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TWENTY-FIRST ANNUAL REPORT OF THE

FEDERAL RESERVE BANK
OF BOSTON
FOR THE YEAR ENDED
DECEMBER 31, 1935

BOSTON • MASSACHUSETTS




TWENTY-FIRST ANNUAL REPORT
OF THE FEDERAL RESERVE BANK
OF BOSTON

FOR THE YEAR ENDED
DECEMBER 31, 1935

BOSTON, MASSACHUSETTS







CONTENTS
PAGE

Letter of Transmittal
Introductory
Business Conditions in New England
Business Indices — New England
Member Bank Credit
Federal Reserve Bank Credit
Bankers' Acceptances
Acceptance Liability
Open Market Operations
Member Bank Reserve Deposits
Money Rates and Discount Rates
Boston Money Market, 1935
Federal Reserve Notes
Reserve Position
Industrial Loans
Banking Indices — New England
Operating Statistics
Statement of Condition
Income and Disbursements
Membership
Bank Organization and Personnel
Stockholders' Meeting
List of Officers and Directors




4
5
6
12-13
14
16
16
18
19
19
19
21
21
22
21
24-25
26-27
28
30
30
31
32

LETTER OF TRANSMITTAL

BOSTON, MASS.,

March 2, 1936.

HON. MARRINER S. ECCLES, Chairman,
Board of Governors of the Federal Reserve System,
Washington, D. C.
Sir:
I have the honor to submit herewith the Twenty-first 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, 1935, to December 31, 1935.




Respectfully yours,
FREDERIC H. CURTISS,
Chairman and Federal Reserve Agent

TWENTY-FIRST ANNUAL REPORT
OF THE FEDERAL RESERVE BANK
OF BOSTON
INTRODUCTORY
HE year
witnessed further recovery in
and inTdustrya for1935 New enactmentterritoryBankingcommerce1935, apthe
England
as well as in the United
States as whole. The
of the
Act of
proved August 23, 1935, was an outstanding development for the
Federal Reserve System.
In 1935 an unparalleled volume of goldflowedto the United States,
and gold stocks increased by $1,885,000,000 to the record figure of
$10,123,000,000. Accompanying this inflow of gold, excess reserves of
all member banks throughout the country rose from $1,038,000,000 to
$2,852,000,000 on December 31, 1935. Early in December excess
member bank reserves reached the unprecedented figure of $3,324,000,000. The decline during the second half of December resulted
largely from Treasury transactions. A large amount of the proceeds
of new securities sold were paid for directly rather than by the establishment of deposit balances to the account of the Treasury at subscribing member banks. As a result there was an increase on December
16 of some $600,000,000 in United States deposits in the Federal reserve banks, accompanied by a similar decline in member bank excess
reserves.
Although new borrowing by the Treasury continued on a large scale
in 1935, balances carried by the United States Government on deposit
at member banks declined during the year, while Government deposits
at Federal reserve banks increased. In the aggregate the Treasury
working balance was reduced. Treasury expenditures from its balances
and from the proceeds of additional securities sold to banks resulted in an increase in member bank deposits held for the general
public. Demand deposits at these banks rose in 1935 to levels never
before attained.
Although deposits in member banks throughout the country increased more than $4,500,000,000 during 1935, there was an increase
of less than $300,000,000 in loans to commercial borrowers. A larger
amount of new loans to business was offset in part by the liquidation



ANNUAL REPORT

OF THE FEDERAL RESERVE BANK OF BOSTON

of old loans. Member bank holdings of direct obligations of the
United States Government increased by $600,000,000 in 1935 and
their holdings of obligations issued by Government agencies and
guaranteed by the Government increased by $570,000,000.
Advances by Government lending agencies, which are financed
largely by funds obtained from the sale of securities to banks and the
public, increased further in 1935. Loans and investments of these
agencies, including purchases of preferred stock and capital notes and
debentures of banks and excluding investments in direct obligations
of the United States Government and in securities of Government
agencies, increased by about $1,000,000,000, to a total of more than
$9,000,000,000 at the end of the year. The increase in 1935 reflected
principally a growth of $840,000,000 in mortgage loans and of $250,000,000 in crop, livestock, and commodity loans, while other loans
declined.
BUSINESS CONDITIONS IN NEW ENGLAND
The low point in business activity for New England occurred in
1932 when the average rate of operations, according to the index
compiled by the New England Council, was 67.7 per cent of the
computed normal. A study of 34 principal series relating to all types
of economic activity in this district shows that 16 series were lowest in
1932, eight in 1933, three in years other than 1932 or 1933, while five
series registered no recovery of other than a temporary nature. Generally the series pertaining to production and orders, employment
and payrolls, agriculture, public construction, and prices were lowest
in 1932, while series relating to check transactions and retail trade,
life insurance sales and savings deposits, private construction, and
the cost of living reached their lowest level in 1933. Shoe production
receded moderately in 1930 and since has steadily expanded, while
wool consumption and receipts contracted sharply in 1934 only to
recover under the impetus of the revival in the demand for men's
clothing to a new high in 1935. There was no recovery in new business
incorporations and the cotton textile industry after a brief expansion
in 1933 lapsed into the downward trend in force in this district for
over 12 years.
The distinguishing feature of business recovery during 1935 was
the steadiness of the upward tendency, principally in the last half
of the year in contrast to the course of recovery in 1933 and 1934,
which was characterized by wide variations in the month to month
changes, stimulated or depressed by unusual events, ranging from
bank holidays and codes, to the textile strike. The rise in industrial



ANNUAL REPORT OF THE FEDERAL RESERVE BANK OF BOSTON

activity during the past year, which averaged 10.4 per cent above
1934, resulted from gains in the volume of electric power production
and boot and shoe output, as well as in the record mill consumption
of raw wool. There was a marked recovery of approximately nine
per cent in the machine tool and metal trade industry. Meanwhile,
private construction under the stimulus of residential building more
than offset the losses in the value of new public works and utilities.
A slight improvement was noted in retail trade during 1935.
The extent of the recovery in 1935, as compared with 1934, is
indicated by the appended table, comprising 59 series relating to
business conditions in New England. The changes in over 80 per
cent of these series reflected improved conditions. If the series relating to the cotton textile industry are excluded, then only six were
unfavorable, namely, the declines in the number of new incorporations, the amount of new life insurance sales, the value of new contracts awarded in public works and utilities, and possibly the rises
in the cost of living series.
Recreation: At the present time no adequate measure of the amount
of recreational activity in New England has been developed. The
economic importance of New England as an all year recreational
center has been growing rapidly in the depression years. For many
years New England with its wide variety of mountain, countryside,
and seashore resorts was a popular summertime playground. It has
been only in the past four or five years that there has been any such
effort to promote New England as a winter sports area. The "snow
train", an innovation of our own railroads, has become a familiar
institution. This year because of the widespread interest in winter
sports activities it was possible to successfully stage an indoor ski
exposition and tournament. Thus New England, which experienced
the best tourist trade activity in its history last summer, has now
found an additional source of revenue in its natural resources for
winter sports.
Agriculture: Under the influence of rising farm prices, total acreage
in cultivation of the principal New England crops increased 1.5 per
cent with a corresponding rise in the farm value of the crops during
1935 over the preceding year. There was an effective reduction in
acreage, production, and yield in the potato crop, with a resultant
improvement in farm value as the average price per bushel rose from
25.9 cents in 1934 to 58.2 cents during 1935. The farm value of the
potato crop in 1935 was $26,855,000, a gain of 57.6 per cent over the
1934 value. The stocks of marketable potatoes on hand at the end
of 1935 were also lower than the previous carry over by 36.5 per



[7]

ANNUAL REPORT OP THE FEDERAL RESERVE BANK OF BOSTON

cent. Three other New England cash crops reflected improvement
in farm value. The 1935 tobacco crop was valued at the farm as
worth $7,002,000, compared with $6,518,000 in 1934, principally
because of increased production rather than higher unit prices.
While the cranberry crop was only slightly larger in 1935, higher
prices per barrel increased the farm value from $3,016,000 in 1934
to $3,450,000 during 1935. The commercial apple crop was 3,654,000
bushels in 1935, compared with 1,942,000 bushels in 1934, but the
value at the farm only increased from $2,511,000 to $3,790,000, as
the price declined approximately 50 cents per bushel.
Building: Residential building is divided into two broad classifications. The first group includes those types of construction, such
as hotels, apartments, and dormitories, which are designed to accommodate the transient elements of the population or those preferring
multiple-scale dwellings. The second classification is that of one- and
two-family houses, which might be more properly designated as
construction for homes. It was in this type of residential building
that the increase in construction contracts awarded occurred during
1935. The following table shows the distribution of the contracts
awarded for one- and two-family houses in New England:

ONE- AND TWO-FAMILY HOUSE CONTRACTS—NEW ENGLAND
1935

1934

1933

Single Houses for Owner Occupancy
Single Houses for Rent
Two-Family Houses . . . .
Housing Developments

$18,892,000
10,772,000
1,203,000
3,787,000

$14,415,000
7,077,000
814,000
1,355,000

$20,369,000
7,369,000
1,244,000
1,823,000

Total One- and Two-Family Houses

$34,655,000

$23,661,000

$30,805,000

The table below summarizes the changes in one- and two-family
house contracts awarded during 1935, as compared with the low
point in 1934.
SUMMARY OF ONE- AND TWO-FAMILY HOUSE CONTRACTS
AWARDED IN NEW ENGLAND
1935

Number of Buildings
Square Feet of Floor Space .
Value of Contracts
Average Value per Building .
Average Cost per Square Foot
* Value of 1934 contracts stated
in the previous table.
[ 8 ]




1934

PerCent
Change

6,190
4,271
+44.9%
9,941,500
6,432,000
+54.6
$34,655,200
$23,751,000*
+45.9
. .
$5,598.58
$5,560.97
+ 0.6
. .
$3.49
$3.69
— 5.4
here does not compare with the revised figures given
.

.

ANNUAL, REPORT OF THE FEDERAL RESERVE BANK OF BOSTON

The significant feature of the increase in both the value and the
volume of one- an,d two-family house construction during 1935 is
that there was no reduction in the unit value of the houses constructed
despite a slight reduction in the cost per square foot.
Textiles: When the comparison of the textile industry is based on
the volume of consumption of the staple raw materials, cotton and
wool, it is evident that during the past year cotton mill activity in
New England was lower than in any previous year since 1932, but
woolen and worsted mill activity was best since the data have been
compiled beginning in 1921.
The number of bales of raw cotton consumed by New England
cotton manufacturing establishments in 1935 amounted to 805,793
bales, a reduction of 11.4 per cent from the 908,994 bales consumed
in the previous year. Furthermore, the volume of consumption in
1934 was 6.6 per cent lower than in 1933, principally attributable to
the interruption in manufacturing activity during September, 1934,
as a result of the textile strike. Amongst the six New England states,
four reported reductions in cotton consumption. These reductions
ranged from two per cent in Massachusetts to 28.9 per cent in New
Hampshire. The loss of almost 47,000 bales of cotton consumption
in New Hampshire during 1935 was principally centered in a single
unit. There were increases in cotton consumption in Vermont and
Connecticut, amounting to 27 and 15.9 per cent, respectively. Stocks
of raw cotton held at New England mills at the end of December,
1935, were 19.5 per cent lower than at the close of 1934.
There was a continuation of the downward trend in force during
the past 12 years in cotton spindles in place in New England. At
the close of 1935 there were 9,008,000 spindles in place, as compared
with 18,862,000 spindles on December 31, 1923. The entire six New
England states reported reduction in spindlage of 14.2 per cent, ranging from 2.6 per cent in New Hampshire to 26.9 per cent in Rhode
Island. Spindle activity in New England during 1935 showed a sharp
decline, amounting to 20.7 per cent from 1934. This condition was
accentuated by the decline in spindle activity in New Hampshire,
which dropped from 761,000 spindles in 1934 to 360,000 in 1935, a
shrinkage of 52.7 per cent. While the percentage of spindles active
to spindles in place declined from 66.4 per cent in 1934 to 61.3 per
cent in 1935, there was an increase in spindle hours operated per
spindle in place amounting to 6.8 per cent. At the end of 1933,
spindle hours operated per spindle in place stood at 110, while at the
close of 1935 the average hours operated were 157.
As far as the monthly records are available, the 1935 wool con


ANNUAL REPORT OF THE FEDERAL RESERVE BANK OF BOSTON

sumption total of 398,040,000 pounds, grease equivalent, established
a new high. This increase, attributable to a revival in the demand for
men's clothing, followed a comparatively low volume of consumption in 1934, which was accentuated in part by the textile strike,
amounting to 188,990,000 pounds, grease, a decline of 33.1 per cent
from the previous year. This increase in New England wool consumption has resulted in substantial rises in wool receipts at Boston,
where domestic wools received were 22.3 per cent greater than a year
ago, while foreign wools were up more than 135 per cent. The percentage of foreign to domestic wools received at Boston rose from
10.6 per cent in 1934 to 20.41 per cent for 1935.
Trade: Sales of New England reporting department and apparel
stores during 1935 were 0.2 per cent larger than in 1934, while the
volume in December was 2.8 per cent larger than in the corresponding month of 1934. The following table presents the detail for each
New England state and for four cities:

STATES

Net Sales
December, 1935
compared with
December, 1934

Connecticut Stores .
Maine Stores .
Massachusetts Stores
New Hampshire Stores
Rhode Island Stores
Vermont Stores .

+
+
+
+
+
-

4.1%
5.5
2.4
10.3
3.4
1.0

CITIES
B o s t o n D e p a r t m e n t Stores
N e w H a v e n D e p a r t m e n t Stores .
.
.
.
Providence D e p a r t m e n t Stores .
.
.
.
Springfield D e p a r t m e n t Stores
All R e p o r t i n g N e w E n g l a n d S t o r e s (47 concerns)

+
+
+
+
+

2.9
4.1
3.4
0.6
2.8

Net Sales
Jan.-Dec, 19S5
compared with
Jan.-Dec., 1934
-0.3%
-2.1
+0.3
+7.7
-0.8
-1.7

+0.5
+0.2
-0.8
+0.7
+0.2

A survey of Massachusetts retail establishments according to
11 major classifications has been conducted by the Federal Reserve
Bank of Boston since September, 1933, and the composite group
results of the survey are released through the Bureau of Foreign and
Domestic Commerce, U. S. Department of Commerce. In December,
1935, reports were received from 901 concerns, of which 56.3 per cent
reported an increase over a year ago; 36.8 per cent, a decrease; and
6.9 per cent, no change. The group results are shown in the following table:

10




ANNUAL. REPORT OF THE FEDERAL RESERVE BANK OF BOSTON

MASSACHUSETTS RETAIL SALES
December, 1935, compared with December, 1934
Number of Firms
(compared vrith 1984)
Number of
showing
Firms
No
ReportIncreasei Decrease Change
ing
Food
General Merchandise .
Automotive
. . . .
Apparel
F u r n i t u r e a n d Household,
Radio
R e s t a u r a n t s and E a t i n g
Places
Lumber
Coal
Drug
Hardware
Miscellaneous . . . .

TOTAL

Sales
December,
1935
(000's
omitted)

Per
Cent
Change in
Dollars

. 124

+ 3.6%
+ 3.1
+29.5
+ 2.5

. 115

74
61
67
59

43
68
13
45

7
9
4
11

$ 3,177
9,217
3,321
6,229

77

41

28

8

925

+12.0

55
59

37
39
29
36
37
27

13
17
59
16
23
12

5
3
3
5
4
3

1,555

+ 5.7

133
84

.

91
57
64
42

631

2,655
366
398
596

901
507
332
62
$29,070
Total Reported Volume — December, 1935
$29,070,468
Total Reported Volume — December, 1934
$27,549,365




+16.8
- 5.8

+ 6.6
+ 9.6
+10.0
+ 5.5%

BUSINESS INDICES — NEW ENGLAND
GENERAL BUSINESS
1. Business Activity Index — New England Council
2. Number of Commercial Failures (Dun & Bradstreet, Inc.)
3. Liabilities of Commercial Failures (Dun & Bradstreet, Inc.)
•i. New Incorporations — Mass. (Year ending Nov.
30)
5. Check Transactions
6. Department Store Sales (1923-25=100) . . .
7. New Life Insurance Sales
8. Savings Deposits, Gross, 61 New England Mutual Savings Banks
INDUSTRIAL PRODUCTION
1. Electric Power Production (Kilowatt hours)
2. Cotton Consumption (Bales)
3. Cotton Receipts — 5 New England Cities (Bales)
4. Average Cotton Stocks at Mills (Bales) .
5. Spot Cotton, Middling, N. Y. (Cents per Pound)
G. Average Cotton Spindles in Place
. . . .
7. Average Cotton Spindles Active
8. Average Spindle Hours Operated per Cotton
Spindle in Place
9. Wool Consumption (Pounds, grease equivalent)
10. Wool Receipts — Domestic — Boston (Pounds,
in condition received)
11. Wool Receipts — Foreign — Boston (Pounds,
in condition received)
12. Raw Wool — Boston, 25 Quotations (Cents per
Pound)
13. Shoe Production (Pairs)
INDUSTRIAL EMPLOYMENT AND PAYROLLS
(Monthly Average)
1. Number of Manufacturing Establishments Reporting
2. Number Employed in Identical Establishments
3. Number Employed per Establishment

4. Weekly Payroll in Identical Establishments .
http://fraser.stlouisfed.org/ 5. Weekly Wage per Person per Establishment.
Federal Reserve Bank of St. Louis

1936

1934

Per Cent Change
1936-1934
1934-1933

+ 10.4%

+ 0.5%

1,363

-

4.8

- 39.8

$18,852,638

$25,120,493

-

25.0

- 44.1

2,171
2,186,700,000
67.8
$510,025,000

2,184
$19,939,800,000
67.7
$520,345,000

—

0.6

- 14.2
4- 10.1
4- 5.5

1,719,004,000

$1,681,104,000

6,911,000,000
805,793
398,098
160,729
11.89
9,858,000
5,838,000

6,371,459,000
908,994
465,338
250,532
12.37
10,771,000
7,132,000

136
398,040,000

141
188,990,000

- 4.5
4-110.6

- 3.3
- 33.1

226,715,000

185,407,000

4- 22.3

- 40.2

46,255,000

19,648,000

4- 32.7

- 35.3

47.95
132,890,000

48.45
120,525,000

- 1.0
4- 10.3

4- 8.7
4- 3.8

3,092
528,189
171
810,381,643
$19.66

2,862
478,013
167
$8,799,937
$18.40

44+
44-

444-

83.0

75.2

1,297

+ 11.3
+ 0.2
- 2.0

+ 3.2

4- 2.3

4- 1.9

4-

+

5.0

44-

23.5
1.7
14.3
0.4
3.3

8.4
11.4
14.4
35.8
3.9
8.5
8.1

8.0
10.5
2.4
18.0
6.8

19.1
16.6
2.3
24.0

+ 6.7

BUSINESS INDICES — NEW ENGLAND (continued)
ORDERS —MASSACHUSETTS (1926=100)
1. Textiles
2. Leather and Shoes
3. Metal Trades
4. Paper
CONSTRUCTION
1. Residential Building Contracts Awarded
. .
2. Non-Residential Building Contracts Awarded .
5. Public Works Contracts Awarded
. . . .
4. Public Utilities Contracts Awarded . . . .
5. Total Construction Contracts Awarded . . .
6. Building Costs (1913=100)
7. Building Wages — Hourly Rates — Massachusetts
PRICES (1926=100)
1. Wholesale Prices — United States
2. Retail Prices of Food— New England . . .
3. Cost of Living Index — Total — Massachusetts.
4. Cost of Living Index — Food — Massachusetts
5. Cost of Living Index — Clothing — Massachusetts
6. Cost of Living Index — Shelter — Massachusetts
7. Cost of Living Index — Fuel and Light — Massachusetts
TRANSPORTATION
1. Net Revenue and Non-Revenue Ton Miles . .
2. Gross Ton Miles per Train Hour
3. Passenger Train Car Miles
4. Net Railway Operating Income
5. Passengers Carried — Boston Elevated Railway
6. Receipts — Boston Elevated Railway Co. . .
AGRICULTURE
1. Total Acreage — Principal Crops
2. Total Farm Value — Principal Crops
. . .
3. Farm Prices — United States (1926=100) . .
4. Potato Crop
1. Acreage
2. Production (Bushels)
3. Yield per Acre (Bushels)
4. Value of Crop
5. Average Price per Bushel
6. Stocks of Marketable Potatoes (Dec. 31)

(Bushels)


108.8
62.5
63.2
66.5

84.2
56.7
53.7
59.6

$40,363,500
$56,333,900
$43,114,500
$8,227,600
$148,039,500
176.5
$0.79

$30,789,300
$50,346,300
$53,441,600
$10,284,100
$144,861,300
176.4
$0.81

+ 31.2
+ 11.8

80.0
80.6
84.9
82.5

74.9
73.1
81.3
72.9

+ 6.7
+ 18.4
+ 4.4

82.1
83.2

82.1
82.0

No change

+

1.5

79.3

82.3

-

3.6

7,245,000,000
22,491
139,249,000
$18,145,939
280,402,526
$24,926,426

7,178,000,000
22,396
137,060,000
$16,110,603
277,034,175
$24,818,625

3,692,800
$100,169,000
78.7

3,638,200
$98,551,000
65.3

+ 1.5
+ 1.6
+ 20.3

222,200
46,155,000
208
$26,855,000
$0,582

231,000
65,725,000
285
$17,036,000
$0,259

-

22,874,000

86,026,000

+
+
+
+
-

29.2
10.2
17.7
11.6
19.3
20.1

+ 2.2
+ 0.1
-

2.4

-f 13.2

+
+
+
+
+
+

1.0
0.4
1.6
12.6
1-2
0.4

3.8
29.8
27.0

+ 57.6
+124.7
-

36.5

+
+
+
+

0.5
20.3
33.7
10.2

-

15.2

c!

+ 62.7
+ 42.7

S3
M
IJ

+ 20.0
+ 3.7

x

+
+
+
+

H

-

35.7

No change

13.5
5.7
7.4
13.2

+ 14.5
+ 3.3
+ 0.1
+ 9.3
No change
+ 0.9
-

15.2

+ 8.4
+ 2.7
+
+
+
+
+
+
-

2.3
2.7
27.2
13.8
31.0
14.9
48.7
60.7

+ 48.6

hfl

0

o

w
rri
-•

H

a

M
r1
td
si
w
W

w
a

n
o
a

o
09

H
• /

ANNUAL REPORT OF THE FEDERAL RESERVE BANK OF BOSTON

MEMBER BANK CREDIT
There was a substantial increase in total deposits of reporting
member banks in this district during the year 1935. There was a
slight reduction reported in time deposits although the deposits of
the mutual savings banks in the district showed a steady increase
during the year. The increase in demand deposits resulted principally
from imports of gold into the country during the year and expenditures
by the United States Government of funds borrowed from banks.
This increase in deposits was much less than in other sections of the
country.
The trend of deposits of the member banks located in Boston and
those in the New England district outside of Boston was at variance.
Government deposits in Boston member banks dropped 88 per cent
during 1935, as compared with drops of 47 per cent in the outside
weekly reporting member banks, and 51 per cent in all reporting
member banks throughout the country. Demand deposits throughout
New England rose something over 20 per cent, about the same rate
of growth as elsewhere in the United States. Owing to the more rapid
drop in Government deposits in Boston, and to the decline in time
deposits throughout New England in contrast to gains elsewhere,
gross deposits in New England reporting member banks expanded
only nine per cent, as compared with a 14 per cent growth for the
United States as a whole.
The increasing business activity was reflected in the reporting
member banks in Boston by an advance in the volume of loans to
commercial customers. These customers' commercial loans increased
$17,000,000 during 1935, a gain of over eight per cent. In the New
England member banks outside of Boston the volume of commercial
loans declined slightly.
In the Boston reporting member banks the only other class of
loans and investments to expand were securities guaranteed both
as to principal and interest by the United States Government. Holdings of direct obligations of the United States Government declined,
reflecting in part the retirement during the year of bonds bearing the
circulation privilege. Other classes of loans and investments, including
acceptances, commercial paper, collateral loans both to customers
and brokers, loans to other banks, real estate loans, and other bonds
and securities also declined at Boston banks. In the New England
member banks outside of Boston, on the other hand, expansion took
place in holdings of acceptances and brokers' commercial paper purchased in the open market, and in all classes of bonds and stocks
owned, while commercial loans to customers, collateral loans to cusf 14 1



ANNUAL. REPORT OF THE FEDERAL RESERVE BANK OF BOSTON

MEMBER

BANK

CREDIT

SITUATION

REPORTING MEMBER BANKS IN FEDERAL RESERVE DISTRICT 1
700

93

1932

1933

600
500
400
300

COLLATERAL LOANS *
200
100

MOO

700
600
500

/TIME DEPOSITS

400
300
200
100

UNITED STATES DEPOSITS\

0




1934

1935

ANNUAL REPORT OF THE FEDERAL RESERVE BANK OF BOSTON

tomers and brokers, and real estate loans declined. Total loans and
investments in the Boston banks as a whole dropped $21,000,000, as
compared with a $93,000,000 expansion in total deposits. In the
reporting centers outside of Boston total loans and investments rose
$4,000,000, while total deposits gained $46,000,000. The excess of
the increase in total deposits over total loans and investments took
the form principally of increased reserve balances with the Federal
Reserve Bank of Boston, in increased holdings of vault cash on the
premises of the reporting member banks, and increased deposits with
correspondent banks. There was, therefore, a marked concentration
of funds constantly moving into the larger financial centers of the
country.
FEDERAL RESERVE BANK CREDIT
Reflecting to a large extent the continuous and unparalleled flow
of gold into the United States and its redeposit by member banks
in the Federal reserve banks, the volume of total cash reserves in the
Federal Reserve Bank of Boston expanded steadily throughout the
year, until on December 31, it had risen to $553,000,000, a point
exceeded only on December 18, 1935, when cash reserves reached a
peak of $565,000,000. As total earning assets of the Federal Reserve
Bank of Boston remained substantially unchanged throughout the
year, this vast reservoir of liquid reserves in the Federal Reserve
Bank of Boston was not utilized to expand Federal reserve credit in
use in New England. Since the member banks had an unparalleled
volume of excess reserves there was no additional Federal reserve
credit extended during the year. Daily average borrowings by all
member banks during 1935 were at the lowest levels since 1915.
On the other hand, direct loans to industry stood at slightly under
$3,000,000, close to the peak reached during November.
Therefore, practically all of the earning assets of the Federal
reserve banks were in the form of United States Government obligations. In the case of the Federal Reserve Bank of Boston,
$158,000,000 of the $161,000,000 of total earning assets consisted
of United States securities on December 31, 1935.
BANKERS' ACCEPTANCES
In line with the Federal reserve districts as a whole the volume of
bankers' acceptances created in this district declined during 1935
to the lowest level of any past year. The moderate expansion in
imports and exports of merchandise during the current year was due
[
 16 ]


ANNUAL, REPORT OF THE FEDERAL RESERVE BANK OF BOSTON

FEDERAL

RESERVE BANK OF BOSTON

FLUCTUATION OF PRINCIPAL
600

1931

1932

1933

ITEMS

1934

1935

550

500

450

TOTAL RESERVES 5,
400

350

300

250

200

^t NOTES IN
CIRCULATION
* 150

200

TOTAL EARNING ASSETS \
150




GOVERNMENT SECURITIES

17

ANNUAL REPORT OF THE FEDERAL RESERVE BANK OF BOSTON

largely to price factors, the physical volume of our leading export
commodities remaining close to the low levels established during
1932 and 1933. Those manufactured commodities, which showed
the greatest expansion in American foreign trade, were for the most
part financed through other channels than acceptances, while the
exports of raw materials showed little improvement. The financing
by the Government of many basic commodities, especially cotton,
was another factor in the reduced volume of bankers' acceptances
so far as this district was concerned.
With the supply of acceptances reduced to around $400,000,000
during most of 1935 and with the member banks ordinarily holding
more than half of the outstanding acceptances, the demand so far
exceeded the supply that asking rates in the open market remained
throughout the year at the record low levels established in 1934,
with rates of }/% of one per cent for maturities up to 90 days, 34 per
cent for four months' acceptances, and % per cent for longer maturities. In view of the scarcity of acceptances and of the ready market
for those which were available, the Federal Reserve Bank of Boston
allowed even the small volume of holdings which it had in its portfolio at the opening of the year to decline gradually, but almost continuously, until the holdings at the close of the year were only
$343,000. Throughout the year the Federal reserve buying rate
was maintained at J^ per cent, well above the open market rate,
offering little encouragement to dealers to sell their acceptances to
the Federal reserve bank.
ACCEPTANCE LIABILITY
All Banks and Acceptance Corporations in Federal Reserve District I
January
February
March
April
May
June
July
August
September
October
November
December

31
28
31
30
SI
30
31
31
30
31
30
31

1935

$32,000,000
31,000,000
32,000,000
30,000,000
29,000,000
29,000,000
28,000,000
28,000,000
27,000,000
27,000,000
30,000,000
31,000,000

1934.

$45,000,000
44,000,000
43,000,000
40,000,000
37,000,000
34,000,000
32,000,000
33,000,000
33,000,000
34,000,000
33,000,000
34,000,000

1933

$43,000,000
41,000,000
41,000,000
43,000,000
46,000,000
47,000,000
48,000,000
44,000,000
44,000,000
45,000,000
47,000,000
47,000,000

1932

$60,000,000
58,000,000
54,000,000
54,000,000
46,000,000
43,000,000
43,000,000
42,000,000
40,000,000
41,000,000
43,000,000
42,000,000

With the usual fall expansion both in foreign trade and in the
volume of acceptance liabilities outstanding, the total rose from
$321,000,000 in July to $397,000,000 on December 31. Acceptances
originating in Boston reflected a minimum of seasonal influence,
18



ANNUAL REPORT OF THE FEDERAL RESERVE BANK OF BOSTON

rising only from $28,000,000 in July to $31,000,000 in December.
As in previous years, acceptance liabilities made in Boston exceeded
those made in any other Federal reserve district, with the exception
of New York, and were almost double those in the Chicago and San
Francisco districts which ranked third and fourth.
OPEN MARKET OPERATIONS
During the year 1935 the Federal Reserve Bank of Boston, in common with the other Federal reserve banks, was practically out of the
open market. The holdings of United States obligations averaged
$158,000,000, or the same as the previous year, with slight changes
in maturities. The holdings of acceptances in the bank's portfolio
during the year was negligible, and was represented entirely by the
bank's participation in the system's account.
MEMBER BANK RESERVE DEPOSITS
Formerly the movement of member bank reserve deposits in the
Federal Reserve Bank of Boston followed closely the trend of changes
in the volume of time and demand deposits in the member banks,
but this has not been the case for several years. In 1935, as in the
previous year, increasing deposits in the member banks were not
paralleled closely by expansion in loans and investments. Consequently, reserve deposits rose sharply during the year, instead of
merely following the percentage ratios of required reserves.
Excess reserves of the member banks; while present in large volume in New England, as in the United States as a whole, are not
evenly distributed between banks. For the most part excess reserves
are concentrated in the accounts of the larger banks both in Boston
and in the other New England cities. The majority of banks numerically, although they hold more than the minimum reserve required
by law, nevertheless, have a far lower ratio of excess than have the
relatively few larger banks. On the other hand, country banks carry
a large amount of balances with city banks so that in effect many of
the excess reserves held by city banks really belong to country banks.
MONEY RATES AND DISCOUNT RATES
The absence of any appreciable demand for credit, with the resultant accumulation of bank deposits and excess reserves, was reflected
in the virtually unchanged rates on short-term money, with all classes
of rates remaining at the new lows recorded in 1934. On the other
hand, the easy situation which had already developed in the short


[ 19 1

ANNUAL REPORT OF THE FEDERAL RESERVE BANK OF BOSTON

term money market during 1934 communicated itself more fully
to long-term loans during 1935. Mortgage rates declined, with five
per cent generally available by the close of the year. High-grade
bond prices rose with correspondingly lower yields, while even greater
advances took place in the second-grade bonds, which were influenced not only by the money factor but also by the strength in the
stock market. By the close of the year, high-grade bond prices and
high-grade bond yields were close to the record levels of 1899, the
BOSTON
NINETY

1926

1927

1928

1929

FEDERAL

MONEY

MARKET

DAY SECURITIES

1930

RESERVE

BANK

1931

OF BOSTON

BANKERS
ACCEPTANCES
UNITED STATES TREASURY

1932

1933

REDISCOUNT

CERTIFICATES

1934

1935

RATE

OF INDEBTEDNE

only time in the history of the country when the return on long-term
capital was lower than in 1935.
Throughout the year the discount rate at the Federal Reserve
Bank of Boston remained at two per cent, which rate was established on February 8, 1934. Similarly, no change took place in the
buying rate for acceptances in the open market, which remained at
3 2 per cent, considerably above the asking price for acceptances in
^
the open bill market.
As in 1934, a large part of the Treasury financing was accomplished
by Treasury bills sold on a discount basis. Various bill maturities
were offered, with the 273-day bills predominating. Such bills were
sold at time of offering to yield the investor as low as .05 per cent in
July. The record low yield was obtainable only on one issue and
advanced somewhat during the fall months, declining again toward
the end of the year, the December 31 issue yielding .08 per cent on
the average at time of original offering by the Government. In addition to Treasury bills, several issues of long-term Government bonds
20



ANNUAL REPORT OF THE FEDERAL RESERVE BANK OF BOSTON

were made during the year as well as several issues of Treasury
notes. Yields on all classes of new securities were at record low levels
throughout the greater part of the year, reflecting a highly favorable
market for the sale of Government securities and reflecting the vast
buying movement on the part of banks, institutions, and investors
of all descriptions. By the close of the year the total gross debt of the
Government, excluding debt of various Government agencies, had
risen to $30,557,000,000, of which it is estimated $16,400,000,000, or
54 per cent, was held by banks, including member banks, non-member
state banks and trust companies, mutual savings banks, and Federal
reserve banks. Of the $2,000,000,000 increase in total gross debt of
the United States during the year, the banks alone absorbed
$800,000,000 through increased holdings of Government securities.

BOSTON MONEY MARKET, 1935
Prevailing Rates on 15th of each Month

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

U. S. Treasury
Bilh
273-Day
Acceptances
Time Loans
Customers'
Loans
Maturities
90-Day
Brokers'
Secured by
Commercial Correspondent
(Average
Maturities Commercial
Bonds and Stocks
Loans
Banks
Offering Price) (Asking Rate) Paper
—
8%
4~4i%
U-5% 4-6%
Wo
3
.17
5
O2 9>2
U-4
i
3
.14
8
3^-5
U-4
Nominal
i
1
3
.18
4
3-4^
U-4
1
f*
.14
4
34-4|
U-3
I
3
.1.5
4
3—4i
U~4
I
.05
4
14 3
2|-4J
1
I
3
.07
4
4-4|
3-4
4
.20
a
U~4
i
3
4-4|
.21
4
U-4
I
.14
i!-4!
U-4
Nominal
3
4
.09
2-5
U-4
8"

FEDERAL RESERVE NOTES
During 1935 the volume of Federal reserve notes of the Federal
Reserve Bank of Boston rose on December 24 to the highest level
ever recorded when the amount in circulation stood at slightly over
$322,000,000. This expansion was not peculiar to New England and
did not reflect any unusual local situations. Total money of all
kinds in actual circulation rose to a holiday peak of almost $6,000,000,000, a figure exceeded only for a very brief interval before and
during the period of the Banking Holiday in 1933 when hoarding was
general. In addition to the expansion in Federal reserve notes in
circulation during 1935, total currency of all kinds was further aug


[ 21 1

ANNUAL, REPORT OF THE FEDERAL RESERVE BANK OF BOSTON

merited by a large volume of silver certificates issued pursuant to
the Silver Purchase Act of 1934.
In New England, as in the rest of the country, the expansion in
currency became more rapid during the second half of 1935. The
return flow of holiday currency in January was rather less marked
in 1935 than in pre-depression years, so that the expansion which
commenced late in May, starting as it did from an abnormally high
level, becomes all the more significant. To a certain degree, of course,
this growth was seasonal in character, but it far exceeded similar
seasonal growth in previous years. On December 31, 1935, there
were outstanding $46,000,000 more Federal reserve notes of the
Federal Reserve Bank of Boston than on December 31, 1934.

RESERVE POSITION
The influence of increasing gold stocks of the United States arising
from the heavy imports of gold from abroad, which exerted a strong
influence upon the increasing member bank reserve balances with
the Federal Reserve Bank of Boston, also brought about a substantial increase in the total cash reserves of the Federal reserve bank.
These total cash reserves advanced during the year 40 per cent, rising $158,000,000 to a total of $553,000,000 on the closing day of the
year.
In spite of the rapid expansion in Federal reserve liabilities requiring reserves, that is, in total deposits and in Federal reserve notes
in actual circulation, the rate of increase in total cash reserves
exceeded the amount required against deposits and Federal reserve
notes so that the reserve ratio closed the year at 79.5 per cent, as
compared with 73.6 per cent on December 31, 1934.
INDUSTRIAL LOANS
At the meeting of the board of directors on January 9, 1935, Mr.
Robert Amory, of Boston, Massachusetts; Mr. Winthrop L. Carter,
of Nashua, New Hampshire; Mr. Albert M. Creighton, of Boston,
Massachusetts; Mr. Carl P. Dennett, of Boston, Massachusetts;
and Mr. Edward M. Graham, of Bangor, Maine, were reappointed
as members of the Industrial Advisory Committee to serve until
March 1, 1936. All of these members accepted their reappointment
and were approved by the Federal Reserve Board. The Committee
selected Mr. Creighton again as chairman, and Mr. Ellis G. Hult
as manager. From January to July this department was quite active
[ 22 1



AXNUAL REPORT OF THE FEDERAL, RESERVE BANK OF BOSTON

in connection with new applications and loans but from then to the
end of the year the number of applications rapidly declined. It is
difficult to finci a reason for this decrease. It is possible that the district had been thoroughly canvassed and that there was no need for
further aid from this provision of the law or, as the time seemed to
synchronize with an upturn of business activity in the district,
that prospective borrowers had been able to get along without additional working capital or had been accommodated by their banks.
During the year 1935 there were 49 applications approved by
this bank amounting to $4,072,000, which brought the total of applications approved to December 31, 1935, to $8,248,000. There were
outstanding loans and commitments on December 31, 1935, amounting to $6,279,077.29, as compared with December 31, 1934, of
$3,472,180.63.




[ 23 ]

ANNUAL REPORT OF THE FEDERAL RESERVE BANK OF BOSTON

BANKING INDICES —NEW ENGLAND
Data as of last reporting date each year
(Amounts in millions of dollars)
REPORTING MEMBER BANKS
In Boston:
19S6

n

1.
2.
8.
4.
5.

Dftmand Denosits.
. !$
Balances Due to Domestic Banks
Balances D u e t o Foreign Banks
United States Deposits .
Time Deposits

Change in One Year
Percentage
Amount

1934

728
202
9

$

169
4
85
140

10
133

T O T A L D E P O S I T S . . . I$ 1,082
Loans, Investments and Reserves:
7. Open Market Commercial Paper
21
and Acceptances
. . . .
220
8. Customers' Commercial Loans .
9. Customers' Collateral Loans
97
30
10. Brokers' Loans
2
11. Loans to Other Banks
37
. . . .
12. Real Estate Loans
6.

591

$

989

27
203
98
47
4
42

+ $137
+ 33
+
5

+ 23.2%
+ 19.5
+ 125.0

+ $ 93

+ 9.4%,

-

75
f

6

- 22.2

+

17

+ 8.4

-

$ 14
10

8

-

1
17
2
5

$407

$421

247

257

16.

Total Loans and Discounts .
United States Obligations Owned
Obligations Guaranted by United
States
Other Bonds a n d Stocks Owned

11
89

3
94

+

17.

Total Security Investments

.

$347

$354

—

d
>
<
p

18.
19.

Total Loans and Investments
Reserve with Federal Reserve
Bank
Vault Cash
. .
Balances with Other Domestic
Banks

$754

$775

-

225
90

161

+
+

77

06

$392

$289

1,146

13.
14.
15.

20.
21.

62

- 88.2
- 5.0

1.0
— 36.2
- 50.0
- 11.9
-

3.8%
3.9

5

+266.7
5.3

n
/

-

2.0%

$ 21

-

2.7%

-

64
28

+ 39.8
+ 45.2

+ 11
+ $103

+ 16.7
+ 35.6%

$ 1,064

+

+

34S
31
8
198

284
29
15

+
+

59
2
rr

20fi

-

8

28.
TOTAL DEPOSITS . . .
Loans, Investments, and Reserves:
29. Open Market Commercial Paper
and Acceptances
. . . .
30. Customer's Commercial Loans .
31. Customers' Collateral Loans
32. Brokers' Loans
33. Loans to Other Banks
34. Real Estate Loans
. . . .

$580

$534

28
71
74
2

35.

22.

Gross Reserves

23.

TOTAL LOANS, INVESTMENTS,
AND
RESERVES
Outside of Boston:
Deposits:
24. Demand Deposits
25. Balances Due to Domestic Banks
26. United States Deposits .
27. Time Deposits

Total Loans and Discounts

24]



.

7.7%

+ 20.8
+ 6.9
- 46.7
3.9

+ $ 46

+ 8.6%

+

5

+ 21.7

—
-

2
7
6

2.7
8.6
- 75.0

53

23
73
81
8
*
56

-

3

-

5.4

$228

$241

-

$ 13

-

5.4%

•

ANNUAL REPORT OF THE FEDERAL RESERVE BANK OF BOSTON

BANKING INDICES — NEW ENGLAND
1935

36. United States Obligations Owned
37. Obligations Guaranteed by
United States
38. Other Bonds and Stocks Owned
39.

148
19
78

1934

(continued)
Change in One Year
Amount
Percentage

142 12
74

6
7
4

+
+

+ 4.2
+ 58.3
+ 5.4

Total Security Investments .

$245

$228

+ iI 17

40.
Total Loans and Investments
41. Reserve with Federal Reserve
Bank
42. Vault Cash
43. Balances with Other Domestic
Banks

$473

$469

5
+ 14

+ -9%

49
16

47
17

t

2
1

+ 43
.
- 59
.

67

53

+

14

+ 26.4

44.

$132

$117

Gross Reserves

.

.

.

.

TOTAL LOANS, INVESTMENTS, AND RESERVES
MONEY RATES (Boston)
Open Market:
46. Open Market Prime Commercial
Paper
47. Bankers' Prime 90-day Accept-

5 15

+ 7.5%

+ 12.8%

45.

48.

Call M o n e y ( B o s t o n ) . .

At Member
Banks:
49. M i n i m u m
Commercial
R a t e (Customers) . .
50. M i n i m u m
Collateral
R a t e (Customers) . .

+ $ 19

+ 3.2%

1%

ft
14

Loan
. .
Loan
. .

0
—| point

0

—Ij points

At Federal Reserve Bank of Boston:

51. Discount Rate
52. Buying Rate on Acceptances .
MISCELLANEOUS
53. Acceptance Liabilities (F. R.
$31
District I)
Mutual Savings Banks:
54. Deposits in 61 Reporting Banks
$ 1,719
in 6 New England States .
Check Transactions (year's totals):
55. B o s t o n
56. Outside N e w E n g l a n d Cities
57.
T o t a l — 17 Cities . . .
* Less t h a n $500,000.




$14,762
7,434
.
22,187

- 8.8%
$ 1,681
$13,290
6,650
19,940

+$38

+ 2.3%

B 1,472
+ : 784 +
+ 2,247 +
+
+

11• 1 %
11.8
11.
3

ANNUAL REPORT OF THE FEDERAL RESERVE BANK OF BOSTON

COMPARATIVE STATEMENT OF CONDITION
RESOURCES
Dec. SI, 19S4

Dec. 31,1935

CASH RESERVES
Gold certificates with Federal Reserve Agent $356,617,080.00
Gold redemption fund (Federal reserve notes)
2,994,705.99
Gold certificates in vault
0
Interdistrict settlement fund
160,205,632.33
Other cash
32,719,140.86

$299,617,080.00
662,325.95
4,210,000.00
59,463,701.05
31,028,439.17

TOTAL GOLD RESERVE AND OTHER CASH . $552,536,559.18

$394,981,546.17

REDEMPTION FUND, FEDERAL
RESERVE BANK NOTES
. .

$

LOANS AND INVESTMENTS
Loans to member banks:
On the security of obligations of the United
States
$
307,000.00
By the discount of commercial paper or
35,836.69
agricultural paper or acceptances
25,200.00
Foreign loans on gold
342,756.87
Acceptances bought in the open market .
2,941,273.69
Industrial advances (direct)
United States Government bonds, notes,
certificates of indebtedness, or bills .
157,671,000.00

250,250.00

$

994,500.00
60,357.67
0
404,101.49
1,775,083.97

157,671,000.00

$161,323,067.25

$160,905,043.13

MISCELLANEOUS RESOURCES
Checks and other items in process of collection $ 67,388,264.92
Banking house (less reserves)
3,112,513.25
Federal Deposit Insurance Corporation stock
Less reserves
0
All other resources
460,780.26

$ 51,221,543.17
3,168,345.25
10,230,236.88

TOTAL LOANS AND INVESTMENTS .

TOTAL MISCELLANEOUS RESOURCES

$ 70,961,558.43

TOTAL RESOURCES . .

$784,821,184.86

. .

676,363.86
$ 65,296,489.16

$621,433,328.46

COMPARATIVE STATEMENT OF CONDITION
A comparison of the statement of the Federal Reserve Bank of
Boston as of December 31, 1935, with that of December 31, 1934,
shows the following changes:
1. Total gold reserves and other cash increased $158,000,000, or
40 per cent.
2. Loans, secured and unsecured, decreased $687,000.
3. Industrial advances, or direct loans, increased $1,166,000.
4. Bankers' acceptances decreased $61,000.
5. United States Government securities, no change.
6. Total loans and investments, little or no change.
26 ]




ANNUAL REPORT OF THE FEDERAL RESERVE BANK OF BOSTON

COMPARATIVE STATEMENT OF CONDITION
LIABILITIES

TOTAL DEPOSITS, SUBJECT TO RESERVES

$270,943,030.00
922,250.00
$271,865,280.00
$ 10,820,340.96
251,603,516.18
3,175,385.08
$265,599,242.22

$

Other deposits

$316,738,900.00
0

$378,700,936.30

DEPOSIT LIABILITIES
U. S. Government deposits
Member banks' reserves

Dec. 31, 1934

$46,871,941.94
326,489,372.68
5,339,621.68

TOTAL CURRENCY IN CIRCULATION .

Dec. SI, 1936

$316,738,900.00

CURRENCY I N CIRCULATION
Federal reserve notes — net circulation .
Federal reserve bank notes — net circulation

$

.

1,712,670.93

1,647,931.32

RESERVES FOR LOSSES
MISCELLANEOUS LIABILITIES
Deferred credits for uncollected funds

$ 65,359,507.50
100,845.32

$ 50,420,005.63
94,242.00

. $ 65,460,352.82

$ 50,514,247.63

$ 9,430,000.00
CAPITAL AND SURPLUS
9,902,044.69
Capital paid-in
2,876,280.12
Surplus (Section 7)
Surplus (Section 13b)
SUBSCRIPTION FOR FEDERAL DEPOSIT $
0
INSURANCE CORPORATION STOCK
$784,821,184.86
TOTAL LIABILITIES

$ 10,762,400.00
9,902,044.69
911,945.72

$621,433,328.46

Ratio of total reserves to deposit and Federal
reserve note liabilities combined . . . .
79.5%
Commitments to make industrial loans . . . $ 3,337,803.60

$

All other miscellaneous liabilities .

.

.

TOTAL MISCELLANEOUS LIABILITIES

$ 10,230,236.88

73.6%
1,697,096.66

7. Federal Deposit Insurance Corporation, reserve equal to 100 per
cent of amount of capital stock owned.
8. Federal reserve notes in circulation increased $46,000,000, or
17 per cent.
9. Federal reserve bank notes were retired on March 21, 1935.
10. Deposits of the United States Government increased $36,000,000.
11. Reserve deposits of member banks increased $74,000,000, or
29.4 per cent.
12. Total deposits increased $113,000,000, or 42.5 per cent.
13. Reserve percentages against combined Federal reserve notes
and deposit liabilities increased from 73.6 per cent to 79.5 per
cent.
14. Commitments to make industrial advances increased $1,641,000.



ANNUAL REPORT

OF THE FEDERAL RESERVE BANK OF BOSTON

INCOME AND DISBURSEMENTS
The following table shows the sources of income and the disbursements for the year 1935, as compared with similar items for 1934.
The total current earnings for the year 1935 were $328,686.52 less
than in 1934. This was due to a smaller volume of loans to member
banks and to a lower level of interest rates, which was offset to some
extent by interest from industrial loans. As in the two previous
years, the interest received from United States securities was the
principal source of income. On the other hand, the expenses of current operations were $154,159.85 more in 1935 than in 1934. This
increase was due almost entirely to the appropriation to the Retirement Fund although the expenses of the Industrial Loan Department, the Security Exchange Department, and the Bank Examination Department, due to increased activities, were larger than in
1934. The current net earnings were increased $355,511.84 by the
profit on United States Government securities sold during the year.
After making allowance for cost of printing Federal reserve notes
and cost of redemption, depreciation on bank building, etc., the net
income available for dividends amounted to $670,564.96, as compared with $932,791.47 in 1934.
The regular dividend of six per cent was paid to member banks
and after the payment to the Secretary of the Treasury of interest
on funds employed in industrial loans under Section 13b, amounting
to $46,502.56, there was transferred to the 13b surplus account
$2,509.22.




ANNUAL REPORT OF THE FEDERAL RESERVE BANK OF BOSTON

ANNUAL REPORT OF THE FEDERAL RESERVE BANK
INCOME AND DISBURSEMENTS
1935

EARNINGS
From loans to member banks and paper discounted for them
Foreign loans on gold
Acceptances bought in the open market .
Industrial advances and commitments
United States Government bonds, notes,
certificates of indebtedness, and Treasury
bills
Other earnings
Total earnings
Additions to earnings:
Profit on U. S. Government securities sold
All other
Total income applicable to expenses and other
deductions
DEDUCTIONS FROM TOTAL INCOME
For the expense of current bank operations
(including the non-reimbursable expense incurred as Fiscal Agent of the United States)
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
For depreciation, reserves, losses, etc.
Total deductions
Net income available for dividends, additions
to surplus, etc
DISTRIBUTION OF N E T INCOME
Payment to the Secretary of the Treasury,
employed funds (Section 13b) . . . .
Dividends paid to member banks at the rate of
6 per cent on paid-in capital
. . . .
Transferred to surplus (Section 7)
. . .
Transferred to or from surplus (Section 13b)
that portion of excess expenses over income
on industrial advances and investments
charged to surplus, or that portion of excess
income over the 2 per cent paid to the Treasurer of the United States on employed funds
Total net income distributed

$

1934

13,076.43
68.49
2,626.31
143,630.09

27,963.52
661.80
26,537.21
17,589.13

2,559,708.48
8,131.78

2,934,435.07
48,741.37

$2,727,241.58

$3,055,928.10

355,511.84
34,547.53

521,657.86
47,036.55

$3,117,300.95

$3,624,622.51

$2,113,487.05

$1,959,327.20

122,195.81
211,053.13

74,385.22
658,118.62

$2,446,735.99

$2,691,831.04

$ 670,564.96

$ 932,791.47

$

$

46,502.56
621,553.18
0

2,509.22
$ 670,564.96

0
644,075.03
291,872.20

3,155.76*
$ 932,791.47

* Transferred from Surplus 13b.




29 ]

ANNUAL, REPORT OF THE FEDERAL RESERVE BANK OF BOSTON

MEMBERSHIP
On January 1, 1935, there were 371 licensed member banks of the
Federal Reserve System in the First Federal Reserve District, 322
national banks and 49 state banks. During the year two national
banks and four state banks were merged into a newly chartered state
bank, which was admitted to the system, and one national bank was
absorbed by another national bank.
The various changes in membership are classified in detail in the
following table:

Licensed member banks December 31, 1935

Total

49

371

1

1

50

372

2
1

4

6
1

3

Losses:
Consolidation of member banks with newly chartered
member trust company
Consolidation of national bank

State
Banks

322

Licensed member banks January 1, 1935
Gains:
New member trust company

4

7

319

46

365

National
Banks

322

BANK ORGANIZATION AND PERSONNEL
Directors: On December 31, 1935, the terms of Mr. Alfred L. Ripley as Class A director, and Mr. Philip R. Allen as Class B director,
and Mr. Frederic H. Curtiss as Class C director and Chairman and
Federal Reserve Agent, expired. Mr. Ripley and Mr. Allen were
re-elected as Class A and Class B directors, respectively, by member
banks in Group 1 for three-year terms, Group 1 being composed of
banks having a combined capital and surplus of more than $1,200,000.
Mr. Curtiss was reappointed by the Board of Governors of the Federal Reserve System as Class C director for a term of three years.
Pending the anticipated reconstitution of the Board of Governors of
the Federal Reserve System, effective February 1, 1936, Mr. Curtiss
was redesignated as Chairman and Federal Reserve Agent and Mr.
Allen Hollis was redesignated as Deputy Chairman. In December,
1935, Mr. Edward H. Osgood tendered his resignation as Assistant
Federal Reserve Agent to take effect at the end of the year.
Personnel: The number of employees on December 31, 1935, other
than officers, was 689, compared with 662 on December 31, 1934.
Advisory Council: At a meeting of the Board of Directors held on
January 9, 1935, Mr. Thomas M. Steele, President of The First
30 1



ANNUAL REPORT OF THE FEDERAL RESERVE BANK OF BOSTON

National Bank and Trust Company of New Haven, New Haven,
Connecticut, was reappointed a member of the Federal Advisory
Council to represent the First Federal Reserve District for the year
1935.
STOCKHOLDERS' MEETING
On November 8, 1935, the thirteenth annual meeting of representatives of member banks was held at the Federal Reserve Bank of
Boston with 307 representatives from 218 member banks in attendance. The Chairman of the Stockholders' Advisory Committee, Mr.
Burns P. Hodgman, President of The First National Bank of Concord, Concord, New Hampshire, presided. The principal address
was delivered by Mr. Thomas M. Steele, President of The First
National Bank and Trust Company of New Haven, New Haven,
Connecticut, member of the Federal Advisory Council from the First
Federal Reserve District, and formerly Chairman of the Stockholders' Advisory Committee, whose subject was "The Work of the
Federal Advisory Council." Brief addresses were also given by
Mr. Frederic H. Curtiss, Chairman and Federal Reserve Agent, and
Mr. Roy A. Young, Governor of the Federal Reserve Bank of Boston. At the conclusion of the meeting, Mr. Hodgman announced
that Mr. Charles L. LeBourveau, President of The First National
Bank of White River Junction, White River Junction, Vermont,
had been elected by the Stockholders' Advisory Committee as chairman of the committee for the ensuing year.




[Si

FEDERAL RESERVE BANK OF BOSTON
OFFICERS AND DIRECTORS
1935
OFFICERS
FREDERIC H. CTJRTISS, Federal Reserve Agent
EDWARD H. OSGOOD, Assistant Federal Reserve
Agent
CHARLES F. GETTEMY, Assistant Federal Reserve

ROY A. YOUNG, Governor
WILLIAM W. PADDOCK, Deputy

Governor
WILLIAM WILLETT, Cashier
KBICKEL K. CARRICK, Secretary

WILLIAM D. MCRAE, Assistant Federal Reserve
Agent

and General Counsel

HARRY F. CURRIER, Auditor

ELLIS G. HULT, Assistant Cashier
ERNEST M. LEAVITT, Assistant Cashier
CARL B. PITMAN, Assistant Cashier
L. WALLACE SWEETSER, Assistant Cashier

DIRECTORS
Class and Group
A 1 ALFRED L. RIPLEY,

A 2 F. S. CHAMBERLAIN,

A 3 ARTHUR SEWALL,
B 1 PHILIP R. ALLEN,
B 2 EDWARD S. FRENCH,
B 3 EDWARD J. FROST
C
C
C

FREDERIC H. CURTISS,
ALLEN HOLLIS,
CHAS. H. MERRMAN,

Chairman of the Board,
The Merchants National Bank
of Boston
President,
The New Britain National
Bank
President,
The Bath National Bank
President, Bird & Son, Inc.
President, Boston and Maine
Railroad
Vice President and Director,
Wm. Filene's Sons Company
Chairman
Deputy Chairman, Lawyer
President, Lippitt Woolen Co.

Term Expires
December 31
Boston, Mass.

1938

New Britain, Ct.

1937

Bath, Me.
E. Walpole, Mass.

1936
1938

Springfield, Vt.

1937

Boston, Mass.
Boston, Mass.
Concord, N. H.
Providence, R. I.

1936
1938
1936
1937

ASSOCIATE COUNSEL
PHILLIPS KETCHUM, Boston, Mass.

MEMBER OF FEDERAL ADVISORY COUNCIL
THOMAS M. STEELE

President of The First National Bank and Trust Company of New Haven,
New Haven, Conn.
INDUSTRIAL ADVISORY COMMITTEE
ALBERT M. CREIGHTON, Chairman

Director, Boston Woven Hose and Rubber Company,
Boston, Mass.
CARL P. DENNETT, Vice Chairman

80 Federal Street, Boston, Mass.
ROBERT AMORY

President, Nashua Manufacturing
Company, Boston, Mass.




WINTHROP L. CARTER

President, Nashua Gummed and Coated

Pa

Per

Co

» Nashua, N. H.

EDWARD M. GRAHAM
President, Bangor Hydro-Electric Co.,
Bangor, Me.