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THIRD ANNUAL REPORT
OF THE

FEDERAL RESERVE BANK
OF CLEVELAND
FOR THE YEAR ENDED DECEMBER 31. 1917

,,

WASHINGTON
GOVERNMENT PRINTING OFFICE
1918

THIRD ANNUAL

REPORT

OF THE

FEDERAL RESERVE BANK
OF CLEVELAND
FOR THE YEAR ENDED DECEMBER

WASHINGTON
GOVERNMENT

PRINTING
1918

OFFICII

31. 1917

LETTER

OF TRANSMITTAL.

FEDERAL RESERVE

BANK,

Cleveland, Ohio, January 15, 1918.
Sm: I have the honor to submit herewith the third annual report
of the Federal Reserve Bank of Cleveland, covering the year 1917.
Respectfully,
D. C. WILLS,
Ohairman and Federal Reserve Agent.
Hon. W. P. d. HARDING,
Governor, Federal Reseroe Board,
Washington, D. O.
3

TABLE OF CONTENTS.
Page.

Earnings and expenses
Discounts for member banks
"
"
Bankers' acceptances
"
United States bond transactions
Municipal warrants
Reserve position of the bank
State-bank members
'.'
Relations with member banks and the public
Relations with the Government
Libery loan campaigns
Treasury certificates of indebtedness
Federal Reserve note issues
Branch banks established
Internal management of the bank
Check clearing and collection

7
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8
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9
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10
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10
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10
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10
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11
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12
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. 12-17
15
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17
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18
.
20
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21
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CHARTS.

No. 1.
No.2.
No.3.
No.4.
No.5.

Gross earnings, classified expenses, and net earnings... .. ... .....
Relation of revenue-producing assets to capital stock...................
Certificates of indebtedness..........................................
Government deposits............
. ..
Movement of Federal Reserve notes and gold reserve.......

.

...
.

23
24
25
26
27

EXHIBITS.

A. Gross earnings, classified expenses, and net earnings. . . . .. . . . . . . . . . . . . . . .
B. Average earning assets and average rates. .. . . . . . . . . . . . . . . . .. . . . . . . . . . . . . .
C. Statement of condition of the Federal Reserve Bank. .. . . . . . .. . . . . . . . . . . . .
D. Profit and loss account... . . . . .
.. ..
. .. ..
E. Resources of member banks. .. .. . . . . . . . . . . . . . . . . . . . . . . . .. .. . . . . . . . . . . . . .
F. Operations in investments and discounts department. . . .. . . . . . . . . . . . . . . . .
G. Discountrates..........................................................
H. Bills bought in the open market.... ..
. . ..
.. ..
I. Operations in United States securities. . . . . . . . . . . . .
. .. . . . . . . . . . . . . . . . .
J. Municipal warrants purchased. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . .
K. Changes in the reserve position of the bank. . . . . . . . . . . . . .. . . . . . . . . . . . . . .
L. Member banks. .
..
.
M. Accommodation of member banks through discount of paper. .
N. First Liberty Loan. . . . ..
O. Second Liberty loan...................................................
P. Certificates of indebtedness. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . .
Q. Rediscounts of paper secured by Government securities...................
R. Government deposits.
. ..
.. ..
S. Federal Reserve note issues. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
T. Check clearing and collection. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . .
U. Gold settlement fund...
.....
V. Fiduciary powers granted to national ban ks.. , . . . . . . . . . . . . . . . . . . . . . . . . . . .
5

28
28
29
30
30
30
31
32
32
32
33
33
34
34
34
34
35
35
35
36
31;
36

THIRD ANNUAL REPORT OF THE FEDERAL
RESERVE BANK OF CLEVELAND.
It has been frequently urged that the primary function of the
Federal Reserve Bank is that of service-first, i.n mobilizing reserves;
second, in rediscounting; and third, in providing an elastic currency;
and that it did not greatly matter whether or not the Federal Reserve Banks might be money-making institutions. With vastly increased opportunities for service during the past year, however, the
Federal Reserve Banks have demonstrated their capacity to earn
a very comfortable margin over their expenses. The Federal Reserve
Bank of Cleveland has made net earnings during the year sufficient
to pay its entire arrearage of accrued dividends; but as a matter of
banking prudence, it has been deemed wise to provide an ample
reserve against depreciation, and accumulated dividends have therefore been paid to July 1, 1917. All furniture and equipment have
been charged off the books. The expenses at the same time have
naturally increased markedly with the rapidly expanding activities.
Chart No.1, appended hereto, .shows graphically the gross earnings, both in total and divided into the three chief classes of revenue,
together with the expenses and net earnings, and Exhibit A gives
the data in tabular form. Chart No.2 shows the relation of revenue-producing assets to capital stock. Exhibit B contains the daily
average of invested funds, and the average rate of earnings on each
class of investments, for each month of the year, compared with
each month of 1916, and summary of investment operations is also
shown in this exhibit.
Exhibit C is a comparative balance sheet as at the close of business December 30, 1916, and December 31, 1917.
Exhibit D is the comparative profit and loss account for the years
1916 and 1917.
The extraordinary history of the United States during the year
has tended toward a uniformity of experience in business and banking conditions throughout the country. District No.4 is very largely
a manufacturing district, and its record for the year as such is quite
similar to that of the other industrial districts. It is the leading dis7

8

ANNUAL REP,ORT OF FEDERAL RESERVE BANK 0]' CLEVELAND.

trict in the production of primary iron and steel products, and its
industries of this character have of course been taxed to capacity
throughout most of the year, together with industries in most other
lines, although there has been some slight recession from the peak after the completion of contracts for munitions, etc., from foreign Gov
ernments, and pending the placing of orders for our own Government. This district also ranks high in agricultural products; and
although the planting season 'vas late and cold, the crops have been
large and profitable. Building industries have been checked somewhat by the high cost of materials and labor. Transportation difficulties have been very great, and in many lines have severely retarded production as well as distribution. The district, although containing a very large part of the bituminous coal supply of the country, has suffered a severe coal shortage during the last part of the
year, owing in part to transportation difficulties, in part to the situation which arose from the fixing of coal prices, and in part to the
necessities of the Northwest for coal, resulting in the priority order
for Lake shipments; in some cases, industries have been obliged to
close down for short periods because of lack of fuel. In spite of the
untoward conditions above referred to, however, the general prosperity has been great, and the record of the district in Liberty loan
subscriptions is evidence not only of the patriotism and thrift of our
people, but also of surplus wealth nroduced. Between the first and
second Liberty loans, the deposits in the banks of the district showed
an actual increase of about 3 per rent. The growth of resources of
member banks during the year is shown in Exhibit E.
DISCOUNTS :FOll MElI1BER BANKS.

The operations of the Federal Reserve Bank of Cleveland in rediscounts have immensely increased during the latter months of the
year. This increase has been produced not only by the finanoing of
Liberty loans, but by the demands of industry and commerce, which
have required large amounts of working capital for financing current
orders and operations, increased notably by high cost of materials
and labor and consequent large inventories, and to some extent by
the delays in production and deliveries incident to the difficulty of
obtaining materials and the inadequate transportation facilities.
Exihibit F shows the year's operations in rediscounts for member
banks under the several classes of paper, and classified by maturities,
with the same data for 1916.
While the demand for money has increased and the money rates
have tended to harden, no general advance in rates of rediscount
at this bank was deemed advisable until December 1, when this
bank in common with most of the other Federal Reserve Banks announced slight advances.

ANNUAL

REPORT

OF FEDERAL

RESERVE

BANK

OF CLEVELAND.

9

Exhibit G shows the rates throughout the year for the various
classes and maturities of paper.
The growth in the use of trade acceptances has been marked during the latter part of the year. It was to have been expected that
the usual reluctance to change would deter banks and business houses
from the adoption of this new system until an active demand for
money and credit and for the facilities of the Federal Reserve Banks
should furnish a practical demonstration of the ad vantages of this
kind of paper. From the inauguration of the Federal Reserve system, the best-informed men have felt that the adoption of the tradeacceptance system was only a matter of time, but that a considerable
amount of time would be necessary before it should become the commoner method of closing accounts. It now seems that in less time
than was anticipated, the system may come into very general operation. The Federal Reserve Bank of Cleveland has been active in
the promotion of the adoption of the system at every opportunity,
having been represented at a number of meetings of trade organizations for conferences on the subject, and having furnished information to a very large number of inquirers both by mail and in person.
A large number of copies of the booklet, "Why Accept 1 " have been
ordered through this bank during the year by business houses introducing the system among their trade.
llANK}~RS'

ACCEPTANCES.

Transactions in bankers' acceptances have been large, although
recently the bank has not been actively in the market for bankers'
bills because of the needs of our member banks. District No.4 being
rather more self-contained than some of the other districts, however,
there have been occasions when the demands of member banks in
other districts were so much greater, proportionately, than in this
district, that other Federal Reserve Banks have found it desirable to
dispose of some of their investments in bankers' bills, and the Federal
Reserve Bank of Cleveland has been glad to be of service to the general situation by making large purchases on these occasions-thus
providing the intercommunication and leveling up between the reservoirs which was intended in the establishment of the system of 12
banks, but without the necessity of rediscounting for any other Federal Reserve Bank its member banks' paper. A number of the larger
banks in district No.4 have entered the acceptance field, discounting
bills for both foreign and domestic trade during the year, and the
Federal Reserve Bank of Cleveland has purchased the bills of its
own member banks freely when offered.
The following member banks have, upon application, been granted
the right to accept up to 100 per cent of their capital and surplus
54007-18-2

10

ANNUAL

REPORT OF FEDERAL RESERVE BANK OF CLEVELAND.

during the year: Fifth-Third National Bank, Cincinnati; Cleveland Trust Co.; First National Bank, Cleveland; Union National
Bank, Cleveland; Union Trust Co., Pittsburgh.
Exhibit H shows the transactions in bankers' acceptances during
the year ns compared with 1916.
UNITED STA'I'ES BONDS.

Transactions in the older issues of Government securities have of
course been practically suspended since the offering of the first Liberty loan. Purchases of small amounts of bonds from member banks
have been made as a matter of accommodation. Exhibit I shows the
transactions in Government securities.
MUNICIPAL

WARHANTS.

As soon as war was declared and it became apparent that the
facilities of the Federal Reserve Banks would probably be needed
by their member banks, the Federal Reserve Bank of Cleveland, in
accordance with the wise suggestion of the Federal Reserve Board
and in common with 'the other Federal Reserve Banks, withdrew
entirely from the market for municipal warrants, and has since purchased only small amounts of early maturing municipal bonds for
which sinking funds had been provided, merely as an accommodation
to member banks desiring to dispose of such bonds. The tra nsactions
in municipal warrants are shown in Exhibit J.
ImsERVE POSITJON.

Th,e reserve position of the bank has remained strong in spite of
the demands upon its loaning power. This has been due chiefly to
the increased reserve required to be maintained in the Federal
Reserve Banks by the amendment' of section 19 of the Federal
Reserve Act, but also in part to the large increases in capital and
reserve deposits on account of the accession of important State
banks to our membership, as well as the increase in the capital and
surplus of banks already members; and in some degree also to the
considerable sums of gold patriotically sent by both member and
State banks to strengthen the position of the system, either as excess
deposits or in exchange for Federal Reserve notes. Exhibit K shows
the changes in reserve position during the year.
STATE BANK MEMBERS.

The movement of the larger and more progressive State banks to
join the Federal Reserve system has been marked in this district.

ANNUAL

11

REPORT OF FEDERAL RESERVE BANK OF CLEVELAND.

This movement was known to be ultimately inevitable, and has been
of course stimulated largely by the amendment of section 9 of the
Federal Reserve Act as well as by a recognition of the added strength
and prestige given to any bank by voluntary membership in the
system, but has been also in large part due to a patriotic response to
the forceful appeal of the President and a desire to do eveything
necessary to fortify the position of our banking system against all
possible contingencies arising from the war. Some considerable
credit must also be given to the member banks, who ha ve shown in
many cases their growing appreciation of the value of membership,
thus encouraging nonmembers to join the system.
The following State banks haye been admitted to membership
during the year:
Date
of admission.
1917.
Apr. 11
July
2
Nov. 1
Nov. 8.
Do ....
Nov. 21
Do ....
Nov. 24
Nov. 30
Dec. 3
Dec. 14
De-c. 28

Narne of bank.

Cleveland Trust Co ..................•........•.....
Guardian Savings & Trust Co .......•.........•..........
Lawrence Savings & Trust Co ......•...............
Citizens Savings & Trust Co.............
Citizens Trust & Savings Bank..................
Ohio Bank & Trust Co..............................
Hillsboro Bank & Savings Co.......................
City Trust & Savings Dank.........................
Union Trust Co. of Pittsburgh......................
Exchange Bank of Kentucky.......................
Pittsburgh Trust Co................................
First Standard Bank & Trust Co

Location of bank.

Cleveland. Ohio ..•..........
do
.
New Castle. Pa ..•...........
Cleveland. Ohio •.•..........
Columbus. Ohio ..•..........
Massillon. Ohio ..•...•.......
Hillsboro. Ohio
.
YoungstoWD Ohio
.
Pittsburgh. i •.............
'a
Mount Sterling. Ky
.
l'ittsburgh.!'a
....•.•.•.....
Maysville. Ky..•............

Capital
and
surplus.

ss.ooo.ooo

6,000.000
600.000
8.000,000
850.000
18.7,500
62,000
350,000
36,000,000
75,000
3,000,000
235,000

Exhibit. L shows the changes in the membership, in capital stock,
and in reserve deposits during the year.
RELATIONS WITH MEMBlWS AND THE

r-nm.rc.

Exhibit M shows the accommodation which has been extended to
.member banks through rediscounts and purchase of acceptances during the year compared with 1916.
Overdrafts have been small in volume, and of those which have
appeared a number have been due to delays in the mail service.
The required reserve deposits of member banks have been quite
genrndly maintained unimpaired, and although it has been necessary to assess penalties for deficient reserves upon a small number of
ban ks each month, the disposition to maintain reserves in conformity
with the law, or beyond requirements, has been apparent on the part
of most banks. Weeldy reports of required reserve are made by
banks in the reserve cities and semimonthly reports by all other banks.
One member bank has been closed by the comptroller during the
year. The Federal Reserve Bank of Cleveland has had no losses and
has no past-due paper on its books.

12

ANNUAL

REPORT OF FEDEHAL RESERVE BANK OF CLEVELAND.

Through its Liberty loan transactions the bank has corne into
touch with the general public to a far greater degree than would
have been thought possible at the beginning of the year. Arising
out of this relation has come a realization of the functions played
by the Federal Reserve Banks, not only as fiscal agents of the Government, but in steadying the money market and in providing for
the distribution of the immense amounts of money and credit which
have been moving throughout the country. This practical experience
has confirmed the impression which the public very generally entertained even in advance of many banks, that the Federal Reserve
system is a tremendously useful and practically indispensable servant
of the public welfare; and undoubtedly great good is already resulting from the strengthening of this conviction.
RELATIONS WITH THE GOVERNMENT.

The relation of the Federal Reserve Bank to the Government IS
of course the outstanding feature of the year's history. In the Federal Reserve Bank of Cleveland a fiscal agency department, with a
staff of 60 persons, has been created in a few months, occupying almost half of the entire floor space required by the bank. This department does not include members of the Liberty loan committees,
but is occupied in the distribution of bonds and certificates, the collection of and accounting for payments, the arrangements with depositary banks, tabulation of data, and in general the handling of
the business produced by the great success of the "sales force," the
Liberty loan committee, which has rendered such conspicuous voluntary service.
THE FIBST LIBEHTY LOAN.

The call of the Secretary of the Treasury for organization to obtain SUbscriptions to the first Liberty loan was received by the Federal Reserve Bank of Cleveland on May 3, 1917, and at an informal
conference the immediate formation of a central Liberty loan committee to represent the entire district was deemed advisable. This
was accomplished by requesting the clearing house associations ill
the 13 more important centers of population and banking resources
to send one delegate each to the Federal Reserve Bank for a discussion of program and the formation of a permanent organization.
These delegates met on May 12, 1917, and after a thorough discussion of the problem, in so far as its details could be foreseen at that
time, effected the organization of a central Liberty loan committ~e.
The committee thereupon appointed an executive committee.
The members of the central Liberty loan committee were thereupon constituted chairmen of the local organizations in their respec-

ANNUAL

REPORT 0]' FEDERAL RESERVE BANK OF CLEVELAND.

13

tive counties. The rural territory not directly covered by these committees appointed representatives who thereupon organized a separate county organization committee with subcommittees directed
from Cleveland, Toledo, Columbus, Cincinnati, Pittsburgh, and Lexington. The 168 county areas within the Fourth Federal Reserve
District were completely organized, the various security houses within the district contributing from their sales force members who were
assigned to separate counties, and proceeded at once to ol'ganize
county organizations.
The district Liberty loan organization, as such, was compelled under force of circumstances to use the Federal Reserve Bank as headquarters, and under the stress of conditions, this produced some
confusion which in some degree hampered the committees, as well as
the operating staff of the Federal Reserve Bank.
By June 1, 1917, there was thorough organization in everyone
of the 168 counties of the district, and the 'effect of this organization, entirely voluntary, became at once apparent. The organization was, of course, more highly developed in the larger centers, although the work of the rural county chairmen can not be spoken
of with too high praise.
The closing of subscriptions June 15, 1917, showed in possession of
the Federal Reserve Bank, qualified subscriptions in excess of $286,000,000 from 514,000 su bscribers, The several areas reported as
follows:
Quota.
Pittsburgh
Toledo
Cleveland

.
.
.

Subscription.

S80, 858, 000
17,121,100
71,756,000

------_ .. _-

.------

811J,047.350
~66,gg~,~g
, ,

Quota.
Columbus .•..•......
Cincinnati.
Lexington .•...•.•...

.

$9,279,000
33,368,500
8,025,000

Subscription.
310,751,550
44,659,450
6,819,750

---',----------'--- -----'--~--

Exhibit K shows the subsciiptions and allotments «lassified.
SECOND

LIBERTY

LOAN

o~' ]

HI

7.

Experiences of the first Liberty loan indicated clearly the wisdom
and necessity of f1 separate location for the headquurtei-s
of the
central Liberty loa n committee and a more comprehensi ve staff in
its organization. The executive committee appointed on the first
Liberty loan campaign immediately held sessions with a view of
perfecting such an organization. The personnel of the central
Liberty loan committee, as well as the personnel of the executive
committee, was largely unchanged. There were a few changes in
the chairmanships of the various county committees, owing to illness,
other activities, etc., but in the main the skeleton organization developed in the first campaign was retained, although extended in
detail in many respects.

14

ANNUAL

REPORT

OF FEDERAL RESERVE BANK OF CLEVELAND.

The executive committee determined llpon the policy of making a
practical requisition upon each bank for its proportionate share of
the amount of the second loan which the Secretary of the Treasury
expected the fourth district to raise, With this end in view, the
executive officeof the committee carefully studiediuethods and means
to establish just quotas of the banking resources of the district, J n
August, 1917, all banks within the district were ask~d to report the
condition of their deposits as of June 15 and August 15, and also
the amount of Liberty loan bonds of the first loan still in their
possession, The response to this questionnaire was liberal and enabled the committee to establish the interesting fact that only a
small percentage of bonds of the first Liberty loan was still in the
hands of the banks, and, furthermore, that the deposits of institutions
so reporting had increased from June 15 to August 15 between 3~
and 4 per cent. The banks that did not report were considered as
possessing the deposits' given in the Rand-McNally Bankers' Directory of July 1, 1917, plus 31 per cent, the average increase shown by
the reporting banks. Upon this basis, a quota of so many dollars
was fixed upon every banking institution in the district; and each
bank was advised by special letter, received on October 1, of their
proportion of the $300,000,000of bonds which was the total minimum
subscription asked of the Fourth Federal Reserve district by the
Secretary of the Treasury. The effectiveness of the more comprehensive organization and the value of the well-learned lessons of the
first loan campaign became quickly apparent as the second loan
campaign gathered headway, Every bank in the district was requested
to report the subscriptions obtained for each day upon" keyed" cards
furnished them for the purpose. This rather burdensome task was
faithfully performed by about 80 per cent of the banks, and the
committee was able to judge of the progress with more than ordinary
accuracy from day to day.
The entire 168 counties within the Fourth Federal Reserve district
in the second campaign were divided into six" areas," administered
from Cleveland, Cincinnati, Columbus, Pittsburgh, Toledo, and Lexington, The Liberty loan organizations in these six central points
took upon themselves cheerfully, and performed with the greatest
skiil, the task of coordinating the campaign between each center and
the counties assigned to it. Each area organization made every effort to exceed the minimum quota of every county within its area.
The rivalry between the areas was healthful and helpful; the work
of the county chairmen was most noteworthy in its zeal and efficiency.
The organizations in each of the six area centers were highly developed, and were made up of an extremely skillful and high-powered
personnel.

ANNUAL

REPORT OF FEDERAL RESERVE BANK OF CLEVELAND.

15

The distribution of publicity and its choice and preparation were
excellent and far-reaching in their effect. The publicity bureau, which
undertook to supply advertising and editorial matter for 912 papers
within the district, prepared and distributed a large amount of extraordinary copy, and it is interesting to note that 850 newspapers
out of the 912 whose cooperation was so requested, complied in the
fullest degree.
The result was a total subscription to the second Liberty loan in
the Fourth Federal Reserve district in excess of $486,000~000,reported from 867,000 subscribers. The several areas reported as follows:
I
______

I __

1

CI~vcland............
P.itt~burgh...........
Cincinnati

_.

1
__ Q_u_ot_a._ Subscription.

Q_"o_t,_a._ SlIhscriPtion.I
$92,72.5,200
127,SI9,500
36,701,100

5151,377,200
205,5~1,lQO
74,7 (ti, 4.)0

I Tolr;do..
Columbus...........
Lexington

4

•••••

•••••

$12,511,900
21,054.200
8,732,950

$19,.502, 00
8
22,648,500
11, 38fl,100

Exhibit 0 shows the number and amounts of subscrrptions and
allotments of the second Liberty loan, elivided according to size of
SUbscriptions in the classes fixed by the Secretary of the Treasury
for the purpose of allotment.
THEASURY CEH'l'TFICATES

01·' INDEBTEDNESS.

With each issue of Treasury certificates of indebtedness, an effort
has been made not only to secure more than the district's proportion
of the total issue, but also to assure as wide a distribution as possible. The earlier issues were brought particularly to the attention
of banks throughout the district which had experience as distributors of high-grade bonds and note issues, and their hearty cooperation was uniformly secured. Exhibit P shows the total amount of
each issue and the amounts allotted to the fourth district.
The Federal Reserve Bank of Cleveland purchased varying
amounts of each issue, chiefly for the purpose of having some of the
certificates on hand for distribution to intending purchasers who had
not subscribed before the subscriptions were closed; and in every
case the amount held by the Federal Reserve Bank found lodgment
in the hands of purchasers within a very short time after the date
of issue.
FINANCING

THE CARRYING OF WAR LOANS.

For the first Liberty loan and the issues of certificates leading up
to it, a rather remarkably small volume of rediscounting by the

16

ANNUAL

REPORT

Oli' FEDERAL RESERVE BANK' OF CLEVELAND.

Federal Reserve Bank was required, and the reports received from
the banks under date of August 15 indicated that at that time practically all of the loan had been absorbed by the public, only a small
amount of bonds being held by the banks themselves. For the second
Liberty loan and the Treasury certificates issued in connection with
it, a considerably larger volume of discounting has been done, and the
indications are that a considerably larger volume of bonds is still
in the hands of banks, although the proportion is not in the least a
matter of concern.
The total volume of member banks' collateral notes secured by
Liberty loan bonds or certificates of indebtedness on July 15 was
$1,050,000; on December 15, $10,885,550. The total volume of member banks' customers' paper, similarly secured, on our books on December 15 was $10,201,672.94. The exact corresponding figure for
.Tuly 15 is not ascertainable, the records not being kept at that time
to show this amount; but the amount was less than $1,000,000.
Exhibit Q shows the total volume of rediscounts, both of member
banks' notes secured by Governmentsecurrties as collateral and of
paper of customers of the banks secured by Government securities,
for each month of the year.
F~XPENSE

0 •.. LIHEHTY

LOAN

AG,~:NCY.

For the first Liberty loan the sum of $75,000 was named as the
amount of expense in the fourth district which the Treasury Departwent would reimburse, upon presentation of vouchers in due form,
WIthout question. The attempt was made to keep the =xpenditure
within this sum, but the actual expense chargeable to the first Liberty
loan to the date hereof is $104,593.05. For the second Liberty loan
$200,000 was named as the available amount, and there has been
expended to date $131,404.60.
,Vith considerable difficulty and gradually a capable office force
has been built up for the clerical work of the Liberty loan committee, for the receiving of subscriptions and payments and accounting
therefor, for issuing and exchanging certificates and bonds, for handling applications fordesignation as depositary for war-loan funds
and conducting the business incident to such deposits, and for the
other necessary work involved in our functions as fiscal agent; and a
total of $49J92.08 has been paid in salaries to date of this report.
No fees or commissions have been paid; the banks of the district
have perform ed their arduous duties in handling large numbers of
small subscriptions and in mallY cases very small payments, and in
distributing the bonds, without reimbursement of allY sort. The expense of all newspaper advertising done in connection with the loans
was contributed by public-spirited banks and business houses, The

ANNUAL REPOR,T OF FEDERU,

RESERVE BANK OF CLEVELAND.

17

actual out-of-pocket expcnses of representatives of the Liberty loan
committees in traveling, purchasing supplies, etc., were refunded, as
far as possible.
GENEHAL EFFECT OF GOVERNMENT FINANCING.

The effect of the Government financing in district No.4 has been
undoubtedly similar to that in all other districts. There has been,
naturally, an expansion in banking resources, a tightening of the
rates for money, and the loaning ability of all financial institutions
has been quite heavily drawn upon. Without doubt a part of the
curtailment of building operations is due to the investment of funds
in war loans which might otherwise han gone into such operations,
as well as to the high cost of building. Many other forms of enterprise which are dependent upon a free supply of money Tor investment as fixed capital have been curtailed. The flotations of the
loans, together with other influences of the war, has resulted in a
decided trend toward the gradual exclusion of the purchase, and
consequently the manufacture and distribution, of nonessentials.
Manufacturers and dealers in nonessentials are therefore beginning
to be quite seriously affected. On the other hand, this tendency toward economy and thrift is undoubtedly having a very beneficial effect on all of the people, and after the pains of adjustment have been
passed, the general situation should be sounder than before.
Chart No.4 shows the fluctuation of Government deposits during
the year, and Exhibit R gives the same information in tabular form.
RELATIONS WITH COlUPTROLLER'S OFFICE.

The bank has endeavored during the y~ar to keep in close harmony
with the office of the Comptroller of the Currency and the chief
national bank examiner of the district, whose office is in the same
building. Acknowledgment is very glady made of the cooperation
which has been rendered by Chief Examiner S. H. L. Cooper and
his staff.
NOTE ISSUE.

In the issue and redemption of Federal Reserve notes, which has
been a conspicuous feature of the year's operations, the experience
of district No.4 runs practically parallel with that of all the other
districts. A large number of notes have been issued in exchange for
gold and gold certificates deposited' with the bank, which have
strengthened the general national situation very materially. The
demands, however, for pay-roll currency have been constant and increasing, and far in excess of the currency deposited with this bank,
54007-18--3

18

ANNUAL

REPORT

OF FEDERAL

RESERVE

BANK

OF CLEVELAND.

so resulting in a large increase in the volume of outstanding Federal
Reserve notes. Of course, this currency expansion is in some degree
necessary and inevitable at a time of greatly increased volume of
business and higher cost of labor and commodities. The gold reserve
against Federal Reserve notes, however, has remained strong throughout the year, and there is, in our judgment, little warrant for a fear
that undue or unnecessary inflation is taking place.
Chart No. 5 shows the movement of Federal Reserve notes 'and
of gold reserve during the year, and Exhibit S shows the denominat.ions issued, destroyed, and outstanding, as well as those exchanged
with other Federal Reserve Banks. The cost of Federal Reserve
notes issued, including redemption cost, was $75,526.78.
BRANCH

BANKS.

The officers and directors of the Federal Reserve Bank or Cleveland have always had in mind the certainty that sooner or later it
would be desirable to establish branch banks in at least the two other
large cities in the district. Upon the enactment by Congress of the
amendment to the Federal Reserve Act, faciliating, among other
t.hings, the establishment of branches, in June of this year the Federal R;eserve Board suggested that in their judgment the time had
come when the system would shortly require this additional machinery. The distances in district No.4 being comparatively short, there
is not the same urgent necessity of branches as is evident in some of
the districts covering larger areas. However, it was recognized that
particularly in the collection of checks and in the' payment and receipt of cash, there would be very great conveniences, particularly to
the member banks in Cincinnati and Pittsburgh, in the location of
branches in those cities. ~o requests had been made by the banks of
either city, however, for the establishment of a branch until July 2,
1-917, when the clearing house banks of Cincinnati, through a committee, forwarded to the directors of the Federal Reserve Bank of
Cleveland a petition for the establishment of a branch in that city.
The clearing house committeewas immediately invited to confer with
our directors on July 10, and at this and succeeding conferences the
situation in Cincinnati was carefully considered. A committee of the
board of directors was appointed to meet with Mr. Delano, of the
Federal Reserve Board, at Cincinnati about the middle of August,
.and at the meeting of the directors on September 7 the committee
reported, suggesting the establishment of a branch for thc handling
and collection of checks and' drafts and the receipt and payment of
cash.
After further conference with the Cincinnati representatives, and
.exhaustive consideration of the by-laws and the probable operation

ANNUAL

REPORT OF FEDERAL RESERVE BANK OF CLEVELAND.

19

of the branch on the part of the Federal Reserve Board and representatives of our directors, involving several conferences, the directors, at the meeting of October 5, recommended to the Federal
Reserve Board that they be permitted to establish a branch at Cincinnati.
In view of the probability that the plan of operation of this branch
would constitute a desirable precedent for branches in other districts, the Federal Reserve Board at once devoted itself and its counsel to thorough and careful deliberation upon the form and content
of the by-laws.
The Federal Reserve Board having approved our recommendation
on October 29, at the meeting of November 7 the directors of the
Federal Reserve Bank of Cleveland formally, by resolution, established the branch and named Mr. VV.S. Rowe, president of the First
National Bank; Mr. VV. C. Procter, president of The Procter &
Gamble Co., and Mr. L. W. Manning, secretary of the Federal
Reserve Bank of Cleveland, as their three appointees for directors
of the Cincinnati branch.. subject to the approval of the Federal
Reserve Board. The Federal Reserve Board approved these appointments and itself appointed Mr. Charles A. Hinsch, president of the
Fifth -Third National Bank of Cincinnati, and Hon. Judson Harmon,
former governor of Ohio, as its appointees. Since that time the
plans for opening the branch have gone forward as rapidly as possible; quarters have been secured, part of the staff has been employed,
vault and other equipment has been ordered, the accounting forms
and procedure have been very carefully worked out, and the beginning of the bank's operations is expected to occur early in January.
Under date of October 17 a petition from the member banks of
Pittsburgh for the establishment of a branch in that city was tran~mitted to our directors, some informal discussion having occurred
prior to that time. With the experience and the plan adopted at
Cincinnati as a guide, somewhat more rapid progress was possible
than in the case of Cincinnati, and after conference with the committee representing the Pittsburgh Clearing House Association, at
the regular meeting of November 7 a resolution was adopted recommending to the Federal Reserve Board that permission be granted
to establish a branch in Pittsburgh with powers similar to those of
the Cincinnati branch. A committee was appointed to confer with
t.he representatives of the clearing house association in Pittsburgh
on November 14~and at the meeting of our board on December 8 the
report of the committee was received and Messrs. n. B. Mellon, vice
president of the Mellon National Bank; Charles VV.Brown, president of the Pittsburgh Plate Glass Co., and George De Camp, national bank examiner, were named as the appointees of the Federal Re-

20

ANNUAL

REPORT

OF FEDERAL

R.ESERVE BANK

OF CLEVELAND.

serve Bank of Cleveland on the directorate
of the Pittsburgh
branch.
The Federal Reserve Board approved these appointments and named
Messrs. T. H. Given, president
of the Farmers
Deposit National
Bank, and J. D. Callery, chairman
of the board of directors of the
Pittsburgh
Railways Co., as its appointees.
Mr. De Camp, designated
as manager of the branch, was unable to secure release by the Comptroller of the Currency until January
1, but on that date will nssume
his duties, and the opening of the Pittsburgh
branch should follow
closely after that of the Cincinnati
branch.

The board of directors has met 13 times during the year with an
a ttendance of eight.
Fifty-three
meetings of the executi ve
committee have been held. Mr. R. P. vVright, secretary and treasurer
of the Reed Manufacturing
Coo, of Erie, Pa., succeeded Mr. C. H.
Bagley, of Cony, Pa., as a class B director on January
1, 1917,
Mr. Bagley ha ,oing been unable to stand for reelection because of
poor health; and this has been the only change in the personnel of
the board.
Mr. VV. S. Rowe has remained the member of the ad visory
counci I.
On .Ianuu ry 1, 1917, Mr. Horace G. Davis, then assistant to the
Federal Reserve agent, was made H 11 assistant cashier; and on September 1, Mr. F. J. Zurlinden,
,,0110 had been head of the discount and
investment
depa.rtmentv wa s made all assistant cashier, as was also
Mr. w. F. Tu.ylor, who had been uuditor;
and Mr. G. H. Wagner,
who had been assistant auditor. was made auditor.
At this time a,
readjustment
of the work of the bank, made necessary in large part
-by the establishment
of the fiscal agency department,
was effected,
and Mr. M. J. Fleming,
assistant
cashier since .Ianua ry 1, 1916,
took charge of the new department,
the remainder
of the operating departments
being distributed
under the supervision
of the other
three assistant cashiers.
Owing to the increase in the work OT all
departments,
rna nv uddi tions to the sta if 11ave been necessary, and
there are now 6+ emplovees in the banking department
proper, 75
in the transit department,
and 58 in the fiscal agency department.
Of the bank employees, six are serving exclusively in the department
of the Federal
Reserve agent, which has required
an increasing
organization.
On November 27 Mr. L. VV. Manning, who had been with the bank
since its organization,
and had served since January
1 as secretary
of the bank and assistant to the Federal Reserve agent, took office as
manager of the Cincinnati
branch.
To accommodate the fiscal agency department
it has been necessary
to secure additional space, adjoining the quarters on the first floor of
l. vernge

ANNUAL

REPORT OF l!'EDERAL RESERVE BANK

0]' CLEVELAND.

21

the Williamson Building which have been occupied by the bank since
January 1, 1917; and this space has had to be built, covering a court
between the two wings of the building. Our rapidly expanding functions have made it increasingly difficult to provide and arrange working facilities rapidly enough. An additional supply of vault equipment has been necessary, and the vault is now fully occupied with
high-grade modern chests, in units which will be available in the
event of any necessity of change in location.
EXAMINATIONS.

One complete examination of the bank has been made during the
year by the Federal Reserve Board examiner and his staff; also a
brief examination of the methods of the fiscal agency department
while the first Liberty loan was being handled.
CHECK COLl"ECTION AN D ChEAlUNG.

The check clearing and collection system has grown with the other
work of the bank during the year, and as a result of frequent invitations, 70 nonmember banks have been added to the par list, which
now includes 565 of the 1,170 nonmember banks in the district.
Exhibit T shows the volume of clearing operations.
The operations of the gold settlement fund during the year are
fully covered in the report of the Federal Reserve Board. The immense usefulness and actual indispensability of this facility has been
many times demonstrated in the shiftings of funds incident to the
Government financing .. Exhibit U shows the monthly totals of debits
and credits to the Federal Reserve Bank of Cleveland in the gold settlement fund.
Exhibit V is a tabular statement of the applications for fiduciary
powers granted under the provisions of section 11k of the Federa 1
Reserve Act.
THE OUTLOOK.

The conditions at the close of the year in district No. 4 are somewhat uncertain and difficult, by reason of the many complex problems
awaiting satisfactory solution throughout the Nation, and the inevitable adj ustments consequent upon the necessary emphasis OJ)
economy, and the concentration of effort upon only those enterprises which are essential to the winning of the war. The outlook
can not be said to be wholly favorable to the continuance of unbridled prosperity therefore; but there is no pessimism as to the ontcome, and no disposition to withhold an,) ounce of energy or sacrifice
(hat may be called upon. It is evident that the power of service of

22

ANNUAL

REPORT

OF :FEDERAL RESERVE BANK OF CLEVELAND.

the Federal Reserve Bank of Cleveland may receive a severer test
than any it has yet had; it is also evident that the confidence in the
strength of this institution, as an integral part of the Federal Reserve system under the wise leadership that has been so evident during the past year, is unshakable and well founded. The officers and
directors of the bank welcome the opportunity of service to the utmost, confidently counting upon the continually increasing cooperation of the banks and the people of the fourth district.

ANNUAL

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24

ANNUAL REPORT OF FEDERAL RESERVE BANK OF CLEVELAND.

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REPORT OF FEDERAL RESERVE BANK OF CLEVELAND.

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28

ANNUAL REPORT OF FEDERAL RESRRVE BANK OF CLEVELAND.

JDXHIBIT A.-GI·oss

earnings,

I

Bills
hought

Bills discounted,
members.

Month,

cuusttte«,

United
States securities.

:~a~k:r.

expenses, mul net eant'ings,

Total expenses,

Net earnIngs.

$12,104.12
rs, 152.89
15,207.13
18,177. 89
20,214.55
23,006.16
20,731. 55
17,048.01
24,933.76
28,244.19
33,250.99
91,233.07

553,009.52
37,560.05
35,943.42
35,837.89
46,005.02
;;0,076.21
58,010.11
90,042,02
92,796.76
130,151. 41
160,175.08
214,847.34

'I'otal earnings,

All other
earnings.

1917.

January __.... _...
$2,093.53
February .........
3,633.21
March .... _.......
5,630.09
April .............
7,587.62
6,145.43
May ..............
June ............
_. 16, U8. 35
24,740.22
July ..............
AllR\1sL ...... _._.
26,261. 09
25,779.67
September ........
October, _.... _...
34,794.80
November .. _.....
67,360.98
December. _..... '1155. 023. 91
Total.......

EXHIBIT

820, .558.76 S17, 693. 35 $24,768.00
11,486.90
22.425.74
15,167.09
15,048.93
10.707.17
1~, 764 36
U,159.49
22,494.73
12,773.94
9.902.67
26,516.28
23,655.19
(.,042.67
22,653. '.17
28,267.88
5,103.09
19,804.09
29,091.26
6,139.90
22,979.42
51,709.62
2,079.48
26,105.75
63,765.62
56,421. 88
33,351. 16
6,827.76
8,438.52
29,306.82
88,619.75
4, 59S. 59
79,654 . .58 66,803.33

375,168.90

317,924.42

1490,711.58

5&1,113.64
52,712.94
51,150.55
54,015.78
66,219.57
73,082.37
78,741. 66
107,090.03
117,730.52
131,395.60
193,726.07
306,080.41

B.-Average
ea'rning assets classified, and aceraae rates
monuis ot 1917 tuul. corresporuiimp months ot 19.16.
(In thousands

or dollars;

Month.

'1'otal
invested
funds.

Average
rate.

Total
invested
funds.

-- --January ............
_.
February ............
March. __.............
April. ............
_...
May ... _... _._ .......
June ... _._ ...........
July __ ...............
August. ____ .........
September _..........
October ........
_.....
November.
..........
December. _..........

2.84
3.00
2.98
2.81
2.92
3.03
3.18
3.18
3.22
3.29
3.47
3.79

19.079
20.633
19,356
21.958
25,904
28,780
28.719
38,649
43,720
44,611
65.010
93.554

Bills
bought
in open
market.

January ........
_.....
February _.. _.... _...
Mareh .. __............

981
976
1.122
I, 689
2.613
4,401
6,596
7,052
7,285
6,695
6,884
9.590

tf~~I.:::::::::::::::
..
_

June ... _.............
July .... _............
August ... __ .........
September .. _... _....
October ..........
__..
November _... _......

December , .. · .. _· ..

··1

2.26
2.71
2.62
2.53
2.44
2.48
2.55
2,60
2.63
2.74
2.72
2.75

7,593

9.222
11.175
14,551
15,802
18.450
18.306
17.461
18.163
17.576
21,468

Bills dis- Avercounted,
age'
mem·
rate.
bers.

Average
rate.

Municipal warrants.

---

---

1. 94
1. 93
1.92
1. 95

1. 99
2.06
2.14
2.25
2.33
2.41
2.41
2.58

1,973
2,670
3.112
2,987
2,891
1,554
1.237
1,075
33
12
12
11

--

---

4.14
3.77
3,65
3.67
3.68
3.74
3.75
3.74
3.61
3.73
3.87
4.24

596
1,264
1,816
2,519
1.967
5.245
7.769
8,248
8.695
10,978
21, 200
43.105

Bills dis- Avercounted,
age
mem·
rate
bers.

Average
rate.

-3.40
3.05
3.20
3.21
3,20
3.58
3.63
3.70
3.44
4.62
4.44
4.00

Mnnicipal warrants.

--2.816
2,955
3.853
4.869
5.486
4.510
4,781
4,597
2,780
4.219
3,680
2.713

---

--415
272
254
436
284
277
420
282
598
371
272
1.206

' 4.59
4.68
4.31
4.10
4.35
4.42
4.26
4.56
4.19
4.49
4.16
3.84

Average
rate.

--2.97
2.93
2.78
2.5.5
2.59
2.90
2.85
3,06
3.10
3.27
3.40
3.93

United
States
bonds.
--7,792
6,822
6.850
11.427
12.101
10.995
8.778
9,821
11.015
13.475
12.000
24,263

Bills
bought
in open
market.

I A verage
rate.

--

---

2.78
2.96
3.07
3.09
3.11
3.13
3.13
3.12
3.23
3.29
3.39
3.58

8,718
9,877
7.578
5.025
8,945
10.987
10.935
19.505
23,976
20.147
31. 790
26.175
1916

1917

1916

1917

1916
Month.

---

6.713

1917

1916

1917

Average
rate.

tor the 12

i.. e., 000 omitted.)

1916

1917

977,754.83

1,297,059.141319.304.31

107,254.24

Average
rate.

-2.66
2.90
2.59
2.48
2.58
2.50
2.66
2.75
2.88
2.91
2.97
3.24

United
States
bonds.

Average
rate.

--- -2.501
3,390
3.994
4.181
6,167
6.614
6.653
6.375
6,799
6.878
6.739
7,960

2.57
2.65
2.54
2.56
2.39
2.38
2.63
2.60
2.62
2.65
2.53
2.40

ANNUAL

REPORT OF FE)l)ERAL RESERVE

BANK

29

OF CLEVELAND.

EXHIBIT B.-.il1:cl'age

months

earniny assets ·cla8~i.ficel, (md, a'vcra.ge rates for the 12
of 1917 and c01'1'csponding 'months of 19.16-Continued.

__ .- ------_._-----------,----------,-----SUMMARY

----_.

OF INVESTMENT

OPERATIONS.

1916

1917

Dai1~SI~edffc~~;,i~d~~~~~~!s:d

$9,531,458.45
15,348,152.44
1,·157,325.80
11,314,574.40

.
:

Total...........................
'I'otal volume 01 business handled:

$425,175.75
4,672,647.68
3,943,462.52
5,692,.>48.42

37,651,511. 09

_~~~~~~_
:~~:.' _

{i~~~f~~'~~~~~an~~~.g.~~·.:::::::::::::::::::::::::::::::::::::::
United States securities ............................•.............

14,733.834.37

I=====~==,I==="'====

!~~~f~~~;l:t~e~~~~~~.: t~:~t i~;~~:
::::::::::::::::::::::::::::::::::::: 2~t i gg ~j; !~
:

"1 __ 6_9:.., _100_. __ 11..:,,_7_21..:,,_1_60_._00_
7_0_7:.,' _00_
1

United States securities

Total..
········
Average capital.
Rate 01 gross earnings on capital.

.. ··

•·······

.. ············

.. ·

per cent.

374,941,472.72
6,433,207.00
20

.

·1

56,715,828.99
5,9S2,695.oo
7.17

C.-Statemcnt
ot condition. ot the Federal. Reserve Btnik. ot Cleve/rmd
at the close of tnisimess, Dec. 31, 1917, conuxued. with Dec. 30, 1916.

EXHIBIT

-----------

---R~;SOURCES.

\1

Bills discounted, members .....................................•.......
Advances to. members on eligible cnllateral . ............•.......•........
Aeceptnnces-bouzht
U~~i~~~Set~\~ss~g~~;i,~I:,~
~i~~~1W:~:obligations

1

·.

···1

···1

a:~~:~~
~~~~~:
i~~L::::::::::::::::::::::::::::::::::::::::::::
2percent

bonds

(COD

sols and Panamas)

·.····

3 per cent one-year Treasury notes. ..
3 per cent conversion bonds...........................
3! per cent first Liberty loan bonds
4 per cent second Liberty loan bonds
4. per cent United States Treasury certificates
June 25, 1918............

...• ·····

.. ·· ..

of indebtedness

due

·.
··

1_9_1_7
__

-r-__

$37,163,027.27
33,733,150.00
21,111,990.951
7,233.38

1_91_6_

$1,006,773.50
..
10,153,694:75
2,684,589.64

473,600.00 I

2,403,900.00

~:g?g;3:~ U~~:~:~

3,221,000.00
414,800.00
2,027,000.00
320,750.00

50,000.00

618,000.00
1,800.00

I

..

.............

21,824,517.89
Totallunds empl?yed
:
,
-103,554,411.60
297,660.08
Accrued mterest on United States secuntlCs............................
62,878.48
39 544 25
· .................
Cost of unissued Federal Reserve notes
· .. ··
20: 163.92
· .................
Furniture and equipment. ..................................•.........
934.76
· .................
Expense paid in ad vance
·· .. ·
·
·····
14,921,032.18
45, 176,685, 19
Due from other Federal Reserve banks ..........•.......•.............
129,610.22
11,792.01
Due from banks and bankers
.
2.3,162,771.93
10,417,595.49
Deferred debits
·.···· .. ···
· .. ·
··
15,761,382.50
29,153,275.00
Gold coin and certificates ou hand .............•..............
.
16,953,000. 00
37,664,000.00
Gold settlement fund
····· .. •·· .. ·········
42,250.00
98,800.00
Gold re~em.rtion fund
.
10,832,305.00
55,369,700.00
Gold WIth Federal Reserve agent. ............•........................
4,725,000.00 ................
Gold with foreign agencies
·
·····
· .. ·
484,417.00
238,369.00
1 egal tender notes and silver certiflcates ........................•.....
588,935.00
3,666,525.00
Federal Reserve notes 011 hand ..................................•.....
91, R16.77
1.081,302.20
Other cash and coin
·
·
· .. ···
140,000.00
866,265.00
Mutilated currency forwarded lor redemption
- ......•.....
68,051.154.98 ................
Due from depositary banks and trust companies I .................•...
28,554.65
139,247.83
Other resources
:. .

:1

'fatn] resources. _

_

,_

.

LlAllILlTIES.

Capital paid in ........................................•............
Profit and loss
·
Unearned interest and discount
United States Government deposits
Due to member banks (reserve account)
Due to nonmembcr banks (clearing account)
Due to other Federal Reserve banks
Deferred credits
:
Federal Reserve notes outstanding
Treasurer 01 the United States (special deposit account)
Treasurer 01 the United Stutes (Liberty loan deposit account)..........
Other Iiahilities........................................................
Total liabilities...

..

' ..
.
.
.
·
.
.
.
.
.

373,022,178.22

6,021,800.00
8,026, ioo. 00
94,797.44
132,311.58
37,978.59
190,643.23
974,809.73
30,578,247.23
54.586,226.61
109,724,561. 05
94,160.59
20
33,970,479.80 ..'ii,263;
8,759,174.62
16,553,514.19
10,832,305.00
105,66~, 700.00
34,242,190.00 . ...............
33,809,004.981
.
31,305.57
3,491. 52

ian.'

373,022,178.22
I War loan deposits.

92,573,719.71

92,573,719.71

30

ANNUAL

REPORT OF FEDERAL RESERVE BANK OF CI;EVELAND.
EXHIBIT

D.-PTOjit

lmd loss a-ccount.
1917

Profit and loss balance Dec. 30, 1916
Earnings fromBills discounted, members
Bills discounted, bankers' acceptances
Municipal warrants
Interest carned on United States securities
Profits realized on United States securities
Sundry earnings, including service charge transit department,
exchange bought and sold

.

and

Total .

$94,797.44

.
.
.
.
.

375,169.00
496,711. 58
48,131. 73
317,924.42
24,260.69

.
.

Expenses:
Assessment for expenses of Federal Reserve Board
.
Cost of Federal Reserve notes issued
.
Cost of unissued Federal Reserve notes
.
Premium on United States bonds and securities charged of]'
.
Operating expenses including amortization of furniture, vault and
equipment and other accounts
.
Dividend paid
.
Profit and loss credit balanee
.
Total. ......................................•......................
Percentage
1916
1917

1916
. ..............

318,064.41
106,993.11
116,925.13 .
144,843.65
37,228.53
.5,101. 50

63,145.30

1----------·1--------1,420,140.16

429,156.33

I=~==I==~~=
25,783.40
72,280.77
18,975.62
209,469.52

...............

5,870.44

. ..............
...............

185,251. 94
143,236.51
94, 7~7. 44

245,150.97
716,168.30
132,311.58

429,156.33

1,420,140.161

of net earnings to average capital:

EXHIBIT

3.98
'15.2

E.-ResoU1·ces ot member' ba-nks.

-----------------------------------,---------.--------. Nov. 20, 1917.
Member banks, total resources
Deposits:
Demand ............................................•..........
Time ..........•.•.............................................
COMPARISON

OF

DEPOSITS

.'.....•............

$1,985,977,000

Cincinnati.

/

Includes

three Staie banks admitted

to membership

in,discounts

930,705,000
235,112,000

IN

~~~~~~~gl:::::::::::::
:::::::::::::::::: ::::: ::::::::::::::
::::::: :
1

$1,498,515,000

1,172,813,000
402,519,000

OF THE MEMBEH
BANKS
CITIES IN DISTRICT
NO.4.

IDX.HIBrT F.-Opera-tions

Nov. 17,1916 .

THE

THREE

$108,893,000
318,680.000
411,214,000

I

$97,411,000
146,409,000
315,130,000

<luring 1917.

and investments

department,

1917
Bills discounted, members:
Commercial and industrial.
.
Trade acceptances
.
Agricultural and live stock
.
Rediscounts, secured bv United States obligations •............
Member bank collateral notes, secured by United States obliM~~~~~sb;';;k coli;'ie~ai

notes:

SeCUre(! y eiiiil;ie
b

j,aper:::::::

M, 232, 244. 04
175,185.26

_"_'_2,..:.'3_8_5..:.:_.'00_"
0_'
00_'

gg..:.:_~_~_~,..:.'
~_g_8_:8_8_\_'_'_'

:I

212,176, lOS. 36

Classification by maturities:
Within 15 days...
1.6to 30 days.
31 to 60 days. ..
61 to 90 days.
Beyond 90 days

....•......

.
1

'fotal....................................................
Average rate per cent:
1917
1916

1916

$72,948,095.22
4,400,589.19
167,575.28
15,126,195.67

Total.....................................................

LARGEST

6,792,429.30

147,846,219.88
26,101,442.96
18,773,616.49
19,386,885.84
6_7.:..,_94_°_.
_19_ .

2,288,100.00
3,203,600.00
778,100.00
37r" 000. 00
1_46..:.' __
,_60_0_.
00

212,176,105.361

';

1

6,792,400 00

3.29
4.25

ANNUAL

REPORT

OF FEDERAL

MEMBER

BANK

G.-Discount

EXHIBIT

RESERVE

31

rates.

BANK

COLLATERAL

OF CLEVELAND.

NOTES.
1 to 15 days.
Secured
Secured
by
by ellglUnited
ble
States sepaper.
curities.

In Iorce=-

Jan. 1. 1917
May 10. 1917
Sept. 25. 1917
Dec. 1. 1917•••..........................................................

,

-

REDISCOUNTS-COMMERCIAL

3!
4

PAPER.
1

In force-

--------------------

3t
3t

.
···
·· .. ·
···
·.· .. ···· .. ·

·

to 15
days.

16 to 30
days.

I days. 90
61 to

31 to 60
days.

--------1

~~~~~~~~~~~~~~
~~ ~~~ ~mY:
~: ~~

~I !! t i:

'fRADE

---

if

ACCEPTANCES.
1

In (orce-

---------------------

16 to 30
days.

31 to 60
days.

.61to 90
days.

---------

1

Ian. 1. 1917........................................•............
Apr. 16. 1917..
Dec. 10.1917...................................................

to 15
days.

1

3
3t
4

3
3~
4

3!
31
4

----------------------~--~-

4
4
4

--I_--_-

AGRICUL'l'URAL

AND LIVE-STOCK
1 to 15
days.

In Iorce-;

PAPER.
16 to 30
days.

31 to 60
days.

----- -----Jan. 1. 1917

3t
3}

t~~ ::::::::: ::::::::: ~:::::::::::::I
f~·f~tr:: ::::::

4
4

4

.

!t I

3t

4}
4
4
4t

61 to 90
days.

Beyond
90 days.

------

-----

5
5
5
5

4!
4!

4It

4~

I
------------~----~----~------~----~---COMMODITY

PAPER.

1 to 15
days.

In force-

------------------------.---

SECURED

31 to 60
days.

61 to 90
days.

--------1------ ----- ----- ------

Jan. 1.1917
Apr.16.1917 .••................................................
REDISCOUNTS

16 to 30
days.

BY UNITED

.

STATES

GOVERNMENT
1 to 15
days.

In force-

Iune 15, 1917•..................................................
Sept. 25.1917
Dec. 10. 1917•••................................................
Open-market purchases of bankers' acceptances:
In forceJan. 1.1917 •....................................................................
Dec. 1. 1917

3t
4

.

SECURITIES.

16 to 30
days.

3t
4
4

31 to 60
days.

3t
4
4

61 to 90
days.

3t
4
4

per cent. 2t to 4i
do
3 to 4

32

ANN UAL REPORT 0];' FEDERAL RESERVE BANK 0]' CLEVELAND,
EXHIBIT

H,-Bills

bought in 01Jenmarket

(a·cceptcmces).
1917

--------

19I6

------.------

Bankers, export and import..........................................
Bankers, domestic
Dollar exchange bills..

~~~~j~S~i~r~~~d:'C~~£~~~~;'es"
~::~
~ ::::::::::::::::::::::::::::::::::::
'I'ota.l .

$73,538,033.79
15',195,883.59
64,675.00

,.............

.

1,

$27;237,096.49
304,905.75

r~~;
~~:
~~

1------1--·--91,109,193.06

27,542,002.21

3,190,925.72
11,318,35(;.10
26,055,907.18
50,544,004.06

Olasstication by maturities:
Within 15 days.............
.•.. ..
.. ..•... . . . ....•. . .. . .
1Gto 30 days..
......•.........
31 to GO days........................
..••..............
.•.•.......
61 days to 3 months... .......•.......•.•...............•.........

1,542,425.48
5,788,427.94
20,211,148.82

1------1

Total......................................................

HI, 109,193.061

27,542,002.24

Average rate per cent: 1917,3.23; 1916,2.29.
EXHIBIT 1.-OP(lI'(LUi)//8

·ill

Uilitell

»ecurities,

8/(I/e"

I

i On hand

I

-------------------------1

United States Government 2 per cent con~ols......
. ....
Unncd Stutes Government 2 per cent Panamas ....
.

uir~~e~L,~j~~e~~.
G.~~er~e~t
United States Government
United States Government
notes
,
United States Government

Dec. 30,
1911;.

i .$903,900
_.1

1,500,OUO

.. 2. pe.r.. ~~nL.cer~iJi~~~~S. f.l............
O
3 per cent Spanish war 10an'l 2,586,500
;1per cent I-year 'I'reasury
-........................
fi18,000
3 per cent 30'year conversion 1

1917.
Sold,
paid, and
converted
during
1917.

Purchased
during
1917.

j-----I1

$66,400
J, 230, 500

3,500,000
67,100

$963,900
2,25.1,300

4,297,000

· ......

1,694,000
1,203,200
4

I

$6,400
467,200

-_

3,500,000

....

u~ft~~S States' .i~~.~~;;,~!C~i·:i·
i
p~'r' '~~~t'
c"i.iiftcates· ~'f'l
1,800
1,616,200
Indebtedness
_. _. _
_.. _. _..
. _.. __
:.. _
_
4,645,000
United States Government 3} per cent certificates of 1
indebtedness
I....•..
124,000
United States Government 3} per rent certificates of
indebtedness
. 1,460,000
United States Government 3t per cent Liberty loan
. 2,280,700
United States Governent 4 per cent bonds of 1925.......
2,369,200
92,700
United States Government 4 per cent Liberty loan
.
504,000
United States Government 4 per cent ccrtlficates of
indebtedness
.
15,827,500
Unlted States Government 4 per cent certiflcatcs of
indebtedness, held under sale and repurchase
agree-

1

..... __ ..

2, G53, 660
·1
3,221,000
414,800

(i45', 000
124,000

1,460,000
2.53,700
83,700
183,250
15,777,500

'-'-"--'"

2,027,000
2,378,200
320,750
50,000

6,000,000

28,000;000

:1-"-;-: 9-' .. -·I-:-::-~-1-1-:r;o-00-·+----+---- 39,539,010
;-~-:-~GO38,151,550

men~~~~;...:::::::::::::::::::::::::::::::::::::::::::

EXHIBIT J.-Municipal

ioarront«

purcluised.
1917

City.............................................
State.... ......•................•..........•.........•.•.......•........
County. . ...........•.•.........•...•...•.........•..•.•.....••.•......
Other
'
. ........•.•..
'I'otal ,

On hand
Dec. 31.
1917.

.

Classification by maturities:
16 to 30 days. .........................•............................
31 t060days.......................................................
61 to90days.......................................................
Beyond 90 days to 6 months. . ...•.......•........••.•........•....
Total. . ...............................•..........•...............
A verage rate of earnings, per cent:
1917.......................................•.......•...........................•...........•.....
1916..........................................................................•..................

$2,846,166.00
5t, 803.22
51, !OS. 08

1916
$10,051,988. 7~.
260,028.0~
172,8'15.36
175,375.35

1-----------1---------2,949,074.30

10,660,237.45

2,562.50
5,129.16
692,427.16
2,248,955.48

381,633.20
2,221,525.66
497,590.0~
7,559,488.57

2,949,074.30

10,660,237.45

1-----------1----------

3.30
2.97

ANNUAL

HEPORT

OJ" FEDERAL

l;;XHlBIT K,-C/tanges

Month,

I

~~~~~:::::: ::::::::::

June ..... --_ .................
July .........................
August .........................
September ...................
October. ....................

.November

Required (35
per cent),

I

5[9,883,243.45
20,140,947.75
21,830,493.30
21,687,821.40
25,065,025.00
:;6,889,015.84
36,708,766.86
39,:188,127.89
33,778,156.72
36,779,019.87·
46,830,071.96
42,637,220,05

:::: :::1

, ..................

December ...................

EXHIIlI'I'

Carried.

I

Per cent,

$44, 5B5,102. 35
41,875,468,60
46,497,955. 45
41,690,550.30
48,165,198.00
80,637,413.80
85,612,601.80
90,415,959.50
72, 264, 7~0,85
80,024,612.10
90,934,366.65
71,"180,815.85

78,5
12.8
74.5
67.2
67,2
76.5
51. 6
80.3
74.8
76.2
67.9
58,9

Per cent.

Excess,

1

43.5
37.8
39.5
32.2
:12.2
41. 5
46.6
45.3
39.8
41. 2
32.9
23.9

$24,711,858.90
21,734,520,85
24,667,462.15
20, 002, 728. 90
2;,100,173.00
43,748,397.96
48,901, 834. 94
51,027,831. 61
38,486,614.13
43,245,652.23
44,104,294.69
29,143,595.80

L.-ilIembm· banks, district. NO.1.

Number of member banks, Dec. 31, 1916___
New national
banks organized_____________________________
State banks and Trust companies admltted__________________
Closed by Comptroller
Liquidated

33

OF CLEVELAND,

in the '/'csel"ve position ot the lianl.; cit/ring the year.

-I

January .....................
February ....................

Rl~SERVE BANK

75;-:
2
12

of the Currency

767

1
2

3

Number of member banks .Tan. 1, 1918_________________________
Distribution:
In reserve dties______________________________________
50
In other tha n reserve clties____________________________
714
Total
.__
Total capital
Stock allotted

stock Dec. 31, 1916
member banks for quarter

704

7A4

$12.04:1,
flOO
endlng-

$~~~:~gg

Dec. 31, 1917
lr~~i.h3j~~ii~I~~====================================== 3,135;90n
Total
Stock surrendered

-

4,039,600

_

](1.08:1,200

I~~·
3if.', liil~~~~~~~~~~~~~~~~~~~~~~~~~~~
Total

rota!

paid-up

subscrrpttons

capital

quarter

stock

ending-

10,400
11,600
6,100
2,900

Dec. 31, 191 L_____________________________

capital stock Dec. 31. 1916_____________________________
paid In quarter endlng-c-

ir~~e0, li~I7=======================================
31
Dept. 30, 1917________________________________________
ec. 31, 1917

Total
Cash subscriptions
In

1-'-

ai. ooo

16,052,200
6,021,
ROO

1~~:J~g

215,650
1,567,950
_

refunded

for surrender

of stock quarter

end-

Sept. 30, 1917
~
_
J~a:e~~:1917
De~ 31. f~f+======================================== _
Tota! paid-up capital stock Dec, 31, 1917

5,200
5,800
3,050
1,450
_

2,019,800
8,041,600

15,500
8,026,100

34

ANNUAL

EXHIBIT

REPORT

OF FEDERAL

RESERVE

BANK

OF CLEVELAND.

M.-A.ccO'Inmodation of member bunlos thrtnut]: d'isco'unt of paper.
Banks
accommodatcd.
1917

--------------

1916

·------1---

1917

---

Kentucky
Ohio

.
.

12
102
44
2

.

Total.

160

50

---

8
32
9

fV'~~s~l::i~i~: : : : : : : : : : : : : : : : : : : : : :: : : : : : : : : :: : : : : : : : : : : : : : : : : :

1916

--70
974
153
9

1

1,206

60
152
26
2
240

'fotal pieces handled in 1917 14,050; in 1916, 1,401.
Amount of smallest note or ill rediscounted,
$28.85.
Amount of largest note or bill rediscounted, $13,500,000.

6

EXHJB1T N.-Il'il·St

Libel·ty loan of 1917.
Subscnptlons.

Allotment.

---_·_·_--·----1----- ----Class A, $50 to $10,000.

...•............

$128,811,700

5128,811,700

g!~~~
~ \~~~i~i~:~~~6:~.:.:::::::
::::::::
:::::::::::::::::::::::::::::: ~~;!t~:~i~;m:~~
'rotal. . . . . .

.

. . .. ..

..

..

EXHIBIT O.-Second

Liberty

-------1-------286,231,000

loan of 1917.
Number 01
Amount of
subscripsubscriptions.
tions.

8l~~~
~: ~fg,~~~t~,~g:oo<).·.::::::::::::::::::::::::::::::::::

Class C, $50,050 to $100,000
Class D, $100,050 to $200,000
~,~~~ s~ic~~~:O~~
Total.

.~I.l~.

.
.

~.p:
::::::::::::::::::::::::::::::::::::

.

,...............

Date of Issue.
ttar. 25 .......•......
ay 10 ..............
May 25 ..............
June 8...............
Au~, 9 .........•.....
Aug. 28 ..........•...

Amount.
12G8,205, 000
200, 000, 000
200,000,000
200,000,000
300,000,000
250, 000, 000

Allotment.
$14,000,000
15.000,000
10,800,000
19,100,000
33 592 000
2-t: 157; ooc

783,972
2,844
549
218
199
1,265

1-----1-----789,047

I£XHIBIT P.-Cel·titicates

I

203,300,050

$172, 996, 050
79,545,600
'18,3.12,850
35,487,950
136,598, ROO
13, 125,550
486,106,800

Allotmcnt.

$172, 996, 050
79,545,600
43,553,700
26,732,700
74,398,850
13,125,550
----------410,352,450

ot indebtedness.
Date of issue.

Sept. 17..............
Sept. 26 .............
Oct. 18 .•............
Oct. 24 ..............
Nov. 30 ..............

'Amount,
$300,000,000
400, 000, 000
385,197,000
685, 296, 000
b9l, 000, 000

Allotment ..
124.180,000
34,209,000
38,863,000
26,471,000
115,230,500

ANNUAL REPOltT OF ~'EDEHAL RESEiwE
Q.-Rediscmmts

EXHIBIT

of paper

secured

by

Government securities.

Rediscounts
secured by
U. S. bonds
and certificates.

and certificates.

May
June.................
July.................
August.
September

find certificates.

$49,250.00
&58,209.25
510,123.75

.

.

1
$[WI,000. 00 I October ...........•.
November
1,957,000.00
2,210,000.00 I December
7,025,000.00
Total.......
9,018,000.00

66,089,550.00

.
.

I

EXHlBIT R.-Govcrn'/lu.mt

$12,885.000.00
13,574,250.00
18,870,300.00

15,126,195.67

fJ'.c~~'b~;ds
{;~CN~T~:ds

Member
bank collateral notes
secured by
U. S. bonds
and certificates.

$7,542.50
8,594,8.13.03
5,106,237.14

Member
bank collateral notes

Rediscounts

...

deposits, 1917.
18,272,174.61
11,136,745.93
6,499,959. 71
12,719,069.72
22,179,485.22
30.57~641. 65

July
AugusL
September
October
November
Decmnber

$1,216,035.12
~~~~~~~y~~~~~~~~~~~~~~~~
712,815.21
March
_
3,913,251.22

April
May
June

_
_
_

6,597,627.26
5, 182, 731. 99
3,293,614.65

EXHIBIT S.-F'edm·al
COVER

Reserce notes.

OF NOTES

Gold coin and eertificates
United States Treasury gold order certificates
Gold redemption
fund with United States Treasurer
Credit balance with Federal Reserve Board
Paper held as collateral for Federal Reserve notes (actual

ISSUED.
-

amount,

..
OF FEDERAL
RESERVE
NOTES
ISSUED,
STANDING,
NOVEMBER,
1914, '1'0 DECEMBER

Fives ...................•.•..................................
Tens .....................••...................•..............
Twenties ...........................................•..........
Fifties •......................................................
Hundreds

.

Returned for destruction
Returned lor destruction
Returned
for destruction
Cleveland
__.. _

by Federal Reserve agent..........
by other Federal Reserve banks
by Treasurer
of the United States
__.. _. . . . . . . . . .. . . . . . .

RESERVE

NOTES

105,669,700
AND

Destroyed.

114, 660,000

8,990,300

and

HECEIVED

Federal

Reserve

_
;lND

$8,947,750
23,708,060
51,865,140
15,700,750
5,448,000

il--1-05-,-66-9-,
-700-

Bank

_

_..
of

--------

I Returned
to.

Exchanged
Reserve

$720,000
781,955
8,008,345

__.. _.. 8,910,300
RETURNED.

(Amounts of Federal Reserve notes received from other Federal Reserve Banks for rcdcmptlcn
and returned to other Federal Reserve banks lor redemption
or credit by the FederalReserve
Cleveland for the period Jan. 1 to Dec. 31,1917.)
Exchanged
with Federal " Received
Reserve Bank 0(- .:
from.

OUT-

Outstanding.

52,672,250
2,931,940
2,934,860
2a9,25O
152,000

..

Total. ....
FEDERAL

.

$11,620,000
26,640.000
54,830,000
16,000,000
5,600,000

.

Total.

.
.
.
.

DESTROYED,
31, 1917.

Issued.

Denomination.

$5,804,545
9, no, 000
5,455,155
35,000,000
50,300,000

··

$51,254,883.29) required

Total....
DRNOMINATIONS

35

BANK O:F CLEVELAND.

with Federal
Bank of-

Received
from.

or credit
Bank of

I Returned
'

to.

-- -..
-_·-----11----------

Boston
_
NewYork
Philadelphia
Richmond. __. .. .•........
Atlanta ...........•......
Chicago....................
St. Louis. .

: SI52,900!
1 1,720,700
,
835,000
.
133,950
__j
282,150
1,178,650
226,705

536,4151
1,216,800
247,995
100,600
72,180
418,040
\!,1,02O

Minneapolis
Kansas City
Dallas
_. __
San Francisco ....
Total.

_.
_. _. _.
.
.

SlIti,030
66,740
:19,410
36,840
5, 175 740
J

2,5:14,070

30

ANNUAL

REPORT OF FEDERAL

RESERVE

T.-C/tl(fri·l/g~.

l£XHIIHT

BANK

OF CLEVELAND.

1.'1/1'.

I

DHiIy a vcrage.

I Number
items.
____________

of

Number

,.

~~?)~I'~I~{~);"::
~::::::::::::::: ~::::::::: .. :.. ' .

March
April..
May
June .. _.......................•.......•......
July
August
September
October
Novernber
_.....................•.........
December.

.
.
.

.
.
.
.
.

Amount

,

,.

435,384

16,745
16,431
16,83(j
17,365
18,H6
18,935
18,548
17,392
20,897
21,248
22,500
2'1,824

$21.8,777,981.82

186, 342, 030. 19
236,308,813. 73
248, 982, 01l5.96
299.213,801. 47
355,994,450.53
379,3011,461. 52
368, 449, 7.6.41
338,747,136.48
412,879,353. 88
434,818, 4.Y1. 55 I
452,2:1;1,367.85 I

3n,911

45,1.580
434: 129
471,797
492,316
463 713
469; 594
522,431
573,698
58", 016
62-0,591

of

I

Amount.

l

_

'_t_e.m_s_·

II

. 8.414,5.17. 76
8.101,827.40
8, 752, 178. 28
9,959,283. 83
11,508,223.

13

13,692,094.25
15,172,378.46
13,646,288.01
13, 549, 8&'). 45
15,Z91,82i.92

16,723,786.71
18, (l89, :134.72

1

Total number
Total amount

of items handled
handled

&~~i)~)~sren:,e~tf{a~'~t~cf~:
.De~art.rne]~t:::::::::::::::::::::::::::::::::::::::::::

Cost per gl,OOO...................................................
Ser vire charge pCI' item
- _.....
_. _

_...

.

:ccnis::
do
do

.

U.--·Montllf!J t ot als of debit« and credit» to the Federal
of Ctevetoaui 'in the gold settlement tusui.

EXHIBIT

.
5,901,160
. $3,932, 05ti, 724. 39
$83,491. 98
, 1. 41
.
2.12
1.5
.

Resercc Bunk.

------------------------------------------------------Deblts,191,.
January
Februarv .
March .. : ..
April.
.
Ma~l .

0

._.

_

•••••

_. __

__

•••

__

•

_.

_.. _

__

••••

_

.

~~t~I~~'::::' :::.::. ~~::.::..
..
;
·~::
I
November
December.

_.. .

'I'otal..

$77, 036, 000
71,849, 000
105, G15,000
96,190,000
170, 16S, 000
176,745, 000
203, 455, 600
233, 538, 000
177,29;1,000
206, 195,~OO
338. 08·', 000
334, 888, 500

......1------. ..

.

Credits,

1
1

1917.

S67, 437, 000
72. 001, 000
J03, 575, 000 1
101, IS';, 000 1
164, 70i, 000 '
Vi5, 822, 000
206,037,000
223,541.000
193,5(;8,000
190, 039, 300
325, Oil, 600
3:"}8, 057, UOO

1

2,191.357,900

Debits, 1916.

2, 170,646,900

I

$4,868, 000
4,163,000
8,290,000
6,440. 000
8,418, 000
J.1, 904, 000
12,714,000
32.241, 000
41,02-1, 000
.>0,2i5. 000
57,217,000
70, 90S, 000
:108,'129,000

Balance Dec. 30, 1916.....•..............................
13"10"('0 Dec, 31,1917 ....

Powers granted.

Trustee only
.-. . . . .. .. . . . .
Registrar of stocks and bonds. . .. .. .. .. . .. .. .. .. . .. .. .
Trustee and registrar of stocks and bonds. . . .
Trustee, executor,
administrator,
and registrar of
stocks and bonds........
Tota\..

/

Credits,

I

1916.

S5, 35G,000
4,3.6,000
6,366,000
J, 3G7,000
11,919, 000
12.,030, 000
1:1,822, 000
30,77:3, 000
43,219,000
'19,017, 000
65,162,000
67,963, 000
314, :140,000
$16.953. 000
37,664, 000

Pennsylvania.

Ohio.

3
3
1
---------

-----1---

Ken·

II

tucky,

West
VIr'
ginia.

I.

~I---------

Total
granted
since
organization.

Tota\.

1
3
3

6
5
If

-----8-

--;g

1 ••••••••

"

~"