Full text of Federal Reserve Bulletin : July 1917
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, IS17
WASHINGTON
GOVERNMENT PRINTING OFFICE
1917
FEDERAL RESERVE BOARD.
EX OPFICIO MEMBEES.
WILLIAM G. MCADOO,
Secretary of the Treasury,
Ohairman.
JOHN SKELTON WILLIAMS,
Comptroller of the Currency.
W. P. G. HARDING. Governor,
PAUL M. WARBURG, Vice Governor.
FREDERIC A. DELANO.
ADOLPH C. MILLER.
CHARLES S. HAMLIN.
H. PARKER WILLIS, Secretary.
SHERMAN ALLBN, Assistant Secretary and Fiscal
Agent.
M. 0. ELLIOTT, Counsel.
SUBSCRIPTION PRICE OF BULLETIN.
The Federal Reserve Bulletin is distributed without charge
to member banks of the system and to the officers and directors
of Federal Reserve Banks. In sending the Bulletin to others the
Board feels that a subscription should be required. It has
accordingly fixed a subscription price of $2 per annum. Single
copies wiil be sold at 20 cents. Foreign postage should be added
when it will be required. Remittances should be made to the
Federal Reserve Board. Member banks desiring to have the
Bulletin supplied to their officers and directors may have it sent
to not less than 10 names at a subscription price of $1 per annum.
No complete sets of the Bulletin for 1915 are available.
Bound copies of the Bulletin for 1916 may be had at $5 per copy.
in
TABLE OF CONTENTS.
Page,
Review of the month
..
Subscriptions to the Liberty Loan
New form of Federal Reserve Bank statement
..
State banks admitted to system
Dividends declared by Federal Reserve Banks
Reserve requirements under the new amendments
Rediscounting by nonmember banks
Amendments to the Federal Reserve Act as approved
"Our financial duty" (from the London Economist)
Charters issued to national banks
Commercial failures reported
Gold settlement fund
Operation of the Federal Reserve clearing system
Assessment for expenses of Federal Reserve Board
Informal ruling of the Federal Reserve Board
Law department
Supreme Court decision in case brought to test constitutionality of section 11 (k) of Act
Reissue of regulations of the Board
, Business conditions throughout the Federal Reserve districts
Money in circulation, 1914-1917...
Chart showing
Discount operations of the Federal Reserve Banks
Acceptances
Resources and liabilities of the Federal Reserve Banks
Federal Reserve note accounts of Federal Reserve Banks and agents
Earnings on investments of Federal Reserve Banks
Discount rates in effect
Gold imports and exports
Foreign exchange rates
IV
,.
497
505
506
507
507
508
509
509
518
520
520
521
524
525
527
528
534
539
551
562
562
563
565
570
572
574
575
575
576
FEDERAL RESERVE BULLETIN
VOL.
8
JULY 1, 1917.
No. 7
in which the latter are engaged in liquidating
their installment pledges. While the operaThe month of June has been, perhaps, more tion is in progress, the relation of the banks
important than any other similar period in the to the loan as supporters and carriers of the
histor}^ of the Federal Reserve System. Three bonds will naturally be continued. Thus far
epochal events have given it this unusual the efforts of the banks have manifestly been in
position—the consummation of the Liberty direct line with the recommendation, placed
Loan (with the added functions assigned to the before them by the Board in statements both
Federal Reserve Banks as fiscal agents of the before and after the beginning of the war with
Government of the United States); the adoption Germany, that they should act as distributors?
of the amendments to the Federal Reserve Act and only to a moderate extent as actual inveswhich became law on June 21; and the favorable tors in the new securities. The country is to be
decision of the Supreme Court in Bank v. congratulated upon the smooth and efficient
working of the plan for the distribution of the
Fellows, the so-called trustee powers case.
Completion of subscriptions to the Liberty new bonds, and so far as now can be foreseen,
Loan was announced by the Sec- upon the readiness and success with which the
retM o f t h e
public has arranged to absorb them.
7
TteBswi on June
It is worth while, by way of review, to
16 in a statement making
enumerate the various steps
known that the offering had been heavily overtakan by the Federal Reserve
subscribed. Subsequent figures show that the
Board in its effort to facilitate
aggregate subscriptions received amounted to
$3,035,226,850, and came from more than the distribution of the loan through the assist4,000,000 individual subscribers. The large ance of the banks. These various steps have
percentage of subscriptions received in sums been as follows:
1. Establishment of a rate of 3 per cent per
of less than $10,000, estimated as it is at 99 per
cent, shows to how great a degree the small annum for the discount at Federal Reserve
subscriber has actually taken up the bonds. Banks of the direct 15-day obligations of memIt can not as yet be stated how far subscrip- ber banks, secured by Treasury certificates of
tions to the bonds have been paid for outright indebtedness. These certificates were issued
either by checks upon accumulated funds in I at 3 and 3 | per cent per annum.
banks, or by transfer of cash, and in what j 2. The establishment of a rate of discount
measure the subscribers have taken advantage at Federal Reserve Banks of 3J per cent per
7
of the various plans for liquidation by install- annum for customers 90-day notes redisments which have been offered to them by the counted with the indorsement of member banks
various banks and trust companies of the when such notes had been originally given for
country. In so far as subscriptions have been the purpose of securing funds for the purchase
made on a partial payment basis, however, of bonds.
3. The general grant of permission to member
they will imply the necessity of continuous
saving by all such subscribers during the period banks to act as agents of nonmember banks
REVIEW OF THE MONTH.
497
498
FEDERAL RESERVE BULLETIN.
JULY 1, 1917,
in rediscounting until further notice the notes i Federal Reserve Banks to the banking comof the latter at Federal Reserve Banks in ; munity in the flotation of the Liberty Loan.
order to obtain funds to facilitate the opera- ! This aid was given by discounting, at the rates
tions of such non-member banks in Government | of 3 and 3i per cent already described, member
| banks' notes secured by commercial paper or
bonds.
4. The establishment of a "one-day rate" ; United States certificates of indebtedness and
of from 2 to 4 per cent for use in financial ; interim, receipts of subscriptions to the Liberty
centers, chiefly New York, for the purpose I Loan. Between May 18 and June 22 the
of restoring to the market funds temporarily I amounts of these notes held by the Federal
withdrawn through Government loan opera- i Reserve Banks increased from $14,883,000 to
I $169,789,000. In the meantime the Federal
tions.
5. Provision that nonmember bank notes I Reserve Banks increased their holdings of acmight be discounted at Federal Reserve Banks | ceptances purchased in the open market from
with the indorsement of a member bank on j 1100,177,000 to $194,303,000, the increase for
the same basis as customers' notes (that is; I the last two weeks only, being about $60,running up to 90 days' maturity) on condition ! 000,000. It is likely that by far the larger
that such notes should be rediscounted only ! portion of American bank acceptances " afloat"
up to July 15, provided that the notes were are, at present in the portfolios of the Federal
•accompanied by an affidavit that the proceeds \ Reserve Banks. The Federal Reserve Bank
thereof had been used for the purchase or j of New York was especially active during the
! past month, increasing its holdings of discounted
carrying of bonds.
\
6. General assurances to savings banks and and purchased paper by about 121.2 millions
trust companies that the Board desired in ! and 67.9 millions, respectively.
every way to cooperate with them in avoiding | Practically no change is shown in the total
shock or disturbance to existing conditions; j of United States securities held, but there
and that the system stood ready further to I was a large reduction in the amount of municiextend through member banks reasonable ac- i pal warrants carried by the Federal Reserve
commodation at Federal Reserve Banks for ; Banks.
the purpose of protecting the interests of such I In the following table are shown the changes
savings banks and trust companies in the event I between the two dates in the amounts of bills
of necessity resulting from withdrawals made | held by each bank, as well as the aggregate
by depositors in order to purchase or invest in | investments held by all the banks:
Government bonds.
I
Lin thousancjfafis of dollars.]
It will be observed that the action taken by
Net
Net
Federal Reserve Bank.
I May 18. June 22.
the Board has been limited to specified periods
increase. decrease.
of time and specified maturities in the belief
Boston
15,734
41,795
26,061
that as early as possible the member banks New
York
30,968
220,032
189,064
Philadelphia...
21,544
27,586
ought to endeavor to close their operations by Cleveland
6,042
9,965
20,499
10,534
16,919
15,576
requiring customers to liquidate as rapidly as Richmond
1,343
Atlanta
,
5,284
5,227
57
Chicago
10,877
41,933
possible their purchases of bonds.
31,056
St. Louis
7,053
11,267
4,214
9,534
10,586
Comparative figures for earning assets, espe- Minneapolis
1,052
Kansas City....
18,031
4,361
13,670
cially for the amounts of bills Dallas
4,062
5,151
1,089
San Francisco..
10,065
16,261
6,196
held b
' y t h e Federal Eeserve
Total bills
145,023 j 435,287
290,264
Total U. S. securities
114,390 ! 114,918
Banks on May 18 and June 22, Total
528
municipal warrants
j 14,639 !
2,444
12,195
are of unusual interest in throwing light on the
Total investments held. 274,052
552,649
278,597
amount of assistance actually rendered by the
JULY 1, 1917.
FEDERAL RESERVE BULLETIN.
499
Changes of cash holdings resulting from the
The^gold position is of|direct|interest in this
loan operations have likewise same connection For the four weeks ending:
sSTSndUion's. beenimportant. Aloss of about
June 15 the (total net [outward
one hundred millions in total re- and
gold movement was $43,048,000 .
serve and a reduction of the so-called excess
gold imports during the period
reserves of the New York City clearing house amounting to $3,535,000 and gold exports durbanks from $146,754,000 on May 19 to ing the same period, largely to the Far East, to
$54,051,000 on June 16, resulting in a decline $46,583,000.
of these banks7 reserve percentage (as gauged
The increase of the country's stock of gold
by the ratio of their total reserves to their net through net gold imports since August, 1914,
demand deposits) from 22.6 per cent to 19.5 appears from the following exhibit :
per cent, are the most prominent developments.
and exports into and from the United States
Government deposits of these banks, chiefly in Gold imports
from Aug. 1, 1914, to June 15,1917,
connection with Liberty Loan operations, in[000 omitted.}
creased meanwhile about sixty-three millions.
A similar tendency is noted by the New York
|. Excess
State banking department, the reserve perImports. Exports. i ° " »
j exports.
centage of the trust companies in Greater New
|
York showing a decrease from 25.6 to 21.4 per Aug. 1 to Dec. 31,1914
$23,253 $104,972 j > $81,719
1 to Dec. 31,1915
451,955
31,426 ! 420,529
cent and the reserve percentage of the New Jan.
Jan. 1 to Deo. 31,1916
155,793 1 529,952
685,745
153,810 j 235,029
388,839
York City State banks a decline from 28.5 to Jan. 1 to June 15,1917
1,549,792 446,001 j 1,103,791
Totai
23.8 per cent. Foreign Government deposits
with the leading New York banks apparently
1
Excess of exports over imports.
account for the temporary improvement in the
The rapid increase in the operations of Fedreserve situation of the clearing house banks
eral Reserve Banks occurring
indicated in the report for May 26.
General Growth of •
,,
. . . .
* i
Average excess reserves of the Philadelphia Banking Credit B m c e t h e N a t i o n o f l o a n
clearing house banks and trust companies
operations makes it particushow a decline from $19,627,000 for the week larly appropriate to examine with care the
ending May 19 to $14,209,000 for the week expansion of bank credits both in the United
ending June 16. This movement was some- States and in Europe. European figures are
what intermittent, the report for the week of especial interest, as indicating to some exending June 2 indicating an increase in average tent the increase in lending operations neexcess reserves from $18J593,OOO to $23,262,000. cessitated by the conduct of the war. The
For the Boston clearing house banks a following figures designed to illustrate some of
gradual increase of average excess reserves the salient points in connection with this enfrom $28,350,000 for the week ending May 19 largement of bank credits have, therefore,
to $34,829,000 for the week ending June 9, is been compiled from the returns furnished by
shown, the report for the following week indicat- all banks of the United States, as well as from
ing, however, a decline to $32,635,000.
those which show the condition of the principal
Reports to the Comptroller of the Currency British banks and the central banks of confrom 42 clearing house associations indicate, tinental Europe.
for the same period, aggregate increases of
Figures for individual deposits subject to
$44,262,000 in excess reserves as against check, as reported by national banks on June
aggregate decreases of $138,919,000, or a net 30,1916, and March 5, 1917, are given in the
decrease in excess reserves of $94,657,000 following table. On the supposition that the
between the week ending May 19 and the week individual deposits, subject to check, of all the
reporting banks in the United States increased
ending June 16.
500
FEDERAL EESERVE BULLETIN.
JULY 1, 1917.
at the same rate between the two dates, there Scotland, and Ireland, including the Bank of
is obtained a total of such deposits for March 5 England, at the end of 1913 and 1916, recently
published by the London Statist, especially
of $13,756,428,000.
figures of discounts, investments, and deposits,
All reporting
National
are instructive in this connection. They show
banks.
banks.
the changes in the condition of the banks result$6,368,293,000 $13,756,428,000 ing from assistance rendered to their customers
Mar. 5,1917
5,577,629,000 12,045,909,000
June 30,1916
as well as to the Government direct in financing
1,710,519,000
790,664,000
Increase, totai
14.2 the war.
14.2
It is well to bear in mind that while
Increase, per cent
the bank-note circulation of the United KingDuring the past three years the money in dom shows a relatively moderate increase
during the period, the amount of Government
circulation increased as follows:
currency notes, whose issue began only in
June 1, 1917
$4, 731,327,000
August,
1914, reached a total of $730,675,776
July 1,1914
3,419,168,000
at the end of 1916, and stands at present (June
Increase
1,312,159,000
6) at $772,936,462, secured by gold to the exFor aggregate individual deposits subject to tent of 17.9 per cent only.
check the estimated increase for about the same
period is as follows:
End of 1913.
Mar. 5,1917
June 30, 1914
$13,756,428,000
9,539,574,000
4, 216,854,000
This, therefore, is a total increase of individual check deposits and money of $5,529,013,000.
The increase of $4,216,854,000 in checking
deposits thus shown may be compared with an
increase of $l^*20yiO&;6flO, or ^4&. per cent, in
the bank holdings of various securities (including Government bonds, but exclusive of Federal Keserve Bank stock), as shown by the fol!
lowing figures: Total bank investments on June
130, 1916, were, $6,821,516,000, and on June 30,
1914, were, $5,584,900,000.
Between June 30,1916, and March 5,1917, the
investments of National and Federal Reserve
Banks increased from $2,378,109,000 to $2,588,704,000, or by about 9 per cent. Applying
this rate of increase to the June 30, 1916,
figures for all bank investments, there is shown
a calculated total of bank investments for March
5, 1917, of $7,435,452,000, or $1,850,552,000
in excess of the like total for June 30, 1914.
This increase constitutes about 45 per cent of
the increase during the same period shown above
in individual deposits, subject to check.
Comparative figures of principal assets and
liabilities of the principal banks of England,
End of 1916.
Cash in hand and at Bank of England . $1,013,050,000 $1,905,673,000
Bills discounted
593,265,000
857,253,000
Investments
1,180,530,000 2,493,098,000
Bank notes in circulation
221,859,000
362,506,000
Deposit and current accounts
5,557,728,000 8,067,221,000
Statements of the German Reichsbank, the
Bank of France, and the Russian State Bank,
showing their comparative condition just prior
to the outbreak of the war and at the most
recent available date, afford further light upon
credit expansion in Europe,
Principal assets and liabilities of the German Reichshanh.
July 31,1914. May 23,1917.
$298,261,000
Gold in vault
495,296,000
Loans and discounts
7,960,000
Treasury notes
299,515,000
Deposits
Bank notes in circulation.. 692,442,000
8602,897,000
2,194,374,000
124,322,000
1,104,482,000
1,935,435,000
June 7,3917,
§602,930,000
i," 964," 721,666
Principal assets and liabilities of the Bank of France.
July 30,1914
Hay 24,1917..
Gold in vault
$799,279,000
Advances to the Treasury since Aug., 1914.
Bank notes in circulation
1,289,855,000
Current account deposits:
Government
73,834,000
Other
. . .
182,881,000
$624,435,000
2,007,200,000
3,743,140,000
256,715,000
523,034,000
15,673,000
507,361,000
FEDERAL RESERVE BULLETIN,
JULY 1, 1917.
Principal assets and liabilities of the Russian State Bank.
501
nizing of the Senate and House drafts by
selecting from each the sections which were
May 1/14,
July 26/29,
agreed upon for incorporation into the final law.
1917.
1914.
Thus the provision adopted by the Senate with
Gold on hand
3825,884,000 | $761,262,000 reference to the issue of reserve notes against
Loans and discounts, including collateral
660,148,000 gold, and the counting of gold held by Federal
loans
400,205,000
4,687,166,000
Treasury bills
Reserve Agents, as part of the note reserve of
Deposits and current accounts:
108,752,000
264,937,000
'm Government
327,585,000 1,450,223,000 Federal Reserve Banks, was adopted; while the
^Other
341,174,000 5,900,428,000
Notes in circulation
House's provision as to the amount of reserves,
which omitted all requirements as to vault cash,
The general question of bank-credit expan- was likewise included. Other important secsion in Europe has been interestingly dis- tions taken from the Senate bill were those procussed in an article in the London Economist, viding for new methods of handling the gold
elsewhere reproduced in this issue of the Fed- settlement fund and altering the liability of
Federal Reserve Agents for moneys in their
eral Reserve Bulletin (p. 518).
The President on June 21 signed the bill charge. The Board has so frequently and so
amending the Federal Reserve positively expressed its views with reference to
act w h i c h i n i t s
ISmeits.
>
original form the urgent necessity of the adoption of the leghad already passed the House islation and the benefits to be derived from it
of Representatives on May 5 and the Senate that only very general comment is required at
on May 9. Both Houses had previously re- j this time.
ceived and adopted a conference report recon-! The amendments, as already remarked, follow lines that have been recomciling the two drafts of the measure, this report I
tended by the Board and were
being debated in the House on June 12-14, | Amfndments.
fully explained both in the Anand in the Senate on June 18. The act as I
finally adopted embodies principles already dis- j nual Report for 1916 and in communications
cussed in the Bulletin, and in the Board's vari- j to both Houses of Congress. Their broad purous reports and statements, the only new j pose is that of strengthening the gold reserves
feature being a modification of the so-called j of the Federal Reserve Banks, and this end is
exchange amendment, to which reference was ; accomplished in two principal ways. Arrangemade in the Review of the Month for June 1. jments are made for transferring to the Federal
The exchange amendment gave to the banks • Reserve Banks the vault cash heretofore carthe right to make an exchange charge of not! ried at the option of the banks either in
exceeding one-tenth of 1 per cent, As finally j their own vaults or with the reserve instimodified in the conference report and in the ! tutions. At the same time the nonmember
measure now law, this amendment places in; banks are encouraged to deposit their rethe hands of the Federal Reserve Board the \ serves with the Federal Reserve Banks by
authority to regulate the amount of exchange the making of liberal provisions which will
charges, within this limit of one-tenth of 1 enable them to exchange their gold for Fedper cent, and provides that no exchange charge eral Reserve notes and to carry accounts
shall be made to Federal Reserve Banks. This with the Federal Reserve Banks for the clearis a mandatory requirement that non-member ing and collection of their checks. The other
as well as member banks shall remit absolutely method chiefly relied upon to effect the purat par. No material changes were made in the pose of the amendments is that of rendering the
other provisions of the law, the work of the system more attractive to State institutions in
conference committee consisting in the harrno- the belief that they will become members of it
10594&—17
2
502
FEDERAL EESERVE BULLETIN.
and in consequence subscribe for stock and
deposit their reserves with the reserve banks.
The act now adopted releases the money reserve heretofore carried in the vaults of the
member banks in so far as it may not be locally
necessary, since the member banks are left to
the exercise of their own judgment regarding
the amount of funds so needed.
Other amendments provided for in the new
law authorize desired changes in the criminal
section of the Federal Reserve Act, adjusting
the provisions with reference to action of directors more nearly to practical requirements
as developed by experience. They also make
provision for improved methods of conducting
the work of the gold settlement fund, which has
at times been delayed on account of the fact
that the various processes of shifting, indorsing,
and cashing the ten thousand dollar gold certificates by which the fund was represented had
become very burdensome.
Various other improvements of administrative practice have likewise been incorporated,
not the least important being a change in the
liability^f> provisions of the law, whereby the
Federal Reserve Banks are made to join with
the Reserve Agents in their assumption of liability for notes and gold. On the whole the Board
believes it to be true that the amendments have
added very materially to the efficiency of the
Federal Reserve Act as a working measure
and have also strengthened the reserve system
as a whole by providing for a much larger
control over the gold stock of the country.
The section of the new law relating to State
banks and trust companies is
practically an enactment of the
Board's regulations on that
subject already in effect. A3 heretofore stated
by the Board, it was deemed advisable to
make plain to intending members that these
administrative regulations would be recognized
as having the force of law, and hence the recommendation to Congress that they be incorporated into the pending measure. In genera]
the provisions now given legislative sanction
JULY 1,1917.
assure every State bank and trust company
entering the Federal Reserve System that there
shall be no interference with its charter and
statutory rights, and that it may continue to
exercise all powers granted to it under such
charter. In addition, of course, it becomes
entitled to the usual privileges of member
banks. In order to put the State banks thus
becoming members upon a plane of equality
with national banks, and at the same time to
enforce upon them a rule which experience has
shown to be wise, it is, however, specified that
the Federal Reserve Bank shall not grant to a
State member bank the discount privilege with
respect to any paper made by a borrower who
is obligated to the member bank to an amount
in excess of 10 per cent of its capital and surplus. The conditions of examination of State
member banks are also carefully defined, these
State members being subject only to examination by the Board or by the Federal Reserve
Bank of their district, on the one hand, and, of
course, to the State examination prescribed by
the authorities of the State in which they may
be located. This provision also transfers to
the Federal Reserve Bank of the district the
reports which State members have heretofore
made to the Comptroller of the Currency. As
in the past, there is suitable provision for the
withdrawal of State members who may desire
to leave the system. The assurances as to conditions of their membership thus furnished to
State banks have been very generally approved by institutions which had contemplated
making application, but had been deterred by
considerations of various kinds.
A feature of the law amending the Federal
Reserve Act that is likely to
Change In Status n
fi ure
of Branches.
S
.
m
an
.
, .
important
wa
J
^
the operation of the Federal
Reserve System during the near future, is that
which relates to the establishment of branches.
Few provisions of the law have been found
more unsatisfactory than those bearing on this
subject, the text of the act lacking clearness
and precision, besides meeting with various
JULY 1, 1917..
.FEDERAL SESEBVE BULLETIN.
508
difficulties of practice not anticipated. Per- those points to build up their balances in
haps the two most troublesome elements in Federal Reserve Banks without further delay,
the situation have been that relating to the while it was recommended that elsewhere
appointment of the directorates of branches? deficiencies in balances be not penalized until
and that which requires the Federal Reserve after July 15. The Board at the same time
Banks to establish branches. Under these | issued to all Federal Reserve Banks instructions
provisions it has often appeared that the I with reference to the new form to be given to
Federal Reserve Board could not direct the the consolidated weekly statement of Federal
establishment of branches, but must wait for Reserve Banks in consequence of the changes
the initiative to come from the Federal Reserve in the provisions of the law. The most signifiBanks. The new law authorizes the Board to cant of these changes, of course, related to the
require the establishment of such branches. accounting for gold and notes, particularly as
Thus it would seem that the responsibility for between the bank itself and the Federal
the further development of the branch system is Reserve Agent. Letters and telegrams on
now most largely centered in the Federal Reserve this subject were dispatched to the banks on
Board, whose duty will, therefore, be at an early June 20 and 21 in order that they might be
date to examine the field and develop a consist- prepared against the date when they would be
ent policy of branch banking. The experience informed of the actual signing of the new
thus far has been such as to indicate that a measure, so that if practicable, the consolimethod of control over branches different from dated weekly statement of the system might
that heretofore applied may be desirable. Leav- assume its revised form in the issue of
ing this for further determination as conditions June 23. As the bill ultimately became law
develop, the Board is considering the establish- on June 21, it proved possible to secure the
ment of branches at various places. The crea- cooperation of the Federal Reserve Banks in
tion of a branch at Spokane, Wash., with prob- time to make the desired change in the stateably branches at Seattle, Wash., and Portland, ment issued on June 23. A copy of the revised
Oreg., has already been tentatively provided statement appears elsewhere in this issue.
Supplementary to the instructions already
for, and the same is true of the proposed
issued as above described, the
branch at Baltimore, Md.
Changes in
Board
suggested to the FedImmediately upon receiving official infor- Reserve Policy.
eral
Reserve
Banks that it
mation that the new measure
b
would
probably
be
well
for
them
to adopt a
t a d «en signed and had beuniform
policy
with
respect
to
their
method of
come law, the Board on June 22
treating
and
reporting
reserves
against
notes
sent out to Federal Reserve Banks a general
and
deposits.
The
new
amendments
to
the
letter advising them of the adoption of the
act
would
permit
a
reserve
bank
to
count
amendments to the act and requesting them
to bring the information to the attention of gold held by its Federal Reserve Agent as a
their member banks. In this letter particular part of its required note reserve, while the Fedattention was called to the new reserve require- eral Reserve Bank might, if it chose, retain such
ments, but it was suggested to the Federal I gold on deposit with the agent against its
Reserve Banks that in view of the changes in outstanding notes, or might substitute comprogress as the result of Government borrowing mercial paper for the gold to any extent
operations, care should be used in effecting desired, provided that the gold remaining in
the transfers. It was also suggested that a be- the hands of the agent or specially segregated
ginning be made in central reserve cities and against notes in the vaults of the bank itself
Federal Reserve cities by requiring banks at did not fall short of 40 per cent of the notes
504
FEDERAL RESERVE BULLB-TUST,
JULY 1,1917,
outstanding. Differences in policy on the at the same time the use made of the money as
part of Federal Reserve Banks in regard to the reserve is identical with that to which it would
treatment of this item would have resulted in have been put had the metal been actually
considerable variations in the statements and physically present in the vaults of the
issued by them, and the Board consequently reserve banks themselves. The Board in
thought it well to recommend to them that, so granting the permission specified, however,
far as practicable, they maintain in their that for the future such holdings of ear-marked
reports an approximately equal percent- gold in foreign countries should not exceed a
age against both notes and deposits. The re- moderate percentage of the total gold holdings
ports heretofore issued have shown Federal Re- of participating banks. An inspection of the
serve notes secured by practically 100 per statement of the banks for the week ending
cent of gold. Under the new mode of report- June 23 shows that the amount so held was
ing the withdrawal of such gold from behind $52,600,000.
the notes in exchange for commercial paper
The decision of the Supreme Court of the
and its transfer to the deposit reserve account
United States in the case of
Bank v
correspondingly strengthens the deposit pro- Fellows, handed down
tection by enlarging the funds technically held
on June 11 (and printed elsefor that purpose. The plan establishes practi- where in this issue), fully sustains the action
cally a new basis of reserve comparison for the of Congress in providing for the grant of trustee
reserve banks and will correspondingly alter powers to national banks, subject to such
or affect comparisons based upon the older limitations as State law may impose. The
figures.
Federal Reserve Board has, since its organizaOne feature of the month's changes in tion, granted trustee powers, in whole or in
reserve requirements and re- part, to nearly 400 banks, guiding its action in
Holding of
serves
has grown not out of the each case by competent legal advice with
Gold Abroad.
legislation referred to, but out respect to the scope of such powers to be perof the conditions of the war. Obligations mitted under the law of the State in which the
amounting to about $50,000,000 in favor of applying bank is located. Most of the banks
American holders, which matured at London thus granted trustee powers are already exerjoint stock banks, were paid at the Bank of cising them to a greater or less extent. The
England. The resulting obligation to hold- decision of the court confirms them in what they
ers of the paper was assumed by the Fed- have already done and assures them of the
eral Reserve Bank of New York and by it dis- constitutionality of the provision of law under
tributed among the Federal Reserve Banks pro which they are operating. It is to be expected
rata, with the understanding that the proceeds that many others will now apply for and be
of the obligation when paid should be deposited granted authority of this kind. The banking
with the Bank of England and held there as aspect of this decision is also of very consider"ear-marked " gold, subject to the orders of the able importance. The verdict takes anotherstep
reserve system. Permission to carry out this toward the establishment of a greater degree of
transaction was given by the Federal Reserve similarity of function between commercial banks
Board on June 7, thus adding to the consoli- and trust companies, thereby continuing the
dated weekly statement a new item—c 'Gold held development which has already been begun
with foreign agencies7'—which appeared for from the opposite side as the result of the
the first time on June 23. This step is in line action of various States in granting to trust
with the practice of foreign banks. It has the companies commercial banking powers. I t
advantage of avoiding the necessity of shipping is not likely that even in those States where the
gold over-sea under dangerous conditions, while development is most advanced and decided, an
JULY 1,
.FEDERAL RESERVE BULLETIN.
1917.
identity of function will at any time in the
near future be brought about, but the present
processes of development are such as to suggest an increasingly close degree of approximation to this condition in the case of some
institutions or groups of institutions. We
print elsewhere in this issue a comparative
showing of the status of State law on the subject of acceptances. It would be much to be
desired if uniformity of State law on that
question and others relating to banking in
general, could be secured, together with liberal
and rational legislation regarding relations
between banks and trust companies, and the
relationship of both classes of institutions to
the Federal Reserve System.
During the past month the movement of
State banks and trust cornMovement of
.
Budu into System P a m e S
. ,
mto
,i
the
•« ,
Federal
-, T>
Re
~
serve System has continued.
Among those admitted have been the Merchants Loan & Trust Co. of Chicago, the St.
Joseph's Valley Bank of Elkhart, Ind., Messrs.
Coffman, Dobson & Co., of Chehalis, Wash., the
Guardian Savings & Trust Co., of Cleveland,
Ohio, and several others. The adoption of
the amendments to the Federal Reserve Act
has led a number of State institutions to
declare their intention of becoming members
at an early date, their hesitation thus far
being said to be due to the fact that they
desired to have legislative assurance of the
stability of the provisions with reference to
membership of State banks embodied in the
Board's administrative regulations.
Subscriptions to Liberty Loan.
The following statement issued by Secretary
of the Treasury McAdoo under date of June
22, 1917, furnishes summarized information
with reference to the Liberty Loan operations
in progress during the months of May and June:
"The total of the subscriptions to the $2,000,000,000 Liberty Loan amounts to $3,035,226,850—an oversubscription of $1,035,226,850, or
50 per cent more than the amount offered.
505
"More than 4,000,000 men and women of the
United States subscribed for the bonds, placing
this vast sum of money at the disposal of their
Government for the prosecution of the war.
Of this number it is estimated that 3,960,000
people, or 99 per cent, subscribed in amounts
ranging from $50 to $10,000, while the number
of individual subscribers to $5,000,000 and over
was 21, their subscriptions aggregating $188,789,900.
" The figures as to the number of subscriptions
are estimates, because the returns from the
12 Federal Reserve Banks in this respect are
incomplete, but when finally reported they will
exceed the number stated. One of the chief
purposes of the campaign was to distribute the
Liberty Bonds widely throughout the country
and place them as far as possible in the hands
of the people. This was important, because
the strength of Government finance, like the
strength of Government policies, rests upon
the support of the people. The large number
of subscribers, especially the large number of
small subscribers, is most gratifying, and indicates that the interest of the people was aroused
as never before in an issue of bonds.
'' The widespread distribution of the bonds and
the great amount of the oversubscription constitute an eloquent and conclusive reply to the enemies of the country who claimed that thejheart
of America was not in this war. The result, of
which every citizen may well be proud, reflects
the patriotism and the determination of the
American people to fight for the vindication of
outraged American rights, the speedy restoration of peace, and the establishment of liberty
throughout the world.
"The Congress pledged all the resources of
America to bring the war to a successful termination. The issue just closed will serve as an
indication of the temper and purpose of the
American people and of the manner in which
they may be expected to respond to future^calls
of their country for the necessary credits to
carry on the war.
"As originally announced the present issue of
bonds is limited to $2,000,000,000, and no allotments will be made in excess of that amount.
I have consequently decided to exercise the
right reserved in the announcement offering the
bonds to the public, to allot in full all applications for the smaller amounts and to reduce
allotments on applications for the larger
amounts. In view of the great number of subscribers for $10,000 and less, allotments will be
made in full to them.
506
1917
FEDERAL RESERVE BULLETIN,
The subscriptions by Federal Reserve Districts are as follows:
Boston
New York
Philadelphia
Cleveland
Kichmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
$332, 447, 600
1,186,788,400
232,309,250
286,148,700
109,737,100
57,878,550
357,195,950
86,134, 700
70,255,500
91,758,850
48,948,350
175, 623,900
Allotments will be made as follows:
Subscriptions.
Up to and including
$10,000.
Over $10,000 up to
and i n c l u d i n g
3100,000.
Over $100,000 up to
and i n c l u d i n g
$250,000.
Over $250,000 up to
and i n c l u d i n g
52,000,000.
Over §2,000,000 up
to and including
S6,000,000.
Over 36,000,000 up
to and including
$10,000,000.
325,000,000
$25,250,000
Districts.
Allotment.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Total
Allotments.
,296,684,850 100 per cent
8100,050 to 8250,000.
Subscription.
Over 8250,000.
Allotment. Subscription.
:
$10,293,900| 822,875,350 $12,155,700 $40,802,000
250 860,901,850
35,628,000 79,173,,300180,723,25!
|
16,355,750 17,083,750 57,035,100
7,360,100
10,457,700] 23,239,300 16,970,200 57,814,050
8,025,000 3,744,900 11,987,000
3,611,2501
3,460,000 2,736,550 9,596,600
1,557,000!
15,089,8501 33,533,050 12,814,150 45,806,550
6,695,700 2,172,350 7,005,900
3,013,050!
2,820,750 3,636,000 12,510,000
l,269,350|
7,558,250 7,744,950 26,294,300
3,401,200;
3,015,000 2,225,000 8,100,000
1,356,7501
6,166,850! 13,704,150 6,041,500 20,130,000
99,201,000! 220,455,600 268,048,300 957,983,350
New Form of Federal Reserve Bank Statement.
$1,296,6S4,850
Immediately upon the adoption of the bill
amending the Federal Reserve Act, the Federal
99,205,000 Reserve Board directed Federal Reserve Banks
to alter the form of their weekly statement in
184,381,800
such a way as to show the altered status with
58,661,250 respect to reserves resulting from the passage
of the new legislation. The necessity for this
9,801,600
grew out of the amendment providing that gold
with
a Federal Reserve Agent should count as
50,000,000 20.22 per cent
10,110,000
5,093,650
25,250,000 20.17 per cent
part of the reserves of the Federal Reserve Bank
Total subscriptions 3,035,226,850
Total allotment. 2,000,000,000
which deposits such gold. The Board's letter
on this subject, addressed to Federal Reserve
" I n cases where larger subscriptions have
been reported to the Federal Reserve Banks as Banks, was sent out on June 20, and was as
consisting of a number of smaller subscriptions, follows:
provision has been made for allotment in acThe conference report on Federal Reserve
cordance with the several amounts of the
Act amendments having passed the Senate,
smaller subscriptions."
the amendments will have been enacted into
law as soon as the President affixes his sigFollowing is the distribution and allotment of nature.
Under separate cover there is forwarded to
Liberty Bonds, by Federal Reserve Districts:
you a copy of the conference report as adopted.
$50 to 810,000.
$10,050 to 55100,000.
A reprint of the Act is in course of preparation
and will be sent to you in a few days in such
Districts.
quantity as you may desire.
Allotment.
Allotment. Subscription.
As soon as the amended law goes into effect
it will be necessary to adjust the weekly state1. Boston
$203,265,4001 3203,265,400 $39,302,900 §65,504,850
2. New Y o r k .
274,019,550 274,019,550 103,616,200172,693 700 ments issued by the banks and the consoli3. Philadelphia
112,412,100) 112,412,100 27,903,800 46,506,300
128,729,400! 128,729,400 45,819,550 76,365,950 dated statement issued by the Board so as to
4. Cleveland..
68,506,150! 68,506,150 12,731,350 21,218,950 conform to the new provisions of the Act.
5. Kichmond.
I
37,741,1001 37,741,100 4,248,500 7,080,850
6. A t l a n t a . . . .
195,210,7001 195,210,700 49,587,400 82 645,650 take pleasure in inclosing herewith a copy of
7. Chicago
40,960,400! 40,960,400 18,883,650 31,472,700
8. St. Louis...
39,747,600 39,747,600] 9,106,300 15,177,150 the consolidated statement showing the method
9. Minneapolis
40,732,350 40,732,350 10,304,400 17,173,950 which the Board will adopt in publishing the
10. Kansas City
25,954,500 25,954,500 7,127,300 11,878,850
11. Dallas
129,405,600 129,405,600 7,430,500 12,384,150 next weekly statement, provided the new Act
12. San Francisco
There is also inclosed
Total
1,296,684,8501,296,684,850 336,061,850 560,103,050 is in force at that time.
copy of Form 34, containing the changes to be
560,103,050 60 per cent, but
not less than
§10,000 bonds.
220,455,600 45 per cent, but
not less than
1,60,000 bonds.
601,514,900 30 per cent, but
not less than
§112,500 bonds.
234,544,300 25 per cent, but
not less than
§600,000 bonds.
46,674,150 21 per cent
336,061,850
JULY l,
1917.
507
FEDERAL RESERVE BULLETIN.
made by the bank in its daily statement to
the Board.
In preparation of its weekly statement, the
Board proceeds on the theory that the liability
of Federal Reserve Banks on outstanding
Federal Reserve notes will not be " reduced"
by the amount of gold held by the Agent, but
that gold deposited with the Federal Reserve
Agent is to be considered as collateral reserve,
but is not
to be considered as "reducing
liability.'7
It was thought advisable to keep the item
"Gold held by the banks" and "Gold with
Federal Reserve Agent" separate, so as to
show exactly how the notes are secured.
A Federal Reserve Bank, under the amended
law, will be entitled to withdraw gold held by
the Federal Reserve Agent and substitute
therefor commercial paper, provided it maintains a reserve of at least 40 per cent of gold
in its own vaults, or it may withdraw the gold
held with the Agent down to 40 per cent. It
should be borne in mind, however, that whenever there is in the hands of the Federal Reserve Agent more than 40 per cent of gold
against notes, the excess beyond that figure
can be counted as additional reserve against
notes only, but can not be in that case counted
as a reserve against deposits.
26 voted not to request Federal Reserve Banks
to make purchases of United States bonds for
this quarter.
Dividends Declared by Federal Reserve Banks.
Dividends at the rate of 6 per cent per
annum for varying periods were declared
during June by all Federal Reserve Banks
except at Boston. The following table gives
the periods for which dividends were declared
during the present calendar year:
Federal Reserve Bank of—
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St Louis...
Minneapolis
Kansas City
*
Dallas
San Francisco
Apr. 1-Dec. 31, 1915.
July 1-Dec. 31,1915.
July 1-Dec. 31, 1915.
Nov. 1,1916-June 30,1917.
July 1-Dec. 31,1916.
Jan. 1-June 30, 1916.
| A P r ' 1 - J u n e 30' 1915'
Uuly 1-Dec. 31,1915.
July 1, 1915-June 30,1916.
{ J u l ^ 1 " D e c - 31> 1 9 1 5 '
(Jan. 1-June 30, 1918.
May 1-Oct. 31, 1916.
Apr. 1-Sept. 30, 1915.
Fiduciary Powers.
The applications of the following banks for
permission to act under section 11-k of the
Federal Reserve act have been approved since
The following State institutions were ad- the issue of the June Bulletin:
mitted to membership in the Federal Reserve
DISTRICT No. 1.
System during the month of June: Interna- Trustee, executor, administrator, and registrar of stocks
tional Trust Co., Boston, Mass.; International and bonds:
Bank and the German Savings Institution, St.
Weoster and Atlas National Bank, Boston, Mass.
Louis, Mo.; Standard Trust & Savings Bank,
DISTRICT NO. 2.
Chicago, 111.; Merchants Loan & Trust Co., Registrar of stocks and bonds:
Chicago, 111.; St. Joseph Valley Bank, Elkhart,
Paterson National Bank, Paterson, N. J.
Ind.; Coffman, Dobson & Co., Bankers (Inc.),
DISTRICT NO. 6.
Chehalis, Wash.: Guardian Savings &Trust Co., Trustee, executor, administrator, and registrar of stocks
Cleveland, Ohio; and the Atascosa County and bonds:
Fourth National Bank, Macon, Ga.
State Bank, Jourdanton, Tex. The number of
State institutions which have now joined the
DISTRICT NO. 7.
system is 56.
Trustee, executor, administrator, and registrar of stocks
State Banks Admitted.
Offerings of Two Per Cent Bonds.
and bonds:
First National Bank, Red Oak, Iowa.
First National Bank, Waverly, Iowa.
DISTRICT No. 11.
Only $1,279,000 of United States 2 per cent
consols were offered for sale through the Trustee, executor, administrator, and registrar of stocks
bonds:
Treasurer of the United States to Federal andCommercial
National Bank, Shreveport, La.
Reserve Banks under section 18 of the FedFirst National Bank, Orange, Tex.
eral Reserve Act for the quarter ending June
DISTRICT NO. 12.
30, 1917. Sixteen banks made offerings, dis- Trustee, executor, administrator, and registrar of stocks
tributed among ten districts. In view of all and bonds:
conditions, the Federal Reserve Board on June
First National Bank, Moscow, Idaho.
508
FEDERAL BESEBVE BULLETIN.
Reserve Requirements Under the New
Amendments.
The Federal Reserve Board on June 22 sent
to all Federal Reserve Banks an official letter
announcing that the Act amending the Federal
Reserve Act had become law and explaining
the conditions under which the new reserve requirements would be made effective. The
letter is as follows:
The bill recently passed by Congress amending the Federal Reserve Act has been approved
by the President and has become a law. A
revised draft of the Federal Reserve Act as
amended has been prepared and will be forwarded to all Federal Reserve Banks and member banks as soon as received from the printer.
New regulations by the Board are in the course
of preparation and will be forwarded to you in
the very near future. In the meantime your
attention is directed to section 10 of the Act in
question which amends section 19 of the Federal Reserve Act and provides in part as follows:
"SEC. 19. Demand deposits within the meaning of this Act shall comprise all deposits payable within thirty days, and time deposits shall
comprice all deposits payable after thirty days,
all savings accounts and certificates of deposit
which are subject to not less than thirty days'
notice before payment, and all postal savings
deposits.
"Every bank, banking association, or trust
company which is or which becomes a member
of any Federal Reserve Bank shall establish
and maintain reserve balances with its Federal
Reserve Bank as follows:
"(a) If not in a reserve or central reserve
city, as now or hereafter defined, it shall hold
and maintain with the Federal Reserve Bank
of its district an actual net balance equal to
not less than seven per centum of the aggregate amount of its demand deposits and three
perl centum of its time deposits.
' (h) If in a reserve city, as now or hereafter
defined, it shall hold and maintain with the
Federal Reserve Bank of its district an actual
net balance equal tonot less than ten per centum
of the aggregate amount of its demand deposits
and three per centum of its time deposits.
"(c) If in a central reserve city, as now or
hereafter defined, it shall hold and maintain
with the Federal Reserve Bank of its district
an actual net balance equal to not less than
thirteen per centum of the aggregate amount
of its demand deposits and three per centum of
its time deposits."
JULY 1,1917.
Compliance with this section will make it
necessary, in most cases, for member banks to
increase their balances with the Federal Reserve
Banks. It is, of course, desirable that these
deposits should be made promptly, but with as
little disturbance to financial conditions as
possible, and to accomplish this the cooperation of all member banks is necessary.
Federal Reserve Banks in central reserve
cities should request their member banks
located in such, cities to increase their balances
with their Federal Reserve Bank in an amount
sufficient to comply with the new requirement
of the Act, not later than June 27.
In view of the fact that it is to be assumed
that reserve city banks and country banks will
be obliged to draw heavily upon their central
reserve city and reserve city correspondents in
order to meet demands to be made on account
of the instalments becoming due upon subscriptions to the Liberty Loan, country banks
and reserve city banks should be requested
immediately to build up their balances with
their respective Federal Reserve Banks by
remitting cash from their own vaults as far as
they can. do so without impairing their ability
to care for local needs.
The Board considers it inadvisable to increase at this time the pressure on reserve and
central reserve cities by encouraging heavy
withdrawals from those cities by correspondent
banks desiring to make transfers to the Federal
Reserve Banks to meet the new reserve requirements.
While the new law becomes technically effective upon the date of its passage by Congress ana signature by the President, it is, of
course, understood that a reasonable time must
be allowed for making the necessary transfer of
reserve to meet the requirements of the Act.
If, therefore, member banks continue to
maintain with the Federal Reserve Banks the
percentage of reserve required hitherto, the
Federal Reserve Banks may, until July 15,
reasonably refrain from imposing penalties
against member banks on account of deficiency
in reserve carried with them. That is to say,
failure to transfer the additional amount required by the new Act need not be penalized
until after July 15.
It is suggested to Federal Reserve Banks that
it might be advisable for them, in order to
facilitate and expedite the transfer of cash
from vaults of member banks to the vaults of
Federal Reserve Banks, to show liberality, as
far as permitted by law, in refunding to member
banks the shipping expenses of currency sent
to Federal Reserve Banks before June 30 and
JULY 1,
EEDEBAL RESERVE BULLETIN,.
1917.
in dealing with remittances of gold coin to be
exchanged for Federal Reserve notes. A
similar policy is suggested in dealing with
State banks desiring to establish balances with
Federal Reserve Banks in advance of becoming
either full members or members of the clearing
system.
It must be evident to all banks that it is to
their own interest to strengthen as far as possible the reserve and lending power of their
Federal Reserve Banks, the facilities of which
arevlikely to be used extensively in connection
with the" shifting of funds incident to the payments to be made on account of Liberty bond
subscriptions. Every bank, member and nonmember, should, therefore, do its utmost to
strengthen the gold reserve of the Federal
Reserve Banks hy promptly transferring such.
vault money as can be spared and by exchanging gold certificates and gold for Federal
Reserve notes, thereby helping to carry out the
policy adopted for the public welfare of encouraging for purposes of general circulation,
the use of Federal Reserve notes rather than of
gold certificates.
It is hoped that banks in Federal reserve
cities will make a special effort to cooperate
with the central reserve cities in at once transferring to their respective Federal Reserve
Banks such amount "of vault money as they
can conveniently spare. In case of demand
they can always replenish their currency supply
by calling upon their respective Federal Reserve
Banks.
Rediscounts for Nonmember Banks.
The following letter, regarding authority
granted by the Federal Reserve Board to
member banks to rediscount for nonmember
banks whenever the proceeds are used for the
purpose of paying for or carrying Liberty
Loan bonds, was sent to all Federal Reserve
Banks on June 9:
Inquiries have been made of the Board from
several quarters concerning the Board's circular of May 22. In this circular the Board has
authorized member banks to rediscount for
nonmember banks, including savings banks,
from June 15 to July 15, whenever the proceeds have been or are to be used to meet demands caused by subscriptions to the Liberty
Loan. The question has been raised whether
this authorization would permit member banks
105949—17
3
509
to rediscount with their indorsement with
Federal Reserve Banks a direct obligation of
a nonmember bank provided the nonmember
bai\k states in an affidavit that the proceeds of
the note have been used for the purpose of
paying for or carrying Liberty Loan bonds.
The Board has carefully considered this
matter and reached the conclusion that, in
view of the importance of making this loan a
success, and furthermore, in view of the fact
that the amendments covering the admission
of State banks are still under the consideration
of Congress at this time, the Board should not,
all things considered, withhold this authority,
which it is advised by counsel it may grant,
it being strictly understood that this authority,
as stated before, is given to be in force only
between June 15 and Juty 15, 1917, and the
Board is desirous that it should be understood
that the whole question will be reviewed after
that date and a new decision then given to
cover similar cases in the future.
Amendments to the Federal- Reserve Act.
The bill (H. R. 3673) amending various sections of the Federal Reserve Act has been
passed by Congress and was approved by the
President on June 21, 1917.
For the convenience of member banks the
Board has prepared the following synopsis of
those amendments. The text of the bill is
printed after this synopsis:
Section 1.—Branches of Federal Reserve Banks.
This section amends section 3 of the Federal
Reserve Act so as to authorize the Board to
permit or require any Federal Reserve Bank to
establish branch banks within its district, and
provides that the number of directors of such
branches shall, at the option of the Board, be
not more than seven nor less than three.
Section 2.—Assistants to Federal Reserve Agents.
This section amends section 4 of the Federal
Reserve Act so as to provide for the appointment of assistants to the Federal Reserve
Agents who shall have power to act in his name
and stead during his absence or disability.
The office of Deputy Federal Reserve Agent
formerly held by one of the class C directors
is abolished.
510
FEDERAL BESERVE BULLETIN.
Section 3.—Membership of State Banks and Trust Companies.
This section amends section 9 of the Federal
Reserve Act relating to the admission of State
banks and trust companies to the Federal
Reserve System, so as to provide that, subject
to the provisions of the Federal Reserve Act
and to the regulations of the Board made pursuant thereto, any State bank or trust company which becomes a member of the Federal
Reserve System shall retain its full charter
and statutory rights and may continue to
exercise all corporate powers granted to it by
the State in which it was created and shall
be entitled to all the privileges of member
banks; provided, however, that no Federal
Reserve Bank may discount for such a member bank any note, draft, or bill of exchange
of any one borrower who is liable to the member bank for more than 10 per cent of its
capital and surplus.
State banks and trust companies which are
member banks are made subject to examinations made by direction of the Federal Reserve
Board or of the Federal Reserve Bank by
examiners selected or approved by the Federal
Reserve Board. Examinations by State authorities when approved by the directors of
the Federal Reserve Bank may be accepted
in lieu of examinations by examiners approved
by the Federal Reserve Board. Reports of condition and of payments of dividends must be
made to the Federal Reserve Bank instead of
the Comptroller of the Currency as in the past.
State banks and trust companies which have
become member banks are authorized to withdraw from the Federal Reserve System after
six months7 written notice.
JULY 1,1917.
balance sufficient to offset the items in transit
held for its account by the Federal Reserve
Bank. This section also authorizes any member bank to make reasonable charges to be
determined and regulated by the Federal
Reserve Board, but in no case to exceed 10
cents per $100 or fraction thereof for the collection or payment of checks and drafts and
remission therefor by exchange or otherwise.
Federal Reserve Banks, however, are not subject to these charges.
Section 5.—Acceptances by Member Banks.
This section amends section 13 of the Federal
Reserve Act so as to authorize the Federal
Reserve Board to permit member banks to
accept drafts and bills of exchange drawn
against shipments of goods or against warehouse receipts covering readily marketable
staples up to 100 per cent of the capital and
surplus of the accepting bank.
Section 6.—Foreign Agencies of Federal Reserve Banks.
This section amends section 14, subsection
(e) of the Federal Reserve Act so as to authorize the Federal Reserve Board to give its consent to or require reserve banks to open and
maintain accounts in foreign countries, etc.,
and also provides for participation accounts.
Section 7.—Issue of Federal Reserve Notes Against Gold.
This section amends section 16 of the Federal
Reserve Act so as to authorize the issue of
Federal Reserve notes upon the security of gold
or gold certificates and so as to provide that
gold or gold certificates held b}^ the Federal
Reserve Agent as collateral security shall be
counted as part of the gold reserve which the
Federal Reserve Bank is required to maintain
against its notes in actual circulation. This
section also authorizes the issue of Federal
Section 4.—Clearing and Collection for Nonni ember Reserve notes upon the security of 15-day
Banks.
notes of member banks secured by eligible comThis section amends section 13 of the Federal mercial paper or by bonds or notes of the
Reserve Act so as to authorize Federal Reserve United States.
Banks, solely for purposes of exchange or of Section 8.—Deposits of Gold with the Treasurer ©r
collection, to receive deposits of currency, Assistant Treasurer.
checks, drafts, and maturing notes or bills from
This section amends section 16 of the Federal
any nonmember bank or trust company which Reserve Act so as to authorize the Treasurer or
maintain* with the Federal Reserve Bank a any assistant treasurer of the United States
JULY 1, 1917.
FEDERAL RESERVE BULLETIN.
511
to receive deposits of gold or gold certificates
when tendered by any Federal Eeserve Bank or
Federal Reserve Agent for credit to its or his
account with the Federal Reserve Board.
TEXT OF AMENDMENTS.
Reserve Act so as to repeal any provision of law
requiring any national bank to maintain a
minimum deposit of bonds with the Treasurer of the United States.
Be it enacted hy the Senate and House of
Representatives of the United States of America
[Public—No. 25—66th Congress.]
[II. B, 3673.]
Act To amend the act approved December 23, 1913,
Section 9.—Deposits of Government Bonds with the Anknown
as the Federal Reserve Act, as amended by the
Treasurer.
acts of August 4, 1914, August 15, 1914, March 3, 1915,
This section amends section 17 of the Federal and September 7, 1916.
in Congress assembled, That section three of the
act known as the Federal reserve act be
amended and reenacted so as to read as follows :
Section 10.—Reserves.
I "SEC. 3. The Federal Reserve Board may
This section amends section 19 of the Federal permit or require any Federal reserve bank to
Reserve Act so as to provide for an immediate establish branch banks within the Federal
reserve district in which it is located or within
transfer of all reserves to Federal Reserve the district of any Federal reserve bank which
Banks. Under this section the total amount may have been suspended. Such branches,
of reserves to be maintained by a member bank subject to such rules and regulations as the
must be carried with the Federal Reserve Federal Reserve Board may prescribe, shall be
Bank of its district. The amount of these re- operated under the supervision of a board of
directors to consist of not more than seven nor
serves is as follows:
less than three directors, of whom a majority
of one shall be appointed by the Federal reserve
bank of the district, and the remaining direcDemand Time
deposits. deposits. tors by the Federal Reserve Board. Directors
of branch banks shall hold office during the
Per cent. Per cent. pleasure of the Federal Reserve Board/ 7
Country banks
7
3
Reserve city banks
10
3
SEC. 2. That section four in the paragraph
Central reserve citv banks..
13 i
relating to the appointment of class C directors
and prescribing their duties be amended and
Member banks are no longer required to reenacted so as to read as follows:
"Class C directors shall be appointed by the
maintain any reserves in their own vaults.
Federal Reserve Board. They shall have been
Section 11.—Salaries or Fees of Directors, Officers, or for at least two years residents of the district
Employees.
for which they are appointed, one of whom shall
This section amends section 22 of the be designated by said board as chairman of the
Federal Reserve Act, relating to the salaries board of directors of the Federal reserve bank
or fees paid to officers, directors, or employees and as 'Federal reserve agent/ He shall be a
person of tested banking experience, and in
of member banks by adding provisos to the ! addition to his duties as chairman of the board
effect that- directors, officers, employees, or j of directors of the Federal reserve bank he shall
attorneys shall not be prohibited from re- \ be required to maintain, under regulations to
ceiving the same rates of interest paid to other : be established by the Federal Reserve Board,
depositors of the bank, and that notes, drafts, • a local office of said board on the premises of
the Federal reserve bank. He shall make regubills, or other evidences of debt executed or lar reports to the Federal Reserve Board and
indorsed by directors or attorneys of the bank shall act as its official representative for the
may be discounted with such bank on the same : performance of the functions conferred upon it
terms and conditions as other notes, drafts, oy this act. He shall receive an annual combills, or other evidences of debt, upon the pensation to be fixed by the Federal Reserve
: Board and paid monthly by the Federal reserve
affimative vote or written assent of & majority ; bank to which he is designated. One of the
of the members of the board of directors of : directors of class C shall be appointed by the
Federal Reserve Board as deputy chairman to
such member bank.
512
FEDERAL RESERVE BULLETIN.
exercise the powers of the chairman of the board
when necessary. In case of the absence of the
chairman and deputy chairman, the third-class
C director shall preside at meetings of the board.
"Subject to the approval of the Federal
Reserve Board, the Federal reserve agent shall
appoint one or more assistants. Such assistants, who shall be persons of tested banking
experience, shall assist the Federal reserve
agent in the performance of his duties and shall
also have power to act in his name and stead
during his absence or disability. The Federal
Reserve Board shall require such bonds of the
assistant Federal reserve agents as it may deem
necessary for the protection of the United
States. Assistants to the Federal reserve agent
shall receive an annual compensation, to be
fixed and paid in the same manner as that of
the Federal reserve agent."
SEC. 3. That section nine be amended and
reenacted so as to read as follows:
'•'SEC. 9. Any bank incorporated by special
law of any State, or organized under the general
laws of any State or of the United States,
desiring to become a member of the Federal
Reserve System, may make application to the
Federal Reserve Board, under such rules and
regulations as it may prescribe, for the right to
subscribe to the stock of the Federal reserve
bank organized within the district in which the
applying bank is located. Such application
shall be"for the same amount of stock that the
applying bank would be required to subscribe
to as a national bank. The Federal Reserve
Board, subject to such conditions as it may
prescribe, may permit the applying bank to
become a stockholder of such Federal reserve
bank.
"In acting upon such applications the
Federal Reserve Board shall consider the financial condition of the applying bank, the general
character of its management, and whether or
not the corporate powers exercised are consistvent with the purposes of this act,
"Whenever the Federal Reserve Board shall
permit the applying bank to become a stockholder in the Federal reserve bank of the district its stock subscription shall be payable on
call of the Federal Reserve Board, and stock
issued to it shall be held subject to the provisions of this act.
"All banks admitted to membership under
authority of this section shall be required to
comply with the reserve and capital requirements of this act and to conform to those provisions of law imposed on national banks which
JULY 1,
1917,
prohibit such banks from lending on or purchasing their own stock, which relate to the
withdrawal or impairment of their capital
stock, and which relate to the payment of
unearned dividends. Such banks and the officers, agents, and employees thereof shall also be
subject to the provisions of and to the penalties
prescribed by section fifty-two hundred and
nine of the Revised Statutes, and shall be
required to make reports of condition and of
the payment of dividends to the Federal
reserve bank of which the}?- become a member.
Not less than three of such reports shall be
made annually on call of the Federal reserve
bank on dates to be fixed by the Federal
Reserve Board. Failure to make such reports
within ten days after the date they are called
for shall subject the offending bank to a penalty
of $100 a day for each day that it fails to transmit such report; such penalty to be collected
by the Federal reserve bank by suit or otherwise.
"As a condition of membership such banks
shall likewise be subject to examinations made
by direction of the Federal Reserve Board or
of the Federal reserve bank by examiners
selected or approved by the Federal Reserve
Board.
"Whenever the directors of the Federal
reserve bank shall approve the examinations
made by the State authorities, such examinations and the reports thereof may be accepted
in lieu of examinations made by examiners
selected or approved by the Federal Reserve
Board: Provided, however, That when it deems
it necessary the board may order special
examinations by examiners of its own selection
and shall in all cases approve the form of the
report. The expenses of all examinations,
otner than those made by State authorities,
shall be assessed against and paid by the banks
examined.
"If at any time it shall appear to the Federal
Reserve Board that a member bank has failed
to comply with the provisions of this section
or the regulations of the Federal Reserve
Board made pursuant thereto, it shall be
within the power of the board after hearing
to require such bank to surrender its stock in
the Federal reserve bank and to forfeit all
rights and privileges of membership. The
Federal Reserve Board may restore membership upon due proof of compliance with the
conditions imposed by this section.
"Any State bank or trust company desiring
to withdraw from membership in a Federal
JULY 1,
1917.
FEDERAL RESERVE BULLETIN.
51.3
reserve bank may do so, after six months7 change of any one borrower who is liable for
written notice shall have been filed with the borrowed money to such State bank or trust
Federal Reserve Board, upon the surrender company in an amount greater than ten per
and cancellation of all of its holdings of capital centum of the capital and surplus of such State
stock in the Federal reserve bank: Provided, bank or trust company, but the discount of
however, That no Federal reserve bank shall, bills of exchange drawn against actually existexcept under express authority of the Federal ing value and the discount of commercial or
Reserve Board, cancel within the same calendar business paper actually owned by the person
year more than twenty-five per centum of its negotiating the same shall not be considered as
capital stock for the purpose of effecting borrowed money within the meaning of this
voluntary withdrawals during that year. All section. The Federal reserve bank, as a consuch applications shall be dealt with in the dition of the discount of notes, drafts, and bills
order in which they are filed with the board. of exchange for such State bank or trust comWhenever a member bank shall surrender its pany, shall require a certificate or guaranty to
stock holdings in a Federal reserve bank, or the effect that the borrower is not liable to
shall be ordered to do so by the Federal such bank in excess of the amount provided by
Reserve Board, under authority of law, all of this section, and will not be permitted to beits rights and privileges as a member bank come liable in excess of this amount while such
shall thereupon cease and determine, and notes, drafts, or bills of exchange are under
after due provision has been made for any discount with the Federal reserve bank.
indebtedness due or to become due to the
" I t shall be unlawful for any officer, clerk, or
Federal reserve bank it shall be entitled to a agent of any bank admitted to membership
refund of its cash paid subscription with under authority of this section to certify any
interest at the rate of one-half of one per check drawn upon such bank unless the person
centum per month from the date of last or company drawing the check has on deposit
dividend, if earned, the amount refunded in no therewith at the time such check is certified an
event to exceed the book value of the stock at amount of money equal to the amount specified
that time, and shall likewise be entitled to in such check. Any check so certified by duly
repayment of deposits and of any other balance authorized officers shall be a good and valid
due irom the Federal reserve bank.
obligation against such bank, but the act of
"No applying bank shall bo admitted to any such officer, clerk, or agent in violation of
membership in a Federal reserve bank unless it this section may subject such bank to a forpossesses a paid-up, unimpaired capital suffi- feiture of its membership in the Federal Recient to entitle it to become a national banking serve System upon hearing by the Federal
association in the place where it is situated Reserve Board."
under the provisions of the national-bank act.
S E C 4. That the first paragraph of section
"Banks becoming members of the Federal thirteen be further amended and reenacted so as
Reserve System under authority of this section to read as follows:
"Any Federal reserve bank may receive from
shall be subject to the provisions of this section
and to those of this act which relate specifically any of its member banks, and from the United
to member banks, but shall not be subject to States, deposits of current funds in lawful
examination under the provisions of the first money, national-bank notes, Federal reserve
two paragraphs of section fifty-two hundred notes, or checks and drafts payable upon presand forty of the Revised Statutes as amended entation, and also, for collection, maturing
hj section twenty-one of this act. Subject notes and bills; or, solely for purposes of exto the provisions of this act and to the regula- change or of collection, may receive from other
tions of the board made pursuant thereto, any Federal reserve banks deposits of current funds
bank becoming a member of the Federal Re- in lawful money, national-bank notes, or
serve System shall retain its full charter and checks upon other Federal reserve banks, and
statutory rights as a State bank or trust com- j checks and drafts payable upon presentation
pany, and may continue to exercise all cor- | within its district, and maturing notes and bills
porate powers granted it by the State in which | payable within its district; or, solely for the
it was created, and shall be entitled to all j purposes of exchange or of collection, may reprivileges of member banks: Provided, hovj-\ ceive from any nonmember bank or trust comever, That no Federal reserve bank shall be j pany deposits of current funds in lawful money,
permitted to discount for any State bank or j national-bank notes, Federal reserve notes,
trust company notes, drafts, or bills of ex-1 checks and drafts payable upon presentation,
514
FEDERAL RESERVE BULLETIN.
JULT 1,1917.
or maturing notes and bills: Provided, Such
SEC. 6. That section fourteen, subsection (e),
nonmember bank or trust company maintains be amended and reenacted so as to read as
with the Federal reserve bank of its district a follows: ,
ii
balance sufficient to offset the items in transit
(e) To establish accounts with other Fedheld for its account by the Federal reserve eral reserve banks for exchange purposes and,
bank: Provided further, That nothing in this with the consent or upon the order and direcor any other section of this act shall be con- tion of the Federal Reserve Board and under
strued as prohibiting a member or nonmember regulations to be prescribed by said Board, to
bank from making reasonable charges, to be open and maintain accounts in foreign coundetermined and regulated by the Federal Re- tries, appoint correspondents, and establish
serve Board, but in no case to exceed 10 cents agencies in such countries wheresoever it may
per $100 or fraction thereof, based on the total be deemed best for the purpose of purchasing,
of checks and drafts presented at any one selling, and collecting bills of exchange, and to
time, for collection or payment of checks and buy and sell, with or without its indorsement,
drafts and remission therefor by exchange or through such correspondents or agencies, bills
otherwise: but no such charges shall be made of exchange (or acceptances) arising out of acagainst the Federal reserve banks."
tual commercial transactions which have not
SEC. 5. That the fifth paragraph of section more than ninety days to run, exclusive of
thirteen be further amended and reenacted so days of grace, and which bear the signature of
two or more responsible parties, and, with the
as to read as follows:
"Any member bank may accept drafts or consent of the Federal Reserve Board, to open
bills of exchange drawn upon it having not and maintain banking accounts for such foreign
more than six months sight to run, exclusive correspondents or agencies. Whenever any
of days of grace, which grow out of transactions such account has been opened or agency or corinvolving the importation or exportation of respondent has been appointed by a Federal
goods; or which grow out of transactions in- reserve bank, with the consent of or under the
volving the domestic shipment of goods pro- order and direction of the Federal Reserve
vided shipping documents conveying or secur- Board, any other Federal reserve bank may,
ing title are attached at the time of acceptance; with the consent and approval of the Federal
or which are secured at the time of acceptance Reserve Board, be permitted to carry on or
by a warehouse receipt or other such document conduct, through the Federal reserve bank
conveying or securing title covering readily opening such account or appointing such
marketable staples. No member bank shall agency or correspondent, any transaction auaccept, whether in a foreign or domestic trans- thorized by this section under rules and reguaction, for any one person, company, firm, or lations to be prescribed by the Board."
corporation to an amount equal at any time
SEC. 7. That section sixteen, paragraphs two,
in the aggregate to more than ten per centum three, four, five, six, and seven, be further
of its paid-up and unimpaired capital stock and amended and reenacted so as to read as folsurplus, unless the bank is secured either by lows :
attached documents or by some other actual
"Any Federal reserve bank may make apsecurity growing out of the same transaction plication to the local Federal reserve agent for
as the acceptance; and no bank shall accept such amount of the Federal reserve notes heresuch bills to an amount equal at any time in inbefore provided for as it may require. Such
the aggregate to more than one-half of its application shall be accompanied with a tender
paid-up and unimpaired capital stock and sur- to the local Federal reserve agent of collateral
plus: Provided, however, That the Federal lie- in amount equal to the sum of the Federal reserve Board, under such general regulations as serve notes thus applied for and issued pursuit may prescribe, which shall apply to ail banks ant to such application, The collateral' secualike regardless of the amount of capital stock rity thus offered shall be notes, drafts, bills of
and surplus, may authorize any member bank exchange, or acceptances acquired under the
to accept such bills to an amount nor exceeding provisions of section thirteen of this act, or
at any time in the aggregate one hundred per bills of exchange indorsed by a member bank
centum of its paid-up and unimpaired capital of any Federal reserve district and purchased
stock and surplus: Provided further, That the under the provisions of section fourteen of this
aggregate of acceptances growing out of do- act, or bankers' acceptances purchased under
mestic transactions shall in no event exceed the provisions of said section fourteen, or gold
fifty per centum of such capital stock and or gold certificates; but in no event shall such
surplus."
collateral security, whether gold, gold ccrtifi-
JULY 1,
1917.
EEDEBAL RESERVE BULLETIN".
515
cates, or eligible paper, be less than the amount wise than for redemption may be exchanged
of Federal reserve notes applied for. The for gold out of the redemption fund hereinafter
Federal reserve agent shall each day notify provided and returned to the reserve bank
the Federal Reserve Board of all issues and through which they were originally issued, or
withdrawals of Federal reserve notes to and they may be returned to such bank for the
by the Federal reserve bank to which he is credit of the United States. Federal reserve
accredited. The said Federal Reserve Board notes unfit for circulation shall be returned by
may at any time call upon a Federal reserve the Federal reserve agents to the Comptroller
bank for additional security to protect the Fed- of the Currency for cancellation and destruceral reserve notes issued to it.
tion.
The Federal Reserve Board shall require each
Every Federal reserve bank shall maintain
reserves in gold or lawful money of not less Federal reserve bank to maintain on deposit
than thirty-iiye per centum against its deposits in the Treasury of the United States a sum in
and reserves in gold of not less than forty per gold sufficient in the judgment of the Secretary
centum against its Federal reserve notes in of the Treasury for the redemption of the
actual circulation: Provided, however, That Federal reserve notes issued to such bank, but
when the Federal reserve agent holds gold or in no event less than five per centum of the
gold certificates as collateral for Federal reserve total amount of notes issued less the amount of
notes issued to the bank such gold or gold gold or gold certificates held by the Federal
certificates shall be counted as part of the gold reserve agent as collateral security; but such
reserve which such bank is required to main- deposit of gold shall be counted and included
tain, against its Federal reserve notes in actual as part of the forty per centum reserve hereincirculation. Notes so paid out shall bear upon before required. The board shall have the
their faces a distinctive letter and serial num- right, acting through the Federal reserve agent,
ber which shall be assigned by the Federal to grant, in whole or in part, or to reject
Reserve Board to each Federal reserve bank. entirely the application of any Federal reserve
Whenever Federal reserve notes issued through bank for Federal reserve notes; but to the
one Federal reserve bank shall be received by extent that such application may be granted
another Federal reserve bank, they shall be the Federal Reserve Board shall, through its
promptly returned for credit or redemption to local Federal reserve agent, supply Federal
the Federal reserve bank through which they reserve notes to the banks so applying, and
were originally issued or, upon direction of such bank shall be charged with the amount of
such Federal reserve bank, they shall be notes issued to it and shall pay such rate of
forwarded direct to the Treasurer of the United interest as may be established by the Federal
States to be retired. No Federal reserve bank Reserve Board on only that amount of such
shall pay out notes issued through another under notes which equals the total amount of its
penalty of a tax of ten per centum upon the outstanding Federal reserve notes less the
tace value of notes so paid out. Notes pre-; amount of gold or gold certificates held by the
sented for redemption at the Treasury of the Federal reserve agent as collateral security.
United States shall be paid out of the redemp- Federal reserve notes issued to any such bank
tion fund and returned to the Federal reserve shall, upon delivery, together with such notes
banks through which they were originally of such Federal reserve bank as may be issued
issued, and thereupon sucn Federal reserve under section eighteen of this act upon security
bank shall, upon demand of the Secretary of of United States two per centum Government
the Treasury, reimburse such redemption fund ' bonds, become a first and paramount lien on
in lawful money or, if such Federal reserve all the assets of such bank.
notes have been redeemed by the Treasurer in
"Any Federal reserve bank may at any time
old or gold certificates, then such funds shall reduce its liability for outstanding Federal ree reimbursed to the extent deemed necessary serve notes by depositing with the Federal reby the Secretary of the Treasury in gold or serve agent its Federal reserve notes, gold,
gold certificates, and such Federal reserve bank gold certificates, or lawful money of the
shall, so long as any of its Federal reserve notes United States. Federal reserve notes so deremain outstanding, maintain with the Treas- posited shall not be reissued, except upon comurer in gold an amount sufficient in the judg- pliance with the conditions of an original issue.
ment of the Secretary to provide for all redemp"The Federal reserve agent shall hold such
tions to be made by the Treasurer. Federal gold, gold certificates, or lawful money availreserve notes received by the Treasurer other- able exclusively for exchange for the outstand-
f
516
FEDERAL BESBBVE BULLETIN.
ing Federal reserve notes when offered by the
reserve bank of which he is a director. Upon
the request of the Secretary of the Treasury
the Federal Reserve Board shall require the
Federal reserve agent to transmit to the
Treasurer of the United States so much of the
gold held by him as collateral security for Federal reserve notes as may be required for the
exclusive purpose of the redemption of such
Federal reserve notes, but such gold when deposited with the Treasurer shall be counted
and considered as if collateral security on deposit with the Federal reserve agent.
"Any Federal reserve bank may at its discretion withdraw collateral deposited with the
local Federal reserve agent for the protection
of its Federal reserve notes issued to it and
shall at the same time substitute therefor other
collateral of equal amount with the approval
of the Federal reserve agent under regulations
to be prescribed by the Federal Reserve
Board. Any Federal reserve bank may retire
any of its Federal reserve notes by depositing
them with the Federal reserve agent or with
the Treasurer of the United States, and such
Federal reserve bank shall thereupon be entitled to receive back the collateral deposited
with the Federal reserve agent for the security
of such notes. Federal reserve banks shall
not be required to maintain the reserve or the
redemption fund heretofore provided for against
Federal reserve notes which have been retired.
Federal reserve notes so deposited shall not be
reissued except upon compliance with the conditions of an original issue/'
All Federal reserve notes and all gold, gold
certificates, and lawful money issued to or deposited with any Federal reserve agent under
the provisions of the Federal reserve act shall
hereafter be held for such agent, under such
rules and regulations as the Federal Reserve
Board may prescribe, in the joint custody of
himself and the Federal reserve bank to wiiich
he is accredited. Such agent and such Federal
reserve bank shall be jointly liable for the safekeeping of such Federal reserve notes, gold,
gold certificates, and lawful money. Nothing
herein contained, however, shall be construed
to prohibit a Federal reserve agent from depositing gold or gold certificates with the
Federal Reserve Board, to be held by such
board subject to his order, or with the Treasurer of the United States for the purposes authorized by law.
JULY 1,
1917.
SEC. 8. That section sixteen be further
amended by adding at the end of the section
the following:
"That the Secretary of the Treasury is
hereby authorized and directed to receive deposits of gold coin or of gold certificates with
the Treasurer or any assistant treasurer of the
United States when tendered by any Federal
reserve bank or Federal reserve agent for credit
to its or his account with the Federal Reserve
Board. The Secretary shall prescribe by regulation the form of receipt be issued by the
Treasurer or Assistant Treasurer to the Federal
reserve bank or Federal reserve agent making
the deposit, and a duplicate of such receipt shall
be delivered to the Federal Reserve Board by
the Treasurer at Washington upon proper
advises from any assistant treasurer that such
deposit has been made. Deposits so made
shall be held subject to the orders of the
Federal Reserve Board and shall be payable
in gold coin or gold certificates on the order
of the Federal Reserve Board to any Federal
reserve bank or Federal reserve agent at the
Treasury or at the Sub treasury of the United
States nearest the place of business of such
Federal reserve bank or such Federal reserve
agent: Provided, however, That any expense
incurred in shipping gold to or from the
Treasury or subtreasuries in order to make
such payments, or as a result of making such
payments, shall be paid by the Federal Reserve Board and assessed against the Federal
reserve banks. The order used by the Federal
Reserve Board in making such payments shall
be signed by the governor or vice governor, or
such other officers or members as the board
may by regulation prescribe. The form of
such order shall be approved by the Secretary
of the Treasury.
"The expenses necessarily incurred in carrying out these provisions, including the cost of
the certificates or receipts issued for deposits
received, and all expenses incident to the
handling of such deposits shall be paid by the
Federal Reserve Board and included in its
assessments against the several Federal reserve
banks.
"Gold deposits standing to the credit of any
Federal reserve bank with the Federal Reserve
Board shall, at the option of said bank, be
counted as part of the lawful reserve which
it is required to maintain against outstanding
Federal reserve notes, or as a part of the
FEDERAL RESERVE BULLETIN.
JOLT 1, 1917.
517
reserve it is required to maintain against eral reserve bank of its district an actual net
deposits.
balance equal to not less than ten per centum
"Nothing in this section shall be construed of the aggregate amount of its demand deposits
as amending section six of the act of March and three per centum of its time deposits.
fourteenth, nineteen hundred, as amended by
" (c) If in a central reserve city, as now or
the acts of March fourth, nineteen hundred and hereafter defined, it shall hold and maintain with
seven, March second, nineteen hundred and I the Federal reserve bank of its district an actual
eleven, and June twelfth, nineteen hundred and j net balance equal to not less than thirteen per
sixteen, nor shall the provisions of this section ! centum of the aggregate amount of its demand
be construed to apply to the deposits made or deposits and three per centum of its time deto the
receipts or certificates issued under those posits.
acts.77
"No member bank shall keep on deposit
SEC. 9. That section seventeen be amended with any State bank or trust company which is
and reenacted so as to read as follows:
not a member bank a sum in excess of ten per
"SEC. 17. So much of the provisions of sec- centum of its own paid-up capital and surplus.
tion fifty-one hundred and fifty-nine of the Re- No member bank shall act as a medium or agent
vised Statutes of the United States, and section of a nonmember bank in applying for or receivfour of the act of June twentieth, eighteen hun- ing discounts from a Federal reserve bank undred and seventy-four, and section eight of the der the provisions of this act, except by peract of July twelfth, eighteen hundred and mission of the Federal Reserve Board.
eighty-two, and of any other provisions of ex"The required balance carried by a membes
isting statutes as require that before any na- bank with a Federal reserve bank may, under
tional banking association shall be authorized the regulations and subject to such penaltier
to commence banking business it shall transfer as may be prescribed by the Federal Reserve
and deliver to the Treasurer of the United Board, be checked against and withdrawn by
States a stated amount of United States reg- such member bank for the purpose of meeting
istered bonds, and so much of those provisions existing liabilities: Provided, however, That no
or of any other provisions of existing statutes bank shall at any time make new loans or shall
as require any national banking association pay any dividends unless and until the total
now or hereafter organized to maintain a mini- balance required by law is fully restored.
mum deposit of such
bonds with the Treasurer
"In estimating the balances required by this
is hereby repealed.7'
act, the net difference of amounts due to and
SEC. 10. That section nineteen be further from other banks shall be taken as the basis for
amended and reenacted so as to read as follows: ascertaining the deposits against which re"SEC. 19. Demand deposits within the mean- quired balances with Federal reserve banks
ing of this act shall comprise all deposits paya- shall be determined.
"National banks, or banks organized under
able within thirty days, and time deposits shall
comprise all deposits payable after thirty days, local laws, located in Alaska or in a dependency
all savings accounts and certificates of deposit or insular possession or any part of the United
which are subject to not less than thirty days' States outside the continental United States
notice before payment, and all postal savings may remain nonmember banks, and shall in
that event maintain reserves and comply with
deposits.
"Every bank, banking association, or trust all the conditions now provided by law regulatcompany which is or which becomes a member ing them; or said banks may, with the consent
of any Federal reserve bank shall establish and of the Reserve Board, become member banks of
maintain reserve balances with its Federal re- any one of the reserve districts, and shall in that
event take stock, maintain reserves, and. be subserve bank as follows:
"(a) If not in a reserve or central reserve ject to all the other provisions of this act."
SEC. 11. That that part of section twentycity, as now or hereafter defined, it shall hold
and maintain with the Federal reserve bank of two which reads as follows: "'Other than the
its district an actual net balance equal to not usual salary or director's fees paid to any offiless than seven per centum of the aggregate cer, director, or employee of a member bank and
amount of its demand deposits and three per other than a reasonable fee paid by said bank to
such officer, director, or employee for service
centum of its time deposits.
" (6) If in a reserve city, as now or hereafter rendered to such bank, no officer, director, emdefined, it shall hold and maintain with the Fed- ployee, or attorney of a member bank shall be
105949—17
4
518
FEDERAL RESERVE BULLETIN.
a beneficiary of or receive, directly or indirectly,
any fee, commission, gift, or other consideration for or in connection with any transaction
or business of the bank," be amended and reenacted so as to read as follows:
"Other than the usual salary or director's fee
paid to any officer, director, employee, or attorney of a member bank, and other than a reasonable fee paid by said bank to such officer,
director, employee, or attorney for services
rendered to such bank, no officer, director, employee, or attorney of a member bank shall be
a beneficiary of or receive, directly or indirectly,
any fee, commission, gift, or other consideration for or in connection with any transaction
or business of the bank: Provided, however,
That nothing in this act contained shall be construed to prohibit a director, officer, employee,
or attorney from receiving the same rate of
interest paid to other depositors for similar
deposits made with such bank: And provided
further, That notes, drafts, bills of exchange, or
other evidences of debt executed or indorsed by
directors or attorneys of a member bank may
be discounted with such member bank on the
same terms and condition as other notes, drafts,
bills of exchange, or evidences of debt upon the
affirmative vote or written assent of at least a
majority of the members of the board of directors of such member bank."
Approved, June 21, 1917.
Our Financial Duty,1
As a nation we are agreed that our only present concern is to win the war quickly and completely. For this purpose we still, after nearly
three years of enormous strain, have ample
resources available if we make full use of them.
Our soldiers in the field have done and are doing
deeds which ought to stir every one of us at
home to do everything that is in our power to
back their efforts. The richest and mightiest
nation on earth is now arming rapidly to join
the fight for liberty and justice as our comrade
in arms; while, after making all allowances for
possible bias by which information concerning
Germany is likely to be warped, it is safe to
infer that the difficulty with which our chief
enemy maintains the contest grows daily, and
will grow still faster in the future. And yet,
1
From the London Economist, June % 1917.
JULT 1,1917.
with victory thus assured and almost within
our grasp, we are not doing our financial duty,
because there are still thousands of people
among us who are wasting their money as if
they had never heard of a war. As we feared
at the time of the war loan's success, that success has deluded us into thinking that "finance
is all right," and this delusion has been fostered
by the chancellor's paltry addition of six millions to permanent taxation in a budget which
shows a deficit of 1,650 millions, and by Mr.
McKenna's unfortunate remark that exchange
is no longer a problem of predominant importance. Finance is all right, but only on condition that we all save every possible penny for
the war, and we are still a long ways from doing
that. The Manchester Guardian observed very
truly, in a leading article last Thursday, "In a
country where every man lived in the spirit of
these tragic years there could be no talk of a
lottery loan;" but in this country, where every
man by no means lives in this spirit, there is,
and has to be, talk, not of a lottery loan, but of
a premium bond issue, as a possible means of
getting money out of the pockets of the thoughtless and checking their untimely extravagance.
Our contemporary also observes that if people
"will not voluntarily give their money to the
State when the State is taking the lives of the
best of the nation, then the State should, by
taxes, take their money from them." We entirely agree, but the chancellor has just brought
in a budget which has lamentably failed in this
obvious and elementary duty. Since the current financial year began the Government has
sold exchequer bonds and savings certificates
amounting to less than 36 millions in 56 days,
and has in the same period got in nearly 117
millions on account of the war loan issued in
January. If we credit the whole of these
amounts to the savings of the investing classes,
they are providing money at the rate of less
than 20 millions a week, and will not, at this
rate, provide 1,000 millions in the course of the
year, in which 1,650 have to be found by borrowing. The investor is not doing nearly
enough, and so the chancellor goes to the bank-
EEDESAL RESEKVE BULLETIN.
519
ers and dealers in credit and sells them Treasury ! multiplying money, and so making us reduce
bills for money which they manufacture for j consumption.
him, and so produces inflation with all its i The process is simple. The banks buy
attendant evils, present and future.
j Treasury bills from the Government and pay
We ventured to point out, in a recent issue : for it by a draft on their balance at the Bank
of the Economist, that a remedy for inflation ! of England; the Government pays the cash out
would be found if all the money required for j to contractors, who pay it back into the bank,
the war were taken from the citizens in taxes | which thus have their cash returned to them
and loans produced by saving, and we were j and their deposits increased by the sum that
thereupon told by the Scotchman that "this] they put into Treasury bills. Apparently the
may be true in theory, but it is far too Utopian j wealth of the country has been increased.
to be of practical value. We are spending from j Actually, banking deposits, which are potential
6 to 7 millions a day, and are the savings of j currency, have been increased by a creation of
the people sufficient to find that money"?; credit; and with every increase in the volume
With all deference to our contemporary we of currency there is a tendency for prices to
contend that, apart from borrowing abroad j rise.
and realizing assets abroad, the savings of the | The reverse process is equally simple. The
people are the only source out of which the ',Government gets money from bank depositors
war can and must be financed. If the people Iin taxes or savings, and uses it to pay off the
do not save enough voluntarily to supply all | Treasury bills or other securities held by the
that the Government needs in taxes and loans ; banks. It pays the banks off with cash, taken
out of savings, then the Government forces ; from them and handed over to it by their
them to save more by getting money from I depositors. The banks get their cash back and
banks, which the banks manufacture for it; by I its amount is unaltered, but their deposits are
this process money is multiplied, prices rise, ; reduced by the sura handed over by depositors
and compulsory saving is enforced on the and used by the Government for redeeming
people (especially those least able to bear it) ; Treasury bills. By this reduction of potential
because their money, being depreciated, gives ; currency, if it goes far enough, we can effect a
them less goods, and so they have to go with- j fail in prices or at least a check in their advance.
out goods and reduce consumption. The idea I The war would be cheapened, the banks would
that war can be paid for by financial legerde- I be less locked up in Government securities, the
main, involving no privation to anyone, is a ; very natural and very dangerous suspicion of
delusion. To get the goods needed for the war the working classes would be allayed, and we
the Government has to make the civilians go moldy civilians left at home could at- least feel
without goods. If we all cut down consump- i that we were doing our best by the real men
tion, as we ought to, to the bare necessaries • who are fighting for us, if only we did our simneeded for health and efficiency, and handed ple duty of saving every possible shilling for
over all surplus spending power to the Gov- the war, instead of having the process of selfernment, then the whole of the nation's pro- denial enforced on us by inflation.
ductive power, apart from what is required for
necessaries, would be available for the war, and
this is the only source, apart from foreign
Press Statement.
financial help, out of which war's needs can be
The Comptroller of the Currency issued, on
met. As we do not do this and the GovernJune
9, the following statement to the press:
ment does not force us to do so directly by
This office has received inquiries as to
taxation and compulsion, it does so, in an increasing degree as the war's cost rises, by the whether the provisions of section 5200 of the
roundabout means of financing, through banks, Revised Statutes, limiting the liabilities to a
national bank of any person, firm, or corpo-
520
FEDERAL RESERVE BULLETIN.
ration for money borrowed, to a sum not exceeding 10 per cent of the bank's capital and
surplus, would prevent a national bank from
selling United States bonds owned and acquired in good faith by it to a customer and
accepting the purchase price from such customer partly in cash and partly in the notes
of the customer secured by the bonds purchased, if the notes so given should aggregate
more than the 10 per cent limitation above
referred to.
Such a transaction would not be construed
by this office as involving the borrowing of
money from the national bank. The notes
here accepted as part of the purchase price are
evidence of the agreement on the part of the
purchaser to pay at a future date the balance
of the purchase money of the bonds in accordance with the agreement of sale and are not,
therefore, subject to the limitation imposed
by section 5200.
In order, however, that the national-bank
examiners finding such notes in a bank may
be fully advised of the nature of the transaction, it is desirable that the notes should
show on their face that they represent part of
the purchase price of the bonds, or there should
be some form of collateral agreement filed with
the bank showing the true nature of the
transaction.
New National Bank Charters.
The Comptroller of the Currency reports the
following increases and reductions in the number of national banks and the capital of
national banks during the period from May
26, 1917, to June 22, 1917, inclusive:
Banks.
New charters issued to
With capital of
Increase of capital approved for
With new capital of
12
JULY 1,1917,
Total number of banks going into liquidation or reducing capital (other than those
consolidating with other national banks). 8
Aggregate capital reduction
$460,000
The foregoing statement shows the aggregate of
increased capital for the period of the banks
embraced in statement was
2,095,000
Against this there was a reduction of capital
owing to liquidations (other than for consolidation with other national banks) and
reductions of capital of
460.000
N et increase
1, 635,000
Failures, by Federal Reserve Districts,
Although the country's business mortality at
this time last year was relatively moderate,
present returns are even more favorable, 815
commercial failures being reported to R. G.
Dun & Co., for three weeks of June, as against
874 in the same period of 1916. The record for
May—the latest month for which complete
figures are available—discloses 1,296 defaults
for $11,771,891, exclusive of a large life insurance receivership in Pennsylvania, and compares with 1,482 insolvencies for $19,466,436 in
May, 1916. Apart from the ninth and twelfth
districts, where increases of 15 and 18 failures,
respectively, occurred, and the fourth and sixth
districts, where there was no change at all,
defaults were less numerous than last year in
every Federal Eeserve district, and in most
instances the improvement was substantial.
Similarly, increases in liabilities were the exception, appearing only in the first, fourth, and
fifth districts, and in several cases the reduction
was pronounced, notably so in the second,
sixth, eighth, and tenth districts,
$800, 000
Failures during May.
10
1, 295, 000
Number.
Liabilities.
Districts.
Aggregate number of new charters and
banks increasing capital
22
With aggregate of new capital authorized
2,095,000
Number of banks liquidating (other than
those consolidating with other national
banks)
7
Capital of same banks
Number of banks reducing capital
1
Reduction of capital
360,000
100,000
1917
First
Second
Third
Fourth....
Fifth
Sixth
Seventh...
Eighth....
Ninth
Tenth
Eleventh..
Twelfth...
Total
152
237
59
98
76
115
167
69
53
51
58
161
| 1,2
1916
157
312
73
98
79
115
220
98
38
68
81
143
1,482
1917
SI,556,618
2,780,807
578,653
1,048,049
915,789
1,438,019
1,250,196
278,598
237,761
293,037
503,691
910,673
11,771,8
1916
il, 239,043
6,914,971
716,787
736,195
783,480
3,947,950
.1,882,586
763,712
258,850
519,774
707,572
995,516
19,466,436
JULY 1,1917.
FEDERAL RESERVE BULLETIN.
GOLD SETTLEMENT FUND.
CHANGE IN OPERATION OF FUND.
Important changes in the operation of the
gold settlement fund were made possible by
the approval on June 21, 1917, of the amendments to the Federal Reserve Act. Section 16
of the amendments was recommended to Congress for the purpose of simplifying the operation of the fund; which has grown to such proportions as to make the handling of the gold
certificates evidencing the deposits of Federal
Reserve Banks and Federal Reserve Agents a
heavy responsibility. The fund has grown
from about $20,000,000, when its operation
began in May, 1915, to $523,410,000.
Some idea of the magnitude of the fund may
be formed from the fact that a truck load of
gold certificates was transferred from the
Federal Reserve Board to the Treasury of the
United States. It took three men over two
days to place a stamped indorsement upon the
certificates. Had the amount represented been
in the form of gold coin it would have weighed
963 short tons.
Under the old system of handling the gold
settlement fund, if a deposit of §5,000,000 was
made by the Federal Reserve Bank of Chicago
with the assistant treasurer at Chicago, a telegram would have been sent from the subtreasury at Chicago to the Treasurer of the
United States at Washington, who would issue
gold certificates of the series of 1900 in the
$10,000 denomination, payable to the order of
the Federal Reserve Board. Custody of these
certificates was assumed by the Botjard with
credit upon the books of the fund. Payments
from the fund were made by reversing the
operation, the certificates being taken from the
vault, indorsed, and presented to the Treasurer
of the United States, with the request that he
cause payment to be made through the assistant treasurer in the city where the payment
521
was desired. Transfers between banks and
between banks and agents were, and still will
be, made upon the books of the fund.
Under the new plan the Treasurer of the
United States has opened an account with the
Federal Reserve Board, giving credit to the
Board for the sum of the deposits of the Federal
Reserve Banks and Federal Reserve Agents.
Individual accounts are, as heretofore, kept by
the Federal Reserve Board. When a bank or a
Federal Reserve Agent desires to make a deposit for credit in the gold-settlement fund, the
gold is delivered at the nearest subtreasury.
The Assistant Treasurer gives a receipt, form of
which is prescribed, and advises the Treasurer
of the United States by wire. The Treasurer
then issues a duplicate receipt to the Federal
Reserve Board and credit is given upon the
books of the gold-settlement fund. Payment
out of the fund will be directed by the Federal
Reserve Board with a form of check drawn
upon the Treasurer of the United States.
The Treasurer of the United States, who has
heretofore received the gold and issued gold
certificates against it, will receive and retain
the gold as heretofore, but instead of issuing
certificates in large numbers, will give one
receipt for the lump sum. Balances of Federal
Reserve Banks and agents will be separately
kept upon the books of the gold-settlement
fund, and book transfers made as before.
In making the transfer the office of the
Treasurer of the United States was represented
by George Fort, Assistant Treasurer, and C. S.
Pearce, cashier, of the United States. The
Federal Reserve Board was represented by
Sherman Allen, Assistant Secretary and fiscal
agent, who had charge of the gold-settlement
fund since it was opened in May, 1915. Below
is given the circular issued by the Treasury
Department, which also contains section 16,
under which the account with the Treasurer of
the United States was opened:
522
FEDERAL RESERVE BULLETIN.
,T;7r.Yi. 1.9.17.
for credit to ;£gold settlement fund'7 account with the
Reserve Board.
Instructions Relative to Deposits of Gold Coin and Gold Federal
receipt is issued under authority or section 8 of the
Certificates for Credit in Gold Settlement Fund Ac- actThis
June 21, 1917, amending the Federal reserve
count and Payments Therefrom Under Act of June act,approved
and the deposit made is held subject to the order of
21, 1917.
the Federal Reserve Board in accordance with the provisions of said act.
TREASURY DEPARTMENT,
[1917. Department Circular No. S6. Treasurer's Office.]
O F F I C E OF THE SECRETARY,
Assistant Treasurer of the United States.
Washington, D. C, June 26, 1917.
(3)
The
following
form of order for use by the
To the Treasurer and Assiatant Treasurers of the
Federal Reserve Board in transmitting funds
United States:
to Federal lieserve Banks of Rederal Reserve
(1) The act approved June 21, 1917, amend- Agents has been approved:
ing the Federal Reserve Act, contains the folTREASURER OF THE UNITED STATES,
lowing provisions:
Washington,
, 191...
That the Secretary of the Treasury is hereby authorized
Pay to
and directed to receive deposits of gold coin or of gold cer- dollars ( $ . . . .
), in gold coin or gold certificates,
tificates with the Treasurer or any assiatant treasurer of
the United States when tendered by any Federal Reserve out of deposits made with the Treasurer of the United
Bank or Federal Reserve Agent for credit to its or his ac- States under authority of the act approved June 21, 1917.
FEDERAL RESERVE BOARD,
count with the Federal Reserve Board. The Secretary
By
shall prescribe by regulation the form of receipt to be isAssistant Secretary,
sued by the Treasurer or Assistant Treasurer to the Federal
Countersigned,
Reserve Bank or Federal Reserve Agent making the deposit, and a duplicate of such receipt shall be delivered
to the Federal Reserve Board by the Treasurer at WashGovernor (or other duly authorized officer or member.)
ington upon proper advices from any Assistant Treasurer
that such deposit has been made. Deposits so made shall
(4) The Federal Reserve Board should file
be held subject to the orders of the Federal Reserve
Board and shall be payable in gold coin or gold certifi- with the Treasurer of the United States a copy
cates on the order of the Federal Reserve Board to any of any by-laws or regulations prescribed by it
Federal Reserve Bank or Federal Reserve Agent at the authorizing any of its officers or members other
Treasury or at the Subtreasury of the United States
nearest the place of business of such Federal Reserve than the governor or vice governor of the
Bank or such Federal Reserve Agent: Provided, however, board to execute such orders, and facsimile
That any expense incurred in shipping gold to or from signatures should be filed with the Treasurer
the Treasury or Sub treasuries in order to make such pay- or any officers or members who are to sign
ments, or as a result of making such payments, shall be
paid by the Federal Reserve Board and assessed against such orders.
the Federal Reserve Banks. The order used by the Fed- j (5) The Treasurer should open and maintain
eral Reserve Board in making such payments shall be I a separate account of all expenses incurred in
signed by the governor or vice governor, or such other of- I shipping gold to or from the Treasury or Subficers or members as the Board may be regulation prescribe.
The form of such order shall be approved by the Secretary | treasuries in order to make payments or as a
| result of making payments under authority of
of the Treasury.
The expenses necessarily incurred in carrying out these I this section and of any other expenses incident
provisions, including the cost of the certificates or recipta thereto. An account should be rendered at
issued for deposits received, and all expenses incident to the end of each quarterly period to the Federal
the handling of such deposits shall be paid by the Federal
Reserve Board and included in its assessments against the Reserve Board for reimbursement of such
several Federal Reserve Banks.
expenses.
OSCAR T. CROSBY,
(2) The following form of receipt has been
prescribed to be issued by the Treasurer and
Assistant Treasurers when deposits are made
by the Federal Reserve Banks or Federal
Reserve Agents with the Treasurer or Assistant
Treasurers for credit to the account of such
bank or agent with the Federal Reserve Board:
Acting Secretary of the Treasury.
TRANSACTIONS DURING MONTH.
Transactions through the gold settlement fund
I continue to increase in volume, the settlement of
,1917.
j June 21 showing total clearings of well over half
Received from the Federal Reserve Bank of
the sum of $
in gold coin or gold certificates, • a billion dollars. On the date named the obli-
TREASURY OP THE UNITED STATES,
1917.
523
FEDERAL KESEEVE BULLETIN.
gations settled, covering transactions between Cleveland, and San Francisco were the largest
the banks during the preceding week, amounted gainers in the fund.
to $613,620,000. The transfers with in the
of clearings and transfers, Federal Reserve Banks,
fund ordered by banks during the same week A mount
from May 18, 1917, to June 21, 1917, inclusive.
were very large, amounting to $219,983,000.
[000 omitted.]
Thus far in 1917, from January 1 through the
settlement of June 21, not quite one-half the
Total
Balances Transclearings. adjusted.
fers.
year, the total of obligations liquidated through
the fund, including both weekly settlements and Settlement of—
May 24,1917..
S37I,961
§28,756 85,730
transfers, is $8,975,910,500, exceeding by
May 31; 1917..
388,512
53,391 103,943
June
7,1917..
367,499
39,360
7,885
$2,289,295,500 the total of like transactions
June 14,1917.
478,310
43,435 74,100
June 21,1917.
613,620
70,525 219,983
during the years 1915 and 1916 combined. The
Total
2,219,902
235,467 411,641
total for these two years was $6,686,615,000.
5,963,754
Previously reported for 1917.
408,865 380,613.5
Below are shown the figures covering the
Total since Jan. 1,1917
644,332 792,254.5
8,183,656
Total transfers Jan. 1,1917, to date .
792,254.5
transactions which took place in the fund from Total
for 1916, including transfers... 5,633,966
May 18 through June 21. Changes in owner- Total for 1915, including transfers... 1,052,649
Total clearings and transfers |
ship in the fund amounted to 4.19 per cent of
May 20,1915 to June 21,1917. j 15,862,525.5
the obligations settled. Boston, Philadelphia,
Changes in ownership of gold.
[000 omitted.]
Total to May 17,1917.
From May 18, 1917, to June 21, 1917, inclusive.1
Total ciianges from May
20, 1915, to June 2i,
1917.2
Decrease.
Balance to
credit May
17, 1917,
plus net
deposits of
gold since
that date.
Decrease.
Federal Reserve Bank oi—
'•Joston
New York
PMladelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis.
Minneapolis
Kansas City .
Dallas
San Francisco
Total
$387,169
387,169
Increase.
£47,144
68,063
36,4G1
14,507
22,909
35,130
6,386
10,096
52,850.5
29,526.5
64,096
387,189
Balance
Tune 21,
1917.
Decrease.
Increase.
816,316
136,559
2,204
12,146
16,275
6,073
21,048
13,052
5,143
28,733
7,715
4,416
S39,593
36,498
§166,061
23,433
33,035
20,431 | - 2,447
3,626
32,777
16,583
11,211
22,235
6,498
14,077
17,360
$23,277
269,680
269,680
110,185
110,185
$487,230
Increase.
?>70,421
89,292
57,350
IS 663
19,283
46,859
9,917
16,164
46,352.5
35,888 5
77,040
21,229
20,889
4.155
11,729
3,531
6,068
6,362
12,944
487,230
'? Changes in ownership of gold during period May 18,1917, to June 21,1917, equal 4.19 per cent of obligations settled.
Total changes in ownership of gold since May 20,1915, equal 3.11 per cent of obligations settled.
487,230
524
FEDERAL KESEEVE BULLETIN.
JULY 1, 1917.
Gold settlement fund—Summary of transactions from May 18, 1917, to June 21, 1917, inclusive.
[000 omitted.]
Federal Reserve Bank of—
Balance
Gold.
last
statement,
DeMay 17, With1917.
drawn. posited.
Debit.
Credit.
Weekly settlements from May 18, 1917, i j u n e 21
to June 21, 1917.
j 1917^ '
I balance
j in fund
Net
Total
Total
after
Net
debits.
debits.
credits. credits. clearing.
322,316
37,809
4,854
19,296
13,655
4,973
30,208
7,242
7,923
22,233
7,175
12,176
S6,000
1,250 $100,000
3,200
550
7,150
1,000
3,620
1,000
2,100
4,120
13,280
6,330
520
250
3,030
6,500
50
590
8,000
240
§22,400
46,400
32,000
725
8,875
7,300
50,000
7,600
5,000
21,683
7,500
10,500
S3,508
164,000
SI,352
217,661
30,000
9,700
1,478
423
2,490
2,986
5,851
12,775
670
482
2,074
§148,S36
783,835
257,653
181,888
118,825
57,403
252,098
155,085
55,813
100,260
39,899
68,307
189,860
44,480
219,983
219,983
235,467
2,219,902
Boston
New York
Philadelphia...
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis...
Kansas City...
Dallas
San Francisco.
Total.
124,300
Transfers.
$191,005
566,174
310,882
203,502
131,856
61,077
283,827
156,516
66,881
115,445
53,761
78,976
•543,521 ! S39,593
36,498
53,229
23,433
23,092
33,035
13,454
20,431
2,447
6,164
32,777
34,715
16,583
7,282
11,211
11,068
22,235
15,855
14,077
14,344
17,360
12,743
2,219,902 I 235,467 j 269,680
Federal Reserve Agents9 fund—Summary of transactions for week ending June 21, 1917.
[000 omitted.]
Balance
last stateFederal Reserve Agent at— > ment,
May 17,
1917.
Boston
New York
Philadelphia.Cleveland
Richmond
Atlanta
Chicago
i
!
i $24,310
! 12,500
6,000
! 13,480
! 48,310
Gold
withdrawn.
Gold deposited.
Balance
last state- Gold
ment,
withMay 17, drawn.
1917.
Federal Reserve Agent at—
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
SI,150
'""2*666'
!
!
|
..!
i
Gold de- Balance
21,
posited. June
1917.
86,270
3,220
20,560
5,640
21,110
7,000
610
520
2,000
35,690
6,250
13,560
5,030
22,590
! 161,400
14,700
32,130
178,830
§900
$320
3,030
2,400
120
Total
Operations of the Federal Reserve clearing system, May 16 to June 15, 1917.
Items drawn on
banks in Federal
reserve city
(daily average).
Items drawn on
banks in district
outside Federal
reserve city
(daily average).
Items drawn on
banks in other
districts (daily
average).
INum: Num- Amount. Num- Amount.
ber.
I her. Amount. ; ber.
2,743
5,617
11,533
1,301
1,108
1,138
6,430
1,717
2,219
1,858
807
1,427
Boston
New York
Philadelphia
Cleveland....
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Total.
88,935,177;
41,512,562'
12,484,718!
3,137,142;
2,365,173;
1,138,8881
12,417,892!
4,688,585!
4,238,515'
3,oo3,50S|:
1,081,381
1,766,342'
36,165
31,644
16,319
15,771
14,052
9,085
13,059
8,401
11,014
9,489
9,337
4,857
84,107,572
7,709,795
2,406,923
7,427,676
4,028,265
1,682,282
2,982,619
1,651,660
880,109
1,687,150
3,111,6301
923,780
2,855
16,050
6,788
1,171
1,676
1,312!
1,3721
192
637
603
382
112
$5,282,949
9,861,966
9,090,027
1,999,640
3,082,938
1,277,305
516,427
1,710,385
1,261,586
3,439,911
747,973
Total (exclusive
of items drawn
on Treasurer of
United States)
(daily average).
Number.
Items drawn on
Treasurer of
United States
(daily average).
! Num! ber. Amount.
41,763 §18,325,698
53,311 59,084,323
34,6401 23,981,668
18 2431 12,564,458!
16,836| 9,476,376!
11,535
4,098,475
20,861 15,916,938
10,310
8,050,630
13,870
6,380,210
11,950
8,680,569;
10,526
4,943,984!
2,733,408
§222,222
1,927
7,399 1,526,006
171,031
1,103
57,213
634
231
24,511
431
78,2101
1,872
261,514|
1,165
207,334!
206
26,225
253
35,690
18
120
1,105 1,804,522
I-
37,898 97,322,883; 179,193 38,599,461 33,150 38,314,393 250,241 174,236,737 16,344
May 16 to June 15,1917
Apr. 16 to May 15, 1917
33,767 87,370,859 171,093 36,473,163 33,428 d U , OOVJ. i 238,288 160,680,956 15,925
Mar. 16 to Apr. 15, 1917
31,162 60,288,002 168,607 32,666,959 32,008 34,693,542 231,777 127,648,503 12,582
!
234,475 116,404,430
Feb. 16 to Mar. 15, 1917
220,421 110,188,028
Jan. 16 to Feb. 15,1917
241,933 121,814,589
Dec. 16,1916, to Jan. 15,1917...
236,038 125,603,732
Nov. 16 to Dec. 15,1916
227,489 115,061,224
Oct. 16 to Nov. 15,1916
|
204,891 97,666,107
Sept. 16 to Oct. 15,1916
i
177,397 78,559,704
Aug. 16 to Sept. 15, 1916
!
133,113 59,301,696
July 15 to Aug. 15,1916
i
Nonmember
Mem- banks
ber
from
banks which
in dis- checks
trict. are collected
at par.
248
342
250
542
392
624
630
753
520
382
1,045
471
731
943
627
533
1,901
958
1,023
1,523
223
1,128
4,414,508
7,651
8,789
3,597,865
2,643,408
7,634
7,625
7,630
7,630
7,622
7 627!
7,623j
7,618
7,618|
7,624
8,926
8,607
8,007
8,086
8,130
8,065
8,059
7,459
7,449
7,032
FEDERAL RESERVE BULLETIN.
JULY 1, 1917.
525
hereby levies an assessment upon the several
Federal Reserve Banks of an amount equal to
Acting under the provisions of the Federal I eleven hundredths of 1 per cent (O.OOll/of the
Reserve Act, the Federal Reserve Board on total capital stock of such banks, and the fiscal
June 19 voted an assessment of $0.0011 upon agent of the Board is hereby authorized to collect from said banks such assessment and exethe capitalization of Federal Reserve Banks to cute, in the name of this Board, a receipt for
cover the estimated general expense of the payment made. Such assessment will be colBoard from July 1 to December 31, 1917. The lected in two installments of one half each, the
assessment is based upon a capital of $114,342,- first installment to be paid on July 1, 1917, and
000, as of June 15, 1917. The rate of assess- the second half on September 1, 1917.
ment will yield $125,776.20. The resolution of
Estimate for July, 1917, assessment.
the Board and the figures on which the assessAverage monthly encumbrance for period
ment is based follow:
Jan.* 1, 1917, to Tune 30, 1917
§19, 782. 67
Whereas, under section 10 of the act approved Estimated monthly requirements, July
'.
21,005. 97
December 23, 1913, and known as the Fed- to December, inclusive, 1917
eral Reserve Act, the Federal Reserve Board
Estimated monthly increase
1, 223. 30
is empowered to levy semiannually upon the
Federal Reserve Banks in proportion to their Estimated requirements, June to De126, 035. 82
capital stock and surplus an assessment suf- cember, inclusive, 1917
unencumbered balance July
ficient to pay its estimated expenses, includ- Estimated
8, 315.19
ing the salaries of its members, assistants, 1, 1917
attorneys, experts, and employees, for the
117, 720. 63
half year succeeding the levying of such as- Total capitalization of Federal .Reserve
114, 342, 000. 00
sessment, together with any deficit carried Banks June ]5, 1917
Rate of assessment; to produce §5117, 772. 26
0. 00103
forward from the preceding half-year; and
0011
Whereas, it appears from the estimates submit- Rate of assessment to produce S125, 776. 20
ted and considered that it is necessary that I hi view of ail conditions I have the honor to recommend.
a fund equal to eleven hundredths of 1 per i that an assessment of eleven-hundredths of 1 per cent be
cent (0.0011) of the capital stock of the Fed- j levied.
SHEKMAN ALLEN,
eral Reserve Banks be created for the pur- j
Fiscal Agent.
poses hereinbefore described, exclusive of the Approved for 0. 0011:
F. A. DELANO,
cost of engraving and printing of Federal
A . C. MlLLEK,
Reserve notes: Now, therefore, be it
C. S. ILVMLLN,
Resolved, That, pursuant to the authority
Co'tnmUiee on Organization, Expenditures, and
vested in it by law, the Federal Reserve Board
Staff.
Assessment by Federal Reserve Board.
105949—17
5
528
FEDERAL RESERVE BULLETIN.
JULY 1,
1917.
Detailed statement of expenditures and commitments as a basis of estimate.
Jan. 1 to
May 31,1917.
Estimate
for June.
Estimated
monthly
requirements,
July 1 to
Dec. 31,1917.
Total for 6
months.
PERSONAL SERVICES.
Board and its clerics
Secretary's office
Counsel's office
Division of Audit and Examination.
Division of Reports and Statistics
Division of Issue
Messengers
Charwomen
Total.
$36, 756. 29
12, 685.55
10, 341.66
951.66 '
580.00
579.16
975.00
294.00
I.
79,163.3
$7,383.31
2,481.67
2,018. 32
1,458.32
1,130.00
768.33
395.00
60.00
S44,139.60
15,167.22
12,359.98
9,409.98
6,710.00
4,347.49
2,370.00
354.00
57,356.60
2,527.87
2,060.00
1, o68.33
1,118.33
724.58
395.00
59.00
$7,383.31
2,531.67
2,018.32
1,883.34
1,230.00
768.33
395.00
60.00
15,694.95
94,858.27
15,809.71
16,269.97
124. 87
100.00
100.00
1,253.49
319.64
2,241.76
20.30
20S. 92
53. 27
373.63
3.38
250.00
50.00
600.00
15.00
2.50
10.00
3.00
"iio.'oo"
728. 91
1,947.48
45.00
12.104. 23
64.92
180.00
75.00
247.48
121.49
324.58
7.50
2,017.37
10.82
30.00
12.50
41.25
225.00
333.00
5.00
2,000.00
20.00
30.00
15.00
50.00
100.00
14.50
5.00
750.73
134.83
78.52
125.12
22.47
13.09
150.00
20.00
25.00
264.55
"250."66'
838.05
451.29
1,207.28
1,133.80
139.68
75.22
201.21
188.97
150.00
50.00
250.00
NONPERSONAL SERVICES.
Transportation and subsistence:
Board and its clerks
Secretary's office
Division of Audit and Examination.
Division of Reports and Statistics...
Counsel's office
Messengers (carfare)
Communication service:
Telephone
Telegraph
Postage
Printing and binding, etc
Contract repairs
Electricity (light and power)
Steam (heat)
I
Other nonpersonal services
Supplies:
Stationery
Periodicals
Other.
Equipment:
Furniture and office supplies..
Books
Gold set! lenient fund
Expert assistance transit matters..
Contingencies
L, 128.62 :
219.64
1,141.76
20.30
15.00
235.00
320.00
20.00
1,776.13
493.91
627.48
25.00
10. 328.10
64.92
150.00
75.00
137. 48
650. 73
120.33
73.52
30.00
i
573.50
451.29
957.28
L. 133. 80
500.00
Total
20,387.66 I
3,450.05
23,837.71
3,972.95
4,736.00
Grand total.
99,550. 98 !
19,145.00
118,695.98
19,782.66
21,005.97
191?.
527
FEDERAL EESEKVE BULLETIN.
INFORMAL RULINGS OF THE BOARD.
Below are reproduced letters sent out from
time to time over the signatures of the officers
or members of the Federal Reserve Board
which contain information believed to be of
general interest to Federal Reserve Banks and
member banks of the system:
Demand Notes.
(To a Federal Reserve Bank.)
I have received your letter of June 13, and
in reply wish to say that the Board has been
advised by its counsel that a note made payable "on demand, and if no demand is made,
then on
," is eligible for rediscount by a
Federal Reserve Bank, provided the date to
be filled in is not more than 90 days from the
date of discount, and provided further it conforms to the other provisions of law and the
regulations of the Board.
Section 13 of the Federal Reserve Act requires that notes, drafts, and bills rediscounted under its provisions "must have a
maturity at the time of discount of not more
than 90 days, exclusive of da}^ of grace."
The form, which is suggested in your letter,
conforms to that requirement, inasmuch as it
is equivalent to making the note payable on or
before a certain date, which in no event is
more than 90 days from the date of discount.
If the proceeds of the paper under consideration have been or are to be used for the purposes mentioned in your letter, and if the
paper is otherwise in conformity with the law
and the provisions of the Board's regulations,
it is eligible for rediscount by the Federal Reserve Bank.
If there is any doubt whether the proceeds
of certain paper are to be used for a commercial or industrial purpose, or whether they are
to be used for permanent or fixed investments,
then, under the provisions of regulation A,
series of 1916, you may properly accept a
statement of the borrower showing a reasonable
excess of quick assets over current liabilities
as evidence that it is not drawn for the purpose
of making a fixed or permanent investment.
JUNE 11,
19^7.
Acceptances Drawn to Finance the Future Importation
of Goods.
(To an individual.)
I have received your letter of June 7, asking
whether or not the
National Bank may
accept drafts drawn for the purpose of financing
transactions involving the importation of goods.
Regulation No. 6, dated November 10, 1914,
to which you refer in your letter, has been
superseded by subsequent rulings of the Board
which clearly authorize the acceptance of a
JUNE 15, 1917.
draft drawn for the purposes which you
describe. The Board is of the opinion that a
Morris Plan Bank.
national bank may properly accept a draft
(To a Federal Reserve Bank.)
drawn for the purpose of importing goods
In reply to your letter of June 2, I wish to whether or not the sale of the goods under consay that the Board has ruled that a Morris sideration has actually been consummated at
plan bank is a "bank" within the meaning of the time of the acceptance of the draft. If
section 8 of the Clayton Antitrust Act and the accepting bank is assured that the prothat word as used in that part of section 4 of ceeds of the draft will ultimately be used
the Federal Reserve Act which reads as follows: solely for the purpose of financing a transaction
"No director of class C shall be an officer, di- involving the importation of goods, it is imrector, or employee, or stockholder of any matorial whether or not the goods have
bank" must be construed to include a Morris actually been sold at the time of acceptance.
plan bank.
In fact, it is not even necessary that the goods
The Board could not consistently make any to be sold be identified at the time of acceptother ruling.
. ance. The accepting bank, however, must
JUNE 13, 1917.
be reasonably sure that the draft is drawn for
the purpose of financing a transaction involving
Paper of a Y/aterworks Company.
the importation or exportation of goods, and
(To a Federal Reserve Bank.)
that its proceeds will be used for that purpose.
Under the circumstances cited in your letter
I wish to acknowledge receipt of your letter
of June 8 relating to the eligibility of 90-day | there would not seem to be any doubt of your
paper of a certain waterworks company, the | authority to accept the bills of exchange
proceeds of which have been or are to be used to which you describe.
JUNE 14, 1917.
provide funds for pay roll, purchases of coal, etc.
528
FEDERAL EESERVE BULLETIN".
JULY 1,
1917.
LAW DEPARTMENT.
The following opinion of counsel has been
The other paragraph relating to the acceptauthorized for publication by the Board since ance of drafts drawn for the purpose of furthe last edition of the Bulletin:
nishing dollar exchange is in a later and
separate part of section 13, and the proviso to
Limitations on Member B&nk Acceptances.
The 50 per cent limit imposed upon the amount of drafts that paragraph refers specifically to the drafts
which a member bank may accept for the purpose of fur- which it authorizes any member bank to accept;
nishing dollar exchange is separate and distinct from and that is, drafts drawn for the purpose of furnot included in the limits imposed by section 13 upon the nishing dollar exchange and limits the acceptamount of drafts or bills of exchange drawn against the
ance of that kind of drafts to 50 per cent of the
shipment of goods or against, warehouse receipts covering
paid-up
and unimpaired capital and surplus
readily marketable staples, which a member bank may
of the accepting bank.
accept.
JUNE 15, 1917.
In the opinion of this office, therefore, the
SIR: The attached letter raises the question 50 per cent limit imposed upon the amount of
whether or not a member bank may, under the drafts which a member bank may accept for
provisions of section 13 of the Federal Reserve the purpose of furnishing dollar exchange is
Act, as amended by the Act gf September 7> separate and distinct from and not included in
1916, lawfully accept bills of exchange drawn the limits imposed by section 13 upon, the
against the shipment of goods, or secured by amount of drafts or bills of exchange drawn
warehouse receipts covering readily marketable against the shipment of goods or against warestaples, up to an amount not exceeding 50 house receipts covering readily marketable
per cent of its capital and surplus, and in addi- staples, which a member bank may accept.
tion accept bills of exchange drawn for the
Respectfully,
purpose of creating dollar exchange up to an
M. C. ELLIOTT, Counsel.
amount not exceeding 50 per cent of its capital
To Hon. W. P. G. HARDING,
and surplus.
Governor Federal Reserve Board.
Section 13, as amended, authorizes national
banks to engage in two separate and distinct
kinds of acceptance business, first, the accept- Authority of National Banks Located in Delaware to
ance of drafts growing out of transactions in- Act as Trustee, Executor, Administrator, and Eegisvolving the shipment of goods or secured by "' trar of Stocks and Bonds.
warehouse receipts covering readily marketable
On April 18, 1917, the governor of the State
staples; and, second, the acceptance of drafts of Delaware approved a bill passed by the
drawn merely for the purpose of furnishing legislature of that State authorizing national
banks to act as trustee, executor, administradollar exchange.
In the paragraph authorizing the acceptance tor, and registrar of stocks and bonds.
of drafts and bills drawn against the shipment
The law reads as follows:
of goods, etc., the law specifically limits the
SECTION 1. It shall be lawful for any national
aggregate of such acceptances to 50 per cent of bank, located in this State, when authorized by
the paid-up and unimpaired capital and sur- the laws of the United States, to act by any and
plus of the accepting bank.1 This limitation every method of appointment, and in any caexpressly refers to acceptances growing out pacity whatever, as trustee, and as executor,
of transactions involving the shipment of administrator, or registrar of stocks and bonds.
SEC. 2. In case any such national bank shall
goods, etc.
be appointed trustee, executor, or adminis1
Since this memorandum was prepared section 13 has trator, as aforesaid, it may not be required, in
been amended so as to authorize the Federal Reserve the discretion of the appointing person, corpoBoard to permit member bank to accept such drafts and ration, court, judge, officer, or authority, to give
bills up to an amount not exceeding 100 per cent of the security on any bond which it may by law be
compelled to give by reason of such appointment.
capital and surplus of the accepting bank.
of the Federal Reserve Board for the information of Federal Reserve
Banks and member banks.
There will appear in this department of the Bulletin from time
The following abstract of State laws relating to the right of banks
created and organized under the laws of the several States to accept to time abstracts of other laws of the several States relating to the
drafts and bills of exchange has been prepared by the counsel's oflice regulation of the banking business.
Acceptances by State Banks and Trust Companies.
State laws affecting bank acceptances.
NOTE.—Unless otherwise stated, the percentages in the "Maximum amount" column are based upon the institution's capital. The word "capital" as used iu this digest signifies combined capital stock and surplus
The small figures refer to the authorities cited, iii tho last column.
State.
Alabama.
Arizona...
Arkansas..
California..
Colorado
District
No.
10
1,2
Delaware.
3,4
Maximum amount.
Powers.
Sources of power, j
: No specific pow: er to accept.
11,12
!
do
:
8 i
do
J 2 ' C o m m e r c i a l ! T o a c c e p t Express
uto. 0)
banks.(i)
; drafls.(i)
Connecticut.
District of Columbia
Florida
Institutions
affected.
Time to rim.
Total.
j
I To ono customer.
Securities.
Miscellaneous
restrictions.
Remarks.
Authorities.
"I"
stat- I 6 months.,
No s p e c i fi
po w er to
accept.
All State banks To accept drafts Special express
or b i l l s of
and t r u s t
statutes.
exchange
companies.
0) (2) (3) (0
drawn against
existing
values, or
c o m m e rcial
paper owned
by the person
n e g o t i ating
s a m e a ni d
! indorsed b y
j them without
; l i m i t ai tions.(i) («)
j N o specific
I power to ac| copt.
i — Ido
I
do
OmonthsO).-
..: 50 per cent 0 ) . . . 10per cent (i)...
50 por cent (»)... | 10 per cent; (s)..
Subject to regula- The bank must ; (i) Bank Act of
first obtain in \ O a 1 i f ornia,
tions and restrictions
by
w r i t i n g ;
art. 3, sec. 80,
superintendent
the c o n s e n t | s u b d i v i o f b a n k s . (i)
of the super- j sion4.
Must be drawn
iutendent of j
by p a r t i e s
banks, (i)
engaged in agricultural, industrial, or commercial b u s i n e s s
d i r e c t l y
connected with
tho production,
manufacture,
purchase, sale,
or consignment
of the g o o d s
involved in the
transaction i n
wh ich t h e
a c c e p t a. u c o
originated, (i)
Drafts must
have bills of
lading or warehouse receipts
attached
or stocks or
b o n d s of
known value
and worth at
least 20 per
cent in excess
of draft.(4)
Record of acceptances
must be kept.
02
g
a
(1) Connecticut
Public Acts,
1915, ch. 81,
sec. 1.
(2) Id., sec. 2.
00 Id., sec. 3.
(4) Id., sec. 4.
Crc
O
State laws affecting bank acceptances—Continued.
District
No.
State.
Georgia
Maximum amount.
Institutions
affected.
Powers.
To accept drafts Express specific
statute, (i)
drawn on marketable collateral^)
All banks and
trust companies incorporated in State.
,
19
Illinois
Indiana
Iowa
Kansas
Kentucky
7, 8
S8
4108
Louisiana
Time to run.
Securities.
6 months' sight.
C1)
To one customer
Miscellaneous
restrictions.
See "Miscellane- Must be drawn
against marketous
restrictions."
able collateral
to be specified
on the face of
the instrument.
(})
No s p e c i f i c
power to accept.
!
do
do
j
do
do
. . ..do
Banks of depos- To accept drafts. Express statute.
it, discount,
(*)
ih
exchange, and
circulation, (i)
1 Trust compan- All powers and General ena- Sec Federal Ticies, (i)
privileges of
bling statute. serve Act.
member
0)
banks under
Federal Reservo Act. (i)
j
•
o
Remarks.
Authorities.
All acceptances (^Georgia Acts
1916, No. 475,
and letters of
sec. 1.
credit must be
e n t e r e d on (2) Id., sec. 2.
books of company and appear in all reports and
statements. (3)
State banks al- 0) Idaho Seslowed to be- s i o n L a w s ,
1915, ch. 81,
come members of Fed- sec. 41a.
eral Reserve
System and
complv with
regulations of
Federal Reserve Board,
but not expressly granted powers of
Federal Reserve Banks.
0)
See Federal Reserve Act.
See Federal Be- ' See Federal Reserve Act.
j serve Act.
Trust companies permitted
to become
stockholders
in Federal Reserve System
and given all
privileges and
p o w e r s of
m e m b e r
banks upon
doing so. Acceptances not
specifically
mentioned. 0)
fcrj
o
W
ft
U2
A statute per- (i) Kentucky
Statutes (Cavm i t s banks
r o l l ) , 1915,
and trust companies incorsec. 584a.
p o r a t e d in
Kentucky to
become members of Federal Reserve
System; but
does not expressly give
them p r i v i leges of member banks. C1)
0) Louisiana
Acts,1916,184,
sec. 3.
6,11
Maine
Sources of power.
Total.
0)
Idaho
CO
!
(i) Maine Acfc
1915, ch, 262,
sec. 80.
d
E
H
M
Maryland
Trust companies incorporated under laws
of Massachusetts, (i) (2)
Massachusetts.
Michigan...
7,9
Minnesota..
Mississippi.
Missouri
9
6.8
8,10
No specific pow- |
er to accept.
To accept drafts Special express
statute (i); alagainst actual
so general enav a l u e s 0);
bling act. (2)
also all powers
and privileges
under Federal
Heserve Act.
No specific power to accept.
do
:
.do.
State banks and To accept drafts. Specific express
(See also Fedstatutes and
trust compaeral Reserve
nies. 0) («)
reference to
Act. (1) (2)
Federal Re-
serve
Act. 0)
(2)
Montana.
9,12
all General enabling See Federal ReAll banks be- Probably
powers of mem- statute, (i)
serve Act.
coming members of Federal
bers, of "NaReserve
Banks.
tional Reserve
Association of
United States."
0)
Nebraska.
10
State banks and All privileges
and powers of
trust l companies. ( )
member banks
under Federall
Reserve Act.( )
.do.(i)
50 per cent without bank eommissionor's
permission; .
100 per cent
with his permission, (i)
Not more than
paid-up and
unimpaired
capital stock
and surplus,
except with
approval of
bank commissioner, (i) (2)
See Federal Re- See Federal Re- !
serve Act,
j
serve Act.
Subject to such re- Trust compan- (1) Massachusetts General
ies becoming
strictions as
Acts, 1916,
stockholders
bank commisin Federal Rech. 129, sec.
sioner may imserve B a n k
pose. 0)
may have all
powers and
privileges of
m e m b e r
banks. (2)
(2) Massachusetts Acts,
1914, ch. 537,
sec. 1.
Banks and trust (1) S e s s i o n
Laws Miscompanies besouri, 1915,
coming memsec. 66.
bers of Federal Reserve (2) Id., sec. 127.
Bank are authorized to excrcise
all
powers not in
conflict with
State
laws,
which are conferred on member banks by
the
Federal
Reserve
Act.
2
0) ( )
Act
permits i) Montana
Civil Codo
State banks to
1915,
sec.
become mem3930.
bers of "National Reserve
Association of
United States/'
and provides
that any bank
doing so "shall
be permitted
to conform to
and transact
its business in
accordance
with the terms
and provisions of the
Act of Congress creating
the same and
the rules and
regulations of
such association or branch
thereof."(>)
Bee Federal Re- See Federal Re- State banks and (i) Laws, 1915,
trust compach. 175, sec. 1,
serve Act.
serve Act.
nies permitted to become
members ot
Federal Reserve B a n k
and have all
powers a n d
privileges of
member banks
under Federal
Reserve Act.
5
State laws affecting bank acceptances—Continued.
CO
to
State.
District
No.
Institutions
affected.
New York.
Sources of power.
Time to run.
Securities.
To one customer.
Miscellaneous
restrictions.
No spooifie powr to accept.
New Hampshire
Now Mexico..
Powers.
Total.
Nevada..
New Jersey.
Maximum amount.
2,3
1' r u s t companies, (i)
All powers and G e -i. e r a 1 ena- See Federal Reprivileges
bling statute.
serve Act.
.ember banks]
(')
under Federal i
Resarve .Vet. !
Batiks and trust
companies incorporated under jaws of
New
.Terse v.
2
To accept
drafts, j Express specific
0) (2)
I statute.(i) (2)
T
0)( )
Not exceeding 1
yoar.(i) (2) •
See Federal Reserve Act.
.j See Federal Re- | See Federal Rej serve Act.
j serve Act.
10 per cent.
Remarks.
Authorities.
I
State banks al- '}) Laws Nevada. 1915, ch.
lowed to become members
31.
of Federal Reserve System,
but not expressly grant- j
ed privileges
of m e m b e r
banks. 0)
T r u s t compa- C1) New Hampnies becoming
shire Acts,
stockholders
1915, ch. 109,
in Federal Re- i sec. 28.
serve B a n k j
may have all ;
powers a n d I
privileges of
in e m b e r
banks. 0)
(}) Acts, 1915,
ch. 306, sec. 1.
(*) Acts. 1915,
ch. 307, sec. 1.
/
10,11 I I n c o r p o r a t e d A3! privileges General., enaState banks.0)
and powers of
bling statute.
member banks
i,;rider Federal
Reserve
Act.
C1)
All
banks (»)
a n d t r u s3 t
companies. ( )
See Federal Reserve Act-
To accept drafts. Express specific
j Not exceeding
statutes.0) (3) i one year.(i) (»)
C1) (3)
See Federal Reserve Act.
Sec Federal Re- ! See Federal Reserve Act.
servo Act.
State banks per- |
mitted to foecome members of Federal
Reserve Bank
and given all
powers a n d
privileges
of
member
banks.(i)
10 per cent; ex.- I For
a m o u t s ; Subject
amounts
ubject to very All acceptances !
eept institu- ! over 10 per i elaborate restric
are subject to i
tions in bor- ! cent of capital j tions applicable
g e n e r a l re- |
oughs having
and surplus,
slrictions and !
to all exten2,000,000 popcollateral havregu 1 a t i o n s
sions of credit
ulation, 25 per
ing an ascergoverning
by banks and
cent, and othtaihed market
b a n k s and
trust
companies.
2
4
er institutions,
value of at
trust
com(
)
(
)
'
40 per cent, if
least 15 per
panies.
in both cases
cent
more
the credit is
than
the
given to a
amount of the
State
other
liabilities so
than
New
secured.
In
York, a forthe case of
eign nation, or
banks located
a municipal,
in boroughs
r a i l r o a d , or
having a poppublic-service
ulation
of
corporation; or
2,000,000 or
if upon drafts
over, such sedrawn against
cured indebtactually existedness shall
ing values or
not exceed 15
upon
paper
per cent of
a c tually
capital
and
)T,aws, 1915,
ch. 07, see. 96.
(i)New York
Consolidated
Laws, ch. 2,
sec.
106.
(2) Id., sec. 108.
(3) Id., sec. 185.
(*) Id., sec. 190.
CQ
surplus.
In
the case of institutions located
elsewhere it shall
not exceed 30
per
cent. (2)
(4) (5).
owned by the
person negotiating
the
same and indorsed without limitation.
These limitations do not
applv to loans
to the United
States, State
of New York,
or any city,
county, or village in such
Stato.(*)(*)(5)
North" Carolina
• -y
North Dakota
Ohio
Oklahoma
•Oregon
9
4
10 11
12 Banks 0)
3,4
Pennsylvania
iRhodfl Island
9
20 per cent, ex- See Federal Recept on drafts
serve Act.
against actually existing
v a l u e s and
commercial
paper actually owned by
the Derson negotiating it.(2)
S-30 rederal Ros?rve ACL
Granted power (l) Lord's Oreto b e c o m e
gon L a w s
members o:
I915,sec.4">61,
Federal Re- 2 subsection 9.
serve 'll-irik, ( )Id.,sec.4o7().
and "to have
arid exercise
all Dowers not
in "conflict
with the laws
or this State,
which a r e
conferred upon any such
member bank
by the Federal Reserve
Act." OX*)
(0 Act June 7,
1917.
See Federal Reserve Act.
Not exceeding 1
I
er to accept,
do
State banks (}).. Probably
ail General enabling See Federal Restatute. 0)
s<?rv? .vet.
powers
of
member banks
under Federal
Reserve
Act.
C1)
!
See- Federal Reserve Act.
See Federal Reserve Act.
Stite bar* ksrerniiUod to become members of Fed
eral Re-servo
Bank end to
comply with
and be subject to the
Fedora! Reservo Act.;1)
See Federal Reserve Act
(i) L-iws 1915
oh. 102 art. 2,
sec. 3o.
tj
I
d
s
6.8
Tennessee
..'
Texas
Utah
Vermont
Virginia
11
12
1
5
Washington
12
West Virginia
45
Wisconsin
7,9
To accept; drafts.
i
Genera! enabling statute.(*)
j
•South. Carolina
South Dakota
Wvoming
State banks and
trust 1 companies^ )
No specific power to accept.
do
do
do
Powers under
Federal Reserve Act.(l)
I
10
All banks and
trust
companies. (l)
er to accept,
do
do
do
To accept drafts.
!
1
|
(i) Acts, 1918,
ch. 298, sec.
1, p. 512.
li'Vv-ii'V f(>n<: :'i s i
0)
er to accept.
do
do
do
!
CO
CO
534
FEDEKAL RESERVE BULLETIN.
Fiduciary Powers of National Banks.
A decision in the case brought to test the
constitutionality of section 11 (k) of the Federal Reserve Act was handed down by the
Supreme Court of the United States on June
11. The text of the decision follows:
SUPREME COURT OF THE UNITED STATES.
No. 764.—OCTOBER TERM, 1916.
FIRST NATIONAL BANK OF]
Bay City, Plaintiff
Error,
vs.
in
In Error to the
Supreme Court
GRANT FELLOWS, ATTORNEY
of the State of
General of the State of Michigan.
Michigan, on the Relation
of Union Trust Company
ot al.
[June 11, 1917.]
JULY 3,1017.
that although Congress was not expressly given
the power to confer the charter, authority to
do so was to be implied as appropriate to carry
out the powers expressly given. In reaching
this conclusion it was further decided that to
recognize the existence of the implied power
was not at all in conflict with Article I, section
8, clause 18 of the Constitution, providing that
Congress should have power "To make all laws
which shall be necessary and proper for carrying
into execution the foregoing powers," since that
provision did not confine the implied authority
to things which were indispensably necessary,
but on the contrary gave legislative power to
adopt every appropriate means to give effect
to the powers expressly given. In terms it was
pointed out that this broad authority was not
stereotyped as of any particular time but
endured, thus furnishing a perpetual and living
sanction to the legislative authority within the
limits of a just discretion enabling it to take into
consideration the changing wants and demands
of society and to adopt provisions appropriate
to meet every situation which it was deemed
required to be provided for. In fact the rulings
which we have stated were all summed up in
the following; passage which ever since has been
one of the principal tests by which to determine
the scope of the implied power of Congress over
subjects committed to its legislative authority:
Mr. Chief Justice WHITE delivered the
opinion of the court.
We are of opinion that the procedure resorted to was appropriate and that the State
court was competent to administer relief, but
we postpone stating our reasons on the subject We admit, as all must admit, that the powers of tho Government are limited, and that its limits are not to be tranuntil the merits have been passed upon.
But we think the sound construction of the ConThe court below held that an act of Congress scended.
stitution must allow to the National Legislature that disconferring on national banks additional powers cretion, with respect to the means by which the powers it
was in excess of the authority of Congress and confers are to be carried into execution, which will enable
that body to perform the high duties assigned to it, in the
was hence repugnant to the Constitution. manner
most beneficial to the people. Let the end be
— Michigan—. The correctness of this con- legitimate, let it be within the scope of the Constitution,
clusion is in substance the sole question for and all means which are appropriate, which are plainly
adapted to that end, which are not prohibited, but condecision on the merits.
with the letter and spirit of the Constitution, are
Although the powers given were new, the sistent
constitutional. P. 421.
principles involved in the right to confer them
were long since considered and defined in adIn 0shorn v. Bank, 9 Wheaton, 738, where
judged cases. We shall first consider the lead- substantially the subject was presented in the
ing of such cases and then, after stating this same form in which it had been passed upon
case, determine whether they are controlling, in McCullocli v. Maryland, yielding to the
causing the subject not to be open for original request of counsel, the whole subject was reconsideration.
examined and the previous doctrines restated
In McCullocli v. Maryland, 4 Wheaton 316, and upheld. Considering more fully, however,
the bank had been incorporated by Congress the question of the possession by the corporawith powers to transact business of both a gov- | tion of private powers associated with its
ernmental and of a private character. The j public authority and meeting the contention
question which was decided was the authority | that the two were separable and the one, the
of Congress to grant such charter. Without public power, should be treated as within and
undertaking to restate the opinion of Mr. Chief the other, the private, as without the implied
Justice Marshall, it suffices for the purpose of j power of Congress, it was expressly held that
the matter now before us to say that it was held | the authority of Congress was to be ascer-
Juh\ 1, 1917.
FEDERAL RESERVE BULLETIN.
tained by considering the bank as an entity
possessing the rights and powers conferred
upon it and that the lawful power to create
tne bank and give it the attributes which were
deemed essential could not be rendered unavailing by detaching particular powers and
considering them isolatedly and thus destroy
the efficacy of the bank as a national instrument. Tne ruling in effect was that although
a particular character of business might not
be when isolatedly considered within the implied power of Congress, if such business was
appropriate or relevant to the banking business
the implied power was to be tested by the
right to create the bank and the authority to
attach to it that which was relevant in the
judgment of Congress to make the business of
the bank successful. It was said: "Congress
was of opinion that these faculties were necessary, to enable the bank to perform the services
which are exacted from it, and for which it.
was created. This was certainly a question
proper for the consideration of the National
Legislature." P. 864.
As the doctrines thus announced have been
reiterated in a multitude of judicial decisions
and have been undeviatingly applied in legislative, and enforced in administrative action,
we come at once to state the case before us to
see whether such doctrines dispose without
more as a mere question of authority of the
subject under consideration.
Section ll(k) of the act of Congress approved
December 23, 1913, establishing the Federal
Reserve Board (38 Stat. 251, 252, c. 6), gives
to that board authority "To grant by special
permit to national banks applying therefor,
when not in contravention of State or local
law, the right to act as trustee, executor,
administrator, or registrar of stocks sfad bonds
under such rules and regulations as the said
board may prescribe."
The First National Bank of Bay City having
obtained the certificate required began the
exercise of the powers stated. Thereupon certain trust companies which under the laws of
Michigan had the authority to do the same
character of business petitioned the attorney
general of the State to test the right of the
national bank to use the functions on the
ound that its doing so was contrary to the
ws of the State of Michigan and that the
action of the Federal Reserve Board purporting to give authority was in contravention of
the Constitution of the United States. The
attorney general then, on the relation of the
trust companies, commenced in the supreme
S
535
court of the State a proceeding in the nature
of quo warranto to test the right of the corporation to exercise the functions. The bank
in defense fully stated its Federal charter, the
rights given by the act of Congress and the
action of the Federal Reserve Board taken
thereunder. The attorney general demurred
to this defense, first, because Congress had no
power to confer the authority which was called
in question; second, because if it had the power,
it was without right to delegate to the Reserve
Board the determination of when it should be
used; and third, because the exercise of the
powers was in contravention of the laws and
authority of the State and the Reserve Board
therefore under the act had no power to grant
the certificate.
The case was heard by the full court. In an
opinion of one judge which, it would seem, was
written before the opinion of the court was
prepared, it was elaborately reasoned that the
exercise by a national bank of the functions
enumerated in the section of the Act of Congress
under consideration would be contrary to the
laws of the State and therefore the Reserve
Board under the terms of the Act of Congress
had no power to authorize their exertion. The
opinion of the court, however, fully examining
the grounds thus stated and disagreeing with,
them, expressly decided that corporations were
authorized by the State law to perform the
functions in question and that the mere fact
that national banks were Federal corporations
did not render them unfit to assume and perform such duties under the State law because
the mere difference existing between the general
administrative rules governing national banks
and State corporations afforded no ground for
saying that it would be contrary to State law
for national banks to exert the powers under
consideration. The authority conferred by the
act of Congress and the rights arising from the
certificate from such point of view were therefore upheld. Looking at the subject, however,
from a consideration of the legislative power of
Congress in the light of the decisions in McGulloch y. Maryland and Osborn v. Bank and
recognizing that it had been settled beyond
dispute that Congress had power to organize
banks and endow them with functions both of
a public and private character, and in the
assumed further light'of the rule that every
reasonable intendment must be indulged in in
favor of the constitutionality of a legislative
power exercised, it was yet decided that Congress had no authority to confer the powers
embraced in the section of the act under con-
536
FEDERAL RESERVE BULLETIN.
JULY 1,1917.
sideration and hence that the section was void. and private powers which should be given to
The court, following its reference to MeOullocii v. it, in application the discretion of Congress
Maryland and 0shorn v. Bank and to passages was disregarded or set aside by exercising
in the opinions in those cases upholding the judicial discretion for the purpose of deterrightful possession by the bank of both public mining whether it was relevant or appropriate
functions and private banking attributes, to give the bank the particular functions in
stated the grounds which led it to conclude question.
that the rulings in the decided cases were dis3. Because even under this mistaken view
tinguishable and therefore not controlling. It the conclusion that there was no ground for
said:
implying the power in Congress was erroneous
But in the reasoning of the judges, in the opinions to because it was based on a mistaken standard,
which i have referred, I find, I think, a conclusive argu- since for the purpose of testing how far the
ment supporting the proposition that Congress has exceeded its constitutional powers in granting to banks the functions in question which were conferred by
right to act as trustees, executors," and administrators. the act of Congress to the bank were relevant
If for mere profit it can clothe this agency with the powers to its business or had any relation to discrimi-'
enumerated, it can give it the rights of a trading corpora- nation by State legislation against banks
tion, or a transportation company, or both. There is,
as Judge Marshall points out, a natural connection be- created by Congress it considered not the
tween the business of banking and the carrying on of actual situation, that is, the condition of the
Federal fiscal operations. There is none, apparently, State legislation, but an imaginary or nonbetween such operations and the business of settling existing condition, that is, the assumption that
estates, or acting as the trustee of bondholders. This so far as the State power was concerned the
being so, there is in the legislation a direct invasion of the
sovereignty of the State which controls not only the particular functions were in the State enjoyed
devolution of estates of deceased persons and the conduct- only by individuals or corporations not coming
ing of private business within the State, but as well the at all, actually or potentially, in competition
creation of corporations and the qualifications and duties with national banks. And the far-reaching
of sucli as may engage in the business of acting as trustees,
executors, and administrators. Such an invasion I think effect of this error becomes manifest when it
the court may declare and may prevent by its order op- is borne in mind that plainly the particular
erating upon the offending agency.
functions enumerated in the statute were conBut we are of opinion that the doctrine thus ferred upon national banks because of the fact
announced not only was wholly inadequate to that they were enjoyed as the result of State
distinguish the case before us from the rulings legislation by State corporations, rivals in a
in McOuTioch v. Maryland and Oshorn v. Banfc,greater or less degree of national banks.
4. In view of the express ruling that the enbut on the contrary directly conflicted with
what was decided in those cases—that is to say, joyment of the powers in question by the
disregarded their authority so as to cause it national bank would not be in contravention
to be our duty to reverse for the following of the State law, it follows that the reference of
the court below to the State authority over the
reasons:
1. Because the opinion of the court instead particular subjects which the statute cleals with
of testing the existence of the implied power to must have proceeded upon the erroneous asgrant the particular functions in question by sumption that because a particular function
considering the bank as created by Congress as was subject to be regulated by the State law,
an entity with all the functions and attributes therefore Congress was without power to give
conferred upon it, rested the determination as a national bank the right to carry on such
to such power upon a separation of the par- functions. But if this be what the statement
ticular functions from the other attributes and [ signifies, the conflict between it and the rule
functions of the bank and ascertained the ex- Isettled in McOulloch v. Maryland and Oshorn
istence of the implied authority to confer them | v. Bank is manifest. What those cases estabby considering them as segregated—that is, by ! lished was that although a business was of a pridisregarding their relation to the bank as com- vate nature and subject to State regulation, if
ponent parts of its operations—a doctrine it was of such a character as to cause it to be
which, as we have seen, was in the most express incidental to the successful discharge by a* bank
terms held to be unsouhd in both of the cases. chartered by Congress of its public functions, it
2. Because while in the premise to the was competent for Congress to give the bank
reasoning the right of Congress was fully the power to exercise such private business in
recognized to exercise its legislative judgment cooperation with or as part of its public auas to the necessity for creating the bank thority. Manifestly this excluded the power
including the scope and character of the public of the State in such case, although it might
JULY 1,
1917.
FEDERAL RESERVE BULLETIN.
possess in a general sense authority to regulate
such business, to use that authority to prohibit
such business from being united by Congress
with the banking function, since to do so would
be but the exertion of State authority to prohibit Congress from exerting a power which
under the Constitution it had a right to exercise.
From this it must also follow that even although
a business be of such a character that it is not
inherently considered susceptible of being included by Congress in the powers conferred on
national banks, that rule would cease to apply
if by State law State banking corporations,
trust companies, or others which hj reason of
their business are rivals or quasi rivals of
national banks are permitted to carry on such
business. This must bo since the State may
not by legislation create a condition as to a
particular business which would bring about
actual or potential competition with the business of national banks and at the same time
deny the power of Congress to meet such
created condition by legislation appropriate to
avoid the injury which otherwise would be
suffered by the national agency. Of course, as
the general subject of regulating the character
of business just referred to is peculiarly within
State administrative control, State regulations
for the conduct of such business, if not discriminatory or so unreasonable as to justify the
conclusion that they necessarily would so
operate, would be controlling upon banks
chartered by Congress when they came in
virtue of authority conferred upon them by
Congress to exert such particular powers. And
these considerations clearly were in the legislative mind when it enacted the statute in
question. This result would seem to be plain
when it is observed (a) that the statute authorizes the exertion of the particular functions by
national banks when not in contravention of
the State law; that is, where the right to perform them is expressly given by the State law
or what is equivalent is deducible from the
State law because that law has given the functions to State banks or corporations whose
business in a greater or less degree rivals that
of national banks, thus engendering from the
State law itself an implication of authority in
Congress to do as to national banks that which
the State law has done as to other corporations,
and (6) that the statute subjects the right to
exert the particular functions which it confers
on national banks to the administrative authority of the Reserve Board, giving besides to that
board power to adopt rules regulating the
exercise of the functions conferred, thus afford-
537
ing the means of coordinating the functions
when permitted to be discharged b}^ national
banks with the reasonable and nondiscriminating provisions of State law regulating their
exercise as to State corporations—the whole to
the end that harmony and the concordant
exercise of the national and State power might
result.
Before passing to the question of procedure
we think it necessary to do no more than say
that a contention which was pressed in argument and which it may be was indirectly referred to in the opinion of the court below
that the authority given by the section to the
Reserve Board was void because conferring
legislative power on that board, is so plainly
adversely disposed of b}' many previous adjudications as to cause it to be necessary only
to refer to them. Field v. Clark, 143 U. S.
649; BuUfield v. Stranahan, 192 U. S. 470;
United States v. Grimaud, 220 U. S. 506;
Monongaliela
Bridge Company v. United States,
216 U.€ S. 177; Intermountain Bate Cases, 234
U.S. 476.
The question of the competency of the procedure and the right to administer the remedy
sought, then remains. It involves a challenge
of the right of the State attorney general to resort in a State court to proceedings in the nature of quo warranto to test the power of the
corporation to exert the particular functions
given by the act of Congress because they were
inherently Federal in character, enjoyed by a
Federal corporation and susceptible only of
being directly tested in a Federal court.
Support for the challenge in argument is rested
upon Ableman v. Booth, 21 Howard 506;
Tarble's Case, 13 Wallace 397; Van Reed v.
People's National Banlc, 198 U. S. 554, 557;
State ex rel. Wilcox v. Curtis, 32 Connecticut
374. But without inquiring into the merits of
the doctrine upon which the proposition rests
we think when the contention is tested by a
consideration of the subject matter of this particular controversy it can not be sustained.
In other words, we are of opinion that as the
particular functions in question by the express terms of the act of Congress were given
only "when not in contravention of State or
local law," the State court was, if not expressly, at least impliedly authorized by Congress to consider and pass upon the question
whether the particular power was or was not
in contravention of the State law, and we
place our conclusion on that ground. We
find no ambiguity in the text, but if it be that
ambiguity is latent in the provision, a consid-
538
FEDERAL RESERVE BULLETIN".
JULYI, 1917.
eration of its purpose would dispel doubt espe- j very serious injury to many classes of society
cially in view of the interpretation which we! which also might be occasioned. And our
have given the statute and the contrast be-; conclusion on this subject is fortified by the
tween the clause governing the subject by the I terms of section 57, chapter 106,13 Statutes 116,
State law and the provision conferring ad- j making controversies concerning national banks
ministrative power on the Reserve Board, i cognizable in State courts because of their
The nature of the subject dealt with adds I intimate relation to many State laws and regucogency to this view since that subject in- j lations, although without the grant of the act
yolves the action of State courts of probate j of Congress such controversies would have been
in a universal sense, implying from its very \ Federal in character.
nature the duty of such courts to pass upon the i As it follows from what we have said that
question and the power of the court below the court below erred in declaring the section
within the limits of State jurisdiction to settle of the act of Congress to be unconstitutional,
so far as the State was concerned the question ! the judgment must be reversed and the case
for all such courts by one suit, thus avoiding! remanded for further proceedings not inconthe confusion which might arise in the entire \ sistent with this opinion.
system of State probate proceedings and the i
JULY 1, 1917.
FEDEEAL RESERVE BULLETIN.
539
REGULATIONS OF THE FEDERAL RESERVE BOARD.
WASHINGTON, June £?, 1917.
The Federal Reserve Board transmits herewith a new
issue of all of its regulations of 1916 applicable to member
banks. This revision was necessitated by the enactment
of the recent amendments to the Federal Reserve Act.
Regulations C, H, and J have been materially altered
because of those amendments. Regulation D has been
amended so as to include postal savings deposits in the
definition of a "time deposit" as required by the recent
amendment to section 19. Regulation G has been amended
by adding a paragraph relating to the renewal of loans
upon the security of real estate. Regulations A, B, E, F ?
and I are identically the same as last year.
Instructions which concern paly Federal Reserve
Agents or Federal Reserve Banks will be covered in
separate letters or regulations, as in the past.
W. P. G. HARDING, Governor.
H. PARKER WILLIS, Secretary.
REGULATION A, SERIES OP 1917.
(Superseding Regulation A of 1916.)
I I . General character of notes, drafts, and bills of exchange
eligible.
The Federal Reserve Board, exercising its statutory right
to define the character of a note, draft, or bill of exchange
eligible for rediscount at a Federal Reserve Bank, has determined that—
(a) It must be a note, draft, or bill of exchange the proceeds of which have been used or are to be used in producing, purchasing, carrying, or marketing goods 1 in one
or more of the steps of the process of production, manufacture, or distribution.
(b) It must not be a note, draft, or bill of exchange the
proceeds of which have been used or are to be used for
permanent or fixed investments of any kind, such as land,
buildings, or machinery.
(c) It must not be a note, draft, or bill of exchange the
proceeds of which have been used or are to be used for
investments of a purely speculative character.
(d) It may be secured by the pledge of goods or collateral
provided it is otherwise eligible.
III. Applications for rediscount.
All applications for the rediscount of notes, drafts, or
bills of exchange must contain a certificate of the member
bank, in form to be prescribed by the Federal Reserve
A. NOTES, DRAFTS, AND BILLS OP EXCHANGE.
Bank, that, to the best of its knowledge and belief, such
I. General statutory provisions.
notes, drafts, or bills of exchange have been issued for one
Any Federal Reserve Bank may discount for any of its or more of the purposes mentioned in II (a).
member banks any note, draft, or bill of exchange proIV. Promissory notes.
vided—
(a) Definition.—A promissory note, within the mean(a) It has a maturity at the time of discount of not more
than 90 days, exclusive of days of grace; but if drawn or ing of this regulation, is defined as an unconditional
issued for agricultural purposes or based on live stock, it promise, in writing, signed by the maker, to pay, in the
may have a maturity at the time of discount of not more United States, at a fixed or determinable future time, a
sum certain in dollars to order or to bearer.
than six months, exclusive of days of grace.
(6) Evidence of eligibility and requirement of statements.—
(6) It arose out of actual commercial transactions; that
is, it must be a note, draft, or bill of exchange which has A Federal Reserve Bank must be satisfied by reference to
been issued or drawn for agricultural, industrial, or com- the note or otherwise that it is eligible for rediscount.
mercial purposes, or the proceeds of which have been used Compliance of a note with II (b) may be evidenced by a
statement of the borrower showing a reasonable excess of
or are to be used for such purposes.
(c) It was not issued for carrying or trading in stocks, quick assets over current liabilities. The member bank
bonds, or other investment securities, except bonds and shall certify in its application whether the note offered
for rediscount has been discounted for a depositor or
notes of the Government of the United States.
(d) The aggregate of notes, drafts, and bills bearing the another member bank or whether it has been purchased
signature or indorsement of any one borrower, whether a from a nondepositor. It must also certify whether a
person, company, firm, or corporation rediscounted for any financial statement of the borrower is on file.
Such financial statements must be on file with respect
one member bank shall at no time exceed 10 per cent of
the unimpaired capital and surplus of such bank; but this to all notes offered for rediscount which have been purrestriction shall not apply to the discount of bills of ex- | chased from sources other than a depositor or a member
change drawn in good faith against actually existing bank. With respect to any other note offered for rediscount, if no statement is on file, a Federal Reserve Bank
values.
(e) It is indorsed by a member bank.
i When used in this regulation the word "goods" shall be construed
(/) It conforms to all applicable provisions of this regu- to include goods, wares, merchandise, or agricultural products, including
lation.
live stock.
REDISCOUNTS UNDER SECTION 13.
540
FEDEBAL RESERVE BULLETIN.
JULY 1,
1917.
(b) Eligibility.- -To be eligible for rediscount at the
special rates authorized to be established for commodity
paper; such a note, draft, bill of exchange, or trade acceptance must also comply with the respective sections of
this regulation applicable to it, must conform to the
requirements of the Federal Reserve Bank relating to
shipping documents, receipts, insurance, etc., and must
be a note, draft, bill of exchange, or trade acceptance on
which the rate of interest or discount—including commission—charged the maker does not exceed 6 per cent
per annum.
(c) Suspension of commodity role,—As the special rate
on commodity paper is intended to assist actual producers
V. Drafts, bills of exchange, and trade acceptances.
during crop-moving periods and is not designed to benefit
speculators, the Board reserves the right to suspend the
(a) Definition.—A draft or bill of exchange, within the special rates herein provided whenever it is apparent
meaning of this regulation, is defined as an unconditional that the movement of crops, which this rate is intended
order in writing, addressed by one person to another to facilitate, has been practically completed.
other than a banker as defined under B .(6), signed by the
person giving it, requiring the person to whom it is adB . BA.NT.KERS' ACCEPTANCES.
dressed to pay, in the United States, at a fixed or deter(a) General statutory provisions.—Any Federal Reserve
minable future time, a sum certain in dollars to the order
of a specified person; and a trade acceptance is defined as Bank may discount for any of its member banks bankers'
a draft or bill of exchange drawn by the seller on the acceptances which have a maturity at the time of discount
purchaser of goods sold and accepted by such purchaser. of not more than three months' sight, exclusive of days of
(b) Evidence of eligibility.—A Federal Reserve Bank grace, which are indorsed by at least one member bank
shall take such steps as it deems necessary to satisfy itself and which grow out of transactions involving the importaas to the eligibility of the draft or bill offered for redis- tion or exportation of goods; or, which grow out of transcount, unless it presents prima facie evidence thereof or actions involving the domestic shipment of goods, probears a stamp or certificate affixed by the acceptor or vided shipping documents are attached at the time of
acceptance; or, which are secured at the time of acceptdrawer showing that it is a trade acceptance.
ance by a warehouse receipt or other such document
conveying or securing title covering readily marketable
VI. Six months1 agricultural paper.
staples. Any Federal Reserve Bank may also acquire
(a) Definition.—Six months' agricultural paper, within drafts or bills of exchange drawn on member banks by
the meaning of this regulation, is defined as a note, draft, banks or bankers in foreign countries or dependencies or
bill of exchange, or trade acceptance drawn or issued for insular possessions of the United States for the purpose of
agricultural purposes, or based on live stock; that is, a furnishing dollar exchange.
note, draft, bill of exchange, or trade acceptance the
(6) Definition.—A banker's acceptance within the
proceeds of which have been used, or are to bo used, for meaning of this regulation is defined as a draft or bill of exagricultural purposes, including the breeding, raising, change of which the acceptor is a bank or trust company,
•fattening, or marketing of live stock, and which has a or a firm, person, company, or corporation engaged in the
maturity at the time of discount of not more than six
business of granting bankers' acceptance credits.
months, exclusive of days of grace.
(c) Eligibility.—To be eligible for rediscount the bill
(?>) Eligibility.—To be eligible for rediscount, six months' must have been drawn under a credit opened for the puragricultural paper, whether a note, draft, bill of exchange, pose of conducting, or settling accounts resulting from, a
or trade acceptance, must comply with the respective transaction or transactions involving (1) the shipment of
sections of this regulation which would apply to it if its goods between the United States and any foreign country,
maturity were 90 days or less.
or between the United States and any of its dependencies
or insular possessions, or between foreign countries, or (2)
VIT. Commodity paper.
the domestic shipment of goods, provided shipping docu(a) Definition.—Commodity paper within the meaning ments are attached at the time of acceptance; or it must
of this regulation is defined as a note, draft, bill of ex- be a bill which is secured at the time of acceptance by a
change, or trade acceptance accompanied and secured by warehouse receipt or other such document conveying or
shipping documents or by a warehouse, terminal, or other securing title covering readily marketable staples. Any
similar receipt covering approved and readily marketable, Federal Reserve Bank may also acquire drafts or bills
drawn by a bank or banker in a foreign country or denonperishable staples, properly insured.
shall use its discretion in taking the steps necessary to
satisfy itself as to eligibility. It is authorized to waive
the requirment of a statement with respect to any note
discounted by a member bank for a depositor or another
member bank:
(1) If it is secured by a warehouse, terminal, or other
similar receipt covering goods in storage;
(2) If the aggregate of obligations of the borrower
rediscounted and offered for rediscount at the Federal
Reserve Bank is less than a sum equal to 10 per cent of the
paid-in capital of the member bank and does not exceed
$5,000.
JULY 1,1917.
FEDERAL RESERVE BULLETIN.
pendency or insular possession of the United States for
the purpose of furnishing dollar exchange and accepted
by a member bank in accordance with the provisions of
Regulation C. Such drafts or bills may be acquired prior
to acceptance provided they have the indorsement of a
member bank.
(d) Evidence of eligibility.—A Federal Reserve Bank
must be satisfied, either by reference to the acceptance
itself or otherwise, that it is eligible for rediscount. Satisfactory evidence of eligibility may consist of a stamp or
certificate affixed by the acceptor in form satisfactory to
the Federal Reserve Bank.
REGULATION B, SERIES OF 1917.
(Superseding Ilogulation B of 1916.)
OPEN-MARKET PURCHASES OF BILLS OF EXCHANGE, TRADE
ACCEPTANCES, AND BANKERS' ACCEPTANCES UNDER
SECTION 14.
I. General statutory provisions.
Section 14 of the Federal Reserve Act permits Federal
Reserve Banks under rules and regulations to be prescribed
by the Federal Reserve Board to purchase and sell in the
open market from banks,firms,corporations, or individuals,
bankers' acceptances and bills of exchange of the kinds and
maturities made eligible by the Act for rediscount, with
or without the indorsement of a member bank.
II. General character of bills and acceptances eligible.
The Federal Reserve Board, exercising its statutory
right to regulate the purchase of bills of exchange and
acceptances, "has determined that a bill of exchange or
acceptance, to be eligible for purchase by Federal Reserve
Banks under section 14—
(a) Must not have been issued for carrying or trading
in stocks, bonds, or other investment securities, except
bonds and notes of the Government of the United States.
(6) Must not be a bill the proceeds of which have been
used or are to be used for permanent or fixed investments
of any kind, such as land, buildings, or machinery, or for
investments of a merely speculative character.
(c) Must have been accepted by the drawee prior to
purchase by a Federal Reserve Bank unless it is accompanied and secured by shipping documents or by a warehouse, terminal, or other similar receipt conveying security
title.
(d) May be secured by the pledge of goodsl or collateral,
provided it is otherwise eligible.
In addition to the above general requirements, each
bill of exchange and trade acceptance purchased under
the terms of this regulation must also conform to the more
541
specific requirements set forth under III, and each
banker's acceptance must also conform to the more specific
requirements set forth under IV.
III. Bills of exchange and trade acceptances.
(a) Definition.—A bill of exchange, within the meaning
of this regulation, is defined as an unconditional order in
writing, addressed by one person to another, other than a
banker as defined under IV («), signed by the person giving it, reqairing the person to whom it is addressed, to pay,
in the United States, at a fixed or determinable future
time, a sum certain in dollars to the order of a specified
person; and a trade acceptance is denned as a bill of
exchange drawn by the seller on the purchaser of goods
sold, and accepted by such purchaser.
(6) Eligibility.—To be eligible for purchase the bill must
have arisen out of an actual commercial transaction, domestic or foreign; that is, it must be a bill which has been
Issued or drawn for agricultural, industrial, or commercial
purposes or the proceeds of which have been used or are
to be used for the purpose of producing, purchasing, carrying or marketing goods in one or more of the steps of the
process of production, manufacture, or distribution. It
must have a maturity at time of purchase of not more than
90 days, exclusive of days of grace.
(c) Evidence of eligibility.—A Federal Reserve Bank
shall take such steps as it deems necessary to satisfy itself as
to the eligibility of the bill offered for purchase, unless it
presents prima facie evidence thereof or bears a stamp or
certificate affixed by the acceptor or drawer showing that
it Is a trade acceptance.
(d) Statements.—Unless indorsed by a member bank, a
bill is not eligible for purchase until a satisfactory statement has oeen furnished of the financial condition of one
or. more of the parties thereto.
IV. Bankers' acceptances.
(a) Definition.—A banker's acceptance, within the
meaning of this regulation, is a bill of exchange of which
the acceptor is a bank or trust company, or a firm, person.,
company, or corporation engaged in the business of granting bankers' acceptance credits.
(b) Eligibility.—To be eligible for purchase, the bill
which must have a maturity at time oi purchase of not
more than three months, exclusive of days of grace, must
have been drawn under a credit opened for the purpose of
conducting, or settling' accounts resulting from, a transaction or transactions involving—
(1) The shipment of goods between the United States
and any foreign country, or between the United States and
any of its dependencies or insular possessions,, or between
foreign countries, or
(2) The shipment of goods within the United States,
i When used in this regulation the word " goods " shall be construed to
include goods, wares, merchandise, or agricultural products, including provided the bill at the time of its acceptance is accompanied byi;shipping^documents, or
live stock.
542
JULY 1, .1017.
FEDERAL RESERVE BULLETIN.
(3) The storage within the United States of readily marketable goods, provided the acceptor of the bill is secured
by warehouse, terminal, or other similar receipt, or
(4) The storage within the United States of goods which
have been actually sold, provided the acceptor of the bill
is secured by the pledge of such goods;
or it must be a bill drawn by a bank or banker in a foreign
country or dependency or insular possession of the United
States for the purpose of furnishing dollar exchange. In
this latter case the bank or banker drawing the bill must be
in a country, dependency, or possession whose usages of
trade have been determined by tho Federal Reserve
Board to require the drawing of bills of this character.
(c) Evidence of eligibility.—A Federal Keserve Bank
must be satisfied either by reference to the acceptance
itself, or otherwise, that it is eligible for purchase. Satisfactory evidence of eligibility may consist of a stamp or
certificate affixed by the acceptor, in form satisfactory to
the Federal Keserve Bank. No evidence of eligibility is
required with respect to a bill accepted by a national bank.
(d) Statements.—Bankers' acceptances, other than those
accepted or indorsed by member banks, shall be eligible
iov purchase only after the acceptor has furnished a satisfactory statement of financial condition in form to be approved by the Federal Reserve Board and has agreed in
writing with a Federal Reserve Bank to inform it upon
request concerning the transactions underlying such
acceptances.
REGULATION C, SERIES OF 1917.
(Superseding Regulation C of 1916.)
ACCEPTANCE BY MEMBER BANKS OP DRAFTS AND BILLS
OF EXCHANGE.
A. ACCEPTANCE OF DRAFTS OR BILLS OF EXCHANGE DRAWN
AGAINST DOMESTIC OR FOREIGN SHIPMENTS OF GOODS
OR SECURED BY WAREHOUSE RECEIPTS COVERING
READILY MARKETABLE STAPLES.
time, in the aggregate, more than 10 per cent of its
paid-up and unimpaired capital stock and surplus. This
limit, however, does not apply in any case where the
accepting bank is secured either by attached documents
or by some other actual security growing out of the same
transaction as the acceptance. The law also provides
that any bank may accept such bills up to an amount not
exceeding at any time, in the aggregate, more than onehalf of its paid-up and unimpaired capital stock and
surplus; or, with the approval of the Federal Reserve
Board, up to an amount not exceeding at any tims, in the
aggregate, more than 100 per cent of its paid-up and
unimpaired capital stock and surplus. In no event,
however, shall the aggregate amount of acceptances
growing out of domestic transactions exceed 50 per cent
of such capital stock and surplus.
II. Regulations.
1. Under the provisions of the law referred to above the
Federal Reserve Board has determined that any member
bank, having an unimpaired surplus equal to at least 20
per cent of its paid-up capital, which desires to accept
drafts or bills of exchange drawn for the purposes described
above, up to an amount not exceeding at any time, in the
aggregate, 100 per cent of its paid-up and unimpaired
capital stock and surplus, may file an application for that
purpose with the Federal Reserve Board. Such application must be forwarded through the Federal Reserve
Bank of the district in which the applying bank is located.
2. The Federal Reserve Bank shall report to the Federal
Reserve Board upon the standing of the applying bank,
stating whether the business and banking conditions
prevailing in its district warrant the granting of such
applications.
3. The approval of any such application may be rescinded upon 90 days' notice to the bank affected.
B. ACCEPTANCE OF DRAFTS OR BILLS OF EXCHANGE DRAWN
FOR THE PURPOSE OF CREATING DOLLAR EXCHANGE.
I. Statutory provisions.
Under the provisions of the fifth paragraph of section 13
of the Federal Reserve Act. as amended by the acts of
September 7, 1916, and June 21, 1917, any member bank
may accept drafts or bills of exchange drawn upon it,
having not more than six months' sight to run, exclusive
of days of grace, which grow out of transactions involving
the importation or exportation of goods; or which grow
out of transactions involving the domestic shipment of
goods, provided shipping documents conveying or securing
title are attached at the time of acceptance; or which are
secured at the time of acceptance by a warehouse receipt
or other such document conveying or securing title covering readily marketable staples. This paragraph limits
the amount which any bank shall accept for any one person?
company, firm, or corporation, whether in a foreign or
domestic transaction, to an amount not exceeding at any
I. Statutory Provisions.
Section 13 of the Federal Reserve Act also provides that
any member bank may accept drafts or bills of exchange
drawn upon it having not more than three months' sight
to run, exclusive of days of grace, drawrn, under regulations to be prescribed by the Federal Reserve Board, by
banks or bankers in foreign countries or dependencies or
insular possessions of the United States for the purpose of
furnishing dollar exchange as required by the usages of
trade in the respective countries, dependencies, or insular
No member bank shall accept such drafts or bills of
exchange for any one bank to an amount exceeding in the
aggregate 10 per centum of the paid-up and unimpaired
capital and surplus of the accepting bank unless the draft
or bill oi: exchange is accompanied by documents con-
JULY 1. 1017.
543
FEDERAL EESEEVE BULLETIN.
veying or securing title or by some other adequate security.
No member bank shall accept such drafts or bills in an
amount exceeding at any time in the aggregate one-half
of its paid-up and unimpaired capital and surplus. This
50 per cent limit is separate and distinct from and not
included in the limits placed upon the acceptance of
drafts and bills of exchange as described under section A
of this regulation.
II. Regulations.
Savings accounts.
The term "savings accounts" shali be held to include
those accounts of the bank in respect to which, by its
printed regulations, accepted by the depositor at the time
the account is opened—
(a) The pass book, certificate, or other similar form of
receipt, must be presented to the bank whenever a deposit
or withdrawal is made, and
(b) The depositor may at any time be required by the
Any member bank desiring to accept drafts drawn by bank to give notice of an intended withdrawal not less
banks or bankers in foreign countries or dependencies or than 30 days before a withdrawal is made.
insular possessions of the United States for the purpose
of furnishing dollar exchange shall first make an applicaTime certificates of deposit.
tion to the Federal Reserve Board setting forth the usages
A "time certificate of deposit" is defined as an instruof trade in the respective countries, dependencies, or
insular possessions in which such banks or bankers are ment evidencing the deposit with a bank, either with or
without interest, of a certain sum specified on the face of
located.
If the Federal Reserve Board should determine that the the certificate paya,ble in whole or in part to the depositor
usages of trade in such countries, dependencies, or pos- or on his order—
(a) On a certain date, specified on the certificate, not
sessions require the granting of the acceptance facilities
applied for. it will notify the applying bank of its approval less than 30 days after the date of the deposit, or
(6) After the lapse of a certain specified time subsequent
and will also publish in the Federal Reserve Bulletin
to
the date of the certificate, in no case less than 30 days, or
the name or names of those countries, dependencies, or
(c) Upon written notice given a certain specified number
possessions in which banks or bankers are authorized to
draw on member banks whose applications have been of days, not less than 30 days before the date of repayment,
and
approved for the purpose of furnishing dollar exchange.
(d) In all cases only upon presentation of the certificate
The Federal Reserve Board reserves the right to modify
or on 90 days' notice to revoke its approval either as to at each withdrawal for proper indorsement or surrender.
any particular member bank or as to any foreign, country
or dependency or insular possession of the United States
in which it has authorized banks or bankers to draw on
REGULATION E, SERIES OF 1917.
member banks for the purpose of furnishing dollar ex(Superseding Regulation E of 1916.)
«
REGULATION D, SERIES OF 1917.
PURCHASE OP WARRANTS.
(Superseding Regulation D of 1916.)
Statutory requirements.
TIME DEPOSITS AND SAVINGS ACCOUNTS.
Section 14 of the Federal Reserve Act reads in part as
follows:
Every Federal Reserve Bank shall have power—
(6) To buy and sell, at home or abroad, bonds and notes
of the United States, and bills, notes, revenue bonds, and
warrants with a maturity from date of purchase of not exceeding six months, issued in anticipation of the collection of taxes or in anticipation of the receipt of assured
revenues by any State, county, district, political subdivision, or municipality in the continental United States,
including irrigation, drainage, and reclamation districts,
such purchases to be made in accordance with rules and
regulations prescribed by the Federal Reserve Board.
Section 19 of the Federal Reserve Act provides, in part,
as follows:
Demand deposits, within the meaning of this act,
shall comprise all -deposits payable within 30 days, and
time deposits shall comprise all deposits payable after
30 days, and all savings accounts and certificates of deposit which are subject to not less than 30 days' notice
before payment, and all postal savings deposits.
Time deposits, open accounts.
The term "time deposits, open accounts" shall be held
to include all accounts, not evidenced by certificates of
deposit or savings pass books, in respect to which a written
contract is entered into with the depositor at the time the
deposit is made that neither the whole nor any part of
such deposit may be withdrawn by check or otherwise,
except on a given date or on written notice given by the
depositor a certain specified number of days in advance,
in no case less than 30 days,
For brevity's sake, the term "warrant*' when used in
this regulation shall be construed to mean "bills, notes,
revenue bonds, and warrants with a maturity from date
of purchase of not exceeding six months,'' and the term
"municipality" shall be construed to mean "State,
county, district, political subdivision, or municipality in
the continental United States, including irrigation, drainage., and reclamation districts,"
544
FEDERAL BESERVE BULLETIN.
Regulation.
I. Any Federal Reserve Bank may purchase warrants
issued by a municipality in. anticipation of the collection
of taxes or in anticipation of the receipt of assured revenues, provided—
(a) They are the general obligations of the entire municipality; it being intended to exclude as ineligible for
purchase all such obligations as are payable from " local
benefit" and "special assessment'' taxes when the municipality at large is not directly or ultimately liable;
(b) They are issued in anticipation of taxes or revenues
which are due and payable on or before the date of maturity of such warrants; but the Federal Reserve Board may
waive this condition in specific cases. For the purposes
of this regulation, taxes shall be considered as due and
payable on the last day on which they may be paid without penalty;
(c) They are issued by a municipality—
(1) Which has been in existence * for a period of 10
years;
(2) Which for a period of 10 years previous to the purchase has not defaulted 2 for longer than 15 days in the
payment of any part of either principal or interest of any
funded debt authorized to be contracted by it;
(3) Whose net funded indebtedness * does not exceed
10 per centum of the valuation of its taxable property, to
be ascertained hy the last preceding valuation of property
or the assessment of taxes.
II. Except with the approval of the Federal Reserve
Board, no Federal Reserve Bank shall purchase and hold
an amount in excess of 25 per centum of the total amount
of warrants outstanding at any time and issued in conformity with provisions of section 14 (b) above quoted, and
actually sold by a municipality.
III. Except with the approval of the Federal Reserve
Board, the aggregate amount invested by any Federal
Reserve Bank in warrants of all kinds shall not exceed
at the time of purchase a su.ru equal to 10 per centum of
the deposits kept by its member banks with such Federal
Reserve Bank.
IV. Except with the approval of the Federal Reserve
Board, the maximum amount which may be invested at
the time of purchase by any Federal Reserve Bank in
warrants of any single municipality shall be limited to
the following percentages of the deposits kept in such
Federal Reserve Bank by its member banks:
Five per centum of such deposits in warrants of a municipality of 50,000 population or over;
Three per centum of such deposits in warrants of a municipality of over 30.000 population, but less than 50,000;
One per centum of such deposits in warrants of a municipality of over 10,000 population, but less than 30,000.
V. Warrants of a municipality of 10,000 population or
less shall be purchased only with the special approval of
the Board.
i See Appendix to this regulation.
JULY 1,1917.
The population of a municipality shall be determined
by the last Federal or State census. TKhere it can not be
exactly determined the Board will make special rulings.
VI. Opinion of recognized counsel on municipal issues
or of the regularly appointed counsel of the municipality
as to the legality of the issue shall be secured and approved
in each case by counsel for the Federal Reserve Bank.
VII. Any Federal Reserve Bank may purchase from any
of its member banks warrants of any municipality, indorsed by such member bank, with waiver of demand,
notice, and protest, up to an amount not to exceed 10 per
centum of the aggregate capital and surplus of such member bank: Provided, however, That such warrants comply
with provisions I and I I I of these regulations, except that
where a period of 10 years is mentioned in I (c) hereof a
period of 5 years shall be substituted for the purposes of
this clause.
APPENDIX TO REGULATION E.
"NET FUNDED INDEBTEDNESS."
The term "net funded indebtedness" is hereby defined
to mean the legal gross indebtedness of the municipality
(including the amount of any school district or other
bonds which depend for their redemption upon taxes
levied upon property within the municipality) less the
aggregate of the following items:
(1) The amount of outstanding bonds or other debtobligations made payable from current revenues;
(2) The amount of outstanding bonds issued for the
purpose of providing the inhabitants of a municipality
with public utilities, such as waterworks, docks, electric
plants, transportation facilities, etc.: Provided, That evidence is submitted showing that the income from such
utilities is sufficient for maintenance, for payment of
interest on such bonds, aad for the accumulation of a
sinking fund for their redemption;
(3) The amount of outstanding improvement bonds,
issued under laws which provide for the levying of special
assessments against abutting property in amounts sufficient
to insure the payment of interest on the bonds and the
redemption thereof: Provided, That such bonds are direct
obligations of the municipality and included in the gross
indebtedness of the municipality;
(4) The total of all sinking funds accumulated for the
redemption of the gross indebtedness of the municipality,
except sinking funds applicable to bonds just described
in (1), (2), and (3) above.
"EXISTENCE" AND "NONDEFAULT."
Warrants will be construed to comply with that part of
I (c) of Regulation E relative to term of existence and nondefault, under the following conditions:
(1) Warrants issued by or in behalf of any municipality
which was, subsequent to the issuance of such warrants,
consolidated with or merged into an existing political division which meets the requirements of these regulations,
545
FEDERAL BESEBYE BULLETIN.
JULY 1, 1917.
will be deemed to be the warrants of such political division: Provided, That such warrants were assumed by such
political division under statutes and appropriate proceedings the effect of which is to make such warrants general
obligations of such assuming political division and payable,
either directly or ultimately, without limitation to a
special fund from the proceeds of taxes levied upon all the
taxable real and personal property within iLs territorial
limits.
(2) Warrants issued by or in behalf of any municipality
which was, subsequent to the issuance of such warrants,
wholly succeeded by a newly organized political division
whose term of existence, added to that of such original
political division or of any other political division so succeeded, is equal to a- period of 10 years will be deemed to
be warrants of such succeeding political division: Provided, That during such period none of such political divisions shall have defaulted for a period, exceeding 15 days in
the payment of any part of either principal or interest of
any funded debt authorized to be contracted by it: And
provided fur ther, That such warrants were assumed by such
new political division under statutes and appropriate proceedings the effect of which is to make such warrants general obligations of such assuming political division and
payable, either directly or ultimately, without limitation
to a special fund from the proceeds of taxes levied upon
all the taxable real and personal property within its territorial limits.
(3) Warrants issued by or in behalf of any municipality
which, prior to such issuance, became the successor of one
or more, or was formed by the consolidation or merger of
two or more, preexisting political divisions, the term of
existence of one or more of which, added to that of such
succeeding or consolidated political division, is equal to
a period of 10 years, will be deemed to be warrants of a
political division which has been in existence for a period
of 10 years: Provided, That during such period none of such
original, succeeding, or consolidated political divisions
shall have defaulted for a period exceeding 15 days in the
payment of any part of either principal or interest of any
funded debt authorized to be contracted by it.
II. Applications.
A national bank desiring to exercise any or all of the
privileges authorized by section 11, subsection (h), of the
Federal Reserve Act shall make application to the Federal
Reserve Board on a form approved by said Board (Form
No. 61). Such application shall be forwarded by the
applying bank to the Chairman of the board of directors
of the Federal Reserve Bank of its district, and shall
thereupon be transmitted to the Federal Reserve Board
with his recommendations.
III. Separate departments.
Every national bank permitted to act under this section shall establish a separate trust department, and shall
place such department under the management of an
officer or officers, whose duties shall be prescribed by the
board of directors of the bank.
IV. Provision for keeping trust funds.
The funds, securities, and investments held in each
trust shall be held separate and distinct from the general
funds and securities of the bank, and separate and distinct one from another. The ledgers and other books
kept for the trust department shall be entirely separate
and apart from the other books and records of the bank.
V. Examinations.
Examiners appointed by the Comptroller of the Currency or designated by the Federal Reserve Board will
hereafter be instructed to make thorough and complete
audits of the cash, securities, accounts, and investments
of the trust department of every bank at the same time
that examination is made of the banking department.
VI. Conformity with Stale laws.
Nothing in these regulations shall be construed to give
to a national bank doing business as trustee, executor,
administrator, or registrar of stocks and bonds under
section 11 (7c) of the Federal Reserve Act any rights or
privileges in contravention of the laws of the State in
which the bank is located.
VII. Revocation of permits.
REGULATION Ff SEMES OF 1917.
(Superseding Regulation F of 1916.)
TRUST POWERS OF NATIONAL BANKS.
I. Statutory provisions.
The Federal Reserve Act provides:
SEC. 11. The Federal Reserve Board shall be authorized
and empowered:
$'(£) To grant by special permit to national ban«cs applying therefor, when not in contravention of State or
local law, the right to act as trustee, executor, administrator, or registrar of stocks and bonds, under such rules
and regulations as the said board may prescribe.
The Federal Reserve Board reserves the right to revoke
permits granted under these regulations in any case where
in the opinion of the Board a bank has willfully violated
the provisions of these regulations or the laws of any
State relating to the operations of such bank when acting
as trustee, executor, administrator, or registrar of stocks
and bonds.
VIII. Changes in rules.
These regulations are subject to change by the Federal
Reserve Board; provided, however, that no such change
shall prejudice obligations undertaken in good faith under
regulations in effect at the time the obligation was assumed.
546
FEDERAL RESERVE BULLETIN.
REGULATION G, SERIES OF 1917.
(Superseding Regulation G of 1916.)
LOANS ON FARM LAND AND OTHER REAL ESTATE.
Section 24 of the Federal Reserve Act provides in part
that—
Any national banking association not situated in a central
reserve city may make loans secured by improved and
unencumbered farm land situated within its Federal
reserve district or within a radius of one hundred miles
of the place in which such bank is located, irrespective
of district lines, and may also make loans secured by improved and unencumbered real estate located within one
hundred miles of the place in which such bank is located,
irrespective of district lines; but no loan made upon the
security of such farm land shall be made for a longer time
than five years, and no loan made upon the security of
such real estate as distinguished from farm land shall be
made for a longer time than one year nor shall the amount
of any such loan, whether upon such farm land or upon
such real estate, exceed fifty per centum of the actual
value of the property offered as security. Any such bank
may make such loans, whether secured by such farm land
or such real estate, in an aggregate sum equal to twenty-five
per centum of its capital and surplus or to one-third of its
time deposits and such banks may continue hereafter as
heretofore to receive time deposits and to pay interest on
the same.
National banks not located in central reserve cities may,
therefore, legally make loans secured by improved and
unencumbered farm land or other real estate as provided
by this section.
Certain conditions and restrictions must, however, be
observed—
(a) There must be no prior lien on the land; that is, the
lending bank must hold an absolute first mortgage or deed
of trust.
(b) The amount of the loan must not exceed 50 per cent
of the actual value of the land by which it is secured.
(c) The maximum amount of loans which a national
bank may make on real estate, whether on farm land or on
other real estate as distinguished from farm land, is limited
under the terms of the act to an amount not in excess of
one-third of its time deposits at the time of the making of
the loan, and not in excess of one-third of its average time
deposits during the preceding calendar year: Provided,
howevery That if one-third of such time deposits as of the
date of making the loan or one-third of the average time
deposits for the preceding calendar year, is less than onefourth of the capital and surplus of the bank as of the date
of making the loan, the bank in such event shall have authority to make loans upon real estate under the terms of
the act to the extent of one-fourth of the bank's capital and
surplus as of that date.
(d) Farm land to be eligible as security for a loan by a
national bank must be situated within the Federal Reserve
District in which such bank is located or within a radius
of 100 miles of suck bank irrespective of district lines.
(e) Real estate as distinguished from farm land to be
eligible as security for a loan by a national bank must be
J U L Y 1,
1917.
located within a radius of 100 miles of such bank irrespective of district lines.
(/) The right of a national bank to "make loans' *' under
section 24 includes the right to purchase or discount loans
already made as well as the right to make such loans in the
first instance: Provided, however, That no loan secured by
farm land shall have a maturity of more than five years
from the date on which it was purchased or made by the
national bank and that no loan secured by other real estate
shall have a maturity of more than one year from such date.
(g) Though no national bank is authorized under the
provisions of section 24 to make a loan on the security of
real estate, other than farm land, for a period exceeding
one year, nevertheless, at the end of the year it may
properly make a new loan upon the same security for a
period not exceeding one year. The maturing note must
be canceled and a new note taken in its place, but in
order to obviate the necessity of making a new mortgage
or deed of trust for each renewal the original mortgage or
deed of trust may be so drawn in the first instance as to
cover possible future renewals of the original note. Under
no circumstances, however, must the bank obligate itself
in advance to make such a renewal. It must in all cases
preserve the right to require payment at the end of the
year and to foreclose the anortgage should that action
become necessary. The same principles apply to loans
of longer maturities secured by farm lands.
(h) In order that real estate loans held by a bank may
be readily classified, a statement signed by the officers
making the loan and having knowledge of the facts upon
which it is based must be attached to each note secured
by afirstmortgage on the land by which the loan is secured,
certifying in detail as of the date of the loan that all of the
requirements of law have been duly observed.
REGULATION H, SERIES OF 1917.
(Superseding Regulation II of 1916.)
MEMBERSHIP OP STATE BANKS AND TRUST COMPANIES.
I. Statutory requirements.
Section 9 of the Federal Reserve Act, as amended by the
act approved June 21, 1917, which authorizes State banks
and trust companies to become members of the Federal
Reserve System, is quoted in the appendix to this regulation.
II. Banks eligible for membership.
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.
JULY 1, 1917.
FEDERAL BESEEVB BULLETIN.
547
•"I"
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, 1100,000.
In cities exceeding 50,000 inhabitants, $200,000.
III. Application for membership.
the Federal Reserve Act and to the regulations of the
Federal Reser\ e Board, including any conditions embodied
in the certificate of approval. .
2. 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
3. Shall enjoy ail the privileges and observe all those
requirements of the Federal Reserve Act and of the regulations of the Federal Reserve Board made in conformity
therewith which are applicable to State banks and trust
companies which have become member banks.
Any eligible State bank or trust company may make application on F. R. B. Form 83a, made a part of this regulation, to the Federal Reserve Board for an amount of capital
stock in the Federal Reserve Bank of its district equal to 6
per cent of the paid-up capital stock and surplus of such
State bank or trust company. This application must be
forwarded direct to the Federal Reserve Agent of the disVI. Examinations and reports.
trict in which the applying bank or trust company is located and must be accompanied by Exhibits I, II, and III,"
Every State bank or trust company, while a member of
referred to on page 1 of the application blank.
the Federal Reserve System, shall be subject to examinations made by direction of the Federal Reserve Board or of
IV. Approval of application.
the Federal Reserve Bank by examiners selected or
approved
by the Federal Reserve Board.
In passing upon an application the Federal Reserve
In order to avoid duplication, examinations of State
Board will consider especially—
1. The financial condition of the applying bank or trust banks and trust companies made by State authorities will
be accepted in lieu of examinations by examiners selected
company and the general character of its management.
or
approved by the Board wherever these are satisfactory
2. Whether the corporate powers exercised by the applying bank or trust company are consistent with the to the directors of the Federal Reserve Bank and where,
in addition, satisfactory arrangements for cooperation in
purposes of the Federal Reserve Act.
3. Whether the laws of the State or district in which the matter of examination between the designated examthe applying bank or trust company is located contain iners of the Board and those of the States already exist or
provisions likely to prevent proper compliance with the can be effected with State authorities. Examiners trom
provisions of the Federal Reserve Act and the regulations the staff ot the Board or of the Federal Reserve Banks will,
of the Federal Reserve Board made in conformity whenever desirable, be designated by the Board to act
with the examination staff of the State in order that
therewith.
uniformity in the standard of examination may be assured.
If, in the judgment of the Federal Reserve Board, an
Every State bank or trust company, while a member of
applying bank or trust company conforms to all the requirethe
Federal Reserve System, shall be required to make in
ments of the Federal Reserve Act and these regulations,
and is otherwise qualified for membership, the Board will each year not less than three reports of condition and of
issue a certificate of approval subject to such conditions the payment of dividends. Such reports shall be made
as it may deem necessary to insure compliance with the to the Federal Reserve Bank of its district on call of such
act and these regulations. When the conditions imposed bank on dates to be fixed by the Federal Reserve Board.
by the Board have been accepted by the applying bank
APPENDIX TO REGULATION H.
or trust company the Board will issue a certificate of apSection 9 of the Federal Reserve Act as amended by the
proval, whereupon the applying bank or trust company
shall make a payment to the Federal Reserve Bank of its act approved June 21, 1917, provides that:
district of one-half of the amount of its subscription, i. e.,
Any bank incorporated by special law of any State, or
3 per cent of the amount of its paid-up capital and surplus, organized under the general laws of any State, or of the
and upon receipt of this payment the appropriate cer- United States, desiring to become a member of the Fedtificate of stock will be issued by the Federal Reserve eral Reserve System, may make application to the Federl Reserve Board, under such rules and regulations as it
Bank. The remaining half of the subscription of the ap- j may prescribe for the right to subscribe to the stock of the
plying bank or trust company shall be subject to call Federal reserve bank organized within the district in
which the applying bank is located. Such application
when deemed necessary by the Federal Reserve Board.
shall be for the same amount of stock that the applying
bank would be required to subscribe to as a national bank.
V. Powers and restrictions.
The Federal Reserve Board, subject to such conditions
Every State bank or trust company while a member of as it may prescribe, may permit the applying bank to
become a stockholder of such Federal reserve bank.
the Federal Reserve System—
In acting upon such applications the Federal Reserve
1. Shall retain its full charter and statutory rights as a Board shall consider the financial condition of the apply ingState bank or trust company, subject to the provisions of I bank, the general character of its management, and
548
FEDERAL BESERVE BULLETIN.
JULY 1,1917.
whether or not the corporate powers exercised are con- vision has been made for any indebtedness due or to besistent with the purposes of this act.
come due to the Federal Reserve Bank it shall be entitled
r Whenever the Federal Reserve Board shall permit the to a refund of its cash paid subscription with interest at
applying bank to become a stockholder in the Federal the rate of one-half of one per centum per month from date
reserve bank of the district its stock subscription shall be of last dividend, if earned, the amount refunded in no
payable on call of the Federal Reserve Board and stock event to exceed the book value of the stock at that time,
issued to it shall be held subject to the provisions of this and shall likewise be entitled to repayment of deposits
and of any other balance due from the Federal Reserve
act.
All banks admitted to membership under authority of Bank.
this section shall be required to comply with the reserve
No applying bank shall be admitted to membership in a
and capital requirements of this act and to conform to those Federal Reserve Bank unless it possesses a paid-up unrevisions of law imposed on national banks which pro- impaired capital sufficient to entitle it to become a national
ibit such banks from lending on or purchasing their own banking association in the place where it is situated under
stock, v/hich relate to the withdrawal or impairment of the provisions of the national bank act.
their capital stock, and which relate to the payment of
Banks becoming members of the Federal Reserve System
unearned dividends. Such banks and the officers, agents under authority of this section shall be subject to the
and employees thereof shall also be subject to the provisions provisions of this section and to those of this act which
of and to the penalties prescribed by section fifty-two hun- relate specifically to member banks, but shall not be
dred and nine of the Revised Statutes, and shall be re- subject to examination under the provisions of the first
quired to make reports of condition and of the payment of two paragraphs of section fifty-two hundred and forty of
dividends to the Federal reserve bank of which they be- the Revised Statutes as amended by section twenty-one
come a member. Not less than three of such reports shall of this act. Suoject to the provisions of this act and to
be made annually on call of the Federal reserve bank on the regulations of the Board made pursuant thereto, any
dates to be fixed by the Federal Reserve Board. Failure bank becoming a member of the Federal Reserve System
to make such reports yvithin ten days after the date they shall retain its full charter and statutory rights as a State
are called for shall subject the offending bank to a penalty bank or trust company, and may continue to exercise all
of §100 a day for each day that it fails to transmit such corporate powers granted it by the State in which it was
report; such penalty to be collected by the Federal created, and shall be entitled to all privileges of member
banks: Provided, however, That no Federal Reserve Bank
reserve bank by suit or otherwise.
As a condition of membership such banks shall likewise shall be permitted to discount for any State bank or trust
be subject to examinations made by direction of the company notes, drafts, or bills of exchange of any one
Federal Reserve Board or of the Federal reserve bank by borrower who is liable for borrowed money to such State
examiners selected or approved by the Federal Reserve bank or trust company in an amount greater than ten
per centum of the capital and surplus of such State bank
Board.
trust company, but the discount of bills of exchange
Whenever the directors of the Federal reserve bank or
against actually existing value and the discount "of
shall approve the examinations made by the State author- drawn
commercial or business paper actually owned by the person
ities, such examinations and the reports thereof may be negotiating
the same shall not be considered as borrowed
accepted in lieu of examinations made by examiners money within
meaning of this section. The Federal
selected or approved by the Federal Reserve Board: Reserve Bank,the
a condition of the discount of notes,
Provided, however, That when it deems it necessary the drafts, and bills as
of exchange for such State bank or trust
board may order special examinations by examiners of company, shall require
certificate or guaranty to the
its own selection and shall in all cases approve the form of effect that the borrower isanot
liajle to such bank in excess
report. The expenses of all examinations, other than of the amount provided by this section, and will not be
those made by State authorities, shall be assessed against permitted to become liable in excess of this amount
and paid by the banks examined.
while such notes, drafts, or bills of exchange are under
If at any time it shall appear to the Federal Reserve discount with the Federal Reserve Bank.
Board that a member bank has failed to comply with the
It shall be unlawful for any officer, clerk, or agent of
provisions of this section or the regulations of the Federal
Reserve Board made pursuant thereto, it shall be within any bank admitted to membership under authority of this
the power of the board after hearing to require such bank section to certify any check drawn upon such bank unless
to surrender its stock in the Federal reserve bank and to the person or company drawing the check has on deposit
forfeit all rights and privileges of membership. The therewith at the time such check is certified an amount,
Federal Reserve Board may restore membership upon of money equal to the amount specified in such check.
due proof of compliance with the conditions imposed by Any check so certified by duly authorized officers shall be
a good and valid obligation against such bank, but the
this section.
Any State bank or trust company desiring to withdraw I act of any such officer, clerk, or agent in violation of this
from membership in a Federal reserve bank may do so, j section may subject such bank to a forfeiture of its memberafter six months' written notice shall have been filed with j ship in the Federal Reserve System upon hearing by the
the Federal Reserve Board, upon the surrender and can- | Federal Reserve Board.
cellation of all of its holdings of capital stock in the Federal j
reserve bank: Provided, however, That no Federal reserve j
bank shall, except under express authority of the Federal
REGULATION I, SERIES OF 1917.
Reserve Board, cancel within the same calendar year
(Superseding Regulation I of 1916.)
more than 25 per centum of its capital stock for the pur- |
INCREASE
OR
DECREASE
OF CAPITAL STOCK OP FEDERAL
pose of effecting voluntary withdrawals during that year. !
All such applications shall be dealt with in the order in i
RESERVE BANKS.
which they are filed with the board.
^
j
Increase of capital stock.
Whenever a member bank shall surrender its stock |
holdings in a Federal Reserve Bank, or shall be ordered
Whenever the capital stock of any Federal Reserve
to do so by the Federal Reserve Board, under authority of
law, all of its rights and privileges as a member bank j Bank shall be increased by new banks becoming members,
shall thereupon cease and determine, and after due pro- i or by the increase of capital or surplus of any member
E
JULY 1, 1917.
FEDERAL RESERVE BULLETIN.
549
bank and the allotment of additional capital stock to such
IV. Whenever the stock of a Federal Reserve Bank shall
bank, the board of directors of such Federal Reserve Bank be reduced in the manner provided in Paragraphs I, II, or
shall certify such [increase to the Comptroller of the Cur- III of this regulation the board of directors of such Federal
rency on Form^58, which is made a part of this regulation. Reserve Bank shall, in accordnace with the provisions of
section 6, file with the Comptroller of the Currency a cerDecrease of capital stock.
tificate of such reduction on Form 59, which is made a part
I. Whenever a member bank reduces its capital stock of this regulation.
or surplus, and, in the case of reduction of its capital, such
reduction has been approved by the Comptroller of the
REGULATION J, SERIES OF 1917.
Currency and by the Federal Reserve Board in accord(Superseding Regulation J of 1916.)
ance with the provisions of section 28 of the Federal Reserve Act, it shall file with the Federal Reserve Bank of
CHECK CLEARING AND COLLECTION.
which it is a member an application on Form 60, which is
Section 16 of the Federal Reserve Act authorizes the
made a part of this regulation. When this application
has been approved, the Federal Reserve Bank shall take Federal Reserve Board to require each Federal Reserve
up and cancel the receipt issued to such bank for cash Bank to exercise the function of a clearing house for its
payments made on its subscription and shall issue in lieu member banks, and section 13 of the Federal Reserve Act
thereot a new receipt after refunding to the member bank as amended by the act approved June 21, 1917, authorizes
the proportionate amount due such bank on account of each Federal Reserve Bank to receive from any nonthe subscription canceled. The receipt so issued shall member bank or trust company, solely for the purposes of
show the date of original issue, so that dividends may be exchange or of collection, deposits of current funds in
lawful money, national bank notes, Federal Reserve notes,
calculated thereon.
checks, and drafts payable upon presentation, or maturing
II. Whenever a member bank shall be declared insol- notes and bills, provided such nonmember bank or trust
vent and a receiver appointed by the proper authorities
company maintains with its Federal Reserve Bank a
such receiver shall file with the Federal Reserve Bank of
balance sufficient to offset the items in transit held for its
which the insolvent bank is a member an application on
account by the Federal Reserve Bank.
Form 87, which is mado a part of this regulation., for the
In pursuance of the authority vested in it under these
surrender and cancellation of the stock held by, and for
the refund of all balances due to such insolvent member provisions of law, the Federal Reserve Board, desiring to
bank. Upon approval of this application by the Federal afford both to the public and to the various banks of the
Reserve Agent the Federal Reserve Bank shall accept and country a direct, expeditious, and economical system of
cancel the stock surrendered, and shall adjust accounts check collection and settlement of balances, has arranged
between the member bank and the Federal Reserve Bank to have each Federal Reserve Bank exercise the functions
by applying to the indebtedness of the insolvent member of a clearing house for such of its member banks as desire
bank to such Federal Reserve Bank all cash-paid subscrip- to avail themselves of its privileges and for such State
tions made by it on the stock canceled with one-half of 1 per banks and trust companies as may maintain with the Fedcentum per month from the period of last dividend, if eral Reserve Bank a balance sufficient to qualify it a?;
earned, not to exceed the book value thereof, and the a clearing member under the provisions of section 13.
Each Federal Reserve Bank shall exercise the functions
balance, if any, shall be paid to the duly authorized reof a clearing house under the following general terms and
ceiver of such insolvent member bank.
III. Whenever a member bank goes into voluntary conditions:
(1) Each Federal Reserve Bank will receive at par
liquidation and a liquidating agent is appointed, such
agent shall file with the Federal Reserve Bank of which from its member banks, and from nonmember banks in its
it is a member an application on Form 86, which is made a district which have become clearing members, checks *
part of this regulation, for the surrender and cancellation drawn on all member and clearing member banks and on
of the stock held by and for the refund of all balances due all other nonmember banks which agree to remit at par
to such liquidating member bank. Upon approval of this through the Federal Reserve Bank of their district.
(2) Each Federal Reserve Bank will receive "at par
application by the Federal Reserve Agent the Federal
Reserve Bank shall accept and cancel the stock surren- from other Federal Reserve Banks and will receive at par
dered, and shall adjust accounts between the liquidating from all member and clearing member banks, regardless
member bank and the Federal Reserve Bank by applying of their location, for the credit of their accounts with their
to the indebtedness of the liquidating member bank to respective Federal Reserve Banks, checks drawn upon all
such Federal Reserve Bank all cash-paid subscriptions member and clearing member banks of its district and
made by it on the stock canceled with one-half of 1 per
i A check is generally defined as a draft or order upon a bank or order
centum per month from the period of last dividend, if upon a bank or banking house, purporting to be drawn upon a deposit
earned, not to exceed the book value thereof, and the of funds, for the payment at all events of a certain sum of money to a
balance, if any, shall be paid to the duly authorized liqui- certain person therein named, or to him or his order, or to bearer, and
payable instantly on demand.
dating agent of such liquidating member bank.
550
FEDERAL RESERVE BULLETIN,
JULY 1,
1917.
upon all other nonmember banks oi its district whose against such items the draft would be charged against iia
checks can be collected at par by the Federal Reserve reserve balance if such balance were sufficient in amount
Bank. The Federal Reserve Banks will prepare a par to pay it; but any resulting impairment of reserve balances
list of all nonmeraber banks, to be revised from time to would be subject to all the penalties provided by the act.
time, which will be furnished to member and clearing
Inasmuch as it is essential that the law in respect to
member banks.
the maintenance by member banks of the required mini(3) Immediate credit entry upon receipt subject to mum reserve balance shall be strictly complied with
final payment will be made for all such items upon the the Federal Reserve Board, under authority vested in it
books of the Federal Reserve Bank at full face value, but by section 19 of the act, hereby prescribes as the penalty
the proceeds will not be counted as part of the minimum for any deficiency in reserves a sum equivalent to an
reserve nor become available to meet checks drawn until interest charge on the amount of the deficiency of 2 per
actually collected, in accordance with the best practice cent per annum above the 90-day discount rate of the
now prevailing.
Federal Reserve Bank of the district in which, the mem(4) Checks received by a Federal Reserve Bank on its ber bank is located. The Board reserves the right to inmember or clearing member banks will be forwarded di- crease this penalty whenever conditions require it.
rect to such banks and will not be charged to their accounts
For the purpose of keeping their reserve balances intact
until sufficient time has elapsed within which to receive member banks may at all times have recourse to the readvice of payment.
discount facilities offered by their respective federal
(5) In the selection of collecting agents for handling Reserve Banks.
checks on nonmember banks, which have not become clear(8) Each Federal Reserve Bank will determine by
ing members, member banks will be given the preference. analysis the amounts of uncollected funds appearing on
(6) Under this plan each Federal Reserve Bank will re- its books to the credit of each member bank. Such
ceive at par from its member and clearing member banks analysis will show the true status of the reserve held by
checks on all member and clearing member banks and on the Federal Reserve Bank for each member bank and will
all other nonmember banks whose checks can be collected enable it to apply the penalty for impairment of reserve.
at par by any Federal Reserve Bank. Member and clearA schedule of the time required within which to collect
ing member banks will be required by the Federal Reserve checks will be furnished to each bank to enable it to
Board to provide funds to cover at par all checks received determine the time at which any item sent to its Federal
from or for the account of their Federal Reserve Banks: Reserve Bank will be counted as reserve and become
Provided, hovjer.er, That a member or clearing member available to meet any checks drawn.
bank may ship currency or specie from its own vaults
(9) In handling items for member and clearing member
at the expense of its Federal Reserve Bank to ccver banks, a Federal Reserve Bank will act as agent only.
any deficiency which may arise because of and only in. the The Board will require that each member and clearing
case oi inability to provide items to offset checks received member bank authorize its Federal Reserve Bank to send
from or for the account of its Federal Reserve Bank.1
checks for collection to banks on which checks are drawn
(7) Section 19 of the Federal Reserve Act provides and, except for negligence, such Federal Reserve Bank
that—
will assume no liability. Any further requirements that
The required balance carried by a member bank with a the Board may deem necessary will be set forth by the
Federal Reserve Bank may, under the regulations, and Federal Reserve Banks in their letters of instruction to
subject to such penalties as may be prescribed by the their member and clearing member banks. Each Federal
Federal Reserve Board, be checked against and with- Reserve Bank will also promulgate rules and regulations
drawn by such member bank for the purpose of meeting- governing the details of its operations as a clearing house,
existing liabilities: Provided, however, That no bank shall such rules and regulations to be binding upon all member
at any time make new loans or shall pay any dividends and nonmember banks which are clearing through the
unless and until the total balance required by law is fully Federal Reserve Bank.
restored.
(10) The cost of collecting and clearing checks must
It is manifest that items in process of collection can not necessarily be borne by (lie banks receiving the benefit
lawfully be counted as part of the minimum reserve and in proportion to the service rendered. An accurate
balance to be carried by a member bank with its Federal account will be kept by each reserve bank of the cost of
Reserve Bank. Therefore, should a member bank draw performing this service and the Federal Reserve Board
will, by rule, fix the charge, at so much per item, which
1
In accordance with instructions issued by the Federal Reserve Board
on Apr. 24,1917, the various Federal Reserve Banks have issued circu- may be imposed for the service of clearing or collection
lars setting forth the conditions under which their respective member rendered by the reserve banks, as provided in section 16
banks may draw drafts on their reserve bank accounts payable with ; of the Federal Reserve Act.
or through any other Federal Reserve Bank.
EEDEEAL RESERVE BULLETIN.
, 1917
SUMMARY OF BUSINESS CONDITIONS JUNE 23, 1917,
District No. 1Bosfcon.
.TM'slrict No. 2—
G r;r.ieru.1 busincss... Somewhat c o n - Acti'-o
Good
fused.
Crops:
j Season backward.. Good
: Fair
Condition
Outlook
.....do.
do
Industries of the In most cases very Operating close to "Busy..
busy.
district.
maximum capacity.
Con s t r u c 11 o n, Good.
building,
and j
engineering,
en
Large
oreign trade
Fore
,
13 uiiding construc- Decreasing.
tion lagging.
i Imports and ex- Increasing in value.
! ports less than
last month.
Increase
Increasing
Increase
Bank clearings
do
Firm
and higher
increasing
Money rates
than last month.
increases Heavy
R e c e i p t s more
Railroad,
post- Some
and some de' than last year,
office, and other
but net earnings
receipts.
smaller.
Scarcity of labor
Labor conditions.. Well employed
preva1en t
th ro u gh o ut
district.
Good
Outlook..
Business attemptRemarks.
ing to get adjusted to now
conditions.
District No. 7Chicago.
General business...; Fair
Crops:
Condition
O utlook
!
|
do
| Satisfactory
Industries of the Active
district.
C o n s t r u c t i o n , Slack
building, and on- :
gineering.
i
Foreign trade
Bank clearings
!
District No. 8—
St. Louis.
! Less active, but
satisfactory.
G ood
Satisfactory
i
District No. 5Richmond.
District No.
Atlanta.
Generally good
Active and generally Good.
satisfactory.
Improved
G enoral improve- Fair.
merit.
Optimistic
Do.
Active; labor in de- Operating at maximand. Some commum.
plaint of embargoes.
Restricted owing to Slow.
high cost of sup- |
plies and labor. I
Increase
I Improving.
Favorable
Very active
Inactive
10 per cent increase.. j Increasing.
Increased
Do.
Firmer and rising... Increasing demand.. j
Indicate good vol- j Slight increase.
Increased
lime of business. >
Fair
Well employed
Satisfactory.
Very satisfactory
I Good.
Reports are gener- ' With more seasonally optimistic, i able w e a t h e r ,
crop conditions
will vastly improve.
District No. 10—
Kansas Cit v\
District No. 9—
Minneapolis.
District No. 11—
Dallas.
' Sal is factory volume. I Good
! Fair.
District No. 12—
San Francisco.
Active.
Grain crop being liar-1 Good,
vested "and yield
better than expected.
Do.
Wheat fair; others |
; Excellent for corn... 1\ain needed for corn ;
i
good.
j
I
j Active.
Busy
j Active
\ Generally in full op- Continue active
!
j
: eratiou.
i Decrease
; Not in as large vol- : Some slackening no- Construction work | Increase,
normal; building !
ume as year ago.
ticeable.
operations not uii- i
:
usually lioavy.
!
Improved
Excellent
Increase
i Increase over last Increase
j year.
;
Steady
Money rates
j Strong
i No change
Railroad, post-of- i Decrease over last I Posr-oflScc station- Increase
lice, and other j year.
ary.
receipts.
Good
Labor conditions.. Demand strong... Weil employed
Outlook..
Remarks.
islrict No. 1—
v' lev eland.
TMstpcl; No. • >-Philadelphia.
| Satisfactory
Very good
Improved
; Increase
; Hardening
I •
Increase
j Shortage.
j Increase
Do.
No material change. J No per c e p t i b I e
change.
Post-office receipts Increase.
increase.
Demand for farm
hands in excess of
supply;
skilled
men well employed, satisfactory wages.
Fully employed.
I''or great activity.
' Favorable
i Prospect for fall busi- Business conditions j
favqrable; ou-.look
i ness generally enfor immediate fu; couraging.
ture is promising
in most sections."
552
FEDERAL BESERVE BULLETIN.
JULY 1,1917.
GENERAL BUSINESS CONDITIONS.
Money has tightened to a large extent since
There is given on the preceding page a summary of business conditions in the United last month and rates are from $ to 1J per
States by Federal Reserve districts. The re- cent higher for all dates. Call money, 6 per
ports are furnished by the Federal Reserve cent; time money, 5 | to 6 per cent with the
Agents, who are the chairmen of the boards of bulk of business being done at the former rate.
directors for the Reserve Banks of the several Town notes, 5 per cent for fall maturities.
districts. Below are the detailed reports as of Bankers acceptances, 90 days, 3J per cent upward.
approximately June 23:
Loans and discounts of the Boston Clearing
DISTRICT NO. 1—BOSTON.
House banks on June 16. 1917, amounted to
Ba&ikers and business men in every line are $455,330,000 as compared with $457,051,000
endeavoring to readjust their business to the last month and $428,322,000 on June 17, 1916.
new conditions brought about by our entrance Deposits on June 16, 1917, totaled $352,879,000
into the war. This has caused a somewhat as compared with $351,006,000 on May 19,
confused condition of general business. Those 1917, and $341,969,000 on June 17, 1916. The
lines that are receiving Government orders are amount "Due to banks' 7 on June 16 was
very busy and are maintaining production at $135,056,000 as compared with $137,273,000
the maximum. Other dealers and manufac- on May 19. The excess reserve of these banks
turers are finding their business adversely increased from $22,662,000 on May 19 to
affected to a large extent by current factors. 832,635,000 on June 16.'
Raw material prices and wages paid employees
Exchanges of the Boston Clearing House
are high and require increased working capital for the week ending June 16, 1917, were
to do business. With money rates as they have $266,557,142 compared with $180,740,253 for
been for the past year or two this has been no the corresponding week (five days) last year
hardship and borrowing has been easy. With and $228,733,906 for the week ending May
the placing of the Liberty Loan and the pros- 19, 1917.
pect of other large loans to follow, money has
Building and engineering operations in New
tightened and rates have hardened. Banks England from January 1 to June 20, 1917,
are scanning credits carefully and in most amounted to 890,626,000 as compared with
cases are restricting business entirely to their $97,260,000 for the corresponding period of
own customers. Merchants, feeling the effect 1916, the highest previous year recorded.
of this, are curtailing business perceptibly.
Imports to the port of Boston for May, 1917,
Retailers, feeling that a great deal of money amounted to $20,306,603 as compared with
in their own locality is going out for Liberty $25,810,610 for April, 1917, and $19,555,149
bonds, in many cases in installments covering for May, 1916.
a year, do not want to extend their business
Exports from the port of Boston for May,
until they see what the effect is to be and how 1917, amounted to $18,034,567 as compared
much of that money will come back into their with $20,509,558 for April, 1917, and
own community.
$11,255,012 for May, 1916.
The wool business is very good. There seems
The receipts of the Boston post office for
to be less trading among dealers, but mills are May, 1917, show an increase of $30,411.48, or
buying to cover orders and prices are high, about 4 per cent more than May, 1916. For
with the trend upward.
the first 15 days of June, 1917, receipts were
In the boot and shoe industry new business about 6 per cent, or $27,233.08 less than for
is not coming up to expectations.
the corresponding period last year.
JULYl, 1917.
FEDEEAL RESERVE BULLETIN.
553
records for this staple and the Liverpool cotton
exchange on June 20 was obliged to close temporarily. The wool supply is still scanty,
though the announced decision of the British
Government to release 16,000,000 pounds of
Australian wool for shipment here is expected
to help in coming months. Eetail clothing
lines are only slowly regaining their normal
business. Prices of drugs and chemicals are
DISTRICT NO. 2—NSW YORK,
firm and business active. Jewelry and watches
The general condition of business in the dis- are again selling in good volume. Boot and
trict is excellent and the volume of trade un- shoe sales are slow.
diminished. Activity In retail lines which
Collections are not quite as good as in predeclined following the declaration of war, is ceding months, though reported satisfactory
reviving. Industries whose products are di- in a majority of lines.
rectly or indirectly essential to preparations
Imports at the port of New York for May
for OUT part in the war are working to the were $118,850,759, as compared with
limit of capacity.
$126,801,160 in April and $147,901,883 in
Encouraging reports as to the crop situation March, Exports amounted to $245,968,346, a
come from correspondents throughout the decrease of $16,642,292 from the April figures.
district. There have been heavy increases in
New corporate financing for the month of
the planting of corn, grain, beans, cabbage, May amounted only to $48,320,500, as compotatoes, various canning factory crops, and pared with $191,814,400 in May, 1916. New
vegetables.
corporations have been organized in the
The metal industries, especially steel, are Eastern States, with capital of $3,000,000 or
working under high pressure and the difficulty over, to a total capitalization of $388,481,000,
of securing steel products is hampering other a figure much higher than May, 1916, when the
industries seriously. The unfilled orders of total was $209,735,000, and May, 1915, when
the United States Steel Corporation amounted it was $78,950,000. An important part of the
on June 1 to 11,886,591 tons, as compared with capitalization is for shipbuilding, iron and
12,183,088 tons on May I.
steel, drug and chemical, and copper compaThe fuel situation is improved but lack of nies, and the unusual activity is said to be due
adequate transportation facilities are pre- to the Government's demand for war supplies.
venting the delivery of the large quantities of
The work of placing the Liberty Loan has
coal needed, Anthracite production for April overshadowed everything among the banking
and May was 24 percent over the same months and financial houses of the district. During
last year and arrangements for pooling bi- June there have been extremely heavy withtuminous coal shipments are expected to make drawals of funds from New York by interior
possible very much heavier deliveries,. An : banks in anticipation of Liberty Loan payimprovement in the transportation situation ments. Excess reserve of the New York
is indicated by the reduction of 30 per cent in i Clearing House banks which on May 19 stood
freight-car shortage during May.
; at $146,754,000 had declined on June 15 to
Activity in the textile industries is main- $54,050,750 in spite of an increase of
tained at high level by Government buying, ' $178,000,000 in investments of the Federal
though retailers have shown a tendency to \ Reserve Bank during the same period. Decancel orders booked for later delivery. Cot- : posits of the clearing house banks decreased
ton atT 26 cents a pound has broken all price ! about $82,000,000.
Boston & Maine Railroad reports net operating income, after taxes, for April, 1917, as
$1,041,235 as compared with $1,458,632 for
the-corresponding monthfof 1916. New York,
New Haven & Hartford Railroad reports net
operating income, after taxes, for April, 1917,
as $2,046,686 as compared with $1,904,920 for
the same month last year.
554
FEDERAL RESERVE BULLETIN.
Call money has been very firm and for several
days renewed at 6 per cent. Time money
rates have ranged from 5 to 6 per cent, with
relatively small amounts being loaned. Commercial paper rates have shown continued
firmness at 5 to 5J per cent.
DISTRICT NO. 3—PHILADELPHIA.
JULY 1,
1917.
Textiles.—Conditions in the hosiery and underwear lines are excellent, and the mills are
working to capacity. Carpet and tapestry
mills, however, are dull.
Money.—The decrease in the surplus reserves
of the Philadelphia banks to the lowest point
since early last December has forced up call
money to 5 per cent. Commercial paper' now
rules at 5§ per cent. The rediscount feature of
the Federal Reserve Bank has been availed of
to a very considerable extent.
There has been a noticeable improvement in
business conditions in those lines which are
especially dependent upon weather conditions,
higher temperatures having stimulated demand
for many summer specialties, and business in DISTRICT NO. 4—CLEVELAND.
seasonable merchandise is now well up to norIn the Fourth Federal Reserve District busimal in volume. The Philadelphia department ness conditions have not changed radically over
stores report considerable improvement, and last month, except that banks are not so full
of money, and loaning rates are considerably
expect business to continue good.
AutomoHles.—A large manufacturer of trucks firmer.
reports that the volume of business has very
Agriculture.—While damage is reported to
materially increased and the outlook is favor- prospective crops by rain and cool weather,
able, but that the margin of profit is consider- the actual damage, from the best information
ably less, because of continued increases in the obtainable, is overestimated. A big crop of
cost of labor and materials. The pleasure-car corn is under way. Hay is very heavy, but
the acreage is smaller because of the fact that
business is reported as not very good.
Cotton.—The cotton market is in a highly quite an amount of grass was plowed under to
speculative condition. Government orders make way for grain. Oats look especially good,
have kept certain classes of mills working over- with large acreage. There is an unusually large
time, but carpet mills and others which are acreage of potatoes, beans, and general garden
making goods not in much demand are not so produce. Reports show an increase of from
busy. The high price of cotton has caused 25 per cent to 100 per cent in acreage over
somewhat of a halt in the placing of future last year in some parts of the district. Although the season is late, one-half of the Burorders.
Leather.—The supply of leather on hand is ley tobacco has been transplanted, and indicafair, and prices are firm. Shoe manufacturing tions are for an acreage about the same as last
is dull, some manufacturers saying that they year.
Industries.—Manufacturing continues at full
have not experienced such a dull period since
the panic of 1907. The retailer has very large capacity, with little slowing up in prospect.
It is the general opinion that mills and factories
stocks on hand.
Wool.—Prices are very high, and the market will be busy all year, and it is expected that the
is unsettled. There is a large demand for wool Government buying for war purposes will
for orders taken by mills running on Govern- bring about a further expansion in all lines of
ment work, and also an increasing demand for industry.
The fuel situation continues a difficult one.
wool from manufacturers who are working on
general stock and civilian goods. There is a Several of the largest natural-gas companies in
greater demand for wool than there is supply. the country serving this district have sent forDealers are unable to have any wool shipped mal notices to their customers advising them
to lay in a supply of coal to supplement a probfrom Australia.
JULY 1,
1917.
FEDERAL RESERVE BULLETIN.
able shortage in natural gas next winter. The
high price of fuel for industrial and domestic
use has resulted in some increase in the output
of coal and coke, which is up to the maximum
of the year.
Prices of raw material are advancing, and it
is growing more and more difficult to control
the selling prices. From all estimates obtained, it appears that there will be a serious
pig-iron shortage before the year is out. This
also applies to coal and coke unless the car
situation improves.
It is reported that there is about a 15 per cent
slump in the expected demand for automobiles
as of June 8. The glass and pottery business
continues good, with reported shortage of common labor and insufficient railroad service.
Clay-products companies report exceptionally
good business from farmers. Textile manufacturers report business good, Federal orders
offsetting a falling off in the higher-priced
products.
A satisfactory volume of business continues
among the manufacturers of electrical goods,
and the rubber industry has not been affected
in proportion to the falling off in the expected
sales of pleasure automobiles, for the reason
that there is an increased activity in the manufacture of trucks.
Business in face brick and paving brick has
fallen off, while the demand for fire brick is
booming.
Building operations.—Building operations
show a substantial increase in values for May,
1917, over May, 1916. A number of industrial
cities report an acute shortage in workmen's
homes. In several of the larger cities large
building operations seem to have come to a
standstill.
Labor.—Labor conditions are more acute
than a year ago. The quality of the labor applying is lower than a month ago. There is
considerable unrest among employees on account of conscription, but this condition will
probably be improved after the first draft.
Mercantile lines.—The trend from nonessentials to essentials as noted last month continues.
555
Collections as a rule are reported good, but
instances of slower payments are becoming
more frequent.
Money and investments.—The demand for
money as compared with last month is considerably stiffer, and rates have advanced appreciably. The demand money rate is from 5 to 6
per cent, and 6 per cent is being quoted for four
and six months' commercial paper.
Notwithstanding rather large prepayments
on account of the Liberty Loan to the Federal
Reserve Bank of this district, deposits show
very little shrinkage.
Investment conditions are recovering somewhat from the lull created by the Liberty Loan
campaign, although there is little life yet to the
market. There are indications on every side
that bankers are making the necessary preparations to meet Liberty Bond payments so that
very little disturbance of conditions will occur.
Bank clearings show heavy increases over
last
DISTRICT NO. 5—RICHMOND.
The Liberty Loan has been the all-absorbing topic during the past 30 days, It has
called for and received the most assiduous
attention from every point of view, every
resource—individual, official, and corporate—
having been concentrated in one supreme effort
to make it a success. The maximum amount
of the loan sought to be placed in this district
was named at the high figure of 1100,000,000,
and while it was regarded as almost beyond its
available resources in this direction, the result
which has carried the figures up to $109,000,000
or above is satisfying evidence that the
people of the district have met their responsibilities freely and generously.
While the district has grown vastly in
material wealth in the last few years, its possibilities and insistent demands for development
have been so great that its accumulations have
been absorbed in permanent improvements for
agriculture, manufacturing, and a great variety
of other lines, still leaving a vast demand for
working capital. This demand has offered
profitable employment for bank funds, both
556
FEDERAL RESERVE BULLETIN.
JULY 1,1917,
within and beyond the district, and therefore DISTRICT NO, 6—ATLANTA.
the volume of liquid investments accumulated
The campaign for Liberty Loan bond subin the district has been limited as compared ' criptions proved the most absorbing activity
with its aggregate wealth. Hence, its response I during June. Subscriptions closed on June
to the Liberty Loan is striking evidence of its j 15, with a total of $57,856,600, in the Sixth
desire to assume its share of our new national ! Federal Reserve District.
burden.
I The finance committee of the Steel CorporaBusiness and trade reports, while conserva- i tion, which visited Birmingham during the
tive, are optimistic. Every line of production month, created added optimism in business
and distribution, with scarcely a discordant circles by the announcement that it had voted
note, reports an active demand for goods, gen-I to make an initial expenditure of $11,000,000
erally at high prices, and while higher costs are | in the Birmingham district for a plant to
also reported, a satisfactory margin of profit : make steel plates and other materials needed
remains.
I by the Government.
The season has been backward from an ag-I The labor situation continues uncertain.
ricultural standpoint, but a material improve- I Industries are experiencing difficulty in keepment in crop prospects is universally reported ! ing sufficient labor, and a movement is on foot
from the district, with satisfactory prices | to reorganize the coal miners' unions in these
apparently assured for everything that is being ! fields. Mass meetings are being held and
produced. The truck crops! already sent to | organizers are among the men.
market have brought prosperous returns. The I Savannah shipbuilders report contracts for
Irish potato crop along the seaboard has been 120 steel ships, to cost $200,000,000, with
below normal in quantity and has brought $8 | capacity of 3,500 tons each.
to $10 per barrel, a veritable golden harvest. | Practically speaking, the car shortage has
Cotton and tobacco are at high-water prices, ; not improved. Roads report perhaps a little
with an assured demand for all that can be | better situation in box cars than 30 days ago,
raised. Peanuts are also bringing high prices | but flat and coal cars a greater shortage, and
and their extensive planting is being partic- i with less cars of their own ownership on their
ularly urged, there being a growing demand for i lines than at any period during the past 12
them from the oil mills. The planting of soya I months.
beans also promises to be profitable for crush- ; The packing-house industry in Georgia and
ing purposes.
: Alabama continues to grow. The establishPayments for the large volume of liberty i ment of modern stockyards at Montgomery,
bonds subscribed for now confront the banks ; Ala., will furnish the formost cattle market
of the district. While the completion of these between Louisville and New Orleans, availpayments may be reflected in some decrease of able to shippers in Georgia, Mississippi, Florida,
deposits, and demands for rediscounts, no and Alabama.
material difficulty is anticipated. Our Federal
Money is firmer, with rates stiffening, and
Reserve Bank is amply prepared, particularly banks report better demands for loans. The
strengthened as it will be by the amendments banks were liberal in expenditure of time and
to the Federal Reserve Act, to do its part of money to make the Liberty Loan a success.
this financing and to take care of the agricul- Post-office receipts show an increase over
tural, commercial, and banking interests of the previous month. Generally speaking, there
district. Bank clearings, railroad returns, post- is but little building and engineering work
office receipts, and exports reflect the strong under way in the southern section. The
tide of business within our borders.
Federal Reserve Bank of Atlanta has let con-
JULY 1,
1917.
FEDERAL EESERVE BULLETIN.
557
tract for a new bank building, to cost approxi- ] banks and bond houses cooperating toward
mately $175,000, including vaults.
making it a success. The money market is
Crop conditions in general are anything but firm, with a good supply of funds for all legitigood. Temperatures are ranging low and mate enterprises. It is believed that these
the continued unfavorable weather is the conditions will continue and that the more or
cause of much uneasiness. There is a lessen- less uncertain feeling which exists at present
ing of fear from the boll-weevil in the cotton will disappear after the Liberty Loan campaign
belt. Since cotton was planted dry weather has been closed.
has prevailed and cultivation during the dry
Crop conditions in the seventh district are
spell has helped to reduce the weevil. The fair. Winter wheat in Illinois is estimated
crop is considerably behind and is badly in as half a crop. The supply of oats promises
need of rain and hot weather.
to be one of the largest in years, and corn is in
High prices have brought increased acreage good condition. In Iowa the weather condiin the sugar-cane fields of Louisiana, and many tions have retarded the growth, but small
fields formerly in rice are planted in cane. It grains and grasses are in good condition. An
is estimated the increase will be 12 per cent increased acreage of corn and oats is reported.
Crops in southern Wisconsin and Michigan
above the 1916 average.
The early vegetable season was very profit- promise a fairly good yield. Cool, rainy
able in Florida. Cans were scarce and obtain- weather has delayed the corn planting in
able only at outside prices and the products Indiana, but there has been an increased
conserved considerably reduced. Florida wa- acreage of potatoes and other garden truck.
termelon crop was successful from the standThe automobile industry has shown a depoint of amount shipped, but the drought cut crease in volume, together with other lines
down the total output of larger melons. So which are classed as luxuries. Sales of dry
far 2,438 cars of melons have been shipped: goods are decreasing and the high value of
4,300 cars of potatoes and 4,630 cars of to- merchandise is making it more and more
matoes.
difficult for concerns in this line to finance
The Georgia peach crop is estimated at themselves. Grocery and hardware men are
about 3,800 cars. It is estimated 1,600 cars reporting an active demand.
of different varieties will have been shipped
Clearings in Chicago for the first 21 days
by July 1 and that 2,200 cars of Elbertas will of June were $1,563,000,000, being $348,000,000
move during the period July 1 to 25. The more than for the corresponding 21 days in
crop so far has brought good prices; some June, 1916. Clearings reported by 23 cities
as high as $4 per six-basket carriers, the aver- in the district outside of Chicago amounted
age ranging in the neighborhood of $3. The to $301,000,000 for the first 15 days of June,
Georgia cantaloupe crop will be about 1,500 1917, as compared with $215,000,000 for the
cars. The watermelon crop is reported very first 15 days of June, 1916. Deposits in the 8
heavy, with apple crops short.
Central Reserve City member banks in Chicago were $701,000,000 at the close of business
DISTRICT NO. 7—CHICAGO.
June 21, 1917, and loans were $487,000,000.
Business in this district is still feeling the Deposits show a decrease of approximately
effects of the entry of the United States into $27,000,000 over last month and loans a dethe war, but the volume is holding up satis- crease of approximately $9,000,000.
factorily and it is believed that the readjustment period is causing but moderate disturb- DISTRICT NO. 8—ST. LOUIS.
Business in this district, with the exception
ance to commercial activity. The Liberty
of
those lines supplying the Government with
Loan has been a matter of general interest,
munitions
and such supplies as clothing, hoboth in the cities and in the country, with
558
FEDERAL RESERVE BULLETIN.
, 1917.
siery, blankets, boots, shoes, etc., is not as ac- as in previous years, reports indicate that
tive as it has been for the past few months. the present prices made a satisfactory return
Its general condition, however, is satisfactory, to farmers. Other small fruits are developing
and the fundamental situation seems to be fairly well.
sound.
Truck gardens in the central portions of the
Weather, unfavorable to summer merchan- district have developed very rapidly in the
dise, has retarded buying, and this has resulted past two weeks. There has been an abundance
in an accumulation of stock in the hands of of fresh provisions in the market, and prices
retail distributers. The increased cost of many have declined accordingly. All reports indiarticles has curtailed the consumption of lux- cate that the potato acreage is largely in excess
uries, and a tendency to do away with enter- of former years, and the crop to date has protaining is also reported to be having a slight gressed in a very satisfactory manner.
effect.
Shortage of freight cars in this district is
In the past 30 days, climatic conditions have still serious, the cotton movement in the
been more favorable to crops than at any time southern part being especially hampered. On
this spring, and they have developed accord- June 16, Memphis reported a stock of cotton
ingly. The wheat crop is now being harvested on hand amounting to 247,000 bales, against
in the southern portion of the district. While 91,000 bales on the same date in 1916.
letters from different sections indicate that the
Building permits, for May, in Little Rock,
yield will be shorter than the final estimate for Louisville, and Memphis show a substantial
1916 and for the 5-year average, yet the qual- decrease as compared with last year, while St.
ity is good and the harvest will probably be Louis shows a slight gain for the same period.
above former estimates.
Postal receipts show little change this May
Late reports from the cotton producing sec- as compared with May of 1916, small, immations of the district are also encouraging. The terial gains or losses being reported from the
plant has developed under the seasonable principal cities.
weather of the last ten days, Fields have dried
Bond dealers and bankers, generally, have
out and are now in a position to be worked, and devoted a very large part of their time to the
there is, so far, little or no report of insect Liberty Loan, and consequently the other
damage. Considerable replanting, however, bond business has been quiet. There has been
has been necessary, and the season is still from no change in commercial paper rates since last
two to three weeks late. The present prices reported. The supply of paper is, however,
of cotton will have a tendency to stimulate re- much larger than a month ago, and it is replanting, but this tendency will be to a certain ported that there has been an active demand
extent offset by the increased cost of pro- | from country banks, even though they were
visions and labor.
also subscribing for the Liberty Loan bonds.
The outlook for the oats crop in this dis- I City banks, with a few exceptions, have not
been in the market. Bank rates to customers
trict is particularly bright.
It is reported that splendid progress has been remain unchanged.
made in the cultivation of the corn crop during
DISTRICT NO. S—MINNEAPOLIS.
the last 10 days.
Timely rains during the first week of the
The first cutting of alfalfa was satisfactory
both as to quantity and quality. Meadows, in month wore of the greatest value to the grain
general, are reported to be in good condition, growing sections of the Ninth District, in parts
and there is an abundance of grass for stock. | of which the month of May was very dry.
The strawberry movement is nearing its end ! Late sown, wheat, which until that time had not
in this district, and, while the crop is not large | had. moisture enough to germinate, was in great
JULY 1,1917.
FEDERAL RESERVE BULLETIN.
559
danger. These opportune rains covered the I In Colorado shortage of labor and unusually
sections most in need of moisture and removed ! heavy snowfall in May permitted but few
the only unfavorable factors in the crop out- | mines to maintain normal output. In the
look. Weather conditions during the first Missouri-Kansas-Oklahoma field prices for zinc
three weeks of the month were very favorable and lead ores showed advances in May. Heavy
to a strong and healthy plant growth, and all of rains interfered with production from shallow
the smaller grains benefited greatly. Warmer mines.
Field summaries for May show an increase
weather is needed to advance the corn crop,
which this year represents a largely increased over April in completed oil wells in both Oklahoma and Kansas. Prices of crude oil remain
acreage.
The lack of moisture in North Dakota during stationary in the face of repeated predictions
May caused considerable damage to the rye of increases,
Lumber dealers, generally, make the statecrop. This crop is not, however, of great importance as compared with other small grains. ment that business is better and prices satisThe present outlook is extremely favorable, factory, but complain of the car situation.
and unless the Northwest is overtaken during Prospects for fall trade are good. The twelve
July with hot winds or rust, the district will most important cities in the district show an
probably harvest one of the largest crops it has average net gain in the valuation of building
permits issued for the month of May, as comever known.
Business and banking conditions are satis- pared with the same month last year, of apfactory. Trade is in good volume. Money for proximately 83 per cent, although five of them
current business operations is in good demand. show decreases.
Cooperation among the farmers has placed
The amount of construction in progress is not
as great as a year ago, but is still substantial. the question of harvest labor well in hand.
Flour mills are operating about two-thirds
Clearings during the month are up at all of
the principal cities. Eailway and postal re- capacity.
Many automobiles being sold in the country
ceipts show very favorable figures. Labor is
fully employed, and the district is free from districts, strongly indicative of prosperity.
Implement dealers have had considerable
strikes and similar disturbances. Industrial
concerns are running full time with unfilled delay in securing their orders. Fall orders
orders ahead. The outlook for the summer is being placed in good volume.
There is an upward tendency in coal prices,
favorable in all lines of business.
the general demand on the part of the conDISTRICT NO. 10—KANSAS CITY.
sumers reported at 90 per cent above normal.
Retail dry goods business handicapped by
Total subscriptions to the Liberty Loan in
unseasonable weather. Retail business in
this district amounted to $101,240,650.
Growing crops need warmth and sunshine. shoes, clothing, and men's furnishings is good.
Wholesale distribution, especially in groThe corn acreage is doubtless the largest ever
devoted to a single crop in the district. A ceries and food products, has decreased tolarge acreage of forage crops is being seeded. some extent.
All collections are prompt and the general
Harvest is progressing satisfactorily. Wheat
has generally improved, but estimates have commercial outlook is favorable.
May statistics indicate an increase both in
not changed materially.
The movement of cattle and calves to the purchase and payment activities over the
markets in May was unexpectedly heavy. previous month, and also over last year.
The demand for loans has Increased mateRecord high prices ruled for all classes, esperially with a noticeable hardening of interest
cially beef grades.
560
FEDERAL RESERVE BULLETIN.
JULY 1,
1917.
rates, generally attributed to the shifting of I greatfy suffering from lack of moisture. Conreserves and adjustments in connection with | tinued dry weather in the south and west, howthe Liberty Loan.
*
| ever, has affected the plant and our information
Fourteen leading cities report an average | is that it is in poor condition and not growing.
More seasonable weather has helped retail
gain in May bank clearings over the same
trade and the volume is satisfactory.
month last year of 42.38 per cent.
Range conditions are not good, due to the
DISTRICT NO. II—DALLAS.
continued dry weather and stockmen are conThere is a gradual adjustment to new con- fronted with the question of providing water
ditions brought about by the war, and while its and grass, and unless conditions are soon
effect in the practice of economy by our people, relieved by adequate rains in the cattle
noted in restricted purchasing of luxuries, is country live stock must be shipped to other
unquestionably felt in many channels of trade, territory, or marketed before finished. There
the business outlook is promising and conditions is considerable trading in wool which is selling
throughout the district are for the most part at high prices. The returns will be practically
intrinsically sound.
double those of last year.
Harvesting of the grain crops has progressed
The sale of Liberty Bonds has been of first
satisfactorily in the past month, due to favor- importance in finance in the past month. The
able weather, and the yield is expected to be very generous response by the banks and indiup to the average for several years past. With viduals of this district in oversubscribing the
present prices for the output, good returns are issue merely indicates the generally sound
insured producers. While the cost of all mate- financial conditions. The fact is more signifirials and labor essential to the harvest is much cant when it is remembered that the bonds
heavier than formerly, the active demand and were placed on sale at a time when funds are
top prices more than offset the increase.
actively employed in other channels, and in a
Weather conditions the past 30 days, while period of the year when banks of this district
extremely favorable for the gathering of wheat have their heaviest demands from their custoand oats, have not been good for corn and for- mers and returns from the grain, crop not yet
age crops, and the condition of those crops at received. It was indeed gratifying to observe
this time is poor in most sections of the district, the cooperation of all interests in this patriotic
according to our reports. In fact, authorities movement.
state that unless the present drought is soon
The member banks of the district are having
broken the yield of corn, hay, and other feed a good demand for funds. Notwithstanding
stuffs will be .reduced by 50 per cent. The this activity, however, rates show no evidence
dry weather and high winds have also affected of stiffening, and outside assistance is not
truck gardens, and the vegetation is dying for being sought.
lack of moisture.
Clearings for May show a 45 per cent increase
The peach crop is just beginning to move over the same month 1916, and continue at
from east Texas, and while it will not average record totals, being, for May, 1917, $219,over 25 per cent of normal, the peaches are of 094,822: 1916, $150,215,423. The cities regood quality and prices unusually high, with a porting were Austin, Beaumont, Dallas, El
good demand. Carloads of tomatoes are also Paso, Fort Worth, Galveston, Houston, and
moving from the Jacksonville district, and the vShreveport.
crop promises to be a normal one, yielding
Wholesale trade is normal in most sections
some 2,000 cars.
for this season, with collections only fair.
With the exception of west and southwest Returns from the grain crop are being felt in
Texas, cotton is in fair condition and is not yet increased collections from country merchants.
JULY 1,
1917.
FEDERAL RESERVE BULLETIN.
DISTRICT NO. 12—SAN FRANCISCO.
Maximum production and minimum necessary consumption of foodstuffs is a sound war
principle. At least, in production, this districtis
putting forth a splendid effort. The fall and winter were unfavorable for grain, and the spring was
cold and backward, but in spite of this, and because of the spurs both of patriotism and of
promise of high prices, there has been a large
increase in the acreage of spring planting,
amounting to 32 per cent more than last year
in Washington, Oregon, and Idaho. The Government report, June 1, indicates a yield in this
district of wheat, barley, and oats in excess of
that of last year.
In California the deficiency in precipitation
has been offset by cooi weather during early
summer, which has been ideal for many crops.
Hay, which was generally short last year,will
show a greater tonnage this year. Alfalfa will
exceed 8,000,000 tons, against 5,000,000 last
year.
Growers of deciduous fruits have been greatly
relieved by the announcement that such fruits
will be classed as necessary food, and not as a
luxury, assuring greater demand, better prices,
and more cars for moving the crops. A generally larger yield is indicated.
The crop of navel oranges, during the season
just closed, has been one of the best in years,
aggregating 27,153 cars, as compared with
22,235 cars last year. Shipments of Valencia
581
oranges are just beginning, and likewise promise
to be larger.
Shipbuilding is probably the inost active industry on this coast. Seattle shipyards have
$80,000,000 of contracts, while those of Portland and Tacoma have as much more. The
contracts of the Puget Sound district are believed to exceed those of the San Francisco
district. In California during May petroleum
production averaged 261,004 barrels per day,
and shipments 305,300 barrels, resulting in a
reduction of stored stocks of 1,255,318 barrels.
The increasing shortage of crude oil is rapidly
creating a critical fuel situation. It is reported
that the Southern Pacific Railroad, using crude
oil as fuel for its locomotives, is unable to supply
its requirements, and fear is expressed that by
September 20 per cent of its motive power will
be out of commission unless new supplies oj
crude oil become available.
Not in 10 years has the Pacific Northwest
lumber market been so active and remunerative
as at the present time. Demand has been such
that many large producers are now out of the
market. Lumber production is near the maximum possible.
Food production in this district promises to
be unexpectedly large and materially greater
than seemed probable a month ago, although
not of record volume.
Trade is active. Bank deposits, clearings,
and building permits all show increases.
562
FEDERAL EESEBVE BULLETIN.
JULY 1,1917.
MONEY IN CIRCULATION, 1914 TO 1917. trol of the Federal Reserve Agents.
Considerable changes in the volume and composition of the circulating medium of this country since June, 1914, are indicated in the following table and attached diagrams. The
main factors accounting for these changes are
the heavy net imports of gold, especially during
the calendar years 1915 and 1916, and the issue
of large amounts of Federal Reserve notes,
until recently almost entirely against gold.
This gold, formerly held in trust by the Federal
Reserve agents, under the amended act constitutes a trust fund held in common by both
the Federal Reserve Banks and agents and is,
therefore, not counted as part of the circulation
of the country. Lack of reliable data regarding the amounts of the several classes of money
held by banks other than Federal Reserve Banks
and national banks makes it impossible to
segregate the several classes of money held in
the banks of the country and the figures shown
represent, therefore, the estimated amounts
both outside the Treasury and outside the con-
As distinct
from the Treasury circulation statement, the
figures of gold circulation include the 40 per cent
gold reserve held by the Federal Reserve Banks
against paper-secured Federal Reserve notes.
Under the caption "bank notes" are shown
the amounts of national and Federal Reserve
bank notes issued by the Comptroller's office
to the respective banks, the circulation figures
including therefore the amounts of these notes
held by the banks themselves, as well as
amounts in the hands of the public. Figures
for September, 1914, to June, 1915, include the
amounts of emergency currency issued by the
National Currency Associations under the Aldrich-Vreeland Act. Decreases under the same
head shown for the more recent period, are
due chiefly to the retirement of National bank
notes following extensive purchases of United
States bonds with circulation privilege by the
Federal Reserve Banks and the conversion of
a large portion of these newly purchased bonds
into 3 per cent bonds and notes without the
circulation privilege.
Money in circulation, June 1, 1914, to June 1, 1917.
[From monthly circulation statements of the United States Treasury. In millions of dollars.]
Date.
1+2
1914.
June 1..
Julyl..
Aug. 1..
Sept. 1..
Oct. 1 . .
N o v . .1..
Dec. 1 . .
615
614
632
627
658
666
638
1,106
1,036
974
945
931
913
1915.
Jan.1.
Feb. 1..
Mar. 1..
AOT.1..
Miiyl..
June 1..
July!..
Aug. 1.
Sept.l..
Oct.l..
Nov.L.
Dec. 1..
1910.
Jan. 1
Feb.l
Mar. 1
Apr. 1
Mayl
June 1
July ]
Aug. 1
Sept. I
Oct.]
Nov. 1
Dec. 1
1917.
Jan.1.
Feb.1.
Mar. 1..
Apr. 1..
Mayl..
June 1.
632 j
623 :
943
945
609 !
618
951
603
987
596
1,027
605
1,077
602
1,066
582
1,142
621
1)172
602
1,226
1,259
1,281
1,316
i 1,325
' 1,317
I 1,301
i 1,313
j 1,414
' l',409
I 1,468
1,521
1,562
1,573
617
622 i
(>17
6Io
630
631
634
637
636
651
656
677
.
!
i
i
i
i
i
i
I
j
Silver
dollars. 3+4
5+6
10
1,792
1,720
70 I 1,676
" |' 1,643
71
71 ! 1,660
1,649
70
1,636
70
466
479
475
481
483
483
465
2,258
2,199
2,151
2,124
2,143
2,132
2,101
160
160
160
161
162
162
163
2,418
2,359
2,311
2,285
2,305
2,294
2,264
342
342
339
342
339
337
321
1,541
1,566
1,554
1,569
1,590
1,623
1,682
1,668
1,724
1,793
1,828
1,867
69
1,610
1,634
1,621
1,635
1,655
1,688
1 747
1,732
1,788
1,858
1,894
1,933
455
452
463
2,065
2,086
2,084
2,115
2,135
2,171 I
2,230 '
2,208
2,263
2,340
2,381
2,422
164
160
159
159
158
159
159
159
160
162
164
2,229
2,246
2,243
2,274
2,293
2,330
2,389
2,367
2,423
2,502
2,545
2,590
1,898
1,938
1,942
1,932
1,931
1,944
2,048
2,046
2,102
2,172
2,218
2.250 !
67 i
66 :
66 !
65
66
66
66
67
68
70
70
71
2,451
2,485
2,490
2,484
2,484
2,500
2,605
2,597
2,652
2,725
2,767
2,799
2,621
170
2,652
167
2,656
166
2,650
166
167 ! 2,651
2,669
169
2,874
2,987
3,017
3,088
3,051
3,002
190
188
189
192
192
193
476
475
482
487
1,965
2,004
2,008
1,997
1,997
2.010
2,114
2,113
3,170
2,242
2,288
2,321
481
482
487
487
490
491
484
482
483
479
478
2,417
2,521
2,542
2,612
2,570
2,5 IS
477
466
475
476
481
170 I
171
172
178
181
186
11
United
States 9+10
currency.
Subsidiary
7+8
silver.
1,721
1,650
1,606
1,572
1,589
1,579
1,566
685
1,660 ! 2,345
657
1,793 ! 2,450
661
1,810 j 2,471
2,541
675 !
2,499
686 !
712 ! l ' 730 ! 2,448
hffi j
9
7
5
3
Gold
j Gold
! coin. certificates.
2,775
! 2,768 |
i 2,824 !
I 2,903 i
2,948 I
| 2,985 j
I
3,084 ;
3,175 i
3,206 I
3,280 !
3,243
3,195
2,760
2,701
2,650 i
2,627 j
2,644 '
2,631
2,585
12
Bank
notes.
720
13
718
717
852
1,051
1,084
1,042
3,480
3,419
3,367
3,479
3,695
3,715
3,627
2,542
313
2,568
322
2,570
327
2,605
331
2,628
335
2,664
334
2,723
334
2,703
336
2,762
339
2,842
340
343 ! 2,888
2,933
343
974
880
866
843
815
802
787
772
766
761
756
753
3,516
3,448
3,436
3,448
3,443
3,466
3,510
3,475
3,528
3,603
3,644
3,686
343
341
343
343 |
343
342
344
343
344
344
344
342
2,964
2,993
2,999
2,993
2,994
3,011
3,119
3, 111
3,168
3,247
3,292
3,327
74.6
737
741
740
738
733
729
724
723
725
719
719
3,710
3,730
3,740
3,733
3,732
3,744
3,848
3,835
3,891
3,972
4,011
4,046
343
340
336
337
340
342
3,427
3,515
3.542
721
702
712
712
713
711
4,148
4,217
4,254
4,329
4,296
4,248
3; 617
3,583
3,537
15
Federal Total
11+12 Reserve circunotes. lation.
3,419
3,367
3,479
3,695
3,715
3,630
3,533
3,467
3,463
93
104
133
160
177
204
205
190
188
182
182
174
170
182 I
213
236 j
265 I
287
337
449
494
3,497
3,531
3,590
3,568
3,632
3,736
3,804
3,863
3,914
3,935
3,930
3,921
3,914
3,926
4,022
4.005
4,073
4,185
4,247
4,311
4,446
4,504
4,591
4,710
4,745
4,742
JULY 1,
1917.
FEDEEAL BESEEVE BULLETIN.
563
DISCOUNT OPERATIONS OF THE FEDERAL RESERVE BANKS.
Discount operations of the Federal Reserve
Banks during May totaled $91,413,473, c o m _
pared with a monthly average of $29,374,239
for the first four months of the present year and
$11,195,500 discounted during May 1916. Of
the total discounts for the month, $50,850,080
was in the form of member banks* collateral
notes, compared with, an average of $12,790,375
for the first four months in 1917. Nearly 90
per cent of the collateral notes discounted
during May was secured by commercial paper
and the remainder by United States certificates
of indebtedness. Over three-quarters of the
paper discounted by all the banks during the
month was 15-day paper. Larger percentages
are shown for the eastern banks, 15-day paper
constituting 90 per cent of the Philadelphia
bank's and 95 per cent of the New York bank's
discounts for the month, the greater part of
the short-term paper being in the shape of collateral notes discounted for the large member
banks in the Federal Reserve cities.
Aggregate discounts for the month include
$1,767,702 of trade acceptances (two-name
paper) discounted by 11 Federal Reserve Banks
and $864,121 of commodity paper, largely based
on cotton, and discounted by 4 Federal Reserve
Banks. Comparatively large amounts of trade
acceptances were discounted by the Boston and
St. Louis banks, the two banks accounting for
over one-half of this class of discounts. Richmond, Atlanta, and Kansas City report practically the entire amount of commodity paper.
The aggregate number of bills discounted
during May, exclusive of 253 collateral notes,
was 10,314, averaging in size $3,933, compared
with $4,865 in April, 1917, and about $1,350
in May, 1916. About one-half of the paper
rediscountod (i. e., exclusive of collateral notes
discounted by members with the Federal Reserve Banks) during May was paper in denominations of over $10,000, tendered by the large
city banks in connection with Government loan
operations. Medium-size bills (i. e., in denominations of $1,000 to $5,000) constituted
about 27 per cent of the paper rediscounted
during the month, compared with 53 per cent
in May, 1916. Small bills (in amounts up to
$250) constituted about 23 per cent of the
number, though less than 1 per cent of the
total amount of paper rediscounted during the
month, the Philadelphia bank continuing to
report the largest number of small bills, largely
trade acceptances. The average size of the
collateral notes discounted during the month
was slightly above $200,000, as against an
average of $143,000 for the first four months
of the present year.
Over 76 per cent of all the paper, including
collateral notes, discounted during May was
15-day paper (i. e., maturing within 15 days
from the date of discount with the Federal
Reserve Banks); over 5 per cent was 30-day
paper; over 8 per cent 60-day paper; and over
7 per cent 90-day paper. Agricultural and
live-stock paper maturing after 90 days but
within six months from date of rediscount with
the Federal Reserve Banks (so-called sixmonths paper) figures to the extent of $2,473,780, or 2.7 per cent, in the total discounts for
the month. During the five months of the
year the Federal Reserve Banks discounted
about $5,066,000 of this class of paper, as
against $7,882,700 and $6,702,700 discounted
during the same period in 1916 and 1915.
On the last Friday of the month the banks
held a total of $47,588,087 of discounted paper,
compared with $35,042,056 about the end of
April and $20,364,000 on the corresponding
date in 1916. Of the total held at the close of
the month under discussion, $3,542,350 was
agricultural paper, $3,154,213 live-stock paper,
$24,547,149 commercial and industrial paper,
and $16,344,375 member banks7 collateral
notes. Over one-half of the agricultural
paper of all maturities was held by the Richmond, Chicago, and Dallas banks and about
84 per cent of the live-stock paper by the
Dallas, Kansas City, and Minneapolis banks.
During the month the number of member
banks increased from 7,634 to 7,651, while the
number of member banks accommodated
through discounts with the Federal Reserve
Banks increased from 384 in April to 590 in the
month under review. As compared with May,
1916, the largest increases in number of discounting members are reported by the three
eastern and the St. Louis Reserve Banks.
Bills discounted by each Federal Reserve Bank during May, 1917, distributed by sizes-.
C71
OS
NUMBER OF P1KCES AND AMOUNTS.
T o $100.
Over 5100
to S250.
Over §250
to S500.
Over £500
t o 81,000.
Over .11,000
t o 52,500.
Over 555,000
t o 810,000.
Over $2,500
t o 85,000.
IP
3.2 •
Total
Per cent
Member banks'collateral notes.
Total.
Per
cent.
Banks.
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
O \-er S10,000.
429
$100
300
21,652
10,016
7,182
1,212
683
404
1,835
5,428
791!
165
2
264
293
30
76
53
214
403;
5
$4,461
6,786
28,187
454
48,668
49,789
5,443
13,239
9,195
37,210
65,157
914
04 j
691
113
430
167
61
90
86
250'
250
290||
10!
825,849
28, Sob
41,347
2,054
173,936
61,622
23,337
40,718
31,996
91,336
._,_
108,313
- —
41
96
7
490
165
42
49
134
173|
211
14
S85/204".
34,9.L4j
76,510 1
6,772!
402,404 !
127,7571
31,728
35,504
96,731
114,669|
149,625.
10,0111
95
61
205
38
477
175
•73
79
191
93
158
12
$174,001
97,227
416,801
78,873
843,563
291,973
147,569
155,507
293,322
140,002
256,214
23,099
48,842 1,566! 269,503 1,635 633,044 1,510 1,151,829 1,657 2,918,151
0.1./.
'
'~7.2
1.6
2.8
205
53
398
162
83
208
154
49
S9
24
8976,667
586,071
1,293,342
245,239
1,695,398
647,048
360,141
1,006,006
677,330
163,551!
319,678'
101,740
139 31,338,109
36
879,923
107
951,437
35
318,859
130 1,066,218
73
526,878
28
228,550
100
942,192
59
546,554
22
170,944
33
196,574
18
133,281
134! $5,688,038,
744 S8,272,429! 20. 4
60| 2,834',396 I
4,488,2731 11.0
56 2,386,7641 1,453' 5,216,040! 12.8
5.4
44 1,551,6S6|
184| 2,203,937!
73! 1,497,042; 2,402' 5,737,245; 14.1
5.6
27j
566,676 1,1611 2,278,925
4.0
25!
774,059:
355! 1,572,069.'
82; 2,235,223!
6911 4,429,072| 10.9
7.2
46! 1,261,539!
7291 2,917,071;
3.9
27:
846,301!
854". 1,565,848!
3.6
26!
350,895! 1,2831 1,451,884:
450,600!
1.1
9J
177,675;
92
7,299,519
18.0
581,000
609J 20,170,2941 10,311 40,563,393! 100.0
....I
49.7 ! .
....!
lOO.Oj
226! 50,138,080;
253i 50,850,080!
780
19.91.
131,000! "91
ft
>
QQ
&.
•<J
eg
565
FEDERAL KESERVE BULLETIN.
JULY 1,1917.
Bills discounted during the month of May, 1917, and 1916, and the five months ending May, 1917, and 1916, distributed by
classes.
Collateral Collateral
notes
notes
secured by secured by
U. S. cer- commertificates. cial paper.
Banks.
Boston
New York
Philadelphia...
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis...
Kansas City...
Dallas
San Francisco.
Total
Total
Total
Total
Amounts
$40,000
40.000
880J000
550,000
50,000
10,000
413,000
$2,990,000
2,037,000
14,349,000
2,170,000
19,2S9,550
914,000
1,230,000
1,520,000
300,325
270,000
596,205
$526,388
117,000
25,758
28,564
305,146
195,334
43,387
414,448
5.184,000 45,666,080
1 <—
.
I
102,011,579
1,767,702
298,300
4.615,612
3,527,500
575,000
1,401,000
225,000
May, 1917
May, 1916
Janoary-May, 1917
January-May, 1916
Trade ac-
86,126
9,417
16,134
Commodity paper.
All other
discounts.
§7,746,041
4,351,273
5,190,282
2,175,373
4,963,679
§468,420
1,834,557
249,034
1,528,682
3,999,624
15,000
2,917,071
*i3i,'667" 1,348,055
1,442,467
434,466
864,121
899,400
4,979,438
7,647,400
37,931,570
9,997,700
97,303,801
41,708,900
Totai.
811,302,429
6,545,273
20,445,040
4,923,937
25,076,795
3,202,925
3,215,069
5,949,072
3,792,396
4,236,848
2,273,089
450,600
91,413,473
11,195,400
208,910,430
50,883,900
of discounted paper, including member banks' collateral notes, held by each Federal reserve bank on the last
Friday in May, 1917, distributed by classes.
Banks.
Boston
New York
Philadelphia..
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Distribution,
Agricultural
paper.
Member
Live- Commercial and
banks'
stock industrial
col!ateral
paper.
paper.
notes.
Total.
§2,797,699 $665,00083,!, 462,699
651,270
355,181
227,000
134,259
2,038,625 6,123,000 8,295,884
29,140 $25,346
624,274 2,370,000 3,048,760
654 664
3,330 5,806,671 2,307,050 8,771,715
364,964 221.970 2,157,450
584,000
587,827
12,590 1,901,609
733,000 3,235,026
166,207 195,178 2,424,751 1,020,000 3,806,136
Banks.
Agriculi tural
i paper.
Member
Live- Commercial and
banks'
stock industrial
collateral
paper.
paper.
notes.
Tcta-.
Minneapolis
Kansas City.
Dallas
San Francisco
! $477,363 $635,392;$4,118,999 $385,325 $5,
.5,617,079
224,452 673,091 574,337 1,495,000 2.966,880
703,358 1,341,570 1,085,050 435,000 3:564,978
839,276
131,027
45,746
662,503
Total
Percent
I 3,542, 350 3.t, 154,213124.547,149 16,344,375 47.' 588,087
6.6] '
51.6
34.4
100.0
i
7.4
by sizes, of bills bought in open market by all Federal Reserve Banks during May, 1917, and the five months
ending May, 1917 and 1916.
To $5,000.
To $10,000.
T o 825,000.
To 8100,000.
Over $100,000.
Total.
I
Acceptances bought in
open market.
Bankers' acceptances
Trade acceptances
Total, May, 1917.
Percent..
April, 1917
March, 1917
February, 1917
January, 1917
Total, 5 months ending
May, 1917
Total, 5 months ending
May, 1916
To S50,000.
428:!1818,193,862 172 315,.,127,079 42 88,605,517 4,317
250,424
1,492,568 127
14!
487,884
3,571,384
7,024,7531,580 27,835,025 442 18,681,746
15,377,503 4610,098,085 4,444
12.3 . . . . .
33.8
22.7
4.3
8.5
is. 4
6,186,816 2,047
647 13,231,092 "257 11,003,120
1,589,086 270 2,147,3
7,155,097
4,930,6601,209
6,976,406 171| 7,185,125
876,506 175; 1,381,029
6,801,912
8,012,105 8,474
2,175,a39 777 6,324,0181.248 22,367,962 401i 16,483,974
15,273,481 11 1,859,7681,384
1,023,210 483 1,
300 5,238,206 152! 6,898,422
3,891,515
9,235,8252,,59518,583,249 4,138; 75,648,6911,423j 60,252,377
48,499,508 169 31,087,43412,558
1,274 83,480,477
31
90,907
1,305
748
389J
819:
390|
3,65lj
852 S6,728,2511,544 §27,264,419
570,606
38 296,502 36
1,353! 4,138,7841 ,113! 9,072,8061,394! 25,621,025
407J 15,387,063
16,468,221
7114,660,078 4,532
$79,399,605 96.1
8 3,188,891 3.9
82,588,496
41,312,591
28,151,638
70,637,179
20,617,180
100. G
243,307,084
85,347,977
1
Of t h e above amount, bankers' acceptances totaling $3L,858,4;Q8 were based on imports and exports a n d $7,541,137 on domestic trade transactions.
2 All of t h e above trade acceptances were drawn abroad on importers in t h e United States a n d indorsed b y foreign banks.
566
FEDERAL RESERVE BULLETIN.
JULY 1,1917.
Acceptances bought in open market and held by Federal Reserve Banks as per schedules on file with the Federal Reserve Board
on dates specified, distributed by classes of accepting institutions.
Banker's acceptances.
Date.
Feb. 22.,
Apr. 5...
May 3 . . .
June 7...
July 3 . . .
Aug. 2...
Sept. 6..
Oct. 4 . . ,
Nov. 1...
Dec. 6...
Jan. 3 . . .
Feb. 7..
Mar. 6 . .
Apr. 3 . .
Mayl..
June 5 . .
July 3 . .
Aug. 7..
Sept. 4..
Oct. 2...
Nov. 6..
Dec. 4 . .
Jan. 1...
Feb. 5-.
Mar 5.
Apr. 2 . .
May 7 . .
May 14.,
Mav21..
May 28.,
June 4..
June 11.
June 18.
1915.
1916.
|
Member
banks.
Nonmem- Nonmember trust
ber State
companies.
banks.
893,000
3,653,000 $7,820,000
5,038,000 8,189,000
5,242,000 4,516,000
4,342,000 5,267,000
5,350,000 5,407,000
6,087,000 6,305,000
9,000,000 4,898,000
8,477,000 4,331,000
12,311,000 5,172,000
15,494,000
15,681,000
17,182,000
21,000,000
24,875,000
24,680,000
32,989,000
39,695,000
41,413,000
37,798,000
37,770,000
47,748,000
66,803,000
50,361,000
53,288,000
43,979,000
49,192,000
56,294,000
59,105,000
62,986,000
69,262,000
81,196,000
103,314,000
1917.
Private
banks.
Foreign
bank
branches
Total.
Trade acceptances Total acbought in ceptances.
open
market.
20,000
20,000
132,000
253,000
275,000
$110,000
110,000
192,000
161,000
352,000
472,000
343,000
204,000
396,000
893,000
11,593,000
13,347,000
9,960,000
9,770,000
11,129,000
12,884,000
14,373,000
13,265,000
18,154,000
$93,000
11,593,000
13,347,000
9,960,000
9,770,000
11,129,000
12,884,000
14,373,000
13,265,000
18,154,000
7,160,000
7,876,000
8,670,000
13,573,000
15,400,000
17,029,000
18,921,000
19,060,000
20,356,000
21,782,000
29,474,000
33,232,000
362,000
336,000
408,000
473,000
585,000
644,000
471,000
738,000
726,000
712,000
1,014,000
1,630,000
822,000
1,456,000
1,781,000
3,262,000
3,430,000
7,007,000
11,830,000
13,940,000
12,491,000
9,944,000
12,147,000
16,069,000
23,838,000
25,349,000
28,041,000
38,308,000
44,290,000
49,360,000
64,211,000
73,433,000
74,986,000
70,236,000
80,405,000
98,679,000
23,838,000
$489,000 25,838,000
462,000 28,503,000
722,000 39,030,000
1,477,000 45,767,000
2,208,000 51,568,000
3,422,000 67,633,000
4,225,000 77,658,000
3,673,000 78,659,000
2,306,000 72,542,000
2,378,000 82,783,000
4,487,000 103,166,000
34,625,000
23,511,000
32,518,000
20,328,000
19,650,000
24,383,000
23.316,000
23,441,000
27,611,000
32,043,000
38,776,000
1,502,000
972,000
1,090,000
689,000
236,000
385,000
320,000
525,000
584,000
946,000
1,296,000
18,224,000
13,775,000
20,581,000
16,830,000
19,177,000
18,917,000
19,822,000
19,912,000
21,077,000
22,604,000
23,860,000
$10,000
10,000
10,000
$140,000
354,000
200,000
94,000
117,000
136,000
235,000
239,000
239,000
1,301,000
121,154,000
88,759,000
107,837,000
82,026,000
88,349,000
100,096,000
102,699,000
107,099,000
118,773,000
137,028,000
168,547,000
4,585,000
4,041,000
2,535,000
1,144,000
1,679,000
1,986,000
3,027,000
2,727,000
3,022,000
3 723,000
3,611,000
125,739,000
92,800,000
110,366,000
83,170,000
90,028,000
102,082,000
105,726,000
109,826,000
121,795,000
140,751,000
172,158,000
Amounts
567
FEDERAL RESERVE BULLETIN.
JULY 1, 1917.
of bills discounted and acceptances and warrants bought by each Federal Reserve Bank during
distributed by maturities.
15-day maturities.
May, 1917 >
30-day maturities.
Banks.
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Discounts.
Accept-
$9,493,345
6,201,947
18,545,006
4,416,331
20,353,342
1,392,858
2,477,450
2,243,945
1,011,110
2,931,827
841,205
50,254
§1,087,784
786,340
Warrants.
$10,581,129
' 6,968,287
18,545,006
4,416,331
20,426 945
1,447,858
2,977,450
2,330,150
1,011,110
2,931,827
841,205
236,506
73,603
55,000
500,000
86,205
186,252
Total..
Par cant
Total.
72,713,804
41.8
2,755,184
Acceptances.
Discounts.
§428,929
40,873
1,283,516
175,775
935,616
421,469
258,174
691,898
220,678
344,136
64,580
114,823
SI, 131,498
3,491,961
1,501,582
235,922
2 086,000
321,500
255,546
219,000
235,000
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Dallas.
San Francisco.
Total
P o r coat
Discounts.
Acceptances.
$445,623
164,070
338,565
161,618
1,621,738
753,648
199,024
1,423,881
1,555,648
352,915
427,308
132,380
$1,126,837
1,248,268
1,142,411
1,152,003
1,241,362
588,862
5,003.182
1,224,405
145,043
1,387,148
156,174 I
2,875,278 j
4,980,467 ! 9,585,123
Total.
Discounts.
SI, 500
SI,572,460
1,412,338
1,480,976
1,313,621
2,863,100
1,324,010
5,202,206
2,648,286
1,700,691
1,740,061
583,482
3,007,658
8934,332
138,383
268,424
170,213
1,741,247
366,884
149,513
1,551,606
466,491
200,778
310,322
125,995
1,500
24,848,889
14.3
6,424,188 j 43,938,859
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Total.
Percent
Discounts.
Acceptances.
Warrants.
$845,408 j
6,748,849 $50,437
252,879 29,219
380,013 10,225
10,270 |
424,852
33,850 j
268,066
130,908
37,742 *424,"437"i
538,469
407,192 305,853
629,674
36,800 |
27,148
$200
9,529
2,473,780 9,038,359 | 89,881
25,500
14,591,090
8.4
" \
$6,026,286
16,584,187
2,507,687
5,860,101
462,646
238,828
5,304,037
2,570,403
571,006
2,121,033
350,116
1,542,439
Warrants
Total.
-
86,960,618
16,722,570
2,776,111
5,832,444
2,203,893
605,712
5,453,550
4,122,009
1,037,497
2,321,811
660,438
1,668,434
2,040
50,365,087
28.8
2,040
!
Over 90-day maturities.
Banks.
$25,500
$1,560,427
3,532,834
2,785,098
411,697
3,021,616
768,469
513,720
910,898
455,678
344,136
94,580
191,937
90-day maturities.
Warrants.
17,270,971
! 7,576,418
!
Total,
30,000
77,114
60-day maturities.
Banks.
Warrants.
Total.
Per cent.
Total.
Discounts.
I
Accept- ! Warances. ' rants.
Total.
DisAccept- Warcounts.
rants. Total.
$21,520,242
§845,608 $11,302,429 $10,217,813
8,799,286 6,545,273 28,839,605 ! 550,437 35,435,315
291,627 20,445,040
5,404,559 ! 29,219 25,878,818
390,238
4,923,937
7,428,129 | 12,265 12,364,331
435,122 25,076,795
28,950,676
3,873,881
301,916
4,447,965
3,303,925 1,218,040 27,000
130,908
14,277,834
3,215,069 11,062,765
462,179
10,473,522
5,919,072 4,524,450
538,469
3,792,396
951,049
4,743,445
712,045
4,236,848
3,814,032
8,050,880
666,474
2,273,089
573,090
2,846,179
27,148
450,600
4,681,083
5,131,683
52.6
18.5
79.0
39.8
86.6
72.0
22.5
56.8
79.0
53.9
70.8
8.8
47.4
81.3
20.9
60.1
13.4
27.3
77.5
43.2
20.1
46.1
20.2
91.2
82,588,496 118,921 |174,120,890
100.0
52.5!
47.0
11,602,020
6.7
91,413,473
0.7
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
0.5
100.0
0.2
0.1
0.1
568
FEDERAL RESERVE BULLETIN.
JULY 1,1917.
Maturities of discounts, acceptances, and municipal vjarrants held by the Federal Reserve Banks on Friday, May
5, :1917.
[In thousands of dollars; i. e., 000 omitted.]
1 to 15 days.
Banks
Bills discounted.
Boston
New York
Philadelphia..
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis...
Kansas City...
Dallas
San Francisco.
Total.
Per cent
Acceptances
bought.
16 to 30 days.
Municipal
warrants.
1,936
345
6,872
2,788
4,015
1,211
2,020
1,580
1,603
1,745
934
299
3,720
4,436
2.245
887
2,520
809
1,200
609
630
136
96
1,207
25,348 j
18,495 j
127 !
3,647
1,013 !
1,274 ,
1,272 j
577
177 !
25;
437 !
303 '
8,853
Acceptances
bought.
Bills discounted.
Total.
5,783
8,428
10,130
4,949
6,535
2,021
4,492
2,766
2,410 i
1 906
1,467
1,809
335
80
909
100
1,363
537
606
474
824
281
643
211
744
2,599
3,707
1,239
1,160
633
1,190
412
362
101
101
3,759
52,696
31.1
6,363
16,007
Municipal
warrants.
Total.
1,079
3,695
4,870
1,695
2,523
1,200
2,558
1,140
1,186
737
795
4,275
1,016
254
356
30
762
254
355
51
305
25,753
16! 1
3,383
I
31 to 60 days.
Banks.
Bills
discounted.
Acceptances
bought.
61 to 90 days.
Municipal
warrants.
Boston
New York
Philadelphia...
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis...
Kansas'City...
Dallas
San Francisco.
595
163
363
140
2,037
962
280
1,175
2,177
417
969
188
2,842
15,683
5,014
3,754
1,772
480 I
2,984 I
2,196 j
777 |
1,472
412
3,954
Total.
Percent
9,466
41,340
254
......
100
Boston
New York
Philadelphia...
Cleveland
Richmond
Atlanta
,
Chicago
St. Louis
Minneapolis
Kansas C i t y . . .
Dallas
,
San Francisco..
Total....
Percent
Bills Accept- Municipal
disances
count- bought.
wared.
rants.
Bills
discounted,
3,437
16,100
5,377
Acceptances
bought.
597
63
147
12
973
239
172
507
388
158
254
102
4,708
12,062
1,848
4,414
170
243
3,755
1,885
507
1,376
271
296
3,612
31,535
3,
1,442
3,264
3,471
2,954
1,889
1,381
4,142
51,165
30.2
Over 90 days.
Banks.
Total.
Municipal
warrants.
Total.
5,305
12,237
2,147
4,643
1,158
482
4,07S
2,504
895
1,585
545
601
112
152
217
15
152
112
51
20
203
36,181
21.3
1,034
Total.
Total.
5
9
384
379
157
70
625
366
764
39
3
1,043
8
1,052
384
379
157
70
625
366
764
39
2,798
1,046
3,844
2.3
Total.
Bills Accept- Munidiscipal
ances
count- bought.
warPer
ed.
rants. Amount. cent.
3,463
651
8,296
3,049
8,772
3,32S
3,235
3,806
5,617
2,967
3,564
839
12,014
34,780
12,814
10,294
5,622
2,165
9,129
5,102
2,276
3,085
880
9,216
47,587 107,37'
Bills Accept- Municipal
disances
count- bought.
wared.
rants.
Total.
127
5,029
1,422
2,895
la
31
2,186
1,043
177
431
508
811
15,604
40,460
22,532
16,238
14,409
5,524
14,550
9.951
8,070
6,483
4,952
10,866
9.2
23.7
13.2
9.5
8.5
3.6
8.6
5.9
4.7
3.8
2.9
6.4
22.2
1.6
36.8
18.7
60.8
60.2
22.2
38.2
69.6
45.7
72.0
7.7
77.0
85.9
56.9
63.4
39.1
39.2
62.7
51.3
28.2
47.6
17.8
84.8
0.8
12.5
6.3
17.9
.1
.6
15.1
10.5
2.2
6.7
10.2
7.5
100.0
100.0
100.0
ioo. e
ioo. o
100.0
100.0
100.0
100.0
100.0
100.0
14. 675
169,639
100.0
28.1
63.2
8.7
100.©
ioo. e
569
FEDERAL RESERVE BULLETIN,
j£JLZ I, 1917.
Total investment operations, exclusive of purchases of United States certificates of indebtedness, of each Federal Reserve
Bank during the months of May, 1917 and 1916, and the five w,onths ending May, 1917 and 1916.
Bills bought in open market.
i
Bills
I discounted
ifor member Bankers' ac- Trade acI banks.
Total.
ceptances. ceptances.
Federal Reserve Banks.
Boston
New York
Philadelphia
''•
Cleveland
Richmond
Atlanta (including New Orleans branch)
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
SanjiFrancisco
Total
Total
Total
Total
May, 1917
May, 1916
5 months ending May, 1917
5 months ending May, 1916
..'$11,302,429 $10,217,813
j 6,545,273 28,441,759
20,445,010 5,355,561
i 4,923,937 7,233,979
: 25,076,795 3,873,881
I 3,202,925 1,218,040
i 3,215,069 10,949,443
I 5,949,072 4,524,450
951,049
; 3,792,396
i 4,236,848 3,814,032
< 2,273,089
573,090
I
450,600 2,246,508
; 91,413,473 79,399,605
! 11,195,500 20,990,900
|208,910,430 237,260,408
, 50,883,900 82,219,300
Municipal warrants bought.
City.
$10,217,813
"§397, 846 28,839,605
48,998 5,404,559
194,150 7,428,129
3,873,881
1,218,040
11,062,765
113,322
4,524,450
951,049
3,814,032
573,090
2,434,575 4,681,083
3,188,891
920,600
6,046,676
3,049,700
82,588,496
21,911,500
243,307,084
85,348,000
$50,437 I.
25,219 |.
75,656
6,774,800
14,364,057
46,197,000
!
12,187,300
|
2,040
12,650,200
Federal Reserve Banks.
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta (including New Orleans branch).
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Total
Total
Total
Total
May, 1917
May, 1916
5 months ending May, 1917...
5 months ending May, 1916...
1 year
notes.
!
I
Total.
-...-L
$2,000
J
.1
2,000
!
$50,000
50,000
i
100,000
5,608,100
14,047,200
33,621,100
May, 1917.
Total.
84,000
12,285
$50,437
29,219
12,265
27,000
27,000
43,265
17,100
647,295
150,100
118,921
8,979,200
15,013,392
50,023,300
Total investment operations.
United States bonds aad Treasury notes.
2 per cent. 3 per cent. 4 per cent.
All other.
State.
I May,
Per cent.
1916. May,
1917.
$21,520,242 $6,242,100
35,435,315 8,131,300
25,878,818 6,562,000
12,364,331 4,702,600
28,950,676 3,798,200
4,447,965 2,262,000
14,277,834 4,588,300
10,473,522 2,534,600
4,745,445 2,503,700
$2,000
8,100,880 2,193,200
50,000
2,846,179 1,813,000
52,"666" 5,183,683 2,868,700
12.3
20.3
14.8
7.1
16.6
2.5
8.2
6.0
2.7
4.5
1.6
3.4
12.9
16.8
13.6
9.8
7.9
4.6
9.5
5.3
5.2
4.6
3.8
6.0
104,000
6,113,600
17,748,890
40,966,980
United States bonds, notes, and certificates of indebtedness held by each Federal Reserve Bank on May SI, 1917, distributed
by maturities.
United States bonds with circulation privilege.
I
Certificates of indebt-
Bank.
2 per cent
consols
of 1930.
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
$750
50
Total.
United States securities without circulation privilege.
6,400
915,100
640,600
1,862,500
100
323,050
7,155,850
2,450,900
2,428,750
15,781,050
2 per cent
Panamas
of 1936-38.
3 per cent
loan
of 1918.
4 per cent
loan
of 1925.
3 per cent
conversion
bonds
3-J per of 1946-47.
2 per cent. 3 and
cent.
$3,000,
20,000,
3,500,
2,536,560 $2,369,200 3,500,
2,000,
1,500,
2,581,000 1,768,000 5,000,
1,080,000
2,500;
1,196,180
206,250 2,000,
825,000 2,500,
2,000,
2,500,
$529,000 $2,194,000
1,255,500 2,788,000
549,200 2,548,000
414,800 1,865,000
1,969,000
1,093,000 ""i6,'366' 1,491,000
2,985,000
427,400
554,000
1,153,300 1,444,000
114,800 1,340,000
838,500 j 1,784,000
5.000
905; 000 1,233,600! 1,430,000,
1,544,000
I 1,500,000
7,493,740
4,479,000
$50,000
$100
467,200
237,000
21,000
367,300
16,260
22,240
281,500
1,412,300
3 percent
1-year
notes.
5,168,450 50,000,000
3 per cent
loan
of 1961.
3378,000
6,526,400 I 23,338,000
$400
500
900
Total.
$5,723,750
24,471,550
6,597,300
11,209,160
5,121,100
4,755,900
15,545,600
6,177,400
5,197,040
13,130,590
8,301,900
7,972,750
114,203,140
Total United States bonds with circulation privilege, $29,858,840. Total United States securities without circulation privilege, $84,344,300.,
570
FEDERAL RESERVE BULLETIN.
JI-LY 1, 1917.
RESOURCES AND LIABILITIES,
Resources and liabilities of each Federal Reserve Bank and of the Federal Reserve System at close of business on
June 1 to June 22, 1917.
Fridays,
[In thousands of dollars; i. e., 000 omitted.]
RESOURCES.
Boston.
Gold coin and certificates in
vault:
June 1
June 8
June 15
June 22
Gold settlement fund:
June 1
June 8
June 15
June 22
Gold with foreign agencies:
June 22
Gold with Federal Reserve
Agent:
j
June 22
..J
Gold redemption fund:
I
June 1
I
June 8
|
June 15
June22
1
Legal tender notes, silver, etc.: j
Junel
!
June 8
June 15
June 22
Total reserve:
June 1
j
June 8
|
June 15
June 22
5 per cent redemption fund
against Federal Reserve
Bank notes:
Junel
June 8
,
June 15
,
June 22
Bills discounted, members:
June 1
,
June 8
June 15
June 22
Bills bought in open market:
Junel
June 8
June 15
June 22
United States bonds:
Junel
June 8
June 15
June 22
One-year United States Treasury notes:
Junel
June 8
June 15
June 22
United States certificates of indebtedness:
Junel
June 8
June 15
June 22
Municipal warrants:
June 1
June 8
June 15
June 22
Federal Reserve notes—Net:
June 1
June 8
June 15
New
York.
Phila- ! Cleve- Richdelphla. land. mond.
Atlanta.
Chicago.
St.
Louis.
6,115
6,553
6,299
35,239
33,917
34,354
36,380
11,791
8,055
8,298
8,066
12,286
12,499
12,471
12,514
3,522 25,116
6,58G 32,673
7,839 23,113
2,447 29,077
6,843
14,334
14,394
16,583
7,960
8,848
10,888
11,211
2,100
2,000
13,563
14,359
14,654
14,766
142,192 22,470 19,730
173,235 25,377 19,638
202,014 27,208 20,961
19,571
330,989
6,851
6,980
6,979
6,599
19,753
22 661
21,049
39,593
37,971 10,656 28,306
17,920 24,000 29,377
41,153 10,128 34,513
38,748 23,433 32,835
13,396
14,677
15,983
18,611
4,725
1,837
1,500
7,350
123,680 32,355 34,482
62,028
3,675
18,738
3,675
7,419
16,432
50
50
47
250
250
1,453
5,202
250
350
350
450
25
20
6
51
653
637
663
715
216
242
254
382
381
368
545
30,034
31,892
18,634
28,397
380
396
439
182
182 ,
167 !
198 I
201
203
1,000
782
806
813
1,525
1,217
1,260
2,527
!
i
|
|
33,748
37,451
36,118
85,371
210,447
223,297
263,254
545,754
33,756
50,123
38,125
87,534
21,094
! 22,409
i 23,800
• 35,332
11,535
13,693
15,440
27,745
62,094
68,023
58,985
137,574
I
J
i
|
26,744
48,243
49,217
55,647
91,862
198
j
Dallas.
9,568 21,578
214 i 241
216 ! 322
208
291
212
267
1,251
1,150
1,122
983
20,126
23,861
24,105
37,567
11,656
11,311
13,291
15,300
36,141
52,395
73,248
96,918
530
530
530
530
1,306
1,306
1,306
1,306
2,194
2,194
2,194
2,194
3,000
3,000
3,000
3,000
127
4,523
1,382
366
366
16,936
15,942
1,424
413
158
158
2,500
1,750
2,750
52,600
14,918 17,153
24,408
390,765
122
139
142
141
40
20
33
19
3,053
2,730
3,958
8,001
1,256 ! 117
1,262 I 115
1,162
124
1,106
125
36,624
37,693
24,518
35,680
292
210
221
132
7
7
8
12
30,908 15,154
29,283 15,857
30,494 19,592
50,913 42,882
300
300
300
400
4,453
3,913
2,854
5j 195
5,223
5,188
4 819
8,743
5,237
5,475
5,367
5,640
2,139
1,956
1,952
1,883
15,890
18,938
22,291
27,234
5,779
6,424
6,199
6,072
1,758
1,630
1,490
1,843
4,540
5,694
8 069
10,443
5,844 i 1,152
5,844 i 1,152
5,853 1,152
5,853 1,152
672
672
672
7,007
7,007
7,007
7,007
2,233
2,233
2,233
2,233
1,857
1,857
1 857
1,857
8,842
2,985 I
2,985 j
2,985 j
2985 I
2,985
1,444
1,444
1,444
1,444
2,500
2,500
2,500
2,500
1,491 !
1,491 j
1491 11
1,491
1,491 j
2,788 i 2,548 1,865
2,788 I 2,548 ! 1,865
2,788
2,548 | 1,871
2,788
2,548 i 1,871
20,361 3,500
23,864 I 3,500
22,014 ! 3,500
22,008 3,500 |
187,556
205,886
221,970
267,93C
•i2,506
3,053
4,968
14,699
11,428 10,331 |
10,664 9,867 I
11,196 11,552 !
9,180 11,475 |
549
549
549
22,728 5,506 5,799
21,098 6,069 7,649
22,088 9,747 11,075
24,735 14,077 16,560
3,424
3,545
3,271
3,344
2,916
9,209
3,349 9,197
3,524 I 9,738
9,024 ! 11,279
1,161
7,099
45,057 7,705
136,991 10,473
123,114 18,406
299,225
330,001
365,020
492,742
144
142
339
486
i
6,823
6,156
12,593
26,495
12,506
13,403
14,934
13,659
8,059
8,262
353
352
210
208
20,891
21,909
23,790
47,643
3,500
3,505
3,520
3,520
! 2,893
| 1,621
1,265
! 1,265
1,592
552
2,332
2,00G
2,000
2,000
2,000
15
15
15
15
2,593
2,645
2,600
2,800
! 5,249 i
! 7,331
i 5,091
! 5,000
2,131 i
915 i
153
152
I 5,917 j.
5,3wo •.
5,088 I.
993
466
212 !
212
8,270
8,387
8,535
8,655
8,029
TotaJ.
I
i
!
!
18,462
526,458
21,187
576,310
26,166
615,466
57,521 1,247,698
100
100 i
100 !
100 I
400
400
400
500
742
50,854
98,021
202,824
240,984:
784
718
683
10,321
10,132
9,152
7,632
116,100
135,270
164,525
194,303
8,842
8,842
3,966
3,966
3,970
3,970
2,429
2,429
2,429
2,429
36,387
36,387
36,400
36,427
1,340
1,340
1,340
1,340
1,784
1,784
1,784
1 784
1,430
1,430
1,430
1,430
1,500
1,500
1,500
1,500
23,338
23,338
23,344.
23,344
2,000
2,119
2,072
2,072
2,505
2,548
2,500
2,500
2,905
2,905
2,000
2,000
4,044
4,043
3,587
4,247
54,157
59,96TT
54,384
55,147
152
406
102
51
51
431
71
20
20
786
508
203
204
13,912
5,524
2,470
2,444
2,659
2,943
2,467 i
29,878
3,941 i 3,357
6,538 3,412
6 186 4,543
7,588 4,468
11,351
JULT 1,
571
FEDERAL RESERVE BULLETIN.
1917.
Resources and liabilities of each Federal Rese rve Bank and of the Federal Reserv e System at close of business on Fridays,
June 1 to June 22,1917—Continued.
[Thousands of dollars; i. e., 000 omitted.]
RESOURCES—Continued.
New
Boston.' York.
Due from other Federal Reserve
Banks—Net:
2,596
Junel
3,390
June 8
10,056
June 15
2,492
June 22
Uncollected items:
16,318
June 1
34,445
' June 8
32,428
June 15
15,125
June 22
All other resources:
16
June 1
20
JuneS
70
June 15
June 22
Total resources:
79,782
June 1
99,870
June 8
111,744
June 15
150,507
June 22
Phila-
4,997
1,309
5,556
7,011
44,492 25,660
126,949 | 29,344
81,903 32,695
41,798 21,055
1,664
1,463
1,159
629
312
337
339,819
494,443
583,029
834,052
91,590
106,467
105,137
149,941
Cleveland.
Richmond.
Atlanta.
1,177
16,229
9,171
14,683
11,533
1,593
1,464
2,123
123
1,362
2,549
13,698 10,647
12,921 11,510
22,199 11,205
17,168 10,787
781
464
768
67
92,522 52,262
105,268 65,324
1117,038 56,889
i 156,721
31,184
34,667
37,272
50,105
I
7,432
3,680
1,485
855
St.
MinneLouis. apolis.
City.
San
Dallas. Francisco.
Total.
46
193
4,038
1,524
2,221
4,672
5,425
1,848
6,939
2,651
3,568
13,677
14,811
15,642
12,561
5,713
10,309
12,060
11,870 6,121
7,145
10,726
9,844
13,134
6,670
8,477
10,285
8,318
10,871
7,399
15,935
11,763
177,092
304,730
290,320
195,826
174
146
58
440
590
454
127
277
6,056
5,588
5,217
408
136,126 43,598 39,953 62,034
155,918 50,022 44,457 68,212
153,152 53,166 47,507 72,888
224,787
73,657 101,138
35,333
37,638
43,305
64,637
53,926
58,265
67,052
97,493
1,038,309
1,276,547
1,412,343
1,999,642
6,395
10,047 36,897
9,689 43,489
9,526 29,161
40
64
50
463
298
104
Chicago.
1,030
1,691
1,660
120
901
3,345
4,739
1,834
5,598
5,706
472
130
292
36
118
105
79
LIABILITIES.
Capital paid in:
$5,029
Junel
5,022
June 8
5,112
June 15
5,112
June 22
Government deposits:
13,123
Junel
30,637
June 8
11,264
June 15
June 22
58,846
Due to members—reserve account:
48,880
June 1
46,609
June 8
56,226
June 15
50,311
June 22
Collection items:
12,572
June 1
17,428
June 8
38,996
June 15
11,398
June 22
Federal Reserve notes—net:
Junel
June 8
June 15
Federal Reserve notes in actual
24,627
circulation
Due to other Federal Reserve
Banks—net:
June 1
June 8
June 15
June 22
Federal Reserve Bank note circulation, net liability:
June 15
June 22
All other liabilities, including
foreign Government credits:
178
June 1
174
June 8
,
146
June 15
,
213
June 22
Total liabilities:
79,782
June 1
99,870
JuneS
111.744
June 15
[150,507
JuneS 2 . , , . . ,
!
$12,060
12,063
12,063
12,063
iSo, 264
$6,248 $3,436
6,247 3,436
6.247 3,436
6^,247 5,436
5,272
5,272
5,270
24,989 9,995 5,975
39,632 23,629 27,314
126,559 17,204 21,538
227,882 32,765 38,356
248,409
320,949
364,992
313,418
49,284 !
48,921 |
48,686 I
54,337
34,779 23,814
76,776 23,172
36,196 27,649
33,671 18,997
6,163
203,373
66,885
59,692
75,602
66,153
I13,414
12,015
13,651
14,144
3,046 i
5,303 |
6,145 |
$2,388
2,389
2,387
2,388
$7,057
7,057
7,062
7,062
S3,168 $2,467 i S3,165 82,754 S3,949
3,166 2,468 i 3,166 2,754 3,960
3,243 2,468 3,166 2,755 3,960
3,243 2,468 3,166 2,755 3,961
$56,985
57,000
57,171
57,171
3,411
17,429
7,537
14,323
5,330
6,527
7,318
4,577
14,930
34,935
23,713
-" ~~
2,522
10,240
7,659
9,102
3,229 2,949
7,326
9,166 10,022 6,763 11,831
7,776 6,770 10.363 14,880
16,453 13,852 18,241 27,082
96,478
228,125
262,581
495,807
25,132
23,938
25,078
25,891
18,280
18,520
18,822
19,098
97,786
95,714
100,627
106,356
27,967
26,149
31,657
31,197
28,077
27,348
31,494
28,321
48,450
46,697
50,325
50,759
23,620
22,788
23,471
21,566
38,376
38,446
43,754
38,802
721,146
775,771
870,734
806,209
9.725
8', 506
9,584
9,230
3,333
5,206
6,342
5,186
16,287
18,212
21,750
17,756
3,516
3,929
3,613
8,546
3,243
2,620
3,393
2,761
6,313
6,436
6,941
2,952
2,999
4,471
2,962
4,143
3,919
4,343
5,989
134,091
181,321
176,424
137,581
10,523
11,957
11,211
1,853
2,025
2,403
6,132
6,538
6,994
2,917
2,531
2; 034
1,157
1,788
5,829
2,148
2,334
2,245
16,875 23,610 25,644
19,113
38,339 j 31,777 16,692
18,856 59,285
21,530
300
362
776
1,215
1,308
1,520
1,648
339,819
494,443
583,029
834,052
499,721
1,160
293
18,367
43,715
35,536
41,997
27,776
32,476
43,024
187
170 j
181 (
233 I
91,590
106,467
105,137
149,941
66
44
92,522 52,262
105,268 65,324
117,038 56,8*9
156,721
31,184
34,667
37,272
50,105
362
776
20
35
42
44
39,953 62,034
136,126
155,918 50,022 44,457 68,212
153,152 53,166 47,507 72,888
224, 787 68,963 73,657 101,138
132
109
115
129
1,833
1,854
2,047
2,377
35,333 53,926 1,038.309
37,638 58,265 1,276; 547
43,305 67,052 1.412.343
64,637 97,493 i; 999.642
1 Difference between net amounts due from and net amounts due to other Federal Reserve Banks .
572
FEDERAL RESERVE BULLETIN,
JULY 1,1917.
FEDERAL RESERVE NOTES,
Federal Reserve note account of each Federal Reserve bank at close of business on Fridays June 1 to June 22, 1917.
[In thousands of dollars; i. s., 000's omitted.]
i
New
Boston.] York.
Federal Reserve notes received
from agent—net:
June 1
June8
June 15
June 22
Federal Reserve notes held by
bank:
June 1
June 8
June 15
June 22
Federal Reserve notes in actual
circulation:
June 1
June 8
June 15
June 22
Gold and lawful money deposited with or to credit of Federal Reserve Agent:
June 1
June 8
June 15
June 22
Commercial paper delivered to
Federal Reserve Agent:
Junel
June 8
June 15
June 22
! Phila- Cleveidelphia. land,
24,121
24,091
25,760
26,744
212,763 34,303
214,994 36,604
219,851 39,624
223,680 40,655
2,774
1,373
1,464
2,117
16,936 i
864
15,942 |
967
18,837 2,152
20,307 2,316
RichAtmond. lanta.
Chicago.
St.
Minne- Kansas
Louis. apolis. City. Dallas. Francisco.
17,368 23,350
17,330 23,833
17,284 24,209
17,875 24,799
16,864
16,733
17,411
17,310
18,879
19,119
19,548
19,503
55,547
59,375
62,044
64,508
1,592 ! 750
552 i 257
2,332
730
2,705
618
418
546
5,917
5,398
5,088
5,223
1,495
1,089
633
1,000
893
1,022
1,097
1,189
552
713
561
641
26 i 2,943
256
327 2467
37
2,467
2; 878
34,979
31,058
36,356
40,255
15,873
16,241
16,651
16; 875
22,457
22,811
23,112
23,610
25,208
25,790
25,788
25,644
19,626 20,182
19,672 20,720
19,419 21,172
19,113 21,530
464,865
481,469
491,615
499,721
19,540 24,051 17,478 22,-843
20,280 24,002 17,338 23,663
21,078 19,959 17,174 23,639
21,578 14,918 17,153 24,408
466,969
475,201
459,942
390.765
28,293
30,354
32,506
34.482
647
21,347
22,718
24,296
24,627
195,827 33,439 26,701 |
199,052 35,637 29,802 I
201,014 37,472 30,174 i
203,373 38,339 31,777 i
16,114
16,476
16,681
16,692
18,461 49,630
18,573 53,977
18,880 56,956
18,856 59,285
24,121
24,091
25,760
26,744
212,763 30,393 28,293
214,994 30,334 30,354
194,851 31,327 32,506
32,355 34,482
5,591
4,519
5,470
7,419
16,608
16,548
16,477
16,432
12,086
12,655
12,411
13,498
2,276
2,576
3,071
3,078
25,007
100,058
3,918
6,278
8,304
8,306
Total.
55,547
59,375
62,044
62,028
9.741
9; 703
9,657
9,568
2,486
7,635
7,628
7,630
8,312
3,810
3,553
3,131
3,221
25,760 19,753 22,843
26;503 19,938 23,663
26,349 19,746 23,639
26,285 19.727 24,408
1,892
2,519
6;812
11,429
127 2,661
814
2,824
2,721
2,779
2,748
499,844
512,527
527.971
539;976
34,441
37,930
69,145
153,136
573
FEDERAL BESEBVE BULLETIN.
Jrji/s 1, 1917.
Federal reserve account of each Federal Reserve Agent at close of business on Fridays, June 1 to June
22,1917.
[In thousands ci dollars, i. e., 000's omitted.]
New
Boston. York.
Phila- i Cievedelphia.! land.
RichAtmond. laDta.
Chi-
St. MinneLouis. apolis.
! San
Dallas.; Fran! Cisco.
Total.
36,920 26,060
36,920 27,060
36,920 27,060
36,920
819,520
852,160
884,680
903,700
FEDERAL RESERVE NOTES.
Received from Comptroller:
June 1
June 8
June 15
June 22
Keturned to Comptroller:
June 1
June 8
June 15
June 22
Chargeable to Federal Reserve
Agent:
June 1
June 8
June 15
June 22
In hands of Federal Reserve
Agent:
June 1
JuneS
June 15
June 22
Issued to Federal Reserve Bank
less amount returned to Federal Reserve Agent for redemption:
June 1
June 8
June 15
June 22
G old and commercial paper held
against outstanding notes:
Gold coin and certificates
on h a n d June 1
JuneS
June 15
,
June 22
,
Credit balances—
In gold r e d e m p t i o n
fund—
June 1
,
June 8
June 15
June 22
With Federal Reserve
BoardJune 1
June 8
June 15
June 22
Commercial paper,
required
minimum 1—
June 1
JuneS
June 15
June 22
TotalJune 1
June 8
June 15
June 22
57,340 41,000 30,100 36,380
61,340 42,000 30,100 36,380
61,340 48,000 30,100 36,380
61,340 48,000 31,720 36,380
39,680
47,480
47,480
47,480
383,440
390,040
409,640
422,440
10,309
10,339
10,670
10,686
73,077
77,246
77,489
77,860
8,697
8,756
8,756
9,225
5,667
5,806
5,854
5,878
10,556
10,687
10,749
10,850
29,371
37,141
36,810
36,794
310,363
312,794
332,151
344,580
48,643
52,584
52,584
52,115
35,333
36.194
42,146
42,122
19,544
19,413
19,351
20,870
5,250
13,050
11,050
10,050
97,600 14,340
97,800 15,980
112,300 12,960
120,900 11,460
7,040
5,840
9,640
7,640
2,680
2,680
1,940
3,560
24,121
24,091
25,760
26,744
212,763 34,303
214,994 36,604 30,354
219,851
32,506
223,680 40,655 34,482
16,864
16,733
17,411
17,310
20,810
20,810
21,910
22,910
202,338
203,818
183,914
113,114
3,730
3,730
4,223
4,220
10,828
11,628
11,808
13,605
1,311
1,281
1,850
1,834
10,425
11,176
10,937
10,566
1,853
2,094
2,094
2,275
1,465
1,726
1,698
1,877
67,500
76,140
81,060
84,860
25,740
27,340
27,340
27,340
6,296
6,356
6,427
6,472
2,253
2,265
2,276
2,292
5,112
5,150
5,196
5,605
30,084
30,024
29,953
29,908
65,247
73,875
78,784
82,568
34,640
34,640
36,640
36,640
40,720
42,720
42,720
42,720
5,600
8,681
5,617
6,677 I 8,731
5,741
6,831 ! 8,913
6 8 9 5 j! 8,9
5,951 i 6,895
3,217
3,397
3,421
3,452
146,085
151,027
152,323
154,098
20,628 29,040 34,100
22,843
22,190 29,023 36,043 28', 189 23,663
22,144 30,899 35,889 28,007 23,639
21,735 30,689 35,825 27,988 24,408
673,435
701,133
732,357
749,602
5,690
5,190
6,690
8,340
9,540
9,540
9,540
17,368
17,330
17,284
17,875
23,350
23,833
24,209
24,799
25,760
26,503
26,349
26,285
3,365
3,365
3,365
3,365
13,918
13,955
14,077
14,077
542
513
11,205 9,700
10,905 14,500
10,405 16,740
10,405 18,060
4,860
4,860
3,860
55,547
59,375
62,044
64,508
173,591
188,606
204,386
209,626
8,486
8,261
8,261
8,261
i
25,000
100,000
24,121
24,091
25,760
26,744
3,910
6,270
8,297
8,300
212,763 34,303
214,994 36,604
219,851
223,680 40,655
2,897
2,896
591
519
470
419
1,632
1,572
1,500
1,456
597
585
574
i
19,753 22,843
19,928 23,663
19,746 23,639
19,727 24,408
499,844
512.527
527,971
539,976
2,370
2,370
2,370
2,370
11,110
11,110
11,110
11,110
271,365
273,682
255,674
187,667
1,102
1,085
1,261
1,251
1,621
1,572
1,529
1,008
1,068
1,034
1,013
4,520
5,240
5,740
6,250
23,314
24,339
24,538
24,268
20,060
20,060
16,060
11,060
5,360 1 21,760
5,160 ! 22,590
5,030 22,590
5,030 23,390
172,290
177,180
179,730
178,836
2,275
2,590
2,572 ,
32,875
37,326
68,029
149,211
1,488
5,750
5,750
5,750
5,690
2,480
7,627
7,627
7,627
8,307
3,810
3,553
3,131
3,221
1,709
2,501
6,390
11,367
28,293 16,864 18,879 55,547 17,368
30,354 10,733 19,119 59,375 17,330
32,506 17,411 19,548 62,044 17,284
34,482 17,310 19,503 64,508 17,875
23,350
23,833
24,209
24,799
25,760
26,503
26,349
26,285
5,000
4,000
5,000
7,000
12,080
12,080
12,080
I 12,080
11,273
12,214
11,941
9,891
2,271
2,571
3,071
3,071
I
1,083
1,073
1,049
1,018
54,950
58,790
61,470
61,470
24,810 16,000
24,510 17,000
25,010 19,000
25,860 19,000
2,000
2,000
2,000
2,000
18,879
19,119
19,548
19,503
2,574 I
19,753 I
19,928
19,746 23,639
19,727 24,408
* For actual amounts see item "Commercial paper delivered to Federal Reserve Agent" on p. 572.
499,844
512,527
527.971
539", 976
574
FEDERAL EESEEVE BULLETIN.
JULY 1,1917.
EARNINGS ON INVESTMENTS OF FEDERAL RESERVE BANKS.
Average amounts of earning assets held by each Federal Reserve Bank during May, 1917, earnings from, each class of earning
assets, and annual rates of earnings on the basis of May, 1917. returns.
Average balances for the month of the several classes of earnBanks.
Boston
New York....
Philadelphia..
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco..
Total
Municipal
warrants.
§3,777.062 310,254,345 85,723,750
2,233,395 28,693,172 27,447,743
6,285,865 12,491,970
6,597,300
1,986,808
8,944,948 12,100,676
8,577,570 6,049,249
5,121,100
2,769,246
2,500,270
4,848,258
3,007,142
8,977,587 15,561,890
3.225,169
4,637,794
6,423,497
5; 092,500 4,149,900
5,206,200
1,731.808 2,962,425 13,188,290
3,226', 223
979,282
7,390,000
817,604 8,876.512
8,778.385
S127,168
5,041,887
1,421,462
2,891,251
15,000
14,239
2,182,497
1,039,287
175,900
429.329
548; 254
808,974
; 42,710,392
Earnings from—
Banks.
Bills
bought in
open
market.
United
States
securities.
Bills disi counted,
| members.
99,517,434 118,387,089
Total.
$19,882,325
63,416,197
26,796,597
25,903,683
19,762,919
10,132,013
15,325,727
14,624,500
18,311,852
12,146,739
19,281,475
14,695,194 £275,310,109
Calculated annual rates of earnings from—
Bills
I Bills dis- bought
j Municiin United
counted,
States 1 pal waropen securities.!
rants.
members. market.
! Bills disMuniciTotal. ! counted,
pal wari members. market, 'securities. rants.
Total.
I
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St.
"' 'Louis.
•
Minneapolis.
Kansas City.
Dallas
San Francisco
Total
§11,693
6,090
17,561
6,146
27,708
9,586
10,286
10,471
17,984
6,037
12)223
2,890
S27,915
78,600
32,848
23,655
15,834
6,853
22,826
12,560
11,934
7,831
2,819
22,834
§12,623
53,224
13,941
26,516
10,433
10,721
30,494
13,259
10,182
25,652
17,645
$310
12,777
3,544
7,867
45
53
5,664
2,671
400
1,082
1,403
2,025
§52.541
150)691
67,894
64,184
54,020
27,213
69,270
38,961
40,500
40,602
34,090
45,637
j 138,675
266,509
242,578
37,841
885,603
|
|
I
i
I
1
Per cent. Per cent. Per cent. Per cent. Per cent.
3.64
3.21
3.08
2.87
2.60
3.22
3.22
2.79
2.99
2.30
3.28
2.98
3.96
2.93
2.48
3.68
2.92
3.11
3.20
2.58
3.22
3.80
3.55
3.08
2.40
3.16
4.08
4.33
3.23
2.60
2.77
3.06
4.03
2.99
2.35
3.04
3.02
3.82
3.18
2.43
3.26
2.68
4,16
3.39
2.30
2.62
2.97
4.10
3.11
2.29
3.36
3.07
4.55
3.45
2.86
2.79
2,95
4.16
3.03
2.40
3.82
3.15
2.41
3.03
2.93
575
FEDERAL RESERVE BULLETIN.
j0(/r 1, 1917.
DISCOUNT RATES.
Discount rates of each Federal Reserve Bank in effect June 28, 1917.
Maturities.
Trade acceptances. !
Discounts.
Within 15
days, including
16 to 60 61 to 90
days, in- days, inmember
clusive. clusive.
banks'
collateral
Agricultural
and livestock
paper
over 90
days.
Secured by iJ. S.
certificates of indebtedness or
Libertv Loan
Bonds. "Within
90 days.
Commodity paper
maturing
within 90
61 to 90
To 60
days, in- days, inclusive.
Boston
Ne-yv York1*
Philadelphia...
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis...
Kansas Citv...
Dallas....."....
San Francisco.
f
NOTE.—Rate for bankers' acceptances, 2h to 4 per cent,
1
Rate of 2 to 4 per cent on member banks' 1-day collateral notes in connection with the loan operations of the Government.
2
3 per cent for member banks 1 collateral notes if secured by United States certificates of indebtedness.
3
3 per cent for member banks' collateral notes if secured by United States bonds, notes, or certificates of indebtedness,
GOLD IMPORTS AND EXPORTS.
Gold imports and exports into and from the United States,
[In thousands of dollars; i. e., 000's omitted.]
Week e n d i n g June 1,
1917.
May 25,
.1917.
June 8,
1917.
June 15,
1917.
Total
since
Jan. 1,
1917.
Total for
corresponding
period
auring
1916.
IMPORTS.
Ore and base bullion
615
B ullion, refined....
United States coin
Foreign coin
280
1
17
353
5
382
125
245
116
2
687
150
49
259
3
242
3
1
7,097
19
252,145
52,356
77,222
5,826
1,858
67,744
1,985
41,553
913
1,110
1,004
508
388,839
118,966
3,009
5,404
7
756
25
9,906
106
18,441
2,895
127,160
166
5,897
4,272
30,642
8,413
10,694
148,602
41,977
250
31
5.177
1,443
18,270
..
..
Total
EXPORTS,
Domestic:
Ore and base bullion
United States mint or assay office bars «
Bullion, refined
i
Coin.. .
Total
580
5,123
1,314
20,115
5,710
21,429
Foreign:
!
Coin
19 !
Total
Total exports
Excess of gold imports over exports since Jan. 1,1917,8235,029.
Excess of gold imports over exports since Aug. 1,1914, $1,103,791.
19 !
5,729
68
I
68
21,497
8,413
250
5,208
19,713
10,944
153,810
61,690
576
FEDERAL RESERVE BULLETIN.
JULT: 1,1017.
FOREIGN EXCHANGE RATES.
Monthly ranges of exchange rates on leading foreign m.oney centers, quoted in New York City during the 6 months ending
June, 1917.
[In continuation oi figures published in the April, 1917, Bulletin.]
February.
January.
Low.
London:
60-day bankers' bills
Sight drafts
Paris
Berlin
Petrograd
Vienna
Milan
Amsterdam
Copenhagen
Zurich
Buenos Aires
Rio de Janeiro
Hongkong
Shanghai
Yokohama
francs
dollars for ] £ . .
do
for 100 dollars.
dollars for 400 marks.
dollars for 100 rubles.
dollars for 100 kronen.
lire for 100 dollars.
dollars for 100 florins.
dollars for 100 kroner.
francs for 100 dollars.
dollars for 100 paper pesos.
dollars for 100 paper milreis.
dollars for 100 % Mex.
dollars for 100 Shangh. taels.
dollars for 100 yen.
4.75
28.05
10.50
731.00
40.75
27.20
508.00
43.21
23.21
55.00
84.0C
501
High.
Low.
High.
Low.
4.71|
4.7581
584.25
71ft
29.90
11.79
688.50
4.715
4.7525
585.50
4.72*
4.7580
584-3
4.7125
4.7490
585.50
68.00
27.60
11.05
787.00
27f7
500.00
44.34
23.57
58.00
89.00
501
661
London:
60 day bankers' bills
Sight drafts
Paris
Berlin
Petrograd
Vienna
Milan
Amsterdam
Copenhagen
Zurich
Buenos Aires
Rio de Janeiro
Hongkong
'Shanghai
Yokohama
•.
dollars for 1 £ . .
do
francs for 100 dollars.
dollars for 400 marks.
dollars for 100 rubles.
dollars for 100 kronen.
lire for 100 dollars.
dollars for 100 florins.
dollars for 100 kroner.
francs for 100 dollars.
dollars for 100 paper pesos.
dollars for 100 paper milreis.
dollars for 100 $ Mex.
dollars for 100 Shangh. taels.
dollars for 100 ven.
4.7175
4.7555
583.75
72.00
28.00
11.5C
769.00
40-&
28.10
514.00
42.37
23.00
56.35
84. OG
51.00
J To June 29, inclusive.
701
28.00
10.60
764.00
4O|
27.30
502.00
43.40
22.97
55.75
85.00
501
April.
Low.
March.
29.10
11.10
708.00
40.75
27.55
500.00
44.46
23.46
58.00
89.50
51.00
High.
Low.
4.7250
4.7585
568.00
72.00
28.85
11.60
689.00
41.75
28.90
504.00
42.89
24.35
57.60
86.50
51*
4.7175 I
4.7545
573.50
40ft
27.45
504.00
42.25
22.90
55.25
81.00
51.00
I
May.
High.
4.7275
4.75ft
High.
4.7175
4.7555
5Mft
71.50
28.60
11.50
763.00
40.50
29.60
501.50
44.03
23.18
56.50
86.50
53.00
June, i
Low.
4.7150
4.751579
High.
4.7175
4.7555
572.25
26.40
28.10
22.70
26.10
707.00
4«H
28.10
700.50
41.25
28.70
504.50
44.26
26.75
58.00
86.50
51*
741
41ft
28.60
505
43.42
25.61
57.25
86.50
51*
703.5G
41ft
29.25
483
44.26
20.90
60.50
92.375
51.25
516.00
42.69
24.90
57.25
86.50
51*
INDEX.
Acceptances:
Page.
Distribution of, by classes, maturities, etc
565
By State banks and trust companies, abstract of
State laws regarding
529-533
Amendments to Federal Reserve Act as approved.. 511
Synopsis of
509
Assessment for expenses of the Federal Reserve
Board
525-526
Business conditions throughout the Federal Reserve
districts
551-561
Chart showing money in circulation, 1914-1917
562
Circulars and regulations of the Federal Reserve
Board, reissue of
539-550
Clearing and collection system, operation of
524
Commercial failures reported
520
Discount operations of the Federal Reserve Banks.. 563
Discount rates in effect
575
Dividends declared by Federal Reserve Banks
507
Federal Reserve Act, amendments to, as approved
June 21
.*.
511
Synopsis of
509
Federal Reserve Agents' fund, transactions under.. 524
Federal Reserve Banks:
Dividends declared.
507
Earnings on investments
574
'Resources and liabilities of
570
Weekly statement, new form of
506
Federal Reserve Board, assessment for expenses o t..
525
Federal Reserve note accounts of Federal Reserve
Banks and agents
572
Fiduciary powers:
Granted to national banks
507
Supreme Court decision in case to test constitutionality of section 11 (k) of Act
534-538
Foreign exchange rates
576
Gold imports and exports
575
Gold settlement fund:
Change in operation of
521
Transactions under
523
Informal rulings of the Board:
Demand notes, eligibility of
527
Morris Plan bank
527
Paper of a waterworks company
527
Acceptances drawn to finance the future importation of goods
527
Law department:
Limitations on member bank acceptances
528
Authority of national banks in Delaware to act
as trustee, executor, etc
528
Liberty Loan, subscriptions to
505-506
London Economist, reprint of article from, entitled
'' Our financial duty "
518
Money in circulation, 1914-1917
562
Chart showing
562
National-bank charters issued during month
520
Nonmember banks, rediscounts for
509
Press statement issued by Comptroller regarding
limitations under section 5200, Revised Statutes.. 519
Regulations of the Board, reissue of
539
Reserve requirements under the new amendments. 508
Review of the month
497-505
State banks admitted
507
State laws, abstract of, regarding acceptances by
State banks and trust companies
529-533
Supreme Court, decision of, in case brought to test
constitutionality of section 11 (k) of the Act
534-538
TJnUed States bonds, offerings of
507
O
@FedFRASER