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Twelfth Annual Report
Federal Reserve Bank
of New York
For the Year Ended December 31,1926
®
Federal Reserve Agent
Second Federal Reserve District
Twelfth Annual Report
Federal Reserve Bank
of New York
For the Year Ended December 31, 1926
Federal Reserve Agent
Second Federal Reserve District
Contents
PAGE
Letter of Transmit tal
4
Credit Conditions in 1926
5
The Year in the Money Market
8
Use of Credit
9
Commercial Loans
9
Loans on Stocks and Bonds
10
Bank Investments
14
Movement of Reserve Funds
15
Quarterly Tax Periods
19
Cuban Currency Demand
20
Gold Movements
20
Easier Money in Autumn
21
Discount and Open Market Policy
22
Foreign Relations
23
Stabilization of the Belgian Currency
24
Bank Changes in 1926
25
Reports of Operation
30
Statement of Condition
30
Income and Disbursements
31
Volume of Operations
33
Election of Directors
33
Member of Advisory Council
35
Officers and Staff
35
Directors and Officers
36
FEDERAL
OF
RESERVE
NEW
BANK
YO R K
New York, December 31, 1926
SIRS:
I have the honor to submit herewith the twelfth annual report of the
Federal Reserve Bank of New York,
covering the year 1926.
Respectfully yours,
PIERRE JAY,
Chairman and Federal Reserve Agent.
FEDERAL RESERVE BOARD,
Washington, D. C.
Twelfth Annual Report
Federal Reserve Bank of New York
The operations of the Federal Reserve Bank of New York are
so closely related to changes in the credit situation in this district,
and particularly to changes in the money market that the business
conducted by the bank can best be understood as a part of the
broader picture of credit and money market conditions. This report
will therefore be devoted largely to a review of the year's developments infinance,including a discussion of Federal Reserve operations
at the points where they have influenced or been influenced by
general credit developments.
Credit Conditions in 1926
The year 1926 was characterized by the rather unusual combination of very active business, declining commodity prices, and excellent business profits, together with comparatively small additions
to the total volume of credit, and moderately easy money conditions.
The year 1925 had set many new records in production and trade
but in many lines the 1926figureswere equal to or larger than those
of 1925. Available figures for business activity in the second Federal Reserve district are shown in the following table.
BUSINESS ACTIVITY IN THE SECOND DISTRICT
1925
1926
Percent
Change
434,199,000
+ 3.9
501,914
+ 0.2
267,000,000
-15.0
25,388
+ 2.8
Bank Debits, New York City
$313,373,000,000 $339,055,000,000
Bank Debits, District outside of New
York City
$ 16,995,000,000 $ 18,188,000,000
+ 8.2
Building Permits, New York City
$
Building Permits in 62 cities in District
outside of New York City
$
Sales of 45 Department Stores
$
Number of employees in over 1,600
New York State Factories (average
for year)
Farm Production, New York State
500,885
$
New Corporations formed in New York
State
418,023,000 $
314,000,000 $
24,703
+ 7.0
1,031,000,000 $
1,052,000,000
+ 2.0
361,000,000 $
393,000,000
+ 8.9
TWELFTH ANNUAL REPORT
PERCENT.
^
/
170
tiON-AG,I/CULTURAL
\
\
/
150
J
V
130
\r
J
AGRICULTURAL
1
110
1923
192.4
1925
1926
1. Agricultural and Non-Agricultural Prices (U. S. Bureau of Labor Statistics Indexes;
1910-1914 average = 100 per cent)
The movement of commodity prices during the year is shown in
diagram 1. While the principal downward movement of prices has
been in agricultural products, there was also some downward
tendency in non-agricultural products, particularly in the spring.
Notwithstanding the very large volume of trade during the year,
the total volume of credit employed showed comparatively little
increase. The changes in the total loans and investments of reporting member banks in all districts and in the second district are shown
by weeks in diagram 2.
The increase during the year in total loans and investments of
these banks throughout the country was 400 million dollars, or
% per cent, as compared with an increase of one billion, or 6 per cent,
in 1925. In the second district the amount of credit employed has
remained practically constant except for seasonal increases and
decreases. There was a contrast in credit changes between New
York City and the rest of the district. As the following table
FEDERAL RESERVE BANK OF NEW YORK
BILLIONS of DOLLARS
8ILU0HS of DOLLARS
1926
1925
19 25
P
924
17
2.ND.
DI5TRIS :T
U.S.
J. F. M. A. M. J. J. A. S. O. N. D.
2.
J. F. M. A. M. J J. A.
O. N. D.
Total Loans and Investments of Reporting Member Banks in Principal Cities in the
United States and the Second District.
indicates, bank deposits tended to increase much more outside of
New York City, than in the city itself.
Since net demand deposits decreased in New York City, where
a reserve of 13 per cent is required, and since the entire growth was
in time deposits against which the reserve requirement is only
3 per cent, the total increase in bank deposits in the district has
caused practically no increase in required reserves.
DEPOSITS IN ALL MEMBER BANKS IN SECOND FEDERAL RESERVE DISTRICT
(in millions of dollars)
NEW YORK CITY
ELSEWHERE
TOTAL
Net
Net
Net
De- Time Total De- Time Total De- Time Total
mand
mand
mand
Nov. 25, 1925
Nov. 24, 1926
Change
5,173
5,097
-76
812 5,985 1,235 1,371 2,606 6,408 2,183 8,591
929 6,026 1,266 1,501 2,767 6,363 2,430 8,793
+117
+41
+31
+130 +161
- 4 5 +247 +202
8
TWELFTH ANNUAL REPORT
The Year in the Money Market
The movement of money rates during 1926 may be thought of
as a continuation of the tendencies of the previous year and a half,
but with an important interruption of the movement in the spring
and summer. The relationship of 1926 rates to the rates of preceding recent years is shown in diagram 3.
1923
1924
1925-
1926
3. Money Rates in New York: 4 to 6 Months Commercial Paper, 90-Day Acceptances, and
the Discount Rate of Federal Reserve Bank of New York.
In the autumn of 1926 money rates were generally higher than
at any time since the early part of 1924. The higher level of rates
was reached, however, only after a pronounced recession in the
spring of 1926. This recession was caused by the coincidence of a
number of factors making for easier money, including
1. Gold imports from Canada
2. A decline in brokers loans
3. Some lull in business activity and apprehensions as to
the future
4. The purchase of 65 million dollars of Government securities by the Reserve Banks
5. The reduction of the discount rate of the Federal Reserve
Bank of New York on April 23 from 4 per cent to
per cent.
FEDERAL RESERVE BANK OF NEW YORK
9
As the year progressed, however, the factors which had been
influential in the gradual upward movement of rates during the
preceding 18 months again became influential. After the middle
of October there was again a tendency towards slightly easier credit
conditions and slightly lower rates accompanying some lessening in
industrial activity.
USE OF CEEDIT
As has been indicated the total loans and investments of banks
in the second Federal Reserve district and especially in New York
City have remained relatively more stable during the past two
years and have shown less increase than total loans and investments
of banks in other districts. But interesting changes have taken
place between the different kinds of loans and investments, which
constitute the aggregate.
COMMERCIAL LOANS
Reflecting a high state of business activity, the total of the items
reported in the reporting member bank statements as loans and
discounts "secured by United States Government obligations" and
"all other loans and discounts," which consist largely of commercial
loans, continued to expand both in New York City and in the
country as a whole and the figures reached in the autumn of 1926
were the highest since 1921. The increase in the country as a whole
is largely accounted for by the increase in New York City. These
tendencies are illustrated in diagram 4.
BILUOHScj'DOLLARS
BILLIONS o/DOLLARS
9.0
2.8
V
6.5
IV 192
6.0
7.5
y
1924^"
U.S.
_ . .1 .
.X-
1.9
J. F. M- A M J . J A 5 0 IN D
J. F. M- A- M- J J A- S. 0. N. D.
4. Commercial Loans of Reporting Member Banks in Principal Cities.
TWELFTH ANNUAL REPORT
10
LOANS ON STOCKS AND BONDS
In contrast with the movement of commercial loans, loans on
stocks and bonds in New York City were lower in the latter part of
1926 than in 1925. These figures are illustrated by diagram 5.
BILLIONS ^DOLLARS
y.- F. n
5.
BILUONSofDOUNiS
2.8
6
A . M . J. J. A. S. 0. N. D.
J. F M. A. M. J . J. A. S. O N . D
Loans Secured by Stocks and Bonds—Reporting Member Banks in Principal Cities.
The principal fluctuating element in loans on stocks and bonds
of the reporting member banks is loans to brokers and dealers in
securities in New York City. Such loans constitute about half of
total reported loans on stocks and bonds. Through a series of
reports inaugurated by the Federal Reserve Board in January 1926,
there are now publicly available each week, figures for the loans to
brokers and dealers by New York banks for their own account,
for the account of their domestic correspondent banks, and for the
account of others. There have also been made available by the New
York Stock Exchange somewhat similar figures, but reported by the
borrowers rather than the lenders of funds, and including the borrowings from private banking institutions as well as from member
banks.1 From these two series of data it now becomes possible to
trace currently the movement of loans to brokers and dealers in
securities. Diagram 6 shows these figures for 1926, in comparison
with the total loans on stocks and bonds of the reporting member
banks and with the movement of stock prices as shown by the
index of the Standard Statistics Corporation.2
1
There was also published in the Federal Reserve Bulletin for November 1926. a
series of figures for loans to brokers which had been reported by the New York City
banks to the Federal Reserve Bank of New York, from the fall of 1917 through January
1926.
1
The index has been adjusted to a new scale to facilitate the comparison.
FEDERAL RESERVE BANK OF NEW YORK
lBILLION5afPOLLAR5
11
PRICE INDEX
PRICES qfZSO STOCKS
»»-•"**
-.-•V
80
70
60
TOTAL LOANS on 5TOCK5 AND BONDS
REPORTING MEMBER 0A/VATS
WANS TO BROKERS
'SPORTED
BY NY. STO&C EXCHANGE.
LOANS TO BROKERS & DEALERS
REPORTED &YNMBAMK%
J.
F
M
A
M
J
J
A
S
O
M
O
1926
6. Loans on Stocks and Bonds, and Stock Prices (Standard Statistics Index).
Thesefiguresbring out a number of facts concerning the financing
of purchases of securities. It may first be observed that the general
movement of loans to brokers fluctuates closely with the prices of
securities.
Another relationship which the figures reveal is the shifting from
time to time between the carrying of securities by loans to brokers
and carrying them by loans placed directly with member banks.
By subtracting from the total loans on stocks and bonds of reporting
member banks the loans which New York City banks are making to
brokers and dealers for their own and other accounts, we secure a
figure which represents roughly the amount of money loaned by
banks directly to their customers for carrying securities or for other
purposes where stock or bond collateral is required.3 The movements of these two curves are shown in diagram 7.
The diagram shows that the decline in stock prices from the
middle of February until April was accompanied by a shifting of
loans from brokers to direct borrowing, but that on the other hand
the rise in security prices from May to October was accompanied
by the reverse type of movement.
3
The computation is not precise because the two sets of loan figures do not cover
exactly the same lenders.
TWELFTH ANNUAL REPORT
12
BILLIONS of DOLLARS
3/2
F
M
A
M
J
J
A
S
O
N
7. Loans on Stocks and Bonds to Brokers and Dealers, and Estimated Loans Directly to
Customers—All Reporting Member Banks.
BILLIONS
OFDCLLARS
l.5t
\
^ ,
»
/ o r accou ntof
CORRESPOrt DENT
ANK5
\
\
sA
1 ACCOy/vr
PL
*•*
,5
\
\
/
" \
d//VT5
JAN-
FE3- MAR- APR- MAY JUN- JUL
AUG- SEP- OCT- NOV- DEC-
8. Loans to Brokers and Dealers Placed by New York City Weekly Reporting Member Banks.
FEDERAL RESERVE BANK OF NEW YORK
13
A further tendency during the year in brokers loans has been a
tendency for loans by New York City banks for their own account
and the account of their domestic correspondent banks to decline,
whereas loans for account of others increased during the year.
These changes are shown in diagram 8.
In connection with the reduction since early in the year in loans
to brokers and dealers, it may be noted that in the course of the
year there has been a considerable increase in the total volume of
securities dealt in. Issues of new securities in 1926 were larger than
in any previous year. The amounts and character of these issues
are shown in the accompanying diagram.
6,31/
ICRETGN
STATED
MUNICIPAL
DOMESTIC
CORPORATIONS
1920
1921
1922
1923
1924
1925
1926
9. New Capital Issues by Types of Borrowers, Refunding Issues Excluded.
(in millions of dollars)
Source—Commercial and Financial Chronicle
A natural result of this large volume of new issues has been an
increase in the number of issues listed on the New York Stock
Exchange and available potentially as collateral for loans, as is
shown by the following figures from the records of the New York
Stock Exchange. The change in number of shares reflects stock
dividends as well as new issues.
TWELFTH ANNUAL REPORT
14
LISTINGS ON NEW YORK STOCK EXCHANGE
STOCKS
January 1, 1926
January 1, 1927
Increase
Issues
Shares
Market Value
1,043
1,081
491,615,837
585,641,222
94,025,385
$34,489,227,125
38,376,162,138
$ 3,886,935,013
38
BONDS
VALUES
Issues
January 1, 1926
January 1, 1927
Increase...
1,367
1,420
53
At Par
At Market
$36,995,089,533
37,900,053,650
$ 904,964,117
$35,509,211,458
37,167,607,468
1,658,396,010
BANK INVESTMENTS
The changes in the investment holdings of New York City banks
and of reporting member banks in all principal centers are shown in
the following diagram.
BILUON5cfDOLLARS
c
56f
1
BILLIONSofDOLLARS
1
^
1926
I
1 2.1
1925
5.2
1924
/
4.6
U.S.
J. F. M A. n J- J- A- 5. O. N. D.
J. F. M A. M. J. J. A. S O.
10. Investments of Reporting Member Banks in Principal Cities.
FEDERAL RESERVE BANK OF NEW YORK
15
They indicate that, as the demand for funds for commercial
uses has tended to increase during the year, the investment holdings
of the banks in all centers have had but little net increase, and
the investments of banks in New York City which felt most directly
the demands for additional credit, have had no growth.
MOVEMENT OF RESERVE FUNDS
Back of the changes in the use of credit in the money market
during 1926, described above, the analysis shows certain underlying
forces which have been at work. The amount of funds which the
banks are prepared to lend or invest depends in the last analysis
upon the condition of their reserves. For the banks as a whole, the
condition of reserves in turn depends upon four principal factors:
(1) international gold movements, (2) domestic currency requirements, (3) changes in reserve requirements arising from increases
or decreases in deposits, and (4) changes in the volume of Reserve
Bank credit in use arising either from borrowings of member banks
or from open-market operations of the Reserve Banks. There are
a number of other minor factors which influence reserve funds, but
in the main these are the principal influences. If the reserves of
the banks generally are being diminished through gold exports or
withdrawals of currency the banks ordinarily do not finance an
increase, or even maintain the same amount of credit, without a
rise in interest rates; and, conversely, if bank reserves are being
supplemented by gold imports or return of currency from circulation, the banks find themselves in a position to make further credit
advances without a rise in interest rates.
A little more than two years ago a series of studies was inaugurated by the Federal Reserve Bank of New York for the purpose of
analyzing more closely the day to day influences affecting bank
reserves. Since practically all of the financial operations which have
an influence upon bank reserves are reflected on the books of the
Federal Reserve Banks, and it is therefore possible to trace the
principal changes that are taking place in the demand for and supply
of funds. With the aid of these analyses the accompanying diagrams have been prepared showing for each quarter of 1926 the day
to day changes in the reserves of 23 of the largest New York City
banks, the amount of borrowing by principal New York City
banks at the Federal Reserve Bank, and the closing call loan rate,
together with a notation as to the causes which were operating at
different times to bring about the more important changes shown.
An inspection of these diagrams indicates that there have been
a number of regular weekly, monthly, quarterly, and holiday move
TWELFTH ANNUAL REPORT
16
WlCCffT.
19
FEBRUARY
26
S
tS.
VS
MARCH
it"
192.6
lla.
Call Money Rates and Reserves and Borrowings of New York City Banks.
First Quarter
ments of funds and a number of unusual causes which have influenced
bank reserves, borrowing from the Reserve Bank, and money rates.
Of the regular influences, one of the most important is the
movement of currency. Every week when payrolls are made up
and preparations are made for week-end expenditures, member
banks come to the Reserve Bank and draw currency. The consequence is that on Thursday, Friday, and Saturday there is almost
always a net withdrawal of funds from the Reserve Bank, which
amounts on the average to about 12 to 15 million dollars for the
three days. The currency which is paid out in payrolls on Saturday
finds its way back into the banks promptly on Monday and Tuesday,
30
APRIL
lib.
7
14
* £1
MAY
1926
26
4
II
18
JUNE
29
Call Money Rates and Reserves and Borrowings of New York City Banks.
Second Quarter
FEDERAL RESERVE BANK OF NEW YORK
17
lie. Call Money Rates and Reserves and Borrowings of New York City Banks.
Third Quarter
and the banks in turn bring the currency back to the Reserve
Bank, so that there is usually a net receipt of 12 or 15 million dollars on Monday, Tuesday, and Wednesday. This regular weekly
movement of currency is, of course, not limited to New York but
takes place throughout the country and probably amounts, for the
country as a whole, to a net payment into circulation of about 50
million dollars in the second half of the week, and the return from
circulation of about the same amount in the first half of the week.
Some of the banks in other districts instead of borrowing from their
local Reserve Bank in order to take care of the week-end demand for
currency, draw upon their New York balances, and thus the New
lid.
Call Money Rates and Reserves and Borrowings of New York City Banks.
Fourth Quarter
TWELFTH ANNUAL REPORT
18
York market is affected not only by local currency movements
but by currency movements throughout the country.
The weekly withdrawal of currency is not the only important
regular currency movement. There are also withdrawals preceding
and deposits following every holiday, and the semi-monthly payroll
dates. Certain of these movements are from time to time obscured
by changes in business or by the particular day of the week on which
the semi-monthly payroll dates happen to fall, and other changing
circumstances. So it is not possible to trace with exactness the
influence of all the forces.
The general nature of some of these currency movements in the
New York district is shown in the accompanying table, which gives
the daily net receipts or payments of currency at the Federal Reserve Bank of New York for the second and third quarters of 1926.
DAILY NET CURRENCY MOVEMENT IN NEW YORK CITY TO OR PROM THE
FEDERAL RESERVE BANK OF NEW YORK
( + indicates deposits in the Reserve Bank and — withdrawals from the Reserve Bank)
(in millions of dollars)
Week Beginning Monday
Apr.
5
12
19
26
May
3
10
17
24
31
June
7
14
21
28
July
5
12
19
26
Aug.
2
9
16
23
30
Sept. 6
13
20
27
Average...
Tuesday Wednesday Thursday
Friday
- 2.5
- 8.7
- 7.0
-10.8
- 5.7
- 9.1
- 6.8
-13.5
- 5.2
- 5.5
- 7.7
- 7.5
-14.8
- 0.8
- 7.8
- 7.5
-10.5
- 8.7
- 9.8
- 8.8
- 9.2
-11.1
- 6.0
- 8.3
- 6.2
-13.5
- 4.5
- 8.0
- 5.2
-13.7
- 5.5
- 9.7
- 7.2
-12.4
- 5.4
- 7.1
- 6.8
- 8.2
-14.0
- 4.1
- 6.3
- 7.2
- 9.6
- 7.2
- 9.3
- 8.2
- 7.7
- 8.2
- 4.5
- 6.3
- 6.0
-11.4
+
+
+
-
- 8.2
- 7.8
- 1.4
+ 5.4
+ 3.0
+ 2.6
+ 1.5
+ 0.1
+ 3.5
+ 0.8
+ 2.6
Holiday
+ 6.1
- 0.3
+ 3.2
- 0.9
Holiday
+ 4.0
+ 0.8
+ 1-1
- 4.6
+ 2.2
- 0.7
+ 2.3
- 2.3
Holiday
+ 3.2
+ 1.5
- 8.5
+ 11.7
+ 7.7
+ 8.3
+ 5.9
+ 8.1
+ 9.3
+ 7.8
+ 6.3
+ 0.7
+ 9.8
+ 3.7
+ 7.7
+ 1.6
+ 4.5
+ 10.0
+ 6.7
+ 6.5
+ 5.5
+ 7.2
+ 4.6
+ 7.0
- 1.8
+ 0.8
+ 8.4
+ 5.6
+ 6.7
+ 3.3
+ 4.1
+ 3.5
+ 6.5
+ 3.9
+ 5.8
+ 2.9
+ 7.2
+ 5.0
+ 3.0
+ 4.1
- 1.2
+ 12.8
+ 3.6
+ 4.3
+ 0.8
+ 3.2
+ 3.1
+ 3.2
+ 3.4
+ 3.9
+ 7.9
+ 2.2
+ 4.4
- 0.9
+ 1-2
+ 6.2
+ 4.2
+ 7.5
Saturday
1.3
2.0
1.0
3.8
0.3
2.2
0.9
4.0
0.4
1.3
1.6
1.2
0.8
1.0
2.1
1.2
3.8
0.3
2.6
0.6
1.3
1.8
0.6
0.4
0.3
2.7
FEDERAL RESERVE BANK OF NEW YORK
19
It will be noticed that the weekly movement is exceedingly
regular. The first three days of the week regularly bring an inflow of
currency and the last three days an outflow. The extra demand for
currency which accompanies holidays is also shown and a careful
reading of the table will reveal the effect of the semi-monthly payrolls. Larger withdrawals than receipts shown by the averages are
due to the fact that the period covered was one when currency in
circulation was increasing, due partly to seasonal causes.
It is generally recognized that there is a regular tendency for
money rates to be firmer at the beginning and end of the month
than at the middle of the month. These recent studies appear to
indicate that currency requirements may be as great a factor in this
monthly movement as dividend payments, payments of first of the
month accounts, or other transactions of that sort, which involve
bank credit rather than currency. The effect on bank reserves of
a payment of currency is ten times as great, on the average, as a
corresponding increase or decrease in the demand deposits of banks,
because the withdrawal of 100 dollars of currency reduces reserves
100 dollars, whereas an increase of 100 dollars in demand deposits
only involves on the rough average, an increase of about 10 dollars
in bank reserves.
The effects of the different currency movements which we have
been describing may be traced in diagrams on pages 16—17. It will be
noted from these diagrams that bank borrowings tend to be higher
at the close of the week than at the beginning of the week. This is
due in part to the larger requirements for currency at the close of the
week and is also due in part to the adjustment of bank reserves at the
end of the week. The heavier borrowings and higher call rates at
the end of each month, together with effects of holiday currency
withdrawals are also clearly indicated on the diagrams.
QUARTERLY TAX PERIODS
On the fifteenth day of March, June, September, and December,
the diagrams show the effects of the quarterly Treasury financing.
The typical operations at these periods and the effects on the money
market were so fully described in the 1924 annual report of this
bank that the description is not repeated here. The comment may
perhaps be made, however, that the procedure in connection with
these very large movements of funds at tax periods has now been so
regularized that very large shifts of funds take place at those times
without any considerable effect upon the market, as is indicated by
the comparatively steady level of call money rates during these
periods.
20
TWELFTH ANNUAL REPORT
CUBAN CURRENCY DEMAND
In tracing the movement of bank reserves, of borrowing, and of
money rates during the year certain unusual occurrences leave their
mark upon the figures. A brief but interesting movement of this
sort occurred in the second week of April. The chart shows that at
that time the reserves of the New York City banks were rapidly
reduced more than 50 million dollars, and there followed a sharp
increase in call rates, and an increase in borrowing at the Reserve
Bank. These changes were due to a sudden demand for currency in
Cuba. On April 10 and 12, certain of the New York City banks, for
their own account and the account of Canadian banks having
branches in Cuba, transferred currency to Cuba through the Federal
Reserve Banks. This involved their drawing upon their reserves
at the New York bank and receiving currency in Cuba. The
amount of such transfers on these two dates alone amounted to
about 40 million dollars and accounted for the changes shown for
that period in diagram lib.
GOLD MOVEMENTS
A more important influence upon the bank reserve position was a
reversal in 1926 of the direction of gold movement. In 1925 there
had been net exports of $134,000,000 of gold. In 1926 there were
imports of nearly $100,000,000. Imports were particularly heavy
in the first three months of the year and were a factor in reduced
borrowing at the Reserve Bank and easier money in March and April.
The country's imports and exports of gold during the year are
shown in the following table. The movement to and from Canada
directly reflected fluctuations in the exchanges, but most of the
other movements were of special character and bore only an indirect
relation to the exchanges and the relative position of money rates in
this country and abroad. As elements in the reversal of direction
of gold movement between 1925 and 1926 three important facts
may well be borne in mind. The first is that in 1925 India had
imported about $200,000,000, of which nearly $60,000,000 came
from the United States; whereas in 1926 she imported somewhat less
than $100,000,000, shipments from the United States being negligible. The second is that although German gold imports amounted
to about $150,000,000 in both 1925 and 1926, in the former year
about one-half came from the United States and in the latter about
one-third, a correspondingly heavier demand falling on London,
where, owing to the position of the exchanges, gold could be purchased more cheaply than in New York. The third fact is that
Australia, which in 1925 imported over $25,000,000 from the United
States, in 1926 exported over $50,000,000 to the United States.
FEDERAL RESERVE BANK OF NEW YORK
GOLD MOVEMENTS DURING 1926
{in millions)
Canada
Australia
Germany
Mexico
Chile
Japan
Other countries
Total
Imports from
Exports to
$82
51
$42
24
21
14
21
$213
48
6
20
$116
EASIER MONEY IN AUTUMN
After the middle of October there was a tendency towards easier
money rates and reduced borrowing at the Reserve Bank. While this
easing was partly seasonal in nature, it also reflected a lessened
demand for credit from the security markets and some reduction
in currency requirements for payrolls. There was not only a
lessened credit and currency demand in New York City, but
there were considerable transfers of funds to New York from
other parts of the country. In the statistics of the Federal Reserve System the change which took place is perhaps best shown
in total holdings of bills and securities, representing the total
amount of Federal Reserve credit in use. During the first 9
months of the year these total bills and securities had been running
&ILUONS of DOLLARS
1.5
.9 f.
12.
F M
MILLIONS of DOLLARS
380
ND
Total Bills and Securities of All Federal Reserve Banks and the Federal Reserve Bank
of New York.
(Average daily figures each month).
TWELFTH ANNUAL REPORT
22
about 50 to 100 million dollars larger than in 1925, but in October
and November they dipped under the 1925 line and stayed there for
the balance of the year. The total bills and securities held by the
System and by the New York bank are shown in diagram 12.
Discount and Open Market Policy
There were three changes in 1926 in the discount rate of the
Federal Reserve Bank of New York as follows:
January 8—Increase from 33^2 to 4 per cent
April
23—Decrease from 4 to 3j^ per cent
August 13—Increase from 3 ^ to 4 per cent
The increase in January occurred at a time when production and
trade were very active. It followed an increase in open market
money rates and a considerable general increase in the volume of
credit, particularly credit employed in the security markets.
The rate decrease in April occurred when there was some hesitation in business and apprehension as to the future. It followed some
reduction in open market money rates and some decline in the
volume of credit in use in the second district.
The increase in August occurred when business was very active.
It followed an increase in open market money rates and in the volume
of Federal Reserve credit in use.
The buying rates for bankers acceptances at which the bank
stood ready to purchase prime bankers acceptances from member
banks and dealers continued to follow closely the prevailing open
market rates. The buying rates in force at different times, during
the year were as follows:
Date of Change
*Jan.
Jan.
Apr.
May
May
Aug.
Aug.
Sept.
1,
8,
27,
20,
21,
16,
23,
1,
1926
1926
1926
1926
1926
1926
1926
1926
1-15
days
3K
3H
SYs
SVs
Wz
3%
3H
In'effect on
16-30
days
3M
3M
3M
3Ys
3V$
SVs
3K
3H
31-45
days
46-60
days
3M
3%
3%
sy
SH2
3M
3H
WB
3V2
zy2
3H
3H
3H
3V2
3%
3%
61-90 91-120 121-150 151-180
days
days
days
days
3VB
3V2
3%
3%
3V2
3M
3K
3V2
3%
3%
3V2
3V2
3V8
3%
3H
3%
3%
4
4
4
3H
4
4
4
3%
4
4
4
3%
4
4
4
FEDERAL RESERVE BANK OF NEW YORK
23
Open market operations, which consist—as far as they reflect
policy—of purchases and sales of Government securities, are handled
as a System matter by an Open Market Investment Committee composed of the governors of five of the Reserve Banks, acting with the
approval of the Federal Reserve Board and the boards of directors of
all twelve Reserve Banks. Operations in 1926 consisted of the sale
of 50 millions of Government securities in the latter part of January
and in February, the purchase of 65 millions in the early part of April,
and the sale of 75 millions between the 11th of August and the 13th
of September.
The sale in the latter part of January was the sequel to a temporary purchase of 50 millions of securities in December. The
effect of the whole operation was to offset somewhat the tendency
towards tight money in the last week of December and conversely
to offset somewhat the tendency towards very easy money as currency returned from circulation in January. The January sale,
moreover, gave added effectiveness to the rate increase of the New
York Bank.
The purchase of securities in April, occurring simultaneously
with transfers from the interior, and following gold imports, enabled
member banks in New York City to liquidate temporarily much of
their indebtedness at the Reserve Bank, and preceded the decrease
in rate.
The sale of securities in August took the form in part of sales to
the Treasury, which in turn restored its balance at the Reserve Banks
by calling funds from all depository banks. The payment for the securities thus in effect was drawn from banks in all districts rather
than directly from banks in New York City as is the case when
securities are sold in the New York market. The effect was to
offset gold imports being received at that time, to increase somewhat
member bank indebtedness at the Reserve Banks, and thus to
add something to the effectiveness of the rate increase in New York.
Foreign Relations
The year 1926 has been on the whole a year of improvement in
European monetary matters and there has been progress toward the
return to more stable conditions. Notwithstanding serious labor
disturbances which greatly reduced export trade, Great Britain
maintained its monetary position with less loss of gold and a firmer
exchange than in the preceding year, and particularly towards the
end of the year money rates tended to be easier.
TWELFTH ANNUAL REPORT
In other European money markets the gradual return over the
past two years to a more nearly normal situation is perhaps best
indicated by the movement of central bank rates, which is shown in
the following diagram.
RATE.
•
n
E2J Tnd of IQZfi
Wk End of'198.6
in
:
i
I
1
•
;
6
::
!
:
7
6
:
-4
J
\
-
' i:
i
•
A
I
i
f
_.
_;
V.
5
!
£
:,
A ________ *
0
•
-5
-•
-':
-: -: -;
-|
-
-]
-: -
-
-
-
-
-j
"! "I
-\
-\
-f
-\
-\
-!
1 ^
;
»
•
\
•
M
13.
5 2of 1926.
Discount Rates of Foreign Banks of Issue at the end of 1924 and the end
Available figures indicate that the reduction which has taken
place in this period in open market money rates is as great as
the reduction in discount rates of banks of issue. In a number of the
important European money centers rates for short term money are
now distinctly low and funds are also much more readily available
for the domestic purchase of security issues. The evidence is that
the acute shortage of liquid capital which existed in certain European
countries not many months ago has now passed.
It is still too early to discover what the effects of this important
change will be upon our money market. One would expect some
lessening of the pull from abroad upon American funds. But the
factors in the situation are many and complex.
STABILIZATION OF THE BELGIAN CURRENCY
After a long period of careful preparation the stabilization plan
of the Belgian Government became effective on October 25. The
FEDERAL RESERVE BANK OF NEW YORK
25
value of the franc was fixed by decree at a gold value, amounting to
about 2.781 cents. For international purposes a new unit of account
was created, the belga, equivalent to five paper francs, with a fixed
value of 0.209211 grams of fine gold or about 13.904 cents.
An international loan of $100,000,000 was offered by the Belgian
Government in England, Holland, Sweden, Switzerland, and the
United States, one-half of the total being offered in the United
States. The proceeds of this loan were turned over by the Government to the National Bank of Belgium to be applied in reducing
the State's indebtedness to the bank, which was further diminished
by the application to the same end of the profits arising from the
revaluation of the bank's existing reserves, hitherto carried at their
prewar value.
As a part of the plans for the stabilization of the Belgian currency, the Federal Reserve Bank of New York, in association with
other Federal Reserve Banks, indicated its readiness to cooperate
with the Belgian bank of issue, the Banque Nationale de Belgique,
by participating with other banks of issue in credit arrangements
under which the Federal Reserve Bank of New York agreed, if
desired, to purchase up to a total amount of ten million dollars of
prime commercial bills from the Banque Nationale de Belgique.
In these arrangements the Federal Reserve System acted in collaboration with the Central Banks of Austria, England, France,
Germany, Holland, Hungary, Japan, and Sweden.
The credit arrangement made by this bank on behalf of all the
Federal Reserve Banks with the National Bank of Belgium was the
principal new development in the relations with foreign banks of
issue. A loan on gold which had been made to the Bank of Poland
was entirely repaid during the year. This bank continued to carry
on the usual correspondent relationships with foreign banks of issue,
which consisted principally of the maintenance of balances here, the
investment of funds in Government securities or bankers acceptances,
and the earmarking of gold.
Bank Changes in 1926
Two tendencies in banking organization in the district are worthy
of note; first, an increase in the number of new banks and second,
a tendency toward bank consolidations.
The changes in the number and kind of banks in the district are
shown in the following table. Notwithstanding the consolidations
which have taken place, there has been an increase of 16 in the
number of national banks in the district and an increase of 37 in the
state banks and trust companies of which 17 were additions to
member banks, and 20 to nonmember banks.
TWELFTH ANNUAL REPORT
NUMBER OF MEMBER AND NONMEMBER BANKS IN SECOND FEDERAL RESERVE DISTRICT
AT END OF YEAR
DECEMBER 31,
1925
DECEMBER 31,
1926
Type of Bank
Non
Per cent
Non
Per cent
Members Members Members Members Members Members
National Banks
State Banks*
Trust Companies
Total
734
55
91
235
156
100
19
37
750
57
106
232
179
100
20
37
880
391
69
913
411
69
* Exclusive of savings banks.
In the country as a whole the total number of commercial banks
declined in five years from about 29,000 to about 26,500, or a reduction of about 9 per cent largely due to failures and mergers. There
has been no such change in this district because there have been few
bank failures, but the growth in number of banks had been comparatively slow in recent years until recent months when growth
has been more rapid.
CHANGES IN FEDERAL RESERVE MEMBERSHIP IN SECOND DISTRICT DURING 1926
Total membership beginning of year
880
ACTIVE
Increases:
National Banks Organized
Conversion of nonmember banks
Admission of state banks
35
1
16
Total increases
52
Decreases:
Conversion of national banks to nonmember
Withdrawal of state banks
Total decreases
Net active increases
45
PASSIVE
Decreases:
Member banks combined with other members.
Insolvencies
12
0
Net passive decreases
12
Net final increase
33
Total membership end of year
913
FEDERAL RESERVE BANK OF NEW YORK
27
In 1926 the membership of the Federal Reserve System in this
district reached its highest point, due partly to an increase in the
number of banks and partly to a movement among state institutions
toward membership. The changes in membership are set forth in
detail in the foregoing table. The changes are divided into two
types—active changes which reflect the choice of banks as to
membership, and passive changes which result from mergers, liquidations, etc.
It will be noted from the foregoing table that there have been
12 mergers or consolidations of member banks in the district,
most of which have occurred in New York City and other large
centers. There have also been a number of cases of member banks
absorbing nonmember banks. Two important consequences to
the general banking situation result from the tendency toward bank
mergers during the past generation. One consequence is the greater
concentration of banking resources, and the second is an increase in
branch banking within city limits. The greater concentration of
banking resources is perhaps most vividly illustrated in the case of
New York City. Certain of the principal facts are set forth in the
following table, which gives the situation at intervals since 1889.
CHANGES IN NUMBER AND RESOURCES OF
COMMERCIAL BANKS IN NEW YORK CITY SINCE 1 8 8 9 1
(dollarfiguresin millions)
Number
of banks
1889..
1900
1914
1920
1926
142
152
129
123
143
Resources Percent of
Total
Resources 10 largest 10 largest
all banks
banks
to total
Average
resources
all banks
Average
resources
10 largest
banks
$343
766
1,850
4,530
6,098
$ 7
14
30
69
73
$34
77
185
453
610
$1,028
2,111
3,911
8,441
10,370
33
36
47
54
59
t Exclusive of savings banks.
The number of banks operating in Greater New York has shown
practically no net change during the entire 37 years. There were
142 banks operating in 1889 and there are now 143, and the distribution of these banks between national banks, state banks, and trust
companies is approximately the same as it was a generation ago.
Thus the mergers in this period have not actually diminished the
number of banks in operation. There have been new banks organized rapidly enough to offset mergers, but not rapidly enough to
keep pace with the growth of population, so that each bank now
serves a larger population.
TWELFTH ANNUAL REPORT
28
The greater concentration of banking resources is illustrated by
the figures for the total resources of the 10 largest banks in the city.
These resources amounted to $343,000,000 in 1889 and $6,098,000,000 in 1926, and showed a much more rapid growth than the resources of all banks. In fact, in 1889 the resources of the 10 largest
banks amounted to 33 per cent of the total commercial banking
resources of the city, whereas on June 30, 1926, they amounted to 59
per cent. This tendency toward the greater concentration of banking power is in keeping with the experience of the older European
countries.
Somewhat similar changes have taken place in other large cities
of the district as shown in the following table for the years 1889 and
1926.
CHANGES IN NUMBER AND RESOURCES OF COMMERCIAL BANKS
IN FOUR CITIES SINCE 1889t
Number of
Banks
Albany
Buffalo
Rochester
Newark
Resources all
Banks
(in millions)
Resources 3
Largest
(in millions)
Percent 3
Largest to all
1889
1926
1889
1926
1889
1926
1889
1926
10
13
9
11
5
7
8
28
$20
31
16
19
$143
461
245
336
$11
13
8
8
$134
408
139
166
55
42
50
42
94
89
57
49
t Exclusive of savings banks.
This concentration of resources has been accompanied by a
growth in the number of branches and banking offices, in addition to
the parent banks. The growth in the number of banks in the district having additional offices of any kind and the number of such
offices is given approximately for the past 39 years in the following
table compiled from replies to questionnaires sent to all banks in the
district having branches. The method used in arriving at the figures
was to classify by year of establishment the branches in operation
as of June 30, 1926, and accumulate the figures from year to year.
This method does not take into account the branches that were discontinued prior to June 30, 1926.
FEDERAL RESERVE BANK OF NEW YORK
NUMBER OF BANK8 WITH BRANCHES AND NUMBER OF BRANCHES IN OPERATION
IN SECOND FEDERAL RESERVE DISTRICT ON JUNE 30, EACH TEAR*
(Branches discontinued prior to June 30, 1926, not included)
New York
City
Buffalo
All other
in New York
State
Banks No.
of
with
Banks No.
of
with
Banks N o .
of
with
YEAR
New Jersev Total all cities
inS<;cond
in Second
Federal
Federal
Reserve
Reserve
District
District
Bank
with
No.
of
Bank
with
No.
of
Branches Branches Branchfi Branche Branche Branche Branche Branche Branche Branches
1
1
1
1
1
2
2
1
1
2
2
1
2
2
3
3
2
3
3
1
1
1
1
1
1
1
1
1
1
2
2
2
2
2
2
2
2
2
2
3
3
3
3
3
3
3
3
3
3
1898
1899
1900
1901
1902
1
3
3
6
8
1
6
9
20
30
3
3
3
3
3
3
3
3
3
3
4
4
9
12
23
33
1903
1904
1905
1906
1907
14
16
16
19
20
44
50
57
73
82
1
1
1
1
1
1
1
1
1
1
3
3
3
3
3
3
3
3
3
18
20
20
23
24
86
1908
1909
1910
1911
1912
20
21
23
24
26
86
91
94
98
105
1
2
2
2
2
1
2
2
2
2
3
3
3
3
3
3
3
3
3
3
24
26
28
29
31
90
96
99
103
110
1913
1914
1915
1916
1917
27
27
29
29
30
115
123
130
136
145
1
1
2
2
2
2
2
2
2
2
2
2
4
7
11
11
11
4
9
16
16
16
33
36
42
43
44
121
134
148
156
168
1918
1919
1920
1921
1922
30
31
33
36
38
152
158
173
192
212
1
2
2
4
5
2
4
7
9
9
2
4
7
11
12
11
11
11
11
11
16
16
16
16
17
44
11
20
28
32
48
53
60
63
175
189
216
247
273
1923
1924
1925
1926
42
46
53
57
242
274
315
365
5
5
5
47
49
53
62
13
15
17
18
18
22
25
30
11
11
11
11
17
17
17
17
71
77
86
91
324
362
410
474
1888
1889
1890
1891
1892
1
1
1
1
1
1893
1894
1895
1896
1897
1
1
* Exclusive of savings banks.
5
2
5
5
3
6
6
9
11
1
2
48
54
61
77
TWELFTH ANNUAL REPORT
30
Reports of Operation
As complete statistics of the operations of each Reserve Bank are
published in the annual report of the Federal Reserve Board, detailed figures of the operations of this bank are omitted from this
report, with the exception of the following pages showing the statement of condition at the beginning and end of the year, the income
and disbursements during the year, and a table showing the volume
of operations in principal departments, including the Buffalo
Branch.
STATEMENT OF CONDITION
RESOURCES
CASH RESEKVES held by this bank against its
deposits and note circulation:
Gold held by the Federal Reserve Agent as
part of the collateral deposited by the bank
when it obtains Federal Reserve notes.
This gold is lodged partly in the vaults of
the bank and partly with the Treasurer
of the United States
Gold redemption fund in the hands of the
Treasurer of the United States to be used
to redeem such Federal Reserve notes as
are presented to the Treasury for redemption
Gold and gold certificates in vault
Gold in the gold settlement fund lodged with
the Treasurer of the United States for the
purpose of settling current transactions
between Federal Reserve districts
Legal tender notes, silver, and silver certificates in the vaults of the bank (available
as reserve only against deposits)
Total cash reserves
Non-reserve cash consisting largely of National bank notes, and minor coin
Dec. 31, 1926
Dec. 31, 1925
$282,987,466.59
$329,996,016.59
15,197,976.79
439,891,808.03
13,516,129.74
331,225,694.40
223,474,611.35
254,226,803.87
22,523,994.00
27,256,282.00
$984,075,856.76
$956,220,926.60
$15,893,779.00
$16,966,978.42
$146,539,450.00
$197,709,000.00
37,935,764.92
101,443,211.79
35,234,620.12
42,019,937.59
58,863,750.00
57,199,050.00
2,106,000.00
$344,782,176.71
$334,268,607.71
$16,276,254.61
$16,617,060.69
188,450,357.86
1,788,471.18
170,992,612.34
4,162,451.27
$206,515,083.65
$191,772,124.30
$1,551,266,896.12
$1,499,228,637.03
LOANS AND INVESTMENTS:
Loans to member banks:
On the security of obligations of the United
States
By the discount of commercial or agricultural paper or acceptances
Acceptances bought in the open market
United States Government bonds, notes, and
certificates of indebtedness
Foreign loans on gold
Total loans and investments
MISCELLANEOUS RESOURCES:
Bank premises
Checks and other items in process of collection
All other miscellaneous resources
Total miscellaneous resources
Total resources
FEDERAL RESERVE BANK OF NEW YORK
LIABILITIES
31
Dec. 31, 1926
Dec. 31, 1925
$416,874,122.50
$393,036,812.50
$416,874,122.50
$393,036,812.50
$835,959,724.96
$847,248,505.07
498,341.80
3,183,106.57
34,844,167.75
11,282,630.44
$871,302,234.51
$861,714,242.08
$162,884,891.11
2,142,447.92
$150,262,580.52
1,856,109.53
$165,027,339.03
$152,118,690.05
$36,449,250.00
$32,394,500.00
61,613,950.08
59,964,392.40
$98,063,200.08
$92,358,892.40
NOTES IN CIRCULATION:
Federal Reserve notes in actual circulation
payable on demand. These notes an
secured in full by gold and discountec
and purchased paper
Total notes in circulation
DEPOSITS:
Reserve deposits maintained by member
banks as legal reserves against the deposits
of their customers
United States Government deposits carried at
the Reserve Bank for current requirements
of the Treasury
Other deposits including foreign deposits,
deposits of nonmember banks, etc
Total deposits
MISCELLANEOUS LIABILITIES:
Deferred items, composed mostly of uncollected checks on banks in all parts of the
country. Such items are credited as deposits after the average time needed to
collect them elapses, ranging from 1 to 8
days
All other miscellaneous liabilities
Total miscellaneous liabilities
CAPITAL AND SURPLUS:
Capital paid in, equal to 3 per cent, of the
capital and surplus of member banks
Surplus—That portion of accumulated net
earnings which the bank is legally required
to retain
Total capital and surplus
Total liabilities
$1,551,266,896.12 $1,499,228,637.03
INCOME AND DISBURSEMENTS
The following table shows the income and disbursements for the
years 1926 and 1925. Total earnings in 1926 were nearly $400,000
larger than in 1925, due partly to the higher rate of discount and
higher bill rates prevailing during most of the year. Expenses of
current bank operations again were slightly smaller than the preceding year, notwithstanding a continued increase in the volume of
operations of the bank. The net income for the year was sufficient
to pay the 6 per cent dividend on capital stock provided by the Federal Reserve Act, and to add $1,649,500 to the surplus, which under
the law must be increased by all net income after dividends until it is
equal to the total subscribed capital stock of the bank. The total
TWELFTH ANNUAL REPORT
32
subscribed capital stock of the bank is now $72,898,500, the total
paid in capital stock $36,449,250, and the surplus after this year's
payment $61,613,950.08. The capital increases each year as the
bank resources of the district increase, since member banks are
required to subscribe to an amount of Federal Reserve stock equal
to six per cent of their own capital and surplus, and to pay in onehalf of the amount subscribed.
1926
1925
EARNINGS:
From loans to member banks and paper discounted for them
From acceptances owned
From United States Government obligations
owned
Other earnings
Total earnings
$5,836,835.57
2,001,668.33
$5,188,505.53
1,469,858.04
2,379,546.18
382,917.47
2,984,698.11
574,111.85
$10,600,967.55
$10,217,173.53
ADDITIONS TO EARNINGS:
For sundry additions to earnings, including
income from Annex Building
$174,366.14
DEDUCTIONS FROM EARNINGS:
For current bank operation. (These figures
include most of the expenses incurred as
fiscal agent of the United States)
For Federal Reserve Currency, mainly the
cost of printing new notes to replace worn
notes in circulation, and to maintain supplies unissued and on hand, and the cost of
redemption
For depreciation, self-insurance, and other reserves, etc
Total deductions from earnings
Net income available for dividends, additions
to surplus, and payment to the United
States Government
$5,991,459.59
$6,006,571.11
429,981.88
318,630.63
604,143.98
788,673.37
$7,025,585.45
$7,113,875.11
$3,749,748.24
$3,103,298.42
$2,100,190.56
$1,888,195.73
1,649,557.68
1,215,102.69
$3,749,748.24
$3,103,298.42
DISTRIBUTION OF N E T INCOME:
In dividends paid to member banks, at the
rate of 6 per cent on paid-in capital
In additions to surplus—The bank is required by law to accumulate out of net
earnings, after payment of dividends, a
surplus amounting to 100 per cent of the
subscribed capital; and after such surplus
has been accumulated to pay into surplus
each year 10 per cent of the net income
remaining after paying dividends
Any net income remaining after paying
dividends and making additions to surplus
(as above) is paid to the United States
Government as a franchise tax. No balance remained for such payments in 1926
or 1925.
Total net income distributed
FEDERAL RESERVE BANK OF NEW YORK
33
VOLUME OF OPERATIONS
The following table indicates that the volume of operations in the
principal departments of the bank has generally continued to increase during the year.
Number of Pieces Handled
Bills discounted:
Applications
Notes discounted
Bills purchased in open market for
own account
Currency received and counted....
Coin received and counted
Checks handled
Collection items handled:
United States Government coupons
paid
All other
United States securities—issues, redemptions, and exchanges by
fiscal agency department
Transfers of funds
1926
1925
1924
16,249
35,660
15,528
36,272
12,452
39,622
76,466
605,280,000
1,129,027,000
155,488,000
63,037
554,123,000
981,654,000
143,175,000
61,453
512,097,000
917,181,000
136,853,000
10,783,000
2,064,000
12,156,000
2,040,000
14,055,000
2,429,000
1,572,000
329,000
2,048,000
294,000
4,009,000
293,000
Amounts Handled
Bills discounted
$17,242,348,000 $17,067,799,000 $7,030,842,000
Bills purchased in open market for
own account
1,437,565,000 1,160,605,000 1,077,399,000
Currency received and counted... .
3,925,170,000 3,539,722,000 3,177,027,000
114,281,000
Coin received and counted
380,569,000
268,129,000
Checks handled
93,068,875,000 88,241,217,000 68,678,871,000
Collection items handled:
United States Government coupons
332,369,000
paid
296,577,000
311,647,000
All other
2,065,742,000 2,085,032,000 1,873,743,000
United States securities—issues, redemptions, and exchanges by fiscal agency department
2,635,722,000 2,960,523,000 3,526,342,000
Transfers of funds
44,392,474,000 38,821,282,000 35,182,641,000
ELECTION OF DIRECTORS
In the autumn Robert H. Treman, President of the Tompkins
County National Bank of Ithaca, N. Y., and Theodore F. Whitmarsh, President of Francis H. Leggett & Company, New York,
were re-elected as directors, each for a term of three years from
January 1, 1927, by the member banks of Group 2, that is, banks
having capital and surplus not exceeding $1,999,000 and not below
$201,000. Mr. Treman has been a class A director since 1914
representing the banks, and Mr. Whitmarsh a class B director since
1924 representing the business interests of the district. Out of 316
34
TWELFTH ANNUAL REPORT
banks in group 2, 236 banks voted and of these, 218 cast votes for
Mr. Treman,and 219 for Mr. Whitmarsh. Charles Van Winkle, of
Rutherford, New Jersey, who was also nominated for class A
director, received 18 votes, and Frank D. Clearman, of Belleville,
New Jersey, a class B nominee, received 17 votes.
On December 31,1926, Pierre Jay resigned his position as class C
director and Chairman of the Board and Federal Reserve Agent, to
accept an appointment as American Member of the Transfer Committee under the Dawes Plan, leaving two years of his term as
director unexpired. At their meeting on December 16, the directors
adopted the following minute with reference to Mr. Jay's resignation.
From the date of its organization, more than twelve years ago, Pierre Jay has
served the Federal Reserve Bank of New York as Chairman of the Board and
Federal Reserve Agent. He is now resigning to become the American Member
of the Transfer Committee under the Dawes Plan.
As an officer of the bank and as a representative of the Federal Reserve Board
he has achieved a unique position as a wise councillor and a tactful leader.
He has presided at the meetings of the directors with dignity and a sympathetic
understanding of varying points of view. He has contributed to the discussions a
comprehensive knowledge of the affairs of the bank, and a clear insight into its
problems.
In the broad field of policy he has exerted, by his scholarly analysis of Federal
Reserve problems and his quiet diplomacy, a large influence upon the recorded decisions and the unwritten tradition of the Federal Reserve System.
Through his writing and speaking he has made a valuable contribution in the
interpretation of the Federal Reserve System to the public.
By his personal charm and his kindliness he has endeared himself to all his
associates.
To Pierre Jay, unselfish servant of the public interest, statesman of finance,
and kindly friend, we, the directors of the Federal Reserve Bank of New York,
express our appreciation of the service he has rendered, our regret at his leaving us,
and our confidence that he will find the satisfaction of great accomplishment in his
new and important work.
On December 31, 1926, the term of William Lawrence Saunders
of Plainfield, N. J., as class C director and Deputy Chairman expired, and at their meeting on January 13 the directors passed the
following resolution:
Upon the retirement of Mr. William Lawrence Saunders as a class C director
and Deputy Chairman, his associates on the board desire to express their appreciation of the unselfish and effective service which he has rendered during the past
ten years.
Distinguished as an engineer, inventor, and industrial executive he has given
liberally of his time and energy to the affairs of the bank, and his broad knowledge
and experience, coupled with sound judgment and tact, have enabled him to make
a large contribution to the determination of its policy. The directors and officers
will miss greatly his wise counsel and kindly personality.
On January 13, 1927, Owen D. Young, of New York City, was
appointed by the Federal Reserve Board as a class C director for a
three-year term and Deputy Chairman of the Board for 1927 to
fill the position made vacant by the retirement of Mr. Saunders.
In order to accept this appointment, Mr. Young resigned his position
FEDERAL RESERVE BANK OF NEW YORK
35
as a class B director of the bank, an office to which he was elected
for a second term of three years by member banks of Group 1 in
the autumn of 1925. An election to fill the vacancy thus created is
now being held.
On February 10, 1927, the Federal Reserve Board announced
the appointment of Gates W. McGarrah of New York City as class
C director to fill Mr. Jay's unexpired term and designated him
Chairman of the Board and Federal Reserve Agent. Mr. McGarrah
will enter upon the duties of this office on May 1, 1927.
Two directors at the Buffalo Branch were appointed during 1926.
Frederick B. Cooley, President of the New York Car Wheel Company, Buffalo, was appointed by the Federal Reserve Board on
December 17 for a term of three years beginning January 1, 1927,
to succeed James H. McNulty, deceased. Harry T. Ramsdell,
Chairman of the Manufacturers & Traders Trust Company, Buffalo,
was reappointed for a term of three years from January 1, 1927.
Walter W. Schneckenburger continued as Managing Director. The
Branch has seven directors of whom four are appointed by the Bank
and three by the Federal Reserve Board.
MEMBER OF ADVISORY COUNCIL
At a meeting of the board of directors held on January 28, 1926,
James S. Alexander of New York City, was elected a member of the
Federal Advisory Council from the second Federal Reserve district
for the year 1926, to succeed Paul M. Warburg who had served as a
member of the Council for five years. On January 6, 1927, Mr.
Alexander was reelected for the year 1927.
OFFICERS AND STAFF
During the year 1926 the following members of the official staff
resigned to accept other positions:
January 31—George B. Roberts, Manager, Reports Department.
July 31—Howard M. Jefferson, Manager, Personnel Department.
September 30—Adolph J. Lins, Manager, Credit and Discount
Department.
Laurence H. Hendricks, Controller of the Fiscal Agency Function, has tendered his resignation effective January 31, 1927.
Through readjustments in the departmental organization no
additions were made during the year to the official staff except that
on July 1, Herbert S. Downs, formerly a special representative of the
bank, was appointed Manager of the Bank Relations Department.
The total staff of the bank was practically the same size at the
end as at the beginning of the year, 2,446 as compared with 2,447 a
year before. These figures include the staff of the Buffalo Branch.
36
TWELFTH ANNUAL REPORT
DIRECTORS AND OFFICERS
December 31, 1926
Class Group
A
Term
Expires
Dec. 31
DIRECTORS
1 JACKSON E. REYNOLDS, New York City
1928
President, First National Bank
A
2 ROBERT H. TREMAN, Ithaca, N. Y
1926
President, The Tompkins County National Bank
A
3 DELMER RUNKLE, Hoosick Falls, N. Y
1927
President, Peoples National Bank
B
1 OWEN D. YOUNG, New York City
1928
Chairman, General Electric Company
B
2 THEODORE F. WHITMARSH, New York City
1926
President, Francis H. Leggett & Company
B
3 SAMUEL W. REYBURN, New York City
1927
C
C
President, Associated Dry Goods Corporation and Lord & Taylor
PIERRE JAY, New York City, Chairman
W. L. SAUNDERS, Plainfield, N. J., Deputy Chairman
Chairman, Ingersoll-Rand Company
C
CLARENCE M. WOOLLEY, New York City
.
1928
1926
.
1927
Chairman, American Radiator Company
MEMBER OF FEDERAL ADVISORY COUNCIL
JAMES S. ALEXANDER
Chairman, National Bank of Commerce in New York
FEDERAL RESERVE AGENT'S FUNCTION
PIERRE JAY, Federal Reserve Agent
W. RANDOLPH BURGESS
CARL SNYDER
Assistant Federal Reserve Agent
General Statistician
HERBERT S. DOWNS, Manager, Bank Relations Department
GENERAL OFFICERS
BENJ. STRONG, Governor
J. HERBERT CASE, Deputy Governor
GEORGE L. HARRISON, Deputy Governor
Louis F. SAILER, Deputy Governor
EDWIN R. KENZEL, Deputy Governor
L. RANDOLPH MASON, General Counsel
JESSE HOLLADAY PHILBIN, Secretary and Assistant General Counsel
EDWARD L. DODGE, General Auditor
FEDERAL RESERVE BANK OF NEW YORK
37
SENIOR OFFICERS
RAT M. GIDNEY
LAURENCE H. HENDRICKS,
Controller of Loans
Controller of Fiscal Agency Function
ARTHUR W. GILBART,
J. WILSON JONES,
Controller of Cash and
Controller of Administration
Controller of Collections
LESLIE R
ROUNDS>
Controller of Accounts
JUNIOR OFFICERS
DUDLEY H. BARROWS,
ROBERT M. O'HARA,
Manager, Administration Department
CHARLES H. COE,
Manager, Bill Department
JAMES M. RICE.
Manager, Check Department
Manager, Accounting Department
JAY E. CRANE,
STEPHEN S. VANSANT,
Manager, Foreign Department
Manager, Safekeeping Department
and Assistant Secretary
L WARD
EDWIN C. FRENCH,
Manager, Cash Department
WATERS)
Manager, Collection Department
WALTER B. MATTESON,
Manager, Securities Department
BUFFALO BRANCH
Term
Expires
Dec. SI
DIRECTORS
FRANK W. CRANDALL
1928
President, National Bank of Westfield, Westfield, N. Y.
ARTHUR HOUGH, BATAVIA, N. Y
1927
President, Wiard Plow Company
JOHN A. KLOEPFER, Buffalo
1928
President, Liberty Bank of Buffalo
ELLIOTT C. MCDOUGAL, Buffalo
1927
President, Marine Trust Company
JAMES H. MCNULTY, Chairman
1926
President, Pratt and Lambert, Inc., Buffalo
HARRY T. RAMSDELL, Buffalo
1926
Chairman, Manufacturers and Traders Trust Company
WALTER W. SCHNECKENBURGER, Managing Director
1926
Officers
WALTER W. SCHNECKENBURGER,
Managing Director
HALSEY W. SNOW, J R .
Cashier
CLIFFORD L. BLAKESLEE,
Assistant Cashier
ELMER L. THEOBALD,
Assistant Cashier
@FedFRASER