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2B8 FEDERAL RESERVE BOARD WASHINGTON X-4485 ADD~ESS OFFICIAL CORRESPONDENCE TO 'THE FEDERAL RESERVE BOARD· SU:SJECT: December 30, 1925. Ratios of Capital Assets to ~~rrent Liatilities. Deru· Sir: At its meeting on December l, 1925, t~e Fe1eral Advisory Council at the Boardfs request gave consideration to the cause and probable effoct of the present trend towards lower ratios of capital assets to current liabilities in the ba..YJ.king ins t:i tutions of the country. Tho Council 1 s recommendation to the Board on this topic is as follows: ' 1 From the rne!:lora.ndum and chart furnished by the Federal Ro serve Board it is evident that tl-:ere has b oen a downward tendency in the proportion of capital funds of national banks to liabilities, and the chart would indicate that the ratio has reached its lowest point siilCe 1865. It would seem, therefore. proper for the Federal Reserve Board to draw attention of the Federal reserve banks to this trend 1 and through them, the attention of the clearing houses and member banks with a view to en-· couraging a close study of the question on their :Qart . 11 .. Accordingly, we are sending you h•Jrowi th a copy of the chart showing the trend of the ratio of capitAl to deposits since 1865 and a table giving the same inforination for two more recent dates by Federal reserve districts. This material is sent to you for your information and such diJtrihution as you may see fit to make among memoer banks or 0 ther banks. Yours very truly, Enclosure Wal tc;r L. Eddy, Secretary • .. '1'0 .ALL FEDERAL RESERVE AGE1rl£S.
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