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4
ANNUAL REPORT
of the

Federal Reserve Agent
of the

Fourth Federal
Reserve 'District
to the

Federal Reserve Board

Covering Operations
for the
Calendar Year
1930

FEDERAL RESERVE BANK OF CLEVELAND




Letter of Transmittal
January 28, 1931.
SIR:
I have the honor to transmit to you herewith the sixteenth annual
report of the Federal Reserve Bank of Cleveland, covering operations
for the calendar year 1930.
Respectfully,
GEORGE D E C A M P ,
Federal Reserve Agent.

HON. EUGENE MEYER, Governor,
Federal Reserve Board,
Washington, D. C.




Directors and Officers, 1931
DIRECTORS
CLASS A
CHESS LAMBERTON, Franklin, Pa., 1931
ROBERT WARDROP, Pittsburgh, Pa., 1932

O. N. SAMS, Hillsboro, Ohio, 1933
CLASS B
R. P. WRIGHT, Erie, Pa., 1931

G. D. CRABBS, Cincinnati, Ohio, 1932
J. E. GALVIN, Lima, Ohio, 1933
CLASS C
L. B. WILLIAMS (Deputy Chairman), Cleveland, Ohio, 1931
GEO. DECAMP (Chairman), Cleveland, Ohio, 1932
W. W. KNIGHT, Toledo, Ohio, 1933

OFFICERS
GEO. DECAMP, Chairman of the Board
and Federal Reserve Agent
W. H. FLETCHER, Assistant Federal
Reserve Agent
J. B. ANDERSON, Assistant Federal
T>
* ~ i.
Reserve Agent
F. V. GRAYSON, Auditor

E. R. FANCHER, Governor
M. J. FLEMING, Deputy Governor
F. J. ZURLINDEN, Deputy Governor
H. F. STRATER, Cashier and Secretary
W. F. TAYLOR, Assistant Cashier
£ . W. ARNOLD Assistant Cashier
(jr. M. WAGNER, Assistant Uasnier
D R C L O U S E R > Assistant Cashier
C. L. BICKFORD, Assistant Cashier

CINCINNATI BRANCH
DIRECTORS

OFFICERS

THOS. J. DAVIS
FRED A. GEIER
B. H. KROGER
E. S. L E E

C. F. MCCOMBS, Managing Director

C. F. MCCOMBS
JOHN OMWAKE
GEO. M. VERITY

B. J. LAZAR, Cashier

H. N. OTT, Assistant Cashier
BRUCE KENNELLY, Assistant Cashier

PITTSBURGH BRANCH
DIRECTORS

OFFICERS

A. E. BRATTN

J. C. NEVIN, Managing Director

J. R. ElSAMAN
A. L. HUMPHREY
J. S. JONES

T. C. GRIGGS, Cashier

R. B. MELLON

P. A. BROWN, Assistant Cashier

J. C. NEVIN

JAMES RAE




F. E. COBUN, Assistant Cashier
—3—




SIXTEENTH ANNUAL REPORT
FEDERAL RESERVE BANK OF CLEVELAND
FEDERAL RESERVE CREDIT

Reflecting the decline in manufacturing activity, the lessened
volume of commercial transactions, and lower prices of commodities,
the local use of Fourth District bank credit was sharply restricted in
comparison with that of recent years. From the high point reached
in the fall months of 1929, at which season there is usually the greatest
demand for reserve funds, the total volume of bills and securities held
by the Cleveland reserve bank fell from in excess of two hundred millions to less than eighty millions of dollars. While in total amount the
decline was not substantially greater than the decrease from the high
point of 1928 to the low point of 1929, it was much more precipitate,
the movement from one extreme to the other occurring in a fivemonth period.
BILLS PURCHASED AND ACQUIRED

MILLIONS

MILLIONS

OOLLABS

DOLLARS

250

250

200

200

150
100

5O

••

I
•
m 1

L**1

I'" I

• 1

• 1 1 III
f-'«J

•
5

V"J L 1

150
100

SO

In comparison with the immediately preceding years, the composition of the items making up the total has undergone marked
change. Bills discounted for members dropped to less than twelve
millions in September — the lowest figure for that item since the
early months of 1917. Government securities held increased sharply,
from a level of thirty millions at the beginning of the year to slightly
more than double that amount in mid-December, and were higher
than since late in 1927 when this bank's holdings of Government
securities were largely increased in keeping with the easy money
policy adopted as a System matter. Bankers' bills purchased have
fluctuated within rather narrow limits, and represent almost in entirety purchases by the Open Market Committee in which this bank
shares.
—5—



BILLS DISCOUNTED FOR MEMBERS
BILLIONS

BILLIONS

OOLLARS

DOLLARS

e
4
2

!
nflnfl 1I B B •

4

2

To the extent that the earning resources of the Cleveland bank
are influenced by such open market operations, the employment of
reserve funds locally is obscured. Purchases from our members of
Government securities and of acceptances have represented but a
small part of the holdings of this bank; consequently, the small extent
of direct member bank borrowing evidences the limited use of reserve
bank credit by Fourth District members during the year. Especially
is this true with respect to banks in the more important centers.
During 1929 nearly 90 per cent of direct borrowings was for the account of city banks. In the past year, country bank discounts at this
bank held at substantially the levels of recent years, while city bank
borrowings fell sharply to a level as low as three million dollars in late
September. During the latter months both city and country bank
borrowings increased seasonally, the former in greater proportion
than the latter, but at the higher point at the year end were well below
the average of the past several years. There was practically no
change from the preceding year in the number of banks to which
credit was extended.
BANKS ACCOMMODATED
NUMBER

eoo

600

400

200

1 1 11 1 I I 1 •
1 1
fswl

1922

470J

f J85 J

463J

1923

1924

1925

[*"J

iv"°l

1926

1927

1 / ^
1928

400

200

f'^
1929

1930

The discount rate was reduced four times; from 5 to 4J^ per cent
on February 8; to 4 per cent on March 15; to 3 3^ per cent on June 7
and to 3 per cent on December 29. The last-mentioned rate is the
lowest ever established by this bank for all classes of paper of all
maturities.




—6—

EARNINGS AND EXPENSES

Current net earnings, reflecting both a smaller volume of discounts
and lower rates, were less than one-fourth the similar figure for 1929.
The effect upon open market rates of the easy money policy adopted
and pursued by the System throughout the year is evidenced by
earnings on bankers' acceptances, which were $539,000 this past year
against $1,130,000 in the preceding twelve months, while purchases
for 1930 were $25,000,000 in excess of those of last year. Earnings on
government securities were much larger, by reason of greatly increased average holdings.
Total expenses were reduced $136,000 from the previous year, notwithstanding that the volume of work in most departments was not
greatly changed.
There is given below a distribution of net income for 1930:
Net Income Available for Dividends, Reserves, and Surplus, January 1,
1930 to December 31, 1930
Withdrawn from Reserve for Undetermined Losses
TOTAL
Distribution:
Depreciation Allowances on Bank Premises
Reserve for Self Insurance
Dividends Paid to Members

$1,047,123.08
200,000.00
$1,247,123.08
$ 274,387.30
188,958.61
952,933.47
$1,416,279.38
1,247,123.08

TOTAL
Deduct Total Amount Available.
Net Deficit Charged to Surplus. .

$ 169,156.30

MEMBER BANK CREDIT

Following the abrupt decrease in credit extended by Fourth District reporting member banks (representing about 65 per cent of the
member bank resources of our territory) which accompanied the
security market collapse of 1929, a rapid expansion carried the total
to a new high level, at $2,300 millions in late September. This was
the result of an increase in investment account, which had shown a
practically uninterrupted upward trend from the first week of January. At the high point, investments had increased $208 millions
from the first of the year, partly offset by a reduction of about $40
millions in "all other" loans. Loans on security collateral remained
unchanged.
From September until the end of December a moderate decline in
loans, plus a somewhat pronounced liquidation in investment account,
reduced total reporting member bank credit about $95 millions to the
lowest level attained at any time during the last half of the year.
The net result of changes in the loan and investment accounts
during the year may be observed in the following table:
Weekly Reporting Member Banks
Loans on securities. ..
All other loans
Total investments....
Total loans, discounts and investments




Dec. 31, 1930
Dec. 31, 1929 (Figures in Millions) Net change
$ 752
$ 706
-$46
818
769
- 49
604
741
+137
$2,174
$2,216
+$42
n

Deposits at weekly reporting member banks increased rapidly
the first nine months of 1930, demand deposits growing from $1,006
millions in January to $1,170 millions at the high point of the year,
reached on July 16. Time deposits gained sharply in the first three
months of the year, reflecting in part the deposit of public funds received through tax payments and in part deposits of corporate funds
which had previously been placed in the call market. By mid-September, time deposits had increased more than $100 millions from the
first of the year, bringing total deposits to new all-time "high" of
$2,204 millions. From that point on, a greater-than-seasonal movement resulted in a loss of more than $50 millions to the year end.
Between the middle of July and the last of December, member
banks experienced an unusual shrinkage of demand deposits, the decline in five months amounting almost to nine per cent. At no other
time since weekly figures have been compiled has a loss of such proportions occurred. A large part of this decrease resulted from the
withdrawal of deposits in city banks on the part of country banks
wishing to improve their cash position. "Due to" balances of weekly
reporting banks (all in the more important cities, and including all
reserve cities in the district) decreased $92 millions during the last
three months of the year.
CHANGES IN MEMBERSHIP
There was a net loss of twenty-five in the number of member
banks in the Fourth District during 1930, twenty-two of which were
national and three of which were state banks.
Thirty national banks and six state banks surrendered membership in the system. The greater part of these losses was the result of
mergers, consolidations and the like, one state member withdrawing
voluntarily.
The schedule below shows the changes in membership structure
for the year:
National
Banks

State
Banks

Withdrawn in 1930

698
8
706
30

102
6

Number of members 12-31-1930 ..

676

96

Number of members 12-31-1929...
Admitted in 1930

99
3

FEDERAL RESERVE NOTES

Following the introduction of the new-size currency in July of
1929, the System experienced a sharp and sustained rise in note circulation, continuing until the demand for year-end holiday currency
had been satisfied. From the high point in December a persistent




CURRENCY RECEIVED AND COUNTED
MILLIONS

MILLIONS

DOLLARS

DOLLARS

1200

BOO

400

FICURES

INDICATE

MILLIONS

Of

cccs

'

l 11 I

• l
itn

v**\

L J *J

t»«

riiTj

1200

KM

|I4SJ

IKS

L"'J

nil

|

•00

|

400

||4»1

Jt_M_
IS2»

I92»

1930

decline occurred until late August of 1930, when a slightly belated
seasonal expansion began. From late October to the week preceding
Christmas an unusually rapid increase in notes in circulation took
place, amounting to more than $365 millions.
CASH RECEIPTS AND DISBURSEMENTS
DOLLARS

2000

DOLLARS

RECEIPTS

MB

2000

DISBURSEMENTS

1000

1600

1200

1200

800

800

400

400

Contrary to the experience of the System as a whole, the note circulation of the Cleveland bank increased steadily throughout the first
eight months (after the seasonal early-year contraction), and for an
extended period during the summer months this bank had in actual
circulation a greater amount of reserve notes than any other bank in
the System. Despite this unusual condition, the volume of our currency in use averaged lower than that of any year since 1918.
COIN RECEIVED AND COUNTED
MILLIONS

MILLIONS

DOLLARS

DOLLARS

24

FIGURES INDICATE MILLIONS OP PtCCES

16

—

.

fi3»j

r<<2j

24

•
• • I1 11 I I •
I M P 11

16

1

e




r

17

J

Tieil

Ties

L T5 J L"6J

1930

S

The rapidity with which the new-size money supplanted the old is
reflected in the currency receipts at this bank, shown in the following
table:
Receipts of Currency—July 1929-December 1930*
Per Cent Distribution of
Old Size
New Si*e
99.9
0.1
1.0
99.0
4.0
96.0
90.0
10.0
79.0
21.0
68.0
32.0
49.0
51.0
32.0
68.0
24.0
76.0
12.0
88.0
9.0
91.0
7.0
93.0
7.0
93.0
4.0
96.0
3.0
97.0
3.0
97.0
3.0
97.0
2.0
98.0

1929
July
August. . .
September,
October...
November.
December.
1930
January...
February..
March
April
May
June
July
August
September
October...
November.
December.

CHECK CLEARING AND COLLECTION

Despite a much-lessened volume of business, the number of checks
collected by the reserve bank increased slightly, the total number
being 86,825,493 compared with 85,515,197 in 1929. The increase
was greatest at Pittsburgh and Cleveland and negligible at Cincinnati. It is probable that clearings figures at the latter point were influenced by important bank consolidations occurring there during the
year.
CHECK

BILLIONS

COLLECTIONS

6ILLI0NS
Of
DOLLARS

or

OOLLARS

40

20

40

• • |

[] Q Q y

1 1 1 1•

20

r«7 j

In dollar amount, the total collected fell far short of the preceding
year, the loss amounting to nearly five billions of dollars.
•The above figures relate to dollar values — not to number of pieces.




— 10 —

Details of check collection activities for 1930 are given below:
Transit Department Check Clearings and Collections for Year 1980
Cleveland

On Cleveland banks
On other banks in District No. 4
On banks in other Districts
On Treasurer of United States

Items
7,699,143
25,324,565
790,301
1,153,745

$ 5,949,749,774.54
2,787,401,254.74
82,112,614.51
110,405,902.36

Tota
Items sent to Cincinnati and Pittsburgh branches

34,967,754
334,211

$ 8,929,669,546.15
$
50,292,741.67

On Cincinnati banks
On other banks in District No. 4
On banks in other Districts
On Treasurer of United States

4,903,119
13,840,893
643,766
766,567

$ 2,371,668,612.84
1,075,454,277.99
73,367,443.72
115,612,571.63

Total
Items sent to Main Office and Pittsburgh branch

20,154,345
268,333

$ 3,636,102,906.18
$
38,905,868.52

9,885,507
20,255,717
891,349
670,821

$11,992,988,971.01
1,530,341,066.56
451,047,256.85
79,343,302.81

31,703,394
82,786

$14,053,720,597.23
$
60,284,125.83

Amounts

Cincinnati

Pittsburgh
On Pittsburgh banks
On other banks in District No. 4
On banks in other Districts
On Treasurer of United States
Total
Items sent to Main Office and Cincinnati branch. ..
Recap itu lation
Total number of items handled
Total amount of items handled
Items and amounts handled by both Main Office and
branches and not duplicated in above figures

86,825,493
685,330

$26,619,493,049.56
$ 149,482,736.02

NON-CASH COLLECTIONS

In 1930, 364,099 items, amounting to $508,980,797.66, were
handled through the non-cash collection department.
The number and amounts of items handled at the main office and
branches at Cincinnati and Pittsburgh were as follows:
Number
299,896
34,417
29,786
364,099

Main Office.
Pittsburgh Branch.
Total

Amounts
$421,592,601.66
36,587,074.86
50,801,121.14
$508,980,797.66

On items handled through the three offices, collecting banks made
collection charges on 29,740 items, aggregating $10,539,506.94, at a
rate slightly more than one-tenth of one per cent.




— 11

NON-CASH

COLLECTIONS

UILLIONS

UILLIONS

DOLLARS

600

DOLLARS

ricuRCS

NOICATE

THOUSANDS Of ITEMS

600

••§

400

•

200

1922

1924

^^-

^__

Hill

ill
1123

• •

1925

102t

1927

192e

(929

400

200

19}0

Member banks sent direct to other Federal Reserve banks and
branches for collection 58,508 items, aggregating $69,883,828.43.
FISCAL AGENCY OPERATIONS

During the year 1930 there were issued five series of Treasury
certificates of indebtedness and eight series of Treasury bills. Allotments thereon in this district were as follows:
February 18
March 15
April 15
May 19
June 16
July 14
August 18
September 15
October 15
October 16
November 17
December 15
December 15

Ninety day bills
Nine month 334% certificates
Ninety day bills
Ninety-one day bills
One year 2J^% certificates
Sixty-three day bills
Ninety-one day bills
One year 2%% certificates
Sixty-two day bills
Sixty-two day bills
Ninety-one day bills
Six month 1%% certificates
One year 1%% certificates

$ 1,500,000
25,313,000
1,000
000
20,042,500
000
1,000,000
23,531,000
500,000
500,000
2,650,000
10,347,000
21,679,000

Government securities delivered on allotment numbered 7,375
pieces.
Government securities received for exchange of denomination or
form (within the issue) consisted of 51,314 pieces of coupon form and
12,938 pieces in registered form, aggregating $105,666,850, including
$60,989,050 received for transfer by wire.
GOVERNMENT COUPONS REDEEMED
MILLIONS

MILLIONS

DOLLARS

DOLLARS

1OO

100

80

80

40

• • • •

20

179001

60

•

I I 1 I •I MI
_
ruocl




r^rxl

FsiooJ

— 12 —

60

H

40

fine!

V"'J

f\xjij

20

Wire transfers of Government short-term securities from other
districts to this district aggregated $20,792,500; from this district to
other districts, $60,989,050.
Government coupons redeemed totaled 2,573,888, aggregating
$47,274,784.47. Federal farm loan coupons redeemed totaled 287,165,
aggregating $8,813,595.20.
Government obligations presented for redemption numbered 451
in registered form and 25,471 in coupon form and had a value of
$83,675,951.
PERSONNEL
In the November election by member banks in group 3, O. N.
Sams, of Hillsboro, Ohio, was reelected Class A director, and John E.
Galvin, of Lima, Ohio, elected Class B director, for three-year terms
ending December 31, 1933.
The Federal Reserve Board redesignated George DeCamp as
Chairman of the Board and Federal Reserve Agent for the year 1931,
and L. B. Williams as Deputy Chairman for the same period. Mr.
W. W. Knight also was reappointed, by the Federal Reserve Board,
for a three-year term as Class C director.
George M. Verity, of Middletown, Ohio, was reappointed by the
Federal Reserve Board as a director of the Cincinnati branch, and
J. S. Jones, of Wheeling, West Virginia, appointed a director of the
Pittsburgh branch, each for terms of three years. The Board of
Directors of the main office reappointed B. H. Kroger, of Cincinnati,
Ohio, and R. B. Mellon, of Pittsburgh, Pennsylvania, as directors of
the Cincinnati and Pittsburgh branches, respectively, also for threeyear terms. C. F. McCombs and J. C. Nevin were reappointed to
serve as Managing Directors of the Cincinnati and Pittsburgh
branches, respectively, for the year 1931.

NUMBER OF EMPLOYEES
NUMBER

NUMBER

1200

aoo

400

• •

•

1200

1
I I I 1 1 11

J

111

800
|

400

There has been no change in the official staffs at the main office
and branches, and the number of employees was 891 at the end of
the year.




— 13 —

J. A. House, President of the Guardian Trust Company, Cleveland, Ohio, was elected a member of the Federal Advisory Council to
represent the Fourth District for the coming year.
NEW PITTSBURGH BRANCH BUILDING

On November 1, 1930, ground was broken for the erection of a new
building to house our Pittsburgh branch. The new structure will be
located at Grant Street and Ogle Way on a plot approximately 75 by
195 feet. The proposed building will be of "set-back" type with
Creole marble base and Cherokee marble shaft. The land cost was
$780,000, and the expenditure of $875,000 authorized by Congress in
accordance with amendment to Section 10 of the Federal Reserve Act
does not include the cost of vaults, permanent equipment, etc., which
will be in the neighborhood of $575,000.
The present space occupied by the branch is inadequate by reason
of the narrowness of the building, which requires that some departments be distributed over two or more floors. The new branch is designed to permit centralization of working forces and operations of
individual departments on the same floors, and should result in more
efficient and economical operation of the branch.
BUSINESS CONDITIONS

A business depression of unusual severity, still in progress as the
year closed, characterized 1930. Industrial operations were sharply
curtailed, especially in the major lines of industry upon which Fourth
District prosperity largely depends. Unemployment was widespread
and purchasing power substantially reduced. Both wholesale and
retail trade declined in dollar value, partly a reflection of lower commodity prices. Lake shipping was dull, the ore movement to lower
lake ports being the smallest since 1924.
The District's basic industry, iron and steel, reduced operations
very materially. For the entire country, output in 1930 was only
64 per cent of capacity, while in the same period of 1929 operations
averaged 92 per cent. Local mills, being very dependent on the automobile industry for their market, up until December carried the brunt
of the decline. Some of the large orders for pipe to be used in western
projects benefited Youngstown mills, but they have now about disappeared. With building, railroad equipment and general manufacturing purchases in very small volume, the steel industry experienced the effects of a typical buyer's market. Prices declined
sharply, the composite average falling to $31.68, the lowest since
1915, as against $35.93 last year.
The automobile companies have had an unsatisfactory year.
Production was about 37 per cent below that of 1929. Stocks of
both new and used cars have been reduced. The curtailment of automobile production had a very depressing effect on the numerous parts




and accessory firms located in this District. Many factories shut
down entirely or were operating on very limited schedules for much
of the year.
This also had its effect on the rubber and tire industry so far as
demand for new car tires was concerned. The decline, however, in
the demand for replacement tires has been great also, somewhat of a
paradox to the industry.
In 1929 renewal tire sales were estimated by the Department of
Commerce at 47,053,000 units, while in 1930 the maximum estimate
of renewal sales is placed at 40,000,000 tires. In addition to this, the
industry has suffered heavy financial losses from the decline in crude
rubber and cotton prices.
Building, one of the few industries which did not make a particularly impressive showing in 1929, continued to decline at a rapid rate
in 1930. Although decreases have been recorded in all types, the
greatest falling-off in this district has been in residential building.
Clothing manufacturers have been hampered by unseasonable
weather to quite an extent and by the fact that dealers were somewhat overstocked with goods at the beginning of the year. Declining
prices also have had a deterring effect. The shoe industry has experienced a decided downward trend in both production and profits.
Farmers have been confronted with many difficulties. Drought
damage to crops, particularly corn, was very severe. Composite crop
yields were over 20 per cent below the preceding ten-year average in
this District, and accompanying this there has been a decided drop
in agricultural prices. These two declines have greatly affected total
farm income.
The dollar volume of retail trade was about ten per cent below
1929, based on the reports received from department stores through
the District. How much of this reduction was due to the lower retail
prices prevailing in 1930 can only be estimated, but there seems to be
no doubt but that part of the falling-off in sales can be explained in
this way. Wholesale firms reported large decreases in most lines.
Chain store operations held up rather well.
Coal production was affected by the drop in manufacturing activity, 1930 output in this District being about ten per cent below
1929. Cement production increased about six per cent, output being
stimulated by the large amount of public utility and road construction. Most of the smaller industrial concerns, including paint, glass,
tool and equipment, hardware, etc., were operating at lower levels in
1930 than in 1929.




— 15 —

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