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SEVENTH ANNUAL REPORT of the FEDERAL RESERVE BANK OF PHILADELPHIA FOR THE YEAR ENDING DECEMBER 31, 1921 SEVENTH ANNUAL REPORT of the FEDERAL RESERVE BANK OF PHILADELPHIA FOR THE YEAR ENDING DECEMBER 31, 1921 PUBLISHED BY THE FEDERAL RESERVE AGENT OF THE FEDERAL RESERVE BANK OF PHILADELPHIA LETTER OF TRANSMITTAL February 28, 1922. Hon. W. P. G. Harding, Governor, Federal Reserve Board, Washington, D. C. SIR: I have the honor to transmit to you herewith the seventh annual report of the Federal Reserve Bank of Philadelphia, covering the year 1921. Very truly yours, RICHARD L. AUSTIN Federal Reserve Agent and Chairman 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. M. J. Murphy, New York, N. Y. Charles K. Haddon, Camden, N. J. Class C Richard L. Austin, Philadelphia, PaHenry B. Thompson, Wilmington, Del. Charles C. Harrison, Philadelphia, Pa. OFFICERS Richard L. Austin, Federal Reserve George W. Norris, Agent and Chairman Governor Henry B. Thompson, William H. Hutt, Deputy Chairman Deputy Governor Arthur E. Post, Assistant Federal Edwin S. Stuart, Reserve Agent Deputy Governor Walter T. Grosscup, Assistant William A. Dyer, Federal Reserve Agent Cashier C. A. Mcllhenny, Assistant Cashier W. J. Davis, Assistant Cashier J. M. Toy, Assistant Cashier F. W. LaBold, Assistant Cashier R. M. Miller, Jr., Assistant Cashier S. R. Earl, Assistant Cashier William G. McCreedy, Comptroller Member of Federal Advisory Council Levi L. Rue, Philadelphia, Pa. Table of Contents PART I—SUMMARY PAGE Reference to business conditions Summary of operations Statement of condition Earnings and expenses and profit and loss Discount rate changes Reserve position 5 6 7 9 10 11 PART II—OPERATIONS Loan and discount operations: Summary Bills rediscounted Purchased paper United States securities 13 13 14 16 Currency: Federal Reserve notes Federal Reserve Bank notes Currency department 17 18 18 Clearings and collections: Transit operations Gold settlement fund Collection department Coupon department Wire transfer operations . 19 . 20 21 21 22 Fiscal agency operations: Bond conversions and deliveries Certificate of indebtedness and note issues Government deposits Government checks War Savings activities 22 23 23 23 24 Internal organization: Directors and officers Changes in official staff Assumption of sub-treasury functions Building and vault Employees 24 25 25 25 26 PART III—BANKS OF THE DISTRICT Number, capital, surplus, etc., by classes State member banking institutions Special powers for national banks Department of Bank Examination 26 27 28 28 APPENDIX Statistical tables 29 Seventh Annual Report of the Federal Reserve Bank of Philadelphia B USINESS conditions in the Third Federal Reserve District during the year 1921 having been fully set forth in the reviews issued monthly by this Bank, only a brief reference to them is necessary here. The year began with practically all business, except some retail lines, much depressed. Manufacturers and distributors were carrying large stocks of raw materials and merchandise obtained at high cost, and credit was greatly extended as a result of these conditions. A feeling that intensive liquidation was necessary pervaded the business community, and it seemed for a while as if most business efforts were directed to that end; there was scarcely any planning for future business and few commitments of any kind were made. Save for a buying movement in the textile, leather and shoe industries beginning late in January and extending through February, there was no relief from the depression until it reached its lowest point in July. For the three or four months following, an increased demand was noted for practically all of the textiles, leather, boots and shoes, and some of the products of iron and steel. This demand, however, was comparatively shortlived, and the last months of the year witnessed a recurrence of the lull. This lull was partly seasonal in its nature. There was every evidence that fundamentally conditions in business were much better at the close of the year than they were at the beginning. The decrease of loans and imports of gold so strengthened the position of the Reserve banks, that they no longer found it necessary to maintain high discount rates in order to safeguard their reserves, so that on July 21, coincidently with the Federal Reserve Banks of Boston and New York, this Bank lowered its rate on commercial paper from 6 to 53^2 per cent. Further improvement in its position resulted in additional reductions in discount rates in this district on October 5 to 5 per cent and on November 3 to 43^2 per cent. Following the reduction of discount rates and the* general easing of monetary conditions, the prices of Government bonds and notes advanced rapidly, the demand for Government certificates of indebtedness increased, higher prices for good securities prevailed, and the market rates for commercial paper and bankers' acceptances 5 SEVENTH ANNUAL REPORT, FEDERAL RESERVE BANK OF PHILADELPHIA declined. The improvement in financial conditions was undoubtedly a contributing factor of the first importance in preparing the way for the up-turn in business in August, which continued month by month up to November. Operations and Services The operations of the various departments connected with the rediscounting and clearing functions of this Bank declined very materially during 1921, as a direct result of the smaller volume of business operations, and of lessened credit demands. While these services to banks, therefore, were not called upon so heavily as in 1920, others were more fully availed of by the member banks. Among the latter were collections, transfers of funds by leased wire, and the safekeeping of securities. The Bank Examination Department expanded its activities, and the dissemination of accurate information on business conditions through the medium of the monthly report has been of assistance to bankers and business men in this and other districts. The great expansion in the circulation of the business review during 1921, from 3,300 to 9,800, was due almost entirely to requests from the persons who are receiving it. The table given below summarizes the activities of the principal departments of the Bank: Discounts for member banks.... Number of banks accommodated Bills purchased Currency: Shipments Receipts Gold settlement fund operations —net gain Collection items handled United States coupons paid Transfers of funds by wire Bond conversions and exchanges. War savings securities sold Transit—checks handled As of December 31: Securities in safekeeping for member banks State bank and trust company members Examinations by Bank Examination Department Circulation of report on business conditions *Net loss. 1921 1920 1919 $3,872,367,000 509 $99,176,000 $5,820,258,000 484 $76,380,000 $10,736,435,000 494 $14,048,000 646,540,000 691,239,000 643,266,000 570,093,000 389,269,000 444,475,000 11,424,000 364,897,000 69,587,000 847,697,000 628,379,000 1,553,000 13,035,022,000 18,674,000 233,309,000 62,519,000 625,339,000 680,534,000 2,594,000 16,327,200,000 *5,734,000 5,037,000 13,843,744,000 $63,263,000 $27,743,000 $20,962,000 51 46 38 57 42 9,800 3,300 47,064,666 2,000 SEVENTH ANNUAL REPORT, FEDERAL RESERVE BANK OF PHILADELPHIA The issue of currency, the redemption of notes unfit for circulation, and shipping charges have been a source of heavy expense to the Bank, but an invaluable service to the member banks and the public. During 1921 the original cost of the Federal Reserve currency of this bank (including shipping charges) was $320,922.89, and redemption costs were $113,210.76. To these must be added the taxes paid on Federal Reserve Bank note circulation—$58,312.82, and the cost of currency and coin shipments to and from banks, amounting to $107,113.61. In all, these charges totalled $599,560.08, or almost 22 per cent of the total current expenses of the Bank. Statement of Condition The statement of condition of this Bank reveals the nature of the changes wrought by the decline in the use of credit during 1921. Comparing the December 31, 1921, statement with that of the year before, we find that bills discounted decreased $83,831,000, and total earning assets $100,018,000. Maturing loans were paid off in this district, not so much by the payment of gold and other cash, which increased $14,263,000, or by debits to member banks' reserve accounts, which decreased $6,308,000, as by the return of Federal Reserve notes, of which $77,597,000 were retired from circulation during the year. The reserve ratio responded to the lessened calls upon the loaning power of this Reserve bank, and the gain in reserves, by increasing from 54.7 to 71.2 per cent. Statements for the past four years follow: SEVENTH ANNUAL REPORT, FEDERAL RESERVE BANK OF PHILADELPHIA Statement Federal Reserve Bank of Philadelphia (In thousands of dollars, i. e., 000's omitted) RESOURCES Dec. 31,1921 Dec. 31,1920 Dec. 31,1919 $1,950 61,776 $6,087 50,353 264 $1,194 31,679 10,506 $63,726 144,402 4,366 $56,704 138,791 8,902 $43,379 88,948 8,448 Total gold reserves Legal tender notes, silver, etc. $212,494 7,159 $204,397 993 $140,775 589 Total reserves Bills discounted: Secured by U. S. Government obligations. All other Bills bought in open market $219,653 $205,390 $141,364 66,615 21,937 15,895 115,647 56,736 12,689 174,450 35,405 5,177 Total bills on hand U. S. bonds and notes U. S. certificates of indebtedness: One year certificates (Pittman Act) All other Municipal warrants $104,447 2,173 $185,072 1,431 $215,032 1,385 10,000 189 140 30,280 181 30,280 407 Total earning assets Bank premises 5 per cent redemption fund against Federal Reserve Bank notes Uncollected items All other resources $116,949 600 $216,967 500 $247,104 500 700 46,296 218 1,300 67,749 358 1,475 92,971 692 $384,416 $492,264 $484,106 $8,736 17,945 $8,485 17,010 $7,884 8,805 1,786 104,706 1,210 1,222 111,014 1,447 5,189 110,541 9,358 $107,702 200,724 $113,683 278,321 $125,088 237,051 5,886 43,049 374 22,601 51,324 840 28,792 75,633 853 $384,416 $492,264 $484,106 71.2 *54.7 *41.0 Gold and gold certificates Gold settlement fund—F. R. Board. Gold with foreign agencies Total gold held by bank. . . Gold with Federal Reserve Agent. Gold redemption fund Total resources. LIABILITIES Capital paid in Surplus Deposits: Government Member bank—reserve account. All other Total deposits Federal Reserve notes in actual circulation. . Federal Reserve Bank notes in circulation— net liability Deferred availability items All other liabilities Total liabilities. Ratio of total reserves to deposit and Federal Reserve note liabilities combined ""Calculated on basis of net deposits and Federal Reserve notes in circulation. SEVENTH ANNUAL REPORT, FEDERAL RESERVE BANK OF PHILADELPHIA Earnings and Expenses Although the rate of earnings on loans and discounts was about the same as in 1920, the smaller amount of earning assets was reflected in a diminution in the earnings of the Bank. In the table below interesting items bearing upon earning power are presented for the past five years: Year 1921 1920 1919 1918 1917 Average earning assets Average rate of earnings on bills, etc. Net earnings available for dividends, etc. Annual rate of earnings on capital $160,991,000 223,888,000 218,039,000 101,067,000 29,737,000 4.94% 5.01" 3.94" 4.19" 3.32" $5,339,000 9,065,000 6,659,000 3,192,000 754,000 60% 117" 89" 46" 12" The paid-in capital of the Philadelphia Federal Reserve Bank is less than 3 per cent of its total resources, and the average earning assets for the year were more than 18 times this capital, so that a very moderate rate of interest charged for the rediscounting of paper would result in large earnings on the capital. Such earnings when proportioned to the total resources of the Bank would be relatively small. It should not be forgotten, as has often been said before, that the Federal Reserve banks have been able to greatly increase their loans through the note issuing powers, a privilege conferred upon them by the Federal Government. The gross earnings for 1921—$8,008,000—were derived from the following sources: bills discounted, 85.5 per cent; purchased paper, 6.4 per cent; United States securities, 7.5 per cent; and miscellaneous sources, .6 per cent. After the payment of dividends and the addition of $935,239 to the surplus, the remainder—$3,886,552, was turned over to the Government in payment of the franchise tax. In 1920, owing to the fact that the surplus of 100 per cent of subscribed capital permitted by law had just been built up, only $363,662 was paid to the Government as a franchise tax. Comparative profit and loss statements follow:1 'For statement of earnings and expenses by months see appendix, exhibit 2. 9 SEVENTH ANNUAL REPORT, FEDERAL RESERVE BANK OF PHILADELPHIA Earnings Current expenses Current net earnings Additions to current net earnings: Amounts deducted from reserve for depreciation and U. S. Bonds Assessment account expenses Federal Reserve Board previously charged to profit and loss All other Total additions Deductions from current net earnings: Depreciation allowances on bank premises Reserve for depreciation on U. S. bonds. . Assessment account expenses Federal Reserve Board All other Total deductions Net deductions from current earnings Net earnings available for dividends, surplus and franchise tax Dividends paid Transferred to surplus account Franchise tax paid U. S. Government 1921 1920 1919 $8,008,095 2,766,443 $11,848,551 2,176,274 $8,609,880 1,775,185 $5,241,652 $9,672,277 $6,834,695 8,188 $31,828 104,366 $3,697 $135,380 $146,194 $3,697 $30,000 $646,620 105,396 $29,112 7,578 1,339 41,828 108,283 $37,578 $753,355 $179,223 *$97,802 $607,161 $175,526 $5,339,454 $9,065,116 $6,659,169 $517,663 935,239 3,886,552 $496,679 8,204,775 363,662 $462,380 6,196,789 $127,192 *Net addition. Changes in Discount Rates The discount rates of this Bank on all paper, except that secured by United States certificates of indebtedness, were continued unchanged up to July 21, 1921. During that period the rate on paper secured by United States bonds was 5}/% per cent, and on commercial, agricultural and livestock paper, 6 per cent. The rate on paper secured by certificates of indebtedness ruled at the rate borne by the certificates, but with a minimum of 5 per cent up to February 2. On February 3 the minimum was raised to 5 ^ per cent, and on June 16 a flat rate of 6 per cent was established.2 In July conditions were thought by the Board of Directors to be propitious for the lowering of rates, and they were reduced on July 21 to 53^2 per cent for paper of all classes and maturities. This reduction was followed by two others, to 5 per cent on October 5, and again to 4 3^ per cent on November 3. The rate in effect at the close of the year was 43^2 per cent. discount rate changes in appendix, exhibit 1. 10 SEVENTH ANNUAL REPORT, FEDERAL RESERVE BANK OF PHILADELPHIA Reserve Position The decrease during 1921 of approximately 100 millions of dollars in the holdings of bills discounted and other earning assets was accomplished for the most part through the retirement from circulation of almost 78 millions in Federal Reserve notes. A decrease of over 6 millions in the reserve deposits of member banks, and an increase of more than 14 millions in reserve cash were the other manifestations of the decline in earning assets. The reserve ratio, therefore, responded to these salutary changes by increasing from 54.7 per cent at the end of 1920 to 71.2 per cent on December 31, 1921. The first six months of the year were marked by declining gold holdings, but the decreases in liabilities—Federal Reserve note circulation and total deposits—were so large that the unfavorable trend of the reserve cash was more than offset, with the result that the reserve ratio increased from 54.7 to 57.5 per cent within this period. During the last six months, liabilities continued to decline and reserve increased, so that a still larger increase in the reserve ratio, from 57.5 per cent to 71.2 per cent, occurred. A summary, by quarters, of the reserve ratio and contributing factors, is given below:1 (In thousands of dollars, i. e., 000's omitted) Reserve ratio Total reserves Total earning assets Federal Reserve notes in circulation Total deposits Dec. 31, 1921 Sept. 30, 1921 June 30, 1921 Mar. 31, 1921 Dec. 31, 1920 71.2% $219,653 116,949 70.2% $218,157 124,738 57.5% $193,505 174,401 52.9% $183,315 200,916 54.7% $205,390 216,967 200,724 107,702 209,063 101,582 226,454 109,927 239,749 106,626 278,321 113,683 The chart on the next page shows the trend of cash reserves, note circulation, and deposits with greater minuteness over the past two years. In this chart, however, the line for deposits should not be accepted too literally. Up to and including March 11,1921, this line represents net deposits, and after that time, total deposits. In the summary given above, total deposits are given for December 31, 1920, in order that it may be comparable with the figures for the succeeding quarters. x For weekly figures, see appendix, schedule 11. 11 SEVENTH ANNUAL REPORT, FEDERAL RESERVE BANK OF PHILADELPHIA FEDERAL RESERVE BANK OF PHILADELPHIA DEPOSITS, F.R. NOTE CIRCULATION, CASH RESERVES AND RESERVE RATIOS, 1920-1921 PERCENT »ER CENT — RESERVE RATIOS — A CTUAL ——--ADJUSTED A. A-A- VJ t /—. ' ,,, .*•»• 70 60 50 *T 40 30 20 10 10 MILLIONS OF DOLLARS ZOO MILLIONS OF DOLLARS 200 DEPOSITS 150 100 100 50 o 0 400 400 F.R. NOTE CIRCULATION 350 350 300 300 250 250 200 200 150 .150 100 100 50 50 O O 500 500 450 DEPOSIT AND F.R. NOTE LIABILITIES.XAND TOTAL RESERVES, C 450 400 400 350 350 300 300 250 250 200 200 150 150 100 100 50 50 O 0 1920 1921 Adjusted percentages ara calculated after reducing or increasing reserves held by the amount of accommodation received froa or extended to other Federal Reserve tanks. The deposit curve is based, on "net deposits" up to Uareh 11, 1921, and on "total deposit*" thereafter. 12 SEVENTH ANNUAL REPORT, FEDERAL RESERVE BANK OF PHILADELPHIA LOAN AND DISCOUNT OPERATIONS T HE total of all discounts and open market purchases by the Federal Reserve Bank of Philadelphia during 1921 was $4,174,403,000, a decrease of 35 per cent from 1920, and of 61 per cent from 1919. A comparative summary is given below:1 Bills discounted Bills bought United States securities Municipal warrants Totals 1921 1920 1919 $3,877,366,959* 99,175,592* 197,720,850 140,000 $5,964,836,594* 76,380,100* 357,432,400 0 $10,736,435,270 14,048,447 52,921,500 0 $4,174,403,401* $6,398,649,094* $10,803,405,217 •Bills discounted for, and acceptances bought from, other Federal Reserve banks included. The average daily earning assets are of greater interest than the figures on operations, as they show the effect of the loan and discount operations upon the investment holdings of the Bank.2 In the table which follows, little change is indicated in the holdings of purchased paper, but the holdings of bills discounted decreased about 33 per cent from the 1920 figure. For the first time since early in 1918, municipal warrants appear in this tabulation: Bills discounted Bills bought United States securities Municipal warrants Totals 1921 1920 $124,878,388 9,159,376 26,945,703 7,123 $190,122,307 9,809,869 33,955,559 0 $193,194,965 1,581,247 23,262,740 0 $160,990,590 $233,887,735 $218,038,952 1919 Rediscounted Paper Bills to the amount of $3,872,367,000 were discounted for member banks in 1921, as compared with nearly 6 billions in 1920, and almost 11 billions in 1919. The number of banks which were accommodated in the course of the year was 509 compared to 484 in 1920. x Loans and discount operations in appendix, schedule 3. *For holdings at end of each week, see appendix, schedule 11. 13 SEVENTH ANNUAL REPORT, FEDERAL RESERVE BANK OF PHILADELPHIA In addition to the discounts for member banks $5,000,000 of bills was discounted for other Federal Reserve banks in January. It was at no time necessary for this Bank to rediscount with any other Reserve bank during the year. This condition furnishes an interesting contrast with 1920, during which year this Bank was rediscounting with other Reserve banks during the first four months of the year, and during the last four months it, in turn, was loaning to others. A statement of the holdings of discounted paper more clearly indicates the extent of the assistance rendered to member banks than the data on operations. There is given below a table showing the amount of discounted bills held by this Bank on December 31, 1920, and at the end of each of the succeeding quarterly periods: (In thousands of dollars, i. e., 000's omitted) Classes of paper Customers' paper secured by Government obligations Member banks' coll. notes: Secured by Government obligations Otherwise secured Commercial paper Agricultural paper Live-stock paper Trade acceptances Bankers' acceptances Totals Dec. 31, 1921 Sept. 30, 1921 June 30, 1921 Mar. 31, 1921 Dec. 30, 1920 $10,459 $14,993 $24,933 $35,660 $39,597 56,155 0 21,103 719 0 116 0 55,096 0 30,911 372 5 224 0 69,603 0 45,166 641 0 252 0 72,871 0 47,208 400 5 213 0 76,080 50 57,069 388 0 229 150 $88,552 $101,601 $140,595 $156,357 $173,563 A reduction in the total amount of paper held occurred in each quarter of 1921 but the greatest decrease took place in the third quarter during which period a decline was recorded amounting to 46 per cent of the total decline of $87,011,000 for the year. Smaller holdings of bills secured by Government obligations account for the major part of the total decrease. Purchased Paper With the decline in borrowings by member banks, this Bank has increased its purchases of bankers' acceptances in the open market. Its total purchases of this paper in 1921 were $99,176,000, of which all but $6,823,000 was bought from dealers operating in the Third 14 SEVENTH ANNUAL REPORT, FEDERAL RESERVE BANK OF PHILADELPHIA FEDERAL RESERVE BANK OF PHILADELPHIA MOVEMENT OF EARNING ASSETS DURING 1920 AND 1921 MILLIONS OF DOLLARS 150 MILLIONS OP DOLLARS ISO UNITED STATES SECURITIES 100 100 50 50 100 100 PURCHASED BILLS 50 50 350 350 DISCOUNTED BILLS SEE NOT£ BELOW ) i ' 300 300 ISO 250 200 200 150 150 100 50 1 1921 1920 A - Paper tsonred by u . 3 . Government obligations discounted for bank! In d i i t r i a t . 2 - Total paper diMounted for banks in d i s t r i c t . 0 - Total discounted paper held. Space between l i n e s B and a represents - rtiere above line B - paper discounted for, and - «her» below line B - paper rediscounted with, other Federal Reserve Bank*. 15 SEVENTH ANNUAL REPORT, FEDERAL RESERVE BANK OF PHILADELPHIA Federal Reserve District. The latter amount was acquired through the Federal Reserve Bank of New York. In 1920 total purchases were $76,380,000, of which 46 per cent was purchased through the New York Federal Reserve Bank. This larger patronage with dealers in acceptances operating in this district is in line with the policy of the Bank of fostering the development of a local acceptance market. The bills bought during the past year divide themselves, according to the transactions involved, as follows: Foreign bills, 66.3 per cent; domestic bills, 20.8 per cent; bills creating dollar exchange, 12.9 per cent. An interesting comparison of holdings, average maturities, and rates over the past four years is given in the table below: Purchases in open market during year Holdings at end of year 1921.... 1920.... 1919... 1918... $15,895,000 12,689,000 5,177,000 3,011,000 Average maturity Average Rate Amount Purchases from other Federal Reserve banks 44.81 days 59.09 " 57.00 " 5.34% 5.89" 4.38" 4.12" $92,353,000 41,232,000 14,048,000 77,686,000 $6,823,000 35,148,000 0 42,322,000 United States Securities Holdings of United States securities at the end of 1921 show a large decrease in the 2 per cent certificates of indebtedness which are deposited with the Treasurer of the United States to secure the circulation of Federal Reserve Bank notes. Other changes are of minor importance. There follows a tabular presentation of holdings at the end of the past three years: United States bonds: 2% Panamas of 1936-38 3% conversion bonds of 1946-47 3J^% Liberty loan 4% Liberty loan 4J4% Liberty loan Total United States bonds 1921 1920 1919 $100 549,200 48,100 0 836,400 $100 549,200 48,100 0 836,400 $100 549,200 11,850 797,150 26,600 ,433,800 $1,433,800 $1,384,900 Victory notes Certificates of indebtedness: 2% to secure circulation of Federal Reserve Bank notes All other 739,000 0 0 10,000,000 189,000 30,280,000 181,500 30,280,000 407,000 Total United States securities $12,361,800 $31,895,300 $32,071,900 16 SEVENTH ANNUAL REPORT, FEDERAL RESERVE BANK OF PHILADELPHIA CURRENCY Federal Reserve Notes With the exception of a few weeks around the holiday period at the end of the year, the circulation of Federal Reserve notes of this Bank decreased throughout the whole of 1921. The amount in circulation on January 1 was $278,322,000, and on December 31, $200,724,000. The lowest point was $197,251,000, reached on December 6, and from that point the circulation increased to $211,040,000 on December 23, to take care of Christmas trade needs, and this in turn was followed by a decline to the end of the year. While it is true that notes were issued to the Bank by the Federal Reserve Agent in larger quantities than in 1920, redemptions in 1921 were proportionately so much larger, that the volume of notes outstanding decreased greatly, as the following calculation shows:1 • Notes outstanding January 1 Issued to Bank during year Notes returned for redemption and fit notes returned.. Notes outstanding December 31 1921 1920 $291,298,605 183,410,000 $247,895,665 177,420,000 $474,708,605 $425,315,665 251,838,490 134,017,060 $222,870,115 $291,298,605 In connection with the decrease throughout the district infthe amount of disbursements for payrolls, etc., it is interesting to note that, in the amount of their issue, notes of the $10 and $20 denominations reversed their positions. In 1920, 25 per cent of the notes issued were of the $10 denomination, and 37.4 per cent were of the $20 denomination. In 1921, 31.6 per cent were $10 notes, and 26.8 per cent, $20 notes.2 The statement of the Federal Reserve Agent's account, with comparisons for the two preceding years, follows: issues and redemptions by months given in appendix, table 4. 1 Comparison of amount of each denomination issued yearly given in appendix, table 5. 17 SEVENTH ANNUAL REPORT, FEDERAL RESERVE BANK OF PHILADELPHIA Resources Federal Reserve notes on hand Federal Reserve notes outstanding... Collateral security held: Gold in gold redemption fund Gold with Federal Reserve Board.. Eligible paper Total resources Dec. 31, 1921 Dec. 31,1920 Dec. 31,1919 $50,400,000 222,870,115 $25,580,000 291,298,605 $21,340,000 247,895,665 14,013,355 130,389,260 101,435,017 17,401,845 121,389,260 162,024,571 14,558,905 74,389,260 165,192,017 $519,107,747 $617,694,281 $523,375,847 $881,360,000 $680,580,000 $510,780,000 608,089,885 363,701,395 241,544,335 $273,270,115 $316,878,605 $269,235,665 144,402,615 101,435,017 138,791,105 162,024,571 88,948,165 165,192,017 $519,107,747 $617,694,281 $523,375,847 Liabilities Federal Reserve notes received from Comptroller (gross) Less returned to Comptroller for destruction Received from Comptroller ( n e t ) . . . . Collateral pledged by Bank against outstanding notes: Gold and gold certificates Eligible paper Total liabilities Federal Reserve Bank Notes Under the authority of the Pitman Act, the United States Treasury has been buying silver since February to take the place of the silver dollars which were melted down and sold to foreign governments as bullion during the war. Circulating notes known as silver certificates, secured by these silver dollars, were acquired by the Government by purchase from the Federal Reserve banks, payment being made for them in 2 per cent certificates of indebtedness. The Federal Reserve banks were authorized to use such certificates as security for the issue of Federal Reserve bank notes. Following the purchase of silver by the Treasury, the coinage of silver dollars and the issue of silver certificates has been resumed. The 2 per cent certificates of indebtedness are being paid, and equal amounts of Federal Reserve bank notes retired. Federal Reserve bank notes in circulation decreased from $22,601,000 to $5,886,000 during 1921, and holdings of Pitman Act certificates of indebtedness declined from $30,280,000 to $10,000,000 in the same period. Currency Department The assumption of the functions of the Sub-Treasury in February necessitated the addition of 12 persons to handle coin and 5 to 18 SEVENTH ANNUAL REPORT, FEDERAL RESERVE BANK OF PHILADELPHIA supplement the existing force of money counters. Figures of currency counted during 1920 and 1921 follow: 1921. 1920. Number of pieces Amount 104,743,901 71,673,499 $766,821,557 683,291,320 The increase in the number of pieces handled comes directly as a result of Sub-Treasury activities, as 48,692,292 bills of the $1 and $2 denominations were counted in 1921, as compared with 19,394,081 in 1920. These bills were largely United States notes. The average daily number of all pieces handled in 1921 was 380,886, and in 1920, 259,686. Total shipments of currency were little larger than in 1920, but receipts increased very perceptibly, as the tabulation shows:1 1921 1920 1919 Receipts Shipments $691,239,266 570,093,449 444,475,010 $646,539,531 643,266,382 389,269,059 The amount of coin received from March 1 to December 31 was $18,319,000, and the amount paid out, $18,532,000. In the seven months from June 1 to the end of the year, 103,078,479 pieces of coin, amounting to $13,106,464 were counted. CLEARINGS AND COLLECTIONS Transit Department Operations The volume of checks passing through the Transit Department reflects directly the volume of business transactions in this district. It is not surprising, therefore, to note that in 1921 there was a falling off in the dollar amount. There was, however, a marked increase in the number of items making up this total. The average amount of each check handled during 1921 was Monthly shipments and receipts given in appendix, schedule 6. 19 SEVENTH ANNUAL REPORT, FEDERAL RESERVE BANK OF PHILADELPHIA $250, and in 1920, $344. If this decline in the average amount for which each check was drawn had been confined to the past year, it might be assumed that it was entirely a result of smaller average purchases. But it has continued over the past four years for which we have records, and this suggests the conclusion that checks are coming more and more into common usage as a means of payment even in the smallest transactions. Part of the decrease is ascribable to the increasing tendency on the part of member banks of making transfers to other banks by wire instead of transfer drafts, but this tendency by no means accounts for the entire downward trend in the size of the average check. The average daily number of checks handled during the year was 174,100, as compared with 156,617 in 1920, and the largest number handled in any one day was 253,768 on November 10. The summary below gives the total number and amount of checks handled during the years from 1918 to 192111 Amount of Checks Handled 1921 1920 1919 1918 On Philadelphia banks On banks elsewhere in district On banks in other Reserve .districts Totals $8,483,268,001 10,466,186,613 8,907,672,377 6,655,028,275 $2,745,789,135 3,123,073,591 2,129,201,167 1,263,933,879 $1,805,964,565 2,737,939,769 2,806,870,819 3,373,447,958 $13,035,021,701 16,327,199,973 13,843,744,363 11,292,410,112 Number of Checks Handled 1921 1920 1919 1918 On Philadelphia banks On banks elsewhere in district 19,441,824 16,593,192 12,051,043 4,256,167 24,435,943 21,679,301 15,379,260 8,569,393 On banks in other Reserve districts 8,352,255 9,025,978 7,456,465 4,308,201 Totals 52,230,022 47,298,471 34,886,768 17,133,761 Gold Settlement Fund Operations Total receipts through the gold settlement fund during 1921 were $6,948,659,183.78, and disbursements, $6,937,235,623.73, showing 'Monthly figures on transit operations given in appendix, schedule 7. 20 SEVENTH ANNUAL REPORT, FEDERAL RESERVE BANK OF PHILADELPHIA a gain of $11,423,560.07 from this source for the year.1 In 1920 there was a gain of $18,674,000 through this fund, and in 1919 a loss of $5,734,000. Collection Department The report of the collection department shows a great expansion in the number and amount of items received for collection, that is, notes and bills payable at a future date The number of items received expanded from 92,651 in 1920 to 221,238 in 1921, or 139 per cent, and the amount of these items from $233,309,000 to $364,897,000, or 56 per cent.2 The average amount of each item, however, declined from $2,519 to $1,649. The ratio of the number of items returned unpaid to total items received increased from 16.4 per cent in 1920 to 17.7 per cent in 1921. Coupon Department A smaller number of United States coupons was paid by the coupon department than in 1920, but their total amount increased 11 per cent. Comparative figures for the past three years follow: 1921 1920 1919 Number Amount 8,781,836 9,493,270 8,258,108 $69,587,294.85 62,519,070.00 47,063,622.79 The division of the 1921 and 1920 totals according to the class of the security from which the coupons were clipped is given herewith: Number 1920 Liberty bonds and Victory notes Certificates of indebtedness. . Other United States coupons 9,441,536 44,527 Amount 1921 8,641,093 117,599 23,144 Monthly figures given in appendix, schedule 8. J Monthly figures given in appendix, schedule 9. 21 1920 1921 $56,462,863 6,011,002 $59,462,517 9,304,749 820,029 SEVENTH ANNUAL REPORT, FEDERAL RESERVE BANK OF PHILADELPHIA Wire Transfer Operations The transfer of funds over the leased wires of the Federal Reserve System is coming into increasing use by our member banks. In 1921, 13,366 messages transferring $847,699,000 were sent, whereas in 1920, the number of messages was 9,832, and the total amount involved, $625,339,000. This increasing appreciation of this serivce is even more manifest in the number of banks availing themselves of it. The largest number of banks making such transfers in any one month of 1920 was 27, as compared with 68 in 1921. The amounts transferred to each of the other Reserve districts during 1921 were: $78,670,000 383,636,000 61,226,000 49,533,000 24,384,000 136,065,000 Boston. .. New York Cleveland Richmond Atlanta. . Chicago. . St. Louis.... Minneapolis. . Kansas City. Dallas San Francisco $14,779,000 43,569,000 11,418,000 15,085,000 29,334,000 FISCAL AGENCY OPERATIONS As a result of transactions involving the exchange, conversion, and transfer of ownership of Liberty bonds and Victory notes, the Liberty bond department of this Bank handled 3,486,163 pieces to the amount of $633,523,400 during 1921. In 1920, 3,589,075 pieces amounting to $680,533,650 were exchanged or converted. The exchange of permanent for temporary bonds formed the bulk of the operations in both years. Details of various operations connected with the fiscal agency function follow: Liberty bonds and Victory notes: Conversions Exchanges Transfers of ownership Purchases for United States Treasury Received in payment of inheritance taxes Certificates of indebtedness redeemed 22 Number of pieces handled Amount 71,901 3,405,886 8,376 13,415 1,495 71,817 $11,148,350 617,230,300 5,144,750 28,160,700 1,677,600 193,807,000 SEVENTH ANNUAL REPORT, FEDERAL RESERVE BANK OF PHILADELPHIA Certificates of Indebtedness Probably one of the best indications of easier monetary conditions is to be found in the subscriptions to the various issues of United States certificates of indebtedness. In 1920 this district was allotted $264,323,000 of certificates, and the ratio of subscriptions to allotments was 118 per cent. There were 16 issues in 1921 with a total allotment to the district of $266,293,500. Subscriptions were 216 per cent of allotments for the first 8 issues, and 682 per cent for the last 8. The number of subscribing banks, however, declined from 999 in 1920 to 838 in 1921. Comparative data of subscriptions and allotments in 1920 and 1921 follow:1 1921 Subscriptions Allotments Subscriptions Allotments $425,522,500 664,323,000 $113,801,500 152,492,000 $96,149,000 216,185,000 $80,722,500 183,600,500 $1,089,845,500 $266,293,500 $312,334,000 $264,323,000 Loan certificates Tax certificates Totals 1920 In addition to the certificates, two issues of three-year United States Treasury notes were marketed in 1921. Subscriptions in this district were $240,996,300, and allotments, $86,106,700. Government Deposits Government deposits averaged a little higher than in 1920, and the number of depositories increased from 684 at the end of 1920, to 689 at the end of 1921. At the close of business December 31, 1921, deposits were $31,490,000, and the amount of collateral pledged was $55,095,000. Government Checks The number of Government checks handled increased from 1,918,816 in 1920 to 2,065,822 in 1921, but the amount involved decreased from $528,703,755 to $462,551,120. Statistics of each issue given in appendix, schedule 10. 23 SEVENTH ANNUAL REPORT, FEDERAL RESERVE BANK OF PHILADELPHIA War Savings Activities Cash sales of War Savings securities in the Third Federal Reserve District fell off again in 1921, amounting to $1,552,876, as compared with $2,593,882 in 1920, $5,036,774 in 1919, and $41,662,200 in 1918. The causes operating to produce this decline in sales were the waning of enthusiasm after the war, the low rate of interest on these securities, and the rise in unemployment. The new peace-time savings plan of the Treasury Department, which became effective December 15, provided for $1 savings stamps, and savings certificates in denominations of $25, $100 and $1,000, to be sold at flat prices of $20, $80 and $800 respectively. The maximum annual investment permitted to one person in a year was raised from $1,000 to $5,000. Apparently this revision of the plan made these securities more acceptable, for sales during the last two weeks of December exceeded those of the same period in 1920 by 66 per cent. INTERNAL ORGANIZATION Board of Directors Class Name Residence Group 1. Joseph Wayne, Jr., president, Philadelphia, Pa. Girard National Bank, Philadelphia, Pa. Group 2. Francis Douglas, cashier, First Wilkes-Barre, Pa. Nat. Bank, Wilkes-Barre, Pa. Group 3. M.J. Murphy,c/o A.B. Leach & Clarks Green, Pa. Co., Bankers,NewYork,N.Y. B. Group 1. Alba B. Johnson, vice-president, Southwark Foundry & Machine Co., Phila., Pa. Group 2. Edwin S. Stuart, merchant, Philadelphia, Pa. Group 3. Charles K. Haddon, vice-president, Victor Talking Machine Co., Camden, N. J. Richard L. Austin Henry B. Thompson, president, U. S. Finishing Co., New York, N. Y. Charles C. Harrison Term expires Dec. 31, 1923 Dec. 31, 1921 Dec. 31, 1922 Rosemont, Pa. Dec. 31, 1922 Philadelphia, Pa. Dec. 31, 1923 Camden, N. J. Dec. 31, 1921 Philadelphia, Pa. Wilmington, Del. Dec. 31, 1923 Dec. 31, 1922 Philadelphia, Pa. Dec. 31, 1921 The annual election of directors resulted in the re-election of Mr. Francis Douglas and Mr. Charles K. Haddon to represent 2-1 SEVENTH ANNUAL REPORT, FEDERAL RESERVE BANK OF PHILADELPHIA class A, group 2, and class B, group 3, respectively, for terms of three years ending December 31, 1924. Mr. Charles C. Harrison, a class C director, was reappointed by the Federal Reserve Board for the same term, and Mr. Richard L. Austin was reappointed as Federal Reserve Agent and Chairman of the board of directors for a term of one year, and Mr. Henry B. Thompson was reappointed as Deputy Chairman for one year. The board of directors again selected Mr. Levi L. Rue, president of the Philadelphia National Bank, to represent the Third Federal Reserve District on the Federal Advisory Council. Mr. R. D. Stockton, on May 1, announced his resignation as the Comptroller of this Bank, to take effect June 1. His resignation was accepted by the board of directors with expressions of regret, and at a later meeting Mr. William G. McCreedy, formerly assistant auditor, was appointed to serve as Acting Comptroller. Mr. Walter T. Grosscup, with the approval of the Federal Reserve Board, was appointed as Assistant Federal Reserve Agent on July 13. The assumption of the functions of the Sub-Treasury of the United States on February 4 (in accordance with the Act of Congress of May 29, 1920) has thus far not added greatly to the work of the Bank. A small increase in the force of the currency department to handle coin and count a larger amount of currency was necessary, but little additional work has fallen thus far upon the Government coupon or Liberty loan departments. The new vault of the Bank was completed in the middle of the year. It adds greatly to safety and convenience in handling the large amounts of money and securities in the possession of the Bank. A valuable service is being performed for the member banks in receiving their securities for safekeeping. At the end of the year the amount of securities so deposited by member banks was $63,263,000, as compared with $27,743,000 at the end of 1920. Total expenditures up to December 31, 1921, on the building, the vaults, and for other expenses in connection with them, were $2,422,677. This may be divided as follows: Original cost of building, $600,000; remodeling and improvements, $412,032; furniture and equipment, $413,239; old vault, $107,930; new vault, $748,982; repairs and alterations (not permanent), $140,494. The sum of $748,982 charged to the new vault does not include the cost of remodeling the building, etc., these expenses being included under another heading. 25 SEVENTH ANNUAL REPORT, FEDERAL RESERVE BANK OF PHILADELPHIA A total of 897 officers and clerks were in the employ of the Bank on December 31, 1921, as compared with 842 at the end of 1920. BANKS OF THE DISTRICT In the following tabulation the 1,189 banking institutions in the Third Federal Reserve District on December 31, 1921, are classified according to location, membership in the Federal Reserve System, and membership in the par collection system: Banks on par list National banks State bank members Nonmember state banks Totals Pennsylvania New Jersey. . Delaware. . .. 556 79 18 39 8 1 395 15 33 990 132 55 Totals 653 51 473 1,177 Noncheck state banks Grand totals 997 135 57 12 1,189 At the end of 1920 there were 1,149 banking institutions in the district, while at the beginning of the year there were only 1,105. The more important items taken from the statements of the banks as of June 30, 1921, are given in a table below. It will be observed that the member banks of the Federal Reserve System had 63 per cent of the total resources of all banks in the district. If we consider only the eligible banks, we would find that the member banks composed 69 per cent of the total number of all eligible institutions, 69 per cent of their combined capital and surplus, and 72 per cent of their total resources. (In thousands of dollars, i. e., 000's omitted) National banks Number Capital Surplus Undivided profits. Total deposits Total resources... 651 $88,639 125,162 43,207 1,282,803 1,704,925 Member state banks 48 $25,821 48,738 11,887 290,403 390,902 2G Nonmember state banks Totals 469 $76,226 86,019 29,489 978,850 1,228,149 1,168 $190,686 259,919 84,583 2,552,056 3,323,976 Ratio member banks to all banks 60% 60' 67' 65' 62' 63' SEVENTH ANNUAL REPORT, FEDERAL RESERVE BANK OF PHILADELPHIA Changes in the condition of the member banks are best reflected in the reports which 58 of these banks rendered during 1921. For purposes of comparison their combined reports as of January 7 and December 28 are given below: January 7 December 28 $76,385,000 198,983,000 406,702,000 $51,519,000 199,543,000 326,617,000 $682,070,000 $577,679,000 United States securities owned Other securities owned $69,072,000 154,363,000 $75,626,000 162,447,000 Total investments $223,435,000 $238,073,000 Total loans, discounts and investments* $905,505,000 $815,752,000 Total deposits Borrowings from Federal Reserve bank $719,036,000 110,036,000 $684,735,000 50,024,000 Loans and discounts: Secured by United States securities* Secured by other stocks and bonds All other Total loans and discounts* •Includes rediscounts with the Federal Reserve Bank. In the investment items an increase of more than 14 millions of dollars is to be noted, which offsets in part the decrease of 104 millions in loans and discounts, including rediscounts with the Federal Reserve Bank. From the figures it appears that 60 millions of the total reductions in the loans and discounts of these member banks were used to reduce their borrowings from the Federal Reserve Bank. The downward trend of loans and discounts and of borrowings from the Federal Reserve Bank, with minor fluctuations, was continuous throughout the year. State Member Banking Institutions At the end of 1920, 46 State banks and trust companies, in this district, were members of the Federal Reserve System, and, during 1921, 6 other banks in Pennsylvania were added to the list. One of the member banks in Scranton, however, was consolidated with a national bank in February, with the result that the number of member state banking institutions on December 31, 1921, were 51. Of this number 39 were located in Pennsylvania, 8 in New Jersey and 4 in Delaware. 27 SEVENTH ANNUAL REPORT, FEDERAL RESERVE BANK OF PHILADELPHIA Fiduciary Powers for National Banks Sixteen applications for fiduciary powers for national banks were acted upon and granted during the year. Six of these were requests for additional powers by banks which had previously been granted only partial powers, so that the net increase for 1921 is only 10 in the number of banks possessing these privileges. A table follows showing the banks in each state possessing either full or partial powers on December 31, 1921: Full powers Partial powers Totals Pennsylvania New Jersey . Delaware 68 18 2 36 5 2 104 23 4 Totals 88 43 131 Department of Bank Examination Among the duties of the Department of Bank Examination are the examination of the banking and trust departments of state member banks, the investigation of applications for fiduciary powers, new national bank charters, and applications under the Clayton Act in connection with interlocking directorates. It also has maintained a separate record of applications and transactions affecting the capital stock of this Bank. During 1921, 57 examinations of banking institutions were made in all, of which 46 were in co-operation with the State Banking departments. The remaining 11 were independent examinations, all but one resulting from applications for membership in the System. The total banking resources of all the banks examined was $261,387,000; 37 individual trust departments with total assets of $527,420,000, and 25 corporate trust departments covering a total of $1,098,316,000 were also examined. The number of transactions handled and applications investigated were: fiduciary powers, 16; national bank charters, 8; Clayton Act applications, 32; capital stock transactions, 179. The Department has been frequently called upon by State banking institutions in this city and elsewhere in the district in connection with bank mergers and other matters and has been particularly helpful in assisting banks in the installation of trust departments. 28 SEVENTH ANNUAL REPORT, FEDERAL RESERVE BANK OF PHILADELPHIA APPENDIX EXHIBITS PAGE 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. Changes in discount rates Earnings and expenses, 1921 Loan and discount operations Federal Reserve notes issued and in actual circulation Denominations issued Currency receipts and shipments Transit department operations Gold settlement fund operations Collection department operations Treasury certificates issued Movement of principal asset and liability items during 1921 . . . 29 30 31 32 33 34 35, 36 37 38 39 Insert Exhibit 1 Changes in Discount Rates Rates for all maturities in effect Jan. 1 Member banks' collateral notes: Secured by bonds or notes of the U. S Secured by U. S. certificates of indebtedness... Secured by U. S. threeyear notes Secured by commercial paper Rediscounts: Secured by bonds or notes of the U. S Secured by U. S. certificates of indebtedness... Secured by U. S. threeyear notes Commercial paper Agricultural or live-stock paper Endorsed bankers' acceptances Trade acceptances Feb. 3 June 16 July 21 5% 6% 6% 6% 5% 6% 5% 6% 5% 5K 5% 6% 5% 6% 6% 6% 6% 5% 5% 6% 6% 6% 5% 6% 6% 6% 6% 6% 6% 5% 5% *At rate borne by certificate, but not less than 5% **At rate borne by certificate, but not less than 29 Oct. 5 Nov. 3 Exhibit 2 Earnings and Expenses 1921 EARNINGS From investments Deficient reserve penalties Sundry earnings Total earnings Total current expenses Current net earnings Annual rate of net earnings $847,827.92 803,647.17 871,143.37 779,364.27 805,782.79 755,698.71 645,787.51 591,879.41 524,021.57 498,989.64 416,515.28 420,923.34 $3,220.24 5,506.58 1,766.74 3,250.38 2,670.03 4,014.72 3,265.65 2,217.07 2,254.57 2,767.04 1,902.55 1,607.29 $552.19 271.27 742.52 487.28 420.95 3,119.97 492.98 356.81 430.92 336.76 375.14 4,474.24 $851,600.35 809,435.00 873,652.63 783,101.93 808,873.77 762,833.40 649,546.14 594,453.29 526,707.06 502,093.44 418,792.97 427,004,87 $153,012.44 150,920.39 178,526.08 157,293.60 160,159.02 592,825.52 199,967.93 192,941.45 188,608.11 191,174.22 174,714.52 426,299.39 $698,587.91 658,514.61 695,126.55 625,808.33 648,714.75 170,007.88 449,578.21 401,511.84 338,098.95 310,919.22 244,078.45 705.48 96.7% 100.5" 95.1" 88.5" 88.8" 24.0" 61.4" 54.7" 47.4" 42.2" 34.1" .9" Totals, 1921 $7,961,580.98 $34,442.84 $12,071.03 $8,008,094.85 $2,766,442.67 $5,241,652.18 60.0% Totals, 1920 $11,736,470.00 $69,150.00 $42,931.00 $11,848,551.00 $2,176,274.00 $9,672,277.00 116.8% Totals, 1919 $8,550,650.00 $25,673.00 $33,555.00 $8,609,879.00 $1,775,184.00 $6,834,695.00 89.0% Totals, 1918 $4,230,955.00 $29,784.00 $97,000.00 $4,357,740.00 $1,086,916.00 $3,270,824.00 46.0% January February March April May June g July August September October November December SEVENTH ANNUAL REPORT, FEDERAL RESERVE BANK OF PHILADELPHIA Exhibit 3 Loan and Discount Operations Bills discounted for member banks January February March April May June July August September October November December Totals, 1921 Totals, 1 9 2 0 . . . . Discounted paper acquired from other Federal Reserve banks Open market paper acquired from other Federal Reserve banks Bills bought in open market $349,825,864.28 309,687,078.02 399,243,410.19 359,860,513.19 357,917,059.63 372,532,913.95 282,489,271.17 309,970,455.61 272,172,581.15 281,555,106.36 275,544,613.03 301,568,092.08 $5,000,000 $6,671,629.41 11,001,773.89 9,022,991.43 9,859,527.67 11,037,621.55 3,399,958.78 1,402,926.52 4,302,508.68 2,000,775.11 8,777,865.43 11,052,658.03 13,822,838.77 $3,872,366,958.66 $5,000,000 $92,353,075.27 $6,822,517.35 5,820,257,742.17 144,578,852 41,232,255.15 35,147,844.94 Totals, 1 9 1 9 . . . . 10,736,435,270.00 $6,822,517.35 14,048,447.00 Total discount and open market purchases United States securities January... $26,721,000.00 7,544,000.00 February.. March. . . . 26,939,000.00 10,160,000.00 April 31,319,000.00 May 55,902,100.00 June July 325,100.00 1,758,000.00 August.... September. 6,316,800.00 October. . . 4,157,500.00 November. 2,340,000.00 December. 24,228,350.00 Totals: 1921 $197,726,850.00 1920 357,432,400.00 1919.... 52,921,500.00 Municipal 1921 $45,000.00 95,000.00 $388,218,493.69 335,055,369.26 435,205,401.62 379,880,040.86 400,273,681.18 431,834,972.73 284,217,207.69 316,030,964.29 280,490,156.26 294,490,471.79 288,992,271.06 339,714,280.85 $140,000.00 $4,174,403,401.28 0 0 31 1920 $656,620,270.22 571,916,990.34 544,618,765.49 596,705,178.67 461,996,683.82 525,832,296.73 561,643,726.62 568,684,403.01 477,114,821.26 447,374,996.26 526,776,425.53 459,364,535.31 it 324 318 330 369 384 399 393 382 381 388 403 417 509 $6,398,649,094.26 484 10,803,405,217.00^, 494 Exhibit 4 Federal Reserve Notes Issued and in Actual Circulation 1921 Outstanding at beginning of month Outstanding at end of month Issued during month Fit notes received Redeemed $7,450,000 $20,259,100 $271,579,505 Held by bank at end of month In actual circulation at end of the month 1921 1920 $25,040,000 $259,053,585 $223,585,215 January $291,298,605 $7,990,000 February 271,579,505 19,700,000 19,519,150 271,760,355 23,340,000 259,162,480 242,238,875 March 271,760,355 12,800,000 19,732,850 264,827,505 28,540,000 239,749,520 247,631,135 " April 264,827,505 13,120,000 25,044,060 252,903,445 21,420,000 235,555,585 245,442,935 May 252,903,445 16,200,000 24,435,300 244,568,145 21,420,000 230,644,670 249,835,795 June 244,668,145 20,000,000 23,025,635 241,612,510 21,420,000 226,453,965 249,135,625 July 241,642,510 20,000,000 18,788,695 242,853,815 21,420,000 221,080,590 251,795,885 August 242,853,815 20,800,000 21,220,150 242,433,665 20,620,000 213,764,635 268,543,798 September 242,433,665 8,400,000 19,889,500 230,944,165 20,220,000 209,062,515 270,823,520 October 230,944,165 7,400,000 17,631,350 220,712,815 35,220,000 201,612,125 271,743,935 November 220,712,815 14,000,000 17,240,000 217,472,815 27,220,000 197,873,035 270,553,290 December 217,472,815 23,000,000 17,602,700 222,870,115 22,146,205 200,723,910 278,321,675 SEVENTH ANNUAL REPORT, FEDERAL RESERVE BANK OF PHILADELPHIA Exhibit 5 Denominations of Federal Reserve Notes Issued to Bank During 1921 1921 1920 1919 Denominations Amount $5 $10 $20 . $50 $100 $500 $1000 Totals $45,550,000 57,940,000 49,120,000 23,000,000 5,600,000 600,000 1,600,000 % 24.8 31.6 26.8 12.5 3.1 .3 .9 $183,410,000 100.0 Amount Amount % 24.1 25.0 37.4 9.7 2.8 .1 .9 $37,010,000 58,880,000 75,970,000 9,600,000 11,600,000 600,000 2,000,000 19.0 30.1 38.8 4.9 5.9 .3 1.0 $177,420,000 100.0 $195,660,000 100.0 Of. /a $42,780,000 44,380,000 66,460,000 17,200,000 4,800,000 200,000 1,600,000 Exhibit 6 Currency Receipts and Shipments Receipts 1921 From member banks From non-member banks Shipments To member banks To non-member banks Total receipts 1921 1920 1921 1920 $47,238,481 29,132,634 39,996,106 46,697,711 39,590,446 48,536,095 51,623,976 48,800,799 51,909,656 53,257,562 53,669,878 59,640,105 $38,223,737 51,453,041 56,372,687 53,096,348 52,627,402 59,145,596 54,492,399 55,517,449 57,675,875 44,141,834 57,168,285 66,624,878 $33,689,992 60,276,829 48,045,055 46,795,965 48,879,250 47,084,490 53,279,310 60,711,627 57,511,399 64,210,360 55,338,584 67,443,521 $51,595,145 44,465,986 62,341,633 53,258,070 53,580,969 57,984,393 53,491,855 58,522,114 57,194,486 53,721,975 51,228,665 59,801,585 $2,680,995 981,592 1,228,087 1,833,625 1,793,825 1,949,081 3,870,021 4,298,529 3,585,365 3,315,290 3,958,055 4,557,925 $38,223,737 51,453,041 56,372,687 53,098,348 52,627,402 59,145,596 54,492,399 55,517,449 57,675,875 44,141,831 56,682,165 66,066,915 $486,120 557,963 $54,276,140 45,447,578 63,569,720 55,091,695 55,374,794 59,933,474 57,361,876 62,820,643 60,779,851 59,037,265 55,186,720 64,359,510 Totals, 1921. $657,186,876 $34,052,390 $646,495,448 $1,044,083 $691,239,266 Totals, 1920. $548,123,372 $21,970,077 $643,266,382 January.. . February.. March.... co April May June July August.... September. October. . . November. December. Total shipments $646,539,531 $570,093,449 $643,266,382 Exhibit 7 Transit Department Operations Total number and amount of checks handled monthly Philadelphia banks January February.... March District no. 3 banks Total Other Reserve districts Number Amount Number Amount Number Amount Number Amount 1,532,048 $763,752,067 1,920,154 $229,096,300 767,327 $178,436,983 4,219,529 $1,171,285,350 1,366,611 631,846,062 1,740,122 188,250,851 659,700 156,176,482 3,766,433 976,273,395 1,730,797 765,566,073 238,589,370 755,009 188,586,871 4,589,325 1,192,742,314 w April 1,656,888 725,395,039 2,103,519 2,075,994 229,593,189 739,158 171,289,882 4,472,040 1,126,278,110 May 1,596,161 669,269,248 2,008,479 212,513,318 643,596 143,074,354 4,248,236 1,024,856,920 June 1,751,023 733,844,057 2,207,131 238,140,347 688,878 145,295,082 4,647,032 1,177,279,486 July 1,551,810 686,234,031 2,096,797 220,961,209 698,106 139,561,762 4,346,713 1,046,757,002 August 1,622,596 656,528,382 2,058,650 220,089,914 670,545 134,888,196 4,351,791 1,011,506,492 September... 1,596,828 690,155,021 1,989,154 234,906,528 639,720 129,019,429 4,225,702 1,054,080,978 October 1,607,224 695,205,485 2,016,014 223,615,704 667,003 153,651,603 4,290,241 1,072,472,792 November. . . 1,614,274 685,224,901 1,962,588 223,689,804 657,187 136,686,167 4,231,019 1,045,600,872 December. . . 1,815,564 780,247,635 2,257,341 286,342,601 766,026 129,297,754 4,838,931 1,195,887,990 19,441,824 $8,483,268,001 24,435,943 $2,745,789,135 8,352,255 $1,805,964,565 52,230,022 $13,035,021,701 Total Exhibit 7—Continued Average daily number and amount of checks handled Philadelphia banks 05 District no. 3 banks Total Other Reserve districts Number Amount Number Amount Number Amount Number Amount January 61,282 $30,550,083 76,806 $9,163,852 30,693 $7,137,479 168,781 $46,851,414 February.... 62,119 28,720,276 79,096 8,556,858 29,986 7,098,929 171,201 44,376,063 March 66,569 29,444,848 80,904 9,176,514 29,039 7,253,342 176,512 45,874,704 April 63,726 27,899,809 79,846 8,830,507 28,429 6,588,072 172,001 43,318,388 May 63,846 26,770,770 80,340 8,500,532 25,743 5,722,974 169,929 40,994,276 June 67,348 28,224,771 84,889 9,159,259 26,495 5,588,273 178,732 42,972,303 July 62,073 27,449,360 83,871 8,838,449 27,924 5,582,471 173,868 41,870,280 August 60,096 24,315,866 76,246 8,151,478 24,838 4,995,859 161,177 37,463,203 September... 63,873 27,606,200 79,566 9,396,262 25,589 5,140,777 169,028 42,143,239 October 64,288 27,808,219 80,640 8,944,628 26,681 6,146,064 171,609 42,898,911 November... 70,185 29,792,387 85,330 9,725,643 28,574 5,942,877 184,089 45,460,907 11,013,176 29,462 4,972,991 186,112 45,995,691 $9,152,630 27,841 $6,019,882 174,100 $43,450,072 December. .. 69,829 30,009,524 86,821 Average... 64,806 $28,277,560 81,453 Exhibit 8 Gold Settlement Fund Operations Net gain for month Balance at close Total receipts Total disbursements January $620,186,948.53 $625,709,472.10 February 532,428,799.05 513,829,541.68 March 605,169,944.92 620,556,750.80 April 634,334,475.79 631,698,092.80 May 548,320,993.45 550,062,748.71 June 598,843,168.58 595,544,878.23 July 545,265,462.21 546,603,791.95 1,338,329.74 50,896,790.81 August 552,755,742.12 556,741,487.10 3,985,744.98 46,911,045.83 September 560,062,233.13 554,039,719.06 6,022,514.07 October 587,924,248.23 570,468,504.48 17,445,743.75 November 549,030,165.84 555,175,154.25 6,144,988.41 64,244,315.24 614,337,001.93 616,805,482.57 2,468,480.64 61,775,834.60 $6,948,659,183.78- $6,937,235,623.73 $48,012,188.53 $36,588,628.48 $8,949,690,155.95 $8,931,016,633.33 $53,832,460.15 $35,158,937.53 1921 Net loss for month $50,352,274.55 $5,522,523.57 63,429,008.35 $18,599,257.37 15,386,805.88 1,741,755.26 48,936,830.20 52,235,120.55 3,298,290.35 52,933,559.90 70,389,303.65 Totals, 1921 48,042,202.47 50,678,585.46 2,636,382.99 December Totals, 1920 44,829,750.98 Exhibit 9 Collection Department Operations Number of items received 1921 City Country Amount of items received for collection Number of items returned—unpaid Total City Country 2,115 City Country Total 2,422 $6,671,557 $17,204,235 $23,875,792 17,195,665 23,296,257 20,521,354 26,612,002 Total January 3,372 9,105 12,477 307 February. . . . 2,626 8,608 11,234 266 1,941 2,207 6,100,592 March 2,948 11,635 14,583 307 2,220 2,527 6,090,648 8§ April 3,304 12,172 15,476 380 2,807 3,187 6,209,097 7,876,993 14,086,090 May 3,055 14,205 17,260 330 3,559 3,889 5,482,308 25,850,233 31,332,541 June 3,548 16,210 19,758 336 3,411 3,747 5,982,214 27,360,942 33,343,156 July 3,958 16,873 20,831 444 2,731 3,175 6,967,219 23,803,947 30,771,166 August 3,464 17,011 20,475 386 2,969 3,355 6,778,332 23,884,217 30,662,549 September.. . 3,318 16,418 19,736 395 3,138 3,533 8,834,749 24,771,407 33,606,156 October 4,326 18,244 22,570 463 3,145 3,608 10,390,318 28,754,555 39,144,873 November.. . 3,989 18,101 22,090 424 3,068 3,492 10,213,907 27,258,153 37,472,060 December. . . 4,697 20,051 24,748 451 3,484 3,935 11,800,985 28,892,932 40,693,917 Totals 42,605 178,633 221,238 4,489 34,588 39,077 $273,374,633 $364,896,559 $91,521,926 SEVENTH ANNUAL REPORT, FEDERAL RESERVE BANK OF PHILADELPHIA Exhibit 10 Treasury Certificates of Indebtedness Issued During 1921 Loan Certificates of Indebtedness Issued Date of Symbol series E-1921 F-1921 G-1921 H-1921 A-1922 B-1922 C-1922 Issue Maturity Jan. 15, 1921 Jan. 15,1921 Feb. 15,1921 April 15, 1921 May 16, 1921 Aug. 1, 1921 Nov. 1, 1921 April 15,1921 Oct. 15, 1921 July 15, 1921 Oct. 15,1921 Feb. 16, 1922 Aug. 1,1922 April 1,1922 Total subscriptions Subscription allotted 5K% $15,032,000 63,527,000 5H" 5 H " 22,291,000 5K" 52,535,000 5 ^ " 91,076,000 5K" 156,827,500 4M" 24,234,000 $5,160,500 18,903,000 10,945,000 19,047,000 25,757,500 30,336,500 3,652,000 Rate Tax Certificates of Indebtedness Issued Symbol series TS2-1921 TM-1922 TJ-1922 TM2-1922 TM3-1922 TS-1922 TS2-1922 TJ2-1922 TD-1922 Date of Total subscriptions Subscription allotted 5H% $10,434,000 45,981,000 5H" 53^" 45,628,000 5M" 44,488,000 5 " 53,246,500 5 M " 81,467,500 4 M " 128,814,500 4 M " 18,360,500 4 M " 235,903,000 $10,434,000 40,346,000 25,333,500 9,033,500 8,191,500 12,081,500 17,476,500 3,707,000 25,888,500 Rate Issue Maturity Mar. 15,1921 Mar. 15, 1921 June 15, 1921 Aug. 1, 1921 Sept. 15, 1921 Sept. 15, 1921 Nov. 1, 1921 Dec. 15,1921 Dec. 15,1921 Sept. 15,1921 Mar. 15, 1922 June 15, 1922 Mar. 15, 1922 Mar. 15, 1922 Sept. 15, 1922 Sept. 15, 1922 June 15, 1922 Dec. 15, 1922 Treasury Notes Issued Date of Symbol series A-1924 B-1924 Issue Maturity June 15,1921 Sept. 15, 1921 June 15,1924 Sept. 15, 1924 39 Rate Total subscriptions Subscription allotted $60,086,600 180,909,700 $45,509,500 40,597,200 Movement of Principal Asset and Liability Items During 1921 (Amounts in thousands of dollars, i. e., 000's omitted) Purchased bills Discounted bills Reserve percent.a er«s * TV»tfll Date earning assets (2+7 +10) Total held (3+4) 1 199,420 199,307 182,895 191,14* 199,618 203,695 213,437 210,221 200,911 194,988 197,967 206,414 197,845 8.. 178,162 15.. 191,940 22.. 190,591 27.. 189,229 M a y 4.. 183,412 11.. 175,905 18.. 191,364 25.. 183,249 June 1.. 196,225 8.. 188,240 15.. 195,718 22.. 170,298 29.. 174,648 July 6.. 155,769 13.. 147,438 20.. 148,706 27.. 148,534 Aug. 3.. 151,299 10.. 141,658 17.. 144,584 24.. 137,705 31.. 134,525 Sept. 7. . 130,317 14.. 130,030 21.. 132,421 28.. 123,493 Oct. 5. . 115,470 11.. 117,697 19.. 126,659 26.. 124,521 Nov. 2.. 119,783 9.. 114,801 16.. 113,586 23.. 3 113,559 30.. 110,439 Dec. 7.. 3111,681 14.. 3108,631 21.. <121,364 28.. *121,676 Jan. 7.. 14.. 21.. 28.. Feb. 4.. 11.. 18.. 25.. Mar. 4.. 11.. 18.. 25.. April 1.. Dis counted for other Federal Reserve banks Discounted for m e m b e r banks in this district Total (2—3) Secured by U.S. Gov't. obligations Per cent Total held (5-5-4) (8+9) 2 3 4 5 6 7 155,623 153,379 141,894 149,340 146,019 148,407 156,911 156,969 152,262 146,909 150,843 158,762 152,633 132,033 144,496 144,233 145,026 141,604 136,381 146,965 144,976 155,691 149,569 139,080 134,351 140,684 123,360 116,443 118,835 119,098 122,120 112,132 115,320 107,581 106,529 103,183 103,746 103,124 100,476 94,155 95,420 101,657 100,885 96,084 91,667 90,109 88,406 86,217 88,645 85,630 91,953 90,316 12,100 10.236 5,991 4,946 2,182 2,148 143,523 143,143 135,903 144,394 143,837 146,259 156,911 156,969 152,262 146,909 150,843 158,762 152,633 132,033 144,496 144,233 145,026 141,604 136,381 146,965 144,976 155,691 149,569 139,080 134,351 140,684 123,360 116,443 118,835 119,098 122,120 112,132 115,320 107,581 106,529 103,183 103,746 103,124 100,476 94,155 95,420 101,657 100,885 96,084 91,667 90,109 88,406 86,217 88,645 85,630 91,953 90,316 111,684 109,233 108.271 109,674 108,042 110,857 109,390 110,120 107,205 110,213 109,403 111,967 106,646 102,335 104,274 108,198 110,140 107,329 102,154 109,324 110,731 114,117 111,280 104,111 96,691 94,815 84,043 83,388 85,638 85,709 87,503 82,031 85,949 78,073 78,150 76,937 74,745 74,318 69,840 67,600 68,264 71,654 68,767 67,356 66,008 63,932 70,007 66,126 67,160 66,405 70,401 70,213 77.8 76.3 79.7 76.0 75.1 75.8 69.7 70.2 70.4 75.0 72.5 70.5 69.9 77.5 72.2 75.0 75.9 75.8 74.9 74.4 76.4 73.3 74.4 74.9 72.0 67.4 68.1 71.6 72.1 72.0 71.7 73.2 74.5 72.6 73.4 74.6 72.0 72.1 69.5 71.8 71.5 70.5 68.2 70.1 72.0 70.9 79.2 76.7 75.8 77.5 76.6 77.7 11,997 11,155 8,689 9,883 21,650 22,627 23,810 20,918 16,485 16.181 13,482 14,077 14,572 15,680 16,856 14,018 12,387 11,443 9,411 8,336 8,908 11,182 9,656 8,149 6,089 4,689 3,390 2,538 1,492 1,105 681 1,081 1,887 3,245 3,127 2,288 1,440 2,372 1,972 1,353 2.391 6,255 5,889 6,484 6,744 7,846 9,809 10,156 8,970 8.665 13,859 15,277 Bought Purfrom chased other Federal in open Reserve market banks (7—8) 8 6,823 6,823 6,733 4,038 3,213 2,796 1,547 1,206 Federal United Total Reserve Total States cash deposits notes in securi- reserves Ac- Adcircu- tual justed2 ties lation 9 10 11 12 13 14 15 11,997 11,155 8,689 9,883 14,827 15,804 17,077 16,880 13,272 13,385 11,935 12,871 14,572 15,680 16,856 14,018 12,387 11,443 9,411 8,336 8,908 11,182 9,656 8,149 6,089 4,689 3,390 2,538 1,492 1,105 681 1,081 1,887 3,245 3,127 2,288 1,440 2,372 1,972 1,353 2,391 6,255 5,889 6,484 6,744 7,846 9,809 10,156 8,970 8,665 13,859 15,277 31,800 34,773 32,312 31,919 31,949 32,661 32,716 32,334 32,164 31,898 33,642 33,575 30,640 30,449 30,588 32,340 31,816 30,365 30,113 36,063 29,365 29,352 29,015 48,489 29,858 29,275 29,019 28,457 28,379 28,331 28,498 28,445 27,377 26,879 24,869 24,846 24,844 26,925 21,045 19,962 19,886 18,747 17,747 17,215 16,390 15,631 15,344 14,021 14,021 14,291 15,457 15,988 212,208 203,196 215,248 212,816 198,539 196,282 179,246 192,185 197,733 200,958 188,523 188,132 194,210 201,865 188,152 186,962 186,199 190,811 198,426 180,864 177,395 173,264 177,994 181,254 185,049 186,944 206,367 209,584 208,168 206,217 207,384 209,429 207,839 203,874 210,290 220,180 222,209 208,748 217,396 227,737 227,571 208,799 212,429 216,364 224,833 220,480 221,414 225,155 221,705 230,840 219,297 216,638 115,100 106,117 108,373 111,478 109,680 110,378 107,694 109,586 112,167 111,647 104,286 114,671 112,887 107,286 107,478 107,695 103,329 103,209 103,879 106,849 97,092 100,341 101,799 108.663 98,420 101,098 103,218 104,230 104,270 102,691 108,632 101,243 105,504 98,025 100,668 103,810 105,836 100,632 100,161 106,272 106,114 104,042 103,879 106,501 101,280 103,109 103,093 103,783 102,899 101,928 100,286 98,997 273,005 266,856 263,141 262,522 254,979 256,313 254,110 260,274 255,895 251,623 241,622 242,344 239,274 236,446 235,815 233,467 234,527 233,280 234,291 229,259 228,229 230,413 228,216 226,633 224,125 226,352 224,513 223,653 219,130 219,341 217,307 219,778 216,543 214,334 213,765 213,818 213,815 210,130 208,698 205,264 207,445 201,154 200,853 198,986 204,422 200,725 200,324 197,873 198,014 203,767 207,593 205,198 58.2 57.2 61.3 59.5 56.4 55.3 51.5 53.6 55.7 57.0 54.5 52.7 55.1 58.7 54.8 54.8 55.1 56.7 58.7 53.8 54.5 52 4 53.9 54.1 57.4 57.1 63.0 63.9 64.4 64.0 63.6 65.2 64.5 65.3 66.9 69.3 69.5 67.2 70.4 73.1 72.6 68.4 69.7 70.8 73.5 72.6 73.0 74.6 73.7 75.5 71.2 71.2 61.5 60.1 63.0 60.9 58.9 57.8 53.4 54.8 56.6 57.8 54.9 53.0 March 18, net deposits, as given below, were used in calculating reserve percentages: Jan. 7 $91,593,000 Feb. 4 $97,292,000 Mar. 4 14 88,478,000 11 98,568,000 11 21 88,182,000 18 93,978,000 28 95,128,000 25 97,994,000 .... .... .... .... .... .... .... .... .... $98,843,000 100,964,000 'Adjusted percentages are calculated after increasing or reducing reserves held by the amount of accommodation extended to or received from other Federal Reserve Banks. A blank (..) in this column indicates that no accommodation was extended to or received from other Federal Reserve Banks. 'Includes $45,000 of municipal warrants. •Includes $95,000 of municipal warrants.