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TWELFTH ANNUAL REPORT
OF THE

FEDERAL RESERVE BANK
OF RICHMOND

FOR THE YEAR ENDED DECEMBER 31, 1926




WM. W. HOXTON
Chairman and Federal Reserve Agent

FEDERAL RESERVE BANK
OF RICHMOND

February 14, 1927.
FEDERAL RESERVE BOARD,

Washington, D. C.
GENTLEMEN :

I have the honor to submit herewith the Twelfth
Annual Report of the Federal Reserve Bank of Richmond,
for the year ended December 31, 1926.




Respectfully,
WM. W. HOXTON,

Chairman of the Board and
Federal Reserve Agent.

DIRECTORS AND OFFICERS OF
THE FEDERAL RESERVE BANK OF RICHMOND
For Year 1927
Directors
Class A

Class B

CHAS. E. RDSMAN, 1927,

EDMUND STRUDWICK, 1927,

JAMES C. BRASWELL, 1928,

EDWIN C. GRAHAM, 1928,

L. E. JOHNSON, 1929,

D. R. COKER, 1929,

Baltimore, Md.

Rocky Mount, N. C.
Alderson, W. Va.

Richmond, Va.

Washington, D. C.
Hartsville, S. C.

Class C
WM. W. HOXTON, 1929, Chairman of

the Board, Richmond, Va.
A. DELANO, 1927, Deputy
Chairman, Washington, D. C.
ROBERT LASSITER, 1928, Charlotte,
N. C.
OFFICERS
FREDERIC

GEORGE J. SEAY, Governor.

PEPLE, Deputy Governor.
H. BROADDUS, Deputy Governor.
S. WALDEN, JR., Controller.

CHAS.

R.
J.

A.

WM. W. HOXTON, Chairman of the

Board and Federal Reserve Agent.
J. G. FRY, Assistant Federal Reserve
Agent.

GEORGE H. KEESEB, Cashier.
HUGH LEACH, Auditor.
ALBERT S. JOHNSTONE, Manager,
JOHN

Personnel and Service.
T. GARRETT, Manager, Bank
Relations Dept.
W. W. DILLARD,
EDWARD WALLER, JR.,
GEORGE S. SLOAN,

Assistant Cashiers.
Counsel

MAXWELL G. WALLACE

Member Federal Advisory Council
JOHN F. BRUTON, 1927

Wilson, N. C.

BALTIMORE BRANCH
Directors
A. H. DUDLEY, 1927,

Baltimore, Md.
H. B. WILCOX, 1927,

JOHN G. ROUSE, 1927,

Baltimore, Md.

Baltimore, Md.

LEVI B. PHILLIPS, 1928,

W M . H. MATTHAI, 1928,

CARTER G. OSBURN, 1929,

EDMUND P. COHILL, 1929,

A. H. DUDLEY, Managing Director.

THOMAS I. HAYS,

M. F. REESE, Cashier.

JOHN R. CUPIT,

Cambridge, Md.

Baltimore, Md.

Baltimore, Md.
Officers

Hancock, Md.

Assistant Cashier.




Assistant Cashier.

TWELFTH ANNUAL REPORT
FEDERAL RESERVE BANK OF RICHMOND

GENERAL BUSINESS CONDITIONS

Business continued in the Fifth Federal Reserve District
in very large volume during 1926, and on the whole probablyexceeded the volume of business transacted in 1925. Toward
the end of the year trade showed a distinct tendency to decline
from the previous high levels, but the decline was not drastic
and did not appear to be due to any particular uneasiness as
to the near future.
The volume of construction work undertaken in the Fifth
District in 1926 was below that of 1925 in most of the cities,
but there was a large volume of industrial construction in
suburban and rural sections, and the value of contracts actually awarded in the District in 1926 exceeded that of 1925
by 1.4 per cent. This continuation of construction work
played a leading part in keeping labor well employed, which
in turn insured a large purchasing power on the part of the
public.
Trade in 1926 exceeded that of the preceding year.
Debits to individual, firm and corporation accounts in the District's leading cities set a new record, exceeding the debits of
1925 by more than half a billion dollars. Retail sales, as reflected by the business of thirty-one department stores in the
Fifth District, were 3.0 per cent above 1925 sales. Wholesale
trade, on the other hand, was in smaller volume in 1926 than
in 1925 in nearly all lines for which statistics were available,
but the decline was partly due to a generally lower price level
last year, especially for cotton goods. Collections in 1926
were on the whole fairly satisfactory, but bad spots developed
during the year as a result of unfavorable agricultural developments. There were fewer commercial insolvencies in the
Fifth District last year than in 1925, and liabilities involved
were also lower.
The year 1926 was favorable for the leading industries of
the District, with the exception of textile milling, and even



4

TWELFTH ANNUAL REPORT OF THE

this line did a very large volume of business. Cotton consumption last year by Fifth District mills was considerably above
that of 1925. Operation on a falling market for raw material
was very difficult, and profits were reported small, but retail
trade was good, tire manufacturers were busy, and the demand for cotton products was therefore large in the aggregate. The buying was largely of a hand-to-mouth variety,
however, which kept the mills puzzled all the time. Lumber
mills and brick yards profited by the large construction program, and operated fully without any burdensome accumulation of stock. Tobacco factories ran full time, and several
large plants materially increased their facilities. The coal
industry of the District had a very unusual year. During the
early months of 1926 the anthracite strike greatly increased
the demand for bituminous coal, and during the rest of the
year there was an extraordinary demand for export and
bunker coal as a result of the long British strike.
The results of farming operations in the Fifth District
were very spotted in 1926. The cotton crop of the District
was larger than in 1925, but the drastic price decline was
much greater than the increase in yield. As a consequence,
the money income from cotton was many millions of dollars
less in 1926 than in 1925. The section suffering most was
northern and western South Carolina, where two dry summers
in succession reduced cotton yields to such a low point that
many farmers made little more than sufficient cotton to pay
for the fertilizer used under the crop. In eastern South
Carolina and in much of North Carolina the seriousness of the
situation arising from the low cotton prices was ameliorated
by a fairly good tobacco crop which sold for high prices. In
Virginia the few counties dependent upon cotton were hard
hit, and dark tobacco brought very low prices, but the bright
tobacco yield and price were above those of 1925. The fruit
crop of the District was one of the largest on record, and truck
crops were fairly satisfactory in yield. Maryland agricultural
returns were probably less than in 1925, growers of canning
crops particularly having had an unsuccessful year.
VOLUME OF BUSINESS

The physical volume of business handled by the Federal
Reserve Bank of Richmond in 1926 was somewhat larger than
that of 1925 in the chief departments of the Bank, and in
general was the largest in the history of the Bank. The following table shows the volume of work handled in the principal departments during the year 1926, as compared with
the year 1925:



FEDERAL RESERVE BANK OF RICHMOND

1926

1925

Per Cent of
Increase or
Decrease

BILLS DISCOUNTED AND
BOUGHT :

Number
Amount

69,302
2,821,870,280

75,715
2,314,263,396

— 8.47
+21.93

50,430,000
48,171,677
$13,924,751,000 $14,038,542,000

+ 4.69
— .81

CHECKS HANDLED BY TRANSIT
DEPARTMENT :

Number
Amount
NON-CASH COLLECTIONS
HANDLED:

Number
Amount

185,248
244,284,493 $

201,136
236,341,688

— 7.90
+ 3.36

102,084,000
523,891,000 $

93,233,000
482,560,000

+ 9.49
+ 8.56

156,440,000
15,342,000

147,919,000
14,910,000

+ 5.76
+ 2.90

113,614
106,317
$ 4,219,893,299 $ 3,975,049,800

+ 6.86
+ 6.16

CURRENCY RECEIVED AND
COUNTED :

*Number of pieces..
* Amount
COINS RECEIVED AND COUNTED :

*Number of pieces
•Amount
TELEGRAPHIC TRANSFERS OF
FUNDS:

Number
Amount
FISCAL AGENCY—U. S. SECURITIES RECEIVED, ISSUED, REDEEMED, CANCELLED OR EXCHANGED :

Number
Amount

56,839
86,879,571 $

83,361
93,542,822

—31.81
— 7.12

— Denotes decrease in 1926.
* New currency and coin not included.

The number of bills discounted or bought in 1926 declined 8.47 per cent in comparison with 1925, but the amount
involved rose 21.93 per cent. The volume of checks cleared
through the Transit Department increased 4.69 per cent, but
the aggregate amount involved declined eighty-one hundredths
of 1 per cent. Non-cash collection items handled in 1926 declined 7.90 per cent in number but rose 3.36 per cent in
amount. The numbers of pieces of currency and coin received




6

TWELFTH ANNUAL REPORT OF THE

and counted increased 9.49 and 5.76 per cent, respectively,
and the amounts involved rose by 8.56 per cent and 2.90 per
cent. Wire transfers of money rose 6.86 per cent in number
and 6.16 per cent in amount in comparison with 1925. Fiscal
Agency work for the Federal Government declined more than
any other activity of the Bank, the number of U. S. securities
received, issued, redeemed, cancelled or exchanged decreasing
31.81 per cent in 1926 and the amount involved declining 7.12
per cent.
FINANCIAL RESULTS OF OPERATIONS

The following is a condensed statement of earnings, expenses, dividends, and surplus account for the year 1926:
Average
Average
Daily
Daily
Holdings Earnings
$ 41,911,417 $4,593
10,531,500
1,025
7,833,881
716

Bills Discounted
Bills Purchased
U. S. Securities Held
Penalties, Miscellaneous
Earnings, and Foreign
Loans on Gold
$ 60,276,798
Totals
Current Expenses
Current Net Earnings
Account of Reserves, Depreciation, etc
Net Earnings Available
for Dividends, Surplus
and Franchise Tax
Dividends Paid
Transferred to Surplus
Account
Franchise Tax Paid to
Government

320
$6,654

Annual
Rate of
Earnings Earnings
.0400
$ 1,676,456
.0355
374,177
.0334
261,475
Total

116,909
$ 2,429,017
1,383,939
$ 1,045,078
317,433
$
$

727,645
363,957
279,216

$

84,472
727,645

The gross earnings of the Federal Reserve Bank of Richmond for the year 1926 were $2,429,017, as compared with
$2,182,460 for 1925, an increase of $246,557. The increase
was due entirely to increased holdings of U. S. securities and
bankers' acceptances purchased, the average volume of rediscounts last year being lower than in 1925. For several
years the percentage of earnings derived from the discount of
paper for member banks has steadily declined, and in 1926
made up only 69 per cent of gross earnings, compared with



FEDERAL RESERVE BANK OF RICHMOND

7

79 per cent in 1925, 86 per cent in 1924, and 93 per cent in
1923. The average rate of earnings on all earning assets during 1926 was .0384, practically the same as .0383 in 1925,
which was the lowest average rate since 1917.
The Bank's current expenses in 1926 were $1,383,939, a
decrease of $67,675 under the total of $1,451,614 incurred for
expenses in 1925, and less than in any year since 1919, while
current net earnings for 1926 totaled $1,045,078, as compared
with $730,846 for 1925, an increase of $314,232. After the
proper transfers had been made from the $1,045,078 of net
earnings to reserve, depreciation and miscellaneous accounts,
dividends to member banks on capital stock, and to surplus
account, there remained $84,472 available for payment to the
Federal Government on account of Franchise tax. No payments were made on this account in either 1925 or 1924.
EXPENSES OF OPERATION IN 1926
The expenses of Federal Reserve Banks are incurred in the exercise
of functions prescribed by law, which involve the rendering of services
directly to the United States Treasury and to member banks, and through
member banks indirectly to the entire business community—agricultural,
industrial, and commercial.
Federal Reserve Banks—furnish an elastic currency; afford means of
rediscounting commercial and agricultural paper; act as Fiscal Agents of
the U. S. Treasury Department; pay checks and warrants drawn on the
Treasury of the United States; exercise the functions of Sub-treasuries in
the supply, exchange, and redemption of currency and coin; effect the par
clearance of checks on more than 85 per cent of the banks of the country;
collect for member banks maturing notes, drafts, etc.; effect the transfer
of funds by telegraph and mail, and make daily settlement between all
Federal Reserve Districts; and perform other public services.
The expenses of conducting the operations of the Federal Reserve
Bank of Richmond for the year 1926, divided according to functions, were
as follows:
CURRENCY AND COIN
The cost of receiving and handling 147.457.263
pieces of currency aggregating $641,792,000,
of which 102,084,000 pieces had been in circulation and had to be sorted and counted;
paying or shipping out 145 554.230 pieces of
currency aggregating $635,049,000; receiving
and handling 164.142,377 pieces of coin aggregating $16,067,000; paying or shipping out
160.795,917 pieces of coin aggregating $15,551.000 was
$115,655.30
The shipping charges (postage, expressage and
insurance) on currency and coin to and from
out-of-town members amounted to
104,466.12
Assessments by the Treasury Department to
cover the cost of printing and maintaining an




8

TWELFTH ANNUAL REPORT OF THE
adequate supply of new Federal Reserve notes
and the cost of redeeming and destroying Federal Reserve notes and Federal Reserve bank
notes unfit for circulation, plus the shipping
charges thereon between the Bank and Washington, and the shipping charges on fit F. R.
notes between the Bank and other Federal
Reserve banks amounted to
60,868.94

Total Cost
$ 280,990.36
LOANS, REDISCOUNTS AND INVESTMENTS
The cost of making discounts and advances to
430 member banks: 61,683 notes aggregating
$2,732,649,000, were received, examined and
discounted; 62,409 notes collateral to member
bank notes aggregating $1,338,900,000 were received, examined and handled; 8,515 pieces of
marginal or excess collateral, aggregating
$29,816,000, were received, examined and handled; 7,619 banker's acceptances, aggregating
$89,221,000, were purchased in the open market, examined and handled; includes the cost
of special handling accorded 7,503 notes aggregating $90,878,000 paid before maturity and
the unearned discount rebated; also includes
the cost of credit investigation, securing and
analyzing commercial and bank statements,
maintaining credit files, etc
$ 52,823.49
The cost of effecting 1,185 transactions in the
purchase and sale (in the open market) of
government securities for out-of-town banks,
aggregating $7,870,000 and the cost of receiving, verifying and holding securities
pledged as collateral to notes, and for safe
keeping, and maintaining the proper records
thereof, as follows: receiving 30,863 pieces
aggregating $150,801,000; shipping 36,103
pieces aggregating $165,056,000; holding in
our vaults throughout the year securities, deposited by member banks as collateral to discounts or for safe-keeping, ranging from
$55,520,000 to $73,107,000; was
11,944.45
Total Cost
$ 64,767.94
TRANSIT AND COLLECTIONS
Handling and collecting 48,951,000 checks, aggregating $13,754,829,000 cost
$196,241.45
Receiving, examining, paying and listing according to Treasury regulations 1,479,000 government checks, aggregating $169,922,000, and
shipping them to Washington cost
5,946.75
Handling 947,527 checks aggregating $68,936,000 returned unpaid for various reasons cost.. 19,476.01
Handling 185,248 non-cash collection items (maturing notes, drafts, coupons, etc.) aggregating $244,284,000 cost
31,697.30
Total Cost
$ 253,361.51



FEDERAL RESERVE BANK OF RICHMOND
ACCOUNTING
This function includes:
The general books, capital stock records, issuing
and recording official checks, and the detail
transcript of the general account of the Treasurer of the United States.
The member bank accounts—both reserve accounts and deferred accounts—and the calculation of deficiencies in reserve, if any, and
the assessments of penalties for deficiencies as
prescribed by law.
The accounts with other Federal Reserve banks,
and the operation of the Gold Settlement Fund
through which $15,041,156,000 was received
from and paid to other Federal Reserve banks
and branches, the Treasurer of the United
States, and the Federal Reserve Agent.
The transfers of funds for account of member
banks of which there were 113,614 aggregating
$4,219,893,000.
The accounting involved in making all the expenditures of the bank.
The accounting and other expenses in connection
with closed or suspended banks.
Planning new accounting forms and systems and
making changes in old forms as the need
therefor arises.
Total Cost

9

$ 121,514.17

FISCAL AGENT OF THE UNITED STATES
Services rendered as Fiscal Agent of the U. S.
Government:
Receiving, proving and crediting to banks, preparing schedules, cancelling and shipping to
Washington 1,223,087 government coupons aggregating $13,253,000 cost
$ 4,235.69
Fiscal Agency work for the U. S. Government
principally relating to the issue of 5,725 pieces
of government securities amounting to $26,584,000; the redemption of 7,446 pieces
amounting to $21,884,000; the exchange and
transfer of 36,344 pieces amounting to $29,755,000; the redemption of war savings and
thrift stamps 40,562 pieces amounting to
$155,800; the receipt of subscription^ and payments for new issues, tke handling of the war
loan depositary accounts, the custody of a
stock of securities ranging from $40,894,000
to $80,487,000, cost
31,594.13
Total Cost
$ 35,829.82
Reimbursed by the Treasury Department
6,852.90
Net Cost to the Bank
$
GENERAL EXPENSES—NOT ALLOCATED TO
THE ABOVE FUNCTIONS
Official salaries and supervisory expenses
$115,187.37




28,976.92

10

TWELFTH ANNUAL REPORT OF THE

Directors' fees and traveling expenses
Governors', Federal Reserve Agents' and Federal
Advisory Council conferences
Our proportion of the expenses of the Federal
Reserve Board
Operation of the banking houses at Richmond
and Baltimore (includes salaries of superintendent, mechanics, firemen, janitors, elevator
operators, etc., and light and power, heat, taxes, fire insurance, repairs and alterations,
etc.)
The provision of personnel
Legal expenses
Maintaining the general audit of the Bank and
Branch
Work of the Federal Reserve Agent's Department, including issuance of Federal Reserve
notes, custody of collateral therefor, custody
of reserve stock of Federal Reserve notes, the
examination of member banks, preparing and
publishing the Monthly Review of Business
and Agricultural Conditions, assembing various statistical data, etc
Bank relations work: visiting, and advising and
conferences with member and non-member
banks
Handling incoming and outgoing ordinary and
registered mail
Protection—Salaries of special officers and
watchmen, and other protective services
Other general services, including purchasing of
supplies and equipment, operating the office
supplies and stationery stock room, telephone
service, filing and caring for old records, operating duplicating processes, salaries of general office boys, operation of automobile
trucks, and repairs to equipment
Shipping charges (postage and insurance) on
securities
Postage on ordinary mail
Insurance—Employee's group life, Employees'
fidelity, Bankers' blanket bond and burglary,
Workmen's Compensation, Fire—equipment
and supplies, and Automobile
Total Cost
Total Operating Expense*

6,624.85
1,027.92
38,059.76

119,661.83
18,565 39
11,929.72
25,998.17

50,042.65
29,085.07
22,082.77
46,639.44

65,764.55
2,284.05
60,992.56
20,736.26
$ 634,692.36
$1,384,303.26

* NOTE: The total Operating Expense during 1926 was $364.36 more
than the total amount of expenditures charged to the Current Expense account of the Bank during the year. The difference represents the excess
of office supplies, printing and stationery, and postage actually used during
the year and charged to the proper functions in the above statement of
Operating Expenses, over the amount of such supplies purchased during
the year and charged to Current Expense account.




11

FEDERAL RESERVE BANK OF RICHMOND

DISCOUNT OPERATIONS

The Federal Reserve Bank of Richmond discounted paper
totaling $2,732,649,373 for member banks in 1926, as compared with $2,265,228,332 in 1925, but the average amount
of outstanding credit to members during the later year was
really smaller than in the earlier year. The average amount
of paper under discount each day is a better measure of the
actual credit extended to member banks than the total volume
of discounts for the year, the latter figure being too much influenced by the class of paper offered and the length of time
for which the money is borrowed; frequent offerings of short
time paper will of course swell the aggregate discounts. The
daily average amount of paper under discount was $41,855,268
in 1926 and $43,053,947 in 1925, a decrease last year of 2.78
per cent. District of Columbia, West Virginia and South
Carolina banks used reserve bank credit more extensively in
1926 than in 1925, while Maryland, Virginia and North Carolina banks discounted less than in the previous year. The following table shows by states the daily average amount of
paper under discount at the Federal Reserve Bank of Richmond during the year 1926, and in comparison with 1925:
States
Maryland
District of Columbia
Virginia
West Virginia
North Carolina
South Carolina
Fifth District

1926

1925

Per Cent of Increase or Decrease

$ 5,464,527
1,799,481
12,858,552
4,421,710
12,101,601
5,209,397

$ 5,505,460
1,271,282
14,379,139
3,853,092
13,823,088
4,221,886

— .74
+ 41.55
—10.57
+ 14.76
—12.45
+ 23.39

$41,855,268

$43,053,947

— 2.78

Of the total volume of 1926 discounts, 53.67 per cent
were secured by Government obligations, 40.60 per cent were
otherwise secured, and only 5.73 per cent were unsecured, as
compared with approximately 64 per cent secured by Government obligations in 1925, 28 per cent otherwise secured, and
8 per cent unsecured. As in 1925, a large proportion of the
borrowing in 1926 was done by city banks, which accounts for
the small percentage of unsecured paper offered for discount.
This is of course a natural situation, since the reserve deposits
of banks in cities having more than 25,000 inhabitants constitute 65 per cent of all reserve deposits. In proportion to
reserve deposits, the smaller towns and cities borrowed most.
On December 31, 1926, the total of discounted paper held



12

TWELFTH ANNUAL REPORT OF THE

by the Bank was $23,508,830. In addition to the paper under discount at the end of the year, the Bank held $12,796,334
in bankers' acceptances purchased from member banks and in
the open market, and $7,416,900 in Government securities,
bringing the total of earning assets on December 31st up to
$43,722,064, in comparison with total earning assets amounting to $56,056,135 held on December 31, 1925.
Four hundred and thirty member banks discounted paper
with the Federal Reserve Bank of Richmond at some time in
1926, and at the end of the year 208 of the 589 member banks
were being accommodated.
The discount rate at the Bank on all classes of eligible
paper was 4 per cent throughout 1926, at which point the rate
was set on June 14, 1924.
ACCEPTANCES
Trade acceptances amounting to $1,882,759 were discounted for member banks in 1926, compared with $3,747,151
of the same class of paper discounted in 1925 and $9,038,994
in 1924. However, the volume of trade acceptances discounted by the reserve bank cannot be taken as a measure of
the extent to which trade acceptances were used, the amount
received by the Federal Reserve Bank depending upon the
necessity for rediscounting as well as upon the volume of trade
acceptances held by member banks.
The Federal Reserve Bank of Richmond purchased a total
of $89,220,905 of bankers' acceptances in 1926, of which $31,709,202 were bought from member banks, $49,464,466 from
dealers and non-member banks, and $8,047,237 from other
reserve banks. In 1925, this Bank purchased acceptances
amounting to $15,151,148 from member banks and $33,883,915 from dealers, a total of $49,035,063.
CHECK COLLECTIONS
The Transit Department handled 50,430,000 cash items
in 1926, totaling in amount $13,924,751,000, compared with
48,171,677 items and an amount totaling $14,038,542,000
handled in 1925. Thus the number of items handled last year
was 2,258,323 more than in 1925, and greater than in any
other year, but the amount handled in 1926 declined $113,791,000 from 1925. This is accounted for in part at least by
the lower price level. With a larger number of items and a
smaller total value, the average amount of each item dropped
to $276 last year in comparison with $291 during 1925. The
number of items handled each working day in 1926 was
166,987, amounting to $46,108,447, compared with 159,509
items totaling $46,485,238 handled daily in 1925. Of the
50,430,000 items handled in 1926, 4,246,000 were forwarded



FEDERAL RESERVE BANK OF RICHMOND

13

to other Federal reserve banks and branches, and 1,479,000
were drawn on the Treasurer of the United States.
Cash letters forwarded direct to other Federal reserve
banks and branches by member banks in the Fifth District,
for collection and credit to the accounts of the sending banks
at the Federal Reserve Bank of Richmond, numbered 221,764,
totaling in amount $2,188,709,800, as compared with 197,448
cash letters amounting to $1,902,666,600 sent direct to other
districts in 1925. The use of direct routing of cash items has
grown steadily for several years, this method resulting in a
saving of transit time in securing credit to reserve accounts.
GOLD SETTLEMENT FUND

The Federal Reserve Bank of Richmond received $7,522,223,000 from Federal reserve banks and other sources through
the Gold Settlement Fund in 1926, while it paid out $7,518,933,000. The excess of receipts over disbursements resulted
in a net increase for the year of $3,290,000, leaving a balance
of $27,242,000 in the Fund at the close of business December
31, 1926. This is a graphic illustration of the magnitude of
exchange settlements through that marvelous mechanism.
The following table shows the total receipts from and
payments to other Federal reserve banks on account of daily
transit clearings, with percentages of the total:
(000 omitted)
Receipts
from
$ 179,819
2,462,651
785,204
648,455
526,255
308,484
116,527
15,623
35,370
38,059
49,917

Payments
$ 172,707
2,491,252
811,210
576,649
428,786
367,533
165,001
8,541
33,943
18,232
40.877

$ 352,526
4,953,903
1,596,414
1,225,104
955,041
676,017
281,528
24,164
69,313
56,291
90,794

$5,166,364

$5,114,731

$10,281,095

Settlements between
Head Office and
Branch:
Richmond
$1,135,519
Baltimore
1,054,752

$1,054,752
1,135,519

$2,190,271
2,190,271

$7,305,002

$14,661,637

District
Boston
New York
Philadelphia
Cleveland
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Totals

Totals




$7,356,635

to

Total
Settlements

Percentage
of Total
3.43
48.18
15.53
11.92
9.29
6.57
2.74
.24
.67
.55
.88
IflO.

14

TWELFTH ANNUAL REPORT OF THE

The percentages of settlements with New York, Philadelphia, Chicago, Kansas City and San Francisco were higher in
1926 than in 1925, while the percentages with all other districts decreased last year. We received more than we paid
to Boston, Cleveland, Atlanta, Minneapolis, Kansas City, Dallas and San Francisco, while we paid to more than we received
from New York, Philadelphia, Chicago and St. Louis. Settlements with all districts except Minneapolis were in larger
amounts in 1926 than those of 1925.
NON-CASH COLLECTIONS

The Collection Department of the Bank handled 185,248
non-cash items for member banks in 1926, having an aggregate value of $244,284,493, as compared with 201,136 items
amounting to $236,341,688 handled in 1925. These items
were notes, acceptances, drafts and securities.
WIRE TRANSFER OPERATIONS

Wire transfers of money, which are made for member
banks without cost to them, are facilitated by the operation of
the private leased wire connecting all Federal reserve banks
and branches, and the Federal Reserve Board. Member banks
used our facilities for transferring funds by wire 113,614 times
in 1926, the total amount so transferred being $4,219,893,299,
as compared with 106,317 transfers aggregating $3,975,049,800 made in 1925. There were 92,385 telegrams sent or
received over the private wire during 1926.
NOTE ISSUES

The flow of Federal reserve notes into and out of circulation followed seasonal trends in 1926, gradually declining
from the first of the year to July, and then rising to the high
point of the year in December. Except for April, the average amount in circulation each month during 1926 was greater
than in 1925 through September, but during October, November and December the average amount outstanding in
1926 was considerably below the average amount outstanding
during the corresponding three months of the previous year.
The fall expansion was less extensive in 1926 than in 1925,
probably due chiefly to a smaller amount of cash being necessary to move the cotton crop of the Carolinas and Virginia,
and to a lower price level. The average daily circulation in
1926 was $77,631,423, as compared with $78,026,007 in cir


FEDERAL RESERVE BANK OF RICHMOND

15

culation throughout 1925, a decline of $394,584 in spite of the
fact that during eight months of 1926 the average amount outstanding was above the amount for the same months of 1925.
On December 31, 1926, the volume of notes in actual circulation totaled $84,320,380, as compared with $93,111,750 on
December 31, 1925.
CURRENCY AND COIN SERVICE

The Federal Reserve Bank of Richmond received $458,354,554 in currency and coin from member banks in 1926, and
$34,590,392 from non-member banks. Shipments to member
banks during the year totaled $430,530,758, and $7,294,149
were sent to non-members. The total amount of currency and
coin received from or shipped to member and non-member
banks in 1926 was $930,769,853, a sum $77,855,109, or 9.1
per cent, in excess of total shipments in 1925.
In shipments of currency and coin to or from member
banks, the reserve bank defrays all shipping charges and insurance. It also pays the charges on remittances from nonmember banks in settlement for cash letters, but all other
shipments to or from non-member banks are made at the expense of the non-members involved in the transactions. Such
other shipments are usually of the nature of Subtreasury transactions.
RESERVE POSITION

The ratio of cash reserves to deposit and note liabilities
combined was lower every month last year than in 1925 except in May, July, September and December. The highest
monthly average of the year was 73.98 per cent in December,
and the lowest was 56.15 per cent in June. The December
figure coincided with the point at which loans to member
banks were lowest, and the June average coincided with the
period of maximum loans. The average ratio for the year
1926 was 64.24 per cent, as compared with 67.56 per cent in
1925.
Average daily deposits totaled $70,482,552 in 1926 and
$67,878,628 in 1925; average daily note circulation was $77,631,423 in 1926 and $78,026,007 in 1925; and daily average
cash reserves totaled $95,146,374 last year and $98,569,739
the preceding year. Deposits averaged highest in November
and lowest in June; note circulation was highest in December
and lowest in July; and cash reserves were highest in December and lowest in June. The high and low months for both
deposits and note circulation were the same as in 1925, but



16

TWELFTH ANNUAL REPORT OF THE

the high and low points for cash reserves were reached in
January and July in 1925, respectively.
CHANGES IN MEMBERSHIP

Membership in the Federal Reserve System in the Fifth
District declined during 1926 from 607 banks to 589 banks.
Four banks joined the System during the year, but 22 members were lost through liquidations or mergers, a net decrease
of 18 members. At the end of 1926 there were 533 National
bank members and 56 State bank members in the District.
The 56 State bank members had 35 branches at the end of the
year. Increased capital and surplus, with the new member
banks, added 7,503 shares of stock of the reserve bank to the
members' holdings during 1926, while liquidations, mergers
and withdrawals deducted 5,465 shares, a net gain of 2,038
shares during the year. On December 31, 1926, the shares in
this Bank owned by member banks numbered 121,888, as
compared with 119,850 shares held on December 31, 1925.
Thus the net increase in the paid-up capital of the Bank during 1926 was $101,900.
BANK RELATIONS DEPARTMENT

During 1926 the members of the Bank Relations Department made 424 visits to member banks and 186 visits to nonmembers, a total of 610 visits. In general, the work done in
1926 was divided into two distinct parts. The first half of
the year was chiefly devoted to bank relations work strictly,
but the latter half was almost entirely given over to special
cases as they developed. Some banks were visited a number
of times. Many meetings were held with Boards of Directors.
Much attention was given directly to collections from failed
member banks, especially in South Carolina, with results that
justified the time and expense expended.
During the year the Department made an analysis of the
method used by member banks in computing reserve requirements, which enabled the Bank to correct some irregularties
that had existed prior to the analysis.
One or more representatives of the Relations Department
attended all bankers' conventions held in the Fifth District in
1926, and a number of group meetings were also attended.
Frequent visits to Washington were made, for conferences
with the Chief National Bank Examiner and other officials of
the Comptroller's office in reference to certain National banks
in the District. The cordial relations maintained with the
Comptroller's office were mutually helpful.



FEDERAL RESERVE BANK OF RICHMOND

17

BANK EXAMINATION DEPARTMENT

The Examination Department consists of four examiners,
a clerk, and one stenographer, under the personal supervision
of the Assistant Federal Reserve Agent.
Continuing the policy adopted in 1923, the Examination
Department chiefly concerned itself during 1926 with credit
investigations of member banks, making formal examinations
only in cases of banks applying for membership in the Federal
Reserve System. The investigations covered every credit line
of importance in the banks under consideration, and have
proven satisfactory. Nearly all investigations were made in
co-operation with State Banking Departments, with which cordial relations have been maintained.
Examinations and credit investigations were made during
1926 as follows:
Banks
Credit investigations made at time bank was being
examined by State Bank Examiners
66
State banks examined in connection with their applications for membership
1
Special investigation of State bank in connection with
application for membership
1
Independent credit investigations of National banks
1
Total

69

Branches
18

18

STOCKHOLDERS' ANNUAL MEETING

The stockholders of the Federal Reserve Bank of Richmond held their second annual meeting on April 14, 1926.
Among those present were George R. James, of the Federal
Reserve Board; Carter Glass, U. S. Senator from Virginia and
Ex-Secretary of the Treasury; W. P. Folger, Chief National
Bank Examiner for the Fifth Federal Reserve District; eight
Directors of this Bank, all Directors of the Baltimore Branch,
and 156 delegates representing 120 member banks. Mr.
Henry M. Victor, of Charlotte, N. C., who was elected Chairman at the first stockholders' meeting in 1925, presided, and
Wm. W. Hoxton, Chairman of the Board, welcomed the delegates to Richmond. Addresses were delivered by Chairman
Victor, George R. James, of the Federal Reserve Board, Senator Carter Glass, and George J. Seay, Governor of this Bank.
Opportunity for general discussion was offered. New officers
for 1926-1927 were elected as follows: Chairman, Charles M.
Gohen, First-Huntington National Bank, Huntington, W. Va.;
Vice-Chairman, John Poole, Federal-American National Bank,
Washington, D. C.; and Secretary, George H. Keesee, Federal




18

TWELFTH ANNUAL REPORT OF THE

Reserve Bank of Richmond. Chairman Victor was made an
ex-officio member for one year of the Advisory Committee, and
six new members were chosen for two year terms.
INTERNAL ORGANIZATION

The Board of Directors held twelve regular meetings in
1926. In the annual fall election, member banks in Group 3
re-elected L. E. Johnson, of Alderson, W. Va., as a Class A
director, and the banks in Group 2 re-elected D. R. Coker, of
Hartsville, S. C, as a Class B director. The Federal Reserve
Board reappointed Wm. W. Hoxton as a Class C director. All
of these gentlemen will serve three years from January 1,
1927. The Board redesignated Wm. W. Hoxton as Chairman
of the Board and Federal Reserve Agent for the year 1927,
and also redesignated Frederic A. Delano as Deputy Chairman.
The Board of Directors, at the December meeting, reelected John F. Bruton, President of the First National Bank
of Wilson, N. C, as the representative on the Federal Advisory Council for the Fifth District, and designated James C.
Braswell, of Rocky Mount, N. C, as alternate to attend the
meetings of the Council whenever Colonel Bruton for any reason may not be able to be present.
There were no changes in the official personnel at the
Head Office or at the Baltimore Branch in 1926. During the
year 1926, the total number of employees of the Federal Reserve Bank of Richmond, including the Baltimore Branch, decreased from 576 to 541, a net decrease of 35, of whom 21
were at Richmond and 14 at Baltimore. Of the 541 officers
and employees at Richmond and Baltimore on December 31,
1926, the salaries of 14 employees were reimbursed to the
Bank compared with 13 persons so paid of the 576 employees
on the rolls at the end of 1925.
BALTIMORE BRANCH

There are 155 member banks in the territory served by
the Baltimore Branch, which comprises the State of Maryland
and thirty counties in northern West Virginia.
The actual number and amount of all transactions of the
Baltimore Branch are included in the aggregate volume reported by the Head Office. Due to an increase in the number
of checks handled by the Transit Department, the physical
volume of business conducted through the Branch during 1926
was larger in the aggregate than in 1925, although a smaller
number of transactions were handled in several departments.
The number of employees at the Branch, including officers,



FEDERAL RESERVE BANK OF RICHMOND

19

decreased from 176 on December 31, 1925, to 162 at the close
of 1926.
The working conditions at the Baltimore Branch were not
changed during the year 1926, the operations being conducted
in three separate buildings. However, a resolution was passed
by Congress in April 1926, which authorized the Federal Reserve Bank of Richmond to invest not exceeding $1,025,000 of
its funds in a building for its Baltimore Branch for the conduct
of its entire operations. Substantial progress had been made
at the close of 1926 in the development of the plans and specifications for the building, and it is expected that the actual
construction will begin within a few months.
FIDUCIARY POWERS

Applications of the following National banks for permission to exercise fiduciary powers under authority of section
11 (k) of the Federal Reserve Act, as amended, were approved
during the year 1926:
Name of Bank

Date Granted

Location

The Franklin National Bank
Washington, D. C
Cumberland, Md
First National Bank
Snow Hill, Md
First National Bank
Towson, Md
The Towson National Bank
Bedford, Va
Peoples National Bank
Crewe, Va
First National Bank
Emporia, Va
First National Bank of Emporia
Fairfax, Va
National Bank of Fairfax
First National Bank of Farmville.... Farmville, Va
Harrisonburg, Va
Rockingham National Bank
Martinsville, Va
First National Bank
Norfolk, Va
Virginia National Bank
Orange, Va
The Citizens National Bank
Phoebus, Va
Old Point National Bank
Shenandoah Valley Nat'l Bank (x).. Winchester, Va
Welch, W. Va
McDowell County National Bank
Williamson, W. Va
The First National Bank
Asheboro, N. C
First National Bank
Monroe, N. C
First National Bank
Reidsville, N. C
First National Bank
The South Carolina National Bank.. Charleston, S. C
Charleston, S. C
Peoples-First National Bank
Springfield, S. C
First National Bank (t)
Sumter, S. C
The National Bank of Sumter
Charlottesville. Va
Nat'l Bank of Charlottesville (x)
(x) Supplementary powers.
(t) Guardian of Estates.

J

10-20-26
11- 3-26
3-23-26
4-21-26
10-28-26
5-18-26
9-15-26
11- 2-26
4- 8-26
9- 2-26
1-28-26
1-19-26
8-23-26
11-30-26
11-30-26
1-28-26
11- 2-26
3-23-26
9- 2-26
3- 9-26
5-24-26
5-11-26
11- 2-26
6- 2-26
12- 7-26

FISCAL AGENCY OPERATIONS

The volume of work done by the Federal Reserve Bank
of Richmond as Fiscal Agent of the United States was smaller



20

TWELFTH ANNUAL REPORT OF THE

in 1926 than in 1925 in every branch of the work. There
were only two issues of Treasury Certificates of Indebtedness
and one issue of Treasury Bonds during 1926. Total subscriptions in the Fifth District amounted to $97,622,000, of which
$34,553,900 was allotted. Including deliveries, redemptions
and exchanges of Certificates of Indebtedness, Treasury Notes
and Treasury Bonds, 13,722 pieces, amounting to $58,228,100
were handled during the year. The exchange, conversion,
transfer and redemption of Liberty Bonds, Victory notes, Farm
Loan Bonds and Federal Intermediate Credit Bank Debentures
required the handling of 36,783 pieces, amounting to $28,495,650. War Savings securities redeemed and prepared for
redemption numbered 6,334 Certificates (40,562 stamps),
with a cash value of $155,821.
An analysis of the United States Treasurer's general account with the Bank shows that on January 1, 1926, the Treasurer had a balance of $1,674,781. Receipts for the credit of
the Treasurer during the year totaled $764,147,309, while disbursements totaled $765,088,400, leaving a balance due the
Treasurer on December 31,1926, of $733,690.
NOTE
For a more complete statistical presentation of the operations of the Federal Reserve Bank of Richmond during 1926,
the reader is referred to the tables in Part II of the Annual
Report of the Federal Reserve Board for 1926.




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