Full text of Annual Report of the Federal Reserve Bank of New York : Second Annual Report of the Federal Reserve Bank of New York for the Year Ended December 31, 1916

View original document

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

SECOND ANNUAL REPORT
OF THE

FEDERAL RESERVE BANK
OF NEW YORK
FOR THE YEAR ENDED DECEMBER 31, 1916

WASHINGTON
GOVERNMENT PRINTING OFFICE
19 17

LETTER OF TRANSMITTAL.
F ederal R

eserve

Bank,

New York, January 1, 1917.

Sir : I have the honor to submit herewith the second annual report
of the Federal Reserve Bank of New York, covering the year 19J6.
Respectfully,
P ie r r e

Jay,

Chairman and Federal Reserve Agent

Hon. W. P . G . H a r d i n g ,
Governor Federal Reserve Board
Washington, D. G.

TABLE OF CONTENTS.
Page.

Results of operation............................................................................................ 7-11
1. Balance sheet..........................................................................................
7
2. Income and expenses..............................................................................
8
3. Reserve position of the bank...................................................................
9
10
4. Discount rates.^......................................................................................
5. Maturities of investments........................................................................
11
Investments during 1916.................................................................................... 11-15
1*. Member bank rediscounts and advances.................................................
11
. Bankers ’ acceptances and the discount market......................................
12
3. United States bond operations........ ......................................................
14
4. Municipal warrants..................................................................................
15
Federal Reserve note issues................................................................................
16
Collections and clearings.................................................................................... 17-20
1. Collection system....................................................................................
17
2. Gold settlement fund..............................................................................
20
3. Transfer system.......................................................................................
20
21
Fiscal agency of the United States...... 1.............................................................
Relations with member banks..........................................................................
21
Relations with nonmember banks......................................................................
23
Relations with the public................................................................- .................
23
Organization of the bank.................................................................................... 23-26
1. Internal management of the bank...........................................................
23
24
2. Bank premises..:....................................................................................
3. Election of directors................................................................................
25
4. Advisory council.....................................................................................
26
General business and banking conditions.......................................................... 26-35
1. Banking position of the district during 1916...........................................
26
2. Money rates.............................................................................................
26
3. Gold movement.......................................................................................
27
4. Foreign loans...........................................................................................
27
5. Foreign banking conditions.....................................................................
30
6. New York Stock Exchange transactions.................................................
32
7. Crop conditions.......................................................................................
33
8. Imports and exports................................................................................
34
9. General business conditions....................................................................
34

APPENDIX.
Capital account reconciliation............................................................................
Federal Reserve notes.........................................................................................
Operations in Government bonds.............................. ........................................
Transit and exchange transactions......................................................................
Gold settlement fund operations.........................................................................
Schedule showing when proceeds of items will become available......................
Authority given national banks to accept up to 100 per cent of capital and
surplus.............................................................................................................
5

36
36
37
37
37
38
38

FEDERAL RESERVE BANK OF NEW YORK.
OFFICERS.

B enjamin Strong, Governor.
R obert H. T reman, Deputy Governor.
William W oodward, Deputy Governor
James F. Curtis, Secretary and Counsel.
(inactive).
L aurence H. H endricks, Assistant
Louis F. Sailer, Cashier.
Cashier.
E dwin R. K enzel, Assistant Cashier.
Joseph D. H iggins, Assistant Cashier.
H oward M. Jefferson, Auditor.
DIRECTORS.

Pierre Jay, New York City, Chairman
George Foster Peabody, Saratoga Springs,
N. Y., Deputy Chairman and Deputy
and Federal Reserve Agent.
Franklin D. Locke, Buffalo, N. Y.
Federal Reserve Agent.
Leslie R. Palmer, Croton on Hudson,
Henry R. Towne, New York City.
Robert H. Treman, Ithaca, N. Y.
N. Y.
William B. Thompson, Yonkers, N. Y.
Charles Starek, New York City.
William Woodward, New York City.
6

SECOND ANNUAL REPORT OF THE FEDERAL RESERVE
BANK OF NEW YORK.
P i e r r e Ja y ,

Chairman and Federal Reserve Agent.

esults

O p e r a t io n .

(1) BALANCE SHEET.

The following is a statement comparing the condition of the
Federal Reserve Bank of New York on December 31, 1915, and
December 30, 1916, and showing the increase and decrease in the
various items of resources and liabilities.
Dec. 30,1916.

De6. 31,1915.

Increase.

Decrease.

RESOURCES.

Earning assets:
Bilk discounted for member banks...........
Acceptances purchased.............. . ................
Municipal warrants.......................................
United States bonds..................................... .
United States one-year Treasury notes___
Total.

$7,071,158.55
41,457,184.04
972,311.62
1,042,550.00
1,205,000.00
51,748,204.21

$236,472.08 $6,834,686.47
9,546,011.06 31,911,172.98
1,198,585.98'
1,042,550.00
1,205,000.00
10,981,069.12

Reserve cash:
Gold coin and certificates.............................. 159,321,257.50 169,073,827.50
Gold settlement fund.........................: .......... 20,570,000.00
5,717,000.00
Gold redemption fund for Federal Reserve
notes...............................................................
250,000.00
55,000.00
Legal tender notes. / ...................................... 11,188,200.00
5,691^765.00
Silver, certificates and coin............................
4,077,274.80
284,322.40'
Total..

195,406,732.30 180,821,91^.90

Other resources:
Federal reserve notes and other cash on
hand............................................................... 13,865,897.46
Items'in process of collection........................ 23,077,418.64
Exchanges for clearing house and cash
2,503,168.21
items..............................................................
12,501.88
Interest accrued on United States bonds..
Cost of unissued Federal Reserve notes___
235,598.86
Expense of organization.................................
Furniture and equipment.............................
8,753.52
Expenses paid in advance, etp.....................
Total................. .

39,703,338.57

.40,993,409.45

$226,274.36

226,274.36
9,752,570.00

14,853,000.00
195,000.00
5,496,435.00
3,792,952.40
24,337,387.40 9,752,570.00

16,180,530.94

2,314,633.48
23,077,418.64

987,566.35
8,147.92
232,086:79
122,335.01
26,980.36
6,312.18
17,563,959.55

1,515,601.86
4,353.96
3,512.07
122,335.01
26,980.36
2,441.34
24,603,327.87 2,463,948.85

286,858,275.08 209,366,943.57 177,491,331.51

Total resources..
LIABILITIES.

Capital fund:
Capital paid in....................
Profit and loss.....................
Total.

11,865,750.00
163,063.98

11,063.150.00
2 111.22

802,600.00
163,175,20

12,028,813.98

11,063,038.78

965,775.20

Deposits:
3,571,391.94
Due to United States Government...........
Due to member banks, reserve balances.. 237,907,354.87 179,404,501.65
Due to member banks,uncollected funds. 18,552,984.84
Due to other Federal Reserve B a n k s12,373,721.91 17,886,055.54
Collected funds, net...............................
2,085,975.49
Uncollected funds...................................
841,219.44
188,275.81
Cashier’s checks outstanding......................
274,679,704.86 198,131,776.63

Total.

1 Net.

2 Deficit.

3,571,391.94
58,502,853.22
18,552,984.84
5,512,333. <
2,085,975.49
652,943*1
82,713,205.49 6,165,277.26

A N N U A L REPORT OF FEDERAL RESERVE B A N K OF N E W Y O R K.

Dec. 30,1916.

Dec. 81,1915.

$140,246 60
9,509.64

$140,000.00
31,520.01
608.15

149,756.24

172,128.16

117,628.08

Total liabilities............................................. j286,858,275.08 209,366,943.57

77,491,331.51

l ia b il it ie s —

Increase.

Decrease.

continu ed.

Other liabilities:
Liability on Federal Reserve notes.
Unearned discount.............................
Sundry reserves...................................
Total.........................................................

$140,000.00
$117,628.08
140,000.00

FEDERAL RESERVE AGENT.

Resources: Gold to reduce note liability........... 107,003,765.00

89,440,000.00

18,563,765.00

Liabilities: Notes outstanding.............................'107,003,765.00

89,440,000.00

18,563,765.00

i Net.

The most noticeable features of the statement are the increase in
the investments, principally acceptances purchased, and the increase
in the member bank deposits, due partly to expansion of their own
deposits and partly to the excess balances which some of them
maintain.
(2) INCOME AND EXPENSES.

The following statement shows the income and expenses of the bank
for the years 1915 and 1916:
1916

1915

INCOME.

Bills discounted for members............................................................................................ $37,368.26
Acceptances bought............................................................................................................. 530,483.75
United States securities..............................
................................................................ 81,644.49
Municipal warrants.............................................................................................................. 214,122.13
Profit realized on United States bonds...........................................................................
43,515.01
Commissions received.......................................................................................................... 42,387.09
Service charges......................................................................................................................
32,959.90
Sundry profits.......................................................................................................................
1,128.59
Excess of expense over income, carried to profit and loss............................................

$36,840.98
97,054.10

Total............................................................................................................................. 983,609.22

345,146.55

i91,86§. 68
9,437.72
9,833.85
111.22

EXPENSE.

Directors’ fees, outside conferences and Federal Advisory Council..........................
10,764.51
Salaries.................................................................................................................................... 215,307.83
45,810.04
General expenses.................................................................................................................. 151,200.36
Cost of Federal Reserve notes used..................................................... 1........................... 95,240.00
Assessment for expenses of Federal Reserve Board...................................................... 39,029.38

18,240.72
154,043.05
42,749.95
44,472.23
63,800.00
21,840.60

Total............................................................................................................................. 557,352.12

345,146.55

Net earnings..........................................................................................................................

426,257.10

Charged off, Dec. 30,1916:
Organization expense............................................................................. $72,289.96
Furniture and equipment...................................................................... 63,442.17
Sundry.......................................................................................................
347.98
Dividend paid..........................................................................................127,113.01
263,193.12
Amount carried over to profit and loss................................................................. 163,063.98

The principal increase is due to the income from acceptances pur
chased. The item “ Commissions received” represents, principally
the allowance made by other Federal Keserve Banks to this bank for,

.A N N U A L REPORT OF FEDERAL RESERVE B A N K OF N E W Y O R K .

purchasing and caring for investments made for their account in the
New York market. The item “ Service charges” represents the ag
gregate of charges, at 1 cent per item, made to member banks depos
iting checks with this bank for collection. Both of these items are,
in their nature, deductions from the expenses of the bank rather than
credits to income, but it has seemed clearer to show them among the
items of income.
The increase in the salary item arises from the increase of the staff,
due partly to the general development of the business of the bank,
and partly to the growth of the collection system. The general ex
pense item for 1916 includes $58,751.15, charged to general expenses
in monthly installments during the year, representing the amortization.
of the organization expenses and furniture and equipment; $12,937.70
representing the cost of redeeming Federal Reserve notes, and
$12,582.92, representing service charges paid other Federal Reserve
Banks for items sent them for collection, no similar items having been
included in general expenses for 1915.
At the close of the year, in connection with the payment of the first
installment of the accrued dividends, the entire balance in the organi„ zation expense and the furniture and equipment accounts, aggregating
$135,732.13, was charged off and a balance of $163,063.98 was car
ried forward to profit and loss. The only item of a nonliquidating
character now carried in the balance sheet is the amount of $235,598.86
representing the cost of unissued Federal Reserve notes. The cost
of printing Federal Reserve notes and maintaining a large supply of
them in New York and Washington is charged to this account, and
whenever any are issued to this bank for use the account is credited
with the proportionate cost.
On December 15 the directors declared a dividend at the rate of
6 per cent per annum from November 2, 1914, to March 31, 1915,
aggregating $127,113.01, which was credited to the member banks on
December 30, 1916.
(3) RESERVE POSITION.

The following table shows the reserve position of the bank at the
close of business each month during the year:
1916.

Jan. 31.................
Feb. 29................
Mar. 31................
Apr. 29................
May 31.................
June 30................
July 31.................
Aug. 31...............
Sept. 30...............
Oct. 31.................
Nov. 30...............
Dec. 31................

Net deposits.

Total reserve.

$208,798,935.54 $176,166,295.25
209,818,946.99 178,143,417.00
207,446,502.45 170,140,997.90
192,610,702.28 156,189,343.35
215,138,290.18 167.565.327.30
218,614,623.88 181.180.118.30
217.325.003.36 175,842,078.15
207,995,176.68 165,664,667.10
210.134.122.36 174,708,731.55
228,771,932.10 191,848,674.70
203,290,119.62 165,764,526.80
249,099,118.01 195.406.732.30

85717— 17-------2

Legal
tender
notes.

Silver and
silver
certificates.

Gold and gold
certificates.

$3,050,435 $2,546,060.25 *170,569,800.00
284,947.00 172.823.785.00
5,034,685
113,658.40 168.286.292.50
1,741,047
1,840,765 3,995,545.85 150.353.032.50
13,079,355 5.981.131.80 148,501,837/50
9,639,020 10,972,688.30 160.568.410.00
5,574,565 8,913,683.15 161.353.830.00
1,767,645 3,778,552.10 160.118.470.00
725,669.05 171.724.457.50
2,258,605
1,837,510
566,-729.15 189,444,435.55
2,973,380 1,084,437.40 161,706,709.40
11,188,200 4.077.274.80 180.141.257.50
(

Gold with
Federal
Reserve
Agent.
$94,240,000
77,634,700
75,125,400
70.791.200
74.390.200
69,473,500
66.041.200
68,995,800
78,413,600
84,230,815
90,733,015
107,003,765

A N N U A L REPORT OF FEDERAL RESERVE B A N K OF N E W Y O R K .
(4) DISCOUNT RATES.

The discount rates established by the Federal Reserve Bank of New
York during the year and the rates at which acceptances were pur
chased in the open market have been as follows:

Discount rates for various maturities.

Month.

15 days

(tachS- ' u t o 3 0
ing collateral
cmsn eloans).

10
days
1or less.

3 1.................
4
January........
February___
3 '.................
4
March...........
3 1.................
4
April............. .
3 1.................
4
Mav________
3 i_________
4
4
June..............
3 .................
4 i
July...............
3 .................
4
August.........
3 ................
4
September...
3 .................
October........................
3 .................
November...................
3 .................
December....................
3 .................

61 to 90
16 to 30 31 to 60
days, in days, in days, in
clusive. clusive.
clusive.

4 I
4
4

4 '
4
4 '

January to September, tra.lo acceptances, 11 to 90 days, 31 per cent.
ceptances, 16 to 90 (lavs, 3;. per cent.

Rates at which ac
ceptances
were
purchase 1 in the
open market.
Agricul
In-lorsei
tural
trade
paper, Bankers’
accept
bills of
91 c*ays
ances. . foreign
to 6
origin.
months.

2-2*

2 -2 t
2 -21

2-2A
2-3*
2 -If*

2i-2f

2 \ - 2 '\

2\ - 2\

21- 2|

2\-2\

24-2|
24-2J
22-3

21-25
2 * -2 f
22-3
2{-3
3 -31

Octol er to Peceml er, trac e ac

The established discount rates, until the last few weeks of the year,
were above the market rates for commercial paper. In accordance
with the policy referred to in the last annual report and during the
present period of abundant bank reserves this bank has continued
to maintain its discount rates somewhat higher than the level of
current rates for commercial paper in order not to stimulate the use
of its resources. In periods of ease of money it. is not to be expected
that member banks will rediscount with this bank, but during the
rise in money which occurred in December, 1916; when rates for
commercial paper rose somewhat above the level of tlie established
discount rates of this bank member banks did not hesitate to redis
count freely.
During the first half of the year the purchases of bankers’ accept
ance; in the open market in increasing volume by Federal Reserve
Banks undoubtedly had the effect of keeping the market rate for
such acceptances slightly below the level it would otherwise have
maintained. One of the purposes of the Federal Reserve Banks in
purchasing acceptance-* at rather low rates was to stimulate the draw
ing of “ dollar bills” in foreign countries. While this gave the holder
of such bills a very profitable market in which to sell them, it tended,
on the other hand, to keep that market rather limited and to dis
courage many possible purchasers from entering it. During the late
autumn the rates at which Federal Reserve Banks purchased bills

A N N U A L REPORT OF FEDERAL RESERVE B A N K OF N E W Y O R K .

gradually rose and a freer market developed, attracting the funds of
many institutions throughout the country which had hitherto re
frained from purchasing acceptances.
(5) MATURITIES.

The following statement shows the maturities of investments, other
than United States securities, held by the Federal Reserve Bank of
New York December 30, 1916:
’

Bills discounted.

Within 10 days.......................................................... $566,258.63
11 to 30 days.............................................................. 5,397,785.01
31 to 60 days.............................................................. 1,012,548.41
94,566.50
61 to 90 days..............................................................
91 days (6 months)...................................................
Total................................................................

I nvestm ents

the

mem ber

F ederal, R

bank

$76,5i6.*74*
365,512.50
334,943.46
195,338.92

7,071,158.55

D u r in g
(l )

Warrants.

972,311.62,

eserve

Acceptances.

Totals.

$7,142,789.23
11,211,476.10
12,770,380.96
10,332,537.75

$7,709,047.86
16,685,777.85
14,148,441.87
10,762,047.71
195,338.92

41,457,184.04

49,500,654.21

ank

ork

1916.

r e d is c o u n t s

and

advances.

Since January 1, 1916, 302 applications for rediscounts or advances
aggregating $22,501,332.41 have been received from 62 member
banks, of which 16 were located in New York City and 46 elsewhere
in the district'.
A recent amendment to the Federal Reserve Act permits a member
bank to borrow for not exceeding 15 days from a Federal Reserve
Bank on vits own note secured by eligible paper or United States
tonds. Member banks are thus enabled* to borrow for short periods
on the security of paper having not more than 90 days to run and
without the accounting labor either to them or to the Reserve Bank
of recording and computing interest on large numbers of small notes.
The total amount advanced by the bank in this manner during the
•year was $7,939,400 out of a total of $22,329,581.81 borrowed by
member banks. The total amount of trade acceptances discounted
was $166,564.16.
During the period of unsettlement which prevailed in the stock
and money markets during the latter part of December several of
the large New York City banks made use of' the rediscount facilities
of this bank for the first time. The amount thus rediscounted for
or advanced to New York City banks during the month of December
was $15,621,973.
The district is distinctly a creditor district, and its banks are
lenders rather than borrowers of money. On June 30, 1916, the total
amount borrowed by our' member banks from all sources was

AN N tTAL REPORT OF FEDERAL RESERVE BA jKK OF N E W Y O R K ..

$4,909,000 against total member bank borrowings for the entire
country on the same date of $69,067,000.
The foliowing' is a statement of discounts for and advances to
member banks, by months, during 1916 as compared with similar
transactions durjng 1915:
1916

1915

Month.
Number
of items.

Number
of items.

Amount.

139 $>1,642,303.85
January..........................'..........................................................
117
$125,655.65
February..................................................................................
184
73,
98,304.35
1,046,307.55
167
March........................................................................................
249
190,652.27
304,638.35
April..........................................................................................
149
149,950.15
241
216,449.17
207
M ay............................................................................................
191,290.38
235,957.67
307
426
June.............................................................. ............................
348,405.34
289,518.48
325
116
259
333,949.18
235,494.37
July............................................................................................
August......................................................................................
241
586,851.00
124
157,026.34
September................................................................................
560,583.29
211
286,208.77
105
............................. *......................................................
October
107
137,183.62
177 1,035,118.65
715,293.90
64
November.................................................................................
152,330.23
79
December..................................................................................
132
131,661.74
567 17,977,996.38

Total...............................................................................

2,505 22,329,581.81

2,261

4,819,548.87

The following figures show certain data concerning the rediscount
operations during 1915 and 1916:
1915

1916
Number of applications received........................................................................
302
Amount of applications received........................................................................ $22,501,332.41
Amount of applications accepted and discounted or advanced upon........ $22,329,581.81
Largest application................................................................................................ $3,877,000.00
Smallest application.............................................................................................
$450.00
Number of pieces of paper discounted..............................................................
2,502
Largest piece of paper discounted...................................................................... $1,000,000.00
Smallest piece of paper discounted................... ................................................
$18.00
Average size of notes discounted.........................................................................
$8,914.01
.........................................................................
Number of banks redisc6unting
62

277
$11,384,037.63
$9,668,632.41
$2,182,500.00
.$1,015.00
2,676
$300,000.00
$20.20
•S3,613.09
49

(2) BANKERS* ACCEPTANCES AND THE DISCOUNT MARKET.

This year has witnessed a remarkable increase in the volume of
business financed in this country under bankers’ acceptance credits,
or “ dollar credits” as they are called both at home and abroad.
The following is a statement gathered from reports made to public
officials in the months ofvMarch, September, arid November, 1916,
showing the amount of acceptance liabilities of national banks in
district No. 2 and trust companies and State banks in the State of
New York:
March.

j September.

November.
i

National banks.................................................................................... I $21,361,952
Trust companies.................................................................................. | 55,374,903
State banks...........................................................................................
2,501,970
Total...........................................................................................

79,238,825

$44,300,877
68,588,558
2,737,995

$54,445,056
88,733,874
4,254,738

115,677,430

147,433,668

A N N U A L REPORT OF FEDERAL RESERVE B A N K OF N E W Y O R K .

As originally passed, the Act permitted national banks to accept
only bills arising out of transactions involving the importation or
exportation of goods, but under the amendment of September 7,
1-91(3, national banks may now accept bills covering domestic.ship
ments or secured by the pledge of readily marketable goods in stor
age. The immediate effect of this amendment was to cause a sub
stantial volume of staple commodities, such as cotton, grain, and
metals, to be carried or shipped within the United States under
bank acceptances instead of under direct bank loans, with bene
ficial results to the producers, merchants, and manufacturers
affected owing to their ability to draw their supply of funds from
wider markets and sometimes at lower rates than before.
The permission granted by the same amendment to member banks
to accept bills for the purpose of furnishing “ dollar exchange” in
certain countries where trade usages require it is already beginning
to be availed of.
Some progress has been made during the year in the development
of a discount market. Responsible banking and brokerage houses
have, become dealers and specialists in bankers’ acceptances, pur
chasing them at wholesale as they are accepted and offered in this
Country, quoting rates by, cable to foreign countries where they
originate as bills of exchange, and contracting for their purchase
upon arrival here. This is giving an increasing currency and stability
to the “ dollar” bill in foreign markets.
The demand for such bills during the year from banks and other
investors1 requiring liquid assets of short maturity has generally
<exceeded the supply and has tended to keep the rates for them well
below those commanded by any other form of commercial credit
instrument. The ease with which they were negotiated at stable
rates during periods when other money rates rose abruptly demon
strated in a convincing way their desirability as prime and liquid
banking assets, which has long been recognized in other countries.
The liberal purchase of bankers’ acceptances by the reserve banks
has undoubtedly added stability to the open market and aided its
development.
The number of makers as well as of buyers of bankers* acceptances
increased substantially during the year. During the latter half of
the year the somewhat higher discount rates which prevailed for
bankers’ acceptances induced many banks outside of the larger
cities, including a number of banks in western and southern points,
to make investments in them and added in an encouraging manner
to the breadth of the discount market. Among those undertaking
the granting of acceptance credits were a number of private bankers,
most of whom have cooperated and established relations with the
Federal Reserve Bank of New York by giving its officers such state

A N N U A L REPORT OF FEDERAL RESERVE, B A N K OF N E W Y OR K .

ments of condition as the regulations of the Federal Reserve Board
require to make their acceptances eligible for purchase by Federal
Reserve Banks. During the year also several of the foreign-trade
banks of other countries having branches in New York City have
likewise filed statements of condition with this bank in order that
this bank might be in a position to purchase trade bills on American
firms indorsed by them.
The volume of American acceptances current at the close of 1916,
including those of nonmember banks and private bankers, and trade
bills of foreign origin drawn on American firms and indorsed by
banks, is estimated to be about $250,000,000.
During the year the Federal Reserve Bank of New York has
followed the same policy in purchasing acceptances as during the
previous year. The acceptances of nonmember banks and of private
bankers have been purchased as freely as those of member banks,
although the rate on the latter has been slightly more favorable. In
order to encourage the indorsement of bills a slight differential has
also been made in favor of bills indorsed by prime banks or bankers.
The monthly purchases of acceptances and indorsed trade bills by
this bank for itself and other Federal Reserve Banks have been as
follows:
Acceptances purchased.

For account of Federal
Reserve Bank of New
York.

For account of/other
Federal Reserve Banks.

Number
of items.

Month.
Amount.

............... "
........ ~i
January..............................................................................
February...........................................................................
March.................................................................................
April...................................................................................
May.....................................................................................'
June....................................................................................
July.....................................................................................
August...............................................................................
September.........................................................................
October..............................................................................
November......................................................................... *
December.......................................................................... !

321
318
422
375
248
821
617
241
391
673
844
1,025

$3,952,829.10
5,332,262.69
8,360,862.35
6,315,912.77
5,310,107.67
15,676,835.43
13,645,319.31
8,352,138.82
8,218,059.57
13,600,297.20
17,982,141.64
16,659,784.04

Total........................................................................1

6,296

123,406,549.59 ,

Amount.

•—

i
.
!1
!i
,
1

168
308
441
186
565
1,287
976
776
967
1,042
919
1,032

$1,748,101.40
4,132,336.01
5,902,385.17
4,506,359.68
9,448,715v 52
18,302,523.60
10,413,591.87
11,727,725.41
13,586,894.24
15,145,972.77
14,192,741.94
17,380,591.85

8,667

126,487,939.46

CLASSIFICATION.

Import and export...................... *...................................1................. 112,664,618.27
6,485,112.43 1
Domestic........................................................................... 1.................
Indorsed trade bills of foreign origin............................*.................
4,026,818.89 1
Bills drawn to furnish u Dollar exchange ” ................... j......................
230,000.00
Total........................................................................1.................

123,406,549.59

121,536,683.33
1,362,255.07
3,589,001.06
126,487,939.46

(3) UNITED STATES BOND OPERATIONS.

During the year this bank has purchased from member banks and in
the open market $7,818,750 of United States 2 per cent bonds bearing
the circulation privilege, of which it has converted $6,476,200, its full

A N N U A L REPOET OF FEDERAL RESERVE B A N K OF N E W Y O R K .

quota under the provisions of law and the rulings of the Secretary
of the Treasury and the Federal Reserve Board, into $3,239,200
30-year 3 per cent “ conversion bonds” and $3,237,000 1-year 3 per
cent gold notes of the United States.
The 30-year 3 per cent conversion bonds have no circulation
privilege, but are accepted as security for deposits of public moneys.
Believing that it was one of the purposes of the Act to refund the
United States 2 per cent bonds by issues, devoid of special features
attractive only to banks, which would find a market among investors
desiring a bond of the highest security and at the same time exempt
from both personal and income taxes, this bank has sold in the open
market a portion of its holdings of both classes of bonds. The bonds
have been taken largely by private investors and have not come again
in the market, indicating a steady demand for the issues.
The outstanding national-bank notes decreased from $746,679,970
on December 31, 1915, to $708,817,446 on December 30, 1916, largely
through the purchase of United States 2 per cent bonds by Federal
Reserve Banks.
Details of transactions in United States bonds will be found in the
appendix.
(4) MUNICIPAL WARRANTS.

During the year the monthly purchases of warrants by this bank
for itself and other Federal Reserve Banks have been as follows:

Month.

January...
February..
March-----April.........
May......... .
June..........
July...........

For account
For account
, of Federal of
other Fed
■ Reserve
eral
Reserve
Bank of
Banks.
New York.

$6, 110,000
5.530.000
1.536.000
5.797.500
1.532.000
2.068.000
1.983.500

$1,115,000
6.990.000
4.030.000
293,000
2.800.000
2.947.000
1.396.000

Month.

August........
September..
October___
November..
December..
Total.

For account For account
of Federal, ofolher
Reserve , Federal
Bank of •* Reserve
New York.
Banks.
>112,500 .
1,202,000 j
3.560.000
4,971,500 I
1.925.000
36,328,000

$313,000
4.650.000
365,000
1.300.000
26,199,000

Average rate for yoir. 2.464-.

The rates have ranged from 2\ per cent to 3£ per cent, according
to the state of the market, the maturities, and the credit of the issuing
municipality.
' The requirements of eligibility for purchase by reserve banks have
become better understood both by municipalities issuing warrants
and by dealers, with the result that of those offered fewer have to be
declined on account of technical defects, and more standard forms
of instruments are now being issued.
While the larger municipalities have quite generally availed of the
wider market thus created for eligible warrants, the smaller ones have

A X N U A L REPORT OF FEDERAL RESERVE B A N K OF X E W Y OR K.

not done so, and member banks located in the smaller municipalities
have seldom offered their local warrants, which would be eligible for
purchase if indorsed by them.
F ederal R

eserve

ote

I ssu es.

During the year the policy of issuing Federal Reserve notes in ex
change for gold, through the medium of commercial paper as pro
vided in the Act, has been followed consistently. The net amount o f .
Federal Reserve notes of this bank in circulation increased from
$73,300,720 at the beginning of the year to $93,426,100 at the end, a
gain of $20,125,380 during the year. On July 31 the net amount in
circulation had declined to $54,210,745 owing to seasonal redemptions.
The Federal Reserve note has been used not to increase the circulat
ing medium, which seems already to be adjusted in volume to our
periods of maximum demand under normal conditions, but as a
means of steadily accumulating gold. In this respect the bank has
followed the practice of the note-issuing banks of other countries
which are ‘ authorized to issue currency against less than 100 per
cent of metallic cover. Through the medium of notes the gross
gold accumulated at the close of 1916 by this bank and held by the
Federal Reserve Agent, was $107,003,765, and by the systeni as a
whole $282,523,000, none of which appears in the balance sheets of
Federal Reserve Banks. The ability of this bank and of the system
to supply demands for gold are greater by 60 per cent of these
respective amounts than they would be had no notes been put in
circulation. While the policy of accumulating gold through the
issuing of notes has been misunderstood and even criticized in some
quarters, it has had the hearty approval of the member banks, and,
with some exceptions, of the financial and general press.
In order to facilitate the accumulation of gold and to place member
banks not in New York City on a basis of equality with the New
York City banks with respect to the use of Federal Reserve notes, this
bank has offered to pay to the country member banks the cost of
shipping gold to it and the cost of shipping Federal Reserve notes to
them in return. Through their cooperation a substantial volume of
gold has been thus accumulated.
During the year there has been no change in the policy adopted
by this bank of keeping on reserve in New York and Washington a
very large supply of unissued Federal Reserve notes sufficient in its
opinion to meet any possible demands upon it for currency, based
upon past experience.
The redemption of Federal Reserve notes unfit for circulation has
begun and $54,509,235 of notes have been thus retired. Whenever
practicable soiled notes are laundered and placed again in circulation.
The cost of printing the notes has been slightly increased during the

A N N U A L REPORT OF FEDERAL RESERVE B A N K OF N E W Y O R K .

year, and is now on the basis of $10.58 per thousand bills, irrespective
of the denominations.
In the latter part of the year the demand for notes has largely been
for those of the denomination of $5. It would greatly facilitate the
use of Federal Reserve notes with the larger institutions if the Federal
Reserve Banks were authorized to issue the notes in the form of
certificates drawn to order in denominations of $5,000 and $10,000.
Further details of the transactions in and movements of Federal
Reserve notes will be found in the appendix.
C o l l e c t io n s

and

Cl e a r in g s .

(1) THE COLLECTION SYSTEM.

The voluntary intradistrict collection system which this bank
inaugurated on June 1, 1915, was continued on the same basis until
July 15, 1916. The first six months of the operation of this system,
established on a basis of immediate debit and credit, demonstrated
clearly that it was impossible on a voluntary basis to extend the
system materially either within this district or across district lines,
and, furthermore, that the immediate debit and credit basis was
unsatisfactory to both the member banks and the Federal Reserve
Bank of New York for the following reasons:
The member banks, having items charged to their accounts a day
before the items could reach them, were always uncertain how their
reserve account with this bank stood until the following day. This
uncertainty required them either to keep large excess balances with
this bank or expose their reserve accounts to impairment, even to
being overdrawn. Nearly every day a large percentage of the
accounts of the country members of the collection system was im
paired, many of them to such an extent that they were actually
overdrawn.
The Federal Reserve Bank of New York found its resources
reduced by the impairment of these reserve balances and found
itself compelled, against its express determination to the contrary,,
to purchase from its member banks their out-of-town checks, com
monly called “ float.”
On May 1 the Federal Reserve Board issued a circular requiring
each of the Federal Reserve Banks, under section 16 of the Federal
Reserve Act, “ to exercise the function of clearing houses for its mem
ber banks.” JJach Federal Reserve Bank was authorized to receive*
at par from its member banks checks drawn on all member banks,
whether in its district or other districts, and checks drawn on all
nonmember banks which could be collected at par. Immediate credit
entry was, to be given upon receipt for all items received, but the
proceeds were not to be counted as reserve or to become available
to meet checks drawn until actually collected. Checks so received
85717—17----- 3

A N N U A L REPORT OF FEDERAL RESERVE B A N K OF N E W Y O R K .

were to be forwarded direct to the member banks and charged to
their accounts after sufficient time had elapsed within which to
receive advice of payment. Member banks were required by the
Federal Reserve Board to provide funds to cover at par all checks
received from or for the account of their Federal Reserve Bank, but
were permitted to ship lawful money or Federal Reserve notes to
provide such funds, when necessary, at the expense of their Federal
Reserve Bank. The expense of conducting the collection depart
ment was to be assessed, on a per item basis, on the member banks
using its facilities. Notice was given that penalties would be as
sessed for the impairment of the reserves of member banks with
their Federal Reserve Banks.
In order to insure the presentation of checks by the most direct
route to the banks on which they are drawn, the following restric
tion was adopted by the Federal Reserve Bank of New York:
To insure direct routing, this bank will not accept any item drawn on a bank located
outside this district when such item bears the indorsement of a bank located outside
of this district.

This restriction has prevented banks outside of district No. 2 from
sending items drawn upon banks in other districts to New York City
for the purpose of making New York exchange.
Each Federal Reserve Bank adopted a schedule showing the num
ber of days which must elapse before the proceeds of items deposited
with it would become available as reserve or to be drawn against.
Each of these schedules covers the entire country and is based upon
the average time required for the Federal Reserve Bank to send items
to its member banks and receive remittances from them plus the
one-way mail time between Federal Reserve Banks. The schedule
of the Eederal Reserve Bank of New York will be found in the
appendix.
The member banks in this district were advised by circular letter
on June 6 concerning the operating details of the collection system
which was put into operation on July 15. The immediate result
was an increase in the number and amount of items handled. At
the outset items were received from the New York City banks up to
1 o’clock. Early in November this hour was changed to 2 o’clock,
and items of $5,000 or over were received up to 3.30 p. m. This
has resulted in increasing very largely the number as well as the
amount of items, especially those drawn on banks in other Federal
Reserve districts. In this district items drawn on 625 member banks
and 313 nonmember banks are being accepted on December 31, 1916.
No items are accepted which can not be collected at par. The serv
ice charge imposed by this bank since July 15 has been at the rate
of 1 cent per item, covering the expense of conducting its collection
department.

A N N U A L REPORT OF FEDERAL RESERVE B A N K OF N E W Y O R K .

The transactions of the collection department during the year
have been as follows:
[000’s omitted under “ Amount ” column.]
Items on New
York clearing
house banks.

Items on banks in
district No. 2.

Items on banks in
other Federal Re
serve districts.

Items on other
Federal Reseflre
Banks.

Number. Amount. Number. Amount. Number. Amoimt. Number. Amount.

T
INTRADTSTRICT
. SYSTEM.

1916.
January.
February.
►March___
April. . . .
May..........
June..........
July 1-15..
Total.

45,187
40,803
46,862
44,671
65,182
91,455
40,364

$158,
165,
207,
179,
241,
271,
129.

212,
201,
224,
234,
237,
252,
133,

7 7

$56,
63,
64,
69,

11.

7,331
7,731
9,117
8,918
9,354
8,841
4,471

$26,550
26,260
27,931
28,717
31,834
30,085
15,945

802
719
702
647
601
691
352

$20,647
21,265
20,751
21,678
23,414
23,705
15,436

56,263

187,322

4,514

146,8§6

374,624 , 1,353,604
1,497,189
7

446,392

190,149
46,615 | 119,920
473,412
112,068 ! 223,088
304,239
483,930
97,244
348,286
556,380
93,967
378,902 I 549,810
95,649
427,549 j 602,264
109,341

43,743
77,330
90,866
109,369
109,826
114,152

33,310 | 28,675
68,740
193,902
99,688
234,865
311,652
123,302
152,138
340,788
176,221
380,927

260
470
337
402
484
548

4,617
6,339
4,605
4,020
3,047
7,316

554,884 1,801,984 2,8&5,945

545,286 1,495,444 j 648,764

2,501

29,944

COUNTRY-WIDE
SYSTEM.

July 16-31..
August____
September.
October___
November..
December..
Total.................

Through the cooperation of many nonmember banks and the
courtesy of most of the member banks in this district, it has been
possible thus far to collect chocks on 313 out of the 463 nonmember
banks in this district without deduction for exchange. •The total
“ par list” of the 12 Federal Reserve Banks on December 30, 1916,
aggregated about 16,000 banks, or about 60 per cent of the number of
banks in the country. It is probable, however, that the par list in
cludes over 85 per cent of the total banking resources of the country
and, therefore, over 85 per cent of the volume of checks could, if de
sired, be collected through the Federal Reserve system.
In order to devise a time schedule which would be practicable, it
was, of course, impossible to calculate the exact time with respect to
each point; therefore, average time has been used. As a result of the
average time basis, this bank finds itself carrying uncollected checks
deposited by its member banks to an amount between $1,000,000 to
$2,000,000. With four times the volume of checks handled, the
“ float” carried is no larger than under the old intradistrict system.
Under the new system, by a change in the time schedule, even this
inconsiderable amount of “ float” could probably be avoided if de
sired, but under the former system the acquisition of “ float” was
practically unavoidable.
The facilities of the collection system of this bar.k are not ger orally
availed of by the member banks. Out of 625 member banks, only

A N N U A L REPORT OF FEDERAL RESERVE B A N K OF N E W Y O R K .

150 send items regularly, of which one-half are country banks and
the other half are situated in large cities. The number of items
collected through this bank is estimated to be only about one-seventh
of the total number which passes through the banks of this district
(not including items on New York Clearing House banks), although in
amount the items so collected are estimated at over one-third of such
aggregate. Most country banks still send their collections to one or
more of the large banks in reserve cities which make a specialty of
collections. Many of the city banks send items direct to country
banks with which they have reserve or other relations, allowing them
exchange or its equivalent, time, in remitting therefor.
It is desirable for the smooth working of the collection system that
it should develop gradually. This bank would be embarrassed if the
total volume of items 011 the district were suddenly deposited with it
for collection. Until the collection system is able to collect items on
practically every bank in the country, its use is sure to be somewhat
limited. It will be the endeavor of this bank as rapidly as possible to
increase its par list within its own district and to develop its collecting
organization to include the collection of notes, drafts, coupons, and
other noncash items.
Since the country-wide collection system has been in operation,
the New York Clearing House Association has amended its rules and
regulations in such a manner as to reduce very materially its required
charges for the collection of out-of-town items. On such items the
members of the clearing house were formerly obliged to charge either
one-tenth or one-fourth of 1 per cent, in accordance with the distance
of the point from New York. The present schedule of charges is onefortieth of 1 per cent on two-day points, one-twentieth of 1 per cent
on four-day points, and one-tenth of 1 per cent on eight-day points.
These charges represent a reasonable rate of interest on the funds for
the number of days during which the Federal Reserve Bank defers
credit.
(2) GOLD SETTLEMENT FUND.

During 1916 this bank has paid out through the gold settlement
fund at Washington $230,147,000 in gold. A statement of the opera
tions of the fund as affecting this bank will be found in the appendix.
The distribution through this fund of a large volume of gold paid into
it by the Federal Reserve Bank of New York is a natural consequence
of the importation through New York of large amounts of gold during
the year, elsewhere referred to in this report, which had to be shipped
to other parts of the country in payment for goods there purchased.
(3)

THE TRANSFER SYSTEM.

The gold settlement fund has made possible the maintenance of the
transfer system, inaugurated on May 26, 1915. Under this system a

A N N U A L REPORT OF FEDERAL RESERVE B A N K OF N E W Y O R K .

Federal Reserve Bank undertakes to transfer funds for any member
bank (a) to any other member bank in this district and (jb) to any
other Federal Reserve Bank for account of any of its member banks.
If the transfers are advised by mail no charge is made. If the
transfers are advised by telegram a charge at the rate of 2 per cent
per annum on the funds to be transferred is made for the number of
days which would have been required to effect a mail transfer. On
December 30, 1916, this bank amended its rule for the telegraphic
transfer of funds and notified its member banks that it would make
such transfers without charge except for the cost of the telegram.
This is a service which it is expected will be more and more availed
of as the ease and economy of using it are understood.
T

is c a l

gency

the

n t ie d

Sta te s.

After carefully studying the details and preparing for it, the
work of this bank as fiscal agent and depositary of the United States
commenced January 1, 1916.
Government funds in national banks in Greater New York, except
post office and court deposits, have been transferred to this bank and
collectors of customs and internal revenue have deposited their
receipts with it daily throughout the year. Out of such funds are
paid all checks and warrants drawn upon the Treasurer of the United
States which are presented to this bank, as well as coupons of United
States bonds.
During the year this bank handled 1,356,265 checks aggregating
$220,476,738.83 drawn on the Government’s account.
R

e l a t io n s

w it h

em ber

anks.

Federal Reserve district No. 2 embraces New York State, Fair
field County, Conn., and the following counties in New Jersey:
Bergen, Essex, Hudson, Hunterdon, Middlesex, Monmouth, Morris,
Passaic, Somerset, Sussex, Union, and Warren.
The number of member banks on December 30, 1916, was 625,. as
compared with 616 on December 31, 1915, located as follows:
Connecticut....................................................................................... 15
New Jersey............................................................................ ...........130
New York, country.................................................................... 445
New York, city........................................................................... 35
----- 480
Total..................................................................... ................. 625

During the year one State institution was admitted to member
ship (the Corn Exchange Bank of New York Citjr) and 15 member
banks in Connecticut were transferred to this district from the
Federal Reserve Bank of Boston.

A N N U A L REPORT OF FEDERAL RESERVE B A N K OF N E W Y O R K .

Seventeen member banks were liquidated during the year, 6 to
go out of business for one reason or another, and 11 to convert
Into trust companies. Ten new national banks have begun business
in the district during the year.
The frank and cooperative attitude of this bank toward its mem
ber banks,' referred to at some length in the last annual report, lias
been maintained throughout the year. Officers of the bank have
attended all bankers’ conventions and group meetings to which in
vitations have been received, as well as several local conferences of
bankers, and have made addresses when requested. The executive
committee of the recently organized national bank section of the
New York State Bankers Association spent a day at the office of
this bank conferring with its directors and officers upon its activi
ties and familiarizing themselves with its organization and aims.
Wherever opportunity has offered, officers of this bank have called
upon member banks, and an increasing number of officers of member
banks have called at the office of the bank in Xew York. Personal
relations between this bank and its members, which are so essential
to the success of the system, are thus being gradually established.
It is believed that, as compared with a year ago, the officers of
member banks understand much better the workings and purposes of
the reserve system and generally are more in sympathy with them.
In order to offset any losses arising through the collection system the
officers of this bank at every opportunity have pointed out to mem
ber banks tfye desirability of revising relations with their depositors,
of analyzing depositors’ accounts to ascertain the cost of handling
them, and, wherever practicable, of puttirg each account on a paying
basis by imposing such charges or requiring such balances to be main
tained as will compensate the bank for services rendered; also the
possibility of increasing earrings by withdrawing and loaning at
home funds they have hitherto found it necessary to keep with col
lecting banks to compensate for collecting their items. Although
many bankers, especially those in the smaller places, feel that such a
course is not practicable, nevertheless the experience of a number of
banks in this district which have undertaken such a revision of
relations proves that in most cases depositors are reasonable and
willing to compensate banks for services rendered. Letters describing
their experiences are on file in this bank and will be shown to anyone
interested. A convenient form for use in analyzing depositors’ ac
counts has been prepared by this bank and distributed to its members,
a number of whom have put it in practice with beneficial results. In
a number of cases, upon request, one of the junior officers of the bank
has visited country banks, explained methods of analyzing accounts,
and generally discussed the possibility of readjustments of the kinds

A N N U A L REPORT OF FEDERAL RESERVE- B A N K OF N E W Y O R K .

referred to. The same policy will be continued during the coming
3rear whenever such visits will not interfere too seriously with the
' conduct of the business of the bank.
R

e l a t io n s

w it h

onmem ber

Banks.

During the year whatever relations have been had with nonmem
ber banks in the district have been friendly and cooperative. Fed
eral Reserve notes have been issued freely to nonmember banks in
exchange for gold. No discrimination has been made against checks
indorsed by nonmember banks deposited in the collection system by
member banks, and the acceptances of nonmember banks have been
freely purchased throughout the year. A number of nonmcmber
banks in the country districts have agreed to remit to this bank at
par for items drawn upon them, in order to assist in the development
of its collection system, and their cooperation has been particularly
appreciated.
With regard to becoming members of the Federal Reserve system
thei% has been but little change in the attitude of the State institu
tions referred to in the last annual report. On the whole there is a
growing feeling among them that our bankirg system should be more
thoroughly unified and that the resporsibilities of maintaining the
Federal Reserve system should be shared by all, rather than by only
a part, of the banks of the country.
R

e l a t io n s

w it h

the

P u b l ic .

Much public interest in the Federal Reserve system has been
evinced during the year. Editorials and special articles on various
phases of its operations are constantly appearing in the daily press
and periodicals. Addresses have been made by the officers of the
bank before various associations and trade conventions. Public con
fidence in the system continues.
Many of those engaged in foreign trade are beginning to realize the
advantages of the use of bankers’ acceptances and of the development
of a discount market. Considerable support has been given by im
portant commercial organizations and houses to the movement
inaugurated by the Federal Reserve system to develop the use of trade
acceptances.
O r g a n iz a t io n
( j)

in t e r n a l

the

Bank.

managem ent.

During the year the directors of the bank held 25 meetings, at which
the average attendance has been 83 per cent; the executive commit
tee, consisting of the governor or deputy governor, the chairman, and
four directors, all of the directors serving upon it in turn, held 34
meetings; and two special committees held three meetings.

A N N U A L REPORT OP FEDERAL RESERVE B A N K OF N E W Y O R K .

At the first meeting of the directors held in 1916 the officers of the
bank were reelected for the ensuing year and the auditor was made
an officer, with authority to sign correspondence and reconcilements
of accounts.
On June 22 the directors, having learned with great regret that
Governor Benjamin Strong, owing to ill health, had been ordered by
his physician to take a complete rest, granted him a leave of absence,
with the expectation that he would resume his duties as soon as prac
ticable. They then appointed Mr. Robert H. Treman, one of the
directors of the bank and president of the Tompkins County National
Bank, Ithaca, N. Y., a deputy governor ad interim, and he assumed
the active duties of this office on Tuesday, June 27.
On September 20, Mr. J. D. Higgins, who has been with the bank
since its organization, was appointed an assistant cashier.
On January 1, 1916, the staff of the bank cpnsisted of 6 officers and
69 clerks. On December 31 there were 9 officers and 164 clerks.
The large increase in the clerical staff was occasioned partly by the
general development of the business of the bank, and partly by* the
work of caring for the deposits of the United States, but principally
by the inauguration of the country-wide collection system on July 15.
The department handling Government deposits consists of 9 men.
The transit department, prior to July 15, consisted of 4 men and 3
women. Since then it has grown steadily and on December 30 con
sisted of 13 men and 41 women. A night force of 5 men prepares
incoming 'mail for the department. The establishment of the col
lection system has affected the volume of work in all departments of
the bank, necessitating the employment of a number of additional
clerks.
The organization of the staff has been considerably developed dur
ing the year with a view to taking care of future growth and of any
sudden demands which might be made upon it. Appreciation should
be expressed of the loyalty and zeal with which the staff have dealt
with the various operating and accounting problems which have arisen
during the year and have carried on the constantly growing volume of
transactions passing through the bank.
(2) BANK PREMISES.

On May 1,1916, the bank assumed tenancy of its new offices at the *
Pine and Nassau Streets corner of the Equitable Building. These
premises are well suited to present needs, and provision is made in
the lease for large additional space when required. The total floor
space now occupied is 21,625 square feet.
The executive and banking departments and a room for the use of
member banks are situated on the main floor. The basement con
tains money counting rooms and the main and emergency vaults.

A N N U A L REPORT OF FEDERAL RESERVE B A N K OF N E W Y ORK.

The credit, audit, stenographic, mailing.and filing divisions and library
occupy the mezzanine. The collection and bookkeeping departments
are on the fifth floor, connected with the other departments by private
elevator.
The main vault is of the strongest and most modern type, large
enough to hold adequate supplies of currency for all requirements.
Pending the completion of this vault the funds of the bank have been
kept chiefly in the vaults of the Subtreasury and the New York Clear
ing House, v
(3) ELECTION OF DIRECTORS.

To fill the vacancies caused by the expiration on December 30,
1916, of the terms of Messrs. William Woodward and Henry R. Towne
an election was held from November 21 to December 6. Of the 209
banks in the group 'voting this year 130 chose electors and became
entitled to vote. The following candidates for the vacancies were
nominated:
For Class A director:
J. M. Carpenter, Wellsville, N. Y.; nominated by 1 bank.
*William Woodward, New York City; nominated by 85 banks.
For (lass B director:
Newcomb Carlton, New York City; nominated by 9 banks.
J. M. Carpenter, Wellsville, N. Y.; nominated by 1 bank.
Eugenius H. Outerbridge, New York City; nominated by 10 banks.
Henry R. Towne, New York City; nominated by 65 banks.

At the closing of the polls it appeared that the following votes had
been cast in the column of first choice:
For Class A director:
J. M. Carpenter...........................................................................
3
William Woodward..................................................................... 120
For Class B. director:
Newcomb Carlton....................................................................... 36
J. M. Carpenter...........................................................................
2
Eugenius H. Outerbridge........................................................... 11
Henry R. Towne........................................................................ 74

Mr. Woodward was declared elected Class A director and Mr.
Towne, Class B director, each for a term of three years, beginning
January 1, 1917.
Although second notices were mailed to the district reserve electors,
nevertheless only 123 of the 209 banks in the group which voted
performed their important duty to participate in the election of
directors of this bank.
At a meeting of the Federal Reserve Board on December 19, 1916,
Mr. Pierce Jay was reelected a Class C director of the bank for a term
of three years from January 1, 1917, and redesignated chairman of
the board and Federal Reserve Agent for 1917.

A N N U A L REPORT OF FEDERAL RESERVE B A N K OF N E W YORK*
(4) MEMBER OF ADVISORY COUNCIL.

On January 12 the directors reelected Mr. J. P. Morgan, of Now
York City, a member of the Federal Advisory Council from Federal
Reserve district No.'2 for the year 1916.
G eneral B
( l)

b a n k in g

p o s it io n

u s in e s s

the

Co n d it io n s .
d is t r ic t

d u r in g

1916.

The resources of the member banks in this district increased from
3,326 million dollars on September 2, 1915, to 4,063 millioil dollars
on September 12,1916, a gain of 736 millions. During substantially
the same period the trust companies of New York State added to
resources 470 millions and the State banks of deposit and discount
gained 169 millions. Estimates based upon the figures of the na
tional banks on September 12 and State banks on September 20 show
an approximate growth of 1,376 million dollars in the resources of
all the national and State banks in this district during the year
ended in the latter part of September, 1916.
Liabilities to stockholders increased 80 millions, to depositors
nearly 1,250 millions. An increase of 793 millions is shown in loans
and discounts, and of 318 millions in bonds and other securities.
Cash on hand, bank balances and cash items increased 186 millions,
and acceptances and letters of credit were 53 millions higher. Of
the total, the gain in resources by New York City banks was 985
millions, leaving about 390 millions increase for the rest of the State.
(2) MONEY RxVTES.

Except for the brief period in December when a severe stringency
occurred in money on call, a good supply of loanable funds at low
and stable rates lias been available in this market throughout the
last year, despite the unprecedented activity of trade and industry,
the great volume of stock exchange business, and the negotiations
from time to time of large loans to other countries. The proceeds
of these foreign loans, together with enormous imporatations of gold
and an increasing use of bankers’ acceptances, operated to finance
the abnormal industrial and commercial expansion to such an extent
that ordinary channels of credit were not subjected to special strain.
At the beginning of the year prime six months’ commercial paper
sold at 3 per cent to Sh per cent with a restricted volume of trading at
2f per cent. Bankers’ acceptances yielded .2 per cent to 2§ per cent,
as was the case during the preceding five months. Call loans were
made at 3 per cent early in January, but rates soon declined ter If per
cent and 2 per cent. Time loans on collateral ranged from 2\ per
cent to 3£ per cent. These rates remained practically unchanged

A N N U A L REPORT OF FEDERAL RESERVE B A N K OF N E W Y O R K .

during the first quarter of the year, with the exception of fractional
advances on collateral time loans toward the end of February. Dis
turbance in foreign relations caused a somewhat firmer money mar
ket in April, when, in the third week, call loans rose to 4 per cent for
a brief period. Rates quickly declined to about 2h per cent and
although excess reserves were steadily decreasing, remained easy until
June, when the rate for bankers’ acceptances advanced to 2\-2% per
cent and then' was some calling of street loans.
On July 8 excess reserves of the New York Clearing House members
were reduced .to $53,546,000. Two days later call loans advanced
to 6 per cent. Renewals were granted at 4J per cent and 5 per cent
for a few days. This quickly attracted local and out-of-town funds
which reduced xates to 21 per cent. Excess reserves increased
$41,000,000 during the following week and an easy money market
continued during the next three months. Money rates became dis
tinctly firmer in November. During the last week of that month
call money advanced sharply. New York bank reserves had been
gradually shrinking and on Saturday, December 2, the excess had
declined to $41,000,000, the lowest amount since the establishment
of the Federal Reserve Banks. On the Monday following call money
rose to 15 per cent, the highest rate since December 2, 1913. Loans
were renewed on that, date at 6 per cent and at 8 per cent the next
day. Rediscounting at the Federal Reserve Bank by leading New
York City banks and liberal purchases of bankers* acceptances by the
Federal Reserve system brought prompt relief. ' Substantial improve
ment in the reserve position was shown in the next two weeks, and
rates reacted to normal levels.
(3) THE GOLD MOVEMENT.

The United States Treasury statement of money in circulation
dated January 1, 1917, shows gold in the country $2,864,841,650, as
compared with $2,312,444,489 on January 1, 1916, an increase of
$552,397,161.
Imports of gold from all sources during the year 1916 were
$685,990,234. Gold exports were $155,792,927, mainly to Argentina,
other South American countries, Cuba, Japan, and Spain.Tho gold production of the United States and its dependencies in
1916 was $02,316,400.
(4) FOREIGN LOANS.

According to estimates of the Journal of Commerce, loans and
credits aggregating $2,235,900,000 have been negotiated in the
United States by other countries since the outbreak of the war. It
is calculated that approximately $175,000,000 of these obligations

annual

report

federal

reserve

bank

OF N E W Y O R K .

have been liquidated, leaving about $2,150,000,000 outstanding at
the end of the year 1916.
Following is a published compilation of foreign loans and credits
negotiated in the United States during the war:
EUROPE.

Great Britain:
Anglo-French Governments, 5 per cent 5-year bonds....................
British Government, 5 per cent.....................................................
British Banking credit, 4^ per cent.. : ...........................................
British Government, 5£ per cent...................................................
Government grain credit................................................................
City of Dublin, 5 per cent..............................................................
London water board.......................................................................

$250,000,000
250,000,000
50,000,000
300,000,000
50,000,000
2,000,000
6,400,000

Total Great Britain.....................................................................

908,400,000

French Government:
Anglo-French bonds.......................................................................
Collateral loan, 5 per cent American Foreign Securities Co..........
C., M. & St. P. collateral 4 per cent..............................................
Treasury notes, 5 per cent, one year paid......................................
Treasury bonds, 5 per cent, one year paid.....................................
Commercial credits, estimated.......................................................
Collateral loan, secured by Pennsylvania and C. M. & St. P. R. R.
bonds, paid.................................................................................
Three City loan, 6 per cent............................................................
City of Paris, 6 per cent.................................................................
Total' France...............................................................................

250,000,000
100,000,000
47,000,000
10,000,000
30,000,000
100,000,000
48,000,000
60,000,000
50,000,000
695,000,000

Russian Government :
Credit, 6£ per cent, 3 years............................................................ ......50,000,000
Acceptances, paid.............................................................. '.................25,000,000
Credit to Russian-Asiatic Bank............................................................25,000,000
Treasury notes, 5 per cent, 1 year, paid........................................ ......10,000,000
Unsecured loan, 6 per cent............................................................ ......50,000,000
Total Russia................................................................................

160,000,000

Italian Government: Bonds, 6 per cent, 1 year....................................

25,000,000

German Government:
Notes, 5 per cent, 9 months, paid.................................................. ...... 10,000,000
Notes, 6 per cent basis, due April, 1917............................................... 10,000,000
German war bonds, estimated.............................................................. 25,000,000
Total Germany............................................................................

45,000,000

Swiss Government: Notes, 5 per cent. 1,2, and 3 years.......................
15,000,000
Greek Government: Banking loan........................................................
7,000,000
Swedish Government: Notes, 6 per cent..............................................
5,000,000
Norwegian Government:
Bonds, 6 per cent, 7 years..............................................................
5,000,000
Notes, 6 per cent, 2 and 3 years.....................................................
3,000,000
Miscellaneous loans and banking credits, estimated.*.................................. 25,000,000
Total Europe............................................................................... 1,893,400,000

A N N U A L REPORT OF FEDERAL RESERVE R A N K OF N E W YORK.
CANADA.

Canadian Government:
Notes, 5 per cent, 1 and 2 years.....................................................
Notes, 5 per cent, 5, 10, and 15 years.............................................
Government of Newfoundland, 5 per cent, 3 years........................
Province of Ontario:
Notes, 5 per cent, 10 years..................................... •......................
Bonds, 5 per cent, 5 years..............................................................
Loan, 3| per cent, 9 months...........................................................
Province of Quebec:
Bonds, 5 per cent, 10 years............................................................
Bonds, 5 per cent, 3 to 5 years.......................................................
Province of British Columbia:
Bonds, 4J per cent, 10 years..........................................................
Bonds, 4£ per cent, 25 years___ u...................................................
Treasury bills, 4J per cent, 1 year............... i ................................
Province of New Brunswick: Bonds, 5 per cent, 5 years.....................
Province of Alberta:
Bonds, 5 per cent, 10 years...................................... .....................
Bonds, 5 per cent...........................................................................
Province of Manitoba:
Bonds, 5 per cent, 3 years.............................................................
Bonds, 5 per cent, 3 years..............................................................
Bonds, 5 per cent, 5 years..............................................................
Province of Saskatchewan:
Bonds, 5 per cent, 5 and 10 years..................................................
Bonds, 5 per cent, 3 years..............................................................
Bonds, 5 per cent...........................................................................
Province of Nova Scotia:
Bonds, 5 per cent, 10 years............................................................
Bank loan, 4£ per cent, 1 year.......................................................
City of Toronto:
Serial bonds, 5 per cent.................................................................
Notes, 5^ per cent..........................................................................
Bonds, 4£ per cent, due 1949 and 1955..........................................
City of Quebec: Bonds, 5 per cent, 5 years (1920)...............................
City of Vancouver:
Treasury notes, 6 per‘cent..............................................................
Bonds, 4i per cent, 10 years..........................................................
City of South Vancouver: Bonds, 6 per cent, 3 years..........................
City of Montreal:
Bonds, 5 per cent, 20 years............................................................
Bonds, 5 per cent, 3 years..............................................................
City of Ottawa:
Bonds, 5 per cent, 20 and 30 years................................................
Notes, 5 per cent, 1 year................................................................
City of Prince Rupert...........................................................................
City of Sault Ste. Marie: Bonds, 5 per cent, 30 years..........................
City of Calgary: Treasury notes, 3 years...............................................
City of Maisonneuve: Notes, 6 per cent, 2} years.................................*
City of Hochelaga: Bonds, 5 per cent, 28 years....................................
City of Victoria, B.C.: Bonds, 5 per cent, 3 years...............................
Canadian internal 5 per cent, estimated...............................................
Toronto Harbor.....................................................................................

$45,000,000
75,000,000
5,000,000
10,000,000
3,000,000
2,000,000
4,000,000
6,000,000
2,000,000
1,000,000
2,700,000
700,000
2,000,000
4,000,000
963,000
1,000,000
5,475,000
1,000,000
2,500,000
3,500,000
1,000,000
1,000,000
3,669,000
3,000,000
2, 500,000
2,125,000
1, 644,000
827,000
790,000
'
2,000,000
6,900,000
1,032,500
1,000,000
1, 600,000
500,000
2,000,000
80(), 000
375,000
1,000,000
30,000,000
1,500,000

A N N U A L REPORT OF FEDERAL RESERVE B A N K OF N E W Y O R K .

Quebec School......................................................................................
Miscellaneous loans of Canadian provinces and municipalities (esti
mated)........ ......................................................................................
City of Montreal....................................................................................

$200,000
24,399,500
3,.800,000

Total Canada...............................................................................

270,500,000

LATIN AMERICA.

Argentine Government:
Notes, 6 per cent, 1, 2, and 3 years................................................
Bonds, 6 per cent, 5 years..............................................................
Loan, 6 per cent, 6 months............................................................
Notes, 5 per cent, 1 year................................................................
Notes, 5 per cent, 1 year................................................................
Government of Chile.............................................................................
Government of Bolivia.........................................................................
Republic of Panama: Bonds, 5 per cent, 30 years................................
Uruguayan Government: Notes, 6 per cent, 6 months.........................
Uruguay................................................................................................
Comision Reguladora (agency of Yucatan Government) credit on sisal
hemp.................................................................................................
Miscellaneous bank loans and securities...... ........................................
Sao Paulo, 6 per cent............................................................................
Argentina banking credit......................................................................
Total Latin America...................................................................

15,000,000
50,000,000
6,000,000
18,500,000
15,000,000
6,000,000
1,000,000
3,000,000
646,375
2,500,000
10,000,000
5,353,625
5,500,000
18,500,000
157,000,000

ASIA.

China: Loan, 6 per cent.......................................................................

5,000,000

Total foreign loans in United States........................................... 2,325,900., 000
Less amount paid (estimated)...............................................................
175,000,000
Total........................................................................................... 2,150,900,000
5. FOREIGN BANKING CONDITIONS.

It has been estimated that the indebtedness of the seven principal
nations engaged in the European war row exceeds $75,0Q0,J)00,000,
which is an increase from $27,000,000,000 sirce the middle of the
year 1914. The annual interest thereon, it is calculated, will amount
to $3,800,000,000 in 1917 as agairst the yearly interest of
$1,070,000,000 in 1914.
*
‘
*
The total British war credits voted between August 1, 1914, and
October 11, 1916, were £3,132,000,000. Et gland s average daily
expenditure for war purposes since April 1,1916, is reported to have
been £5,000,000. The total daily cost to all the powers engaged in
the war is reported to be $105,000,000.
Among the important financial events abroad during the year was
the Economic Conference held in Paris from Jtac 14 to 17 by
representatives of the allied Governments, and the recommendation
by Lord Faringdon’s committee for a new British foreign trade bank
to be capitalized at £10,000,000.

A N N U A L REPORT OF FEDERAL RESERVE B A N K OF N E W Y O R K.

In August, the British treasury issued a new plan for dealing with
mobilized securities, under which the securities are to be borrowed
for a period of five years from March 31, 1917, for an additional
i per cent per annum on their face value.
Important accessions to the money holdings of the European
countries have been received from purchases of gold ornaments
and from deposits of coin. The gold purchasing bureau opened in
Berlin on October 17 is reported to have received an immense amount
of gold in the form of jewelry, plate, and heirlooms. •Great quantities
of gold have been shipped into the Scandinavian countries, Spain,
and Holland.
The stock held in the Bank of the Netherlands on December 2,
1916, was 585,144,000 florins against an average of about 120,000,000
florins before the outbreak of the war. Rates of interest on cus
tomers’ deposits were reduced in that country from 1J to ^ per cent.
London discount rates, which were 5 to 5J per cent at the first of
the year, declined about f per cent toward the end of February,
and ruled generally at 4J to 4f- per cent for three months thereafter.
A firmer market in June was followed by an advance from 54 to 5 f per
cent in July. During the remainder of the year rates ruled about
5-& to 5f per cent.
Continental discount rates have been more or less nominal since
the war began.
The statements of the leading European banks showing their
figures at the end of last year compared with the latest statements
for 1916 are as follows:
BANK OF ENGLAND.

Dec. 30, 1915.

Other securities
Reserve
Proportion of resources to liability.
Bullion............... . ..............................

per cent..

49,677,000
111,971,000
111.971.000
32.839.000
112,075,000
112.075.000
34.616.000
21H
52,576,407

Dec. 27, 1916.

126,726,000
57,187,000
106,461,000
33,079,000
18.49
54,304,915

IJANK OF FRANCE.

Gold.
Silver
Discounts and advances.
Circulation.

Tec. 30, 1915.

Tec. 28, 1916.

Francs.

annu al

repoet

federal

reserve

bank

OF N E W Y O R K .

IMPERIAL B A N K OP G ER M AN Y.

Dec. 31, 1915.

Dec. 30,1916.
t

Gold

Marks.
Marks.
2.520.473.000
2.445.185.000
5.803.314.000
9 609,767,000
6 917,922,000
Circulation...............................................................................................................
8.054.652.000

.........................................................................

BANK OF NETHERLANDS.

Florins.

Florins.
'587,602,000
6,985,000
160.214.000
758.379.000
54,577,000

j Dec. 16/29,1915.

Dec. 16/29,1916*

Bills discounted and advances.............................................................................
Circulation,
.....................
.............................
Deposits...................................................................................................................

......

Dec. 30. 1916.

429.180.000
6,192,000
172.428.000
577,152 000
29,772,000

Gold.............................................................................................. \........................

.. u.

I)ec. 31, 1915.

..... .....

BANK OP RUSSIA.

Gold..........................................................................................................................
Balance abroad
j
Silver and subsidiary coin
Securities and short loans
Treasury bonds
Other loans and advances....................................................................................
Securities
!
1
Circulation
Govemment deposits
Deposits, other
1

.............................................................
..................................................
.................................................. .
.............................................................
....................................................................
..................................................................
.......................................................
..............................................................
(6 )

NEW

YORK

Roubles.

1,611,740,000 i
270,010,000
36,750,000
392,870,000
3,244,580,000
905,180,000
259,440,000
5,304,620,000
204,140,000
1,272,080,000

Roubles.
1’, 472,610,000
2.149.850.000
114.740.000
245.570.000
0,534,050,000
064.400.000

136.110.000

8.591.280.000

216.010.000

2.146.800.000

STOCK E X C H A N G E .

A great volume of trading has taken place on the New York Stock
Exchange during the last year. Transactions in January exceeded
those of the corresponding period of any year since 1910. Then
followed three months of comparatively dull markets, with a down
ward tendency of prices. Activity increased in May, but declined
again in June on account of the Mexican situation. Less trading
was recorded in July than in any of the 16 months preceding.
There was a considerable increase during August and a strong up
ward turn in prices until the last days of the month when recessions
were caused by threatened strikes on the railways. In September
there began a remarkable period of speculative activity, which
reached a total of 29,992,582 shares for the month against 18,399,286
shares in September, 1915. The movement continued to increase in
volume during October and November. Transactions during the
•latter month aggregated 34,552,860 shares or nearly 100 per cent
more than in November, 1915. The peace proposals caused a tre
mendous liquidation of stocks in December, which was accompanied

A N N U A L REPORT OF FEDERAL RESERVE B A N K OF N E W Y O R K .

by a great fall in prices, particularly in shares of industrial corpora
tions engaged in the manufacture of war supplies.
A large volume of bond trading has continued throughout the
year with considerable transactions in Anglo-French, South American,
United Kingdom, and Canadian issues.
The New York Times record of the average prices of 50 repre
sentative stocks at the high point in 1916 was 101.51 on November
20 against 94.13 in the year 1915 and 88.47 at the end of 1916. The
average price of 40 representative bonds at the end of 1916 was
88.64, which may be compared with the high point, in 1915, of 87.62
on November 24.
Comparative transactions in bonds and stocks traded in on the
New York Stock Exchange during the past six years are the following:
Year.

Shares.

Bonds.

Year.

Shares.

1916.............................
1915.............................
1914.............................

230,060,900
173,155,644
45,989,158

$1,133,935,300
955,525,200
460,472,500

1913.............................
1912.............................
1911..................... .

76,134,996
118,452,676
127,376,149

Bonds.
497,158,600
645,300,000
878,933,700

(7) CROPS.

Unfavorable weather reduced the yield and caused disappoint
ment in the harvest of all the leading crops except hay and tobacco.
All products of the soil, however, have greatly advanced in price,
thus more than compensating producers for the shrinkage in volume.
The Department of Agriculture gives the following statistics:
Crops of wheat, corn, oats, barley, and rye.
Total production.

1916

1915

1914

Corn................................................................................................
Wheat............................................................................................
Oats................................................................................................
Barley............................................................................................
Rye.................................................................................................

Bushels.
2.583.241.000
639.886.000
1.251.992.000
180.927.000
47,383,000

Bushels.
2.994.773.000
1.025.801.000
1.549.030.000
228,851,000
54,050,000

Bushels.
2.672.804.000
891.017.000
1.141.060.000
194.953.000
42,779,000

Total....................................................................................

4,703,429,000

5,852,505,000

4,942,613,000

1915

1914

Farm values on Dec. 1.
Crops.

1916

Corn............................................................................................... $2,295,783,000
Wheat............................................................................................
1,025,765,000
Oats................................................................................................
656.179.000
Barley............................................................................................
159.534.000
R ye................................................................................................
57,857,000
Total....................................................................................

4,195,118,000

$1,722,680,000 $1,722,070,000
942.303.000
878.680.000
559.506.000
499.431.000
118.172.000
105.903.000
45,083,000
37,018,000
3,387,744,000

3,243,102,000

A N N U A L ' REPORT OF FEDERAL RESERVE B A N K OF N E W Y O R K .

Average prices per bushel received by farmers and planters.

Wheat....................................................................................................................................
R ye........................................................................................................................................
Oats........................................................................................................................................
Barley....................................................................................................................................
Com........................................................................................................................................
Buckwheat............................................................................................................................
Potatoes......................: ........................................................................................................
Flaxseed................................................................................................................................
Rice........................................................................................................................................

1916

1915

Cents.
160.3
122.1
52.4
88.2
88.9
112.9
146.1
248.0
88.6

Cents.
91.9
83.4
36.1
51.6
57.5
78.7
61.7
174.0
90.6

1914
Cents.
98.6
86.5
43.8
54.3
64.4
76.4
48.7
126.0
92.4

A cotton area larger than usual had been planted but the crop was
greatly reduced by unfavorable weather conditions and the boll
weevil. The yield is estimated by the Department of Agriculture at
11,511,000 bales, against 11,192,000 bales in 1915. The estimated
value, however, is $1,079,598,000, compared with $604,210,000 for the
preceding year.
(8) EXPORTS AND IMPORTS.

Merchandise exports reached unprecedented totals throughout the
year 1916, the aggregate for the twelve months ended December
30 being $5,481,423,589, an increase over the corresponding total
in 1915 of $1,926,752,742, and more than double the movement of
1914. The value of exports for December, which shows the heaviest
total of any of the 12 months of the year, was $521,650,904. The net
balance of exports for December, 1916, was $316,816,716, as com
pared with $187,473,857 for December, 1915.
The greater part of the increase in exports this year arises from
shipments to Great Britain and France, but there has also been a
substantial gain in exports to Cuba, China, Japan, and the South
American countries. Evidence of the expansion in trade with Great
Britain is measured by the calendar year figures of foreign trade, which
show exports to that country aggregating $1,888,314,301 for the year
1916, as compared with $590,732,398 and $599,812,295 for 1913 and
1914, respectively.
Imports of merchandise have also been very heavy this year, the
falliiig off in trade from Europe having been more than offset by in
creases from Canada, Cuba, China, Japan, South America, and theEast
Indies. The total for the 12 months of the year was $2,391,654,335,
against $1,778,596,695 and $1,789,276,001 in the corresponding peri
ods of 1915 and 1914, respectively. •
(9) GENERAL BUSINESS CONDITIONS.

The year 1916 opened upon a period of great activity in our domestic
and foreign trade, with industries working at full capacity, orders

A N N U A L REPORT OF FEDERAL RESERVE B A N K OF N E W Y O R K .

increasing, a growing scarcity of materials and labor, wages advanc
ing, prices rising, and buying almost unrestrained. The heavy move
ment of exports was confronted by a shortage of vessels and inade
quate loading facilities, which caused a serious congestion of freight
on railroads leading to eastern ports. Upwards of 50,000 cars await
ing ocean shipment were held up in terminals and on tracks in and
near New York. To relieve the situation embargoes were placed upon
various lines of goods and maintained in some cases until late in the
spring.
During the second quarter of the year general business was steadier
and commitments were made with greater deliberation. A more con
servative buying policy was accompanied by h slight decline in com
modity prices. Every month, however, the volume of goods pro
duced and sold in many lines greatly exceeded records of correspond
ing periods in previous years.
The usual mid-year dullness, which ordinarily causes a lull in com
merce at that season, was hardly noticeable this year, for manufac
turers were busy on orders booked far ahead and brisk business con
tinued in wholesale jobbing, retail, and export trade.
In August and September growing confidence in the business out
look was evidenced by increased activity in practically all mercantile
lines, notwithstanding a strong upturn in prices which raised the
average price of commodities to the highest level ever recorded and
developed during October into a widespread speculative movement
in commodities and securities.
Bradstreet’s index number for commodity prices of the year 1916
was 20 per cent above 1915 and 33 per cent above 1914. Annual
index numbers for the last five years are as follows:
1916....................................................$11.8251
1915....................................................
9.8530
1914....................................................
8.9034

1913......................................................$9.2076
1912...................................................... 9.1867
10-year average................................ 8.3377

Industry and commerce continued practically unchanged for the
rest of the year, notwithstanding developments during December in
the European war situation, the short but severe strain in call-money
rates, and the very unsettled stock markets. An unprecedented vol
ume of holiday trade was handled by retail stores.
The year has been one of great general prosperity which has been
shared by the wage earners. Manufacturers and distributors seem to
be proceeding with caution, keeping in mind the readjustments that
will be necessary when peace comes.

A N N U A L REPOET OF FEDERAL EESERVE B A N K OF N E W Y O R K .
A

p p e n d ix .

Capital account reconciliation, Jan. 1, 1916, to Jan. 1, 1917.

Capital paid in Jan. 1, 1916.................................................................$11,063,150.00
Sundry increases:
Due to increases in capital and surplus of member
banks.................................................................... $605,050.00
Due to organization of new banks and admission of
State banks........................................................... 318,600.00
923, 650.00
Sundry decreases:
Due to decreases in capital and surplus of member
banks......................................................................
6,000.00
Due to banks liquidated............................................ 115,050.00

11,986, 800.00

121,050.00
11,865, 750.00
Summary of Federal Reserve notes.

Total notes issued to bank:
1914^-15............................ ...............................................
1916.................................................................................

$89, 240.000.00
71, 273.000. 00

Less notes unfit for circulation, retired........................................

161, 513,000.00
54, 509,235. 00

Net amount outstanding..........................................................
As follows:
In circulation...............................................................................
. On hand Dec. 30,1916................................................................
On Dec. 30, 1916, the Federal Reserve Agent held, against Federal
Reserve notes, gold certificates aggregating....... : ..........................

107,003,765.00
93, 426,100. 00
13, 577, 665. 00
107,003,765. 00

Total of Federal Reserve notes paid out by the Federal Reserve Bank of New York, by
months, 1916.
To non
To member member
banks.
banks.
January................................... $4,774,000
February................................. 5.571.500
7.158.500
March
April........................................
6.354.500
May..........................................
5.712.500
June.......................................... 5.512.000
July
4.967.000
August..................................... 8.752.500
September............................... 13,758,000
October.................................... 13,548,500

$479,000
686,000
454.000
283.000
401.000
155.000
110.000
119.500
275.500
333,000

To member To non
member
banks.
banks.
November............................... $15*579,100
December................................ 21,718,700

$607,000
676,000

113,406,800

4,579,000

Total to nonmember
banks.........................

4,579,000

117,985,800
Total received from Federal
Reserve Agent.................... 71,273,000

Movement of Federal Reserve notes between Federal Reserve Bank of New York and
other Federal Reserve Banks, Jan. 3 to Dec. SI, 1916.
Notes of
Federal
Reserve
Their notes
Bank of
New York shipped to.
received
from.
Atlanta.................................
Boston..................................
Chicago.................................
Cleveland.............................
Dallas
Kansas City........................
Minneapolis.........................

$376,965
3,068,000
1,615,500
299,760
116,805
26,000
146,655

$2,653,310
1,262j 400
137,150
903,100
1,251,550
752,200
702,800

Notes of
Federal
Reserve
Bank of Their notes
New York shipped to.
received
from.
Philadelphia....................... $3,111,000
Richmond...........................
286,290
214,520
St. Louis..............................
165,485
San Francisco.....................
Total..........................

9,426,980'

$1,617,500
3,155,250
426,000
1,353,600
14,214,860

A N N U A L REPORT OF FEDERAL RESERVE B A N K OF N E W Y O R K .

Operations in Government bonds.
Open
Converted
market
and sold
purchases. during 1916.
United States 2 per cent consols of 1930.................................................... $6,130,750
......... , ..
. .............................
Pftnam^. 2s of 1906/36,. - .......
410.000
Panama 2s of 1908/38..................................................................................... 1,028,000
United States 1-year Treasury notes due Apr. 1,1917.........................
250.000
T otal...,...............................................................................................

$5,988,200
410.000
128.000
250,000

$142,550

7,818,750

6,776,200

1,042,550

Received
during
1916.

Sold
during
1916.

United States conversion 3s of 1916/46....................................................... $3,239,200
United States 1-year Treasury notes due Apr. 1,1917........................... 1,782,000
United Stat s 1-year Treasury notes due July 1,1917...........................
750.000
United States 1-year Treasury notes due Oct. 1,1917...........................
955.000
United States 2 per cent consols of 1930...................................................
50*000
Total......................................................................................................

Balance
Dec. 31,
1916.

6,776,200

900,000

Balance
Dec. 31,
1916.

$3,239,200
1,532,000
750,000

$250,000
955,000

50,000
5,571,200

1,205,000

Transit and exchange transactions between Federal Reserve Bank of New York and other
Federal Reserve Banks, Jan. 1, 1916, to Dec. 31, 1916.
Items de
Items sent
posited
with Fed bv Federal
Reserve
eral Re
serve Bank Bank of
New
York
of New
to.
York by.
Atlanta........................................................................................................................1.........
Boston....................................................................................................................................
Chicago...................................................................................................................................
Cleveland...............................................................................................................................
Dallas......................................................................................................................................
Kansas City...........................................................................................................................
Minneapolis...........................................................................................................................
Philadelphia.........................................................................................................................
Richmond..............'...............................................................................................................
St. Louis................................................................................................................................
San Francisco.......................................................................................................................

126,277
341,911
331,406
99,785
127,299
75,353
65,244
508,135
269,150
160,290
114,944

40,745
214,383
102,505
_ 81,544
11,229
28,530
12,453
264,002
324,006
22,333
9,300

Total............................................................................................................................

2,219,794

1,111,030

Summary of gold settlement fund operations, Jan. 1, 1916, to Dec. 81, 1916.
Amount re
m id
ceived by the Amount
by the New
New York
York Fed
Federal Re
serve Bank eral Reserve
Bank in
in settle
settlement
ment of ac
of
accounts
counts due
due to—
from—
Boston...............
Philadelphia...
Cleveland.........
Richmond.......
Atlanta.............
Chicago.............
St. Louis......... .
Minneapolis___
Kansas C ity....
Dallas......... *...
San Francisco..
Total.
Loss.

$197, 825.000
217, 579.000
78 235.000
324, 586.000
41, 653.000
100,825.000
22, 069.000
12 632.000
088.000
n! 949.000
10,135.000

$227, 904.000
221 346.000
; 718.000
257, 244.000
87, 021.000
69, 104.000
94, 360.000
61, 442.000
62, 076.000
71, 354.000
080.000

. 1,046,576,000 1,288,649,000
. 242,073,000

Net gain.

Net loss.

$30: 079.000
767.000
$10,517,000
67,342,000
45,368,000
31,721,000
291.000
810.000
988.000
405.000
945.000
109,580,000
242,073,000

351,653,000

A N N U A L REPORT OP FEDERAL RESERVE B AN K OP N E W YORK.

Analysis of gold movement through gold settlementfund.
Gold settlement balance, Jan. l, 1916.. $5,717,000
Deposited out of vault of Federal Re
serve Bank of New York.................... 245,000,000
Special deposits account Federal Re
serve Bank of New York by Federal
Reserve Bank of—
Atlanta................................................
1,302,000
Boston.................................................
1,500,000
Chicago................................................ 23,500,000
Cleveland............................................
4,350,000
Dallas...................................................
6,281,000
Kansas City........................................
500,000
Philadelphia......................................
1,000,000
7,440,000
Richmond..........................................
St./Louis..............................................
6,245,000
San Francisco....................................
9,900,000
Total................................................ 312,735,000

Settlement loss.......................................... $242,073,000
Gold withdrawn.......................................
2,000,000
Special deposits by Federal Reserve
Bank of New York, account Federal
Reserve Bank of—
1,500,000
Atlanta...............................................
Chicago................................................
1,000,000
Dallas...................................................
4,000,000
1,800,000
Kansas City........................................
Philadelphia......................................
5,000,000
San Francisco.....................................
34,792,000
Balance in fund Dec. 31,1916___
20,570,000

Total................................................

312,735,000

SCHEDULE SHOWING WHEN THE PROCEEDS OP ITEMS WILL BECOME AVAILABLE.

Immediate credit: New York (Manhattan).
One day after receipt: Boston, Philadelphia, and Richmond.
Two days after receipt (business days) :
Cleveland and Cincinnati, Chicago, Atlanta, Minneapolis and St. Paul, St.
Louis, Kansas City, Mo.; Kansas City, Kans.
Banks in Connecticut, Delaware, District of Columbia, Maine, Maryland, Massa
chusetts,1 New Hampshire, New Jersey, New York,1 Pennsylvania,1 Rhode
Island, Vermont, Virginia.1
Four days after receipt (business days):
Dallas, New Orleans.
Banks in Alabama. Arkansas, Florida, Georgia,1Illinois,1Indiana, Iowa, Kansas,1
Kentucky, Michigan, Minnesota,1 Mississippi, Missouri,1 North Carolina,
Ohio,1 South Carolina, Tennessee, West Virginia, Wisconsin.
Eight days after receipt:
Banks in Arizona, California, Colorado, Idaho, Louisiana,1 Montana, Nebraska,
Nevada, New Mexico, North Dakota, Oklahoma, Oregon, South Dakota,
Texas,1Utah, Washington, Wyoming.
A u g u s t 1, 1916.
N o t e . —Two-day items we forward on Saturday will be available Tuesday : four-day items we forward
Thursday will be available Tuesday, and those forwarded Friday and Saturday, on Wednesday.

AUTHORITY GIVEN TO ACCEPT UP TO 100 PER CENT OF CAPITAL AND SURPLUS.

American Exchange National Bank, New York City.
. Bank of Ne^ York, N. B. A., New York City.
Chase National Bank, New York City.
Chemical National Bank, New York City.
Harriman National Bank, New York City.
Irving National Bank, New York City.
Mechanics & Metals National Bank, New York City.
Merchants Exchange National Bank, New York City.
National Bank of Commerce, New York City.
National City Bank, New York City.

i Except banks in cities referred to.

Full text of Annual Report of the Federal Reserve Bank of New York : Second Annual Report of the Federal Reserve Bank of New York for the Year Ended December 31, 1916

FRASER