Full text of Federal Reserve Bulletin : April 1918

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FEDERAL RESERVE
BULLETIN




ISSUED BY THE

FEDERAL RESERVE BOARD
AT WASHINGTON

APRIL, 1918

WASHINGTON
GOVERNMENT PRINTING OFFICE
1918

FEDERAL RESERVE BOARD.
BX OFF1CIO MEMBERS.
WILLIAM G. MCADOO,

Secretary of the Treasury,
0hdir7na.fi.

W. P. G. HARDING, Governor.
PAUL M, WAKBURQ, Vice Governor
FREDERIC A. DELANO.
ADOLFH 0 . MILLER.
CHARLES S. HAMLIN.

JOHN SKELTON WILLIAMS,




Comptroller of the Currency.

H. PARKER WILLIS, Secretary.
SHERMAN ALLEN,

Assistant Secretary and Finca! Agent.
M. 0 . ELLIOTT, Counsel.




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to member banks of the system and to the officers and directors
of Federal Reserve Banks.

In sending the Bulletin to others the

Board feels that a subscription should be required.

It has

accordingly fixed a subscription price of $2 per annum.

Single

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when it will be required.
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Remittances should be made to the
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No complete sets of the Bulletin for 1915 are available.
Bound copies of the Bulletin for 1916 and 1917 may be had at $5
per copy.

TABLE OF CONTENTS.
Review of the month
Bankers' acceptance policy
Curtailment of unnecessary credit
Bank holdings of foreign securities
.
,.
Capital Issues Committee statements
The Government Official Bulletin
War expenditures, war debts, and increase in note circulation of principal countries
Interest rates on deposits
State banks and trust companies admitted to the system during the month
Commercial failures reported
Charters issued to national banks during the month
Banks granted authority to accept up to 100 per cent of capital and surplus
Fiduciary powers granted to national banks
Act providing for operation of railroads while under Federal control
War finance corporation act
Third Liberty Loan bond act
Informal rulings of the Federal Reserve Board
Law department
Business conditions throughout the Federal Reserve districts
Deposits and investments of national banks
•.
Chart showing
„
...
Gold settlement fund
Operation of the Federal Reserve interdistrict collection system
Discount operations of the Federal Reserve Banks
Acceptances
Resources and liabilities of Federal Reserve Banks
Federal Reserve note account of Federal Reserve Banks and agents
Member bank condition statement
Earnings on investments of Federal Reserve Banks
Gold imports and exports
Discount rates in effect
.Foreign exchange rates




IV

r

247
257
260
263
263
266
267
285
294
295
295
296
296
296
300
306
309
311
318
337
337
338
340
341
343
347
350
352
356
357
357
358

FEDERAL RESERVE BULLETIN
VOL.

4

APRIL 1, 1918.

No. 4

like 12 billions of dollars. The estimated tax
revenues of the Government for the fiscal year
As this issue of the Bulletin goes to press, the 1918 are $3,886,800,000, leaving, therefore,
date (April &) which marks the some 8J billions of dollars of outlay to be otherOUT first year of r
first anniversary or our lormat wise provided for ana presenting the Nation
with the greatest fiscal problem it has ever had
war.
;.
entrance -into the war. is close to face. The deficit has thus far occasioned
at 'hand and suggests a look backward to see two loans, for which bonds in an aggregate of
what has been accomplished and a look forward $5,894,000,000 have been issued, leaving, as the
to see what is ahead of us in the way of further minimum amount to be provided out of the
third Liberty loan, some three billions of dolneeded preparation.
lars.
In placing these vast loans extensive use
The twelve months that have thus far elapsed
has
been
made of successive offerings of Treashave been one of the most notable periods in
ury
certificates,
negotiated as the current rethe financial and economic history of the counquirements
of
the
Treasury necessitated, and
try and, not least of all. in that of the Federal
with
the
certainty
that
they would after a brief
Reserve System. On the economic side, the
interval
be
funded
into
long-term bonds as
year has witnessed extensive efforts to compass
these
wore
offered
to
the
public.
the difficult problem of readjusting our indusBoth
the
financing
of
the
long-term bonds
trial system, to meet the exacting economic
REVIEW OF THE MONTH.

exigencies of the war. On the financial side,
it has witnessed the rapid and successful adjustment of our credit and financial system to
meet the succeeding necessities of the Public
Treasury. The financial transactions of the
Government have been projected on a scale of
magnitude never equaled by any Government
and have subjected our financial and banking
systems to severer tests than ever would have
been, thought probable. That our system of
credit has thus far so successfully been able to
stand the strain imposed upon it is due to an
extent, which it would be difficult to exaggerate, to the Federal Reserve System, which has
had not only an important but a reassuring
part to play in every stage of the process of war
financing.
National expenditures for the fiscal year
1918, including therein advances of credit to
the belligerent Governments associated with
us, may be expected to amount to something-




Sen fee of Fed- aii( ^ ^ l e certificates of indebtederal Reserve Sys~ ness called for extensive and
iem
'
hearty cooperation on the part
of the banks of the country and that, in turn,
was largely, if not mainly, conditioned upon
the extent of the support they were permitted
to feel could and would be accorded them by
the Federal Keserve system. How extensive
the support of the Federal Reserve system has
been is disclosed in the growth of the investment holdings of the Federal Reserve Banks,
consisting of bills discounted and bought, from
$100,663,000 at the beginning of the war to
$971,452,000 when these attained their highest point (Dec. 21, 1917), while the second
Liberty loan was in process of flotation. In
addition to extending reserve credit to their
members and engaging in open-market operations in the purchase of acceptances from
both member and n on member banks, the
247

248

FEDEUAL RESERVE BULLETIN.

?, LOIS.

Federal Reserve Banks have supplied the \ Reports received by the Federal Reserve
country with its growing need of currency, ; Board from member banks in about 100 leadFederal Reserve notes issued having increased , ing cities indicate an increase, between January
from $376,510,000 at the beginning of April, 4 and March 15, from 1,013.8 to 1,635.8
1917, to $1,452,838,000 at the present time. ; millions in United States securities held. On
Whether accommodation to the hanks and the latter date the 682 banks heard from held
public could have been extended with so about 1 billion of certificates of indebtedness,
much of safety and liberality by the Federal ; or about 38 per cent of the certificates, and
Reserve system, had the system not been much \ 367 millions of Liberty bonds, or 6 per cent
strengthened by the amendments proposed by \ of the total Liberty bonds then outstanding.
the Board and adopted by Congress and ap- : While comparisons of partial March 15 data
proved by the President June 21, 1917, may with the complete December 31 data do not
be doubted. Gold holdings of the system, justify any definite conclusions regarding the
which were $943,552,000 at the opening of ; present holdings of national banks, and maniApril, 1917, are now «1,815,704,000. Figuring festly throw even less light upon the amount
the percentage of the gold holdings against of United States war obligations held at prestotal liabilities—notes and net deposits—for ent by all the banks of the country, the figthe two dates (April 6, 1917, and March 29, ures are thought to be, however, indicative
1918) yields a percentage for April 6 of 83 and of a considerable reduction in the amount of
for March 29 of 60.8. Heavy drafts have thus Liberty bonds held by the commercial banks
been made, it appears,, upon the credit-extend- in the larger cities of the country.
ing power of Federal Reserve Banks, but the
It further appears that the total of bans
Federal Reserve system stands to-day not only secured by Government war obligations C lendas the greatest holder of gold hi the world, ing by borrowing"), as reported by member
but also as possessing a reserve position banks in the 100 large cities, has decreased
stronger than that occupied by any of the from 423.8 millions on January 4 to 302.7 milgreat central banks of Europe prior to the war. lions on March 15 of the present year.
Between March 5, 1917, the date of call
Government deposits, which stood at 34,7
preceding the entrance of the millions on March 5, increased to 517.3 millions
a i i d ? ^ ^ U n i t e d S t a t e s i n t 0 t h e War> on December 31, the major portion of the
and December 31, 1917, the larger total representing deposits on account
date of the latest call, for which data have of sales of certificates of indebtedness and
been made public, loans and discounts of Liberty bonds. Aggregate net deposits on
national banks increased from 8,712.9 to which reserve is computed (inclusive of Gov9,390.8 millions dollars, their holdings of United ernment deposits on the earlier date but exStates securities from 714.5 to 1,624.5 millions, clusive of these deposits on the latter date)
and their oilier investments from 2,335.3 show an increase from 10,489.2 to 10,556.5 milto 2,572.3 millions. The difference between lions, as against an increase from 8,712.8 to
the totals of United States securities held on 9,390.8 millions in loans and discounts, and
the two dates, 910 millions, represents approxi- from 11,365.1 to 13,179.6 millions in total, exmately the amount of United States war clusive of permanent, investments.
obligations held by national banks at the end
Between January 4 and March 15 of the
of 1917. Of the total, 610 millions were present year net deposits (including GovernLiberty bonds and about 300 millions were ment deposits) of member banks in the larger
certificates of indebtedness, i. e., over 11 per cities show an increase from 9,898.4 to 10,044.3
cent of the Liberty bonds and 43 per cent of millions, while loans and investments rose from
the certificates outstanding on that date.
11,205.9 to 11,924.8 millions.




APRIL 1.

1918.

FEDERAL .RESERVE BULLETIN.

Although extravagance and waste have to
some extent interfered with the
^The credit situ- ra pi ( ] prosecution of our war
program, there are hopeful
symptoms which tend to offset these unfavorable aspects of the situation. The war savings certificate campaign has met with success,
the total of such stamps and certificates already
disposeci of being tentatively reported as
$124,000,000, while its educational effects have
been of utmost value. Important forward steps
have been taker in the control of long-term
credits through the creation of the Capital
Issues Committee of the Board, and, as a consequence of the work of this committee, in curtailing the issue of shares and bonds intended to
provide for the undertaking of new and unessential enterprises. Curtailment of commercial
credits has not yet been so effectively brought
about, although the increase in the current
rate of interest from about 4 to 4J per cent to
about of to 6 per cent for prime commercial
paper to-day in itself affords evidences of the
automatic check that has been imposed upon
unnecessary enterprises through the natural
increase in the charge for the use of capital.
The passage of the war finance bill providing
for a recognized and legally constituted body
charged with the control of long-term issues of
paper, and understanding the needs of the situation which is effectively permeating the banking community, will contribute materially to
a wise ami conservative reduction in unnecessary banking credits. Some suggestions as to
the way in which this reduction can be brought
about and the methods that may under existing conditions safely be employed to that end
may be found in a memorandum on economy
and credit curtailment published elsewhere in
this issue (p. 260).
On the whole, the year's experience in banking and finance may be regarded as reassuring
and as exhibiting a latent financial strength
far in excess of what the country had been
thought to possess.




249

The credit situation at present confronts as
its principal danger the possibility of an undue
reliance on the banking institutions of the
country as the means of sustaining long-period
financing. Such reliance necessarily results in
the development of bank credits which are notbacked or protected by short-term self-liquidating paper, but whose protection is found in
securities or paper protected by them. The
consequences of the creation of banking credit
on this basis are too well known to require
extended discussion, but it may suffice to say
that this enlargement of credits, if unaccompanied by a corresponding curtailing of consumption in an equal amount, is the principal
cause of the advance of prices and the cause
of an enlargement of obligations against which
there is no corresponding liquid protection.
It will only be through the practice of the
most rigid economy in the saving of goods,
services, and general productive power that
the financing of the Government can be successfully carried on and the balance of safety
be satisfactorily maintained.
The financing of the war is only in part a
monetary problem; in very large part it is an
economic problem—a problem of conserving
the economic as well as the financial strength
of the Nation and developing our resources
and productive power to the point where they
will be able to sustain the great military operations which are in prospect and all that is
incident to them. No one should, therefore,
consume goods except to the extent that their
consumption is necessary to maintain health
and vigor. No one should draw upon the
credit resources of the country except to finance
transactions which are essential for a nation
at war. Credit, like goods, should be saved.
Conservation of credit as regards nonessential
enterprises is necessary in order to provide,
without undue expansion, the credit required
by the Government and by business essential
to the success of the war and the well-being of
the country. The Board most earnestly in-

250

FEDERAL RESERVE BULLETIN.

vites serious consideration of a program of national economy as an imperative necessity as
we enter upon another year of war, and bespeaks the cooperation of all the banks in
behalf of its fulfillment in their several communities as well as their continued cooperation
in the further concentration of gold in the
Federal Reserve banks.
The Secretary of the Treasury, in an annourj cement made March 2, desThe third Lib- .
erty loan.
f

j

A

^

ag

&

d

f

.,
„ the opening of the campaign
for the third Liberty loan, and on March 26 he,
in a conference with Mr. Kitchin, chairman of
the Ways and Means Committee, outlined his
plan for this loan. Actual expenditures of the
United States Government and of the Allied
Governments having been much less than had
been indicated by the earlier estimates, the
amount of the next loan will be only $3,000,000,000, the right being reserved to allot oversubscriptions. The Secretary has asked authority from Congress to issue bonds bearing interest
at the rate of 4J per cent per annum, acceptable
at par and accrued interest in payment of United
States inheritance taxes taxable in the same
manner as the bonds of the second Liberty loan,
and having the benefit of a sinking fund of 5 per
cent per annum during the period of the war
and for one year thereafter. The sinking fund
is stated as a percentage of the maximum aggregate amount outstanding of all 4J per cent
Liberty loan bonds, its operations embracing
both the new issues now contemplated and the
bonds to be issued upon conversion into 4J per
cent bonds of the previous issues. It is the
belief of the Secretary that the rate proposed is
adequate and that by restricting unnecessary
capital issues, and by inducing the people who
subscribe for Liberty bonds to save, and to
keep the bonds for investment, and by purchases with the sinking fund from those who
find themselves compelled to sell, further increases in the interest rate may be avoided.
In order to put an end to the expectation of
higher interest rates, it is proposed that the
conversion privilege shall be eliminated from




APRIL 1,

1918.

the new bonds, but the holders of Liberty bonds
of all existing issues will be given an opportunity to convert their bonds into the new 4 |
per cent bonds.
In addition to the foregoing principal items
of the proposed program, Congress will be
asked for authorit}7 to issue bonds to the
amount of $4,500,000,000 besides those now
authorized, in order to provide for future
issues; for authority to issue additional Treasury certificates of indebtedness up to a
maximum amount of $8,000,000,000 outstanding at any time; for authority to make additional loans to the Allied Governments during the summer; and for authority to deposit
income and excess profits taxes with national
banks, State banks, and trust companies
throughout the United States in the same
manner as the proceeds of the Liberty loans.
Appreciation of the necessity of distributing
the new bonds as far as possible into the hands
of bona fide investors, and consequently preventing them from accumulating in the hands
of banks, is now much more general than
heretofore. A feature of the campaign about
to open will be the effort to secure as large
a permanent absorption of the bonds as is
possible, thereby proportionately relieving the
banks of the necessity of continuing to hold
and cany the securities beyond the time when
the}7 should be paid off through the redemption of their Treasury certificates by the use of
subscriptions to bonds obtained through the
investors of the country.
The issue of a minimum of $500,000,000
United States Treasury certifi° c a t e s ' subscriptions for which
closed on March 22, was oversubscribed. The Federal Reserve districts of
Boston, New York, Cleveland, Chicago, Minneapolis, and Kansas City all exceeded their
tentative quota, while the following districts
failed to reach their quota: Philadelphia, Richmond, Atlanta, St. Louis, Dallas, and San
Francisco. The following is a list of the tentative quota by districts, and a list of the subscriptions allotted:

AL>RIL 1,

1918.

Tentative
quota.
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago.
St. Louis
Minneapolis...
Kansas City...
Dallas..
San Francisco
Treasury Department

251

FEDERAL RESERVE BULLETIN,

'Subscriptions
allotted.

S33,000,000 S53,690,000
j 173,000,000 193,700,500
j 40,000,000 38,000,000
! 45,000,000 48,400,000
• -! 18,000,000 16,234,500
j 15,000,000 14,557,000
60,000,000 84,414,000
25,000,000 i 22,842,000
15,000,000 i 16,000,000
25,000,000 j 26,116,500
18,000,000 ! 15,000,000
.! 33,000,000
. .
30,250,000
! 3,828,000
500,000,000 ! 543,032,500

into permanent private ownership and will
restore to the banks their fluid assets for use as
a revolving1 fund in carrying through to success
further financing.
The number of subscriptions, by districts, for
the issues dated January 22, February 8, and
February 27 were as follows:
Jan. 22.
Boston
Now York....
Philadelphia.
Cleveland.
Richmond
Atlanta
Chicago
St.. Louis
Minneapolis...
Kansas Citv...
Dallas....;....
San Francisco.

212
275
415
770
158
216
910
L 054
375
515
480
384

471
786
800
1,200
479
755
2,424
1,034
1,193
1,547
951
930

554
1,192
730
1,396
558
717
2,832
1,401
1,436
1,653
955
1,048

Filial results of the sale of Treasury certificates undertaken February 27 and in progress
at the time of issue of the March Bulletin and
briefly referred to therein, have since been
6.364
12,550
14,472
Total.
made available and furnish an interesting
comparative showing when contrasted with the
The conference committee appointed March
results of the issues of February 8 and January
22, There has been throughout a progressive War Finance 21 reported to the Senate on
April 1 and to the House on
increase in the number of participating banks, Corporation.
April 2 its agreement on the
this number advancing from 6,364 subscribers
war
finance
corporation
bill. The bill as agreed
to the certificate issue of January 22 to 12,550
upon
differs
in
a
number
of important particufor the second and 14,472 for the third, while
lars
from
the
original
draft
and is reprinted
in every case, including the fourth issue, the
elsewhere
in
the
Bulletin.
The
provision of
offering has been fully taken or oversubscribed.
the
bill
as
thus
revised
which
is
of greatest
An especially interesting aspect of the operaimmediate
significance
for
the
Federal
Reserve
tion has been the success attained in securing
system
is
found
in
section
13.
This
prescribes
a wider distribution of the certificates among
the banks of the interior, which during the the conditions under which paper collateraled
by obligations. of the new corporation may be
period preceding the second Liberty loan had
admitted to discount at the Federal Reserve
hardly sustained their full share of the burBanks. The essential language on this subject
den, leaving the bulk of the load to be carried
is as follows:
by institutions on the eastern seaboard.
The banks and trust companies throughout the SEC. 13. That the Federal Reserve banks shall be authorized, subject to the maturity limitations of the Federal
country are now definitely enlisted in the task Reserve act and to regulations of the Federal Reserve
of carrying through the financial operations Board, to discount the direct obligations of member banks
of the Government, and a correspondingly secured by such bonds of the corporation and to redisgreater degree of strength is thereby imparted count eligible paper secured by such bonds and indorsed
to the financial machinery. General public by a member bank. No discount or rediscount under this
section shall be granted at a less interest charge than one
cooperation will be necessary in order to enable per centum per annum above the prevailing rates for
the banks successfully to continue this service eligible commercial paper of corresponding maturity.
and to provide for the current needs of the Any Federal Reserve bank may, with the approval of
Public Treasury by relieving them of their cer- j the Federal Reserve Board, use any obligation or paper so
tificates from time to time as new loans are | acquired for any purpose for which it is authorized to use
| obligations or paper secured by bonds or notes of the
offered and the funding of the certificates is United States not bearing the circulation privilege:
undertaken. This process will shift such bonds Provided, however. That whenever Federal Reserve notes




252

FEDERAL RESERVE BULLETIN.

are issued against the security of such obligations or paper
the Federal Reserve Board may make a special interest
charge on such notes, which, in the discretion, of the
Federal Reserve Board, need not; be applicable to other
Federal Reserve notes which may from time to time be
issued and outstanding. .All provisions of law, not inconsistent herewith, in respect to the acquisition by any
Federal Reserve Bank of obligations or paper secured by
such bonds or notes of the United States, and in respect to
Federal Reserve notes issued against the security of such
obligations or paper, shall extend, in so far as applicable
to the acquisition of obligations or paper secured by the
bonds of the corporation and to the Federal Reserve notes
issued against the security of such obligations or paper.

During the past month there have been decided indications of a disposi•SSE tm cietion on the part of banks in
posits.
some parts of the country to
increase the rates of interest allowed by them
on deposits. The continued demand for banking loan funds and the rising rates of interest
obtainable for loans have led some bankers
to the belief that it would be necessary for
them to increase the inducements offered
to depositors in order to maintain their existing
line of deposits and possibly obtain additions
thereto. The Board has felt it was unlikely
the inducements offered by higher rates of
interest would bring about any healthy growth
of the deposit lines of the banks, while on the
other hand it has been of the opinion that the
general result of an increase in interest rates
would operate to increase the burden of borrowers generally, due to the consequent higher
interest and discount rates or else development
of conditions which would produce an unsound basis for banking, and thus weaken
the whole banking structure. This belief led
the Board to make a careful inquiry into the
whole matter. As a result of the preliminary investigation, Governor Harding on
February 26 said in a public statement that
"the loans and deposits of banks have increased enormously during the past three
years, and it would seem to be the part of
wisdom for the banks to undertake to place
themselves in a position to continue to aid the
Government in its financial operations by curtailing unnecessary credits and by encouraging




APRIL I,

1918.

their depositors to buy Treasury certificates
and Government bonds, even though there be
some shrinkage in their deposits as a consequence.. Banks should remember that when
deposits are reduced reserves are released.
Reckless competition for deposits supported
by high interest rates will tend to force the
Government to pay higher rates, thereby imposing additional burdens on the people; and
any forced and artificial expansion of banking
credits will promote rather than check inflationary tendencies, which should be guarded
against at the present time. There does not,
seem to be any demand on the part of depositors for increased rates of interest on their
balances, and the Board wishes it understood
that it does not favor any movement to increase
these rates and that it will do all in its power
to discourage it. It sincerely hopes that those
banks which have unduly advanced their rates
will consider well the consequences involved
and that they will as far as possible do their
part toward restoring rates to the former
level."
It was pointed out that the objects aimed
at by the Board would be imperiled if any
bank or group of banks should embark upon a
policy of increasing their deposits by offering
unusual inducements other than interest, inasmuch as aggressive steps taken by any bank in
this way would doubtless lead to the need of
protective measures on the part of banks
whose business might be subjected to attack.
In past years the interest rates allowed at
New York banks upon the deThe

situation

in New York

.,,

£

,,

u

i

posits 01 other banks

T_

have

afforded a tentative standard or
basis for such rates in other parts of the country. At this time, therefore, there has been
special interest in the New York interest rate
situation, and when competitive bidding for
deposits began during the latter part of February and the first half of March, the Board
was necessarily interested in the character
of the policy to be adopted. Several .large
banks had already advanced interest rates on
bank balances with the resulting probability

iP.rL 3 , 1S3 8.

FEB.EEAL EESERVE BULLETIN.

that should the competition continue, especially between the trust companies and commercial banks, interest rates might be advanced
to a level which would involve danger and
invite retaliatory tactics on the part of banks
outside New York which would think themselves under the necessity of protecting their
deposit lines. The outcome of the situation
was an effort on the part of the New York
banks to reach, an agreement based upon a fixed
relationship between the 90-day rate established by the Federal 'Reserve Bank of New
York for commercial paper and the regular
interest rate to be granted by the banks to
their depositors. The theory of trie proposal
was that inasmuch as there should be some
relationship between the yield to be obtained
in the bill market and. the earning to be realized
through the placing of deposits with other
banks, there should be a schedule of advances
to be automatically made as a maximum in the
deposit rate as the standard discount rate
increased. Opposed to this view was the consideration that the payment of interest by
banks upon, deposits of other banks has long
been recognized as an undesirable practice,
admitted to be such by the New York Clearing
House Association in years past. Those who
hold this view believe that any advance in
interest rates upon the level established, in
past years must be looked upon as undesirable,
the preferable trend of development, according to them, being in the direction of reduction
or elimination of such rates rather than of
increase, even when such increase might be
carefully regulated with reference to the prevailing rate of discount.
The agreement among clearing-house banks
Agreem en t of New York arrived at on
among clearing- March 19 with respect to the
house banks.
payment of interest on deposits
not only relates their maximum amount to the
90-day discount rates in the way already
described but also, in effect, brings about an
average reduction. In times past commercial
banks of New York have paid 2 per cent, while
of late various trust companies have increased




253

their rates to 3 per cent or in some cases to an
even higher level. The new agreement provides for a uniform interest rate based on a
minimum of 3. per cent Mid a maximum of
8 per cent, the minimum rate of 1 per cent
corresponding to the theoretical 2 per cent rate
for 90-day commercial paper at the New York
Federal Reserve Bank, with an advance of
oiie-loirrth. of 1 per cent on deposits for every
advance of one-naif of 1 per cent in the bank
rate up to a maximum of 3 per cent on deposits.
Upon this basis a 5 per cent rate at the Federal
Reserve Bank of New York would be paralleled
by a maximum 2 | per cent rate on deposits,
while a 4 | per cent rate at the Federal Reserve
Bank would correspond to a 2\ per cent rate
on bank deposits. Less interest will be paid
in the aggregate and the possibility of unrestricted competition is eliminated. The Board,
therefore, felt warranted in informing the New
York Clearing House of its feeling that every
effort had been made to reach an accommodation affecting interest along sound lines and
that in the circumstances it would make no
objection to the final adjustments as announced
by the clearing house on. March 19. Its general position on this whole matter was indicated
to the Federal Reserve Banks in a telegram of
Maxell 12. printed elsewhere in this issue, in
which it asked them to keep close watch of
the situation with respect to competition for
deposits through the advancing of interest
rates, suggesting that wherever possible they
induce banks which, were contemplating advances to defer such action and further to
induce those who were already paying more
than previously existing rates to reduce them.
As the Board learns the names of cities in
which, the tendency toward an undue increase
in the rate of interest is manifested by local
banks, it is planning to take the question up
with clearing-house organizations in those
cities, believing that the vast majority of
banks will be glad to be relieved from excessive
burdens of interest, which in many cases they
have been led to assume through fear that
competing banks, by offering a higher rate,

254

FEDERAL RESERVE BULLETIN.

would be able to draw business away from
them.
For the four weeks between February 23 and
O p e r a t i o n s March 22, the Federal Reserve
of the Reserve Banks increased their bill holdBanks,
ings by 6(5.3 millions. Operations were heaviest during the first and third
weeks in March in connection with the issue by
the Government of the two issues of certificates of indebtedness of 500 and 543 million
dollars, respectively. During the period under
review the banks increased their holdings of
discounted paper by 33.6 millions and those of
purchased paper by 32.7 millions, those of
Government short-term securities, largely certificates of indebtedness, by 56.3 millions, and
their total investments by 131.5 millions. Of
the total discounts on hand at the earlier date,
509.5 millions, paper directly traceable to war
finance operations, viz, member banks' own
notes and customers7 paper secured by Government war obligations constituted 263.9 millions, or about 52 per cent. By March 22 total
discounts had increased to 543.1 millions, of
which war loan paper constituted over 51 per
cent. For the latter date the banks report
among their investments also 187.1 millions
of certificates of indebtedness and 21.2 millions
of Liberty bonds purchased for the temporary
accommodation of their members, the New
York bank alone holding 150.8 millions of these
securities.
Acceptances on hand show a continuous
increase from 296.2 to 328.9 millions, the
Cleveland and Chicago banks showing the
largest additions to their holdings of this class
of paper. Total earning assets increased from
1,031.8 to 1,163.3 millions and constituted
77.2 per cent of net deposits on March 22, as
against 70.5 per cent on February 21. During
the period under review the banks' gold
reserves increased from 1,772.4 to 1,802.8
millions, their net deposits from 1,462.6 to
1,505.8 millions, and Federal Reserve notes
in circulation from 1,314.6 to 1,429.5 millions,
resulting in a decline of the ratio of total reserves to aggregate net deposit and note
liabilities from 66 to 63.4 per cent.




AraiL 1, 3 918.

In the following table are shown the changes
between February 21 and March 22, 191.7,
in the totals of discounted and purchased bills
held by each of the Federal Reserve Banks,
also changes in the aggregate holdings of other
classes of investments:
[In thousands of dollars, i. e., 000's omU-Led.]
Federal reserve bank.
Boston
New York._
I 'hiiadeiphia
Cle vela nd
R ichmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
".
San Francisco

Net
' Fob. 21. '. Mar. 22. .;;increase,
. Not; i decrease.
i
!
:
•
:
!
!
I
I
!

75.723 j 68,304 ; .
354\067 : 429,185; 75,118
43,113
47,437 :
4,324
44,330
54,033
9,703
38,613
39,915 !
1,302
16,181
19,589
3,408
61,202
94,037
33,026
27,793
5,233
8,850
12,761
30,220
20,300
9,920
20,223
18,275
1,948
60,015
60,511

Total bills
i 805,704 i 871,999
United States long-term se- I
curitics
j 52,950
61,039
United States short-term se- !
curitics
169,707 226,036 :
O ther earning assets
j
3,436
4,240 :

7,419

32,835

66,295
8,089
56,329
804

Total investments held.jl,031,797 1,163,314 ; 131,517

Between February 15 and March 15 member
banks in about 100 leading
Condition of ...
.
, ,, .
Cltles
member banks
g r e a s e d their investments in Government securities, largely certificates of indebtedness, by
over 225 million dollars. On the latter date
682 reporting member banks show a total of
1,635.8 millions of Government securities on
hand, of which 268.8 millions were United States
bonds to secure circulation and 367 millions other
United States bonds, chiefly Liberty bonds,
while 999.8 millions were certificates of indebtedness. In addition the banks report
loans of 302.7 millions as against 355.1 millions on February 15, secured by Liberty
bonds and certificates. Comparative figures
for the 112 member banks in the three central
reserve cities indicate an increase of 132.3 millions in the holdings of Government securities,
but a decrease of about 44 millions in loans
secured by Government war obligations.
Of the total circulation bonds held by all
reporting banks on March 15 only about 18
per cent are held by the banks in the central
reserve cities as against 50 per cent of all other
United States bonds and over 75 per cent of

ATliiL 1.

FEDERAL KESEBVE BULLETIN.

255

all certificates shown by reporting banks. Of | of all reporting banks, in the calculation of
the total United States bonds other than cir- ; which no account is taken of Government deculation bonds shown for March 15, the 58 | posits, declined from 61.6 millions February 15
member banks in Greater New York hold ! to 25.1 millions on March 1 and stood at about
about 44 per cent and of the total certificates I 72 millions on March 15. For the central rereported under that date, about 71 per cent, serve city banks a decline in excess reserves
Other loans and investments of all reporting from 33.6 millions to 6.6 millions on March 1
banks show a decrease of 42.1 millions, the is shown, the figure for March 15 being 39.5
decrease for the central reserve city banks of millions.
137 millions being offset in part by gains of
A point of special interest in the acceptance
94.9 millions shown for the other banks.
situation is the undertaking of
lar e n e w credits h
Reserves of all reporting banks (held with
S
J groups of
the Federal Reserve Banks) show an increase
banks for the purpose of fiof 12.9 millions, as against a slight decrease in- nancing important movements of food products.
dicated for the New York City banks. Cash in Requirements growing out of present extraorvault shows a loss of about 7 millions, the banks dinary circumstances have made it necessary to
in both central and other reserve cities report- develop a suitable policy for dealings in acceping smaller cash holdings. On the other hand, tances of this kind at Federal Reserve Banks.
total demand deposits went up about 32 mil- The Board has accordingly expressed its genlions, the larger loss of 35.7 millions in demand eral views on the acceptance situation in a letter
deposits shown for the central reserve city and memorandum, copies of which have been
banks being more than offset by considreable distributed to all Federal Reserve Banks and
gains under this head at banks in the other which are reprinted elsewhere in this issue. In
reserve cities, largely in the Chicago, Kansas this letter and memorandum it has been called
City, Richmond, and Atlanta districts. Time to the attention of the several Federal Reserve
deposits show an increase of 11.4 millions, an Banks that acceptance credits should not be
increase of 29.2 millions at the banks in the allowed to run for more than a moderate period
reserve cities being offset by reductions at the and that where groups of banks open such
central reserve city banks.
credits the members of such groups should not
Government deposits gradually increased as a matter of habit adopt the practice of buyfrom 621.9 millions on February 15 to 796.9 ing their own acceptances, except, as previously
millions on March 8 but show a large decline ruled, when necessary to keep their outstanding
for the following week, the total for March 15 acceptances within the limits prescribed by the
being 103.4 millions below the total for the law. It was also emphasized that the rate at
corresponding date in February. Central re- which renewal acceptances should be disserve city banks show a total decrease of 123.1 counted for the drawer should not be a fixed
millions in Government deposits since February one, but should be based upon the rate ruling
15, while other reporting banks show a gain of at the time of renewal. It is understood that
transactions covered by acceptance credits
19.7 millions.
The ratio of combined cash and reserve to must be of a legitimate commercial nature and
total deposits including Government deposits that the paper growing out of them must be
continued fairly steady around 13.7 per cent eligible according to existing rules and reguexcept for March 1 when the rate declined to lations. The several banks have been re13 per cent. For the central reserve city quested to call to the attention of the Board
banks this rate works out at 14.4 per cent on the facts in each case where acceptance syndiFebruary 15, at 13.4 per cent on March 1, and cates are formed for more than moderate
at 14.9 per cent on March 15. Excess reserves amounts.




256

FEDERAL BE SERVE BULLETIN",

APRIL 1, 1918.

The successful application of these principles j have given the directors of a branch bank a
necessarily depends upon the general spirit of | broader discretion as to internal management
cooperation of the banks. Acceptances of this j of the branch and as to discount operations
kind must not be permitted to constitute the j than other Federal Reserve Banks have done
greater proportion of the acceptances outstand- | with their branches, this circumstance does not
ing at any given date, the quantity of the ac- interfere with the theory and the fact that the
ceptances of this character being placed upon assets, liabilities, and operations of a branch.
the market having as important a bearing as the are actually the assets, liabilities, and operaquality, and the Board therefore will exercise tions of the head office—the Federal Reserve
the power from time to time to declare the j Bank,
purchase of such acceptances by Federal Re- I The Federal Reserve Board on March 12
serve Banks undesirable, even though they j
telegraphed the governors of
Meeting with
may be based upon exactly similar transactions, governors.
Federal Reserve Banks asking
whenever the total amount of acceptances
them to come to Washington
already outstanding seems unduly large.
for a conference on Friday morning, March 22.
At a meeting on that date the Secretary of the
During the past month the Federal Reserve Treasury having further matured his plans for
Board has authorized the es- the next Liberty loan, discussed with the
i.ew or nciieb. ^^lig^^TQ^ o f branches at El Board and with the governors some features of
Paso (eleventh district) and at Salt Lake City, the next campaign which will begin early in
Utah (twelfth district). The El Paso branch April. There were present also representais the first to be established in the Dallas dis- tives of various Liberty loan organizations.
trict, while the Salt Lake City branch is the The conference afforded an opportunity also
fourth to be established in the San Francisco for discussion of interest rates both from the
district. The branches at Baltimore and standpoint of the general situation and with
Detroit already authorized and announced, respect to Treasury financing. At a conferhave been actually opened. This raises the ence between the Board and governors held on
total number of branches either actually opened Saturday, March 23, there was general discusor shortly to be organized, to 13. While sion of questions of organization affecting the
there are some differences in the by-laws and Federal Reserve Banks. Methods of extendconditions of organization of Federal Reserve ing the par list were considered and there was
branches, a branch of a Reserve Bank has no an expression of views with reference to posseparate corporate entity and its operations sible changes in discount rates on paper of
are in effect the operations of the Federal Re- various maturities.
serve Bank. Reserve deposits carried by j For the four weeks ending March 15 the
member banks upon the books of a branch are j
net outward gold movement
actual reserve carried with the Federal Re- j Movement of totaled about $2,743,000, comgold,
serve Bank, and where deposits are made in a
pared with a net inward movebranch by an agent of the Government and are ment of about $99,000 for the preceding four
charged to that branch on the books of the j weeks. Gold imports for the four weeks totalTreasurer of the United States, the Board j ing $2,838,000 came largely from Canada,
understands that this is done merely as a mat- Mexico, and Colombia, while gold exports
ter of bookkeeping convenience. The deposit totaling about $5,379,000 were "consigned
liability rests with the Federal Reserve Bank. chiefly to Chile, Mexico, and Colombia.
There is no difference in this respect in the
The gain in the country's stock of gold since
status of any branch of any Federal Reserve August 1, 1914, was $1,048,187,000, as may
Bank. While some Federal Reserve Banks be seen from the following exhibit:




.A:»aiL 1. 1918.

i'EDEEAL RESERVE BULLETIN.

251

an agreement is made with the drawer for purchase of acceptances for future delivery, the rate should not be a fixed
Excess of
one, but should be based upon the rate ruling at the time
imports
Expor!;•.>.
over
of the sale.
exports.
(3) Transactions covered by these credits should be of a
legitimate commercial nature, and acceptances must be
823,2.53 :
' 331,719
S 10-1,972
k-.ii. 1 t o B e e . :*l, 1914...
451.955 •'
420,529 eligible according to the rules and regulations of the Board.
:J1,426
•fan. I t o Doe. 31, 1915
685,745 :
529,952
1,55,793
J a n . .1 t o Dec. 31, 1936
(4) Whenever syndicates are formed for the purpose of
372,171
1.81,542
•fan. 1 t o Dec. 31, 1917
o->3',7J.3 '
Tan. 1 to Mar. 15, 1918.
7^907 :
12, mr granting acceptance credits for more than moderate
1,722.563 ;
474,190
L948,107 amounts. Federal Reserve Banks should be consulted with
Total
regard to the transaction. The question of eligibility,
1
Excess of exports over imports,
both from the standpoint of the character of the bill and
of the amount involved, will be passed upon by the Federal Reserve Bank subject to the approval in each case of
Bankers' Acceptance Policy.
I the Federal Reserve Board.
As stated in the memorandum, die Board will rely
During the past two months the attention of . upon the fair spirit of cooperation on the part of the Mew
the Federal Reserve Board has been directed to ; York banks, but it must be understood in passing upon
various questions with respect to the making j these transactions that not only quality but also quantity
be the controlling factors. The aggregate of these
of bankers' acceptances in New York and else- jmust
acceptances should not be permitted to constitute the
where. Discussion of the matter has resulted j greater proportion of outstanding acceptances at any time,
in the transmission to all Federal Reserve j and it must be understood that while the Federal Reserve
Banks of letters dealing with certain phases of j Banks and the Federal Reserve Board might look with
the situation. The Board has prepared and I ravor upon a transaction as long as the total amount inis not excessive, transactions of exactly the same
distributed a memorandum on the subject, in i volved
character may be ruled out whenever the aggregate
which its views in respect to the existing accept- amount of outstanding acceptances of this character beance situation have been set forth. Informa- j comes, in the opinion of the Federal Reserve Board, untion has also been asked with respect to the | duly large.
methods pursued by the several banks in ascer- j You are authorized to communicate the contents of
taining the origin of the acceptances they this letter to the accepting banks of your district, and the
Board will advise the other Federal Reserve Banks of the
purchase.
policy which has been agreed upon.
SYNDICATE ACCEPTANCE CREDITS.

GENERAL ACCEPTANCE POLICY.

The following letter was transmitted by
The memorandum, already referred to, preGovernor Harding, viz:
pared by the Board with 'a view to outlining
FayauAKY 7, 1918.
its general acceptance policy, reads as follows:
Receipt is acknowledged of your letter of January 29 in
In dealing with the question of'acceptances,
which you ask for a statement of the Board's policy in dealing with acceptances drawn under credits extending over it is desirable that the Board should not be
a period of one or two years. After a very full discussion obliged to adopt inflexible regulations unless
of the matter, the Board has decided to authorize this ex- absolutely necessary. It should be borne in
pression of its views in accordance with the principles out- mind that we are competing in the acceptance
lined in the memorandum attached hereto. The banks of field with other countries which have no legal
New York may, during a period which can be declared restrictions in which sound business judgment,
ended at any time, proceed upon the basis of this memo- guided from time to time by the central banks
randum in accordance with your letter of January 23. of these countries, constitutes the unwritten,
but none the less rigid law. The banks of the
The essential principles may be summed up as follows:
• (1) Acceptance credits opened for periods in excess of United States would greatly assist the Board
90 days should only, in exceptional cases, extend over a in its work of developing a modern and efficient
period of more than one year, and in no case for a time system of American bankers' acceptances—and
they would best serve their own purposes—if
exceeding two years.
(2) Banks which are members of groups opening these they would study and assimilate the underlying
credits should not buy their own acceptances, and where principles which must guide the Board, and




258

FEDERAL RESERVE BULLETIN.

observe these principles voluntarily without
requiring inflexible rules. Unless the bankers
cooperate with the Board in this manner, many
transactions—unobjectionable as long as they
are engaged in for legitimate purposes and
within reasonable limits—will have to be barred
because strict regulations do not admit of
discrimination.
Proper regard for conservation of the
strength of the Federal Reserve system requires that it must be possessed of short paper
well scattered in its maturities (not exceeding
90 days), that when this paper matures it can
be actually collected and that the supply of
new paper coming into the market can be
controlled to a certain degree b}^ an advance
or decline in the rate of interest at which
bankers' acceptances are bought. Higher rates
will exert a restraining influence on the producer and the dealer and will thereby reduce
borrowings and bring about a certain degree
of contraction.
By keeping these principles in mind, upon
which the strength of our structure depends
we can readily understand the hazardous conditions which would be created if, for example,
$300,000,000 of acceptance credits should be
opened for the purpose of financing corporations for a period of two or three years, the
corporations having secured from the acceptors
(directly or by a trading process) a fixed and
definite rate of interest for the entire term of
the credit. This rate would necessarily be
much higher than the current rate for bankers'
acceptances. Let us assume that $300,000,000
had been loaned to corporations at 8 per cent
for two years, plus the acceptance commissions.
If during these two years the bank rate should
advance to 20 per cent, the corporations would
not be affected thereby; they would renew from
time to time as though money rates had remained unchanged; and consequently, the
bank rate, as far as they are concerned, would
lose its power to bring about contraction.
Thus the acceptance would cease to serve
the purpose of financing the borrower; it
would be for the purpose of financing the accepting bank. It would really become an
accommodation draft for the benefit of the
banker, regardless of the current rate and
regardless of general conditions, and whether
these conditions demand contraction or expansion, the bankers would have to rediscount
these acceptances, at a profit or at a loss, if
their own position so required. Here, too,
the bank rate would lose its power to produce




APKIL 1,

1918.

contraction because the commitment is a definite one for two years.
Another flaw in this method of financing is
that there is practically no limit to the amount
of acceptances which may be created in this
manner.
In addition, the rate guaranteed the corporation by the banker would likely be so high as to
tempt the accepting bank (having exchanged
its acceptance with another bank associated
in this business) to rediscount the acceptance
with the Federal Reserve Bank or to sell it in
the open market. For the accepting bank this
transaction would not involve the investment
of money as long as the market is able to absorb
the acceptances offered. The unavoidable
consequence of this process must be in order to
prevent an avalanche of these acceptances; the
discount rate would have to be advanced so as
to reduce the tempting margin and thereby
lessen the supply. These syndicate or accommodation acceptances would therefore tend
to raise the rate to the detriment of the legitimate business of the country—particularly the
import and export business. When, three
years ago, we began our campaign to establish
American bankers' acceptances, our rate was
2-2 £ per cent and the English rate was about
5 per cent. Our rate has now moved up to
4-41 per cent while the English rate is about
3 | per cent. This signifies that we have reached
a point where American houses find it to their
advantage again to draw on English banks,
as they did some years ago, rather than upon
banks of the United States. It is certain that
if syndicate acceptances of this character were
offered in European countries the market would
at once discriminate against them and put an
end to such transactions. It is the application
of this rigid principle of keeping the acceptance
market primarily reserved for strictly commercial uses that has kept the acceptance
business in England in a sound condition and
has made the English acceptance market so
important an adjunct of the money fharket.
If in the light of these considerations we seek
to apply these principles to actual operations
we must reach these conclusions:
There is no reason wiry a bank should not
agree that for legitimate commercial purposes
and for transactions complying with the rules
and regulations of the Federal Reserve Board,
it would commit itself for two years to accept
for a customer for importations or exportation is.
or for the purpose of carrying staples properly
warehoused. There is no reason'whv a bank

259

FEDERAL RESERVE BULLETIN.

APRIL 1. 1918.

should
not say to a tobacco manufacturer, viz, the indorsement of a bank, banker, or
6
'Whenever you have tobacco properly stored responsible firm.
and for which you will give me proper wareIt is true that the banks accepting in the
house receipts, I am willing to accept for you7 present syndicate transactions make an addiand charge you a commission of
per cent/ tional profit in the interest rate which they
Whether it would be wise to make a commit- guarantee to the borrower. It is suggested,
ment which would force the bank to accept | however, for their consideration that it would
for a customer even when convinced that tlie | be a sounder policy if the^ would charge a
borrower is carrying too large a supply of raw j higher acceptance commission for domestic
material, or that the transaction is speculative, i transactions of this kind, for larger commisis a question of banking judgment. It would sions would be justified for credits extending
be safer, of course, if the banker could qualify over a considerable period. This would be
his obligation to accept. But this is an in- | sounder than to adopt a policy which, if perstance where it would be a mistake to lay down | mitted freely to develop, would undermine the
a rule and where reliance must be placed upon safety of our acceptance system and our money
the business sagacity of the banker, for, in such market.
a case, the borrower would remain subject to
The principles governing the acceptance are
the hazards of the money market and any equally applicable to single-name paper. A
advance in rate would have an effect upon his bank may agree to carry a customer over a
period of a year and to buy from time to time
own commitments.
However, the manufacturer should not feel I his single-name paper. If this paper, according
that, in dealing with a bankers' acceptance he | to the statements submitted, should be eligible
is taking any other risk than that of the inter- in other respects, Federal Reserve Banks
est rate. He should be trained—and this is might discount it, provided the paper is not
an important matter—to understand that ho j part of a loan whicli has been negotiated at a
can at" any time sell his acceptance, not to the fixed rate for a definite period, a year or two,
acceptor but to other banks, or through for example. A 90-day note made under a
J

-

. a

"• "1

—

•

.

.

.

.

•

•

*

y *

™S

.

tn

~*

if*

•

.

m

-a

""

brokers in the market, or to the federal Re- j definite renewal agreement in this way is a
serve Banks. It is much to be desired that the j camouflage for the convenience of the banker
American banks and banking firms should to enable him to finance himself by using the
follow the European practice of freely indorsing 90-day form as a mask to conceal what is, in
first class bankers' acceptances. No drawer of j effect, an ineligible 1-year note. But if the
bankers' acceptances in Europe, in normal I interest rate should remain open between bortim.es, would expect to encounter any difficulty j rower and lender subject to adjustment to
IT
ihis
• paper.
:____ TT
n it
•,_ ^
J:
i. t k e m a r ] r e t rate, a different aspect would be
in selling
He can sell
to discount
companies or to private banks or bankers, to presented, and the Federal Reserve Banks
be rediscounted at rates a fraction above the might discount such notes within reasonable
ruling interest rate (in England for as little as J limits.
per cent above the discount rate and often
When a credit is required for two years it
less). The manufacturer, after having his bill should be regarded as an unsound basis for
accepted, should feel quite safe in keeping the j commercial borrowings on 90-day paper.
acceptance in his portfolio, being confident Without a guaranty for renewals it would be
that, without any further negotiation, he could dangerous for the borrower. With such a
sell it at any time that he would be in need of guaranty it would be an unsound banking
cash. Instead of forming syndicates guaran- credit. A demand for one or two year money,
teeing the interest rate to the acceptor, banks except for special contracts, indicates a need
should make agreements with manufacturing for greater working capital which ought to be
concerns to buy acceptances, from time to obtained by increase of capital or sale of oblitime, from the drawees at, say, \ per cent in gations in the investment market.
excess of whatever might be the ruling interest
It may be argued that there is at present no
rate for bankers' acceptances. In this way a investment market, and therefore these rereal discount market would be developed in newal transactions are necessary. But does
this country. Federal Reserve Banks will, the abrogation of the investment market afford
sooner or later, have to adopt the European a reason for the destruction of the commercial
rule of buying only paper bearing a third name, paper market also? Some plan must, and




49615—18

3

260.

FEDERAL RESERVE BULLETIN.

APRIL 1,

1918.

7. Curtailment of Unnecessary Credits.
will be developed to restore to a certain extent,
at least, the security market. But even if
The request which the Secretary of the Treasthis restoration can not be effected, should we
not look upon credit as a commodity of which ury made on February 6, 1918, to every bank
only a limited supply is available? If we have and trust company of the country that it
approached the limit, would it not be wise to should set aside 1 per cent of its resources
conserve credit and apply it only in those each week for investment in the Treasury cerdirections where its use will most greatly benefit
the country? In the case of the Tobacco Co., tificates of indebtedness, has brought to the
if it had not secured the full credit it sought it Federal Reserve Banks many inquiries as to
would in that event have bought less tobacco how the banks could make available so large a
and possibly might have advanced its selling sum for the use of the Government and at the
prices. What if it had reduced its inventories same time maintain their usual business with
and the consumption of tobacco ? Would not their depositors and customers. There is welthis have been just what is at present required ?
The corollary is that business must adjust come evidence that the bankers of the country
itself to credit; not credit to business at this are giving thoughtful consideration to the
time.
question of conserving credit for the GovernTo recapitulate: Agreements to grant credits ment, and the Federal Reserve Board thinks
for an extended period by the purchase of it the appropriate time to issue a statement
90-day paper or by 90-day acceptances ought expressing its views upon the principles which
to be based upon transactions connected
directly with the purchase and sale of goods should guide the action of the banks.
and the intermediate process of manufacturing.
It is clear that if the war requirements of the
Credits so extended should relate to the re- Government arc to be financed without undue
sources of the borrowing concern and should
not be granted for the purpose of furnishing expansion of banking credits, not only must
working capital or for the temporary financing there be some reduction of existing credits,
| but there will have to be applied a rigid check
of permanent investments.
These transactions should be of an individual ; upon the further expansion of credit in direccharacter; they call for direct contact between | tions not cleanly essential for the prosecution
banker and borrower, and syndicate credits i of the war, and for the health and necessary
should be avoided. Agreements by bankers
to furnish one or two year money at a definite ! comfort of the people. It is no more possible
rate of interest against 90-day paper or ac- j to superimpose upon the volume of prewar
ceptances to be used to finance themselves ; credits the immense volume of additional
should not be countenanced either openly credit required by the Government for war
or in the form of exchange of paper between purposes than to superimpose upon the volbankers.
These are the principles which the Federal ume of prewar production of goods the imreserve system must apply. It would be mense volume of additional goods required by
inexpedient to attempt more than to establish | the Government to prosecute the war. Our
the principles. It would be detrimental to | problem is to convert less essential into more
formulate definite regulations dealing in minute essential credit, and to convert less essential to
detail with the various phases of the problem.
It would be far better to give some latitude to more essential production and distribution of
the banks in dealing with these matters. goods. The saving of credit and money goes
But this will depend entirely upon the wisdom hand in hand with the saving of labor and maand discretion of the member banks. The terials in the program of adjusting the busibanks will best serve their own interests if, ness of the Nation to a war basis, and our best
following the example of European institu- hope of avoiding competition between the
tions, they will adopt these principles as selfimposed, well-tried rules of business prudence Government and its citizens for credit, money,
rather than by abusing their freedom of action labor, and materials, which can only result in
to force the Board to tie their hands by rigid credit and price inflation and higher costs of
regulations.
living, is saving.




APRIL 1,

1918.

FEDERAL RESERVE BULLETIN.

261

As far as expenditures arc financed by the LOANS FOR NONPRODUCTIVE OR NONDISTRIBITsale of new securities they are scrutinized unTIVE PURPOSES.
der the leadership of the Capital Issues ComLoans for nonproductive or nondistributive
mittee of the Federal Reserve Board; as truspurposes
are usually loans for nonessential
tees of the individual banking credit of the
purposes.
The following are types of this
country, however, the bankers are charged
class
of
loans:
with the duty of studying and understanding
Loans for purchasing or carrying property,
the program in order that each and every one
whether
real estate or personal securities.
may in turn educate his borrowers and the
Loans
for additions to or improvements of
people of his community to the necessity of
property
not used in production or distribusaving credit as well as food and other mation.
terials, and may thereby conserve the credit
Loans to States or municipalities for imof his bank for the use of the Government as
provements.
far as may be practicable. It will be clear to
By inquiring the purpose for which each
bankers, also, that credit conservation is necesnew
loan is required, and declining wherever
sary not only for Government financing, but
practicable
to grant loans of these classes, and
also for the protection and preservation of the
by
gradually
causing existing loans of these
banks themselves, individually and collectclasses
to
be
reduced
or eliminated, bankers
ively, since undue expansion of bank credits?
could
conserve
credit
without causing hardleads inevitably to unsafe and unsound ecoship
and
also
give
many
people an impetus to
nomic conditions, and no stone should be left
save
at
-a
time
when
saving
is of vital imporunturned to keep our banking institutions
tance
to
the
Nation.
But
discretion
must be
sound and strong.
used in not forcing borrowers to reduce loans
It is not the purpose of the Board to sugto an extent that is unreasonable or would
gest the specific ways in which credit should be
cause avoidable hardship or embarrassment;
conserved, or unnecessary expenditures curmuch can be accomplished by sound advice
tailed: each banker must determine this for
and the exertion of moral pressure.
himself. The Board can only discuss the subject in general terms, with emphasis on the
LOANS TO FACILITATE PRODUCTION OH DISTRInecessity that while credit conservation should
BUTION.
be undertaken promptly it should be carried
out gradually, with reasonable discretion and
The three main groups of borrowers for prowith the least possible avoidable embarrass- ductive or distributive purposes are farmers,
ment to the business of individuals and indus- manufacturers, and merchants.
tries. Proper education of borrowers and custo1. Farmers.—The farmers are being asked
mers to the needs of the situation will accomplish to produce more than ever before and loans for
far more than abrupt discrimination or pressure. productive purposes must have the right of
In the absence of any official classification of I way. But the kind of loans which should be
the more essential and the less essential things | discouraged or declined are:
and enterprises it will be necessary for each j (a) Loans for the acquisition of additional
banker in determining how he may do his | property, unless the area under production is
share in the conservation of credit to use his | to be increased thereby and immediate results
own judgment. There seem to be, however, j may be expected;
two clearly defined groups of loans:
(6) Loans for any construction not necessary
(a) Loans to facilitate production or distri- to the productiveness of the farm within the
year; and
bution.
(c) Loans for the purchase of articles of com(b) Loans for nonproductive or nondistribufort and luxury.
tive purposes.




262

FEDERAL RESERVE BULLETIN.

In sections where farming profits have been
large, an endeavor should be made to induce
farmers to apply a good portion of them to the
reduction of long-standing loans or to the
financing of their seasonal requirements, thereby conserving bank credit.
2. Manufacturers,—Manufacturers who are
making large profits should be urged to reduce
or extinguish their debts rather than increase
capacity and output unless the industry is one
which is clearly necessary to the prosecution of
the war. All manufacturers should be urged
to carry as small inventories as practicable;
to eliminate from their products elements
which add to its cost but not to its intrinsic
value &3id serviceability, or which are introduced simply for fashion or appearance; and
to avoid as far as practicable introducing new
styles during the period of the war.
Manufacturers whose product is not clearly
required either for the prosecution! of the war,
or to maintain the health and efficiency of our
civilian population, should be urged to assist
the Government by adapting at least a part of
their plants to the manufacture of articles
clearly required for these purposes. Bankers
would do well to scrutinize carefully the credits
of those engaged in industries not clearly
essential for these purposes since such industries
are likely to be the first ones to suffer interruption from transportation, fuel, or power
embargoes.
3. Merchants.—Almost tho same suggestions
that have been made with regard to the production of goods by manufacturers may be
applied to tho distribution of goods by merchants, namely, reduction of stock carried,
reduction or elimination of that portion of their
stock consisting of articles of mere fashion or
luxury and the substitution of plainer and more
serviceable articles, and the avoidance of the
introduction of new styles in clothing, articles
of personal comfort, etc.
The Board feels that it would be impracticable to deal with the subject more specifically
at the present time, but urges that every banker
assist in the movement, to the best of his
ability.




APRIL 1, 1918.

(a) By studying and understanding the economic necessity for the conservation of credit.
(&) By a careful analysis of each loan in his
institution to ascertain those which are the
least essential to the prosecution of tho war.
(c) By applying to each, application for a now
loan the test "Is it necessary for the prosecution
of the war or the health and safety of our civilian population?77
(d) By discussion with other bankers in the
same place or neighborhood as to methods of
credit conservation which it may be practicable
for them to undertake.
(e) By urging his local trade organizations
and board of trade to study the subject and
make definite recommendations for the conservation of credit and the conversion of loss
essential to more essential production and distribution.
(/) By discussing the matter with, his customers with a view to educating them to the
necessity of keeping their demands for credit
at a minimum.
(g) By exerting his influence upon his neighbors and his municipality to reduce expenditures for improvements to a minimum during
the period of the war. Postponement of every
improvement not absolutelynecessaryforhealth
and safety should become a national policy.
Qi) By acting always with discretion and
reasonableness.
Tho conservation of credit and money will
result in tho saving of labor and materials
which the Government needs for the prosecution of the war; and every improvement or
expenditure which an individual, a corporation,
or a municipality refrains from making during
the war represents a requirement to be fulfilled
when the war is over.
Merchants and manufacturers will readily
understand that present saving is laying up
for the future an important reserve purchasing
power which they may count on during whatever period of readjustment may follow the end
of the war; and it must be apparent to every
banker that the larger the savings his customers make the larger the deposits such savings
will inevitably create.

APRIL 1. 1918.

FEDERAL RESERVE BULLETIN.

263

It is hoped by the Board, that the Federal
Reserve Banks will make themselves the leaders in this campaign by organizing in their
respective districts committees of bankers,
merchants, and manufacturers so that results
may be reached by a mutual understanding
and a united effort for the public good rather
than by a policy of enforcing hard and fast
rules. If at any time the assistance or advice
of the Board should be desired it will be given
gladly. It is realized that each industry and
branch of business must be taken upon its own
merits and that proper treatment involves in
a great many cases a redirection of industries
and redistribution of labor. This is a problem
which has been actively studied and in many
cases comprehensively dealt with by various
departments and boards of the Government.
Wherever }^our committees desire the advice
or cooperation of these Government agencies
the Board will be glad to act as intermediary
and advisor in such cases.

tional banks in the New England States,
$182,854,947 by national banks in the eastern
States, $15,294,128 in the southern States,
$42,057,311 in the middle States, $8,101,292
in the western States, and $11,742,292 in the
Pacific States.
The banks of the central reserve cities owned
$99,549,562 foreign Government bonds. National banks in other reserve cities held
$59,488,751, while the amount held by all
country banks was $121,614,995.
The State in which the country banks held
the largest amount of foreign Government
bonds was Pennsylvania—$31,260,866. Country banks in New York State came next with
$23,701,435, followed by Now Jersey with
$8,312,698, Ohio with $7,719,036, Massachusetts with $5,898,144, Michigan with $4,266,262, Virginia with $3,411,536, Connecticut with
$3,305,188. In no other State did the amount
of foreign Government bonds held by country
national banks amount to as much as
$3,000,000.

Bank Holdings of Foreign Securities,

Capita! Issues Committee Statements.

Interesting figures as to the holdings of bonds
'Following are statements for the press issued
and other securities of foreign Governments by during March by the Capital Issues Committee
national banks in the United States on Decem- of the Federal Reserve Board:
ber 31, 1917, have been compiled by the CompMARCH 9, 1918,
troller of the Currency from bank reports, The
The
Capital
Issues
Committee
has received
total held was found to be $350,644,161, of
copies of the following resolutions, which are
which amount but $709,613 were those of Ger- typical of the spirit with which it meets in its
man-Austrian Governments.
efforts to restrict or to curtail as far as possible
The reports of condition for December 31, issues not absolutely essential at this time:
1917, show that the total amount of bonds of
[By the Investment 'Bankers' Association of America.]
foreign Governments held by the national banks Whereas the board of governors of the Investment Bankof the country on the elate named was $280,- ers' Association of America has already heartily indorsed
the plan for the supervision of capita! issues which is now
653,308, of which only $709,613 were bonds of ; in operation; resolved, that it is the sense of this board that
the German-Austrian Governments. O ther ; no member of this association should buy or sell or oiTer
| for sale, except subject to the final approval of the Capital
foreign securities held by the national banks on Issues Committee, any securities which come within the
the same date aggregated $69,990,853, making scope of the Capital Issues Committee regulations, unless
the issuance of such securities first shall have been aptotal of all foreign securities $350,644,161, proved by that committee.
against $297,236,000 foreign securities held I
[By the American Bankers' Association.]?
November 17, 1916, and $158,500,000 on May | Whereas the Secretary of the Treasury requested the
1, 1916.
| Federal Reserve Board to take up the question of a iimitaof the issues of new securities throughout the United
Of the total amount of foreign Government || tion
States along the lines of the conservation of capita! for the
bonds owned, $20,603,338 were held by na- ; prosecution of the war—that is to say, to limit so far as




264

FEDERAL RESERVE BULLETIN.

possible the issue of new securities for nonessential purposes, in order that essential financing, including the
Government financing itself, can be made possible; and
Whereas pursuant thereto the Federal Reserve Board
has named Mr. 'Warburg, Mr. Delano, and Mr. Hamlin on
a committee to be known as the Capital Issues Committee:
Now, therefore be it resolved, that we, the administrative
committee of the American Bankers' Association, are in
full accord with this movement and give it our hearty and
unqualified support; and, further, that we recommend to
the members of the American Bankers' Association that
they also extend their hearty support in carrying out the
purposes for which the Capital Issues Committee was
appointed.

The chairman stated that the committee had
been asked to consider applications with respect to the issue by municipalities of notes
running for one year or less issued for current
expenses in anticipation of tax payments, and
that the committee does not consider that such
issues come within its purview.

MARCH 16, 1918.

APRIL 1, 1918.

written a letter to Mr. Gompers further amplifying his view. This letter reads as follows:
OFFICE OF THE SECRETARY OF THE TREASURY,
Washington, March 15, 1918.

MY DEAR MR. GOMPERS: I have your letter of February
18, inclosing copy of a resolution adopted by the Building
Trades Council of San Francisco, in which it is stated that
I have been reported in the public press as having "appealed to property owners not to construct any homes or
buildings during the war." This is entirely erroneous.
I have said that building operations which are not required
to protect the health or provide for the comfortable needs
of our people, or to supply facilities necessary for the
proper conduct of business essential to the successful
prosecution of the war, should be postponed.
As you know, I have no authority to direct that building
operations be curtailed. I have merely suggested that
unnecessary work of that kind be postponed until the end
of the war. Such postponement would, I am sure, help
win the war, but every patriotic man must be determined
by his own conscience in the matter and must decide for
himself if he can postpone the erection of a contemplated
building until the war is over. Compliance with this
suggestion may cause some inconveniences which are to
be greatly deplored, but such inconveniences are an
unavoidable incident to war. The situation must be
viewed from a national and not from a local standpoint.
We are engaged in a colossal war, in which the safety of
America is seriously imperiled. We can not win the war
unless every resource of the Nation is carefully husbanded
and used with the utmost intelligence. The great financial operations of the Government, greater than those ever
undertaken by any government in the history of civilization, make it essential that every unnecessary expenditure
by the Government, by the States and municipalities, and
by private corporations and individuals, be avoided while
the war is in progress. Unless this is done, it will be impossible for the people of the United States to furnish the
money which the Government must have to support its
soldiors and sailors who are shedding their blood for us

The chairman of the Capital Issues Committee stated that the work of the committee during the week had been particularly heavy, a
very large number of applications having been
received. He stated that the total number of
applications received up to date and disposed
of by the committee was 96, aggregating
$232,868,918. The majority of the approvals
given by the committee covered renewals and
refunding operations. Approvals of new issues,
municipal or otherwise, represented in many
the battlefield.
cases reductions of the amounts originally ap-j! UDQTI
The issue at s(:alee is world freedoin and world deinocracy.
plied for. The number of cases formally de- | Germany, drunk with the lust for power, would rule the
clined is comparatively small for the reason j world. We are coming to recognize that whether the war
that a great many of the applications are being is to bo won or lost depends upon whether we are willing
to make the sacrifice of blood, treasure, and service necessuppressed at the source either because the sary
to enable us and our allies to achieve the honorable
applicants realized that the purposes for which and lasting
peace to which we aspire. We are increasingly
they would desire to issue securities were not coming to'appreciate that to make possible such a victory,
compatible with the national interests or be- every man, woman, and child must be willing to do their
There must be no slackers in Wall Street, none in
cause the local committees were able to impress utmost.
the homes, none on the farms, none in our industries.
upon would-be applicants this point of view I, Capital
and labor alike must do their utmost. There must
before the applications reached the central be no waste, no extravagance, no unnecessary expenditure. The Nation has need of all its man power, of all its
committee at Washington.
of all its resources.
A great deal of doubt and, in some cases, wealth,
The successful financing of the war depends in large
protest has been elicited hy Secretary McAdoo's part
upon the current savings of the people, upon the
earlier statements with respect to the desira- difference between what is made and what is spent.
bility of restricting unnecessary building opera- Habits of thrift must be stimulated, and, if need be, every
tions. Some letters have been received, par- dollar of savings should be lent to the Government. There
no better investment for the poor and rich alike, than a
ticularly from the Pacific coast, from, building is
United States Government loan bearing interest. Those
associations and carpenters unions, protesting who fail to save what they should, and to lend their savings
against what they considered an embargo upon as needed to the Government, will fail to do their full duty.
their activities. Some of these letters were Those who wish to treasure the remembrance of patriotic
can have no choice. They must do their utmost
transmitted to Secretary McAdoo by Mr. service
to serve and their utmost to save and be willing to lend
Samuel Gorapers, and Secretary McAdoo has the Government all they save.




265

FEDERAL RESERVE BULLETIN.

A I - R I M , 15)18.

I hope you will use your influence to persuade the
members of the Building Trades Council of San Francisco
that the Government has need of all the money, all the
labor, all the material, and all the transportation facilities
that can be made available. I should like them to know
that men are needed to build ships, to build houses to
house men working in the shipyards, to erect plants to
produce war material, to run our railroads, to operate our
industries, and to produce food required by the allies and
ourselves. These needs are already great and will increase,
not lessen, as the war progresses. If our wage-earners are
unable to find employment for which they are best fitted
and which they would prefer, or if they are unable to find
employment where it would be most convenient for them
to work, the opportunity is presented to render a most
patriotic service in this period of national stress by seeking
other kinds of employment, and, if need be, moving to
other districts where work is to be had.
No one knows better than you the need of the hour.
Save in exceptional cases, to expend money or to use
material or employ labor in the production of what is
not needed to win the war. as I view it. would be an unpardonable waste and would, in effect, be lending aid to
the enemy.
I am sure that you are in accord with the principle underlying the views 1 have expressed and that you will, in that
splendid spirit of patriotism, and service which has
characterized, so strikingly your every action and utterance
during this war, join with me in appealing to every good
citizen to help the Government by conserving and using
to their best advantage those invaluable resources of the
Nation, labor and materials, without which freedom and
democracy can not be saved for the world.
Very truly, yours,
(Signed)

W. G. MCADOO.

badly in need of hundreds of thousands of workers. This
is quite true. But the Emergency Fleet Corporation could
presently give employment "to only about 10,000. This
wide variance between needs and employment capacity
is caused by the inability of the shipyards to house the
armies of shipbuilders necessary for the production of the
tonnage of which our "Nation is so badly
in need, and to
which it is entitled. Where carpenters,1 for instance, find
that the policy of economy guiding your committee curtails or halts their work, they can find plenty of vitally
necessary work, and a patriotic work, in building homes for
those who are building our ships—if not on the ships themselves.
Of course, it is understood that change of domicile by
workers entails sacrifice and expense. But you will not
find the laboring man of America hesitating about the sacrifice of his comfort and convenience when the Nation calls.
To transfer labor from surplused to depleted sections, the
Employment Service will shortly have a revolving traveling fund of 8259,000. This may be used to advance
transportation, to be later reimbursed by the intended
employee. For the rush work of the Emergency Fleet
Corporation on the Pacific coast, and in certain Army
construction, funds for transportation are being provided
by the departments affected, for the use of the Employment Service.
Carpenters, shipbuilders, structural ironworkers, and
in fact every kind of mechanic, in large numbers, could
find assistance in reaching ready and remunerative employment upon application to the United States Employment Service, a branch of which can be found in every
large city.
Respectfully,
(Signed)

J. B. DENSMORE,

Director United States Employment Service.

SAMUEL GOMPERS, ESQ.,

President, American Federation of Labor,
Washington,]). C.

In addition to this letter, a communication
has been received by the chairman of the
Capital Issues Committee from Mr. J. B.
Densmore, director of the United States
Employment Service of the Department of
Labor, containing some very practical suggestions concerning this problem. The letter
reads as follows:
DEPARTMENT OF LAB on,
UXITED STATES EMPLOYMENT SERVICE,

Washington, March 14, 1918.
Hon. PAUL M. WARBURG,

Chairman Capital Issues Committee,
Washington, ]). C.
SIR: In response to your inquiry, growing out of the
protest of carpenters' unions against the policy of your
comicittec of restricting, as far as practicable, the use in
building construction of capital, credit, and materials, I
beg to say:
While it is true that the labor situation in the United
States is comparatively satisfactory, it is equally true that
conditions could be greatly improved through a more
scientific distribution of labor. In many instances men
are engaged in new lines of endeavor at advanced wages,
leaving unfilled their original fields. For example, in the
vicinity of munition plants one finds farm hands at work
in the factories, while the farmer cries in vain for help, etc.
The unions are quite correct in their statement that they
were told work awaited them at the shipyards only to
learn upon application there that such was not the case.
It has been" stated probably quite frequently that the
Emergency Fleet Corporation (Shipping Board) was




MARCH 30, 1918.

Public and private organizations throughout
the country are fast allying themselves with
the Capital Issues Committee in its work of
confining to essential purposes present capital
expenditures. During the course of the week
just passed the committee had a conference
with the mayor, the comptroller, and the
solicitor of the city of Philadelphia. These
officers expressed themselves as in hearty
sympathy with the aims of the committee and
stated that, at a mutually convenient date,
they would return to Washington and go over
with the committee, item by item, the entire
city budget of many millions, with a view to
bringing the city's capital expenditures into
line with the committee/s policy. Philadelphia contributes a further aid to the committee's endeavors by the following resolution of
its stock exchange:
Whereas the Federal Reserve Board has, upon the request of the Hon. W. G. McAdoo, Secretary of the
Treasury, appointed a committee of its members to act
as a Capital, Issues Committee authorized to pass upon
such proposals as may be submitted to them in respect
to capital expenditures or issues of new securities,
Resolved, That the committee on stock list will require
as a condition to the listing of such new capital issues
the presentation of the approval of such committee of
the Federal Reserve Board.

266

FEDERAL RESERVE BULLETIN.

One of the very largest public-service corporations of the Nation, whose activities reach
every village, city, and town in the country,
and whose expenditures are of huge proportions, has informed the committee of its intention to submit its budget for careful scrutiny.
The Associated Advertising Clubs of the
World are cooperating also by discouraging
advertisements that would be apt to interfere
with the general purposes of the committee.
An arrangement has been perfected whereby
Dr. J. A. C. Chandler, superintendent of
schools of Richmond, Va., will spend half of
each week in Washington for the purpose of
advising the committee with respect to applications involving the issue of securities for the
purpose of erecting school buildings. Dr.
Chandler, whose work in this connection will
be under the supervision of Commissioner of
Education Claxton, will have the advice of
Dr. George D. Strayer, of the faculty of Columbia University, New York, who is serving on
the War Savings Committee at Washington,
and also that of Lieut. Col. L. P. Ayers, a
member of the General Education Board, who
is now serving as statistician of the General
Staff of tho Arxny. This central body will have
at its disposal the facilities of the Bureau of
Education throughout the country.
This specialized organization is created because of the ver}" large number of school
issues and the necessity of dealing with them
also from the educational angle. The committee is most anxious to avoid, as far as it can
be done consistently with a policy of reduction
of capital expenditures, the impairment of the
facilities for mental training of the growing
generation.
A report given out by the committee shows
that from January 12 to March 28, inclusive
(although its organization was not perfected
until early in February), it has given final disposition to some 157 issues, divided as follows:
MuPubTo- Per
nici- lic util- Industrial, tal. cent.
pal.
ity.
Approved
Approved "refunding
Disapproved
Curtailed
Total




5
47 32.00
22
86 54.70
5 I 15
1 I 9 5.00
42

33 i 157 100.00

Ami 1.1, 1918.

The issues aggregated
vided:

Total applications
Disapproved
Approved
Less "refunding"
New issues
New issues same period last
year, excluding refunding...
Analysis of new issues:
Amount of issue
Amount approved
Curtailment effected

,386,752.17, di-

Municipal.

Public utility.

Industrial.

838,039,452
6,379,000

3144,296,400
3,000,000

§118,050,900
11,350,000

31,660,452
15,831,912

141,296,400
118,640,000

106,700,900
98,850,900

15,828,540

22,656,400

7,850,000

47,444,365

86,099,075

212,670,900

22,057,540
15,828,540

25,656,400
22,656,400

19,200,000
7,850,000

6,229,000

3,000,000

11,350,000

So that, out of a total submitted (exclusive
of refunding operations) of $66,913,940, approval was expressed by the committee as to
$46,334,940 (69.3 per cent), and disapproval
was expressed with respect to $20,579,000
(30.7 per cent). In addition, three applications for a total of $2,800,000 were submitted
informaUy to the committee and postponed
for the period of the war. The committee is
collecting data from the various districts with
respect to applications upon which postponement has been secured locally.
The Government Official Bulletin.
The Federal Reserve Bulletin has been requested to call attention to the Official United
States Bulletin, a daily paper published in
Washington, containing all of the more important rulings, decisions, regulations, proclamations, orders, etc., as they are promulgated
by the several departments and the many
special committees and agencies now in operation in the National Capital. This bulletin is
posted each day in every post office in the
United States, and may also be found on file
at all libraries, boards of trade, chambers of
commerce, the offices of mayors, governors,
and Federal officials. It will be found useful
in answering the many questions coming up
daily concerning the war, and by consulting it
many inquiries about which letters are being
written to Washington may be obviated. Unnecessary letters encumber the mails and
occupy labor in Washington, where they are
answered, which is needed for work in connection with the war.

iL i.

FEDEBAL RESERVE BULLETIN.

mis.

267

War Finance: War Expenditures, War Debts, in the comparative table, by far the larger
and Increase in Note Circulation of Principal portion represents inter-ally credit transactions
Countries.
affecting the debt figures shown in the table,
During the first three and one-half years | and thus unduly swelling the total debts
of the war the public debts of the 12 warring I shown for the allied group. On the other hand,
countries, treated below, show an aggregate the war debts of Germany and Austriaincrease of approximately 111.7 billion dollars, Hungary likewise include advances to Bulgaria
of which about 72.4 billions represent the and Turkey. These advances, so far as known,
increase in the public debts of the 9 countries cover by far the larger portion of the war
(including the four self-governing British expenditures of these two countries.
Total debt figures shown pertain to the princolonies) in the allied group and 39.3 billions
the increase in the public debts of Germany cipal belligerent countries only and do not inand Austria-Hungary. Aggregate war costs clude the public debts of neutral countries,
in addition include large amounts raised by which have also risen considerably during the
increased or new taxation introduced by all war, though of course not in the same proporthe warring countries, though it would be quite tion as those of the countries taking an active
difficult to segregate the amounts thus obtained part in the conflict. To cite one instance, the
from the total estimated or actual revenue indebtedness of Switzerland increased by 812.2
shown in the estimates or budget reports of million francs between August, 1914, and
January, 1918, the Government having issued
the respective countries.
Among the European nations Great Britain eight interior loans to defray the expenses of
shows the largest increase of indebtedness, mobilization, besides borrowing 15 millions in
viz, by 24,178 millions of dollars. This total the United States early in 1915.
With the spread of the war over wider and
includes 7,027 million dollars advanced to allies
and dominions up to February 9, 1918. On the wider areas and the continuous rise of prices,
other hand, the total increase is inclusive of the cost of the war is constantly increasing,
advances received from the United States since calling for larger and larger borrowings by
April, 191.7, which totaled $1,370,000,000 the Governments. In floating the huge public
by March 18, 1918. Russia's public debt loans the Governments have had the assistance
shows an increase of 20,291 millions between of the banks, cooperation between the GovernJanuary 1, 1914 and September 1, 1.917. ments and the central banks of issue being
This total includes the amounts advanced by particularly close. Loans of a permanent
the allies and in addition about 7,800 million I character are as a rule preceded by issues
dollars received by the Treasury in the shape in large volume of Treasury bills or certificates,
of notes from the State Bank, whose stock is a large proportion of which is discounted
owned exclusively by the Government. To by the central banks. The amounts of Treasury
the 7,027 millions advanced by the British bills and other short-term obligations disGovernment, largely to Russia and Italy, counted by the European Governments with
should be added advances of the United States their central banks have been constantly
to the allies, totaling about 4,582 millions on rising partly accounting for the inflation of
March 21, while like advances of the French currenc}^ and prices, which in turn cause
Government through the bank of France, increased borrowing. In Great Britain tempototaled about 642 million dollars on March 7 rary borrowings of the Government from the
Bank of England as a rule do not cause any
of the present year.
While some of the advances were made to the increase in note circulation, the Government
Balkan countries, viz, Serbia, Roumania, and receiving deposit credit for the amounts
Montenegro, whose public debts are not shown borrowed. Whatever addition to note cir-




49615—18

4

268

FEDERAL RESERVE BULLETIN.

dilation took place there is due to issues of
currency notes by the Government to the
banks, largely against the deposit of Government and other securities, as distinct from the
practice on the European continent, where,
in most cases, notes are primarily issued
by the central banks to the Governments.
Table on page 269 shows the effect of the war
upon the status of the principal banks of
issue both in the warring and neutral countries.
It is seen that while the amounts of metallic
cover at the banks in the warring countries of
Europe have changed but little in the aggregate, the ratio of these amounts to their liabilities has gone down since July, 1914, from
54.3 to 9.4 per cent.
Amounts of gold held in the vaults of the
central banks of issue do not represent in every
instance the total monetary stocks of gold in
any given country. Great Britain maintains a
metallic cover of £28,500,000 ($138,695,250)
against currency notes which amounted
to £43,519,019 ($211,785,306) on May 12,
1915, and £212,782,295 ($1,035,505,039) on
December 26, 1917. The Irish banks held on
an average for the four weeks ending November
3, 1917, £16,504,786 ($80,320,541) in gold
against an average note circulation of £22,166,439 ($167,872,975), and the Scotch banks reported as of the same date average gold holdings of £16,989,360 ($82,678,720) against an
average amount of notes in circulation of
£18,104,676 ($88,106,406). There should also
be included small amounts of reserve and circulation of six private banks and three joint stock
banks in England proper. The larger commercial banks in England also hold as part of
their vault cash considerable amounts of gold,
the London City and Midland Bank alone
showing £7,000,000 in gold ($34,065,500) on
December 31, 1917.
In the case of Italy, there are notes in circulation of the Banco di Napoli and Banco di
Sicilia, in addition to the issues of the Banca
d'ltalia. On November 30, 1917, the com-




APRIL 1, 1918.

bined gold reserves of the first two banks were
235,000,000 lire ($45,355,000), and silver reserves to the extent of 40,000,000 lire ($7,720,000), against a combined note circulation
of 1,781,000,000 lire ($343,733,000). On the
same date the Italian Treasury held 167,000,000
lire ($32,231,000) of metallic reserve against its
Treasury note issue of 1,684,000,000 lire
($325,012,000).
Figures of gold reserves relating to the Bank
of France, the Reichsbank, and the AustroHungarian Bank are more closely representative of the total monetary stock of gold in those
countries. All the gold in circulation that
could possibly be gathered was concentrated in
the vaults of the central banks. Some increase
in the gold reserve of the Reichsbank is probably due to the transfer to its vaults of part of
the gold reserve held by the Austro-Iiungarian
Bank at the outbreak of the war. On July 23,
1914, the latter hold 1,337,879,000 crowns
($271,589,437) in gold coin and bars, and this
sum had gone down to 264,190,000 crowns
($53,630,570) on December 7, 1917.
Public debt of the principal belligerent countries.
[In millions of dollars.]
A. ALLIED P O W E R S .
Before entering war.
Date.
Aug. 1,1914
Great Britain
June 30,1914
Australia
Mar. 31,1914
Canada
New Zealand. Mar. 31,1914
Union of South
iMar. 31,1914
Africa
France
July 31,1914
Italy
June 30,1914
Jan. 1,1914
Russia
iMar. 31,1917
United States
Total

Amount,

At most recent date.
Date.

Amount.

Increase.

3,458 Feb. 16,1918
93 Mar.
, 1918
336 Feb. 28,1918
446 Mar. 31,1917

27,636 24,178
942
84.9
675
1,011
155
611

579 Mar. 31,1916
598 Dec. 31,1917
792 Dec. 31,1917
092 Sept. 1,1917
1,208 Jan. 31,1918

734
155
22,227 15,029
6,676 3,884
25,383 20,291
7,758 6,550

20,602

92,978 72,376

B. CENTRAL POWERS.
Germany.
Austria...
Hungary.,

Oct.
July
July

Total
Grand total.

1.1913
1.1914
1,1913

1,165 Dec. —,1917 125,408! 24,243
2,640 Dec. —,1917 113,3141 10,674
1,345
-, 1917 15,704! 4,359
5,150
25,752

44,426 39,276
137,404111,652

i Partial estimates. All other statistics are official.

269

FEDERAL RESERVE BULLETIN.

APRIL 1, 1918.

Comparative table showing total note circulation, deposits, and gold and silver holdings of principal hanks ojissue, at the outbreak of the war and at the end of 1917.
[Rates of conversion: 1 lira, franc, or peseta=19.3 cents; 1 mark=23.8 cents; 1 pound=$4.8665; 1 ruble=51.5 cents; 1 Aust. crown=20.3 cents; 1 Dutch
florin=40.2 cents; 1 Scandinavian crown ==26.8 cents; 1 yen=49.85 cents.]
A. ALLIED POWERS.
[In thousands of dollars.]
At outbreak of the war.

Total note
circulation.

At end of 1917.

Ratio of
gold and
Gold and silver to Total note
total note
• silver
holdings. and de- circulation.
posit liabilities.

Total
deposits.

France
Great Britain.
Japan 2
Italy
Russia

1,289,855
144 566
212,342
324.824
841,174

256,716
326,699
61,367
37,403
592,522

919,968
185,567
112,296
232,965
863,371

Per cent.
59.5
39.4
41.0
64.3
60.2

Total
United States 5

2,812,761

1,274,707

2,314,167

56.6

Trttal

610,961
4,311,000
1223,586
808,671
410,816
291,341
8
1,243,574
309,579
4
9,456,516 U,780,088

dJ1
Gold
"OKI and

687,480
283,899
326,982
178,188
4 758,798

Ratio of
gold and
silver to
total note
and deposit lia-

Per cent.
13.7
27.5
46.6
11.5
6.8

15,645,492 ! 3,800,640 i 2,235.377 I
1,246,488 I 1,457,994 I 1,668; 268 ;

11.4
61.7

424,004
1,915,993

64,657
615,929

1.1
13.3

2,339,997

680,586

7.8

14,771
21,5fiO
59,269
185,232
49,600
26,555

46,610
283,515
31,214
518,729
65,943
79,029

44.2
74.7
21.3
71.5
33.1
48.7

356,987 j 1,023,040

59.6

B. CENTRAL POWERS.
Austria-Hungary
Germany

;
I

Total

432,341 ,
692,442 !

59,419
299,515

311,963 !
363,670 !

63.4 3,594,156
36.7 6 2,729,324

i 1,124,783 ;

358,934

675,633 j

45.6

6,323,480

I
C. NEUTRAL POWERS.
Denmark
Netherlands
Norway
Spain
Sweden
Switzerland

I

Total.

39.525
124; 796
32,859 j
370,372 j
54,367 i
51,708 '

5,496
1,904
3,859
96,104
18,440
9,777

673,627

135,580

24,410
68,477
14,405
245,747 I
26,151
38,409

512
54.0
39.2
52.7
35.9
62.5

90,546
357,889
87,524
537,085
7149,722
135,825

417,602

51.6

1,358,591

1 In addition, there wore outstanding currency notes to the extent of £212,782.295, or $1,035,505,039, secured by £28,500,000 in gold.
2 Figures for Dec. 31, 1913 and 1917.
These figures refer to the Bank of Italy. On Nov. 10, 1917, there were also in circulation notes of the Bank of Sicily, 274,666,650 lire; notes
of the Bank of Naples, 1,413,103,400 lire, and treasury bills (Nov. 30), 1,684,000.000 lire (metallic reserve, 167,000,000 lire)—a total of 3.371.770,050
lire, or §650,751,620, as against ,15197,053,400 on July 20, 1914.
4 Figures for Oct. 16/29, 1917.
o Figures for the Federal Reserve Banks, as of Dec. 28, 1917, exclusive of gold with foreign agencies.
e There were also outstanding on Dee. 31, 1917, the following issues:
Million marks.
Treasury notes
350.0
Loan bank certificates
6,265.0
Notes of Bank of Bavaria
68.5
Notes of Bank of Saxony
44.1
Notes of Bank of Wiirttemberg
24.6
Notes of Bank of Baden
26.0
3

or $1,013,450,000. On July 31, 1914, tho issues of the latter four banks amounted to 810,590,900, as against 838,844,500 on Dec. 31, 1917.
7 Figures for Dec. 22, 1917.
GREAT

BRITAIN.

"Revenue receipts of Great Britain yielded a
surplus over expenditures prior to 1914, but
with the opening of hostilities the ratio of
receipts to expenditures commenced to fall
until in 1916 it had gone down to 21.6 per
cent. The year 1916 marked the introduction




6,779.2

of the excess-profits duty, the effects of which
were not materially felt until 1917. In the
latter year the ratio of receipts to expenditures
rose to 26.1 per cent. Owing to a considerable
increase in expenditures in the fiscal year 1918,
which were unforeseen at the time when the
budget was in preparation, the ratio has again

270

FEDERAL RESERVE BULLETIN.

dropped somewhat. The outstanding feature
is, however, that for the whole period of the
war one-fourth of the entire amount of expenditures has been met by receipts and the
remainder by loans and other means. If
loans to the allies and dominions, reported as
£1,444,000,000 by February 9, 1918, are
deducted, the ratio is considerably higher—
27.8 per cent for the entire period of the war.
In the following table, net tax receipts and
total revenue receipts arc related to expenditures, beginning with the year 1913 to date.
[Sources: London Gazette, Feb. 19, 1918; Statesman's Yearbook, 1917,
pp. 42-48; 60th Report of the Commissioners ol His Majesty's Inland
Revenue, 1917.]
[In thousands of £.1

Year ending
March 31.

Total
Net
revenue
receipts
receipts
from
ql the
taxation. exchequer.

PUBLIC DEBT.

The London Economist (Feb. 23, 1918)
places the total gross indebtedness of Great
Britain a! £5,878,600,000 on February 16,
1918, as compared with £710,500,000 on
August 1, 1914, an increase of £4,968,100,000,
or 699. 2 por cent. From the total present
debt there should be deducted the advances
to the Allies and Dominions which had reached
£1,444,000,000 on February 9,1918, making the
net debt on February 16, 1918, approximately
£4,430,000,000' or 121,558,600,000. Details of
the public debt are given in the following table,
taken from the London Economist of February
23, 1918:

Ratio Ratio
of tax of total
Total
revenue
expendi- receipts
to ex- to exture.
pendi- penditure.
ture.
J83,622 i
197,493 I
530,474 I
1,559,158 |
2,198,113

APRIL 1, I9IS.

(Millions of £'s.)
Aug. 1, Mar. 31, Mar. 31, Mar. 31. Fob. 16,
1914.
1916.
1915.
1917.
1918.

82.1
82.6
33.9
18.7
23.5

100.1
100.4 Funded debt
40.4 Terminable annuities
21.6 Unfunded debt:
3J per cent war stock
26.1
4J oer cent war stock
4 and 5 T)er cent war stock
2 483,096
563,811 2,348,330 i 20.6
24.0
National war bonds
Treasury bills
1,436,473
24.9
1,615,764 6,801,981
21.8
Exchequer bonds
War-savings certificates.
War-expenditure
cortifi1 Includes exchequer receipts from customs and excise and net receipts
from all other sources.
Other
debt
2 Exchequer receipts only.
American loans
3 Exchequer receipts from Apr. 1, 1914, to Aug. 1, 1914, were deducted
Temporary a«3 vances
from the total net receipts for the financial year, in order to arrive at the
Other capital liabilities
net tax. receipts for the period between Aug. 1,1914, and Apr. 1,1915.
1913
1914
1915
1916
1917
Apr. 1, 1917, to
I'ob. 16, 1918...
Aug. 1, 1914, to
Fol). 16, 1918...

154,854
163,035
190,054
290; 873
1 516,255

188,802
198,21:3
226,694
336,707
573,428

From statements made by the chancellor of
the exchequer upon the occasion of moving
votes of credit, it appears that average daily
expenditure for the eight months of the fiscal
year 1914 was £2,050,864, whereas for ihe
period between April 1, 1917, to February 9,
1918, it had risen to £6,557,000, representing
an increase of 219. 8 per cent.1 A comparison
of average daily expenditures follows:

Total liabilities
*

586.7
29.6

583.3
28.0

318.5
26.1

317.8
24.0

* 349.1

62.8
900.0

62.7
20.0
1,962.4

1

i

15.5 1 77.2
20. f> | 67.4

1.0
57. 2

" • « • ' < > "

556.8
177.0
1.4
9.2
51.4
19.9
56.7

317.8
24.0

62.7
20.0
2,086.9
363.9
463.7 1,054.8
320.3
402.6
120.3
74.5

23.6
318.5
51. 4
217.5
52.2

23.5
861.9
51.4
237.8
51.2

710.5 1,162.0 2,189.8 3,90G. 6 5,678. 8

National war bonds, subscriptions to which
are continuous, are issued in two forms: (1)
Bonds bearing 5 per cent interest, subject to
the income tax and repayable at 102, 103, and
105 on October 1, 1922, 1924, and 1927,
respectively, and (2) bonds bearing 4 per cent
interest, with income tax compounded, repayAugust 1, 1914-Aprii 1, 1915
£2, 050, 884
able at par in 1927. Holders of old exchequer
Fiscal year 1916
4, 271, 888
bonds
maturing in 1919, 1920, and 1921, and
Fiscal year 19J7
6, 022, 227
April 1, 1917, to February 9, 1918
6, 557, 000 of 44 per cent war-loan stock may convert their
The total credits voted by Parliament up obligations into either form. Bonds are acto March 7, 1918, amount to £6,842,000,000, cepted at their face value in payment of death
duties, excess profits duty, and munitions levy,
or about $33,300,000.
and are convertible into any long-term loans
i Parliamentary debates June 25, July 24, and Dec. 12,1917, and Jan.
that may be issued during the war.
83,1918.




APRIL 1,

271

FEDERAL RESERVE BULLETIN.

1918.

External loans:
4J per cent loan from Great Britain in
March, 1915, issued at 99J and running
for 5 and 10 years
$23, 332. 500
5 per cent loan floated in the United
States in March, 1916, extending for
5, 10, and 15 years, issue price of 99.56,
97.13, and 94.94 respectively
75, 000, 000
5 per cent two-year notes floated in the
United States, issued at 98, during
August, 1917
! 100, 000, 000

FIDUCIARY CIRCULATION.

On August 26, 1914, currency notes to the
extent of £21,535,065 were issued, and their
increase since that date has been marked and
almost unbroken. During the same period the
notes of the Bank of England in circulation
show a moderate increase, the additional issues
of bank notes being fully secured by metallic
reserves with the issue department. The
following table shows the amounts of currency
Total
notes outstanding and Bank of England notes War-savings certificates, to date
in circulation at selected dates since the outGrand total
break of the war:

198,332,500
12, 000,000
960, 332, 500

DETAILS OF CANADIAN WAR LOANS.

[Source: Monetary Times, Jan. 4,1918, p. 126.]
Currency
notes outstanding.
July 29,1914
Aug. 26, 1914
Dec. 30, 1914
Dec. 29, 1915
Dec. 27, 1916
Dec. 26, 1917
Feb. 20, 1918

i
j
1
!
'
|
|

£21,535,065
38,478,164
103,125,099
150,144,177
212,782,295
216,134,893

Ban!- of England notes in
circulation.

Second
First loan,
Third loan, j fourth
loan,
November, September,
Notnber,
1915.
1916.
1917.

£29,708,350
35,571,435

Amount of loan
| 1850,000,000 S100,000,000 $150,000,000 2,3150,000,000
°-^'
- — -•--—- - —
'
800 4200,708,000 5 418,000,000
60,000,000
39,675,535
tion
...j 53,728,500 101,444,800 110,000,000 288,000,000
45.943,965
Total
oversubscripi
46^ 207,340
tion by public
; 28,729,500 51,444,800 50,000,000...
i
Number
of sub- i;
40.800
802,000
scribcrs
24,802
34,526

1 Ultimately increased to 3100,000,000.
2 Ultimately increased to approximately $400,000,000.
a4 Includes £3.073,800 of the first loan converted.
[Sources: Canada Yearbook, 1914, p. 548; Canada Gazette, Mar. G, 1918,
Includes 318,131,000 of the first loan and $5,983,000 debenture stock
j converted.
p. 3077.]
| 5 Approximately $400,000,000 was allotted.

DOMINION OF CANADA.

NOTES IN CIRCULATION.
$335, 998, 850 |
1, 010, 780,470 ! On January 31, 1917, the circulation of the Dominion
| of Canada was composed of $381,500,046 Dominion notes
I and chartered-bank notes. A. total of $267,185,582 DominC A N A D A ' S W A R D E B T T O E N D O F F I N A N C I A L Y E A R 1918.
ion notes was issued, of which $57,360,000 were held in the
central gold reserve and §184,949,958 by the chartered
[Sources: Monetary Times of Canada, Nov. 9, 1917, p. 12, and Feb. 15,
banks. The amount of Dominion notes in the hands of
1918, p. 10; Statesman's Yearbook, 1917; Canadian Annual Review, , the public was thus $24,875,624.
1916, pp. 330-302. J
i The total of bank notes in circulation on January 31,
1918, is given as $171,674,464, of which $18,251,206 are
Internal loans:
reported held by chartered banks other than issuing banks,
First war loan issued at 97-|, bearing 5 per
the amount of bank notes in the hands of the public being
thus 1153,423,258.
cent interest, for a term of 10 years
total amount of notes in circulation according to
(floated November, 1915)
§100,000,000 theThe
method of calculation used by the United States
Second war loan issued at 97J, interest
Treasury was, therefore, as follows:
at 5 per cent, running for 15 years
[Sources: Canada Gazette, Jan. 19,1918, p. 2443. and Mar. 2,1918, p. 2981;
(floated in September, 1916)
100,000,000
Canada Yearbook, 1914, p. 587.]
Third war loan issued at 98, interest at
31,
Mar. 31,1914. Jan.
5 per cent, for a term of 20 years
1918.
(floated March, 1917)
150,000,000
$117,795,719 §267,185,582
Dominion notes issued
Victory loan issued at 100, with interest
3,500,000 | 57,300,000
Held by the Government
114,295,719 209,825,582
rate of 5£, running for 5, 10, and 20
Total net issued
2
90,848,384 171,674,464
years (floated November, 1917)
400,000,000 Chartered-bank notes in circulation.
381,500,046

Net debt on March 31, 1914
Net debt en February 28, 1918

Total notes in circulation

Total




750,000,000
'Monetary Times, Jan. 4,1918, p. 126.

211,144,103

Dominion notes held by the public
18,068,398 "li, 875,624
Chartered-bank notes held by the public... ...83,97M89_ 153.423,258
Total notes held by the public
j 102,045,287 178,2987882

272

FEDERAL RESERVE BULLETIN".

A P R I L 1,

1918.

AUSTRALIA.

Particulars of Australian war loam.

[Sources: Commonwealth of Australia Gazette, Oct. 30, 1917, p. 2789;
Monthly Summary of Australian Statistics, Aug., 1917, p . 41;
Monetary Times of Canada, Feb. 1, 1918, p. 8.J

[Monthly Summary of Australian Statistics, Bulletin No. 68, Aug.,
1917, p. 41.]

First loan.

PUBLIC DEBT.

Net debt of the Commonwealth:
June 30, 1914
June 30, 1917
Sept 30, 1917
Dec. 31,1917

£19,182, 333
169,177, 767
177. 385, 855
200, 501, 018

A. Internal war loans, all at par, bearing 4J
per cent interest:
First loan, issued in August, 1915
£13, 389,440
Second loan, issued in February, 1916... 21, 655, 680
Third loan, issued in September, 1916... 23,587,420
Fourth loan, issued in April, 1917
21, 577,070
Fifth loan, issued in November, 1917 .... 2 20,281,160
Sixth loan, issued in February, 1918
40,000,000
Total
140,490, 770
B. War savings certificates, to December,
1917
2, 719,474
War savings certificates, December, 1917• Apr. 1, 1918 (estimated)
2,500,000
C. War advances by British Government to 2
June 30, 1917
47, 774,269
Total

193,484.513

Australian war expenditure to December 31, 1917,
amounted to $149,896,128. The charges against revenue
and against loans were distributed as follows:

1914-1915
1915-1916
1916-1917
Half-year ended Dec. 30,1917..
Total

Against
revenue.

Against
loans.

Total.

£540,217 £14,471,118 £15,011,335
37,423,568 41,201,946
3,778,378
8,406,970 53,099,841 61,506,811
4,850,286
27,325,750 32,176,036
17,575,851

132,320,277

149,896,128

In his budget speech of August 8, 1917, the
Commonwealth treasurer, Sir John Forrest,
estimated the total Australian expenditure for
the four years ending June 30, 1918, at £214,880,673; of which £25,834,916 will have to
be charged against revenue and £189,045,757
against loans.3 On December 31, 1917, the
Commonwealth debt stood at £200,501,018.
Further details as* to the Australian war
loans arc given in the table below:
i Preliminary figures; no details available.
a As reported in Budget speech of Sir John Forrest, on Aug. 8, 1917;
cf. London Economist, Oct. 6,1917, p. 497.
3
From London Economist, Jan. 12,1918, p. 49, and Oct. 6,1917, p. 497.




Total

8,603
10,145
18,748

Amounts allotted:
Inscribed stock
Treasury bonds

War debt. '

Year or period.

Number of applications:
Inscribed stock
Treasury bonds

Second
loan.

Third loan.

12,450
16,495
28,945

13,660
88,382
102,042

Fourth
loan.

13,657
53,303
66,690

£9,581,120 £16,271,710 £15,417,650 £14,565,190
3,808,320
5,383,970
8,169,770
7,011,880

Total

13,389,4-10

21,655,680

23,587,420

21,577,070

Accrued interest
Expenses of flotation...

221,502
34,659

321,170
50,382

326,881
50,688

254,778
45,900

Total deductions.

256,161

374,552

377,569

300,678

Net proceeds of loans... 13,389,440

21,281,128

23,209,851

21,276,392

FIDUCIARY CIRCULATION.
[Sources: Official Year Book of the Commonwealth of Australia, 19011915, pp. 773 and 739; Monthly Summary of Australian Statistics, Bulletin No. 68, August, 1917, p. 29; Australasian Insurance and Banking
Record, November and December, 1917, and January and February,
1918; Commonwealth of Australia Gazette, January 2,1918.1

Australian notes made their first appearance
in December, 1910. The Australian notes act
of 1910 authorized the Commonwealth Treasurer to issue notes which were to be legal tender
throughout the Commonwealth and redeemable
at the seat of the Federal Government. These
notes were to be issued in denominations of 10
shillings,£l,£5,£10,£20,£50,and£100. The
act prohibited issuance of notes by any State
six months after the date of its enforcement and
on the same date all such notes ceased to be
legal tender a tax of 10 per cent was placed on
all bank notes issued or reissued by any bank
in the Commonwealth and not redeemed.
The act also directed the Treasurer to hold
as a reserve against notes gold coin, with the
following stipulations: (1) Not less than 25
per cent of gold coin against notes issued up to
seven million pounds and (2) 100 per cent reserve of gold coin against any amount in excess of seven million pounds. In 1911 an
amendment was passed, altering the percentages
in force and requiring a flat rate of 25 per
cent of gold coin against all issues. The latter regulation was to go into effect July 1,

273

FEDERAL RESERVE BULLETIN,

APRIL 1,1918.

1912, but the Treasurer deemed it wise to
defer putting it into operation until after the
elections of 1913.
The elections of 1913 resulted in a change of
administration and the new Treasurer, Sir
John Forrest, announced that he would retain
the gold reserve at the rate provided in the
original act. This condition was maintained
until September, 1914, when a change of policy
was necessitated by the progress of events
occasioned by the war. On December 24,
1912, the ratio of gold coin to notes issued
was 44.6 per cent; on December 27, 1913, it
was 45.22 per cent; and by December 30, 1914,
it had fallen to 40.27 per cent. Since then the
ratio has declined still further, reaching about
36 per cent on January 30, 1918.
In 1911 a Commonwealth Bank was established. It has no power to issue notes but
aside from this prohibition it possesses all the
characteristics of other central State banks.
The following table gives the average
amount of Australian notes held by the banks
and the public since August, 1914:
Held by
Held by Total note
issues.
the banks. the public.

1914 (August to December)
1915 (average for year)
1916 (average for year)
1917 (actual December 26,1917).

total increase of the public debt between 1913
and 1916. Since 1910 the absolute increase in
the public debt was £53,793,935 and to this
sum the last three financial years contributed
62.9 per cent. The subjoined table shows the
development of the debt from 1910 to 1917:
[Source: Statistics of New Zealand, 1915, p . 144; New Zealand official
yearbook, 1916, p. 594.]

Mar. 31:
1910
1911
1912
1913
1914
1915
1916
1917

£71,778,580
77,688,396
82,193,310
i 87,457,121
91,689,835
! 96,644,455
! 105,957,433
125,572,515

9,416,292
13,481,173

£2,282,182
2,381,000
2,446,493
2,506,025
2,649,786
2,788,513
2,888,533

On the total gross debt outstanding on March
31, 1916, the following rates of interest were
paid:
6 per cent on
5 per cent on
4J per cent on
4J per cent on
4 per cent on

£5,500
2,682,500
5,257,548
52,100
59,173, 595

3| per cent on
3£ per cent on
£7,743,210 £6,589,798 £14,333,008 3 per cent on
22,420,558
30,902,866

Interest
charge.

Net debt.

31,836,850
44,384,039
47,901,269

3,459,866
29,260,058
9,746,230

Total

109,637,397

Increasing proportions of the new loans were
placed in the domestic market, as may be seen
PUBLIC DEBT.
from the following table, showing amounts
During the financial year 1917 the increase raised in the London, Australian, and New
in the net debt of New Zealand equaled the Zealand markets:
NEW ZEALAND.

Markets for the New Zealand public loans.
Inscribed stock.

London.

1910
1913
1914
1915
1916




£50,954,744
59,484,214
65,600,259
67,532,398
68,213,639

New
Zealand.

Debentures.

London.

Australia.

£410,124 £6,778,914 £4,113,985
475,891 9,445,250 4,213,985
475,991 13,024,050 4,286,800
475,991 8,877,603 3,979,000
475,991 13,251,109 3,520,650

New
Zealand.
£12,632,878
16,441,423
16,343,327
19,194,918
24,176,008

Total gross
debt.

Percentage
of total
gross debt
raised in
New
Zealand.

£74,890,645
90,060,763
99,730,427
100,059,910
109,637,397

17.4
18.7
16.8
19.6
22.4

274

FEDERAL RESERVE BULLETIN.
FIDUCIARY

A P R I L 1, 1918.

CIRCULATION.

FRANCE.

[Source: Monthly Statistics of New Zealand.]

Average amounts of bank notes in circulation.
1913
<£1, 674, 333
1914
1,998,386
1915
2, 846,277
1916
4,049, 527
March quarter, 1917
4, 637,451
June quarter, 1917
4,890, 803
September quarter, 1917
5, 650,880

[Sources: Journal OfTieiel de la Ilepublique frangaisc; Le Rentier, Feb.
7,1918; Bulletin de Statistique et de Legislation Comparee, December, 1917; L'Economiste European, Feb. 1,1918.]

In his Expos6 des Motifs on the occasion of
presenting the budget for 1918, M. Klotz, the
French minister of finance, estimated ordinary
expenses for the year at 7,808,907,439 francs
and receipts at 6,542,513,930 francs, leaving a
UNION OF SOUTH AFRICA.
deficit of 1,266,393,509 francs. To offset this
[Sources: Statistical Yearbook of the Union of South Africa, 1914-15, impending deficit, the adoption of certain tax
p. 232; Statesman's Yearbook, 1917, p. 218.]
measures was urged, designed to yield 1,226.5
Between 1910, when the union between Cape million francs in 1918 and 1,774 millions
of Good Hope, Natal, the Transvaal, and annually thereafter. The total revenue reOrange River Colony was effected, and March ceipts from the beginning of the war to Septem31, 1916, the common debt of the Union in- ber 30, 1917, were stated as 13,816 million
creased 41.9 per cent and interest charges francs, compared with an estimate of 1.4,967
thereon 46.6 per cent. Increases for the year millions for a normal period of the same dura1915-16 constituted by far the larger share of tion—a decline of 7.69 per cent. During the
the total increase for the entire period, as may last five months of 1914 the loss was 38.6 per
be seen from the following table:
cent: in 1915 revenue receipts fell off about 19
per cent; in 1916 the rate of decline was 3.46
Public debt. I
per cent; and for the three quarters ending
September 30, 1917, there was an increase of
£106,291,534 £4,256,172 ! 19.79 per cent.
Mar. 31, 1911
118,987,625
4,770,291
Mar. 31, 1914
122,319,705
4,848,437
Mar. 31, 1915.
The following table indicates the amount of
150,832,743
6,239,389
Mar. 31, 1916
credits granted by the chambers or asked by
The expenditures out of the loan funds for the Government since the beginning of the war
war services during 1914-15 and 1915-16 was and the uses to which the funds were assigned.
£9,258,959 and £10,970,186, respectively. For j Of the total credits to the end of 1917, 82.9
the year 1916-17 a deficit of £536,821 was fore- per cent was used to defray the expenses of
seen, the revenue b 3ing estimated at £ 18,726,58 0 war, 9.7 per cent to cover the debt service, and
and expenditures at £19,263,401.
7.4 per cent for other purposes:
T A B L E I.—Credits voted or ashed for 1914 to 1918.
All other pur-

War purposes.

Debt service.

Francs.
6,400,925,761
18,455,406,750
27,191,308,985
34,471,588,701

Francs.
59,620,763
1,899,393,673
3,333,015,879
4,863,384,400

Total
Estimate for 1918.

86,519,230,197

10,155,420,715
4,899,042,759

7,737,188,288 104,411,839,200
2,909,864,680 ! 7,808,907,439

Grand total..

86,519,230,197

15,054,463,474

10,647,052,968 | 112,220,746,639

August, 1914, to Deo. 31,1914.
Calendar year 1915
Calendar year 191(5
Calendar year 1917




Francs.
128,881,725
2,449,686,102
2,371,725,031
2,786,895,430

Total.
Francs.
6,589,434,249
22,804,486,525
32,896,049,895
42,121,868,531

APRIL 1, 1918.

275

FEDERAL RESERVE BULLETIN".

TABLE II.—Receipts.
Short-term Perpetual debt.
debt.

Floating debt.

1915
1916
1917 (10 months)
Total
I
!

Francs.
5,331,573,000
5,643,787,000
9,400,459,000

Francs.
384,445,000
299,632,000
414,549,000

20,375,819,000 i 499,362,000

Francs.
10,967,000,000
10,786,536,000
'262,12i;000

Advances.

Total interior
loans.

Foreign loans.

Francs.
1,175,000,000
2,450,000,000
4,755,000,000

Francs.
17,858,018,000
18.580.691.000
14; 832', 129', 000

Francs.
1,462,055,000
6,287,078,000
9,360,070,000

22,015,657,000 j 8,380,000,000 i 51,270,838,000 | 17,109,703,000

Budgetary
receipts.

Total receipts.

Francs.
3,770,516,000
4,640,811,000
4,526,905,000

Francs.
23,091,089,000
29,508,580,000
28,719,104,000

12,938,232,000 j 81,318,773,000

Up to the OK] of 1917, the total receipts
According to the report of the budget comfrom advances a<ul loa^s were as follows:
mittee, the expenses of war from its inception
Francs.
to December 31, 1917, totaled 106,519,144,979
Advances of the Bank of France
12, 500,000,000
francs, of which sum 85,545,153,000 francs
Advances of the Bank of Algeria
85, 000, 000
were used for military and other purposes occaNational defense treasury bills (to Nov. 15). 22, 966,157,100
The details run as follows:
National defense short-term bonds
294, 798, 000 sioned by the war.
5 per cent loan of 1915
11, 719, 504, 714 Expenses of war:
5 per cent loan of 1916
10, 074, 674,156
(«) Military
5 per cent loan of 1917
5, 221, 405, 462
(b) Assistance to families affected by
4 per cent loan of 1917 at 68$ (not redeemmobilization orders
able until 1943)
10, 276, 522, 000
(c) Aid to orphans
(d) Assistance to invaded departments
Total
83,134, 061,432
(e) Urgent relief
The total rational debt was estimated by M.
(/) Assistance to refugees
Klotz at 115,166,058,269 francs on December (g) Rehabilitation of invaded regions..
R e c o n s t r u c t i o n of
31, 1917, as compared with 34,188,147,969
landed property. . . 267, 400,000
francs on July 31, 1914. Of the former |
R e c o n s t r u c t i o n of
amount, 18.3 per cent was held abroad, Dur- j
industrial property. 100,075,000
ing the same period debt charges rose 355.7 j
R e c o n s t r u c t i o n of
per cent, as against an increase in the capital
agricultural
property
100,060,000
amounts of the debt of 236.9 per cent. Details of the debt on the two dates are given as (h) Repair of harbors and construction
of means of communication
follows:
(i) Cultivation of abandoned areas
(j) Credits opened for reparation for
July 31, 1914.
damages incurred through the
Capital
Annual debt j
charges.
|
amount.
A. Domestic:
Funded
Floating—
interest bearing
Xonuiterest bearing
B. Foreign:
Funded
Floating

!

Total
Franc*.
\
1,020.483,406 ' Extraordinary expenses of the civil servI
ice
...
17,131,500 |

Francs.
32,579,362,769
1,394.584,900
2Vi, 200,300

Total

3-1,18S. 147,9B9 i

1,037.614,90(5

Dec. 31, 1917.
Capital
amount.
A. Domestic:
Funded
Floating—
Interest bearing
Xomnterest bearing
1$. Foreign:
"Funded
Floating

115,166,058,269 |
49(515—18

Annual debt
charges.

Francs.
• Francs.
:
56,451, 725,669 , . 2,285,549,531
I
j 37,19J, 865.600 : 1,329,867,200
;
439; 050,700 ;
i
' 9.914.200.000
451,237.000
li\ 166;2101300 ;
658,604.200

Total




:

5

Total expenses of war
Public debt service
Ordinary expenses of the civil service

4,725.257,9

;

Grand total

Francs.
76,000,000, 000
7, 730, 000, 000
30, 000,000
10,000,000
128, 000, 000
919,982, 000
467,535,000

329, 386, 000
30, 000, 000

900, 000, 000
86, 545,153, 000
672, 881, 727
87, 218,034, 727
10, 699, 831,149
8, 601, 278, 212
106, 519,144, 979

Average monthly expenses rose from 1,318
million francs in the last five months of 1914 to
1,900 millions in 1915 and 2-,743 millions in
1916. For the ten mouths ending September
30, 1917, the average rose to 3,360 million
• francs, or to two and one-half times the average
! monthly expense incurred in 1914.

276

FEDERAL RESERVE BULLETIN.
BANK NOTE CIRCULATION.

On July 30, 1914; the amount of notes of the
Bank of France in circulation amounted to
6,683,184,785 francs and on February 21, 1918,
it reached 23,986,287,440 francs—an increase

A P R I L 1,

1918.

of 17,303,102,655 francs, or 286.2 per cent.
The growth of the fiduciary circulation and the
ratio of the metallic reserve to combine deposit
and note liabilities during the war period is seen
from the following table:
Notes in
circulation.

Deposits.

Francs.
5,713,551,290
6,683,184,785
10,042.899,720
13,309:850,045
16,678,817,915
22,336,798,710
24,650,026,960

Francs.
978,683,642
1,330,133,678
3,101,063,014
2,287,728,887
2,275,232,984
3,114,325,199
2,659,791,658

Metallic
reserve
in vaults
of bank.

Ratio of
I reserve to
I combined
| note and
; deposit
I liabilities.

_L
Dec. 24, 1913.
July 30, 1914
Dec. 24, 1914.
Dec. 30, 1915.
Dec. 28, 1916.
Dec. 27, 1917.
Mar. 7,1918.,

Francs.

157,454,630
766.674,306
514', 412,872
367,375,464 |
677,696,015 |
562,073,569 !
588,477,815 "

Per cent.
62.12
59.48
34.35
34.41
19.40
13.97
13.27

Li a review of war finance operations pubAccording to the report of the Banque de
France for 1917, about two and one-half lished, in the official Viostnik. Finansov, the war
billions of francs of its cash reserves were expenses are given as follows:
Rubles.
exported in 1915 and 1916, whereas in 1917
2. 546, 000, 000
this sum reached only 450 million francs, of Aug. 1, 1914, to Dec. 31, 1914
9, 374, 900, 000
which 20 millions were shipped to neutral Calendar year 1915
Calendar year 1916
15, 267, 000,000
countries, the remainder representing gold Jan. 1, 1917, to Sept. 1, 1917
14, 204: 815, 000
loaned to the British Treasury in accordance
Total Aug. 1, 1914, to Sept, 1, 1917. 41, 392, 715, 000
with the articles of agreement entered into by
both Governments. Special credit arrangeTotal war expenditures to the end of 1917 are
ments since the entrance of the United States estimated at 51,470,700,000 rubles. In 1914
into the conflict necessitated no further outflow the receipts were 2,898 million rubles; in
of gold to that country. During the year the 1915 they declined to 2,828 millions (the
gold reserves of the Bank of France increased | deficit occasioned by the "vodka" monopoly
by 288,000,000 francs, bringing the total | being greatly offset by receipts from new taxes);
amount of gold secured from the public since and in 1916 State revenues exceeded pre-war
the beginning of the war to 2,227,000,000 francs. proportions, reaching 3,975 million rubles as
RUSSIA.
I the result of new tax measures.
[Sources: L'Economisto Europeen, Dec. 14, 1917; Le Rentier, Oct. 17,
The Viestnik Finansov (No. 39, Oct. 14,
, 1917; Viostnik Finansov, No. 39, Oct. 14, 1917; Torgovo-Promyshlen- |
naya Gazeta, Sept. 25,1917.]
1917) states that on September 1, 1917, there
War loans.
were outstanding foreign loans to the extent
[Statesman's Yearbook for 1917, introduction.]
of 8,461 million rubles (nominal) and shortEquivMillions alent
in
term
obligations to the amount of 16,918,of pounds millions
sterling. of dollars. 700,000 rubles (nominal).
If to these items
are
added
2,611,600,000
rubles,
representing
o per cent State Joan of 1011./ issued November, 1914,
43
209.3
at 95
. ....
balances
of
the
three
budget
years
1914-1917,
First 5 per cent loan of 1915, issued March, 1915, at
94 . . . . . .
..
. .
43
209.3
and
the
internal
war
loans,
11,408,200,000
Second loan of 1915, at oj- per cent, issued May, 1915,
86
418.5
at 99 .
rubles, the total war debt at that date was
Short-term loan or 1915, at 5.\ per cent, issued
86
418.5
December, 1915, at 95 1
".
39,399,500,000 rubles.
First war loan of 1916. at 5. , per cent, issued March,
212
1,031.7
1916, at 95
The progress of the national debt is indicated
Second war loan of 1916, at 5£ per cent, issued
319
1,552.4
December, 1916, at 95
in
the subjoined table. In the eight months
Total....
....
3,839.7
789
Liberty loan of 1917
2,035.5 ending August 31, 1917, it almost doubled,
Grand total
5.875.2
due largely to the enormous increase in ex-




277

FEDERAL RESERVE BULLETIN.

APRIL 1, 1918.

pcnditures and increasing depreciation of the lire on December 31, 1917, an increase of 139.10
per cent, while interest charges on the debt
currency:
Rubles.
rose from 494,244,020 lire to 1,465,284,043
Jan. 1, 1914
9, 888, 309, 698 lire, representing an increase of 196.5 per cent.
Jan. 1, 1915
10,473, 572,000
Jan. I, 1916
18,876,731,000 The following table exhibits the growth of net
Jan. 1, 1917
25, 220, 937,000 indebtedness and interest charges since 1914:
x

Sept. 1, 1.917

49, 287, 809, 698

The note circulation and advances of the
State Bank to the Russian Government on
various dates are outlined in the following
table:
Russian State Bank.

Amount of
public debt.

June 30, 1914
June 30, 1915
June 30, 1916
June 30, 1917
Dec. 31, 1917.

Interest on
public debt.
Lire.
494,244,020
549,991,184
871.293,455
1,274; 094,459
1,465,284,043

Lire.
14,466,870.162
16.368,717; 302
22', 065; 232.424
29.961,030; 959
34 .'590,163,814

[In thousands of dollars.]

Bank

notes in
circulation.

Doc.
Dec.
Dec.
Dec.
Oct.

16-29,1913.
16-28,1914.
:!6-20,1915.
16-29, 1916.
16-29,1917.

Ratio of
metallic
reserves
Advances
Metallic
comto
the
Deposits. Govern- reserves. tobined
note and
ment.
deposit
liabilities.

859.293 600,237 ::
255.720
1,47-*; 880 500,177 ;
l,670!959
2', 731,879 760,253
4,424.512 1,216,852
3,305,036
V 6 ; 5 1 6 |1,780,088 17,839,089

812,788
824.802
848;974
817.485
758;798

55.7
-U.7
24.3
14.5
G.8

Details of the public debt on December 31,
1917, are given below, including interest rates:
Amount of
debt.
I. FUNDED DEBT.

A. "Consolidated" (perpetual) debt:
Rentes at 3J per cent (ex. 3J)
Rcntos at 3 per cent. /.
Rentes at 31- per eer.it.
Rentes at 4% per cent.
Rentes at 5 "per cent..
3 Exclusive of S6f>S,?-7-J ,000 advanced to the Treasury account fooddistribution vserv ice.
Total consolidated, debt
ITALY.
INTERNAL WAR LOANS.
[Sources: JJankvcrein Snisso Bulletin, February, 1917; Statesman's
Yearbook", 1917, introduction.]
Millions
of lire.

Loans for military preparation, issued Jan. 4—11,
11915, redeemable between 1925 and 1940, sold
at 97, yielding 4 J per cent interest
First Avar loan of 4-J per cent, issued July 1-1.8,
19J 5. at 93 and 95, redeemable 1925-1940
Second war loan of 5 per cent, issued Jan. 10-Mar.
1, 1916, at 97J, redeemable 1926-1941
Third war loan of 5 per cent, issued Feb. 5--25,1917,
at 90 (rente). not redeemable till 1931
Fourth war loan of 5 per cent, issued February,
1918. at 86.5 (consols) 2
Total

1, 000
1,146
3, 014

Amount of
interest.

Lire.
8,097,724.438
180.070; 866
943', 455,803
721447; 81.3
7,153,894,600

i
•'
|
I
I

17, 076, 303, 550

B. Redeemable obligations:
3 per cent and 31"'per cent, maturing
in 1930
'
.'.
41 per cent and 5 per cent, maturing
in 1940
.'.

711, 390, 167

467, 3-10,000

14, 725, 700

1,504, 147, 300

73, 958, 652

1,971, 487, 300

88,684, 352

C. Permanent annuity to Holy See:
3 per cent and 3/ per cent.'
64, 500,000
I). Debts separately inscribed:
(a) 3 per cent to 5 per cent, redeem- '
able, 1917 to 1961
173, 853,000
(6) Perpetual (feudal) 3 per cent
465,446
E. Various debts:
(a) 3 per cent to 5 per cent, redeem1,269,322,100
able in 1934 to 1985,
(b) 3 per cent to 5 per cent, perpetual.
63, 713,554
Total funded debt

Lire.
283,420,355
4,802,126
33,021,303
32,451,653
357:694,730

20, 619 645,919

3,225,000
,0,524,670
13,983
42.205,593
2;726,389
854,770,135

IJ. FLOATING I)j-:«T.

3, 512
5, 000
13,672

PUBLIC DEBT.
[Sources: Anniiario StatisticoItaliano, Anno 1915, p. 340; Gazcta UfGcialc
del Regno D'lialia, September, 1917, and January, 1918.]

Long-term treasury bonds at 3£- per cent..
Three and five-vear bonds
! Special treasury bonds placed abrroad...
I Credits opened'by United States Treas'

17,125,000 j
3,238,180,600 :
6,548,746,600 j

599,375
156,461,790
300.967,196

2,590,000,000
: 1,576,456,665

103.276.250
49; 209', 207

Total floating debt

' 13,970,508,865 j

610,513,908

Total public debt

!

Miscellaneous

34,590,163,814 j 1,465,284,043

| Over one-third of Italy's public debt is
The public debt of Italy rose from 14,466,- ! unfunded, the growth of the floating debt for
870,162 lire on June 30, 1914, to 34,590,163,814 the six months ending December 31, 1917,
being almost 4 billions of lire.
1 This figure was arrived at by adding the total war debt to Sept. 1,
In presenting the budget for 1918-19, the
1917, to the debt on Jan. 1, 1914.
minister of finance, Sig. Nitti, stated that all
2 Preliminary figures.




278

FEDERAL RESERVE BULLETIN.

APRIL 1. 1918.

expectations pointed to an increase in State j O n November 10, 1917, the total advances
receipts by 705 million lire and an increase ! m ade by the three banks of issue to the State
3 as follows: Bank of Italy, 2,996,428,529
of ordinary expenditures of 1,017 millions.,
Bank of Naples, 901,848,482 lire; and
Between November 1, 1916, and October 31, ;
1917, expenditures totaled 15,722 million lire.1 Bank of Sicily, 211,944,443—a total of
3,110,221,554 lire.
FIDUCIARY CIRCULATION.
On November 10, 1917, the Gazetta Ufficiale
de Regno D'Xtalia (Jan. 7, 1918) reports the
total amount of bank notes in circulation as
7,673,642, 300 lire, distributed among the three
banks of issue as follows: 5,985,872,250 lire
issued by the Bank of Italy; 1,413,103,400 lire
issued by the Bank of Naples, and 274,666,650
issued by the Bank of Sicily. Against these
notes in circulation there was a reserve cover,
partly of gold, of 23.2 per cent, 22.4 per cent,
arid 20.5 per cent, respectively. On December
31, 1917, the circulation of the Bank of Italy
had risen to 6,539.200,000 lire, secured by 21.5
per cent of total reserve, including 12.8 per
cent of gold, as against an outstanding note
circulation of 3,040,175,850 lire on December
31, 1915, secured by 43.8 per cent of total
reserve, including 35.4 per cent of gold. There
were also treasury notes issued to the extent
of 1,684 million lire on November 30, 1917,
covered by 167 million lire of me Gallic reserve.
The annual reports of the Bank of Italy
segregate the total amount of notes issued to
satisfy commercial needs and amounts issued
on account of the State. The following
table 'gives the total classified note circulation of the three banks of issue at the close
of calendar years, and the like circulation of
Bank of Italy notes, in millions of lire:
Total bank note circulation.!

X o t e circul

For
For
! For
needs of needs of Total
I n c coodms _Of
comG overn- lola I.
! merce.
rnorce. I merit.
Dec. 31,1914..
Dec. 31,1915..
Dec. 31,1916..
Nov. 30, 1917.
Dec. 31,1917




1

734.9
2,201.1
1, 898.6 2,069.5
2,458.0 ' 2,555.0
2,997.0 i 5,122.0
j

i 2,936.0
i 3,968.1
I 5,013.0
! 8,119.0 i
!
i

1,643.8
1,431.6
2,0!o.O
2,560.0
2.212.1

t i
n of B a n k of
I» a 1°y

needs of
Government.

Total.

2.162.3
3'. 010.2
3,876.7
6,338.0
•1,32*7.1 j 6;539.2
518.7
1.608 6
1', 830. 7
3, 778.0

London Economist, Jan. 19, 1918, pp. 85-80.

UNITED STATES.
PUBLIC DEBT.

Between March 31, 1917, when the first 50
million dollars of 2 per cent certificates of
indebtedness were sold to the Federal Reserve
Banks, and March 28, 1918, the gross war debt
of the United States has increased by approximately 9,121 millions of dollars. This debt is
made up as follows:
1. First 3£ per cent Liberty Loan, dated
June 15, 1917, maturing June 15,
1947, redeemable on or after June 15,
1932
$1,986, 774, 655
2. Second 4 per cent Liberty Loan, dated
Nov. 15, 1917, maturing Nov. 15,
1942, redeemable on or after Nov. 15,
1927
3,807,551, 806
3. Treasury certificates of indebtedness:
At 4 per cent, dated Jan. 22, 1918,
payable Apr. 22, 1918
400,000,000
At 4 per cent, dated Feb. 8, 1918,
payable Mar. 9, 1918
500,000,000
At 4$ per cent, dated Feb. 27, 1918,
payable Mar. 28, 1918
500,000,000
At 4J per cent, dated Mar. 20, 1918,
payable June 18, 1918
543,032, 500
In anticipation of income and other
taxes:
At 4 per cent, dated Nov. 30, 1917,
payable June 25
691, 872,000
At 4 per cent, dated Jan. 2, 1918,
payable June 25
491, 822, 500
At 4 per cent, dated Feb. 15, 1918,
payable June 25
74,100, 000
4. War Savings and Thrift Stamps
126, 318, 678

Comparative figures of the total public
debt of the United States under date of March
31, 1917, and January 31, 1918, the date
of the latest public-debt statement, are as
f ollows:

AI»RII. 1,

279

FEDERAL RESERVE BULLETIN".

1918.

Source: Financial statement of tho United States Government, Mar. 31,
1917, and Ian. 31, 1918.1
r. 3'J, 1917. i J a n . 31, 1918.

A. Debt bearing no interest
B. Debt on which interest, has ceased '•
since maturity
".

-S257,227,466 '

8238,019,016

1,459.630 •;

1,639,200

taxation of 3.9 billions, we may estimate that
of the total net expenditures of the United
States for the fiscal year 1918, exclusive of
advances to Allied Governments, more than
50 per cent will he defrayed by taxation.
NATIONAL

C. Interest-bearing debt:
2 per cent consols of 1930, payable
after Apr. 1, 1930
."
3 per cent loan of 1908-1918, redeemable after Aug. 1, 1908, and
payable Aug. 1,1918
4 per cent loan of 1925, payable
after Feb. 1,1925
'..'.

600,288,850 j

BANK

599,724,050

NOTE

AND

FEDERAL

RESERVE

NOTE

CIRCULATIO N, 1914-1918.

j

The outbreak of the European war caused
the
issue by the national banks of "emergency"
118,489,900 !
118,489,900
2 per cent P a n a m a Canal loan,
currency,
secured by miscellaneous securities
series 1906, redeemable after
Aug. 1, 1915, a n d payable A.ug.
other
than
United States bonds under the
1, 1936
•..".
48,954,180
49.817,480 j
2 per cenf: P a n a m a Canal loan,
authority
of
the Aldrich-Vreoland Act of May
series 1908, redeemable afi:e
!
Xov. 1, 1918, and payable Nov.
30,
1908.
During
the week ending August
1, 1938
".
25,947,400
20,178,600 !
3 per cent P a n a m a Canal loan,
8,
1914.
over
8100,000,000
of this currency was
series 1911, payable J u n e 1,1861..
50,000,000
50,000,000 I
3 per cent conversion bonds, pavput
into
circulation,
and
by
the end of August
25,057.200 !
able 1946-47
"..'. .
28.894,500
27)362,000 this amount was more thai? doubled.
3 per cent 1-year Treasury n o t e s . . .
23)o40)000 j
On
Certificates "of indebtedness Tat 3
per cent a n d 3£ per cent on Juno
October
24,1914,
the
maximum
of
8368,616,990
30, 1917, a n d a t 4 per cent on
J a n . 31, 1918)
50,000,000
1,383,873,000 was reached.
Retirement of these notes was
First L i b e r t y loan of 1917, at 31
per cent, redeemable after J u n e
completed
by
June
30, 1915.
15,1932, and payable J u n e 15,1947.
1,986,771,655
Second Liberty loan of 191.7, at •!
Simultaneously with the issue of emergency
per cent, redeemable after Z\ ov.
15,1927, a n d payable Nov. 15,1942.
3,806,493,790 currency clearing-house certificates were used
2\ per cent Postal Savings bonds,
redeemable 1 yea' after date of
to the extent of $211,778,000. The date of
issue, a n d redeemable 20 years
thereafter
"
10,758,560 first issue was August 3; and the last cancel9?151,800
21 per cent Postal Savings bonds,
"redeemable after Tan. 1, 1918.
lation took place on December 14, 1914. The
a n d p a y a b l e J a n . 1, 1937.'.
302,140
887,960
W a r Savings and Thrift Stamps...
4't, 802,191 actual circulation of national-bank notes is
Total interest-bearing debi
1.023.357.250 I 8,196,3?1.S26 given below for various "call" dates - i. e.,
T o t a l gross debt
O28L\0-;t',34f) ;, 8,435.980; 042
Total net d e b t
7, 758', 070") 696 amounts of notes issued by the Comptroller
1,207'. 827.886
of the Currency, less amounts held by the
Of the total war loans realized to the middle national banks:
of March, 1913, credits opened to the Allied
1000 omitted.]
Governments totaled §4,960,600,000, while acCentral Other
tual advances made to the Allies aggregated
. reserve reserve Country
1
city
city
"banks." Total.
$4,506,829,750, distributed as follows:
i banks. banks.
63,9-15,400 ;

63,945,460

r

1

: Commitments
! on Mar. 18,
|
191.8.
Great iJritain
France

Italy
Russia..
Belgium
Serbia..
Cuba...

Actual
I P e c . 31,1913
advances to
ct. 31.'J9J.4
Mar. 18, 1918.
Dec. 31,1914

Nov. 10.1915
....v, 27/1916
,^,+,
Dec.
S2,520,000,000
82,390.000,000 I Dec. 31,1917
1,370)000,000 i
i 1,440,000,000
550,000,000
470,000,000 1
" " •"
825,000,0(50
187.720,750 '
84'. 900,000 j
104,600,000 i
-J-)200',000
6.000,000 !
15)000,000 i

!

jS163,9o9 S488,142 8727,079
! 273,578 511,038 1,018,194
848,807
i 222.655 538,308
713,466
; 172)078 177)754
665,409
-lo'.977 i 153,987 463,445
674,254
49'. 4^8 i 161,389 453.117

• 876,978
203.578
S7',S44
Cvi',S34
:

" --

"

:
:

Federal Reserve notes began to be issued
immediately after the new banks began operaTotal
; 4,960,000,000 ! 4,506,820,750
tions. These issues, moderate during the first
two years of the banks' existence, assumed
Assuming total payments to the Allies elur- ' larger proportions in 1917, as may be seen
ing the current fiscal year of 5 billions, total j from the following table giving the actual
disbursements of 12 billions, and receipts from ! circulation of Federal Reserve notes and of the




280

FEDERAL RESERVE BULLETIN.

APRIL 1,1918.

total gold holdings of the system about the end Second loan issued February 27-March 15, 1915,
at 98J:
of the calendar years 1914 to 1917 and —
on
(1) 5 per cent treasury bills (no amount fixed)
March 16 of the present year.
not redeemable before October 1, 1924.
[000 omitted.]

Federal
Reserve
notes

Dec.
Dec.
Dec.
Dec.
Mar.

Gold holdings of the
Federal
Reserve

SIC.60S
189)026
275,353
1,246,488
1,406,228

31,1914.
30, 1915
29,1916.
28, 1917
16,1918.

8241,321
542,413
736,236
1,671,133
1,793,243

GERMANY.

Between August, 1914, and December, 1917,
war credits, totaling 109 billion marks, were
voted by the Reichstag.
[Economists Europe'en, Dec. 7,1917.]

August, 1914
December, 1914
March, 1915
August, 1915
December, 1915
June, 1916
October, 1916
February, 1917
July, 1917
December, 1917
Total

5 billion
5 billion
10 billion
10 billion
10 billion
12 billion
12 billion
15 billion
15 billion
15 billion

marks.
marks.
marks.
marks.
marks.
marks.
marks.
marks.
marks.
marks.

109 billion marks.

During the same interval seven war loans
were issued by the Imperial Government,
aggregating approximately 73 billion marks,
distributed as follows:




Total

1

9,106

12,162

10, 767

10, 699

12,979

12,626

72,819

Below is given an analysis of the subscriptions to each of the seven German war loans.
It will be observed that the ratio which the
larger subscriptions bear to the total amounts
subscribed has been increasing while the ratio
of the smaller subscriptions has been de4,480
clining.

[Sources: Reports of Imperial Bank of Germany for 1915 and for 1916
Berliner Tagcblalt, Dec. 23, 1917; Frankfurter Zeitung, Sept. 6, 1917
and London Economist, May 19, 1917.]
[In millions of marks.]

First loan issued September 10-19, 1914, at 97J:
(1) 5 per cent treasury bills falling due October 1, 1920
(2) 5 per cent imperial loan, not redeemable
before October 1, 1924

(2) 5 per cent imperial loan, not redeemable
before October 1, 1924
Third loan issued September 4-22, 1915 at 99:
5 per cent imperial loan, not redeemable!
before October 1, 1924
J
Fourth loan issued March 4-22, 1916:
(1) 4J per cent treasury bills (no amount"
fixed), falling due on July 1, 1932,
issued at 95
(2) 5 per cent imperial loan, falling due on
October 1, 1924, issued at 98J
Fifth loan issued September 4-October 5, 1916:
(1) 4$ per cent treasury bills (no amount]
fixed), falling due between 1923 and]
1932, issued at 95
(2) 5 per cent imperial loan, not redeemable
before October, 1924, issued at 98....
Sixth loan issued March 15-April 16, 1917, at 98:
(1) 4-J per cent bond, redeemable in drawings'
at 110 to 120, according to date of drawing
(2) 5 per cent imperial loan, not redeemable
before October, 1924
Seventh loan issued September 19-October 18,
1917, at 98:
(1) 4J per cent bond, redeemable in drawings
at 110 to 120, according to date of drawing
(2) 5 per cent imperial loan, not redeemable
before October, 1924

APRIL 1, 1918.

281

FEDERAL RESERVE BULLETIN.
[Millions of marks.]

First loan.

Second loan.

Third loan.

Fourth loan.

Sixth loan.i

Fifth loan.

Subscriptions.

Up to 200 marks
300 to 500 marks
600to 1,000marks
1,100 to 2,000 marks

231,112
I 241, 804
\ o4>:5
- , , ,,.,
If
>14d

2,100 t o 5,000 m a r k s
|
5,100 t o 10,000 m a r k s
\
10,100 t o 20,000 m a r k s
20,100 t o 50,000 m a r k s
!
50,100 t o 100,000 m a r k s . . . . I
100,100 t o 500,000 m a r k s . . .
500,100 t o 1,000,000 m a r k s .
O v e r 1,000,000 m a r k s

Total
1,267,235
F u r t h e r subscriptions :
from battle field and for- •!
eign countries beyond
the sea brought' the
total to
!

452,113
581,470
660,776
418,861
361,459
130,903
46,105
26,407
7,742
4 361
538
325

71
254
604
733
1,354
1,057
745
926
648
1,066
440
1,162

984,35S
858,259
918,595
530,176
422,626
147,593
53,445
32,840
10,090
7,074
832
530

2,691,060

9,060

3,966,418

36
111
587 |
579;

157,591
56,438
19,913
11,584
3,629
2,050
361
210

P

IS

I
450
307
410
315
509
287
4,460

!
:
i
;
!

9,106

evonth loan.

130
369
844
928
1,563
1.202
'858
1,167
850
1,766
695
1,729

2,406,118
201 1,794,084
967,929
407
681,027
885,941
794
605,594
792
301,863
468.724
245,873
347.725
1,247
113,927
907
93,189
42,158 ;
666
40,571
980
30,361
28,500
734
9,100 i
9,748
7,870
6,308 i 1,531
1,032
780 : ! 641 i
574
1,812 j
725

154
293
552 I
520 i
911 I
763 !
651 I
982
810

1,710
853
2,448

12,101 ! 5,279,645 I 10,712 | 3,809,976

12,162

i 10,767 i

10,6476,768,082

10,699 j

First loan. ' Second loan, j Third loan, j Fourth loan. | Fifth loan.

Sixth loan.i

12,979

12,979

Seventh loan.

Subscriptions.

11

g

1
J..
Up to 200 marks
3.233,472
208
'693,729
295
300 to 500 marks
586.623
531
600 to 1,000 marks...
26-1,871
461
1,100 to 2,000 marks.
23al542
868
2,100 to 5,000 marks.
100,781
818
5,100 to 10,000 marks.
42,732
697
10,100 to 20,000 marks.
33,914
1,189
20,100 to 50,000 marks.
50,100
to
100,000
1,024
12,169
marks
100,100 to 500,000
9,145
2,092
marks
500,100 to 1,000,000
1,363 ! 1.130
marks
1,032 | 3,145
Over 1,000,000 marks.
Total...:
5,213,373 ! 12,458
Further subscriptions
from battle field and
foreign
countries
beyond the sea
brought the total to.
12,626

!

Par ci. Perct. \ Perct. Per ct.\ Perct. Perct. Perct. Perct. Perct. Perct. Perct A Perct. Perct. Per ct.
0.8 ' 24.8 j 1.1
1.9
47.1
1.4
61.9
1.6
45.5
18.2
0.9 i 16.8
2.8
21.6 | 3.1
3.8
17.9
2.8
19.1
13.2
2.4
18.2
2.5 i 21.6
23.2
6.7
7.0
7.4
15.9
5.2
11.6
4.3
16.7
1/24.5
1 42.9 13.1 \ 15. 6
7.7
7.4
8.1 i 13.4;
7.9
4.9
5.1
3.7
8.9
12.9
11.6
14.9
6.5
8.5
13.0
4.5
7.0
6.6
12.4
13.4
10.7
9.9
8.5
11.7 ! 3.7
2.4
7.2
10.1
1.9
6.6
2.2
4.9
4.5
7.1
6.2
8.2
1.1
6.1
6.7
5.6
1.0
1.7
1.6
1.3 I
9.6
9.1
10.2
.7
9.2
9.2
9.5
.9
1.0
8.2
7.2
.2
6.9
.3
!
.3 I 7.2
.3 j 7.0
.3

|
|
|

.1 | 11.4

11.7

.2

.1 ; 14.3

.2

16.8

16.1

9.1
25.2

8,0 |
23.0 I
100.0

:

100.0

100.0

i

1

Data not available.

The London Economist (Feb. 23, 1918)
reports the total funded and unfunded war
debt of the Empire as 84,981,720,000 marks
on September 30, 1917, at the following rates
of interest: 51,044,540,000 marks at 5 per cent;
1,129,820,000 marks at 4 per cent; 1,971,020,000
marks at 3 | per cent; 1,630,980,000 marks at
3 per cent; 2,158,730,000 marks at 5 per cent
(Treasury bonds); 4,028,980,000 marks at 4£
per cent; and 23,017,630,000 marks (Treasury




.2 ! 14.6

4.9
5.7
6.0
6.4
14.3
16.9
12.8
j 19.5
100.0 100.0 I 100.0 j 100.0 100.0 • 100.0 100.0 j 100.0 100.0

bills). The debt on October 1, 1913, was 4,897
million marks, and if to this amount are added
72,819 millions of internal loans, 29 billions representing estimated amount of the floating
debt and 42 millions loans floated in the United
States, the total debt at the end of 1917 would
be about 106,758 million marks.1
1
Cf. Statistisches Jahrbuch fur das deutsche Reich, 1915, p. 359, and
speech by Sir Edward H. Holden, in Statist Feb. 2,1918. Inasmuch as
the debt was being gradually reduced before the war, the figure for
October, 1913, may safely be taken as the maximum indebtedness on
July 31,1914.

282

FEDEKAL RESERVE BULLETIN.

APRIL 1, 1918.

In the budget for 1918-19 the estimates of
War-loan advances comprised 54 per cent of
income and ordinary expenditures balance at the total in January, 47.6 per cent in February,
7,332 million marks, as compared with 4,941 and 33.7 per cent in March, 1916, after which
million marks for the preceding financial }rear. a rise set in, the June percentage being 64.6.
The chief cause for this increase is the rise in Lower percentages are shown for the later
the debt charges. For 1918-19 it will amount months—war-loan advances in August falling
to 5,907 million marks, whereas in 1917-18 it | to 46.4 per cent of the total; m October, to 37.7
was 3,561 million marks. The difference of per cent; and in December to 32 per cent.
1,625 million marks is expected to be met by Loan-bank notes put into circulation by the
increased taxation.1
Reichsbank up to the end of 1916 were distributed as follows: 233.65 million marks in
FIDUCIARY CIRCULATION.
Before the war the Imperial Treasury had 1-mark denominations, 328.67 millions in 2issued a total of over 200 millions of its own mark denominations, and 940.57 millions in
notes, the so-called Reichskassenscheine. Dur- 5-mark denominations. Many of the Reichsing the war the authorized amount of these bank 20- and 50-mark notes were replaced by
legal-tender notes was raised to 360 million loan-bank certificates. On December 30, 1916,
marks, nearly all of which are in circulation. of the total amount of certificates in circulaOn February 7, 1918, the Reichsbank notes in tion, 649.9 millions were in 20-mark denominacirculation amounted to 11,122 million marks. tions and 720.14 millions in 50-mark denominations.
(London Economist, Feb. 23, 1918.)
As reported in the London Economist (Feb.
In addition, there are in circulation certificates of the war-loan banks, the so-called 16, 1918), operations of the loan banks during
Darlehnskassenscheine. The total issued by 1918 were as follows:
[In millions of marks.]
December 31, 1914, according to the Statistisches Jahrbuch fur das deutsche Reich
I Dec. I Jan.
Feb.
Jan.
Jan.
(1915 edition, p. 295), was 1,317 million marks,
I31,1917.i 7,1918. 15,1918.|31,1918. 7,1918.
of which 445.8 millions were in actual circulaIn Reichsbank
! 1,304 ! 1,338 1,256 ! 1,252 1,236
tion and the remainder in the vaults of the ! Treasury
note cover
120 !
120 I 120
120
120
6,260 6,196
In
circulation
6,114 ! 6,288
6,306
Reichsbank. At the end of 1915 the total
Loans outstanding
I 7,690 . 7,654
7,490 I 7,660 I 7,662
actual circulation of these certificates in 20-, 5-,
2-, and 1-mark denominations is shown in the
Some idea of the progressive expansion of
1915 Reichsbank report as 972.2 millions, while
note circulation in Germany during the most
the amount of certificates held by the Reichsrecent period may be had from the following
bank on that date was 1,254.8 million marks.
| table showing the amounts of the several classes
The annual report of the German Loan
I of notes outstanding on the last day of each
Banks for 19162 shows total gross issues of
; month in 1917 and weekly in January and
loan-bank certificates since September, 1914,
I February, 1918. It is seen that the volume
as 38.9 billions of marks, the Loan Bank of
! of Reichsbank notes in circulation has inBerlin alone having issued an aggregate of
j creased by about 3.4 billions during the year,
29.06 billions. On December 31, 1917, the
| from 7,858 to 11,138 million marks, or about
sum of 3.41 billions of marks of these certifi42 per cent. For the loan bank certificates an
cates was outstanding, of which amount the
increase
from 3,070 to 6,288 millions is shown,
Bank of Berlin had issued 2.37 billions. Of the
or
at
the
rate of about 105 per cent. No
loans outstanding at the close of the calendar
increase
is
shown
in the circulation of Treasury
year 1916, 3.27 billions were advanced on
notes,
while
the
amount
of gold cover, following
stocks, shares, and book claims and only 138.18
a
decrease
by
132
millions
between May and
millions on merchandise.
July,
1917,
remained
practically
stationary at
i L'Economiste Europdcn, Feb. 22,191S.
slightly over 2,400 million marks.
2"Konjunktur" July 5, 1917.




283

FEDERAL RESERVE BULLETIN".

APRIL 1, 1918.

Note circulation in Germany.
[Compilation of weekly figures given in London Economist.]
[Millions of marks.]
Mar.
31,
1917.

Apr.
30,
1917.

May
31,

8,108
348

8,616
348

8,316

8,286
344

8,852
344

9,338 ! 10,204 j 10,400 110,622

344

3,376

3,754 | 3,898 | 4,110

4,522

4,724

4,984 i 5,430 | 5,606 j 5,860

Dec. ! Jan. Feb.
31, i 31,
28,
1916. i 1917. 1917.
Reichsbank notes. 8,054 i 7,858
Treasury notes
352 ! 350
Loan-bank certifi2,874 I 3,070
cates
Gold.

Total.

344

June
30,
1917.

July j Aug. i Sept.
"
' 31, : 29,
31,
1917. j 1917. : 1917.

OA A
344

O 4O

!

OiO

.

O Aa

11,280 ill, 278 11,832 ,12,718 il2,558 '12,740 il3,564 13,920 14,666 15,982 116,354 ' 16,830 18,084 j 17,888 : ,17,504 17,774
2,520 j 2,524 2,526 { 2,532 j 2,532 ! 2,534 I 2,456 2,402 2,404 : 2,404 ! 2,404 i 2,406 2,406 j 2,406 2,406 | 2,406
AUSTRIA.

j

17,776
2,406

Million crowns.

j (6) Second loan, issued May, 1915, at 95J (5J per
j
cent stock, not redeemable before 1925)
j (c) Third loan, issued October, 1915, at 93.6 (5J
!
per cent treasury bills not redeemable
I
before Oct. 1, 1930)
I (d) Fourth loan, issued May, 191.6:
j
5-J per cent treasury bills repayable at
I
par in June, 1923, issued at 93
|
5-J per cent bonds to run for 40 years, issued
i
at S95^
! (e) Fifth loan, issued in December, 1916:
I
5J per cent treasury bills at 92 J\
i
5Jtper cent bonds, at 96$
J
• (/) Sixth loan
(g) Seventh loan, issued in December, 1917:
5$ per cent loan redeemable at par by"J
drawing between 1923 and 1957, issued
I
at 91
\
!
5J per cent bonds redeemable at par in
;
1926, issued at 93
J

The first Austrian budget to be presented
2, 688
to Parliament Since the outbreak of the war
is for the fiscal year 1917-18. Discussion of
4, 203
this budget reported in the Neue Freie Presse
of September 26, 1917, shows estimated expenditures for the financial year 1917—18
4,520
as 22,169,662,326 crowns, of which sum
5,359,937,606 crowns are considered ordinary
civil expenditures and 16,809,724,720 extraordinary expenditures. The total ordinary rev'
enue is estimated at 3,890,475,536 crowns and
5, 289
temporary sources of revenue are expected
to yield in addition 303,606,000 crowns, or a
total of 4,194,081,536 crowns. The deficit of
5, 802
17,975,580,790 crowns is to be covered by
credit operations.
A comparison of expenditures incurred during previous years affords some idea of the
Total
32,073
growth of the national debt since 1914. In
Advances by the Austro-IIungarian Bank to
1914-15 the ordinary budget and expenses I the Austrian Government totaled 9,040 million
incurred directly for war purposes totaled ! crowns on December 7, 1917, according to the
10,705,847,000 crowns. During 1915-16, this
! first report submitted to the bank's board of
sum rose to 15,725,970,000 crowns; during
| directors since the beginning of the war. Ac1916-17, to 18,787,726,000 crowns, and the
estimate for 1917-18, as reported above, places | cording to the Economiste Europeen these
advances were given as 13,130 millions by the
it at 22,169,662,000 crowns.1
budget commission of the Reichsrat. It is
WAR LOANS.
likely, however, that the larger figure includes
Seven war loans were floated in Austria, the advances of the bank to the Hungarian
yielding a total of 32,073 million crowns, Government. The total war debt of Austria
is stated by the same authority as 52,580 mildescribed as follows:
[Sources: Statesman's Yearbook 1917; Fromden-Blatt, Dec. 16, 1917; lion crowns, equivalent to $10,673,740,000,
Frankfurter Zeitung, Oct. 24, 1917; and Kolnische Zeitung, Nov. 6,
composed as follows:
Million crowns.
Receipts from loans, 29,270 million crowns;
(a) First loan, issued November, 1914, at 97$
advances
of Austro-Hungarian Bank, 13,130
(5J per cent treasury bills, falling due at
par on Apr. 1, 1920)
2, 201 millions; advances of Austrian banks, 7,230
million; and advances of German banks, 2,950
i L'Economiste frangais, Jan. 5,1918, p. 30.




49615—18

6

284

FEDERAL RESERVE BULLETIN.

APRIL 1, 1918.

million crowns. It is not clear whether amounts was 22.9 per cent; at the end of 1915 it fell to
advanced by the banks are for Austria only or 9.4 per cent; in 1916, to 2.8 per cent, and in
1917, to 1.6 per cent. Simultaneously with
for the Dual Monarchy.
this decline in gold cover, the advances of the
FIDUCIARY CIRCULATION.
Austro-Hungarian Bank to the government
have increased prodigiously. From 625 million
According to the Nieuwe Rotterdamsche crowns in 1915 they rose to 13,690 millions
Courant (Nov. 26, 1917), the total advances of at the end of 1917.
the Austrian War Loan Bank were 247,354,220
crowns up to October 31,1917. Of this amount,
HUNGARY.
145,068,730 crowns were repaid, leaving 102,- [Sources: Statesman's Year-Book, 1917; Bankverein Suisse, Bulletin
285,490 still outstanding at the time. Of the
mensuel No. 2, February, 1917; Neue Freie Presse, Oct. 28,1917.]
latter sum 100,512,890 crowns, or 98.3 per
Loans issued during the period 1914 to 1917.
cent, represented advances upon securities or
Million
savings-bank accounts; 122,070 crowns, or onecrowns.
tenth of 1 per cent, on merchandise, and the First loan, issued Nov. 16-23, 1914, at 97-J, 6 per
remainder of 1,650,530 crowns advances on I cent rente, not redeemable until Nov. 1, 1920... 1,175
! Second loan, issued May 12-26, 1915, 6 per cent
mortgage securities.
j stock, at 97.5, not redeemable before 1921, and
Excerpts from the Frankfurter Zeitung (De- 5J per cent rente at 90.8, not redeemable before
1,132
cember 22, 1917) and the Fremden-Blatt (De- 1925
cember 19, 1917, and January 18, 1918) de- Third loan, issued Oct. 18-Nov. 17,1915, 6 per cent
1,985
scribe the report of the Austro-Hungarian Bank rente at 97.1, not redeemable before 1921
I Fourth loan, issued Apr. 19-May 23, 1916, 6 per
as presented to the board of directors, which ' cent rente at 96.7, not redeemable before Nov. 1,
throws considerable light on the note circula- | 1921, and 5J- per cent treasury bills at 91.4, not
tion and the general condition of the bank. j redeemable before June 1, 1926
2,025
Notes in circulation increased from 2,160 mil- | Fifth loan, issued Nov. 23-Dec. 22,1916, 6 per cent
lion crowns on July 23, 1914, to 18,440 millions j rente at 97.2, not redeemable before 1920, and '5J
| per cent treasury bills at 95.5, redeemable at 105
on December 31, 1917, an increase of 15,580 I between 1922 and 1942
2,415
million crowns. About two-fifths of this in- | Sixth loan, issued in 1917, 6 per cent rente and 5J
crease took place in 1917, as the following table i per cent treasury bills (unofficial returns)
2,532
Seventh loan, issued in 1917, 6 per cent rente at
indicates :
Million
crowns.

Dec. 31, 1913
July 23, 1914...
Dec. 31, 1914
Dec. 31, 1915
Dec. 31, 1916
June 30, 1917
Oct. 19, 1917
Dec. 7, 1917
Dec. 31, 1917

2,490
2,160
5,200
7,200
10,890
12,000
15,600
17,740
18,440

In 1915, the average monthly increase was
166 million crowns and in 1917 it rose to 640
million crowns. The gold cover has meanwhile been constantly dwindling. At the end
of 1914 the ratio of gold to note circulation




96.1 and 5J per cent treasury bills at 91.25, convertible at option of Government after Aug. 1,
1922
^,000
Total

14, 264

Advances of the Austro-Hungarian Bank to
the Hungarian Government amounted to 4,158
million crowns on December 7, 1917, and by
adding 1,050 million crowns, representing "valuta" loans in Germany up to the end of 1916,
and current account advances by various banks
to the extent of two billion crowns, the total war
debt of Hungary may be estimated at 21,472
million crowns.
1

Proliraiaary uao'Bcial ostimate .

APRIL 1,

1918.

FEDERAL RESERVE BULLETIN.

285

provisions of this section shall report their findings to the
Interest on Deposits,
association, and if approved by a majority vote of all the
After a discussion of the situation as to rates members of the association the offending member or nonof interest on deposits, which lasted for several member shall be fined $5,000. On the second offense the
weeks, the New York Clearing House Associa- member, or such nonmember, shall be subject to expulsion
tion at a special meeting held on Tuesday, from the Clearing House Association, and the committee
proceed to act as the constitution provides for the
March 19, arrived at an adjustment of the will
expulsion of a member.
pending issues. The by-laws of the Clearing
The substance of the proposed amendment
House Association were amended by adopting
a provision covering maximum rates. This had previously been considered by the Federal
action was nearly unanimous,, only three out of I Reserve Board, and in a letter dated Monday,
the 58 banks and trust companies voting on the March 18, and addressed to Mr. Walter E.
amendment being recorded in opposition. The ! Frew, president of the New York Clearing
amendment, which fixes the schedule of rates House Association, Governor Harding said:
of interest effective April 1, 1918, is as follows:
" I acknowledge receipt of your letter of the
No member of this association, or bank, or trust company, 15th instant inclosing copy of the proposed
or others clearing through any member, shall agree to pay amendment to the constitution of the New
or shall pay. directly or indirectly, on any credit balance York clearing house which, I understand, has
payable on demand or within 30 days, or certificate of been agreed upon by the clearing-house comdeposit so payable, by its terms, issued to or for the account mittee and by the committee of trust comof any bank (other than a mutual savings bank located in panies including both members of the clearing
the second Federal Reserve district), trust company, or house and those not members.
other institution conducting a banking business, or private
"The proposed amendment to your by-laws
banker or bankers, located in the United States or Dominion has been considered by the Federal Reserve
of Canada, interest at a rate in excess of 1 per cent per Board, and while the Board regrets that it has
annum when the then 90-day discount rate for commercial not proved practicable to reach an agreement
paper at the Federal Reserve Bank of New York is 2 per providing for an interest schedule based on a
cent or less, and an additional one-fourth of 1 per cent for maximum of 2 per cent for bank balances, it
every one-half of 1 per cent that such discount rate shall appreciates the difficulties which have been in
exceed 2 per cent, except that the maximum rate paid or the way of reaching such an agreement. The
agreed to be paid on any such credit balance or certificate Board understands that no bank or trust comof deposit shall not in any case be higher than 3 per cent pany will be obliged to increase any lower
per annum; nor shall any member or nonmember clearing existing rates, but that the rates proposed are
through a member, pay or agree to pay on any like cr-.-dit maximum rates, to which level any higher
balance of, or like certificate of deposit issued to, any rates now obtaining must be reduced, and it is
mutual savings bank located in the second Federal Re- gratified to know that the plan proposed will,
serve district, or any person, persons, copartnership, cor- if adopted, materially reduce the average rates
poration, or association, other than those specified and of interest now being paid by banks and trust
included above, interest at a higher rate than 3 per cent companies on the various classes of accounts,
per annum; nor on any time deposit, or certificate of de- namely, bank balances, open accounts, cerposit payable by its terms later than 30 days from, the date tificates of deposit payable on demand, and
thereof, at a higher rate than 3£ per cent per annum. The time deposits and certificates.
foregoing provisions are not intended to apply to the ac"The schedule, therefore, is a revision downcount of, or any certificate of deposit issued to, any person ward instead of upward, and while the Board
or persons residing and transacting business in any foreign fears that, unless thoroughly explained and
country other than the Dominion of Canada, or to any cor- understood, its adoption may result in an adporation, association, or copartnership organized and lo- vance of rates by some of the interior banks, it
cated in any foreign country other than the Dominion of feels that a distinct gain has been made in the
Canada, or to any corporation, asssociation, or copartner- promotion of a spirit of harmony and unanimity
ship organized and located therein, nor .to affect such among the New York City institutions which
interest rates as are or may be fixed or regulated by law.
ought to be instrumental in preventing any
The clearing-house committee upon ascertaining to the runaway competition throughout the country,
satisfaction of a majority of its members that a member, or which the Board will use every effort to forenonmember clearing through a member, has violated the stall.




286

FEDERAL RESERVE BULLETIN.

APRIL 1, 1918.

" I n view of all the circumstances, therefore, j each to keep on hand at all times an amount of coin equivthe Board will make no objection to the revised j alent to not less than 20 per cent of our net deposits of every
plan proposed, and it sincerely hopes that your kind, which shall be made to include certified checks and
committee's view of the results will prove cor- all other liabilities (except circulating notes), deducting
rect. I wish, on behalf of the Board, to thank • the daily exchanges received from the clearing house.
you and the other members of your committee This agreement may be annulled by a majority of all the
for your constant and unremitting efforts to members to the same, at a meeting called by request of five
bring about a satisfactory solution of this ex- members, on written notice to each stating the object of
ceedingly difficult problem, and to express; the meeting.
sincere appreciation of the spirit of cooperation, j
concession, and conciliation which has been | Mr. Booth, of the American Exchange Bank,
manifested by your banks and trust com- | offered the following as a substitute for a part
panies."
of the above preamble and first resolution, viz:
Whereas the almost unanimous sentiment of the banks in
New York has been expressed against the principle of
One of the earliest expressions on the matter | paying interest, on current deposits as unsafe to themby the New York banks, with respect to the selves and to the community; and whereas, we believe
question of interest on deposits, was furnished that the present is a peculiarly auspicious time to correct
the evil: Therefore
by the preamble and resolutions adopted by the j Resolve, That we, on behalf of our respective institutions,
46 banks belonging to the New York Clearing j do agree that we will not hereafter consent to receive an
House Association on March 15, 1858, reading account and allow interest on the same.
HISTORY OF INTEREST QUESTION.

!

substantially as follows, viz:

The amendment was accepted by Mr. Taylor,

Whereas 40 of the 46 banks belonging to the New York and the preamble and resolutions as amended,
Clearing House Association have signed an agreement
no longer to allow interest on deposits directly or indi- were then upon motion laid on the table, for the
rectly, providing all the banks composing such associa- purpose of receiving the report of the committee
tion shall concur in said agreement; and whereas, entire appointed to consider "the measure of each bank
unanimity has thus been so nearly expressed as to render holding at all times not less than a certain fixed
it in our opinion desirable to carry that agreement into percentage of coin to its liabilities.77
practical operation; therefore
Mr. Silliman presented the following report,
Resolve, That we on behalf of our respective institutions,
viz:
do agree to waive the condition which requires the concurrence of all the banks to said agreement, and we bind
The committee to whom was referred the subject of the
ourselves to adhere to the same in all respects as if it were "proper ratio of specie to be hereafter held by the banks
so signed by every member of the Clearing House Asso- in the city of New York, in regard to their liabilities"
ciation.
respectfully report that they do not propose to go into an
Resolve, That in order more effectually to accomplish a elaborate examination of the expediency of an increased
reform, which we believe is demanded alike by the best and equal ratio of specie, deeming that the experience
interests of the commercial community and our own, we of the past year has sufficiently demonstrated the neceshereby appoint a committee of five members, to whom shall sity of both; but intend to confine themselves to the
be communicated all information touching the practical statistics bearing upon the subject, prepared with much
working of this agreement, and who shall be required to labor from the records of the clearing house by Mr. Lyman,
convene the parties hereto for mutual counsel and protec- j the manager.
tion, by written notice, whenever in their opinion the oper- ; It would appear from these records that after deducting
ations of any bank or other causes makes it necessary; and | exchanges the average net amount of the liabilities, conWhereas in the opinion of this association, it is impracti- sisting of deposits and circulation, for the year ending
' cable for any institution in this city, engaged in the busi- July 28, 1855, was 863,032,146, and the average amount
ness of legitimate banking, to pay interest on deposits, of specie thereon was 22J per cent, or $14,144,527.
and at the same time carry the relative proportion of
specie reserve, which experience has proved to be re- For the year ending July 26, 1856, net liabilities
$71, 254,052
quired, for its own safety and public good: Therefore
13, 390,193
Resolve, That, in furtherance of the end proposed, by our Average of specie, 18J per cent
agreement to discontinue the payment of interest on For the year ending July 25, 1857, net liabilideposits, and in accordance with the recommendation of
ties
74, 354, 345
the report of the committee on that subject, we also agree, Average of specie, 16 per cent
11, 885,647




AI-RII, 1.

1918.

FEDERAL RESERVE BULLETIN.

287

As the ratio of specie held by the different banks has . which is not yet ready to be consolidated into lixed capital
been by no means equal, the committee have deemed it i or immovable forms. The custodians of such funds are
expedient to separate three of the banks holding the largest consequently bound by the very nature of their trust to
reserves from the rest, not with any invidious intent, but ! preserve them in their integrity and to apply them only
simply that the ratio held by the banks in general, may ; in such ways as will prevent them from falling into inbe more fairly indicated.
i activity and also to hold such proportion in ready cash
Of the above sum in 1855, three banks held on their net in hand, as -ong experience has proved to be necessary,
liabilities §3,942,178, or 36 per cent; while all the remaining ! to meet immediate demands in every possible emergency,
banks held 810,202,349, or 19J per cent; in 1856, the same > And it may be confidently affirmed that a bank or banker
three banks held 83,777,331, or 30 J per cent; the remaining . who faithfully meets all these obligations renders a full
banks held 89,612,862 or 10-J- per cent; year ending July, j equivalent for any benefits which can be honorably
1857, the same three banks held 83,208,874, or 27f per ! derived from the custody of such a trust.
cent; the remaining banks held 88,610,773, or 131- per cent;
No institution can, in the long run, purchase deposits of
and from that period to March 6, 1858, the same three ! money payable on demand of the owners, and at the same
banks have held on their net liabilities $5,634,358, or 44J j time secure to itself a just and proper compensation for the
per cent; while the remaining have held §14,867, 268, or \ business, without violating some of the conditions indis261- per cent.
j pensable to the public safety. It must either use them in
It would be easy for the committee to demonstrate the | ways that are illegitimate and perilous, or use them in
necessity of a larger reserve of gold than that heretofore \ excess. This has been abundantly proved by innumerable
held, but they conceive that the rapid transit of the pre- : instances in years past, and the practice of paying interest
cious metals from their depositories, through the influence for such deposits was unanimously condemned by the bank
of steam conveyance, under telegraphic instructions, will, officers in 1857 as one of the principal causes of the panic
of itself alone, present to the minds of bank officers suffi- at that period, for the reasons given in a printed report, of
cient reasons for the requisition of a stronger base than that which a copy is annexed hereto, and to which, with the conon which they have hitherto rested.
sequent resolutions of the associated banks then adopted,
The committee propose that on and after the
day of : your committee most respectfully invite attention.
April next the banks in the city of New York shall by a
The creation of many new institutions since the late
written instrument, under the sanction of their various Civil War began which have considered it expedient to
boards of directors, bind themselves to hold at all times ": purchase public favor and thus divert to themselves
a ratio of not- less than 20 per cent in specie upon their net | business from established channels, has revived the cusdeposits arid circulation, the dictinct meaning of the . torn of paying interest upon deposits, and has also led
term ''deposits7' to be denned by a committee duly ap- i some o.f the older banks in self-defense to yield more or
pointed for that purpose to insure uniformity thereon.
! less to the pressure in the same direction, while it has
Tho committee further recommend that at an adjourned ! induced others to adopt newer methods of obtaining
meeting, aiter duly considering tho subject, the bank patronage equally pernicious.
officers shall come fully prepared to sign such instrument.
And thus a sharp and degrading competition has not
; only prevailed among banks in this city, but has been
ACTIOX OF 1873,
i excited as a necessary consequence in other places, where

In 1878 a committe appointed by the New !
York Clearing House Association "to carefully i f r o m a l l claBSefl of s o c i e t y < B a n k s ^i-oughout the country
consider and report what reforms are required : have been aroused to enlist in the same destructive pracin the practical operations of banks with each tices toward each other and in defense of their various
other and with the public to increase the localities. A premium has been unnecessarily given for
which, left to itself, would fall without cost into
security of their business/' reported in part as business
its natural channels and adjust itself to such localities as
follows, viz:
| the convenience of the people and the best interests of the
That in order to reach the object sought by the resolution it is necessary briefly to review the condition and
practical working of the banking system in this city before
the commencement of the late panic.
Banks are the natural depositories of the current capital
of the Nation, passing into and out of active industry and
commerce. The balances held by them are for the time
specially reserved by their owners from permanent investment and kept subject to immediate command. They
constitute a main portion of the wealth of the community




country require.
Without such rivalry the resources of the Nation would
be so di ffused among the banks as to give increased financial strength and stability to every part, and not only
remove a great cause of irritation, but add to the comfort,
efficiency, and profit of all.
The evil results of paying interest upon current deposits,
avowed when the internal commerce of the Nation was
conducted upon a specie basis, are greatly aggravated
; when it is carried on by an irredeemable currency, which

288

FEDERAL EESEEVE BULLETIN.

APRIL 1,

1918.

has a fixed and invariable volume, and which flows to and and were it not for the fact that several of the 48 banks are
from the commercial center with the changes of the seasons. more or less involved in the same practice, this disparity
Such a currency is superabundant in summer, and instead would be still more apparent.
When the late panic commenced, the 60 banks composof being then naturally absorbed and diminished by redemption, it accumulates in banks, which can not keep it ing the New York Clearing House were indebted for about
idle without loss of the interest paid to its owners. Legiti- two hundred millions of deposits. Of this amount three
mate commerce does not then demand it. It is still subject institutions (paying interest to their country depositors)
to instant call. There is consequently no resource but to owed about fifty millions, and including these, 12 banks
loan it in Wall Street upon stocks and bonds, in doing of similar character owed about one hundred millions;
which so much of the Nation's movable capital passes for that is to say, 12 institutions held one half of the aggregate
the time into fixed and immovable forms of investment, deposits, and the other 48, their associates, the other half.
and its essential character is instantly changed. Loans are The proportionate reserve of legal-tender notes in the
made with facility upon securities which have no strictly associated banks was also greatly in favor of the latter
commercial quality, new and unnecessary enterprises are number for the obvious reason that banks which pay
encouraged, wild speculations are stimulated, and the interest upon money can least bear to have any amount of
thoughtless and unwary are betrayed into ruinous opera- it idle. The active demand first came, as it usually comes,
tions. The autumnal demand finds the resources of the Na- for that portion of deposits due to country banks, who, in
tion unnaturally diverted from their legitimate channels, addition to their annual necessities, had been disturbed by
and they can only be turned back with difficulty and public failures of several city bankers, holding large balances of
embarrassment. Such has been our well-known experience money due to the interior. These deposits were to a great
year after year. Interest upon money has, as a conse- extent loaned upon stocks and bonds in Wall Street,
quence, fluctuated widely from 3 and 4 per cent per annum payable "on call," with the confident belief that they
in summer to 15 and 20 per cent in the fall and winter upon were there earning more than the interest paid for securing
commercial paper, and aipon stocks at times to one-half them, and were available as promised. But, from the
and even 1 per cent a day. Vicissitudes like these are very nature of the case, the rapid withdrawal of deposits
utterly destructive to all legitimate commerce, and insti- from the banks made the "call" from every direction
tutions whose operations tend to such results are enemies simultaneous, and closed every resource from which the
"Street" derived its power to respond. Borrowers upon
to the public welfare.
Deposits which are derived from strictly commercial stocks were deprived both of their facilities of borrowing
operations can not fluctuate so widely from time to time and of all power to sell their securities. The necessary
as to produce disturbance in the community, and banks result occurred. Banks which found themselves in this
which confine their business to them, as they naturally dilemma had no alternative but to ask the assistance of
arise, are always reliable and regular in their treatment of their associates, and the conflagration was so rapid and
their dealers, and can be conducted with ease and com- violent that every consideration of fraternal sympathy,
fort to their managers and safety to the public. On the self-preservation, and public safety compelled a general
contrary, deposits which] are purchased by payment of and earnest cooperation; and the majority, who had for
interest, or otherwise, and which must therefore of neces- long years conducted their business upon sound principles,
sity be largely loaned u on demand," are the cause of and who had patiently submitted to the loss of valuable
continual agitation and solicitude to those who hold them accounts, drawn from them by their associates, by pracin charge. They are certain to be withdrawn at the tices against which they had continually protested, inseason of the year and at the moment most inconvenient stantly responded to the call by placing their resources at
to the banks and to their dealers. This fact is best command of those who had done so much toward producing the calamity, making common cause, the weak with
illustrated by the following figures:
the strong, to avert a universal catastrophe.
The average deposits of the 60 clearing-house
An expedient was found by which the stronger banks
banks for 10 weeks from 5th July to 6th
placed
themselves under the unequal burthen, and equalSeptember were
$232, 228, 000
ized the pressure, by gathering in their resources and
The lowest amount reached since the panic
was
143,170,000 placing them at the disposal of the weaker, who were thus
furnished with means to meet the demands of their deposiShowing a total reduction of
89,058,000 tors and to save themselves from public exposure and
their dealers in city and country from disaster and ruin.
Of the above amount during
Meanwhile the public confidence in institutions had
the 10 weeks, 12 interestbecome so greatly impaired that the "legal-tender reserve"
paying banks held
§111, 585,000
The lowest total reached by
was reduced from thirty-four millions, on the 20th Septemthem since the panic
52, 669, 000
ber, to five millions eight hundred thousand on the 14th
October, an amount of ready money never before paid out
Showing a loss in 12 banks of
58, 916, 000 in the same time. Interior banks, whose ready means in
And in the other 48 banks of
30,142, 000 hand had always been merely nominal, but whose re-




APRIL 1, 1918.

FEDERAL RESERVE BULLETIN.

289

sources consisted chiefly of credits upon the books of sudden contingencies, and which is, therefore, in its very
interest-paying banks in the principal cities, were under nature, a variable quantity. It is impossible clearly to
the necessity of calling back their deposits in a medium prescribe by statute the circumstances or the exact periods
never before required, and to these the associated banks during which the reserve should be increased or diminished.
were asked to respond, as well as to the demands of timid There seems an intrinsic absurdity in a law requiring that
dealers at home.
a "reserve" must be always kept, which was created on
Your committee take this occasion to congratulate the purpose to be used, or that a bank officer who draws upon
associated banks upon the liberal and excellent spirit in his reserve, under circumstances for which it was intended,
which this crisis has been met, and upon the happy escape is false to the oath which he takes to obey the law. But the
from a most imminent danger which threatened them, and j fact that a military commander can not be definitely inwith them, the country at large. It is not too much to say ! structed when he may employ his reserve force is not re*
that had it been less boldy, promptly, or unanimously en- ! garded as a reason why that important portion of an army
countered, the results must have been more disastrous j organization should be abandoned or be reduced in number
and widespread than any that have occurred during the i or efficiency. So long as bank debts are subject to cash
present generation,
| payments, so long must the obligation be either imposed
While the banks have intelligently recognized the errors or assumed of keeping sufficient cash in hand to pay whatof their associates, by which the late financial complica- ever portion can possibly be presented. It must always
tions were aggravated and the community imperiled, there be remembered that, in the absence of any important cenhas been no disposition whatever to deal in harsh re- tral institution, such as exists in other commercial nations,
proaches. On the contrary, the magnitude of the trust is the associated banks are the last resort in this country, in
deeply felt, and the utmost good feeling prevails; an times of financial extremity, and upon their stability and
earnest desire and a unanimous determination are ex- sound conduct the national propspeity greatly depends.
pressed on every side to reform existing abuses and to In claiming for them that, in taking faithful care of the
reorganize the clearing house upon a basis of mutual active capital of the Nation with which they are intrusted,
they render a full and equitable compensation for its proper
support and uniformity of business.
Late experience has again demonstrated the fact that use, your committee point to the consequent and parathe banks in the association are necessarily dependent mount duty of the banks to hold such proportion of that
one upon the other in times of peril, as well as in fund in actual possession in cash as the extremest needs
the trusts which the large operations of the clearing may demand.
house daily impose, and that the entire body inevitably
It has been suggested that the Federal principle which
suffers from the errors and indiscretions of a single member. our association has applied to banking, through the use of
No institution, therefore, has a moral right to conduct its "loan certificates" in two important crises, might be used
affairs with the public in defiance of the general conviction effectively in regular business, by keeping two separate
of its associates, or to introduce private terms of dealing accounts, /iz, "cash" and "bank credit," each payable
with its customers which are in conflict with the best in kind, to avoid a "run " upon banks in time of panic; and
interest of all. Bank officers have no right to be sharp, much speculati /e study throughout the world is gi /en to
personal competitors for public patronage, nor merely the question how the idea of "clearing" as used through
laborers for dividends on behalf of a limited constituency. banks may be indefinitely extended to effect the smaller
They are in a most important sense trustees for the whole exchanges of the community so as to dispense in a great
community, and public administrators of great interests, measure with large reserves of ready money. But in the
which forbid the least departure from principles which present condition of economic science, and especially in
long experience has sanctified.
this important exigency, your committee recommend that
With these general considerations your committee we accept the teachings of practical experience, and purproceed to the more practical questions submitted to sue the well beaten track which trade and commerce unithem, viz, "What reforms are required in the operations versally recognize.
of banks with each other and the public to increase the | Experience of older commercial nations has shown that
security of their business?" and, first and most prominent, j the volume of "reserve>? should be in the proportion of onethey recommend that the banks entirely discontinue the | fourth to one-third the direct liabilities of a bank, and
payment of interest upon deposits, whether directly or j whenever it is there found receding from this amount, reindirectly.
| strictive measures are taken to replenish it. Our own
THE 11ESSRVE.
' association in 1857 established a minimum ratio of 20 per
The requirement of a "legal reserve" is now engaging cent in coin, which was for the time carefully observed,
special public attention, and much impatience is expressed and again in 1860 increased this minimum to 25 per cent.
at the lav/ which compels banks to hold a definite ratio of j The present abnormal condition of the currency increases
legal-tender notes to liabilities. The practical difficulty : the difficulty inherent in this subject. The law permit?
consists in attaching a rigid and inflexible rule of law to a the reserve to consist of coin and legal-tender notes, and
mobile fund, which is held for "the purpose of meeting j at the same time compels banks to receive as money the




290

FEDERAL RESERVE BULLETIN.

A P R I L 3, 191.8.

If the legal or financial necessity exists to maintain a
notes of national banks, which in legal payments are not
money; so that, for practical uses as "reserve," we are certain reserve, it is manifestly the duty of every institutroubled by a species of money which is above, and by tion to carry its just proportion, and no bank, whether
another which is below the standard quality. And it incorporated under national or State law, can honorably
affords a striking commentary upon our present anomalous ; evade its full share of this burthen.
condition, that the money of the world, which is now freely ; Your committee therefore recommend that all the
coming into the country from legitimate commerce, can not ; associated banks, while they strictly follow the requirebe absorbed into our banking system, but is necessarily ments of the national currency act by keeping on hand,
repelled as a cause of serious embarrassment. The opinion either in coin or legal-tender notes,'an amount not less than
that has largely prevailed, that because the business of , 25 per cent of their total liabilities to the public, be
this country is now conducted upon a basis of irredeemable , required always to hold at 15 least per cent in legal-tender
paper, that therefore there can be no suspension of pay- notes, subject only to such modifications as the clearingments, has been most effectually dispelled, and the con- house committee may, from time to time, unanimously
trary is established, that a currency from its nature limited determine.
in volume is subject to sudden and special dangers, and
A suggestion has been made, which your committee
therefore requires special protection. Recent experience consider worthy of notice, because it has heretofore proved
has shown how rapidly thirty-four millions may be with- an important restriction to excessive expansion, and
drawn from our associated institutions, and. for practical because it may assist in preventing many of the evils
uses, how inadequate is the reserve held by country banks. referred to—that no institution be allowed to loan more
That reserve, as fixed by law, is 15 per cent of liabilities, than two and a half times its capital and surplus.
and three-fifths of it may consist of deposits in banks in the
larger cities, who may subdivide it by placing one-half
COMMITTEE OF 1884.
their own reserves in banks in the city of New York, where
again it is subject to a further reduction, form the fact that
On July 29, 1884, a special committee of the
these last are only required to hold 25 per cent of their own Now York Clearing House Association, after
liabilities, of which these deposits form part. The
very careful investigation of the deposit
aggregate held by all the national banks of the United
States does not finally much exceed 10 per cent of their question, prepared the following majority
direct liabilities, without reference to the large amount of report, viz:
debt which is otherwise dependent upon the same reserves.
That while they substantially concur in the recomWhen we consider that a portion of this final reser te may mendations of the committee in its previous report, they
consist of coin, which, under present circumstances, has have endeavored to remove some of the objections made
no practical power in an extremity, and a further fact that during the discussion, so as to secure what they consider
the interest-paying banks, which have always held the very desirable—a cordial and unanimous adoption of
larger part of those reserves, have been forced by their these reforms by the whole association.
position continually to disregard the law, it is manifest
The most important and, in fact, the special reform
that the requirement, in its real operation, has not worked which is essential to the-efficient and harmonious union
against the public welfare or against the true interests of ; and cooperation of the banks in one association is the total
the. banks themselves.
abolition of the payment of interest upon current deposits.
The abandonment of the practice of paying interest
This reform has been urged upon the banks from time
upon deposits will remove a great inducement to divide to time for more than 25 years and it has always received
these reserves between cash in hand and deposits in cities, the most favorable consideration. Upon two special
and make the banks throughout the country what they occasions after violent financial revulsions throughout
should always be. financial outposts, to strengthen the the country, like the present, it was adopted by almost
general situation. The associated banks of New York, the unanimous agreement, and in each instance it failed .of
ultimate resource in financial emergencies, are deprived by becoming a binding obligation only by the dissent of two
usury laws of the power, which is so effectively used by the or three members whose active opposition was unfortuprincipal banks in Europe, of protecting or augmenting nately permitted to defeat the wishes of the very large
their resources by adjusting the rate of interest to the majority.
necessities of the occasion, a power which, if practicable,
Your committee believe that the careful custody of
Congress might safely confer upon the clearing-house com- money held in such a manner as to be always responsive
mittee, in consultation with the Secretary of the Treasury, to call is itself sufficient compensation to its owners and
with great advantage to the country; as also the power of depositors, and that banks which carry their full propordeciding when the time or the emergency has arisen in tion of the reserve cash of the Nation and at the same time
which the public interest requires a relaxation of the rigid preserve their assets in legitimate commercial securities
legal requirement in respect to the reserve to be held by render a just equivalent and furnish a perfect guarantee
banks in New York City.
for the trust committed to their care; and that any further




1, 1918.

FEDERAL BESEB-VE BULLETIN.

291

consideration or compensation than this must be given
Although this has been the practical experience of the
either at the expense of the needful reserve or of the safety New York Clearing House Association, and although in
of the investments. The proportion of cash to deposits, every great emergency since its organization it has proved
which from long experience} conservative institutions in itself possessed of vast capacity to benefit the country
national commercial centers find it expedient to hold, and protect its own members, yet it must ever be kept
is at least from one-quarter to one-third the amount. It in mind that this is simply a voluntary association, submust be evident that at the average rate of interest this ject to dissolution by a vote of the majority, and subject
ratio can not be maintained by any bank where com- also to the withdrawal of members at their own pleasure.
pensation is given for its deposits.
From the nature of the business, no bank, however prosThe responsible duty of holding and maintaining the perous, is so independent of all circumstances that it may
ultimate cash reserve of this great Nation is especially not on some special occasion find it convenient to seek
imposed upon the associated banks in New York, and the aid or the consideration of its colleagues. A solemn
from doing its full part of this imperative duty no one can obligation, therefore, rests upon everyone to concede
honorably escape. They are all so inextricably bound something to the common good. If the measure not
together by the daily transfer of portions of the Nation's proposed should, upon trial, prove erroneous, it may be
deposits from one bank to another, by the difficulty of revoked as readily as it is adopted.
recovering checks upon defaulting members after they
With the rapid growth of this Nation it is more and more
pass through the clearing house, by the universal distrust important that this commercial depository be always kept
which one failing institution casts upon its associates, specially strong in cash reserves, and be prepared to meet
and by the urgent demand made upon the stronger in any sudden exigency that may arise within our vast
time of trouble to combine their resources for the protec- domain. When the intention to do this is distinctly detion of the weaker to avert public disaster, that an iden- clared by the associated banks, by their abolishing the
tity of interest is created by the very existence and neces- payment of interest upon deposits and by thus removing a
sities of this association. This organization can therefore great cause of weakness and of alienation among them,
no longer be regarded as a simple place of meeting of bank your committee believe that capital will be attracted to
officers, without responsibility for and utterly independent this city and to this associated body as a place of special
of and indifferent to each other's welfare and habits of security. Thus it has proved with those members who
business. These banks, as custodians of an interchange- have tried it. If a small proportion of the deposits hitherto
able public trust, have practically and within certain secured by purchase be consequently drawn away to
limits become a federative community, with mutual other institutions within this city, or to other places withresponsibilities and obligations, and it is no less the out it, that which remains will be more permanent and
privilege than the duty of the members to conduct their reliable, and will be sufficient to make our business safer
own business and the scrutinize the practices of others and more profitable than before.
with a view to the stability of this association and the
If it results in the retention of a larger cash reserve by
welfare of the Nation.
interior banks, or in the withdrawal oi those funds which
This view of the mutual relation of members was fully are particularly subject to alarm and which betray the
recognized in the recent action of the association, when depositaries into questionable temporary loans, it can be
they took possession of one of the largest institutions and no cause of regret to the banks nor to the Nation.
The present occasion seems to your committee most
discharged its liabilities to the public of some $8,000,000,
and when they further agreed to participate in any loss opportune for this reform. The subject has been ripening
by the issue of loan certificates to that and to other banks; in this association for more than a quarter of the century.
and also when they so changed the constitution as to per- | The business of the Nation requires the financial support
mit official visitation and examination into the condition i which this united and compact body can give it, and the
of members, and gave power to demand security for their experiment, if it be an experiment, ought now to be
fairly and honorably tried.
exchanges.
To their special and important recommendation of
Powers so great and so important as these, which have
been exercised and concurred in by every member, are ceasing to pay interests upon deposits your committee
sufficient to show that this association no longer regards have added but one more, viz:
That of confining the use of the clearing house exclusitself as a simple meeting place for the exchange of papers,
without further responsibility, but that it has become an ively to its own members.
Hitherto the practice of permitting exchanges through
institution of national significance and value, competent
members of the association of checks drawn upon parties
to consider any question vital to its own interests.
If the association can thus promptly meet the necessi- not members has freely given every facility enjoyed by
ties of a great financial crisis, it may certainly venture to those who carry the burthens of the banking business to
urge upon its members the importance of such reform in those who do not, and who neither fairly participate in its
their modes of business as they believe will tend to pre- expense nor in its responsibilities. Such parties, therevent such a crisis, and will enable them the better to meet fore, possess advantages superior even to banks who
created and v.rho sustain the institution.
<me if it comes.




40615—18

T

292

FEDERAL RESERVE BULLETIN.

APRIL 1, 19 IS.

In order effectually to secure the object of strengthening ; "There are three special abuses to which I desire for a
the association as proposed in the first recommendation of I moment to call your attention.
your committee it is manifestly necessary to witnhold ; "First. The payment of interest upon deposits oi:
gratuitous facilities from active outside competitors, : money payable on demand. This subject has upon
who would otherwise use our own appointed instrument ; several occasions in years past been under consideration,
to subvert the object we have in view. If desired, every and its total abolition has been almost unanimously
legitimate depository possessed of the needed requisites • agreed to among our banks by written contract. Yet by
and responsibility may find entrance into the clearing i the refusal of one or more members it has failed to become
house subject to the same conditions and restrictions as j a binding obligation. Like some other great reforms,
are imposed upon existing members. More than this ; this one does not admit of partial application or of comcan not be justly required, and less will not afford adequate | promise. Any attempt to make exceptions to the pro1
protection.
hibition among partners mutually dependent can only
In respect to the subject of receiving upon deposit as result in entirely releasing them all from any obligation
cask checks drawn upon places out of the city, your com- . respecting it. Yet every banker will freely admit that
mittee have thought it inexpedient now to make special the purchase of deposits payable on demand operates, in
recommendation, but they suggest that a separate and some degree, as an absolution of the obligation to be
special committee be appointed to investigate this ques- ; always in condition to meet the contract. Both the giver
tion, and also to advise whether an arrangement could : and receiver of interest on such deposits, by the nature of
not be made through the clearing house to secure some i the business, substantially, though not expressly, agree
safe and prompt clearing of such checks, which will i to such use of the money as may prevent its immediate
;
return.
accrue to the benefit of all banks in the association.
Finally, your committee can not disregard the just ; "What, Mr. Chairman, is the nature of bank deposits?
complaint of the banks respecting the large volume of j Every responsible person in regulating his own affairs
checks which arise from transactions in the stock exchange, ! must withhold from permanent investment and keep in
and which embarrass them in their dealings with each I ready money enough for his current wants. This is his
other and greatly increase the risks of the clearing house. i reserve. When such sums, for greater safety, arc placed
The committee, however, content themselves by the i in charge of another person, they do not lose their essential
simple expression, of the wish generally entertained j character; and when they become further aggregated and
among the banks that some arrangements may be made j pass into the possession of a bank or banker they are still
by the parties interested to establish a special clearing- subject to the same immediate wants of every original
house for stocks, so that these large checks may be abated. owner for the very purpose for which he set them aside.
With these general remarks your committee present And when these rivulets of capital, become streams, and
| streams gather into rivers and flow toward the ocean
the following summary:
First. That no member of the New York Clearing House j until they reach this city, where they come into financial
Association shall pay interest upon or allow compensation relations with other men in other continents, the parties
who here take them in charge assume new and accumutor deposits after January 1, 1885.
Second. That to secure uniformity in the business of the lated responsibilities. They are subject not only to the
banks no checks shall pass through the clearing house necessities of the people at home but also to the world| wide influences of commerce.
except those drawn upon members of the association.
Third. That any infraction of the above rules shall be
"Now, there is a constant and irrepressible conflict
regarded as a forfeiture of membership of the association, going on in the mind of every intelligent man or woman
subject on complaint of any member to investigation by between the desire to invest their own capital so that it
the clearing-house committee, in the manner provided in may earn them the utmost revenue and the necessity oi
the constitution.
retaining enough of it in ready cash to meet their current
Fourth. That the association recommend that some necessities. This question decided, each for himself, that
mode of settlement of transactions at the New York Stock portion of the total which is thus reserved becomes charged
Exchange be adopted, whereby the large volume of with peculiar functions. It is the national reserve, and
checks which now pass through the clearing house from the chief cause of financial disturbances arises from tresthat business may be diminished or avoided.
passing upon it.
Fifth. If these measures be adopted by the association,
"Is it not evident, Air. Chairman, that when these
that the committee recommend the same to clearing- reserves are attracted by banks and bankers who pay
houses in Boston, Philadelphia, Chicago, and other cities. interest for them, they immediately lose their peculiar
and become, so far, at once changed from
In urging the adoption of some action similar character
reserves into investments, and that their original purto that contemplated in this report, Mr. George pose is greatly reversed? The people's ready cash, by
S. Coc, president of the American Exchange the very condition of receiving interest for it, necessarily
passes through the banker into fixed forms never intended.
National Bank, said in part:




APRIL 15 1918.

FEDERAL RESERVE BULLETIN.

293

Keserve and investment! Idleness and work! They are their colleagues in business, while at the same time they
adverse and irreconcilable conditions. It is true that in are continually held up as patterns of enterprise and as
the hands of sound commercial banks some of these models for imitation. Differing so widely from their
deposit funds may be legitimately used for the best in- associates in principle and in practice the two can not
terests of society, in the negotiation of business notes work harmoniously together, nor equally and honorably
representing articles of human want and subsistence, share the burdens of a national financial system, whose
passing from production into consumption. This is using stability requires the New York banks voluntarily to
the fund hy promoting the very object for which each stand firmly and compactly together as one united body.
person originally provided it. But such, we all know,
"Experience among ourselves has again and again
is not the tendency nor the operation of the practice now proved that the interest-paying banks are the first to
in question, Money payable on demand with interest become embarrassed by any kind of financial disturbance,
is chiefly loaned here upon fixed property intended for even if they themselves are not the means of producing
permanent investment and upon bonds, stocks, and it, and that they are then almost alone in being compelled
other obligations made for the construction of public to sopk protection from the loan committee, by a pledge
enterprises and works of established purpose, whose large of their securities.
expenditures are not again resolvable into money. They | "Will a few members of this association, on the one
are in their nature fixed, and they demand, not their hand, longer continue a practice that subjects them to
ready cash reserve, but the permanent savings of the this humiliation? And is it just, on the other, for a large
people to construct them. So that temporary loans of majority to tacitly submit to having their business thus
reserved capital upon such securities are certain to be drawn away, and the community periodically disturbed
called in when they are hardest to pay. because the by associates whom, in the hour of peril, they are comready-money reserves so injudiciously absorbed by them pelled for their own protection to support?
are called back by their owners in apprehension or for
"There is no necessity whatever, as there is certainly no
the supply of their own needs.
profit, for the banks in the New York Clearing House to
"We all know by experience that those deposits upon continue this practice. Public safety, business conveniwhich interest is paid are the most fugitive and evanes- ence, and social needs all absolutely require the service
cent of all. Those who placed them with us well under- which these banks perform. The commanding position of
stand their danger. While they receive interest, they do this metropolis will constantly bring to it all the capital
so with doubt and suspicion of those who allow it, and that healthful commerce and trade can safely employ, and
with the consciousness that they themselves are partially any fictitious attractions only tend to false estimates of
compromising principle in placing them with those who wealth and betray the community into unprofitable and
are willing to pay the price.
dangerous enterprises.
"From the very start the vicious practice of paying
"If the banks composing this body should unanimously
interest for the custody of the people's cash reserves agree to totally abolish this practice, the business of each
pursues such funds like an enemy from place to place would not seriously diminish, because no dealer could
and impairs their integrity at every point. And when secure better terms by changing from one member to
those deposits have at last concentrated in New York another, and even if in the course of time the disparity
banks, the same evil overtakes them there, all tending between the banks in deposits should consequently not
to the reduction of tangible cash assets to the lowest continue as great as now, the loss by any one in volume
point, and to the weakness and impoverishment of the would be more than compensated by a gain in terms and
whole country. Arrest this practice here, at the termina- by diminished risk, labor, and expenses.
tion of the line, and the reform will, of necessity, run
"Taken as a whole, whatever the banks composing this
back through every link of the chain in other cities, adding association pay to their dealers and correspondents as
strength to the whole to the incalculable benefit of the interest is a totally unnecessary and gratuitous payment.
nation. Every institution that accepts the reserves of It is worse than money thrown away so far as and because
the community, agreeing to return them upon instant it tends to divert the current of capital of the country
demand, gives a full equivalent in their faithful care. from its natural flow. If it be expedient for one member
It is in duty bound to retain so large proportion of such to practice it, it is expedient for all, and then the special
deposits, in actual cash, that no other compensation can and selfish advantage to any single one is lost. If it should
be safely allowed. Any such payment should be taken be continued after our recent experience, it must be disat once as a confession that the fund is to be used in some tinctly recognized as a defect in our financial system and
manner inconsistent with its real nature and is to be a standing cause of contention and of sharper competition
placed more or less in peril. Deposits so unnaturally among banks in their pursuit of public favor which must,
attracted are necessarily capricious and transitory. They separate the two classes of institutions into known and
fly away at the first whisper of danger, to the detriment irreconcilable divisions.
of the many who have touched them. Those banks
" I n the business indirectly done through the New York
which so purchase them are objects of special dread to Clearing House there enters another element which it is




294

FEDEBAL RESERVE BULLETIN.

also proper for us to consider as affecting the stability of
the whole system. The trust companies and other depositaries of funds, very much of which are payable on
demand and bear interest, are receiving the full benefit
of this association through the medium of one or another
of our members, and so they successfully compete with
us all. They thus secure every facility of exchanging
their checks with all the banks and are hj that means
enabled to divert to themselves a large proportion of the
current deposits of the city and country, which have
always been regarded as a special function of banking
institutions. Instead of being trust companies in the real
meaning of the term, many of them are banks of deposit
paying interest. This large volume of deposits is not only
in much greater ratio to capital than are the deposits in
banks, but it is supported by no special cash reserve of
its own whatever. The only ready means it has consist
in keeping current balances at credit in banks like other
dealers. It thus leans upon the same reserve as do the
banks themselves. If such institutions are to enjoy the
privileges of the clearing house, they should certainly at
least bear the same burdens which rest upon its members,
and also contribute their full share of the reserve funds in
cash by which the stability of the business is maintained.
By a strange generosity on the part of the Clearing House
Association it enables these lively competitors to do their
business with the public upon better terms than they can
do their own, while they do not contribute to the public
safety.
"Second. Another abuse to which I invite your attention is that of receiving and crediting to dealers as cash
in hand checks drawn upon banks out of the city. The
aggregate amount of such checks in progress of collection
by all the members of this body is not less than ten millions, and may average fifteen or twenty millions.
"These checks can not be converted into cash here in
less time than one week, and for that period they remain
as dead assets to the banks. How did this absurd practice arise? Simply by the eagerness of one bank to draw
to itself the business of others by superior inducements,
an advantage which, in the nature of the case, could be
but temporary. Others, in self defense, were necessarily
compelled to follow the pernicious example, until the
practice became general. But for this practice this
large sum would naturally lie as deposits in New York
banks from their correspondents throughout the country,
held here for the purposes of exchange. They are not
expelled from their natural commercial resting place, and
their true position is actually reversed.
"Third. There is still another subject of solicitude with
which we are all daily familiar. I allude to the reception
of checks of large amounts, drawn upon banks which
particularly deal with brokers and operators in bonds and
stocks. The sums represented in such transactions by
the nature of the business are of great magnitude. The
custom has become established, of pivoting the operations
of the brokers' board through the banks by expressing




APRIL .1, 19;8.

and accounting for their money value in detail, thus
making it necessary to draw upon banks the immense
total that is passed from hand to hand. They give rise
to checks in sums greatly disproportioned to the capital
of banks which keep such accounts, and are the occasion
of constant embarrassment to bank officers, who desire
to treat their associates in the clearing house and their
own dealers with generous confidence, and mean at the
same time to avoid extraordinary risks. The effort has
been partially made to conduct this business by a clearinghouse arrangement where shares, not money or checks,
and only balances resulting from them are thus paid;
and it is the earnest desire of bank oflicers that this effort
should be accomplished. I believe that the experiment,
if seriously attempted, can be made successful to the
satisfaction of brokers, the relief and safety of the banks,
and the good of the community."

State Banks and Trust Companies Admitted.
The following list shows the State banks and
trust companies which have been admitted to
membership in the Federal Eeserve system
during the month of March:
Total
rosources.

Capital. ; Surplus,

Security Trust & Savings Bank, !
;
Billings,Mont
".
; 8100,000
$791,749
Rhode Island Hospital Trust Co., •
;
Providence, R. I
3,000,000 j 33,500,000 57,503,575
Harvard Trust Co., Cambridge, !
!
200,000 ;
100,000
3.963,641
First State Bank, Canyon, Tex. ..'<
25,000 |
'235,702
2,500
Union Bank & Trust Co., Baton i
Rouge, La
j
150,000 |.
150,000
First Territorial Bank. Lovington,
N.Mox
.i
30.000 ;
580,225
20,000
Walker Bros., IB ankers .Salt Lake: !
City, Utah
500,000 j 100,000
8,720,163
The Peoples State Bank, Imlay :
City, Mich
I
50,000 ;
10,000
619,337
Peoples Trust Co., Binghampton, !
500,000 ! 100,000
4,787,550
Merrill Trust Co.,"Bangor/Me.."..I
300,000 ! 400,000
5]453,820
Saline Savings Bank, Saline,Mich.!
25,000 I
Farmers Loan & Trust Co., Tip20,000
387,725
50,000 j
ton, Ind
State Bank of Madoh'a, Madolia,
45,000
719,866
50,000
Minn
;
Allegheny Trust Co., Pittsburgh, !
10,000
688,705
Pa
,
700,000
500,000
Liberty Trust Co., Boston, Mass, .j
200,000
1,261,620
Stewart State B ank. St, Charles ,111.!
100,000 ' 300,000
40,000 j 4,853,405
First State Bank of Pctoskey, Pe- i!
toskey, Mich
50,000
10,000 ]
153,605
Fidelity Trust Co., Portland, Me..
400,000
400,000
76,337
First Wellington Bank, Welling13,397,469
ton, Ohio
85,000
70,000 j
170,920
Illinois State Bank, East St.
Louis, 111
400,000
3,149,355
Anson State Bank, Anson, Tex...
35,000
270,110
10,000
Merchants & Planters Bank, Texarkana, Ark
j
200,000
10,000
1,130,085
Bank of Ellsworth, Ellsworth, j
Wis
:
50,000
914,576
15,000
Commercial Trust Co. of N. J.,
Jersey City, N. J
1,000,000 1,500,000 | 29,996,271
South Texas State Bank, Galveston, Tex
100,000
1,322,217
Rittenhouse Trust Co., Philadel50,000 I 2,000,231
phia, Pa
250,000

i

Capital.

Ballinger State Bank & Trust Co.,
Ballinger, Tex
Bank of Fergus County, Lewistown, Mont
Depositors Savings & Trust Co.,
;• '• Akron. Ohio
Marine Bank & Trust Co., New
Orleans, La
American Trust & Savings Bank,
Albuquerque, N. Mox.~
High land Park State Bank of Detroit, Siich
First State Bank, Franklin, Tex..
Battery Park Bank, Ashevilie,
N.C.
Manistco County Savings Bank,
Maiiistee, Micli
First State Bank & Trust Co.,
Hereford, Tex
State Savings Bank & Trust Co.,
Moline,ffl'.
Moline Trust & Savings Bank,
Molinc,Iil
Farmers Guaranty State Bank,
Jacksonville, Tex
Peoples Savings Bank & Trust
Co.. Moline. Ill
Williams Valley Bank, Williamstown, Pa
Nassau Comity Trust Co. Mineola,N.Y
Total:

295

FEDERAL KESERVE BULLETIN.

ArniL •

Total
Surplus. ; resources.

860,000

••512,000

!

8229,644

250,000

250,000 :

3,294,317
4,242,085

300.000

250,000

400,000

100,000 ,

506,207

100,000

40,000 j

601,196 |

500,000
30,000
100,000

100,000 '
7,500 •
100,000

2,648,586

100,000

100,000

2,069,897 |

50,000

25,000 j

300,000

100,000

225,000

85,000

50,000

:

7,500 !
i

250,000
50,000
100,000
11,415,000

150,000 |
44,000 i
75,000

increase, and particularly large reductions are
shown by the sixth, ninth, tenth, and twelfth
districts. In. respect to the liabilities, the
amounts are smaller than in February, 1917,
in all of the 12 districts, except the first and
third.
Failures during February.
Number.

9,725,519
213,996

1918
Hrst

868,611 j ff°f...
o QQn A An!' Fourth...
6,990,447
Fifth_
ixth....
3,316,953 S
Seventh..
Eighth...
373,455 Ninth..
4,325,468 TenthEleventh..
429,815 Twelfth...
1,981,862

Liabilities.

Districts.

Total.

1917

1918

139
153
65
93
51
43
161
67
30
32
41
105

93
204
65
90
58
114
141
90
51
51
50
152

538,100
685,010
839,038
903,625
634,509
279,989
814,311
423,386
298,000
308,987
288,227
016,000

980

1,165

12,829,182

1917
$657,828
3,891,882
470,444
1,461,654
934,923
1.098,938
1,871,188
770,013
375,790
680.471
518;042
3,886;680
16,617,883

8,658,500 181,916,215

New National Bank Charters.
The Comptroller of the Currency reports the
following increases and reductions in the numThree hundred and eighty-five State insti- ber of national banks and the capital of
tutions are now members of the system, national banks during the period from February
having a total capital of $255,224,800, total 23, 1918, to March 22, 1918, inclusive:
surplus of $337,611,576, and total resources
Banks.
of $6,248,072,077.
New charters issued to
12
Change cA name: The Alliance Trust & Guaranty Co., of Hackonsack,
N. J., a member institution, has changed its name to the Peoples Trust &
Guaranty Co. of liackensaek.

Commercial Failures Reported.
While commercial failures in the United
States last year were comparatively moderate,
the returns this year make a still better exhibit,
only 747 defaults being reported to R. G.
Dun & Co., in three weeks of March, against 861
in the same period of 1917. The record for
February, the latest month for which complete
statistics are available, is the most favorable
of any February since 1907, insolvencies numbering 980 and involving $12,829,182 of
liabilities. These figures compare with 1,165
reverses for $16,617,883 in February, 1917,
and, according to the statement specially compiled for the Federal Reserve Board, fewer
failures than last year appear in 8 of the 12
Federal Reserve districts, with no change
occurring in the number of defaults in the
third district. Only in the first, fourth, and
seventh districts was there any numerical




With capital of
Increase of capital approved for
With new capital of
Aggregate number of new charters and banks
increasing capital
With aggregate of new cap ital authorized
Number of banks liquidating (other than
those consolidating with other national
banks)
Capital of same banks
Number of banks reducing capital
Reduction of capital
Total number of banks going into liquidation or reducing capital (other than those
consolidating with other national banks)..
Aggregate capital reduction

$625,000
21
1,385,000
33
2, 010, 000
4
500,000
0
0
4
500,000

The foregoing statement shows the aggregate of
increased capital for the period of the banks
embraced in statement waa
2,010,000
Against this there was a reduction of capital
owing to liquidations (other than for consolidation with other national banks) and reductions of capital of
500,000
Net increase

1, 510, 000

296

FEDERAL, RESERVE BULLETIN.

Acceptances to 100 Per Cent.

APRIL '

Government Control of Railroads.

The act providing for the operation of railSince the issue of the March Bulletin the
roads
while under Federal control was signed
following banks have been authorized to accept
by
the
President and became law on March 21.
drafts and bills of exchange up to 100 per cent
Below
is
printed the text of the act in mil:
of their capital and surplus:
United States Mortgage & Trust Co., New York City.
[S. 3752.]
Bank of New York, N. B. A., New York City.
Citizens Bank of Norfolk, Norfolk, Va.
Mercantile Trust Co., St. Louis, Mo.
Bank of North America, Philadelphia, Pa.
United States National Bank, Portland, Greg.
Canal Bank & Trust Co., New Orleans, La.
National City Bank, Chicago, 111.
Fort Dearborn National Bank, Chicago, 111.
Drovers National Bank, Chicago, 111.
National Bank of Commerce, Baltimore, Md.
Citizens and Peoples National Bank, Pensacola, Fla.

An Act To provide for the operation of transportation systems while
under Federal control, for the just compensation of their ovrnors, and
for other purposes.

Be it enacted by the Senate and Bouse of Representatives of
the United States of America in Congress assembled, That
the President, having in time of war taken over the possession, use, control, and operation (called herein Federal
control) of certain railroads and systems of transportation
(called herein carriers), is hereby authorized to agree with
and to guarantee to any such carrier making operating
returns to the Interstate Commerce Com mission, that during the period of such Federal control it shall receive as
just compensation an annual sum, payable from time to
time in reasonable installments, for each year and pro rata
Fiduciary Powers.
for any fractional year of such Federal control, not exceeding
a sum equivalent a3 nearly as may be to its average
The applications of the following banks for
annual railway operating income for the three years ended
permission to act under section 11-k of the June thirtieth, nineteen hundred and seventeen. That
Federal Reserve Act have been approved since any railway operating income accruing during the period
of Federal control in excess of such just compensation shall
the issue of the March Bulletin:
remain the property of the United States. In the computation of such income, debits and credits arising from
DISTRICT NO. 2.
the accounts called in the monthly reports to the InterTrustee and registrar of stocks and bonds:'
state Commerce Commission equipment rents and joint
Union National Bank, French town, N. J.
facility rents shall be included, but debits and credits
arising from the operation of such street electric passenger
DISTRICT N O . 4.
railways, including railways commonly called interurbaus,
as are at the time of the agreement not under Federal conRegistrar of stocks and bonds:
trol, shall be excluded. If any lines were acquired by,
Peoples National Bank, Pittsburgh, Pa.
leased to, or consolidated with such railroad or system between July first, nineteen hundred and fourteen, and
DISTRICT NO. 5.
December thirty-first, nineteen hundred and seventeen,
Registrar of stocks and bonds:
both inclusive, and separate operating returns to the InterMadison National Bank, Madison, W. Va.
state Commerce Commission were not made for such lines
after such acquisition, lease, or consolidation, there shall
DISTRICT NO. 7.
(before the average is computed) be added to the total
railway operating income of such railroad or system for
Trustee, executor, and administrator:
the three years ended June thirtieth, nineteen hundred
First National Bank, Dana, Ind.
and seventeen, the total railway operating income of the
lines so acquired, leased, or consolidated, for the period
DISTRICT NO. 10.
beginning July first, nineteen hundred and fourteen, and
Trustee, executor, administrator, and registrar of stocks ending on the date of such acquisition, lease, or consolidation, or on December thirty-first, nineteen hundred and
and bonds:
seventeen, whichever is the earlier. The average annual
Central National Bank, Tulsa, Okla.
railway operating income shall be ascertained by the
Trustee, executor, and administrator:
Interstate Commerce Commission and certified by it to
First National Bank, Troy, Kans.
the President. Its certificate shall, for the purpose of
First National Bank, Cameron, Mo.




1918.

FEDEKAL BESBKVE BULLETIN.

such agreement, be taken as conclusive of the amount of
such average annual railway operating income.
Every such agreement shall provide that any Federal
taxes under the act of October third, nineteen hundred
and seventeen, or acts in addition thereto or in amendment thereof, commonly called war taxes, assessed for the
period of Federal control beginning January first, nineteen hundred and eighteen, or any part or such period,
shall be paid by the carrier out of its own funds, or shall
be charged against or deducted from the just compensation; that other taxes assessed under Federal or any other
governmental authority for the period of Federal control
or any part thereof, either on the property used under
such Federal control or on the right to operate as a carrier,
or on the revenues or any part th ereof derived from operation (not including, however, assessments for public improvements or taxes assessed on property under construction, and chargeable under the classification of the Interstate Commerce Commission to investment in road and
equipment), shall bo paid out of revenues derived from
railway operation while under Federal control; that all
taxes assessed under Federal or any other governmental
authority for the period prior to January first, nineteen
hundred and eighteen, whenever levied or payable, shall
be paid by the carrier out of its own funds, or shall be
charged against or deducted from the just compensation.
Every such agreement shall also contain adequate and
appropriate provisions for the maintenance, repair,
renewals, and depreciation of the property, for the creation of any reserves or reserve funds found necessary in
connection therewith, and for such accounting and adjustments of charges and payments, both during and at the
end of Federal control as may be requisite in order that
the property of each carrier may be returned to it in substantially as good repair and in substantially as complete
equipment as it was in at the beginning of Federal control, and also that the United States may, by deductions
from the just compensations or by other proper means and
charges, be reimbursed for the cost oi; any additions,
repairs, renewals, and betterments to such property not
justly chargeable to the United States; in. making such
accounting and adjustments, due consideration shall be
given to the amounts expended or reserved, by each
carrier for maintenance, repairs, renewals, and depreciation during the three years ended June thirtieth, nineteen
hundred and seventeen, to the condition of the property
at the beginning and at the end of Federal control and to
any other pertinent facts and circumstances.
The President is further authorized in such agreement
to make all other reasonable provisions, not inconsistent
with the provisions of this act or of the act entitled "An
act making appropriations for the support of the Army for
the nscal year ending June 30, 1917, and for other purposes/' approved August 29,1916, that he may deem necessary or proper for such Federal control or for the determination of the mutual rights and obligations of the parties to
the agreement arising from or out of such Federal control.




297

If the President shall find that the condition of any
carrier was during all or a substantial portion of the period
of three years ended June 30, 1917, because of nonoperation, receivership, or where recent expenditures for additions or improvements or equipment were not fully reflected in the operating railway income of said three years
or a substantial portion thereof, or because of any undeveloped or abnormal conditions, so exceptional as to make
the basis of earnings hereinabove provided for plainly
inequitable as a fair measure of just compensation, then
the President may make with the carrier such agreement
for such amount as just compensation as under the circumstances of the particular case he shall find just.
That every railroad not owned, controlled, or operated
by another carrier company, and which has heretofore
competed for traffic with a railroad or railroads of which
the President has taken the possession, use, and control,
or which connects with such railroads and is engaged as a
common carrier in general transportation, shall be held
and considered as within "Federal control," as herein
defined, and necessary for the prosecution of the war, and
shall be entitled to the benefit of all the provisions of this
act: Provided, however, That nothing in this paragraph
shall be construed as including any street or interurban
electric railway which has as its principal source of operating revenue, urban, suburban, or interurban passenger
traffic, or sale of power, heat and light, or both.
The agreement shall also provide that the carrier shall
accept all the terms and conditions of this act and any
regulation or order made by or through the President under
authority of this act or of that portion of the act entitled
"An act making appropriations for the support of the Army
for the fiscal year ending June 30, 1917, and for other purposes," approved August 29, 1916, which authorizes the
President in time of war to take possession, assume control, and utilize systems of transportation.
Sec. 2. That if no such agreement is made, or pending
the execution of an agreement, the President may nevertheless pay to any carrier while under Federal control
an annual amount, payable in reasonable installments,
not exceeding ninety per centum of the estimated annual
amount of just compensation, remitting such carrier, in
case where no agreement :1s made, to its iogal rights for
any balance claimed to tho remedies provided in section
three hereof. Any amount thereafter found due such
carrier above the amount paid shall bear interest at
the rate of six per centum per ar.num. The acceptance
of any benefits under this section shall constitute an
acceptance by the carrier of all the provisions of this Act
and shall obligate the carrier to pay to the United States,
with interest at the rate of six per centum per annum from
a date or dates fixed in proceedings under section three,
the amount by which the sums received under this section
exceed the sum found due in such proceedings.
Sec. 3. That all claims for just compensation not adjusted (as provided in section one) shall, on the application of the President or of any carrier, be submitted to

298

FEDERAL RESERVE BULLETIN.

APRIL 1,1918,

boards, each consisting of three referees to be appointed ; dends during the three years ended June thirtieth, nineby the Interstate Commerce Commission, members of i teen hundred and seventeen: Provided, however, That
which and the official force thereof being eligible for j such carriers as have paid no regular dividends or no
service on such boards without additional compensation. ! dividends during said period may, with the prior approval
Such boards of referees are hereby authorized to summon i of the President, pay dividends at such rate as the Presiwitnesses, require the production of records, books, cor- i dent may determine.
respondence, documents, memoranda, and other papers, j; Sec. 6..;That the sum of $500,000,000 is hereby- approview properties, administer oaths, and may hold hearings jlpriated, out of any moneys in the Treasury not otherwise
in Washington and elsewhere, as their duties and the con- appropriated, which, together with any funds available
venience of the parties may require. In case of disobe- from any operating income of said carriers, may bo used
dience to a subpoena the board may invoke the aid of any by the President as a revolving fund for the purpose of
district court of the United States in requiring the attend- paying the expenses of the Federal control, and so far as
ance and testimony of witnesses and the production of necessary the amount of just compensation, and to prodocumentary evidence, and such court within the juris- vide terminals, motive power, cars, and other necessary
diction of which such inquiry is carried on may, in case equipment, such terminals, motive power, cars, and equipof contumacy or refusal to obey a subpoena issued to any ment to be used and accounted for as the President may
person, corporation, partnership, or association, issue an direct and to be disposed of as Congress may hereafter by
order requiring appearance before the board, or the pro- law provide.
duction of documentary evidence if so ordered, or the
The President may also make or order any carrier to
giving of evidence touching the matter in question; and i make any additions, betterments, or road extensions, and
any failure to obey such order of the court may be pun- to provide terminals, motive power, cars, and other
ished by such court as a contempt thereof. Such cases equipment necessary or desirable for war purposes or in
may be heard separately or together or by classes, by such the public interest on or in connection with the property
boards as the Interstate Commerce Commission in the first of any carrier. He may from said revolving fund advance
instance, or any board of referees to which any such cases to such carrier all or any part of the expense of such addishall be referred may determine. Said boards shall give tions, betterments, or road extensions, and to provide
full hearings to such carriers and to the Unite.d States; terminals, motive power, cars, and other necessary equipshall consider all the facts and circumstances, and shall ment so ordered and constructed by such carrier or hy the
report as soon as practicable in each case to the President President, such advances to be charged against such carthe just compensation, calculated on an annual basis and rier and to bear interest at such rate and be payable on
otherwise, in such form as to be convenient and available I such terms as may be determined by the President, to the
for the making of such agreement as is authorized in sec- end that the United States may be fuiiy reimbursed for
tion one. The President is authorized to enter into an any sums so advanced.
••—•,.'
agreement with such carrier for just compensation upon a
Any loss claimed by any carrier by reason of any such
basis not in excess of that reported by such board, and may additions, betterments, or road extensions so ordered and
include therein provisions similar to those authorized un- constructed may be determined by agreement between
der section one. Failing such agreement, either the the President and such carrier; failing such agreement the
United States or such carrier may file a petition in the amount of such loss shall be ascertained as provided in
Court of Claims for the purpose of determining the amount section three hereof.
of such just compensation, and in the proceedings in said
From said revolving fund the President may expend
court the report of said referees shall be prima facie evi- such an amount as he may deem necessary or desirable
dence of the amount of just compensation and of the facts j for the utilization and operation of canals, or for the purtherein stated. Proceedings in the Court of Claims under chase, construction, or utilization and operation of boats,
this section shall be given precedence and expedited in barges, tugs, and other transportation facilities on the
every practicable way.
inland, canal, and coastwise waterways, and may in the
Sec. 4. That the just compensation that may be deter- j operation and use of such facilities create or employ such
mined as hereinbefore provided by agreement or that may j agencies and enter into such contracts and agreements as
be adjudicated by the Court of Claims, shall be increased j he shall deem in the public interest.
by an amount reckoned at a reasonable rate per centum to
Sec. 7. That for the purpose of providing funds requisite
be fixed by the President upon the cost of any additions | for maturing obligations or for other legal and proper exand betterments, less retirements, and upon the cost of penditures, or for reorganizing railroads in receivership,
road extensions to the property of such carrier made by carriers may, during the period of Federal control, issue
such carrier with the approval of or hy order of the Presi- such bonds, notes, equipment trust certificates, stock, and
dent while such property is under Federal control.
other forms of securities, secured or unsecured by mortSec. 5. That no carrier while under Federal control gage, as the President may first approve as consistent with
shall, without the prior approval of the President, declare the public interest. The President may, out of the revolvor pay any dividend in excess of its regular rate of divi- ! ing fund created by this Act, purchase for the United




APRIL t,

1918.

FEDEEAL BESEBVB BULLETIN.

299

States all or any part of such securities at prices not exceed- which it was originally instituted., But no process, inesne
ing par, and :oiay sell such securities whenever in Ms or final, shall be levied against any property under such
judgment it is desirable at prices not less than the cost Federal control.
That during the period of Federal control, whenever in
thereof. Any securities so purchased shall be held by
the Secretary ox the Treasury, who shall, under the direc- his opinion the public interest req uires, the President may
tion of the President, represent the United States in all initiate rates, fares, charges, classifications, regulations,
matters in connection therewith in the same manner as a - and practices by filing the same with the Interstate Comprivate holder thereof. The President shall each year as merce Commission, which said rates, fares, charges, classisoon as practicable after January first, cause a detailed. fications, regulations, and practices shall not be suspended
report to be submitted to tho Congress of all receipts and I hy the commission pending final determination.
expenditures made under this section and section six \ Said rates, fares, charges, classifications, regulations,
and practices shall be reasonable and. just and shall take
during the preceding calendar year.
Bee. S. That, the President may execute any 01 the effect at such time and upon such notice as he may direct,
powers herein and heretofore granted him with relation to I but the Interstate Commerce Commission shall, upon
Federal control, through, such agencies as he may deter- \ complaint, enter upon a bearing concerning the justness
mine, and may fix the reasonable compensation for the arid reasonableness of so much, of any order cf the Presiperformance of services in connection therewith, and may dent as establishes or changes any rate, fare, charge, classiavail himself of 'the advice, assistance, and cooperation of fication, regulation, or practice of any carrier under Fedthe Interstate Commerce Commission and of *h.e members era! control, and. may consider all the facts a-ncl circumand employees thereof, and may also call upon any depart- stances existing at the time of the making of i'he same.
ment, commission, or board of the Government for such In determining any question concerning any such rates,
services as he may deem expedient. But no such official fares, charges, classifications, regulations, or practices or
or employee of the United States shall receive any addi- changes therein, the Interstate Commerce Commission
tional compensation for suck services except as now per- shall give (hie consideration to the fact that the transportation systems are being operated under a unified and
mitted by law.
Sec. d. That the provisions of the Act entitled "An Act i coordinated national control and not in competition.
making appropriations for the support of the Army for the j After full hearing the cominissiori may make such findfiscal year ending June thirtieth, nineteen hundred and ings and orders as are authorized by the Act to regulate
seventeen, and for other purposes/'' approved August commerce as amended, and said findings and orders shall
twenty-ninth, nineteen hundred and sixteen, shall remain be enforce;! as provided in said Act: Provided, however,
in force and effect except, as expressly modified and That when the President shall find and certify to the
restricted by this Act: and the President, in addition to Interstate Commerce Commission that in order to defray
the powers "conferred, by this Act, shall have and is hereby the expenses of Federal control and operation fairly
given such, other and further powers necessary or appro- chargeable to railway operating expenses, and also to pay
priate to give effect to the powers herein and heretofore railway tax accruals other than war taxes, net rents for
conferred. The provisions of this Act shall also apply to joint facilities arid equipment, arid compensation to the
any carriers to winch Federal control may be hereafter carriers, operating as a unit, it is necessary to increase the
extend ecL
j railway operating revenues, the Interstate Commerce
Sec. 10. That carriers while under Federal control shall j Commission in determining the justness and reasonablebe subject to all laws and liabilities as common carriers, j ness of any rate, fare, change, classification, regulation, or
whether arising under State or Federal laws or at common | practice shall take into consideration said finding and
law, except in sc> far as may be inconsistent with the pro-1 certificate by the President, together with such recomvisions ox this Act or any other Act, applicable to such Fed- j mendations as he may make.
eral control or with any order of the President. Actions at \ SEC. 11. That every person or corporation, whether
law or suits in equity may be brought hy and against such • carrier or shipper, or any receiver, trustee, lessee, agent,
carriers and judgments rendered as now provided by law; j or person acting for or employed by a carrier or shipper,
and in any action at law or suit in equity against the car-1 or other person, who shall knowingly violate or MI to
rier, no defense shall be made thereto upon the ground that j observe any of the provisions of this act, or shall knowthe carrier is an instrumentality or agency of the Federal " ingly interfere with or impede the possession, use. operaGovernment. Nor shall any such carrier be entitled to j tion, or control of any railroad property, railroad, or transhave transferred to a Federal court any action heretofore or j portation system hitherto or hereafter taken over by the
hereafter instituted by cr against it. which action was not j President, or shall knowingly violate any of the provisions
so transferable prior to the Federal control of such carrier;! of any order or regulation made in pursuance of this act.
and any action which has heretofore beer, so transferred j shall be guilty of a misdemeanor, and shall, upon conbecause of such Federal control or of any Act of Congress or j viction, be punished by a fine of not more than So,GOO,
official order or proclamation relating thereto shall upon or, if a person, by imprisonment for not more than two
motion of either party be retransferred to the court in years, or both. Each independent transaction constitut49815- 18— 8




300

FEDEEAL BESEBVE 3T7IXET1N.

APBIL I s

1918.

ing a -violation of, or a failure to observe, any of the pro- under the act to protect trade and commerce against
visions of this act, or any order entered in pursuance unlawful restraints and monopolies, approved July 2,1890,
hereof, shall constitute a separate offense. For the taking ar\d amendments thereto, shall proceed to final determinaor conversion, to Ms own use or the embezzlement of | tion as soon, as may be, as if the United States had not
money or property derived from or used in connection | assumed control of transportation systems; but in any
with the possession, uso, or operation of said railroads or such case the court having jurisdiction, may, upon the
transportation systems, the criminal statutes of the United application of the United States, stay execution of final
States, as well as the criminal statutes of the radons judgment or decree until such, time as it shall deem, proper.
States where applicable, shall apply to all officers, agents,
Sec. 14. That the Federal control of railroads and
and employees engaged in said railroad and transporta- transportation systems herein and heretofore provided for
tion service, while the same is under Federal control, to shall continue for and during the period of the war and for
the same extent as to persons employed in the regular a reasonable time thereafter, which shall not exceed one
service of the United States. Prosecutions for violations year and nine months next following the date of the
of this act or of any order entered hereunder shall be in proclamation by the President of the exchange of ratificathe district courts of the United States, under the direc- tions of the treaty of peace: Provided, koiuever, That the
tion, of the Attorney General, in accordance •with the President may, prior to July 1, 1918, relinquish control of
procedure for the collection and imposing of fines and all or any part of a.ny railroad or system of transportation,
penalties now existing in. said courts.
further Federal control of which the President shall deem
See. 12, That moneys and other property derived from not needful or desirable; and the President may at any
the operation of the carriers daring Federal control are time during the period of Federal control agree with the
hereby declared to be the property of the United States. owners thereof to relinquish all or any part of any railroad
Unless otherwise directed, by the President, such moneys or system of transportation. The President may reshall not be covered into the Treasury, but such moneys linquish all railroads and systems of transportation under
and property shall remain in the custody of the same Federal control at any time he shall deem such action
of8.cers, and the accounting thereof shall be in the same needful or desirable.. No right to compensation shall
manner and form as before Federal control. Disburse- accrue to such owners from and after the date o! relinments therefrom shall, "without further appropriation, be quishment for the property so relinquished.
made in the same manner as before Federal control and for
Sec. 15. That nothing in. this act shall be construed to
such, purposes as under the Interstate Commerce Com- amend, repeal, impair, or affect the existing laws or powers
mission classification of accounts in force on December 27, of the States in relation to taxation or the lawful police
1317, are chargeable to operating expenses or to railway regulations of the several States, except wherein such laws,
tax accruals and. for such other purposes in connection powers, or regulations may affect the transportation of
with Federal control as the President may direct, except troops, war materials. Government supplies, or the issue
that taxes under Titles 1 and 2 oi the act entitled "An of stocks and bonds.
act to provide revenue to defray war expenses, and for
Sec, 18. That this act is expressly declared to be emerother purposes." approved October 3, 191.7. or any act-in gency legislation enacted to meet conditions growing out
addition thereto or in amendment thereof, shall be paid of war; and nothing herein is to be construed as expressing
by the carrier out of its own. funds. It Federal control or prejudicing the future policy of the Federal Government
begins or ends during the tax year for which, any taxes so concerning tb.e ownership, control, or regulation of carriers
chargeable to railway tax accruals are assessed, the taxes or the method or basis of the capitalization thereof.
for such year shall be apportioned to the date of the
Approved March 21, 1918.
beginning or ending of such Federal control, and disbursements shall be made only for that portion, of such, taxes as
is due for the part of such tax year which falls within the
War Fm&siee Corporation. Act,
period of Federal control.
At such periods as the President may direct, the books
Th.e committee of conference on the disshall be closed and the balance of revenues over disburse- agreeing votes of the two Houses on the amendments shall be covered into the Treasury of 'the United
States to the credit of the revolving fund created by this ment of the House to the bill (S. 3714.) to proact. If such revenues are insufficient to meet such clis- vide further for the national security and
burseinents, the deficit shall be paid out of such revolving defense, and, for the purpose of assisting
fond in such, manner as the President may direct.
in the prosecution of the war, to provide
Sec. 13. That all pending cases in the courts of the credits for industries and enterprises in the
United States affecting railroads or other transportation
United States necessary or contributory to the
systems brought under the act to regulate commerce,
prosecution
of the war, and for other purposes,
approved February 4. 1887, as amended and suppleafter
conference,
agreed, on April 1 to recommented, including the commodities clause, so called, or




I, 1918.

FEDERAL RESERVE BUJLLEXLBF.

801

mend to the respective Houses tlio following Of the four directors sc appointed, the President of the
United States shall designate two to serve for two years
measure and its report was subsequently and
two for four years, and thereafter each, director so apadopted by both:
pointed shall serve for four years. Whenever a vacancy
shall occur among the directors so appointed, the person
appointed director to fill, any such vacancy shall hold
ofll.ee for the unexpired term of the member whose place
lie is selected to fill. Any director shall be subject to removal by the President of the United States. Three memT I T L E L—WA.R, F I N A N C E CORPORATION7.
bers of the board ox directors shall constitute a quorum for
Be it enacted by the Senate and House of Representatives of the transaction of business.
SEC, 4. That the four directors of the corporation apthe United Slates of ..America in Congress assembled, That
the Secretary of the Treasury and four additional persons pointed as hereinbefore provided shall receive annual
(who shall be the directors firet appointed as hereinafter salaries, payable monthly, of 812,000. Any director reprovided), are hereby created a bedy corporate and politic ceiving from, the United States any salary or compensation
In. deed and in law by the name, style, and title of tho for services shall not receive as salary from the corpora''War Finance Corporation" (herein called tho corpora- tion any amount which, together with any salary or comtion), and. shall have succession for a period of tan years: pensation received from the United States, would make
Provided, That in no event shall the corporation, exercise the total amount paid to him by tlie United States and by
&,n:y of the powers conferred by this acL except si; eh as arothe corporation exceed $12,000.
SEC, 5. That ih.o principal office of the corporation shall
incidental to the liquidation of its assets aim the winding
up of its affairs, after six months alter tho termination of be located in the District of Columbia, but there may be
the "war, the date of such termination to he fixed by proc- established agencies or branch, offices in any city or cities
of the United States under rules and regulations prescribed
iamatioH of the President of the Uni.tod States,
by
the board of directors.
SEC. 2. That the capital stock of the corporation shall be
SEC. 8, That the corporation shall be empowered and
$600,000,000, all of which shall be subscribed by the "United
States of America; and such subscription shall be subject authorized to adopt, alter, and use a corporate seal; to
r.o call upon the vote of three-fifths of the board of directors make contracts; to purchase or lease and hold or dispose
of the corporation, vvith the approval of the Secretary of of such real estate as may be necessary for the prosecution
the Treasury,^at such, time or times as inay be deemed ad- of its business; to sue and be sued; to complain and defend
visable: and there is hereby appropriated, out of any in any court of competent jurisdiction, State or Federal;
money in the Treasury not otherwise appropriated, the to appoint, by its board of directors, and fix the compenffiim of $500,000,000, or so much thereof as may be neces- sation of such officers, employees, attorneys, and agents
sary for the purpose of making payment upon such sub- as are necessary for the transaction of the business of the
scription 'when and as cs,!Ied. 'Receipts for payments by corporation, to define their duties, require bonds of them
the United States of America for or on account of such and Ox the penalties thereof, and to dismiss at pleasure
stock shall be issued hj tho corporation to the Secretary such officers, employees, attorneys;, and agents; and to
of the Treasury, and shall be evidence of stock ownership. prescribe, amend, and repeal, by its board of directors,
subject to the approval of tlio Secretary of the Treasury,
SEO. 3. That the management of the corporation shali
by-laws regulating the manner in which its general busibe 'vested in. a board of directors, consisting of tho Secreness may be conducted and the privileges granted to it
tary of the Treasury, "who shall be chairman of the board;
hj law may bo exercised and enjoyed, and prescribing the
&n& four other persons, to be appointed by the President
powers and duties of its officers and agents.
of the United. States, by and with the advice and consent
SEC. 7. That ihB corporation shall be empowered, and
of the Senate. No director, officer, attorney, agent, or employee of the corporation shall in any manner, directly or authorized to make advances, upon such terms, not inconmdireeth\ participate in the determination of any ques- sistent herewith, as it may prescribe, for periods not extion affecting his personal interests, or the interests of any ceeding five years from the respective dates of such adcorporation, partnership, or association, in which, he is vances:
(1) To any bank, banker, or trust company, in the
directly or indirectly interested; and each director shall
devote his time, not otherwise required by the business of United States, which shali have made after April sixth,
the United States, principally to the business of the cor- nineteen hundred and seventeen, and -which, shall have
poration. Before entering upon, his duties, each of the outstanding, any loan or loans to any person, firm, corporafour directors so appointed, and each officer, shall take an tion, or association, conducting an established and going
oath faithfully to discharge the duties of his eflke. Noth- business in the United States, whose operations shall be
ing contained in this or any other act shall be construed to necessary or contributory to the prosecution of the war,
prevent the appointment as a director of the corporation and evidenced by a note or notes, but no such advance
of any officer or employee under the United States or of a shall exceed seventy-five per centum of the face value of
such loan or loans; and
director of a Federal reserve bank.
AN ACT To provide further for tlio national socuriSy y.nd dofcnso, and,
for tlio purpose of assisting in the prosecution of tks wsi. to provide
credits for Industries and enterprises in ths United States necessary
0? contributory to ztm prosecution of tlio war, !HK5 to suporriss tlio
issuance of seeiirities, &nti for other purposes.




302

FEDEiiAL RESERVE BULLETIN.

AritiL .1, 191S.

(2) To any bank, banker, or trust company, in the borrowing institution is located, but such rate of interest
United States, which shall have rendered financial assist- shall in no case be greater than the average rate receivable
ance, directly or indirectly, to any such person, firm, cor- by the borrowing institution on its loans and investments
poration, or association by the purchase after April sixth, made during the six. months prior to the date of the adnineteen hundred and seventeen, of its bonds or other vance, except that where the average rate so receivable
obligations, but no such advance shall exceed seventy- by the borrowing institution is loss than such rate of disfive per centum of the value of such bonds or other obliga- count for ninety-day commercial paper the rate of interest
tions at the time of such advance, as estimated and deter- on such advance shall be equal to such rate of discount.
mined by the board of directors of the corporation.
The corporation shall retain power to require additional
All advances shall be made upon the promissory note or security at any time.
notes of such bank, banker, or trust company, secured by . SEC. 9. [That the corporation shall be empowered and
the notes, bonds, or other ob!igations,which are the basis of I authorized, in exceptional cases, to make advances directly
any such advance by the corporation, together with all the I to any person, firm, corporation, or association, conducting
securities, if any, which such bank, banker, or trust com- I an established and going business in theUnited States, whose
pany may hold as collateral for such notes, bonds, or other j operations shall be necessary or contributory to the prosecution of the war (but only for the purpose of conducting
obligations.
The corporation shall, however, have power to make such business in the United States and only when in the
advances (a) up to one hundred per centum of the face opinion of the beard of directors of the corporation such
value of any such loan made by any such bank, banker, or person, Srm, corporation, or association is unable to obtrust company to any such person, firm, corporation, or tain funds: upon reasonable terms through banking chanassociation, and (b) up to one hundred per centum of the nels or from the general public), for periods not exceeding
value at the time of any such advance (as estimated and five years from the respective dates of such advances, upon
determined by the board of directors of the corporation) such terms, and subject to such rules and regulations as
of such bonds or other obligations by the purchase of which may be prescribed by the board of directors oi the corporafinancial assistance shall have been rendered to such per- tion. In no case shall the aggregate amount of the adson, firm, corporation, or association: Provided, That every vances made under this section exceed at any one time
such advance shall be secured in the manner described in an amount equal to twelve and one-half per- centum of the
the preceding part of this section, and in addition thereto sum of (1) the authorized capital stock of the corporation
by collateral security, to be furnished by the bank, banker, plus (2) the aggregate amount of bonds of the corporation
or trust company, of such character as shall "be prescribed authorized to be outstanding at any one time when the
by the board of directors, of a value, at the time of such capital stock is fully paid in. Every such'advance shall
advance (as estimated and determined by the board of be secured by adequate security of such character as shall
directors of the corporation), equal to at least thirty-three be prescribed by the board of directors of a value at the
per centum of the amount advanced by the corporation. time of such advance (as estimated and determined, by the?
The corporation shall retain power to require additional board of directors), equal to (except in case of an advance
made to a railroad in the possession and control of the
security at any time.
SEC, 8. That the corporation shall be empowered and President, for the purpose of making additions, bet-torauthorized to make advances from time to time, upon ments or road extensions to such railroad) at least ono
such terms, not inconsistent herewith, as it may prescribe, hundred and twenty-five per centum of the amount adfor periods not exceeding one year, to any savings bank, vanced by the corporation. The corporation shall reti-ib
banking institution or trust company, in the United power to require additional security at any time. The
States, which receives savings deposits, or to any building rate of interest charged on any such advance shall not be
and loan association in the United States, on the promis- less than one per centum per annum in excess of the rate
sory note or notes of the borrowing institution, whenever of discount for ninety-day commercial paper prevailing
the corporation shall deem such advances to be necessary at the time of such advance nt the Federal reserve bank
or contributory to the prosecution of the war or important of the district in which the borrower is located.
in the public interest: .Provided,, That such note or notes SEC. 10. That in no case shall the aggregate amount oi1
shall be secured by the pledge of securities of such the advances made under this title to any one person, firm,
character as shall bo prescribed by the board of directors | corporation, or association exceed at any one time an
of the corporation, the value of which, at the time of such amount equal to ten per centum of the authorized capital
advance (as estimated and determined hy the board of stock of the corporation, but this section shall not apply
directors of the corporation) shall be equal in amount to in the case of an advance made to a railroad, in the posat least one hundred and thirty-three per centum of the session and control of the President, for the purpose of
amount of such, advance. The rate of interest charged on making additions, betterments, or road extensions to such
any such advance shall not be less than one per centum railroad.
per annum in excess of the rate of discount for ninety-day
SEC. 11. That the corporation shall be empowered, and
commercial paper prevailing at the time of such advance authorized to subscribe for, acquire, and own, buy, sell,
at, the Federal reserve bank of the district in which the and deal m bonds and obligations of the United States




FEDERAL HESEBVK BULLETIN.

808

issued or converted after September twenty-fourth, nine- Federal Reserve Board may make a special interest charge
teen hundred and seventeen, to such extent as the board on such notes, which, in the discretion of the Federal Reof directors, with the approval of the Secretary of the serve Board, need not be applicable to other Federal reTreasury, may from time to time determine.
serve notes which may from time to time be issued and outSEC. 12. That the corporation shall be empowered and standing. All provisions of law. not inconsistent hereauthorized to issue and have outstanding at any one time with, in respect to the acquisition by any Federal reserve
its bonds in an amount aggregating not more than six times bank of obligations or paper secured, hy such bonds or
its paid-in capital, such bonds to mature not less than one notes of the United States, and in respect to Federal reyear nor more than five years from the respective dates of serve notes issued against the security of such obligations
issue, and to bear such rate or rates of interest, and may be or paper, shall extend, in so far as applicable, to the
redeemable before maturity at the option of the corpora- acquisition of obligations or paper secured by the bonds of
tion, as may be determined by the board of directors, but the corporation and to the Federal reserve notes issued
such rate or rates of interest shall be subject to the approval against the security of such obligations or paper.
of the Secretary of the Treasury. Such bonds shall have
SEC. 14. That the corporation shall not exercise any of
a first and paramount floating charge on. all the assets of the i;he powers granted by this title or perform any business
corporation, and the corporation, shall not at any time except such as is incidental and necessarily preliminary
mortgage or pledge any of its assets. Such bonds may be to its organization until it has bee** authorized by the
issued at not less than par in payment oi any advances President of the United States w commence business under
authorized by this title, or niay be offered for sale publicly | the provisions of this title.
or to any individual, firm, corporation, or association; at j SEC. 15. That all net; earnings of the corporation not resuch, price or prices as the board oi directors, with the quired for its operations shall be accumulated as a reserve
approval of the Secretary oi the Treasury, may determine. fund until such, time as the corporation liquidates under
Upon such terms not inconsistent herewith as may be the terms of this title. Such, reserve fund shall, upon the
determined from time to time by the board of directors, direction of the board, of directors, with the approval of thv
with the approval oi the Secretary of the Treasury, at or Secretary of the Treasury, be invested in. bonds and oblibefore the issue thereof, any of such bonds may be issued gations of the United States, issued or converted after
payable in any foreign money or foreign moneys, or issued September twenty-fourth, nineteen .hundred and sevenpayable at the option of the respective holders thereof teen, or upon like direction and approval may be deposited
either in dollars or in any foreign money or foreign moneys in member banks of the Federal Reserve System, or in
at such fixed rate of exchange as may be stated in any such any of the Federal reserve banks, or be used from, time to
bonds. For the purpose of determining the amount of time, as well as any other funds of the corporation, in the
bonds issued payable in any foreign money or foreign purchase or redemption of any bonds issued by the cormoneys the dollar equivalent shall be determined by the poration. The Federal reserve banks are hereby authorpar of exchange at the date of issue thereof, as estimated ized to act as depositaries for and as fiscal agents of the
by the Director of the Mint and proclaimed by the Secre- corporation in the general performance of the powers contary of the Treasury in pursuance of the provisions of ferred by this title. Beginning six months after the termsection twenty-five of the act entitled "An act to reduce ination of the war. the date of such, termination to be lixed
taxation, to provide revenue for the Government, and for by a. proclamation of the President of the United States,
other purposes," approved August; twenty-seventh, eight- the directors of the corporation shall proceed to liquidate
its assets and to wiod up its affairs, but the directors of the
een hundred and ninety-four.
SEC. 13. That the Federal reserve banks shall be author- corporation, in their discretion, may, from time to time,
ized, subject to the maturity limitations of the Federal prior to such date, sell and dispose of any securities or other
reserve act and to regulations of the Federal Reserve Board, property acquired by the corporation. Any balance reto discount the direct obligations of member banks secured maining after the payment of all its debts shall be paid
by such, bonds of the corporation and to rediscount eligible into the Treasury of the United States as miscellaneous
paper secured by such bonds and indorsed by a member receipts, and thereupon the corporation shall be dissolved.
SEC. 16. That any and all bonds issued by the corporabank. No discount or rediscount under this section shall
be granted at a less interest charge than one per centum tion shall be exempt., both as to principal and interest,
per annum, above the prevailing rates for el igible commer- | from all taxation, now or hereafter imposed by the United
cial paper of corresponding maturity.
I States, any State, or any of the possessions of the United
Any Federal reserve bank may. with the approval of the \ States, or by any local taxing authority, except (a) estate
Federal Reserve Board, use any obligation or paper so or inheritance taxes, and (b) graduated additional income
acquired for any purpose for which it is authorized to use taxes, commonly known as surtaxes, and excess-profits
obligations or paper secured by bonds or notes of the and war-profits taxes, now or hereafter imposed by the
United States not bearing the circulation privilege: Pro- United States, upon ih& income or profits of individuals,
vided, however, That whenever Federal reserve notes are partnerships, corporations, or associations. The interest
issued against the security of such obligations or paper the OB an amount of such bonds the principal of which does




804

FEDERAL RESERVE BULLETIN.

APRIL 1, 1918.

not exceed in the aggregate §5,000, owned by any indi- person committing any of the offenses punishable under
vidual, partnership, corporation, or association, shall be this section.
exempt from tho taxes referred to in clause (b). The corSEC. 19. That the corporation shall file quarterly reports
poration, including its franchise &n.d the capital and re- with the Secretary of the Senate and with the Clerk of the
serve or surplus thereof, and the income derived there- House of Representatives, stating as of the fjrsi; day of
from., shall be exempt from all taxation now or hereafter each month of the quarter just ended (1) the total amount
imposed by the United States, any State, or any of the of capital paid in, (2) the total amount of bonds issued,
possessions of the United States, or by any local taxing (3) the total amount of bonds outstanding, (4) the total
authority, except that any real property of the corporation amount of advances made under each of sections seven,
shall be subject to State, county, or municipal taxes to the eight, and nine, (5) a list of the classes and amount of
same extent, according to its value, as other real property securities taken under each of such sections, (6) the total
is taxed.
amount of advances outstanding insider each of sections
SEC, 17. That the united States shall not be liable for seven, eight, and nine, and (7) such other information a*
fcb.e payment of any bond or other obligation or the interest may be hereafter required by either Ho use of Congress.
thereon issued or incurred by the corporation, nor shall it
The corporation shall make a report to Congress on the
incur any liability ia respect of any act or omission of the first day of each, regular session, including a detailed statecorporation.
ment of receipts and expenditures.
BEG, 1.8. That whoever (I) makes any statement, knowSEC. 20. Section fifty-two hundred and two of the Reing it to be false, for the purpose of obtaining for himself vised Statutes of the United States is hereby amended BO
or for any other person, firm, corporation, or association as to read as follows: "Sec. 5202, No national banking
any advance under this title, shall be punished by a line association shall at any time be indebted, or in any way
of not more than §10,000, or by imprisonment for not more liable, to an amount exceeding the amount of its capital
than five years, or both.
stock at such time actually paid in and remaining undiWhoever willfully overvalues any security by which any minighed by losses or otherwise, except on account of
such advance is secured, shall be punished by a tine of not demands of the nature following:
more than $5,000, or by imprisonment for not more than
"First. Notes of circulation.
two years, or both,
''•'Second. Moneys deposited with or collected by the
Whoever (1) falsely makes, forges, or counterfeits any association.
bond, coupon, or paper in imitation of or purporting to be
"Third. Bills of exchange or drafts drawn s\gain?T,
in imitation of a bond or coupon issued by the corpora- money actually on deposit to the credit of the association,
tion; or (2) passes, utters, or publishes, or attempts to pass. I or due thereto.
utter, or publish, any false, forged, or counterfeited bond, I "Fourth. Liabilities to the stockholders of the associacoupon, or paper purporting to be issued by the corpora- | tion for dividends and reserve profits.
tion, knowing1 the same to be falsely made, forged, or 1 "Fifth. Liabilities incurred under the provisions of the
counterfeited; or (3) falsely alters any such bond, coupon, | Federal Reserve Act,
or paper; or (4) passes, utters, or publishes as true any
"Sixth.. Liabilities incurred under the provisions of
falsely altered or spurious bond, coupon, or paper issued the War Finance Corporation Act."
or purporting to have been issued by the corporation,
knowing the same to be faslely altered or spurious, shall ;
TITLE II.
OAPTTAL L-SUE* COMMITTEE.
be punished hj a fine of not more than 810,000, or by im- !
prisonment for not more than five years, or both,
i SEC. 200. That there is hereby created a committee to
Whoever, being connected in any capacity with the be known as the "Capital Issues Committee," hereinafter
corporation, (I) embezzles, abstracts, or willfully mis- called the committee, and to be composed of seven memapplies any moneys, funds, or credits thereof, or (2) with bers to be appointed by the President of the United States.
ID tent to defraud the corporation or any other company, by and with the advice and consent of the Senate. At
body politic or corporate, or any individual, or to deceive least three of the members shall be members of the Federal
&rcy oBicer of the corporation, (a) makes any false entry Reserve 'Board.
in any book, report, or statement of the corporation or
No member; officer, attorney, agent, or employee of the
(b) without authority from the directors draws any order committee shall in any manner, directly or indirectly,
or assigns any note, bond, draft, mortgage, judgment, or participate in the determination of any question affecting
decree thereof, shall be punished by a fine of not more his personal interests, or the interest of any corporation,
than §10,000, or by imprisonment, for not more than five partnership, or association in which he is directly or inyears, or both.
directly interested. Before entering upon his duties, each
The Secretary of the Treasury is hereby authorized to member and officer shall take an oath faithfully to disdirect and use the Secret Service Division of the Treasury charge the duties of his office. Nothing contained in this
Department to detect, arreat. and deliver into custody or any other act shall be construed to prevent the appointo? the United States marshal having jurisdiction any ment as a member of the committee, of any officer or em-




APBII, 1.191S.

FEDERAL RESERVE BULLETIN.

80o

ployee under the United States or of a director of a Federal \ or face value of which. Issue and sny other securities Issued
reserve bank,
by the same person, firm, corporation, or association sinco
The terms during which the several members of the the passage of this a-ct is In excess of $100,000. Shares of
committee shall respectively hold oGiee shall bo deter- stock oi any corporation or association without nominal or
mined by the. President of the "United States, ami the par value shall for the purpose of this section be deemed
compensation of the several members of the committee to be of 'the par value of flOO each. Any securities which.
who are not members of the Federal [Reserve Board shall upon the date oi tho passage of this act are in the possession
be 87.500 per annum, payable monthly, but ii any such or control of the corporation, association, or obHs'or issumember receives any other compensation from any office (ing the same shall be deemed to h.a;ve been issued After
or employment under the United States tho amount BO j the passage of this act within the moaning' hereof,
received shall be deducted, from such salary, and ii such ; Nothing in this title shall be construed to authorize such
other compensation is 37,500 or more, such member shall j committee to pass upon (1) any borrowing by any person,
receive no salary as a member of the committee. .Any | firm, corporation, or association in the ordinary COIU'SG of
member sha-ll be subject to removal hj the President of business as distinguished from borrowing for capital purthe United States. The President sha-H designate one of poses, (2)fcherorowing or refunding of indebtedness existthe members as'chairman, but any subsequent vacancy in ing at the time of the passage oi this act, (3) the resale A
the chairmanship shall be filled by the committee. Four any securities the sale or offering of which, the coniTnittoe
n.? embers of the committee shall constitute a quorum i'or 'has determined to be compatible with the national intar(4) any securities }.*me6 by av.y rsih-oad corporation
the transaction of business.
SBC. 201,, That the committee may employ and fix the j the property of which, may be in the possession si\d concompensatiozi of such officers, attorneys, agents, and other j trol of the President of the 'United States, or (o) any bonds
employees as may be deemed necessary to conduct its I issued by the War Finance Corporation,
business, who shall be appointed •without regard, to the j Nothing done or omitted by the coumviittee 'hereuncier
provisions of the act entitled "An zcz TO regulate and im- shall be eor^tmed :-:s eaiTy.bg the* approval of the
prove the civil service of the United States,J} approved zoittee or of the united States of the legality, validity,
January sixteenth, eighteen hundred and eighty-three worth, or security of any securities.
(volume twenty-two, United States Statutes at Large, page j SEC. 204. That there k hereby appropriated, out cJ. any
four hundred &nd three), and amendments thereto or any j money in tlit- Tre<wary not otherwise ftppropii&tad, for
rules or regulations made hi pursuance thereof. No such | the remainder of the fiscal ye.&v ending June fchiitieth,
officer, attorney, agent, or employee shall receive more -nineteen hundred
eight won, ami the ftsc^I
coznpensauon than persons performing services of like ov ing June thirtieth, nineteen Imndred and nineteen, the
«imi3ar character under the Federal Reserve Board.
I sum o! 8200,000 for the purpose of defraying the expenses
SEC. 202, That all the expenses of the committee, in- of the establishment and maintenance q£ the committee.
eluding all necessary expenses for transportation incurred including zhe payment of. the salaries and rents heroin
by the members or by its officers, attorneys, agents, or authorized.
employees under its orders in mailing an investigation or
SEC. 205. That the committee shall inake % report to
upon official business in any ether places than at their Congress on the first day of each regular session, m
respective headquarters, shall be a'Oowed and paid on a detailed statement of receipt:? find expenditures, >md
the presentation of itemized vouchers therefor approved. also including t h e na-mca oi all officers and cvir?p3oycu;^ a-7id
the salary paid to each.
by the chairman.
SEC. 206. That this title shall continue in e.;Yect until,
The committee may rent suitable oillees for its use, and
purchase such furniture, equipment, and supplies as may but not aiter, the expiration of six months after the terbo necessary, but shall not- expend more than §10,000 mination of the war, the date of such, termination to b«
determined by a proclamation of the Preddeirfc of the
annually for offices in the District of Columbia.
The principal office of the committee shall be in the United States, but the President may at any time by
Di.strict of Columbia, but it may meet and exercise all proclamation declare that this title .Is no longer 7-.ecessa.ry,
its powers at any other place. The committee may; by and thereupon it shall cease to be in effect.
one or more ox its members, or by such, agents as it may j
designate, prosecute any inquiry necessary to its duties !
TITLE TIT. MISCEL-.-AXEOUfc.
in any part of the United States.
SEC. 203, That the committee may, under rides><m&\ SEC. 300. That whoever willfully viol ales any of the proregulations to be prescribed by it from, time to time, in- | visions of this act, except where a different penalty is provestigate, pass upon, and determine whether it is compati- j videdinthis act, shall, upon conviction in any court of
ble with the national interest that there should be sold or the United States of competent jurisdiction, ha lined not
offered for sale or for subscription any issue, or any part more than $10,000 or imprisoned fov not more than one
of any issue, of securities hereafter issued by any person, ! year, or both; and whoever knowingly participates in &ny
firm, corporation, or association, the total or aggregate pax j auch violation, except where a, different penalty is pro-




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APRIL 1. 1.918.

FEDERAL EESE.KVE BULLETIN.

poses of this act, and to meet expenditures authorized for
the national security and defense and other public purposes authorized by law, not exceeding in the aggregate
$12,000,000,000, and to issue therefor bonds of the United
States, in addition to the $2,000,000,000 bonds already
issued or offered for subscription under authority of the
act approved April twenty-fourth, nineteen hundred ard
seventeen, entitled 'An act to authorize an issue of bonds
to meet expenditures for the national security and defense
and, for the purpose of assisting in the prosecution of the
war, to extend credit to foreign governments, and for
other purposes': Provided, That of this sum £3,063.945.4f;0
shall be in lieu of that amount of the unissued bonds
authorized by sections one and four of the act approved
April twenty-fourth, nineteen hundred and seventeen,
$225,000,000 shall be in lieu of that amount of the unissued
bonds authorized by section thirty-nine of the act approved
August fifth, nineteen Imndred and Dine, SI50.000.CCO
shall be in lieu of che unissued bonds authorized by the
joint resolution approved. March, fourth, nineteen hundred
and seventeen, and ^100.000,000 shall be in lieu of the
unissued bonds authorized by section four hundred of the
act approved March third, nineteen hundred <in<! seventeen .
"The bonds herein authorize-1"! shall be in such form or
forms and denomination or denominations and subject xo
such terms and conditions of issue, conversion, redemption,
maturities, payment. %,rid rate or rates of interest, not exceeding four and one-quarter per oentum per annum, and
time or times of payment of interest, as the Secretary
of the Treasury from time U> time at or before the issue
thereof may prescribe. The principal and interest thereof
Third Liberty Bond Act.
shall be payable in United States gold coin of the present
standard of value.
Following is the text of the act providing for
"The bonds herein authorize:\ shall from lime to rime

vided in this act, shall be punished by a like fine or imprisonment, or both.
SEC. 301. That no stamp tax shall be required or imposed
upon a promissory note secured by the pledge of bonds or
obligations of the United States issued after April twentyfourth, nineteen hundred and seventeen, or secured by the
pledge of a promissory note, which itself is secured by
the pledge of such bonds or obligations: Provided, That in
either case the par value of such bonds or obligations shall
equal the amount of such note.
Ssc, 302. That if any clause, sentence, paragraph, or
part of this act shall, for any reason, be adjudged by any
court, of competent jurisdiction to be invalid, or. in case
any court of competent jurisdiction shall adjudge to be invalid any provisions hereof in respect of any class or classes
of securities, such judgment shall not affect, impair or invalidate the remainder of this act, but shall be confined in
its operation to the clause, sentence, paragraph, part, or
subject matter of this act directly involved in the controversy in which such judgment shall have been rendered.
SEC. 308. Thax the term "securities,'5 as used in this act.
includes stocks, shares of stock, bonds, debentures, notes,
certificates of indebtedness, and other obligations.
Ssc. 304. That the right; to amend, alter, or repeal this
act is hereby expressly reserved.
SEC. 305. That the short title of this act shall be the
''War Finance Corporation Act."
•SjiC. 306. That all provisions of any act or acts inconsistent with the provisions of this act are 'hereby repealed.

an. additional issue of bonds, as approved, by first, be offered at not less than par as a x>opular loan, under
such regulations, prescribed by the Secretary of the Treasthe President on April 4.
[H. E. 11323.)
AN ACT To amend an act approved September twenty-fourth, ninotcen
hundred and seventeen, entitled "An act to authorize an additional
issue of bonds to meet expenditures for the national security and
for the purpose of assisting in the prosecution of the

ury from time to time, as will in his opi nion give the people
of the United States as nearly as .may be an equal opportunity to participate therein, but he may make allotment
in full upon applications for smaller amounts of bonds in
advance of auy date which he may set for the closing ot
, subscriptions and may reject or reducereduce allotments upon

r. to extend additional credit to i'oreien troveniments, and for other i , ,

-s •

••

i*

i.

..

,

n

'
I later applications and applications lor larger amounts, and
; may
reject; or reduce
applications
from
Be it enacted by ike Senate and House of Representatives of
! incorporated
banks allotments
and trust upon
companies
for their
own
the '(Mud Slates of America in Congress assembledf That\ j account and make allotment in full or larger allotments
ihe fa'st section of the act approved September twenty- j to others, and may establish a graduated scale of allotfourth, nineteen hundred and seventeen, entitled "An act I ments, and may from time to time adopt any or all of
to authorize an additional -issue of bonds to meet expend!- ! said methods, should any such action be deemed by him
toes for the national security and defense, and. for the j to be in the public Interest: Provided, That such reduction
purpose of assisting in the prosecution of the war. to extend j or increase of allotments of such bonds shall be made under
additional credit to foreign governments, and for other j general rules to be prescribed by said Secretary and shall
purposes/1 be, and is hereby, amended to read as follows: apply to all subscribers similarly situated. And any por"That the Secretary of the Treasury, with the approval tion of the bonds so offered and not taken may be otherwise
of the President, is hereby authorized to borrow, from disposed of by the Secretary of the Treasury in such manner
time to time, on the credit of the united States for the pur- and at such price or prices, not less than par, as he mar




.1, 1918,

FEDERAL KBSEBVE BULLETIN.

determine. The Secretary may make special arrangements for subscriptions at not less than par from persons
in the military or naval forces of the United States, but
any bonds issued to such persons shall be in all respects
the same as other bonds of the sine issue,"
SEC. 2. That the last sentence of section two of said
act approved September twenty-fourth, nineteen hundred
and seventeen, be, and is hereby, amended to read as
follows:
"For the purposes of this section there is appropriated,
out of any money in the Treasury not otherwise appropriated, the sum of §5,500,000,000, and in addition thereto
the unexpended balance of the appropriations made by
section two or said act approved April twenty-fourth,
nineteen hundred and seventeen, or so much thereof as
may be necessary: Provided, That the authority granted
by this section to the Secretary of the Treasury to establish credits for foreign Governments, as aforesaid, shall
cease upon the termination of the war between the United
States and the Imperial German Government."
SEC. 3. That section four of said act approved September twenty-fourth, nineteen hundred and seventeen, is
hereby amended by adding two new paragraphs, as
follows:
"That holders of bonds bearing interest at a higher
rate than four per centum per annum, whether issued
(a) under section one, or (b) upon conversion of four
per centum bonds issued under section one, or (c) upon
conversion of three and one-half per centum bonds issued
under said act approved April twenty-fourth, nineteen
hundred and seventeen, or (d) upon conversion of four
per centum bonds issued upon conversion of such three
and one-half per centum bonds, shall not be entitled to
any privilege of conversion under or pursuant to this
section or otherwise. The provisions of section seven
shall extend to all such bonds.
'If bonds bearing interest at a higher rate than four
per centum per annum shall be issued before July first,
nineteen hundred and eighteen, then any bonds bearing
interest at the rate of four per centum per annum which
shall, alter July first, nineteen hundred and eighteen,
and before the expiration of the six months' conversion
period prescribed by the Secretary of the Treasury, be presented for conversion into bonds bearing interest at such
higher rate, shall, for the purpose of computing the amount
of interest payable, be deemed to have been converted on
the dates for the payment of the semiannual interest on the
respective bonds so presented for conversion, last preceding the date of such presentation."
SEC. 4. That the last sentence of section five of said
act approved September twenty-fourth, nineteen hundred
and seventeen, be, and ia hereby, amended to read as
follows:
"The sum of such certificates outstanding hereunder
and under section six of said act approved April twentyfourth, nineteen hundred and seventeen, shall not at any
one time exceed in the aggregate $8,000,000,000."




807

SEC. 5. That section eight of said act approved September twenty-fourth, nineteen hundred and seventeen,
bo, and is hereby, amended to read as follows:
"SEC. 8. That the Secretary of the Treasury, in his
discretion, is hereby authorized to deposit in such incorporated banks and trust companies as he may designate,
the proceeds, or any part thereof, arising from the sale of
the bonds and certificates of indebtedness and war-savings
certificates authorized by this act, and arising from the
payment of income and excess profits taxes, and such
deposits shall bear such rate or rates of interest, and shall
be secured in such manner, and shall be made upon and
subject to such terms and conditions as the Secretary of
the Treasury may from time to time prescribe: Provided,
That the provisions of section fifty-one hundred and
ninety-one of the .Revised Statutes, as amended by the
Federal reserve act, and the amandinents thereof, with
reference to the reserves required to be kept by national
banking associations and other member banks of the
Federal Reserve System, shall not apply to deposits of
public moneys by the United States in designated depositaries. The Secretary of the Treasury is hereby authorized to designate depositaries in foreign countries with
which shall be deposited all public money which it may
be necessary or desirable to have on deposit in such
countries to provide for current disbursements to the
military and naval forces of the United States and to the
diplomatic and consular and other representatives of the
United States in and about such countries until six months
after the termination of the war between the United
States and the Imperial German Government, and to
prescribe the terms and conditions of such deposits."
SEC. 6. That said act approved September twentyfourth, nineteen hundred and seventeen, is hereby
amended by adding four new sections, to read as follows:
•'SEC. 14. That any bonds of the United States bearing
interest at a higher rate than four per centum per annum
(whether issued under section one of this act or upon
conversion of bonds issued under this act or under said
act approved April twenty-fourth, nineteen hundred and
seventeen), which have been owned by any person continuously for at least six months prior to the date of his
death, and which upon such date constitute part of his
estate, shall, under rules and regulations prescribed by the
Secretary of the Treasury, be receivable by the United
States at par and accrued interest, in payment of any
estate or inheritance taxes imposed hy the United States,
under or by virtue of any present or future law, upon such
estate or the inheritance thereof.
"SEC. 15. That the Secretary of the Treasury is authorized, from time to time, until the expiration of one year
after the termination of the war, to purchase bonds issued
under authority of this act, including bonds issued upon
conversion of bonds issued under this act or said act approved April twenty-fourth, nineteen hundred and seventeen, at such prices and upon such terms and conditions
as he may prescribe. The par amount of bonds of any

308

FEDERAL RESERVE BULLETIN.

APRIL 1,

1918.

such series which may be purchased in the twelve months' j such bonds or certificates, but not also in United States
period beginning on the date of issue, shall not exceed ! gold coin, and he may dispose of such bonds or certificates
one-twentieth of the par amount of bonds of such series I in such manner and at such prices, not less than par, as he
originally issued, and in each twelve months' period ! may determine, without compliance with the provisions
thereafter, shall not exceed one-twentieth of the amount ! of the third paragraph of section one. In determining the
of the bonds of such series outstanding at the beginning amount of bonds and certificates issuable under this act
of such twelve months' period. The average cost of the i the dollar equivalent of the amount of any bonds or certibonds of any series purchased in any such twelve months' ficates payable in foreign money or foreign moneys shall
:
period shall not exceed par and accrued interest.
be determined by the par of exchange at the date of issue
"For the purposes of this section the Secretary of the thereof, as estimated by the Director of the Mint, and proTreasury shall set aside, out of any money in the Treasury j claimed by the Secretary of the Treasury, in pursuance of
not otherwise appropriated, a sum not exceeding one- the provisions of section twenty-five of the act approved
twentieth of the amount of such bonds issued before April August twenty-seventh, eighteen hundred and ninetyfirst, nineteen hundred and eighteen, and as and when any four, entitled 'An act to reduce taxation, to provide revemore such bonds are issued he shall set aside a sum not ex- j nue for the Government, and for other purposes.' The
ceeding one-twentieth thereof. Whenever, by reason of Secretary of the Treasury may designate depositaries in
purchases of bonds, as provided in this section, the amount foreign countries, with which may be deposited as he may
so 8e\aside falls below the sum which he deems necessary determine all or any part of the proceeds of any bonds or
for the purposes of this section, the Secretary of the certificates authorized by this act, payable in foreign
Treasury shall set aside such amount as he shall deem money or foreign moneys.
necessary, but not more than enough to bring the entire
"SEC. 17. That the short title of this act shall be {Secamount so set aside at such time up to one-twentieth of the Liberty Bond Act.1 "
amount of such bonds then outstanding. The amount so
SEC. 7. That the act entitled "An act to authorize an
set aside by the Secretary of the Treasury is hereby appro- | issue of bonds to meet expenditures for the national
priated for the purposes of this section, to be available security and defense, and, for the purpose of assisting in
until the expiration of one year after the termination of the the prosecution of the war, to extend credits to foreign
war.
Governments, and for other purposes," approved April
"The Secretary of the Treasury shall make to Congress 24, 1917, is hereby amended by adding a new section to
at the beginning of each regular session a report including read as follows:
"SEC. 9. That the short title of this act shall be 'First
a detailed statement of the operations under this section.
"SEC. 16. That any of the bonds or certificates of in- Liberty Bond Act.'"
SEC. 8. That the short title of this act shall be "Third
debtedness authorized by this act may be issued by the
Secretary of the Treasury payable, principal and interest, Liberty Bond Act.»
in any foreign money or foreign moneys, as expressed in
Approved, April 4, 1918.




309

FEDERAL RESERVE BULLETIN.

AMBIT- 1, 1918.

INFORMAL RULINGS OF THE BOARD.
Below are reproduced letters sent out from
time to time over the signatures of the officers
or members of the Federal Reserve Board
which contain information believed to be of
general interest to Federal Reserve Banks and
member banks of the system:
Draft Drawn for Insurance Premium as a Trade Acceptance.
[To a Federal Reserve Bank.]

The Board has considered carefully the question raised in your letter of March 1. and I am
instructed to say to you that a draft drawn by
a casualty company against a policy holder for
premiums could hardly be said to be a draft by
the seller on the purchaser of goods sold and
would not, in the opinion of the Board, come
within the Board's present definition of a trade
acceptance.
It is, of course, within the power of the Board,
to extend this definition so as to include drafts
drawn for insurance, services rendered, etc., if
it determines this to be advisable. It would,
however, require rather a forced construction
to treat a draft drawn for an insurance premium
as a trade acceptance under the present definition of the Board.
MARCH 6,

1918.

Cattle as Readily Marketable Commodity.
(To Federal Reserve Banks.)

An informal ruling of the Board is published
on page 65, volume 2, of the Federal Reserve
Bulletin to the effect that it is the view of the
Board that cattle should be considered as a
readily marketable commodity and that a
Federal Reserve Bank may consider as eligible
a bankers' acceptance secured by chattel mortgage on cattle.'
This has apparently been, construed to mean
that a national bank may accept drafts if secured at the time of acceptance by a chattel
mortgage on cattle.
In. the particular instance in. which this ruling
was made the drafts were drawn against a trust
company which was not a member of the
Federal Reserve system, and. the question before
the Board was whether or not" this banker's
acceptance was eligible for discount by a
Federal Reserve Bank and not whether a
national bank was authorized to accept drafts
or bills of exchange secured by a chattel mort-




gage. As the language of the ruling is, however, susceptible of this interpretation the
Board desires to correct any misapprehension
on the subject and has ruled that drafts or bills
of exchange drawn in domestic transactions
against a national bank can not, under authority of section 13, be accepted when secured by
a chattel mortgage on cattle, but only when
accompanied by shipping documents or when
secured by a warehouse receipt or other similar
documents conveying or securing title to
readily marketable staples.
While cattle may be treated as readily marketable staples, a chattel mortgage is not considered a document similar to a warehouse
receipt, since the borrower retains the possession of the goods and conveys to the bank only
the legal title.
The .Board having reached the conclusion
that national banks are not authorized to accept
bills secured by chattel mortgages on cattle,
deems it advisable that Federal Reserve Banks
should consider as ineligible bills drawn against
the security of such chattel mortgages, whether
accepted by member or nonmember banks.
MARCH 29,

1918.

Tractors Used in Agricultural Operations.
(To Federal Re-serve Banks.)

The Board has received many inquiries of late
as to the eligibility of notes given by farmers in
payment of tractors used by them in agricultural
operations. The Board has already ruled that
notes given for the purchase price of farm implements which are to be resoldf may be discounted
as commercial paper, and, if the implements are
not to be resold but are to be used for an agricultural purpose notes given in payment ma}'
be discounted as agricultural paper. The
Board has considered the question whether a
tractor can be regarded as a farming implement
or whether it must be treated as a permanent
fixed investment. While it is expected that
the use of a tractor will be extended, over
several seasons, this circumstance does not
make necessary the classification of a tractor
as a fixed investment. Horses and mules
bought for 7farm work T are purchased with
several years use in view , yet there can be no
question that a note given by a farmer in payment of a pair of mules to be used in farm
work, maturing within six months, is eligible

810

FEDERAL RESERVE BULLETIN,

APRIL 1, 1918.

as agricultural paper. Where tractors are used J tion. The capacity of the Bureau of Engraving
to supplement the work of horses or mules or j and Printing is strained to the utmost, and the
are used altogether instead of these animals, it | Board feels that the banks and the public can
seems to the Board that notes given by farmers ; render a public service by acting upon this
for the purchase price of tractors, and maturing i suggestion.
within six months, should be admitted to dis-: MARCH 30, 1918.
count as agricultural paper, and you are requested to advise your member banks accordNotes of Farmers for Commodities Used in Farming.
ingly.
;
(To a Federal Reserve Bank.)
MARCH 27, 1918.

Receipt is acknowledged of your letter of
February 23, asking for a ruling of the Board
Bank Examination Forms.
. on the right of a, Federal Reserve Bank to
: discount as agricultural paper notes of farmers
(To Federal Reserve'Banks.)
i executed for the purchase price of commodities
A suggestion has been made by one of the | used for farming purposes.
Federal .Reserve agents that an effort should ! In reply you are advised that in the opinion
be made to induce the banking departments of ! of the Board where a farmer makes his note
the various States to adopt for use of exam- | payable to the seller of a commodity and actuiners in making reports of examination a form | ally uses the commodity for agricultural purused by the Federal Reserve Boards' Division | poses, such a note may be treated as agricultural
of Audit and Examination (Form 103). It is paper, whether discounted with the member
realized, of course, that it will probably be very bank by the farmer as the maker or by the
difficult to accomplish this, and that many seller as the indorser.
bank commissioners may flatly decline to
the farmer makes his note payable to
change their forms. On the other hand, some theWhere
member
bank and uses the proceeds for an
of them may be willing, after consulting with agricultural purpose,
such note may likewise
their examiners, to adopt the Board's form, in be discounted by a Federal
Reserve Bank as
which case a step toward uniformity will have agricultural paper. If, however,
under either
been attained. The Board has never com- of the foregoing cases the farmer does
not use
municated with any of the bank commissioners or intend to use the commodity purchased
for
regarding this matter, but would be pleased if an agricultural purpose, although it is capable
each Federal Reserve agent would ascertain of being so used, the note in question should
the views upon this subject of the bank comtreated as commercial paper and not as
missioners or superintendents of the States in be
agricultural
paper and should not be redishis own district.
counted by the Federal Reserve Bank if it has
MARCH 29, 1918.
a maturity in excess of 90 days.
MARCH 6, 1918.
Redemption of Federal Reserve Notes.
(To Federal Reserve -Banks.)

Drafts for Purchase of Electrical Goods, Including Cost of
Installation, as Trade Acceptance.

The Board is advised by the Division of Issue
(To a Federal Reserve Bank.)
and Redemption that redemptions of Federal
Reserve notes are running in very large amount ! Receipt is acknowledged of your letter of
and that in many instances notes are sent in February 19, submitting for consideration of
the Board the question whether drafts drawn
which are fit for circulation.
The Board understands, of course, that there for the purchase price of electrical and mechanis a strong preference and demand for new bills, ical goods, whicn include the cost of installabut in times like the present, when it is neces- tion, may be treated as trade acceptances when
sary to economize in all directions, it seems that such drafts are accepted by the purchaser.
It appears that it is customary for the seller
the spirit of economy should be extended also
to the use of currency. It is suggested, there- of such goods to contract for their installation
fore, that Federal Reserve Banks ask their and to include the cost of installation in the
member banks to continue to pay out Federal selling price.
In the opinion of the Board such an acceptReserve notes as long as they are reasonably
fit for use, and to refrain from sending notes to ance would come within the Board's definition
Washington for redemption unless they are so of a trade acceptance.
worn or soiled as to be actually unfit for circulaFEBRUARY 23, 1918.




, 1918.

TEDEBAL BESEBVE BULLETIN.

311

LAW DEPARTMENT.
The following opinions of counsel have been Reserve Act on the acceptance power of naauthorized for publication by the Board since tional banks.
the last edition of the Bulletin:
As an alternative the national bank might
treat
this as a loan to its customer and might
Acceptances by Correspondents at Request and under
show
its liability to its correspondent, in its
Guarantee of National Banks.
report of condition, as money borrowed, in
Drafts accepted by foreign correspondents at the rewhich case it would of course be subject to
quest, and under the guarantee of a national bank in the
United States, should be reported as a direct liability of the limitations of section 5202, Revised Statsuch national bank, and should be treated as subject to utes.
the limitations imposed by the Fedora] Reserve Act on
A different situation is presented where a
the acceptance power of national bauks.
| national bank in the United States arranges
| with its foreign correspondent to accept drafts
MABCH 7, 191.8.
j for the account of one of its customers under
SIR: In the accompanying letter your office
j an agreement that if the'Customer does not
is asked whether drafts or bills of exchange ac| provide funds before the maturity of the accepted by foreign correspondents at the inceptance with which to pay it the national
stance and request, and under guarantee of
bank will do so. In such case the national
national banks in the United States, should
bank would be only contingently liable on the
be reported as acceptances of the national bank
acceptance and need not show this as an acmaking such guarantee, in its report of conceptance liability.
dition. It has been suggested that such, acRespectfully,
ceptances should be shown as contingent liaM. C. ELLIOTT, Counsel.
bilities of the bank. I am unable to agree

To Hon. JOHN SKELTON WILLIAMS,
with this conclusion.
Comptroller of the Currency.
A national bank which arranges with its correspondent to accept a bill or draft, under the
circumstances recited, undertakes and agrees Acceptances Wiikout Documents Attached.
with its correspondents to furnish funds with The acceptance of a draft by a member bank against an
which to pay the acceptance at maturity. Its acceptance agreement which purports to assign to the
liability, therefore, is to all intents and pur- bank certain collateral security, but which does not speposes the same liability that is assumed where cifically mention any security as assigned is an ordinary
accommodation acceptance, and is not authorized by law.
the national bank itself accepts the draft.
MARCH 22, 1918.
It is true that the acceptance in the ease
under consideration is not negotiated at an | SIR: From the accompanying letter it apacceptance of the national bank but rather as an pears that a certain bank has entered into an
acceptance of its correspondent. The. author- arrangement with a firm of brokers, under
ity of the national bank:, however, to guarantee which it accepts drafts drawn by the brokers
such an acceptance is an incident of its author- i against an acceptance agreement which purity to accept. In other words, the national ports to assign to the bank collateral security,
bank in such case is exercising this power but which does not specifically mention any
j security as assigned.
through an agent.
In the opinion of this office, this is an orIn the opinion of this office, all such acceptances should be reported as acceptances of the dinary accommodation acceptance which is not
national bank and should be treated as sub- authorized by law. The drafts are apparently
ject to the limitations imposed by the Federal drawn in a domestic transaction and can be




312

FEDERAL RESERVE BULLETIN.

APRIL 1,

1918.

properly accepted under the terms of the act provided the commodity is used for an agriculonly when shipping documents conveying or tural purpose or must it be treated as comsecuring title are attached at the time of ac- mercial paper eligible for rediscount only in the
ceptance, or when such drafts are secured at event that it has a maturity not exceeding
the time of acceptance by a warehouse receipt | 90 days.
or other such document conveying or securing i In my opinion it should be treated as agrititle covering readily marketable staples.
I cultural paper if the maker of the note is to
The acceptance agreement submitted does ! use the commodity purchased for an agriculnot in the opinion of this office, constitute a ! tural purpose regardless of the fact of whether
warehouse receipt or other similar document, ; the note is discounted by the maker or by the
conveying or securing title to readily marketa- indorser.
ble staples, and does not, of course, come • It will be observed that in dealing with comwithin the classification of shipping documents. ; mercial paper the act provides that—
Kespectfully,
* * * any Federal Reserve Bank may
M. G. ELLIOTT, Counsel.
discount notes * * * arising out of actual
| commercial transactions; that is, notes * * *
To Hon. JOHN SKELTON WILLIAMS,
issued or drawn for agricultural, industrial, or
Comptroller of the Currency.
j commercial pruposes, or the proceeds of
i which have been used, or are to be used, for
such purposes.
Note for Purchase Price of Commodities Used for AgriUnder this language a note executed by the
cultural Purpose.
purchaser
and delivered to the seller would be
A note given for the purchase price of a commodity can
be classed as agricultural paper eligible for rediscount eligible for rediscount as a "note drawn or iswhen having a maturity in excess of 90 days, if the maker sued for a commercial purpose," or a note
is to use the commodity for an agricultural purpose, re- 1 drawn by the purchaser payable to a bank the
gardless of whether the note is discounted by the maker
! proceeds of which were used for a commercial
or by the indorser.
purpose would likewise be eligible under the
MARCH 5, 1913.
\
SIR: AS I understand it the case submitted 1 terms of the act.
The act further provides that—
in the accompanying letter is as follows:
If a farmer makes his note payable to a | Notes * * * drawn or issued for agrimember bank and discounts it with the bank, I cultural purposes * * * a n c j having ma| turity not exceeding six months * * * may
using the proceeds for an agricultural purpose, : be discounted in an amount to be limited to a
this note is eligible for rediscount under section percentage of the assets of the Federal Reserve
13 because the proceeds have been used for an Bank to be ascertained and fixed by the Fedagricultural purpose.
• eral Reserve Board.
If, instead of discounting his own note with i The language of this proviso is similar to
the bank, the farmer makes his note payable : that used in connection with commercial paper;
to the seller of a commodity to cover the pur- ! that is to say, the notes referred to are dechase price of the commodity and uses the scribed as those "drawn or issued" for a specommodity purchased for an agricultural pur- " cific purpose. By analogy, therefore, a note
pose, can this note when discounted by the : executed by the purchaser to the seller for a
seller or holder with the member bank be i commodity used by the purchaser for an agritreated as agricultural paper and rediscounted ; cultural purpose should be considered as drawn
with the Federal Reserve Bank when it has a 1 or issued for an agricultural purpose within the
maturity in excess of 90 days ?
• meaning of the act.
In other words, the question raised is whether
If, however, the purchaser who executes the
a note given for the purchase price of a com- ; note did not intend to use the commodity for
modity can be classed as agricultural paper an agricultural purpose but for a commercial




i. T. 1918.

FEDEEAL RESERVE BULLETIN.

purpose it would not be eligible as agricultural
paper although the commodity purchased is
susceptible of use for an agricultural purpose.
Respectfully,
M. C. ELLIOTT, Counsel,
To Hon. W. P. G. HARDING,

Governor Federal Beserve Board.
Duty of National Banks to Assist in Financing the Government.
National banks were created primarily to assist the
Government in the conduct of its fiscal affairs, and in
performing the various services incident to the marketing
of Liberty bonds, war-savinga stamps, thrift stamps, and
any other obligations of the Government, they are carrying out one of the fundamental purposes for which they
were created.
FEBRUARY 2, 1918.

SIR: YOU have asked for an expression of
opinion of this office on the question' of how
far national banks should bo expected to assist
in financing the Government, and particularly
in marketing Liberty bonds, war-savings
stamps, thrift stamps, etc.
I am advised that, except in a few isolated
cases, the question is more or less academic,
since banks, as a rule, have shown a very
patriotic desire to aid the Government without, question in every possible way.
To properly answer your inquiry it is necessary to review very briefly the history of
Federal legislation on the subject of banking.
As you know, when the first bank of the
United States was created by Congress the
constitutionality of the act was bitterly contested. The Supreme Court, speaking through
Chief Justice Marshall, sustained its constitutionality on the ground that a bank "is
an instrument which is necessary and proper
for carrying on the fiscal operations of the
Government."
In other words, the fundamental purpose of
the creation of banks by Congress was to provide an instrument which could be used by the
Government in the conduct of its fiscal affairs.
The private capacity of the bank is purely
incidental to its public capacity. It was contended in the earlier cases dealing with this




818

subject that while Congress might have a
right to create a Federal or Government
bank to be used in the conduct of the fiscal
affairs of the Government it did not have the
right to vest such a corporation with the
power to engage in the banking business generally. In discussing this question Chief Justice
Marshall, in the case of Osborn v. U. S. Bank,
9 Wheat. 738, 861 (p. 860) said:
The whole opinion of the court, in the case
of McCulloch v. The State of Maryland, is
founded on, a:nd sustained by, the idea that
the bank is an instrument which is "necessary
and proper for carrying into effect the powers
vested 7 in the Government of the United
States. ' It is not an instrument which the
Government found ready made, and has supposed to be adapted to "its purposes; but one
which was created in the form in which it now
appears for national purposes only. It is,
undoubtedly, capable of transacting private as
well as public business. While it is the great
instrument by which the fiscal operations of
the Government are effected, it is also trading
with individuals for its own. advantage.
In answer to the argument that banks
should not be permitted to engage in private
business, the court said, on page 863:
The operations of the bank are believed not
only to yield the compensation for its services
to the Government, but to be essential to the
performance of those services. Those operations give its value to the currency in which all
the transactions of the Government are conducted. They are, therefore, inseparably connected with those transactions. They enable
the bank to render those services to the Nation
for which it was created, and are, therefore,
of the very essence of its character as national
instruments. The business of the bank constitutes its capacity to perform its functions,
as a machine for the money transactions of the
Government. Its corporate character is merely
incident, which enables it to transact that
business more beneficially.
It is obvious, therefore, that services performed for the Government hj a bank created
by Congress are not merely incidental to the
private operations of the bank, but the converse is a more accurate statement of the true
situation; that is to say, the private operations

814

FEDERAL RESERVE BULLETIN.

of the bank are merely incidental to the fundamental purpose for which such bank was
created, namely, to assist the Government in
the conduct of its fiscal affairs.
This is, of course, true of national banks
created b}^ the act of 1864. In Farmers'
National Bank v. Dearing, 91 U. S. 29, 33. the
court says:
The constitutionality of the act of 1864 is
not questioned. It rests on the same principle as the act creating the second bank of the
United States. The reasoning of Secretary
Hamilton and of this court in McCuiioch v.
Maryland (4 Wheat. 316) and in Osborne v.
The" Bank of the United States (9 id. 708)
therefore applies. The national banks organized under the act are instruments designed
to be used to aid the Government in the administration of an important branch of the
public service.
It is entirely consistent with the purposes of
the act creating such banks, therefore, for the
Secretary of the Treasury to call upon such
banks to perform any reasonable service that
may be required of them in financing the
Government's needs.
The act of June 30, 1864, specifically provides that such banks "may be employed as
financial agents of the Government and shall
perform all such reasonable duties * * *
as may be required of them."
The marketing of Liberty bonds, war-savings stamps, and thrift stamps, and of any
other obligations of the Government, involves—
(a) The receipt of applications for subscriptions.
(6) The allotment of subscriptions.
(c) The collection of the purchase price of
obligations subscribed for and sold.
(d) The delivery of such obligations.
(e) The conversion into other forms of obligations when permitted by law.
(/) The deposit of funds realized, from the
sale of such obligations.
(g) The disbursement of such funds.
(h) The payment of maturing United States
obligations.
In conducting these fiscal operations it is
necessary for the Secretary of the Treasury to




APRIL I,

1918.

employ agencies or instrumentalities in different
parts of the United States, and national banks
performing such services are clearly carrying
out one of the fundamental purposes for which
they were created.
Respectfully,
M. C. ELLIOTT, Counsel.
To Hon. JOHN SKELTON WILLIAMS,

Comptroller of the Currency.
Bankers Acceptances Growing Out of Export Transactions.
Where a dealer is engaged in purchasing the same character of goods for export and for domestic use, a member
bank accepting his draft drawn to finance an export transaction should require proper assurances that proceeds of
draft are, to be used in connection with such export transaction and that the acceptance will be paid out of proceeds of sale of goods exported.
APRIL 1, 1918.

SIR: It appears that certain dealers in staples who have a large domestic business are
under contract to export food to the allies.
The question has arisen, to what extent and
under what circumstances,member banks may
accept drafts or bills of exchange drawn by
such dealers.
(1) Where the drafts are drawn in a domestic
transaction, under section 13 they must be
accompanied by shipping documents or the
bank must be secured at the time of acceptance
by a warehouse receipt or other similar document conveying or securing title to the goods
involved.
(2) Where the draft grows out of a particular
transaction involving the export of goods, the
regulations of the Board require that the bill
must have been drawn under a credit opened
for the purpose of conducting or settling accounts resulting from such transaction.
In other words, it must appear that the bill
is drawn and the proceeds are used in connection with the export transaction. The Federal Reserve Bank must be satisfied, either by
reference to the acceptance itself or otherwise,
that it is eligible for rediscount. Satisfactory
evidence of the eligibility may consist of a
stamp or certificate affixed by the acceptor in
form satisfactory to the Federal Reserve Bank.

APRIL 1,

1918.

FEDERAL RESERVE BULLETIN.

315

In the case under consideration it is assumed State Bank Membership,
that the dealer is engaged in the purchase of
The Mississippi Legislature has recently
goods for export and is purchasing the same enacted the following law authorizing State
character and class of goods for domestic use. banks and trust companies to become member
Some difficulty may be encountered, therefore, !banks:
in ascertaining whether the goods purchased I SECTION 1. Be it enacted by the Legislature of the Slate of
in any particular transaction are to be used I Mississippi, and it is hereby enacted by the authority of
i the same, that any bank or trust company incorporated
for export or for domestic consumption.
under the laws of ^Mississippi shall have the power to subYou have asked that consideration be given !i scribe
to the capital stock and become a member of the
to the question of what evidence the accepting Federal reserve bank created and organized under an
bank should require if the acceptance grows j act of Congress of the United States approved the twentyout of a transaction involving the export of | third day of December, anno Domini one thousand nine
goods and what form this evidence should take. !1 hundred and thirteen, and known as the Federal reserve
act.
It is respectfully suggested that where the I SEC. 2. Any such bank or trust company shall comply
dealer desires to finance the purchase and sale i with the reserve requirements of the Federal reserve act
of goods to be exported his contract with the I and its amendments and the compliance of such bank or
bank should provide (a) that he has entered 1 trust company therewith shall be in lieu of, and shall
into a contract for the export of the goods of a I relieve such bank or trust company from, compliance
the provisions of the laws of this State relating to the
fixed amount; (b) that the total amount of I1 with
maintenance of reserves.
drafts drawn by him under the credit opened
to finance the export of such goods shall at no ! The Kentucky Legislature also recently
time exceed the aggregate amount of the im- j amended certain sections of the banking laws
port or export transactions contracted for and \ of that State so as to authorize State banks
in process of execution; (c) that the proceeds ! and trust companies to pledge any portion of
of drafts drawn against the accepting bank ! their assets as security for deposits of the
under this credit are to be used in connection '. United States Government; to provide that
with the export contracts referred to, and that I State banks and trust companies becoming
the proceeds of the sale of the goods exported : members of the r ederal reserve bank shall be
will be applied in payment of the acceptances : subject to all the provisions of, and have all the
unless the dealer has in. the meantime placed : powers com erred by, the Federal Reserve Act,
the bank in funds to meet them at maturity or and may conform to the reserve requirements
has secured such acceptances by shipping docu- I of the iVederal Keserve Act in lieu cf the reserve
ments, warehouse receipt, or other similar doc- requirements of the State laws; and to authorument conveying and securing title to readii}- ize the State banking commissioner to accept
| examinations made by the 1 ederal reserve
marketable staples.
Unless the dealer can and will assure the ! authorities in lieu of his official examinations
bank that the proceeds of the credit are to be ! and to furnish to the Federal reserve agent
used in an export transaction, and that the : copies of examinations and. reports of member
proceeds of the goods exported are to be used i banks.
to liquidate the acceptances, the dealer should i Section 579 of Carroll's Kentucky Statutes,
be required to treat the bills as drawn in do- . as so amended, provides in part as follows:
mestic transactions and the bank should i In addition to the powers heretofore conferred upon
; and now possessed by banks, trust companies, and comrequire security provided by section 13.
; bined banks and trust companies doing business under the
Respectfully,
! laws of this State, they are hereby authorized and empowM. C. ELLIOTT, Counsel.
ered subject to existing statutory or charter limitations to
To Hon. W. P. G. HARDING,




Governor Federal Reserve Bank.

pledge such portion of their assets as may be required by
law7 as collateral security for Government deposits made

316

FEDERAL RESERVE BULLETIN.

APRIL 1,1918.

with them, or any of them, by or under the authority of the than at sight or on demand." By section 800 of the act
United States.
the tax is payable in respect of such drafts and checks,
or in respect of the paper upon which they are written,
Section 584 now reads, in part, as follows:
by any person who makes, signs, or issues the same, or
Any bank or trust company, incorporated under the for whose use or benefit the same are made, signed, or
laws of this Commonwealth, which shall become a member issued. By section 802 anyone is guilty of a misdemeanor
of a Federal reserve bank shall be subject to all the pro- who "(a) makes, signs, issues, or accepts, or causes to be
visions of the Federal Reserve Act and its amendments made, signed, issued, or accepted, any instrument, docuand to the regulations of the Federal Reserve Board ap- ment, or paper of any kind or description whatsoever
plicable to such bank or trust company and shall have all without the full amount of tax thereon being duly paid."
the powers and assume all liabilities conferred and imposed
(1) The general rule is that a taxable draft or check
by said act in regard to State member banks, and any such becomes subject to the tax concurrently with its delivery.
bank or trust company shall comply with the reserve re- In the case of a draft the rule means that the tax attaches,
quirements of the Federal Reserve Act and its amend- not when it is signed by the drawer, or presented to the
ments, and the compliance of such bank or trust company drawee for acceptance, or accepted by him, but when it
therewith shall be in lieu of and shall relieve such bank is delivered to the payee, if drawn to a third person, or
or trust company from compliance with the provisions of negotiated by the drawer, if drawn to his order, whether
the laws of this Commonwealth relating to the maintenance such delivery or negotiation takes place before or after
of reserves.
acceptance.
If a draft was drawn and accepted before the passage of
Section 165 now reads, in part, as follows:
the act, but not delivered or negotiated until afterwards,
the tax is payable. If a draft is presented to the drawee
Provided that any bank or trust company or combined
for acceptance and discount by him, stamps must first
bank and trust company which shall become a member of
be affixed by the drawer, for the acceptance and delivery
a Federal reserve bank created and organized under the
are simultaneous.
act of Congress known as the Federal Reserve Act shall be
The payee or the indorsee from the drawer must see to
subject to the examination required under the terms of the
it that the drawer, as the person "who makes, signs, or
said Federal Reserve Act, and the banking commissioner
issues" the draft, pays the tax before delivery. "Acmay, in his discretion, accept examinations made by the
cept" is used in the penal provision in section 802 in the
Federal reserve authorities in lieu of examinations made
general sense of "receive," not in the special sense peunder the laws of this Commonwealth; and the banking
culiar to drafts. No drawee accepting an unstamped uncommissioner is further authorized and directed to furnish
delivered draft would violate the law; but if the draft has
to the Federal reserve agent of the district in which such
already become taxable because of a prior delivery, the
member bank may be situated copies of reports and examacceptor must be sure that stamps are affixed.
inations made of such member bank.
(2) The general rule is that a taxable draft or check
becomes subject to the tax if delivered within the territorial jurisdiction of the United States. The rule means
War Stamp Taxes.
that the tax does not attach to a draft drawn and accepted
Following is a reprint of Treasury degision here, but delivered abroad, whether before or after ac(T. D. 2682) relating to war stamp taxes on ceptance, but does attach to a draft delivered here,
whether before or after acceptance, although drawn and
negotiable instruments:
accepted abroad. In general, a draft sent through the
TREASURY DEPARTMENT,
mail is delivered when and where deposited in the mail
OFFICE OF COMMISSIONER OF INTERNAL REVENUE,
addressed to the payee or the indorsee from the drawer.
Washington.
If a draft drawn abroad, on a foreign drawee, with a
To Collectors of Internal Revenue:
foreign payee, passes through a bank here in the course
The stamp tax on drafts and checks imposed by Schedule of collection, no tax is payable, unless it should be deA of Title VIII of the act of October 3, 1917, attaches to livered by an agent of the drawer to an agent of the payee
drafts or checks (1) at the time of delivery, if (2) delivered within the United States. Because of the constitutional
within the territorial jurisdiction of the United States restriction that no tax or duty shall be laid on articles
and (3) expressed to be payable otherwise than at sight or exported from any State, drafts with bill of lading aton demand, but not to drafts or checks not yet delivered, tached covering goods in the course of exportation are
or delivered in a foreign country, or expressed to be pay- not subject to the tax.
(3) The general rule is that a draft or check delivered
able at sight or on demand.
Schedule A of Title VIII of the act of October 3, 1917, within the United States is subject to the tax if expressed
imposes a tax on " 6. Drafts or checks payable otherwise to be payable otherwise than at sight or on demand.




APRIL 1,1918.

FEDERAL RESERVE BULLETIN.
__

317

Accordingly, an ordinary sight draft with bill of lading I or delivered before acceptance the holder would be
attached is not taxable, but a draft expressed to be pay-! obliged to stamp it on acceptance, in default of which
able at sight "on arrival of car," or containing a memo- ! both he and the acceptor would be liable for the statutory
randum to hold until arrival of car, is. A sight draft, | penalty.
accompanied by instructions outside the instrument, as i For the purposes of the tax there is no difference in the
"Do not present until arrival of car," or some such memo- I treatment of ordinary bills of exchange, trade acceptances,
randum, is not taxable. A sight draft accepted and paid \ and bankers' acceptances, as defined by the regulations
for the drawee by the collecting bank, which holds it I of the Federal Reserve Board,
and charges interest until the drawee takes it up, is not'
,
DANIEL C. ROPER,
taxable.
\
Commissioner of Internal Revenue.
A draft might be drawn stating no time for payment, j Approved March 26, 1918.
which would class it as a sight draft, and be accepted at j
W. G. MCADOO,
90 days, which would change its nature. If negotiated '
Secretary of the Treasury.




318

FEDEKAL RESERVE BULLETIN.

APRIL 1, 1918.

SUMMARY OF BUSINESS CONDITIONS, MAR. 23, 1918.
District No. 2—
New York.

District No. 1—
Boston.
General business
Crops:
Condition
Outlook

Active

i Good

Foreign trade...

Money rates

Busy

Active.

Very busy..

Below normal

Building l i g h t ;
shipbuilding active.

Decreasing.

General trade restricted.
Slight increase over
same time last
i
year.
Increasing
: Steady at 6 per cent.
I Increase..

Kailroad, decrease;
post office, increase.
Scarce and well
paid.

Railroad, post office,
and oilier receipts.
Labor conditions

Heavy.

District No. 8—
St. Louis.

Good

General]j' active

Good, except corn .! Good
| Promising.
! Favorable

j

i

Industries of the dis- j Essential
Indus- j Busy
tric-t.
i tries fuJlv cm- i
ployed.
Const•i;ie1 Ixi, build- Xoitclivity worthy ! Quiet
Lug, and engineerof mention.

District No. 4Cleveland.

Active

Satisfactory.
Good

Prosperous
Satisfactory,
cept labour.
Active

Necessary
lines
busy.
Very limited

Increase..

Very firm..

.do..

Decreasing.

.do..

District No. 9—
"Minneapolis.
| Good
i
! Sp r i n g

Unsettled
Improving

District No. 10—
Kansas City.
j Good

i Fair to good
outlook \ More favorable

i Active
'
' Slow.

District No. oRichmond.

Active

do....
Decrease.

Demand for skilled Strong demand,
labor greater than
high wages.
supply.
i G

District No. 7—
Chicago.
General business
Crops:
Condition
Outlook

Good

frair

,

Industries of the district.
Construction, building, and engineering.

Bank clearings..

District No. 3—
Philadelphia,

| Aetivie
:
Operations generIillv curtaiied.

District No. 6—
Atlanta.
j Above normal.

' Good.
ex- |
Do.
i
Busy.

Private building i Very light.
negligible; Gov- '
eminent work \
active.
•
Limited by freight) Unsatisfactory.
room.
i
Increase
! Increase.
Good demand, 6
per cent.
Kailroad, irregui lar; post office,
! volume large.
j In demand, much
j complaint.

Firmer.
Stationary.
Unsettled.

j Satisfactory and
j encouraging.
' Weather
condi! tions very favorj able, stimulat! ing activities in
all'lines.

Generally favorable.

District No. 11—
Dallas.

District No. 12—
San Francisco.

Good

Active.

Fair
Generally
able.

Good.
Favorable.

favor-

Active

Vorv active.

Building inactive; | 13 per cent desome revival; be-j crease over year
iievod will soon | ago.
bo fit-live.

j

Satisfactory; lack j Large increase.
of shipping has !
Iiic-i-er-sc

*. Increase

• Increasing
!
j Firm

Money rotes

Firm

\'niiro.$d. pc.si o'Vioo
and olhcr rc-coipls
I^abor cosidiiions..

Increase in postal j Little change
receipts.
Labor
general! v Unsettled
i Good
sasisfled.

Outlook.
Remarks

No misgivings




Firm

Eneouniglrig

do

' Great.lv increased.j Increase of 3i.3 per Largely increasing.
|
"
! cant.
' !
j Slight increase
| Firm: demand in- ! Finn.
creasing.
'
; Increase
I Increasing.
j
I
I Very unsettled
j Scarcity in many I Unsettled, but imlines, even with : proving.
advancingwages.i
Favorable
Favorable
Favorable.
"Weather condi- Favorable features
tions have imobtain in all
proved farm outbranches of buslook; wholesale
iness: some raintrade is very acfall in drouth
tive; mid-contisections,
and
nent oil field
conditions improduction
is
proved, Though
increasing.
far from normal;
where rains have
fallen,
conditions are normal, and prospects good: mercantile lines active; industries
generally busy.

APBIL 1, 1918.

FEKEBAL EESEEVE BULLETIN.

319

GENERAL BUSINESS CONDITIONS.
There is given on the preceding page a summary of business conditions in the United
States by Federal Reserve districts. These
reports are furnished by the Federal Reserve
agents, who are the chairmen of the boards of
directors for the Federal Reserve Banks of the
several districts. Below are the detailed reports as of approximately March 23:

certificates of indebtedness have been very
large and have been widely distributed over the
district. This, however, is due more largely to
the nontaxable feature than to any marked
change in the money situation. While money
has continued to be well loaned up and banks
are taking care of practically none but their
own customers, some out-of-town banks have
been small buyers of commercial paper. The
DISTRICT NO. I—BOSTON.
tension in the money market of the past few
Reports of increased business activity are weeks has been relieved, however, to some
being received from all parts of the district. extent by the decrease in the demand for loans
Cities outside of Boston having war orders are from the cotton and wool industries, the deexperiencing good retail trade through the mand for carrying these commodities* having
purchasing power of well paid workmen, who decreased through Government and seasonable
apparently are saving but a small part of their conditions. Time collateral money has been
particularly hard to obtain. Call money rules
increased wages.
Retail stores in Boston report heavy Satur- at 5£ to 6 per cent. Time collateral loans are
day sales which they explain by the presence of quoted nominally 6 per cent for dates not over
large numbers of week-end visitors going to four months. Commercial paper is 6 per cent
Army and Navy cantonments and also through almost regardless of the character of the name,
although in very exceptional cases that rate has
the demand already outlined.
Cities and towns not having war industries been shaded.
are complaining that their inhabitants are
The wool trade has been unsettled by the
being attracted to other places by offers of more action of the Government in executing its
lucrative employment. In some localities this option on Argentine wools and there is practimovement is assuming large proportions.'
cally no trading between dealers. The supply
The approach of spring and warm weather on hand is small, and prices are firm. For the
should accentuate good trade, and both manu- first time in years dealers are not contracting
facturers and dealers are optimistic as to the for western wool on the sheeps' back, but are
future, but their tendency is to so conduct their proceeding on conservative lines and waiting
business as to further the conduct of the war. to see if there will be any Government regulaSome domestic industries have been directly tions in regard to it. Wool released from Ausbenefited by war conditions and this is partic- tralia by the English Government continues to
ularly true of the fish trade which is an im- arrive. Woolen and worsted mills are almost
portant industry in this section. Dealers and all running to capacity.
Retail shoe trade is much better than
fishermen alike have prospered because of the
during January and February, the increase in
excessive demand and high prices.
New England is whole-heartedly in the war. business having started about March 1, and
Income taxes and Government regulations are it is felt that with the approach of Easter, if
being recognized more generally as necessities the weather is good, business will be large.
to its successful conclusion and, therefore, are This is helping collections, which are showing
a decided improvement. It is reported that
accepted cheerfully.
In spite of the fact that money has been domestic business of manufacturers is only
scarce, the subscriptions to the recent issues of about 65 per cent of normal, but with Govern-




320

FEDEEAL RESERVE BULLETIN.

ment orders factories are running at about 90
per cent of capacity. Leather prices are soft,
except in those lines that are used for army
shoes.
Cotton mills are running at capacity, with
advance orders booked well into next summer.
It is a seller's market and mills are reticent
about accepting too large an amount of business for future delivery. This is true of both
fine and coarse goods mills. Prices are advancing but are being paid willingly, the main
question on contracts being date of delivery.
The fixing of a price on the Government order
that has been pending in Pall River for some
time has tended to make the manufacturers
even more reluctant to take additional domestic orders.
The exchanges of the Boston Clearing House
for the week ending March 16, 1918, were
$254,899,211, compared with $221,114,491 for
the corresponding week last year and $234,616,383 for the week ending March 9, 1918.
Building and engineering operations in New
England from January 1 to March 21, 1918,
amounted to $27,622,000, as compared with
$32,201,000 for the corresponding period of
1917.
The receipts of the Boston post office for
February, 1918 show an increase of $115,625.42, or about 17 per cent more than February, 1917. For the first 15 days of March,
1918, receipts were about 19 per cent, or
$90,558.01 more than for the corresponding
period of last year.
Boston & Maine Railroad reports a loss from
operation, after taxes, for January, 1918, of
$669,780, as compared with net operating income taxes of $816,694 for the corresponding
month of 1917.
Loans and discounts of the Boston Clearing
House banks on March 16, 1918, amounted to
$475,039,000, as compared with $476,410,000
last month and $465,298,000 on March 17,
1917. Demand deposits on March 16, 1918,
amounted to $400,246,000, as compared with
$392,771,000 on February 16, 1918, and $371,143,000 on March 17, 1917. Time deposits on
March 16, 1918 totaled $20,745,000, as com-




APRIL 1,

1918.

pared with $22,787,000 on February 16, 1918,
and $33,319,000 on March 17, 1917. The
amount "due to banks" on March 16, 1918,
was $125,296,000, as compared with $129,913,000 on February 16, 1918.
DISTRICT NO. 2—NEW YORE.

Business activity and sentiment show further
recovery from the disturbed conditions and
uncertainty prevailing during the early part
of the year. A number of railroad freight
embargoes have been removed, but a new
embargo has been placed on shipments of lessthan-carload lots to the port of New York.
Traffic is moving more freely, though there is
still much congestion of goods and shortage
of cars. Continued mild weather has lessened
the pinch of fuel shortage.
Reports of increased production come from
the steel industry, upon which so many other
war industries depend, indicating substantial
increase in the rate of output of steel ingots and
more favorable conditions as to transportation
and coke supply. Sales of pig iron for future
delivery have been very light, as difficulty is
experienced in producing material already
contracted for.
Industries devoting a considerable portion
of their capacity to Government orders are
very'active, though hampered by difficulty in
obtaining and holding skilled labor and obtaining the necessary transportation accommodation and supplies. The necessity for anticipating needs for raw material, in order to avoid
delays due to transportation difficulties and
other causes, has led to the acquisition of heavy
stocks and the reporting of large inventories,
but efforts are being made to pursue a conservative course in buying and to keep inventories
within reasonable bounds.
General retail business in New York City is
reported as fairly active. Country merchants
are having more active trade and are purchasing more freely. Chain stores report, good
business in February and March. Business in
the shoe trade continues quiet. Watches are
selling freely with demand greater than supply.
Other jewelry lines are reported quiet. Furni-

APRIL 1,1918.

FEDERAL RESERVE BULLETIN.

ture business is also quiet. Cloak and suit
sales are above those for the same period last
year, and buying is fairly active, notwithstanding continued advances in prices. Silk
production is estimated to be at about 75 per
cent of normal, silk prices having advanced
proportionately less than either cotton or
woolen prices, while sales are about normal and
stimulated by seasonable weather and the
approach of Easter. Textile and knitting
mills are very busy and demand for their
products is very keen.
Building operations continue light, while
demand for space for business and residence
purposes is resulting in an upward trend in
rentals.
In the foreign-exchange market a strengthening in lire exchange has followed measures
taken by the Italian Government to license all
dealings in lire at Italian centers. Spanish
exchange, on the other hand, has reached a
new high point.
Stock market average prices have continued
to move upward, especially for the railroad
stocks, with trading, however, in small volume.
Bond prices have eased off slightly. Several
new issues of short-term notes have sold readily
at prices to yield the public between 7 and 8
per cent, and New York City has placed
$20,000,000 short-term corporation stock on a
4.79 per cent basis.
During the month the banks haVe continued
to absorb a large volume of United States certificates of indebtedness, the amount outstanding in this district having increased from about
$1,200,000,000 on February 15 to over $1,550,000,000 on March 21. The request of the Secretary of the Treasury that every bank subscribe for a stipulated proportion of its resources has brought about a very much wider
distribution of the certificates in this district
than before. New York City institutions have
made substantial sales to customers.
Excess reserves of New York Clearing House
banks touched a low point on March 1 of
$12,500,000, but made prompt recovery in the
following week to $55,000,000. The issuance
of certificates of indebtedness and the move-




321

ment of funds in considerable amounts to other
districts, through the gold settlement fund,
have led to heavier borrowing from this Federal
Reserve Bank.
The ruling rate for call money, with an
occasional temporary easing, was 6 per cent
up to February 18, when an easing tendency
became apparent. The time mone}^ rate of 6
per cent has been nominal, as loans of this
class have been scarce. The rate for commercial paper has been steady at 6 per cent,
though-some sales have been made at a higher
rate. Commercial paper is being sold in good
volume with wide distribution, though borrowing needs have extended to such a degree as to
render difficult their complete satisfaction.
The market rates on bankers' acceptances have
shown a steady upward tendency, and are
quoted at 4f to 4-J- per cent, or about one-half
per cent higher than a month ago.
DISTRICT NO. 3—PHILADELPHIA.

Favorable weather conditions and considerable improvement in the fuel situation
have resulted in increased activity in most
lines of business.
The milder weather has benefited some retail
linos, the stores reporting business running
ahead of last year. Considerable difficulty is
experienced in obtaining adequate help, and
necessary increases in wages have added to the
already greatly increased cost of conducting
business.
Wholesalers report the receipt of more
inquiries for spring and summer requirements.
Jobbers of dry goods state that there is much
complaint regarding the scarcity of merchandise and the high level of prices, but business
continues in well-maintained volume. Jobbers
of hosiery, underwear, and knit goods have had
a very satisfactory season.
The demand for all kinds of silk goods has
been very good, but production is much
hampered by the restricted labor supply and
the congested conditions of traffic.
Business in cotton yarns has been very
active. The Government is buying large
quantities of cotton goods. Labor is scarce.

322

FEDERAL RESERVE BULLETIN.

There has been an unusually large and
steady consumption of wool. Mills have large
orders and are running full. Prices have been
uniformly strong. Supplies on hand are not
large, and goods are being sold at the price
ruling at the time of delivery.
The production of coal has responded to the
general improvement in business. Steam coal,
however, is available only in small quantities.
The United States Geological Survey estimated
production for the week ended March 9, 1918,
as 11,228,000 tons, which is the largest since
the week ended November 24, 1917.
The iron and steel mills have recovered
slowly from the conditions which curtailed
production, and are now running 60 to 75 per
cent of capacity.
The railroads have boon enabled to increase
their service and furnish transportation for the
materials Yvrhich have been tied up in various
sections of the country. The number of cars
moved over the Pennsylvania Railroad at
Lewistown Junction during February exceeded
tho figures for January by 15 per cent. The
continuance of mild weather during March
should result in a steady improvement in the
movement of cars.
There is no material change in the grocery
situation. The continuance of embargoes still
renders deliveries of commodities very irregular. The supply of sugar has increased. Flour
and its substitutes are in scant supply. Tho
demand for canned goods continues large.
Money rates have remained high, the market
in Philadelphia being on a 6 per cent basis.
Not very much choice commercial paper has
been offered, but there has been a liberal supply of the medium grade. The renewal of
notes by the customers of the banks continues.
Financial institutions are getting their houses
in order for the forthcoming Liberty loan
campaign.
Discount operations at the Federal Reserve
Bank during the month of February amounted
to $31,868,000, compared with $36,200,000 the
preceding month, and $1,682,000 in February,
1917. The Philadelphia institutions have re-




APRIL 1,

1918.

discounted in considerable volume, borrowings
by out-of-town banks being comparatively
small.
DISTRICT NO. 4—CLEVELAND.

Government requirements indicated in many
different ways have given merchants and manufacturers a new understanding of Government
needs and led them to rearrange their business
accordingly. Some readjustments have been
radical; many lines have been cut out and
others enlarged and developed. Business, benefited by the many experiences of the past
months, is gradually gaining added momentum,
and promises, if unhampered by fresh difficulties, to regain its former pace.
Manufacturing.—Rumors of new prices on
iron and steel about to be put into effect by the
Government have had the effect of holding
future contracts in abeyance. All steel mills
are believed to have large quantities of Government orders ahead and for the most part are
operating on a brisk scale. Steel business is
being more closely confined to Government
needs. Unprecedented orders and consequent
activity is the general judgment of steel men.
Small companies handling articles of necessity
are being organized, indicating investing power
on the part of the public. Pig iron is scarce in
the district and buyers are compelled to go
South for supplies. The expected large orders
for freight ears and locomotives will give the
steel business added impetus.
The clay and brick industry is still very much
hampered through lack of transportation facilities, and in consequence prpduction is very
much decreased.
The coal trade shows considerable improvement, but is still under normal. In one large
manufacturing coal-producing district the supply of cars has been the best in months. Additions to coke ovens operating is reported, and
more decided activity in this line is expected.
For the purpose of coal conservation, and as
agreed to by window-glass manufacturers, 45
plants, practically all located in this district,
shut down on March 19 and 15 plants resumed

APRIL 1,

1918.

FEDERAL RESERVE BULLETIN.

to continue until July 1. it is estimated that
production for the year will be about 50 per
cent of the usual output.
Mercantile lines.—The dry goods jobbing
business continues to be healthy and substantial, and is increasing in volume. Merchants
buy readily even though the prices are high,
which shows a healthy confidence.
Retailers report exceptionally active business
in both men's and women's ready-to-wear
clothing; and departments catering exclusively
to women customers are enjoying an unusually
brisk business.
Agriculture.—Winter wheat, except in few
instances, and then in restricted areas, is reported in good condition, and the prospects for
a bumper yield are very fair. In some localities
there is still a large acreage of last year's corn in
the fields. This will delay spring plowing and
may somewhat reduce new acreage. Farm
bureaus are importing and distributing seed
corn tested for germination, and while the
price is high, it is expected that there will be
sufficient for the spring planting. Never before has the farmer given so much attention to
the selection of seeds, and it is believed that it
will result in a banner year in the production
of foodstuffs. The tobacco crop has been
marketed at high prices, and the farmers in
the tobacco districts are said to be in excellent
financial condition. On account of the high
price of raw cattle, hogs and sheep are replacing them to some extent.
Collections.—Collections are uniformly reported good, with a larger volume of cash than
heretofore and in excess of increased business.
Transportation.—Transportation has improved decidedly, but in many cases is still
considered unsatisfactory and unreliable, and
apparently has not made the advance it should
have made under the favorable weather conditions. However, delayed freight is reported
being forwarded and congestion at many points
relieved. Lack of men and equipment still
continues to embarrass the situation. It is
thought that lake navigation will be late in
opening on account of the ice.




323

Labor.—There is a keen demand for labor at
increasing wages. Large advances are the
order of the day and finishing mills in the
wrought-iron trade are said to be paying the
highest wages ever paid in the history of the
x
ron business. In the smaller factories women
are employed to do the lighter forms of work.
an}" complaints are made of the shortage of
farm labor, and as the situation is fully realized
it is believed that means to relieve same will
be effected.
Money and investments.—Loans are largely
confined to borrowers who are engaged in lines
to help win the war. The demand is very
strong. Reports of banks that have increased
rates on deposits are for the most part unfounded. Bankers generally frown on this
practice and. are inclined to follow the request
of the Federal Reserve Board. Investments
are largely confined to Government and
kindred issues.
Building.—Building operations are practically at a standstill, which is an unusual condition for this time of year.
The few instances of increase in valuation of
permits granted are occasioned by the erection
of large factories in connection with Government work, and the houses required for the
workingmen. In many of the steel and manufacturing centers the grave need of additional
houses convenient to the plants is daily becoming more apparent and rents in those localities are increasing rapidly as a result.
DISTRICT NO. &—RICHMOND.

The return of good weather has renewed and
stimulated activities in every direction. All
lines of business are still feeling the benefit of
the prosperous results to the farmers from last
season's crops and, with very few exceptions,
all industries are enjoying exceptional prosperity. These conditions are, of course, especially stimulated by war conditions. The
volume of trade is limited by inadequate labor
and transportation and the difficulty of obtaining raw materials. Financial statements for
the past year, as a rule, disclose very satisfac-

324

FEDERAL RESERVE BULLETIN.

APRIL 1,

1918.

tory returns, the high cost of production being Some sales of farm land are reported. Wide
fully offset by the prices obtained for finished publicity has been given by circulars and newsproducts.
papers throughout the district to the efforts of
Complaints as to the shortage of fuel have the Federal Reserve Board, through its Capital
ceased, and it is being suggested to private con- Issues Committee, to limit investments and
sumers that they obtain this summer their sup- capital requirements to undertakings and
plies for next winter in order to equalize during activities necessary to win the war. All other
the year the demands for transportation and improvements, including nonessential building,
avoid an abnormal demand for transportation are at this time regarded as undesirable. The
in tins direction next fall and winter. Efforts Board's efforts in this direction are meeting
to increase the supply of oil in West Virginia with hearty cooperation, both by the people
are being nullified to a considerable extent by and commercial, civic, and other organizations
the difficulty in securing deliveries of the nec- throughout the district.
essary piping and machinery. Complaints as
The almost abnormally prosperous condito transportation are still made. This is tions in the agricultural districts, which have
especially the case at points where Government been heretofore referred to, have left the
operations are most active, and are reported farmers even at the close of the past season
especially acute at Norfolk and other Chesa- with more money on hand than ever before.
peake Bay points.
Some crops are not yet entirely marketed, and
The past month has been favorable for agri- farmers are reported as still making deposits
cultural purposes, and wheat is reported to in the banks. These conditions arc still
have come through the winter in good condi- reflected in large deposits, and the banks have
tion. Lands are in excellent condition owing not yet been fully subjected to the usual heavy
to the hard freeze and numerous snows during spring drain, due to withdrawals for making
the past winter. Plowing is going on actively new crops. A large volume of cotton is still
and preparations are being made for as early being carried at our ports, awaiting shipment
planting as the weather will permit, a full acre- abroad or to northern mills. In addition,
age being anticipated of corn, cotton, spring southern mills have secured and are carrying
oats, and other crops. Fertilizers are in good the necessaiy raw cotton to supply them until
demand, the supply especially limited by lack the next crop. While the banks of the district
of transportation facilities, and an output of are meeting these demands largely out of their
not over 80 per cent is anticipated. Dealers in own resources, the abnormal volume of such
agricultural implements complain of inability demands is reflected in $35,000,000 to
to secure sufficient transportation to make $40,000,000 of rediscounts being carried by the
deliveries of goods which they have sold. It is Federal Reserve Bank. A considerable numto be hoped that the efforts of the Government ber of member banks apparently invested last
to protect and supply farm labor will relieve fall and winter, when their resources were at
the situation in this direction, as otherwise it high water, in outside commercial paper which
will be impossible to produce and harvest any- is now maturing and being collected or rething like adequate crops.
discounted for the purpose of meeting the
Manufacturers, particularly cotton mills, are natural decline (less than normal, however) in
continuing to find their products in urgent de- i deposits at this time of the year. The redismand, running as nearly on full time as labor i count of new paper for agricultural purconditions will permit, and output sold ahead ! poses is not relatively large, and the normal
for several months.
i liquidation in the lines referred to above may
Sales of real estate are very limited, particu- I be expected to reasonably supply the increaslarly in the cities, as investors are not disposed ing agricultural demand which may now be
at this time to tie up resources in this direction. anticipated.




APRIL 1,

1918.

FEDERAL RESERVE BULLETIN.

325

Banking operations have been on an enlarged | per cent. Probably 20 per cent more fertilizer
scale with a corresponding gross profit, but will be used this year than last year. Labor
with relatively smaller net profits. Clearings conditions upon the farms in Georgia are
are still on an ascending scale. This is attrib- quite unsatisfactory, labor being scarce, wages
uted by some bankers to the engagement of high, and in many cases help unreliable.
their organizations and resources in coopera- This condition will have a tendency to decrease
tion in Government financing, which has in- the production of cotton. Georgia live-stock
creased expenses and reduced their margin of interests are expanding rapidly. More cattle
profit. There is, however, no complaint on than ever before are being placed on the
this score. On the contrary, the banks are market, principally from the velvet-bean secearnest and patriotic in their desire to serve tion of the State.
the Government to the utmost limit possible*
The agricultural conditions in Alabama are
Notwithstanding our being at war, the seri- reported very favorable. The farmers appear
ousness of which seems to be gradually coming to have more money of their own than usual,
to the realization of our people, the}7" are facing and farm credit easy to obtain. There has
the situation with equanimity and a determina- been sold in Alabama 61 per cent more fertion to win.
tilizer up to date, as compared with the same
There is a general looking forward with con- date 1917. Reports indicate a 10 per cent
fidence to increased activities and to the main- j increase in acreage planted in cotton, as comtaining of present favorable conditions, par- pared with last year. The acreage in corn to
ticularly if farmers are enabled to secure the | be planted appears to be about the same as
help necessary for raising and harvesting croi>s. j last year, with increased planting of peanuts
I and velvet beans. Farm labor appears to be
DISTRICT NO. 6—ATLANTA.
very scarce and wages higher than the farmers
Business conditions, as evidenced by bank | feel justified in paying.
In Mississippi a great deal of corn has been
clearings, appear to be slightly above normal
for this season of the year. This is probably j planted, and much of the cotton land has been
due to the large food and feed crops produced "bedded/' awaiting the planting season time.
last year and the good prices for which these All work appears to be well advanced. Oats
products sold. Active propaganda for in- promise a fair yield. A considerable acreage
creased food and feed crops is being properly of spring oats was planted and this crop apcarried on all over the district, and recently pears in good condition. Wheat withstood
at a meeting held in Macon, Ga., approximately I the winter and is doing well, with splendid
2,000 representative citizens attended.
reports from the alfalfa field.
In Louisiana the farmers are further adSeasonable weather prevailed during March
for farming operations, and the work is fairly vanced with their operations this season than
well advanced. Agricultural reports from Geor- any season for the past 10 years. Reports
gia show approximately 40,000,000 bushels of I show preparations have been made for an
corn reserve as of March 1, with little wheat • increase of about 25 to 30 per cent in everyand oats on hand. Indications are that there thing except sugar cane, the acreage of sugar
will be another short crop of oats. The ; cane being about the same as last year.
wheat crop is doing well and the outlook ! In Tennessee splendid weather has greatly
is for a slight increase over last year's pro- i enhanced prospects, and the farmers have
duction. Indications are that all food and ! already made preparatory progress. Labor is
feed crops will be increased. Cotton will be • reported very scarce, due largely to the Govplanted on a smaller scale than last year, ; eminent work being carried on at Nashville
though the reduction will slightly exceed 10 ; and at Mussel Shoals, close to the Tennessee




326

FKDEKAL KESERVE BULLETIN.

A P R I L 1,

1918.

border. Cotton and food crops will be largely ; ever known, from $300 to $450, and even
increased in the State, if labor can be obtained. | higher. The demand has been unusually good,
A recent survey shows that Tennessee has j and with high prices obtained for cotton
about an average supply of live stock, except j farmers have been willing to pa}^ high prices
horses. Wheat looks fine, with a large acreage for their stock. The heavy demand for war
reported.
purposes has served to cut down the supply.
Figures on Florida's crops of last year's proBanking.—The compilation of annual reduction, as compared with 1916 show—
ports for the State banking departments show
a large increase in individual and savings
1917
1916
deposits:
Corn
Potatoes
Peanuts
Oranges

bushels.. i
do
:
do
|
boxes..:

13,875,000
2.275,000
1,400,000
4,200,000

12,300,000
1.332,000
'300,000
6,933,000

In general the agriculture conditions are
exceedingly bright, and more modern farm
implements are being used by the farmers.
This is not due altogether to a progressive
tendency, but brought about by the scarcity
of labor, and the necessity of improved machinery to make up for the loss.
Tobacco.—The tobacco market shows considerable improvement; and, notwithstanding
high prices, sales show an increase at all loosefloor houses and heavy purchases are being
made by the buyers at the market. Owing to
the lack of warehouse facilities and shortage
of bottoms for foreign shipments, tobacco
crops arc being stored with some difficulty.
On account of the shortage of labor, it is not
expected that over 60 per cent of the 1917
crop will bo planted this year.
The final census of cotton ginnings for the
year 1918, recently issued by the Government,
show a yield in—
State.
Georgia
Florida
Alabama
Mississippi
Louisiana
Tennessee

1917-18

1916-17

Bales,
j Bales.
1,882,544 ! 1,852,104
50,979
48,131
552,676
520J292 '.
800,190
884,020
441,121
626,388 •
378,064
,
237,917

The Georgia crops, based on 30 cents a pound
staple, is worth about $282,000,000. against
$181,000,000 in 1916.
Live stock.—The live-stock market has been
very active, mules selling at the highest prices




1916

Increase.

Alabama:
j
Individual deposits
!S41, 837,024 S31,038,819 S10,798,204
Sayings deposits
i 12, 021,583 11,018,895
1,002,688
Florida: "
"
I
Individual deposits
I 30, 497,835 27,727,597
2,770,238
Savings deposits
j 14, 205,538 12,120,211
2,087,327
Louisiana:
|
Individual deposits
'114, 407,207 71,345,603
43,061,664
Savings deposits
j 32, 813,431 28,368,748
•i, 444,683
Mississippi:
!
Individual deposits
! 74, 454,165 49,812,905 I 24,641,260
Savings deposits
j 11] 819,768 11,027,105 :
792,663
Tennessee:
{
Individual deposits
i 73, 001,014 58,145,584 ' 14,855,430
Savings deposits
! 29,294,051 i 27,559,742
1,734,309
Georgia: Individual and savings j
deposits
(posits
1.. !!l89,103,420 '1-1-2,193,161 | 4fi. 910, 259
_

_ I

__i

_

Money in the cotton belt is easier than in
the large financial centers. The demand for
money is not excessive, though rates are
stiffening some.
Industrial.—Increased
developments continue in the shipbuilding plants at all port
cities. The New Orleans dock board proposes
to sell $3,500,000 to 84,000,000 in bonds for
developments looking to the establishment of
additional shipbuilding facilities in New
Orleans.
Labor troubles in the coal-mining sections
in Alabama appear to be at an end, and increased outputs may be looked for. Pig-iron
production in February, 207,075 tons, showed
a decrease as compared with 218,410 tons
during January.
With the improvements in the labor situation in the coal-mining section, the coke ovens
expect a large supply of coal, with encouragement for better production. The present pigiron situation has produced a strong market,
and the manufacturers are only selling to regular customers. Some predictions are made
that a shortage is liable to occur before the year

AiMti h I, 1918.

FEDERAL KESEKVE BULLETIN.

is out, as there is a scarcity of coke in the
industrial sections of the South. While unfilled tonnage of the steel plants shows a decrease of 2,000 tons during the period of
February, compared with January, it is not
looked upon as a decrease in orders/but due to
weather and shipping conditions.
Business conditions in and around Nashville are especially bright, owing to the construction of the big powder plants about 4
miles from that city. Work is being rapidly
pushed on the construction of the Government
nitrate plants at Mussel Shoals, near Sheffield,
Ala., and an experimental plant is being constructed at a cost of $12,000,000. Work has
been started on an additional nitrate plant, to
cost approximately $30,000,000, and plans are
being formulated to build Dam No. 2, at a
cost of about $16,000,000. This Government
work has created unusual activity in northern
Alabama.
The early Easter trade is reported active and
prospects bright for spring and summer. Very
little of the past season's goods are visible,
indicating conservative buying and excellent
marketing. There has been no building of any
consequence. In fact, ordinary repairs are
being put off on account of high prices of
materials and inability to get labor. The
labor situation will probably prove serious not
only to the building lines, but may cause a
curtailment of production of cotton, corn, and
general foodstuffs.

327

there is some interest manifested in long-term
bonds. The market is expected to narrow as
the Liberty loan campaign draws near.
It is too early to forecast with any degree of
accuracy the condition and prospects of winter
wheat. There are some reports of damage to
the crop by freezing weather in the States of
Iowa and Michigan. Illinois and Indiana
wheat stood the severe weather well and
the crop is promising. Increased acreage is
observed throughout the district. Efforts are
being made to save as much as possible of the
corn and through cooperation by the roads
this grain is being moved rapidly, taxing the
capacity of the dryers.
Automobile manufacturers have restricted
output of pleasure cars in line with Government requirements. Many are employing their
facilities to capacity on truck orders and aeroplane parts.
It is said that owing to difficulty in securing
raw materials, implement manufacturers will
not be able to supply in full the acute needs of
agriculture. Delivery is uncertain on account
of car shortage. Attractive offers held out to
labor in other fields cause restlessness. Collections are good.
There is no change to report in building and
construction which have been practically at a
standstill for six months. What building there
is, is quite generally restricted to war requirements.
Candy manufacturers report steady increase
in amount of sales, although this volume is
DISTRICT NO. 7—CHICAGO.
| due to the advance of from 10 to 25 per cent
Confidence in the stability of the business ! in prices. Tonnage is limited by sugar restricand banking situation is the tenor of reports I tions. It is reported that consumption of
received from all parts of this district. De- candy and chocolate by cantonment and trainposits and loans are working toward a more ing stations is large.
Prices in dry goods continue to advance,
easy condition, and the open weather is permitting farm operations as well as enabling the with no appreciable effect on buying. The
railroads to recover from the state of paralysis comment is made that speculation is a big
induced by the severe weather. Worthy ! factor in volume and that as a result some
borrowers are able to secure accommodation 1 small merchants arc overbought and ovorwithout difficulty. Interest rates hold firm. ! extended with their banks. Collections are
Short-term public utilities, industrial notes, I satisfactory.
Though distinct improvement is observed in
and municipal obligations are bought rather
freely on account of the attractive }deld and I the transportation of grain, there is room for




328

FEDERAL RESERVE BULLETIN.

A P R I L 1,

1918.

The lumber business is in, a spotty condition.
still further improvement. The latest Government report reveals the fact that farm re- But as a general thing the volume is decidedly
serves of corn and oats are record breaking subnormal. This is, of course, attributed to
with wheat holdings considerably more than the falling off in construction. Some sections
expected. The situation is, therefore, con- report an active demand which they are unable
trolled by the adequacy of transportation, to supply through inability to secure transthough some wheat is held for higher prices. portation. Collections are fair to good.
Mail order volume is well maintained. ReSales among representative houses in the
grocery line show a good increase in articles ports are that business shows a satisfactory
that are obtainable. Much difficulty, how- increase for the past month over a like period
ever, is experienced in securing the two great last year.
The piano industry reports highly satisfacstaples, sugar and flour, though the former is
becoming more plentiful. Canners are now tory collections and a good volume of new
placing contracts with farmers for sweet corn, orders. Freight congestion, heatless Mondays,
tomatoes, and the like. The release of grain and scarcity of raw materials are now reflected
and live stock through the improved railroad in output which is inadequate. Labor is still
in short supply.
situation has resulted in better collections.
Limitations imposed upon steel output by
The situation in the hardware line is fair.
Builders' supplies are not in great demand on transportation and fuel scarcity have relaxed
account of the general cessation of building to some extent. Production is approaching
activity. Authorities look forward to a good normal. Government orders are the feature,
demand from farmers within the next few while domestic demand is subsiding except in
the farm implement business, which promises
weeks. Collections are said to drag a little.
Shoe manufacturers, except those employed activity. Collections have been good, but
on Government orders, have been reticent in it is suggested that heavy inventories carried
regard to commitments for hides due to a de- j by certain small manufacturers may affect recline in prices* Increasing strength in buying, ceivables.
Jewelry houses experienced a slight slackenhowever, indicates that some concerns believe
the low price has been reached. Houses ing in volume during February which some
favored with Government contracts are work- | attribute to unfavorable weather and heatless
ing to capacity. No immediate labor trouble j Mondays. The outlook for an early resumption of normal activity is said to be promising.
is in prospect.
Live stock have been coming to market in There is no complaint about collections.
Government demand for woolens has adincreased volume owing to a marked relief in
the traffic blockade. Export demand forms vanced prices of raw material to the highest
the basis of a good business in packing-house ever known. The general feeling seems to be
products, while domestic consumption has that Government control will eventually be
slackened due to the Lenten season, meatless applied to maximum prices. Retail clothiers
days, and organized economy. Beef cattle and are buying rapidly for fall delivery. Sharp adsheep have been fairly well shipped. Hogs vances will be made in overcoats and suits.
will no doubt be in good supply for some time The usual sacrifice sale of winter clothing is not
to come. The receipts of live stock at Chicago in evidence. It is said collections will have
close scrutiny of credit men on account of
for the four weeks ending March 16 were:
the tendency toward excessive, high priced
inventories on the part of retailers who control
Hogs.
Sheep.
Calves.
Cattle.
small capital.
1918
245,338
276,546
49,197
919,079
Clearings in Chicago for the first 17 business
282,023
45,091
185,556
1917
681,834
days of March were $1,495,000,000, being




APRIL 1, 1918.

FEDERAL RESERVE BULLETIN.

$28,000,000 more than for the corresponding
17 business days in March, 1917. Clearings
reported by 21 cities in the district outside of
Chicago amounted to $306,000,000 for the first
15 days of March, 1918, as compared with
$290,000,000 for the first 15 days of March,
1917. Deposits in the 12 central reserve
city member banks in Chicago were $897,000,000 at the close of business March 20, 1918,
and loans were $582,000,000. Deposits show
an increase of approximately $63,000,000 over
last month, and loans an increase of approximately 82,000,000.

329

been a number of strikes and threats to strike
recently. The Government has intervened in
several cases which affected the production of
war articles, resulting in settlements. While
the situation is improving, it may sti1? be said
to be unsettled.
The winter wheat is reported to be in good
condition throughout the district, though rain
is needed in some quarters. Spring plowing
for oats, corn, etc., is underway, and preparations for gardening have also begun. A great
many in the cities are arranging for gardens,
as well as those in the country, in order to help
the food supply. A movement has been
DISTRICT NO. 8—ST. LOUIS.
started in some of the States in this district to
In general, business has been active in this get each farmer to test his seed corn before
district during the past month, some lines re- planting, so as to insure a bumper corn crop,
porting greater volume than last year. How- which is so much needed.
The report of the St. Louis National Stock
ever, more conservatism is noted, and the
production of nonessentials is more and more Yards for February indicates an increase in the
giving way to those things necessary for the receipts of cattle, hogs, horses, and mules over
the corresponding month last year and a deprosecution of the war.
The continued mild weather has further im- crease in the receipts of sheep. It shows
proved the fuel and transportation situation, decreases in the sales of cattle and hogs and
and this has greatly benefited business. It has increases in the sales of sheep, horses, and
brought about a rather free movement of all mules in comparison with February of last
kinds of commodities, which has helped both year. However, comparing the first two
months of this year with the same period last
the producer and the distributor.
The approach of spring is causing farmers to year, the report shows decreases in both the
buy implements and other supplies, and this receipts and sales of all live stock excepting
has stimulated the country trade. Manufac- horses and mules, in which there have been
turers of farm implements generally report a substantial increases.
The postal receipts for February in St. Louis,
better business than at this period last year.
The demand for tractors is said to be unusually Louisville, Memphis, and Little Rook all show
slight decreases from the previous month, but
heavy.
Wholesale millinery houses report a good substantial increases over February of last
trade for the coming spring. Distributors of ! year, due no doubt in large measure to the
shoes and wearing apparel state that the vol- | increased postal rates.
ume of orders for spring delivery surpasses that ! Reports for February from the leading cities
of last year. Many are having difficulty in | in this district show slight increases in the
replenishing their stocks to meet the require- ! number of building permits issued and the estiments. Retail merchants also report a good I mated cost of construction as compared with
business. There seems to be a general demand the previous month, but material decreases in
comparison with February a year ago. There
for the better class of merchandise.
Collections, as a rule, are reported to be | is little building going on in this district except
I that which is absolutely necessary.
satisfactory.
The demand for money has continued steady
A disturbing factor to business in this district has been the labor situation. There have during the past month, especially in the large




330

FEDERAL RESERVE BULLETIN.

centers. The bank rate to customers continues
at 6 per cent in the centers, and slightly
higher in the outlying districts.
Yeiy few of the banks in the large centers
are in the market for commercial paper, though
there is a fair demand from country banks.
The rate is now practically 6 per cent for all
maturities. Many of the commercial paper
brokers are now encouraging the issuance of
paper maturing within three or four months.
This is said to attract the banks more at this
time, because it enables them to be more liquid
and paper maturing within 90 days is immediatory available for rediscount at the Federal
Reserve Bank.
The attention of bankers, brokers, and others
is now being directed to the third Liberty loan,
which will be launched on April 6, and preparations are well under way in this district to help
make it a grand success.
DISTRICT NO. 9—MINNEAPOLIS.

APRIL 1,

1918.

have been encouraged to test their seed much
more thoroughly and on a much more extensive scale than ever before. Through the
patriotic action of a county agricultural agent
in Minnesota a newly invented seed-corn tester,
capable of testing the germination of 600 ears
of corn at one time, has been made available
to the farmers of the district at the cost of
manufacture, and many hundreds of these
improved testers are being sent daily into the
rural districts, where they will substantially
aid in determining the seed value of available
corn.
A number of counties in western North
Dakota and eastern Montana, which were hard
hit by the failure of the 1917 crop, have taken
advantage of special legislative enactments in
those States and have issued seed grain bonds
for the purchase of seed supplies, with which
to relieve needy farmers. It may be assumed
that the acreage outlook is very much improved
as compared with 30 days ago, but there is
still some doubt as to whether the wheat
acreage will be up to a normal year, and there
is still much question as to whether, even with
the very active work that has been done, a
decrease in corn planting can be prevented.
A large amount of spring work is necessary
because of the deficiency of fall plowing due
to dry weather. Good moisture conditions are
promised during spring plowing and planting,
and should the present favorable weather conditions continue, the farmers will be able to
offset the lack of fall work by an unusual
amount of early spring cultivation.

Farmers are actively preparing for the spring
planting and for early entry into the fields.
There is every evidence of an early spring.
There has been benefit to the agricultural sections by the heavy winter snows.
Business conditions throughout the district
remain normal. Trade is active. Labor is
fully employed. Banking conditions show
little change, with rates still very firm.
The acreage prospects of the ninth district
are still considerably in doubt. Agitation over
the question of prices on small grain will have,
in the opinion of many experts, an adverse
influence on the planting of spring wheat.
This is due to the fact that other grains than DISTRICT NO. 10—KANSAS CITY.
wheat have climbed to such high levels on the j Agriculture.—There is a continued and inmarket that the much-needed wheat is placed | creasing demand for corn as a substitute for
at a strong disadvantage, both from the stand- ! wheat flour, and both the export and milling
point of the return per acre and because of the | demand effect the maintenance of unusually
fact that the earlier grains are more certain ! high prices. The average quality is better in
and less liable to suffer from plant diseases. | this district than in the central States and
Extremely active work over the entire dis- j many flour mills have now turned to corn
trict has relieved the corn situation appre-! grinding. February was a record month in
ciahly. Available stocks of seed have been i both receipts and shipments on the local marlocated, and well distributed, and the farmers j ket, which were nearly four times as great as




APRIL 1,

1918.

FEDERAL RESERVE BULLETIN.

for the same month last year. Visible supplies
at the principal district markets increased over
90 per cent during the month. By Government estimates, corn stocks on the farms in
the States of this district, on March 1, were 123
per cent greater than on the same date last
year.
The wheat movement continues very small,
with local receipts for the month only one-fifth
and shipments one-twentieth of those a year
ago. All mills are running on reduced operations, owing to the scarcity of grain, and 85
mills in this district for the past month were
grinding at only a little over half capacity,
with a resultant decrease under last year's output. The Food Administration, however, is
hopeful regarding wheat supplies for the remainder of the crop year, although present
indications show wheat will be very scarce
between now and the harvest. District market wheat stocks decreased two-fifths during
the month, and supplies on the farms, March
1, were only one-half of those last year.
Enough rain and snow fell over the entire
district to supply a fair amount of moisture to
the ground. The wheat crop prospects are
better than in the early winter, with the present crop condition in all States reported as
fair to good.
Live stock,—The live-stock markets are in a
somewhat unsettled condition, because of the
conflict in the effort to keep prices high enough
to encourage producers and at the same time
low enough to make meats reasonable to consum, ers. Protests that the minimum price
set on hogs is too low have been made by the
feeders of this district. Because of the high
cost of feeding operations these producers
claim they do not profit by the fattening of
hogs, cattle, or sheep, with the prevalent market prices. However, the weight of hogs
received at four markets of the district for the
past month average 227 pounds, or 18 pounds
heavier than for the same month last year,
indicating that farmers are still feeding hogs
freely, notwithstanding high prices of corn.
Cattle receipts at the six principal markets
for February increased about one-fourth over




33.1

the corresponding period last year. Hog receipts showed a slight gain of 3 per cent. The
movement of sheep to market decreased 30
per cent. Hog packing at district centers was
heavy, with slaughterings one-tenth greater
than for February, 1917.
Mining.—The zinc and lead ore markets in
the Missouri-Kansas-Oklahoma district for
February were in sharp contrast. Prices for
zinc ores continue to decline, while lead prices
hold firm, with a strong demand from buyers
for all the lead ore they can secure. Surplus
stocks of both metals increased during the
month, attributed chiefly to inability of securing cars for shipments. The zinc output for the
month decreased 18 per cent under the same
month last year and the valuation declined 46
per cent. The load output gained 7 per cent
over February, 1917, but the valuation of it
decreased one-fourth. A general dissatisfaction is reported among the operators, in view of
the low prices paid for their output, as compared with the fairly satisfactory prices paid
to the smelters for their product.
Metal mining in Colorado continues very
dull, with the exception of the now mines now
producing molybdenum ores. Tho predicted
silver revival has resulted in a considerable
slump and the State's zinc production has
shown a steady decline.
Oil.—Indications show that operations in the
mid-Continent oil field are active. Although
during February there were but 2 more wells
completed in Oklahoma and 20 fewer wells
completed in Kansas than in January, the new
production increased 38 per cent in Oklahoma
and 42 per cent in Kansas. In both States the
total oil production for the past month showed
an increase over the preceding month. As
compared with February a year ago, Kansas
nearly doubled its production, while Oklahoma's production decreased 12 per cent.
Though no producing wells were completed in
Wyoming during February, it is reported that
operators are hopeful over the prospect of an
increased production for this year. The scarcity of all drilling materials and casing is evident, and inability to secure these supplies

332

FEDERAL KESEEVE BULLETIN.

continues to curtail field operations in some
parts of the district.
Lumber and construction.—It is predicted
that retail lumber dealers will have trouble in
securing supplies, because of the scarcity of
labor at the camps, bad transportation facilities, and the large Government demands on
the production. Prices on all kinds of lumber
are high, with present tendency toward even
higher levels. Therefore, dealers are not
stocking up on the present market. A good
demand is expected from country districts,
especially in the event of good crops, but the
cities look forward to quiet conditions in all
lines of construction.
Building permits issued during February in
10 of the largest cities of this district continue
to decline in volume, showing a 31 per cent
decrease under the same month last year.
The estimated cost of such constructions, however, increased nearly 8 per cent over February,
1917, compared with a 44 per cent loss from
reports of 110 principal cities of the entire
United States.
Labor.—Labor conditions have been very
unsettled in this district and over a dozen small
strikes have been reported during the past
month. The strike of the southern Kansas
coal miners has been satisfactorily settled.
Interurban car men in Kansas and Missouri,
who have been out for over a month, have
again returned to work. A local strike of
laundry drivers has been in effect since the
middle of last month, and this may lead to a
sympathetic strike threatened by all union
labor in this city.
Government and State agents are exerting
all energies to successfully meet the threatened
shortage of farm labor. Labor and seed surveys are being carried on in several States,
and every effort is being extended to secure the
requisite number of farm hands.
Mercantile.—Although the number of business
failures in this district during January decreased
one-fifth under the same month last year, the
liabilities of such failures were 12 times greater.
Purchase and payment activity for February,




APRIL 1,

1918.

in the States wholly or partially within this
district, gained 2 and 4 per cent, respectively,
over the corresponding period a year ago, while
indebtedness decreased over 3 per cent.
Trade in all wholesale and manufacturing
lines continues active. The demand for farm
tractors and attachments is heavy, and the
interest in automobiles and accessory supplies
is pronounced. Spring goods are beginning
to show more activity and the general retail
trade gradually improves. Collections are
reported prompt in almost all lines.
Financial.—AH except one of the 17 cities
of this district, for which bank clearings during
February were reported, showed a marked
increase over February of last year. The
largest gain recorded was 61.4 per cent, while
the average gain for all the cities was 52 per
cent.
While rates have increased slightly during the
month, the demand has not lessened. Borrowers seem to realize that with the extensive
financing for Government purposes, which the
banks are called upon to undertake, normal
time rates could hardly prevail.
The organization of the campaign for the
flotation of the third Liberty loan in this tenth
district has been perfected. All efforts are
being extended to push the sale of this forthcoming issue, the exact amount of which has
not yet been announced.
DISTRICT NO. 11—DALLAS.

Further improvement in agricultural conditions, the result of fairly good rains over a large
section of the district early in the month and
open weather during the greater part of March,
both of which were favorable for crop preparation, constitute the principal changes in the
agricultural situation. Commercial activities
in all lines are seasonable and well maintained.
The volume of wholesale and retail trade is all
that could be expected for the season, considering the tendencies in every quarter to restrict
purchases to necessities only, and conform to
the regulatory war measures. Collections are
good.

APRIL 1, 1918.

FEDERAL RESERVE BULLETIN.

333

While it is too early to accurately forecast Liberty loan campaign, and organizations are
crop returns, the outlook is favorable. As being completed in every community. We
farming conditions rather determine the pros- believe that the district will subscribe its full
perity of the district, the agricultural situation allotment, whatever that may be, and that the
is one that commands more than passing in- banks will do their full part, as they have in
terest. In portions of the west and southwest the past. Bond dealers report a good demand
sections rainfall early in the month relieved for municipals of long maturity.
A large number of applications from State
conditions to an extent. It has not been sufficient, however, to give permanent improve- banks are being received, and it is believed
ment to the situation, and conditions there that in a short time practically all of the best
will not return to normal until a good rain institutions in this district will be members.
Demand for rediscount with this bank during
falls.
Prospects for the small grain crop are im- the past month has been unusually heavy,
proved in some sections, though the general bills discounted having increased over $3,500,outlook is far from satisfactory. In the north- 000 within that period. Interest rates are
central and Panhandle sections, where the steady and no change is noted.
acreage planted in wheat and oats was large,
Clearings at the principal cities of the
the farmers have given up hope of any return district—Austin, Beaumont, Dallas, El Paso,
whatever from those crops. Where the ground Fort Worth, Galveston, Houston, and Shreveis in condition, as a result of recent rains, they port—show an increase of 31.3 per cent over
are preparing it for other feed crops, such as February, 1917.
Kafir corn, maize, and sorghum. The past
There is evidence of a revival in building
month has brought renewed activity in the operations, and spring promises a further
planting of home gardens, and campaigns for improvement in the industry. There is unincreased food crops. The acreage planted to questionably a tendency to subordinate buildfoodstuffs will be unusually large. Prospects ing activities to the Government's requireare excellent for a large apple crop in the Ros- ments, and ordinary operations have been
weil section. Cold nights have kept the trees below normal since war was declared. The
from sprouting, which is much desired at this demand for all kinds of lumber is greater than
season. The onion crop at Laredo is about can be supplied. Some mills have been comready for marketing, and promises to be un- | pelled to withdraw from the market entirely.
usually large, probably up to last year's ship- The supply of cars is sufficient to keep mills
ments of some 4,000 cars.
operating as fully as they are able to secure
This district is approaching the season when labor for their needs. The congestion in the
member banks expect a material falling off in East has necessitated an embargo by the
deposits, with a corresponding increase in their Director General of Eailroads against shiploans. An early analysis of reports of condi- ments for points east of the Indiana-Illinois
tion, on the Comptroller's call of March 4, State line, except where the material is conindicates reduced deposits and increased loans. signed to Government officials. Collections in
There is unquestionably a tendency on the the lumber trade are good, and more accounts
part of banks to restrict the granting of new are being discounted at the present time than
credits and to conserve their funds to help is usually the case at this season. Manuthe Government in its war financing. The facturers of brick and tile report that, although
subscriptions to issues of certificates of in- activities in that line have been quite dull for
debtedness during the past month have been the past six weeks, they expect a revival of
liberal, and, each issue has shown a considerable activities as the season advances, and anticiincrease in the number of banks participating. pate sufficient orders to keep their plants
Preparations are being made for the third running full time.




334

FEDERAL RESERVE BULLETIN.

Collections are good. Building permits at
the principal cities of the district—Austin,
Beaumont, Dallas, El Paso, Fort Worth,
Galveston, Houston, San Antonio, and Shreveport—taken as a whole, show a decrease of 26.3
per cent over February, 1917, while Dallas,
Fort Worth, and Houston show a slight increase, with San Antonio showing an increase
of 260 per cent.
The labor situation is unchanged over 30
days ago. A recent strike among the street-car
employees at Yfaco, which for a time threatened
serious trouble, was settled satisfactorily.
There will be an active demand for men for
farm work.
With the opening of spring, and rains in a
part of the cattle-raising sections, there is some
improvement in the live-stock situation. Grass
has started over parts of the range country and
the situation as to stock water has also been
relieved, though not sufficient to answer requirements for any considerable time. At
Albuquerque cattle are being contracted for
at from $2 to $5 per head over last year's
prices.
Developments in the oil fields in the vicinit}^
of Coleman have made business unusually good
there. Some 8 or 10 wells flowing from 80 to
100 barrels per day have been brought in.
Quite a good deal of lease money has been put
in circulation, which has been a material help
to farmers, particularly as that section has
suffered heavily from the drouth.
Reports from Galveston indicate that prospects for an increase in exports from that port
are excellent. It is expected that large
shipments of barley and rye from the Pacific
coast for export will be ordered to Galveston
in the very near future. Lack of facilities has
curtailed exports for sometime past.
There seems to be a tone of optimism as to
the immediate future, and while conservatism
prevails, and all interests of the district are
subordinated to war plans, yet the situation is
sound, and business should continue without
undue disturbance.




APRIL 1,

191S.

DISTRICT NO. 12—SAN FRANCISCO.

The first year of participation in the war, by
reason of increased Government requirements,
for men and materials, has resulted in practical
elimination of unemployment in this district
and in general and important advances in"
wages, with consequent increased purchasing
power on the part of industrial workers. It
would aid the country in greatest measure
if this enlarged buying power were exercised
only to the extent necessary for essential
things and if the remainder were loaned in
some form to the Government. Reports from
throughout this district, however, indicate
increased sales of luxuries and nonessentials.
The need of curtailing nonessential consumption has not been comprehended. The limited
volume of sales of Thrift Stamps and War
Savings Certificates indicates likewise a failure
to realize the necessity that savings should be
loaned to the Government to aid in the successful prosecution of the war. On the basis of
$20 per capita each year, this district should
buy $8,750,000 of War Savings Certificates and
Thrift Stamps per month. The actual sales,
however, from December 3, 1917 to March 1,
1918, had been only as follows:
Arizona
California:
I\ orthem
Southern
Idaho
Xevada
Oregon (incomplete)
Utah
Washington
Total

$40,395.00
$785, 001. 25
417, 272. 50
1, 202, 273. 75
50, 483. 25
12, 825.00
38, 600.00
112,440.00
247, 404.00
1,704,181.00

The lumber situation has been complicated
by labor troubles, but the industry is strongly
supporting the Government. Demand for
lumber for private buildings continues light,
building permits in 19 principal cities of the
district being 13 per cent less in February, 1918,
than in the corresponding month in 1917, but
Government requirements for shipbuilding,

335

FEDERAL RESERVE BULLETIN.

APRIL 1, 1918.

aeroplanes, and cantonments consume all avail- so general that there now seems every reason
able lumber. In spite of the great need for to expect abundant crops of every description.
lumber, strict adherence to 8-hour labor This is a complete reversal of the situation of
would restrict production 20 per cent. In a few weeks ago, when California was suffering
contrast with this situation the output of aero- I from an unparalleled drought.
plane spruce, under control of the Army, has j Fall sown wheat in the Northwest has come
been increased 400 per cent since October, 1917. i through the winter with minimum loss and
The organization of a "Loyal Legion of Loggers ! promises maximum yield per acre. Sowing of
and Lumbermen " has facilitated settlement of | spring wheat in Washington will not be comlabor disputes in this field and resulted in a pleted for three weeks. Though large, this
quickened spirit of patriotism, evinced by bet- I acreage may be seriously curtailed by sowing
ter work and increased production.
j of barley and oats, now quoted at $74 per ton.
An event in shipping causing a great deal of The Oregon wheat acreage is estimated at 25
comment was the successful launching on March per cent over that of last year.
14 near San Francisco of the 5,000 ton steamer | The hop industry furnishes an interesting
Faith, built of reinforced concrete. This ! example of transition from nonessential to
experimental concrete ship was built at a cost essential production, many hop growers having
of $125 per ton compared with the Govern- planted other crops, some to the extent of threement price of $210 per ton for steel ships, and fourths of last year's acreage. The Food
in a period of 4 months as compared with a Administration is attempting to secure reducperiod of from 6 | to 9 months for steel ships j tion of hop acreage by one-third. Hop kilns
of similar tonnage. A plant for building steel I in the northwest are being used to dry vegeships of the same size would cost $1,000,000 as | tables, which are sold to the Government for
j overseas use.
against 875,000 for such concrete ships.
War needs have greatly stimulated rice pro- | General business is active. February clearduction in California, which in 1917 produced | ings in. 20 principal cities of the district exone-sixth of the rice crop of the United States. ! ceeded those of the same month in 1917 by 20
Production and acreage for the last two years, per cent. Foreign trade continues to expand,
January, 1918, imports and exports increasing
with estimates for 1918, arc as follows:
85 per cent over the corresponding month last
1918
year,
as shown by the following table:
1917
(estimated).
Production

pounds..

82,000
280,000,000

;

;

!

Rice screenings, hitherto used largely for j
animal feed, are now being used for flour.
Demand is so great, however, that indications
are that, in less than 30 days, there will bo no
supply available for California mills.
Demands for California petroleum caused a
further decrease of 412,087 barrels in stored
stock during February. Production amounted
to 7,634,671 barrels and shipments to 8,046,758
barrels. Stored stocks on February 28 were
31,360,378 barrels.
Sains throughout California in late February
and during March have been so abundant and




[000 omitted.]

120,000-130,000 I
400,000,000 !
i

January, 1917.

January, 1918.

ImExImports. ports. Total. ports. ports. Total.
San Francisco
Los Angeles
Oregon
Washington
Total

810,169 313,427 623,596 $24,314 826,509
587
1,375
788
1,849
625
936
765
115
171
189
12,531 15,761 28,292 24,529 21,954
23,659

30,540

54,199 i 50,881

49,203

850,823
2,474
304
46,483
100,084

Due to advantageous freight rates, San
Francisco has become a coffee distributing
center of the United States, second only in
importance to New York and New Orleans.
Imports at at this port, which have doubled in

336

FEDERAL RESERVE BULLETIN.

the past three years, have been as follows
(receipts in 150-pound bags):
1913
1914
1915
1916
1917

Comparative statement of condition of national banks in
Twelfth Federal Reserve district.

399,896
383,361
RESOURCES.
397,852
615,276 Cash and exchange
and discounts
868,301 Loans
Bonds and securities
Banking house and equipment..
real estate
continue Other
Other resources

Dec. 27,1916. Dec. 31,1917.

Total

1,078,595,000 1,234,338,000

Charter rates in trans-Pacific trade
firm, averaging 50 per cent higher than in the
spring of 1917.
About April 1 the Federal Reserve Bank
will open a branch in Salt Lake City, Utah, for
member banks in Utah and Southern Idaho.
This will be its fourth branch, others having
been established, in the order named, at
Spokane, Seattle, and Portland.
The increase in resources of national banks
of this district during the past year is shown
in the following:




APRIL 1, 1918.

3309,527,000
555,911,000
172,067,000
22,268,000
6,443,000
12,379,000

$318,568,000
650,812,000
223,634,000
25,239,000
5,721,000
10,364,000

LIABILITIES.

Capital
Surplus and undivided profits...
Duo to banks
Demand deposits
Time deposits
Money and bonds borrowed
Circulation
Acceptances
Other liabilities
Total

89,622,000
65,319,000
195,627,000
507,783,000
147,220,000
632,000
60,883,000
3,901,000
7,622,000

89,841,000
65,745,000
181,334,000
621,379,000
182,374,000
10,964,000
61,315,000
6,774,000
11,944,000

1,078,595,000

1,234,338,000

Rediscounts:
With Federal Reserve Bank
With other banks

324,000
74,000

20,361,000
577,000

APRIL 1, 1918.

337

FEDERAL RESERVE BULLETIN.

i
DEPOSITS AND INVESTMENTS OF NA- officers. Net deposits up to October 31, 1914,
TIONAL BANKS, 1913-1917.
represent amounts subject to reserve require-

In the following table and attached diagram
are traced the changes in the several classes of
deposits, also in loans and investments of national banks, between June 4, 1913, and December 31, 1917. To the end of 1914 figures in
the first column include Individual deposits,
Dividends unpaid, and Postal savings deposits,
since then Demand deposits, Time deposits,
and Postal savings deposits. Bank deposits
are exclusive of amounts due to Federal Reserve Banks, while United States deposits include also deposits of United States disbursing

ments; in subsequent abstracts up to and including May 1, 1917, amounts on which reserve
is computed, and for subsequent dates include
also Government deposits, which are disregarded at present by the Comptroller's Office in
computing reserves. Loans and investments
are shown exclusive of permanent investments,
such as bank building and other real estate, furniture and fixtures, and stock of Federal Reserve Banks. Percentages have been computed
showing for each call date the ratios of loans
and investments to both gross and net deposits.

Movement of principal classes of deposits, also of loans and investments of national banks since June, 1913.
[From abstracts of the Comptroller of the Currency.]
[000's omitted.]
8

|

Deposits
n. s,
including
postal
savings
deposits.
June 4,1913...
Aug. 9,1913...
Oct. 21, 1913...
Jan. 13,1914...
Mar. 4,1914...
June 30,1914..
Sept. 12,1914..
Oct. 31,1914...
Dec. 31,1914..
Mar. 4,1915...
May 1,1915....
June 23,1915..
Sept. 2,1915...
Nov. 10,1915..
Dec. 31,1915..
Mar. 7,1916...
May 1, 1916....
June 30,1916..
Sept. 12,1916..
Nov. 17,1916..
Dec. 27,1916..
Mar. 5,1917...
May 1,1917....
June 20,1917..
Sept. 11,1917..
Nov. 20,1917..
Dec. 31,1917..
1
2




$5,974
5,783
6,074
6,098
6,136
6,130
6,168
6,115
6,294
6,291
6.618
6; 504
6,718
7,407
7.628
7,685
8,105
8.125
8; 412
9,105
8,970
9,240
9,665
9,613
9,975
10,339
10,735

Bank
deposits.

$2,120
2,108
2,180
2,211 !
2,471
2,185
1,950
1,891
1,869
2,243
2,226
2,208
2,466
2,709
2,738
3,074 i
2,995 '
2,713
2,916
3,349
3,261
3,683
3,379
3,026
3,045
3,103
3,190

1 + 2.

United
Tota i : Total
Loans and
Per cent Per cent
States
gross
;
net
invest7-6.
deposits. deposits. ; deposits.1 \ ments.2
7-J-5.

88,094
7 891
8,254
81309
8,607
8,315 "
8,118
8,006 !
8,163
8,534
8,844
8,772 •
9,184
10,116
10,366
10,759 :
11,100 !
10,838 !
11,328 i
12,454
12,231
12,923
13,044
12,639
13,020
13,412
13,925

150
57
90
84
66
67
70
70
72
59
47
49
45
41
36
33
35
39
35
35
35 I
35
36
133
210
1,352
517

§8,144
7,948
8,344
8,393
8,673
8,382
8,188
8,076
8,235
8,593
8,891
8,821
9,229
10,157
10,402
10,792
11,135
10,877
11,363
12,489
12,266
12,958
13,080
12,772
13.230
14;794
14,442

S7,125 |
7,097 i
7,172
7,226
7,505
7,495
7,293
7,167
6,668
7,066
7,198 !
7,283 !
7 523 !
8,257 {
8,366
8,783 j
8,782 i
8,702
9,202
9,977
9,929 I
10,4.89
10,283
10,306 !
10,293 j
11,701
11,074

$8,052
8,062
8,180
8,072 j
8,266 j
8,347
8,637 !
8,635 j
8,437
8,471 i
8,600 !
8,639
8,823
9,471 !
9,651 ,
9,869 I
10,046 !
10,101
10,417
10,958
10,963
11,365
11,550
11,9-16
12,292
14,029
13,180

98.8
101.4
93.7
93.8
95.3
99.5
105.4
106.9
102.4
98.2
96.7
97.9 .
95.6 i
93.2
92.7
91.4
90.0
92.8
91.6
87.7
89.3
87.7
88.3
93.5
92.9
94.8
91.2

Including Government deposits.
Exclusive of fixed investments, viz, banking house, real estate, furniture and fixtures, also stock of Federal Reserve Banks.

113.6
114.1
111.7
110.1
111.4
118.4
120.5
126.6
119.9
119.5
118.6
117.3
114.7
115.4
312.4
114.4
116.1
113.2
109.8
110.4
108.4
112.3
115.9
119.4
119.9
119.0

338

FEDERAL RESERVE BULLETIN.

APRIL 1, 1918.

GOLD SETTLEMENT FUND.
Operations through the gold settlement fund
for the four-week period from February 21 to
March 21, 1918, continued on a large scale,
mainly on account of the heavy movement of
funds between Federal Reserve Banks resulting from banks in the interior drawing oh their
New York correspondents in payment for certificates of indebtedness issued in anticipation
of the third Liberty loan. Clearings and transfers combined, effected through the fund during
the four weeks ended March 21, amounted
to $2,885,286,000, averaging $721,321,500 per
week, compared with a like average of $760,629,800 for the preceding five-week period.
Net changes in ownership of gold in the
banks' fund through transfers and settlements
amounted to 3.31 per cent of the total obligations settled as against 1.90 per cent for the
preceding period. This increase of 1.41 per
cent is due chiefly to a net loss of $80,283,000
by New York resulting from net payments
through settlements of $159,783,000 against
net receipts of $79,500,000 from transfers.
Changes in the ownership of gold since the
commencement of the operation of the fund,
May 20, 1915, to March 21, 1918, amount to
1.52 per cent of the total obligations settled.
Chicago, Boston, and Richmond show the
largest gains through the shifting of credits in
the fund, while New York, Atlanta, and Dallas
show decreases.
During the four-week period the balance in
the fund to the credit of the New York bank

decreased 38.8 millions, and the balance to the
credit of the agent 35 millions, making a total
decrease of 73.8 millions. Chicago's balance
in the banks' fund shows the largest gain, viz,
24.7 millions, while the balance to the credit
of the Chicago agent gained 21.5 millions,
making a total gain of 46.2 millions. Boston's
and Richmond's balances also show considerable increases, while aggregate banks' and
agents' balances in the fund show a gain of
26.6 millions for the four-week period under
review.
A revised form of statement showing the
transactions through the banks' and agents'
funds, which has been is use for several weeks,
is published for the first time in the present
number of the BULLETIN. It is designed to
set forth more clearly transfers of credits between the two funds. The banks' statement
now shows actual withdrawals of gold from the
fund and payments of gold into the fund; also
total withdrawals, including transfers to the
Federal Reserve agents and total deposits,
including transfers from the Federal Reserve
agents. The new form of statement of the
agents' fund shows withdrawals for transfers
to the banks and deposits through transfers
from the banks and in addition all other withdrawals and deposits.
Below are given figures showing changes in
the fund between February 21 and March 21,
inclusive:

Amounts of clearings and transfers through the gold settlement fund by Federal Reserve Banks, from Feb.
,
2, 1918,
to Mar.
21, 1918, both inclusive.
[In thousands of dollars.]
Total
clearings.
Settlement of—
Feb. 28,1918
Mar. 7.1918
Mar. 14,1918
Mar. 21,1918
Total
Previously reported for 1918
Total since Jan. 1,1918...
Total for 1917




Balances
adjusted.

Clearings

Transfers.

587,027
771,168
601,936
695,825

45,181
45,825
78,953
34,225

35,000
85,000
11,330
37,000

2,716,956
5,277,069

204,184
426,135

168,330
635,402

7,994,025
24,319,200

630,319
2,154,721

803,732
2,835,504.5

and transfers
Total
Totp]
Total
Total

for
for
for
for

1918 to date
1917
1916
1915

.

.

.

Total clearings and transfers, May 20,1915, to Mar. 21,1918.

8,797,757
27,154,704.5
5,533,966
1,052,649
42,539,076.5

339

FEDERAL RESERVE BULLETIN.

APRIL 1, 1918.

Changes in ownership of gold.
[In thousands of dollars.]
Total to Feb. 21, 1918.

From Feb. 22, 1918, to Mar. 21, 1918, both inclusive.

Total changes from May
20,1915, to Mar. 21,1918.

Decrease.

Balance to
credit Feb.
21, 1918,
plus net
deposits of
gold since
that date.

Decrease.

Federal Reserve Bank of—

Boston .
New York
Philadelphia
Cleveland
Richmond
Atlanta .
Chicago
St Louis
Minneapolis
. .
Kansas City
Dallas
*.
San Francisco

.

.

.

Increase.

24,935

568,118

80,485
103,414

i,47i

56,853
55,912
35,760
20,553
69 433 5
40,366.5
81,877

. . .
. . .
569,589

Total

Gold settlement fund—Summary

Balance
Mar. 21,
1918.

Decrease.

30,666
105,107
43,423
. 36,711.5
7,541. 7
20,149
32,376
25,480.9
3,311
36,420 *
18,662
20,356

44,544
24,824
51,270
44,564.5
18,965.7
12,099
74,895
33 169.9
4,114
38 643.4
11,432
21,683

380,204.5

380,204.5

569,589

Increase.

80," 283"

8,050

Increase.

13,878
7*847*
7,853
11,424

38,813
*""648,'40i*

88,332
111,267
9,953
48,803
98,431
43,449
21 356
71 656 5
33,136.5
83,204

42,519
7,689
803
2 223
7,230
1,327
95,563

95,563

648,401

648,401

of transactions from Feb. 22, 1918, to Mar. 21, 1918, both inclusive.
[In thousands of dollars.]
Weekly settlements, Feb. 28, 1918, to
Mar. 21, 1918, both inclusive.

Aggregate Aggregate
Transfers.
Balance
withdeposits
last
statedrawals
Gold
Federal Reserve ment,
Gold
transand trans- and
withBank of—
fers from
Feb. 21, drawals. Deposits. fers to
agent's
1918.
agent's
Debit. Credit.
fund.
fund.

Net
debits.

Total
debits.

j Total
! credits.

Net
credits.

Balance
in fund
at close of
business,
Mar. 21,
1918. '

l

Boston
I
New York
!
Philadelphia...)
Cleveland..
Richmond
!
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco..

63)667
49,663
500
52,897.9
1,311.4
11,214.8
203.1
14,594
' ~ '
50,144.3 ,
840
26) 776.4 I
200
8.011 i.
85)700.9 !.
16.042.2
409.9

Total

377,673.5 i 3,544.4

2,460
6,440
4,425
5,125
530
2,005
5,021.
79.
1,300
719.

13,100
21,311.4
4,203.1
850
63,680
2,200
8,000

4,460

3,969.9
5,080

2,460
41,440
6,860
5,125
530
6,405
45,911.7
904.5
3,300
719.5
6,589. 7
4,680

13,155.4 122,394.4

124,925.4

Federal Reserve agents'fund—Summary

9,500
113,000

9.911
159,783

186,118
871,210
310,296
220,099
133,361
95,489
377,961
186,136
93,191
111,451
57,874
73,770

14,289

190,496
711,427
336,143
227,952
138,115
87,439
437,480
193,825
96,494
136,314
63,644
97,597

25,847
13,583
9,762
2,194
59,519
9,325
11,834
24,893
6,522
23,827

44,544
24,824
51,270
44,564.5
18,965.7
12,099
74,895
33,169.9
4,114
38,643.4
11,432
21,683

168,330 ; 168,330 201,595 2,716,956 2,716,956

201,595

380,204.5

33,500
18,000
330

7,000

"37," 666' "26," 666"!
2,500
23,000
13,000
41,000

5,730
5,008
10,244
1,636
8,531

330
752
' 18," 066'

of transactions from Feb. 22, 1918, to 'Mar. 21, 1918, both inclusive.
[Tn thousands of dollars.]

Federal Reserve agent at—

Balance
last state- Gold withment, Feb. drawals.
21, 1918.

Boston
New York
Philadelphia..
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis...
Kansas City...
Dallas
San Francisco.

11,500
40,000
65,354
50,000
25,000
41,270
140.484.5
37)737.6
25.500
52,860
7,624
36,616

Total....

533,946.1




500 !
1,000 !
500 j
:

500 j .

3,000 !

Gold

WithDeposits
Total
drawa! s for | th rou gh
withtransfer j transfers
drawals.
to bank, j from bank.

35,000
2,435

35,000
2,935

4,400
40,890
825
2,000

12,600
20,000
4,000
850
62,840
2,000
8,000

6,000
220

3,560
5,000

5,400
41,390
825
2,000
500
6,000
720

91,770

118,850

94,770

Total
deposits.

Balance
at close of
business,
Mar. 21,
1918.

3,560
5,000

11,500
5,000
75,019
70,000
29,000
36,720
16i;934.5
38,912.6
31,500
52,360
5,184
40,896

118,850

558,026.1

12,600
20,000
4,000
850
62,840
2,000
8,000

340

FEDERAL RESERVE

1918.

BULLETIN.

OPERATION OF THE FEDERAL RESERVE CLEARING SYSTEM, FEB. 16, 1918, TO
MAR. 15, 1918.
drawn on
Items drawn on Items
handled Total (exclusive
banks in
Items drawn on Items
drawn on Num- Numbanks in
by both bank of items drawn Items
district
outside
banks in
Treasurer of
ber of ber of
and
branches
on
Treasurer
of
Federal Reserve Federal Reserve
other districts
United States mem- non(daily
United States) (daily
city (daily
(daily
average).
city
(daily
average).
ber memaverage).
(daily average).
average).
ber
average).
banks banks
in
on
disI
par
trict. list.
N£?" Amount. ^
Amount, fe'Amount.| ^ m " Amount. Number. Amount.
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco

730-S12,
558| 65, 217,
095 16, 796,
3, 916, 742|
904 3,
4, 543, 500
4
737j 2, 798, OO A
719; 19, 419! 000
434' 848 •; 912;
!, 875,
244j
#
52l! 3,873,901

35,865; S5,283,9201 4, 307 S4,965,755;
43,902 S23,053,139
73,662115,457,300
43,780135,676,64123, 32414,563,1581
49,063 31,306,922
22; 946! 3,145,05711, 02211,365,162!
21.620:11,848,014 366i 3,013,201! 555 $3,681,846' 27,445 22,459,803
3,830,416|
! 31,102 17,145,345
27'594i1 8,705,429 239|
13,064
: 880; 2,324,042! 542 225,387' 17,223 7,985,230
"*
f\f* A\ c\2,636,967
r*f\f* n o w
23,033; 5,451,000 : 918 733,000!
33,670 25,603,000
12,876122,037,450j 16oi 1,218,557|
8i
3,357 15,483: 30,915,290
17; 028;' 8,811,143
13,257 1,245,116! 923! 1,653,822!
16,190 9,448,663] 1, 082; 2,992.675! 2,423:1,815.483 21,984 23,132,336
13,950 5,360,759; 588; 1.209,077j
8,457,920
!
15,7
w,
15,356 2,235,146' 445 '681,844 4,172J 686,998 23,
7,477,889
rt

9,966 $4,379,491
410
26,32710,295,729
678
3,922 757,025
628
1)134 029,704
769
1,241
268,652
53(5
1,832 716,184
406
5739
831,000 1,137
5,739
138,220
485
91,550
795
293,430
960
1,773
638
1,505! 374,334
571
l,745j 4, 052,438

Totals:
Feb. 16 to Mar. 15,1918. "51,408! 153,701, 375 259,531113,l34l162;51,259;48,556,709| 7,700!6,413,071 369,898!321,805,317i 58,991 25,827,757
Jan. 16 to Feb. 15,1918.. 146,207153,847, 568 227,312J80,248,466 44,654;42,852,372! 7,128 5,836,958 325,301 282,785,364! 48,224 21,316,033
Dec. 16,1917, to Jan. 15,
i
!
!
1918
48,549148,033, 108 253,458.89,065,135!4.9,342:52,175,578| 7,718'3,402: .035359,067.292,585,856,! 38,130 21,116,293
334,787 314,623,152! 33,806!27,179,053
I
Nov. 16 to Dec. 15,1917. ;47,678171,723, 439 240,756184,440,761:46,353 58,458,952;
325,690 283,938,810 30,426". 17,496,9741
!
Oct. 16 to Nov. 15,1917. •47,574=166,552, 773 232,723,64,296,21045,393 53,089,827j
293,742 220,732,251 26,79713,518,5661
i
,
Sept. 16 to Oct. 15,1917. 140,591128,271, 466 212,935147,476,204 40,21644,984,581
251,061 |182,3O3,483 23,492Jll,006,515
Aug. 16 to Sept. 15,1917. :'36,305!100,331, 694 182,191'41.323,62132,564 40,648,168S!
i
243,625:176,410,2191 19,533! 9,701,569
July 16 to Aug. 15,1917. >36,727| 98,075, 919 175,625 40; 353,278 31,273,37,981,022:
255,039197,489,674! 19,100! 11,637,899|
June 16 to July 15,1917. 38,476!.109,722, 256; 182,622'41,004.720 33,94146,762,698
250,241 !174,236,737| 16,344! 4,414,5081
May 16 to June 15,1917. ;37,898| 97,322, 883 179,193:38,599', 461 33,150 38,314,393
238,288160.680,956 15,925 3,597,865!
Apr. 16 to May 15,1917. i33,767! 87,370, 859 171,093:36,473,163 33,428136,836,934
231,777127; 648,503! 12,582 2,643,408!
Mar. 16 to Apr. 15.1917. 31,162' 60.288, 002 168,607:32,666,959 32,008 34,693,542




252
425
315
619
261
322
2,223
1,002
1,077
1,535
255
1,139

8,013 9,425
7,972 10,519
7,909
7,823
7,826
7,747
7 718
7,683
7,666
7,651
7,634
7,625

9,321
9,210
9,052
8,934
8,837
8,805
8,789
8,926
8,607

APKIL 1, ISIS.

FEDERAL EESEKVE BULLETIN.

341

DISCOUNT OPERATIONS OF THE FEDERAL RESERVE BANKS.
Discount operations of the Federal Reserve bonds and certificates are shown for the New
Banks during February totaled $762,439,698, York bank. New York, Chicago, Cleveland,
compared with $868,421,473 for January. and Richmond each report total discount transThese figures, except for the Chicago bank, are actions, including temporary purchase of United
exclusive of the purchases with resale agreement States war obligations, in excess of 100 millions,
Over 70 per cent of the month's discounts
of United States Liberty bonds and certificates
of indebtedness, which totaled $363,675,200 and all the temporary purchases of United
during February and $405,029,450 during Jan- States war obligations were for 15 days or less;
uary. Of the total discounts reported for the over 5 per cent each was 30-day and 60-day
month, 261.8 millions, as against 351.7 millions paper, and nearly 18 per cent was 90-day
for the month before, represents the total dis- paper. Six-month paper, i. e., agricultural
counts of member banks collateral notes secured and live-stock paper maturing after 90 days,
by United States war obligations and 137.3 mil- totaled 6.2 millions, about 40 per cent being the
lions, as against 40.4 millions, the discounts for share of the Kansas City bank.
the month of customers' paper thus secured.
On the last Friday of the month the Federal
Over 52 per cent of the banks' reported discount Reserve banks held a total of 509.5 millions
transactions, as against 45 per cent in January, in addition to 100.9 millions of certificates of
are thus directly traceable to war finance oper- indebtedness, all of which were held tempoations, the New York, Chicago, and Boston rarily under repurchase agreements for the
banks showing the largest activities in this | accommodation of member banks. Correfield. Discounts of collateral notes secured by | spending figures for the end of January were
commercial paper aggregated 44.9 millions 627.6 millions of discounts and 46.2 millions
compared with a total of 130.3 millions for of certificates. Of the total discounts on
January, 1918, and an average monthly total hand 269.2 millions, or about 53 per cent, was
of 154.9 millions for 1917. Customers7 paper, made up of paper secured by Government war
other than Liberty loan paper, rediscountod obligations, 22.3 millions, or over 4 per cent
with the Federal Eeserve Banks totaled 298 by member banks' collateral loans secured by
millions as against 332.6 millions the month commercial paper, and 178.1 millions, or about
before, the total including 3.3 millions of bank 35 per cent, by customers' paper thus secured
acceptances and 4.7 millions of nonmember or unsecured, the remainder being agricultural
banks' paper rediscounted during the month and live stock paper largely carried by the
under review. Of the total of this class of western banks.
paper about 60 per cent was reported by the
During the month the number of member
Kichmond and New York banks. Total dis- banks increased from 7,980 to 8,031, mainly
counts for the month include, in addition, 20.5 the result of admission to membership of 50
millions of trade acceptances, of which 10.3 State banks and trust companies. The total
millions were in the domestic trade and 10.2 in number of members discounting during Febthe foreign trade, the latter all discounted by ruary was 1,353, Chicago and New York with
the New York bank. About 35 per cent of the 251 and 219 member banks accommodated
total discounts and over 75 per cent of the during the month leading all other Federal
purchases with resale agreement of Liberty Reserve districts.




342

APRIL 1, 1918.

FEDERAL RESERVE BULLETIN.

Bills discounted during the months of February, 1918 and 1917, distributed by classes.

Federal Reserve Banks.

Boston
New York
Philadelphia...
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis...
Kansas City...
Dallas
San Francisco.

Member banks'"collateral notes.
Customers'
paper secured
Secured by
by Liberty
Liberty bonds
bonds or
or United
Otherwise
United States
secured.
certificates of States certificates of inindebtedness.
debtedness.
§40,049,332
55,772,061
17,371,856
3,432,227
17,952,994
100
2,154,554

Total, February, 1918..

124,668
105,948
306
286,655

SO,783,000
99,726,403
3,311,200
23,125,500
11,419,060
3,131,500
2 84,764.114
9,594,883
307,000
3,428,900
5,481,500
10,732,600

137,250,701

261,805,660

Total, February, 1917..

S780,000
13,581,356
45,000
243,500
23.776,881
' 75,000
175,000
3,475,000
2,755,000

Trade ac-

$623,541
Hl.487,566
'120,612
3,096,981
547,899
573,167
128,167
1,754,783
33,394
1,397,180

1.1,443,362

Total.

812,591,161
87,233,994
11,064,700
17,893,893
90,843,090
6,639,710
16,858,492
18,926,295
6,613,178
13,171,519
2,095,924
14,066,682

§60,827,034
267,801,380
31,868,368
47,548,601
120,808,043
10,587,977
127,682,208
30,350,961
7,253,240
21,578,547
10,332,730
25,800,609

120,477,962 j

3 297,998,638

2762,439,698

858,078 j

10,109,164

22,408,604

714,672
44,906,737

All other
discounts.

1 Including 310,230,115 in the foreign trade.
IncludesS3,282,519
United States
securities
purchasedand
from$4,697,200
banks under
15-day repurchase
agreements.
Includes
of bankers'
acceptances,
of nonmember
banks' paper
rediscounted for member banks, but excludes 84,291,395
of bills of lading-drafts.
32

Amounts of discounted paper, including member banks' collateral notes, held by each Federal Reserve Bank on the last Friday
in February, 1918, distributed by classes.
[In thousands of dollars; i. e., 000 omitted.]

Banks.

Ivletnber banks' collateral notes.
Customers'
paper secured by
Liberty Secured by
Agricul- Live stock bonds or
Liberty
Trade ac- All other
tural paper. paper.
bonds or
United
ceptances. discounts.
States cer- United
Otherwise
tificates of States cer- secured.
indebted- tificates of

Total.

indobtcd-

Boston
New York
Philadelphia...
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis. .
Kansas City...
Dallas
San Francisco.
Total.
Percent




129
78
12
593
142

5!
184 i

63
1,197
555
319
647

85 ,
1,804 !
9,534 !
2,576 :
3,314 I

3,735
0.7

17,502 ;
3.4 '

44,006
66,433 I
13,748
5,318
5,433
5,116
4,294
1,378
168
488
7
449
146,838
28.8

4,561
43,575
2,501
9,721
8,059
1,928
38,731
4,255
202
1,192
2,381
5,246

15
55
11,400

122,332
24.0

22,337
4.4

365
7 ,754

175
1 ,385
1, 188

2,495
3,893
195
3,518
1,259
967
350
2,162
68
1,096
2,675
18,678
3.7

8,009
55,546
8,327
16,823
19,752
1,070
23,335
13.527
7; 251
4,561
1,853
18,058
178,112
35.0

59,436
177,330
24,849
35,392
35,116
9,462
78,110
21,470
10,865
18,811
8,304
30,389
509,534
100.0

343

FEDERAL RESERVE BULLETIN.

APRIL 1, 1918.

Acceptances bought in open market and held by Federal Reserve Banks as per schedules on file with the Federal Reserve Board9
or as reported by the Federal Reserve Banks on dales specified, distributed by classes of accepting
institutions.
Bankers' acceptances.
Date.

Member
banks.

1915.

Feb. 22
Apr. 5
July 3
Oct. 4

•
'
;

1916.
Jan.3
Apr.
pr. 3
J
JuivS
i
S
Oct. 2

3

1917.

Jan.l
Apr. 2
July 14-15.
Sept. 2 9 . . .
Dee. 3 1 . . . .

1918.

Jan. 31..
Feb. 28.

Amounts

2

Nonmember
trust
companies.

I!
9

8

9

:
0

893,000
3,653,000
4,312,000
9,000,000

§7,820,000
5,267,000
4,898,000

15,494,000
21,000 000
32,989,000
0
0
37,798,000
66,803, 000
43,979,000
108,597, 000
131,997,000
227,717,000

i
i
|
!

240,259,000 j
252,747, 000 I

Nonmember State
banks.

Foreign
bank
brandies
and agencies.

Private
banks.

Trade acTotal acbought in
open j ceptances.
market, j

Total.

• $93,000
11,503,000
9,770,000
14,373,000

"132," 666" j

SI10,000
161,000
313,000

S93,000
11,593.000
9,770;000
14,373,000

7.160,000
13,573,000
18,921,000
21,782,000

352,000
473,000
471,000
712,000

822,000
3,262,000 j
11,830,000 I
9,914,000 !

38,308,000
64,211,000
70,236,000

8722,000
3,422,000
2,306,000

23,838,000
39,030,000
67,633,000
72,542,000

34,625,000
20,328,000
30,390,000
14,987,000
8,163,000

1,502,000
689,000
3,333,000
2,193,000
3,179,000

121,151,000
82,026,000
184,785,000
173,171,000
266,853,000

4,585,000
1,144,000
4,660,000
6,942,000
6,383,000

125,739,000
83,170,000
189,4.45,000
180,113,000
273,236,000

22,099,000 ! 6,947,000 ! 278,374,000
28,419,000
7,097,000 I 293,767,000

6,363,000
5,456,000

284,737,000
299,223,000

810,000 i

5,547,000 | 3,522,000
1,648,000 j 3,856,000

18,224,000 :.
16,830,000 j
33,082,000 i
21,708,000 !
20,137,000 |

j

23,838,000

8200,000
3,805,000
2.286,000
7;657,000

of bills discounted and acceptances and warrants bought by each Federal Reserve Bank during February,
distributed by maturities.
15-da;r maturities.
Discounts.

Acceptances.

Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St Louis
Minneapolis
Kansas Gitv
Dallas
San '''rancisco

$17,336,789
184,353,362
19,928,502
32,780,753
112,407,480
7,214,858
110,547,775
20,334,278
2,181,108
6,972,509
8,291,075
16,419,862

8110,800
4 807,910
454,112
7,243
111,000
82,000

Total
Per cent

538,768,351

6,153 208

30-day maturities.

Warrants.

25,000*'
256,666 "•
355,143

""

Total.

Discounts.

Acceptances.

Warrants.

Acceptances.. Warrants.

82.079,497
16.666.842
'947,311
5,577,311
1,665,904
967,249
4,163:561
3,409,189
890,430
3,314,014
369,242
680,389

$507,944
8,535.838
2,047,171
36,304
754,571
255,934
1,414,840
'284,709
390.000
353,500
3,809 710
935,889

$2,587,441
25,202,680
2,994,482
5,613,615
2,420.475
1,228,183
5.578,401
3,693,898
1,280,430
3,667,514
4,178,952
1,616,278

544 921 559
58.6

40,730,939

19,326 410

60 057,349
6.5

90-day maturities.
Total.

Discounts.

Warrants.

Acceptances.

Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City Dallas
San Francisco

$3,290,795
11,486,011
522 238
3,037,379
2,064,584
1,731.687
6,523,682
3,793,150
2,682,452
3,493,354
683,803
2,441,573

81,595.595
21,817,113
2,515.448
2,453,575
1,929,571
1,475,452
1,296,600
312.350
773,001
475,135
1,466,815
4,396,453

84,886,390
33,303.124
3,037.686
5,490^954
3,994,155
3,207,139
7,820,282
4,105.500
3,455,453
3,968,489
2,150,618
6,838,026

838,044,153
54.355.875
9,794,125
6,090,053
4,634,846
648,698
6,130,524
2,797,380
1,092,185
5,301,576
500,540
5,643,500

88,290.197
56,809,974
4,056.470
5.567,665
2j556,450
835,749
8,306,081
2,004,956
392,500
644,263
100,000
6,482,495

Total
Per cent

41,750,708

40,507,108

82,257,816
8.9

135,033,455

96,046,800 j




Total.

817,447.589
189.161.272
20,382,614
32,787,996
112,518.480
7,240,858
110,547,775
20,359,278
2,181,108
6,972,509
8,541,075
16,775,005

60-day maturities.
Discounts.

1918,

$1,500

" " " " * " " " " • * * " "

1,500

Total.
846,334,350
111,165,849
13,850,595
11,657,718
7,191.296
1,485,947
14,436,605
4,802,336
1,484,685
5,945.839
600,540
12,125,995
231,081,755
24.9

344

FEDERAL RESERVE BULLETIN.

APBIL 1, 1918.

Amounts of bills discounted and acceptancs and warrants bought by each Federal Reserve Banlc during February, 1918r
distributed by maturities—Continued.
Over 90-day maturities.
Discounts.

Warrants.

Aeceptancas.

$75,800
Boston
939,290
New York...
678,192
Philadelphia
63,105
Cleveland....
35,229
Richmond...
25,485
Atlanta
316,666
Chicago
16,964
St. Louis
407,065
Minneapolis..
Kansas City.. 2,497,094
488,070
Dallas
615,285
San Francisco

SI,219,342

Total... 6,156,245
Percent..

3,765,135

Total.
Discounts.

Total.

! $1,295,142 £60,827,034
939,290 267,801,380
774,192 31,868,368
115,951 47,548,601
225,229 120,808,043
25,485
10,587,977
1,188,575 127,682,208
871,909
1,055,100 30,350,961
1,03.8,136
7,253,240
407,065
21,578,547
2,497,094
10,332,730
$132,000
620,070
294,902
910,187 25,800,609
98,000
52,846
190,000

132,000

10,053,380
1.1

Maturities of discounts, acceptances, and municipal

762,439,698

Acceptances.
§511,723,878
91,970,835
9,171,201
8,117,633
5,541,592
2,599,135
11,889,430
3,665,151
1,555,501
1,472,898
5,626,525
12,464,882
165,798,661

Per cent.
Warrants .

$1,500

132,000
133,500

Dis- Accept- Warcounts. ances. rants.

Total.
§72,550,912
359,772,215
41,039,569
55,688,234
126,349,635
13,188,612
139,571,638
34,016,112
8,808,741
23,051,445
16,091,255
38,265,491

83.8
74.4
77.7
85.4
95.6
80.3
91.5
89.2
82.3
93.6
64.2
67.4

16.2
25.6
22.3
14.6
4.4

19.7
8.5

10.8
17.7
6.4

0.8

35.0
32.6

928,371,859 i
inn
100.0n j! 82.1 ; 17.9

Total.
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0-

warrants held by each Federal Reserve Banlc on Thursday, Feb.

21,1918.

[In thousands of dollars; i. e., 000 omitted.]
1 to 15 days.
Acceptances
bought.

Bills discounted.
Boston
New York

Philadelphia
Cleveland
Rich n i o n d

.

. . . .

Atlanta
Chicago
St Louis
Minneapolis
Kansas City
Dallas
San Francisco
Total
Per cent

. . . .

11,815
96,395
9,322
19,857
24,118
4,928
43,651
12,112
2,649
4,490
4,363
11,025

1,311
68,620
5,235
4 003

2*4,725

93,562

16 to 30 days.

Municipal
warrants.

Bills discounted.

Acceptances
bought.
3,277 !
15,047
2,783

123

7,639
8,893
2,274
4,856
3,179
1,669
23,312
3,225
2, 766
1,947
763
5,012

133

338.420
42.0

65,535

39,5oO

577

340

4, 437
4,856

746
486

i

TJiils discounted.

Total.
Per cent




Total.
10,916
23. 940
5,057
5 802
3,665
3,218
28,463
4,308
3,156
2,300
3, 111
11,349
105,08f>
13.0

1,549
5 151
1,083
390
353
2,348
6,337

31 to 60 days.

Boston
New York
Philadelphia..
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis...
Kansas C i t y . . .
Dallas
San Francisco.

Municipal
warrants.

13,126
165,015
14,567
24,460
24,695
6,555
44,932
12,902
2,989
4,498
8,800
15,881

10

1,504
1,281
790

Total.

j Acceptances
| bought.
i

25,
IJ2 |

31
74,087 ;

6,239 j .
55,683 i.
7,121 i.
2,288 :.
1 867 ;.
2,811 ;
4,292 !:.
1,761 .
773 1.
726 !.
3,086 !.
13,725 i.
100,372 |

Municipal
warrants.

61 to 90 days.

Total.
13,298
80,905
10,329
8,600
6.345
5; 181
8,008
6,363 i
3,610 j
5,308
4,339
22,182
174,406
21.7

Bills discounted.

j Acceptances \ Municipal
j bought.
| warrants.

32,9X9 !
40,813 j
10,044 j
4,367 !
3,322 !
420 ;
4,500 ::
1,470
1,255 ".
5,065 i
800 !
4,760 !

5,460 !
37,387 !
3,125 !
1,301!:
587
855 |
5,203 '
2.689 !
'393 :
402
.100 I
5,204 •

1

115,795 ;

82,688 j

1

Total.
38,370
84,200
13,169
5,838
3,880
1,276

9,763
4,159
1,648
5,487
9G0
9,984
22.1

345

FEDERAL RESERVE BULLETIN.

APRIL 1, 1918.

Maturities of discounts, acceptances, and municipal warrants held by each Federal Reserve Bank on Thursday, Feb. 21,
1918—Continued.
[In thousands of dollars; i. c , 000 omitted.]
Over 90 days.
Bills dis- Acceptances Municipal
warrants.
counted. bought.
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago...
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Total.
Percent —

19 !
2,871 !
61 i
1,358,
2,727 !
1,125 i
1,135 !
9,392 |.

3|

458
471

Percentages.

Total.

Total.

19
85
2,871
61
1,358
2,727
1,593
1,135
9,863
1.2

Bills disMunicipal
counted. bought.

Total.

59,436
177,330
24,849
35,392
35,116
9,462
78,110
21,470
10,865
18,811
8,304
30,389

16,287
176,737
18,264
8,938
3,497
6,719 ;
15,927
6,323 :
1,896 'j
1,489
9,971
30,122

75,723
354,067
43,123
44,330
38,613
16,315
134
94,037
27,793
12,761
20,300
468 i 18,743
60,511

509,534

296,170

612

Bills dis- Acceptances Municipal
warrants.
counted. bought.

10

806,31(5 j

Total.

78.5
50.1
57.6
79.8
90.9
58.0
83.1
77.2
85.1
92.7
44.3
50.2

21.5
49.9
42,4
20.2
9.1
41.2
16.9
22.8
14.9
7.3
53,2
49.8

0.8

100.0
100.0
100.0
100.0
100.0
100.0
100. .0
100.0
100.0
100.0
100.0
100.0

63.2

6.7

.1

100.0

Liberty loan bonds and United States certificates of indebtedness purchased during the months of January and February, 1918,
under 15-day repurchase agreements.
January. 1

Boston
New York
Philadelphia..
Cleveland
Atlanta
Minneapolis..
Dallas
Total.
1

Liberty
bonds.

Certificates
ofindebted-i
ness.
i

§1,985,000

$165,000
306,350,000
4,034,000
79,600,000
700,000
75,000

5,752,450
4,305,000
2,013,000
50,000
14,105,450

February.*

Total,

Liberty
bonds.

§2,150,000 82,280,
306,350,000
18,
9,786,450 3,445,
79,600,000
5,005,000 5,53S,
2,088,000
3,693,
50,000

390,924,000 I 4.05,029,450

14,975,200

Certificates
of indebtedness.

Total.

SI, 000,000 §3,280,000
265,610,000 265,628,000
6,571,000
3,126,000
52,830,000 52,830,000
8,682,900
3,144,000
26,683,300
22,990,000
348,700,000

363,675,200

Figures are exclusive of repurchase agreements of the Chicago bank, wlrioh are included with discounted bills under caption "Member banks
collateral notes secured by Liberty bonds and certificates."




346

APRIL 1,1918.

FEDERAL RESERVE BULLETIN.

Total investment operations, exclusive of purchases of United States certificates of indebtedness, of each Federal Reserve Bank
during the months of February, 1918 and 1917.
Bills dis- :
counted for ! ...
members and!

Federal Reserve Bank.

Banks?

Bills bought in open market.

Trade

! acceptances. acceptances.

827,034 ! 311,198,677
Boston
267, 801,380 I 91,718,282
New York
868,368 ! 9,171,201
Philadelphia.
548,601 ! 8,117,633
Cleveland
808,043 ! 5,541,592
Richmond
Atlanta...
120, 587,977 ' 2,599,135
11,889,430
Chicago
10, 682,208:
[
St. Louis
127,350,951 i 3,665,151
253,240
i
1,555,501
Minneapolis
30
Kansas City
7,578,547 ! 1,472,898
332,730
>
5,626,525
Dallas
21,
San Francisco
10, 800,609 : 10,705,769
25,
Total, February, 1918... 782,439,698 i 163,261,794 i
Total, February, 1917... 22,408,604 ! 68,990,791 j

,'5525,201
252,553

Total.

1,759,113

311,723,878
91,970,835
9,171,201
8,117,633
5,541 "~~
2,599,135
11,889,430
3,665,151
1,555,501
1,472,898
5,626,525
12,464,882

2,538,867
1,646,388

165,798,661
70,637,179

8:

Municipal warrants.

City.

State.

All other.

,500

2 per cent.

3 per cent.

3J per cent.
$20,000

Boston
New York
Philadelphia..
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis...
Kansas City...
Dallas
San Francisco.

75,000
1,070,000
514,300

Total, February, 1918...
Total, February, 1917...

S200

$144,500 1

1,879,300

132,000

132,000 I
5,798,677 |

1,500
53,985

133,500
5,852,662

Total investment operations.

Treas4 per cent. |: 1-year
ury notes.

February,
1918.

Total.

82,010,000 i.
18,000 !.
3,370,000 ! .
1,250 I.
2,350 -,.
4,486,800 :.

$2,030,000
18,000
3,445,000
1,250
2,350
5,558,800

3,179,000 :

3,693,300

13,067,400 ;.
250 i

SI, 500

3132,000 |-

United States bonds and Treasury notes.

Federal Reserve Bank.

Total.

§456,000

14,746,700
600,950

$74,
359,
44,
55,
126,
18,
139,
34,
12,
23,
16,
38,

February,
1917.

580,912
790,215
484,569
667,484
351,985
745,412
571,638
016,112
502,041
051,445
091,255
265,491

$9,322,187
24,684,930
11,786,311
9,771,303
12,463,798
2,097,817
9,728,315
5,774,492
4,362,900
3,122,342
2,749,591
3,655,409

943,118,559

99,499,395

United States securities held by each Federal Reserve Bank on Feb. 28, 1918, distributed by maturities.
United States bonds with circulation
privilege.
Federal Reserve Bank.

Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas'City
Dallas
San Francisco
Total.

2 per cent
consols of
1930.
1936-1938.
$750
50
6,400
915,100
610,600
1,862,500
100
323,050
7,155,850
2,450,900
2,428,750

1918>

United States securities without circulation privilege.

3 p e r cent
United
4 p e r cent- conver- 3 per cent 3 per cent 3£ per cent 4 per cent
1-year
Liberty
Liberty certificates
loan of
sion
loan
of
loan of
loan of
1925.
b o n d s of Treasury
1961.
indebtnotes.
1947.
1942-1947. ofedness.
1946-1947.

$529,000 $2,194,
5,013,
2,548,
3,221,
1 —
1,491,
3,378,
1,444,
1,340,
1,784,
1,430,
1,500.

1,255,400
850,000
549,200
3100
467,200 2,653,660 82,378,200
414,800
237,000
10,300
21,000
427,400
367,300 2,581,000 1,768,000
1,080,000
1,153,300
i6,260 1,199,180 '""206," 250* 114,800
22,240
825,000 838,500
281,500
1,233,600

15,784,050 1,412,600 7,563,840

5,177,450 6,526,300 |27,312,000

$80,000 2,3333,014 SI,250,000
329,850 3,152,900 66,429,000
86,850 5,152,850 3,119,000
1,966,900
375,000 16,584,000
42,900
38,250
25,000
418,250 3,215,100 1,605,000
$400
1,185,500
500

219,300
7,500
1,900
28,250

1,262,450 6,752,500
13,100 2,584,500
52,800 1,300,000
52,000

$4,391,764
76,230,200
11,456,000
28,067,160
3,227,250
7,401,250
311,570,100
3,677,400
11,434,290
13,230,690
6,750,700
4,009,000

900 13,181,700 13,600,464 100,886,500 181,445,804

1 Includes United Stales securities purchased from banks under 15-day repurchase agreements.
2
Includes unpaid portion of Liberty loan bonds sold to individual subscribers.
s Exclusive of 342,404,830 of United States securities purchased from banks under 15-day repurchase agreements.
Total United States bonds with circulation privilege, 529,937,940.
Total United States securities without circulation privilege, $151,507,864.




Total.

347

FEDERAL RESERVE BULLETIN.

APBJL 1, 1918.

RESOURCES AND LIABILITIES OF FEDERAL RESERVE BANKS.
Resources and liabilities of each Federal Reserve Bank and of the Federal Reserve system, at dose of business on
Mar. 1 to Mar. 22, 1918.
RESOURCES.
[In thousands of dollars; i. e., 000 omitted.]
Boston.

Gold coin and certificates
in vault:
Mar.l

10, 575 I 316,059
10, 129 | 318,676
324,577
10, 856
10. 370 ! 324,997

Mar. 8.
Mar, Jo
>vlar. 22
0<>]d settlement fund—
Federal Reserve Hoard:
Mar. 1
Mar. 8
Mar. If:..
M*vr. 22
'"old with
agencies:

20, 668 I
40, 359 j
39, 986 !
45, 782

M;ir.

M:.:r.'22."."!!!;!!!;;!;;i

:ohi with i-YdfI-;-",1 lie- i
serve agents:
i
M-.r. I
!
Mar. S
I
=•••

!

M r . 22

,

M-r

M r.l..:.
Mar. 8
Mar.l*
Mar.22
T;.t:-I cold reserves:
Mar.l
Mar. 8
Mar. IS

ij^.itil-ten U)v\ tes,-diver, :•
etc.

50,673
42,770
18,219
47,824
18,112
18,112
18,112
18,112

MOT.

249,784
249,226
209,028
208,514
2,000 !
1,989 I
1,994 !
1,994 |
85,598
104,753
105,057
110,323

26,349
6,326
24,473 i 6,444
31,298 I 6,430
26,427 I 6,460

10,700
11,038
11,282
9,379

47,011 51,234
50,645 51,332
47,792 47,839
51,432 ! 44,980
3,675
3,675
3,675
3,675

4,725
4,725
4,725
4,725

I 20,196
I 23,381
! 27,974
j 19,046
j
!
!
J

1,837
1,837
1,837
1,837

6,026 j
6,696 i
6,807 ;
6,547 !
13,926
10,993
13,637
12,599

|
!
i
i

j 1,575 !
j l'. 575 :
! lj 575 !
\ 1.575 !

74,388 i 84.549 i 25,888 ! 46,734
75,247 j 86; 568 25,646 I 44,402
76,580 90,306 25,577 i 44,423 !
77,396 94,978 j 29,429 " ~

10,000
10,000
10,000
10,000

2,000
2,000
2,000
2,000

644,628
638,784
579,936
609,447

137,774
142,605
141,329
143,882

5,857 :
39,910
Msr. 1
•
5,744 ! 39,921
Mar.8
:
4,948 ! 40,170
:
Mar. 15
4,383 j 40,644
Mar. 22
;
Total cash reserves:
i 91,455
684,538
Mar. 1
j 110,497
678,705
Mar. 8.
! 110,005
620,106
Mar. 15
! 114,706 ; 650,091 i
Mar.22
!
Bills discounted for mcrn- '
bcrs and Federal Reserve Banks:
60,959 ; 217,801 i
Mar.l
60,249 ; 223,296 i
Mar. 8
54,761 ! 241,146 i
Mar.15
56,829 i 249,280 !
Mar. 22
:
Bills bought in open I
market:
! 21,685
105,545 I
Mar.l
!
178.256
8,072
Mar. 8
i
9,477
182,116
Mar. 35
i
11,475
179,905
Mar.22
i
United States Govern- '
ment long-term sccuri- i
ties:
I
4,768
940
j
Mar.l
4,761 :
960
Mar. 8
i
4,729 !
Mar. 15
!
1,620 I
895
Mar.22
j
United States Govern- j
ment short-term securi- ;
ties:
j
2,219
87,780
Mar. 1
i
2.194
121,760
Mar.*
i
2'199
137,461
Mar. 15
:
155,832 :
2,249
Mar.22
:




Minneapolis.

Chicago.

309
147 ;
388
311

944 !
1,162 ;
812 :

|167,166 ; 54,598
1167,245 ! 57,735
1174,556 : 62,194
!l71,421 ; 57,103

09,205
64,828
67,254
63,504

359
357
311
383

2.007
1)875
1,821
1,791

1,115 i
1,017;
766 ;
1,052 |
138,889
143,622
142,095
144,934

351
427
376
331

1,476 :
1,154 !
1,126 !
1,050 :

28,718
29,290
28,907
28.708

j
i
l
i

4,313
3,847
3,578
3,324

Total.

192 ! 8,695
316
8,835
204
8,982
267 9,120

15,696
15,785
15,819
15,988

14,821
12,278
11,390
11,437

16,106
12,379
14,361
19,033

357,299
354,585
372,508
379,866

2,625
2,625
2,625
2,625

1,838
1,838
1,838
1,838

2,888
2,888
2,888
2,888

52,500
52,500
52,500
52,500

55,634
55,54.4
55,498
55,446

2.1,156
21,118
21,496
21,985

43,133
45,547
45,496
50,128

885,346
896,702
869,628
878,805

406
390
882
878

941
1,061
1,108
1,130

7,350
7,350
7,350
7,350

2,100 | 2,100
2,100 2,100
2,100 2,100
2.100 2,100

151,407
159)474
165.472
162,806

40,004
41,471
41,445
4.1,077

43,989
43,858
45,761
46.652

993
1,053
1,166
1,190

1,039
1,204
1,396
1,388

j 1,492 |
798 ;
j
892 :
!
947
!

238,235
242,040
272,825
259,738

77,983
78,892
82,985
81,059

5,404
5,171
5,2'$
. 5,456

j
I
i
i

1,299 |
1,374 j
1,377
1,471 !

65,444
68,217
75,373
69,801
601
605
641
612

99,060
88,504
95,322
89,980

;

9,549 i
10,940 !
9,711 :
12.1.19

35,663
36,219
33,847
34,177

22,574 I 8,696
25,606 6,177
22,727 ! 5,598
24,818 ! 5,236

17,475
18,901
19,172
„,.._
18,172

! 14,175 • 4,293
: 22,735
5,555
:. __,„_.
22,644
6,939
i 22.351
8,625

6,512
7,104
7.18S •
7'. 470

19,073
19,432
20.649
27; 025

6,204
6,376
7,258
8.208

1,233
4,335
1,233 | 4,046
1,233
4,040
1,233
4,183 .

31.676
26.452
24', 270
39,533

2,233
2,233
2,233
2,233

5.744
5', 886
5,583
5,467

8,262
8,262
7,788
7,788

!
!
!
!

•
ii 1,777,329
! 1,788,198
i 1,793,243
I 1,802,814

348
277
283
384

60.444
59,685
58,950
59,558

1,984
2,114
6 i 2,222
:
'4
2,258

22,249
25,052
24,290
29,265

. 49,435 90,535 1,837,773
,
1,847,883
, , 3
i 47,244 89,742
91,881
i 1,852,193
: 47,036
,
,
, ,
101430 : 11,862,372
862372
: 47,768 101,430

502, 525
16,525 : 10,739 ; 32,536
520,340
20,759 1 12,683 34,353
22, 578 ; 11,839 31,664 i 517, 484
24, 070 i 13,806 30,544 1 543 119

1,635
1,481 : 10,722
3,986 • 6,519 10,060
3,611 I 6,165 : 8,110
3.011 i 6,150
6,417

3,174
2,982
2,388
2,787

20,569
20,267
21,086
21,114

47,451 90,187•
45,130 89,465
44,814 91,598
45,510 101,046

r

79,282 ! 66,045 I 99,144
80,2 6 j 68,822 j 88,580
84,3(2
84,32 76,014
76,014 ! 95,398
,
82.530 I 70,413 ; 90,054

31,721
32,284
28,654
31.290

94 i
36 I
72 i
55

84

243,639
71.212
247,211
66,703
69,075 : 278,034
265,194
6o,295

:

461,615
464,144
477.521
470,529

, i
49,767 I 30,527 \ 2,167 40,203
44,873 i 30,270 | 5.676 i 29,629
69,930 I 34,466 10'801 i 36,113
59,685 33,170
4,114 ! 30,764

168,642 j 54,957
168,399 . 58,092
1175,682 ! 62,505
1172,471 57,486

33,513
32,722
30,669
31,682
!

27,966
28,615
28,781
28,942

:

30,353
30,956
29,919
29,471

I
!
j
!

8,862 :
8,862 ;
8,862 I
8.862 !

4,021
4,020
4,020
3,970

2,457
2,457
2,457
2,468

4,358
4,301
4,191
4,087

2,730
3,220
2,944
2,929

1,552 !
1,9S2 i
1,923 j
1,«67

299,213
317,952
323,248
328,880

1
') 705
72, 154
68,383
ttl,
039

I
6,162 17,255
4.867 16,687
6) 01J 15,105
8,056 17,967

1,994
1,934
1,994
1.99J

3,096 : 20,298 j 1,444 ' 8,594
:<.$!» ! lft. 609 ! 1.444 ; 4,149
3'. 766 i 13'. 287 : 1,444 3.655
•5)445 j 2O;-!77J 1,4-14

:
'•
'
j

157,,482
IS'/.,S22
] 93
226! 030

848

ITE.DK.EAL RESERVE BULLETIN;

AL>3IL 1, 19-18.

Resources and liabilities of each Federal Reserve Bank and -if the Federal Reserve system at close of business on t'ridays.
Mar. I to Mar. ;>•?,' ,'9/£—Continued.
RESOURCES—Continued.
[In thousands of dollars; i, e., 000 omitted.]
Boston.

All other earning assets:
Mar.l
Mar. 8
Mar. 15
Mar. 22
Total earning assets:
Mar.l
Mar. 8
Mar. 15
Mar. 22
Due from other Federal
Reserve Banks—not:
Mar.l
Mar. 8
Mar. 15
Mar.22
Uncollected items:
Mar.l
Mar.8
Mar. 15
Mar.22
Total deductions from
gross deposits:
Mar.l.
Mar.8
Mar.15
Mar.22
5 per cent redemption
fund against Federal
Reserve bank notes:
Mar.l
Mar.8
Mar.15
Mar.22
All other resources:
Mar.l
Mar.8
Mar.15
Mar.22
Total resources:
Mar.l
Mar.8
Mar. 15
Mar.22

85,803
71,475
67,217
71,448

New
York.

475,894
52S, 073
565,452
588,637

Phila- ! Clevedelphia. • land.

51,640
54,706
55,056
60,960

'
i
i
I

•I73,205 39,241
80,406 41,066
76,206 38,820
79,788 43,142
9,429
2,334

3,010
4,834
2,640

8,786
1,841

"3,"433"

3,949
769

Atlanta.

Chicago.

St.
Louis.

Minneapolis.

207
254
305
337

739
673
629
672

274
297
388
520

985
955
748

23,699
25,959
25,010
28,554

107,449
99,385
92,682

5,134
5,990
2,310
4,700

20,742
24,068
14,806
16,546

San I
Dallas. Fran- ; Total
cisco. !

1,180
1,602
1,781
24 ! 1,826

32,729 23,144 31,226 I 29,392
35,956 18,249 40,441 31,585
34,050 16,000 41.796 28,694
101,884 37,223 17,064 43; 143 i 28,948
6,442
3,373
3,354
4,947

8,933
8,241
804
5,811

1,189
8,452
5,154
6,546

2,622
734

285 !
283 !
189 !
173
67,183
70,031
66,152
04,523

3,680
4,064
4,040
4,240

I 1,040,605
! 1,097,332
! 1,107,135
i 1.163,314

1,747 i Ii.U,882
946 I
6,113
352 I 1 11,609
1,573 !

18,801

18,975
18,412
22,064
20,065

75,731
69,8.16
84,690
79,306

38,386
40,181
38,426
38,3.59

21,915 27,959 21,042
19,521
19,675
26,368 26,156 20,037
29,089 27,627 19,740

66,566 19,264
57,169 19,005
53,729 18,843
64,594 17,818

12,293
10,594
11,045
13,295

32,330 ;i 21,172
25,714 17,280
25,088 ;I 18,209
29,354 17,695

13,552
12,990
12,492
10.879

i
!
!
-l

369,185
337,283
357,147
367,821

21,985
18,412
30,850
21,906

75,731
69,816
84,690
79,306

39,424
40,181
43,260
40,999

31,344
21,855
26,368
32,522

87,308
81,237
68,535
81,140

21,226
18,835
11,849
19,106

33,519
34,166
30,242
35,900

17,280
18,209
18,429

15,299 !
13,936
12,844
12,452

381,067
343,396
368,756
376,822

400
400
400
400

137
137
137
137

404 |.
345 I 387 I341
199,243
200,384
208,072
208,060

1,236,163
1,276,594
1,270,248
1,316.034

230,357
238,854
240,798
247,234

31,908
26,926
26,156
28,396

141
2
52
82

26,176
25,665
22,347
24,440

25,706
22,378
22,197
22,765

326
929
30

796
761
1,452
550

102,758
96,246
94,076
95,282

173,186
174,035
171,806
178,435

3,260,778
3,289,909
3,330,073
3,403,395

2,813
2,814
2,823
2,823

4,243
4,263
4,263
4,243

73,401
73,624
73,88(5
74, Oil

82
88
84
97

273,191 126,247 121,169
270,660 126,086 118,415
278,256 127,533 116,516
284'781 i129' 106 118,386

438,396
427,833
439,251
448,218

137,717
138,600
140,609
142,518

110,415
105,906
103,863
106.583

164,289
163,587
167,836
169,497

537
537
537
537

LIABILITIES.
Capital paid in:
S
19,685
8,842 8,320 ! 3,740
9,261 3,504 2,668 3,413
2,916
Mar.l
6,018
6,863 8.355 ! 3,753 2,928
9,269 3,512 2,703 3,413
Mar.8
6,110
19,641
6,864
3,454 2,734 3,447
2,927
9,290
8.356 I 3,756
Mar.15
6,327
19.645
6,864 8,363 ! 3,756 2,943
9,296 3,466 2,736 3,450
Mar.22
6,351
19,720
Surolus:
75
649
38
216
40
116
Mar.l
216
116
38
40
75
649
Mar.8
116
216
40
38
Mar.15
75
649
116
216
40
75
649
38
Mar.22
Government deposits:
6,724
25,962 14,563 13,833 12,938
8,800
10,303 17,930
7,684
4,989
Mar. 1
2,678 4,798 6,324 2,817
28 10,642
4,302
699
.;),729
Mar.8
2,448
7,190 6,256 3,573 5,108
11,944
3,721
5,942
Mar.15
5,685
8,660
12,885 8l 046 6,391 8,788
4; 111 6,696
8,974 11,487 | ??4?
Mar.22
5,728
349
!
Due to members—reserve
account:
82,886 594,032
178,366 50,286 38,530 68,881
77,779 !l08,0;>3 I 44,978 37,767
Mar.l..
183,089 52,772 39,837 72,323
83,277 634,778
91,810 ! 110,632 ! 48,927 40,960
Mar.8
187,954 51,907 40,453 74,884
87,748 1108,734 ! 45,747 39,181
87,226 616,249
Mar.15
185,946 53,499 39,895 70,541
91', 306 |I13,055 j 42,501 38,954
Mar.22
87,247 849,IS6
Collection items:
15,636
23,683 8,994 3,988 9,686
31,450 ! 18,495 i 19.057 13,700
54,010
Mar.l
24,765 15,145 4,637 10,783
31,644 j 16,830 i 17,791 11,695
Mar.8
15,269
50,806
24,389 15,756 4,099 9,530
32,650 I 21,486 j 17,523 12,287
Mar.15
18,063
59,«14
25,731 14,291 4,198 10,852
31,175 I 22,529 j 20,283 11,734
Mar.22
17,0.15
54,295
1
Difference bo-tvvaen net amounts dio from and net; amounts due to other Federal Reserve Banks.




1,134
1,134
1,134
1,134

12,905
6,083
4,780
7,129

14,052
9,660
6,221
10,921

150,781
56,208
72,023
91,505

39,234
39,901
38,576
38,442

67,398
69,198
69,388
69,453

1,388,020
1,465,504
1,448,047
1,480,025

5,884
5,862
5,560
5,997

13,448
11,759
11,200
11,015

218, a31
216,986
232,157
229,115

FEDERAL RESERVE

. 1, 1918.

34"9-

BULLETIN.

Resources and liabilities of sack Federal Reserve Bank and of the Federal Reserve system at close of business on Fridays,
Mar. 1 to Mar..22, *92£—-Continued.
LIABILITIES—Continued,
[.tn thousands of dollars; I. e., 000 omitted,]
New
Boston. I>\ YorSc,
Due to other Federal Re- i
serve banks—net:
•
Mar.l
!,
Mar. 8
!
Mar. 15
|.
Mar. 22
\.
€>ther deposits, including •
foreign
Government
credits:
Mar.l
'
Mar. 8
:
Mar.15
Mar. 22
i
Total gross deposits:
j
Mar.l
i!
Mar. 8
Mar.15
Mar. 22
Federal RevServe notes in !
actual circulation:
i
Mar.l
'
Mar. 8
J
Mar.15
Mar. 22
Federal Reserve bank
notes in circulationnet liability:
Mar.l..;
Mar. 8
Mar.15
Mar. 22
A.II other liabilities:
Mar.l
Mar. 8
Mar.15
Mar. 22
Total liabilities:
Mar.l
•'.Tar. 8
Mar.15
Mar. 22




1

Phi la- ; Clove- ' Riehdelphia. I land, i mond.

52,353
38.763
24;003
"40,739

3,713

81,756
72,192
75,163
8
78,331

Atianta.

Minneap- Kansas Dallas.
City.
olis.

; st.
Chicago. ! Louis.

San
Francisco.

!
... 1.543
2,627 | 1,085 !

232
236
200
207

j
!
j
!

105,028 771,101
104,508 ; 800,268
110,974 : 783,695
109,990 820,900

119,532
127,195
126,340
131,455

144,710 i 6!), 024
138,340 fil?
| 68,709
nnQ
144,991
147,278

87,273
441,025
88,908 451,781
89,932 ' 481.719
30,844
469] 7i»2

103,933
104,798
107,594
198,915

119,920
123,410
124,392
128,566

2,085
2,158
2,365
2,620
Jw,158 230,096
56,961 i 212,690
55,194 i 221,898
57,397 i 227,182

j 53,367 59,057
i 53,508 58,486
55.363 58,355
58j 339 58,006

i
i
!
I

198,477
205,084
207,284
210.776

i
I
i
!

24 I
81 |
127
37 !

II !

&
6
| 73,88: 58,362
72,796 50,806
74,046 48.140
75,873 50,490
59,966
61,894
62,706
62,770

51,251
52,248
! 52,854
I 53,225

2,440
3,155
2,518

18
19
91,512
85,941
89,540
90,200

58,023
51,855
49,986
51,568

60,912
65,707
66,300
67,271

41,815 74,045
41,453 76,715
41,150 77,579
40,760 80,285

,

199,243
200,384
208,072
208,060

i
•
;
;

3,723 ...
4,255 ..
4,540 !..
5,013 j...

11,230,163
il,276.594
1,270,248
1,316,034

230,357
238,854
240,798
247,234

241
555
517
574
273,191
270,660
278,256
284 781

346
574
563
748

I
j
!
|
126,247
I126,086
127,533
129,106

121,169
118,415
118,516
118,388

i
i
i
i

438,396
427,833
439,251
448,218

380
398
403
409

111
97
94

1,351,09?.
1,383,990
1,406,228
1,429,509

7,999
8,000
8,000
7,978

j

453
526
549

84,122
77,137
81,048
81,751

94,898 1,820,954
93,057 1,815,835
89,964 | 1,833,275
93,907 I 1,882,396

8,000 !
8,000 I
7,978 |
851
783
764
800

Total.

107
124
117
131

137,717 110,415 164,289 102,758 173,186
138,600 105,906 163,587 96,246 174,035
140,609 103,883 167,836 94,076 171,806
169,497 95,282 178,435
142,518

6,199
7,326
7,550
8,367
3,280,778
3,289,909
3,330,073
3,403,395

350

FEDERAL BESEKVE BULLETIN.

APRIL 3, 1918.

FEDERAL RESERVE NOTES.
Federal Reserve note account of each Federal Reserve Bank at close of business on Fridays, Mar. 1 to Mar. 22. 1918.
[In thousands of dollars; i. e., 000 omitted.]

Boston.

Federal Reserve notes re- \
ceived from agent—net: •
Mar. 1 . . . . :
i
Mar. 8
Mar. 15
'•
Mar. 22
Federal Reserve notes '
Tielff by banks:
Mar.'l
Mar. 8
Mar. 15
Mar. 22
Federal Reserve notes in
actual circulation:
Mar. 1
Mar. 8
Mar. 15
Mar. 22
Gold deposited with or to
credit; of Federal Reserve agent:
Mar.i
Mar. 8
j
Mar, 15
!
Mar. 22
i
Paper delivered to Fed- j
oral Reserve a^ent:
j
Mar. 1
:
I
Mar. 8
1
Mar. 15
Mar. 22




90,180
92,101
92,046
93,502

Mew
York.

Philadelphia.

Kan- !
San
sas '•. Dallas. Francisco.
City. ^

RichAtmond. i lanta.

508,724 107,708 122,689
527,366 ! 108,567 126,208
526,168 : 110,900 129,326
540,854 i 119,316 134,878

2,907
8,193
2,114
2,658

67,699
75,585
64.449
71J102

3,725
3,771
3.306
10,401

87,273
88,908
89,932
90,844

441,025
451,781
461,719
469.752

103,983
104,796
107,594
108,915

48,680
48,601
48,546
48,502

249,784
249,226
209,028
208,514

74,388
75,247
76,580
77,,?.)6

82,644
68,321
04,238
68,304

383.345
401.548
423,261
429.185

34,565 : 47,688
40,421 ; 50,403
35,976 53,313
42,003 : 54.033

2,769
2,798
4,934
6,312

59,346 i 60,845 i
60,027 60,182 I
62,758 :. 59,504
64,528 58,974 I
5,979
6,519
6,395
6,189

;
:

1,788 !
1,696 i
1,149 i
968 i

207,082
213,109
218,607
221,540

! 64,116 52,235
i 65,333 I 52,904
66,327 I 53,807
j 65,959 ! 54,098

:

8,605 ! 4,150
8,025
3,439
11,323 :! 3,621
10,764 3,189

119,920 53,367 59,057
198,477 = 59,966
123,410 [ 53,508 58,486 ] 205,084 61,894
124,392 | 56,363 : 58,355 ! 207.284 j 62,706
128,566 58,339 : 58,006 i 210,776 I 62,770

84,549 25,888
86,568 I 25,646
90:306 ! 25.577
94,978 I 29'. 429
35,014
37,225
35,556
39,297

46,734
44.402
44', 423
41,893
14,286
16,642 :
15,437
17; 646 I

151,407 : 40,004
159,474 i 41.471
165.472 ": 4f,r,445
165
162;805 41.077
56,293
54,498
53,315
60,438

j 25.608
! 30', 769
i 27,939
I 30,462

65,481 42,102 84,137
70,887 : 41,878 86,651
70,555 ! 41,379 88,919
71,619 1 40,925 92,512
287
425

Total.

1,464,645
1,505,213
1,520,296
1,558,705

165

10,092
9,936
11,340
12,227

113,554
121,223
114,068
129,196

51,251 60,912 ! 41,815
52,248 65,707 41,453
52,854 66,300 i 41,150
53,225 67,271 j 40,760

74,045
76,715
77,579
80,285

1,351,091
1,383,990
1,406,228
1,429,509

43.989
43^ 858
45,761
46,652

j 55,634 ; 21,156
i 55,544 I 21.118
I 55.498 ! 21,496
j 55,446 i 21,985

43, 133
45, 547
45, 496
50, 128

885,346
896,702
869,628
878,805

8,
9,654
8,554
8.259

16,397 i 21,461
20,990 ! 22,743
27,600 19,949
29.180 20,223

56,608
60 061
55 914
53 644

782,777
813,275
821,052
852.674

984
656
953
873

4,569
5,180
4,255
4,348

851

FEDERAL .RESERVE BULLETIN,

APRIL 1. 3 918.

Federal Reserve note account of each Federal Reserve agent at close of business on Fridays, Mar. 1 to Mar. 22, 1918.
[In thousands of dollars: i. o., 000 omitted.]

'Boston.

Now
York.

Philadelphia.

San- ;
San
sas i Da Has. Fran(.ify. ;
cisco.

Clove- ; Richiand. i mond.

Total.

FEDERAL RESERVE NOTES.

Received from Comptroller:
Mar. 1
Mar. 8
Mar. 15
Mar. 22
Returned to Comptroller:
Mar.l
:
Mar. 8
Mar.15
Mar. 22.,
Chargeable to Federal
Reserve agent:
Mar.l
Mar.8
Mar. 15
Mar. 22
In hands of Federal Reserve agent:
Mar.l
Mar.8
Mar. 15
Mar. 22
Issued to Federal Reserve
Bank, less amount returned to Federal Reserve agent for redemption:
Mar.l
Mar.8
Mar. 15
Mar. 22
Collateral held as security
for outstanding notes:
Cold coin and certificates on h a n d Mar. 1
Mar.8
Mar. 15
Mar. 22
In gold redemption
fund—
Mar.l
Mar. 8
I
Mar. 15
1
Mar. 22
!
Gold settlement fund-!
Federal
Reserve |
Board—
i
Mar.l
I
Mar.8
1
Mar. 15
i
Mar. 22
j
Eligible paper, re- i
quired minimum*—:
Mar.l
i
Mar.8
j
Mar. 15
Mar. 22
!
Total—
i
Mar. 1
Mar.8
:
Mar. 15
'•!
Mar. 22




117,920 :
126,000 :
126,000 :
126,440

744,120
703,480
782,680
789,080

22,820 :
23,259 i
23,314
23,858

139,956
140,514
145,712
146,226

142,840
142,840
149,400
153,600

81,740
82,740
85,740
87,740

80,620
89,620
89,620
89,620

23,852 11,071 |
24,093 i 11,552 I
25,260 ! 11,814 !
25,644 I 12,142 i

16,939
17,258
17,527
17,757

12,150 ! 9,498
9,774 ! 11,305
1 2 , 8 8 3 '•• 9,951 • 10,307 ; 11,436
13,111 ; 10,493 i 10,333 11,678
13,641 i 10,940 10,701 : 11,787

604,164
622,966
636,968
642,854

118,988
118,747
124,140
127,956

4,920
10,640
10,640
9.080

95,440
95,600
110,800
102,000

11,280
10,180
13,240
8,640

90,180
92,101
92,046
93,502

508,724
527,366
526,168
540,854

107,708
108,567
110,900
119,316

32,110
32,109
32,109
32,109

195,961
195,961
191,161
191,154

5,070
4,992
4,937
4,893

13,823
13,265
12,867
12,360

5,729
5,488
5,871
5,777

11,500
11,500
11,500
11,500

40,000
40,000
5,000
5,000

68,659
69,759
70,709
71,619

41,500
43,500
43,500
45,000

258,940 j
278,140 i
317,140 |
332,340 |
I
508,724
527,366
526,168
540,854

33,320
33,320
34,320
41,920

135,969 64,801
135,488 ! 65,482
142,266 168,213
147,558 I 69,983

77,470
76,737
76,509
75,979

I
!
|
!

253,800 • 70,100 ; 67,980 j 86,740 i 68,50091,800
258,840 \ 80,800 ' 67.980 : 92,740 j 68,500
94,400
264,160 , 83,500 ; 69,980 ! 93,740 [ 68,500 96,720
276,580 83,500 . 69,980 i 94,740 ! 68,500
100,680

i
I
!
j

95,100
102,741
102,686
102,582

147,040
147,040
154,080
159,700

:
!
:
j

66,326
70,493
73,167
72,799

244,302
248,889
253,667 ,
265,640 j

i

90,180
92,101
92,046
93,502

13,280 :
9,280 I
12,940 I
12,680 i

122,689
126,208
129,326
134,878

!
:
i
i

5,455 :
5,455 j
5,455
5,455

16,625 i
16,555 !
17,005 !
17,005

59,346
60,027
62,758
64,528

60,845
60,182
59,504
58,974

107,708
108,567
110,900
119, 316

!
!
|
i

888 : 3,160
646 2,428
577 i 2,199
429 2,669

60,000 25,000 : 40,470
60,000 25,000 :39,470
70,000 25,000 39,720
70,000 I 29,000 36,720
I
i
!
j

38,140
39,640
39,020
39,900

122,689
126,208
129,326
134,878

207,082
213,109
218,607
221,540

I
;
I
!

33,458
34,381
37,181
35,099

59,346
60,027
62,758
64,528

j
!
I
I

j
!
!
!

4,440
3,640
4,495
4,095

14,580
14,580
14,580
14,580

13,102
13,102
! 13,102
: 13,102

14,111 55,675
15,780 53,635
15,081 :53,135
17,081 58,735

60,845 207,082
60,182 •213,109
59,504 218,607
58,974 221,540

!
!
|
i

28,500
28,500
30,500
31,500

52,860
52,360
52,360
52,360

8,246
9,046
8,046
7,446

9,847
15,343
15,057
16,173

20,946
20,760
19,883
18,940

64,116 52,235
65,333 52,904
66 327 53,807
65,959 54,098

65,481
70,887
70,555
71,619

42,102 i84,137
41,878 86,651
41,379 88,919
40,925 92,512

37,738
39,252
39,253
38,913
24,112
23,862
24,882
24,882

i
!
•
!

I
i
!
i

2,774
3,184
3,138
3,086

I'or actual amounts see item " Paper delivered to Federal Reserve agent," on p. 350.

2,302
2,264
2,242
2,221

211,065
212,835
238,410
231,750

i 84,137 1,464,645
86,651 1,505,213
88,919 1,520,296
92,512 1,558,705

2,387
2,256
2,159
2,050

412
2,266
196 ; 2,219
484 i 2,192
371 s 2,164

292,490
296,932
305,412
309.704

84,137 1,675,710
86,651 1,718,048
88,919 1,758,706
; 92,512 1,790,455

7,360 12,835 !
7,760 ! 12,785 \
8,760 • 13,175 :
8,460 ! 13,395 '

;

150,995
159,278
164,988
162,434

7,663
7,749
7,801
8,168

64,116 52,235 65,481 | 42,102
65,333 52,904 70,887 i 41,878
66,327 ! 53,807 70,855 ! 41,379
65,959 : 54,098 71,619 | 40,925

'
j
i
i

3,104 !.
2,504 !.
2 , 5 0 4 •.
2,504 L

18,130
19,951 :
13,368 !
18,209 !
6,419
6,617
8,938
6,769

!
I
!
!

\ 13,563
13,837
i 13,946
I 14,180

!

56,675 i 72,841 i 54,937
i 56,544 ! 78,647 I 54,663
58,302 79,315 I 54,554
80,079 i 54,320
58,1

2,210
5,160 :
6,840
6,840 I

37,220 !
35,780 !
35,060 '
44,100 I

13,899
14,093
14,425
14.661

1,968,200
2,014,980
2,064,120
2,100,160

j 4,517
i 4,431
i 4,380
i 4,232

4,274 ! 38,616
4,274 : 41,116
4,674 [ 41,116
5,184 ! 45,896
I 41,004 |
j41,104 j
|43,423
|42,384

276,987
278,207
266,824
271,658
49,747
47,986
47,984
47,021

558,612
570,509
554,820
560,126
579,299
608,511
650,668
679,900

1,464,645
1,505,213
1,520,296
1,558,705

8.52

1, 1C-IS.

.FHDEB.4.L BESKRVE BULLETIN.

MEMBER BANK CONDITION STATEMENT.
Principal resources and liabilities of rn&nbcr banks located in central reserve, reserve, and other selected cities,
tit- as at close
business on Thursday, Feb. 21, and on Fridays from Mar. 1 to Mar. 15, 1918.
[hi f-housduds of doilass; i. e... 000 omitted.]
L TOTAL :FOE ALL REPORTING HANKS..

Boston.

Number of bsiiks reporting:
Feb. 21....
Mar. 1
Mar. 8
Mar. 15
United States bones to
secure fiircuiation:
Fob. 21
Mar. ] , . . .
Mar. 8....
Mar. 15
Orher 'United States
bonds, ini'tod s Liber tv bonds:
Feb. 21
Mar. 1.
Mar. 8
Mar. 15
United States certificates
of indebtedness:
Feb. 21
.Mar. 1
Mar. 8
Mar. 15
Total United States securities owned:
Feb. 21
...!
Mar.l
I
Mar. 8
|
Mar. 15
!
Loans secured by United I
States bonds and cer- i
• iificates:
I
Feb. 21
Mar. 1
I
Mar. 8
!
Mar. 15
!
A3! other loans and investments:
Feb. 21
.!
Mar.l
!
Mar. 8
i
Mar. 15
\
Reserve with Federal Re- j
serve Banks:
i
Feb. 21
!
Mar.l
i
Mar. 8
j
Mar. 15
!
Gash in vault:
i
Feb. 21
:
Mar.l
!
Mar.8
!
Mar. 15
Net demand deposits on
which reserve is computed:
Feb. 21....
Mar.l
Mar.8
Mar. 15
Time deposits:
Feb. 21...
Mar.l
Mar.8
Mar. 15
Government deposits:
Feb. 21
Mar.l
Mar.8
Mar. 15




New
Yorfc.

Philadel- V.lvvc- Richphia.
Jand. mond.

San
Francisco.

St. j MiwneChicago. Louis. j ape?.is. Kansas
f'ity. Dallas.

Atlanta.

46 i
4o :

41 |
1.4,621 i

14.621 I
.14,621 i
14.622 |

50, tiC7
50,885
50,476.
50,201

12.933
I2l934
12,928
12,981

42! i l 2 ' 24,75-i I 15,147
42)342 23,775 ; 15,150

19,331
19,043
39,367
19,567

; 17,S7O
1 17,380
, 17.369
I 17; 369

I 10,992
! 12,165 6.140
I 11,229 0)052
! 11.395 8,315

42, o~3

23.072 ! 15.200 i
22) 076 I 13,430 i

17,750
17,414
17,569
17,569

;
5,507
5,1)32

10,701
10,744
10.496
10.899

180,056
182,921
182,787
178,800

14,131 42,551
11,950 42,712
11,391 I 37; 711
13,082 i 37,202

18,899
17,420
19,250
19,750

14,384
13,547
13,462
13,206

43,012
41,624
41,384
39,935

I9,o00
28,328
20,325
18,493

691,591 !
786,998 i
729,243 ;
723,242 i

26,826
37,291
40,176
36, 178

56,786
46,726
46,805
46.108

7,356
11,260
12,783
12,868

9,909
12,710
14,894
14,804

43,603 J 15,688 10,339
53,388 . 24,146 11,475 21,405
53,231 24,811 11,917 23,494
52,348 24,121 13,159" 22,758

922,854 i
44,822
.53,693 1,020,804 :.
45,442
962,506 j
44,014
952,243 !

53,890
62,175
64,295
60,241

141,890
! 132,210
1127,428
1125,802

49,327
50,756
56,787
56,393

39,498
39,687
43,503
43,160

105,946
114,055
113,982
111,850

i 44,050
i 53,691
I 53.409
! 52'. 885

193,797 '• 22,527
194,611 i 22,359
179,349 I 22.799
163,880 '' 22', 098

20,393
21,095
20,924
20,179

2,657
2,390
2,863
2,686

32,950
35,673
33,108
26,293

j 10,326
! 10,306
! 9,579
j S,722

4,042,932
4,124,021
4,008,702
4,015,493

603,004
594,200
597,347
596,346

9Ot5,965
907,421
918,959
914,466

288,570
261,280
291,027
292,336

1,333,939
1,327,122
1,354,827
1 358,537

1372,730
1372,370
382,545
382,800

61,417
615,351
58,993 i 556,722
59,039 I 600,600
61,305 j 587,284

58,607
51,102
64,116
58,058

137,11"
144,465

36,275
35,495
36,531
35,911

23,466 ! 123,599 i
23,236 i 119,489 !
22,746
121,936 j
22,650
119,923 !

21,974
20,872
19.424
19;659

59,051
60,128
63,148
63,847

12,784
11,651
13,235
12,793

31,903
31,583
31,348
31,196
710,431
(191,976
712,572
722,943

12,742 I
12,875
13,675
13,786
1327,796
|308,385
(344,287
1341,155

86,806 27,240
83,888 55,583
82,527 | 29,217
81,060 I 28,871

24,921
22,598
26,432
26,014
36,384 ! 15,710 16,652
35,989 I 14,806 13,876
35,993 i 16,251 14,042
34,106 15,570 14,318
I

606,494
602,747
593,488
605,882

4,320,311 !
4,288,632 i
4,243,281 !
4,294,804 ;

569,913
571,755
578,497
576,268

715,494
690,339
694,835
699,445

'257,098
1242,500
1273,358
268,095

207,551
187,571
213,945
215,921

81,546
80,960
80,684
80,202

307,705 !
303,193 I
298,223 !
293,630 i

15,876
15,056
14,963
15,225

217,119
217,757
217,337
211,635

47,554
45,500
45,853
48,200

74,631
77,287
78,817
80,218

35,704
45,104
42,241
37,055

512,563 !
498,780 j
499,853 i
278,318 i

40,099
39,184
38,594
29,257

36,143
43,966
50,823
39,914

8,711
8,539
10,360
12,195

| 22,22ti
j 23,385
I 23,476
I 27,406

j
j
I
!

35,399 !
35,399 j
35,469 !
35,399 i

10,217 16,679
9,842 15,338
9.857 17,334
10)132 15,047

40,255
46,208
-^8,380
",994

6,653 16,380
9,929 24,281
10,519 24,738
10.54S 25,114
I 34,620 68,458
I 37,185 75,018
I 37,945 77,541
38,249 75,560

2.839 ! 3,425
2,730 ; 3,569
3,209 3,384
3,290 i 3,042

(.-82

47 !

254, S4ti
265) 502
270, G&s
208, &?. 5

375;st#
371, 70C
307,127

m,
1,067,937
l,012,9&>
999,^31
1,567,731
1,708,867
1,654,094
1,635,803

5,260
5,107
5,247
4,812

341,715
344,986
328,134
•302,708

; 190,593 476,026
; 184,061 473,527
1180,846 471,062
|184,O98 478,359

9,951,500
9,941,331
9,945,544
9,986) 331

19,433 42,218 i 17.185 44,167
18,876 41,435 ! 17', 488 41,339
18,937 45,569 IS', 857 43,308
10,946 j 45,067 18,632 45,692

1,170,737
1,089,152
1,164.890
1,152',3C5

2,896
2,688
2,649
2,724
|246,186
!244,248
{231,066
243,783

8,831
9,014
8,532
8,987

452,328
452,720
452,304
156,015

i 15,913 I 12,309
: 16,696 •12,226
; 16,813 j11,843
i 16,269 I 12,202

21,739
20,959
20,211
20,277

368,413
358,942
364,174
360,601

1172,782
;168,003
170,037
160,930

158,140
554,664
354,117
360,458

9,095,546
8,968,138
8,998,092
9,118,935

! 55,676 ! 24,563
! 50,806 !22,254
I 55,570 i 24,170
j 51,460 I 22,116

102,051
102,555
102,365
106,179

1,404,882
1,375,066
1,395,667
1,393,180

!
272,199
270,406
281,961
287,492

J179,436
il79,718
1176,746
.189,161

343,440 83,081
336,237 73,424
355,289 77,126
355,781 77,224

51,640
50,037
45,270
51,310

11,036,781
ll, 011,509
|l,014,072
11,049,607

51,066
61 986
69,500
51,385

398,747
|400,694
403,755
'404,872

!

19,588 14,140 I 14,300 i 10,311
28,194 i 14,796 I 14,814 j 10,300
28,928 16,770 I 17 342 !11,733
22,953 13,800 i 14,577 ! 9,972

742,625
776,244
796,855
518,545

353

FEDERAL RESERVE BULLETIN.

(U resources and liabilities of member hanks located in central reserve, reserve, and other selected cities, as at close of
hudness. on Thursday, Feb. 21, and on Fridays from Mar. 1 io Mar. ./•>. 1918—Continued.
riu thousands of dollars; i. e., GOO omitted.]
2. MEMBER BANKS IN CENTRAL RESERVE OITJES.

Eich- i Atmono. ! iar.t.r;.

! Philadel- Clevej phia.
land,

Boston.

San :
Sf. I Minne- i Kansas Dallas. FranChicago. ! Louis.
| Total.
| apolis. \ City.
eisco. ;

i
7 1

• C O T T E A ; . r^SETv." : : <:57]i".S.

Nf>'i:r.ber <:•! b&DV.s reporri

.Feb. 2!
i
Mar. l
:
Mar. 8...
..!
Mar. 35..
I'tited States bonds to
f-seure circulation:
Feb. 23;
Mar. I
Mar. 8
Mar. 15,
Other XT. S. bends, inf lading Liberty bonds:
Feb. 23...
Mar.l
Mar. 8
Mar. 15.
United States certificate:
of indebtedness:
Feb. 21
:...,
Mar. 1
-1
Mar. 8
..I
Mar. 35
!
Total United States securities owned:
Feb. 21
Mar. 1
Mar. 8
Mar. 15
"Loans secured by United
States bonds 'and certificates:
Feb. 2!
Mar. 1
Mar. 8
Mar. 15
All other loans end investments:
Feb. 21
Mar.l
Mar. 8
='
Mar. 15
•'
Reserve with Federal |
Reserve Bank:
;
Feb. 21
i
Mar. 1
!
Mar. 8
|....
Mar. 15..
j
Cash in vault:
Feb. 2]
Mar.l
Mar. 8.
Mar. 15
Net demand deposits on
which reserve is computed:
!
Feb. 21
!....
Mar.l
!
Mar. 8
1
Mar. }5.
!
Time deposits:
!
Feb. 21
1
Mar.l
:
Mar. 8
i
Mar. 15
j
Government deposits: i
Feb. 21
Mar.l
'••
:
Mar. 8
Mar.lfi




4

i

58 I
58 i
58 i

40 !
4 0 '•
:

35,693
35,957
35,563
35,287

1,303
3..:-H)3
1^893
1,393

162,168 i
164,533 i
162,955 i
160,675 !
.! 681,068 i
i 770,688 1
I 711,185
706,589

171,693
170,840
155,326
140,610

112
112
U2
112

: 10,370 !...
; 10,370 i...
''-. 30,339 i...
•' 10,369 .....

47.720
•1~;325
47,04-)

15,102 •• 6,444:
1-1,906 ! 7,211 ;
«3,8C0 i. 0,962 :
13.983 ! (5,980 :..

..|
.1

=

!

•

•

;

•

"

•

•

:

!

•

32,587 ! 19,469 •....
I 31,300 ! 19,220 :
. i 30,292 : IS, 882

i
.i

i IS;*.. 714
3 88', 650
'•• 183.717
• 18]\988

..

2ti, 12h i 12,664 :

"

878,929
973,178
| 909,703
j 902,851

34
14
34
1-1

i

719,857

822'744
.j 761,705
755,703

:

!

42,620 ! 29,478 \
48,886 ! 37,050 '.
46,493 ;! 36,551 i
45,668 36,171

•

I 950,947
! 1,057; 114
992,747
• . . . . 984,690

198,040
201,223
180,647
160,669

39,354 7,793
21,595 | 8,7S8
17,380 ! 7,941
12,942 i 7,117

3,621,616
|3,698,762
, ,
13,584,334
;3,583, oW
j
;
! 580,000
! 517,168
j 560,675
...' 550,365

828,553
818,208
825,346
819,651

108,359
104,809
306,058
104,713

37,810
37,652
39,145
38,191

7,261
6,863 !
7,676
7,427 ;

717,560
690,472
686,505
701,131

194,224
199,266 :
199,787
205,045 :

4,849,821
4,785,480
4,745,731
4,805), 075

137,422
138,112
138,688
138,708

63,510; :
57,030
57,137 :
57,243

460,801
451,302
440,310
443,196

i
13,938,037
13,895,742
13,859,439
!3,902,899
J
259,869
256,160
244,485
247,245
495,053

486,067
471,704
266,559

,273,114
|270,461
,272,971
273,472

4,723.283
4,787; 431
4,682,651
4,676,689

27.652
27:663
,223 28,130
100,498 27,155

703,974
642,268
686,028
678,018

96,322
97

37,422
48,044
53,891
38,600

16,504
24,051
24,618
19,519

153.436
149,324
152,879
150.331

:

!
:
!
:
I

I

.
i.
i.
..
i

548,979
558,162
549,343
324,678

354

.FEDERAL RESERVE BULLETIN.

APRIL 1,

1918.

Principal resources and liabilities of member banks located in central reserve, reserve, and other selected cities, as at close of
business on Thursday, Feb. 21, and on Fridays from Mar. 1 to Mar. 15, 1918—Continued.
[In thousands of dollars; i. e., 000 omitted.]
3. MEMBER BANKS IN RESERVE CITIES.

Total.

OTHER RESERVE CITIES.

Number of banks report- i
ing:
:
!
Feb. 21
Mar.l....
!
Mar. 8
:
Mar. 15
United States bonds to •
secure circulation:
!
Feb. 21
!
Mar.l
Mar. 8
Mar. 15
Other U. S. bonds, in- i
eluding Liberty bonds: i
Feb. 21
;
Mar.l
I
Mar. 8
:
Mar. 15
United States certificates ;
of indebtedness:.
i
Feb. 21
i
Mar.l
;
Mar. 8
i!
Mar.JS

Total United States se- !j
curities owned:
Feb. 21
i
Mar.l
Mar. 8
Mar. 15
Loans secured by United ;
States bonds and cer- i
tificates:
i
Feb. 21
1
Mar.l
;
Mar. 8
Mar. 15
All other loans and investments:
Feb. 21
Mar.l
Mar. 8
Mar. 15
Reserve with Federal Reserve Bank:
Feb. 21
Mar.l
Mar. 8
Mar.15
Cash in vault:
Feb. 21
Mar.l
Mar. 8
Mar.15
Net demand deposits on
which reserve is computed:
Feb.21
Mar.l
Mar. 8
Mar.15
Time deposits:
Feb.21
Mar.l
Mar.8
Mar.15
Government deposits:
Feb.21
Mar.l
Mar.8
Mar.15




421
418
420
421
35,399
35,399
35,469
35,399

158,441
170,671
173,257
173,370

16,679
15,338
17,334
15,047

152,487
159,038
156,742
153,095

8,003 16,380
8,818 24,281
9,284 ! 24,738
9,390 "• 25,114

168,284
221,137
224,169
217,426

4,498
4,498 •
4,408 •
4,499
6,115
6,050 :
5,911 :
5.886 I

10,459 i 11,473 I 39,410 12,602
10,4L6;
9,424 i 39,921 12,410
12,226 ji 8,684 ; 34,981 12,775
10,280
8,589 ! 34,788 12,690

12,786
12,152
12,078
11,837 i

8,471
8,825 I 21,405
9,707 23,494
9,637 22,758 I

15,403
23,518
15,048
13,970

8,363
12,896
13,646
12,216

!
i
!
!

24,999
34,536
37,251
33,689

i 53,949 | 8,087 9,028 i
I 42,924 9,205 10,916 i
42,584 10,1.39 12,664 •
12,624 i
42,562

17,238
20,511
21,611
21,730

2,363
3,302
4,003
3,686

26,016
34,066
25,457
24,355

27,188
31,678
34,238
30,862

I
i
j
>

45,395
52,883
54,852
51,248

1.28,498
118,053
112,913
112,508

61,124
62,845
64,878
83,575

11,211
12,483
12,439
12,307

15,899
16,409
17,055
19,125

12,276
13,961
13,637
13,237

'>
'
!
!

21,846 19,677 | 10,706
21,693 20,353 J 10,944
22,136 20,269 11,486
21,542 19,418 11,807

2,383 ! 13,341
2,130 I 13,635
2,608
15,280
2,419 ! 12,914

2,140
1,173
1,295
1,265

2,713
2,533
2,529
2,541

26,193
25,838
25,493
25,455

i
!
I
i

31, 775
35,279
36,869
38,695

531,482
513,279
534,174
542,935

257,139
260,643
257,782
256,571

542,273
534,015
537,313
536,048

833,485
836,485
845,464
849.382

228,418
231,377
243,010
1245,627

51,126
48,389
48,536
50,774

23,874
26,410
28,166
25,497

54,214
46,575
59,539
53,616

80,480
78,666
76,818
76,125

16,814
16,844
16,558
16,614

8,358
8,304
8,574

19,451
18,229
18,956
16,709

32,330 11,646
31,589 11,882
32,138 ! 12,241
30,481 | 11,841

479,147
475,168
467,790
482,664

227,368
235,426
234,579
233.868

512,024
514,205
520,775
518,915

31,810
31,386
31,035
30,580

30,462
28,210
28,41.7
28,341

31,166
39,600
36,297
31,815

4,115
19,170
3,987

33,784
33,468
36,662
36,381

I
I
i
I

8,714
10,965 I 8,628
10,947 I 8,434
11,298 j 8,625

26,618 ! 3,518 4,113
25,434 i 3,841 4,459
26,043 3,106 4,223
24,421 3,291 6,363

40,255 30,064
46,208 32,457
48,380 32,884
47,994 ! 33,181

!
I
I
|

2,839
2,730
3,209
3,290

i
|
j
i

i 68,458
I 75,018
! 77,541
j 75,560

519,467
550,847
554,168
543,891

3,339 i 5,260
3,483 ! 5,107
3,297 j 5,247
2,943 4,812

122,713
123,580
126,486
121,643

i180,182 i 452,328 160,886 476,026

4,484,906
181,197 1452,720 155,229 1473,527 4,439,071
180,855 452,304 153,182 1471,062 4,531,016
178,242 456,015 156,511 1478,359 4,565,859

251,076
225,624
253,043
254,490

493,758
497,451
518,333
527,597

78,053
77,524
84,694
84,082

20,767 22,136
20,663 19,982
22,461 23,781
22,441 23,352

37,361
41,693
43,127

6,965
6,357
6,731
7,202

15,529
15,098
15,710
15,843

42,218
41,435
45,569
45,067

15,206
15,342
16,941
16,416

44,167
41,339
43,308
45,692

416,670
397,617
429,253
425,152

14,579
11,906
11,902
12,443

20,732
22,010
23,553
25,238

4,431
3,735
4,349
4,216

5,844
5,882
5,973
5,929

15,913
16,696
16,813
16,269

10,587
10,363
9,989
10,463

21,739
20,959
I 20,211
! 20,277

182,424
178,399
179,257
178,970

181,717
162,715
187,212
189,467

310,386
311,976
318,567
339,272

60,063
53,687
64,022
64,842

134,521
136,341
139,920
142,343

398,747
400,694
403,755
404,872

147,829 (358,140
143,102 1354,664
145,128 354,117
140,297 366,458

3,643,766
3,597,171
3,660,197
3,722,105

201,397 13,760 27,155 55,676
193,502 10,408 26,870 50,806
212,150 14,153 27,029 55,570
212,639 14,031 27,017 51,460

19,286 102,051
17,432 102,555
19,383 102,365
19,359 j106,179

785,893
767,198
795,875
797,839

10,026 !
9,732 I
11,028
9,373 I

175,909
194,054
222,659
167,778

I

9,740

651,927
626,275
631,490
639,378

1181,897
182,918
192,842
199,731

200,123 34,137 60,188
8,961 200,693 32,366 64,009
8,836 200,418 31,894 64,625
9,098 198,910 34,338 65,887
38.764
37,246
36,613
27,530

35,573
43,428
50,208
39,193

8,149
7,839
9,220
7,488

13,464
13,796
16,349
12,687

2,267
3,161
3,116
2,444

12,460
12,156
15,075
11,638

I 14,300
I 14,814
I 17,342
; 14,577

355

FEDERAL KESEEVE BULLETIN.

1918.

Principal resources and liabilities of member banks located in central reserve, reserve., and other selected cities, as at close of
business on Thursday, Feb. 21, mid on Fridays from. Mar. 1 to Mar. 15, 1918—Continued.
[In thousands of dollars; 1. e., 000 omitted.]
4. MEMBER BANKS OUTSIDE R E S E R V E CITIES.

New
York.

Boston.

Philadelphia.

Kansas
City.

St. j MinneLonis. j apolis.

Dallas.

San
Francisco.

Total.

COUNTRY BANES.
Number oi b a m s reporting:
Feb. 21
,
March!
March 8
March 15
United States bonds to
secure circntetzon:
Feb. 21
Mar.!
Mar. 8
Mar. 15
Other U. S. bonds, including Liberty bonds:
Feb. 21
"
Mar.l
Mar. 8
Mar. 15
United States certificates
of indebtedness:
Feb. 21
Mar.l
Mar. 8
Mar. 1 5 . . . .
Total United States securities owned:
Feb. 21
Mar.l
Mar. 8
Mar.15
Loans secured b y United
States bonds and certificates:
Feb. 21
Mar.l
Mar. 8
Mar. 15
AJ1 other loans and investments:
Feb. 21
. Mar. 1
Mar. 8
Mar. 15
Reserve with Federal
Reserve BanV:
Feb. 23
Mar.l
Mar. 8
Mar. 15
Cash in vault:
Feb. 21
Mat. I
Mar. 8
Mar.15
Net demand deposits on
which reserve is computed:
Feb. 21
Mar.l
Mar. 8
Mar.15
Time deposits:
Feb. 21
Mar.l
Mar. 8
Mar.15
Government deposits:
Feb. 21
'
Mar.l
Mar.8
Mar. IB




21
21
21
20

153
146
150
149

10,123
10,123
10,123
10,123

6,548
6,562
6,547
6,548

4,010
4,011
4,011
4,011

7,414
7,364
7,564
7,064

8,412
10,799
9,820

3,230
3,030
3,227
3,230

750
750
750
750

1,670
1,670
1,670
1,670

2,895
2,645
2,382
2.807

2,4.03
2,403
2.403
2; 403

49,029
47,170
49,476
48,426

4,586
4,694
4,585
5,013

8,029
7,972
7,606
7,545

2,658
2,526
2.507
2,493

3.141
2^791
2,730
2,494

6,297
5,010
6,475
7,066

1,598
1,395
1,384
1.369

1,292
1,284
1,541
1,531

1,030
1,113
1,161
1,124

1,664
1,681
1,829
L952

1,503 !
1,214
1,423
1,507

31,798
29,680
31,241
32.094

4,097
4,810
5,277
4,523

2,160
3,414
4,412
4,437

1,827
2,755
2,925
2,489

2,837
3,802
4,221
3,636

1,269
2,055
2,644

881
1,794 j
2,230 j
2,180

240
290
320
326

661
1,375
1,588
1,613

1,868 ; . . . .
2,650 j . . . .
2,210 ! . . . .
3,522 ! . . .

!
650 j
1,111
1,235
i l',158

16,490
24,056
27,062
26,702

18,806
19,627
19,985
19,659

16,737
17,948
18,565
18,530

8,495
9,292
9,443
8,993

13,392
14,157
14,515
13.194

17,552
15,477
19,918
19,704

6,427
6,976
6,421
8,281

!
!
j
!

681

716
742
655
761

5,710
5,745
5,855
5,741

9,810
10,386
10,033

663
556

164,177
164,616
166,586
180,008 I 175,356

60,731
60,185
60,034
60,298

178,949
178,697

10,291
10,604
10,503
10,531

I
!
;
!

11,477
13,144
11,759
11,422 |

2}818

5,709
6,219
6,84.1
6,779

2,282
2,324
2,611
2,607

3,361
4,158!
4,419
4,407

2,036
1,931 I
2,189 I 255
1,979 i 267

455
443
448
437

I
393 j
345!
343
340

73,480 99,378 37,494.
70,936 77,008 :35,656
73,495 101,277 37,984
65,084 95.528 37,846

11,628
11,463
11,148
11,289

4,393
6,326
4,527
5,222
4,577 | 5,709
4,442 ! 4,935

6,473
4,920
6,756
6,430

2,785
2,616
2,651
2,662

807
835
841
840

1,658
1,475
1,670
1,554

2,073
1,970
2,140
!, 875

503
466
450
418

1,093
1,053
1.210
l',150

17,912
17,453
18,152
17,605

6,882
6,376
7,304
6,520

2,523
2,643
2,468
2,950

4,054
4,400
3,855
3,625

4,064
2,924
4,010
3,929

! 154,906
| 157,464
: 149,263
i 158,037

57,889
57,550
57,722
57,353

63,567
64,064
63,345
60,069

75,801
59,182
80,516
68,364

25,834
24,856
26,733
26,454

8,835
9,061
9,000
9,204

49,736 ! 17,374
18,823
49,574
25,321
49,649
18,044
49,622

6,028
6,095
6,127
6,127

16,996 13,417
17,064 13,134
16,919 13,959
12,725 13,862

14,443
13,278
14,192
14,331

4,621
4,623
4,451
4,434

1,335
1,938
1,981
1,697

570 i.
538 ! 2,414
615 2,470
721 ! 2.303

562
700
1,140
4,707

180
146
130
98

6,652
6,392
6,188
6,036

i
|
!
[

I 21,563
24,385
24,880
25,246

\
I
:
\

=•
183'
155
120 I
183
66,004 •
63,051
50,411
65,541

!
!
i
I

4,556
4,728
5,061
5,068

97,317
100,906
107,779
107.177

!

t
!
i

86

86
87
99

20.362
20;i83
21,001
20,396

29,907
28,832
! 27,664
! 27,587

743,311
714,829
731.877
743;783

! 1,979
2,146
1,916
2,216

50,093
49,267
49,609
49,135

1,722

32,553
31,219
32,038
31.300

.! 1 854
.j 1,739

I
127,347
127,579
125,698
123,218

4,538
5,504 !
5,944 i
5,240 :

7,770
8,598 !
8,979
7.772

I

44,915
43,377
36,826
46,818

5,811 i 24,485
5,986 23,167
5,836 18,241
5,950 24,293

817
982
1,194
990

1,680
2,640
1,695
2,162

i 24,953
24,901
24,909
20,633

601.959
585; 487
592,164
587,755

5,277
4,822
4,787
2,757

158,188
156,566
159,482
152,145

285
568
705

17,737
24,028
24,853
26.089

356

1, 1918.

JTEDKKA.L RESERVE BULLETIN".

EARNINGS ON INVESTMENTS OF FEDERAL RESERVE BANKS.
Average amounts of earning assets held by each Federal Reserve Bank during February, 1918, earnings from each class of
earning assets, and annual rates of earnings on basis of February, 1918, returns.
Average balances for the month of the several classes of earning assets.
Bills discounted for Bills bought
United
members
in open j
States
and Federal
market. ! securities.
Reserve
Banks.
n
New York
Philadelphia..
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis—
Kansas C i t y . . .
Dallas
San Francisco..
Total.

$53,712,747
180.063,642
26| 462,460
39,598,731
32,757,638
9,940.007
84,923)160
27,395,180
11,348.000
24,350,246
9,425,212
31,564,310

314,551,394
171,032,882
16,792,076
10,631,834
8,561,241
6,660,865
12,438,155
5,835,624
1,420,000
757,905
11,064,860
29,325,210

j
53, 310,893 i
. 72, 079,388 i
! 10, 311,798 i
i 35, 525,442 !
3,257,284 I
6, 677,614 |
12, 277,779 I
3,677,400 j
8)697,000
13, 971,993
6, 786,414
I 3,943,000

531,541,333

289,071,546

180,516,005

rnings 1'romBills discounted for
Biils
members
bought
and Fed- in
open
eral Remarket.
serve
Banks.

Banks.

Bostont
New York
Philadelphia
Cleveland . .
Richmond
Atlanta . . .
Chicapo . . .
St. Louis
Minneapolis...
Kansas City.
Dallas
SanfFrancisco
Total




- ..

$45,726
494,616
46,913
32,592
18,253
19,934
37) 259
17,958
4,317
2,339
31,995
89,358

«S, 150
175,472
29,600
98,623
6,775
17,165
31,069
7,769
22,522
30,013
14,739
7,949

1,638,446

841,259

449,846

Total.

575,034
423,4449,502
53,5576,334
85 7756,007
44,5576,163
140,533 | 23,4418,519
109,6639,094
36,9908,204
21,4465,000
,080,144
400,600 j 27,677,086
64,832,520

1273,590
10,000

824,723 I 1,001,953,607

Calculated annual rates of earnings from—

i/nited
States Municipal
securi- warrants.
ties.

3163,349
522,075
81,895
122,986
101,902
32,423
263,322
88,926
41,897
82,897
30,760
106,014

Municipal
warrants.

$686
35
394

1,247
2,362

Total.

$217,225.
1,192,849
158,443
254.200
126,930
69,916
331,650
114,653
68,736
115,249
78,741
203,321
2,931,913

Bills discounted
Bills
for .mem- bought
bers and in open
Federal
Reserve market.
Banks.

United
States
securities.

Municipal
warrants.

Total.

Per cent. Per cent. Per cent. Per cent. Per cent.
4.14
3.96
3.21
3 77
3.77
3.76
3.17
3.26
3.67
4.03
3.61
3.74
4.56
3.85
3.70
4.28
3.62
3 86
2 81
4.00
2 70
3 71
4.25
3.90
3.35
3.65
.3.89
4.04
3.90
3.30
3 94
4.01
4.23
2.75
4 08
3.37
3.96
4.81
4 17
9
4.43
4.02
80
'5 84
3.47
3.91
2.61
3 73
3*41
4.38
2.41
3.97
4.06
4.02

3.79

3.25

3.73

3.8i

.FKOEKAl..

APRIL 1, 1918.

857

B I* I ,LETJ X .'

GOLD IMPORTS AND EXPORTS.
.Gold imports and exports into and from the United States.
[[n thousands of dollars: i. a., OIK) ornitled.]
Week ending—
Feb. 22.
1918. '

Mar. 1,
1918,

Total
since
Tan. 1,
1918.

Total tor;
corresponding
period"
during
1917.'

Mar. 8,
1918.

Mar. 15,
1918,

IIS

34!.i

2,039

2,952

3ni

1G7

143,219
51,006
50,85*

IMPORTS.

Oro and base bullion
United States mint or ass&v office bars
Bullion refined
United States coin
Foreign coin
Total

221

143

679
88

400 i

995

549 '

10

98

3,377
2,449
132

482

611

7,997

248,041

IS

i

EXPORTS,

Domestic:
Ore and base bullion
United States mine or assay office bars
Bullion refined
Coin

64
282

2,982
434

25
776

169
641

3,253
6,690

52
3,238
' 1,194
42,519

346

3,417

805

810

9,959

47,008

175

31
3,323

1 !

Total
Foreign:
Bullion refined
Coin

2

Total
Total exports-

4

1

2

1

348

3,4.18

805

810

175

3,854

10,134

50,857

DISCOUNT RATES.
Discount rates of each Federal Reserve Bank in effect Mar. 30, 1918.
Maturities.
Trade acceptances.

Discounts.

Federal Tlesorva Baalc,

Within 15 j
days. i
including
member
banks'
collateral
notes.

10 to 60
days.

61 to 90
days.

Agricultural and
live-stock
paper
over 90
days.

Secured by U. S. certificates of indebtedness or Liberty loan
bonds.
Within 15
days, including
member
banks'
collateral
notes.

Boston
Mew York i . . . .
Philadelphia..
Cleveland
Richmond
Atlanta
Chicago
St. Louis,
Minneapolis...
Kansas City...
Dallas....."....
San Francisco.
1

Rate of 3 to 41 per cent for 1-day discounts in connection with the loan operations of the Government.

NOTE 1.—Rate for acceptances purchased in open market, 3 to 4A per cent, except for Boston, Chicago, and Minneapolis, whose rates range from
3 to 5 per cent.
NOTE 2.—In case the 60-day trade accaptaacn rate is higher than the 15-day discount, rale trade acceptances maturing within 15 days wili to
taken at the lower rate.




358

FEDERAL EESEEVE

BULLETIN.

APRIL 1,

19IS.

FOREIGN EXCHANGE RATES.
Monthly ranges of exchange rates on lead/ing foreign money centers, quoted in New York during the three months
March 1918.

ending

[In continuation of figures published in the January, 1918, Federal Reserve Bulletin.]
January.
i Exchange
i at par.'
i
!
London:
dolls, for £1 . I
60-day bankers' bills
iI
4.8665
4.8665
do
SightTdrafts
francs for 100 dolls.. I 518.1347
Paris
23.82
dolls. for 400 marks
Berlin
dolls, for 100 rubles !
51.46
Petrograd
20.26
Vienna
dolls for 100 kronen 1
518.1347
Milan.. .
lire for 100 dolls
dolls, for 100 pesos.. ; 518.1347
Madrid
40.20
dolls. for 100 fiorins i
Amsterdam
dolls.for lOOkroros '.
26.80
Stockholm
OopfiTjh fl.g#n
26.80
do
Zurich . .
francs for 100 dolls '. 518.1347
dolls, for 100 paper pesos i » 96.48
Buenos Aires 1
dolls,
for
100 paper imlreis !1 3 54.62
Rio de Janeiro*
2 38.50
dolls, for 100 pesos
Valparaiso 1 ..
49.85
dolls, for 100 yen
Hongkong.
.dolls.for 100 Hongkong dolls
dolls, for 100 Shanghai taels 1
Shanghai
nal rate of £—$4.8665«
London price of silver at nonu
New York price of silver 6 ...




1
2

Cable rates on New York.
Rate for a gold peso.
• Rate for a gold milreis.

Low.

4.7125
4.7520
573.75
12.75
859.50
24
43
32.50
30.25
450
44
26.577
26.88
50.65
71
105
94.809
86.625

High.

|

February.
Low.

!
4.71625 j
4.715
4.7535 :
4. 7530
572.50
570.25
13.125
83i.5O
24.40
44.25
34.25
31. 75
435

45.977
27.137
28.01
51.875
75
114
98.919
91.25

High.

4.71625
4.7535
571

March.
Low.

4. 7150
4.7535
572.75

High.

4. 72125
4 7535
572. 2-0

13

13.75

13.25

13.50

! 878.50
24
i
44
i
32.25
i
30.50
i 451.50
* 43.737
i 25.773
26.312
! 51.50
70.75
103
j 93.165
! 85.125

850
25.25
45.50
33.50
31
446
44.044
26.666
27.322
51.65
73
108
94.809
86.625

892.50
24.30
44.75
31.75
30
448
43.868
25.77
27.32
51.65
70.75
103
93.165
85.125

835
25.625
46 75
34
31. 75
431.50
44.436
26.42
30.30
51.75
77
111
100.837
92.875

* Average for January, 97.222; for February, 93.825; and for March, 95.795.
* Average for January 88.702; for February, 85.716; and for March, 88.082.

INDEX.
Pa e
Acceptances:
sBankers', memorandum by Board regarding
practice of granting renewal acceptance
credits
257
Banks granted authority to accept up to 100 per
cent of capital and surplus
296
Distribution of
343
Acts:
Third Liberty loan
306
Federal control of railroads
296
War finance corporation
300
Bankers' acceptances, memorandum by Board regarding practice of granting renewal acceptance
credits
257
Branches of Federal Reserve Banks authorized.... 256
Business conditions throughout the Federal Reserve districts
318-336
Capital Issues Committee:
Act creating
304
Press statements issued by
263
Certificates of indebtedness oversubscribed
250
Chart showing deposits and investments of national
banks, 1913-1917
337
Charters issued to national banks during month
295
Check clearing and collection system, operation of. 340
Commercial failures reported
295
Commercial paper, discount of.
341
Credits, curtailment of
260-263
Deposits, interest rates on
285-294
Deposits and investments of national banks, 19131917
337
Chart showing
337
Discount operations of the Federal Reserve Banks. 341
Discount rates in effect
357
Federal Reserve agents' fund, transactions through.
Federal Reserve Banks:
Discount operations of
341
Earnings on investments of
356
Investment operations during month
346
Resources and liabilities of
347
Federal Reserve note account of Federal Reserve
Banks and agents
350
Fiduciary powers granted to national banks
296
Foreign countries, note circulation, deposits, and
reserves of principal banks in
267-284
Foreign exchange rates
358
Foreign governments, securities of, held by national
banks in the United States
263
Gold imports and exports
357
Gold settlement fund, transactions through
338
Governors of Federal Reserve Banks, conference of,
with the Federal Reserve Board
256
Informal rulings of the Board:
Draft drawn for insurance premium as a trade
acceptance
309
Cattle as readily marketable commodity
309
Tractors used in agricultural operations
309
?3ank examination forms
310




Informal rulings of the Board—Continued.
Redemption of Federal Reserve notes
310
Notes of farmers for commodities used in farming 310
Drafts for purchase of electrical goods, including
cost of installation, as trade acceptance
310
Investment operations of the Federal Reserve Banks
during the month
346
Investments of Federal Reserve Banks, earnings on. 356
Law department:
Acceptances by correspondents at request and
under guarantee of national banks
311
Acceptances without documents attached
311
Note for purchase price of commodities used
for agricultural purposes
312
Duty of national banks to assist in financing the
Government
313
Bankers' acceptances growing out of export
transactions
314
Acts passed by Mississippi and Kentucky Legislatures regarding State bank membership
315
Yvar stamp tax on negotiable instruments
316
Liberty loan, third:
Announced
250
Text of act of
306
Member banks, statements showing condition of...
352
National banks:
Charters issued to. during month
295
Deposits and investments of, 1913-1917
337
Securities of foreign governments held by
263
New York Clearing House Association, amendment
to by-laws of, regarding interest rates on deposits. 285-294
Note circulation, deposits, and reserves of principal
banks of the world
267-284
Official Bulletin, reference to
266
Railroads, text of act providing for operation of
296
Resources and liabilities of Federal Reserve Banks.. 347
Review of the month:
Our first year of war
247
The credit situation
249
The third Liberty loan campaign
250
Certificates of indebtedness oversubscribed
250
War finance corporation act
251
Interest on deposits—agreement among New
York clearing house banks
252
Operations of the Federal Reserve Banks
254
Condition of member banks
254
Acceptance problems
255
New branches of Federal Reserve Banks
authorized
256
Meetings with the governors of the Federal
Reserve Banks
256
Movement of gold
256
State banks and trust companies admitted to the
system during the month
294
United States bonds held by Federal Reserve Banks
on February 28, 1918
346
War expenditures, war debts, and increase in note
circulation of principal countries
267-284
War finance corporation act
300-306

o