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FE D E R A L R ESER VE BANK
O F C H IC A G O

FIR ST A N N U A L REPORT
TO THE

Federal
R e s e r v e Bo a r d

t
D E C E M B E R 31. 1915







O FFIC E R S A N D D IR E C T O R S

F E D E R A L RESERVE BANK
O F C H IC A G O
D IS T R IC T N O . 7

D IR E C T O R S
C LA S S " A "

Term Expires
•George M* Reynolds. Chicago, 111.........* .December 31, 1918
Jas. B. Forgan......... Chicago, 111..*........December31, 1916
E. L. Johnson.......... Waterloo, la..........December 31, 1917
C LASS " B "

•A, H. V ogel... . . . . . . Milwaukee, Wis.,.December 31,1918
Henry B. Joy.',* . . . . .Detroit, Mich.... ♦.December 31,1916
M. B, Hutchison___Ottumwa, la.........December 31,1917
C LA S S “ C "

tE . T. M eredith......D es Moines, la...December 31,1918
C, H. Boaworth.........Chicago, 111........... December 31, 1916
W. F. McL*alleti........Columbia City, Ind., "
31,1917
<*Re-elected for three years.)
(tReappointed for three years.)
O F F IC E R S
C. H. BOS WORTH, Chairman of the Board and Federal
Reserve Agent
W, F. McLALLEN, Deputy Chairman, etc., and Secretary
JAS. B. McDOUGAL. Governor
C. R. McKAY, Deputy Governor
G. McCLOUD, Cashier
S. B. CRAMER, Acting Auditor

B,

MEM BER ADV ISOR Y CO UN CIL

JAS. B. FORGAN







F E D E R A L R ESER VE BOARD
W A S H IN G T O N
Ex*OfRcIo Members
W IL LIA M Q. McADOO
Secretary of the Treasury
Chairman

CHARLES S. HAMLIN, 8overnor
F R E D ER IC A. DELANO,
VlM*6overnor
PAUL M. WARBURG
W. P. G. HARDING
ADOLPH C. M ILLE R

JOHN SKELTON W IL L IA M S
Comptroller of the Currency

H. PAR KER W ILLIS, 8eer*tary
8HERMAN ALLEN. Ant. Secretary

Address Reply to
FEDERAL RESERV E BOARD

October 15, 1915.

Sir:

Some months ago the Federal Reserve Board
voted to ash each Federal Reserve Agent to pre­
sent to it an annual report on the operations of his
office. * * *
* * * The main content of the report should
be a review from your standpoint as the Chairman
of the board of directors of your bank and the
official representative of the Federal Reserve
Board, of the bank's policies and the scope of its
operations for the year, the banking and credit
conditions and needs of your Federal Reserve dis­
trict and the extent to which these have been met
by your bank, and a description in general terms
of the results of the year's operations, progress
made, prospects for the future, and the problems
presenting themselves for solution in your bank or
in your district. Attention should also be given
to any difficulties encountered in the administra­
tion of the Federal Reserve Act or the Board*s
regulations, and to any amendments either to the
Federal Reserve Act or to the National Bank Act
which in your judgment or in the judgment of
your board of directors seem advisable. * * *

Respectfully,
IL PARKER W IL L IS ,
Secretary .
Mr. C. H. Bosworth,
Chairman, Board of Directors,
Federal Reserve Bank of Chicago.







F IR S T A N N U A L

REPORT

TO THE
FEDER AL RESERVE

T

BOARD

HE Federal Reserve Act was approved by
the President, December 23, 1913.
The Organization Committee proceeded prompt­
ly to divide the countiy into districts and to con­
duct the election of Class "A" and Class “B”
directors* In its circular of May 11, 1914, the
hope was expressed that the banks “may be or­
ganized in ample time to elect officers and secure
banking quarters and be in actual operation by
August 1, 1914.”
It was very unfortunate that this hope was not
realized, so that the new system could have been
ready to take care of the emergency resulting from
the declaration of war in Europe. There was un­
avoidable delay in the appointment of the Fed­
eral Reserve Board and, again, in the appointment
by the Board of the Class “C” directors of the
banks.
The announcement of Class “C” directors of
the Federal Reserve Bank of Chicago was not
made until October 7 and they were immediately
summoned to Washington. The first meeting of
directors was held at the rooms of the Chicago
Clearing House Association on October 13,1914.
A meeting at Washington of all the directors of
all of the banks with the Federal Reserve Board
was called for October 20, and at that meeting it
was agreed that all the banks could open for busi­
ness on November 16, although the time for or­
ganization was necessarily short.
A call for the payment on November 2 of the
first installment of subscriptions to the capital
stock of the Federal Reserve Banks was issued by
the Federal Reserve Board, and on October 25
the Secretary of the Treasury stated that he had
determined to announce on November 16,1914, the
establishment of the Federal Reserve Banks in all
the Federal Reserve Districts, and on October 28




5

the Federal Reserve Board advised the member
banks to arrange to transfer the required reserves
to the new banks on that date. All the national
banks in this district except two became members.
Mr. F. A. Delano, Vice-Governor of the Federal
Reserve Board, was present at the first meeting
of the Board of Directors of the Federal Reserve
Bank of Chicago. At this meeting the directors
classified themselves into one, two and three year
terms and took up the selection of quarters and
the election of officers.
The full Board—with one exception—attended
the joint conference at Washington on October
20; on their return, the second meeting was held
on October 23, at which meeting a seal was se­
lected, by-laws adopted, an Executive Committee
named, the Governor appointed, and the Executive
Committee ordered to canvass all available sites
for quarters for the bank.
Up to and including November 16, 1914, four
directors* meetings and eight executive commit­
tee meetings were held, all officers appointed,
quarters selected and on the last-named date the
Federal Reserve Bank of Chicago opened, for busi­
ness at Clark and Monroe streets.
The following telegrams were exchanged be­
tween the Secretary of the Treasury and the bank :
“Washington, D. C., Nov, 16, 1914.
“C. H. Bosworth,
“Federal Reserve Agent,
“Chicago, 111.
“Please accept my cordial congratulations upon
the opening of the Federal Reserve Bank of your
district and my sincere commendation upon the ef­
fective work you have done in preparing the hank
for business in the short time allowed for the open­
ing. I am sure that the Federal Reserve Banks will
serve a great and beneficent purpose in the future
of our country and I am sure that this department
and the Federal Reserve Board may count upon your
loyal co-operation in the important work and duties
which have been confided to you. My hearty good
wishes for your success.
“ (S ig n e d )

W . G . M cA doo.”

“Chicago, Nov. 16, 1914.
“Hon. W.^ G. McAdoo,
“Chairman Federal Reserve Board,
“Washington, D. C.
“Allow us to extend our congratulations to you
and your associates on the Federal Reserve Board




6

upon the successful opening of the district banks.
We are pleased to announce that the Federal Re­
serve Bank of Chicago opened on time at ten o'clock
this morning fully prepared to perform the functions
required of it. On hehalf of ourselves and all the
directors of this institution we have to say that you
may count upon our loyal co-operation in this im­
portant work.
11(Signed) J . B. M cD ougal, Governor.
“ C. H . B oswobth , C h airm an .”

ACTIVITIES OF THE BOARD OF DIREOTOBS

When the bank was organizing, directors* meet­
ings were frequent and held upon call of the
chairman. During 1915, however, the regular
monthly meeting has been found satisfactory, as
a very full report of executive committee proceed­
ings is sent out to all directors every week. Since
organization, there haye been seventeen directors*
meetings and eighty executive committee meetings.
Upon different occasions members of the Fed­
eral Reserve Board have visited the bank, and
a number of them have attended directors* meet­
ings.
Four directors, residents of Chicago, with the
Governor as Chairman4, constitute the Executive
Committee. At the beginning this committee met
from three to four times a week. After January
8, 1915, two, and since June 25, 1915, one meet­
ing a week has been sufficient. Occasionally one
or more of the out-of-town directors have met
with the committee.
The committee reviews the acts of the officers
in the matter of rediscounts for member banks
and the purchase of acceptances and other invest
ments and passes upon all current questions of
policy, methods and procedure, subject to ratifica­
tion by the Board of Directors. The directors
approve or disapprove of the acts of the Executive
Committee, receive reports from the officers, de­
termine interest and discount rates and, in gen­
eral, perform the functions ordinarily exercised
by boards of directors.
BUSINESS AND BANKING CONDITIONS DURING THIS
PERIOD

The Federal Reserve Bank of Chicago was
opened just as business was beginning to recover
from the shock occasioned by the declaration of




7

war in Europe. After November 16, 1914, the
steadying and quieting influence of the Federal
Eeserve System began to be felt and a quick re­
duction began in the high rates of interest then
prevailing.
Early in August, Aldrich-Vreeland currency had
been applied for by the currency associations lo­
cated in this district to the amount of $38,198,490.
About the same time Detroit, Des Moines and
Chicago banks had issued clearing house certifi­
cates. About the'time this bank was organized
the banks began to redeem their Aldrich-Vreeland
currency and to retire their clearing house cer­
tificates.
By January 1,1915, a better tone was apparent.
At this time member banks were discounting with
the Reserve Bank to the extent of $3,000,000, al­
most all of which was from large city banks. This
amount gradually dwindled to $760,000 on the
first of May, practically all being from smaller
country banks. There was a .plethora of money
in the banks, but business was still timid and
sensitive to war scares, and weather conditions
all over the United States were unusually unfavor­
able to growing crops.
Between May and September crop prospects im­
proved until there was a practical certainty of a
record production; so-called war orders began to
make themselves felt; railroads began necessary
betterment work and the buying of additional
equipment, and lumber and the building trades
began to take on life, except in Chicago, where
the strikes caused a complete tie-up in building
operations until July. During this third quarter
of the year bank deposits continued abnormally
high and interest rates unusually low.
The marketing of crops was delayed until well
into the last quarter of the year. A considerable
per cent of the com crop was damaged by early
frosts and is now being fed to stock, resulting in
increased loans to farmers by country banks and
in the member banks rediscounting with the Fed­
eral Reserve Bank to the extent, at this date, of
a little over $3,000,000.
Illustrating the solid character of commercial
and manufacturing activities, advices from the
steel and iron trade show increasing demands, and




8

the output is almost all for domestic requirements.
Railroads are showing heavy increases in earnings.
General business conditions and seasonable weather
are favorable to a much greater volume of mer­
chandising, both wholesale and retail, than a year
ago. Deposits in Chicago banks increased over
$40,000,000 between the Comptroller’s calls of
September 2 and November 10, 1915.
Confidence in the immediate future is evidenced
by the large expenditures being undertaken for the
purpose of enlarging outputs and the steady buy­
ing of retailers to replace or enlarge depleted
stocks. Money rates are low and bank deposits are
still increasing.
CHARACTER OF DISCOUNTING

The first discounting with the Federal Reserve
Bank of Chicago by member banks was done by
several of the large Chicago banks and was largely
complimentary and for the purpose of blazing the
way and setting an example.

Later on, some discounting was for the purpose
of enabling the members borrowing to retire Aldrich-Vreeland currency.* From the latter part of
December, 1914, to March, 1915, much of the dis­
counting was from Iowa, Illinois and Indiana
banks and was due to local emergencies caused by
the hoof and mouth disease. Latterly, in 1915,
some discounting has been occasioned by the poor
and unmarketable quality of the corn crop in cer­
tain sections of the district. In addition to this
there has been more or less continuous discount­
ing in a small way, due to the individual require­
ments of a number of the country banks.
MEETINGS AND ORGANIZATION OF FEDERAL RESERVE
AGENTS

A conference of all the twelve Federal Reserve
Agents was called by the Board and was held in
the Treasury Building, Washington, February 1
to 6, 1915, at which many subjects were discussed,
A second conference was called and held at
Washington, November 4 to 6,1915. At both con­
ferences jQint sessions with the Federal Reserve
Board were held.
At the November conference a permanent organ9




ization was effected and an executive committee
appointed.
The Executive Committee met in joint confer­
ence with the Executive Committee of the Gov­
ernors at Washington, November 17, 1915.
FEDERAL RESERVE NOTE-ISSUING CAPACITY AND
POLICY OF THE BANK

Taking the statement of the bank of December
1, 191£j, and after setting aside the required 35
per cent reserve against deposits, the bank had
left $27,697,106 gold reserve applicable to a Fed­
eral Reserve note issue. The gold reserve re­
quired by the Act against a note issue is 40 per
cent. This $27,697,106 would, therefore, sustain
a Federal Reserve note issue of $69,242,765.
The Federal Reserve 3oard is authorized to sus­
pend this reserve requirement, and if the occasion
demanded it, undoubtedly would do so, and the
note-issuing capacity of the bank could readily be
extended to in excess of $100,000,000.
It is the policy of the bank to issue Federal Re­
serve notes freely where conditions and circum*
stances make it necessary. Up to the present
time it has had no occasion to issue Federal Re­
serve notes except for the purpose of familiariz­
ing member banks and the public with the new
form of currency. While $4,380,000 in notes has
been* issued the issue was quickly covered with
gold of equal amount deposited with the Federal
Reserve Agent, thus producing no expansion.
If an amendment to the Federal Reserve Act
can be secured, under which the Federal Reserve
Banks will be permitted to issue notes directly
against deposits of gold and under which the gov­
ernment will assume the responsibility of the ex­
pense involved, it will then be the policy to issue
notes freely with a view to accumulating gold,,
which will stand available in case of need.
U. S. BOND-SECURED CURRENCY

Under the Act the Federal Reserve Banks are
authorized to deposit U. S. government bonds
having the circulating privilege, and to receive
from the Comptroller of the Currency circulating
notes, which shall be issued and redeemed under
the same terms and conditions as national b#nk




10

notes, except that they are not limited to the
amount of the capital stock of the bank issuing
them.
This bank has had printed $2,560,000. of such
bond-secured notes, ready for issue. None has
been issued up to date.
This currency is available, however, in case of
emergency. It would also be available in case of
rediscounting with us by another Federal Reserve
Bank, where currency shipment to the other bank
was necessaiy, as Federal Reserve notes could not
be used for this purpose, the law not allowing one
Federal Reserve Bank to pay out the Federal Re­
serve notes issued by another bank, except under
a heavy penalty.
FEDERAL RESERVE BANK AS FISCAL AGENT OF THE
U. S. GOVERNMENT

On November 23, 1915, the Secretary of the
Treasury announced that he had determined to
appoint the Federal Reserve Banks to be deposit­
aries and fiscal agents of the United States on
January 1, 1916. *
The deposits of all officers of the government in
the City of Chicago, now made with the national
banks of that city at present designated as United
States depositaries, will be made with the Federal
Reserve Bank, with the exception of post office
funds and the deposits to the credit of a United
States Court and its officers, and the Federal Re­
serve Bank will be required to cash all government
warrants and checks drawn on the Treasurer of
the United States which may be presented to it In
the same manner and to the same extent as the
national bank depositaries are now required to
honor such checks.
The amount held by the national bank deposit­
aries in Chicago to the credit of the Treasurer
of the United States at the close of business De­
cember 31, 1915, will be transferred to the Federal
Reserve Bank; that amount is approximately
$1,000,000 at present.
ELECTION OF DIRECTORS

The terms of one Class “A” and one Class “B”
director expired on December 31, 1915. An elec­
tion to choose their successors was held in Novem­




11

ber, resulting in the re-election of both of the old
directors.
TRUSTEE POWERS TO NATIONAL BANKS

Up to December 1, 1915, special permits have
been granted by the Federal Reserve Board to
national banks in the Seventh District to act as
trustee, executor, etc., when not in contravention
of state laws, as follows:
To 20 national banks in Indiana.
To 8 national banks in Illinois.
To 11 national banks in Iowa.
To 8 national banks in Michigan.
To 4 national banks in Wisconsin.
MEMBERSHIP OF STATE BANKS

Recognizing that a unified banking system, em­
bracing in its membership the well-managed banks
of the country, small and large, state and na­
tional, is the aim of the Federal Reserve Act, the
Federal Reserve Board issued on June 7, 1915, its
Circular No. 14, providing for membership of
state banks in the system.
The regulations were made as liberal as pos­
sible and even provided a method by which state
banks that joined might withdraw, a privilege
not accorded by the Act to the national banks.
Two state banks—the Bank of Wisconsin, Madi­
son, Wis., and the Central Trust Company of Illi­
nois, Chicago, 111., joined the system at its incep­
tion.
Since then the following state banks have joined:
Commercial and Savings Bank, Albion, Mich.
Elmhurst State Bank, Elmhurst, 111.
Commercial Trust and Savings Bank, Joliet, 111.
Badger State Bank, Milwaukee, Wis.
Fruit Growers’ State Bank, Saugatuck, Mich.
THE INTERNAL ORGANIZATION AND PERSONNEL OF
THE BANK

The three classes of directors, being men of
wide experience, from the small as well as the
large cities, compose an able and efficient board,
fairly representing all interests, including bank­
ing, commercial, industrial and agricultural.
The executive officers of the bank were taken
from the banking activities of the community,




12

where each has had years of practical experience.
The heads of the various departments and other
employes came from active positions in various
banks, where they received the practical training
essential to the best service. The various depart­
ments are now fully organized and equipped and
in readiness for increasing activities, whatever
they may be.
RATES OP DISCOUNT

Discount rates naturally are influenced by pre­
vailing conditions and in naming rates it is the
policy of the bank to carefully consider the gen­
eral business situation. Should the demands be
sufficient to absorb a considerable amount of the
bank’s resources it is the policy of the Board of
Directors to immediately reconsider the established
rates with a view to advancing them if advisable.
On the other hand, should conditions be such as
to indicate that the established rates are excessive
due consideration will be given to a readjustment
downward.
DISCOUNTING

It is the policy of the bank to lend liberal as­
sistance to deserving banks for seasonal or emer­
gency purposes, and on the other hand to discour­
age any tendency toward over-expansion.
Prom the outset, the officers have undertaken
by correspondence and by personal interview to
familiarize member banks with the procedure in
discounting, which has been made as simple and
expeditious as possible, all unnecessary formality
being eliminated.
OPEN-MABKET OPERATIONS TO DECEMBER 1, 1915
Open-market transactions to date have been con­
fined to the purchase of government bonds, shorttime municipal warrants and bankers’ acceptances.
The total of bankers* acceptances purchased is
$4,773,465.72, represented by bills drawn against
exports or imports and accepted by banking institu­
tions of known responsibility.
The total of municipal obligations purchased
is $7,108,748.76, represented by warrants and
bonds issued by municipalities in various states,
of maturities ranging from 16 days to 6 months.




13

The total of XL S. bonds purchased is $4,090,000,
all carrying the circulation privilege as follows:
$2,525,000 TL S. 2 per cent bonds and $1,565,000
3 per cent, the threes being due and payable in
1918.
THE CHECK-COLLECTION SYSTEM

On November 16, 1914, the date this bank
opened for business, it installed a collection sys­
tem by taking from member banks for immediate
credit checks drawn by member banks on mem*
ber banks located in Chicago and the seven re­
serve cities of this district.
On December 3, 1914, the collection service was
enlarged to include all items drawn on member
banks located in Chicago and the seven reserve
cities in this district.
On December 16, 1914, the bank began taking
checks drawn upon all of ' the Federal Reserve
Banks for immediate credit. This was a tem­
porary arrangement and subject to revision at such
time as a permanent plan for clearing between
Federal Reserve Banks could be agreed upon.
On April 7, 1915, the member banks were
advised that a voluntary intra-district collection
system would be established and that items would
be received for immediate credit at par from such
banks as joined the collection system, provided
they were drawn upon banks which were members
of the collection system.
On June 10, 1915, the voluntary intra-district
collection system was put into effect.
On June 15, 1915, the bank began receiving
items on all the Chicago Clearing House banks
from member banks, whether they had joined the
collection system or not, and in addition checks
and drafts on Federal Reserve Banks located in
Boston, New York, Philadelphia and St. Louis
for immediate credit at par except when the
amounts exceeded $10,000, in which case it re­
served the right at its option to receive the items
at the market rate for exchange on the cities men­
tioned. Checks on other Federal Reserve Banks
which were previously received for immediate
credit at par were then received on a deferred
credit basis of from one to four days, in accord­
ance with the schedule of deferred credits ap-




14

proved by the Federal Reserve Board. Besides
receiving the above items from member banks,
whether they had joined the collection system or
not, it began, on June 14, 1915, receiving from
member banks that are members of the collection
system checks and drafts on member banks lo­
cated in Boston, New York, Philadelphia and St.
Louis for immediate credit at par, reserving the
right at its option to receive these items at the
market rate for exchange on these cities when the
amounts exceeded $10,000.
No further changes in the collection system have
been made up to date. The development of the
check-collecting function has proved the most dif­
ficult problem confronting the management of the
bank.
OPERATION OF CHEC3K-C0LLECTI0N SYSTEM

From November 16, 1914, to December 3, 1914,
drafts drawn by member banks on Reserve and
Central Reserve city banks in District No. 7 were
cleared as shown below:
AVERAGE PER DAY
Number of Items
City
Country
Total
7

59

96

City

Amount
Country

Total

$ 125,000

$63,000

5188,000

From December 3 to December 16 all checks
drawn on member banks in Reserve and Central
Reserve Cities of District No. 7 were cleared as
shown below:
AVERAGE PER DAY
City
793

Number of Items
Country
Total
2,262

3,055

City

Amount
Country

Total

$820,000

1650,000

*1,470,000

From December 16, 1914, to June 10, 1915, all
checks drawn on member banks in Reserve and
Central Reserve Cities of District No. 7 and
checks drawn on all other Federal Reserve Banks
were cleared as follows:




15

AVERAGE PER DAT
Number of Items

December 1640....
January.............. .
February..............
March..................
April.....................
May.......
June 1-10...............

Other
Federal
Reserve
Banks

Total

10
25
33
39
48
43
49

3,363
4,192
4,017
4,004
4,014
3,971
4,122

Country

Other
Federal
Reserve
Banks

Total

$ 700,000
1.315.000
1.144.000
1.430.000
1.064.000
962,000
1.395.000

$ 525,000
730.000
734.000
649.000
666.000
735,000
1.434,000

$2,217,000
3,049,000
3,121,000
3,754,000
3,166,000
3,074,000
4.283,000

Country

City

893 *
2,463
911
3,256
3,269
715
3,202
763
3,262
704
730
3,198
3,305
768
Aimount
City

December 16-30.... $ 992.000
January................ 1.004.000
February........... . 1.243.000
March.................. 1.675.000
April.. . . . . . . . . . . . . 1.436.000
May..................... 1.377.000
June 1-10............... 1.454.000

From June 10 to December 31 all checks drawn
on member banks of District No. 7 which have
joined the collection system, checks on members
of Chicago Clearing House Association, checks on
all other Federal Reserve Banks and checks on
member banks in Boston, New York, Philadelphia
and St Louis were cleared as follows:
AVERAGE PER DAT
Number of Items

'June 10-30.............
July......................
August..................
September............
October................
November............
December............

944
1,669
1,699
1,981
2,212
2,248
2,472

Other
Federal
Reserve
Banks

Total

50
61
64
82
94
95
108

5,947
7,445
7,458
8,540
10,058
10,304
10,964

Country

Other
Federal
Reserve
Banks

Total

$ 987,000
1.125.000
1.155.000
1.353.000
1.752.000
1.952.000
1.983.000

$ 958,000
721.000
515.000
1.225.000
1.212.000
1.509.000
2.037.000

$3,561,000
3.689.000
3.463.000
4.669.000
5.928.000
6.923.000
7.745.000

Country

City

4,953
5,715
5,695
6,477
7,752
7,916
8,384
Amount

City
June 10-30............. $1,616,000
July....................
1.843.000
August.................. 1.793.000
September............ 2.121.000
October................ 2.964.000
November........... 3.462.000
December............ 3.725.000

ITEMS AND AMOUNT HANDLED

From November 16,1914, to December 31, 1915,
the check-collection department has handled—with­
out charge to the member banks—2,122,405 items,
the sum total amount of which is $1,303,629,563.43.




16

EXCHANGE AND COLLECTION CHARGES ON OHECES
IN THIS DISTRICT

Exchange charges in this district are not exces­
sive, being rarely over $1 per $1,000. In Illinois
about 50 per cent of the member banks remit at
par. The rates of the banks which charge nm
from 25 cents to $1 per $1,000.
In Indiana possibly 15 per cent of the banks re­
mit to their Chicago correspondents at par. The
rates of the banks which charge rnn from about
50 cents to $1 per $1,000, and in some instances
as high as $1.25 per $1,000.
In Iowa, about 25 per cent remit at par, the
remainder charging about $1 per $1,000
In Michigan and Wisconsin there are very few
par points, as nearly all the banks charge $1 per
$1,000.
Outside of the banks which have joined the col­
lection system, very few reductions in exchange
charges have been made. There are a few banks,
however, that are agreeing to remit at the rate of
10 cents per letter regardless of the amount, but
there has been no reduction to any extent of ex­
change charges by non-jnembers of the collection
system.
IMPORTANCE OF THE BANK TO THE COMMUNITY

Notwithstanding the almost negligible demands
on most of them for either credit or currency, the
Federal Reserve Banks have performed an impor­
tant function in the creating of confidence and in
stabilizing the financial structure of the country.
During the several very critical periods this year
the system fully demonstrated its worth, inspiring
confidence and banishing fear, and forestalling
panic from the mere fact of its existence.
ATTITUDE TOWARD MEMBER BANKS

The Federal Reserve Bank of Chicago belongs
to its members. They have furnished the entire
capitalization and are the sole depositors, they
have elected six of the nine directors and the di­
rectors in turn have elected all the officers of the
bank except the chairman of the Board. Further­
more, the Federal Reserve Board has stated its
policy to be that it does not desire to interfere
with the management of the banks except to see




17

that the law is observed. Therefore, the attitude
toward member banks is one of cordial co-operation
for the purpose of securing for them and through
them for the business community and the public
every advantage intended and possible under the
Act.
CO-OPERATION BETWEEN FEDERAL RESERVE BANKS

Co-operation between the Federal Reserve Banks
has Ibeen evidenced by the organization of a con­
ference of Governors for the purpose of considering
problems and questions that have arisen, and ex­
changing views in order that all may have the
benefit of the views of each. The full conference
has held five meetings, each meeting lasting sev­
eral days, in addition to which the Executive Com­
mittee of the Conference of Governors has trans­
acted such business as has been delegated to it by
the full conference. Also a number of joint meet­
ings have been held between the Federal Reserve
Board and the full Conference of Governors, and
between the Board and the Governors* Executive
Committee.
Respectfully submitted,
C. H. B osw o r th ,
Chairman of the Board.
Chicago, 111., December 31, 1915.




18

FEDERAL RESERVE NOTES
Figures at Close of Business December 31, 1015
Total Federal Reserve Notes printed for this bank................ $60,000,000
Beld in Washington ready for shipment.............. 950,620,000
Held by Federal Reserve Agent (New Notes)__ 4,660,000
Issued to bank..................................................... 4,720,000 60,000,000
Outstanding in circulation, secured by deposit of gold with
Federal Reserve Agent...................................................
Returned by bank for cancellation and destruction...............
Notes of other Federal Reserve Banks redeemed and returned
to issuing bank...............................................................
Our notes returned to us by other Federal Reserve Banks....

4,380,000
340,000
834,875
148,460

RECORD OF DISCOUNT RATES
Effective
1914
Nov. 14................
Dec. 1................
Dec. 16................
1915
Jan,
1................
Jan. 23................
Dec. 1................
Dec. 11................

Maturities
up to
30 Days

Maturities Maturities Maturities
up to
up to
over
60 DAys
90 Days
90 Days

6%
54%
5%

6%
6%
6%
6%
51%
5%.
41%
51%
41%
% ) 4%
(No change
Special rat e of 31% on ten-day pap er.

6%
6%
6%
6%
5%

CAPITAL STOCK SUBSCRIPTIONS AS OF DECEMBER

31, 1915

Central Reserve City Banks............................................... $ 4,488,000.00
Reserve City Banks............................................................ 2,195,700.00
Country Banks.................................................................... 6,609,700.00
113,293,400.00
Table showing reserve required to be deposited with Federal Reserve
Bank of Chicago December 1, 1915, figured from the Comptroller’s call
of November 10* 1915, and compared with actual balances as shown by
books on December 1, 1915.
Reserves
Reserves
Required to be
Carried with Carried with
Federal
Federal
Reserve Bank. Reserve Bank.

Excess
Reserves.

Central Reserve City
Banka.................... $34,174,300.00
Reserve City Banks.. 5,568,700.00
Country Banks.......... 12,400,200.00

$31,777,500.00
6,031,900.00
11,956,500.00

$2,396,800.00
•463,200.00
443,700.00

$52,143,200.00

$49,765,900.00

$2,377,300.00

•Short of Required Reserves.




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$ 144,502,000.00
76,940,000,00
730,549,000 00
221,660,000.00
1,725,520,000.00
8,754,000.00
270,479,000.00

COMPARATIVE

STATEMENT

OF INVESTMENTS— SEMI-MONTHLY

ta
P

21




EARNINGS OF THE FEDERAL RESERVE BANK OF
CHICAGO FOR THE PERIOD FROM NOVEMBER
10, 1914, TO DECEMBER 31, 1915.

Earnings:
Discount...........r........................................................ *117,411.56
Interest on Bonds and Investments............................. 136,568.11
Sundry Profits............................................................ 14,905.32
$268,884.99

ChargedtoEarnings:
Current Expense..........................................................$200,306.98
Organization Expense.................................................. 39,947.56
Federal Reserve Notes Issued.................................... 5,328.88
Equipment.................................................................. 3,210.18
$248,793.60
Balance carried to Profit and Loss Account.............................$ 20,091.39

EXPENDITURES OF THE FEDERAL RESERVE BANK OF
CHICAGO FOR THE PERIOD FROM NOVEMBER 16,
1914, TO DECEMBER 31, 1915.
/.

CurrentExpenses:
Assessment to defray Expenses of Federal Reserve
Board, July 1st to December 31st, 1915................ $ 13,226.40
All other Expenses....................................................... 187,080.58
Total........................................................$200,306.98

2. Organization Expenses:
Expenses prior to November 16th, 1914.......................$ 16,640.51
Assessment to defray Expense of Federal Reserve
Board prior to June 30th, 1915............................... 23,307.05
Total........................................................$ 39,947.56

Coit ofFederalReserveNotes:
...................................................................................$ 65,708.94

Equipment:

Furniture and Fixtures................................................ I
Vaults.........................................................................
Machines.....................................................................
Other..........................................................................

9,351.50
6,960.00
7,363.53
2,535.15

Total........................................................$ 26,210.18
Total Expenditures........................................ $332,173.66




22

DISCOUNT DEPARTMENT OPERATIONS
November 16, 1914, to December 31, 1914.
116 applications for discount approved at 4% to 6% from 78 member
banks as follows:
COUNTRY

RESERVE CITIES
*7 banks
1 bank
1 bank
2 banks

$4,207,350.00
108,782.86
30,500.00
125,000.00

15 banks
17 tanks
29 banka
2 b^nks
4 banks

$142,126.42
224,891.09
358,169.32
150,295.50
62,700.00

11 banks
•Central Reserve City.

$4,471,632.86

67 banks

$938,182.33

Illinois.. .. .. ..
Indiana........
Iowa ........
Michigan........
Wisconsin.......

DISCOUNT DEPARTMENT OPERATIONS
January let to December 31st, 1915.
1,049 applications for rediscount approved at 4% to 6%from 139 member
banks as follows:
RESERVE CITIES
Illinois...........
Indiana.
Iowa..............
Michigan........
Wisconsin..

COUNTRY

•3 banks

$1,442,618.08

2 banka

155,000.00

33 banks
21 banks
76 banks
5 banks
3 banks

$1,631,207.28
1,328,478.32
4,260,295.65
208,570.82
209,701.96

5 banks

$1,600,618.68

139 banks

$7,638,254.03




23

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