View original document

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

FEDERAL RESERVE
BULLETIN




ISSUED BY THE

FEDERAL RESERVE BOARD
AT WASHINGTON

JULY, 1915

WASHINGTO I
GOVERNMENT PRINTING OFFICE
1915

SUBSCRIPTION PRICE OF BULLETIN,
May and June issues of the Federal Reserve Bulletin were
distributed without charge.

This distribution will be continued

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

In sending the Bulletin to others the

Federal Reserve Board feels that a subscription price should be
required.

It has accordingly fixed this price at $2 per annum.

Single copies will be sold at 20 cents.

Remittances should be

made to the Federal Reserve Board.




115

TABLE OF CONTENTS.
Page.

Work of the Board
Expenses of the Board.
Gold settlement fund
Meeting of governors of Federal reserve banks
Informal rulings of the Federal Reserve Board
The Pan American financial conference
Address by Hon. P. M. Warburg
Address by Hon. C. S. Hamlin
Circulars and regulations
Law department
General business conditions
Gold imports and exports
Commercial paper rediscounted
Acceptances
Resources and liabilities of Federal reserve banks
116




117
118
120
122
125
128
132
136
145
150
157
164
166
169
170

FEDERAL RESERVE BULLETIN
VOL.

1

JULY 1, 1915

WORK OF THE BOARD.
During the month of June the work of the
Federal Keserve Board has included the following principal elements:
(1) Completion and distribution of the circular and regulations relating to membership
of State banks in the Federal reserve system.
(2) Development of plan and arrangements
for prompt consideration and action upon applications of State banks for such membership.
(3) Development and application of a plan
for the actual transfer of member banks from
one Federal reserve district to another—a step
necessitated by the redistricting decisions issued in May.
(4) Action favorable to the establishment at
New Orleans of a branch bank of the Federal
Reserve Bank of Atlanta, and development of
regulations relating thereto.
The list of applications for power to exercise the functions of trustee, executor, etc.,
granted during the month, will be found on
page 144.
Eevision of the circular and regulation relating to capital stock has been necessary.
These will be found on pages 148-149 of this
issue.
So far as possible, matters awaiting the
Board's action prior to the beginning of summer have been disposed of.
Distribution of the Board's circular and regulations relating to membership of State banks
in the Federal reserve system completes an inquiry which the Board has had actively in
hand ever since it was organized. In making
public the circular and regulations the Board
issued the following statement, which briefly
sets forth the character of the task now brought
to a termination:
The Federal Reserve Board to-day makes
public the text of its proposed circular and
regulations relative to membership of State
banks in the Federal reserve system. Supplies
of this document have been sent to each Federal reserve bank, and will be distributed to the




No. 3

National and State banks in the several districts.
The Federal Reserve Board has had the
question of admission of State banks to the
reserve system under careful consideration
practically ever since the opening of the new
institutions. The subject has presented various
difficulties of interpretation and administration, and it was deemed best to obtain as much
advice and suggestion as possible. The present
circular and regulation are the result of many
consultations with experts, representatives of
Federal reserve banks, and members of the
Advisary Council of the system. The latter
body unanimously recommended action along
the lines of the present plan. It is believed
that agreement has been arrived at with reference to the conditions of State bank membership on the part of practically all who are
familiar with the subject, and that the present
circular and regulation fairly represent the
consensus of opinion. The Federal Reserve
Board regards the action taken in the State
bank matter as being of the utmost importance
to the future development of the system, and
its action has been considered with a corresponding amount of care.
Acting in accordance Avith the plan thus
marked out for the admission of State banks,
the Board has begun the investigation of those
whose applications had already been made and
of others which have been filed since the publication of the regulations. Among the earliest
to make application for immediate admission
to the system in accordance with the terms of
the new regulations were the Old Colony Trust
Co., of Boston, and the Broadway Trust Co.,
of New York. In the case of all State banks
and trust companies seeking admission to the
Federal reserve system, the Board has ruled
that the new application blanks distributed
with the circular and regulations shall be followed, independent of the question whether
any applying institution had made application
prior to the issue of the regulations or not.
This is merely in order to secure uniformity.
During the month of June the Board has
voted to request various of its members to ac117

118

FEDERAL RESERVE BULLETIN.

cept invitations to attend State bankers' association meetings to which they had been invited, for the purpose of participation in the
sessions, and of explaining the position of the
Board on pending questions. The Board desires to keep in communication in this way
with associations of bankers throughout the
country.
For the summer months arrangements have
been made whereby a quorum will be constantly available for meetings in Washington.
Purely routine business will be dealt with by
the executive committee of the Board.
Expenses of Federal Reserve Board.
It is estimated by the Federal Reserve Board
that its general expenses for the six months
from July 1 to December 31, 1915, will be
$110,897.82. This is based upon probable
monthly requirements of $18,482.97. Approximately $22,500 for contingencies is provided
by an estimated unexpended balance of about
$25,000 from the first assessment. This, added
to the amount of the second assessment, $108,447, will give the Board $133,447 to meet its
obligations during the next six months. An
assessment of one-tenth of 1 per cent to cover
the $108,447 deemed necessary was voted by
the Board by agreement to the following resolution on June 15:
Whereas under section 10 of the act approved
December 23, 1913, and known as the Federal reserve act, the Federal Reserve Board
is empowered to levy semiannually upon the
Federal reserve banks, in proportion to their
capital stock and surplus, an assessment sufficient, to pay its estimated expenses, including the salaries of its members, assistants,
attorneys, experts, and employees for the
half year succeeding the levying of such assessment, together with any deficit carried
forward from the preceding half year; and
Whereas it appears from estimates submitted
and considered that it is necessary that a
fund equal to one-tenth of 1 per cent of the
capital stock of the Federal reserve banks be
created for the purposes hereinbefore described, exclusive of the cost of engraving
and printing Federal reserve notes: Now
therefore be it




JULY 1, 1915,

Resolved, That pursuant to the authority
vested in it by law the Federal Reserve Board
hereby levies an assessment upon the several
Federal reserve banks of an amount equal to
one-tenth of 1 per cent of the total capital
stock of such banks, and the fiscal agent of the
Board is hereby authorized to collect from said
banks such assessment and execute in the name
of this Board a receipt for payment made.
Such assessment will be collected in two installments of one-half each, the first installment to be paid on July 1 and the second half
on September 1, 1915.
The first assessment for expenses of the
Board was for four-tenths of 1 per cent and
was made on November 2, 1914. This included
an amount for Federal reserve notes. It was
paid in three installments and aggregated
$431,768.40.
On March 23 the Board agreed to separate
the receipts from this assessment, placing
$191,897.30, the amount estimated for general
expenses, in one account, and the $239,871.10
estimated for Federal reserve notes in another.
At the same time a note account was opened
with each of the 12 Federal reserve banks and
credit given for the amount paid in for notes
when the assessment was first made,
Under the Federal reserve act, the Board is
directed to make an assessment once in six
months to cover its expenses for the succeeding half-yearly period. There was no actual
basis on which to estimate the first assessment,
the first payment of which was made on November 2. It was found sufficient, however,
after the separation of the general expense account from the note account, to carry the
Board to June 30, 1915, the end of the fiscal
half year. It will be noticed, therefore, that
the amount levied for a period of six months
was made to carry the expenses to the end of
June, or eight months.
There are reproduced below both the consolidated and detailed estimates upon which
the July assessment now made by the Board
is based. These provide for carrying over an
unexpended balance of approximately $25,000
anticipated to be held on June 30. Included
in the total expenditures and pledges prior to
June 1,1915, is $23,199.98, for which the Board

1, 1915.

was obligated prior to November 2, 1914, the
date on which it took over so much as it required of the clerical force of the Organization
Committee.
The following statement was issued by the
Board to the press on June 16:
The Federal Eeserve Board to-day sent to
all Federal reserve banks copies of a resolution
levying an assessment of one-tenth of 1 per cent
on gross capital against the several Federal reserve banks for the purpose of defraying the
estimated general expenses in connection with
the work of the Board from July 1 to December 31, 1915. This will result in payment of
$108,447.
The first assessment was levied on November
2, 1914, and was for $431,768.40. In this estimate a sum for the cost of Federal reserve
notes was included. These accounts have since
been separated. The present assessment includes no estimate for the preparation of Federal reserve notes, each bank paying for its own
notes.
Federal reserve banks are requested to make
remittance of one-half of the amount of their
assessment on July 1 and the second half on
September 1. The basis of estimate is the
capital stock allotted to member banks figured
at its full value of about $108,447,000.
Consolidated statement

as basis for the estimate for July,
1915, assessment.

Total encumbrance for month of May, 1915
$18, 480.36
Estimated monthly requirements, July-December, 1915
18,482.97
Increase over May

2.61

Total estimated requirements, July-December
1915
110, 897. 82
Total receipts to June 1, 1915
(general expenses of board
$192, 350. 01
Total
encumbrances
to June 1, 1915__ $147,034.76
Estimated
requirements, June, 1915_ 20, 000. 00
167,034.76
Estimated
ment

119

FEDERAL RESERVE BULLETIN.

unexpended

balance

first

assess-

Detailed statement as basis of estimate for July, 1915,
assessment.
Encumbrances.
Total to
June 1.

April.

May.

PERSONAL SERVICES.

Salaries:
Board and its clerks
$66,626.55
Secretary's office
10,827.69
Correspondence division.. 5,854.82
Mail and files
2,140. 33
Counsel's office
7,737. 76
Division of audit and examination
7,189.98
Division of reports and
statistics
3,419.98
Division of issue
10,676.89
Telephone operator
348.33
Messengers
2,653.30
Charwomen
417.99
Contingencies

$7,333.31 $7,333.31
1,436.67 1,470.00
558.32
641.65
310.00
310.00
1,158.33 1,519.44
876.65

1,128.33

1,133.33

596.66
1,739.31
50.00
355.00
60.00

541.66
1,872.66
50.00
355.00
60.00

558.33
650.00
50.00
355.00
60.00
1,000.00

117,893.62 14,557.58 15,198. 72

14,999.97

NONPERSONAL SERVICES.

Transportation and subsistence of persons:
Board and its clerks
Secretary's office
Division of audit and examination
Division of reports and
statistics
Messengers (car fare)

Communication service:
Telephone
Telegraph
Postage

288. 62

192.12

200.00
25.00

2,263.39

300.04

720.92

800.00

15.00

5.00

2,912.03

Transportation of things...

633.64

593.66

10.00
5.00
1,040.00

913.04
1.44

2.93
966.10
2,130.17
157.00

60.00
234.10

75.00
300.00
50.00

50.00
200.00
55.00

3,253.27

294.10

305.00

425.00

Printing, binding, etc
7,119.41
Engraving, etc
308.82
Advertising
39.15
95.42
Contract repairs
210. 00
Electricity(light and power)
Steam (heat)
75.00
Other(nonpersonal services) 2,180. 09

801.24
250.00

1,260.85

1,000.00
250.00

1.00
30.00

.50
30.00

45.00

83.85

30.00
10.00
75.00

10,027.89

1,127.24

1,375.20

1,365.00

Total nonpersonal
16,196.12 2,015.00 2,594.68
services

2,830.00

Supplies:
Stationery
Periodicals.
Other
Equipment:
Furniture a n d office
equipment
Books

2,790.08
134.25
797.33

100.93
8.00
21.43

322.59
1.60
48.22

300.00
20.00
50.00

130.36

372.41

370.00

8,149.99
72.58
548.08

132.98
25.00

314. 55

200.00
83.00

Office changes and improvements
Total
capitalisation
Federal
reserve
expendibanks, June 1
$108, 447, 000. 00 Reimbursable
tures: Expenditures and
Rate of assessment to produce $80,576.12_
. 000743
452 71
Rate of assessment to produce $81,335.25. 00075
Rate of assessment to produce $ 108,447__
. 001
147,034. 76 16,860.92 18,480.36
SHERMAN ALLEN,
Fiscal Agent.
Approved by committee on budget and expenditures as
basis for an assessment of one-tenth of 1 per cent.
F. A. DELANO,
A. C. MILLER,,

Committee.




$7,333.31
1,500.00
475.00
310.00
1,575.00

3,721. 66

25, 315. 25
80, 582. 57

JCNE 12, 1915.

Estimated
average
monthly
requirements
July 1 to
Dec. 31.

18,482.97

NOTE.—Total commitments to November 2, 1914, in-

cluded in tbe total of $147,034.76 to June 1. were
$23,199.98.
SHERMAN ALLEN,

Fiscal Agent.

120

EEDEEAL RESERVE BULLETIN.

Gold Settlement Fund.
Deposits in the gold-settlement fund have
now reached the sum of $30,540,000. This is
held in gold certificates issued by the Treasurer of the United States in denominations of
$10,000, payable to the Federal Reserve Board
and perforated with the words " Payable only
to the Treasurer of the United States or a
Federal reserve bank." These certificates are
kept in a safe with two combinations, which
safe is placed in one of the larger vaults of the
Treasury Department, access to which can only
be had by two officers of the Board acting together.
In this issue of the Bulletin is given a summary of the transactions through the fund
from May 19 to June 24, inclusive. A total of
$18,450,000 had been deposited up to the time
of the second settlement, made on the morning
of May 27. As a result of this settlement the
balances of several Federal reserve banks fell
below the required amount of $1,000,000 each,
and additional gold deposits were made to the
amount of $4,400,000, increasing the gold in the
fund to $22,850,000. After the settlements of
June 10 and 17 additional gold deposits were
required, and the amount of gold held in the
fund has thus been increased to $30,540,000, at
which figure it stood at close of business June 24.
On Wednesday evening each Federal reserve bank telegraphs to the Federal Reserve
Board the amount due from it to each other
Federal reserve bank. These telegrams are all
in the hands of the Board early Thursday morning, and the figures given are then assembled
on a sheet known as " the checkerboard," which
has the names of the Federal reserve banks at
the head of 12 columns and also at the lefthand margin. From the telegram of each bank
the amounts which it reports due to other Fed-




JULY 1, 1915.

eral reserve banks are listed in the proper columns under the names of the other banks, the
total being entered at the right margin, and
each horizontal column thus shows amounts
and total which the Federal reserve bank owes
to all the other reserve banks. When the figures from the 12 telegrams have been entered
the vertical columns show the amounts and
total due from other Federal reserve banks to
the reserve bank named at the head of each
column. Each bank is then charged with the
amount due to other Federal reserve banks and
credited with the amounts due to it from them,
the net amount to its debit or credit being carried to its account on the books of the goldsettlement fund. A telegram is sent to each
bank giving the amounts which other Federal reserve banks report due it, and the net
amount by which it is debtor or creditor at the
clearing. Upon receipt of this telegram it
charges the accounts of other Federal reserve
banks for the amounts it has reported due to
them, and credits their accounts with the
amounts which they have reported due to it,
the obligations in each case having been extinguished by the operation of settling and the
transfer of title to gold held in the goldsettlement fund.
In response to a request from a Federal reserve bank, the Federal Reserve Board has
agreed to pay to the Treasurer of the United
States from the gold-settlement fund sums in
multiples of $10,000 for the credit of any reserve bank's gold redemption fund with the
Treasurer of the United States.
This information has been transmitted to
the other 11 banks. No request from a Federal
reserve bank for the transfer of funds other
than the weekly settlement had before been
received.

JULY 1, 1915.

121

FEDERAL RESERVE BULLETIN.

Gold settlement fund—Summary of transactions May 19,1915- June 24, 1915,
[In thousands of dollars.]

Boston.
Preliminary settlement as of close
of business May 19,1915:
Due to other Federal reserve
banks
$3,230
Due from other Federal re1,687
serve banks
Net balance due to fund
Net balance due from fund
Initial gold deposits
Balance in fund
Settlement of May 27,1915:
Due to other Federal reserve
banks
Due from other Federal reserve
banks
Net balance due to fund
Net balance due from fund
Balance in fund after settling.
Gold deposits

New
York.

Cleve- Richland. mond.

Atlanta.

Chicago.

St.
MinneLouis. apolis.

Kansas
City.

San
Dallas. Francisco.

Total.

$9,589

$840

$395

$1,215

$1,330

$4,368

$1,804

$396

$3,627

$4,057

$1,671

$32,522

11,284

1,715

324

1,532

2,931

4,305

1,477

1,482

1,752

1,554

2,479

32,522

63

327

1,875

2,503
808

6,382
6,382

1,543

71

1,695

875

2,550

1,000

1,000

1,500

1,700

260

1,070

1,330

1,000

2,880

3,010

1,150

18,450

1,007

2,695

1,875

1,429

2,017

1,861

1,007

1,003 1 2,086

1,005

507

1,958

18,450

2,817

4,391

1,692

134

527

832

2,927

2,821

1,145

1,641

709

8

19,644

2,145

9,300

678

363

373

778

2,406

1,351

173

1,065

966

46

19,644

154

54

521

1,470

972

576
257

38

5,433
5,433

429

764

1,996

18,450

600

500

50

4,400

672

4,909
335

7,604

680

Settlement of June 3,1915:
Due to other Federal reserve
banks
Due from other Federal reserve
banks

Philadelphia.

317

1,014

1,601

229
861

1,863

1,807

486

—467 o

600

1,658

500

1,470

1,114

2,203

5,972

1,439

110

277

492

4,871

2,401

127

689

357

47

18,985

2,792

4,268

2,323

342

566

367

2,902

3,828

96

1,169

321

11

18,985

125

1,969

36

884

232

289

36

3,901
3,901

2,245

1,890

2,152

1,509

1,228

2,010

22,850

1,704

Net balance duf to fund
Net balance due from fund...

589

Balance in fund after settling.

1,604

5,900

1,427
1,682

—883 a

2,430

31
480

1,083

3,000

GokTdeposits
Settlement of June 10,1915:
Due to other Federal reserve
banks
Due from other Federal reserve
banks

2,128

5,176

874

92

515

599

8,149

6,286

91

858

472

114

25,354

2,634

7,906

851

248

625

472

4,015

6,028

232

1,598

714

31

25,354

127

4,134

258

83

4,625
4,625

Net balance due to fund
Net balance due from, to fund.
(

1,086

506

2,730

Balance in fund after settling.

2,110

8,630

23
156

2,222

Gold deposits

110

2,046

2,262

141

1,555 -2,017o| 2,172

242

1,224

2,249

1,470

3,100

420

Settlement of June 17,1915:
Due to other Federal reserve
banks
Due from other Federal reserve
banks

740

10,038

2,162

60

677

684

4,349

4,038,

158

1,803

495

687

26,458

5,007

1,720

289

831

878

8,279

3,735

220

2,068

647

13

26,458

5,031

442

674

6,450
6,450

1,253

29,370

Balance in fund after settling.

3,574

229

3,599

1,780

Gold deposits

154

194

3,930

2,695

2,416

1,749

5,013

303
62

1,869

265

152

1,286

2,514

1,622

600

B alance in fund after settling.

570

2,841

3,479

2,512

171

717

417

3,982

2,928

339

562

305

166

18,419

2,486

4,358

1,595

164

610

249

3,454

3,172

156

1,198

951

26

18,419

917

7

107

168

528

140

2,405
2,405

1,483

30,540

355
879

3,419

4,478




183
244

863

3,288

2,309

Overdrawn.

98402—15

3,520

1,307

1,464

Net balance due to fund
Net balance due from fund .

25,850

2,771

Net balance due to fund
Net balance due from fund

Settlement of June 24,1915:
Due to other Federal reserve
banks
Due from other Federal reserve
banks

1,927
=

1,581

4,485

2,113

636

1,103

646

3,150

2,268

122

FEDERAL BESEEVE BULLETIN.

Meeting of Governors of Reserve Banks.
The Fourth Conference of Governors of the
Federal reserve banks was held in Chicago at
the Blackstone Hotel on June 14 to 16, inclusive, this being the first conference not held
in Washington. All the governors were in
attendance with the exception of Gov. Kains,
of the San Francisco Reserve Bank, which was
represented by Mr. Eussell Lowry, deputy governor of the bank.
Mr. Strong, who is chairman of the conferences for the current year, presided, and Mr.
Curtis, counsel and secretary of the New York
Reserve Bank, acted as secretary.
During the sessions Mr. A. C. Miller, of
the Federal Reserve Board, attended on two
occasions by invitation, and took part in the
discussion. Mr. J. B. Forgan, president of
the Federal advisory council, was also present
for a brief conference with the governors, and
Mr. J. A. Broderick, chief of the division of
audit and examination, Federal Reserve
Board, assisted in the discussion of the items
relating to records and accounts.
The conference had under consideration and
disposed of 76 items under 24 principal topics.
Among other actions taken by the conference
were the following:
The chairman was authorized to appoint
a representative of all the 12 banks to act with
the representative of the Federal Reserve
Board appointed to audit the accounts of the
gold settlement fund.
The executive committee was authorized to
call a meeting of auditors or accountants of
the reserve banks for the discussion in detail
of daily transactions, records and reports, cost
of printing notes, analysis of operating expenses, standard form for analysis of expenses
and income, establishment of unit cost or
standard of comparison, and other similar
topics.
It was also voted to be the sense of the meeting that the reserve banks should loan men
from their respective forces to assist the examining staff of the Federal Reserve Board
in conducting examinations of banks applying
for membership in the system.




JULY 1,1915.

In relation to the re discounting of commercial paper, it was agreed that each governor
would send to the other 11 banks copies of the
forms of application and financial statement
to be required after July 15 next, in accordance
with the provisions of Circular 3, Regulation
B, of the Federal Reserve Board, on this subject.
Plans were also agreed upon for the preparation of standard forms for municipal warrants, the extension of facilities for transferring funds, and recommendations concerning the proper method of computing dividend
payments.
The chairman was authorized to invite a
member of the Federal Reserve Board to attend future conferences of the governors, especially to discuss such topics as may be suggested by the Board.
Recommendations indicating the attitude of
the governors were also made by the conference to the Federal Reserve Board with reference to the following subjects:
1. Rebating interest on rediscounts.
2. Discount rates for short-term paper of
less than 15 days' maturity.
3. Cooperation with national-bank examiners in the examination of member banks.
4. The principles to be adopted in the examination of State bank members, both for
regular and for admission examinations.
5. Cooperation with State authorities in such
examinations.
6. Digest of rulings of Federal Reserve
Board.
7. Discount rates.
8. Purchase of total issues of municipal
warrants of small municipalities.
9. Amortization of organization expenses.
10. Operation of the gold-settlement fund.
11. Purchase of Government bonds.
12. Purchase of trade acceptances.
13. Deposit of money in the Treasury to the
credit of Federal reserve agents.
14. Appointment of committee to confer on
general Subtreasury relations.
15. Indorsement of paper and gold order
certificates held by Federal reserve agents for
account of Federal reserve banks.
16. Issuance of letters of credit by national
banks.
17. Establishment of branches of Federal
reserve banks.

JCLY 1,

FEDERAL RESERVE BULLETIN.

1915.

In addition to the topics referred to in the
foregoing, the following were also discussed:
Relations between Federal reserve banks.
Open-market operations.
Intradistrict collections.
Interdistrict collections and clearings.
Foreign exchange.
National bank reserves.
Retirement of Federal reserve notes.
In place of the subcommittee which had previously had in charge the matter of arranging
the intradistrict collection systems and the
gold settlement fund recentty established at
Washington, the conference voted to create a
standing executive committee to be composed
of Messrs. McDougal, Aiken, Strong, Rhoads,
Fancher, and Seay, of which Mr. McDougal
was appointed chairman. It is understood
that this committee will hold meetings from
time to time to act on such matters as have
been referred to them by the conference, or
as they may be requested to take up by the
Federal Reserve Board.
The conference adjourned at the call of the
chairman with the understanding that the next
meeting would be held in some other Federal
reserve city and probably toward the end of
the summer.
Branch at New Orleans.
The Federal Reserve Board in a press statement issued June 24 announced that it has approved the request of the Federal Reserve
Bank of Atlanta to open a branch at New
Orleans, La. Its action was taken in accordance with the provisions of section 3 of the
Federal reserve act, which reads as follows:
Each Federal reserve bank shall establish
branch banks within the Federal reserve district in which it is located, and may do so in
the district of any Federal reserve bank which
may have been suspended. Such branches shall
be operated by a board of directors, under rules
and regulations approved by the Federal Reserve Board. Directors of branch banks shall
possess the same qualifications as directors of
the Federal reserve banks. Four of said directors shall be selected by the reserve bank
and three .by the Federal Reserve Board, and
they shall hold office during the pleasure, re-




123

spectively, of the parent bank and the Federal
Reserve Board. The reserve bank shall designate one of the directors as manager.
While the Board has carefully considered
the principles which should be observed in
opening a branch of the Federal Reserve Bank
of Atlanta, it is not ready at this time to promulgate any general rules applicable to other
points, as it regards the proposition as somewhat experimental.
It is felt that the experience gained in this
case will have an important bearing upon the
future development of the branch-bank idea.
Incidentally it may be mentioned that the
banks comprised in the New Orleans Clearing
House Association have undertaken to make
good for the first year of operation any difference between the expense of conducting the
new branch bank now proposed and the revenues to be derived from it.
No definite assignment of territory has been
made to the New Orleans branch, but it is
understood that it is intended to assign to it
the member banks of Louisiana and Mississippi
in district 6, and those of Mobile and Baldwin Counties, Ala. The banks in the territories so segregated will deal with the New
Orleans branch only.
The Board has directed that the New Orleans
branch shall conduct only operations in the
discount and purchase of commercial paper and
acceptances and those relating to clearing, collection, and exchange transactions and transfers of funds. The issue of notes and the func-.
tion of rediscounting with other Federal reserve banks, the purchase of United States
bonds and notes, and dealings in warrants of
"municipalities" are to be carried on solely
by the Federal Reserve Bank of Atlanta. All
operations are to be reported promptly to the
Federal Reserve Bank of Atlanta, and the Federal Reserve Board is to be advised of the same
without delay. The transactions of the New
Orleans branch will be considered as the transactions of the Federal Reserve Bank of Atlanta and so reported in the statements of the
latter.
It is assumed that the provisions of the Federal reserve act require that of the seven direc-

124

FEDERAL RESERVE BULLETIN.

JULY 1, 1915.

York, Philadelphia, San Francisco, and St.
Louis.
The matter of establishing such a rate has
been before the Board for some time past, and
has received very careful investigation. It
was discussed at the recent conference of governors in Chicago, and the general idea of such
a rate was approved. In the opinion of the
Board the introduction of the plan just at the
beginning of the crop-moving season may result in extending material assistance to banks
which desire special accommodation for very
short periods. The short-term rate is believed
likely to be an effective substitute for call loans
based on collateral, and is in line with the
policy of the Board heretofore established of
progressively decreasing the rate of discount
as the maturity of the paper presented is shortened and as its liquidity correspondingly increases. The new plan will, it is thought, be
Discount Rates.
particularly useful to banks that are members
Discount rate of each Federal reserve bank in effect of the clearing system and desire from time to
on June 26, 1915.
time to obtain short-term accommodation for
the maintenance of their balances with the reMaturi- MaturiAgriculties of
ties of
Date of Maturitural and
serve banks.
Federal reserve
over 60 live-stock
last
ties of 30 over 30
tors two shall be bankers and two business men
(not necessarily bankers), and that the three
Government directors shall conform, so far as
possible, to the same requirements as those of
the " C " class directors of the parent bank. A
manager will be appointed from among the
directors.
The terms of office of the first directors are
set at one year, those first appointed to hold
office for one year from January 1,1916.
By-laws, salaries, fees, etc., are to be subject
to the approval of the Federal Reserve Board.
Transactions in foreign exchange on behalf
of the New Orleans branch are to be the subject of later regulations.
No other Federal reserve bank has approved
a request for branches, and the Board does not
expect to take further action until more experience has been gained.

bank.

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

change
of rate.

June
Feb.
Jan.
Feb.
June
Apr.
Jan.
Apr.
May
June
Feb.
May

18
18
28
6
25
30
23
22
18
18
4
8

days and days to days to paper over
60 days, 90 days,
less.
90 days.
inclusive. inclusive.
4
4
4
4
4
4
4
4
4
4
4

3£

4
4
4
4
4
4
4
4
4
4
4
4

4|

4i
4i
4i
4i

*l

4&
5
4|
41.

4£

Authorized rate of acceptances, 2 to 4 per cent.
On June 24 the Federal Reserve Board approved a
rate of 3 per cent for loans of 10 days' maturity at
the Federal reserve banks of New York, Philadelphia,
San Francisco, and St. Louis.
On March 10 the Federal Reserve Board fixed the
following rates for rediscounts between Federal reserve banks: 3£ per cent for maturities of 30 days
and less; 4 per cent for maturities of over 30 days
to 90 days, inclusive.

Short-term Discount Rate.
The Federal Reserve Board in a press statement issued June 24 announced a new departure with regard to discount rates, approving a
rate of 3 per cent for loans of 10 days' maturity at the Federal reserve banks of New




Aldrich-Vreeland Currency.

By July 1, 1915, practically all of the Emergency, or "Aldrich-Vreeland " Currency issued
after the declaration of the European war will
have been retired. In this connection the following figures may be interesting: The first
issue of notes was made during the first days
of August, 1914. By August 8 the amount approved by the Secretary of the Treasury for
issuance " had reached $100,068,350. This
amount was increased on September 5 to $240,979,960, on October 3 to $344,779,640, on November 7 to $379,060,715. By February 13
the aggregate approvals had reached $386,444,215, but by that time $341,067,073.22 of the
total amount issued had been retired, leaving
the net amount outstanding February 13, 1915,
only $45,377,141.78. The maximum amount
outstanding at any time was reached the latter
part of October. The redemptions began in
the middle part of October. By November 28,
$101,602,066 had been retired; by December
26, 1914, redemptions had amounted to $217,101,614; by January 2, 1915, the total redemptions had amounted to $238,698,483; February
6, $326,203,992; March 6, $354,597,268; April 3,
$368,987,024; May 1, $376,097,462; June 5,
$380,701,044.

FEDERAL EESEEVE BULLETIN.

JULY 1,1915.

125

INFORMAL RULINGS OF THE BOARD.
Below are reproduced letters sent out from
time to time over the signatures of the officers of the Federal Reserve Board, which contain information believed to be of general
interest to Federal reserve banks and member
banks of the system:
Branches of National Banks.
Your letter of May 7 relative to the First
National Bank of
and its branch bank
has had the consideration of the Federal Reserve Board.
I am attaching hereto copy of opinion, dated
September 15, 1909, by former Attorney General George W. Wickersham, dealing with the
status of branch banks. It will be observed
that the Attorney General reaches the conclusion that—
u
No matter how many branches the State
bank may have, upon compliance with the provisions of section 5154, Revised Statues, it becomes a national banking association, with the
same powers and privileges * * * as are
prescribed for other associations originally organizing as national banking associations,"
and that he treats the branch banks as having
no separate corporate existence.
Without discussing, therefore, the question
submitted from a standpoint of bookkeeping, it
would seem to be necessary for the Federal
Reserve Bank of St. Louis in all cases to treat
all transactions, either of a parent bank or one
of the branches, as a transaction of the cor- ]
poration. In this view the reserve to be maintained should be based upon the aggregate deposits of the parent bank and its branches, and
the capital-stock subscriptions and dividends
paid on capital stock should be treated in the
same manner. If, as a matter of bookkeeping
convenience, your bank desires to carry separate checking accounts, there would seem to
be no legal objection to this course being followed.
MAY 22, 1915.
Reducing Capital Stock.

The Federal Reserve Board has considered
your recent letter relative to the method of
taking action on the application of member
banks for reduction in capital stock and has
also given attention to letters received on the
same subject from other Federal reserve agents.




It appears that in not a few instances member banks which make such applications are
indebted to the Federal reserve bank of their
district for accommodation, so that the latter
has a very decided interest of its own in their
action.
For this and other reasons the Board has
voted that in the future when a member bank
desires to reduce its capital stock it shall be
required first to make application to the Federal reserve bank of its district, and, after
obtaining its approval, to present its case to
the Comptroller of the Currency, the matter
finally going with the Comptroller's favorable
or adverse recommendation to the Federal
Reserve Board as at present.
It is recommended that you notify each of
your member banks of this change in practice.
JUNE 2, 1915.
Deposit of Trustee Funds.

Your letter of June 1, inquiring on behalf
of a member bank whether it is necessary for
such bank to deposit cash owned by it as
trustee in another institution, has been received.
In reply you are advised that the Board has
considered this matter and is not disposed to
make such a requirement.
Under Regulation H it does, however, call
for the segregation of such trust funds, they
being carried in a distinct account in the case
of each trust.
JUNE 3, 1915.
Trust Powers.

Your letter of May 17, relative to the application of Kentucky member banks for
fiduciary powers, has been given due consideration. In answer, it is requested that you
forward all applications filed by national
banks for permission to act as executor, trustee,
etc., to this Board. The Board, in the last
analysis, must determine whether or not to
grant these permits in the light of the information before it. It is, therefore, the Board's
wish that all Federal reserve banks comply
with the terms of the regulations already issued and submit all applications for its consideration.
The Board desires to have your opinion in
each case as to whether the applying bank is
worthy, from a business standpoint, to be
vested with the powers applied for, even if

126

FEDERAL RESERVE BULLETIN.

JQLZ 1, 1915.

your views of the State law should lead you
In reply you are informed that no authority
to refrain from recommending favorable ac- from the Federal Reserve Board is necessary,
tion.
unless you wish to conduct a business in acceptances in excess of 50 per cent of your capital
JUNE 4, 1915.
and surplus.
Timber as Note Security.

In reply to your letter of the 7th instant, I
am authorized by the Board to say that we do
not feel that it would be a safe policy for
Federal reserve banks to look upon* timber
standing upon tracts of land as quick assets,
such as manufactured goods in the hands of a
manufacturer or merchandise in the hands of
a jobber. While it is true that there are times
when timberlands, that have been thoroughly
cruised and reported upon by competent experts, are readily salable, there are other conditions relating to properties of this kind which
must be taken into consideration. Forest fires
sometimes destroy a good deal of standing timber, and sometimes wind storms greatly diminish the value of such properties.
The precedent would be a dangerous one, as
owners of coal and ore lands might ask to have
their coal and ore in the ground appraised on
a royalty basis, and ask to have paper, based
upon their holdings of such lands, made eligible
for discount at Federal reserve banks.
The Board is clearly of the opinion that
there is nothing in the act, or in good banking
practice, that would permit of the classification of uncut timber or unmined minerals as
quick assets.
JUNE 11, 1915.
Trust Company Branches.

Your letter of June 11, with reference to the
regulations just issued covering the terms
under which State banks and trust companies
may become members of the Federal Reserve
System, is received.
I note your request to be advised whether a
trust company having branches is eligible for
membership, and whether such trust company
as a member may maintain the branches as at
present.
In reply you are informed that both questions should be answered in the affirmative.
JUNE 12,

1915.

Authority to Accept.

Your letter of June 11, relative to acceptances, and asking if it is necessary to have authority from the Federal Reserve Board to
undertake acceptance business, is received.




JUNE 14,

1915.

Acceptances.

In reply to your letter of May 26, addressed
to the Governor of the Federal Reserve Board,
I beg to state that you are mistaken in thinking that the Board has restricted the Federal
reserve banks' discount privilege to acceptances
pertaining " to the original transactions only "
and that the Federal reserve banks could not
discount renewals.
This is not the case. Whenever a member
bank accepts " drafts drawn upon it and growing out of transactions involving the importation or exportation of goods having not more
than six months' sight to r u n " the Federal
reserve banks may discount the same, provided
that at the time of the discount they do not run
more than three months. If the transaction
has not been liquidated by the time the first
acceptance matures, and the member bank,
under the law, may in that case renew the acceptance, there is no reason why the Federal
reserve bank may not discount such renewed
acceptance, though, of course, the Federal reserve bank may not engage in advance to discount any renewals.
JUNE ie,

1915.

Deposits as Loans.

In reply to your letter of May 22, addressed
to the Federal Reserve Board, permit me to
point out to you that the ruling of the Comptroller does not imply that deposits of national
banks with nonmember banks are to be considered as " loans." It says only that " all deposits of a national bank with nonmember
banks which are in excess of 10 per cent of its
capital and surplus are to be reported as excessive loans." Inasmuch as the law plainly
states that " except as thus provided, no member bank shall keep on deposit with any nonmember bank a sum in excess of 10 per cent of
its own paid-up capital and surplus," the
Comptroller has no choice but to enforce this
requirement of the act; and while the Board
sympathizes very much with the embarrassing
position in which the banks of South Dakota
have been placed it does not see how, under the
act, any different ruling can be suggested,
JUNE 16,

1915.

JULY 1,

127

FEDERAL RESERVE BULLETIN.

1915.

Money-Order Business.

Purchase of United States Bonds.

Your letter of June 8, addressed to Hon.
Charles S. Hamlin, has been taken under careful advisement by the Board. I am instructed
to say that the Board feels that the Federal
reserve banks could not at this time go into the
money-order business. Under the law it does
not seem that they have authority to do so,

I am directed by the Federal Keserve Board,
in answer to your letter of June 9, to state
that the law requiring the purchase of United
States bonds does not become effective until
two years after the passage of the Federal
reserve act; that is to say, not until the year
which begins December 23, 1915. You will
find this provision in section 18 of the Federal
reserve act. After December 23, 1915, any
member bank desiring to retire the whole or
any part of its circulating notes may file an
application expressing a desire to sell its bonds
at par and accrued interest, and the Federal
Reserve Board may, at its discretion, require
Federal reserve banks to purchase such bonds
from member banks whose applications have
been filed with the Treasurer at least 10 days
before the end of any quarterly period at
which the Federal Reserve Board may direct
the purchase to be made.
You understand, under the provisions of the
law, that if there were more than twenty-five
millions of bonds offered for sale in any one
year the amount that would be purchased from
any offering bank would be proportionately
decreased. The law is tolerably clear on this
matter, and you will find a ruling of our
counsel in this connection on page 99 of the
June issue of the FEDERAL RESERVE BULLETIN.

JUNE 17,

1915.

Collateral Trust Notes.

Your letter of June 11, relative to the rediscount of manufacturers' notes secured by bills
receivable, has been carefully considered.
In reply to the question you have submitted,
it is the opinion of the Board that a note of a
manufacturer secured by his bills receivable is
most desirable paper, and should certainly not
be debarred as a "collateral trust note." It
would be entirely unreasonable to say that the
note of a manufacturer is good when it is unsecured and bad when it is secured. When the
note is issued for the purpose of carrying collateral for a speculative purpose or collateral
in the nature of stocks and bonds (other than
securities of the United States), the note would
have the character of a " collateral trust note "
of a character rendering it ineligible for rediscount.
JUNE 17, 1915.

JUNE 18,

Pig Iron as Security.
Your letter of June 8 has been given careful
consideration by the Board.
In reply to your question whether the note
of a furnace company would be eligible if the
concern had manufactured a stock of pig iron
for later delivery on a large contract and used
the pig iron as security for the note during part
of the period previous to delivery, you are advised that the note is eligible under the circumstances, inasmuch as a sale has been made and
the carrying of the material is not for speculative purposes. On general principles, we
might say that where goods are used as collateral in the natural course of business (production or distribution) collateral of this kind
would certainly not make the note ineligible.
From a banking point of view, however, it is
necessary to scrutinize each case in order to ascertain whether or not it is a matter of legitimate business or speculation, and also whether
or not the goods offered as collateral are readily
marketable; but this, of course, is a general
question of banking prudence, which must be
left to the judgment of those in charge of the
member banks and the Federal reserve banks,
JUNE 17, 1915.




1915.

Silver Certificates for Notes,

At a meeting of the Federal Reserve Board
on January 12 it was voted that, inasmuch as
silver certificates are now to all intents and
purposes lawful money, they may be received
by Federal reserve agents when offered by
Federal reserve banks for the purpose of reducing their liability for Federal reserve notes
outstanding.
Endorsements.

In reply to yours of the 15th instant, in the
opinion of counsel to the Board it is necessary
that any notes held by the Federal reserve
agent as security for Federal reserve notes
should have the indorsement of the Federal
reserve bank hypothecating same.
The Federal reserve agent should be placed
in a position to collect any notes maturing in
his possesion and should have the indorsement of the Federal reserve bank on such notes
in order to fix definitely the liability of such
bank. Indorsements may, of course, be made
in blank if desired.
JANUARY 23,

1915.

128

FEDERAL RESERVE BULLETIN.

THE PAN AMERICAN FINANCIAL
CONFERENCE.
The general results of the Pan American
conference which are likely to receive greatest
attention and study are found in the recommendations made:
(1) With reference to the future work growing out of the conference;
(2) With reference to actual legislation of a
general sort for the purpose of carrying out
the objects of the conference; and
(3) With reference to the commercial measures designed to be actually taken as the result
of the conference.
The three specific points relating to future
work which will stand out as a result of this
conference are (a) the suggestion that a regular board or other division of the Pan American Union at Washington be established for
the purpose of taking charge of and reporting
upon financial conditions throughout the Western Hemisphere; (b) the recommendation that
there be established an "International High
Commission on Uniform Legislation"; and
(c) the suggestion that there be an annual
Pan American conference. The first of these
suggestions is obvious in its purpose. It is a
plan for maintaining and disseminating regular information regarding financial conditions
throughout South and Central America and
the United States. With reference to the second and third points, probably the most clearcut explanation is that furnished by Hon. William G. McAdoo, Secretary of the Treasury,
in a letter written by him to each of the delegations from Central and South America immediately prior to their departure from the
United States. In this letter Mr. McAdoo
said:
The conference demonstrated conclusively to
my mind that it will be of immense advantage
to all the Republics of the American Continent
to hold an annual Pan American financial conference in Washington. I am going to ask the
President of the United States to strongly recommend this to the next session of the United
States Congress and ask for a sufficient appropriation to carry on the work. I am sure that




JULY 1,1915.

the Congress of the United States will act
favorably upon this suggestion. I respectfully
request that you make a similar recommendation to your Government. I have suggested
that the city of Washington be made the place
of meeting for the annual sessions of the Pan
American Financial Conference merely because I think that it is, on the whole, the most
convenient place therefor, and that it is possible to secure a larger attendance of our important financiers and business men in Washington than elsewhere. Moreover, the Pan
American Union has a beautiful building in
Washington, where all the necessary facilities
for the conference can be obtained. It is also
important, I think, to have the Pan American
Financial Conference cooperate with the Pan
American Union. I shall be glad, however, if
you will frankly inform me whether you think
it would be better to hold the financial conference at some other place than Washington.
I earnestly recommend that the minister of
finance of your country appoint at the earliest
possible moment the nine members of the international high commission, proposed in the report of the committee on uniform legislation.
I inclose several copies of that report.
In order that this high commission may
have the status to which its importance and
dignity entitle it, I think that the minister of
finance of each country should himself accept
the chairmanship of the commission in his
country. This suggestion has been made to
me from many quarters, and I think it is an
admirable one. The Secretary of the Treasury
of the United States will act as chairman of the
commission for the United States. If the ministers of finance of the several countries will
adopt this suggestion, the commission will at
once have a prestige and dignity which will
add much to its effectiveness. The high commission of each country should promptly organize and appoint a secretary general, who
should at once assume the duties of his office
and get into communication with the high
commissions appointed by the several countries.
There should be^ a meeting of the International High Commission as early as possible at
some suitable place in Central or South America. I would suggest the city of Buenos Aires
as being the most convenient point for this
purpose, and that the date for the meeting be
the 1st day of November, 1915. This date
would be very appropriate for the members of
the United States commission, as it will be
about one month before the next session of the

FEDERAL RESERVE BULLETIN.

JULY 1,191?

United States Congress, which convenes on
the 6th of December, 1915. Thus an opportunity would be given to submit to that session
of the United States Congress the conclusions
reached by the International High Commission.
It is, of course, essential that the work of the
several High Commissions be coordinated and
have general direction from some common point.
I would suggest that until there can be a meeting of the International High Commission, as
proposed, the secretary general of the United
States commission act temporarily as secretary
general for the International High Commission, and I shall be greatly obliged if the minister of finance of each country will cable me
as soon as possible if this suggestion is acceptable to his country.
The secretary general of the United States
commission will have his headquarters in the
United States Treasury Department at Washington, and will be immediately under the direction of the Secretary of the Treasury of
the United States. Every effort will be made
to keep in touch with the general situation and
to arrange for the meeting of the International
High Commission when a permanent organization can be effected. I shall greatly appreciate
it if the minister of finance of each country
will cable me at the Treasury Department in
Washington the names of the members of the
High Commission for his country as soon as
they are appointed, in addition to the name of
the secretary general, and state whether the
city of Buenos Aires is agreeable for the first
meeting of the International High Commission
and if November 1 is acceptable as the date for
said meeting.
Each High Commission should, as soon as appointed, take up and consider carefully the report made by the committee on uniform legislation to the Pan American financial conference, dated May 29, 1915, copies of which are
inclosed, and should send to the secretary general, Treasury Department, W as hmgton, D. C,
the fullest possible information as to the extent to which the recommendations of the committee on uniform legislation above referred to
are regarded favorably by their Governments,
together with any suggestions they have to
offer.
I would also respectfully urge upon your
Government the importance of making such
provision as may be necessary to give the High
Commission an official status and standing, and
also for the making of a reasonable appropria98402—15




3

129

tion to enable the High Commission of each
country to carry on its work. I shall beg the
President of the United States to make similar
recommendations to the Congress of the United
States, and I am satisfied that there will be no
difficulty in securing from the Congress of the
United States the necessary appropriation for
this purpose. The creation of an International
High Commission is certain to produce advantageous results in all the countries concerned. I respectfully urge upon you the importance of these suggestions, and beg that you
will express to your Government my hope that
it will take early and favorable action thereon.
The ideas developed in the course of the
conference with reference to the uniform legislation to be adopted throughout • all of the
States of North, Central, and South America
are most clearly expressed in that part of the
report of the committee on uniform laws relating to the actual measures of legislation
proposed. Parts of the report which bear
upon this question are as follows, beginning
with an enumeration of work to be done:
1. The establishment of a gold standard of
value.
^ 2. Bills of exchange, commercial paper, and
bills of lading.
(Note the results of the two European conferences on these subjects.)
3. Uniform (a) classification of merchandise, (b) customs regulations, (c) consular
certificates and invoices, (d) port charges.
(See the report adopted by the Fourth International American Conference, at Buenos
Aires, 1910.)
4. Uniform regulations for commercial travelers.
Consider in this relation the question of a
certificate to be issued by the proper department of the Government of the country from
which the traveler comes that the bearer is a
bona fide commercial traveler, this certificate
to be properly viseed.
5. To what extent further legislation may
be necessary concerning trade-marks, patents,
and copyrights.
(See the treaties adopted by the Fourth International American Conference.)
6. The establishment of a uniform low rate of
postage and of charges for money orders and
parcels post between the American countries.

130

FEDERAL RESERVE BULLETIN.

JULY 1,

1915.

7. The extension of the process of arbitra- portation facilities between the leading ports
tion for the adjustment of commercial dis- in South America and the United States are
putes.
of vital importance. The conference unaniORGANIZATION.
mously adopted the following resolution:
1. That for the purpose of carrying into effect
Resolved, That it is the sense of this conferthe resolutions of the conference, and particu- ence that improved ocean transportation facililarly for bringing about uniformity of laws ties between the countries composing the Pan
on the subjects embraced in those resolutions, American Union have become a vital and imthere be established an International High Com- perative necessity, and that every effort should
mission, to be composed of not more than nine be made to secure at the earliest possible momembers, resident in each country, to be ap- ment such improved means of ocean transporpointed by the minister of finance of such tation, since it is of primary importance to the
country. The aggregate members thus ap- extension of trade and commerce and improved
pointed shall constitute the commission.
financial relations between the American Re2. That for the purpose of aiding the In- publics.
ternational High Commission and coordinatWith reference to postal facilities, the Posting its work there be created in the Pan American Union a bureau, whose chief shall receive master General of the United States submitted
a salary of not less than $5,000 gold per an- the following suggestions:
num; and it is recommended that, in view of
The Postmaster General of the United States
his initiative in bringing about the conference,
the governing board of the Pan American under date of October 17, 1914, addressed to
Union invite the Hon. William G. McAdoo, the postal authorities of each of the countries
Secretary of the Treasury of the United and colonies of the Western Hemisphere t<>
States, to suggest the name of the first chief which our domestic letter rate did not then
of this bureau. Expenses of the bureau, in- apply a proposal on the part of this Governcluding the salaries of the chief and his as- ment to enter into conventions establishing a
sistants, to be paid by the Pan American 2-cent letter rate—the domestic rate—from the
Union, in whose budget a corresponding in- United States to those countries if they would
agree that letters coming from their countries
crease shall be included.
3. The American Governments are requested to the United States should bear their domestic
to instruct their diplomatic and consular offi- rate. This offer upon the part of the United
cers and their commercial attaches to cooper- States postal administration still stands and it
ate with the International High Commission is intended in the near future to again address
a communication to each country renewing the
and with the bureau.
The bureau shall be authorized to obtain in offer.
There is now pending an offer to enter into
each country such expert assistance as may be
necessary to the prosecution of its work, the a convention for the exchange of money orders
expenses thus incurred to be treated as a part with each country of Central and South
America with which we do not now transact
of the expenses of the bureau.
4. The bureau shall make to the governing such business, with the exception of two r
board of the Pan American Union, for dis namely, Guatemala and Venezuela, which at
tribution among the Governments concerned, this time have no domestic money-order system,,
and to the International High Commission, an and consequently could not exchange remittances in that form with the United States. I t
annual report.
is the
the Postmaster General to
As for immediate economic measures to pro- new inpurpose offuture the invitation which rethe near
he
mote better relationships between North, Cen- has extended to the countries referred to, to
tral, and South America, probably the most enter into money-order exchange conventions
important were those relating to the improve- with this country as early as practicable.
The Postmaster General of the United States
ment of communication. Both better shipping
is also examining the terms of the parcels-post
facilities and better postal arrangements were
conventions in force between the United States
recommended. It was the unanimous opinion and the several countries of Central and South
of the conference that improved ocean trans- America with a view to removing all obstacles




JULY 1, 1915.

FEDERAL RESERVE BULLETIN.

that it is practicable to remove in the way of restrictions embodied in such conventions which
interfere with the freedom of transmission of
parcels, etc.
The things above indicated are those which
the Postmaster General of the United States
is anxious to do and have done in order to
bring about better postal relations between this
country and the respective countries of Latin
America with a view to increasing the trade
relations between the countries of the Western
Hemisphere for their mutual advantage.
Subsequent to the close of the conference Mr.
McAdoo made a recommendation for an annual Pan American Financial Conference and
for immediate and continued cooperative efforts, which have already been quoted. He
also suggested a plan for the maintenance of
the work of the several group committees
which had been assigned to the various South
American countries represented in the following language:
Much of the success of the conference resulted from the division of the representatives
of the United States into 18 group committees,
one of which was assigned to the delegation
from each of the visiting countries, thus bringing about a group conference between the delegates of each country and a committee of representative financiers and business men of the
United States, with a resulting interchange of
views at close range and under conditions
where the problems of each country were intimately discussed and the difficulties in the way
of more extended trade, commerce, and intercourse between them were developed and the
remedies therefor ascertained and considered.
It is clear that it will be to the interest of all
concerned if these group committees shall be
continued. It is my purpose, therefore, to
appoint a group committee in this country to
which will be assigned the specific duty of
keeping in touch with the delegates from your
country and act as the medium in the United
States through which you may secure reliable
information or submit matters for the consideration of financiers, merchants, or manufacturers in the United States. This committee will, of course, have no official status, but
will act as a voluntary organization for the purpose of fostering closer financial and commercial relations between our respective coun-




131

tries. The group committees now appointed
will serve until the convening of the Pan
American Financial Conference of 1916, unless
relieved from further service by the Secretary
of the Treasury of the United States.
I would suggest that the delegates from your
country continue as a group committee for
your country, so that in like manner our business men and financiers may be able to apply
to you for reliable information concerning
matters affecting business or finance in your
country.
The participation of the Federal Reserve
Board in the conference consisted in work
done by the several members of the Board in
connection with the various group committees
to which they were assigned, as well as in connection with the general committees on which
some of the members of the Board served; but
the governor of the Board, Hon. Charles S.
Hamlin, and Hon. Paul M. Warburg, member
of the Board, delivered addresses at public sessions of the conference. These addresses are
reprinted in this issue of the Federal Reserve
Bulletin.
The conference convened in Washington on
Monday, May 24, and continued in practically
continuous session until the close of that week
The first day was naturally devoted to organization, and committees were established one
for each of the South American countries represented, including in its membership a number of delegates representative of that country
itself, and a number of American delegates who
were to act in an advisory capacity. In addition to these special committees or " groups,'*
there were named certain general committeesincluding one on uniform laws, one on transportation communication between the United
States and South America, and certain others.
Many interesting reports with reference to the
existing conditions and financial needs of the
different countries represented in the conference were presented. To review these would
be a matter of very great detail, and would
amount to a study of the existing economic
and financial conditions prevalent in each such
State throughout South and Central America.

132

FEDEKAL RESERVE BULLETIN.

Future of American Credit.
Hon. Paul M. Warburg, member of the Federal Eeserve Board, delivered the following
address before the Pan American Financial
Conference, at Washington, D. C , on May 25:
It is a great honor to be permitted to speak before
a conference including the eminent leaders of government, finance, and business of an entire continent.
It must be confessed, however, that to address so distinguished an audience upon a topic as difficult as
the future financial course of the nations of America
is a task to be undertaken only with great diffidence
and hesitation.
We meet here deeply impressed by the unparalleled
struggle which involves all the leading European nations and conscious of the fact that we are witnessing the beginning of one of the most important transformations in the world's history.
We can not at this time forecast whether the outcome of this struggle will be a drastic revision of the
world's map or wThether national lines will remain
substantially unchanged. But we already know that
the economic consequences of this unhappy strife will
be far-reaching and will vitally affect the future
economic development of our own hemisphere.
The object of this address is to attempt to crystallize some thoughts that must have come to us all who
have stood in awe and amazement watching the sudden outburst and rapid spread of this disastrous conflagration across the Atlantic.
Before presenting these thoughts to you, on behalf
of the Federal Reserve Board I beg to express the
great satisfaction that my colleagues and I feel at
being afforded this opportunity of deliberating with
you the problem confronting us all at this momentous
turn in our history.
WHENCE AND WHITHER?
THE FUTURE FINANCIAL COURSE OF AMERICAN NATIONS.

In August, 1914, six European powers went to war.
The anomalous consequence of this event was that all
American nations were thrown into a condition of
acute financial and commercial disturbance.
Would it have been possible to avoid so disastrous
an effect upon nations not directly involved in this
struggle and thousands of miles removed from the
fields of battle? And, furthermore, by what means may
we hope to prevent, in the future, the recurrence of
such fatal conditions?
These questions are deserving of the most serious
consideration by this conference. The problem affects
us all. We have all, whether in the northern, central,
or southern division of the Western Hemisphere,
suffered together. It is of the most vital importance
that, if at all possible, a proper remedy be found.




JULY 1, 1915.

Our sufferings originated in disturbances of three
kinds—of shipping, of trade, and of credit.
These three phases of our economic life are so
closely interrelated that a.breakdown of one immediately affects the other. A collapse of credit must interrupt trade, and therefore shipping. On the other
hand, disruption of shipping and trade necessarily
disorganizes credit, crippling, as it does, the banking
machinery which rests on the fulfillment of contracts,
remittances, and payments based on commercial transactions.
When in the face of untoward events actual experience affords a definite standard by which to judge
cause anc| effect it seems easy and often gratuitous
for the critic to state what steps should have been
taken. Retrospect is easier than forecast. Still, it
is only by such analysis that we may hope to avoid
similar mistakes in the future.
Reviewing, then, last summer's events upon these
assumptions we may say that disruption of shipping,
trade, and credit in the countries of this hemisphere
might have been less disastrous if, instead of relying
exclusively upon Europe for their shipping and credit
facilities, the American nations had begun in time to
develop and organize their own large resources.
It is not within the purview of this address to
elaborate the most interesting and important question,
What American nations might have done in the past
or what they should do in the future in order to secure their own transportation facilities independent
of those of Gthers. Confining ourselves to the subject
of credit and banking, we may say with confidence
that had the United States enacted and put into operation three years ago its Federal Reserve System
not only could our country have weathered the storm
without such far-reaching disturbances but we should
have been in position to save our American sister
Republics much loss and inconvenience.
In order to make this point clear it may be profitable
to summarize briefly last year's events as now a chapter of the world's financial history. When the war
began England occupied a most advantageous strategic
financial position. She had been acting as the banker
of the entire world, particularly by her system of acceptance credits, thus financing a vast majority of
transactions involving the importation and exportation
of goods between nations. The Hindu, the Chinaman,
the Japanese, the Australian, the African from Cape
Colony to Egypt, the Canadian, the South American,
the citizen of the United States, and those of a large
number of the European States, all had used the English credit market.
But when the war broke out all countries were suddenly called upon to pay their debts and to finance
their trade from that time forward wherever they
could do it to their best advantage. The consequence
of this situation was that England found herself in
the position of a creditor calling upon the entire world

JULY 1,1915.

FEDERAL RESERVE BULLETIN.

for the payment of debts due at a time when shipping
and trade were disorganized. It was therefore impossible within the short time granted for such payment to liquidate obligations by the shipment of merchandise, even though it had been previously sold
under contract. At the same time a British debt to
foreign countries was shielded by a moratorium, so that
the foreigner who happened to be in debt to England,
yet unable to collect there any sums due him, found
himself able to settle his own debts to that country
only by buying sterling remittances at most exorbitant
prices or by shipping actual gold. British stock exchanges had been closed, and even those foreign
debtors who owned British securities or securities
which normally found a market in England, by thy
sale of which, therefore, they might have created balances with which to pay their debts, saw themselves
debarred from using these assets for the liquidation
of their obligations.
Every country was thrown into confusion. Not one
remained sufficiently undisturbed to be able to help
the others.
An English writer, now officially connected with the
British exchequer, has written a very able and interesting book wherein he sums up the condition then
created, as follows:
London was so strong that it did not know how
strong it was. Consequently, being a little flustered
by the suddenness of the outbreak of the war, on a
scale that mankind had never seen before, it made the
mistake of asking its debtors to repay it, not the
thousands of millions that it had lent in the form of
permanent investment, but the comparatively trifling
amount—perhaps one hundred and fifty or two hundred millions (pounds sterling)—that it had lent In
the shape of bills of exchange drawn on it, and other
forms of short credits. Thereby it put the rest of the
economically civilized world, for-the time being, into
the bankruptcy court, and so, finding that none of its
debtors could pay, it thought itself obliged to ask
for time from its own creditors at home.1
It is not for us to criticize England for having
acted in the premises from a merely selfish point of
view. This may well have been her duty. Her vital
interests were at stake, and in view of the great
catastrophe which she had to face it was necessary
that she should muster from all parts of the world,
not only her military but also her financial reserves.
Nor is much to be gained by insisting, with the British authority already cited, that some of the drastic
measures which England found it necessary to take,
and even her moratorium, might have been avoided if,
immediately upon the beginning of the disturbance,
she had been adequately prepared to issue without
hesitation an ample supply of emergency currency.
We must not blame England; we must blame ourselves for having carelessly placed ourselves in tnis
economically dangerous position.
1

Hartley Withers, " War and Lombard Street."




133

Without venturing to analyze the problems of other
countries, we may say with reference to the United
States that the responsibility for having been caught
tied hand and foot when the crash came is in two
respects our own. As already stated, we should several years ago have reorganized our financial system
so as to keep our gold under our own effective control
and so as to enable us to finance with our own resources our import and export transactions. We
should, furthermore, have avoided borrowing abroad
when we could have financed our requirements at
home, even though foreign aid was had at a slight
advantage in rate.
The chief lesson which all American nations will
have to learn from last year's experience is that it is
unwise for the world to place its financial dependence
upon any single nation; and that those who can
afford to do so, as, for instance, the United States,
should from this time on adopt a policy of greater
reliance upon their own resources. Those countries
which can not rely exclusivelv upon their own resources should adopt a policy of dividing the risks of
financial dependence as evenly and widely as they
possibly can.
Financial dependence expresses itself in two ways—
first, in the short-term credit granted to individuals,
and, second, in the long-term and corporate credit,
particularly that granted to Governments.
Dealing first with the problem of individual credits,
the United States may be profoundly grateful that
just at this time its new banking system has been established. The day of the opening of our Federal
reserve banks will mark the advent of our financial
independence. We are now able to finance our own
imports and exports by the use of American acceptances. More than that, we are in a position to finance
the trade of other nations and to play in this respect
the part of an international banker that has heretofore been played almost exclusively by England.
While it is true that Germany and France during
the past generation have begun to finance a large
portion of their own trade by acceptances of their
own banks, the bulk of the business has heretofore
been handled by England. There is no doubt that
upon the establishment of peace there will be a
tendency on the part of many nations to emancipate
themselves in this respect, and, we may add, with
profound conviction, that it is precisely in this field
that the United States will be destined to play a most
important r61e.
We realize, of course, that it will be an arduous
task to procure for our American acceptances the
same standing in world markets as is now enjoyed
by those of nations that have been in the field for generations past. Their commercial and financial relations are well established, and bankers in foreign
countries are more familiar with the names of European than of American acceptors. Moreover, the

134

FEDERAL RESERVE BULLETIN.

avenues that lead toward European establishments
for the sale or discount of acceptances are clearly
mapped out and at present of readier access than the
new paths leading to those of the United States. It
is difficult to change well-established banking habits.
We are well aware, therefore, of the fact that it will
be necessary for this country to render the utmost
possible assistance in order to facilitate a development
so eminently desirable for the future protection of
these large continents. This can be done in several
ways:
First, by the readiness of our banks and bankers
to enter this new field in a spirit of liberality and
patriotism. They must be thoroughly imbued with
the thought that it is necessary for the financial independence of their country and for the security of
our American sister Republics that import and export
transactions touching this country should in the future
be financed by ourselves.
It may be opportune to point out in this connection
that the Federal reserve act gives ample powers for
the development of this business, even though these
powers may have to be still further enlarged. Member banks may accept and Federal reserve banks may
discount bills arising out of transactions based upon
the " importation or exportation" of goods. The
Federal Reserve Board has been advised by its counsel
that the words " importation " and " exportation," as
used in this connection, need not be construed as confining these transactions to importations or exportations into or from the United States, but that these
transactions may also cover shipments between foreign countries. We shall be in position, therefore, to
serve as bankers for our American sister Republics,
not only in their trade with us, but even in their
trade with others.
In order to develop this new avenue of American
banking we need not even draw upon the means heretofore employed for the financing of our own problems. The United States has a gold stock amounting
to the phenomenal sum of about $1,890,000,000, of
which so far only $300,000,000 in round figures have
been concentrated in the Federal reserve banks. The
Federal reserve banks need only continue the process
just begun of substituting Federal reserve notes for
the gold and gold certificates now in circulation in
order to gain control of a vast additional financial
power which now lies idle. We may confidently expect, therefore, to find ample means to handle this
business by the simple process of perfecting our organization and assembling our idle gold.
But in order to compete successfully in foreign markets we must have not only banks and bankers of undoubted standing, able and willing to undertake these
acceptance transactions, but also discount rates that
compare favorably with those of competing nations.
The fact that, within a few months, our banks have
been able to accept in the aggregate an amount re-




, 1915.

ported to be in excess of $120,000,000 permits the conclusion that we have begun on a proper basis and with
success. But the test will come when peace shall have
been restored and when we shall have to make special
efforts to maintain and strengthen our position. It
will then be one of the functions of the Federal reserve
banks to assist in the establishment of discount rates
for these acceptances low enough to render them
effective in securing business.
There is one other signal service that Federal reserve banks can render in this respect; that is, to
facilitate the quotation of so-called " forward discount
rates." A bank in a foreign country, when buying a
dollar acceptance, must be assured of the rate at which
the bill will be discounted when it reaches our country. On this rate it will largely depend whether the
foreign shipper will use his European or his American credit facilities. The Federal reserve banks are
fully alive to the importance of this question, and I
may state on behalf of some of the largest of these
banks that they will be prepared to give the greatest
possible assistance by adopting a liberal policy in
quoting such forward discount rates, good for a cer*
tain date or for delivery upon the arrival of mail by
a given steamer.
The Federal Reserve Board and the Federal reserve
banks have not yet reached any conclusions as to the
most efficient method of fixing and transmitting these
rates; whether they should be announced locally only
at the office of a Federal reserve bank or whether it
would be helpful to cable them to the main banking
centers in foreign countries. It is hoped that both our
guests and our bankers will consider the matter and
give us the benefit of their suggestions.
The Federal reserve act, for the first time since
the establishment of our national banking system,
enabled national banks to open branches in foreign
countries. Important branches have already been
opened and others are soon to follow. It is hoped
that the law may be amended in the near future so
as to still further facilitate the establishment of such
branches. It is generally felt that these direct connections with foreign countries will tend toward the
development of better knowledge and understanding
of local conditions and problems and the greater intimacy necessary for the development of cordial and
mutually satisfactory business relations.
The vast powers of the Federal reserve banks will
enable them to play a most important part, and they
will do all they can to assist in facilitating the growth
of a truly American banking system ramifying
throughout our entire hemisphere
The policy thus outlined as applicable to individual
transactions should also apply to corporate and Government financing. It is a source of weakness when
a nation depends too largely on one single or several
closely interrelated foreign markets, no matter how
attractive may be the terms upon which its obligations

JULY 1,1915.

FEDERAL RESERVE BULLETIN.

may be placed there. For, as experience has shown
such securities can be thrown back upon their makers
at a time when it is least convenient. If during a
critical period one single market or group of markets
becomes unavailable while obligations of a debtor
country mature or requirements must imperatively
be met the debtor country finds itself in a most precarious condition.
It is true that one country can not prevent another
from buying its securities, nor would it be advisable
hermetically to seal one stock exchange against securities quoted on another for fear that a closing of
the one might otherwise force the closing of the other.
The advantage of free international interchange is
such in peace that we must be willing to bear the disadvantages resulting therefrom in time of war. But
every country, in order to be safe, must be prepared
for such an eventuality. The financial structure of
a country consists of three main parts—funded longterm securities and the organization for marketing
them, viz, the stock exchange; individual short-term
credits and the organization for marketing them, viz,
the discount market and the deposit banks; and,
finally, the note-issuing reserve banks. Every country
must be prepared in grave emergencies to see the
first of these three organs crippled and the stock exchange closed, but there must be such provision that
the business of the country shall in that case be
carried on by the other two units. In that respect
last August found us still unprepared. The fact that
our stock-exchange loans became unavailable crippled
us. Our Federal reserve system has since been opened,
our organization is now established, and any future
catastrophe will find us well equipped.
There is no doubt, however, of the vulnerability of
any country if too large a volume of its securities be
held in one other country. It is certain that the
United States will be in a safer condition if, in the
future, when placing the securities to be issued for
the development of our own properties, we rely to a
larger extent than in the past upon our own markets.
It is important to state this principle emphatically,
even though for the next few years to come it be not
likely that Europe could act as a large purchaser of
our securities owing to the stupendous amount of
bonds issued by the various European Governments,
the extraordinary inflation of currency existing in
almost every part of Europe, and the appalling loss
of property suffered by those countries. Indeed, it
may well be expected that from now on the United
States will not only have to rely largely upon its own
resources for its internal development but that we
shall be called upon to provide means for absorbing
the securities previously placed in Europe but now
returning to us. It is impossible to predict how far
the death struggle now going on in Europe must proceed before an end is reached, and we can not, therefore, form any estimate of the extent of the destruc-




135

tion of property and prosperity. But even at this
juncture it must be apparent to every student of the
problem that borrowing nations will have to husband
their resources and move slowly in the further development of their capacities until the power of some
of these warring nations to save shall have recuperated and European money shall again freely seek
opportunities for investment abroad. Upon the degree
to which destruction continues will depend the r61e
we eventually shall have to play, not only with respect to our own affairs but with respect to those of
others. No doubt there will be a strong desire on the
part of other countries, and particularly of the American nations, to ask of the bankers of the United States
governmental and corporate credits. Some large
foreign loans, aggregating more than $200,000,000,
have been recently placed as a beginning. Our country will be prepared to render very substantial service
in this respect. But we must bear in mind that in
order to create a broad market for bonds of foreign
nations it is not sufficient that our bankers alone be
familiar with these countries. It is necessary that
the investor, from his own knowledge, have confidence
and a sympathetic understanding concerning the borrowing country's conditions. In other words, in order
to open a wide market for foreign securities there
must be intimate business relations with the countries
which offer such securities for investment. The belief
is often expressed that foreign loans create foreign
business relations. This is true, but it can be said
with equal force that foreign business relations are
conducive to the conclusion of foreign loans. We
may state with confidence that the United States will
prove a strong market, growing in importance from
year to year, for the loans of those foreign countries
with which we entertain business relations.
Europe has done much in developing the northern,
the central, and the southern parts of this hemisphere.
European banks and bankers have been our stanch
and loyal friends in the past. It would be unbecoming
in us, and disloyal at the same time, were we to forget this or to attempt to profit from their misfortunes.
But our own growth and development, and the unhappy fate that has overcome Europe have combined
to bring us to a momentous turning point in our
economic history. Our own steadily increasing weight
and Europe's relatively weakened condition mean that
the New World must in the future lean less heavily on
the Old.
I think I am justified in saying that there is no
difference of conservative opinion that the United
States does not aspire now to take the place of
Europe's leading financial powers. Our own field of
operation is still too vast to enable us or to render it
even desirable for us to become the entire world's
banker at this stage of our own development. But the
safety of all countries—and we include England among
their number—demands that if again the latter should

136

FEDERAL RESERVE BULLETIN.

find herself forced to call upon her debtors for instant payment, there should be at least one country
strong and independent enough to shoulder a substantial portion of the burden.
The development of all American nations lies in the
same direction, though there will be a difference iu
degree. It must be the aim of the United States from
now on to move rapidly toward entire financial independence. It must be the aim of her sister Republics
so to divide the credits needed for their further development that the temporary breakdown of one creditor country will not seriously embarrass them. They
will enjoy the greatest degree of safety in this respect
if their creditor nations are geographically, politically,
and economically separated from one another as far as
possible. So that in case one should become involved
the other may be expected to remain unaffected thereby. Though in normal times closely connected with
Europe, the American continents ought to be so organized as to form a distinct and independent unit in
times of emergency—a union whose transportation and
credit systems will remain unbroken, even though all
Europe should go to war.
An American union of this kind will prove of the
greatest economic advantage for all nations concerned.
If such a union be thought desirable, it must, however,
be forged and riveted every day of the year. If it is
to stand the test of time and stress, it must be a
structure of gradual growth, carefully planned and
consistently developed, and built upon a safe foundation.

Organization of Reserve System.
Hon. Charles S. Hamlin, governor of the
Federal Reserve Board, delivered the following address before the Pan American Conference at Washington, D. C, on Tuesday, May 25:
This conference of the sovereign nations of the
Western Hemisphere with the Secretary of the Treasury of the United States is an event of deep significance to the whole civilized world.
If your deliberations are successful it will not only
add to the prestige of the nations involved and to the
distinction of the delegates but, as well, it will add
another achievement to the many already to the credit
of the Secretary of the Treasury, and will place another laurel wreath upon the brow of the President
for his victories in the cause of peace.
The scope of your deliberations, necessarily limited
to the subjects assigned for discussion, need have been
limited only by the confines of human knowledge. |
When we consider the achievements of the nations j
whose representatives are gathered here we realize
what a wealth it constitutes, for you could speak with
authority upon the achievements of your citizens in I
the realms of science, philosophy, art, music, educa- |




JULY 1,

1915.

tion, history, medicine, or international law, as well
as upon the questions you have come together to discuss. That limitations necessarily had to be imposed
upon your deliberations, thereby restricting them to
the field of commerce, transportation, and finance, is
perhaps, after all, an advantage, for to discuss the
many important contributions to the world's advancement made by those nations -would require such time
that from the very nature of things it could not be
given.
I take it that the object of every Government is to
secure the greatest good of the greatest number of its
people, and I believe the world realizes to-day that
the prosperity of the people of one nation, in the
long run, tends to the prosperity of those of other
nations, while the adversity of one people must ultimately tend to the adversity of others. Just as the
individual prospers best when his country prospers.
so the nation prospers best out of the prosperity of all
nations.
In past centuries this great truth was not realized.
On the contrary, it was boldly advanced by thinkers
and philosophers that each man is arrayed against
his fellow man; that the gain of the one is the exact
measure of the loss to the other; that competition
between individuals, whether in warfare or in commerce, must ultimately mean the destruction of the
weaker and the gain of the stronger. So, also, it was
believed that as between sovereign nations the precise
measure of the gain to one from international trade
was the measure of the loss to the other.
Fortunately, however, such doctrines have not survived, and when occasionally they show their heads
above the surface they are recognized as but temporary deviations from well-established rules of action.
The world recognizes to-day that sympathy and cooperation are the most powerful factors in working
out the social and industrial welfare of the individual,
and that the same principles apply to the relations of
one sovereign nation to another.
Furthermore, the fact so cogently pointed out by
Adam Smith, the great economist, that both nations
gain by dealings in international trade is now accepted
by all nations as a guiding principle, although, to be
sure, many nations have somewhat obscured the principle by the levying of customs duties upon imports
far above any possible need, either for revenue or for
industrial development.
It is also true that the nations to-day are beginning
to recognize that they have products, whether of agriculture or manufacture, which they can create in
such quantities that they are obliged to seek and obtain for them, or for a portion of them, foreign markets. They further realize that they must accept in
great measure as payment for their exported products goods imported from these countries purchasing
their exports or from other countries for their account. In other words, speaking generally, every bale
of goods exported from a country must be paid for

JULY 1, 1915.

FEDERAL RESERVE BULLETIN.

by a bale of goods imported into the country. The
actual payment may be made by the delivery of socalled " bills of exchange," but these bills of exchange
in a very large measure are but symbols of property
or are a claim for money based upon the sale of property. The merchant ships his goods abroad, but he
sells the bill he draws upon the foreign purchaser to
some domestic bank, and these bills, representing
property, are used to offset similar bills drawn by
foreign sellers against imports into the country. If
the exports and imports of the country do not furnish
bills of exchange enough to balance, then gold or its
equivalent is used or, perhaps, loans, but these latter
play a relatively minor part in international exchanges.
It would be impossible for a country to shut itself
off from other countries and still hope to continue its
exports, receiving payment in gold instead of in goods.
If we assume—what is impossible of realization—that
any country could shut off its imports and continue to
export, receiving gold for its exports, within a very
few years it would cripple the exchange system of all
foreign countries by the amount of gold it would take
from them, but long before that point could be reached
the importation of gold would so raise prices as to
effectually stop its exports.
Trade, as now generally recognized, means buying
as well as selling, and in so far as this conference has
to do with trade and with the means and methods for
increasing trade, it has to do with the increase of buying as well as with the increase of selling.
We all recognize to-day the real interdependence of
nations; they are especially interdependent from the
aspect of trade and commerce. The nation of large
resources recognizes that in the long run it is for its
own profit to strengthen this interdependence by furnishing the nation of smaller resources means to meet
trade indebtedness to it. It should never be forgotten,
however, that in the long run this indebtedness must
be met by the shipment of goods, whether from the
debtor country or from some other country, for its
account, to the creditor country.
The Question, however, which must be foremost in
your minds is just what the United States can do in
assisting other nations to finance their trade movements, both with the United States and with the other
nations of the world. As to the amount of capital at
present available in the United States for such purposes and the working out in detail of any specific
plans or suggestions it is not my province to speak.
I shall leave that field open to the delegates assembled
here, and especially to my colleague, Hon. Paul M.
Warburg, who can speak with the authority of a master on every detail of international finance.
The message which I wish to bring to you to-day,
however, is that the United States was never before
in such a position as it occupies to-day to reach out
and extend its trade by granting credit to those nations who wish to be its customers.
98402—15
4




137

The dislocation of foreign trade caused by the present war furnishes the United States with a great opportunity, inasmuch as nations which for generations
have had the relation of purchaser and seller now find
these relations disrupted.
The United States also has but recently placed itself
upon a sound financial foundation by enacting a new
banking system, which, together with the reform laws
already enacted, I believe will constitute one of the
strongest systems in the world.
Furthermore, the new system of banking inaugurated by the Federal reserve act has provided an opportunity to our people of financing our foreign trade.
It lias economized the use of credit and capital. It
has increased its efficiency, which will enable us, as
I have said, to engage in financing trade movements
with and between foreign countries, which will do
much to build up our international trade exchanges,
particularly with the great nations whose representatives are here assembled.
This leads naturally to consideration of the banking system which has lately been organized under
the Federal reserve act. In order to understand the
changes brought about by the new banking system
we must briefly consider what the former system was.
its defects, and how these defects have been remedied
in the new system.
Prior to November 16, 1914, when the new Federal
reserve banks opened their doors, we had approximately 7,500 banks in the United States chartered by
the National Government and having the sole right
to issue notes known as national-bank notes. The
capital and surplus of these banks was a little under
two billions of dollars and, taken in connection with
their deposits, represented a banking power of over
nine billions of dollars. There were also over 20,000
State banks, trust companies, and savings banks
chartered by the respective States, representing a
capital and surplus of a little over two billions of
dollars and, including deposits, representing a banking
power of over fourteen billions of dollars.
These banks, both National and State, were independent and isolated, except as to a limited interdependence of some State institutions through stock
ownership. They together constituted over 30,000 individual units, between which in times of financial
stress effective cooperation was impossible.
Leaving out of consideration for the moment the
State banks, there were in the United States over
7,500 independent units called national banks, each,
as I before stated, having the power of note issue and
each bound to keep in its vaults and with other national banks in certain cities, called reserve cities, a
reserve fixed by law.
Under the national-bank act, however, these reserves
were, in effect, sealed up and could not lawfully be
used, even in times of financial stress. A bank whose
lawful reserve was below the legal limit was bound
to restore it, and if it was not restored within a speci-

138

FEDERAL RESERVE BULLETIN.

fied time the Comptroller of the Currency could place
a receiver in the bank.
The merchants and farmers of the country \rere
often refused credit—the very essential of business
life—and yet they could see these sealed-up reserves,
ample for relief purposes, and yet denied them. They
were in the position of a man weakened by hunger
looking through a plate-glass window observing every
kind of food which he is told is for his benefit, and
yet no morsel of which could he, under any circumstances, be permitted to eat.
As a result, in times of financial stringency each
bank had to protect itself regardless of the condition
of other banks, and had to fortify itself against its
demand obligations by piling up reserves far above the
prescribed limit. To do this it had to call loans or
refuse to renew or make new loans during the stringency. The necessary result of this procedure was to
make the stringency even more severe, and the hoarding of its resources by the individual banks quickly
led to hoarding by individuals, thus throwing the
whole banking system into confusion and ruining
thousands of merchants who were unable to obtain
the assistance to which under ordinary circumstances
they would have been clearly entitled.
During the latter part of the panic of 1907 it was
found that some banks which by law need carry only
15 per cent reserves were actually carrying reserves
of between 40 and 50 per cent of their deposits, while
in 1914 the reserves of some banks amounted to 70
per cent. It is also a most significant fact that at the
height of that panic over $200,000,000 in cash were
being carried by the banks, in their vaults and with
their reserve agents, in excess of their legal requirements. If these $200,000,000 of resources could have
been used for the common benefit, such a panic would
not have taken place.
Under our old system the banks of the United
States were in the position of an army entering into
action as a disorganized body of individuals, without
a single onicer and without a single company, battalion, regiment, or brigade. That our oft-recurring
panics under the old system did not involve more of
our banks and their customers in general ruin is one
of the wonders of financial science and is a great
tribute to the marvelous recuperative powers and unrivaled resources of our people.
Under our old financial system—or, rather, lack of
system—every dollar loaned by a bank on commercial
paper was a dead investment, as if buried in the
ground, until the day of maturity. The paper, when
discounted, was lowered into the vaults of the bank
with almost funereal ceremony; in fact, the national
banks were but mausoleums for dead commercial
paper, and if a bank president with ghoulish propensities were to open the vaults and try to dispose
of any of the paper stored there, before its resurrection on the day of maturity, the act would have been
looked upon with suspicion. As a result, when a
bank had made all the loans it could its power to aid




JULY 1, 1915.

its customers absolutely ceased, and many a merchant of high standing and good credit had to be
refused further assistance, to his injury and possible
disaster.
Every bank had to arrange so that some of its resources should be invested in so-called liquid assets,
so that in times of financial stress they could instantly
realize upon these assets. As a result funds which
otherwise might have been loaned to farmers and
merchants were sent to the large financial centers of
the country to be there invested in call loans upon
stock exchange collateral—that is to say, upon bonds,
stocks, and other securities which represented no
commercial transactions, but which, in many cases,
simply represented speculative activities. When, however, in times of stress these loans had to be called
it was often found that what was considered to be a
most liquid asset was, for the time being, no asset-at
all—as witness the period in the summer of 1914,
when these so-called liquid assets were absolutely debarred from sale by the closing of the stock exchanges.
Furthermore, under the old system the national
banks issued so-called national-bank notes, which
were originally designed to constitute an elastic currency, rising and falling in response to the demands
of agriculture and commerce. Unfortunately, however, these notes had no such elasticity as was thus
ascribed to them, because of the fact that their issue
was not controlled by or based upon business development; on the contrary, these notes were indissolubiy
chained to Government bonds, which had to be pledged
with the Government as collateral. These Government
bonds were neither issued nor regulated by the expansion or contraction of trade and commerce. They were
fixed in amount and fluctuated in value in no fixed
ratio to the development of those branches of business.
As a fact, it was the fluctuation in value of these bonds
which influenced the expansion or contraction of the
national-bank notes rather than an expansion or contraction in business. When business slackened and
contraction of these notes was desirable, the notes responded but feebly, and in some cases actually increased in amount; while, on the other hand, when expansion was desirable to accommodate increasing
trade, the notes at times actually decreased; and at
other times when they responded to the need for expansion the response was so belated as to take effect
only when the necessity for the expansion had ceased.
This alliance of national-bank notes with Government bonds was a strange one. The national-bank
notes, supposed to be a measure of the development
and expansion of trade, were linked to and governed
by the fluctuation in value of these bonds, which represented war, the destruction of trade, and the past dire
necessities of the Government. Thus these nationalbank notes, intended to represent the progress and development of trade and commerce of the twentieth
century, were linked to the evidences of destruction of
trade and commerce of the nineteenth century. There
may have been a reason for this strange alliance la

JULT 1,

1915.

FEDERAL RESERVE BULLETIN.

the nineteenth century owing to the necessity for finding a market for Government bonds, but in this twentieth century there is certainly no good reason for its
continuance.
Furthermore, under the old system the national
banks were not able to finance our foreign trade, because under the law they could not lend their credit
in the form of acceptances. As a result our foreign
trade had to be financed in London and on the Continent, and the expression now so frequetly heard—
dollar acceptances—was merely an ideal as far removed from practical realization as the moon is distant from the earth.
For example, we buy large quantities of raw and
manufactured silk from the Orient. This silk goes
direct to the Pacific ports of our country; it is taken
overland by special train. The bill of exchange, however, drawn for the selling price, is drawn upon a
foreign bank and is sent, together with the bill of
lading and other documents, east to London, or it
may even pass through the United States on its way
to the foreign bank upon which it is drawn, later to
be returned to the United States for final discharge
of the obligation of the purchasers in this country.
The lack of cooperative union or confederation between the individual banks and their reserves also
weakened the ability of the banks to conserve the
supply of gold, the standard of value in the United
States, and as a result the movement of the precious
metals from the country, even when in strict accordance with the laws of trade and of ultimate advantage
to the United States, was looked upon with anxiety
as a symptom of financial trouble, causing uncertainty
and lack of confidence.
I have tried to show some of the defects which existed under our former system—the lack of cooperation between the individual banks, the lack of any
system by which the reserves could be either used
by the individual banks or consolidated into a common
fund for the benefit of all the banks, the impossibility
of rediscounting commercial paper once discounted by
the banks, its lack of liquidity, and the consequent
necessity for investment of part of the bank's assets
in call loans as the most liquid investment possible,
the lack of a genuine elastic currency, and, finally,
the lack of power to finance our foreign trade through
the loaning of credit by means of acceptances.
The question naturally arises just how the Federal
reserve act has remedied these conditions, placing the
United States upon a firm banking foundation. I shall
try to answer this question briefly.
It should be clearly understood that the Federal
reserve act does not add a dollar of money to existing stocks held by the banks or by the people, and also
that, while it gives the national banks some valuable
new powers and privileges, it does not change their
inherent structure or their present charters.
Just what, then, has the Federal reserve act accomplished? While the act is a long one, containing
much minute detail, its underlying principles are simplicity itself.




139

In the first place, it divides the United States into
12 districts, each district containing approximately
from 500 to 700 national banks. The national banks
in each district unite in forming a new bank called
the Federal reserve bank, to which each national bank
contributes 6 per cent of its paid-up capital stock and
surplus to provide the necessary capital.
The individual capital of these 12 Federal reserve
banks varies, respectively, from a little under 5 millions to a little over 20 millions of dollars. The total
capital of the 12 banks (not counting State institutions which may ultimately become members) is a
little over 100 millions of dollars.
At the present time only one-half of the capital
payments have been called, and the total paid in by
all the national banks amounts to a little over 50
millions of dollars.
We thus have 12 Federal reserve banks with a total
capital of over 50 millions of dollars paid in and about
as much more subject to call by the Federal Reserve
Board when and if needed. This capital, under the
terms of the Federal reserve act, has been paid in
gold or gold certificates.
The 12 Federal reserve districts vary greatly in
area and in population. For example, the Federal
reserve district of Chicago has a population of over
12,000,000 of people, exceeding the combined populations of Norway, Sweden, and Switzerland.
On the other hand, the area of the Federal reserve
district of San Francisco (683,852 square miles) is so
extensive that you could place within it England,
Scotland, and Ireland, the whole of continental
France, Italy, and Germany and still have left an
area exceeding that of all the New England States
combined, excepting only the State of Maine.
In addition to the capital payments I have before
mentioned, each national member bank is obliged to
pay to its Federal reserve bank a certain portion of
its legal reserve, which portion, however, it still
counts as part of its reserve. These payments of reserves are spread over a period of three years, and
the total payments will amount to over one-third of
the total reserves held by the national member banks.
Up to the present time about two hundred and
ninety-five millions of reserve money has been thus
paid to the 12 Federal reserve banks, and at the end
of three years over four hundred millions will have
been paid in, which latter amount will be, of course,
greatly increased by the admission of State banks and
trust companies. At that time all the reserves of the
member banks must be held in their vaults or with
the Federal reserve bank, the privilege of keeping
their reserves in part in approved bank's in reserve
cities ceasing at the end of that period. This will
necessarily largely increase the amount of money deposited by the member banks in the Federal reserve
banks.
In addition the Secretary of the Treasury may deposit the general funds of the Treasury—excepting
only certain trust funds—with the Federal reserve
banks, and disbursements of the Government may be
made by checks drawn against such deposits.

140

FEDERAL RESERVE BULLETIN.

The national banks in the 12 respective districts
(and State banks which may join the system later)
are the only stockholders of the Federal reserve banks,
and their stock can not be transferred or hypothecated. The stock is entitled to a 6 per cent annual
cumulative dividend, and one-half the net earnings
of the Federal reserve banks may be paid into a surplus fund until it amounts to 40 per cent of the paidup capital stock.
All net earnings over and above this dividend and
surplus are paid to the United States as a franchise
tax.
Each Federal reserve bank' is managed by a board
of directors, consisting of nine members, of which
three are appointed by the Federal Reserve Board
and six are elected by the member banks, three of the
six directors representing the banks and three consisting of members who at the time of their election
were actively engaged in commerce, agriculture, or
some other industrial pursuit.
These 12 Federal reserve banks are under the control and direction of the Federal Reserve Board, consisting of the Secretary of the Treasury and the
Comptroller of the Currency, ex officio, and of five
other members appointed by the President and confirmed by the Senate.
The Federal Reserve Board sits in Washington,
D. C. It appoints, as I before said, three directors on
the board of each Federal reserve bank; it has general powers of supervision and examination of the
Federal reserve banks and the member banks; it may
suspend or remove, for cause, any director or officer
of the Federal reserve banks; it may suspend the operation of any Federal reserve bank and liquidate or
reorganize such bank; it defines the paper which may
be rediscounted by Federal reserve banks; it has
power to review and determine the rates of discount
established from time to time by the Federal reserve
banks for the discount of commercial paper offered by
the member banks; it regulates the open-market
powers of the Federal reserve banks; it has power
to suspend every reserve requirement of the act if it
deems such course necessary; and it has many other
specific powers which I need not mention here.
Each Federal reserve bank is independent of every
other. They are empowered, however, with the permission of the Federal Reserve Board, and at rates
fixed by the board, to rediscount the discounted paper
of any of the other Federal reserve banks, and can
be required to do so by the affirmative vote of at least
five members of the Federal Reserve Board.
The act aiso creates a body known as the Federal
Advisory Council, one member of which is elected by
each Federal reserve bank. The duties of the council
are to confer with the Federal Reserve Board and to
advise it as to matters connected with discount rates,
note issues, reserve conditions, open-market powers,
and similar questions.
I have thus given a skeleton outline of the Federal
reserve system. Many details I have had to omit for




JULY 1,

1915.

fear this address would take on the quality and length
of a treatise or textbook. I think, however, that what
I have outlined will give a fair understanding of the
scope of the system.
The question remains as to how the Federal reserve
act remedies the defects which I have outlined as
characteristic of the old system.
The first fundamental defect of the old system
pointed out by me was that each national bank was
independent, and that as a result we had 7,500 independent banks and 7,500 scattered reserves, no effective cooperation being possible, nor could the individual reserves even be drawn upon legally by the very
banks which owned them.
This defect is remedied under the Federal reserve
act through the capital and reserve deposits placed
by each member bank with its reserve bank. These
payments constitute a substantial fund—already about
350 millions of dollars, and constantly growing—which
must be used by the Federal reserve banks for the
benefit of the member banks and their customers—the
people of the United States.
These funds are held for use in discounting commercial paper offered by the banks for discounting
acceptances and for certain open-market investments
which I shall not undertake to enumerate to-day.
Any bank desiring funds can take its commercial
paper to the Federal reserve bank and obtain gold or
lawful money in exchange. This privilege enables a
bank to loan freely in times of commercial stress and
to draw down its available resources far below what
would have been considered prudent under the old system, for the commercial paper discounted by the
banks under the new system is as good as gold, as it
can be turned into cash or a cash credit at once at the
Federal reserve bank upon request. This privilege
also makes commercial paper a genuinely liquid investment, whereas under the old system such investments were absolutely dead until the day of maturity.
Such commercial paper is far more liquid than a loan
upon investment securities, for the loan upon commercial paper presumably liquidates itself, as the borrower receives from the consummation of the commercial transaction—to assist which the note was
originally discounted—the money with which to pay it.
It should, moreover, be pointed out that every dollar paid into the Federal reserve banks by the member banks, including all deposits made by the United
States Government, is impressed with a trust in that
it must be used (excepting as to certain open-market
investments) only for the discount of paper issued
or drawn for agricultural, industrial, or commercial
purposes, whether in the domestic or foreign trade,
and can never be invested in or loaned upon speculative securities or even upon real estate transactions.
The second fundamental defect in the old system
which I have pointed out was the lack of a really
elastic currency. The Federal reserve act remedies
this defect by providing for the gradual payment and
cancellation of the national-bank notes, and further,

JULY 1,

1915.

FEDERAL RESERVE BULLETIN.

by giving authority to the Federal Reserve Board to
issue to Federal reserve banks applying therefor obligations of the United States known as Federal reserve
notes. The bank obtaining such notes must deposit
with one of the Government directors, known as the
Federal reserve agent, as collateral commercial paper
approved by the regulations of the Federal Reserve
Board up to the face value of the notes thus issued,
and in addition must maintain a gold reserve of 40
per cent against such notes. These notes will constitute a truly elastic currency, rising and falling with
the rising and falling of agriculture, trade, and commerce. No limit is imposed upon their issue. Such
a note could conceivably be issued against every commercial or agricultural transaction represented by commercial paper which has been discounted by member
banks. When, however, the commercial paper liquidates itself, and the maker uses the funds received
from the transaction to pay off the note, the Federal
reserve notes issued against that paper must be returned and canceled, or the amount of the notes thus
paid must be retained by the Federal reserve agent
against the Federal reserve notes until they are returned and canceled.
The Federal reserve notes will also serve to protect
the gold supply of the United States, for much of it,
sooner or later, will go into the vaults of the Federal
reserve banks and Federal reserve notes will be issued
in its place.
The Federal reserve act also authorizes national
banks, for the first time, to accept bills of exchange
growing out of the import and export trade under
certain reasonable regulations, and the Federal reserve banks are also authorized to discount such
acceptances. This grant of power is a most valuable
one and will enable our banks to finance our foreign
trade by loaning their credit upon these acceptances.
By this grant of power the so-called " dollar acceptance " is made for the first time possible, and this
means much for the future development of our trade,
especially with the great nations of Central and South
America, and will add much to our ability to assist
them in financing their sales to and purchases from
the United States.
The Federal reserve act, however, has done much
more to help make possible closer trade relations with
foreign countries. The Federal Reserve Board is
given power to permit national banks to establish
branches in foreign countries, and it is at once apparent what a great assistance this will be, not only to
the United States but likewise to the great nations
who are trading with the United States, especially
those whose delegates are assembled here. Branches
of national banks have already been authorized in
Argentina, Brazil, Panama, and other countries, and
it is confidently expected that a great development in
our trade relations with such countries will result.
The Federal Reserve Board is also authorized to
permit the Federal reserve banks to open and maintain banking accounts, appoint correspondents, and establish agencies in foreign countries, for the purpose




141

of purchasing and selling bills of exchange arising
out of commercial transactions; these banks are also
authorized to deal in gold coin and bullion at home
and abroad. It is easy to see what power the Federal Reserve Board, through the Federal reserve
batiks, will thereby have, in connection with its power
over discount rates, over the movement of the precious
metals into and from the United States.
These great powers can and will be exercised in
such a manner as to emcourage and assist in every
way the growth of the volume of trade between the
United States and foreign countries.
I think it will be realized, as I have before stated,
that, growing out of this new banking act, the time
has come for a marvelous development in our foreign
trade, especially with South America, and that an
opportunity is given to finance that trade such as has
never been possible before.
The resources of the Federal reserve system will
also be greatly augmented in the future by the addition of large resources contributed by State banks
and trust companies, which the act permits to join
the Federal reserve system under reasonable regulations. I venture to express the hope that within the
near future the majority of the strong State banks
and trust companies doing a commercial business will
join this system.
The Federal reserve act economizes the use of capital ; it makes its use more effective than under the old
system; by lowering the prescribed reserve requirements it has released hundreds of millions of capital
which will provide additional credit; by its rediscount provisions and by the powers given to the Federal Reserve Board to suspend reserve requirements
in cases of necessity it has practically made a financial panic of the type we went through in 1907 an
impossibility.
The banks have been greatly strengthened by these
reforms and have enlarged their power to grant discounts to their customers both in domestic and International trade.
I believe the result will be of lasting advantage and
benefit, not only to the people of the United States
but to the people of all nations which engage in trade
with us.
I have tried briefly to outline just what the Federal
reserve act? has done for us, and to show how, incidentally, it may be of great advantage to all nations
that trade with us. There remains only to consider
the practical application of the principles of the act
to the great problems of commerce, transportation,
and finance which you are called together to consider^
and these problems will be considered by you in conjunction with our own delegates, who are, it is needless to add, chosen men, representing the highest
ability in practical banking, and who represent as well
the highest type of our citizenship.
I am sure that it will be the earnest prayer of all
the people of our country, and of the great nations
whose delegates are here assembled, that our deliberations shall be crowned with successful achievements.

142

FEDERAL RESERVE BULLETIN.

Transfer of Member Banks Between
Districts.
When the Federal Reserve Board announced
decisions in the redistricting cases it was stated
to the reserve banks affected thereby that the
decisions should become effective not later than
July 1, 1915, and that in the meantime it was
designed to work out a satisfactory plan covering the details of the transfer. This plan was
intended to provide a method of surrendering
stock in the reserve banks from which the
member banks were transferred, of taking out
new stock in the reserve banks to which they
were transferred, and of bringing about a settlement of capital stock and reserve accounts
between the two Federal reserve banks affected
by each such transfer with the smallest possible
amount of delay and difficulty. Investigation
of the problems growing out of such transfer
was undertaken by various Federal reserve
agents and officers of Federal reserve banks,
particularly by those of New York and Philadelphia, and by the Federal Reserve Board.
As a result, on June 16 forms of procedure
were forwarded to the six Federal reserve
banks affected by the redistricting decisions, as
follows:
SIR: Upon review of the decision of the Reserve Bank Organization Committee the Federal
Reserve Board has entered an order effective
from July 1, 1915, readjusting districts Nos.
4 and 5, as a result of which your bank will,
after that date, be ineligible to hold stock in
the Federal Reserve Bank of Richmond, but
will be eligible to membership in the Federal
Reserve Bank of Cleveland. In order to comply with the terms of the order referred to you
are requested to have your board of directors
adopt, on or before July 1, the inclosed resolutions covering surrender of your stock in the
Federal Reserve Bank of Richmond and application for stock in the Federal Reserve Bank
of Cleveland. When this has been done a certified copy should be forwarded to the Federal
Reserve Bank of Cleveland. Two copies of the
resolution are inclosed so that you may have a
duplicate for your files.
For convenience the necessary operations
have been arranged in the following order:
(1) Adopt the resolutions above referred to
and send certified copy to the Federal Reserve
Bank of Cleveland.




JULY 1, 1915.

(2) Send to the Federal Reserve Bank of
Cleveland, with a certified copy of the resolutions, all receipts issued and sent to you for
payments made by you on account of your subscription to the capital stock of the Federal
Reserve Bank of Richmond.
(3) Execute and send to the Federal Reserve Bank of Cleveland the necessary order
authorizing the Federal Reserve Bank of Richmond to remit to the Federal Reserve Bank of
Cleveland, on your behalf, the net amount
hereinbefore paid by you on account of your
subscription to the capital stock of the Federal Reserve Bank of Richmond. This payment will be applied by the Federal Reserve
Bank of Cleveland on your subscription to the
capital stock of said bank. Upon receipt of
this payment the Federal Reserve Bank of
Cleveland will execute and forward to you its
temporary receipt for the amount so paid.
(4) At the close of business on June 30,1915,
for the purpose of transferring reserve balance
from the Federal Reserve Bank of Richmond to
the Federal Reserve Bank of Cleveland, please
send to the Federal Reserve Bank of Cleveland
for your credit your draft on the Federal Reserve Bank of Richmond for the balance as
shown on your books.
(5) Please fill out Treasury Department
Form B-2149 prescribing method of calculation of reserve as at the close of business June
30. 1915, and send it to the Federal Reserve
Bank of Cleveland. The Federal Reserve Bank
of Richmond will send statement of your account at the close of business June 30, 1915,
and will reconcile it in the usual manner.
(6) Inasmuch as the 6 per cent dividend
provided for by statute is cumulative, the Federal Reserve Bank of Richmond will issue to you
an accrued dividend certificate. This certificate will entitle you to receive interest on your
cash-paid subscription at the rate of 6 per cent
per annum, to be computed from the dates of
your cash payments to the date of the surrender
of your stock, and to be paid to you when the
earnings of the Federal Reserve Bank of Richmond justify the payment of accrued dividends
to its stockholders.
Kindly note that all of the above papers are
to be sent to the Federal Reserve Bank of
Cleveland.
Respectfully,
FEDERAL RESERVE BANK OF RICHMOND,

By

5

Governor.

FEDERAL RESERVE B A N K OF CLEVELAND,

By

Governor. .

JULY 1, 1915.

143

FEDERAL RESERVE BULLETIN.

At a meeting of the board of directors of the
duly called and held on the
of
day of
, 191-, the following resolution was
offered and duly adopted:
" Whereas this bank has subscribed to
shares of the capital stock of the Federal Reserve
Bank of Richmond, pursuant to a resolution adopted
-by its board of directors on the
day of —
,
1914, in accordance with the provisions of the act
of Congress approved December 23, 1913, and known
as the Federal reserve act, has paid on account
thereof in installments the sum of $
, said sum
being 50 per cent of the par value of said shares;
"And whereas, according to the certificate filed
April 2, 1914, by the reserve bank organization committee with the Comptroller of the Currency, designating the several Federal reserve cities and defining
the geographical limits of the districts to be respectively served by the Federal reserve banks located
in said cities, this association was at that time located in district No. 5, which district is served by
the Federal Reserve Bank of Richmond;
"And whereas the Federal Reserve Board under
the authority granted to it by section 2 of the said
Federal reserve act has by resolution adopted May
4, 1915, ordered that Federal reserve district No. 4
shall be modified and extended so as to include on
and after July 1, 1915, the counties of Tyler and
Wetzel, in the State of West Virginia, which said
counties have heretofore been included in Federal
reserve district No. 5;
"And whereas this association is located in the
county of
in the State of West Virginia, said
county being one of the two counties transferred by
said resolution and order from district No. 5 to district No. 4: Now, therefore, be it
"Resolved, That the president or vice president and
cashier of this association be, and they are hereby,
authorized, empowered, and directed to make application to the said Federal Reserve Bank of Richmond
for the cancellation of said
shares of stock
heretofore allotted to this bank and for the refund
of all payments made thereon; and be it further
"Resolved, That the president or vice president and
cashier of this association be, and they hereby are,
authorized, empowered, and directed to make application for and to subscribe to
shares of the par
value of $100 each of the capital stock of the Federal
Reserve Bank of Cleveland, to pay for such stock in
accordance with the provisions of the said Federal
reserve act, and to take any other action necessary or
desirable to the accomplishment of the said readjustment."
I hereby certify that the foregoing is a true and
correct copy of a resolution passed by the board of directors of this association on the date specified.
Cashier.

-, and agree to pay for same in accordance
to $with the provisions of the Federal reserve act.
[SEAL.]

By

of

,

, President.

, Cashier.
We, the undersigned, hereby certify that this bank
has an unimpaired capital of $
and surplus
of $
, as shown by its books at the close of business on the
day of
, 1915.
(To be signed by three or more directors.)

Directors.
LOCATION OF APPLYING BANK.

City or town
County
State
CERTIFICATE OF FEDERAL RESERVE AGENT.

The foregoing application for the surrender of
stock in the Federal Reserve Bank of Richmond has
been examined and the statement of the number of
shares allotted to the applying bank has been verified.
I recommend that
shares of stock be accepted
for cancellation, and that the cash subscriptions
already paid for this surrendered stock be returned.
Federal Reserve Agent,
Federal Reserve Bank of Richmond.
CERTIFICATE OF FEDERAL RESERVE AGENT.

shares of
The foregoing application for
stock in the Federal Reserve Bank of Cleveland has
been examined and checked. The amount of stock
applied for is equal to 6 per cent of the capital and
surplus of the applying bank as shown by certified
statement of directors. I recommend that
shares of stock be allotted to it by the Federal Reserve Board.
Federal Reserve Agent,
Federal Reserve Bank of Cleveland.
CERTIFICATE OF APPROVAL.

The foregoing application for the surrender of
shares of stock in the Federal Reserve Bank
of Richmond, and for the allotment of
shares
of stock in the Federal Reserve Bank of Cleveland,
has been approved by the Federal Reserve Board.

Pursuant to the foregoing resolution, the
, of
, hereby makes application for the cancellaSecretary, Federal Reserve Board.
tion of
shares of stock of the Federal Reserve
Bank of Richmond heretofore allotted to it, and for
RECORD OF ENTRY.
the refund of such cash payments as this bank may
The foregoing application has been duly entered on
be entitled to under the provisions of section 5 of the
Federal reserve act.
the records of the Federal Reserve Board.
Pursuant to foregoing resolution, the
hereby
subscribes to and makes application for
shares
Bookkeeper.
of the capital stock of the Federal Reserve Bank of
191-.
Cleveland of the par value of $100 each, amounting




144

FEDERAL RESERVE BULLETIN.

JULY 1, 1915.

Trustee Powers.
Applications from the following banks for
FEDERAL RESERVE BANK OF RICHMOND,
permission to act under section 11 (k) of the
Richmond, Va.
DEAR S I R S : In accordance with resolution of the Federal reserve act have been approved since
Federal Reserve Board, dated May 4, 1915, transfer- the June issue of the Bulletin, as follows:
SAMPLE FOEM.

191—.

ring this bank from district No. 5 to district No. 4,
and with the resolutions of the board of directors of
this bank, dated
, 1915, this bank has applied
for cancellation of its
shares of stock of the
Federal Reserve Bank of Richmond and has applied
for
shares of the stock of the Federal Reserve
Bank of Cleveland.
To facilitate these transactions you are hereby authorized and requested to pay to the Federal Reserve
Bank of Cleveland on account of our subscription to
the capital stock of that bank $
, representing
the net amount paid by us on account of our subscription to
shares of your capital stock.
Yours, very truly,
President or Cashier.

This still left open the question of adjustment
of accounts between Federal reserve banks to
cover the dividends and expenses incurred by
the several banks since the date of their organization. That subject was taken under further
advisement, the forms already quoted being
previously sent out in order to avoid delay so
far as possible, and on June 18 the following
message was telegraphed to the Federal reserve
banks affected, authorizing them to proceed as
rapidly as possible with the process of arranging the transfer:
At conference this morning it was agreed to
leave the question open of adjustment of accounts between the two Federal reserve banks
and the issuance of accrued dividend certificates, and to authorize modification of joint
letter to member banks by embodying a provision to the effect that the Board will later consider and determine which of the Federal reserve banks should assume liability for accrued
dividends and will then authorize such Federal
reserve bank to issue the accrued-dividend certificates.
Further announcement will be made with
reference to the final adjustment of details
with regard to transfers of capital stock and
reserves and the settlement of earnings and expense accounts between the banks affected.




DISTRICT NO. 1.

Trustee and registrar of stocks and bonds:
Ashuelot National Bank, Keene, N. H.
DISTRICT NO. 2.

Registrar of stocks and bonds:
National Park Bank, New York City.
DISTRICT NO. 3.

Registrar of stocks and bonds:
Merchants National Bank, Cape May, N. J.
Fourth Street National Bank, Philadelphia, Pa.
DISTRICT NO. 5.

Trustee, executor, administrator, and registrar of
stocks and bonds:
Citizens National Bank, Alexandria, Va.
Clifton Forge National Bank, Clifton Forge, Va.
Covington National Bank, Covington, Va.
DISTRICT NO. 6.

Trustee, executor, administrator, and registrar of
stocks and bonds:
Bessemer National Bank, Bessemer, Ala.
Fourth and First National Bank, Nashville, Tenn.
DISTRICT NO. 7.

Trustee, executor, administrator, and registrar of
stocks and bonds:
First National Bank, Story City, Iowa.
City National Bank, Council Bluffs. Iowa.
Farmers National Bank, Webster City, Iowa.
Peoples State National Bank, Anderson, Ind.
First National Bank, Dyer, Ind.
First National Bank, La Porte, Ind.
Rockville National Bank, Rockville, Ind.
Rushville National Bank, Rushville, Ind.
Trustee, executor, and administrator:
Union County National Bank, Liberty, Ind.
DISTRICT NO. 10.

Trustee, executor, administrator, and registrar of
stocks and bonds:
First National Bank of Eagle County, Eagle,
Colo.
Central National Bank, Carthage, Mo.
Trustee and registrar of stocks and bonds:
First National Bank, Horton, Kans.
First National Bank, Hutchinson, Kans.
First National Bank, Tulsa, Okla.
First National Bank, Cheyenne, Wyo.
Trustee, executor, and administrator:
First National Bank, Trinidad, Colo.
Trustee:
First National Bank, Woodward, Okla.

JULY 1,1915.

FEDERAL RESERVE BULLETIN.

145

CIRCULARS AND REGULATIONS.
Membership in the Federal reserve system carries
The circulars and regulations given below
were issued by the Board since the June issue with it privileges and guaranties of great value, not
only to the banks themselves, but to their customers
of the Bulletin:
as well. It may be confidently expected that with the
further development of the system and the fuller appreciation by the public of its meaning and value,
membership will come to be regarded as evidence of
WASHINGTON, June 7, 1915.
banking solidity, and that the access afforded by membership to the facilities and resources of the system
MEMBERSHIP OF STATE BANKS.
will add to the prestige of even the strongest instiA unified banking system, embracing in its mem- tutions; so that in time the public will recognize in
bership the well-managed banks of the country, small the new banking organization which is in process of
and large, State and National, is the aim of the Fed- realization two principal classes of banks—those
eral reserve act. There can be but one American which belong to the Federal reserve system and those
credit system of nation-wide extent, and it will fall which do not, or " Member Banks " and " Nonmember
short of satisfying the business judgment and expecta- Banks."
tion of the country and fail of attaining its full poThe Board realizes, however, that membership also
tentialities if it rests upon an incomplete founda- carries with it of necessity obligations as well as privition and leaves out of its membership any considera- leges. The Federal reserve act imposes certain fundable part of the banking strength of the country. The mental conditions governing the membership of State
way must therefore be opened for State banking in- banks in the Federal reserve system, and prescribes
stitutions to contribute their share to the capital and that banks not organized under Federal law must
resources of the Federal reserve banks, in harmony comply with the capital and reserve requirements rewith the intent of the Federal reserve act and in ac- lating to national banks, and must conform to the
cordance with its provisions. State banks, trust provisions of law imposed upon national banks recompanies, and national banks have their distinctive specting the limitation of liability which may be incharacters and places in the American banking or- curred by any person, firm, or corporation to such
ganization, and these should be respected in co- banks, the prohibition against purchases of or loans
ordinating them in the Federal reserve system. The upon stocks of such banks, the withdrawal or improblem presented is to find a basis upon which these pairment of capital, and the payment of unearned
different types of banking institutions may thus be dividends, and must conform to other provisions of the
associated which shall be fair to each and which Federal reserve act applicable to member banks, such
will not require greater uniformity of operation than as restrictions on the amount of acceptances by such
may be necessary to the attainment of the purposes banks and on transactions between such banks and
of the Federal reserve act.
their directors, and to such rules as the Federal ReAppreciating fully that the strength of the Federal serve Board may prescribe.
reserve system is to be measured by the quality and
With respect to loans on real estate or mortgages,
character of its members, rather than by their num- the Board is not disposed to assume as a matter of
ber, the Federal Reserve Board is prepared to use principle either the authority or the duty to impose
the broad discretionary power vested in it by the Fed- restrictions of a character calculated to embarrass
eral reserve act to bring about this coordination on properly conducted State banks in applying for memthe basis of equity and practicability. The Board bership, or to impair their usefulness in a well-defined
has sought, in the regulations governing the admis- field of banking. It has endeavored in the regulations
sion of State banks and trust companies hereto ap- merely to provide a reasonable limitation, so that
pended, first, to establish only such reasonable stand- loans or investments of this character shall not be so
ards of admission as will be generally recognized excessive in amount as to impair the liquid condition
as necessary to protect the Federal reserve system and of a bank.
the national banks, whose membership in the system
Within the limits thus described, it will be the policy
is obligatory, against the admission of any bank of the Board to determine the eligibility of State banks
which would be a source of weakness rather than of for membership in the Federal reserve system by
strength, and, second, to prescribe such regulations means of examination. Since admission to the sysgoverning their conduct as will insure a reasonable tem will be looked upon as an evidence of the bank's
conformity to fundamental principles deemed essen- strength, examinations for admission must disclose
tial to the success of the new banking system.
clearly the condition of an applying bank and the
CIRCULAR NO. 14, SERIES OF 1915.




146

FEDERAL RESERVE BULLETIN.

character of its management. These examinations
must, therefore, be thorough and effective, and be
under the direction of the Federal Reserve Board, but
the Board will endeavor to avoid unnecessary additional expense to the banks by dispensing with separate and independent examinations so far as practicable and by adopting a method of joint or supplementary examination in conjunction with State banking authorities. The Board plans to draw freely upon
the examiners and auditors in the employ of the respective reserve banks and to use their services for
the purpose of thus supplementing examinations conducted by the banking departments of the several
States. It is hoped, therefore, that in passing upon
applications for membership, the Board and the several Federal reserve banks will have the cooperation
of State banking authorities, so that every qualified
applying bank may be admitted to membership and
all not qualified excluded.
With respect to the matter of status, there are important differences between the membership of national banks and of State banking institutions in the
Federal reserve banks. Membership of national banks
is not elective, but is prescribed by the law. So long
as a bank is a national bank it must be a member
bank. When it ceases to be a member bank, it ceases
by the same fact to be a national bank, the law having provided no method by which a national bank can
sever its relations with a Federal reserve bank except by the process of liquidation. All this is set
forth in definite terms in the Federal reserve act.
The situation of the State banks is fundamentally
different. National banks are member banks as a
matter of necessity; State banks become member
banks as a matter of choice. Membership in a Federal reserve bank is an incident in the life of a State
institution, not an essential part of its being; and its
continued existence as a State institution would not
be threatened or interrupted if its membership should
cease, its status being fixed by the laws of its State,
not, as in the case of the national banks, by the
Federal reserve act. The conditions of membership
of State institutions are, furthermore, prescribed only
in general terms in the act, the further and final
elaboration of them being left to the Federal Reserve
Board, which is vested with the necessary discretionary authority.
In view of this discretionary
authority, the Board believes it a duty to define clearly
terms and conditions upon which State banks and
trust companies may withdraw from membership,
since otherwise those charged with the management
of these institutions might not feel authorized to
enter a system under which by future regulation the
scope of their operations might be restricted. It is
not to be expected that much use will be made of
the withdrawal privilege; indeed, it is the belief of
the Board that as the system develops membership




JULY 1, 1915.

therein will carry with it guaranties of safety and
security which will be of inestimable value; at the
same time it recognizes the responsibilities of those
intrusted with the management of the State institutions and has, therefore, in the appended regulation clearly defined the conditions upon which any
State institution may withdraw from membership.

REGULATION M, SERIES OF 1915.
WASHINGTON, June 7, 1915.
MEMBERSHIP OF STATE BANKS.

I. Statutory requirements.
Specific provisions of the Federal reserve act applicable to State banks and trust companies which
become member banks are quoted at the end of this
regulation.
II. Banks eligible for member'ship.
A State bank or a trust company to be eligible for
membership in a Federal reserve bank must comply
with the following conditions:
(1) It must have been incorporated under a special
or general law of the State or district in which it is
located.
(2) It must have a minimum paid-up unimpaired
capital stock as follows:
In cities or towns not exceeding 3,000 inhabitants,
$25,000.
In cities or towns exceeding 3,000 but not exceeding
6,000 inhabitants, $50,000.
In cities or towns exceeding 6,000 but not exceeding
50,000 inhabitants, $100,000..
In cities exceeding 50,000 inhabitants, $200,000.
III. Application for membership.
Any eligible State bank or trust company may
make application on Form 83, made a part of this
regulation, to the Federal reserve agent of its district
for an amount of capital stock in the Federal reserve
bank of such district equal to 6 per cent of the paidup capital stock and surplus of such State bank or
trust company.1
Upon receipt of such application the Federal reserve agent shall submit the same to a committee
composed of the Federal reserve agent, the governor
of the Federal reserve bank, and at least one other
member of the board of directors of such bank, to
be appointed by such board, but no Class A director
1
Three per cent has already been called from national and
other member banks, but the remainder of the subscription
or any part of it shall be subject to call if deemed necessary
by the Federal Reserve Board.

147

FEDERAL RESERVE BULLETIN.

JULY 1, 1915.

whose bank is in the same city or town as the applying bank or trust company shall be a member of such
committee. This committee shall, after receiving the
report of such examination as may be required by the
Federal reserve bank in pursuance of directions from
the Federal Reserve Board, consider the application
and transmit it to the Federal Reserve Board with its
report and recommendations.
IV. Approval of application.
In passing upon an application the Federal Reserve
Board will consider especially—
(1) The financial condition of the applying bank
or trust company and the general character of its
management.
(2) Whether the nature of the powers exercised
by the said bank or trust company and its charter
provisions are consistent with the proper conduct of
the business of banking and with membership in the
Federal reserve bank.
(3) Whether the laws of the State or district in
which the applying bank or trust company is located
contain provisions likely tc interfere with the proper
regulation and supervision of member banks.
If, in the judgment of the Federal Reserve Board,
an applying bank or trust company conforms to all
the requirements of the Federal reserve act and these
regulations, and is otherwise qualified for membership, the Board will issue a certificate of approval.
Whenever the Board may deem it necessary, it will
impose such conditions as will insure compliance with
the act and these regulations. When the certificate of
approval and any conditions contained therein have
been accepted by the applying bank or trust company,
stock in the Federal reserve bank of the district in
which the applying bank or trust company is located
shall be issued and paid for under the regulations of
the Federal reserve act provided for national banks
which become stockholders in the Federal reserve
banks.
V. Powers and restrictions.
Every State bank or trust company while a member
of the Federal reserve system—
(1) Shall retain its full charter and statutory rights
as a State bank or trust company, and may continue
to exercise the same functions as before admission,
except as provided in the Federal reserve act and the
regulations of the Federal Reserve Board, including
any conditions embodied in the certificate of approval;
(2) Shall invest only in loans on real estate or
mortgages of a character and to an extent which, considering the nature of its liabilities, will not impair
its liquid condition;
(3) Shall adjust, to conform with the requirements
of the Federal reserve act and these regulations,
within such reasonable time as may be determined by




the Board in each case, any loans it may have at the
time of its admission to membership which are secured by its own stock, or any loans to one person,
firm, or corporation aggregating more than 10 per
cent of its capital and surplus or more than 30 per
cent of its capital, or any real estate loans which,
in the judgment of the Federal Reserve Board, impair
its liquid condition;
(4) Shall maintain such improvements and changes
in its banking practice as may have been specifically
required of it by the Federal Reserve Board as a condition of its admission, and shall not lower the standard of banking then required of it; and
(5) Shall enjoy all the privileges and observe all
those requirements of the Federal reserve act and of
the regulations of the Federal Reserve Board applicable to State banks and trust companies which
have become member banks.
VI.

Withdrawals.

Any State bank or trust company desiring to with
draw from membership in a Federal reserve bank
may do so 12 months after written notice of its intention to withdraw shall have been filed with the Federal
Reserve Board. The Board will immediately notify
the Federal reserve bank of the receipt of such notice.
At the expiration of said 12 months such bank or
trust company shall surrender all of its holdings of
capital stock in the Federal reserve bank, which stock
shall then be canceled and the withdrawing bank or
trust company shall thereupon be released from its
stock subscription not previously called. Such bank
or trust company shall, immediately upon the cancellation of its stock, cease to be a member of the Federal reserve bank, and the Federal reserve bank shall
then refund to such bank or trust company a sum
equal to the cash-paid subscription on the shares surrendered, with interest at the rate of one-half of 1
per cent per month computed from the last dividend, if earned, not to exceed the book value thereof,
and the reserve deposits, less any liability of such
member to the Federal reserve bank: Provided, That
no Federal reserve bank shall, except by the specific
authority of the Federal Reserve Board, cancel within
the same calendar year more than 10 per cent of its
capital stock for the purpose of effecting voluntary
withdrawals during that year. All applications, including therein any on which action may have been
deferred because in excess of the aforesaid 10 per cent
limitation, will be dealt with in the order in which
they were originally filed with the Board.
Any State bank or trust company desiring to withdraw from membership at the expiration of the 12
months' notice, notwithstanding the fact that the
Federal reserve bank has previously canceled 10 per
cent of its stock during the same calendar year, may
do so. In such case, however, the Federal reserve

148

FEDERAL RESERVE BULLETIN.

bank shall not be required to repay to the withdrawing bank or trust company the sums due as above,
until such time as its stock would have been canceled
had it not exercised this option. The Federal reserve
bank shall, however, give a receipt for the stock surrendered.
VII. Examinations.
Every State bank or trust company, while a member
of the Federal reserve system, shall be subject to such
examinations as may be prescribed by the Federal
Reserve Board in pursuance of the provisions of the
Federal reserve act.
In order to avoid duplication, the Board will exercise the broad discretion vested in it by the act in
accepting examinations of State banks and trust companies made by State authorities wherever these are
satisfactory to the Board and are found to be of the
same standard of thoroughness as national bank examinations, and where in addition satisfactory arrangements for cooperation in the matter of examination between the designated examiners of the Board
and those of the States already exist or can be effected
with State authorities. Examiners from the staff of
the Board or of the Federal reserve banks will, whenever desirable, be designated by the Board to act
with the examination staff of the State in order that
uniformity in the standard of examination may be
assured.
VIII. Future regulations.
The Federal Reserve Board reserves the right to
make such amendments and adopt and issue, from
lime to time, such further regulations authorized by
(he act as it may deem necessary, but no amendment
<f Section VI of these regulations, relating to volun»
tary withdrawals, shall take effect until six months
after is adoption and issue by the Board.
CIRCULAR NO. 15, SERIES OF 1915.
(Superseding Circular No. 9 of 1915.)
WASHINGTON, June 17, 1915.
CHANGES IN CAPITAL STOCK OF FEDERAL RESERVE BANKS.

JULY 1, 1915.

of that regulation. There is no change in Circular No.
9, which consists simply of appropriate extracts from
the Federal reserve act and reads as follows:
Section 5 of the Federal reserve act provides that—
The capital stock of each Federal reserve bank shall
be divided into shares of $100 each. The outstanding
capital stock shall be increased from time to time as
member banks increase their capital stock and surplus
or as additional banks become members, and may be
decreased as member banks reduce their capital stock
or surplus or cease to be members. * * * When
the capital stock of any Federal reserve bank shall
have been increased either on account of the increase
of capital stock of member banks or on account of the
increase in the number of member banks the board
of directors shall cause to be executed a certificate
to the Comptroller of the Currency showing the increase in capital stock, the amount paid in, and by
whom paid. When a member bank reduces its capital
stock it shall surrender a proportionate amount of its
holdings in the capital of said Federal reserve bank,
and when a member bank voluntarily liquidates it shall
surrender all of its holdings of the capital stock of said
Federal reserve bank and be released from its stock
subscription not previously called. In either case the
shares surrendered shall be canceled and the member
bank shall receive in payment therefor, under regulations to be prescribed by the Federal Reserve Board,
a sum equal to its cash-paid subscriptions on the
shares surrendered and one-half of 1 per centum a
month for the period of the last dividend, not to exceed the book value thereof, less any liability O such
f
member bank to the Federal reserve bank.
Section 6 provides:
If any member bank shall be declared insolvent
and a receiver appointed therefor, the stock held by
it in said Federal reserve bank shall be canceled, without impairment of its liability, and all cash-paid subscriptions on said stock, with one-half of 1 per
centum per month from the period of last dividend,
not to exceed the book value thereof, shall be first
applied to all debts of the insolvent member bank
to the Federal reserve bank, and the balance, if any,
shall be paid to the receiver of the insolvent bank.
Whenever the capital stock of a Federal reserve bank
is reduced, either on account of a reduction in capital
stock of any member bank or of the liquidation or insolvency of such bank, the board of directors shall
cause to be executed a certificate to the Comptroller
of the Currency showing such reduction of capital
stock and the amount repaid to such bank.
Pursuant to these provisions of the statue the accompanying regulations have been adopted by the
Federal Reserve Board.

On January 28, 1915, the Federal Reserve Board issued Circular No. 9, series of 1915, relating to increases
and decreases in the capital stock of Federal reserve
REGULATION N, SERIES OF 1915.
banks. The circular in question was accompanied by
(Superseding Regulation G of 1915.)
Regulation G on the same subject. The attached reguWASHINGTON, June 17, 1915.
lation (Regulation N) is now presented as superseding
Regulation G, having been made necessary by the INCREASE OF CAPITAL STOCK OF FEDERAL RESERVE BANKS.
adoption of new application blanks (Forms 86 and 87)
to be filed by liquidating or insolvent member banks.
Whenever the capital stock of any Federal reserve
The only changes that have been made in Regulation bank shall be increased by new banks becoming memG are contained in paragraphs 2 and 3, which appear bers, or by the increase of capital or surplus of any
in the attached Regulation N as paragraphs 2 and 3 member bank and the allotment of additional capital




JULY 1,

1915.

FEDERAL RESERVE BULLETIN.

149

stock to such bank, the board of directors of such ing to the indebtedness of the insolvent member bank
Federal reserve bank shall certify such increase to to such Federal reserve bank all cash-paid subscripthe Comptroller of the Currency on Form 58, which is tions made by it on the stock canceled with one-half
made a part of this regulation.
of 1 per centum per month from the period of last
DECREASE OF CAPITAL STOCK OF FEDERAL RESERVE BANKS. dividend, if earned, not to exceed the book value
thereof, and the balance, if any, shall be paid to the
I. Whenever a member bank reduces its capital duly authorized receiver of such insolvent member
stock or surplus, and, in the case of reduction of its bank.
capital, such reduction has been approved by file
III, Whenever a member bank goes into voluntary
Federal Reserve Board in accordance with the pro- liquidation and a liquidating agent is appointed, such
visions of section 2 of the Federal reserve act, it shall agent shall file with the Federal reserve bank of which
file with the Federal reserve bank of which it is a it is a member an application on Form 86, which is
member an application on Form 60, which is made a made a part of this regulation, for the surrender and
part of this regulation. When this application has cancellation of the stock held by and for the refund
been approved, the Federal reserve bank shall take of all balances due to such liquidating member bank.
up and cancel the receipt issued to such bank for Upon approval of this application by the Federal Recash payments made on its subscription and shall serve Board the Federal reserve bank shall accept
issue in lieu thereof a new receipt after refunding and cancel the stock surrendered, and shall adjust
to the member bank the proportionate amount due accounts between the liquidating member bank and
such bank on account of the subscription canceled. the Federal reserve bank by applying to the indebtedThe receipt so issued shall show the date of original ness of the liquidating member bank to such Federal
issue, so that dividends may be calculated thereon.
reserve bank all cash-paid subscriptions made by it
II. Whenever a member bank shall be declared in- on the stock canceled with one-half of 1 per centum
solvent and a receiver appointed by the proper au- per month from the period of last dividend, if earned,
thorities, such receiver shall file with the Federal re- not to exceed the book value thereof, and the balance,
serve bank of which the insolvent bank is a member if any, shall be paid to the duly authorized liquidating
an application on Form 87, which is made a part of agent of such liquidating member bank.
this regulation, for the surrender and cancellation of
IV. Whenever the stock of a Federal reserve bank
the stock held by and for the refund of all balances shall be reduced in the manner provided in Paragraphs
due to such insolvent member bank. Upon approval I, II, or III of this regulation the board of directors
of this application by the Federal Reserve Board the of such Federal reserve bank shall, in accordance
Federal reserve bank shall accept and cancel the stock with the provisions of section 6, file with the Compsurrendered, and shall adjust accounts between the troller of the Currency a certificate of such reduction
member bank and the Federal reserve bank by apply- on Form 59. which is made a part of this regulation,




150

FEDERAL RESERVE BULLETIN.

JULY 1, 1915.

LAW DEPARTMENT.
Several States have, since the passage of the
Federal reserve act, passed laws specifically authorizing State banks to subscribe for stock in
a Federal reserve bank and to become members
of such bank. A number of States have also
passed laws expressly authorizing national
banks to exercise the powers of trustee, executor, administrator, and registrar of stocks
and bonds.
For the convenience of those banks which
may be interested, a list of the States which
have passed such laws is given below. There
are five other States from which no report
has been received, so this list is not necessarily
complete.
Colorado.—The State legislature, at its last
session, passed a law, effective July 12, 1915,
authorizing State and National banks to act
as trustee, executor, administrator, and registrar of stocks and bonds.
Idaho.—An act approved March 11, 1915,
authorizes any State bank to subscribe for
stock in a Federal reserve bank.
Indiana.—The following act of the Legislature of Indiana, giving national banks the right
to accept and execute " trusts of any and every
description," was approved on March 8, 1915:
Be it enacted by the General Assembly of
the State of Indiana, That every person, firm,
or corporation transacting a banking business
subject to the provisions of an act entitled,
"An act to regulate and supervise the business of banking by individuals, partnerships
or unincorporated persons," approved March
eighth, nineteen hundred and seven, and every
corporation transacting a banking business as
prescribed in "An act to authorize and regulate
the incorporation of banks of discount and
deposit in the State of Indiana," approved
February seventh, eighteen hundred and
seventy-three, and all acts amendatory or supplemental thereto, and every national bank
coming within the United States Federal reserve act shall be empowered by this act to
accept and execute trusts of any and every description which may be committed or transferred to them, under the same rules and regulations as now govern like powers in loan and




trust companies. In case of any person, firm
or corporation transacting a banking business
and accepting any trust under the provisions
of this act, the president or cashier of such
bank is authorized to receive and execute the
same in the name of the bank.
Iowa.—The last session of the Iowa Legislature passed laws authorizing State banks and
trust companies to become members of a Federal reserve bank and authorizing national
banks to exercise the same powers as are conferred upon trust companies and State and
savings banks.
Be it enacted by the General Assembly of the
State of Iowa:
SECTION 1. That any State bank, savings
bank or trust company organized under the
laws of this state is authorized and empowered,
upon a vote of the shareholders thereof owning not less than fifty-one (51) per cent of the
capital stock of such State bank, savings bank
or trust company, to become a member of the
Federal reserve bank in the Federal reserve
district in which such banks or trust companies
are located, and to incur liability therefor.
Be it enacted by the General Assembly of
the State of Iowa:
SECTION 1. That the law as it appears in
section eighteen hundred and eighty-nine-d,
supplement to the code, 1913, be and the same
is hereby amended by adding a paragraph at
the end of said section, as follows:
9. When so authorized by any law of the
United States now in force or hereafter enacted, national banks may exercise the same
powers and perform the same duties as are
by this section conferred upon trust companies,
State and savings banks.
Kentucky.—The Legislature of Kentucky at
its 1914 session passed the following act, authorizing State banks and trust companies to
subscribe for stock in a Federal reserve bank:
Any bank or trust company organized under
the laws of this Commonwealth may subscribe for and own stock of the Federal reserve
bank with the Federal reserve district where
such bank or trust company is located and may
take any steps necessary to become a member
of such Federal reserve bank.
Maine.—A law, permitting trust companies
to subscribe for stock in a Federal reserve bank,

JULY 1, 1915.

FEDERAL R*SERVE BULLETIN.

was passed at the last session of the legislature.
It is to be noted in this connection that trust
companies are the only form of State banks in
Maine, except savings banks.
CHAPTER 262.—An act to amend section eighty of chap-

ter forty-eight of the Revised Statutes, as amended
by chapter fifteen of the public laws of nineteen
hundred five, allowing trust companies to become
stockholders in Federal reserve banks.

Section eighty of chapter forty-eight of the
Revised Statutes of nineteen hundred three
as amended by chapter fifteen of the public laws
of nineteen hundred five is hereby amended
by adding after the word " restored " in the next
to the last line of said section the following:
« Provided, however, That any trust company
may become a stockholder in a Federal reserve
bank within the Federal reserve district where
said trust company is situated, and while such
trust company continues as a member bank
under the provisions of the United States
'Federal Reserve Act,' approved December
twenty-third, nineteen hundred thirteen, or
any acts in amendment thereof, shall be subject
to the provisions of said ' Federal Reserve Act'
and any amendments thereof relative to bank
reserves in substitution for the requirements of
this section. Every such trust company may
have and exercise any and all of the corporate
powers and privileges which may be exercised
by member banks under provisions of the
' Federal Reserve Act' or any acts in amendment thereof or in addition thereto," so that
said section as amended shall read as follows:
" SEC. 80. Every trust and banking company having authority to receive money on
deposit shall at all times have on hand in the
lawful money or national bank notes of the
United States, as a cash reserve, an amount
equal to at least fifteen per cent of the aggregate amount of its deposits which are subject
to withdrawal upon demand or within ten
days: Provided, That in lieu of such cash reserve, two-thirds of said fifteen per cent may
consist of balances payable on demand, due
from any national bank or trust company
created under the laws of this State, or from
any trust company located in any of the other
New England States or New York and approved by the bank examiner in writing; and
one-third of said fifteen per cent may consist
of the bonds of the United States, the District
of Columbia, and any of the New England
States and the States of New York, Pennsylvania, Maryland, Ohio, Indiana, Kentucky,
Michigan, Wisconsin, Minnesota, Iowa, Illinois, Missouri, Kansas, and Nebraska, the abso-




151

lute property of such corporation. Whenever
said reserve shall be below said percentage of
such deposits, such corporation shall not further diminish the amount of its legal reserve
by making any new loans until the required
proportion between the aggregate amount of
such deposits and its cash reserve shall be restored: Provided, however, That any trust
company may become a stockholder in a Federal reserve bank within the Federal reserve
district where said trust company is situated,
and while such trust company continues as a
member bank under the provisions of the
United States ' Federal Reserve Act,' approved
December twenty-third, nineteen hundred
thirteen, or any acts in amendment thereof, shall
be subject to the provisions of said ' Federal Reserve Act,' and any amendments thereof relative to bank reserves in substitution for the requirements of this section. Every such trust
company may have and exercise any and all of
the corporate powers and privileges which may
be exercised by member banks under provisions
of the ; Federal Reserve Act' or any acts in
amendment thereof or in addition thereto. All
provisions of charters in conflict with this section are void."
Approved March 31, 1915.
Massachusetts.—On May 19, 1914, the Massachusetts Legislature passed the following act
authorizing trust companies to become member
banks under the provisions of the Federal reserve act:
CHAP. 537:
SECTION 1.

A trust company which becomes
a stockholder in a Federal reserve bank within
the Federal reserve district where such trust
company is situated and while such trust company continues as a member bank under the
provisions of the United States Federal Reserve
Act approved December twenty-third, nineteen
hundred and thirteen, or any acts in amendment thereof, shall be subject to the provisions
of said Federal Reserve Act and any amendments, thereof relative to bank reserves, in substitution for the requirements of sections eight,
nine and ten of chapter five hundred and
twenty of the acts of the year nineteen hundred and eight, as amended by chapter three
hundred and seventy-seven of the acts of the
year nineteen hundred and ten. Every such
trust company may have and exercise any and
all of the corporate powers and privileges
which may be exercised by member banks
under the provisions of said Federal Reserve
Act or any acts in amendment thereof or in
addition thereto.

152

FEDERAL RESERVE BULLETIN.

There are no State banks, as distinguished
from trust companies and savings banks, in
Massachusetts.
Michigan.—The State legislature has passed
a law giving to State banks the right to purchase stock in a Federal reserve bank or to do
any other act required to be done by a bank
to become a member bank under the Federal
reserve act.
The people of the State of Michigan enact:
#
%
*
*
*
SEC. 4. Upon making and filing the articles
of incorporation required by this act the bank
shall become a body corporate, and as such
shall have power:
*
*
*
*
*
Seventh. To exercise by its board of directors
or duly authorized officers or agents, subject to
law, all such power as shall be necessary to
carry on the business of banking by discounting and negotiating promissory notes, drafts,
bills of exchange and other evidences of debts,
by receiving deposits, by buying and selling
exchange, coin and bullion, and by loaning
money on personal and real security, as provided hereinafter, to purchase capital stock in
a Federal reserve bank, or do any other act
required to be done by a bank to become a
member bank under the Federal Reserve Act
passed by the Sixty-third Congress of the
United States, or any amendment thereto:
Provided, however, That the amount of reserve required to be kept on hand by any such
bank becoming a member bank under the
said Federal Reserve Act shall be as fixed
by said Federal Reserve Act or any amendment thereto, and not as fixed by the provisions of this act; but no such bank shall
take or receive more than the rate of interest
allowed by law in advance on its loans and discounts: Provided, That this restriction shall
not authorize any transaction for a less sum
than fifty cents; and no bank shall transact
any business except such as is incidental and
necessarily preliminary to its organization until it has been authorized by the commissioner
of the banking department to commence the
business of banking.
Minnesota.—A law has been passed, approved
March 6, 1915, authorizing State banks and
trust companies to become members of a Federal reserve bank:
Section 1. Any incorporated State Bank or
Trust Company may become a member of the




JULY 1, 1915.

Federal Reserve Bank of the Federal Reserve
District in which said bank or trust company
is located and may invest in and hold stocK
therein.
Section 2. This act shall take effect and be in
force from and after its passage.
Mississippi.—The Mississippi Banking Law,
1914, provides in section 64:
Banks forbidden to hold stock in otherbanks.—No part of the stock of any bank, except regional reserve banks, doing business in
this State, shall be owned by any bank under
the provisions of this act.
Missouri.—Article II, section 66, of the Banking Laws of Missouri, Revision 1915, provides
that State banks shall have the right—
To purchase and hold, for the purpose of becoming a member of a Federal reserve bank, so
much of the capital stock thereof as will
qualify it for membership in such reserve bank
pursuant to an act of Congress, approved December twenty-third, nineteen hundred and
thirteen, entitled the "Federal reserve act,"
and any amendments thereto; to become a member of such Federal reserve bank, and to have
and exercise all powers, not in conflict with the
laws of this State, which are conferred upon
any such member bank by the " Federal reserve
act " and any amendment thereto. Such member banks and its directors, officers and stockholders shall continue to be subject, however,
to all liabilities and duties imposed upon them
by any law of this State and to all the provisions of this chapter relating to banks.
Article I I I , section 127, provides that trust
companies shall have the right—
To purchase and hold, for the purpose of becoming a member of a Federal reserve bank, so
much of the capital stock thereof as will
qualify it for membership in such reserve bank,
pursuant to an act of Congress, approved December twenty-third, nineteen hundred and
thirteen, entitled the "Federal reserve act,"
and any amendments thereto; to become a member of such Federal reserve bank, and to have
and exercise all powers not in conflict with the
laws of this State, which are conferred upon
any such member by the Federal reserve act.
Such trust company and its directors, officers
and stockholders shall continue to be subject,
however, to all liabilities and duties imposed
upon them by any law of this State and to all
the provisions of this chapter relating to trust
companies.

JULY 1,1915.

FEDERAL RESERVE BULLETIN.

153

Montana.—Section 23 of chapter 89, Session
New Jersey.—Chapter 159, Laws of 1914, auLaws of 1915, of the State of Montana, au- thorizing State banks and trust companies to
thorizing any State bank to become a member become member banks, provides that—
bank, provides:
1. It shall be lawful for any trust company
or State bank heretofore or hereafter incorAny bank is hereby authorized and em- porated under the laws of this State, to become
powered to join or associate itself with the a member of the Federal Reserve Bank, organNational Reserve Association of the United ized or to be organized in the Federal Reserve
States, or any branch thereof, and nothing District in which such trust company or State
herein contained shall prevent or prohibit any bank is located, under the provisions of the
bank from joining or associating itself with pet of Congress known as the Federal Reserve
any such association or branch thereof or from Act, approved December twenty-third, one
investing any part of its capital or surplus in thousand nine hundred and thirteen; and such
the stock of such association or any branch trust company or State bank may subscribe for,
thereof, in accordance with the terms and pro- purchase, hold, and surrender, from time to
visions of the Act of Congress creating such time, such amounts of the capital stock of such
association. Any bank joining or associating Federal Reserve Bank as such trust company
itself with such association or branch shall be or State bank may deem advisable or as may
permitted to conform to and transact its busi- be required under said Federal Reserve Act,
ness in accordance with the terms and pro- or any amendment thereof, in order to obtain
visions of the Act of Congress creating the and continue such membership, and upon the
same, and the rules and regulations of such purchase of such stock, to assume the liabilities
association or branch thereof.
and become entitled to the benefits recited in
Nebraska.—At the last session of the Ne- said Federal Reserve Act.
2. This act shall take effect immediately.
braska Legislature a laAv was passed authorizApproved, April 14, 1914.
ing State banks and trust companies to become
New York.—Article I I I , section 106, subdimember banks:
vision 4, relating to the powers of State banks,
Any bank or trust company, incorporated provides that such banks shall have the
under the laws of this State, shall have power right—
to subscribe to the capital stock, and become a
To purchase and hold, for the purpose of
member of a Federal reserve bank created and
organized under an Act of Congress of the becoming a member of a federal reserve bank,
United States, approved December twenty- so much of the capital stock thereof as will
third, nineteen hundred and thirteen, and qualify it for membership in such reserve bank
known as the Federal Reserve Act, and shall pursuant to an act of congress, approved Dehave power to assume such liabilities and to cember twenty-three, nineteen hundred and
exercise such powers as a member of such Fed- thirteen, entitled the "federal reserve act";
eral reserve bank as are prescribed by the pro- to become a member of such federal reserve
visions of said act, or amendments thereto; bank, and to have and exercise all powers,
and, so long as such bank shall remain a mem- not in conflict with the laws of this state
ber of the Federal reserve system created by which are conferred upon any such member
said Act of Congress, it shall be subject to ex- bank by the federal reserve act. Such memamination by the legally constituted authori- ber bank and its directors, officers, and stockties and to all provisions of said Federal re- holders shall continue to be subject, however,
serve act and regulations made pursuant there- to all liabilities and duties imposed upon them
to by the Federal Reserve Board which are ap- by any laws of this state and to all the proplicable to such banks as members of the Fed- visions of this chapter relating to banks.
eral reserve system; and the State authorities
Article V, section 185, subdivision 12, relatmay, in their discretion, accept examinations
ing to the powers of trust companies provides
and audits made under the provisions of the
Federal reserve act in lieu of examinations re- that every trust company shall have the right—
quired of banks organized under the laws of
To purchase and hold, for the purpose of
this State.
becoming a member of a federal reserve bank.




154

FEDERAL RESERVE BULLETIN.

so much of the capital stock thereof as will
qualify it for membership in such reserve bank,
pursuant to an act of congress approved December twenty-three, nineteen hundred and
thirteen, entitled the " Federal Reserve Act";
to become a member of such federal reserve
bank, and to have and exercise all powers,
not in conflict with the laws of this state,
which are conferred upon any such member
by the federal reserve act. Such trust company and its directors, officers and stockholders shall continue to be subject, however, to
all liabilities and duties imposed upon them
by any law of this state and to all th§ provisions of this chapter relating to trust companies.
North Dakota.—The last session of the North
Dakota Legislative Assembly amended section
5187 of the Compiled Laws of 1913 to read as
follows, permitting State banks to become
member banks:
No bank shall as principal employ its money
or other of its assets, directly or indirectly in
trade or commerce, nor employ or invest any of
its assets or funds in the stock of any corporation, bank, partnership, firm or association,
nor shall it invest any of its assets in speculative margins of stocks, bonds, grain, provisions, produce or other commodities, except
that it shall be lawful for banks to make advances for grain or other products in store or
in transit to market, Provided, nevertheless,
that this Act shall not be construed as in any
way preventing a bank from investing such
part of its funds in stock of the Federal Reserve
Bank of this district as may be necessary to
become a member of the Federal Reserve Association and from carrying such stock among
its assets.
Ohio.—Section 9764, subsections 1, 2, and 3,
has been amended to read as follows, permitting State banks to become member banks and
authorizing national banks to act as trustee
and registrar:
SECTION 1. Wherever the term "statebank"
is used in this act the said term shall be held
to include every corporation or association having the power to receive and receiving money
on deposit, chartered or incorporated under
any general or specific law of Ohio, but shall
not include building and loan associations; and
wherever the term "Federal Reserve Act" is
used in this act the same shall be held to mean




JULT 1, 1915.

the act of the 63rd Congress of the United
States entitled "An Act to provide for the
establishment of Federal reserve banks, to
furnish an elastic currency, to afford means of
rediscounting commercial paper, to establish
a more effective supervision of banking in the
United States, and for other purposes," approved by the President of the United States
on December 23rd, 1913.
SEC. 2. Every state bank, in addition to the
powers, rights and privileges possessed by it
under the laws of Ohio shall have the right
and power to become a member bank under
the Federal Reserve Act upon the terms and conditions set forth in said Federal Reserve Act, or
hereafter provided by law, in order to become
a member bank as contemplated by said Federal Reserve Act. Every state bank which becomes a member bank shall have the right and
power to do everything required of or granted
by said Federal Reserve Act to member banks
which are organized under state laws; and
compliance by state banks with the reserve
requirements of said Federal Reserve Act shall
be accepted in lieu of the reserve requirements
provided by the laws of Ohio. Nothing contained in this section of this act shall in any
way or manner affect or have reference to
state banks which do not become member
banks under said Federal Reserve Act except as
provided in this act.
SEC. 3. No state bank or national bank
shall act as administrator, executor, trustee or
registrar of stocks and bonds in this state:
Provided, however, that trust companies organized under the laws of Ohio shall have the
same powers in the acceptance and execution
of trusts which are now conferred upon them
by law, and other state banks and national
banks may have the same powers in the acceptance and execution of trusts which are now
conferred by law upon trust companies, upon
such state banks and national banks complying with all the requirements, regulations and
conditions imposed by the laws of Ohio upon
trust companies in the matter of the acceptance
and execution of trusts.
Oregon.—Section 4576 of Lord's Oregon Laws
has been amended by the 1915 Legislative Assembly to read as follows:
Sec. 4576 * * * (d) Hereafter no State
bank shall invest any of its assets in the capital
stock of any other corporation except in the
capital stock of a Federal Reserve Bank, and
except such as it may acquire or purchase to

JULY 1,

1915.

FEDERAL RESERVE BULLETIN.

save a loss on preexisting debt, and stocks so
acquired or purchased shall be sold within
twelve months from the date acquired or purchased: Provided, that a further time may be
granted by the Superintendent of Banks.
South Carolina.—On February 18, 1914, an
act was passed authorizing State banks and
trust companies to become member banks. It
provides:
1. That any bank, banking association or trust
company chartered and engaged in the banking business under the laws of this State may
associate itself with any national reserve association of the United States, or any branch
thereof under any law now existing, or hereafter enacted by the Congress of the United
States; and may invest such part of its capital
or surplus therein as may be necessary to acquire and preserve its membership in such association.
2. That all Acts or parts of Acts inconsistent
herewith be, and the same are, repealed.
South Dakota.—An act approved March 6,
1915, authorizing national banks to act as
trustee, executor, administrator, or registrar of
stocks and bonds provides that—
SEC. 1. It shall be lawful for national
banks when authorized by the laws of the
United States to act as trustee, executor, or
administrator of estates or trusts or as registrar of stocks and bonds: Provided further,
that State banks may act in similar capacity
under such rules and restrictions as the Department of Banking and Finance may prescribe.
SEC. 2. All acts or parts of acts in conflict
with the provisions of this act are hereby repealed.
Article II, section 36, of the Bank Guaranty
Law, enacted in 1915, provides in part that—
Any bank organized under the laws of this
state may become a member of a Federal Reserve Bank, pursuant to the provisions of the
Federal Reserve Act and any Act of Congress
supplemental thereto or amendatory thereof,
and after becoming such member and shareholder it may comply with, and shall be subject to said Federal Reserve Act and such
other Acts of Congress, anything in the laws
of this state to the contrary notwithstanding.




155

Texas.—Senate bill No. 5, passed by the
Third Called Session of the Thirty-third Legislature, provides in section 1 that—
All banks or bank and trust companies incorporated under the laws of Texas shall have
authority to become members of Federal Reserve Banks under the terms and limitations as
may be prescribed by the laws of the United
States and such rules and regulations relative
thereto as may be promulgated by lawful authority.
The act further specifies the reserve requirements by which State banks which become
members of a Federal reserve bank shall be
governed. They are similar to those of section
19 of the Federal reserve act.
It also provides in the act that—
State banks becoming members of a Federal
Reserve Bank shall have authority to conform
to the Federal Reserve Law now, or as hereafter
enacted, and all rules and regulations promulgated relative thereto by lawful authority; and
shall likewise be subject to all limitations of
law and to such rules and regulations now or
hereafter enacted or promulgated.
There are other sections of the act relating
in more detail to State banks becoming members of a Federal reserve bank.
Utah.—Chapter 47, section 1, Session Laws
of 1913, provides that—
SECTION 1. Holding stock in other corporations lawful—Proviso.—That any bank or
loan, trust, and guaranty company or association, organized under the laws of the State of
Utah, may purchase, own, hold, and sell or
otherwise dispose of any of the shares of the
capital stock of any other bank, loan, trust,
and guaranty association or other corporation;
provided such purchase shall be authorized by
the executive committee and approved by the
Board of Directors; and in case the purchase is
of stock in any other banking corporation the
approval of said purchase must also be had
from the State Bank Commissioner: And provided further, That nothing in this act shall
be so constructed (construed) as to permit the
establishment, maintenance or control of any
branch bank or loan, trust or guaranty company in the State.

156

FEDERAL RESERVE BULLETIN.

Vermont.—At the last session of the legislature a law was enacted providing that national
banks may act as trustee, executor, administrator, and registrar of stocks and bonds. A
copy of the law is not available at the present
time, so can not be quoted here.
Virginia.—In an act approved March 2,1914,
authorizing State banks to become member
banks, it was provided—
That the banks heretofore and hereafter
chartered by the State of Virginia, be and they
are hereby empowered to become member
banks of the federal reserve banks of the
United States, as authorized by an act of congress entitled "An act to provide for the establishment of federal reserve banks, to furnish
an elastic currency, to afford means of rediscounting commercial paper, to establish a more
effective supervision of banking in the United
States," and for other purposes, approved December twenty-third, nineteen hundred and
thirteen; or as may be authorized by any
amendment to said act of congress: Provided,
That nothing herein contained shall be construed as requiring said State banks to become
such member banks.
Inasmuch as it is of the greatest importance
that State banks may have the right to subscribe at the earliest possible moment to the
stock of federal reserve banks, an emergency
exists and this act shall take effect from and
after its passage.
In an act approved March 27, 1914, authorizing national banks to act as trustee, executor,
administrator, or registrar of stocks and bonds,
it was provided—
That all national banks which have been, or
hereafter may be, permitted by law to act as
trustee and in fiduciary capacities, shall have
all the rights, powers, privileges and immunities conferred upon trust companies by an act
of the General Assembly of Virginia, entitled
"An act to provide how trust companies may
be incorporated, and to provide for general
powers for the purpose of doing a trust business in this State in addition to a general banking business."
Washington.—Section 3324 of Eemington and
Ballinger's Annotated Codes and Statutes of
Washington was so amended by the 1915 session of the legislature as to read as follows:
The shares of stock of such incorporated
bank shall be deemed personal property and




JULY 1,1916.

shall be transferred on the books of the bank
in such a manner as the by-laws thereof shall
direct. No bank shall be the purchaser of its
own capital stock, or accept its capital stock,
or any part of it, as security for loans. No
bank shall subscribe for or purchase the stock
of any other banking corporation, except a
Federal Reserve Bank of which such bank
shall become a member, and then only to the
extent required by such Federal Reserve Bank.
Section 3346 of .Remington and Ballinger's
Annotated Codes and Statutes of Washington
was amended in order to authorize national
banks to act as trustee, executor, administrator, and registrar of stocks and bonds. It is
provided—
That national banks, having a paid-up
capital of $50,000 or more when authorized or
permitted so to do by or under any act of the
Congress of the United States, may exercise
any of the powers conferred upon trust companies organized under this act.—Chapter 38.
Laws 1915.
In the following States, though there has
been no specific legislation enabling State banks
to subscribe for stock in a Federal reserve
bank, the State authorities have ruled that
State banks may subscribe for such stock under the laws as they exist at the present time:
Alabama, Arkansas, Delaware, Georgia, Illinois, Indiana, Kansas, Maryland, North Carolina, Pennsylvania, Tennessee, Wisconsin, and
Vermont. The State authorities have ruled in
Montana and Rhode Island that trust companies, as distinct from State banks, are eligible to subscribe for stock in a Federal reserve
bank, but that State banks are ineligible.
No laws relating either to the right of State
banks to subscribe for stock in a Federal reserve bank or to the eligibility of national
banks to act as trustee, executor, administrator,
or registrar of stocks and bonds have been
passed in any of the following States: Alabama, Arkansas, Connecticut, Delaware, Florida, Georgia, Illinois, Kansas, Maryland, New
Hampshire, Oklahoma, Pennsylvania, Rhode
Island, or Tennessee, and, owing to the absence
of information, no report can be made at this
time regarding the question of express legislation in Arizona, California, Louisiana, New
Mexico, and Nevada.

.JULY 1,

1915.

FEDERAL RESERVE BULLETIN.

GENERAL BUSINESS CONDITIONS.
General ^business and banking conditions are
described in reports made by Federal reserve
agents for the 12 Federal reserve districts.
Below are given in detail digests of conditions in the various districts substantially as
reported by Federal reserve agents.
DISTRICT NO. 1—BOSTON.
Weather conditions, which have been unsettled, and the wave of economy, which is affecting all classes, have no doubt been important factors in affecting general business
during June. The latter factor has been
noticeably felt in the mill towns where, while
increased deposits in savings banks are reported, the business of the local department
stores is not satisfactory, and manufacturers
of cheap jewelry, dependent on department
store trade, report unusually poor business.
The increased surplus in reserves shown by
the New York and Boston clearing house
banks due to the lack of demand from local
commercial borrowers, the dullness of the
stock market, and the scarcity of the supply of
commercial paper in the hands of note brokers
has affected money rates. While demand
money to call brokers holds at 3 per cent
banks are finding it difficult to maintain a 4
per cent rate to their best commercial customers, and are more inclined to shade that
rate. Note brokers' commercial paper is 3^
to 4 | P e r cent; savings bank mortgages, 4J to
5 per cent; 90-day bank acceptances, 2-| to 2§
per cent-; town notes, from 2f to 3J per cent;
Boston bank rate to country banks, 3-| to 4 per
cent.
The shoe and leather business is still very
dull and while prices of leather as a rule are
well maintained, tanners are keeping their production just sufficient to meet the actual demands. The shoe manufacturers as a rule report no better business, but on the other hand
state that the situation is not getting Avorse
and that the underlying tone is fairly healthy.




157

The reports from the cotton mill districts
show business in that line, for the most part,
satisfactory, although the dry goods market
does not seem to be quite as firm as it has been
during the past few weeks. The situation in
reference to the dyestuffs is reported as being
rather acute, and in certain lines has caused
curtailment.
There seems to be a recession of business in
the wool, woolens, and worsted trade since the
1st of May. The high price of wool has been
a restriction. Uncertainty that the price of
raw material will be maintained and the unsatisfactory condition of the goods market are
influencing the manufacturers to go slow, many
feeling that the present demand for wool has
been largely fictitious and due to a considerable
extent to the congestion of shipments from
foreign ports.
DISTRICT NO. 2—NEW YORK.

Bankers in this district outside of New York
City report that crops in general have a good
start, notwithstanding the wet, cold, unseasonable weather which prevailed during the month
of May. Peaches, small fruits and vegetables
were seriously affected by frost in the northern
counties. Dairy business is very satisfactory,
with cheese selling at record prices. Frequent
rains have made good pasturage. Orders have
caused increased activity in many industries
and better employment for labor. Strikes are
reported in southern and northern sections of
the district. Bank deposits are generally increased ; collections are fair, with but light demand for loans.
In New York City trade was also somewhat
retarded by the unseasonable weather, but from
a number of large houses it is gathered that
mercantile lines in general continue to show an
improving trend and a reasonably satisfactory
outlook.
Exports from this port in May were $102,238,195, against $66,008,905 in May, 1914. Imports last month were $78,415,038, as compared
with $87,508,546 in May, 1914. Since January 1, exports are $139,133,000 higher than last

158

FEDEEAL RESERVE BULLETIN.

year, and imports $166,039,000 lower. Exports
show more demand for goods for civilians. A
large shrinkage appears in imports of precious
stones.
More new companies were incorporated during the month than in May last year, but the
figures of new incorporations for the last five
months are still far behind those of the corresponding periods of recent years. Building
permits issued last month show a decline in
number of over 50 per cent. Failures in the
district increased 66 in number over May, 1914,
but the liabilities decreased about 50 per cent.
Trading in bonds and stocks fell off considerably from the preceding month.
Transactions through the New York Clearing House in May totaled $7,238,531,558, which
is $1,396,623,951 less than a year ago. Offerings of bankers' acceptances and commercial
paper were lighter. Loans to other countries
amounting to $247,500,000 have been reported
as negotiated here during the past five months.
Nevertheless money continues to accumulate
at this center. The movement of gold inward
since the beginning of the year is reaching unparalleled proportions; $112,250,000 has thus
far been received from other countries, chiefly
from Canada on London account. This movement has not stopped the downward tendency
of rates for sterling and continental bills, which
are falling to unprecedented levels. The total
of the excess reserves of the clearing-house
members on June 19 was $200,400,000, a gain
of $30,220,000 since May 1. The result is an
easier money market, with rates generally oneeighth to one-fourth per cent lower than they
were a month ago. Prime commercial paper
finds markets ranging from 3J to 4 per cent,
acceptances, 2£ to 2f per cent.
DISTRICT NO. 3—PHILADELPHIA.
The largest surplus reserves held by the
banks in six months and easy rates for money,
with little demand for funds, are the characteristic financial features in this district. Domestic business is still below normal, but manufacturers and jobbers are prepared to take ad-




JULY 1,1915.

vantage of brighter prospects, and are looking
to the future more cheerfully than a few
months ago.
Orders are being received in greater volume
than last month for supplies for export, and
this business is not only helping to restore confidence but is spreading business to other allied
industries. Many large concerns are turning
their attention to this new business, which usually necessitates the installation of machinery
or additions to plants. This has had a favorable effect upon concerns engaged in the manufacture of machinery, tools, and building materials, with the result that the steel industries
show a decided gain over last month. Conditions of employment are improved, and the increase in pay roils, with the corresponding increase in purchasing power, have made the
home trade better.
Most domestic manufactories are operating
at about the same capacity as last month, excepting the steel industries. Shipyards are exceedingly busy, and will be for months to come.
Anthracite-coal mining is close to the minimum
usual during the summer months, but there is
an increased demand for bituminous coal. Although some of the large railroad shops are operating at only 75 per cent of capacity, the
number on the pay rolls is being greatly increased.
The demand for wool is increasing, and
prices are rising. Cotton yarn does not show
much change. The demand for hosiery, notions, and dry goods is improving, but the demand for silks has fallen off somewhat. Improvement is noted in hides and leather. The
chemical and dyestuff situation remains unchanged, with prices high and supply low.
Electrical supplies are in demand, and business is good in paints and wall paper.
Crop reports are very favorable, and there is
evidence that prices will be better this year
than last.
Money-market conditions are about the same
as last month. There is very little demand for
money, and the rates are easy, call money being
quoted from 3J to 4 per cent, time money 4 to

JULY 1,

1915.

FEDERAL RESERVE BULLETIN.

44 per cent, and commercial paper 3 | to 4J
per cent. The supply of commercial paper is
extremely limited, and new names are not appearing in the market to any extent. The
available amount of loanable funds keeps
steadily increasing. Bank clearings show a
slight increase over last month. Investment
purchasing of bonds is reported in greater
volume than for some time.
DISTRICT NO. 4-—CLEVELAND.
Business in some large industrial plants with
special lines is almost booming. General business is only fair. Coal and pig-iron activities
are still unsatisfactory but improving. The
automobile manufacturing and rubber industries are working to capacity. Orders for domestic consumption of sufficient size to cause
comment are reported by a number of companies. An instance of the latter is found in
the increased activity in plants of the American
Locomotive Co.
Collections are not as good as they were 30
days ago. Landlords report payments from
tenants slower for June than for any month
since January. Banks doing a savings business
notice the closing of an unusual number of
accounts by small depositors although aggregate totals of savings deposits are maintained.
Money has a firmer tendency, a. better demand being reported in two of the large centers of the district. In three other centers
funds are fairly plentiful, but the offering of
cheap money is not being pressed as was the
case 60 days ago. There are indications from
some sections of demands for crop-moving
funds.
While weather conditions have not been conducive to seasonable trade in mercantile lines
they have not been detrimental to crop prospects, except corn, which is backward due to
cold, wet weather. The outlook for an unusually prosperous season for farm products
still continues.
Deposits in commercial banks are running
strong and a hopeful feeling for improved conditions exists in all the industrial communities
in the district.




159

DISTRICT NO. 5—RICHMOND.

Little change has been observed in this dis«
trict either in general trade conditions or in
particular lines of business activity in the last
30 days. It can fairly be said that any progress
heretofore evidenced has been held, although
no material further development is shown, as
indeed might naturally be expected in a territory so largely agricultural and during a
period immediately preceding the earliest
movement of its farm products.
Eetail trade generally is quiet, reflecting
economies practiced by ultimate consumers.
These are manifest particularly in cotton and
tobacco territories.
Some of the cotton mills claim to be making
money, but it is probably the fact that most of
them are satisfied with nominal profits.
Lumber is in poor position, with little prospect of improvement in the immediate future.
Tobacco has been overplanted. Stands are excellent, but prospects point at the moment to
a yield which, in connection with the great
quantity of the staple now being carried by
warehousemen, suggests prices in the future
which will not be acceptable to the growers.
Diversification should help a generous number
of farmers who have undertaken it, even should
it happen that the price of grains be lower than
the high-water marks reached by them some
months ago.
While the banks at our centers probably are
holding very little more than reserve requirements demand, it is also true that they are not
being called upon for fresh credits in any
large way. The interior banks, having met the
spring demands of their customers, will require very little further aid until possibly the
actual movement of the larger staples will demand currency against temporary credits.
There is no demand from any large direction
for further liquidation, suggesting that creditors are satisfied both with immediate conditions and prospects. In other words, the general situation seems to be sound and in position
promptly to develop as conditions permit.

160

FEDERAL RESERVE BULLETIN.

JULY 1,1915.

Money for active commercial purposes remains easy, with usual rates prevailing; but
Conservatism appears to be the dominant
little or no funds for permanent investments
feature in nearly all lines of commerce and
are offered. Real estate agents in the cities
trade in the sixth district, with a steady and
report their business as extremely dull.
sound improvement in the economic situation.
While the merchants are beginning to replenish
their somewhat depleted stocks, they are closely DISTRICT NO. 7—CHICAGO.
limiting themselves to immediate needs and
Business in the seventh district has made
are not buying in large quantities.
steady although slow progress during the past
The situation in the cotton-manufacturing
month. Labor troubles in the building trades,
industry continues good, with mills operating
however, still continue.
at more than normal output. There is still a
Excessive rains in the early weeks of June
large amount of cotton held in warehouses and
proved a drawback in leading retail lines and
compresses, holders not desiring to sell on falling prices: and owing to the almost complete had an injurious effect on the fruit crop in
closing of the export trade due to war condi- Michigan and on some farm crops in the distions, very little cotton has been moved during trict. Notwithstanding this, late advices indicate unprecedented cereal prospects.
the past month.
This good outlook has imparted confidence
Building operations are below normal, with
in the future of manufacturers and distribulittle improvement in the building-materials
tors. More activity has developed in all iron
lines or in the lumber industry. This, together
and steel lines—both in actual dealings and in
with the lack of cotton shipments, has conorders for forward deliveries. The spreading
tributed largely to the decreased railroad earnof work and improving calls for supplies are
ings during the month of May and June. Rereflected in other lines and further gains have
ports indicate a surplus of idle cars. June 30
been made in reducing idle factory capacity
marks the end of the fiscal year, and the roads
and increasing the demand for labor. Dishave let no contracts for construction work or
tribution of general merchandise has been fair,
rolling stock. There is a slight tendency to imjobbers reporting a good demand for textiles
provement in - passenger traffic over the preand other staples. Primary movements of
vious month, and while the fruit and melon
grain have fallen off, due to weather intercrops are beginning to move, no great improveruptions and lessened export sales.
ment is looked for until cotton begins to come
Money was without special change—commerupon the market.
cial paper (brokers) rates averaging around
The farmers are somewhat behind in their
work owing to rains, but general reports indi- 3^ per cent.
Orders of goods for export have been recate the crops are in a healthy condition. The
sponsible for some of the increase in activity
production of cotton is likely to be far less
than last year owing to the large curtailment in this district, but this tendency has been offset by the hesitation due to the condition of
of commercial fertilizers.
our diplomatic relations. Such hesitation is
Business is reported fairly good in the iron
also partly responsible for reduced investment
and coal industry. The naval stores lines show
in securities and in permanent improvements.
a very slight improvement, with prices low.
The cattle industry is increasing greatly in DISTRICT NO. 8—ST. LOUIS.
the cotton section of this district; many silos
are being built and dipping vats are becomThe output of the manufacturers who have
ing numerous.
no products available for export to Europe
DISTRICT NO. 6—ATLANTA.




JULY 1,1915.

FEDERAL RESERVE BULLETIN.

seems to be still below normal, although the
somewhat more active condition < f the jobbing
*
trade would seem to be an indication that these
interests will improve in the course of the next
few months. Stocks of goods in the hands of
retail merchants appear to be low, and they are
buying a trifle more freely. Prices seem to
have advanced in some lines during the last
few months, and the undertone of general
merchandise continues strong, with a fairly
well-defined feeling of confidence.
The dry period, which caused some uneasiness in April and the early part of May, was
broken by general rains about May 20, and the
rainfall now approaches the normal for the
year. The season thus far has been favorable
for agricultural development. It has been especially favorable for truck-farm products and
the small-fruit crops. A few sections of this
district have reported some damage to wheat,
but this does not seem to have been serious.
The corn crop appears to have developed in a
normal and satisfactory manner. There seems
to have been a decrease in the tobacco acreage
in Kentucky and Tennessee, with a corresponding gain in the grain acreage. The outlook for
the cotton crop is reported to be favorable.
The live-stock market in this district continues
to show considerable activity, owing to the purchase of horses and mules for export.
There has been little change in bank rates in
the past month. Money continues plentiful,
with rates still somewhat lower than the normal. Bank reserves in this district continue to
be held largely in excess of the legal requirements, and banks are therefore still in the
market for investments for their surplus funds.
Commercial paper seems to be somewhat more
active, due to the fact that rates are a trifle
higher. The demand from country banks for
lines of credit, to be used in moving crops,
seems to be beginning to have its effect on the
market, and indications are that rates may be
higher in a comparatively short time.
There seems to have been little change in
business conditions in this district during the
last 30 days.




161

DISTRICT NO. 9—MINNEAPOLIS.

Dull and overcast weather, with an unusual
amount of rain following after a cold and
rainy May, has undoubtedly damaged the
northwestern corn crop. Many fields have
been replanted, and in some sections corn has
been replanted the second time. Over most of
Wisconsin, Minnesota, North and South Dakota the ground has been so wet as to interfere
with cultivating corn and the crop has made
very little progress. While it is generally admitted among experts that damage has occurred, it is yet too early to estimate it. July
and August are the corn months, and with a
change of weather and more sunshine, corn
may yet be a very fair crop.
Small grains have suffered no damage of
consequence with the exception of rye, which
will be a light crop. Wheat is in excellent
condition, and it has been impossible to substantiate reports of any serious damage in any
part of the district. With the exception of a
rather poor outlook for corn, crop conditions
promise very well.
Business has responded, to a considerable
extent, to the promises of a good year in the
agricultural districts. Retail trade is active
and collections are good. In the manufacturing centers a good many concerns are still
running on short time, but there is a feeling
that June is developing a slight change for the
better. The lumber trade, which has shown
no signs of recovery for several months, is
somewhat more active but is still very much
depressed.
A noticeable feature is an increasing demand
for bank accommodation over practically the
entire district, with the prospect that during
the next 30 days money will be in active demand in support of a larger volume of commercial business. The wholesale trade is in
good condition.
There is a stiff demand for horses throughout the western Dakotas and Montana, and
Montana promises to market the annual wool
clip during the next 30 days at prices that are
at least as good as the State has ever seen be-

162

FEDERAL RESERVE BULLETIN.

fore. Some contracts have already been made
at prices ranging from 26 to 28 cents, and the
prevailing opinion on the part of experts in
touch with the situation is that the bulk of the
clip will bring a price of 26 cents, or from 8
to 10 cents better than the price of former
years.
The optimism which was a feature of the
business situation last month has not decreased,
but, if anything, has grown and business men
generally are looking forward to good harvests
and a very active fall business. The greatest
need of the Northwest at this time is warm and
pleasant weather and a period of rapid growth
for the grain crops and especially corn.
DISTRICT NO. 10—KANSAS CITY.
Financial conditions prevailing throughout
District No. 10 are above normal for this season of the year. In many portions of the district bank deposits are increasing, while in all
parts of the district the supply of loanable
funds far exceeds the local demand.
Generally speaking, crop conditions are excellent, although excessive rains, accompanied
in some parts of the district by hail, have
greatly damaged what promised to be record
crops. The damage on this account will aggregate a huge total. Rivers and streams in Oklahoma, Kansas, and Nebraska have been out of
their banks, with the result that low lands
have been flooded.
The outlook for all kinds of fruits, berries,
and melons was never better, and these products are already reaching the markets and commanding good prices. The wheat harvest has
begun in the southern portion of the district,
and will continue northward into Nebraska and
the Dakotas during the next 30 to 40 days. The
harvest is being greatly retarded, however, by
reason of excessive moisture.
The lead and zinc industry is experiencing
the greatest activity known in its history, zinc
commanding the unprecedented price of as
high as $145 per ton. The coal mining industry is normal for this season.




JULY 1,1915.

The live-stock market and the packing industry are normal, while wholesalers and retailers report brisk trade with fair collections.
Farm implements and automobiles are vying
with each other for record of sales, the tendency being a trifle in favor of the latter. The
horse and mule market is active and strong, the
foreign demand having taxed this district to
the utmost.
There seems to be a surplus of harvest
laborers and some towns are reported as overrun with an influx of idle men. However, the
district is free of labor troubles, and there will
be employment for all, although the wet spring
has naturally retarded all seasonal activities.
Immense sums of money are being expended
throughout the district in civic improvements
and building, and labor in all trades is fully
employed. This is especially true of Kansas
City, where only recently a large bond issue
was voted, the proceeds of which, together with
large extensions by public utility corporations,
augurs well for the wage earner.
DISTRICT NO. 11—DALLAS.
During the past 30 days no untoward development of real significance has transpired
with the exception of excessive rainfall in two
or three of our wheat-growing counties. The
progress of crops in general has been entirely
favorable.
Southern and central Texas have completed
the gathering of their oats with undoubtedly
the largest yield ever known to the State. The
price, however, has fallen. The farmer grows
his crop, and having no place to care for it,
throws it on the market at any price it will
bring. In this connection the bankers of the
State are undertaking an aggressive campaign
to secure the erection of warehouses. While
this is primarily aimed in the interest of cotton, the lesson ought to hold in general. The
present crops of the district have been produced at a very low cost.
The harvesting of wheat is well under way
in certain sections. Estimates indicate from

JULY 1, 1915.

FEDERAL RESERVE BULLETIN.

eighteen to twenty million bushels. The loss
through recent floods is estimated as high as
20 per cent.
The condition of the corn crop is most favorable. All through southern and central Texas
it has reached maturity, and there is a larger
yield than ever known before. Through central and northern sections the condition is excellent One or two additional rains will mature the crop most bountifully.
The condition of cotton is not*entirely satisfactory. In some sections the outlook is bright,
but as a whole the crop is about two weeks late
and decidedly spotted. There has undoubtedly
been a very material reduction in the area devoted to it. The boll weevil, too, is reported to
be active in some sections.
A splendid forage crop has been matured
almost over the entire district. The far western end of the district is in excellent condition,
owing to satisfactory prices for cattle and the
fact that the mining interests have been very
much stimulated through the rise in the price
of copper.
Loans of the Dallas bank on June 22 were
$6,262,000, a figure which has varied very little
during the past month. This indicates that demand still remains light and that the prevailing rates are, for all needs and purposes, satisfactory.
Reports from correspondents show that the
•country banks are still fairly well provided
with funds. This is, however, an abnormal
year. Business generally is reported running
to better advantage, and while not in large
volume the merchants appear to be doing fairly
well. They are buying less in quantity and are
more careful of their commitments. There are
comparatively few failures, and on the whole
there prevails a better temper with the public
and with the business world in general.
DISTRICT NO. 12—SAN FRANCISCO.
The lumber industry is very depressed, and
lack of bottoms hampers exports, although report comes from Portland of several million
feet clear spruce taken at advancing prices for




163

European account. It is asserted business conditions in the Northwest can not be good until
lumber and shingles, upon which principal
pay rolls there depend, can be marketed at a
profit. As elsewhere, chief attention to a major
industry results in feast or famine. Famine
impels diversification. An element of this
has been the recent rapid development of hog
raising. Formerly the pork consumed was almost wholly shipped in. This and other meats
are now almost entirely local.
The live-stock industry is prosperous. Wool
is being contracted for at very high prices.
Large numbers of range horses have sold to
Europe at fancy prices. Barley is reported
in excellent condition. Apparently, for lack
of ships, that taken for Europe must go by
rail to Atlantic seaboard. Wheat acreage has
been importantly increased. Unusual May
rains made the hay crop probably the heaviest
in 10 years, and most favorable to live stock
and dairying. Large amounts of butter are
being shipped to Australia.
Petroleum is not in worse situation than for
several months past. Domestic consumption
of lubricants and fuel oil, a barometer of industrial activity, reported 15 to 20 per cent less
than last year. Because of the war nitrate
shipments from South America to Europe have
ceased. This stopped export of fuel oil from
California to South America, Domestic consumption of refined products and their export
to Orient well maintained, thus measurably offsetting unfavorable factors.
Gathering of crops is quite general throughout the district, and will continue throughout
the year. Taken together, a huge total of fresh
fruits, berries, melons, and vegetables is marketed. The Valencia orange crop of good volume is now going forward at satisfactory
prices. Growing oranges have set well, giving
good promise of coming crop.
From December to May deposits of national
and State banks in this district increased approximately $17,500,000, while loans and investments decreased approximately $11,000,000.
This emphasizes the fact that credit conditions
are easy.

164

FEDERAL RESERVE BULLETIN.

JULY 1,1915.

IMPORTS AND EXPORTS OF GOLD.
Imports of gold, by customs districts, Jan. 1 to June 18, 1915.
j
660

Total.

80

3

Vermont.

•a

St. Lawrence.

Xi V«

Michigan.

Q

Buffalo.

Washington.

.4,
Is

San Francisco.

Alaska.

El Paso.

Arizona.

ri

New Orleans.

Porto Rico.

New York.

Maryland.

Maine and New
Hampshire.

[In thousands of dollars.]

Jan. 1 to May 21.
Om fine! bftSA bullion
Bullion, refined, and bars .

1

TTnitarl ^tfttfiS OO1H

Total

. ...

1

60
4,363
10,633
50 3,663
50 18,719

159

10
7
10
I

27

159

146
56
311 1,099

457 1,155

490

1 434

42
6,256
21
8,224

1,744

14,543

1,858

7

1,753

111

1,952
37,073
495

9

233

490

6

80

660

3

4,439
14,849
47,753
12,442

39,520

3

79,483

For week ending May 28.
Orft and b&so bullion
United States mint or
assay office bars
"Rnllinn refined
TTnitftd States coin

3

15

14

380

4,919

158
2,507
12

750
15

26
190
2,006

12

"*"l

802 . . . .

17

14
210
[7,426
762

4,919

8,792

!

52

2,677

Total

18

233

111

18

90

47

For week ending June b.
Ore and base bullion
Bullion refined
United States coin

1
1

1
2

9

88

12

2

3

9

88

! 265
•
202
10,123
7

8,ii7

7

2,229

Total

&

90

47

8,117

10,597
—

For week ending June 11.
57
95
150
23

Ore and base bullion
Bullion refined
United States coin
Foreign coin
Total

157

53

98

15,218

1 000
18

157

1,435

1
4

2
2

1
366

....

152

9

325

378
P* 548
15,370
1,024

13

435

18
9

53

98

13

111
81

95

15,219

37

17,320

For week ending June 18.
Ore and base bullion
Bullion, refined
United States coin
Foreign coin

6
263
5
9

Total

3

15,814

r256
15,819

15,814

16,952

*

\9
95 . . . .

283

3

5

4

367

152 j . . . .

149

189

148

62

158

42 i 7

1,969

2,138

6,904
21
9 974

....

449
6

9

16,941

7

2,424

2,147

192

37

wm

Jan. 1 to June 18.
Ore and base bullion
United States mint or
assay office bars
Bullion, refined
United States coin
Foreign coin
Total




1

5,069
15,301
"**50" 3,714
1

....

50 24,233

I

29

14

10
9
10

316 1,121

189

856

464 1,197 1,014

80

5,718

775
1,952
81,141
496

80

775

3

83,589

3

14
16,677
96,491
14,244
133,144

165

FEDERAL RESERVE BULLETIN.

JULY 1, 1915.

Exports of gold, by customs districts, Jan. 1 to June 18,1915.
[In thousands of dollars.]

Jan. 1 to May 21.
Ore and base bullion
United States mint or assay office
bars
Bullion, refined
United States coin
Foreign coin
Total

1

3,281
935
2

4,216

16

3

5
2
4

6

8
32
3,352
940

1

11

6

4,451

Vermont.

Total.

119

16

16

St.
Lawrence.

118

2
31

3
17
3
5

16

151

28

2

2

Duluth
and
Superior.

1

Maine
San
and
New Hawaii. Alaska. Fran- Wash- Buffalo. Dakota. MichNew
igan.
cisco. ington.
Hamp- York.
shire.

1
1

For week ending May 28.

Ore and base bullion
United States mint or assay office
bars
United States coin
Foreign coin
Total

21

21

1
3

20

132

20

132

12
33

2

1
34
135

4

2

191

For week ending June 4.

Bullion refined
Foreign coin.. .
Total

1

1
125

1

126

125
125

For week ending June 11.

Bullion, refined
United States coin
Foreign coin
Total

1

4
26
125

1

155

1

1
20
133

1

154

4

25
125
150

4

For week ending June 18.
Bullion, refined
United States coin
Foreign coin

20
133

Total

153

Jan. 1 to June 18.
Ore and base bullion
United States mint or assay office
bars..
Bullion, refined
United States coin
Foreign coin
Total




1
2

2

2
3,326
1,450

16

4,776

16

3 !

140

139

36

2
43

3
17
5
5

3fi

184

30

4

1

4

6
3
5
3

7

9
38
3,432
1,458

1

17

7

5,077

1
1

166

FEDERAL RESERVE BULLETIN.

DISTRIBUTION OF REDISCOUNTS.

The character of the rediscount business of
the several reserve banks is indicated to some
extent by the following tables giving the distribution of the rediscounted paper, exclusive
of acceptances, by sizes and maturities.
The average size of the 9,558 notes rediscounted by all the twelve reserve banks during
the month of May was about $1,271. The
averages vary between $908 for the Dallas
bank and $4,930 for the San Francisco bank.
Of the total number of notes rediscounted
about 27.5 per cent, and of the total amount
about 54 per cent were notes in amounts of
$1,000 to $2,500. The latter percentage varied
between 66.6 per cent for St. Louis and 24.5
per cent for San Francisco. The number of
small notes (up to $250) constituted over
30 per cent of the total number of notes discounted, representing 3.5 per cent of the total
amount of the rediscounts. Nearly 88 per
cent of the entire number of notes up to $250
was handled by the three southern banks.
A comparison of the April figures with those

JULY 1,1915.

for May shows that the banks handled during
the latter month a larger percentage of 30-day
paper and of agricultural paper maturing
after 90 days. The three southern banks report about 75 per cent of the latter class of
business. There seems to be a rather close
connection between the distribution of discounts by sizes and maturities, as normally
the larger-size notes are also of the shortermaturity class. An illustration of this fact is
presented by the figures of the San Francisco
bank, whose percentage of 30-day paper from
less than 6 per cent in April increased to over
30 per cent in May, apparently as the result
of discounting a relatively large amount of
notes of the largest size.
The table showing the distribution by maturities also gives the number of banks in each
state and district for which paper was rediscounted during the two months. This number increased from 617 to 796, but is still less
than 10 per cent of the total number of member banks. The largest percentages of banks
accommodated are shown for the three southern bank districts.

Commercial paper, exclusive of acceptances, rediscounted by each of the Federal reserve banks, during the month of May, 1915,
distributed by sizes.
NUMBER OF PIECES AND AMOUNTS.
[In thousands of dollars.)
To $100.

Over $100 to
$250.

Over $250 to
$500.

Over $500 to
$1,000.

Over $1,000
to $2,500.

Over $2,500 Over $5,000
to $5,000.
to $10,000.

Bank.

Over
$10,000.

Total.

+5

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

a-g

It

§ft

0.2

19.8
17.5
.8
2.8
.3
1.6
17.5
861

1.6
6.9
5.9
4.3
102.2
78.1
9.6
13.5
6.3
2.5
130.2
1.3

41
33
24
586
445
31
84
35
14
785

11
42
54
41
523
357
66
84
59
21
654
21

362.4 1,933

61.1 2,094

3 ft

4.8
15.0
20.7
15.4
211.7
137.0
25.9
30.4
21.4
7.7
232.3
8.4

26
44
59
39
482
359
70
64
83
20
436
38

B

3ft

a
21.6
31.
50.
28.6
392.1
280.8
58.4
48.2
57.1
15.4
307.6
25.8

23
46
73
59
450
344
89
83
74
43
353
50

41.5
70.0
128.9
96.2
801.6
611.9
156.4
136.3
108.4
69.1
556.7
79.5

74.3
81.9
97.6
101.1
1,303.0
810.2
111.9
122.0
82.3
45.5
644.6

47.5
30.4
49.4
88.5
498.2
288.3
58.5
34.9
59.0
66.0
396.4

253.0

223.9

730.7 1,720 1,317.8 1,687 2,856.51942 3,698.3 250 1,870.1

It

91
191.3
206
236.0
15.0
251 368.1
96.6
213 431.3
252.2 2,697 3,580.8
15.0 1,985 2,238.8
25.0
306 446.5
395 388.1
283 334.8
144 207.8
199.4 2,736 2,484.7
645.6
251 1,237.5

1.6
1.9
3.1
3.5
29.5
18.4
3.7
3.3
2.8
1.7
20.2
10.3

71 1,248.8 9,55812,145.71 100.0

PERCENTAGES OF AMOUNTS OF EACH CLASS TO TOTAL.
Bank.
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St Louis
Minneapolis .
Kansas City
Dallas
San Francisco
Total

To $100.

.




. .

Over
$100 to
$250.

Over
$250 to
$500.

Over
$500 to
$1,000.

Over
Over
Over
$1,000 to $2,500 to $5,000 to
$5,000.
$10,000.
$2,500.

Over
$10,000.

Total.

Per cent. Per cent. Per cent. Per cenL Per cent. Per cent. Per cent. Per cent. Per cent.
24.8
0.9
2.5
21.7
38.8
11.3
100.0
12.8
0.1
2.9
6.4
13.4
29.7
34.7
100.0
13.4
13.8
4.1
1.6
5.6
35.0
26.5
100.0
.2
3.6
22.3
23.4
22.4
6.6
20.5
100.0
1.0
22.4
2.9
5.9
10.6
13.9
7.1
100.0
.6
36.6
3.5
27.3
36.2
6.1
12.6
12.9
.7
100.0
.2
2.2
5.8
13.1
35.0
13.1
25.0
5.6
100.0
.7
3.5
7.8
12.4
35.1
9.0
31.5
100.0
.1
1.9
6.4
17.1
32.4
17.6
24.5
100.0
.8
1.2
3.7
7.4
33.3
31.7
21.9
100.0
9.4
5.3
12.4
22.4
.7
25.9
100.0
15.9
8.0
.1
2.1
6.4
18.1
20.4
52.2
100.0
.7
.5

3.0

6.1

10.8

23.5

30.5

15.4

10.2

100.0

JULY 1,

167

FEDERAL RESERVE BULLETIN.

1915.

Amounts of paper rediscounted during April and May by each of the Federal reserve banks, distributed by States, and
maturities as of date of rediscount.

District No. 1—Boston:
ConnGcticut
Maine

75
70
171
56
19
48

6

5

5.7

27.5

49.3

41.6

15.0

10.4

436

13

12

153.4

52.5

131.1

99.2

41.1

30.9

479

479

18

18

54.2

26.3

55.2

63.1

107.0

142.9

25
201
533

25
201
532

1
10
8

1
19
11

36.0
10.0

3
53.4
26.0

2 0
47.9
18.8

9.3
101.9
59.1

5.6
127.6
30.6

58.6
52.0

759

758

19

24

46.0

79.7

68.7

170.3

163.8

72
379
302
9

72
379
301
9

4
19
8
1

q
94
1Q
2

19.3
14.7
29.4
3.0

33.5
49.7
24.4
1.5

93.4
51.9
27.8
1.0

23.2
101.5
30.6
2.5

762

761

25

54

66.4

109.1

174.1

14
100
79
70
137
108

13
100
80
70
136
108

1
1
39
36
37
11

1
49
40
38
9

138.2
136.7
59.0
29.4

123.3
275.4
138.5
11.6

35.8
11.6
360.5
392.3
265.2
55.8

508

Total

9
1

439

New Hampshire
"Rhode Island
Vermont

74
70
170
56
18
48

507 125 130

363.3

93
56
114
5
18
96

92
56
114
5
18
97

97
18
50
1
1
33

20.5
38.9
37.2

40.3
29.7
46.5

20.0
57.5

382

382 104 130

314
197
348
72
50

313
197
348
73
49

11
5
13
9
1

981

980

59
156
61
69
15
80
20
460

9
3
9

27.8

12.8
134 9

25 0

1

44.0
10.0

9.0
17.2
31.4

16.0
10.1

18.5
2.0

May.

Total commercial paper *
rediscounted.

April.

May.

April.

May.

April.

May.

April.

Paper
Paper
Paper
maturing after maturing after maturing after
60 days but
30 days but
90 days.
within 60 days. within 90 days.

May.

April.

May.

Paper
maturing
within 30
days.

April.

Districts and States.

Number of
banks
accommodated.

May.

Number
of
member
banks.
April.

[In thousands of dollars.]

56.6
10.1
178.9
10.0

27.5
27.9
56 4

70.0

8.7

79.5

8.7

325.6

191.3

3.7

216.4

236.0

9.7
.3

5.5
2.0

7.6
221.2
59.7

9 6
219.4
139.1

110.6

10.0

7.5

288.5

368.1

47.4
66.1
30.6
3.0

26.9
59.3
34.0

36.2
.9

3.0
39.8
1.4

160.1
168.9
88.7
7.0

86.6
250.4
90.3
4.0

157.8

147.1

120.2

37.1

44.2

424.7

431.3
—
—

6.8
346.8
311.0
456.3
31.0

67.5
34.9
577.1
395.4
292.8
63.0

23.7
538.3
476.4
404.2
67.8

0.6
41.9
139.1
64.0
5.4

103.3
1.0
47.1
31.5
93.2 1,117.7 1,101.6
228.8 1,063.5 1,291.6
44.1
681.0 1,043.1
2.6
153.6
113.0

548.8 1,121.2 1,151.9 1,430.7 1,510.4

251.0

369.7 3,166.2 3,580.8

•

Diltrict No. 2—New YorkDistrict No. 3—Philadelphia:
Dfcla.wa.T6

New Jersey
Pennsylvania
Total
District No. 4—Cleveland:
Kentucky
Ohio
Pennsylvania..
West Virginia
Total
District No. 5—Richmond:
District of Columbia
Maryland
.
North Carolina
Smith Carolinfv

Virginia
West Virginia
Total
District No. 6—Atlanta:
Florida.. .
Georgia
Louisiana
Mississippi
Tennessee...
Total.
District No. 7—Chicago:
Illinois
Indiana
.
Iowa
Michigan
Wisconsin
Total
District No. 8.—St. Louis:
Arkansas
Illinois
Indiana
Kentucky
Mississippi
Missouri
Tennessee
Total




.

.

.

162.0
113.5
280.4
68.5
31.5
285.9

129.4
155.1
235.6
25.2
77.9
127.2

188.4
128.4
226.6
1.0
31.0
163.3

58.3
12.5
93.0

11.0
46.4

74.9
74.5
209.0
36.1
23.7
333.5

174.1

173.9

751.7

941.8

750.4

738.7

181.0

13
11
20
3
1

3.3
1.5
11.7
7.0

5.5
7.9
17.1
14.1

17.6
2.9
31.9
15.1

20.2
13.7
81.5
6.5
2.8

59.1
10.5
28.1
2.0

47.7
33.4
32.2
2.9

31.4
9.7
27.8
2.5
3.7

32

48

23.5

44.6

67.5

124. 7

99.7

116.2

75.1

161.0

265.8

446.5

58
156
61
69
16
79
20

5
14
9

17
1

1.3
8.2

5.0

7.2
34.7

40.9
43.8

3*i

1
7
5

2 8
17.6

1 0
5.9
26.0

21.1
32.5

8
5.6
15.7
43.4

29.4
38.5
11.5
5 1

1
8
3

6.4
14.9
45.6
20 0
4.5
10.5
5.7

3.2
18.6

4

3.2
17.4
20 0
11 5

26.6

15.6

1.0
19.2
.7

14.1
59.1
65.6
31 9
4.5
50.0
55.8

77.5
122.0
11.5
9 0
7.6
66.8
93.7

459

36

43

30.3

41.0

105.7

107.4

107.6

134.1

37.4

105.6

281.0

388.1

15
17
42
1
9
27

5.0
12.2

23.6

133.3
19.2
207.0
24.9

283.1
281.0
574.8
61.3
126.6
530.4

524 0
290 8
760. §
69.5
73.5
520.5

384.4 1,857.2 2,238. 8
62.5 • 111.4
17.3
24.6
69.6
99.5
26.6
11.6
3.7

135.9
72.3
200.4
20.6
17.3

168

FEDERAL RESERVE BULLETIN.

JULY 1,1915.

Amounts of paper rediscounted during April and May by each of the Federal reserve banks, distributed by States, and
maturities as of date of rediscount—Continued.

District No. 9.—Minneapolis:
Michigan
Minnesota
Montana
North Dakota
South Dakota
Wisconsin

25.0

2
5

1
8
10
q
5
6

3.8

2.0
26.1

27.1

11.1
67.1

723

23

39

11.3

42.8

55.3

111.7

122
214
52
215
10
187
33

122
214
52
214
10
188
33

?

3

14
5
12
1
6
1

12.4
54.1
32.9

2.0

14.2

52.0

1.5

10.0
58.2
68.7
35.3

5.1
9.0

ft
6
1
10

2.8

5.4

833

833

41

27

26
28
163
537

6
6
4
26
5
4
28
163 29 23
537 100 120

760

760 138 153

31
276
65
152
110
86
720

Total
District No. 10.—Kansas City:
Colorado
. Kansas
Missouri
Nebraska
ffiH New Mexico
p" Oklahoma
Wyoming
Total
District Ne. 11.—Dallas:
Arizona
Louisiana
New Mexico
Oklahoma
Texas
Total
District No. 12.—San Francisco:
Alaska
Arizona
.

31
277
65
153
110
87

7
6

7.5

8.6

8.5

05

May.

April.

May.

April.

May,

38.4

41.2

74.0

19.9

5.5
9.9

7.3
1.6

18.3
4 6
36 1

1.0

Total commercial paper
rediscounted.

4.1

58.7

16.5

12.0

19.6

26.8

9.9

32.3
45.0
44 1
17.7

61.1
42.2
15 5
8.4
51.8

30.0
61.0
62 4
49 1
34.9
97.4

139.1

179.0

334.8

6.9

40.0
15 0
8.4

20.2

10.5
17.4
50
4.1
4.2

16.0

6.3

22.4
139.5
104.2
120.9
4 6
60 5
11.8

12 0
18.4
88.8
35.0
4 9
48 7

463.9

207.8

.7

1.9

12.7
12.9
4 9
7.1

5.5

20.5

177.6

82.2

104.9

58.7

73.4

84.4

12.0

11.9
84.6

12.2
89.9

57.3
21.4
91.5
520.4

58.4
10.1
32.8
475.0

92.7
52.4
118.3
684.5

89.7
10 0
97.9
564.7

11 8
182.1
638.6

180.9

118.0

690.6

576.3

947.9

762.3

832.5 1,028.1 2,651.9 2,484.7

33.1

350.2

199.5
7.7

164.6
24.9

209.4
20.7

484.7
52.5

51.4

4.1

44.0

2.0

6.2

4.3

108.0

3.9

265
57
10
86
23
78

28
8

24
5

3
1
3

6

528

527

43

38

35.1

439
479
759
762
508
382
981
460
720
833
760
528

436 13 12
479 18 18
758 19 24
761
54
507 1?ft 130
382 104 130
980 3? 48
459 36 43
723 ?3 3Q
833 41
760 138 153
527 43 38

153.4
54.2
46.0
66.4
363.3
174.1
23.5
30.3
11.3
108.0
180.9
35.1

46.4

234.4
179.9
19.8
43 5
85 6
67 5
126.0
403.8
268.9
838.8 1,928.1 1,968.4

1

266
57
10
86
23
78

Total

27.7

2.2

1

Idaho
Nevada
Oregon
Utah
Washington

5.0
9.7

April.

May.

April.

Paper
Paper
Paper
maturing after maturing after maturing after
30 days but
60 days but
90 days.
within 60 days. within 90 days.

May.

May.

Districts and States.

Paper
maturing
within 30
days.
April.

Number
of
member
banks.

May.

Number of
banks
accommodated.
April.

[In thousands of dollars.]

374.3

i.6

19.4

6.0

17.5

6.8

20.0

3

5.5

9.9

10.2

7.3
5.2
4.4

21.9

229.8

214.4

263.4

564.9

67.1

83.9

14.8

17.4

6.3

486.0 1,050.9
36.6
85.8
14.3
37.4
21.1

63.2
37.6

595.4 1,237.5

RECAPITULATION.

Districts:
No 1 Boston
No 2 New York
No 3 Philadelphia
No 4—Cleveland
No 5 Richmond
No 6—Atlanta
No 7 Chicago
• .
No 8—St Louis
No 9—Minneapolis
No. 10—Kansas City
No. 11—Dallas
No 12—San Francisco
Total




...

52.5
99.2
41.1
131.1
30.9
26.3
55.2
63.1
107.0
142.9
68.7
79.7
170.3
163.8
110.6
109.1
174.1
157.8
147.1
120.2
548.8 1,121.2 1,151.9 1,430. 7 1,510.4
173.9
751.7
750.4
941.8
738.7
44.6
67.5
124.7
99.7
116.2
41.0
105.7
107.4
107.6
134.1
42.8
55.3
111.7
38.4
41.2
20.5
177.6
82.2
104.9
58.7
118.0 . 690.6 576.3
947.9
762.3
374.3
229.8
214.4
263.4
564.9

8.7
325.6
191.3
216.4
3.7
236.0
7.5
288.5
10.0
368.1
37.1
44.2
431.3
424.7
251.0
369.7 3,166.2 3,580.8
384.4 1,857.2 2,238.8
181.0
75.1
265.8
161.0
446.5
37.4
105.6
281.0
388.1
74.0
139.1
179.0
334.8
73.4
46.4
463.9
207.8
832.5 1,028.1 2,651.9 2,484.7
83.9
595.4 1,237.5
67.1

7,611 7,605 617 716 1,246.5 1,631.5 3,628.5 3,800.8 4,202.0 4,331.1 1,638.6 2,382.3 10,715.6 12,145.7
8.1 9.4
11.6
13.4
33.9
31.4
39.2
15.3
35.6
19.6
100.0
100.0

JOLY 1, 1915.

169

FEDERAL RESERVE BULLETIN.

ACCEPTANCES.
Acceptances, by classes, held by the Federal reserve banks each week.
Nonmember banks'
acceptances.
.

Member
banks'
acceptances.

Date.

Trust
companies.

Private
banks.

Total.

State
banks.

1915.
May 31
June 7-.
June 14
June 21

.

.

.

$5,294,000
5,242,000
4,690,000
5,047,000

$3,774,000
4,516,000
5,080,000
4,828,000

$10,000
10,000
10,000

1110,000
192 000
131,000
146,000

$9,188,000
9 960 000
9,911,000
10,021,000

Acceptances indorsed by member banks: Member banks' acceptances, $1,686,000; trust companies' acceptances, $120,000; private banks' acceptances, $20,000; total, $1,826,000.
Amounts

of acceptances held by the several Federal reserve banks at close of business on Fridays from May 28 to June

18,1915.

[In thousands of dollars.]
New Phila- Cleve- RichYork. delphia. land. mond.

Boston.
Acceptances maturing within 30
days:
May 28
June 4
June 11
June 18
Acceptances maturing after 30 days
but within 60 days:
May 28
June 4
June 11
June 18
Acceptances maturing after 60 days
but within 90 days:
May 28
June 4
June 11
June 18
Total:
May 28
June 4
June 11
June 18

Distribution

Atlanta.

Chicago.

MinneSt.
Louis. apolis.

Kansas
City.

San
Dallas. Francisco.

$405
694
742
742

$3,383
4,073
4,861
4,836

574

4 416
4,166
3,282
2,425

$791 $1,294
798 1,529
1,684
1,168
856 1,666

$298
333
183
233

$102
120
189
168

$365
442
517
434

$45
40
100
300

$36
57
138
133

$47
60
140
304

450

148

364

281

742
603
657

1,545
1,599
1,151
829

126

415
423
328

128
101
49

74

267
218
18

107
49
25

398

411
360
308

260
141
137

587
441
430
326

333
1,029
1,892
1,867

109
134
132
434

15
9
16
16

36
36

17
11
44
44

13
11
17
17

208
175
173
27

124
124
216
134

1,908
1,981
2,201
1,839

3,172
4,157
4,727
4,362

857
882
738
995

265
257
306
233

729
679
789
544

343
318
362
362

175
175
204
175

653
646
673
639

1,103
1,078
1,099
1,013

530

237
236

...

of acceptances held by Federal reserve banks according to schedules on hand June 21,1915,
acceptors and sizes.
To $5,000.

Over $5,000
to $10,000.

Over $10,000
to $25,000.

Over $25,000
to $50,000.

Over $50,000 Over $100,000.
to $100,000.

Total.
Per
cent.

Members banks..
Trust companies.
Private banks

61

Total

97




1,406
1,934
2,956
2,901
W
9,205
10,173
11,099
10,162

by classes of

Class of acceptors.

Percent.

Total.

$114,709
141,594
256,303 103
2.6

$427,259 108 $1,806,168
1,649,515
377,693
106,769

39 $1,501,822
~~ 1,327,845
39,472

$883,000
818,106

$315,000 249 $5,047,958
513,818 242 4,828,571
146,241
8

804,952 199 3,562,452

2,869,139

21 1,701,106

828,818 49910,022,770

35.5

28.6

17.0

504
481
15

8.0

8.3

100.0

170

FEDERAL RESERVE BULLETIN.

JULY 1,1915.

Resources and liabilities of each of the Federal reserve banks and of the Federal reserve system at close of business on Fridays,
May 28 to June 25.
[In thousands of dollars.]
RESOURCES.
New
York.

Boston.

Gold settlement fund,
credit balances:
May 28
June 4
June 11
June 18
June 25
Gold coin and certificates
in vault:
May28
June 4
June 11
June 18
June 25
Legal tender notes, silver,
etc.:
May28
June 4
June 11
June 18
June 25
Total reserves:
May28
June 4
June 11
June 18
June 25
Commercial paper:
May 28
June 4
June 11
June 18
June 25
Bank acceptances:
May 28.
June 4
June 11
June 18
June 25
United States bonds:
May 28
June 4
June 11
June 18
June 25
Municipal warrants:
May 28
June 4
June 11
June 18
June 25
Due from other Federal
reserve banks, net:
May 28
June 4
June 11
June 18
June 25
Federal reserve notes, net
assets:
May 28
June 4
June 11
June 18
June 25
All other resources:
May 28
June 4
June 11
June 18
June 25
Total resources:
May 28
June 4
June 11
June 18
June 25

Phila- | Cleve- Richdelphia. ; land. mond.

San
Minne- Kansas
St.
Atlanta. Chicago. Louis. apolis. City. Dallas. Francisco.

$1,015
1,604
2,110
3,574
3,419

$7,604
5,900
8,630
3,599
4,478

$1,361 $1,658
2,245
1,890
2,222 2,046
1,780 2,695
1,863 3,288

$1,863
2,152
2,262
2,416
2,609

$1,807
1,682
1,555
1,749
1,581

$1,086
1,117
1,083
5,013
4,485

$1,003
2,430
2,172
1,869
2t113

13,097
12,128
12,636
12,688
12,824

95,860
97,445
99,778
100,034
107,985

17,471 15,511
14,906 ! 15,334
15,457 ! 14,743
16,659 14,162
15,718 13,825

5,529
5,432
5,353
5,215
4,925

3,900
3,909
3,951
3,824
3,781

34,132
34,449
30,254
29,822
29,982

8,090
8,096
8,100
8,120
8,121

95

Total
for
system.

$1,264
1,228
1,470
1,612
2,268

$2,046
2,010
1,927
1,253
1.003

$23,426
24,850
28,950
29,360
31,360

7,575
7,175
7,210
6,730
6,682

4,725
4,226
4,237
3,766
3,771

7,330
8,318
9,037
9,135

220,214
217,665
217,281
217,161
223,827

457
457
463
465
468

576
569
627
657
682

9
17
7
3
3

31,989
35,337
44,632
48,916
47,848

81,114 $1,605
1,509
1,083
1,224
2,249
1,286
2,514
1,103
3,150
7,427
7,235
7,244
7,104
7,078

I

1,113 I 21,223
817 ! 24,961
629
35,224
758
38,948
348
37,619

3,112
2,366
2,841
2,962
3,295

767
769
766
821
853

89
105
103

242
245
324
379
276

3,148
3,796
2,450
2,684
3,122

1,241
1,239
1,204
1,126
1,075

94

15,225
14,549
15,375
17,020
16,591

124,687
128,306
143,632
142,581
150,082

21,944
19,517
20,520
21,401
20,876

17,936
17,993
17,555
17,678
17,966

7,487
7,678
7,704
7,736
7,637

5,949
5,836
5,830
5,952
5,638

38,366
39,362
33,787
37,519
37,589

10,334
11,765
11,476
11,115
11,309

8,547
8,325
8,476
8,398
8,185

9,637
9,141
9,922
9,709
10,300

6,565
6,023
6,334
6,035
6,721

8,952
9,357
10,252
10,293
10,141

275,629
277,852
290,863
295,437
303,035

319
337
371
329
296

425
416
468
510
540

638
812
711
624
653

759
735
786
819
784

7,412
7,187
7,282
7,299
7,378

4,469
4,259
4,345
4,433
4,399

912
986
1,130
1,187

724
663
643
697
744

591
697
814
941
1,082

604
582
589
570
611

6,148
6,171
6,152
6,297
6,455

1,738
1,765
1,760
1,778
1,867

24,747
24,536
24,907
25,427
25,996

1,908
1,981
2,201
1,839
2,041

3,172
4,157
4,728
4,362
4,631

857
882
738
995
975

265
257
306
233
213

729
679
789
544
475

343
318
362
362
342

175
175
204
175
168

653
646
673
639
632

1,102
1,077
1,099
1,013
902

9,204
10,172
11,100
10,162
10,379

194

175
175
265
285
485

3,575
3,650
3,725
3,725
3,725

242
242
242
242
242

1,025
1,025
1,025
1,025
1,025

930
930

1,000
1,000
1,000
1,001
1,000

6,947
7,022
7,187
7,208
7,601

2,703
1,729
1,191
1,096
1,291

2,474
1,597
1,328
1,387
1,507

3,281
2,601
2,072
1,290
1,515

777
801
326
302
387

789
413
397
468

156
181
165
165
230

1,080
1,080
473
473
636

23,094
17,916
9,996
9,664
11,509

2,480
2,989
2,370
2,067

1,014
l-~1,889
1,817
1,530

2,062
115
8,591
7,705
7,612

1,484
1,694
1,276
928
607

12
34
271
254
157

738
199
563
548

866
667
1,037
498
409

9,210
9,721
19,370
15,976
17,206

2,300
2,298
2,294
2,308
2,306

42
44
47
57
60

235
168
284

1,397
1,365
1,373
1,356
1,317

7,765
7,350
6,204
7,753
9,124

308
298
259
214
195

2,805
2,127
2,713
2,739
2,787

63
69
67
64
56

366
396
498
540
476

53
55
154
81
45

76
66
68
61
65

5,426
5,551
6,146
6,533
5,501

51,541 16,751
49,915 17,654
52,503 17,085
54,435 16,442
54,604 16,478

11,277
11,403
11,505
11,422
11,425

12,346
12,614
12,976
13,116
13,727

12,894
12,610
12,935
13,028
13,869

16,211
16,377
17,062
16,473
16,337

360,247
357,531
371,281
370,329
381,456

2,338
1,808
1,878
2,058
2,228

9,595
7,329
2,149
2,495
3,246

2,383
674
1,099
2,101

578
1,087
1,073
1,037
486

3,178 I
2,507
1,507 I
3,304
4,466 !
|
229 |
209
137
143
153 i

23,123
21,007
22,358
22,636
24,100

141,286
142,924 |
152,621
153,395 i
163,118 !

372
571
361
353
357

]




1,158
1,090
1,190
1,101
1,285

103
534
125
242

34
87
91
71
51

267

265
216
412
645
734

149
143
548
743
160

71
50
114
96
109

463
835
103
170
235

26,441
25,723
26,652
27,202
26,841

23,039
22,957
22,973
23,098
22,928

16,129
16,006
16,291
16,233
16, 410

10,984
10,930
10,812
10,680
10,514

296
136

128
361
295
615
648

171

FEDERAL RESERVE BULLETIN.

JULY 1, 1915.

Resources and liabilities of each of the Federal reserve banks and of the Federal reserve system at close of business on Fridays,
May 28 to June 25—Continued.
[In thousands of dollars.]
LIABILITIES.

Boston.

Capital paid in:
May 28
June 4
June 11 . . .
June 18
June 25
Reserve deposits, net:
May 28
Jimft4
June 11
June 18 . .
June 25
Federal reserve notes,
net liability:
May 28
. . .
June 4
June 11
June 18
June 25
Due to other Federal Reserve Banks, net:
May 28
June 4
June 11
June 18 .
June 25
All other liabilities:
May 28
June 4
June 11
June 18
June 25
Total liabilities:
May 28
June 4
June 11 . .
June 18
June 25

New
York.

Philadelphia.

Cleveland.

Richmond.

Atlanta.

Chicago.

Minne- Kansas
St.
Dallas.
Louis. apolis. City.

San
Francisco.

Total
for
system.

1
$4,805
4,802
4,802
4,802
4,802

$9,962
9,962
9,962
9,962
9,962

$6,227
6,227
6,228
6,226
6,225

$5,977
5,976
5,976
5,976
5,976

$3,356
3,358
3,362
3,364
3,364

$2,410
2,412
2,414
2,414
2,414

18,018
15,751
17,052
17,164
18,588

127,474
127,330
133,472
131,757
141,844

19,829
19,496
20,424
20,976
20,616

17,062
16,981
16,997
17,122
16,952

8,106
7,808
8,016
7,885
7,957

5,662
5,258
5,463
5,418
5,253

4,596
4,766
4,836
4,900
5,001

2,877
3,200
2,896
2,806
2,803

161

1,156
2,563
4,492
7,670
8,895

300
454
504
509
710

141,286
142,924
152,621
153,395
163,118

$2,791
2,783
2,783
2,783
2,780

$2,919
2,923
2,924
2,926
2,926

$3,932
3,933
3,933
3,934
3,934

$54,158
54,184
54,195
54,201
54,200

44,933 13,963
43,312 14,866
45,898 14,297
47 829 is fisa
47 998 '• 1 S fi8S

9,128
9,472
9,631
9,881
10,475

6,702
6,577
6,187
6,134
6,571

12,279
12,444
13,129
12,539
12,403

292,050
288,281
299,653
299,361
311,349

8,894
8,986
9,087
9,003
9,004

193
3,255
359
3,088
3.804
562
452 s 3,942
472 ! 4.341

i

10,921
11,413
12,098
12,100
12,617

234

385

1,775
2,589
4,492
7,831
8,895

26

2,694
3,069
4,695
4,006
2,417

23,123
21,007
22,358
22,636
24,100

$6 608 ' &>• 7K» $2,383
2,417
3,788
6,603
2,418
2,788
6,605
2,419
2,789
6,606
2,421
2,790
6,606

71
74
77
84
88
26,441
25,723
26,652
27,202
26,841

23,039
22,957
22,973
23,098
22,928

16,129
16,006
16,291
16,233
16,410

10,984
10,930
10,812
10,680
10,514

3,118
3,653
5,335
4,667
3,290

18
22
20
26
31

35
34
39
42
44
51,541
49,915
52,503
54,435
54,604

11,277
11,403
11,505
11,422
11,425

12,346
12,614
12,976
13,116
13,727

12,894
12,610
12,935
13,028
13,869

16,211
16,377
17,062
16,473
16,337

360,247
357,531
371,281
370,329
381,456

$2,660
2,860
2,860
3,000
3,300

$2,600
3,100
3,100
3,600
3,600

$4,000
4,500
5,000
5,800
6,195

$2,040
2,040
2,040
2,040
2,040

$67,156
70,956
74,596
79,386
82,961

175
289
235
168
284

16,751
17,654
17,085
16,442
16,478

347
281
78
238
168

290
457
241
403
404

1,397
1,365
1,373
1,356
1,317

9,309
8,602
7,271
9,168
10,472

CIRCULATION O F F E D E R A L R E S E R V E N O T E S .
Federal reserve notes issued to the banks:
May 28
June 4
June 11
June 18
June 25
Federal reserve notes in
the hands of the banks:
May 28
June 4
June 11
June 18
June 25
Federal reserve notes outstanding:
May 28
June 4
June 11
June 18
June 25
'.
Gold and lawful money
deposited with t h e
agents:
' May 28
June 4
June 11
June 18
June 25
Net liability on account
of Federal reserve notes
May 28
June 4
June 11
June 18
June 25
.Net assets on account of
Federal reserve notes:
May 28
June 4
June 11
June 18
June 25




I
$2,320
3,320
3,320
3,320
3,320

$31,840
32,440
35,100
38,100
40,500

372
571
361
353
357

3.358
2,687
1,687
3,484
4,646

1,948
2,749
2,959
2,967
2,963

28,482
29,753
33,413
34,616
35,854

2,320
3,320
3,320
3,320
3,320

31,660
32,260
34,920
37,920
40,320

$2,900
3,100
3,300
3,300
3,700

$7,200
7,400
7,500
7,650
7,750

$4,950
4,950
4,950
5,150
5,150

$4,380
4,380
4,380
4,380
4,380

267
189
296
136
283

404
334
264
200
199

323
304
394
397

2,300
2,298
2,294
2,308
2,306

1,606
2,153
2,329
2,349
2,349

2,633
2,911
3,004
3,164
3,417

6,796
7,066
7,236
7,450
7,551

4,627
4,950
4,646
4,756
4,753

2,080
2,082
2,086
2,072
2,074

584
582
579
569
566

2,485
2,571
2,625
2,832
3,016

2,253
2,819
3,022
3,362
3,432

3,710
4,043
4,759
5,397
5,791

643
675
667
684
723

57,847
62,354
67,325
70,218
72,489

1,640
2,240
2,420
2,420
2,400

2,900
3,100
3,300
3,300
3,700

2,200
2,300
2,400
2,550
2,550

1,750
1,750
1,750
1,950
1,950

4,380
4,380
4,380
4,380
4,380

626
626
626
626

2,660
2,860
2,860
3,000
3,300

2,060
2,460
2,460
2,910
2,960

455
955
955
1,455
1,450

2,040
2,040
2,040
2,040
2,040

54,691
58,291
61,431
65,871

4,596
4,766

2,877
3.200
2'
2,806
2,803

193
359
562
452
472

3,255
3,088
3,804
3,942
4 341

$1,640
2,240
2,420
2,420
2,400

4,900
5,001
372
571
361
353
357

3,178
2,507
1,507
3,304
4,466

267
189
296
136

2,300
2,298
2,294
2,308
2,306

$626
626
626

175
289
235
168
284

10,921
11,413
12,098
12,100
12,617
1,397
1,365
1,373
1,356
1,317

7,765
7,350
6,204
7,753
9,124

INDEX.
Page.

Acceptances
169
Address by Hon. P. M. Warburg
132-135
Address by Hon. C. S. Hamlin
*.... 136-141
Branch bank at New Orleans
123
Business conditions, general
157-163
Circulars and regulations
145-149
Commercial paper rediscounted
166-168
Discount rates
124
Emergency currency outstanding
124
Expenses of the Federal Reserve Board
118-119
Gold imports and exports
164,165
Gold settlement fund
120,121
Summary of transactions, May and June
121
Governors of Federal reserve banks, meeting of . . .
122
Informal rulings of the board
125-127
Branches of national banks
125
Reducing capital stock
125
Deposit of trustee funds
125
Trustee powers
125




o

Informal rulings of the board—Continued.
Timber as note security
Trust company branches
Authority to accept
Acceptances
Deposits as loans
Money-order business
Collateral trust notes
Pig iron as security
Purchase of United States bonds
Silver certificates for notes
Indorsement of notes
Law department
Pan American financial conference
Resources and liabilities of Federal reserve banks.
Short-term discount rate
Subscription price of Bulletin
Transfer of member banks
Trustee powers, applications for, approved
Work of the Federal Reserve Board

Page,
126
126
126
126
126
127
127
127
127
127
127
150-156
128-131
170,171
124
115
142-144
144
117

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