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V

Fifteenth Annual Report of
the Federal Reserve Bank
of Boston for the year ended
December 31, 1929 °£

ISoston, zJXCassachusetts



FEDERAL RESERVE BANK OF BOSTON
OFFICERS AND DIRECTORS
December 31, 1929

OFFICERS
FREDERIC H. CURTISS, Federal

W. P. G. HARDING, Governor

Reserve

Agent

WILLIAM W. PADDOCK, Deputy Governor
CHARLES F. GETTEMY, Assistant Federal

WILLIAM WILLETT, Cashier

Reserve Agent

KRICKEL K. CARRICK, Secretary

HARRY F. CURRIER. Auditor

ELLIS G. HULT, Assistant Cashier
ERNEST M. LEAVITT, Assistant Cashier
L. WALLACE SWEETSER, Assistant Cashier

DIRECTORS

Class and
Group

Term Expires
December 31

A 1 ALFRED L. RIPLEY,
A 2 F. S. CHAMBERLAIN,

Chairman of the Board,
Boston, Mass.
1932
The Merchants National Bank,
President, New Britain National Bank, New Britain, Ct. 1931

A 3 EDWARD S. KENNARD,

Vice-President and Cashier,
The Rumford National Bank,

Rumford, Me.

B 1 PHILIP R. ALLEN,

President, Bird & Son, Inc.

E. Walpole, Mass. 1932

B 2 ALBERT C. BOWMAN,

President, John T. Slack Corporation,

Springfield, Vt.

1931

B 3 A. FARWELL BEMIS,

Chairman, Bemis Bro. Bag Co.

Boston, Mass.

1930

C

FREDERIC H. CURTISS,

Chairman,

Boston, Mass.

1932

C

ALLEN HOLLIS,

Deputy-Chairman, Lawyer,

Concord, N. H.

1930

C

CHAS. H. MANCHESTER , President,

Providence Gas Co.,

Providence, R. I. 1931

GENERAL COUNSEL
ARTHUR H. WEED, Boston, Mass.

MEMBER OF FEDERAL ADVISORY COUNCIL




1930

ARTHUR M. HEARD

President, The Amoskeag National Bank,
Manchester, N. H.

FIFTEENTH ANNUAL REPORT
OF THE

Federal Reserve Bank
of Boston
For the year ended
December 31, 1929

BOSTON, MASSACHUSETTS




LETTER OF TRANSMITTAL

BOSTON, MASS.,

January 28, 1930.

HON. ROY A. YOUNG,

Governor, Federal Reserve Board,
Washington, D. C.
SIR:

I have the honor to submit herewith the Fifteenth Annual Report of
the Federal Reserve Bank of Boston, covering industrial and credit
conditions in New England, and the operations of the bank for the period
January 1, 1929 to December 31, 1929.




Respectfully yours,
FREDERIC H. CURTISS,

Chairman and Federal Reserve Agent.

FIFTEENTH ANNUAL REPORT OF THE
FEDERAL RESERVE BANK OF BOSTON
NEW ENGLAND BUSINESS CONDITIONS DURING 1929
•

During 1929 the general level of industrial activity in New England
was higher on the average than in any previous year; thus, this district
shared in the general activity which prevailed throughout the country
during the year. During the first quarter of 1929 general business activity in New England increased at a rapid rate, and continued rising
throughout the second quarter. After mid-year, however, there was
evidence that business was slowing down, such evidence being visible
previous to the period of drastic stock market liquidation during October
and November. Throughout the third quarter of 1929 there was a
moderate recession in business activity, which continued in October. During the last two months of the year, however, sharp curtailment in most
lines of New England industry brought the general level at the close of
the year to a point considerably under any which had prevailed since
1924. There were no particularly outstanding events in New England
industrial conditions during the year, the rise to new high levels being
the result of generally healthy expansion, which usually proceeds by a
series of spurts, expansion (supply) outrunning consumption (demand),
followed by a readjustment period, during which demand grows up to
supply. The closing months of 1929 witnessed a readjustment period.
There was a continued diversification of New England industry during
1929, and whereas the textile and boot and shoe industries were predominating factors in former years, at the present time these two industries comprise a relatively small percentage of the total New England
industrial activity.
New England industry is now supplemented by a newer form of
activity in developing and utilizing the recreational facilities of this section
of the country. This new activity is a rapidly growing business, which
has become of substantial value to New England welfare. The condition
of New England agriculture during the year 1929 showed a substantial
improvement over the previous year. The unusually large potato crop
of Aroostook County, Maine, sold at higher prices, contributed substantially to the increase in total crop values between 1928 and 1929,
while the cranberry crop, produced largely in Massachusetts, and the
tobacco crop, raised principally in Connecticut, were also contributing
factors. The agricultural situation in New England at the beginning of
1930 is excellent.



ANNUAL REPORT OF THE FEDERAL RESERVE BANK OF BOSTON

Building activity, more especially the speculative feature, continued
the decline which started in the middle of 1928. The volume of retail
sales reported by New England stores during 1929 was slightly
larger than that reported during the previous year, the increase being
1.3 per cent. Conditions in the New England textile industry during
1929 were somewhat more satisfactory on the average than those which
prevailed in 1928. New England boot and shoe production during 1929
was greater than in 1928, although toward the latter part of the year
considerable curtailment was reported. The allied metal trades and
machine tool industries in New England reported unusual activity during 1929.
While production in New England has no doubt been affected indirectly
by the profits made in the security market, this district, on the other
hand, has few, if any, industries which have been directly stimulated by
those profits. During the year 1929, the manufacturer, merchant, and
farmer, have been able to get ample credit at reasonable rates to meet
their requirements, and while member banks have taken advantage of the
high yield on security loans, this apparently was not done at the expense
of the merchant and the farmer. The decline in industrial activity in
November was unusually sharp, and the extent of the recession which
has taken place since midsummer may have been accentuated by the
decline in the security markets of October and November. The level
of industrial activity at the close of 1929 was considerably under the
level which prevailed at the end of the preceding year.
Employment: Employment conditions throughout New England during
the past year have been on the whole exceptionally good. Not only has
there been a fairly high
demand for workers,
INDEXES OF EMPLOYMENT
MASSACHUSETTS AND UNITED STATES
b u t most industries
have been relatively
free of labor disturbances. Records of the
leading public employment offices show an
increase of over six per
cent in the demand for
employees, principally
for skilled workers and
m a c h i n i s t s in the
metal and machine tool
trades. Since 1923 the
trend in the total num


ANNUAL REPORT OF THE FEDERAL RESERVE BANK OF BOSTON

bers employed in reporting manufacturing establishments throughout NewEngland has been downward. From the point of view of industry the
movement represents a period of resuscitation. Over-capacity and overproduction are being gradually eliminated, and obsolete equipment is being
replaced with labor-saving machinery. Thus, operatives affected by these
economic changes have become engaged in departments or trades which
furnish such equipment, or have entered other fields of industry wheie
opportunity is less restricted. The greatest outlet for New England
enterprise has been in the growth and development of its recreational
activities, which are constantly drawing upon an increasing number of
employees.
Cotton: In 1929 New England mills consumed 6.7 per cent more raw
cotton than during 1928, and cotton consumption for the entire country
was 7.0 per cent larger
TEXTILE ACTIVITY
in 1929. The increase
NEW ENGLAND
which tool place in
1923
1924
1925
1926
1927
1928
1929
New England, however, was simply an
improvement over a
very small volume of
consumption in 1928, a
year during which less
cotton was consumed
in New England than
in anv other post-war
year. The improvement
was not sufficient to
bring the New England
total up to the levels of
recent years other than 1928. For the entire country, cotton consumption
in 1929 was only slightly less than the largest post-war annual volume of
1927.
Cotton consumption in New England during the past 10 years has
shown a declining tendency, and there probably are three principal factors
which have influenced the trend: — liquidation of mills and transfer of
operations to other sections of the country; the fact that rayon has been
used in increasing quantities by cotton mills in mixture with cotton
fibre; and the frequent condition in which New England finishing mills
have found it advantageous to purchase gray cloth from southern mills.
Production of fine cotton goods in New Bedford increased more than
65 per cent in 1929 over 1928, but the strike in 1928 curtailed production
sharply during that year. Total production in New Bedford, however,



ANNUAL REPORT OF T H E FEDERAL RESERVE BANK OF BOSTON

in 1929 was larger than in 1925, 1926, and 1928, and was about 11 per
cent less than in 1927.
The New England cotton textile trade, although more satisfactory
in 1929 than in 1928, could not be considered among those industries of
this district which shared in an unusually high level of activity during
IO 2
- 9Wool: The amount of raw wool consumed by New England mills in
1929 was larger than in any year since 1923, and yet during the year
wool prices declined steadily. In November and December there was a
sharp decrease in New England consumption, as compared with the corresponding months in 1928, but a decline was general throughout most
lines of activity during the last two months of 1929, and was not confined
to the textile industry. During each of the first nine months of 1929
there was a larger per cent of wool machinery active in New England
than during the corresponding months a year ago, but throughout the
fourth quarter there was less activity. Although activity in the woolen
industry was greater on the average during 1929 than in 1928, profit
margins were reported to be small, and in some instances practically nil.
The Wool Institute, however, is becoming more and more of a factor in
aiding the industry to become stabilized. The outlook for the woolen
industry, while far from satisfactory, appears to be more encouraging.
Building: The year 1929 closed with the lowest total value of new
construction contracts awarded since 1924, both in the country as a
whole and in New
VALUE OF BUILDING CONTRACTS AWARDED
England. The value of
NEW ENGLAND
contracts awarded in
1926
1927
1928
1929
New England has been
declining steadily durE H
ALL OTHER
COMMERCIAL i
ing the past two years,
RESIDENTIAL —
and for the year 1929
was $98,198,600, or 20
per cent below that of
the preceding year.
The general tendency in
recent years has been
for the total value of
building to increase
gradually in a cyclical
manner, with the peaks
occurring approximately every three years. A 12 months' moving average
of total value of new contracts awarded for New England indicates that



8

ANNUAL REPORT OF THE FEDERAL RESERVE BANK OF BOSTON

the peaks during the post-war decade have occurred in 1922, 1925, and
1928. The years since 1919 have been so replete with various factors
relative to rehabilitation, reorganization, and new economic tendencies,
that none of these distinct periods of building has been exactly identical
with any other.
The decline from the high level of building operations reached during
1928 has been attributed for the most part to the conditions prevalent
in the money market and some apparent over-capacity existing in office
and apartment house types of buildings. The interest in speculative
activity resulted in increasing the cost and decreasing the volume of
money available for real estate operations through the attractiveness of
collateral loans, but at the same time attracted funds which normally were
deposited in savings and co-operative banks. These institutions find their
chief source of investment in real estate loans and mortgages, particularly
of the residential type, which has been one of the principal causes of
weakness in the construction industry during 1929.
Metals: It is in the metal trades and machine tool industry of New
England that the greatest percentage of increased activity has occurred
during the past year. This increase has been the natural accompaniment
of the high rate of production in the automotive and kindred industries
throughout the country. With the industrial output of the nation at the
highest level ever recorded during a period when the country was at
peace, the demand for copper, brass, and their fabricated products has
been proportionately large. The increasing output of industrial products
has inevitably stimulated a demand for newer and more efficient types
of machine tools. This demand, however, encountered some difficulty in
the third quarter, with the declining tendency of the volume of industrial
output and the constantly rising interest rates, w*hich operated to check
the further investment in equipment. The metal-rolling mills and fabricating plants of the Naugatuck Valley, the machine tool industry of Massachusetts, Rhode Island, and Connecticut, and the specialty products shops
throughout New England have experienced during the past 18 months
the most sustained production schedules in recent years. Current employment figures throughout the year have indicated full-time and overtime operations to be in force, mill orders indexes have given evidences
of a substantial backlog of new business on the books, and the prices
of the leading metals have been firm. Changes that have occurred during
the closing months of 1929 within this group of industries are the result
of influences which are causing similar reductions throughout all lines of
activity, and have not materially affected the outstanding record of 1929.




ANNUAL REPORT OF THE FEDERAL RESERVE BANK OF BOSTON

Boots and Shoes: Total boot and shoe production in New England
during 1929 was slightly less than one per cent ahead of the previous
year's record and proSHOE PRODUCTION
portionately below the
NEW ENGLAND
increase of 4.5 per cent
1923 1924 1925 1926 1 9 2 7 1928 1929
shown in the figures
for the total output of
the country. While this
h
moderate rise in the
• ',
> j i
volume of shoe produci ' \
/ '., j \
tion in New England
u > \~f~t"
•i \
indicates that the shoe
'<
\
~i V
y
1
industry has not been a
considerable factor in
1TUAL
the high rate of indusMONTHS
trial activity that characterized the past year,
t h e performance of
each industry must be appraised by the economic forces operative within
that particular industry. The annual output of shoes within the New
England states from 1924 to 1928 increased 13.8 per cent, whereas the
corresponding record for the entire country showed a gain of only 9.9
per cent. When the respective percentage increases in total annual production during the five-year period, 1924-1929, are compared, however,
New England registers an increase of 14.9 per cent against a gain of
15.3 per cent for the United States, which relationship represents a more
balanced distribution of output, in view of the industrial growth of the
country and the location of the principal marketing areas.
Shoe shipments from Brockton during 1929 were larger on the average
than in the preceding year, and for the entire period gained nearly 15 per
cent. Wholesale prices of hides and leather products were distinctly
lower at the end of 1929 than at the end of 1928.

J

W

J

AAV

v

A

\'c

MOVING

AVERAGE

Trade: The volume of retail trade in 1929 reported to the Federal
Reserve Bank of Boston by 89 New England stores was about one per
cent larger than the aggregate business of these firms during 1928. Sales
of Boston department stores were 1.8 per cent larger in 1929 than in
1928, and were approximately equal in volume to the record year of
1927. As a matter of fact, since 1920 the percentage increases or decreases in annual volumes from year to year have been relatively small,
especially during the past three years. The following table indicates the
annual percentage changes since 1919:



\

IO

ANNUAL REPORT OF THE FEDERAL RESERVE BANK OF BOSTON

From
From
From
From
From
From
From
From

1919
1920
1921
1922
1923
1924
1925
1926

to
to
to
to
to
to
to
to

1920
1921
1922
1923
1924
1925
1926
1927

+16.2
—0.6
+3-8
-j- 6.6
—0.7
+ 1.5
-j- 4.0
+0.5

From 1927 to 1928
From 1928 to 1929

—1.9
+

1.8

The total sales volume of an identical number of Boston stores
increased 34.5 per cent between 1919 and 1929. The growth during
recent years, however, has been smaller than in the early part of the
period, as will be noticed from the above table. It seems significant that
Boston department store sales in December, 1929, were only one-tenth of
one per cent less than the record December business of 1928. The above
data are based upon aggregate net sales, however, and may not be indicative of trends of profits.
Commercial failures, as reported by R. G. Dun & Company, increased
1.8 per cent in number during 1929, compared with the preceding year,
while during the same period total liabilities were 12.6 per cent larger.
Although liabilities for the entire country were 4.2 per cent greater in
1929 than in 1928, the number of failures declined about 3.5 per cent.

The following table presents the changes which have taken place in
many New England business activities between 1928 and 1929. The
table does not necessarily contain all available business data pertaining to
this district, but does furnish a cross-section sufficiently comprehensive
to be indicative of economic changes in New England:
BUSINESS INDICES—NEW ENGLAND
Change Change
1929
to
1928

GENERAL BUSINESS :

1929
1. New Incorporations—Massachusetts
2. Electric Power Production
(Kwh.)
3. Carloadings (Mdse., l.c.l.,
and Misc.)
4. Residential Building Contracts Awarded
5. Commercial and Industrial
Building Contracts Awarded
6. Total Construction Contracts Awarded




1928

1928
to
1927

—0.6 +15.7

2,717

2,733

6,647,619,000*

5,953,75i,ooo

+ 117

+9-6

1,969,629

1,979,564

—0.5

+0.3

$ 153,269,000

$ 203,349,000

—24.6

+9.7

$ 108,014,000

$ 149,132,000

—27.6

+75-O

$ 398,382,400

$ 495,581,000

—20.0

+20.3

ANNUAL REPORT OF THE FEDERAL RESERVE BANK OF BOSTON

II

BUSINESS INDICES—NEW ENGLAND—Continued
Change Change
1929

1929
to
1928

1928

1928
to
1927

INDUSTRIAL CONDITIONS :

1. Cotton Consumption (bales)
2. Production — Fine Cotton
Goods (pieces)
3. Average Cotton Spindles in
Place
4. Average Cotton Spindles
Active
5. Wool Consumption (lbs.).
6. Activity—Woolen Spindles
(% of Single Shift Capacity)
7. Activity—Worsted Spindles
(% of Single Shift Capacity)
8. Shoe Production (pairs) . .
9. Orders of Paper Mills....
(% of 1923-25 Mo. Ave.)
10. Machine Tools—Net Orders
—U. S
(% of 1923-25 Mo. Ave.)
11. Orders of Metal Trades..
(% of 1926 Mo. Ave.)
12. Average Number Employed
(Reporting Mass. Establishments)
13. Average Monthly Payrolls
(Reporting Mass. Establishments)
14. Labor Demand at Public Employment Offices—8 Cities.
15. Silk Machinery Activity (%
Capacity)
16. Fish
Receipts—3
Ports
(pounds)

1,415,671

1,326,800

+ 6.7

—21.1

5,185,352

3,135,814

+65.3

—44-8

14,702,500*

15,635,908

-5-6

-7.8

11,126,000*
297,733,000*
74.1*

10,840,534
268,207,000
75-8

68.5*

63.3

+8.3

-9.6

122,088,000*
109.5*

122,012,000
92.7

+0.8
+ 18.2

+8.0

277.6

226.5

+22.6

+65./

116.4*

101.3

+ 14.8

218,671

209,058

+4-6

—IO.I

$5,469,689

$5,151,018

+6.2

—9.6

74,509

70,813

+ 5-2

+ 1.8

81.7

91.9

—II.I

321,561,000*

277,993,000

+2.6 —19.0
+ 11.1 —2.4
—2.2

—2.1

+ 5-7

+11.2

+15.8

+5-3

+ i-3

—i-5

TRADE :

1. Department Stores Sales..
(% of 1923-25 Mo. Ave.)
2. Sales of New Motor Cars
3. Number of
Commercial
Failures (R. G. Dun & Co.)
4. Liabilities of Commercial
Failures (R. G. Dun & Co.)

106.6

105.1

260,205

214,854

2,601

2,555

+ 1.8

+3-6

$54,623,125

$48,521,219

+ 12.6

-76

202,111,000

$143,784,000

104.9

105.8

+21.1

+25.0

AGRICULTURE :

1. Value of Farm C r o p s . . . .
(Dec. 1, 1929, Prices)
2. Average Level of Farm
Prices (B.L.S.—1926 = 100)
*Preliminary.




+37-O —12.4
—0.9

+6.4

12

ANNUAL REPORT OF THE FEDERAL RESERVE BANK OF BOSTON

MONEY AND BANKING

From early in April, 1928, to the end of May, 1929, the reporting member banks in the New England district, both those in Boston and outside
of Boston, experienced a continuous drop in deposits. This drop probably
was caused in a large measure by withdrawals in connection with the
security market, depositors withdrawing money for investment purposes
or attracted by the high rates prevailing on loans against securities in
New York. Both time and demand deposits of the reporting banks
showed substantial declines. During this same period commercial loans
steadily declined in these banks, and this decline continued in the outside
banks until the end of the year. While the Boston banks showed an
upward trend in commercial loans from May until November, 1929, this
change was due in a large measure not so much to strict commercial
loans, as to loans to other banks, — savings banks and co-operative banks,
— which are included in these figures; also, in November, the purchase
of acceptances and brokers' commercial paper was an important factor.
Both the Boston and outside reporting member banks showed a steady
increase in collateral loans, largely to their depositors, culminating on
October 30, and a steady decline in security holdings. From early June
to the end of the year the total deposits of all reporting banks increased
until the loss in the early months of the year had been entirely offset in
November, the improvement, however, being made mostly by the Boston
banks. During the spring the pressure on the Reserve Bank for rediscounts from the member banks was heavy, the pressure being more from
the Boston banks than from the outside banks, and during the latter part
of the year more from the country banks than from those in Boston.
About three-quarters of the 1929 expansion in loans and investments of
Boston member banks was eliminated during the readjustment which
took place following the severe drop in the stock market. Outside of
Boston the changes which took place in the loans of reporting member
banks were substantially similar to those in Boston until November.
Following the stock market crash late in October and early in November,
the outside reporting member banks were less able to liquidate their
position than were the Boston banks, the latter being assisted in improving their position in part by the redeposit by depositors of funds recalled
from the stock exchange, and in part by the continuous liquidation of
their investment holdings, supplemented at the end of the year by a
decrease in collateral loans. Late in October and early in November the
member banks of Boston utilized their improved position and liquidated
their indebtedness to the Federal Reserve Bank. After having reduced
such borrowings to a minimum, the lowest since 1926, they still found



ANNUAL REPORT OF THE FEDERAL RESERVE BANK OF BOSTON

MEMBER

BANK CREDIT

REPORTING MEMBER BANKS
l900r

1925

1800




926

SITUATION

IN FEDERAL

RESERVE DISTRICT I

1927

LOANS AND INVESTMENTS

NET

DEMAND DEPOSITS

1928

1929

13

14

ANNUAL REPORT OF THE FEDERAL RESERVE BANK OF BOSTON

themselves with excess funds, which they invested to a large extent in
the open market, purchasing bankers' acceptances, and brokers' commercial paper, on a scale unknown for a long time. Late in November and in
December when deposits in the Boston banks declined sharply, they first
liquidated these temporary open market investments and later increased
their borrowings seasonally at the Reserve Bank, but on a much smaller
scale than usual.
A significant characteristic of New England banking in recent years
has been the increasing trend on the part of member banks toward what
is ordinarily considered savings bank activities. The 385 country banks
in the First Federal Reserve District, taken in the aggregate, have over
half of their deposits invested in bonds, stocks, and long term real
estate loans. Even in the Boston member banks the proportion of holdings of bonds, stocks, and mortgages currently absorb about 30 per cent
of the loanable deposits. The development of this trend coincides closely
with the growth in time deposits from 1924 to 1927. When time deposits
began to decline early in 1928, both country and city banks began to
liquidate their security holdings and continued to do so in 1929.
LOANS TO MEMBER BANKS
The pressure on the member banks was reflected in the demand
for rediscounts and advances at the Reserve Bank. Following the
seasonal January contraction the loans to member banks at the
Reserve Bank mounted rapidly until on May 29 this institution was advancing $109,000,000 to its member banks. This amount was considerably
higher than at any time since the Spring of 1921, — the highest for
advances made to the Boston banks since 1921 and to the outside banks
since 1920. The demand from the member banks for rediscounts has
already been referred to and was caused by the decrease in their deposits,
accompanied for the most part by demands of their depositors for loans
against collateral. The situation was such that the directors of the
Reserve Bank became convinced that it could best be met by an increase
in the discount rate and they accordingly so voted at their meeting on
March 27, and reaffirmed this vote for several weeks. This increase was
not approved by the Federal Reserve Board.
The strain on the member banks continued unabated with an increasing
demand by them for advances from the Reserve Bank. On May 4 a
letter was received from the Federal Reserve Board asking the cooperation of the Reserve Bank in communicating with such member banks
as had been unable to adjust their position; this letter was presented at
the directors' meeting on May 8 and a resolution was adopted instructing



ANNUAL REPORT OF THE FEDERAL RESERVE BANK OF BOSTON

the Governor and Chairman to confer with the executives of such banks
as might be considered to come within the scope of the letter, for the
purpose of obtaining their opinion as to the best methods of dealing with
the subject as it bore on their particular situation and on the district as
a whole.
Every executive of each member bank interviewed not only expressed
his willingness to co-operate but pointed out that he and his associates
had been using every endeavor to adjust his bank's position, explaining
the problems that confronted him with the falling off of his bank's
deposits, the difficulty of liquidating his bank's security holdings without
loss, and the constant pressure from his depositors for loans on collateral.
Notwithstanding these efforts the loans and discounts of member banks
continued to rise through May and again in June. When the advances
to the member banks began to decline, the decline continued almost
steadily until the end of the year, the improvement being brought about
by continually increasing deposits of the Boston banks and the heavy
liquidation reported by those banks in security holdings. During the first
half of the year the reserve ratio of the Reserve Bank of Boston was
not only below the average for the System, but for a time it was the lowest
of any of the Reserve Banks, namely 51.3%. But from the middle of the
year onward the reserve percentage steadily increased, until, on December
4 the bank had a reserve of 87.7 per cent, and for several weeks the
reserve ratio was not only higher than the average for the System as a
whole but higher than that of any other Reserve Bank. It is probable
that this high reserve may be connected somewhat with the replacing of
FEDERAL RESERVE BANK OF BOSTON
fLUCTUATION OF PRINCIPAL ITEMS

_L92_k




1927

192

9

i6

ANNUAL REPORT OF THE FEDERAL RESERVE BANK OF BOSTON

gold certificates by Federal Reserve notes during the summer and fall,
during and after the exchanging of the new currency issues of reduced
size, as well as from the reduction in advances to member banks.
TOTAL BILLS AND SECURITIES
The average volume of reserve credit extended by the Boston Reserve
Bank during 1929 was only slightly less than in the previous year, an
increase in loans to member banks and a decrease of bankers' acceptances
and government securities being shown. The volume of government
securities held varied slightly during the greater part of the year or until
the bank's participation in purchases made through the open market committee from October to the end of the year, incidental to the movement
of gold out of the country and to the break in the security market, when
the volume steadily increased.
THE ACCEPTANCE MARKET

The average volume of acceptances purchased by the Reserve Bank
of Boston during 1929 was considerably less than in 1928. This was due
to a more satisfactory
distribution of bills in
ACCEPTANCE LIABILITIES
ALL BANKS AND ACCEPTANCE CORPORATIONS
NEW ENGLAND AND UNITED STATES
the outside m a r k e t
1927
19 28
1929
among banks and investors, the volume of
a c c e p t a n c e s made
showing a heavy increase during the year
over previous years, not
only in the Boston district but in the country
as a whole. During the
first half of 1929 the
volume of acceptances
carried by the Reserve
Bank declined from a
high point on January 16 of $74,000,000 to a low point on June 26 of $8,000,000. The usual seasonal upward movement in acceptance holdings,
which as a rule is continuous from the middle of August until the end of
December, lasted only until the middle of October, 1929, following which
there was a substantial contraction which brought the holdings of acceptances of the Reserve Bank on November 27 to less than $5,000,000,
the lowest since 1924. It is especially significant that the low point



ANNUAL REPORT OF THE FEDERAL RESERVE BANK OF BOSTON

17

occurred at the season of the year when ordinarily acceptance holdings
in the Reserve Bank are close to their peak, the reduction being caused
by the outside demand for acceptances, especially from the Boston banks
which utilized their surplus funds for their purchase. The following
table shows acceptance liabilities in the New England district at the end
of each month in 1929 and at similar periods during the past three years
as reported to the American Acceptance Council.
ACCEPTANCE LIABILITY
Of All Banks and Acceptance Corporations in Federal Reserve District 1
January 31
February 28
March
31
April
30
May
31
June
30
July
31
August
31
September 30
October
31
November 30
December 31

1928
$137,000,000
134,000,000
136,000,000
132,000,000
127,000,000
122,000,000
112,000,000
112,000,000
112,000,000
120,000,000
137,000,000
145,000,000

1929
$143,000,000
131,000,000
127,000,000
123,000,000
116,000,000
115,000,000
111,000,000
117,000,000
118,000,000
146,000,000
163,000,000
171,000,000

1927
$ 86,000,000
86,000,000
90,000,000
90,000,000
82,000,000
82,000,000
82,000,000
86,000,000
91,000,000
110,000,000
122,000,000
138,000,000

1926
$ 94,000,000
99,000,000
96,000,000
90,000,000
84,000,000
77,000,000
71,000,000
66,000,000
64,000,000
58,000,000
71,000,000
82,000,000

BUYING RATES ON ACCEPTANCES

*January

I, 1929
4,1929
21, I929
February 15,1929
March
21, I929
March
26, I929
July
12, I929
August
IO, I929
October
25, I929
November I, 1929
November 15, 1929
November 22, 1929
* In effect on.

January
January

I-I5
Days
4/%
4*4

43A

16-30
Days
4*4%
4/2

4/8

43A
47A

46-90
Days
4*4%
4 3 /4
5
5%
S$&

91-120
Days
4%%

5/2

31-45
Days
4/2%

5*4
5*4
5*6
5*6

5

5

5*4
53A
5*4

5*4

5%
5

5Vs
5*4
5%
5

5*4
5*6

5*4
5JA

454
4*4

4^4
4*4

4*4

43A
4*4

4

4

4

4

5

5*4
5

5

47A
5

121-180
Days
5%
5
5

5*4

5*4

5/2

5^8

4*4
4

53A

5*4
5*4
5*4
5
4*4
4*4

MEMBER BANK RESERVE DEPOSITS

The average deposits representing the reserves of the member banks
in the Reserve Bank of Boston varied little during the year, averaging
some $4,000,000 less than in 1928. The low point of the year was on
June 19 when the total member bank reserve deposits were $138,000,000,
—the high point being on December 4 when they reached $155,000,000,
this rise corresponding largely with the growth in deposits in the Boston
member banks during the second half of the year.



i8

ANNUAL REPORT OF THE FEDERAL RESERVE BANK OF BOSTON

FEDERAL RESERVE NOTES

The average volume of Federal Reserve notes of the Federal Reserve
Bank of Boston outstanding during the year 1929 was $24,000,000
greater than in 1928. Nevertheless the volume, as well as the trend, of
this currency was similar to that in 1928 during the first half of the year,
but greatly increased from July 10 coincident with the change in size of
currency by the Treasury Department. This increase was due in a great
measure to the replacement of gold certificates in circulation by the
Federal Reserve notes largely in connection with payroll currency.
MONEY RATES AND DISCOUNT RATES
Two distinct movements took place in the Boston money market during
1929. The first half of the year was characterized by rising money rates
while during the last half of the year, more especially during the last
quarter, money rates declined sharply. This easing was not as marked
as in either 1924 or 1921 and was limited largely to those classes of money
most sensitive to open market influence. Notwithstanding the relatively
small supply of brokers' prime commercial paper the rate ran to 6%
per cent in October due to inactive demand, but fell to 5>4 per cent about
the middle of November and later to 5 per cent early in December, when
the Boston banks were buying paper more liberally than in recent
years. As a whole the year closed with rates for customers' loans at the
Boston banks substantially the same as at the beginning of the year both
BOSTON

MONEY

MARKET

NINETY DAY SECURITIES

1921

1922




192 3

1924

1925

1926

1927

1928

FEDERAL RESERVE BANK OF BOSTON REDISCOUNT RATE
BANKERS' ACCEPTANCES
UNITED STATES TREASURY

CERTIFICATES OF INDEBTEDNESS

1929

ANNUAL REPORT OF T H E FEDERAL RESERVE BANK OF BOSTON

19

in the case of commercial loans and secured loans. On the other hand,
the rates for brokers' quick call loan^ and prime bankers' acceptances,
United States Treasury short-time securities, and commercial paper were
substantially lower than at the opening of the year. During the entire
year customers' loans for commercial and agricultural purposes were made
by the banks freely and at reasonable rates, irrespective of the attractiveness of the yield of stock exchange loans. In past years the credit
strain on the member banks in New England has generally come in the
last three months of the year and the easing of money rates this year
was occasioned by the sharp decline in the stock market in October and
November.
During the year 1929 there was only one change in the discount rate
of the Reserve Bank of Boston. On November 21 the prevailing discount rate of 5 per cent which had been maintained since July 19, 1928
was reduced to 4 ^ per cent.
The reserve bank rate of 5% was below the ruling money rates on all
bank investments except short time United States securities as will be
seen from the following table:
BOSTON MONEY MARKET—1929
Prevailing Rates on 90 Day Maturities as of 15th of Each Month

Month
January
February
March
April
May
June
July
August
September
October

November
December

U. S. Treasury
Time Loans
Loans
Certificates
Secured by Customers' to Corof
Accept- Brokers'
Bonds & Commercial respond- Indebted- ances Commercial
Stocks
Loans
ent Banks ness (Asking Rate) Paper
6-6/%
5/-6%
5/-6%
424%
5%
6-6/
5'/
5^
4/4
5/
5/
:
6-6/
5i/-5 24
5/-6
424
5/4
SZA
:
3
6-624
5Z-524
5 /-6
4A
5^4
6
6-7
524-6
$/v-b
5
5/
6
6-7
524-6
53^-6
454
sV& 6
6-7
' 5^4
5Z-6
4J4
sVs,
6
6-7
524-6
6
424
5 / 6
6/-7
6
•
6
4/
5^
6
6-7
524-6 "
6
4]/.
5%
6%

6-6/

6

524-6
5'/-6

S/-6

5</-6

3

2^

4%
3^

524
5

The following table presents the changes which have taken place in
many phases of New England banking and credit during the calendar
year 1929:




2O

ANNUAL REPORT OF THE FEDERAL RESERVE BANK OF BOSTON
BANKING INDICES—NEW ENGLAND
Data as of last reporting date each year
(Amounts in Millions of Dollars)
Change in One Year
1928 Amount Percentage

1929
REPORTING MEMBER BANKS:—
In Boston:—
1. Commercial Loans
2. Real Estate Loans
3. Collateral Loans
4.
Total Loans
5. U. S. Securities
6. All other Securities owned
7.
Total Bonds and Stocks
8.
Total Loans and I n v e s t m e n t s . . .
9. Net Demand Deposits
10. U. S. Government Deposits
11. Time Deposits
12.
Total Deposits
13. % of Reserve to total deposits
14. % of Loans and discounts to total
deposits

$432
$400
+ $32 + 8.0%
93
9 6 — 3
—3.1
396
347
+
49 +14.1
921
843 +
78 + 9 . 3
62
91 — 29 —31.9
89
115 — 26 —22.6
151
206 — 55 —26.7
1,072 1,049 +
23 + 2 . 2
736
695 +
41 + 5 . 9
4
5—1
—20.0
271
279 —
8—2.9
1,011
979
+
32 + 3.3
7.7% 8.0% — 0.3 points
91.1% 86.1% +

5.0 points

Outside of Boston:—
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.

Commercial Loans
Real Estate Loans
Collateral Loans
Total Loans
U. S. Securities
All other Securities owned
Total Bonds and Stocks
Total Loans and Investments..
Net Demand Deposits
U. S. Government Deposits
Time Deposits
Total Deposits
:.
% of Reserve to total deposits
% of Loans and discounts to total
deposits

$174
$197 —
85
8 4 +
205
166
+
464
447
+
84
8 8 —
109
136 —
193
224 —
657
671 —
353
336 +
*
1 —
262
274 —
615
611
+
4.6% 5.9% —

$23
1
39
17
4
27
31
14
17
1
12
4
1.3

75.4% 73.2% +

2.2 points

MONEY RATES:—(Boston)
Open Market:—
29.
30.
31.
32.

Brokers'Prime Commercial P a p e r . .
Bankers'Prime 90-day Acceptances.
Treasury Certificates of Indebtedness (June 15 maturity)
Call Money (Boston)




y2

5%
4
3.04
6

4.37
12

1.33
6

—11.7%
+1.2
+23.5
+3.8
—4.5
—19.9
—13.8
— 2.1
+5.1
—
— 4.4
+ .7
points

ANNUAL REPORT OF THE FEDERAL RESERVE BANK OF BOSTON

21

BANKING INDICES—NEW ENGLAND—Continued
IQ2Q
At Member Banks:—
33. Prime Commercial Loan Rate
34. Time Collateral Loan Rate
At Federal Reserve Bank of Boston:—
35. Discount Rate
36. Buying Rate on Acceptances

Change in One Year
IQ28 Amount Percentage

5^-6% 5^-6%
6
6-6^ —
4y2
4

0%

5 — y2
4^2 — Vz

MISCELLANEOUS:—
37. Acceptance Liabilities (F. R.
District 1)
Mutual Savings Banks:—
38. Deposits in 63 reporting banks in 6
N. E. states
Check Transactions {year's totals) :—
39. Boston
40. 15 Outside New England Cities....
41.
Total—16 Cities
*Less than $500,000.




$171

$145

+

1,614

1,596

+

27,540 25,268
12,635 11,507
40,175 36,775

$26

+17.9%

18 + 1.1

+2,272
+1,128
+3,400

+ 9.0
+9.8
+ 9.2

22

ANNUAL REPORT OF THE FEDERAL RESERVE BANK OF BOSTON
COMPARATIVE STATEMENT OF CONDITION
RESOURCES

Dec. 31,1929
CASH RESERVES held by this bank against its deposits and note circulation:
Gold held by the Federal Reserve Agent as part
of the collateral deposited by the bank when
it obtains Federal Reserve notes. This gold
is lodged partly in the vaults of the bank and
partly with the Treasurer of the United
States
$224,917,080.00
Gold redemption fund in the hands of the Treasurer of the United States to be used to redeem such Federal Reserve notes as are presented to the Treasury for redemption
6,928,201.64
Gold and gold certificates in vault
31,007,387.86
Gold in the gold settlement fund lodged with the
Treasurer of the United States for the purpose of settling current transactions between
Federal Reserve districts
4,359,473.68
Legal tender notes, silver, and silver certificates
in the vaults of the bank (available as reserve only against deposits)
16,771,061.00
TOTAL CASH RESERVES

Non-reserve cash, consisting largely of National
bank notes and minor coin

Dec. 31,1928

$08,304,180.00

9,807,877.81
36,246,463.83

27,592,095.40
17,755,791.00

$283,984,104.18 $189,706,408.04

$10,001,913.17

$11,537,544.46

$i3,355-i43-8i

$28,816,300.00

13,289,145.09
29,878,460.49

40,427,973.79
54,618,933.83

25,850,000.00
1,000,000.00

8,173,000.00

LOANS AND INVESTMENTS :

Loans to member banks :
On the security of obligations of the United
States
By the discount of commercial or agricultural
paper or acceptances
Acceptances bought in the open market
United States Government bonds, notes, certificates of indebtedness and bills
Federal Farm Loan bonds
TOTAL LOANS AND INVESTMENTS

$83,372,749.39 $132,036,207.62

MISCELLANEOUS RESOURCES :

Bank premises
Checks and other items in process of collection
All other miscellaneous resources

$3,5799^6.75
78,858,882.03
133,938.71

$3,701,084.50
70,000,497.93
131,379-36

TOTAL MISCELLANEOUS RESOURCES....

$82,572,757.49

$74,823,861.79

TOTAL RESOURCES




$460,831,524.23 $408,104021.91

ANNUAL REPORT OF THE FEDERAL RESERVE BANK OF BOSTON

23

COMPARATIVE STATEMENT OF CONDITION
LIABILITIES

Dec. 31,1929

Dec. 31,1928

CURRENCY IN CIRCULATION :—

Federal Reserve notes in actual circulation, payable on demand. These notes are secured in
full by gold and discounted and purchased
paper
$206,557,720.00 $161,292,328.00
Total Currency in Circulation

$206,557,720.00 $161,292,328.00

DEPOSITS :

Reserve deposits maintained by member banks as
legal reserves against the deposits of their customers
$141,547,279.89 $146,177,118.84
United States Government deposits carried at the
Reserve Bank for current requirements of the
Treasury
2,012,548.99
1,103,204.32
Other deposits including foreign deposits, deposits of non-member banks, etc
481,998.78
568,073.60
Total Deposits

$144,041,827.66 $147,848,396.76

MISCELLANEOUS LIABILITIES :

Deferred items, composed mostly of uncollected
checks on banks in all parts of the country.
Such items are credited as deposits after the
average time needed to collect them elapses,
ranging from 1 to 8 days
All other miscellaneous liabilities
Total Miscellaneous Liabilities

$76,694,547.51
194,042.21

$68,752,254.45
436,377-57

$76,888,589.72

$69,188,632.02

$11,592,500.00

$10,155,800.00

21,750,886.85

19,618,865.13

$33,343,386.85

$29,774,665.13

$460,831,524.23

$408,104,021.91

CAPITAL AND SURPLUS :

Capital paid in, equal to 3 per cent of the capital
and surplus of member banks
Surplus—That portion of accumulated net earnings which the bank is legally required to retain
Total Capital and Surplus

TOTAL LIABILITIES

Reserve percentage against combined Federal Reserve notes and deposit liabilities



81.0%

61.4%

24

ANNUAL REPORT OF THE FEDERAL RESERVE BANK OF BOSTON

The principal changes in the resources and liabilities of the Federal
Reserve Bank of Boston as of December 31, 1929, compared with
December 31, 1928 as shown by these statements are as follows:
1. Loans to member banks show a decrease of $42,600,000.
2. Bankers' acceptances bought in the open market show a decrease
of $24,700,000.
3. United States securities show an increase of $17,700,000.
4. Total gold reserves show an increase of $95,300,000.
5. Capital stock and surplus show an increase of $3,600,000.
6. Deposits show a decrease of $3,800,000.
7. Federal Reserve notes show an increase of $45,300,000.
8. Reserve percentages against combined Federal Reserve notes and
deposit liability are increased from 61.4% to 81.0%.

The gross earnings for the year 1929 were $695,000 more than in
1928, this increase coming almost entirely as a result of increased loans
to member banks, the income from acceptances and government securities
owned being less than in 1928. The expenses of current bank operations
increased $77,000, due largely to the increased volume of operations in
the Discount, Transit and Currency Departments, as shown in the
succeeding table.
The cost of Federal Reserve notes, incidental to the change in size of
currency, increased $284,508 over the preceding year. After the usual
depreciation on bank building equipment, etc., had been set up,
the net income was sufficient to pay the usual 6% dividend to stockholding member banks and to add to surplus $2,132,021.72.




ANNUAL REPORT OF THE FEDERAL RESERVE BANK OF BOSTON

25

INCOME AND DISBURSEMENTS
EARNINGS :—
1929

From loans to member banks and paper discounted for them
From acceptances owned
From U. S. Government obligations owned....
Other earnings
Total Earnings
Additions to earnings
Total income applicable to expenses and other
deductions

1928

$3,448,828.36
1,283,931.80
301,687.94
126,382.94

$2,465,266.04
1,485,605.17
454,142.46
60,328.34

$5,160,831.04
IQ.751.58

$4,465,342.01
2.531.42

$5,180,582.62

$4,467,873.43

$1,908,662.50

$1,831,063.73

323,446.68
182,339.66

38,938.92
281,348.88

$2,414,448.84

$2,151,351.53

$2,766,133.78

$2,316,521.00

$634,112.06

$590,830.04

2,132,021.72

1,725,691.86

$2,766,133.78

$2,316,521.90

DEDUCTIONS FROM TOTAL INCOME:—

For the expense of current bank operation, (including the non-reimbursable expense incurred as Fiscal Agent of the U. S.)
For Federal Reserve currency, mainly the cost
of printing new notes to replace worn notes in
circulation, and to maintain supplies unissued
and on hand, and the cost of redemption....
For depreciation, reserves, losses, etc
Total Deductions
NET INCOME available for Dividends, additions to
Surplus, and payment to the U. S. Government
DISTRIBUTION OF NET INCOME :—

Dividends paid to member banks at the rate of
6 per cent on paid-in capital
Additions to Surplus (the bank is required by
law to accumulate out of net earnings, after
payment of dividends, a surplus amounting to
100 per cent of the subscribed capital; and,
after such surplus has been accumulated, to
pay into surplus each year 10 per cent of the
net income remaining after paying dividends)
Any net income remaining after paying dividends and making additions to surplus (as
above) is paid to the U. S. Government as a
franchise tax. No balance remained for such
payments in 1929 or 1928.
Total net income distributed




26

ANNUAL REPORT OF THE FEDERAL RESERVE BANK OF BOSTON

VOLUME OF OPERATIONS

The following table shows the volume of operations in the principal
departments of the bank during the year compared with the similar
items for the preceding year:
NUMBER OF PIECES HANDLED :—

1929

Bills Discounted:—
Applications
Notes discounted
Bills purchased in open market for own
account
Currency received and counted
Coin received and counted
Checks handled
Collection Items Handled:—
U. S. Government coupons paid
All other
U. S. Securities:—
Issues, redemptions and exchanges by Fiscal
Agency department
Transfers of funds

1928

10,665
72,614

9.252
65,671

27,402
254,503,000
323,286,000
93,123,000

47,5^7
242,601,805
213,018,130
86,246,000

1,473,000
409,000

2,191,238
409,105

101,000
63,00c

449,476
61,960

$3,952,081,000

$4,284,601,886

419,214,000
1,630,441,000
34,139,000
21,747,140,000

748,364,260
1,527,458,227
23,580,002
21,510,491,590

39,291,000
764,321,000

41,421,127
796,097,527

283,203,000
9,208,537,000

454,273,190
8,070,296,636

AMOUNTS HANDLED:—

Bills discounted
Bills purchased in open market for own
account
Currency received and counted
Coins received and counted
Checks handled
Collection Items Handled:—
U. S. Government coupons paid
All other
U. S. Securities:—
Issues, redemptions and exchanges by Fiscal
Agency department
Transfer of funds
MEMBERSHIP

On January 1, 1929, there were 408 member banks. Eight new national
banks were organized during the year, and four state banks were added.
There was a loss of 14 national bank members, principally through consolidations and mergers, and two state bank members withdrew. On
December 31, 1929, there were 404 members, a net loss of four for the
year.
The state banks which withdrew were the Hadley Falls Trust Company, Holyoke, Mass., and The Thames Bank, Norwich, Connecticut, the
latter being consolidated with a non-member bank. While the number of



ANNUAL REPORT OF THE FEDERAL RESERVE BANK OF BOSTON

member banks showed a decrease, the paid-in capital of the Federal
Reserve Bank increased over $1,400,000.
The tendency to establish branches was less marked in 1929 than in
the preceding year, but the formation of groups of banks proceeded at a
greatly accelerated pace. On December 31, 1929, there were nine groups
of banks in this district, comprising 65 individual banks with total assets
of $1,440,000,000, according to the latest figures available.
The outstanding banking event of the year was the affiliation of The
First National Bank of Boston and the Old Colony Trust Company of
Boston in December. While this brought together two hitherto entirely
independent banking units, it was not, strictly speaking, a consolidation in
the usual and technical sense of the term, since each institution continues
its separate corporate existence, but so far as practicable and compatible
with the wishes of interested parties the fiduciary business of the two
will be handled by the Old Colony Trust Company and the commercial
banking business will be conducted by The First National Bank. Each
corporation has its own board of directors, the personnel of which is
identical. The stock of the Old Colony Trust Company and of The First
National Old Colony Corporation will be held for the pro rata benefit of
the stockholders of The First National Bank.
The various changes in membership are classified in detail in the
following table:
National
Banks
373

Members January 1, 1929

State
Banks

Total

35

GAINS :—

New national banks
New state members

4
381

LOSSES:—

Absorption of national bank by state bank
member
,.. . .
Consolidation of national banks
Liquidation and consolidation with nonmember bank
Voluntary liquidation succeeded by nonmember state bank
Voluntary liquidation succeeded by new
national bank
National banks converted to state member
banks
Withdrawal of state bank members




4

39

420

1
8
1
1
1
2
14
2
367

37

404

28

ANNUAL REPORT OF THE FEDERAL RESERVE BANK OF BOSTON

FIDUCIARY POWERS

Twenty-five permits were issued to national banks to exercise fiduciary
powers under authority of Section 11 (k) of the Federal Reserve Act,
as amended, during 1929. Eighteen of the permits were issued to banks
which had never exercised trust powers, three were granted additional
powers, and four were confirmatory after consolidation.
CONNECTICUT
First National Bank
*Naugatuck National Bank
National Whaling Bank
First National Bank
Uncas-Merchants National Bank
MAINE
Camden National Bank
Thomaston National Bank

Middletown
Naugatuck
New London
New Milford
Norwich
Camden
Thomaston

MASSACHUSETTS
Abington
Abington National Bank
Millers River National Bank
Athol
Cohasset
Cohasset National Bank
Haverhill
Essex National Bank
Haverhill
Haverhill National Bank
Newburyport
First & Ocean National Bank
Peabody
Warren National Bank
Pittsfield
**Pittsfield-Third National Bank & Trust
Somerville
Somerville National Bank
**Springfield-Chapin National Bank & Trust Springfield
Westfield
Hampden National Bank
Worcester
10/21/29
**Worcester County National Bank
Worcester
11/22/29
**Worcester County National Bank

NEW HAMPSHIRE
Rockingham National Bank
*Laconia National Bank
National Bank of Lebanon
Wilton National Bank

Exeter
Laconia
Lebanon
Wilton

VERMONT
Merchants National Bank

St. Johnsbury

* Supplementary powers.
* Confirmatory.

The total number of national banks in each state which had been
authorized to exercise trust powers at the end of the year was as follows:
Connecticut 31, Maine 33, Massachusetts 102, New Hampshire 35, Rhode
Island 5, and Vermont 28.



ANNUAL REPORT OF THE FEDERAL RESERVE BANK OF BOSTON

29

BANK ORGANIZATION AND PERSONNEL

Directors: On December 31, 1929, the terms of Mr. Alfred L. Ripley
as Class A director, Mr. Philip R. Allen as Class B director and Mr.
Frederic H. Curtiss as Class C director expired. Mr. Ripley and Mr.
Allen were re-elected for three-year terms by the member banks in Group
1, — banks having a combined capital and surplus in excess of $999,000,
— and Mr. Curtiss was reappointed by the Federal Reserve Board for a
similar term of three years. The Federal Reserve Board also redesignated
Mr. Frederic H. Curtiss as Chairman and Federal Reserve Agent and Mr.
Allen Hollis as Deputy Chairman for the year 1930.
Personnel: No change in the official staff occurred during the year
1929. The number of employees on December 31, 1929, other than
officers was 768 compared with 715 on December 31, 1928.
Advisory Council: At a meeting of the Board of Directors held on
January 4, 1929, Mr. Arthur M. Heard, President of the Amoskeag
National Bank of Manchester, New Hampshire, was reappointed as a
member of the Federal Advisory Council to represent the First Federal
Reserve District for the year ending December 31, 1929.




3O

ANNUAL REPORT OF THE FEDERAL RESERVE BANK OF BOSTON

STOCKHOLDERS' MEETING

The Seventh Annual Meeting of the member banks was held at the
Federal Reserve Bank of Boston on November 8, 1929, with 350 representatives from 257 member banks registering. The Chairman of the
Stockholders' Advisory Committee, Mr. Charles S. Hichborn, President
of the First National Granite Bank of Augusta, Maine, presided. He
introduced the Chairman of the Board of Directors, who extended the
official welcome of the bank and gave a brief address, discussing the
trend in member bank credit as shown by charts covering changes in
loans, investments, and deposits for the three years ending June 29, 1929,
and presenting and analyzing a liquidity chart, which had been developed in the bank as a guide for member banks wishing to lay out a
policy of bank operation. In the absence of Hon. Carter Glass, who was
expected to deliver the principal address but was detained at the last
minute by official duties, the Governor of the bank addressed the meeting
at length, first reviewing the condition of the bank and then discussing
the distribution of Federal Reserve Bank earnings, which wras to have
been the subject of Senator Glass' address. The special committee appointed pursuant to a resolution adopted at the Stockholders' Meeting in
J928, to investigate the subject of a more equitable participation by
member banks in the earnings of the Federal Reserve Banks, reported
and submitted resolutions embodying the conclusions of the committee.
The resolutions proposed that the Congress be petitioned to amend Section
7 of the Federal Reserve Act so as to provide that after the payment
of expenses and a 6 per cent cumulative dividend to stockholders, the
remaining net earnings of each Federal Reserve Bank shall be distributed
as follows: 25 per cent of such earnings to the United States as a franchise tax, 50 per cent to member banks, and 25 per cent to the surplus of
such Federal Reserve Bank until the surplus shall amount to 100 per cent
of the subscribed capital of the Federal Reserve Bank, any portion of
such 25 per cent not needed for the creation of such a surplus to be distributed to the member banks. The resolutions also proposed a further
amendment of Section 7 by which, in the event of the dissolution or liquidation of a Federal Reserve Bank, any surplus remaining after the payment of all debts and obligations shall be distributed among the stockholding member banks in proportion to their capital stock holdings in the
Federal Reserve Bank. The report of the committee was accepted and
the resolutions submitted by it were unanimously adopted.





Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102