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1925
Sleventh oAnnual %eport
of the

FEDERAL RESERVE BANK
OF PHILADELPHIA

MADE TO THE FEDERAL RESERVE BOARD
FOR THE THIRD FEDERAL RESERVE DISTRICT
BY THE CHAIRMAN OF THE BOARD
AND FEDERAL RESERVE AGENT




LETTER OF TRANSMITTAL
February 18, 1926

Federal Reserve Board,
Washington, D. C.
Sirs:
I have the honor to transmit herewith
the eleventh annual report on the operations of the Federal Reserve Bank of
Philadelphia, covering the year 1925.




Very truly yours,
RICHARD L. AUSTIN

Chairman of the Board and
Federal Reserve Agent

1925
dleventh oAnnual %eport
of the

FEDERAL RESERVE BANK
OF PHILADELPHIA

MADE TO THE FEDERAL RESERVE BOARD
FOR THE THIRD FEDERAL RESERVE DISTRICT
BY THE CHAIRMAN OF THE BOARD
AND FEDERAL RESERVE AGENT




CONTENTS
Page
Profit and loss statement

5

Statement of condition

7

Loans and discounts

8

Reserve position

10

Federal reserve note issues

11

Money rates and the discount rate

12

Departmental operations

13

Internal organization

16

Banks of the district:
Changes in condition of member banks

17

Membership

18

Fiduciary powers

18

Earnings and expenses of member banks

19

Relations with banks

20

Business conditions:
General conditions during 1925

20

Car loadings

22

Employment and wages

22

Building activity

22

Retail and wholesale trade

23







• •

Eleventh Annual Report of the
Federal Reserve Bank of Philadelphia

Profit and loss statement
The profit and loss account of the Federal Reserve Bank of
Philadelphia for 1925 is given below in comparison with results
in the two preceding years:
1923
Gross earnings
Current expenses
Current net earnings
Additions to current net earnings....
Deductions from current net earnings
Net deductions from current net earnings
Net earnings available for dividends,
surplus and franchise tax
Distribution:
Dividends
Paid to Government as a franchise
tax
Transferred to surplus account....

1924

1925

$4,592,771
2,295,726

$2,915,845
2,153,835

$3,135,550
2,036,268

$2,297,045

$762,010

$1,099,282

19,617
138,825

22,131
37,049

$119,208

$14,918

$21,162

$2,177,837

8747,092

$1,078,120

$582,292

$615,135

$673,212

416,957
1,178,588

131,957

404,908

566
21,728*

''Of this sum $16,887 represents furniture and equipment charged off.

Various causes contributed to a better demand for credit,
necessitating more rediscounting than during the previous year.
The average of bills and securities held increased from $71,608,000
in 1924 to $86,506,000 in 1925, but the rate of return declined from
4.02 per cent to 3.58 per cent. Gross earnings surpassed those in
1924, but current expenses were lower than at any time since 1919.
In comparison with 1921, the year of heaviest expense, a saving of
$331,000 was realized, principally owing to declines in salary pay


Eleventh Annual Report, Federal Reserve Bank of Philadelphia
ments, printing and stationery, supplies, and in the cost of printing
and redeeming Federal reserve currency.
Net earnings increased from $747,092 in 1924 to $1,078,120
in 1925. Increased capital, due to growth in membership and in
the capital and surplus of member banks, made larger dividend
payments necessary, leaving $404,908 for transfer to the surplus
account, which is still less than 100 per cent of the subscribed
capital.
A comparison of current expenses in 1925 with those in 1924
is given in the table below:
1924
Operating departments:
Loans and discounts
Currency and coin (includes insurance, mail and express
charges for shipments)
Transit and collections
Fiscal agency functions
Custody of securities and cash. ..
Purchase and sale of securities
(includes insurance, mail and
express charges for shipments)
Transfer of funds
Bank relations
Federal Reserve Agent's dep'ts i
(includes custody of collateral j
against Federal reserve notes, i
note issues, examination of j
banks, research and preparation of statistics, publication of
monthly business review and
reference library)
Maintenance of accounts
Maintenance of the audit
Service departments:
Telegraph and telephone (ex-1
penses in 1925 largely distrib- j
uted to other departments).. j
Personnel
Mail distribution and filing
Printing and supplies
Guards

1925

Percent
change

$56,975.07

$53,436.09

— 6.2%

616,690.95
425,605.44
62,280.91
37,318.37

621,344.55
423,133.48
51,143.49
36,371.23

— 0.6 "
—17.9 "
— 2.5 "

25,753.89
11,329.73
8,042.43

31,672.75
15,996.09
13,364.06

+23.0 "
+41.2 "
+66.2 "

148,725.09
96,744.93
72,774.35

105,108.86
95,491.56
61,615.18

—29.3 "
— 1.3"
—15.3 "

44,298.52
20,818.14
20,240.85
45,476.62
62,150.79

20,718.96
17,253.17
18,329.91
27,117.55
55,715.57

—17.1 "
— 9.4 "
—40.4 "
—10.4 "

146,913.55

142,813.91

— 2 8"

7,565.40

7,176.34

— 5.1"

+ 0.8"

General:

Official salaries and supervisory
expenses
Directors' fees and traveling expenses




Eleventh Annual Report, Federal Reserve Bank of Philadelphia
1924
Assessment on account of Federal Reserve Board Expenses. .
Insurance
Legal expenses
Traveling expenses (expenses in
1925 distributed to other de- j
partments)
!
Operation of banking house
Miscellaneous
Total—current expenses....

Percent
change

1925

$60,321.67
34,575.80
5,462.02

$66,139.02
32,169.06
2,846.91

5,288.64
128,279.15
10,203.44

126,553.87
10,756.77

+ 9.6"
— 7.0 "
—47.9 "
i
1

o

ii

JL.o

+ 5.4"

$2,153,835.75 | $2,036,268.38

Statement of condition
The statement of this Bank at the end of 1925 appears in the
following table, together with statements at the close of 1924
and 1923:
(000's omitted)

December
31,1923

December December
31,1924 ! 31,1925

RESOURCES
Gold reserves
Reserves other than gold
Total reserves
Non-reserve cash
Bills discounted:
Secured by Government obligations
Other bills discounted
Total bills discounted
Bills bought in open market
U. S. Government securities
Federal intermediate credit bank bonds.
Foreign loans on gold
Total bills and securities.
Uncollected items
All other resources
Total resources




$249,034
10,747

$231,567
4,994

$216,812
4,910

j $259,781
\
1,345

$236,561
1,731

$221,722
1,716

42,814
16,110

27,411
8,873

34,450
18,807

$58,924

$36,284

$53,257

33,261
12,952

18,276
29,889
1,550
582

16,923
24,063
3,050
725

$105,137

$86,581

$98,018

53,356

59,472

65,526

1,295

1,317

1,518

| $420,914

$385,662

$388,500

Eleventh Annual Report, Federal Reserve Bank of Philadelphia
(OOO's omitted)

December j December December
31,1923
31,1924 | 31,1925

LIABILITIES
Federal reserve notes in actual circulation

$221,038 i $168,737 I $155,933

Deposits:
Member bank—reserve account
Government
Other deposits
Total deposits

119,129 [
2,437 !
' 337 I

129,677 ,
2,152 i
807 !

139,272
1,256
1,211

$121,903

$132,636

$141,739

47,805
9,941
19,927

53,591
10,518
20,059

58,539
11,623
20,464

300

121

202

$420,914

$385,662

$388,500

Ratio of total reserves to deposit and Federal reserve note liabilities combined. . .

75.8%

78.5%

74.5%

Contingent liability on bills purchased for
foreign correspondents

$1,633

$4,140

$6,541

Deferred availability items
Capital paid in
Surplus
All other liabilities
Total liabilities

Loans and discounts of the Bank
Holdings of bills and securities by this Bank increased from
$86,581,000 on December 31, 1924, to $98,018,000 at the end of
1925. Bills discounted followed a generally rising course during
the year, a course which was very similar to that followed by the
Federal reserve banks as a whole. The lowest point here was
22.6 millions on January 20 and the highest, 66.5 millions on December 23. The net increase for the year was 17 millions, or 47
per cent. Holdings of other bills and securities rose from 50 millions at the beginning of the year to a peak of 66 millions on March
17. The total subsequently declined to 31 millions on July 28.
Over the last five months of the year fluctuations were less striking
and the year ended with holdings of 45 millions, a decline of 5
millions from the beginning of the year.
In past years variations in borrowing have mainly resulted
from the changing needs of banks in the larger cities. Their
weekly reports of condition, therefore, are of particular interest
to those who would understand the changes in borrowings at the
reserve banks. Borrowings by member banks in smaller centers
show much less variation.



Eleventh Annual Report, Federal Reserve Bank of Philadelphia

MI LLtONS OF
DOLLARS

FEDERAL RESERVE BANK
OF PHILADELPHIA
(Monthly avercig'es of daily fig'ures)

300

280
RESERVE CASH

220
200
180

FEDERAL RESERVE
NOTE CIRCULATION

160
14-0
TOTAL DEPOSITS ...

120
TOTAL BILLS AND
SECURITIES

100
80

LLS DISCOUNTED
1923



1924

925

Eleventh Annual Report, Federal Reserve Bank of Philadelphia

Reserve position of the Bank
Owing to the fact that an increasing amount of gold certificates
has been put into circulation, taking the place of Federal reserve
notes in a measure, it is interesting to note the effect upon the
reserve ratio. This ratio is the percentage of reserve cash to the
combined liabilities—total deposits and Federal reserve notes in
circulation. The offsetting of a deposit liability by an issue of
notes makes no change in the actual liabilities of the reserve bank.
However, if gold certificates are issued, reserve cash is diminished
and the reserve ratio declines.
The amount of money in circulation in the United States has
remained relatively steady during the past two years. The extent
to which Federal reserve notes have been replaced by gold certificates appears in the table:
(000,000'a omitted)1

cerS£Ls

January 1, 1924. .
"1925..
"1926..

$582
970
1,114

j reJrcnrtes
$2,224
1,842
1,816

Other money i Total money
$2,145
2,181
2,078

$4,951
4,993
5,008

The circulation of gold certificates increased 532 millions in the
years 1924 and 1925 and Federal reserve notes declined 408 millions. The total circulation of Federal reserve notes fell 17 per
cent in 1924 and a little over 1 per cent in 1925. The notes issued
by this Bank decreased to a greater extent—24 per cent in 1924
and 8 per cent in 1925. From 169 millions on January 1, 1925,
the circulation of this Bank declined to 148 millions on January 22,
but rose to 164 millions on March 14. Thereafter the trend was
irregular, but mainly downward, the lowest point being 143 millions on November 18. Undoubtedly the strike in the anthracite
coal regions was partially responsible for the low level reached so
late in the year. The Christmas season's demand for currency
followed the usual course and circulation reached its maximum
at almost 170 millions on December 24, dropping to 156 millions
at the close of the year, which was nearly 13 millions less than
at the beginning of the year.
The growth of the banks of the district is reflected in an
increase in the balances carried here, a gain of more than 9 millions
taking place from 129.7 millions on January 1 to 139.3 millions at
the close of the year.
Reserve cash decreased by almost 15 millions during 1925. At
the beginning of the year and in the last two months seasonal



10

Eleventh Annual Report, Federal Reserve Bank of Philadelphia
changes in Federal reserve note circulation exerted a greater influence upon the reserve ratio than did changes in deposits or reserve cash, but over the balance of the year the ebb and flow of
gold more largely accounted for the significant changes in this
ratio, as will be noted in the table below:
Changes
in
reserve
ratio
Jan. 1—Jan. 21
Jan. 21—Mar. 18
Mar. 18—July 8
July 8—Oct. 21
Oct. 21—Nov. 4
Nov. 4—Dec. 28
Dec. 23—Dec. 31
Total changes....

+4.2#

Changes in factors from which
reserve ratio is computed
(000's omitted)
Cash
F. R. note
Total
reserve?
circulation
deposits

—8.5 "
+7.2 "
—9.1 "
+6.0 "
—6.2 "
+2.4 "

—$5,700
—18,300
+18,000
—28,200
+18,100
— 5,300
+ 6,600

—$20,300
+ 8,200
— 3,400
— 8,800
+ 1,300
+ 23,000
— 12,800

—$2,000
700
+ 100
+ 5,300
+ 400
— 6,000
+12,000

—4.0%

—$14,800

—$12,800

+$9,100

During 1925 the reserve ratio of this Bank fluctuated more
than 15 per cent, from a high point of 83.6 per cent on January
24 to a low of 68.2 per cent on October 16. At the close of the year
the ratio was 74.5 per cent, only 4 per cent below the figure on
December 31, 1924. During the last two years the reserve ratio
of this Bank has usually been higher than that of the system.
Federal reserve notes
A statement of the accounts of the Federal reserve agent
follows:
December 31
1923
RESOURCES
Federal reserve notes on hand. .
Federal reserve notes outstanding
Collateral security held:
Gold certificates on hand
Gold in gold redemption fund.
Gold with Fed. Reserve Board
Eligible paper
Total resoui*ces



December 31
1924

December 31
1925

$38,400,000

$32,000,000

$28,000,000

255,836,875

215,664,025

195,800,860

14,000,000
13,180,115
153,889,260
80,849,544

6,000,000
14,847,265
147,389,260
52,898,583

2,000,000
11,784,100
127,389,260
56,640,423

$556,155,794
11

$408,799,133

$421,614,643

Eleventh Annual Report, Federal Reserve Bank of Philadelphia
December 31
1923
LIABILITIES
Federal reserve notes received
from comptroller—net
Collateral pledged by Bank
against outstanding notes:
Gold and gold certificates....
Eligible paper
Total liabilities

December 31
1924

December 31
1925

$294,236,875

$247,664,025

$223,800,860

181,069,375
80,849,544

168,236,525
52,898,583

141,173,360
56,640,423

$556,155,794

$468,799,133

$421,614,643

Federal reserve note circulation was lower in 1925 than in
1924, nevertheless a larger amount of new notes was required. In
the table below amounts outstanding, issued and redeemed in 1924
and 1925, are given:
1924

1925

$255,836,875
128,160,000
16,000,000

$215,664,025
133,200,000
10,000,000

Notes redeemed and fit notes returned*

$399,996,875
184,332,850

$358,864,025
163,063,165

Outstanding at end of year

$215,664,025

$195,800,860

Federal reserve notes:
Outstanding, beginning of year
Issued (new notes) during year
Issued (fit notes) during year

* Includes $16,000,000 fit notes returned in 1924 and $10,000,000 in 1925.

Money rates and the discount rate
In the last half of 1924 the market rate for commercial paper
fell to 3-3^4 per cent and 90-day bankers' acceptances were offered
as low as 2 per cent. Towards the close of the year increasing
firmness was manifested and this continued over the greater part
of 1925, although rates for such paper were comparatively stable
in the middle of the year. At the close of 1925 commercial paper
was quoted at 41/4-4i/^ per cent, as compared with 3 ^ - 3 % per cent
at the close of 1924, and bankers' bills were offered at 3% per cent
as against 3 per cent in December, 1924.
Increasing demand for credit during 1925 was indicated in
the expansion of the loans of member banks, and was followed by



12

Eleventh Annual Report, Federal Reserve Bank of Philadelphia
larger borrowings from the reserve banks. Rates for money
strengthened throughout the country as was shown by increases
in the discount rates of several of the reserve banks, including this
Bank. The change in the rate of this Bank took place on November
20, when it was advanced from 3*/2 to 4 per cent.

Departmental operations
In the following table comparison is made of the operations of
the principal departments of the Bank during 1925 with those
in 1924:
Number
of items

Dollar
amount
of items

Bills discounted
+ 3.8%
Purchased bills
+36.4M
Currency received and counted
+ 6.3 "
Coin received and counted
+22.7"
Checks handled
+12.1"
Collections handled:
U. S. Government coupons paid
—13.3 "
All other
+ 5.9"
U. S. securities issued, redeemed and exchanged by
fiscal agency department
—50.7 "
Transfers of funds (exclusive of clearings by wire) j + 4.0 "

+59.4%
+45.2"
+ 3.0 "
+18.3"
+23.8"
— 8.9 "
+14.4"
—20.6 "
+ 3.3 "

These percentages indicate a considerable increase in the volume of work handled by this Bank. In comparison with 1921,
the year in which current expenses were largest, the changes are
still more striking, as the following percentages (based on number
of items handled) show: bills discounted, decreased 48 per cent;
purchased bills, increased 53 per cent; currency counted, increased
67 per cent; checks handled (including return items), increased 23
per cent; United States Government coupons paid, decreased 51
per cent; other non-cash collection items handled, increased 119
per cent; the issue, redemption and exchange of United States securities, decreased 84 per cent; wire transfers and transfers for
national banks to the 5 per cent redemption fund, increased 40
per cent.
The number of officers and employees has been reduced by 161,
or 18 per cent, since the end of 1921.



13

Eleventh Annual Report, Federal Reserve Bank of Philadelphia
Details of the operations of the principal departments of the
Bank are given in the table following:
1923

1924

1925

Total number of piece ft handled
Bills discounted:
Applications received
Notes discounted
Bills purchased in open market
for own account
Currency received and counted
Coin received and counted....
Checks handled (exclusive of
return items)
Collection items handled:
U. S. Government coupons
paid .
All other
U. S. securities — issues, redemptions, and exchanges by
fiscal agency department...
Transfers of funds (exclusive
of clearings by wire)

17,583
53,614

14,029
35,579

15,978
36,921

11,367
156,722,000
194,118,000

6,630
164,432,000
216,525,000

9,044
174,790,000
265,610,000

51,325,000

59,010,000

66,164,000

6,355,000
382,000

4,952,000
458,000

4,292,000
485,000

6,754,000*

1,211,000

597,000

78,662

81,822

74,031

Total dollar amounts handled
Bills discounted
$1,264,030,000 $2,014,776,000
: $2,911,142,000
Bills purchased in open market
for own account
\ 159,105,000
89,140,000
129,441,000
Currency received and counted 1,011,761,000
1,084,405,000 i 1,117,470,000
Coin received and counted. .. .
27,062,000
30,353,000
35,901,000
Checks handled (exclusive of
return items)
15,808,129,000 i 20,795,229,000 25,743,036,000
Collection items handled:
U. S. Government coupons
paid
63,054,000
55,876,000
50,890,000
All other
432,479,000
462,479,000
529,267,000
U. S. securities — issues, re- j
demptions, and exchanges by j
fiscal agency department... j 578,493,000
456,097,000
361,969,000
Transfers of funds (exclusive j
of clearings by wire)
j 3,379,281,000
4,748,989,000
4,907,549,000
* Large total due to redemption of war savings securities which matured
January 1, 1923.



14

Eleventh Annual Report, Federal Reserve Bank of Philadelphia
The number and amounts of items handled on the average
working day appear in the following table:
1923

Average number of pieces handled
Bills discounted:
Applications received
Notes discounted
Bills purchased for own account
Currency received and counted
Coin received and counted
Checks handled (exclusive of return
items)
Collection items handled:
U. S. Government coupons paid
All other collections
United States securities—issues, redemptions and exchanges by fiscal
agency department
Transfers of funds (exclusive of clearings by wire)
Average dollar amounts handled
Bills discounted
Bills purchased for own account
Currency received and counted
Coin received and counted
Checks handled (exclusive of return j
items)
i
Collection items handled:
U. S. Government coupons paid
All other collections
United States securities—issues, re-1
demptions and exchanges by fiscal
agency department
Transfers of funds (exclusive of clearings by wire)

1924

1925

59
179

46
118

53
123

38
522,000
647,000

22
544,000
717,000

30
581,000
882,000

171,000

195,000

220,000

21,183
1,275

16,397
1,516

14,260
1,610

22,513

4,010

1,984

247

260

272

$9,704,000 ! $4,186,000
530,000 !
295,000
3,373,000
3,591,000
90,000
101,000

$6,694,000
430,000
3,713,000
119,000

52,694,000 I 68,858,000

85,525,000

185,000
1,531,000

169,000
1,758,000

1,928,000 ! 1,510,000

1,203,000

11,264,000 I 15,725,000

16,304,000

210,000
1,442,000

During 1925 the department of bank examination made 56
credit investigations and examinations of member state institutions in co-operation with the state banking departments. In addition the department examined independently 11 state banks and
trust companies which had applied for membership, made 3 independent credit investigations, and conducted 9 investigations in
connection with the organization of new national banks. Twentyone applications for fiduciary powers and 14 applications under the
Clayton Act also were handled.



15

Eleventh Annual Report, Federal Reserve Bank of Philadelphia
Internal organization
The annual election for directors resulted in the re-election of
Alba B. Johnson and John C. Cosgrove as directors for terms of
three years from January 1, 1926, representing banks of class B,
group 1, and class A, group 3, respectively. The Federal Reserve
Board reappointed Harry L. Cannon as a class C director for a
like term. By election of the board of directors, Levi L. Rue, president of the Philadelphia National Bank, represented this district
on the Federal Advisory Council during 1925.
Board of Directors
Name

Class

Residence

Term expires

Group 1 Joseph Wayne, Jr., president Philadelphia, Pa. Dec. 81, 1926
Girard National Bank, Philadelphia, Pa.
Group 2 Francis Douglas, cashier, First Wilkes-Barre, Pa. Dec. 81, 1927
A..<
National Bank, Wilkes-Barre,
Pa.

Group 3 John C. Cosgrove, director, Johnstown, Pa.
First National Bank, Hastings, Pa.

Dec. 31, 1925

' Group 1 Alba B. Johnson, chairman of Rosemont, Pa.

Dec. 31, 1925
board, Southwark Foundry
and Machine Co., Philadelphia
B . . . Group 2 Edwin S. Stuart, merchant, Philadelphia, Pa. Dec. 31, 1926
Philadelphia, Pa.
Group 3 Charles K. Haddon, merchant, Haddonfield, N. J. Dec. 81, 1927
Camden, N. J.

f
1
I A. Dyer, the cashier of the Bank, tendered his resignaWilliam

Richard L. Austin, chairman of Philadelphia, Pa. Dec. 31, 1926
"Hit* \J\JtXl KA.
hojiY*fi
tilt.

Charles C. Harrison, deputy- Philadelphia, Pa. Dec. 31, 1927
chairman of the board
Harry L. Cannon
Bridgeville, Del. Dec. 31, 1925

tion to take effect May 31. A minute adopted by the board of directors read in part as follows:
"The Board of Directors of the Federal Reserve Bank of
Philadelphia desires to record the regret with which it receives
the resignation of Mr. William A. Dyer as cashier. . .
"His resignation represents to this bank the loss of a
most efficient officer, and to the directors and other officers
the loss of a trusted and valued friend and colleague. . . . "



16

Eleventh Annual Report, Federal Reserve Bank of Philadelphia
Mr. Dyer closed a service of almost seven years at this institution to take up the presidency of the Manayunk National Bank of
Philadelphia. C. A. Mcllhenny, formerly an assistant cashier, was
appointed to succeed him.
At the end of 1925 the official staff numbered 11, as compared
with 13 at the beginning of the year. The number of employees
was reduced from 771 to 725.
Construction of a six-story addition to the Bank on a plot
adjoining the rear of the building at the corner of Tenth and Ludlow Streets was started early in the year. This building should be
completed within a few months and will give much needed space
to the various departments of the Bank.
Banks of the district
The industrial activity, large building programs, and the rising
and active security markets which prevailed during 1925 resulted
in increased loans by the member banks in the third district as in
the country as a whole. The following are changes which took
place in the condition of member banks during 1925:
Member banks

Third district
+$199,000,000
— 28,000,000
+ 163,000,000
+ 17,000,000

Loans and discounts
Investments
Deposits, total
Borrowings

United States
+$2,094,000,000
+
79,000,000
+ 1,867,000,000
+ 355,000,000

The situation revealed by these figures differs materially from
that in 1924, when deposits accumulated much more rapidly than
did loans, with the result that borrowings were reduced and very
large additions were made to investments in securities. During
1925, loans continued to increase, but deposits did not quite keep
pace and the banks added to their borrowings.
The weekly reports of member banks in leading cities divide
loans into "loans on securities" and "all other" loans, the latter
being largely commercial in character. "Loans on securities" rose
rather steadily from the middle of 1924 up to the end of 1925. At
member banks in four cities of this district the increase in the
years 1924 and 1925 was 118 millions, or 41 per cent, and at banks
in 100 cities throughout the country was 1,661 millions, or 39 per
cent. The greater part of these gains took place in 1925.
Commercial loans in the third district and in the United
States showed approximately the same percentages of change in
1924 and 1925:



17

Eleventh Annual Report, Federal Reserve Bank of Philadelphia
Member banks in leading cities
Third district
United States

Commercial loans
1924—changes in dollars. ..
"
" per cent .
1925—changes in dollars. . .
" per cent .

+$19,100,000
+
5.7%
+ $4,600,000
+
1.3%

+$407,000,000
+
5.2%
+$101,000,000
1.2%

Fluctuations during 1925 in this district were very similar to
those in 1924. In both years a high point was attained in the
spring, and a peak was reached in the late summer or fall. The
peak in 1925 was 386 millions and 1924, 390 millions. Over
most of 1925 such loans slightly exceeded loans on like dates in
1924, but, allowing for seasonal changes, they have been very stable
over the past year and a half.
Membership

The number of member banks in this district increased from
743 at the end of 1924 to 755 on December 31, 1925. Six national
banks were liquidated in the course of the year, of which three
were acquired by state banks or trust companies which already
were members or later became members. Additional losses of
national bank membership included a consolidation of two national
banks and the insolvency of another. Offsetting these was the
organization of ten new national banks. Ten additional state
institutions were admitted to membership. Total membership at
the end of 1925, by states, is given in the table below:

Pennsylvania
New Jersey
Delaware
Totals

National
banks

State
institutions

Totals

565
90
18

68
10
4

633
100
22

673

Number of member banks

82

755

Fiduciary powers

The number of national banks now having either partial or
full fiduciary powers is 214, out of a total of 673 national banks in
the district. Figures by states follow:
is



Eleventh Annual Report, Federal Reserve Bank of Philadelphia

Totals

Partial
powers

8
4

171
33
10

169

Pennsylvania
New Jersey
Delaware

Full
powers
138
25
6

National banks
having trust powers

45

214

Totals

Earnings and expenses of member banks

An analysis of operating expenses and earnings of member
banks for the year ended June 30, 1925, shows that expenses and
net profits of banks in the third district compare favorably with
those of members throughout the country:
Earnings and expenses
of member banks

Amount on each $100 of
loans and investments
Third
district

United
States

$5.30
.92

$5.36
1.05

$6.22

$6.41

1.07
.07
2.00
.30
.62

1.26
.07
2.17
.35
.74

$4.06

$4.59

$2.16

$1.82

.17
1.06
.93

.50
.91
.41

$487
1.99%

$626
1.32%

9.68%

8.24%

Interest received
Other income
Gross earnings
Salaries and wages
Interest on borrowed money
Interest on deposits
Taxes
Other expenses
Total expenses
Net earnings
Net losses
Dividends
Net to profits and reserves
Other comparisons of interest:
Loans and investments per $100 of capital, surplus and undivided profits
Profits* on loans and investments
Profits* on capital, surplus and undivided j
profits

* After deducting net losses, but before dividends.
19



Eleventh Annual Report, Federal Reserve Bank of

Philadelphia

Relations with banks

In order to facilitate co-operation between the banks of the
district and the Federal Reserve Bank, a Federal reserve relations
committee was appointed, consisting of twenty-four bank officers
representing the New Jersey and Delaware Bankers' Associations
and the six groups of the Pennsylvania Bankers' Association included in this district. Two meetings were held in 1925. At the
meeting held on December 7 a plan was adopted to provide for a
nominating advisory committee, which would recommend candidates to the member banks to fill vacancies in the board of directors
of the reserve bank.
Contact with the banks of the district also is maintained
through personal visits and attendance at bankers' meetings held
in various parts of the district. During 1925 more than 800 visits
were made to member and non-member banks.
Business

conditions

The industries of the third Federal reserve district are
diverse and of manufactured products firms in this district produce
a large part of the country's total. In mining the operations are
large, the output of its coal mines including all of the anthracite
coal and a substantial quantity of bituminous coal. The district
experienced in 1925, excepting for the coal strike, the satisfactory
conditions that prevailed generally throughout the country. Manufacturing was steadier than in 1924 and the output was greater.
In wholesale prices there was less fluctuation than has occurred in
the last ten years and the average for the year was 6 per cent
above that in 1924. Debits to individual account, which are regarded as the most representative figures on the dollar volume of
business, were 11 per cent larger at banks in the 18 most important
cities of the district.
At the opening of 1925 the outlook for business in this district
was good; prices were strong and production had recovered materially from the low point of the preceding summer. Sales in the
early months of the year, however, did not come up to expectations
and distribution in wholesale and retail channels was impeded by
inclement weather; production declined, but not to nearly the same
extent as in 1924.
Meanwhile building had gone forward in unusual volume and
contracts reached record totals. The production of automobiles
absorbed much material. Greatly increased sales of farm implements testified to an improved situation on the farms. Later in the



20

Eleventh Annual Report, Federal Reserve Bank of Philadelphia

BUSINESS ACTIVITY IN THE
THIRD FEDERAL RESERVE DISTRICT

Employment
3

STATES

^ no

Wade Payments
3 STATES
STATES

I5O

Wholesale
3RD

I6O
I4-O
12O
IOO
8O

Trade

DISTRICT

SO

Retail Trade
3RD

DISTRICT

E>ui Id i nc£ Contracts Awarded
3RD

DISTRICT

3 -

Debits to Individual Accounts
IS CITIES
923




924
21

1925

Eleventh Annual Report, Federal Reserve Bank of Philadelphia
year the railroads, which hitherto had been backward in purchasing, bought large quantities of equipment and supplies. Favorable
conditions such as these, combined with steadiness of prices, were
followed by greater activity and figures for the year show that
production was the largest on record. The anthracite strike, which
began on September 1, had the effect of curtailing the distribution
of goods in the mining regions, but this section is well equipped
with manufacturing plants which are not affected by mining operations.
Car loadings

The volume of business in the United States, as indicated by
car loadings in the fifty-two weeks ended December 26, exceeded
that in 1924 by 5.4 per cent, and in the Allegheny district (which
comprises a group of railroads serving the third Federal reserve
district and adjacent territory) the increase was 4.9 per cent.
Loadings of merchandise and miscellaneous freight were heavier
and large gains were made in ore and coke shipments. Larger
crops of wheat, corn and oats in the third Federal reserve district
probably account in part for heavier loadings of grain and grain
products in the Allegheny district. Loadings of these commodities
in the country as a whole declined. The output of corn in the
United States was larger in 1925 than in 1924, but much of this
crop is used on the farms and never enters into car loadings. The
production of wheat was much smaller in 1925.
Employment and wages

Employment and payrolls fluctuated to a smaller extent in
1925 than in 1924 and were on higher average levels. In the states
of Pennsylvania, New Jersey and Delaware the average of payrolls
in 1925 was 3.4 per cent higher and in the United States, 3 per cent
above 1924. There is a close relation in the movements of payroll
figures in the three states to the national totals.
Building activity

The third district, in common with many other sections,
shared in the building activity which marked 1925, but the increase
in building contracts awarded over those in the previous year was
20 per cent as compared with a gain of 30 per cent in 36 states. The
consumption of building materials was proportionately increased
and caused a demand for labor sufficient to maintain the high rates
of wages heretofore prevailing. Contracts awarded in this section
for residential, educational, social and recreational buildings showed



22

Eleventh Annual Report, Federal Reserve Bank of Philadelphia
particularly large gains, but the construction of industrial buildings, public works and public utilities was in smaller volume than
in 1924.
Retail and wholesale trade

Sales by department stores in all parts of the United States in
1925 were 5 per cent higher than in 1924 and at stores in the third
district the increase was 2 per cent. Four mail order houses with a
national distribution showed an increase of 12 per cent in sales and
gains also were reported by chain stores, but the figures submitted
by the latter are not altogether representative of changes in retail
sales because of the constant increase in the number of stores.
The figures for the third district would have been somewhat
larger if the coal strike had not been in effect in the last four
months of the year. This, probably, accounts for the decline of
3 per cent from 1924 to 1925 in sales at wholesale by firms in this
district, as national figures on wholesale distribution increased 2
per cent. The figures for the country as a whole show only slight
changes in sales of groceries, shoes and drugs, but in meats the
increase was 13 per cent, in dry goods 2 per cent, and in hardware
4 per cent.




2:5

Federal Reserve Bank of Philadelphia
'Directors and Officers
DIRECTORS
Class A
Class B
Joseph Wayne, Jr., Philadelphia, Pa. Alba B. Johnson, Rosemont, Pa.
Francis Douglas, Wilkes-Barre, Pa.
Edwin S. Stuart, Philadelphia, Pa.
John C. Cosgrove, Johnstown, Pa.
Charles K. Haddon, Haddonfield, N. J.
Class C
Richard L. Austin, Philadelphia, Pa.
Charles C. Harrison, Philadelphia, Pa.
Harry L. Cannon, Bridgeville, Del.

Member of Federal Advisory Council
Levi L. Rue, Philadelphia, Pa,

OFFICERS
Richard L. Austin,
Chairman and Federal Reserve Agent
Charles C. Harrison,
Deputy Chairman
Arthur E. Post, Assistant Federal
Reserve Agent

George W. Norris,
Governor
William H. Hutt,
Deputy Governor
Edwin S. Stuart,
Deputy Governor
C. A. Mcllhenny,
Cashier and Secretary
W. J. Davis, Assistant Cashier
J. M. Toy, Assistant Cashier
R. M. Miller, Jr., Assistant Cashier
F. W. LaBold, Assistant Cashier
S. R. Earl, Assistant Cashier




William G. McCreedy, Comptroller

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