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SIXTEENTH ANNUAL REPORT OF THE FEDERAL RESERVE BANK OF BOSTON FOR THE YEAR ENDED DECEMBER 31, 1930 • BOSTON . MASSACHUSETTS SIXTEENTH ANNUAL REPORT OF THE FEDERAL RESERVE BANK OF BOSTON FOR THE YEAR ENDED DECEMBER 31, 1930 BOSTON, MASSACHUSETTS CONTENTS PAGE Letter of Transmittal New England Business Conditions During 1930 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, 1930 Federal Reserve Notes and Reserve Position Banking Indices — New England Operating Statistics Statement of Condition Income and Disbursements Volume of Operations Membership Fiduciary Powers Bank Organization and Personnel Stockholders' Meeting List of Officers and Directors 4 5 8-9 10 12 13 14 14 15 15 16 17 18-19 20 20 23 24 24 25 26 28 29 LETTER OF TRANSMITTAL BOSTON, MASS., February 3, 1931 HON. EUGENE MEYER Governor, Federal Reserve Board Washington, D. C. Sir: I have the honor to submit herewith the Sixteenth 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, 1930, to December 31, 1930. Respectfully yours, FREDERIC H. CURTISS Chairman and Federal Reserve Agent SIXTEENTH ANNUAL REPORT OF THE FEDERAL RESERVE BANK OF BOSTON N E W ENGLAND BUSINESS CONDITIONS DURING 1930 At the beginning of 1930 general business in New England was at levels lower than at any time since 1924. During the first quarter of 1930 it appeared that the recession in general business had terminated, and slightly more than seasonal spring expansion took place. This recovery, which later proved to be temporary, was not general in all lines of industry, and further declines continued after the first quarter. During the first five months of 1930 an unusually large volume of radio sales was made by New England department stores, and the influence of these sales was sufficient to cause total net sales to exceed those of the corresponding five months in 1929. The fact that New England industry does not have active representation in the production of iron and steel and automobiles may sometimes cause the general trend of business activity in this district to differ from that of the entire country. In general, however, industrial conditions in New England correspond relatively to those of the nation. The depression of 1930 was not sectional nor even limited to any single nation, but was world-wide; consequently, the readjustments were evident in all parts of the world. Many of the changes in production, distribution, and finance which took place in New England are shown under individual headings in other sections of this report, but in general there was a reduction in the volume of production in practically all lines of New England industry, a decline in distribution, and a liquidation in the volume of bank credit in use, and at the end of 1930 the aggregate level of business activity was lower than at any time since 1921. Employment: The past twelve months witnessed a curtailment in the number of workers employed in the six New England states. The curtailment was not necessarily confined to any particular class of workers, but affected skilled and unskilled alike. It cut across the whole range of employed, from day laborers to executives. On the whole, the entire movement represented a conscious attempt to eliminate the non-essential factors in personnel and to reduce the payroll cost to conform to production requirements. A review of the significant employment data will illustrate the tendency of the New England employment situation during the past year. While over a period of years the trend in the number of workers called for at public employ- [5] ANNUAL REPORT OF T H E F E D E R A L RESERVE B A N K ment offices situated in Massachusetts, Rhode Island, and Connecticut has been downward, the decline which occurred during 1930 cannot be wholly attributed to this cause. The total number of workers called for in 1930 was 51,936, which represented a decline of over 30 percent in the demand, when compared with the previous year. Instead of the monthly totals varying to conform to the usual seasonal demand in each successive month during 1930, practically without exception the number of workers called for was constantly smaller. Building: For the year ending December, 1930, total construction contracts awarded in New England were valued at $354,720,000, a decline of 10.9 percent from the total value of $398,382,400 awarded in 1929, which was 20 percent lower than in the preceding year. Both residential and commercial and industrial contracts declined approximately 25 percent in 1929, compared with 1928. In 1930, residential building fell off only 27.6 percent against a corresponding decrease of 38.3 percent in new commercial and industrial awards. There has been considerable expansion in the volume of new contracts for school and college building. The total value of these contracts rose from $35,118,000 in 1929 to $54,106,000 in 1930, a gain of 54 percent, which places this type of building among the major classes of construction in this area. The only two classes of building to show increases in 1930 over 1929 were the public works and utilities and school and college groups. The first type of construction was increased as a result of the effort of various public agencies to relieve unemployment, while the second group reported a greater value of awards largely as a result of the erection of new units or houses at certain of our large universities. Textiles: New England textile activity, as measured by the consumption of raw cotton and wool and silk machinery activity, has been steadily declining throughout the past year. Of course, such a decline has been in no way peculiar to the textile industry, but has been characteristic of practically all types of industries and business both in this district and in the entire country. For the entire year 1930, cotton consumption was 32 percent lower than in 1929, with a reduction of 7.7 percent in the total number of spindles in place and a curtailment of 21.1 percent in spindles active. Wool consumption during the past year was 23.2 percent smaller than in 1929, with a greater reduction in woolen spindle activity (27.2 percent) than in worsted spindle activity (19.4 percent). The decrease in silk machinery activity for the year was only 7.4 percent, compared with a decline of 11.1 percent in the preceding twelve months. [6] 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 Shoes: The trend in the total boot and shoe production for each year since 1924 through 1929 was upward, although the gain recorded in 1929 was less than one percent. During the past year, however, shoe production was 14.6 percent below that of the previous year. The relatively smaller decline in shoe production in 1930, as compared with the reduction in other industries, is attributable for the most part to the record in the preceding two years. The volume of production in 1928 increased substantially over that of 1927, with the result that during 1929 production schedules were more moderate. With the general shrinkage in the demand for all kinds of products, the production of shoes during the past year dropped to the lowest volume since the present system of reporting the number of pairs manufactured began in 1924. Trade: There was an increase in 1930 for the second consecutive year over the corresponding period in both the number and total liabilities of commercial failures in this district, and in 1930 the number of failures was 8.3 percent greater than in 1929. Total liabilities increased during the period by 10.7 percent. In nine of the twelve months of 1930 the number exceeded that of the corresponding months of 1929; in only seven months of the twelve, however, were total liabilities greater in 1930 than in 1929. In each month of 1930, sales of new automobiles in New England were less than in the corresponding months of 1929, and for the entire year declined 23.5 percent. Between 1928 and 1929 sales of new automobiles in this district increased 21.1 percent. Consequently, sales in 1930 were less than in either 1928 or 1929. Sales of more than one hundred reporting New England stores during 1930 were 5.6 percent less than in 1929, and in each of the New England states a decrease in sales was reported. The fact that the figures represent dollar value of total net sales and the percentage change in none of the six states, with one exception, amounted to as much as 6 percent would seem to support the conclusion that more merchandise was sold by New England stores in 1930 than in 1929, because retail prices on the average declined considerably between these years. In 1930, the proportion of cash sales to total sales in Boston department stores continued to become smaller, the proportion of regular charge sales to total sales was less than in 1929, and the relative amount of instalment sales increased considerably. In 1930, the ratios of monthly collections to accounts outstanding at the beginning of the month were smaller than in the corresponding months of any of the three preceding years. [7] BUSINESS INDICES —NEW ENGLAND 00 GENERAL BUSINESS 1930 1. New Incorporations — Massachusetts 2,540 2. Life Insurance Sales $688,257,000 3. Carloadings (mdse., Id, and misc.) 1,710,655 4. N. E. Railroad Net Operating Income . . . . $40,350,518 (11 months ending November 30) 5. Residential Building Contracts Awarded . . . . $111,937,000 6. Commercial and Industrial Contracts Awarded . . $66,611,000 7. Public Works and Utilities Contracts Awarded . . $67,021,000 8. Total Building Contracts Awarded $354,720,000 INDUSTRIAL PRODUCTION 1. Industrial Activity, based on Electric Power Consumption (1923-25 average) 2. Cotton Consumption (bales) 3. Average Cotton Spindles in Place 4 Average Cotton Spindles Active 5. Wool Consumption (lbs., grease) 6. Woolen Spindle Activity (% single shift capacity) . 7. Worsted Spindle Activity (% single shift capacity) . 8. Silk Machinery Activity 9. Shoe Production (pairs) 10. Shoe Shipments — Brockton and Haverhill . . . 11. Orders of Paper Mills — Massachusetts . . . . (% of 1926 monthly average) 12. Orders of Metal Trades — Massachusetts . . . . (% of 1926 monthly average) 1929 2,723 $713,784,000 1,969,629 $50,645,448 $153,269,000 $108,014,000 $49,651,000 $398,382,400 Per Cent Change 1929-1928 1930-1929 - 6.7% - 4.0 -13.0 -20.3 - 0.4% -27.6 -38.3 -24.6 -27.6 -20.0 -20.0 +34.9 -10.9 + 6.3 - 0.5 +23.7 98.7 929,287 13,559,000 8,797,000 229,798,000 52.6 55.2 75.6 105,142,000* 22,541,120* 81.6* 121.3 1,415,671 14,702,500 11,126,000 299,136,000 73.5 68.5 81.7 123,092,000 26,722,518 98.8 18.7 32.2 7.7 21.1 23.2 28.4 19.4 7.4 14.6* 15.6* 17.4* + 5.9 + 6.7 77.4* 113.2 -31.6* + 9.9 - 5.6 + 2.6 +11.6 - 3.0 + 8.3 -11.1 + 0.8 +15.0 + 7.0 BUSINESS INDICES—NEW ENGLAND (continued) EMPLOYMENT 1. Labor Demand at Public Employment Offices (8 cities) 2. Average Numbers Employed — Massachusetts . . 3. Average Monthly Payrolls — Massachusetts . . 4. Average Weekly Wage — Massachusetts . . . . 5. Average Percent of Full-time Employment — Massachusetts 19So 1929 Per Cent Change 1930-1929 1929-1928 51,936 195,224 $4,559,621 $23.31 74,477 218,671 $5,469,689 $25.02 -30.2 -10.7 -16.7 - 6.8 + + + + 5.2 4.6 6.2 1.6 64.4 83.0 -22.2 + 6.4 101.6 106.6 - 4.7 + 1.3 198,904 2,816 $60,510,721 260,205 2,601 $54,623,125 -23.5 + 8.3 +10.7 +21.1 + 1.8 +12.6 -10.4 - 5.5* - 3.4 - 1.3 + 2.3 + 0.5 -22.2 -15.6 +36.4 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 (1926 = 100) . . 86.4 147.9* 95.1 96.5 156.6 98.5 AGRICULTURE 1. Value of Farm Crops (December 1 Prices) . . . $152,341,000 2. Average Level of Farm Prices (B.L.S., 1926 = 100) . 88.5 Preliminary. $196,022,000 104.9 - 0.9 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 MEMBER BANK CREDIT The lower level of general business activity, it will be seen, was reflected in the figures and operations of the member banks, and, in turn, in those of the Federal Reserve Bank of Boston. The year 1930 was a difficult one in credit conditions and investment policies for banks, and these, for the most part, have been met successfully by New England bankers. The total deposits of the reporting member banks showed unusual stability during the year. On the other hand, the year has been marked by rather violent fluctuations in the various classes of deposits. Demand deposits have experienced three marked cycles of upward and downward movements, each of which has lasted for about three or four months. Time deposits, on the contrary, have followed a fairly consistent upward course during the greater part of the year. Expanding saving deposits accounted for only a small part of the growth of these time deposits, most of which occurred in certificates of deposits and in time deposits of foreign banks. This change from demand to time deposits is a characteristic fairly typical of periods of depression, for when commercial customers and investors do not require a full measure of quickly available bank balances the tendency is for them to transfer a part of said balances into the form of time deposits in order that they may obtain a higher rate of interest from the banks until such time as they may again withdraw for use in current business transactions or for investments. The liquidation of commercial loans, more especially of customers' loans, which began in the winter of 1929 continued generally throughout New England during the year, and the member banks were confronted with the problem of investing their surplus funds to advantage. These surplus funds were utilized by the member banks for repayment of borrowings from the reserve banks, and the balance, including funds received from liquidation of collateral loans which showed a marked decline during the year, found its way into the security market, and the holdings of securities by the member banks rose substantially during the year. This increase in the holdings of securities was very general throughout the New England district, the banks in Fall River and Portland being the only reporting banks which showed a decline in security accounts. This expansion, which took place in the security holdings of member banks, represented principally investments in corporate securities, investments of United States obligations showing somewhat of a declining tendency during most of the year. 10] A N N U A L REPORT OF T H E FEDERAL MEMBER REPORTING !900r MEMBER BANK CREDIT BANKS IN FEDERAL RESERVE SITUATION RESERVE DISTRICT I 1926 930 NET BORROWINGS FROM BANK DEMAND DEPOSITS -^ F.R.B.-V 11] A N N U A L REPORT OF T H EFEDERAL R E S E R V E B A N K FEDERAL RESERVE BANK CREDIT The demand for commercial and agricultural credit on the member banks and the change in volume and character of their deposits and their investments are reflected in their borrowings from the reserve bank. The liquidation of outside loans and the lack of increased demand for loans from their customers occasioned a steadily decreasing use of reserve bank advances as the year progressed. The liquidation of member banks' borrowings from the reserve bank began in the summer of 1929 and the volume had been gradually reduced by the FEDERAL RESERVE BANK OF BOSTON FLUCTUATION 1926 1927 OF PRINCIPAL ITEMS 1928 1929 1930 end of the year, so that a large amount of further liquidation was not to be expected during the current year of 1930. The average total loans to all member banks in the New England district in the year 1930 was only $16,000,000. This was the lowest average of borrowings recorded in any year since 1917, the year of the entry of the United States into the World War. During the year 1930 the average borrowings of all the Boston banks was less than $3,000,000. At times during the early fall months those borrowings were as low as $100,000. Although the total loans to member banks of the Federal Reserve Bank of Boston were only $13,000,000 lower on December 31,1930, than on December 31, 1929, nevertheless, the average loans of all member banks throughout the year 1930 were $53,000,000 lower than the average throughout the year 1929. The total volume of reserve bank credit extended by the Reserve Bank of Boston during 1930 was less than in 1929. While the total [12J ANNUAL REPORT OF THE FEDERAL RESERVE BANK assets on December 31,1930, were $6,000,000 greater than on December 31, 1929, the average daily volume was $29,000,000 less in 1930 than in the previous year. The reduction in loans to member banks and bankers' acceptances purchased in the open market was offset to some extent by the purchases of United States securities made through the Open Market Committee. Although the increase in United States securities held between December 31, 1929, and on a similar date in 1930 showed an increase of only $24,000,000, the expansion in the daily average of United States securities held during the year by the bank amounted to $33,000,000. BANKERS' ACCEPTANCES The average total volume of bankers' acceptances created in the New England district was considerably greater than in the previous year although the high point reached in 1929 was somewhat higher than at any time during 1930. This characteristic follows the^general ACCEPTANCE ALL 1927 1800 LIABILITIES BANKS AND ACCEPTANCE CORPORATIONS NEW ENGLAND AND UNITED STATES 1928 1929 1930 A 1700 \ 1600 1500 / 1400 / UNITE 3 STATES-'*/ 1300 / 1200 \ / \\ / r w / 1100 1000 V / 900 / 800 700 200 =====— 100 — NEW ' ENGLAND- -^crr^^—| " —— trend of all acceptances created in the United States and is rather remarkable, considering the low range of commodity prices. This volume of acceptances was maintained by the large increase of acceptances to finance transactions in or between foreign countries. While the Federal Reserve Bank of Boston maintained rates only fractionally higher than the open market there was less dependence for the support of the acceptance market on the reserve bank than in previous years, the member banks and other corporations and individuals carrying 13 A N N U A L R E P O R T O F T H E F E D E R A L R E S E R V E B A N K larger volumes of acceptances in their investment accounts in order to employ their surplus funds in readily marketable securities regardless of the low yield prevailing during the year. While a comparison of the volume of acceptances held on December 31, 1929, by the Reserve Bank of Boston with those held on December 31,1930, showed only a decrease of $5,000,000, the daily average of the bank's holdings for the year showed a reduction of $9,000,000. The asking rate on 90-day bankers' acceptances declined from 4 per cent in January to If per cent in December. ACCEPTANCE LIABILITY Of All Banks and Acceptance Corporations in Federal Reserve District I 1930 1929 $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 January 31 February 28 31 March 30 April 31 May 30 June 31 July 31 August September 30 October 31 November 30 December 31 $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 19S7 $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 $86,000,000 86,000,000 90,000,000 90,000,000 82,000,000 82,000,000 82,000,000 86,000,000 91,000,000 110,000,000 122,000,000 138,000,000 BUYING RATES ON ACCEPTANCES 1-15 Days * January 1, 1930 January 31, 1930 February 11, 1930 February 24, 1930 March 5, 1930 March 6, 1930 March 11, 1930 March 14, 1930 March 17, 1930 March 19, 1930 March 20, 1930 May 2, 1930 8, 1930 May 20, 1930 May 3, 1930 June 5, 1930 June 16, 1930 June 20, 1930 June 30, 1930 June 21, 1930 July December 24, 1930 * In effect on. 14 16-45 Days 46-60 Days 4 4 4 4 31 3f 3! 3| 3f 3| 8 3 2 If If If If If If Si 'S 24 24 21 21 2 2 If If 3} 3J 3 2f 21 2 2 lf lf 121-180 Days 44 44 41 41 4 34 Sf 3f 3 2 4 4 91-ISO Days 4 4 33 l 2| 76-90 Days 3f 3f Sf 3| 3| 61-75 Days 4 4 si 31 84 Sf 3| 31 31 SI Sf 3 24 21 21 24 2 2 2 If If Sf 31 3 3 3 3 A N N U A L REPORT OF T H EFEDERAL RESERVE B A N K MEMBER BANK RESERVE DEPOSITS The average deposits representing the reserves of the member banks in the Federal Reserve Bank of Boston varied little during the year, averaging exactly the same as in 1929, although the volume on December 31, 1930, was some $9,000,000 higher than on December 31,1929. The low point for the year was on May 28, when the total member bank reserve deposits were $139,000,000 — the high point being on November 19 when they reached $158,000,000. These movements corresponded closely with the fluctuations in the deposits of the member banks throughout the year. MONEY RATES AND DISCOUNT RATES Reflecting the increasingly easy position of the member banks not only in New England but also in the larger outside money centers, money rates declined steadily during the first half of the year, reaching their lowest level by midsummer and remaining at that low level with hardly a flurry even during the weeks when ordinarily some seasonal expansion is to be expected in the fall and early winter. The open market asking rate on 90-day bankers' acceptances remained at If per cent from June 25 until the end of the year. Similarly, the rate for brokers' prime commercial paper remained at 3 per cent during the last six months of 1930. Rates within the member banks, especially in Boston, followed a generally similar course, dropping substantially from the levels prevailing in January to the low levels which prevailed from July to December. A similar trend was discernible in the open market quotations for short-term government obligations, which on December 31, 1930, yielded 1.46 per cent as compared with 3.04 per cent on December 31, 1929. The December financing of the Federal Treasury was accomplished this year at the record low rates of If per cent for six-months' certificates and If per cent for twelvemonths' certificates. This compared with certificate rates a year ago of 3§ per cent for nine-months' maturities. The business depression, which began to manifest itself at the end of 1929 and which grew in intensity with but slight variations throughout most of 1930, was the most important consideration in the determination of the general credit policy of the Federal Reserve Bank of Boston during the year. Reflecting the extreme credit ease throughout the country, high reserve percentages prevailed during the year in the Federal Reserve System and especially in the Federal Reserve Bank of Boston. Under these circumstances it was felt that every [15 1 ANNUAL REPORT OF T H E F E D E R A L RESERVE BANK effort should be made not only to keep credit plentiful through the participation in the purchases of United States Government securities made by the Open Market Committee, but also to see that the volume of credit created should be adequate at all times and at such rate as would encourage business to expand when and if conditions warranted. BOSTON MONEY NINETY 1921 1922 1923 1924 FEDERAL MARKET SECURITIES 1925 RESERVE -ooooo- BANKERS UNITED DAY BANK 1926 OF BOSTON 1927 1928 REDISCOUNT 1929 19 30 RATE ACCEPTANCES STATES TREASURY CERTIFICATES OF INDEBTEDNESS The discount rate policy of the Federal Reserve Bank of Boston as well as its policy on open market investments was directed toward that end. On February 13, the discount rate of 4 | per cent which had been in effect since November 21, 1929, was reduced to 4 per cent. The discount rate was further reduced to 3^ per cent on May 8 and to 3 per cent on July 5. BOSTON MONEY MARKET, 1930 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 Customers' Time Loans Secured by Commercial Bonds and Slocks Loans [161 55\ 5J-5* 4f-5 4f-5 43-5 4|-5 4|-5 4-5 5} 5-51 4f-5 4|-5 4|-4f 4§-5 3f-4 3f-4| 3f-4 4-41 4_4i Brokers1 U. S. Treasury Loans to Correspondent Certificates of Acceptances Commercial Paper Indebtedness (Asking Rate) Banks 3| i 4f-5 4 2| 5 3\ 4 If 1| If If If H 3f 2i H H H H U Si 31 3 3 3 3 A N N U A L REPORT OF T H E F E D E R A L RESERVE BANK FEDERAL RESERVE NOTES AND RESERVE POSITION The volume of Federal reserve notes outstanding during 1930 declined steadily throughout the first eleven months reflecting the lack of currency requirements resulting from curtailed business activity and lower commodity prices. The average volume of Federal reserve notes of the Federal Reserve Bank of Boston outstanding during the year 1930 declined $14,000,000 and the volume outstanding on December 31,1930, was $75,000,000 less than on December 31, 1929. The reserve percentage of the Federal Reserve Bank of Boston was almost ten points higher on the average in 1930 than in 1929, averaging 82.1 per cent in 1930 against 72.4 per cent in 1929. This increase is due to a large extent to the reduction in total earning assets and in Federal reserve note liabilities. 17 A N N U A L REPORT O FT H EF E D E R A L R E S E R V E B A N K BANKING INDICES — NEW ENGLAND Data as of last reporting date each year (Amounts in millions of dollars) Change in One Year REPORTING MEMBER BANKS In Boston: 1. Commercial Loans . . . . 2. Real Estate Loans . . . . 3. Collateral Loans 4. Total Loans 5. U. S. Securities 6. All Other Securities Owned. . 7. Total Bonds a n d S t o c k s 8. Total Loans a n d Investments 9. Net Demand Deposits . . . 10. U. S. Government Deposits . 11. Time Deposits 12. Total Deposits . . . . 13. % 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. 22. Total Bonds and Stocks Total Loans and Investments 23. 24. 25. 26. 27. 28. Net Demand Deposits . . . U. S. Government Deposits Time Deposits Total Deposits . . . . % of Reserve to Total Deposits % 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) . . . [181 1930 1929 Amount Percentage $412 83 340 835 83 137 220 $432 93 396 921 62 89 151 — $20 — 10 — 56 - 86 + 2 1 + 48 + 69 1,055 693 21 297 1,011 8.9% — 4.6% -10.8 —14.1 - 9.3 +33.9 +53.9 +45.7 1,072 - 17 - 1.6 736 — 43 — 5.8 4 + 1 7 +425.0 271 + 26 + 9.6 1,011 0 0 7.7% + 1 . 2 points 82.6% 91.1% - 8 . 5 points $161 86 169 416 83 146 $174 85 205 464 84 109 229 193 + + — + 645 657 353 * 262 615 4.6% — 69.7% 75.4% - 36 +18.7 - 316 * 281 597 4.2% $13 - 7.5% 1 + 1 . 2 36 - 1 7 . 6 48 - 1 0 . 3 1—1.2 37 +33.9 3% 12-1.8 37 - 1 0 . 5 — 19 + 7.3 18 - 2.9 .4 points + — 5.7 points 5% - If 4 — 2| 1.46 4 3.04 6 2 — 1.58 - 2 A N N U A L REPORT OF T H E F E D E R A L RESERVE BANK BANKING INDICES —NEW ENGLAND (continued) At Member Banks: 1930 33. Prime Commercial Loan Rate . 34. Time Collateral Loan Rate . . 4-4j% 4-5 1929 Change in One Year Amount Percentage 5^-6% — 1§ points 6 — 2 At Federal Reserve Bank of Boston: 35. Discount R a t e 36. Buying R a t e on Acceptances 3 . 4§ 4 - l£ — 2} $145 $171 -$26 -15.2% $1,668 $1,603 +$65 +4.1% $22,074 10,490 32,564 $27,540 12,635 40,175 I f MISCELLANEOUS 37. Acceptance Liabilities District 1) (F. R. Mutual Savings Banks: 38. Deposits in 62 Reporting Banks in 6 New England States. . Check Transactions (year's totals): 39. Boston 40. Outside N e w England Cities . 41. Total — 1 6 Cities . . . . -$5,466 - 2,145 - 7,611 -19.8% -17.0 -18.9 • Less than $500,000. 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 COMPARATIVE STATEMENT OF CONDITION RESOURCES Dec. 31,1930 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 $149,917,080.00 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 . 1,491,937.27 Gold and gold certificates in vault . . . . 31,148,853.82 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 . . . 18,711,357.27 Legal tender notes, silver and silver certificates in the vaults of the bank (available as reserve only against deposits) 10,095,641.00 TOTAL CASH RESERVES Dec. 31,1929 $224,917,080.00 6,928,201.64 31,007,387.86 4,359,473.68 16,771,961.00 $211,364,869.36 $283,984,104.18 $6,472,757.02 $10,901,913.17 $5,880,000.00 $13,355,143.81 7,358,014.93 25,314,981.10 13,289,145.09 29,878,460.49 49,924,500.00 00 850,000.00 25,850,000.00 1,000,000.00 00 . $89,327,496.03 $83,372,749.39 Bank premises Checks and other items in process of collection All other miscellaneous resources . . . . $3,457,889.00 65,974,753.56 128,822.69 $3,579,936.75 78,858,882.03 133,938.71 TOTAL MISCELLANEOUS RESOURCES . $69,561,465.25 $82,572,757.49 $376,726,587.66 $460,831,524.23 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 Farm Loan bonds Federal Intermediate Credit Bank (debentures) TOTAL LOANS AND INVESTMENTS MISCELLANEOUS RESOURCES TOTAL RESOURCES A N N U A L R E P O R T O F T H EF E D E R A L R E S E R V E B A N K COMPARATIVE STATEMENT OF CONDITION LIABILITIES Dec. SI, 19S0 Dec. SI, 1929 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 $132,034,860.00 $206,557,720.00 $132,034,860.00 $206,557,720.00 $150,935,582.92 $141,547,279.89 829,200.20 2,012,548.99 TOTAL CURRENCY IN CIRCULATION DEPOSITS Reserve deposits maintained by member banks as legal reserves against the deposits of their customers United States Government deposits carried at the Reserve Bank for current requirements of the Treasury Other deposits, including foreign deposits, deposits of non-member banks, etc. . . . 490,186.15 481,998.78 $152,254,969.27 TOTAL DEPOSITS $144,041,827.66 $59,167,277.53 93,815.99 $76,694,547.51 194,042.21 $ 59,261,093.52 $ 76,888,589.72 $11,876,950.00 $11,592,500.00 21,298,714.87 21,750,886.85 $33,175,664.87 $33,343,386.85 $376,726,587.66 $460,831,524.23 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 . . All other miscellaneous liabilities . . . . 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 . . . 74.4% 81.0% 21 ANNUAL REPORT OF T H E F E D E R A L RESERVE BANK COMPARATIVE STATEMENT OF CONDITION The principal changes in the foregoing statement of the Federal Reserve Bank of Boston as of December 31, 1930, compared with those of December 31, 1929, are as follows: 1. Loans to member banks show a decrease of $13,000,000. 2. Bankers' acceptances bought in the open market show a decrease of $5,000,000. 3. United States securities show an increase of $24,000,000. 4. Total earning assets show an increase of $6,000,000. 5. Total gold reserves show a decrease of $66,000,000. 6. Federal Reserve notes show a decrease of $75,000,000. 7. Capital stock shows an increase of $284,000. 8. Member bank reserve deposits show an increase of $9,000,000. 9. Reserve percentages against combined Federal Reserve notes and deposit liability show a decrease from 81 percent to 74.4 percent. The table on the following page shows the income and disbursements of the Federal Reserve Bank of Boston for the years 1930 and 1929. A somewhat smaller volume of earning assets, together with lower discount rates on member bank loans and lower buying rates on acceptances purchased in the open market, reduced gross earnings of the Federal Reserve Bank of Boston for the year 1930 some $2,800,000. Although the expense of current bank operations was reduced by some $53,000 and the cost of Federal Reserve notes $101,000, the net income available for dividends was only $253,777.32 after depreciation of bank building and equipment had been set up. The 6 per cent dividend provided for by the Federal Reserve Act was paid to member banks, and in order to provide for this payment the surplus fund was drawn down $452,171.98. A N N U A L REPORT OF T H E F E D E R A L RESERVE BANK INCOME AND DISBURSEMENTS EARNINGS Prom loans to member banks and paper discounted for them From acceptances owned From U. S. Government obligations owned . . Other earnings Total earnings Additions to earnings Total income applicable to expenses and other deductions 19S0 $595,986.60 438,263.76 1,201,548.78 132,286.19 $3,448,828.36 1,283,931.80 301,687.94 126,382.94 $2,368,085.33 187,202.32 $5,160,831.04 19,751.58 $2,555,287.65 $5,180,582.62 DEDUCTIONS FROM TOTAL INCOME For the expense of current bank operations (including the non-reimbursable expense incurred as Fiscal Agent of the United States) $1,855,608.12 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 222,183.68 For depreciation, reserves, losses, etc 223,718.53 Total deductions Net income available for dividends, additions to surplus, and payment to the U. S. Government 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 per cent of the subscribed capital; and, after such surplus has been accumulated, to pay into surplus each year 10 per cent 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 1930 or 1929. Total net income distributed 1929 $1,908,662.50 323,446.68 182,339.66 $2,301,510.33 $2,414,448.84 $253,777.32 $2,766,133.78 $705,949.30 $634,112.06 452,171.98* $253,777.32 2,132,021.72 $2,766,133.78 * Deficit — deduction from surplus. [23] 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 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: 19S0 1929 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 10,665 72,614 27,402 254,503,000 323,286,000 93,123,000 1,275,000 394,000 . 5,547 38,541 . 22,613 258,983,000 355,855,000 93,658,000 1,473,000 409,000 75,000 57,000 101,000 63,000 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: TJ. S. Government coupons paid All other $582,459,000 $3,952,081,000 . 326,407,000 419,214,000 1,635,396,000 1,630,441,000 36,234,000 34,139,000 19,925,948,000 21,747,140,000 31,793,000 905,198,000 39,291,000 764,321,000 U. S. Securities: Issues, redemptions and exchanges by Fiscal Agency department 279,331,000 Transfer of funds 10,118,449,000 283,203,000 9,208,537,000 MEMBERSHIP On January 1,1930, there were 404 member banks. No new national banks were organized during the year, and no state banks were added. There was a loss of five national bank members and three state bank members, principally through consolidations and mergers. One state bank withdrew. On December 31, 1930, there were 396 members, a net loss of eight for the year. The state bank which withdrew was the New Britain Trust Company, New Britain, Connecticut. While the number of member banks A N N U A L REPORT OF THE FEDERAL RESERVE B A N K showed a decrease, the paid-in capital of the Federal Reserve Bank increased over $284,000. The various changes in membership are classified in detail in the following table: National Banks 367 M e m b e r s J a n u a r y 1, 1930 LOSSES Consolidation of national bank's . . . . 3 Suspension a n d insolvency 1 Voluntary liquidation succeeded b y a nonmember s t a t e b a n k 1 W i t h d r a w a l of state b a n k m e m b e r . . . Absorption of a s t a t e b a n k m e m b e r b y a national b a n k Stale Banks 37 Total 404 5 1 2 M e m b e r s December 8 1 , 1930 3 362 8 34 396 FIDUCIARY POWERS Twenty permits were issued to national banks to exercise fiduciary powers under authority of Section 11 (k) of the Federal Reserve Act, as amended, during 1930. Ten of the permits were issued to banks which had never exercised trust powers, seven were granted additional powers, and three were confirmatory after consolidation. CONNECTICUT Canaan National Bank 1 Torrington National Bank and Trust Co. MAINE First National Bank Peoples National Bank Fort Fairfield National Bank MASSACHUSETTS 3 First National Bank 1 Home National Bank Everett National Bank 2 Union Old Lowell National Bank Newton National Bank 1 Union Market National Bank First National Bank First National Bank Winchester National Bank 1 Mechanics National Bank 4 Worcester County National Bank Canaan Torrington Farmington Farmington Fort Fairfield Boston Brockton Everett Lowell Newton Watertown Webster Winchendon Winchester Worcester Worcester ANNUAL REPORT OF T H E FEDERAL NEW HAMPSHIRE 1 National State Capital Bank 1 Dartmouth National Bank Lancaster National Bank 1 Citizens National Bank RESERVE BANK Concord Hanover Lancaster Newport 1 Supplementary Powers 2 Confirmatory 3 Confirmatory January 8,1930, retroactive to December 14, 1929 4 Confirmatory February 4,1930, retroactive to December 27, 1929 The total number of national banks in each state which had been authorized to exercise trust powers at the end of the year was as follows: Connecticut 31, Maine 36, Massachusetts 105, New Hampshire 36, Rhode Island 5, and Vermont 28. BANK ORGANIZATION AND PERSONNEL Directors: On December 31, 1930, the terms of Edward S. Kennard as Class A director, A. Farwell Bemis as Class B director, and Allen Hollis as Class C director, expired. Mr. Kennard and Mr. Bemis were re-elected for three-year terms by the member banks in Group 3,— banks having a combined capital and surplus of less than $300,000,— and Mr. Hollis 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 1931. Personnel: The number of employees on December 31, 1930, other than officers, was 703 compared with 768 on December 31, 1929. W. P. G. Harding, Governor of the Federal Reserve Bank of Boston since January 11, 1923, died on April 7, 1930. As a tribute of esteem the directors adopted the following minute at their meeting on April 16, 1930: William Proctor Gould Harding, a native of Greene County, Alabama, died at Boston, Massachusetts, April 7, 1930, in his sixty-sixth year. Descended from a family prominent in New England from earliest colonial times, Governor Harding found a welcome in Boston where he spent the last seven years of a useful and eventful life. He became Governor of the Federal Reserve Bank of Boston on January 11, 1923, after serving as a member of the Federal Reserve Board from its organization in 1914 until the expiration of his full term in 1922. As Governor of the Board for six years, he witnessed the convulsions of a world at war, supervising the banking reserves of the nation and making them available for the indispensable uses of war without impairment of their basic utility for commercial needs. Confronted by the menace of post-war adjustments, he was able with rare foresight and steadfast purpose to safe- [261 A N N U A L REPORT OF T H E F E D E R A L RESERVE BANK guard the integrity of our banking system, always discharging his duties with courage, skill and patience. He displayed his abilities as a constructive leader in the organization and supervision of a unique banking system, in an uncharted sphere, surrounded by difficulties and beset by perverse and baseless criticism, the injustice and bitterness of which were apparent to him but did not influence his course of action. Of brilliant intellectual endowment, he became a Bachelor of Arts at the University of Alabama in his sixteenth year, the youngest graduate in the history of that institution. The following year he earned his Master's degree, an academic attainment which was to ripen into such distinction that his Alma Mater in 1916 and Harvard and Columbia in 1922 conferred upon him their highest honorary degrees. Comprehending legislative enactments, particularly those relating to banks and banking, with the precision of a legal mind, he possessed a command of English, a clarity of thought and a gift of expression which enabled him to state complex technical matters in clear and interesting language, as is manifest in his numerous addresses and contributions to periodical literature and his book on "The Formative Period of the Federal Reserve System." Bringing to the Federal Reserve Board an intimate knowledge of commercial banking acquired in his native state, he contributed in turn to the Boston Reserve Bank the vast store of experience and observation gained in his service on the Board. To the last week of his busy life, the bank and the whole system continued to profit from his advice and counsel. Strong in personality and single-minded in devotion to his responsibilities, his complete absorption in his work limited the number whom he could admit to the intimacy of friendship. Those who were thus privileged held him in high esteem. The directors of this bank desire to attest their deep appreciation of Governor Harding's ability as chief executive officer of the bank and his rare qualities as an esteemed and loyal friend, and to record their keen sense of their personal loss sustained in his death. On August 27, 1930, the directors appointed Roy A. Young as Governor of the bank to succeed Mr. Harding. Governor Young took office on September 1, 1930. Mr. Young at the time of his appointment was Governor of the Federal Reserve Board, appointed by President Calvin Coolidge on October 4, 1927, coming to Washington after eight years' experience as Governor of the Federal Reserve Bank of Minneapolis. Advisory Council: At a meeting of the Board of Directors held on January 15,1930, Herbert K. Hallett, Chairman of the Board of Directors of the Atlantic National Bank of Boston, Massachusetts, was appointed as member of the Federal Advisory Council to represent the First Federal Reserve District for the year ending December 31, 1930. 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 STOCKHOLDERS' MEETING The eighth annual meeting of the member banks was held at the Federal Reserve Bank of Boston on November 21, 1930, the registration showing an attendance of 347 delegates and other representatives from 254 member banks. The Chairman of the Stockholders'Advisory Committee, Mr. Florrimon M. Howe, President of the Industrial Trust Company of Providence, Rhode Island, presided. Addresses were made by Mr. Allen Hollis, Deputy Chairman of the Board of Directors, Governor Roy A. Young and Hon. C. S. Hamlin, member of the Federal Reserve Board. A resolution in memory of the late W. P. G. Harding, former Governor of the Federal Reserve Board and Governor of the Federal Reserve Bank of Boston from 1923 until April, 1930, was presented by Hon. Channing H. Cox, Vice President of The First National Bank of Boston, and adopted by the meeting with a rising vote. At the afternoon session, the Committee on Resolutions reported, recommending the adoption of a resolution commending to the Federal Reserve Board and the Federal Reserve Banks the appointment of committees to make a thorough and scientific investigation of banking questions, and expressing the opinion that no changes in the national banking law or the Federal Reserve Act, so far as they relate to branch, chain and group banking and reserve requirements, should be made until the Congress of the United States has had an opportunity, after adequate inquiry, to take a broad view of the many problems presented. The report of the committee was approved and the resolution adopted as recommended by the committee. After an announcement by Mr. Howe that Mr. Lester F. Thurber, President of the Second National Bank, Nashua, New Hampshire, had been elected Chairman of the Stockholders' Advisory Committee for the ensuing year, the meeting was adjourned. [28] FEDERAL RESERVE BANK OF BOSTON OFFICERS AND DIRECTORS December 31, 1930 OFFICEKS ROT A. YOUNG, Governor FREDERIC H. CTJRTISS, Federal Reserve Agent WILLIAM W. PADDOCK, Deputy Governor CHARLES F. GETTEMY, Assistant Federal WILLIAM WILLETT, Cashier Reserve Agent KHICKEL K. CARRICK, Secretary HARRY F. CURRIER, Auditor ELLIS G. HULT, Assistant Cashier ERNEST M. LEAVITT, Assistant Cashier L. WALLACE SWEETSER, Assistant Cashier DIRECTORS Class and Group A 1 ALFRED L. RIPLEY A 2 F. S. CHAMBERLAIN A 3 EDWARD S. KENNARD B 1 PHILIP R. ALLEN B 2 ALBERT C. BOWMAN B 3 A. FARWELL BEMIS C FREDERIC H. CURTISS C ALLEN HOLLIS C CHAS. H. MERRIMAN Term Expires December 31 Chairman of the Board, 1932 The Merchants National Bank Boston, Mass. President, New Britain National Bank New Britain, Conn. 1931 Vice-President and Cashier, The Rumford National Bank Rumford, Me. 1933 President, Bird & Son, Inc. E. Walpole, Mass. 1932 President, John T. Slack Corporation Springfield, Vt. 1931 Chairman, Bemis Bro. Bag Co. Boston, Mass. 1933 Chairman, Boston, Mass. 1932 Deputy-Chairman, Lawyer Concord, N. H. 1933 President, Lippitt Woolen Co. Providence, R. I. 1931 GENERAL COUNSEL ARTHUR H. WEED, Boston, Mass. MEMBER OF FEDERAL ADVISORY COUNCIL HERBERT K. HALLETT Chairman of the Board, The Atlantic National Bank of Boston Boston, Mass.
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