 0
Summary of c h a n g e s i n owners h i p of g o l d b y b a n k s t h r o u g h
t r a n s f e r s and s e t t l e m e n t s .
$
•
Decrease
6,752,840.37
$
31,493,783.51
6,744,986.90
4,241,055.06
478,216.79
3,941,304.70
20,167,912.93
5,464,494.76
1,319,577.82
|
5 S , 9*6,645.36 | $
A .. 1V % . O 70 «.08 5
1 i 0 3 8 I 8 *J
Increase
I
*
1 6 . 2 7 2 , 9 6 3 . 5 0 |$ U6.872.963.5O
FEDERAL
RESERVE
taiBBary of t r a n s a c t i o n s f o r p e r i o d ending Deceniber 22 1 1921,
T ads r a l
Balance l a s t
Gold
Gold
Reserve
a tatement
Withdrawals
Dec. 15, 1921,
'Deposits
Agent a t
Boston
1*
155,000,000
|$
New York
J
171,000,000
I
Philadelphia
1
130,339,260
Cleveland
j
145,000,000
Richmond
I
3^,595,000
Atlanta
I
35,4oo, 000
1
3,900,000
!
Chicago
|
289,644,500
J
7,000,000 1
S t . Louis
I
55,000,000
Minneapolis
J
2,200,000
1
Kansas C i t y
|
27,360,000
I
Dallas
j
2,234,000
San F r a n c i s c o j
'204,811,500
Total
| $ 1,252,634,260
-
|t
-
1
100,000,000
-
1
•
j$
-
-
1
-
1
-
J
10,000,000
1
-
1
-
1
-
1
-
3,500,000
1
-
I
20,000, coo
1.
»
1
1,600,000
1
-
!
-
2,000,000 I
-
1*
5,000,000
1
-
-
I
*
*
1
100,000,000
271,000,000
1
10,000,000
135,369,260
».
3,000,000 1
j
155,000,000
1$
1$
1
!
5,000,000
1
X-3280-a
Washington, D. G.
December 2 3 . 1921,
Balance a t
Total
c l o s e of
busineas
Deposits
Dec * 2 2 . 19*" 1*
FUND
( CONFIDENTIAL)
Total
Deposits
through
Withdrawals
transfers
f r o m bank
Wi thdrawals
for
transfers
t o bank
1$
-
A G E N T S1
1
7,000.. 000 1
•
—
31,595,000
\
2,500,000
-
3,000,000
j
3,900,000
j
6,000,000
37,500,000
I
7,000,000
j
20,000,000
302,644,500
1,600,000
56,600,000
J.
2,200,000
I
I
1
i
27,900,000 ;$ 125,100,000 1*
j
-
I
*-
145,000,060
1
*
25,#0,000
2,000,000
2,234,000
-
2,125,000
j
10,000,000
2,125,000
1$ 2 2 , 5 0 0 , 0 0 0
1
;$
9,125,000
30,025,000
1
10,000,000
205,686,500
1$ 147,600,000
5 '
-J
FEDERAL RESERVE BOARD
WASHINGTON
X-3281 '
December 23, 1921.
SUBJECT:
R a t e on S p e c i a l T r e a s u r 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
Dear S i r :
The Board has been advised by t h e Treasury Department
t h a t i n view of the r e d u c t i o n s which have t a k e n p l a c e i n current
r a t e s of i n t e r e s t , i n Federal Reserve Bank d i s c o u n t r a t e s , and
i n t h e r a t e s a t which l o n g term Treasury C e r t i f i c a t e s can be
f l o a t e d , a r e d u c t i o n w i l l be made i n t h e r a t e of i n t e r e s t t o
be borne by t h e s p e c i a l c e r t i f i c a t e s i s s u e d by t h e Treasury from
time t o time, f o r a day or two a t a time i n a n t i c i p a t i o n of t h e
r e c e i p t of funds from t a x e s or d e p o s i t a r i e s , from 4 p e r cent t o
3 per c e n t . This new r a t e of 3 per cent on t h e s p e c i a l c e r t i f i c a t e s w i l l be e f f e c t i v e beginning January 3* 1922. The Board
i s assured t h a t i t w i l l be t h e p o l i c y of t h e Treasury t o make
every p o s s i b l e e f f o r t t o keep the amount of s p e c i a l c e r t i f i c a t e s
Which may be i s s u e d from time t o time down t o t h e minimum.
Very t r u l y y o u r s .
G o v e
GOVERNORS ALLF.R.BANKS
COPIES TO AGENTS
r n o r .
X-3282
TREASURY IEPARTMENT
WASHINGTON
±378
December 14, 1921.
The Governor
Federal Reserve Board.
Sir:
You are advised t h a t the Department has r e f e r r e d t o the Comptroller
General of t h e United S t a t e s , Treasury Department D i v i s i o n , f o r settlement
t h e account of the Bureau of Engraving and P r i n t i n g f o r preparing Federal
Reserve n o t e s during the p e r i o d November 1 t o November 30, 1921, amounting
t o $ 2 6 0 , 2 4 5 . 4 2 , a s follows:*Federal Reserve Notes 1914
.
M
New ' Y o r k . . . . . . . . . .
Philadelphia.
Cleveland.........
Atlanta...........
Kansas C i t y . . . . . . .
208,000
597,000
209,000
91,000
82,000
136,000
221,000
169,000
90,000
w w*
w -
81,000
850,000
180,000
102,000
50,0d0
49,000
57,000
76,000
40,000
34,000
138,000
340,000
71,000
67,000
55,000
18,000
83,000
38,000
21,000
19,000
£ioo
120
29,000
San F r a n c i s c o . . . . . 534,000 134,000 350*000
21,366,000 4633,0001,200,000
w *
« W
Ma w
tw
r
I i—
* i »
i
W W
W
33,000
3,000
11,000
www
.-WW
2,000
W W •
W
1,000
www
www
W—
W
www
www
* r W
BW
W W
W
www
Www
W W
W
47,000
.
www
3,000
Total
427,000
1,767,000
493,000
263,000
200,000
203,000
362,000
283,000
151,000
53,000
29,000
1,018,000
5,249,000
5,249,000 s h e e t s a t $49.58 per M . . . . . . . #260,245.42
The charges a g a i n s t the s e v e r a l Federal Reserve Banks are a s f o l l o w s :
Sheets
Boston
$2?,000
New Y o * k . * f . » . . . U , t 6 7 , 0 0 0
P h i l a d e l p h i a . . . . a 493,000
Cleveland
263,000
Richmond
200,000
Atlanta
203,000
Chicago
362,000
St. Louis..
283,000
M i n n e a p o l i s . . . . . . 151,000
Kansas C i t y . . . . . .
53,000
Dallas
29,000
San Francisco....1.018.OOP
5,249,000
CompenPlate
Sat i o n P r i n t i n g
# 7 , 1 0 9 , 5 5 6,819.19
2 9 , 4 2 0 . 5 5 28,218.99
&i&>8*45 7,873*21
4*078.95 4 , 2 0 0 . 1 1
3 , 3 3 0 , 0 0 3,194*00.
3,379.95 3 , 2 4 1 . 9 1
6,027.30 5 , 7 8 1 . 1 4
4,711.95 4,519.51
2,514.15 2,411.47
882.45
846.41
482,85
463.13
16.949.70 16^257.46
87,395.85 83,826.53
I n c . Comjjateriala p e n s a t i o n
Total
5 , 2 1 3 . 6 7 2 , 0 2 8 . 2 5 # 21,170.66
21,575.07 8,383.25
87,607.86
6,019.53 2,341.75
24,442.94
3,2ll*23 1,249.25
13,039.$4
2,442.00
960*00
9,916.00
2,478.63
964.25
10,064.74
4,420.02 1,719.50
17,947.96
3,455.43 1,344.25
14,031.14
1,843.71
717.25
7,486.58
647.13
251.75
2,627.74
354.09
137.75
1,437.82
12.429.78 4.835.50
50.472.44
64,090.29 2 4 , 9 3 8 . 7 5 260,245.42
The Bureau appropriations w i l l be reimbursed i n t h e 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 t h a t your Board cause such I n d e f i n i t e approp r i a t i o n t o be reimbursed i n l i k e amount.
By d i r e c t i o n of the Secretary:
Respectfully,
S . P. G i l b e r t , J r . , U n d e r Secretary,
1379
X-3282-a
TBBASURY DEPARTMENT
WASHINGTON
December 14, 1921.
The Governor
Federal Reserve Board,
'
Sir:
You are advised t h a t t h e Department has r e f e r r e d t o t h e Comptroller
General of t h e United S t a t e s , Treasury Department D i v i s i o n , f o r settlement
the account o f the Bureau of Engraving and P r i n t i n g f s r preparing Federal
fie serve n o t e s during t h e p e r i o d November 1 t o November 30, 1921, amounting
t o $ 9 . 9 2 , a s follows*.
Federal Reserve Notes 1918
£500
Philadelphia . . . ;
Cleveland
v
- &&
G
100
81000
Total
100
100
100
200
100
200 s h e e t s a t $49.58 per M i . . . . . .
$9.92
The charges a g a i n s t the several Federal Reserve Banks are a s f o l l o w s :
Sheets
Philadelphia
Cleveland
Compen*
satlM
Plate
Minting
100
100
200
#1.6?
1.66
$3.33
$1.60
1.60
$3tE0
,
lnc.ComMaterials s e n s a t i o n
$1.22
1.22
$2.44
# *47
46
$ .95
Total
.
$4.96
4.96
$9.92
The Bureau appropriations w i l l We feimtiUribd i n the above amount from
t h e i n d e f i n i t e appropriation "Preparation and i s s u e 6k Federal Reserve N o t e s ,
Reimbursable", a%d i t i s requested that your Board cau&e such i n d e f i n i t e app r o p r i a t i o n t o be reimbursed i n l i k e amount.
By d i r e c t i o n of the Secretary:
Respectfully,
S. P. G i l b e r t , J r . ,
Under S e c r e t a r y ,
1880
t
FEDERAL
RESERVE
BOARD
STATEMENT FOR THE PRESS
X-3283
For Release i n Morning P a p e r s ,
Tuesday, January 3# 1922,
The f o l l o w i n g 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 c o n d i t i o n s throughout t h e s e v e r a l F e d e r a l
Reserve D i s t r i c t s d u r i n g t h e month of December, a s
c o n t a i n e d i n the forthcoming i s s u e of t h e F e d e r a l
Reserve B u l l e t i n .
Comparison of t h e y e a r - e n d r e p o r t s w i t h -those f o r t h e
c o r r e s p o n d i n g month i n 1920 demonstrates t h e continued upward
movement of b u s i n e s s and i n d i c a t e s gradual r e s t o r a t i o n of normal
c o n d i t i o n s . . This i s t r u e i n s p i t e of t h e f a c t t h a t t h e month
of December, which i s normally a p e r i o d of comparative c l o s i n g
down or t r a n s i t i o n , i n d i c a t e s , a s i s u s u a l l y t h e case, some
r e c e s s i o n from t h e h i g h e r l e v e l s of p r e c e d i n g
activity.
autumn b u s i n e s s
Chief importance i s u s u a l l y a s s i g n e d a t t h e c l o s e
of t h e y e a r t o t h e h o l i d a y t r a d e , emphasis b e i n g r a t h e r on t h e
s i d e of d i s t r i b u t i o n t h a n on t h e s i d e of p r o d u c t i o n .
This
i n t e n s i f i e d demand s e r v e s t o b r i n g i n t o a c t u a l use t h e goods
produced i n t h e e a r l i e r i n d u s t r i a l p e r i o d .
The h o l i d a y t r a d e
'
- 2 -
2-5283
1381
i s t h u s a t e s t of t h e soundness of t h e p r e c e d i n g b u s i n e s s a c t i v i t y *
R e p o r t s from athe v a r i o u s Federal Reserve D i s t r i c t s c o v e r i n g over
h a l f t h e month show t h a t t h i s y e a r * s demand i n t h e e a s t e r n D i s t r i c t s
h a s . r e g i s t e r e d an i n c r e a s e r u n n i n g a s high a s 10 p e r cent over t h a t
of 1920> w h i l e i n othef D i s t r i c t s t h e s i t u a t i o n i s pronounced s a t isfactory.
M a n u f a c t u r i n g l i n e s , a l t h o u g h slowed down because of
l e s s e n e d s e a s o n a l demand, g e n e r a l l y r e p o r t a f a i r l y s a t i s f a c t o r y
condition* a l t h o u g h a l a c k of forward o r d e r s s t i l l t e s t i f i e s t o ,
t h e u n c e r t a i n t y w i t h which t h e p r o s p e c t s of t h e coming months a r e
r e g a r d e d by many f i r m s .
F r e i g h t r a t e s continue a s a d i s t u r b i n g
f a c t o r due t o t h e b e l i e f t h a t r e d u c t i o n s a l r e a d y announced as
a f f e c t i n g some commodities may be much more w i d e l y extended i n t h e
near future.
M a n u f a c t u r i n g c o n d i t i o n s a r e f a r from u n i f o r m t h r o u g h o u t t h e
country*
There h a s been a d e c r e a s e i n t h e a c t i v i t y of t h e i r o n
and s t e e l i n d u s t r y s i n c e t h e f i r s t of December, which, however,
i s a t t r i b u t e d t o t h e seasonal c o n d i t i o n s a l r e a d y r e f e r r e d t o ,
b e i n g p a r t l y t h e outcome of f r e i g h t r a t e d i f f i c u l t i e s and of t h e
u s u a l i n v e n t o r y t a k i n g by p u r c h a s e r s , who n a t u r a l l y d e s i r e t o
keep t h e i r s t o c k s a s low a s p o s s i b l e a t t h i s time*
In t e x t i l e s
t h e r e h a s been but l i t t l e change s i n c e l a s t month, both c o t t o n and
woolen m i l l s b e i n g operated a t a h i g h p e r c e n t a g e of c a p a c i t y .
U n c e r t a i n t y a s t o t h e f u t u r e of t h e c l o t h i n g i n d u s t r y i s due t o
x-3283
- 3 -
l a b o r d i s t u r b a n c e s and t h e d e s i r e of cbnsumers f o r lew p r i c e d
goods.
I n t h e l e a t h e r and shoe t r a d e s s i m i l a r i r r e g u l a r i t y p r e -
v a i l s , t h e m a j o r i t y of D i s t r i c t s , .however, r e p o r t i n g c o n d i t i o n s
good or s a t i s f a c t o r y , w h i l e i n a few, s l i g h t d e c r e a s e s of output
are noted.
The r e l a t i v e l y lower p r i c e s which have been r e a l i z e d both
f o r c e r e a l s and f o r c o t t o n , have proved d i s c o u r a g i n g t o t r a d e i n
t h e a g r i c u l t u r a l d i s t r i c t s , and have a l s o r e s u l t e d i n r e t a r d i n g
t h e p r o c e s s of l i q u i d a t i n g f r o z e n l o a n s r e p r e s e n t i n g p a s t advances
of c r e d i t .
Wholesale p r i c e s a r e showing i n c r e a s e d s t a b i l i t y , t h e
i n d e x of t h e F e d e r a l Reserve Board l o s i n g only one p o i n t f o r t h e
month of November, w h i l e p r i v a t e r e p o r t i n g a g e n c i e s i n d i c a t e
e i t h e r s t a b i l i t y or very s l i g h t i n c r e a s e s d u r i n g December.
A
problem i s t h u s p r e s e n t e d t o bankers w i t h r e f e r e n c e t o t h e i r p o l icy in financing preparations f o r the next crop.
Meanwhile f a r m -
e r s i n many, d i s t r i c t s have shown a d i s i n c l i n a t i o n t o buy a s f r e e l y
a s would o t h e r w i s e have been t h e c a s e , due t o t h e s m a l l e r p u r c h a s i n g power i n t h e i r hands, and t h e f a c t t h a t i n sane q u a r t e r s a t
l e a s t t h e r e i s s t i l l u n c e r t a i n t y a s t o t h e amount of new c r e d i t
which t h e y can o b t a i n .
This s i t u a t i o n r e f l e c t s i t s e l f
in the
r e t u r n s f o r t h e w h o l e s a l e t r a d e i n t h e s o u t h e r n d i s t r i c t s where
t h e month of December showed a pronounced d e c l i n e i n dry goods,
a l t h o u g h t h e s i t u a t i o n i s f a v o r a b l e a s compared w i t h c o n d i t i o n s
of a y e a r ago.
Hardware and r e l a t e d l i n e s ape a l s o i n an u n s a t i s -
factory condition.
In r e t a i l t r a d e , a s a l r e a d y s t a t e d , t h e
1383
- 4 -
X-32S3
e x c e p t i o n a l demand of t h e holiday season h a s s e r v e d t o o f f s e t d e c l i n e s
which might o t h e r w i s e have been n o t e d a s t h e r e s u l t of t e m p o r a r i l y
reduced buying power i n t h e a g r i c u l t u r a l d i s t r i c t s .
This h a s been
e s p e c i a l l y encouraging i n view of t h e f a c t t h a t November t r a d e had
shown some f a l l i n g off from t h e h i g h l e v e l a t t a i n e d d u r i n g October.
Unemployment c o n d i t i o n s , on t h e whole, a r e but l i t t l e changed
from t h o s e r e p o r t e d a month ago.
A s l i g h t l y b e t t e r s i t u a t i o n has
been e s t a b l i s h e d i n some of t h e l a r g e r c i t i e s where c e r t a i n p l a n t s
p r e v i o u s l y closed a r e working on p a r t t i m e .
As i s always t r u e d u r i n g
t h e w i n t e r , t h e c e s s a t i o n of a g r i c u l t u r a l a c t i v i t y h a s s e t f r e e a
c e r t a i n amount of l a b o r which, however, on t h i s o c c a s i o n , h a s not
found employment a t t h e seasonal w i n t e r o c c u p a t i o n s which o r d i n a r i l y
a b s o r b a p a r t of i t .
A decided improvement i n European exchanges h a s t e n d e d t o some
e x t e n t t o h e l p t h e f o r e i g n t r a d e s i t u a t i o n d u r i n g t h e month of December, but t h e extreme c a u t i o n i n the e x t e n s i o n of bank c r e d i t which
was p r e v i o u s l y so n o t a b l e a phase of our f o r e i g n t r a d e s t i l l c o n t i n ues.
Export f i g u r e s i n d i c a t e a s t i l l f u r t h e r d e c l i n e of a c t i v i t y
i n s t a p l e s , w h i l e i m p o r t s show an advance.
Disturbed conditions i n
v a r i o u s c o u n t r i e s of Europe s t i l l r e n d e r a maintenance of b u s i n e s s
r e l a t i o n s w i t h them u n c e r t a i n and h a z a r d o u s .
R a t e s of i n t e r e s t ,
which had a l r e a d y made a n o t a b l e d e c l i n e d u r i n g the autumn, have tended,
on t h e whole, s t i l l f u r t h e r downward, p a r t l y owing t o t h e f a c t t h a t
t h e r e was no f o r e i g n o u t l e t f o r our c a p i t a l .
X-3283
- 5 AGRICULTURE:
The c o n d i t i o n of w i n t e r wheat t h i s f a l l has been
g e n e r a l l y good except i n c e r t a i n p a n s of D i s t r i c t No. l b (Kansas City)
and No. J ( C h i c a g o ) .
D i s t r i c t No. 7 (Chicago) r e p o r t s th&t weather has
"been f a v o r a b l e to the growth of the wheat p l a n t except i n n o r t h e r n I n d i a n a
and the n o r t h w e s t e r n p a r t of the lower p e n i n s u l a of
Michigan.
In D i s t r i c t
No. 8 ( S t . Louis) t h e r e has been ample m o i s t u r e and good growth i s b e i n g
made on an acreage about as l a r g e as t h a t p l a n t e d i n 1)20.
Reports from
D i s t r i c t No. 10 (Kansas C i t y ) i n d i c a t e t h a t the c o n d i t i o n of t h e w i n t e r
wheat i s s e v e r a l p o i n t s lower than l a s t y e a r , due t o l a c k of m o i s t u r e d u r i n g
t h e autumn months.
I n Kansas the S t a t e Board of A g r i c u l t u r e e s t i m a t e d the
c o n d i t i o n of wheat at the end of November a t 5 8 . 6 p e r c e n t , which was the
l o w e s t November c o n d i t i o n on r e c o r d .
D i s t r i c t No. 8 ( S t . Louis) r e p o r t s t h a t the y i e l d of the white p o t a t o
crop has been g e n e r a l l y low, b u t t h a t b o t h the y i e l d and q u a l i t y of gweet
potatoes are excellent.
Shipments of p o t a t o e s from Nebraska p r i o r t o
December 1, were g r e a t e r than t o t ^ l shipments of the 1320 c r o p .
Sugar b e e t
f a c t o r i e s i n Colorado r e p o r t u n u s u a l l y high y i e l d s , whereas the Michigan
s u g a r b e e t crop i s n o t so l a r g e as was a n t i c i p a t e d .
D i s t r i c t No. 6 ( A t l a n t a )
r e p o r t s t h a t c o n d i t i o n s i n the L o u i s i a n a cane sugar d i s t r i c t a r e e x c e l l e n t ,
t h a t weather has been p r o p i t i o u s f o r g r i n d i n g , and t h a t t h e s u g a r
c o n s i d e r a b l y l a r g e r t h a n was e x p e c t e d .
yield is
Reports from D i s t r i c t No. 8
( S t . Louis) i n d i c a t e t h a t t h e s u g a r y i e l d has been high i n M i s s i s s i p p i , b u t
r a t h e r d i s a p p o i n t i n g i n t h e s o u t h e r n c o u n t i e s of Ark an s as . L a t e s t a v a i l a b l e
e s t i m a t e s i n d i c a t e t h a t 7,631,000 b u s h e l s of r i c e were r a i s e d i n C a l i f o r n i a
t h i s s e a s o n , as conpared w i t h 9 , 7 2 0 , 0 0 0 b u s h e l s i n 1920.
X-3283
- o COTTON:
The c o t t o n crop was e s t i m a t e d t o amount t o 8, 3U0, 000 b a l e s
i n a s t a t e m e n t of t h e Department of A g r i c u l t u r e i s s u e d December 12, which
compares w i t h a crop of 13* 439>603 b a l e s i n 1920 and an average crop of
11,481,084 bales in the preceding five years.
Actual ginnings of cotton
prior to December 13, totaled 7*799#458 bales, as compared with 10,876,263
b a l e s i n t h e corresponding p e r i o d of 1$20,
The g i n n i n g s p r i o r t o December
13# 1920, amounted t o 81 p e r cent of the crop, but t h e marked d e c r e a s e i n
g i n n i n g s d u r i n g t h e f i r s t t h i r t e e n days of December i n d i c a t e t h a t a l a r g e r
p r o p o r t i o n of t h e I92O crop was probably ginned by December 13*
In spite
of the i n c r e a s e i n t h e e s t i m a t e d s i z e of t h e c u r r e n t c o t t o n crop, t h e p r i c e
of m i d d l i n g upland c o t t o n a t New York i n c r e a s e d from 1 8 . 4 c e n t s on November
23 t o 1 8 . 9 c e n t s on December 23.t
TOBACCO:
Movement t o market of t h e manufactured and e x p o r t t y p e s of
tobacco h a s proceeded r a p i d l y ,
When t h e l e a f
s a l e s warehouses i n V i r g i n i a
and North C a r o l i n a closed f o r -
the Christmas h o l i d a y s , i t was e s t i m a t e d
t h a t t h r e e - f o u r t h ' s of t h e s e a s o n ' s crop had been s o l d .
The Burley Tobacco
Growers Cooperative A s s o c i a t i o n has now been i n c o r p o r a t e d , and f i n a l
o r g a n i z a t i o n p l a n s are being made f o r h a n d l i n g t h e crop, but a few
Burley markets a r e open, w h i l e the dark tobacco markets i n w e s t e r n
Kentucky and Tennessee are i n f u l l o p e r a t i o n ,
In a l l sections, prices
r e a l i z e d a r e g e n e r a l l y considered s a t i s f a c t o r y , a l t h o u g h i t i s s a i d from
D i s t r i c t No. 5 (Richmond)
demand.
t h a t poor g r a d e s c o n t i n u e low and i n l i t t l e
The l e a f tobacco s i t u a t i o n i n P h i l a d e l p h i a shows no charge,
manufacturers not yet buying to any appreciable extent, and local dealers
t h e r e a r e consequently d i s c o u r a g e d .
The new .^Pennsylvania crop a s a whole
has not a s y e t been sold by t h e f a r m e r s .
Christmas demand f o r c i g a r s has
- 7 -
X-3283
bean w e l l maintained i n D i s t r i c t Mo, 3 ( P h i l a d e l p h i a ) .
Jobbers have p u r -
chased c a u t i o u s l y , and l i t t l e r e t u r n of unsold goods a f t e r t h e h o l i d a y s i s
expected.
Many d e a l e r s a t t h e l a s t minute were obliged t o p l a c e rush o r d e r s
f o r a d d i t i o n a l s u p p l i e s , although l a t e r i n December some r e q u e s t s f o r d e f e r r e d
shipments came i n from d e a l e r s who wished t o have s t o c k s a s small a s p o s s i b l e
when t a k i n g i n v e n t o r y ,
FRUIT:
The c i t r u s f r u i t crop i s maturing r a t h e r slowly, a s a r e s u l t of
adverse weather c o n d i t i o n s i n both C a l i f o r n i a
and F l o r i d a , and shipments
from both S t a t e s a r e lower t h a n i n t h e corresponding p e r i o d of 1$20.
District
No, 6 ( A t l a n t a ) r e p o r t s t h a t t h e c o n d i t i o n of oranges and g r a p e f r u i t has
1
d e c l i n e d s l i g h t l y during t h e p a s t month and t h a t s i t e s on a l l v a r i e t i e s a r e
r e p o r t e d t o be medium t o small.
Reports from D i s t r i c t No, 12 (San Frartcisco)
s t a t e t h a t t h e p i c k i n g of t h i s s e a s o n ' s
crop of navel oranges began about
the middle of November i n Central C a l i f o r n i a and e a r l y i n December i n
Southern C a l i f o r n i a ,
Shipments up t o December 14 were l i j g h t and were composed
l a r g e l y of small sized f r u i t , due t o t h e l a c k of e a r l y i a i l r a i n s i n t h e
producing s e c t i o n s .
The average p r i c e p e r box r e c e i v e d by grower# of navel
oranges was $ 3 , 8 4 i n November, as compared w i t h a p r i c e of $4.32 i n November,
1920.
The h a r v e s t i n g of t h e apple crop of D i s t r i c t No* 1 2 (San F r a n c i s c o ) i s
now completed, and r e v i s e d e s t i m a t e s show a p r o d u c t i o n of 45,095*000 bushels
i n t h a t D i s t r i c t f o r 1921, a s comparsd w i t h 30,852,000 b u s h e l s i n 1920. The
1
s e a s o n ' s shipments of boxed a p p l e s from t h e P a c i f i c Northwest t o t a l e d 37,^25
c a r s up t o December 3> as compared with 22,399 c a r s i n t h e corresponding
p e r i o d of 1920.
P r i c e s r e c e i v e d by growers f o r Johathan a p p l e s i n November
were from 25 t o 50 c e n t s p e r box l e s s t h a n i n November, J.92o.
i n g s a r e r e p o r t e d t o be normal f o r t h i s time of t h e y e a r .
Storage h o l d -
'
•
•
GRAIN MOVEMENTS:
8
-
.J--.,
X-32S3
Grain movements were g r e a t l y c u r t a i l e d d u r i n g
November and were much smaller than in e i t h e r October, 1921 or November, 1920.
Wheat r e c e i p t s a t l e a d i n g i n t e r i o r c e n t e r s were smaller t h a n in any month
s i n c e May and were about 35 p a r cent l e s s t h a n i n November, 1920. R e c e i p t s
of wheat a t Duluth and Minneapolis amounted t o 13,707,236 b u s h e l s in
November, which was $0 par cent l e s s t h a n i n October, 1921 and 36 p e r cent
l e s s t h a n i n November, 1920.
At fouf l e a d i n g markets of D i s t r i c t No. 10
(Kansas C i t y ) 7>272, 950 bushels of wheat were received i n November, which
was 43 p e r cent l e s s than October r e c e i p t s and
r e c e i p t s i n November, 1920.
p e r cent l e s s t h a n
Despite t h i s sharp d e c l i n e i n November
marketing, wheat r e c e i p t s a t t h e s e f o u r c e n t e r s from July 1 t o November 30
were 6 0 . 5 p e r cent g r e a t e r i n Ig21 t h a n i n 1920.
This heavy marketing i n
i n J u l y , August, September and October m a t e r i a l l y reduced s t o c k s of wheat
i n f a r m e r s ' hands, but a l a r g e p r o p o r t i o n of stocks of corn and other g r a i n s
yet remain on t h e farms.
N e v e r t h e l e s s , t h e r e was a decided decrease i n
November r e c e i p t s of corn, o a t s , rye and b a r l e y , a s compared w i t h October.
Stocks of g r a i n a t 11 i n t e r i o r c e n t e r s d e c l i n e d s l i g h t l y , a s a r e s u l t of
t h i s marked c u r t a i l m e n t of r e c e i p t s , w h i l e t h e s t o c k s a t nine seaboard
c e n t e r s a t t h e c l o s e of November were 10 p e r cent l e s s t h a n i n Ootober,1921,
and 8 p e r cent l e s s t h a n i n November, 1920.
Stocks of rye i n c r e a s e d both
a t i n t e r i o r and seaboard c e n t e r s , while t h e s t o c k s of a l l other g r a i n s
were diminished.
FLOUR:
November p r o d u c t i o n of f l o u r showed a sharp decrease from t h e
October f i g u r e i n a l l D i s t r i c t s .
Output r e p o r t e d i n D i s t r i c t No. 9
(Minneapolis) was 2,256,748 b a r r e l s i n November, which was 2b p e r cent below
the October f i g u r e , . w h i l e i n D i s t r i c t No. 10 (Kansas C i t y ) r e p o r t e d November
;
X-32S3
- 9 p r o d u c t i o n was 1 , 6 7 3 , 0 3 4 b a r r e l s , which was 2 7 . 1 p e r c s n t below 1he October
f i g u r e of 2 , 2 9 5 , 7 8 9 b a r r e l s .
November p r o d u c t i o n i n D i s t r i c t No* 7 (Chicago)
was r e p o r t e d a s 351,0C6 b a r r e l s , a d e c r e a s e of 2 9 . 5 p e r c e n t from t h e October
output.
P r o d u c t i o n of 11 l e a d i n g m i l l s i n D i s t r i c t No. 8 ( S t . Louis) was
2 b l , 4 0 0 b a r r e l s , a s compared w i t h 359,74b b a r r e l s i n O c t o b e r .
In District
No. 12 (San F r a n c i s c o ) 71 m i l l s r e p o r t e d a p r o d u c t i o n of 856,079 b a r r e l s
d u r i n g November, a s compared w i t h 997*325 b a r r e l s produced by 63 m i l l s i n
October.
The o u t p u t t h i s y e a r , however, i s g e n e r a l l y i n e x c e s s of t h e
November, 1920 f i g u r e .
Lack of s t a b i l i t y i n t h e wheat market i s s a i d by
s e v e r a l D i s t r i c t s t o be h a v i n g a d e t r i m e n t a l e f f e c t on t h e i n d u s t r y . M i l l e r s
i n November were c l e a n i n g up old b u s i n e s s and f i l l i n g small o r d e r s f o r
immediate s h i p m e n t .
hand-to-mouth p o l i c y .
Bakers bought b u t l i t t l e , and j o b b e r s pursued a
Export t r a d e i n D i s t r i c t No. 1 0 (Kansas C i t y ) was very
p o o r , w h i l e i n D i s t r i c t No* 8 ( S t , L o u i s ) such demand a s e x i s t e d was c o n f i n e d
almost e x c l u s i v e l y t o c l e a r s and low grade f l o u r s .
P r i c e s advanced i n l a t e
November i n sympathy w i t h the u p t u r n i n wheat, b u t t h e i n c r e a s e was wiped out
i n t h e f i r s t weeks of December.
LIVE STOCK;
November r e c e i p t s of c a t t l e and c a l v e s and sheep a t
f i f t e e n w e s t e r n m a r k e t s were l e s s t h a n i n Ocjtober, a l t h o u g h r e c e i p t s of hogs
were g r e a t e r , b u t f o r a l l t h r e e c l a s s e s t h e f i g u r e s were below t h o s e f o r
November, 1920,
November r e c e i p t s of c a t t l e and c a l v e s amounted
to
1 , 3 9 4 , 2 1 7 head, a s compaKd w i t h 1 , 7 1 2 , 9 1 7 head d u r i n g October and 1 , 7 8 1 , 2 6 1
head d u r i n g November, 1920.
177.
The r e s p e c t i v e i n d e x numbers were 138, 170 &n&
R e c e i p t s of sheep d e c r e a s e d from 1 , 8 4 2 , 1 4 8 head i n October, c o r r e s p o n d -
i n g t o an i n d e x number of 135, t o 1 , 2 4 4 , 2 1 4 head i n November, c o r r e s p o n d i n g
t o an index number of 91,
a s
compared w i t h 1 , 5 4 2 , 4 7 7 head i n
c o r r e s p o n d i n g t o an i n d e x number
of 113*
November, 1920,
R e c e i p t s of h o g s , on t h e o t h e r
hand, i n c r e a s e d from 2 , 0 5 7 , 2 3 1 head d u r i n g October t o 2,559*916 head d u r i n g
X-32S3
— 10 —
November, a s coopared w i t h 2,624,18$ head d u r i n g November, 1920.
r e s p e c t i v e index numbers were $4, l l 6 and 11$.
The
November i s t h e opening
month of t h e w i n t e r p a c k i n g season f o r hogs, but i n the case of t h e o t h e r
c l a s s e s of animals i n c r e a s e d i n t e r e s t i n f e e d i n g because of t h e low p r i c e
of corn and o t h e r coarse g r a i n s , h i g h f r e i g h t r a t e s and g e n e r a l l y u n s a t i s f a c t o r y p r i c e s of l i v e animals a t t h e m a r k e t s a r e a s s i g n e d by D i s t r i c t
No, 10 (Kansas C i t y ) a s f a c t o r s c o n t r i b u t i n g t o t h e r e d u c t i o n i n r e c e i p t s .
The l o n g drought which had p r e v a i l e d i n t h e range country of D i s t r i c t
No, 11 ( D a l l a s ) f o r s e v e r a l months was broken i n many l o c a l i t i e s by e a r l y
December r a i n s , w h i l e l i v e stock i n D i s t r i c t No. 12 (San F r a n c i s c o ) i s
r e p o r t e d i n e x c e l l e n t c o n d i t i o n , w i n t e r range p r o s p e c t s good, and much low
p r i c e d hay a v a i l a b l e f o r f e e d i n g where n e c e s s a r y .
There was an extreme
s c a r c i t y of hogs i n t h e P a c i f i c Northwest d u r i n g November, and t h e s t r o n g
l o c a l demand was supplied from the m i d d l e - w e s t e r n S t a t e s .
Twenty-five r e p r e s e n t a t i v e p a c k e r s r e p o r t a d e c l i n e of 29-7 P e r cent
i n November s a l e s (measured i n d o l l a r s ) from t h o s e f o r October, and a d e c l i n e
of 2 7 . 9 p e r cent from t h o s e f o r November, 1920.
The domestic demand f o r
f r e s h meats and l a r d i s s t a t e d by D i s t r i c t No. 7 (Chicago) t o have had a
tendency t o slow up a l i t t l e i n November and December, although t h e volume
was f a i r l y w e l l m a i n t a i n e d .
Meat p a c k e r s i n D i s t r i c t No. 10 (Kansas C i t y )
r e p o r t e d November export t r a d e i n pork p r o d u c t s a s on t h e whole s m a l l e r i n
volume t h a n i n October.
An o u t s t a n d i n g f a c t o r i n the i n d u s t r y h a s n a t u r a l -
l y been the s t r i k e of packing house employees which commenced i n t h e
w e s t e r n c e n t e r s , b u t s h o r t l y extended t o New York a s w e l l .
X-3283
- 1 1
COAL:
November,
-
P r o d u c t i o n of bituminous coal showed a s l i g h t d e c r e a s e d u r i n g
The output f o r t h e month was 35* 955# 000 t o n s , c o r r e s p o n d i n g t o
an index number of 97# a s compared w i t h t h e October p r o d u c t i o n of 43,7^1# 000
t o n s c o r r e s p o n d i n g t o an i n d e x number of 118 and a p r o d u c t i o n of 51,^57,000
t o n s i n November, 1920, c o r r e s p o n d i n g t o an i n d e x number of 139*
recent
study of commercial s t o c k s of coal showed t h a t bituminous s t o c k s held by
consumers on November 1, t o be 47, 000,000 t o n s , an amount s u f f i c i e n t f o r
43 d a y s ' r e q u i r e m e n t s a t t h e average r a t e of consumption m a i n t a i n e d d u r i n g
t h e p r o c e e d i n g t h r e e months.
Stocks were 1 6 , 0 0 0 , 0 0 0 t o n s , or 25 p e r c e n t ,
below t h e maximum of 63, 000, 000 t o n s r e p o r t e d on November 8, 191S, and were
t h e h i g h e s t s i n c e January 1 , 1 9 2 1 , b u t D i s t r i c t No. 3 ( P h i l a d e l p h i a ) r e p o r t s
t h a t c o m p e t i t i o n of non-union coal and B r i t i s h coal h a s f o r c e d union
o p e r a t o r s e i t h e r t o s e l l t h e i r product a t a s a c r i f i c e or t o c l o s e down
t h e i r mines.
P r o d u c t i o n of a n t h r a c i t e coal decreased from 1, 580, 000 t o n s i n October
t o 6 , 8 5 9 , 0 0 0 t o n s i n November which i s somewhat lower t h a n t h e p r o d u c t i o n
of 7> 441,000 t o n s i n November, 1920.
93 and 101.
The r e s p e c t i v e
index numbers a r e 102,
D i s t r i c t No. 3 ( P h i l a d e l p h i a ) r e p o r t s t h a t domestic demand has
been almost a s d i s a p p o i n t i n g d u r i n g t h e p a s t two months a s t h e i n d u s t r i a l
demand f o r steam c o a l s .
D e a l e r s ' s t o c k s a r e very heavy i n t h e m a j o r i t y of
grades and a l t h o u g h the p r i c e s tend t o be f i r m l y maintained, t h e r e have been
some s l i g h t r e d u c t i o n s .
The l e s s e n i n g of i r o n and s t e e l m a n u f a c t u r i n g h a s
been r e f l e c t e d i n reduced p u r c h a s i n g of coke and i n a weakening of p r i c e s .
The p r o d u c t i o n of beehive coke f o r November was 477,000 t o n e a s compared w i t h
4 l 6 , 000 t o n s i n October, and 1 , 6 2 2 , 0 0 0 t o n s i n November, I92O, while November
p r o d u c t i o n of by-product coke was 1 , 7 6 6 , 0 0 0 t o n s a s compared w i t h 1 , 7 3 4 , 0 0 0
t o n s i n October.
X-32S3
- 12 -
PETROLEUM:
R e p o r t s from t h e p r i n c i p a l o i l f i e l d s i n d i c a t e an i n c r e a s e d
p r o d u c t i o n of crude p e t r o l e u m f o r t h e month of November.
Petroleum p r o -
d u c t i o n i n D i s t r i c t No, 12 (San F r a n c i s c o ) showed a marked r e v i v a l a f t e r
t h e two s u c c e s s i v e months of d e p r e s s i o n caused by a s t r i k e of t h e o i l workers
Average d a i l y p r o d u c t i o n d u r i n g November was ^33,3^3 b a r r e l s , an i n c r e a s e
of 65;3^6 b a r r e l s over t h e d a i l y average p e t r o l e u m p r o d u c t i o n d u r i n g October,
Consumption a l s o i n c r e a s e d , but not t o t h e same e x t e n t a s p r o d u c t i o n , so
t h a t s t o r e d s t o c k s stood a t 33j486,350
b a r r e l s on November 30, 1921, a s
compared w i t h 22, 582,304 b a r r e l s on November 30, 1$20.
T h i r t y - e i g h t new
w e l l s w i t h an i n i t i a l d a i l y p r o d u c t i o n of 9,755 b a r r e l s were completed
d u r i n g November and one w e l l was abandoned.
I n t h e Kansas-Oklahoma f i e l d
November p r o d u c t i o n of crude o i l was s l i g h t l y l e s s t h a n f o r e i t h e r October
or November, 1920.
Development o p e r a t i o n s i n t h i s f i e l d shew an i n c r e a s e
of 1,503 b a r r e l s i n d a i l y new p r o d u c t i o n of crude o i l over t h e October
r e c o r d , though fewer w e l l s were completed i n November.
o i l and r e f i n e d p r o d u c t s i n c r e a s e d r a p i d l y .
reported an increased production.
Stocks of both crude
D i s t r i c t No. 11 ( D a l l a s ) a l s o
There were 19I w e l l s completed i n t h i s
D i s t r i c t d u r i n g November, i n c l u d i n g 132 p r o d u c e r s , a s compared w i t h 192 i n
October, of which only 92 y i e l d e d o i l .
In t h e new Mexia f i e l d 14 new p r o -
ducing w e l l s were completed, y i e l d i n g an i n i t i a l p r o d u c t i o n of 103,125
b a r r e l s , but o p e r a t i o n s have been c u r t a i l e d i n t h e North Texas d i s t r i c t due
i n l a r g e measure t o t h e i n s u f f i c i e n t supply of w a t e r power t o i n s u r e continuec
drilling.
P r i c e s i n t h e Mexia and C o r s i c a n a f i e l d s advanced on December 12,
b u t o t h e r crude o i l p r i c e s i n D i s t r i c t No. 11 ( D a l l a s ) have remained
IRON /ND STEEL:
steel industry.
Some tendency t o r e a c t i o n i s e v i d e n t i n t h e i r o n and
November p i g i r o n p r o d u c t i o n amounted t o 1,415,481 t o n s , as
compared w i t h 1,246,676 t o n s i n October, t h e r e s p e c t i v e index numbers being
6 l and 54.
The t o t a l number of a c t i v e f u r n a c e s i n c r e a s e d from 96 on
November 1 t o 120 on December 1,
This i n c r e a s e was not p a r a l l e l e d in t h e
case of s t e e l i n g o t s , t h e output of which merely rose from 1 , 6 l 6 , 8 1 0 t o n s
in October, corresponding t o an index number of 70, t o 1,660,001 t o n s i n
November, corresponding t o an index number of 71.
F a i r l y heavy shipments
r e s u l t e d i n a s l i g h t decrease i n t h e u n f i l l e d o r d e r s of t h e United S t a t e s
S t e e l Corporation from 4,286,829 t o n s at t h e c l o s e of October t o 4,250,542
tone a t t h e c l o s e of November.
The c u r r e n t S i t u a t i o n i s much more marked
i n D i s t r i c t No. 3 ( P h i l a d e l p h i a ) than i n t h e P i t t s b u r g h d i s t r i c t , and many
r e p o r t s from t h e former i n d i c a t e t h a t "the p r e s e n t s t a g n a t i o n i s even more
pronounced than t h a t which e x i s t e d d u r i n g August".
Dullness i s ascribed
l a r g e l y t o u n c e r t a i n t y as t o f u t u r e f r e i g h t r a t e s and t h e d e s i r e of merchants
to
carry minimum s t o c k s a t time of i n v e n t o r y .
especially poor.
Demand f o r p i g i r o n i s
Stocks a r e , however, r e p o r t e d low, and many i n q u i r i e s a r e
being r e c e i v e d f o r d e l i v e r y d u r i n g t h e f i r s t q u a r t e r of 1922.
Orders f o r
f i n i s h e d p r o d u c t s are f o r immediate d e l i v e r y only, but i t i s s a i d from
D i s t r i c t No. 4
(Cleveland) t h a t "miscellaneous new b u s i n e s s has continued
t o flow i n t o t h e m i l l s s u r p r i s i n g l y w e l l . "
R e f l e c t i n g t h e general s i t u a t i o n
i n t h e i n d u s t r y , and t h e sharp competition e x i s t i n g f o r a l i m i t e d volume of
b u s i n e s s , p i g i r o n p r i c e s have shown a f u r t h e r downward t r e n d .
AUTOMOBILES:
Manufacturers a r e a w a i t i n g t h e
r e s u l t s of t h e automobile
shows before determining t h e i r m a n u f a c t u r i n g schedules f o r t h e coming y e a r .
November p r o d u c t i o n i s a p p a r e n t l y l e s s t h a n f o r t h e p r e v i o u s months,
X-3283
- 14 -
m a n u f a c t u r e r s h a v i n g 63 p e r cent of t h e p a s s e n g e r car o u t p u t of D i s t r i c t
No. 7 (Chicago) p r o d u c i n g 69,125 c a r s i n November a s compared w i t h 84,913
c a r s i n October.
November c a r l o a d shipments were 14, C6l, a s compared w i t h
17,676 c a r l o a d s i n
10,509 machines.
October, w h i l e driveaways decreased from 12,SOS t o
Factory s a l e s i n November a r e , however, s t a t e d t o have
i n c r e a s e d over October i n D i s t r i c t No. 7 (Chicago).
NON-FERROUS METILS:
The copper market continued t o improve d u r i n g
t h e l a t t e r p a r t of November and during t h e f i r s t two weeks of December. On
to l 4 cents
December 14 copper (New York, n e t r e f i n e r y ) was s e l l i n g a t from 13-75 c e n t s j
p e r pound, a r i s e of almost 20 p e r cent over t h e p r i c e i n August,
The
r e c o r d f o r t h e market i s p a r t i c u l a r l y encouraging when compared w i t h a
s i m i l a r p e r i o d l a s t y e a r when copper d e c l i n e d s t e a d i l y from 1 8 . 5 0 c e n t s
p e r pound i n J u l y t o 1 2 . 3 7 5 c e n t s a t t h e end of 1920.
I t i s believed t h a t
copper mines may be reopened much sooner t h a n was a n t i c i p a t e d a few
months a g o . Much copper h a s been sold t o l a r g e e l e c t r i c a l m a n u f a c t u r e r s
f o r d e l i v e r y a s f a r ahead a s n e x t June.
Export b u s i n e s s i n copper c o n t i n u e s
t o be s u r p r i s i n g l y good, Germany and Japan b e i n g t h e b e s t p u r c h a s e r s .
Copper p r o d u c t i o n f o r November was 24,613,754 pounds a s compared w i t h
20,926,554 pounds i n October and 21, 713/ 9^4 pounds d u r i n g November, 1920.
The p r i c e of l e a d quoted by t h e l e a d i n g i n t e r e s t c o n t i n u e s t o be 4m?0 c e n t s
p e r pound and a f a i r amount of b u s i n e s s i s b e i n g done a t t h a t l e v e l .
P r o d u c t i o n of z i n c i n November amounted t o 21,135 t o n s , a s compared w i t h
14,538 t o n s i n October and 33,318 t o n s i n November, 1920.
Stocks continued
t o d e c l i n e d e s p i t e the i n c r e a s e d p r o d u c t i o n and t o t a l e d only 67, 049 t o n s
on December 1.
D i s t r i c t No. 10 (Kansas C i t y ) r e p o r t s t h a t November s h i p -
ments of z i n c o r e s from t h e mines of M i s s o u r i , Kansas and Oklahoma showed
X-32S3
- 15 -
an average of 7/909 t o n s shipped p e r week a s compared w i t h 6,719 t o n s
i n October and 5 , 0 0 0 t o n s i n September.
The average v a l u e p e r t o n
i n c r e a s e d from $23.92 i n October t o $2$.25 i n November.
COTTON TEXTILES:
Cotton consumption i n November showed a decided
i n c r e a s e over t h e amount consumed i n October and the
t h a n a t any time s i n c e t h e summer of 1920.
f i g u r e s were h i g h e r
The l a t e s t e s t i m a t e of the
Department of -Agriculture i n d i c a t i n g a l a r g e r c o t t o n crop t h a n was
expected, h a s r e c e n t l y been an u n s e t t l i n g f a c t o r a l t h o u g h t h e e f f e c t s of
the announcement had p r e v i o u s l y been d i s c o u n t e d t o a c e r t a i n e x t e n t .
D i s t r i c t No. 1 (Boston) e s t i m a t e s t h a t p r o d u c t i o n i n t h a t s e c t i o n i s on a
b a s i s somewhat i n excess of 80 p e r cent a t t h e p r e s e n t t i m e .
Reports from
D i s t r i c t No. 3 ( P h i l a d e l p h i a ) i n d i c a t e d t h a t some l i n e s of c o t t o n manuf a c t u r e s such a s branded goods, and gray goods, are b e i n g purchased a t
about t h e same r a t e a s h e r e t o f o r e but i t i s s a i d t h a t no f i r m s r e p o r t a
s u f f i c i e n t number of o r d e r s t o i n s u r e o p e r a t i o n s f o r more than t h r e e months.
Stocks a r e b e i n g kept a t a low p o i n t w i t h a view of h a v i n g a s small
i n v e n t o r i e s a t t h e end of t h e year a s p o s s i b l e .
The o r d e r s r e c e i v e d by
t e x t i l e m i l l ^ i n D i s t r i c t No. 5 (Richmond) were not a s numerous d u r i n g
November a s i n September and October but the m i l l s a r e g e n e r a l l y running
time
on a f u l l / b a s i s and a r e l o o k i n g forward t o f a i r l y good t r a d e a f t e r the
opening of t h e new y e a r .
Some m i l l s a r e p l a n n i n g changes i n machinery
and r e p o r t s g e n e r a l l y s t a t e t h a t t h e r e i s " r e t u r n i n g c o n f i d e n c e i n t h e
s t a b i l i t y of v a l u e s f o r raw c o t t o n and t e x t i l e s . "
The s p e c i a l r e p o r t s
based on r e t u r n s from 37 r e p r e s e n t a t i v e c o t t o n c l o t h m i l l s l o c a t e d i n
D i s t r i c t No. 6
( A t l a n t a ) i n d i c a t e t h a t c l o t h p r o d u c t i o n i n y a r d s during
November was 4 . 2 p e r cent g r e a t e r t h a n i n October and 31-3 p e r cent g r e a t e r
-
t h a n i n November,1920.
1
6
-
H
y
8
-
U n f i l l e d o r d e r s , on band a t t h e end of November
d e c l i n e d 6 . 7 p e r cent a s coapared w i t h the p r e c e d i n g month but were 3^«3
p e r cent above t h o s e on hand a t t h e c l o s e of November, 1920.
I t i s said
t h a t w h i l e t h e t o t a l of u n f i l l e d o r d e r s on an average showed a d e c l i n e ,
sane of t h e r e p o r t i n g m i l l s have o r d e r s which w i l l r e q u i r e f u l l time
o p e r a t i o n * f o r many weeks.
One m i l l s t a t e s t h a t i t w i l l r e q u i r e 40 weeks
r u n n i n g f u l l time t o complete i t s o r d e r s on hand.
A m a j o r i t y of r e p o r t i n g
m i l l s a r e r u n n i n g on f u l l time and some of them a r e o p e r a t i n g day and n i g h t
shifts.
The p r o d u c t i o n of c o t t o n y a r n by 40 m i l l s l o c a t e d i n D i s t r i c t No.6
( A t l a n t a ) was a l s o 3«2 p e r cent g r e a t e r i n November t h a n i n October. Orders
on hand a t t h e end of November d e c l i n e d 1 2 . 7 p e r cent a s compared w i t h
October f i g u r e s but were 6s»3 p e r c e n t g r e a t e r t h a n a t t h e end of November,
1920.
The d e c l i n e i n o r d e r s i s a t t r i b u t e d t o t h e f a c t t h a t buyers wish t o
go i n t o t h e new y e a r w i t h
'small s t o c k s and, f u r t h e r m o r e , t h e r e has
e x i s t e d f o r some time an element of u n c e r t a i n t y due t o t h e b e l i e f t h a t
t h e p r i c e of c o t t o n would be a f f e c t e d by t h e l a t e r e s t i m a t e s of t h e
Department of A g r i c u l t u r e .
Some r e p o r t i n g m i l l s a r e s a i d t o have sold
t h e i r p r o d u c t f o r many weeks ahead a t p r i c e s which allow some p r o f i t b u t
a few m i l l s s t a t e t h a t t h e i r o p e r a t i o n s a r e b e i n g c a r r i e d on without
p r o f i t a t t h e p r e s e n t moment*
COTTON FINISHING:
R e p o r t s from 34 of t h e 58 members belonging t o t h e
National A s s o c i a t i o n of F i n i s h e r s of C o t t o n F a b r i c s show t h a t d u r i n g t h e
month of November t h e r e was a drop i n f i n i s h e d y a r d s b i l l e d t o 97,132,172
from 105,286,414 i n October.
There was a l s o a drop i n f i n i s h i n g o r d e r s
r e c e i v e d d u r i n g the month, t h e f i g u r e f o r November being 8 5 , 2 7 9 , 1 7 5 a s
compared w i t h 100,909,9^5 f o r t h e p r e c e d i n g month.
The p e r c e n t a g e of
a v e r a g e c a p a c i t y i n o p e r a t i o n f e U from 77 t o 69 p e r cent f o r a l l r e p o r t i n g
Districts.
10
days t o
The a v e r a g e work ahead a t t h e end of t h e month dropped from
9 - 2 day#.
X-32S3
- 17 WOOLEN TEXTILES:
Curing the month of November t h e r e was a s l i g h t
r e d u c t i o n i n t h e a c t i v i t y of t h e woolen i n d u s t r y a s evidenced by the Census
r e p o r t s of p e r c e n t a g e s of i d l e wool machinery and of i d l e h o u r s t o t o t a l s
r e p o r t e d on December 1 .
I n a l l c a s e s except looms 50 i n c h reed space and
l e s s , p e r c e n t a g e s of a c t i v i t y and of i d l e h o u r s have i n c r e a s e d a s compared
w i t h t h e b e g i n n i n g of November.
For example, t h e p e r c e n t a g e of i d l e h o u r s
on t h e f i r s t of t h e month t o t o t a l r e p o r t e d r o s e from 2 4 . 9 p e r cent t o
2 8 . 7 p e r cent i n t h e case of looms wider t h a n 50 inch reed space, and i n the
case of woolen and worsted s p i n d l e s t h e p e r c e n t a g e s were 2 1 , 9 an& 12.6 p e r
cent r e s p e c t i v e l y , as compared with 1 8 . 3 and 8 . 1 p e r cent on November 1 .
Wool consumption i n November amounted t o $58,259,000 pounds a s compared
w i t h 62,130,667 pounds i n October.
However, d e s p i t e t h e s l i g h t r e d u c t i o n
i n a c t i v i t y which i s , n o doubt, l a r g e l y a t t r i b u t a b l e t o s e a s o n a l f a c t o r s , t h e
New England m i l l s continue t o run a t n e a r l y f u l l c a p a c i t y , w i t h a r e c e n t
s l i g h t slowing down i n advance of o f f e r i n g s f o r the f a l l of 1922.
The incoming
o r d e r s a r e s t a t e d not t o be s a t i s f a c t o r y , however, p r i m a r i l y because of t h e
unsettled conditions prevailing i n the clothing industry.
D i s t r i c t No. 3
( P h i l a d e l p h i a ) l i k e w i s e emphasises t h e l a c k of demand from t h e c l o t h i n g
i n d u s t r y due not alone t o a d i s p o s i t i o n on t h e p a r t of t h e consuming p u b l i c
t o demand lower p r i c e d goods, but a l s o t o t h e u n c e r t a i n t y brought about by
the
unsettled labor conditions within
the industry.
t r a d e i n woolen and worsted goods i s said t o be very
a r e placed merely f o r t h e purpose of f i l l i n g i n .
In
that District
i n a c t i v e and o r d e r s
Several m i l l s - .are
o p e r a t i n g a t only 25 p e r cent of normal c a p a c i t y and o r d e r s a r e not s u f f i c i e n t
t o keep them running more t h a n t h r e e or f o u r weeks.
The average c a p a c i t y f o r
X-3283
r IS twelve p l a n t s l o c a t e d i n t h e D i s t r i c t was about 45 p e r c e n t .
J
•"•• L>1'
-•••
The s i t u a t i o n
of t h e y a r n m a n u f a c t u r e r s appears t o have remained s u b s t a n t i a l l y unchanged*
f h e demand f o r weaving yarns continues
poor while k n i t t i n g y a r n s a r e s t i l l
i n g r e a t demand, and a number of l a r g e r m i l l s are o p e r a t i n g a t capacity
as a r e s u l t .
Raw wool p r i c e s have been advancing s t e a d i l y both f o r lower
and f o r h i g h e r grades of wool, but the s c a r c i t y of t h e b e t t e r grades i s
causing them to advance more r a p i d l y than t h e poorer grades*
CLOTHING:
Notwithstanding the u n f a v o r a b l e f a c t o r s t e n d i n g t o u n s e t t l e
the c l o t h i n g i n d u s t r y , t o which r e f e r e n c e has a l r e a d y been made, t h e l i m i t e d
r e p o r t s a v a i l a b l e show t h a t a f a i r amount of b u s i n e s s
November*
was t r a n s a c t e d i n
Ten c l o t h i n g f i r m s i n D i s t r i c t No, 2 (New York) engaged i n the
d i s t r i b u t i o n of men 1 s and women1s c l o t h i n g , r e p o r t s a l e s i n November t o have
been 11*7 p e r cent below t h o s e f o r t h e p r e c e d i n g month, b u t 21.2 p e r cent
i n excess of November, 1920.
I n D i s t r i c t No* 8 (St. Louis) t o t a l s a l e s and
o r d e r s f o r 23 r e p o r t i n g i n t e r e s t s were s t a t e d t o have been l a r g e r i n u n i t s
t h a n they were i n t h e same month of 1920, but t h e demand i s p r i n c i p a l l y f o r
cheap s u i t s and manufacturers are c a r r y i n g a much l a r g e r p r o p o r t i o n of low
p r i c e d goods-
Buying i s s t i l l confined t o o r d e r s f o r immediate d e l i v e r y *
In D i s t r i c t No, 7 (Chicago) from which r e p o r t s on a u n i t b a s i s are received
from m a n u f a c t u r e r s of men 1 s c l o t h i n g , t h e r e t u r n s f o r t h e seaspn to date
i n d i c a t e l a r g e advances i n output over t h e p r e c e d i n g y e a r .
The November
q u e s t i o n n a i r e sent out t o e i g h t wholesale c l o t h i n g f i r m s shows t h a t o r d e r s
f o r s p r i n g t a k e n from t h e opening of the season t o t h e date of t h e l a s t
r e p o r t were 130*6 p e r cent i n excessof t h o s e f o r t h e corresponding p e r i o d
of 1920,
F i f t e e n r e p o r t i n g t a i l o r s - t o - t h e - t r a d e s t a t e t h a t t h e s u i t output
f o r November was 1 1 . 1 per cent g r e a t e r t h a n f o r t h e same p e r i o d a year ago,
although i t had dropped l U . l p e r cent below t h e t o t a l s f o r t h e preceding
month.
'
.J..-
, -A
X-32S3
- 19 SILK TEXTILES:
R e p o r t s r a t h e r g e n e r a l l y i n d i c a t e t h a t the demand
f o r s i l k goods, e s p e c i a l l y broad s i l k s , h a s been s l i g h t l y more a c t i v e of
l a t e weeks and c e r t a i n l y t h e r e h a s " b e e n sone i n c r e a s e i n p r i c e s due i n
p a r t t o l a r g e r s a l e s f ^ i n p a r t t o t h e e f f e c t of t h e r a p i d advance t h a t h a s
o c c u r r e d i n r e c e n t months i n t h e p r i c e of raw s i l k .
N e v e r t h e l e s s , such
s t a t i s t i c s a s a r e a v a i l a b l e i n d i c a t e a f u r t h e r r e d u c t i o n i n a c t i v i t y of
t h o s e m i l l s l o c a t e d i n the North Hudson and i n t h e P a t e r s o n d i s t r i c t s .
I n North Hudson, 2 , 0 4 7 looms out of a t o t a l r e p o r t i n g of 4,586 were
o p e r a t i n g on December S, and t h e p e r c e n t a g e of a v a i l a b l e c a p a c i t y was
37- 7«
In P a t e r s o n w i t h 1% GCO looms, only 3 , 1 5 5 were a c t i v e and
the p e r c e n t a g e of a v a i l a b l e c a p a c i t y i n o p e r a t i o n was 1 1 . 6 ,
In
D i s t r i c t No. 3 ( P h i l a d e l p h i a ) c o n d i t i o n s appear t o be much b e t t e r , a s
r e p o r t i n g m a n u f a c t u r e r s a r e o p e r a t i n g a t about 30 p e r cent of normal,
a l t h o u g h p r a c t i c a l l y a l l o r d e r s a r e f o r immediate d e l i v e r y .
In t h e case
of e s t a b l i s h m e n t s m a n u f a c t u r i n g s i l k y a r n s , t h e r a t e of p r o d u c t i o n was
r e p o r t e d t o be about 63 p e r cent of normal.
The f a l l i n g off i n demand
which h a s o c c u r r e d , l e a d i n g t o a c u r t a i l m e n t of o p e r a t i o n s , i s a t t r i b u t e d
t o u n c e r t a i n t y r e g a r d i n g f u t u r e p r i c e s of raw s i l k .
S i l k consumption
a c c o r d i n g t o t h e e s t i m a t e s f u r n i s h e d by t h e S i l k A s s o c i a t i o n of America
amounted t o 1 8 , 3 5 5 b a l e s i n November a s compared w i t h 26,816 b a l e s i n
October.
HOSIERY:
Only D i s t r i c t No. 3 ( P h i l a d e l p h i a ) and D i s t r i c t No. 6
( A t l a n t a ) r e g u l a r l y r e p o r t concerning a c t i v i t y i n t h e h o s i e r y i n d u s t r y .
Judging from i n f o r m a t i o n r e c e i v e d from t h e s e D i s t r i c t s , t h e market f o r
c o t t o n h o s i e r y h a s been w e l l s u s t a i n e d d u r i n g t h e p a s t month.
No. 3 . ( P h i l a d e l p h i a )
District
n o t e s t h e r a t h e r s p e c i a l i z e d c h a r a c t e r of t h e demands.
x-3^83
-
20 -
The m i l l s t h a t produce h e a t h e r h o s i e r y , f o r example, a r e r u n n i n g a t capacityand o r d e r s continue t o be r e c e i v e d f o r t , e f a l l t r e d e of 1322.
I t is stated
t h a t t h i s f a c t i s a t t r a c t i n g more m i l l s i n t o t h i s f i e l d and t h e p r o s p e c t s
a r e t h a t t h e output f o r next year w i l l be l a r g e r .
The demand f o r s i l k
h o s i e r y a l s o c o n t i n u e s t o be e x c e p t i o n a l l y good but o t h e r l i n e s of c o t t o n
and mercerized h o s i e r y show s l i g h t a c t i v i t y and very few m i l l s engaged i n
p r o d u c i n g t h e s e a r e a b l e t o run on f u l l t i m e .
This s i t u a t i o n c o n t r a s t s
w i t h t h a t of the m i l l s in D i s t r i c t Bo. 6 (.Atlanta), however, a s t h e manuf a c t u r e r s of c o t t o n h o s i e r y i n t h a t r e g i o n continued t o do a good b u s i n e s s
d u r i n g November and were r e p o r t e d t o be o p e r a t i n g a t from 60 to 100 p e r cent
capacity.
One p l a n t as a m a t t e r of f a c t s t a t e d t h a t i t was running f u l l
day and n i g h t and had s u f f i c i e n t o r d e r s t o keep i t going f o r some months
on t h i s b a s i s .
The speecial r e p o r t s r e c e i v e d by t h e P h i l a d e l p h i a Bank from
24 h o s i e r y f i r m s s e l l i n g t o t h e w h o l e s a l e t r a d e showed a s l i g h t drop i n t h e
p r o d u c t manufactured during November ( i n dozens of p a i r s ) of 3 - 5 p e r c e n t .
Orders booked d u r i n g November were reduced 59-^ p e r cent and u n f i l l e d o r d e r s
on hand a t t h e end of November were 2 . 2 p e r c e n t below t h o s e on hand a t t h e
end of t h e p r e c e d i n g month.
However, t h e o u t p u t , o r d e r s booked, and u n f i l l e d
o r d e r s a s compared w i t h November a year ago showed e x t r a o r d i n a r y i n c r e a s e s
of 2 2 2 . 1 p e r c e n t , 6 3 . 6 p e r cent and 528.2 p e r cent r e s p e c t i v e l y .
The n i n e
r e p o r t i n g f i r m s s e l l i n g t o t h e r e t a i l t r a d e manufactured 1 J . 3 P e r cent
fewer p a i r s i n November t h a n i n t h e p r e c e d i n g month.
Orders booked f e l l 40
p e r cent and u n f i l l e d o r d e r s on hand November 30, were 19-2 p e r cent below
those on hand a t t h e end of October.
KNIT GOODS.
Very l i t t l e change was r e c o r d e d d u r i n g t h e month of Nov-
ember i n t h e p r o d u c t i v e a c t i v i t y of t h e r e p o r t i n g m i l l s b e l o n g i n g to the
-
X-3253
21 -
A s s o c i a t i o n of Knit Goods Manufacturers of America*
On© of t h e f o u r
m i l l s r e p o r t e d closed i n October resumed o p e r a t i o n s i n November, and 57
m i l l s were t h e n o p e r a t i n g a t an average of 86.5 p e r cent of normal capaci t y as compared w i t h 87-3 P e r cent average c a p a c i t y f o r 56 m i l l s r e p o r t ^
i n g i n October.
In November, 1920, r e p o r t i n g m i l l s were producing a t a
r a t e of only 23* 2 p e r cent of normal c a p a c i t y ,
For the 56 m i l l s which
f u r n i s h e d comparable data, both f o r October and f o r November, u n f i l l e d
o r d e r s on November 1, showed a gain of 67,990 dozens, r e a c h i n g a t o t a l
of 1,077,^03 dozens.
There was a r e d u c t i o n of 99;&3& dozens i n new o r -
d e r s r e c e i v e d during November, the t o t a l s f a l l i n g from 40o,675 dozens
i n t h e month of October t o 306,837 dozens i n November.
P r o d u c t i o n in
November amounted t o 362,660 dozens -* a l o s s of 19,685 dozens.
R e p o r t i n g underwear m i l l s l o c a t e d i n D i s t r i c t No* 3 ( P h i l a d e l p h i a )
s t a t e t h a t t h e r e i s an increased demand f o r heavy weight underwear and
t h a t although t h e general opening f o r the f a l l season of 1922 w i l l not
take p l a c e u n t i l a f t e r the new y e a r , considerable b u s i n e s s has a l r e a d y
been done.
Comparatively few o r d e r s f o r l i g h t weight underwear a r e now
being received by m a n u f a c t u r e r s i n D i s t r i c t No* 3 ( P h i l a d e l p h i a ) *
SHOES AND LEATHER.
P r i c e s of h i d e s and s k i n s advanced s l i g h t l y during
the f i r s t two weeks of December, but t h e r e was a marked r e d u c t i o n i n v o l ume of s a l e s .
D i s t r i c t No, 7 (Chicago) r e p o r t s t h a t s a l e s of green e a t less
t i e h i d e s in t h e United S t a t e s were about 26 p e r c e n t / i n November than i n
October, w h i l e s a l e s of green calf s k i n s i n c r e a s e d 7-9 P 0 r cent.
District
No. 3 ( P h i l a d e l p h i a ) s t a t e s t h a t diminution i n t h e s l a u g h t e r of animals i s
r e s u l t i n g i n a s t r e n g t h e n i n g of hide p r i c e s .
Demand f o r s o l e l e a t h e r
- 22 -
.
X-32S3
d e c l i n e d somewhat i n the e a r l y p a r t of.December w h i l e demand f o r most grades
of upper l e a t h e r has been w e l l m a i n t a i n e d .
A c t i v i t y has been p a r t i c u l a r l y
marked i n t h e c a s e of l e a t h e r s i d e s and t h e i r s a l e throughout t h e United
S t a t e s was l 6 . 6 p e r cent g r e a t e r i n November t h a n i n October.
R e p o r t s from
D i s t r i c t No. 3 ( P h i l a d e l p h i a ) i n d i c a t e t h a t t h e c a l l f o r low p r i c e d shoes i s
r e s u l t i n g i n a c o n s i d e r a b l e r e d u c t i o n i n s t o c k s of s i d e l e a t h e r and i n c r e a s e d
i n q u i r i e s f o r cheaper grades of heavy l e a t h e r .
Export o r d e r s a r e i n c r e a s i n g
and a l a r g e p r o p o r t i o n of t h e s o - c a l l e d " D i s t r e s s " l e a t h e r , held f o r account
of banks or i n s o l v e n t t a n n e r s , has been sold f o r shipment a b r o a d .
District
No. 7 (Qhicago) r e p o r t s t h a t t a n n i n g a c t i v i t y was more i r r e g u l a r i n November
than i n October.
Shoe m a n u f a c t u r i n g continued to show c o n s i d e r a b l e a c t i v i t y during November.
The November p r o d u c t i o n of n i n e i m p o r t a n t shoe m a n u f a c t u r e r s i n
D i s t r i c t No, 1 (Boston) was 8 p e r cent l a r g e r t h a n i n October, and 120 p e r
cent g r e a t e r t h a n i n November, 1920.
Six of t h e s e concerns showed shipments
10 p e r c e n t and new o r d e r s 13 p e r cent lower i n November t h a n i n October.
There h a s been some d e c l i n e i n t h e p r o p o r t i o n of women's shoes t o t o t a l p r o duction.
R e p o r t s of 45 shoe f i r m s i n D i s t r i c t No. 3 ( P h i l a d e l p h i a ) show t h a t
p r o d u c t i o n i n November was 7 P 6 r cent l e s s t h a n i n October, but 17-8 p e r cent
g r e a t e r t h a n i n November, 1920.
Shipments f o r t h e s e f i r m s d e c l i n e d 18 p e r cent
a s compared w i t h October, w h i l e new o r d e r s i n c r e a s e d 3 0 . 3 P e r cent and o r d e r s
on hand i n c r e a s e d 18 p e r c e n t .
F a c t o r i e s i n t h a t D i s t r i c t which make cheap
.
shoes a r e b u s i e r than t h o s e making high grade shoes and a r e r e c e i v i n g o r d e r s
i n i n c r e a s i n g volume.
I n D i s t r i c t No. 7 (Chicago) 27 shoe m a n u f a c t u r e r s r e -
p o r t t h a t p r o d u c t i o n i n November was about 1 p e r cent lower t h a n i n October,
but 67 p e r cent g r e a t e r t h a n i n November, 1920. November shipments f o r t h e s e
f a c t o r i e s were 5 p e r cent l e s s t h a n i n October, w h i l e u n f i l l e d o r d e r s i n creased 2 p e r c e n t . D i s t r i c t No, 8 ( S t . L o u i s ) s t a t e s t h a t November s a l e s of
11 r e p o r t i n g i n t e r e s t s were from 14 t o $2 p e r cent l a r g e r i n number of p a i r s
t h a n a y e a r ago, w h i l e the d o l l a r v a l u e was from 25 p e r cent l e s s t o 7 P e r
cant g r e a t e r t h a n i n November, 1920.
>
^,-i
*
- 2] LUMBER,
X-]283
A f t e r the unusually s t r o n g demand t h i s f a l l , which continued
beyond t h e u s u a l time of seasonal d e c l i n e , some decrease in demand f o r lumber i s r e p o r t e d i n s e r i o u s D i s t r i c t s .
In a d d i t i o n to decrease i n b u i l d i n g
a c t i v i t y , o t h e r causes given are the inventory season and t h e u n c e r t a i n t y as
t o f r e i g h t r a t e s which i s causing some m i l l s t o delay shipments of lumber f o r
future use.
In D i s t r i c t No. 6 ( A t l a n t a ) , average o r d e r s from 128 pine m i l l s
f o r t h e week ending December 2nd were only 400,000 f e e t , as compared w i t h
572,000 f e e t f o r 13S m i l l s f o r t h e week ending November 4th* - Average p r o duction, howeveri v. : a w e l l maintained, although weather c o n d i t i o n s in some
p a r t s of the D i s t r i c t have begun t o i n t e r f e r e w i t h l o g g i n g o p e r a t i o n s .
Most of t h e demand i s f o r t h e h i g h e r grades, as i s a l s o t h e case with h a r d wood lumber.
ember •
D e a l e r s i n t h e l a t t e r s t a t e t h a t b u s i n e s s improved d u r i n g Nov-
In D i s t r i c t No* 11 ( D a l l a s ) , Hovember o r d e r s received by 37 p i n e
were e q u i v a l e n t t o only 75^ of normal p r o d u c t i o n , a s compared with $0% during
October*
Production, however, was considerably higher than i n October, being
only 26% below normal as compared w i t h 32% d u r i n g the p r e v i o u s month*
In both
t h e s e D i s t r i c t s shipments of p i n e outran p r o d u c t i o n , and s t o c k s were consequentl y reduced during November*
The o u t s t a n d i n g f e a t u r e i n D i s t r i c t No# 8 ( S t , Louis) was a r a t h e r abrupt
c e s s a t i o n of demand from r e t a i l e r s f o r b u i l d i n g lumber around the middle of
November, followed by d e c l i n i n g p r i c e s , but c o n s i d e r a b l e buying of c a r and
b r i d g e m a t e r i a l then commenced, and continued f o r about t h r e e weeks,
Factory
lumber i s quiet and weak i n t h e case of t h e major softwoods, n e t a b l y Southern
pine and Western f i r , but the r e v e r s e i s t r u e of hardwoods and c y p r e s s .
In
t h e s e , t h e p r i c e advances made i n November have been f a i r l y w e l l held i n December.
Twelve r e p r e s e n t a t i v e f i r m s i n D i s t r i c t No. 9 (Minneapolis) w i t h
about 600 r e t a i l y a r d s r e p o r t s a l e s i n board f e e t a s 30 p e r cent l e s s i n November t h a n i n October and 57 p e r cent l e s s t h a n a y e a r ago#
Fourteen manu-
f a c t u r e r s r e p o r t s i m i l a r p e r c e n t a g e s of d e c l i n e i n c u t , w h i l e combined s t o c k s
of w h o l e s a l e r s and r e t a i l e r s a t t h e end of November were about 6 p e r cent
l e s s t h a n a month ago and 10 p e r cent l e s s t h a n a y e a r ago when measured i n
board f e e t .
General c o n d i t i o n s i n t h e lumber i n d u s t r y of D i s t r i c t No. 12 (San F r a n c i s c o )
are r e p o r t e d more s a t i s f a c t o r y t h a n a t any time i n t h e p a s t s i x t e e n months.
The s u c c e s s and i n c r e a s i n g importance of w a t e r - b o r n e shipments t o the A t l a n t i c
Coast, and a s u s t a i n e d export demand have been t h e o u t s t a n d i n g f e a t u r e s of t h e
market#
November p r o d u c t i o n of four a s s o c i a t i o n s was 3 5 ^ , 2 5 2 , 0 0 0 f e e t , or 7^
l e s s t h a n i n October.
This d e c r e a s e was p a r t l y s e a s o n a l and p a r t l y due t o
severe storms which swept t h e Columbia R i v e r Valley i n Oregon d u r i n g t h e l a s t
week of November and caused t h e c l o s i n g of some m i l l s and c u r t a i l m e n t of p r o duction in others*
Orders r e c e i v e d d u r i n g November were 351*280,000 f e e t , or
20*3# l e s s t h a n i n October, and shipments f e l l t o 340,150,000 f e e t .
M i l l stocks
on November 30th were l e s s t h a n a month e a r l i e r , e x c e p t a t t h e p i n e m i l l s of
C a l i f o r n i a and Oregon, w h i l e wholesale and r e t a i l y a r d s a r e s a i d t o be c a r r y i n g only s u f f i c i e n t lumber t o meet the c u r r e n t needs of t h e i r t r a d e ,
Prices
i n t h e upper grades were steady d u r i n g November, w h i l e i n c r e a s e s occurred i n
a few of t h e lower grades*
Logging o p e r a t i o n s i n t h e P a c i f i c Northwest, due
l a r g e l y t o s e v e r e storms, were l e s s t h a n i n October.
BUILDINGr
The v a l u a t i o n of b u i l d i n g p e r m i t s i s s u e d i n s e l e c t e d c i t i e s
d u r i n g November showed a moderate d e c l i n e from t h e h i g h l e v e l reached i n Oct o b e r i n a l l of t h e F e d e r a l Reserve D i s t r i c t s except D i s t r i c t No, 11 ( D a l l a s ) .
The p e r c e n t a g e of d e c r e a s e v a r i e d from 2 , 0 p e r cent f o r D i s t r i c t No, 1 (Boston)
t o 3 0 . 7 p e r cent f o r D i s t r i c t No* 8 ( S t , L o u i s ) .
The v a l u e of p e r m i t s i s s u e d
i n s e l e c t e d c i t i e s of D i s t r i c t No, 11 ( D a l l a s ) was 2 0 , 4 p e r cent g r e a t e r i n
- 25 November t h a n i n October.
X-3283
A comparison w i t h November, 19-0, shows
c r e a s e s i n value of p e r m i t s issued i n
large in-
every Federal H e s e r v e D i s t r i c t , ranging
from 2 3 . 8 p e r cent i n D i s t r i c t No. 6 ( A t l a n t a ) t o 189-5 F e r cent i n D i s t r i c t
No. .2
(New York).
The t o t a l value of b u i l d i n g p e r m i t s issued i n l66 s e l e c t e d
c i t i e s amounted t o $145,883, 415 i n November, a s compared w i t h $172,204,403 in
October, 1921, and $73*17^ 276 i n November, 1920.
The value of c o n t r a c t s award-
ed i n seven Federal Reserve D i s t r i c t s , a s compiled by t h e F. W. Dodge Company
decreased from $203,95^,^31 i n October t o $127,374,432 i n November,
Decreases
were r e g i s t e r e d i n D i s t r i c t s NoJ 1 (Boston), No.2 (New York), No, 3 ( P h i l a d e l p h i a ) , No. 5 (Richmond), No. 7 (Chicago), and No. 9 (Minneapolis), while
D i s t r i c t No. 4 (Cleveland) r e g i s t e r e d a s l i g h t i n c r e a s e .
D i s t r i c t No. 1 (Boston) r e p o r t s t h a t the i n c r e a s e i n t h e volume of r e s i d e n t i a l c o n s t r u c t i o n i s p a r t i c u l a r l y encouraging, and e s t i m a t e s t h a t t h e cost
of b u i l d i n g and t h e s i z e of r e n t s are now on about t h e same comparative b a s i s
as i n 1913.
Reports frem D i s t r i c t No. 3 ( P h i l a d e l p h i a ) s t a t e t h a t , although a
l a r g e number of p e r m i t s have been i s s u e d , but l i t t l e a c t u a l ' c o n s t r u c t i o n i s
being done, owing t o t h e approach of w i n t e r and t h e u n c e r t a i n t y a s t o f u t u r e
costs.
In D i s t r i c t No. 8 ( S t . Louis) t h e r e has been a d e c l i n e i n l a r g e b u i l d -
i n g e n t e r p r i s e s , but t h e r e has been a continuance of r e s i d e n t i a l b u i l d i n g .
Reports from D i s t r i c t No. 10 (Kansas City) a l s o show a marked i n c r e a s e i n t h e
c o n s t r u c t i o n of r e s i d e n c e s , but l e s s a t t e n t i o n t o t h e e r e c t i o n of b u s i n e s s
b u i l d i n g s and f a c t o r y e x t e n s i o n s .
Construction continues active in t h e coastal
c i t i e s of D i s t r i c t No. 12 (San F r a n c i s c o ) , but has shown some s l a c k e n i n g in the
interior states.
EMPLOYMENT.
The Department of Labor t h o r u g h i t s Employment Service
announced t h a t on November 30, 1,428 f i r m s which make r e g u l a r r e p o r t s t o i t ,
had 7,219 more employees on t h e i r pay r o l l s t h a n a t t h e end of t h e p r e c e d i n g
-20 month.
X-32S3
The i n c r e a s e , however, w^s r e l a t i v e l y s l i g h t amounting t o only
.46 p e r cent*
Consequently the f i g u r e s do not i n d i c a t e much change i n the
e x i s t i n g s i t u a t i o n one way or the o t h e r .
In D i s t r i c t No. 1 (Boston) the
t e x t i l e c e n t e r s are those i n which the s u b s t a n t i a l gains t h a t have been
achieved have been most f u l l y r e t a i n e d .
Unemployment i s c o n s i d e r a b l e i n
the s h o e , c e n t e r s of Massachusetts b u t the s i t u a t i o n i s s a i d t o be more n o r mal i n Brockton than elsewhere#
On the o t h e r hand, unemployment in Providence
i s more widespread than a t the beginning of 1)21 although a s l i g h t improvement has occurred during t h e -Autumn.
In the metal working, machinery and
t o o l making d i s t r i c t s which have s u f f e r e d froin s h a r p c u r t a i l m e n t of a c t i v i t y ,
employment c o n d i t i o n s began t o improve a t the beginning of t h e /utumn-
The
r e p o r t s from the -Massachusetts Department of Labor and I n d u s t r y , and s i m i l a r
d a t a from the o t h e r New England s t a t e s
11
i n d i c a t e t h a t the peak of unemploy-
ment has been passed" but t h a t " c o n d i t i o n s are s t i l l s e r i o u s e s p e c i a l l y since
prolonged i d l e n e s s has reduced the r e s o u r c e s of many f a m i l i e s " .
There have
been v i r t u a l l y no changes i n the s i t u a t i o n i n t h e S t a t e of New York during
the month .as the s e a s o n a l d e c l i n e s t h a t have occurred i n some l i n e s have
been o f f s e t by i n c r e a s e d a c t i v i t y i n o t h e r s , n o t a b l y i n the i r o n and s t e e l
industries.
The i n c r e a s e s i n numbers employed r e p o r t e d by the New York
S t a t e Department of Labor amounted to 3 P e r cent i n t h e metal i n d u s t r i e s ,
w i t h a somewhat s m a l l e r gain in wood working f a c t o r i e s ,
Increases are,
however, o f f s e t by r e d u c t i o n s in the c l o t h i n g i n d u s t r y due t o s t r i k e s and
t o s ea s o n al f a c t o r s , and a l s o by d e c l i n e s i n the food p r o d u c t s i n d u s t r i e s *
The Municipal Employment Bureau of New York C i t y r e p o r t s t h a t the number
of a p p l i c a n t s f o r p o s i t i o n s was l e s s i n November and December than i n Octob e r , while the h o l i d a y season has brought about a somewhat i n c r e a s e d demand
f o r workers*
The Bureau has t h e r e f o r e been able t o p l a c e a l a r g e r percentage
I
*
- 27 -
of a p p l i c a n t s .
X-32S3
The l a t e s t f i g u r e s a v a i l a b l e f o r D i s t r i c t No. 3 ( P h i l a d e l -
p h i a ) i n d i c a t e a d e c l i n e i n r e c e n t weeks i n i n d u s t r i a l a c t i v i t y .
On Decem-
b e r 15 t h e P e n n s y l v a n i a s t a t e Department of Labor r e p o r t e d t h a t t h e number
unemployed i n t h e s i x c i t i e s of Altoona, H a r r i s b u r g , Johnstown, P h i l a d e l p h i a ,
S c r e n t o n and W i l l i a m s p o r t had i n c r e a s e d S*4 p e r cent over t h e r e t u r n s f o r
December 1 .
The l a r g e s t p a r t of t h i s i n c r e a s e , however, was accounted f o r
by t h e c l o s i n g of t h e c o a l mines i n t h e S c r a n t o n d i s t r i c t .
A compilation
b a s e d on a s p e c i a l q u e s t i o n n a i r e s e n t out t o 517 f i r m s l o c a t e d i n D i s t r i c t
No- 3 ( P h i l a d e l p h i a ) showed t h ^ t t h e n u m e r of employees on t h e pay r o l l s
on December 1, was 1 3 2 , 2 6 8 , a f i g u r e 1 p e r c e n t l e s s t h a n t h a t r e p o r t e d on
June 1, b u t 4-5 p e r c e n t l a r g e r t h a n t h e number employed on September 1 .
D i s t r i c t No. 5 (Richmond) r e p o r t s no a p p r e c i a b l e change i n t h e number of unemployed i n t h a t D i s t r i c t *
Two i m p o r t a n t r a i l r o a d s h"ve c l o s e d t h e i r sh6ps
u n t i l a f t e r t h e new y e a r t h e r e b y r e l e a s i n g s e v e r a l thousand men, b u t t h e r e
has been some i n c r e a s e i n t h e amount of p u b l i c work b e i n g done i n t h e c i t i e s
employed
and c o u n t i e s . There has a l s o been a s l i g h t a c c e s s i o n t o t h e number/by the
i n d u s t r i a l p l a n t s l o c a t e d i n the D i s t r i c t .
In D i s t r i c t No. 6 ( A t l a n t a )
r e a c t i o n a r y t e n d e n c i e s were in e v i d e n c e i n November.
R a i l r o a d r e p a i r shops
were r e p o r t e d t o have reduced t h e number employed by about 5 P e r c e n t and
m a n u f a c t u r e r s of f o o d and k i n d r e d p r o d u c t s had a l s o f e w e r employees on t h e i r
pay r o l l s .
On t h e o t h e r hand, d u r i n g November the t e x t i l e i n d u s t r y showed a
s l i g h t i n c r e a s e i n t h e number employed.
In D i s t r i c t No. 7 (Chicago) t h e
s p e c i a l q u e s t i o n n a i r e which was s e n t out t o 258 f i r m s i n d i c a t e d t h a t the
s i t u a t i o n had remained p r a c t i c a l l y unchanged d u r i n g November as t h e r e was
only a f r a c t i o n a l i n c r e a s e of .3 p e r c e n t i n t h e number employed on November
30 as compared w i t h t h e p r e c e d i n g month.
The r e d u c t i o n as compared w i t h t h e
same month a y e a r ago amounted t o 1 9 . 3 p e r c e n t .
Reports from the D e t r o i t
-
28
-
X-32S3-
Employers Association showed that f i r m s employing 111,403 men on November 1,
had 110,118 men on t h e i r pay r o l l s on December 13.
I t i s s a i d , however, t h a t
i f the r e d u c t i o n in working hours be taken i n t o c o n s i d e r a t i o n there would be
a decrease in the number of man-hours worked of 9«5 P e r c e n t .
In D i s t r i c t No.
9 (Minneapolis), although there was an i n c r e a s e i n the number employed in the
l a r g e r f a c t o r i e s i n Minneapolis and S t . Paul during the month of November t h i s
s i t u a t i o n i s a t t r i b u t a b l e e n t i r e l y t o an i n c r e a s e i n t h e a c t i v i t y of r a i l r o a d
r e p a i r shops.
Taking the D i s t r i c t as a whole employment conditions are said
to be l e s s f a v o r a b l e as "in Minnesota, weather conditions
work and b u i l d i n p c o n s t r u c t i o n .
have a f f e c t e d road
Flotir m i l l s are beginning t o reduce operations
and the i r o n mines have closed down in the rve.jority of cases«
In North Dakota,
unemployment i s growing more serious with the approach of cold weather and the
completion of public works.
In South Dakota unemployment shows a decrease from
October on account of a large volume of b u i l d i n g .
In Montana, the g e n e r a l em-
ployment trend i s downward, although lumber and f l o u r m i l l a c t i v i t y has i n creased somewhat.
increased i d l e n e s s .
Minins shows no improvement and seasonal c o n d i t i o n s have
Beet sugar f a c t o r i e s are completing t h e i r s e a s o n ' s work.
In g e n e r a l , i n the a g r i c u l t u r a l regions of the Minneapolis D i s t r i c t , there i s
a complete lack of demand f o r a g r i c u l t u r a l laborers and a general surplus of
common l a b o r " .
In D i s t r i c t No. 12 (San Francisco) unemployment increased in
a l l s e c t i o n s during November due b o t h t o seasonal d e c l i n e s in a g r i c u l t u r e and
to r e d u c t i o n i n i n d u s t r i a l a c t i v i t y .
Increases in unemployment were c h i e f l y
evident i n a g r i c u l t u r e , lumbering, f i s h i n g and s h i p b u i l d i n g .
in the D i s t r i c t are as a whole f a i r l y well employed.
S k i l l e d laborers
The considerable increase
i n unemployment in C a l i f o r n i a i s a t t r i b u t e d to the coming i n of migratory
workers from other p a r t s of the country with the c e s s a t i o n of seasonal a c t i v i t y .
In Oregon and Washington also the end of the h a r v e s t season and the closing of
<
- 2% -
X-3283
logging camps and saw Trills have added t o the number of unemployed.
In Arizona,
Nevada and Utah t h e r e has been p r a c t i c a l l y no improvement i n l a b o r c o n d i t i o n s
and none i s l i k e l y u n t i l t h e r e i s a g e n e r a l resumption of work i n the mining
and s m e l t i n g i n d u s t r i e s *
WHOLESALE TRADH.
A v a r i e t y of f a c t o r s , b o t h cf a s e a s o n a l and of a
s p e c i a l n a t u r e has c o n t r i b u t e d t o a marked r e d u c t i o n i n the s a l e s of most of
the r e p o r t i n g wholesale f i r m s i n the f o u r l i n e s of g r o c e r i e s , d r y goods, h a r d ware, b o o t s and s h o e s .
The r e d u c t i o n s a r e p a r t i c u l a r l y marked i n t h e c a s e of
d r y goods, t h e d e c r e a s e s in s a l e s d u r i n g November as compared w i t h October
ranging from a minimum of 12.7 p e r c e n t i n D i s t r i c t No. 2 (New York), w i t h
t h r e e f i r m s r e p o r t i n g , t o a maximum of 3 8 . 1 p e r c e n t i n D i s t r i c t No. 11 ( D a l l a s )
with ten firms r e p o r t i n g .
The d e c r e a s e s a r e e s p e c i a l l y heavy i n the t h r e e
s o u t h e r n D i s t r i c t s No. 5 (Richmond), No. 6 ( A t l a n t a ) , and No. 11 ( D a l l a s ) •
These r e d u c t i o n s i n s a l e s no doubt r e p r e s e n t n o t only a s e a s o n a l r e c e s s i o n ,
which i s a p t t o be more pronounced i n Southern a g r i c u l t u r a l s e c t i o n s than
elsewhere, b u t t h e y a l s o r e f l e c t a. diminished p u r c h a s i n g power due t o the
slower movement of such c r o p s as c o t t o n , sugar and r i c e > -As compared w i t h a
y e a r ago, however, d r y goods s a l e s make a q.uite f a v o r a b l e showing and, unq u e s t i o n a b l y - given the g r e a t p r i c e r e d u c t i o n s t h a t have occurred i n the i n t e r v a l - they r e p r e s e n t a g r e a t e r volume of goods than d i d the November s a l e s
of t h e p r e c e d i n g y e a r .
In D i s t r i c t No. 2 (*rew York) and No. 12 (San F r a n c i s o o )
t h e r e a r e i n c r e a s e s in s a l e s values of d r y goods of 1 1 . 6 p e r c e n t , 3 f i r m s
r e p o r t i n g , and 5»2 p e r c e n t , 12 f i r m s r e p o r t i n g , r e s p e c t i v e l y , over l a s t y e a r .
Decreases ranged from 1 . 4 p e r cent in the case of D i s t r i c t No. 5 (Richmond),
18 f i r m s r e p o r t i n g , t o 8 2 . 3 per c e n t i n t h e case of D i s t r i c t No. 9 (Minneapolis),
5 firrrs reporting.
Another f a c t o r i n f l u e n c i n g the November d r o p i n s a l e s , n o t
only i n d r y goods b u t i n a l l other l i n e s , i s d o u b t l e s s the d e s i r e on the p a r t
- 30 -
X-322)
of r e t a i l e r s t o e n t e r upon the new year w i t h i n v e n t o r i e s reduced t o the
lowest p o s s i b l e p o i n t *
In the case of wholesale grocery, f i r m s , decreases
d u r i n g November as compared with October ranged from 1 . 1 p e r cent in the
c a s e of D i s t r i c t No.2 (Mew York), with 9 f i r m s r e p o r t i n g , to 19 r e r cent
i n D i s t r i c t No. 11 ( D a l l a s ) , with 13 f i r m s r e p o r t i n g .
D i s t r i c t No- 3
( P h i l a d e l p h i a ) i w i t h 48 f i r m s r e p o r t i n g , s t a t e s t h a t t h e u s u a l b r i s k h o l i day demand i s l a c k i n g , and D i s t r i c t No* 6 (.Atlanta) emphasizes the slow
movement of a g r i c u l t u r a l p r o d u c t s as having had a pronouncedly d e p r e s s i n g
e f f e c t upon the demand from a g r i c u l t u r a l s e c t i o n s .
Here a g a i n , however,
the showing as compared w i t h a y e a r ago i s q u i t e f a v o r a b l e from the p o i n t
of view of volume of s a l e s , decreases, ranging from 4*9 p e r cent i n the case
of D i s t r i c t No. 10 (Kansas C i t y ) , with 5 f i r m s r e p o r t i n g , t o 30*4 p e r cent
i n t h e case of D i s t r i c t No. 6 ( A t l a n t a , w i t h 29 f i r m s r e p o r t i n g #
The drop i n hardware s a l e s i n November i s probably a t t r i b u t a b l e in
good p a r t to the s e a s o n a l r e d u c t i o n in the demand f o r b u i l d i n g and cons t r u c t i o n m a t e r i a l s , and a l s o to the f a i l u r e of r e t a i l e r s t o p l a c e t h e usu a l advance o r d e r s f o r a g r i c u l t u r a l s u p p l i e s f o r s p r i n g u s e .
The g e n e r a l •
testimony seems t o be t o the e f f e c t t h a t b u s i n e s s i n hardware i s , on the
whole, u n u s u a l l y slow even f o r the season.
Decreases i n November s a l e s
as compared w i t h October ranged from 1*3 p e r c e n t i n the c a s e of D i s t r i c t
No* 11 ( D a l l a s ) , w i t h 11 f i r m s r e p o r t i n g , t o ,17-2 p e r c e n t i n the c a s e of
D i s t r i c t No* 10 (Kansas C i t y ) , w i t h 4 f i r m s r e p o r t i n g .
In D i s t r i c t No* 5
(Richmond) , No# 6 ( A t l a n t a ) , No, 7 (Chicago) and No* 12 (San F r a n c i s c o ) ,
s a l e s of b o o t s and shoes in November r e g i s t e r e d marked d e c l i n e s as comp a r e d w i t h October, the r e s p e c t i v e p e r c e n t a g e s b e i n g 3&*6 p e r cent w i t h
IS f i r m s r e p o r t i n g , 23,S p e r c e n t with 10 f i r m s r e p o r t i n g , l6«7 P e r <-ent
w i t h 11 f i r m s r e p o r t i n g and 18-4 p e r c e n t w i t h 1^ f i r m s reporting*
D i s t r i c t No. 6 ( A t l a n t a ) r e p o r t s t h a t i t i s
1
- 31 -
X-32S3
probable that warm weather was responsible for some of the falling off in
shoe sales in that District*
O the other hand District No, 2 (New York)
n
reported a slight increase of 2*5 per cent for the 8 firms reporting in
that District.
In all cases except District No. 12 (Sara Francisco) where
there was' a negligible decrease as compared with a year ago, shoe sales
showed a decided increase, ranging from 5+2 per cent in the case of District No. 7 (Chicago), with 11 firms reporting to 45*3 per cent in the case
of District No. 2 (New York) , with 8 firms reporting.
It will be remember-
ed: that a year ago the shoe industry was in an unusually depressed condition
and the increases therefore find their explanation in this fact#
R T I TRAPE. Retail sales in November showed a noticeable decrease
E AL
as compared with those of October* 1921, and November, 1^20*
Reports of
Districts No. 1 (Boston) and No. 2 (New York) for the f i r s t part of December,
however, showed increases of 10 per cent and 3 P e r cent respectively, over
the corresponding period in lj20, indicating that the volume of Christmas
trade h^s been larger than last year.
During November activity was great-
est in the tobacco, candy, gloves and jewelry lines, while the market for
heavy clothing was unusually dull.
November sales of JSl representative
department stores throughout the United States showed a decrease of 13*7
per cent from the sales of November, 1320*
Decreases were recorded in all
Districts and amounted to 7.2 per cent in District No* 1 (Boston), 8*2
per cent in District No. 2 (mew York), 8*9 P e r cent in District No- 3
(Philadelphia), 21,1 per cent in District No. 4 (Cleveland) > 12«3 P e r cent
in District No* 5 (Richmond), 21,4 per cent in District No. 6 (Atlanta),
1~*9 per cent in District No* 7 (Chicago), 3.4 per cent in District No. 8
(St.. Louis), 18.3 p6r cent in District No. 9 (Minneapolis) , 13*8 per cent
in District No, 10 (Kansas City), 25*3 P e r cent in District No. 11 iDall-s),
A
7*9 P e r
cen
^
X-3283
District No* 12 (Sas Francisco) * Department store stocks
showed l i t t l e change during November and. the rate of turnover remained approximately the same as in October, while outstanding orders were somewhat lower.
PRICES»
No material change has occurred in the general wholesale price
level in the United States in the last six weeks.
Price revisions continue to
he made, hut the average of e l l prices has tended to he stabilized about a
level 40 to 50 per cent above the pre-war.
There has been no considerable
change from this level since last April, the indexes of the Bureau of Labor
Statistics and the Federal Reserve Board showing a range of not more than
6 points during this entire period*
The Federal Reserve Board index for
November stood at lUo as compared with lUl in October, and 100 an the base
year, 1913*
During November, the various group indexes, such as the prices of raw
materials> producer^* and consumers1 goods shewed even less change than in
recent months#
The trend of producers 1 goods was definitely towards lower
levels# but raw materials and finished consumers 1 goods showed very l i t t l e
change*
Domestic goods as a whole declined while foreign imported goods rose,
but the rate in both cases7 was slow*
Agricultural commodities were the only
group in which prices declined seriously during November, while lumber prices
showed the most material increases * Oils, certain of the nonferrous metals,
hides> and rubber were among the other commodities to increase in price*
Coal, pig iron, cotton and many leading agricultural commodities declinedDuring the f i r s t three weeks of December, prices in the semi-finished
steel industry have tended to ,increase but pig iron has continued to decline
and the downward movement in bituminous coal has gained in momentum*
prices have also steadily declined•
Agricultural prices show varied tenden-
cies, hogs and cattle declining, wheat and oats advancing*
Cot ton
-
33 -
X-32S3
Retail prices during November also showed very l i t t l e change from the
September and October levels.
The index of food prices compiled " y the
b
Bureau of Labor Statistics registered 152 as compared with 153 in October
and an average of 100 in 1913.
SHIPPING.
Changes in ocean freight rates during December were unim-
portant as compared with those which have occurred in the last few months•
In spite of some reductions in a number of trades, including the Far East,
rates were in general firmer than for some time past*
The charter market
displayed l i t t l e activity, and while a few vessels were chartered at figures
Representing concessions below quotations in the previous month, there was
nothing approaching a general decline during December.
Taking the year as a
whole, the shipping industry has been passing through a most difficult period
in which many of the weaker operators have been forced ,to go out of business,
and in which, as a result of greatly reduced freight rates, smaller available
cargoes, and continued high costs of operation, very few companies have been
able to make a satisfactory showing.
This condition has been world-wide,
although American companies have f e l t in special degree the handicap of a
higher scale of wages than their foreign competitors have been obliged to pay
F R I N T A E The outstanding fact in connection with the latest
O EG R D .
o f f i c i a l reports on our foreign trade is the decline in the value of exports
in November to the lowest level reached since August, 1915*
At the same time
the value of imports increased well above the figures recorded for recent
months, with the result that the excess of merchandise exports over imports
was less than in any previous month for more than a year.
During November,
the flow of gold to the United States which has been an important factor in
our foreign trade ever since October, 1920, continued without interruption,
swelling the total net imports of the metal in the f i r s t eleven months of
,34-
x
-
1921 to a figure of about $63£ 1000,CCO.
-3283
In the same months of 1320, net
imports of gold amounted, to only $67 >000,COO, while for the same period
of 1913 the movement was in the opposite direction, net exports of gold
totaling $258,000,000.
Stated in terms of value, the export trade of the United States in
November amounted to $21$,000,000, compared with $3^3»552,4lS in October,
and $676,528,311 in Uoverrber, 3^20.
The large decline from a year ago that
is revealed in these figures is in no snail measure to be accounted for by
the much reduced prices at which practically all commodities are now valued.
That there has been some contraction in the actual volume of shipments is
apparent from a comparison of the quantities of the principal individual
commodities in our export trade now as against a year ago, and also from the
reductions in the weight of water-borne exports as shown by data compiled
by the Department of Comrrerce from the records of the United States Shipping
Board.
More exact than comparisons w i t h the value statistics of a year ago,
are com-erisons between the values reported for recent months, in which
changes in the price level are not very serious and where the values indicate
more feirly the real tendencies in our foreign trade.
Such comparisons with
recent months disclose the fact that since prices reached a more stable level
some months ago, our foreign trade hps witnessed nothing approaching a serious
decline,
Viewed in this way, the foreign trade situation is by no means so
discouraging.
FEDERAL RESERVE BOARD
WASHINGTON
X-32SU
December 27# 1921-
SUBJECT*
C o r r e c t i o n i n I n t e r - D i s t r i c t Time S c h e d u l e .
Dear S i r :
Please change the inter-district time schedule
to show from N w Orleans to Houston two days.
e
The time
from Houston to N w Orleans will remain at one day.
e
This change i s made with the agreement of the
Federal ,Reserve Bank of Atlanta and the Federal tieserve Bank of Dallas, and i s due to changes in mail
time between the two points and the time of clearing at
Houston.
Very t r u l y y o u r s ,
Wm. W. Hoxton,
Secretary.
T G V R O S O A L F. R. BANKS.
O OENR F L
FEDERAL RESERVE BOARD
WASHINGTON
December 27, 1921.
X-3285
SUBJECT:
Data for -Annual Report of Federal Reserve Board
Regarding Foreign Banking Institutions.
Gentlemen:
The Annual Report of the Federal Reserve Board to Congress
i s now in course of preparation and w i l l be issued shortly, The
Board i s desirous of including in this report a table similar to
that published in last year's report giving certain data regarding foreign banking corporations doing business under agreement
with the Board,
It will be appreciated, therefore, if you will have transmitted to this office, before January 10, 1922, information, as
of December 31, 1921, for your corporation, as requested below:
1.
Capital and Surplus.
2.
Total Resources (Head Office only).
3.
Number of foreign branches.
4.
Number of domestic branches.
5-
Number of f o r e i g n a g e n c i e s .
6.
Number of a f f i l i a t e d banks and, also, number
of o f f i c e s maintained by these banks.
Very truly yours,
Walter L. Eddy,
Assistant Secretary,
L T E T BE S N T E E E F R I N B N I G INSTITUTIONS.
ETR O
E T O L V N O EG A KN
X-32S6
FEDERAL
RESERVE
BOARD
S A E E T F R T E PRESS
T TMN O H
For release in afternoon papers,
Wednesday, January 4, 1$22.
C N I I N O T EA C P A C MR E
O DTO
F H C E T N E A KT
The Federal Reserve Banks report the condition of the acceptance
market in their respective Districts as follows:
DISTRICT N , 1 (BOSTON).
O
The activity which prevailed in the b i l l market last month did
not continue in December.
Occasionally, buying was moderately active
but there wks one week when sales, as reported by the bill dealers,
were at the lowest point for the year.
Undoubtedly, the influence of
tax payments coming simultaneously with the new certificate issue and
the year-end adjustments has had a deterrent effect on the investors
and bill buyers.
The dealers have had more recourse than formerly to
the Reserve Bank on repurchase agreements.
Should a large supply of
b i l l s appear on the market with the apathy which exists in buying at
present, i t should cause an increase in the rate.
The Federal Reserve
— 2 ~
X~3<2$6
Bank has not reduced it* buying, rate to a point where i t would be profitable for banks to buy from dealers to sell to i t , preferring to let the
market adjust itself without interference*
Corporations seem to have
been the best buyers of bills, augmented by one or two of the large Boston
banks.
The prevailing opinion among the bill dealers i s that no great
activity will occur until after the turn of the year.
DISTRICT NO, 2 ( E . Y B h
NY O K
- considerable decline in the foreign trade of the United States
A
during 1921, in addition to the fall in prices, resulted in a reduction
in the amount of bankers bills in the Nw York market.
e
ever, a steadily broadening market<.
There, was, how-
Dealers reported considerable num-
bers of new customers not only among savings banks, commercial oanas, and
trust companies, but also among industrial corporations, and p r i v a t e
i n v e s t o r s wishing t o place funds in an investment affording s a t i s f a c t o r y
rate, minimum risk and instant convertibility.
While purchases by Nw
e
Y r City banks were relatively restricted during the year, the demand
oK
from country banks was good and the l i s t of country member banks for w o
hm
b i l l s were purchased by the Federal Reserve Bank of Nw York increased
e
from 217-to 250 and purchases for foreign banks considerably more than
doubled.
O a number of occasions dealers were unable to secure sufficn
ient bills to meet the demand,
In consequence of the smaller volume of bill offerings and the
strengthening market, rates moved consistently downward during the year.
B December all maturities were offered at 4-1/8 per cent as compared with
y
a range of 6 to 6 - 1 / 2 per cent in December, 1920.
Rates at which dealers
purchased b i l l s were generally 1/g of one per cent above the offering rate.
M l
. 3 -
X-3286
The continued increase not only in the number of dealers handling
acceptances but in the amount of capital which they are able to command
has'been an important factor in the steadiness of rates,
?he dealers
provide a two-way market; that is, they not only sell b i l l s to customers,
but they repurchase b i l l s from them.
The maintenance of such f a c i l i t i e s
i s essential to the development of the American market for b i l l s , which
in turn i s a highly important factor in financing American foreign trade.
The same dealers who handle b i l l s commonly deal -in Treasury c e r t i f i cates, which, like b i l l s bearing banking endorsement, are available for
purchase by a Federal Reserve Bank or as collateral for loans at the
Reserve Banks.
As in previous ye?rs, the Federal Reserve Banks stood
ready to purchase such bankers acceptances and Treasury certificates as
the market could not readily absorb.
In consequence, however, of the broad-
ening market, the decreased volume of b i l l s , and easier money conditions,
the market was l e s s dependent upon the Reserve Banks than at any other time
since i t s inception in 1916.
O December 22, the Federal Reserve Bank of
n
N w York held $59,000,000 of purchased bills, as compared with $114,000,000
e
on December
31, I92O,
and $203,000,000 on December
31,
1919,
There was a
corresponding decrease in the bill holdings of the entire Reserve System.
A highly important development of 1921 was the growth of a market for
call money lent agsinst the security of bankers acceptances and Treasury
certificates, large amounts of which are ordinarily carried in portfolio
by the dealers.
By far the largest part of their portfolios, which usually
range between $50, 000, 000 and $100, C O 000 i s carried on borrowed money.
O,
In order that their business may offer a reasonable prospect of profit,
the rates for such loans should be related to the rates which their secur
- 4 -
X-3286
i t i e s earn, rather than be subject to conditions peculiar to the other
great market for call money, thst on the Stock Exchange.
With the easing
of credit conditions such funds have become available at rates 1/2 to 1
psr cent below those prevailing on the Stock Exchange.
DISTRICT WO. 1 (PHILADELPHIA).
Four dealers in acceptances operating in the Third Federal Reserve
District report sales during November totaling $16,7^3,000 as compared
with $9,980,000 in October, and $9,093,000 in November, 1920.
Three of
these, who also give country-wide figures, report an increase of only ,5
per cent over October, and a decline of 15 per cent from November, 1920.
O five dealers, only one states that the ..supply i s not sufficient to
f
meet the demand.
Twelve banks in this District executed $3,5^4,000 of
acceptances during the month ending December 10, which is a marked decline
from the previous month's figure of $6,325,000.
Acceptances of these banks
outstanding on December 10, however, were not much lower than on November
10, the decrease being from $11,824,000 to $11,231,000.
Exports of grain,
flour, cotton and meat products, imports of sugar and coffee, and the warehousing of cotton and tobacco were the principal transactions that gave rise
to acceptances executed recently.
importance.
Dollar exchange operations were also of
T o of the largest dealers give the following estimates of the
w
relative importance of the various types of transactions in connection with
acceptances nf the past month:
Peeler Nc. 1
Warehousing
Exports and imports
Domestic shipments
Dollar exchange
20^
50
20
10
Dealer No. 2
2C#
6C19
1
-,5 -
X-3286
Selling ratss in effect in the middle of the months of December,
,
November, 1921, and December, 1920, follow:
Dec. 1Q21
Members:
30 t o 90 days
' 180 days
Nov. 1A21
fiecr
1920.
' -i /).
'4
•
130 d a y s
4-1/4 if
4-1/2 - 4-3/4
°
4-1/4 - 4-3/8
. . .
4-1/2 - 4-3/4
«,
c-ti?
0-1/4 - 0-1/2
4-3/8 - 4-5/8
Nonmembers:
30 to 90 days
~
0 - 1
4-1/8
4-1/8 - 4-3/6
4-5/8 - 5
DISTRICT NO. 4 (CLEVELAND)•
Bankers acceptances bought by this Bank during, November, 1921* amount
to $3,326,713, and the maturing and paid,
$3,579,216.
O twenty banks in
f
this District, eight report acceptances executed during November to the
amount of $1,9*3,400, and acceptances paid, $1,729,159banks report no acceptances executed or paid.
Twelve of the twenty
There was no improvement in
the acceptance market over the previous month.
With exports falling off each
month and domestic holiday shipments consummated,
a comparatively small supply
of prime b i l l s came into the market.
DISTRICT
NO.
6
(ATLANTA).
O fourteen reports regarding accsptance transactions during November,
f
1921, received from accepting member banks in this District, only four show
any transactions.
Domestic acceptances executed by these reporting banks
were about five times as large in November as in October, but approximately
22 1/2 per cent l e s s than were executed during November last year.
Foreign
acceptances executed during November were approximately 24 per cent less than
during October, and 31.4 per cent less than during November of last year.
Acceptances purchased in the open market during November by the Federal Reserve Bank of Atlanta were smaller in amount by 44 per cent than those purchased during October 1921, but were larger by 28.4 per cent than the total
for November 1920.
The total for Hoveniber
was larger than f or any previous
-
X-32S6
6 -
month t h i s y e a r except September and October.
DISTRICT NO. 7 (CHICAGO).
R e p o r t s from banks i n t h i s D i s t r i c t i n d i c a t e a g e n e r a l f a l l i n g off i n
a c c e p t a n c e t r a n s a c t i o n s d u r i n g November.
D i l l s accepted were 53 P e r cent
and b i l l s bought, s o l d , and h e l d a t t h e c l o s e of t h e month approximately
70 p e r cent of t h e c o r r e s p o n d i n g October amounts.
Purchase r a t e s f o r Nov-
ember were r e p o r t e d r a n g i n g from 4 - 1 / 8 t o 4 - 7 / 8 p e r c e n t , a l t h o u g h most
of t h e r a t e s r e p o r t e d were l e s s t h a n 4 - 1 / 2 p e r c e n t .
The m a t u r i t i e s of
b i l l s purchased were d i v i d e d a s f o l l o w s : 30-day, 1 . 7 P e r c e n t ; 60-day,
l 6 . 4 p e r c e n t ; 90-day, 81,5 p e r c e n t ; and 180-day, 0 . 4 p e r c e n t .
g r e a t e r p a r t of t h e b i l l s were r e p o r t e d drawn a g a i n s t meats,
meat
The
..products,
tobacco, and canned goods..
A d e t a i l e d summary of r e t u r n s of t w e n t y - n i n e banks f o l l o w s '
* B i l l s bought
** B i l l s sold
B i l l s h e l d a t c l o s e of month
Amount accepted
In Thunsandg of D o l l a r s
Movnmhor
. . . Oct&h&E.
NovoRbor
$5,009
12, 710
6,551
4,650
16,885
5, 9 8 1
* E x c l u s i v e of b i l l s purchased by t h e a c c e p t i n g bank,
and of p u r c h a s e s f o r t h e account of s p e c i f i c customers.
** E x c l u s i v e of b i l l s purchased f o r t h e account o f , and
sold t o s p e c i f i c customers.
Comparison of s t a t i s t i c s on b a c k e r s a c c e p t a n c e s a t t h e Federal Reserve
Bank of Chicago f o r October and November f o i l owe:
During month
Bankers a c c e p t a n c e s r e d i s c o u n t e d
•Bankers a c c e p t a n c e s bought
Bankers a c c e p t a n c e s sold from h o l d i n g s
Held a t c l o s e of month
Bankers a c c e p t a n c e s r e d i s c o u n t e d
^Bankers a c c e p t a n c e s bought
November
2,637
5,194,568
None
3,427,354
* Included i n a c c e p t a n c e s bought, but not i n a c c e p t a n c e s
s o l d , are t h o s e bought witi* agreement by t h e s e l l e r s
t o r e p u r c h a s e w i t h i n f i f t e e n days-
-7^-
X-3286
DISTRICT NO. 8 (ST. LOUIS).
A f t e r a f a i r d i s p l a y of a c t i v i t y d u r i n g l a t e October and e a r l y November, the acceptance market has lapsed i n t o a p e r i o d of extreme quiescence
The P r i n c i p a l cause of t h e slowing down i n t h e demand i s the d e c l i n e in
r a t e s , which i n November ranged from 4 - l / 4 t o 4 - 7 / 8 p e r c e n t , b u t s i n c e
December 1, have dropped t o 4 - 1 / 8 t o 4 - 3 / 8 p e r c e n t .
T o t a l h o l d i n g s of
a c c e p t a n c e s by t h i s Bank a t the c l o s e of November were $3,981,663, of which
$793.OCX) o r i g i n a t e d i n St- Louis.
This compared w i t h $750,730 f o r October,
of which $394,000 o r i g i n a t e d i n St - L o u i s .
Between November 16 and Decem-
b e r 15 t h e h i g h , low and customary i n t e r e s t r a t e s p r e v a i l i n g i n S t • Louis,
L o u i s v i l l e , Memphis and L i t t l e Bock, as r e p o r t e d b y banks i n those c i t i e s
were as f o l l o w s :
S t . Louis
Louisville
C.
H.
L.
Bankers * .Acceptances of 60 t o 90 d a y s :
Endorsed
4-5/8 4-3/8 4-3/8
Unendorsed
4 - l / 4 4-1/4 4 - l / 4
Memphis
L i t t l e Rock
H. L. C.
H.
L.
C.
.
DISTRICT NO. 9 (MINNEAPOLIS).
During t h e month of November t r a d e acceptances t o t h e amount of $143,000
were d i s c o u n t e d "by t h i s Bank, which was a d e c r e a s e of $111,000 f r o m the October
figures-
I n October t h e r e were a l s o $75,000 worth of b a n k e r s acceptances d i s -
counted as compared w i t h none i n November.
A y e a r ago i n November $53^>COO
w o r t h of b a n k e r s a c c e p t a n c e s were p u r c h a s e d b y the Minneapolis F e d e r a l Reserve
Bank and $222,000 worth of t r a d e a c c e p t a n c e s were d i s c o u n t e d . Minneapolis
Bank
F e d e r a l Reserve/ r a t e s were reduced on November 7 , t o 5 - l / 2 p e r cent on a l l
c l a s s e s of p a p e r .
DISTRICT NO* 11 (DALLAS') .
Accepting hanks of t h i s D i s t r i c t m a t e r i a l l y reduced t h e i r a g g r e g a t e
a c c e p t a n c e l i a b i l i t y d u r i n g the p a s t month.
Total acceptances outstand-
ing on November 30th aggregated $ 3 , 2 5 2 , 3 8 7 , r e p r e s e n t i n g a d e c r e a s e of
$^39>19^ f r o m the t o t a l of $3,691,580 o u t s t a n d i n g on October 3 1 s t , which
was t h e h i g h e s t mark of the y e a r .
Acceptances drawn a g a i n s t import and
e x p o r t t r a n s a c t i o n s amounted t o 3 1 , 6 7 5 , 2 2 8 , w h i l e *1,577,159 were drawn
a g a i n s t domestic shipments and s t o r a g e of goods.
Bankers a c c e p t a n c e s
hfeld b y t h i s Bank on November 3 0 t h amounted t o $190,000, which r e p r e s e n t s
a d e c r e a s e of $15,000 from our h o l d i n g s on October 3 1 s t .
All acceptances
h e l d were executed b y banks of t h i s D i s t r i c t *
DISTRICT NO. 12 (SAN ERANCIg.CO^-.
B i l l s o r i g i n a t i n g on t h e P a c i f i c Coast a r e a p p e a r i n g i n l a r g e r
Q u a n t i t i e s on the open d i s c o u n t market and a r e no l o n g e r c o n f i n e d t o one
or two c i t i e s .
This supply, however, i s s t i l l i n s u f f i c i e n t t o meet the
i n v e s t m e n t demand of c o a s t b u y e r s , and prime e a s t e r n b i l l s c o n t i n u e i n
good demand.
E a s i e r money c o n d i t i o n s and a s c a r c i t y of prime b i l l s com-
b i n e d d u r i n g t h e p e r i o d November 15 .to December 15 t o e f f e c t a f u r t h e r
r e d u c t i o n i n r a t e s , and prime b i l l s of a l l m a t u r i t i e s a r e now (December 15)
s e l l i n g on a 4 - l / S p e r c e n t b a s i s compared w i t h a ^ - 3 / 8 p e r c e n t b a s i s
on November 15»
During the l a t t e r p a r t of November t h e demand f o r a c c e p t -
ances was s t e a d y w i t h a heavy c a l l f o r b i l l s which would f a l l due b e f o r e
the end* of the year*
At the same time a g r a d u a l b r o a d e n i n g of t h e market
x-3286
1 4 2 4
- 9 was n o t i c e a b l e , c h i e f l y among c o u n t r y b a n k s , b u t t o a l e s s e r e x t e n t among
c o r p o r a t i o n s and p r i v a t e i n d i v i d u a l s .
By the middle of December t h i s
f i r m n e s s had begun t o d i s a p p e a r , due t o t h e s e m i - a n n u a l c o n s e r v a t i o n of
c a s h h o l d i n g s b y the b a n k s , and t h i s tendency became more marked a f t e r
t h e announcement of the new Government o f f e r i n g of 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 on December 15*
The p r i n c i p a l d e a l e r on the Coast r e p o r t s
that ninety-day b i l l s continue t o be i n g r e a t e s t f a v o r , although a l a r g e r
supply of s i x t y - d a y b i l l s r e s u l t e d i n a g r e a t e r p r o p o r t i o n of b i l l s of
t h a t m a t u r i t y b e i n g marketed d u r i n g the p a s t month than i n the p r e v i o u s
period.
A rough c l a s s i f i c a t i o n of b i l l s marketed f o l l o w s :
30
60
90
120
150
day
day
day
day
day
6.5$
33.O
56-3
H
0« 6
T h i r t y - s i x l e a d i n g banks of the D i s t r i c t -reported t o t a l November purchases
of a c c e p t a n c e s of $9,103,681 compared w i t h $7i392»4l5 i n August, the i n c r e a s e b e i n g almost e n t i r e l y i n p u r c h a s e s of b i l l s o r i g i n a t i n g i n t h i s
District*
These b i l l s were based p r i m a r i l y on g r a i n s , s u g a r , canned goods,
and c o t t o n w i t h a s c a t t e r i n g of s i l k , r i c e and c o f f e e b i l l s .
Purchases
and h o l d i n g s of a c c e p t a n c e s of the 3? r e p o r t i n g banks a r e a s f o l l o w s :
-
10
X-328S
-
A O N BOUGHT
MUT
:
Created, i n
^
Amount Accepted :12th F e d . R e s . D i s t r i c t
November
October : November
October
Pacific
Northern
Southern
$1,451,433 $1,140,199 *
3,461,612
3,580,105
651,006
539,005
225,982 $
All Other
November
October
Amount held a t
c l o s e of month
November
October
270,081 S i , 957,511 $ 2 , 0 1 , 8 8 6 1 [$2,183,493 $2,871,967 $ 6,673.742 $7,752,824
2,231,734 *2,078,211 *2,571,826
235,961
Total
November
October
172,041
1,820,667
937,664
4,863,560
3.015,875
2,316,137
3,109,149
1,332,532
2,056,628
1,504,573
2,903,347
2,057,143
Other
Districts
Total
* 5 , 5 6 4 , 0 5 1 * 5 , 2 5 9 ; 3 0 j : * 2 , 7 5 3 , 6 7 7 *2,520,333:*6,350,004 * 4 , s 7 2 , 0 8 2 : * 9 , 1 0 3 , 6 8 1 *7,332,415:$12,499,286*12,313,122
(O
X-3287
UNITED STATES OF AMERICA
BEFORE THE FEDERAL RESERVE BOARD
At a d u l y c a l l e d meeting of the F e d e r a l Reserve Board h e l d a t i t s
o f f i c e s i n t h e T r e a s u r y B u i l d i n g , C i t y of Washington, D i s t r i c t of
Colunibia, on t h e 2 4 t h day of December, 1921.
•PRESENT:
W. -P. O. HARDING, Governor
EDMUND
ADOLPH C. MILLER,
JOHN R. MITCHELL,
D. R. CRISSINGER. ,
FEDERAL RESERVE BOARD
- VS -
MEMBERS.
Report of F e d e r a l Reserve
Board s t a t i n g i t s Findings
as t o t h e F a c t s and Conclusion.
WADE H. COOPER,CONTINENTAL TRUST C CMP ANY
A D THE UNION SAVINC-S BANK
N
P u r s u a n t t o the p r o v i s i o n s of an Act of Congress, approved October
15, 1914, e n t i t l e d "An Act t o supplement e x i s t i n g laws a g a i n s t u n l a w f u l
r e s t r a i n t s and monopolies, and f o r o t h e r p u r p o s e s k n o w n a s t h e Clayton
A c t , t h e F e d e r a l Reserve Board i s s u e d and served a c o m p l a i n t upon
r e s p o n d e n t s . C o o p e r , C o n t i n e n t a l T r u s t Company and The Union Savings Bank,
c h a r g i n g them and e a c h of them w i t h v i o l a t i o n of S e c t i o n 8 of s a i d Act*
The r e s p o n d e n t s having e n t e r e d , ^t h e i r appearances b y t h e i r a t t o r n e y s
M e s s r s . Douglass, Obear and Douglass,. and having f i l e d answers h e r e i n ,
t h i s p r o c e e d i n g d u l y came on t o be h e a r d "before t h e F e d e r a l Reserve Board
on t h e 30 day of November, 1921, and evidence was i n t r o d u c e d i n support
of t h e a l l e g a t i o n s of s a i d complaint and on b e h a l f of r e s p o n d e n t s , and
d u l y reduced t o w r i t i n g .
Now t h e F e d e r a l Reserve Board, having h e a r d argument of c o u n s e l f o r
r e s p o n d e n t s and having d u l y c o n s i d e r e d t h e r e c o r d , which i s h e r e b y made
a p a r t of t h i s r e p o r t , and being now f u l l y advised i n the p r e m i s e s , makes
• t h i s i t s report, and s t a t e s i t s f i n d i n g s a s t o t h e f a c t s and i t s c o n c l u s i o n ,
as f o l l o w s :
fc3 T
"
1427
FINDINGS AS TO THE FACTS*•
1 . That Continental Trust Company i s a bank, banking a s s o c i a t i o n or
t r u s t company organized and i t e r a t i n g under the laws of the United S t a t e s ,
t o w i t , the Code of Law f o r the D i s t r i c t of Columbia, i n t h e City of Washington, D i s t r i c t of Columbia, w i t h a c a p i t a l stock of $ 1 , 0 0 0 , 0 0 0 , and i s a
member bank of the Federal Reserve System and i s a stockholder i n and member
of t h e of t h e Federal Reserve Bank of Richmond,
2 . That the Union Savings Bank i s a bank, backing a s s o c i a t i o n , or
t r u s t company organized under the. laws of the S t a t e of West V i r g i n i a and
operating under the laws of the United S t a t e s , t o w i t , the Code of Laws f o r
t h e D i s t r i c t of Columbia, i n the City of Washington, D i s t r i c t of Columbia^
with a c a p i t a l stock of $200,000.
3* That s a i d City of Washington, D i s t r i c t of Columbia* i s a c i t y ,
incorporated town or v i l l a g e of more than 200,000 i n h a b i t a n t s a s shown by
t h e l a s t preceding decennial census of the United S t a t e s . (F. ft. Board Exh i b i t s Nos. 18 and 1 9 ) .
U. That Wade H» Cooper i s a r e s i d e n t of the City of Washington,
D i s t r i c t of Columbia.
5- That said Cooper was on November 30, 1921* s e r v i n g a s p r e s i d e n t
aid d i r e c t o r of Continental Trust Company and had been c o n t i n u a l l y s e r v i n g
a s such p r e s i d e n t and d i r e c t o r s i n c e about April 27, 1921.
. S. That said Cooper was on November 30, 1921, s e r v i n g a s president
and d i r e c t o r of t h e Union Savings Bank and had been c o n t i n u a l l y serving as
such p r e s i d e n t and d i r e c t o r s i n c e about t h e year 1913.
7* *bat f o r some time p r i o r t o October 7, 19I0, said Cooper was s e r v i n g
a s d i r e c t o r of the Continental Trust Company.
8 . That on or about October 7» 191&, t h e said Cooper f i l e d an a p p l i c a t i o n with t h e Federal Reserve Board, under the p r o v i s i o n s of an Act of Congress
^ p r o v e d May 15, 191c, known as the Kern Amendment t o t h e Qlayton Act, f o r t h e
permission to serve on the d i r e c t o r a t e s of Continental Trust Company,
*oe Union Savings Bank, respondents h e r e i n , and United S t a t e s Savings Bank,
a l l of the City of Washington, D i s t r i c t of Columbia. (F. R. Board Exhibits
Nos. 1 4 2 ) .
9 . That s a i d Board approved said ^ p l i c a t i o n as t o Continental Trust
Company and United S t a t e s Savings Sank but disapproved i t a s t o Continental
Trust Company and t h e Union Savings Bank on the ground t h a t s a i d l a t t e r two
banks were i n s u b s t a n t i a l competition and t h a t said Board had no power under
t h e law t o grant i t s permission t o serve on the d i r e c t o r a t e s of both sugh banks*
1 0 . That s h o r t l y t h e r e a f t e r said Cooper applied f o r and was granted a
hearing before said Boerd a t which the said Cooper and Charles
Warden,
Vice President of Continental Trust Company, appeared and submitted evidence
upon the question of s u b s t a n t i a l competition between Continental Trust Company
X-32S?
;
^ 3 ~
and The Union Savings Bank and t h e a p p l i c a t i o n of s a i d Cooper f o r p e r m i s s i o n t o s e r v e t h e s e two banks was r e c o n s i d e r e d *
11* That upon r e c o n s i d e r a t i o n of t h e a p p l i c a t i o n of s a i d Cooper t o
serve on t h e d i r e c t o r a t e s of C o n t i n e n t a l Trust Company and The Union Savi n g s Bank, and upon c o n s i d e r a t i o n of t h e f u r t h e r evidence p r e s e n t e d by s a i d
Cooper and harden a t s a i d h e a r i n g , t h e F e d e r a l Reserve Board confirmed i t s
former r u l i n g t h a t t h e s e two i n s t i t u t i o n s were i n s u b s t a n t i a l c o m p e t i t i o n .
12. That subsequently and on October 24, l $ l o , the F e d e r a l Reserve Board
n o t i f i e d Cooper t h a t i t could not g r a n t him p e r m i s s i o n t o s e r v e on t h e d i r e c t o r a t e s of C o n t i n e n t a l Trust Company and The Union Savings Bank, and no
such p e r m i s s i o n was g r a n t e d . (F. R. Board E x h i b i t No. 3 ) .
13* That s h o r t l y t h e r e a f t e r t h e s a i d Cooper r e s i g n e d a s d i r e c t o r of
C o n t i n e n t a l T r u s t Company* (F* Re Board E x h i b i t No*
.
14* That on or about February 1, 1917# Cooper a p p l i e d f o r and r e c e i v e d
t h e Federal Reserve Board*s p e r m i s s i o n t o s e r v e on t h e d i r e c t o r a t e s of the
F i r s t N a t i o n a l Bank of Hyatt s v i l l e , Maryland, The Union Savings Bank and
United S t a t e s Savings Bank. (F% R. Board E x h i b i t s Nos. 6 and 7)*
15* That on or about A p r i l 27# 1921, Cooper became p r e s i d e n t and d i r e c t o r of C o n t i n e n t a l T r u s t Company w h i l e s t i l l s e r v i n g a s p r e s i d e n t and
d i r e c t o r of t h e Union Savings Bank and United S t a t e s Savings Bank and w i t h out having o b t a i n e d t h e F e d e r a l Reserve B o a r d f s p e r m i s s i o n t o s e r v e a s d i r e c t o r or o f f i c e r of C o n t i n e n t a l Trust Company.
l o . That on June 28, 1921, t h e Federal Reserve Board n o t i f i e d Cooper
t h a t he was v i o l a t i n g S e c t i o n 8 of t h e Clayton Act i n s e r v i n g C o n t i n e n t a l
T r u s t Company w i t h o u t having obtained t h e p e r m i s s i o n of t h e Federal Reserve
Board t h e r e f o r . (F. R. Board E x h i b i t No. S).
17* That on June 29* 1921# Cooper e x p l a i n e d t o t h e F e d e r a l Reserve Board
t h a t he had been e l e c t e d p r e s i d e n t and d i r e c t o r of the C o n t i n e n t a l Trust
Company with t h e i d e a of c o n s o l i d a t i n g i t w i t h The Union Savings Bank and
another i n s t i t u t i o n .
(F. R. Board E x h i b i t No. 9)
lc» That on or about August 4, 1921, and a f t e r some f u r t h e r c o r r e s p o n d ence between Cooper and t h e Federal Reserve Board, (F, R. Board E x h i b i t No.lO),
Cooper f i l e d a new a p p l i c a t i o n f o r t h e B o a r d ' s p e r m i s s i o n t o serve C o n t i n e n t a l Trust Company, The Union Savings Bank and United S t a t e s Savings Bank*
(F. R. Board E x h i b i t No. 11)
19* That upon c o n s i d e r a t i o n of s a i d a p p l i c a t i o n and t h e evidence and
arguments submitted w i t h i t t h e Federal Reserve Board a g a i n reached the conc l u s i o n t h a t C o n t i n e n t a l Trust Company and The Union Savings Bank were i n
s u b s t a n t i a l c o m p e t i t i o n and t h a t the Board had no power t o grant
said a p p l i c a t i o n .
- 4 -
1-3267
20. That on or about September JO, 1921, t h e F e d e r a l Reserve Board
n o t i f i e d Cooper t h a t i t could not grant him p e r m i s s i o n t o s e r v e C o n t i n e n t a l
T r u s t Company and The Union Savings Bank and f u r t h e r n o t i f i e d him t h a t u n l e s s he r e s i g n e d from one or t h e other of t h o s e i n s t i t u t i o n s by October
3, 1921# t h e Board would i n s t i t u t e p r o c e e d i n g s t o e n f o r c e t h e l a w . ( F , H.
Board E x h i b i t No. 1 2 ) .
21. That Cooper did not r e s i g n from e i t h e r C o n t i n e n t a l Trust Company
of The Union Savings Bank by October 3; 1921, b u t , on t h e c o n t r a r y , cont i n u e d t o s e r v e a s p r e s i d e n t and d i r e c t o r of both i n s t i t u t i o n s .
22. That C o n t i n e n t a l Trust Company i s l o c a t e d on t h e n o r t h w e s t corner
of F o u r t e e n t h and H S t r e e t s , a t No, 801 f o u r t e e n t h S t r e e t , Northwest, i n t h e
City of Washington, D i s t r i c t of Columbia.
23« That The Onion Savings Bank i s l o c a t e d a t No. ?10 F o u r t e e n t h S t r e e t ,
Northwest, on t h e west s i d e of Fourteenth S t r e e t , between G and H S t r e e t s ,
and between G S t r e e t and New York Avenue, i n t h e City of Washington, D i s t r i c t
of Columbia.
24, That C o n t i n e n t a l Trust Company i s l o c a t e d n o r t h and s l i g h t l y e a s t
of gmd approximately 1 ^ b l o c k s d i s t a n t from The Union Savings Bank.
25* That f o u r t e e n t h S t r e e t r u n s n o r t h and s o u t h and H S t r e e t and &
S t r e e t run e a s t and west and New York Avenue r u n s n o r t h e a s t and southwest
and New York Avenue i s t h e only s t r e e t t h a t i n t e r s e c t s F o u r t e e n t h S t r e e t
between t h e i n t e r s e c t i o n of H S t r e e t s and F o u r t e e n t h S t r e e t and t h e i n t e r s e c t i o n of C S t r e e t and Fourteenth S t r e e t .
r
26, That s t r e e t c a r s run on Fourteenth S t r e e t from south of
Street
t o n o r t h of H, S t r e e t and on H S t r e e t west of F o u r t e e n t h S t r e e t and on New
York Avenue n o r t h e a s t and southwest of Fourteenth S t r e e t , and on New York
Avenue southwest o f , F o u r t e e n t h S t r e e t t u r n i n g n o r t h on ^Fourteenth S t r e e t ,
and on Fourteenth S t r e e t n o r t h of New York,Avenue t u r n i n g southwest on
New York Ave,
27. That C o n t i n e n t a l Trust Company engages i n commercial banking busi n e s s , a d v e r t i s e s f o r , s o l i c i t s and a c c e p t s commercial a c c o u n t s and s a v i n g s
accounts and makes l o a n s on r e a l e s t a t e and o t h e r c o l l a t e r a l , and does a
t r u s t company b u s i n e s s , and t h a t i t s commercial a c c o u n t s c o n s t i t u t e a p proximately L75^ of t h e t o t a l of i t s commercial and savings d e p o s i t s 26, That The Union Savings Bank engages i n commercial banking b u s i n e s s , a d v e r t i s e s f o r , s o l i c i t s and a c c e p t s commercial accounts and savings
accounts, and makes l o a n s on r e a l e s t a t e and o t h e r c o l l a t e r a l , and t h a t i t s
s a v i n g s accounts c o n s t i t u t e approximately SC$ of t h e t o t a l of i t s commercial
and s a v i n g s d e p o s i t s .
29, That C o n t i n e n t a l T r u s t Company and The Union Savings Bank a r e
g e n e r a l l y ( e n g a g e d i n t h e same c h a r a c t e r of b u s i n e s s and a r e so s i t u a t e d
t o appeal, and do i n f a c t appeal, t o the same customers or would-be
customers.
1-32S7
- 5 -
JO. That C o n t i n e n t a l T r u s t Company and The Union Savings Bank a r e i n
s u b s t a n t i a l c o m p e t i t i o n w i t h each o t h e r .
31. That Cooper has, s i n c e on or about A p r i l 27, 1921, c a r r i e d on n e g o t i a t i o n s l o o k i n g toward t h e c o n s o l i d a t i o n of C o n t i n e n t a l T r u s t Company
and The Union Savings Bank and United S t a t e s Savings Bank, but t h a t no
agreement has been e n t e r e d i n t o w i t h r e s p e c t t o such c o n s o l i d a t i o n and
t h a t c e r t a i n s t o c k h o l d e r s of The Union Savings Bank a r e opposed t o t h e
c o n s o l i d a t i o n upon t h e b a s i s which h a s been proposed by Cooper.
32, That t h e f a c t of t h e encumbency of Cooper a s p r e s i d e n t of both
C o n t i n e n t a l T r u s t Company and The Union Savings Bank and t h e p o s s i b i l i t y
of t h e i r c o n s o l i d a t i o n t e n d s t o check the amount and degree of c o m p e t i t i o n
which would o t h e r w i s e e x i s t between s a i d C o n t i n e n t a l T r u s t Company and'
s a i d The Union Savings Bank.
cpTn&vsipn,
That t h e s e r v i c e of respondent Wade H. Cooper a t t h e same time
a s p r e s i d e n t or d i r e c t o r of respondent C o n t i n e n t a l T r u s t Company and a s
d i r e c t o r or p r e s i d e n t of respondent The Union Savings Bank, under
• *
t h e c o n d i t i o n s and c i r c u m s t a n c e s d e s c r i b e d i n t h e f o r e g o i n g f i n d i n g s
c o n s t i t u t e s a v i o l a t i o n by each of paid r e s p o n d e n t s of S e c t i o n 6 of t h e
Act of Congress approved October 15, i g i 4 , e n t i t l e d "An Act t o supplement
e x i s t i n g laws a g a i n s t u n l a w f u l r e s t r a i n t s and monopolies, and f o r o t h e r
p u r p o s e s , * known a s t h e Clayton Act, a s amended.
By t h e Board
Governor,
Dated t h i s 2 4 t h
day of December, 1921.
ATTEST:
Secretary.
X-3287-a
UNITED STATES OF AMERICA
BEFORE THE FEDERAL RESERVE BOARD
At a duly c a l l e d meeting of t h e F e d e r a l Reserve Board h e l d a t i t s
o f f i c e s i n t h e Treasury B u i l d i n g , City of Washington, D i s t r i c t of Columbia,
on t h e 24th day of December, 1^21.
PRESENT:
W. P . G. HARDING, Governor
EDMUND PLATT,
ADOLPH C. MILLER,
JOHN TL MITCHELL,
D- R. CRISSINGER.
MEMBERS.
FEDERAL RESERVE BOARD
-VSW D H. COOPER, CONTINENTAL TRUST
AE
COMPANY AND THE UNION SAVINGS BANK
ORDER.
The above e n t i t l e d proceeding having been heard by t h e Federal
Reserve Board on t h e 30th day of November, 1921, on t h e complaint of t h e
Board, the answers of respondents, the testimony and evidence and t h e
arguments of Counsel f o r respondents, and t h e Board having made i t s r e p o r t
s t a t i n g i t s f i n d i n g s as t o t h e f a c t s and i t s conclusion t h a t t h e respondents
have v i o l a t e d S e c t i o n 8 of an Act of Congress, approved October 15, 191
e n t i t l e d "An Act t o supplement e x i s t i n g laws a g a i n s t unlawful r e s t r a i n t s
and monopolies, and f o r e t h e r purposes, " known a s the Clayton Act i t i s now
ORDERED AND DECREED
That Wade H. Cooper, on or b e f o r e the 17th day of January, 1922,
t e r m i n a t e h i s s e r v i c e i n any c a p a c i t y , whether a s o f f i c e r , d i r e c t o r and/or
employee, w i t h e i t h e r Continental Trust Company or The Union Savings Bank,
both of Washington, D. C., and w i t h i n the same time f i l e w i t h t h e Federal
Reserve Board s a t i s f a c t o r y p r o o f , i n t h e form of sworn e x t r a c t s from the
X-3?-S7-a
-
2
-
minutes of meetings of t h e d i r e c t o r s or s t o c k h o l d e r s of s a i d C o n t i n e n t a l
Trust Company or s^id The Union Savings Bank, t h a t he h a s t e r m i n a t e d h i s
s e r v i c e s w i t h e i t h e r said C o n t i n e n t a l Trust Company or s a i d The Union
Savings Bank a s a f o r e s a i d ; and t h a t t h e r e a f t e r s a i d Cooper cease and
d e s i s t from s e r v i n g a t t h e same time a s o f f i c e r , d i r e c t o r a n d / o r employee
of s a i d C o n t i n e n t a l T r u s t Company and a s o f f i c e r , d i r e c t o r a n d / o r employee
of s a i d The Union Savings Bank.
2, That s a i d C o n t i n e n t a l Trust Company, on or b e f o r e t h e 17th day
of January,1922, r i d i t s e l f of Wade H, Cooper, a s i t s o f f i c e r , d i r e c t o r
a n d / o r employee, and w i t h i n t h e same time f i l e with t h e F e d e r a l Reserve
Board s a t i s f a c t o r y p r o o f , i n t h e form of sworn e x t r a c t s from t h e minutes
of m e e t i n g s of i t s d i r e c t o r s or s t o c k h o l d e r s , t h a t i t h a s r i d i t s e l f of
Wade H, Cooper a s a f o r e s a i d ; and t h a t t h e r e a f t e r s a i d C o n t i n e n t a l Trust
Company s h a l l a t no time permit s a i d Cooper t o be or s e r v e as i t s o f f i c e r ,
d i r e c t o r a n d / o r employee; provided, however, t h a t if s a i d The Union Savings
Bank s h a l l , on or b e f o r e t h e l j t h day of January, 1922, have r i d i t s e l f of
s a i d Cooper a s i t s o f f i c e r , d i r e c t o r a n d / o r employee and s h a l l w i t h i n the
same time have f i l e d w i t h t h e Federal Reserve Board s a t i s f a c t o r y proof
t h e r eof a s h e r e i n a f t e r p r o v i d e d , then t h i s o r d e r s h a l l not be e f f e c t i v e as
a g a i n s t s a i d C o n t i n e n t a l T r u s t Company w h i l e s a i d Cooper i s not and does
not s e r v e a s o f f i c e r , d i r e c t o r a n d / o r employee of s a i d The Union Savings Bank
3* That s a i d f h e Union Savings Bank, on or b e f o r e t h e l ? t h day of
January, 1922, r i d i t s e l f of Wade H, Cooper, a s i t s o f f i c e r , d i r e c t o r and/or
employee, and w i t h i n t h e same time f i l e w i t h t h e Federal Reserve Board
s a t i s f a c t o r y p r o o f , i n t h e form of sworn e x t r a c t s from t h e minutes of meeti n g s of i t s d i r e c t o r s or s t o c k h o l d e r s , t h a t i t h a s r i d i t s e l f of Wade H,
Cooper a s a f o r e s a i d ; and t h a t t h e r e a f t e r s a i d The Union Savings Bank s h a l l
a t no time p e r m i t s a i d Cooper t o be or serve a s i t s o f f i c e r , d i r e c t o r and/or
employee; p r o v i d e d , however, t h a t if s a i d C o n t i n e n t a l T r u s t Company s h a l l ,
on or b e f o r e t h e l j t h day of January, 1922, have r i d i t s e l f of s a i d Cooper
a s i t s o f f i c e r , d i r e c t o r a n d / o r employee* and s h a l l w i t h i n t h e same time
have f i l e d w i t h t h e F e d e r a l Reserve Board s a t i s f a c t o r y proof t h e r e o f a s
h e r e i n a f t e r p r o v i d e d , t h e n t h i s order s h a l l not be e f f e c t i v e a s a g a i n s t
s a i d The Union Savings Bank w h i l e said Cooper i s not and does not serve as
o f f i c e r , d i r e c t o r a n d / o r employee of s a i d C o n t i n e n t a l Trust Company,
By t h e Board
Dated t h i s 24th day of
December, 1921%
ATTEST:
Secretary,
—
» Governor,
FEDERAL RESERVE
BOARD
WASHINGTON
X-32S8
December 29, 1921
SUBJECT*
Oaths of D i r e c t o r s and O f f i c e r s of
F e d e r a l Reserve Banks«
Dear S i r :
There appears t o b e some u n c e r t a i n t y on t h e p a r t
of some of t h e F e d e r a l Reserve Banks as t o the Board *s
p r a c t i c e w i t h r e f e r e n c e t o o a t h s of d i r e c t o r s and o f f i c e r s
of F e d e r a l Reserve Banks» I t i s t h e Board *s p r a c t i c e t o
r e q u i r e a l l d i r e c t o r s of F e d e r a l Reserve Banks, a l l d i r e c t o r s of F e d e r a l Reserve Branch Banks, a l l F e d e r a l Reserve
Agents, and a l l A s s i s t a n t F e d e r a l Reserve A g e n t s , whether
l o c a t e d a t F e d e r a l . Reserve Banks o r F e d e r a l Reserve Branch
Banks, t o e x e c u t e o a t h s of o f f i c e when they e n t e r upon
t h e i r o f f i c i a l d u t i e s . Whenever t h e term of o f f i c e of a
d i r e c t o r , F e d e r a l Reserve Agent or A s s i s t a n t F e d e r a l Res e r v e Agent e x p i r e s and t h e same p e r s o n i s r e a p p o i n t e d he
s h o u l d e x e c u t e a new oath* A l l such oaths s h o u l d "be executed
i n w r i t i n g on t h e forms p r e s c r i b e d "by t h e F e d e r a l Reserve
Board and should be promptly f o r w a r d e d t o t h e Board f o r
filing*
Very t r u l y y o u r s ,
W a l t e r L. Eddy,
Assistant Secretary*
CHAIRMAN OF ALL FEDERAL RESERVE BANKS.
G 0 LD
FEDERAL RESERVE BOARD
S E T T L E ME N T F U N D
kvina ry of t r a n s a c t i o n s f o r -period ending December 2 9 . 1921,
S'e&e r s l
Balance l a s t
Gold
Gold
Reserve
statement
Bank of
Dec* 2 2 , 1921.
Withdrawals
Deposits
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
Total
*
Total
7,818,400.00
3,008,295.00
615,150.08
9,(%8, 9 7 6 . 9 5
90,963, 609.83
670,926.51
18,116, 7 3 0 . 2 5
722,281.23
360,346.%
532,803.47
489,352.71
1,025,341.26
26,899, 2 9 6 . 6 8
29,048, 226.1s
763.24
475.06
!* 5 5 1 , 5 4 6 , 6 4 5 . 3 6 | $
$
,880,000,00
998,978.04
778,139.67
22,875, 3 6 0 . 0 5
S:».
r
868,324.15
4 8 , 3 6 3 , 154.48
Federal
Reserve
Bank of
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
S t , Louis
Minneapolis
Kansas City
Dallas
Sen F r a n c i s c o
TsF
7,
1,4! +,7S .48
3M37, 139.56
172,786, 7 5 0 . 5 0
'55,357# 1 6 2 . 6 1
9 , 3 4 5 , 8 2 3 . 7 5 I*
Aggregate
withdrawals
and t r a n s f e r s
t o Agent's fund
339,*53.84
31,444,726.48
868,324.15
998,978.04
778,139.67
(CONFIDENTS)
Aggregate
d e p o s i t s and
t r a n s f e r s from
Agent's fund
7,818,400.00
360,346.31
532,803.47
1,500.00
1,000,000,00
2,038,250.10
400.00
489,352.71
'
4 0 , 3 4 5 , 8 2 3 . 7 5 I*
Net
Debits
Total
Debits
Total
Credits
3,221,462.36
277,685.(5
385,705.14
103,907,272.48
80,895,288.70
91,556,^6.37
33,377,674.16
157,688,872,43
73,329,629.58
25,413,968.01
81,059,443.47
92,084,491.72
39,183,400.91
154,467,410,07
77,452,320.14
4gfCK5.748.4q
1,115,865.77
. . . .
$
*
1$
S
Net.
Credits
% % % %
102,791,406.71
25,136,282.98
58,221,602,01
1 7 , 3 6 9 , 5 6 2 . 3 9 1 * 1,104,339,618.631* 1 , 1 * . 3 3 9 . 6 1 8 . 6 3 I*
$
164,154.77
528,475.35
5,805,726.75
• 4,122,690.56
•»
2,006,000,00
3 0 , 7 7 1 , 8 4 5 , 4 0 I*
Summary of changes i n owners h i p of g o l d b y banks through
t r a n s f e r s and s e t t l e m e n t s .
41,400,760.07
139,388,505.58
57,381,267.69
45,528,131.21
21,625,695.73
1*,119,553.62
84,0?1,620.96
22,518,639.58
Decrease
Increase
$
$
816,615.66
*
5*11972.667.a. |$
:
V
115,865.77
1,835,845.23
471,524.65
5,805,726.75
6,221^462,36
•F
1Q, 384.34
I*
2,000,000,00
1,000,000.00
5,931,899.30
17,369,562.39
1,000,000.00
1,000,000.00 ;
1,000,000,00
Balance i n
fund a t c l o s e
of b u s i n e s s
Dec. 29, 1921.
S e t t l e m e n t s from December 23, 1921 t o December 2 9 , 1921
inclusive.
Credits
3,000,000,00
6,025,000.30
1,025,341.26
T
2,000,000.00
1,000,000.00
880,000.00
1,500.00
1,000,000,00
2,038,250,10
16,746,845.40 I$
Debits
3,008,295.00
670,926.51
722,281.23
4,000,000,30
T R A N S F E R S
10,000,000,00
1,615,150.08
400,00
X-3289
Washington, D. C.
December 3 0 , 1921.
•
5,122^690.56
722,314.97
1,614,294.86
7.mS99.3<L
21,196,926.44 | * 21,196,926.44
£
g
FEDERAL
Summary of t r a n s a c t i o n s f o r period ending December 29, 1921
Gold
Gold
Federal
Balance l a s t
Reserve
s tatement
Withdrawals
Deposits
Dec. 2 2 , ,1921.
Agent at
Boston
$
155,000,000
New York
$
145, 0 0 0 , 0 0 0
Richmond
Atlanta
5,000,000
2,000,000
Minneapolis
2,200,000
Kansas C i t y
25,360,000
-
-
Total
2,234,000
—
—
-
•
|$
15,000,000
—
U,000,000
10,000,000
$
30,000,000
301,000,000
145,000,000
3,000,000
-
8 , 5 0 0 , 000
-
28,595,000
110,000,000
5,000,000
-
2,000,000
• 1,500,000
56,100,000
-
2,200,000
-
—
-
1,000,000
-
|$ 12,025,000
145,000,000
130,389,260
-
1,000,000
Balance at
c l o s e of
business
Dec. 2 9 , 1 9 2 1 .
$
5,000,000
-
2,025,000
|$
Deposits
-
-
-
-
1$ 1 , 3 7 0 , 2 0 9 , 2 6 0
-
$
Total
Withdrawals
-
1,000,000
-
205,686,500
-
-
X«32S9-a
Total
30,000,000
1,500,000
—
San Francisco
-
1,500,000
56,600,000
Dallas
$
$ 10,000,000
—
3,000,000
302,644,500
S t . Louis
Deposits
through
transfers
from hank
-
37,500,000
Chicago
Withdrawals
for
transfers
to hank
-
-
F UW D
Washington, D. C.
-
5,000,000
31,595,000
•
A G E W T S'
-
135,339,260
Cleveland
<
•
271,000,000
Philadelphia
$
RESERVE
•
2,025,000
-
j$ 3 1 , 0 0 0 , 0 0 0
«•
*•
|$
27,025,000
297,644,500
26,360,000
2,234,000
203,661,500
|$
35,000,000
1 , 3 7 M 84,260
HW
Oi
FEDERAL RESERVE BOARD
WASHINGTON
December "hi, 1921.
X-329O
SUBJECT:
S e t t l e m e n t t h r o u g h Gold S e t t l e m e n t Fund of Shipments
of " o t h e r " F e d e r a l Reserve n o t e s .
Dear S i r :
The p l a n r e f e r r e d t o i n t h e B o a r d ' s l e t t e r of December 22, 1921,
(X-3279) f o r e f f e c t i n g d a i l y s e t t l e m e n t s f o r shipments of " o t h e r "
F e d e r a l Re s e r ve n o t e s w i l l be put i n t o o p e r a t i o n on February 1, 1922,
and i s a s f o l l o w s :
Each F e d e r a l Reserve Bank and Branch F e d e r a l R e s e r v e Bank w i l l
forward each a f t e r n o o n t o t h e F e d e r a l R e s e r v e Board, b e g i n n i n g February
1, 1922, a t e l e g r a m , a s p e r form a t t a c h e d h e r e t o , marked E x h i b i t "A",
g i v i n g t h e amount of f i t F e d e r a l Reserv e n o t e s shipped t o each o t h e r
F e d e r a l Reserve Bank and t h e amount of u n f i t n o t e s of o t h e r F e d e r a l
Reserve Banks shipped t o t h e T r e a s u r e r of t h e United S t a t e s on t h e d a t e
of t h e t e l e g r a p h i c a d v i c e . When a Bank or Branch h a s made no shipment
on a g i v e n d a t e i t ghould w i r e t h e Board a s f o l l o w s : "No shipment F e d e r a l
R e s e r v e n o t e s t o d a y " , u s i n g t h e code word CIDER. Telegrams should be
d i s p a t c h e d i n time t o r e a c h t h e Board not l a t e r t h a n 4 o ' c l o c k , Washington
time.
A f t e r r e c e i p t of t h e F e d e r a l Res erv e n o t e t e l e g r a m s t h e Board w i l l
p r e p a r e a t e l e g r a m , (copy of form a t t a c h e d — E x h i b i t "D"), t o each
F e d e r a l R e s e r v e Bank, g i v i n g t h e amount of t h e B a n k ' s n o t e s shipped by
each o t h e r F e d e r a l Reserve Bank and Branch on t h a t d a t e . These t e l e g r a m s
w i l l be forwarded t o r e a c h t h e Banks b e f o r e , i f p o s s i b l e ,
or not l a t e r
t h a n t h e u s u a l time of r e c e i p t by t h e Banks of t h e r e g u l a r Gold S e t t l e ment Fund C l e a r i n g t e l e g r a m s .
To r e d u c e t h e number of words s e n t over t h e l e a s e d w i r e s a l l s h i p ments of F e d e r a l Reserve n o t e s should be i n even t h o u s a n d s . The use of
numerals should be employed i n a l l t e l e g r a m s ; t e l e g r a p h o p e r a t o r s should
e x e r c i s e e x t r a o r d i n a r y c a r e i n t r a n s m i t t i n g messages. I t w i l l be n e c e s s a r y
t h a t a t e l e g r a p h o p e r a t o r remain on duty a t each Bank u n t i l both t h e
Gold S e t t l e m e n t Fund C l e a r i n g t e l e g r a m and t h e F e d e r a l Reserve n o t e
t e l e g r a m or t e l e g r a m s d i s p a t c h e d by t h e Bank and i t s Branches have been
r e c e i v e d by t h e Board, v e r i f i e d and r e l e a s e i n s t r u c t i o n s g i v e n from
Washington.
— 2
X-32Q0
—
The f o l l o w i n g e n t r i e s may be made by t h e F e d e r a l Reserve Banks on
t h e i r books:
For n o t e s shipped by them, they w i l l
DEBIT: Gold Settlement Fund
CREDIT: Federal Reserve n o t e s o t h e r F e d e r a l Reserve Banks
For n o t e s of t h e i r i s s u e which have been s h i p p e d by o t h e r
F e d e r a l Reserve Banks and B r a n c h e s , t h e y w i l l , on r e c e i p t of
•Board's telegram
DEBIT: Federal Reserve n o t e s i n t r a n s i t
CREDIT: Gold Settlement Fund
Upon r e c e i p t of f i t n o t e s , t h e f o l l o w i n g e n t r i e s w i l l be made:
DEBIT: Cash
CREDIT: Federal Reserve n o t e s i n t r a n s i t
F i n a l e n t r i e s i n t h e Federal Reserve n o t e s i n t r a n s i t account f o r
u n f i t n o t e s shipped by o t h e r F e d e r a l Reserve Banks and Branches w i l l be
made upon r e c e i p t of advice from t h e Comptroller of t h e Currency t h a t
t h e n o t e s have been r e c e i v e d and c a n c e l e d .
For shipments made by Branches, t h e f o l l o w i n g e n t r i e s w i l l
be made by t h e Head O f f i c e :
DEBIT: Gold Settlement Fund
CREDIT: Branch
When a Branch makes shipments of Federal Reserve n o t e s , t h e
Branch w i l l make the f o l l o w i n g e n t r i e s :
DEBIT: Head O f f i c e
CREDIT: Federal Reserve n o t e s o t h e r F e d e r a l Reserve Banks
There a r e enclosed h e r e w i t h c o p i e s of suggested forms t o g e t h e r w i t h
a memorandum e x p l a n a t o r y t h e r e o f . A d d i t i o n a l c o p i e s of t h i s l e t t e r and
e n c l o s u r e s a r e fowarded h e r e w i t h f o r t r a n s m i s s i o n by . you t o your Branch
Branches, i f any.
Very t r u l y y o u r s ,
G o v e r n o r .
Enclosures.
GOVERNORS OF ALL FEDERAL RESERVE BANKS.
x-3290-a
FORMS TO BE USED
The f o l l o w i n g f o r m s may be used i n c o n n e c t i o n
of s e t t l e m e n t :
w i t h t h e new p l a n
E x h i b i t 'A'
S e t t l e m e n t f o r F e d e r a l Reserve n o t e s
telegram.
T h i s i s a t r i p l i c a t e form t o be used by t h e s h i p p i n g F e d e r a l Reserve
Bank o r Branch f o r f i t F e d e r a l Reserve n o t e s shipped t o o t h e r F e d e r a l
Reserve Banks, and u n f i t F e d e r a l Reserve n o t e s of o t h e r F e d e r a l Reserve
Banks shipped t o Washington. The amount of f i t n o t e s t o be e n t e r e d i n
column under code word CHURCH, and t h e amount of u n f i t n o t e s t o be shown
i n column under code word CHURNING, t h e t o t a l s of both columns t o be e x tended i n grand t o t a l b l o c k . A l l amounts shown on t h e s e t e l e g r a m s should
be i n even t h o u s a n d s , t h a t i s , o m i t t i n g 000-00. To avdd e r r o r s i n t r a n s m i s s i o n i n i n s t a n c e s where a sending Bank h a s no shipments of n o t e s f o r
one or more o t h e r F e d e r a l Reserve Banks, t h e word "NONE" should be
i n s e r t e d i n tthe p r o p e r column.
Copy No. 1 of t h i s form i s t o be forwarded t o t h e T e l e g r a p h D e p a r t ment f o r t r a n s m i s s i o n t o t h e Board.
Copy No. 2 i s a c o n f i r m a t i o n of t h i s t e l e g r a m t o be m a i l e d t o t h e
Board.
Copy No. 3 s e r v e s a s the t i c k e t of e n t r y i n t h e F e d e r a l Reserve
Bank o r Branch.
When t h i s form i s p r i n t e d f o r t h e u s e of Branch Banks, Copy No. 3
should r e a d "Debit - Head O f f i c e " i n s t e a d of "Debit - Gold S e t t l e m e n t
Fund".
If t h e s h i p p i n g Bank d e s i r e s one o r more o f f i c e c o p i e s f o r i n t e r n a l
check p u r p o s e s , t h e y may be added w i t h o u t changing t h e s t a n d a r d of t h e
form.
E x h i b i t 'B'
Shipments of F e d e r a l Reserve n o t e s f i t f o r
circulation.
T h i s form i s t o be executed by t h e s h i p p i n g F e d e r a l Res erv e Bank
or Branch and e n c l o s e d w i t h shipment of f i t F e d e r a l R e s e r v e n o t e s and
s e r v e s a s t h e t i c k e t of e n t r y i n t h e r e c e i v i n g F e d e r a l Res erv e Bank.
X-3290 a
In accordance w i t h t h e adopted r e p o r t of the Committee on S t a n d a r d i z a t i o n of I n t e r - F e d e r a l Reserve Bank Forms, the c o l o r of t h i s t i c k e t
should b e B u f f .
If t h e s h i p p i n g F e d e r a l Reserve Bank d e s i r e s one o r more c o p i e s of
t h i s form f o r i n t e r n a l check p u r p o s e s , t h e y may b e added w i t h o u t changing
t h e s t a n d a r d of t h e f o r m .
Inasmuch as the F e d e r a l Reserve Bank of i s s u e w i l l b e advised b y
t e l e g r a p h t h r o u g h the F e d e r a l Reserve Board of each shipment i n t r a n s i t
and t h e amount r e f l e c t e d i n t h e i r F e d e r a l Reserve n o t e s i n t r a n s i t a c c o u n t ,
no s e p a r a t e a d v i c e by m a i l has been p r o v i d e d .
.As t h e s h i p p i n g b a n k immediately o b t a i n s payment t h r o u g h the Gold
S e t t l e m e n t TUnd and t h e b u r d e n of checking t o s e e t h a t t h e shipment i s
r e c e i v e d f a l l s upon t h e bank of i s s u e , no form of acknowledgment o r r e c e i p t f o r the shipment has been p r o v i d e d .
E x h i b i t *C'
U n f i t F e d e r a l Reserve n o t e s shipped t o
Washington.
This form i s t o b e executed b y t h e s h i p p i n g Bank or Branch and serves
as an a d v i c e t o the Bank of i s s u e of t h e amount and denominations of t h e i r
n o t e s forwarded t o the T r e a s u r e r of t h e United S t a t e s f o r redemption*
If t h e s h i p p i n g F e d e r a l Reserve Bank or Branch d e s i r e s one o r more
c o p i e s of t h i s form f o r i n t e r n a l check p u r p o s e s , t h e y may be added w i t h o u t
changing t h e s t a n d a r d of t h e form.
E x h i b i t 'D'
S e t t l e m e n t f o r F e d e r a l Reserve n o t e s t e l e g r a m .
This i s a d u p l i c a t e form t o b e used by the F e d e r a l Reserve Board i n
t r a n s m i t t i n g F e d e r a l Reserve n o t e s s e t t l e m e n t t e l e g r a m t o F e d e r a l Reserve
Banks.
S e t t l e m e n t t e l e g r a m s w i l l i n d i c a t e t h e amount of f i t n o t e s shipped
b y o t h e r F e d e r a l Reserve Banks and t h e i r Branches, i n column under code
word CHURCH; u n f i t n o t e s i n column under code word CHURNING and the t o t a l
of b o t h columns.
X-3290 a
Code Words to be Used.
DRUID
(See Exhibit A - Form 1.)
Please credit our Gold Settlement Fund account for Federal
Reserve notes of other Federal Reserve Banks shipped to the
"banks of issue and the Treasurer of the United States, Washington, D. C., as follows:
CUC
HRH
(See Exhibit A - Form 1 and Exhibit D - Form 1.)
Fit Federal Reserve notes.
C U NN (See Exhibit A - Form 1 and Exhibit D - Form 1.)
HRIG
Unfit Federal Reserve notes.
D U M R (See Exhibit D - Form 1.)
RM E
In accordance with your telegram of today we have credited
your Gold Settlement Hind account for Federal Reserve notes
of other Federal Reserve Banks shipped by you (and by your
Branches) to the banks of issue and to the Treasurer of the
United States, Washington, D. C., as follows:
DUCKBILL (See Exhibit D - Form 1.)
Your Gold Settlement Rind account has been charged for
Federal Reserve notes of your Bank shipped to you and to
the Treasurer of the United States, Washington, D. C.,
by other Federal Reserve Banks and their Branches as
f oilows:
CIDER
No shipment Federal Reserve notes today.
1441
FEDERAL RESERVE BOARD
WASHINGTON
July 2, 1921St.2098.
SUBJECT: Earnings and Expense Reports
of Federal Reserve Banks.
Deafr 3 £ r :
Referring to the Board's letter St. 2083» dated
June 25) 1921, on the above subject, there i s being
forwarded to you today under separate cover a supply of
forms 95, 96 and 96-a, also of the general instructions
governing the preparation of earnings and expense reports,
as follows:
Form 95 copies
Form 96 copies
Form 96a " copies
General instructions -
copies.
Very truly yours,
E. L. Smead, Chief,
Division of Reports and Statistics.
Letter sent to all Federal Reserve Agents.
FEDERAL RESERVE BOARD
WASHINGTON
July 19, 1921,
at.2123-
SUBJECT: Abstract of Condition Reports
of State Eank and Trust Company
Members and of all Member Banks
as of April 28, 1921.
Dear Sir:
are forwarding to you -under separate cover
copies of the Board's Abstract No. 14 showing the
condition of State Bank and Trust Company members and of
all member banks as at close of business on April 2S, 1^21.
Consolidated figures for all member banks, both National
ana state, are shown on pa 3 es 1 and 12.
Please forward one copy of the abstract to each
State Bark and Trust Company member in your district that has
expressed a desire to receive copies of abstracts as issued.
Very truly yours,
E. L. Smead, Chief,
Division of Reports and S t a t i s t i c s .
Letter sent to each F. R. Agent.
FEDERAL RESERVE BOARD
WASHINGTON
July 21, 1921.
St.2144.
SUBJECT: Statistics relating to State
Banks and Trust Companies
eligible for membership in
Federal Reserve System.
Dear S i r :
' :
With a view of bringing the data requested in the
Board's letter, St. 1299 > dated July 20, 1920, up to date
may we ask that you kindly furnish the Board at your earliest
convenience with a statement showing the number, capital, surplus, and total resources of State bank and Trust companies in
your district having capital stock sufficient to meet capital
requirements for membership in the Federal Reserve System as
of June 30, 1921, or the nearest date thereto for which data
are available.
The statement should be compiled in the manner indicated
in the letter above referred to, a copy of which i s enclosed
herewith.
Very truly yours,
Enclosure.
Letter sent to each Federal Reserve Agent.
Walter L. Eddy,
Assistant Secretary.
July 20, 1920.
St. 1 2 9 9
Subject:
Statistics relating to State
banks and Trust companies e l igible for membership in F-RSystem.
Dear Sir:
With the view of enabling the Board to continue the preparation of tables
similar to those appearing on pages 29 and 30 of the I919 annual report, i t is requested that you have the following data regarding State banks and Trust companies
in your d i s t r i c t compiled from the latest available reports, and forwarded to the
Board at your earliest convenience:
State Banks and Trust Companies with Capital Stock
sufficient to meet capital requirements for membership in Federal Reserve System.
(In thousands of dollars, i . e . , 000 omitted.)
* Members of F. R. System
*
Non-members of F. R. System
*
on June 30, 1920.
J
on June 30, 1920.
:
:
: Surplus :
: Date :
:
: Surplus :
:
:
rexclusive: Total : of :
:
;exclusive: Total
:Hun-:Capital:
of
: re-' :condi-:Nun-:Capi-:
of
: re:ber :
:undivided:sources: tion :ber : tal :undivided;sources
:
:
: profits :
:report:
:
: profits:
S t a t e of
Banks with a combined capital
and surplus of~
Less than
$1,000,000 e — — — —
Over $1,000,000
but less than
$5,000,000
$5,000,000and. over- - — — —
In addition to furnishing separate data for each State, i t will be appreciated
i f you will give the name and location of each non-ueuVber State Bank and Trust
144.5
- a-
St.
1299
company in your district which has a combined, capital and surplus of $1,000,000
or over, with separate figures of capital, surplus and total resources.
While i t i s recognized that figures as of June 30, 1920, will not be available
for all banks and that consequently the latest available data w i l l have to be
utilized, i t i s desired that banks be classified as members and non-members on
the basis of their status on June JO in order that reports for a l l districts may
be on a uniform basis.
It will be appreciated i f you w i l l give the necessary
instructions that care be exercised to exclude a l l institutions which, on the
basis of capital requirements, are not eligible for membership in the Federal
Reserve System.
Yours very truly,
Secretary.
Copy of this letter sent to Chairman of each F. R. Bank.
FEDERAL RESERVE BOARD
WASHINGTON
August 8, 1921
st.2190.
SUBJECT: Fora 44-a, Monthly Federal
Reserve Note Report.
Dear Sir:
In view of the plan outlined, in the Board's
letter, X-313^> dated June 6, 1921, providing for
interdistrict settlements for Federal reserve notes,
i t is requested that Federal reserve notes forwarded
to the hank of issue for credit by another Federal
reserve hank, and for which payment has been made
through the Gold Settlement Fund, be treated by the
issuing bank as notes on hand in the preparation of
Forms 34 and 44-a.
Kindly acknowledge receipt.
Very truly yours,
E. L. Smead, Chief,
Division of Reports and Statistics.
Letter sent to a l l Federal Reserve Agents.
St.2^258.
L A LIQUIDATION IN A RC L U A A D IN O H R COUNTIES.
ON
GIUTRL N
TE
The following analysis of loans of banks in agricultural
and non-agricultural portions of the country was prepared
for use in connection with Governor Strong's testimony before
the Joint Commission of Agricultural Inquiry.
Tables showing
figures in detail have been submitted to the Commission, and
copies are on f i l e in the Division of Reports and Statistics,
Federal Reserve Board, and in the New York Federal Reserve
Bank.
The original transcripts, as taken from the condition
reports giving data for each member bank grouped by counties,
are also on f i l e with the Division of Reports and Statistics.
1448
AUtilCULTURAL A D INDUSTRIAL LIQUIDATION
N
March k, 1920 to April 28, 1921.
Not for publicationSt.222$.
The following tables give an analysis of reports to the Comptroller of the
Currency and the Federal Reserve Board fran about 9> 5^0 banks throughout the
country which are manbers of the Federal Reserve system.
The purpose of the
analysis was to ascertain what changes took place during the year ended April
28, 1921 in the loans of banks in agricultural communities as compared with the
loans of banks in non-agricultural communities.
While loans by country banks
are often made fcr uses other than to finance farmers, and many loans by city
banks are made to move crops and for other purposes intimately connected with
agriculture, i t i s f e l t that the figures compare with fair accuracy the liquidation of industrial and agricultural loans.
All counties i n the country were grouped in three classes, agricultural,
semi-agricultural and not>-agricultural.
Counties were classified as agricultural,
when the value of their products according to data obtained from the 1920 census
reports, the Geological Survey, the Bureau of Soils, and a l l other available
sources was estimated to be not less than 80 per cent agricultural; as semiagricultural when their products were between 50 and 80 per cent agricultural;
and as non-agricultural, when their products were less than 50 per cent agricultural.
The summary table below shows that between May 4, 1920 and April 28, 1921
the loans and discounts of banks in agricultural counties throughout the country
declined $36,$00,000 or slightly more than 1.2 per cent; the loans and discounts
of banks in semi-agricultural counties declined $18,700,000 or 1.3 per cent; and
the loans and discounts of banks in non-agricultural counties declined $827,100,000
or 5.6 per cent.
The borrowings frcm the Federal Reserve Banks by banks in agri-
cultural counties increased $127,"00,000 or 56.5 per cent; borrowings by banks in
semi-agricultural counties remained practically stationary; and borrowings by
banks in ron-agricultural
counties declined $629,100,000 or 28.5 P e r cent.
-
2
-
St.2225a
INCREASE O DECREASE IN LOANS, B R O I G (a>AND
R
O R WN S
DEPOSITS O M M E B N S (1920-1921).
F E BR A K
(Amounts i n m i l l i o n s
of d o l l a r s ' )
Agricultural : Semi-agricul- : Mon-agricultur-:
counties :tural counties: al counties :
: Per i
: Per
: Per
*
'
: Amount*
;cent ; Amount : cent: Amount ; cent ".Amount i cent
Loans and discounts
-36.5 *1.2
-18.7
-1-3 -827-1
-882.3
-5.6
-4.5
Borrowings from F* R,
Banks —
+ 1 2 7 * 6 "*"56 *5
- 0 . 2 -629.I - 2 8 . 5
--O.3
-501.8 -19.5
Borrowings from other
banks + 4 5 , 2 +65.7
>6.1 + 1 9 , 0
+0.6
+0.5
+51.8 +27.3
Total deposits
-4ll.S
-11.1
-87*7
-5,2
-665.7
-4.4
-II65.2
-5'7
(a) Bills payable and rediscounts •
•
In partial explanation of the relatively heavy demands upon the Federal Reserve
system by banks in agricultural counties, i t appears that their loss in total deposits was 11,1 per cent, as against a loss of 4.4 per cent, by banks in non-agricultural counties.
Between May 4, 1920, and April 28, 1921, member banks show a total liquidation
of loans amounting to $882,000,000 of which $827,000,000, or $4 per cent, i s
shown for banks in non-agricultural counties, while the liquidation in agricultural
and semi-agricultural counties amounted to only about $55»000,000.
An analysis of
the changes in loans by Federal Reserve districts shows few important reductions
for banks in agricultural counties, the largest reduction being reported for banks
in the Kansas City district, where loans were reduced by about $53>000,000.
On
the other hand, banks in the Richmond and Atlanta districts showed somewhat larger
loans this year than a year ago.
In the semi-agricultural counties, no important
changes are reported for ary of the Federal Reserve districts.
In the non-agri-*
cultural counties the volume of liquidation has been material in every Federal
Reserve district, except Cleveland, which reports a 10 per cent increase in loans.
I
ii50
I
-
3 -
st.2225a.
The contrast "between the barks in agricultural and non~agricultural counties
i s even more pronounced when borrowings from the Federal Reserve banks are compared*
These borrowings increased for banks in agricultural counties by about
128 millions, or 57 per cent* particularly heavy relative increases being shown
for the Atlanta, Dallas and Minneapolis districts•
In the semi-agricultural
counties, the amount of loans from Federal Reserve Banks shows
practically
no
changes for the year, substantial increases in the Richmond and Atlanta districts
being offset by a reduction of 10 millions in the Cleveland district*
In non-
agricultural counties the reduction of borrowings from Federal Reserve Banks is
universal for a l l the districts, except Cleveland* For the system as a whole,
the reduction in borrowings from Federal Reserve Banks amounted to about ^02
millions; for banks in non-agricultural counties the reduction was 629 millions,
which was offset in part by an increase of 128 millions in the borrowings of
banks in agricultural counties.
Figures for the several Federal Reserve districts are shown in the table
below:
14G1.
- 4 -
:(a)
INCREASE O DECREASE IN LOANS A D IN B R O I G
R
N
O R WN S
F O FEDERAL RESERVE B N B DISTRICTS (1920-1921)
RM
AK Y
Federal
Reserve
District
>r.) 3 ton
Naw York
Philadelphia
Cleveland
Richmond
Atlanta
Dallas
(Amounts in millions of dollars)
St,222%.
DISCOUNTS
AD
N
LOANS
: Semi-agricultural: Non-agricultural !
: Agricultural
Total
counties
:
counties
:
:
counties
: Per
: Per
: Per : Amount
* Amount : Per ] Amount
: cent "Amount : cent
: cent :
:cent
-0.7
+1,6
+5.4
+1.5
+7.5
+7.7
+ 7.1
-0.5
+5-1
-0.3
-2-3
-2.2
-2.4
-1-9
-4.8
-17-4
-0-6
-4,6
-6.0
-2.0
+15-0
+9.6
-1.6
+10.2
+11.0
+4.7
+2.4
-22.8
+2.9
-6.3
+4.4
— •0
1
+4.5
+2-0
+4.5
-36.2
-426.1
-27-8
-2-7
-35-3
-2.5
-7.1
-7.8
-2.8
-405.7
-16.7
+106.7
-1.7
-5-1
-49-2
-55-0
-.6
-6.6
-166-1
-78.1
-64.4
-137.3
-5.4
-13.0
+100.8
+9-5
-9-3
-58-7
-29.9
-12.1
-12.6
-11.8
-12.0
-13.3
-I.5
+ 6.7
-7.8
Chicago
St. Louis
Minneapolis
Kansas City
-16.4
-19.1
-52-9
-13-0
-9.0
-10.4
-132-3
-73-7
-4o-7
>-75.4
San Francisco
+47.1
*13-2
-5.4
• -4.2
-17-7
— •8
1
+24.0
+1.6
-36-5
-1.1
-18-7
-1-3
-827.V
-5-6
-882-2
-4.5
Total
Federal
Reserve
District
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Dallas
-3.8
-6.1
-9.1
-g.o
B N S "taf
AK
RESERVE
FEDERAL
FO
RM
BRO IG
O R WN S
: Semi-agricultural: Non-agricultural
Agricultural
Total
counties
:
counties
counties
: Per
Per
Per
: Per
Amount : cent
Amount
Amount
Amount : cent
cent
cent
-22-3
-28-5
+61.6
-29.3 - 2 3 . 5
+0.5
+11.8
+0-3
-205-9 - 2 5 . 0
-206.9 - 2 6 . 5
+4-5
+0.3
+9-2
+0.7
-75-4 -33.-7
-73.3 - 3 5 . O
-0.2
-6-3
-i/g
-17-9
+ 4.0
+2.9
. +15.0 +15.0
-34.0
-10.0
-1.0
-13-7
+2-5
+3.0
—8.6
— *8
9
+26.5
+4.7
+39.4
+6.9
-4.1
-3-5
-29.9 -31.9
+96.6
+9.6
+120.2
+16.2
-7.4
-5.8
—24*0 —60.5
+22.0
-3-8
-25.3
493.0
—20 *1
+75-3
+2.8
+50.0
-1.6
-1.5
+23-2
+16.6
+56.5
-3
— 2
0
-629.1
-28.5
-501.9
-19-5
+22.0
+127-5
+U5.I
+1+2.0
+102.2
-0,4
-7.4
(a) B i l l s payable and rediscounts.
-92.2
-75-5
-23.9
San Francisco
+18.3
-32.0
-59.1
-1.8
+11.3
+6.8
-117.9
-46.9
+51.4
+25-9
-0.6
-0.2
-1.8
Chicago
St. Louis
Minneapolis
Kansas City
Total
—l • 6
-6.3
*
-80.5
-Id
-46-9
-42.6
-12.6
-32.1
-48.3
-14.)
-25.2
1
*
452
-
5
-
St. 2225d.
A comparison of borrowings with the so-called oasic line is presented in
the next table.
On April 28, 1921, the borrowings of member banks from Fed-
eral reserve banks in agricultural counties were in excess of the so-called
basic line in the Southern and Middle and Far Western districts, with the exception of Kansas City.
In semi-agricultural counties borrowings were below
the basic line in all the districts except tnose of Rich&ond, Atlanta, and
Chicago; while in the non-agricultural counties, all the districts, except
Richmond and Atlanta, reported borrowings below the basic line.
BORROWINGS^ F O F D R L • RESERVE BANKS, C M A E WT
RM E E A
O P RD I H
"BASIC LINE" O APRIL 28, 1921.
N
Hon-agri cultural
Semi-agricultural
Agricultural
counties
counties
counties
%Ratio of:
:
:Ratio of
:
;
;Ratio of
Federal
Borrow-:Basic:borrow- :Borrow-:Basic;borrowBorrow-• :Basic:borrowReserve
ings : line: ings to ings : linerings to : ings : line:ings to
District
:
: basic :
. :
: basic
basic
- line •
:
: line_
;
: line
m
Amount : Meant: Percent Airount ° A conk Percent: Amount :Amounk Percent
J5-i
50.0
2-9
4.6
Boston
2-5
53-5
574.1 1 0 8 3 . 0 5 3 . 0
59.4
10.7
24.6
New York
8.8
35-7
171.0 79.6
136.2
56.7
6-3
3.6
8.6
54.8
Philadelphia
15-7
114.5 1 8 0 . 7 6 3 . 3
33-5
57.6
6.4
Cleveland
21.6
19-3
29.4
*
:
„
Richmond
Atlanta
Dallas
24.3
29.7
45.8
19.9
15.9
39-3
122.3
186.8
ll6.4
Chicago
St. Loui s
Minneapoli s
Kansas City
San Francisco
83.4
23.0
36.1
33.3
72.2
22.2
33-3
' 45.1
115-5
103-7
108.6
74.0
51.2
4i.4
353-1
355-8
99.2
g
4
: L
^
?
68,8 113.7
55.0 115.6
173.9
156.9
71.6
78.2
63.6
15-7
250.3
55-7
34.5
56.1
300.1
88.8
7-7
11.0
104.7
48.1
61.7
53-0
39.6
72.9
83.4
62,7
87.0
77.0
18.6
45-7
103.8
145.4
71.3
71.9 1,577-8
2418.1
65.2
22.1
12.7
12.4
11.2
15.7
33-1
31.6
4.7
123.6
Total
i
19-4
2.0
5.8
137.6
4.2
191.4
(a) Bills payable and rediscounts.
28.7 54.7
FEDERAL RESERVE BOARD
WASHINGTON
Lit. 2 2 3 t i .
August 29, 1S21.
SUBJECT:
C l a s s i f i c a t i o n of A g r i c u l t u r a l
and. L i v e s t o c k P a p e r .
Dear S i r :
One o f
the Federal
the Board t h a t ,
in classifying its
practicable for it
based on l i v e s t o c k .
the p r a c t i c e s
to insuring
of
that
r e s e r v e banks has r e c e n t l y a d v i s e d
discounted paper,
to segregate a g r i c u l t u r a l
In order that
is
c o m p a r i s o n may be made of
the various Federal
reserve
banks w i t h a view
the d i f f e r e n t i a t i o n between a g r i c u l t u r a l
i t w i l l be a p p r e c i a t e d i f
im-
paper from paper
l i v e s t o c k p a p e r may b e a s u n i f o r m a s p o s s i o l e
System,
it
and
throughout
the
you w i l l kindly advise
the
B o a r d how y o u r b a n k i n c l a s s i f y i n g d i s c o u n t e d
b i l l s as re-
p o r t e d o n F o i m J>8 a n d o n BD-U s c h e d u l e s d e t e r m i n e s w h e t h e r a
given note
is
given for agricultural
p u r p o s e s o r i s b a s e d on
livestock.
Very t r u l y y o u r s ,
W a l t e r L. Eddy,
Assistant Secretary.
L e t t e r s e n t to Agent a t
except Chicago.
each F.R.Bank
FEDERAL RESERVE BOARD
WASHINGTON
September 16, 1$21.
st.2279.
SUBJECT:
C l a s s i f i c a t i o n of Gold B u l l i o n and
Coin h e l d by F e d e r a l R e s e r v e Banks
and A g e n t s .
Dear S i r :
I t i s r e q u e s t e d t h a t t h e Board be f u r n i s h e d w i t h a
s t a t e m e n t showing, a s a t c l o s e of b u s i n e s s on December 31, 1320
and June 30, 1521, t h e f o l l o w i n g i n f o r m a t i o n r e g a r d i n g g o l d b u l l i o n
and c o i n h o l d i n g s of t h e F e d e r a l Reserve Bank and Agent:
1.
Gold b u l l i o n and c o i n h e l d by F . R. Bank i n
own v a u l t
(a)
(b)
(c)
(d)
U- S. c o i n - - - - - - Foreign coin - - - - - U. S. Assay O f f i c e b a r s
Other b u l l i o n - - - - Total -
- - - $
- - - - - - '
- - - - - -
- -
- -$
2-
Gold a t U. S. Assay O f f i c e f o r which s e t t l e m e n t
h a s not been r e c e i v e d - - - - - - - - - - - - -
3-
Gold b u l l i o n and c o i n h e l d by F . R. Agent i n
own v a u l t
(a)
(b)
(c)
(d)
U. S. c o i n - - - - - - - - - Foreign coin - - - - - - - - U. S. Assay O f f i c e b a r s - - O t h e r b u l l i o n ————————
Total - - - - - - - Very t r u l y y o u r s ,
W a l t e r L. Eddy,
Assistant Secretary.
Letter sent to each Federal Reserve Agent.
FEDERAL
RESERVE
BOARD
WASHINGTON
September 22, 1921.
St.2282,
SUBJECT:
Revision of 1,tailing List for Federal
Reserve and Member Bank Press Statement s.
. Dear Sir:
Your name appears on the mailing l i s t to receive regularly,
as issued, statements similar to those enclosed herewith showing 1.
2.
Condition of Federal Reserve Banks
Condition of Reporting Member Banks
in Selected Cities.
The mailing l i s t i s being revised, and you are requested
to indicate in the space provided below whether or not you wish
your name continued thereon for copies of either or both of the
statements issued subsequent to October 1. In the event advice is
not received from you as requested, i t will be assumed that you do
not desire to have your name continued on the mailing l i s t .
Very truly yours,
Walter L. Eddy,
Assistant Secretary.
To the Federal Reserve Board:
I desire to have ny name continued on the mailing l i s t for the
statement marked "X" below:1.
Condition of Federal Reserve Banks
2.
Condition of Reporting Member Banks in
Selected Cities.
Name
Address
Date
1921.
Representing
.
FEDERAL RESERVE BOARD
WASHINGTON
September 19, 1921.
St.2284.
SUBJECT: Volume of items forwarded " y Transit
b
Department to other Federal reserve
banks and their branches.
Dear Sir:
It i s noted that the amount of items forwarded to other
Federal reserve banks and their branches, as shown against caption 10 of the combined monthly reports of clearing operations
(i'orm 170) submitted by your bank, i s considerably in excess of
the aggregate of amounts reported on the reverse side of the forms
by other Federal reserve banks and branches as having been received
from your bank (and branches) within the corresponding monthly
period. The discrepancy will be apparent if the amount of items
shown in column 4 opposite the name of your bank on the enclosed
mimeographed statement St.2256-b, prepared from data shown on the
reverse side of forms 170, i s compared with corresponding figures
shown against item 10 of the combined report on form 1J0 submitted
by your bank covering the period ending July 15, 1921. For the
system as a whole i t will be noted that the enclosed statement
shows 3,233,000 items amounting to $5^5,20J,000 as having been received from Federal reserve banks and branches, while we find, as
published in columns $ and 10 of table on page 1013 of the August
Federal Reserve Bulletin, that the aggregate of the figures reported against caption 10 on form 170 by all banks i s 3,5^5,000
items amounting to $1,045,770>000.
While items in transit doubtless will occasion a slight
difference between the aggregate of items forwarded by your bank
(and branches), and of such items received by 'other Federal reserve
banks and their branches during any given period, i t is evident,
that there must be a lack of uniformity in the method of compiling
these s t a t i s t i c s . It will be appreciated, therefore, if you will
kindly furnish the Board with a statement showing the number and
amount of items forwarded by your bank (including branches) during
the month ending July 15 to each Federal reserve bank and branch,
and also advise whether only items actually forwarded by the Federal reserve bank (and branches) have heretofore been included in
amounts reported against item 10 of Form 170.
Very truly yours,
E.
D i v i s i o n of
L. Smead, C h i e f ,
Reports and S t a t i s t i c s .
Enclosure.
Letter
sent
to
each agent
except
Chicago and St.
Louis.
a
FEDERAL RESERVE BOARD
WASHINGTON
September 2 7 , 1921.
St.230U.
SUBJECT;
A b s t r a c t of C o n d i t i o n R e p o r t s
of S t a t e Bank and T r u s t Company
Members and of a l l Member Banks
a s of J u n e 3^» 1$21.
Bear S i r :
We a r e f o r w a r d i n g t o you u n d e r s e p a r a t e c o v e r
c o p i e s of t h e B o a r d ' s A b s t r a c t No. 15 showing t h e
c o n d i t i o n of S t a t e Bank and T r u s t Company members and of
a l l member banks a s a t c l o s e of b u s i n e s s on J u n e 3 0 , 1921-.
C o n s o l i d a t e d f i g u r e s f o r a l l member b a n k s , b o t h N a t i o n a l
and S t a t e , a r e shown on p a g e s 1 and 12.
P l e a s e f o r w a r d one copy of t h e a b s t r a c t t o e a c h
S t a t e Bank and T r u s t Company member i n y o u r d i s t r i c t t h a t h a s
e x p r e s s e d a d e s i r e t o r e c e i v e c o p i e s of a b s t r a c t s a s i s s u e d .
Veiy t r u l y y o u r s ,
E. L. Smead, C h i e f ,
D i v i s i o n of R e p o r t s and S t a t i s t i c s ,
L e t t e r s e n t t o each F . R. Agent.
K-;
FEDERAL RESERVE BOARD
WASHINGTON
November 3» 1921,
st.2377.
SUBJECT: Condition Report oT State Bank
and Trust Company Members,
Form 105..
Dear s i r :
There are "being forwarded to you today under
separate cover by registered mail
copies of Fonn
105, revised as of October 20, 1921.
Please mail three copies of the form to each
State Bank and Trust Company member in your d i s t r i c t ,
with instructions to hold the blank forms pending receipt of a call for condition report, when they should
be promptly f i l l e d out and two copies mailed to you in no case later than ten days after receipt of the
call.
Kindly acknowledge receipt.
Very truly yours,
Walter L. Eddy,
Assistant Secretary.
Letter
sent
to
each F.
R. A g e n t .
FEDERAL RESERVE BOARD
WASHINGTON
November 3> 1921•
St.2378-
SUBJECT: Preparation of Annual Reports.
Dear Sir:
The Board, has decided, to follow a plan similar to
that adopted last year, as outlined in i t s l e t t e r St. 1^77,
dated November 16, 1920, with respect to the data which will
be published in Its forthcoming annual report- It i s requested,
therefore, that you give immediately following the introduction
to your report a general review of the services ana activities
of the Federal reserve bank, to be followed by a statement of
earnings and expenses and the disposition made of net earnings.
Last year, owing to the necessity of reconciling a
large number of differences between figures in the Agents' reports and those compiled by the Board, i t ..as impossible to get
the Board's complete report out until about the middle of June.
It i s the Board's deaire to have the 1321 report completed not
later than March JO, and in order that this may be done, i t is
requested that the manuscript for the text of your report be
forwarded to the Board as early as practicable, also that a
complete set of the statistical tables which will appear in the
appendix be forwarded to the Board as soon after January 1 as
possible. Both the text of the report and the s t a t i s t i c a l tables
should be submitted to the Board in duplicate.
In the preparation of your annual report, i t i s requested that so far as possible all figures relating to operations
of prior years be taken from annual reports already published,
thus avoiding the aecessity of reconciling such figures with those
to be published in the Board's report. The abstract of your report, to be published in the appendix of the Annual Report of the
Board will, in accordance with the policy inaugurated in the 1920
report, include the following tables, which will be compiled in
uniform manner for all Federal reserve banks:
1.
Comparative statement of condition as of December 31,
1921, 1320, and 1S19.
st.237S.
-
2
-
2.
Movement of principal asset and l i a b i l i t y items
during 1921.
3»
Volume of paper discounted and bought cach month
during 1921 (exclusive of "bills discounted f o r
or purchased from other Federal reserve banks).
4.
Detailed statement of earnings and expenses for
the years 1921, 1920 and 1919-
5-
Currency received from and paid to member and
non-member banks during 1921.
6.
Operations of check clearing and collection
department during 1921.
The above tables, which with the exception of table 2
w i l l show comparative figures for the years 1920 and 1915 > w i l l
be prepared by the Federal Reserve Board and submitted to your
bark for verification as soon after January 1 as possible.
From the data given in table 2, charts similar to
those printed in the Board's 1920 Annual Report w i l l be prepared
and plates thereof forwarded to you when completed.
It i s not intended in the foregoing specifications of
tables for use in the Board's Annual Report to impose any restriction upon the matter to be included in the f u l l reports of
the Federal reserve agents.
Very truly yours,
Governor.
Letter sent to each F. R. Agent.
FEDERAL RESERVE BOARD
WASHINGTON
November 16, 1921•
St.2410
SUBJECT: O u t l i n e of F e d e r a l R e s e r v e
Branch BanksDear S i r :
With a view t o t h e r e v i s i o n of t h e o u t l i n e of F e d e r a l r e s e r v e
"branch banks c o v e r i n g powers and f u n c t i o n s , a l s o c h a r a c t e r and volume
of b u s i n e s s h a n d l e d , c o p i e s of which were f o r w a r d e d t o you on October
28, 1320 w i t h t h e B o a r d ' s l e t t e r S t . 1528, t h e r e a r e e n c l o s e d h e r e w i t h
c o p i e s of a skeleton form d e s c r i b i n g b r i e f l y t h e p r i n c i p a l f u n c t i o n s .
and powers of t h e s e v e r a l b r a n c h e s .
The s t a t e m e n t h a s been a r r a n g e d i n t a b u l a r form w i t h t h e powers
and f u n c t i o n s l i s t e d i n t h e l e f t - h a n d margin and t h e names of the b r a n c h e s
shown a t t h e t o p , so t h a t when complete i t w i l l a f f o r d a r e a d y comparison
of t h e powers and f u n c t i o n s of t h e s e v e r a l b r a n c h e s .
The d i v i s i o n of the
b r a n c h e s i n t o two groups i s wholly t e n t a t i v e and when t h e s t a t e m e n t i s
f i n a l l y p r e p a r e d i t may be f o u n d a d v i s a b l e e i t h e r to a r r a n g e f o r more
than two groups o r t o omit t h e g r o u p i n g a l t o g e t h e r .
In t h e f i r s t group
a r e now l i s t e d t h o s e b r a n c h e s t h a t d i s c o u n t p a p e r f o r and c a r r y r e s e r v e
a c c o u n t s of member banks, w h i l e a l l o t h e , b r a n c h e s a r e shown i n group 2.
May we a s k t h a t one copy of the e n c l o s e d f o r m be r e t u r n e d t o t h e
Board w i t h t h e l e t t e r "Y" f o r "Yes" or "N" f o r "No" shown o p p o s i t e each
f u n c t i o n f o r each of t h e b r a n c h e s of y o u r bank, t o g e t h e r w i t h any comments
or s u g g e s t i o n s f o r t h e r e v i s i o n o r improvement of t h e p r o p o s e s form t h a t
you may c a r e to make?
I f a b r a n c h p e r f o r m s any f u n c t i o n s n o t p r o v i d e d f o r
2
-
St.2410.
i n the proposed form, or j-erforms c e r t a i n of i t s f u n c t i o n s i n a, manner
d i f f e r e n t from t h a t d e s c r i b e d t h e r e i n , an a p p r o p r i a t e a d d i t i o n or i n s e r t i o n should be made.
I t i s a l s o r e q u e s t e d t h a t a s soon a f t e r January
1, 1922 a s p o s s i b l e you forward t o t h e Beard s t a t e m e n t s showing f o r each
Branch (1) The name, home a d d r e s s , and b u s i n e s s of each d i r e c t o r .
(2) T e r r i t o r y a s s i g n e d to branch a s of January 1, 1922.
(3) Number, c a p i t a l , s u r p l u s and t o t a l r e s o u r c e s of N a t i o n a l banks
(combined f i g u r e s f o r a l l banks) i n b r a n c h zone on' December
31, 1921i or on t h e d a t e n e a r e s t t h e r e t o f o r which c o n d i t i o n
r e p o r t f i g u r e s a r e a v a i l a b l e , the d a t e of t h e c o n d i t i o n r e p o r t s to be i n d i c a t e d .
(4) Statement s i m i l a r t o t h a t immediately p r e c e d i n g c o v e r i n g
S t a t e bank and T r u s t company members of the System.
(5) Number of non-member banks i n b r a n c h zone on p a r l i s t January
1, 1922.
Your prompt a t t e n t i o n to t h i s m a t t e r w i l l be a p p r e c i a t e d .
Very t r u l y 2 o u r s ,
W a l t e r L. Eddy,
Assistant Secretary.
(All Agents - except Boston ana P h i l a d e l p h i a .
P W R A D FUNCTIONS O T E FEDERAL RESERVE B A C BANKS.
O ES N
F H
RNH
St.aUlOa.
FEDERAL
GROUP
MEMBER AND NONMEMBER BANKS —
C a r r i e s r e s e r v e a c c o u n t s of member banks
and c l e a r i n g a c c o u n t s of nonmember banks
which have been assigned, to d e a l w i t h
t h e branch r- - - - - - - - - - - - - - C a r r i e s no d e p o s i t a c c o u n t s . C r e d i t f o r
a l l items d e p o s i t e d i s a r r a n g e d d a i l y w i t h
p a r e n t bank by t e l e g r a p h o r o t h e r w i s e - - GOVERNMENT — ,
Government d e p o s i t s a r e r e c e i v e d and
1 . C a r r i e d on books of Branch - - - 2. Transmitted t o p a r e n t bank - - - Daily t r a n s c r i p t s a l s o p a i d checks and
w a r r a n t s and c a n c e l l e d coupons and o t h e r
o b l i g a t i o n s a r e forwarded to
1 . U. S- T r e a s u r e r - - - - - - - - 2 • P a r e n t bank - - - - - - - - - - -
RESERVE
BAC
RNH
BNS
AK
GROUP
t
POWERS Al-iD F A C T I O N S OF THE FEDERAL RESERVE BRANCH BANKS
3
St.^41Ob.
FEDERAL
RSSEBVE
BRANCH
GROUP
G R O U P
DISCOUNT
AND OPEN
OPERATIONS
£
MARKET
<
D
o
a
DISCOUNTS —
D i s c o u n t s e l i g i b l e p a p e r ana c a r r i e s i t
on i t s own books
1 - Without r e f e r r i n g t h e p a p e r t o t h e
p a r e n t bank f o r review - - - - - 2 . S u b j e c t t o review a t t h e head, o f f i c e
Examines n o t e s p r e s e n t e d f o r r e d i s c o u n t
and i f t e c h n i c a l l y a c c e p t a b l e , may
a r r a n g e by t e l e g r a p h f o r immediate c r e d i t
on t h e books of t h e p a r e n t bank. The
n o t e s a r e then f o r w a r d e d t o t h e h e a d
o f f i c e f o r f i n a l approval - - _
OPES MARKET OPERATIONS —
Acceptances
1. Acceptances a r e purchased i n open' marke t
and c a r r i e d on books of Branch - - - 2 - P u r c h a s e s a c c e p t a n c e s i n open market
o n l y upon i n s t r u c t i o n s f r e e , and
f o r t h e a c c o u n t of p a r e n t bank - - - U. S . S e c u r i t i e s
P u r c h a s e s a r e made upon i n s t r u c t i o n s
from and f o r t h e a c c o u n t of p a r e n t bank - -
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POWERS AND FUNCTIONS OF THE FEDERAL RESERVE BRANCH BANKSSt,24l0c.
FEDERAL
BANKS
GROUP
CLEARINGS
AND
GROUP
COLLECTIONS
4>
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CASH ITEMS —
C l e a r s and c o l l e c t s c h e c k s , d r a f t s and
o t h e r c a s h items c o l l e c t i b l e a t p a r
t h r o u g h a F e d e r a l r e s e r v e bank o r b r a n c h - COLLECTION ITEMS —
Receives f o r c o l l e c t i o n maturing b i l l s ,
n o t e s , coupons, a c c e p t a n c e s , b i l l of
lading drafts, e t c . - - - - - - - - - GOT D SETTLEMENT FUND —Participates directly in daily clearing
t h r o u g h Gold S e t t l e m e n t F u n d . - - - - - - - D a i l y c l e a r i n g t e l e g r a m t o the Board,
g i v i n g c r e d i t s t o o t h e r F . R. banks and
b r a n c h e s , i n c l u d e s a l s o c r e d i t s t o own
head o f f i c e and o t h e r b r a n c h e s i n own
district - - -
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POWERS AND FUNCTIONS OF THE FEDERAL RESERVE BRANCH BANKS •
3
FEDERAL
BRANCH
GROUP
GROUP
CLEARINGS
AND
COLLECTIONS ( C o n t ' d . )
A
A
CLEARING HOUSE —
A l l f u n c t i o n s f o r m e r l y performed, by t h e
l o c a l c l e a r i n g house a r e now performed
by t h e "branch - - - - - - - - - - - - A l l members of t h e l o c a l c l e a r i n g house
a r e members o r c l e a r i n g ncan-members of
t h e F e d e r a l R e s e r v e System and c l e a r i n g
house b a l a n c e s a r e p a i d by d e b i t o r c r e d i t
e n t r i e s t o members r e s e r v e t>r t o nonmember c l e a r i n g a c c o u n t s on books of t h e
Branch - - - - - - - - - - - - - - - - - Membership 1 . Branch has same p r i v i l e g e s and i s
s u b j e c t t o same p e n a l t i e s a s a r e
o t h e r members of the c l e a r i n g
house a s s o c i a t i o n b u t has no v o i c e
i n i t s management- - - - - - - - 2» Pays dues a s a member of t h e
association.
St.24104-
s
POWERS AND FUNCTIONS OF THE FEDERAL -RESERVE BMNCH BAivKS
H
St-24l0e.
RESERVE
BRANCH
BANKS
GROUP
GROUP
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CURRENCY (INCLUDING COIN)—
M a i n t a i n s a supply of F e d e r a l R e s e r v e n o t e s
t o meet r e q u i r e m e n t s of banks i n b r a n c h
territory _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
M a i n t a i n s a supply of $1 and $2 n o t e s and
of s i l v e r and minor c o i n t o meet r e q u i r e ments of banks i n b r a n c h t e r r i t o r y - - - - TELEGRAPHIC TRANSFERS —
Makes t e l e g r a p h i c t r a n s f e r s of f u n d s f o r
t h e a c c o u n t of member and c l e a r i n g nonmember banks l o c a t e d i n b r a n c h t e r r i t o r y . - FISCAL AGENCY —
Pays government checks and redeems coupons,
m a t u r i n g c e r t i f i c a t e s of i n d e b t e d n e s s and
o t h e r government o b l i g a t i o n s . - - - - - Makes exchanges of L i b e r t y bonds and
V i c t o r y n o t e s , a l s o r e c e i v e s such bonds
and n o t e s f o r r e g i s t i y , t r a n s f e r , e t c S e l l s war s a v i n g s s e c u r i t i e s through
b o t h c a s h and c o l l a t e r a l a g e n t s - - - Receives subscriptions
to c e r t i f i c a t e s
of i n d e b t e d n e s s and Treasury n o t e s
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POWERS AND F U N C T I O N S O F
THE F E D E R A L R E S E R V E BRANCH
BANKS
St-24l0f-
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FEDERAL
BRANCH
RESERVE
BANKS
GROUP
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$
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CUSTODIES —
)
R e t a i n s c u s t o d y i n i t s own v a u l t s (Sf - - - - 1 - L i b e r t y b o n d s , V i c t f r y n o t e s , and
o t h e r s e c u r i t i e s h e l d by t h e F i s c a l
Agency Department f o r t h e a c c o u n t
•
of t h e U. S . T r e a s u i y . - - - - - - 2 - C o l l a t e r a l p l e d g e d by member banks a s
s e c u r i t y f o r government d e p o s i t s . - —
3 • Collateral security f o r rediscounts
and. member banks 1 c o l l a t e r a l n o t e s
as follows:
( a ) U- S . G o v e r n m e n t ; ; s e c u r i t i e s
only- - - - - - - - (b) All c o l l a t e r a l - - - - - - - 4. S e c u r i t i e s held in s a f e keeping. - - -
FEDERAL RESERVE AGENT —
A s s i s t a n t F e d e r a l R e s e r v e Agent h a s c u s t o d y
of . . .
- , . . .
1 . Unissued F . R- n o t e s .
__
2- Gold and p a p e r c o l l a t e r a l p l e d g e d a s
s e c u r i t y a g a i n s t F . R. n o t e s . - - _
BANK PREMISES —
Branch o c c u p i e s r e n t e d q u a r t e r s . - - - - - Q u a r t e r s o c c u p i e d by t h e Branch a r e
o.viled by t
h e F e d e r a l r e s e r v e ba-%k. - - - -
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FEDERAL RESERVE BOARD
WASHINGTON
November I S , 1921.
st.2U22.
SUBJECT:
R e v i s i o n of B a l a n c e
S h e e t , Form 3^*
Dear S i r :
E n c l o s e d h e r e w i t h i s a copy of t h e p r e s e n t e d i t i o n
of d a i l y "balance s h e e t Form 3^> w i t h changes n o t e d t h e r e o n
which i t i s p r o p o s e d t o i n c o r p o r a t e i n t h e f o r m t o "be u s e d
d u r i n g 1922.
The s u b t o t a l s f o r N o n - r e s e r v e c a s h a n d U n c o l l e c t e d
c h e c k s , d r a f t s , e t c . , u n d e r t h e g e n e r a l h e a d of U n c o l l e c t e d i t e m s
have b e e n i n s e r t e d i n o r d e r t h a t t h e a c t u a l f l o a t a r i s i n g f r o m
t i m e s c h e d u l e s may be r e a d i l y o b t a i n e d f r o m t h e b a l a n c e s h e e t .
The changes i n t h e M i s c e l l a n e o u s l i a b i l i t i e s and Net e a r n i n g s
b l o c k s h a v e b e e n made i n o r d e r t h a t t h e f i g u r e s r e q u i r e d f o r
p u b l i c a t i o n i n t h e B o a r d ' s w e e k l y p r e s s s t a t e m e n t may a p p e a r on
t h e f a c e of t h e b a l a n c e s h e e t . S u f f i c i e n t b l a n k l i n e s w i l l b e
l e f t i n t h e s e v e r a l b l o c k s t o p r o v i d e f o r t h e i n s e r t i o n of new
a c c o u n t s d u r i n g 1922 i f n e c e s s a r y .
I n c a s e y o u have any s u g g e s t i o n s f o r t h e f u r t h e r r e v i s i o n of t h e f o r m , o r f o r any m o d i f i c a t i o n s i n changes i n d i c a t 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 mail o r t e l e g r a p h them i n time
t o r e a c h t h e Board not l a t e r t h a n Monday, November 28.
Very t r u l y y o u r s ,
W a l t e r L . Eddy,
Assistant Secretary.
Enclosure.
L e t t e r sent to a l l Federal Reserve Agents.
F E D E R A L
R E S E R V E
B O A R D
WASHINGTON
The telegram given below is hereby confirmed.
Assistant to Governor.
Curtiss, Boston
Jay, New York
Austin, Philadelphia
Wills, Cleveland.
Hardy, Richmond.
McCord, Atlanta
TAS
RN
Heath, Chicago
Martin, St. Louis
Rich, Minneapolis
Ramsay, Kansas City
.Ramsey, Dallas
Perrin, San Francisco
St.2445.
November 30, 1921
Beginning this week Board's weekly press statement will
show separately new item "Municipal warrants" following WU. S. certificates
of indebtedness - All other".
On balance sheet form 34 and in Wednesday
night telegrams, holdings of municipal warrants if any should be reported
against code T R immediately following code TALL- Maturity distribution
ON
of warrants should also be shown on reverse side of form 34 and telegraphed
against following code words:
Past due code SALE, Within 15 days SEND,
16 to 30 days SIFT, 31 to 60 days SORE, 6l to 90 days SUCH, Over 90 days
SYLP, Total code TOST- In Board's weekly C N telegram, municipal
OD
warrants will be shown against code T R - Code item B N in daily T N
ON
UD
ED
telegram should hereafter include municipal warrants.
Total holding's of
municipal warrants on November 23 will be shown in this week's consolidated
press statement as 22 thousands while code items B R and T C will be
UK
AK
reduced to 69,375 & & 1,274,545» respectively.
&
EDDY.
• }
*
JL'-i.
FEDERAL RESERVE BOARD
WASHINGTON
December 2, 1921.
St.2443.
SUBJECT: Revision of Balance Saeet,
Form 34.
Dear Sir:
Referring to the Board's letter St. 2422, dated
November 18 on tne above subject, there i s enclosed herewith
an unruled proof copy of the 1922 edition of balance sheet
form 34, as f i n a l l y approved for printing.
In order that the Board may have in i t s f i l e s
complete information regarding a l l accounts appearing on
balance sheets of the Federal reserve banks, i t i s requested
that beginning with January 1 i t be furnished with a memorandum in f u l l explanation of any accounts which i t i s found
necessary to insert on the balance sheets, ( i . e . , accounts
other than tnose covered by printed captions).
This memorandum
should, if practicable, be forwarded to the Board on the
f i r s t day that a new account appears on the balance sheet.
Very truly yours,
Walter L. Eddy,
Assistant Secretary.
Enclosure.
Letter
sent to each Federal Reserve Agent.
•
•I *
•>
-S- -C tf Airf
FEDERAL RESERVE BOARD
WASHINGTON
St.2467.
December 6, 1$21•
SUBJECT: Closing of Books on December 31, 1921•
Dear Sir:
With a view of securing uniform reports from a l l Federal
reserve banks the Federal .Reserve Board has approved the following rules governing the closing of books on December
1921.
1- C S O VAULTS, PERMANENT ALTERATIONS A D IMPROVEOT F
N
MENTS, A D B 1 C PREMISES.
:
AC
No charges to current expenses or deductions from current net earnings should ce cade on account of vaults, permanent
alterations or improvements, or bank premises without f i r s t
obtaining the approval of the Federal Reserve Board.
In acting
upon requests for approval to charge off the cost of alterations
and improvements and to make charge-offs on account of depreciation of bank buildings or properties purchased with the intention of erecting new bank buildings, the Board will be guided in
general by the principles outlined i n ' i t s letters, X-ljUl, dated
December 3, 1919, and X-32% dated November 30, 1921.
2. FURNITURE A D EQUIPMENTN
In order that the account "Furniture and Equipment" may
be handled on a uniform basis throughout the year the balance
remaining in this account, on December 31 should be charged to
St.2^67.
-
current expenses.
2
-
Beginning with 1922, the cost of furniture and
equipment will be handled, in accordance with general instructions
issued by the Board on June 20, 19213- APPARENT DEPRECIATION O U. S. G V R M N SECURITIESN
OEN ET
Fall provision should be made for apparent depreciation
(based on market value) on U. S. Government securities before any
amount i s transferred to surplus account.
No change should be made
in the book value of securities, but depreciation allowances should
be deducted from current net earnings and carried to account "Depreciation reserve on U. S.. bonus", while any appreciation on such
bonds should be added to the same account.
Adjustments should be
figured on the basis of December.30, 1921 market quotations.
4. SURPLUS A D FRANCHISE TAX.
N
After all current expenses, depreciation allowances, other
extraordinary charge-offs, and dividend payments have been provided
for, the net earnings remaining should be distributed as follows;
(a) Transfer to surplus account all available net earnings
provided the normal surplus account will not as a result exceed the
bank's subscribed capital, in which case only such amount should be
transferred as is necessary to increase the normal surplus to an
amount equal to the bank's subscribed capital;
(b) Of the balance of net earnings, if any, 10 per cent should
be transferred to super-surplus account, and 90 per cent paid to the
U- S. Government as a franchise tax.
As stated in the Board's letter St. l64l, dated December 11,
1920, the normal surplus of each Federal reserve bank, i . e . , the
St.246?•
- 3
surplus which according
to law ay reach a maximum equivalent to
the bank!s subscribed capital, should be kept separate on the bank's
books from the super-surplus to be accumulated from net profits retained by the bank after the normal surplus shall have reached 100
percent of the bank's subscribed capital.
On Form 3^ and in all
published statements, however, the two accounts - surplus, and supersurplus - will, in accordance with the present practice, be combined
under the general heading "Surplus".
Kindly acknowledge receiptVery truly yours,
G VROOENR
(All Federal Reserve Agents)
jL-I75
FEDERAL RESERVE BOARD
WASHINGTON
December 12, 1521.
St.2474.
SUBJECT: Reports of Earnings, Expenses,
and Dividend. Payments for 1521.
Dear Sir:
May xve ask that you kindly accomany your regular earnings and
expense reports for the month of December with the following additional
data for the period January 1 to December ]1, 1521.
1.
(code)
EC AH
EADS ER AN
EISA ENID -
Statement showing the following information:
Gross earnings
Total current expenses
Current net earnings - - - - - - - - - - - - - - $
Additions to Current Net Earnings - - Deductions from Current Net Earnings - Net additions to or deductions from
current net earnings ——————————————
EAST - Net earnings available for dividends, surplus and
franchise tax - - - - - - - - - - - - - - - - ETSE EE VN
E3IN E/tET -
Dividends paid - - - - - - - - - - - - - Carried to normal surplus account - - Carried to Super-surplus account - - - Paid to Government as a franchise tax Total - - - - - - - - - - - - -
E O - Amount charged to super-surplus, account depreTN
ciation allowances and special reserves - - - I t w i l l b e appreciated i f t h e a m o u n t s s h o w n o p p o s i t e i t e m s f o r
which code words a r e g i v e n a r e t e l e g r a p h e d t o t h e Board not l a t e r
t h a n J a n u a r y 4 , 1522.
to
2.
current
Itemized statement showing in d e t a i l a l l d e b i t s and c r e d i t s
net earnings (profit and loss account) during the year.
3*
S e p a r a t e r e p o r t s o n F o r m s 9 5 s m d 5b s h o w i n g , i n t h e s e c o n d
or t o t a l columns, earnings and expenses during the e n t i r e y e a r .
In the
p r e p a r a t i o n o f t h e s e r e p o r t s , i t w i l l b e a p p r e c i a t e d i f t h e segregation
of t h e c o s t of p o s t a g e , e x p r e s s a g e , s e c u r i t y s h i p m e n t s , a n d c u r r e n c y
a n d c o i n s h i p m e n t s a s s h o w n o n F o r m 5b f o r t h e f i r s t s i x m o n t h s o f t h e
2 -
St.2474.
year i s revised, if practicable, in accordance vvitn present requirements on Form 96, so that the figures will be shorn on a car-parable
basis throughout the year. The total cost of furniture and equipment
during the entire year should be included in the current expense f i g ures in accordance with Governor Harding's letter St. 2467» dated
December 8, 1$21.
The regular monthly reports on Forms 95
96 should, of
course, show in the second column, the earnings and expenses of the
bank from July 1 to December 31, 1921.
Very truly yours,
E. L. Smead, Chief,
Division of Reports and Statistics.
(All F. E. Agents)
FEDERAL RESERVE BOARD
WASHINGTON
December l ; 1921.
M
St. 2481.
SUBJECT: Reports on Forms 170 and ljO-a.
Bear Sir:
In addition to the regular report of clearing operations on Form 1J0 for the period December 16, 1521 to January
15, 1522, may we request that the Board " e furnished as soon
b
after January 1 as practicable, with a similar report covering the period December lb to Jl, 1521, "both dates inclusive,
for the Federal reserve "bank and each "branch.
It will also "be appreciated if you will kindly furnish
us at the same time with a statement on Form lJO-a for the
Federal reserve bank and each "branch, showing as of December
31, 1521, "by states, the number of national "banks, other
member hanks, non-member banks on par l i s t , and non-member
"banks not on par l i s t , located in the territory assigned to
the Head Office and each branch,respectively.
Very truly yours,
E. L. Smead, Chief,
Division of Reports and Statistics.
(Letter to a l l F. R. Agents.)
14Y8
FEDERAL RESERVE BOARD
WASHINGTON
December lb, 1521.
St.2USb.
SUBJECT: Holdings of U. S. Securities,
December 31, l'S21.
Dear Sir".
For use in the forthcoming 1$21 annual report T will
you kindly furnish the Board as soon as practicable after
January 1, 1$22, -with a statement Showing the amount of U. S.
securities held by your bank as at close of business on
December 31, 1S21, classified in detail in accordance with
the "table printed on page lb7 of the Board's 1^20 nnrrnal report.
Very truly yours,
E. L, Smead, Chief,
Division of Reports and Statistics.
(Letter
sent to
each F e d e r a l Reserve Agent.)
FEDERAL RESERVE BOARD
WASHINGTON
December lb, 1921.
St.2USS.
SUBJECT: Forms for use during 1522.
Dear Sir:
There is "being forwarded to you today, under separate
cover, a supply of each of the following forms for use during
1322:
Number of
Form
copies
number
report
A
Discount and open-market
operations
100
Designation of
100
44
100
44-a
F. R. notes outstanding and
amount held by bank, also gold
held against outstanding notes.
95
Earnings of F. B. Bank.
9b
Current expenses of F. B, Tank.
9b-a
Current e x p e n s e s of F i s c a l
Agency Department.
97
Income and Expense - "Other
Beal Estate".
97-a
Reimbursable expenditures,
account Fiscal Agency operations.
75
75
171
Number of each, denomination
and aggregate amount of F. E.
notes received, issued to
hank, returned to Comptroller,
etc.
Average daily holdings of each
class of earning assets, earnings
thereon, etc.
Minor changes only have been made in the f i r s t
three forms listed, while a l l the earnings and. expense
forms are identical with those now "being used.
Form F. E. A. 5, Daily statement of Federal Reserve
Agent, is being reprinted, and the same number of copies
of t z i s form as requested last year '.Till be forwarded to
you as soon as received from the printer, w~:ich will be
probably within a week.
Very truly yours,
E. L. Smead, Chief,
Division of Reports and Statistics,
Letter sent to each Federal Reserve Agent.
FEDERAL RESERVE BOARD
WASHINGTON
December 17, 1921.
St.2U-.S0.
SUBJECT: Revision of Form St. 1752,
Weekly Report of Silver and
Minor Coin.
Dear Sir:
There are "being forwarded, to you tocfe-y
copies
of revised form St. 1752> weekly report of silver and minor
coin held "by the Federal reserve "bank or "branch.
It will be noted that the revised statement, copy
of which is attached hereto, calls for holdings of standard
silver dollars in addition to subsidiary silver and minor
coin, also that hereafter the amounts of new coin are to he
telegraphed as well as of total holdings.
The f i r s t report
on the revised form, should "be submitted as of January 4, 1$22.
Kindly notify "branches accordingly.
Very truly yours,
"'alter L. Eddy,
Assistant Secretary.
Letter to each Federal Reserve Agent.
FEDERAL RESERVE BOARD
WASHINGTON
December 17, 1321.
St.2491.
SUBJECT: Revision of Form St. 52-a, Daily
Condensed Statement of Condition
of F. E. Banks.
Dear Sir:
There are enclosed herewith $0 copies of revised
form St. 92-a, condensed statement of condition of Federal
Reserve Bank (daily T N telegram), for use "beginning with
ED
the report as of January 3» 1922. •
It will he noted that hereafter it w i l l not he
necessary to telegraph separately figures of member banks'
collateral notes and of customers' paper, secured by U, S.
Government obligations and otherwise secured and unsecured.
Holdings of discounted b i l l s in the revised form are divided
into two classes only, as is the case in the Board's weekly
press statement, i . e . , Bills discounted - secured by U. S.
Government obligations, and B i l l s discounted - a l l other.
Very truly yours,
Walter L. Eddy,
Assistant Secretary.
Letter to each Federal Reserve Agent.
FEDERAL RESERVE BOARD
WASHINGTON
December 17,
St. 2U92.
1^21.
SUBJECT: Revision of Form 3S, Classification
of Holdings of discounted and purchased "bills.
Dear Sir:
The revised edition of form 38, "Classification of
discounted and purchased "bills", for use during 1S22 provides
that amounts reported against each subdivision of discounted
"bills should include paper rediscounted with other Federal
reserve "banks, and exclude paper acquired from other Reserve
Banks.
In other words, such figures should represent the
amount of accommodation actually "being extended to member
"banks in your own district.
The f i g u r e s
reported under the'
heading of purchased "bills should continue to represent actual
holdings of acceptances as in the past.
No other changes have
he en made in the form.
The f i r s t report on the new form, a supply of which
will "be forwarded to you as soon as received from the printer,
should " e rendered as of January 31, 1322.
b
Yours very truly,
Halter L. Eddy,
Assistant Secretary.
Letter sent to each Federdl Reserve Agent.
I
i
FEDERAL RESERVE BOARD
WASHINGTON
December 20, 1921 st.2495.
SUBJECT: Statistics of Fiscal Agency
Operations for Annual Report.
Dear Sir:
For use in connection with the Board's 1321 Annual Report,
will you kindly furnish the Board as promptly as possible with a
statement in the four. outlined below, showing the volume of Fiscal
Agency operations handled by your bank, including branches if any,
during 1921:
1.
U. S. G V R M N C U O S - Number of pieces and amount
OEN ET O P N
paid.
2.
U. S. CERTIFICATES OF INDEBTEDNESS - Number of pieces
and amount redeemed or paid.
3.
U. S.. LIBERTY B N S A D VC O Y NOTES - Exchanges, conOD N IT R
versions, etc., showing (a) number of pieces received,
(b) number of pieces delivered, and (c) amount delivered, classified as follows:
A - Conversions:
1. Permanent bonds delivered in return for temporary
bonds.
2. Permanent bonds delivered in return for other
permanent bonds.
3 . Tax-exempt Victory notes delivered in return for
taxable notes, or vice versa.
B - Exchanges:
1. Registered bonds delivered in exchange for coupon
bonds.
2- Coupon bonds delivered in exchange for registered
bonds.
3• Bonds of one denomination delivered in exchange
for bonds of another denomination.
4. Permanent bonds delivered in exchange for temporary bonds.
C - Transfers of ownership.
D - All other (specify class of tran sactions included)
E-
Grand total — no transaction to be counted
more than once.
1435
- 2 -
St.21+95-
4.
U. S, LIBERTY BONDS AND VICTORY NOTES PURCHASED FOR
ACCOUNT OF TJ. S. TREASURY - Number of p i e c e s and amount.
5-
U. S- LIBERTY BONDS AND VICTORY NOTES RECEIVED IN PAYMENT
OF INHERITANCE TAXES - Number of p i e c e s and amount.
6.
W R SAVINGS SECURITIES (Treasury Savings C e r t i f i c a t e s and
A
Stamps, War Savings Stamps and T h r i f t Stamps) (a) Number of pieces and amount (maturity value) s o l d .
(b) Number of p i e c e s and amount (maturity value) r e deemed or p a i d .
Very t r u l y yours,
Walter L- Eddy,
Assistant Secretary.
( L e t t e r to a l l F . R. Agents)
FEDERAL RESERVE BOARD
WASHINGTON
December 21, 1921•
St.2499.
SUBJECT:
E x p e n d i t u r e s a c c o u n t War
Finance Corporation.
Dear Sir:
In accordance with the procedure followed in
1919, may we ask that reimbursable expenditures in connection with War Finance Corporation operations be included in your reports covering expenses of the Fiscal
Agency Department which are reimbursable by the Treasury
Department (Form 97-a)I t will be appreciated also i f you w i l l kindly
have a note added to item l4, "Total expenditures since
January 1," showing the amount of expenditures on account
of War Finance Corporation operations which have been included in the to tal •
Very truly yours,
E, L. Smead, Chief,
Division of Reports and S t a t i s t i c s .
(F. B. Agents at a l l banks except Minneapolis)
FEDERAL RESERVE BOARD
WASHINGTON
December 21, 1921.
st.2500.
SUBJECT:
C o n d i t i o n R e p o r t s of S t a t e Bank
and T r u s t Company Members, Form 1 0 $ .
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 today u n d e r
s e p a r a t e c o v e r by r e g i s t e r e d m a i l
c o p i e s of Form
105, r e v i s e d a s of December 1, 1921, t o g e t h e r w i t h
c o p i e s of t h e B o a r d ' s December, 1.921, c i r c u l a r of i n s t r u c t i o n s , r e g a r d i n g t h e p r e p a r a t i o n of c o n d i t i o n r e p o r t s P l e a s e m a i l t h r e e c o p i e s of Form 105 a n d one copy
of t h e c i r c u l a r of i n s t r u c t i o n s t o e a c h S t a t e bank and
t r u s t company member i n y o u r 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 h o l d t h e M a n k f o r m s p e n d i n g r e c e i p t of a c a l l f o r cond i t i o n r e p o r t s , when they s h o u l d be p r o m p t l y f i l l e d o u t
a n d two c o p i e s m a i l e d t o you - i n no c a s e l a t e r t h a n t e n
d ays a f t e r r e c e i p t of t h e c a l l .
The banks s h o u l d be r e q u e s t e d t o d e s t r o y t h e
b l a n k f o r m s s e n t you on November 3 and t o u s e o n l y t h e
f o r m s r e v i s e d a s of December 1, 1921, i n making o u t cond i t i o n r e p o r t s to be s u b m i t t e d i n c o m p l i a n c e w i t h t h e
next c a l l .
Kindly acknowledge r e c e i p t .
Very t r u l y y o u r s ,
W a l t e r L. Eddy,
Assistant Secretary.
(To a l l F . E. A g e n t s )
FEDERAL RESERVE BOARD
WASHINGTON
December 2 3 , 1921.
st. 2503.
SUBJECT:
D i s c o n t i n u a n c e of R e p o r t s .
Dear S i r :
B e g i n n i n g w i t h J a n u a r y 1, 1922, you a r e a u t h o r i z e d
t o d i s c o n t i n u e t h e s u b m i s s i o n of r e p o r t s on t h e f o l l o w i n g
forms:-
Form X-10J8
- B & t u r i t y d i s t r i b u t i o n of h i l l s
discounted f o r and acceptances
p u r c h a s e d f r o m o t h e r F. R.
hanks.
Form S t . 552 - Report of payment f o r l o a n a n d
tax certificates - Fiscal
Agency Department.
Form S t . 550 - Monthly r e p o r t of war s a v i n g s
s e c u r i t i e s s o l d o r exchanged F i s c a l Agency Department.
Very t r u l y y o u r s ,
W a l t e r L. Eddy,
Assistant Secretary.
L e t t e r t o each F e d e r a l Reserve Agent.
FEDERAL RESERVE BOARD
WASHINGTON
December 2 7 , 1921.
s t . 2507.
SUBJECT:
Weekly p r e s s s t a t e m e n t .
Dear S i r :
Beginning w i t h J a n u a r y 4 , 1922 d e f e r r e d a v a i l a b i l i t y i t e m s w i l l be d e s i g n a t e d i n t h e w e e k l y COHD
t e l e g r a m showing t h e c o n d i t i o n of t h e t w e l v e F e d e r a l
r e s e r v e "banks combined, by code word TAPP i n s t e a d of
code word GUST now b e i n g u s e d .
T h i s change i s made t o
c o n f o r m w i t h r e v i s e d b a l a n c e s h e e t f o r m 3 4.
Very t r u l y y o u r s ,
E. L. Smead, C h i e f ,
D i v i s i o n of R e p o r t s and S t a t i s t i c s .
A l l a g e n t s e x c e p t Richmond.
1490
FEDERAL RESERVE BOARD
WASHINGTON
December 3 0 , 1921S t . 2517.
SUBJECT:
E a r n i n g s and D i v i d e n d s r e p o r t s
of S t a t e Bank a n d T r u s t Company
members a s of December 3 1 » 1821.
Dear S i r :
There a r e "being 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 "by r e g i s t e r e d m a i l
c o p i e s of form 10J f o r u s e of
S t a t e t a n k a n d T r u s t company members i n s u b m i t t i n g t h e i r semia n n u a l r e p o r t s of e a r n i n g s a n d d i v i d e n d s .
^
P l e a s e a d v i s e t h e "banks t h a t t h e r e p o r t i s t o cover
t h e s i x - m o n t h p e r i o d e n d i n g December 31, 1921, i r r e s p e c t i v e of
whether, o r n o t t h e y may have c l o s e d t h e i r "books on t h a t d a t e ;
or w h e t h e r a n y d i v i d e n d s t h a t may h a v e "been d e c l a r e d c o v e r
that particular period.
The r e p o r t s h o u l d "be' s u b m i t t e d t o 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 t h e "blank forms b y r e p o r t i n g
hanks.
'
\
K i n d l y acknowledge r e c e i p t .
#
Very t r u l y y o u r s ,
W a l t e r L. Eddy,
Assistant Secretary.
( L e t t e r s e n t t o e a c h F, R. A g e n t . )
.7
@FedFRASER