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ANNUAL REPORT
of the

Federal Reserve Agent
of the

Fourth Federal
Reserve District
to the

Federal Reserve Board

Covering Operations
for the
Calendar Year
1929

FEDERAL RESERVE BANK OF CLEVELAND







Letter of Transmittal
January 22, 1930.
SIR:
I have the honor to transmit to you herewith the fifteenth annual
report of the Federal Reserve Bank of Cleveland, covering operations
for the calendar year 1929.
Respectfully,
GEORGE D E C A M P ,
Federal Reserve Agent.
HON. ROY A. YOUNG, Governor,
Federal Reserve Board,
Washington, D. C.







Directors and Officers, 1930
DIRECTORS
CLASS A
O. N. SAMS, Hillsboro, Ohio, 1930
CHESS LAMBERTON, Franklin, Pa., 1931
ROBERT WARDROP, Pittsburgh, Pa., 1932

CLASS B
S. P. BUSH, Columbus, Ohio, 1930
R. P. WRIGHT, Erie, Pa., 1931

G. D. CRABBS, Cincinnati, Ohio, 1932
CLASS C
W. W. KNIGHT, Toledo, Ohio, 1930
L. B. WILLIAMS (Deputy Chairman), Cleveland, Ohio, 1931
GEO. DECAMP (Chairman), Cleveland, Ohio, 1932

OFFICERS
GEO. DECAMP, Chairman of the Board
and Federal Reserve Agent

E. R. FANCHER, Governor
M. J. FLEMING, Deputy Governor
F. J. ZURLINDEN, Deputy Governor
H. F. STRATER, Cashier and Secretary
W. F. TAYLOR, Assistant Cashier

W. H. FLETCHER, Assistant Federal
Reserve Agent
J. B. ANBERSON, Assistant Fdrl g ; £ $ ^ t t t $ 5 £
ee
a
Reserve Agent
D B C L O I J S E R > Assistant Cashier
F. V. GRAYSON, Auditor
C. L. BICKFORD, Assistant Cashier
CINCINNATI BRANCH
DIRECTORS

OFFICERS

THOS. J. DAVIS

C. F. MCCOMBS, Managing Director

FRED A. GEIER
B. H. KROGER
E. S. L E E

B. J. LAZAR, Cashier

C. F. MCCOMBS

H. N. OTT, Assistant Cashier

JOHN OMWAKE

GEO. M. VERITY

BRUCE KENNELLY, Assistant Cashier

PITTSBURGH BRANCH
DIRECTORS

OFFICERS

A. E. BRAUN

J. C. NEVIN, Managing Director

J. R. EISAMAN
A. L. HUMPHREY
R. B. MELLON

T. C. GRIGGS, Cashier

JOSEPH R. NAYLOR

P. A. BROWN, Assistant Cashier

J. C. NEVIN

JAMES RAE




F. E. COBUN, Assistant Cashier




FIFTEENTH ANNUAL REPORT
FEDERAL RESERVE BANK OF CLEVELAND
FEDERAL RESERVE CREDIT

Notwithstanding that general manufacturing in the fourth district was unusually active during the past year, new high production
records being established in a number of industries, the volume of
bank credit extended by commercial banks was but slightly higher
than in the previous year, while reserve bank credit utilized was less
than in 1928. This reduction occurred in spite of an increase of 54 in
the number of borrowing banks and of nearly 34% in the number of
approved applications for rediscounts and advances. Including
holdings of Government securities and bills purchased in the open
market, the daily average of earning assets at the Cleveland reserve
bank was less by about $4,000,000 than in the year immediately
preceding.

BILLS DISCOUNTED FOR MEMBERS
BILLIONS

OF
DOLLARS

OF
3OLLXRS

•

6

.1

A

_
2

Ft 5J

1

Z4

J

• •

1
S.7J

3 •

1927

I9?R

6

4

L5*J

2

1929

The number of rediscount items handled increased sharply, 17,843
pieces being accepted as against 11,184 in 1928. Collateral notes
also were greater in number, a comparison showing 13,149 and 9,914
for the same periods. The number of bankers acceptances handled
was reduced from 15,209 to 7,330, bringing the total for all items
handled to a little more than 5 per cent above that of last year.
The reserve ratio of the Cleveland bank fluctuated rather widely,
exhibiting a sharp drop between the first of August and the first of
November. This was occasioned by a loss in gold holdings, resulting
7



BILLS PURCHASED AND ACQUIRED
MILLIONS

DOLLARS

DOLLARS

250
200

ISO
100

50

•I
f»«J
1922

I
I

L'"J
1923

• •
Tuej

L"'J

1924

I92S

I•

1
I54j

•
64

L j
1927

250

•

200

5

L" !
1928

•
L

|27

1

150
100

50

1929

largely from the transfer of funds out of the district through the gold
settlement fund. In the period above-mentioned both note circulation and deposit liability fell off, (the latter but slightly) the total
amount being about $21,000,000. From August 7 to November 6
the gold holdings of this bank decreased nearly $125,000,000, which,
notwithstanding the decline in liabilities subject to reserve, brought

the reserve ratio down from 81.9, the high point of the year, to 52.4
per cent. Immediately following the severe break in security quotations in late October and in early November, with a sharp reduction in
loans in New York and a transfer of funds to the interior, gold holdings increased $75,000,000 to the end of the year, bringing the ratio
to 71.8 per cent, which was substantially above the level of the early
part of 1929 or of the late months of the year before.
MEMBER BANK CREDIT

Total credits extended by reporting member banks in the fourth
district fluctuated within a comparatively narrow range throughout
the year, and at its close were $17,000,000 below the amount reported
for the average of the last month of 1928. There were, however,
important changes in some items. Loans on securities reached the
"high" in early November, approximately $80,000,000 above the
January average. "All other" loans increased less than was expected
in a period of such activity as developed during the year, indicating




to a degree the ability of business to finance its operations without
recourse to the use of bank credit, either through the use of its own
cash resources, the sale of its securities, or otherwise.
The increase in loan account of reporting members has been offset
by a corresponding drop in investment account, which shows a decrease for the year of about $100,000,000.
A feature disclosed by figures of a special group of reporting banks
is an interruption of the trend in savings deposits, which had moved
steadily upward for a number of years. The average increase for the
previous three years was in the neighborhood of $47,000,000, whereas
1929 recorded a decrease of $12,000,000.
EARNINGS AND EXPENSES
Gross earnings for the calendar year 1929 were $6,987,000, exceeding the figure for the previous year by $736,000, largely because of
higher discount rates prevailing at the reserve bank. Total expense
increased $189,000, leaving current net earnings of $4,201,000,
distributed as follows:
Reserves and charges
Dividends
Transferred to surplus account.

$ 495,000
910,000
2,796,000
$4,201,000

Net earnings for the year amounted to approximately 1.9 per
cent of average capital, surplus and deposits, combined.
CHANGES IN MEMBERSHIP

During the year seven banks, three national and four state, were
admitted to membership. There were 30 losses to membership for
the reasons given below:
Voluntary withdrawals
3
Insolvencies
3
Absorbed by other member banks
5
Absorbed by non-member banks
4
Consolidated with national banks
5
Consolidated with state member banks
4
Succeeded by new member banks
5
Voluntary liquidation (terminal)
1
The net result of membership changes was a loss of 23 banks.
On December 31, 1929, there were 698 national and 99 state bank
members in the fourth district.
FEDERAL RESERVE NOTES

The circulation of federal reserve notes in the fourth district during the past year, despite an increase in general business activity over
that of 1927 and 1928, was below the average of either of those two
years. The decrease is attributed in part to the more general use of




checks, the tendency toward the use of checks for payroll purposes,
and in the last few months of the year to a reduction in production
and the volume of retail sales.
The introduction of the new small-size currency, which was
shipped to banks for payment into circulation on July 10, increased
the circulation for that week, but the "curiosity demand" which it
was thought might result in currency expansion for some weeks or
months was soon satisfied, circulation for the week following the new
issue being lower than for the week immediately preceding. Except
for the week of December 24, when expansion usually occurs as a
result of the holiday demand, the volume of our notes in circulation
since the small-size currency was paid out has been lower than that
of any week in the first half-year, barring the week of Feb. 6.
CASH FIECEIPTS AND DISBURSEMENTS
or

DOLLARS

DOLLARS
2000
1600

1200

eoo
400

2000

•

1600

1 1 1111 ll
Jl 11 III

1200

eoo
400

Details of the operations of the money department are given in the
following schedule:
Total Receipts and Payments All Sources
Office

Receipts

Payments

Cleveland

$ 643,261,000
218,672,000
572,623,000

$ 645,334,000
220,356,000
571,278,000

$1,434,556,000

$1,436,968,000

Pittsburgh

Currency Received and Counted
Office

Total Pieces

Total Amount

Cleveland

71,768,000
32,701,000
56,877,000

$435,235,000
142,364,000
415,051,000

161,346,000

$992,650,000

Pittsburgh

CHECK CLEARING AND COLLECTION

While both the total number of items handled and the amounts
collected for all three offices of the bank combined show increases
over those of the previous year, there was a marked decrease at the



— 10 —

main office in checks drawn on Cleveland banks. This has been
largely the result of an increase in the membership of the local
clearing-house association. It is also partly due to mergers and
consolidations of important Cleveland banking units, which, however, did not take place until late in the year, and consequently did
not materially affect 1929 figures.
CHECK

SILLIONS
or
DOLLARS

COLLECTIONS
or
DOLLARS

40

20

40

•

.

•

I

I

I

nBHHHHHB

20

The number of employees in the check collection department has
decreased more than 10 per cent in the last year, the daily average
number of items handled per employee has increased nearly 200 and
the cost per item handled shows a small reduction.
The accompanying table gives details of check collection operations:
Transit Department Check Clearings and Collections for Year 1929
Cleveland

On Cleveland banks
On other banks in fourth district
On banks in other districts
On Treasurer of United States

Items
7,255,185
24,977,805
1,091,602
1,090,118

Amounts
S 7,920,680,649.93
3,310,011,713.43
142,439,800.24
115,953,091.56

Items sent to Cincinnati and Pittsburgh branches

34,414,710
355,934

$11,489,085,255.16
69,964,684.24

On Cincinnati banks
On other banks in fourth district
On banks in other districts
On Treasurer of United States

4,864,874
13,778,240
593,856
772,058

Items sent to main office and Pittsburgh Branch

20,009,028
270,854

$ 5,537,701,822.53
1,226,876,556.12
84,525,891.84
123,409,959.33
$ 6,972,514,229.82
48,855,913.14

On Pittsburgh banks
On other banks in fourth district
On banks in other districts
On Treasurer of United States. . .

9,831,389
19,836,074
751,441
672,555

$10,655,718,080.04
1,657,245,839.56
513,882,613.49
85,191,243.84

Items sent to main office and Cincinnati branch... .

31,091,459
62,339

$12,912,037,776.93
$72,831,397.69

Cincinnati

Pittsburgh




— 11 —

Recapitulations
Total number o f items handled
Total amount of items handled
Items and amounts handled by both main office and
not duplicated in above figures

85,515,197
689,127

$31,373,637,261.91
$191,651,995.07

NON-CASH COLLECTIONS

In 1929, 380,464 items amounting to $511,642,761.49 were handled
through the non-cash collection department.
The number and amounts of items handled at the main office and
branches at Cincinnati and Pittsburgh are as follows:
Number
Main office. .
Cincinnati branch...
Pittsburgh branch

311,974
38,570
29,920
380,464

Amounts
$417,301,673.22
43,794,850.91
50,546,237.36
$511,642,761.49

On items handled through the three offices, collecting banks made
collection charges on 32,396 items at a rate slightly more than 1/10
of one per cent.
COLLECTIONS

NON-CASH

MILLION)

or

OF
DOLLARS

DOLLARS
600

600

100

200

•

III

III

rj73j

i3"!

11
400

L3**!

200

Member banks sent direct to other federal reserve banks and
branches for collection, 53,436 items aggregating $63,811,839.39.
The total number of collection items handled for the year shows a
decrease of a little more than one per cent in the number of items
handled. This may be attributed to bank consolidations, financing
by credit companies, increase in chain stores which operate on a cash
basis and the elimination and consolidation of small business firms.
The gradual absorption of the small merchant and manufacturer
into the large chains and units is responsible to a degree for the declining numbers of trade acceptances and notes received by the
collection department. The item loss in commercial paper handled
is offset in part by the increased number of coupons and securities
received for collection during 1929.




— 12 —

FISCAL AGENCY OPERATIONS

During the year 1929 there were issued four series of Treasury
certificates of indebtedness and one series of Treasury bills. Allotments thereon in this district were as follows:
March 15 nine-month 4 Ji % certificates
June 15 nine-month 514% certificates
September 16 nine-month 4%% certificates
December 16 nine-month 3 J4% certificates
December 17 ninety-day Treasury bills

$31,122,000
33,110,500
44,753,000
11,891,000
2,450,000

Government securities delivered o,n allotment numbered 21,449
pieces, representing 1,435 separate transactions.
Government securities received for exchange of denomination or
form (within the issue) consisted of 51,612 pieces of coupon form and
9,741 pieces in registered form, aggregating $119,704,650. Against
such receipts there were delivered 46,510 obligations in coupon form
and 16,008 in registered form. There were 10,047 separate exchange
transactions.
GOVERNMENT COUPONS REDEEMED
UILUONS

MILLIONS

or

Of
DOLLARS

DOLORS
100
FIGURES

INDICATE

THOUSANDS

Of

COUPO

100

s

ao

80

60
40
20

• • • • • • • •

III

ill

60
40

20

Government and federal farm loan coupons redeemed during 1929
totaled 3,021,777 aggregating $60,555,310. Government obligations
presented for redemption numbered 2,282 in registered form and
72,339 in coupon form and had a value of $133,970,983. Included in
these coupon form redemptions were 2,709 Treasury savings certificates and war savings stamps, which totaled $74,533. There also
were redeemed 14 federal land bank bonds valued at $39,100. In
all, 16,914 separate redemption transactions were functioned.
PERSONNEL
In the regular November election, Robert Wardrop, of Pittsburgh,
Pennsylvania, and George D. Crabbs, of Cincinnati, Ohio, were reelected Class "A" and Class "B" directors, respectively, for the threeyear terms ending December 31, 1932. There were no other nominations for either post.
The Federal Reserve Board reappointed George DeCamp as
Class "C" director for three years, at the same time redesignating him
as Chairman of the Board and Federal Reserve Agent for the usual
one-year term.




1Q

The Reserve Board also reappointed John Omwake and A. L.
Humphrey as directors at the Cincinnati and Pittsburgh branches,
respectively, for three-year terms. Thomas J. Davis and Joseph R.
Eisaman were elected by the Board of Directors of the main office to
serve at Cincinnati and Pittsburgh for similar periods. The present
Managing Directors at the branches, C. F. McCombs at Cincinnati
and J. C. Nevin at Pittsburgh, were also reelected to serve for the
year 1930.
In May, the Reserve Board authorized the appointment at each
branch of an Acting Assistant Federal Reserve Agent for a six-month
period, in connection with the maintenance and issue of a supply of
new small-size currency. In December these appointments were
extended to Feb. 1, 1930.
NUMBER OF EMPLOYEES
NUM3EH

1200

eoo

NUMBER

•

m

Ml

1200

I I I I

I

600

400

400

There has been no change in the official staff of the bank, and the
number of officers and employees dropped from 923 at the close of
1928 to 921 last December.
GENERAL BUSINESS CONDITIONS

Business conditions in the fourth district for the year 1929 as a
whole, were unusually good. Operations at industrial plants attained
peak levels and most concerns experienced the best year in history.
Not only was the output of goods in unprecedented volume, but the
earnings reported by many corporations have never before been
equaled.
In the first half of 1929, general business improved with each
succeeding month, continuing the uptrend which started early in
1928. The turning point was reached in early summer, and industrial activity began to recede gradually in August. The peak, however, was so far above the general level of preceding years that even
with the gradual falling-off which was noticed in autumn and the
more drastic declines of November and December, operations at the
year end were only slightly less than the average of the past three
years.
Employment and payrolls have been well maintained. The high
point of the year occurred in August, with mild recessions in Septem-




— 14 —

ber and October. In the last two months of the year this decline was
somewhat accelerated. In spite of these decreases, employment
averaged higher than last year.
Iron and steel, the district's basic industry, fared unusually well
during the first half of the year but operations fell off in the fall until
output in December was at a lower rate than in other parts of the
country. In the early part of the year heavy automotive requirements, coupled with large orders from other sources, kept steel mills
working at capacity for months. In the latter part of the year, however, local mills have borne the brunt of the decline in steel requirements, due to the large proportion of automotive steel produced
locally. Rail orders, which have been unusually large recently,
counterbalanced the decrease in some centers, but have benefited
few of the fourth district steel mills. The increased volume of business in the first part of the year was contracted for at relatively high
prices, so that earnings showed a decided gain over former years.
The rubber and tire industry, after staging a recovery in late 1928,
operated at record levels for the first few months of 1929, but was
soon confronted with abnormal inventories of finished goods. This
situation was partly remedied by a sharp decline in production which
occurred in the third quarter. In spite of this, output for the year was
only slightly less than in 1928. In the latter months of 1929, prices
of crude rubber, which had been around twenty cents for some time,
fell to around sixteen cents, due partly to larger imports.
Coal production in the district showed improvement throughout
the year, reflecting increased operations at Ohio mines, which have
been producing on a more satisfactory scale than for the past several
years. Production for 1929 was substantially greater than in the
same period of last year. Shipments of coal at Lake Erie ports were
the largest ever reported, being 14 per cent larger than 1928, the best
previous year. Prices, however, are still low and wages of workers
and net earnings were unsatisfactory but were better than for some
time.
Building was the only major industry which has not made a favorable showing. Over-built conditions in some sections and high financing costs have resulted in relatively little building in the residential
field. Other types, however, have not been affected to such a degree
and were about on a par with 1928.
Most other types of industrial activity were satisfactory. Consumption of electric power exceeded 1928 by about ten per cent.
Motor accessory, machinery, tool and equipment concerns enjoyed a
very prosperous year. Paint production was in record volume and
demand from automotive sources kept operations at glass factories
at high levels.
Agricultural production was about the same as in 1928. Decreases
in some crops were counterbalanced by increases in others. The
tobacco crop was slightly larger than in 1928, but was of poorer
quality.




Statement of condition of the Federal Reserve Bank of Cleveland
December SI, 1929 and December 31, 1928
1929

RESOURCES

1928

Cash Reserves:
Gold with Federal Reserve Agent
Gold settlement fund — Federal Reserve Board
Gold redemption fund — Federal Reserve notes
Gold bullion, coin and certificates

$130,900,000.00
70,959,579.80
6,493,334.30
45,906,231.87

$119,070,895.00
72,505,853.84
7,414,225.11
39,847,450.69

Total gold reserves
Legal tender notes, silver coin and certificates

$254,259,145.97
8,618,135.00

$238,838,424.64
11,687,024.00

$262,877,280.97
6,724,403.46

$250,525,448.64
6,504,202.34

76,718,607.35
23,499,106.07
29,478,800.00
1,500,000.00

92,702,241.74
52,377,239.91
32,961,800.00

$131,196,513.42
66,851,964.38
6,267,803.43
1,087,613.31

$178,041,281.65
67,068,387.44
6,535,180.62
1,113,530.16

$475,005,578.97

$509,788,030.85

$188,197,920.00

$216,890,225.00

173,739,386.42
1,981,661.90
2,255,055.57

182,774,489.60
1,215,785.61
1,507,600.01

$177,976,103.89
62,957,322.61

$185,497,875.22
65,383,472.73

$ 15,632,200.00
29,140,768.62
1,101,263.85

$ 14,418,550.00
26,345,333.54
1,252,574.36

$475,005,578.97

$509,788,030.85

Total cash reserves
Non-Reserve Cash
Bills and Securities:
Bills discounted for members
Bills bought in open market
U. S. Government securities
Other securities. . .

...

Total bills and securities
Unoollected Items
Bank Premises — Less reserves for depreciation
Total Resources
LIABILITIES
Federal Reserve Notes (in actual circulation)
Deposits:
Member bank — Reserve account
U. S. Treasurer — General account
Other deposits
Total deposits
Deferred Availability Items
Other Liabilities:
Capital stock paid in
Surplus fund
Miscellaneous liabilities

....

Total Liabilities




— 16 —

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