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187
BOARD OF GOVERNORS
R-93
OF" THE
FEDERAL RESERVE SYSTEM
WASHINGTON
AOORESS OFFICIAL CORRESPONDENCE
TC THE BCARO
October 22, 1937.
SUBJECT:
Monthly Report of Bank and
Public Relations Activities.
Dear Sir:
There is inclosed for your information a summary of the bank relations reports
submitted by the Federal Reserve banks for
the month of September in response to the
Board's letter of August 25, 1956 (X-9680).
Very truly yours,
Chester Morrill,
Secret.::try.
Inclosure.
TO PRESIDENTS OF ALL FEDERAL RESERVE BANKS
R-93-a
188
October 15, 1937.
TO
The Board
FROM
Mr. Hammond,
Division of Bank Operations
SUBJECT:
Summary of Bank Relations
Reports.
Reports of bank relations as requested in the Board's letter of August 25, 1936 (X-9680) have been received for the month of September and
excerpts therefrom will be found on the following pages. A table showing
for all twelve banks the number of vistts made, meetings attended, and addresses delivered has also been prepared and follows the quotations.
The attitude toward the Federal Reserve System
Among western bankers there continue to be frequent complaints about
the higher reserve requirements now in effect, on the ground that they make
it necessary - or may make it necessary - for member banks either to borrow
or to sell investment securities. Also in the west and in the south tho
necessity of charging exchange is a barrier to membership. At the same
time bankers appear conscious of a strong and possibly increasing resistance from the public to exchange charges. The opposition of bankers to
the McAdoo and Patman bills is frequently expressed, both personally and
in resolutions.
Banking conditions
New York, Philadelphia, and Richmond comment upon the fact that numerous banks are making no progress toward retirement of their preferred
stock or other contingent liabilities resulting from reorganization.
Cleveland reports that the Ohio banking authorities are about to issue
regulations, analoeous to the Board's Regulation U, governing the margin to
be required on collateral loans.
General economic conditions
In the east, summer travel and industrial activity have made business
good in many places, and in others - particularly in the coal regions of
Pmmsylvania - conditions have continued to bo discouraging. In the west,
the early promise of an exceptionally go0d farming year was in many places
frustrated by drouth, heat, and &r~sshoppors, though in general crops wero
abtmdant, and livu stock is in good condition but scarce. In the south,
conditions appear generally favorable, except for tho fall in the price
of cotton.
Excerpts from the reports follow:
tached to the original hereof.)
(The reports themselves are at-
1_89
R-95-a
-2-
Boston
Throughout the several sections of the district visited during the
period of this report bankers and others interviewed referred to general
business conditions in their respective communities as being good. In
those sections catering principally to the summer tourist and resident
trade this season's business has been the best experienced in several
years. This is notably true in northwestern Connecticut where there has
been
constantly increasing demruld for residential country and village
property, the demand coming largely from Now York. It is reported that
ti1is demand is gradually extending into the state, having been particularly noticeable this past spring and summer.
a
..
In tbe various manufacturing towns, mills and·factories arc operating most departments full time with employment and payrolls at or above
the levels of a year ago. No indica.tions of probable labor disturbances
are apparent at the present time, according to those interviewed. In some
of these towns there is a marked shortage of housing facilities, with
little or no residential building underway or in contemplation.
Lending rates at
collateraled loans are
lower rates obtainable
collatern.l. Mortgages
the banks range from six per cent downward - well
readily made at from four to five per cont, with
according to the size of the loan and character of
aro made at five and five and one-half percent.
Only a fow banks in the larger cities reported any marked incroase
in the demand for loans at this season over the demand of a year ago,
~1ough on tho whole the portfolios of the bunks visited ~r0 somewhat
larger. A good many of tho banks in the manufacturing towns, particularly in Connecticut, are operating small loan departments and individual
banks report this business to have grown substantially over the past year.
The interest of banks located in non-payroll towns is being attracted to
this operation, and the na.ture of the inquiries made at some of these
banks would seem to indicate that they are giving consideration to the
advisabili "t?J of setting up personal loan departments.
The present reserve requir~ment wns tho only matter complained of
at any of the banks visited, and at only two or three of the smaller banks
was the subject referred to. Routine operations between the Federal Reserve Bank of Boston and the member banks visited are being conducted in
a manner satisfactory to the latter nnd no suggestions were offered us to
how our various services might be improved.
New York
Monmouth County, New Jerse;y
Banks located in summer resort sections along the coast had a considerable increase in deposits as a result of the good summer season but
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R-95-a
:190
New York continued
many were unable to use these temporary funds to any great advantage and
consequently held them as idle cash. A few banks, however, employed some
of their funds in such short term investments as commercial paper purchased in the open market, bonds called for payment during the fall ~onths,
and United States Treasury bills and notes. The officer of one member bank
remarked that he had purchased $200,000 commercial paper having six months'
maturit,r and yielding 1 per cent, and commented that if his summer money
is withdrawn faster than he anticipates, he will probably obtain funds
through rediscounting as much of this paper as necessary at the Federal
Reserve bank, taking advantage of the recent reduction in the discount
rato to 1 per cent.
Several bar~ers mentioned t~~t income obtained from service charges
is a material help to earnings, some giving varying amounts ranging from
10 to 20 per cent of net earnings as being· deriv~d from this source.
Delaware and Sullivan Counties, New York
Ten of the twenty-four banks in these counties report a small appreciation remaining in their bond portfolios. Officers of a £ew other institutions were non-committal, while nine definitely stated that the market value of their securities was now less than book. Practically all
bankers introduced the subject of the recent decline in the stock and bond
markets and expressed considerable apprehension and discouragement as to
the future trend. United States government obligations, direct or fully
guaranteed, co~pose approximately 42 per cant of the securities held by
the banks in this territory. ·
Only three banks reported any material increase in their loan portfolios, and a number of executives remarked upon the difficulty in a~ding
to their loan lists in view of the constant pressure being exerted by ex~
aminers for substantial reduction in some of the existing loans.
A number of bank officers discussed the activities of tho Production
Credit Association. For the most part, they feel that this agency is not
competitive because of the high rate charged, the stock ownership feature,
and the greater risk involved. One, however, voiced a very emphatic protest and stated that in his territory the Production Credit Association
has been making many loans which should be made by the banks.
The subject of reserve requirements was nowhere mentioned and it would
appear that none of these institutions are suffering any real hardship as
a result of the increases. Several banks, however, have found it necessa~J
to borrow during recent months, this borrowing being due in most cases to
s¥asonal requirements or to the withdrawal of public funds.
191
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R-93-a
New York continued
Nassau County, New York
Forty-three of the commercial banks in this county have issued preferred stock, capital notes, or debentures, the total amount being
$6,887,000. One bank has retired its entire issue of t-75,000 and twentyfive have paid off an aggregate of $648,780 of the original amount. One
state member bank has completed plans to retire its capital notes by sale
of preferred stoch: and two nonmember state banks are working on recapitalization plans whereby their debentures are to be converted into preferred
stock. Of the seventeen institutions which have not retired any of their
capital issues, twelve have an impairment in their common capital as a
result of previous chargeoffs. One national bank which has its deposits
insured 100 per cont by the Federal Deposit Insurance Corporation has been
unable to sell preferred stock to the Reconstruction Finance Corporation
and expects to work out of its difficulties by merging with a nearby
institution.
Ten of the eleven banks which have established pay-as-you-go checking
accounts in their communities report that the venture into this field is
proving profitable from an income-producing standpoint, and has resulted
in the opening of an aggregate of over 5,000 new accounts.
Onondaga County, New York
.At the present time there appears to be little likelihood of any
immedlate extension of branch banking within the county although the management of one small independent bank is seeking a purchaser who will continue
its operation as a branch.
Philadelphia
The banks visited generally show an improvement in condition during
the past year. There was a rather general complaint as to low earnings
but most of the institutions have boen able to add to their undivided
profits accounts during the year. This was due in many instances to profit
taking in the investment account, but there were very few institutions
whose operating incomes were not sufficient to pay their expenses and
dividends. The cashier of one bank, however, advised our representative
that thE:; president, who is the dominant factor in its management, had discussed with the board on several occasions the desirability of liquidating
the institution if it could not make a better profit. This particular
institution is one of the str0ngest small b3.nkS in our district and could
pay its depositors in full and retire its capital stock from the funds which
could be realized from the sale of its investment securities and from cash
on deposit with otht~r banks.
The two outstanding factors from an industrial standpoint are the
recent slackening of activities at the Bethlehem Steel Company and the
192
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R-95-a
Philadelphia continued
inactivity of many of the coal mines. While most of the banks visited
continue to pay the maximum allowable rate of interest on deposits, it was
found tha.t many of them ar8 giving consideration to reducing the rate to
at least 2 per cent. On the other hand, instances were fotmd where banks
had reduced the rate to 1-1/2 per cent without regard to whether or not
competing banks in the same to-vvn would adopt G similar rate. In one city a
graduated scale is paid with $10,000 being fixed as the maximum amount on
which interest will be paid.
In another c:i. ty thb bankers report that they are discoure.ging savings
accounts other thc..n those of small amounts and suggesting the depositing
of larger ammmts in the postal s<wings system.
At two institutions it w~::~.s reported that increased resorv:;; requirement::; were interfering l'dth et,rnings of the banks. At cne of these our
representative was advised thr1t due to the good demand for credit which
this institution had been experiencing the increase in reserve requirements
resulted in the ina hili ty of this bank to mcot ull of the demands r:1ade upon
it without resorting to the use of borrowed money.
Cleveland
Member bank int0rest is centered at the present time largely in the
of invGstment accounts. Many bankers feel trw.t thGir present holdings of Governments are ainple, and in some instances there is a tendency
to shift from long-term to short-term Federal issues. In some sections,
notably in the rural districts of Kentucky, banks are indicating a d,::sire
to increase holdings of Governments "for purposes of safety". There is
a great deal of uneasiness evidrmced concerning bond prices, and while the
thought is expressed that the action of the Reserve banks in lowering discount rates may prove effective in checking the decline in the price of
Governments there appears to be a lack of confidence that the action taken
will produce the desired result. A prominent Ohio banker attributes
fluctuations in thu bond market to nervousness among bankers as a. result
of I'eccnt ch;:mges in banking laws and reguL:.,tions and the possible effects
thereof.
~1tatus
In the industrial sections covered by representatives of this bank
dur1.ng tho month thert: was noted a b.ck of the usur.. l dem:-:nd for seasonal
extensions of credit. Several banks expressed the:: thought -Lhat the practice
of mercanti l.o and manufacturj_ng seasonal borrowing wr1.s beeoming a thing of
the past. The reverse of thi.s ~1ituaUon is true in the St<ite of Kentucky,
where a strong seasonal dc·mand has developed.
Criticism was henrd of re;~ul?,tions recently issued by the Superintendent of Banks of the State of Ohio, with the approval of the banking
&dvisory board, pruscribing marginal requirements on collaterD.l loans.
-6-
R.-95-a
193
Cleveland continued
These regulations were much moro restrictive than Regulation U. They provide maximum loan values of 50 per centum on "listed" obligations, "unless
well diversified", in which event a loan value of 70 per centum was authorized. In respect of "unlisted" obligations, the maximum lo~m value was
fixed at 50 per centum, except that when "well diversified" loan values
should not exceed 50 per centum of market value. All other collateral,
including stocks, and commodities, etc., had a maximum loan value of 50
per centum of market or estimated value. These loan values applied without reference to the purpose for which the proceeds of the loan were to be
used. The effective date of the regulation was later suspended and the
regulation is now in process of revision. An examination of a rough draft
of the proposed new regulo.tion indicates that if it be acceptable to the
State Superintendent and the banking advisory board, it will be reissued in
a form rather closely conforming to the provisions of Regulation U.
Richmond
Our representative in the State of Maryland again calls attention to
the small nonmember banks in his territory, many of which were reorganized
a.fter the banking holiday on more-or-less drastic terms. Many of these
banks have found the possibility remote of improving or overcoming the
condition leading to their reorganizat-ion. Lack of earnings and a feeling that they have been discredited in the eyes of the community aggravates
the situation.
Certain member banks show an inclination to criticize their membership
in the System. One national bank in North Carolina complained of the cost
of membership occasioned by the loss of exchange revenue. This bank is
surrounded by a group of nonpar nonmember banks in nearby towns. Another
national bank in North Carolina was critical of the increase in reserve
requirements and wondered why it was thought necessary to increase the requirements the full amount permitted by the Act. Its attitude seemed to
be that this action reduced the ability of member barucs to invest profit-·
ably and nt the same time increased the purchasing power in tho hands of
the Reserve banks. This bank also complained of the policy which, as they
expressed it, "makes it practically impossible for small country banks to
participate in the short-term financial operations of the Government, thus
forcing them to invest in longer-term obligations at a gr~ater risk." Still
another national bank in North Carolina told our representative that tho
Federal Reserve Bank has lost its function of being a bunkers 1 bank and i,s
now merely a Governmental bureau to facilitate Government financin~.
Further, in its opinion, there are too man,y overlapping agencies and superV2S2on of all banks should be centered in one authority. This last bank
quoted is a substantial institution which has an excellent local reputation.
One large nonmember bank, in discussL1g the question of membership,
was quite critical of recent trends in the financial world as related to
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Bichmond
R-93-a
194
~ontinued
our country and expressed his belief that efforts are being made to bring
about a centralization of all essential activities - steps which he believes
will destroy private initiative and enterprise.
Generally speaking, the banks in the larger cities in our district
feel that the reduction in discount rates was.a mistake. They tell us that
banks already poss0ssed sufficient excess f1mds to meet any reasonable and
legitimate need this fall, and that once a rate is reduced for a borrower
the rate for the other borrowers in the same class must almost inevitably
be reduced likewise. There is some keen competition between large banks
in larger cities in our district for the loan accounts of well established
potential borrowers and this competition is manifested in a competition of
low rates. In the medium-size: cities and larger towns this rate competition
is not so clearly mnnifested. In the banks in smaller towns and small
communities the reduction in rates apparently gives them no concern whatever as far as they are affected, for they charge their local customers the
maximum rate allowed anyhow, which is usually 6 per cent.
Atlanta
Georgia
It is the consensus of oplnlon of the bankers interviewed in northern
Georgia that the farmers will elect to sell their cotton rather than obtain
funds through the Governmental loan provision inasmuch as they are reluctant
to participate in an agreement to curtail production which has not as yet
been definitely formulated. It is our information that the farmers in this
section are enjoying better living conditions than for a number of years.
In Savannah the banks reported increased demands for legitimate commercial loans.
Louisiana
'The saw mills in the section near Alexandria are operating on full time
and it is estimated they have a supply of virgin timber that will furnish
approximately 15 years' cut. The management of the two banks in Alexandria
advised that local conditions are considered good even in the face of sor:1e
concern on the part of the farmers because of the recent decline in the price
of cotton. It was stated that had the price of cotton remained at 12 cents
or better this particular section would have 8njoyed a revival of business
conditions greater than for several years past.
The bankers in Lake Charles advised that the ricE; growers are exceptionally well pleased with the yield per acre but that some concern is felt, due
to the price being approximately 25 per cent less than that expected. In
this immediate section there is quite a bit of optimism over the number of
oil wells that are being brought in.
195
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R---93--11.
Atlanta contl.nued
---------The New Orleans bankers reported a revival of trade with South
American Countries, and also considerable interest in oil developments in southern Louisiana. It is predicted by some that New Orle£ms
may within the next few years become one of the larger oil Cf;nters of
the United States.
The m.aj ori ty of the bankers are of the op1.n10n that Governmen t[~.l
loan agencie:::' have been r.t distinct bonefi t to their local communi tiGs.
One banker GxprE.;ssed the opinion that the Production Credit Association had done more in his immediate section to teach farmers to respect
their obligations a.nd better methods of cultivating thoir crops than
he had been ablr:; to do in all of his banking experience.
Some of the b:::.nkcrs viGi ted appuared disturbed about reserve re-quirements having been increased to the maximum provi<isd under the Fcderr.;l Reserve !'ct. They state that it is no turcien to them now to maintain their re;;;erves but they aro wondering rdwther, when the time comes
when they can employ the maximum n.rnount of loan~:.ble funds profitably,
the reserve requircJments wi2.l be low•.;rcd in orcier th;J. t they can usc
their own funds in making loans rather thc.n be forced to borrow whilr.
maintaining maximum reserve requirements.
Chicago
A number of calls were made on nonmember banks by our representatives v:hen they happened to be in adjacent territory ::end some nonmember
banks were interviewed s.t group ma(::tings. A majority of them expres<>E":d
some interE,st in membership nnci in our serviceD. A few we consider
good immediate prospects. One bank would make application for membership except for its low capital deposit ratio; another ·,Jishes to join
but prefers to convert into a National bank; one has r.lreadyapplied,
and another stated that its directors had agreed to file application
;J.nd asked us to forward blanks. One hs.nk stot(~d that it would like
me::nbcrship, bllt that it i::: preparing to open a brD.nch in a small nearby
village, which of course would preclude its joining the System.
One of our repre sen ta ti ves relJOrted thn t at a group meeting in
Michig::,n, tho B1mking Coi-:unissioncr of th:lt State stressed the idee. of
eliminating meny small Skte banks locateci in -!:.he ::;m~:~.ller town::., and
th0 establishr.•ent of branches. Sever[c:l brmkers &lso informed our representative that ccn attempt was being m~.tde to convert me.ny of the smal.L
b&.nks into branches and that the Feder[:l D0posi t Insurnnce Corpon:.tion
was sanctioning such a plan. A similar policy hs.s alrer,dy been rcportea.
in connection with one of the other Stc..tes in this district.
:196
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R-93-a
Chicago continued
Very little change is reported by our member banks with respect
to local lonns. One of the larger banks in the district advises that
it has covered a rather large territory seeking receivers' loans and
has obtained a considerable number of these.
Cutting of corn is proceeding rapidly and both Illinois and
Missouri will enjoy a very satisfactory harvest. All forage crops
are-exceedingly plentiful, and because of a shortage of feeding cattle,
a good many bankers are advising customers to store corn and await
results of the 1958 harvest before disposing of any surplus grain.
Energetic efforts to secure live stock continue to be made.
The Delta is raising one of the biggest cotton crops on record,
and Mexican labor is being imported from Southern Texas to help in the
picking. However, the price, even with the premium for length of staple,
is disappointing. The lo•'; price for cotton seed (from tlB to $>22 per
ton) does not pay picking and ginning charges. On the other hand, the
large crop wtll put a lot of money into circulation, which will help
retail trade and increase rE~venue of the gins and railroads.
The opinion WhS expressed that not more than l/3 of the cotton
crop will be placed in this year's 9 cent Commodity Credit Corporation
loan, one reason for lack of interest being that the cotton is bc::ing
sold as it is ginned. Also, the present price is from 1 to 1-l/2 cents
above the 9 cent limit. If the price breaks, a good many planters
will take advantage of the CCC loan, but they do not like to sign the
bl.snket contract to agree to any acreage reduction scheme the Government may put in next year, which they must do in order to get the subsidy.
Throughout Illinois and Missouri production and employment in manufacturing plants continue at a good level. Some improvement is noted
in Goal mining in view of the agreement reached by operctors and the
miners' union, which has caused a resumption of work in a number of
cases and paved the way for a full producticn schedule about October l.
The discovery of oil
able financial benefit to
than a hundred wells have
$10,000 per unit, with no
in various parts of Illinoi6 is of considera number of communities. Considerably more
been drilled at an aver[lge coet of over
indication of lessening of activity.
With the assurance of adequate harvests of for!l.ge crops, country
banks in Illinois and Missouri are experiencing an incre!tsed demnnd
for loans, particularly by persons who contemplate an increase in their
live stock feeding operations. Most banks are eager to find an outlet
for surplus funds, but are carefully analyzing the applications. As
-10-
R-93-a.
197
the g(·meral uptrend .in local loans 'Nill result in added eilrnings, the
prospect is grs.tifying to all concerned.
The bankers visited in the South criticise the Administrb.tion more
freely than f\ year ago. They are uneasy about the possibility CJf inflation, the effect of the Patman Bill un the Systeu1, and tho huge
deficit in the national budget. One nonmember bank is gettinp; rid of
its long-term Governments and now holds only maturities between now
r.nd 1941. The opinion was expressed that deposits will not go as high
LS they did a year ago, that planters will be able to pay their loans,
but thG.t there v:ill not be enough left over to pay interest on mortgages or taxes or to leave a reserV(-J for next year's operations.
r~inneapolis
Northwestern Wisconsin
-··
.
It is encouraging to learn from many of the bankers visited that
there is a marked increase for.local loans and it appears there is considerable liquida-tion of their securities portfolio. Many of the live
ctock loans formerly held by the Regional Agricultural Credit Corporation and also the Production Credit Associations have been taken over
by the local institutions. They stated that the Regional Agricultural
Credit Corporation had taught the borrowing public the nece~sity for
not only the borrower but the: lender as ·Nell placing his loan on an
;:;.mortiz,ed basis. In the case of the dairy farmer, assignmcmts of his
dairy income are received b~r the bank so that there are weekly or
monthly reductions of hi;3 indebtedness to the bank.
Ecst central Dakota::
It is generally commented that up to June 25, and later in some
sections, prospects for good crops were never better. There had been
intermittent rains through the early summer f.md the temperature: not too
hot. With cessation of rain the subsoil moisture was insufficient to
withstand the hot winds. Cut worms were bad and, in add.ition to demaging the small grain, also went after the corn. The rust came very
suddenly n.nd what was left furnished food for the grc:,sshoppers.
The farmers are much slov:er in being convinced of the desirability
of sticking to cattle, horses, hogs and sheep, than the bonkers. Many
bank officers sto.te that during the war period farmers were told they
would be unpatriotic if they did not grow wheat. The light soil turned
at that time has not been of much use since. Through urging of bnnkc->rs,
many farms now have small flocks of sheep. One banker so.id his brmk
could not have carried on but for the profits made from sheep raislng
in his vicinity. 'rhe hog population is about 50 per cent of normal,
but ca.n be brought bach: more rapidly than other kinds of live stock.
198
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I-\.-95-a
~d.nnca.Q.£1is continu~.~d
Btmks are not lending readily for the purchase of better grade feeders,
because of the shortage of grain feed. They are encouraging the purchase of cheaper cattle at 5 and 6 cents, feeling that the chance of
loss is sm~ll8r than in the better grades.
Service Float a.nd Exche.nge Charges are in effF3Ct and in the state
banks vie:ited it was quite apparent most of them could not exist without subst,:..ntial profits from exchange. Several of the n&tional b~mks
said thnt tf conditions did not improve, they would have to seriously
consider giving up the national charter. As a mat1,er of fact, they have
considered taking out state charters but are 8.fraid of the sts. to administration. They ar<J giving up $2,500 to $6,000 in exchange by remu.ining
members.
The following petition (quoted in part) was addressed to Governor
Langer by citizens of Mcintosh County, Noi·th Dakota. Another petition
we.s being preparod for pressntation to the Farm Credit Administration
and the Federal Lend Bank requ\..sting that nothing be done for anoth€r
year to deprive the farmers of tht.:ir land. SeveraL ba.nkers s~:id that
tho Federal Land Bank would ovm plenty of North t.akota before long 8Jld
that they might better put some .live stock on the fa.rms and help the
fn.rmer than take thG lu.nd and suffer big losses in disposing of it.
"Whereu.s an economic crisis is now confronting the people
of our Sktte in that a large number of farmers and their families from our area are now moving out of our State, turning
their che,ttels over to their creditors and leaving nothj_ng but
their unpaid real eE.tate taxes for the remaining oneE, to mal~e
good, tl.nd
"Vlhereas, It is impossible for the rema~n~ng ones to assume this extrr1. burden <md. pr.cy taxes when those now levied ere
confiscatory, o.nd consequently, others must soon follow those
already departed c.nd .leave their homes in this Stn.te, and that
when this occurs, the mechanic, co.rpenter·, mason, bbcksmith,
doctor, lawyer, teacher,· preacher, bnnker, a.nd politic ian must
ulso move on lec.ving an unoccupied dome:.in to be again inhabited
by the gophers and coyotes. A million ~1cres alrea.dy forfeited
to th0; Stat<3 prove that this is no exoggr~ration.
"That a moratorium on state interest pt,yments would al.lov;
the use for running expense of half of our now thrE•e million
dollar income from sales tax, rmd that the other hc.lf could
then be used to tako care of old age pensions and othE;r incidente.ls. That 6Ufficient additional revenue could. be; dE;ri ved
from all. our diff:-;rent license taxns such as snuff, cige~rette,
soft drink, beoer and booze taxes, most of them recently added
to the tax burden.
1_99
-12-
R-93-a
"That as an inducement to all farmers now so sorely
pressed a~d through no fault of their own, all delinquent
and due taxes now of record against their property should be
stricken off and cancelled in total and that an assurance
that these cancelled taxes will not be added to the burden
0f those who can pay or to those to be paid in the future,
and a fair and just tax measure based on the one proposed
at our last legislature whereby the total tax to be levied
on real estate would be limited to 10% of its fair rental
value.
"Be It Further Resolved that the undersigned respectfully petition your excellency, Hen. William Langer of the
State of North Dakota, and demand that you immediately call
a special session of the legislative Assembly for the purpose and the purpose alone of CANCELLING ALL TAXES now of
record in our State and that all taxes against real property
in the future be limited to 10% of its fair rental value.
"That such call be made immediately before more families
leave and the State become depopulated."
Kansas City
Bankers are taking considerable interest in legislation that affects their business. In particular there is opposition to any tampering with the present law prohibiting the payment of interest on demand
deposits. There is also~outspoken opposition to any legislation looking to Government ownership of the Federal Reserve Banks. A third
kind of legislation that is opposed is pending bills that would permit
branch banking on certain conditions to cross state lines in the Federal Reserve District where the parent bank is located.
Bank visits during September brought to light the fact that there
is still considerable opposition to the increased reserve requirements.
In a number of cases country bankers very frankly stated that they are
unable to see a.ny j.ustification for the raising of the reserve requirement of country banks. To them the problem with which the increased
reserve requirement has to do is one confined to large cities of the
East and they fail to see why country banks should be penalized. Calls
on a number of non-member banks that are eligible for membership reveal
that the increased reserve requirement is the thing that is keeping
them from becoming members; they seemed quite enthusiastic about member-ship but reserve requirements are a stumbling block.
For instance, a banker seemed greatly interested in membership but
stated that virtually a.ll of his deposits were demand obligations and a
-15-
R-95-a
Kansas City continued
14 per cent reserve requirement would require a deposit with the Federal
Reserve Bank of $75,000 or $80,000, and that this would leave an amount
remaining insufficient to justify reasonable balances with correspondent
bank::;. Some banks that borrow also make the observation tnat the cost
to them of the funds impounded ·by higher rese:rve requirements :i.s measured
by the co3t of the borrowed funds.
One state banker, who hcs borro;1ed rather irregularly the pnst
few months from the Federal RE:serve Bunk on Government bonds, stated
that the 1~ per cent rediscount rate was very satisfactory u.nd that
he could see no reason for selling bonds that were yielding 2~· per
cent when he could borrow at this low rate.
Reports received from over the District indic~:.:,.te that there has
been a noticeable let-down both in sentiment and businesr.: volume in
the last thirty days. But the District is dGcid.edly spotted. Be.nkers
in Cheyenne, Wyom:lnr;, report no rt3ccssion there, the high price of
cettle being a boon to th[ct stE;to. Crop::; in OkJ.uhoma were good and
the cil industry is active at prices higher than a yeo.r ::J.go. Lines
of activity that have slumped badly in recent weeks in other pr:~rts of
the District are reported still active in that st~tte.
The northeastern pa:ct of the ~istrict .is in relatively the pooref;t
condition. The e.veragc temperature in August in ~~ebraske. was the
highest on record and rainfn.ll was only about 60 per cent of mmmtl.
Great damage wns done to a corn prospect that looked ver:/ promising
:"Ln E:arly July. Gr8£ct darnagG w:1s also C.one ·to oats. In c,.ddi tion to
this the ·1•heat crop was some-:r1hat below nvrmal. The number of hogs on
farms is only a third of what it formerly 'MlS ·."nd the short corn crop
this yer:..r will further del£(1 the building up of <.. nvrmal live st.Jck
pcpulation. These fun<iamont:,l adju;,;;tments profc;undly affect th€ lxmkers 1
f)I'Oblem in these communitif;s anct bank visits sht-w theJ' c.re the chief
topic of interest .~mel di::;cussion.
{Dallas submitted only statisticcl information as to vi.sit,e to
banks. The few visits mnde were routine in character and developed
no information of general int~:r~~st, according to D.:::1Lt::!..s 1 report.)
'
Salt Lake City_ Brru1ch
Yields from f.:~.rm crops harvested so far this yec.r '.~<ere £tbove normal.
Yield 8Stimates of late potatoes and sug.:::.r bet~ts yet to be hu·vested
indicate 1m abovE: average condition. Hm.cvor, prices of farm products
200
201
-14s:~n
H-93-a
Fre.ncisco continued
gener<:.lly, with· some fe'ii exceptions, ;:~re ·beJ.ovl those of last ;year,
but becnus.:~ of the above .-:tvArage yields the tobJ f· .rm income in this
:.:.one this yoP,r ·rill be equal to or ~;ligt.tly ezcecd thct of l'J36. In
Southern Lw.ho tb-.:;re is a teridenc;y· on the p<::rt of f:.~rmc,rs to hold the
bor:n, potato, and viheat crops for better p1·iccs, t.hus ret:\rd:l..rlf!: to <,
cortain extent nm:·ma~ b:mk liquidation. Ordinarily, <.ct th:~s t.irac; of
thE.; year live stock feeder opGra tor~> an" Sf:> eking b<.~nk cre:di t, tY1t 3o
f,:r to dat,:c. there cppE:;·<.rs to b€' little interest by fJUCb ope:rn.tors
beccc'.H;e of the high price of f c~odc r li v,;, stock. iVlo;:;t of the b~nks
w~1icil would be affectod by this !)r·ob{..Lb1G retarded liquidatiou of bn.nk
loans to f[.lrmt:;rs have: muintuir1E~d throughouT, the yt:ar o. f;;.vorul)l<; C<h>h
poGition, and e,s ;;;, r0su.lt they vi:Ll1 be n.blto to r1ccomrnoa: tt~ no:l·mal
bu::dness without rr:.,sorting to 'borrowing from the hesurvc; bunk.
Brc;eding ew,~s have beer• corning from tilE; higher re::nges in exccll.ent
condition e.nd r;;.re non moving f1·om the lovJcr rL,ng.:~s to the winter rungo
whsre conditions r:.re clr.:,imGd to be quite S<J.Jc,i(?f:lctor:~. In Southern
and Western Ido.ho, whore considerable suppJ.E..:nenk,_l wint<.:r f\:~cc:ing is
done becaus;:; of ectrly lambing, there is wnple tay e.nd othc:r· f;xd. ~::,vail
eblE! at reJ.sonable prices. The sume conditions p1·evuil with re~:pect
t,, range cattl,.:::, 1.nd, on thu whole, conditions are l_)romising to tho
livestock industry going into the winter.
It is report,::d that a ers,atcr munber of bt_;;ef cnttll: than usual aro
now moving to nwr~~c,t 1 and that many 0ld ewes hs.ve been solei at g0od
prices cmd rnovc!d tr; the Eastern section of the United Stctes, v•·hich
places tht: general livestock and range situaticn, particularly in
S01;thern ldc;ho, in a very satid'-:o.ctory condition.
•
PUBLIC RELATIONS ACTIVITIES OF FEDERAL RESERVE BANKS
SEPTErviBER, 1957
Federal
Reserve
Bank
Boston
New York
Philadelphia
Cleveland
Visits to oonk"
Member Non- Total
member
l
I
64
160
97
19
None
9
5
11
87
11
17
28
175
51
29
1
None
24
14
67
15
1
21.
126
55
64
122
65
9
58
54
10
Richmond
Atlantc.
Chicago
St. Louis
86
20
12
51
Minneapolis
Kn.nsas City
Dallc::.s
s~n Francisco
I
Meetiruzs attended
Nwnber
At tend.:mce
59
20
Addresses !IlLde
Nwnber
Attendc.:.nce
None
None
2
1
110
25
5,285*
2,700
None
None
5
1
680
40
1,885
946
4
None
755
None
1,750
510
3,540
Ll)
rl
I
3
67
*Attendance at 2 not reported.
59
4
88
. 10
5
None
15
250
!~one
152
@FedFRASER