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EVENTEENTH ANNUAL REPORT OF THE

FEDERAL RESERVE BANK
OF BOSTON
FOR THE YEAR ENDED
DECEMBER 31, 1931

• BOSTON




MASSACHUSETTS •

SEVENTEENTH ANNUAL REPORT
OF THE FEDERAL RESERVE BANK
OF BOSTON

FOR THE YEAR ENDED
DECEMBER 31, 1931

BOSTON, MASSACHUSETTS







CONTENTS
PAGE

Letter of Transmittal
New England Business Conditions During 1931
Business Indices — New England
Member Bank Credit
Federal Reserve Bank Credit
Bankers' Acceptances
Acceptance Liability
Buying Rates on Acceptances
Member Bank Reserve Deposits
Money Rates and Discount Rates
Boston Money Market, 1931
Federal Reserve Notes
Reserve Position
Banking Indices — New England
Operating Statistics
Statement of Condition
Income and Disbursements
Volume of Operations
Open Market Operations
Membership
Fiduciary Powers
Stockholders' Meeting
List of Officers and Directors




4
6
10-11
12
16
17
. . .
18
18
18
19
20
20
21
22-23
24-26
27
28
29
29
30
31
32

LETTER OF TRANSMITTAL

BOSTON, MASS.,

February 15, 1932

HON. EUGENE MEYER
Governor, Federal Reserve Board
Washington, D. C.
Sir:
I have the honor to submit herewith the Seventeenth Annual Report
of the Federal Reserve Bank of Boston, covering industrial and credit
conditions in New England, and the operations of the bank for the
period January 1, 1931 to December 31, 1931.




Respectfully yours,
FREDERIC H. CURTISS

Chairman and Federal Reserve Agent

SEVENTEENTH ANNUAL REPORT
OF THE FEDERAL RESERVE BANK
OF BOSTON
It is impossible to view the events of 1931 from a strictly local perspective. The year 1931 stands out as being probably the worst year
of depression the country has experienced during the past century,
with the possible exception of the depressions occurring in the 70's
and the 90's. While 1929 marked the peak in productive activity and
in stock market expansion, and 1930 reflected the reaction from these
peaks, 1931, instead of giving evidence of the depression having run
its course, seemed to indicate rather an acceleration in the momentum
of the decline. Practically every phase of business and industrial
activity not only failed to improve, but grew steadily worse, especially
during the latter part of the year. Productive activity toward the
end of 1931 was little more than half what it had been in June, 1929.
Payrolls also were cut in half, commodity prices were reduced onethird, cost of living was down about 16 percent, and financial indexes
showed equal or even greater declines. Deposits in the member
banks were 20 percent below their 1929 peak, while the stock market
had shrunk to a point where indices of industrial stock prices showed
values of only twenty cents on the dollar, as compared with those in
the fall of 1929. The bond market likewise had declined severely,
the highest grade of railroad bonds having dropped 15 percent, while
bonds of lower ratings had lost one-third of their value, as compared
with the peak reached in 1929.
New England was affected by conditions in the rest of the United
States, which, in turn, were affected as never before by foreign situations. Financial difficulties and political uncertainties in Europe have
been germinating since the World War. Many of these difficulties
seemingly reached a breaking point during 1931. While attention
was being focussed on conditions in Western Europe, the situation
was becoming critical in Austria. It culminated in the threatened
suspension of the Credit-Anstalt, a Rothschild bank, which handled
approximately two-thirds of all the bank business done in Austria.
This suspension seriously embarrassed the Austrian National Bank
and the Austrian Treasury, which endeavored to support the CreditAnstalt and necessitated a credit by the Bank for International Settlements to be placed at the disposal of the Austrian National Bank.
Attention was thus focussed on the credit situation in other countries,
and a run soon developed on foreign short-term credits in Germany,
which resulted in the famous Hoover Moratorium on June 20. Beginning in July there was a similar run against short-term foreign




[5]

A N N U A L R E P O R T OF T H E F E D E R A L R E S E R V E

BANK

credits held in London. Although advances were made by the Federal
Reserve Banks and by the Bank of France, England finally was forced
to suspend the gold standard on September 21.
It is not surprising, in view of these events abroad, that whatever
tendency toward recovery had appeared in the domestic situation in
the United States during the early months of 1931 soon gave way to
a slowing down in practically all branches of industry, to be followed
during the second half of the year by a greatly augmented rate of
decline in the volume of member bank credit in use.
N E W ENGLAND BUSINESS CONDITIONS D U R I N G

1931

The general level of business activity in New England was lower at
the end of 1931 than at the beginning, and throughout the entire year
business was disappointingly slow; nevertheless, conditions in the
First Federal Reserve District reflected a greater degree of stability
than in most other sections of the country. The changes which took
place in the general industrial composite, after making adjustments
for those of seasonal nature, caused a rising tendency to be reflected
during the first quarter of 1931 and a declining one during the second
quarter. The most active month of the year was July, with decreases
occurring month by month to the end of the year. Between October
and November and also between November and December changes
were practically seasonal, although increased hesitancy prevailed
during the entire quarter. The continuance during 1931 of the worldwide depression caused a greater lack of business confidence than
existed in 1930, and further readjustments in production, finance,
and distribution took place. In New England, toward the latter
part of 1931, some disturbance occurred in financial circles, which
probably reflected its influence in further retarding industry and trade
in this section. While the dollar volume of retail trade in New England
during 1931, according to reports from more than one hundred stores,
was approximately 9 percent less than in 1930, retail prices on an
average were estimated to have declined about 15 percent.
During the first three quarters of 1931 two important industries
in New England reported relatively active operations, but in each
case substantial declines occurred during the fourth quarter. The
woolen division of the textile industry in this district used considerably
more raw wool in 1931 than in the previous year, and the 1931 output
of New England boot and shoe factories, although sharply curtailed
during the last three months, was approximately 6 percent more than
that for the previous year. Cotton consumption in New England
failed to increase in 1931 over 1930, and at the end of 1931 the volume
[61



A N N U A L

REPORT

OF T H E FEDERAL

RESERVE

BANK

of rawT cotton consumed by local mills was only about 40 percent of
the average month of 1923-24-25.
The building industry likewise not only failed to gain in activity
during the year but became more curtailed as the year closed. In both
major divisions, residential and commercial and industrial building,
diminished operations prevailed in this district throughout 1931.
Employment: Almost without exception, the indexes of labor demand, based on the calls for workers at public employment offices in
eight representative New England cities reflected, after seasonal adjustment, the generally inactive state of manufacturing activity.
Also, in each of the three series representing the demand for workers
in Massachusetts, Rhode Island, and Connecticut, new low records
were attained in the number of opportunities for employment as the
year 1931 ended. This latter phase of the employment situation was
not entirely attributable to the current depression, although considerably accentuated by it, as the rate of the downward trend in the
demand for workers at the eight public employment offices has been
steadily increasing during recent years. The total decline in the
number of workers called for at eight New England public employment offices upon which the three state indexes are based was 32.3
percent during the past year.
Building: The most active year during the post-war decade for
the construction industry in this district was 1928, when the total
value of new construction contracts awTarded amounted to nearly
$497,000,000. During the past three years the volume of new construction undertaken has declined over 40 percent, the total value
of new contracts awarded in 1931 amounting to only $295,000,000.
There was a decrease of 16.8 percent in the value of new awards last
year, the principal declines occurring in residential, commercial and
factory construction. The generally depressed condition within the
building industry is undoubtedly due to the fact that in only two
months of 1931 did the total value of new awards exceed that of the
corresponding month of 1930, and that for every month, with but
one exception, the value of new awards amounted to at least 10
percent less than in the same month of the preceding year. In February and March, 1931, during which the total value of awards exceeded
that of the corresponding months of 1930, a single large project in
each month, rather than a more generally active condition, accounted
for the increase. The greatest shrinkage occurred in the residential
type of construction, which has declined about 60 percent in the value
of new contracts awarded during the past three years. The index of
the volume of new residential building, based on the number of square




[7]

A N N U A L

REPORT

OF T H E FEDERAL

RESERVE

B A N K

feet of new contracts awarded, shows that residential building has
been declining in volume since the first quarter of 1928. A similar
condition has prevailed in the volume of new commercial and factory
building contract awards. While the percentage decrease in the past
year has been greater in these two classes of building than in residential construction, new commercial and factory building does not
represent as large a proportion of the total construction industry as
does either residential building or public works and utilities. Although
residential construction in this district continued to represent about
one-third of total construction activity, the amount of public works
and utilities construction has increased rapidly, as a means by which
certain phases of the present economic situation might be alleviated.
So numerous have been the awards for these public works relief projects that, after the exclusion of the $16,000,000 vehicular traffic
tunnel contract awarded in Boston during February, the value of new
public works and utilities contracts for 1931 exceeded that for any
of the immediate preceding years.
Textiles: While the number of bales of raw cotton consumed in 1931
by New England cotton mills was the smallest of any post-war year,
there was some increased activity in the woolen and worsted and silk
mills during the earlier months of the year, although in the latter
months this activity was affected by labor difficulties. Cotton consumption during 1931 declined 12.4 percent from the total number of
bales consumed in 1930. During the first four months of 1931 there
were evidences of an improving tendency in the amount of raw cotton
consumed, but by May this condition had changed by a gradual reduction in the average number of bales consumed. So active were the
New England woolen and worsted mills during the summer of 1931
that a rate of raw wool consumption was maintained equal to that
which prevailed in the same period of 1929. For the entire year 1931
the volume of raw wool consumed exceeded that of the previous
twelve months by over 22 percent. As a result of labor difficulties
due to wage reductions effective in Lawrence, the amount of wool
consumed in the last quarter of 1931 was considerably reduced, with
the rate of activity at the close of the year comparable with that for
the same period of 1930. A similar condition prevailed in the silk
textile industry, although the downward tendency in the rate of silk
machinery activity after the close of the first quarter was more directly
attributable to curtailment than to the strike in certain Rhode Island
mills during June. So marked has been the reduction in the rate of
silk machinery activity that as 1931 drew to a close the seasonally
adjusted index of the activity of broad silk looms indicated an ap[8]




A N N U A L

REPORT

OF T H E F E D E R A L

RESERVE

BANK

proach toward a new low level of operations. For the entire year 1931,
as compared with the preceding year, there was a decrease of 6.2 percent in silk machinery activity.
Shoes: During 1930 the production of shoes in this district declined
14.6 percent from the amount of the preceding year. Furthermore, in
every month of 1930 the volume of output in New England was lower
than that for the corresponding month of 1929. The number of pairs
of shoes produced in 1929, while 4.3 percent below the output in 1923,
the first year for which figures for this district are available, represented the culmination of a steady improvement in the volume of
output extending over a period of five years. In 1931, however, a
moderate improvement of some 6 percent over the preceding year
was noted in shoe production. Each successive month of the past
year through July recorded a larger percentage increase in output
over the same month of 1930. Beginning in August, however, a reversal became evident in the tendency of the comparative percentage
changes in the monthly production figures. This fact is shown by a
comparison of the number of shoes produced in the first seven months
of this year with the same period in the previous two years, which
indicates that at the close of July the production of shoes in this district was 9.5 percent greater than in the same seven months of 1930,
and only 4.2 percent less than in the corresponding period of 1929.
Trade: The dollar volume of sales of more than one hundred reporting retail establishments in New England was about 9 percent smaller
in 1931 than in 1930. According to the Fairchild Retail Price Index,
retail prices on an average declined more than 15 percent during the
year 1931. Consequently, it may be concluded that more units of
merchandise were distributed by retail establishments in 1931 than
in 1930. A similar condition existed a year ago, in comparison with
1929. In other words, for two consecutive years retail prices have
apparently declined considerably more in percentage change than has
the aggregate volume of dollar sales. In each of the six New England
states decreases were reported between 1930 and 1931: Connecticut,
—5.6 percent; Maine, —8.8 percent; Vermont, —8.9 percent; Massachusetts, —9.0 percent; New Hampshire, —10.5 percent, and Rhode
Island, —10.8 percent. A higher average collection ratio was reported
for New England stores during 1931 than during the preceding year,
but this was probably due to the fact that a larger relative decrease
occurred in regular charge accounts outstanding than in the amount
of collections month by month, and in 1931 the proportion of cash
sales to total sales was greater than in 1930.
Sales of new automobiles in the New England district during 1931




[91

BUSINESS INDICES — NEW ENGLAND
GENERAL BUSINESS
wsi
1. New Incorporations — Massachusetts . . . .
2,413
2. Life Insurance Sales
$645,474,000
3. Car Loading (mdse., l.c.l., and misc.)
1,541,192
4. New England Railroad Net Operating Income
(11 months ending November 30)
$28,979,372
5. Residential Building Contracts Awarded
. . . $87,548,000
6. Commercial and Industrial Building Contracts
Awarded
$27,960,000
7. Public Works and Utilities Building Contracts
Awarded
$87,054,000
8. Total Building Contracts Awarded
$295,019,000
INDUSTRIAL PRODUCTION
1. Industrial Activity — Electric Power Consumption
(1923-25 average)
2. Cotton Consumption (bales)
3. Average Cotton Spindles in Place
4. Average Cotton Spindles Active
5. Wool Consumptions (lbs., grease)
6. Woolen Spindle Activity(% of single shift capacity)
7. Worsted Spindle Activity(% of single shift capacity)
8. Silk Machinery Activity
9. Shoe Production (pairs)
10. Shoe Shipments — Brockton (pairs)
11. Orders of Paper Mills — Massachusetts (% of 1926
monthly average)
12. Orders of Metal Trades — Massachusetts (% of
1926 monthly average)




96.5%
840,427
12,308,000
7,765,000
280,000,000
56.0%*
64.5%*
70.0%
111,498,000*
8,473,000

1930
2,540
$688,257,000
1,710,655

Percent Change
1930-19X9
1931-1930

5.0
6.0
9.9

- 6.7
- 4.0
-13.0

$40,230,026
$111,937,000

-28.0
-21.8

-20.3
-27.6

$66,611,000

-58.2

-38.3

$67,021,000
$354,720,000

+29.8

+34.9

-16.8

-10.9

- 2.3
-12.3
- 9.2
-11.7

-25.1

-18.7
-32.2
- 7.7
-21.1
-23.2
-28.4
-19.6
- 7.4
-14.7
-15.1

98.7%
959,287
13,559,000
8,797,000
229,807,000
52.6%*
55.0%*
75.6%
105,018,000
11,335,000

-

+21.9
+ 6.5
+ 17.3
-

7.3

+ 6.0

62.0%

80.1%

-22.6

-18.9

51.5%

75.7%

-32.9

-32.3

BUSINESS INDICES —NEW ENGLAND (continued)
EMPLOYMENT
1. Labor Demand — 8 Public Employment offices .
i. Average Number Employed — Massachusetts . .
3. Average Monthly Payrolls — Massachusetts . .
4. Average Weekly Wage — Massachusetts . . .
5. Average Full-time Employment — Massachusetts
TRADE
1. Department Store Sales (% of 1923-25 monthly
average)
2. Sales of New Motor Cars
3. Number of Commercial Failures (R. G. Dun & Co.)
4. Liabilities of Commercial Failures (R. G. Dun & Co.)
PRICES
1. Bureau of Labor Statistics — Wholesale Prices
2. Bureau of Labor Statistics — Retail Prices . .
3. Cost of living — Massachusetts
AGRICULTURE
1. Value of Farm Crops (December 1)
2. Average Level of Farm Products (B.L.S.,1926 = 100)




* Preliminary.

1931

33,811
172,069
$3,693,840
$21.42
52.8%

1930

51,936
195,224
$4,559,621
$23.31
64.4%

Percent Change
1931-1930
1930-1929

-34.9
-11.9
-18.9
- 8.1
-18.0

-30.2
-10.7
-16.7
- 6.8
-22.2

G
>

r
R
W
-z
O

a
H
89.5%
164,672
2,688
$83,413,721

101.6%
198,904
2,816
$60,510,721

-11.9
-17.2
- 4.6
+38.1

- 4.7
-23.5

71.2%
76.2%"
86.5%

86.4%
91.7%
95.1%

-17.6
-16.9*
- 9.1

-10.4
- 6.0
- 3.4

$130,353,000
88.5%

-31.3
-26.6

-21.7
-15.6

+ 8.3
+ 10.7

O
"1

H
B
M
*S

w

$89,497,000
64.9%

a
M

a

A N N U A L REPORT

OF T H EF E D E R A L

R E S E R V E

B A N K

were 17.2 percent less than in 1930. The largest decrease in registrations of new cars was reported in Vermont, while the smallest decline
was in New Hampshire. The aggregate new car sales for New England
were smaller in 1931 than in any of the preceding three years.
Although the total number of commercial failures in this district
during 1931 was less than in 1930 by 4.6 percent, total liabilities were
38.1 percent greater in 1931.
MEMBER BANK CREDIT
The depressed level of general business activity, not only in New
England but throughout the United States, and indeed throughout
the entire world, was reflected in the figures and operations of the
member banks. The volume of member bank credit outstanding,
both as measured by total deposits and by total loans and investments
of the New England member banks, was subjected during the year to
the most extensive decline ever recorded. Total deposits in the reporting member banks in this district declined 16 percent between
December 31,1930, and December 30, 1931. This rate of decline was
only slightly greater than the corresponding rate for all reporting
member banks throughout the United States where the contraction
was about 15 percent. Boston member banks suffered nearly twice as
severe a contraction as the reporting outside banks, deposits in the
reporting Boston banks having dropped 19 percent, and those in the
reporting outside banks 11 percent. The declining trend in New
England member bank credit began in the spring of 1928, and continued for a little more than a year until the late spring of 1929;
thereafter there was an irregular upward movement until the fall of
1930, whereupon the declining trend of the previous year was renewed.
It continued throughout 1931, gathering momentum rapidly during
the last three months of the year. It was perhaps inevitable that
England's abandonment of the gold standard, and the reduction of
$728,000,000 in the gold stock of the United States during the six
weeks following England's abandonment of the gold standard, should
have repercussions throughout the United States, including New
England. This was indicated by the increasing rapidity of the decline
in deposits and gathered a momentum which continued throughout
December in spite of the fact that the outward flow of gold from the
United States ended late in October and was followed by an inward
movement during the next two months which restored nearly one
quarter of the previous six weeks' reduction in gold stock.
A succession of events such as this produced certain important reactions on the banking structure throughout the United States. With
[12]



A N N U A L

R E P O R T

O F T H EF E D E R A L

MEMBER
REPORTING
!900r

1927

BANK

MEMBER

BANKS

CREDIT
IN FEDERAL

R E S E R V E

B A N K

SITUATION
RESERVE

DISTRICT

1928

1800




^TOTAL

LOANS

AND INVESTMENTS

^BORROWINGS

FROM

F.RB

1

A N N U A L

REPORT OF T H EF E D E R A L

R E S E R V E

B A N K

stock and high grade bond prices falling rapidly back to the level of
1921 and with second grade bond prices the lowest ever recorded, the
collateral behind secured loans in many instances became depleted.
Furthermore, the bond portfolios of the member banks showed serious
shrinkage at a time when banks were losing deposits so heavily.
The decline in the price of farm products, especially potatoes, developed a serious problem for the banks in the agricultural sections
of this district, especially in Aroostook County, Maine, where the
potato crop is the principal industry. This banking situation was
further aggravated in September when England went off the gold
standard, by the withdrawal of deposits into Canada from banks close
to the Canadian line, exchange on the United States going to a premium of about 20 percent in Canada. Apart from the failure of one
small trust company at Fort Kent, the situation was taken care of
through the consolidation of banks in certain localities, and assistance
rendered by the Federal Reserve Bank, correspondent banks, the
National Credit Corporation, the Federal Land Bank, and the Federal
Intermediate Credit Bank.
Although the bank failures in the country had been very numerous
throughout the year, the New England district had been almost free
from banking difficulties of this nature, and until December 15, with
the failure of the Federal National Bank of Boston, had had no
member bank failures, while only seven small out-of-town non-member
trust companies had failed. The Federal National Bank had total
assets at the date of closing of about $33,000,000 and was not a member of the Boston Clearing House Association. It had five branches
located largely in outlying sections of the city and controlled through
stock ownership eight banks in other near-by localities in Massachusetts. The affiliated banks were: Brockton Trust Company of Brockton, Inman Trust Company of Cambridge, Gloucester National Bank
of Gloucester, Lawrence Trust Company of Lawrence, Middlesex
National Bank of Lowell, State National Bank of Lynn, Salem Trust
Company of Salem, and Bancroft Trust Company of Worcester.
These banks had aggregate assets of about $36,000,000, or about the
same amount as the parent bank with which they had more or less
interlocking loans. As a result all of these banks were forced to be
taken over by the national and state authorities at the time of the
closing of the Federal National Bank.
Because of this situation runs developed on one or more Boston
banks, and on December 17 the Boston-Continental National Bank
of Boston, with deposits of about $6,367,000, was forced to close.
The runs on other Boston banks were overcome through the assistance
of the Federal Reserve Bank, and the aid of the Boston Clearing
[14]



A N N U A L

REPORT

OF T H EFEDERAL RESERVE

BANK

House banks and of the National Credit Corporation (a voluntary
organization of banks throughout the country which had begun its
operations early in December), and while a number of small banking
institutions outside of Boston were forced to close, the fact that the
failures were not even more numerous was, no doubt, due to the beneficial assistance given by that corporation either directly or indirectly
to other banking institutions having heavy withdrawals. The psychological effect of the existence of the National Credit Corporation was
of great stabilizing value, organized as it was to make advances to
banks against assets ineligible for discount with the Federal reserve
bank. The other Boston banks were in a liquid position to withstand
the extraordinary withdrawal of deposits during 1931. During the
year 1931 these remaining banks lost $189,000,000 in deposits and
their contraction in loans was even greater, amounting to $215,000,000.
This was made up of a reduction in commercial loans of $127,000,000,
in real estate loans of $5,000,000 and in collateral loans of $83,000,000.
On the other hand, these banks increasing their holdings of United
States obligations by $37,000,000 and their holdings of other bonds
and stocks by $12,000,000. During this period their liquid position
was actually improved as indicated by the increasing proportion
which their combined eligible paper and United States Government
obligations bore to their total deposits.
Outside of Boston the decline in deposits in the reporting member
banks amounted to $65,000,000, while the decline in loans was only
$47,000,000. Holdings of United States Government obligations, as
in the case of Boston banks, increased, the addition amounting to
$16,000,000, while holdings of other bonds and stocks owned declined
$6,000,000.
Time deposits in the Boston member banks proved to have relatively no greater stability than did demand deposits, since the rate
of decline in time deposits was 23 percent as compared with only
16 percent in demand deposits, although the actual amount of demand
deposit contraction amounted to $110,000,000, while the drop in time
deposits was $63,000,000. Outside of Boston, on the other hand, most
of the decline occurred in demand deposits.
The declining trend in commercial loans of the Boston member
banks has been in progress steadily since the latter part of 1925, with
the result that the level on December 30, 1931, was the lowest recorded
since comparable statistics have been available. Contraction in collateral loans also has been rapid during 1931, but represented a much
less prolonged decline, having started early in 1930 and by the end
of 1931 having reached a level comparable with that of 1925. The
contraction in real estate loans began in the spring of 1929 and con-




[15 1

ANNUAL

REPORT

OF T H E FEDERAL. R E S E R V E

BANK

tinued uninterruptedly until a level was reached at the end of 1931
comparable with that in 1927. Holdings of bonds and stocks by the
Boston member banks, on the other hand, maintained an upward
trend until the end of October, 1931, following which the cumulative
momentum of the decline in deposits reached such large proportions
that holdings of bonds and stocks also declined rapidly during November and December. Outside of Boston, substantially the same
movements occurred, with the exception that little or no decline in
the reporting member banks' holdings of real estate loans took place.
The strength of the credit situation in Boston was put to a severe
test during December and culminated in a four days' run on the
Boston Five Cents Savings Bank, one of the largest and oldest of
the Boston mutual savings banks, a run which was successfully
met, all deposits being paid in cash without invocation of the ninetyday stop law. The restoration of confidence in this mutual savings
bank was so marked, following the cessation of its run, that the net
reduction in the number of accounts on the bank's books at the end
of December was not great, 85 percent of the number of accounts
closed during the month having been offset by new accounts opened.
Furthermore, the net decline in savings on deposit in this bank during
the month of December was only about 3 percent. Although the
ninety-day stop law is very rarely invoked in the Commonwealth of
Massachusetts, the seven mutual savings banks in Lowell voted on December 16 to invoke it in that city, at the same time limiting each
depositor to a withdrawal of $100 during that period. This action
followed immediately after the closing of two of the commercial banks
in Lowell, the Middlesex National Bank and the Lowell Trust
Company.

FEDERAL RESERVE BANK CREDIT
Borrowing on the part of New England member banks was at a low
level during the first nine months of 1931, but following England's
abandonment of the gold standard and the heavy withdrawals of
gold from this country, which were reflected in the increasing momentum of the decline in member bank deposits, the member banks
were obliged to seek increasing recourse from the Federal Reserve
Bank of Boston. Loans to member banks increased rapidly during
the last three months of the year, reaching a peak of $71,000,000 on
December 26. This, however, was not an exceptionally high figure,
being lower than the average loans to member banks outstanding
during most of the period from May, 1928, until October, 1929.
On the other hand, the total volume of assets acquired by the
[16]



A N N U A L

R E P O R T

O FT H E

F E D E R A L

R E S E R V E

B A N K

Federal Reserve Bank of Boston reached peaks in October and again
in December which were higher than any figure since the spring of
1921. This was due, in part, to the steadily increasing volume of
United States obligations held, which in December reached levels
never before attained. Holdings of acceptances reached the highest
peak since January, 1926, during October, 1931, following which they
FEOERAL

RESERVE

FLUCTUATION

[938

OP

PRINCIPAL

BANK OF BOSTON
ITEMS

1929

6|j'*''Ml»l«!j'j'»l3'Ol*!0lj'flluUlMljljlAl3l6l|Jl0|jir

l

19 30

1931

l* l A!uU T J T »'S l OlNl(J|J!f U ' » lU ' J <J ' »

declined rapidly to a more customary level by the end of December.
The average total earning assets outstanding during 1931 were
$90,000,000, an increase of $16,000,000 over 1930. The average
loans to member banks were about $1,000,000 less, the increase being
$6,000,000 in the average amount of bankers' acceptances carried
and $11,000,000 in United States securities.
BANKERS' ACCEPTANCES
The volume of bankers' acceptances made in the First Federal
Reserve District during 1931 was considerably less than at any time
during the past four years. While the decrease was to a greater extent
in acceptances made in connection with transactions outside of the
United States, the general industrial depression and the lower prices
prevailing on commodities throughout the year were an additional
factor in the decreased volume. On the other hand, the volume of
bankers' acceptances carried by the Federal Reserve Bank during
the year was larger, averaging about $6,000,000 more a day than in
1930. This was chiefly due to the reduced volume of acceptances
carried by foreign central banks. The buying rates on ninety-day




17

A N N U A L REPORT OF T H E FEDERAL

R E S E R V E

B A N K

bankers' acceptances maintained during the year increased from
If percent in January to 3 | percent in December. Buying rates were
reduced gradually during the early months of the year until on May 19
the rate on ninety-day bills stood at 1 percent, and that rate was maintained until September 25, rates gradually increasing until the end of
the year.
ACCEPTANCE LIABILITY
Of All Banks and Acceptance Corporations in Federal Reserve District I
1931

1930

1929

1928

$133,000,000
125,000,000
113,000,000
102,000,000
106,000,000
104,000,000
98,000,000
91,000,000
81,000,000
71,000,000
66,000,000
62,000,000

January 31
February 28
31
March
30
April
31
May
30
June
31
July
31
August
September 30
October 31
November 30
Decembei• 31

$166,000,000
157,000,000
151,000,000
145,000,000
145,000,000
136,000,000
134,000,000
129,000,000
122,000,000
137,000,000
145,000,000
145,000,000

$143,000,000
131,000,000
127,000,000
123,000,000
116,000,000
115,000,000
111,000,000
117,000,000
118,000,000
146,000,000
163,000,000
171,000,000

$137,000,000
134,000,000
136,000,000
132,000,000
127,000,000
122,000,000
112,000,000
112,000,000
112,000,000
120,000,000
137,000,000
145,000,000

BUYING RATES ON ACCEPTANCES
1-15
Days

"January
1,
January 16,
January 26,
April
11,
April
22,
April
27,
May
5,
May
6,
May
13,
May
19,
September25,
"October
9,
October 14,
October 16,
November20,

1931
1931
1931
1931
1931
1931
1931
1931
1931
1931
1931
1931
1931
1931
1931

U
H

n
li

H
H
H
U
I
I

u

1 3
l
i

H
3

16-30

Days

If

M
n
H
H

u
li

H
H
l

81-45
Days

Days

If
If

If
If

n
H

i!

91-120
Days

If

n
n
n
ii

if

ii

H
U

n
i

if

U
s*
3|

if
2*i
<i

3

3

J

8

46-75

n
n
if
ii
ii

H
I
ii

if

n

3|
3|

76-90

Days

If

If

H
U
i!

if
if
i|

ii

i!

ii

l*

I

ii

if

»i
si

* In effect on.

ii
2
2*

si
si

121-180
Days
2
2
2
2
£
2
2
2

ii
ii

H
3
3^

si

MEMBER BANK RESERVE DEPOSITS
Although deposits in the member banks were declining with unparalleled rapidity during 1931, their reserve balances with the Federal
Reserve Bank of Boston showed little change at the end of the year as
compared with the beginning. In fact, during October when the banks
were going to extremes to obtain liquidity in view of the uneasiness
prevalent at the moment, member bank deposits in the Federal Re[18]




A N N U A L

REPORT

O FT H E F E D E R A L

RESERVE

B A N K

serve Bank of Boston rose to $167,000,000, the highest point ever
recorded. Total deposits in the reporting member banks, which
represent about two-thirds of the deposits in all member banks, were
$254,000,000 lower at the end of 1931 than at the end of 1930. Meanwhile, the reserve deposits of the reporting member banks in the
Federal Reserve Bank increased $4,000,000 between December 31,
1930, and December 31, 1931, while those for all member banks declined only $2,000,000.
MONEY RATES AND DISCOUNT RATES
The increasingly easy position of the member banks during the first
half of the year was reflected in money rates which declined steadily
during the spring and early summer, reaching their lowest point in
BOSTON

MONEY

NINETY

1922

1923

1924

— —

1925

FEDERAL

BROKERS
•ooooo. B A N K E R S

DAY

1926

RESERVE

BANK

MARKET

SECURITIES

1927

or

1928

BOSTON

1929

REDISCOUNT

1930

1931

RATE

COMMERCIAL PAPER
ACCEPTANCES

K

S•

June and July when rates were at levels which had not been equalled
for many years, if ever before, in the United States. Brokers' commercial paper throughout the summer sold on a 2 percent basis in
Boston, and the ninety-day asking rate on bankers' acceptances was
generally f of 1 percent with the exception of a short period in July
when the rate dropped to f of 1 percent. These movements closely
paralleled the position of the reporting member banks where the
percentage of loans and discounts to total deposits declined steadily
throughout the spring and early summer. An abrupt change in the
money market occurred shortly after England's abandonment of the
gold standard and money rates began to rise abruptly. The asking
rate for bankers' acceptances rose in the period of a few weeks during




19

A N N U A L REPORT

OF T H EF E D E R A L

R E S E R V E

B A N K

September and October to a peak of 3 | percent and brokers' commercial paper to 4 percent. Some moderate degree of easing in these rates
took place in the latter part of the year, with the result that the asking
rate for bankers' acceptances on December 31 was 3 percent as compared with If percent a year ago, and the going rate for brokers'
prime commercial paper was 3 | percent at the end of 1931 as compared
with 3 percent a year ago. Similar trends were observable in the
open market for short-term Government obligations. The yield on
short-term United States Certificates of Indebtedness declined to the
unprecedentedly low level of .07 percent on September 23. During the
following months it rose to a peak of 2.86 percent on December 30,
which compares with 1.46 percent a year ago.
As in previous years, changes in the discount rate of the Federal
Reserve Bank of Boston followed rates in the open money market.
Two reductions occurred during the year. On January 2, 1931, the
rate was reduced to 2^ percent and on May 7 it was further reduced
to 2 percent. This 2 percent discount rate remained in effect until
the credit strain of the fall months developed, when it was raised to
2§ percent on October 10 and again to 3 | percent on October 17, at
which level it remained during the remainder of the year.
BOSTON MONEY MARKET, 1931
Prevailing Rates on 90-Day Maturities as of 15th of Each Month
Month

January
February
March
April
May
June
July
August
September
October
November
December

Time Loans
Customers'
Loans to
Secured by
Bonds and Stocks Commercial Correspondent
Loans
Banks

4-5
4f-5

4^-5
4f-5
4-5
4-4|
3f-5
3f-5
3|-5
4f-5

U. S. Treasury
Brokers'
Certificates of Acceptances Commercial
Indebtedness (Asking Rate) Paper

If

H

2|

4

1*

3|-4
4-4f
3§-4
31-4

f

3-4|

4
4

i
h
1

1

3-4
3-4

2f
2i
2i

i
i

i

3J-4J

4-4§
4-4|
4

3-3J
4-5
4-5

1

8

If

7

2}
2|
3

2
2
2
2
2|
4
4

FEDERAL RESERVE NOTES
In years past, after each holiday season, there has been a sharp
contraction in Federal reserve notes outstanding in this district. This
reduction has also been evident in the country as a whole. While
Federal reserve notes contracted to some extent after the first of the
year, this contraction was subnormal everywhere, and was less marked
in this district than elsewhere. Increased demand for currency for
[201



A N N U A L

REPORT

OF T H EFEDERAL

RESERVE

BANK

commercial or payroll requirements accounts, no doubt, for the
slight increase in Federal reserve notes outstanding during the spring
months; in fact, there was very little evidence that the increase was
due to lack of confidence on the part of bank depositors during that
period. In fact, while Federal reserve notes in circulation showed
only a gradual increase until October, that increase was not especially
significant and apparently was due to apprehension of reports of bank
failures elsewhere in the country. In October and again in December,
however, following the epidemic of bank failures from which this district was not immune, the demand for Federal reserve notes rose
rapidly. Not only hoarding by individuals but also an abnormal desire
for vault cash on the part of both member and non-member banks
to bulwark them against runs by depositors contributed to this movement. The reporting member banks accordingly increased their vault
cash reserves steadily until on December 23 they were carrying more
currency on hand than at any time since 1917, in spite of the fact that
their deposit liabilities were at the lowest level since 1924. From
December 10 to December 21 Federal reserve notes increased $60,000,000. The Federal Reserve Bank of Boston made every effort to supply
outlying banks promptly with currency with which to meet emergency
situations, with the result that in many cases runs were forestalled.
RESERVE POSITION
The total cash reserves of the Federal Reserve Bank of Boston rose
gradually until September 22, when they stood at $245,000,000. The
effect of England's suspension of the gold standard was felt through
the sharp decrease in cash reserves, the decline extending until
November 30, when those reserves had been reduced by $86,000,000.
While shipments of gold to France during this period were no doubt a
factor, a still more important one was the premium on Canadian
exchange which attracted deposits from the banks of the district into
Canada. From November 30 to the end of the year cash reserves
increased until on December 31 they stood at $231,000,000, this
recovery doubtless being due to member banks fortifying their position by a restriction of their loans and investments through the
maturing or disposal of assets originating outside of the district.
The reserve percentage against deposit and note liability followed that
of the system, as a whole, much more closely in 1931 than in previous
years. The reserve ratio of the Federal Reserve Bank of Boston was
highest in February, March, April and August, in each of which
months it at some time exceeded 84 percent. It reached the lowest
point on November 3 at 54 percent.




[211

A N N U A L R E P O R T OF T H E F E D E R A L R E S E R V E

BANK

BANKING INDICES —NEW ENGLAND
Data as of last reporting date each year
(Amounts in millions of dollars)
REPORTING MEMBER BANKS
In Boston: —
1. Commercial Loans
2. Real E s t a t e Loans
3. Collateral Loans
4.
Total Loans . . . . .
5. U . S. Securities
6. All other Securities Owned . .
7.
Total Bonds and Stocks
8.
Total Loans and Investments
9. Net Demand Deposits
. . .
10. U. S. Government Deposits . .
11. Time Deposits
12.
Total Deposits . . . .
IS. % of Reserve to Total Deposits
14. % of Loans and Discounts to
Total Deposits
Outside of Boston: —
15. Commercial Loans
16. Real Estate Loans
17. Collateral Loans
18.
Total Loans
19. U. S. Securities
20. All Other Securities Owned . .
21.
Total Bonds and Stocks
22.
Total Loans and Investments
23. Net Demand Deposits
. . .
24. U. S. Government Deposits . .
25. Time Deposits
26.
Total Deposits
. . . .
27. % of Reserve to Total Deposits
28. % of Loans and Discounts to
Total Deposits
MONEY RATES (Boston)
Open Market:
29. Brokers' Prime
Commercial
Paper
30. Bankers' Prime 90-day Acceptances
31. Treasury Certificates of Indebtedness (June 15 maturity)
32. Call Money (Boston)
. . . .

[22]




1.931
$280
73
241
594
117
137
254

1930

$407
78
.'J24
809
80
125
205

Change in One Year
Amount Percentage

-$127
5
83
- 215

+
+
+

-31.2%
- 6.4
-25.6
-26.6
+46.3

37
12 + 9.6
49 +23.9

- 166 - 1 6 . 2
- 110 - 1 6 . 4
16 - 7 6 . 2
63 - 2 3 . 0
- 189 - 1 9 . 4
+2.4 points

848
568
5
211
784
11.6%

1,014
678
21
274
973
9.2%

75.8%

83.1%

— 7.3 points

$142
86
141
369
99
140
239

$161
86
169
416
83
146
229

-

$19 - 1 1 . 8 %
0
0
28 - 1 6 . 8
47 - 1 1 . 3
+ 16 + 19.3
6 - 4.1

+

10 + 4.4

608
260
3.6
268
532
5.1%

645
316
.1
281
597
4.2%

37 - 5.7
56 - 1 7 . 7
+ 3.5 +3500.0
13 - 4.6
65 - 1 0 . 9
+ . 9 points

69.4%

69.7%

— .3 points

-

3%

3
2.74

+ii
1.46
4

+1.2*

+i

A N N U A L

R E P O R T

O FT H E

F E D E R A L

R E S E R V E

B A N K

BANKING INDICES —NEW ENGLAND (continued)
1981

At Member Banks:
33. Prime Commercial Loan Rate .
34. Time Collateral Loan Rate . .

1930

Change in One Year
Amount
Percentage

4-5%
4£-5

4-4|%
4-5

+ | points
+ J points

3|

3

+§

At Federal Reserve Bank of Boston: —
35. Discount Rate
36. Buying Rate on Acceptances —
(90 days)
MISCELLANEOUS
37. Acceptance Liabilities (F. R.
District 1)

3|

If

+lf

$62

$145

-$83

-57.2%

Mutual Savings Banks: —38. Deposits in 62 Reporting Banks
in 6 New England States . .

$1,704

$1,668

+$36

+ 2.2

Check Transactions (year's totals): —
39. Boston
40. Outside New England Cities . .
41.
Total — 1 6 Cities
. . . .

$17,346
8,822
26,168

$22,074
10,490
32,564

-$4,728
-1,668
- 6,396

-21.4
-15.9
-19.6




A N N U A L

R E P O R T

O FT H E

F E D E R A L

R E S E R V E

B A N K

COMPARATIVE STATEMENT OF CONDITION
RESOURCES
Dec. SI, 1931

CASH RESERVES held by this bank against
its deposits and note circulation:
Gold held by the Federal Reserve Agent as
part of the collateral deposited by the bank
when it obtains Federal Reserve notes. This
gold is lodged partly in the vaults of the
bank and partly with the Treasurer of the
United States
$147,627,080.00
Gold redemption fund in the hands of the
Treasurer of the United States to be used
to redeem such Federal Reserve notes as are
presented to the Treasury for redemption .
4,743,868.58
Gold and gold certificates in vault . . . .
20,791,883.82
Gold in the gold settlement fund lodged with
the Treasurer of the United States for the
purpose of settling current transactions
between Federal Reserve districts
. . .
40,281,601.83
Legal tender notes, silver and silver certificates
in the vaults of the bank (available as reserve only against deposits)
17,355,044.00
TOTAL CASH RESERVES

$149,917,080.0G

1,491,937.27
31,148,853.82

18,711,357.27
10,095,641.00

$230,799,478.23

Non-reserve cash, consisting largely of National bank notes and subsidiary silver . .

LOANS AND INVESTMENTS
Loans to member banks:
On the security of obligations of the United
States
By the discount of commercial or agricultural paper or acceptances
Acceptances bought in the open market . .
United States Government bonds, notes, certificates of indebtedness and bills . . . .
Federal Intermediate Credit Bank (debentures)
TOTAL LOANS AND INVESTMENTS

Dec. SI, 19S0

.

$211,364,869.36

$7,807,603.88

$6,472,757.02

$23,493,318.40

$5,880,000.00

19,711,952.98
33,431,461.18

7,358,014.93
25,314,981.10

61,001,700.00
2,130,000.00

49,924,500.00
850,000.00

$139,768,432.56

$89,327,496.03

MISCELLANEOUS RESOURCES
Bank premises
Checks and other items in process of collection
All other miscellaneous resources
. . . .
TOTAL MISCELLANEOUS RESOURCES .

TOTAL RESOURCES

• Includes $1,968, 060.72 claims Suspended Banks.
$684,706.42 due from foreign banks.

24




$3,335,841.25
58,808,310.63
2,733,207.79 *

$3,457,889.00
65,974,753.56
128,822.69

$64,877,359.67

$69,561,465.25

$443,252,874.34

$376,726,587.66

A N N U A L

REPORT

O FT H E F E D E R A L

RESERVE

B A N K

COMPARATIVE STATEMENT OF CONDITION
LIABILITIES
Dec. SI, 1931

Dec. SI, 19S0

CURRENCY IN CIRCULATION
Federal Reserve notes in actual circulation,
payable on demand. These notes are secured in full by gold and discounted and
purchased paper
$194,460,480.00

$132,034,860.00

TOTAL CURRENCY IN CIRCULATION . $194,460,480.00

$132,034,860.00

DEPOSITS
Reserve deposits maintained by member banks
as legal reserves against the deposits of
their customers
$149,287,196.86
United States Government deposits carried at
the Reserve Bank for current requirements
of the Treasury
2,538,090.41
Other deposits, including foreign deposits,
deposits of non-member banks, etc. . . .
6,003,715.25
TOTAL DEPOSITS

$150,935,582.92
829,200.20
490,186.15

$157,829,002.52

$152,254,969.27

MISCELLANEOUS LIABILITIES
Deferred items, composed mostly of uncollected checks on banks in all parts of the
country. Such items are credited as deposits
after the average time needed to collect
them elapses, ranging from 1 to 8 days
$57,993,276.59
All other miscellaneous liabilities
1,182,902.92

$59,167,277.53
93,815.99

TOTAL MISCELLANEOUS LIABILITIES .

CAPITAL AND SURPLUS
Capital paid-in, equal to 3 percent of the
capital and surplus of member banks . .
Surplus — that portion of accumulated net
earnings which the bank is legally required
to retain
TOTAL CAPITAL AND SURPLUS

.

.

TOTAL LIABILITIES

Reserve percentage against combined Federal
Reserve notes and deposit liabilities . . .




$59,176,179.51

$59,261,093.52

$11,748,650.00

$11,876,950.00

20,038,562.31

21,298,714.87

$31,787,212.31

$33,175,664.87

$443,252,874.34

$376,726,587.66

65.6%

74.4%

A N N U A L

R E P O R T

O FT H E

F E D E R A L

R E S E R V E

B A N K

COMPARATIVE STATEMENT OF CONDITION
The principal changes in the foregoing statement of the Federal
Reserve Bank of Boston, as of December 31, 1931, compared with
those of December 31, 1930, are as follows:
1. Loans to member banks show an increase of $30,000,000.
2. Bankers' acceptances bought in the open market show an increase
of $8,000,000.
3. United States securities show an increase of $11,000,000.
4. Total earning assets have increased $50,000,000.
5. Total gold reserves show a decrease of $12,000,000.
6. Federal reserve notes in circulation show an increase of
$62,000,000.
7. Total deposits have increased $5,000,000, the increase being in
United States Government deposits and deposits due to foreign
central banks.
8. Reserve percentages against combined Federal reserve notes and
deposit liability have decreased from74.4 percent to 65.5 percent.

The analysis of income and disbursements of the Federal Reserve
Bank of Boston for the years 1931 and 1930 appears on the following
page. While the volume of earning assets in 1931 were larger than in
the previous year, the lower discount rate prevailing through most of
the year and the lower returns on other classes of assets reduced gross
earnings $567,467. Current expense of operations was reduced in 1931
about $129,312.
This resulted in a net loss of operating income of $140,000 after
setting up depreciation for building, reserve losses, etc., whereas in
1930 there had been shown a net profit of $253,000. The 6 percent
dividend provided for by the Federal Reserve Act was paid to member
banks and this, together with the loss of operating costs, was charged
to surplus account, which was reduced thereby $849,369.49.




A N N U A L

REPORT

OF T H EFEDERAL RESERVE

BANK

INCOME AND DISBURSEMENTS
EARNINGS

1931

19S0

From loans to member banks and paper discounted
for them
$416,255.33
From acceptances owned
460,503.65
From U. S. Government obligations owned . .
825,951.98
Other earnings
97,908.28
Total earnings
$1,800,619.24
Additions to earnings
154,035.59

$595,986.60
438,263.76
1,201,548.78
132,286.19
$2,368,085.33
187,122.90

Total income applicable to expenses and other deductions
$1,954,654.83

$2,555,208.23

DEDUCTIONS FROM TOTAL INCOME
For the expense of current bank operations (including the non-reimbursable expense incurred as
Fiscal Agent of the United States)
$1,814,480.56
For Federal Reserve currency, mainly the cost of
printing new notes to replace worn notes in circulation, and to maintain supplies unissued and
on hand, and the cost of redemption . . . .
133,999.44
For depreciation, reserves, losses, etc
146,405.20
Total deductions
$2,094,885.20
Net income available for dividends, additions to
surplus, and payment to the U. S. Government
minus
$140,230.37
DISTRIBUTION OF NET INCOME
Dividends paid to member banks at the rate of
6 percent on paid-in capital
Additions to surplus (the bank is required by law
to accumulate out of net earnings, after payment
of dividends, a surplus amounting to 100 percent
of the subscribed capital; and, after such surplus
has been accumulated to pay, into surplus each
year 10 percent of the net income remaining after
paying dividends)
Any net income remaining after paying dividends
and making additions to surplus (as above) is
paid to the U. S. Government as a franchise tax.
No balance remained for such payments in 1931
or 1930.
Total net income distributed
* Deficit — deduction from surplus.




. . minus

$709,139.12

849,369.49*

$140,230.37

$1,855,608.12

222,183.68
223,639.11
$2,301,430.91
$253,777.32

$705,949.30

452,171.98*

$253,777.32

ANNUAL

REPORT

OF T H E F E D E R A L

RESERVE

B A N K

VOLUME OF OPERATIONS
The following table shows the volume of operations in the principal
departments of the bank during the year compared with the similar
items for the preceding year:
NUMBER OF PIECES HANDLED
Bills Discounted:
Applications
Notes discounted
Bills purchased in open market for own account
Currency received and counted
Coin received and counted
Checks handled

wst
5,381
37,158
.
19,000
240,021,000
356,212,000
91,448,000

5,547
38,541
22,613
258,983,000
355,855,000
93,658,000

1,122,000
432,000

.

isso

1,275,000
394,000

83,000
51,000

75,000
57,000

Collection Items Handled:
U. S. Government coupons paid
All other
U. S. Securities:
Issues, redemptions and exchanges by Fiscal Agency
Department
Transfers of funds
AMOUNTS HANDLED
Bills discounted
Bills purchased in open market for own account
Currency received and counted
Coins received and counted
Checks handled
Collection Items Handled:
U. S. Government coupons paid
All other

.

$563,629,000
$582,459,000
. 302,606,000
326,407,000
1,460,844,000
1,635,396,000
34,179,000
36,234,000
17,448,185,000 19,925,948,000

29,317,000
1,029,120,000

31,793,000
905,198,000

U. S. Securities:
Issues, Redemptions and exchanges by Fiscal Agency
Department
563,668,000
279,331,000
Transfer of funds
9,713,628,000 10,118,449,000

28]




A N N U A L

REPORT

OFT H EFEDERAL RESERVE

B A N K

OPEN MARKET OPERATIONS
Apart from bankers' acceptances purchased in the open market and
referred to elsewhere in this report, the Federal Reserve Bank of
Boston participated during the year in the transactions in United
States securities, for the Federal Reserve System account. The
Federal reserve bank held United States securities on January 1,
1931, of about $50,000,000, which were increased to $61,000,000 at the
year's end. This bank also purchased, from time to time, short-term
securities of the Federal Intermediate Credit Bank and held on
December 31, 1931, about $2,000,000 of such securities. During the
year the Federal Reserve Bank of Boston participated with the Federal
Reserve Bank of New York in the following transactions with foreign
central banks: May 22 and June 16 in the credits extended to the Austrian
National Bank, June 19 in the credit extended to the National Bank of
Hungary, June 24 in the credit extended to the Reichsbank, July 24 in
the credit extended to the Bank of England. The total amount of
foreign commitments on December 31,1931 was about $3,200,000.
MEMBERSHIP
On January 1, 1931, there were 396 member banks. One new
national bank was organized during the year, and no state banks were
added. There was a loss of twenty national bank members, twelve
through consolidations and mergers, six through suspension and insolvency and two by voluntary liquidation. There was a loss of four
state bank members, two through withdrawal, one by suspension and
one through consolidation. On December 31, 1931, there were 373
members, a net loss of twenty-three for the year.
The various changes in membership are classified in detail in the
following table:
National Banks

Members, January 1, 1931
GAINS
New national bank
LOSSES
Consolidation of national banks . . .
. 5
Liquidation and consolidation with nonmember banks
6
Absorption of national bank by state bank
member
1
Suspension and insolvency
6
Voluntary liquidation
1
Voluntary liquidation succeeded by a new
national bank
J^
Withdrawal of state bank members . .
. 2
Suspension and insolvency
1
Consolidation of state bank members
.
. 1
Members, December 31, 1931




Slate Banks

Total

362

34

396

1
363

34

1
3~97

20_
^
343

30

2

4
373

A N N U A L

REPORT OF T H EF E D E R A L R E S E R V E

B A N K

FIDUCIARY POWERS
Six permits were issued to national banks to exercise fiduciary
powers under authority of Section ll(k) of the Federal Reserve Act.
as amended, during 1931. One of the permits was issued to a bank
which had never exercised trust powers, three permits granted additional powers, and two were confirmatory after consolidation.
CONNECTICUT

Mystic River National Bank
Mystic
National Bank of Commerce (2 permits) (1) New London
MAINE

Thomaston National Bank (2)

Thomaston

MASSACHUSETTS

Beverly National Bank (1)
Boston-Continental National Bank (2)

Beverly
Boston

(1) Supplementary Powers
(2) Confirmatory

BANK ORGANIZATION AND PERSONNEL
Directors: On December 31, 1931, the terms of Mr. Frederick S.
Chamberlain as Class A director, Mr. Albert C. Bowman as Class B
director, and Mr. Charles H. Merriman as Class C director, expired.
Mr. Chamberlain was re-elected as Class A director, and Mr. Edward
S. French, President of the Boston and Maine Railroad, was elected
Class B director, by member banks in Group 2 for three-year terms —
Group 2 being composed of banks having a combined capital and
surplus of not less than $300,000 and not more than $999,000 — and
Mr. Merriman was reappointed by the Federal Reserve Board for a
similar term of three years. The Federal Reserve Board also redesignated Mr. Frederic H. Curtiss as Chairman and Federal Reserve
Agent, and Mr. Allen Hollis as Deputy Chairman for the year 1932.
Personnel: The number of employees on December 31, 1931, other
than officers, was 662 compared with 703 on December 31, 1930. On
February 11, 1931, Mr. Carl B. Pitman was appointed as Assistant
Cashier. On January 31, 1931, Mr. E. R. Bishop, who had been in
charge of Member Bank Relations work for several years, resigned
to become President of the First National Bank of Gardner, Massachusetts. On September 18, 1931, Mr. Arthur H. Weed, Secretary of
the bank from December 29,1917, to October 21, 1920, and Counsel
to the bank from January 7, 1915, died. At a meeting of the Board of
Directors held on October 7, 1931, Mr. Phillips Ketchum was appointed to succeed Mr. Weed as Counsel.
[30]




A N N U A L R E P O R T OF T H E F E D E R A L R E S E R V E

BANK

Advisory Council: At a meeting of the Board of Directors held on
January 14,1931, Mr. Herbert K. Hallett, Chairman of the Board of
Directors of the Atlantic National Bank of Boston, Massachusetts,
was appointed member of the Federal Advisory Council to represent
the First Federal Reserve District for the year 1931.
STOCKHOLDERS' MEETING
The annual meeting of the member banks was held at the Federal
Reserve Bank of Boston on November 20, 1931, with 306 delegates
and other representatives from 217 member banks attending. The
Chairman of the Stockholders' Advisory Committee, Mr. Lester F.
Thurber, President of the Second National Bank of Nashua, New
Hampshire, presided. The principal address was made by Mr. Robert
Lincoln O'Brien and remarks were also made by Mr. Frederic H.
Curtiss, Chairman of the Board of Directors, Governor Roy A.
Young, and Hon. Charles S. Hamlin, member of the Federal Reserve
Board. At the conclusion of the meeting Mr. Thurber announced that
Hon. Channing H. Cox, Vice President of the First National Bank of
Boston, had been elected Chairman of the Stockholders' Advisory
Committee for the ensuing year.




31

FEDERAL RESERVE BANK OF BOSTON
OFFICERS AND DIRECTORS

1932

OFFICERS

ROY A. YOUNG, Governor
FREDERIC H. CURTISS, Federal Reserve Agent
WILLIAM W. PADDOCK, Deputy Governor
CHARLES F. GETTEMY, Assistant Federal
WILLIAM WILLETT, Cashier
Reserve Agent
KRICKEL K. CARRICK, Secretary
HARRY F. CURRIER, Auditor
ELLIS G. HULT, Assistant Cashier
ERNEST M. LEAVITT, Assistant Cashier
CARL B. PITMAN, Assistant Cashier
L. WALLACE SWEETSER, Assistant Cashier

Class and
Group

DIRECTORS

A 1 ALFRED L. RIPLEY
A 2 F. S. CHAMBERLAIN
A 3 EDWARD S. KENNARU
B 1 PHILIP R. ALLEN
B 2 EDWARD S. FRENCH
B 3 A. FARWELL BEMIS
C FREDERIC H. CURTISS
C ALLEN HOLLIS
C CHAS. H. MERRIMAN

Chairman of the Board,
The Merchants National Bank
President
New Britain National Bank
Vice-President and Cashier,
The Rumford National Bank
President, Bird & Son, Inc.
President,
Boston & Maine Railroad
Chairman, Bemis Bro. Bag Co.
Chairman
Deputy-Chairman, Lawyer
President, Lippitt Woolen Co.

Term Expires
December 31

Boston, Mass.

New Britain, Conn. 1934
Rumford, Me.
1933
E. Walpole, Mass. 1932
Boston, Mass.
Boston, Mass.
Boston, Mass.
Concord, N. H.
Providence, R. I.

GENERAL COUNSEL
PHILLIPS KETCHUM, Boston, Mass.

MEMBER OF FEDERAL ADVISORY COUNCIL




1932

THOMAS M. STEELE

President, First National Bank & Trust Co.
New Haven, Conn.

1934
1933
1932
1933
1934