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SECOND ANNUAL REPORT
OF THE

FEDERAL RESERVE BOARD

FOR THE YEAR ENDING
DECEMBER 31

1915

WASHINGTON
GOVERNMENT PRINTING OFFICE
1916

TABLE OF CONTENTS.
Page.
PART I.—REPORT OF THE FEDERAL RESERVE BOARD

1-120

Letter of transmittal
General condition of money market
Growth of export trade
Definition of paper
Discount policy
Federal Reserve Banks as fiscal agents
Cotton crop movement
Currency movement
Foreign borrowing
Standardization of commercial paper
Unification of banking
Clearings and collections
Issue of Federal Reserve notes
Branches and agencies
Changes in Federal Reserve districts
Operation and expenses of Federal Reserve Banks
Operations of the Federal Reserve Board
Proposed amendments to the Federal Reserve Act

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EXHIBITS.

Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit

Exhibit
Exhibit
Exhibit

A.—Discount rates
B.—Federal Reserve notes
C.—Statements of condition of Federal Reserve Banks
D.—Discount and other investment operations of Federal Reserve
Banks
E.—Gold settlement fund
F.—Intradistrict clearings
G.—Receipts and disbursements of the Federal Reserve Board ..
H.—Earnings and expenses of Federal Reserve Banks
I.—Estimated expense and dividend requirements of Reserve
Banks
J.—Personnel and salaries:
(1) Salaries paid by Federal Reserve Banks
(2) Salaries of officers and employees of the Federal Reserve Board
(3) Salaries paid national-bank examiners
K.—Procedure in passing upon applications of national banks
for fiduciary powers under section 11 (k) of the Federal
Reserve Act
L.—Reserve requirements for State banks and trust companies..
M.—Changes in Federal Reserve districts
in

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CONTENTS.
Page.

Part II.—REPORTS OF FEDERAL RESERVE AGENTS TO FEDERAL RESERVE

BOARD

121-388

District No. 1—Boston
District No. 2—New York
District No. 3—Philadelphia
District No. 4—Cleveland
District No. 5—Richmond
District No. 6—Atlanta
District No. 7—Chicago
District No. 8—St. Louis
District No. 9—Minneapolis
District No. 10—Kansas City
District No. 11—Dallas
District No. 12—San Francisco
Directory of the Federal Reserve Board and officers and directors of Federal
Reserve Banks

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PART I.
REPORT OF THE FEDERAL RESERVE BOARD,
WITH EXHIBITS.

AMUAL REPORT OF THE FEDERAL RESERVE BOARD.
FEDERAL RESERVE BOARD,

Washington, February 1, 1916.
The SPEAKER OF THE HOUSE OF REPRESENTATIVES:

SIR: The first annual report of the Federal Reserve Board, rendered
in accordance with the requirements of section 10 of the Federal Reserve Act, was transmitted under date of January 15, 1915, at a time
when the Federal Reserve Banks had barely begun active business
operations. The Board herewith submits its second report, the first
that permits a review of the actual operation of the new system.
In order to provide a complete account of the working of the
Federal Reserve System, the Board has called upon each Federal
Reserve Agent for a detailed report of the operations and problems
of his bank during the year 1915.
The various Federal Reserve Agents have responded fully, and
their reports are published as part 2 of this report. Owing to the
similarity of problems and experiences in the various districts, it is
inevitable that these reports to a certain extent should all cover the
same ground, and repetitions were therefore unavoidable, both in
the body of the reports and in the statistical material furnished.
The Board has, however, deemed it best to present them in somewhat condensed form, in the belief that such publication will furnish
very desirable information and will be welcome in this form, particularly to member banks desiring information concerning conditions and operations in any particular district.
GENERAL CONDITION OF MONEY MARKET.

A condition of remarkable ease has been the outstanding feature of
the money market of the country during the first year of operation
under the Federal Reserve Act. Whatever other causes may have
contributed to this result, much of it is due to the stability established and the feeling of security inspired, by the new banking
"system; so much of it, indeed, as to afford a striking vindication of
the wisdom of the law and the efficiency of the agencies of its administration even in advance of the fuller development of their activities. The test of a banking and financial system is its operation.
More than a year will be needed for an adequate test of our new
banking system. The year which has passed, however, has, owing

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

to the continuance of the economic disturbances and financial uncertainties engendered by the European war, been of more than ordinary
significance in supplying experience of the kind that tests the strength
of a financial and credit system, and deserves, therefore, extended
notice as a period of importance in the history and working of the
Federal Reserve Act.
The year 1915 has been a period of marked and sudden transition.
In almost every department of financial life conditions have been
completely altered. At the close of 1914 foreign commerce was
uncertain, business conditions depressed, manufacturing conducted
upon a somewhat restricted basis, a considerable floating indebtedness to foreign countries had still to be liquidated, the commodity
exchanges of the country were either closed or operating under very
great limitations. To-day the export trade of the country has
reached the high-water mark, manufacturing is active in nearly all
lines and in nearly all sections of the country. Demand for practically all agricultural products is strong, the commodity exchanges
of the country are open, depression in business life has given
way to a condition of extreme activity. The change has been most
notable in certain special industries, where the transformation of
conditions has been so great as to be startling. In this fundamental change affecting the whole basis of business and commercial life throughout the country, it has been the part of wisdom that
Federal Reserve Banks should conserve their resources and hold
themselves in readiness to meet any unexpected developments in
the situation. This object has been constantly held in view both
by the Federal Reserve Banks themselves and by the Federal Reserve
Board. Preparedness and efficiency have, indeed, been the important elements in the Board's policy, and this policy, together with the
disturbed conditions abroad which have prevented the reserve banks
from engaging in certain classes of operations open to them under
the Act, have naturally limited the scope of the operations for the
first year of their existence.
GROWTH OF EXPORT TRADE.

The financial history of the year has been to an unprecedented
extent founded upon development of the export trade of the United
States. That trade, which had been in many departments almost prostrate immediately after the opening of the European war, promptly
recovered its vigor in many branches, so that during the early stages
of the year's operations, terminating about February, 1915, a surplus
of exports, largely of agricultural products, was used to liquidate
floating indebtedness existing at the opening of the war. This debt the
Board soon after its organization estimated at about $500,000,000.
Since then large surpluses of exports have been paid for to a consid-

ANNUAL REPORT OF THE FEDEEAL RESERVE BOARD.

erable extent through the return of American securities held by foreign
owners. Still later, the international balances resulting from continued purchase of goods were settled largely upon a credit basis,
aided by sales and transfers of securities sent by foreign owners to
the United States. It has been only within the past few months
that there can be said to have been restoration of general activity
resulting in the development of conditions likely to be ultimately
reflected in demands upon the Federal Reserve Banks. There
has been within the past few months a very great expansion
of loans and deposits by member banks, as is shown by the
fact that, whereas the combined loans of national banks were
$6,347,636,570.27 at the end of 1914, they were, on November 10,
1915, $7,233,928,973.15; while total deposits between the said dates
have increased from $8,236,468,374.36 to $10,157,472,691.86. These
facts would seem to indicate that it is prudent to be prepared for
a time when the reserve resources of the country will be subjected
to a severe test and when the leadership and the operations of
the Federal Reserve Banks will become correspondingly more
influential.
DEFINITION OF PAPER.

The Board has devoted itself to a definition of different classes of
paper which, under the terms of the Federal Reserve Act, may be
considered eligible for discount at Federal Reserve Banks, seeking to
classify and describe the various kinds, and to fix the qualifications
of eligibility upon a reasonable and unmistakable basis which should
make clear to the commercial world the conditions to be observed in
dealings with Federal Reserve Banks. It has prepared with great
care regulations fixing conditions under which banks other than
national may be admitted to the system, in order that State institutions may have adequate opportunity to join and ample notice regarding the conditions under which they may be admitted to membership.
The Board has given much attention to the adoption of appropriate
measures designed to facilitate the movement of exports and of
others intended to promote the ready movement of crops. All this
has been done upon a basis furnished by the general work previously
accomplished in defining commercial paper and in issuing standard
regulations designed to describe the essential elements of the principal
types. Very satisfactory results have been accomplished through
these efforts. The crop-moving season has been unusually easy with
exceptionally little strain or indication of stringency in any locality.
The process of financing an enormous and abnormal movement of
exports has proceeded without shock. The development of the
bankers' acceptance, by means of which American institutions
are beginning to occupy a leading place in the financing of the world's
international trade, has gone steadily forward. The total amount of

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

such acceptances outstanding at the close of the year 1915 is estimated at fully $100,000,000—an auspicious beginning in this branch
of business and one of significant importance, not only with regard
to the service rendered to many who would otherwise have suffered
from the withdrawal of European credit facilities, but also because
of the valuable field of investment thereby opened to the Federal
Reserve Banks themselves. Much, nevertheless, remains to be done.
Conditions in the principal financial markets of Europe have been
such that the Board has not deemed it wise to encourage the several
reserve banks either to establish agencies abroad or to embark
actively upon foreign exchange transactions. The coming year will
see large progress in all of these respects. Foreign banking operations in some fields at least, it is hoped, will not be long deferred;
and as business returns to a normal condition abroad, this branch
of the operations of the Federal Reserve Banks will steadily and
rapidly expand.
The operations of the banks have been limited in their scope by the
fact that there was a great volume of fluid resources, due partly to the
release of reserves which occurred simultaneously with the opening
of the banks and partly to general conditions which have relieved
the reserve institutions of demands that would otherwise have been
brought to bear upon them, the most striking feature of which is
the great inflow of foreign gold into the United States in consequence
of enormous sales to foreign countries. As a result of these conditions, the direct discounts of reserve banks for member banks
have at no time been much in excess of $30,000,000, notwithstanding that practically every type of commercial paper available for
discount at Federal Reserve Banks has been defined and described.
Believing that until a firm basis for discount operations had been
laid and the organization of the Federal Reserve Banks completed
it would be wise to defer any general provision for open-market
operations, the Board during the early part of the year confined its
instructions and regulations to those classes of open-market operations which were deemed most immediately essential. Included
in this category were purchases and sales of Government bonds, bankers' acceptances, and municipal warrants. More recently, in a
letter of October 8, confirmed by a circular and regulation of December 6, the Board authorized the several institutions to purchase, at
rates to be fixed by them within certain limits prescribed by the
Federal Reserve Board, all those classes of bills of exchange which
are by the Act made eligible for rediscount. It may be noted
that, as shown by analysis of a recent combined statement of all
Federal Reserve Banks, more than 75 per cent of the aggregate
investments held by them have been obtained through open market
operations in government bonds, warrants, acceptances, and com

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

mercial paper. They have, therefore, open to them a wide field of
operation, and there is to-day no reason why they should not employ
their resources as largely as prudence and the requirements of good
banking dictate.
DISCOUNT POLICY.

The Board has endeavored during the past year to develop a consistent discount policy, graduating its rates according to the maturity and character of paper discounted or purchased in the open
market. Beginning at the opening of the system with a comparatively high rate for ordinary commercial paper and with more or less
variation between the different districts, the reserve banks have during
the year steadily reduced the general level of discount rates and have
worked rapidly and effectively toward uniformity for the entire
country. It may no t be practicable to maintain uniform rates throughout the twelve districts, but they should unquestionably bear a consistent relation one to another, while a very much greater adherence
to uniformity than before the enactment of the Federal Reserve Act
will undoubtedly be secured. At the close of 1915 the lowest rates
made by the Federal Reserve Banks for any class of paper were those
on bankers' acceptances, approved by the Board at from 2 to 4 per
cent, but running in actual practice only a little above the lower limit
thus stated. Trade acceptances at a prevailing rate of about 3 |
per cent, very short-term maturities for ordinary commercial paper at
3 to 3 | per cent, and longer term paper up to 90 days at a current rates
of 4 and 4J per cent were the outstanding features of the discountrate situation. The fact that commodity paper, that is, notes and
bills secured by readily marketable staples, has been acquired
in large amounts at rates from 3 to 3J per cent, and that long-term
agricultural paper has, subject to the restrictions of the law, been
freely taken by the reserve banks wherever offered, shows what the
system can do for the agricultural short-time borrower.
More immediately important to the actual borrower than the rates
maintained at the reserve banks are those established by the member
banks for their customers. It is an undoubted fact that rates for
good commercial paper have never approached so uniform a level in
the United States as during the last year—a condition due to a
variety of circumstances, prominent among which is the operation of
the Federal Reserve System. It is as yet premature to speak positively on this subject, inasmuch as lending conditions and interest
rates of the year 1915 are not to be regarded as normal. There can,
however, be no doubt that during the year the effect of the Federal
Reserve System, heightened as it has been by the steady inflow of
gold from foreign countries, has resulted in a material reduction of
and marked approach to uniformity of rates throughout large sections of the United States.

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

With our vast export trade giving rise, as it does, to an enormous
quantity of foreign bills; with the gradual growth of the practice
of drawing documentary bills against domestic shipments; and with
the increasing tendency on the part of business men to put their
paper into the trade-acceptance form in lieu of the promissory note,
the Federal Reserve Banks should have no difficulty in amply supplying themselves in due time with such amounts of paper as they may
deem desirable. Up to the present time it is the judgment of the
Board that the banks have acted prudently in abstaining from entering the foreign field or from engaging more actively in open-market
transactions than they have. Money rates have been unprecedentedly low, and any attempt of the Federal Reserve Banks to
attract business by further reduction of their rates might only have
produced a further depression of rates and increased the danger of
inflation of credit without, at the same time, bringing additional
business to the Federal Reserve Banks. Under ordinary conditions
the power to engage in open-market operations will be an important
factor in the control of discount rates by the Federal Reserve Banks.
The policy of the Board, for reasons already indicated, has been
one of conservatism. When prevailing money rates harden, as they
may be expected to in time, it will be the policy of the Board to
encourage the Federal Reserve Banks, through the active purchase
of paper and the increase of investments, to release funds, and
thereby to steady rates at what it conceives to be the normal level.
BANKS AS FISCAL AGENTS.

An important step toward the enlargement of the scope of the
reserve banks and the complete enforcement of the Federal Reserve
Act was taken by the Secretary of the Treasury on November 23,
when he designated the reserve banks as fiscal agents. Under his
direction there were transferred, on January 1, 1916, to the reserve
banks funds already on deposit with the member banks in the Federal
reserve cities, an aggregate of about $9,000,000. Thus has been
begun the important fiscal reform of receiving and disbursing the
funds of the United States through the Federal Reserve Banks.
Prior to the action thus taken in designating all of the reserve banks
as fiscal agents the Secretary of the Treasury had already placed
with three of the banks public moneys under the provision which
authorizes him to employ them as depositaries and had offered
to make similar deposits in the Federal Reserve Banks of St. Louis,
Kansas City, and Minneapolis. The banks in which deposits were
made Were the Federal Reserve Banks of Richmond, Atlanta, and
Dallas, $5,000,000 being placed with each. Of this sum, $14,000,000
was transferred through the instrumentality of the gold fund at Washington, and $1,000,000 was directly deposited in cash. The reasons

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

of the Secretary of the Treasury for making these deposits are stated
in his annual report to Congress in December, 1915.
COTTON CROP MOVEMENT.

Because of the difficult international conditions, the Federal
Keserve Board early in the summer felt that it would be advisable
to be prepared for any contingency that might arise in connection
with the marketing of the cotton crop. Fears for the situation were
widespread in the South, some pessimistic observers predicting a
repetition of the disastrous experiences of 1914. The Board, therefore, in June, 1915, appointed a special committee to study the condition and needs of the cotton-growing districts. The committee,
realizing the importance of fostering a financial condition in which
producers would not be obliged to sacrifice their cotton, but would
be assisted in the gradual and orderly marketing of the crop, began
its work by investigating warehouse facilities in the cotton belt and
by making a careful study of the laws governing warehousing in the
Southern States. It also informed itself regarding the extent of
crop diversification, which early in the year had been strongly urged
by the Department of Agriculture and by bankers' associations in
the South. It ascertained that the cotton acreage had been greatly
reduced and that food crops had been planted to a greater extent
than in previous years, and it was not long in reaching the conclusion
that the yield of cotton would be much less than was the case in 1914.
Finding the storage facilities for such portion of the crop as might
havo to be carried over generally adequate, it recommended the
creation of a special kind of accommodation to assist those producers who, having made their crop, might desire temporarily to
withhold a portion of it from the market. The committee entertained the view that warehouse receipts for cotton, grain, and other
staple, nonperishable agricultural products of a readily marketable
character, form an excellent basis for bank loans, particularly as
under the terms of the Federal Reserve Act and the regulations of
the Board, notes thus secured are eligible for rediscount by Federal
Reserve Banks.
During the summer, the committee developed a method by which
producers could secure low rates upon loans secured in this manner,
and in order to encourage cooperation between member banks and producers, the Board issued on September 3, 1915, its commodity paper
regulation which provided that notes secured by nonperishable staple
commodities, having a specified date of maturity, and upon which
member banks had not charged a rate of interest or discount, including all commissions, of more than 6 per cent per annum, should be eligible for rediscount in Federal Reserve Banks at a preferential rate.
It should be especially noted that this commodity rate, so called, was

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

not confined to any section of the country or to loans secured by any
one commodity, but was general in its nature. It applied not to cotton
alone, but to other staple products, such as grain, sugar, and wool.
It was, in fact, adopted by several of the reserve banks, some of them,
however, receiving but little business under it owing to the abundance
of funds in member banks.
The Board, moreover, in the exercise of the powers conferred upon it
by the Federal Reserve Act, was fully prepared to set in operation, if it
should become necessary, at rates to be fixed by it, the machinery of
interbank rediscounting, in order to make available for Federal Reserve
Banks requiring larger resources the available funds of other reserve
banks, the collective strength of the reserve system as a whole being
far in excess of any demands that might reasonably be expected to
be brought to bear upon it at that time.
The Board's commodity paper regulation was issued September 3,
1915, well before the time when the movement of the cotton crop could
be expected to give rise to drafts upon the southern banks, and it was
some time, therefore, before any considerable number of applications
for loans at the commodity rate was made. During the month of
November the southern reserve banks converted many of their loans
into the commodity form. Such loans aggregated $10,300,000 to
the end of the year, $7,500,000 being the volume outstanding on
December 30, 1915.
The effect of the commodity paper regulation was mainly anticipatory and protective. The certain assurance that whatever funds
might be necessary for the gradual and orderly marketing of the
cotton crop would be available at moderate rates had an immediate
and stimulating effect on sentiment. Other factors which contributed
to the same result were the evidences of an early and active buying
movement and the realization that the cotton yield would be much
less than that of 1914. Within 60 days, prices advanced from 8 cents
to 12 cents per pound. There was a steady movement of the staple
to primary markets, the price of cotton seed advanced to a figure that
added from $20 to $25 a bale to the farmer's income, and comparatively little cotton had to be carried by banks for producers.
CURRENCY MOVEMENT.

The fact that there has been no demand for inter-bank rediscounts,
and that the autumn season has passed without the usual stringency due to the necessities of crop moving, point conclusively to
the benefits derived from the Federal Reserve System. It is quite
true, as has often been observed, that the great release of reserves
under the Federal Reserve Act produced an unusual ease of money
the country over. This general ease, however, would not of itself
have solved the difficulty of crop moving, or have met the regu-

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

larly recurring currency requirements of the various agricultural
sections of the country. These requirements have been met during
the present year without the great movement of currency that has
been necessary in former years, and at a very greatly reduced cost
to the community. This favorable result is largely due to the
operation of the national clearance system conducted by the Board
by means of the gold settlement fund at Washington. This
fund now aggregates about $80,000,000 and since the beginning of
June, when it was inaugurated, about a billion dollars have been
cleared at a negligible expense of a thousand dollars. The benefits
derived in this connection are a conclusive demonstration of the merits
of the reserve system in disposing of one of the Nation's most troublesome and most discussed financial problems of former years.
FOREIGN BORROWING.

In the course of the year's operations the Board has received
many inquiries with reference to its attitude toward foreign borrowing in the United States, and its policy with reference to the obligations
of foreign governments. The subject has received careful attention,
and the Board has reached the conclusion that its province
should be primarily that of overseeing the regular business operations of the Federal Reserve Banks without endeavoring to direct
them. It has further reached the conclusion, supported by competent legal advice, that the purpose for which goods are sold or
exported, or the use to which such goods are ultimately put,
does not fall within its province or jurisdiction. If the transactions which have given rise to such sales or shipments are of a
true commercial nature, if the basis upon which they rest is such
as to comply with the requirements of the Federal Reserve Act,
and if the maturity of the loan falls within the limitation of the
law, then the paper growing out of them, no matter by whom or
for what drawn, may at will be discounted by Federal Reserve
Banks, and must be regarded as falling within the legitimate sphere
of their operations. The Federal Reserve Act makes no provision for
collateral bond or stock loans, or for the purchase by reserve institutions of foreign governments7 obligations. Neither such obligations,
therefore, nor loans to member banks based thereon are eligible as
investments for Federal Reserve Banks. The operation of the reserve
system is a matter of business to be conducted in accordance with
the terms of the Reserve Act and the regulations of the Board. It is
not the province of the Board to deal with problems involving
international relationships of the United States, either for the purpose of restricting or extending exportations.
The eligibility of paper for reserve banks is determined by considerations which are as valid under one set of international relation

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

ships as another; the function of passing upon and dealing in such
paper under these regulations belongs to the several reserve banks.
The Board, however, believes that the financing of the country's
export trade is at the present time one of the most important financial problems with which the nation has to deal; and it is of the
opinion that Federal Reserve Banks can not, even if they would,
avoid their legitimate and proper share of responsibility of assisting
in this process of financing.
STANDARDIZATION OF COMMERCIAL PAPER.

The belief of the Board that the Federal Reserve Banks are now
in position to render efficient service in the event of stringency is
in no small part based upon the response of member banks to the
efforts of the Board in standardizing and unifying types of commercial paper and borrowing practices. It was a current remark
when the Federal Reserve Act was under consideration that member
banks would find but little of the kinds and maturities of paper made
eligible for rediscount. Experience has shown the exaggerated character of this view, but it has also shown the desirability, not to say
necessity, of securing a thorough standardization of paper in order
that those items which might perhaps be open to technical objections
should be plainly and obviously brought within the requirements of
the law, and in order that member banks may obtain experience and
facility in carrying through rediscount operations. In this regard
much progress has been made; and many banks which believed at the
opening of the year that no considerable part of their paper would be
available for rediscount, now recognize that a substantial proportion of
it either is already eligible or may easily be made to comply with the
provisions of the law. With the aid and cooperation of Federal
Reserve Agents, country bankers have been made acquainted not only
with the terms of the Act, but with the Board's regulations, and it is
believed that in the event of necessity, the flow of paper to Federal
Reserve Banks for discount with a view to obtaining additional
accommodations will be prompt and will continue steady.
During the past year the Board has held many conferences for the
purpose of developing a better understanding of the duties of the
Federal Reserve System and the meaning of the Federal Reserve Act,
as well as for the purpose of obtaining advice and suggestions regarding problems that were before it for solution and for developing uniformity of operations upon the highest basis of efficiency.
The regulations of the Board have been prepared with a view
to the necessities of practically every part of the country, including
both agricultural and city constituencies, and there is now no reason
why prompt and ready relief should not be rendered at any time
of difficulty, or why regular relations should not be maintained

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

with member banks desiring accommodation in the furtherance
of their business. It will be possible from this time forward
greatly to simplify circulars and regulations with such few changes in
substance as may be needed. At the present moment active business relations are maintained by Federal Reserve Banks with a substantial number of member banks and this number is steadily on
the increase. The reserve banks are, in short, living and active
members of the banking community, and not only have done a
creditable amount of business thus far, incidentally relieving many
strained and difficult situations, but have prepared the way for a
very much larger scope of activity in the event of necessity. Meantime they have had a most important influence in securing reasonable rates for rediscounts to member banks from their correspondents.
They have performed both an educational and a commercial function. In the further and progressive development of their reserve
functions under the Federal Reserve Act they have, in accordance
with the terms of the Act, received from member banks, under
date of November 16, an additional installment of reserves, amounting from country banks to one-twelfth, and from reserve city banks
to one-fifteenth of their total required reserves. Some member banks,
recognizing the wisdom of maintaining the reserve institutions in as
efficient a condition as possible, have already adopted the practice of
keeping with their reserve bank excess balances over and above their
minimum required reserves. For all these reasons the reserve banks
find themselves in much stronger position than they were a year ago,
the aggregate of their gold and lawful money being $345,260,000 on
December 31, as against $229,069,000 on the same date a year earlier.
It is hoped that as the system further develops member banks may,
both as a matter of convenience to themselves and in order to
strengthen their Federal Reserve Banks, adopt the plan of keeping
with their reserve banks larger excess balances.
UNIFICATION OF BANKING.

In this process of developing the reserve power, of cultivating good
relations with member banks, of educating their members to a recognition of the true theory upon which the reserve system is founded,
and of otherwise carrying on the larger purposes aimed at by the
Federal Reserve Act, the Board has been mindful of the delicate and
important duty of unifying, so far as possible, the banking system
of the country—a duty plainly imposed upon it by the provisions of
the statute. This duty has presented itself in two ways—in the
broadening of the power of national banks in such a way as to
afford them such advantages as were deemed consistent with safety,
and in the admission of State institutions to membership in the
20067°—16

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

reserve system. It was no doubt the view of the framers of the
Federal Reserve Act that, because of the admission of State institutions to the full advantages of the law, national banks should be in
some measure compensated by the granting of certain auxiliary
privileges—the reduction of reserves against savings accounts, the
extension of the power to act as trustee, executor, administrator,
etc., and in other ways. The Board, however, deemed it essential
that such grants of fiduciary authority should be made only to those
institutions whose past record and present condition are such as to
furnish evidence of their worthiness to be thus recognized. It
has instituted careful examination into the condition of each
institution making application for such powers, after a method
fully described in this report, and has not scrupled to reject the
applications of many banks which, although in a sound and
solvent condition, were not considered to fulfil the several requirements of worthiness from a fiduciary standpoint.
It is with regret that the Board reports that its action in thus granting the powers authorized by the Federal Reserve Act to national banks
has been the subject of much criticism and opposition on the part of a
number of trust companies even in those States in which trust companies are engaged in the business of commercial banking in direct
competition with national banks. Suits have been instituted in two
or more States to test the constitutionality of section 11 (k) and to
prevent by injunction or otherwise the exercise of the powers of
trustee, executor, administrator, and registrar of stocks and bonds
by national banks, either on the ground that the Act is unconstitutional or that the exercise of these powers is in contravention of the
laws of the State in which such national banks are located. Advices
have been received that similar suits will be brought in other States.
The Board has authorized its counsel to intervene in these cases; to
file briefs in support of the constitutionality of the Act; and to appear
and argue the questions involved when this course is deemed necessary or advisable. Every effort will be made to obtain an early
adjudication of this important question by the Supreme Court
of the United States.
A somewhat similar, although less marked, situation has developed
with respect to savings accounts. Under regulations carefully developed by the Board, it has been sought to limit the number of
accounts against which reduction of reserves to 5 per cent has been
permitted to those which are beyond question what they profess to
be, the reduction, therefore, involving no element of danger to the
liquid condition of the banks. Despite this care, some State officials
have considered it their duty to attempt to restrict the development
of the savings deposit function of national banks, and in California
this attitude has been carried so far that the Board has recommended

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

to the local Federal Reserve Bank the institution of injunction proceedings, designed to protect the rights of the member banks. A
similar condition of affairs exists with respect to the other branch
of the process of unification—that relating to the admission of State
banks and trust companies to membership. The Board has nevertheless deemed it wise to offer to all eligible State institutions the utmost
freedom in associating themselves with the system, in order that
there might, if possible, be developed a uniform banking system
embodying as large a proportion as possible of the eligible commercial
banks of the country under a single general oversight for the same
general purposes—the prevention of stringency or financial difficulty
and the strengthening and enlargement of the financial resources of
the country* After full investigation, the Board, therefore, decided that
State banks should be given, subject to suitable restrictions, the privilege of withdrawal from the system at their own option, and has in other
ways endeavored to facilitate the process of affiliation. While the
attitude of State banks and trust companies has been such that but
32 have been admitted to membership, 84 others have become
members by conversion or by reorganization as national banks
during 1915* This number, moreover, includes some of the best
institutions in the country.
It is an unfortunate fact that in some of the States reserve requirements for State banks and trust companies have been materially
lowered by legislative enactment since the adoption of the Federal
Reserve Act. The only justification for the reduction of the reserve
requirements for national banks is the fact that the national banks are
members of the Federal Reserve System and that the Federal Reserve
Banks hold a part of the consolidated reserves of the national banks,
and are, therefore, in position to come immediately with all of their
resources to the support of the national banks in case of necessity
or emergency. In other words, the entire strength of the Federal
Reserve System is substituted for the reduced reserve requirement
of the national banks. On the other hand, where the State banks
and trust companies have reduced their reserves to the same level as
the national banks without becoming members of the Federal Reserve System, such State banks and trust companies have not available to them the strength and resources of the Federal Reserve
Banks as a substitute for their lowered reserves. This is an
element of danger in our banking system, because the weakening of
the reserves of the State banks and trust companies makes them
more vulnerable in times of emergency, and it is conceivable that a
situation might arise in the affairs of such State banks and trust
companies where they might have to call upon the credit structure
of the national banks and the Federal Reserve System for support
when they would not be entitled to it because they had not con

ANNUAL KEPORT OF THE FEDERAL RESERVE BOARD.

tributed to the strength of the Federal Reserve System by taking
membership in it. The Board is giving serious thought to this question, and to the action that may be taken to guard against the consequences of this situation. In the meantime the Board is firmly of the
opinion that the States themselves should, instead of permitting a
reduction in the reserves of State banks and trust companies, require
them to maintain reserves higher than the reserves of national banks
so long as such State banks and trust companies do not become members of the Federal Reserve System. It is scarcely necessary to say.
that the credit resources of the country would be greatly enlarged and
strengthened, with corresponding benefit to business and to all the
people of the country, were the State banks and trust companies to
be joined together with the national banks in the homogeneous and
well-organized banking system provided by the Federal Reserve Act.
It would be deplorable were feelings of State or local pride to
lead any of the States into " competition; ? with the Federal Reserve
System such as would prompt them to lower their own banking
standards or reserve requirements with a view of enabling or inducing State banks to refrain from- taking membership therein.
The Board is satisfied that State banks gain in safety and that the
States sacrifice none of their prerogatives or powers when such
banks become members of the Federal Reserve System, and therefore
expresses the hope that no seeming divergence of interest will be
permitted to impede the establishment of higher standards of banking.
CLEARINGS AND COLLECTIONS.

Section 16 of the Federal Reserve Act made general provision for
the establishment of a system of clearance of checks throughout the
United States, each Federal Reserve Bank being required to act as
a clearing house for its members if directed by the Federal Reserve
Board, while the Federal Reserve Board was authorized to clear for
the reserve banks themselves.
The Board had from the first recognized its duty to make this
provision of the law effective as fully and at as early a date as conditions would permit; and in its first report spoke of this as "one of
the most important responsibilities with which it is charged under the
Act." So, regarding its duty in this particular, it undertook early
in 1915 the preparation of a general circular and regulations intended
to provide for the clearing of checks within the several Federal
reserve districts, while it also took under advisement the establishment of a gold settlement fund at Washington for the purpose of
clearing obligations between Federal Reserve Banks. The latter undertaking has been carried to a successful conclusion and the gold
settlement fund has been in full and satisfactory operation since
about the first of June. The Board, however, had not advanced

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

far with its work relating to the intradistrict branch of the clearance
system before technical and other difficulties began to make their
appearance. Many banks, both city and country, throughout the
system were opposed to the enforcement of the provisions of the
law because of the loss of exchange charges which would thereby
be entailed upon them. Legal questions were also raised, it being
argued that there is no power to compel a member bank not located
in a Federal Reserve city to pay or have charged to its account at
the Federal Reserve Bank of its district a check which it had not
seen and approved prior to the time of presentation at its own
counter. For the purpose of ascertaining the Board's powers in
this connection the opinion of the Attorney General has been
requested.
While the Board was not inclined to attach undue importance
to objections based upon self-interest, it felt that it must take
cognizance of all legal objections, and it recognized that the clearing
question was essentially a reserve problem rather than a technical question or a mere matter of administration. Inasmuch as
the Federal Reserve Act had granted a period of three years
within which to effect the final transfer of reserves to Federal Reserve Banks (balances with correspondents counting as
reserves in the meantime), there was a certain ground for objection to the immediate introduction of complete clearance at
Federal Reserve Banks. As is well known, reserve balances in
some reserve cities have heretofore been used for the purpose of
providing for exchange and collection operations, and so long as
this function on the part of city correspondents continued there was
some argument in favor of deferring any compulsory application of
par clearance at the reserve banks. Study of the problem, moreover,
shows that, pending the time when State banks enter the system in
larger numbers, it may be necessary for some member banks to
collect and clear through their correspondents in reserve cities.
So complex was the situation and so serious the difficulty involved
in the compulsory application of any system, however carefully conceived, that the Board felt it would be well if member banks could
be brought to recognize of their own free will the advantages of a
general and nation-wide clearing system—advantages which would
inure not only to the benefit of the public at large, but ultimately to
the direct benefit of the member banks themselves from the purely
business standpoint. It therefore took under favorable consideration
the question of a voluntary clearing system. Both the difficulties of
a compulsory plan and the probable merits of a voluntary system had
been strongly represented to the Board by the governors of the respective Federal Reserve Banks who at various meetings had thoroughly canvassed the whole situation. Under a plan, proposed by

ANNUAL BEPOBT OF THE FEDERAL RESERVE BOARD.

the governors, which in most districts became effective during June,
1915, provision was made for the acceptance at par by the Federal Reserve Bank of each district of checks drawn upon any
member bank of that district which had previously assented to the
provisions of the scheme. It was hoped that a very large number of
member banks would promptly affiliate themselves with the new system of clearing and that the natural force of economic competition
would ultimately attract to it those who at first might hesitate.
This system, as already stated, became operative in most districts
during June, 1915. Prior to this whole discussion, however, two districts had already undertaken the application of the clearing provision of the law. Early in December, 1914, district No. 10 and district No. 8 (Kansas City and St. Louis) had sought and obtained
permission to apply to their members a complete system of required
clearing. This system had been in full operation in both districts
prior to the general application of the voluntary system. Upon the
inauguration of the latter the directors of the Federal Reserve Bank
of St. Louis deemed it wise to offer to their member banks the option
of withdrawing from the clearance system if they so desired; but so
successful had been the working of the plan that comparatively few
retired, about 80 per cent of all continuing their membership. The
Federal Reserve Bank of Kansas City continued its required system
as before for the benefit of all its member banks, numbering 950.
As about 365 banks continued their membership in the St. Louis
district, a total of approximately 1,300 was included in the clearing
system of the two districts in question. Outside of these two districts about 1,100 member banks voluntarily affiliated themselves
with the clearing system within a short time after its inauguration,
and there was a subsequent net inward movement of about 50 additional members, making approximately 1,150 banks which of their
own free will have assented to the voluntary clearing plan. This is
considerably less than 25 per cent of the institutions eligible for membership, and the proportion has been so small as to prove a severe
disappointment to those who had confidently expected that the foresight and enlightened self-interest of the member banks would speedily
accomplish the desired result. Some progress has been made through
the action of the banks, both member and nonmember, in improving
exchange conditions and in providing for the clearance of country
checks at points where this practice has never before prevailed;
but in the main comparatively small advance has thus far been made
in rendering effective the provisions of the law requiring the standardization of exchange and clearance practices. This slowness is
largely due to the failure of jobbers and merchants to appreciate
the advantages of the clearance system and to enlarge its membership
by insisting that their own banks join and cooperate in the plan. The

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

subject has recently been reopened at the conferences between the
governors of the Federal Reserve Banks, the Federal Reserve Agents,
the transit managers of the reserve banks, and the Board itself, with
a view to extending the present system not only in the several districts
themselves but as between the various districts. For many years it
has been lawful for banks to count as reserves deposits with other
banks. It was never the intention of the Federal Reserve Act that
member banks should continue the maintenance of these reserve
accounts. On the contrary, the full meaning of the Act is manifestly
opposed to such an idea. It is the plain conception of the Act that
the reserve banks should, to a very large extent, if not entirely, perform the work that is now being done by correspondent banks in this
respect. This means that the reserve balances to be carried in the
future by the reserve banks instead of by the correspondent banks
should serve as the basis for a system of clearing and collecting the
exchanges of the country. Whatever can be done to bring about
the prompt and effective use of this new system of bank settlement
will be done.
ISSUE OF NOTES.

During the year 1915 the circulation of Federal Reserve notes has
increased to $188,817,000 as of December 31, 1915. Believing that
the country should be prepared against any contingency, the Board
had authorized the printing of about $700,000,000 of these notes.
Almost one-quarter of the total supply printed has been placed in
circulation. On December 31,1915, however, only $16,675,000 of notes
secured by commercial paper pledged with the Federal Reserve Agents
was outstanding as an obligation of the Federal Reserve Banks. The
liability of the Federal Reserve Banks as to the remainder has
been discharged by the deposit with the Federal Reserve Agents of
a like amount of gold and lawful money. This result has been
achieved by the Federal Reserve Banks in responding to requirements
for currency by issuing Federal Reserve notes rather than by parting
with gold. While the gold pledged with the Federal Reserve Agents
represents a very valuable protection in case of a substantial demand
for gold, it must be observed that the process is expensive without,
at the same time, giving to the Federal Reserve Banks that additional strength and lending power which they would secure in case
the law were amended so that the Federal Reserve Banks would
remain liable for the outstanding notes, but, on the other hand,
would retain property title to the gold delivered to the Federal
Reserve Agents, which, in that case, would not be paid in to extinguish the liability upon the notes but would be deposited as collateral security against them.
Further reference is made to this subject under the head of amendments.

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.
BRANCHES AND AGENCIES.

The question of branches of Federal Reserve Banks has received
careful attention during the past year. There has been intimation
from several quarters that the establishment of a branch at a given
point would be acceptable to the banks of that place. Only in one
instance—that of New Orleans—did the Board receive a definite
request from a Federal Reserve Bank to establish a branch. Believing that New Orleans and the adjacent territory could make advantageous use of this additional banking machinery, the Board authorized the establishment of a branch of the Federal Reserve Bank of
Atlanta to be located in New Orleans, and this branch was opened
for business on September 10. Operations at the New Orleans branch
have proceeded satisfactorily, and the institution has been of considerable use to the local banks. The branch is already more than
self-supporting.
Investigation and experience have seemed to show that, at least
for some years to come, the organization of branches with completely equipped offices, vaults, and the like, and with a full staff of
salaried officials, will be too heavy an expense for most of the reserve
banks, yet, that valuable service could be performed by local offices
of the several banks in not a few places. The Board has, therefore, had under consideration the question whether establishing local
agencies might not meet the requirements of the case better than
the more fully organized branch office. Competent legal opinion is
to the effect that the creation of such local offices is permissible under
the terms of the law, and the Board believes that it may prove practicable to meet banking necessities in many sections of the country
by this means.
CHANGES IN DISTRICTS.

Practically as soon as it was organized the Board received applications from various cities and districts asking for changes in the
adjustments that had been made by the Organization Committee,
under the Board's general power to review the findings of that body.
As set forth in its first report, it appointed dates for the hearing of
each case, and on May 4 it announced decisions readjusting the
boundaries between the second and third, the boundaries between the
fourth and fifth, and the boundaries between the tenth and eleventh
districts. The details of this action are stated in Exhibit M.
The appeals presented by the cities of Pittsburgh and Baltimore,
which regarded their claims to designation as the site of a reserve
bank as superior to the cities of Cleveland and Richmond, respectively, were not finally disposed of, the Board feeling that further
experience would be necessary in order to reach an intelligent con

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

elusion regarding this whole matter. Later requests were received
from certain banks in Louisiana for transfer from the Dallas to the
New Orleans district, by certain banks in Connecticut for transfer
from the Boston to the New York district; and by certain other banks
in southern Wisconsin for transfer from the Minneapolis to the Chicago
district. Believing that the subject ought not to be delayed indefinitely, full consideration was given to it during the months of October
and November by a special committee of the Board, and the question
was considered whether a reduction in the number of reserve banks
was not desirable and whether, if desirable, it might not be made in
such a manner as incidentally to settle the various pending appeals.
Further consideration of this subject was suspended, in view of
an opinion rendered by the Attorney General of the United States
on November 22, wherein it was held that the Board possessed
no power to reduce the number of Federal Reserve Districts. The
question what action to take on appeals still pending must, therefore,
be considered in the light of this opinion, which has materially
changed some of the aspects of the case. A further opinion has been
asked as to whether the Board has power to change the location of a
Federal Reserve Bank within a district.
OPERATION AND EXPENSES.

Meantime the experience already secured in the operation of Federal Reserve Banks has thrown much light both upon the conditions
of their operation, the problems they will have to meet, and the cost
to which they will be subjected in doing business. Due to the conditions prevailing during the past year, as already set forth, the
reserve banks as a unit have done little more than to provide for
their current expenses. The complete tabular statement of income
and outgo, furnished on pages 87-95, shows that the current expenses
for 1915 have been covered and in addition a sum of $639,881 realized. The condition of the banks as income producers is jiot, however, uniform, nor should their usefulness be gauged by their earning
capacity. As will be seen from the statement in question, in the
case of the Richmond bank the excess of earnings over current
expenses for the past calendar year was $233,331, or over 8 per cent
of the average paid-in capital, while in the case of nine other banks
these excesses varied from less than $4,000, or a fraction of 1 per
cent, to $137,336, or over 6.5 per cent of the paid-in capital. Two
banks are shown to have declared dividends. There are still two
institutions which during the past year have not fully covered their current expenses, although such deficiency is of relatively small amount.
The Board, in submitting this tabular statement of earnings and
expenses, feels warranted in expressing the conviction that the system,
as a whole, has been economically and efficiently operated. In

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

order that the fullest information may be afforded concerning the
conditions obtaining in each of the banks, there is submitted the
complete salary roll of each institution, as well as an estimate, in round
numbers, of the expense and dividend requirements of the several institutions. An inspection of the detailed salary rolls in comparison with
the salaries for bank officers and employees in the several reserve cities
will show that Federal Reserve Banks have been operated upon what is
practically an ordinary commercial basis in so far as relates to expenses,
the only criticism that might reasonably be made being apparently
that certain of the institutions were slightly "overstaffed" at the
beginning; that is to say, had in their employ a rather disproportionate number of officers of the higher class and salary rating. This
difficulty of organization could not be avoided, in view of the uncertainty regarding the volume of business to be developed by the several
banks and the possibility that at any time conditions might be such
as to require a large and rapid expansion of the operations of the
several institutions. The Board, therefore, believes that the institutions have been fulfilling their duty efficiently and satisfactorily in
the face of a difficult international financial situation; and looks
confidently forward to a material enlargement of operations in the
near future, in the natural course of events.
" Regulation in ordinary times as well as protection in extraordinary times" was the principle laid down by the Board in its first
annual report for defining the general scope of activities of the Federal
Reserve Banks. The conditions of the last year, however, have
happily not been such as to call for the exercise of the emergency
function of the reserve banks nor have they been such as to call for
much regulative action on the part of the banks. Speaking by and
large of the situation in the midst of which the reserve banks have
found themselves during the first year of their existence, it has been
one of such ease and quiescence as not to call for much activity on
the part of the reserve banks except in a few districts, but the experience gained has confirmed the Board in the conclusion expressed a
year ago that " normally a considerable proportion of their resources
should always be kept invested in order that the release or withdrawal from active employment of their banking funds may exercise
a beneficial influence," and that "to influence the market a reserve
bank must always be in the market." The events of the year also
seem to make clear that in all except unusual years it may be expected
that the proportion of their resources which the reserve banks will
have to keep loaned or invested in order to exercise a proper regulative effect upon the market or will be able to invest through operations in the open market as such a market develops, will produce
earnings sufficient for dividend purposes as well.

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

OPERATIONS OF THE BOARD.

The Board's own internal organization has not been materially
changed since its first report. Various divisions whose organization
was then outlined have continued in operation. Two (those of correspondence and mail and files) have been consolidated with the secretary's office. Only very slight changes in the personnel or size of
the staff have been effected. At present the actual cost of conducting the work of the Federal Reserve Board, including members' salaries and the total payments to the staff in Washington, as well as
the examining corps, is about $18,000 per month. So far as can be
judged, this sum is not likely to vary much in the near future, except in so far as it may be increased by the added cost of examining
State banks which may join the system, should such action be necessary, or by the growth of the statistical department.
The Board has foreborne to enter into a multitude of details concerning its work which might prove of interest and importance. Full
information with regard to the year's operations has been afforded in
the Federal Reserve Bulletin, which is now published monthly and
in which is given a complete account of the operations of the Board
as they are developed. Full statistical data and complete detailed
reports for each of the Federal reserve districts are presented in
exhibits hereto attached, and a complete file of the Bulletin is
herewith transmitted.
PROPOSED AMENDMENTS.

A year's experience in the operation of the Federal Reserve Act
has confirmed the Board in its profound conviction that the Act has
been one of the most beneficial pieces of legislation ever adopted by
Congress. Not only have its fundamental principles been fully vindicated but in most details the working of the measure has been successful. The Act, however, is a progressive piece of legislation and
creates new conditions as the result of its own operation. Modification in its terms growing in part out of these new conditions will
subsequently be required from time to time.
For the present the Board presents the following suggestions for
amendments to the Act:
(1) In addition to powers now possessed in this connection by
Federal Reserve Banks and national banks, the latter should be
permitted to subscribe for and hold stock in banks organized for the
special purpose of doing a banking business in foreign countries.
(2) With the approval of the Federal Reserve Board the issue of
Federal Reserve notes to Federal Reserve Banks should be permitted either against the deposit of an equal amount, face value, of

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

notes, drafts, bills of exchange, and bankers' acceptances acquired
by Federal Reserve Banks under sections 13 and 14 of the Act, or
of gold, or of both, provided, however, that gold so deposited with a
Federal Reserve Agent shall count as part of the reserve required by
the Act to be maintained by the bank against such notes outstanding.
(3) The acceptance system, provision for which is made in foreign
trade operations by the Federal Reserve Act, should be extended to
the domestic trade in so far as relates to documentary acceptances
secured by shipping documents or warehouse receipts, covering readily
marketable commodities or against the pledge of goods actually sold.
There can be but little question of the safety of such acceptances,
and their use will tend to equalize interest rates the country over
and help to broaden the discount market.
(4) Permission should be granted to national banks to establish
branch offices within the city, or within the county, in which they
are located.
(5) In order to enable member banks to obtain prompt and economical accommodations for periods not to exceed fifteen days, the
Federal Reserve Banks should be permitted to make advances to
member banks against their promissory notes secured by such notes,
drafts, bills of exchange, and bankers' acceptances as the law at
present permits to be rediscounted or purchased; or against the
deposit or pledge of United States Government bonds, the purchase
of which is now permitted under the law.
(6) The Board furthermore recommends that the power of national
banks to make loans on farm lands as provided in section 24 be
extended so as to permit any national bank not situated in a central
reserve city to make loans secured by improved and unencumbered
farm land situated within its Federal Reserve district, or within a
radius of 100 miles from the place in which such bank is located,
irrespective of district lines. It also recommends that the powers of
national banks be further extended to permit any such bank to make
loans on any improved and unencumbered real estate located within
100 miles of the place in which such bank is located, irrespective of
district lines; provided, however, that the aggregate of farm land
loans and other real estate loans made by any national bank shall
not exceed 25 per centum of its capital and surplus or one-third of
its time deposits; and provided further, that no such real estate loan,
as distinguished from a farm land loan, shall exceed a period of one
year nor exceed 50 per centum of the actual value of the property
offered as security.
It is believed that the enactment of these amendments will, besides
enlarging the usefulness of the national banks, result in greatly
strengthening the operation of the Federal Reserve Act, and more
completely realize the purposes of its framers. The text of the

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

amendments designed to carry out these recommendations will be
submitted by the Board at an early date. The Board has under
consideration other suggestions for amendments to the Federal Reserve Act concerning which no conclusions have yet been reached,
and regarding which the Board will take occasion to submit its views
to the Congress at an appropriate time in the future.
W. G. MCADOO,
Secretary of the Treasury,
Chairman.

C. S. HAMLIN, Governor.
F. A. DELANO, Vice Governor.
P. M. WARBURG.

JOHN SKELTON WILLIAMS,

W. P. G. HARDING.

Comptroller of the Currency.
A. C. MILLER.
Members, Federal Reserve Board.

EXHIBITS.

Exhibit A.—DISCOUNT RATES.
Changes in discount rates during calendar year 1915.
PAPER MATURING WITHIN 10 DAYS.
June.

July.

Sept.

In
force
Jan. 1,
11

1916.
CO

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

Dec.

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

27 28 3

19 18

s
30

4j
41

5
5

5
41
5

4
41

5
5

20067°—16-

•I 1

4
4

In f o r c e
Jan.] ,1916.

June.

Feb.

Jan.
1

Mar.

PAPER MATURING WITHIN 30 DAYS.

4
4
4
4
4
4
4
4
4
4
4
3J

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.
Changes in discount rates during calendar year 1915—Continued.

5
5
5

May.

18 30 18 25

4
4

5
5
5

51
51

4
41

4
4

Mar.

Jan.

Feb.

14 21 22 23 27 28

DAYS.

Aug.

Sept.

6 18 19 18 30 9 13 14 16 23 24 21 15

4
4
41
4
4
41
4
41
4
4
41

5
6

51
5J
6
6

PAPER MATURING AFTER 6() BUT WITHIN

Boston
New York...
Philadelphia
Cleveland
Richmond.
Atlanta
Chicago
St. Louis
Minneapolis..
Kansas Citv..
Dallas
San Francisco

Nov.
In force Jan.
1,1916.

Boston
New York..
Philadelphia
Cleveland
Richmond.
Atlanta
Chicago
. .
St. Louis
Minneapolis
Kansas Citv
Dallas
San Francisco.

Feb.

June.
In force Jan.
1,1916. 1

Mar.

Jan.

Apr.

PAPER MATURING AFTER 30 BUT WITHIN 60 DAYS.

4
5

4
41

51
5+

AGRICULTURAL AND LIVE STOCK PAPER MATURING AFTER 90 DAYS.
Jan.

Mar.

Feb.

Apr. June. Oct. Nov.

force

Boston
6
New York
Philadelphia. 6
6
Cleveland
6
Richmond
6
Atlanta
Chicago... . 6
6
St. Louis
Minneapolis.. 6
Kansas City.. 6
6
Dallas
San Francisco. 6

21 23

Jan.l,
15 1916.
5
5

5
5
5

5
41

5
5

5
5
5

41
6

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.
Changes in discount rates during calendar year 1915—Continued.
TRADE ACCEPTANCES MATURING WITHIN 90 DAYS.
July.

Oct.

Dec.

In
force
Jan.

1916.
CO

Sept.

Aug.

Boston
New York
Philadelphia

Cleveland
Richmond

{If

. .

Atlanta
New Orleans brch.
Chicago
St. Louis..
Minneapolis.
Kansas City

f *3*

13^

1 24

3f-4

<«>
331

Dallas

San Francisco

33*

3*
[ *3*

Rate for trade acceptances maturing within 60 days.
2
Rate for trade acceptances after 60 but within 90 days.
« A rate of 2 to 4 per cent for bills with or without member bank's indorsement made effective December 27,1915.
4 A rate of 3 | to 4 per cent for trade acceptances, bought in the open market without member banks'
indorsement was made effective in the New Orleans district on December 16.
COMMODITY PAPER MATURING WITHIN SIX MONTHS.
Sept.
4

In
force
Jan.
1916.
13*

CO CO

13
3
3

3
3

(2)

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

Oct.

Rate for commodity paper maturing within 90 days.
3J per cent for commodity paper maturing within 30 days; 4 per cent for commodity paper maturing
after 30 but within 60 days; 4 | per cent for commodity paper maturing after 60 but within 90 days; 5 per
cent for commodity paper maturing after 90 days.
2

NOTE.—Rate for bankers' acceptances, 2-4 per cent. On March 10 the Federal Reserve Board fixed the
following rates for rediscounts between Federal Reserve Banks: 3 | per cent for paper maturing within
30 days; 4 per cent for paper maturing after 30 but within 90 days.

Exhibit B.—FEDERAL RESERVE NOTES.

CO
O

Federal Reserve notes received from the Comptroller of the Currency, issued to each Federal Reserve Bank and in actual circulation, gold and lawful money,
also paper, held by each Federal Reserve Agent, and amounts of Federal Reserve notes held and amounts carried to net assets and liabilities by each
Federal Reserve Bank on the last Friday in each month from Nov., 1914, to Dec. SO, 1915.
[In thousands of dollars.]
•D o+
Boston.
Federal Reserve notes received from the
Comptroller of the Currency less returned
for destruction:
Nov.27,1914
Dec. 31,1914
Jan.29,1915
Feb.26,1915
Mar.26,1915
Apr.30,1915
May28,1915
June25,1915
July30,1915
Aug. 27,1915
Sept.24, 1915
Oct.29,1915
Nov. 26,1915
Dec. 30,1915
Federal Reserve notes issued to Federal
Reserve Banks (net amount):
Nov.27,1914
Dec.31,1914
Jan.29,1915
Feb.26,1915
Mar.26,1915

New

Phila-

York>

delphia>

Cleveland

Richmon(L

,
n^;« ~ a+- T ^ io
K,,n
Atlanta. Chicago. St. Louis.

Minne-

Kansas

apoli^

city>

-n^n^
Dallas.

San Francisco>

m *. •>
Total.

o
w
H

2,000
2,000
2,000
2,000
5,000
5,000
10,000
11,000
11,700
11,700
11,600
11,500
15,960
15,860

5,000
10,000
12,200*
16,200
25,200
29,960
36,920
42,080
49,840
58,800
63,760
76,480
98,440
106,240

3,000
3,000
3,000
3,000
2,980
2,940
2,920
5,360
5,310
8,270
9,010
12,100
11,940
11,840

2,000
2,400
2,400
3,000
3,800
5,000
5,000
6,000
6,400
7,000
8,000
10,000
11,560
12,520

2,400
2,960
3,560
3,960
5,240
6,720
7,780
8,420
9,160
10,000
11,800
15,100
15,100
17,000

2,000
2,000
2,000
5,800
7,000
7,500
8,500
8,500
8,500
9,100
12,100
16,600
18,900
20,400

3,780
3,780
4,380
4,380
4,380
4,380
9,380
9,260
9,260
9,260
9,260
9,260
9,360
9,260

3,400
3,400
3,400
3,400
3,400
3,400
3,400
3,400
3,400
3,400
3,400
6,600
9,600
9,600

2,000
2,000
2,000
2,000
3,000
3,000
4,000
4,000
5,000
6,000
9,000
15,000
17,000
19,000

620
2,000
2,000
2,000
2,000
2,000
4,000
6,000
6,800
8,000
8,000
9,000
11,000
11,000

2,000
2,000
2,000
3,000
3,000
4,200
6,700
7,695
11,895
13,895
15,325
19,565
19,555
19,519

380
2,000
2,000
2,000
2,000
2,000
3,600
3,600
10,000
10,000
10,000
10,000
9,770
9,770

28,380
37,540
40,940
50,740
67,000
76',100
102,200
115,315
137,265
155,425
171,255
211,205
248,085
262,009

110
110
110
110
1,320

1,000
10,000
10,600
11,800
19,040

420
740
740
740
720

204
204
354
1,200

100
790
1,000
2,700
4,000

20
500
1,000
2,600
4,100

1,700
2,400
2,400
4,380
4,380

700
626
626
626

175
260
410
860
1,660

330
335
345
1,360
1,360

500
500
1,200
1,500

660
860
860
1,280

3,855
17,199
18,795
27,590
41,186

&
w
o

Apr. 30,1915
May 28,1915
June 25,1915
July 30,1915
Aug. 27, 1915
Sept. 24,1915
Oct. 29,1915
Nov. 26, 1915
Dec. 30, 1915
Gold and lawful money in hands of or to
credit of Federal Reserve Agent:
Nov. 27,1914
Dec. 31,1914
Jan. 29,1915
Feb. 26, 1915
Mar. 26, 1915
Apr. 30,1915
May 28,1915
June 25,1915
July 30,1915
Aug. 27,1915
Sept. 24,1915
Oct. 29,1915
Nov. 26,1915
Dec. 30,1915
Paper held by Federal Reserve Agent:
Nov. 27,1914
Dec. 31,1914
Jan. 29,1915
Feb. 26,1915
Mar. 26,1915
Apr. 30,1915
May 28,1915

1,320
2,320
3,320
4,420
4,620
5,120
5,820
7,820
10,020

27,040
31,840
40,500
47,720
52,820
59,220
70,960
79,160
89,440

100
105
110
1,310
1,320
2,320
3,320
4,420
4,620
5,120
5,820
7,820
10,020

9 915
10 170
11,561
18,833
26 859
31,660
40,320
47,520
52,550
58,950
70,740
79,010
89,300

1,640
2,400
2,930
3,610
4,670
6,160
7,960
9,160

110
10
5

1 000

420

1,640
2,400
2,930
3,610
4,670
6,160
7,960
9,160

2,200
2,900
3,700
4,700
5,200
6,400
8,600
9,200
11,000

740

680

5,800
7,200
7,750
8,400
9,000
10,760
13,800
14,440
15,630

4,050
4,950
5,150
5,500
5,600
9,280
13,900
15,750
18,950

4,380
4,380
4,380
4,380
4,380
4,380
4,380
4,380
4,380

626
626
626
626
836

2,425
5,825
6,950
8,950

2,460
2,660
3,300
4,400
5,000
6,700
11,000
12,500
14,000

2,000
2,600
3,600
4,100
5,580
6,780
7,880
9,900
11,000

260

260
260

2,500
4,000
6,195
8,615
10,215
13,325
15,445
15,385
15,145

1,280
2,040
2,040
2,040
3,040
4,000
4,600
4,370
6,450

225

235

1,750
1,950
2,150
2,250
5,500
9,650
11,500
14,200

2,400
4,380
4,380
4,380
4,380
4,380
4,380
4,380
4,380
4,380
4,380
4,380

2,010
5,325
6,450
8,950

100
790

20
500

1 478
2,171

100

1,000
2,701
4,002
5,201
5,001

2,100
4 101
3,804
3,203

740

147

500

720
680

1,200
2,200
2,900
3,700
4,700
5,200
6,400
8,600
9,200
11,000

600

250

2,200
2,550
2,300
1,900
4,000
8,500
8,800
9,550

202

430
239

180
207

207
181
180

600
626
626
626
626
626
626
626
626

410
760

1,460
2,460
2,660
3,300
4,400
4,400
6,700
11,000
12,500
14,000
175

965
101
200

140
630
860

1,160
1,160
1,660
2,060
2,960
3,410
4,410
5,310
6,015
7,815
9,000

1,450
2,550
4,000
8,140
11,040
11,290
11,440

1,280
1,280
2,040
2,040
2,040
3,040
4,000
4,600
4,370
6,450

331
75
85

500
500

520
230

201
200
340
540

455

1,200
1 500
2,500
3,546

54,336
67,156
82,961
97,831
109,901
133,060
168,370
187,815
214,125

225
12,252
15,401
20,844
30,969
42,315
54,691
68,996
81,426
90,986
115,180
151,830
171,095
197,450
3,634
4,953
3,395
6,749
10,220
12,026
12,470

CO
Federal Reserve notes received from the Comptroller of the Currency, issued to each Federal Reserve Bank and in aetual circulation, gold and lawful money,
also paper, held by each Federal Reserve Agent, and amounts of Federal Reserve notes held and amounts carried to net assets and liabilities by each
to
Federal Reserve Bank on the last Friday in each month from Nov., 1914, to Dec, 30, 1915—Continued.

[In thousands of dollars.]
Boston.

Paper held b y Federal Reserve A g e n t Continued.
June 25,1915
July 30,1915
Aug. 27,1915
Sept. 24,1915
Oct. 29,1915
Nov. 26,1915
Dec. 30,1915
Federal Reserve notes in hands of bank:
Nov. 27,1914
Dec. 31,1914
Jan. 29,1915
Feb. 26,1915
Mar. 26,1915
Apr. 30,1915
May 28,1915
June 25,1915
July 30, 1915
Aug. 27,1915
Sept. 24,1915
Oct. 29,1915
Nov. 26,1915
Dec. 30,1915

New
York.

Philadelphia.

Cleveland.

5,222
6,739
7 506
6,843

180
200
270
270
220
150
140
55
11
10
10
444
284
372
357
419
495
368
745
1,077
709

322
5,481
2,840
419
2,248
3,328
3,358
4,646
6,463
7,515
8,258
11,596
13,592
16,017

Richmond.

36
8
7
11
6
6
34
51
90
150
599
805
249
401

Atlanta. Chicago. St. Louis. Minneapolis.

5,301
5,772

3,203
3,351
3,359
3,787
4,250
4,751

6,096

4,751

61
332
267
283
307
406
335
385
306
292

10
160
187
123
123

212
417
500
500

170
134
220
153
323
397

Dallas.

640
691
1 170
1 471

4,746
5,836
6 231
5,325

1 869
2,087

4,413
4,323
3,751

2,002
3

449
415

61
1

13
147

3
11

2,313
2,207

11
12

523

528

2/245

370
303
347

368
223

2,300
2,306

26
42

138
417
596
175

284

168

2,370
2,431

110
191

534
443

914
1,282

895

395

1,566
712

817

818

643
66

602

Kansas
City.

404
199
245

522

235

349

315

750

426
286

628
984

2,208
2,190
1,846

814

1,294

1,695

San Francisco.

337
424

Total.

13,991
16,817
19,350
18,113
16,553
17,583
16,740

O
w
H
O

1,155

6,591
4,295

329
672

4,633

605

7,892

290
404

1,397
1,317

10,472

1,171
1,764

12,704

1,974

17,398

1,874
1,544

22,345

1,301

25,099

140

333

328
477

361
305

488
1,159
522

360
361
419

7,419
9,309

14,668

22,511

W
O
>

Federal Reserve notes issued by the Federal
Reserve Bank and in circulation:
Nov. 27,1914
Dec. 31, 1914
Jan. 29,1915
Feb. 26,1915
Mar. 26,1915
Apr. 30,1915
May 28, 1915
June 25,1915
July 30, 1915
Aug. 27,1915
Sept. 24, 1915
Oct. 29,1915
Nov. 26, 1915
Dec. 30,1915
Federal Reserve notes, amount of, carried
to net assets:
Nov. 27,1914
Dec. 31,1914
Jan. 29,1915
Feb. 26,1915
Mar. 26,1915
Apr. 30,1915
May 28,1915
June 25,1915
July 30,1915
Aug. 27,1915
Sept. 24,1915
Oct. 29,1915
Nov. 26,1915
Dec. 30,1915

55
99

678
4,519

100
100
876
1,036

7,760
11,381
16,792
23,712
28,482

1,948
2,963

35,854

384
732
733
729
714
674
1,606
2,349

142
143
324
868
2,200
2,633
3,417
4,393
4,794
6,065
8,215

4,001
4,125
4,752
5,075

41,257
45,305
59,364

2,840
3,460
4,071
5,355

6,743
9,311

65,568
73,423

7,711

8,894

8,759

10,708

5,396
2,410
180
2,041

5
10
434
284
372
357
419
495
368
745
1,077
709

50,962

3,147
3,178
4,466
6,363
7,245
7,988
11,376
13,442
15,877

45
780
840
2,513
3,877
5,677
6,796
7,551
8,155
8,765
10,445
13,374
14,154
14,816

20
434
830
2,466
3,880
3,897
4,627
4,753
4,978
5,251
8,530
13,272
14,766
17,656

1,057
1,951
1,985
2,067
2,173
2,135
2,080
2,074
2,010
1,949
2,172
2,190
2,534
2,685

172

11,788
13,182

415
2,313
2,207
2,245
2,300
2,306
2,370
2,431

1
11
12
26
42
60
110

13
147
38
217
596
175
284
534

2,208
2,190
1,846
1,695

499
782

8
7
11
6
6
34
51
90
150
599
805
249
401

332
267
283
72
406
335
385
306
292

247

639
625
615
614
600
584
566
516
645
1,511
4,543
6,555
8,133

817

263
722
1,243
1,864
2,485
3,016
3,866
4,557
5,805
9,434

1,666
712
818

289
332
334
837
990
1,697
2,253
3,432
3,960
5,252
6,303
7,392
8,741
10,478

323
170

2,700
410
451
672
1,132
2,277
3,710
5,791
8,282
9,854
13,020
15,085
15,024
14,726

323
436
531
608
675
643
723
869
1,276
2,026
2,726
2,826
5,149

194
329
672
605
1,397
1,317
1,171
1,764
1,974
1,874
1,544
1,301

10,608
14,500
22,957
33,767
46,444
57,847
72,489
85,127
95,233
115,662
146,025
165,304
189,026

5,418
3,179
3,215
6,091
6,909
7,765
9,124
11,029
12,491
14,866
19,723
19,176
21,910

CO
Co-

fin thousands of dollars.]
Boston.

NewYork.

Philadelphia.

Cleveland.

Richmond.

Atlanta.

Chicago. St. Louis.

Minneapolis.

Kansas
City.

172

289
72
74

Dallas.

San Francisco.

Total.

1
Federal Reserve notes, amount of, carried 1
to net liabilities:
;
Nov. 27,1914 .
.
Dec. 31,1914

f."

C7S

384
140
119
177

Jan. 29,1915
Feb 26 1915
Mar 26 1915
Apr. 30 1915
May 28,1715
June 25, 1915
July 30 1915
Aug 27 1915
Sept. 24 1915
Oct. 29,1915
Nov 26 1915
Dec 30 1915

i
. . . .

45
780
840
9 513
3,877
5,077
4,596
5,001
5,855
6,865
6,445
4,874
5,354
5,266

20
434
794
1 966
3,880
3,647
2,877
2,803
2,828
3,001
3,030
3,622
3,266
3,456

832
1,716

105

157

37
193
472
550
842
993
1,377
926
1,478

2,475
410
451
672
1 132
2,277
3,255
4,341
5,732
5,854
4,880
4,045
3,734
3,286

183

3,774
2,278
5 328
8,889
11,038
10,921
12 617

o
w
H

14,965
16,73S
15 348
13,918
13,385
13,486

fa1

ANNUAL REPORT OF T H E FEDERAL RESERVE BOARD.

Statement of Federal Reserve notes by denominations, printed, shipped to Federal Reserve
Agents, and on hand in reserve vault, Dec. 31, 1915.
Bank.
Boston:
Printed
Shipped
On hand
New York:
Printed
Shipped
On hand
Philadelphia:
Printed
Shipped
On hand
Cleveland:
Printed
Shipped
On hand
Richmond:
Printed
Shipped
On hand
Atlanta:
Printed
Shipped
On hand
Chicago:
Printed
Shipped
On hand
St. Louis:
Printed
Shipped
On hand
Minneapolis:
Printed
Shipped
On hand
Kansas City:
Printed
Shipped
On hand

Fives.

Tens.

Twenties.

Fifties.

Hundreds.

Total.

$18,000,000 $13,600,000 $6,800,000 $2,200,000 $4,400,000 $45,000,000
5,080,000 5,920,000 1,760,000 1,600,000 2,000,000 16,360,000
7,680,000

5,040,000

600,000

107,960,000 129,000,000
36,600,000 45,520,000

51,040,000
15,520,000

6,000,000
2,200,000

8,000,000 302,000,000
6,400,000 106,240,000

71,360,000

83,480,000

35,520,000

3,800,000

1,600,000

195,760,000

20,000,000
5,400,000

15,000,000
4,680,000

7,200,000
2,400,000

2,600,000

5,200,000

50,000,000
12,480,000

14,600,000

10,320,000

4,800,000

2,600,000

5,200,000

37,520,000

17,680,000
2,480,000

15,120,000
3,520,000

10,000,000
4,800,000

2,400,000
1,000,000

4,800,000
800,000

50,000,000
12,600,000

15,200,000

11,600,000

5,200,000

1,400,000

4,000,000

37,400,000

10,000,000
4,800,000

10,400,000
4,880,000

5,680,000
4,720,000

3,400,000
1,800,000

2,400,000
800,000

31,880,000
17,000,000

5,200,000

5,520,000

960,000

1,600,000

14,880,000

10,800,000
6,400,000

7,000,000
7,000,000

4,800,000
4,800,000

1,400,000
1,200,000

2,000,000
1,200,000

26,000,000
20,600,000

200,000

800,000

5,400,000

12,920,000

4,400,000

2,400,000

28,640,000

24,000,000
7,780,000

18,040,000
200,000

8,960,000
800,000

3,000,000
200,000

6,000,000
400,000

60,000,000
9,380,000

16,220,000

17,840,000

8,160,000

2,800,000

5,600,000

50,620,000

11,960,000
4,360,000

8,960,000
2,840,000

4,480,000
2,000,000

1,400,000
400,000

3,200,000

30,000,000
9,600,000

7,600,000

6,120,000

2,480,000

1,000,000

3,200,000

20,400,000

14,000,000
7,640,000

8,160,000
6,480,000

5,040,000
4,080,000

800,000
400,000

2,000,000
400,000

30,000,000
19,000,000

6,360,000

1,680,000

960,000

400,000

1,600,000

11,000,000

8,000,000
8,000,000

6,160,000
5,160,000

3,040,000
2,240,000

800,000
600,000

2,000,000

20,000,000
16,000,000

1,000,000

800,000

200,000

2,000,000

4,000,000

ANNUAL BEPOBT OF THE FEDERAL EESEEVE BOARD.

Statement of Federal Reserve notes by denominations, printed, shipped to Federal Reserve
Agents, and on hand in reserve vault, Dec. 31, 1915—Continued.
Bank.
Dallas:
Printed
Shipped

Fives.

Tens.

Twenties.

Fifties.

Hundreds.

$9,200,000 $7,000,000 $5,760,000 $1,400,000 $1,600,000
5,900,000 6,360,000 5,520,000 1,400,000
400,000

On hand

3,300,000

640,000

240,000

San Francisco:
Printed
Shipped

14,000,000
4,160,000

10,600,000
2,760,000

5,200,000
1,680,000

On hand

9,840,000

7,840,000

3,520,000

Total.

$24,960,000
19,580,000

1,200,000

5,380,000

1,600,000
600,000

3,600,000
2,000,000

35,000,000
11,200,000

1,000,000

1,600,000

23,800,000

VAULT BALANCE, DEC. 31, 1915.
Total printed..
Total shipped.
Total on hand..

$265,600,000 $249,040,000 $118,000,000 $27,000,000 $45,200,000 $704,840,000
.,600,000 95,320,000 50,320,000 11,400,000 14,400,000 270,040,000
167,000,000 153,720,000

67,680,000 15,600,000 30,800,000

434,800,000

Federal Reserve notes by denominations issued through the Federal Reserve Agents to the
banks, also the amounts retired and outstanding, Dec. 31, 1915.
Bank.
Boston:
Issued
Ketired
Outstanding
New York:
Issued
Retired
Outstanding
Philadelphia:
Issued
Retired
Outstanding
Cleveland:
Issued
Retired
Outstanding
Richmond:
Issued
Retired
Outstanding

Fives.

Tens.

$3,620,000
260,000

$4,680,000
210,000

$640,000

$600,000
10,000

$980,000
20,000

$10,520,000
500,000

3,360,000

4,470,000

640,000

590,000

960,000

10,020,000

35,600,000

36,160,000

12,080,000
800,000

1,600,000

4,800,000

90,240,000
800,000

35,600,000

36,160,000

11,280,000

1,600,000

4,800,000

89,440,000

3,840,000
529,000

3,880,000
111,000

2,080,000

9,800,000
640,000

3,311,000

3,769,000

2,080,000

9,160,000

2,120,000
35,000

3,280,000
25,000

4,400,000
20,000

750,000

530,000

11,080,000
80,000

2,085,000

3,255,000

4,380,000

750,000

530,000

11,000,000

4,690,000
110,000

4,990,000
200,000

4,680,000
340,000

1,650,000
260,000

670,000
140,000

16,680,000
1,050,000

4,580,000

4, 790,000

4,340,000

1,390,000

530,000

15,630,000

Twenties.

Fifties.

Hundreds.

Total.

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

Federal Reserve notes by denominations issued through the Federal Reserve Agents to the
banks, also the amounts retired and outstanding, Dec. SI, 1915—Continued.
Banks.

Fives.

Tens.

Twenties.

Fifties.

Hundreds.

Total.

Atlanta:
.

. . $6,480,000
260,000

$7,011,000
291,000

$5,650,000
850,000

$840,000
355,000

$1,245,000
520,000

$21,226,000
2,276,000

Outstanding

6,220,000

6,720,000

4,800,000

485,000

725,000

18,950,000

3,540,000
760,000

200,000

800,000

200,000

400,000

5,140,000
., 760,000

2,780,000

200,000

800,000

200,000

400,000

4,380,000

4,197,000
167,000

2,870,940
70,940

1,928,560
8,560

200,000

9,196,500
246,500

4,030,000

2,800,000

1,920,000

200,000

8,950,000

5,662,000
2,000

4,960,000

3,120,000

110,000

150,000

14,002,000
2,000

5,660,000

4,960,000

3,120,000

110,000

150,000

14,000,000

5,990,000
70,000

3,410,000
10,000

1,360,000
80,000

570,000
170,000

11,330,000
330,000

5,920,000

3,400,000

1,280,000

400,000

11,000,000

Retired

4,620,000
127,000

5,800,000
297,000

4,640,000
256,000

1,070,000
340,000

50,000
15,000

16,180,000
1,035,000

Outstanding

4,493,000

5,503,000

4,384,000

730,000

35.000

15,145,000

2,160,000
170,000

1,520,000
140,000

1,680,000

600,000

800,000

6,760,000
310,000

1,990,000

1,380,000

1,680,000

600,000

800,000

6,450,000

Issued
Retired

Chicago:
Issued
Retired

...

Outstanding
St. Louis:
Issued
Retired
Outstanding
Minneapolis:
Issued
Retired
Outstanding
Kansas City:
Issued
Retired

Outstanding
Dallas:

San Francisco:
Issued
....
Retired
Outstanding

RECAPITULATION.
Total issued . . .
Total retired
Total outstanding

$82,519,000 $78,761,940 $43,058,560
2,490,000 1,354,940 2,354,560
80,029,000

77,407,000

40,704,000

$8,190,000
1,135,000
7,055,000

$9,625,000 $222,154,500
695,000
8,029,500
8,930,000

214,125,000

ANNUAL REPORT OF T H E FEDEBAL RESERVE BOAED.

Fives.

Tens.

Twenties.

Fifties.

Hundreds.

Total.

$5,080,000 $5,920,000 $1,760,000 $1,600,000 $2,000,000 $16,360,000
36,600,000 45,520,000 15,520,000 2,200,000 6,400,000 106,240,0C0
12,480,000
5,400,000 4,680,000 2,400,000
800,000 12,600,000
2,480,000 3,520,000 4,800,000 1,000,000
800,000 17,000,000
4,800,000 4,880,000 4,720,000 1,800,000
6,400,000 6,800,000 4,800,000 1,200,000 1,200,000 20,400,000
800,000
9,380,000
200,000
400,000
200,000
7,780,000
9,600,000
400,000
4,360,000 2,840,000 2,000,000
400,000
400,000 19,000,000
7,640,000 6,480,000 4,080,000
12,440,000
600,000
6,200,000 4,360,000 1,280,000
400,000 19,580,000
5,900,000 6,360,000 5,520,000 1,400,000
600,000
800,000 10,000,000
4,160,000 2,760,000 1,680,000

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

93,800,000

94,320,000 I 49,360,000

13,200,000

265,080,000

$10,000

$20,000

260,000
355,000

520,000

$500,000
800,000
640,000
80,000
1,050,000
2,276,000
760,000
246,500
2,000
330,000
1,035,000
310,000

11,400,000

R E T U R N E D BY F E D E R A L R E S E R V E BANKS.

Boston
New York
Philadelphia
Cleveland
Richmond

$260,000

$210,000

0,000

Atlanta
Chicago
St. Louis
Minneapolis
Kansas Cit y
Dallas
San Francisco.
Total

529,
35,
110,
260,
760.

111,000
25,000
200,000
291,000

20,000
340,000
850,000

167,
2.

70,940

8,560

70,
127,
170,

10,000
297,000
140,000

80,000
256,000

170,000
340,000

15,000

1,354,940

2,354,560

1,135,000

695,000

2,490,000

140,000

8,029,500

TOTAL AMOUNTS FOR WHICH F E D E R A L R E S E R V E AGENTS A R E A C C O U N T A B L E .

Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta.,
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Total

$5,340,000
36,600,000
5,929,000
2,515,000
4,910,000
6,660,000
8,540,000
4,527,000
7,642,000
6,270,000
6,027,000
4,330,000

$6,130,000 $1,760,000 $1,610,000 $2,020,000 $16,860,000
45,520,000 16,320,000 2,200,000 6,400,000 107,040,000
4,791,000 2,400,000
13,120,000
3,545,000 4,820,000 1,000,000
800,000 12,680,000
5,080,000 5,060,000 2,060,000
940,000 18,050,000
7,091,000 5,650,000 1,555,000 1,720,000 22,676,000
200,000
800,000
200,000
400,000 10,140,000
2,910,940 2,008,560
9,846,500
400,000
6,480,000 4,080,000
400,000
400,000 19,002,000
4,370,000 1,360,000
12,770,000
770,000
6,657,000 5,776,000 1,740,000
415,000 20,615,000
2,900,000 1,680,000
600,000
800,000 10,310,000

99,290,000

95,674,940 51,714,560

12,535,000

13,895,000

273,109,500

ANNUAL REPORT OP THE FEDERAL RESERVE BOABD.

Fives.

Tens.

Twenties.

Fifties.

Hundreds.

Total.

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

$640,000
$3,620,000 $4,680,000
35,600,000 36,160,000 12,080,000
3,840,000 3,880,000 2,080,000
2,120,000 3,280,000 4,400,000
4,690,000 4,990,000 4,680,000
6,480,000 7,011,000 5,650,000
200,000
800,000
3,540,000
4,197,000 2,870,940 1,928,560
5,662,000 4,960,000 3,120,000
5,990,000 3,410,000 1,360,000
4,620,000 5,800,000 4,640,000
2,160,000 1,520,000 1,680,000

750,000
1,650,000
840,000
200,000
200,000
110,000
570,000
1,070,000
600,000

$980,000 $10,520,000
4,800,000 90,240,000
9,800,000
530,000 11,080,000
670,000 16,680,000
1,245,000 21,226,000
400,000
5,140,000
9,196,500
150,000 14,002,000
11,330,000
50,000 16,180,000
800,000
6,760,000

Total..

82,519,000 78,761,940 43,058,560

8,190,000

9,625,000 222,154,500

$600,000
1,600,000

RETURNED TO COMPTROLLER FOR DESTRUCTION.
Boston
New York. .
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco

Total

$260,000

$210,000

529,000
35,000

111,000
25,000

$10,000

$20,000

$500,000
640,000
80,000

$20,000

120,000

43,000
170,000

14,000
60,000

4,000

1,157,000

420,000

24,000

61,000
230,000
10,000

20,000

1,631,000

IN HANDS OF F E D E R A L RESERVE AGENTS, DEC. 31, 1915.
Boston
New York
Philadelphia...
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City...
Dallas
San Francisco.
Total

$1,460,000 $1,240,000 $1,120,000 $1,000,000 $1,020,000
600,000 1,600,000
1,000,000 9,360,000 4,240,000
1,560,000
800,000
320,000
360,000
240,000
400,000
250,000
270,000
90,000
220,000
380,000
410,000
270,000
180,000
80,000
715,000
475,000
4,880,000
200,000
330,000
40,000
80,000
290,000
1,980,000 1,520,000
960,000
250,000
200,000
280,000
960,000
670,000
1,364,000
843,000 1,132,000
365,000
2,000,000 1,320,000

$5,840,000
16,800,000
2,680,000
1,520,000
1,370,000
1,450,000
4,880,000
650,000
5,000,000
1,440,000
4,374,000
3,320,000

15,614,000

49,324,000

16,493,000

8,632,000

4,335,000

4,250,000

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

Statement of Federal Reserve notes by denominations since organization of banks, received
by agents, issued to the banks, returned to the Comptroller for destruction, and on hand
Dec. 31, 1915, as reported by Federal Reserve Agents—Continued.
TOTAL AMOUNTS OF FEDERAL RESERVE NOTES ACCOUNTED FOR.
Federal Reserve Agent at—
Boston
New York...
Philadelphia.
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis..
Kansas City...
Dallas
San Francisco.
Total...,

Fives.

Tens.

Twenties.

Fifties.

Hundreds.

To;al.

340,000 $6,130,000 $1,760,000 $1,610,000 $2,020,000 $16,860,000
600,000 45,520,000 16,320,000
2,200,000 6,400,000 107,040,000
929,000 4,791,000 2,400,000
13,120,000
515,000 3,545,000 4,820,000 1,000,000
800,000
12,680,000
910,000 5,080,000 5,060,000 2,060,000
940,000
18,050,000
660,000 7,091,000 5,650,000 1,555,000 1,720,000 22,676,000
540,000
200,000
800,000
200,000
10,140,000
400,000
527,000 2,910,940 2,008,560
400,000
9,846,500
642,000 6,480,000 4,080,000
400,000
19,002,000
400,000
270,000 4,370,000 1,360,000
770,000
12,770,000
027,000 6,657,000 5,776,000 1,740,000
415,000 20,615,000
330,000 2,900,000 1,680,000
600,000
10,310,000
800,000
99,290,000

95,674,940

51,714,560

12,535,000

13,895,000

273,109,500

RECAPITULATION.
Received from comptroller
Returned by banks
Total
Issued to banks
Returned for destruction
On hand Dec. 31,1915
Total

$96,800,000 $94,320,000 $49,360,000 $11,400,000 $13,200,000 $265,080,000
2,490,000
1,354,940
2,354,560
1,135,000
695,000
8,029,500
99,290,000

95,674,940

51,714,560

12,535,000

13,895,000

273,109,500

82,519,000
1,157,000
15,614,000

78,761,940
420,000
16,493,000

43,058,560
24,000
8,632,000

8,190, OO0
10,000
4,335,000

9,625,000
20,000
4,250,000

222,154,500
1,631,000
49,324,000

99,290,000

95,674,940

51,714,560

12,535,000

13,895,000

273,109,500

ANNUAL REPORT OP THE FEDERAL RESERVE BOARD.
Mutilated Federal Reserve notes, by denominations, received from Federal Reserve
for destruction, to Dec. 31, 1915.

Bank.
Boston
CIlftVPlRiTld

Chicago
Dallas
San Francisco
Total

Fives.

Tens.

Twenties.

Fifties.

$278,000
511,000
35 000
120,000
43,000
170,000

$212,000
109,000
25,000
14,000
60,000

4,000

1,157,000

420,000

24,000

Hundreds.

Agents

Total.

$10,000

$20,000

$520,000
620,000
80,000
120,000
61,000
230,000

10,000

20,000

1,631,000

$20,000

VAULT BALANCE (MUTILATED NOTES), DEC. 31, 1915.

Total received
Total destroved
On hand

$1, 157,000
1, 082,000

$420, 000
363, 000

$24,000
10,000

$10, 000

$20, 000

$1, 631, 000
1, 455, 000

75,000

57, 000

14,000

10, 000

20, 000

176, 000

NOTE.—Burned, badly mutilated, and fractional parts of Federal Reserve notes, amounting to $245 have
been identified, valued, and the bank of issue determined.
Amount

of Federal Reserve Bank currency received by Comptroller of the Currency from
Bureau of Engraving and Printing, issued, and on hand Dec. 31, 1915.

Bank.

Cleveland
Richmond
Chicago
Minneapolis...
Kansas City..
Dallas:
Received..
Issued
On hand..
Total on hand.

Fives.

Tens.

Twenties.

Total on
hand.

$1,000,000
200,000
800,000
600,000

$1,000,000
400,000
1,200,000
1,200,000
2,000,000

$1,040,000
400,000
560,000

40,000
10,000
30,000

400,000
280,000
120,000

560,000
480,000
80,000

230,000

2,630,000

5,920,000

2,080,000

10,630,000

$3,040,000
1,000,000
2,560,000
1,800,000
2,000,000

NOTE.—Plates for fives, tens, and twenties, and printing of $5,000,000 have been ordered for San Francisco,
and plates for fives, tens, twenties, fifties, and hundreds engraved for both Boston and New York, and
fives, tens, and twenties for St. Louis, but no currency ordered printed.

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.
COST OF FEDERAL RESERVE NOTES.

The cost to each Federal Reserve Bank of Federal Reserve notes, including paper,
preparing plates, and printing, to December 31, 1915, but exclusive of cost of transmittal is as follows:
Federal Reserve Bank:
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Total

$50,035.37
336,392.93
54,805. 29
51, 566. 85
32,171. 29
29, 962.09
65, 708. 94
33, 602. 08
36,085. 49
22, 574. 59
27,388.85
38,599. 76
778,893.53

INTERDISTRICT MOVEMENT OF FEDERAL RESERVE NOTES.
Amounts

of Federal Reserve notes received from and returned to other Federal Reserve Banks for redemption or credit by each Federal Reserve Bank
during the period Nov. 16, 1914, to Dec. SI, 1915.
Boston.

New York.

Philadelphia.

Cleveland.

Richmond.

Atlanta.

Received. Returned

Federal Reserve Bank.
Received.

Returned. Received. Returned. Received.

Returned. Received.

Returned.

$24,315
234,095
57,405

$575
22,530
1,055

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

$924,655

$240,420

$232,070
29,750
575
1,440
1,255
7,400
3,050
160
550
290
6,330

$954,645
31,690
24,315
69,865
29,800
22,925
3,770
20,305
12,485
22,780
7,205

1,324,615
22,530
42,810
82,285
212,200
72,555
2,885
4,470
8,505
108,735

330,590
246,355
1,539,935
688,435
81,215
55,780
114,625
130,695
327,650
190,490

1,055
57,405.00
4,155 337,750.00
2,525 60,105.00
11,540 11,995.00
3,115
4,645.00
260 10,935.00
260 11,465.00
245 23,915.00
4,165
8,180.00

2,135
6,750
51,280
19,080
560
935
1,170
9,385

Total....

282,870

1,199,785

2,806,245

3,946,190

379,620 1,896,762.50

407,110

$31,690 $29,750.00
320,610 1,340,617.50

$29,800
662,515
60,105
970
19,420

$1,255
82,285
2,525
6,750
91,195

19,420
265
190
350
420
2,540
25

66,925
115,755
600
1,685
40,110
15,465

1,870
1,965
1,825
2,235
144,740
540

73,750

1,013,350

337,185

$69,865
1,513,965
337,750
6,730

$1,440
42,810
4,155
2,135

6,730
970
2,000
240
1,185
1,085
1,405
195

91,195
54,735
29,690
500
1,590
1,545
19,250

37,970

2,126,815

3
H
O
H

INTERDISTRICT MOVEMENT OF FEDERAL RESERVE NOTES—Continued.
Amounts

of Federal Reserve notes received from and returned to other Federal Reserve Banks for redemption or credit by each Federal Reserve
during the period Nov. 16, 1914, to Dec. 81, 1915—Continued.
Chicago.

Federal Reserve Bank.

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

St. Louis.

Minneapolis.

Kansas City.

Dallas.

San Francisco.

Bank

Total.

d
Received.

Returned.

$22,925
77,955
11,995
2,000
265
1,870

$7,400
212,200
11,540
51,280
54,735
66,925

41,040
5,970
950
1,065
8,900

38,155
252,795
192,770
148,680
40,895

174,935 1,077,375

Returned.

Received.

Returned.

Received.

$3,050
72,555
3,115
19,080
29,690
115,755
41,040

$20,305
114,625
10,935
1,185
350
1,825
252,795
24,875

$160
2,885
270
560
500
600
5,970
435

24,875
435
3,090 404,030
7,220 1,569,735
6,625
3,260

$12,485
120,245
10,535
1,085
420
2,115
192,770
404,030
2,535

2,800
1,845
23,140

2,535
1,140
2,195

113,860 2,289,550

454,680

17,250

Received.
$3,770
50,890
4,645
240
190
1,965
38,155

Returned.

Received.

Returned.
$505
10,505
415
1,560
2,845
55,110
1,065
9,220
1,845
19,160

14,160
24,195

$550 $22,780
4,470 308,700
23,915
260
935
1,405
2,540
1,590
144,740
1,685
950 148,680
3,090 1,569,735
1,140
2,945
14,190
14,190
1,055
33,765

784,575

31,720 2,271,590

103,275

Received.

Returned.

Received. Returned

$7,205
181,650
8,180
195
25
540
40,895
6,625
2,195
1,055
725

$6,330 $1,169,795 $291,435.00
108,735 3,817,320 2,854,237.50
4,165
1,879,830 389,780.00
9,385
37,970 419,760.00
19,250
73,750 2,154,085.00
15,465
337,065 1,054,270.00
8,900 1,077,375 178,195.00
3,260 2,289,550 120,750.00
23,140
17,240 454,825.00
24,195
31,575 801,075.00
33,765
76,880 2,290,540.00
256,590 258,450.00

249,290

256,590

1,045

11,064,940 11,267,402.50

d
ft

W
ft
02

Exhibit C.—STATEMENTS OF CONDITION OF FEDERAL RESERVE BANKS.
Combined resources and liabilities of all Federal Reserve Banks as at close of business on the last Friday of each month during 1915.
RESOURCES.
[In thousands of dollars.]
Dec. 31,
1914.

Jan. 29.

Feb. 26.

Gold coins and certificates in vault.
Gold settlement fund
Gold redemption fund

223,641

235,417

248,256

Total gold reserve
Legal tender notes, silver, etc..

229,069
26,578

Total reserve

Commercial paper a
Bankers' acceptances a
United States bonds
Municipal warrants
Federal Reserve notes, net assets
Due from other Federal Reserve Banks, netAll other resources
Total resources..

Mar. 26. Apr. 30.

Aug. 27. Sept. 24. Oct. 29.

Nov. 26. Dec. 30.

May 28.

June 25.

July 30.

222,746
31,360
1,081

212,988
52,140
1,064

211,145
55,930
1,104

229,972
59,050
1,202

218,224
61,960
1,222

245,986
73,830
1,252

266,546
77,293
1,124

653

824

950

219,187
23,426
1,027

235,905
20,882

248,909
29,085

242,168
23,098

238,228
26,518

243,640
31,989

255,187
47,848

266,192
22,092

268,179
19,878

290,224
22,920

281,406
37,058

321,068
37,212

344,963
13,525

255,647
9,909

256,787
13,955

205
734
5,418
7,930
5,931

2,015
11,165
3,179
7,421
7,712

277,994
18,577
1,892
5,406
12,011
3,215
8,088
4,550

265,266
22,001
9,682
6,639
14,940
6,091
5,573
3,019

264,746
22,774
13,812
6,813
18,656
6,909
9,468
4,425

275,629
24,747
9,204
6,947
23,094
7,765
7,435
5,426

303,035
25,996
10,379
7,601
11,509
9,124
8,311
5,501

288,284
29,102
11,625
7,923
16,107
11,029
7,078
5,904

288,057
29,275
13,564
8,836
25,808
12,491
6,990
4,962

313,144
31,373
13,058
9,328
24,945
14,866
7,409
3,577

318,464
30,448
13,619
10,505
25,014
19,723
8,533
3,645

358,280
32,794
16,179
12,919
27,308
19,176
14,053
4,633

358,488
32,308
23,013
15,797
12,220
21,910
20,767
6,547

285,774

302,234

331,733

333,211

347,603

360,247

381,456

377,052

389,983

417,700

429,951

485,342

491,110

428

241,344

237,278

d
>

s
H
O

Combined resources and liabilities of all Federal Reserve Banks as at close of business on the last Friday of each month during 1915—Continued.
LIABILITIES.

Capital paid in.
Government deposits
Reserve deposits, net
.
Federal Reserve notes, net liability
All other liabilities
Total liabilities

Dec. 31,
1914.

Jan. 29.

Feb. 26.

18,051

20,440

36,069

36,105

263,948
3,775

279,516
2,278

290,336
5,328

285,774

302,234

331,733

Mar. 26. Apr. 30.

Nov. 26. Dec. 30.

May 28.

June 25.

July 30.

Aug. 27.

Sept. 24.

Oct. 29.

39,669

54,158

54,200

54,181

54,689

288,217
8,889

294,832
11,038
2,064

292,050
10,921
3,118

311,349
12,617
3,290

306,183
14,965
1,723

316,989
16,738
1,567

54,748
15,000
329,941
15,348
2,663

54,838
15,000
343,554
13,918
2,641

54,846
15,000
397,952
13,385
4,159

54,915
15,000
400,012
13,486
7,697

333,211

347,603

360,247

381,456

377,052

389,983

417,700

429,951

485,342

491,110

(a) MATURITIES OF BILLS ON HAND.

Mar. 26, Apr. 30,
1915.
1915.

May 28,
1915.

June 25,
1915.

July 30,
1915.

7,790

12,907
12,423
8,621

14,333
10,070
11,972

12,065
13,639
11,774
3,249

4,445
10,658
17,209
8,582
1,945

36,586

33,951

36,375

40,727

42,839

Dec. 3,
1914.

Jan. 29,
1915.

Feb. 26,
1915.

Within 10 days
Over 10 but within 30 days
Over 30 but within 60 days
Over 60 but within 90 days
Over 90 days

4,632
3,531
1,746

6,331
4,903
2,721

7,656
7,102
5,711

9,715
14,514
7,454

12,058

9,909

13,955

20,469

31,683

Total

16,738

[In thousands of dollars.]
Maturities.

Aug. 27, Sept. 24,
1915.
1915.

Oct. 29,
1915.

Nov. 26,
1915.

7,487
11,997
15,561
8,173
1,213

6,939
10,595
15,969
8,462
2,102

6,164
11,129
18,325
9,524
3,831

6,467
14,278
16,859
13,696
4,081

44,431

44,067

48,973

55,381

Dec. 30,
1915.

W
O

ANNUAL REPORT OP THE FEDERAL RESERVE BOARD.

Commercial paper, exclusive of acceptances, held by each Federal Reserve Bank on Dec.
SO, 1915, distributed by maturities.
[In thousands of dollars.]
MATURITIES.

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

. ..

Total

Bankers'

Within
10 days.

From
11 to 30
days.

From
31 to 60
days.

From
61 to 90
days.

58
37
41
169
1,029
1,132
487
250
217
630
1,093
86

66
99
65
100
2,718
1,973
1,235
393
164
1,056
1,056
87

92
82
37
170
2,753
2,722
876
374
196
841
1,079
130

19
19
18
68
933
1,273
720
133
212
521
694
84

5,229

9,012

9,352

16.2

27.8

28.9

Over 90
days.

Total.

Per cent.

11
32
74
1,031
687
105
510
533
1,035
63

235
237
172
539
7,507
8,131
4,005
1,255
1,299
3,581
4,957
450

0.7
.7
.5
1.7
23.2
25.1
12.4
3.9
4.0
11.1
15.3
1.4

4,694

4,081

32,368

100.0

14.5

12.6

100.0

acceptances held by each Federal Reserve Bank on Dec. 30, 1915, distributed by
maturities.
[In thousands of dollars.]
MATURITIES.

Boston 1
New York..
Philadelphia
Cleveland
Richmond
Atlanta....
Chicago
St Louis
Minneapolis
Kansas City
Dallas
San Francisco

Within
10 days.

From
11 to 30
days.

From
31 to 60
days.

From
61 to 90
days.

285
748
73
10

1,338
1,977
591
235

2,559
1,844
1,107
257

25
29
14
22

7
481
183
160
105

19
905
239
173
150

2,311
4,146
772
302
150
46
605
210
131
152

6,493
8,715
2,543
804
150
72
2,016
661
478
429

28.2
37.9
11.0
3.5
.6
.3
8.8
2.9
2.1
1.9

188

256

178

652

2.8

1,236

5,265

7,509

9,003

23,013

100.0

5.4

22.9

32.6

39.1

100.0

. . .

Total
Percent
1

Over 90
days.

Total.

Includes $3,000 of trade acceptances bought in the open market.

Per cent.

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

Short-term investments

(municipal

warrants) held by each Federal Reserve Bank on Dec.

SO, 1915, distributed by

maturities.

[In thousands of dollars.]
MATURITIES.

Boston
. .
New York...
Philadelphia.
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas .
San Francisco
Total
Per cent

Within
10 days.

From
11 to 30
days.

From
31 to 60
days.

From
61 to 90
days.

Over 90
days.

227
90
97
79

92
267
40
352

302
385
920
383

630
90
173
39

1,790
437
308
1,993

198
10

Total.

3,041
1,269
1,538
2,846

Per cent.

24.9
10.4
12.6
23.3

330

27
10.3
2.4
7.0
2.3
.6
2.8
100.0

82
26
625
20

715
55
61
35

1,256
292
861
288
72
345

55
12
10
55

206
189
165
168
72
137

721

907

3,339

1,761

5,492

12,220

5.9

7.4

27.3

14.4

45.0

100.0

Amounts of bankers1 acceptances, distributed by classes of acceptors, held by all Federal
Reserve Banks, according to schedules on file with the Federal Reserve Board on the last
Monday of each month in 1915.
Nonmember bank acceptances.
Member
bank acceptances. Trust comState
Private
panies.
banks.
banks.
Feb. 22.
Mar. 31,
Apr. 26,
May 31.
June 28.
July 26.
Aug. 30,
Sept. 27
Oct. 26 .
Nov. 29
Dec. 27.

3,075
4,593
5,294
4,211
5,165
6,274
7,281
8,109
10,902
13,790

7,734
8,848
3,774
4,801
4,832
6,599
5,314
4,419
4,549
5,697

20
20
74
193
275
292

87
110
110
161
367
457
408
237
396
820

Total.

10,906
13,561
9,188
9,173
10,384
13,350
13,077
12,958
16,122
20,599

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

United States bonds held by each Federal Reserve Bank on Dec. 31}1915, distributed by
classes.
2 per cent. 3 per cent. 4 per cent.

Banks.
Boston
New York
PhiladplDhia
Cleveland
Richmond
Atlanta
Chicago
St Louis
Minneapolis
Kansas City
Dallas
San Francisco

$1,000,000

Total.
$1,000,000

2,000,000
400,000 $1,187,000

$770,000

2,000,000
2,357,000

. -

Total

2,525,000
970,000
1,025,000
2,151,350
870,000
1,010,000

1,706,000

11,951,350

3,197,120

4,231,000
970,000
1,328,820
2,151,650
870,000
1,010,000

303,820
300

770,000

15,918,470

Short-term investments (municipal ivarrants) held by each Federal Reserve Bank on Dec.
31, 1915, distributed by classes.
[In thousands of dollars.]
City
warrants.

State
warrants.

All other
warrants.

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

2,274
882
1,304
2,634

382
138
77

485
179
103
143

246

82
325
56
76
568
78
76
74

Total....

8,692

2,001

1,607

16.3

13.0

Per cent

672
170
300
210

5
528
96
43

Total.
3,141
1,199
1,484
2,846
82
330
1,256
342
911
288
76
345
12,300
100.0

Statement showing condition of each Federal Reserve Bank and of the system at close of business on Dec. SO, 1915,
RESOURCES.
[Detailedfiguresby ledger items shown for each bank in first column;figuresin the second column, representing consolidatedfiguresof weekly statement, printed in italics.]
New York.

Boston.
Gold bullion and United States coin
United States gold certificates (including clearing-house certificates)
Gold coin and certificates in vault ..
Gold settlement fund
Gold redemption fund with United States Treasurer
Total gold reserve
Legal tender notes
United States silver certificates
United States silver coin
Legal tender notes, silver, etc

4,279,000.00
5,500.00

6,717,000.00
55,000.00

$55,405.00
6,384,280.00
$168,964,937.50
6,717,000.00
55,000.00

8,695,000.00

$6,439,685.00
8,695,000.00
15,134,685.00

175,736,937.50

18,381,720.00

1,832,380.00
1,264,880.00
339.10

6,164,410.00
1,312,241.00
406.05
361,509.00

7,477,057.05

3,097,599.10

18,743,229.00

183,213,994.55

18,232,284.10

—

8,952,269.79

6, 728,049. 60
986,250.00
3,041,004.95
709,095.00

986,250.00
3,041,004.95

709,095.00

1,268,975.5516,016,710.00
140,000.00

1,628,567.44

H
M

o
w
r

1,268,975.55

2,715,122. 00
1,973,247.50
1,537,814.63
401,387.50

1,973,247.50
1,537,814.63

401,387.50

15,876,710.00
4,254,613.76
586,669.14

2,724,886.03
1,096,318.59

172,146.06
2,542,975.94

237,572.08
8,714,697.71

235,471.40
6,492,578.20

Total bills discounted and bought
United States bonds
Investments (municipal warrants)
Federal Reserve notes on hand
Less liability on Federal Reserve notes
Federal Reserve notes—Net
Due from other Federal Reserve Banks
Less due to other Federal Reserve Banks
Due from other Federal Reserve Banks—net

$14,097,220.00
4,279,000.00
5,500.00

216,405.00
145,104.00

Total reserve
Commodity paper
Trade acceptances
Commercial paper n . s . . . . . .
Bankers' acceptances

$1,447.50
168,963,490.00

$4,000.00
14,093,220.00

Philadelphia.

3,667,944.62

W
O
>

All other resources:
Difference account
Interest accrued on investments
National bank notes and Federal Reserve notes of other banks
Nickels and cents
Commissions paid
Expenses paid in advance
Furniture find eoniprn.pnt
Expense—Current
Expense—Organization
Cost of unissued notes
Due from other Federal Reserve Banks—Account investments

15.00
4,891.22
134,000.00
13.46
997.79
970.00
9,595.24
66,084.37
30,265.19
33,287.30
247,082.77

8,465.14
72,095.00
21.07

10,499.10
261,645.00
101.34
1,540.51
1,684.23
18,491.31
121,691.09
31,700.74
55,772.04
552,843.37

3,965.78
26,980.36
217,713.40
122,335.01
232,086.79

o
H

Premium and discount
Bank premises
Sundry debits
Profit and loss

2,346.40

Total of all other resources, gross
Less liability for:
Unearned discount
Unearned interest on investments
Discount, earned
Interest on investments, earned .. .
Sundry profits
Reserved for Federal income tax
Difference account
Premium and discount
Exchange
Provision for disbursements
Profit and loss
Total deductions

.
.

. , . ._.
553,533.20

686,008.95

1,055,968.73

18,367.70
16,580.88
40.371.96
45,597.74
2,401.60
190.00

25,448.69
3,095.11
67,462.39
88,347.41
16,534.28
584.83
123.26

8,126.21
6,418.24
49,450. 78
62,011.42
3,289.83
239.81
2.52

. .

t-1

113.93
43,064.21
129,538.81

244,774.11

123,509.88

A11 other resources, net
Total resources

26,330.86

430,023.32

441,234.84

926,429.92

32,266,219.31

209,753,184.73

29,454,230.27

Statement showing condition of each Federal Reserve Bank and of the system at close of business on Dec.

30,1915.—Continued.

RESOURCES—Continued.
[Detailedfiguresby ledger items shown for each bank in first column;figuresin the second column, representing consolidatedfiguresof weekly statement, printed in italics.]
Cleveland.
Gold bullion and United States coin
United States gold certificates (including clearing-house certificates)

$1,504,410.00
8,054,900.00

Gold coin and certificates in vault
Gold settlement fund
Gold redemption fund with United States Treasurer

11,042,000.00

Total gold reserve

Legal tender notes
United States silver certificates.
United States silver coin

Due from other Federal Reserve Banks—Net

9,875,000.00
333,500.00

$5,223,120.00
9,875,000.00
333,500.00

1,342,830.63
2,357,000.00
2,846,067.50

$4,872,189.90
3,717,000.00
307,512. 36
8,896,702.28

67,117.55

185,028.75

\7.55

9,081,731.01

15,4

4,836,925.80
183,319.53
3, 111, 149.70
71,665.22

t-1

w
Ul

8,203,060.25
1
82,271.76

82,271.76

330,177.58

291,820.00
2,368,492.66
156,059.24

2,076,777.18
918,795.51
2,212,433.42

o
w

34,650.00
126,973.00
23,405.75

2,406,341.51
216,655.29
4,883,729.44
150,000.00

539,106.09
803,724.54

3,717,000.00
307,512.36

15,431,620.00

21,812,310.25

2,357,000.00
2,846,067.50
291,820.00

$1,421,189.90
3,451,000.00

44,750.00
21,166.00
1,201.55
1,211,000.25

Federal Reserve notes—Net

Due from other Federal Reserve Banks
Less due to other Federal Reserve Banks

$9,559,310.00
11,042,000.00

20,601,310.00

Total reserve.

Atlanta.

$478,220.00
4,744,900.00

1,018,260.00
188,642.00
4,098.25

Legal tender notes, silver, etc

Richmond.

816,975.20
200,490.63
1,157,981.67 ]

616,484.57

All other resources:
Difference account
Interest accrued on investments
National bank notes and Federal Reserve notes of other banks
Nickels and ppnts
Commissions Daid
ExDpnsps Daid in advance

»
11,817.19
88,025.00
.67
1,410.27
2,283.42
20,187.08
136,883.20
37,377.56
42,757.61

Furniture and equipment
Exnpnsfi Cnrrpnt
E xnpnsp——Organization
Cost of unissued notes
Due from other Federal Reserve Banks—Account investments
Redemption account (mutilated currency)
. .

103,190.00

867,500.00

w
o
118,000.00

Prpminm and discount

91,990.94

Sundry debits
Profit and loss

Total deductions
A11 other tesoufces—Net. .
Total Tesoufces

103,190.00

432,732. 94

Total of all other resources—Gross
Less liability for:
Unearned discount
Unearned interest on investments
Discount parned
Interest on investments, earned
Sundry profits
Reserved for Federal income tax
Difference account
Premium and discount
Exchange
-.
.
Provision for disbursements
Profit and loss

985,500.00

4,711.37
17,082.55
42,692.83
71,251.94
823.88
171.76

. .

2,312.50

td
>

5,268.29
..

.
. .

144,315.12
388,417.82

103,190.00

985,500.00

31,150,879.62

24,498,907.22

19,216,953.41
00

Statement showing condition of each Federal Reserve Bank and of the system at close of business on Bet, SO, 1915—Continued.
RE S OURCE S—Continued.
[Detailedfiguresby ledger items shown for each bank in first column; figures in the second column reprenseting consolidated figures of weekly statement, printed in italics.]
Chicago.
Gold bullion and United States coin
United States gold certificates (including clearing-house certificates)
Gold coin and certificates in vault
Gold settlement fund
Gold redempionfund with United States Treasurer
Total gold reserve
Legal-tender notes
United States silver certificates
United States silver coin
Legal tender notes, silver, etc

$2,540,007.50
32,622,340.00
1,256,000.00

Commodity paper
Trade acceptances
Commercial paper n. s
Bankers' acceptances
Total bills discounted and bought
United States bonds
Investments (municipal warrants)
Federal Reserve notes on hand
Less liability on Federal Reserve notes
Federal Reserve notes—Net
Due from other Federal Reserve Banks
Less due to other Federal Reserve Banks
Due from other Federal Reserve Banks—Net
All other resources:
Difference account
Interest accrued on investments

$35,162,347.50
1,256,000.00

6,072,000.00
25,050.00
65,000.00
28,431.00

$2,699,658.00
4,355,000.00
30,000.00
7,084,658.00

620.00
035.00

10,137.00

93,431.00

19,655.00

9,157,481.00

7,104,313.00

6,021,054.26
4,218,000.00
1,255,737.27

970,000.00
291,552.60
817,460.00

1,916,150.39
970,000.00
291,552.60

2,997,558.12
1,630,527.91

1,303, 820.00
860, 513.28
817, 775.00

4,797.57

1,777,291.90
1,303,820.00
860,513.28

817,775.00
4,461, 867.11
22, 603.72

1,367,030.21

9,886,563.96

1,280,485.50
477,806.40

817,460.00

10.00

19,000.00

66,400.00
91,758.08
1,096,762.08
661,230.23

11,094,607.36
1,208,043.40

19.715.46

4,355, 000.00
30, 000.00

37,048,484.50

4,005,390.06
2,015,664.20
4,218,000.00
1,255,737.27
1,694,640.00

$2,967,000.00
6,072,000.00
25,050.00
9,064,050.00

36,418,347.50

$469, 008.00
2,230, 650.00

$2,967,000.00

239,350.00
390,777.00
10.00

Total reserve

Minneapolis.

St. Louis.

4,439,263.1

6,339.17

W
O

National-bank notes and Federal Reserve notes of other banks
Nickels and cents
Commissions paid
Expenses paid in advance
Furniture and equipment
E xpense—Current
Expense—Organization..
Cost of unissued notes
T)ne frorn oth^r Federal "Reserve Tlanks amount investments
Redemp tion account (mutilated currency).
Premium and (iis^onnt.
Bank premises
Sundry debits
Profit and loss

582,355.00
27.77
770.85

2,855.00
79.87
787.88

26,210.18
91,696.63
23,821.47
65, 708.94

20,346.13
154,544.62
15,702.85
34,483.46

54,133.14
57,225.94
21,738.04
38,634.12

3
d
>
o

749.69

Total of all other resources—Gross
Less liability for:
Unearned discount
Unearned interest on investments
Discount, earned
Interest nti investments earned
Sundry profits
Reserve for Federal income tax
Difference account
Premium and discount
Exchange.

203,300.00
2.59

431,204.96

. . .
•

32,322.49
8,825.43
58,652.96
72,443.29
170.64
310.00
7.12
8,177.70
11,753.36
416 88 i

813,028.25

181,793.16

7,306.16
1,048,35
60,505.99
23,731.98
3,046.61
277.77

13,546.00
5,042.71
42,729.90
21,440.00
4,073.11

17,565.64

7,521.64

426 47

15 83

O
>

Profit and loss
Total deductions. .

193 079.87

113 908 97

94,369 19

All other resources—Net

238,125.09

699,119.28

Total resources .

60,362,605.08

15,218,793.48

87,423.97
16,390,400.54

Statement showing condition of each Federal Reserve Bank and of the system at close of business on December SO, 1915—Continued.
RESOURCES—Continued.
[Detailedfiguresby ledger items shown for each bank in first column;figuresin the second column representing consolidatedfiguresof weekly statement, printed in italics.]
Kansas City.
Gold bullion and United States coin
United States gold certificates (including clearing-house certificates)
Gold coin and certificates in vault -•
Gold settlement fund
Gold redemption fund with United States
Treasurer
Total gold reserve
Legal-tender notes
United States silver certificates
United States silver coin
Legal-tender notes, silver, etc
Total reserve
Commodity paper
Trade acceptances
. .
»
Commercial paper, n. s
Bankers' acceptances
Total bills discounted and bought..
....
United States bonds
Investments (municipal warrants)
Federal Reserve notes on hand
Less liability on Federal Reserve notes
Federal Reserve notes—Net
..... .
Due from other Federal Reserve Banks
Less due to other Federal Reserve Banks
Due from other Federal Reserve Banks—Net
All other resources:
Difference account
Interest accrued on investments

$3,833,700.00

Dallas.

3,740,400.00
$8,380,340.00
2,464^000.00

2,464,000.00
107,000.00

107,000.00
10,951,340.00

71,260.00
42,808.00
5,500.00

8,941,000.00
259,800.00

•

2,119,221.95
288,015.84

4 010 353.27
2,119,221.95
288,015.84

572,274.77
425,022.78

870,000.00
71,888.16

$266,545,467.90
77,293,000.00

1,000,475.00
344,978.13
1,300,980.00

3,491,304.32
6,293.31
168,855.78

5,050.00

1,123,362.36
344,961,830.26

9,756,395.00
3,590,536.00
179,423.00
4,764.35
14,089,694.35

16,833.70
433,236.52
652,254.93
4,957,460.53
870,000.00
71,888.16

77,293,000.00
1,123,362.36

2,260.00
2,479.00
25.35

329,676.10
160,820.32

449.22

254,500,100.00
$4,204,930.00
9,880,000.00

14,084,930.00

259,486.95
13,435,016.95

147,251.99

8,652.82

259,800.00
13,175,530.00

214,000.00
96,000.00
4,647,460.53

83,279.22
3,498,201.76
428,872.29

9,880,000.00

' Total.
$12,045,367.90

2,701,280.00
$3,974,730.00
8,941,000.00

53,050.00
62,000.00
144,436.95
119,568.00
11,070,908.00

••

$1,503,650.00

$234,330.00

4,546,640.00

San Francisco.

3
H
w
O

13,526,354.00
358,488,184.26
7,542,667.31
687,845.82
24,140,711.22
23,011,469.66

1 102 325 15
1,000,475.00 15,798,014.45
344,978.13 12,218,997.25
22,049,867.50
140,000.00
1 300 980 00
35,189,032.61
6,411,644.55
3 485 011.01
15.00
80,676.89

55,382,694.01
15,798,014.45
12,218,997.25

fe
w

w
K
W

21,909,867.50

20,766,791.30

National-bank notes and Federal Reserve
notes of other banks
r
Nickels and cents
Commissions paid
Expenses paid in advance
Furniture and equipment
Expense—Current
Expense—Organization
Cost of unissued notes
Due from other Federal Reserve Banks
account investments
Redemption account (mutilated currency).
Premium and discount
Bank premises
Sundry debits
Profit and loss
Total of all other resources—Gross
Less liability for:
Unearned discount
Unearned interest on investments
Discount, earned
Interest on investment, earned
Sundry profits
. . .
Reserve for Federal income tax
Difference account
Premium and discount
Exchange . .. .

126,475.00
1.99
861.03

1,060,890.00
10,991.50

10,500.00
3.56

46,828.85
131,425.64
45,164.51

33,255.41
61,644.66

6,422.59
9,064.32
33,626.49
41,961.96

3,512,830.00
11,243.82
6,368.33
8,903.43
262,450.29
1,047,973.87
361,731.86
554,616.82

9,924.60

9,395.95

9,521.80

1,623,425.32
157,263.00
91,990.94
144,783.85
3,096.09
45,248.61

1 186 172.02

1,367 335.19

116,150. 72

7,912,618.12

21,818.96
741.21
81,100.61
20,421.49
647.21

30,657.67
221.26
146,386.95
829.47
391.19

8,244.89

170,550.14
59,055.74
590,898.21
408,934.80
31,378.35
1,984.17
132. 90
41,914.98
13,089.98
6,277.43
43,064.21

823,499.18

36,000.00

3,263.00

144,783.85

1,543.84
2,860.06
210.00

6,337.50
1,222.69
149.96

Profit and loss
Total deductions
All other resources—Net

1,061,442. 54

Total resources

186,046.73

124,729.48

- -

18 697 193.59
1

o
c

w
Ul
<

w
o
>

1,367,280.91

13,008.75
1,181,288.46

103,141.97

6,545,337.2.

20,684,509.88

21 426 605.61

491,109,885.91

Items in transit, i. e. total amounts due from less total amounts due to other Federal Reserve Banks.

Statement showing condition of each Federal Reserve Bank and of the system at close of business on Dec. SO,

1915—Continued.

LIABILITIES.
[Detailedfiguresby ledger items shown for each bank in first column; figures in the second column representing consolidated figures of weekly statement, printed in italics.]
Boston.

Capital
....
Capital—suspense account.

$5 158,150.00

Capital paid in
Government deposits

Reserve deposits:
Due to member banks
Due to member banks—transit
Due to Reserve city clearing-house banks
Transit account
Return item checks
Cashiers' checks
Expense checks
Total reserve deposits—gross
Less:
Exchanges for clearing house
Checks and other cash items
Dues from member banks—overdrafts
Due from banks and bankers
Due from Reserve city clearing-house banks
Deferred credits
Total deductions
Reserve deposits—net
Due to other Federal Reserve Banks
Less due from other Federal Reserve Banks

New York.

e!
>

$5,269,600.00

$11,055,200.00
7,950.00
$5,158,150.00

Philadelphia.

$11,063,150.00

$5,269,600.00

r
w
ft

c
w
27,243,543.90

181,799,307.21

25,783,564.88

o
.
H

1,315.70
10,787.66

44.35
2,113,342.26
13,198.58

107. 63

27,255,647.26

183,925,892.40

25,783,672.51

115,413.83
15.00
30,833.42

694,711.57
1,409.03
22,648.95

1,577,487.57

K
ft
ft

ft
CO

ft
w
ft

21,554.67

w
o
>

1,315.70
147,577.95

718,769.55
27,108,069.31*

1,599,042.24
183,207', 122.85

11,266,607.05
3,256,010.29

24,18^,630.27

Due to other Federal Reserve Banks—net

8,010,596:76

Federal Reserve note liability.
Less Federal Reserve notes on hand
Federal Reserve notes—net

All other liabilities:
Due to other Federal Reserve Banks—investment account.
Unearned discount
Unearned interest on investments
Discount, earned
Interest on investments, earned
Sundry profits
Provision for disbursements
Profit and loss

7,472,315.12

d
>
w
O

w
H

Total all other liabilities—gross.

O
*4

7,472,315.12

Less:
Furniture and equipment
Expense—current
Expense—organization
Cost of unissued Federal Reserve notes.
Nickels and cents
Total deductions
AII other liabilities—net
Total liabilities

7, fl2,315.12
209,753,184.73

29,454,230.27

Statement showing condition of each Federal Reserve Bank and of the system at close of business on Dec.

a*
o

30,1915—Continued.

LIABILITIES—Continued.
| Detailed figures by ledger items shown for each bank in first column; figures in the second column representing consolidated figures of weekly statement, printed in italics.]
Cleveland.
Capital
Capital—suspense account

$5,941,150.00

Capital paid in
Government deposits

lieserve deposits:
Due to member banks
Due to member banks—transit.
Due to reserve city clearing-house banks
Transit account
Return item checks
Cashiers' checks
Expense checks

Richmond.
$3,353,800.00

$5,941,150.00
5,000,000.00

25,204,595.81

Atlanta.
$2,422,400.00

$3,353,800.00
5,000,000.00

10,901,417.15

5,000,000.00

$2,422,400-00
5,000,000.00

8,404,281.97

o
w
H
O

...

w
5,133.81

9,744.46

97,230.71

25,209,729.62

10,911,161.61

8,501,512.68

2,522.79
596.92
51,976.36

74,439.16
42,746.73
103,077.12
44,838.76

55,096.07

265,101.77

Total reserve deposits—gross
Less:
Exchanges for clearing house .
Checks and other cash items...
Due from member banks—overdrafts
Due from banks and bankers
Due from reserve city clearing-house banks
Deferred credits
Total deductions

25,209,729.62

Less due from other Federal Keserve Banks

10,856,065.54

o
>
8,236,410.91

nut to other Jbtaerai neserve ±iariKs—nei

Federal Reserve note liability
Less Federal Reserve notes on hand..

4,750,000.00
1,294,250.00

6,080,000.00
813,650.00

5,266,350.00

Federal esRerve notes—net

3,455,750.00

All other liabilities:
Due to other Federal Reserve Banks—investment account -.
34,966.04
877.42
229,273.83
1,513.48
4,829.08
313.54

27,132.71
212.54
798.69

Unearned interest on investments.
Reserve discount earned
Interest on investments, earned
Sundry profits
Provision for disbursements
Profit and loss

.
91,948.55

Total all other liabilities—gross

120,092.49

271,773.39

Less:
Furniture and ©QuiDment
E xp ense—Current
Expense—Organization
Cost of unissued Federal Reserve notes .
Nickels and cents

9,500.00
55,473.59
15,058.00
17,368.34
.88

8,545.68
103,025.70
23,597.22
34,058.68
153.61

97,400.81

169,380.89

Total deductions
A11 other liabilities—net
Total liabilities

d
O
W
H

31,150,879.62

22,691.68

102,392.50

24,498,907.22

19,216,953.41

o
b

Statement shovnug condition of each Federal Reserve Bank and of the system at close of business on December SO,

1915—Continued.

LIABILITIES—Continued.

O
to

[Detailed figures by ledger items shown for each bank in first column; figures in the second column representing consolidated figures of weekly statement, printed in italics.)
St. Louis.

Chicago.
Capital
Capital—suspense account
Capital paid in.. ..
GovcTwnent deposits
Reserve deposits:
Due to member banks
Due to member banks—transit
Due to reserve city clearing-house banks
Transit account
Return item checks
Cashiers' checks
Expense checks - .

$6,644,600.00
$6,6U,600.00

53,540,972.32
266,649.10

Total deductions
Res ewe deposits—net
Due to other Federal Reserve Banks
Less due from other Federal Reserve Banks

100,878.99

$2,546,550.00
300.00
$2,781,000.00
1
100 878 99

12,124,877.10

$2,546,850.00

w
o
w
H

13,843,550.54

o
1-3

Total reserve deposits—gross
Less:
Exchanges for clearing house
. . .
Checks and other cash items
Due from member banks—overdrafts
Due fron^ banks and bankers .
Due from reserve city clearing-house banks
Deferred credits

$2,781,000.00

Minneapolis.

. .

1,193.13
49,992.50
60.15

247,734.29

53,858,867.20

12,372,611.39

79,194.97

30.63
35,666.27

61,667.15
.

13,843,550.54

. . .

W
O
140,862.12

35,696.90
53 718 005.08

12,336,914.49

13,843,550.54

Due to other Federal Reserve Banks—net

Federal Reserve note liability
Less Federal Reserve notes on hand
Federal Reserve notes—net

All other liabilities:
Due to other Federal Reserve Banks—investment account
Unearned discount
Unearned interest on investments
Discount earned
Interest on investments earned
Sundry profits
Provision for disbursements
Profit and loss

50
H

Total all other liabilities—gross
Less:
Furniture and equipment
Expense—current
Expense—organizatiom
Cost of unissued Federal Reserve notes
Nickels and cents

Total deductions
A11 other liabilities—n*t - Total liabilities

60 362 605.08
1

15,218,793.48

16,390,400.54

Shown among all other liabilities in weekly statement.
>

Statement showing condition of each Federal Reserve Bank and of the system at close of business on December SO,

1915—Continued.

LIABILITIES—Continued.
[Detailedfiguresby ledger items shown for each bank in first column; figures in the second column representing consolidatedfiguresof weekly statement, printed in italics.)
Kansas City.
Capital
Capital—suspense account

$2,752,816.67

$3,037,800.00

Government deposits

5,000,000.00

Reserve deposits:
Due to member banks
14,359,046.26
Due to member banks—transit
Due to reserve city clearing house banks...
Transit account
Return item checks..
Cashiers' checks
4,387.76
Expense checks
Total reserve deposits—gross—

Total deductions
Reserve deposits—net

Due to other Federal Reserve Banks.

San Francisco.
$3,941,800.00

$2,752,816.67

$3,037,800.00

Capital paid in

Less:
Exchanges for clearing house
Checks and other cash items
Due from member banks—overdrafts
Due from banks and bankers
Due from reserve city clearing-house banks.
Deferred credits

Dallas.

$54,904,866.67
8,250.00
$3,941,800.00

5,000,000.00

9,783,296.47

15,100,878.99
17,539,455.88

6,928.16

400,527,909.49
266,649.10
21,500.00
16,824.05
1,237.48
2,547,937.88
20,186.89

17,561,892.39

403,402,244.89

51,001.87

2,742,964.99
45,431.34
361,422.10
62,114.83
151,000.00
27,400.61

21,500.00
15,508.35
9,476.80

14,363,434.02

9,814,273.27

148,193.23
344.04
33,998.16

288.99
17,276.07
151,000.00
26,084.91

14,180,898.59

9,645,708.21

$54,918,116.6?
15,100,878.99

3,390,333.87

77,086.78

168,565.06

182,535.43

Total.

17,484,805.61

400,011,911.02
11,266,607.05

3,256,010.29

Less due from other Federal Reserve Banks ..
Due to other Federal Reserve Banks—net

Federal Reserve note liability
Less Federal Reserve notes on hand
Federal Reserve notes—net

2,000,000.00
521,505.00

16,535,000.00
3,048,420.00

3,705,000.00
419,015.00
1,478,495.00

3 285 985.00

13,486,S8Q.OO

All other liabilities:
Due to other Federal Reserve Banks—investment account..
Unearned discount.
Unearned interest on investments
Discount earned
Interest on investments earned
Sundry profits
Provision for disbursements
Profit and loss

7,472,315.12
62,098.75
1,089.96
230,072.52
1,513.48
4,829.08
313.54
91,948.55

Total all other liabilities—gross.. .

7,864,181.00

Less:
Furniture and equipment
E xpense—current
Expense—organization.
Cost of unissued Federal Reserve notes
Nickels and cents

18,045.68
158,499.29
38,655.22
51,427.02
154.49

Total deductions from all other liabilities—gross

266,781.70

A11 other liabilities—net
Total liabilities...

i 7,597,399.30
18 697 193 59

20,684,509.88

21,426,605.61

491,109,885.98

1
Difference between above amount and corresponding amount shown in weekly statement—$100,878.99—represents the amount of Government deposits shown separately
in above statement, but included among other liabilities in the weekly statement.

o
>

OS
OS

Exhibit D.—DISCOUNT AND OTHER INVESTMENT OPERATIONS OF FEDERAL RESERVE BANKS.

Amounts of commercial paper, exclusive of acceptances, discounted by the several Federal Reserve Banks during each month from Nov. 16,1914, to Dec.
SI, 1915, and total amounts discounted during 1914 and 1915.
PAPER MATURING WITHIN 30 DAYS.
[In thousands of dollars.]
1915

1914

Federal Reserve Bank.

Novem- Decem- Total in
1914.
ber.
ber.

January.

February. March. April.

May.

June.

SepOcto- Novem- Decem- Total in
July. August. tember.
ber.
ber.
ber.
1915.

Total
since
Per
Nov. 16, cent.
1914.

o
H

Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Total
Percent

181.4
15.1
2,509.9 1,556.6
909.1 642.9
41.1 224.1
49.7 530.1
1.1 257.8
2,143.5
391.1
985.1
149.5
200.0 355.7
3.2
402.6
173.6
47.0
608.5
2.0
7,306.2 5,074.5
18.8

13.0

196.5
103.0
4,066.5 1,204.9
1,552.0
173.9
265.2
30.1
579.8 1,004.4
258.9 362.6
2,534.6
54.7
1,134.6 314.9
7.1
555.7
405.8
55.8
220.6
174.9
610.5
623.0

102.0
878.6
321.3
208.5
573.1
354.1
34.1
26.9
38.7
130.7
221.8
67.7

85.8
6.7
375.9
104.7
302.5
340.6
149.4
46.6
70.9
69.0
140.8
105.7

153.4
52.5
54.2
26.3
46.0
79.7
66.4 109.1
363.3 548.8
174.1 173.9
23.5
44.6
30.3
41.0
11.3
42.8
108.0 . 20.5
180.9 118.0
27.6 374.3

162.6
36.8
210.3
183.0
637.9
199.5
55.7
52.3
46.0
21.6
103.5
101.1

59.7
68.7
225.6
192.0
580.3
175.3
93.2
64.8
29.5
107.3
14.8
104.7

19.2
2.9
701.2
30.0
462.6
218.9
26.6
41.1
42.6
83.2
31.3
40.7

28.0
26.4
283.9
120.3
420.6
186.6
32.4
77.0
50.9
307.9
224.0
71.9

5.0
36.9
216.5
87.3
534.0
258.0
49.9
145.9
60.4
268.7
456.9
40.9

72.9
60.7
74.6
56.9
562. 7
502.1
90.6
259.1
64.7
731.9
254.6

67.8
22.7
65.2
26.9
558.8
293.0
930.2
128.8
46.1
458.8
210.5
16.9

911.9
2,425.8
2,774.1
1,215.2
6,549.0
3,238.7
1,584.9
1,228.7
511.0
2,363.4
2,132.0
1,574.5

12,380.7 4,109.3 2,957.5 1,798.6 1,239.0 1,631.5 1,810.3 1,715.9 1,700.3 1,829.9 2,160.4 2,730.8 2,825.7

26,509.2

31.8

10.6

7.6

4.6

3.2

4.2

5.5

7.0

7.3

68.2

1,108.4
6,492.3
4,326.1
1,480.4
7,128.8
3,497.6
4,119.5
2,363.3
1,066.7
2,769.2
2,352.6
2,185.0

2.9
16.7
11.1
3.8
18.3
9.0
10.6
6.1

2.7
7.1
6.1
5.6

38,889.9 100.0
100.0

2
td

PAPER MATURING AFTER 30 DAYS BUT WITHIN 60 DAYS.
Boston
New York
Philadelphia...
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco..
Total....

10.5
48.3
571.3
102.1
9.7
73.7
31.4
136.7
139.7
806.2
21.9 355.1
557.9 1,253.3
508.1
84.9
23.1
16.8
25.7
47.4
261.0
5.5
89.7
1,929.1 3,250.9
3.1

5.1

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

1.0
31.6
1.4
31.3
99.7
21.8
231.0
79.0

43.9
77.5
65.1
169.8
514.4
448.5
625.9
99.5
30.0
35.1
197.9

Total....

585.6

Percent

11.6
21.5
58.8,
66.0
92.7
673.4 353.2
83.5
46.2 144.8 470.7
83.4
28.4 266.5 224.0
168.1
945.9 1,078.9 2,000.0 1,736.2
377.0 1,389.3 1,254.6 1,274.8
1,811.2 168.2 121.
227.4
593.0 174.8 102.3
70.1
43.3 101.4
37.3
23.1
90.6
38.0
42.5
87.0
308.4 226.1 960.6 663.8
75.0 323.2 252.5
95.2

41.3
131.1
99.2
143.2
104.9
8.6
17.
24.4
58.5
60.5
55.2
63.1
82.0
157.6
92.7
42.9
44.2
43.6
26.4
68.7
170.3 149.0 168.4
44.1
25.2
59.1
33.0
40.3
174.1 157.8 198.7
103.4
174.0 267.
152.9 184.9
, 121.2 1,151.9 1,294.5 1,762.2 1,937.3 1,848.2 1,476.1 1,793.9 1,503.3
751.7
941.8 725.4
755.1 908.0 1,396.2 977.3 1,355.8 1,367.0
67.5
124.7
151.7 245.4
95.0
276.6
376.3 544.0
399.5 292.3 217.1
105.6
107.4
113.3 126.7
234.7
284.
68.8
55.3
111.7
103.8 287.6
187.1
153.5 168.5
126.7
680.4 879.5 652.2
177.6
82.2
162.9 208.3 327.4
544.4
690.6 576.3 597.5 358.9 790.7 1,228.6 996.0 1,045.8 517.8
32.9
80.4
102.3 214.4 183.3 233.9
191.3
94.3
51.7

728.2
1,171.2
1,405.9
1,972.6
18,703.7
13,097.0
2,667.0
2,228.4
1,445.0
3,930.5
8,652.7
1,835.2

787.0
1.2
1,844.6 2.9
1,489.3 2.4
2,140.7
3.4
19,649.6 31.2
13,474.0 21.4
4,478.2
7.1
2,821.4
4.5
1,468.1 2.3
3,973.0
6.3
8,961.1 14.2
1,930.4 3.1

5,180.0 3,627.0 5,421.7 5,257.4 3,500.9 3,800.8 3,905.3 4,512.4 4,990.9 6,180.0 5,327.4 6,242.0 5,071.6

57,837.4

100.0

8.0

91.8

8.2

5.8

8.6

8.3

5.6

6.0

6.2

7.2

7.9

9.8

8.5

9.9

PAPER MATURING AFTER 60 DAYS BUT WITHIN 90 DAYS.

13.1
70.6
5.1

Per cent

313.3
2,620.9
4.3

421.6
39.4
41.1
11.7
75.1
25.1
43.9
41.3
32.3
38.3
30.9
26.4
16.1
1,211.7
48.0
107.0
84.2
47.6
56.1
61.4 215.8
106.3
169.3
142.9
98.4
74.7
918.7
41.4
57.6
19.0
20.6
28.5
42.4
89.1
95.5
59.8 190.4i 163.8 110.6
1,035.0
147.3 120.2
125.4
71.2
53.3
76.8
45.3
66.0
64.0
50.2
92.1 123.2
650.7 995.9 2,033.1 1,430.7 1,510.4 1,667.3 1,793.9 1,485.7 1,218.4 1,208.2 2,202.8 1,531.5 17,728.6
765.4 1,181.2 1,148.6 750.4 738.7 1,092.7 910.0 1,110.5 1,418.6 1,713.2 2,124.4 1,510.3 14,464.0
90.3
359.3 418.1 326.5 428.0 2,507.0
80.9
116.2 212.8 200.1
78.7
96.2
99.9
99.0
375.2 250.0
172.2 2,253.2
134.1 159.3 205.3 213.0 225.4
178.8 133.4
107.5
1,283.9
30.9
98.1
171.8
150.0
41.2
63.2
20.3
177.
107.1
187.3
197.7
38.4
6.4
234.0 368.5
58.7
75.0
89.3
704.8 634.2 340.4 2,896.0
65.5 214.
104.9
9,519.5
341.8 245.1 876.2
762.3 959.3 1,113.4 870.2
668.5
865.5
981.0
947.
3,083.2
101.7 216.4 316.3 227.5
564.9 489.7 367.9
119.7
230.0
57.9
226.5
164.7
5,306.5
6,791.2 5,260.7 57,322.4
3,206.5 2,365.1 3,265.9 5,162.< 4,166.4 4,331.1 5,187.2 5,294.3
5,671.0
4,520.1
8.8
8.6
5.4
6.9
7.1
3.9
8.5
8.7
5.3
11.2
9.4
7.5
44.9
109.1
66.5
201.1
614.1
470.3
856.9
178.5
30.0
48.2
268.5
318.4

466.5 0.8
1,320.8 2.2
985.2
1.6
1,236.1 2.0
18,342.7 30.3
14,934.3 24.7
3,363.9 5.5
4.0
2,431.7
1,313.9 2.2
4.9
2,944.2
9,788.0 16.2
5.6
3,401.6
100.0
60,528.9
100.0

Amounts of commercial paper, exclusive of acceptances, discounted by the several Federal Reserve Banks during each month from Nov. 16, 1914, to Dec.
oc
31, 1915y and total amounts discounted during 1914 and 1915—Continued.
AGRICULTURAL AND LIVE STOCK PAPER MATURING AFTER 90 DAYS.
[In thousands of dollars.]
1915

1914

Federal Reserve Bank.

Novem- Decem- Total in
ber.
1914.
ber.

January.

February. March. April.

May.

June.

Octo- Novem- Decem- Total in
SepJuly. August. tember.
ber.
1915.
ber.
ber.

Total
since
Per
Nov. 16, cent.
1914.

c
r
K
C

Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta.
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Total
Per cent

6.7

1.5
1.1

7.0
9.6
81.9
376.7
318.6
56.4
196.4
356.9
786.1
.63.5

25.0
10.9
38.4
303.2
1,910.1
3,409.6
2,479.8
607.3
1,966.6
1,685.6
6,452.7
794.8

25.0 0.1
.1
10.9
2
39.1
344.1
1.7
1,955.0 9.6
3,430.8 16.9
2,686.9 13.2
614.8 3.0
2,021.6 9.9
1,698.9 8.4
6,694.1 32 9
806.6 4.0

19,684.0

20,327.8 100.0

2.1

68.5
160.2
48.6
25.2
52.3
27.1
193.7
35.7

4.4
10.3
193.3
126.1
135.5
15.9
28.5
45.8
549.2
69.7

643.8

611.4

885.2 1,180.8 1,643.0 2,382.3 2,603.2 1,715.4 1,022.4 1,088.6 1,892.0 2,505.7 2,254.0

3.2

3.0

128.2

515.6

0.6

2.6

4.8
1.4

1.4
39.4
89.7
154.9
46.6
31.2
12.9
52.4
301.8
154.6

0.7
40.9
44.9
21.2
207.1
7.5
55.0
13.3
241.4
11.8

13.4
1.3
47.9

3.3
1.4

0.3

0.7
40.9
40.2
18.7
148.7
7.5
41.6
12.0
193.5
11.8

4.7
2.5
58.4

8.7
3.7
7.5
44.2
369.7
384.4
161.0
105.6
139.1
46.4
1,028.1
83.9

0.1

4.4

6.8

10.0
37.1
251.0
181.0
75.1
37.4
74.0
73.4
832.5
71.5

8.1

11.7

5.3
404.6
340.4
227.9
76.0
457.9
83.5
816.8
86.1

12.3

13.6
217.8
150.6
123.2
70.0
285.5
113.4
649.1
86.0

8.4

0.3
6.1
88.0
92.3
103.3
63.1
127.4
131.2
352.4
51.6

5.0

48.1
50.2
192.0
284.8
25.0
72.2
117.0
252.9
43.8

5.4

0.9

74.1
41.9
517.6
490.4
33.0
198.5
254.8
242.8
38.9

9.3

7.7
15.4
53.5
733.4
464.8
68.5
321.9
383.7
447.3
9.5

12.3

11.1

96.8

100.0
be
>

Total amounts of commercial paper, exclusive of acceptances, discounted by the several Federal Reserve Banks during each month from Nov. 16,1914, to
Dec. 81,1915, and aggregate amounts discounted during 1914 and 1915.
[In thousands of dollars.]
1915

1914

Federal Reserve Bank.

Novem- December.
ber.

Boston
273.6
New York
3,112.9 1,736.2
Philadelphia
920.2 782.4
Cleveland
103.8 571.5
Richmond
...
293.8 1,890.9
Atlanta
(including
47.2 1,080.1
New Orleans branch)
2,990.8 2,419.0
Chicago
1,572.2 341.4
St. Louis
213.4
450.4
Minneapolis
442.7
67.1
Kansas City
212.9
826.0
Dallas
12.6 1,023.3
San Francisco
Total
Percent

9,949.111,461.9
5.4

Total.

Janu- Febru- March. April.
ary.
ary.

May.

June.

Sep- Octo- Novem- Decem- Total in
July. August. tember.
ber.
ber.
ber.
1915.

Total
Per
since
Nov. 16, cent.
1914.

300.2 126.3 139.6 178.2 325.6
191.3 347.4
201.7
75.8
91.3
54.5 170.8
184.2 .. 2,086.7
4,849.1 1,642.3 1,046.3 190.7 216.4 236.0 289.5 334.0
157.0 286.2
137.2
152.3
131.7 4,819.6
1.702.6 277.8 527.3 1,041.4 288.5 368.1 454.
483.1 788.0 337.6 296.2 156.7
117.6 5,137.1
675.3 183.9 606.5 462.2 424.9 431.3 437.2 373.0 276.1 481.3 391.1 328.4
130.1 4,526.0
2.184.7 2,802.5 3,658.7 4,265.1 3,166.2 3,580.8 4,004.3 4,354.2 3,973.6 3,537.4 3,260.2 4,612.9 3,675.5 44,891.4

2,386.9
9,668.7
6,839.7
5,201.3
47,076.1

1.3
5.3
3.7
2.9
25.8

1,127.3 2,677.5 2,944.8 2,890.1 1,857.2 2,238.8 2,358.0 1,991.0 2,329.7 3,193.4 3,466.1
361.8 298.5 591.0 266.0 446.5 648.1 661.9
5,409.8
305.8 953.1 1,227.0
1,913.6 613.9 339.2 266.0 280.8 388.1 400.9 466.8
551.9 612.0 953.6
795.0 800.3 507.1 448.4 605.3
663.8 127.6 115.2 264.0 179.0 334.
509.8 127.3 363.0 276.8 463.9 207.8 333.5 643.3 775.8 1,337.8 1,908.7
1,038.9 936.5 1,729.3 2,230.0 2,651.9 2,484.7 2,477.1 2,136.2 2,044.6 2,686.5 2,364.2
1,035.9 835.4 761.9 744.2 428.9 1,237.5 860.2
792.5 448.3 440.0

35,336.6
14,648.5
8,231.2
5,870.3
11,385.3
27,795.8
8,323.6

19.3
8.0
4.5
3.2
6.2
15.2
4.6

4,715.7 3,547.0 34,209.3
1,258.2 2,220.8
9,238.7
574.5 6,317.6
5,206.5
620.4 409.4
2,629.3 1,808.3 10,875.5
2,636.0 2,379. 9 26,756.9
119.1 233.0 7,287.7

21,411.010,712.8 12,530.3 13,399. 7 10,549.3 12,145.7 13,406.013,238.012,233. 7 14,405.015,050.8 18,269. 715,412.0 161,353.0 182,764.0 100.0
11.7

5.9

7.3

5.8

6.7

7.3

7.2

8.2

10.0

88.3

100.0

to
c

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

Amounts of trade acceptances discounted by each of the Federal Reserve Banks from Sept, 2,
date of first discount, to Dec. 31, 1915.1
[In thousands of dollars.]
Trade acceptances discounted during month of—

Federal Reserve Bank.
September.

New York
Cleveland

Dallas

. . .

San Francisco
Total

November. December.

Total.

4.8
2.7

.9
.6

10.6
259.2
12.3
4.5
2.5
28.8

100.1
402.6
37.1
59.4
22.4

145.7
205.6
13.8
71.8
37.9
19.9

194.1
139.7
104.6
11.5
61.0
3.1

49
450. 5
1,007.1
167.8
87.8
160.8
74.2

319. 5

629.1

496.2

514.0

1,958.8

1.6

Richmond...
,
Atlanta, (including New Orleans branch)..
St Louis
Kansas City

October.

Amounts of commodity paper discounted by each of the Federal Reserve Banks from
8, date of first discount, to Dec. 31, 1915.l

Sept.

[Tn thousands of dollars.]
Commodity paper discounted during month of—

Federal Reserve Bank.
September.

Richmond
Atlanta (including New Orleans branch)..
St Louis
. .
Minneapolis
Dallas
San Francisco 2
Total

. .

96.0
807.3

2.3

905.6

October.

November. December.

364.4
1,657.2
31.2
1.5
4.8
35.7

1,523.4
2,739.1
15.0
12.5
83.7
1.5

897.6
1,828.7
53.6
11.3
148.2

2,881.4
7,032.3
99.8
25.3
239.0
37.2

2,094.8

4,375.2

2,939.4

10,315.0

1
Included in totals of commercial paper, shown in preceding tables.
2 All discounted at regular rates.

Total.

Number of'member banks, by districts, accommodated through the discount of commercial paper during each month from November, 1914, to Dec. 31,1915.
1914

Federal Reserve
Bank.

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

... .

Total number of
member banks
accommodated...
Total number of
national
and
other member
banks

1915

Novem- Decem- January. February.
ber.
ber.

April.

May.

June.

July.

August. SeptemOctober. November.
ber.

6
12
12
91
96
31
24
21
11
58
29

6
10
22
17
100
123
31
24
17
17
70
32

13
13
25
22
112
113
42
32
30
35
102
31

13
18
19
25
122
104
32
34
23
41
138
37

12
18
24
31
129
130
48
44
39
27
153
38

13
20
26
32
137
128
57
44
96
38
166
56

12
20
24
24
155
127
50
34
51
72
136
55

6
10
16
18
146
119
35
52
68
70
129
42

9
13
14
19
127
129
65
54
43
89
160
39

7
8
11
23
126
135
78
45
56
150
128
27

6
8
16
21
128
181
95
54
66
110
129
21

9
12
13
9
112
131
83
45
112
83
118
27

19
49
65
81
226
247
143
129
176
258
360
167

29
54
70
88
226
248
221
131
197
274
366
169

339

398

469

570

606

693

813

760

711

761

794

835

754

1,920

2,073

7,593

7,609

7,618

7,614

7,622

7,623

7,624

7,625

7,640

7,650

7,655

7,646

3
8
7
2
16
9
46
6
8
9
16
2

7
5
13
16
66
59
55
21
22
7
54
14

132

7,584

March.

Total
since
Nov.
16,
Decem- Total
1914.
in
1915.
ber.

d
>
r
w
o
w
H

O
*j

w
c
>

Amounts

of bankers' acceptances purchased by Federal Reserve Banks during each month from date of first purchase (Feb. 19,1915) to Dec. 31,1915, and
total amounts purchased during the calendar year 1915.
[In thousands of dollars.]
Banks.

Boston
New York
Philadelphia
Cleveland.. . . .
Richmond
Atlanta (including New Orleans branch)
Chicago
St. Louis
Minneifvpolis

February.

March.

340
1,660
339
200

1,030
3,343
857
931

1,412
67
210

127

Kansas City
Dallas
San Francisco

April.

550
1,272
437
141

May.

643
867
170
73

June.

573
3,083
550
49

July.

1,064
2,497
801
29«

August.

Septem- October.
ber.

1,064
1,598
328
170

December.

3,347
1,900
709
316

14,105
25,834
7,565
2,963
250
72
5,782
1,801
1,455
1,788

21.7
39.8
11.7

781
1,770
994
137
100

1,792
2,200
430
336

671
263
209
177

742
261
178
179

12,921
5,644
1,950
312
150
72
901
261
163
169

Total.

247

324

235

143

364

121

262

287

247

3,230

5.0

100.0

111

82
424

823

44
29

141
116

2,666

8,356

4,018

2,865

4,701

5,986

4,656

4,548

6,340

7,919

12,790

64,845

Percent....

4.1

12.9

6.2

4.4

7.3

8.9

7.5

6.8

10.0

12.2

19.7

100.0

.4
.1
8.9
2.8
2.2
2.8

367
120
72
86

159
218
59
352

Total

4 fi

498
300
191
194

293
126
101
275

628

Per
cent.

November.

Includes $31,000 of trade acceptances purchased in open market.

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Amounts

of bankers1 acceptances vurchased during each month from date of first purchase (Feb. 19,1915) to December, 31,1915, distributed by maturities.
MATURITIES,
fin thousands of dollars.]

Months.

February..
March
April
May
June
July
August

After 30
Within 30 but
within
days.
60 days.

After 60
days but
within 3
months.

2,610
6,284
3,073
1,583
3,933
5,207
3,842

814
75
2
141
43
339

1,258
870
1,280
627
736
475
1

Total.

2,666
8,356
4,018
2,865
4,701
5,986
4,656

Months.

After 30
Within 30 but
within
days.
60 days.

After 60
days b u t
within 3
months.

Total.

September.
October...
November.
December..

78
493
151
844

211
761
1,780
1,003

4,259
5,086
5,988
110,943

4?548
6,340
7,919
12,790

Total.

2,980

9,057

52,808

64,845

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Includes $31,000 of trade acceptances purchased in open market.

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Amounts of United States bonds (par value) purchased by Federal Reserve Banks each month from date of opening to Dec. 31, 1915.
1914

1915

Novem- Decem- January. Februber.
ber.
ary.

Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago . .
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Total
Per cent
Of the above totals, the following
classes of bonds were purchased
. each month:
2 per cent bonds
3 percent bonds
4 per cent bonds

March.

April.

May.

June.

July. August. September.

October.

$205,000 $1,245,000 1,675,000
25,000
650,000
405,500 116,250

P.ct.
6.3

$200,000 150,000
$154,000 1,496,000
2,000,000
$175,000 259,500 127,500 198,500 $26,500 45,000 672,000 $753,000 2,357,000

12.6
14.8

234,500

100,000 100,000
$400,000
220,000
300,000 $75,000
420,000

$500,000

26,500

2,000
300 435,000

45,000
725,000
55,000
176,100

79,000
105,820
136,000

10,000

1,000,000

Total purchased
and on hand
Dec. 31,1915.

$1,000,000

$200,000 $300,000

$100,000

Novem- December.
ber.

121,000 4,231,000
970,000
141,000 1,328,820
462,500 2,151,650
870,000 870,000
1,010,000

26. ft
6.1
8.3
13.5
5.5
6.3

205,000 2,650,500 2,566,250 1,340,000 75,000 285,000 559,500 477,500 735,300 488,000 1,200,100 2,988,820 2,347,500 15,918,470 100.0
16.1

8.4

0.5

175,000 2,380,500 2,166,250
30,000 270,000 400,000

940,000
400,000

75,000

1.3

16.7

1.8

3.5

3.0

4.6

3.1

7.5

18.8

14.7

100.0

10,000 200,000 350,000 300,000 435,000 1,055,100 2,282,000 1,582,500 ll,951,35p
275,000 359,500 127,500 435,300 53,000 145,000 316,820 385,000 3,197,120
390,000 380,000 770,000

75.1
20.1
4.8

Amounts of municipal

warrants purchased by the Federal Reserve Banks each month from date of opening to Dec. SI, 1915.
[In thousands of dollars.]

1914

1915

Novem- Decem- January. Febru- March. April.
ber.
ber.
ary.
^ Boston
New York..
Philadelphia
Cleveland

!
l

Hi<^hTn e n d

Atlanta, including New Orleans branch
Chicago
St. Louis
.
L. . ...
Minneapolis
Kansas City
Dallas
San Francisco
Total
Percent .

May.

June.

Total
Total since No- Per
cent.
vember,
for
1915.
Sep- Octo- Novem- Decem1914.
July. August. tember.
ber.
ber.
ber.

555.5
320.0
5,261.3 2,041.8
49.6
1,525.1
820.1
37.0

307.7
781.0
458.0
493.5
1.0

635.5 658.7 732.3 434.4 1,149.1 749.0
705.3 1,607.2 1,889.6 3,611.5 4,647.2 422.1
243.1 643.5 321.5 649.7 1,001.0
724.9
513.2 1,004.8 1,660.1
616.3 632.0 348.7

340.2
100.0
218.0
454.5

105.0
29.8

969.5
575.0
35.0
63.4

432.0
150.9
199.4
46.5

375.0
45.8
54.2
70.0

502.5
109.4
195.3
75.4

935.0 1,701.0
327.1 682.6
205.1 394.9
290.1 501.0

4.6
216.6
137.9
68.7
60.6

119.3
10.0
65.0
40.0

55.1

167.6

860.4

338.1

380.4

70.8

23.1

1,525.0
677.0

400.0

677.0

10,087.0

1.1

15.1

668.4

1,706.6
5,006.5
684.1
73.1 .
69.3

670.9
391.9
881.3
188.7
13.0

8,259.9
26,465.4
7,399.8
6,805.0
120.3

325.1
206.3
110.9
583.9
75.5
71.9
88.0

597.4
85.4
194.7
27.7
3.8
155.8

329.7
7,684.6
2,264.8
2,396.2
1,250.2
75.7
2,807.7

2,583.2 3,739.2 3,196.6 4,946.8 4,512.8 7,346.5 11,750.0 4,115.3 1,370.1 9,001.2
3.9

5.6

4.8

7.4

6.8

11.0

17.7

6.2

2.1

13.5

3,210.6 65,859.3
4.8

98.9

8,259.9 12.4
26,465.4 39.8
7,399.8 11.1
6,805.0 10.2
.2
120.3
329.7
7,684.6
2,264.8
3,073.2
1,250.2
75.7
2,807.7

.5
11.6
3.4
4.6
1.9
.1
4.2

66,536.3 100.0

100.0

NOTE.—The amounts of municipal warrants purchased by the Boston, New York, Philadelphia, Chicago, St. Louis, and San Francisco banks as shown in the above statements do not agree with the amounts shown in the reports for those banks, as the above figures represent the amounts charged to investments, whereas the figures given in the
Federal Keserve Agents' reports for the banks represent in part the par value of the warrants purchased.

d
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Total investment operations (bills discounted, bankers1 acceptances, United States bonds and municipal warrants bought), by months, of each Federal
Reserve Bank during the period November, 1914, to Dec. 31, 1915.

[In thousands of dollars.]
1915

1914

Novem- December.
ber.

March.
Total. January. February.

300.2
681.8
273.6
26.6
Boston
3,112.9 1,736.2 4,849.1 6,903.6
New Vork
782.4 1,702.6 1,802.9
920.2
Philadelphia....
675.3 1,004.0
571.5
103.8
Cleveland
293.8 1,890.9 2,184.7 2,802.5
Richmond
47.2 1,080.1 1,127.3 2,677.5
Atlanta
2,990.8 2,624.0 5,614.8 3,131.8
Chicago
613.9
341.4 1,913.6
1,572.2
St. Louis
527.6
213.4 1,127.4 1,340.8
Minneapolis
.
509.8
532.8
67.1
442.7
Kansas City
936.5
826.0 1,038.9
212.9
Dallas
12.6 1,023.3 1,035.9 1,835.4
San Francisco...

Total

799.6
4,748.1
915.9
906.5
3,695.7
2,944.8
2,078.5
394.0
892.2
479.3
1,729.3
761.9

April.

1,515.9 1,511.1
4,314.7 2,193.7
968.6
2,356.4
1,886.7 1,182.2
4,266.1 3,166.2
2,890.1 1,857.2
991.0
3,372.5
557.7
1,128.0
554.4
809.0
785.4
842.2
2,230.0 2,651.9
1,223.3 1,419.5

May.

June.

July.

1,493.0
2,710.2
1,181.6
1,311.3
3,580.8
2,238.8
1,080.5
651.9
448.0
629.8
2,484.7
2,431.9

1,652.7
5,262.1
1,526.3
1,094.4
4,004.3
2,358.0
1,361.6
554.3
1,019.3
435.9
2,477.1
1,433.3

1,900.1
6,442.5
2,083.8
1,311.7
4,354.2
1,991.0
2,094.9
1,093.9
1,196.4
1,127.4
2,136. 2
1,315.9

DecemOctober. NovemAugust. September.
ber.
ber.
2,588.9 1,621.3
6,402.2 2,478.3
2,117.0 2,056.5
1,649.4 2,304.9
3,973.6 3,637.4
2,329.7 3,198.0
2,869.3 1,563.2
1,375.5
869.9
1,020.0
589.1
1,524.1 1,919.4
2,044.6 2,686.5
1,480.7
631.8

2,186.7
2,437.2
1,098.2
1,226.6
3,260.2
3,466.1
2,062.3
1,951.6
934.3
2,301.8
2,364.2
671.8

5,724.4
7,058.8
3,045.8
1,389.5
4,682.2
1,040.8
2,285.5
1,241.8
1,488.1
3,019.8
2,707.9
494.1

Total.

Total
since organization.

3,776.1 25,451.6 25,751.8
6,167.6 57,119.0 61,968.1
2,948.9 22,101.9 23,804.5
1,383.8 18,651.0 17,326.3
3,838.5 45,261.7 47,446.4
3,619.0 34,611.0 35,738.3
3,840.2 26,731.3 32,346.1
920.9 11,353.4 13,267.0
908.1 10,386.5 11,727.3
2,467.5 16,065.4 16,575.2
3,253.7 27,702.6 28,741.5
635.8 14,335.4 15,371.3

9,949.1 12,343.9 22,293.0 23,450.3 20,345.8 26,834.9 17,838.9 20,242.5 23,179.3 27,048.0 29,375.0 23,556.3 23,961.0 38,178.7 33,760.1 307,770.8 330,063. H

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ANNUAL KEPOKT OF THE FEDERAL RESERVE BOARD.

Exhibit E—GOLD SETTLEMENT FUND.
Preparations to'' exercise the functions of a clearing house for Federal Reserve Banks,''
as provided for in sectionl6 of the Federal Reserve Act, were taken up by the Federal
Reserve Board in April, 1915, and on May 8 the following circular and regulation
were issued:
(Circular No. 13, series of 1915.)

CLEARINGS BETWEEN FEDERAL RESERVE BANKS.

Section 16 of the Federal Reserve Act authorizes the Federal Reserve Board, at
its discretion, to exercise the functions of a clearing house for the Federal Reserve
Banks.
Pursuant to the authority of this section the Federal Reserve Board has devised a
plan for the establishment of a gold fund for the weekly settlement of balances arising
out of transactions among the 12 Federal Reserve Banks, to be operated under
the direction of the Federal Reserve Board with the cooperation of the Treasury
Department.
The regulation governing the establishment and operation of this fund is issued
herewith.
(Regulation L, series of 1915.)
CLEARINGS BETWEEN FEDERAL RESERVE BANKS.

I. Statutory provisions under section 16.—"The Federal Reserve Board shall make
and promulgate from time to time regulations governing the transfer of funds and
charges therefor among Federal Reserve Banks and their branches and may at its
discretion exercise the functions of a clearing house for such Federal Reserve Banks
or may designate a Federal Reserve Bank to exercise such functions, and may also
require each such bank to exercise the functions of a clearing house for its member
banks."
II. General provisions.—In the exercise of the functions of the clearing house
authorized under the provisions of section 16, quoted above, the Federal Reserve
Board and the Federal Reserve Banks will be governed by and subject to the following
regulations and the Federal Reserve Board will be the custodian of the funds hereinafter termed the Gold Settlement Fund. The Board will appoint a settling agent,
who shall keep the necessary records and accounts.
III. Deposits in the gold settlement fund.—(a) Each Federal Reserve Bank shall, not
later than May 24. 1915, forward to the Treasury or the nearest sub treasury, for credit
to the account of the Gold Settlement Fund, $1,000,000 in gold, gold certificates, or
gold order certificates, and in addition an amount at least equal to its net indebtedness
due to all Federal Reserve Banks.
(b) The Treasurer of the United States or Assistant Treasurer will, in accordance
with arrangements made with the Treasury Department, advise the Federal Reserve
Board, by mail or telegraph, of the receipt of all funds deposited on account of the
Gold Settlement Fund, and the Treasurer will issue and deliver to the Federal Reserve
Board gold order certificates made " payable to the order of the Federal Reserve Board "
covering the sum so deposited.
(c) Each Federal Reserve Bank shall maintain a balance in the Gold Settlement
Fund of not less than $1,000,000.
(d) Excess balances may, at the convenience of each Federal Reserve Bank, remain
deposited with the Gold Settlement Fund.
IV. Custody of funds.—(a) A safe in the Treasury vault will be set apart for the
exclusive use of the Federal Reserve Board.
(6) To open the Treasury vault, the presence of two persons designated by the
Secretary of the Treasury is required. The combination of the safe set apart for the
use of the Board will be controlled by two persons designated by the Board.
(c) A vault record shall be kept, giving a memorandum of all entrances to the safe, by
whom made, for what purpose, and the certificates deposited or withdrawn. Each
entry on the vault record book shall be signed by the persons having access to the safe.
V. Accounts.—In its relations with other Federal Reserve Banks each Federal
Reserve Bank shall keep an account showing balances " due to " other Federal Reserve
Banks representing the proceeds of items which it has actually collected and payments
and transfers which have been made to it for the account of such other Federal Reserve
Banks and an account showing balances "due from" other Federal Reserve Banks

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

representing the proceeds of items which it has sent to such other Federal Reserve
Banks and payments and transfers which have been made to such other Federal
Reserve Banks for its account.
VI. Procedure.—(a) At the close of business each Wednesday night, each Federal
Reserve Bank shall telegraph to the Federal Reserve Board, confirming such telegram by mail, the amounts in even thousands due to each other Federal Reserve
Bank as of that date, as indicated by its "due t o " account provided for in Rule V.
If Wednesday is a holiday in the State in which a Federal Reserve Bank is iocated,
then such bank shall telegraph, as herein provided, on Tuesday, at the close of business.
(6) The settling agent shall, on each Thursday, make the proper debits and credits
in the accounts of each Federal Reserve Bank with the Gold Settlement Fund, and
shall telegraph to each bank the amounts, in even thousands, of credits to its settlement account, giving the name of each Federal Reserve Bank from which each of its
credits was received and also its net debit or credit balance in the weekly settlement.
(c) Each Federal Reserve Bank shall, on receipt of the telegram from the settling
agent, debit the "due t o " Federal Reserve Banks' accounts, and shall credit the Gold
Settlement Fund; and shall credit the "due from" Federal Reserve Banks' accounts
and charge the Gold Settlement Fund. The difference between the total debits
and credits shall equal the net debit or credit to the Gold Settlement Fund, as advised
in the telegram from the settling agent.
VII. Deficits.—(a) Should the debit settlement balance of any Federal Reserve Bank
be in excess of the amount of its credit in the Gold Settlement Fund, such deficit must
be immediately covered either by the deposit of gold, gold certificates, or gold order
certificates in the Treasury or nearest subtreasury, or by credit operations with other
Federal Reserve Banks which have an excess balance with the Gold Settlement Fund.
Any delay in covering such deficit shall be subject to such charge as the Federal
Reserve Board may impose.
(6) As required in III (c) of this regulation, each Federal Reserve Bank shall maintain a balance in the Gold Settlement Fund of not less than $1,000,000. Should the
credit balance of any Federal Reserve Bank in such fund fall below $1,000,000, such
bank shall restore its balance to that amount in either manner indicated under VIII
(a) of this regulation on or before Tuesday of the following week.
VIII. Excess balances.—Any excess balance shall, on request, either by telegraph or
letter, of the Federal Reserve Bank to which it is due, be refunded by the return to
the reserve bank of the gold order certificates held by the Gold Settlement Fund
properly indorsed; or by the indorsement and delivery to the Treasurer of a like
amount of such certificates for which he will give in exchange bearer gold certificates,
which the Federal Reserve Board may send by registered mail, insured, to the banks,
if they want funds other than gold order certificates, or in lieu of such payment the
Treasurer may by wire or mail direct payment to be made by a subtreasury office
through the medium of the general account, provided funds are held in such office
available for the purpose. Gold order certificates will, when presented at the office
of the Treasurer of the United States or any subtreasury, bearing the signatures of
duly authorized officers of the Federal Reserve Bank, be payable in gold or gold
certificates. If the Treasury finds it necessary to ship from one point to another
in order to have the gold or gold certificates available at the subtreasury to which
such gold order certificates are presented, the Federal Reserve Board will, for the
account of the Gold Settlement Fund, refund any expense incurred by the Treasury
in making such shipments.
IX. Reserve.—Each Federal Reserve Bank shall count as a part of its legal reserve
the funds standing to the credit of its account on the books of the Gold Settlement
Fund.
X. Expenses.—Cost of operation of and shipment of currency by the Gold Settlement
Fund shall be apportioned by a semiannual accounting among the 12 Federal Reserve
Banks on a basis to be hereafter determined by the Board after consultation with the
Federal Reserve Banks.
XI. Audit.—At least once in each three months an audit shall be made of the Gold
Settlement Fund by a representative of the Federal Reserve Board and a representative appointed by the Federal Reserve Banks.
XII.—The Federal Reserve Board reserves the right to add to, alter, or amend these
regulations.
Under this regulation, each Federal Reserve Bank deposited with the Treasurer
of the United States at Washington, or at any Subtreasury $1,000,000, plus the net
amount of its indebtedness to other Federal Reserve Banks. The Treasury Department had agreed to cooperate with the Federal Reserve Board in operating the fund,

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

and under the arrangements thus concluded the several assistant treasurers were to
forward telegraphic advice of deposits received to the Treasurer of the United States
at Washington, who would in turn issue gold order certificates of the $10,000 denomination, payable to the Federal Reserve Board.
To ascertain the amount which each bank should deposit, a preliminary settlement
or clearing was made May 20 on the basis of figures reported by the Federal Reserve
Banks at the close of business May 19. The required deposits, aggregating approximately $18,000,000, were made in the week following this preliminary settlement.
The first regular weekly settlement was made on Thursday, May 27, each Federal
Reserve Bank having on Wednesday evening transmitted to the Federal Reserve
Board advice of the amount due from it to each other Federal Reserve Bank and
after completion of the settlement a telegram was sent to each bank giving the amounts
which other Federal Reserve Banks had reported due it, and the net amount by which
it was debtor or creditor at the clearing. Upon receipt of this telegram each bank
charged the accounts of other Federal Reserve Banks for the amounts it had reported
due to them, and credited their accounts with the amounts which they had reported
due to it, the obligations in each case having been extinguished by the operation of
settling and the transfer of title to gold held in the gold settlement fund. This procedure has since been followed at each Thursday settlement.
The gold order certificates held in the fund are in the joint custody of a settling agent
and deputy settling agent appointed by the Federal Reserve Board, and are deposited by
them in a burglar-proof safe, controlled by double combination lock requiring the presence of both officers to obtain access. This safe is in a vault of the Treasury Department.
Transfers of funds from the credit of one Federal Reserve Bank to that of another
are affected by book entries, upon telegraphic or mail request from the Federal Reserve
Bank making the transfer.
Withdrawals from the fund are effected either by delivery to the Treasurer of the
United States of the certificates, bearing proper indorsement, with a request that he
arrange for payment to the Federal Reserve Bank making the withdrawal at the subtreasury nearest said bank, or by return to the Federal Reserve Bank of the gold order
certificates, indorsed.
Through the procedure above outlined, the Federal Reserve Board has, up to the
close of the year 1915, settled through the gold settlement fund for the 12 Federal
Reserve Banks an indebtedness aggregating $1,052,649,000, with a net change of only
$95,697,000 in ownership of the gold held in the fund, or 8.14 per cent of the total
amount cleared. The direct expense incidental to the administration of the gold
settlement fund in handling these transactions has been approximately $1,150,
principally for equipment and telegraph service.
A noteworthy feature in the operation of the fund has been the avoidance of the
necessity for shipment of funds between Federal Reserve Banks. Statements are
given below, one showing the amount which each bank has deposited and withdrawn,
the amount which each has collected from or paid to other Federal Reserve Banks,
and the amount to which, during the period of operation ending December 31, 1915,
it has been debtor or creditor. A statement is also given showing the places at which
the deposits and withdrawals of funds have been made, from which it will be noted that
at only one sub treasury have the withdrawals exceeded the deposits (New Orleans,
where $3,510,000 was deposited and $7,810,000 withdrawn), and as the fiscal operations
of the Treasury Department had concentrated a surplus of cash at that point, no shipment was necessary to meet this excess of withdrawals.

Condensed summary of transactions, May 20 to Dec. SI, 1915, both inclusive.

Federal
Reserve
Bank of—

Gold
deposited.

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

$3,230,000
87,000,000
12,450,000
3,200,000
9,770,000
6,380,000
12,030,000
3,220,000
1,400,000
3,480,000
7,660,000
5,980,000

Total

155,800,000

Withdrawn.

Withdrawn
by transfer
to Federal
Reserve
Agent.

Excess of—
Total
withdrawn.
Deposits.

270,000
7,930,000
5,000,000

9,550,000
13,700,000
4,260,000
5,000,000
4,000,000
7,000,000
1,900,000
2,050,000

$12,000,000
270,000
10,660,000
13,700,000
6,260,000
7,000,000
4,000,000
7,270,000
9,830,000
7,050,000

25,580,000

52,460,000

78,040,000

$7,000,000
270,000
1,110,000
2,000,000
2,000,000

$5,000,000

$3,230,000
87 000,000
450,000
2,930,000
5,770,000

77,760,000

Withdrawals.

$890,000
7,320,000
3,780,000
2,600,000
3,790,000
2,170,000
1,070,000

Payments to and from other Federal Reserve Banks.
Total debits.

Total credits.

$134,160,000
334,583,000
129,399,000
17,194,000
67,879,000
32,107,000
156,084,000
101,517,000
6,141,000
37,305,000
20,398,000
15,882,000

$135,209,000
253,300,000
138,644,000
25,306,000
78,644,000
43,144,000
151,670,000
111,369,000
13,096,000
43,559,000
31,876,000
26,832,000

1,052,649,000

Net debit.

$81,283,000

4,414,000

85,697,000

Net credit.

Balance to
credit in
fund Dec.
31,1915.

9,852,000
6,955,000
6,254,000
11,478,000
10,950,000

$4,279,000
5,717,000
9,695,000
11,042,000
9,875,000
3,717,000
1,356,000
6,072,000
4,355,000
2,464,000
9,308,000
9,880,000

85,697,000

77,760,000

$1,049,000
9,245,000
8,112,000
10,765,000
11,037,000

Deposits and withdrawals by Federal Reserve Banks, and where made, May 20 to Dec. 31, 1915.
[OOO's omitted.]
Federal Reserve Bank of—
Treasury, subtreasury, or mint
at—

Boston.
Deposited.

Boston
New York
Philadelphia
Cincinnati
Washington
Chicago . . .
Total

New York.

Withdrawn.

Deposited.

Withdrawn.

Philadelphia.
Deposited.

Withdrawn.

Deposited.

Atlanta.

Richmond.

Cleveland.
Withdrawn.

Deposited.

Withdrawn.

Deposited.

Chicago.

Withdrawn.

Deposited.

Withdrawn.

$3 230
$87,000
$12,450

$7,000

$110
$1 500
1,700

$270

i$9,770

$1,110

16,270

3,200

270

9,770

1,110

6,380

to
H
$12,030

3 230

12,450

87,000

7,000

12,030 |

$2,000
2,000

Federal Reserve Bank of—

Treasury, subtreasury, or mint at—

St. Louis.
Deposited.

Boston
New York
Philadelphia
Cincinnati
Washington
Chicago
St. Louis
New Orleans
San Francisco
Denver
Total

Withdrawn.

Minneapolis.
Deposited.

Withdrawn.

Kansas City.
Deposited.

Withdrawn.

San Francisco.

Dallas.
Deposited.

Withdrawn.

Deposited.

Withdrawn.

3 $5,980

$5,000

5,980

5,000

155,800

2 $4,150

$1 400
$3,220

$2,000

$3,480
3,510

25
7,810

Deposited.
$3,230
87 000
12,560
1,500
21,890
13,430
6,700
3,510
5,980

$0.5
$270

By all banks.

94.5
3,220

2,000

1,400

3,480

270

7,660

7,930

Withdrawn.

$7,000.5
1,650
2,000
2,025
7,810
5,000
94.5

25,580

1 Includes a deposit of $5,000,000 made by the Treasury Department.
2 Includes a deposit of $4,000,000 made by the Treasury Department.
3 In addition to the amount shown, $4,400,000 has been deposited with the assistant treasurer of the United States at San Francisco, to the credit, however, of the Federal Reserve
Agent at San Francisco.

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD*
FEDEKAL RESERVE AGENTS' FUND.

The opening of accounts with the Federal Reserve Agents was authorized by the
Federal Reserve Board by a resolution adopted September 8, 1915, for the purpose
of facilitating the adjustment of accounts between the several Federal Reserve Agents
and the Federal Reserve Banks, and the settling agent and deputy settling agent
were instructed to handle deposits received from the Federal Reserve Agents in the
same manner as those received from the Federal Reserve Banks,, with the proviso,
however, that the accounts and records pertaining to the deposits, withdrawals, or
transfers of funds to the credit of the se\eril Federal Reserve Agents should at all
times be kept separate and distinct from those relating to Federal Reserve Banks and
separate and distinct from each other.
*
The fund thus established has been designated the " Federal Reserve Agents' fund "
and amounted on December 31, 1915, to $56,860,000, representing money held by
the Federal Reserve Agents against Federal Reserve notes issued to the Federal
Reserve Banks and against which the banks had deposited the funds in question to
reduce or extinguish their liability for the notes.
GOLD H E L D BY T H E F E D E R A L RESERVE BOARD TO THE CREDIT OF F E D E R A L
RESERVE AGENTS AS AT CLOSE OF BUSINESS DEC. 31, 1915.
Transfers made by Federal Reserve Banks from funds to their credit with the gold settlement
fund to the credit of their respective Federal Reserve Agents with the Federal Reserve
Agents' fund
$52,460,000
Deposits made by Federal Reserve Agents with subtreasuries for credit with Federal Reserve
Agents' fund
4,400,000
Total

56,860,000

Federal Reserve Agent at—
Philadelphia
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
Ban Francisco

$5,000,000
9,550,000
13,700,000
4,260,000
5,000,000
4,000,000
7,000,000
1,900,000
6,450,000

Total

56,860,000

Exhibit F.—INTRADISTRICT CLEARINGS.
Total number of items and amounts cleared by each Federal Reserve Bank to Dec. 31,1915.
Federal Reserve Bank.

Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
New Orleans branch.
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Total

Number
of items
cleared.

Amounts
cleared.

181,209 $272,395,481
262,211 1,334,015,772
493, 168,559
873,271
299,580
139,086,000
569,146
237,877,300
186,421
101,060,344
6,148
18,452,426
122,405 1,303,629,563
936,580
642, 531,753
22,942
23, 323,569
059,619
748,833,696
252,420
127,210,440
438,349
5,129
9,777,081 5,442,023,252

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

Exhibit G.-RECEIPTS AND DISBURSEMENTS OF FEDERAL RESERVE
BOARD.
There is here given a detailed account of receipts and expenditures by the Federal
Reserve Board. The expenses of the Reserve Bank Organization Committee were
paid from an appropriation of $100,000 made by Congress. Of this appropriation there
is a balance of $17,708.15 unexpended.
Under the Federal Reserve Act the Federal Reserve Board is authorized to make
semiannual assessments upon Federal Reserve Banks to cover its expenses. The
first assessment for this purpose was made on November 2,1914.
Disbursements for the Board were, until February 12, 1915, made by the governor
of the Board, on which date the moneys of the Board were deposited in the Treasury
of the United States to the credit of a special fund, a bonded fiscal agent having been
appointed by the Board and authorized to make collections and disbursements.
The funds of the Board are carried in a special account with the Treasurer of the
United States and transfers are made by the governor of the Board to the credit of the
fiscal agent as necessary. The accounts of the Board pass through the hands of the
Auditor for the State and other departments and are given the official examination
required by the Government. The term "auditor's settlement by transfer" under
"Disbursements" covers settlements made by transfers of credit authorized and
directed by the auditor on the books of the Treasury Department. It is used by the
Federal Reserve Board largely in connection with payments to the Bureau of Engraving and Printing for the preparation of Federal Reserve notes. The term "commitments" where used covers all obligations entered into by the Board.
Telegrams paid for by the Federal Reserve Board are billed at the Government
rate. All payments for the Board are first approved either by the Board or the Committee on Budget and Expenditures and the secretary of the Board.
RECEIPTS.

Unexpended balance Jan. 1, 1915
Second assessment (made July 1, 1915)
Reimbursements
Bulletin, subscriptions to
Total available

$139,169.80
108,283. 64
528.07
521. 84
248, 503.35

DISBURSEMENTS.

By governor of Board (Jan. 1 to Feb. 12, 1915)
By fiscal agent (Feb. 13 to Dec. 31, 1915)
Auditors settlements by transfer (Jan. 1 to Dec. 31, 1915)

18, 478. 26
172, 731.19
20, 004.13

Total disbursements
211, 213. 58
Balances on hand Dec. 31,1915, with Treasurer of United States to credit
of—
Fiscal agent
$12, 268. 81
Federal Reserve Board
25, 020.96
37, 289. 77

248, 503. 35

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.
GENERAL STATEMENT.

First assessment, including $239,871.10 for Federal Reserve notes, made
Nov. 2, 1914
$431,768.40
Overpayments first assessment
106.43
Amount assessed for Federal Reserve notes

431,874.83
239, 871.10

To credit of general expenses (including $106.34 overpayment)
Total disbursements to Jan. 1, 1915

192, 003. 73
52, 833. 93

Unexpended balance Jan. 1, 1916

139,169.80

To credit general expenses, 1914
Total commitments to Dec. 31, 1914

192, 003. 73
62, 498.08

Unencumbered balance Jan. 1, 1915

129, 505. 65

Unexpended balance Jan. 1, 1915
Unencumbered balance Jan. 1, 1915

139,169. 80
129, 505. 65

Unpaid commitments Jan. 1, 1915
Available funds during 1915 as per statement
Unpaid commitments Jan. 1, 1915
Commitments during 1915

9, 664.15
248, 503. 35
$9, 664.15
207, 722. 71
217,386.86

Unencumbered balance Dec. 31, 1915
Unpaid commitments Dec. 31, 1915 (estimated)

31,116.49
6,173. 28

Unexpended balance Dec. 31, 1915

37, 289. 77

Detailed statement of expenses.

To and
including
Dec. 31,
1914.
January.

1915

February.

Personal services—Salaries:
Board and its clerks
$29,765.00 $7,449.98 $7,361.64
Secretary's officel
6,641.09 2,563.87 2,472.92
975.00 1,058.33
Counsel's office
1,868.33
Division of audit and examination
1,635.01 1,183.33 1,183.33
Division of reports and sta605.28
602.22
476.66
tistics
3,027.87 1,613.68 1,130.01
Division of issue
50.00
50.00
93.33
Telephone operator
405.00
375.00
788.30
Messengers
60.00
60.00
117.99
Charwomen

March.

April.

May.

June.

July.

August.

SeptemOctober.
ber.

November.

December.

T o t a l for
y e a r 1915.

$7,333.32 $7,333.31 $7,333.31 $7,333.32 $7,333.31 $7,333.31 $7,333.32 $7,333.31 $7,333.31 $7,333.31 $88,144.75
2,468.32 2,388.32 2,338.32 2,312.77 2,318.32 2,318.32 2,359.98 2, 406.15 2,337.21 2,323.32 28,607.82
1,158.33 1,158.33 1,519.44 1,574.99 1,715.82 1,950.00 1,908.34 1,866.66 1,
1,866.67 18,618.57
1,183.33

976.65

1,128.33

1,133.33

1,164.16

1,464.16

1,426.16

1,404.16

14,815.26

597.50
1,293.36
50.00
355.00
60.00

596.66
1,739.31
50.00
355.00
60.00

511.66
1,872.66
50.00
355.00
60.00

558.33
1,837.68
50.00
355.00
60.00

610.83
651. 66
50.00
425.CO
60.00

633.33
651.66
50.00
425.00
60.00

633.33
616.66
50.00
440.00
60.00

608.33
651.66
50.00
375.00
60.00

633.33
651.66
50.00
315.00
60.00

7,128.57
13,361.66
600.00
4,605.00
720.00

44,539.14 14,777.52 14,296.51 14,499.16 14,657.58 15,198.72 15,215.42 14,329.10 114,585.78 14,885.79 14,832.27 14,686.33 14,637.45 176,601.63
Nonpersonal services—Transportation and subsistence of
persons:
Board and its clerks
Secretary's office
Division of audit and examination
Counsel's office
Messengers (car fare)
Transportation of things

86.80

12.00

54.10

288.62

410.37
13.80

46.59

97.44

215.00
28.00

287.70

349.32

538.77

346.42

1,157.11

150.90

21.80
27.22

828.61

1.72

5.00
.69

5.00
1.49
1

5.00

223. 75

116.80

588.69
14.90

5.00
.24

671.99
5.00

308.40

1,656.27
41.80

581.34
11.70

5,351.75
53.82
25.00
2.65

o
^

a
Ei

Ei
pi

El
P3

Correspondence division and division of mail and files abolished and made part of Secretary's Office Dec. 1,1915.
oo
Ox

Detailed statement of expenses—Continued.
To a n d
including
Dec. 31,
1914.

Communication service:
Telephone
Telegraph
Postage
Printing, binding, etc
Engraving
Advertising
Contract repairs
Electricity
Steam (heat)
Other (nonpersonal services)
Supplies:
Stationery
Periodicals
Other
Equipment:
Furniture and office equipment
Books
Office changes and improvements
Reimbursable expenditures (including return of overpayments)

Total
1

Estimated.

$709.59
1,201,61
51.00
3,350.91
58.82
39.15
38.45

January.

February.

$45.08

$69.48

140.66
23.50
1,714.96

239.31
245.89

March.
$36.61
226,42
27.50
155.77
7.10

April.

$58.80
300,33
2,573.14

48.00

.15

30.00

15.00

1,255.93

760.91

34.40

2,040.46
93.25
646.02

209.00
5.25
12.78

58.26
6.00
14.57

7,088.40
27.00

283.62

160.24

541.08

7.00

346.28

106.43

17,958.94

3,365.86

262,

5.58

Decem- Total for
ber. year 1915.

May.

June.

July.

August.

$67.46
277= 20

$62.50
311,23

$81.15
1250.00

$44.52

i$43.00

1250.00

19.87

736.16

i 250.00
20.00
798.28

11.65

8.00

1.58

30.00

55.00
1,462.66

767.64

$57.69
253.71
20.00
990.63

.50
30.00

'6.00
30.00

30.00

October.

i $40.00
1250.00

i$40.00
250.00
30.00
1
728.14 1,649.47
1

250.00

6.67
30.00
15.00

60.00

1915

1.00

15.00

45.00

275.90

90.00

181.07
20.40
7.45

219.02
8.00
8.58

449.04
3.60
40.69

117.65

105.40
15.00

106.40
25.00

309.23
1.25

401.31
92.85

31.12

17.74
7.15
8.63

440.22

50.64

88.22
18.00
2.20

93.74
15.00
16.45

62.90
6.40

123.85
27.25

79.14
22.43

305.63
136.31

101.90
360.00
90.00

18.35
30.00
15.00

1,221.67

15.46
93.03
65.71

$646.29
2,998.86
176.00
12,512.61
257.10

56.15
8.00
33.98

1,662.06
157.11
207.74

418.63

2,768.07
382.07

72 AS

7.00

1,288.05

1,420.74

4,279.31

47.80

56.60

4,603.33

2,170.08

18,143.38 15,584.56 15,919.90 18,936.89 19,802.05 17,385.50

2,107.55

14.00

19.30

2.00

115.39

85.79

2,231.09

1,368.85

2,375.30

2,386.47

433.31
3,523.45

31,120.08

16,436.65 jl6,816.87 16,254.64 17,207.57 17,072. 80 18,160.90 207,722.71

2 Annual report for 1914 gave total expenses to Dec. 31,1914, as $59,229.87. This was necessarily an estimate. The actual payments were $62,498.08.

Exhibit H.—EARNINGS AND EXPENSES OF FEDERAL RESERVE BANKS.
Earnings and current expenses of each Federal Reserve Bank and of the system as a whole from Nov. 16 to Dec. 31, 1914.
EARNINGS.

Boston.

Bills discounted—members
Bills bought—bankers' acceptances
InvestmentsUnited States bonds. .
Warrants
Sundry profits
Total earnings

New
York.

Philadelphia.

$828 $13,927

$2,729

Cleveland.

MinneRichmond. Atlanta. Chicago. St. Louis. apolis.

Kansas
City.

Dallas.

San
Francisco.

$1,322

$1,934

$2,679

$2,761

$2,077 $4^,730

$2,808

$17,625

$9,463

Total
Nov.Dec,
1914.

d
>

$62,883
H

63
891

10
13,927

2,739

2,077

4,730

2,808

107

155

17,814

9,463

1,322

1,934

251
163
220

330

151
178
475

60
196
510

6,687
4,056
148
158

3,419
1,182
197
53

3,321
3,234
135
138

4,125
2,897
1
116

225

809
146

2,679

2,761

63,145

301
1,430

729
1,124
8,353
87

CURRENT E X P E N S E S .
Federal Advisory Council
Governors' conferences
Directors' fees
Legal fees
SalariesBank officers
Clerical staff
Special officers and watchmen.
Allother
Traveling expensesDirectors
Officers and clerks

31
59
1,200

349

3,217
3,136

10,367
3,636
90

3,461
2,777
667

658
440

531
285

188
137
470
25

48
27
920
62

3,750
4,443
917
200

4,783
2,592
20
181

2,663
1,872
170

6,200
5,027
414
588

736
183

742

313

243

63
560

496

5,133
5,543
7

57,126
40,395
2,766
1,434
4,330
1,646

Earnings and current expenses of each Federal Reserve Bank and of the system as a whole from Nov. 16 to Dec. 31,

00
00

1914—Continued.

CURRENT EXPENSES—Continued.

Boston.

Per diem allowances of directors
Telephone
Telegraph
Postage
Expressage
Rent
Insurance and premiums on fidelity bonds
Light, heat, and power
Printing and stationery
Repairs and alterations
All other expenses, not elsewhere specified

New
York.

Philadelphia.

S290

$8
36
34

78
13
198
37
6,500

I
I 2,499
1
| 746

686
1,093

196
4
1,207
760
87

Cleveland.

$310
215
122
611
8
538
1,247

Richmond.

$670
42
72
367
209
392

MinneAtlanta. Chicago. St. Louis. apolis.

$75
23
44
237
813

730
66

172

300

797

286
321

217

2,778
53
116
2,849
354
2,660
23,342
5,528

13,710

25,004

10,756

15,148

12,791

Excess of current expenses over earnings.....; 12.819

11,077

8,017

15,136

8,061

4,316

48
14
1,274

103
72
312

7,124

Total current expensas

$90

$1,010
45

$125
54

30
648
270
1,784
162

254

65
509
816
750
2,173
30
901
62
282

19,866
10,403 I

3,780

Kansas Dallas.
City.

$425

San
Francisco.
$30
33
153

Total
Nov.Dec,
1914.

$3,033
754

70
213
975
99

$39
58
825

446
96

828
6,637
1,668

1,039
166

1,258
1,904

255
1,451

2,415
324
45

20,557
6,892
605

4,296

18,029
1,893

310

196

879
1,124
248

11,647

13,552

15,763

18,207

186,910

10,325

11,618

13,084

15,446

123,765

H
O

7,367

r
w

Earnings and current expenses of each Federal Reserve Bank and of the system as a whole during the calendar year 1915.
EARNINGS.
New
York.

Philadelphia.

Cleveland.

Richmond.

Atlanta.

$9,859

$22,855

11,281

$312,907
858

$227,212

97,135

$17,445
29,605

$29,555

49,038

Boston.

Bills discounted—members
Bills bought—bankers' acceptances.
Investments:
United States bonds

Minneapolis.

Kansas
City.

Dallas.

San Francisco.

Total.

$76,495

$44,836
6,387

$50,489
5,248

$62,715
7,832

$239,558

24,069

$61,707 $1,155,633
13,122
244,664

75,591

7,488
16,325

18,793
20,931

20,631

62,431

9,575

635
289

18,431
18,432

490,689

192,520
10,547
9,161

54,156

15,516
55,972

601

1,541

123,782

824

484

4,609

14,823

3,105

4,148

648

1,505

1,508

64,597

125,566
998

332,218
1,110

1133,276
1,540

113,148
1,410

314,850

233,652

253,409
2,338

78,141

99,609
819

101,401
861

241,987

113,200

771

2,140,457
9,847

j 124,568

331,108

131,736

111,738

314,850

251,071

77,370

98,790

100,540

241,987

113,200

2,130,610

$13,258
902

$5,577
150

717
2,970
1,501

169
1,800
2,871

$7,871
951
2,419
897
1,320

$108,315

931
422

$5,928
297
728

$5,511

785
317

$4,753
697
1,003
339
3,410
1,924

32,373

40,750
24,032

443,191
382,259

113

25,013
7,814

6,351
57,916
2,402

Warrants
Commissions received
S u n d r y profits
Total earnings
Deduct commission paid.
Earnings

Chicago. St. Louis.

201

233,652

171,724
13,150

CURRENT EXPENSES.

Assessment account expenses of Federal
Reserve Board since July 1
Federal Advisory Council
Governors' conferences
Federal Reserve Agents' conferences
Directors' fees
Legal fees
Salaries:
B a n k officers
Clerical staff
Special officers a n d w a t c h m e n
All other

$9,610
410
484
283
6,938
1,200

.....
.1.

32,050
18,641
322

$21,841
1,000
1,440
267

$10,523
343
912
218

$11,901
386
774
244

$6,710
87
851
202

$4,832

7,340
2,250

3,153
1,969

2,090
2,500

3,260
941

4,925
1,304

2,430
5,500

4,460

68,033

32,580
31,309
5,384

30,083

25,978
24,736
1,026
1.389

26,444
24,674
2,484

50,000
42,225

51,858
35,164

27,542

36,089
1,133

20,745

25,500
31,681

4,777
3,434

1,650
1,185

1,799

2,319

66,708
2,860
1

403
895
224

Including $20,503 appreciation on United States bonds.

1,387
524

26,255
1,146
1,806

7,013
11,746
4,299
44,096
21,960

oo
CD

JSarnings and current expenses of each Federal Reserve Bank and of the system as a vjhole during the calendar year

1915—Continued.

CURRENT EXPENSES—Continued.
Boston.
Traveling expenses:
Directors
Officers and clerks
Per diem allowances of directors
Telephone
Telegraph
Postage
Expressage
Rent
Insurance and premiums onfidelitybonds.
Light, heat, and power
Printing and stationery
Repairs and alterations
All other expenses not elsewhere specified.
Total current expenses
Excess of earnings over current expenses..

New
York.

$1,072

$2,859

755
1,370
1,017
125
1,983

930
2,290
1,614
410
4,228
797

Philadelphia.

Cleveland.

$1,174
217

$2,170
1,115
1,420
894
190
3,234
563

1,068
959
63

13,400
1,345
971
2,788
474
5,028

39,497
1,603

19,350

2,848
1,572
7,720
2,761
1,138
3,291
535
1,198

102,433

256,342

22,135

74,766

2,167

10,782
243

6,398
2,298

Richmond.

$1,951
455
1,880
306
271
2,911
2,712
5,823
1,862
672

MinneAtlanta. Chicago. St. Louis. apolis.

Kansas
City.

$953
674
940
543
274
1,864
345

$3,854

$3,579
1,463
2,518
291
504
3,468
8
7,852
1,852

$1,468
927
790
1,264
529
4,311
2,101
25,176
2,731
1,294

4,039
1,780

91
4,729
107

3,153

1,677

3,669

7,507
995
4,244

110,935

108,050

91,519

96,316

20,801

3,688

223,331

137,336

1,375

$1,380
935
1,170
767
663
4,892
690
16,725
1,822
4,833
136

5,000
1,144
68
3,808
507

369
3,891
537
359
9,372
4
8,500
1,188
986
7,721

Dallas.

$1,866
1,022
1,332
581
346
3,047
5,729
8,405
5,401
178

San FranTotal.
cisco.

$168
1,306
330
407
203
1,471
220
15,656
667

$22,494
10,168
18,999
9,180

3,039
2,258

3,937
43,629
16,908
160,152
24,674
5,658
60,864
8,041
50,319

109,875

109,213

1,490,729

132,112

3,987

639,881

2,035

87
3,892

5,116
98
2,912

176,965

80,367

112,401

74,106

18,423

111,861

260
4,875

w
H

i Deficit of operations.

o
>

EXPENSES OF THE FEDERAL ADVISORY COUNCIL AND OF THE CONFERENCES OF THE GOVERNORS AND OF THE FEDERAL RESERVE AGENTS FROM
DATE OF ORGANIZATION TO DEC. 31, 1915.

Below are given the expenses of the meetings of the Federal Advisory Council and of the conferences of Federal Reserve Agents and of the
Governors of the Federal Reserve Banks. These conferences have been held in order to facilitate, through exchange of views, the development
of the best methods of dealing with the problems and management of the Federal Reserve Banks and the Federal Reserve Agents' offices. Two
conferences of the Federal Reserve Agents have been held and G.Ye conferences of the Governors of the Federal Reserve Banks.*

Federal Reserve Bank.

Federal
Federal Governors' Reserve
Advisory conferences.
Agents'
Council.
conferences.

Total.

Federal Reserve Bank.

Federal
Federal Governors
Reserve
Advisory conferences.
Agents'
Council.
conferences.

Total.

o
w
H

Boston
New York
Philadelphia.
Cleveland
Richmond
Atlanta
Chicago

$410
1,000
374
574
135
403
1,153

$543
1,440
912
911
878
958

$283
267
218
244
202
224
317

$1,236
2,707
1,504
1,729
1,215
1,585
2,418

St. Louis
Minneapolis..
Kansas City..
Dallas
San Francisco

357
1,387
951

Total...

7,742

$150
848

1,181
924
524
2,720

$422
339
717
169
897

$1,503
2,368
1,998
2,080
4,568

12,870

4,299

24,911

$931

i These items of expense are included in the general tabular summary of expenses and earnings herewith given. They are segregated for convenience of reference.

o
H

t- 1

w
GO

Organization expenses, also cost of Federal Reserve notes and equipment for the period November, 1914, to December 31, 1915.

Expenses prior to Nov. 16,1914
Assessments, account expenses Federal
Reserve Board, prior to July 1,1915
Total organization expenses
Cost of Federal Reserve notes
Cost of furniture and equipment:
Equipment
Vaults
Machines
Other
Total cost of furniture and equipment.

Boston.

New
York.

Philadelphia.

Cleveland.

Richmond.

Minneapolis.

Kansas
City.

FranDallas. San
cisco.

Total.

$12,999

$30,967

$13,305

$15,866

$12,012

$15,255

$16,641

$5,854

$13,205

$15,699

$14,556

$19,809

$186,168

17, 266

41,368

18,396

21,511

11,556

8,342

23,307

9,849

8,533

9,880

10,164

13,817

193,989

30,265

72,335

31,701

37,377

23,568

23,597

39,948

15,703

21,738

25,579

24,720

33,626

380,157

50,535

345,887

55,772

51,772

31,766

34,058

65,709

34,483

38,634

25,057

28,844

42,188

804,705

9,543

8,941

4,538

3,899

2,726
1,496
4,323

9,351
6,960
7,364
2,535

9,960

9,291
4,662

4,940
9 540
4,372
1,335

10,013
373

6,077
44,351
3,682
49

5,374
15,071
12,314
14,070

0,376
19,466
7,388
25

. 1,069
600
4,753

72,794
97,484
80,746
33,596

1,804

8,145
9,894

11,347

26,980

18,491

20,187

11,849

8,545

26,210

20,346

54,159

46,829

33,255

6,422

284,620

7,297
653

Atlanta. Chicago.

St.
Louis.

W
O
>

Organization expenses November, 1914, to December 31, 1915.
Boston.

New
York.

Philadelphia.

Cleveland.

Richmond.

Expenses prior to Nov. 16, 1914
Assessment, account expenses Federal Reserve Board prior to July 1,1915
Cost of Federal Reserve notes used prior to
Dec. 31,1915, not offset by current earnings
Deficiency in earnings to Dec. 31,1915
Depreciation, furniture and equipment

$12,999

$30,967

$13,305

$15,866

$12,012

$15,255

$16,641

17,266

41,368

18,396

21,511

11,556

8,342

23,307

2,586

150,000

Tfctal
Less amounts charged against current
earnings to Dec. 31,1915

34,603

Organization expenses Jan 1,1916.. .

Atlanta. Chicago.

9,014
9,383

St.
Louis.

Minneapolis.

Kansas
City.

Fran- Total.
Dallas. San
cisco.

$5,854

$13,205

$15,699

$14,556

$19,809

$186,168

9,849

8,533

9,880

10,164

13,817

193,989

12,120
69,346

10,603

13,805
23,479
5,000

7,273
11,459

105,401
113,667
6,752

97,169

32,341

52,358

605,977

1,752
122,335

31,701

55,774

184
34,603

122,335

31,517

55,774

23,568

23,597

39,948

23,568

23,597

39,948

67,863

24,720
24,720

97,169

32,341

67,863

112,017
52,358

g
to
H

493,960

iCost of notes used from July 1 to Dec. 31, $63,800, charged to current expenses.
>

to
ft

w
c
>

Cost of Federal Reserve notes, November, 1914, to Dec. SI, 1915.
Boston.

Cost of Federal Reserve notes up to Dec. 31,
1915
Less cost of notes used u p to Dec. 31,1915:
Charged to current expenses
Charged organization expense
Total
Cost of unissued Federal Reserve notes Jan.
1,1916

NewYork.

$50,535 $345,887

Philadelphia.

$55,772

Cleveland.

Richmond.

$51,772

$31,766

$34,058

$65,709

14,398

24,556

5,329

Minneapolis.

Kansas
City.

$34,483

$38,634

$25,057

12,120

8,098
10,603

13,805

Atlanta. Chicago. St. Louis.

FranDallas. San
cisco.

Total.

$28,844

$42,188

$804,705

7,273

157,017
105,401

9,316
2,586

63,800
50,000

12,600

11,902

113,800

12,600

9,014

14,398

24,556

5,329

12,120

18,701

13,805

18,920

7,273

262,418

38,633

232,087

43,172

42,758

17,368

9,502

60,380

22,363

19,933

11,252

9,924

34,915

542,287

9,014

18,920

Cost offurniture and equipment (including vaults), November, 1914, to Dec. 31, 1915.

fJogt rt flCi'iipiTieTit

Depreciation allowance
Balance Jan. 1,1916

Boston.

NewYork.

Philadelphia.

Cleveland.

Richmond.

Atlanta. Chicago. St. Louis. Minneapolis.

Kansas
City.

$11,347
1,752

$26,980

$18,491

$20,187

$11,849
2,349

$8,545
2,317

$26,210
3,210

9,595

26,980

18,491

20,187

9,500

6,228

23,000

FranDallas. San
cisco.

$20,346

$54,159

$46,829
5,000

$33,255

$6,422

$284,620
14,628

20,346

54,159

41,829

33,255

6,422

269,992

Total.

o
w

Recapitulation

of earnings and expenses of each Federal Reserve Bank and of the system as a whole from organization to Dec. 31 ,1915.

Earnings:
Nov. 16 to Dec. 31,1914
Jan. 1 to Dec. 31,1915 .
Appreciation on United States bonds
Total
Current expenses:
Nov. 16 to Dec. 31,1914..
Jan. 1 to Dec. 31,1915
Total . .
Excess of earnings
Excess of current expenses
Amortization:
Cost of Federal Reserve notes used
Furniture and equipment
Total

Boston.

New
York.

$891
124,568

$13,927
331,108

125,459

Philadelphia.

Atlanta. Chicago. St. Louis. Minneapolis.

Kansas
City.

FranDallas. San
cisco.

Cleveland.

Richmond.

$2,739
111,233
20,503

$2,077
111,738

$4,730
314,850

$2,808
233,652

$17,814
251,071

$9,463
77,370

$1,322
98,790

$1,934
100,540

$2,679
241,987

$2,761
$63,145
113,200 2,110,107
20,503

345,035

134,475

113,815

319,580

236,460

268,885

86,833

100,112

102,474

244,666

115,961 2,193,755

13,710
102,433

25,004
256,342

10,756
110,935

15,148
108,050

12,791
91,519

7,124
96,316

23,342
176,965

19,866
136,313

11,647
80,367

13,552
112,401

15,763
109,875

186,910
18,207
109,213 1,490,729

116,143

281,346

121,691

123,198

104,310

103,440

200,307

156,179

92,014

125,953

125,638

127,420

9,316

63,689

12,784

215,270

133,020

68,578

119,028

8,098
69,346

9.383

23,479

11,459

516,116

113,800

12,600

9,014

14,398
2,349

24,556
2,317

5,329
3,210

12,120

18,701

13,805
5,000

18,920

7,273

262,418
14,628

13,654

113,800

12,600

9,014

16,747

26,873

8,539

12,120

18,701

18,805

18,920

7,273

277,046
217,463

65,523

151,940

Organization expenses to Dec. 31,1915

30,265

72,335

31,701

37,377

23,568

23,597

39,948

15,703

21,738

25,579

24,720

33,626

Total
Deduct excess earnings
Add deficit in earnings

43,919
9,316

186,135
63,689

44,301
12,784

46,391

192,255
215,270

50,470
133,020

48,487
68,578

27,823

40,439
8,098

44,384

109,163
119,028

40,899

Organization expenses, Jan. 1,1916..
Profit and loss account credit

34,603 U22,335

9,383

1,677,639

11,902
1,752

Dividends paid

Profit and loss account debit

Total.

31,517

69,346

55,774

97,169
23,015

82,550

20,091

11,459

23,479
32,341

52,358

67,863
9,865

111

380,157
874,666
1 516,116
493,960
135,521
111
CD

Cost of Federal Reserve notes used from July 1 to Dec. 31, 1915, and not offset by earnings—Sill—carried to profit and loss.

ANNUAL "REPORT OF T H E FEDERAL RESERVE BOARD.

Exhibit I.—ESTIMATED EXPENSE AND DIVIDEND REQUIREMENTS OF
FEDERAL RESERVE BANKS.1
The accompanying table presents the capital, estimated expenses, and dividend
requirements of each of the banks:
Paid-in capital, estimated expenses, and dividend requirements of the Federal Reserve Banks.
Estimated yearly-

Bank.

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

Paid-in
capital.

Total
expenses and
dividend
Expenses. requirements. requirements.

Reserve
deposits.

Total capital
and deposits.

$5,162,000
10,982,000
5,270,000
5,946,000
3,366,000
2,419,000
6,625,000
2,797,000
2,487,000
3,020,000
2,757,000
3,931,000

$18,652,000
147,299,000
18,637,000
17,272,000
7,544,000
5,202,000
47,269,000
13,068,000
8,736,000
10,191,000
6,002,000
12,444,000

$23,814,000
158,281,000
23,907,000
23,218,000
10,910,000
7,621,000
53,894,000
15,865,000
11,223,000
13,211,000
8,759,000
16,375,000

$110,000
300,000
130,000
120,000
100,000
100,000
180,000
125,000
86,000
120,000
130,000
110,000

$310,000
659,000
316,000
357,000
202,000
145,000
398,000
168,000
149,000
181,000
165,000
236,000

$420,000
959,000
446,000
477,000
302,000
245,000
578,000
293,000
235,000
301,000
295,000
346,000

54,762,000

312,316,000

367,078,000

1,611,000

3,286,000

4,897,000

Dividend

Portion offunds to be hept employed to meet expenses.

Bank.

At 3 per
cent net.

Per
cent
of
paidin

At 4 per
cent net.

It
$3,666,000
Boston
10,000,000
New York
Philadelphia... 4,333,000
4,000,000
Cleveland
3,333,000
Richmond
3,333,000
Atlanta
6,000,000
Chicago
4,167,000
St. Louis
2,866,000
Minneapolis
Kansas City— 4,000,000
4,333,000
Dallas
San Francisco.. 3,666,000

71 $2,750,000
91 7,500,000
82 3,250,000
67 3,000,000
99 2,500,000
137 2,500,000
91 4,500,000
149 3,125,000
115 2,150,000
133 3,000,000
157 3,250,000
93 2,750,000

Per
cent
of
paidin
capital.

At 5 per
cent net.

53 $2,200,000
68 6,000,000
61 2,600,000
51 2,400,000
74 2,000,000
103 2,000,000
68 3,600,000
112 2,500,000
86 1,720,000
99 2,400,000
118 2,600,000
70 2,200,000

At 6 per
cent net.

Per
cent
of
F u n d s inpaid- vested on
in
Sept. 3,
capi1915.
tal.

Per
cent
of
paid
in
capital.

42 $1,833,000
55 5,000,000
50 2,167,000
40 2,000,000
60 1,666,000
83 1,666,000
54 3,000,000
89 2,083,000
69 1,433,000
79 2,000,000
94 2,167,000
56 1,833,000

35 $6,574,000
45 15,181,000
41 5,041,000
34 3,563,000
50 8,463,000
69 5,312,000
45 9,234,000
74 2,964,000
58 4,120,000
66 3,686,000
79 7,061.000
47 4,613,000

127
138
96
60
251
220
139
106
166
122
256
117

Per
cent
of
paidin
capital.

Portion of funds to be hept employed to meet expenses and dividend requirements.

Bank.

Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago

St. Louis
Minneapolis
Kansas City
Dallas
San Francisco

Per
Per
At 3 per cent of At 4 per cent of At 5 per
cent net. paid-in cent net. paid-in cent net.
capital.
capital.
$14,000,000
31,967,000
14,867,000
15,900,000
10,067,000
8,167,000
19,266,000
9,767,000
7,833,000
10,033,000
9,833,000
11,533,000

271 $10,500,000
291 23,975,000
282 11,150,000
267 11,925,000
7,550,000
299
6,125,t)00
338
14,450,000
291
7,325,000
349
5,875,000
315
7,525,000
332
7,375,000
356
8,650,000
293

203
218
211
200
224
253
218
262
236
249
267
220

Per
cent of
paid-in
capital.

$8,400,000
19,180,000
8,920,000
9,540,000
6,040,000
4,900,000
11,560,000
5,860,000
4,700,000
6,020,000
5,900,000
6,920,000

i Published in Federal Reserve Bulletin, Oct. 1, 1915.

163
175
169
160
179
202
174
209
189
199
214
176

Per
At 6 per cent of
cent net. paid-in
capital.
$7,000,000
15,983,000
7,434,000
7,950,000
5,033,000
4,084,000
9,633,000
4,884,000
3,916,000
5,017,000
4,916,000
5,767,000

135
145
141
134
150
169
146
175
157
166
178
147

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.
Exhibit J.—PERSONNEL AND SALARIES.
Annual salaries paid by Federal Reserve Banks in the year ending Dec. 31, 1915.
FEDERAL RESERVE BANK OF BOSTON.

FEDERAL RESERVE BANK OF NEW

YORK—Continued.
Governor
$15,000
Federal Reserve Agent. 10, 000

STAFF—continued.
$25, 000

STAFF.

1 at $5,000
5,000
1 at $3,500
3,500
2 at $1,800
3,600
3 at $1,600
4,800
1 at $1,200
1,200
1 at $1,000
1,000
4at$900
3,600
2at$780
1,560
2at$600
1,200
lat$420
420
_
25,880
18
Total
50,880
Deputy Federal Reserve Agent $25 per
day when serving in the absence of the
Federal Reserve Agent.
Counsel, $1,200 per annum.
FEDERAL RESERVE BANK OF NEW YORK.

Governor
$30,000
Federal Reserve Agent. 16, 000
STAFF.

1 at $12,000
1 at $10,000
1 at $6,000
1 at $4,800
1 at $4,200
1 at $4,000
1 at $3,500
1 at $2,700
2 at $2,400
1 at $2,000
3 at $1,800
7 at $1,500
1 at $1,400
7 at $1,200
1 at $1,140
1 at $1,100
1 at $1,080
1 at $1,040
1 at $1,000
3at$936
9 at $900
1 at $840

12,000
10, 000
6,000
4,800
4,200
4,000
3,500
2,700
4,800
2,000
5,400
L0, 500
1,400
8,400
1,140
1,100
1,080
1,040
1,000
2,808
8,100
840

lat$800
2at$720
1 at $700
1 at $624
3 at $600
2 at $540
3 at $520
1 at $500
2 at $480
2 at $450
lat$466
4 at $360
3at$300
—

$800
1,440
700
624
1,800
1,080
1,560
500
960
900
466
1,440
900
$109, 978

Total

155,978

FEDERAL RESERVE BANK OF
PHILADELPHIA.

Governor
$20, 000
Federal Reserve Agent. 10, 000
$30, 000
STAFF.

$46, 000

1 at $5,000
1 at $3,000
1 at $2,500
1 at $2,400
3 at $1,800
1 at $1,600
2 at $3,500
1 at $1,100
1 at $1,080
1 at $1,040
1 at $1,020
1 at $910
6 at $900
4 at $840
6 at $780
3 at $720
1 at $624
1 at $600
1 at $480
2 at $360
2 at $260
1 at $234
1 at $208
—
43
Total

5,000
3,000
2,500
2,400
5,400
1,600
3,000
1,100
1,080
1,040
1,020
910
5,400
3,360
4,680
2,160
624
600
480
720
520
234
208
47,036
77, 036

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

Annual salaries paid by Federal Reserve Banks in the year ending Dec.
FEDERAL RESERVE BANK OF
CLEVELAND.

Governor
$18, 000
Federal Reserve Agent. 10, 000

$28, 000

STAFF.

1 at $4,000
2 at $3,000
2 at $2,500
2 at $2,400
2 at $1,800
2 at $1,500
4 at $1,200
1 at $1,000
1 at $960
1 at $900
1 at $840
2 at $780
1 at $720
1 at $660
1 at $600
3 at $480
1 at $420
1 at $240
—
29
Total

4,000
6,000
5,000
4,800
3,600
3,000
4,800
1,000
960
900
840
1,560
720
660
600
1,440
420
240

31,1914—Oontd.

FEDERAL RESERVE BANK OF ATLANTA—

Continued.
STAFF—continued.
2 at $2,400
$4,800
1 at $2,000
2,000
3 at $1,800
5,400
3 at $1,200
3,600
3at$900
2,700
2at$780
1,560
lat$624
624
4 at $600
2,400
1 at $540
540
1 at $480
480
2 at $300
600
—
—
$30, 804
05

Total
Counsel, $50 per month.
Secretary (serves only at
monthly meetings of
board), $300 per annum.
40,540
68,540

FEDERAL RESERVE BANK OF CHICAGO.

Governor
$20, 000. 00
Federal Reserve
Agent
10,000.00
$30, 000. 00

FEDERAL RESERVE BANK OF RICHMOND.

Governor
$10, 000
Federal Reserve Agent. 10, 000

STAFF.

$20, 000

STAFF.

1 at $4,000
1 at $3,500
1 at $3,000
4 at $2,000
2 at $1,800
1 at $1,200
2 at $1,000
3 at $900
1 at $840
2 at $780
1 at $720
6 at $600
2 at $480
1 at $300
—
28
Total

4,000
3,500
3,000
8,000
3,600
1,200
2,000
2,700
840
1,560
720
3,600
960
300

35,980
55,980

FEDERAL RESERVE BANK OF ATLANTA.

Governor
$9, 000
Federal Reserve Agent.. 7, 500
$16, 500
STAFF.

lat$3,600
1 at $2,500

3,600
2,500

47,304

1 at $10,000
1 at $6,000
1 at $4,000
1 at $2,500
1 at $2,400
1 at $1,900
1 at $1,800
4 at $1,500
1 at $1,400
1 at $1,320
1 at $1,300
7 at $1,200
1 at $1,140
1 at $1,100
1 at $1,080
2 at $1,000
lat$960
2 at$900........
4 at $780
5at$720
lat$624
3 at $600
lat$540
1 at$4S0
2at$375
1 at $286.08
1 at $260
—
^g
Total

10, 000. 00
6,000.00
4,000.00
2,500.00
2,400.00
1,900.00
1,800.00
6,000.00
1,400.00
1,320.00
1,300.00
8,400.00
1,140.00
1,100.00
1,080.00
2,000.00
960.00
1,800.00
3,120.00
3,600.00
624.00
1,800.00
540.00
480.00
750.00
286.08
260.00
66,560.08
96,560.08

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

Annual salaries paid by Federal Reserve Banks in the year ending Dec. 31, 1915—Contd.
FEDERAL RESERVE BANK OF ST. LOUIS.

Governor
$20, 000
Federal Reserve Agent. 10, 000
1 at $7,500.
1 at $6,000.
2 at $3,200.
1 at $2,700.
1 at $2,400.
2 at $2,000.
2 at $1,500.
3 at $1,200 .
1 at $1,080.
1 at $960...
4 at $900...
2 at $780...
2 at $720...
1 at $660...
5 at $600...
1 at $540...
3 at$480...
1 at $420...
1 at $300...
1 at $240...
lat$60....

| 3 0 , 000

STAFF.

7,500
6,000
6,400
2,700
2,400
4,000
3,000
3,600
1,080
960
3, 600
1, 560
1,440
660
3,000
540
1,440
420
300
24*0
60

$40, 640
Total
$10,000
Governor
Federal Reserve Agent. 7,500

80,900
OF MINNE-

Governor
$15, 000
Federal Reserve Agent.
7, 500

$22, 500

STAFF.

2 at $3,000
1 at $2,500
1 at $2,000. 1 at $1,600
2 at $1,500
2 at $1,200
1 at $1,020
1 at $1,000
2 at $900
lat$780
2 at $480
1 at $360.....

6,000
2,500
2,000
1,600
3,000
2,400
1,020
1,000
1,800
780
960
360

1 at $6,000
1 at $2,500
1 at $2,100
1 at $2,000
1 at $1,800
1 at $1,620
at $1,080
Digitized for 2
FRASER

STAFF.

6,000
2,500
2,100
2,000
1,800
1,620
2,160

46, 273
63,773

FEDERAL RESERVE BANK OF SAN
FRANCISCO.

45,920

FEDERAL RESERVE BANK OF KANSAS
CITY.

$7, 500
7,500

6,000
10,000
2,500
4,800
2,100
7,500
1,320
2,400
1,020
2,700
3,600
600
480
468
420
365

Total

23, 420

Governor
Federal Reserve Agent.

1 at $6,000
2 at $5,000 .
1 at $2,500.
2 at $2,400.
1 at $2,100.
5 at $1,500.
1 at $1,320.
2 at $1,200.
1 at $1,020.
3 at $900...
5 at $720...
1 at $600...
1 at $480...
1 at $468...
1 at $420...
1 at $365...

$17,500

STAFF.

Total
Counsel, $1,500 per annum.

55,640

FEDERAL RESERVE BANK OF DALLAS.

50, 900

Total

CITY—Continued.
STAFF—continued.
4 at $1,020
$4,080
2 at $960
1,920
3 at $900
2,700
4at$840
3,360
3at$780
2,340
5 at $720
3,600
3 at $600
1,800
1 at $540
540
2at$480
960
2 at $400
800
1 at $360
360
38

37
FEDERAL RESERVE BANK
APOLIS.

FEDERAL RESERVE BANK OF KANSAS

$15,000

$15,000
Governor
Federal Reserve Agent. 12,000
1 at $6,000 .
1 at $4,200.
1 at $3,000.
1 at $2,500.
2 at $2,400.
2 at $1,800.
4 at $1,500.
1 at $1,200.
2 at $1,020.
2 at $900...
1 at $780...
1 at $720...
1 at $480...

6,000
4,200
3,000
2,500
4,800
3,600
6,000
1,200
2,040
1,800
780
720
480

$27,000

37,120

Total

64,120

100

ANNUAL KEPOKT OF THE FEDEKAL KESEKVE BOARD.

SALARIES OP OFFICERS AND EMPLOYEES OF THE FEDERAL RESERVE BOARD AS OF
DEC. 31, 1915.
OFFICE OF THE SECRETARY.

H. Parker Willis, secretary
Sherman Allen, assistant secretary and fiscal agent
Staff:
2 at $1,800
1 at $1,600
3 at $1,200
3 at $1,000
2 at $900
1 at $780
1 at $600

$7,500
6,000
3,600
1, 600
3, 600
3,000
1, 800
780
600
$28,480

OFFICES OF MEMBERS OF THE BOARD.

Staff:
6 at $2,500
5 at 1,200

15,000
6,000
21 000
OFFICE OF COUNSEL.

Milton C. Elliott, counsel
J. P. Cotton, consulting counsel
Staff:
1 at $3,600
1 at $3,300
1 at $1,800
1 at $1,200

7,500
5,000
3, 600
3, 300
1, 800
1, 200
22,400

DIVISION OF AUDIT AND EXAMINATION.

Joseph A. Broderick, chief of division
Staff:
1 at $3,600
1 at $2,250
2 at $1,500
2 at $1,000

6,000
3, 600
2, 250
3, 000
2,000
16,850

DIVISION OF REPORTS AND STATISTICS.

Morris Jacobson, chief of division
Staff:
1 at $1,200
1 at $1,000
2 at $900

3,600
1, 200
1, 000
1, 800
7,600

DIVISION OF ISSUE.

W. E. Buell, chief of division
Staff:
1 at $1,800
1 at $1,000
2 at $900
1 at $720

2, 500
1,800
1,000
1,800
720
7,820
MESSENGERS.

1 at $780
4 at $720
1 at $120

780
2, 880
120
3,780
CHARWOMEN.

3 at $240

http://fraser.stlouisfed.org/
Total
Federal Reserve Bank of St. Louis

720
720
108, 650

ANNUAL KKPOKT OF THE FEDERAL RKSEftVK BOARD.

101

SALARIES OF BANK EXAMINERS EFFECTIVE IN THE YEAR ENDING DEC. 3], 1915.1

Section 21 of the Federal Reserve Act directs the Federal Reserve Board, upon
recommendation of the Comptroller of the Currency, to fix the salaries of all (national)
bank examiners and make a report thereof to Congress, the expense of examinations to
be assessed by the Comptroller of the Currency upon the banks examined in proportion
to assets or resources held by the banks upon the dates of examinations. All national
bank examiners are appointed by the Comptroller of the Currency, with the approval
of the Secretary of the Treasury. The list follows:
DISTRICT NO. 1—BOSTON.

(432 national member banks.)
J. D. Brennan, chief examiner
6 examiners, at $3,000

$8,000
18,000
$26,000

DISTRICT NO. 2—NEW YORK.

(612 national member banks.)
Charles Starek, chief examiner
1 examiner, at $5,000; 1 examiner, at $4,200; 2 examiners, at
$3,600; 1 examiner, at $3,000; 1 examiner, at $2,400

15,000
21, 800
36,800

DISTRICT NO. 3—PHILADELPHIA.

(628 national member banks.)
E. I. Johnson, chief examiner
1 examiner, at $4,200; 1 examiner, at $3,600; 1 examiner, at
$3,000; 3 examiners, at $2,400

7, 500
18,000
25,500

DISTRICT NO. 4—CLEVELAND.

(761 national member banks.)
S. H. L. Cooper, chief examiner
1 examiner, at $5,000; 1 examiner, at $4,200; 4 examiners, at
$3,600; 2 examiners, at $2,400

7, 500
28, 400
35,900

DISTRICT NO. 5—RICHMOND.

(502 national member banks.)
Thomas P. Howard, chief examiner
1 examiner, at $6,000; 1 examiner, at $3,600; 5 examiners, at
$3,000; 1 examiner, at $2,400

6,000
27,000
33,000

DISTRICT NO. 6—ATLANTA.

(382 national member banks.)
C. H. Abbott, chief examiner
3 examiners, at $3,600; 1 examiner, at $3,000; 1 examiner, at
$2,400

6,000
16, 200
22,200

DISTRICT NO. 7—CHICAGO.

(983 national member banks.)
Sherrill Smith, chief examiner
1 examiner, at $5,000; 1 examiner, at $4,200; 2 examiners, at
$3,600; 6 examiners, at $3,000; 2 examiners, at $2,400

12,000
39, 200
51,200

Two examiners, whose resignations took effect Dec. 31, 1915, omitted from list.

102

ANNUAL REPORT OF TtiE FEDERAL RESERVE BOARD.
DISTRICT NO. 8—ST. LOUIS.

(468 national member banks.)
C. E. French, chief examiner
1 examiner, at $4,200; 3 examiners, at $3,000; 1 examiner, at
$2,400

$10,000
15, 600
$25,600

DISTRICT NO. 9—MINNEAPOLIS.

(733 national member banks.)
Peter M. Kerst, chief examiner
1 examiner, at $4,200; 3 examiners, at $3,600; 2 examiners, at
$3,000; 3 examiners, at $2,400

7,500
28,200
35,700

DISTRICT NO. 10—KANSAS CITY.

(948 national member banks.)
J. D. Rising, chief examiner
1 examiner, at $4,200; 1 examiner, at $3,600; 4 examiners, at
$3,000; 6 examiners, at $2,400

6,000
34,200
40,200

DISTRICT NO. 11—DALLAS.

(637 national member banks.)
J. C. Chidsey, chief examiner
6,000
1 examiner, at $3,600; 3 examiners, at $3,000; 2 examiners, at
$2,400
17,400
-—

23,400

DISTRICT NO. 12—SAN FRANCISCO.

(527 national member banks.)
Claud Gatch, chief examiner
2 examiners, at $6,000; 3 examiners, at $4,200; 1 examiner, at
$3,600; 2 examiners, at $2,400

7, 500
33, 000
40,500
396, 000

Total
RECAPITULATION.

Examining staff:
Chief examiners—
At $15,000 per annum
At $12,000 per annum
At $10,000 per annum
At $8,000 per annum
At $7,500 per annum
At $6,000 per annum

1
1
1
1
4
4

Total chief examiners
Salaries, chief examiners
Other examiners—
At $6,000 per annum
At $5,000 per annum
At $4,200 per annum
At $3,600 per annum
At $3,000 per annum
At $2,400 per annum

Total other examiners
Salaries, other examiners

Total examining staff
Total salaries

99, 000
3
3
10
19
32
24
297,000
103
396, 000

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

103

Exhibit K.—PROCEDURE IN PASSING UPON APPLICATIONS OF NATIONAL
BANKS FOR FIDUCIARY POWERS UNDER SECTION 11 (K) OF THE FEDERAL RESERVE ACT.
The following instructions were issued to all Federal Reserve Agents:
By direction of the Board this letter is sent for your guidance in passing upon the
applications of national banks for the privilege of exercising the powers of trustee,
registrar, executor, and administrator.
All applications from applying banks must be transmitted first to the Federal
Reserve Agent of the district in which the bank is located, who will forward the applications with his recommendations to the Federal Reserve Board. The Federal
Reserve Agent in making his recommendations is expected to take into consideration
the general standing of the bank, character of its management, and its fitness to exercise the fiduciary powers applied for, as well as the benefits that the community in
which the bank is located will be apt to receive from the exercise of such powers by
the bank. Special weight will be given by the Federal Reserve Board to the approval or disapproval of the Federal Reserve Agent. Applications that are recommended by him for approval will be referred by the Board to a committee which,
after a careful examination of the records on file in the office of the Comptroller of the
Currency relating to the business and the management of the bank, will report to
the Board favorably or adversely, as the case may be, upon the application.
In addition to the points above outlined the Board's committee considers the
strength of the bank as shown by its statements and by the examiner's reports, and
especial weight is attached to the observance on the part of the bank of the requirements of law and of the regulations and admonitions which are sent out from time
to time by the Comptroller's office.
It is not, as a rule, deemed advisable to grant permits for the exercise of fiduciary
powers to a national bank—
(1) Where its surplus does not amount to at least 20 per cent of its capital stock.
(2) Where reports show that it is carrying an excessive amount of past-due or doubtful paper.
(3) Where it is carrying real estate loans not authorized by law.
(4) Where it is shown that the bank is in the habit of granting excessive overdrafts
continuously.
(5) Where the loans of the bank are not well distributed, by reason of an excessive
proportion of the total loans having been granted to a few interests, or where loans
made to officers and directors are too large in proportion to the total amount of loans,
or are not well secured.
(6) Where the examiners have reported that the directors do not direct or are lax
or negligent in their attendance at board meetings or in giving attention to the bank's
management and direction.
Federal Reserve Agents in making their recommendations are expected to pay
particular attention to the strength of the management of the bank from a moral
standpoint, and should decline to recommend any application where they feel that
the officers of the bank as individuals would not be worthy of being intrusted with
the management of trust funds or the administration of estates.

Exhibit L.~RESERVE REQUIREMENTS FOR STATE BANKS AND TRUST COMPANIES.
Summary of reserve requirements for State banks and trust companies.
, and class of institution.

Amount of reserve required.

To consist of—

Alabama:
Every "bank, firm, person, or 15 per cent of demand deposits
Two-fifths cash on hand, remainder (three-fifths)
corporation doing a banking
on deposit with banks and bankers.
business."
Arizona:
State banks
15 per cent of all deposits
Savings banks
No fixed requirement at present, al- Two-fifths cash in vault, three-fifths with apthough State comptroller may, in his proved reserve agents.
discretion, impose same.
Arkansas:
77
15
per cent of aggregate deposits
A portion (notfixedby law) of the reserve must
" Every bank
be cash in vault; remainder may be on deposit
with approved reserve agents.
Banks acting as approved reserve 20 per cent of aggregate deposits
Two-fifths cash in vault; remainder may be on
deposit with approved reserve agents either in
agents.
or out of the State.
At least one-third of the required reserve must be
cash on hand consisting of gold coin, gold bullion, United States gold certificates or United
California:
States notes; in addition thereto, at least one"Every commercial bank"—
sixth must be cash on hand, consisting of the
In cities having a population 18 per cent of aggregate deposits.
foregoing or any form of currency authorized
of 100,000 or over.
by the laws of the United States; the remainder
Tn cities having a population 15 per cent of aggregate deposits.
may be on deposit with approved reserve
of 50,000 to 99,999.
agents
or may be cash on hand, consisting of
Elsewhere
12 per cent of aggregate deposits.
gold coin, gold bullion, United States gold
certificates, United States notes, or any form
of currency authorized by the laws of the
United States.
"One-half must be cash on hand, consisting half
"Every savings bank or savings 5 per cent of aggregate deposits..
of
gold coin, gold bullion, United States gold
department of a bank."
certificates, or United States notes, and half to
consist of the foregoing or any other form of
currency authorized by the laws of the United
States; the remainder may be in cash on hand
as last above mentioned in United States
bonds, or on deposit with approved reserve
agents. No savings bank required to maintain reserves on hand in excess of $400,000.

Changes since passage of the Federal Reserve Act.
Foregoing is statute of Apr. 2, 1911. Amendments to Act in effect Feb. 15, 1915, do not
change reserve requirement.
Requirements specified for Arizona are those prescribed by the Revised Statutes of Arizona,
1913. No changes since made.

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Requirements specified are those prescribed by
Act approved Mar. 3,1913. No changes since
made.
Prior to Aug. 7,1915, commercial banks receiving
deposits of other banks were required to maintain a reserve equal to 20 per cent of aggregate
deposits, and other commercial banks were required to maintain a reserve of 15 per cent, twofifths in each case to be cash on hand in lawful
money of the United States, or gold and silver
certificates of the United States; one-half of
the remaining three-fifths might be on deposit
with approved reserve agents in New York,
Chicago, or St. Louis, and the remainder on
deposit with banks within the State other than
savings banks. Savings banks were required
to hold 4 per cent of aggregate deposits, onehalf in lawful money, gold or silver certificates,
and the remainder in United States bonds, or
gold and silver certificates and lawful money,
or on deposit with approved reserve agents as
above indicated for commercial banks. Banks
becoming members of the Federal Reserve
System are to maintain the reserves required
by the Federal Reserve Act.

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Colorado:
"Every bank except savings
bank."
Approved reserve agents
Every savings bank
Connecticut:
Every State bank and trust company.

20 per cent of deposits.,

Not less than one-fifth to be cash on hand, remainder (four-fifths) with approved reserve Requirements specified are those prescribed by
25 per cent of deposits
act of Mar. 24,1915.
agents in the State or national banks in reserve
15 per cent of savings deposits, 20 per or central reserve cities.
cent of other deposits.
12 per cent of demand deposits (pay- At least one-third must consist of gold and silver Provisions here cited were enacted in 1915, the
requirement prior to that time having been 15
coin, demand obligations of the United States,
able within 30 days), 5 per cent of
or national-bank notes, held in vault; remainper cent of aggregate deposits, not less than
time deposits.
der may consist of balances due from approved
four-fifteenths to consist of gold and silver coin,
reserve agents in New York, Boston, Philadeldemand obligations of the United States or
phia, Chicago, Albany, New Haven, Hartford,
national-bank currency, held in vault, remainBridgeport, or Water bury; and one-sixth of
der to consist of balances on deposit with apthe total reserve may consist of bonds which
proved reserve agents or of railroad bonds which
are legal investments for savings banks in Conare legal investments for savings banks in Connecticut.
necticut.

Delaware:
Every bank and trust company—
In cities of population of over 15 per cent of aggregate deposits payable within 30 days.
50,000.
In cities of less than 50,000 10 per cent of aggregate deposits paypopulation.
able within 30 days.
District of Columbia:
Savings and State banks
Trust companies.

Florida:
"Every banking company''

Not less than one-third in lawful money of the
United States, gold certificates, silver certificates, or notes and bills issued by any lawfully
organized banking association, held in vault, Requirements specified are those prescribed by
and remainder with an approved Delaware
act approved Apr. 5,1909.
bank or trust company having a capital of at
least $50,000 and surplus of $50,000, or with approved depository in New York, Philadelphia,
or Baltimore.

Must maintain the reserve required by
the laws of the State under which
the corporation is organized.
Must deposit with Comptroller of the
Currency, money, bonds, mortgages,
deeds of trust, or other securities
equal in actual value to one-fourth
of the capital stock paid in.
20 per cent of aggregate deposits

i
Two-fifths must be in lawful money of the United Requirements specified are those prescribed by
States on hand. Three-fifths may be on deact in force prior to passage of the Federal Reposit with banks and bankers, or invested in
serve Act.
bonds of the United States, State of Florida,
counties and cities of the State of Florida, such
bonds to be approved by the State comptroller.
(The State comptroller advises that his department does not permit banks other than savings
institutions to count bonds as part of reserve.)

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Summary of reserve requirements for State banks and trust companies—Continued.
State, and class of institution.

Amount of reserve required.

Georgia:
" Every bank or corporation doing 25 per cent of demand deposits.
a banking business."

Idaho:
"Every bank or trust company r
Illinois:
Chicago banks.
Country banks.

Indiana:
State banks.
Trust companies..

15 per cent of aggregate deposits.

To consist of—

Changes since passage of the Federal Reserve Act.

Cash in hand including amount due by banks
and bankers and the market value of bonds
actually owned and held. The reserve may
consist of either or all of the above items, the
proportion not being fixed by law.

Act approved Aug. 13, 1915, authorizes and empowers State banks, savings banks, and trust
companies organized under laws of the State of
Georgia to become members of the Federal reserve system, in which case they are to conform
to the regulations of the Federal Reserve Bank
and the Federal Reserve Board.

Two-fifths must be actual cash in vault; threefifths may consist of balances due from good
solvent banks.

Act approved Mar. 11, 1915, reenacts former requirement as given here.

25 per cent of individual and bank de- One-half in vault and one-half with approved
•No change.
posits.
reserve agents.
15 per cent of individual and bank de- Two-fifths in vault and three-fifths with apposits.
proved reserve agents.
No statutory requirements for
maintenance of reserves. The State
auditor of public accounts, however,
under his authority, requires reserves to be maintained as above
stated.
No statutory requirements. Office
ruling of bank commissioner, 15 per
cent.
15 per cent of commercial deposits payable upon demand and subject to
check.

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ktfone.
'Cash, currency, or current funds".

Iowa:
State banks—
One-fourth must be in vault; three-fourths may 1 Required reserves upon time deposits in savings
In cities and towns of popu- 10 per cent of total deposits..
> banks and trust companies have been reduced
be on deposit with other banks.
lation under 3,000.
j from 15 to 8 per cent.
do
In cities of population of 3,000 15 per cent of total deposits..
or over.
Trust companies and savings
banks—
In cities of population under 15 per cent of demand deposits, 8 per
.do.
cent of time and savings deposits.
3,000.
In cities of population of 3,000 20 per cent of demand deposits, 8 per
.do.
cent of time and savings deposits. I
or over.

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Kansas:
"A bank located in a city having
less than 50,000 population, in
which the credits due other
banks are less than 20 per cent
of its deposits."

Four-twelfths in vaults, eight-twelfths either in Requirements specified are those prescribed by
act of 1915 repealing section 471, General Statvaults or in other banks, provided, that upon
utes of 1909, which prescribed reserve requireapproval of the bank commissioner, any bank
ments as follows: Banks in cities or towns of
located in a city having less than l;000 populaless than 5,000 population, 20 per cent of entire
tion shall not be required to keep in its vaults
deposits, banks located in cities of population
more than three-twelfths of its reserves.
over 5,000, 25 per cent of entire deposits, of
"A bank located in a city having 15 per cent of the aggregate amount of Five-fifteenths in vaults, ten-fifteenths either in
which one-fourth must be cash in vault (exits vaults or in other banks.
less than 50,000 population, in
demand deposits, 5 per cent of its
cluding cash items) and three-fourths might
which the credits due other
time deposits.
be on deposit with good solvent banks.
banks are not less than 20 per.
cent of its deposits, and any
bank located in a city having a
population of 50,000 or over."
Kentucky:
"Each bank and trust company
authorized to receive deposits "—
(1) In reserve cities
15 per cent of total demand deposits^
The requirements specified were enacted in 1914.
per cent of time and savings deposits. One-third "shall be in money"; remainder may
Act of 1909 provided for reserve of 25 per cent
of total deposits to be held by banks in cities
be in balances due from other banks and sub12 per cent of total demand deposits
(2) Elsewhere
of population of over 50,000, and for reserve
ject to call.
(payable within 30 days), 5 per cent
of 15 per cent by banks in other cities.
of time and savings deposits.
Louisiana:
Act of 1914 authorizes State banks, savings banks,
25 per cent of demand deposits; no Eight-twenty-fifths in cash on hand..
State banking corporations
and trust companies to join Federal Reserve
requirements covering time deposits.
System and be bound by its regulations.
Maine:
No statutory or departmental requirement for Any "trust company" may become a stock"Every trust and banking comholder in the Federal Reserve Bank * * *
cash in vault; one-third of said 15 per cent
pany" having authority to reand in such case shall be subject to the provimay consist of the bonds of the United States,
ceive money on deposit.
"in the lawiul money or natioi
sions of said Federal Reserve Act and any
District of Columbia, and certain States; twobank notes of the United States.
amendments thereof relative to bank reserve in
thirds may be on deposit with approved
substitution for the requirements of this section.
reserve agents.
Maryland:
"State banks and trust com- 15 per cent reserve against demand One-third cash on hand (in case of trust com- No change.
panies cash in hand may be replaced by apdeposits; no reserve against time
panies."
proved bonds), two-thirds with approved redeposits.
serve agents.

12 per cent of the aggregate amount of
demand deposits (payable within 30
days), 5 per cent of time deposits.

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Summary of reserve requirements for State banks and trust companies—Continued.
State, and class of institution.
Massachusetts:
" Every trust company " .

Trust companies doing business
in Boston within 3 miles of the
statehouse.

Michigan:
Commercial banks—
(1) In cities of 100,000 population or less (not being reserve banks).
(2) In cities and towns of over
100,000 population (and in
cities of less population
when designated by the
bank commissioner as " reserve cities").
Savings banks
Minnesota:
State banks.

Mississippi:
"Every bank"—
(1) In towns of population less
than 50,000.
(2) In towns of over 50,000

Amount of reserve required.

To consist of—

15 per cent of demand deposits and de- Not less than two-fifths to be in lawful money
posits subject to withdrawal within
of the United States, gold certificates, sil30 days.
ver certificates, or notes and bills issued by
any lawfully organized national banking association; remainder (three-fifths) due from any
trust company in the city of Boston authorized, or national banks in'Massachusetts or in
the cities of New York, Philadelphia, Chicago,
or Albany, or one-fifth may be in bonds of the
United States or of Massachusetts at fair market value.
20 per cent of demand
deposits
and
deBoston
trust companies acting as reserve agents
posits subject f.o withdrawal within
must hold half of their required reserve in law30 days.
ful money of the United States, gold certificates, silver certificates, national bank notes;
remainder may be in Boston trust companies
authorized or in national banks, as above.
15 per cent of total deposits..
20 per cent of total deposits..

One-half must be in lawful money in vault, remainder on deposit in bank s in approved reserve cities.
. ...do

15 per cent of total deposits..

One-third in lawful money in vault, remainder
on deposit with banks in approved reserve
cities or invested in approved bonds.

15 per cent of demand deposits, 5 per
cent of time deposits.

At least one-fourth in cash on hand, remainder
with reserve agents.

15 per cent of demand deposits, 7 per Actual cash or balances due from good solvent
cent of time and savings deposits.
banks.
25 per cent of demand deposits, 10 per
..do
cent of time and savings deposits.

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Changes since passage of the Federal Reserve Act.

Banks joining Federal Reserve System to be subject to provision of Federal Reserve Act as to
reserve in substitution for the requirements of
foregoing provisions.

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Act of 1915 provides that State banks joining the
Fed eral Reserve System shall be governed by
the reserve requirements of the Federal Reserve
Act instead of the foregoing.

Act of 1915 provides that State banks or trust companies may enter the Federal Reserve System.
Reserve requirement was formerly 20 per cent
of demand liabilities, one-half of which must be
cash on hand and remainder might be on deposit with approved reserve agents.

None.

Missouri:
"Every bank"

"Each trust company"—
(1) If located in city of over
200,000 population.
(2) If located in city of population, 25,000 to 200,000.
(3) If located elsewhere
Montana:
"Every bank except a reserve
bank."
Banks approved by superintendent of banks as reserve banks.
Nebraska:
" Every bank"
Banks in cities of more than 25,000
population.
Savings banks
Nevada:
Every bank

15 per cent of aggregate demand de- Two-fifths must be held in vault in coin or cur- Any State bank or trust company becoming a
member of a Federal Reserve Bank shall be
rency authorized by the laws of the United
posits.
required to maintain only such reserves as are
States, except that banks in cities of 200,000
required by the Federal Reserve Act.
population or over may not count Federal
Reserve notes as part of their reserve on hand;
three-fifths may be with approved reserve
18 per cent of aggregate demand de- At least seven-eighteenths must be in cash on
posits.
hand; may not count Federal Reserve notes.
15 per cent of aggregate demand de- At least six-fifteenths must be cash on hand
posits.
Law not clear, but apparently does not fix prodo
portion to be held in vault.
Such portion as directors may determine may be
15 per cent of deposit liabilities..
on deposit with approved reserve agents.
None.
do
25 per cent of deposit liabilities..

15 per cent of aggregate deposits.
, One-third must be cash in vault; two-thirds with
approved reserve agents.
20 per cent of aggregate deposits.
None.
5 per cent of aggregate deposits...
15 per cent of entire deposits
At least one-third in actual cash; two-thirds may
be on deposit with approved reserve agent.
25 per cent of deposits of the other
Depository banks.
None.
banks.
Savings banks and trust com- 10 per cent of deposits
One-half cash; one-half on deposit with good solpanies not transacting a general
vent banks.
banking business.
New Hampshire:
"Every State bank, trust com- 15 per cent of deposits in banking or Not less than one-third must consist of lawful Any " trust company " may become a stockholder
pany, or similar corporation,
commercial department.
in Federal Reserve Bank * * * and in such
money of the United States gold certifidoing a general banking busicase shall be subject to the provisions of said
cates, silver certificates, Federal Reserve
ness."
Federal Reserve Act and any amendments
notes, or national-bank notes; two-thirds may
thereto relative to bank reserve in substitution
consist of net balances due the corporation
for the requirements of this section. Prior to
from approved reserve agents.
1915 the requirement for cash in vault was for
"lawful money of the United States."
New Jersey:
Two-fifths must be in cash on hand, remainder
15 per cent of immediate liabilities
"Every bank"..
(three-fifths) on deposit with good solvent Amendment of 1914 provides that any trust combanks and trust companies.
pany or State bank may become a member of
"Every trust company receiving 15 per cent of immediate demand lia- One-fifth in cash on hand, four-fifths on deposit
Federal Reserve System.
deposits of money subject to
bilities.
with good solvent banks or trust companies.
check or payable on demand."
No reserve required against time
liabilities.

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Summary of reserve requirements for State banks and trust companies—Continued.
State, and class of institution.

Amount of reserve required.

To consist of—

New Mexico:
All banks
Two-fifths must be in cash, balance in exchange
12 per cent of entire deposits..
New York:
State banks—
(1) In boroughs of 2,000,000 18 per cent of aggregate demand de- At least two-thirds in cash in vault, of which at
population or over.
least one-half shall be gold or gold certificates
posits.
or United States notes and remainder may be
any other form of currency, except Federal Reserve notes, authorized by the laws of the
United States. Remainder with approved reserve agents, which for banks which have
joined the Federal Reserve System may include the Federal Reserve Bank.
(2) In boroughs of 1,000,000 to 15 per cent of aggregate demand dedo
1,999,999 population.
posits.
(3) Elsewhere
12 per cent of aggregate demand de- At least one-third in cash in vault
posits.
Trust companies—
(1) In boroughs of 2,000,000 15 per cent of aggregate demand de- At least two-thirds in cash in vault
population or over.
posits.
(2) In boroughs of 1,000,000 13 per cent of aggregate demand de- At least eight-thirteenths in cash in vault
posits.
to 1,999,999 population.
(3) Elsewhere
10 per cent of aggregate demand de- Four-tenths in cash in vault (for cities offirstand
second class), three-tenths in cash in vault (for
posits.
third-class cities, incorporated or unincorporated villages).
No reserve required against time
liabilities.
North Carolina:
per cent of demand deposits, 5 per Two-fifths must be cash on hand; remainder may
State banks and savings banks. 15cent
of time deposits.
be on deposit with other banks.
North Dakota:
20
per
cent
of
demand
deposits,
10
per
Two-fifths
must be cash on hand; three-fifths
State banks
cent of time deposits.
may be on deposit with approved reserve
agents.
Ohio:
15 per cent of total deposits
At least 6 per cent of demand deposits, and at
Commercial banks..
least 4 per cent of time deposits to be kept in
vault in lawful money, National bank notes or
bills, notes, and gold or silver certificates issued
by the United States; remainder may be on
deposit with approved reserve agents.
At
least 2 per cent in vault in money as above;
Savings banks.
10 per cent of time deposits
not more than 3 per cent in approved securities; remainder on deposit with approved reserve agents.
15 per cent of demand deposits
At least 6 per cent in vault in money as above;
remainder with approved reserve agents.

Changes since passage of the Federal Reserve Act.
Formerly 25 per cent oi deposits.

Before passage of the Federal Reserve Act, the
requirements were as follows: For State banks
in boroughs having population of 1,800,000 or
over, 25 per cent oi deposits, of which threefifths must be cash on hand; in boroughs having a population of 1.000,000 to 1,799,000, 20 per
cent of deposits, ol which one-half must be cash
on hand; elsewhere, 15 per cent of deposits, of
which two-fifths must be cash on hand; for
trust companies in boroughs having population
of 1,800,000 or over, 15 per cent of deposits, oi
which all must be cash on hand; in boroughs of
1,000,000 to 1,799,000, 15 per cent of deposits, of
which two-thirds must be cash on hand; elsewhere, 10 per cent oi deposits, of which one-half
or six-tenths must be cash on hand. No reserve required against time deposits.

None.
Law formerly provided for reserve of 20 per cent
of all deposits.

Every State bank to have power to join the Federal Reserve System, and those becoming
members to be governed by the reserve requirements of said act in lieu of foregoing.

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Oklahoma:
Every bankIn cities of less than 2,500
population.
In cities of more than 2,500
population.
Banks selected as depositaries.
Savings associations
Oregon:
Every State bank

Pennsylvania: "Every corporation receiving
money subject to be paid out on
on demand."
"Every bank, savings bank, or
trust company receiving deposits payable at a future
time."
Rhode Island:
"Every bank and trusteompany':

Approved reserve agents.

At least one-third must be cash on hand; two- The requirements given are those provided by
15 per cent of entire deposits.
an amendment of 1915. The requirements
thirds with approved reserve agents.
prior to that time had been 20 per cent and 25
do
20 per cent of entire deposits.
per cent for banks in cities of less than 2?500
population and more than 2,500 population,
....do
do
respectively.
10 per cent of deposits.
All in cash on hand.
15 per cent of total demand deposits One-third cash on hand, two-thirds with ap- Banks joining Federal Reserve System shall
(excepting United States or postal
proved reserve agents.
maintain as reserve deposits with the Federal
savings deposits), 10 per cent of total
Reserve Bank such portion of its total reserve
time and savings deposits.
as shall be required of members of the Federal
Reserve System. Prior to amendment of 1915,
banks in cities having population of over 50,000
were required to hold 25 per cent of total demand deposits and 15 per cent of time and
savings deposits, one-third to be cash on hand
and the remainder with approved reserve
agents.
At least one-third must consist of lawful money
of the United States, gold certificates, silver
certificates, National bank notes or clearing
15 per cent of aggregate immediate de- house certificates representing specie or lawful
money deposited for the purpose; one-third or
mand liabilities.
less may consist of United States bonds, Pennsylvania bonds, bonds of Pennsylvania mu- None.
1\ per cent of time deposits.
nicipalities and bonds which are a legal investment for savings banks; remainder may consist of money on deposit on call with approved
Pennsylvania banks and trust companies or
approved banks or trust companies in any
reserve city.
15 per cent of aggregate deposits. No Not less than two-fifths to be held in vault in
cash reserve requirement against
form of gold and silver coin, demand obligasavings deposits.
tions of United States, or national-bank currency; remainder (three-fifths) may consist of
balances subject to draft with approved reserve agents in Providence, New York, Boston,
Philadelphia, Chicago and Albany.
None.
25 per cent of all deposits, except that May be kept and maintained in the manner
any Providence bank which is a
provided in the national banking act of the
member of the clearing house may be United States to be kept and maintained in
a reserve agent for banks in towns,
reserve cities.
but not cities, while holding only
a 15 per cent reserve.

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Summary of reserve requirements for State banks and trust companies—Continued.
State, and class of institution.
South Carolina:
State banks.

South Dakota:
"Every bank".
Approved reserve agents.
Tennessee:
Every bank,firm, person,or corpotion doing a banking business.
Texas:
State banks—
(1) Capital of $25,000 or over..
(2) Less than $25,000.
Utah:
Commercial banks
In cities of 50,000 or more
Savings banks
Vermont:
"Every bank".

Virginia:
State banks..

Amount of reserve required.

To consist of—

Changes since passage of the Federal Reserve Act.
Act of 1914 authorizes any bank, banking association or trust company chartered and engaged
in the banking business under the laws of South
Carolina to join any national reserve association under any law now existing or hereafter
enacted by the Congress of the United States.

No law requiring reserve, left to discretion of bank.

O f which such portion as the directors may determine may be on deposit with approved agents.
In lawful money or on deposit with approved None.
reserve agents.
10 per cent of demand deposits. No May consis t of the balance due by banks and None.
bankers to said bank when payable on demand.
requirement against time deposits.

20 per cent of total deposits.
25 per cent of total deposits.

15 per cent of demand deposits.
20 per cent of demand deposits.

Two-fifths must be cash on hand; remainder, or
three-fifths, with approved reserve agents.
do

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[Former requirement prior to 1914 was 25 per cent
I of demand deposits. All banks, members of
1 Federal Reserve System, have same requirel ments as national banks.

15 per cent of aggregate deposits and At least one-eighth to consist of lawful money of
demand liabilities.
the United States on hand; remainder may be
on deposit in solvent banks other than savings
banks.
20 per cent of aggregate deposits and ....do
None.
demand liabilities.
10 per cent of deposit liabilities
At least one-fourth in lawful money of United
States; remainder may be on deposit in solvent
banks other than savings banks.
15 per cent of commercial deposits, 3 Two-fifths may be in United States bonds, or None.
per cent of savings deposits.
State bonds, or bonds of cities of 200,000 population or over; one-tenth must be in cash on
hand; one-tenth must be in cash on hand or
on deposit with banks in same county; twofifths may be in authorized banks. Required
cash in vault only 1| per cent of commercial
deposits, or 3 per cent of savings deposits.
No legislative enactment; banking department attempts to secure maintenance of reserves, as follows:
12 per cent of demand deposits
Five-twelfths cash in vault, seven-twelfths due 1 Prior to passage of Federal Reserve Act, department insisted on 15 per cent, two-fifths in vault
from solvent banks.
5 per cent of time deposits..
and three-fifths with other solvent banks.
.....do

Washington:
" Every bank and trustcompany " 15 per cent of total deposits..,

Of " available funds," which may consist of balances due from approved reserve agents and
actual cash or checks on solvent banks located
in the same city.

Prior to the passage of the Federal Reserve Act
the requirement was 20 per cent on demand
liabilities.
None.

West Virginia:
"All banks »

15 per cent of demand deposits.

Wisconsin:
State banks—
(1) Not approved as reserve
banks.
(2) Approved by c o m m i s sioner of banking as reserve
banks.
Savings banks (mutual)

At least two-fifths must be in lawful money of
United States, three-fifths may be with approved reserve agents in or out of the State.

12 per cent of total deposits.
20 per cent of total deposits..

Such portion as directors determine may be on
deposit with approved reserve agents.
In lawful money or on deposit with approved
reserve agents.

Trust companies
Wyoming:
Every banking association, including trust companies and
savings banks.

5 per cent of total deposits..
12 per cent of total deposits.
20 per cent of demand liabilities to
depositors, 10 per cent of savings
deposits.

In cash on hand, or on deposit with approved
reserve agents.
.do

Prior to 1915, requirements were 15 per cent for
banks not in reserve cities and 25 per cent for
banks in reserve cities.

Cash in vault or on deposit with approved reserve None.

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114

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.
Exhibit M.—CHANGES IN FEDERAL RESERVE DISTRICTS.
THE R E DISTRICTING DECISION. 1

Shortly after its organization, the Federal Reserve Board received petitions from
banks located in several of the Federal Reserve Districts, asking the transfer of designated portions thereof to other districts. These petitions were filed under section 1
of the Federal Reserve Act, which provides for an appeal from the decision of the
Organization Committee to the Board, in the following language:
" As soon as practicable * * * the Reserve Bank Organization Committee shall
designate not less than eight nor more than twelve cities to be known as Federal Reserve
cities, and shall divide the continental United States, excluding Alaska, into districts,
each district to contain only one of such Federal Reserve cities. The determination
of said organization committee shall not be subject to review except by the Federal
Reserve Board when organized: Provided, That the districts shall be apportioned with
due regard to the convenience and customary course of business and shall not necessarily be coterminous with any State or States. The districts thus created may be
readjusted and new districts may from time to time be created by the Federal Reserve
Board, not to exceed twelve in all. * * * "
The Board, recognizing the general desire for the establishment of the Federal
Reserve Banks at as early a date as practicable, determined to defer the investigation
and hearing of these petitions until a later date, announcing, however, that the action
taken with reference to the banks would not prejudice the decision to be arrived at
later, when the petitions should come up for definite determination.
When the first pressure of work attending the organization of the banks was over,
dates were set for the hearing of the petitions, and during the months of January and
February, 1915, all that had then Deen filed were heard by counsel. A detailed list
of the dates set for the hearings and a statement of other facts relating to the proceedings were printed in the First Annual Report of the Board (p. 192). Subsequently
the petition of certain banks in Tennessee for transfer from district No. 6 to district
No. 5 was withdrawn, at least for the time being. This left the following cases pending
before the Board:
(1) The petition of certain banks in northern New Jersey for transfer from district
No. 3 to district No. 2.
(2) The petition of certain banks in West Virginia for the transfer of the counties
of Wetzel and Tyler from district No. 5 to No. 4.
(3) The petition of certain banks in Oklahoma for transfer from district No. 11 to
district No. 10.
(4) The petition of certain banks in Nebraska and Wyoming for transfer from district
No. 10 to No. 7.
(5) The petition of the city of Baltimore to be designated as the headquarters of
district No. 5 in place of Richmond, Va.
(6) The petition of the city of Pittsburgh to be designated as the headquarters of
district No. 4 in place of Cleveland, Ohio.
Meantime, on March 13, certain banks in southern Wisconsin had filed a petition for
transfer from district No. 9 to district No. 7, and still more recently, on May 10, certain
banks in Connecticut filed a petition for transfer from district No. 1 to district No. 2.
These last two petitions, however, were received at a time when the Board had either
decided or was on the point of deciding the cases already presented. They were consequently not included in the action finally taken, but were reserved for later hearing
and adjudication.
When the arguments and briefs relating to the petitions already enumerated were
in hand, they were apportioned to committees of the Board. These committees
1
Reprinted from the Federal Reserve Bulletin of June 1, 1915.

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

115

reviewed the testimony and filed reports making recommendations with regard to the
best method of disposing of the subjects referred to them. Action would then have
been taken had it not been for the necessary absence of some members of the Board.
This necessitated a postponement of action during the latter part of March and the
whole of April. It was then voted to take definite action respecting the pending cases
which had been heard at some time during the week beginning May 3. In accordance
with this determination the Board on May 4 passed the following resolution:
"Be it resolved, That the recommendations of the respective committees be adopted
and approved, and that the petitions of the banks in southern Oklahoma, northern
New Jersey, Tyler and Wetzel Counties, West Virginia, be granted; and,
"Be it also resolved, That the petition of the banks of Wyoming and Nebraska be
denied; and,
"Be it further resolved, That action on other pending petitions be deferred until
further experience in the actual operation of the several districts, especially in the
light of the new clearing system which is about to go into effect, and of the extent to
which State banks take membership in the Federal Reserve System, shall have provided the Board with the necessary data' for a conclusion, it being the opinion of the
Board that action on petitions relating to changes in cities designated as the location
of Federal Reserve Banks should be deferred until the Board shall have reached a
conclusion from experience as to any further readjustments in the boundaries of the
several districts, or in the number of districts, which may be desirable in the operation
and development of the Federal Reserve System."
It will be seen that the Board in this decision denied one of the petitions—that of
Nebraska and Wyoming—deferred action on two, those of the cities of Baltimore and
Pittsburgh, for future consideration, and granted three, those of the banks of New
Jersey, West Virginia, and Oklahoma.
In order to make plain exactly what changes in the previous districts were made
effective by the granting of these three petitions, the accompanying map has been
drawn, and is herewith presented for the purpose of showing the boundaries of the
12 districts as they stand to-day. Inasmuch as the map is drawn upon too small a
scale to admit of the clear representation of counties, there is hereto appended a list
of counties in each of the States affected by the red istricting.
The names and capitalization of the banks in these transferred territories are
likewise given.
NEW JERSEY.

Counties transferred to district No. 2.
Bergen.
Essex.
Hudson.

Hunterdon.
Middlesex.
Monmouth.

Atlantic.
Burlington.
Camden.

Cape May.
Cumberland.

Morris.
Passaic.
Somerset.

Sussex.
Union.
Warren.

Counties remaining in district No. 3.
Gloucester.
Mercer.

Ocean.
Salem.

OKLAHOMA.

Counties transferred to district No. 10.
Beckham.
Caddo.
Carter.
Comanche.
Custer.
Garvin.
Grady.

Greer.
Harmon.
Haskell.
Hughes.
Jackson.
Jefferson.

Kiowa.
Latimer.
Le Flore.
Love.
McClain.
Murray.

Pittsburg.
Pontotoc.
Roger Mills
Stephens.
Tillman.
Washita.

116

ANNUAL REPORT OF TI.1.R FEDERAL RESERVE BOARD.
Counties remaining in district No. 11.

Atoka.
Bryan.

Choc taw.
Coal.

Johnston.
McCurtain.

Marshall.
Pushmataha.

WEST VIRGINIA.

In West Virginia the counties of Wetzel and Tyler were transferred from district
No. 5 to district No. 4.
NEW JERSEY.
List of banks transferred to district No. 2.
Name of bank.
Farmers National
First National
Seacost National
Atlantic Highlands National...
First National
Do
Belvidere National
Warren County National.
Bernardsville National
First National
Peoples National
Bloomfield National
Citizens National
Boonton National
Bound Brook National
First National
Do
Do
Do
Citizens National
Caldwell National
Califon National
Carlstadt National
Clinton National
First National
Do
Closter National
National Union
First National
Do
\
Do
Do
National State
Citizens National
First National
Flemington National
Hunterton County National...
First National
Central National
First National
National Freehold Banking Co.
Union National
First National
Do
Hackensack National
Peoples National
Hackettstown National
Peoples National
Hardyston National
First National
Do
Second National
First National
Irvington National
First National
Do
Hudson County National
Merchants National
Keansburg National
Peoples National
Amwell National
Lambertville National
Little Falls National
First National

Location.
Allentown
Arlington
Asbury Park
Atlantic Highlands.
Belleville
Belmar.
Belvidere.
.do.
Bernardsville.
Blairstown
do.
Bloomfield...
Bloomsbury.
Boonton.
Bound Brook...
....do
Bradley Beach.
Branchville
Butler.
Caldwell.
do...
Califon.
Carlstadt.
Clinton..
.do.
Cranbury.
Closter
Dover..
Dunellen
East Newark.
Eatontown...
Edge water
Elizabeth.
Englewood...
Englishtown.
Flemington..
.do.
Fort Lee.
Freehold.
....do...
do
Frenchtown.
Garfield
Guttenburg..
Hackensack..
do.
Hackettstown.
do.
Hamburg
High Bridge.
Hoboken
do
Hope
Irvington..
Jamesburg.
Jersey City.
do
do
Keansburg...
Keyport
Lambertville.
.do.
Little Falls.
Lodi

Capital and
surplus.
$100,000
81,000
175,000
100,000
225,000
75,000
175,000
100,000
50,000
50,000
75,000
150,000
25,000
200,000
60,000
125,000
27,500
50,000
100,000
41,000
50,000
31,000
60,000
150,000
70,000
150,000
50,000
375,000
40,000
35,000
33,000
50,000
1,000,000
150,000
58,500
200,000
200,000
49,000
100,000
150,000
100,000
160,000
64,000
75,000
200,000
300,000
250,000
100,000
85,000
30,000
660,000
400,000
32,000
145,000
75,000
1,200,000
750,000
250,000
27,500
60,000
157,000
200,000
30,000
35,000

ANNUAL KEPORT OF THE FEDERAL RESERVE BOARD.

117

List of banks transferred to district No. 2—Continued.
Name of bank.
Citizens National
First National
Do
Do
Manasquan National
Farmers & Merchants National
Metuchen National
First National
Do
Essex National
First National
National Iron
First National
Citizens National
American National
Broad-Market National
Essex County National
Manufacturers National
Merchants National
National Newark Banking Co
National State Bank
North Ward National
Union National
National Bank of New Jersey
Peoples National
Merchants National
Sussex National
Ocean Grove National
Orange National
Second National
Passaic National
First National
Paterson National
Second National
First National
Phillipsburg National
Second National
City National
First National
Rahway National
First National
Second National
First National
Do
Do
Do
Do
Rutherford National
First National
Do
Do
Second National
First National
Do
Do
Do
Farmers National
First National
Do
Do
National Bank
Peoples National
National Bank of North Hudson
First National
Do
Do
Do
Total.

Location.
Long Branch.
.do.
Lyndhurst
Madison
Manasquan
Matawan
Metuchen
Milford
Milburn
Montclair
do.
Morristown.
....do
Netcong
Newark
..do.
.do.
.do.
.do.
.do.
.do.
do
....do
New Brunswick.
do.
Newton
....do.......
Ocean Grove.
Orange
do.
Passaic..
Paterson.
do.
....do
Perth Amboy.
Phillipsburg..
do.
Plainfield.
do.
Rahway.
Ramsey..
Red Bank
Ridgefield Park.
Ridgewood
Rockaway
Roosevelt
Roselle..
Rutherford.
Sea Bright..
Secaucus...
Somerville..
do.
South Amboy
South River
Spring Lake
Summit
Sussex.
Tenafly
Town of Union..
Washington
Westfield
do.
West Hoboken
West Orange
Westwood
Whitehouse Station.
Woodbridge

I Capital and
\ surplus.
$250,000
150,000
55,000
85,000
75,000
150,000
55,000
45,000
87,000
187,500
150,000
250,000
400,000
50,000
375,000
270,000
2,000,000
750,000
1,000,000
2,000,000
750,000
500,000
3,000,000
500,000
250,000
190,000
400,000
50,000
300,000
300,000
550,000
1,100,000
600,000
350,000
300,000
500,000
150,000
300,000
300,000
150,000
45,000
225,000
60,000
110,000
30,000
50,000
65,000
150,000
32,500
25,000
250,000
100,000
125,000
125,000
75,000
100,000
200,000
50,000
125,000
250,000
123,948
80,000
115,000
120,000
47,000
47,000
40,000
32,071,448

118

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.
OKLAHOMA.

List of banks transferred to district No. 10.

The First National Bank.
Merchants & Planters National.
First National
Do.
Do
City National
First National
Do
National Bank of.
First National
Do.
Ardmore National.
First National
State National
First National
Do
Do
Calvin National
First National
The Chickasha National...
Citizens National
First National
Oklahoma National
First National
Oklahoma State National.
First National
Cordell National
Far mers National
State National
First National
Peoples State National
First National
City National
Duncan Nat onal
First National
Do
Do,
Francis National
First National
National Bank of Commerce
First National
Do
Farmers National
First National
National Bank of
First National
State National
City National
Farmers & Merchants National
First National
American National
Farmers National
First National
City National
National Bank of Commerce
State National
Farmers National
First National
Keota National
First National
Peoples National
City National
First National
Do
Do
Do
Mangum National
First National
Marietta National
The National Bank of
State National
Farmers National
First National
American National
City National
First National
Do
Do

Alex
Allen.
Altus.
.do
Anadarko.
do....
Apache...
Arapaho.
Ardmore.
..do...
.do..
Berwyn.
Blair .
Blanchard..
Calvin
do
Chickasha...
do
do
do
Clinton
do
Comanche...
Cordell
.....do
do
CusterCity.
do
Davis
Duncan
....do
....do
Eldorado
Elk City.
Francis..
Frederick..
do
Gotebo
Grandfield.
Hammon..
Hartshorne..
Hastings
Heavener...
do..
Hobart..
....do...
....do
Holdenville
....do
....do..
Hollis.
.do..
do..
Hvdro.
" do..
Keota.
Kiowa.
do..
Lawton
do
Lindsay
Lone Wolf.
Mangum.
do....
Marietta..
do..
Marlow..
do..
Mavsville..
....Ido
.do..
• McAlester..

do
Minco
Mountain View.

$60,000
60,000
26,722
45,000
30,000
54,500
67,250
60,000
30,000
30,000
30,000
120,000
200,000
110,000
30,000
29,000
50,000
28,000
30,000
113,500
90,000
260,000
125,000
35,000
27, 750
30,000
35,000
28,500
33,500
30,000
30,000
60,000
42,000
50,000
60,000
40,000
56,000
30,000
72,000
90,000
27,700
30,000
27,650
75,000
28,500
31,000
25,000
33,500
60,000
30,000
30,000
27,500
30,000
25,500
30,000
25,000
25,050
27,500
28,500
36,000
27,500
100,000
110,000
50,000
34,000
75,000
80,000
75,000
100,000
29,200
26,750
27,500
32,500
125,000
55,000
135,000
30,000
30,000

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

119

List of banks transferred to district No. 10—Continued.
Name of bank.
First National
Do
Do
National Bank of Commerce
Pauls Valley National
First National
National Bank of
The Chickasaw National
Union National
First National
Do
Farmers & Merchants National.
First National
Do
Do
Beckham County National
First National
Do
Do
Dp
American National
First N ational
Do
Do
Do
Park National
First National
Temple National
First National
Do
National Bank of
First National
Walters National
First National
Do
Waurika National
First National
German National
American National
First National
Latimer County National
First National
Southern National

Location.
New Wilson..
Olustee
Pauls Valley.
do
....do..
Poteau.,
do..
Purcell.
....do...
Q u.linton..
i
Ringling.
Roff
Rush
do..Springs.
Ryan
Sayre.
do....
Sentinel.,
Snyder..
Spiro..
Stigler..
.do..
Stonewall.
Stratford..
Stuart
Sulphur...
Talihina...
Temple
Thomas...
Verden
do..
Walters.
.do..
Washington..
Waurika
do..
Weatherford.
do
Wetumka ...
.do.
Wilburton ...
Wynnewood .
do

Capital and
surplus.
$25,000
30,000
150,000
60,000
30,000
42,500
60,000
75,000
33,000
30,000
50,400
37,500
36,000
36,000
60,000
27,500
32,500
27,500
27,500
29,000
30,000
60,000
42,000
27,500
29,000
30,000
26,250
27,500
30,000
26,500
30,000
30,000
10,000
26,000
27,650
25,500
28,500
60,000
30,000
35,500
29,000
100,000
80,000

Total.

5,994,873

WEST VIRGINIA.

List of banks transferred to district No. 4Name of bank.
First National
Do
Farmers and Producers National..
First National
Peoples National
Total .

Location.
Middlebourne
New Martinsville.
Sistersville
do
.....do

Capital and
surplus.
$39,500
75,000
136,000
165,000
115,000
530,500

The pending cases divide themselves into two broadly distinguishable classes, the
one involving extensive revision of the work already done and requiring for its elucidation and proper determination knowledge which could come only from experience
and observation of the actual working of the several Federal reserve banks; the other
involving simpler and less extensive interests and requiring less detailed information
as to the whole problem of districting.

120

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

The Board's announcement on the whole subject, while going as far as it has been
deemed practicable under existing conditions to take action, is not at all to be regarded as final and was not intended to be so. The right to act further on the matter
is reserved for future exercise as that may be necessary and at any time. Although
there has been no express statement to that effect, it is a clear inference from the
opinion handed down that future action will depend very much upon the course of
events in the districts as they are now made up, and will be determined by the con-*
ditions that are disclosed in the operations of the banks.

PART II.
REPORTS OF FEDERAL RESERVE AGENTS TO
FEDERAL RESERVE BOARD.

121

REPORTS OF FEDERAL RESERVE AGENTS.
In accordance with a request from the Federal Eeserve Board,
each Federal Reserve Agent has submitted a report to it concerning
the operation of the Federal Reserve Bank of his district for the past
year. These reports are herewith presented as personal expressions
of the Federal Reserve Agents, all recommendations for changes in
law being omitted:
DISTRICT NO. 1—BOSTON.
FREDERIC H. CURTISS, Chairman and Federal Reserve Agent.
Owing to the prevailing low rates for money, due to a large extent to the money
released by the new reserve requirements and to the advances made on emergency
orders, member banks have found it necessary to rediscount with this bank only
to a limited extent, and, therefore, to meet operating expenses the directors of this
bank have found it necessary to seek investments in the open market.
Municipal notes, bankers' acceptances, and, to a limited extent, Government bonds
have thus far constituted its principal investments.
A retrospect of conditions existing at the time the Federal Reserve Banks began
operations, November 16, 1914, should be of interest. There was outstanding in this
district on November 16, 1914, about $31,000,000 of emergency currency, consisting
of Aldrich-Vreeland notes and clearing-house certificates. The Boston banks showed
a deficit with their reserve agents and only a moderate excess in cash. The comptroller's call of October 31, 1914, showed bills payable and notes rediscounted of
about $6,000,000, most of this being borrowed by the country banks. At the date of
that call many of these banks were running below their reserves and the total surplus
reserve of the banks in the district was abnormally low. Money rates were high.
Demand money to brokers ranged from 5^ to 7 per cent, and the commercial borrower
was obliged to pay 6 per cent and even higher'for accommodation up to six months.
Member banks were restricting their own customers and were out of the market for
outside paper.
The Boston Stock Exchange was closed except for dealings through a committee,
and only limited transactions were allowed. The associated banks of Boston were
paying balances through the Boston clearing-house in clearing-house certificates and
bank notes. Within a few days after the opening of the Federal Reserve Bank call
money was lending at 4J to 5 per cent, and commercial paper was moving fairly
freely at 5J to 6 per cent. The new reserve requirements, which went into effect
at the date of opening of the bank, were materially felt throughout the district.
OPENING OF THE BANK.

As soon as the board of directors of this bank organized one of their first official
actions was the selection of its executive officer, the Governor. After a most careful
canvass of eligible men the position was offered to and accepted by Mr. Alfred L.
Aiken, at that time president of the Worcester National Bank, Worcester, Mass.
As it was deemed advisable to have a Deputy Governor, Mr. Thomas P. Beal, class
A director, and president of the Second National Bank of Boston, at the request of
the directors consented to assume that position without compensation until such
time as the services of an active officer were required,

20067°—16
9
123

124

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

Mr. Florrimon M. Howe, assistant cashier of the Old Colony Trust Co., Boston, was
chosen cashier of the bank.
Temporary banking rooms were secured at 101 Milk Street and vaults were hired
from the New England Trust Co.
The first payment on capital stock was received at the Subtreastiry, through the
courtesy of Mr. Charles S. Strecker, the assistant treasurer. This payment amounted
to $1,618,924.99 and was practically all received on or before November 2, 1914.
The stock of this bank was subscribed in about the following proportions:
Banks in group 1 approximately 76f per cent.
Banks in group 2 approximately 16^- per cent.
Banks in group 3 approximately 7-£$ per cent.
Group 1, banks with a capital and surplus over $250,000; group 2, banks between
$120,000 and $250,000; group 3, banks under $120,000.
The first shipment of Federal Reserve notes was also received at the Boston Subtreasury, where they were stored until the permanent vaults were ready for occupancy.
Acting under instructions from the Secretary of the Treasury, this bank was opened
for business on November 16, 1914, and the first payment of reserves was received at
the Subtreasury. This payment amounted to approximately $15,000,000, about
$9,300,000 of this being paid in gold, showing that the request of the Federal Reserve
Board to member banks that they make this payment in gold met with satisfactory
response.
Permanent quarters were later secured at 53 State Street, to which the bank moved
on January 1, 1915. These quarters are on the first floor of the Exchange Building,
and cover about 4,283 square feet offloorspace. These rooms were formerly occupied
by a bank and are well adapted to present needs. They furnish adequate space for
offices, a directors' room, cages, and space for clerical work. They are rented at an
annual rental of $12,500 and a lease was taken for four years from January 1, 1915.
The vaults in this room are modern, well arranged, and adequate for daily needs. In
the same building there has been rented from a safe-deposit company vaults formerly
occupied by the Boston Clearing House Association, and in these are carried the
bank's main reserves. Federal Reserve notes and the gold in the custody of the Federal Reserve Agent are kept in separate safes in the same vault.
INTERNAL ORGANIZATION AND PERSONNEL OF THE BANK.

The bank has a governor, a deputy governor (who is inactive), a cashier, assistant
cashier, chief clerk, paying teller, receiving teller, discount clerk, assistant discount
clerk, and eight other clerks, including stenographers, a telephone operator, bookkeepers, etc. Owing to the exigencies connected with the early opening of the bank,
the employees were chosen with emphasis given to their past experience in the position to be filled, and therefore most of them were drawn from the large commercial
banks, and the efficiency of these clerks has been an important factor in keeping the
staff at a minimum.
The Federal Reserve Agent is in charge of the credit and the statistical department
of the bank. He has an assistant, a secretary, and a stenographer. The deputy Federal Reserve Agent, after the early stages of the organization of the bank, apart from
his duties as director has been active only in the absence of the Federal Reserve Agent,
the department in its present stage of development not requiring the services of two
officials.
When the operating force of the bank has at any time had an unusual volume of
work put upon it the clerical force of the Federal Reserve Agent's department has
been freely used by the bank, and this has helped to keep the clerical force of the
bank small. This department has collected a moderate-sized reference library, which
has proved of considerable value to the officers of this bank and to member banks.

DISTRICT NO. 1—BOSTON.

125

BY-LAWS.

At a meeting of the board of directors on November 5, 1914, the following by-laws
were approved. Since that time two amendments have been made, one adopted on
June 3, 1915, and the other on September 2, 1915, both being in regard to the time of
directors' meetings:
BY-LAWS OF THE FEDERAL RESERVE BANK OF BOSTON.

ARTICLE 1.—Directors.

SECTION 1. Quorum.—A majority of the directors shall constitute a quorum for the
transaction of business, but less than a quorum may adjourn from time to time until
a quorum is in attendance.
SEC. 2. Vacancies.—As soon as practicable after the occurrence of any vacancy in
the membership of the board the chairman of the board shall take such steps as may
be necessary to cause such vacancy to be filled in the manner provided by law.
SEC. 3. Meetings.—There shall be a regular meeting of the board every Thursday
at 2.30 o'clock p. m. or, if that day be a holiday, on the first preceding full business
day. The chairman of the board may call a special meeting at any time and shall do
so upon the written request of any three directors or of the governor. Notice of regular
and special meetings may be given by mail or by telegraph. If given by mail, such
notice shall be mailed at least two days before the date of the meeting. If given by
telegraph, such notice shajl be dispatched at least one day before the date of the meeting. Notice of any meeting may be dispensed with if each of the directors shall in
writing waive such notice.
SEC. 4. Powers.—The business of this bank shall be conducted under the supervision and control of its board of directors, subject to the supervision vested by law
in the Federal Reserve Board. The board of directors shall appoint the officers and
fix their compensation. The board may appoint legal counsel for the bank, define
his duties, andfixhis compensation.
SEC. 5. Special committees.—Special business of the bank may be referred from
time to time to special committees, which shall exercise such powers as the board
may delegate to them.
SEC. 6. Order of business.—The board may from time to time make such regulations
as to order of business as may seem to it desirable.
ARTICLE 2.—Executive committee.
SECTION 1. How constituted.—There shall be an executive committee consisting of
the governor, the Federal Reserve Agent, and one or more directors chosen from
classes A or B; the member or members of the committee chpsen by the board shall
serve during the pleasure of the board or for terms fixed by it. Not less than three
members of the committee shall constitute a quorum for the transastion of business,
and action by the committee shall be upon the vote of a majority of those present at
any meeting of the committee. The committee shall have power to fix the time and
place of holding regular or special meetings and the method of giving notice thereof.
Minutes of all meetings of the executive committee shall be kept by the secretary,
and such minutes or digests thereof shall be submitted to the members of the board
of directors at its next succeeding meeting. Such minutes shall be read to the meeting
if required by any member of the board.
SEC. 2. Powers.—Subject to the supervision and control of the board of directors,
as set forth in article 1, section 4, the executive committee shall have the following
powers:
(a) To pass upon all commercial paper submitted for discount.
(b) To initiate and conduct open-market transactions.
(c) To make from time to time such changes in the discount rates as may seem best,
the same to be reported to the board of directors at the next meeting of the directors
following such changes.
(d) To buy and sell securities.
(e) To apply for and provide for the security to be pledged against the issuing of
such Federal reserve notes as may, in the judgment of the committee or of the board,
be necessary for the general requirements of the bank.
(/) To employ or to delegate to officers of the bank authority to employ clerks and
other subordinates and to define their duties and tofixtheir compensation.
(g) To approve bonds furnished by the officers and employees of the bank and to
provide for their custody.
(h) In general, to conduct the business of the bank, subject to the supervision and
of the board of directors.
Digitized for control
FRASER

126

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.
ARTICLE

3.—Officers.

SECTION 1. The board of directors shall appoint a governor, a deputy governor, a
secretary, and a cashier, and shall have power to appoint such other officers as the board
may from time to time determine to be necessary and appropriate for the conduct of
the business of the bank. The offices of deputy governor, secretary, and cashier, or
any two of them, may be held by one person, in the discretion of the board. The
officers chosen by the board shall hold office during the pleasure of the board.
SEC. 2. Federal Reserve Agent.—The Federal Reserve Agent, as chairman of the
board of directors shall preside at meetings thereof. Copies of all reports and statements made to the Federal Reserve Board shall be filed with the Federal Reserve
Agent.
SEC. 3. Deputy^ Federal Reserve Agent.—In the absence or disability of the Federal
Reserve Agent Ms powers shall be exercised and his duties performed by the deputy
Federal Reserve Agent.
SEC. 4. The governor.—Subject to the supervision and control of the board of directors, the governor shall have general charge and control of the business and affairs of
the bank, and he shall be the chairman of the executive committee. He shall have
power to make any and all transfers of securities or other property of the bank which
may be authorized to be sold or transferred by the executive committee or by the
board. The governor shall have power to prescribe the duties of all subordinate
officers and agents of the bank where such duties are not specifically prescribed by
law or by the board of directors or by the by-laws. The governor may suspend or
remove any employee of the bank.
SEC. 5. The deputy governor.—In case of the absence or disability of the governor
his powers shall be exercised and his duties discharged by the deputy governor, and
in case of the absence or disability of the deputy governor, the board shall appoint
from the directors a governor pro tern. The duties of the deputy governor shall otherwise be such as may be prescribed by the board of directors or by the governor. In
case the board shall deem that the business of the bank requires the appointment of
one or more assistant deputy governors it shall have authority to appoint such assistant
deputy governor or governors and shall prescribe and define his or their duties.
SEC. 6. The secretary.—The secretary shall keep the minutes of all meetings of the
board and of all committees thereof. He shall have custody of the seal of the bank,
with power to affix same to certificates of stock of the bank, and by authority of the
board or the executive committee to such other instruments as may from time to
time be required. The board of directors may, in their discretion, appoint a secretary pro tern or empower one or more officers to affix the seal of the bank to certificates
of stock or other instruments. The secretary shall perform such other duties as may
from time to time be prescribed by the board of directors, the executive committee,
or the governor.
SEC. 7. The cashier.—The cashier and at least one other officer designated by the
board of directors shall have the joint custody of all moneys, investments, and securities of the bank, subject to such rules as the board may adopt. He shall perform such
other duties as may be assigned to him from time to time by the executive committee,
the board of directors, or the governor.
ARTICLE 4.—Certificates of stock.

SECTION 1. Signature.—All certificates of stock, or payment of or on account of
stock subscriptions, shall be signed by the governor or a deputy governor and the
secretary or cashier, or such other officers as may be prescribed-by the board, and such
certificates shall bear the corporate seal.
ARTICLE 5.

SECTION 1. Business hours.—The bank shall be open for business for such hours
as the directors may from time to time determine.
ARTICLE 6.—Amendments.

These by-laws may be amended at any regular meeting of the board by a majority
vote of the entire board: Provided, however, That a copy of such amendment shall
have been delivered to each member at least 10 days prior to such meeting.
Adopted by the Board of Directors of the Federal Reserve Bank of Boston on
November 5, 1914.
The following amendment was favorably acted upon at the directors' meeting of
June 3, 1915:

DISTRICT NO. 1—BOSTON.

127

Before the word ''Thursday," section 3, line 1, of the by-laws, insert the word
"alternate"; after the word "Thursday," insert the words "beginning June 24," so
that the section will read:
"There shall be a regular meeting of the board every alternate Thursday at 2.30
o'clock p. m., beginning June 24, or if that day be a holiday, on the first preceding
full business day. The chairman of the board may call a special meeting at any time
and shall do so upon the written request of any three directors or of the governor.
Notice of regular and special meetings may be given by mail or by telegraph. If
given by mail, such notice shall be mailed at least two days before the date of the
meeting. If given by telegraph, such notice shall be dispatched at least one day
before the date of the meeting. Notice of any meeting may be dispensed with if each
of the directors shall in writing waive such notice."
The following amendment was favorably acted upon September 2, 1915.
Article 1, section 3, line 2, after the word "at," strike out the words "2:30 o'clock
p. m.," and substitute therefor the following: "Such time as may be fixed by the
board," so that that portion of section 3, as amended will read as follows:
"SEC. 3. Meetings.—There shall be a regular meeting"of the board every alternate
Thursday at such time as may be fixed by the board, or if that day be a holiday on
the first preceding full business day," etc.
DIRECTORS AND EXECUTIVE COMMITTEE.

During the first eight months the board of directors met every week, the executive
committee meeting on the same day. The amendment to the by-laws of June 3,
mentioned above, provided that the directors should meet every alternate Thursday,
and thereafter both the executive committee and the directors' meetings were held
every two weeks. The records show that 47 meetings of the board have been held,
with an average attendance of about 8 directors. The executive committee has met
52 times, with an average attendance of 4 members.
The executive committee consists of the governor of the bank, who is chairman,
the chairman of the board of directors, and three other members of the board. It
has been found expedient to have the class A and class B directors representing
group 1 serve on this committee continuously, both being Boston directors, the other
two class A directors serving during alternate periods.
Records are kept of the executive committee meetings. All rediscounts for member banks and investments made are approved, and matters pertaining to the policy
and conduct of the bank are discussed by that committee. The records of these
meetings are read and the action of the committee confirmed at each meeting of the
board of directors.
At each meeting of the board of directors a statement of the condition of the bank
and a deta'led record of all transactions in the way of loans and investments is presented to the directors. While the officers of the bank are in more frequent consultation with the two Boston directors, every director is in close touch with the bank's
affairs, and gives careful attention and thought to the development of its usefulness.
ADVISORY COUNCIL.

The board of directors, after careful consideration of the provisions of the Federal
Reserve Act regarding the functions and conception of the Federal reserve advisory
council, decided to appoint a banking official not connected with this bank as an
officer or director as a member of that council. On October 16, 1914, the directors
chose Mr. Daniel G. Wing, president of the First National Bank of Boston, as the
member of the Federal advisory council from this district for the term ending December
31,1915. Mr. Wing accepted this position and has served without compensation other
than allowances for ordinary traveling expenses. He has thus far attended every meeting of the advisory council, and after each meeting has appeared before the board of
directors of this bank by invitation and informed it of the deliberations and conclusions arrived at by that council.

128

ANNUAL HEPOKT OF THE

1'KDKHAL KKSKKYti BOARD.

DISCOUNT R A T E S .

Kates of discount were established by the board of directors, and went into
effect as follows:
10 days. 30 days. 60 days. 90 days.

Over.

N o v . 16..
20..
Dec. 1 7 . .
30..
Feb. 3 . .
J u n e 18..
July 1 . .
Aug. 6..

The directors in establishing rates for the longer-time paper have had in mind the
out-of-town banks. These rates have been established based on prevailing rates in
the outlying districts, so that assistance could be furnished without causing undue
inflation. As the money market became more normal and reserves began to accumulate in the centers, rates were maintained, as it was felt that the Boston banks,
owing to their large amount of unemployed funds, would probably meet any rate
established by this bank, and that a further reduction of rates might affect the general
money market.
While member banks have been slow to avail themselves of the privilege of rediscounting with this bank, this is due to a considerable extent to the general belief
that the process is a slow one and surrounded by much formality. Banks that have
rediscounted, however, find that such is not the case, and are using that privilege
whenever necessary. There is no delay in crediting a bank with its rediscounts.
The governor and chairman pass on paper as presented.
The 10-day rate was established to meet the needs of those banks that carry as a
secondary reserve the demand street loans of brokers, that the services of this bank
might be called upon for temporary use, instead of those loans being called. In normal
times it is expected that banks will use this short-time privilege, and that this rate
will follow very closely the current demand rates in Boston.
A commodity rate of 3J per cent was established on September 24, 1915, but as
yet no loans of a character warranting special rates have appeared in this district.
A similar situation arises in the matter of trade acceptances. The trade acceptance
in use at the present time has the character to a large extent of the ordinary two-name
paper offered for rediscount.
This bank has rediscounted for 29 member banks since the inauguration of the
system. These rediscounts have amounted to $2,386,922.80. The following table
shows these distributed by months:
Month.
November
December
January
February
March

1914

1915

April
May

June
July
August
September
October
November
December
Total
point, July 2,1915, $436,545.87.
Digitized forHighest
FRASER

Number
of applications.

Amount.

3
9

$26,577. 81
273,577. 56

9
8
15

126,343. 68
139,595. 96
178,163. 04
325,652. 53
191,338. 78
347,359.11
201,668.11
75,847.01
91,264.35
54,546.98
170,799. 34
184,188. 54

22
21
22
21
15
17
9
12
18

2,386,922.80

DISTRICT NO. 1

BOSTON.

129

During November and December, 1914, 10 banks rediscounted, and during the
year 1915, 28 banks rediscounted, of which 9 had rediscounted in 1914.
FEDERAL RESERVE NOTES.

This bank has issued $10,520,000 Federal Reserve notes in the following denominations :
5's
10's
20's
50's
100's

$3, 620, 000
4, 680, 000
640, 000
600, 000
980, 000

These notes have all been issued against rediscounts or indorsed bankers' acceptances, and the bank has reduced its liability by a deposit of gold. Mutilated notes
have been canceled and returned to the extent of $500,000, as follows: 5's, $260,000;
10's, $210,000; 50's, $10,000; 100's, $20,000.
The demand for these notes has come for the most part from Boston member and
nonmember banks, and as their issuance has not drained the bank's gold reserve,
but instead has mobilized additional gold in the hands of the Federal Reserve Agent,
it has been deemed a wise policy and one giving, additional strength to the bank's
position. The application for notes and the pledging of collateral in each case has
been approved by the executive committee. All gold held by the Federal Reserve
Agent for the redemption of Federal Reserve Notes is carried in gold order certificates
running in favor of the Federal Reserve Bank or Federal Reserve Agent of Boston.
There has been received from the Comptroller of the Currency $16,360,000 in Federal
Reserve Notes, as follows:
5's
10's
20's
50's
100's

$5, 080, 000
5, 920, 000
1, 760, 000
1, 600, 000
2, 000, 000

These notes have been carried, together with the gold certificates held by the
agent, in separate safes in the bank's vaults, in the State Street safe deposit vaults
located beneath the banking rooms of the Federal Reserve Bank.
Access to the bank vaults requires the presence of three officers and access to the
Federal Reserve Agent's safes requires the Federal Reserve Agent and one other.
It has been intimated by member banks that the demand for $50 and $100 notes
has been for the use of mutual savings banks. The demand for $10 notes can partly
be traced to the fact that $10 gold certificates have been used for pay roll and other
counter requirements in this district, and the Federal Reserve note has no doubt
replaced much of this class of currency.
In order to meet any unusual demand for currency a supply of Federal Reserve
notes of this bank amounting to $45,000,000 has been printed, a generous supply
being carried always on hand in Boston by the Federal Reserve Agent, ready for issuance. As these notes are estimated to cost $0.00959 per note, this has been a heavy
expense to the bank, but as the supply will probably cover several years' necessities
the cost will be distributed over that period. Each time notes are issued the cost is
charged by the bank as a current expense.
Satisfactory results have been obtained in cleaning and laundering soiled notes at
a very small cost.
The Subtreasury has furnished facilities for canceling and cutting mutilated notes
that have been redeemed and those notes have been forwarded to the comptroller

130

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

for destruction. Federal Reserve notes of other Federal Reserve Banks have been
received on deposit by this bank and forwarded to the issuing bank as follows:
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago.
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco

$954, 645
31, 690
24, 315
69, 865
29, 800
22, 925
3, 770
20, 305
12, 485
22,780
7, 205

Total

1,199, 785

Notes of this bank have been received from other Federal Reserve Banks as follows:
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco

:
.»

Total

$232, 070
29, 750
575
1, 440
1,255
7, 400
3, 050
160
550
290
6, 330
282, 870

GOVERNMENT BONDS.

This bank has purchased $1,000,000 United States Government 2's, 1930, at prices
ranging from 98J to 99. The question of purchasing Government securities has been
frequently discussed by the directors of this bank. Apart from the fact that each year
this bank may be called upon to purchase its pro rata of such securities presented
for purchase by member banks under the provisions of the Federal Reserve Act,
various arguments have been presented against the purchase of such bonds for investment.
OPEN-MARKET OPERATIONS.

In order to meet its operating expenses this bank has been a large purchaser of
bankers' acceptances and city and town notes.
On February 18, 1915, the directors of this bank voted to establish a rate of not
less than 2 per cent and not more than 4 per cent for the purchase of bankers' acceptances. It has purchased acceptances at rates varying from 2 per cent to 3 per cent.
The following table shows the purchases by months:

MrtXRHJT NO. 1

BOSTON.

Month.

February.
March
April
May
kfay.
June
July
August
September..
October
November..
December..

l.'il
Number
of purchases.

1915.

A mon n I.

$340; 317.18
1,030. 278.09
549i 853.94
643, 209.30
572; 516.55

1,063; 620 68
1,063, 486.29
781, 224.78
1,791, 963.05
3,348 051.89
2,920, 804.84

Total.

14,105,326.59

It is the custom of New England cities and towns, especially in Massachusetts, to
issue short-time notes in anticipation of taxes, to be paid from the current taxes.
These municipal warrants form a most attractive investment, a default in payment
being practically unknown. Under regulations of the Federal Reserve Board this
bank has purchased $8,247,535.85 of these warrants, as shown by the following table:
Month.

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

1915.

Total

Number
of purchases.

Amount.

$555,000.00
320,000.00
306,840.00
635,000.00
658,200.00
731,000.00
433,000.00
1,144,000.00
748,000.00
339,000.00
1,706,575.27
670,920.58
8,247,535.

These have been purchased at prices ranging from 2 per cent to 3J per cent. The
prevailing prices have been somewhat higher than in past years, due to purchases
by Federal Reserve Banks and low money rates. These town notes are readily convertible, there being a good demand for them from savings banks and trustees.
THE HANDLING OF CHECKS.

There is no problem that has been given more careful study by the officers of this
bank than that of the handling of checks for its member banks. In this particular
district, owing to the highly developed system which has been operated for several
years by the Boston Clearing House Association, the necessity for this bank to develop
a collection system of its own, so far as the handling of intradistrict checks is concerned, was not so imperative as in most of the other districts, for through that medium
a very large percentage of checks on New England banks, member and nonmember,
are being handled at par. The need of member banks is largely for the handling of
interdistrict checks, which not only form a large percentage of the total amount of
checks they receive, but most of which are subject to a collection charge under the
Boston Clearing House rules, member banks carrying accounts in other cities—principally Albany and Philadelphia—in order to collect these checks at par. The development of this interdistrict clearing is naturally dependent upon the development
of the clearing systems in other districts.

132

ANNUAL KEPOHT OF THE FEDERAL KESEKVE BOARD.

In connection with the opening of the Federal Reserve Banks this bank advised
its members that it would receive on deposit for immediate credit checks drawn on
any Federal Reserve Bank and checks drawn by member banks on member banks
in Boston only. This practice was continued until the collection system was inaugurated on June 15, 1915.
On November 13, 1914, tlie Federal Reserve Bank of Boston was elected a limited
member of the Boston Clearing House Association, and on November 18, 1914, began
to clear its Boston checks. From that date on the Boston banks made clearing-house
settlements by checks drawn on this bank, a policy which still continues and which has
done away with the payment of money in clearing-house transactions and the necessity
of carrying through the streets large sums of currency to and from the clearing house.
The method by which this is accomplished is as follows: Boston banks having debit
balances against the clearing house each day draw their check in favor of the clearinghouse manager, who in turn opens a temporary account in the Federal Reserve Bank.
These checks he deposits each day and draws his checks in favor of banks gaining or
having a credit balance.
On June 15, 1915, this bank inaugurated the voluntary clearing system generally
adopted by the Federal Reserve Banks, a system of immediate debit and immediate
credit for intradistrict checks. Forty-three banks joined this system at the outset,
and since that time nine additional banks have joined and two withdrawn from the
system, making the present number 50, as shown by the following list:
CITY OR TOWN AND NAME OF BANK.

Attleboro, Mass., First National Bank.
Bellows Falls, Vt., National Bank of.
Boothbay Harbor, Me., First National
Bank.
Boston, Mass., Boylston National Bank.
Boston, Mass., Commercial National Bank
Boston, Mass., First National Bank.
Boston, Mass., Fourth Atlantic National
Bank.
Boston, Mass., Merchants National Bank.
Boston, Mass., National Union Bank.
Boston, Mass., Old Boston National Bank.
Boston, Mass., Old Colony Trust Co.
Boston, Mass., Peoples National Bank of
Roxbury.
Boston, Mass., Second National Bank.
Boston, Mass., Webster & Atlas National
Bank.
Bridgeport, Conn., First Bridgeport
National Bank.
Chelsea, Mass., Broadway National Bank.
Claremont, N. H., Claremont National
Bank.
Clinton, Conn., Clinton National Bank.
Danbury, Conn., Danbury National Bank.
Gloucester, Mass., Cape Ann National
Bank.
Greenfield, Mass., First National Bank.
Greenwich, Conn., Greenwich National
Bank.
Haverhill, Mass., First National Bank.
Hudson, Mass., Hudson National Bank.
Holyoke, Mass., Park National Bank.
Hopkinton, Mass., Hopkinton National
Bank.
Lynn, Mass., Manufacturers National
Bank.

Manchester, N. H., Amoskeag National
Bank.
Manchester, N. H., Merchants National
Bank.
Marlboro, Mass., First National Bank.
Marlboro, Mass., Peoples National Bank.
Milibury, Mass., Millbury National Bank.
Montpelier, Vt., First National Bank.
New Bedford, Mass., Mechanics National
Bank.
Newburyport, Mass., Merchants National
Bank.
New Haven, Conn., First National Bank.
North Bennington, Vt., First National
Bank.
Northborough, Mass., Northborough
National Bank.
Norwood, Mass., Norwood National Bank.
Plymouth, Mass., Plymouth National
Bank.
Portsmouth, N. H., First National Bank.
Providence, R. I., National Exchange
Bank.
Quincy, Mass., Mount Wollaston National
Bank.
Springfield, Mass., Chicopee National
Bank.
Springfield, Mass., Springfield National
Bank.
Ware, Mass., Ware National Bank.
Westfield, Mass., Hampden National
Bank.
Windsor, Vt., State National Bank.
Worcester, Mass., Merchants National
Bank.
Worcester, Mass., Worcester National
Bank.

DISTRICT NO. 1-—BOSTON.

138

The largest number of checks handled in one day was 1,803, on October 18, 1914,
and the smallest number 226, on June 15, 1915. The average number of items daily
was as follows:
July, 1,023; August, 1,030; September, 1,045; October, 1,205; November, 1,255;
December, 1,202. The average amount of these checks daily has been as follows:
July, $1,064,297.36; August, $977,795.84; September, $1,090,206.51; October,
$2,010,813.44; November, $2,901,186.54; December, $2,290,814.11.
With the inauguration of this collection system the bank changed its previous
schedule in reference to checks on Federal Reserve Banks taking for immediate credit
drafts drawn by member banks upon the principal banks in New York, Albany, and
Philadelphia, as well as drafts drawn upon the Federal Reserve Banks of New York
and Philadelphia. Checks on the following Federal Reserve Banks are received on
a deferred basis.
Federal Reserve Bank of Richmond, two days after receipt.
Federal Reserve Bank of Cleveland, two days after receipt.
Federal Reserve Bank of Chicago, two days after receipt.
Federal Reserve Bank of St. Louis, two days after receipt.
Federal Reserve Bank of Atlanta, three days after receipt.
Federal Reserve Bank of Minneapolis, three days after receipt.
Federal Reserve Bank of Kansas City, three days after receipt.
Federal Reserve Bank of Dallas, four days after receipt.
Federal Reserve Bank of San Francisco, six days after receipt.
With the opening of the Federal Reserve Banks, the Boston Clearing House Association passed a resolution to amend section 2 of its rules and regulations to read a
follows:
"SEC. 2. For all items collected for account of the Governments of the United
States, the State of Massachusetts, or the city of Boston, for New England checks
collectible at par through the Boston Clearing House, and for items payable in the
cities of New York, Providence, Albany, Troy, Jersey City, Newark, Hoboken,
Bayonne, Philadelphia, and Baltimore, and for all items (whether such items are
collected through the Federal Reserve Bank of Boston or otherwise) which the Federal
Reserve Bank of Boston shall have notified the manager of the Boston Clearing House
Association that it will receive from its members for immediate credit at par, the
charges shall in all cases be discretionary with the collecting bank, and shall not be
governed by the provisions of these rules and regulations.''
Although all member banks were invited to enter the clearing system no efforts were
made on the part of this bank's officers to influence member banks to join, the character of the business of the banks in New England, especially that of banks outside of
Boston being such that after careful study it was concluded that these banks would
have difficulty in maintaining balances to meet their checks. The country bank has
been accustomed to count as reserve checks sent to its reserve correspondent as soon
as those items were mailed, and balances with those correspondents being counted as
reserve by the country banks as shown by their own books, and not as shown by the
books of the collecting bank, although even the record of the latter bank would include
uncollected checks. Furthermore, a practice has developed of allowing the out-oftown bank to remit for its own checks, and therefore the country bank has been accustomed to handle its business under the prevailing practice, the burden of carrying the
uncollected checks falling on the reserve correspondent, the country bank carrying
compensating balances to reimburse it.
As the reserves of the country banks are to be ulitmately transferred to the Federal
Reserve Banks, the Federal Reserve Banks must furnish its members with the facilities which they are receiving from their reserve correspondents. While the physical
handling of items, both time and demand, is a large one, it is not insurmountable, for

134

ANNUAL JiUrOKT OF TJI ti FEDERAL llESEHXti BOARD.

that means simply men and machines. The expense will be heavy, but there is little
question but that a saving can be made over the present existing methods, and under
the Federal Reserve Act this expense can be prorated among the member banks.
On the other hand, as the checks pertain to the reserves of the out-of-town member
banks the problem is a more serious one.
On November 10, 1915, the Boston Clearing House passed the new schedule of collection charges appended hereto, which showed a substantial reduction. There is no
question but that most of these changes were brought about by the facilities offered
by the Federal Reserve Banks through the gold settlement fund, and by the collection
system inaugurated in the clearing houses in other cities which are based to quite an
extent on the facilities given by other Federal Reserve Banks. The problems
involved in the handling of checks arise largely in connection with the out-of-town
banks, especially as it pertains to their reserves, and in this connection it would
appear that there was need for amendments to the Federal Reserve Act.
PUBLICITY.

Each month the Federal Reserve Agent has furnished for the Federal Reserve
Bulletin a report on conditions in New England. In this connection information,
opinions, and statistics have been furnished freely by the merchants in the different
linea of trade, and by the local bankers, and this service and cooperation has been
most helpful. The officers of the bank have furnished the local newspapers from
time to time with such details of its operation as they felt would be of interest to the
public at large. Rates of discount established by the bank appear each day in these
papers. During the past year addresses have been made before State banking associations and before many trade associations, it being thought a matter of the greatest
importance to have the bankers and merchants not only familiar with the details of
the Federal Reserve System, but to have them interested in the work the bank is
doing and the progress being made in the development of the system. The public
apparently know very little about the new banking system or its purpose and every
effort should be made to give them authentic information.
RELATIONS BETWEEN THE FEDERAL RESERVE BANK OF BOSTON AND ITS MEMBER
BANKS.

Owing to the unusual condition existing in the money market, and to the fact that
the reserve city banks offer facilities to the country banks which this bank has not yet
developed, more particularly in connection with the collection of checks and other
items, the latter banks have carried only their minimum reserve requirements with
this bank and have used its facilities only to a limited extent. The relations between
country bank officials and the officials of this bank have been most cordial. While
many of the banks in this district are borrowing, most of them find it much more
convenient to go to their correspondent bank and borrow, either in the form of a
demand loan, with or without collateral, or against a certificate of deposit.
The comptroller's calls on the several dates show the total borrowings of member
banks in the district as compared with their rediscounts with this bank, as follows:
Total
Borrowed,
borrowed. F . R . B .
Dec. 31,1914..
Mar. 4,1915...
May 1,1915...
June 23,1915..
Sept. 2,1915...
Nov. 10,1915..

$4,738,416
4,047,708
3,969,796
4,284,445
3,398,856
2,985,406

$105,000
234,531
410,723
270,441
190,849
131,725

DISTRICT NO. 1—BOSTON,

135

The officials of the city banks on the other hand are apparently satislied with the
progress made in the development of this bank's functions. While but few of the
Boston banks have rediscounted with us, almost all have intimated that should
occasion arise they would do so. Furthermore, several Boston banks have entered
into the acceptance business to a large extent, and the assistance that this bank has
given in the matter of rates and market for acceptances has done much to bring it
into favor with those banks. The Boston banks have also used this bank to a large
extent in exchange transactions, and the services offered by the gold settlement
fund have been used almost exclusively by those banks.
Thus far Boston banks have received more benefits from this bank than have the
other banks in this district. A possible exception to this is in Aroostook County,
Me., where, owing to an unusual situation surrounding the principal industry, the
potato crop, banks have relied on this bank to a considerable extent to carry them
through a trying period. The moral effect of having the Federal Reserve Bank of
Boston stand behind them was not only appreciated by those banks, but enabled
them to handle their business much more satisfactorily and to finance themselves
without having to call upon this bank to an undue extent for rediscounts or without
embarrassing their customers.
THE ATTITUDE OF STATE BANKS TOWARD THE FEDERAL RESERVE SYSTEM.

The trust companies in this district, at least those doing a commercial business,
are watching with interest the operations of this bank, and several are inclined to
enter the Federal Reserve System.
The relations between the officials of this bank and those of the State institutions
have been most satisfactory, and frequent interchange of ideas and the cooperation
received by these officials have been most helpful.
The board of directors have appointed a committee consisting of the governor,
the Federal Reserve Agent, and one director to examine and pass on the condition
of State banks applying for membership in the system. The class B director, group 1,
is the third member of this committee in the case of trust companies located in Boston,
and the class A director, group 1, on trust companies outside of Boston.
On the recommendation of the above committee the Federal Reserve Board admitted
the Old Colony Trust Co. to membership on August 14, 1915. This trust company
subscribed for 7,200 shares of stock, making payment of $360,000, being 50 per cent
of its subscription, on August 24, 1915, and on the same day transferred to this bank
$2,600,000 reserves.
In connection with the application of State banks for admittance to the Federal
Reserve System, the assistance and cooperation of the Massachusetts banking department has been of great assistance, and the relations between the officials of this bank
and those in that department are most cordial.
BANKERS' ACCEPTANCES.

New England imports a large volume of hides and wool from South America and
cotton and jute from the Orient and other sections of the world. These shipments
in the past have been financed through credits drawn on European centers. Since
the opening of the Federal Reserve Banks these foreign trade transactions have been
financed to a large extent through dollar credits drawn on this country and the
acceptances arising therefrom have found a ready market in the Federal Reserve
Banks. Several of the member banks in this district have entered this new field
of finance and the Federal Reserve Bank of Boston has used every effort to further
and develop that business, not only by buying a large amount of that class of paper,

136

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

but also through furnishing favorable forward discount rates to assist in protecting
its member banks. The following member banks have entered this field:
1. First National Bank, Boston, Mass.
2. Fourth-Atlantic National Bank, Boston, Mass.
3. Merchants National Bank, Boston, Mass.
4. National Shawmut Bank, Boston, Mass.
5. Old Colony Trust Co., Boston, Mass.
6. Second National Bank, Boston, Mass.
7. Merchants National Bank, Worcester, Mass.
Under special permission of the Federal Keserve Board the First National Bank,
of Boston, and the National Shawmut Bank, of Boston, have been given authority to
accept up to 100 per cent of their capital and surplus. It is of interest to note that the
former bank has reported the largest amount of acceptances of any member bank of the
Federal Reserve System.
GOLD SETTLEMENT FUND.

The inauguration of the gold settlement fund in Washington is one of the most
important developments of the Federal reserve system, and its influence has been
felt by the banks in the district in facilitating the handling of domestic exchange,
arising for the most part in connection with the collection of checks outside of the
district. While this settlement fund has been used for the most part by the city banks,
it has enabled those banks to collect the checks of the out-of-town banks with less
expense. The influence of this fund has also been shown in the recent regulation on
checks adopted by the Boston Clearing House Association and other associations.
Since the inauguration of this clearing fund between the Federal Reserve Banks
this bank has handled for its member banks without cost to them about $267,000,000
of exchange, only having to transfer $680,000 of gold to the fund after the initial
deposit.
ELECTION.

An election was held between November 16, 1915, and December 1, 1915, for the
selection of a class A and a class B director. The retiring directors represented group
3, and, therefore, only banks in that group had the right to vote for their successors.
Group 3 consists of 145 of the smaller banks in the district, and of that number only
60 banks certified district reserve electors. Only a moderate amount of interest was
taken in the election and only three candidates were nominated for each class. Of
the 60 electors only 52 voted. A majority of the votes cast were for the outgoingdirectors, Mr. Arthur M. Heard, of Manchester, N. H., class A, and Mr. Charles G.
Washburn, of Worcester, Mass., class B, who therefore were declared reelected.
MEMBER BANKS.

When the Federal Reserve Bank of Boston commenced business on November 16,
1914, it had 439 member banks. Soon after this the Island Pond National Bank,
Island Pond, Vt., joined the system, and on June 18, 1915, the First National Bank,
Van Buren, Me., which had just been organized, joined. On August 24, 1915, the
Old Colony Trust Co., Boston, Mass., also became a member, making a total of 442
banks.
During the first year the following nine banks have gone into liquidation and withdrawn from the system, leaving 433 member banks in this district:
Charter Oak National Bank, Hartford, Conn., consolidated with Phoenix National
Bank, Hartford, Conn.
Pacific National Bank, Lawrence, Mass., consolidated with Merchants Trust Co.,
Lawrence, Mass.
Aetna National Bank, Hartford, Conn., consolidated with Hartford National Bank,
Hartford, Conn,

DISTEICT NO. 1

BOSTON.

137

National Union Bank, Woonsocket, It. I., consolidated with Woonsocket Trust Co.,
Woonsocket, R. I.
Winthrop National Bank, Boston, Mass., consolidated with Merchants National
Bank, Boston, Mass.
New Haven County National Bank, New Haven, Conn., consolidated with New
Haven Bank, N. B. A., New Haven, Conn.
Lynn National Bank, Lynn, Mass., consolidated with Lynn Safe Deposit & Trust
Co., Lynn, Mass.
First Ward National Bank, Boston, Mass., and Mutual National Bank, Boston,
Mass., formed Metropolitan Trust Co., Boston, Mass.
The capital stock of this bank has been increased 6,044 shares since the original
payment was made on November 2, 1914. Through the admission of the Old Colony
Trust Co. of Boston and the readjustment of the capital and surplus of member banks
9,359 additional shares have been issued to member banks at par. Through the
liquidation of member banks and changes in capital and surplus 3,315 shares have
been surrendered.'
FIDUCIARY POWERS.

Under date of February 15, 1915, the Federal Reserve Board issued its circular
inclosing regulations covering the granting of special permission to national banks
to perform certain fiduciary functions under section 11 (k) of the Federal Reserve Act.
Thus far the applications of the following banks have been approved by the Federal
Reserve Board:
TRUSTEE, EXECUTOR, ADMINISTRATOR, AND REGISTRAR OF STOCKS AND BONDS.
CONNECTICUT.

1915.
Mar. 22
22
22
Apr. 29

Middletown National Bank, Middletown.
Second National Bank, New Haven.
Manufacturers National Bank, Waterbury.
National Bank of Nor walk, Nor walk.
May 8 National Tradesmena Bank, New Haven.
Q Merchants National Bank, New Haven.
O
July 26 Yale National Bank, New Haven.
Aug. 20 City National Bank, South Norwalk.
26. City National Bank, Bridgeport.
MASSACHUSETTS.

Mar. 15. First National Bank, Boston.
18. National Shawmut Bank, Boston.
22. Merchants National Bank, Boston.
22. Second National Bank, Boston.
22. Union Market National Bank, Watertown.
22. Worcester National Bank, Worcester.
26. Peoples National Bank, Boston.
26. Merchants National Bank, Salem.
26. Merchants National Bank, Worcester.
Apr. 3. National Mahaiwe Bank, Great Barrington.
3. Norwood National Bank, Norwood.
12. City National Bank, Holyoke.
20. First National Bank, Haverhill.
20. First National Bank, Webster.
22. Chicopee National Bank, Springfield.
24. Crocker National Bank, Turners Falls.
29. Home National Bank, Holyoke,

138

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

1915.
May 8.
8.
10.
June 1.
July 26.
Aug. 26.
26.
Sept. 10.
13.
Dec. L.

Massasoit-Pocasset National Bank, Fall River.
Mechanics National Bank, New Bedford.
Peoples National Bank, Marlboro.
Agricultural National Bank, Pittsfield.
Northampton National Bank, Northampton.
First National Bank? Marlboro.
Pittsfield National Bank, Pittsfield.
Cape Ann National Bank, Gloucester
Greylock National Bank, Adams.
Holyoke National Bank, Holyoke.
NEW HAMPSHIRE.

Apr.

3.
12.
20.
20.

Claremont National Bank, Claremont.
Stafford National Bank, Dover.
First National Bank, Concord.
Keene National Bank, Keene.
RHODE ISLAND.

Mar. 26. Aquidneck National Bank, Newport.
VERMONT.

May

5.
8.
Oct. 21.
Dec. 1.

Peoples National Bank, Brattleboro.
Citizens National Bank, Poultney.
First National Bank, Brandon.
Welden National Bank, St. Albany.
TRUSTEE, EXECUTOR, AND ADMINISTRATOR.
CONNECTICUT.

Mar. 22. First National Bank, Wallingford.
NEW HAMPSHIRE.

Mar. 18. Merchants National Bank, Dover.
May 10. Indian Head National Bank, Nashua.
TRUSTEE, EXECUTOR, AND REGISTRAR OF STOCKS AND BONDS.

Apr. 12. First National Bank, Portland, Me.
Oct. 6. Norway National Bank, Norway, Me.
TRUSTEE, AND REGISTRAR OF STOCKS AND BONDS.
NEW HAMPSHIRE.

June 7.
July 13.
14.
Aug. 2.
Sept. 10.

Ashuelot National Bank, Keene.
Citizens National Bank, Newport.
Wolfeboro National Bank, Wolfeboro.
Amoskeag National Bank, Manchester.
Mechanicks National Bank, Concord.
TRUSTEE.

May

6. Old Lowell National Bank, Lowell, Mass.
REGISTRAR OF STOCKS.

Mar. 22. Essex National Bank, Haverhill, Mass.
REGISTRAR OF STOCKS AND BONDS.

Sept. 21. City National Bank, Danbury, Conn.

DISTRICT NO. 1

BOSTON.

139

In none of the New England States is there any statutory provision expressly
authorizing national banks to act as trustee, executor, administrator, and registrar
of stocks and bonds except Vermont. In Vermont the legislature of 1915 passed an
act expressly authorizing national banks to act as executor, trustee, and administrator. New Hampshire recently passed an act forbidding banks to act as executor
or administrator. The question as to whether this act applies to national banks as
well as trust companies is now pending before the New Hampshire Supreme Court.
A committee, composed of the governor, the chairman, and the cashier, have
passed upon the applications of member banks for powers under section 11 (k) of the
Federal Reserve Act. In the case of each application this committee has scrutinized carefully both the resources and management of the applying bank before
making its report. The committee makes its report to the board of directors, who
make, through the chairman, a recommendation to the Federal Reserve Board based
upon the report of that committee. The granting of these privileges has been greatly
appreciated by member banks.
In determining the standing of these banks, the cooperation and assistance afforded
by Mr. James D. Brennan, chief national-bank examiner of this district, has been of
much value.
CREDIT NEEDS OF THE DISTRICT.

This is a savings district for the most part, and banking capital is in excess of the
demands of local business. Therefore banks are obliged to seek investments in the
open market. Commercial paper should constitute more of the investments of the
commercial bank, especially of the country bank. The country bank's experience,
however, in purchasing outside paper has not been very satisfactory, and this has led
those banks to invest more and more in a poorer grade of bonds yielding a high per
cent of income. These investments, in many cases, have not proved satisfactory,
and many banks show a heavy shrinkage in their bond accounts.
The development of a credit department and its use by member banks is a subject
that has been given careful consideration. Thus far the work in the credit department has been limited largely to the compiling of statistics and credit information
on member banks and State banks applying for membership. The credit departments of the Boston banks have been of much assistance and have been frequently
used in checking up the makers of notes offered for rediscount.
Every effort should be made by reserve banks to see that proper safeguards surround the commercial notes purchased by momber banks through note brokers. It
would seem advisable to standardize, as far as possible, the form of statement furnished by the broker to banks buying paper in the open market and that such statements should be certified to by outside accountants, and in the case of the larger borrowers that notes be registered by some responsible agent. This bank has furnished to
its member banks a simple form of statement to be used in obtaining credit information from depositors and has recommended the forms adopted by the American Bankers' Association as a standard form when more detailed information was deemed
necessary.
The provision of the Federal Reserve Act allowing member banks under certain
restrictions to invest in farm mortgages has been exercised to but a limited extent by
banks in this district, farm lands in New England not furnishing for the most part
attractive security for loans. There is, however, in many of the country districts a
demand for real-estate loans. If the Federal Reserve Act could be amended so that
in lieu of the farm loan member banks outside of reserve cities could invest a certain
portion of their time deposits in loans against improved local real estate, perhaps at
60 per cent of the assessed value of the land and buildings, member banks have
stated they would avail themselves of that privilege, and could invest more of their
surplus money locally and with greater safety.
20067°—16—10

140

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.
COOPERATION BETWEEN FEDERAL RESERVE BANKS.

This bank has purchased about $4,886,000 municipal notes, which it has distributed
among the other Federal Reserve Banks. In matters pertaining to exchange between
it and the other Federal Reserve Banks, this bank has allowed those exchanges to
take a normal course and has not made any profit on such transactions. The board
of directors voted to purchase from other Federal Reserve Banks a considerable
block of rediscounts provided those banks found it necessary to rediscount.
RELATIONS BETWEEN THE GOVERNOR AND FEDERAL RESERVE AGENT.

The relations between the governor and the Federal Reserve Agent from the beginning have been those of partners rather than of officers in a corporation, both realizing
that the ultimate success of the Federal Reserve Bank of Boston should be their first
thought. Both have shared in the responsibilities and tried to direct the bank's
policy for the greatest benefit of the commerce and member banks in this district.
While the Federal Reserve Agent has had charge of the credit department and statistical work, his organization has been easy of access and freely used by the officers
of the bank. On the other hand, the banking staff has assisted the Federal Reserve
Agent's department in collecting statistics, in handling unfit Federal Reserve notes,
and this service has been given freely when needed. There has been cooperation
at all times between the banking department and the department of the Federal
Reserve Agent.
EFFECT OF RATES OF DISCOUNT FIXED BY THE FEDERAL RESERVE BANK ON MONEY
RATES IN THIS DISTRICT.

The opening of the Federal Reserve Bank of Boston on November 16, 1914, had a
marked effect upon the then existing money rates in this district, especially so in
the large centers. This, however, was caused more through the release of cash formerly held by member banks as reserve than by the establishment of discount rates
by this bank.
Within a few days after the opening of the bank rates were reduced anywhere
from 1 to 2 per cent and the banks in the large centers were more inclined to extend
accommodation to their own customers, and the demand rate on brokers' loans was
equally materially reduced. The establishment of the lower rates from time to time
affected the rates paid by the country bank on its borrowings, for the Boston banks,
wishing to retain the loans of the out of town banks, met those rates and the country
banker has been able to borrow money during the past year probably lower than he
ever has before.
On the other hand, the exceptionally large reserves in the centers have no doubt
been a factor in the reducing of rates. During the past 12 months the country banks
have been borrowing on an average of about $4,000,000, and as this bank has only
rediscounted on an average about $200,000 of that amount that fact is apparent.
The following table shows that trend of rates in this district since November, 1914:

Aug.

July.

June.

May.
3

Dec.

Nov.

Apr.

Mar.

Feb.

Jan.

4-5* 3-J-4

Oct.

6-7

1915

Sept.

Call money
Time money, 6 months or
less
Year money
Acceptances
Town notes
Between banks

Dec.

Nov.

1914

3*-4i
M-4k H -41 3h 4 3f-4 3i-4*
4* 11
U
4*
4.1 _4i4+-44
2-2i 2-21 2-2^ 2-2£
2 -22J
-21
4 3 1 4 3 - 3 | 3 -3f 3 -3f
3 -m 21-3,1 2g- - 3 - | 2TV3^ 21-31 2i-3 21-23 2 ~2i
3J-4 3^-4
6 5|-6 4-5
3J-4 •i - 4 3 -4 3 - 4 3 -4 3 - 4 3 -4

6-7 5 -fi
6

4-5 4 4*
5
4f

3i-4*

DISTRICT NO. 1

BOSTON.

141

DISTRICT PROBLEMS.

The influence of the new reserve requirements, which became operative at the time
the Federal Reserve Bank opened, is a subject which is worth studying. Reference
to the subject of reserves has been made elsewhere in this report, especially as it
refers to the problem surrounding the collection of checks and its influence in the
retiring of emergency circulation.
Thus far, for the most part, the reduction in the new reserve requirements has been
of little help to the out-of-town bank.
On the other hand, the Boston banks, Boston being the only reserve city in this
district, have been able to reduce their reserves nearer the minimum. The releasing
of these reserves and the release of reserves in central reserve cities, especially New
York and Chicago, have produced a surplus in bank reserves which has greatly depressed the money market, producing low rates, which have reacted against the
country bank.
Another problem, which is not perhaps peculiar to this district is so important that
mention should be made of it, is the practice of allowing high rates of interest by banks
on open accounts and time deposits. While competition for business has brought
this practice about and will cause its continuation, still especially in the case of the
out-of-town bank it weakens the bank's condition, these banks feeling obliged to
invest their funds in loans and securities of a lower grade than good banking practice
would warrant in order to show a profit on those accounts. This question of interest
paid on accounts pertains likewise to the State institutions, and cooperation between
State banking departments and the officers of the Federal Reserve System would
seem advisable.
INDUSTRIAL AND AGRICULTURAL SITUATION.

The general industrial situation in this district at the time this bank began business was unsatisfactory, due to quite an extent to circumstances connected with the
European struggle. Mills were running only a proportion of their capacity, and,
owing to the prevailing high rates of money and the unsettled condition in staple
products, general business was marking time. Orders for foreign consumption,
however, were arriving in increasing amounts, and these orders for boots, shoes,
leather, arms, ammunition, woolen goods, and machinery have been the principal
stimulus to business for the greater part of the past year. Early in the fall, however,
domestic orders began to appear, especially from the South and West, and our mills
began to feel the effect of the falling off of foreign-made goods. While emergency
orders are still an important factor in some centers, general business has shown a
steady improvement from domestic trade, and on the whole every line, with but a very
few exceptions, reports good business. Labor is apparently well employed all over
the States, and especially in agricultural districts is hard to obtain. The dye situation, which affects the textile trade, has been getting more and more serious and has
restricted the production of certain goods.
Wliile New England is largely a manufacturing district, agriculture plays quite
an important factor in the outlying sections. A year ago, with the exception of the
potato crop, the general run of farm products was good and brought fair prices. The
foot-and-mouth disease was heavily felt in the spring in certain sections where farmers
have relied on carrying over stock for spring market. The season of 1915 on the
whole has been unsatisfactory for the farmer, the early rainy weather, together with
the unseasonable spring and summer months, has brought rather poor returns from
most of the crops, especially the hay crop, which is an important one in New England.
On the other hand, the potato crop in Maine, where it is the most important factor,
lias been unusually good and prices for that commodity range high. The farmers
relying on that crop will probably more than make up for their losses last year.

142

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.
EARNINGS AND EXPENSES.

Not until January 9, 1915, when the tentative regulation of the Federal Reserve
Board on the purchase of town warrants was received, was this bank in a position
to invest any of its money, with the exception of a limited amount of notes rediscounted for its member banks. The release on February 12, 1915, of Circular 5 of
that board enabled this bank to buy bankers' acceptances, and these two classes of
loans have formed the greater part of its investments throughout the year.
During the period of organization the expenses were heavy. On June 30, 1915,
therefore, an operating loss of $26,243.80 was shown. In addition to that its share
of the expenses of the Federal Reserve Board, its organization expense, and the
cost of preparing a large supply of Federal Reserve notes created an expense of
$56,562.70, this expense to be distributed over several years and charged off as earnings warrant.
It is the custom of this bank to count as income only actual interest and discount
earned, unearned income being carried in a separate account and transferred from
day to day as earned to current income. On June 30,1915, this bank showred unearned
income of $23,550.83, or an amount nearly equal to the operating loss.
While the demand for rediscounts from member banks has not increased, investments in acceptances, town warrants, and Government bonds during the second half
of the year have been such that the earnings for that period make a much more satisfactory showing, the surplus for the second period being practically enough to take
care of the operating loss of the first eight months.
LINE OF DEVELOPMENT.

The past year has been one of development. The officers and directors of the
bank have had no precedents to guide them. They have been blazing a new trail,
and, although each step has had to be carefully thought out, progress has been steadily made. The problems of this bank have been so different from those of the ordinary commercial bank that past experience and training have been of little help in
solving them. Each problem as it came up has had to be carefully analyzed and
solved only after the most careful study and inquiry into all conditions affecting it.
It has been the aim of the officers and directors of this bank to put it in operation
and to carry on its business with as little disturbance to the financial machinery of
this district as possible. Its development has not been forced, but has come naturally, adjusting its policy to present banking conditions and making innovations
slowly and with due care. It has been its aim to conserve its resources in such shape
as to make them available should occasion arise when member banks should need its
services.
APPENDIX.
BOSTON CLEARING HOUSE ASSOCIATION.
[Collection schedule, January, 1914.]
FOR NEW ENGLAND.

Free.—All items on Providence, R. I., and checks on banking institutions remitting at par through the Boston Clearing House.
One-tenth of 1 per cent.—All other New England items (exceptions noted below).1
OUTSIDE NEW ENGLAND.

Discretionary.—All items on Albany, N. Y.; Baltimore, Md.; Bayonne, N. J.;
Hoboken, N. J.; Jersey City, N. J.; Newark, N. J.; New York, N. Y.; Philadelphia,
Pa.; and Troy, N. Y.
i One-twentieth of 1 per cent.—Caribou, Fort FairfLeld, Fort Kent. Houlton, Mars Hill, Presque Isle,
Buren, and Washburn in State of Maine.
Digitized forVan
FRASER

UISTKIC'J' .Nu.

I—BOSTOiX.

143

One-tenth of 1-percent.—All items on Canada, Delaware, District of Columbia, Illinois, Indiana, Iowa, Kentucky, Maryland, Michigan, Minnesota, Missouri, New
Jersey, New York, Ohio, Pennsylvania, Virginia, West Virginia, and Wisconsin.
One-fourth of 1 per cent.—All items on Alabama, Arizona, Arkansas, California,
Colorado, Florida, Georgia, Idaho, Indian Territory, Kansas, Louisiana, Mississippi,
Montana, Nebraska, Nevada, New Mexico, North Carolina, North Dakota, Oklahoma,
Oregon, South Carolina, South Dakota, Tennessee, Texas. Utah, Washington, and
Wyoming.
No charge less than 10 cents.
CHARGE POINTS NOVEMBER, 1914.
[Showing points that have gone on par list since that date.
BOSTON CLEARING H O U S E .
FOREIGN DEPARTMENT.

Checks on banking institutions, as listed below, will be received on deposit subject
to a discount of one-tenth or one-twentieth of 1 per cent as stated, under the rules
and regulations adopted by the Clearing House Association.
VERMONT.
One-tenth of 1 per cent.

Poultney, First National Bank.
Poultney, Citizens National Bank.
Proctor Trust Co.
Proctorsville, National Black River Bank.
Randolph National Bank.
Richford Savings Bank & Trust Co.
Rutland, Clement National Bank.
Rutland, Killington National Bank.
Rutland, Rutland County National Bank.
Rutland, Rutland Trust Co.
Springfield, First National Bank.
St. Albans, Welden National Bank.
St. Albans, Franklin County Savings
Bank.
St. Albans, Peoples Trust Co.
Swanton Savings Bank & Trust Co.
Vergennes, National Bank of.
West Rutland Trust Co.
White River Junction, First National
Bank of.
WTiite River Junction, Hartford Savings
Bank & Trust Co.
Winooski, Champlain Trust Co.
Woodstock National Bank.

Barton Savings Bank & Trust Co.
Bethel, National White River Bank.
Bradford National Bank.
Bristol, First National Bank.
Burlington, Howard National Bank.
Burlington, City Trust Co.
Burlington, Merchants National Bank.
Burlington Trust Co.
Burlington, Ohittenden County Trust Co.
Chelsea, National Bank of Orange County
Chester, National Bank of.
Danville, Caledonia National Bank.
Derby Line, National Bank of.
Enosburg Falls Sayings Bank & Trust Co.
Enosburg Falls, First National Bank.
Essex Junction, Essex Trust Co.
Fairhaven, Allen National Bank.
Fairhayen, First National Bank.
Hard wick, Granite Trust Co.
Hardwick Savings Bank & Trust Co.
Hyde Park, Lamoille County NationalBank.
Island Pond National Bank.
Ludlow Savings Bank & Trust Co.
Lyndonville National Bank.
One-twentieth of 1 per cent.
Manchester Center, Factory Point National Bank.
Caribou, Arqostook Trust Co.
Middlebury National Bank.
Caribou National Bank.
Middletown Springs, L. & A. Y. Gray.
Fort Fairfield National Bank.
Montpelier National Bank.
Fort Fairfield, Frontier Trust Co.
Morrisville, Union Savings Bank & Trust Fort Kent Trust Co.
Co.
Houlton, Farmers National Bank.
Newport, National Bank of.1
Hoalton, First National Bank.
Newport, Orleans Trust Co.
Houlton Trust Co.
North Bennington, First National Bank.
Mars Hill Trust Co.
Northfield National Bank.
Presque Isle National Bank.
Northfield Savings Bank.
Presque Isle, Merchants Trust & Banking
North Troy, Valley Savings Bank &
Co.
Trust Co.
Van Bur en Trust Co.
Orleans, Central Savings Bank & Trust Van Buren, First National Bank.
Co.
Washburn, Aroostook Trust Co.
1
Have gone on par list since Nov. 16, 1914,

144

ANNUAL KEPOKT OF THE FEDERAL RESERVE BOARD.
NEW HAMPSHIRE.

Wolfborough, National Bank.
Woodsville National Bank.

One-tenth of 1 per cent.
CONNECTICUT.

Berlin National Bank.
Berlin Guaranty Trust Co.
Oolebrook, Farmers & Traders National
Bank.
Oolebrook National Bank.
Conway National Bank.
Groveton, Coos County National Bank.
Lancaster National Bank.
Lancaster Trust Co.
Lisbon Savings Bank & Trust Co.
Littleton National Bank.
North Conway Loan & Banking Co.
Whitefield Bank & Trust Co.

One-tenth of 1 per cent.

Ansonia National Bank.1
Darien, Home Bank & Trust Co.1 1
Derby, Birmingham National Bank.
Mystic River National Bank.
Norwalk,Fairfield County National Bank.
Norwalk, Central National Bank & Peoples Trust Co.
Seymour Trust Co.1 1
Shelton Trust Co.
Thomaston National Bank.
C. A. RUGGLES, Manager.

NOVEMBER,

1914.

CHARGE POINTS, NOVEMBER 16, 1915.
BOSTON CLEARING H O U S E ASSOCIATION.
NOVEMBER 16, 1915.

At a special meeting of the Boston Clearing House Association, held to-day, the
"Rules and regulations regarding collections" were amended to make discretionary
the following additional points:
1. Checks on points receivable upon deposit at par by# Federal Reserve Banks in
the cities of Boston, New York, and Philadelphia from their respective member banks.
2. Checks on banks and trust companies in the States of New York and New Jersey
receivable upon deposit at par by members of the New York Clearing House Association.
3. Checks on Federal Reserve Banks, provided that the credit of interest upon such
checks shall be delayed in accordance with the schedule of deferred credit adopted by
the Federal Reserve Bank of Boston.
4. Items on Chicago and St. Louis.
5. Drafts drawn upon insurance companies and mutual savings banks located in
New England.
The "Rules and regulations regarding collections" as amended now read as follows:
SECTION 1. These rules and regulations shall apply to all members of the assocition, and to all banks or trust companies or others clearing through such members.
The parties to which the same so apply are hereinafter described as collecting banks.
SEC. 2. The charges shall be discretionary with the clearing bank and shall not be
governed by the provisions of these rules and regulations upon the following items:
a. All items collected for account of the Governments of the United States, the Commonwealth of Massachusetts, or the city of Boston.
b. New England checks collectible at par through the Boston Clearing House.
c. Checks which Federal Reserve Banks in the cities of Boston, New York, and Philadelphia shall give notice that they will receive upon deposit at par from their respective member banks.
d. Checks on banks and trust companies in the States of New York and New Jersey
receivable upon deposit at par by members of the New York Clearing House Association.
e. Checks drawn upon any Federal Reserve Bank: Provided, That the credit of
interest upon such checks shall be delayed in accordance with the schedule of deferred
credit adopted by the Federal Reserve Bank of Boston.
/ . Items payable in the cities of New York, Providence, Albany, Troy, Jersey City,
Newark, Hoboken, Bayonne, Philadelphia, Baltimore, Chicago, and St. Louis.
g. Drafts drawn upon insurance companies and mutual savings banks located in
New England.
SEC. 3. For all items payable at any point in New England, excepting—
a. Items on the city of Providence, R. I.,
b. Checks collectible at par through the Federal Reserve Bank of Boston,

Have gone on par list since Nov. 16, 1914.

DISTB1CT NO. 1

BOSTON.

145

c. Checks on those banking institutions which pay checks on themselves sent
through the clearing house by remitting therefor promptly on receipt thereof, without
charge, checks on some member of the Boston or New York Clearing House, or upon
some banking institution clearing through some such member; and
d. Drafts drawn upon insurance companies and mutual savings banks located in
New England,
the collecting bank shall charge not less than one-tenth of 1 per cent of the amount of
the items respectively, and in no case less than 10 cents upon any one item, but all
such items received from any one depositor or correspondent on the same day may
be added together and treated as one item for the purpose of fixing the amount to be
charged.
Until further notice from the clearing house committee, section 3 of the rules and
regulations regarding collections outside the city of Boston is modified by the addition of the following:
"Should any banking institution in New England pay checks on itself sent through
the clearing house by remitting therefor promptly on receipt thereof, with a charge
of one-twentieth of 1 per cent, checks on some member of the Boston or New York
clearinghouse, or upon some banking institution clearing through some such member,
the collecting bank shall charge not less than one-twentieth of 1 per cent of the amount
of the items, respectively, and in no case less than 10 cents upon any one item; but
all such items received from any one depositor or correspondent on the same day may
be added together and treated as one item for the purpose of fixing the amount to be
charged/'
SEC. 4. For all items received (except those on Federal Reserve Banks and on the
points declared discretionary in sec. 2), payable at points in Delaware, District of
Columbia, Indiana, Illinois, Iowa, Kentucky, Maryland, Michigan, Minnesota, Missouri, New Jersey, New York, Ohio, Pennsylvania, Virginia, West Virginia, Wisconsin, and Canada, the collecting bank shall charge not less than one-tenth of 1
per cent of the amount of the items, respectively, and in no case less than 10 cents
upon any one item; but all items described in this section received from any one depositor or correspondent on the same day may be added together and treated as one
item for the purpose of fixing the amount to be charged.
SEC. 5. For all items (except those on Federal Reserve Banks) payable at points
in Alabama, Arizona, Arkansas, California, Colorado, Florida, Georgia, Idaho, Indian Territory, Kansas, Louisiana, Mississippi, Montana, Nebraska, Nevada, New
Mexico, North Carolina, North Dakota, Oklahoma, Oregon, South Carolina, South
Dakota, Tennessee, Texas, Utah, Washington, and Wyoming, the collecting bank
shall charge not less than one-quarter of 1 per cent of the amount of the items, respectively, and in no case less than 10 cents upon any one item; but all items described
in this section received from any one depositor or correspondent on the same day
may be added together and treated as one item for the purpose of fixing the amount
to be charged.
SEC. 6. The charges herein specified are in all cases to be collected at the time of
deposit or not later than the 10th day of the following calendar month. No"collecting
bank shall directly or indirectly^ allow any abatement, rebate, or return for or on
account of such charges, or make in any form any compensation therefor.
SEC. 7. In case any member of the association shall learn that these rules and regulations have been violated by any of the collecting banks, it shall immediately report
the facts to the chairman of the clearing house committee, or, in his absence, to the
manager of the clearing house. Upon receiving information from any source that
there has been a violation of the same, said chairman, or, in his absence, said manager, shall call a meeting of the committee. The committee shall investigate the
facts, and determine whether a formal hearing is necessary. In case the committee
so concludes, it shall instruct the manager to formulate charges and present them to
the committee. A copy of the charges, together with written notice of the time and
place fixed for hearing regarding the same, shall be served upon the collecting bank
charged with such violation, which shall have the right at any hearing to introduce
such relevant evidence and submit such argument as it may desire. The committee
shall hear whatever relevant evidence may be offered by any person and whatever
arguments may be submitted, and shall determine whether the charges are sustained.
In case it reaches the conclusion that they are, the committee shall call a special
meeting of the association and report thereto the facts with its conclusions. If the
report of the committee is approved by the association, the collecting bank charged
with such violation shall pay to the association the sum of $1,000; and in case of a
second violation of these rules and regulations any collecting bank may also, in the
discretion of the association, be excluded from using its privileges directly or indirectly, and, if it is a member, expelled from the association.

CHARLES P. BLINN, Jr., Secretary.

146

REPORT OF THE FEDERAL RESERVE BOARD.
BOSTON CLEARING HOUSE ASSOCIATION.
[List No. 2. December 6,1915.]

Banks outside of New England upon which the charge is discretionary:
All items on the cities of—
Albany, N . Y .
Baltimore, Md.
Bayonne, N. J.
Chicago, 111.
Hoboken, N. J.
Jersey City, N. J.
Checks upon the following banks:
Federal Reserve Banks—
Atlanta, Ga.
Chicago, 111.
Cleveland, Ohio.
Dallas, Tex.
Kansas City, Mo.
Minneapolis, Minn.

All items on the cities of—Continued.
Newark, N. J.
New York, N . Y .
Philadelphia, Pa.
St. Louis, Mo.
Troy, N . Y .

Federal Reserve Banks—Continued.
New York, N.Y.
Philadelphia, Pa.
Richmond, Va.
St. Louis, Mo.
San Francisco, Cal.

DELAWARE.

Delmar, First National Bank.

Seaford, First National Bank.
NEW JERSEY.

Allentown, Farmers National Bank.
Arlington, First National Bank.
Asbury Park, Asbury Park & Ocean
Grove Bank.
Asbury Park, Asbury Park Trust Co.
Asbury Park, Seacoast National Bank.
Atlantic City, Boardwalk National Bank.
Atlantic City, Marine Trust Co.
Bayonne, all items.
Beilevue, First National Bank.
Berlin, Berlin National Bank.
Bernardsville, Bernardsville National
Bank.
Blackwood, First National Bank.
Blairstowri, First National Bank.
Bloomfield, Bloomfield National Bank.
Bloomfield, Bloomfield Trust Co.
Bloomfield, The Watsessing Bank.
Boonton, Boon ton National Bank.
Bound Brook, Bound Brook National
Bank.
Bound Brook, First National Bank.
Caldwell, Caldwell National Bank.
Caldwell, Citizens' National Bank.
Camden, Camden National Bank.
Camden, Camden Safe Deposit & Trust
Co.
Camden, First National Bank.
Carlstadt, Carlstadt National Bank.
Clayton, Clayton National Bank.
Clifton, Clifton Trust Co.
Clinton, Clinton National Bank.
Closter, Closter National Bank.
Cranford, Cranford Trust Co.
Dunellen, First National Bank.
East Orange, East Orange Bank.
East Orange, Essex County Trust Co.
East Orange, People's Bank.

East Orange, Savings, Investment <fc
Trust Co.
Edgewater, First National Bank.
Edgewater, Northern New Jersev Trust
Co.
Elizabeth, Eiizabethport Banking Co.
Elizabeth, Elizabeth Trust Co.
Elizabeth, National State Bank.
Elizabeth, Union County Trust Co.
Englewood, Citizens' National Bank.
Englewood, Palisades Trust & Guaranty
Co.
English town, First National Bank.
Flemington, Flemington National Bank.
Flemington, Hunterdon County National
Bank.
Fort Lee, First National Bank.
Freehold, National Freehold Banking Co.
Garfield, First National Bank.
Glen Ridge, Glen Ridge Trust Co.
Guttenberg, First National Bank.
Hackensack, Hackensack National Bank.
Hackensack, Hackensack Trust Co.
Hackensack, Peoples National Bank.
Hackettstown, Hackettstown National
Bank.
Hackettstown, Peoples National Bank.
Haddon Heights, Had don Heights National Bank.
Harrison, West Hudson County Trust Co.
Hoboken, all items.
Hope, First National Bank.
Jersey City, all items.
Lakewood, People's National Bank.
Lyndhurst, First National Bank.
Manasquan, Manasquan National Bank.
Matawan, Farmers & Merchants National
Bank.

DISTRICT NO. 1—BOSTON.
Millville, Mechanics National Bank.
Montclair, Bank of Montclair.
Montclair, Essex National Bank.
Montclair, Essex Title Guaranty & Trust
Co.
Montclair, First National Bank.
Montclair, Montclair Trust Co.
Moorestown, Moorestown National Bank.
Morristown, American Trust Co.
Morristown, First National Bank.
Morristown, Morristown Trust Co.
Morristown, National Iron Bank.
Mount Holly, Union National Bank.
Netcong, Citizens National Bank.
Newark, all items.
New Brunswick, National Bank of New
Jersey.
New Brunswick, New Brunswick Trust
Co.
New Brunswick, Peoples National Bank.
Nutley, Bank of Nutley.
Orange, Orange National Bank.
Orange, Second National Bank.
Passaic, Hobart Trust Co.
Passaic, Merchants Bank.
Passaic, Passaic National Bank.
Passaic, Passaic Trust & Safe Deposit Co.
Passaic, Peoples Bank & Trust Co.
Paterson, Citizens Trust Co.
Paterson, First National Bank.
Paterson, German-American Trust Co.
Paterson, Hamilton Trust Co.
Paterson, Paterson National Bank.
Paterson, Paterson Safe Deposit & Trust
Co.
Paterson, Second National Bank.
Paterson, Silk City Safe Deposit & Trust
Co.
Pedricktown, First National Bank.
Perth Amboy, First National Bank.
Perth Amboy, Perth Amboy Trust Co.
Pitman, Pitman National Bank.
Plainfield, City National Bank.
Plainfield, First National Bank.
Plainfield, Plainfield Trust Co.
Plainfield, State Trust Co.
Pomp ton Lakes, First National Bank.
Port Norris, First National Bank.
Princeton, Princeton Bank.
Ridgefield Park, First National Bank.
Ridgewood, First National Bank.
Ridge wood, Ridgewood Trust Co.
Rockaway, First National Bank.
Roosevelt, First National Bank.
Roselle, First National Bank.
Rutherford, Bergen County Bank.
Rutherford, Rutherford National Bank.
Rutherford, Rutherford Trust Co.
Secaucus, First National Bank.
Somerville, First National Bank.
Somerville, Second National Bank.
South Orange, People's Bank (branch of
East Orange).
South Orange, Savings Investment &
Trust Co.
South River, First National Bank.
South River, South River Trust Co.

147

Spring Lake, First National Bank.
Summit, First National Bank.
Summit, Summit Trust Co.
Swedesboro, Swedesboro National Bank.
Tenafly, First National Bank.
Toms River, First National Bank.
Union, Town of, First National Bank.
Vineland, Tradesmen's Bank.
Weehawken (see Union, town of).
Westfield, National Bank of Westfield.
Westfield, Peoples National Bank.
Westfield, Westfield Trust Co.
West Hoboken, Commonwealth Trust Co.
West Hoboken, National Bank of North
Hudson.
West New York, N. J. Title Guaranty &
Trust Co.
West Orange, First National Bank.
W'estwood, First National Bank.
Woodbridge, First National Bank.
Williamstown, First National Bank,
NEW YORK.

Albany, all items.
Amityville, Bank of Amityville.
Amityville, First National Bank.
Amsterdam, First National Bank.
Astoria, all items.
Babylon, Babylon National Bank.
Babylon, Bank of Babylon.
Bay Shore, First National Bank.
Bay Shore, South Side Bank,
Bayside, all items.
Bronxville, Gramatan National Bank.
Brooklyn, all items.
Buffalo, Bank of Buffalo.
Buffalo, Buffalo Trust Co.
Buffalo, Central National Bank.
Buffalo, Commonwealth Trust Co.
Buffalo, German-American Bank.
Buffalo, Manufacturers & Traders National Bank.
Buffalo, Marine National Bank.
Buffalo, Market Bank.
Buffalo, Peoples Bank.
Buffalo, Third National Bank.
Cazenovia, Cazenovia National Bank.
College Point, all items.
Corona, all items.
Dundee, Dundee National Bank.
Elmhurst, all items.
Elmira, Merchants National Bank.
Elmira, Second National Bank.
Far Rockaway, all items.
Farmingdale, Bank of Farmingdale.
Farmingdale, First National Bank.
Fleischmanns, Citizens Bank of Griffins'
Corner.
Floral Park, Floral Park Bank.
Flushing, all items.
Freeport, First National Bank.
Freeport, Freeport Bank.
Geneva, First National Bank.
Glen Cove, Glen Cove Bank.
Glen Cove, Nassau Union Bank.
Glens Falls, First National Bank.

148

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

Glens Falls, National Bank of Glens Falls.
Granville, Washington County National
Bank.
Great Neck, Bank of Great Neck.
Greenwich, First National Bank.
Groton, Mechanics Bank.
Gouverneur, First National Bank.
Hempstead, First National Bank.
Hempstead, Hempstead Bank.
Highland Falls, First National Bank.
Hoosick Falls, Peoples National Bank.
Hudson Falls, Peoples National Bank.
Huntington, Bank of Hunting ton.
Huntington, First National Bank.
Ithaca, First National Bank.
Ithaca, Tompkins County National Bank.
Jamaica, all items.
Lake Placid, Lake Placid National Bank.
Larchmont, Larchmont National Bank.
Lawrence, Bank of Lawrence.
Lockport, National Exchange Bank.
Lockport, Niagara County National Bank.
Long Island City, all items.
Lynbrook, Lynbrook National Bank.
Mamaroneck, First National Bank.
Mariners Harbor, all items.
Mechanicsville, Manufacturers National
Bank.
Middleport, First National Bank.
Millbrook, Bank of Millbrook.
Mineola, First National Bank.
Mineola, Nassau County Trust Co.
Mount Yernon, First National Bank.
Mount Vernon, Mount Vernon Trust Co.
Newburgh, Highland National Bank.
New Brighton, all items.
New Rochelle, Huguenot Trust Co.
New Rochelle, National City Bank.
New Rochelle, New Rochelle Trust Co.
New Rochelle, North Avenue Bank.
New York City, all items.
Niagara Falls, Niagara Falls Trust Co.
Niagara, Power City Bank.
Northport, First National Bank.
Northport, Northport Trust Co.
Nyack, Nyack National Bank.
Nyack, Rockland County Trust Co.
Ogdensburg, National Bank of Ogdensburg.
Ossining, First National Bank.
Ossining, Ossining National Bank.
Oyster Bay, North Shore Bank.
Oyster Bay, Oyster Bay Bank.
Ozone Park, all items.
Pearl River, First National Bank.
Peekskill, Westchester County National
Bank.
Perry, First National Bank.
Philmont, First National Bank.
Plattsburg, First National Bank.
Pleasantville, Mount Pleasant Bank.
Port Chester, First National Bank.
Port Chester, Mutual Trust Co. of Westchester County.
Port Jefferson, Bank of Port Jefferson.
Port Jefferson, First National Bank.
Port Richmond, all items.

Port Washington, Bank of North Hempstead.
Richmond Hill, all items.
Ridgewood, Ridgewood National Bank.
Rochester, Traders National Bank.
Rockaway Beach, all items.
Rockville Center, Bank of Rockville
Center.
Rockville Center, First National Bank.
Roslyn, Bank of Hempstead Harbor.
Rye, Rye National Bank.
Salem, Peoples National Bank.
Saranac Lake, Adirondack National
Bank.
Saratoga Springs, Adirondack Trust Co.
Saratoga Springs, Citizens National Bank.
Schenectady, Citizens Trust Co.
Schenectady, Mohawk National Bank.
Schenectady, Schenectady Trust Co.
Schenectady, Union National Bank.
Smithtown Branch, National Bank of
Smith town Branch.
Southampton, First National Bank.
Stapleton, all items.
Stony Brook, Bank of Suffolk County.
Syracuse, Central City Trust Co.
Syracuse, City Bank of Syracuse.
Syracuse, Commercial National Bank.
Syracuse, First National Bank.
Syracuse, Merchants National Bank.
Syracuse, National Bank of Syracuse.
Syracuse, Salt Springs National Bank.
Syracuse, Syracuse Trust Co.
Syracuse, Third National Bank.
Syracuse, Trust & Deposit Co. of Onondaga.
Tottenville, all items.
Troy, all items.
Tuckahoe, First National Bank.
Westbury, Bank of Westbury.
Westhampton Beach, Seaside Bank.
Whitestone, all items.
White Plains, Central Bank of Westchester County.
White Plains, Citizens Bank.
White Plains, County Trust Co.
White Plains, First National Bank.
Woodhaven, all items.
Yonkers, First National Bank.
Yonkers, Westchester Trust Co.
Yojkers, Yonkers National Bank.
PENNSYLVANIA.

Allen town, Allen town National Bank.
Allentown, Merchants National Bank.
Allentown, Second National Bank.
Altoona, First National Bank.
Altoona, Second National Bank.
Blue Ball, Blue Ball National Bank.
Bradford, Bradford National Bank.
Canton, Farmers National Bank.
Canton, First National Bank.
Catasauqua, National Bank of Catasauqua.
Chambersburg, National Bank of Chambersburg.

149

DISTRICT NO. 1-—BOSTON.
Olarks Summit, Abington National Bank.
Coatesville, National Bank of Chester
Valley.
(Jollegeville, Collegeville National Bank.
Coplay, Coplay National Bank.
Danville, Danville National Bank.
Danville, First National Bank.
Duncannon, Duncannon National Bank.
Duncannon, Peoples National Bank.
Dunmore, First National Bank.
East Berlin, East Berlin National Bank.
Fawn Grove, First National Bank.
Freeland, First National Bank.
Girardville, First National Bank.
Glenside, Glenside National Bank.
Hamburg, First National Bank.
Hazleton, First National Bank.
Honey Brook, First National Bank.
Howard, First National Bank.
Huntingdon, First National Bank.
Lancaster, Northern National Bank.
Lancaster, Peoples National Bank.
Landisville, First National Bank.
Lansdale, First National Bank.
Lehighton, First National Bank.
Lemasters, Lemasters National Bank.
McConnellsburg, First National Bank.
Marietta, Exchange National Bank.
Millersville, Millersville National Bank.
Milton, Milton National Bank.
Mount Joy, First National Bank.
Mount Union, First National Bank.
Mountville, Mountville National Bank.
Nazareth, Nazareth National Bank.
Norristown, Peoples National Bank.

North Wales, North Wales National Bank.
Philadelphia, all items.
Phoenixville, National Bank of Phoenixville.
Pottsville, Miners National Bank.
Pottsville, Pennsylvania National Bank.
Quakertown, Quakertown National Bank.
Reading, National Union Bank.
Ridgway, EJk County National Bank.
Scranton, First National Bank.
Scranton, Third National Bank.
Scranton, Traders National Bank.
Selins Grove, Farmers National Bank.
Sbippensburg, Peoples National Bank.
Tamaqua, First National Bank.
Terre Hill, Terre Hill National Bank.
Tremont, Tremont National Bank.
Troy, Grange National Bank of Bradford
County.
Waynesboro, Citizens National Bank.
Waynesboro, Peoples National Bank.
West Chester, First National Bank.
West Chester, National Bank of Chester
County.
Williamsport, First National Bank.
Williamsport, West Branch National
Bank.
York, Central National Bank.
York, First National Bank.
York, York National Bank.
VIRGINIA.

Richmond, checks on all banks.
C. A. RUGGLES, Manager.

DISTRICT NO. 2—NEW YORK.
PIERRE JAY, Chairman and Federal Reserve Agent.

CHAPTER I.—ORGANIZATION.
DESIGNATION OF DISTRICT NO. 2.

The designation of New York State as Federal Reserve District No, 2, with New
York City as the location of the Fedeial Reserve Bank, was made by the reserve bank
organization committee on April 2, 1914.
CERTIFICATE OF INCORPORATION.

The certificate of incorporation, signed by the following as incorporators: The
National Commercial Bank, Albany; National Park Bank, New York; Marine National
Bank, Buffalo; First National Bank, Syracuse; Irving National Bank, New York, wag
filed with the Comptroller of the Currency May 18, 1914, whereupon the Federal
Reserve Bank of New York became a body corporate.
BOARD OF DIRECTORS.

The election of the three class A and the three class B directors of the Federal
Reserve Bank of New York was conducted by the organization committee during June
and July, 1914, and announcement of the election was made August 10. The appointment of the three class C directors by the Federal Reserve Board was announced on
September 30, completing the board of directors. On October 5 the first meeting of
the board of directors was held in the office of the Bank of the Manhattan Co., 40 Wall
Street, New York. Mr. Benjamin Strong, jr., then president of the Bankers Trust
Co. of New York, was elected governor of the bank, and Mr. Leslie R. Palmer, a
member of the board, secretary pro tempore. At the second meeting of the board
the terms of office of the directors were designated as follows:
Class A, representing the member banks: Franklin D. Locke, term expires December 31,1915; William Woodward, term expires December 31,1916; Robert H. Treman,
term expires December 31,1917.
Class B, representing commerce, agriculture., or industry: Leslie R. Palmer, term
expires December 31, 1915; Henry R. Towne, term expires December 31, 1916;
William B. Thompson, term expires December 31, 1917.
Class C, representing the Federal Reserve Board: George Foster Peabody, term
expires December 31, 1915; Pierre Jay, term expires December 31, 1916; Charles
Starek, term expires December 31, 1917.
A meeting of the directors and governors of all the reserve banks, called by the
Federal Reserve Board, was held in Washington October 20-22. At this meeting,
which was attended by over 80 directors and governors of Federal Reserve Banks,
standard by-laws were prepared, a uniform plan of accounting was tentatively approved
on, and various problems relating to the inauguration of the system and the operation
of the banks were discussed.
151

152

ANNUAL KEPORT OF THE FEDERAL RESERVE BOARD.

During October Mr. William Woodward, president of the Hanover National Bank
and a class A director, consented to become acting deputy governor, and Mr. James F.
Curtis was elected secretary and counsel for the bank.
On October 26 the following telegram was received:
" PIERRE JAY,
" Chairman Board of Directors,
" Federal Reserve Bank, New

York,

"Please call a meeting of the directors of the Federal Reserve Bank of your district
bank to commence business as prescribed by section 4 of the Federal Reserve Act, and
the Secretary of the Treasury will, in conformity with section 19 of the Act, formally
announce the establishment of the Federal Reserve Banks in each of the Federal
reserve districts on the 16th day of November, 1914. Please also assure the directors
that this department will gladly extend to them every facility and all possible assistance in opening the banks on that date and also assure them of my very best wishes
and of my earnest desire to cooperate with them in every possible manner to render
this great public service.
"W. G. MCADOO,
'' Secretary of the Treasury.''

To this telegram the directors replied on October 28, assuring the Secretary of the
Treasury of their desire to cooperate with the plan set forth in his telegram, as
follows:
"Hon. W. G. MCADOO,
" Secretary of the Treasury,

Washington:

"At the meeting of the directors of the Federal Reserve Bank of New York to-day
your telegrams of Monday to Gov. Strong and myself were presented, and I was
authorized to express to you the entire concurrence of the board of directors in the
telegraphic replies sent you on Monday by Gov. Strong and myself and to thank
you for your good wishes and offer of assistance and to assure you of their desire to
cooperate with your plan.
"PIERRE JAY, Chairman."

From its first meeting until December 31,1915, the board of directors has held 50
meetings, of which 18 have been attended by the full board, 24 by eight directors,
7 by seven directors, and 1 by six directors.
The relatively small size of this Federal reserve district has made it practicable to
hold frequent meetings of the board of directors, which has therefore been a more
active body than the exec utive committee. At these meetings the affairs and development of both the bank and the system have been discussed and considered at length.
The executive committee, consisting of the governor, as chairman, and four directors,
has held 59 meetings, of which 9 have been attended by the full committee, 10 by
five members, 22 by four members, and 18 by three members. The governor and
chairman are ex officio members of the committee. Mr. Woodward was elected a
member to serve till December 31, 1915, and all the other directors have served
upon it in turn. Mr. Starek, vice chairman, has been invited to attend all meetings
of the committee.
During the first five months all applications for rediscount were acted on by the executive committee, but on April 7, 1915, the senior officers were authorized, within
certain limits, to pass upon them, since which date relatively few meetings of the committee have been held.
There have also been 13 subcommittees of the board for the consideration of special
matters, several of which have held two or more meetings.
BY-LAWS.

The by-laws of the bank were originally adopted on October 28, 1914. They have
been amended from time to time, and a copy of them in their present form is attached
Digitized forhereto.
FRASER

DISTRICT NO. 2

NEW YORK.

153

PAYMENT OF CAPITAL.

One-half of the subscribed capital of the bank has been called during the period
covered by this report. The Federal Reserve Board designated November 2, 1914,
as the day for the payment of the first installment of one-sixth of the subscribed amount.
This installment aggregated $3,321,950, and as the office of the bank at that time was
not suitable for the purpose it was received in a room in the New York clearing house
by the three acting assistant cashiers of the bank and a number of volunteer clerks
from New York member banks.
Two other installments, each one-sixth of the amount subscribed, have been received, one on February 2, 1915, aggregating $3,318,183.35, and one on May 2, 1915,
aggregating $3,317,516.65. On July 1, 1915, the capital subscribed by 131 banks in
northern New Jersey, which by the adjustment of the district became members of the
Federal Reserve Bank of New York, was received, aggregating $962,650. Sundry
increases and decreases have brought the total capital paid up to $11,063,150 on
December 31, 1915.
The details of the capital account will be found in the Appendix.
TEMPORARY STAFF AND OPENING OF BANK.

On October 26, when the telegram was received from the Secretary of the Treasury
advising that he Would announce the establishment of the Federal reserve banks on
November 16, no staff had been assembled, nor had a banking room been secured.
Over 2,000 applications for positions in the bank were on file, but it was obviously
impossible during the intervening three weeks to attempt the organization of a permanent staff. The expedient of a temporary staff was therefore determined upon.
Mr. G. E. Gregory, cashier of the National City Bank of New York, consented to
become acting cashier of the bank, and Messrs. B. W. Jones, assistant secretary, and
R. H. Giles, assistant treasurer, respectively, of the Bankers Trust Co., and Mr. S. A.
Welldon, assistant cashier of the First National Bank, to become acting assistant
cashiers to effect the assembling and organization of a staff. Through the generous
cooperation of the subtreasury at New York and of several New York banks an
efficient volunteer staff was borrowed, each man experienced in his particular department.
On Monday, November 9, possession was obtained of the banking room at 62 Cedar
Street, which had been leased, and during the week the officers and clerks met daily
for drill in the various branches of the work.
On November 16 the bank opened its doors with a staff of 7 officers and 85 clerks.
During the day $99,611,670 of reserves were taken in from 211 banks. The tellers reported their accounts in balance at 5.30, and at 8 p. m. the first balance sheet of the
Federal Reserve Bank of New York was mailed to the Federal Reserve Board.
PERMANENT ORGANIZATION.

During the next eight weeks the permanent staff of the bank was gradually organized.
Mr. E. R. Kenzel was appointed assistant cashier, Mr. H. M. Jefferson auditor; Mr. L. II.
Hendricks transit manager. By the middle of January, 1915, a permanent staff of
5 officers and 36 clerks had been assembled, 9 of them having remained from the
volunteer body. June 9,1915, Mr. L. F. Sailer, assistant cashier of the National Park
Bank of New York, was elected cashier and Mr. L. H. Hendricks assistant cashier.
The staff on December 31, 1915, consists of the governor, the acting deputy governor,
the secretary, the cashier, two assistant cashiers, the auditor, and 67 clerks and other
employees; the Federal Reserve Agent, deputy Federal Reserve Agent, an assistant,
and one clerk.
In assembling the permanent staff and organizing the accounting system of the bank
the plan has been to free the departments as much as possible from mixed classes of

154

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

duties and yet so to interlock their work that automatic checks could be established
between the departments and on the accounts generally. It has also been planned as
far as possible to educate the employees in all branches of the work in order to be
ready at all times to handle a large volume of business in any particular department.
The accounting system provides a set of records both efficient and complete, yet
understandable to the layman, and so devised as to facilitate the preparation of the
many forms of statistics which are required. All work, including the general ledger,
is subject to countercheck. Bound books of entry are provided at some point in every
chain of operations.
The principal difference between the accounting plan of this and other large banks
is the introduction of separate debiting and crediting departments, which prepare the
debit and credit journals for the bookkeepers, and to which all departments originating
debits and credits route such items. This makes possible a valuable check on the
ledger accounts.
The auditor's department is not an operating department, but an independent
organization with authority to audit all of the departments, reporting to the directors,
the executive committee, and the officers. The proofs of all departments are audited
by it daily.
The work of the bank is divided among the following departments: Paying teller,
receiving teller, note teller, discount mail teller, securities, foreign exchange, crediting, debiting, bookkeeping, general bookkeeping, credit, auditing, statistics, transit
statement, filing, stationery, stenographic, telephone, pages, floormen, and watchmen. A separate department is also maintained by the Federal Reserve Agent.
DEPARTMENT OF THE FEDERAL RESERVE AGENT.

The Federal Reserve Agent's department, by early agreement with the deputy, was
organized in such a way as to relieve these two statutory officers of clerical duties and
the handling of Federal reserve notes, gold, lawful money, and collateral. A responsible assistant, with necessary clerical assistance from the bank, has kept all records
of the receipt and issue of Federal reserve notes, and under the responsibility of the
agent jointly with one of the officers of the bank has had custody of all Federal reserve
notes, gold, lawful money, and collateral held by the department.
OFFICES.

A temporary office at 27 Pine Street was used from October 10 to November 9, 1914.
On that day the bank occupied the office at 62 Cedar Street, which had been leased
from Messrs. Harvey Fisk & Sons, consisting of a banking room, suitable rooms for
directors, officers, and clerks, and a security vault. The bank was very fortunate,
on such short notice, to be able to obtain an office so well fitted for its initial and
organization period. But as its work progressed it became apparent that offices better
suited to its ultimate development should be obtained. The time consumed and the
inconvenience caused by the frequent visits by officers to the subtreasury and the
clearing-house vaults alone seemed to necessitate moving to an office adequately
equipped with vault accommodation. On December 16, 1915, therefore, a lease was
entered into with the Equitable Building Corporation for offices at the Pine and
Nassau Streets corner of its building, opposite the subtreasury, under which the
building corporation provides a very satisfactory banking room, vault, and working
space, including accommodations for officers of member banks, with options on other
space to cover future expansion. The term of the lease begins May 1,1916.
SUBTREASURY COOPERATION.

Immediately after designating the date for the inauguration of the Federal Reserve
System the Secretary of the Treasury advised this bank that the subtreasury at New
York would clo everything in its power to facilitate its operations, Hon, Martin

DISTRICT NO. 2—NEW YORK.

155

Vogel, assistant treasurer in New York, placed at the disposal of the bank two large
compartments in the sub treasury vaults, one for the bank and the other for the Federal
Reserve Agent, both of which have been in constant use since the day the bank began
business, requiring at each entry the presence of two members of the subtreasury
staff.
At the opening of the bank, and for a few days thereafter, the assistant treasurer
detailed a number of his most experienced money counters to assist in counting the
large volume of reserves then transferred. He also extended to the bank the facilities
of the subtreasury for cutting and mutilating Federal reserve notes unfit for circulation
as the first step in the process of their retirement. All gold coin received by the
bank has been weighed for it by the subtreasury. The attitude of the assistant treasurer and his staff throughout the period covered by this report has been cooperative
in every way and the assistance given by them to the bank has been material and is
gratefully acknowledged.
CLEARING-HOUSE COOPERATION.

At every step in the organization and operation of the bank the attitude of the New
York Clearing House Association has been one of active cooperation. On November
2, 1914, when the first installment of the capital stock of the bank was paid in, the
clearing house set apart a room in which the gold might be received and a vault for its
custody. The greater part of the reserves of the bank, from the day of its opening,
has been kept in the vaults of the clearing house. These vaults have been used
almost daily, and often more than once a day, each entry requiring the presence of
the manager of the clearing house as well as a representative of the chairman of the
clearing-house committee.
On November 9, 1914, the directors authorized the governor to apply for limited
membership in the clearing house as a convenience both to it and the member banks.
On November 13 the application was approved and the bank became a limited member, for the purpose of clearing checks, but without the usual financial responsibilities.
Full acknowledgment is made of the indebtedness of this bank to the officers and
members of the clearing house for the cooperation and assistance which they have
always given it.
MEMBER OF FEDERAL ADVISORY COUNCIL.

On November 25, 1914, the board of directors elected Mr. J. P. Morgan, of New York
City, a member of the Federal Advisory Council from Federal reserve district No. 2 for
the year 1915.
CHAPTER II.—DEVELOPMENT OF FUNCTIONS, AND OPERATIONS THEREUNDER.
DEPOSITARY OF THE RESERVES OF MEMBER BANKS.

The initial transfer of the reserves of 480 member banks in November, 1914, amounted
to $106,702,995.81. Of these deposits $97,954,175.84 came from banks in the city of
New York and $8,748,819.97 from other banks.
The second transfer of reserves began on November 16, 1915, and amounted to
approximately $3,700,000. The wide difference in the two amounts is due to the fact
that New York City banks were required to transfer at the outset their entire contribution of reserves, while in the case of other banks the transfer is distributed over a
period of 36 months. Most of the initial transfer was made in gold, gold certificates,
and lawful money. The second and third transfers were made largely in checks on
New York correspondents.
Outside of banks which have joined the collection system, and whose accounts are
therefore active, only about 36 banks draw on their accounts from time to time. The
accounts of the other 410 banks remain practically dormant. Of those banks whose
20067°—16
11

156

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

accounts are active, New York City banks usually replenish their balances by depositing their own cashier's checks, which are settled on the following day through the
clearing house; and other banks by transfers from New York City correspondents.
Some New York banks have been depositing items on banks in our collection system
and on the other Federal Reserve Banks. A certain volume of gold, silver, legaltender notes, and Federal reserve notes unfit for circulation is also deposited, but a3
yet the bank has not accepted national-bank notes on deposit, as it is unwilling to
become practically a redemption agency for the volume of notes which would be
deposited and assume the resulting expense.
It is difficult for this bank to ascertain whether the reserves of member banks are
unimpaired, as their position is learned only from the reports made in response to the
periodical calls of the comptroller. It seems desirable not only for this purpose but as
a measure of general banking publicity that the position of all member banks with
respect to reserves, loans and discounts and deposits should be presented more frequently and made public as is done by clearing houses and by a number of State
banking departments.
The total gold held by the bank and its Federal Reserve Agent on December 31,
1915, is $264,144,380, an increase of $182,610,665 over the amount held at the close
of business on the day of opening.
During the period about $110,000,000 in gold was received from member banks by
direct transactions outside of clearing house settlements.
The following statement shows, at the end of each month, the deposits of member
banks, the total reserve held, the composition of the reserve, and the gold held by
the Federal Reserve Agent. The growth in deposits is due largely to the increased
reserves which the expanding deposits of the member banks require them to carry.
Composition of reserve.
Deposits of
member banks. Total reserve. Legal-tender Silver and silver Gold and gold
certificates.
notes.
certificates.
Nov. 16,1914
Dec. 31,1914
Jan. 31,1915
Feb. 28,1915
Mar. 31,1915
Apr. 30,1915
May 31,1915
June 30,1915
July 31,1915
Aug. 31,1915
Sept. 30,1915
Oct. 31,1915
Nov. 30,1915
Dec. 31,1915

$101,816 801.29 $102,933, 569.00 $10,485,613 $10,914,241.00 $81,533,715.00
5,010,073.00
110,114! 812.84 99,099, 258.00
82,234,885.00
11,854,300
4,658,571.75
118,587! 486.21 93,407, 196.75
85,954,975.00
2,793,650
8,084,741.70
124,946', 634.28 112,234, 489.20
98,995,747.50
5,154,000
12,549,698.05 96,738,407.50
125,306, 078.26 112,393, 305.55
3,105,200
12,903,194.75
131,826, 629.32 107,261 027.25
91,940,332.50
2,417,500
17,121,267.60 103,539, 082.50
128,143, 549.39 125,181, 895.10
4,521,545
141,929, 512.72 151,345, 687.40
15,066,605 16,180,474.90 120,098,607. 50
10,806,233.85 128,182,262.50
147,581. 376.68 143,274 771.35
4,286,275
11,577,495.75 130,154,037.50
155,069. 198.47 144,274, 273.25
2,542,740
11,800,761.20 129,516, 755.00
155,203^ 832.64 147,328, 951.20
7,011,435
178,765, 123.50 172,323 885.60 19,153,460 12,587,570.60 140,582;855.00
8,936,229.25 152,756, 435.00
185,052, 542.32 185.690, 699.25 23,998,035
284,322.40 174,845, 827.50
179,433 322.16 180,821 914.90
5,691,765

Gold with
Federal
Reserve
Agent.

$9,115,000
9,370,000
11,560,550
18,833,350
26,858,700
31,660,000
40,320,000
47,520,000
52,550,000
61,350,000
70,?40,000
79,010,000
89,300,000

ACCOUNTS WITH OTHER FEDERAL RESERVE BANKS.

In accordance with the decision of the conference of directors and governors at
Washington October 20-22, 1914, the Federal Reserve Bank of New York on opening
announced its readiness to receive at par for immediate credit checks on all other
Federal Reserve Banks. The New York Clearing House immediately placed such
checks on its discretionary list.
On November 19 the People's National Bank of Brooklyn deposited a check of
$76.80 drawn on the Federal Reserve Bank of Kansas City. This was the first interdistrict transaction and the item was sent to the Federal Reserve Bank of Kansas City
for the credit of this bank. The volume of such transactions grew rapidly, and the
method of settling the resulting balances between Federal Reserve Banks became
one of the matters requiring immediate attention.

DISTRICT NO. 2-—NEW YORK.

157

At the first conference of the governors of Federal Reserve Banks, December 10-12
1914, it was agreed that at any time debtor banks might make settlement and creditor
banks might require settlement, in which latter case the expense of settlement should
be divided between the settling banks. It was decided to continue for a few months
the practice of receiving at par checks on Federal Reserve Banks in order to observe
the results of facilitating in this way the transfer of money between the 12 Federal
reserve cities. Member banks in debtor districts promptly took advantage of it to make
exchange without cost on points in creditor districts. The result was that the Federal
Reserve Banks in debtor districts soon found themselves owing large sums to reserve
banks in creditor districts. In order to prevent the further accumulation of such balances and avoid a heavy burden of expense,, reserve banks in debtor districts charged
member banks drawing such checks with exchange thereon at the current rate for exchange on the points to which they were sent. This had the effect of restraining
the process and the transfer of funds returned to its normal basis.
When the gold settlement fund was established, May 19, 1915, thus providing a
method of settling balances weekly, the total debit balances paid in by all reserve
banks in settlement of balances then unliquidated, and after six months of heavy
transactions, were only $6,383,000.
On June 15, by agreement between the Federal Reserve Banks and at their request,
this bank ceased receiving for immediate credit at par checks on other Federal Reserve
Banks, except those of Boston and Philadelphia, and deferred the credit of such checks
for a sufficient number of days to allow them to reach the paying bank. The New
York Clearing House, however, made no change in its rules except to impose a small
charge on checks drawn on the Federal Reserve Bank of San Francisco.
The aggregate transactions between this bank and other Federal Reserve Banks
from November 16, 1914, to December 31, 1915, have been $1,229,982,000.
Details of transactions between Federal Reserve Banks will be found in the
appendix.
GOLD SETTLEMENT FUND.

In view of the volume of transactions which had developed between Federal Reserve Banks during the early part of 1915 and of the proposal that they should establish
a system of check collection, it became evident that some method must be devised
of settling balances between them promptly, economically, and with minimum shipments of coin or currency. A plan whereby each Federal Reserve Bank should deposit with the Federal Reserve Board in Washington a portion of its gold reserve to be
used in settling balances with other Federal Reserve Banks was put into operation
on May 19, 1915, each reserve bank being required to pay into the fund $1,000,000
and its net debit to the other reserve banks. The total initial deposits were
$18,450,000.
Deposits in and withdrawals from the fund are made by banks at the nearest subtreasury. At the close of business each Wednesday each bank advises the Board the
amount due by it to any other bank, and the resultant net balance is charged or credited
to it on the books of the gold settlement fund. The transfer is a bookkeeping rather
than a physical one. Many banks maintain open exchange accounts with other banks
which are not settled. Special interim settlements may also be arranged between
banks when desired, and for convenience and safety in the custody and transfer of
their funds, Federal Reserve Agents are authorized to deposit gold with the gold
settlement fund.
In the domestic exchange markets which exist in several of the Federal Reserve
cities, New York is one of the principal cities on which exchange is bought and sold.
No such market for exchange on other points exists in New York. Also all the other
reserve banks receive checks on this bank at par for immediate credit, while New
York defers credit on all reserve bank checks save those of Boston and Philadelphia,

158

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

and more lately of Richmond. This bank therefore has been unable to secure an
offset to the large volume of New York exchange deposited with it by other reserve
banks, and it has been obliged to settle for it through the gold settlement fund in
gold, although in collecting such exchange through the clearing house it has been
paid largely in silver certificates or legal-tender notes, both of which currencies, as
well as gold, may be used by its members in paying debits. The total amount which
this bank has paid in gold to other reserve banks through the fund up to December
31, 1915, has been $83,283,000. At one time through these exchange operations of
other reserve banks it had an accumulation of $30,252,000 of silver, and $13,502,000
of legal-tender notes, which, however, through the cooperation of member banks in
this city wa3 later largely reduced. The neutralization of this process of drawing
out the gold of this bank, putting it in circulation in other centers, and leaving the
bank with silver in its place is one of the matters requiring study and adjustment.
Further details of the operation of the fund will be found in the appendix.
ESTABLISHMENT OF RATES OF DISCOUNT.

The Federal Reserve System was inaugurated at a time when the stringency of
money rates which had prevailed during August, September, and the early part of
October, 1914, was perceptibly easing. During these months purchases of commercial
paper by the banks had shrunk to a minimum, and the open-market rates ruled
from 6 to 7J per cent.
The announcement on October 26 that the Federal Reserve System would be opened
in three weeks, releasing a volume of reserves estimated at over $450,000,000, the
free issue of emergency currency under the Aldrich-Vreeland Act, the steady liquidation in merchandise and many commodities, and the decline in foreign exchange all
combined to reduce rates to a normal basis. The first rates established by the Federal
Reserve Bank of New York on November 16, 1914, were 5J per cent for paper not
exceeding 30 days and 6 per cent for paper of longer maturities. At that time there
was still a substantial volume of New York Clearing House loan certificates outstanding bearing 6 per cent interest. Surplus reserves of New York Clearing House
institutions increased from $19,200,000 on November 14, 1914, to $127,400,000 on
November 21, 1914, owing to the reductions in required reserves permitted by the
Act. This transfer of $108,200,000 in New York alone from the category of required
reserves to that of excess reserves produced an effect which was promptly felt
throughout the country. The relief felt by bankers and business men at the establishment of the reserve system, the complete retirement of clearing house loan certificates in New York, the beginning of the retirement of emergency currency, the
reopening of the stock and cotton exchanges, the return of foreign exchange substantially to normal, the dullness of trade and business, and the inevitable tendency
of bankers to put at least a portion of their surplus reserves to work led to a further
easing of the money market. On December 18 the bank rate for 30-day paper was
reduced to 5 per cent and on December 23 to 4J per cent.
In the belief that a period of easy money was at hand, the directors of the reserve
bank adopted the policy of keeping its rediscount rates slightly above the market
rates for commercial paper, so that, unless member banks really needed them, its
resources, most of which had hitherto been kept in the vaults of the member banks,
should not be forced upon a market already oversupplied with funds. This policy
has prevailed throughout the period under review. While business dullness has
given place to business activity, the great importations of gold have been more than
sufficient to support the credits—"domestic and foreign''—which the various activities
and developments have required. The surplus reserves of the country have continued
to increase in spite of the unparalleled expansion of loans and the withdrawal from
circulation of $89,300,000 of gold through the issue of Federal Reserve notes against it.

DISTRICT NO. 2—NEW YORK.

159

Except in time of commercial or financial crisis, the normal aggregate borrowing
by member banks in this district seldom exceeds $5,000,000. It seems likely, therefore, that of the funds of this bank which will normally be put into use only a small
portion will be absorbed by rediscounts of member banks. The balance will be
invested in Government obligations, in municipal warrants, bankers' acceptances,
and other bills purchased in the open market. The same will be true of other
reserve banks in districts where normal borrowing by member banks is light. The
influence of this bank on interest rates and the expansion and contraction of credits
is likely to be exercised more through its open-market operations than through the
rediscounts of the member banks, or of other Federal Reserve Banks. But, as it
has never possessed any volume of such paper, it has thus far been unable to exert
any influence over rates.
It should be the policy of reserve banks to maintain a fairly stable rate on such
paper. Then in times of expansion or demand for credit, when market rates rise
aboA^e theirs, such paper will flow into them in substantial volume and the gold
released in payment will find its way into the reserves of member and other banks,
increasing their credit power and checking extreme advances in rates. In times of
contraction or abundant credit, when market rates fall below those of the reserve
banks, the investments of the latter will be absorbed, as they mature, by banks and
other institutions, thereby transferring gold from their reserves to the reserve banks,
reducing the credit power of the member banks and checking extreme declines in
rates.
Similarly, if a sufficient volume of bankers' acceptances based on imports and
exports is developed to create a stable discount market in New York or elsewhere in
the United States, an international ebb and flow may be effected. When the dollar
acceptance reaches a degree of currency comparable with that of the sterling acceptance, its use will depend largely upon whether, on arrival in New York, it can be
discounted at a rate lower than the rate for sterling acceptances in London. Those
engaged in international business will draw on the city where their drafts can be
discounted at the lowest rate.
When the London rate rises above the New York rate, a substantial volume of
such bills will be transferred from the London to the New York market and be absorbed
by American banks. If in turn the New York rate rises above the London rate, a
substantial volume of bills formerly drawn on New York will be drawn on London,
thereby transferring the burden of absorbing them from New York to London and
raising the New York reserve percentage by reducing the volume of both loans
and deposits. The greater stability of exchange resulting from greater flexibility of
international discount markets should tend in time to reduce transfers of gold
reserves between New York and London.
Through the creation of the bankers' acceptance an international credit instrument
has been introduced into our banking system which when developed is likely to
prove a potent influence in regulating the flow of credit between Europe and America,,
It should enable America, in normal times, to regulate its credit position primarily
by recourse to the European market, thereby rendering domestic rate fluctuations
less violent. Greater stabilization of interest rates is one of the most valuable contributions the system is capable of making to the orderly progress of business.

160

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

The rates established by this bank have been as follows:
Date established.

Nov 16 1914
Dec. 18,1914
Dec 23 1914
Feb. 3 1915
Feb. 17, 1915
June 24 1915

10 days.

11 to 30
days.

31 to 60
days.

61 to 90 91todays
6
days.
months.

Per cent. Per cent. Per cent. Per cent. Per cent.
6
6
6
6
5
5
5
4
5
3
4
4
4

. .

....
SPECIAL RATES.

Feb. 17,1915, bankers' acceptances, 2 to 4 per cent.
July 24,1915, trade acceptances, 3J per cent.

An inquiry has recently been made concerning the effect the rates of this bank
have had on rates charged by its member banks to their customers. Outside of New
York City they are reported to have had no effect on the rates charged by member
banks. In New York City the consensus of opinion is that they have had no effect on
rates charged to commercial customers, but that member banks in this district have
had to meet the reserve bank rates of other districts, and on loans to member banks in
those districts the rates have been slightly lower than heretofore would have been
charged. On the market for acceptances and warrants the rates at which reserve
banks have been willing to buy have probably had a softening effect. This inquiry,
however, related to the direct effect of the rates officially established by this bank
and neither to the influence for lower rates exerted by the great reduction in required
reserves permitted by the act nor to the indirect influence exerted by the mere existence of the Federal Reserve System.
ELIGIBLE PAPER.

At the inception of the Federal Reserve System no subject aroused more general
interest among the banks and the public than the kind of paper which would be denned
as eligible for rediscount with Federal Reserve Banks. Circular No. 13, issued by the
Federal Reserve Board November 10, 1914, defined paper eligible for rediscount in
such a manner as to create the impression that very strict tests would be applied to
paper submitted for rediscount, and that onerous requirements with regard to statements of borrowers would be insisted upon. The general effect of the circular was to
lead country bankers to believe that their paper would not meet the requirements
and that they were without means of availing themselves of the resources of the
reserve bank. At bankers' gatherings held in the autumn and early winter the complaint was frequently heard that country banks held no paper eligible for rediscount.
Notwithstanding the general feeling with regard to the eligibility of their paper,
a number of banks, both country and city, from time to time applied for rediscounts.
The application blank required the member bank to certify the eligibility of the
paper under the terms of the Act and the regulations of the Federal Reserve Board.
The policy of this bank has been to accept such certificate without further inquiry
except in cases which indicated a possible misunderstanding of the definition of
eligible paper and to be liberal rather than technical where construction has been
necessary.
In revising and republishing the various regulations for the year 1915 the Reserve
Board simplified the regulation concerning eligible paper so as to leave no reasonable
doubt in the mind of any banker that at least a substantial part of his normal discounts would fall within its terms. The revised regulation was received with great
satisfaction by the member banks. To the request of the comptroller in his call of

DISTRICT NO. 2—NEW YORK.

161

March 4, 1915, that each bank should state approximately how much paper it held
which was eligible for rediscount, 81 banks replied that they held none. Shortly after
receiving these reports letters were written by this bank to such banks inviting their
officers to call and discuss the question of eligibility. In this way a much better
understanding of the subject was established.
As a result of several months' experience in making rediscounts and discussing the
subject with bankers this bank, on June 19, 1915, issued its circular No. 25 on eligible
paper with a view to further clarifying the subject and enabling a banker readily to
determine which of his notes could be certified as eligible.
The regulation defining eligible paper required a bank applying for rediscounts
after July 1, 1915, to state whether or not it held statements from borrowers in all
cases of rediscounts aggregating $5,000 or over, or 10 per cent of its capital, and in all
cases of purchased paper. To assist the member banks in obtaining such statements,
the reserve bank prepared four standard statement forms:
(a) For individual farmers or live-stock dealers.
(b) For individual merchants, manufacturers, etc.
(c) For firms.
(d) For corporations.
A large number of these were printed and offered without charge to member banks
in sufficient volume to use with all their borrowers. One hundred and ten banks
replied, taking about 38,000 of the forms. Subsequent correspondence with these
banks indicates that although the progress in getting statements from small borrowers
is slow, the fact that the statement is requested on a form bearing the name of the Federal Reserve Bank leads many to comply who have never before been willing to furnish statements.
REDISCOUNTS.

The first application for rediscount, received at the opening of the bank, was for
$2,182,500 from the Chemical National Bank of New York. One other rediscount
was also made on the opening day. During the period under review there have been
received from 54 banks 277 applications for rediscounts aggregating $11,384,937.63.
The largest application was for $2,182,500; the smallest for $1,015. The largest piece
of paper rediscounted was $300,000; the smallest, $20.20.
Applications are acted upon on the day of receipt, and the applying bank is advised
by telegram. The lack of understanding of the requirements, which sometimes led to
delays at the outset, has largely disappeared, and except for slightly more formality
in making the application, there is little difference between discounting at the reserve
bank and at other banks. The impression that the operation is surrounded with
difficulties has been overcome, at least with those banks which have applied. A few
days before maturity each piece of paper is sent for collection to the bank which rediscounted it and on the day of maturity is charged to its account. This gives the rediscounting bank an opportunity to protect all indorsements. The provision of the Act
requiring a rediscounting bank in indorsing paper to "include a waiver of demand,
notice, and protest," while intended to protect the reserve bank, really works against
its interests. Being obliged to relieve the reserve bank of responsibility to protect
prior indorsements, the member banks, if rediscounting becomes general, are likely
to select for the purpose paper which has no indorsements. The reserve bank should
assume as much responsibility in this respect as any other bank.
Although the normal amount of borrowing by the banks in this district is light, yet
the proportion of even this amount done at the reserve bank has been very small.
The banks naturally continue borrowing at equal or lower rates from correspondents
with whom they have had relations for years. In many cases they leave bonds on
deposit with their city correspondents against which, on telegraphic advice, they may
borrow. Other banks which borrow on their commercial paper instead of rediscounting it use it as collateral to their own notes. This is simpler for both lender and bor-

162

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

rower. It would greatly facilitate the operations of the reserve bank if member banks
were permitted to borrow from it on their own notes secured by commercial vr^per,
duly indorsed and certified to as to eligibility, as collateral. Not only would it greatly
reduce the accounting labor of recording and computing interest on large numbers of
small notes, a consideration of first importance in times of stress, but the margin of
collateral which commercial banks receive on such loans could be obtained by the
reserve bank, when desirable, without the formalities otherwise necessary. It would
enable member banks to borrow for short periods, which they are often unable to do at
present for lack of the proper maturities. It would provide that desirable element
of flexibility in rediscounting relations with member banks which is entirely lacking
under the present provisions of the Act.
Further statistics of the rediscounts made during the period will be found in the
Appendix.
FEDERAL RESERVE NOTES.

On November 16, 1914, the first shipment of Federal Reserve notes was received by
the Federal Reserve Agent from the Comptroller of the Currency. On November 19
the bank pledged with the Federal Reserve Agent $500,000 of commercial paper rediscounted by member banks and received from him a similar amount of Federal Reserve
notes. These notes were not required by the banks which made the rediscounts, as
they had already withdrawn by check the credits so established. They were taken
by this bank for its general use. The issue of Federal Reserve notes gave the reserve
bank the opportunity of affording to its member banks complete interchangeability
between book and note credits. The bank therefore established the policy of issuing
Federal Reserve notes freely to any member bank desiring them whether the credit
thus withdrawn was established by it through rediscounting, or the deposit of checks,
or the deposit of gold or lawful money. In practice, however, most credits withdrawn
by notes have been established by the deposit of checks which have been collected
by this bank in gold or lawful money through the clearing house. Accordingly, the
accumulation of cover in the hands of the Federal Reserve Agent has been mainly
gold, with but a small amount of rediscounts. The processes provided by the Act
for the issue of Federal Reserve notes to the reserve bank permit complete interchangeability between gold and rediscounts held by the agent. Gold may be substituted fof rediscounts and rediscounts for gold, in accordance with the requirements
of the reserve bank. During the entire period its requirements have been for notes
with which it might exercise its statutory right to "exchange Federal Reserve notes
for gold, gold coin, or gold certificates."
The policy of the Federal Reserve Bank has resulted in greatly strengthening its
gold position and its ability to assist its member banks or other Federal Reserve
Banks should they at any future time seek credit in order to withdraw gold for domestic
or foreign uses. Through this policy also it has been able potentially, at least, to
retard the expansion of credit by impounding in the hands of the agent a large volume
of gold which might otherwise have found its way into bank reserves already superabundant.
Furthermore, through this policy it has been able to take the first step toward accomplishing one of the purposes of the Act set forth in its title, e. g., "to furnish an elastic
currency." There are two forms of elasticity, one of quantity and the other of quality,
both provided for in the Act.
From the point of view of cover, the gold certificate is completely inelastic. It
stands at one extreme of our currency, with a dollar of gold set aside behind each
dollar of paper. At the other extreme stands the national-bank note, with only 5
cents of gold set aside behind each dollar of paper. The assets of the issuing bank
make it good, but its elasticity is nullified by the requirement that it must be secured
dollar for dollar by Government bonds.

DISTRICT NO. 2— NEW YOBK.

168

Between these two extremes the Federal Reserve note, a new form of currency,
has been introduced. For each dollar of this paper there is set aside from 40 centa
to $1 of gold. As in the case of the national-bank note, the obligation of the United
States and the assets of the issuing bank secure it.
The process in which this and other Federal Reserve Banks have been engaged is
the substitution, as a circulating medium, of a note which is elastic in quality for the
inelastic gold certificate. Gold is the most uneconomical medium of hand-to-hand
circulation since, when held in bank reserves, it will support a volume of credit
equal to four or five times its own volume. What the reserve bank does in accumulating gold behind its Federal Reserve notes is to establish with the holder of each
note a credit which may be availed of whenever the occasion requires. With this
credit established it can convert at will its gold-covered notes into notes covered
partly by gold and partly by commercial pa/per. In times when credit is becoming
strained and bank reserves need strengthening or when gold must be exported, this
conversion will take place, and after the strain is over the gold cover will be restored
through the repayment of the rediscounts substituted for it. In this way elasticity
of quality in our currency is obtainable. But it should not be construed as in any
way a deterioration of the currency contemplated by the Act. Quite the reverse is
true. The Act provides for the issue of Federal Reserve notes in unlimited amounts,
with 40 cents of gold behind each dollar of paper. This is elasticity of quantity and
it becomes operative with the minimum of gold cover. Elasticity of quality, on the
other hand, operates with a gold cover always above the 40 per cent minimum and
ranging as high as 100 per cent.
In order to be prepared for any currency demands which might be made upon it,
the Federal Reserve Bank of New York in the spring of 1915 adopted the policy of
having printed and keeping constantly on hand a supply of Federal Reserve notes
substantially in excess of the amount of emergency currency which, experience shows,
this district might be called upon to supply. The maintenance of this policy and
of the policy of issuing Federal Reserve notes freely has entailed a heavy cost upon
this bank. Unissued Federal Reserve notes are carried at cost on the books of the
bank, and at the end of each month the amount of notes issued to the bank during the
month is charged off at cost. The shipment of notes unfit for circulation to the
Comptroller of the Currency at Washington for cancellation and destruction is a
further item of expense in connection with the maintenance of these policies. The
directors and officers of the bank, however, feel that the results accomplished amply
justify the expense incurred, and consider that the added strength furnished the
bank by the gold thus accumulated is perhaps the most important result of the operations of the period.
Some reduction has already been made in the cost of printing Federal Reserve
notes, and it is to be hoped that further experience and study will enable other substantial reductions to be made in the cost of preparing for issue what has already
become an important element of the circulating medium of the country. The Act
provides that all expenses in connection with the issue and redemption of Federal
Reserve notes shall be borne by the Federal Reserve Banks, and in view of the service
the banks are performing in accumulating gold through the medium of these notes,
the feeling is quite general among their officers that the notes should be furnished to
them at the lowest possible cost consistent with the high quality of workmanship
required.
The design of the notes is not altogether satisfactory for efficient handling. In
sorting notes it is necessary to be able readily to distinguish between notes of this
bank and notes of other reserve banks. This would be greatly facilitated if the printing of the distinctive number and letter of each bank were made more general on the
face of the note.

164

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

While a general simplification of the various forms of currency is much to be desired,
it does not seem appropriate to enter into a discussion of the broader aspects of the
problem here. It may be suggested, however, that the denominations of silver certificates in circulation in this district during the period have not well met the needs.
At times there has been a great shortage of ones and twos and at all times there has
been a plethora of fifties. If the denominations in which silver certificates are issued
could be provided in a more flexible manner, or left to the discretion of the Secretary
of the Treasury, it is probable that the requirements of trade and commerce would
be better satisfied. It would also be a great convenience to reserve banks, as well
as to the member banks in the larger cities, if the gold order certificates could be
issued in denominations of $50,000 and $100,000 as well as in the $5,000 and $10,000
denominations now authorized.
Detailed figures showing the transactions in and movements of Federal Reserve
notes will be found in the Appendix. The following is a summary to December
31, 1915.
Total notes issued to bank
$89,440., 000
Less on hand
$16,139, 280
Unfit for circulation, retired
None.
16,139, 280
Net amount in circulation
73, 300, 720
On December 31, 1915, the Federal Reserve Agent held against Federal Reserve
notes issued:
Rediscounts
$140,000
Gold certificates

89, 300,000

Total

89,440, 000
PURCHASE OF WARRANTS.

The regulation concerning the purchase of municipal obligations issued in anticipation of taxes, termed "Warrants," was issued December 22, 1914. On December
31 this bank arranged to purchase from the comptroller of the city of New York
$5,000,000 of the city's notes due June 4 to 10, 1915. This was its first open-market
operation under the provisions of section 14 of the Act. Shortly after this purchase
had been announced, other reserve banks asked this bank to act for them in purchasing eligible warrants, New York being the primary market for a large volume
of this class of obligation. At the next conference of governors, January 20 to 23, 1915,
the purchase of such "warrants" was thoroughly discussed and other reserve banks
appointed this bank their agent in the New York market to purchase warrants and
other securities authorized under section 14. During the period the aggregate purchases of "warrants" for this bank and for other reserve banks have been as follows:
1915

January
February..
March
April
May
June
July
August .
September.
October
November.
December..
Total.

For itself.

For other
reserve banks.

$5,260,000
1,850,000
777,000
700.000
1,613,000
1,885,000
3,588,500
4,644.000
422,000
100,000
5,000,000
387,027

$4,115,000
1,850,000
1,596,000
630,000
900,000
835,000
2,998,500
5,676,000
768,000
105,000

26,226,527

19,761,582

i65

DISTRICT NO. 2—NEW YORK.

The purchase of this volume of "warrants" under the terms of the regulation has
tended toward uniformity of issue and understanding of the basis of quality on the
part of both the municipalities and the reserve banks. It seems not unlikely that
if the latter continue to purchase "warrants" a very desirable standardization of
such obligations will gradually be brought about. To facilitate this the Federal
Reserve Bank of New York has prepared a standard form of note or revenue bond
conveniently arranged to include:
(a) The certificate, (b) certification of ordinance passed by the common council,
(c) certificate of authority, (d) certificate of corporation council, and (e) comptroller's
certificate of facts.
The language and arrangement conform with the provisions of New York law and
the eligibility requirements of the Federal Reserve Act.
The only difficulty encountered under the regulation has been that some municipalities which defer the payment of taxes for many months after their assessment,
borrow in anticipation of such taxes in two periods. The earlier of these notes, many
of which are offered in this market, are rendered ineligible by the regulation which
provides that warrants must mature after the day upon which penalty attaches for
nonpayment of taxes.
Some confusion has arisen on the part of municipalities and those who deal in
their obligations concerning the meaning of the term "warrant" as used in the regulation of the Reserve Board. The obligations covered by the regulation must be
obligations of the entire municipality, but a warrant in the ordinary use of the term
is an evidence of the authority of a disbursing officer to discharge a debt of the municipality, often from some specific fund. Possibly the use of some other term would
lead to a clearer general understanding of the class of obligation covered by the regulation.
One provision of the regulation which has hardly been used is the authority to
the Reserve Bank to purchase warrants from any member bank with its indorsement.
If this provision were availed of more generally a very desirable facility might
be extended to member banks which would be of indirect advantage to their
municipalities.
BANKERS' ACCEPTANCES.

The right to accept drafts was conferred on New York State banking institutions
by the act of April 16, 1914. Shortly afterwards a few acceptances were reported,
principally against securities. It was not until the derangement of international
credit facilities at the opening of the European war that American bankers' acceptances, especially those relating to foreign commerce, came into existence in substantial
volume. At that time some of the trust companies with foreign connections extended credits freely to their customers to replace credits formerly granted by European banks which had been either withdrawn or reduced; they also accepted drafts
in large volume. On and after May 18, 1914, member banks were authorized also to
accept drafts drawn upon them involving the importation or exportation of goods.
The volume of acceptance liabilities reported by New York banks in March, June,
and September, 1915, has been as follows:
Mar. 4.
National banks ..
Trust companies.
State banks

$18,706,078

Mar. 19.

June 23.

$68,268,749
1,074,607

$16,721,068
47,403,681
1,003,624

Sept. 2. I Sept. 25.
$6,910,755

$35,731,856
1,812,076

166

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

The regulation of the Federal Keserve Board defining the kind of acceptances
which are eligible for purchase by Federal Keserve Banks was published on February
12, 1915. The first bills were purchased by this bank on February 23, consisting of
$87,400.63, accepted by the National City Bank, having 35 to 69 days to run, at 2J
per cent.
The monthly purchases of acceptances by this bank in the New York market have
been:
For itself.
1915

February...
March
April
May
June
July
August
September.
October
November..
December..
Total.

Number
! of pieces.

Amount.

For

other Reserve
Banks.

Number
of pieces.

Amount.

$1,659,740.21
3,343,143.17
1,272,694.36
867,420.18
3,083,261.75
2,496,865.67
1,597,630.63
1,769,880.50
2,199,679.95
1,899,606.56
5,64-5,708.78

86
250
84
48
34
147
89
172
163
246
313

263,871.25
799,809.42
700,396.57
305,873.80
602,558.89
348,050.89
910,417.47
948,243.05
028,098.36
594,951.04
809,823.59

1,236 25,833,631.76

1,632

22,312,094.33

41
140
8G
46
132
106
103
89
68
115
310

The policy pursued by this bank thus far has been to purchase good acceptances
whether or not the acceptor was a member bank. It has been suggested that by
purchasing only bills accepted by member banks the business would be driven to them.
But the broader policy was determined upon in the belief that the most important
duty of this bank, at the inception at least of the use of bankers' acceptances in the
United States, is to assist in developing both the business and the market; that nonmember banks in extending acceptance credits are contributing to the development
of the business; and that the establishment of a stable discount market of large volume in New York will in the long run help member banks in developing their acceptance business far more than any attempt of the reserve bank to restrict the business
to them.
The reserve bank and the market rate for the discount of such bills in New York
has been for nearly a year, and is now, lower than the rate for similar bills in London.
The relatively small volume of isuch credits which American banks have succeeded
in making operative even under the unusually favorable opportunity which the war
presents for their extension, is evidence of the difficulty which will be encountered
in developing the acceptance business in the United States. Some of the fundamental
difficulties are:
(1) The disinclination to break old banking connections.
(2) The difficulty of educating handlers of bills in distant places as to American
credits.
(3) The lack of bill buyers in foreign countries who will quote as low rates on dollar
as on sterling bills.
(4) The natural prejudice of bill buyers in foreign countries in favor of a bill of
known currency and against a bill of as yet unknown currency.
(5) The lack of men trained to exercise the judgment and financial responsibility
required of them as managers of branches or agencies which American banks might
establish in foreign countries.
(6) The inferior communications for both goods and mail between the United States
and foreign countries as compared with those between Great Britain and foreign
countries.

DISTRICT NO. 2

NEW YORK.

167

Only time, experience, and patient effort will remove these handicaps to the elevation of dollar exchange to its proper position in international finance. The business,
however, is developing and will continue to grow as our banking machinery and connections extend throughout the world.
The Act permits member banks to accept an amount of bills not exceeding 50 per
cent of their capital and surplus. By the amendment of March 3, 1915, under certain
conditions they may be authorized by the Federal Reserve Board to accept up to 100
per cent of the capital and surplus. The following banks in this district have received
such authorization:
Amount of
capital and
surplus.

Bank of New York, New York
Mechanics & Metals National Bank, New York
Atlantic National Bank, New York
American Exchange National Bank, New York

$6,000,000
12,000, 000
1, 600,000
8,000,000

As this bank has probably been the largest single purchaser of bankers' acceptances,
it has been able, as it gained experience, to exert some influence toward standardizing
practice and form. The acceptance of drafts in one city payable in another city has
been discouraged; insistence that bills shall be so indorsed as to leave open no question of title will, when universally adopted, add greatly to the ready negotiability of
bills; and discussion of the terms of the regulation with acceptors and bill brokers has
led to a better understanding of the scope of the field it covers.
The amended regulation issued September 7, 1915, considerably broadened the
field of acceptances eligible for purchase and encouraged an increased volume of
these instruments. The further amended regulation issued December 4, 1915, covering the purchase of bankers' acceptances arising out of domestic transactions relates
to a class of bills which national banks are not authorized to accept. When accepted
by institutions of high credit they have a ready market, though at a fractionally
higher rate than acceptances based on foreign transactions.
PURCHASE OF UNITED STATES BONDS.

The Act authorizes the Federal Eeserve Board during each year, commencing two
years from the passage of the Act, to require reserve banks to purchase from national
banks not exceeding $25,000,000 of United States bonds used in securing circulation.
The Federal Reserve Board has ruled that the first year for such purchase begins
January 1,1916; that such year shall be divided into quarters; and that it may require
the reserve banks to purchase not exceeding $6,250,000 of such bonds in any one
quarter. A circular has been sent to member banks advising them of this ruling and
supplying them with forms upon which applications to sell such bonds may be made
to the Treasurer of the United States. Applications received not later than March
21, 1916, will be considered in connection with the purchase to be made March 31,
1916. The circular calls attention to the right of the reserve banks to anticipate such
required purchases from member banks by purchasing bonds in the open market.
COLLECTION SYSTEM.

At the meeting of directors and governors of Federal Reserve Banks held in Washington October 20 to 22, 1914, it was voted that at the outset each Federal Reserve
Bank should receive at par for immediate credit checks and drafts—
(a) On any other Federal Reserve Bank.
(b) On member banks in reserve and central reserve cities in its own district.
In this district a circular was sent to member banks on November 13 advising that
the arrangement would become effective November 18.
The only cities affected by the plan were the central reserve city of New York
(consisting of the Boroughs of Manhattan and Bronx) and the reserve cities of Albany

168

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

and Brooklyn. The transactions between the banks in these cities through the reserve
bank were naturally very limited.
The course of the transactions in checks on other Federal Reserve Banks has been
already described.
The question of developing a collection system within the respective districts was
discussed at the first meeting of the governors' conference on December 10, 1914, and
has been an important item of discussion at each succeeding conference. It has also
been discussed frequently at meetings of the directors of this bank and been the
subject of communications between them and the Reserve Board. On February 17,
1915, the directors conferred at the office of the bank with 16 representatives of member banks from various parts of New York State relative to the practicability of establishing within the district a voluntary intradistrict collection system, based upon
immediate credit and debit of checks. After full consideration and with the approval
of the Reserve Board, the member banks were notified of the intention of the bank to
establish such a system and given an opportunity to join it. When the plan became
effective June 1, 1915, practically all the banks in the reserve and central reserve cities
had joined, together with 32 in other places, a total of 70 banks. The directors of each
bank which joined authorized the reserve bank to charge to its account upon receipt
all items drawn upon it. About the same time a similar plan was offered to their
members by the other Federal Reserve Banks except those at St. Louis and Kansas
City, where membership was originally involuntary, and at San Francisco, where
deferred debit and credit was adopted as a basis. On June 15 also, the receipt of
checks on other Federal Reserve Banks, except those in Boston and Philadelphia,
was changed from an immediate to a deferred-credit basis. The New York Clearing House placed all banks which had joined the collection system on its discretionary
charge list. On July 1, 30 banks in northern New Jersey also joined the collection
system, and in spite of a few withdrawals the number has gradually increased to 129
on December 31, 1915.
There seem to be three main reasons why so few country banks have joined the
collection system.
The first is the practice, quite general among such banks in this district, of charging
exchange on remitting for items drawn upon them. Broadly speaking, the smaller the
bank the larger the percentage of its earnings derived from exchange. Under the present collection system, items are not sent for collection and remittance, but are charged
directly against the account of the paying bank, giving it no opportunity to collect an
exchange charge. Consequently only those banks joined which were ready to forego
this charge, or did not customarily impose it.
The second consideration which prevents many banks from joining is that membership obliges them to carry larger reserves. Whereas the practice of the comptroller's
office has been tofigurereserves from the books of the member bank, the Federal Reserve
Act contemplates that the amounts required to be kept on deposit in the reserve bank
shall be figured from the books (f the reserve bank. The reserves of banks which keep
dormant balances with the reserve bank are maintained unimpaired, but there is constant tendency to impairment of the reserves of the banks which join the collection
system, for in order to meet the checks charged against them through the system they
are required in practice to absorb the volume of checks which they have constantly
in transit to their reserve agents. Not only have the reserve balances kept with this
bank by most country members of the system been constantly impaired, the average
impairment during the first three months running as high as 31 per cent of the aggregate
amount they should have kept on deposit, but hardly a day has passed without one or
more members being actually overdrawn by the charge against them of unanticipated
items.
The third difficulty is due to the small number of banks which have joined the
system. With New York banks receiving at par for immediate credit all items drawn

DISTRICT NO.

169

-NEW YORK.

on members of our collection system, the entire volume of checks outstanding against
any member bank which joined might be regularly charged against its account by the
Federal Reserve Bank, whereas it could only send as an offset checks on the few banks
in this district which had joined. This is the principal cause of the impairment of
reserves above referred to.
Seven months' experience with the present intradistrict collection system makes it
seem reasonably clear that no substantial growth can be expected either in number of
members or volume of transactions until those banks which join the system can be
given an opportunity of adequately offsetting the items which are charged against them
through it. The question of extending the collection system across district lines has
been under active consideration for the last three months.
The following statement shows the number, volume, and kinds of checks received
by the Federal Reserve Bank through its collection system since its inauguration
June 1, 1915:
I t e m s on New
Y o r k Clearing
House banks.

Items on member
banks.

Items on other
Federal Reserve
Banks.

Items on banks in
other Federal reserve cities.

Date.
Number.
June
July
August
September
October
November
December
Total

Amount.

Number.

Amount.

Number.

Amount.

Number.

Amount.

13,782159,562,980.99
065.07 1,022 $20,950,324.00
64,533 $23,
15,540,402.99
"" "' 87592765.95 121,847 33,349, 932.90
20,486
17,296,162.46
823! 358.37
23,661
, , 0 4 0 . 5 3 144,714
155,231
744: 826.39 250 9,572,274.24
24,591
591117,643,223.21
,3,
141,229.93 552 20,053,209.12 4,972 $5,843,180.55
27,000176;,509, 679.77 181,228
435,424.19 783 24,086,071.98 7,055 14,462,270.54
28,566 170,449, 943.39 202,011
794.35 804 17,179,737.84 8,009 24,503,900.68
816.
29,139 181
201,251
81,172, 972.38
167,225 877,384,606.22 1,070,815 287,143,631.20 4,135 124,678,182.63120,036 44,809,351.77

The total number of checks received on deposit from member banks from November 16, 1914, to December 31, 1915, has been 1,362,642, aggregating $1,938,810,485.
On August 9, 1915, the New York Clearing House established a department for the
collection of checks on out-of-town banks, which includes all banks in New York, New
Jersey, Connecticut, Massachusetts, and Rhode Island which agree to remit at par in
New York funds on the day of their receipt for any items sent them. Starting with
347 members, their system now has over 500 members. The volume of transactions is
about twice as large as that of the collection system of the reserve bank and, as its
sphere of operations widens, the number of par points in the territory covered will
increase. On December 30, 1915, the clearing-house offered to receive items on
any banks joining its system in places from which mail reaches New York over
night.
The clearing-house system was organized with a desire to cooperate with the
reserve bank in improving collection conditions and the two systems have operated
entirely harmoniously. That neither has made more substantial progress in enrolling
country banks in New York State is due partly to the fact that many of the latter do
not wish to give up the exchange charge and others do not wish to disturb present
relations with reserve agents.
Through the influence of these two agencies par remittances in the district are
gradually spreading. Where charges are made for collecting checks payable within
the district the fee is usually one-tenth of 1 per cent.

170

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.
ADMISSION OF STATE BANKS AND TRUST COMPANIES.

The regulation of the Federal Reserve Board relating to the admission of State
banking institutions to the Federal reserve system was issued on June 7, 1915.
While final action on applications of State institutions rests with the Federal
Reserve Board, the regulation requires the reserve bank to investigate thoroughly
each application and forward it, with its recommendations, to the Board. The
policy of this bank in passing on such applications conforms with the spirit of the
regulation, which contemplates the admission of only those State institutions which
will add strength to the reserve system. Mere solvency will not be a sufficient
qualification. To receive the approval of the directors of this bank, a State institution
must be not only solvent but strong, well-managed, and in a condition of liquidity
appropriate to the nature of its deposits.
The application of the Broadway Trust Co. of New York City, made several months
before the issuance of the regulation, has been approved by both the bank and
the board, and on August 4, 1915, it paid in one-half of its subscription to the capital
stock, transferred the prescribed amount of reserves, and became a member bank.
FISCAL AGENT OF THE UNITED STATES.

On November 24, 1915, the Secretary of the Treasury advised this bank that he
had appointed it a fiscal agent of the United States, effective January 1, 1916. On
this date it is purposed to begin the transfer to the bank of funds of the United States,
except post-office and court funds now on deposit in national banks in New York
City. These balances at present aggregate about $1,500,000. The officers of the
bank have conferred with officials of the Treasury Department both in Washington
and New York and the details of the work have been carefully studied in order that,
this function may be performed satisfactorily from its inception.
The plan contemplated provides for the regular daily deposit with this bank of the
receipts of the collectors of customs and collectors of internal revenue located in the
greater City of New York and the gradual taking over of the encashment of checks of
the Government by this bank in place of the sub treasury. It is expected that within
a few weeks all deposits of this character, as well as the payment of all checks, can
be handled by the bank without lowering in any way the efficiency with which this
branch of the Government business is handled by present methods. It will, however,
involve some increase in the clerical force and office accommodations of the bank.
BALANCE SHEET.

For purposes of comparison balance sheets of three dates are presented in the appendix.
The large increase in the deposits of member banks is due primarily to the increase in
their own deposits, elsewhere referred to, and to the fact that several are carrying
substantial excess balances with this bank. About $3,150,000 were received from the
banks in northern New Jersey during July, 1915, and about $3,674,000 were received
from member banks outside of the central reserve city of New York at the transfer
of the second installment of their reserves on November 16, 1915.
PROFIT AND LOSS.

During the early part of the period under review, certain expenses were incurred
in organizing the bank, renting temporary offices, remodeling the banking room at
62 Cedar Street, defraying the initial expenses of the Federal Reserve Board, etc.
The treatment of these expenses was carefully considered and it was determined
that beginning January 1, 1916, the amortization of organization expenses, including
the cost of the Federal Reserve notes issued up to that time should be undertaken in
not exceeding 30 monthly installments, so that they would be entirely eliminated
on or before June 30, 1918. It was also determined that unissued Federal Reserve

DISTRICT NO. 2

NEW YORK.

171

notes should be carried at cost in the balance sheet and that, beginning July 1,
1915, all notes should be charged at cost to current expenses.
In view of the small volume of rediscounts for member banks and of the complete
absence of rediscounts for other Federal Reserve Banks, the policy of the bank has
been to purchase in the open market sufficient warrants and acceptances to cover
the cost of operation, including the issue of Federal Reserve notes. In fact most of
the reserve banks, except those in Richmond, Atlanta, and Dallas, have had largely
to depend on such purchases to pay their expenses. Owing to the general demand
for such paper and investments, it has been impossible for this bank to secure a
sufficient volume quite to equal its expenses. The rates on such investments have
declined steadily throughout the year and are now at their lowest level. Realizing
the influence which the reserve bank might have upon these rates if it pressed its
funds upon the market, it has been the policy of the bank to follow rather than lead
the market in its decline. In these circumstances, no thought could be given to
earning dividends. The view generally held not only by the directors and officers
of this bank but by the member banks as well is that such a money market as has
prevailed during the period under review provides no proper basis for the earning
of dividends by a Federal Reserve Bank located in a creditor district, and that at
such a time its funds should be practically withdrawn from use.
From November 16, 1914, to December 31, 1915, total earnings from all sources
have been $345,035.33, and current expenses have been $345,146.55, leaving a deficit
for the period of $111.22. The details of the earnings and of the organization and
current expenses are set forth in full in the Appendix.
EXAMINATION BY THE FEDERAL RESERVE BOARD.

On February 8, 1916, the examiners of the Federal Reserve Board visited the bank
and conducted an examination of its affairs lasting somewhat over a week.
FUNCTIONS NOT YET DEVELOPED.

The small amount of rediscounting done by member banks thus far has not made it
necessary to consider the establishment of branches of this bank to facilitate either
deposit or discount relations with its member banks. Thus far the mail has been a
sufficient medium for the exercise of these two functions. Whether branches or
agencies will later have to be established to provide promptness and directness in the
collection system is a question which probably will not come up for solution unless
and until the collection system reaches a more general development than at present.
Of the open-market operations described under section 14 of the Act, the authority
to purchase acceptances and municipal warrants has been freely availed of; the authority to open accounts, appoint correspondents, establish agencies, and purchase
bills in foreign countries as well as to deal in foreign exchange at home, has not been
exercised and probably will not be generally availed of until conditions abroad have
cleared and normal business is resumed. As yet no bonds or notes of the United
States have been purchased, and consequently no Federal Reserve Bank notes based
on such bonds have been issued. There has been no occasion to have transactions
in gold coin or bullion.
No other Federal Reserve Bank has applied to this bank for the rediscount of any
of its paper.
20067°—16
12

172

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

CHAPTER III—THE MEMBER BANKS AND THE FEDERAL RESERVE DISTRICT.
READJUSTMENT OF DISTRICT.

On May 4, 1915, the Federal Reserve Board voted to readjust this district so as to
include it in the following New Jersey counties:
Bergen, Essex, Hudson, Hunterdon, Middlesex, Monmouth, Morris, Passaic,
Somerset, Sussex, Union, Warren.
The readjustment became effective July 1, 1915, and increased the number of
member banks by 131. On December 31, 1915, there were 132 member banks in
these counties contributing $964,550 to the paid in capital of this bank and $4,849,183.87
to its deposits.
NUMBER OF BANKS.

On November 16, 1914, the number of member banks in district No. 2 was 480, and
on December 31, 1915, 616. During the period covered by the report, 131 banks in
New Jersey were added by the readjustment of the district, 9 new national banks were
. organized and became members, and 1 trust company became a member. Four
national banks withdrew from membership by liquidation, either voluntary or involuntary.
ELECTION OF DIRECTORS.

The separation of the banks of this district into three voting groups, in the manner
provided by the Act, results at present in the following divisions:
Group 1.—Two hundred and five banks with capital and surplus of $185,000 and
over. (Elects directors in 1916.)
Group 2.—Two hundred and five banks with capital and surplus of from $70,000 to
$185,000. (Elects directors in 1917.)
Group 3.—Two hundred and five banks with capital and surplus of $70,000 and
under. (Elected directors in 1915.)
On September 30, 1915, a circular was sent to each bank in group 3 designating
October 29 as the last day when it might file the certificate of election of its district
reserve elector and of nominations, if any, for the vacancies to be filled by the expiration of the terms of Messrs. Franklin D. Locke and Leslie R. Palmer. Of the 205
banks in the group 127 chose electors and became entitled to vote. The following
candidates were nominated:
For class A director:
B. H. Howell, Garfield, N. J.; nominated by 1 bank.
Franklin D. Locke, Buffalo, N. Y.; nominated by 82 banks.
Josiah W. Place, New York, N. Y.; nominated by 3 banks.
Walter M. Van Deusen, Newark, N. J.; nominated by 4 banks.
D. D. Woodard, Granville, N. Y., nominated by 1 bank.
For class B director:
James W. Johnson, New Brunswick, N. J.; nominated by 3 banks.
Leslie R. Palmer, Croton-on-Hudson, N. Y.; nominated by 88 banks.
Preferential ballots as provided by the Act, together with instructions, were mailed
to electors on November 15. On December 1 the polls closed and it appeared that
the following votes had been cast in the column of first choice:
Class A director: B. H. Howell, 2; Franklin D. Locke, 105; Josiah W. Place, 4;
Walter M. Van Deusen, 9; D. D. Woodard, 2.
Class B director: James W. Johnson, 8; Leslie R. Palmer, 114.
Whereupon Mr. Locke was declared elected class A director and Mr. Palmer class B
director, each for a term of three years, beginning January 1, 1916.
Although second notices were sent out shortly before October 29 and December 1,
respectively, regarding the choice of district reserve electors and the voting upon candidates, nevertheless, only 122 of the 205 banks exercised their important franchise
to participate in the election of directors of this bank.

DISTRICT NO. 2

173

NEW YORK.

ANALYSIS OF OPERATIONS OP NATIONAL BANKS.

At the suggestion of the Federal Reserve Board and for the purpose of an analysis
of operations, the member banks in. the district have been divided into seven
groups on the basis of their total resources, and certain figures from the reports of
September 2 and November 10, 1915, to the comptroller have been tabulated under
these groups:
Group 1.
Group 2.
Group 3.
Group 4.
Group 5.
Group 6.
Group 7.

Banks with total resources under $100,000
Banks with total resources between $100,000 and $200,000
Banks with total resources between $200,000 and $300,000
Banks with total resources between $300,000 and $500,000
Banks with total resources between $500,000 and $2,500,000
Banks with total resources between $2,500,000 and $20,000,000
Banks with total resources over $20,000,000

3
33
62
106
304
80
25

The figures tabulated show the relations to total capital and to total resources of the
investments, the deposits, the receipts from exchange, the net earnings, the dividends
paid, and the amount of eligible paper held.
Investments.—The following table shows the percentage of the total resources
invested in loans and discounts, in bonds and securities other than United States
bonds, and in eligible paper. It seems to present no figures of especial significance
except the relatively small percentage of bonds and securities held by the larger
banks:
Relation to total resources of—
Group.

1
2
3
4
5
6
7

Average total
resources per
bank.

$60,846
162,399
254,702
387,849
917,732
6,089,073
116,342,950

Bonds and
securities,
Loans not
Eligible
and dis- ing includunited paper.
counts.
States
bonds.
Per cent.
46.68
48.23
47.95
50.48
44.21
52.98
55.54

Per cent. Per cent.
20.09
11.12
19.36
18.18
16.57
20.94
14.24
23.96
12.82
24.48
16.38
16.89
10.14
9.01

Liabilities.—The following table shows the relation of the capital, surplus, and undivided profits to demand deposits and time deposits. It indicates clearly the greater
extent to which the larger banks are able to expand their liabilities; also the more
active nature of their deposits:

Group.

1
2
3
4
5
6

Average capital, surplus,
and undivided
profits per
bank.

$26,784
34,207
51,050
76,967
168,341
971,865
12,207,560

Relation to total capital
of—
Demand
deposits.

Time
deposits.

Per cent.
116.99
253.63
265.26
264.97
271.93
439.81
809.31

Per cent.
11.45
60.88
78.11
99.08
117.82
55.82
8.54

174

ANNUAL REPORT OF T H E FEDERAL RESERVE BOARD.

Nature of deposits.—The division of the deposits between demand and time is shown
by the following table, which again emphasizes the far greater activity of the larger
banks. The banks in New York City almost without exception take no savings
accounts.

Average
total
deposits
per bank.

Group.

1
2
3
4
5
6 .
7

$34,406
107,588
175,296
280,202
656,111
4,816,866
99,841,084

. .
. . .

Relation to total
deposits of—
Demand
Time
deposits. deposits.
Per cent. Per cent.
91.08
8 92
80.64
19.36
77.25
22.75
72.78
27.22
69.72
30.28
11 15
88.85
98.96
1.04

Exchange, earnings, and dividends.—Yet the greater resources of the larger banks do
not result in earnings proportionately larger, since a very large part of the loans of the
smaller banks run at a steady 6 per cent rate, while the loans of the larger banks, particularly in New York City, are subject to the money-market rates, which seldom
reach 6 per cent. Furthermore, the more active nature of the deposits of the city
banks requires the maintenance of larger reseves, not only of cash but of readily convertible paper and loans. The larger proportion of their earnings paid out in dividends
than in the case of the banks with resources under $300,000 is due probably to the fact
that the latter class of banks are largely new institutions which consider it necessary
to accumulate a substantial surplus before paying normal dividends. The table shows
the relation of gross receipts from exchange, of net earnings and of dividends to both
total capital and total resources. They are averaged from the figures reported for 1912,
1913, and 1914, but as the figures of total capital and total resources for those years are
not available the figures of November 10, 1915, are used. Therefore the averages of
figures are not correct, being smaller than they actually should be. They are sufficiently accurate, however, for purposes of comparison between the larger and the
smaller banks. The smaller the bank the larger in proportion are its receipts from
exchange.
Receipts from exchange.

Group.

li
2
3
4
5
6
7

Net earnings.

Dividends.

Per cent
of capital,
surplus,
and undivided
profits.

Per cent
of total
resources.

Per cent
of capital,
surplus,
and undivided
profits.

Per cent
of total
resources.

Per cent
of capital,
surplus,
and undivided
profits.

1.16
.90
.73
.45
.39
.14

0.25
.18
.15
.08
.06
.02

4.84
6.04
6.45
6.39
6.39
6.91

1.01
1.21
1.28
1.17
1.01
1.10

1.49
2.57
3.58
4.11
4.88
4.79

Per cent
of total
resources.

0.31
.52
.71
.75
.78
.77

The three banks composing group 1 were not in existence during these years.

Directors'' liabilities and eligible paper.—The relation of the directors' liabilities,
direct and indirect, and of the eligible paper, to loans and discounts, is shown in the
following table. It appears that the smaller the bank the more, proportionately, are
its directors indebted to it; also the greater the proportion it holds of paper eligible for

175

DISTRICT NO. 2—NEW YORK.

rediscount with the Federal Reserve Bank. The figures relating to eligible paper,
however, are very approximate, since they represent merely estimates presented by
each bank according to the judgment of its officers.
Average
loans and
discounts.

Group.

1
2
3
4
5 .
6
7 .

. --

$28,405
78,327
122,276
195,813
405,748
3,226,332
64,574,549

Directors'
liability,
direct.

Directors'
liability,
indirect.

Eligible
paper.

Per cent.
27.86
6.17
5.28
5.45
5.81
4.41
1.69

Per cent.
19.57
13.70
9.40
8.25
6.01
1.40
.17

Per cent.
43.40
40.15
34.52
28.21
29.00
30.92
17.90

The aggregate figures from which the foregoing tables of percentages have been
compiled will be found in the Appendix.
The various analyses above presented indicate clearly the advantages which the
larger banks have over the smaller banks in respect of ability to do a larger volume of
business. Yet, except in the case of the very small banks, the amount earned, net,
on the total capital contribution does not vary greatly. There seems to be no indication in these figuies that small banks in a favorable location can not, if well managed,
become firmly established, pay reasonable dividends, and serve well their communities. But to reach and maintain a satisfactorily strong position much service must be
given without compensation by the senior officers, and great economy practiced at all
times. The nine new national banks established during the period under review, with
$25,000 capital each, indicates that the experience of other small banks in recent years
has not been altogether discouraging. It is desirable, however, that in this district,
already well provided with banking capital, careful investigation should be made of
applications to establish small banks, in order that they may not be authorized in
communities unlikely to be able to support them or already well supplied with banking
facilities.
For pe/haps the most important study of banking condition the comptroller's
reports do not present the necessary data, namely, the nature of the loans and discounts of the banks. While these reports show whether the loans and discounts are
on demand or time, and are secured or unsecured, they do not indicate what proportion of them is temporary and what proportion is practically permanent. The relative
liquidity of the various groups of banks can not therefore be presented. Naturally
an analysis of loans and discounts with this object in view would be difficult, and at
best only approximate, but it is believed that if some satisfactory basis for the preparation of figures can be arrived at it would be of the greatest value, not only as a contribution to the study of banking conditions but as a guide to the reserve bank in
extending credit to its members.
TIME DEPOSITS AND SAVINGS ACCOUNTS.

On November 10, 1915, the member banks in this district held time deposits aggregating over $140,000,000. These are mainly savings accounts, on certificates or special
pass books. They also have a considerable volume of savings accounts which are
included in their demand deposits because they are not received under contracts
which give the bank the right to require notice before withdrawal. In New York
State there are 140 mutual savings banks with total deposits on July 1, 1915, of
$1,791,524,601. There are also a number of important mutual savings banks in the
portion of New Jersey included in this district. Most of these savings banks pay
4 per cent on deposits. The influence of this rate is reflected in the rate offered by
the commercial banks, National or State, which wish to attract time and savings

176

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

accounts. The competition among banks for such accounts usually starts in the larger
centers where there is a mutual savings bank. To compete with the savings bank
they offer the same rate, and having once begun to allow it no bank feels willing to
reduce it for fear of losing business to its competitors. The effect of this is promptly
felt in the surrounding country, and the sphere of influence of these various centers
has gradually widened, so that, with a few exceptions in the more remote districts,
4 per cent is the usual rate paid by commercial banks for time and savings accounts.
At this rate the business has a margin of profit which, for a commercial institution,
is not commensurate with the profits it should make. Furthermore, it leads in many
cases to paying interest on demand commercial accounts. It may fairly be said
that one of the principal reasons why the country banks in this district are so sensitive
to any loss of income the reserve system is likely to entail upon them is the burden
of paying high interest rates on deposits which they have assumed and which, while
willing, they have been as yet unable to find any practical way to reduce.
Under the stimulus of the reduction of the required reserve provided by the Act
on time and savings deposits, the conversion of such accounts from demand to time
accounts which will comply with the definition established by the Act and the Reserve
Board is proceeding quite generally. During the period time deposits have increased at a ratio about five times greater than the ratio of increase of demand deposits.
LOANS ON IMPROVED FARM LANDS.

The provision of the Act permitting loans on improved farm lands has not been
largely availed of as yet. On November 10,1915, 75 member banks reported $451,524
of such loans.
FIDUCIARY POWERS.

The Federal Reserve Board is authorized by the Act "to grant by special permit
to national banks applying therefor, when not in contravention of State or local law,
the right to act as trustee, executor, administrator, or registrar of stocks and bonds
under such rules and regulations as the said Board may prescribe.''
With respect to New York, counsel for the bank has rendered an opinion that it is
in contravention of State law to grant such permits except with respect to acting as
registrar of stocks and bonds. Accordingly, no general fiduciary permits have been
granted in New York, but a number of banks have been authorized to act as registrar
of stocks and bonds.
With respect to New Jersey, counsel has rendered an opinion that it is not in contravention of State law to grant such permits to banks organized prior to the passage of
the general trust company act of March 24,1899. Under this opinion, adopted by the
Federal Reserve Board, general fiduciary permits have been granted.
The Federal Reserve Board requires the Federal Reserve Bank to pass upon all such
applications before it considers them. As in the case of the admission to membership
of State institutions, the policy of both the Board and the bank is to approve only
applications of banks which appear to be strong and well managed.
The list of member banks to which permits have been granted will be found in
the Appendix.
BRANCHES OF MEMBER BANKS.

Under the authority granted by section 25 of the Act, the National City Bank of
New York has opened branches at Buenos Aires, in the Argentine Republic, and at
Rio Janeiro, Santos, and Sao Paulo, in Brazil. The Buenos Aires office has a subbranch
in Montevideo, Uruguay. It has also absorbed the Banco de la Habana, Habana,
Cuba, a going concern with $1,000,000 capital, which is now operated as a branch.
The bank has assigned to these branches a capital of $3,000,000, but the provision of the
Act requiring capital to be set aside is considered undesirable, as there can be no
limitation upon the liability of the bank for liabilities contracted at its branches.

DISTRICT HO. 2—NEW YORK.

177

Inasmuch as British and other branch banks operating in South America report their
total capital, it seems inadvisable to have any suggestion of limited responsibility
on the part of our banks with respect to their foreign branches. The National City
Bank reports that many difficulties in the establishment of branches in foreign fields
so far from headquarters were anticipated and have been realized, but that what has
been accomplished is sufficiently encouraging to justify persistence in its policy.
The National City Co., affiliated with the National City Bank, has recently bought
control of the International Banking corporation, with head office in New York and
with a number of branches in foreign countries, mainly in the Orient.
While in some respects the European war has favored the establishment of foreign
branches, in other respects it has hampered their progress. Some business has been
diverted thereby to the United States, but on the other hand the war has so demoralized trade and disturbed credits as to multiply the hazards of banking for institutions
seeking to obtain a foothold in distant countries. The difficulties, expense, and risks
attendant upon the establishment of foreign branches in cities other than the leading
European centers are such as to deter any but the largest banks from undertaking this
desirable extension of our banking facilities. The organization of special banks, as
has been frequently suggested, to transact business in foreign countries, would be in
accordance with the practice of European countries having foreign trade to finance.
If the national banks were permitted to hold stock in such banks it would offer them
an opportunity to facilitate the foreign business of their customers with a minimum of
risk and would be consistent with the policy of offering substantially equal advantages
to all national banks.
In New York a State bank or trust company is allowed considerable latitude, under
certain restrictions, in the establishment of branches in the city in which its main
office is situated. Several institutions have availed themselves of this privilege
during the past year. One, the Century Bank of New York, with 10 branches,
secured a national charter and then absorbed the Chatham & Phenix National Bank
of New York. The business of both banks and all the branches is carried on under
the name of the Chatham & Phenix Bank of the City of New York. An indirect
way has thus been found for the establishment of branches by national banks in their
own cities. This is a desirable extension of their field of usefulness which seems to give
every advantage to depositors with a minimum of disadvantages to borrowers, and it is
to be hoped that Congress will soon amend the national-bank act so as to permit the
development, under appropriate restrictions, to proceed directly and freely. At the
same time the present requirement that to each branch a certain specified portion of
the capital must be assigned should be removed. Sound banking principles and
practice require that the entire capital of the bank should protect the liabilities
wherever created.
CHARACTERISTICS OF THE FEDERAL RESERVE BANK OF NEW YORK.

The special characteristics of the Federal Reserve Bank of New York may be
summarized as follows:
1. It is primarily a city institution. On December 31, 1915, $7,288,650, or 65.88
per cent, of its paid-in capital is contributed by its 34 members located in the central
reserve city of New York (Boroughs of Manhattan and Bronx); the remaining
$3,774,500, or 34.12 per cent, of its paid-in capital is contributed by the 582 other
members. Of its deposits $161,794,012, or 90.18 per cent, is contributed by these city
members; the remaining $17,610,489, or 9.82 per cent, of its deposits is contributed
by the 582 other members.
2. It is located in the settling center of the country; therefore, a very large volume
of domestic exchange is likely to flow through it.

178

ANNUAL REPOBT OF THE FEDERAL RESERVE BOARD.

3. It is located in the city, upon the banks of which, in commercial or financial
crises, the principal strain has always fallen. It must, therefore, always be prepared
to grant credit promptly, in large volume and in such form as it may be required.
4. It is located in the city in which the principal gold exports and imports normally
are arranged, and must be prepared to facilitate its member banks in such transactions.
5. It is located in the investment and banking center of the country, and therefore
in the most favorable field for the exercise of the open-market operations authorized
under section 14 of the Act. During the past year the bulk of investments by all
Federal Reserve Banks in municipal warrants and bankers' acceptances have been
made through this bank, and it seems likely that when conditions permit the inauguration of transactions in foreign exchange and foreign bills by the reserve banks it
will be again called upon to act for them.
6. The exercise of these investment functions for itself and other reserve banks
requires an organization of a special nature, differing somewhat from that of other
reserve banks.
RELATIONS WITH MEMBER BANKS.

The aim of this bank at all times has been to maintain frank and friendly relations
with its member banks. At every meeting of the New York or New Jersey Bankers*
Associations, or of their groups, to which invitations have been received, one or
more of the directors or officers have been present and discussed the development of
the various functions of the system.
When the establishment of an intradistrict collection system was under consideration, the directors and officers invited representative member bankers from all parts
of the district to confer with them at the office of the bank. The plan finally adopted
was thoroughly discussed in all its aspects and a consensus of opinion seemed to
prevail that it was a fair and reasonable plan.
When the conditions under which State banks should be admitted to the Reserve
System were under consideration three conferences were held by the directors and
officers of the bank, one with national bankers, one with State bankers, and one
with trust company officers, from various parts of the district, to ascertain their views
upon the question at issue. In every case the policy has been pursued of dealing
frankly with those present, in order that they might understand fully how the action
under consideration would affect them.
The officers have expressed themselves at all times as desirous of establishing personal relations with officers of member banks and have invited them to call at the
bank when in New York City. Yet a year has gone by and officers of probably not
over 15 per cent of the member banks have done so. Many of them still have the
feeling that the bank is a branch of the Government. Their experience with the Government consists piincipally of the statutory and supervisory relationship which
exists between them and the comptroller's office. The conception of the relation of
this institution with them as cooperative makes headway slowly. The fact that the
national banks were practically compelled to join the system naturally retards the
development of the cooperative idea. The change of attitude, upon which the success
of the system will ultimately depend, will probably come slowly, but there are
already signs, as we enter upon the second year of the system, that the banks are
getting more accustomed to it and appreciate the results it has already accomplished.
It is hoped that during the coming year, with organization pressure somewhat less^
ened, more time can be devoted by the officers to developing personal relations with
the officers of member banks.
The present attitude of the member banks toward the reserve bank may be sum
marized as follows:
The New York City banks, upon which the strain of all crises first and chiefly
falls, fully understand the value and benefits of the system. While regretting the

DISTRICT NO. 2—NEW YORK.

179

loss of bank deposits which will probably be drawn from them (estimated to be as high
as $250,000,000), they are nevertheless hearty supporters of the system, at all times
cooperative in their attitude.
Many of the banks in other large cities are unable to take full advantage of the
lowered reserve requirements, but in spite of the loss of interest on their reserve
balance, most of them understand what the system in its larger aspects means for
American banking and generally give it their support.
While the same may be said of many of the country banks, yet it is among the
country banks as a class that most of the apathy and hostility to the Federal Reserve
System which still persists is found. Their opportunities and earnings are relatively
small, and in order to live they must figure closely. They feel the loss of interest
on reserve deposits; the absence, as yet, of dividends on their capital contribution;
and the prospective loss rr decrease of the exchange they generally charge on remitting
for checks drawn upon them. Many banks in industrial centers are precluded by
the activity of their business from taking advantage of the reduction in the required
reserve. They believe that they will, in fact, be required to carry an even larger
reserve than heretofore in order to obtain collection service for notes, drafts, and
nonmember bank checks and the various other services now rendered by their reserve
agents, but not yet undertaken by the reserve banks. It is very natural that they
should view with reluctance the termination or diminution of long-standing business
associations with their reserve agents. Few of them, as yet, conceive of the reserve
bank as their active reserve agent, performing all the services which go with the
relationship. The dormant accounts most of the banks maintain with the reserve
bank are, perhaps, indicative of their attitude toward it. Relatively few banks
of this district are borrowers; in good times arid bad they have been able when
necessary to borrow from their city correspondents on bonds or on the indorsement
of their directors, two avenues which are now to be closed to them. The rediscounting privilege has been little availed of and the larger functions of the Federal
Reserve System, such as influencing domestic rates and international gold movements through the development of a discount market and by dealing in foreign bills,
appear remote from their spheres of activity. They feel that the system has few
advantages to offer in return for the cost it entails upon them.
All of these points will be felt with increasing acuteness by the country banker as
his reserve transfers approach completion and as reduced balances result in reduced
service from his city correspondent. His point of view is outlined thus frankly in
order that the difficulties he sees may be clearly recognized and steps taken gradually
to remove them. The development of a more satisfied relationship requires progress
on the part of the reserve bank and a willingness to cooperate on the part of the
country banker.
The reserve bank should organize a complete collection system embracing the handling of notes, drafts, and items on nonmember banks, which eventually will bring
all the members into daily active relations with the bank. It must be ready to act
for member banks in the purchase, sale, and custody of securities; to supply credit
information on names whose paper is offered by brokers; to give its members information concerning methods of developing the new functions which the Act authorizes them to exercise; to perform the services now rendered by their reserve agents;
and generally to assist them in every reasonable way.
The member banks should look upon the reserve bank not as an alien but as their
own institution. They own all its capital and most of its resources, and they control
its management through the directors they elect, subject always to the supervision
of the Reserve Board. At the reserve bank they may borrow as a standing right
and not as a favor which may be cut off. They no longer have to buy or carry bonds
to serve as security for loans; the paper of their own customers, large or small, will
now serve as their security. While panics in the past may not have affected them,

180

ANNUAL REPORT OF THE FEDERAL RESERVE BOAED.

they have been disastrous to the business interests of the country, who are their
customers; and their contributions to the reserve bank should be recognized as a
form of insurance not merely for themselves but for their customers as well. If this
insurance is expensive and makes some changes in the nature of their business, the
Act should be carefully studied with a veiw to making the most of the new functions
it provides. New avenues of activity should be looked for. The banks which will
get the most out of membership are those which are the first to see and develop the
opportunities it provides and to educate their customers to the protection and facilities they will enjoy through the system. The occasion is a favorable one also for the
correction of abuses. Customers will do things in the name of the Federal Reserve
System which they have never done before. The experience of banks in using the
forms provided by the reserve bank to get statements from their borrowers is evidence of this. The occasion should be seized also to increase the balances of depositors who carry unprofitable accounts. To assist member banks in studying their
accounts this bank has had under preparation by chartered public accountants a
reasonably simple form for analyzing accounts which may be obtained by banks
desiring to use it.
It is the duty of the directors and officers to understand not only the problems of
the reserve bank but those of the member banks as well; and it has been their
endeavor during the past year to give special study to those of the country bank.
Several suggestions for the relief of the country bank have come to their notice.
One of these, which the American Bankers' Association at its 1915 Seattle convention favored, was to permit the 3 per cent of reserve which the member bank may
carry either in its vaults or in the reserve bank, to be deposited with member banks
not more than 300 miles distant and* count as reserve. This seems to be contrary to
the spirit and intent of the Act, which is primarily to centralize reserves in Federal
Reserve Banks.
Another suggestion which seems more worthy of consideration is that the percentage
of reserve required for country banks should be somewhat further reduced. When
the reserve transfers are completed checks in transit can no longer count as reserves.
It is clear, therefore, that the reserve reduction contemplated by the Act will not be
realized in practice. A further reduction in the reserve requirements would, in the
case of many banks, result in a reserve less than the amount their business actually
required, and would enable them to carry the amount thus freed wherever it would
best serve their particular business, and, if they so desired, to maintain some relations with present city correspondeats. It would lead away from the present rigidity
of bank reserves toward greater flexibility and a better understanding of their meaning and purpose.
The formation of a national-bank section of the American Bankers' Association and
the cooperative relationship which its executive committee has established with
those charged with the duty of operating the Federal Reserve System, suggests the
desirability of the formation of similar sections of State bankers' associations. Owing
to its diverse membership, consisting of national banks, State banks, trust companies,
savings banks, and private bankers, State bankers' associations are naturally somewhat reluctant to deal actively with the problems and development of the Federal
Reserve System. Too large a proportion of their membership is interested only academically in the system. A national-bank section of a State bankers' association
could act as an important medium of communication between the reserve bank and
its member banks, and would be of constant value to both.
NATIONAL-BANK SECTION OP THE AMERICAN BANKERS' ASSOCIATION.

The American Bankers' Association at its meeting in Seattle on September 6-10,
1915, established a national-bank section. The officers and executive committee of
this section had their first meeting in New York City November 20, some of the ses-

DISTRICT NO. 2—NEW YORK.

181

sions of which the governor and chairman of this bank had the privilege of attending
by invitation. The cooperative attitude of the organization toward the development of the system was apparent throughout and great satisfaction was expressed that
member banks now had an organization through which they could express their
desires and views officially to the Reserve Board and the reserve banks, and through
which the Reserve Board and reserve banks could communicate officially with the
member banks. The work of this section if carried forward on broad lines is likely
to play an important part in the development of the reserve system, and it seems
desirable that the plan should be followed in the State bankers' association as well.
RELATIONS WITH STATE BANKS.

The attitude of the State institutions in New York City and other large cities to
the reserve system is one of friendly support and of appreciation of its meaning and
advantages to the banking and business interests of the country. They agree that
ultimately, in order to give the system the strength and influence it should have,
State institutions should join it, but they see no immediate need of doing so and are
inclined to wait and observe what advantages it will develop for them. Some have
expressed the belief that, without bearing the burdens of the system, they will,
nevertheless, be able to participate indirectly in its advantages. The officers of some
of the leading institutions have expressed a desire that before considering joining the
system their status as members should be more fully defined by law and left less to
the regulation of the Reserve Board. The attitude of State institutions in the country
districts appears to be one of complete indifference.

CHAPTER IV.—GENERAL CONDITIONS.
INTRODUCTION.

In view of the abnormal conditions which have prevailed and of the progress which
has been made from business depression to business activity during the period under
review, a description is presented in some detail of the main factors which have contributed to the change, together with a brief summary of present industrial and banking conditions.
CLEARING-HOUSE LOAN CERTIFICATES.

Between August 3 and October 15, 1914, the New York Clearing House Association
issued to 44 of its 61 members 3,128 loan certificates, aggregating $124,695,000. The
largest amount outstanding at any one time was $109,695,000 on September 25. The
first cancellation was on August 26, and the last on November 28, 1914. The period
of time from the first issue to the final cancellation was 118 days, compared with 154
days in the panic of 1907-8 and 132 days in 1903. The percentage of maximum
amount of certificates outstanding to total deposits of clearing-house members was
5.5 as compared with 8.28 in 1907-8.
EMERGENCY CURRENCY.

The National Cuirency Association of the city of New York, formed under the
Aldrich-Vreeland Act, approved 129 applications for emergency currency between
August 3 and October 6, 1914, aggregating $145,298,960. The largest amount of
emergency currency in circulation at any one time was $137,012,260 on October 21.
The maximum amount of emergency currency which could have been issued, under
the approval of the Secretary of the Treasury, by the New York City association was
$302,905,000, which is 125 per cent of the combined capital and surplus of the member
banks. The New York City association availed itself of 47.86 per cent of the amount

182

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

which, under the law, it was possible to issue. The first cancellation was approved
October 13, 1914, amounting to $2,000,000, and the last January 25, 1915.
National currency associations were also formed in other important cities in the
district.
THE NEW YORK STOCK EXCHANGE.

On Friday morning, July 31, 1914, the New York Stock Exchange closed. It was
the last large exchange of the world to suspend trading. This action was taken after
meetings between the governors of the exchange and leading bankers, to protect the
market against demoralization and further selling of securities from abroad. The
very large volume of loans on stock exchange collateral held by the New York banks
for themselves and their correspondents became at once completely illiquid, and the
value of the collateral could not be ascertained. Even the action rooms were closed,
and the prices at which a small volume of rather urgent dealings in stocks and bonds
was carried on, were not made public. Later a minimum price list was established
and efforts made by the stock exchange committee to control the trading, which
became more active as the situation eased.
The fact that there was no market for bonds was an added unsettlement to general
business. New financing had to be postponed, and even some municipalities failed
to sell their bonds.
On November 28 the exchange was partially opened for trading in bonds at fixed
minimum prices. On December 12 trading in stocks was resumed on a restricted
basis, subject also to minimum prices. These restrictions were gradually relaxed
and were finally removed on April 1, 1915.
Trading became very active in April and the great speculation began in shares of
companies engaged in making supplies for belligerent nations. Sales of $109,934,000
bonds and 20,007,188 shares of stocks made April the most active month on the exchange in the past five years. A very active and rising market continued until the
sinking of the Lusitania on May 7, when a severe decline in prices set in and the
volume of dealings decreased about 50 per cent. Activity was resumed in July,
when $56,489,500 bonds and 14,326,813 shares of stocks were sold. This movement
was increased during August and September to such an extent that brokers found
difficulty in carrying out the routine work entailed by their orders. The unrestrained
nature of the speculation evoked considerable public comment. A broader market
with more general trading and activity in railroad issues came in October, when
$104,490,000 bonds and 26,639,081 shares of stock were sold. The heaviest dealings
in bonds of any month since June, 1909, occurred in November on transactions
amounting to $124,697,500.
The comparative transactions in bonds and stocks for the past five years have been
as follows:
Year.
1915
1914
1913
1912
1911

Shares.

Bonds.

173,155,644
45,989,158
76,134,996
118,452,676
127,376,149

1955,525,200
460,472,500
497,158,600
645,300,000
878,933,700

The selling of American stocks and bonds held by European investors has been
steady and persistent throughout the year, accelerated at times by the very favorable
movement of exchanges for such sellers. Mr. L. F. Loree, president of the Delaware
& Hudson Railway Co., early in the year undertook to obtain from the railroads of
the country an estimate of the total amount of railroad securities held in foreign
countries, and published figures during the early spring showing the amount reported

DISTRICT NO. 2

NEW YORK.

183

as of January 31, 1915. On December 24 he published a subsequent estimate as of
July 31, showing $2,223,000,000 par value, or $1,751,000,000 market value, a decrease
in the par value of $480,000,000 during the six months. These figures do not include
any industrial or municipal securities, of which large amounts are held in foreign
countries.
In some of the European countries, notably in Great Britain, the Governments
have made arrangements with holders of American securities to borrow them for use
as collateral to loans to be placed in the United States, with authority to sell them
if occasion to do so should arise.
FOREIGN EXCHANGE.

The foreign exchange market since July, 1914, has witnessed trying conditions,
unparalleled fluctuations and extraordinary relief measures in both Europe and the
United States.
On July 17, 1914, demand sterling was quoted at 4.8690 with a downward tendency,
caused by offerings of grain and finance bills. Francs and marks were quoted at
5.16J and 96^, respectively. During the following week political unrest in Europe
and firmer discounts abroad caused sharp advances in rates.
Immediately after the outbreak of the European war thousands of American tourists
in the warring countries found themselves without money and unable to negotiate
letters of credit. Demands for payment of loans and credits, sales of securities, and
remittances for tourists became so great that the exchange markets were completely
demoralized and rates were not posted. Sterling cables were quoted at 7 on August 1;
checks on Paris 4.25. The Government and the bankers acted promptly by dispatching the U. S. S. Tennessee with $4,500,000 in gold, and a credit was opened through the
Bank of France by Messrs. J. P. Morgan & Co.
Shipping and export trade were greatly unsettled by war conditions. Notwithstanding the moratoria abroad, the United States faced the necessity of settling its
maturing foreign indebtedness, which to England alone was estimated to exceed
$200,000,000. Arrangements were made by the Bank of England whereby remittances
of gold might be made for its account to Ottawa.
Credit interchanges were quickly established between New York and London, and
by August 15 nominal quotations for demand sterling declined to 5. During the
next two months exports of grain, cotton, and general merchandise became more normal and bills drawn against them were freely negotiated at rates ranging between
4.92 and 5.08. Nominal rates for French and German checks were 5.05 and 97,
respectively. The latter declined to 90J during the third week in October.
In order to cope with this extraordinary situation it was felt that joint action on a
comprehensive plan would become necessary. The Federal Reserve Board, in conjunction with the Secretary of the Treasury, therefore took the initiative in calling,
September 4, a conference of representatives of the clearing houses of all the reserve
cities.
Letters signed by Messrs. James B. Forgan, Levi L. Rue, Benjamin Strong, jr.,
Thomas P. Beal, and Sol. Wexler were addressed to the Secretary of the Treasury
and the Federal Reserve Board on September 4 and September 19 recommending
the formation in New York of a gold pool through which the requirements of all parts
of the United States for foreign exchange would be fairly and impartially dealt with.
The plan was approved by the Secretary of the Treasury and the Federal Reserve
Board on September 21, and on that date the first meeting of the gold fund committee
was held at the New York Clearing House. The members were Albert H. Wiggin,
chairman; James B. Alexander, Francis L. Hine, Benjamin Strong, jr., William
Woodward, and Frank A. Vanderlip. Banks and trust companies in New York City
subscribed to the pool $45,000,000, and subscriptions amounting to $63,929,360 were

184

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

received from banks and trust companies throughout the United States. It was
found unnecessary, however; to call for more than 25 per cent of the subscriptions,
and owing to the easier exchange market resulting, to a considerable extent, from the
mere existence of the pool, its activities were quite limited. Another gold pool
aggregating $100,000,000 was formed in September by New York banks to provide
gold for shipment to London to pay the indebtedness of New York City maturing
there before the close of the year, but Messrs. J. P. Morgan & Co., the managers of the
pool, found it unnecessary to call for payment in gold of more than about one-third
of the subscriptions.
During October there was an appreciable improvement in the general exchange
situation. The movement of exports was improving and call money rates in London
were about 1 per cent. At the invitation of the Secretary of the Treasury, Sir George
Paish and Basil P. Blackett, Esq., arrived from England during October and remained
about a month discussing the situation with the Government and bankers, but no
definite action resulted from their visit.
The ending of the British moratorium on November 4, the improvement in cotton
exports, and the operations of the gold pool all contributed to further ease in rates during the first week in November. German exchange was stronger during the second
week in December, as a result of remittances for securities sold. French checks at
this time were quoted at 5.16, and in the last week of 1914 demand sterling declined
to 4.84}.
On January 9, 1915, the return movement of gold from Ottawa commenced. It
began to be generally recognized that international trade would run heavily in favor
of the United States. The managers of the gold pool met on January 22 and decided
to return to subscribers the balance of their payments.
During February more cotton bills appeared in the market and exports continued
to show a large excess over imports. The movement of supplies to the warring nations
was very heavy. On February 11 demand sterling declined to 4.82f, the lowest figure
since October, 1907. Francs declined to 5.22J and marks to 85^. The next week
sterling receded still further to 4.79, and continental rates also followed. Notwithstanding the low rates, gold was not imported in any large amounts. A steady sale
of American securities from abroad continued.
In April the advances in security prices on the New York Stock Exchange and the
low rates of international exchange induced increased foreign selling of securities in
this market. Exchange rates did not vary very much until the third week in May,
when a new low record of 5.43J was established for Paris checks. At the end of July
there was a very weak market, and during the second week in August sterling declined
to 4.70\ in spite of large remittances of gold from London via Halifax. This weakness
continued with gradual declines which became very abrupt toward the end of August.
On September 1 the record low quotation of 4.50 to the pound was reached. From
this there was a quick recovery on moderate transactions during the next few days,
the rate being carried in a firm market to 4.72.
The Anglo-French commissioners, Lord Reading, Sir Edward H. Holden, Bart.,
Sir Henry Babington Smith, Basil P. Blackett, Esq., M. Ernest Mallet, and M.
Octave Homberg, arrived on September 10 to discuss with American bankers plans
to stabilize exchange. Further large shipments of gold were received from London
via Halifax. Rates fluctuated irregularly. During the next month a firmer tone
resulted from prospects of successful negotiations with the Anglo-French commissioners, but when the underwriting of the $500,000,000 loan was announced the market did not respond and weakness in sterling was accompanied by recessions in continental exchange. During the third week in October the publication of figures of
heavy exports and large offerings of bills caused further weakness. An irregular but
stronger market developed in November and continued during December with the

DISTRICT NO. 2

185

NEW YORK.

exception of German exchange, which reached the record low quotation of 75{ on
December 16. It should be observed that the effects of violent fluctuations are quite
as serious as abnormal rates of foreign exchange. Our foreign commerce can not be
conducted without unusual hazard of loss to importer and exporter whether exchange
on other countries is quoted at prohibitive premiums or prohibitive discounts. The
unusual hazards of commerce in time of war are greatly magnified by violent fluctuations in the cost of settling accounts whether for goods imported or exported.
The efforts of bankers have therefore been continuous since the outbreak of the
war to establish a more stable market for exchange, as well as to bring about more
normal quotations, whether the exchanges have been at prohibitive premiums, as in
the fall of 1914, or at serious discounts, as during the past few months. The difficulties have been increased by the risks involved in transporting gold from one country
to another, the difficulty of obtaining insurance at reasonable rates against both
marine and war hazards, and the lack at times of neutral vessels satisfactory to shippers and underwriters. In the period reviewed the range of the leading quotations,
chiefly for cables, has been:
Low.
Date.

Sterling
Francs
Marks
Roubles
Lire
Guilders

Sept. 1,1915
. do
Dec. 16,1915
Nov. 9,1915
Sept. 1,1915
do

Rate.

4.50
6.03
• 751
32.00
6.55
.38*

High.
Discount.

Date.

Per cent.
7.5 Aug. 1-8,1914
do
16.3
20.3
do
37.8
do
26.4
do
4.2 Dec. 30,1915

Rate.

7.00
4.25
1.01
• 52J
4.00
• 43J

Premium.
Per cent.
43.8
18.0
6.0
2.0
22.8
8.2

186

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

The following chart shows the high and low points of sterling exchange, by months,
during 1914 and 1915:
COURSE

1914

700

x: D :
S :i •

OF-STE-RLINQ

1915

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HIGH
LOW

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MM

*
\

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450

THE GOLD MOVEMENT.

The total imports of gold into the United States for the 11 months ending November,
1915, aggregated $403,531,913, as compared with $53,279,000 in the same period last
year. Most of this came from Canada, representing the return of gold that was shipped
in the fall of 1914 from New York to Ottawa on account of the Bank of England, and
the large shipments sent from London via Halifax. The facilities at the assay office
were hardly sufficient at times to handle the great quantity of gold imported and

DISTRICT NO. 2

187

NEW YORK.

some shipments were delayed in Canada until room could be made at the assay office
for further receipts. A large part of the later shipments have consisted of foreign coin.
Exports of gold from the United States for the first nine months of 1915 amounted
to $19,536,133, against $222,485,000 in the corresponding months last year.
The following chart shows the net gold movements during 1913, 1914, and 1915.
Balance of gold movement {in millions of dollars).

i 5I i I
i

1915
JULY
AUG.
SEPT
OCT.
NOV
DEC.

4 (

1914

JUNE
JULY
AUG.
SEPT
OCT
NOV
DEC
JAN.
FEB.
MAR
APR.
MAY

-»

OCT.
NOV.
DEC.

APR.
MAY
JUNE

1913

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+ +T

IMPORTS AND EXPORTS.

Compared with the exports of 1913 those of 1914 were showing a steady decrease
each month until after the outbreak of the war. From September on, a steady recovery
in the volume of exports took place, due principally to the great shipments of supplies
to the warring nations which have continued ever since in increasing volume, notwithstanding an increase in ocean freight rates varying from 25 per cent to 250 per cent
according to the destination. The lack of adequate shipping elevators and lighterage
to handle the enormous quantity of exports has caused much congestion. During

20067°—16 —13

188

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

December, 1915, approximately 45,000 carloads were held in warehouses and freight
cars in and near New York awaiting shipment. The railroads have felt obliged to
declare embargoes in some cases on all outward traffic, in others only on certain commodities, until the congestion can be relieved by ocean shipments. Besides the great
increase in exports to England, France, Russia, and Italy, shipments to Sweden,
Norway, Denmark, and Holland have greatly increased, but compared with the first
nine months of 1913 exports for the same period of this year to other countries show
decreases as follows:
Canada, $72,(330,984; Mexico, $9,028,297; South America, $6,710,180.
The following table lists the classes of goods exported in which the largest percentages of increase are shown and the export of which may be considered as due primarily
to demands arising out of the war:
Nine months ending with September.
Per cent increase (+)
or decrease (—).

Articles and classes.

Live animals
Explosives
Wool manufactures
Zinc manufactures
Brass and manufactures
Sugar, refined
Automobiles
Leather manufactures, other..
Chemicals and drugs
Breadstuffs
Boots and shoes
Cotton manufactures
Meats..
Carriages
Iron and steel manufactures
Cotton, raw
Oils, mineral
Copper and manufactures
Naval stores
Wood, lumber, and other manufactures..
Agricultural implements
Miscellaneous
Total.

$96,200,000
84,300,000
25,200,000
21,500,000
31,800,000
24,800,000
85,600,000
94,600,000
54,200,000
423,400,000
29,800,000
71,100,000
194,800,000
18,900,000
251,100,000
307,300,000
106,200,000
83,900,000
9,300,000
40,300,000
10,400,000
217,200,000

14,000,000
4,900,000
3,500,000
3,200,000
4,900,000
5,800,000
22,700, 000
26,700,000
20,200,000
172,800,000
12,400,000
34,100, 000
97,700, 000
9,500, 000
152,800,000
242,200,000
108,200, 000
95,600,000
12,200,000
65,300,000
20,600,000
145,200,000

2,532,500,000

1,467,400,000

+2,305.0
+1,620.4
620.0
571.9
549.0
327.6
277.1
254.3
168.3
145.0
140.3
108.5
99.4
98.9
64.3
26.8
1.9
12.2
23.8
38.3
49.5
49.5
72.5

From February to August, 1914, imports had shown large increases over the same
period of 1913. But in every, month except one from August, 1914, to August, 1915,
there was a decrease of imports when compared with the same month a year earlier.
Total imports for the first nine months of the past three years have been as follows:
1913, $1,327,385,071; 1914, $1,410,071,874; 1915, $1,302,281,591.
The following table lists the classes of goods imported which show the largest increases
or decreases:
Nine moiiths ending with September.
Articles and classes.
Wool manufactures
Breadstuffs
Leather and manufactures Meat and dairy products
Cotton manufactures
Iron and steel manufactures..
Animals, chiefly cattle
Silk, raw
Hides and skins
Chemicals, drugs, etc.
Wool, raw
Sugar
India rubber and substitutes.
Miscellaneous.
Total.

1915
$13,600,000
14,100,000
11,400,000
22,100,000
30,600,000
14,800,000
13,300,000
61,600,000
90,400,000
65,200,000
68,000,000

1914

157,400.000
83,400^00
501,300,000

$36,400,000
25,500,000
18,900, 000
39,700, 000
48,800,000
22,900,000
17,300,000
72,900,000
93,500,000
61,900,000
53,800,000
112,000,000
57,800,000
570,700, 000

1.302.100.000

1,410,100,000

Per cent increase (+)
or decrease (—).
-62.6
-44.7
-39. 7
-39.3
-37.3
-35.4
-23.1
-15.5
- 3.3

+
5.3
+26.4
+40. 5
+44.3
-12.1

- 7.6

DISTRICT NO. 2

189

NEW YORK.

The balance of trade in favor of the United States for the first nine months of the
past three years has been as follows: In 1913, $406,037,087; 1914, $57,330,115; 1915,
$1,227,293,504.
In considering this balance there should be remembered the large amount of money
that in normal times would be spent abroad by American tourists.
. The following chart shows the balance of trade for the years 1913, 1914, and the first
nine months of 1915.
Balance of trade (in millions of dollars).

19)3

F--F+f

1914

1915

[—{—j—111 1

>So

loo

MONEY RATES IN NEW YORK CITY.

In the last week of July, 1914, before the European war, money rates in New York
ranged as follows: Call, If to 2 per cent; time loans on collateral, 60 days to 4 months,
2 | to 3J per cent; prime commercial paper, 4J per cent. Immediately following the
outbreak of war, call and time loans ranged from 6 to 8 per cent and commercial paper
5 J to 6J per cent. By the third week of August the ruling rate for call and time money
was 8 per cent and commercial paper advanced to 6J to 7J per cent. But there was
less demand for money and slightly easier conditions in the money market in September brought the range of rates on time and call loans to 6 to 8 per cent with the
main volume at 7 per cent.
Early in October there was an improved demand for prime commercial paper, which
sold freely at 6§ per cent. By the middle of October the highest rate for call money
was 7 per cent and in the latter part of the month the range was: Call and time 6 to 7
per cent; commercial paper, 6 to 1\ per cent.

190

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

In November the prospect of the opening of the Federal Reserve Banks and the
consequent release of reserves brought further ease in rates. The Comptroller of the
Currency made public a list of banks that were charging only 6 per cent. Time money
was quoted 5J to 6 per cent, commercial paper, 6 to 7 per cent. During the second
week bankers in New York were reported to be seeking loans and the call rate went
as low as 4J per cent, ranging from that to 6 per cent. Time money declined to 5J
per cent while the best commercial paper found buyers at 5J per cent.
Light trade demands and absence of speculation caused a steady downward trend
of money rates. Up to December 19, New York City banks had retired $128,581,540
out of a total of $144,000,000 emergency currency issued to them. Call money ranged
from 2\ per cent to 4 per cent, time loans on collateral, 3J to 4 per cent, and commercial
paper, 4J to 5 per cent.
Notwithstanding the great activity in the stock market which has prevailed during
the last nine months of the year call money has ruled throughout the year at from 1J
to 2 per cent, and time loans on collateral, 2J per cent to 3J per cent. Commercial
paper, which in January ruled from 4 per cent to 5 per cent soon broke below 4 per
cent, with a substantial volume of sales of the best names at 2J per cent to 2J per cent.
Prime bankers' acceptances in January ruled from 2-J per cent to 2-J per cent, and
declined gradually throughout the year, at the close of which they ruled from 2 per
cent to 2J per cent.
The chart on the following page shows the course by months of the New York
rates for call money, time loans, and commercial paper.
LOANS TO FOREIGN COUNTRIES.

One of the most important developments of the year has been the extension of credit
in very large amounts to foreign Governments and to bankers and merchants in foreign
countries. Most of these loans have been to enable the borrowers to pay for goods
purchased in the United States, thereby steadying the exchanges and enabling them
to continue both their ordinary and their extraordinary purchases.
The most important loan was, of course, the Anglo-French loan of $500,000,000 which
was distributed by a large syndicate of bankers formed by Messrs. J. P. Morgan & Co.
It matures in 1920, bears interest at 5 per cent, and was taken by the underwriters at
96J and offered to the public at 98. It is the only one of the foreign loans that has been
listed on the New York Stock Exchange and is actively dealt in. The other loans
were arranged by banks, private bankers, and syndicates, and most of them have not
been offered generally to the public.
While a large volume of unreported credits to foreign borrowers has been extended
by banks in the course of financing exports, the loans and credits to foreign Governments, municipalities, and banks publicly announced to have been arranged in the
United States since the European war began are approximately as follows:
Anglo-French loan
British banks
Italy
Russia
Russian banks
France
Germany
Greece
Sweeden
Norway

$500,000.000
50,000,000
25,000,000
25,000,000
67,000,000
75,000,000
10,000,000
7,000,000
5,000,000
3,000,000

SwitzerlandCanada
Canadian municipalities
Argentina
Bolivia
Panama
Chile
Total

$15,000,000
45,000,000
105,000,000
40,000,000
1,000,000
3,000,000
6, 500,000
982, 500,000

DISTRICT NO. 2

NEW YORK.

Money rates at New York (monthly average).
1915

JAN
FEB
MAF
APR
MA\
JUN
JUL
AUG
SEP
OCT
NOV
DEC
JAN
FEB
MAF
APR
MA>
JUN
JUL
AUG
SEP
OCT
NOV
DEC
JAN
FEB
MAf
APR
MAI
JUN
JUL
AUG
SEP
OCT
NOV
DEC

1914

Y
_^

SEE

SE •

-h

191

192

ANNUAL KEPOBT OF T i l H FEDERAL KESEliVE BOAJRD.
THE 1915 CROPS.

The 1915 harvest in the United States surpassed any before recorded in both volume and value. The value of the principal farm crops estimated by the Department
of Agriculture on the basis of December 1 prices was $5,568,773,000. This compares
with $4,974,527,000 last year, $4,966,497,000 in 1913, and $4,757,478,000 in 1912.
Because of the advance in grain prices as the war in Europe progressed, very large
areas of grain were planted, the acreage of the principal crops this year aggregating
486,570 square miles. The corn crop was the second largest ever grown and the
number of acres planted has been exceeded only once before in this country. The
value of the corn crop surpassed the previous most valuable crop ever grown by
over $30,000,000. The wheat crop for the first time was over a billion bushels. New
records were made in production by wheat, oats, barley, rye, sweet potatoes, rice,
and hay. All the principal crops except barley and tobacco established records as
being the most valuable ever grown in this country.
[000 omitted.]
Acreage.

Corn
All wheat
Oats
Barley.
Rye
Buckwheat.
Flaxseed
Rice
Potatoes
Hay
Tobacco
Cotton

1915

1914

108,321
59,898
40,780
7,395
2,856
806
1,367
803
3,761
50,872
1,368
30,957

103,435
53,541
38,442
7,565
2,541
792
1,645
694
3,711
49,145
1,224
36,832

Total bushels.
1915

2 Pounds.
IMMIGRATION AND

1914

1915

3,054,535
672,804
1,011,505
891,017
1,540,362
141,060
237,000
194,953
49,190
42, 779
15, 769
16,881
13,845
13, 749
28,947
23,649
359,103
409,921
i 85,225
i 70,071
2 1,060,587 21 ,034,679
3 16,135
3 11,161

Total.
i Tons.

Farm value Dec. 1.
1914

$1,755,859
930,302
555,569
122,499
41,295
12,408
24,080
26,212
221,104
912,320
96,041
602,393

$1,722,070
878,680
490,431
105,903
37,018
12,892
17,318
21,849
199,460
779,068
101,411
525,324

5,300,082

4,891,424

5 Bales.
EMIGRATION.

The effect of the war on immigration and emigration has been very marked. Both
arrivals and departures have decreased notably and the effect of the now almost
balanced movement can not fall to be felt in the domestic labor market if the present
industrial activity continues. For the first nine months the net immigration has
been: In 1913, 863,784; in 1914, 384,169; in 1915, 64,485.
The following chart shows the net movement by months during these years.

DISTRICT NO. 2

193

NEW YORK.

Net immigration.
JULY
AUQ.
SEPT
OCT.
NOV.
DEC.

FEB.
MAR
APR.
MAY

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FOREIGN BANKING CONDITIONS.

The outbreak of the war precipitated grave responsibilities upon the great central
banks, as well as the private banks, of the principal belligerent nations. Various
measures were undertaken to meet the crisis which at once developed, both in credit
and in currency.
In England the Government declared various moratoria extending the date of payment of maturing bills. The Bank of England was indemnified against loss in the
purchase of bills and under this guaranty it made a practically unlimited offer to take
bills which had become unliquid by reason of war conditions. The Government
authorized the issue, through the Bank of England, of £1 and 10-shilling notes of the
Government to relieve the currency stringency and take the place of sovereigns and
half sovereigns which disappeared from circulation. The effect of these measures
was instantly felt. By having a vast volume of their securities made liquid English
banking firms and institutions were enabled to conduct their customary business.
The Bank of England largely increased its deposit liabilities and its investments in
bills, and a reduction in both the bank rate and the rates for bills in the open market
quickly followed.

194

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

In France the note issues of the Bank of France are limited in amount by law.
Increases in the limit of the note issue were authorized, enabling the bank to make
large advances to the Government and to provide notes for current circulation. To
some extent these notes were deposited with various organizations, notably the Chamber of Commerce of Bordeaux, which issued notes of smaller denominations to circulate in place of gold coins, which promptly disappeared from circulation. These
measures were subsequently followed by appeals to the people to deposit their gold
with the Bank of France, which ultimately brought the gold holdings of the bank to
an amount in excess of $1,000,000,000.
In Germany more extensive measures were taken to meet the situation than in
either England or France. Immediate provision was made to enlarge the note issues
of the Reichsbank and local credit banks were organized at which solvent borrowers
could obtain credit upon bcth securities and commodities. The Reichsbank was
authorized to receive and hold notes issued by certain of these banks on a parity with
its gold reserves. Such notes were also issued in small denominations for purposes of
circulation. These efforts to maintain the gold reserve of the nation were supplemented by an embargo on the export of gold and by appeals to the people to surrender
their gold to the Reichsbank, thereby largely increasing its holdings.
While all these measures have many characteristics in common, provision having
been made in both England and France for the extension of date of payment of debts
and in all three countries for a wide extension of the power of note issue by the central
banks, the means employed in each case were somewhat different. The effect of
these operations are clearly reflected in the attached tables showing the changes which
have taken place in the statements of the three central banks of these countries. The
issue of Government notes in England to supplement the note issues of the Bank of
England was accompanied by an accumulation of gold reserve for their redemption,
the difference between the gold reserve and the face of the notes being covered by
Government securities and balances at the Bank of England.
The striking similarity in the demands made upon the credit systems of all the belligerent nations is equally reflected in these statements. The ability to convert
unliquid assets through the agency of a central bank and to furnish the people with a
convenient and acceptable circulating note for their daily transactions undoubtedly
saved these nations and their citizens from enormous losses that otherwise would have
been sustained by reason of credit contraction and trade stagnation.
The following tables show the principal assets and liabilities of the three Government
banks at intervals during the period:
BANK OF ENGLAND.
[000,000 omitted.]
Date.

1914.
July 30
Oct. 8
Nov. 19
Dec. 31
Feb. 18
Apr. 22
May 27
June 24
July 29
Aug. 26
Sept. 30
Oct. 28
Nov. 25

Governse- Circula- Deposits. Ratio of
Bullion. Reserve. ment se- Other
tion.
reserve.
curities. curities.
£.

£.

47
114
107
106

£.

67
164
164
155

Per cent.
40
24.53
34

1915.
102
144
139
136
191
142
132
97

158
214
220
208
273
224
192
140
145

NOTE.—On Dec. 8, 1915, there were outstanding in addition £94,291,700 currency notes of £1 and 10shilling denominations, against which a gold reserve of $23,500,000, or 30.2 per cent, is carried, the balance
the issue being covered by Government securities and a balance at the Bank of England.
Digitized forofFRASER

195

DISTRICT NO. 2—NEW YORK.
BANK OF FRANCE.
[000,000 omitted.]
Date.

Gold.

Silver.

1914.

Francs.
4,141

Francs.
650

Francs.
2,448

4,237
4,191
3,913
3,927
4,129
4,266
4,550
4,729
4,835

375
376
375
371
367
356
354
353
362

2,285
2,709
2,709
2,858
2,426
2,380
2,386
2,338
2,192

July 30
1915.

Feb. 18
Apr.22
May 27
June 24
July 29
Aug. 26
Sept. 30
Oct. 28
Nov.25

Discounts. Advances.

Deposits. Circulation.

Francs.
737

Francs.
1,330

Francs.
6,683

830
650
644
629
610
580
579
561
563

2,822
2,350
2,301
2,354
2,600
2,642
2,860
2,684
2,665

10,831
11,541
11,829
12,106
12,592
12,949
13,457
13,867
14,278

IMPERIAL BANK OF GERMANY.
[000,000 omitted.]

Date.

Gold.

1914.

Marks.
1,356
1,529
1,991

July 25
Aug. 22
Dec.4...
1915.
Feb.10
Apr. 30
June 2
July 17
Oct. 23

2,156
2,366
2,377
2,390
2,430

Loans
and discounts.
Marks.

Circulation.

4,616
2,968

Marks.
1,890
3,999
4,205

3,379
3,807
4,163
4,482
3,924

5,046
5,311
5,318
5,311
5,675

801

INDUSTRIAL AND COMMERCIAL CONDITIONS.

The latter half of 1914 was marked by general industrial unsettlement and depression. Securities and many commodities were undergoing liquidation, interest rates
were high, credit in demand, and both unemployment and individual and corporate
retrenchment were general. The year 1915 has brought a reversal of these conditions,
probably unequaled in its swiftness, intensity, and magnitude. The recovery had
its inception in easy money, growing export trade, reestablishment of the international exchanges, and the return of confidence. In the autumn of 1914 large foreign
orders began to be placed in the United States for munitions and other raw and manufactured goods necessary for the prosecution of the European war and the maintenance of civil populations. These orders created centers of industrial and trade
activity and purchasing power, to which unemployed labor gravitated. In other
sections the purchasing power was maintained or increased by the sale of large crops
at very high prices. From these centers, gradually widening in area and influence
throughout the spring and summer, has developed the present general commercial
and industrial activity.
The balance of trade, which had been running against the United States for several
months preceding the war, soon began to turn in its favor through heavy shipments
of grain and other commodities. By January, 1915, the shipment of grain, cotton,
copper, live stock, meat, and other raw and manufactured articles had reached a
sufficient volume to turn the gold movement also in favor of this country. The
increased traffic of the railways and the tremendous demand on the iron and steel
industry for the manufacture of munitions caused these two fundamental industries
to resume normal purchases. The general retrenchment practiced during the first

196

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

six months of the war was relaxed as the effects were felt of better employment of
labor, increasing commercial and industrial profits, and the great crops of 1915, marketed at prices well above the normal. Even in the South the intense depression of
the winter of 1914-15 was lifted by the sale of the 1915 cotton crop, although of reduced
volume, at prices better than anticipated.
Improvement began to manifest itself in nearly all lines of industry about the beginning of the year 1915. By that time a favorable balance of trade had been established;
railroad earnings had begun to improve and iron and steel to move in greater volume; bank clearings throughout the country were increasing slightly; unemployment
in New York State and the number of commercial failures throughout the country had
reached their highest points.
But while the improvement began during the first half of the year, business did not
attain its present momentum till toward the end of the summer. Inquiries recently
made of leading merchants and manufacturers throughout the country indicate very
generally that their volume has been much greater during the last than during the
first six months of-the year, in many cases comparing favorably with other periods of
industrial activity. Wages have been substantially increased in industries operating
directly or indirectly under the stress of purchases by the belligerent nations. Except
in neighboring industries wage increases have not yet become general, although there
are signs that demands for higher wages are likely to spread. The reduction of immigration to the lowest point in many years should have a tendency at least to prevent
unemployment. The savings banks in many parts of the North Atlantic States report
substantial gains, especially during the autumn months. Earnings of public service
corporations as a whole have shown increased gross earnings during the last half of the
year. The general retail trade of the autumn has been unprecedented in volume.
The rise in price of many raw materials, coupled with the rise in wages in certain
industries, has increased prices to the consumer and, in some cases, has had the effect
of reducing profits. The favorable market for securities has given railroads and
industrial enterprises a better opportunity to finance improvements than has prevailed for many years. Except in certain lines, principally those adversely affected
by European conditions, the business of the country may be said to be working to
capacity nearly everywhere, with many industries handling a volume never before
equaled.
Appended to this paragraph are the following charts, showing figures for 1913,1914,
and 1915, and indicating clearly the course of the present industrial revival:
Total bank clearings.
Changes in gross railroad earnings from previous year.
Iron production.
Number of commercial failures.
Unfilled tonnage, United States Steel Corporation.
Percentage of employment in New York State.
Idle car figures.

DISTRICT NO. 2

197

NEW YORK.

BANKING AND FINANCIAL CONDITIONS.

The most important banking and financial developments of the period under review
are—
1. Reduction of required bank reserves and steady increase of surplus reserves.
2. Great expansion of bank deposits and loans.
3. Large importations of gold.
4. Large loans to foreign countries.
5. Heavy purchases of American securities from foreign countries.
The Comptroller of the Currency in September, 1914, published a calculation that
the total National Bank Reserves released by the act on November 16, 1914, would
aggregate $465,000,000. During 1915 several States reduced the reserves required of
their State institutions to correspond with the percentages required under the Federal
Reserve Act even though they should not join the system and secure its reserve advantages. The Comptroller reports the amount of excess reserves held by the national
banks of the country on September 2, 1915, at $869,000,000.
The net deposits of all national banks rose from $7,157,000,000 on October 31, 1914,
to $8,323,000,000 on September 2, 1915, an increase of $1,166,000,000, or 16 per cent.
The net deposits of national banks in New York City during the same period increased
$530,000,000, or 43 per cent. Nearly half of the increase was in the New York City
national banks, which were called on primarily to finance the country's heavy export
trade.
The great expansion in New York is better shown by the figures month by month
of the New York clearing-house banks since the day before the Federal Reserve System opened, indicating an increase in deposits of 78 per cent in 13J months.
ALL NEW YORK CLEARING-HOUSE BANKS.
[000,000 omitted.]

Date.

Capi- Undivided
tal. profits.

Gold.

Legal
tenders.

Silver.

Balance,
Federal
Reserve
Bank.

FedNaNet Excess
tional- eral
Re- Loans, deposrebank serve
etc.
its.
serves.
notes. notes.

1914.
Nov. 14
Dec. 26.'."

175
175

300
300

*340
191

102
59

18
14

1
1

2,133
2,179

1,925
2,074

7
117

1915.
Jan.30..
Feb.27..
Mar. 27..
Apr. 24..
May 29..
June 26.
July 3 1 . .
Aug. 2 8 .
Sept. 25.
Oct. 30..
Nov. 27..
Dec. 3 1 . .

175
175
175
175
175
175
176
176
177
179
176
176

298
298
302
304
304
304
309
309
306
307
310
312

209
215
239
263
291
324
295
336
369
399
398
335

69
66
66
66
65
55
70
70
67
56
49
71

84
75
83
82
76
71
78
78
72
66
81
79

108
113
115
121
117
131
133
141
144
164
165
165

15
9
10
9
8
9
9
8
8
7
8
8

1
1
1
1
2
2
2
2
3
3
3
4

2,233
2,298
2,385
2,400
2,437
2,476
2,578
2,655
2,766
3,044
3,123
3.257

2,213
2,268
2,386
2,432
2,490
2,583
2,695
2,810
2,951
3,270
3,364
3,462

114
135
150
171
183
193
180
205
198
196
194
146

» Specie.

The following chart shows the increase in loans and deposits of New York clearinghouse banks by years since 1903. The increase in 1911 is caused by trust companies
joining the clearing house. An expansion has occurred in one year which normally
would have been spread over nearly a decade.

198

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.
Deposits and loans of New York clearing-house, banks (in billions of dollars).

3.5
3

§1

1
:£:

-il—

2.5

-4trI/ r

l.o

A
3.5
I

i
I

1 /I
/I

1/ 1
/
/
Tl

2-5
/

Z
I
f

DISTRICT NO. 2

NEW YORK.

199

While a portion of the expansion here shown is due to industrial demands and
stock-market activity, the greater volume of it doubtless has arisen from transactions
relating to the shipment of goods, to the return of American securities, and to the
extension of credit to foreign countries.
The surplus reserves, maintained not only in New York City but throughout the
country, are evidence of the proper caution with which bankers are taking advantage
of the lowered reserve requirements in view of the abnormal conditions prevailing
here and in Europe. With such excess reserves, it has been natural that the rates for
loans in the money markets of the country should be extremely low. The demand
from banks for commercial paper has resulted in rates lower than ever before reported,
and the volume has been wholly unequal to supplying the demand.
The tremendous exports of the past year, instead of being balanced by increased
imports of consumable commodities, have been paid for largely by gold, by securities
returned to this country and by credits extended here to foreign countries. The
unusual nature of the trade activity has required a new form of financing. Instead
of financing shipments by American manufacturers to be paid for abroad, it has been
necessary to finance foreign purchasers to enable them to pay in cash in this country.
Looking outside of the banks to the conditions of agricultural productivity and
industrial activity now prevailing, prices have risen considerably for agricultural
products and minerals; many manufactured articles have advanced in price; labor
is better employed and wages in many sections and industries have risen; immigration as a net movement has practically ceased; security prices have risen generally
and in several industries notably. The requirements of American industries have
thus far consumed but little of the increased credit power of the banks. The banks
have used the added credit power given them by the inflow of gold to assist in developing foreign trade.
As long as the favorable balance of trade continues and bankers proceed with
the same caution which has characterized their course thus far, there seems to be no
present reason for concern; but the test of what must be considered as our normal
banking power will come after the war is over. If the balance of foreign trade then
continues favorable and we are enabled to retain a substantial portion of the gold
which has come here under stress of war conditions, we can continue to make advances
to our foreign trade connections. But, should the balance turn against us, or heavy
foreign demand for credit arise, the added gold is likely to return to Europe, thereby
diminishing proportionally our power to lend to foreign countries in developing trade
with them. So many factors will enter into the resultant that it is idle to attempt
to make predictions. The one safe rule for the banks of the country is to keep liquid;
to see that in the period of tremendous expansion which circumstances are forcing
upon them their increased resources do not consist of loans and securities representing
fixed assets. They should be ready at all times for a drain on their gold and a reduction of their credit power. The fact that, in spite of the growing expansion excess
reserves continue to grow even faster, is evidence that they appreciate the possibly
transient character of their increased banking power and do not intend to expand
beyond a safe and reasonable point.
The following charts indicate the expansion which is taking place not only in
banking power but in commodity and security prices: National-banks deposits, 1914
and 1915; commodity prices 1913, 1914, and 1915; security prices, 1914 and 1915.

200

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.
CHAPTER V.—SUMMARY OF RESULTS OF OPERATION.

What has thus far been accomplished by the Federal Reserve Bank of New York
may perhaps be briefly summarized.
The bank has been thoroughly organized, with a staff of officers and clerks experienced in the work of the particular departments to which they have been assigned.
The organization is more complete than the business actually done would seem to
require since it has been felt essential by the directors and officers that a complete
departmental organization should be maintained, capable, with the addition of necessary clerical assistance, of performing any volume of business which might be suddenly
thrust upon it.
The bank was opened and the reserve transfer accomplished without any of the
disturbances which it was predicted would occur.
Valuable experience has been gained of the meaning and effect of the regulations
of the Federal Reserve Board governing the development of the various functions of
reserve banks, which has in turn been transmitted to the member banks.
Considerable effort has been expended in explaining to member banks the purpose
and meaning of the Federal Reserve System and the ways in which the bank can be
of service to them in quiet as well as in active times. The business community has
also had an opportunity to become informed of its development and functions. The
officers have also devoted the necessary time to furnishing information to the press in
order that the public might be correctly informed of the operations of the bank, and
the generally favorable attitude of the press has been an important factor in establishing public confidence in the system.
Federal Reserve Notes have been issued freely and become already an important
part of our currency, and through their use the bank has greatly strengthened its gold
position and its credit power.
The establishment of a market for bankers' acceptances has been assisted by the
purchases made by this bank for itself and other reserve banks, and the study given to
the drawing and indorsement of such bills has made more certain their ready
negotiability.
Through experience gained in discounting paper for member banks, an understanding has been reached by both this bank and its member banks of the kind of paper
which is eligible for discount.
Through its collection system an important step has been taken toward effecting
cheaper and more direct check collections.
A gold settlement fund has been established at Washington for settlements between
Federal Reserve Banks and their districts which should substantially reduce currency shipments.
On January 1, 1916, the bank will begin acting as fiscal agent of the United States.
A satisfactory trial has been made of the new form of Government supervision
requiring one-third of the directors of the bank to be appointed by the Reserve Board
and to exercise primary responsibility for all the policies and transactions of the bank.
The coordination of the work of the reserve banks by the Reserve Board has been
supplemented by conferences of their governors and of groups of other officers, and
the development of the system is progressing along such harmonious lines as local
conditions and requirements will permit.
During this period of relative operating inactivity the officers and directors of the
reserve banks have had an opportunity to study the Act. Its ambiguities have come
to light and suggestions for amendments which seem desirable have been made to the
Reserve Board through whom they may if approved be transmitted to Congress.
The system has been enabled quietly to develop most of its important functions
and to gather not only experience but strength to respond to such calls as may be
made upon it. The experience of the principal European countries in dealing with

DISTRICT NO. 2—NEW YORK.

201

the conditions suddenly forced upon them at the outbreak of the war, now that it
can be seen in some perspective, should be studied during the coming year by the
officers and directors of Federal Reserve Banks. A clear understanding should be
obtained of the methods by which demoralization of credit was effectually met by
the European countries and of the methods which, under conditions peculiar to the
United States, would be likely to prove effective in maintaining its credit machinery
in any strain which might grow out of the European war or other international complications. The lessons are now both clear and fresh; we should not fail to learn
them and understand their application to our own conditions.
This report would not be complete without suitable recognition and acknowledgment of the work of both the temporary and permanent staffs of the bank. Those who
were temporarily employed performed their duties in the spirit of public service.
The members of the permanent staff, likewise, from the outset have worked without
regard to office hours and through the energy and devotion with which they have
undertaken the tasks assigned them the functions of the bank been developed upon
a sound and permanent basis.
APPENDIX 1.—BY-LAWS OF THE FEDERAL RESERVE BANK OF NEW YORK.

ARTICLE I.—Directors.

SECTION 1. Quorum.—A majority of the directors shall constitute a quorum for the
transaction of business, but less than a quorum may adjourn from time to time until
a quorum is in attendance.
SEC. 2. Vacancies.—As soon as practicable after the occurrence of any vacancy in
the membership of the board the chairman of the board shall take such steps as may
be necessary to cause such vacancy to be filled in the manner provided by law.
SEC. 3. Meetings.—(Amended July 7,1915.) There shall be a regular meeting of the
board every Wednesday at 9.45 o'clock a. m., or, if that day be a holiday, on such day
as the board may determine at a preceding meeting (unless otherwise ordered by a
majority of the board). The chairman of the board may call a special meeting at
any time and shall do so upon the written request of any three directors or of the
governor. Notice of special meetings shall be given by mail or by telegraph. If
given by mail, such notice shall be mailed at least two days before the date of the
meeting. If given by telegraph, such notice shall be dispatched at least 24 hours
before the date of the meeting. Notice of any meeting may be dispensed with if each
of the directors shall in writing or by telegraph waive such notice.
SEC. 4. Potvers.—The business of this bank shall be conducted under the supervision and control of its board of directors, subject to the supervision vested by law
in the Federal Reserve Board. The board of directors shall appoint the officers and
fix their compensation.
The board may appoint legal counsel for the bank, define his duties, and fix his
compensation.
SEC. 5. Special committees.—Special business of the bank may be referred from
time to time to special committees, which shall exercise such powers as the board
may delegate to them.
SEC. 6. Order of business.—The board may from time to time make such regulations
as to order of business as may seem to it desirable.
ARTICLE II.—Executive committee.
SECTION 1. How constituted.—There shall be an executive committee consisting of
the governor, the chairman, and one or more directors chosen by the board, who shall
serve during the pleasure of the board or for terms fixed by it. Not less than three
members of the committee shall constitute a quorum for the transaction of business,
and action by the committee shall be upon the vote of a majority of those present at
any meeting of the committee.
The committee shall have power to fix the time and place of holding regular or
special meetings and the method of giving notice thereof.
Minutes of all meetings ol the executive committee shall be kept by the secretary,
and such minutes shall be submitted to the members of the board of directors at its
next succeeding meeting. Such minutes or a digest thereof shall be read to the meeting if requested by any memberof the board.

202

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

SEC. 2. Powers.—Subject to the supervision and control of the board of directors
as set forth in Article I, section 4, the executive committee shall have the following
powers:
(a) To pass upon all commercial paper submitted for discount.
(b) To apply for and provide for the security of such Federal Reserve notes as may,
in the judgment of the committee or of the board, be necessary for the general requirements of the bank.
(c) To employ or to delegate to officers of the bank authority to employ clerks and
other subordinates and to define their duties and to fix their compensations.
(d) To approve bonds furnished by the officers and employees of the bank and to
provide for their custody.
(e) To exercise such other powers as may be from time to time delegated to such
committee by the board of directors.
(/) In general, to conduct the business of the bank, subject to the supervision and
control of the board of directors.
(g) It shall recommend to the board of directors from time to time changes in the
discount rate.
ARTICLE

III.—Officers.

SECTION 1. The board of directors shall appoint a governor, a deputy governor, a
cashier, and a secretary, and shall have power to appoint such other officers as the
board may from time to time determine to be necessary and appropriate for the conduct of the business of the bank. The offices of deputy governor, cashier, and secretary, or any two of them, may be held by one person, in the discretion of the board.
The officers chosen by the board shall hold office during the pleasure of the board.
SEC. 2. Federal Reserve agent.—The Federal Reserve agent, as chairman of the
board, shall preside at meetings thereof. Copies of all reports and statements made
to the Federal Reserve Board shall be filed with the Federal Reserve agent.
SEC. 3. Deputy Federal Reserve agent.—In the absence or disability of the Federal
Reserve agent his powers shall be exercised and his duties performed by the deputy
Federal Reserve agent, who may perform such other services as shall be requested by
the board of directors not inconsistent with his duties as provided by law.
SEC. 4. Governor.—Subject to the supervision and control of the board of directors,
the governor shall have general charge and control of the business and affairs of the
bank and he shall be the chairman of the executive committee. He shall have power
to make any and all transfers of securities or other property of the bank which may be
authorized to be sold or transferred by the executive committee or by the board. The
governor shall have power to prescribe the duties of all subordinate officers and agents
of the bank where such duties are not specifically prescribed by law or by the board
of directors or by the by-laws. The governor may suspend or remove any employee
of the bank.
SEC. 5. Deputy governor.—In case of the absence or disability of the governor his
powers shall be exercised and his duties discharged by the deputy governor, and in
case of the absence or disability of the deputy governor the board shall appoint one
of the other directors governor pro tern. The duties of the deputy governor shall
otherwise be such as may be prescribed by the board of directors or by the governor.
In case the board shall deem that the business of the bank requires the appointment
of one or more assistant deputy governors, it shall have authority to appoint such
assistant deputy governor or governors and shall prescribe and define his or their
duties.
SEC. 6. Cashier.—(Amended Aug. 4, 1915.) The cashier (with such other officer
or officers as may be designated by the board of directors) shall have the custody of
all moneys, investments, and securities of the bank, subject to such rules as the board
may adopt for their safety. He shall perform such other duties as may be assigned
to him from time to time by the board of directors, the executive committee, or the
governor.
SEC. 7, Secretary.—The secretary shall keep the minutes of all meetings of the
board and of all committees thereof. He shall have custody of the seal of the bank,
with power to affix same to certificates of stock of the bank, and by authority of the
board or the executive committee to such other instruments as may from time to
time be required. The board of directors may, in the absence or disability of the
secretary, or upon other occasion where in the discretion of the board greater convenience can be attained, appoint a secretary pro tern, or empower one or more officers
to affix the seal of the bank to certificates of stock or other instruments. The secretary shall perform such other duties as may from time to time be prescribed by the
board of directors, the executive committee, or the governor.

DISTRICT NO. 2—NEW YORK.

203

ARTICLE IV.—Certificates of stock.

All certificates of stock or of payment of or on account of stock subscriptions shall
be signed by the governor or a deputy governor and the secretary or cashier, or such
other officers as may be prescribed by the board, and such certificates shall bear the
corporate seal.
ARTICLE V.—Business hours.

The bank shall be open for business from 10 o'clock to 3 o'clock on each day except
Sundays or days or parts of days established as legal holidays.
ARTICLE VI.—Amendments.

These by-laws may be amended at any regular meeting of the board by a majority
vote of the entire board: Provided, however, That a copy of such amendment shall have
been mailed to each member at least five days prior to such meeting, unless waiver
thereof shall have been made in writing.

APPENDIX 2.—CONDENSED STATEMENT OF CONDITION OF FEDERAL RESERVE BANK
OF NEW YORK DEC. 31, 1915.
Resources.
Bills
discounted—
Members
$236,472.08
Bills
discounted—
Bought
9,546,011.06
Investments and accrued interest
1,206,733.90

Liabilities.
Capital paid in
Unearned discount and interest
Due to member banks
$10,989,217.04 | Due to other Federal Reserve Banks.

Due from member
banks, overdrafts...
28,820.51
Due from other Federal
Reserve Banks
1,932,512.64
1,961,333.15
Furniture and equipment

31,520.01
179,433,322.16
19,818,568.18

Cashiers'checks

841,219144

Federal Reserve notes

140,000.00

Withheld for Federal income tax

608.15

26,980.36

Expense of organization

122,335.01

Cost of unissued Federal Reserve
notes

232,086.79

Expenses paid in advance

3,965.78

Amounts awaiting reimbursement..

2,346.40

Federal
reserve
notes on hand
16,139,280.00
National-bank notes
and Federal reserve notes of other
Federal
Reserve
Banks
. 41,250.94
Exchanges and other
cash items
987,566.35
Gold
174,845,827.50
Lawful money
5,976,087.40
Profit and loss

16,180,530.94

181,809,481.25
111.22

Total

211,328,387.94

Total
Net deposits
Per cent cash to net deposits

20067°—16

$11,063,150.00

211,328,387.94
197,144,210.28
91.6

204

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.
APPENDIX 3.—PROFIT AND LOSS STATEMENT.

Nov. 16, 1914, to Dec. 31, 1915.
Current expense.

Income.
Bills discounted—Members
Acceptances purchased
Investments—Warrants
Sundry profits
Excess of expenses over income carried
to profit and loss
Total.

$36,840.98
97,054.10
191,868.68
19,271.57
111. 22
345,146.55

Directors' fees, outside conferences, and
Federal Advisory Council
$18,240.72
Salaries
154,043.05
Rent
42,749.95
General expense
44,472.23
Cost of Federal Reserve notes used
63,800.00
Assessment for expenses of Federal Reserve Board
21,840.60
Total

345,146.55

Statement of organization expenses, Dec. 31, 1915, carried in assets.
Assessment for expenses of Federal Reserve Board
Expense of organization—Local
Furniture and equipment
Cost of unissued Federal Reserve notes

$41,367.72
80,967.29
26,980.36
232,086.79

Total.

381,402.18

APPENDIX 4.—COMPARATIVE STATEMENTS OF CONDITION.
Nov. 16, 1914.

June 30,1915.

Bills discounted—Members
$2,213,500.00
Bills discounted—Bought
Investments and accrued interest
Due from member banks, overdrafts
Due from other Federal Reserve Banks
Furniture and equipment
Expense of organization
13,401.02
Cost of Unissued Federal Reserve notes
Expenses paid in advance
Amounts awaiting reimbursement
Federal Reserve notes on hand
National Bank notes and Federal Reserve notes of other
Federal Reserve Banks
Exchanges and other cash items
j
51.20
Gold
I 81,533,715.00
Lawful money
| 21,399,854.00
Profit and loss
;

$543,404.99
4,664,859.76
3,697,484.16

Dec. 31, 1915.

RESOURCES.

Total

5,565,329.74
*"i86,'467.*38
1,613.60
3,531,475.00

$236,472.08
9,546,011.06
1,206,733.90
28,820.51
1,932,512.64
26,980.36
122,335.01
232,086.79
3,965.78
2,346.40
16,139,280.00

52,122.54
1,480,378.25
120,098,607.50
31,247,079.90

41,250.94
987,566.35
174,845,827.50
5,976,087.40
111. 22

171,068,822.82

211,328,387.94

3,321,950.00
9,96t,650.00
43,064.21
15,718. 44
I
8,368.81
I 101,816,801.29 141,929,512.72
18,294,279.06
644,353.43
13,401.12
180,000.00
244.96

11.063,150.00
31,520.01
179,433,322.16
19,818,568.18
841,219.44
140,000.00
608.15

105,160,521.22 171,068,822.82
101,830,151.21 153,822,437.72
98.3
101.08

211,328,387.94
197,144,210.28
91.6

105,160,521.22
LIABILITIES.

Capital paid in
Profit and loss
Unearned discount and interest
Due to member banks
Due to other Federal Reserve Banks
Cashiers'checks
Federal Reserve notes
Withheld for Federal income tax
Total
Net deposits
Per cent cash to net deposits

DISTRICT NO. 2

205

NEW YORK.

A P P E N D I X 5 . — C A P I T A L A C C O U N T R E C O N C I L I A T I O N , N O V . 2,

1914,

TO D E C . 3 1 ,

1915.

Capital paid in first installment, Nov. 2,1914
$3,321,950.00
Capital paid in second installment Feb. 2,1915
3,318,183.35
Capital paid in third instaUment May 3,1915
3,317,549.98
Capital paid in by 131 banks in northern New Jersey transferred from District No. 3; first,
second, and third installments
962,650.00
10,920,333.33

Sundry increases:
Due to increases in capital and surplus of member banks
Due to organization of new banks

$44,150.00
221,650.00

Sundry decreases:
Due to decreases in capital and surplus of member banks
Due to banks liquidated

4,983.33
118,000.00

Capital paid in Dec. 31,1915, by member banks

APPENDIX

265,800.00
11,186,133.33

122,983.33
11,063,150.00

6.—REDISCOUNTS.

Nov. 16, 1914, to Dec. SI, 1915.
Number of applications received
Amount of applications received
Amount of applications accepted
Amount of applications rejected
Largest application
Smallest application
Number of pieces of paper discounted
Amount discounted
Largest piece of paper
Smallest piece of paper
Average size of note discounted
Number of banks rediscounting

277
$11,384,037.63
$10,746,610.61
$637,427.02
$2,182,500.00
$1,015.00
2,676
$9,668,632.41
$300,000.00
$20.20
$3,613.09
54

Number of pieces of paper and amount discounted, by months.
Number.
November, 1914
December
January, 1915..
February
March
April
May
June

209
206
139
184
167
241
207
426

Number.

Amount.
$3,112,900. 73
1,736,182. 81
1,642,303.85
1,046,307.55
190,652.27
216,449.17
235,957. 67
289,518. 48

Amount.

July
August
September.
October
November.
December..

259
124
211
107
64
132

$333,949.18
157,026. 34
286,208.77
137,183. 62
152,330.23
131,661.74

Total

2,676

9,668,632.41

APPENDIX 7.—MATURITIES OF INVESTMENTS OF FEDERAL RESERVE BANK OF NEW
YORK, DEC. 31, 1915.
Maturing.
Within—
10 days
11 to 30 days
31 to 60 days
61 to 90 days
91 days to 6 months.
Total

Bills
discounted.

Warrants.

Acceptances.

Totals.

$98,791.24 $763,548. 53
188,193. 77 1,961,806. 07
384,373.97 1,870,083.25
GO, 277. 00 4,950,573.21
436,950.00

$900,320.64
2,247,150.04
2,336,879. 80
5,059,768.64
436,950. 00

236,472. 08 1,198,585. 98 9,546,011.06

10,981,069.12

$37,980.87
97,150.20
82,422. 58
18,918.43

206

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.
APPENDIX 8.—FEDERAL RESERVE NOTES.

Federal reserve notes issued to Federal Reserve Agent,

Nov. 16, 1914, to Dec. 31, 1915.

Total amount of notes shipped to the Federal Reserve Agent
Total net amount issued to the bank by the Federal Reserve Agent
In the following denominations:
Fives
Tens
Twenties.
Fifties
Hundreds

$106,240,000
89,440,000
$35,600,000
36,160,000
11,280,000
1,600,000
4,800,000

Total amount in hands of Federal Reserve Agent Dec. 31,1915

16,800,000

Total of Federal reserve notes paid out by the Federal Reserve Bank of New
months.
To
member
banks.

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

1914

October
November
December

$785,500
2,933,600

1915

3,365,600
3,393,000
6,605,000
6,453,500
5,690,000
7,487,000
6,864,500
6,394,000
8,078,000

To
member
banks.

To nonmember
banks.
1915

To nonmember
banks.

$9,897,000 $657,000
9,878,500
771,000
13,236,000 1,291,000

Total to nonmember banks.
$291,000
433,000
442,000
452,000
735,000

York, by

91,061,200 5,072,000
5,072,000

96,133,200
Total amount received from
Federal Reserve Agent... 89,440,000
6,693,200

The difference between the amount paid out and the amount received from the
Federal Reserve Agent represents notes which were deposited but were sufficiently
clean to be again paid out.
Movement of Federal reserve notes between Federal Reserve Bank of New York and other
Federal Reserve Banks, Nov. 16, 1914, to Dec. 81, 1915.
Notes of
Federal
Reserve Their notes
Bank of shipped to.
New York
received
from.

Notes of
Federal
Reserve
Their notes
Bank of shipped to.
New York
received
from.
$82,285
924,655
212,200
22 530
8,505
4 470
2,885

Atlanta
Boston
Chicago

Cleveland
Dallas .
Kansas City
Minneapolis

. . .

$688,435
240,420
81,215
246,355
327,650
130,695
114,625

Philadelphia.
Richmond...
St. Louis
San Francisco

$1,324,615
42,810
72,555
108,735

$330,590
1,539,935
55,780
190,490

Total...

2,806,245

3,946,190

APPENDIX 9.—TRANSIT AND EXCHANGE TRANSACTIONS BETWEEN FEDERAL RESERVE
BANK OF NEW YORK AND OTHER FEDERAL RESERVE BANKS, NOV. 16, 1914, TO
DEC. 31, 1915.
Items de- Items sent
posited
Federal
with Fed- byReserve
eral Reserve Bank of
Bank of
New York
New York
to.
by.
Atlanta
Boston
Chicago
Cleveland
Dallas
Kansas City
Minneapolis

$55,353,000 $42,966,000
112,818,000 100,108,000
W3,797,000 43,192,000
2,966,000
18,126,000
44,286,000 25,968,000
28,074,000 22,854,000
2,798,000
7,817,000

Items de- Items sent
posited
Federal
with Fed- byReserve
eral Reserve Bank of
Bank of
York
New York New to.
by.
Philadelphia
Richmond
St. Louis
San Francises
Total

§233,244,000 $83,733,000
58,693,000 74,221,000
49,085,000 23,307,000
43,799,000 12,777,000
795,092,000

434,890,000

DISTRICT NO. 2

207

NEW YORK.

APPENDIX 10.—SUMMARY OF GOLD SETTLEMENT FUND OPERATIONS, MAY 19,
TO DEC. 31, 1915.

1915,

Settlement of accounts.

Boston
Philadelphia
Cleveland
Richmond
" "" '
Atlanta
Chicago
St. Louis..
Minneapolis
Kansas City
Dallas
San Francisco

Total
Loss

Amount
received in
settlement of
accounts due
from other
Federal Reserve Banks.

Amount
paid in
settlement of
accounts due
to other
Federal Reserve Banks.

$74,357,000
29,676,000
1,589,000
60,460,000
17,485,000
15, 739,000
, 10,719,000
I 2,377,000
13,006,000
8,652,000
|
2,017,000

$73,779,000
49,247,000
5,692,000
46,069,000
24,023,000
32,036,000
27,072,000
4,939,000
18,314,000
13,667,000
25,519,000

j 236,077,000
84,280,000

320,357,000

I
I
I

Net gain.

$578,000
14,391,000

14,969,000
84,280,000

Net loss.

$19,571,000
4,103,000
6,538,000
16,297,000
16,353,000
2,562,000
5,308,000
5,015,000
23,502,000
99,249,000

Analysis of gold movement through gold settlement fund.
Deposited out of vault of Federal Reserve Bank of New York
$89,000,000
Special deposits account Federal Reserve Bank of New York by Federal
Reserve Bank of—
Atlanta
463,000
Cleveland
952,000
Chicago
264,000
Kansas City
400,000
Minneapolis
433,000
Philadelphia
1,000,000
St. Louis
87,000
San Francisco
11,624,000
Total

104,223,000

Settlement loss
$84,280,000
Special deposits by Federal Reserve
Bank of New York, account Federal
Reserve Bank of—
Boston
1,000,000
Kansas City
100,000
Philadelphia
13,121,000
San Francisco
5,000
Balance in fund Dec. 31,1915
5,717,000

Total

104,223,000

APPENDIX 11.—FIDUCIARY POWERS.

Banks granted permission to act as registrar of stocks and bonds.
NEW YORK.
Name.

Location.

National Commercial Bank.
National Bank of Auburn.
Nassau National Bank.
National Exchange Bank.
Second National Bank.
Edwards National Bank.
National Bank of Far Rockaway.
First National Bank.
Geneva National Bank.
Farmers National Bank.
Washington County National
Bank.
First National Bank.
Herkimer National Bank.
National Exchange Bank.
First National Bank.
Frontier National Bank.
American Exchange National
Bank.
Bank of New York, N. B. A.
Bronx National Bank.

New York
Do
Do
Do
Do
Do
Do
Do
Do
Ovid
Plattsbure
Do
Richfield Springs..
Riverhead

Location.
Albany
Auburn
Brooklyn
Clayton
Cooperstown
Edwards
Far Rockaway
Geneva
Do
Granville
Do
Hempstead
Herkimer..
Lockport
Mineola
Morristown
New York
Do

Name.

Chase National Bank.
Gotham National Bank.
Ilarriman National Bank.
Liberty National Bank.
Irving National Bank.
Lincoln National Bank.
National Bank of Commerce.
National Park Bank.
Seaboard National Bank.
First National Bank.
City National Bank.
Plattsburg National Bank.
First National Bank.
Suffolk County National
Bank.
Rochester
Lincoln National Bank.
Saratoga Springs... First National Bank.
Stapleton
Richmond Borough National
Bank.
WeUsville
First National Bank.
Westfield
National Bank of Westfield.

208

A N N U A L REPORT OF TILE FEDERAL RESERVE BOARD.

Banks granted permission to act as trustee, executor, administrator, and registrar of stocks
and bonds.
NEW JERSEY.
Location.
Dover
Hoboken
Long Branch
Newark
Do

Name.

Location.

National Union Bank.
First National Bank.
Do.
Essex County National Bank.
Merchants National Bank.

Newark
New Brunswick...
Plainfield....
Rutherford

Name.
National State Bank.
Peoples National Bank.
City National Bank.
Rutherford National Bank.

Banks granted permission to act as trustee, executor, and administrator.
NEW JERSEY.
Location.

Name.
National Iron Bank.
National Newark Banking Co.
First National Bank.

Morristown.
Newark
Somerville..

APPENDIX 12.—AGGREGATE STATISTICS OF SEVEN GROUPS OF NATIONAL BANKS IN
DISTRICT N O . 2, AS OF NOV. 10, 1915.

Group No.

Assets and liabilities.

1
2
3
4
5
6
7

On basis of resources.

Under $100,000
$100,000 to $200,000
$200,000 to $300,000
$300,000 to $500,000
$500,000 to $2,500,000
$2,500,000 to $20,000,000. . .
$20,000,000 up

Group No.

Total

1
2
3

i
6
7

On basis of resources.

Under $100,000
$100,000 to $200,000
$200,000 to $300,000
$300^00 to $500,000
$500,000 to $2,500,000
$2,500,000 to $20,000,000...
$20,000,000 u p
Total

Number
of
Danks.

Liabilities of directors.
Total
resources.

Loans and
discounts.

Eligible
paper.

Direct.

Indirect.

$182,539
$85,216
3
$36,677
5,359,181
2,584,800
33
1,037,600
15,791,538
7,581,105
62
2,618,421
41,112,035
5,855,600
20,756,179
106
278,990,542
123,347,319 35,768,051
304
487,125,845
258,106,583 79,803,305
80
25 2,908,573,769 1,614,363,722 289,075; 206

$23,679
159,353
400,208
1,131,064
7,170,748
11.370,954
27.312,153

$16,671
354,157
712,969
1,712,727
7,418,169
3,614,372
14,809,025

613 3,737,135,449 2,026,824,924 414,194,860

47,568,159

28,647,090

Bonds and
Num- securities,
Capital,
ber
etc., not surplus, and
of
including undivided
banks. United States profits.
bonds.

Demand
deposits.

Timo
deposits.

Money
borrowed.

3
33
62
106
304
80
25

$20,312
$80,354
$94,010
1,128,837
974,388
2,863,143
3.165,144
3,308,409
8,395,819
21,617,453
9,850,529
8,158,493
138,624,233
68,311,381 51,175,794
341,951.215
82,287,231 77,749,216
262,037,133 305,188,995 2,469,933,061

$9,207
687,241
2,472,528
8,084,009
60,298.666
43,398,058
26,094,057

$37,000
119,500
174,020
882,421
870,985

613

426,789,383 446,646,833 2,983,478,934 141,043,766

2,083,926

DISTRICT NO. 2

209

NEW YORK.

Losses, earnings, and dividends.

Group
No.

On basis of resources.

Losses on account of loans to
nondepositors (bought for
investment).

Under $100,000
3
$100,000 to $200,000
1 33
62
$200,000 to $300,000
$300,000 to $500,000
j 106
$500,000 to $2,500,000
..| 304
$2,500,000 to $20,000,000....
"
$20,000,000 up
Total.

Group
No.

Losses on account of other loans
and discounts, not including
loans to banks.

613

1912

1913

1912

$4,806
11,842
31,346
263,101
97,026
174,600

$4,887
10,830
43,864
388,833
143,647
273,903

582,181

865,964 1,313,516 3,487,955 4,809,205

1914

1913

$1,786
$9,871
$3,637
$5,775
39,256
10,765
29,219
6,632
74,703
58,892
29,392
35,617
525,826 207,577 334,432
426,769
220,445 1,459,555 1,372,253 1,392,727
451,500 1,772,799 3,022,992 4,098,812
6,018,685

Total earnings and profits after Gross receipts from exchange.
deducting expenses and losses.
On basis of resources.

Under $100,000
$100,000 to $200,000.....
$200,000 to $300,000
$300,000 to $500,000.....
$500,000 to $2,500,000.,.
$2,500,000 to $20,000,000.
$20,000,000 u p . . . .
Total.

1-°

1912

1913

1914

1912

1913

$12,704
25,452
59,008
231,841
346,111
473,295

$13,433
28,289
60,315
234,508
300,466
417,006

$13,125
31,347
60,060
232,395
270,906
406,350

613 33,265,768 29,768,660 27,253,920 1,148,411 1,054,017

1,014,183

3
$55,181
$46,397
$62,607
33
184,122
207,044
182,882
62
505,459
585,323
489,519
106
304 3,608,031 3,380,844 2,835,221
80 5,670,043 4,964,948 4,210,516
25 23,171,852 20,655,184 19,473,175

1914

Dividends paid.
Group
No.

On basis of resources.

Under $100,000
$100,000 to $200.000
$200,000 to $300',000
$300,000 to $500,000
$500,000 to $2.500,000
$2,500,000 to $20,000,000.
$20,000,000 up
Total.

1912

1913

1914

3
33
62
106
304
80
25

$14,900
72,640
299,350
2,069,938
3,735,524
14,343,311

$17,150
76,804
283,150
2,094,598
3,744,524
14,306,421

$18,400
94,721
294,850
2,152,338
3,912,947
15,311,442

613

20,535,663

20,522,647

21,784,698

DISTRICT NO. 3—PHILADELPHIA.
R. L. AUSTIN, Chairman and Federal Reserve Agent.

ORGANIZATION OF FEDERAL RESERVE BANK or PHILADELPHIA.

In accordance with the instructions of the Federal Reserve Board, the directors of
the Federal Reserve Bank met at Philadelphia on October 8, 1914, and proceeded to
organize the board. Charles J. Rhoads was elected governor, and the terms of the
directors were designated as follows:
Name.
Charles J. Rhoads
William H. Peck i
M. J. Murphy
AlbaB. Johnson
EdwinS. Stuart
GeorgeW.F.Gaunti
RichardL. Austin
George M. La Monte
George W. Norris

Residence.
Philadelphia, Pa...
j Seranton, Pa
do
| Philadelphia, Pa...
do
MullicaHill,N.J...
Philadelphia, Pa...
! Bound Brook, N. J.
• Philadelphia, Pa...

Term expires. Group. Class.
Dec. 31,1917
Dec. 31,1915
Dec. 31,1916
.do.
Dec. 31,1917
Dec. 31,1915
Dec. 31,1917
Dec. 31,1915
Dec. 31,1916

i Has just been reelected to serve the full 3-year term, expiring Dec. 31, 1918.

Temporary offices were secured at No. 437 Chestnut Street, where the business of the
bank was conducted until permanent quarters were obtained at 406-408 Chestnut
Street. Previous to the opening of the bank a clerical force was selected, and the
payments by our member banks of the first installment of capital stock, amounting to
$2,087,426, were received. The Central National Bank kindly extended the use of its
facilities to the bank in counting and storing the gold as received on account of this
payment.
We were fortunate in being able to secure as permanent quarters a building adjacent
to the Subtreasury, formerly occupied by a bank. This building was completely
renovated and altered in 10 days, and was ready for occupancy on the 16th day of
November, 1914, the day designated for the opening for business of the Federal Reserve
Banks. The bank commenced business with the following staff of officers and employees, all of whom are on the pay roll now:
OFFICERS.

Charles J. Rhoads, Governor.
Richard L. Austin, Federal Reserve Agent and chairman of the board.
George M. LaMonte, Deputy Federal Reserve Agent and Deputy Chairman of the
Board.
Arthur E. Post, secretary to the chairman and acting cashier.
211

212

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.
EMPLOYEES.

William I. Rutter, jr., auditor.
Samuel R. Earl, paying teller.
William H. Coster, discount clerk.
J. Edward Kerr, general ledger bookkeeper.
Frank W. Lamping, jr., receiving teller.
Franklin W. La Bold.
John F. Glenn.
Clarence E. Wolfinger.
Joseph. D. Goodman.
Hannah C. Daly.
Blanche M. Vanaman.
Cora M. Crowell.

Marie V. Patterson.
Sara G. Peoples.
Frederick W. Seelig.
Raymond M. Moore.
Irwin L. Park.
William J.«Kelly.
JohnMcIlvaine.
W. E. Jones.
Herman Graf..
Emil Rohr.
William Theurer.
Beverly Becks.

On December 10, 1914, Frank M. Hardt, an officer of the National Bank of the
Northern Liberties, of Philadelphia, was elected cashier and Mr. Post resigned as
acting cashier, but continued as secretary to the Chairman, in charge of the details
of the operations between this bank and the Federal Reserve Board.
In order to properly handle the large payments made to the bank on account of the
transfer of the first installment of reserves of member banks, the force was temporarily augmented by clerks whose services were kindly provided for several days by the
following institutions: Central National Bank, Fourth Street National Bank, Girard
National Bank, Philadelphia Clearing House Association, Philadelphia Trust Co., and
the Remington Typewriter Co.
The employment of the clerical force and the perfection of the bank organization
were under the direct supervision of Gov. Rhoads. The very satisfactory manner in
which the operations of the bank have been conducted testify to the care with which
the members of the staff were selected and the complete organization effected by him.
GENERAL BANKING AND CREDIT CONDITIONS IN THIS DISTRICT SINCE THE OPENING
OF THE BANK.

The Philadelphia district, designated as Federal Reserve District No. 3, included
New Jersey, Delaware, and all of Pennsylvania east of the western boundaries of
McKean, Elk, Clearfield, Cambria, and Bedford Counties, and contained 758 member
banks. On July 1, 1915, the northern half of New Jersey, including the part of the
State north of Mercer and Ocean Counties, containing 131 member banks, was transferred to the New York district. This reduced the number of our member banks to
627, the subscribed capital of the bank to $10,523,500, the paid-in capital to $5,261,750,
and deposits to $18,410,520. The district now comprises an area of 37,198 square miles,
with an estimated population of 6,560,000. Its agricultural interests are important
and its manufacturing and mining industries are second to none. Its credit demands
are fairly constant, there being no great seasonal demand, such as is experienced
throughout the Southern and Western States. The combined resources of the member banks in this district are $1,055,107,691, the combined resources of the trust companies and State banks are $695,198,982, making the combined total banking resources
of the district $1,750,306,673. Based upon the present deposits of our member banks,
when the total reserves of member banks have been transferred, two years hence, the
reserve deposits of this bank will amount to about $43,577,965. During the year
three new banks have been organized in the district.
During the past year our member banks have been subject to the same discouraging
influences that affected banking interests in all other parts of the country. For some
time before the breaking out of the European war, business in this district had been

DISXK10T NO. :t

213

PHILADELPHIA.

declining, and the effect of the war was to accelerate this movement, so that the
bank commenced business at a time when the volume of business in the district was
far below normal.
Industrial plants were being operated at less than 50 per cent of their capacity, the
movement of freight by the railroads was smaller than it had been for years, and the
number of the unemployed was almost unprecedented. Confidence in the future on
the part of business men was lacking. This general and widespread contraction in
business caused a liquidation of loans, which, together with the funds released by
the reduction in bank reserves, effected by the Federal Reserve Act, resulted in the
greatest accumulation of idle money ever known in the banks of this district, so that
on October 4, 1915, the member banks of the Philadelphia Clearing House Association alone had $55,404,000 of excess reserves.
At this time, however, almost a normal volume of business is being transacted,
the traffic of the railroads is above normal, industrial plants are being operated at
nearly full capacity, and there is employment for all kinds of labor.
During the period in which this bank has been in operation the average borrowing
of national banks, through rediscounting or by direct loans from other banks, has
been as follows:
Total
Average
Number
for amount per
of banks. amount
bank.
district.

Date.

Dec. 31,1914..
Mar. 4,1915...
May 1,1915...
June 23,1915..
Sept. 2,1915..
Nov. 10,1915..

758
759
759
758
627
628

$7,464,097
4,933,873
5,281,096
5,372,346
3,526,368
2,108,028

$9,847
6,501
6,959
7,087
5,624
3,357

As shown by the statements of member banks last made to the Comptroller, as
of November 10, 1915, the average rate of interest charged borrowing banks was
approximately 3.95 per cent.
At no time during the year has there been a necessity, so far as the needs of the
business community were concerned, for this bank to make any loans. The small
borrowings of the member banks could easily have been effected with their correspondents in the reserve cities. This condition, however, is only temporary, and
due to extraordinary business conditions. Upon the return of normal conditions
this bank will surely find its expected sphere of usefulness.
Statement of condition, Federal Reserve Bank of Philadelphia,
Dec. SI, 1915.

at the close of business

RESOURCES.

Bills discounted—members
Bills discounted—bought
United States bonds on hand
Investments
Interest accrued on investments
Furniture and equipment
Organization expense
Advance payments
Cost of Federal Reserve notes
Due from Federal Reserve Banks
Due from member banks—overdrafts
Exchanges for clearing house

$168, 274.06
2, 542, 975. 94
1,993, 750.00
1, 484,147.13
10,142.15
18, 491. 31
31, 517. 06
1, 684. 23
43,172.04
5,445,817.16
33, 959. 73
1, 046, 543. 43

214

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

Cash:
Gold coin and certificates
$7, 445, 485. 00
Gold settlement fund
9, 695, 000. 00
National bank notes and Federal Reserve notes of
other banks
215, 885. 00
Federal Reserve notes of the Federal Reserve Bank
of Philadelphia
380, 267. 50
Legal tender notes, silver certificates, fractional
coin, etc
3, 358, 246.13
$21, 094, 883. 63
33, 915, 357. 87
LIABILITIES.

Capital
Unearned discount
Unearned interest
Due to member banks
Government deposits
Cashier's checks
Due to Federal Reserve Banks
Reserved for Federal income tax

$5, 269, 600. 00
7, 798. 05
6, 211. 20
25, 424, 376. 56
787,178. 48
107. 63
2, 419, 846.14
239. 81
33, 915, 357. 87

Expenditures of the Federal Reserve Bank of Philadelphia from organization to and including December SI, 1915.
I. Current expenses.
Expense of governors' conferences
$911. 84
Expense of Federal Reserve Agents' conferences
218.19
Assessments since July 1 on account of expenses of Federal
Reserve Board
10, 523. 50
Federal Advisory Council (fees and traveling expenses)
374. 01
Directors' fees
3, 501. 94
Legal fees
1,969.27
Salaries:
Bank officers
36, 040. 91
Clerical staff
34, 085. 65
Special officers and watchmen
6, 050. 82
Traveling expenses:
Directors
1,191. 48
Officers and clerks
243.12
Per diem allowance of directors
1, 076. 32
Telephone
994. 72
Telegraph
97. 50
Postage
3, 044. 54Expressage
1, 575. 66
Rent
8, 926. 48
Insurance and premiums on fidelity bonds
3, 520. 62
Light, heat, and power
1, 225.18
Printing and stationery
4, 021. 00
Repairs and alterations
600. 81
All other expenses N. E. S
1,497. 53
Total current expenses

121, 691. 09

DISTRICT NO. 3

PHILADELPHIA.

215

n . Organization expenses (see note 1).
Carried from current expenses (account expense prior to Nov.
16,1914)
$13,304.98
Assessment for general expenses of Federal Reserve Board
(prior to June 30, 1915)
18,395.76
Total

31, 700. 74

III. Cost of Federal Reserve notes, total, including expressage, insurance,
etc. (see note 2)
IV. Equipment (see note 3).
Furniture and fixtures
Machines
Other

55, 772. 04
4, 538. 47
9, 291. 26
4, 661. 58

Total equipment

18, 491. 31

Total expenditures

227, 655.18

Earnings of the Federal Reserve Bank of Philadelphia from organization to and including
December 31, 1915.
EARNINGS.

Earnings from:
Bills discounted—member banks
$20,173. 44
Bills purchased—bankers' acceptances
29, 605. 50
Investments in United States bonds
8, 288.13
Investments in warrants
54,155. 88
Sundry profits (including $20,502.50 appreciation in
market value of United States bonds)
23, 792. 33
Total earnings
Deduct commissions paid (see note 4)
Deduct cost of Federal Reserve notes issued (see note 2).

$136,015. 28
1, 540. 51
12, 600. 00
14,140. 51

Net earnings
Excess of "net earnings" over "total current expenses" credited to
"organization expenses" on Dec. 31, 1915

121, 874. 77
183. 68

NOTE 1.—Beginning with January, 1916, at least one twenty-fourth of the total
"organization expenses" is to be charged against current earnings each month.
NOTE. 2.—Beginning with January, 1916, the cost of Federal Reserve notes is to be
charged against current earnings each month as tho notes are issued.
NOTE 3.—Beginning wrth January, 1916, an allowance for depreciation is to be
charged against current earnings each month.
NOTE 4.—This amount represents the commissions paid to other Federal Reserve
Banks for services rendered by them in buying investments for this bank.

216

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.
COMMENT AND EXPLANATION OF THE STATEMENT OF CONDITION.

Referring specifically to the foregoing statement of condition given on page 213,
the following comment and explanation on certain of the account headings may be of
interest:
RESOURCES.

Bills discounted members.—This account represents the amount of bills on hand
rediscounted for our member banks. The first rediscounts were received on November 23, 1914, and since this date the amount of rediscounted bills held at any one
time has fluctuated from $126,882, the lowest amount, to $1,063,784. The total
amount of paper rediscounted aggregates $6,839,674, having been received from
member banks. Of these banks 48 are located in Pennsylvania (of which number
8 are in Philadelphia), 19 are located in New Jersey, and 3 in Delaware. The smallest
amount of rediscounts included in any one application was $253.75 and the largest
amount $500,000. The smallest note rediscounted was for $33.05 and the largest
note $250,000. We have attempted to simplify the operation of rediscounting in
every way possible, and all applications have been acted upon the same day that
they were received. The total amount of bills discounted during any one month is
shown in Appendix VII, on page 226, and the average rate of return during any
month from rediscounts is shown in Appendix VIII, on page 226. The established
rates of discount of this bank are given in Appendix X, on page 227.
Bills discounted bought.—This account consists of bankers' acceptances purchased
by the bank for investment, this bank having been the first Federal Reserve Bank to
buy bankers' acceptances, the initial purchase having been made on February 19,
1915. The acceptances which we have secured have been drawn to cover import and
export transactions on such commodities as hides, wool, sugar, silk, coffee, copper,
grain, rubber, wood pulp, cotton, etc., and we have had difficulty in securing as many
of these acceptances as we should have liked. During the year this account has
fluctuated from $93,205 to $3,008,680, the total amount of bankers' acceptances purchased being $7,565,968.
Investments.—This account includes all warrants or bonds of municipalities
owned. The amount of warrants which we are permitted to hold has been limited
by the Federal Reserve Board to $3,500,000, but the offerings of such investments
have not been sufficient to enable us to have this amount at any one time.
Interest accrued on investments.—This account represents interest accrued on United
States bonds since the date of the past payment of interest.
Redemption account.—All currency sent to the Comptroller of the Currency for
redemption is charged to this account, to cover which remittances are made by the
comptroller.
Organization expense.—This account includes all the expenses of the bank prior to
the opening for business on November 16, 1914, and also our proportionate share of
the expenses of the Federal Reserve Board from the time of its organization to June 30,
1915.
Advance payments.—This account includes payments made in advance for current
operating expenses which should properly be distributed over a period of time, the
accrued proportion being charged each month to the propel subaccount of "Current
expense." Such payments include premiums on fidelity bonds, insurance, and protection charges, contract payments for mercantile agency services, subscriptions, etc.
Cost of Federal Reserve notes.—This account includes the cost of paper, printing,
spoilage, and transportation of Federal Reserve notes printed for the bank since the
opening on November 16, 1914, to December 31, 1915, less $12,600, the estimated
actual cost of the notes delivered to the bank, which has been deducted from " total
earnings."
Due from member banks—Overdrafts.—This account represents amounts due from
Digitized formembers
FRASERof our check-collection system because of items in transit.

DISTRICT NO. 3

PHILADELPHIA.

217

LIABILITIES.

Unearned discount.—This account represents the discount deducted from bills at
the time of obtaining them. This account is charged daily with the amount of discount earned, the same being credited to "Discount."
Unearned interest.—This account represents interest accruing, to maturity, on
warrants owned, the amount of which interest has been added to the principal of the
warrants and charged to "Investments." "Unearned interest" account is charged
daily with the amount of interest earned, the same being credited to " Interest earned
on investments."
OTHER REMARKS CONCERNING THE OPERATIONS OF THE BANK.
PURCHASE OF UNITED STATES BONDS.

All of the bonds purchased by this bank have been 2 per cent consols; the price
has averaged 98.66 per cent. The present market price of these bonds is about 99.6875
per cent, showing an appreciation of $20,502.50. Our first holding of these bonds
was acquired on June 25, 1915, but the majority were not purchased until November,
1915. While an investment in Government bonds was always possible and often
considered by our board, there was a feeling on the part of some of the directors that
the locking up of funds in such bonds was undesirable, because it curtailed the bank's
power to serve the community in case of need, coupled with which was the knowledge
that the bank might be required to buy during the coming year about $2,500,000 of
2 per cent bonds from member banks.
In explanation of the recent purchase of Government bonds, it is only proper to say
that it had developed that the bank has had no difficulty in keeping a large amount
of Federal Reserve notes in circulation, and as the bank has the privilege of issuing
notes against such bonds, it was felt that there was practically no danger of curtailing
the loaning power of the bank by such purchases, as in case of necessity advantage
could be taken of this privilege.
COLLECTION OF CHECKS.

A system for the collection of checks of member banks within this district, by this
bank, was put into operation on June 15, 1915. It provided for the creation of an association of such of our member banks as voluntarily joined it, known as the checkcollection system. Members of this system have the right to send to the Federal
Reserve Bank, for immediate credit at par, all checks received by them on banks that
have joined the system, which checks are to be charged to the accounts of the paying
banks by the Federal Reserve Bank at par immediately upon their receipt.
Only 119 banks out of a total of 628 banks in the district are members of this system;
consequently, its operations have been so restricted that the collection of checks has
been but slightly facilitated, and it is felt that the plan will have to be modified. At
present the correspondents of our member banks in Philadelphia, in consideration
of the balances kept with them, will collect at par all the checks now going through
the check-collecting system. It is believed, however, that when the reserve balances
are concentrated in the Federal Reserve Bank, the reserve city banks will not be
able to do this work without charge, and then our members will be glad to avail themselves of some such system for the collection of checks.
The matter of collection of checks on banks outside of the district has received much
consideration from the officers of this bank in conjunction with officers of other Federal
Reserve Banks, but, as has been announced, no plan for this service has yet been
perfected.
The terms made by the country banks of this district for remitting for their checks
vary from par to one-quarter of 1 per cent. Checks on all banks that are members

218

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

of the check-collection system are collected at par. From the best information available regarding the charges made by the other member banks, outside of Philadelphia, it appears that about 80 per cent of them charge one-tenth of 1 per cent;
about 14 per cent charge one-eighth of 1 per cent; a very few one-fourth of 1 per cent:
and a small number one-twentieth of 1 per cent. Many banks will remit at a lower
rate than their established rates when the sum remitted exceeds a certain amount,
say, $2,500 or $3,000.
The remittance rates noted above have prevailed with our banks for years, and
with the exception of the banks that have joined the check-collection system, we
can not discover that any appreciable reductions have been made in such rates since
the clearing system of the Federal Reserve Bank went into effect.
WORK OF THE AUDITOR.

Each month the auditor verifies the bank's holdings of cash and securities, and
makes a report in person to the board of directors concerning the condition of the
bank. He witnesses all entries into those compartments of the vault used by the
bank for keeping the larger portion of its reserves. He verifies all general ledger
entries. The daily proof sheets of all the departments of the bank are delivered into
his custody, which proof sheets he checks and verifies. He keeps the stock ledger
of the bank, and audits all bills for supplies and other items.
The auditor also makes a monthly report to the Federal Reserve Board as to the
holdings of the Federal Reserve Agent and the condition of his accounts. He witnesses all entries into the vaults occupied by the Federal Reserve Agent, and checks
all entries on his books.
OPERATION OF THE OFFICE OF THE FEDERAL RESERVE AGENT.

As required by the Federal Reserve Act, a local office of the Federal Reserve
Board has been maintained on the premises of the bank by the Federal Reserve
Agent.
The statement of the accounts of the Federal Reserve Agent as of December 31,
1915, is as follows:
RESOURCES.

Federal Reserve notes on hand
$2, 680, 000
Federal Reserve notes outstanding
9,160, 000
Gold and lawful money to retire Federal Reserve notes:
Gold on hand
4,160, 000
Credit balance with Federal Reserve Board
5, 000, 000
Federal Reserve notes sent to Comptroller of Currency for cancellation
and destruction
640, 000
21, 640, 000
LIABILITIES.

Federal Reserve notes from Comptroller of Currency (gross amount) . . . .
Provision for redemption of Federal Reserve notes

12, 480, 000
9,160, 000
21,640, 000

Attached to this office is a secretary and four assistants, whose principal functions
are—
The maintenance for the bank of credit files, including the examination and paralleling of statements of condition, received from member banks.
Checking statements of conditions of member banks as to changes in capital stock
or surplus of member banks, as such changes affect the capital of this bank.

DISTRICT NO. 3—PHILADELPHIA.

219

Keeping the accounts of the Federal Reserve Agent and the preparation of the
reports to the Board.
Collection of information for the preparation of the monthly reports to the Board on
business conditions.
Preparation of various kinds of statistical and analytical reports and many other
miscellaneous duties in connection with both the operation of this office and the
operation of the bank.
All the provisions of the Federal Reserve Act have been carefully observed by the
bank. There has been the closest cooperation between the Governor and the Federal
Reserve Agent, who have together passed upon practically all paper offered for
rediscount, all purchases of bills, warrants, and other investments that have been
made, and have conferred upon all matters affecting the policy of the bank.
Federal Reserve notes to the amount of $9,800,000 have been issued, of which
$640,000 have been returned in mutilated condition to the Comptroller of the Currency for destruction, leaving a balance of notes outstanding of $9,160,000, all of
which are covered by an equal amount of gold, either represented by United States
Treasurer's gold certificates deposited with the Federal Reserve Agent, or deposited
with the Federal Reserve Board for the credit of the Federal Reserve Agent.
As is well known, at no time since the bank was opened has there been any lack
of currency in circulation. New notes, however, have been scarce, and recently
the demand for notes of the denomination of ten and twenty dollars for pay-roll purposes has been great, and it is due to these causes that we have been able to circulate
Federal Reserve notes. The demand for these notes keeps up and the increase in
the circulation of Federal Reserve notes may continue until member banks are unable
to part with any more gold with which to take them out. The gold deposited to cover
these notes is so much gold withdrawn from the available reserves of national banks,
and if the issue of these notes continues it will sooner or later have an effect on bank
reserves. The gold deposited to redeem these notes increases the loaning power of
the Federal Reserve Bank, and it is for the purpose of accumulating such a fund
of gold that notes are issued.
Reference should be made to the cost of printing, issuing, and redemption of Federal
Reserve notes, estimated to be about a cent a note, amounting in the aggregate to
$12,600 on the notes issued, which cost this bank has to bear. These notes are being
substituted for and taking the place of notes that were issued and circulated at the
expense of the United States.
Our operations in connection with the issue of Federal Reserve notes have been
very much facilitated by the hearty cooperation of the officials of the Subtreasury
at Philadelphia, where unissued Federal Reserve notes are kept, and we wish to
express our appreciation of their services.
DIFFICULTIES ENCOUNTERED OR PROBLEMS PRESENTING THEMSELVES FOR SOLUTION
IN THE ADMINISTRATION OF THE ACT OR THE BOARD'S REGULATIONS.

It was found that there was considerable misunderstanding as to the meaning of
that part of circular No. 2 and regulation B, series of 1915, referring to obtaining
written statements from borrowers. It appeared that a large number of our member
banks were under the impression that no obligation was eligible for rediscount unless
the maker had filed with his bank figures showing his financial condition. As many
of the banks had not succeeded in obtaining statements from their depositors, they
believed that the obligations of such depositors did not conform to the regulation determining eligible paper and so reported to us, notwithstanding that the bank officers
were entirely familiar with the financial condition of these customers and felt justified
in discounting their obligations. Considerable time has been spent in explaining this
regulation and in indicating what paper is eligible for discount, but at the same time
20067°—16
15

220

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

effort has been made to show the advantage of securing written statements from
borrowers and to have member banks adopt that practice.
It seems well to encourage member banks to conduct their business so as to be
able to take advantage of their Federal Reserve Bank, and to that end the bank has
been endeavoring to get them to so adjust their methods and practices that they may
have on hand at all times a reasonable amount of paper eligible for rediscount. The
latest reports to the Comptroller of the Currency indicate that our member banks
now hold considerably more paper eligible for rediscount than formerly.
As is well known, there is a prejudice on the part of many member banks against
rediscounting, but as the sound banking principles of the Federal Reserve Act are
better understood, it is expected this prejudice will disappear.
We have observed an unfortunate misunderstanding by member banks of the result
to them of the changes in the reserve requirements. Undue thought is given to the
balance carried, without interest, in the Federal Reserve Bank, but no consideration
is apparently given to the amount of reserves released and to the great reduction in
reserve required on time deposits. It is hoped that proper consideration will be given
to this matter, so that it will be realized that the changes in the reserve requirements
actually result in benefit to the member banks.

LIST OF APPENDICES.

I. By laws of the Federal Reserve Bank of Philadelphia.
II. Table showing total resources of national banks, trust companies, and State
banks in district No. 3.
III. Classification of member banks in district No. 3 according to resources aa of
September 2, 1915.
IV. Earnings, losses, and dividend rates in 1914 of the 628 member banks now in
district No. 3.
V. Comparison of important items in statements of member banks showing relative growth during the past year.
VI. Table showing for each month the amount and denomination of Federal Reserve
notes issued and destroyed.
VII. Table showing for each month the amount of bills discounted for member
banks, bills discounted bought, warrants bought, United States bonds
bought, total funds invested, and the number of member banks accommodated.
VTII. Table showing for each month daily average amount of bills discounted, investments, and total funds invested, with the average rate of return.
IX. Maturities of the investments (exclusive of United States bonds) at the close
of business on the last Friday of each month.
X. Table of established rates of discount of the bank.
XI. Table showing comparatively for several Federal Reserve Banks the proportion of invested funds to resources.
XII. Table showing the results of the operation of the check collection system.

DISTRICT NO. 3

PHILADELPHIA.

221

APPENDIX I.
BY-LAWS OF THE FEDERAL RESERVE BANK OF PHILADELPHIA.
A RTICLE 1. —Directors.

SECTION 1. Quorum.—A majority of the directors shall constitute a quorum for the
transaction of business, but less than a quorum may adjourn from time to time until
a quorum is in attendance.
SEC. 2. Vacancies.—As soon as practicable after the occurrence of any vacancy in
the membership of the board the chairman of the board shall take such steps as may
be necessary to cause such vacancy to be filled in the manner provided by law.
SEC. 3. Meetings.—There shall be a regular meeting of the board every second
and fourth Thursday of each month at 10.30 o'clock a. m., or, if that day be a holiday,
on the first preceding full business day. The chairman of the board may call a special
meeting at any time and shall do so upon the written request of any three directors or
of the governor. Notice of regular and special meetings may be given by mail or by
telegraph. If given by mail, such notice shall be mailed at least three days before
the date of the meeting. If given by telegraph, such notice shall be dispatched at
least two days before the date of the meeting. Notice of any meeting may be dispensed with if each of the directors shall in writing waive such notice.
SEC. 4. Powers.—The business of this bank shall be conducted under the supervision and control of its board of directors, subject to the supervision vested by law in
the Federal Reserve Board. The board of directors shall appoint the officers and Rx
their compensation.
The board may appoint legal counsel for the bank, define his duties, andfixhis
compensation.
SEC. 5. Special committees.—Special business of the bank may be referred from
time to time to special committees, which shall exercise such powers as the board
may delegate to them.
SEC. 6. Order of business.—The board may from time to time make such regulations
as to order of business as may seem to it desirable.
ARTICLE 2.—Executive committee.
SECTION 1. How constituted.—There shall be an executive committee consisting
of the governor, the Federal Reserve Agent, and one or more directors, chosen from
classes A, B, or C; the member or members of the committee chosen by the board
shall serve during the pleasure of the board or for terms fixed by it. Not less than
three members of the committee shall constitute a quorum for the transaction of
business, and action by the committee shall be upon a vote of a majority of those
present at any meeting of the committee.
The committee shall have power to fix the time and place of holding regular or
special meetings and the method of giving notice thereof. Minutes of all meetings
of the executive committee shall be kept by the secretary, and such minutes or
digests thereof shall be submitted to the members of the board of directors at its
next succeeding meeting. Such minutes shall be read to the meeting if required
by any member of the board.
SEC. 2. Powers.—Subject to the supervision and control of the board of directors,
as set forth in article 1, section 4, the executive committee shall have the following
powers:
(a) To pass upon all commercial paper submitted for discount.
(b) To initiate and conduct open-market transactions.
(c) To recommend to the board of directors from time to time changes in the discount rate.
(d) To buy and sell securities.
(e) To apply for and provide for the security of such Federal Reserve notes as
may, in the judgment of the committee or of the board, be necessary for the general
requirements of the bank.
(/) To employ or to delegate to officers of the bank authority to employ clerks and
other subordinates, and to define their duties and fix their compensations.
(g) To approve bonds furnished by the officers and employees of the bank and to
provide for their custody.
(h) In general, to conduct the business of the bank, subject to the supervision
and control of the board of directors.

222

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.
ARTICLE

3.—Officers.

SECTION 1. Officers.—The board of directors shall appoint a governor, a deputy
governor, a secretary, and a cashier, and shall have power to appoint such other
officers as the board may from time to time determine to be necessary and appropriate for the conduct of the business of the bank. The offices of deputy^ governor,
secretary, and cashier, or any two of them, may be held by one person, in the discretion of the board. The officers chosen by the board shall hold office during the
pleasure of the board.
SEC. 2. Federal Reserve Agent.—The Federal Reserve Agent, as chairman of the
board, shall preside at meetings thereof. Copies of all reports and statements made
to the Federal Reserve Board shall be filed with the Federal Reserve Agent.
SEC. 3. Deputy Federal Reserve Agent.—In the absence or disability of the Federal
Reserve Agent his powers shall be exercised and his duties performed by the deputy
Federal Reserve Agent, who may perform such other services as shall be prescribed
by the board of directors not inconsistent with his duties as provided by law.
SEC. 4. The Governor.—Subject to the supervision and control of the board of
directors, the governor shall have general charge and control of the business and
affairs of the bank and he shall be the chairman of the executive committee. He
shall have power to make any and all transfers of securities or other property of the
bank which may be authorized to be sold or transferred by the executive committee
or by the board. The governor shall have power to prescribe the duties of all subordinate officers and agents of the bank where such duties are not specifically prescribed by law or by the board of directors or by the by-laws. The governor may
suspend or remove any employee of the bank.
SEC. 5. The Deputy Governor.—In case of the absence or disability of the governor
his powers shall be exercised and his duties discharged by the deputy governor, and
in case of the absence or disability of the deputy governor the board shall appoint
one of the other directors governor pro tern. The duties of the deputy governor
shall otherwise be such as may be prescribed by the board of directors or by the
governor. In case the board shall deem that the business of the bank requires the
appointment of one or more assistant deputy governors, it shall have authority to
appoint such assistant deputy governor or governors and shall prescribe and define
his or their duties.
SEC. 6. The Secretary.—The secretary shall keep the minutes of all meetings of
the board and of all committees thereof. He shall have custody of the seal of the
bank, with power to affix same to certificates of stock of the bank, and by authority
of the board or the executive committee to such other instruments as may from time
to time be required. The board of directors may, in the absence or disability of the
secretary, or upon other occasion where in the discretion of the board greater convenience can be attained, appoint a secretary pro tern or empower one or more officers
to affix the seal of the bank to certificates of stock or other instruments. The secretary shall perform such other duties as may from time to time be prescribed by the
board of directors, the executive committee, or the governor.
SEC. 7. The Cashier.—The cashier and at least one other officer designated by the
board of directors shall have the joint custody of all moneys, investments, and securities of the bank, subject to such rules as the board may adopt for their safety. He
shall perform such other duties as may be assigned to him from time to time by the
executive committee, the board of directors, or the governor.
ARTICLE 4.—Certificates of stock.

SECTION 1. Signature.—All certificates of stock or of payment of or on account of
stock subscriptions, shall be signed by the governor or a deputy governor and the
secretary or cashier, or such other officers as may be prescribed by the board, and
such certificates shall bear the corporate seal.
ARTICLE 5.

SECTION 1. Business hours.—The bank shall be open for business from 10 o'clock
a. m. to 3 o'clock p. m. on each day except Sundays or days or parts of days established as legal holidays.
ARTICLE 6.—Amendments.

These by-laws may be amended at any regular meeting of the board or by a majority
vote of the entire board: Provided, hovjever, That a copy of such amendment shall
have been delivered to each member at least 10 days prior to such meeting.

223

DISTRICT NO. 3—PHILADELPHIA.
APPENDIX II.

Table showing total resources of national banks, trust companies, and State banks in
district No. 3.
National banks.
Number.
Delaware
New Jersey
Pennsylvania...
Total

24
70
533

Trust companies.

State banks.
Total
resources.

Resources. Number. Resources. Number. Resources.
$15,277,895
81,811,107
958,018,688

17
29
179

$18,680,651
43,388,848
516,291,128

5
8
117

$3,804,488
9,167,935
103,865,932

$37,763,034
134,367,890
1,578,175,748

1627 1,055,107,690

225

578,360,627

130

116,838,355

1,750,306,672

i As of September, 1915.
Summary.

National banks.
Trust companies
State banks
Total

Number
financial
institutions.

Total resources.

627
225
130

$1,055,107,690
578,360,627
116,838,355
1,750,306,672

APPENDIX III.

Classification of member banks in district No. 3 according to resources as of September 2,
1915.
Number.
Banks with resources under $100,000
2
Banks with resources of $100,000 to $200,000
53
Banks with resources of $200,000 to $300,000
69
Banks with resources of $300,000 to $500,000
119
Banks with resources of $500,000 to $2,500,000
312
Banks with resources of $2,500,000 to $20,000,000
64
Banks with resources over $20,000,000
8
Total

627

224

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.
APPENDIX IV.

Earnings, losses, and dividend rates in 1914 of the 628 member banks now in district No, 8.
Classification of banks according to capital and surplus.
Under
$200,000

$200,000 to $500,000 to $1,000,000 to $1,500,000 to $3,000,000 to
$500,000. $1,000,000. $1,500,000. $3,000,000. $9,000,000. L/rOSS tOtcUS*

Amount of earn$2,355,000 $2,644,684 $1,788,156
ings
Amount
of
losses:
Through bad
debts, etc...
838,537
548,381
649,229
Net loss bffore p a y ment of divi48,390
24,792
51,450
dends
Number of banks
paying following dividends:
0
0
6
2 per cent
0
0
2
2\ per cent
1
0
8
3 per cent
0
1
30
4 per cent
0
0
3
4| per cent
4
0
27
5 per cent....
0
0
5
5 J per cent
13
7
105
6 per cent
0
0
1
6J per cent
3
1
9
7 per cent
0
0
1
7£ per cent
8 per cent
28
7
58
8^ per cent —
1
0
0
3
0
4
9 per cent
0
0
1
9\ per cent —
36
9
36
10 per cent
0
0
1
11 per cent
20
11
22
12 per cent
1
0
1
12*, percent...
0
0
0
13 per cent
7
5
1
14 per cent
4
2
3
15 per cent
8
1
6
16 per cent —
3
0
0
18 per cent
1
0
0
19 per cent
7
0
2
20 per cent
0
1
0
22 per cent...
1
1
0
24 per cent
1
0
0
25 per cent
0
1
0
28 per cent
1
0
1
30 per cent
0
1
0
40 percent

$825,709 $1,045,477
236,175

0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
2
0
4
0
1
0
0
2
0
0
3
0
0
0
0
0
0

217,638

0
0
0
0
0
0
0
0
0
0
0
3
0
0
0
0
0
2
0
0
1
0
0
0
0
0
0
0
0
1
0
0

$2,364,679

$11,023,705

1,940,966

4,430,926

282,763

407,395

0
0
0
0
0
0
0
0
0
1
0
0
0

6
2
9
31
3
31
5
126
1
14
1
96
1
7
1
84
1
60
2
1
15
9
21
3
1
12
1
2
1
2
2
1

•

0
0
1
0
1
0
0
1
0
4
0
0
0
0
0
0
0
0
0

552

Number of banks
not reporting
any dividend...
Total numb e r of
banks

•
71

404

146

628

DISTRICT NO. 3

225

PHILADELPHIA.

APPENDIX V.

Comparison of important items in statements of member banks, showing relative growth
during the past year.
Statement of condition.
Increase.
Dec. 31,1914.
Total resources.
. . .
Loans and discounts
United States bonds
Other bonds and securities
Deposits (including due to reserve agents
and other banks)
Due from Federal Reserve Bank
Lawful money reserve in bank
Rediscounts and bills payable
National-bank notes outstanding
Letters of credit and acceptances
Excess reserves..

Decrease.

Sept. 2,1915.

$979,760,179 $1,055,107,691
513,371,368
527,798,584
61,247,659
61,438,269
173,742,289
198,582,225
717,606,782
15,320,943
50,888,165
5,128,975
60,071,279

$75,347,511
14,427,216
190,610
24,839,936

790,464,311
19,442,560
48,299,070
3,525,367
58,278,134
6,107,283
76,836,182

72,857,529
4,121,617

$2,589,095
1,603,608
1,793,145

i Not shown.
NOTE.—The figures as of Dec. 31,1914, are for the 627 banks which were in the district on Sept. 2,1915.

APPENDIX

VI.

Table showing for each month the amount and denomination of Federal Reserve notes
issued and destroyed.
Denominations issued—
Month.
5's.

November
December
January

1914.

20's.

Total
amount
returned
to comptroller
for destruction.

$500,000

$240,000

$740,000

620,000
560,000
420,000
520,000
480,000
320,000
420,000

360,000
240,000
160,000
200,000
640,000
720,000
920,000
400,000

400,000
480,000
720,000
480,000

980,666
800,000
580,000
720,000
1,520,000
1,200,000
1,960,000
1,300,000

$20,000
40,000
20,000
40,000
50,000
40,000
100,000
70,000
160,000
100,000

3,840,000

3,880,000

2,080,000

9,800,000

640,000

1915.

February

March
April
Mav
June
July
August
September
October
November
December

10's.

Total
amount
issued.

. .

....
. . . .

. .

Total

. ..

226

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.
APPENDIX

VII.

Table showing for each month the amount of bills discounted for member banks, bills
discounted bought, warrants bought, United States bonds bought, total funds invested,
and the number of member banks accommodated.

Month.
Members.

1914.
November
December.
1915.
January
February
March
April
May
June
July
August
September
October
November
December

Bought.

Warrants.

United
States
bonds.

$920,200
782,391
277,792
$1,520,000
527,323 "$339," 077*
49,061
1,041,352
458,000
857,493
288,534
243,125
436,745
368,088
643,500
170,553
454,763
321,500 $200,000
549,625
483,130
649, 695
800,894
150,000
788,028
1,001,013
328,073
337,645
724,881
994,388
296,218
217,998
429,901
154,000
156,665
684,099 1,496,000
709,404
117,545 1,949,816
881,278

Total.... 6,839,674

Number of member banks
accommodated.

Investments.

Bills discounted.

7,394,150 2,000,000

7,565,969

Total
funds
invested.

Penn- New Delasylva- Jersey.
ware.
nia.

$920,200
782,391

6
7

1,797,792
915,461
2,356,845
968,404
1,182,141
1,525,888
2,083,719
2,117,114
2,056,914
1,098,117
3,046,168
2,948,639

8
12
15
13
18
18
23
14
12
6
11
12
48

23,799,793

Total.

1
1

7
13

3
9
9
11
11
14
10
2
2
4
3
1

1
1
1
1
1
2
1

12
22
25
25
30
34
34
16
14
11
16
13

i
2

170

65 different member banks were accommodated during the calender year 1915; 43 in Pennsylvania,
19 in New Jersey, and 3 in Delaware.

APPENDIX VIII.
Table showing for each month daily average amount of bills discounted, investments,
total funds invested, with the average rate of return.
Bills discounted.

Month.

November
December

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

Average
rate.

$727,400
491,570

Per cent.
0.0550
.0571

430,351
461,207
1,712,059
2,137,066
1,682,393
1,573,537
1,940,250
2,048,302
2,033,714
1,751,409
1,964,910
2,903,649

.0519
.0451
.0332
.0309
.0307
.0318
.0296
.0280
.0280
.0254
. 0248
.0220

Investments.

and

Average Total funds Average
rate.
rate.
invested.

$727,400
491,570

Per cent.
0.0550
.0571

1,469,689
2,026,400
3,606,088
4,167,682
4,121.792
3,033,004
3,782,997
4,495,098
5,183,684
5,132,334
6.413,989
6,709,591

.0348
.0315
.0308
.0302
.0311
.0286
.0276
.0251
.0253
.0238
.0220

Per cent.

1915.

$1,039,338
1,565,193
1,894,029
2,030,616
2,439,399
1,459,467
1,842,747
2,446,796
3,149,970
3,380,925
4,449,079
3,805,942

0.0336
.0318
.0300
.0308
.0298
.0302
.0272
.0272
.0264
.0252
. 0234
.0220

DISTRICT NO. 3

227

PHILADELPHIA.

APPENDIX IX.

Maturities of the investments (exclusive of United States bonds) at the close of business on
the last Friday of each month.
MATURITY.

ltolO

Last Friday of—

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

days.

31 to 60
days.

11 to 30
days.

61 to 90

days.

91 days to

6 months.

Monthly
total.

1914.
$880,000
684,713

$55,231

189,698
230,449
817,263
1,157,819
2,299,807
631,968
411,355
855,392
634,211
697,289
984,836
695,635

92,062
295,297
1,082,513
2,210,735
782,511
709,499
1 425,263
1,362,544
456,853
2,832,151
1,467,739
2,064,372

$44,925

$655

$880,000
785,524

137,712
191,137

1,422,186
1,359,580
129,619
284,980
842,387
1,050,500
949,195
1,346,323
532,161
357,015
135,357
319,385

1,841,658
2,076,463
4,019,563
4,233,550
4,197,776
2,919,141
3,851,391
4,787,434
5,193,317
4,589,216
4,903,215
4,252,937

1915.

$204,228
493,039
925,166
240,850
1,540,639
210,948

1,990,168
580,016
273,071
527,174
861,350
730,136
2,644,926
461,911
774,644

APPENDIX X.

Table of established rates of discount of the bank.
Date of change.
Class of rediscounts.

Nov. 16,
1914.

Dec. 16,
1914.

Dec. 28,
1914.

Jan. 28,
1915.

Commercial paper:
1 to 10 days' maturity
11 to 30 days' maturity
31 to 60 days' maturity
61 to 90 days' maturity
Agricultural and live stock
paper: 91 days to 6 months'
maturity
Trade acceptances:
1 to 10 days' maturity
11 to 60 days' maturity
61 to 90 days' maturity
Commodity paper:
1 to 30 days' maturity
31 to 60 days' maturity
61 to 90 days' maturity
Authorized rate for discount of bankers' acceptances, 2 to 4 per cent.

June 25,
1915

Sept. 23,
1915.

Oct. 14,
1915.

228

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.
APPENDIX XI.

Table showing comparatively for several Federal Reserve Banks the proportion of invested
funds to resources.
[In thousands of dollars.]

1914.
Nov. 27
Dec 31
1915.

Jan 29
Feb. 26
Mar 26
Apr 30
May 28
June 25

J u l y 30
A u g . 27
S e p t 24

...

Oct 29
Nov. 27
Dec. 30

Investments.

Total resources.

- --

Per
cent.

Total resources.

Investments.

Nov 27
Dec 31

Per
cent.

$20,774
21,501

$880
786

4.2

$110,331
104,885

$2,715
329

2.4

3.6

24,407
23,881
23,685
25,908
26,441
26,841
23,108
23,292
i 23,352
24,200
29,690
29,454

1,842
2,076
4,019
4,233
4,198
3,113
4,191
5,128
5,533
5,081
6,876
6,226

7.5
8.7
16.9
16.3
15.8
11.6
18.1
22.0
23.7
21.0
23.1
21.1

120,949
132,734
132,133
140,458
141,286
163,118
159,252
165,062
173,920
190,304
214,825
209,753

6,275
9,133
12,336
14,257
13,192
8,417
11,812
17,313
14,725
13,673
16,044
10,221

5.2
6.8
9.3
10.1

Cleveland.
Statement.

Boston.

New York.

Philadelphia
Statement.

Total resources.

Investments.

9.3
5.1
7.4

10.5
8.5
7.2
7.4
4.8

Chicago.

Total re- Investsources. ments.

Per
cent.

$16,028
14,076

$217
154

1.1

19,257
19,039
20,005
21,866
23,123
24,100
24,023
25,270
25,934
27,770
32,988
32,267

733
934
2,098
4,112
4,565
4,565
5,023
6,676
6,837
7,092
9,702
10,755

3.8
4.9
10.4
18.8
19.7
18.9
21.3
26.4
26.4
25.5
29.4
33.3

1.0

Richmond.

Per
cent.

Total resources.

Investments.

Per
cent.

Total re- Investsources. ments.

$11,035 $2,022

18.3

3,720
5,587
6,622
6,944
7,413
7,379
8,361
8,652
8,504
6,914
7,106
7,739

29 4
38.5
42.7
44.9
45.9
44.9
48.6
47.8
38.1
32.7
28.9
31.5

Per
cent.

1914.
1915.

Jan 29
Feb 26
Mar 26
Apr. 30
May 28
June 25
July 30
Aug. 27
. .
Sept 24
Oct 29
Nov. 27 . . . .
Dec. 30..
1

$19,515

$506

2.6

$42,409

$2,822

6.6

20,029
21,256
21,051
21,737
23,039
22,928
23,081
23,390
23,250
23,467
30,416
31,149

1,245
1,692
3,198
3,914
3.673
2,989
3,215
4,179
3,885
5,715
5,937
6,546

6.2
15.1
18.0
15.9
13.0
13.0
17.9
16.7
24.3
19.5
21.0

44,897
47,575
47,602
48,258
51,541
54,604
52,-037
54,648
59,279
55,455
59,035
60,363

4,173
5,586
8,051
8,754
8,505
6,902
7,690
9,823
9,766
10,685
10,940
11,495

9.2
11.7
16.9
18.1
16.5
12.6
14.5
18.0
16.5
19.3
18.5
19.0

7.9

12,647
14,492
15,473
15,433
16,129
16,410
17,156
18,115
22,326
21,137
24,586
24,499

Exclusive of an item of $5,600,000, which was cleared on the following day.

DISTRICT NO. 3

PHILADELPHIA.

229

APPENDIX XII.

Table showing the results of the operation of the check-collection system.
Number of member banks in the collection system Dec. 31,1915
Number of additions since the inauguration of the system
Number of withdrawals since the inauguration of the system

119
10
10

Average number and amount of items received daily.
On city banks.

Month.

Number.

July..

1915.
.

August
September
October
November
December

. . .

Average per month..

Amount.

On country
banks.

On other Federal
Reserve Banks.

Num- Amount. Number.
ber.

Amount.

Cross totals.
Num- Amount.
ber.

754
630
859
834
1,002
1,149

$879,407
958,474
1,082,466
1,169,971
2,070,382
2,303,422

4,388 $318,973
4,150 298,817
4,014 310,044
4,415 358,090
4,634 395,675
4,826 429,960

37
43
50
60
86
90

$755,015
794,906
1,196,780
1,407,372
1,914,964
1,985,924

5,179 $1,953,395
4,823 2,052,197
4,923 2,589,290
5,309 2,935,433
5,722 4,381,021
6,065 4,719,306

871

1,410,687

4,405

351,927

1,342,494

5,337

3,105,107

Total amount of credit side of "due t o " accounts with other Federal Reserve Banks, showing total
amount received and credited to other Federal Reserve Banks for the year ending Dec. 31,1915: Total
mail received for credit, $175,297,108.
Total amount of debit side of "due from" accounts with other Federal Reserve Banks, showing total
amount sent out and charged to other Federal Reserve Banks for the year ending Dec. 31,1915: Total
mail sent out for our credit, $288,971,935.

DISTRICT NO. 4—CLEVELAND.
D. C. WILLS, Chairman and Federal Reserve Agent.

ANNUAL REPORT FOR 1915

OF THE FEDERAL RESERVE BANK OF CLEVELAND.

A sound basis has been established for the successful administration of the Federal
reserve system in the fourth district. The officers and directors of the Federal Reserve
Bank of Cleveland have devoted themselves with zest to their task, with full appreciation of a great opportunity and stimulated by the many absorbing problems of the
first year. In the retrospect the year appears to have been well spent in laying safe
foundations for future usefulness, as well as rendering welcome service whenever any
opportunity for such service has been developed.
ORGANIZATION.

Upon the announcement of the date upon which the bank was to begin operations
the directors of the Federal Reserve Bank of Cleveland devoted themselves, through
frequent meetings, to the task of getting together the nucleus of an organization and
securing suitable quarters. We were fortunate in obtaining comparatively inexpensive yet adequate quarters in a building located on the most prominent corner in
Cleveland, with favorable arrangements for such expansion as might prove necessary.
One of the chief advantages of the space that was secured is a modern vault—one of
the strongest in the State of Ohio.
Attention was naturally first directed to securing a capable force to handle the large
amounts of cash to be received for initial capital payments and reserve deposits.
Cleveland and Pittsburgh banks generously loaned the services of a number of men,
with whose assistance the small initial staff which the bank had secured was able to
count, assort, and store this cash without loss or error.
The opening took on almost the character of a celebration, and the attendance was
largely stimulated by the action of a Cleveland member bank which invited the
officers of every member bank in the district to attend a luncheon on the opening day.
Following the opening the officers and directors proceeded with the organization
until a staff of 30 employees had been assembled. Considering the haste which was
necessary in its selection, surprisingly few changes have been necessary in the staff,
which consists at present, in addition to the governor and chairman, of a secretarycashier, one assistant cashier, an assistant to the Federal Reserve Agent, a general
administrative assistant, an auditor, a chief accountant, a loan and discount clerk,
a chief teller, and 20 other employees, including bookkeepers, tellers, transit clerks,
stenographers, vault custodian, guard, etc.
The by-laws adopted by the directors followed the usual form of such instruments,
being especially drafted with the aim of centering the responsibility of operating the
bank on the executive committee and the officers. An executive committee of five
members was decided upon, and rotation is observed in appointments to that committee, all directors, of whatever class, being eligible. With this arrangement it was
considered unnecessary to provide for regular meetings of the entire board of directors more frequently than once a month. The executive committee adopted the
231

232

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

rule of a regular weekly meeting, and the personnel of the committee is so arranged
that a quorum is always quickly available to pass on discounts. The personnel of
the first board of directors of the Federal Reserve Bank of Cleveland has truly represented the three classes, viz, the member banks, the business interests of the district,
and the Federal Reserve Board; and the plan has so far worked to good advantage.
BUSINESS CONDITIONS DURING THE YEAR.

The fourth Federal reserve district is largely self-contained, with only slight seasonal demand for crop movements, with large industries possessed of ample working
capital for most ordinary requirements, with municipalities only beginning to finance
current needs by short-time borrowings, and whose considerable volume of export
and import business has hitherto been conducted through banks in New York and
other seaboard cities.
In a district whose most noteworthy industry is the production of steel and its products of machinery, etc., the country-wide depression at the time of the opening of
the bank and for some months thereafter was particularly marked. The least active
season of many years for the traffic of the Great Lakes was just closing; the coal trade
was suffering, not only from general depression but also from local labor difficulties;
and practically all of the many diversified industries of the district were at low ebb.
Most of the crops of the district had been marketed, except tobacco, in which the
situation was far from normal; some of the movement of live stock had been held up
by the quarantine due to the foot-and-mouth disease; and these were the only pressing needs reflected in the early discounts of the bank.
The amount of the Aldrich-Vreeland currency in the district was at its height,
being then at about twenty-eight millions. The retirement of this currency began
and continued without disturbance, and even the withdrawal from circulation of this
large amount produced a very small demand for the funds of the Federal Reserve
Bank, reflecting the unusual and increasing ease in the money market.
The spring and summer months did not develop any new demand for funds. The
slightly increased demand in the fall in portions of the district where agriculture is
the principal industry absorbed only a part of the uninvested funds of the banks in
most such localities.
This district has had a very large share in the recent business revival, but much
of the new business has been financed outside the district, and in many cases has
brought actual cash from outside markets with the orders. The liquidated condition
of our manufacturers and merchants has further minimized their credit needs, and
their limited requirements have only partially absorbed the large excess of loanable
funds in our member banks. This situation has recently been intensified by the sale
of some large manufacturing enterprises to eastern corporations—a transfer which
has brought into the district a very considerable volume of outside funds.
INFLUENCE OF THE BANK ON BUSINESS AND BANKING.

Of course in all of these situations the existence of the Federal Reserve Bank has
certainly created or strengthened a feeling of confidence among the member banks,
as well as State banks—in fact in all credit agencies. Beyond question the fact that
the bank was established and equipped for service was a safeguard against such
extremes of caution and fear as would otherwise have been inevitable in such a period
of uncertainty and disturbed conditions abroad. Still more important, however, is
the fact that the member banks are rapidly becoming fully alive to the possibilities
opened to them by the Federal reserve system as the most powerful influence for
better banking which has ever presented itself in this country. At the outset, many
of our member banks were plainly in the attitude of waiting to see what the system
would do for them without action on their part. As the system becomes better
understood, they are appreciating the fact that it is chiefly valuable as presenting to

DISTKICT NO. 4

233

CLEVELAND.

them opportunities to improve their own situation and the condition and methods of
their own customers. Our member banks now have a greater proportion of their
assets in liquid loans than ever before, and this is evidence that the Federal reserve
system has already performed an invaluable and momentous service, which does
not show itself in the earnings of the bank. That this service has been rendered in
district No. 4 is evidenced by the following comparison of paper eligible for rediscount with the Federal Reserve Bank reported by member banks in the called statements of December 31, 1914, and November 10, 1915.
Eligible paper reported.
Dec. 31, 1914
Nov. 10, 1915

$105,601,500
127, 628, 700

Increase (about 21 per cent)

22,027,200

The total demand deposits of the member banks of this district on November 10,
as reported to the comptroller, were approximately $712,000,000. This $127,600,000
of rediscountable paper, therefore, means an addition to the immediately convertible
assets of our member banks of 18 per cent of their deposits subject to call.
EARNINGS AND EXPENSES.

Although there has been so little occasion for employing the funds of the Federal
Reserve Bank of Cleveland in any of the channels permitted under the Federal
Reserve Act and the regulations of the Federal Reserve Board, nevertheless the revenues already earned, with earnings accruing from early maturities, will be more
than sufficient to cover the current expenses for the first year of operation. The
expenses of this bank have been less in proportion to the amount of its capital than
those of any other Federal Reserve Bank, with the exception of one which has been
able to avail itself of the services of a subtreasury located in the same city.
On May 17, the first day on which the 50 per cent of our capital stock was fully
paid, the bank had less than 57 per cent of its paid-in capital in revenue-producing
assets. On December 31 this ratio had risen to 110 per cent. The following
table shows the salient features of the operations of the bank for the year:
Funds invested and earnings.

Bills discounted members:
1914 (1J months)
1915

$675,268.10
4,526,036.52

Bills discounted—bought:
Acceptances of nonmember banks
Acceptances of member banks

2,472,876.78
489,897.12

Investments—Warrants, etc.:
Cities
Townships
Counties
States

6,414,160.81
36,587.50
249,916.97
104,302.42

United States Government bonds:
Twos of 1930
Threes of 1918
Fours of 1925

Total
Sundry profits.
Total revenues.

400,000.00
1,187,000.00
770,000.00

Total loans,
etc.

Total rev- Average
rate
enue.
(1915).

$5,201,304.62

$34,100.51

2,962,773.90

13,303.69

2.22

6,804,967.70

72,818.63

2.93

2,357,000.00

15,515.86

2.50

17,325,167.46

135,738.69
823.88
136,562.57

3.01

Of these revenues, $21,337.34 has not accrued.

234

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

Expenses,
Organization:
Our proportion expenses Federal Reserve Board
Federal Reserve Bank of Cleveland
Furniture and equipment (includes vault equipment, $9,539.80)

Total

$21,511.14
15,866.42
20,187.08
57,564.64

Amount.
Current:
Our proportion expense Federal Reserve Board from June 30,1915
Cost of Federal Reserve notes—issued.. .
Federal Reserve Bank of Cleveland
Total

Average
per month.

$11,900.60
9,014.25
112,707.30

$1,983.43
667.72
8,348.69

133,622.15

10,999.84

Membership.

Number of member banks Nov. 16, 1914
New banks organized
State bank admited
Transferred from district No. 5

762
3
1
5
771

Closed by Comptroller of the Currency
Liquidated
Number member banks Jan. 1, 1916
Distribution:
In reserve cities
In other than reserve cities
Distribution according to assets:
Under $100,000 assets
$100,000 to $200,000
$200,000 to $300,000
$300,000 to $500,000
$500,000 to $2,500,000
$2,500,000 to $20,000,000
Over $20,000,000

4
5
—-

9
762
=

45
717
• 762
3
69
101
147
357
75
10
762

REDISCOUNT POLICY.

In fixing rediscount rates, the directors of the Federal Reserve Bank of Cleveland
have recognized that serious evils can follow a rate that is too low, as well as a rate
that is too high, and that the desire to obtain business is not the only consideration,
nor should it be the ruling consideration of a Federal Reserve Bank, whose function
should properly be regulatory of general money rates. The rates established during
the early months of the operation of the bank were properly somewhat lower than
those hitherto offered by some of the largest city banks in this district. These rates
did not, however, produce a large volume of rediscounts in the Federal Reserve Bank,
but decreased the charges of some banks which, in rediscounting for or lending to
their country correspondents, met our rates. It was not to be expected that all of
such rediscounts should immediately be transferred from member banks to the
Federal Reserve Bank, and our directors have felt that it would be improper, even
aside from, the consideration of country-wide welfare, to reduce the rates to such a
point as would produce keen criticism and antagonism on the part of some member

DISTRICT NO. 4

235

CLEVELAND.

banks, without either appreciably increasing the earnings of the Federal Reserve
Bank or promoting the best interests of the borrowing public. With the exception of
the very justifiable special rates for trade acceptances and exceedingly short-time
loans, therefore, our lowest rate has remained at 4 per cent for paper maturing within
60 days, 4J per cent for paper maturing within 90 days, and 5 per cent for agricultural
and live-stock paper maturing within six months.
The bank has had 395 discount transactions with 88 member banks, these transactions being distributed as follows:
L914.

Number
banks.
Kentucky
Ohio
Pennsylvania
West Virginia
Total

. . .

1915.

Amount
discounted.

Number
banks.

Amount
discounted.

3
10
4

$268,095.29
177,026.53
230,146.28

16
38
25
2

$1,156,483.87
1,918,171.91
1,419,775.66
31,605.08

675,268.10

4,526,036.52

At the time of rediscounting the maturities of the paper handled were distributed
as follows: Thirty days, 27 per cent; 60 days, 44 per cent; ninety days, 22 per cent;
beyond 90 days, 7 per cent.
From the called statements of November 10 the following data of the borrowings of
member banks in this district have been compiled:

With banks outside of district
With other banks in district
With Federal Reserve Bank

Bills payable.

Rediscounts.

$1,026,825
2,180,362

$320,695
644,178
540,161

$1,347,520
2,824,540
540,161

3,207,187

1,505 034
35 9
45.6

4 712 221
11 5

Total
Per cent with Federal Reserve Bank
Per cent of rediscounts in district with Federal Reserve Bank

Total.

FEDERAL RESERVE NOTE ISSUES.

The bank has readily and willingly lent itself to the service of impounding gold
through the issuing of Federal Reserve notes, for which dollar for dollar in gold has been
retired into the vaults of the Federal Reserve Agent. The quick withdrawal of the
Aldrich-Vreeland emergency currency naturally necessitated the substitution of
Federal Reserve notes in part, and the demand for currency in pay-roll denominations
has been met. The bank has outstanding at the close of the year $11,000,000 of Federal
Reserve notes.
OPEN-MARKET POLICY.

The Federal Reserve Bank of Cleveland has confined its dealings in open-market
transactions to the purchase of bankers' acceptances based on the importation and
exportation of goods, which have been shared with us by Federal Reserve Banks on
the seaboard, and the purchase of warrants of municipalities and other political subdivisions. No other paper has been purchased without the indorsement of a member
bank. Our board of directors has been actuated by the conviction that in such an
easy money market this bank should guard against the effect which might be produced by undue eagerness to invest the funds of the Federal Reserve Banks at very
low rates through open-market transactions.
20067°—16
16

236

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.
COLLECTION FACILITIES.

Our directors have shared with the officers of the bank the desire to extend the
clearing-house functions as rapidly as is consistent with sound practice and justice to
the member banks. At no time has it been felt, however, that it would be proper to
attempt to force upon member banks the obligations of immediate credit and debit
at the Federal Reserve Bank, and, in common with most of the other Federal Reserve
Banks, we have made membership in the collection system purely voluntary, pending
the determination of the rights and duties of member banks under the act. Through
the operation of the gold settlement fund at Washington our directors have felt warranted in extending to "assenting banks " the privilege of transferring excess balances
to the principal centers by request to this bank, as well as the privilege of remitting
to this bank their drafts on correspondents in those centers to restore depleted reserve
balances.
While there have been instances of banks not members of our collection system
which have discontinued the assessment of collection charges, there has been no
general movement in that direction. None of the clearing houses in this district have
any rules governing collection charges, and therefore the amount of the exchange or
collection charge is a matter of arrangement between the individual banks. The rate
ranges from one-twentieth to one-eighth of 1 per cent.
The following table will show the progress and operation of the intradistrict clearing
system to date:
Transit operations, daily average.

Month.

June
July
August...
September
October...
November.
December

of
Amount. Number
items.

$349,995
736,501
606,900
701,344
826,272
1,318,904
918,985

From
reserve
cities.

810
1,644
1,635
1,756
1,885
1,980
2,028
1

To all
From all
other
other
banks, To reserve banks,
including
including
cities.
Federal
Federal
reserve
reserve
cities.
cities.

1,381
1,494
1,601
1,677
1,748

254
262
284
303
286

C1)
363
548
407
453
435

1,273
1,208
1,478
1,526
1,593

No record.

Members intradistrict collection system.
Total.

Date.

118
118

June 1915
December 1915

Banks in
reserve
cities.
39
38

Banks in
other
cities.
79
80

OFFICIAL RELATIONS.

In the division of work between the governor of the bank and the chairman of the
board, the chairman has, of course, undertaken as Federal Reserve Agent the confidential custody of the called statements of member banks, has assumed supervision
of increases and decreases in subscribed capital stock, has supervised the work of
the auditor, has kept in close touch with conditions in the district through correspondence and otherwise, and has given some attention to the matter of publicity; and,
being continuously a member of the executive committee, has been glad to assist the
governor in some of the features of the operation of the bank, especially with relation
to the investment of its funds. A spirit of cordial cooperation has prevailed between
the two offices.

DISTRICT NO. 4

237

CLEVELAND.

The directors have not felt that the operations of the bank have for the present
required the election of a deputy governor, and this fact has, of course, placed some
added responsibilities on the other officers.
The deputy Federal Reserve Agent in the Federal Reserve Bank of Cleveland is
not active, and has been called upon as deputy chairman only to preside at meetings
of the board of directors in the absence of the chairman.
An exceedingly satisfactory spirit of cooperation has been established between the
officers of the bank and the chief examiner of the district, and good results have
already been obtained through this cooperation.
STATE BANKS.

The advantages of membership in the system have been steadily impressed upon
representative State banks, and several important institutions are known to be very
seriously considering membership;. one application for membership has been acted
upon favorably by the Federal Reserve Board as this report goes forward and the
Guardian Trust and Savings Bank of Toledo is the first State bank member in District No. 4. The standard of State examinations is such that additional examination in connection with applications is not at present contemplated. It is believed
that many of the State banks will in time come to realize that some moral obligation rests upon them to assume their share in the development of the system to its
utmost possibilities.
RELATIONS WITH MEMBER BANKS.

The bank is slowly, but we believe surely, gaining the confidence of its stockholders,
the member banks of the district. There has been very little evidence of any hostility on the part of any member or nonmember banks, and it is my judgment, in
which I am confirmed by a number of the ablest bankers of the district, that the
influence of the system in facilitating better banking, better credit, and better business generally, has already been very marked and has been properly valued, and that
a sure foundation has been laid for further progress. For example, the growth of the
trade acceptance system seems assured; more and more business men and borrowers
of all classes are realizing the importance of sure knowledge of their own financial
condition and the sharing of that knowledge by their bank; more and more banks
are realizing that it is no longer necessary or desirable to curtail loans to their customers when such loans are clearly warranted; and the lesson is being rapidly learned
that the Federal reserve system is a safe bulwark against all purely money stringencies except those that result from improper transactions, and that the system offers
the best incentive and the best opportunity for the improvement of banking practice
and banking methods.
FIDUCIARY POWERS.

In acting on applications for fiduciary powers, our directors took the ground that
no recommendation should be made for permission to exercise any powers other than
those which are definitely granted by the State laws; but this has been modified
under the regulations of the Federal Reserve Board to the extent of an assumption
that a power not definitely prohibited by a State law might be presumed to be permitted. The following fiduciary powers have been granted to member banks in this
district on the recommendation of this bank:
Powers.
Trustee only
. . .
.
Registrar of stocks and bonds only
Trustee and registrar of stocks and bonds
Trustee, executor, administrator, and registrar of stocks and bonds.

Pennsyl- Kentucky.
vania.

Ohio.
2
1
6
0

1
0
0
2

0
0
0
1

238

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.
ELECTION METHOD.

In view of the fact that the method of representation provided for in the three
classes of directors has so far worked well in the case of the Federal Reserve Bank of
Cleveland, no pressing necessity is apparent for a change in the eligibility qualifications of directors. It is plainly apparent, however, that the method of grouping the
banks into three classes according to their capital and surplus is ineffective and has
not brought about the intended result. It is my judgment that if this method of grouping were abolished and the banks were all to act together in elections, the smaller
banks would be likely to be even more adequately represented on the directorates of
the Federal Reserve Banks than they are at present. The difficulty with the present
method is in obtaining intelligent cooperation among the classes of banks which are
supposed to have a community of interest, but which actually do not and can not
have such a community of interest in the widely scattered localities throughout the
districts.
The advantages and disadvantages of the preferential ballot are by this time, perhaps, sufficiently understood. If this method, whose advantages may be sufficient to
warrant its retention, is to be retained, I think it is essential that the method of nomination should be changed, at least to the extent of providing that in order to be placed
upon the ticket a nominee must receive the indorsement of a considerable number of
banks.
COOPERATION WITH OTHER FEDERAL RESERVE BANKS.

A distinct spirit of cooperation between the 12 Federal Reserve Banks has been
developed, not only by the policy of the Federal Reserve Board, but also through
the conferences of the governors and the Federal Reserve Agents, the executive committees of those conferences, and the joint executive committees of both of them.
DIFFICULTIES IN ADMINISTRATION OF FEDERAL RESERVE ACT.

Such difficulties as have been encountered in the administration of the Federal
Reserve Act are certainly no more than were to have been anticipated in the working
out of any new establishment of such size and moment, created by a single piece of
legislation. While the first year's operation has demonstrated the essential soundness
of the principles on which the Act was founded and the essential wisdom of the Act
itself in practically every important particular, yet it has become apparent, of course,
that some of the details must be more clearly enunciated through amendments; and
perhaps some minor changes will be sooner or later desirable.
DIFFICULTIES WITH REGULATIONS.

It would be folly to claim that no difficulty has been encountered in the interpretation and operation of the regulations of the Federal Reserve Board. There is no
doubt that the Federal Reserve Board, like the Federal Reserve Bank of Cleveland,
has endeavored to make its communications as reasonable, as simple, and as easily
understood as possible; and I can not suggest wherein any of its regulations might be
improved. It is also obvious that a number of regulations were necessary at the outset,
and it is my judgment that the number of communications to member banks has been
as small as it could be, and that an even greater number would not be inexcusable or
perhaps undesirable. Rightly or wrongly, however, many of our member banks have
felt that the board's regulations were overnumerous and have not risen to the task of
grasping thoroughly the purport of these various communications. I have reached
the conclusion that only time, with its opportunities for personal conference and its
occasions for actual use of the Federal Reserve Bank, will entirely remedy this condition; and the officers and directors of the Federal Reserve Bank of Cleveland are not
in the least discouraged over the situation, but rather feel that fully as much progress
has been made as could have been expected.

DISTRICT NO. 4

CLEVELAND.

239

In so far as there is actual dissatisfaction with the system on the part of member
banks, such dissatisfaction, I believe, arises generally on the following three points:
1. That no interest is paid on deposits by the Federal Reserve Banks.
2. That the Federal Reserve Banks will not rely solely on the indorsement of member
banks on paper submitted for rediscount.
3. That the system threatens the reduction of profits heretofore obtained through
collection charges, and conversely threatens to withdraw the free collection of items
through city correspondents.
These three objections result from the present unsound practices caused by the
great inducements offered to correspondents by large city banks competing for country
bank accounts. They can not be justified even by their proponents, and every one of
them represents an evil which can be corrected, and will be corrected by strict adherence to the principles already laid down by the new system in these respects.
Time and education will prove to the member banks and other banks which will
become members that their condition under the new system, with these unjustifiable
privileges withdrawn, must be better than before.
OUTLOOK.

I believe it to be the opinion of close observers of financial matters, whose judgment
largely makes the sentiment in this district, as well as the general consensus of public
opinion, that the Federal Reserve Bank of Cleveland, in its first year of operation, has
justified all expectations which could reasonably have been entertained as to the first
results of the establishment of a new banking system in this district. The first year
has demonstrated to many member banks that the system offers great opportunities
for their benefit, but that some action is incumbent on those who would obtain all of
the available advantages. This changing of the general attitude of passive inertia to
one of active cooperation on the part of the member banks and their customers has been
perhaps the most important concern of this bank, and it is evident that most encouraging progress has been made.
The Federal Reserve Bank of Cleveland faces the future with confidence that a
cordial and mutually helpful relationship is being surely established between itself and
its member banks, and that the number of its member banks will increase; that the
new system is already effecting remarkable improvement in banking and business
conditions in the fourth district, and that the continued and developing service of
this bank can not fail to be increasingly helpful to its members and, in a larger sense,
to the public.

DISTRICT NO. 5—RICHMOND.
WILLIAM INGLE, Chairman and Federal Reserve Agent.
On May 18, 1914, there assembled in Richmond the representatives of five banks of
the district, selected by the organization committee to execute the organization certificate of the Federal Reserve Bank of Richmond. The banks whose officers joined
in executing the instrument were—
Merchants-Mechanics National Bank, Baltimore, Md.
First National Bank, Roanoke, Va.
Citizens National Bank, Charleston, W. Va.
Palmetto National Bank, Columbia, S. C.
Murchison National Bank, Wilmington, N. C.
On the same day there was held in Richmond a meeting of the representatives of a
large number of the national banks of the district, for the purpose of agreeing upon
some line of procedure to be followed in electing directors in the reserve bank. It was
recognized that the meeting could do nothing which would bind even those banks
whose representatives were present, but it was thought that harmonious action would
induce general acquiescence in any plan proposed with the idea of simplifying proceedings under the provisions of the law relating to the election of directors. Six
directors were to be chosen, and it was unanimously agreed that one should be named
from each of the six jurisdictions composing the district. The meeting without dissenting voice recommended that member banks cooperate in an endeavor to procure
the election as directors of the following-named gentlemen:
Class A: Mr. Waldo Newcomer, Maryland; Mr. John F. Bruton, North Carolina;
Mr. Edwin Mann, West Virginia.
Class B: Mr. George J. Seay, Virginia; Mr. James F. Oyster, District of Columbia;
Mr. D. R. Coker, South Carolina.
In due course these gentlemen were elected with substantial unanimity. The Federal Reserve Board named as class C directors Mr. William Ingle, of Maryland, as
chairman of the board and Federal Reserve Agent; Mr. James A. Moncure, of Virginia,
as deputy chairman and deputy Federal Reserve Agent; and Mr. M. F. H. Gouverneur,
of North Carolina.
Pursuant to notice from the Federal Reserve Board the chairman of the board of the
Federal Reserve Bank of Richmond called upon the directors to meet in Richmond
on October 5, 1914, for the purpose of effecting permanent organization. All of the
directors were present, whereupon Mr. George J. Seay was elected governor of the
bank. By-laws were adopted and an executive committee of three was provided for.
The governor, the chairman, and Mr. John F. Bruton were the members of this committee. Mr. George J. Seay was elected a member of the Federal Advisory Council.
The by-laws of the bank require that stated meetings of the board of directors
be held on every alternate Thursday. They further provide that when the board is
not in session a majority of the executive committee be empowered to act for the
board. No class C director may be a member of the executive committee, other than
the chairman of the board.
Many hundred tenders of service were received from within and without the district,
and it was difficult so to discriminate as to insure the engagement of high-class men
from different sections of the district and at the same time spare serious disappointment to many most competent applicants. No mistake was made in those selected,
as all have been diligent, thoughtful, and constructive workers in an untried field,
241

242

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

and all have materially aided the senior officers. As the business of the bank developed, minor and subordinate positions were filled usually by young men or women
of Richmond, at salaries which no one obliged to live away from home could accept.
Meanwhile, on November 16, 1914, Mr. George H. Keesee was elected assistant cashier, and later, on June 24, 1915, was made cashier of the bank. Mr. Keesee for some
years previous to his selection had been connected with the Merchants National
Bank of Richmond.
On July 8, 1915, Mr. Charles A. Peple was elected vice governor and Mr. W. E.
Cadwallader became auditor.
The board meets on alternate Thursdays and when especially called by the chairman, the governor, or any three of its directors. Since organization there have been
held 33 meetings, at which there was present 86.19 per cent of a full attendance.
The board remains in session four hours at least, or, if necessary, most of a full business
day. Full report is made to the board of discounts undertaken since its last meeting and other proceedings of the executive committee. The governor reports at
length upon matters of interest either past or prospective, while the chairman makes
the board acquainted with all matters of correspondence with the Reserve Board excepting those of strictly routine nature. The executive committee meets daily, at
the time at which discount offerings can be properly classified and otherwise prepared for its attention.
EXPERIENCES IN OPERATION.

Initial payments on account of stock and reserve deposits were made substantially
all in gold, of which some $1,570,000 was in coin. So much of this coin was old and
had long been held in bank-vault reserves that there was a shortage in its weight
amounting to $859, which, under the circumstances, it was thought best to permit
the bank to absorb. Later payments were accepted when made in current exchange,
which in clearance was at once converted into gold.
In early discount operations there was hesitancy and wide criticism on the part of
the member banks of definition of eligible paper. Possibly it was fortunate that the
necessities of the time practically compelled certain members to rediscount, as in
doing so it was learned that the proceedings offered no really serious difficulty. In
consequence, the example of one was quickly followed by others, with the result
that 226 banks (Dec. 15) which have so used the reserve bank have been highly
appreciative of its aid and methods.
Clearance undertakings have been far from satisfactory. Ninety members agreed
to cooperate in a plan proposed, and in doing so made a material sacrifice, in that
their attitude of helpfulness was taken advantage of by competing member banks
not assenting to the plan. At this writing, notwithstanding the many conferences
which have been held for the purpose of solving the problem, actual clearances in
a wholesale way have not been developed.
Late in November a canvass of all member banks was made, inviting comment
and criticism of both the Reserve Bank and the practical working of the law. Two
hundred and fifteen members responded, many at length, and the correspondence
was and will be most helpful. Criticism, almost always considerate in its expression,
was, when offered, directed in almost every case either to the failure to pay interest
on reserve deposits or to the prospective loss of collection charges. It was evident
that many such members had not properly reflected upon the relation of the two
subjects, and particularly upon the bearing of the new law upon both, nor was appreciation shown in most cases, of the effect of the investment of released reserve.
RESULT OF OPERATIONS.

The first paper was accepted for discount on November 25, 1914, from a South
Carolina member. The discount line gradually developed until its maximum,
$8,747,476.30, was reached on August 7, 1915. Earnings accrued slowly, and it was

DISTRICT NO. 5—RICHMOND.

243

not until January 16, 1915, that their total equaled charges for current expenses,
while expenses of all kinds were not covered by earned discount until April 2, 1915.
Not in a single instance was a loan solicited during the entire period of operation.
Beginning with no productive assets and without inviting business of any kind, it is
gratifying to be able to report that the bank was enabled to pay a dividend to its
shareholders at the rate of 5 per cent per annum on the average of their interest in
the stock of the bank during the 14 months ending December 31, 1915. It is fully
realized that such result was made possible for the reason that the southern portion
of the district was especially in need of the help afforded by the bank.
RATES OF DISCOUNT.

The establishment of an initial discount rate of 6 per cent was followed on December
2, 1914, by the naming of lower rates. Later, as credit became easier, it was possible
further to shade prices, the rates at the close of the year being in essential harmony
with those prevailing in all districts. Where slight differences are in evidence, they
are due probably to a desire to meet special conditions in particular districts.
In accepting paper, the officers of the bank constantly have had in mind the
standards set in the regulations of the Board. Application forms used in submitting
paper for discount were prepared with the idea of obtaining very full information
not only of the liability other than for deposits of an interested member bank, but
of the character and value of the paper offered. Where a member reports that its
advances to a single customer aggregate $5,000 or more, a business statement of such
customer is obtained, even though the reserve bank be offered only a fraction of the
full amount. In passing upon the many thousands of notes handled, it has been
necessary to decline some of the paper as ineligible either in its character or from the
credit viewpoint of a reserve bank. Many notes have been returned for technical
reasons, such as material alterations and imperfect signatures or indorsements. With
very few exceptions full explanatory letters were entirely satisfactory to the members
addressed, and the result has been that ineligible or imperfect papers now reach the
bank in greatly diminished numbers. A preferred rate on "commodity paper,"
announced on September 15, 1915, had a good effect in the cotton districts, not that
it immediately was employed in any material degree, but in reinforcing confidence
at a moment important in the minds of those concerned in the movement of the crop.
Following a softening in the price of the staple in November, there was noticed an
increasing inclination to store some part of the unsold portion of the crop, the action
gradually being reflected in the increasing volume of commodity paper offered the
bank.
The "trade acceptance" must find its first development at manufacturing and
distributing centers. At the larger points, and especially at cities in the northern half
of the district, the price of credit in any form has been so low that attention has not
generally been attracted to the bill of exchange as opposed to other forms of negotiable
paper, as offering peculiar advantages. From varying directions, however, the bank
is receiving a limited quantity of such paper, some of it on forms expressly printed
to meet the requirements of the regulations. Preferred rates will develop its use,
although much educational work is to be done in this connection. Since the promulgation of " open-market" regulations, little opportunity has been offered the
bank to enter the field. Very few member banks in the district have accepted paper
for sale, and such as has been made has been disposed of elsewhere at prices with
which it was not thought wise to compete.
FEDERAL RESERVE NOTES.

The bank, while holding essentially all of its funds in gold, has been filling orders
from members for currency with Federal Reserve notes. In making the shipments,
the bank has prepaid carriage cost, not only as an appreciated service to its members,

244

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

but at first to introduce the notes throughout the district. Notes aggregating a sum
in excess of $2,000,000 have from time to time reached the bank for redemption from
the reserve banks, but the notes were again absorbed by current demands for
currency.
CLEARING SYSTEM.

It is to be regretted that so little has been done in the direction of making effective
the clearance clauses of the Act. Ninety member banks generously cooperated in a
plan offered in April last, but the plan was ineffective in any large way and as a
matter of fact worked some injustice to its adherents. It will be difficult to arrange any
program looking to the handling of transit matter until reserves have all been transferred
from'' approved reserve agents," when member banks will better be able to understand
the relation between reserve and exchange charges and of both in connection with
their own items in process of liquidation. Exchange charges in the district average
one-eighth of 1 per cent, or $1.25 per thousand, either as a direct charge or the equivalent in the form of a supporting balance, while carriage rates on currency between
the reserve city and member banks will not average more than 40 cents a thousand.
Aside from the situation made by those members which voluntarily joined the collection system no change in exchange rates has been noted, excepting only that
Richmond is now essentially a par point.
DEPUTY FEDERAL RESERVE AGENT.

The deputy Federal Reserve Agent is greatly interested not only in the success of
the bank but is concerned that it shall be helpful to the banks and through them to
the public. As he is rarely away from Richmond he is always available to care for
the duties of the Federal Reserve Agent when that officer occasionally is absent. It
is unfortunate that the by-laws of the bank do not permit a class C director to be one
of the executive committee of three members.
RELATION OF THE RESERVE BANK TO THE BANKS OP THE DISTRICT.

The reserve bank has diligently sought to cultivate the friendliest relations with all
banking institutions located in its territory. With better understanding of the law
and its regulations, and particularly of its operations, came appreciation of its purposes, until now only a small minority of members are antagonistic in their attitude.
Criticism when offered is almost always directed to some minor point and is as commonly expressed in considerate language. Discussion of the law has been the principal topic at meetings of bankers held in every State in the district, and at such
gatherings interest in addresses delivered on the subject has been keen and sustained.
The autumn of 1914 found a great number of the banks in the fifth district overstrained to the point of danger. The aid rendered by the reserve bank, first in
assisting in the reestablishment of confidence and later for the direct and material
help extended by it in directions where it was sorely needed has therefore been
appreciated. Liability for bills payable, rediscounts, and emergency currency were
either promptly liquidated by commodity movements, facilitated by changed conditions, or in some part where desired was transferred to the reserve bank by rediscounting eligible paper which the banks learned was held by them in greater volume
than at first was supposed to be the case.
IMPROVED BANKING PRACTICES.

Under the old order of things competition and carelessness led to a departure from
banking rules of generally recognized importance. Banks often consented-to accept
imperfectly or illegally drawn papers on their faith in the assumed intent of their
makers, the same unquestioning faith being further evidenced by the fact, in a very
great number of cases, that the sole repository of credit information was the head of

DISTRICT NO. 5

RICHMOND.

245

some single bank officer. It was believed that to ask a good customer for facts upon
which intelligent judgment could be based would certainly result in loss of business.
It is highly gratifying to learn that such fears were baseless and that with tactful
handling it has been possible to obtain the needed information. In securing the
statements member banks have many times been surprised in learning of a greater
or less responsibility than they had assumed to be the case. Many banks are now
collecting credit information which never before thought it desirable to do so. The
reserve bank holds such statements furnished by the makers of essentially every note
held by it where such note is part of a line of $5,000 or more extended the maker by
his bank. Another valuable service rendered by the reserve bank has been that its
critical comment upon imperfectly drawn notes or documents has apparently led to
the exercise of much greater care in their preparation.
It has been possible often to accentuate the importance of strictly observing the
"excess loan" law by refusing offered notes which were part of such excess line
granted by a member. Where frequently it has been noticed that members in offering paper were violating the law against excess borrowing, the loans have been granted
only upon the promise that proceeds would be used in reducing or liquidating the
excess.
FIDUCIARY POWERS.

In passing upon applications for the exercise of fiduciary privileges full regard is
had to facts as reported in statements of condition and their related schedules, but
particularly to information derived from examiners' reports. Personal knowledge of
individuals and neighborhood conditions in most instances has materially assisted
judgment. Two men of equal ability and sagacity engaged in banking may in different environments depart from some common or standard rule of practice and at the
same time both be safe in judgment and execution.
ELECTION OP DIRECTORS.

Machinery provided for the election of directors is cumbersome, but cumulative
experience will permit its use with reasonable readiness. In the election recently
concluded only 65 per cent of the interested banks (those of Group I) participated
in the proceedings, which resulted in the election of Mr. "Henry B. Wilcox, of Baltimore, as class A director, in succession to Mr. Waldo Newcomer, who declined renomination, and Mr. Edmund Strudwick, of Richmond, as class B director, in succession
to Mr. George J. Seay, who as governor was no longer eligible.
BUSINESS AND AGRICULTURAL CONDITIONS.

During the last four months in 1914 business of every nature in the district was in
a most demoralized and in many cases a distressed condition. A great crop of cotton
could not be sold at cost prices or properly financed until, with the establishment of
the reserve banks in November confidence was so measurably restored. As in the
district as a whole, cotton is the largest single factor in the liquidation of seasonal
debts, the practical stoppage of its movement seriously affected many lines of industry. It was not until foreign commerce had been reestablished and until general
business had been radically readjusted to meet changed conditions that recoveries
could be noted. At first haltingly, but gradually with more certainty, the situation
improved, until now it is possible to report that business in practically all lines in
the fifth district is nearly, and in some instances better than, normal. The cotton
crop of 1915 is being sold at excellent prices. Grains have yielded gratifying returns.
Manufacturers in almost every line are now busy. Labor is fully employed. Jobbers
report generous sales and orders for the future to replenish diminished stocks. Coal
operators are busy. Railroads report greatly increased tonnage and correspondingly
heavy earnings.

246

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.
CREDIT NEEDS OF THE DISTRICT.

Financially the northern half of the district is complementary to its southern half
during most of the year. Banking capital, supplemented by trade credits, is sufficient to care for its proper and normal needs. Credit is shortest in supply in the
months of August and September, and as a rule is easiest immediately following the
maturity of cotton in the fall.
Fourteen months ago the banks of the district were heavily committed for bills
payable, rediscounts, and emergency currency. The last indicated liability long
since disappeared, much of it at the time by the aid of the reserve bank. Excess
bills payable were promptly reduced in the use of the same agency. Easy credit
conditions now obtain throughout the district. As a matter of fact, many substantial
banks have not only cared for all unusual liabilities, but have surplus funds seeking
employment.
When reserves fully shall have been transferred to the reserve banks it is altogether
probable that its unsupported reserves will permit it fully to care for the banking
credit needs of the district.
LIST OF EXHIBITS.

Exhibit A.—Condensed statement of condition, December 31, 1915:
1. Cash on hand.
2. Cash items in transit (other Federal Reserve Banks).
3. Investments.
4. Loans and discounts.
5. Deposits and overdrafts.
6. Loans and investments and unearned discount thereon.
7. Capital stock.
8. Undivided profits.
Exhibit B.—Analysis of statements of condition, as reported by member banks, in
response to call of comptroller, as of November 10, 1915 (recapitulation of):
1. Maryland.
2. District of Columbia.
3. Virginia.
4. West Virginia.
5. North Carolina.
6. South Carolina.
Exhibit C.—Maximum rates of interest paid on deposits, reported by member banks,
in response to call of comptroller, as of November 10, 1915.
Exhibit D.—Loans, daily average balances (recapitulation of):
1. Hypothecated with Federal Reserve Agent.
2. Not hypothecated.
3. Diagram of balances.
Exhibit E.—Discount rates current.
Exhibit F.—Loans, distribution as to member banks accommodated.
Exhibit G.—Diagram of deposits and reserves.
Exhibit H.—Diagram of Federal Reserve notes.
Exhibit I.—Federal Reserve notes, receipts, redemptions, issues, and hypothecated
collateral.
Exhibit J.—Capital stock allotments.
Exhibit K.—Earnings on loans and investments.
Exhibit L.—Analysis of expenses.
Exhibit M.—Commodity paper discounted.
Exhibit N.—Clearance operations.
Exhibit O.—Data assembled from exhibits.

EXHIBIT A.

Condensed statement of condition as of Dec. 31, 1915.
Schedule.

Resources.

Cash:
Gold reserves
Legal tender, silver, etc
Total cash reserves
Other cash and cash items
Total cash..
Transit items (with other Federal Reserve
Banks) .
Overdrafts

. . .

Investments...
Less unearned discount
Loans and discounts
Less unearned discount
Furniture and fixtures
Deferred charges: Cost of preparing unissued
Federal Reserve notes
Total

Amount.

1
1

$15,445,785.00
99,230.65

15,545,015.65
1,041,719.80

Liabilities.
Deposits....
. .
Federal Reserve notes:
Issued
Redeemed

$16,586,735.45

Liability to stockholders:
Capital stock
Undivided profits

Schedule.
5

Amount.
$16,091,237.66
$15,630,000.00
Jk 550,000.00

7
8

3,353,800.00
23,015.26

H
p Q7fi PI x, ^fi

2
5
3
6

82,271. 76
212.54
7,650,865.56
27,156.92

1,161,905.12
66,776.15

82,059.22
7,623,708.64
9,500.00
17,368.34
25, .548,052.92

Total

25,548,052.92

SCHEDULE Al.—Cash on hand as of Dec. 31, 1915.

Classification.

Location of vault.
Description.

Federal
National
Reserve Board FirstBank,
and U. S.
Richmond.
Treasury.

Gold, certificates (order) . . . .
.
Gold certificates (bearer)
Gold coin
Silver certificates
Silver coin
Legal tender notes
National bank notes
Federal Reserve notes
Nickel coin
Copper coin
Exchanges for clearing house
Cash items
Due from Treasurer of United States

$9,875,000.00

333,500. 00

Total ($16 586 735 45)

10,208,500.00

Own
premises.

Gold reserves.

$10,945,000.00
$1,070,000.00
3,689,060.00
3,670,000.00 *"$i9,*666."66'
478,225.00
400,000.00
78,225.00
$45,954.00
6,000.00
39,954.00
1,201.65
1,201.65
52,075.00
11,075.00
41,000.00
28,465.00
130,000.00
53,340.00
805,000.00
.10
.73
24 812 97
101.00
333,500.00
6,122,000.00

256,235. 45

15,445,785.00

SCHEDULE A2.—Cash items in transit to other Federal Reserve Banks {unliquidated through gold settlement fund as of Dec.
Federal Reserve Bank.
Atlanta
Boston
Chicago
Cleveland...
Dallas
Kansas CityMinneapolis

Debit balances. Credit balances.
$125,119.95
123,286.39
380,550.86
100,669.69
620.85
387.65
559.90

$3,446.33
254.25
1,203.84
789.32
57.80
980.00
497.34

Federal Reserve Bank.
New York
Philadelphia..
St. Louis
San Francisco
Total.. .
Net debit

Legal
tender,
silver,
etc.

99,230.65

Other cash.

$158,465.00
858,340.00
.10
.73
24,812.97
101.00
1,041,719.80

31, 1915).

Debit balances. Credit balances.

—w
$1,302,812.44
656,398.42
354,388.13
388.87
3,045,183.15
1,161,905.12

$1,755,559.85
32,126.77
87,493.37
869.16
1,883,278.03

SCHEDULE A3.—Investments as of Dec. SI, 1915.

Warrant of—

State of Georgia (common school)
Do . . .
Do
Do
Do
Do . . .
.
. . .
Do
Do
Do
Do
Do
Do
Do

Total
Unearned discount, 31 days at 3 per cent

Date
purchased.
1915.
Nov. 15
do
do .
do
. do .
do
do
..do. ..
Nov 26
..do .
do
Dec
3
Dec. 15

No.

169
43
18
63
37
71
207
152
57
41
203
140
120

Discount
at 3 per
cent.

Dated.

Maturing.

Amount.

1915.
Oct. 30
do
..do
..
do
. . do.
do
..do
..
...do
..do
..
...do
. . do
do
...do....

1916.
Jan. 31
do
do
do
. do
do
do
...do . . .
do .
...do. . .
. do
do
...do....

$3,550.00
13,500.00
2,067.82
7 378.94
10,521.10
13,000.00
650.00
1,300.00
11,600.00
2,000.00
3,750.00
5 253.90
7,700.00

$23.67
90.00
13.79
49 19
70.14
86.67
4.34
8.67
73.47
12.67
23.75
33 27
31.45

82,271. 76

521.08
212 54

Proceeds.

$51,621.39
17,240.11
5 220 63
7,668.55
81,750.68

Purchased of—

Federal Reserve Bank of Atlanta.
Do.
Do.
Do
Do
Do.
Do.
Do.
Do
Do.
Do.
Do
Do.

CO
H
Q

g
c
t

SCHEDULE A4.—Analysis of loans and discounts as of the close of business Dec. SI, 1915.

o
Total.
Commodity.

Classification.

Bills secured by:
Agricultural products—
Held by the—
Bank
Federal Reserve Agent
Live stockHeld by the—
Bank
Federal Reserve Agent
MerchandiseHeld by the—
Bank
Federal Reserve Agent
Total collateral
Bills unsecured:
Held by the—
Bank
Federal Reserve Agent
Grand total

Trade
acceptances.

Bankers7
acceptances.

Notes.
Combined.

Federal Reserve Agent.

Bank.
d
>

$306,367.55
2,094,761.35
....
...

$2,460,246.49

$2,135,539.00

278.10
11,051.41

11,329.51

1,051.41

5,000.00

15,455.44
19,400.00

39,855.44

24,400.00

8,866.29

101,436.25

2,511,431.44

2,170,990.41

905,024.17
3,868,304.18

5,139,434.12

4,049,423.50

4,874,764.60

7,650,865.56

6,220,413.91

941,364.15
1,558,413.82
1,746,154.76
550,980.04
77,851.83

1,280,451.65
2,339,519.92
2,890,316.73
1,062,725.43
77,851.83

2,339,519.92
2,890,316.73
912,725.43
77,851.83

4,874,764.60

7,650,865.56

6,220,413.91

...

..... ............
2,401,128.90

$18,339.94
36,911.36

$3,866.29

34,986.45
181,119.32

$150,000.00

2,401,128.90

224,972.06

150,000.00

316,101.05
705,125.47
1,043,006.10
336,896.28

22,986.45
75,980.63
101,155.87
24,849.11

150,000.00

2,401,128.90

224,972.06

150,000.00

..... ...
...

$324,707.49

278.10

15,455.44
340,441.03
1,090,010.62
1,430,451.65

MATURITIES.
Within 10 days
11 to 30 days
11 to 60 days
63 to 90 days
Over 90 days
Grand total

1,280,451.65
150,000.00
1,430,451.65

§
>

SCHEDULE A5.—Deposits.
Member banks.

Credits.

Ledger 1.
Ledger 2.
Total.
I Treasurer of United States...
Cashier's checks outstanding.
L Expense checks outstanding.
Total

Overdrafts.

$5,131,277.06
5,906,785.59

$57,980.58
8,795.57

11,038,062.65
5,049,832.97
3,035.05
306.99

66,776.15

I 16,091,237.66

66,776.15

SCHEDULE A6.—Loans and investments and unearned discount thereon.
Q

3 per cent.

Loans

Unearned discount
Warrants
Unearned discount

Total
Total

Net liquid values:
Loans
. . . .
Warrants

...
.

Total
Average unexpired term, in days as of Dec 31,1915

3J per cent.

4 per cent.

4£ per cent.

5 per cent.

Total.

$2,551,128.90
7,986.90
82,271.76
212.54
2,633,400.66
8,199.44

$151,622.67
488.50

$4,494,446.82
16,393.54

$276,007.50
257.05

$177,659.67
2,030.93

151,622.67
488.50

4,494,446.82
16,393.54

276,007.50
257.05

177,659.67
2,030.93

2,543,142.00
82,059.22
2,625,201.22

151,134.17

4,478,053.28

275,750.45

175,628.74

7,623,708.64
82,059.22

151,134.17

4,478,053.28

275,750.45

175,628.74

7,705,767.86

o
3

$7,650,865.56
27,156.92
82,271.76
212.54
7,733,137.32
27,369.46

T
s
o
S

fcO

to
to

SCHEDULE A7.—Capital stock, Dec. 31, 1915 {by States).

Number of members.
National.

Maryland
District of Columbia
Virginia
West Virginia
North Carolina
South Carolina

. .

Total

98
13
136
104
81
71
503

State.

Aggregate of Shares to
Shares
capital and
allotted
thus (net)
as of
surplus as of which
Dec. 31.
Total. Nov. 10,1915. entitled.

98
14
137
104
81
74

$27,681,520
13,220,000
31,307,500
13,961,600
12,676,050
12,450,000

16,622
7,932
18,813
8,383
7,657
7,481

16,908
7,932
18,781
8,390
7,631
7,503

508

111,296,670

66,888

67,145

1
1

Allotments.
Short.

Allotments a t
50 per cent
{unpaid).

Over.
/
286 \

Unpaid.

$38,094.97
18,028.19
42,408.32
18,847.78
17,227.42
16,328.66

$7,618.93
3,605.61
8,481.61
3,769.52
3,445.44
3,265.68

f 3,357,250
|
\
8,450

181,122.13

150,935.34

30,186.79

/
7 \
/
22 \

Net capital stock paid in

Paid.

$45,713.90
21,633.80
50,889.93
22,617.30
20,672.86
19,594.34

315

Cumulative.

$845,400 |
300
396,600
939,050
419,500
100 \
381,550
375,150 |
3,050

Dividends.

3,353,800

Shares surrendered:
Banks (5) transferred to district No. 4.
Banks (8) liquidated

416.21
789.00

346.84
657.51

69.37
131.49

182,327.34

151,939.69

30,387.65

319
864

Total

1,183

Total dividends

SCHEDULE A8.— Undivided profits, Dec. 31, 1915.
Gross earnings:
On loans and investments (see Exhibit K)
E
h
Exchange
Deduct:
Expenses (see Exhibit L)—
Current
Organization
Cost of Federal Reserve notes issued
Depreciation, furniture, and
Net profit
Dividend declared Dec. 22,1915, at 5 per cent
Balance Dec. 31,1915

fixtures

$319,096.16
483.50
• $319,579.66
104,310.45
23,567.85
14,397.92
2,348.49
—
144,624.71
174,954.95
151,939.69
23,015.26

w
o
>
w
o

EXHIBIT B.

Analysis

of statements of condition as reported by member banks in response to call of comptroller as of Nov. 10, 1915.
RECAPITULATION OF SCHEDULES 1, 2, 3, 4, 5, AND 6.
Total resources.

Items.

Number of member banks
Loans and discounts
Bonds, securities, etc

Capital and surplus
Undivided profits
Deposits:
Demand
Time
Money borrowed
Liabilities of directors:
Direct
Indirect
Eligible paper
Profit and loss accounts, 1912,1913, and 1914
Earnings
Losses
Total resources

Under
$100,000.

$262,769.70
29,136.49
182,200.00
4,057.41

$100,000 to
$200,000.

$200,000 to
$300,000.

$4,932,841.95 $12,657,802.34
1,361,343.57
384,946.87
3,844,000.00
1,880,200.00
346,604.55
151,267.39

$300,000 to
$500,000.

$500,000 to
$2,500,000.

$2,500,000 to
$20,000,000.

107

204

Over
$20,000,000.

Total.
508

$26,998,327.19 $131,373,705.06 $171,778,235.01 $26,374,012.09 $374,375,693.34
14,421,405.90 25,389,044.14
46,014,093.53
2,103,852.36
2,324,364.20
7, 809,200.00 37,245,350.00 53,835,720.00
6,500,000.00 111,296,670.00
827,109.64
16,767,062.27
6,294,410.45
850,003.66
8,293,609.17

219,223.96
46,828.21
11,490.29

3,395,464.38
1,668,386.94
302,391.76

8,308,521.40
4,606,444.76
951,451.57

16,964,341.18
9,325,229.37
2,139,188. 77

43,625.96
54,613.78
147,000.00

408,386. 87
578,094.05
1,556,400.00

870,712.19
1,141,594.08
3,853,886.44

1,962,727.31
2,917,408.64
6,478,375.46

5,913.28
5,176.59
534,122.17

299,718.59
10,289.82
8,493,159.62

944,589.44
118,209.83
20,092,804.01

1,745,506.28
119,046.24
42,144,284.43

19,881,358.84
1,028,400.00

262,454,124.32
95,194,634.17
15,502,746.24

7,666,125.65
7,309,001.90
51,551,333.56

1,246,406.07
447,557.00
5,084,000.00

20,325,496.73
23,117,750.07
101,836,590.73

8,693,167.97 11,838,149.06
1,163,388.69
1,562,418.46
188,219,963. 84 307,840,640.38

1,389,364.18
151,413.14
45,901,780.05

24,916,408.80
3,129,942.77
613,226,754.50

87,411,539. 61 126,273,674.95
44,121,884.01 34,397,460.88
7,580,228.18
4,517,995.67
8,127,512. 68
10,669,480.62
33,165,595.27

p
o
W

og
3

SCHEDULE Bl.—MARYLAND.

Number of member banks.
Loans and discounts..
Bonds, securities, etc.
Capital and surplus...
Undivided profits
Deposits:
Demand
Time
Money borrowed

$40,521.85
17,006.28
30,000.00
2,796.28

$895,436.23
220,563.33
316,000.00
17,749.23

$2,214,175.08
922,333.75
676,500.00
60,885.26

$4,789,164.16
1,389,773.69
1,457,300.00
158,215.57

$21,559,174.84
7.722,718.53
6,106,000.00
929,534.23

$50,371,286.63
9,148,248.98
15,595,720.00
2,329,399.40

$13,573,539.45
1,626,028.76
3,500,000.00
459,096.09

$93,443,298.24
21,046,673.32
27,681,520.00

16,435.55
23,088.27

439,630.25
527,392.40
27,000.00

1,679,856.39
1,194,630.86
58,500.00

2,705,970.90
2,830,518.00
185,371.37

14,672,360.58
13,623,265.88
399,403.10

39,731,313.23
5,273,911.04
677,000.00

9,449,128.68

68,694,695.58
23,472,806.45
1,347,274.47

3,957,676.06

Analysis of statements of condition as reported by member banks in response to call of comptroller as of Nov. 10, 1915—Continued.

fcO

SCHEDULE BL—MARYLAND—Continued.
Total resources.
Items.

Liabilities of directors:
Direct
Indirect
Eligible paper
Profit and loss accounts, 1912,1913, and 1914
Earnings
Losses
Total resources

Under
$100,000.

$100,000 to
$200,000.

$200,000 to
$300,000.

$300,000 to
$500,000.

$500,000 to
$2,500,000.

$2,500,000 to
$20,000,000.

Over
$20,000,000.

Total.

$9,556.38
14,830.04
5,000.00

$79,821.10
112,406.12
243,500.00

$130,895.82
127,002.34
666,500.00

$435,347.33
692,831.42
745,000.00

$1,232,796.32
1,590,461.96
6,408,108.86

$1,983,238.38
1,100,893.30
13,895,098.30

$846,500.00
22,691.20
3,000,000.00

$4,718,155.53
3,661,116.38
24,963,207.16

2,632.90
5,176.59
96,901.18

58,878.05
384.84
1,519,958.59

153,286.56

319,539.97
12,393.86
8,273,730.85

1,396,619.06
180,045.12
38,307,894.45

2,867,636.44
685,679.26
94,073,818.08

547,969.00
92,256.77
24,298,445.68

5,346,561.98
999,490.40
170,493,358.84

23,553.96

3,922,610.01

SCHEDULE B2.—DISTRICT OF COLUMBIA.
Number of member banks
Loans and discounts
Bonds securities etc
Capital and surplus
Undivided profits
Deposits:
Time
Money borrowed
Liabilities of directors:
Direct
Indirect
Eligible paper
Profit and loss accounts, 1912,1913, and 1914:
E aroings
Losses
Total resources

::::::::::::::::

$2,534,865.89
1,027,543.25
1,190,000.00
201,946.33

$27,662,758.86
11,129,011.84
12,030,000.00
804,787.38

$30,197,624.75
12,156,555.09
13,220,000.00
1,006,733.71

2,546,095.61
808,871.58
22,528.14

27,408,440.52
5,496,526.40
439,815.25

29,954,536.13
6,305,397.98
462,343.39

219,344.48
147,659.98
245,000.00

1,815,781.55
1,073,927.80
4,930,027.42

2,035,126.03
1,221,587.78
5,175,027.42

152,334.30
2,010.73
5,589,106.04

2,484,609.82
232,729.04
60,533,967.25

2,636,944.12
234,739.77
66,123,073.29

W
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SCHEDULE B3.—VIRGINIA.

Number of member banks.
Loans and discounts
Bonds, securities, etc
Capital and surplus

Undivided profits
Deposits:
Demand
Time
Money borrowed
Liabilities of directors:
Direct
Indirect
Eligible paper
Profit and loss accounts, 1912,1913, and 1914:
Earnings
Losses
Total resources

$88,916.45
10,000.00
54,500.00
1,988.18

$1,055,948.00
70,636.53
418,000.00
15,582.79

$4,450,757.89
110,171.79
1,198,000.00
106,324.96

$8,205,241.32
366,870.24
2,258,000.00
270,971.91

81,531.13
1,845.86

891,970.18
100,774.51
68,814.71

2,663,999.47
1,387,368.70
464,332.43

5,749,750.45
2,242,563.10
550,421.74

20,334,202.16
12,613,107.10
1,575,592.06

38,566,510.60
12,217,337.95
1,473,458.60

10,432,230.16
1,028,400.00

78,720,194.15
29,591,397.22
4,132,619.54

16,004.49
10,148.65
57,000.00

73,047.33
96,617.84
429,000.00

326,338.43
431,142.52
1,468,942.19

476,993.06
741,745.36
2,751,125.46

2,025,559.64
2,263,640.59
9,462,400.00

2,003,765.85
2,506,591.80
22,861,207.84

399,906.07
424,865.80
2,084,000.00

5,321,614.87
6,474,752.56
39,113,675.49

1,828.09

48,752.89
2,879,41
1,765,097.24

301,118.45
28,724.46
6,520,886.90

554,206.75
31,576.60
12,372,288.36

1,914,752.17
223,320.90
50,421,860.19

3,760,683.91
374,362.44
91,656,204.70

841,395.18
59,156.37
21,603,334.37

7,422,737.44
720,020.18
184,506,129.55

*i66*457."79'

$24,070,946.23 $57,233,601.82
1,988,935.94
2,645,068.33
8.729,000.00 15,650,000.00
1,421,167.85
3,231,933.30

137

$12,800,472.64 $117,905,884.35
477,823. 60
5,669,506.43
3,000,000.00
31,307,500.00
390,907.57
5,441,876.56

H
O

SCHEDULE B4.—WEST VIRGINIA.

Number of member banks.,
Loans and discounts
Bonds, securities, etc

104

$5,521,435.24 $25,314,217.12 $13,947,980.08
468,484.46
1,920,936.85
1,070,019.84
1,502,500.00
6,432,600.00
4,680,000.00
114,415.80
964,641.23
535,464.25

$79,894.57
2,130.21
54,200.00

$1,392,619.56
84,534.67
574,300.00
43,193.41

$2,422,085.78
213,515.21
718,000.00
59,783.07

80,396.42
12,879.69
1,490.29

1,079,114.56
493,517.61
69,007.50

1,708,478.71
820,987.38
85,281.40

3,575,538.24
2,389,558.67
183,653.78

18,858,270.98
7,458,476.52
843,167.23

8,844,964.53
5,625,787.68
162,400.00

34,146,763.44
16,801,207.55
1,345,000.20

13,524.37
21,967.68
70,000.00

122,299.46
185,111.96
315,400.00

107,321.75
216,172.12
304,276.38

388,244.46
562,045.58
469,250.00

1,487,793.89
2,221,508.68
2,992,801.63

776,156.09
1,079,183.47
3,175,000.00

2,895,340.02
4,285,989.49
7,326,728.01

1,452.29

88,139.34
4,164.80
2,690,503.85

193,761.40
11,882.05
3,805,807.20

324,744. 70
37,302.33
8,830,130.87

1,655,611.46
280,116.04
39,318,164.22

1,096,333.49
122,532.49
22,441,380.25

3,360,042.68
455,997.71
77,236,304.86

$48,678,232.35
3,759,621.24
13,961,600.00
1,716,758.93

Analysis of statements of condition as reported by member banks in response to call of comptroller as of Nov. 10,

1915—Continued.

to
Or

SCHEDULE B5.—NORTH CAROLINA.
Total resources.
Items.

Under
$100,000.

$100,000 to
$200,000.

Number of member banks..

$200,000 to
$300,000.
11

Loans and discounts
Bonds, securities, etc
Capital and surplus
Undivided profits
Deposits:
Demand
Time
Money borrowed
Liabilities of directors:
Direct
Indirect
Eligible paper
Profit and loss accounts, 1912,1913, and 1914:
Earnings

$5,834.34

Total resources..

36,181.84

$556,425.30
2,121.57
173,300.00
41,421.25

$300,000 to
$500,000.

$500,000 to
$2,500,000.

$2,500,000 to
$20,000,000.

Over
$20,000,000.

Total.

$3,848,700.85 $28,800,484.05 $11,771,420.29
946,771.37
374,034.90
54,142.92
7,839,750.00
3,130,000.00
938,600.00
1,598,391.38
591,912.38
98,833. 70
2,478,794.70 21,044,167.56
7,317,930.61
931,117.26
4,729,051.16
1,684,748.26
589,215.97
2,847,262.10
446,800.00

$46,664,279.84
1,454,658.58
12,676,05.00
2,377,925.21

13,000.79
3,211.57

258,972.49
290,128.17
65,604.12

$1,681,415.01
77,587.82
576,500.00
47,351.75
1,165,364.12
501,645.37
133,533.35

3,500.00

43,665.00
92,597.00
147,000.00

179,010.37
263,746.03
475,000.00

301,129.44
585,750.03
1,117,000.00

1,736,097.99
2,908,429.68
7,579,500.00

712,897.61
1,096,247.79
3,475,000.00

2,976,300.41
4,946,770.53
12,793,500.00

28,030.15
2,277.45
858,133.22

204,897.64
45,614.21
2,827,230.28

251,652.16
13,417.96
5,872,246.14

2,064,284.47
264,741.88
44,330,675.65

914,944.32
45,407.56
19,731,359.69

3,463,808.74
371,459.06
73,655,826.82

17,900.00
14.75

32,278,230.27
8,139,901.79
4,082,415.54

H
O

SCHEDULE B6.—SOUTH CAROLINA.
Number of member banks.
Loans and discounts
Bonds, securities, etc
Capital and surplus
Undivided profits
Deposits:
Demand
Time
Money borrowed
Liabilities of directors:
Direct
Indirect
Eligible paper
Profit and loss accounts, 1912,1913, and 1914:
Earnings
Losses
Total resources

$1,0327412.86
7,090.77
398,600.00
33,320.71

$1,889,368.58
37,735.00
675,000.00
72,259.51

$4,631,785.62
45,092.89
1,652,800.00
184,672.66

$19,094,016.93
814,499.96
6,948,000.00
1,178,729.43

$10,791,187.33

11
$47,602.49

797,112.46

$37,486,373.81
1,927,078.87
12,450,000.00
2,266,091.80

27,860.07
5,802.82
10,000.00

725,776.90

256,574.25
71,965.43

1,090,822.71
701,812.45
209,804.39

2,454,286.89
931,472.34
630,525.91

9,956,442.72
4,889,111.77
1,892,275.55

4,404,515.46
4,099,149.55
1,318,521.82

18,659,704.75
10,883,923.18
4,133,093.10

1,040.72
7,667.41
15,000.00

89,553.98
91,361.13
421,500.00

127,145.82
103,531.07
939,167.87

361,013.02
335,036.25
1,396,000.00

1,425,920.36
1,537,779.73
6,477,784.78

374,286.17
452,157.74
3,215,000.00

2,378,960.07
2,527,533.33
12,464,452.65

84,262.89

75,918.16
583.32
1,659,466.72

91,525.39
8,435.15
3,016,269.62

295,362.70
24,355.49
6,795,888.21

1,509,566.51
213,154.02
10,252,263.29

713,941.08
101,707.67
19,403,910.41

2,686,313.84
348,235.65
41,212,061.14

25,600.00
2.97

1,022,660.25
2,750,000.00

W
O

EXHIBIT C.

Maximum rates of interest paid on deposits, reported by member banks in response to call of comptroller as of Nov. 10, 1915.
District of Columbia.

Maryland.

West Virginia.

Virginia.

North Carolina.

South Carolina.

Total banks.
Rates.

Rates.
Demand. Time. Demand. Time. Demand. Time. Demand.
Not stated
None.
2 per cent
2.25 per cent
2.5 per cent
3 per cent
3 125 per cent
3.5 per cent
3.625 per cent
3.75 per cent
4 per cent

1
27
9
1
8
30
12
1
1
9

5 per cent

26
1
9

1
5

1
10

2
55

1
42

5
1
2

35
1

44
1

Demand.

3
28

67
1

59
1
1

5 5 per cent
6 per cent
Total banks

Time.

Time. Demand. Time. Demand. Time.
3
25

26
1
3

34
3
4

28
2
10
1
1

137

104

21
3
36

4
143
1
18
1
11
147
1
15
1
1
141
6
14
1

2
1

508

4
97
1
100
1
12
1
228
5
48
1
10
508

Not stated.
None.
1 per cent.
2 per cent.
2.25 per cent.
2.5 per cent.
3 per cent.
3.125 per cent.
3.25 per cent.
3.5 per cent.
3.625 per cent.
3.75 per cent.
4 per cent.
4.5 per cent.
5 per cent.
5.26 per cent.
5.5 per cent.
6 per cent.
8 per cent.

Total banks.

I
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EXHIBIT D.

Loans, daily average balances.
RECAPITULATION OF SCHEDULES Dl AND D2.
1914

1915

Whole period.
Nov.16-Dec.31. Jan. 1-Mar. 31. Apr. 1-June 30. J u l y 1-Sept. 30.

Collateral loans:
Agricultural productsNotes
Trade acceptances .
Commodity
Total

Live stock—Notes
MerchandiseNotes
Trade acceptances
Total
Total collateral loans

Oct. 1-Dec. 31.

Year 1915.

$182,094

$440,861

$463,380
819
5,304

$118,782
2,902
1,138,493

$301,550
938
288,299

$267,150
831
255,410

182,094

440,861

469,503

1,260,177

590,787

523,391

12,886

24,265

24,271

11,110

18,145

16,075

4,063

11,803

23,655
1,195

20,775
4,946

15 144
1,548

13,415
1,371

4,063

11,803

24,850

25,721

16,692

14,786

199,043

476,929

518,624

1,297,008

625,624

554,252

6,155,861
56,467
27,534

5,524,142
50,025
24,392

Unsecured:
Notes
Trade acceptances
Bankers' acceptances

$618,221

4,510,813

6,582,372

7,760,569
61,968
9,782

5,738,568
162,059
99,457

Total

618,221

4,510,813

6,582,372

7,832,319

6,000,084

6,239,862

5,598,559

Grand total

618,221

4,709,856

7,059,301

8,350,943

7,297,092

6,865,486

6,152,811

618,221

4,709,856

7,059,301

8,271,871
63,986
9,782
5,304

5,889,235
169,907
99,457
1,138,493

6,490,700
58,953
27,534
288,299

5,820,782
52,227
24,392
255,410

618,221

4,709,856

7,059,301

8,350,943

7,297,092

6,865,486

6,152,811

Classification:
Notes
Trade acceptances
B ankers' acceptances
Commodity
Grand total

3w
o
>

SCHEDULE Dl.—LOANS HYPOTHECATED WITH FEDERAL RESERVE AGENT AGAINST FEDERAL RESERVE NOTES ISSUED, DAILY AVERAGE
BALANCES.
Collateral loans:
Agricultural productsNotes
Trade acceptances
Commodity

$71,864

$294,675

$328,454
546
4,046

$91,439
2,902
1,053,753

$197,023
869
266,623

$174,547
770
236,207

Total

71,864

294,675

333,046

1,148,094

464,515

411,524

Live stock—Notes

10,048

16,537

20,948

8,995

14,148

12,534

250

7,295

18,051
1,142

18,069
4,946

10,985
1,534

9,731
1,359

250

7,295

19,193

23,015

12,519

11,090

82,162

318,507

373,187

1,180,104

491,182

435,148

2,021,921

4,678,072

6,217,454
51,402
9,782

4,564,300
127,562
51,087

4,382,463
45,109
15,342

3,928,663
39,963
13,592

MerchandiseNotes
Trade acceptances
Total
Total collateral loans
Unsecured:
Notes
Trade acceptances
Bankers' acceptances

$404,473

Total

404,473

2,021,921

4,678,072

6,278,638

4, 742,949

4,442,914

3,982,218

Grand total

404,473

2,104,083

4,996,579

6,651,825

5,923,053

4,934,096

4,417,366

404,473

2,104,083

4,996,579

6,584,907
53,090
9,782
4,046

4,682,803
135,410
51,087
1,053,753

4,604,619
47,512
15,342
266,623

4,125,475
42,092
13,592
236,207

404,473

2,104,083

4,996,579

6,651,825

5,923,053

4,934,096

4,417,366

Classification:
Notes
Trade acceptances
Bankers' acceptances
Commodity
Grand total

2
o

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o

to
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CO

Loans, daily average balance—Continued.

SCHEDULE D2.—LOANS NOT HYPOTHECATED, DAILY AVERAGE BALANCES.
1914

1915

Whole period.
Nov.16-Dec.31. Jan. l-Mar.31. Apr. 1-June 30.

Collateral loans:
Agricultural productsNotes
Trade acceptances
Commodity

$134,926
273
1,258

$27,343

146,186

2,838

7,728

3,813

4,508

$110,230

$146,186

110,230

Live stock—Notes
Merchandise—•
Notes
Trade acceptances

Total

Julyl-Sept.30. Oct. 1-Dec. 31.

Year 1915.

84,740

$104,527
69
21,676

$92,603
61
19,203

136,457

112,083

126,272

111,867

3,323

2,115

3,997

3,541

5,604
53

2,706

4,159
14

3,684
12

3,813

4,508

5,657

2,706

4,173

3,696

116,881

158,422

145,437

116,904

134,442

119,104

$213,748

2,488,892

1,904,300

1,543,115
10,566

1,174,268
34,497
48,370

1,773,398
11,358
12,192

1,595,479
10,062
10,800

Total

213,748

2,488,892

1,904,300

1,553,681

1,257,135

1,796,948

1,616,341

Grand total

213,748

2,605,773

2,062,722

1,699,118

1,374,039

1,931,390

1,735,445

213,748

2,605,773

2,062,722

1,686,964
10,896
1,258

1,206,432
34,497
48,370
84,740

1,886,081
11,441
12,192
21,676

1,695,307
10,135
10,800
19,203

213,748

2,605,773

2,062,722

1,699,118

1,374,039

1,931,390

1,735,445

Total
Total collateral loans
Unsecured:
Notes
Trade acceptances
Bankers' acceptances

Classification:
Notes
Trade acceptances
Bankers' acceptances
Commodity. /.
Grand total

ft
O
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O

ft
ft

o
>

DISTRICT NO. 5

261

RICHMOND.

Loans, daily average balance—Continued.
SCHEDULE D3.—LOANS AND INVESTMENTS.
L oans
19
Thousands NOV. DEC
9000

JAM.

FEB.

and

Inwsimenis
1915

MCH. APR. MAY

t/VXE

AUG.

esoo

SEPT. OCT.

DEC.

TV/"-'"

6.000.

7.500.

WOO.

/"'

6.500.

6,000.

L.-7
\

%/**

BAICES.J)EC. 31.1915
i
y

5.000.
/

HO0O,

ills and Notes $W7*. 76¥. 60
^mmodity*'
ZWU26.90
radrAcceplances
22V.97206
Eankers Accptns. 150.000.
^ ~ — V Warrants
8Z271.76

7.000.
6500.
6.000.

¥.500.
¥.000.

ToMljMn^y YY33.13/ 32

1500.

8000.^ ^

/ "1/ 75OO. "

l wt>

Thousands
9000
8.500.

3.500.
3.000.

3000.
!

Z500.
/'

2.000.

ZJOOO

1.500.

1.000.
500.

1.000.

full CJtSSifiction setup Sept. 20'*

500.

to
o
to

EXHIBIT E.

Discount rates current from Nov. 16, 1914, to Dec. 31, 1915.
Agricultural
paper
only.

Commercial paper.
Date
effective.

Commodity
paper.

Trade acceptances.

31 From 61 From 91 Maturity Maturity From 61
Maturity From
to 90
to 90
to 60
days to 6
30 days.
days. months. 90 days. 60 days.
days.
days.

Agricultural
paper
only.

Commercial paper.
Date
effective.

Commodity
paper.

Trade acceptances.

31 From 61 From 61 Maturity Maturity From 61
Maturity From
to 60
to 90
days to 6 90 days. 60 days.
to 90
30 days.
months.
days.
days.
days.

r1
o

1914.
Nov. 16
Dec. 2
Dec. 17
Dec. 28

6
6

6
6
6
51

6
6
6
6

5
4i
4|
4
4
4

4
4

41
4*
42

?
5
5
5
5

O
CO CO

1915.
Jan.8

1915.
Jan. 14
Jan 27
Feb.19 . . .
June 25
Sept. 15
Oct. 21

4
4

W
O

EXHIBIT F.
Loans distributed as to member banks accommodated.
[T=transactions; B=banks.]
1914.

1915.

Total period.
Jan. 1-Mar. 31.

Nov. 16-Dec. 31.

July 1-Sept. 30.

Apr. 1-June 30.

Oct. 1-Dec. 31.

Balance
under
discount,
Dec. 31,
1915.

B . T.

Maryland
District Columbia.
Virginia
West Virginia
North Carolina
South Carolina...
Total

1
2
11
4
28
22

1
2
18
5
65
57

68 148

Amount.
$25,610.00
254,706.10
141,839.97
80,236.51
1,023,923.06
658,431.41

1
3
2
6
42 158
9 19
45 291
42 235

Amount.

$77,843.82
390,719.71
2,567,380.20
171,702.80
4,339,966.41
3,178,678.55

3
1
51
17
49
48

12
3
275
49
361
356

$136,703.73
312,128.77
2,601,607.93
398,401.16
3,371,399.54
3,931,086.58

6
1
60
16
48
52

21
1
366
53
410
364

$196,232.89
184,305.95
3,194,776.13
464,138. 27
4,008,632.88
3,917,098.40

8
3
52
15
46
48

25
5
263
48
400
359

$263,432.32
441,362.98
2,494,637.45
261,989.58
4,235,656.57
4,001,488.12

Amount.

11
62
$699,822.76 $234,040.53
4
17 1,583,223.51
303,685.27
72 1,080 11,000,241.68 1,435,385.11
174 1,376,468.32
26
165,344.95
56 1,527 16,979,578.46 2,808,178.49
57 1,371 15,686,783.06 2,704,231.21

2,184,747.05 141 712 10,726,291.49 169 1,056 10,751,327^71 183 1,215 11,965,184.52 172 1,100 11,698,567.02 226 4,231

E
o
1-3

47,326,117.79 7,650,865.56

2,184,747.05
2 68 148
2
226 4,083 *45,141,370.74

1914
1915

i Includes $250,000 of bankers' foreign trade acceptances.

2 All members discounting in 1914 again discounted in 1915.

o
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OS
00

264

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.
EXHIBIT G.
JYet Deposits an<3 jResen ~es

MILLIONS
15

J9I4NOV. DEC:

FEB.

JAN.

MC/I.

APR.

MAY

I9IS
t/tWS <ivzr

Al/G.

MILLIONS
SEPT.

OCT.

JVOV: DEC.

J3fi56.351.65)
13'

(lA

12
11

12
It

9
Q

T
6

V
'

\ A?J

7
6

"•-

¥
3

1
/ Deposit
•---Jieservee after deducting 40%aya ins* Reserve Note

EXHIBIT H.
MILLIONS
17

Federal Itesei rn? JVb/es

1914
NOV. DEC.

JAM

FEB.

MCH.

APL.

•MAT

MILLIONS

1915
t/UTfE

AITG.

SEPT.

OCT.

JfOK

15,63'0,000.)

15
i

15
/*>

13
12
it

..J

7
6

y
^ /

3
2

•

< ^ ;

„

J..

^
- Issued io B«nk
"lnhands) of Federal Reserve Ayent

| \

2 o^o
ft fSA

EXHIBIT I.

Federal Reserve notes (receipts, redemptions, issues, and hypothecated collateral therefor).
Units (denominations).
Period.

Nov. 16-Dec. 31,1914:
Received from comptroller
Issued to bank
Jan. 1-Mar. 31.1915:
Received from comptroller
Issued to bank . .
Apr. 1-June 30,1915:
Received from comptroller
Issued to bank
July 1-Sept. 30, 1915:
Received from comptroller
Issued to bank
Oct. 1-Dec. 31,1915:
Received from comptroller
Issued to bank
Notes received from bank—gold in redemption
Total to Dec. 31, 1915
Received from comptroller
Received from bank (redeemed)
Total received
Issued to bank
Balance Federal Reserve Agent

$10

$20

$50

280,000
48,000

60,000
23,000

48,000
16,000

124,000

60,000
75,000

24,000
46,500

20,000
14,000

100,000
184,000

72,000
73,000

48,000
51,500

8,000
14,000

220,000
224,000

100,000
121,000

44,000
42,000

360,000
358,000
22,000

196,000
207,000
20,000

72,000
78,000
17,000

Total.
$100

Pieces.

Values.

Loans hypothecated.
Received.

Delivered.

Gold received
for redemption
of Federal Reserve notes.

388,000
87,000

$2,960,000
790.000

$937,055.78

$146,646.07

8,000
3,100

112,000
262,600

2,880,000
3,310,000

6,026,436.01

2,713,985.12

2,700

228,000
325,200

2,580,000
3,650,000

9,147,228.48

7,926,750.74

$2,550,000

8,000
3,400

700

372,000
391,100

3,380,000
3,410,000

12,269,811.57

10,985,220.85

2,050.000

1,600
5,200

200
1,400

628,000
644,800
65,600

5,200,000
5,520,000
1,050,000

11,667,953.85

12,055,469.00

6,000,000
1,050,000

40,048,485.69

33,828,071.78

960,000
22,000

488,000
20,000

236,000
17,000

36,000
5,200

8,000
1,400

1,728,000
65,600

17,000,000
1,050,000

982,000
938,000

508,000
499,000

253,000
234,000

41,200
33,000

9,400
6,700

1, 793,600
1,710,700

18,050,000
16,680,000

44,000

9,000

19,000

8,200

2,700

82,900

1,370,000

CO
1-3

g
O

115,630,000.00
6,220,413.91

T
I—I

o
W
9,550,000
9,550,000

i Net issue of notes to bank.

EXHIBIT J.

Capital stock allotments.
District of Columbia.

Maryland.

Original allotment of October, 1914 (addenda
inclusive)
Additional allotments on increased capital or
surplus
Reductions on decreased capital or surplus
Net of original members
Allotments to new members
Cancellations—members liquidating
Transfers to Cleveland district .
. .
Net balances Dec 31,1915

West Virginia.

Virginia.

North Carolina.

South Carolina.

Banks.

Shares.

Banks.

Shares.

Banks.

Shares.

Banks.

Shares.

Banks.

Shares.

Banks.

101

16,606

7,856

134

18,181

107

8,589

7,344

637
14

17,229

7,932

321

16,908

7,932

5
2

18,813
202
234

137

18,781

Shares. Banks.

6,099

268
26

130
123

4
2
5

8,831
157
279
319

7,351
310
30

i7"

6,259
1,244

104

8,390

7,631

7,503

653
21

Total.

487

Shares.

j
ej
>

64,675
d

1,928
188

o
w

34
8
5

66,415
1,913
864
S19

H
O

508

67,145

164

W
O

EXHIBIT

Earnings on loans, including municipal warrants and bankers' acceptances purchased.
o

- •

Daily averages.1

Paper handled.

Period.

Discount.

Extra earnings on loans.
From
minimum
charges.

From
From
anticipated rebates at
payments. lower rates.

Total
earnings.

Rate
(earned).

Collected.

Rebated.

$618,221.00

5.8450

$17,657.87

$4.22

$4,717.68

$5.51

$6.31

64
89
95
84

4,721,944.00
7,060,383.00
8,350,946.00
7,330,156.00

5.0003
4.6449
4.4763
4.0756

79,920.63
92,615.24
85,110.48
73,905.83

562.13
562.07
768.68
847.33

59,044.86
82,898.26
95,531.71
76,346.66

14.46
7.85
39.18
42.81

61.85
32.35
70.46
135.47

$31.19
12.22
53.05
44.28

59,152.36
82,950.68
95,694.40
76,569.22

45,260,603.85

6,877,078.00

4.5008

331,552.18

2,740.21

313,821.49

104.30

300.13

140.74

314,366.66

47,445,350.90

6,163,081.00

4.5161

349,210.05

2,744.43

318,539.17

109.81

306.44

140.74

319,096.16

Pieces.

Amount.

1,327

$2,184,747.05

Jan. l-Mar.3 1
Apr. 1-June 30
July 1-Sept. 30..

5,809
8,089
8,798
7,745

10,763,252.84
10,751,327.71
11,965,184.52
11,780,838.78

1915

30,441

Whole period

31,76&

Pieces.

Balance.

Earned.

i—»

oo
1914.
Nov. 16-Dec. 31

$4,729.50

1915.

Oct.l-Dec.31

Based upon number of days actually elapsed.

a
W
o

EXHIBIT L.

Analysis of expenses.
1914

1915

Nov. 16-Dec. Jan. 1-Mar.
31.
31.
Current:
Federal Advisory Counsel
Assessment Federal Reserve Board expensi
Directors' fees
al
?
Officers
Clerical staff
Watchmen
Other
Traveling expensesDirectors
Officers and clerks
Federal Reserve Agents' conferences.
Governors' conferences
Per diem allowances, directors
Telephone
Telegraph
Expressage
Rent (including outside vaults).
Fidelity Insurance
Light, heat, and power
Printing and stationery
Repairs and alterations
Miscellaneous
Total.
Organization:
Carried from current
General expenses Federal Reserve Board..
Total

Total.

Apr. 1-June July 1-Sept.
30.
30.

Oct. 1-Dec.
31.

Total calendar year
1915.

Nov. 16-Dec. Nov. 16,194431,1914.
Dec. 31,1915.

$47.70

$25.16

$16.44

920.00
62.50

60.00
437.50

"i,3"66.66

$16.09
3,354.90
820.00
503.62

$28.90
3,354.90
1,080.00

$86.59
6,709. 80
3,260.00
941.12

920.00
62.50

$134.29
6,709.80
4,180.00
1,003.62

4,783.32
2,591.66
20.00
180.50

6,032.06
4,739.97
266.44
350.00

5,687.49
5,433.31
400.00
300.00

6,883.29
6,412,07
200.00
309.25

7,374.95
8,150.83
160.02
430.25

25,977.79
24,736.18
1,026. 46
1,389.50

4,783.32
2,591.66
20.00
180.50

30,761.11
27,327.84
1,046. 46
1,570.00

742.38
70.50

90.03

710.57
179.02

378. 47
68.70

67.73
318.79
90.00
82.11
120.57
501.28
919.75
464.59
831.38
180.69
613.69
835.63
478.10

118. 71
790.00
71.61
28.32
638.88
1,114.34
2,125.00
64.62
130.00
598.56
879.91
780.66

257.72
380.00
73.24
26.73
698.25
779.28
1,000.00
16.54
90.76
1,482.66
44.06
645.94

1,951.07
454.70
201.76
850.98
1,880.00
305. 77
270.70
2,910.93
2,712.23
5,822.92
1,862.24
672.10
4,038.80
1,780.15
1,677.97

742.38
70.50

27.17
670.00
41.66
72.01
367.19
208.98
891.66
103.47
71.83
311.61
285.71
320.84

772.00
206.98
134.03
155.76
620.00
78.81
95.08
1,072.52
1746.34
645. 20
2,233.33
949.70
270.65
1,343.89
20.55
11.287.64
1,060.91

27.17
670.00
41.66
72.01
367.19
208.98
891.66
103.47
71.83
311.61
285.71
320.84

2,693.45
525.20
201.76
878.15
2,550.00
347.43
342. 71
3,278.12
2,921.21
6,714.58
1,965.71
743.93
4,350.41
2,065.86
1,998.81

12,790.69

17,505.47

21,367.44

24,441.57

28,205.28

91,519.76

12,790.69

104,310.45

6,485.98
2,311.19

5,139.70
9,244.74
14,384.44

386.24

5,525.94
9, 244.74

6,485.98
2,311.19

12,011.92
11,555.93

386.24

14,770.68

8,797.17

23,567.85

8,797.17

$47.70

a
w
r

Cost of Federal Reserve notes
Less value of unissued notes (asset carried forward)
Net expense
Equipment
Less asset carried forward
Depreciation
Total expense

9,219.54

2,346.64

9,219.54

2,346.64

821.07

4,033.57
2 3,500.00

5,945.07
2 5,500.00

5,024.11
i 2,033.98
2 5^ 368.34,|

1,141.99
582.53
2 250.00

22,546.72
17,368.34

9,219.54

31,766.26
2 17,368.34

1,689. 75

5,178.38

9,219.54

14; 397.92

466. 25
2 250.00

11,027.42
9,500.00

821.07

2 11,848.49
2 9,500.00

821.07

533.57

445.07

332. 53

216. 25

1,527.42

821.07

2,348.49

31,628.47

34,770.12

22,198.75

25,916.09

30,112.28

112,996.24

31,628.47

144,624.71

i Adjustment of expressage, etc., on Federal Reserve notes from Washington.

13,141.99
f
2 12,000.00 \

Distribution as to periods is arbitrary.
GO

B
Q

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g
o

270

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.
EXHIBIT M.

Commodity paper handled to Dec. 31, 1915.

September
October
November
December
Total

46
286
826
501
1,659

Collateral
(cotton),
bales.

Amount.

CO CO CO CO

Pieces. Rate.

$96,034.00
364,421.17
1,523,388.32
897,644.72

2,596
9,626
33,379
20,621

2,881,488.21

66,222

NOTE.—Average of loans to bale, $43.51.
EXHIBIT N.

Clearance operations.
Number of members in collection system, Dec. 31,1915

Maryland
District of Columbia
Virginia
West Virginia
North Carolina
South Carolina

18
3
29
5
10
26

OPERATIONS OF T H E CLEARANCE SYSTEM SINCE ITS ESTABLISHMENT, JUNE 8, 1915.

Items
Daily average
Amount
Daily average

On Richmond.

Other Federal reserve
cities.

Country.

67,385
290
$82,496,600
$476,800

13,670
79
$76,896,000
$444,500

488,091
2,821
$78,484,700
$453,700

Total

569,146
3,290
$237,877,300
$1,375,000

The department has a manager and five assistants.
Direct cost of operation since June 8, 1915 (salaries, postage, and stationery), $3,500.
Average cost per item handled, six-tenths of 1 cent, exclusive of bookkeeping and overhead charges.
EXHIBIT O.

Data assembled from
Gross resources of member banks
Amount of paper discounted (including warrants)
Number of notes discounted
Total loans and investments Dec. 31,1915
Average loan line during period of operation
Average per cent discount rate charged
Average maturity in days of all paper now in discount line
Commodity paper discounted, all on cotton (66,222 bales)
Number of member banks granted discounts
Number of accepted offerings
Number of banks in clearance system
Average number items daily
Average amount cleared daily
Items cleared since June 8,1915
Aggregate amount of items cleared
Officers
Other employees
Total

exhibits.
$613,226,754.00
$47,445,350.90
31,768
$7,733,137.32
$6,152,811.00
4.5161
33
$2,881,488.21
226
4,231
91
3,290
$1,375,000.00
569,146
$237,877,300.00
4
26
30

DISTRICT NO. 6—ATLANTA.
M. B. WELLBORN, Chairman and Federal Reserve Agent.

OFFICE OF FEDERAL RESERVE AGENT.

As chairman of the board of directors and Federal Reserve Agent since the opening
of the bank, on November 16, 1914, my entire time has been devoted to the duties
of my office. I have been assisted in the general routine work of the office by my
secretary, Mr. Jos. M. Slattery.
In addition to receiving collateral incident to the issuance of Federal Reserve
notes, work is occasioned by deposits of gold to reduce liability for outstanding circulation; and on account of the large amount of agricultural paper handled, with
cotton receipts attached, there is a daily transaction in substitution of collateral,
necessitated by the sales of cotton and withdrawal of cotton receipts pledged.
The total note issue of our bank up to this date, December 31, 1915, amounts to
$18,950,000, and by comparison with the issue of other Federal Reserve Banks it is second
in amount, and stands first in amount, taking into consideration the proportion of
our capital stock to that of other Federal Reserve Banks. This proportionately large
issue of our bank is due to the fact that a great deal of currency is required for
use in moving the cotton crop, which currency prior to the establishment of the
Federal Reserve Bank was obtained by the member banks from reserve cities. Our
bank being within a short distance of each member bank, the difference in the cost of
shipping, either by mail or express, constitutes quite a saving in expense and also a
great convenience, since the banks are able to get the currency in much less time.
Against the issue of Federal Reserve notes I am holding $4,751,245.69 in collateral,
being commercial paper rediscounted by the member banks with the Federal Reserve
Bank of Atlanta. In addition to this collateral the Federal Reserve Board holds
to the credit of the Federal Reserve Agent at Atlanta $14,200,000 in gold transferred
from the gold settlement fund.
EARLY ORGANIZATION OF THE BANK.

At the organization of the bank, owing to the depression throughout the United
States due to the European war, business within the sixth Federal reserve district
was almost paralyzed; the cotton crop was in process of marketing, and Europe, no
longer a purchaser, had previously absorbed more than one-half of this product.
The banks and merchants were, of course, unable to make their usual collections,
and business was in a chaotic state. The decision of the Federal Reserve Board to
have the Federal Reserve Banks open for business on November 16, 1914, greatly
restored confidence, so that by the time the Federal Reserve Bank of Atlanta opened,
the member banks did not find it necessary to offer us rediscounts to any great extent.
In addition thereto, the member banks in our district had obtained Aldrich-Vreeland
emergency currency to the extent of $22,000,000, and had taken advantage of the
lower rates offered by the banks in the large financial centers, as the result of the
establishment of the Federal reserve system.
271

272

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

The physical organization of the Federal Reserve Bank was similar to that of any
other pioneer movement, and consisted simply in working out the details as they presented themselves. The $22,000,000 of Aldrich-Vreeland currency obtained by the
member banks of this district had served to tide over the credit necessities of the district for several months prior to the opening of our bank. The difficulties experienced
in the early operation of the Federal Reserve Bank were due largely to lack of a thorough knowledge of the intent and meaning of the Federal Reserve Act and of the class of
paper eligible for rediscount. The solution of these problems involved much correspondence with the member banks. Another question involved was the difficulty in
obtaining uniform warehouse receipts and insurance sufficiently specific to identify
the product pledged. This problem has been practically solved.
At points of concentration where the movement of cotton is too rapid to permit of the
deposit of receipts with this bank, custodians have been appointed, under adequate
bond, to hold and exchange the securities supporting paper rediscounted with this
bank. The prevailing custom of loans to cotton merchants on demand paper gave rise
to the necessity of rebating on paper withdrawn before maturity, in order to allow the
unhampered sale of the commodity previously pledged.
The effect of the work of the Federal Reserve Bank has been to reduce the rates
of rediscount; to give the member banks the assurance of a place of rediscount at
reasonable rates, and the knowledge that they could obtain currency when needed.
It has stabilized the value of the commodities of the district; the quality of loans by
member banks is much improved; bankers are requiring better paper—paper that
will be liquidated at maturity—with a view to eligibility at the Federal Reserve
Bank.
Of the member banks in the district 49 are borrowing from their correspondents
and have not applied for rediscount with this bank. To these banks I addressed
the following letter:
" I n analyzing the credit needs and conditions of member banks in this district
we notice from your last report of condition to the comptroller that you are using
outside funds.
" Inasmuch as you have never availed yourselves of the rediscount facilities of the
Federal Reserve Bank of Atlanta, we are anxious to ascertain if there be any specific
reason for your not allowing this institution to serve you in this capacity.
"We are desirous of having the thorough cooperation of the member banks, and
would be glad to have a frank expression from you along this line."
With one exception, nearly all of the banks to whom the above letter was addressed
express no dissatisfaction with the Federal Reserve Bank. Some state they prefer
to borrow in New York, as heretofore, believing it involves less trouble, while others
say they can obtain a lower rate in New York than they can with us, the one exception
stating that the Federal Reserve Bank should, in their opinion, accept paper of any
character when offered by a member bank.
INTERNAL ORGANIZATION OF THE BANK.

A complete set of by-laws was adopted by our board of directors at its first meeting,
a copy of which is hereto attached. By referring to the powers and duties of the
executive committee, it will be noted that the management or administration of the
bank is largely left with this committee. The said committee is composed of the
governor, who is chairman of the committee, the Federal Reserve Agent, and one
director. The directors serve in monthly rotation, being selected by the board of
directors at its regular monthly meetings. Thus the governor of the bank and the
Federal Reserve Agent are in continuous service on this committee. This plan
works admirably, and the whole committee is in thorough touch with the workings of
the bank. The executive committee meets daily for the consideration of all discounts

DISTRICT NO. 6—ATLANTA.

273

offered by member banks. When the director serving on the committee lives some
distance out of town and is unable to attend the daily meetings of the executive
committee, he usually selects a director who lives in Atlanta, or very close by, to act
in his stead.
The official staff of the bank is composed of the following:
Salary.
Governor
$9,000
1
Secretary (acts only at board meetings)
25
2
Deputy secretary
Cashier
3, 600
Assistant cashier
2, 500
Manager credit bureau
2, 400
Auditor
2,400
Discount clerk
1, 800
The discount clerk has a staff of clerks with salaries ranging from $480 to $1,200
per annum.
Including this staff of clerks and officers, the total number of employees is 27. Our
bank having to handle so large a number of rediscounts., the force is constantly at
work, frequently into the night, during the autumn and winter seasons.
DEPUTY FEDERAL RESERVE AGENT.

When it is necessary for the Federal Reserve Agent in Atlanta to be absent from the
city for a week or more, he so advises the deputy Federal Reserve Agent, in writing,
requesting him to serve in the interim as Federal Reserve Agent. For such services
he is allowed the same compensation, per diem, as that received by the Federal
Reserve Agent.
Other than this, the deputy Federal Reserve Agent in Atlanta has no specific
duties, and receives no compensation, except the duties and compensation of a regular
director, serving as a member of the board of directors and as a member of the executive
committee.
DEPUTY GOVERNOR.

At the time of the organization of this bank a deputy governor was elected to serve
without compensation, but in view of the ruling of the Federal Reserve Board as to
the ineligibility of member bank officials serving as deputy governor of this bank,
our board of directors, at their meeting on June 11, 1915, in accepting the resignation of the deputy governor, voted not to select a deputy governor (an active
deputy governor being unnecessary); and further voted that the director serving on
the executive committee, each month, be designated governor pro tempore and to act
as governor during the absence of the governor of the bank. For such services, as
governor, he receives the same compensation allowed the governor.
BOARD OF DIRECTORS.

The" board of directors meets once a month, and during the first year of the board's
existence it was found necessary to remain in session two consecutive days at each
meeting; but beginning with the second year a session of one day's duration has been
found sufficient. While the class A and class B directors are in closer touch with
the viewpoint and affairs of the member banks, the class 0 directors are no less attentive to the welfare of the banking interests of the district, and, their positions
being appointive, probably act with a little more independence than the other
directors.
1

Per month.

* The deputy secretary receives a salary as secretary to the Federal Reserve Agent.

274

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.
EXECUTIVE COMMITTEE.
LOANS AND DISCOUNTS.

In the early days of the operation of our bank it was feared that some difficulty
would be experienced in handling the rediscounts offered by member banks—a
fear relieved by experience. The executive committee, in handling the offerings of
constantly borrowing banks, are as considerate of them as is consistent with safety and
prudence; but notes are frequently returned for various reasons, the most prominent
of which are:
I.
II.
III.
IV.
V.

Ineligibility.
A too distant maturity.
Continued renewal.
Poor mercantile ratings, or other unfavorable information.
A too liberal line of credit extended to customer.

The Federal Reserve Bank of Atlanta has, since its opening, discounted 22,011
pieces of paper amounting to $32,882,671.12. This large volume of discounts necessarily requires close and steady work, as our executive committee examines carefully
each day the condition of the borrowing banks, and each piece of paper offered for
rediscount; also the volume of the member bank's transactions with the Federal
Reserve Bank of Atlanta, including the average balance maintained, date of the
first offering, maximum accommodation extended, date of liquidation, if any, maximum accommodation subsequently extended, amount outstanding, proportion of
paper secured by collateral, and pending maturities.
This bank has not deemed, it wise, except at its New Orleans branch, to engage in
open market operations to any great extent, as we have had, at all times, a fairly full
line of discounts, this being, in our opinion, the primary object of the law—to first
accommodate the member banks in extending to them rediscounting privileges. It
is our intention, however, to go into the open market for business whenever our
loanable funds are idle, in order to take care of current expenses and make our own
rates effective when it becomes necessary.
DIVISION OF WORK—GOVERNOR AND FEDERAL RESERVE AGENT.

The division of work in this bank between the governor and the Federal Reserve
Agent is rather evenly balanced, both giving their entire time to the business of the
institution. While it is generally understood that the operation of the bank is under
the management of the governor, still, in practice, this is not exclusively true. The bylaws of the bank provide, under article 2, section 2, paragraph H, that to the executive
committee is delegated the power "in general to conduct the business of the bank,
subject to the supervision and control of the board of directors." As chairman of
the board of directors, I am necessarily a regular member of the executive committee
and am, therefore, called upon to participate in the joint management of the bank.
These duties, in addition to attending to the correspondence with the Federal Reserve
Board, and having custody of the Federal Reserve notes and collateral deposited with
me to secure the issuance thereof, add largely to the contemplated duties of the Federal Reserve Agent. The duties of the Federal Reserve Agent at Atlanta have been
further increased by the establishment of the branch bank in New Orleans. Relations existing between the governor and Federal Reserve Agent are most pleasant
and agreeable.

DISTRICT NO. 6

ATLANTA.

275

POWERS OF TRUSTEE, EXECUTOR, ADMINISTRATOR, AND REGISTRAR OF STOCKS AND
BONDS.

In recommending that permission be granted to. applying member banks to
act as trustee, executor, administrator, and registrar of stocks and bonds, we have
adopted the plan of presenting such applications to the board of directors at its regular
monthly meetings. As chairman of the board of directors, I obtain as a preliminary
all the information available from the chief bank examiner for the district and other
sources and present same to the board of directors with the application. If acted
upon favorably, the application is forwarded to your board, accompanied by such
information as we have obtained, with the recommendation that it be granted.
CLEARING SYSTEM.

Our bank has earnestly endeavored to cooperate with the Federal Reserve Board
in putting into effect the voluntary clearing system proposed by your Board, but the
result has not been satisfactory.
The system was inaugurated on April 10,1915, membership was voluntary, and items
were received only from those banks which agreed to permit their accounts to be
charged with checks on themselves, subject to final payment. The system began
operation with 67 members, 15 joining later, and 9 withdrawing, leaving a present
membership of 73, of which 21 are located in reserve cities.
The number of items handled daily has averaged 440, of which 207 have been on
banks in the district outside of Atlanta, 204 on banks in Atlanta, and 29 on banks in
other Federal reserve districts. The principal objections raised by the member banks
are: (1) They can not anticipate the drawings, hence the difficulty of maintaining
their reserves when checks are charged to their accounts; (2) they object to giving
up exchange charges, which it has been their custom to make; (3) owing to the limited
number of points covered, none being outside the district other than Federal reserve
cities, the volume of items they send in for credit must, of necessity, be small;
(4) since the Federal Reserve Banks will not accept their checks on nonmember
banks, which are in the majority in this district, balances must be maintained with
reserve correspondents, in order to have such items collected.
The effect of the system has not been to reduce exchange charges, either by the
banks themselves or by the two country clearing houses in the district, Atlanta and
Nashville. The charges in this district run from $1.50 to $2 per $1,000, the average
being $1.63 per $1,000 for the entire district.
The Federal Reserve Bank of Atlanta receives from its members, at par, subject to
deferred credit, exchange on points outside of the district. It also makes transfers,
by mail, outside the district without cost, and pays checks on itself coming from other
districts, without charge, provided the volume of exchange deposited by any member bank during the current month equals the amount of the transfers made for that
bank and incoming checks from other Federal Reserve Banks. The charge on the
difference, if any, is based on the cost of shipping currency to the gold fund to cover,
provided such shipments have to be made. We have not endeavored to make a profit
on our exchange transactions, believing we should give this service to our members
without cost, provided we can so do without loss to ourselves.
ATTITUDE OF STATE BANKS.

A canvass of the attitude of the State bankers toward the Federal Reserve System
develops the fact that while every thoughtful State banker fully realizes that the
system to which he has in no way contributed has been indirectly of great benefit to his
institution, he is hesitant about joining a system of which his ideas are more or less
vague. He is familiar with the limitations of the State laws under which he operates,

276

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

but unfamiliar with the National Bank and Federal Reserve Acts and in many cases
exaggerates the extent of their requirements. The State banks are accustomed to
transact business at fixed rates of interest and are not in sympathy with any movement
which may tend to decrease their profits through changes in interest rates, and,
further, it will no doubt be difficult to engage the attention of the majority of State
bankers so long as the period of easy money continues.
BUSINESS CONDITIONS OF THE SIXTH FEDERAL RESERVE DISTRICT.

At the time of the inauguration of the Federal Reserve System the general business
conditions of the district were undergoing a most demoralizing depression, and especially was this true in agricultural lines. The South had produced the largest cotton
crop in its history and a correspondingly small grain crop; the cotton exchanges were
closed, exports cut off, causing a depreciation in value until the market price was
below the cost of production and trade in our main staple almost at a standstill.
The establishment of the Federal Reserve Bank and its public announcement that
it intended to lend all the assistance within its power to aid the producers was the
strongest factor in dispelling the gloom and doubt. In this work the Federal Reserve
Bank had the hearty cooperation of the member banks of the district.
The unusual conditions caused a holding back of the 1914 crop and the marketing
of it in the late winter and spring of 1914-15, thereby necessitating the most rigid economy, especially among the agricultural element of our population. Such conditions
brought most forcefully to the mind of the Southern farmer the imperative need of
crop diversification, with the result that the 1915 crops showed an increase of approximately 70,000,000 bushels in corn, wheat, and oats, with an increase in the rice
crop of approximately 5,000,000 bushels, with more cattle and hogs than any previous
season, and for the first time the cotton crop of the South may be classed to some
extent as a "surplus-money crop." The decrease of approximately 5,000,000 bales in
the 1915 crop and the establishment of a 3 per cent commodity rate to member banks
for money loaned to the farmers at 6 per cent were the strong elements in causing and
maintaining the favorable prices of cotton, and the commodity rate has been especially
effective in the holding and marketing of the crop.
The tobacco growers of both Tennessee and Florida were compelled to carry over a
greater portion of their 1914 crop on account of difficulty in delivery and high ocean
rates, and to the producers of this commodity the Federal Reserve Bank has rendered
valuable aid in assisting them to hold their crop for a more favorable market.
The iron industry has received a strong impetus within the past few months and
the movement in this and kindred industries is stronger than for several years
past. Activity is general throughout the district, covering a multiplicity of lines, and
business conditions appear exceedingly bright.
ESTABLISHMENT OF A BRANCH BANK OF THE FEDERAL RESERVE BANK OF
ATLANTA AT NEW ORLEANS, LA.

The policy of the board of directors of this bank was not favorable to the establishment of branch banks until we had thoroughly developed the business of the parent
bank. In view of the commercial importance of New Orleans and its distance from
Atlanta (approximately 500 miles) the board of directors decided to recommend to
the Federal Reserve Board the establishment of a branch at New Orleans, to be
known as the New Orleans Branch of the Federal Reserve Bank of Atlanta.
The branch bank was opened for business on September 10, 1915. Its territory
comprises that part of the sixth district in the States of Louisiana and Mississippi, and
the banks in the County of Mobile, Ala. The expenses of the branch bank at New
Orleans for the first year's operation are guaranteed by the member banks in the
city of New Orleans.

DISTRICT ISTO. 6

ATLANTA.

277

A duplicate of the accounting system of the Atlanta bank is used in the New Orleans
branch, and the auditor of the Federal Reserve Bank of Atlanta and the examiners
for the Federal Reserve Board make periodical examinations of its accounts. Daily
reports are made to the Federal Reserve Bank of Atlanta, with copies to the Federal
Reserve Board. On Friday of each week the statements of the branch are telegraphed to Atlanta and incorporated in the weekly statement of the Federal Reserve
Bank of Atlanta.
As Federal Reserve Agent, I appointed a " representative of the Federal Reserve
Agent, at New Orleans," to represent me in transactions involving the issuance of
Federal reserve notes, which action was approved by the board of directors of the
New Orleans branch and the Federal Reserve Board.
Upon my request to the Board, the Comptroller of the Currency deposits Federal
reserve notes with the Assistant United States Treasurer at New Orleans, subject to
the order of the Comptroller of the Currency. Upon notice from my representative
at New Orleans that collateral has been deposited, an order for Federal reserve notes is
forwarded to the Federal Reserve Board and transmitted to the Assistant United States
Treasurer at New Orleans, who delivers the Federal reserve notes to the manager of
the New Orleans branch. My representative handles only the collateral and records
incident to the transactions.
CREDIT NEEDS OF THE DISTRICT.

The ability of the Federal Reserve Bank and of the southern banking organizations to
move the cotton crop and to properly finance the preparation of cattle for the market
has demonstrated that the long anticipated relief from seasonal financial pressure has
been realized. The great progress in diversification of crops for the past two seasons
clearly indicates the willing response to broadening effort, this response being limited
only by the great need of an adequate supply of capital to prepare for and finance the
improvements necessary to profitably grow and market crops which have heretofore
been grown to a limited extent only.
Iron and steel industries have no lack of funds for current needs, including tire
movement of their products and tofinancereasonable extensions and for improvements.
The naval-stores industry has suffered severely for the whole season for lack of necessary funds. This is a peculiar industry in that the greater part of operating capital is
expended in labor; therefore, while the result can be accurately forecast, this expenditure is not represented by tangible assets which can be made the basis for financial
negotiations. The industry is sadly in need of some kind of coalition and organization that would tend to stabilize prices and promote confidence in financial circles.
The rapidly diminishing area adaptable to the production of these articles and the
increasing foreign and domestic normal demand indicate that this industry should
be conserved if this country is to receive the returns to which it is entitled from what
has been and is still a natural and valuable asset. The lumber industry is in better
financial position, and for the immediate future appears to be in a fair position so far
as the sale of the product is concerned, but has suffered severely for a period running
back to the depression in 1907, during which time billions of feet of valuable timber
have been manufactured and sold without profit. Any comprehensive plan of conserving the wealth of our natural resources should by all means include some feasible
plan of finance which would enable manufacturers to keep their timber supply inactive during periods of slack demand and low prices, rather than to follow the present system of exhausting this valuable asset to cover carrying charges. The prominent distinction between such industries^ and agriculture and mining is that agricultural products are produced seasonally, and new mineral deposits are constantly
discovered, adding to the already tremendous known quantity of that source of wealth,

278

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

with the fair assurance that yet undiscovered mines will place the probability of exhaustion far remote; while on the other hand the timber area is known, the amount
fairly accurately determined, and the end of an important industry foreseen. All
of which clearly points to the necessity of a careful study of the wasting of this resource
through press of necessity occasioned by lack of capital and credit.
The immediate and crying need of the district is financial encouragement for new
enterprises. Money is plentiful for established demand, but any attempt to promote
new activity or even to reestablish lines of effort which have been idle through the
past depressions meets with little or no encouragement. Although everywhere are
seen the essentials of prosperity, there appears to be a strong undercurrent of uneasiness and disbelief in its solidity or permanency. Under these conditions substantial
progress is, of course, impossible. What stimulus is necessary to a resumption of normal
and progressive enterprise is not apparent unless it be the allaying of uncertainty
regarding the outcome of the European war and of an unanalyzed, yet fcver present
fear of the remote possibility that our own Nation may become involved therein.
EARNINGS OF NATIONAL BANKS OP SIXTH DISTRICT.

A resume* of the earnings of the national banks of this district presents a most interesting subject which the general public has had little opportunity to examine and
about which an almost universal mistaken idea exists. That the net earnings of the
banks of the district fall short of the returns accruing to other lines employing a
similar capital and energy has, of course, been well known to those whose life work has
been along this line of activity. But in the mind of the general public there exists
an impression so greatly at variance with the facts that a wide publicity and a clearer
understanding of the comparatively meager profits realized would no doubt do much
to create a closer and more sympathetic relation between the banks of the district and
their customers. Moreover, in view of the fundamental and sweeping changes in
our financial structure contemplated and effected by the Federal Reserve Act, a
clearer and more appreciative general understanding of the difficulties attendant
upon the operations of the banking business is highly desirable, if not almost essential,
to the purpose of securing the full measure of cooperation necessary to effect the broad
and salutary reforms for which this system was designed.
The following tabulated analysis of earnings is arranged in groups according to
invested capital (i. e., capital, surplus, and undivided profits):
Invested capital:
Less than $50,000
$50,000 to $100,000
$100,000 to $200,000
$200,000 to $300,000
$300,000 to $500,000
* $500,000 to $1,000,000
Over $1,000,000

Net earnings.
per cent.. 6.13
d o . . . . 7. 6
d o . . . . 8. 5
d o . . . . 7. 9
d o . . . . 6. 3
d o . . . . 6. 36
d o . . . . 7.63

I might add, in conclusion, that the policy of the bank has been to issue as many
Federal reserve notes as possible and to put up gold with the Federal Reserve Agent
to reduce outstanding liability. In this manner the Federal Reserve Bank has been
able to accumulate gold, which the officers of the bank believe is the correct policy to
pursue. It is thought highly desirable that ultimately our bank have on hand only gold
and gold certificates and put Federal reserve notes out for circulation into the channels
of commerce.

DISTRICT NO. 6

ATLANTA.

279

BY-LAWS OF THE FEDERAL RESERVE BANK OF ATLANTA.

ARTICLE I.—Directors.

SECTION 1. Quorum.—A majority of the directors shall constitute a quorum for
the transaction of business, but less than a quorum may adjourn from time to time
until a quorum is in attendance.
SEC. 2. Vacancies.—As soon as practicable after the occurrence of any vacancy in
the membership of the board the chairman of the board shall take such steps as may
be necessary to cause such vacancy to be filled in the manner provided by law.
SEC. 3. Meetings.—There shall be a regular meeting of the board every second
Thursday at 1 o'clock p. m., or if that day be a holiday, on the first preceding full
business day. The chairman of the board may call a special meeting at any time,
and shall do so upon the written request of any three directors, or of the governor.
Notice of regular and special meetings may be given by mail or by telegraph. If
given by mail, such notice shall be mailed at least three days before the date of the
meeting. If given by telegraph, such notice shall be dispatched at least one day before
the date of the meeting. Notice of any meeting may be dispensed with if each of the
directors shall in writing waive such notice.
SEC. 4. Powers.—The business of this bank shall be conducted under the supervision and control of its board of directors, subject to the supervision vested by law
in the Federal Reserve Board. The board of directors shall appoint the officers and
fix their compensation.
The board may appoint legal counsel for the bank, define his duties, and fix his
compensation.
SEC. 5. Special committees.—Special^ business of the bank may be referred from
time to time to special committees, which shall exercise such powers as the board may
delegate to them.
SEC. 6. Order of business.—The board may from time to time make such regulations as to order of business as may seem to it desirable.
ARTICLE II.—Executive committee.
SECTION 1. How constituted.—There shall be an executive committee consisting of
the governor, the Federal Reserve Agent, and one or more directors chosen from classes
A, B, or C; the member or members of the committee chosen by the board shall serve
during the pleasure of the board or for terms fixed by it. Not less than three members
of the committee shall constitute a quorum for the transaction of business, and action
by the committee shall be upon the vote of a majority of those present at any meeting
of the committee.
The committee shall have power to fix the time and place of holding regular or
special meetings and the method of giving notice thereof.
The executive committee shall be four in number, and the term of service for executive committee members shall be three months, with rotation.
Minutes of all meetings of the executive committee shall be kept by the secretary,
and such minutes or digests thereof shall be submitted to the members of the board of
directors at its next succeeding meeting. Such minutes shall be read to the meeting
if required by any member of the board.
SEC. 2. Powers.—Subject to the supervision of the board of directors, as set forth
in Article I, section 4, the executive committee shall have the following powers:
(a) To pass upon all commercial paper submitted for discount.
(b) To initiate and conduct open-market transactions.
(c) To recommend to the board of directors from time to time changes in the discount rate.
(d) To buy and sell securities.
(e) To apply for and provide for the security of such Federal Reserve notes as may,
in the judgment of the committee or of the board, be necessary for the general requirements of the bank.
(/) To employ or to delegate to officers of the bank authority to employ clerks and
other subordinates and to define their duties and tofixtheir compensations.
(g) To approve bonds furnished by the officers and employees of the bank and to
provide for their custody.
(h) In general, to conduct the business of the bank, subject to the supervision and
control of the board of directors.

280

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.
ARTICLE

III.—Officers.

SECTION 1. The board of directors shall appoint a governor, a deputy governor, a
secretary, and a cashier, and shall have power to appoint such other officers as the board
may from time to time determine to be necessary and appropriate for the conduct of the
business of the bank. The offices of deputy governor, secretary, and cashier, or any
two of them, may be held by one person, in the discretion of the board. The officers
chosen by the board shall hold office during the pleasure of the board.
SEC. 2. Federal Reserve Agent.—The Federal Reserve Agent, as chairman of the
board, shall preside at meetings thereof. Copies of all reports and statements made to
the Federal Reserve Board shall be filed with the Federal Reserve Agent.
SEC. 3. Deputy Federal Reserve Agent.—In the absence or disability of the Federal
Reserve Agent his powers shall be exercised and his duties performed by the deputy
Federal Reserve Agent, who may perform such other services as shall be prescribed
by the board of directors not inconsistent with his duties as provided by law.
SEC. 4. The governor.—Subject to the supervision and control of the board of directors, the governor shall have general charge and control of the business and affairs
of the bank, and he shall be the chairman of the executive committee. He shall have
power to make any and all transfers of securities or other property of the bank which
may be authorized to be sold or transferred by the executive committee or by the
board. The governor shall have power to prescribe the duties of all subordinate
officers and agents of the bank where such duties are not specifically prescribed by
law or by the board of directors or by the by-laws. The governor may suspend or remove any employee of the bank.
SEC. 5. The deputy governor.—In case of the absence or disability of the governor
his powers shall be exercised and his duties discharged by the deputy governor, and
in case of the absence or disability of the deputy governor the board shall appoint one
of the other directors governor pro tempore. The duties of the deputy governor shall
otherwise be such as may be prescribed by the board of directors or by the governor.
In case the board shall deem that the business of the bank requires the appointment of
one or more assistant deputy governors, it shall have authority to appoint such assistant deputy governor or governors and shall prescribe and define his or their duties.
SEC. 6. The secretary.—The secretary shall keep the minutes of all meetings of the
board and of all committees thereof. He shall have custody of the seal of the bank,
with power to affix same to certificates of stock of the bank, and by authority of the
board or the executive committee to such other instruments as may from time to time
be required. The board of directors may, in the absence or disability of the secretary, or upon other occasion where in the discretion of the board greater convenience
can be attained, appoint a secretary pro tempore, or empower one or more officers to
affix the seal of the bank to certificates of stock or other instruments. The secretary
shall perform such other duties as may from time to time be prescribed by the board
of directors, the executive committee, or the governor.
SEC. 7. The cashier.—The cashier and at least one other officer designated by the
board of directors shall have the joint custody of all moneys, investments, and securities of the bank, subject to such rules as the board may adopt for their safety. He shall
perform such other duties as may be assigned to him from time to time by the executive committee, the board of directors, or the governor.
ARTICLE IV.—Certificates of stock.
SECTION 1. Signature.—All certificates of stock, or of payment of or on account of
stock subscriptions, shall be signed by the governor or a deputy governor and the secretary or cashier, or such other officers as may be prescribed by the board, and such
certificates shall bear the corporate seal.
ARTICLE V.

SECTION 1. Business hours.—The bank shall open for business from 9 o'clock to 2
o'clock on each day, except Sundays or days or parts of days established as legal holidays.
ARTICLE VI.—Amendments.

DISTRICT NO. 7—CHICAGO.
C. H. BOSWORTH, Chairman and Federal Reserve Agent.

OFFICERS AND DIRECTORS.

Directors:
Class A. George M. Reynolds,1 Chicago, 111
Jas. B. Forgan, Chicago, 111
E. L. Johnson, Waterloo, Iowa
Class B. A. H. Vogel,1 Milwaukee, Wis
Henry B. Joy, Detroit, Mich
M. B. Hutchison, Ottumwa, Iowa
Class C. E. T. Meredith,2 Des Moines, Iowa
C. H. Bosworth, Chicago, 111
W. F. McLallen, Columbia City, Ind
Officers:
C. H. Bosworth, chairman of the board and Federal Reserve
W. F. McLallen, deputy chairman, etc., and secretary.
James B. McDougal, governor.
C. R. McKay, deputy governor.
B. G. McCloud, cashier.
S. B. Cramer, acting auditor.
Member advisory council: Jas. B. Forgan.

Dec. 31, 1918
Dec. 31, 1916
Dec. 31, 1917
Dec. 31, 1918
Dec. 31, 1916
Dec. 31, 1917
Dec. 31, 1918
Dec. 31, 1916
Dec. 31, 1917
Agent.

The Federal Reserve Act was approved by the President December 23, 1913. The
organization committee proceeded promptly to divide the country into districts and
to conduct the election of class A and class B directors. The announcement of class C
directors of the Federal Reserve Bank of Chicago was made on October 7, and the first
meeting of directors of the Reserve Bank of Chicago 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 business on November 16, although the time for organization
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 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 a second meeting was held on October 23, and at this
1

Reelected for three years.

Reappointed for three years.
281

282

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

meeting a seal was selected, 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
committee meetings were held, all officers appointed, quarters selected, and on the lastnamed date the Federal Reserve Bank of Chicago opened for business at Clark and
Monroe Streets.
The following telegrams were exchanged between the Secretary of the Treasury
and the bank:
WASHINGTON, D. C , November 16, 1914.
C. H. BOSWORTH,
Federal Reserve Agent, Chicago, III.

Please accept my cordial congratulations upon the opening of the Federal Reserve
Bank of your district and my sincere commendation upon the effective work you have
done in preparing the bank for business in the short time allowed for the opening. 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 cooperation in the important work and duties which
have been confided to you. My hearty good wishes for your success.
W. G. MCADOO.
CHICAGO, November 16, 1914.
H o n . 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 upon the successful opening of the district banks. We are pleased to
announce that the Federal Reserve Bank of Chicago opened on time at 10 o'clock this
morning fully prepared to perform the functions required of it. On behalf of ourselves
and all the directors of this institution we have to say that you may count upon our
loyal cooperation in this important work.
J. B. MCDOUGAL, Governor.
C. H. BOSWORTH, Chairman.
ACTIVITIES OF THE BOARD OP DIRECTORS.

When the bank was organizing, directors' meetings were frequent and held upon
call of the chairman. During 1915, however, a regular monthly meeting has been found
satisfactory, as a very full report of executive committee proceedings is sent out to all
directors every week. Since organization, there have been 17 directors' meetings and
80 executive committee meetings. Upon different occasions members of the Federal
Reserve Board have visited the bank and have attended directors' meetings. Four
directors, residents of Chicago, with the governor as chairman, 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 meeting per week has been
sufficient. Occasionally one or more of the out-of-town directors have met with the
committee.
The committe reviews the acts of the officers in the matter of rediscounts for member
banks and the purchase of acceptances and other investments and passes upon all
current questions of policy, methods, and procedure, subject to ratification by the
board of directors. The directors approve or disapprove of the acts of the executive
committee, receive reports from the officers, determine interest and discount rates and,
in general, 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 war in Europe. After November 16,1914, the steadying and quieting influence of the Federal reserve system began
to be felt and a quick reduction began in the high rates of interest then prevailing.
Early in August Aldrich-Vreeland currency had been applied for by the currency
associations located in this district to the amount of $38,198,490, and Detroit, Des

DISTRICT NO. 7—CHICAGO.

283

Moines, and Chicago banks had issued clearing-house certificates. About the time
this bank was organized the banks began to redeem their Aldrich-Vreeland currency
and to retire their clearing-house certificates. By January 1, 1915, a better tone was
apparent. Member banks were discounting with the reserve bank to the extent of
$3,000,000, almost all of which was from large city banks. This amount gradually
dwindled to $760,000 on the 1st of May, practically all coming from smaller
country banks. There was a plethora of money in the banks, but business was still
timid and sensitive to war reports, and weather conditions all over the United States
were unusually unfavorable to growing crops.
Between May and September crop prospects improved 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 corn 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 Federal 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 demand
and 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 merchandising, 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
undertaken for the purpose of enlarging outputs and the steady buying 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 undertaken 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 discounting was from Iowa, Illinois, and Indiana
banks1, and was due to local emergencies caused by the hocf-and-mouth disease. Latterly, in 1915, some discounting has been occasioned by the poor and unmarketable
quality of the corn crop in certain sections of the district. In addition to this there
has been more or less continuous discounting in a small way due to the individual
requirements of a number of the country banks.
MEETINGS AND ORGANIZATION OF FEDERAL RESERVE AGENTS.

A conference of all the 12 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 conferences joint sessions with the Federal Reserve Board were held. At the
November conference a permanent organization was effected and an executive committee appointed. The executive committee met in joint conference with the executive committee of the governors of reserve banks at Washington November 17, 1915.
20067 °~-16
19

284

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD,
FEDERAL RESERVE NOTE-ISSUING CAPACITY AND POLICY OF THE BANK.

Taking the statement of the bank of December 1, 1915, and after setting aside the
required 35 percent reserve against deposits, the bank had left $27,697,106 gold reserve
applicable to a Federal Reserve note issue. The gold reserve required 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 Board is authorized to reduce
this reserve requirement, so that the note-issuing capacity of the bank could readily
be extended to a sum in excess of $100,000,000.
It is the policy of the bank to issue Federal Reserve notes freely where conditions
and circumstances make it necessary. Up to the present time it has had no occasion
to issue Federal Reserve notes except for the purpose of familiarizing 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.
UNITED STATES BOND-SECURED CURRENCY.

Under the Act the Federal Reserve Banks are authorized to deposit United States
Government bonds having the circulation 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-bank 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 have 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 necessary, as Federal Reserve notes could not
be used for this purpose, the law not allowing one Federal Reserve Bank to pay out
the Federal Reserve notes issued by another bank, except under a heavy penalty.
FEDERAL RESERVE BANK AS FISCAL AGENT OF THE UNITED STATES GOVERNMENT.

On November 23, 1915, the Secretary of the Treasury announced that he had determined to appoint the Federal Reserve Banks depositaries andfiscalagents 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 Reserve 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
depositaries in Chicago to the credit of the Treasurer of the United States at the close
of business December 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 expire on December 31, 1915. An
election to choose their successors was held in November, resulting in the reelection of
both of the old directors. The term of one class C director expired on December 31,
1915, and he has been reappointed by the Federal Reserve Board for three years.
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
in Illinois; to 11 in Iowa; to 8 in Michigan, and to 4 in Wisconsin.

DISTRICT NO. 7

CHICAGO.

285

MEMBERSHIP OF STATE BANKS.

Recognizing that a unified banking system, embracing in its membership the wellmanaged banks of the country, small and large, State and National, 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 possible and even provided a method by which State banks
which joined might withdraw—a privilege not accorded by the Act to the national
banks.
Two State banks—the Bank of Wisconsin, Madison, Wis., and the Central Trust
Company of Illinois, Chicago, 111.,—joined the system at its inception.
Since then the following State banks have become members:
Commercial & Savings Bank, Albion, Mich.
Elmhurst State Bank, Elmhurst, 111.
Commercial Trust & Savings Bank, Joilet, 111.
Badger State Bank, Milwaukee, Wis.
Fruit Growers State Bank, Saugatuck, Mich.
THE INTERNAL ORGANIZATION AND PERSONNEL OP THE BANK.

The directors of the three classes 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 banking, commercial, industrial, and agricultural. The executive officers
of the bank were taken from the banking activities of the community, where each
has had years of practical experience. The heads of the various departments and
other employees came from active positions in various banks, where they received
the practical training essential to the best service. The various departments are now
fully organized and equipped and in readiness for increasing activities, whatever
they may be.
RATES OF DISCOUNT.

Discount rates naturally are influenced by prevailing conditions, and in naming
rates it is the policy of the bank to carefully consider the general 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 immediately to 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 assistance to deserving banks for seasonal
or emergency purposes, and, on the other hand, to discourage any tendency toward
over-expansion. From 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-MARKET OPERATIONS TO DECEMBER 31,

1915.

Open-market transactions to date have been confined to the purchase of Government bonds, short-time municipal warrants, and bankers' acceptances. The total
of bankers'acceptances purchased is $5,782,002.03, represented by bills drawn against
exports or imports and accepted by banking institutions of known responsibility.
The total of municipal obligations purchased is $7,713,901.59, represented by warrants
and bonds issued by 44 municipalities in various States, of maturities ranging from
16 days to 6 months. The total of United States bonds purchased is $4,231,000, all
carrying the circulation privilege as follows: $2,525,000 United States 2 per cent
bonds and $1,706,000, 3 per cent, the threes being due and payable in 1918.

286

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.
THE CHECK-COLLECTION SYSTEM.

On November 16, 1914, the date this bank opened for business, it installed a collection system by taking from member banks for immediate credit checks drawn by
member banks on member banks located in Chicago and the seven reserve 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 temporary 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 intradistrict 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 intradistrict 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 reserved the right at its option to receive
the items at the market rate for exchange on the cities mentioned. 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 accordance
with the schedule of deferred credits approved bythe 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 located 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 difficult problem
confronting the management of the bank.
OPERATIONS OF CHECK-COLLECTING 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

7
89

Amount:
City
Country

$125,000
63, 000

Total

188,000

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.

Number of items:
City
Country

793
2,262

Amount:
City
Country

$820,000
650,000

Total

3,055

Total

1,470,000

287

DISTRICT NO. 7—CHICAGO.

From December 16 to June 10 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:
Average per day.
Number of items.
Date.

December 16-30
January
February
March
April
May
June 1-10

Amount.

Other
City. Country. Federal
Reserve Total.
Banks.
893
911
715
763
704
730

3,366
4,192
4,017
4,004
4,014
3,971
4,122

2,463
3,256
3,269
3,202
3,262
3,198
3,305

City.

Country.

Other
Federal
Reserve
Banks.

$992,000
1,004,000
1,243,000
1,675,000
1,436,000
1,377,000
1,454,000

$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

Total.

$2,217,000
3,049,000
3,121,000
3,754,000
3,166,000
3,074,000
4,283,000

From June 10 to December 31 all checks drawn on member banks of district No. 7
which have joined 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 day.
Number of items.
Date.

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

Other
Federal
City. Country. Reserve Total.
Banks.
944
1,669
1,699
1,981
2,212
2,248
2,472

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

Amount.

City.

50 5,947 $1,616,000
61 7,445 1,843,000
64 7,458 1,793,000
82 8,540 2,121,000
94 10,058 2,964,000
95 10,304 3,462,000
108 10,964 3,725,000

Country.

Other
Federal
Reserve
Banks.

$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

Total.

$3,561,000
3,689,000
3,463,000
4,669,000
5,928,000
6,923,000
7,745,000

ITEMS AND AMOUNT HANDLED.

From November 16, 1914, to December 31,1915, the check-collection department
has handled, without charge to the member banks, 2,122,405 items, the sum total
amount of which was $1,303,629,563.43.
EXCHANGE AND COLLECTION CHARGES ON CHECKS IN THIS DISTRICT.

Exchange charges in this district are not excessive, 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 run from 25 cents to $1 per $1,000. In Indiana possibly 15 per cent
of the banks remit to their Chicago correspondents at par. The rates of the banks
which charge run 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 fewpar points, as
nearly all banks charge $1 per $1,000. Outside of the banks which have joined the
collection 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 exchange
charges by nonmembers of the collection system.

288

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.
IMPORTANCE OF THE BANK TO THE COMMUNITY.

Notwithstanding the relatively small demands on most of them for either credit
or currency, the Federal Reserve Banks have performed an important 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 directors in turn have elected all the officers of the bank except
the chairman of the board. The attitude toward member banks is one of cordial
cooperation 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.
TABLE A.—Federal Reserve notes.
[Figures at close of business Dec. 31, 1915.]

Total Federal Reserve notes printed for this bank
Held in Washington ready for shipment
Held by Federal Reserve Agent (new notes)
Issued to bank

$60, 000,000
$50, 620, 000
4, 660, 000
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
TABLE B .—Comparative
Bills
discounted,
members.

Date.

Nov 18
Dec. 1
15
Jan.
Feb.
Mar.
Apr.
May
June
July
Aug.
Sept.
Oct.
Nov.

2
15
1
15
1
15
1
15
1
15
1
15
1
15
2
16
1
15
1
15
1

1914.

Dec.

1
15

1, 077, 375
174, 935

statement of investments—semimonthly
Bills
discounted,
bought.

United States
bonds.

Investments.

SI 000,000.00
2,602,108.08
3,161,780.11

1915.

4, 380, 000
340, 000

2,667,074.44
2,078,148.58
1,572,045.30
1,089,216.98
787,581.60 ""$489*" 864." 74"
955,771.23
967,783.60
996,048.62
1,412,589.24
813,940.71
1,589,849.24
761,534.17
1,537,128.54
804,180. 51
1,094,680.30
902,374.22
678,535. 84
1,063,580.41
617,245.94
1,240,794.93
394,676.50
1,475,786.28
275,4S5. 60
1,453,923.41
533,499.54
1,284,777.02
717,380.78
1,161,970.85
1,119,435.92
1,280,298.23
1,379,196.06
1,576,061.96
1,551,563.30
1,832,551.39
1,527,493.64
2,379,036.86
1,531,815.86
1,625,302.85
2,780,309.36
1,521,971.13
2,973,487.23
1,487,119.87
3,433,273.29

Total.

$1,000,000.00
2,602,108.08
3,161,780.11
$555,000.00
925,000.00
2,025,000.00
2,875,000.00
3,375,000.00
3,500,000.00
3,525,000.00
3,525,000.00
3,525,000.00
3,525,000.00
3,625,000.00
3,725,000.00
3,725,000.00
3,725,000.00
3,725,000.00
3,826,000.00
3,951,000.00
3,959,500.00
3,986,000.00
4,006,000.00
4,031,000.00
4,062,000.00
4,090;,000.00
4,260,000.00

11,000,000.00
1,525,000.00
1,530,000.00
2,330,000.00
2,330,000.00
2,499,500.00
2,633,500.00
2,931,500.00
3,241,500.00
3,306,500.00
1,222,500.00
1,437,000.00
1,690,500.00
2,023,000.00
2,075,000.00
2,922,404.46
2,932,772.09
2,984,679.35
2,970,489.35
2,664,313.77
2,422,163.77
1,001,898.87
1,482,253.37

3,222,074.44
4,003,148.58
5,122,045.30
5,494,216.98
6,982,446.34
7,753,554.83
8,433,137.86
8,562,289.95
8,755,162.71
8,665,360.81
8,512,410.06
6,628,326.35
6,797,471.43
7,166,771.88
7,735,422.95
7,903,157.80
9,154,811.23
9,551,766.38
10,098,304.61
10,336,534.38
10,606,166.49
10,889,775.98
9,587,357.23
10,608,646.53

289

DISTRICT NO. 1—CHICAGO.
TABLE C.—Record of discount rates.

Nov. 14
Dec. 1
Dec. 16

Effective—

Maturities
up to 30
days.

1914.

Per cent.
6

1915.
Jan. 1 .
Jan. 23
Dec. 11 (special rate of 3^ per cent on 10-day paper)

Maturities Maturities
up to 60
up to 90
days.
days.
Per cent.
6
6
6*

Maturities
over 90
days.

Per cent.
6
6
6

5
4

Per cent.

6
6
6
6

TABLE D.—Showing totals for the district of capital, surplus, demand deposits, time
deposits, total resources, borrowed money, and paper eligible for rediscount with the
Federal Reserve Bank of Chicago as shown by the reports to the Comptroller of the Currency Nov. 10, 1915.
Central Reserve
Reserve cities. Country banks.
cities.
Capital
Surplus
Individual demand deposits
Individual time deposits l ...
Total resources
Money borrowed
Paper eligible for rediscount.

$47,300,000.00
27,560,000.00
290,836,000.00
19,549,000.00
698,007,000.00
400,000.00
125,847,000.00

$25,000,000.00
11,610,000.00
130,438,000.00
24,852,000. 00
290)159,000. 00
226,000.00
40,549,000.00

Total.

$72,202,000.00 $144,502,000.00
37,770,000.00
76,940,000.00
309,275,000.00
730,549,000.00
177,259,000.00 221,660,000.00
737,363,000.00 1,725,529,000.00
8,128,000.00
8,754,000.00
104,083,000.00 270,479,000.00

i Bank deposits omitted.

The total of "Paper eligible for rediscount" does not reflect the true condition, as
a great many of the member banks did not report under this heading.

TABLE E.—Capital stock subscriptions as of Dec. 31, 1915.
Central reserve city banks
Reserve city banks
Country banks

$4,488, 000
2,195, 700
6, 605, 500

Total

13, 289, 200

TABLE F.—Showing reserve required to be deposited with Federal Reserve Bank of Chicago
Dec. 1, 1915,figuredfrom the Comptroller's call of Nov. 10, 1915, and compared with
actual balances as shown by books on Dec. 1, 1915.

Central reserve city banks
Reserve city banks
Country banks
Total

Reserves carried with
Federal Reserve Bank.

Reserves required to be
carried with
Federal Reserve Bank.

$34,174,300
5,568,700
12,400,200

$31,777,500
6,031,900
11,956,500

$2,396,800
1463,200
443,700

52,143,200

49,765,900

2,377,300

Short of required reserves.

Excess reserves.

290

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

TABLE G.—Discount department operations Nov. 16, 1914, to Dec. 31, 1914.
[116 applications for discount approved at 4 per cent to 6 per cent from 78 member banks.]
Reserve cities.
Banks.
Illinois
Indiana
Iowa
Michigan
Wisconsin
Total..
1

Country.

Amount.

Banks.

Amount.

i7
1
1
2

14,207,350.00
108,782.86
30,500.00
125,000.00

15
17
29
2
4

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

4,471,632.86

938,182.33

Central reserve city.

TABLE H.—Discount department operations Jan. 1, 1915, to Dec. SI, 1915.
[1,049 applications for discount from 143 member banks approved at rates varying from 4 per cent to
6 per cent.]
Reserve cities.
Banks.
Illinois
I n d i a n a . . . . .
Iowa
Michigan
Wisconsin
Total..

Banks.

Amount.

$1,442,618.68

158,000.00

33
21
76
5
3

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

1,600,618.68

138

7,638,254.03

. . . .

Amount.

Country.

Central reserve city.

DISTRICT NO. 8—ST. LOUIS.
WILLIAM MCC. MARTIN, Chairman and Federal Reserve Agent.
On May 2, 1914, the reserve bank organization committee announced the boundaries of Federal reserve district No. 8.
On May 11, 1914, this committee designated five banks to execute the organization certificate, and on May 18 representatives of the banks met in the rooms of the
St. Louis Clearing House Association in the city of St. Louis and signed the organization certificate of the Federal Reserve Bank of St. Louis. Arkansas was represented by the German National Bank, of Little Rock, Mr. J. D. Goldman, president,
and Mr. W. A. Hicks, cashier, signing the certificate for that bank. Illinois was
represented by the Ayers National Bank, of Jacksonville, Mr. M. F. Dunlap, president, and Mr. 0. F. Buffe, cashier, signing the certificate. Indiana was represented by the Second National Bank, of New Albany, Mr. Earl S. Gwin, president,
and Mr. Geo. A. Newhouse, jr., cashier, signing for that bank. Kentucky was represented by the National Bank of Kentucky, Louisville, Mr. Oscar Fenley, president,
and Mr. H. D. Ormsby, cashier, signing the certificate. Tennessee was represented
by the First National Bank, of Memphis, Mr. J. A. Omberg, president, and Mr. C. Q.
Harris, cashier, signing for it.
The reserve bank organization committee had sent out preferential ballots in
accordance with the Federal Reserve Act to all member banks, and on August 10,
1914, it announced that group No. 1 had elected Mr. Walker Hill, of St. Louis, as class
A director, and Mr. Murray Carleton, of St. Louis, as class B director; that group No. 2
had elected Mr. Frank O. Watts, of St. Louis, as class A director, and Mr. W. B. Plunkett, of Little Rock, Ark., as class B director; that group No. 3 had elected Mr. Oscar
Fenley, of Louisville, Ky., as class A director, and Mr. Le Roy Percy, of Greenville,
Miss., as class B director.
On September 30, 1914, the Federal Reserve Board announced the appointment
of Mr. William McC. Martin as Federal Reserve Agent and chairman of the board
of directors, and Mr. W. W. Smith as deputy Federal Reserve Agent and vice chairman, and that these two gentlemen, together with Mr. John W. Boehne, of Evansville
Ind., would be the three class C directors.
On Monday, October 5, 1914, the three class C directors of this bank met with the
Federal Reserve Board in its rooms in the Treasury Building at Washington, D. C,
to receive preliminary instructions and discuss the necessary steps for the organization of the bank. Upon the return from this meeting, on October 13, an informal
meeting of the board of directors was called by the chairman of the board. This
had to be an informal meeting, as some of the directors had not had time fully to
qualify in accordance with the provisions of the law, ard was for the purpose of having the directors become acquainted with one another and talk over tentative plans
for the organization of the bank. All the directors were present, except Mr. Le Roy
Percy, of Greenville, Miss. At this meeting the chairman read a telegram from
the secretary of the Federal Reserve Board, advising that a conference had been
called for October 20 in Washington, D. C, and asking that all the directors of each

291

292

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

Federal Reserve Bank be present, if possible. There were selected, as the representatives of this bank, to be present at the meeting of directors in Washington,
Mr. Oscar Fenley and Mr. Frank O. Watts, class A directors, Mr. W. W. Smith, class
C director, and the chairman of the board. These gentlemen all attended the meeting in Washington, and took part in the discussions with other directors in the consideration of plans for the opening of the banks.
On October 23 the Federal Reserve Board called for the first installment of capital
stock, a payment in gold equal to one-sixth of the total amount of capital stock allotted
to each bank, such remittance to be made on or before November 2, 1914.
On October 25, 1914, the Secretary of the Treasury stated that he had determined
to announce the establishment of the Federal Reserve Banks in all the Federal
reserve districts on November 16, 1914. This announcement was made several
days before it was possible to hold the first regular meeting of the board of directors
of this bank. Its first regular meeting was held on October 28, in the board room
of the Mississippi Valley Trust Co., St. Louis. All of the directors were present.
Anticipating an early opening of the bank, the chairman of the board had gone ahead
and ordered certain records, in order to facilitate matters, and at this meeting of the
board his actions were, ratified. The directors also decided by lot, on their terms of
office, in accordance with the provisions of the law, the result being as follows:
CLASS A.

Mr. Frank 0. Watts, for a term to expire one year from January 1, 1915.
Mr. Oscar Fenley, for a term to expire two years from January 1, 1915.
Mr. Walker Hill, for a term to expire three years from January 1, 1915.

Mr. Murray Carleton, for a term to expire one year from January 1, 1915.
Mr. W. B. Plunkett, for a term to expire two years from January 1, 1915.
Mr. Le Roy Percy, for a term to expire three years from January 1, 1915.

Mr. William McO. Martin, for a term to expire one year from January 1, 1915.
Mr. Walter W. Smith, for a term to expire two years from January 1, 1915.
Mr. John W. Boehne, for a term i:o expire three years from January 1, 1915.
A corporate seal was also adopted and by-laws decided on. A committee was
appointed to recommend the salaries of the governor of the bank, deputy governor,
and cashier, and its report was adopted. The officers elected were as follows: Hon.
Rolla Wells, governor; Mr. William W. Hoxton, deputy governor and secretary; Mr.
G. E. French, cashier.
This organization meeting of the board occurred on October 28, and the bank had
to open its doors for business on November 16, thus giving only a little over two weeks
in which to find quarters, get the necessary equipment, and become established.
Prior to this time there had been no officers of the bank, except the chairman of the
board and the vice chairman, and, in accordance with the call of the Federal Reserve
Board, gold was being received in payment of the first installment of capital stock.
The chairman of the board accepted these payments as they came, gave his receipt
for them, and arranged that they be deposited in a safe-deposit box in the Mississippi
Valley Trust Co. Access could be had to this box only by the Federal Reserve
Agent when accompanied by Mr. W. W. Smith, his deputy. At the first regular
meeting of the board the chairman reported what he and his deputy had done in
regard to accepting these payments, and their action was confirmed. As soon aa

DISTRICT NO. 8

ST. LOUIS.

293

officers were appointed for the bank and qualified, these capital stock payments
were turned over to them, and were found to be correct.
Beginning with October 1 the chairman received a great number of applications
for positions with the bank. Wherever possible, the applicants were seen, and all
applications were filed in order of receipt, so that when it came to choosing the official
staff and the office force, every application was given due consideration.
A number of possible locations for the new bank had been looked over by the
chairman and his deputy, and these were reported to the first regular meeting of the
board of directors. At this meeting the board appointed these two gentlemen and
Governor Wells as a committee to select temporary quarters and to purchase such
furniture and equipment as the bank required. At the first meeting of the executive
committee, held on November 4, this committee reported that it had succeeded in
getting temporary quarters on the fourth floor of the Boatmen's Bank Building.
This was a new building, located on the northeast corner of Olive Street and Broadway,
and the fourth floor, fortunately, had not been completely finished, so quick work
was possible. In order to get it ready for occupancy on November 16 it was necessary
that those supplying fixtures and those at work on the building be pushed day and
night, but, with great effort, we succeeded in getting everything ready, so that on
the morning of November 16, 1914, this bank opened its doors for business.
The vaults were extremely inconveniently located a considerable distance from
our banking room, but they were safe, the very best procurable, and we have succeeded in operating with them. Visits to the vaults, due to their location, have consumed a considerable amount of the time of employees, but it was a condition that
could not be remedied.
This bank was opened for business promptly on the day set, and had its own staff
of officers and employees, though the St. Louis banks had very kindly offered to lend
us men if needed.
OFFICERS AND EMPLOYEES.

On the day of opening the staff numbered 6 officers and 17 other employees. For
a few days it had the assistance of Mr. William C. Tompkins, auditor of the Third
National Bank of St. Louis, who helped inaugurate the accounting system, but with
this exception, the bank was opened with its own employees.
Eight days after the opening of the bank there was started a limited clearing system,
and on December 4 the bank extended its clearing facilities and offered to collect
for member banks checks and drafts drawn on any Federal Reserve Bank and checks
and drafts drawn on all member banks of this district. In order to have a sufficient
force to take care of the possible number of items that might come in under this
enlargement of the clearing system, it was necessary to increase the force, so that on
January 1, 1915, the bank had 6 officers and 40 employees.
Now that experience has shown the approximate number of items to be expected
under given conditions, and the scope of other work necessary in carrying on the
operations of the bank, it has been possible to decrease the working force until at
the close of this year there were on the rolls 5 officers and 34 employees.
On January 6, 1915, the Deputy Federal Reserve Agent, Mr. Walter W. Smith,
resigned to take effect January 15,1915, to become vice president of the Third National
Bank of St. Louis. This vacancy was not filled until June 2, 1915, when the Federal
Reserve Board appointed as Mr. Smith's successor, Mr. T. C. Tupper, who had been
connected with the bank since its organization as manager of its credit department.
On July 19,1915, Mr. C. E. French resigned as cashier, to take effect August 7,1915,
as he had been appointed by the Comptroller of the Currency as chief examiner of
Federal Reserve District No. 8. Since his resignation, the deputy governor, Mr.
William W. Hoxton, has been the acting cashier.

294

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.
DIRECTORS AND BY-LAWS.

The by-laws adopted by the board of directors of this bank follow very closely the
by-laws suggested at the conference of directors held in Washington prior to the opening of the bank. They prescribe that there shall be two meetings of the board each
month, on the first and third Wednesdays, at 10 o'clock a. m., and if that day be a
holiday, on the second succeeding full business day. There have been 28 meetings
of the board since the organization of the bank, with an average attendance of seven
directors.
This bank has four out-of-town directors, and attendance at the board meetings
consumes a considerable amount of their time. It takes one of the directors a night
and a day to come from his home to St. Louis. It has been reported that there is a
rumor that directors receive $5,000 a year for their services to this bank. It seems
impossible that this could be the general impression, but if anyone has such an erroneous idea, this is the place to correct it. The directors of this bank receive their
traveling expenses and the usual fee for attending meetings. The money compensation is not anything like adequate for the times these gentlemen give to the affairs
of the bank.
The proposed form of by-laws suggested an executive committee, composed of three
members of the boa.rd, but this was changed so that the by-laws of this bank call for
an executive committee consisting of the governor, the Federal Reserve Agent, and three
directors chosen from classes A and B, this committee to serve during the pleasure of
the board of directors or for terms fixed by it. "With the exception of the Federal
Reserve Agent, under these by-laws, directors of class C are not eligible as regular
members of the executive committee, though it is provided that the governor may
invite any other members of the board to sit with the executive committee and that
such members have full right of membership during such meeting.
At the first meeting of the board there wxere elected to serve on the executive committee, in addition to the chairman of the board and the governor of the bank, Mr.
Walker Hill, Mr. F. O. Watts, and Mr. Murray Carleton, all of St. Louis. These
three elected members were to serve during the pleasure of the board for a term of
office expiring at the first regular meeting of the board of directors to be held in
January, 1916.
As the by-laws were first passed, the executive committee was not given the right
to fix the discount rates, but later it was found advisable to amend them, so that the
executive committee now has the power " to fix the discount rates and change same
from time to time, subject to review and determination by the Federal Reserve
Board."
During the first few months of the bank's existence the executive committee met
several times a week. It is now holding two meetings a week, one on Monday and one
on Thursday, at 10.30 o'clock a. m. Up to and including December 31, 1915, there
have been 150 meetings of the executive committee.
Copy of the by-laws, as amended and in force at the writing of this report, is hereto
attached as Exhibit A.
REDISCOUNT RATES.

On November 16, 1914, the day of opening, this bank established a rediscount rate
of 6 per cent for all maturities of paper eligible for rediscount under the law. This
rate was justified by the conditions then existing. In the latter part of December and
early in January money began to be more plentiful, and it seemed advisable to offer
a preferential rate for notes of shorter maturity. Accordingly, on January 7, 1915, a
4J per cent rate was announced for paper maturing within 30 days, a 5 per cent rate
for paper maturing within 60 days, a 5J per cent rate for paper maturing within 90
days, and a 6 per cent rate on agricultural and live-stock loans running from 90 days
to 6 months. Our rediscount rates have been changed from time to time, in accordance with the conditions within the district. On June 24 a rate of 3 per cent was

295

DISTRICT NO. 8—ST. LOUIS.

established on paper maturing within 10 days. It was thought that perhaps this rate
could be availed of by our large city banks in order to meet their demands for very
short time payments, such as, for instance, building up their legal reserves, temporarily depleted, or the payment of a heavy debit in the clearing house. Much to our
surprise, however, the first offering of this class of paper came from a country bank.
During the late winter and early spring member banks' reserves and deposits increased rapidly, and their discount rates consequently declined steadily. During the
early part of the year bank rates to customers in the larger cities were about 5J to 6
per cent, and commercial paper of the best names was selling from 4J to 5 per cent. In
March the rate further declined, and 5 per cent was the usual bank rate, with commercial paper selling around 4 per cent. Commercial paper brokers generally complained of an inactive business. Banks looked forward to the period of crop movement, anticipating an increased demand for funds, and accordingly a higher rate of
interest. This, however, did not materialize, the demand for crop-moving purposes
being below normal, and discount rates remained at a low level. Such being the
case, on September 14 this bank reduced its rate on 90-day paper to 4 per cent, putting
it on a level with 30 and 60 day rates. On this same day the bank announced a 3 per
cent rate, available for "commodity paper," having a maturity of not more than 90
days, provided the bank offering same could certify that the loan was originally made
at a rate not exceeding 6 per cent. This was designed to help the carrying of cotton,
wheat, and commodities of a like kind. Also, on September 14, in order to encourage
the use in business of "trade acceptances," the bank established a rate on this class
of paper one-half per cent lower than its 30-day rate, the rate being 3J per cent on
maturities of not more than 90 days. So far the banks have not availed themselves,
to any great extent, of any of the preferential rates—that is, the 3 per cent rate on
10-day paper, the 3J per cent rate on trade acceptances, and the 3 per cent commoditypaper rate.
In October of this year the demand was somewhat more active, especially in the
southern parts of the district, but this was not sufficient to cause any marked increase
in rates. At the end of October the rates were still below normal for this time of the
year, the bank rate ranging from Ah to 5 per cent, and commercial paper of the best
names was scarce even at a rate of 3J to 4 per cent for maturities up to six months.
The board of directors of this bank has realized from the beginning that the fixing
of rediscount rates was perhaps the most responsible of its functions. In the face of
earnings not up to our expectation and with a desire for increased business there was
a temptation to lower the rates. However, the board thoroughly appreciated the fact
that if rates were placed at so low a level as to encourage member banks to allow
their customers to borrow too much money and extend too much, the result would be
an overexpansion in business and the possibility of a dangerous situation. The policy
of the board has been to establish a rate which would enable the member banks to •
meet every legitimate demand of business in their respective localities at a reasonable
rate to customers and at the same time not stimulate loans to a point of dangerous
expansion. Since the bank was established there have been seven changes in the rediscount rates, the dates on which these changes have occurred and the rates for the
different maturities being as follows:
10 days.

Nov 16 1914
Dec. 10, 1914
Dec 21, 1914
Jan. 7 1915
Feb 3 1915
Apr. 22 1915
June 24,1915
Sept. 14 1915

...

30 days.

60 days.

90 days. 6 months.

Per cent. Per cent. Per cent. Per cent. Per cent.
6
6
6
6
6
6
6
54
6
44
5
4
4
4
4
4
3
4
5
44
4
4
3
5
44
4

Sept. 14,1915, trade acceptances, 90 days, 34 per cent; commodity paper, 90 days, 3 per cent.

296

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.
EFFECT OF FEDERAL RESERVE RATES ON RATES IN GENERAL.

Since the establishment of the Federal Reserve Bank it is interesting to examine
the rates which banks have been paying for borrowed money and also the rates which
banks have been granting their customers. From reports of member banks made to
the Comptroller of the Currency the following is rioted: On May 1, 1915, the average
rate that banks paid for borrowed money was 5.24 per cent; on June 23, 5.22 per cent;
on September 2, 5.05 per cent; and on November 10, 4.96 per cent. This shows a
steady decrease in the rate at which banks borrowed from their correspondents.
During all this period they could have borrowed from the Federal Reserve Bank at a
less rate.
There has also been a decrease in the rate which member banks charge their customers. The 30-day average rate to customers on May 1, 1915, in this district was 7.31
per cent; on June 23, 6.94 per cent; on September 2, 7.06 per cent; and on November
10, 6.87 per cent. The decrease in rates to customers has been greater in two or three
of the large cities than in the smaller towns. The country banks, as a rule, have
made little decrease in their rates of interest to customers.
REDISCOUNTING.

On November 18, two days after the opening of this bank, we received our first
offering of paper, amounting to $1,000,000. Our next rediscounts were received on
November 23, and totaled $21,000. On November 27 the next offerings were received, aggregating $52,000. The following day we received an offering amounting to
$4,224.95, and on November 30 one amounting to $500,000.
From the opening of the bank to the end of business on Friday, December 4, 1914,
this bank had received a total amount of rediscounts of $1,654,507.76. In fact, two
days after the opening of the bank more rediscounts were on hand than have been
received during any one week since then. The rediscounts received during the week
ending Friday, December 11, 1914, amounted to $71,500. Since that time the rediscounts have increased with more or less regularity from week to week.
Attached hereto, as Exhibit B, is a statement of commercial paper offered by member banks and accepted each week, showing total of each maturity and total of all
maturities to and including December 31, 1915. Also attached, as Exhibit C, is a
chart showing the same facts in graphic form.
The total rediscounts accepted by the bank from its opening on November 16, 1914,
to December 31,1915, amounted to $8,231,082.92. Of this amount, $2,363,330.16, or
28.71 per cent, was of 30-day maturity; $2,821,311.81, or 34.28 per cent, was of 60-day
maturity; $2,431,693.76, or 29.54 per cent, was of 90-day maturity; and $614,747.19,
or 7.47 per cent, was of paper maturing within 6 months. Nearly two-thirds of the
paper accepted by the bank was of the 60 and 90 day class. There were 3,828 notes
accepted during this period, and of this number 118 were for amounts less than $100
each.
From a study of the number of member banks offering rediscounts from the different States and cities of the district it may be said that the smaller banks, rather than
the larger ones, have shown a tendency to use our service. The banks in St. Louis
and Louisville have not had occasion to avail themselves, to any great extent, of the
rediscount privilege. Below is given a table, showing number of member banks
offering rediscounts from each State each month from the opening of the bank, the
total number of banks offering rediscounts from the whole district each month, the
number and percentage of different banks offering rediscounts from each State, and
the number and percentage offering rediscounts from the whole district since the
bank's opening:

DISTRICT NO. 8
1914

297

ST. LOUIS.

1915

State or city.

Arkansas....
Illinois
Indiana
Kentucky...
Louisville..
Mississippi.
Missouri
St. Louis...
Tennessee...
Total

131

62
157
61
61
8
18
72
8
20

38.7
26.7
16.4
22.9

467

28.0

44.4
26.3
50.0
50.0

From November 16, 1914, to January 1,1916, the number of different member banks
accommodated through the discount of paper was 131. The number of different
banks accommodated through the discount of paper from January 1, 1915, to the end
of the calendar year was 129.
It will be noted that a little over one-fourth of our member banks have availed
themselves of the rediscount privilege, and this number is steadily increasing from
month to month. We have made regular customers of these banks, the majority of
them making frequent offerings. It is gratifying to find this steady normal increase,
as it shows that as our member banks become more familiar with the system they are
taking advantage of its facilities. This increased use of the rediscount privilege of
the Federal Reserve Bank is also shown from an analysis of the reports to the Comptroller of the Currency, to wit: On March 4 this bank held approximately 18 per cent
of the total loans of the member banks in this district; on May 1, 18.4 per cent; on
June 23, 17.98 per cent; on September 2, 27.03 per cent; and on November 10, 25.17
per cent.
The following table gives the approximate percentage of rediscounts of the Federal
Reserve Bank of St. Louis as compared with the total borrowings of member banks
for the district and for each State within the district, according to the reports made to
the Comptroller of the Currency under calls of March 4, May 1, June 23, September 2,
and November 10, 1915:
Date of call.

Mar. 4,1915
May 1,1915
June 23, 1915
Sept. 2,1915
Nov. 10,1915

District.
18.40
18.40
17.98
27.03
25.17

Arkansas.
12.8
8.9
20.6
23.8
17.9

Illinois. Indiana.
13.7
16.3
18.9
27.0
29.9

30.9
33.6
27.9
34.5
15.5

Kentucky.
5.4
8.2
3.6
6.7
16.0

Mississippi.

8.3
3.5
25.2
19.6

Missouri. Tennessee.
10.3
10.2
15.7
22.7
17.7

47.3
54.0
33.9
40.9
48.3

It is difficult to draw definite conclusions from this statement, as conditions vary
considerably in the different sections of the district. From the above, however, it
would appear that the member banks in Tennessee have realized the possibilities of
the Federal Reserve Act to a greater extent than those of any other State. Indiana
also has an excellent record in this respect. The above figures seem to indicate a
growing appreciation on the part of bankers in Arkansas, Illinois, and Missouri. The
offerings from Kentucky, however, have been spasmodic and rather disappointing.
A further examination of the reports to the Comptroller of the Currency shows that,
in spite of the fact that member banks could rediscount with the Federal Re&erve
Bank, in which they are stockholders, the banks in this district have placed approximately one-third of their total loans with banks located outside of the district. On

298

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

March 4 the borrowings of member banks from banks outside of the district amounted
approximately to $1,275,000; on May 1, approximately $1,070,000; on June 23, approximately $1,103,000; on September 2, approximately $1,637,000; and on November
10, approximately $2,746,000.
If the borrowing banks of this district had placed their loans which they made outside of the district with the Federal Reserve Bank of St. Louis, it would have enabled
their Federal Reserve Bank, in which they own stock, to have earned considerably
more money and would have not taken any business away from the banks within the
district. It appears from the reports to the Comptroller that few, if any, of these
loans were made at a less rate of discount than the rate offered by this bank. The
average maturity of paper rediscounted with us is probably in excess of 60 days. If
it be supposed that these member banks had rediscounted with us the $7,830,000 of loans
which they placed with banks outside of the district, at our 60-day rate—4 per cent—
this bank would have received an additional revenue of approximately $52,200, which
would have helped our showing considerably.
The following figures, taken from the reports of member banks to the Comptroller
of the Currency, are interesting:
The reports of September 2 showed that loans of member banks were divided as
follows:
With banks within the district
$1, 580,000
With banks outside the district
1, 630,000
With Federal Reserve Bank
1,190, 000
Total

4,400, 000

Of this total, 27 per cent was borrowed from the Federal Reserve Bank.
The reports of November 10 showed that loans of member banks were divided
as follows:
With banks within the district
With banks outside the district
With Federal Reserve Bank

$2, 450,000
2, 745, 000
1, 750, 000

Total.

6, 945,000

Of this total, the Federal Reserve Bank held 25 per cent. In brief, the total loan
of member banks within this district increased $2,545,000 from September 2 to November 10. In this same period the rediscounts with the Federal Reserve Bank increased
only $560,000, or about 22 per cent of the increase.
CLEARINGS.

Eight days after the opening, on November 24, 1914, this bank inaugurated its
clearing system by the collection for its member banks of checks and drafts on other
Federal Reserve Banks and checks and drafts drawn by member banks of this district on member banks located in Louisville and St. Louis.
On December 4, 1914, it extended the clearing facilities and offered to collect for
member banks checks and drafts drawn on all member banks in this district and
checks and drafts drawn on other Federal Reserve Banks. All items handled were
credited to the banks from which received, on the day of receipt, and charged to
the drawee bank on the same day. It soon developed that banks in reserve and
central reserve cities, located outside of District No. 8, were sending in a great number
of items on member banks to be cleared at par, while member banks were not able
to build up their balances, so depleted by checks on their correspondents located
outside of the district. Therefore, on December 18, in order to protect member
banks, the bank was compelled to refuse to accept for collection or credit checks or
drafts drawn on member banks of this district that bore the indorsement of banks
in any reserve or central reserve city located outside of District No. 8. It was forced

DISTRICT NO. 8

299

ST. LOUIS.

to take this step, as there was practically no development of the check clearing system
outside of this district.
The clearing system is based on the assumption that the intent of the Federal
Reserve Act is that every member bank be required to cover at par all checks and
drafts drawn upon it received from the Federal Reserve Bank of which said bank
is a member. Therefore the collection system, as first started, was mandatory upon
member banks. However, when 10 of the other Federal Reserve Banks started
collection systems on the voluntary basis, this bank felt that it should put its member
banks on the same basis as the member banks of other districts. Consequently,
on April 12, 1915, the bank notified the member banks that on and after May 17,1915,
they would have the option of remaining in the clearing system and having their
customers' checks cleared through us at par or of withdrawing from the clearing system
and having their customers' checks handled through the old channels. On that date
there were 462 member banks in District No. 8, and on May 17, 1915, when the voluntary system went into effect, about 20 per cent of our member banks withdrew.
Since that time there have been 12 withdrawals and 9 additions to the clearing
system. The fact that there have been any additions indicates that the system as
operated by the bank has attracted some banks after they more fully understood it,
and the fact that so few have withdrawn indicates that a majority of the member
banks in this district consider the system practical.
This bank from the beginning has operated on an immediate credit and immediate
debit basis, and therefore, on Tuesday, November 16, 1915, the St. Louis Clearing
House Association amended its rules and regulations affecting collection charges,
to be in effect on and after December 1, 1915, as follows:
"On all such items payable or collectible at par in St. Louis, where immediate
credit is had, the charge shall be discretionary with each bank or trust company.
Items collectible at par in St. Louis, where immediate credit is had, shall not be
regarded as finally paid until received and paid by banks upon which drawn, and
recourse may be had upon the clearing bank on such items as may be dishonored,
or for losses occurring in the mails, provided such claims are made in due course."
With this amendment in effect St. Louis business men will be able to receive
par for their checks.
Prior to December 4, 1914, the date when the clearing system was enlarged, the
transit department went over the situation very carefully, and came to the conclusion that on the opening day it should be prepared to handle at least 20,000 items
a day. However, the average number of items received during the first month of
the bank's operation did not exceed 5,000 per day. It has felt that it was unsafe,
however, to open the bank unless we were prepared for the possibilities.
Below is given a statement showing, by months, the numbers of items and amounts
of clearings of the Federal Reserve Bank of St. Louis from the inauguration of its
clearing system to December 31, 1915:
Number of
items.
Nov. 24 to Nov. 30, 1914.
December, 1914
January, 1915
February, 1915
March, 1915
April, 1915
May, 19151
June, 1915
July,1915
August, 1915
September, 1915
October, 1915
November, 1915
December, 1915
Total.

Amount.

8
115,024
136,695
127,227
154,630
154,070
134,452
124,028
129,141
141.850
150.851
182,692
183,036
202,876

$14,312.24
24,611,473.90
28,300,204.08
33,716,002.70
51,190,674.05
56,519,995.37
47,048,300.31
48, 784,820. 71
37,460,280.27
38,091,504.87
51,331,290. 75
63,532,030.66
77,371,144.41
84,559,718.67

1,936,580

642,531,752.99

i In May about 20 per cent of our member banks withdrew from the clearing system.

20067°—16
20

300

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

Attached hereto is Exhibit D, giving this information in graphic form.
It will be noted that this statement shows a steady increase for each month up to
May, 1915, when the effect of the withdrawal of 97 banks from our clearing system
becomes apparent, and a decrease is shown. Beginning with July, however, both
the number of items and the amount show a steady increase.
A full clearing system has been in operation over a year. The bank has never
attempted to keep down operating expenses at the cost of transit efficiency, and our
method in operation, as the records show, has never resulted in dangerous overdrafts.
From an operating standpoint it may be said that it is satisfactory.
Gradually exchange charges on checks are being eliminated in this district, and
the public is getting a direct benefit from the Federal reserve system. It has been
reported that one large firm in the city of St. Louis has had to spend annually in
exchange charges approximately $40,000. Due to the Federal reserve system, this
firm and others like it will b3 saved at least the greater part of this expense. The
banks in this district have been in the habit of charging from 5 cents per letter, regardless of total, to o/ie-fourth of 1 per cent of the total for remitting to other banks to
cover items drawn on themselves or banks in their own town or city. The majority
of the member banks belonging to our clearing system which were in the habit of
charging exchange OQ remittances, as above mentioned, now handle same at par. In
the majority of the larger cities in this district it has been the custom of the banks to
charge exchange on all items deposited with them for collection by local customers.
The charges vary from one-twentieth of 1 per cent to one-fifth of 1 per cent. These
charges, as a rule, are made in accordance with the rules of the local clearing house.
St. Louis is the only city in our district that we know of where the clearing-house rules
have been amended so that banks are no longer obliged to charge on items that are
collectible at par and on which immediate credit can be obtained. It is estimated
that the saving to local customers of St. Louis banks on items drawn on members of
our collection system will average about $500 a day. This saving will be augmented
by additions to the membership of our clearing system and by nonmember banks obtaining from their correspondents facilities similar to those extended by this bank to
its members through its collection system.
Attached hereto as Exhibit E is a statement showing average number of items and
amount per day for each month since January 1, 1915, cleared on member banks outside of St. Louis, cleared on member banks in St. Louis, sent to other Federal Reserve
Banks, and overdrafts of member banks.
INVESTMENTS.

Under the law this bank has been limited in its investments to the purchase of
United States bonds, warrants based on taxation having maturities of not more than
six months, and to acceptances based on the importation or exportation of goods.
This bank now holds $970,000 par value of United States Government bonds. In
view of the fact that each year after this year the bank will have to take its pro rata
share of the $25,000,000 of United States bonds authorized to be purchased under the
Federal Reserve Act, and that bonds purchased during this year could not be counted
as a part of such pro rata share, and in view of the unsettled condition abroad and
other factors, the board of directors of this bank did not deem it wise to tie up more
funds in United States Government bonds.
The method of financing political subdivisions by short-time warrants has not been
much in use in this district, and it has been difficult to get the kind of warrants acceptable by us under the law. Every effort has been made to encourage financing of
this character, and the services of counsel, Mr. James G. McConkey, have been offered
to any community where he was needed to suggest the form of warrants and help in
their issuance. A number of conferences in regard to this type of financing have
been held and considerable correspondence has occurred, and it is hoped that here-

301

DISTRICT NO. 8—ST. LOUIS.

after the district will furnish more warrants of the kind that can be used. The total
amount of eligible warrants purchased by this bank up to and including December
31, 1915, was $2,264,827.87. Very few, if any, bank acceptances based on the importation or exportation of goods, during this year at least, have been obtainable in
this district. The total amount of such acceptances received up to and including
December 31, 1915, was $1,800,564.57. The great majority of warrants that this
bank has been able to purchase, and all of the bank acceptances, have come through
the Federal Reserve Banks of New York, Boston, and Atlanta. The chief source
of revenue at all times has been paper rediscounted for our member banks. Attached
hereto as Exhibit F is a chart showing in graphic form the total investments held by
this bank each Friday from December 11, 1914, to December 3, 1915. This shows
commercial paper rediscounted with this bank, bank acceptances bought, United
States bonds bought, and warrants bought.
It will be noted that the revenue of the bank shows a steady increase from month
to month. Current expenses have been substantially reduced during the last few
months, and in November, 1915, this bank earned over its operating expenses $962.22.
FEDERAL RESERVE NOTES.

Since the opening of the bank four shipments of Federal Reserve notes have been
received by the Federal Reserve Agent from the Comptroller of the Currency, aggregating $9,600,000.
On December 1, 1914, the Federal Reserve Agent made the first delivery of Federal Reserve notes to the bank in exchange for collateral deposited with him. The
second delivery of notes was made on December 14, 1914.
At the present time there is outstanding $8,950,000 in Federal Reserve notes, on
which the bank has eliminated its liability by the deposit of gold with the Federal Reserve Agent to the amount of $8,950,000. Of this amount $3,950,000 is held in the
vaults of the Federal Reserve Agent at St. Louis and $5,000,000 is to his credit with
the Federal Reserve Board in Washington.
NET DEPOSITS AND CASH RESERVE.

Attached hereto as Exhibit G is a chart showing in graphic form the total cash
reserve and net deposits of this bank at the close of business each Friday from November 20, 1914, to December 3, 1915.
STATE BANKS AND TRUST COMPANIES.

In district No. 8 there are 2,574 State banks and trust companies. Of this number
985 State banks and trust companies have sufficient capital to qualify for membership in the Federal Reserve system; 1,588 of them have not sufficient capital to
make them eligible and would have to increase it to become members. The following statement shows, by States, the number of State banks and trust companies that
are eligible and the number not eligible.
State hanks and trust companies eligible for membership in Federal Reserve System.
State.
Arkansas
Illinois
Indiana
Kentucky
Mississippi
Missouri
Tennessee

. .

Total

Number.

Capital.

Surplus.

177
174
89
102
85
303
55

$10,521,617
9,314,300
3,378,000
8,799,850
4,738,500
32,047,100
4,772,460

$3,957,580
4,691,890
1,762,160
4,156,360
2,263,390
16,963,450
2,213,900

985

73,571,827

36,008,730

302

ANNUAL BEPORT OF THE FEDERAL RESERVE BOARD.

State banks and trust companies not eligible for membership in Federal Reserve System.
State.

Number.

Capital.

Surplus.

Arkansas
Illinois
Indiana
Kentucky
Mississippi

251
128
42
201
72
799
95

$3,719,130
1,995,525
1,310,000
3,773,320
1,104,350
13,470,700
1,518,398

Total

1,588

26,891,423

24,383,540

Missouri....
Tennessee

The Mercantile Trust Co., of St. Louis, is the only State institution in this district
that is a member of the Federal reserve system. It came in while the reserve bank
organization committee was organizing the bank and before the Federal Reserve Bank
of St. Louis was opened.
There have been a number of inquiries from State banks and trust companies in
different parts of the district asking for information, with a view of becoming members of the Federal reserve system.
STATISTICS.

An effort has been made by the Federal Reserve Agent to collect reliable information regarding business conditions in this district. It was thought important that
information be obtained at first hand from both the borrower, or businessman's point
of view, and the lender, or the bank's point of view. So far we have been arriving
at the lender's point of view from the copies of the statements sent us, rendered on call
of the Comptroller of the Currency. This is supplemented by personal interviews
with officers of both State and national banks. These personal interviews are written
up in the form of a report two or three times a month. In order to get the borrower's
viewpoint, we have compiled a list of about 125 firms, in nine cities within this district.
These firms are all of the highest rating, and are wholesalers and jobbers dealing in what
may be called "the necessities of life." It was felt that these firms were depending
on, and therefore familiar with, the local retailers in the smaller cities throughout the
district, and that reports on their business would be an accurate index of actual business conditions. Street railway companies in the larger cities of the district furnish us
statistics in regard to earnings and number of passengers carried. From other sources
we get information in regard to failures and the usual statistics in regard to building,
car movements, etc. The heartiest cooperation has been given by all those asked for
information by this bank, and we are extremely grateful for the assistance given us.
District No. 8 is largely a farming district, and it is necessary that we keep closely in
touch with agricultural conditions. We receive the reports of the Bureau of Crop
Estimates at Washington; reports of the Department of Agriculture; reports from the
United States Weather Bureau stations in this district, and reports from various State
boards in the district. These reports are carefully analyzed, and are then supplemented by personal interviews with men closely in touch with agricultural development.
The rediscount records of the bank are presented graphically on charts. From them
we are able to see what effect, if any, the rediscount rate of this bank has on the rediscounts, which, maturities are most frequently offered, what sections of the district are
availing themselves of the facilities offered by the bank and to what extent.
In district No. 8, statistics fall naturally under three heads, as follows: (1) manufacturing and selling, applying more particularly to St. Louis, Louisville, Memphis,
Little Rock, and the larger centers; (2) agriculture and livestock, applying to a great
part of the district, and (3) banking conditions, which apply to all of the district.

DISTRICT NO. 8—ST. LOUIS.

303

BUSINESS AND AGRICULTURAL CONDITIONS DURING THE YEAR.

When this bank opened in November, 1914, the emergency currency, issued by
the banks under the Aldrich-Vreeland Act, to a great extent had been retired. In
other words, this district had partially recovered from the first shock caused by the
declaration of war in Europe the previous August. There was still a general feeling
of uneasiness among all classes of business men, for they were fearful of possible complications in our foreign policy, and were uncertain as to the crop of 1915. However,
due in no small measure to the establishment of the Federal Reserve Bank of St.
Louis, in this district the first quarter of 1915 showed some improvement in general
business conditions as compared to the last quarter of 1914. During this first quarter
national banks held reserves well over their legal requirements, due, in a great measure, to the reduced reserve requirements under the Federal Reserve Act, and also,
to some extent, to a lack of demand for funds for business purposes. At that time
the average bank rate to customers in the large cities was approximately 5 per cent,
and commercial paper was freely quoted around 4 per cent. The tendency of the
money market was toward lower rates.
During the spring months general business showed some improvement. This was
indicated by the increased demand for labor and by the decrease in the number of
commercial failures. Money rates were low and banks, contrary to the usual custom,
were in the market for commercial paper maturing after the crop-moving season.
The shipments of wholesalers were below the average for the period, but collections
were nearly normal and showed the effect of the enforced liquidation during the preceding six months. The demand for commodities available for export was beginning
to be felt and was responsible, in part, for the improvement noted. The live stock and
wheat markets showed the effect of this demand more keenly than any of the other
branches of industry, and this marked activity continued throughout the spring and
early summer.
Climatic conditions during that period were in the main favorable. The rains in
June did some damage to the wheat crop, but even so, the various reports indicated
that it was considerably above the 5-year average. The temperature was below
the normal, generally, but crops grew rapidly and seasonable weather from then on
seemed the only thing necessary to insure a successful harvest.
Commencing the latter part of June, this bank had inquired into the cotton situation throughout the district, gathered data in regard to warehouses, given such help
as it could to communities that needed proper warehouse facilities, and prepared forms
of bonds and warehouse receipts for use when needed. We advised our member
banks that, if necessary, we would gladly send someone from this office to help them
get their local cotton situation into proper shape. We made it very plain that we were
in position to take care of demands arising out of cotton, and that if it were correctly
handled there was no reason why there should be forced sale of cotton at distress
prices in any place in this district. This developed a general feeling of confidence
in the situation, and we believe had a great effect throughout the district. Jobbing
houses generally reported an increase in sales during August and this, in turn, affected
the business of manufacturers and those who deal in raw materials.
As summer merged into fall, a steady improvement was noted. To a great extent
the Federal Reserve Banks had restored confidence, and this was strengthened by
reports on crop conditions. Southern States had made an earnest effort to get away
from the one crop standard, and were raising, in many instances, several times the
usual amount of wheat and corn. However, the cool, damp summer had retarded the
harvesting of the crops and even in September there was no really active demand for
money from country communities. Bank rates for customers remained fixed at
approximately 4J per cent to 5 per cent, and commercial paper rates were quoted at
from 3-|- per cent to 4 per cent for maturities up to six months.

304

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

October, November, and December showed further gains in all industries, and these
gains should go far toward overcoming the loss incurred last winter. Business
houses, generally speaking, are busy. Country merchants are buying freely, and
indications point to a rising market in many of the standard commodities.
Failures showed a decrease both in number and total liabilities each quarter of the
year of 1915, and this is an indication of the more favorable conditions now existing.
The year has been a peculiar one, in that the large city banks have not had the demand
for money from their correspondents they anticipated, nor has the Federal Reserve
Bank rediscounted for its member banks the amount of loans that, judging from statistics of previous needs in this district, it had reason to believe it would be called on to
rediscount. The Federal Reserve Bank, however, has been of great benefit to District
No. 8, for it has restored confidence.
There has been a steady and normal improvement throughout the year, bountiful
crops have been harvested, and it can be said that the year closes with an approach
to a period of prosperity unknown for some time.
WORK THROUGHOUT THE DISTRICT.

This bank had no sooner become established than it became apparent that the chief
problem before the officers was to get the member banks to realize not only the facilities at their disposal, but the ease with which they could be used. In some way or
other many of the banks in this district got the idea that they had no paper eligible
for rediscount, whereas the fact was that,in a majority of instances, the greater part
of the paper in their portfolios was eligible. Member banks seemed also to have
gotten the idea that there was a great deal of "red tape" connected with the bank
and that it was very difficult to do business with it.
Every effort was made by the officers of this bank to have member banks clearly
understand the facts as they exist. They have tried to explain that the bank is operated by practical men and that our effort has ever been to have satisfied customers.
There is no "red tape" connected with its operations. Its officers have been careful
to explain that the Federal Reserve Act did not establish new principles, but, as it
were, systematized good banking standards, and they have suggested to State banks
that, whether or not they ever came into the system, it was good banking policy for them
to conduct their business and get their bill cases into shape the same as requested of
member banks. It is gratifying to be able to state that a number of State institutions
have written for forms of statements and are beginning to use them.
This bank has never accepted a rediscount that was not accompanied either by
the statement of the maker of the note or a statement of the bank offering it, giving,
with some particularity, the approximate figures covering what the customer owned
and what he owed. The request has been reasonable, for the bank only wants to know
what every good banker certainly knows before he grants the loan, whether he gets
the information through conversation or gets it on a statement. At first some member
banks felt that it would be impossible to get statements. It is a great pleasure to
report that, on the whole, member banks have not had the difficulty they anticipated,
and in several instances have been able to render a real service to their customers by
giving them advice when, with the statement before them, they realized the actual
condition then existing. At least a majority of our member banks realize that they
have paper eligible for rediscount with this bank, do not think it is hard to do business with it, or that there is any so-called "red tape," and are adopting the plan of
receiving statements from their customers, realizing that this is a benefit both to the
customers and themselves. This result has not been achieved without a great deal
of hard work on the part of the officers of this bank, and there is still considerable work
to be done before all of the banks are brought into that close intimate touch with this
bank that should exist.

DISTRICT NO. 8

ST. LOUIS.

305

On February 20, 1915, a circular letter was issued, covering eligible paper in detail
and giving specific examples of various kinds of notes that are eligible for rediscount.
We found this circular effective, but our experience has been that the best work is
accomplished when we can talk with our member bankers. The chairman of the
board has made addresses in 22 different cities throughout this district and, in some
places, has spoken several times. The Deputy Federal Reserve Agent has made
several trips throughout our territory, going into the cotton sections to help them get
their paper in acceptable shape, and wherever requested to do so, has gone into the
bank and examined its paper, suggesting that which is eligible and that which is not.
Other officers of the bank have also made trips from time to time. It gives us pleasure
to state that our member banks have shown a most friendly feeling of cooperation,
and we are grateful to all of them.
NEW QUARTERS.

As stated in the early part of this report, this bank was compelled to get temporary
quarters at its opening with inconvenient vault facilities. On October 8, 1915, it
closed a lease for quarters in what is now known as the New Bank of Commerce Building, on the northeast corner of Broadway and Pine Streets, just one block south of
our present location. We took possession of these new quarters during the last week
in December, 1915, and the name of the building has been changed to the Federal
Reserve Bank Building. This gives us a light, commodious, and most convenient
banking room on the second floor, accessible to the street without the use of elevators,
with ample and satisfactory vaults.
CONCLUSION.

This bank, during its first year of operation, has not made money, though it showed
approximately a $1,000 gain over operating expenses for the month of November,
1915. However, it is felt that a much higher service to the district than the making
of money has been rendered. It has stabilized conditions and made it possible for
any customer in the district to get money at a reasonable rate; has operated a clearing
system which has resulted in the elimination of exchange charges on a large majority
of the checks drawn on member banks in the district and the consequent advantage
to business men of district No. 8; has materially helped some banks in communities
suffering from three years of continuous drouth, and at all times has been in position
to give any assistance needed, no matter what the emergency, to any deserving bank
in the district.
EXHIBIT A.
BY-LAWS OF THE FEDERAL RESERVE BANK OF ST. LOUIS.
ARTICLE I.—Directors.

306

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

least two days before the date of the meeting. Notice of any meeting may be dispensed with if each of the directors shall in writing waive such notice.
SEC. 4. Powers.—The business of this bank shall be conducted under the supervision and control of its board of directors, subject to the supervision vested by law in
the Federal Reserve Board. The board of directors shall appoint the officers and fix
their compensation.
The board may appoint legal counsel for the bank, define his duties, and fix his
compensation.
SEC. 5. Special committees.—Special business of the bank may be referred from time
to time to special committees, which shall exercise such powers as the board may
delegate to them.
SEC. 6. Order of business.—The board may from time to time make such regulations
as to order of business as may seem to it desirable.
ARTICLE II.

SECTION 1. How constituted.—There shall be an executive committee consisting of
the governor, the Federal Reserve Agent, and three directors chosen from classes
Aor B; the member or members of the committee chosen by the board shall serve
during the pleasure of the board, or for terms fixed by it. The governor shall have
authority to invite any other members of the board of directors to sit with the executive committee at any regular or special meeting, such member or members to have
full rights of membership during such meeting or meetings. Not less than three members of the committee shall constitute a quorum for the transaction of business, and
action by the committee shall be upon the vote of a majority of those present at any
meeting of the committee.
The committee shall have power to fix the time and place of holding regular or
special meetings, and the method of giving notice thereof.
Minutes of all meetings of the executive committee shall be kept by the secretary,
and such minutes, or digests thereof, shall be submitted to the members of the board
of directors at its next succeeding meeting. Such minutes shall be read to the meeting if required by any member of the board.
SEC. 2. Powers.—Subject to the supervision and control of the board of directors, as
set forth in Article I, section 4, the executive committee shall have the following
powers:
(a) To pass upon all commercial paper submitted for discount.
(b) To initiate and conduct open-market transactions.
(c) To fix the discount rates and change same from time to time, subject to review
and determination by the Federal Reserve Board.
(d) To buy and sell securities.
(e) To apply for and provide for the security of such Federal Reserve notes as may,
in the judgment of the committee or of the board, be necessary for the general requirements of the bank.
(/) To employ or to delegate to officers of the bank authority to employ clerks and
Other subordinates, and to define their duties and to fix their compensation.
(g) To approve bonds furnished by the officers and employees of the bank, and to
provide for their custody.
(h) In general, to conduct the business of the bank subject to the supervision and
control of the board of directors.
ARTICLE

III.—Officers.

SECTION. 1. The board of directors shall appoint a governor, a deputy governor, a
secretary, and a cashier, and shall have power to appoint such other officers as the board
may from time to time determine to be necessary and appropriate for the conduct of
the business of the bank. The offices of deputy governor, secretary, and cashier, or
any two of them, may be held by one person, in the discretion of the board. The
officers chosen by the board shall hold office during the pleasure of the board.
SEC. 2. Federal Reserve Agent.—The Federal Reserve Agent, as chairman of the
board, shall preside at meetings thereof. Copies of all reports and statements made
to the Federal Reserve Board shall be filed with the Federal Reserve Agent.
SEC. 3. Deputy Federal Reserve Agent.—In the absence or disability of the Federal
Reserve Agent his powers shall be exercised and his duties performed by the Deputy
Federal Reserve Agent, who may perform such other services as shall be prescribed
by the board of directors not inconsistent with his duties as provided by law.
SEC. 4. The governor.—Subject to the supervision and control of the board of directors, the governor shall have general charge and control of the business and affairs of

DISTRICT NO, 8—ST. LOUIS.

307

the bank, and he shall be the chairman of the executive committee. He shall have
power to make any and all transfers of securities or other property of the bank which
may be authorized to be sold or transferred by the executive committee or by the
board. The governor shall have power to prescribe the duties of all subordinate
officers and agents of the bank where such duties are not specifically prescribed by
law or by the board of directors or by the by-laws. The governor may suspend or
remove any employee of the bank.
SEC. 5. The deputy governor.—In case of the absence or disability of the governor
his powers shall be exercised and his duties discharged by the deputy governor, and
in case of the absence or disability of the deputy governor the board shall appoint
one of the other directors governor pro tern. The duties of the deputy governor shall
otherwise be such as may be prescribed by the board of directors or by the governor.
[n case the board shall deem that the business of the bank requires the appointment
of one or more assistant deputy governors, it shall have authority to appoint such
assistant deputy governor or governors, and shall prescribe and define his or their
duties.
SEC. 6. The secretary.—The secretary shall keep the minutes of all meetings of the
board and of all committees thereof. He shall have custody of the seal of the bank,
with power to affix same to certificates of stock of the bank, and by authority of the
board or the executive committee, to such other instruments as may from time to
time be required. The board of directors may, in the absence or disability of the
secretary, or upon other occasion where in the discretion of the board greater convenience can be attained, appoint a secretary pro tempore or empower one or more
officers to affix the seal of the bank to certificates of stock or other instruments. The
secretary shall perform such other duties as may from time to time be prescribed
by the board of directors, the executive committee, or the governor.
The cashier and at least pne other officer designated by the board of directors shall
have joint custody of the inactive reserve of the bank and bonds purchased by the
bank for investment. All other moneys and investments shall be in the custody of
the cashier. He shall perform such other duties as may be assigned to him from time
to time by the executive committee, the board of directors or the governor. In the
event of the absence or inability of the cashier to act, then the governor or the executive committee shall have power to appoint some officer to act in his stead.
ARTICLE TV .—Certificates of stock.
SECTION 1. Signature.—All certificates of stock, or of payment of or on account of
stock subscriptions, shall be signed by the governor or a deputy governor, and the
secretary or cashier, or such other officers as may be prescribed by the board, and such
certificates shall bear the corporate seal.
ARTICLE V.

SECTION I. Business hours.—The bank shall be open for business from 10 o'clock
a. m. to 3 o'clock p. m. on each day except Sundays or days or parts of days established as legal holidays.
The bank shall be open for business from 10 o'clock a. m. to 12 o'clock noon on
Saturdays.
ARTICLE VI.—Amendments.

These by-laws may be amended at any regular meeting of the board by a majority
vote of the entire board: Provided, however, That a copy of such amendment shall
have been mailed to each member at least 10 days prior to such meeting.

308

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.
EXHIBIT B.

Commercial 'paper offered by member banks accepted each week, showing total of each
maturity and total of all maturities to and including December 31, 1915.
Week ending—

Dec.

1914.
.

30 days.

Dollars.
Dollars.
1,007,729.83 551,582.82
43,000.00
3,000.00
14,295.76
9,008.58
65,591.60 24,195.10
3,957.75
5,213.05

...

18
24
31

Jan.

1015.

15
22

281,331.46
4,000.00
20,502.00
9,046.78
7,667.49
16,551.03

Feb. 5
12
19

26
Mar. 5

, .. .

Apr

May

9
16
23
30

21
28
June 4

....

18
July

9
15

23
30
Aug. 6
13
20
27

Sept. 3
10

17
24
Oct. 1
8
15

22
31

Nov. 7
14

Pec
Dec
Pec
Dec.

7
14
21
31

60 days.

1,872.52
5,775.50
5,036.26
16,372.03
13,144.00
12,713.21
3,200.00
3,848.70
4 638 22
14,272.99
18,056.12
8,800.50
4,877.00
8,062.69
900.00
151.75
13,739.83
15,399.71
22,197.93
3,729.41
39,367. 56
6,940.00
11,885.14
11,597.36
8 399 50
11,022.27
10,976.44
7,221.76
4,133.00
10,241.35
48,916.33
18,522.33
15,845.14
40,358.54
32,598. 76
47,061.61
32,405.71
20,287.62
163,458. 89
42,988.53
38,329.69
18,461.17
25,185. 45
46,764.54

6,552.57
62,587.43
12,693. 23
92,650.39
10,063.78
52,652.38
26,000.00
11,872.38
8,299. 71
7,239.08
16,213. 27
15,593.83
27,888.91
9,860.00
36,038.88
24,177.00
31,052.42
25? 792.19
20,355.83
30,271.94
30,892.22
10,562.15
9,148. 42
33,004.90
9,987.44
50,744.45
18,980. 54
13,690.13
24,072.09
66,014.78
43,005.12
15 644 00
48,347.52
112,204. 80
47,235.55
11,030.77
61,976.91
155,448.27
55,377.73
27,217. 64
100,718.36
39,256.13
205,492.58
95,684.38
116,385.52
54,775.70
25 436.25
77,989.92
51,014.26
66,637.17
21,481.34

90 days.

6 months.

Dollars.
95,195.11
23,000.00
34,927.96
8,100.00
17,228.26

Dollars.

27,500.00
14,613.81
5,639.19
51,208.95
46,617.73
88,851.33
12,742.50
22,348. 82
54,487.50
26,916.37
16,380.86
11,245.90
54,625.94
11,550.00
10,839.95
34,919.69
28,243.45
34,922.48
23,295.58
25,223.10
45,518.00
12,290.56
19,755.00
43,584.68
30,185. 89
78,207.47
31,097.15
49,189.12
64,624.53
34,746.71
42,466.96
40,374.47
65,356.12
44,424.20
42,240.74
38,378.47
49,988.28
75,613.99
76,019.37
71,587.83
93,641.99
36,482.80
143,050.24
105,804.11
50,609.27
64,568.39
28,996.34
38,168. 79
30,052.39
56,637.26
47,408.16

Total from Nov. 16, 1914, to and in2,363,330.16 2,821,311.81 2,431,693.76
cluding Dec. 31, 1915
Percentage of each maturitv
1

28.71

34.28

29.54

2,500.00
5,000.00

Total of
week.
Dollars.
1,654,507.76
71,500.00
63,232.30
97,886.70
26,399.06

6,000.00
4,161.45
15,008.87
10,299.32
1,946.11
4,143.60
6,003.00
15,105.52
3,986.80
5,520.40
511.67
9,069.37
16,456.36
11,507.88
32,610.38
25,160.72
1,309.82
46,455.38
5,999.48
2,550.00
21,362.90
28,899.95
18,205.19
24,953.49
979.50
28,460. 86
8,809.04
15,782.50
12,257. 24
4,612.88
10,715.00
33,894.69
2,355.00
7,186. 50
2,890.00
4,207.75
9,642.90
3,027.90
11,096.50
9,255.01
13,779.16
4,188.83
25,967.45
24,517.78
17,379.04
800.00
6,000.00
32,214.01

614,747.19 8,231,082.92
7.47

These figures include rediscounts accepted from opening of bank to Dec. 4, 1914.

321,384.03
85,362.69
38, 834. 42
167,914.99
74,648.32
160,000.85
42,886 10
42,096.72
83,668.23
43,178.51
54,486.56
39,983.73
95,739.73
24,610.00
59,796.90
80,191.27
85,076.74
112,381.17
77,612.63
61,681.86
130,928.29
29,752.19
31,605.17
111,692.30
84,472.99
169,355.04
78,760.59
103,226.31
124,097.48
121,455.67
112,851.94
76,675.21
129,338.79
178,320.44
130,592.14
55,897.24
129,393.04
282,868.59
154,127.18
124,293.51
237,746.79
119,434.19
404,759.44
247,673.36
191,471.24
308,770.43
121,938.90
171,867.44
100,327.82
154,459.88
147,868.05

100

DISTRICT NO. 8

309

ST. LOUIS.

EXHIBIT C.

Commercial paper offered by member banks and accepted each iveeh, showing total of
each maturity and total of all maturities from December 4,1914, to November SO, 1915
{in thousands).

650 1
600
575

w:h in

550

f); iy
)^ Y
:h n 9 D D^y
Viihin 6
m h s-

*\ h n

ri If
P >P it J
P IP i_r i La tu ri K
P ip er [a ±
P P er 1
ri
T it 7\\

625

__.

525.
500
475

450

- - - -

- -

425 JL

1
375 E I
i1

400 1J
350
325
300
275

225
Z0

11
I.
£
tj

°M

150 i
125 I
100 (__
75

- -

1I
11i

1
1I

1 I
i I ih\ // \
1 1if
\

l
111

;'; 1

I '\ \ /
\l
]r.

50 * M
25 /

/\
>••<

^¥;

/\
/ \
\

A
/ \ /./

/
/

/
/•

•s.
V

II
/\ ,
1
/\
\
\
V
l \ 1/ \ •:
i / \
/
/ •i 1
•'
M

\ 4- li
i
/

650
625
600
575
550
525
500
475
450
425
400
375
350
325
300
275
250
225
200
175
150
125
100
75
50
25

310

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.
EXHIBIT D.

Number of items {in thousands) and total clearings (in millions) each month.
78
77
76
75
74
73
7?,
7i
70

60
*SR
57
56
55
54
52
50

48
47
46
45
44
4?
41

39
38
36
35
34
33
32
^0

29
28
27
26
25
24
23
22
21
20

200
195
190
185
180
175
170
165

1\
\
j \
( \
\

160
155
150
145
140
135
130
125
120
11R
110
105
100

I
i

95
90
G5

Ay r

80
75
70
fi5

I
I

ft?

A
' \

60
5F>
50

j
i
\
i

4R
4ft

I
I

j
j

1 ^

7>0
25
20

Ull

TO eni o f >
B? TlV
rit hdi

64
63

. i IU«J

May ab ou' 2 0
emb e i
e*w f i oin
em
t> e Hi

(^Pi

67
66

ins

er of
LcL

311

DISTRICT NO. 8—ST. LOUIS.
EXHIBIT E.

Statement showing operation of clearing system.
Items cleared on Items cleared on Items sent to other
member banks
member banks
Federal Reserve
in St. L o u i s
outside St. Louis
Banks (daily av(daily average).
(daily average).
erage).

Month.

Items.
1915.
January
February
March
April
May
June
July
August
September...
October
November...
December

4,832
5,128
5,302
5,648
4,800
4,205
4,319
4,772
5,318
5,795
6,314

Amount.

$554,809.
571,319.
571,969.
712,415.
577,644.
510,754.
541,618.
565,486.
658,191.
845,598.
885,306.
920,862.

Items.

Amount.

364
374
386
411
446
391
485
510
490
556
703
597

$375,762.12
497,602.17
638,475.96
879,700.91
695,408.65
723,405.44
601,424.69
529,795.24
830,585.01
936,615.83
1,225,952.55
1,267,707.28

I Iten

O v e r d r a f t s of
member banks
(daily average).
Accounts.

Amount.

$80,497.38
81,341.82
49,874.70
108,197. 26
74,237.55
42,580.23
43,793. 72
37,466.48
56,609.54
113.801.86
73,966.47
80,077.07

23 S157,875. 87
29 396,991.83
38 685,505.88
82 668,682.94
131 608,878. 72
174 642,225. 82
161 297,736.73
173 369,775.77
224 564,474.83
213 665,171. 24
299 983,586.42
310 1,071,027.35

Prior to May 17 the system was mandatory; since that time it has been voluntary.
Approximately 80 per cent of our member banks belong to the clearing system,
about 40 per cent of which use us actively for collecting such items as they handle
that are eligible for collection through us.
The figures given above are daily averages.

EXHIBIT F.

Statement of investments held by Federal Reserve Bank of St. Louis, each Friday, from
December 11, 1914, to December 8, 1915 {in thousands).

6000
5500
5000
4600

4000
3500
3000
2500
2000
1500
1000
500

Cc m nerfi i a l p a]ser
Ba idc Ac cep ta n es
0
3. E ond 8
MD n Lcip al 1 n -ant
ro U 1 Inve st nts

- 6000

\
/

Ccm

i
/ ==
-

_ •
* • :

•f

- , ' •

| "

UiS. cic n<Is
'War ra nt e

5500
5000
4500
4000
3500
3000
2500
2000
1300
1000
500

312

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.
EXHIBIT G.

Total cash reserve and net deposits each Friday, from November 20, 1914, to December S,
19IS (in thousands).

T it Ri

15,000
14,500
14,000
13,500
13,000
12,500
12,000
11.500
11,000
10,500
10,000
9.500
9,000
8,500
8.000
7,500
7.000
6.500
6,000
5,500
5.000

«\

1 \

!n
1\\

>I
\i

\
\

\
\ I

1
1

J \

1
1

\
1
\

000
500
,000
,500
,000
,500
,000
,500
,000
,500
,000
,500
,000
,500
,000
,500
,000
,500
,000
,500
,000

DISTRICT NO. 9—MINNEAPOLIS.
JOHN H. RICH, Chairman and Federal Reserve Agent.

Since the Ninth Federal Reserve Bank was opened, there has been no emergency
to give it opportunity to demonstrate what it might do in support of agriculture, commerce and industry within its district, if it were to fully employ its resources and the
authority given it by law. The outbreak of war in Europe greatly disturbed business
in all parts of the ninth district, putting a stop to new enterprises and retarding all
commercial activities for a considerable period. The year 1915 has witnessed very
slow, but steady progress back to normal. It opened with loans and rates for money
at the lowest level in many years, but closed with business in a highly prosperous
condition, and with expressions of hopefulness for 1916 on every hand.
Had it been possible to open the Ninth Federal Reserve Bank in July, 1914, instead
of November, it would have had opportunity to add to its earnings from $250,000 to
$340,000 as an incident to the issue of a large volume of emergency currency, which,
because of the lack of a Federal Reserve Bank, was put out by the currency associations authorized by the Aldrich-Vreeland Act. The bank was handicapped through
opening its doors just after the only heavy demand that this district has known for
several years had been fully satisfied. This disadvantage is, however, wholly confined to the question of profits, and, even at that, has not prevented the bank from
arriving, well before the close of 1915, at the point of earning enough to meet its expenses, and a reasonable profit besides.
To engage in its first operations during a period of business quiet and readjustment,
has given every encouragement to diligently seek opportunities to meet the needs of
its member banks and to gradually perfect its methods to such a degree as to render
the best, the most expeditious, and the most efficient service.
The Ninth Federal Reserve Bank is functioning properly. It has had opportunity
during the year to meet various emergencies confined to localities and districts, and
has promptly extended the support needed by its member banks. While there has
been no general call for the rediscount of paper, it has provided facilities which numerous banks have been glad to utilize, with the result that such rediscounts as it has
made for its members have been very well scattered over territory embracing, in whole
or in part, six States. The volume of business thus done, together with active efforts
to have the Federal Reserve Act better understood, has laid a foundation which
will be extremely valuable in future periods of heavy demand. It is notable that
where there has been opportunity to come closely into touch with member banks,
the result has invariably been a high degree of appreciation by member institutions
of the serviceability of this bank and the simplicity of its methods. Its management
and its operation have had the entire approval of its membership. The only criticism it has received has been from outside sources and resulted from an imperfect
understanding of what it is permitted by law to do.
The Ninth Federal Reserve Bank has sought to make the Federal Reserve Act
fully operative within its district. During the spring of 1915 it had opportunity to
demonstrate its effectiveness in meeting the requirements of agriculture in the Northwest during the planting season, and rediscounted liberally for member banks, in order
313

314

ANNUAL REPOKT OF THE FEDEEAL EESERVE BOARD.

to enable them to better satisfy the requirements of farmers. It relieved local pressure
at a number of points where manufacturing enterprises and general business were
depressed because of war conditions, and had opportunity to show that it can efficiently meet the demands of industry. Again, in the fall of the year, when an adverse
season had created large amounts of immature corn, it was able to perform a very
valuable service in assisting member banks to meet the requirements of farmers who
were suddenly compelled to make provision for utilizing a valuable forage crop. During the prevalence of the foot-and-mouth disease it was able to come to the assistance of
many banks in the western part of its territory, which had applications for loans from
numerous stockmen who had cattle ready for market, but were unable to ship on
account of quarantine conditions. The service above indicated, while not perhaps of
notable consequence in any single case, consists in the aggregate of a very valuable
degree of assistance, which would not have been available except for the Federal
Reserve Bank, and without which, portions of the district would have encountered
considerable hardships.
Immediately upon receipt of authority this bank instituted a system for the clearing
of checks within its own district, which has been in successful operation since June 1.
During the fall crop-moving period it announced a special commodity rate for the
assistance of grain growers, extending the opportunity to member banks to rediscount farmers' notes, collateraled by elevator tickets, at 3 per cent, with the understanding that the rate to the maker of the paper should be limited to 6 per cent.
Practically all the currency required for crop-moving purposes during the fall
period was furnished by this reserve bank at a cost to member banks that was appreciably less than in former years. Shipments of currency from points outside the
district were reduced to about $1,000,000, or a merely nominal figure.
Currency has usually been shipped from Chicago and the East. In 1915, for the
first time, it was possible to obtain at home the currency needed by country banks.
The added convenience of the service afforded by the reserve bank ranks second
only to the saving in cost. From October 1 to December 31 the issue of Federal
Reserve notes for this purpose was approximately $8,000,000, in addition to $6,000,000
previously issued and available in part for crop purposes.
For the rediscount of agricultural and commercial paper rates of discount were
established at the opening of the bank, which have shown a downward tendency
throughout the year. Member banks have been able to loan from correspondent
banks on a better basis than before because of the effect of these discount rates, and
have also had the option of rediscounting paper at the Federal Reserve Bank on a
better basis than was previously known in this district. The rates of the larger city
banks to country correspondents have shown a tendency to maintain a relation to
the reserve bank's discount rates as announced from time to time, and the indirect
influence of such discount rates has been an important factor.
The influence of the discount policy of this bank upon rates paid by bank customers
is not so easily traced, but in many instances the right to rediscount has resulted in the
extension of credit which member banks would otherwise have been compelled to
curtail or refuse. Especially in the stock and agricultural districts it is found that
the facilities afforded by the reserve bank have enabled member banks to continue
to extend credit at reasonable rates, where, without such facilities to fall back upon,
member banks would have been compelled to restrict their loans. The steadying
influence of the reserve bank has been very valuable to the agricultural and business
interests of the district, because it has prevented uneasy financial conditions and the
fluctuations of rates that would easily have been possible if the reserve bank had
not been in existence.
It is worthy of note that out of approximately 4,000 notes and bills offered for rediscount only a very few have come from the member banks in the large cities. These
banks, with only four exceptions, have had no occasion to rediscount since this

DISTRICT NO. 9

MINNEAPOLIS.

315

reserve bank was founded. Practically all of these rediscounts have been made for
institutions located in the country districts, i. e., for member banks doing the bulk
of their business with the agricultural class and with stockmen. It is therefore
apparent that the service thus rendered has been a service which has been extended
in a very large part to farmers and to producers of stock, and that the support extended
by this bank has been to those engaged in production, rather than to those engaged
in the handling and marketing of farm and range products.
At the close of the year it is evident that there are opportunities for business open
to the Ninth Federal Reserve Bank sufficient to provide more than for its expenses
and in a year of normal business activity probably sufficient to meet its dividend
requirements. This would be fully guaranteed, even in normal times, should Congress see fit to reduce the amount of paid-in capital, allowing the proportion so reduced
to stand subject to call. Should such reduction be made, there should be a compensating deposit of Government funds to guard against a contraction of the resources
of reserve banks and loss of issue power.
SUMMARY OF THE YEAR'S WORK.

The results obtained since organization are told in detail in the subjoined portion
of this report, but may be briefly summarized as follows:
When instructions to open on November 16, 1914, were received this bank was
without organization or staff. Such organization was provided, and the bank was
opened on the date set by the Secretary of the Treasury.
The changes and adjustments incident to obtaining a permanent staff have been
accomplished and the work of such staff has been reduced to an efficient operating
basis, with a reduction, rather than an increase, in the number of employees.
Permanent quarters, of such a character as to reflect credit upon this bank and
upon the reserve system, have been obtained and occupied under a long lease, the
terms of which are very favorable.
The necessary equipment for the operation of the bank upon a permanent basis
has been obtained and installed.
To meet the requirements of this bank and for the accommodation of member
banks desiring to place deposits here a new money vault, which is the safest and strongest in western United States, has been completed and is in use. It embodies the
best principles of modern vault construction and is electrically protected by the best
available systems. Provision was made in this vault for the segregation of space for
the Federal Reserve Agent, to which he alone has access.
By active correspondence and personal consultation the membership of State banks
has been encouraged, with the result that 20 such institutions have taken membership by conversion, and 1 by entry as a State bank. Nineteen have membership
under active consideration.
Important service has been extended to the agricultural and stock-raising interests
of this district, the rediscounts of this bank having been almost entirely with members
doing the bulk of their business with such interests.
State and municipal financing has been facilitated through purchases, under the
authority of the act, of State warrants issued in anticipation of assured revenues and
the warrants of various cities, aggregating $3,073,172.32.
Purchases of United States bonds have been made with the view of participation
in the eventual retirement of national-bank circulation.
There has been a growth of membership of 26 banks, bringing the total membership
up to 735, and increases sufficient to create a paid-in capital of $2,546,550.
Federal reserve note circulation has been expanded to meet all the demands of
the district, eliminating in 1915, for the first time the necessity of shipping in more
than nominal amounts in currency, for the purpose of moving the northwestern
crops.

20067°—16
21

316

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

Continuous effort has been directed toward broadening the information of member
banks with respect to the Act and their rights under it, with the result that such banks
have obtained a clear understanding, on the basis of which their requirements can
be readily and expeditiously met.
Discount rates have been maintained at levels which are favorable to member
banks, and have created, as well, a more favorable basis than previously existed,
for the discount of paper by members with their city correspondents. These discount rates have also influenced current rates of interest to commercial enterprises
in the large cities of the district, which were more favorable in 1915 than in any
previous year.
A system of check clearing, to which there have been 76 additions and only two
withdrawals, has been established, with 68 new additions to Minneapolis and St.
Paul par lists. Progress has been made toward making checks of member banks
par within this district.
Personal contact with member banks has been sought by the Federal Reserve
Agent, Governor, and other officers, who have appeared at and addressed 47 gatherings of bankers and business men, and who have continuously encouraged the representatives of member banks to visit this reserve bank, for the purpose of inspecting
it and consulting with respect to its operations and policy, and their rights under
the Act.
Through personal contact and cooperation, general and substantial support of the
newspaper press within the district has been obtained, together with the support
and cooperation of numerous business organizations.
The regulations of the Federal Reserve Board have been promptly applied and
made effective within this district, the policy of this bank being to extend to its member banks every advantage authorized by the Act, or permitted through interpretation by the Federal Reserve Board.
Through the cooperation of correspondents representing agriculture and the principal lines of commercial business, as well as banking, a crop and business reporting
system has been created, which has permitted the establishment of a series of monthly
crop and business reports, which are forwarded to the Federal Reserve Board, and
have been much in demand from those desiring unbiased and impartial information.
As a result of the general policy of this bank, as expressed in this summary of the
year's work, a substantial public confidence has been built up, and there has been
impressed upon those engaged in agriculture and business within this district the
purpose of its officers and board of directors to render at all times the broadest degree
of public service permitted by law, and compatible with sound banking principles.
Its relations with its members have been of the most satisfactory character and have
given ample evidence of the keen appreciation of such members of the new facilities
afforded them, and the protection rendered by the reserve system.
ORGANIZATION OF THE NINTH BANK.

Pursuant to the authority conferred in section 2 of the Federal Reserve Act, the
Reserve Bank Organization Committee created the Ninth Federal Reserve District,
embracing the following territory:
Square miles.

State of Montana
State of North Dakota
State of South Dakota
State of Minnesota
North two-thirds of Wisconsin
Northern peninsula of Michigan
Total

146, 997
70, 837
77, 615
84, 682
41, 000
17, 000
438,131,

DISTRICT NO. 9—MINNEAPOLIS.

317

The territory thus determined extends from the northern end of Lake Michigan to
the Montana-Idaho line, a distance of approximately 1,500 miles east and west. Its
greatest distance north and south is from the southern boundary of South Dakota to
the Canadian line, or approximately 600 miles. Minneapolis was designated as the
location of the Ninth Federal Reserve Bank.
It is a territory of peculiarly diversified interests. Northern Michigan is a heavy
producer of copper, iron, and lumber. Wisconsin is one of the leading States of the
Union in the dairy industry and agriculture and has important lumber interests in
its northern portion and an important shipping business at its Lake Michigan and
Lake Superior ports. Northern Minnesota is a heavy producer of iron and lumber,
while the remainder of the State is largely agricultural. North and South Dakota are
mainly agricultural. Eastern Montana is an agricultural and stock country. Central
Montana is first in the United States in the production of copper, and western Montana
is a very important producer of lumber, with large areas devoted to fruit and agriculture. These are the principal interests which the Ninth Federal Reserve Bank
was established to support and serve. The territory had, at the time of the organization of the Ninth Bank, a population of 5,724,895 and member (national) banks to the
number of 709.
Under the authority conferred by the act the reserve bank organization committee
took appropriate steps for the election of a board of directors, with the cooperation of
an informal committee within the district. On October 1, 1914, the Federal Reserve
Board appointed John H. Rich, manufacturer, Red Wing, Minn., as Federal Reserve
Agent; P. M. Kerst, clearing-house examiner, St. Paul, Minn., Deputy Federal
Reserve Agent; and John W. Black, wholesale coal merchant, Houghton, Mich., as
director, the three serving as class C directors. The election of directors, as provided
by the act, resulted in the choice of the following class A directors: E. W. Decker,
banker, Minneapolis, Minn.; J. C. Bassett, banker, Aberdeen, S. Dak.; Hon. L. B.
Hanna, governor and banker, Fargo, N. Dak. The following were elected as class B
directors: F. P. Hixon, lumberman, La Crosse, Wis.; F. R. Bigelow, insurance, St.
Paul, Minn.; and Norman B. Holter, wholesale hardware, Helena, Mont. The organization was further perfected by the appointment, on February 21, 1915, of Hon. A.
Ueland as counsel: on July 21 by the appointment of Curtis L. Mosher as assistant
to the Federal Reserve Agent, and on January 5, 1916, by the appointment of Wm. H.
Lightner, St. Paul, Minn., attorney, as class C director, vice chairman, and deputy
Federal Reserve Agent, in place of P. M. Kerst, retired, because of pressure of other
duties.
The directors met and organized on October 14, 1914, electing Theodore Wold,
president of the Scandinavian-American National Bank, as governor, and C. T.
Jaffray, vice president of the First National Bank of Minneapolis, as member of the
advisory council. The session was continued through the following day. A committee on permanent quarters was named, by-laws were adopted, provision was made
for an official seal of the bank, and an executive committee, consisting of the Federal
Reserve Agent, the Governor, and Director Decker, was elected.
On October 28 temporary offices were opened in the directors' room of the Minnesota Loan & Trust Co. in Minneapolis, and arrangements were made for the receipt
of the initial reserve and capital payments. Immediately thereafter temporary
quarters were obtained in the Lumber Exchange Building, which were occupied
until the permanent quarters in the New York Life Building were ready for occupancy on January 1, 1915.
Telegraph notification was received from the Comptroller of the Currency on November 14, 1914, that the organization certificate had been executed in Washington,
and upon November 16 the Ninth Federal Reserve Bank was formally opened for
business.

318

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

The official and clerical staff of the bank is numerically less at the end of the year
than at the beginning.
The membership of the Federal Reserve Bank of Minneapolis, at the time of its
organization, consisted of 709 banks. Since that date membership has been acquired
by 26 banks, bringing the total up to 735. One of these is the largest State bank in
Minnesota, which has entered the system as a State bank. Twenty are conversions
of State banks into national banks. The remainder are new national banks. In
addition to these changes there were in process of conversion upon December 31, 19
State banks, which will take membership, with prospective additional increase
through the organization of eight new national banks.
EXECUTIVE COMMITTEE AND BOARD OF DIRECTORS.

Pursuant to the authority of the by-laws, copy of which is attached, the executive
committee has exercised the powers indicated in section 2 thereof, and has carried
on the work assigned by the board of directors, and acted in an advisory capacity to
the officers of the bank, during the intervals between directors' meetings. The
executive committee has consisted, since the organization of the bank, of the governor, the Federal Reserve Agent, and one director, and, being small in size, has
been able to meet frequently. The practice of the committee has been to meet at
11 o'clock in the bank on each business day of the year, there to pass upon all paper
submitted for rediscount, and conduct other business authorized by the by-laws.
It has maintained its daily sessions with remarkable success, and has been a highly
efficient agency in supervising and facilitating the business of this bank.
The board of directors, being scattered, in point of residence, from the central
part of Montana to the northern peninsula of Michigan, has not been able to meet
frequently, but in accordance with the by-laws has held regular sessions on the first
Monday of every month at 11 o'clock a. m. in the directors' room of this bank. The
continuing service of the executive committee has made it possible to avoid special
meetings of the full board. The sessions of the directors have been thorough and
searching, and each member has shown a willingness to devote all the time required
to a proper handling of the business in hand. Careful analysis and discussion of
business and financial conditions throughout the district, changes in currents of
trade and industry, developments in agriculture, and consideration of discount
rates have become regular features of the board's sessions, and have been a means of
harmonizing opinion as to the proper course and policies for this bank to pursue.
The directors have called at the bank frequently, between regular meetings, and
have kept in close touch with its affairs. The weekly statements of the bank and
all other information of value are regularly mailed to each director.
OPERATING DIFFICULTIES.

The Ninth Federal Reserve Bank was opened almost immediately after $17,000,000
of Aldrich-Vreeland emergency currency had been issued in this district. The
opportunity to supply the needs of its members had therefore been anticipated in
advance of its coming into the field. During the latter half of November and the
month of December, 1914, such rediscounts as were afforded members were largely
courtesy transactions, the greater part representing the efforts of larger banks to
acquaint the public with the new Federal Reserve currency. After January 1, 1915,
the ninth district entered a period when all credit demands had been satisfied, and
loans dropped to the lowest ebb in many years. Rates on commercial paper took
new low levels. The demand at country points was light and banks in larger centers
experienced much difficulty in employing their funds to advantage. There was
no change in this condition until spiing farm activities began to provoke some demand
in early May. The Ninth Bank then enjoyed a period during which there was a

DISTRICT NO. 9

319

MINNEAPOLIS.

moderately active demand from its members, which continued during June, July,
and August. This demand held during the first week of September, and then moderated to some extent. From late September to the end of the year the figures show
comparatively small changes.
This year, in brief, has been a year of cheap money rates and ample money in the
ninth district. The excess reserve of member banks in the ninth district is significant of this condition, and is shown by the following figures issued by the Comptroller of the Currency:
AsofDec. 31, 1914.
Mar. 4,1915..
May 1, 1915..
June 23,1915
Sept. 2, 1915.

Reserve
required.
344,781,908
47,909,124
47,027,161
45,826,686
47,024,900

Reserve
held.

Excess.

$80,113,119 135,332,010
111,069,784 63,160,660
106,262,875 69,235,714
94,462,540 48,635,854
101,210,407 54,185,506

The volume of rediscounts has been depressed in proportion to the lack of normal
activities in commercial and industrial business, and throughout the year, has been
below what might reasonably be expected under the usual crop and business conditions. But one hope of active rediscounting presented itself, and that hinged upon
the marketing of an unusually large grain crop in the Northwest. A production of
100,000,000 bushels of wheat over and above the usual crop, indicated that there
would be a sharp and continuing demand during the last quarter of the year. Very
unusual weather conditions slowed down the marketing of the new crop immediately
after harvest. Bain, wet roads, the demands of fall plowing, and a disposition to
hold grain for better prices, combined to influence farmers to market only as they
needed funds. The receipts at terminal markets were extremely light during September and October, and the slow movement made it possible to finance the marketing of the crop very largely on the farmers' money. The demand upon banks was
light, and the large elevator concerns, which usually begin issuing terminal grain
paper by mid-October, had put out only very small amounts as late as the end of the
year. In response to higher prices, the December movement of grain was very active.
There is a very large amount of small grain still held on farms, which will come
gradually into the markets.
These conditions resulted in the peculiar situation, that during a period when
country banks and the grain trade are usually heavy borrowers, the large elevator
concerns were satisfying their requirements with moderate amounts of their straight
paper and country banks were paying up.
The volume of current rediscounts, acceptances, and investments of the Ninth
Federal Reserve Bank, by 15-day periods since organization, is shown in Table A,
attached hereto. There is shown, in Table B, the total rediscounts and bills payable
of member banks, by States, their deposits, and their rediscounts with this bank, as
of the date of the Comptroller's call on November 10. Table C gives the amount of
rediscounts by States and statistics relating thereto. Table D gives an analysis of
rediscounts.
DISCOUNT RATES—CHARACTERISTICS OF 1915

BUSINESS.

The directors and executive committee of this bank have endeavored to hold
rates of discount at a level low enough to fully and amply accommodate any member
bank and at the same time avoid a rate so low as to encourage rediscount for the sake
of the intermediate profit. Within certain narrow limits it is probably true that
these rates could have been varied during the year without any appreciable effect
on the amount of business coming to this bank. In other words, member banks

320

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

have not used this bank except where necessity existed and under such necessity
the rate has not been a material factor in determining whether they would or would
not make use of our facilities. While it is possible that a slightly higher rate might
have been charged in some cases, with additional profit to the bank, it has been the
opinion of the directors and executive committee that rediscounts should not be
taxed with all the traffic could bear, but that the policy should be that of making a fair,
moderate and reasonable rate for all business offered.
The course of the discount rates of this bank, and all changes therein, with the
dates on which such changes were made, is shown in Table E.
The interest rates prevailing over the district must be borne in mind in order to
appreciate the very attractive basis afforded for the rediscount of the paper of member
banks. Throughout the well-settled and well-developed farming districts of central
Wisconsin and southern Minnesota, farmers of established credit are customarily able
to borrow at 6 and 6J per cent. Throughout the less developed sections of northern
Wisconsin and northern Minnesota current rates are 7J to 8 per cent to customers of
good credit. In South Dakota rates vary from 7 to 8 per cent in the well developed
eastern portion and from 8 to 12 per cent in the thinly settled western portion.
Approximately the same rates (except that the legal rate is 10 per cent) apply in
North Dakota, the eastern portion of which is a well developed and prosperous farming country, while the western part is undergoing rapid development and is practically a new country. The rates in Montana, which is a State of immense extent,
undergoing settlement and development, and thinly populated, range from 8 to 12
per cent, with an average of 10 per cent.
The Ninth Federal Reserve District has been prosperous since the founding of the
bank. It can not be said that an emergency has existed in the district at any time
since this bank was opened on November 16, and there has, therefore, been no opportunity to make a practical test or demonstration of the efficiency of this bank during
a period of stress.
In the ninth district, as elsewhere, the Federal Reserve Bank was an entirely new
element in banking. The readjustment of the customary practices of member banks,
sufficient to give it a satisfactory volume of rediscounts, was slow. Business and
agriculture were placing no burdens upon local banks greater than they could satisfactorily carry. The average member bank has had less occasion during 1915 than
in former years to borrow in order to satisfy current demands.
The influences of the year have been such as to encourage those in business to
exercise caution and prudence, and bank depositors generally have shown hesitation
in drawing down their balances or in embarking with the usual freedom in new
enterprises.
It was evidence of a sound and progressive policy that during a period when bank
deposits have been high and the demand for loans less than normal, this bank has
gradually increased the volume of its rediscounts for its members and brought its
earnings up to a point sufficient to cover all of its current expenses and create a
reasonable balance to profit and loss. This would not have been possible had not the
bank functioned perfectly, and as was intended by the law. It is aJso significant
of the persistent and continuous effort of the officers to have member banks and the
public clearly understand its purpose.
A gradual spread of a practical understanding of the workings of the FederaJ reserve
system has undoubtedly had a beneficial influence upon the amount of business done
during the year. Such pressure as has occurred within the district has been largely
local. Where local strain has appeared this bank has been quick to extend assistance
as required by its members, and the active efforts of the officers of the bank has been
directed throughout the year toward acquainting member banks with the degree of
support this bank stands ready to extend.

DISTRICT NO. 9

MINNEAPOLIS.

321

As an incidental but important part of the work of creating a proper understanding
of the Act and the Ninth Federal Reserve Bank, the Federal Reserve Agent and
governor have taken special pains throughout the past 14 months to meet with bankers
at their group meetings and conventions and engage in a practical discussion of the
subject. The Federal Reserve Agent has made 20 such addresses during this period.
The Governor has addressed 16 State and district conventions, while other officers of
the bank have done similar work when opportunity afforded. The bank has been
represented, since organization, at 47 such gatherings where opportunity for questions and informal discussion have been afforded. It has been found that personal
contact with member bankers and the public, especially when there has been opportunity to answer questions and engage in discussions, has been of much service in
giving member banks a working knowledge of the law and informing them as to the
details of rediscount and currency issue.
The service extended by the press of the ninth district in spreading information
should have proper acknowledgment. The attitude of the newspapers has been
extremely friendly and editors have shown a keen interest in furthering the new
banking system wherever opportunity has afforded.
The earnings and expenses of the Ninth Federal Reserve Bank since organization
are shown in Table F.
FEDERAL RESERVE NOTES.

The policy of the Ninth Federal Reserve Bank with respect to Federal Reserve
notes has been largely governed by the purpose of providing an ample volume of
currency for the regularly occurring demands of the crop-moving period in the fall,
and the Federal Reserve notes have been issued freely in response to the requirements
of member banks. As previously noted, the issue of such notes for crop-moving
purposes from October 1 to December 31, 1915, amounted to $8,000,000, in addition
to which a considerable part of the $6,000,000 of currency previously issued was also
available. The Federal Reserve notes entering directly into the crop moving represent a smaller volume than has ordinarily been required in this district. This is
accounted for by the very slow movement of the grain crops and the large amounts
of available funds in all commercial banks and principally in the banks of Minneapolis, St. Paul, and Duluth, which, with the larger firms in the grain trade, bear
the burden of crop financing.
Member banks have expressed much satisfaction in their ability to promptly obtain
currency for local use, and Federal Reserve note operations have entailed frequent
shipments to outside points in the district. Returned Federal Reserve notes coming
back into the hands of the bank did not reach a sufficient volume during the year
to make it necessary to return any to the Federal Reserve Agent, and damaged and
mutilated currency returned to this bank did not reach proportions requiring any
shipments to Washington for redemption. During the early part of 1916 it will be
necessary for the bank to make return to the Federal Reserve Agent of issued Federal
Reserve notes and also to forward mutilated for destruction. The year's operations
have not presented sufficient time to make any estimate of the cost of Federal Reserve
notes in relation to the period of their life and usefulness, and the cost analysis shown
in Table H is therefore upon the basis of new notes.
Shipments of Federal Reserve notes from Washington to the Federal Reserve Agent
of this bank aggregated $19,000,000 during the period closing December 31, on which
date there remained in the hands of the reserve agent $5,000,000 in unissued notes,
and in the hands of the Treasury Department at Washington, subject to the order of
this bank, an additional $11,000,000 ready for shipment. A total of $30,000,000 has
therefore been printed for use in the ninth district.

322

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.
CHECK CLEARING.

Pursuant to the authority of the Federal Reserve Board, a system of check clearing
was established in the Ninth Federal Reserve District on June 1. Participation in
check clearing was purely voluntary on the part of member banks, but the system
was established with 110 banks participating, and from June 1 to December 31 there
were 76 additions and only 2 withdrawals to the system. The check-clearing system
has operated without overdrafts and without deficiencies in reserve. Of the 186
members in the collection system, 68 are new additions to Minneapolis and St. Paul
par lists, and this benefit has been passed on to their customers. The average number
of items daily and the average amount of items daily, by months, is shown in Table G.
EXCHANGE CHARGES IN THE NINTH DISTRICT.

The customary charges made by the country banks on checks sent them by their
city correspondents vary from 10 cents per $100, based on the total included in remittance letters, up to 15 cents per $100, based on each separate item. In the last few
years the city banks have tended to pay a constantly increasing amount on the same
volume of business to their country correspondents for exchange charges, as more and
more banks are basing their charges on each separate item instead of on total of letters.
Since the establishment of the Federal Reserve Banks and their collection system
there has been no change in the basis on which such charges are made. A number
of banks that formerly charged exchange have joined the Federal Reserve Bank collection system and now remit for their checks at par to their city correspondents.
The remainder of the 186 banks that are members of the Federal Reserve Bank collection system were not charging exchange prior to joining the system. It seems to
be the purpose of the banks of the ninth district to wait development of the collection
system of the Federal Reserve Bank before any action is taken or changes are made
relative to exchange charges. It appears that member banks of this district believe
that eventually they will be compelled to cease charging exchange to the indorsers
of checks sent them for collection or credit, but owing to the loss of profit they will
not give up this practice until the situation is such that they can no longer be made.
A total of 960 banks (State and national) in the ninth district do not charge exchange
on checks drawn upon them.
APPLICATIONS FOR FIDUCIARY POWERS.

Observation of conditions in this district has gradually brought the officers of this
bank to the conviction that the granting of fiduciary powers to small banks under
certain restrictions is of great advantage to their communities. It has been observed
that many towns, where sound and well-managed banks are successfully operated,
are without the advantage of trust company service. With the reservation that such
powers should not be granted except where member banks are under management
that is above criticism, and where the character and integrity of their officers is thoroughly established, it has been the policy of the officers of this bank to recommend
the granting of fiduciary powers to some banks that are not of commanding size. It is
believed that it is safe to trust such powers to a small bank, if well managed, as well
as to a large bank, and that the favorable action of the Federal Reserve Board in such
cases confers valuable benefits upon the community. Especially in the administration of estates it has been the view of the officers of this bank that it is better to trust
to the judgment and integrity of a sound and well-managed member bank than to an
individual approved by the court, and that, having more at stake and having better
facilities than an individual, a properly managed member bank is in better position
to render this necessary service.

DISTRICT NO. 9—MINNEAPOLIS.

. 823

On February 18 the counsel for this bank rendered an opinion upon clause K, section 11 of the Act, with reference to the granting of fiduciary powers, in which he expresses the following conclusion:
" I t follows that * * * national banks can not lawfully act as trustees, executors, administrators, and registrars of stocks and bonds unless there is State legislation
expressly conferring upon them the power to do so. At present there is no such
legislation in any of the six States comprising the ninth Federal reserve district."
Since writing this opinion, favorable legislation has been adopted in South Dakota,
but in Michigan, Wisconsin, Minnesota, North Dakota, and Montana the situation
remains as then outlined, and counsel has refused favorably to certify applications
from those States.
This suggests the desirability of State legislation expressly conferring the right to
exercise the powers granted under the Federal Reserve Act, without which favorable
action on such applications as come from the States of the ninth district, with the
exception of South Dakota, will still be subject to question as to the legal right of the
applicant to exercise the powers granted.
RELATIONS WITH MEMBER AND OTHER BANKS.

The attitude of the Ninth Bank toward the national banks of its district has been
that of an organization receptive to the suggestions and comments of its stockholders.
Visiting representatives of member banks have been reminded that while this bank
has the obligation of rendering them effective service the obligation rests upon them
as stockholders to maintain an active interest in it and assist it through friendly
criticism. Every effort has been made to encourage representatives of member
banks to visit the bank, and since its organization a large amount of correspondence
has been carried on for the purpose of creating and maintaining personal contact between the officers of this bank and the official heads of member banks. The attitude
of the members toward the Federal Reserve Bank has been at all times friendly.
Some few institutions have been apprehensive of competition that might result from
the operations of the Ninth Bank, but even under this condition have not hesitated
to say that their membership constitutes a very valuable insurance, and that this bank
is a very necessary and important safeguard.
The larger banks voluntarily state that the question of receiving dividends on their
stock is unimportant as compared with the advantages they receive through the holding of stock, and their comments upon the management of the bank, so far as they have
reached the officers of this institution, have been commendatory, friendly, and helpful.
Much the same attitude has been maintained toward the numerous State banks of
this district, and through personal contact and correspondence a continuous effort
has been made to interest them in the facilities offered by the Federal reserve system
and encourage them to take membership. These activities have resulted in the
membership of the largest State bank in Minnesota. A number of other strong institutions have been brought to a point where they are giving the subject serious consideration. The attitude of State banks in general has been friendly. While there has yet
been no general movement of State banks toward membership, and while many such
banks show a desire to wait and observe the workings of the Federal Reserve System,
the year has brought 20 ninth district banks into the system, through the process of
conversion into national banks, and 19 more are undergoing conversion. This process,
rather than direct acquisition of membership as State banks, seems to be the favored
method of entry to the system. This bank has had the helpful cooperation of the
State superintendent of banks of Minnesota and the commissioner of banking of Wisconsin, and there has been no opposition on the part of State officials toward the
acquisition of membership in the reserve system by banks operating under the laws
of their States.

324

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.
CREDIT NEEDS OF THE DISTRICT.

The only credit requirements of the ninth district (luring the past 14 months that
were of any considerable magnitude had been satisfied before the Ninth Bank was
opened for business on November 1, 1914, as previously noted. Following the opening of the bank the district passed into a period of very slack demand, during which
there was a heavy accumulation of money in all banks, and restricted opportunities
to loan. From May 1 on throughout the year there was a gradually and very noticeable drift back to normal conditions. The recovery was very slow. Business activities have not yet reached a point, although the closing month of the year showed
considerable advance, where they have made greater demands than banks locally
have been able to satisfy. The volume of rediscounts carried by the Ninth Bank
has increased more in response to steady and persistent efforts to create a better understanding of the system and the facilities afforded, than from any sharp demand.
Such demand, when it has manifested itself, has been confined to districts or industries especially affected by the disturbed conditions of the year. Where opportunities for service have presented themselves the support rendered by this bank has been
immediate and effective. Experience gained during the year, through the rediscounts for scattered member banks, points conclusively to a gradual growth of this
business to proportions that will be satisfactory, even in years of normal business.
Where member banks have had the opportunity of utilizing the facilities afforded,
we have invariably found them pleased with the direct methods employed.
A marked reluctance to rediscount was manifested by practically all members at
the opening of the bank. To use its facilities has meant the abandonment, in many
cases, of firmly rooted precedents. The task of acquainting more than 700 banks
with their rights under the Act was formidable, but a necessary preliminary to the
development of a volume of business. Excellent progress has been made, and as
member banks have been brought into intimate touch with their reserve bank they
have invariably been highly pleased with its ability to render them practical
support.
The only credit demands which have presented themselves which have not been
fully and promptly met have come from farmers who desire cheap money to enable
them to hold grain in the anticipation of a better market. The problem of meeting
this demand is extremely difficult. This bank placed in operation the commodity
rate authorized by the Federal Reserve Board as soon as authority was received, and
has done some business under it. The application of the commodity rate under the
requirement that the grain held as security against the paper rediscounted be stored
in a "warehouse" (country elevator) necessarily involves that the farmer enjoying
the 6 per cent rate must first place his grain in store and pay charges thereon. The
storage charges, plus interest on the loan at 6 per cent, invariably increases the cost
of the accommodation extended far beyond the nominal rate of 6 per cent. The
interest paid, plus the elevator charges, ranges all the way from 17 to 21 per cent on
the money borrowed.
The farmers in the ninth district have been accustomed to making some use of
elevator tickets as collateral for their paper at the banks, but the process is not highly
regarded because of the cost. They have also been accustomed to borrowing on the
security of chattel mortgages on grain. Numerous letters have reached this bank
from all parts of the grain territory inquiring for Government funds to be loaned on
security of grain held on the farm. The supposition of the writers has uniformly been
that this bank could discount paper based on grain, at the commodity rate, the rate to
the maker to be 6 per cent. Some have thought that through Federal action, this
bank could deal direct with the farmer. These requests have been supported by the
argument that it is unfair to force the farmer to market his grain immediately after
harvest, when all farmers are marketing grain and the market is glutted. The only

DISTRICT NO. 9

MINNEAPOLIS.

325

method that will afford them proper relief, they argue, ia a system that will permit
them to hold their own grain in their own storage. Bankers in grain territory have
very frequently made such loans, but on account of the risk of the removal of the
security they have been compelled to confine their accommodation to farmers of
established credit and men favorably known to them.
The Ninth Federal Reserve Bank has always been ready to rediscount paper based
on grain, at its current discount rates, and under its rules, when presented by a member bank for rediscount. The demand here involved is for a special form of credit,
at a preferential rate.
No method of satisfying this demand presents itself unless some condition can be
created under which the integrity of the security for the loan can be fully and amply
protected. It is possible that through an amendment to the Act some method might
be devised by which a member bank could safely loan on grain stored on the farm
and be permitted in such cases to rediscount the note as commodity paper. It is
not probable that such a regulation can be worked out, unless it is possible to make it
a Federal offense to remove grain stored in such a manner, when the note has been
rediscounted at a Federal Reserve Bank. No comment is made on the question of
the desirability of incorporating further preferential credit provisions in the Act, or
widening the already liberal accommodation to agriculture therein provided. Farmers'
organizations in the ninth district have been very active in discussing rural credit
questions, and especially of affording the farmer more opportunity to loan at moderate
rates upon farm products on his own farm. This agitation will probably become
increasingly active.
EXCHANGE OPERATIONS.

The demand for eastern exchange in this district is so steady that for the greater
part of the year a premium is paid. For a period of from two to three months, during
crop-moving time, Chicago and eastern funds go to a substantial discount. It was
therefore considered desirable by the officers of this institution to accumulate funds
for the use of member banks when the turn came. This was done by the acceptance
of eastern exchange at a discount based on the cost of shipping mixed currency to or
from the nearest subtreasury. These accumulated funds will be sold on the same
basis.
It is believed that the policy of establishing a flat rate is sound and desirable and
that the building up of balances in the East at a fixed discount rate and the sale of
these balances at a fixed premium will do much to prevent violent rate fluctuations.
NEW MONEY VAULT.

The permanent quarters occupied by the Federal Reserve Bank of Minneapolis
contained a vault which, with the installation of modern money chests, has been of
value for the safe-keeping of tellers' current funds, books, and documents. It was
not sufficiently strong to house deposits of this bank, and it became necessary to
provide new and better facilities. Pending the construction of a new vault, Federal
Reserve notes and deposits were carried in various vaults of the commercial banks
in Minneapolis and comparatively little cash was held by the reserve bank itself.
The new money vault was completed and put in use on October 1. Its walls,
floor, and ceiling are constructed of 5 inches of steel, heavily protected by steel bars
and railroad rails laid in concrete. The main door is 7 feet 7 inches in diameter and
15 inches thick, exclusive of bolt frames, and is ground into the frame to a steamtight fit. An emergency door is provided to guard against lockouts. Both the main
and emergency doors are solid and the form of construction avoids piercing them
for the purpose of operating the bolt mechanism. On both doors the locking mechanism is controlled by four-movement time clocks, which operate the bolt motors.

326

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

The vault is 8 feet 2 inches high, 18 feet 8 inches wide, and 9 feet deep inside, and
provides 15 steel lockers for the use of the Federal Reserve Bank and 12 similar lockers,
within a space segregated for the Federal Reserve Agent, for the use of that department. The space allotted the Federal Reserve Agent is protected by grills and may
not be entered except by him or his representative.
The electrical protection of the vault is of the most modern and complete character
and is connected with large alarm gongs inside the banking office and outside the
building on the street.
The officers and directors of the bank gave much thought and investigation to this
subject before contracts were let and the designs of the engineers were not accepted
until there had been a most thorough inquiry, for the purpose of providing for this
bank a vault of such strength and such high quality as to make it the most modern
and the safest in the western United States. The space provided therein is sufficient for the safeguarding of large deposits from member banks and the attention of
such institutions is being called to the additional safety involved in the deposit of
their funds here.
ELECTION OF DIRECTORS.

Vacancies occurred in classes A and B on the board of directors of this bank, which
were filled by election in November. The process of classifying the member banks
by groups and carrying the election provisions of the act into effect, made it possible
to observe some points that seem worthy of consideration.
Classification of member banks by groups on the arbitrary basis of the amount of
their capital stock and surplus, resulted in the establishment of groups 2 and 3, both
consisting of members scattered over the whole or parts of six different States.
As a result of the scattered location of the voting members of the participating
groups, the vote in both groups was light and the vacancies on the board were filled
through the balloting of only 25 per cent of the members entitled to vote. It seems
unfortunate that after active efforts to interest every member having a right to vote,
a greater interest was not manifest in so important a matter. It is probable that the
scattered condition of the member banks alone will always make it difficult to arouse
an active interest in the election of directors. As a remedy for this condition, it is
suggested that attempts to classify the board of directors into three groups be abandoned in favor of a plan under which all member banks will vote at one time on each
of the vacancies occurring among the elected members of the board. This would involve an amendment to the act providing for the selection by member banks of five
of the nine members of the board of directors, such nominees to be either bankers or
business men, at the option of the member banks. The remaining four should be
appointed by the Federal Reserve Board.
As an incident to the election of directors, a member bank nominated a banker
interested in four State banks, but not connected with any member (national) bank.
Counsel for this bank ruled that there is nothing in the law to prevent placing the
name of the representative of a nonmember bank upon the official ballot, if such
nominee is regularly nominated. This suggests that there is at least a possibility of
the election of a director having no interest in any member bank. Such an election
could not occur except in class A. While nominees for class A shall be "chosen by
and be representative of the stockholding banks," they might not necessarily be bank
officers, directors, or stockholders. In cases where such nominees have active bank
connections it is suggested that they be made ineligible except where such connections
are with stockholding banks. Such restrictions of nominations in class A, and a
simplification of the process of election will undoubtedly contribute to a greater interest by banks eligible to vote, in the elections which will occur from year to year.

DISTRICT NO. 9

327

MINNEAPOLIS.

TABLE A.—Rediscounts; bills bought, United States bonds and investments of the Federal
Reserve Bank of Minneapolis, by 15-day periods since organization.
Rediscounts Bills bought
for member
(acceptbanks.
ances).
Dec.l...
Dec. 15..
Jan. 2....
Jan. 15..
Feb. 1...
Feb. 15..
Mar. 1...
Mar. 15..
Apr. 1...
Apr. 15..
May 1...
May 15..
June 1
June 15..
July 1...
July 15..
Aug. 1..
Aug. 15..
Sept.l..
Sept. 15.
Oct.l...
Oct. 15..
Nov. 1..
Nov. 15..
Dec.l...
Dec. 15..
Jan. 1 . . .

$29,449.01
58,611.67
424,644.51
194,389.71
229,606.02
287,696.05
215,051.93
365,627.29
395,327.39
395,918.91
421,513.84
504,686.52
687,891.95
838,435.60
1,143,169.42
1,472,588.24
1,721,292.02
1,869,828.12
1,937,289.61
1,752,437.65
1,562,371.76
1,562,908.98
1,425,489.63
1,504,260.57
1,555,125.18
1,430,850.05
1,222,161.51

$250,749.19
336,870.75
427,849.82
394,987.11
253,987.79
174,839.11
174,934.16
147,758.00
107,008.12
219,279.08
236,447.97
279,531.35
315,035.23
349,600.63
297,527.37
357,496.69
361,275.21
402,028.49
431,471.35
477,806.40

United
States
bonds.

$550,000
650,000
950,000
950,000
1,025,000
1,025,000
1,025,000
1,025,000
1,025,000
1,025,000
1,025,000
1,025,000
1,025,000
1,027,000
1,027,000
1,027,000
1,032,000
1,107,000
1,159,820
1,189,820
1,303,820
1,328,820

Investments.

$684,394.05
676,975.07
1,076,975.07
1,076,975.07
400,000.00
400,000.00
455,000.00
473,000.00
634,360.85
663,970. 85
688,601.93
397,162.27
367,806.82
444,931.82
538,952.26
569,325.54
891,333.78
736,997.67
795,498.50
770,498.50
792,812.28
770,621.97
890,828.25
893,430.68
910,513.28

TABLE B.—Rediscounts and bills payable, showing the deposits and bills payable of
member banks in the ninth district, and their rediscounts with the Federal Reserve Bank,
as of the date of the comptroller's call of November 10, 1915.
MICHIGAN.
Deposits
Rediscounts and bills payable
Rediscounts with Federal Reserve Bank

$26,020, 848. 00
141, 338. 87
14, 885. 71

MINNESOTA.
Deposits
Rediscounts and bills payable
Rediscounts with Federal Reserve Bank

313, 448, 840. 00
2, 424,103. 02
856, 329. 54

MONTANA.
Deposits
Rediscounts and bills payable
Rediscounts with Federal Reserve Bank

46,025, 062. 00
278,176. 00
102, 224. 58

NORTH DAKOTA.
Deposits
Rediscounts and bills payable
Rediscounts with Federal Reserve Bank

49, 926,472. 00
589,721. 91
124,155. 61

SOUTH DAKOTA.
Deposits
Rediscounts and bills payable
Rediscounts with Federal Reserve Bank

47, 669,498. 00
360,390. 04
284,003. 51

WISCONSIN.
Deposits
Rediscounts and bills payable
Rediscounts with Federal Reserve Bank
Total deposits of member banks
Total bills payable
Total rediscounts with Federal Reserve Bank

67, 237,795.00
573, 502. 80
173, 525. 63
550, 328, 515. 00
4, 367, 232. 64
1, 555,124. 58

328

A N N U A L REPORT OF T H E FEDERAL RESERVE BOARD.

TABLE 0.—Rediscounts by States, showing, by States, the amount of discounted paper
held by the Federal Reserve Bank of Minneapolis, the number of member banks, and
the member banks rediscounting Dec. 31, 1915.
of Number of
Amount of Number
member banks redisrediscounts.
banks.
counting.

State.

Minnesota
North Dakota
South Dakota
Wisconsin
Montana
Michigan
Total

$674,270.31
93,289.55
330,802.26
70,116.72
48,232.14
27,904.73

279
152
119
88
66
31

55
16
22
9
8
2

1,244,615.71

735

112

Total number of pieces, 4,054.
T A B L E D.—Statistics of rediscounts handled by Federal Reserve Bank
from Nov. 16, 1914, to Nov. 15, 1915.

Minnesota.

Number member b a n k s . . . .
279
Number member banks ac78
commodated
Number applications made
292
for rediscount
1,511
Number pieces passed upon.
Average amount of each
1,623
piece
Totalamounts rediscounted $2,346,386

North
Dakota.

South
Dakota.

Wisconsin.

Montana.

Minneapolis

Total
and av-

Michigan.

152

119

197

116
138
554
837
1,212
1,100
$851,614 $698,569

138
872

72
281

19
59

775
4,054

1,620
$1,323,480

1,630
$436,037

735

3,234
1,435
$134,813 5,790,899

Average amount of each piece discounted, $1,435; smallest item, $26.27; largest item, $100,000.
T A B L E E.—Discount rates, showing the course of the rates of the Federal Reserve Bank of
Minneapolis and dates on which changes were made.

30 days.

60 days.

Commod90 days. 6 months. ity
paper.

Per cent. Per cent. Per cm*. Per cent. Per cent.
6
62
6^
6
6
6
6
5
4*

Nov. 16
Dec. 7, 1914.
Dec. 24, 1914
Jan. 9
Feb. 2
Feb. 19
Mar. 2
May 22
Sept. 16
Sept. 27

4
4
4

T A B L E F.<—Earnings and current expenses, showing the earnings of the Federal Reserve
Bank of Minneapolis and current expenses, by periods, since organization.
NOV. 16, 1914, TO JAN. 1, 1915.
Earnings from—
Bills discounted, member banks
Bills purchased (acceptances)
Investments:
United States bonds
Warrants
Sundry profits
Total earnings
Current expenses

$1,322.47
0

0
0
0
1, 322. 47
11,647. 24

329

DISTRICT NO. 9—MINNEAPOLIS.
JAN. 1 TO JULY 1, 1915.

Earnings from—
Bills discounted, member banks
Bills purchased (acceptances)
Investments:
United States bonds
Warrants
Sundry profits

$10, 780. 65
2,030.17
,

7,480. 56
10, 643. 26
75. 48

Total earnings
Current expenses

31, 010.12
39,152.17
JULY 1 TO DEC. 31, 1915.

Earnings from—
Bills discounted, member banks
Bills purchased (acceptances)
Investments:
United States bonds
Warrants
Sundry profits

39, 708.10
3, 217. 73
11, 312. 69
10, 287. 56
4, 073.11

Total earnings
Current expenses

68, 599.19
41, 215. 29

Total earnings since Nov. 16, 1914
Total current expenses

100, 931. 78
92,014. 70

Balance

8, 917. 08

Less commissions to other Federal Reserve Banks

819.48

Balance

8,097. 60

NOTE.'—Much more favorable earnings of the last half of 1915 should be noted.
TABLE G. -Check clearing, showing the operation of the intradistrict system of the Ninth

Federal Reserve Bank.
NUMBER OF ITEMS DAILY.

City.

County.

Other
Federal
Reserve
Banks.

Banks in
other Federal Reserve cities.

57
85
140
149
164
177

July
August
September
October...
November
December.
AVERAGE AMOUNT OF DAILY ITEMS.
July
August
September
October...
November.
December.

$11,281
12,627
33,600
32,894
55,908
32,687

$6,619
20,321
46,566
40,940
38,202
35,806

0
0
0
0
0
0

$30,100
22, 780
95, 757
157,526
192,40
77,662

330

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

TABLE H.—Cost of Federal Reserve notes printed for Federal Reserve Bank of Minneapolis from Nov. 1, 1914, to Nov. 1, 1915.
AMOUNT ORDERED.

$5
$10
$20
$50
$100

$14,000,000
8,160,000
5,040,000
800,000
2,000,000
Total

30,000, 000
NUMBER OF NOTES.

$10..
$20..
$50..
$100.

2,800,000
816,000
252,000
16,000
20,000

Total

3,904,000
NUMBER OF SHEETS (FOUR NOTES TO THE SHEET).

700, 000
204, 000
63, 000
4,000
5,000

$5s ,
$20s .
$50s .
$100s

Total.

976,000
TOTAL COST OF NOTES (UNDELIVERED).

Cost of paper, 976,000 sheets, at $4.67 per M
Cost of printing 976,000 sheets, at $30,034 per M.
32 face plates

$4, 559. 58
29, 313.17
2, 212. 74

Total
36,085.49
(Cost of face plates includes back plates, dies, rolls, and allowance for repairs.)
Table showing maximum notes the plates will print and our credit for unused portion.
[The life of a plate is 50,000 sheets.]
D enomination.
5
10
20
50

100

Total

Number Maximum
of
number of
plates.
notes.

Number
of notes
printed.

Balance
as an
asset.

Cost of
plates.

Portion
used.
$938.74
273.5S
84.48
5.36
6.71

$335.26
195.79
116.67
128.75
127.40

1,308.87

903.87

19
7
3
2
2

3,800,000
1,400,000
600,000
400,000
400,000

2,800,000 $1,274.00
816,000
469.37
252,000
201.15
16,000
134.11
20,000
134.11

6,600,000

3,904,000

2,212.74

COST PER 1,000 NOTES (UNDELIVERED).

Plates
Paper
Printing
Total

$0. 335
1.167
7. 508
9. 01

DISTRICT NO. 9

331

MINNEAPOLIS.

Cost per $1,000- (delivered) based on present rates.

Plates .
Paper
Printing
Undelivered
Postage
Insurance
Delivered

$5s.

$10s.

$20s.

$50s.

$0.0671
.2334
1.5017

$0.0335
.1167
.7508

$0.0167
.0584
.3754

$0.0067
.0233
.1502

$0.0033
.0117
.0751

1.8022
.05
.12

.9010
.0960
.12

.4505
.0480
.12

.1802
.0192
.12

.0901
.0096
.12

1.9722

1.1171

.6185

.3194

.2197

$100s.

TABLE I.—Record of Federal Reserve notes, Dec. 31, 1915.

Denomination.
$5
$10
$20
$50
$100
Total

Total
Received
to
printed for from comp' Issued
bank.
this bank. troller.

Balance
In agent's with
comphands.
troller.

$14,000,000
8,160,000
5,040,000
800,000
2,000,000

$7,640,000
6,480,000
4.080,000
400,000
400,000

$5,662,000
4,960,000
3,120,000
110,000
150,000

$1,980,000
1,520,000
960,000
290,000
250, 000

$6,360,000
1,680,000
960,000
400,000
1,600,000

30,000,000

19,000,000

14,002,000

5,000,000

11,000,000

Federal Reserve notes in agent's hands, also gold deposited to retire notes issued to the bank
held in the following
compartments.
FEDERAL RESERVE NOTES HELD.
Compartment.
No 1

$10
$720,000

$20

$50

$100

$400,000

$260,000
360,000

No. 2
No 3
No 5
No. 6
No 7
No.8

$290,000

$250,000

290,000

250,000

720,000
640 000

Total .

1,980,000

800,000

560,000

1,520,000

960,000

GOLD H E L D .

Compartment.
No. 4

Bearer certificates.
$900,000
960,000

No. 5

Order cer- Credit in
tificates. gold fund.

$5,630,000

1,860,000

5,630,000

Total Federal Reserve notes held b y Federal Reserve Agent
Total gold coin and certificates held
Total credit in gold fund
Total funds of Federal Reserve Agent

20067°—16

4,000,000

Total.

$1,000,000
1,000,000
510, 000

$900,000
10,590,000
1,000,000
1,000,000
510,000

2,510,000

14,000,000

$4,000,000

No 9
No. 10

No. 11
Total

Cxold

coin.

$5,000,000
10,000,000
4,000,000
19,000,000

332

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

TABLE J.—Distribution of maturities of paper and short-term investments held by Federal
Reserve Bank of Minneapolis, at close of business Dec. 30, 1915.
After 10
After 30
After 60
Within 10 but
within but within but within
days.
60 days.
90 days.
30 days.

After 90
days.

Total.

Bills discounted members
$217,331.11 $163,925.63 $196,355.42 $211,673.68 $510,199.66 $1,299,485.50
Bills bought in open market.. 14,154.68 160,106.77 172,379.68 131,165.27
477,806.40
Total bills
Short-term investments, exclusive of United States
bonds

231,485.79 324,032.40 368,735.10 342,838.95 510,199.66 1,777,291.90
10,095.83 164,958.72 625,083.72

60,375.00

860,513.28

BY-LAWS OF THE FEDERAL RESERVE BANK OF MINNEAPOLIS.

ARTICLE 1.—Directors.

SECTION 1. Quorum.—A majority of the directors shall constitute a quorum for
the transaction of business, but less than a quorum may adjourn from time to time
until a quorum is in attendance.
SEC. 2. Vacancies.—As soon as practicable after the occurrence of any vacancy in
the membership of the board the chairman of the board shall take such steps as may be
necessary to cause such vacancy to be filled in the manner provided by law.
SEC. 3. Meetings.—There shall be a regular meeting of the board the first Monday
of every^ month at 11 o'clock a. m. or, if that day be a holiday,, on the first succeeding
full business day. The chairman of the board may call a special meeting at any time,
and shall do so upon the written request of any three directors or of the governor.
Notice of regular and special meetings may be given by mail or by telegraph. If
given by mail, such notice shall be mailed at least five days before the date of the
meeting. If given by telegraph, such notice shall be dispatched at least two days
before the date of the meeting. Notice of any meeting may be dispensed with if each
of the directors shall in writing waive such notice.
SEC. 4. Powers.—The business of this bank shall be conducted, under the supervision and control of its board of directors, subject to its supervision vested by law
in the Federal Reserve Board. The board of directors shall appoint the officers
and fix their compensation.
The board may appoint legal counsel for the bank, define his duties, and fix his
compensation.
SEC. 5. Special committees.—Special business of the bank may be referred from
time to time to special committees, which shall exercise such powers as the board
may delegate to them.
SEC. 6. Order of business.—The board may from time to time make such regulations
as to order of business as may seem to it desirable.
ARTICLE 2.—Executive committee.
SECTION 1. How constituted.—There shall be an executive committee consisting of
the governor, the Federal Reserve Agent, and one or more directors chosen from classes
A or B; the member or members of the committee chosen by the board shall serve
during the pleasure of the board or for terms fixed by it. Not less than three members
of the committee shall constitute a quorum for the transaction of business; an action
by the committee shall be upon the vote of a majority of those present at any meeting
of the committee.
The committee shall have power tofix the time and place of holding regular or
special meetings and the method of giving notice thereof.
Minutes of all meetings of the executive committee shall be kept by its secretary,
and such minutes shall be read to the members of the board of directors at its next
succeeding meeting.
SEC. 2. Powers.—Subject to the supervision and control of the board of directors,
as set forth in article 1, section 4, the executive committee shall have the following
powers:
(a) To pass upon all commercial paper submitted for discount.
(6) To initiate and conduct open-market transactions.
(c) To fix the discount rate from time to time with the approval of a majority of
the board of directors.

DISTRICT NO. 0

MINNEAPOLIS.

333

(d) To buy and sell securities.
(e) To apply for and provide for the security of such Federal Reserve notes as may,
in the judgment of the committee or of the board, be necessary for the general requirements of the bank.
(/) To employ or to delegate to officers of the bank authority to employ clerks and
other subordinates and to define their duties and to fix their compensations.
(g) To approve bonds furnished by the officers and employees of the bank and to
provide for their custody.
(h) In general, to conduct the business of the bank, subject to the supervision and
control of the board of directors.
ARTICLE

3.—<

SECTION 1. The board of directors shall appoint a governor, a deputy governor, a
secretary, and a cashier, and shall have the power to appoint such other officers as the
board may from time to time determine to be necessary and appropriate for the conduct of the business of the bank. The offices of deputy governor, secretary, and
cashier, or any two of them, may be held by one person, in the discretion of the board.
The officers chosen by the board shall hold office during the pleasure of the board.
SEC. 2. Federal Reserve Agent.—The Federal Reserve Agent, as chairman of the
board, shall preside at meetings thereof. Copies of all reports and statements made
to the Federal Reserve Board shall be filed with the Federal Reserve Agent.
SEC. 3. Deputy Federal Reserve Agent.—In the absence or disability of the Federal
Reserve Agent his powers shall be exercised and his duties performed by the deputy
Federal Reserve Agent, who may perform such other services as shall be prescribed
by the board of directors not inconsistent with his duties as provided by law.
SEC. 4. The governor.—Subject to the supervision and control of the board of
directors, the governor shall have general charge and control of the business and affairs
of the bank and he shall be the chairman of the executive committee. He shall have
power to make any and all transfers of securities or other property of the bank which
may be authorized to be sold or transferred by the executive committee or by the
board. The governor shall have power to prescribe the duties of all subordinate
officers and agents of the bank where such duties are not specifically prescribed by
law or by the board of directors or by the by-laws.
The governor may suspend or remove any employee of the bank.
SEC. 5. The deputy governor.—In case of the absence or disability of the governor
his powers shall be exercised and his duties discharged by the deputy governor, and
in case of the absence or disability of the deputy governor the board shall appoint
one of the other directors governor pro tempore. The duties of the deputy governor shall otherwise be such as may be prescribed by the board of directors or by the
governor. In case the board shall deem that the business of the bank requires the
appointment of one or more assistant deputy governors, it shall have authority to
appoint such assistant deputy governor or governors and shall prescribe and define
his or their duties.
SEC. 6. The secretary.—The secretary shall have custody of the seal of the bank,
with power to affix same to certificates of stock of the bank, and by authority of the
board or the executive committee to such other instruments as may from time to
time be required. The board of directors may, in the absence or disability of the
secretary, or upon other occasion where in the discretion of the board greater convenience can be attained, appoint a secretary pro tempore or empower one or more
officers to affix the seal of the bank to certificates of stock or other instruments. The
secretary shall perform such other duties as may from time to time be prescribed by the
board of directors, the executive committee, or the governor.
SEC. 7. The cashier.—The cashier and at least one other officer designated by the
board of directors shall have the joint custody of all moneys, investments, and securities of the bank, subject to such rules as the board may adopt for their safety. He
shall perform such other duties as may be assigned to him from time to time by the
executive committee, the board of directors, or the governor.
ARTICLE 4.—Certificates of stock.
SECTION 1. Signature.—All certificates of stock, or of payment of or on account of
stock subscriptions, shall be signed by the governor or a deputy governor and the
secretary or cashier, or such other officers as may be prescribed by the board, and
such certificates shall bear the corporate seal.

334

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.
ARTICLE 5.

SECTION 1. Business hours.—The bank shall open for business from 10 o'clock to 3
o'clock on each day except Sundays, or days or parts of days established as legal holidays, except that on Saturdays the bank shall close at 12 o'clock noon.
ARTICLE 6.—Amendments.

DISTRICT NO. 10—KANSAS CITY.
J. Z. MILLER, JR., Chairman and Federal Reserve Agent.
On telegraphic advice from the Secretary of the Treasury dated October 26, 1914,
and under certificate of authority issued by the Comptroller of the Currency dated
November 14, 1914, the Federal Reserve Bank of Kansas City opened its doors for
business November 16, 1914.
Prior to the formal opening of the bank, the reserve bank organization committee
conducted an election by which the member banks selected the following directors
in classes A and B:
CLASS A.

Gordon Jones, Denver, Colo.
W. J. Bailey, Atchison, Kans.
C. E. Burnham, Norfolk, Nebr.

Thomas C. Byrne, Omaha, Nebr.
M. L. McClure, Kansas City, Mo.
L. A. Wilson, El Reno, Okla.

On October 7, 1914, the Federal Reserve Board announced the appointment of the
following class C directors:
J. Z. Miller, jr., Kansas City, Mo., Federal Reserve Agent and chairman of the
board.
Asa E. Ramsay, Muskogee, Okla., deputy Federal Reserve Agent and vice chairman
of the board.
R. H. Malone, Denver, Colo.
ELECTION OF BANK OFFICERS, ADOPTION OF BY-LAWS, ETC.

Prior to the formal opening of the bank two meetings of its board of directors were
held; the first on October 16,1914, and the second on October 31,1914. At the meeting on October 16, 1914, the salary of the deputy Federal Reserve Agent and vice
chairman of the board, Mr. Asa E. Ramsay, was fixed at $6,000 per annum. Mr. Charles
M. Sawyer, then bank commissioner of the State of Kansas, was unanimously
chosen governor of the bank, at a salary of $7,500 per annum. Mr. E..F. Swinney,
president of the First National Bank of Kansas City, Mo., was designated a member
of the advisory council.
At the meeting held October 31, 1914, Mr. Jerome Thralls, then manager of the
Kansas City Clearing House Association, was elected secretary-cashier, at a salary
of $6,000 per annum, and by-laws were adopted—copy attached and marked "Exhibit A."
BANKING QUARTERS.

At the October 31 meeting several propositions for suitable banking quarters were
considered. By unanimous decision the board accepted the proposition submitted
by the R. A. Long Investment Co., involving the lease of the entire ground floor
(8,500 square feet) of the R. A. Long Building, located at the northeast corner of
Tenth Street and Grand Avenue, together with optional rights on certain additional
space in the same building. The construction of vaults, alteration on the interior,
335

336

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

and equipment of the bank with, furniture, fixtures, and office devices represent an
expenditure of approximately $45,000.
The details of this arrangement, accompanied by diagrams, blue prints, terms,
etc., have heretofore been furnished the Federal Reserve Board.
INTERNAL ORGANIZATION AND PERSONNEL OF THE BANK.

The operation of the bank has developed two distinct departments—the bank proper
and the office of the chairman and Federal Reserve Agent.
The governor receives and presents items for discount, conducts correspondence
with member banks relating thereto, and is the joint custodian of the moneys and
securities of the bank. The cashier is responsible for the clerical records of the bank
and has under his direct supervision the transit, clearing, and collection operations;
he is joint custodian of the moneys, securities, and discounts; he is also secretary of
the bank, the executive committee, and board of directors.
The Federal Reserve Agent, with a small corps of assistants, receives, issues, and
redeems Federal Reserve notes; holds, in chests assigned to him, gold, moneys, and
collaterals for Federal Reserve notes outstanding; maintains all records relating
thereto, together with adequate credit files; and as chairman keeps in touch with
the current commercial operations of the bank by attending meetings of the executive
committee and board of directors and by reports of the auditor of the bank.
The employees in the various departments are as follows:
Federal Reserve Agent and credit bureau, 3.
Clerical and transit, 27.
Messengers, watchmen, etc., 7.
The first pay roll of the bank, basis November 30, 1914, reported 26 employees (not
including executive officers), with compensations aggregating $2,221.68 per month.
The greatest number of employees on the bank's pay roll at any one time was 39 on
January 12, 1915, with compensations aggregating $3,031.68 per month. At the close
of business December 31, 1915, the bank had 37 employees and a pay roll aggregating
$2,884.99 per month.
APPEALS FROM DECISION OF ORGANIZATION COMMITTEE.

Shortly after the opening of the Federal Reserve Bank of Kansas City petition
were filed by certain banks in Oklahoma for transfer from district No. 11 (Dallas) to
district No. 10; and by certain banks in Nebraska and Wyoming for transfer from district No. 10 to district No. 7 (Chicago).
The briefs and arguments relating to these petitions were apportioned to committees
of the Federal Reserve Board, which, in turn, reported their findings and conclusions
to the Board itself; and, on May 4, 1915, the Federal Reserve Board passed a resolution granting the petition of the banks in southern Oklahoma and denying the petition of the banks of Wyoming and Nebraska.
The result of this decision was the transfer from district No. 11 (Dallas) to district
No. 10 of that portion of the State of Oklahoma originally included in district No. 11
(Dallas) with the exception of the following counties in the southeastern portion of
the State: Atoka, Bryan, Choctaw, Coal, Johnston, Marshall, McCurtain, and Pushmataha, and added 121 banks to the membership of the Federal Reserve Bank of
Kansas City.
FREQUENCY OF BOARD AND EXECUTIVE MEETINGS.

The by-laws provide that the board of directors shall meet on the second and fourth
Thursdays of each month. These meetings have been a heavy expense to the bank,
the cost, by way of directors' fees, per diem, and expense of travel and subsistence,
being about $400 for each one-day meeting, or a total from the beginning of $10,724.98.

DISTKICT NO. 10

KANSAS CITY.

337

Since the formative period of the bank has passed, and in view of the expense
incident to board meetings, the chairman has suggested that only one regular meeting
of the board be held each month, especially since the law provides that the chairman
may call a special meeting at any time on his own motion and i« obliged to do so at
the request of the governor or any three directors.
With the exception of one or two meetings, all members of the board have been
present. At each meeting, in addition to the approval of the action of the executive
committee, all discounts, bond purchases, and investments made by the bank since
the last meeting are reviewed. A list of member banks rediscounting with the
Federal Reserve Bank is presented, showing the total liability of each member to the
Federal Reserve Bank, so that the directors, individually and collectively, are at all
times fully informed on discount relations with member banks. As the residences of
the directors of this bank are widely scattered throughout the district, the board has
been able to keep in very close and intimate touch with conditions prevailing in all
parts of the district.
The executive committee, consisting of the governor, the chairman of the board,
and one other director, meets every day at 11 o'clock to pass upon rediscounts and
perform other duties and exercise other powers as set forth in the by-laws.
PARTICULAR CHARACTERISTICS OF THE BANK.

Probably the most striking characteristic of the Federal Reserve Bank of Kansaa
City is the variety of interests it is called upon to serve. The area of district No. 10
is approximately 470,000 square miles, within which is the geographical center of the
continental United States.
When it is considered that practically every cereal, such as corn, wheat, oats, etc.;
every staple commodity, such as cotton, tobacco, and sugar; all forage crops, including
Kafir corn, hay, and alfalfa; practically every mineral mined in this country, including radium, gold, silver, copper, lead, zinc, iron, coal, salt, asbestos, gypsum, oil, and
gas—that all these are produced in immense quantities; that it is the very heart of
the live-stock industry; that enormous manufacturing plants, producing a vast variety
of finished products, are in operation; that in the Kansas City territory alone over
10,000,000 barrels of cement are produced annually; that Kansas City is the largest
winter-wheat market and yellow-pine distributing point in the world, and ranks first
of all cities in the country in the distribution of farming implements and second in
the assembling and distribution of automobiles; and that the district is traversed by
nearly 50 separate and distinct lines of railroad, including 20 trunk lines, the diversified interests this bank is called upon to serve can be partially realized.
There is probably no other territory, equal in size, which compares with district
No. 10 in the diversity of agricultural, industrial, and commercial activity.
The bank has a membership of 949, including 3 State institutions, classified on
basis of total resources November 10, 1915, as follows:
Number of banks under $100,000
$100,000 to $200,000.
$200,000 to $300,000
$300,000 to $500,000.
$500,000 to $2,500,000
$2,500,000 to $20,000,000. . . .Over $20,000,000

29
223
190
216
244
44
3

Exhibit B attached hereto is a partial abstract of condition of member banks of this
district on November 10, 1915.

338

ANNUAL REPORT OP THE FEDERAL RESERVE BOARD.
POLICIES OF THE BANK IN REGARD TO RATES OP DISCOUNT, ETC.

(a) Rates of discount.—It has been the policy of the Federal Reserve Bank of Kansas
City to promulgate rates of discount "which would have a tendency to lower and stabilize rates of interest and prove attractive to member banks. While the bank has not
become a competitor of banks in reserve cities, at the same time it was felt that the
Federal Reserve Bank should be self-sustaining during normal as well as abnormal
times. It has been necessary, therefore, that rates of discount be made attractive and
give employment to at least a portion of its funds.
At the beginning the rate of discount proposed by the board of directors was 7 per
cent on all maturities, but, on November 14,1914, the Federal Reserve Board approved
a rate of 6 per cent on all maturities. This rate gradually declined until August, 1915,
since when a 4 per cent rate on maturities of 90 days or less and a 5 per cent rate on
maturities over 90 days and under 6 months have prevailed. Recently the Federal
Reserve Board has approved rates of 3§ per cent for paper maturing within 10 days,
3J per cent on trade acceptances, and 3 per cent on commodity paper.
(6) Rediscounting.—The executive committee has adhered to the definitions of
eligible paper laid down by the Federal Reserve Board. In a few instances it has been
necessary to return offerings for the reason that they were improperly indorsed or
wholly ineligible. But from the outset, even up to this time, the executive committee
has encouraged member banks to familiarize themselves with rediscount transactions
with the Federal Reserve Bank and has overlooked trifling particulars and unimportant shortcomings in the preparation and presentation of paper.
Attached hereto is Exhibit 0, showing the discount operations for the calendar
year 1915 as well as for the entire period from November, 1914.
(c) Issue of Federal Reserve notes.—To meet the commercial and industrial demand
and to facilitate the movement of crops, it is the policy of this bank to supply its
members with Federal Reserve notes as counter currency. This bank has issued,
and now has outstanding, nearly $10,000,000 of such notes, about $2,000,000 of which
is secured by commercial paper and $8,000,000 by gold deposits with the Federal
Reserve Agent.
(d) Open-market operations.—The open-market transactions of the Federal Reserve
Bank of Kansas City have been confined to warrants and acceptances purchased
through other Federal Reserve Banks, there being little opportunity in the district
for transactions of this nature.
(e) Clearing system.—December 1, 1914, this bank began a system of clearings based
on the immediate credit and debit of all checks and drafts received from member
banks, drawn on member banks in the district and on other Federal Reserve Banks.
Later, this was extended to include checks and drafts on clearing-house banks in
certain Federal Reserve Bank cities.
Attached hereto is Exhibit D, a statement of the transactions under this system,
showing 2,059,619 items handled, aggregating $748,833,696.29.
In handling this volume of clearings with the small proportion of reserves paid in,
quite naturally during the first few months an occasional debit balance or overdraft
against member banks appeared. Our method of clearing was an innovation, and a
few members questioned the legal warrant of this bank to make an immediate debit
to their accounts for items sent them, although, at the same time, most of these members were sending to this bank for immediate credit, items drawn on points throughout the district—generally such items as would otherwise have cost them exchange
to collect. At one time these overdrafts assumed rather large proportions and became
a vexatious question. Finally, all member banks were notified that only such checks
as could be charged to their account without creating an overdraft would be handled,
all checks in excess of their balances to be returned to the sending bank. This has

DISTRICT NO. 10

KANSAS CITY.

339

proven a satisfactory solution of the problem and has not appreciably diminished the
volume of clearings.
The clearing-house function contemplated by the Federal Reserve Act is a service
second in importance only to providing an elastic currency and facilities for rediscounting commercial paper. The Federal Reserve Bank of Kansas City is handling
the clearings in a practical and economical manner.
The full reserves to be deposited with this bank will aggregate about 127,000,000;
the capital now paid in is about $3,000,000, making a total of $30,000,000. Setting
aside $9,500,000 for reserves on deposits, and assuming that this bank absorbed the
entire "float" of the district—say, $6,500,000—it would still have a note-issuing power
of $35,000,000, which is probably three times as much as all the banks of this district
have ever received from their correspondents in times of distress. Government deposits, if any, would increase the note-issuing power proportionately.
Until the Federal Reserve Board has prescribed a system of clearings which will
apply with equal force and uniformity to all districts, this important function of the
Federal Reserve Act can not reach the full measure of its usefulness. If the uniform
system finally adopted by the Board goes further and brings about an arrangement
whereby Federal Reserve Banks may clear checks drawn on nonmember banks, it
will greatly enlarge the benefits to be derived from this provision of the law by the
commercial and industrial interests of the country, and, incidentally, would relieve
the large city banks of the elaborate "transit" departments with which they are now
burdened.
DIVISION OF WORK BETWEEN GOVERNOR AND CHAIRMAN.

Governor.—The duties of governor are enumerated and defined in the by-laws of
the bank. He presides at meetings of the executive committee and controls the
internal operation of the bank. Junior officers in charge of the respective departments receive their authority and instructions from the governor.
Chairman and Federal Reserve Agent.—The chairman presides at directors' meetings,
serves as a member of the executive committee, and is always available in an advisory
capacity.
As agent he issues and redeems Federal Reserve notes; keeps the Federal Reserve
Board advised on the affairs and condition of the bank; prepares and transmits the
daily, weekly, monthly, and annual reports; and transmits to the governor of the
bank memoranda of communications from the Federal Reserve Board, taking receipted copies thereof, which serves to keep necessary records and charges each
official with the responsibilities resting upon him.
DISCUSSION OF OFFICE AND DUTIES OF DEPUTY FEDERAL RESERVE AGENT.

At the first meeting of the board of directors the salary of the Deputy Federal
Reserve Agent and vice chairman of the board was fixed at $6,000 per annum. Other
than from the text of the law and the qualifications enumerated at that time the
board had no definite conception of what duties the Act contemplated that official to
perform. It was assumed that the full time and activity of a man of tested banking
experience was required.
It has been demonstrated, however, that the full time of this official, unless the
activities of the bank are greatly enlarged, is not required. Without doubt at some
time in the future when the scope of the activities of the Federal Reserve Bank has
been made to include functions which are not now exercised the full time of such
official will be almost indispensable. It is contemplated that in the course of time
the credit files of the Federal Reserve Bank will not be confined merely to financial
statements of member banks and of parties whose paper is presented by member

340

ANNUAL REPORT OF THE FEDEKAL RESERVE BOARD.

banks for discount, but will include general credit and financial information of the
entire district, which will be available for the use of the public as well as member
banks. In this event the position of Deputy Federal Reserve Agent in charge of the
credit bureau and as active assistant to the chairman would be necessary and should
be filled by a thoroughly competent individual.
The Deputy Federal Reserve Agent and vice chairman of the board of this bank
resigned his office, effective October 1, 1915, to accept an executive position with one
of the large financial institutions of Kansas City.
ATTITUDE OF FEDERAL RESERVE BANK TOWARD MEMBER AND OTHER BANKS IN
DISTRICT.

One of the specific purposes of the Federal Reserve Act, as enumerated in the title
thereof, is to improve banking conditions in the United States, and the Federal Reserve
Bank of Kansas City has made an earnest effort to carry out this specific purpose of
the Act.
Members have been advised, voluntarily and by request, of what were considered
subjects of both praise and criticism; have been solicited to visit the bank when in
the city and correspond upon any points upon which they desired information; have
been advised, when occasion required, upon the internal affairs of their banks; and
their attention has been directed to the elimination of undesirable features; in fact
a genuine and impartial interest has been taken in the affairs of each member.
In addition to this, the officers and directors of the bank have taken every proper
occasion to go out into the district and discuss at group meetings and with individual
bankers the operation of the Federal Reserve Bank, and there is hardly a city of any
importance in the district which has not been visited.
ATTITUDE OF MEMBER BANKS TOWARD FEDERAL RESERVE BANK.

(a) Country members.—With few exceptions, the Federal Reserve Bank of Kansas
City has been accorded the most hearty cooperation on the part of these members.
On account of the Federal Reserve Act bringing about innovations in former methods
and practices of member banks, there has been some criticism and, in a few instances,
the bank has met with what seemed to be a determined opposition; but, as time has
proven the efficacy of the system and has demonstrated the benefits to be derived
therefrom, this criticism has practically ceased, and most, if not all, opposition has
disappeared.
(b) Reserve city members.—Cooperation from these has not been quite so cordial.
While a large majority of the officers of the reserve city banks expressed their approval
of the Act, and its administration by the Federal Reserve Board, as well as the operation of the Kansas City bank, some are indifferent and a few are hostile, and their
views are to some extent adopted by the country bankers, thereby in a measure hindering cooperation on their part. Most of the opponents adhere to the central-bank
idea, and some point out their anxiety that the administration of the Act may become
partisan and political.
It will be recalled that during the discussion of the bill in Congress, bankers, mostly
from the reserve and central reserve cities, crossed the continent to urge that the Act
provide for a dividend rate of 6 per cent on the capital paid in. At the beginning
many of the reserve city bankers expressed the fear that the Federal Reserve Banks
would not earn the dividend. Later on most of these same bankers became alarmed
for fear the banks would earn the dividend and in doing so would become competitors
of the commercial banks, especially those in reserve cities.
Experience has demonstrated that to earn current expenses and dividends this bank
would require a continuous investment of $7,500,000 at 4 per cent.

DISTRICT NO. 10

KANSAS CITY.

841

ATTITUDE OF STATE BANKS TOWARD FEDERAL RESERVE BANK.

It seems that the State banks and trust companies have not been sufficiently
impressed with the benefits of membership in the Federal reserve system to make any
concerted move toward joining, and it is doubtful if they will do so until circumstances bring forcibly to their notice the decided advantages membership conveys,
especially in times of financial uncertainty or distress.
The Federal Reserve Bank of Kansas City has not actually solicited membership of
State banks and trust companies, believing that the interests of the system would be
best served by permitting it to thoroughly prove to such institutions that they were
deceiving only themselves by refraining from filing their applications. When it is
realized that concessions have been made by the Federal Reserve Board to State
banks and trust companies, which, in some respects, have given them a decided
advantage over national bank members, it is believed that sooner or later a majority
of the better State institutions will seek membership.
One of the largest trust companies in the district, as well as one State bank in
Kansas and one in Nebraska, have joined the system.
ASSISTANCE FEDERAL RESERVE BANK HAS BEEN TO THE BANKING AND BUSINESS
INTERESTS OF THE DISTRICT.

Under the old national-bank act, when money has been in great demand or there
has been financial disturbance, the greatest anxiety of bankers has been where and
how they might secure funds not only to meet the demands of anxious depositors, but
supply the legitimate requirements of their customers. There was always an uneasiness, and even a fear, that their correspondents, being called upon by great numbers
of bankers, might not be able to meet all demands; and this anxiety quite naturally
communicated itself to the commercial and industrial interests of the country.
A feeling of confidence has permeated not only the financial interests of the district
but the business and industrial interests as well. This feeling of confidence has
extended itself to State banks and trust companies, even though not members of the
Federal reserve system.
The abnormally high prices received for the abundant crops of this section created
unusually large bank deposits, and the reserves thereon released by the Federal
Reserve Act have made money more plentiful throughout the district.
In addition to this, the establishment of the Federal Reserve Bank, and its operation
during the past year, has proven a stabilizer of business and a leveler and equalizer of
interest rates. When this bank opened November 16, 1914, the prevailing rates of
interest ranged from 7 per cent to 8 per cent in Missouri, 8 per cent to 10 per cent in
Kansas and Nebraska, 8 per cent to 12 per cent in Colorado, and 10 per cent to 20 per
cent in Oklahoma, New Mexico, and Wyoming. The first rate approved by the
Federal Reserve Board for this bank was 6 per cent for all maturities. When this rate
was promulgated the uneasiness which had prevailed following the outbreak of the
European War gradually diminished, and a more comfortable feeling was experienced
by practically all member banks and by the public generally. As a result, interest
rates gradually declined, and have continued to do so until at this time they are at the
lowest point in the history of banking in this district.
BUSINESS AND AGRICULTURAL CONDITIONS DURING THE YEAR; ALSO SHOWING
PRESENT TREND.

It is probably safe to say that general business and agricultural conditions during
the year 1915 have rarely, if ever, been more favorable in the territory comprising
the tenth district.

342

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

Although the quality of the yield of wheat in some portions of the district was
somewhat disappointing, yet the yield was so abundant that, with the prevailing
prices, the net returns were above normal.
The late rains and mild weather kept the pastures and ranges in condition for
grazing until very late in the season, with the result that stockmen were relieved of
the feeding of stock to a very great extent, and much live stock was marketed in fat
condition direct from the range. The splendid condition of the ranges was exceptionally beneficial to the sheep industry of Wyoming and Colorado, and both wool
and lambs commanded unprecedented prices, and the season closed with the flocks
in superb condition.
The prices of oil in the Oklahoma and Kansas fields, although quite low during the
first half of the year, have rallied to such extent that the industry is enjoying exceptional prosperity. The high prices prevailing for lead and zinc has caused the greatest
activity in the history of those mines.
The horse and mule industry has been phenomenally active, and probably more
of those animals have been sold at high prices during the past few months than during
any previous similar period.
The sale and distribution of automobiles and farming implements throughout the
district has been remarkable; and Kansas City now ranks second in the distribution
of the former, and still maintains her first rank in the distribution of the latter.
Milling and manufacturing plants throughout the district are running full time,
and have been doing so practically throughout the entire year. Manufacturers report
increase in output and sales ranging from 6 per cent to as high as 70 per cent over the
year 1914, while both manufacturers and jobbers report splendid collections.
Many manufacturers report that practically their entire output for 1916 is sold,
and most of them advise that their products are sold far ahead. A spirit of optimism
pervades the entire district and is not limited to any particular industry. The year
has been free of serious labor disturbances, and labor, both common and skilled, has
been very generally employed.
CREDIT NEEDS OF THE DISTRICT.

On account of the diversity of its agricultural, industrial, and commercial interests,
the credit needs of district No. 10 are almost continuous and do not materially fluctuate. While it is true that during the fall of the year there is the largest movement
of crops, yet it is equally true that the commercial necessities at other seasons of the
year require practically an equal amount of loanable funds. Loans and discounts in
this district are probably as uniform in volume as in any other district.
EXCHANGE AND COLLECTION CHARGES ON CHECKS.

Before the establishment of the Federal Reserve Bank the prevailing rates of exchange throughout this district ranged from 5 cents per letter to 30 cents per $100.
These rates of exchange had maintained for many years with only slight fluctuations,
Since the Federal Reserve Bank has been in operation, there has been a material
reduction in the exchange and collection charges. Many banks which formerly
charged 10 cents per $100 are now remitting at par, and few, if any, of the old-time
charges are being made.
DIFFICULTIES ENCOUNTERED IN THE ADMINISTRATION OF THE FEDERAL RESERVE
ACT AND THE REGULATIONS OF THE BOARD.

The principal difficulty encountered in the administration of the Act and the
regulations of the Board has been the apparent unfamiliarity of member banks therewith. This is evidenced by the fact that every day inquiries are received regarding
salient features of the Act, which have been answered in circular after circular issued

by both the Board and this bank. It is not uncommon, even at this late date, to

DISTRICT NO. 10

KANSAS CITY.

343

receive from important member banks offerings of paper secured by certificates of
stock representing the capitalization of corporations or loans secured by real estate.
At a recent meeting of the national-bank examiners of this district, called by the
chief national-bank examiner, acting under instructions of the Comptroller of the
Currency, the examiners were earnestly urged to assist in enlightening and educating member banks on this subject of eligible paper.
EARNINGS AND EXPENSES.

The earnings of this bank have not been quite sufficient to pay current expenses,
although if the total amount charged to current expenses were credited with the
value of the unused stationery on hand and the profits accruing from investments in
United States bonds the deficit would be covered, or nearly so. There is attached
hereto marked " Exhibit E," a statement showing earnings and expenses in detail
from November 16, 1914, to the close of the calendar year 1915.
On account of the season of the year when the bank started the member banks of this
district had arranged with their correspondents for accommodations incident to the
movement of crops in the fall of 1914, and hence had no occasion to make offerings of
paper for discount with this bank. The spring of 1915 found the district with an
excess of loanable funds in the vaults of member banks, and, except in nominal
amounts, not until the summer and fall of 1915 was the bank called upon to discount
paper.
As stated in another portion of this report, the construction of vaults, alteration of
interior of banking quarters, equipment of bank with furniture, fixtures, and office
devices entailed an expenditure at the outset of about $45,000. This item is subject
to a reduction of $15,000 under the terms of the lease of banking quarters; that is,
during the fourth and fifth years there is to be refunded to the bank by the lessor the
sum of $7,500 per annum to reimburse the bank for vault construction.

EXHIBIT A.
BY-LAWS OF THE FEDERAL RESERVE BANK OF KANSAS CITY.

ARTICLE 1.—Directors.

344

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.
ARTICLE 2,—Executive committee.

SECTION 1. How constituted.—There shall be an executive committee consisting of
the governor, the Federal Reserve Agent, and one or more directors chosen from
classes A or B; the member or members of the committee chosen by the board shall
serve during the pleasure of the board or for terms fixed by it. Not less than three
members of the committee shall constitute a quorum for the transaction of business,
and action by the committee shall be upon the vote of a majority of those present.
The committee shall have power to fix the time and place of holding regular or
special meetings and the method of giving notice thereof.
Minutes of all meetings of the executive committee shall be kept by the secretary,
and such minutes or digests thereof shall be submitted to the members of the board of
directors at its next succeeding meeting. Such minutes shall be read to the meeting if
required by any member of the board.
SEC. 2. Powers.—Subject to the supervision and control of the board of directors,
as set forth in article 1, section 4, the executive committee shall have the following
powers:
(a) To pass upon all commercial paper submitted for discount.
lb) To initiate and conduct open market transactions.
(c) To recommend to the board of directors from time to time changes in the discount rate.
(d) To buy and sell securities.
(e) To apply for and provide for the security of such Federal Reserve notes as may,
in the judgment of the committee or of the board, be necessary for the general requirements of the bank.
(/) To employ or to delegate to officers of the bank authority to employ clerks
and other subordinates, and to define their duties and to fix their compensations.
(g) To approve bonds furnished by the officers and employees of the bank and to
provide for their custody.
(h) In general, to conduct the business of the bank subject to the supervision and
control of the board of directors.
ARTICLE

3.—Officers.

DISTRICT NO. 10 KANSAS CITY.

345

be required. The board of directors may, in the absence or disability of the secretary,
or upon other occasion where in the discretion of the board greater convenience can
be attained, appoint a secretary pro tern or empower one or more officers to affix the
seal of the bank to certificates of stock or other instruments. The secretary shall perform such other duties as may from time to time be prescribed by the board of directors, the executive committee, or the governor.
SEC. 7. The cashier.—The cashier and at least one other officer designated by the
board of directors shall have the joint custody of all moneys, investments, and other
securities of the bank, subject to such rules as the board may adopt for their safety.
He shall perform such other duties as may be assigned to him from time to time by
the executive committee, the board of directors, or by the governor.
ARTICLE 4.—Certificates of stock.

SECTION 1. Signature.—All certificates of stock, or of payment of or on account of
stock subscriptions, shall be signed by the governor and the secretary or cashier, or
such other officers as may be prescribed by the board, and such certificates shall bear
the corporate seal.
ARTICLE 5.

SECTION 1. Business hours.—The bank shall open for business from 10 o'clock to 3
o'clock on each day except Saturdays, Sundays, and days or parts of days established
as legal holidays. On Saturdays the bank shall open for business from 10 o'clock to
12 o'clock m.
ARTICLE

6.—Amendments.

These by-laws may be amended at any regular meeting of the board by a majority
vote of the entire board: Provided, however, That a copy of such amendment shall
have been delivered to each member at least five days prior to such meeting.
On January 4, 1915, by-laws were amended as follows:
Section 2, of article 2, subdivision (c):
"(c) Tofixfrom time to time changes in the discount rate and to put same into
operation on receipt of approval of the Federal Reserve Board."
On August 14, 1915, section 1, of article 2, was amended so as to read:
"How constituted.—There shall be an executive committee consisting of the governnor, the Federal Reserve Agent, and one director, appointed by the board. In the
absence of the Federal Reserve Agent, the Deputy Federal Reserve Agent shall act
in his place. In the absence of the governor, the cashier shall act in his place. At
no meeting of the executive committee shall the Federal Reserve Agent and his
deputy act at the same time; and at no meeting shall the governor and cashier act at the
same time. The member of the committee chosen by the board shall serve during the
pleasure of the board or for terms fixed by it, and each director shall have the opportunity to serve his pro rata of the time. A majority of the executive committee shall
constitute a quorum for the transaction of the business, and action by the committee
shall be upon the vote of the majority. The committee shall have power tofixthe
time and place of the holding of regular and special meetings and the method of giving notice thereof. Minutes of all the meetings of the executive committee shall be
kept by the secretary, and such minutes or digests thereof shall be submitted to the
members of the board of directors at its succeeding meeting; such minutes shall be
read to the meeting if requested by any member of the board."

EXHIBIT B.
Partial abstract of condition of member banks.
Capital
Surplus
Undivided profits
Total
Demand deposits
Time deposits
Total
Loans and discounts
Bonds, securities, etc
Eligible paper, approximate
Money borrowed

$68,829,800
32,698,800
17,311,400
115,628,900
519,643,300
91,897,900
611,541,200
449,538,900
20,470,000
154,708,100
10,078,100

346

ANNUAL REPORT OF T H E FEDERAL RESERVE BOARD.

Liability of directors:
Direct
Indirect
Three years' earnings (complete):

$11,559,700
7,626,900

1912
1913
1914

10,931,600
10,652,500
10,774,600

Three years' dividends:
1912
1913
1914

7,665,500
7,847,200
8,387,100

Three years' losses:
1912
1913
1914

2,286,400
2,758,300
3,198,600

EXHIBIT C.

Rediscounts for member banks, to Dec. 31, 1915.
November and
December, 1914
Colorado
Kansas
Missouri
Nebraska
New Mexico
Oklahoma
Wyoming

$11,400
391,300
102, 700

4,400

Total

509,800

Number
of banks.

Total.

1915

$522,400
3,413,600
2,544,400
1,771,900
19,300
2,571,500
32,400

$522,400
3,425,000
2,935, 700
1,874,600
19,300
2,575,900
32,400

18
55
23
71
1
101
5

10,875,500

11,385,300

274

In November and December, 1914,89 notes were rediscounted, and in 1915, 6,946 notes were rediscounted
to Dec. 31, a total of 7,035 notes, average amount of each note 11,600.

Open market transactions from Nov. 16, 1914, to Dec. 31, 1915 (none in 1914).
TRANSACTIONS IN 1915.
155 bankers' acceptances were purchased, aggregating
Purchases of warrants (municipal, State, and county), aggregated

$1,787,960.84
1,250,167.88

UNITED STATES BONDS PURCHASED.
Cost.

Par.

2 per cents of 1930
3 per cents of 1918

$2,118,921.95
300.00

$2,151,350.00
300.00

Total

2,119,221.95

2,151,650.00

EXHIBIT D.

City and country clearings, Dec. 1, 1914, to Dec. 31, 1915.
Month.
December..
January
February..
March
April
May
June
July
August
September.
October
November.
December..
Total.

Year.
1914
1915
1915
1915
1915
1915
1915
1915
1915
1915
1915
1915
1915

Kansas City.

On country.

Total.

$17,559,936.75 $21,082,772.04
24,549,496.46 33,229,513.75
20,315,985.91 30,367,248.63
24,758,835.86 34,579,054.98
22,991,717.41 32,914,047.97
24,029,095.24 34,051,068.50
25,015,256.90 34,552,541.30
17,810,591.68 26,101,975.98
18,423,595.54 31,025,118.86
25,258,294.00 36,864,334.00
30,628,488.74 45,679,585.17
39,937,455.80 42,775,307.45
23,465,161.44 30,867,215.93

$38,642,708.79
57,779,010.21
50,683,234.54
59,337,890.84
55,905,765.38
58,080,163.74
59,567,798.20
43,912,567.66
49,448,714.40
62,122,628.00
76,308,073.91
82,712,763.25
54,332,377.37

314,743,911.73 434,089,784.56

748,833,696.29

347

DISTRICT NO. 10—KANSAS CITY.
City and country clearings, Dec. 1, 1914, to Dec. SI,

1915—Continued.

NUMBER OF ITEMS.
Month.
December..
January
February..
March
April
May
June
July
August
September.
October
November.
December..

Year.
1914
1915
1915
1915
1915
1915
1915
1915
1915
1915
1915
1915
1915

Total.

Kansas City.

On country.

Total.

5,860
10,824
10,649
10,642
11,626
11,405
12,523
10,537
10,625
11,640
12,349
12,184
9,215

69,773
133,512
117,476
140,795
151,741
149,806
160,083
140,277
160,453
173,887
194,930
168,994
157,813

75,633
144,336
128,125
151,437
163,367
161,211
172,606
150,814
171,078
185,527
207,279
181,178
167,028

140,079

1,919,540

2,059,619

Daily average clearings Dec. 1, 1914, to Dec. SI, 1915.
Month.
December..
January
February..
March
April
May
June
July
August
September.
October
November.
December..

Year.

Kansas City.

1914
1915
1915
1915
1915
1915
1915
1915
1915
1915
1915
1915
1915

$675,380.00
981,979.00
863,300.00
916,993.00
884,297.00
961,163.00
962,125.00
685,023.00
708,599.00
1,010,332.00
1,178,018.00
1,597,498.00
902,506.00

$810,877.00
1,329,181.00
1,320,315.00
1,280,705.00
1,265,925.00
1,362,043.00
1,328,944.00
1,003,922.00
1,193,273.00
1,464,573.00
1,756,907.00
1,751,012.00
1,187,200.00

$1,486,257.00
2,311,160.00
2,183,615.00
2,197,698.00
2,150,222.00
2,323,206.00
2,291,069.00
1,688.945.00
1,901,872.00
2,474,905.00
2,934,925.00
3,348,510.00
2,089,706.00

948,247.00

1,311,913.00

2,260,160.00

225
433
463
394
447
556
482
405
408
465
475
487
355

2,682
5,340
5,107
5,214
5,836
5,992
6,157
5,395
6,171
6,995
7,497
6,760
6,069

2,907
5,773
5,570
5,608
6,283
6,548
6,639
5,800
6,579
7,460
7,972
7,247
6,424

430

5,786

6,216

General average.

On country.

Total.

DAILY AVERAGE ITEMS.
December..
January
February..
March
April
May
June
July
August
September.
October
November..
December..

1914
1915
1915
1915
1915
1915
1915
1915
1915
1915
1915
1915
1915

General average.,

20067°—16

348

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.
EXHIBIT E.

Expenditures of the Federal Reserve Bank of Kansas City since organization.
Total since
Nov. 16,1914.
I. CURRENT EXPENSES.

Assessment, general expenses, Federal Reserve Board (monthly proportion)
Federal advisory council (fees)
Directors' fees
Legal fees
Salaries:
Bank officers
Clerical staff
Special officers and watchmen
Traveling expenses:
Directors
Officers and clerks
Per diem allowance of directors
Telephone
Telegraph
Postage
Expressage
Rent
Insurance and premiums on fidelity bonds
Light, heat, and power
Printing and stationery
Repairs and alterations
All other expenses not elsewhere specified

$5,928.48
357.10
3,480.00
1,501.20
28,820.82
34,915.95
2,591.83
4,662.51
541.72
4,316.00
607.18
572.17
10,347.01
103.24
9,538.85
1,354.28
1,241.00
9,171.34
86.63
5,843.46

Total current expenses

125,953.77

Commissions on investments

861.03
II. ORGANIZATION EXPENSES.

Carried from current expenses (account expense prior to Nov. 16,1914)

Assessment for general expenses of Federal Reserve Board (prior to June 30,1915).

15,698.98
9,879.48
25,578.46

Total
III. COST OF FEDERAL RESERVE NOTES.

Cost of Federal Reserve notes, including expressage, insurance, etc
IV. EQUIPMENT.

Furniture and fixtures
Vaults
Machines
Other
Total equipment
Total expenditures

25,057.92
5,374.42
15,071.41
12,313.58
14,069.44
46,828.85
224,280.03

Earnings of the Federal Reserve Bank of Kansas City since organization.
Total since
Nov. 16,1914.
Earnings from—
Bills discounted member banks.
Bills purchased (acceptances)...
Investments:
United States bonds
Warrants
Sundry profits
Total earnings

$64,648.69
7,831.51
20,630.85
9,575.48
648.21
103,334.74

DISTRICT NO. 10
EXHIBIT

KANSAS CITY.

349

Operations of the clearing departments of the Federal Reserve Bank of Kansas City, Dec. 1,
1914, to Dec. 31, 1915.
Cost of operation of country department

$27,066.00

Cost of operation of city department

1,460.29

Total cost of operation

28,526.29

Amount of items handled through the country clearing department

434,089,784.56

Amount of items handled through the city clearing department

314,743,911.73

Total amount of items cleared

748,833,696.29

Number of items handled through the country department

1,919,540.00

Number of items handled through the city department

140,079.00

Total number of items cleared

2,059,619.00
Cents.

Cost of clearing per thousand dollars
Cost of clearing per item

3.81
1-38

Monthly expense of operating the country clearing department of the Federal Reserve Bank
of Kansas City.

Administration (one-half chief clerk's salary, $2,000 per annum, to cover time of officers
consumed in handling the affairs of the department)
$250.00
Premium on surety bonds of employees
5.00
Depreciation on equipment
93.00
Incidentals
40.00
Light
35.00
Rent
100.00
Salaries of 15 clerks....
825.00
Stationery
110.00
Stamps
624.00
Average cost per month
2,082.00
Total cost of operation, Dec. 1,1914, to Dec. 31,1915,13 months
27,066.00
Number of items handled through this department Dec. 1,1914, to Dec. 31,1915
1,919,540.00
Aggregating
$434,089,784.56
Cents.
Cost of handling per thousand dollars
6.23
Cost of handling per item
1.41

Monthly expense of operating city clearing department of the Federal Reserve Bank of
Kansas City.
Administration
Depreciation on equipment
Light
Rent
Salaries:
Holmes West
Messenger, Gamble (one-third)

$10.00
5.00
1.00
5.00
$70.00
16.33
86.33
5.00

Total
Cost of operation Dec. 1,1914, to Dec. 31,1915,13 months
Number of items handled through this department Dec. 1,1914, to Dec. 31,1915
Aggregating
Cost of handling per thousand dollars
Cost of handling per item

112.33
1,460.29
140,079
$314,743,911.73
Cents.
•£§
If.

HISTORY OP OPERATIONS OF COUNTRY CLEARING DEPARTMENT, UNDER OVERDRAFT
ELIMINATION PLAN, NOVEMBER 10, 1915, TO DECEMBER 3 1 , 1915.

On December 1, 1914, the Federal Reserve Bank of Kansas City began a system of
clearing based on the immediate credit and debit of all checks and drafts received
from member banks drawn on member banks in the district, and on other Federal
Reserve Banks. Later, this was extended to include checks and drafts drawn on
clearing-house banks in certain Federal Reserve Bank cities.
In handling the volume of clearings which flowed through this bank, and on account
of the small proportion of reserves paid in, during the first few months of operation
an occasional overdraft was created, and, later, these overdrafts assumed such large

350

ANNUAL REPORT OF T H E FEDERAL RESERVE BOARD.

proportions as to become a serious and vexatious matter. Several tentative plans
looking to the elimination of these overdrafts were suggested and discussed, but,
finally, during the early days of November, 1915, all member banks were notified
that only such checks as could be charged to their account without creating an overdraft would be handled, and that all checks in excess of their respective balances
would be returned to the sending bank, or turned over for their account to such local
correspondent as they might designate.
The success of the operation of this plan is reflected by the figures making up the
following comparative compilation.
Items returned to sending bank.

Items received.

Items turned over
to correspondents.

Date.
Number.

Nov
Dec.
Pec
Dec.
Dec
Dec.

10
1
10
17
24
31

1915.

6,455
5,840
6,027
5,542
5,243
6,094

Amount.

Number.

$1,681,364.52
1,296,888.31
1,213,829.61
1,001,371.85
838,439.98
1,465,701.65

Amount.

22
199
353
207
59
127

$114,493.00
22,702.95
83,670.22
104,882.44
50,769.16
92,850.47

Number.

10
14
5
8
26

Amount.

$245.12
1,447.35
2,733.61
185.90
3,572.41

Under the plan above outlined the overdrafts of this bank, which on November 10,
1915, aggregated $1,794,902.14, have diminished until they equal only a nominal
amount at this time, as is evidenced by the following summary:
Total
amount.
Overdrafts:
Nov. 10,1915.
Dec. 1,1915..
Dec. 10,1915.
Dec. 17,1915.
Dec. 24,1915.
Dec. 31,1915.

$1,794,902.14
32,326.48
22,137.68
2,495.09
2,910.07
11,783.74

Overdrafts.

Date.

Daily average to Feb.
1915
Month of—
March
April
May
June
July
August
September
October
November
December
1915.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.

1.
2.
3.
4.
6.
7.
8..

Number
of accounts
overdrawn.

Date.

Amounts.

$559,121.00

55
60
60
57
53
74
100
131
67
13

540, 340.00
565, 353.00
639, 846.00
583, 511.00
302, 860.00
521, 439.00
843, 319.00
L, 165,005.00
441, 243.00
12, LOO
32,326.48
24,713.16
19,770.87
25,189.50
7,208.96
13,925.57

Dec.9
Dec. 10
Dec. 11
Dec. 13
Dec. 14
Dec. 15
Dec. 16
Dec. 17
Dec. 18
Dec. 20
Dec. 21
Dec. 22
Dec. 23
Dec. 24
Dec. 27
Dec. 28
Dec. 29
Dec. 30
Dec. 31

Number
of accounts
overdrawn.

Amounts.

1915.

Daily average.

$11,123.51
22,137.68
15,094.40
9,799.00
7,495.00
5,020.31
3,686.78
2,495.09
9,638.32
2,405.18
3,510.16
2,465.65
3,477.76
2,910.07
6,772.78
8,210.82
35,278.30
33,998.16
11,783.74
13

12,693.00

DISTRICT NO. 11—DALLAS.
E. O. TENISON, Chairman and Federal Reserve Agei__.
On May 18,1914, pursuant to the summons of the reserve bank organization committee, authorized representatives of the First National Bank of El Paso, Tex., Durant
National Bank of Durant, Okla., First National Bank of Shreveport, La., Frost
National Bank of San Antonio, Tex., and Union National Bank of Houston, Tex.,
met in Dallas and executed the organization certificate which, in accordance with
the provisions of the Federal Reserve Act, brought the Federal Reserve Bank of
Dallas into corporate existence.
Following this, class A and B directors having been elected by the member banks,
according to the Act, and class C directors having been officially appointed and
announced by the Federal Reserve Board, a meeting of the entire directorate "was
held at Dallas on October 16 and devoted to general discussions of the organization
of the bank. At this meeting the terms of office of directors of the different classes
were established, and the election of Mr. Oscar Wells as governor took place, along
with the selection of Mr. J. Howard Ardrey, of Dallas, as member of the advisory council. Immediately after this preliminary meeting a conference of directors of the
several reserve banks was held in Washington, at which a majority of the directors
of the Dallas bank were in attendance.
The second meeting of the board, held on October 29 at Dallas resulted in the
election of Mr. R. L. Van Zandt as vice governor and Mr. J. W. Hoopes as cashier, after
suitable by-laws had been adopted, and arrangements were made to perfect a clerical
staff preparatory to the opening of the bank, soon to follow. At this meeting C O .
Huff was retained as counsel. The complete organization consisted of active officers,
as follows: E. O. Tenison, Federal Reserve Agent; W. F. McCaleb, Deputy Federal
Reserve Agent; Oscar Wells, governor; R. L. Van Zandt, vice governor; J. W. Hoopes,
cashier; with a staff which included Sam R. Lawder, auditor; Charles C. Hall, secretary to the Federal Reserve Agent; Fred Harris, manager discount department;
W. J. Donald, general bookkeeper; R. R. Gilbert, C. B. Cooper, C. J. Kinsolving, jr.,
A. P. Wooldridge, jr., and W. O. Ford, tellers; together with 11 other employees.
Through the courtesy of those banks, the services of J. C. Tenison, of the City National
Bank, and John Crosthwaite, of the Security National Bank, both experienced and
capable tellers, were secured temporarily, and were of material assistance to the permanent staff.
PAYMENT OF CAPITAL.

The initial capital installments having been called for November 2, the work of
receiving these payments and issuing temporary certificates therefor was accomplished
prior to the actual opening of the bank on November 16, which was the date set by
Secretary of the Treasury McAdoo. The bank commenced business in temporaryquarters, which had previously been used as a banking room, and the first reserve
deposits were received according to the statutory requirements without undue
confusion. The transfer of approximately six and one-half millions of dollars in gold
and lawful money was accomplished within a few days.
At the time of the opening of the bank the business interests of this district were
tremendously depressed on account of the complete breaking down of the market
351

352

ANNUAL REPORT OF THE FEDEEAL RESERVE BOARIX

for cotton. Every factor in our economic life was in great distress by reason of the
fact that our principal product had fallen to a price below the cost of production.
The psychological effect of the war in Europe had created an incipient panic among
our productive interests and heavy losses in the aggregate had been borne before
the remedial forces of our new legislation could be gathered. Immediately following
the opening of the Federal Reserve Banks, however, a change was discernible, and
within a short period of time a more normal condition was produced and was later
followed by appreciable advance in the price of agricultural products.
Discount operations gradually gained strength until the time when, by the terms
of the Aldrich-Vreeland Act, it became necessary to retire the emergency currency
issued under that act. Member banks, having become more thoroughly familiar
with the operations of the bank and the rediscounting privileges afforded, practically
the entire amount of outstanding currency was retired through the aid of this bank.
This was one of the first evidences to the banking public of the real service that could
be expected of the reserve banks, and the easy manner of accomplishment of this
materially furthered the popularity of the bank with its members and brought home
to them the great potentialities of the system, thus causing a steady continuance
of our discount operations during the summer months, until the high figure of
$7,729,000 was reached on September 30. Since that date the fall movement of
commodities has resulted in substantial liquidation, until at this time (December 31)
our bills discounted aggregate $4,870,000.
During the early operations of the bank the clearing functions were limited to items
drawn by member banks on member banks in the several reserve cities of the district,
with the additional facility extended to members for transferring funds between this and
other districts by the use of their drafts on us, and on May 27 the establishment of
the gold settlement fund in Washington for the clearing of balances between the
several Federal Reserve Banks made necessary the deposit of three and one-half millions of dollars in gold to settle the adverse trade balances accumulated against this
district. The reversal of trade conditions since that time, due to the seasonal movement of our products, has more than recouped this loss of gold, and our balance in
the gold settlement fund at this time is $8,341,000.
On February 24 Oscar Wells, governor of the bank, having accepted the presidency
of the First National Bank of Birmingham, Ala., tendered his resignation, and on
April 6 Vice Governor R. L. Van Zandt was elected as his successor; J. W. Hoopes
acceding to the vice governorship, and Lynn P. Talley, at that time cashier of the
Lumbermans National Bank of Houston, Tex., was elected to the position of cashier.
The departure of Mr. Wells from the district necessitated the election of a class A
director in his stead, and on February 15 the chairman forwarded to member banks,
in conformity with the provisions of law governing, the necessary certificates and
ballots, and called the election, with the result that Mr. John T. Scott, president of the
First National Bank of Houston, Tex., was elected as Mr. Wells's successor.
CLEARANCE SYSTEM.

Simultaneously with similar action on the part of various other reserve banks, on
June 1 an intradistrict collection system was inaugurated for the benefit of member
banks desiring to use this facility. Membership therein was optional, and contemplated the reciprocal clearing of checks at par through us. At the outset 74 banks
joined the plan, and since that date 36 additional banks have become members,
while 35 have withdrawn. The amounts of checks cleared under this plan have averaged $605,764 per day, and an average of 898 items have been cleared on country
banks, in addition to an average of 304 items on members of the local clearing house.
The rates of exchange charged for collecting and remitting checks which are received
by banks in this district, principally from their city correspondents, are higher than

DISTRICT NO. 11

DALLAS.

353

charges made by banks in older sections of the country. These charges run from a
minimum of one-tenth of 1 per cent to a maximum of one-quarter of 1 per cent, favoring
the latter figure. The rates charged usually are either one-tenth, one-eighth, threetwentieths, or one-quarter of 1 per cent, and the estimated average rate charged (not,
however, by any means on the average volume of business), three-twentieths of 1 per
cent, or $1.50 per $1,000. Probably the average exchange collected on the average
volume of business would be in the neighborhood of one-fifth of 1 per cent, or $2 per
$1,000.
The clearing operations have had no appreciable effect in this district in reducing
exchange charges, the volume of business and the number of banks involved in the
clearing system being negligible. We believe that the matter of reduction in exchange
charges has not been pressed by the city banks since the operation of the Federal
Reserve Banks as before. Many accounts are maintained with city banks for the
purpose of having checks sent by them to the bank maintaining the account and
balance, to produce revenue by way of exchange charges for the drawee bank. Some
sentimental influence is therefore present looking toward the maintenance of these
accounts by the city banks. We believe, however, that if a system can be devised
where checks on member banks in this district, or their equivalent, can meet at a
common point and offset each other to a large extent, exchange charges and the
sentiment in favor of them will gradually disappear, and that such an arrangement
would in the main be gracefully accepted by the member banks. Under such a condition the transportation expense, upon which exchange charges are based, would
only have to be considered as relating to the difference in the amount of checks received from and sent to the Federal Reserve Bank.
During the active cotton season in this district it has heretofore been necessary
for member banks to ship large amounts of currency and coin from central reserve
and sub treasury cities for use in gathering and marketing our products. Against
these shipments member banks receive deposits of drafts on eastern and northern
points, which cover the proceeds of the sale of the products, and these economic factors
affect the market price of eastern and northern exchange materially from time to time.
It has been the effort of this bank to serve its members more acceptably by becoming
a medium through which the supply of, and demand for, exchange in the different
sections of the district might be adjusted, making necessary the transfer of the minimum
amount of actual funds into and from the district at various seasons of the year. In
this manner we have purchased out-of-district exchange to the amount of $48,044,240
and sold exchange on other districts in an aggregate of $23,828,750. No profit has
been contemplated in connection with this service, and the supply or demand has
governed the rate entirely.
In line with the foregoing it may be of interest to state that we have endeavored
to supply our member banks with currency and coin, and have, during the past
season, distributed to member banks an aggregate of $12,163,000 in currency, of
$597,000 in small bills and silver dollars, and $236,400 in fractional coin, including
nickels and cents. The bulk of this distribution will find its way back into the
vaults of the bank after it has served its purpose, and the facilities are ample to carry
it in storage until needed for a similar purpose during the ensuing year.
The issuance of Federal Reserve notes materially aided in this purpose, and since
the opening of the bank these notes have been issued by the agent in the aggregate
sum of $16,180,000 against the deposit of bills receivable to secure. The bank has
reduced its liability by the deposit of $11,440,000 in gold, and has presented its notes
for redemption to the agent in the amount of $1,035,000. Notes aggregating $61,000
have been forwarded by the agent to the comptroller for cancellation and destruction.
Following the decision of the Federal Reserve Board, on July 1 the transfer of 121
member banks in Oklahoma to district No. 10 was effected, leaving 42 members,
in 8 counties in Oklahoma, attached to this bank. This transfer reduced the capital

354

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

of the Dallas bank $186,500, and was accompanied by a reduction in its reserve deposits of $397,700, and at the same time rediscounts of member banks to the extent
of $197,600 were transferred to the Federal Reserve Bank of Kansas City.
The issuing power of the bank has never been subjected to a test of efficiency, and
the ease of the money market has made it necessary to reduce the regular rates of
discount, which were first fixed at 6 per cent for paper maturing within 30 days and
6J per cent for paper of longer maturities, from time to time, to the present rates of:
4 per cent for paper maturing within 90 days and 4J per cent for paper of longer
maturities, 3 | per cent for trade acceptances maturing within 60 days, 4 per cent for
trade acceptances maturing after 60 but within 90 days, and 3 per cent for commodity
paper.
COTTON MOVEMENT.

On June 7 a circular was issued and distributed among the various member and
other banks of the district in which was urged the gradual marketing of the prospective
cotton crop, by properly warehousing the staple and disposing of the supply over an
extended period, reminding the banks that paper secured by approved warehouse
receipts covering readily marketable staples was highly desirable for rediscount with
the Federal Reserve Bank. This circular, together with the efforts of the bankers
and bankers' associations, had a decided effect in the desired direction, with the
result that the average price of our principal product has been approximately double
that of last year. The deposit of $5,000,000 by the Secretary of the Treasury on
September 4 gave added confidence to our growers and merchants, and the board
of the Reserve Bank fixed a rate of 3 per cent for commodity paper having not more
than 90 days to run, where such paper was secured by approved warehouse receipts,
properly insured, and the maker was not being charged more than 6 per cent, either
as interest, or commissions, or both. It has not been deemed desirable by member
banks to avail themselves of this privilege extensively, the total amount of this class
of paper having been accepted by this bank amounting to $239,094.
Prior to the establishment of the commodity rate the board had established a preferential rate on trade acceptances of 3J per cent for maturities within 60 days, and 4
per cent for maturities, 61 to 90 days, and while some evidence is shown that this
class of paper has been created, the aggregate amount offered for rediscount has been
comparatively neglible, amounting to only $160,795.
Discount operations had now extended to considerable proportions, and the machinery necessary to intelligently perform this service for our members had kept abreast of
this advance. The bureau of credit information in this bank had been extensively
developed, and enabled the executive committee to act upon offerings with certainty. Analyses of the reports of member banks, and, where necessary, special
investigations disclosed their actual condition, and requests for, and careful consideration of, information submitted in connection with individual paper, made the extension of credit to members conform in every way to the safest banking principles In
several instances special investigations have been necessary in order to properly
acquaint the executive committee with the condition of member banks, and these
investigations have, without exception, proved of inestimable educational advantage
to the banks themselves. Unfortunately, since the opening of the reserve bank, it
has been necessary for the Comptroller of the Currency to appoint receivers for four
of our members, but it is hoped that with the facilities opened since the enactment
of the Federal Reserve Act, and the accompanying check to loose practices, the future
need not bring a repetition of such action.
The accomplishment of the transfer of the second and third capital installments was
materially aided by the Assistant Treasurer of the United States at New Orleans, Mr.
W. W. Heard, who extended the facilities of his office in receiving direct from member
banks shipments of gold coin and gold certificates for these payments. The transfer

DISTRICT NO. 11

DALLAS.

355

of reserves, the second installment of which was made on November 16, was accomplished without the physical labor incident to the transfer of the first installment, for
the reason that the change in banking conditions, and the establishment of the gold
settlement fund at Washington, made it possible to receive transfers from reserve and
central reserve cities, instead of the actual shipment of gold or lawful money. The
deposits of the bank were increased by this installment to some $9,200,000.
RELATIONS WITH BANKS.

During the month of August our vice governor, Mr. Hoopes, visited practically all
of our member banks in Louisiana, with the view of bringing into closer relationship
the interests of that community and apprising them more thoroughly of the advantages of membership in the Federal reserve system. Later, in November, Mr. Hoopes
attended the meeting of the Arizona State Bankers' Association at Castle Hot Springs,
Ariz., where he addressed the Convention, taking as his subject "The practical operation of the Federal Reserve Bank." On his return trip Mr. Hoopes visited several of
the member banks in that section. Prior to these visits, and since the opening of
the bank, several of our officers have attended various bankers' conventions in the district and have delivered addresses on the workings of the Federal reserve system.
In May, the chairman accompanied Mr. Harding, member of the Federal Reserve
Board, to the meeting of the Texas Bankers' Association, at Waco.
The effect of this intercourse has been far-reaching and the tangible results therefrom have been great. It is the policy of the bank to use every effort to bring the
advantages and protection afforded by membership in the reserve system to the attention of both National and State banks.
Up to the present time only 10 State banks have affiliated themselves with us, and
as long as existing easy conditions last it is doubtful whether they will see the necessity for membership. This bank made an extensive educational campaign with a
view of placing before the State banks the advantages of the system and the steps
necessary for affiliation, and it is hoped that the recent rulings of the Federal Reserve
Board, for the benefit of State banks, will prove an added incentive to them to join.
The temporary quarters of the bank, affording no facilities commensurate with the
volume of business transacted, the board of directors, after considerable deliberation,
caused the purchase of a five-story building on the corner of Commerce and Martin
Streets, and the same was remodeled and fitted with modern fireproof vaults, with a
capacity sufficient for our needs. On November 1 the physical removal took place,
and the quarters are quite adequate for the expanding requirements of the bank. The
cost, when complete, will be approximately $185,000, including building, fixtures,
and equipment.
Beginning October 13 the chairman took the proper steps providing for the election
of one class A and one class B director, to succeed the incumbents whose terms expire
on December 31, and Mr. John T. Scott, of Houston, Tex., was reelected as class A
director, and Mr. Frank Kell, of Wichita Falls, Tex., was reelected as class B director;
each to serve for three years beginning January 1, 1916.
Fiduciary powers have been granted to 19 banks, and several applications are
pending. The board has taken every possible safeguard to the end that fiduciary
powers be granted to only such banks as are without doubt entitled to, and worthy
of, this responsibility. The laws of the States have been carefully canvassed by
counsel, who has rendered an opinion in connection therewith for the guidance of
the directors. Each application is submitted to counsel before action by the board,
and the merits of the individual case are weighed carefully before any recommendation is made.

356

ANNUAL BEPOBT OF THE FEDERAL RESERVE BO^RD.
SCOPE OF ACTIVITY.

As an evidence of the usefulness of the system, during the bank's existence it has
served, in the matter of rediscounting, 366 banks, to an aggregate extent of
$27,795,797, and for the calendar year of 1915 the service has been extended to 360
banks, in an aggregate amount of $26,756,905, the total number of notes handled
being 21,648.
While the earning capacity of the bank is a subsidiary consideration, it is gratifying
to report that earnings from all sources, principally bills discounted, show an excess
of $75,388 over all current and organization expenses.
The directors have held 14 regular and 3 special meetings, and in each case there
has been a quorum present, and in most all instances full representation. At these
meetings detailed reports of the operations of the bank are submitted by the governor
and chairman of the executive committee, as well as the report of the auditor, etc.,
and matters of import are discussed frankly between the different classes of membership . It is gratifying to report that these discussions have been harmonious to a marked
degree. Experience has shown that monthly meetings, as provided in the by-laws,
are sufficiently frequent to meet the necessities. Our executive committee is composed of the governor, as chairman, Federal Reserve Agent, and one other director
chosen by our board, selections being made in rotation from the others, and serving
from one board meeting to the next. This committee meets daily and passes on the
paper offered for rediscount, and other matters of importance to the bank's interest.
The general work of the bank has gone on without friction between the two departments. The Federal Reserve Agent and the governor have at all times been in complete harmony, and all matters of importance have been discussed between them
before being put into operation.
Conditions in this district continue to improve. There has been a pronounced
recovery from the depression that existed a year ago; in fact, from the opening of the
Federal Reserve Bank a gradual improvement has been shown in practically all
lines. That this bank has contributed its share in bringing about such a change
there is no question. A very salutary lesson was learned during the unsettled conditions of last Fall, and forced economies by all have tended to put business of practically all lines on a better basis. The excellent prices realized by farmers have
made possible liquidations of indebtedness that had been carried over from the past
year, as well as their current obligations, and at the present time the outlook for the
coming year is bright.

DISTRICT NO. 12—SAN FRANCISCO.
JOHN PEREIN, Chairman and Federal Reserve Agent.

In compliance with the request of the Federal Reserve Board, I have the honor to
report concerning the establishment, in the twelfth Federal reserve district, of the
Federal Reserve Bank of San Francisco and its financial operations during the first
year, with some statement regarding various features of its development and suggestions of certain changes of laws which would enable the Federal Reserve Bank to
serve more efficiently the productive activities of its district.
Appended are Tables 1 to 10, inclusive, giving details of the bank's condition and
summaries of its principal financial operations; and Exhibits A to M, inclusive, giving
certain collateral information:
TABLES.

1. Statement of condition as of November 30, 1915.
2. Rediscounts classified:
(a) By month and States.
(b) By States and industries.
3. Bankers' acceptances purchased.
4. Municipal warrants purchased.
5. United States bonds purchased.
6. Settlements through gold settlement fund.
7. Federal Reserve notes issued and redeemed.
8. Statement of earnings and expenses.
9. Payments on capital of Federal Reserve Bank, and amount of member banks'
deposits with it November 30, 1915, with estimate of additional deposits to be
made.
10. Checks collected.
EXHIBITS.

A.
B.
C.
D.
E.
F.
G.
H.
I.
J.
K.
L.
M.

Geographical outline and area of the district.
Rate of development of district in population and wealth, by States.
List of principal products and industries of district.
Bank clearings in principal cities of district.
Banking power of district.
Seasonal demands and approximate prevailing rates of interest on loans in the
several sections of the district.
Calculation showing present earning power of member banks compared with that
prior to the enactment of the Federal Reserve Act.
Copy of by-laws of Federal Reserve Bank.
Record of rediscount rates established by Federal Reserve Bank.
List of banks granted special permits to act as trustee, executor, etc.
List of banks granted permission to accept drafts and bills of exchange up to 100
per cent of their capital and surplus.
Rates of exchange charged on checks in twelfth Federal reserve district.
Principal items in member banks' report of condition of November 10, 1915, and
abstract of exchange, losses, and earnings accounts for three years (classification of banks by total resources).
357

858

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.
ESTABLISHMENT.

The first meeting of the board of directors of the Federal Reserve Bank of San
Francisco was held on October 12,1914, continuing, with frequent sessions, during the
two days following. On this occasion Mr. Archibald C. Kains was chosen governor.
On October 14 the entire board of 9 directors and the governor proceeded fo Washington and participated in a two days' conference between representatives of the 12
Federal Reserve Banks and the Federal Reserve Board, called for the purpose of
determining arrangements preliminary to the inauguration of the Federal reserve
system.
Reassembling in San Francisco November 4, without provision then for banking
room, clerical force, or stationery, the necessity was faced of becoming a going concern
in 12 days, inasmuch as the Secretary of the Treasury had signified his intention of
declaring the Federal Reserve System established on November 16, in pursuance of
authority vested in him by the Federal Reserve Act. An apparent physical impossibility proved not to be such, and November 16 found this bank, with a capable staff,
installed in the temporary quarters still occupied.
Because of consequences growing out of the European war, the financial situation
at the time was much strained, as shown by the fact that under the Aldrich-Vreeland
Act, fortunately extended by the provisions of the Federal Reserve Act, additional
currency had already been issued upon applications of banks in this district to the
extent of $15,862,650. Uncertainty and apprehension were general. The salutary
influence of making the provisions of the Federal Reserve Act effective thoroughly
justified the wisdom of immediate opening. Courage quickly reappeared, legitimate
credit and currency requirements were met by member banks, further issues of
Aldrich-Vreeland currency were promptly discontinued, and rapid retirement soon
began of those outstanding. Confidence in the stability of the banking situation
which then began to develop has since grown uninterruptedly, unshaken by the
many alarming incidents and rumors which hitherto would have caused grave
unsettlement.
STAFF AND CLERICAL FORCE.

The total force numbers 21, including officers, tellers, bookkeepers, stenographers,
messengers, policeman, and janitor. The official staff of the operating department
consists of Archibald C. Kains, governor; Russell Lowry, deputy governor; George O.
Bordwell, cashier; Clifford J. Shepherd, assistant cashier; Ira Clerk, auditor. The
deputy governor, however, has tendered his resignation, effective December 31, in
order to accept the presidency of the First National Bank of Oakland, Cal.
The chairman of the board and Federal Reserve Agent, John Perrin, has in his
department one assistant, Clifford J. Shepherd (also assistant cashier), and one stenographer. The deputy chairman and deputy Federal Reserve Agent, Claud Gatch, who
is also chief national-bank examiner, is not regularly engaged in the work of the bank,
but performs certain duties when the chairman is absent.
The executive committee consists of the governor, as chairman ex-officio; C. K.
Mclntosh (class A), James K. Lynch (class A), Elmer II. Cox (class B), and the
chairman of the board ex-officio.
INTERNAL ORGANIZATION.

In operation the cleavage between the governor's department and that of the chairman of the board has been minimized. Statutory discretion is lodged only in the
governor and chairman (or their deputies). Beyond them, there seems no fundamental
reason for any but a homogeneous force available for the duties of either department.
Following this view the assistant of the chairman of the board has been made assistant
cashier of the bank, and on occasion has been acting cashier. The relations between

DISTRICT NO. 12—SAN FRANCISCO.

359

the governor and the chairman have evolved into substantially those of a partnership,
each being fully informed of that which transpires in the province of the other. Policies are discussed and agreed upon for reference to the board of directors. Discussion
and interchange of opinion benefit the presentation of matters to the Federal Reserve
Board.
For prompt disposition of rediscounts the practical method has developed of crediting the proceeds immediately upon the signed approval of the governor and the chairman of the board, other members of the executive committee each investigating at his
individual convenience and affixing to the application his signature of approval. The
summary of rediscounts for each bank is then presented to the full board in the form
of a report signed by the members of the executive committee. Such a method gives
a promptness of service equal to that of a member bank under the management of a
single efficient chief executive. Subsequent approval by other members of the
executive committee is not mere ratification. Their expression of views and criticisms
constantly guide the governor and the chairman of the board in determining a course
in conformity with the views of the entire committee. It is not believed that any
institution can operate efficiently where executive-committee action must precede
every transaction. The executive committee, in addition to participating with the
officers in approving rediscounts and considering matters specifically referred, is available for speedy consultation upon the governor's telephone call. In a stress or crisis
this will serve a most important purpose.
DIRECTORS.

Meetings of directors not less often than twice each month seem very desirable
because of the value of interchange of views, not only with regard to rediscount rates
and all general policies, but also with regard to business conditions. Such frequent
meetings are, of course, feasible only when a board of directors is made up of those
living near, and this was made possible when, by concert of action of many member
banks located at distant points, directors of classes A and B were chosen from among
bankers and business men living in or near San Francisco.
All directors presumably recognize their obligation to serve well all banking and
business interests of the entire district, but it seems logical that each director should
give somewhat special consideration to those interests which he has been especially
chosen to represent. For instance, a class B director, chosen to represent business
interests, by banks of group 3 (now comprising those having capital of $53,000 and
less), would thus give special attention to the credit needs of the customers of group 3
banks throughout the district and to the ways in which the Federal Reserve Bank
could influence the betterment of banking service available to them, etc.
OPERATIONS.

The period since the establishment of the Federal Reserve System has been one of
progressive ease in matters of credit. The check to business and liquidation resulting
from the breaking out of the European war would of itself have resulted in accumulation of idle funds. In addition to this the reduction in reserve requirements under
the provisions of the Federal Reserve Act has given to member banks the privilege
of largely increasing their loans. Excess reserves held by member banks of this
district were $2,420,638 on October 31, 1914, and $75,211,573 on September 2, 1915.
The excess is chiefly due to reduction in reserve requirements, as shown by the fact
that the totals of reserves held on the respective dates were $107,226,892 and
$139,749,562. Cash and exchange held on the same dates were $186,191,580 and
$224,887,649, respectively. In addition to both these factors have been the unparalleled imports of gold. All have contributed to an accumulation of loanable

360

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

funds beyond precedent. Under these circumstances there has been a diminishing
need for rediscounts.
From the standpoint of rapidity of development of the Federal Reserve Bank
this is regrettable. Member banks need information concerning the Federal Reserve
Bank's methods and requirements, best gained by actual rediscount transactions,
in order that they may develop as large a percentage as possible of their paper in
form and character acceptable for rediscount. Such paper is a potential reserve
and in amount must more than offset the reduction of reserve requirements if the
banking situation is to be stronger than hitherto. This development is a process
of education which must include both banks and customers and necessarily will
require time. The earlier entered upon the sooner will there be cumulative strength
in the general situation. Conversely, it is only by experience that the Federal
Reserve Bank can be prepared for the time of heavy demands.
About 31 per cent of the member banks have had rediscount transactions with the
Federal Reserve Bank, many simply to gain information, some because needing
funds. In a considerable number of cases important service has undoubtedly been
rendered. So far as has been learned, member banks have found their dealings
satisfactory. There has been effort to give service as prompt and untechnical as
that of the most efficient member bank.
Table 2 (a) gives information as to rediscounts made, arranged by months and
States; Table 2 (b) arranged by industries and States.
REDISCOUNT POLICY.

The initial rediscount rates established by this bank with the approval of the
Federal Reserve Board were avowedly too high. There was no experience to determine the correct rates and it was believed prudent at the outset to approach the right
level by lowering rates rather than by raising them. After several changes, the rates
fixed on January 22, 1915, have since remained in force substantially unchanged
and are lower than borrowing rates hitherto generally available. The record of rates
established is shown in Exhibit I.
Agricultural paper and that based on live stock are the only kinds eligible for
rediscount with maturities beyond 90 days. For this a rate of 6 per cent has been
established, while the rate for 90 days is 4J per cent. It has now and then been
suggested that this is a discrimination against farmers and those interested in live
stock. It will be observed that agricultural and live-stock paper has every privilege
of other paper in lower rates for shorter maturities, and in addition has the special
privilege of rediscount for maturities beyond 90 days not accorded to any other class
of paper.
Tn a rapidly developing section, such as this district, it is inevitable that there
should be a higher percentage of fixed loans—capital advances for enterprises which,
however worthy, can not quickly repay—than in an older district where there is less
of development enterprise in proportion to accumulated capital. The board of
directors have felt it wise policy that this bank should more assiduously maintain a
liquid condition than would be necessary if in a district where the loans of member
banks were proportionately more liquid. Consequently, the incentive is offered of
considerably lower rates for the shorter maturities.
The management of this bank has deemed it wise, while giving due weight to a
member bank's indorsement, to accept paper only upon its own merits. Accordingly,
statements have been required from the makers of all notes presented for rediscount
both because the Federal Reserve Bank can thus best exercise discriminating judgment, and because it believes no practice more salutary than the development by
member banks of adequate credit files. Exceptions have been made in the case of
notes for small amounts, the applicant's own estimate of a borrower's assets and
liabilities being accepted, but it is expected that ultimately copies of borrower's own

DISTRICT NO. 12—SAN FRANCISCO.

361

statements will accompany even notes for small amounts. Adequate showing is
also required of the responsibility and character of makers of collateraled paper.
If paper is not of satisfactory quality the right is recognized of requiring additional
collateral, but there seem good grounds for believing that no member bank can be
operating wisely whose paper is normally of such inferior quality that it will not
meet the moderate requirements imposed. In no instance, thus far, has additional
collateral been required.
Progressive excellence in the character and form of paper offered for rediscount is
expected. At the outset it is obvious that more can not be exacted than that a member bank should offer the best paper which it then has, but it would seem entirely
proper that there should be progressively rigid requirements, under which, as a
condition of approval, a member bank's paper should conform to a higher standard
after a year's experience than in its initial offerings. So far as has been possible,
technicalities have been waived to avoid refusal of offerings, deficiencies being pointed
out for betterment of subsequent offerings.
OPEN-MARKET TRANSACTIONS.

Under the authority to engage in open-market transactions there have been bought
$1,010,000 of United States 2 per cent bonds (Table 5), and, through the Federal
Reserve Banks of New York and Boston, certain bankers' acceptances (Table 3),
and municipal warrants (Table 4). Bankers' acceptances have been bought at rates
as low as 2 per cent basis and municipal warrants at only slightly higher rates. Thus
far borrowers in this district have not offered important amounts of obligations of
this character, as they doubtless will when they realize the opportunity offered to
finance transactions of a certain character at such advantageous rates. States of this
district will also doubtless authorize municipal warrants of eligible character when it
is realized that temporary municipal borrowings can be negotiated at such low rates.
By such open-market investments a Federal Reserve Bank may, within reasonable
limits, earn what it chooses, independently of rediscounts for member banks. For
this reason it is clear that no member bank should ever feel an obligation to rediscount
with the Federal Reserve Bank for the latter's supposed benefit.
EARNINGS.

The total net earnings from April 1, 1915, to November 30, 1915, have exceeded
the current expenses of that period (Table 8), although current expenses since organization exceed current earnings by $9,521.80. Organization expenses are carried at
$33,626.49 and cost of printing Federal Reserve notes $34,394.27. The latter item
has been reduced by $526.30, the pro rata amount for notes unfit for circulation which
have been canceled. A condition in which reserves in excess of legal requirements
have steadily increased during more than 12 months naturally restricts the volume
of applications for rediscount. Total rediscounts made during the month of November,
1915, aggregated only $119,072, the smallest of any month since November, 1914.
Other income has been derived through the purchases mentioned of bankers' acceptances, municipal warrants, and United States bonds.
The fear sometimes expressed that deficiency in earnings will be made up by
assessments on member banks may, I assume, be dismissed as beyond the probabilities. The relative unimportance of these expenses will be appreciated when it
is realized that their annual rate represents approximately two one-hundredths of 1
per cent of the loans and investments of the member banks in this district. In other
words, if the income rate upon their investments were 6 per cent, it would reduce
this to only 5.98 per cent if the expenses were paid entirely by contributions of member banks.
While there seems no economic defense for an effort under existing conditions to
employ a Federal Reserve Bank's funds for the purpose of earning profit, yet what

362

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

may be called the psychological importance of reasonable earnings seems so great as
to become a well-defined economic factor. The view that effort to make earnings is
now undesirable of course has its basis in the belief that greatest protection to business
interests will be had by withholding the Federal Reserve Bank's credit-extending
power so as to have it available when need arises. But those holding this view may
underestimate the economic importance of present popular approval and unqualified
faith in the success of the Federal reserve system. Earnings constitute the gauge of
success applied by a large section of the public, including many bankers. It is characteristically human to uphold the successful enterprise and to obstruct the unsuccessful. A smaller percentage of money reserve coupled with unqualified approval,
will constitute more potent power of support than larger reserves with less of popular
confidence.
There are collateral advantages in reasonable earnings. They would justify the
most rapid internal development along lines of preparation for useful service, such as
the development and thorough training of the credit department, the efficient service
of which is so essential to discriminating judgment in time of stress and in which all
eligible clerks should serve apprenticeship in order to provide for quick expansion of
capacity to render vital service if stress arises; the thorough development of a department of information as to conditions throughout the district, through which the management of the bank and the Federal Reserve Board would have closest touch with the
trend of credit conditions. Naturally no development will be carried far, the cost of
which must be paid out of capital. Such considerations urge earnings well in excess of
current expenses.
PURCHASE OF UNITED STATES BONDS.

One way to accomplish this without impairing a Federal Reserve Bank's reserves
would be by present purchase of United States bonds. The Federal Reserve Banks
are the instrumentality through which it is designed that the undesirable bond-secured
circulation is to be eliminated. To this end it will become necessary for them ultimately to buy the major part of the outstanding 2 per cent bonds now pledged to secure
circulation. Exchanged for 30-year 3 per cent bonds without the circulation privilege, as provided by the Federal Reserve Act, they will gradually be bought by
investors and this problem will thus be permanently settled and real elasticity in the
currency attained, the volume of Federal Reserve notes then expanding and also
contracting according to varying business requirements. A good many years will
necessarily be required to accomplish this result, but meanwhile the Federal Reserve
Banks would enjoy a net income averaging about 1J per cent per annum upon the
amount of bonds held. By substituting their own bond-secured circulation for
that of member banks now outstanding, the bonds would be carried without
important investment of reserve money. This would be unqualifiedly true if the
present currency is not redundant in volume, and the present rate of redemptions
indicates that it is not. It is to be observed too, if the present volume of currency
should become redundant and consequently enforce greater redemptions, that, while
this would correspondingly invade the reserves of the Federal Reserve Bank, it would
be only because of a reduced volume of cash transactions incident to inactive commerce, when rediscount demands would be light. Heavy rediscount demands would
appear only in conjunction with requirement for a large volume of currency. The
expanding volume of business incident to the country's growth involves necessarily
a certain average increase in the volume of transactions settled with money, entailing
the need of an increasing volume of currency. A volume of currency redundant to-day
would soon be inadequate.
More certain progress in the solution of this problem would be assured if the law were
modified so that the privilege of issuing circulating notes should not be included in

DISTRICT NO. 12

SAN FRANCISCO.

363

national bank charters hereafter granted or in those extended, with a requirement that
Federal Reserve Banks should buy the circulation bonds offered by member banks at
par at the expiration of their charters.
FEDERAL RESERVE NOTES.

Table 7 shows the amount of Federal Reserve notes issued and redeemed and the
States to which shipped. It has been deemed wise policy to pay out Federal Reserve
notes whenever possible inasmuch as their circulation in the place of gold means th©
retention of gold in the vaults of the Federal Reserve Bank where, as a basis for extending credit, it becomes a fortification and guaranty of stability of the business situation.
Federal Reserve notes of this bank now outstanding are in effect gold certificates,
$4,370,000 gold, equal to 100 per cent, having been lodged with the Federal Reserve
Agent for their redemption. In conformity with authority conferred by the Federal
Reserve Act upon the Federal Reserve Board to act as a clearing house for Federal
Reserve Banks, this gold has been placed with the Federal Reserve Board in the form
of order certificates in $10,000 denominations. Settlements are made between the
Federal Reserve Bank and the Federal Reserve Agent by means of transfers in the
gold settlement fund without the local handling of the money.
CHECK COLLECTION.

As provided by the Federal Reserve Act, and upon a plan approved by the Federal
Reserve Board, this bank on August 1, 1915, established in this district a system for
collecting checks, 141 banks voluntarily participating at the outset, the number having
increased to 160 at the end of November.
Thus far checks have been received from and sent to only those banks voluntarily
joining this collection system, the depositing bank being credited and the drawee
bank concurrently debited after as many days have elapsed as required for the drawee
bank to receive checks sent and thereafter send funds for credit to offset the debit
to be made. To give immediate credit would involve one of two courses:
(1) Invest Federal Reserve Bank's reserve in checks outstanding for collection,
weakening proportionately its power to rediscount; or,
(2) Require member banks to carry with Federal Reserve Bank balances sufficiently
larger than required for reserve purposes to cover the amount of checks and remittances
in transit. Distances are so great in this district that this would work a palpable
injustice to distant member banks. In the case of a Seattle bank for instance, it
would be necessary to have an additional balance covering six days sendings which
would be in transit, three days going and three days returning.
The Federal Reserve Bank has neither paid nor charged exchange in these collections. Thus far, however, important elimination of exchange charges can not properly
be claimed, as most of the banks joining the voluntary system had previously been
accustomed to remit at par.
As yet, the volume of checks handled, shown in Table 10, has not been important,
but would doubtless be increased if all checks were received for collection which
members of the collection system would be willing to have charged against their
accounts, even if drawn upon or indorsed by member banks not of the collection
system and nonmember banks. Exhibit L gives information as to rates of exchange
charged in various parts of this district.
If it be accepted as the broad purpose of the Federal reserve system to stabilize
commerce, then the Federal Reserve Banks must establish channels for the collection
of checks which will not become clogged in a financial crisis, as in 1907, otherwise
such a possible dislocation of exchanges would always remain a potential menace.
Appreciation of the importance of assuring safety of the whole financial and commercial situation, and thus of every member bank, should disarm objections of those who
20067°—16
24

364

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

in spite of aspects unsound in present methods are reluctant to forego present exchange
charges. Other provisions of the Federal Reserve Act offer opportunities for counterbalancing profits not hitherto possible.
STATE BANKS AND TRUST COMPANIES.

State banks and trust companies show many evidences of an attitude favorable to
the Federal reserve system, but defer application for membership because no necessity
of present service impels. This bank regards each sound State bank or trust company as a potential member of the Federal reserve system, having clear conviction of
the fundamental importance of such membership. National banks and the Federal
Reserve Banks now constitute the base of an inverted pyramid representing the
entire credit structure of the country, including all State banks and trust companies.
The sufficiency of that base is not in immediate question, but no State bank should
fail to realize that the safety of the whole business situation, and consequently its
own safety and prosperity, depend upon the sufficiency of that base, which would
obviously be greatly broadened if a large section of the State banks were transferred
from the superstructure and made a part of the base itself.
It may reasonably be expected that the more conservative State institutions will
promptly secure any legislation necessary to authorize membership and become members early enough to avoid delay from congestion of applications when stress impends.
The attitude of member banks toward the Federal Reserve Bank augurs well for
such ultimate accessions. Although there are exceptions, usually growing out of
lack of information of the Federal Reserve Bank's methods and disposition, or lack
of understanding of the Federal Reserve Act, yet for the most part there has been
shown a spirit of cordial cooperation, which with better understanding and acquaintance is steadily growing. From those banks concerning aspects of whose condition
it has been necessary to make unfavorable expression there has come without exception frank and cordial response, suggesting the potentiality of this bank as a
remedial influence.
POWERS OF TRUSTEE, EXECUTOR, ETC.

A list is given herewith (Exhibit J) of national banks in this district to which the
Federal Reserve Board has granted special permits to exercise the powers of trustee,
executor, administrator, or registrar of stocks and bonds.
It is the opinion of counsel of this bank that under the laws of only one of the seven
States constituting this district—viz. Washington—may a national bank act as trustee,
executor, administrator, and registrar of stocks and bonds; but that also under the
laws of California, Oregon, Utah, and Arizona it may act as registrar of stocks and
bonds. Enabling legislation will broaden the opportunities of national banks to
render such service.
CONDITIONS IN TWELFTH DISTRICT.

The outbreak of the European war probably occasioned less dislocation of trade
and industry in this district than in any other, and during the 12 months past there
has been a moderate but widespread improvement in general conditions.
Relatively the most unfavorable effect of the war has been upon ocean transportation, and the temporary closing of the Panama Canal has been an importantly untoward
event for this coast. There have been interesting developments in shipping. Following withdrawal of the Pacific Mail steamers has come the recent report of their
purchase by the American International Corporation, to place them again in Pacific
trade, with intimation of important extension of service. The Java-Pacific line has
been established by a foreign syndicate. The Japanese line is reported as doubling
the number of its ships. The Union Iron Works, of San Francisco, of which Mr. John
A. McGregor (class B director) is president, has now under way construction aggre

DISTRICT NO. 12

SAN FRANCISCO.

365

gating $18,000,000. Not only has foreign commerce through Pacific ports increased
during the year in spite of handicaps, but there seems prospect of continued large
expansion.
Live-stock interests of eastern Washington, Oregon, Idaho, Nevada, Utah and
Arizona have thrived throughout the 12 months past, and now have satisfactory
prospects.
Agriculture has prospered. Grain growers of eastern Washington, Oregon, and
southern Idaho received extraordinary prices a year ago, and this year have had
large crops, with profitable, though somewhat lower, prices. Apples of Oregon and
Washington, unsatisfactorily marketed a year ago because of interruption of exports,
have sold at good prices this year. Hops, almost unsalable a year ago, now command
excellent prices. Growers of raisins and prunes have had satisfactory results, particularly this year. Fresh and canned fruits have not been so satisfactory. In citrus
fruits, the crops have been large. Prices of lemons have been continuously demoralized and unprofitable. The first two-thirds of last year's orange crop was sold at
unprofitable prices, but the final third commanded excellent prices. Record prices
are being paid for early oranges of this year's crop, more than 3,000 carloads having
been reported as already shipped from the Porterville (Cal.) district. Beans constitute an important California crop, large amounts being exported. Last year's returns
were unusually large. The harvest this year has also been large and prices good.
The wine industry is not prosperous, and growers of wine grapes suffer accordingly,
but table grapes have sold this season in large quantities at profitable prices.
Activity in mining has steadily expanded during the past year, copper mines,
chiefly centering in Utah and Arizona, making record output. Advancing prices
are benefiting producers of silver, the output of which has a value approximating
two-thirds that of the gold produced in this district, including Alaska. Interest in
gold mining is reported as increasing. One of the interesting gold producers is a
large corporation reclaiming many thousands of acres in the Sacramento Valley by
building dikes and incidentally washing out gold from the earth handled to pay the
cost of the development.
Lumbering, constituting 60 per cent of the commerce and industry of Washington
and Oregon, has been greatly depressed until recently, when important buying,
including some on the part of railroads, has imparted a better tone. There is also
increase of new building. The outlook is much improved.
The petroleum industry, likewise depressed a year ago, has of late shown expanding consumption with advancing prices. The production approximates 100,000,000
barrels per annum.
Producers of Hawaiian sugar have been receiving extraordinary returns this year,
in contrast with disastrous conditions predicted before the outbreak of the war.
Important dealings in stocks of sugar companies have resulted.
Fisheries, one of the important industries of the Pacific coast, have prospered
during the past 12 months, the salmon pack of Alaska being larger than ever before.
This is one of the important items of the industries of Alaska, whose total commerce
now approximates $100,000,000.
Earnings of the principal railroads operating in this district, now at record point,
have continuously expanded throughout the past 12 months, evidencing the rising
volume of general commerce and industry.
This district is enormously rich in natural resources and surpasses in variety of
products. Harvesting of some character is always in progress—as, for instance, in
citrus fruits, lemons are gathered continuously the year round; the first oranges are
gathered in November and picking continues through the succeeding winter, spring,
and summer; strawberries ripen every month; there are always fresh vegetables.
The distribution of harvesting throughout the year balances liquidating transactions
against new requirements in a remarkable way. An illustration is that live-stock

366

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

interests of Idaho borrow in the spring and liquidate in the fall, while those of Arizona
borrow in the fall and liquidate in the spring. Proceeds from the sale of early products
provide the means to meet later requirements in the same locality; the same product
matures in different sections at such diverse times that the realized proceeds of a
harvest in one part would finance the harvest needs of another.
There is probably less of a peak credit load in this district than in any other, and
seemingly, if its credit resources are mobilized, they will rarely fail to suffice for its
commercial needs. Bank deposits have shown large gains within 12 months, and
bank clearings reflect important increase in the volume of transactions.
A plan of cooperative credit, directly benefiting farmers, and incidentally creating
paper admirably eligible for rediscount with the Federal Reserve Bank, has been
developed at Weiser, Idaho, which is interesting because of successful operation, and
unusual because under it creditors instead of debtors cooperate.
There are abundant evidences of continuous progress throughout the district and
growth in both wealth and population. The Federal Reserve Bank of San Francisco
has a great field and large opportunity for useful service.

TABLE 1.—Statement of condition of Federal Reserve Bank of San Francisco, Nov. 30,
1915.
Bills discounted:
Members
Bought
Investments, municipal warrants
United States bonds on hand
Interest accrued on United States bonds
Organization expense
Cost of Federal Reserve notes
Furniture and equipment
Current expense
Profit and loss
Due from other Federal Reserve Banks:
Collected funds
Items in transit

RESOURCES.
$686,776.97
521,346.79
1,132,342.22
1,000,475.00
3,366.66
33,626.49
34,394.27
5,235.37
1,311.87
9,521.80
$2,449,295.49
432,890.23

2,882,185.72
Exchanges for clearing house
24,951.93
Transit account
15,307.89
National-bank notes and notes of other Federal Reserve Banks
39,015.00
Federal Reserve notes on hand
1,535,485.00
Nickels and cents
3.14
Reserves:
Gold settlement fund
$7,536,000.00
Due from Treasurer of United States, gold redemption fund (Federal
Reserve notes)
21,625.00
Gold bullion and coin
347,045.00
Gold certificates
5,454,840.00
Silver certificates
9,657.00
Legal tender notes
16,840.00
Silver coin
26.65
Total reserve

13,385,433.65

Total resources

21,310,779.77

LIABILITIES.
Capital paid in
$3,941,500.00
Capital, suspense account
300.00
Unearned discount
5,884.81
Due to other Federal Reserve Banks
19,317.04
Due to member banks
17,327,170.55
Expensechecks
700.48
Cashiers' checks outstanding
847.00
Deferred credits
15,059.89
Federal Reserve notes
$4,370,000.00
Less gold with Federal Reserve Agent for retirement of Federal Reserve notes.. 4,370,000.00
Total liabilities

21,310,779.77

TABLE 2A.—Classification of rediscounts from

Arizona.

California.

Nov. 16, 1914, to Dec. 1, 1915.

Nevada.

Idaho.

Oregon.

Utah.

Washington.

Total for month.

Months.

1914.
November.
December..
Total.

$9,592
1,014,838

$8,500

$3,000

1,024,430

8,500

3.000

14,263
34,070
68,119
31,412
85,853
39,788
73,585
33,063
28,253
14,955
6,580

20,373
34,152
98,357
11,012
63,165
71,907
114,511
29,084
112,121
65,269
22,050

9
100

$12,592
1,023,338

109

1,035,9

117
161
232
229
251
271
348
229
198
135
59

835,413
761,847
744,225
428,901
1,237,498
860,155
792,547
448,311
440,028
386,766
119,072

163 2,230
165 2,339

7,054,763
8,090,693
3,416

I
Q

1915.
January..
February..
March
April
May
June
July
August
September.
October
November.,
Total, 1915
Total rediscounts to date.
Average per piece

$6,300
15,600
21,900
21,900
10,450

111
161
162
186
171
211
154
131
74
39

769,
567,
572,
332,
1,050,
659,
476,
328,
254,
266,

1,483 5,328,296
1,590 6,352,726
3,995

320 429,941
438,441
1,365

$74,135

74,135
74,135
9,269

642,001
645,001
2,879

$31,134
$52,012
37,400
40,749

130,161
130,161
5,206

5,000
16,102
37,547
48,225
127,543
57,736
38,449
40,206
26,387
428,329
428,329
2,534

CO
Q
O

TABLE 2B .—Classification of rediscounts from

Arizona.

Idaho.

California.

Nov . 16, 1914, to Dec. 1, 1915.

Nevada.

Oregon.

Utah.

Washington.

Classifications.

Total by
classifications.

Pieces. Amount. Pieces. Amoimt. Pieces. Amount. Pieces. Amount. Pieces. Amount. Pieces. Amount. Pieces. Amount. Pieces. Amount.
Agriculture
Live stock
Grain flour, feed
Fruit packers and shippers.
Meat and fish packers
Lumber
Manufacturing
"Wholesale merchandise
Retail merchandise
Petroleum
Miscellaneous
Total rediscounts for
period
Total number of banks rediscounting to date

$21,900

760 $1,159,722
41
143,270
24
225,652
127 629,267
30 284,025
34 212,993
97 633,570
110 1,078,125
317 1,471,798
10
323,972
190,332
40

21,900

1,590 6,352,726

201 $160,655
61 129,980
11
22,949
6,563
3
6
19,142
2
6,000
30

68,898

24,274

321

438,441

$74,135

74,135

75 $192,834
37
102,019
23
81,517
11
11,730
1
5,000
10
62,690
11
37,623
5
22,000
46
116,441
1
5 000
4
8,147
224

645,001

2
6

$7,280
27, 753

4
4
3

30,536
20,263
15,351

28,978

130,161

101
1
7
1
7
23
1
5
19

$167,429
2,000
24,203
800
22,500
107,634
10,000
16 000
65,403

12,360

169

428,329

1,150 $1,783,955
405,002
146
354,321
65
648,360
142
342,061
42
422,722
77
114
702,544
120 1,116,125
418 1,751,518
11
328 972
54
235,113
2,339

o
w

8,090,693
165

TABLE 3.—Acceptances purchased, Nov. 16, 1914, to Dec 1, 1915, segregated by acceptors and months purchased.

Accepted b y -

March.

April.

May.

June.

July.

August.

September. October.

November.

Bank of America
$11,250.00 $6,875.00 $8,750.00
$50,000.00
Bankers Trust Co., New York
$61,442.36 $85,000.00
25,000.00
25,000.00
$i66,"666."66~
American Exchange National Bank, New York
$ioo,'666.'66"
8,750.00
Chase National Bank, New York
"8,750.66"
9,348.00
53,026.46 42,975.11
$19,828.76
10,000.00
57,346.00
National City Bank, New York
"""5,'666." 66' 45,000.00
Columbia Trust Co , New York
10,000.00
17,500.00
National Bank of Commerce, New York
29,681.14 166,624.32
310,023.55 695,292.82 223,684.04
61,980.09 192,436. 78 32,566.43
Guaranty Trust Co New York
16,574.80
10 000 00
Goldman Sachs & Co New York
20,582.63 17 500. 00
69,054.98 28,853.67
Mechanics & Metals National Bank New York
Bank of New York, National Banking Association,
44,070.00
10,000.00 58,750.00
6,248.66
New York
95,762.50
First National Bank, Boston, Mass
11,250.00
Merchants National Bank, Boston, Mass .
118,687.55
Philadelphia National Bank, Philadelphia, Pa
2,373.96
Irving National Bank, New York
Total

424,492.37

823,267.93 323,684.04

234,278. 81 142,562. 72 364,006. 78 121,316.43

262,459.12

286,771.41

Total.
$26,875.00
246,442.36
208,750.00
8,750.00
192,524.33
50,000.00
27,500.00
1,712,289.17
26,574.80
135,991.28
119,068.66
95,762.50
11,250.00
118,687.55
2,373.96
2,982,849.61

T A B L E 4.—Short-term warrants, notes, and bonds purchased Nov. 16, 1914, to Dec. 1, 1915, classified by States and months purchased.
Municipalities within State of—
Month.
California.
March
April
May
June
July
August
September
October
November

Georgia.

Oregon.
$1,020.00

$12,422.25
5,250.00
10,666.25
4,200.00 $63,450.00

Total .

32,538.50

63,450.00

New
Massachusetts.
Hampshire.

New
Jersey.

New York.

$12,111.02
$40,000.00
260 400 00
310,668.42 $15,000.00
221,187.50
50,209.59
"26 ,"366." 66'
24,000.00
25,468.75
10,000.00
13,124.58
1,020.00 916,465.51

15,000.00

Total by
month.
Utah.

$54 115.25
115,554.91
600,000.00

$20,358.40

$55,135.25
167,665.93
860,400.00
338,090.67
380,427.09
668,351.16
70,759.58
23,124.58
88,008.40

20,358.40

2,651,862.66

153,989.59
587,175.32
21,290.83

71,004.35 1,532,125.90

United States consols of 1930
Do
Total . . .

Maturity.
1930
1930

TABLE 5.— United States bonds purchased.
Description.

Rate.

Basis.
2
2

2.0189
2.0182

Par value.
$1,000,000
10,000
1,010,000

Carried at—
$990,625

9,850
1,000,475

OO
CD

TABLE 6.—Gold settlement fund.

TABULATION OF TRANSFERS, MAY-NOVEMBER, 1915.
[G. S. F.=Gold settlement fund.]

For account of—

Boston:
Special transfers
Settlements
New York:
Special transfers
Settlements
Philadelphia
. .
Cleveland
Richmond
Atlanta:
Special transfers
Settlements
Chicago:
Special transfers
Settlements
St. Louis
Minneapolis
Kansas City
Dallas
Federal Reserve Agent
Gold deposited through
assistant treasurer of
United States, San
Francisco
Total

July.

June.

May.

September.

August.

November.

October.

Net.

Total.

We Dr. WeCr. We Dr. WeCr. We Dr. WeCr. We Dr. WeCr. We Dr. WeCr. We Dr. WeCr. We Dr. WeCr. We Dr. W e C r . We Dr. WeCr.
G. S. F . G. S. F . G. S. F . G. S. F. G. S. F. G. S. F. G. S. F . G. S . F . G. S. F. G. S. F . G. S. F . G. S. F. G. S. F . G. S. F. G. S. F. G. S. F . G. S. F. G. S. F .

2,272
10

950
6

200
50

126

200
14

450
904

1,424

3 994
22
2

1
2

222
1
2

568
24
87
18

16
2
1
1

1,679

651

1,694

Balance in gold settlement fund Nov. 30,1915, $7,536.

20
4
2
1
2

109
6

4,694

100
2

251

176

4 452
17

3,921

2 728
35
2

1,852

18
1
1

2,978
1
1
2

12
1
3
3
6

1
3

11
1

2
2
3

15
2

25
3
4
6

200

51
1
3
3
5
230

283

3,453

61
1

4,347

4,445

595

30 15,813 13,600
9
20
13
1
6
17

2,213

80
112
3

621

4,485

4,027

2,884

2,148

5
17

390
6
16
14
25
230

961
42
87
21

571
36
71
7

200

5,980

1,100

3,110

570

1,200
3,725

30
55
5

3,306
1
2
6

235 23,143 15,607

25
30
5,980
8,296

760

o
>

ANALYSIS OF NET MONTHLY TRANSACTIONS TO NOV. 30, 1915.
May.
Purpose.

Exchange...
Do
Do
Do .
Do
Do .
Do
Do
Do .
Do
Do
Net exchange.
Investments
Do
Do . . .
Other transactions.
Do

For account of—

Boston
New York
Philadelphia...
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis...
Kansas City
Dallas

August.

October.

September.

104

4,226

2,694

4
1
1

2
1

69
5

114

2,904
1,200

1
2
2

346
24
86
18

2,692

2
1

89
2

2,776

250

36
1
3
4

3
15

973

1,043

347

1,815

3,237

4,335

250

175

76
350
74

220

1,143

1 865

571
36
71
7

61
2

1,100

5
17
6

200

2,046

3
3

50
1,125

1
2

3
2

2
2

4,872

3,298

100

3,110

102

1,834

938
1
2
1
29

6
4
1

2,763

570

1,400

1
2

Federal Reserve Agent

Net

Net total.

November.

We Dr. WeCr. We Dr. WeCr. We Dr. WeCr. We Dr. WeCr. We Dr. WeCr. We Dr. WeCr. We Dr. WeCr. We Dr. WeCr.
G.S.F. G. S. F. G. S. F. G. S. F . G.S.F. G. S. F. G. S. F. G.S.F. G. S. F . G.S.F. G. S. F. G. S. F. G. S. F. G.S.F. G.S.F. G.S.F.

3,864
Boston
New York
Atlanta
Gold

July.

June.

5,980

230

3 218

7 536

T
O

o
o

372

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

TABLE 7.—Federal Reserve notes—Federal Reserve Agent's account to Nov. SO, 1915,
inclusive.
Received from comptroller:
5-dollar Federal Reserve notes
10-dollar Federal Reserve notes
20-dollar Federal Reserve notes
50-dollar Federal Reserve notes
100-dollar Federal Reserve notes

$4,160,000
2 760,000
1 680 000
".
' 600* 000
800,000

On hand Nov. 30,1915, p . m . :
5-dollar Federal Reserve notes
10-dollar Federal Reserve notes
20-dollar Federal Reserve notes
50-dollar Federal Reserve notes
100-dollar Federal Reserve notes

' '
2 360 000
1 600,000
640 000
400* 000
400,000
1
5,400,000

Issued to Federal Reserve Bank
Received from Federal Reserve Bank and sent to Comptroller of Currency for cancellation and
destruction

4,600,000

Federal Reserve notes outstanding
Deposited by Federal Reserve Agent with Federal Reserve Board in the form of gold order
certificates in $10,000 denominations, for redemption of Federal Reserve notes

4 ; 370 000
'
'
4,370,000

Received from Federal Reserve Agent
Returned to Federal Reserve Agent for redemption
Net totalreceived from agent

4,370,000

......

$4 600 000
' 230' 000

In vaults of bank Nov. 30,1915

i7 535,485

Federal Reserve notes in hands of public

2,834,515

Received from Federal Reserve Agent
Delivered to Federal Reserve Agent for redemption
Net amount notes received
Redeemed:
Member banks
Other Federal Reserve Banks
Total redemptions

4 600,000
' 230,000
4,370,000
$370,245
194,685
564,930
4,934,930
1,535,485

On hand Nov. 30,1915
Total amount of issues and reissues
Distribution approximately as follows:
Paid over counter
California
Washington
Utah
Idaho
Oregon

230,000

3,399,445
1 2,190,950
325,615
828,700
50,000
1,000
3,180

Total

3,399,445

TABLE 8.—Earnings of the Federal Reserve Bank of San Francisco, Nov. 16, 1914, to
Nov. SO, 1915.
Amount
invested.
Earnings from:
Bills discounted member banks.
Bills purchased (acceptances). -.
Investments:
United States bonds
Warrants
Sundry profits

$8,090,185.00
2,870,481.58

$61,811.08
12,018.31

1,010,000.00
2,651,863.66

16,747.97
17,255.27
1,357.80

Total earnings.
1

No doubt many of these were shipped to country bank correspondents.

Total income
since Nov. 16,
1914.

109,190.43

DISTRICT NO. 12—SAN FRANCISCO.

373

T A B L E 8A.—Expenditures of the Federal Reserve Bank of San Francisco to Nov. SO, 1915.
Total since
Nov. 16,1914.
1. CURKENT EXPENSES.

Federal Reserve Board assessment for general expenses, monthly proportion
Federal advisory council (fees)
Directors' fees
Legal fees
Salaries:
Bank officers
Clerical staff
Special officers and watchmen
Traveling expenses:
Directors
Officers and c l e r k s Federal Reserve Agents' conferences
Advisory councils
Governors' conferences
Within twelfth district

$6,559.33
"2,620.' 00
42,125.00
27,788.85
110.00
168.00
$918.70
950.60
2,664.74
1,266.84

Total
Per diem allowance of directors
Telephone
Telegraph
Postage
Expressage
Rent
Insurance and premiums on fidelity bonds
Light, heat, and power
Printing and stationery
Repairs and alterations
All other expenses, not elsewhere specified
Federal Reserve notes, cost

5,800.88
345.00
402.15
349.15
1,773.24
287.38
16,875.44
871.91
285.40
5,333.83
4,078.79
2,411.58
526.30

Total current expenses.

118,712.23
2. ORGANIZATION EXPENSES.

[Carried from current expenses, account expenses prior to Nov. 16,1914.]
San Francisco clearing house membership
Si, 000.00
Alterations to banking quarters
1,568.05
Traveling expenses October conference, 1914, 9 directors and governor
4,607.00
Express on coin and currency in connection with initial payments of capital
stock and reserve
6,682.09
Assessments of Federal Reserve Board
13,817.08
Stationery (ordered by Federal Reserve Board)
5,952.27
Total

33,626.49
3. COST OF FEDERAL RESERVE NOTES.

Cost of manufacturing 3,212,000 notes, amounting to $28,940,000
$31,373.59
Cost of expressage, 180,000 notes, amounting to $2,000,000
$1,000.00
Cost of postage and insurance, 928,000 notes, amounting to $8,000,000. 2,499.88
3,499.88
Sundry costs
47.10
Less:
Amortization (manufacturing) 40,000 notes, amounting to $230,000.
Amortization expressage 40,000 notes, amounting to $230,000
Redemption cost

34,920.57
390.70
115.00
20.60

Total

34,394.27
4. EQUIPMENT.

Furniture and
Vaults

fixtures

932.35

Machines, typewriters, adding machines, scales, etc
Total equipment
Total expenditures

4,303.02
*

5,235.37
191,968.36

TABLE 9.—Capital and deposits paid and estimated additional to be received.
Capital stock—payments made.

Date due.

Per cent
of subscriptions.

Nov 1 1914
Veh 1 191 5
Mav 1 1915

Increases and decreases net

Paid by reserve city
banks.

Reserve deposits.
Paid by

country
banks.

Total
capital.

$743,266.67

$552,583.33 $1,295,850.00

743,266.67
743,266.66
29,950.00

552,583.33 2,591,700.00
552,583.34 3,887,550.00
24,000.00 3,941,500.00

Date due.

Per cent
of requirements.

Reserve
city
banks.

Nov. 16,1914
Do

$8,357,033.66

Nov. 16,1915
Do

2,122,803.00

Country
banks.

Total
reserve.

Combined
capital and
reserve.

$1,295,850.00
$8,357,033.00
i4,"525*i98.*66" 12,882,231.00 "i4,"i78,'08i."66
15,473,931.00
16,769,781.00

2,464,953.00 17,469,987.00 121,411,487.00

ESTIMATED
ADDITIONS.2

Total Nov 16 1916, subject to call

May 16,1916
Do
Nov. 16,1916
Do
2,259,750.00

1,681,750.00

2,122,803.00

'2,'i22,'803.'66"

2,464,953.00
2,464,953.00

3,941,500.00

23,534,290.00
25,999,243.00
28,122,046.00
30,586,999.00
34,528,499.00

OPTIONAL
TRANSFERS.
Nov. 16,1917
Do

8,491,212.00

7,394,859.00

Total after Nov. 16,1917, if entire optional reserve is carried with Federal Reserve Board and entire capital paid, $50,414,570.2
Original subscribed capital, $7,775,100.
i General ledger balances about 30 days after due date used in order to include those not remitting promptly,
a This does not include possible Government deposits.

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