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BOARD OF GOVERNORS
R-i-212
OF" THE
179
FEDERAL RESERVE SYSTEM
WASHINI3TCN
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
Marcl1 21, 19?-8.
SUBJECT:
Dear
Monthly Report of Bank and
Public Relations .Activities.
fir~
'Ihore is :i.nc:Lc:-J8d i'or your J.nforma-
sub::Li.tte:\d oy the
Fede:r~:tl
RGserve bcuks fo::.·
th2 month nf Ft;bruar,y l.n reepcmse t(. the
f3:.;,qrd 1 s J E:Lte:;: of t.:Ll€u;~-c 25, l£56 (X-96t:O).
V~· r.r tr 1.:.1;r ;yours,
Chu~ta~ ~orrill,
::ec:cekry.
Inclosure.
R-212-a
180
March 16, 1938.
TO
The Board of Governors
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, 1956 (X-9680) have been received for the month of February and excer·pts therefrom will be found on the following pages.
A table showing for all twelve banks the number of visits made, meetings attended, and addresses dE;livered has also been prt:pared and
follows the quotations.
The reports reflect a prevailing low .level of business activity.
In some l.ocr-'li'Lies conditions epp~:~u· to have gro-vm worse since the
first of the year, but ln others there n.ppears to hD.ve been defi.ni te
improverJ.en t.
Hev1 York, CleV"c.land and Atl.antc. mention an active interest on
the pe.rt of bcmkers in F. H. A. fin:.1nc:ing. This interest r.ppc:ars to
bo greatest in thtJ field of modernization .ionns. Philad2lphic. rsports
on the other hand that brnk('rs have dono V8ry little F. H. A. fiwmcing.
Nevi York, Clcvc-L1nd and Hicbmond mer:tion a notice<.tble tendency
to-r1ard the connolidation of banks of reletivoly smo.ll size, in some
cases invo1··1ing brench oper2.tions.
In various districts tho e.cti V'i ty of br:.nks in developing correspondent business is ment:ionsd. Chic[tgo mentions the c~we of a country br..nk in Michig&n that is organizing a clearing and collection service among neighboring banks of smaller ;-;ize which will carry their
accounts with it. In cormc)ction with the importance with v:hich banks
regard the correspondent relationship, the increase in reserve requirements continues to be a matter of sor.1e dissati.i:,fr.ction. It is also
mentioned o.s interfering with investrtents.
Minneapolis and Kc.tnsas City mention particularly the concern
which bankers feel cv<"r the Patnsn Bill; therE:' is apparently widespread
conviction that the measure is E~ thr0at to the indepsndence of the
privately mar:aged bank. According to Kans::ts City, the opposition to
the measure seems to be strong<or t:.mong small banks thnn large ones.
Excerpts from the reports follow:
attached to the original hereof.)
(The rerorts themselves are
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R-212-a
181
Boston
(Boston attended five bunkers• meetings but made no visits to
individual banks during tte month.)
New York
!lbany and Schenectady Counties, New York
Although there has been some decline in industrial activity in
and around Albany, especially in the railroa.d yards and shops, the volume of general businel3s has been comparatively stable during the ·past
six months and department store sales during the 1957 Christmas season
were about equal to the totals of the previous year. Increased activity
of the various departments and bureaus of New York Stote, the primary
factor in the Albany employment and general business situation, has tended
to offset the decline in industry.
In Schenectady, the &eneral Electric Company's payroll, which
remained practically stationary until near the end of 1937, has been
declining steadily since the first of the year. Whereas officers of
that company in October estimated that business would continue on a
steady scale through the first half of 19~8, they now predict thnt 1958
volume may be 50 per cent under that of 1957. The American Locomotive
Corporation plant, which employed as many as B,OOO pE:ople last year,
has been practically closed since January 1 and although the corporation
received a small amount of repo.ir work which was expected to carry a
limited force t:b.rough February, thero is little prospect of increasing
operations during March. Several local banks comment that the working
population in Schenectady is more dissatisfied now about the lack of
emplo~nent than in 1952.
Westchester County, New York
One membor bank in Tarr,rtovm (with deposits of $1,800,000) continues to specialize in Federal Housing Administration mortgages and
leads all other institutions in the county in handling this particular
class of business. This benk has made almost $6,000,000 Title II mortgage loans and has actually sold and delivered ~r5,620,000 of such obligationf:. Most of the mortgages granted by this bank are on homes located
in Brooklyn and Queens and have been arrnnged through a mortgage broker
in Jamaic~., Long Island. Since the enactment of the new housing bill
the bcmk has received applications totaling ~267 ,000 for 90 per cent
mortg::.tges. The directors are so pleased with the experience their institution has had in servicing Federal Housing Administration mortgages
that they are nov; considering the formation of a nation.;"l mortgage company to service F'ederal Housing mortgages on large apartment houses.
Fifteen other commercial banks in the county have grc.nted an aggregate
of $2,756,000 Federal Housing Aruninistration mortgage loans.
Most of the manufacturing plants have curtuiled their operations
materially since last October. In Yonkers, t:P,e Alexander Smith n.nd Sons
-5-
R-212-a
182
New York continued
Carpet Company, which normally gives employment to 5,500 people, is now
employing about 5,000 on a 2t day c. week basis with a weekly payroll of
$55,000 as compared with $76,000 last October; the Otis Elevator Company
is now operating on a 5 day a week basis and. has reduced the number of
employees from 5,000 to less than 1,500, dec~asing the weekly payroll
to $35,DOO as compared with $52,000 last October.
Last October the Chevrolet and Fisher Body plants in North Tarrytown were employing a total of 5,500 workers but during the last two
JllOnths of 1957 these shops were practically closed. Since the first of
this year, however, business has improved to the extent that they have
re-employed 2,100 men working on an average of three days a week.
Union County, New Jersey
Bankers generally are welcoming the restoration of modernization
and home repair loans as provided by the recent amendment to the National Housing Act, and refer to their good experier.ce with the similar class
of loans under the first authority, and to the fact that these loans have
given their banks a profitable source of income.
The president of 9. nonmember trust company made the rema,rk, although
not in the form of a criticism, th~tt the increase in reserve requirements
had tied up funds that might otherwise have been used to purchase more
outstBnding morteage partici:ration certificntes (these not being guarantead by the trust ccmp~.ny) in which event the underlying mortgages could
have been taken directly into the bLnk's portfolio with co.11cequent benefit to the earnings of the institution.
The business recession has affsct~,d the larger basic industries
in this county to a greater sxtent thc.n the smaller miscellaneous manufEtCturing concerns. The General Motors Corporution' s pltmt in Linden is
at present emplnying 800 which is less thrn one-third th0 number employed
last summor, and most of them are now Viorking only three days a week.
The Mack Truck division of the Intermttional Motor Corporation's factory
in Plainfield still has its 500 to 600 employees on the payroll but the
plant ru:.s been operating only two or three days a week.
Tho largest single industry, the Singer Manufacturing Company, continues to giv0 steady employment to its normal force of workers numbering
about 5,700; and the Diehl i.ianufacturing Company, a subsidiary of the
Singer company making rmall motors and fnns, hns some contracts from the
Navy Depa:r-tment ~md continues to operate with an extra shift. Tht-J various oil corr:panics including the Stm1dard Oil Company of New J ..;rsey and
the Sincb.ir Oil Company hrlVf:l nls0 1r1a:i.nto.ined steady employment. The
l::imr;•ons Company, manufacturars of mattresses e.nd furniture, is now eJ;1ploying its nor;nal f'orcG of 2, 000 Rfter a seasonal lay off of a part of
its help.
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183
New York continued
Among some of the large concerns in the Elizabeth industrial area
which have been obliged to curtail their opero.tions are: American Type
Founders Company, manufacturers of printers' type and printing presses)
which is now running at only 50 per cent of capacity; the Dupont Company,
manuf<.cturing chemicals and acids, has laid off about half its normal
force of l, 000; the General Aniline Works, Inc., mR.nufactm·ers of dyes,
is now employing about half its 2,000 employees; and the American Cyanamid
Company is now working only 400 of its former force of 700.
Philadelphia
Throughout the sections of the district visited during February
bankers referred to the general business conditions in their respective
communities as being fair to good. A business decline was reported in all
of the industrial tovoms. Some improvement; however, has been noticed
since the beginning of this year. Hc~avy industries and those engaged in
the manufacture of tools and machinery used in the production of automobiles are slack and little improvement in the latter is expected until
automobile output is speeded up. The hosiery, knitting, and other needle
industries have oper-:tted more steadily than any of the others, providing
employment for a large number, the majority of whom e-re women. The industrial activities in and around Wilmington are operating on a reduced
schedule but increased activity is expected in the shipyards because of
the Fedenl Government Nuval program.
The agricultural sectiono enjoyed a fairly good yeaz·. Crops did
not bring the prices anticipated. but becnuse of the large quantities
profits were realized. This, however, did not hold true -with 12pples, as
large quanti ties Wf;re pln.ced in storage in anticipation of better prices
~hich wer~ not forthcoming.
To reliove the market somewhat, the Federal
Surplus Commodities CorporatioH is purchasing large quantities. This is
essential as several Vhrieties must be moved very shortly or they will be
unfit for marketing. E3atisfactory returns from the fattening of staers
for slaughter appear to be doubtful this year and bankers fear that the
farmers will suffer losses.
Manufacturers and c~1nnerr: developed large inventories because of
low prices and poor business conditions but recently have received orders
which will permit them to make some sulos. As th~ inventories are liquidated, bank debts are being repaid and in those cases where the bc,nks have
borrowed from the reserve bank they, likewise, are reducing their obligations.
Demand for credit accommodation is fair but in most banks the total
invested in loans, discounts, and mortgages is decreasing. The prevailing rates charged are between 5 and. 6 per cent. Lower rates are charged
on prime risks and loans secured by listed marketable collutera.l. Liquidation
184
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R-212-a
Philadelp41.£ continued
is considered satisfactory. In some instances bn.nkers do not wish their
better lines reduced tecause of the income they provide and their inability
to reinvest the funds at a satisf[~ctory rnte. There has been very little
F. H. A. activity and very few comments were heard regarding the ~ew provisions of the National Housing Act. Corr.ments regarding Federal agencies
in most instances were fovorable.
Investment accounts continue to be the most vitetl problem because
of depreci:1tion. Depreciation in securities in some of the ban1.e is causing capitnl impairments. How(::ver, at only one bank h<J.ve the directors been
I'i'"quested to post a guarantee. Few securities other than those of th8
United States Government are being purchased, banks preferring to hold idle
cash rather tr.l'..tn to enter the market at this particular time.
D<cposi ts show a gonGral incr8ase and various interest rates ore being
paid on time end savings accounts. One bank has reduced its rete to 2 per
cent on the first $5,000, and 1 percent on the b1:lance. Others o..re paying
2 per cent, but the mc.jority continue to pay the maximum x-ate. Efforts
h2ve been made through county associations to have banks adopt & uniform
rate but so fu.r h11ve not been successful.
Cleveland
Practically half of the banks visited during February were called
upon in connection with the new check collection plan which was made effective January 31, 1958; n.nd the f:L8ld force was o.ugmented for that purpose
by tho addition of six sxtra representatives from the mc.in office:, and one
extra representr:j ti ve from eo.ch of the two branch offices. These visits
were limited to banks which usually could take advantage of the loter closing houx-. The new ple..n ~ppears to be favored by the majority of b:mks and
there has been a fairly substwtial increase in the number of i terns handlf)d.
While business continued at low and still receding levels thae is
somewhat of an upturn in certain sections. Signs of improvement are especially noticeablE. in the Beaver Valle;;· district of Pennsylvania, and in
some portions of southwestern Ohio.
A substantial number of banks report declines in demand dcpodts.
Many banks are expanding their ovm portfolios largely through F. H. A. loans.
At some points in northwestern Ohio the demand for credit accommodations
mGntioned in lnst month's report continued, and some banks in the reserve
cities have commented on some decline in correspondent bank bslances.
The pressure of low earnings is encouraging tr.lk of voluntary mergers or consolidations between h:mkc in communi ties which cloarly are over·banked. This is true in sections where no pressure to effect such consolidations has been applied by any of the supervising .s.gencies.
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R-212-a
185
Richmond
We visited only four member banks and two nonmember banks during
February; however, our officers hud many contacts with officers of member
and nonmember bunks, both through attep.dnnce upon bankers' meetings and
visits to our bank and branches by bankers.
'I'he Federal Deposit Insurance Corporation is gJ.vJ.ng close attention
to banks which are in unsatisfactory condition. Small banks in overbanked
tovms are being encourr:1g~d to sell out to or merge with other brmks. In
some cases unit b~~nks m.'J.y become branches. We understand that the Bank
Commissioners r.tre cooperating with the F.D.I.C. in this progr~m and that
they arE: meeting with fair success.
The Corporation is endeavoring to get nonmember insured banks to
off or otherwise provide for all depreciation in bonds below the
four highest grades, defaulted bonds, and stocks. The Commissioner in one
state in this district does not discriminate in favor of bonds in the four
highest grades and takes the position that banks should provide for the
deprociation in the entire inveotment account.
charg.~
Maryland
Duo to the diversification of business, the number of unemployed in
Baltimore is leso than in most large cities. The Sparrows Point Plant of
the Bethlehem Steel Company 7 one of the largest employers of labor in the
Fifth district, now employs 20,500 persons three days u week as against a
capacity force of 25,000. The ce:mparatively good showing of this particular steel plant is said t.:• be uue to several favorable facturs including a
water front location.
The Glenn 1. Martin Company, manufacturers of airplanes, expanded
their business and increased the number of e~ployees materially during 1937,
and the outlook for 1938 is even better.
The brokers and investment bankers generally are depressed on account
of the smnll volume of security business. Some small firms have gone out
of budness !J.Ud others have reduced their personnel.
Virginia and the C!:irolinas
Tobt~cco
manufacturing h-'ls remained stable.
Textile n1ills are operating on an average of about 50% to 60% of normal, which is a slight improvement over December, 1957. Inventories have
been reduced in finished goods and combed yarns. The makers of full-fashioned
hosiery continue to occupy a more favorable position than the manufacturers
of seamLess hose and half-hose. Additional plants for the manufacture of
full-f.:~shioned hosiery are in the process of construction in North Carolina.
-'7-
Richmond continued
Two of the leading furniture manufccturers are operattng four days
a week and have :;.1.0 excess ir;ventorie::. The m~mufacturers of hit;h--gr&de
furniture are doing better thr..ri the mc.kers c,f lo,;ver grades. As e. •vhole,
they ·bellevo business in their line will improve by spring.
Atlanta
In Ft~bru:;.ry visits were made to twenty-nine banks in centrc:l Flori0a.
The pd.ncipa.l occupations in this part of the stnte are generc:..l farn.ing,
citrus ~nd truck growing, live stock raising 8ld related industries. Consider<Jble damage to truck and citrus crops from cold weather was reported,
the estimate of d1.mage rt~nging up to 50% in some localities. In addition,
tho price of citrus fruits hc.'ls proVc3d disappointing.
The mB.tter of exchange continues to be on8 of considerable interest
to mrmy k'nkers, and probabJy most of the small country non-member banks
visited would bb v<:;ry reJ.uctn.nt to give up thl.s forw of income, particularly
so when th0 bankers S'-'Y th•?.Y are ung_ble to make ::,atisfnctory investments
and loan~: w1th avn.ilo.ble 2:.1rplus fu;1ds. The president of <:. sto.to b1:nk
member· (.;;;hich was recently admitted to membership) str.ted that the bE>.nk 1 s
membex·ship in the System had resuLted in added pr8stige for the bank. This
b~mk, for cor:petitive re.::.sons, had rt:•mitted at prtr for some time prier to
its admLssion to me~nbc.rship.
'i'he cashier of one member bank expressed t,l;.e opinion that reserve
requiremento applicable to smaJl country bani-:s were too high} and that an
ad,iustment should be made which would permit :Lncrear>ed earnings. The
president of n.nother member bank vo:iced his a;1proval of the action of the
Bo11.rd of Governors in raising reserve requirements.
One member bank has discontinued the discount of automobile finance
paper, lc.rgely beaause of the flooded conditi0n of the used car market.
Some of the b'lnks shov; a decided intereDt in F .H. A. insured mortgages,
while other banks are he::litunt, principr,_lly beCfi'J.Se of thG long mr...turities.
In 1937 earnings of a number of the banks vrere reported to be the
best in several year;:;, and in a large number of cr...ses both louns and deposits show an increase over a yee.r ago.
Men1ber bank:::: affiliated with one of th0 three holding co;npanie s
located 5.n Jacksonville clear their chocks through the principal bank in
the group rather than through tho Federal Reserve Bank. However, a nur.1ber
of banks not affiliated with <my group use their correspondent banks in
the collection of checks, in preference to the Federal Reserve Bank.
-8-
R-212-a
jl~~
Chicago
Visiting bankers report business conditions in their localities
generally vert quiet and barlk loans still difficult to obtain. One
banker, however, from a Wisconsln town of 20,000 population states
that the local banks are having more demand for loans than in the
past tvm or three years, some of these loans being made to manufacturers, su:m.e to far•mers v.no are holding barley, and some for the purpose
of buying propm·ty. He also states that while the furniture factories
and. foundri<JH are quiet, at least four concerns in his town are running f'ull time.
A banker in a Michigan town of lJ,OOO stated that he had recently
called a meeting of the 3Illaller bunkers in his area, comprising about
thrbe counties, and arrangements were made for these banks to clear
thc1ir chGcks through his ba:nk. Ch6cks roceivod on the smaller banks
will be sent direct and eccounts charged innnediately. 'l"he banker
feels that this will not only f.'acilitate the collection of items, but
will put him in a position to obtain some loans by participating with
tht::. smaller banks. He statod that other banks are watching this arrangoment with a good deal of int crest, end if the plan !)roves successful it will probably be adopted at other polnts.
Several nonmember bank;:jrs have called here for the purpose of discussing membership and others were interviewed at the Regional Conference &t Des Moines, Iowa. As a result, the directors of one of the
banks have pr-.ssod a resolution authorizing tho officers to file application for membership; two of them have indicated thnt they would consider some capitcl correction; one will decide whether to convert to
a National b3nk; one stated frankly that his bond depreciation would
probably w~ke his bank ineligible, while others indicated that they
would give the mat"ter further consideration.
During the month, we offered
o·otaining at cost our publication
to their cuntomers. As a result,
mately 5,000 copies monthly for a
our member banks the privilege of
"Business Conditions" for distribution
we have received orders for approxiperiod of. twelve months.
We also advised our mmnber banks that, effective March 21, this
bank would extAnd the time for receiving and handling on the current
day deposits of checks drawn on out-of-town par-remitting banks until
6:00P.M. (Saturdays 5:00P.M.), credits on such deposits to be deferred from the date cf receipt in accordance with our present time
schedule.
:188'
-9-
R-212-s
Chi cn{~O continued
This change will permit earlier presentation of a larf-e rmmber of
items now held over for the next day's business and will result in correspondingly earlier credit to the sending bank.
St. Louis
During the month our officers and field representctive visited 99
banks, of which 51 were in Kentucky, 28 in Arkansas, 15 in Mississippi,
3 in Illinoj_s, and 2 in Tennessee. Following is a l'Asume of the re1)0rts
covering these visits:
Agri_£ulture, Industry, and Trade:
In the agricultural sections of we::.:tern Kentucky, there is slight
probability of any chcnge in cond.itions until the harvest season of
1938. unless there should be substantial [,dvcmcGs in market prices of
cctton and corn over the prices Gt which Goveriunent loans were made.
'rhe principal tobacco markets have now close>.d for the season and while
prices were much lower tho.n those for the 1936 crop, the que.ntity grown
W?..S far in excess of that producnd during the preceding season.
However, a high percentage of tho crop was of poor q_uc.lity ~and grs.de, which
reduced the income.
The peach crop in Arkanses is about c. month ahead this year on account of the unseasonably warm we;ather. It was st:1ted that in its l,resent stage, the crop cannot st:lnd a temper<iture of less thi:~n 26 degrees.
Cotton in the hill sections is out of tho field and very little
planting has b0en done for the l9J8 crop. In the Mississippi Delta
there was still a lot of cotton in the field, and pr,:..ctically no ground
hns been broken for the 1938 crop. Very few of the Delta banks have a
lr.:rgo volume of' CCC loans. The cotton picked since December was of a
very low grade and not elig1.ble for the lo~;n. It looks es if' the high
grade cotton pi ckod earlier in the f:~ll hns moved to mc.rket, while the
low grade cotton j_s being held. Howevor, the Delta generally appGared
to be in good condition, ar;.d bcml<::!;rs interviewed we:r:e of' the opinion
that the low price of cotton wr~s offset by the increased production.
Jmmsry sales by retaH norchants in Mississippi showed an increase. This is undoubtedly bec<mse the cotton :pickine, sec..son e:xteLde.d
over 5 months instead of the usud three.
CommerciG.~r.kir~g:
PraeticP,lly all com~try t:::.nks are looking forward to " stimuh~ted
demand f'or loc.ns as tho S};rint; plnntinc scE.son apr·roaches. 'I'his is
-10-
189
St. Louis continued
particularly noticeable i.n tho S.;uth, where considora~Jle prelimiiLry
prE;paration ho.s a.lrendy been made in connaction with ·~red:ing of ground
when weather conditions pcrmi t. Prccticully t~ll banks :Jrv pr"lpcred to
r,;·upr:1y the credit demands of their :respective: communities, though in
som0 qunrters it will bo rwceosary for them to ::we~: sid through cuGtolTlflry chc.m~el:::: before the season is cumplete~. Officers of these b<mks,
wHhout e:xcel;tion, state that th(~y are wlllinb <:;nd 1mxious to grant accommodations.
With the :.>t.rengthening in v~lucs of Government securities, as well
those bearing the gu~rant ee oi' the Government, a keoner interest i ~;
buing ohown ill this form of invoct,iwnt, anu. any pr0vious app'ohension
regarding such securities has almoGt entirely diseppeured.
a~;
One banker stated thn t his dif'ficult;1 waG convincing reserve bank
officers that their voluution on livestock eoverod by chattel mort,;agr:;s
wcs too lm~. Last fall thi:; baukor needed aeconrr.lOdation for a short
period :::..nd sec\.ired it fro1n h i;l Louisville correS})Ondent at [! rc.te lower
than the: FRB rnte and with less "r(~d tape", Advr:mces to distillers are
the JJrincipc.l source of rr:JVenue of a Kentucky bank which wished to know
whether the rc~::erve bank was ev,n· going to perfect uome 1-J]an to em:cble
memb,,r honks to borrow on warehou::-r~ receipts covering whiskey.
( 'l'he following report c:ovo.rs the:: me ot j_ng of Group I, Wi f>Consin
l'hnkorst Assocbtion, Minnuc:pollc, 1\:tinnr::sot~<, FGbru: .. ry ;~;.~, l9J8.)
1'ho principal worry of bsnkcrs seemed to be their bond accounts,
:md the prj_ncipal topic of inter•J.::;t '\A!c:s our forthcoming memb0r bank. conferenct'J scheduled for March 12. This conforence is b1.3ing limit:::~d to
membur hanks in the distric·t Pond has been so ~-..nnounced in every letter
and pioce of yublicity, nnft y0t ,, number of verhal rer:tuests wore received at the convention t'rom b::;nkers in .r.alwaukc-H':, f'rom bond men, from
nonmember bankers, : nd front oth::;r·:. who W8re Jneligib.le for permission
to Lttend tho conference.
As a r0sult of more then one yoa:r' s us0 of tho Fc::dol~al fieaorve
movie in tho public relations proe_:r:·am of' the WiscouDiu Bulikers' A<Jsociation, the bankers ot' thcrt st·1t.e have bc1C01ne •Jrd'ini tely "movie-mindnd".
M··.ny bankers talked to us [:l.bout our uovie and about thf: possibililty of
a commercial bank film being prqH . . red to serve similar I,urposes. 'rhoir
association has voted an appropriation of $8,000 tu produce and distribute such 2 movie, :=..nd tl1e banker.J ocelli trJ be eagerly aw:Liting it.s advent.
190
h-212-8
-11Minneapolis continued
One of' our officers spent e. good ehare of the day followine, the convention with the Secrekry and Assistant Secret~1ry of the Wisconsin Bankers' Association, going over teci·mical problems in connection with the
prepo.r~:t ion of the scri:Pt und scenario for their movie.
Sevoral brmkers were deeply concerned ovor pending Federal legislation, particub.rly the so-cnlled Patman Bill. They were fec.rful thut
this bill, if enacted into law, mi.ght prove an entering wedge by tho
government to take over all thf) bl'~nks, and were hopeful that sufficient
oprosition would develop to prevent the pr.;.ssc.ge of' this bill.
'l'he feeling with reu,lrd to bJ:-.:::.nch banking legislation was somewhut mixed; the wide V'lriance in the attitude of the individual bankers depondent on their estim te of its effect upon their loc~l situation.
The matter of competition frow governmentel at.oeLc:ies was alDo a
point of issue by some of the b;:;.nke rs. It w~:ts generally considered
t!lat competition by the Production C::·edit Corporation was unfair, although in most sect iorcs not VOl'J cnerget ic2lly iJUShc·HL Scver[:<l bankers were hopeful that the Postul i3e;vin{;');.; System would reduce the rate
of interc:1st they wero payi.ng so (.iS tu brine; it more in line with thst
which mnr1y bcrJ;:s felt compellc;d to pay.
It w~~s generally agreed that the d·.Jm.."md for crudi t was light. The
matter of sui table inventm<mts for their funds was a J;roblc·m for many
bankers.
Bcnkors attending this meeting e:,encr·:;lly reported that their particulr?.r sections were suffering from lack of raoL;;ture :,md that unless
they recoi ved a corisiderable amount of snow durinc tho rmll!3 inder of
tho winter or much needed moisture durin~:~ the npr ing end su1,u:.c:r, crops
would be adversely affected this your.
One of our officers devoted cpproximately two hours to discussing industrial loans v;i th sevsr::;l of thu bLnkers present. It u.ppes.rs
that the recent widespreF. . d publicity given the sntall businessman in s.n
s.ttompt to help him, hos creat(:d a fooling th:'l.t the govurnr.;ent is about
to launch a program to t:tid busineBs with very little reu:'rd for the
collatorn.l behind the loan.
After the banquet in the ovenill€, Mr. Orvcl W. Ad:-.ms, president
of the American Bankers Association, l'dt:cl n pr.JIOr eulogizing George
w::-~shington for his gro!1t a ccoml:-lit3hments, and endeavoring to compare
191
R-2l2-a
Washington's admi.nistration to th::.t of HoosevoJ.t's. Aftel' the ba.nyuet
<: number of banl:.er:::: i11dicatud that they were vor.f much disap1ointed
with the paper rend by Mr ..Ad8IM3. Sevenl of the1:1 scid that they considered Illr. Adams en outt>tcndi!.1b <>pe£lker and thc.-:t they cnme princiIJ::_,_lly to hew.r him Givo oLe of his typical dynr;mi c tulks lambasting the
r;r,:;sent admj_ni strr:..tion.
Kansas City
A Colorado State banker told a rep-r·es(mt<:..ti.ve of tnis bGnk that
tho only thing keepinc his institution frou becoming a member of ttl(?
Reserve Systetro wa~~ the present re;Jorve requirement. This bc-:nker had
formerly beon a national bu.nkor and was familiar with the Heserve Sy-stcJ.n ::.:ncl appreciated its serviens. •r;ds exr.erience is u good illustrs·tion of a rather provc.lent diff'eronce of opinion between country and
city b~tnkors in regard to reserve rec1uirements. Boc<mse of' conditions
in rocont yours, city bnnks generully have been more accustomod to
car-ry:ing larger reserves nnd tho increased re(1uirement under present
cor;ditions :i.s not ::;, majJ:t' question with most of' thom. Countr:r bankn,
on the other band, feel the necessity of maintaining satisfactory cqrres;1ow~ent balancE]s and r;~~my take the position that increased reserves
mea~ rednced investn:~mts and hcnct:; SJaaller earnings.
'l'he nt•)Y.Lth of Febru:.u•·J brought grost lmprovo1~1ent in the r,;oisturo
si tw'ltion over most of tho Tenth District. Pl'(lCipi tr-,tion i.n Oklahomc
f·Jr th1s month was the lr:rg(JSt on rccorct--1t ueill{~ oxco~3sivo in the
southc·rn and uGst-centr:::l porti.ons of the St·:1t;e. Good snov;s vrcn.•c c,:.:norc.l ovor most of Kansas and Nebr1.i:::kn. Wintor-whoc.t prospcctG arc
gruot.l.y :lmprovuci oven in wof~tern Kansas [\IH1 the pcnhandle of Oklahoma.
It must be remembered, howovor, thut this is .;n.ly & surf'c:co improvem:.mt os the subnoil in. these statos is still bono dry and long wot
spells or OllJiO:rtune rriins wiLL be necossc.ry to mnko cro1;s.
Both individual bankers and banking groups havo recerJ.tly shown
incr.:;ased interest in the Patmen J3j_ll. Of spucial significance is the
fact that the opposition tc: this me:.~surc; Sc)ems, i f c,Itything, stronger
among small bnnks than l0rge one::~. Banter::. look upon this bill !''.n a
stop in the direction of complc:to unification of the bnnking nystem.
In :: country so lcrgo as this, contr~:Jlizrotion of b:::.nk:ine in Vloshington
they b<:ilieve will neces:=;it;Dte fln jntolorr,ble buroauera.cy.
'The upturn in l3.mb and boef-stoer prices in r•3Ct-mt w<;okrs is s:;rving to limit feeding loc;son. LamlJ prices fell cl:rasti.cull:; betwcl0n the
middle of September and tho mj_ddle of February, but slnce tholl hav-e
risen ne~".rly ::; cm~t a pound. Colorudo fattens ,.;.pproximc toly one-fourth
-lJ-
R-212-a
Krmsas City continued
of the countr-y's ·tott:JJ. gr<:.in-f'1nished lambs, this State fattening more
than n million l3.mbs ennually. In the beet-sugar regions of northern
Colorado lamb feedine; is exten:3ively employed for utilizine, the beet
tops and tho beet pulp. Beef stoera fell from ~17 .25 <• hundredweie)lt
in September to under $8.50 the t'Jrst week in F'ebruccry. The high price
did not last long enough to be re}irescntative :,nd the price rsnge of
ethel' typf~3 o:£' cattle was not so extreme, but the price decline h3s
been rmch as obviously to nako profitable feeding operations impossible.
However, prices are again tending upv1ard an.d to n degree, at least, are
reducing feeding losses.
Heports of the demand for bn.nk lof::ns are somewhat checker(3d. Trw
bcJSt demand is in Oklahoma whore bankers in certnin sections describe
it '1s being r?.ther brisk with tho possibility of coesiderablp, rediscounting in the coming growing t3Ce.son. A ba.n.ker in the irrigated region of south-central Nebrflska also rq;orted some demand f'or lonns.
lb S8.id his institution was meeting the competitLm of the Production
Crt3di t Corporation with respect to c.ll desirzcble loc-,ni3 • Or. the other
h::md, bonlwrs in central e-nd north-centr'll Kunsas report Ji t tle or no
demur-d for f'unds.
There ar.; few sig1.1.s of businoa::J improvement in this District.
Rot nil tr.cde ac stown by dopartr.F.m t store sales was slwrply under
Febru:ccry a ye:1r ago 21 though tbh• wcs due in v~rt to woe the:r condittuns. Cor,structton activity, vrl.tich tondr; to :::nticip:::to G_en,;;ral
busiLoss r.wival, continues hi[:.hl;y· di::.~appointing. The common explanation of the lovi st~lte of' conwwrcL.• l construction activity is the
poor prospuct undor vrElE.:ent; condi tL:·ns of a return on i.nvesti.1ents in
thts field.
DGll.b.S
Fifty-two bnnks, lpcoted in various sections of Texc,s and New
Mexico, were visited. Some of thosu visits wero m&de in connection
·.vi th ammal "group meoti ngs" cor.ducted by the Te:x:~:.s Bar"kers AssociGti.on and w~:rc th,_;refore too l)rief to permit dotrdled discussions of
the problems <.nd attitudes of th8 banks visited.
The viee ;.resident of' a N:.::tionb.l b2n1: hc.ving dqJosits of
~~~;5,000,000 OXJoressed the opiuion that the BocJrd of Governcrc; should
reduce the reserve rc;~uirc;mer. ts of country member bbnk::l. No other
collrrnonts or cri tioisms relc.t ir;g t0 reserve requirements were hecrd.
Satint'e.ction wtth Ir,emborship :roquir.::;ments ~,nd Fedorr;:.l reserve
l)Olicios was gomn·hlly .;xpressed, rmd tho pr5 ncip~.l complair;.t voiced
by the 'l'exr.:s banke: related to tho continued low lcwel of oz.~rninc,s.
Howover, a llUlnb,Jr of l.lfJ.nko informed our officers th;· t they ure D:X:IJUrier,cirg G somevdmt better rlemand fo?.' crndi t this ye.'.~l' thnn tr10y had in
1937.
:192
193
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R.-212-~
1);·,11&3 cont inuod
Ir. the rurr.l communi ties in Tex.::. a the matter tba t t..ppearfl to be
upJ.er:m.ost in the minds of the ban1mrs at iihis time is the government's
1-·rogrem for uidinc the cotton producers this year, the deteils of
which ht::.d not been announced at; the time our visits ·were mc.de.
In the urb~n centers loc&l business conditions were described €45
being fairly St:lti::;f'actory, notwithstanding tho country-wide recession
of the pnst f'ive months.
A unique form of bt::I!k rel:.-; tions activities wus engaged in by our
ban.'!( in Februr1ry when o. dim:.or wa~; .;i ven at Houston by our branch at
that city for the !JUrposo of brj.nging our officel'D into closer cot;tact with the opt1r~.:.ting exocutives oi' the Housto11 member bo.nks. No
baul: pre:.d.dents were invited, the F.ttendance bein~;. limited to vice
presidents in direct charge of thr.:t daily oper~.;tions of' their respective benks.
Condition3 in New Me1~ico :nd Arizona. were found to be somewh~·.t
unfavorable, pHrticular·ly with re:('(.;rence to ::•sriculture, cor:·1:.or mining
hnd the: li veatock indu::;try. Cottor~ f1:2rmers arc rcport;;)d ns d.iss<:.tisi'i ed wi t.h the goVfJIT.Jrtont' s acr.:!!:l.g!.:l r0duct ion plar;.s for 1938. A reduction in the price of copper frum lL1. cents a pound to 10 cents has
cLusod an np1:rociable cor.tr:;ct ion of e cti vi ty :_·.nd J,:;ayrollt> at the copper mines, !.~n ir~crec.r.:e ill sovincs deposits il~ oxpoctF.,ti,:,n of' further
curtail.In:::r.t of employment, rmd '- slowine down in retr.~il trtido.
Prict1 uoclinos in the livar:.:tock, wool ;:I.d n~ohhil' markets h<:;.vo
cidvcrsely u:t'fectvd tho ponitioll of cc:.ttle c<nd shee1. r::..isors in .1~rizona.
11nd Now Mexico, <:lthou~.h livc::Gtock h.·.s wi.nt<;rod woll, is in c,ood fl:;sh,
''\lld c. large Cl":.lf crop is· o:q)ectHd during thb sprir.;.g.
8::-.n. Francisco
Bellflowor
The principal activity in th1.:.,; ar·ea is the production of milk.
Vv'hile thu supply (of mill'~ in the <:,rea) !1<... ~~ not incroas-3d, tho conswnytion over the lc,st fev; mvnths has decreased considernbly, and this is
~scribed to cur1·ent conditions.
Apparently thf3re has been a lo.rge con ...
v~rsinn from Holsteins, which ~i!"(3 l:::.rEG 1;roducors of milk with a sm.;;.ll
butter i'::t content, to Guo.t'IW0Y8 '1!\1 J'erGeys, which };rouuco less milk
but ~.. h igh<3r buttE:Jl' f;;, t coutun·t. Some ot':f'Ol'tf) lwve lr~tely bGen 1r1~.de
by the StC;.te .Milk Coti.trol BotHd to r;'tcbHi~~o milk pricu::;, but court
194
·-15-
R-212-u
h''VG rusulted end tho outconte is in doubt. 'I'wo of the subst:;.nti:.::l dist:ributors :in Los J.ngelr;w .:1::ve rocc11tly takE..n aclvuttcc,e of 77--B,
end i t is eGtim~:.ted that up;Nards of' :$50,000 due to producars Ln this
li i cin ity i fJ t i od U};!, vvi.th r0paymen t pro blo1.1ct i cal.
~:cttons
ProducDrs who underst:::.nd their busineso aEd are h2rd vvorkcr::; e::.ro
:::.t tho :rn·ncrn:;t time mal:ing a little mcney. Tho others 2.ro about brec:ktng GVCJD,
Tho outlook is for green foed at fuvorable prices.
Si tuntdd midwey behveen Los Ang.:;los nnd Lone; Boach. 'I'he populaprincip~:lly of ware oc..rners who wc•rk in the vc:rtous surromldiLc, oil fiuldG. Thore ].s 2. ltmitod amount of r.lcr . .ufccturing, principr;ll..y 0il well m<·.torial, er.d c. cort~~.in amount of agricul tur;;. Owing
to the; cheractor o1' work in which the r.~opul<"tion i~' en~;:~ged, the current rccescion hEs not been felt to the sEme degree us in some other
lines. U:c merehar.ts in the town hcd & ~.-:ood ye::.,r in 1937, although not
cs good c~S 1936.
tion consists
Since the recent rcvjsion of the Netiom:;.l HouE;ing Act, incrc:,sod
inquiries hf1V8 been BXVlrienced,
G:~rden
Grove
Loc~;tod in a high-class V<llcr;.cb orr.n.::._e district.
Vegetabl0s,
strs.wburries, nnd chili pqJpors ~ __ re .;lso a consic:erable source of incarne to the community. Owing, to the freeze in the e:_rly p::-.rt of 1937,
last year' n ve.lencia crop brouf)Yt about he lf' of tlle usual proceeds.
It ].s estimr:ted thc.t the ch.ili pepr:er crop crown in the vicinity (which
probc:bly represents 90% of the total United States crop) returned to
the growers c-~pproximntely the s&me amount tiS wns returned by the vDlencia
orrwges. Conditions this winter, however, ho.ve been ideo.l for the growing of or•.lnges, end unless somethhg untowurd in the way of 3 late frost
occurs, the val8ncia oro.nge crop this f3ll will probably amount to the
second lc.rgest in the history of the corn;nuni ty.
PUBLIC RELATIONS ACTIVITIES OF FEDERAL RESERVE
B1~NKS
FEBRUARY, 1958
Federal
Reserve
Bank
Boston
New York
Philadelphia
Cleveland
I
~
M
I
Visits to banks
,tl.1ember I! member
Non- I
i Total
I
Numb'3r
I
None
125
48
95
None
44
;::5
56
4
11
2
18
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San F·r-ancisco
Meetings attended
2
47
52
27
None
51
12
20
None
1
None
5
"
..L
250
2,010
None
None
1
200
7
None
4
4
47
2
52t±
478
4,629
1,545
9
15
Attendance
2,597
6
29
2
99
52
12
Number
595
515
50
15
...
v
5
2
Addresses made
None
5
2
1
*
5,481
2,070
167
75
151
*Attendance not reported
at 1 not reported
~*Attendance
i
I Attendance
2,962
485~'*
2
1
None
1
300
100
75
@FedFRASER