Full text of Federal Reserve Bulletin : July 1918

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FEDERAL RESERVE
BULLETIN




ISSUED BY THE

FEDERAL RESERVE BOARD
AT WASHINGTON

JULY, 1918

WASHINGTON
GOVERNMENT PRINTING OFFICE
1918




FEDERAL RESERVE BOARD.
EX OFFICIO MEMBERS.
WILLIAM G. MCADOO,

Secretary of the Treasury,
Chairman.

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

JOHN SKELTON WILLIAMS,

Comptroller of the Currency,

H. PARKER WILLIS, Secretary.
L. C. ADELSON,

Assistant Secretary.
M. C. 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 will 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 ten names at a subscription price of $1 per annum,
No complete sets of the Bulletin for 1915 or 1916 are
available. Bound copies of the Bulletin for 1917 may be had at
$5 per copy.

TABLE OF CONTENTS.
Review of the month.
587
Branches of Federal Reserve Banks
596
Reclassification of bank clerks as to draft
597
Banks granted authority to accept up to 100 per cent of capital and surplus
597
Indexes of business conditions
597
Letter of Secretary of Treasury relative to new revenue legislation
600
Extracts from recent expressions on acceptances
602
Credits for canners
607
Fiduciary powers granted to national banks
,
607
Assessment for expenses of the Federal Reserve Board
608
State banks and trust companies entering the Federal Reserve system
609
Charters issued to national banks during the month
609
Commercial failures reported
609
Plan for daily clearing through the gold settlement fund
610-612
Letter of Secretary of Treasury regarding future
financing
612
Liberty bonds lost or stolen
613
Tax rulings by Commissioner of Internal Revenue
614
Questions and answers relating to membership of State institutions issued by the Federal Reserve Bank of New
York
615-622
Foreign exchange regulations
622-627
Capital Issues Committee rules and regulations
627-633
Informal rulings of the Federal Reserve Board
634-636
Law department
637,638
Business conditions throughout the Federal Reserve districts
639-660
Gold settlement fund transactions
661, 662
Operation of the check clearing and collection system
663
Deposits and investments of member banks, January to May, 1918
664
Chart showing
665
Discount operations of the Federal Reserve Banks
666-672
Resources and liabilities of the Federal Reserve Banks
673, 675
Federal Reserve note accounts of Federal Reserve Banks and agents
675,676
Member bank condition statement
677-681
Earnings on investments of Federal Reserve Banks
682
Gold imports and exports
683
Discount rates in effect
683
Stock of money in the United States
684
Foreign exchange rates
684




IV

FEDERAL RESERVE BULLETIN
VOL. 4

JULY 1, 1918.

No, 7

loss to the system and a source of extreme
personal regret to his colleagues."
Late in June Mr. F. A. Delano, member of
Sufficient time has now elapsed since the
Resignation of the Federal Reserve Board
official conclusion of the third
Mr. Delano.
since its organization, addressed
T h e b a n k s a n d T .••
, •>
,
i
•,
, •
Liberty loan to make it certain
the President, asking that he be released from the loan
that the offering has been
the obligation to serve on the Federal Reserve
Board in order that he might accept service placed with comparatively little reliance upon
with the American forces operating in France the banks and that the banking situation has
as an officer of the United States Army Engi- been affected by it to an unexpectedly slight
neer Corps engaged in the construction and extent. Reserves at Federal Reserve Banks
operation of military railways. The President have continued to show great strength during
has granted Mr. Delano's request, and his resig- the period since the conclusion of the loan.
nation will become effective upon acceptance of Some shifting of funds between Federal Reserve Banks was rendered necessary by the
his commission in the Army.
fact that tax-paying certificates had been
For the period of practically four years purchased in varying proportions in the several
since its organization the membership of the districts- and when used for the settlement of
Federal Reserve Board has been intact, and obligations to the Government necessitated a
Mr. Delano's retirement constitutes the first redistribution of funds. This tax settlement,
change. The following entry in the minutes involving an aggregate payment of between two
of the Board, voted upon the announcement of and three billions of dollars, had been generally
his retirement, expresses the feelings of his looked forward to with serious apprehension.
fellow members:
It was predicted that the liquidation of the tax
"The Board has heard with extreme regret payments would cause a considerable strinof the proposed resignation of Mr. F. A. Del- gency in the money market. The necessaiy
ano. It desires to record its appreciation of transactions were, however, carried through
Mr. Delano's able and faithful service as a without the slightest disturbance of normal
member of the Federal Reserve Board and of business and banking conditions, a result which
those high personal qualities which have was rendered possible only by reason of the
made his relation to his colleagues one of un- mechanism of the Federal Reserve system and
usual mutual confidence and regard. Mr. the measures taken in advance by the Treasury
Delano has served two years as vice governor of for the purpose of facilitating and expediting
the Board and for nearly two years additional the return to the market of the sums that had
as member. During this period of almost four been paid in. The effects of the operation are
years the Federal Reserve system has attained probably not as yet fully complete, but the reits growth, while the banking and financial serve percentages reported for June 28 show
problems of the Nation, in whose solution the approximately the true position of the system
and were as follows:
Federal Reserve system has necessarily had a
Boston
66.2 St. Louis
50.3
large part, have been of unprecedented serious- New
48.8
York
60.9 Minneapolis
53.5
66.1 Kansas City
ness. Mr. Delano's contribution to the effective Philadelphia
51.2
Cleveland
72.7 Dallas
— 69.4
50.6 San Francisco
organization of the system and to the success- Richmond
Atlanta
66.9
Total
- 61.7
ful solution of its problems can not be over- Chicago
61.7
estimated. His departure will be a serious




REVIEW OF THE MONTH.

587

588

FEDEKAL RESERVE BULLETIN.

JULY 1,1918.

Final figures showing the methods adopted 25 and mature October 25, with interest at 4J
for settling for the third Liberty loan in cash per cent, and similar issues, it is expected, will
and bank credit give the following results:
be made on Tuesday of every other week following June 25. It is, however, contemplated
Liberty loan payments to and including May 28.
that at a convenient and favorable period during
the summer an offering will be made to the
Federal Reserve
Cash.
Certificates.
Total.
Credit.
Bank.
general public directly, and through the banks,
of an amount yet to be determined, perhaps
Treasury United
States
$11,895,000
811,895,000
$2,000,000,000, of certificates of suitable ma$39,486,000 $168,702,313
Boston
61,499,500
269,688,000
625,952,779 186,350,000
107,618,168
New York
919,920,448
turities for use by taxpayers in paying next
122,455,000
Philadelphia.... 80,912,000
63,378,000
266,745,000
114,825,210 104,126,500
92,112,799
Cleveland
311,064,510
year's
taxes, viz, taxes payable June, 1919,
51,530,519
54,664,413
Richmond
21,712,500
127,907,432
37,174,158
Atlanta
57,307,621
12,371,500
106,753,280
levied
under
existing and pending legislation.
180,816,227
Chicago
467,370,877
125,508,650 161,046,000
47,393,578
St. Louis
53,120,500
175,537,719
75,023,641
To
the
extent
that certificates of that character
60,415,689
Minneapolis
31,958,000
124,698,987
32,325,298
75,763,727
Kansas City
47,536,600
162,621,327
39,321,000
are
sold,
substantially
an equivalent reduction
22,259,184
Dallas
13,459,000
73,200,372
37,482,187
San Francisco... 83,383,500
54,879,500
194,564,000
56,301,000
in the amount of the regular fortnightly sale
Total
878,865,549 1,509,869,112 823,332,600 3,211,967,452 of certificates issued in anticipation of the
next Liberty loan will be effected.
In giving this advice of the estimated reThe success from the standpoint of the abquirements of the Treasury to
sorption and distribution of the securities, as
Sale of certifiall the banks of the country
shown by the enormous number of subscribers cates.
and, through them, to those
to the issue, augurs well for the coming financing of the Government during the first half of who expect to make payment of taxes in 1919,
the fiscal year 1919 now opening. Figures for it is hoped that they will make arrangements
rediscounts of 90-day Liberty-loan paper at promptly of such a character as to enable them
the close of June show a total of only 125 to contribute their proper proportion to the
millions in all, of which 25 millions was held by sale and distribution of Treasury certificates
Boston, 55 millions by New York, and 21 of both issues. The Federal Reserve Banks
millions by Philadelphia.
will advise all national and State banks in
The Secretary of the Treasury, under date of their respective districts of the amount of
Jume 12, has sent to the certificates which they are expected to take
P r e s i d e n t o f e a c h b a n k a n d from time to time in pursuance of this protrust company in the United gram, which amount can be figured as roughly
States a letter in which he outlines the plans for to equal 2jV per cent of the gross resources of
the new Treasury financing intended to supply each bank and trust company for every period
the needs of the Government during the next of two weeks, or a total of 5 per cent monthly.
few months. The expenditures of the Govern- It will be remembered that in the February
ment, as nearly as [can be estimated, will program the amount which the banks were
require the sale of certificates of indebtedness asked to take was substantially equal to 2 per
up to the 1st of November, 1918, aggregating cent of their gross resources for each period
approximately $6,000,000,000. This would in- of two weeks, or a total of 4 per cent monthly.
volve the issue every two weeks of about The total number of biweekly offerings of cer$750,000,000 of certificates substantially similar tificates to be made to the banks will somewhat
in character to those issued prior to the third depend upon the amount to be raised from the
Liberty loan, except that they will have various public through the sale of tax certificates as
maturities not exceeding four months. For above described. The new plan of financing is
the months of July and August this program thus practically parallel to that already applied
will be followed as nearly as possible. The first during the past winter and spring, and it
issue of the certificates bore the date of June looks forward to the offering of a new or




JULY 1,1918.

FEDEKAL BESERVE BULLETIN.

fourth Liberty loan whose amount and terms
have not yet been indicated. The experience
in placing the first issue shows that the banks
are responding enthusiastically to the requirements of the situation and are arranging the
placing of the new issue promptly and with
cheerfulness.
The following is a list of the tentative quota,
by districts, and a list of the subscriptions
finally allotted:
Tentative
quota.
United States Treasury.,
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco

§68,000,000
251,000,000

53;ooo,ooo

Subscriptions,
allotted.
811,938,000
64,590,000
312,844,500
53,000,000
80,000,000
19,013,000
17,233,500
131,481,500
34,654,000
20,000,000
28,410,500
18,481,500
48,000,000

68,000,000
26,000,000
22,000,000
105,000,000
30,000,000
26,000,000
30,000,000
18,000,000
53,000,000
750,000,000 839,646,500

The character and scope of the needs of the
Government have been out-

ithe

Secretary of the Treasury in a
letter to the chairman of the Ways and Means
Committee, transmitted under date of June 12.
In this letter he points out that the expenditures of the Government for March, 1917, were
in round figures §100,000,000. In May, 1918,
they were $1,508,195,000. If there should be
no further increase during the coming fiscal
year, the cash expenditures upon the May basis
would be more than $18,000,000,000. If, as
seems inevitable, the increase in expenditures
should continue at the rate of $100,000,000 per
month for the next six months, or until
December, 1918, and if thereafter the monthly
expenditures should remain stationary until
June 30, 1919, the Treasury would have to
finance expenditures aggregating $24,000,000,000 during the fiscal year ending June 30,
1919; or, to put it another way, if the average
monthly expenditure should exceed that for




589

the month of May, 1918, by 33J per cent, it
will be necessary to spend $24,000,000,000 in
the fiscal year 1919. In the fiscal year ending
June 30, 1918, cash disbursements amounted
to between $12,500,000,000 and $13,000,000,000. Of this amount about one-third lias
been raised by taxes and two-thirds by loans,
all of which will be represented by long-time
obligations, that is, bonds of the first, second,
and third Liberty loans and war savings
certificates. With reference to the methods to
be employed in meeting this heavy demand the
Secretary of the Treasury says: "We can not
wisely contemplate nearly doubling our cash
disbursements in the fiscal year 1919 without
providing additional revenue. We can not
afford to rely upon $4,000,000,000 only from
taxation, because we shall then have to rely
on raising $20,000,000,000 by loans. This
would be a surrender to the policy of high
interest rates and inflation, with all the evil
consequences which would flow inevitably
therefrom, and which would, I firmly believe,
bring ultimate disaster to the country. We
can not afford to base our future financing upon
the quicksands of inflation or unhealthy credit
expansion. If we are to preserve the financial
strength of the Nation, we must do sound and
safe things, no matter whether they hurt our
pockets or involve sacrifices—sacrifices of a
relatively insignificant sort as compared with
the sacrifices our soldiers and sailors are making to save the life of the Nation. The sound
thing to do is unquestionably to increase taxation, and the increases should be determined
upon promptly and made effective at the
earliest possible moment." The conclusion
which the Secretary reaches is that it will be
necessary practically to double the present
Federal taxation, thereby raising it to approximately $8,000,000,000. In order to provide this
sum it is suggested that resort be had to a high
war profits tax superimposed upon the existing excess profits tax and a substantial increase
on the normal income tax upon so-called unearned income. A general suggestion in favor

590

FEDERAL RESEBVE BULLETIN.

of heavy taxation upon all luxuries is added.
Mr. McAdoo's letter, which constitutes an important outline of Treasury policy for the
coming year, is reprinted elsewhere in the
present issue of the BULLETIN.
During the past two weeks the demands of
member banks in various disDemands for
tricts for accommodation on
funds.
Federal Reserve Banks have
been unusually heavy. This has been largely
the outcome of excellent business conditions
and strong demand on the part of customers of
banks for the means with which to finance
normal industrial operations. In some districts agricultural demands have been very
large, while in others the industrial requirements due to the Government's manufacturing
activity have likewise been extensive. The
reports of business conditions from various
parts of the country, published in this issue of
the BULLETIN, show clearly the nature and
scope of the commercial, agricultural, and
industrial movement.
One symptom of this strength of demand is
furnished by the exceptional calls made upon
the Federal Reserve Banks in certain districts
where essential agricultural industries are
reaching the peak of their activity. In such
districts reserves have fallen more than in other
districts, and it has consequently been desirable
to employ the rediscount machinery for equalizing resources provided by the Federal Reserve
Banks. During the month of June three such
redistributions of resources affecting investments and reserves of eight Federal Reserve
Banks were made through the transfer of
short-term paper. The mechanism of rediscounting between Federal Reserve Banks is
now a familiar and smoothly working part of
the Federal Reserve system. In the statistical reports of the Board from time to time
data with respect to these operations were included with other discounts and open-market
operations. These data are summarized and
recapitulated here as a matter of current interest. To date the total of such operations
for the current year has been as follows:




JULY 1,1918.

Discounted bills rediscounted with and acceptances sold to
other Federal Reserve Banks Jan. 1 to June SO, 1918.
[In thousands of dollars.]

Rediscounted or sold by the Federal
Reserve Bank of—

Boston
New York...
Richmond...
Kansas City.
Dallas
Total.

Discounted Acceptbills
ances
redissold.
counted.
18,936 j
75,816 !
21,028
8,530
5,003
34,561

2,995 i
130,577

Total.

18,936
75,816
53,858
8,530
7,998
165,138

From the foregoing statement it is seen that
the total amount of rediscounting which has
thus far been resorted to constitutes only a
small part of the total resources of the Federal
Reserve Banks. It, however, affords precise!}7
the same element of readjustment or equalization which has been necessary in order to furnish the resources that were needed in the
various districts where the demands for loans
were most active. It is interesting to note
that in many cases the flow of money from one
part of the country to another generally reverses itself, so that Federal Reserve Banks
that appear as applicants for rediscounts frequently appear after a short time as takers of
rediscounted paper from other Federal Reserve
Banks. In times past, prior to the organization of the Federal Reserve system, a measure of relief was provided in part through
the transfer of actual currency or money and
gave rise to the annual stringency which prevailed in different parts of the country from
early summer to late autumn—a series of weeks
sometimes referred to as the "crop-moving
period.77 A form of accommodation which is
rendering this old method of interbank discount more and more nearly obsolete is now
provided through the note issue of the Federal
Reserve Banks and transfers made by means
of the Federal Reserve gold-settlement fund,
whose operation is proving with each successive
year more and more successful in avoiding the
shipment of actual money between different
parts of the country.

FEDERAL RESERVE BULLETIN.

JULY 1,1918.

The operation of the gold-settlement fund
greatly extended its
Set hasPesothat
the Board has directed Federal Reserve Banks
to put into effect on July 1 a daily gold-clearing
system. This merely substitutes a daily for a
weekly settlement, such as has been employed
in the past. It is not expected that the change
will bring about any definite alteration in the
relationship of the banks except that of increasing the convenience and speed of their
dealings with one another. Without a full
understanding of the plan daily telegraphic
transfers might at first seem to temporarily
prejudice the reserves of some of the Federal
Reserve Banks. As a matter of fact, however,
the effect will be exactly as at present. The
plan will eliminate a great deal of work at the
Federal Reserve Banks, and through the daily,
instead, of weekly, settlement will provide the
proper adjustments in the holdings of gold to
the credit of each Federal Reserve Bank in the
gold-settlement fund in as nearly automatic a
way as possible. At the present time the Federal Reserve Banks, in addition to the weeldy
settlement, have the privilege of demanding
transfers at any time when a net debit balance
is shown in account with other Federal Reserve
Banks. It must be expected that if the present
plan of weekly settlements were to be maintained, such transfers would become more numerous in the future, as the calls upon the
Federal Reserve Banks become heavier. The
proposed plan will do away with the greater
part of such transfers, and will release, for the
strengthening of their reserves, the funds now
carried as " amounts due from other Federal
Reserve Banks." At the present time practically all the Federal Reserve Banks are advising each other by wire of their daily credits
of immediately available city items. While
good to a limited extent, this plan covers but
a small proportion of the credits, and hence the
need for a daily settlement. In order to render
the work of the gold-settlement fund more effective, as well as to make all communication
between the banks and the Board prompter

£* "




67747—18

2

591

and more certain, a private wire service has
been established between Washington and the
various Federal Reserve Banks as well as between the banks themselves. This service is
now in satisfactory operation.
Comparative weekly figures of principal earning assets for the period be*ween M a y 24 a n d J u n e 21
Banks.
reflect to some extent the degree
of assistance rendered by the
Federal Reserve Banks to their members and
through them to the industrial and commercial
community in meeting the heavy tax demands
of the Government. Judging from the moderate increases in total investments reported by
the Federal Reserve Banks for the first two
weeks in June and the very substantial decrease
shown for the last week under review, member
banks were able to take care of the financial
situation without casting an undue burden
upon the resources of their Federal Reserve
Banks.
Between May 24 and June 14, the Federal
Reserve Banks increased their holdings of discounted paper from 923.3 to 1,016 millions
and their total investments from 1,277.2 to
1,333.4 millions, the larger figure being about 40
millions below the record total for May 10, the
Friday following the closing of the third
Liberty loan.
By June 21, total investments of the banks
had fallen off to 1,240.6 millions and discounts
to 931.3 millions. For the New York bank a
similar development is shown, its discounts
showing substantial increases for the first two
weeks in June and a considerable decline at the
end of the third week, the total discounts held
by the bank on June 21—383.3 millions—being
58.9 millions below the corresponding total four
weeks earlier. The banks at Philadelphia,
Chicago, St. Louis, and Minneapolis report a
practically unchecked increase in discount operations, tempered somewhat by liquidation of
acceptances. War loan paper, i. e., members'
collateral notes and customers' paper, protected by United States war bonds and Treasury certificates, constituted 58.4 per cent of the

592

FEDERAL RESERVE BULLETIN".

total discounts held on June 21, as against 65
per cent on May 24, the Government having
redeemed over one billion of 4£ per cent certificates on May 28 and June 18. At the New
York bank this proportion shows a decline for
the same period from 86 to about 80 per cent.
Acceptances on hand show a steady decline
from 278.2 to 232.5 millions, the New York
bank reporting about 53 per cent of the total
holdings of this class of paper on June 21 as
against 52 per cent on May 31. But little
change is shown in the total of United States
securities owned. These holdings are composed chiefly of United States bonds with the
circulation privilege, 3 per cent conversion
bonds, and 1-year Treasury notes, the banks
holding at present but limited amounts of
Liberty bonds or Treasury certificates.
During the period under review the banks'
gold reserves increased from 1,898 to 1,924.4
millions, while their net deposits show a decline
from 1,557.6 to 1,445.4 millions. Federal Reserve notes in circulation show a continuous
increase by nearly 100 millions from 1,578.6 to
1,678 millions. The ratio of total cash reserves
to aggregate net deposit and Federal Reserve
note liabilities shows a rise from 62.4 to 63.4
per cent.
In the following table are shown the changes
between May 24 and June 21, 1918, in the
totals of discounted and purchased bills held
by each of the Federal Reserve Banks, also
changes between the two dates in the holdings
of other classes of investments.
[In thousands of dollars; i. e., 000's omitted.]
Federal Reserve Bank.

May 24.

June 21. . J-fot

06,
591
Boston
506,
581, 158
New York
74,
Philadelphia...
64, 128
845 ! 66,
Cleveland
48| 552 I 56,
Richmond
30,
28, 3.83
Atlanta
121, 782 I 131,
Chicago
769 I 50,
St. Louis
35,
28', 796
Minneapolis—
56,
73, 023
Kansas City....
29,
930
28,
Dallas
55,
60' 563
San Francisco..
1,201,520 1,163,742
Total
United States long-term se42,067
40,877
curities
United States short-term se32,476
35,883
curities
100
Other earning assets
1,151

Total investments held. 1,277,214 11,2-10,602 j




Net

decrease.

2,589
74,397

10,831
1,959
8,091
2,136
12,815
12,363
6,320
10,161

37,778
1,190

3,407
1,051
36,612

JULY 1,

1018.

Reports from member banks in about 100
leading cities, showing princi-

ConditioR

of

member banks.

7

.

\

v

, -i-/.

i

P a * assets and liabilities each

week between May 17 and June
14, indicate large withdrawals of Government
deposits and considerable liquidation of Government securities, largely Treasury certificates.
Increases in aggregate net demand deposits and
in other loans and investments were on a
smaller scale, while reserves show a more than
corresponding increase. As the result of these
developments the reserve position of the reporting banks shows a material improvement.
Treasury certificates held by all reporting
member banks decreased from 1,153 to 945.2
millions, the largest decrease being shown for
May 31, the Friday following the redemption
by the Government of 500 millions of certificates of the February 27 issue. United States
bonds, other than circulation bonds, on hand,
declined from 635.7 to 586.7 millions, the banks
apparently having placed approximately this
amount of Liberty bonds with their customers
during the four weeks under review. As
against these substantial decreases the banks
report an increase from 501.6 to 518.4 millions in loans secured by Liberty bonds and
Treasury certificates.
Corresponding figures for member banks in
central reserve city banks indicate decreases of
150.2 millions in Treasury certificates and of
about 24 millions in United States bonds,
largely Liberty bonds, as against practically no
increase in loans secured by United States war
obligations. For the member banks in Greater
New York, liquidation of 28 millions of Liberty
bonds, of 128 millions of certificates, also of 3.5
of loans supported by these securities is shown.
Aggregate holdings of United States securities (exclusive of circulation bonds) and of
loans supported by United States war securities
decreased for the four weeks from 2,290.3 to
2,050.3 millions. During the same period the
central reserve city banks show a reduction of
these items from 1,475.8 to 1,301.4 millions and
the New York banks alone a reduction from.
1,324.9 to 1,165.2 millions.
Loans and investments of all reporting banks
exclusive of permanent investments, show a

JULY 1,

1918.

FEDEBAL BESEBVE BULLETIN.

decline from 12,608.7 to 12,506.2 millions, while
the share of United States war obligations and
loans supported by such obligations in the totals
just given declined from 18.2 to 16.4 per cent.
For the central reserve city banks this percentage shows a decline from 23.4 to 20.6 per
cent and for the Greater New York banks a
decline from 26.2 to 23.1 per cent.
For the four weeks under review Government
deposits of all reporting banks show a decline
from 1,284.1 to 868.3 millions, time deposits a
decrease from 1,386.7 to 1,323.4 millions, and
net demand deposits a gain from 8,922.6 to
9,247 millions. Total net, including Government deposits, on June 14 stood at 10,506.7
millions, or 110.5 millions less than on May 17.
Net withdrawals of Government deposits from
central reserve city banks for the same period
aggregated 294.4 millions, aside from a loss of
10.8 millions in time deposits. These losses are
only partly compensated by a gain of 251.2
millions in net demand deposits. For the New
York City banks net withdrawals of 247.7
millions of Government deposits and of 9
millions of time deposits as against a gain of
202.7 millions in net demand deposits are
noted.
Reserves of all reporting banks (all with the
Federal Reserve Banks) increased from 1,148.1
to 1,226.3 millions while cash in vault declined
from 373.1 to 353.9 millions.
As the result of the considerable decrease in
deposits, the ratio of combined reserve and
vault cash to net, including Government deposits of all reporting banks, shows an increase
from 14.3 per cent on May 17 to 15 per cont on
June 14. For the central reserve city banks a
rise of this ratio from 14.9 to 16.0 per cent is
noted. Figures of excess reserves, in the calculation of which no account is taken of Government deposits, indicate a downward trend to
the end of May, the decline from 88.3 on May
17 to 49.6 millions on May 31, fairly corresponding to the decrease in total reserves carried with
the Federal Reserve Banks. During June an
upward trend set in which carried the excess
reserves of all reporting banks to 129.2 millions on June 14. For the banks in central




593

reserve cities a decrease"of excess reserves from
49.2 millions on May 17 to 28.6 millions on the
last of May is noted, followed by an increase to
75.8 millions on June 14.
Even more marked changes are seen in the
excess reserves of member banks in other reserve cities, which, after a decline from 36.8
millions on May 17 to 19.6 millions at the close
of the month, increased to 49.7 millions on
June 14, the banks in the Cleveland district
showing the largest aggregate gain.
Gross earnings, partly estimated, of the FedDividends and eral Reserve Banks for the
surplus profits. p r s t s j x mOnths of the present
year were $24,850,000, while current expenses
for the same period aggregated $4,040,000; the
total estimated net earnings for the first half of
the year are therefore $20,810,000. All of the
banks were able to declare dividends to cover
periods up to June 30 of the present year. Six
of the banks declared dividends for the 6-month
period ending June; four banks for the 12-raonth
period ending June; and two banks for the 18month period endin g June. N one are now in arrears with their dividend payments. The total
amount of dividends due and payable is about
$3,180,000, Deducting this amount, as well
as an additional amount of $644,000 reserved
for depreciation on securities from the total
estimated net earnings for the six months,
there remains a balance to be carried to profit
and loss of over $17,000,000—an amount
which may be somewhat reduced through additional charges to profit and loss on account
of Federal Reserve currency issued during the
period, furniture and equipment, and bank
premises. This $17,000,000 is about 25 per
cent of the average paid-in capital of the Federal Reseve Banks for the six months of the
present year. At the present rate of growth
combined excess profits for all banks, after
payment of the 6 per cent dividends, may
easily reach 50 per cent of the paid-in capital
at the close of the present calendar year.
Only one-half of these excess profits, according
to section 7, is carried by the banks to surplus
account, the other half going to the United
States as a franchise tax. After the surplus

594

FEDERAL RESERVE BULLETIN.

of any bank has reached 40 per cent of its paidin capital, all of the excess profits must be paid
to the United States.
Considerable differences, of course, exist between Federal Reserve Banks in respect to the
proportion of excess profits to capital, so that
in individual cases it may not be true
even with earnings accumulating at their
present rate, that the 50 per cent level will
be reached. In the future, with all arrears in
dividends paid and a surplus of 40 per cent to
paid-in capital set up, the Government will
receive as a franchise tax from the banks all
the excess of their combined net earnings above
6 per cent on the paid-in capital stock.
The most important development during the
Foreign ex- month of June in connection
change develop- with the control of foreign extents,
change has been the appointment by the Government of Italy of a representative in New York of its institute of exchange
through which all of its foreign transactions
have to pass and which stands ready to buy and
sell Italian exchange. The Treasury Department has made an arrangement with the
Italian Government under which certain transactions in lire must be approved by the New
York representative of the Italian institute and
the Division of Foreign Exchange of the Federal Reserve Board. As a beginning, such
transactions are only to affect bills of exchange
involving imports and exports between the
United States and Italy. These represent funds
which American bankers may wish to dispose of
to the institute. Exchange transactions with
the institute for the time being are to be handled
through the regular banking channels. For the
present no further restrictions have been
placed upon trading in lire, and dealers may
buy and sell as in the past, except that cable
transfers can not be sold under the rate
established by the Division of Foreign Exchange from time to time. The Federal Reserve Board, of course, does not guarantee a
continuance of the Italian institute in the
market for the purchase of lire, nor does it
guarantee any transactions which American




JULY 1,

1918.

dealers may undertake under the new arrangement. Its functions in assisting in this matter
are simply advisory.
The Secretary of the Treasury in a letter to
the Senate, in reply to an inquiry put before
him with respect to foreign exchange, states
the situation as to other negotiations with respect to exchange arrangements as follows:
"Agreements have been made with certain
neutral countries in Europe and with countries
in South America and elsewhere involving
financial considerations and tending to protect
the value of the American dollar. Agreements
involving like considerations are in process of
negotiation in other countries and in certain
neutral countries steps have been taken to provide for payments required therein preliminary
to the institution of negotiations. The amount
of balances of neutral nations held by banks,
trust companies, and bankers in the United
States can probably be ascertained and stated
with approximate accuracy as of about May 13,
1918." '
In

the

FEDERAL RESERVE BULLETIN

for

June there was published a reGold embargo • i •• ,., £ A
j • • .
regulations
vised drait ol the administrative regulations relating to coin,
bullion, and currency as then actually applied
in practice under the direction of the Federal
Reserve Board. During the month of June
new regulations have been promulgated by
the Board as approved by the Secretary
of the Treasury. The most important addition to the modified practice already in
force as outlined in the June BULLETIN
is the statement with reference to the
present policy with respect to controlling exports of gold. Under the old regulations the
fundamental test to be applied to a given application was said to be found in the question
whether a given shipment of gold could be
definitely connected with a specified shipment
of merchandise. As the policy has advanced,
this idea has been modified, and the real and
decisive question in most cases now is not
whether payment has to be made for merchandise, but whether the merchandise in question

JULY 1,1918.

FEDERAL RESERVE BULLETIN.

is desired from the standpoint of national interest, and whether, if so, it can or can not be
paid for by some other means than the shipment of gold. The new regulations state, with
reference to this question, that " I t is the practice of the Board not to authorize the exportation of gold except in cases where the desirability of permitting such shipment is clearly established as being compatible with the national
interest. In reaching its conclusions, however,
the Board will consider all attending circumstances in each particular case.'7 This action
practically places the question of gold shipments upon an individual footing, each case
being considered on its own merits.
^Resumption of gold imports on a considerable
scale is indicated by the weekly reports of gold
movements received from collectors of customs
for the four weeks ending June 14. The net
movement in favor of the United States for
this period was $19,410,000, as compared with
a net outward movement of $509,000 for the
preceding four weeks. Gold imports for the
four weeks totaling $23,044,000 came largely
from Canada, Mexico, and Salvador, while gold
exports totaling $3,634,000 were consigned
chiefly to Mexico, Colombia, and Venezuela.
The gain in the country's stock of gold since
August 1, 1914, was $1,066,078,000, as maybe
seen from the following exhibit:

595

several points of significance have been made
clear in informal replies to inquiries. The
Board has stated its opinion that the tradeacceptance question is to be developed on the
basis of business experience after careful and
sympathetic study of the requirements and
characteristics of each trade. Members have
taken the view that it would be unreasonable
to urge the use of the trade acceptance in
every business without exception. On this
point, Mr. Paul M. Warburg says: "Personally,
I have championed the trade acceptance for
many years, and have expressed my views many
times by word of mouth and in writing. That
does not necessarily mean, however, that I am
one of those who believe that the trade acceptance is suitable for every trade. If I could sell
my goods for cash, without allowing a discount,
I would be foolish to make any effort to secure
trade acceptances in lieu of cash. If, however,
as a seller I had to make a very considerable sacrifice in order to secure cash, or if I had to sell
on long-term book credit, I would very carefully
consider the many advantages of introducing
the use of the trade acceptance into my business.'7
Governor Harding, in an address recently delivered before a conference representing the
American Cotton Manufacturers7 Association,
expressed his view with respect to the financing
of
cotton by means of acceptances. He favored
[000 omitted.]
the use of the bankers' acceptance in order
that the southern cotton planter may be
Excess of
Imports. Exports. imports
assured of the continuance of his cash market
over
exports.
by giving him a type of paper which he can
A u g . l to Dec. 31, 1914
I 1523,253 $104,972 I $81,719 dispose of without delay because it repreJan. 1 to Dec. 31, 1915
! 451,955
31,426 i 420,529
ElseJan. 1 to Dec. 31, 1917
! 553,713 372,171 ! 181,542 sents the direct obligation of a bank.
20,044 ; 15,774
Jan. 1 to June 14,1918....
i 35,818
where in this issue are printed extracts from an
Total
jl, 750,484
684,406 ! 1,066,078
address delivered by Mr. Warburg before the
National
Trade Acceptance Conference in
i Excess of exports over imports.
Chicago on June 18 and from the address of
The discussion of the trade acceptance situa- Mr. Harding already referred to.
tion is now in active progress
The following resolutions relating to guarField for accept.
.
. . x 1°,.
1
Guarauty of de- anty of bank deposits were
and various inquiries relating; posits.
adopted at a meeting of the
ances.
.x
,
Federal Reserve Board, held on June 25,1918:
to tne question nave been
Whereas it is important that nothing should impede the
brought from time to time to the attention of unification of the hanking system of the country under the
the Board. No official rulings or expressions
on the subject have recently been issued, but




596

FEDERAL RESERVE BULLETIN.

Federal .Reserve Act, to which the President called attention in his statement of October 13, 1917:
"The Federal Reserve Act is the only constructive
financial legislation which we have ever had which was
broad enough to accommodate at the same time banks
operating under powers granted by the General Government
and banks whose charters are granted by the respective
States. The unification of our banking system and the
complete mobilization of reserves are among the fundamental principles of the act."
Whereas such unification is threatened by the proposed
plan for the guaranty of deposits in national banks:
(1) Because it would tend to stimulate a spirit of competition and antagonism between State-bank systems and
the national banking system;
(2) Because of the difficult and embarrassing situation
in which such State banks, which, owing either to insufficient capitalization or to existing contractual or trust
obligations, could not convert into national banks would
be placed;
*
(3) Because of the agitation which would be produced
in many States to secure local legislation for the guaranty
of deposits in State banks, thus destroying the harmony
now happily developing and almost established between
State and national bank systems, as evidenced by the
increasing number of State member banks in the Federal
Reserve system and the cordial cooperation which many
States are giving to the policy of the Federal Reserve
Board in seeking to "bring about a unification of the American banking system under the Federal Reserve Act.
Whereas there is no sufficient evidence to establish that
there are great sums of currency and specie now in hiding
which would be drawn out and deposited in national
banks were such deposits guaranteed beyond, what is
already being accomplished by the postal savings system
and the vr&r savings stamp associations;
Whereas in the judgment o£ the Board no plan of insurance, either applied to bank deposits or to any other
form of credit or property, is sound or can long be successfully maintained where a uniform premium is assessed
upon all participants, good or bad alike, or equitable
unless the insurance privilege be extended to all member
banks at their election;
Whereas the extension of the principle of insurance to
bank deposits raises large and most difficult questions of
general governmental policy which ought to be decided
only after the most mature consideration;
Whereas, the Government could not safely and wisely
undertake the guaranty of bank deposits without exercising a degree of control over banking loans and investments, which would, in effect, amount to the Government
guaranty of such loans and investments, and thus bring
banking credit under the complete control of the Government;
Whereas the hardships now suffered by depositors of
insolvent banks could be materially lessened by the establishment of a fund for the prompt liquidation of the
valuable assets of failed banks: Therefore
Be it resolved, That the Board deprecates the injection
into the banking situation at this time of the bitterly con-




JULY 1,

1918.

troverted question of guaranty of bank deposits as prejudicial to the development of the Federal Reserve system
and as menacing to the successful financial conduct of the
war, because of the agitation of mind produced in the
business and banking community;
Be it further resolved, That it is the judgment of the Board
that a fund, under the administration of the Federal
Reserve banks, might well be set up to provide and insure
immediate determination of the value of the assets of
failed member banks of the Federal Reserve system and
an immediate distribution of the estimated value of such
assets among depositors, pending their final liquidation;
this to the end that the hardship and injury now sustained
by depositors of failed banks, because of the delays to
which they are subjected in receiving their pro rataof the
assets of failed banks, may be reduced to a minimum.

In casting his vote in favor of this resolution
Governor Harding stated that while he had
always been opposed to a Government guaranty
of deposits made applicable by compulsion to
all national banks and had so expressed himself,
he had had, prior to June 5, several brief and informal conversations with the Comptroller of
the Currency regarding certain features of a
guaranty system, including a voluntary plan,
which warranted the Comptroller in including
him in the "majority of the board" to which
reference was made in the circular letter of that
date issued by the Comptroller, but after a
careful and deliberate consideration of the
whole proposal he had reached a definite conclusion as expressed in the foregoing resolutions,
Brandies of Federal Reserve Banks.
JACKSONVILLE.

On June 25 the Federal Reserve Board
issued the following:
The Federal Reserve Board to-day announced the organization of the new branch
at Jacksonville, Fia, The directors named
by the Board, will be Mr. J. C. Cooper, chairman; Mr. Fulton Saussy. Mr, Cooper is a
well known attorney and Mr. Saussy a merchant of much experience in business administration. The directors named by the Atlanta
Federal Reserve Bank for the Jacksonville
branch are: Mr, E. V. Lane, president of the
Atlantic National Bank at Jacksonville; Mr. B.
H. Barnett, president of the Barnett National

JULY 1,

FEDERAL RESERVE BULLETIN.

1918.

Bank; and Mr. Giles L. Wilson, vice president
of the Florida National Bank. Mr. George R.
De Saussurc will be manager of the branch.
He is a man of large experience in banking,
having been a national bank examiner and at
present vice president of the Barnett National
Bank, which he is leaving to become manager
of the new branch.
EL PASO.

The El Paso branch of the Federal Reserve
Bank of Dallas, the establishment of which
was authorized by the Federal Reserve Board
some time ago, was opened for business on
June 17, with Sam R. Lawder as manager.
BIRMINGHAM.

The Federal Reserve Board on June 22 announced the directors of the Birmingham
branch of the Federal Reserve Bank of Atlanta, as follows: Appointed by the Board,
W. H. Kettig, chairman; Oscar Wells. Appointed by the bank, T. O. Smith, W. W.
Crawford, John H. Frye. Mr. Alex E. Walker
will be manager of the branch.
MEMPHIS.

The following press statement was issued on
June 25:
The Federal Reserve Board to-day voted to
authorize the establishment of a branch of the
Federal Reserve Bank of St. Louis at Memphis,
Tenn. The powers and functions of this
branch have not yet been definitely determined, but will be announced at a later date.

Bedassification of Bank Clerks.

The following communication from Maj.
Gen. E. EL Crowder, Provost Marshal General,
was received by Gov. Harding, of the Federal
Reserve Board, under date of July 5:
I beg to advise you that bank clerks are oxcepted from
the operation of the regulations which, provide for the
withdrawal of deferred classification and order number of
registrants found to be idlers or engaged in nonproductive
occupations or employments.




597

Acceptances to 100 Per Cent.

Since the issue of the June BULLETIN the
following banks have been granted authority
by the Federal Reserve Board to accept
drafts and bills of exchange up to 100 per cent
of their capital and surplus:
American National Bank, Terrill, Tex.
Marine Bank & Trust Co., New Orleans, La.
Hibernia Bank & Trust Co., New Orleans, La.
Phoenix National Bank, Hartford, Conn.

Indexes of Business Conditions.
In the FEDERAL RESERVE BULLETIN for June
it was announced that the Board would shortly
undertake the establishment of a series of indexes of business conditions, for regular publication, in future numbers of the BULLETIN, such
indexes to be compiled and presented for the
purpose of affording data as nearly definite and
authoritative as they can be made with reference to the progress of business, changes in economic conditions, and general alterations in the
financial and banking situation. Preliminary
to the initiation of this series of indexes, it is
deemed desirable to furnish a general account
of what is intended in this connection, both in
order to assist in obtaining the cooperation of
those whose aid must be enlisted in order to
make the undertaking a success and also to
furnish a more complete explanation of the
scope and purpose of the new undertaking.
Preparatory work surveying and examining
the various sources of information relative to
the production and market supply of leading
commodities was undertaken during the month
with the view of selecting most typical and comprehensive indexes of industrial and financial
conditions.
It is the intention the Board to use largely
material gathered by other governmental,
State, and municipal agencies, commercial organizations, and trade journals and to supplement the material thus obtained by information
received through channels of its own, particularly the Federal Reserve Banks and agents,
and also member banks.

598

FEDERAL RESERVE BULLETIN.

Working arrangements have been effected
with most of the Washington offices and services whereby all statistics of a periodical character not treated as confidential will be supplied
to the Board for use in the preparation of its
condensed reports. In this manner the market
movements, including receipts, shipments,
stocks in hand, and prices of leading commodities, will be made available. These data properly classified will be used for computing index
numbers showing changes in the physical volume of trade, visible stocks, consumption, etc.
Under the head of indexes of business conditions the Board includes all statistics relative to production, consumption, transportation, and prices which may be regarded as
affording definite indications of the character
and trend of changes occurring from time to
time in the economic organization of the
country and in the activity exhibited by that
organization. At present various collections
of such data are made. They include compiled
statistics covering the following topics, viz:
(a) Prices, both retail and wholesale, exhibited as actual series and also as index numbers, computed with reference to a specific
base. Such prices are furnished by the Federal Government in the publications of the
Bureau of Labor Statistics, while several index
numbers are computed and issued from time
to time by private investigators. The principal series of index numbers now available are
Dun's, Bradstreet's, the Annalist's, Gibson's,
and two forms of the series compiled by the
Bureau of Labor Statistics. A complete scientific study of the various characteristics of
these series of index numbers has been prepared by Prof. W. C. Mitchell and published by
the United States Bureau of Labor Statistics
(whole No. 173). Selective use will be made
of this series of index numbers and particularly of the data published by the Bureau of
Labor Statistics, with a view to correlating
changes in prices with changes in the production and movement of commodities,
(b) Reports of production.—Many of the chief
industries of the country issue, at intervals,
statements showing the production and ship-




Jfe'LTl, 1918.

ment of their output at varying intervals.
This is true of the basic industries such as
iron, steel, coal, copper, and other leading
mining industries. Figures are given on the
basis of reports received from the principal
producing factors in the given lines to which
they relate, and with them are frequently
associated data showing the quantities of the
given products on hand at points of shipment
or in storage at the chief points for assembling
and distributing the output. In some of these
lines, figures are collected and issued by governmental agencies, but in most cases the data
rendered currently available are supplied
chiefly or only by the producers or distributors
themselves. The main lines of industry in
which basic statistics of this class can be obtained are the following, viz: Coal, iron ore,
pig iron, steel, cement, tin, lead, copper,
sugar, meats, hides, skins, leather, boots and
shoes, lumber, etc.
(c) The Railway Administration of the
United States has under consideration a plan
for the furnishing of compiled statistics relating
to the movement of goods. With this plan
completely carried out it will be feasible to
exhibit the movement of chief items entering
into freight movements from period to period.
These statistics exhibit the extent and character of changes in the movement of essential
materials, and throw light upon the activity of
industry by indicating the extent to which such
materials are being demanded and produced in
order to supply consumption. Selected tabular data intended to exhibit the relative
changes in such movements are thus essential
in forming an idea, at any given time, of the
extent and activity of manufacturing, besides
furnishing information regarding the claims of
the sections producing and shipping such articles upon other regions of the country where
they are manufactured or consumed.
(d) Banking and credit statistics are relied
upon to show not only the character of the
credit situation from the standpoint of internal
bank organization but also the conditions under
which business is able to obtain the accommodation it requires from those who control the

FEDEEAL BESERVE BULLETIN".

JULY 1,1918.

supply of liquid capital and credit. Such
statistics include not only deposits, clearings,
and reserves but also data showing variations
in commercial rates of interest and discount on
specified classes of loans. The material for a
study of variations in banking and credit is
peculiarly extensive and rich, but at certain
points has heretofore been incomplete. Inclusive and valuable statistics of the national
banking system are prepared by the Comptroller of the Currency, while the work done by
the Federal Reserve system in gathering data
relative to the condition of member banks in
the larger cities has become familiar through
the pages of the FEDERAL RESERVE BULLETIN.
In sundry of the States satisfactory statistics
concerning the condition of State banks are published from time to time by the local departments of banking. One of the most serious
gaps in our banking information has been found
in the lack of authoritative data concerning discount and interest rates for standardized classes
of paper. The Federal Reserve system has
already done something toward standardizing
interest and discount rates. Before long it may
be able, with its twelve Federal Reserve Banks
and the branches, which will soon number upward of 15, to furnish authoritative quotations
of interest and discount rates at the principal
financial centers of the country, and so far as
possible to reduce these to an index number
basis.
(e) Figures relating to savings are considered of importance because they show, at least
approximately, the surplus of production over
consumption and thus furnish a clue to the
volume of new wealth created from time to
time and rendered available for reinvestment,
and thus for use in increasing or carrying on
the productive capacities of the country, thereby affording employment to labor. The data
relating to savings have thus far been among
the less satisfactory of those available to students of economic progress. With the development of the new system of income and excessprofits taxes it is, however, hoped to obtain
more satisfactory information, at least within




67747—18

3

599

restricted fields, concerning the development of
wealth and the growth of savings. This will
at least be possible with reference to corporate
savings and investments.
OQ Data designed to show the extent of employment at any given time in the country at
large throw light on the activity of industry
and also upon the purchasing and consuming
power throughout the various industrial sections into which the population is divided.
The degree of employment and unemployment,
and the general level of wages, furnish an
exact index of the economic condition of population in 'any given line of business. The recent
entry of the Government of the United States
into the industrial field as a large employer of
labor and its efforts to secure a better distribution of available workers enables it to furnish reliable information concerning the conditions affecting the movement of and demand
for labor in certain fields as well as the distribution of the available supply of workers in
the specified classes of industry.
While it is desirable and practicable to furnish general indexes of business conditions for
the country as a whole, it will also be necessary, in order to obtain an accurate idea of the
situation of the different sections of the Nation,
and also to obtain a more complete and detailed analysis of local industries, to initiate
similar business indexes for each of the several
districts in which one or more basic industries
have their headquarters. The establishment
of a series of business indexes for the Nation
as a whole is only the first step forward in the
eventual development of a complete series of
business indexes. It is the intention of the
Board, therefore, to extend the system generally throughout the several Federal Reserve
districts, securing in each district the establishment of satisfactory indexes relating to the
condition of the chief industries situated there,
and obtaining, as a result, reliable and authoritative reports of local business conditions. No
announcement can as yet bo made as to the
distribution of industries by districts, or the
character of the methods to be employed in

600

FEDERAL RESERVE BULLETIN.

reporting upon each of them. The character
of industry and the methods of measuring it
vary so widely as between different parts of
the country that identical methods can not be
employed in all cases. The adaptation of the
system of business indexes to the different localities will therefore be deferred to some date
in the future, after the initiation and establishment of the business indexes designed to
exhibit in broad terms the development of national industry.

Additional Taxation.
The following letter relative to new tax
requirements was sent by the Secretary of the
Treasury on June 5 to Hon. Claude Kitchin,
chairman of the Ways and Means Committee
of the House of Representatives:
JUNE 5,1918.
DEAR MR. KITCHIN:

Replying to your letter of June 3, and referring to our
recent conference on the question of new revenue legislation, permit me to submit the following for your consideration:
If the present rate of increase in expenditures should
continue for six months, the Treasury will actually have
to disburse during the fiscal year ending June 30, 1919,
approximately $24,000,000,000.
This estimate is not based merely upon appropriations,
nor merely upon estimates made by other departments as
to their probable expenditures, although they have been
obtained and considered; it is based upon the actual experience of the Treasury during the past year, which has
shown that actual expenditures, exclusive of transactions
in the principal of the public debt, have increased at the
average rate of $100,000,000 per month since March, 1917.
You will observe from the inclosed statement (Exhibit
A) that in March, 1917, the expenditures were in round
figures $100,000,000.
In May, 1918, they were
1,508,195,000. If there should be no further increase
during the coming fiscal year the cash expenditures upon
the May basis would be more than $18,000,000,000. If,
as seems inevitable, the increase in expenditures should
continue at the rate of $100,000,000 per month for the next
six months, or until December, 1918, and if thereafter the
monthly expenditures should remain stationary until
June 30, 1919, the Treasury would have to finance expenditures aggregating $24,000,000,000 during the fiscal year
ending June 30, 1919; or, to put it another way, if the
average monthly expenditure should exceed that for the
month of May, 1918, by 33J per cent, it will be necessary
to spend $24,000,000,000 in the fiscal year 1919.




JULY 1,1918.

In the fiscal year ending June 30, 1918, cash disbursements will amount to between $12,500,000,000 and
$13,000,000,000. Of this amount, about one-third will
have been raised by taxes and two-thirds by loans, all of
which will be represented by long-time obligations; that
is, bonds of the first, second, and third Liberty loans and
war-savings certificates. We shall thus have completed
15 months of the war with a financial record unequaled,
I believe, by that of any other nation.
We can not wisely contemplate nearly doubling our
cash disbursements in the fiscal year 1919 without providing additional revenue. We can not afford to rely upon
$4,000,000,000 only from taxation, because we shall then
have to rely on raising $20,000,000,000 by loans. This
would be a surrender to the policy of high interest rates
and inflation, with all the evil consequences which would
flow inevitably therefrom, and which would, I firmly believe, bring ultimate disaster to the country. We can
not afford to base our future financing upon the quicksands of inflation or unhealthy credit expansion. If we
are to preserve the financial strength of the Nation, we
must do sound and safe things, no matter whether they
hurt our pockets or involve sacrifices—sacrifices of a relatively insignificant sort as compared with the sacrifices
our soldiers and sailors are making to save the life of the
Nation. The sound thing to do is unquestionably to increase taxation, and the increases should be determined
upon promptly and made effective at the earliest possible
moment.
I doubt seriously if the Government can be financed
with only $4,000,000,000 derived from taxation, because
with a tax bill no larger than this sufficient economies
will not be enforced upon the people of America, and without such economies I see no way in which the great financial operations of the Government can be safely conducted.
On the basis of the. present revenue laws we should have
to raise in the fiscal year 1919, $20,000,000,000 by the sale
of Liberty bonds or by loans of one sort or another. I believe that if we are to preserve the soundness and stability
of our financial structure, we should raise by taxation not
less than one-third of the estimated expenditures for the
fiscal year 1919, or $8,000,000,000.
There are also certain general considerations bearing
upon the problem of taxation which I hope I may be permitted to bring to your attention.
The existing excess profits tax does not always reach
war profits. The rates of excess profits taxation are graduated and the maximum is 60 per cent. In Great Britain
there is a flat rate of 80 per cent on all war profits. The
Government departments, under great pressure as they
are to get necessary war materials and supplies with the
utmost expedition, can not in the nature of things fix
their prices nor guard their contracts in such a way as to
avoid the possibility of profiteering. The one sure way is
to tax away the excessive profits when they have been
realized. I do not say this in a spirit of criticism of the
corporations or business men of the country who have for
the most part loyally supported the Government. In

JULY 1,1918.

FEDERAL RESERVE BULLETIN.

entering into war contracts they take grave risks. They
are called upon to make vast expenditures of capital for
purposes which may prove unproductive after the war.
They are not to be blamed in these circumstances for asking for prices and terms which cover these risks. On the
other hand, when the risk has been liquidated by proper
allowances, and the contract has proved profitable, the
Government should take back in taxes all profits above a
reasonable reward. Under existing law, that does not
happen because the tax rates are not high enough and can
not safely be made high enough, since the test now is not
how much of the profits are due to the war, but what relation the profits bear to the capital invested. A company
with a swollen capital and huge war profits escapes.
Of course, no one objects to reasonable profits; on the
contrary, everyone should want, and I am sure does want,
business and enterprise to be rewarded with reasonable,
or even liberal profits. Prosperity should be preserved
and can be preserved, I believe, on the basis of reasonable
profits. The problem of statesmanship is to establish a
just relation between necessary taxation and the earning
power of the Nation.
This brings me to another consideration of great moment
in the Government's financial plans. I hope that it will
not be necessary further to increase the interest rate on
Government bonds. The number of subscribers to the
three Liberty loans aggregated 30,000,000. The people
who subscribed are impatient of those who have not.
Various plans have been urged upon me for forcing the
people to buy Liberty bonds. The man of small means
who buys a $100 bond wants his neighbor to do so, too.
There is a popular demand also for high taxes upon war
profits. There is also a popular demand that all the people
should contribute to financing the war. There should,
therefore, be a substantial increase in the normal income
tax rate and a higher tax should be levied upon so-called
unearned incomes. Income derived from Liberty bonds
would be exempt from this taxation and the relation
between income from Liberty bonds and income from
other securities would be readjusted without increasing
the rate of interest on Liberty bonds. It would not tax
the patriotic purchasers of Liberty bonds on their holdings, but it would weigh heavily upon the shirkers who
have not bought them. It would make the return from
Liberty bonds compare favorably with the return from
other securities. It would give the Government's bonds
an essential and necessary advantage over those of corporate borrowers and would very greatly decrease the relative advantage which State and municipal bonds now enjoy through the total exemption which they carry. It
would produce a gradual readjustment of the situation in
the investment markets instead of an abrupt one, as would
be the case if the interest rate on Liberty bonds should be
increased.
A normal tax falls upon all alike. Therefore, as I
pointed out in my statement before the Ways and Means




601

Committee last summer, there is not the same objection
to the exemption from normal income taxes as there is to
the exemption from surtaxes. A substantial increase in
the normal income tax is the soundest and surest way of
stabilizing the price of Government bonds. If we have
to increase the interest rate on Government bonds, the
increased rate may continue for 10 to 30 years, and some
of the bonds which we have issued will go to great premiums not long after the war is over. If we make the bonds
at the present rate more attractive by increasing the
normal tax, then the decrease in taxation which will follow the close of the war will automatically adjust the
situation. I believe that to stabilize the price of Government bonds by first increasing arid subsequently reducing
the normal income taxes, from which the holders of these
bonds are exempt, is sound finance and sound economics.
There is another feature deserving of consideration. We
are asking the people to finance this war and we are offering them an investment paying 4J per cent interest. The
people have responded wonderfully to this appeal. In the
last Liberty loan campaign 17,000,000, approximately,
subscribed. There is a widespread feeling that many
people who are able to do so, especially those who are
making vast profits out of the war, are not doing their part,
either in the purchase of liberty bonds or in the payment
of taxes—that they are investing in corporate stocks and
bonds producing high returns instead of in the bonds of
their own Government producing reasonable returns, when
the first duty of patriotism and self-protection demands
that they shall buy Government bonds for the protection
of the Nation in its hour of peril.
There is a natural feeling among the masses of the people
that taxation upon incomes and upon war profits should be
high enough to bring the return from corporate investments more nearly on a parity with the return from Government bonds; that the Government should not be forced
to compete for credit with war industries which are profiting abnormally and which, unless restrained by the
exercise of sound and just taxation, will constantly add to
the difficulties of the people of the United States in their
effort to supply the Government at reasonable interest
rates with the credit it needs to fight successfully this war
for liberty.
If I may, without impropriety, offer a suggestion as to
the proposed revenue measure, I should recommend:
(1) That one-third of the cash expenditures to be made
during the fiscal yenr ending June 30,1919, be provided by
taxation. According to my estimates, this would involve
raising $8,000,000,000 through taxation.
(2) That a real war profits tax at a high rate be levied
upon all war profits. This tax should be superimposed
upon the existing excess profits tax in such, a way that the
taxpayer should be required to pay whichever tax is the
greater. The existing excess profits tax should be amended in certain important particulars so as to remove in «
equalities.

802

FEDERAL RESERVE BULLETIN.

(3) That there should be a substantial increase in the
amount of normal income tax upon so-called unearned
incomes. Under existing law earned incomes above certain exemptions are taxed 4 per cent as an income tax and
8 per cent as an excess profits tax, making a total of 12 per
cent, while unearned incomes, derived from securities,
etc., are taxed only 4 per cent. The 8 per cent tax should
be recognized as an income tax and the rate of 12 per cent
(4 per cent normal and 8 per cent excess profits) should be
retained in respect to earned incomes, while a higher rate
than 12 per cent should be imposed on unearned incomes.
(4) That heavy taxation be imposed upon all luxuries.
Sincerely, yours,

JULY 1, 1918.

ACCEPTANCES AND THEIR USE.
Below are given some extracts from discussions of the acceptance situation recently offered by the governor and vice governor of
the Federal Reserve Board:
THE FINANCING OF COTTON PURCHASES.1

I assume at the outset that there is no intention on the
part of anyone to deprive the producer of cotton of his
cash market. That would be unjust, for the cotton producer as a rule is a man of small means. The production
of cotton is distributed over a wide area and among a great
(Signed) W. G. MCADOO.
many individuals. Most cotton producers are obliged to
Hon. CLAUDE KITCHIN,
arrange for their lines of trade in the spring of the year.
Chairman Ways and Means Committee,
The southern banks load themselves up with loans to enHouse of Representatives.
able the southern farmer to produce his crop, and I take
it that it will be universally conceded as fair and just that
Statement showing classified disbursements by months from the southern farmer, having obligations to pay in the fall
March, 1917, to May, 1918, as published m daily Treasuryof the year, shall receive cash for his product when he
statements.
brings it to the market.
That, however, is only a small part of the financial operaOrdinary.
Foreign loans.
tion involved. The customers of the southern cotton producer, the large customers, are the cotton mills of the
$72,773,903.20
March, 1917
South, New England, Canada, Great Britain, and other
$200,000,000.00
81,599,598.22
April, 1917
countries which in normal times absorb our production.
407,500,000.00
114,102,809.08
May, 1917
277,500,000.00 Most of this domestic business is done through the local
134.304,040.35
.June, 1917
885,000,000.00
402,780,351.45
cotton buyer. The cotton buyer goes to his bank and ar208,299,031.05
July, 1917
452,500.000.00 ranges for a line of credit. Ho makes such deposits as
277,438,000.64
August, 1917
473,000; ooo. oo
may be agreed upon, in the way of margin, and he has an
349,013,305.34
September, 1917.
396,000,000.00
462,045,359.94
October, 1917
480,700,000.0;) arrangement with the bank to loan him the amounts which
512,952,035.17
November, 1917.
471,929,750.0;)
he may need in order to make his cash purchases from the
611,297,425.62
December, 1917..
492,000,000.00
715,302,039.83
January, 1918...
370,200,000.00 farmer. The southern bank has been accustomed, as far
675,209,068.43
February, 1918..
325,000,000.00
819,955,367. 20
March, 1918
as domestic purchases are concerned, to receive from the
317,500,000.00
910,756,758,95
April, 1918
287,500,000.00
cotton buyer his draft upon the northern or southern cot1.068,203,026.82
May, 1918
424,000.000.0)
8,610, :i7!, 419.05 j 4,495,329,750.00 ton mill, as the case may be, or, in the case of shipments
across the sea, upon the buyer on the other side.
Total Mar. 1, 1917, to May
As far as domestic transactions and shipments are con31, 1918
\ 7,013,251,770.50 ; 5,380,329,750.00
cerned, these drafts have been at sight which, in all States
except Massachusetts, means on demand. The bill of ladOther special.
Total.
ing leaves a southern bank with the draft attached, goes to
327,176,896.12
March, 1917.
$99,950,799.32 Boston, for instance, if it is a Massachusetts sight draft; the
8.29-1,354.78
April, 1917..
289,893,953.00
May, 1917...
4; 962,746. 28
526,505,555.96 treasurer of tke mill accepts it, and after three days of
June, 1917...
919,445.78
412,723,486.13 grace, has to pay it. If he gets a bill of lading, he has
41,353,442.96
1,329,133,794.41 perhaps to negotiate a loan on that with some bank in the
Northeast. The cotton may be three weeks or three
1,511,814.92
July, 1917
662,310,815.97
2,019,363.50
August, 1917
757,457,36'!. 14 months in transit, and here results a dead load which those
1,364,980.35
September, 1917..
746,378,285.69
1,623,392.58
October, 3917...,
944,368,752.52 mills and their bankers have to carry.
1,200,022.36
November, 1917..
986,081,807.53
Meanwhile, let us look at the situation in the South.
1,914,433.70
December, 1917..
1,105,211,859.32
4,854,005.86
January, 1918
1,090,356.045.69 The change there, ordinarily in the fall of the year, is a
12,477,917.31
February, 1918...
1,012,686; 985.74
18,338,441.98
March, 1918
1,155,793,809.24 sudden one. The southern banks, which rediscount
17,031,020.28
April, 1918
1,215,287,779.23 heavily in order to carry the farmer during the producing
15,992,206.83
Mav, 1918
1,508,195,233.65
Total Mar. 1, 1917, to May
31, 1918
'.




78,327,599.67

11,184,128,768.72

119,681,042.63

12,513,262,563.13

1
Extract from address of William P. G. Harding, governor Federal
Reserve Board, before the Conference on Cotton Buying, held at the
Biltmorc Hotel, New York, May 4, 1918, under the auspices of the National Association of Cotton Manufacturers.

JULY 1,1D1S.

FEDERAL RESERVE BULLETIN.

season, probably reach the peak of their load when the
cotton is being harvested and prepared for market. The
advances they have to make to the cotton buyers to start
the .season, combined with those made to the farmer.
create a highly expanded condition of credits. Then, as
they ,'.:;et these drafts payable on demand or at sight, their
loans automatically are liquidated, so that in the course
of a few days or a few weeks at the longest, the banks which
have been so greatly expanded, pay off their own obligations in the way of rediscounts and find themselves with a
large amount of surplus money on hand. They then go to
the note broker or correspondent banks in the larger cities
and buy commercial paper.
I am very much impressed with the proposition that
some change should be made in the method of financing
the cotton crop, and I believe that the suggestion to introduce 90-day drafts to be accepted by a first-class bank or
banker a most excellent one. This is not a time for sectionalism of any kind. It is not a time for sectionalism in
finance. There is no longer any such thing, because under
the operations of the Federal Reserve system, if the banks
in one Federal Reserve district are unduly expanded, or,
if their credits outstanding are burdensome, they go to
their Federal Reserve Bank and rediscount, and the
resources of that bank can be built up under the system
of interbank discount, for the Federal Reserve Bank of
any district, may, and must, upon the order of the Federal
Reserve Board, rediscount for the Federal Reserve Bank
which needs the assistance; so that the entire resources of
the country are mobilized and, if there is a deficiency in
one section and a surplus in another, a common level is
established through the operation of the system. As there
is no longer any possibility of sectional finance, there is
no reason why there should be any local sentiment.
What affects one affects all.
Now, let us consider the proposed changes. I do not
think they involve the slightest change in the relations
of the local cotton buyer to the farmer from whom he
purchases his cotton. The farmer gets cash as usual.
The southern bank is given an opportunity, if it so desires,
of extending a long credit. In other words, its loans which
have been against goods in posse can become credits
against goods in esse. The crop when raised is a reality,
and credits against these acceptances are credits against
one of the most readily marketable staples in the world.
Assume that a bank in Texas has a bill of lading for 500
bales of cotton, with invoice and draft on some well-known
bank in Boston attached. That draft will be drawn not at
sight, but at 90 days, with instructions that on the acceptance of the draft by the bank the bill of lading may be
surrendered. Then the southern bank, instead of having
a cash credit in Boston or in New York, will have this
banker's acceptance, an instrument of the highest commercial character, an instrument which the Federal
Reserve Board looks upon as paper of the highest class.
If the southern bank is so situated that it can continue to
carry this credit, it may do so and it will have the most,




603

desirable investment that can be obtained. It will not
have to go into the market and buy paper of which it
knows nothing, taking the judgment of some one else.
It has paper with which It is familiar, based on a transaction it knows all about, and accepted by a bank of the
highest character.
If, after receiving this acceptance, the southern bank
finds that it can not carry the credit longer and wishes to
realize upon it, it can go to the open market, a market as
broad as the Nation itself, and sell the acceptance, or it
can rediscount the acceptance with the Federal Reserve
Bank, or the Federal Reserve Bank can buy it in the open
market with or without the indorsement of the selling
bank. You may say there is the question of interest on
that acceptance. Perhaps the cotton broker may think
h e has to pay it. I do not think he will, as it will be added
to the invoice. But suppose he does, let us see what corresponding benefit he has. Those familiar with the movement of cotton in the South realize that two factors are
controlling: One is transportation. Bear in mind that the
cotton broker must be able to buy the cotton when it
comes in from the country to the little towns, because,
if a farmer hauling his 10 or 20 bales of cotton to the market
in his county town is unable to sell the cotton, he is not
going to repeat the experience; and that county town will
cease to be a trading center. The banks have always
exerted themselves to extend credit, in order to pay the
farmer for his cotton as it comes into the local markets.
At times the railroads have been unable to furnish cars
and that has stopped the movement to the cotton mills,
but the local banks and the cotton buyer must carry the
load. But the spot demand must also be considered, and,
as I understand it, the spot depends upon the cotton-mill
men, without regard to the supply of cars available.
Suppose a cotton mill has exhausted its credit and its
bankers say: '' We have gone so far with you, and you have
so much cotton. You must spin that up before we will give
you any further credits." The cotton broker in turn is
compelled to say to the southern bank: " I had expected
to ship out 5,000 bales this month, but have received instructions to hold up for 60 days.'' This is usually because
the cotton mill has had its credits deferred by its bank.
Now, under the acceptance arrangement, credit is not
limited to the resources of a single bank or mill. The banks
of New York, Boston, or other large cities will undoubtedly give acceptance credits to cotton mills. So there will
be no delay owing to lack of financial arrangements by the
mills. My experience is based on cotton at $60 a bale.
With cotton at $160 and §175 a bale, you can see how
greatly conditions are aggravated. If we had stoppage of
shipments for lack of credit at $60 a bale, is it not conceivable that the conditions are aggravated at present
prices?
So far as the cotton buyer himself is concerned, with the
advantage he gains from a steady market and continued
operation, not subject to interruption because of inability
to secure credits by the cotton mills, the acceptance sys-

604

FEDERAL SESEEVE BULLETIN.

JULY 1,1918.

tern will be of great advantage to him. He will save at his adoption of the trade acceptance so vigorously opposed by
local bank and on his warehouse and insurance charges, some bankers and business men? Let us consider first the
and, considering everything, the balance, I think, will go reasons given by the bankers. Some bankers assert that
on the credit side of ins account. As far as foreign ship- in buying a promissory note the mere fact that they are
ments are concerned, we are accustomed to long drafts, conscious of buying the naked note of a customer furnishes
for no one draws a draft on a Manchester mill payable on a reason for their feeling obliged to carefully analyze the
demand. The English have had this systematized for statement of the customer and to judge the merit of the
many years. Drafts are drawn at 60 days', 3 months', or borrower upon the statement of the latter's financial con4 months' time and are accepted by a prime banker. If dition. They allege that this practice is safer than that
a southern bank wishes to buy the drafts, it can do so; but of purchasing a trade acceptance issued by the same firm,
as a rule they are sold through exchange brokers in NCAY because, as they say, in that case they are likely to rely
York, a draft with invoice and bill of lading attached being on the legitimate character of this double-name paper
drawn against them, upon payment of which the foreign without examining as cautiously as they otherwise would
bills are delivered. I see no reason why brokers selling the general condition of the borrower; the likelihood of
commercial paper and foreign bills can not also sell their adopting that course, they urge, might lead to the
domestic bankers' acceptances, so that if a southern bank manufacture and sale of fictitious accommodation acceptwhich wishes cash has a 90-day draft against a lot of cotton ances on the part of their borrowers, and they cite expeaccepted by a bank in the East it can arrange with the rience in support of their contention.
broker to buy that draft and draw on the broker with the
Other bankers state with great force that they are opdocuments attached, the same as is done with the foreign posed to the trade acceptance because they would not feel
draft,
justified in continuing to buy the single-name paper of a
I think that in the interest of the cotton broker, in the borrower who has adopted the habit of selling his trade
interest of the southern banker, in the interest of the banks acceptances. The reason given for this view is that whoof the country at large, and in the interest of the Federal ever buys % trade acceptance acquires the first lien on what
Reserve system, it is well to introduce this new plan, if it would otherwise have represented one of the accounts
can possibly be done. I have considered the matter care- receivable of the concern which drew the acceptance, and
fully in the last 10 days and I have been unable to find in addition to that lien, in case of bankruptcy of the
any valid objections to the plan, nor have I received any drawer of the acceptance, the holder of that acceptance
communications from anyone protesting against it. I am would rank equally with the unsecured note holder as a
here to-day to learn rather than to advise; and in con- general creditor for any part of the acceptance which the
cluding my remarks I wish to say that I will be in the acceptor might not have paid. As you can readily see, it
room for an hour or so and I shall listen very intently to is impossible that both of these opposed views should be
any arguments which may be made for or against the new correct; one banker asserting that he will not buy trade
proposition, but with the light before me it strikes me as acceptances because he does not think they are safe
an excellent plan which should be put in operation, and enough, the other that he opposes the trade acceptance
one which I know can be greatly aided by the Federal because it is so good as to render unsafe the purchase of
Kesorve Banks.
single-name paper of any customers having sold trade
acceptances.
Which of the two arguments is sound? To my mind
THE TRADE ACCEPTANCE SITUATION.1
neither. It has never been contended by the champions
About two years ago I had the honor of addressing the of the trade acceptance that these acceptances should be
Credit Men's Association at a meeting in New York upon bought by anyone who has not familiarized himself thorthe topic of the trade acceptance, and since then so much oughly with the financial condition of the maker of the
has been said about the advantages in the use of that paper; he should take this precaution just as if he were
method of financing that it would be needlessly taxing buying a single name note, and as long as he does that there
your patience were I to undertake to demonstrate again to is no reason whatever why he should not be capable of
you that the trade acceptance, when properly used, turns judging solvency and standing from the statement of a
a frozen asset into a liquid one, and that the firm which borrower who sells the trade acceptances he receives just
organizes its business on the basis of the trade acceptance as he can to-day from the statement of a firm which boris placing itself in a very much stronger position than its rows only on its own note. Indeed, one of the main vircompetitor who refuses to modernize on the same lines. tues of the trade acceptance is that it clarifies the stateIt would be needless repetition were I to reiterate the ment, inasmuch as it shows on the asset side exactly how
other arguments with which you are familiar. It may, much there is available in liquid items, among which are
however, be useful to analyze this question: Why is the the trade acceptances owned, against outstanding liabili Extract from an address of Hon. Paul M. Warburg before the Trade ities. If the borrower wishes to obtain funds on his singlename note in addition to trade acceptances sold (which
Acceptance Conference, June 17,1918.




JULY 1,1918.

FEDERAL RESERVE BULLETIN.

605

would be shown as a contingent liability), he would have lower interest return, just as they buy. by preference,
to satisfy the banker that these funds are required for bankers' acceptances on account of the greater liquidity
temporary working capital or for the purchase of material of the latter, even though at present such acceptances net
used in the process of manufacturing; unless, indeed, the only 4J per cent as against the commercial paper rate of 6
borrower were paying for the purchases by giving his per cent or more.
own trade acceptance. In the latter case the trade acceptNow let us examine the reasons why some business men
ance would show as an obligation on the liability side.
oppose the development of the use of the trade acceptance.
This leads us to the objection made by the banker who Some, I believe, fight it because they are jealous of mainis unwilling to buy the single-name note of a firm which taining their business on a cash basis—that is to say, they
sells trade acceptances. The Canadian and European are willing to pay even a high premium in order to avoid
methods indicate, I believe, the proper answer. In the cares and risks of sales on credit. That is a question
Canada and England and on the European Continent it is which every business in an must decide for himself, and,
quite customary for banks to grant a customer an overdraft as I said in the beginning, we should not attempt to force
credit. Such a "line" represents the sum on which the anyone to do anything in this respect that he does not concustomer may count with fair regularity. In addition to sider to his own best advantage. It is impossible, howthat, the Canadian bank will buy freely the customer's ever, for me to understand why any business man should
trade acceptances, though, of course, within given limits. be alarmed, or excited, because of the use of the trade
Generally speaking, it may be said that if the customer be acceptance by others who are obliged to sell their goods
strong and solvent, and if he be considered fairly conserva- "on open account." Valid objections could be raised
tive in choosing his purchasers, the bank will be found only by one of two classes of business men: Weak or unreready always to buy a handsome amount of trade accept- liable purchasers who object to binding themselves to a
ances in addition to the regular overdraft granted, relying definite obligation to pay on a certain date (in which case,
on the fact that even in case of insolvency on the part of however, the reasons for the opposition on the part of the
the customer the larger percentage of these trade accept- purchaser ought to be the very arguments for the preferances will usually be paid, the risk being so largely ence on the part of the seller); or certain firms of great
divided.
financial or commercial strength, who desire to preserve
When our banks begin to look upon the trade acceptance their position of advantage as against weaker competitors.
from this, let us call it, Canadian point of view, I think When borrowing on its own note, the strong firm, with wellthey may well conclude that it is perfectly proper and safe established credit, can obtain larger loans and on more
for them to buy a certain amount of single-name paper favorable terms than its small competitor, and it is, there(corresponding to the overdraft) and in addition to take a fore, in position to finance its purchases and its sales on a
liberal amount of the customers' trade acceptances, pro- more favorable basis than the small firm. It gains the
vided they use care in scrutinizing the statement of the advantage both as to the larger scope of business it can do
borrower. I believe many of them will be willing to and the lower interest rate it enjoys. True, it could probadmit that the flagrant cases cited hv them of losses on ably do a larger business than at present by adopting the
fictitious trade acceptances were those where the bankers trade acceptance plan, but by thus adopting the trade
neglected to ask for or to insist on getting the customers' acceptance basis smallfirnsswould probably profit more in
statement. It may be timely for me to add that since the proportion than the larger ones; their handicap would be
beginning of the operations of the Federal Reserve system lightened.
the Board has done all in its power, by regulation and
The general use of the trade acceptance is likely to tend
admonition, to insist on full and frank statements on the toward greater standardization of banking paper and
part of business firms, as well as of banks and bankers greater equalization of interest rates, and I am inclined to
themselves. In banking and business the greatest safety think that we might call it a step toward greater delies in publicity and frankness.
mocracy in commerce and banking. That is one of several
I am willing to admit that I have a lingering suspicion reasons why the Federal Reserve Board favors the policy
that certain banks which oppose the trade acceptance of granting a preferential rate for trade acceptances. But,
may be somewhat influenced by the fact that single-name speaking broadly, the Federal Reserve system is interested
paper offers a better interest return than the trade accept- in seeing the business of the country done on the soundest
ance. I am glad, however, to state my belief that the possible basis. Whatever makes for prompt payment
vast majority of the banks take a different point of view may be considered an actual gain at a time when our efforts
in this respect, and that to them the facts that the trade must be bent upon saving as much as possible, not only in
acceptance has been recognized as a preferred type of material and labor, but also time and credit.
paper by the Federal Reserve Banks and that it has a wider
It is one of the most difficult problems at this juncture,
and more favorable market than single-name paper, are of when hundreds of millions of dollars have to be shifted
sufficient force to make them very willing and even every day, to shorten the many circles in which it travels,
anxious to buy these trade acceptances in spite of the not only in the large operations of the Government, but




606

FEDERAL RESERVE BULLETIN.

in every individual transaction. It is in the general interest that money paid out for wages and material return as
fast as it can to the producer when his goods are sold.
Pending the return of the moneys due him he must rely
on bank credit, which naturally is limited, and consequently he has to adjust the scope of his operations to the
speed with which his "turn-over" can be completed.
The trade acceptance plays a most important part in this
respect. By securing trade acceptances, even though he
may hold them to maturity, the manufacturer can figure
with greater exactness what are his obligation and his available cash assets, and, by removing elements of uncertainty,
he is enabled to carry on a larger business and to do it in
greater safety.
At a time when so much depends upon using every possible advantage in order to speed up production, so as to
avoid an unnecessary tie-up of funds, the use of the trade
acceptance may be considered a contribution to the national welfare. It must not be said that whoever fails
to use the trade acceptance is unpatriotic, but it may be
said that it is essential that everyone do what lies in his
power to remove anything that stands in the way of securing the greatest possible efficiency of our country at this
time, and anything done in this direction is patriotic.
It has lately been explained to me that canneries are
facing a rather difficult situation, inasmuch as all prices
for cans, boxes, and wages have risen so much that during
the coming canning season the credits usually available
for the canneries may not be sufficient, the amount of
money involved having doubled and the 10 per cent
limit in many cases prohibiting the country banks from
providing locally the necessary advances. In discussing
this problem and trying to suggest means of relief, I asked
the question, "How do the canneries pay for their cans
and their boxes?" I was told that they pay cash. I inquired, "Could not the can manufacturers take trade acceptances in payment for their cans?" The answer was
that the can company must pay cash itself for the tin
that it buys from the steel manufacturer; that possibly
next year something of the sort might be arranged, but
that for this season it would be too late. I did not have
the time to look.further into the matter, nor is it my intention to venture any opinion as to whether or not it
might be practicable for these important companies to
change their methods of selling their goods. No doubt
they consider themselves better protected in selling for
cash and probably they control the market sufficiently to
enable them to insist on cash terms. On the other hand,
it is clear from the situation that I have described that
great relief could be given in this particular case to the
canneries, provided, of course, that their credit warrants
it, if they could be permitted to pay for their tins and
their boxes by 90-day trade acceptances. The process of
canning is so rapid that probably even a shorter term than
90 days of credit might prove sufficient. As soon as the
canning process is completed, I am told, the canners are
able to secure their loans by warehousing and pledging




JULY 1,1918.

their finished product, and the difficulty of financing is
overcome. But for the short period of the peak of the
load the use of the trade acceptance might be of the greatest advantage to them.
Facilitating the process of manufacture of food products
is certainly a service which contributes to the national
interest at this time, and, while I have mentioned this
case merely for the purpose of illustration, I hope that it
will not be taken amiss if I venture to urge the large industrial concerns in dealing with this question not to consider it exclusively from the point of view of what is to
their own best advantage, but to bear in mind that in
many cases they have the opportunity of rendering a distinct service to the national interest, an opportunity
which when once clearly recognized, they will not wish
to miss at this juncture.
In this connection, ifc may be useful to remind you of a
ruling given by the Federal Reserve Board (printed in the
March, 1917, FEDERAL RESERVE BULLETIN) to the effect

that a trade acceptance, if drawn within reasonable time
after the shipment or delivery of the goods, may be considered as a bill of exchange drawn against actually existing value, so that a national bank may buy such trade acceptances from its customers even after it has reached the
limit of 10 per cent of its capital and surplus, which constitutes the maximum credit such bank may grant a customer on his single-name note. In view of the greatly
increased price of practically all goods and the consequent
larger amount of money involved in production, the facility thus afforded by the use of trade acceptances may
prove of the greatest service, as you may readily see from
the problem of the canneries just described.
Great efforts are being made at present to reduce bank
loans as far as possible where they are made for the carrying on of business transactions not strictly compatible
with the public interest—that is to say, not absolutely
necessary for the successful prosecution of the war or the
health and necessary comfort of the people.
The single-name note easily serves as "camouflage."
It is very difficult to trace exactty what transaction is being financed by any particular note. The trade acceptance, on the other hand, bears on its face the evidence of
its legitimate character—it is capable of proving a most
convincing "alibi" where there is doubt as to the purpose
for which the proceeds have been used, and it may, therefore, be a great help to the banks in carrying out the national object of conserving to the utmost material, labor,
transportation, and credit.
RESOLUTIONS OF CREDIT MEN.

The following resolutions were adopted at
the convention of the National Association of
Credit Men on Friday, June 21, 1918:
Whereas, it is of the utmost importance at this critical
juncture in our financial affairs that we make full use of
every legitimate credit instrument, and

Whereas, in the inevitable expansion of credit incident
to the growing demands of war it is of the utmost importance that we create not only credit instruments that are
eligible for rediscount at Federal Reserve Banks but
instruments of the widest marketability, qualities which,
as leading financial authorities state, are present in the
highest degree in acceptances;
Be it resolved, That the National Association of Credit
Men continue to exert its powers to bring about a better
understanding of the trade acceptance and to advise, so
far as may be, its use in the various lines of trade as contemplated in the Federal Reserve Act as interpreted by
the Federal Reserve Board.
Resolved, That this convention give its cordial approval
to the officers and directors of the association in joining in
the object which is recited in the formation of the American Trade Acceptance Council, believing that through the
cooperation of the large national organizations, representative of every phase of business, comprised within the
council, the strongest possible influence is being placed
behind the movement to substitute the acceptance for
the open account.

Credits for Canaers.

In a letter to Governor Harding, Mr. Herbert
Hoover says of the canning industry:
On a very modest estimate the output of this industry
in fruits and vegetables in 1917 was valued at $275,000,000,
and I believe canners will this year need about $50,000,000
in addition to their ordinary supplies of capital, because
of the increased cost of raw product, cans, cases, and
labor.
I know of no industry that is of more genuine value
to the country, the Army and the Navy, to those associated with us in the war and toward the winning of the
war itself than the canning industry. Its products
represent conservation of the most valuable kind.
The industry to-day is splendidly organized and is
acting as a unit throughout the United States in conserving every particle of the seasonal products that may
result from probably the largest acreage ever planted in
cannery crops.

Governor Harding on July 3 sent to all
Federal Reserve Banks the following letter:
The attention of the Federal Reserve Board has been
called to the fact that because of the limitations of section
5200 of the Revised Statutes many of the smaller national
banks are unable to take care of the needs of their customers engaged in the canning business. The canning
season is now about to begin and the Board is informed
that additional accommodation covering a period of about
four months will be required by many concerns engaged
in this business.
67747—18
1




607

FEDERAL RESERVE BULLETIN.

JULY 1,1918.

It appears that although the canning industries have
sold their output in advance, they are unable to realize
on these sales until deliveries can be made. In the meantime they are in need*of funds with which to purchase
materials and to meet pay rolls. The increased cost of
labor and materials and the demands for larger production
make their needs greater than usual. As the canning industries are located mainly in the small towns, few of them
have established connections with larger banks in the cities,
and have relied hitherto upon local accommodation.
The suggestion has been made that the city banks extend
direct credits to the canners upon the recommendation of
local banks. While the Federal Reserve Board does not
feel warranted in recommending to member banks in the
financial centers that credits be extended to customers of
other member banks in the circumstances recited, it does
feel, however, that it would be desirable to have the
facilities of the Federal Reserve system made available
as far as practicable in the present emergency. In order,
therefore, to afford some measure of relief, it is suggested
that you communicate with some of the larger banks in
your district and ascertain if they would be willing to
cooperate with the smaller banks in the canning districts
by extending temporary credits to such canning enterprises as may be able to make a satisfactory showing as to
their financial condition.

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 issue of the June BULLETIN:
DISTRICT NO. 7.

Trustee, executor, administrator, and registrar of stocks
and bonds:
First National Bank of Englewood, Chicago, 111.
La Salle National Bank, La Salie, ill.
DISTRICT NO. 8,

Trustee, executor, administrator, and registrar of stocks
and bonds:
Citizens National Bank, El Dorado, Ark.
First National Bank, Murphysboro, 111.
DISTRICT No. 9.

Trustee, executor, administrator, and registrar of stocks
and bonds:
Montana National Bank, Billings, Mont.
Trustee, executor, and administrator:
First National Bank, Barron, Wis.
DISTRICT No. 11.

Trustee, executor, administrator, and registrar of stocks
and bonds:
First National Bank, Amarillo, Tex.
DISTRICT N O . 12.

Trustee, administrator, and registrar of stocks and bonds:
Third National Bank. Walla Walla, Wash.

608

JULY 1,1918.

FEDERAL RESERVE BULLETIN.

Assessment by Federal Reserve Board.
Acting under the provisions of the Federal
Reserve Act, the Federal "Reserve Board on
June 20 voted an assessment of 0.00125 per
cent upon the capitalization of Federal Reserve
Banks to cover the estimated general expenses
of the Board from July 1 to December 31,1918.
The assessment is based upon a capital of
$152,556,000, as of June 15, 1918. The rate
of assessment will yield $190,695. The resolution of the Board, with the figures on which
the assessment is based and a detailed statement
of expenditures and commitments as a basis of
estimate, is given below.

Estimated requirements, July to Dec, 1918,
inclusive
,
$212,805. 54
Estimated unencumbered balance July 1,1918 24, 979. 48
187, 826. 06
Total capitalization and surplus of Federal
=
=
Reserve Banks, June 15, 1918
152, 556,000
Rate of assessment to produce $190.695
0. 00125
In view of all conditions I have theh onor to recommend
that an assessment of one hundred and twenty-five thousandths of 1 per cent (0.00125) be levied.
W. M. IMLAY, Fiscal Agent.

Approved:
COMMITTEE ON ORGANIZATION,
EXPENDITURES, AND STAFF.

Detailed statement of expenditures and commitments as a
basis of estimate.

RESOLUTION LEVYING ASSESSMENT.

Total, Jan. I
Whereas, under section 10 of the act approved December
1 to June !
23, 1913, and known as the Federal Reserve Act, the
30,1918. |
Federal Reserve Board is empowered to levy semiannually
upon the Federal Reserve Banks in proportion to their
services:
capital stock and surplus an assessment sufficient to pay Personal
Board aiid its clerks
S45,044.01
15,106.15
Secretary's office
its estimated expenses, including the salaries of its mem12,406.32
Counsel's office
bers, assistants, attorneys, experts, and employees for the
Division of audit and examination
17,695.00
[
half year succeeding the levying of such assessment,
Division of reports and statistogether with any deficit carried forward from the precedtics
11,158.67
Division of issue
6,462.52
ing half year; and
Messengers
3,324.16 ]
Charwomen
396.00 i
Whereas, it appears from estimates submitted and conContingent
sidered that it is necessary that a fund equal to one hun112,592.83 j
Total.
dred and twenty-five thousandths of 1 per cent (0.00125)
services:
of the capital stock of the Federal Reserve Banks be Nonpersonal
Transportation and subsistencecreated for the purposes hereinbefore described, exclusive
Board and its clerks
of the cost of engraving and printing of Federal Reserve
Secretary's office.
Division of audit and exnotes: Now, therefore,
amination
Division of reports and
Be it resolved, That pursuant to the authority vested in
statistics
it by law, the Federal Reserve Board hereby levies an
Counsel's office
Messengers
15.00
assessment upon the several Federal Reserve Banks of an
Communication serviceTelephone
1,316.60
amount equal to one hundred and twenty-five thousandths
Telegraph
4,368.92
of 1 per cent (0.00125) of the total capital stock and surplus
49.50
Printing and binding, etc
18, 733.59
of such banks, and the fiscal agent of the Board is hereby
Contract ropairs
48.21 !
180.00 j
Electricity (light and power)..
authorized to collect from said banks such assessment and
100.00 !
Steam (heat)
execute, in the name of the Board, a receipt for payment
1,635.16 |
Other nonpersonal services
Suppliesmade. Such assessment will be collected in two instalStationery
1,537.50 I
ments of one-half each; the first instalment to be paid on
Periodicals
146.35 !
Other
802.00 I
July 1, 1918, and the second half on September 1, 1918.
Equipment:

Estimate for July, 1918, assessment.
Average monthly encumbrance for period
Jan. 1, 1918, to June 30, 1918
$28, 761. 71
Estimated monthly requirements, July to
Dec, 1918, inclusive
35,467.59
Estimated monthly increase




6,705.88

Furniture and office
Books
Gold-settlement fund (including
salaries)
Foreign exchange (including salaries)
Rent
Capital issues (including salaries).
Contingencies.
Total
Grand total..

3,015.43
370.50

ont

j;

ly

$7,507.34
2,517.69
2,067.72

Estimated
monthly
requirements,
July 1 to
Dec. 31,
1918.
87,650.00
2,750.00
2,082.52

2,949.16 •

4,500.00

2,026.44 !
1,077.09 !
554.03 i
66.00 i

3,500.00
1,600.00
650.00
66.00
1,000.00

2.50 i

5.00

219.44
728.15 |
8.25 !
3,122.26 |
8.03 !
30.00
16.66
272.52

250.00
100.00
10.00
3,000.00
10.00
30.00
20.00
250.00

256.25
24.39
133.67

200.00
25.00
125.00

502.57
61.75

500.00
25.00
300.00

2,435.08

405.85

8,522.07
1,929.60
7,687.01

1,420.35
321.60
1,281.17

59,977.44

9,996.24

11,669.07

172,570.27 i 28,761.71

35,467.59

119.07

' "5f"666."66

JULY 1,1918.

State Banks and Trust Companies Admitted.
The following list shows the State banks and
trust companies which have been admitted to
membership in the Federal Reserve System
during the month of June.
Capital.

Total

Surplus.

Texas Bank & Trust Co., Beaumont, Tex
$250,000
$110,000' 82,976,439
The New Jersey Title Guarantee
& Trust Co., Jersey City, N. J . . . 1,000,000 1,000,000 | 14.805,121
The Farmers Savings Bank, Walla
Walla, Wash
40,000 j
1,682.915
200,000
The Citizens Bank of Aztec,
Aztec, N. Mex
40,000
271,392
10,000 !
First State Bank, Canisteo, N. Y .
50,000
458)038
25,000
Peoples Trust & Savings Bank,
Perry, Iowa
50,000
500 j
378,055
Security Bank & Trust Co.,
Wharton, Tex
50,000
350,367
6,000 I
Citizens State Bank, Tekoa, Wash.
358,239
25,000
10,000 j
Northeastern Banking Co., Commerce, Ga
657,674
100,000
35,000 j
Albion State Bank, Albion, Wash.
103,976
25,000
5,000 i
i<'armors State Savings Bank, Bav I
!
City, Mich
:
".J
100,000
1,050,198
25,000 |
Thatcher Bros. Banking Co., i
Logan, Utah
\
1,285,560
150,000
50,000 |
Lapeer County Bank, Imlay City, j
Mich
|
50,000
10,000
962,049
Fulton Trust Co., New York
!
9.731,360
500,000
250,000
Citizens State Bank, Gcoding, |
Idaho
;
341,9G1
25.000 !
10,000
American Trust Co., Jacksonville, I
728,998
200,000 !
Fla
10,000
Montgomery County Trust Co.,
200,000
Amsterdam, N. Y
2,298,948
200,000
100,000
Security State Bank, Dillon,
185,112
Mont
3,000
50,000
Ogdcn Savings Bank, Ogdcn,
1,544,120
Utah
150,000
150,000
Wells-IIino Trust Co., Savannah,
639,603
Mo
1,800
100,000
Bellovue Realty Savings & Trust
940,747
Co., Bollovue", Pa
125,000
50,000
The Bank of Oregon City, Oregon
1,298,641
City, Oreg
100,000
50,000
McCornick & Co., Bankers, Salt
LaTco City, Utah
600,000
120,000 10,108,453
Mandamin Savings Bank, Mon402,635
35,000
5,000
damin, Iowa
Grant Trust & Savings Co.,
100,000 |
100,000 j 1,845,387
Marion, Ind
Lillcy State Bank, Tecumsch.
20,000 !
696,154
40,000 j
Mich
Tccumsch State Savings Bank,
26,000 |
655,408
26,000
Tecumseh, Mich
Farmers & Stockgrowcrs Bank,
18,009 | 1,187,127
300,000
Salt Lake City, Utah
Bank of New Richmond, New
15,000 I
628,472
35,000
Richmond, Wis
Savings Investment & Trust Co.,
300,000
6,465,331
150,000
East Orange, N. J
American Bank, Union Springs,
5,000
208,270
50,000
Ala
Liberty Bank & Trust Co., New
10,000
298,045
200,000
Orleans, La
The Union Savings Bank, Man50,000
803,804
25,000
chester, Mich
The City Savings Bank & Trust
100,000
100,000 I 2,427,981
Co., Alliance, Ohio
!
Dayton Savings & Trust Co.,
200,000
300,000
Dayton, Ohio
25,000
932,065
50,000
Albion State Bank, Albion, Mich..
The Struthers Savings & Banking
50,000
50,000 | 1,717,284
Co., Struthers, Ohio
Wachovia Bank & Trust Co.,
750,000 j 16,892,813
1,250,000
Winston-Salem, N. C
The Fifth Avenue Bank of New
200,000 2,000,000 I 22,873,437
York, New York

i

NOTE.—The Central Trust Co. of New York and the Union Trust Co.
of New York, member institutions, have consolidated under the name
of the Central Union Trust Co.




609

FEDERAL RESERVE BULLETIN.

Five hundred and twenty-three State institutions are now members of the system, having a total capital of $280,104,900, total surplus of $355,153,565, and total resources of
$6,082,911,349.
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 June 1,
1918, to June 28, 1918, inclusive:
Banks.

New charters issued to
With capital of
Increased of capital approved for
With new capital of.

13
6

$560,000
475,000

Aggregate number of new charters and
banks increasing capital
19
With aggregate of new capital authorized
1, 035, 000
Number oi banks liquidating (other than
those consolidating with other national
banks)
3
Capital of same banks
180, 000
Total number of banks going into liquidation or reducing capital (other than those
consolid ating with other national banks). 3
Aggregate capital reduction
180, 000
The foregoing statement shows the aggregate of
increased capital for the period of the banks
embraced in statement w a s — .
.1,035, 000
Against this there was a reduction of capital
owing to liquidation (other than for consolidation with other national banks) and
reductions of capital of
180, 000
Net increase

855, 000

Commercial Failures Reported.
Notwithstanding various factors calculated
to enhance the possibilities of financial embarrassment, the country's business mortality remains remarkably moderate, only 540 commercial failures being reported to R. G. Dun
& Co., during three weeks of June, against 815
in the same period of 1917. Moreover, the
statement for May, the latest month for
which complete statistics are available, discloses fewer insolvencies (880) than in any
month since September, 1911, and the smallest
number for May in fully a decade. While the
May liabilities, $13,134,672, are 11.6 per cent
above those of last year, they are the lightest
for the period, with this exception, back to

610

FEDERAL RESERVE BULLETIN.

1910, and the indebtedness is less than in
May, 1917, in 7 of the 12 Federal Reserve districts. Thus, reductions from last year appear
in the fourth, fifth, sixth, eighth, ninth, tenth,
and eleventh districts, although the decreases
are not sufficient to offset the increases in the
remaining 5 districts. Numerically, improvement is shown in every district, as compared
with last year, and in several instances the
changes are striking.
Failures during May.
Number

Liabilities.

Districts.
1918
First
Second.
Third
Fourth
Fifth
Sixth
Seventh
Eighth
Ninth..
Tenth
Eleventh
Twelfth

120
164
45
74
39
4©
141 \
34 i
22
41
31
129
8S0

1917

1918

1917

53
51
5«
161

$2,380,400
4,250,139
1,121,474
879,332
20(5,811
209,110
2,106,672
177,340
125,400
184,428
262,671
1,230,895

SI, 556,618
2,760,807
578,653
1,018,049
915,789
1,438,019
1,250,190
278,59S
237,761
293.037
5031691
910,673

1 296

13,134,672

11,771,891

is?,
?,37
59
98
7fi
115
167

JULY 1,1918.

code words. I t should show in numerals,
properly punctuated, the exact amounts in
dollars and cents credited to each of the other
11 Federal Reserve Banks at the close of business on the respective day, and give the same
figures as will be shown in the daily statement
on Form No. 34 against new liability item
"Gold settlement fund—Suspense account"
(replacing item "Due to other Federal Reserve
Banks77).
A sample of the form of telegram, with introductory test word and closing code word denoting date of credits, would read as follows:
Cede
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Code.

10,125, 671.29
5,285, 024.74
388,411.12
812,050.50
78,056.49
47,411.99
1, 304,856.50
708, 980.25
98,412.16
504,411.88
49, 560.48
1, 048, 495.18
SMITH, Casiiier.

Plan for Daily Clearings Through the Gold SettleOn the morning following the Board, having
ment Fund.
received 12 telegrams, will charge each sendThe following plan of daily clearings through ing bank in the gold settlement fund with the
the gold settlement fund has been adopted by aggregate of its telegram, distributing the
the Federal Reserve Board, and the Federal individual credits as therein advised.
The Board will then credit each of the 12
Reserve Banks have been directed to make it
Federal Reserve Banks in the gold settlement
effective on and after July 1, 1918.
At the close of business each night each fund with the aggregate of credits telegraphed
Federal Reserve Bank will wire to the Federal by the other Federal Reserve Banks and send
Reserve Board the aggregate amounts credited appropriate telegraphic advice to each of the
banks credited.
that day to each other Federal Reserve Bank.
In these telegrams the Board will continue
This would amplify the present Wednesday to show net gain or loss in the fund, which
telegram, in so far as actual dollars and cents would confirm to the Federal Reserve Banks
would be wired instead of even thousands. that their respective telegrams of the previous
Credits now entered by each Federal Reserve day had been correctly received.
Bank to the account of each of the other
Upon receipt of the Board's telegram, each
11 banks, which are grouped at present Federal Reserve Bank will make the following
on Form No. 34 in "Due to other Federal entries:
Reserve Banks/ ; would be credited to "Gold
Debit.—"Gold settlement fund, suspense.77
settlement fund, suspense" instead.
Credit.—"Gold settlement fund77 (with agThis telegram should be sent as an "open" gregate of telegram to the Board on the day
message except for the introductory and final previous).




JULY 1,1918.

FEDERAL RESERVE BULLETIN.

Debit.—"Gold settlement fund."
Credit.—"Collectionitems'7 (deferred debits)
(with aggregate of the telegram received that
day from the Board).
The necessity for "Gold settlement fund,
suspense " account arises from the fact that the
Federal Reserve Board's published statement
must reflect the figures shown on the books of
and reported to it by the 12 Federal Reserve
Banks.
This new account will eliminate telegraphic
" float" and thus avoid a situation encountered
several times on Friday nights, under which
asset item "Gold settlement fund" had been
credited by one Federal Reserve Bank without
corresponding debit by another Federal Reserve Bank.
The above covers the modus operandi of the
suggested plan, in so far as the gold settlement
fund accounts of the Federal Reserve Board
and the 12 banks are concerned. The interior
arrangements at the individual Federal Reserve
Banks may be made as follows:
Everything dispatched from one Federal
Reserve Bank to another should be deferred,
and charged to "Collection items, debit."
This covers not only cash letters, whether city
or country items, but payments on telegraphic
transfers ordered by other Federal Reserve
Banks, Federal Reserve notes or currency
shipped to other Federal Reserve Banks, miscellaneous charges, expense, service charges,
interest, telegrams, etc., in fact, every item
heretofore charged to "Due from Federal Reserve Banks" should, under the proposed plan,
be charged to "Collection items, debits."
Some banks might prefer to enter these "Collection items, debits" by detail in books; while
others would prefer to file the carbons of their
letters or other dispatches, etc., under the
names of the Federal Reserve Banks affected.
Some banks prefer the latter plan for the reason
that, by intelligent filing, an automatic tickler
of unaccounted for items is thereby supplied
for convenient tracing.
Each Federal Reserve Bank, in addition to
the daily telegram to the Board, as outlined




611

above, will prepare, as it now does, statement
of the details with proper description, for the
use of each other Federal Reserve Bank whose
account in the gold settlement fund has received credit.
The aggregate of each statement would, of
course, agree exactly with the aggregate
amount of credits wired to the Federal Reserve
Board. This statement should be forwarded
by first mail, carbon to be retained for the files.
Upon receipt of the Federal Reserve Board's
daily wire, it will be impossible to do other than
credit "Collection items" (deferred debits)
with the total, one ticket for each. Federal
Reserve Bank.
Upon receipt, however, of the mail advices
from other Federal Reserve Banks the carbon
copies, or tickets representing previous debits
to "Collection items—deferred debits," covered in the mail advices received would be
transferred from the "Collection items—Deferred debits" files, as well as the credit ticket
representing the entry made on receipt of the
Board's wire.
It would be necessary, of course, to see that
the mail advice footed to the total of the wire,
and that the items covered in the mail advice,
corresponded to the carbons transferred from
the "Collection debit'7 file.
Without a full understanding of the plan,
telegraphic transfers might at first seem to
temporarily prejudice the reserve of the
Federal Reserve Bank which credits its members and charges "Collection items, debits."
As a matter of fact, however, the effect is
exactly as at present, where "Due from other
Federal Reserve Banks" is charged. Both
accounts are deductions from gross deposits.
The effect of this plan would be to eliminate
a great deal of work at the Federal Reserve
Banks, and to provide daily, instead of weekly,
the proper participations in the gold settlement
fund in as nearly an automatic wa;/ as possible.
At the present time, the Federal Reserve
Banks, in addition to the weekly settlement,
have the privilege of demanding transfers at
any time when a net debit balance is shown in

612

FEDERAL RESERVE BULLETIN.

account with other Federal Reserve Banks.
It is to be expected that under the present plan
of weekly settlements such transfers will become more numerous in the future, as the calls
upon the Federal Reserve Banks for financial
assistance of their members become heavier.
The proposed plan will do away with the greater
part of such transfers, also with the necessity
of rediscounts between Federal Reserve Banks
when due primarily to the unavailability of
"Amounts due from other Federal Reserve
Banks/ 7 The rediscounting operation, as at
present conducted, involves a great deal of
work, which, by some means or other, should be
curtailed.
At the present time practically all the Federal
Reserve Banks are advising each other by wire
their daily credits of immediately .available
city items. While good, to a limited extent,
the plan covers but a small proportion of the
credits. The new plan will reduce the number
of telegrams very considerably, and will cover
every credit.
New Treasury Financing,
The following is a copy of a letter sent by
Secretary McAdoo to the president of each
bank and trust company in the United States
on June 12, 1918:
THE SECRETARY OE THE TREASURY,

Washington, June 12, 1918.
DEAR SIR: Following the same plan as that announced
in my telegram of February 6, 1918, I am writing to inform you of the program for the ensuing four months, so
far as one can be made at this time, in order that every
bank and trust company in the United States may have
adequate notice and be able to prepare itself to meet
patriotically the requirements of the Government. I am
sending a similar letter to every bank and trust company
in the United States.
This policy, adopted in February last, was successful,
and, having fulfilled expectations in the sale of certificates of indebtedness prior to the third liberty loan,
demonstrated that the Government could rely upon the
hearty support and cooperation of the banks when given
opportunity in advance to make necessary preparations.
The expenditures of the Government, as nearly as can
be estimated, will require the sale of certificates of in-




JULY 1,1918.

debtedness up to the 1st of November, 1918, aggregating
approximately $6,000,000,000. This would involve the
issue every two weeks of about $750,000,000 of certificates
substantially similar in character to those issued prior to
the third Liberty loan, except that they will have various
maturities not exceeding four months. For the months
of July and August that program will be followed as
nearly as possible.
The first issue of the certificates will be dated June 25,
will mature October 25, with interest at 4£ per cent, and
similar issues, it is expected, will be made on Tuesday of
every other week following June 25. It is, however, contemplated that at a convenient and favorable period
during the summer an offering will be made to the general
public directly, and through the banks, of an amount yet
to be determined, perhaps $2,000,000,000 of certificates
of suitable maturities for use by taxpayers in paying next
year's taxes, viz, taxes payable June, 1919, levied under
existing and pending legislation. To the extent that
certificates of that character are sold, substantially an
equivalent reduction in the amount of the regular iortnightly sale of certificates issued in anticipation of the
next Liberty loan will be effected.
In giving this timely advice of the estimated requirements of the Treasury to all the banks of the country, and,
through them, to those who expect to make payment of
taxes in 1919, it is hoped that they will make arrangements
promptly of such a character that no delay will be experienced in the sale and distribution of Treasury certificates
of both issues.
The Federal Reserve Banks will advise all national and
State banks in their respective districts of the amount of
certificates which they are expected to take from time to
time in pursuance of this program, which amount can be
figured roughly to equal 2J per cent of the gross resources
of each bank and trust company for every period of two
weeks, or a total of 5 per cent monthly. It will be remembered that in the February program the amount which
the banks were asked to take was substantially equal to 2
per cent of their gross resources for each period of two
weeks, or a total of 4 per cent monthly. The total number
of biweekly offerings of certificates to be made to the
banks will somewhat depend upon the amount to be raised
from the public through the sale of tax certificates as above
described.
Already more than 700,000 of our splendid American
boys are on the soil of France and many of them are
actually fighting among the heroic defenders of the western
front. Fresh contingents of American troops are constantly going forward to France, and this stream will not
stop until there is enough of American manhood and valor
on the battle line to defeat the Kaiser and his rninions,
and enforce peace upon the righteous basis which will
make secure the liberties of mankind. America's sons
are dying daily in those battles of fire and poison gases
that are now raging in France. The heart of every Amer-

JULY 1,1918.

ican must thrill with pride and emotion as he thinks of the
sacrifices our sons are making for our safety and our liberty.
Tha bankers of the United States can render a peculiarly
helpful service to our gallant sons by "keeping the Treasury
of the United States supplied with the money required by
the Government to furnish every American hero with the
things he must have to fight victoriously or to die gloriously. I am sure that no patriotic banker in the United
States will fail to do his full meed of essential service to his
country and to her noble defenders.
Cordially yours,
W. G. MCADOO.
To The PRESIDENT OF THE BANK OR
TRUST COMPANY ADDRESSED.

The following bill (H. R. 12580) has been
passed by the House of Eepresentatives and
Senate:
A BILL To authorize an additional issue of bonds to meet expenditures for the national security and defense, and, for the purpose of
assisting in the prosecution of the war, to extend additional credit
to foreign Governments, and for other purposes.

may prescribe, act as a fiscal agent of the United States in
connection with the operations of selling and delivering
any bonds, certificates of indebtedness, or war-savings
certificates of the United States.
SEC. 5. That the short title of this act shall be "Fourth
Liberty Bond Act."

Lost Liberty Bonds.
In the following list will be found the numbers of United States Liberty bonds that have
been lost or stolen; also a list of the bonds that
have been recovered and returned to the proper
owners.
FIRST 3i P E R CENT BONDS, DUE 1947.
Number.

section one of the Second Liberty Bond Act, as amended
by the Third Liberty Bond Act. is hereby further amended
by striking out the figures "S 12,000,000,000" and inserting
in lieu thereof the figures "820,000,000,000."
SEC. 2. That section two of the Second Liberty Bond
Act, as amended by the Third Liberty Bond Act, is
hereby further amended by striking out the figures
"$5,500,000,000" and inserting in lieu thereof the figures
"87,000,000,000."
SEC. 3. That, notwithstanding the provisions of the
Second Liberty Bond Act, as amended by the Third Liberty Bond Act, or of the War Finance Corporation Act,
bonds and certificates "of indebtedness of the United States
payable in anyioreign money or foreign moneys, and bonTfs
of the War Finance Corporation payable in any foreign
money or foreign moneys exclusively or in the alternative^
shall, if and to the extent expressed in such bonds at the
time of their issue, with the approval of the Secretary of
the Treasury, while beneficially owned by a nonresident
alien individual, or by a foreign corporation, partnership,
or association, not engaged in business in the United
States, be exempt both as to principal and interest from
any and all taxation now or hereafter imposed by the
United States, any State, or any of the possessions of the
United States, or by any local taxing authority.
SEC. 4. That any incorporated bank or trust company
designated as a depositary by the Secretary of the Treasury under the authority conferred by section 8 of the
Second Liberty Bond Act, as amended by the Third Liberty
Bond Act, which gives security for such deposits as, and to
amounts, by him prescribed, may, upon and subject to
such terms and conditions as the Secretary of the Treasury

Number.

Amount.

78749
892879
380057

$500
50
100

Be it enacted by the Senate and Rouse of Representatives of
the United States of America in Congress assembled, That




613

FEDERAL RESERVE BULLETIN.

Amount.

961108
380058

S50
100

!

SECOND 4 P E R CENT BONDS, DUE 1942.
92212
893011
3262431
3262435
3262437

$50
50
100
100
100

326'2438
5446722.
5446793
5446721
5146725

$100
100
100
100
100

T H I R D 4-i P E R CENT BONDS, DUE 192S.
Number.

Amount.

i
1

Amount.

Number.

!
705913
705914 .
705915
385332
385333
385358
385369
385373
924086
924087 . . .
924088 .
924089
924090
924091 . .
924092
924093
924094 .
924095
924096
924097
924098 . .
924099
924100
943953 . .
943954
943955
943956
943957 .
943958
943959.
943960
943961
943962
943963
943964..
943965
943966 .
943967

!

S50 i| 943968
50 0439B9
50 943970
100 ! 943971
100
943972... .
100 943973
100 | 943974...
100 j 943975
943376... .
1,000
943977
1.000
1,000 ! 943978
1,000" 943979
1,000 • 943980
94398]
1,000
1,000 ! 913982
1.000
943983
I'OOO 94398-1
1.000
943 985
1,000 I 943986
1.000 ; 943987... .
1,000 1 943988 .
943989
1,000
1,000
943930
1,000
943991 .
1,000 : 943992
1,000 . 943993
1,000
943994
1.000
943995 .
LOO0 943996
L.000 943997 . .
L,000 943998
L,000 943999 .
1,000
944000
1,000 944001
L000 944002
1,000 944003
1,000 944004
I 000 944005

. .
. . .

$1,000
1 000
1.000
I'OOO
1,000
1 000
1,000
1,000
1,000
] 000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000

614

FEDERAL BESEBVE BULLETIN.

In the following list appear the numbers of
United States Liberty bonds that have been
recovered and restored to the interested bank.
These numbers appeared in the Federal Reserve
Bulletin, June, 1918.
FIRST 4 PER CENT CONVERTED,
!

Amount. 1

No.

D U E 1947.

No.

Amount.
$50
50
50
50
50

$50 j 540345
50 i 540346
50 : 540347
50 ! 540348
50 ! 540349

540340.
540341
540342
540343
540344

j

SECOND 4 P E R C E N T B O N D S , D U E 1942.
£50 ! 5446714
50
5446715
50 5446716
50 5446717
50 ! 5146718
50 5446719
5446720
50
50 5446721.
50

5446705
5446706.
5446707
5446708
5446709
5446710
5446711..
5446712
5446713,

$50
50
50
50
50
50
50
50

T H I R D 4} P E R C E N T B O N D S , D U E 1928.

4620
"385330

i

SoOO :I 385331.
100 i-I 385353.

S100
100

If any of these bonds or coupons are presented, kindly write, telephone, or telegraph,
collect, to L. W. Gammon, manager protective
department, American Bankers7 Association,
5 Nassau Street, New York City.
Rulings by the Commissioner of Internal
Revenue.
TAX ON STOCK DIVIDENDS.

Following is a letter written by the Commissioner of Internal Revenue to a Texas firm:

JULY 1,1918.

Under the income-tax act now in force (act
Sept. 8, 1916, as amended by the act of Oct.
3, 1917) stock dividends are expressly taxed,
as they were not under the act of October 3,
1913, the statute under which it was decided in
the case of Towne v. Eisner, to which you refer.
On this point, see section 31 (a) of the act
added by section 1211 of the act of October 3,
1917, which provides in 7part as follows:
"The term 'dividends as used in this title
shall be held to mean any distribution made or
ordered to be made by a corporation, jointstock company, association, or insurance' company, out of its earnings or profits accrued
since March first, nineteen hundred and thirteen, and payable to its shareholders, whether
in cash or in stock of the corporation, jointstock company, association, or insurance company, which stock dividend shall be considered
income, to the amount of the earnings or profits
so distributed."
It has been the ruling of this department, in
accordance with an opinion of the Attorney
General, that under this language the tax upon
stock dividends is to be collected, notwithstanding the decision to which you refer relating to
the earlier act.
You are therefore advised that in so far as
the stock divident is issued against earnings or
profits accrued since March 1, 1913, it will be
subject to additional or supertax in the hands
of the individual stockholders. As to the allocation of earnings distributed by means of such
dividends as between different years in which
the earnings were received, see section 31 (b)
of the act, and Treasury Decisions Nos. 2659
and 2678, copies of which are inclosed. Dividends are not, however, subject to the excessprofits tax against the individual stockholders.
Respectfully,
(Signed)
DANIEL C. ROPER,
Commissioner.

JUNE 18, 1918.

Your letter of June 8, addressed to Hon. W. F. Ramsey, asking certain
questions relative to the application of the internal-revenue laws to certain proposed stock
dividends, has to-day been referred to me for
reply by Hon. M. C. Elliott, counsel for the
Federal Reserve Board.
Income upon which the bank in question has
paid income and excess-profits taxes does not
become subject to any additional taxes by reason of its use in payment for stock issued as a
stock dividend. Your conclusion as to the
first point dealt with in your letter appears to
be correct.
GENTLEMEN:




STAMP TAX ON DRAFTS IN CONNECTION WITH
SHIPMENTS OF GOODS TO SEABOARD.

Following is a letter written by the Commissioner of Internal Revenue to M. C. Elliott,
counsel for the Federal Reserve Board:
JUNE 21, 1918.

Referring to your
letter of June 5 and my acknowledgment of
June 10, it seems from Mr. Curtis's letter that
under credit agreements conforming with the
regulations of the Federal Reserve Board
packers may draw bills of exchange on domesMY DEAR MR. ELLIOTT:

JULY 1,1918.

tic banks against sales of goods to the Allied
Purchasing t^omtnission, such bills running for
a period of time covering approximately the
transit of the shipment from the interior point
to the seaboard, where the goods are taken on
board ship for the ocean voyage at the convenience of the Allied Purchasing Commission.
In Wm. E. Pock & Co. (Inc.) v. Lowe,
decided in the United States Supreme Court
May 20, 1918, which held that the income tax
of 1913 was valid as applied to net income
derived from sales in foreign commerce, the
court had occasion to discuss the effect of the
constitutional prohibition against taxing articles
exported, and it referred to and distinguished
certain of its former decisions on the subject.
It concluded that when the tax is not laid on
the articles themselves while in course of
exportation, the true test of its validity is
whether it so directly and closely bears on the
process of exporting as to be in substance a
tax on the exportation. In the present circumstances it can probably fairly be said that
the tax on the drafts, although they are to be
paid before the actual ocean voyage begins, bears
so directly and closely on the process of exporting as to be in substance a tax on it. The goods
are doubtless ''in course of exportation" from
the time the first carrier receives them.
The same principle would seem to apply as
in the case of the transportation tax. In
Article 31 of Regulations No. 42 rules for
determining when property may be deemed
to be in the course of exportation are laid
down, and apparently the present situation is
within their scope.
It is accordingly held that the stamp tax
imposed by subdivision 6 of Schedule A of
Title VIII of the act of October 3, 1917, does
not attach to drafts on domestic banks in
connection with the shipment of articles from
the interior to the seaboard, where such
articles have been sold to the United States
agent of a foreign purchaser for export under
circumstances entitling the transportation within the United States to exemption from the
transportation tax.
Yours, sincerely,
(Signed)
DANIEL C. ROPER,
Commissioner.
Questions and Answers Relating to Membership
of State Institutions.

The following discussion of membership in
the Federal Reserve system and of conditions




67747—18

615

FEDERAL RESERVE BULLETIN.

5

under which the functions of Federal Reserve
Banks are exercised has been issued by the
Federal Reserve Bank of New York. It is reprinted here in order to render it available to
all member banks. Certain portions of the
document as issued by the Federal Reserve
Bank of New York have been omitted, either
because they are of only local application or
because they have been thoroughly covered in
the Federal Reserve BULLETIN of the past
issues.
Sediscoimting.
SAFETY FOR DEPOSITORS, STOCKHOLDERS, AND BORROWERS.

Q. 1. In what way is membership of advantage to a
State bank or trust company?
A. Through membership in the Federal Reserve system a State bank or trust company is assured of greater
safety for its depositors and stockholders than when operating as a nonmember bank not only as to the repayment
of deposits, but also as to its ability to continue to grant
accommodation at all times, and especially in the midst
of war-time conditions.
Q. 2. In what way does membership insure greater
safety to the institution, its depositors, and stockholders?
A. Nearly every bank or trust company has among its
assets a considerable amount of commercial paper. If it
is a member of the Federal Reserve system, this commercial paper is practically as available as though it were
actual cash, for the member bank can at any time take it
to the Federal Reserve Bank and rediscount or borrow
upon it and is thus in position to meet whatever demands
for cash it may have. Government securities and notes
secured by Government securities or given for the purpose
of purchasing or carrying Government securities may be
used in the same way. The ability of the well-managed
institution to meet its obligations is thus assured.
CERTAINTY OF ACCOMMODATION.

Q. 3. How does this affect the ability of a bank to grant
accommodation to its customers?
A. The ability of a bank to grant accommodation to its
customers under our system of banking is dependent upon
its ability to maintain a fixed ratio of reserves to its deposit
liability. As additional accommodation is extended, deposits increase and a larger reserve becomes necessary. If
the bank can not obtain this additional reserve, it must
cease extending accommodation. By borrowing from the
Federal Reserve Bank and taking credit upon the books
of that institution the member's reserve is increased and
its power to extend accommodation is thereby correspondingly extended to a maximum amount equal, in
the case of a country bank, to about 14 times the amount
it borrows from the Federal Reserve Bank, and in the case

616

FEDERAL EESERVE BULLETIN.

of a reserve city bank or a central reserve city bank to
about 10 times and 8 times, respectively.
Q. 4. How much can a member bank borrow from the
Federal Reserve Bank?
A. The law places no limitation upon the amount which
a particular member bank may borrow from its Federal
Reserve Bank, and the only practical limit is that which
would be dictated by the banking judgment of the management of the Federal Reserve Bank, having in mind its
own position, and the needs of all the other member banks.
Q. 5. Can a member bank borrow on anything besides
commercial paper?
A. Yes. Obligations of the United States Government
are available as collateral for loans made by the Federal
Reserve Bank to its members, and notes of customers,
secured by United States Government obligations, or
given for the purpose of purchasing or carrying Government securities, are eligible for rediscount.
RATES OF DISCOUNT MODERATE AND STABLE.

Q. 6. For what length of time and at what rates will the
Federal Reserve Bank rediscount for or loan to a member
bank?
A. The following is quoted from the latest circular of
the Federal Reserve Bank of New York announcing rates
of discount effective April 6, 1918, and gives full information concerning time and rates for various classes of borrowing at the Federal Reserve Bank:
ADVANCES.

Per cent.

For advances not exceeding 15 days to member banks
on their promissory notes secured by eligible paper
or bonds, notes, or certificates of indebtedness of the
United States
The Federal Reserve Act permits direct advances
by Federal Reserve Banks to member banks on
their own collateral notes only for periods not exceeding 15 days. The Federal Reserve Bank has
pursued a reasonably liberal policy as to renewals
of 15-day notes.

4

REDISCOUNT.

For notes, drafts, and bills of exchange having a maturity at time of rediscount of not more than 15
days
4
For notes, drafts and bills of exchange having a maturity at time of rediscount of more than 15 days
and not more than 90 days
4f
For agricultural paper having a maturity at time of
rediscount of more than 90 days and not more than
six months
5
SPECIAL RATES.

For notes, drafts, and bills of exchange issued or drawn
for the purpose of buying or carrying bonds, notes,
or certificates of indebtedness of the United States
and secured thereby, having a maturity at time of
rediscount of more than 15 days but not more than
90 days
4£




JULY 1,

1918.

Per cent.

For trade acceptances having a maturity at time of
rediscount of more than 15 days but not more than
90 days
4$
For rediscounting for member banks, for periods not
exceeding 15 days, eligible paper having a maturity
at time of rediscount of more than 15 days
4
PRACTICALLY ALL BANKS HAVE PAPER ELIGIBLE FOR
REDISCOUNT.

Q. 7. State banks and trust companies frequently state
that they do not hold paper of a kind eligible for rediscount
at the Federal Reserve Bank. Is this true?
A. The experience of State banks and trust companies
ranging from very small banks in the smallest communities up to the largest institutions of this kind in the country
which have become members of the system, shows conclusively that practically all such institutions have substantial amounts of paper which is eligible for rediscount
at the Federal Reserve Bank, and the institutions which
have thus far joined have experienced no difficulty in
obtaining from the Federal Reserve Bank all needed
accommodation.
Q. 8. Is not the paper held by the smaller banks and
trust companies, and especially those in small towns, too
small to be used for rediscounting?
A. No. It is probable that the small institutions have
an even larger proportion of eligible paper than the larger
ones, and no item is too small in size to be used for this
purpose. Notes for amounts as small as §18 have been rediscounted, and items of $100, $500, and §1,000 and similar amounts constitute the bulk, in number, of Federal
Reserve Bank discounts.
Q. 9. What paper is eligible for rediscount?
A. Generally speaking, the ordinary notes, single or
double name which a bank receives from its business and
agricultural borrowers. More specifically, eligible commercial paper includes notes, drafts, or bills of exchange
having a maturity of not more than 90 days, exclusive of
days *of grace (or agricultural paper having maturity of not
more than 6 months) the proceeds of which have been used
or are to be used in actual commercial transactions, i. e.,
in purchasing, carrying, or marketing goods, or in one or
more of the steps of the process of production, manufacture,
or distribution.
Q. 10. What paper is not eligible?
A. Notes, drafts, or bills 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, or similar instruments issued or drawn for the
purpose of carrying or trading in stocks, bonds, or other
investment securities, except bonds and notes of the
United States, are not eligible for rediscount.
Q. 11. If a note has been made fora commercial purpose,
does the fact that it is secured by pledge of collateral security make it ineligible?
A. No; provided it is otherwise eligible.

JULY 1, 1018.

FEDERAL RESERVE BULLETIN.

EEDISCOUNTING A SIMPLE OPERATION.

Q. 12. Is not rediscounting very complicated?
A. No. Items intended for rediscount are listed on an
application blank and forwarded to the Federal Reserve
Bank, which gives credit on the day of receipt, and notifies
the applying bank by telegram of the amount placed to its
credit.
Q. 13. What information is a bank required to furnish
concerning paper offered for rediscount?
A. In applying for rediscount the member bank lists the
names of makers and indorsers, amounts, maturities, etc.,
and certifies that to the best of its knowledge and belief
the paper has been used for a commercial or agricultural
purpose.
Q. .14. How is the member bank to assure itself that the
paper has been issued for such a purpose?
A. The knowledge of the officers will usually enable
them to make the certificate, but if they are in doubt and
the member bank has a financial statement of the borrower
or an indorscr engaged in business or agriculture, which
shows a reasonable excess of quick assets over current liabilities, the statement may be taken as evidence that the
paper has been issued for a commercial or agricultural
purpose.
Q. 15. Must financial statements of borrowers be furnished when applying for rediscounts?
A. The regulation of the Federal Reserve Board requires that whenever a member bank has rediscounted or
offers for rediscount at the Federal Reserve Bank obligations of one name to the extent of So,000 or more (or in
the case of banks having a capital of less than 850,000, a
sum equal to 10 per cent of the paid in capital of the
bank), it shall have in its own files a statement in respect
to one of the names on the paper. The purpose of this requirement is to stimulate member banks to build up their
credit files and to make it possible for them to get statements from borrowers who have heretofore been unwilling
to give- statements. No statements are required to be
submitted to the Federal Reserve Bank with the application for rediscount, but the member bank indicates on its
application all names in respect to which it has statements on iile, and the Federal Reserve Bank, if it desires
copies of any of these statements, will later ask for them.
The Federal Reserve Board makes no requirements whatever regarding statements from the smaller borrowers.
Collections, Transfers, and Currency Shipments.
ECONOMICAL CHECK COLLECTION.

Q. 16. What service does the Federal Reserve Bank
render in connection with the collection of checks and
drafts?
A. The Federal Reserve Bank collects at par for member
banks checks on 17,500 banks in all parts of the United
States, including ail national banks and a considerably
larger number of State institutions, as shown in a par list
furnished to all member banks.




617

Q. 17. Is there any charge for these services?
A. Until June 15, 1918, there will be a service charge of
1 cent per item, regardless of the size or place of payment.
After that date this charge will be suspended and checks
collected without any cost to the member bank.
Q. 18. When is credit given for checks collected in this
way?
A. For checks on banks in the Borough of Manhattan,
received before 9 o'clock a. m., immediate credit is given.
Checks on Boston, Philadelphia, Richmond, Norfolk, and
Baltimore, are available one day after receipt. For other
checks in this and nearby districts, credit is given two days
after receipt and checks on more distant points are credited
four and eight days, respectively, after receipt.
Q. 19. How should checks be sent to the Federal
Reserve Bank for collection?
A. In the same manner as remitted to other correspondents, except that they should be classified according to
time of availability, i. e., one-day items listed together
and totaled, two-day items, likewise, etc.
Q. 20. Can checks be sent direct to other districts or
must they all be sent through the Federal Reserve Bank
of New York?
A. Arrangements for direct sending may be made, in
which case the checks are sent to the Federal Reserve
Bank of the receiving district, as, for instance, banks in
Buffalo having checks on banks of the Chicago district,
can send these items direct to the Federal Reserve Bank
of Chicago and receive credit with the Federal Reserve
Bank of New York at the time the checks are due to be
paid, this being accomplished by the Buffalo bank's
sending a duplicate remittance slip to the Federal Reserve Bank of New York at the time of mailing the original remittance and items to the Federal Reserve Bank of
Chicago. The moment the checks are collected in Chicago
the funds automatically become reserve to the member
bank in New York.
Q. 21. How are items on member banks in this Federal
Reserve district handled?
A. Items drawn on a member bank are mailed to it, with
remittance blank, and settlement made in either of two
ways, viz:
(1) The member bank's account is charged two days after
remittance has been forwarded, giving time for the items
to reach the member bank and the member bank to forward exchange to cover, or
(2) The member bank, upon receipt of the items, forwards in payment draft on the Federal Reserve Bank or
other funds available on the day of receipt, thus keeping
the transactions separate from reserve account.
Q. 22. Suppose the member bank has not sufficient available exchange with which to make the remittance?
A. If the member bank has not sufficient exchange to
meet the checks drawn upon it, forwarded to it through
the Federal Reserve Bank, it may ship currency or specie
from its own vaults at the expense of the Federal Reserve
Bank.

618

FEDEEAL RESERVE BULLETIN.

Q. 23. What are the advantages of collecting checks and
drafts through the Federal Reserve Bank?
A. (1) Greater economy in collecting these items and
avoidance of the necessity of maintaining balances with
correspondents in various cities in order to obtain check
collection facilities.
(2) The most direct routing of items possible, with corresponding reduction in the length of time items are outstanding, which results in the elimination of float and
enables member banks and their customers to learn at
the earliest possible moment whether items have been paid
or dishonored, and to have the funds represented earn
interest more quickly.
Q. 24. You state that checks can be collected on 17,500
banks; will it not prove a disadvantage to member banks
in this district that there are a number of banks on which
checks can not be collected through the Federal Reserve
Bank?
A. While there is a considerable number of banks upon
which checks can not be collected, they are almost altogether the very small banks, upon which relatively few
checks are drawn. It is probable that at least 95 per cent
of the checks which a member bank would have, would be
upon banks included in the Federal Reserve Bank's
par list. This is particularly true in connection with
checks received by member banks in this district, as
checks can be collected at par on all banks in New England,
in the Second Federal Reserve District, and on a very
large proportion of banks in other neighboring districts.
Moreover, banks which are collecting through the Federal
Reserve Bank find that the items not so collectible are so
few in number that the cost of collecting them is very small.
Q. 25. Would we be able to carry smaller and fewer balances with correspondents for collection purposes?
A. Undoubtedly. This has been the general experience
of our member banks.
Q. 26. How large a volume of items does the Federal
Reserve Bank handle in this manner?
A. The average number of items handled by the Federal
Reserve Bank of New York has been as follows:
Daily.

1915 (last 7 months)
1916
1917
1918 (first 4 months)
1918 (April)

7,259
23,132
53,368
73, 461
82,984

COLLECTION OF NOTES AND BILLS OF EXCHANGE.

Q. 27. Does the Federal Reserve Bank collect notes and
bills of exchange other than checks and bank drafts?
A. Yes. Drafts, notes, coupons, acceptances, etc., are
collected without charge other than any exchange charge
which may be made by the collecting bank. For items returning unpaid, an additional charge of 15 cents is made,
the purpose of this charge being to prevent the clogging of
our facilities with dunning drafts. No charge is made for
•collecting coupons other than expenses of registration and




JULY 1,1918.

insurance or express, plus any charge made by the collecting bank.
MONEY TRANSFERRED WITHOUT CHARGE.

Q. 28. What advantages does the Federal Reserve Bank
offer in the matter of transfer of funds?
A. The Federal Reserve Bank makes telegraphic transfers of funds to any part of the United States for its members absolutely without charge. For example, upon
request from a member bank in Utica the Federal Reserve
Bank of New York would wire the Federal Reserve Bank
of Dallas to pay or credit to any of its members a specified
sum, no charge being made for this service.
A member bank may also make its special drafts on the
Federal Reserve Bank available for immediate credit at
any other Federal Reserve Bank by advising the Federal
Reserve Bank when such drafts are drawn. Its account is
thereupon charged with the amount of the draft and the
Federal Reserve Bank at which the draft is made payable
is advised by telegraph where the amount is in excess of
1250. The member bank is thus placed in position to
obtain without cost and furnish to its customers exchange on any of the twelve Federal reserve cities at any
time or season. These facilities are made possible by the
gold settlement fund which the 12 Federal Reserve Banks
maintain at Washington and through which they settle
their obligations to each other by transfers on the books
of the fund instead of actual shipments of currency or
coin. The gold held in this fund amounted on May 17,
1918, to $418,000,000.
CURRENCY.

Q. 29. What must a member bank do to obtain Federal
Reserve notes from the Federal Reserve Bank?
A. Federal Reserve notes in denominations of $5, $10,
$20, $50, and $100 are shipped to member banks on request,
by registered mail, insured, and the member bank's
account charged with the face amount plus cost of shipment, as follows:
stry. Insurance.

Total
cost.

0.10

§0.30

SI. 84

.10
.10
.10
.10

.60

1.20
3.00
6.00

2.14
2.74
4.54
7.54

Shipments of gold, gold certificates, silver certificates,
and legal-tender notes may be made to the Federal Reserve Bank of New York either by express or registered
mail for credit of the member bank's account or for exchange for Federal Reserve notes. We pay transportation
charges on gold, gold certificates, and silver certificates,
whether fit or unfit for circulation, and also furnish, free of
expense, Federal Reserve notes in exchange.
Q. 30. In what amounts are Federal Reserve notes
available?

JULY 1,1918.

619

FEDEEAL RESERVE BULLETIN.

A. The Federal Reserve Bank is not limited as to the
amount of notes which it may issue, except by the provision that a 40 per cent gold reserve must be maintained
against Federal Reserve notes in actual circulation.
The Federal Reserve Bank of New York now has in
actual circulation approximately $500,000,000 of Federal
Reserve notes. It maintains, ready for issuance, an additional supply of substantially the same amount, which
assures member banks of an ample currency supply at all
times.
Reserve Requirements and Reserve Balances.
RESERVE TO BE CARRIED BY MEMBERS.

Q. 31. What is the amount of the reserve which a mem.
her bank must maintain with the Federal Reserve Bank?
A. (a) If not in a reserve or central reserve city, 7 per
cent of demand deposits and 3 per cent of time deposits;
(b) if in a reserve city, 10 per cent of demand deposits and
3 per cent of time deposits; (c) if in a central reserve city,
13 per cent of denand deposits and 3 per cent of time
deposits.
Q. 32. How are these reserves computed?
A. Formula for the computation of reserves is attached
hereto.
Q. 33. What amount of reserve is a member bank required to maintain in its vault?
A. The Federal Reserve Act requires no stipulated
vault reserve, leaving to the discretion of each institution
the a mount ox cash on hand or till money to be maintained
RELATION TO STATE LAWS PRESCRIBING RESERVES.

Q. 34. How are the reserve requirements prescribed by
State laws affected by the admission of a State bank or
trust company to the Federal Reserve System?
A. In New Jersey a member bank becomes subject to
the reserve requirements of the Federal Reserve Act instead of those of the New Jersey statutes. In New York
a State bank or trust company continues to be subject to
the requirements of the State law concerning reserve,
but is permitted to count as ''cash on hand" any part
of its balance with the Federal Reserve Bank. In Connecticut the statute permits one-half the reserve required
by State law to be carried in the Federal Reserve Bank.

without cost. In short, it may be treated practically the
same as an account carried with any other correspondent.
The Federal Reserve Bank figures the reserve a member
bank is required to keep with it by taking the average
balances maintained during the month; so that an excess
balance during one part of the month willoffset a deficiency
in another part.
OTHER SERVICES.

Q. 36. Will the Federal Reserve Bank check commercial paper for its member banks?
A. The Federal Reserve Bank will give to its members
the benefit of such information as it has available or can
obtain and properly divulge concerning commercial paper
but does not consider it advisable to express an opinion
as to the standing of any particular name.
Q. 37. Will the Federal Reserve Bank hold securities in
custody for its members?
A. Yes. The Federal Reserve Bank is prepared to hold
Government obligations or other securities in custody for
member banks without charge.
Q. 38. What is the effect of membership in the Federal
Reserve system upon a bank's right to obtain postal
savings deposits?
A. The law now requires that new or additional postal
savings shall be deposited with member banks only and
State bank or trust company members are entitled to
receive postal savings deposits on a par with national
banks according to the plan of distribution of such deposits.
Objections to Membership.
Q. 39. Does membership in the Federal Reserve system
have disadvantages for State banks and trust companies?
A. When the Federal Reserve Act was enacted it was
the belief of many officers of State banks and trust companies that there were certain features of membership
which would be disadvantageous to State banks or trust
companies. Amendments have since been made which
have eliminated practically all of these objections, and the
opinion of those who have examined carefully into the
matter is substantially as stated by the Guaranty Trust
Company, in announcing its reasons for entering the
Federal Reserve system:
"As the Federal Reserve Act stands to-day, practically
every serious objection to membership, which was evident
at the time the law was passed, has boon removed * * V

RESERVE BALANCE CAN BE CHECKED ON.

NO INTEREST ON BALANCES.

Q. 35. Can a reserve balance carried with the Federal
Reserve Bank be checked against?
A. Yes. An account maintained with the Federal
Reserve Bank may be made as active as desired. It may
be freely checked against and balances built up by deposits and remittances of checks and drafts, rediscounts,
or shipments of currency made at the expense of the Federal Reserve Bank. Accumulated surplus funds in the
account may be freely transferred to other banks or to
other points in the United States by mail or telegraph

Q. 40. The Federal Reserve Bank pays no interest on
reserve balances, does it?
A. No. The funds which the Federal Reserve Bank
holds are reserve funds. If the Federal Reserve Bank
were to pay interest on its funds, it would, of course, have
to keep such a large portion of them invested in order to
obtain earnings sufficient to cover the interest paid, that
the purpose for which the fund was set aside would thus
be defeated and the Federal Reserve Bank would have
no greater credit making power than other banks and




620

FEDERAL RESERVE BULLETIN".

trust companies which have to invest most of their funds
in order to pay interest on deposits.
The deposits held by the Federal Reserve Bank are the
ultimate reserves of its members, and must be kept instantly available where and when needed.
OFFSETS TO LACK OF INTEREST ON BALANCES.

Q. 41. Would not the loss of interest incident to membership be more than a State bank or trust company could
afford to pay to obtain the privileges of membership?
A. The experience of many State banks and trust companies which are now members of the system demonstrates
that the apparent loss of interest can be offset in large part,
or even entirely, by savings and added profits in other
ways made possible by membership. Among these are
the following:
1. The deposit with the Federal Reserve Bank can, in
practically all cases, be made in part from cash held in
vault which is not at present drawing interest. This is
possible for the reason that the Federal Reserve Bank
can be depended on to furnish currency at any time at a
moment's notice, and that a member bank in New York
and New Jersey is not obliged to maintain excess vault
reserves in order to be certain of not falling below the
minimum prescribed by the State laws. A member bank
in New Jersey is subject only to the reserve requirements
of the Federal Reserve Act, which do not require reserve
in vault. A member bank in New York is permitted by
law to count balances with the Federal Reserve Bank as
cash on hand. For example, officers of a country bank
in New York, now a member of the system, state that
prior to membership they were obliged to maintain vault
reserves running as high as $500,000 in order to avoid
falling below the legal requirement for cash in vault of
$250,000. Their vault cash therefore averaged about
$350,000. As members of the system it will average about
$200,000, ranging from $125,000 to $300,000, these amounts
being ample to meet its demands for cash, the wide fluctuation being due to pay-roll requirements. It therefore
estimated that of a reserve of less than $400,000 required
to be carried with the Federal Reserve Bank, about half
could be transferred from vault and therefore represented
no loss of interest whatsoever.
2. By using the check collection facilities of the Federal
Reserve Bank the State bank or trust company member
is enabled to accomplish considerable savings in two ways:
(a) Balances carried with correspondents at variou a
points solely for the purpose of getting checks collected
can be closed and the balances utilized for loaning. This
course is obviously desirable as, with practically all its
checks collected without cost through the Federal Reserve
Bank, the member is able to effect a very considerable
saving by the utilization of balances which have had to
be maintained in amounts sufficient to pay for the collection of its checks through channels which are indirect
and sometimes expensive.




JULY 1, 1918.

(b) Checks can be collected through the Federal Reserve Bank in the shortest possible time, indirect routing
being avoided. Thus the funds represented become available and earnings begin much more quickly than is the
case where more indirect methods of collection are used.
For example, the State institution mentioned above
estimates that it sends out daily about $200,000 in checks
and drafts and that by using the Federal Reserve collection facilities it receives returns on these items one day
sooner than through its former collection channels. This
saving is. therefore, equivalent to at least 2 per cent interest on 8200,000 and completes the offset to the apparent
loss of interest on the balance carried with the Federal
Reserve Bank.
3. Under present conditions a member bank is able to
borrow at the Federal Reserve Bank at rates usually substantially lower than those obtainable from correspondents.
This is of particular importance in relation to borrowing
for the purpose of assisting the Government in Liberty loan
financing and in purchasing certificates of indebtedness.
4. But perhaps the most important offsetting advantage
is the fact that many member banks feel that they can
safely carry substantially lower excess reserves and invest
a considerable part of present excess reserves in additional
loans to customers or in commercial paper, which, being
eligible for rediscount at the Federal Reserve Bank, is in
the nature of reserve. Additional income thus obtained
will, in many cases, pay amply for the loss of interest on
reserve deposits. Many institutions which as nonmembers
felt that they must carry considerably more than the legal
requirement as an emergency reserve, now feel that membership in the Federal Reserve Bank is their emergency
reserve and that they are free to invest most of their former
emergency reserve in paper immediately available at the
Federal Reserve Bank.
The following is an illustration taken from the actual
figures of three country member banks in New York State
differing in size and in nature of deposits, and is quite
typical of other institutions of which we have knowledge.
Trust
company.

Trust
company.

(a) Net demand deposits
82,493,000
7,567,000
(6) Net time deposits
(c) Due from banks at timn of
642,000
joining
(d) Cash in vault at time of j oining.
334,000
(e) Reserve required to be carried
401,000
with Federal Reserve Bank
(/) Interest at 2 per cent on this
3,000
amount...
.
.
.
If the business of these banks
justified them in carrying only
the legal reserve and they could
invest their former excess reserves (c-e) at 6 per cent, they
might make the following offi^OOO
sets to loss of interest (item / ) . . .
l,f>00
Possible profit from membership..

$2,427,000
1,876,000

$785,000
117,000

461.000
166,000

99 000
39,000

226,000

58,000

4,000

1,200

2 9,400
4,800

»1,600

State
bank.

i $241,000 at 4 per cent.
2 $235,000 at 4 per cent.
3
S46,000at4percent.

400

JULY 1,1918.

FEDERAL RESERVE BULLETIN".

621

Qualifications and Requirements for Membership.

WITHDRAWAL FROM MEMBERSHIP PROVIDED FOR.

WHAT BANKS ARE ELIGIBLE.

Q. 46. Can a State bank or trust company member
withdraw from the system?
A. Yes. Any State bank or trust company desiring to
withdraw from membership in the Federal Reserve Bank
may do so after six months' written notice shall have been
filed with the Federal Reserve Board.
Q. 47. Is there not a provision that no Federal Reserve
Bank, without authority of the Federal Reserve Board,
may cancel within the same calendar year more than 25
per cent of its capital stock for the purpose of effecting
voluntary withdrawals during that year?
A. Yes. In the case of the Federal Reserve Bank of
New York, however, this qualification is not of great
importance for the reason that the proportion of its stock
held by State banks and trust companies is less than onethird of its total stock, so that all of its State bank and
trust company members could retire within two calendar
years.

Q. 42. What banks are eligible for membership in the
Federal Reserve system?
A. Any bank incorporated by special law of any State,
or organized under the general laws of any State, which
has a paid-up, unimpaired capital stock as follows, is
eligible for admission to membership:
In cities or towns not exceeding 3,000 inhabitants,
125,000.
In cities or towns exceeding 3,000 but not exceeding
6,000 inhabitants, $50,000.
In cities or towns exceeding 6,000 but not exceeding
50,000 inhabitants, §100,000.
In cities exceeding 50,000 inhabitants, $200,000.
Q. 43. What tests are applied in considering the application of a State bank or trust company for membership?
A. (1) The iinancial conditions and character of the
management of the applying institution is considered.
(2) Whether the powers exercised by it are consistent
with the Federal Reserve Act.
(3) Whether the laws of the State in which the applying
bank or trust company is located contain provisions likely
to prevent proper compliance with the provisions of the
Federal Reserve Act. The present laws of New York,
New Jersey, and Connecticut do not contain any such
provisions.

REPORTS AND EXAMINATIONS.

Q. 48. Does a State bank or trust company which is a
member of the Federal Reserve system make reports to
the Comptroller of the Currency, or is it subject to examination by the Comptroller of the Currency?
A. No. State banks and trust companies which are
members of the system are not in any way under the
jurisdiction of the Comptroller of the Currency. They
are required to make in each year not less than three
DEPRECIATION OF BOND INVESTMENTS.
reports of condition and of the payment of dividends to
Q. 44. What is the attitude of the Federal Reserve the Federal Reserve Bank of their district, the dates to
Bank and the Federal Reserve Board relative to depre- be fixed by the Federal Reserve Board. No publication of
ciation in market values of stock and bond investments? these reports is required.
Q. 49. What examinations would a State bank or trust
A. A reasonable attitude is taken regarding depreciation in market values. Wherever heavy depreciation is company member be subject to?
A. They are subject to examinations made by direction
shown the applying banks are requested to charge off a
reasonable amountj of the depreciation, say about 20 of the Federal Reserve Board or of the Federal Reserve
per cent, and to agree to make further annual reductions Bank by examiners selected or approved b}r the Federal
until the book and market value of the securities are Reserve Board, but, in order to avoid duplication, examinations made by the State authorities included in this
more nearly in accord.
district are accepted by the Federal Reserve Bank, so that
A STATE BANK OR TRUST COMPANY RETAINS ITS FULL
except as noted in the next succeeding answer no special
POWERS.
examinations are made and member banks are not subject
Q. 45. If a State bank or trust company becomes a to additional expenses for examinations.
member of the Federal Reserve system can it continue
Q. 50. Then membership would not involve extra examto exercise the powers granted it by its State laws or inations?
charter?
A. No. The Federal Reserve Bank may, of course, at
A. The Federal Reserve Act and the regulations of the any time make a special examination but should it be
Federal Reserve Board provide that a State bank or trust deemed necessary to have its examiner visit a member
company, while a member of the Federal Reserve system, bank, the examination would usually be made in eoopera*
shall retain its full charter and statutory rights as a State tion with the State examiner at one of the latter ?s regular
bank or trust company, subject to the provisions of the examinations.
Federal Reserve Act and to the regulations of the Federal
NO LIMITATIONS ON LOANS.
Reserve Board relating to all members, national and State
alike, including any conditions embodied in the certificate
Q. 51. Is a State bank or trust company member limited
of approval.
in the amount which it may lend to any one borrower?




622

FEDERAL RESERVE BULLETIN.

A. No, It is governed in this particular solely by the
provisions of the State laws or its charter. The Federal
Reserve Act does provide, however, that a Federal Reserve
Bank may not rediscount the note of a person or corporation which is indebted to a member bank for more than 10
per cent of the latter's capital and surplus.
INTERLOCKING

DIRECTORS.

Q. 52. Is a State bank or trust company which is a member of the system liable to the provisions of the Clayton
Act?
A. The status of a State bank or trust company, with
relation to the provisions of the Clayton Act, is not in any
way altered by its becoming a member of the Federal Reserve System.
PROCEDURE IN APPLYING FOR

MEMBERSHIP.

Q. 53. What is the procedure in applying for membership?
A. The steps to be taken are:
1. Adoption by the board of directors of a resolution
making application for stock in Federal Reserve Bank
(Form 83a).
2. Formal application for the requisite number of shares»
agreement to pay for same and to comply with require"
ments of Federal Reserve Act, etc. (Form 83a).
3. The following three exhibits are to be attached to
application:
Exhibit 1.—A statement of condition as of given date
signed by three directors and duly certified by cashier or
secretary.
Exhibit 2.—A copy of charter or articles of incorporation
of the corporation with amendments.
Exhibit 3.—A. statement containing certain supplementary information (supplement to F. R. B. Form 83a).
STOCK

JULY 1,

1918.

COMPUTATION OF RESERVE TO BE CARRIED WITH THE
FEDERAL RESERVE BANK BY MEMBER BANKS.
DEMAND DEPOSITS.

1. Deposits, other than United States
Government
deposits,
payable
within 30 days
2. Balances due to banks, other than
Federal Reserve Banks
Less:
3. Balances due from banks, other than
Federal Reserve Banks
4. Items with Federal Reserve Bank in
process of collection
5. Checks on other banks in the same
place
6. Exchanges for clearing house
Total deduction (items 3, 4, 5,
and 6)
7. Net balance due to banks *

S..
%..
$..
S..

8. Total demand deposits (items 1 and 7).
TIME DEPOSITS.

9. Savings accounts (subject to not less
than 30 days' notice before payment)
10. Certificates of deposit (subject to not.
loss than 30 days' notice before payment)
11. Other deposits payable only after 30
days
12. Postal savings deposits
13. Total time deposits (items 9, 10, 11,
and 12)
EESESVE REQUIRED,

Banks in central reserve cities, 13; reserve
cities, 10; elsewhere,. 7 per cent of demand deposits (item 8)
3 per cent of time deposits (item 13)
Total reserve to be maintained with Federal Reserve Bank

SUBSCRIPTION.

Foreign Exchange Regulations.
Q. 54. How much stock of the Federal Reserve Bank is
a member bank required to purchase?
The following new regulations relating to
A. A member bank is required to subscribe for stock of foreign exchange have been sent to Federal
the Federal Reserve Bank equal to 6 per cent of its own
capital and surplus, and make payment at once for half Reserve Banks:
of the amount of the subscription.
(l) INSTRUCTIONS FOR DISTRIBUTION TO DEALERS IN
Q. 55. What dividends does the stock pay?
FOREIGN EXCHANGE.
A. The law provides that member banks shall be enti"Dealers,"
as
defined
under the Executive order, are
tled to cumulative dividends at 6 per cent per annum
upon the amount of their paid-up stock of the Federal Re- prohibited, without the approval of the Division of Foreign
serve Bank. The Federal Reserve Bank of New York Exchange of the Federal Reserve Board, from acting upon
has paid dividends in full up to December 31, 1917, and confirmations of cablegrams which may be received by
is now earning currently an amount far in excess of its them, wherein the original cablegram in part or in whole
has never been delivered to them.
dividend requirements.
All confirmations of cables sent by "dealers" to correQ. 56. At what rate is payment for stock made?
A. At half of the par value, plus interest at J per cent spondents or others outside of the United States, covering
per month from the date of the last dividend. The unpaid
* Should the aggregate "due from banks" (items 3, 4, 5, and 6) exceed
portion of the subscription is payable upon call by the the aggregate "due to banks," both items must be omitted from the
Federal Reserve Board.
calculation.




FEDERAL RESEEVE BULLETIN.

JULY 1,1918.

a transfer of funds or other financial operation, must be
written upon separate sheets of paper, which must not
carry any other correspondence, and must be delivered
unsealed, but stamped, ready for mailing, to the Division
of Foreign Exchange, 14 Wall Street, New York, when
the confirmations are to go from the eastern seaboard,
or cover cablegrams leaving this country by the eastern
seaboard; to the Federal Reserve Bank of San Francisco
when confirmations are of cablegrams leaving this country
via the western seaboard; to the Federal Reserve Bank of
Dallas when the confirmations are of cablegrams leaving
this country via Galveston; and to the New Orleans
branch of the Federal Reserve Bank of Atlanta when the
confirmations are of cablegrams leaving this country via
New Orleans. Any confirmations which may be discovered by the postal censorship in the body of other letters,
or that have been otherwise mailed than as above, will be
forwarded to the Division of Foreign Exchange of the
Federal Reserve Board for such action as may seem
advisable.
"Dealers " having the accounts of foreign correspondents
on their books are prohibited from accepting credits to
such accounts which are not accompanied by the name of
the party making the original request that the deposit be
made, and by the name of the party to whom the foreign
institution receiving the credit is to pay the funds, and
for whose account such payment is made, and the purpose
of the deposit must also be stated.
It is important that this order be noted by all bankers,
institutions, individuals, or others in the United States,
without regard to whether they are "dealers" or not.
This information will be required in addition to the
regular customers' statement.
If, for instance, a firm in Peoria, 111., is requested by an
individual to pay a bank in New York $1,000 for account
of a bank in Sweden, the firm must obtain from such individual the required information, which it must deliver
to its banker in Peoria through whom it wishes to make
the transfer, and such banker, if he carries out the operation through his Chicago or New York correspondents
must forward the information with the instructions, which
must follow the deposit to the New York bank which is
to credit the account of the Swedish bank. All such information must be on a separate sheet of paper, which must
be initialed by every institution through which it goes,
and that must be delivered to the Division of Foreign
Exchange of the Federal Reserve Board, 14 Wall Street,
New York, by the banker crediting the item to the foreign
institution.
Deposits received for the credit of dollar accounts of
foreign correspondents on the books of American "dealers 9 '
from " persons," as defined in the Executive order, outside of the United States must bear the same information,
and "dealers9* should notify their foreign correspondents
that when arranging to have deposits made in this country
for their account that such information must follow the
deposit.




67747—18

6

623

"Dealers3' who are concerned withTthis order should
forward these instructions immediately to such of their
foreign correspondents as carry dollar accounts with them.
In the meantime, while such notices are going forward,
copies of the statements of the credits to foreign correspondents must be delivered to the Division of Foreign
Exchange weekly, beginning June 25, in accordance with
regulations going forward to the Federal Reserve Banks.
The operation of this order, in so far as it relates to deposits
made by "persons3* in the United States, becomes effective
June 15. but "dealers3' may retain deposits made with
them, while obtaining the proper information, until the
order becomes generally known, unless otherwise instructed, but can not enter such credits after June 15,
except to a suspense account, nor advise the beneficiaries,
either by mail, cable, or otherwise, until receipt of the
information, which must be immediately turned over to
the Division of Foreign Exchange.
In case any "person-' or "dealer 3 ' has reason to believe
that any transaction of this nature is for the account or
benefit of an enemy or ally of enemy, he must notify the
Division of Foreign Exchange directly by mail or wire,
as the urgency of the matter would seem to require.
There are now over 12,000 "dealers 3 ' in foreign exchange
registered in the United States. Under the Executive
order they have all been obliged to send forms for declaration of nonenemy interest to all of their foreign correspondents. The Federal Reserve Board has not yet prohibited "dealers 3 ' from doing business with foreign correspondents who have not returned the declarations. The
time has been allowed to run longer than was originally
intended, because of the great delay in the mails and the
desire of the Federal Reserve Board not to interfere with
the legitimate business of the country unnecessarily.
Further, a sufficient proportion of declarations has been
received to warrant, together with the information constantly being received through the research department,
the temporary continuation of business with some of those
institutions which have not yet returned their declarations.
It should be noted, however, that the day is fast approaching when the nonreceipt of declarations will result in the
necessity for the discontinuance of relations, and every
"dealer8* is warned that he should immediately take up
the question with any of his correspondents whose declarations have not yet been received.
All declarations of foreign correspondents should be
filed with the Division of Foreign Exchange of the Federal
Reserve Board immediately upon receipt. "Dealers 2 ' are
also requested to advise the Division of Foreign Exchange
by letter of all foreign correspondents to whom they have
sent declarations which have not been returned, or
where cable advice that they were being sent has not been
received by the close of business June 20.
There has been some doubt on the part of "dealers" as
to just when they should require "customers' statements."
This has been particularly true as between "dealers" trading with each other. Customers' statements, which are

624

FEDERAL RESERVE BULLETIN.

JULY 1, 1918.

merely declarations of nonenemy interest, which have to
The memorandum referred to is as follows:
be made by "persons" in this country having foreign exThe Government of Italy has formed an institute of
change operations with "dealers," must be taken by every exchange, through which all of its foreign exchanges have
"dealer" from every person who is not a "dealer" when to pass. The United States Treasury Department has
any foreign exchange service is being extended. In other made an arrangement with the Italian Government under
words, the "dealer" having contact with the "person" which certain transactions in lire must come before the
who is not a "dealer" is the party who must take the cus- representative in New York of the Italian institute and
tomers' statement. Such statements do not follow the the Division of Foreign Exchange of the Federal Reserve
items, but must be filed by the "dealer" receiving them, Board for approval. Such transactions, for the moment,
subject to the call of the Federal Reserve Board at its only cover commercial bills of exchange for exports from
discretion.
the United States to Italy that represent funds American
As "dealers " receiving items from other "dealers" have banks might wish to dispose of to the institute, which
no means of determining whether such, "persons" are expects to enter the New York market as a buyer of lire.
"dealers," authority has been granted by the Board to The institute may also be a seller of lire from time to
accept the censorship stamp of "dealers" upon letters of time. Exchange transactions with the institute should
advice or inclosure from one "dealer" to another as being preferably be handled through regular foreign exchange
sufficient evidence that a customers' statement has been brokers.
obtained.
The methods under which the institute will operate are
Every "dealer" is responsible to the Federal Reserve as follows:
Board for the taking of customers' statements and not to
Between 10 and 10.30 o'clock every morning the repreother "dealers" through whom he may be passing trans- sentative of the institute and a representative of the Fedactions, except that any "dealer" who has reason to eral Reserve Board will meet in the offices of the Division
believe that any transaction may be for account or benefit of Foreign Exchange, Federal Reserve Board, Room 608,
of an enemy or ally of enemy may make inquiry of the 14 Wall Street, New York, to pass upon the eligibility for
"dealer" who places the transaction through him. If purchase by the institute, of the proceeds of bills of
satisfactory answer is not received, the Division of Foreign exchange covering exports from the United States to
Exchange of the Federal Reserve Board should then be Italy. Presentation of bills must be made by letter in
notified immediately.
triplicate or, in case of necessity, by telegraph. All
The same means of identification may be passed from bills require the approval of both the representative of
one '' dealer " to another in connection with items received the institute and a representative of the Federal Reserve
from abroad. The responsibility for obtaining declara- Board. The institute will not purchase the bills themtions from foreign correspondents and from holders or from selves, but will make offers for the proceeds of approved
agents of holders of securities, and in connection with bills to dealers in the United States buying them. If the
coupon and dividend payments, has been placed entirely rate is accepted, the dealer, upon arrival of the exchange
upon the "dealer" receiving the items from the foreign in Italy, must arrange with his correspondent for deposit
countries. It is not the duty of payers of dividends or of the proceeds in lire with the Bank of Italy, Rome, to
coupons, nor of others in the United States who receive the credit of the representative of the institute in New
such items from "dealers" to require declarations. If, York City. Upon receipt of the lires in Italy by the Bank
however, they have information which leads them, to of Italy, it will wire the representative in New York of
believe that a transaction is for enemy account, it is their the institute to make payment in dollars, for the equivaduty to withhold payment and notify the Division of lent of exchange purchased at the rate agreed upon.
Foreign Exchange.
In this manner American dealers in lire exchange can
continue their purchases from their customers as in the
(2) THE CONTROL OF LIRE EXCHANGE.
The following letter has been sent to the governor of each past and handle their bills directly through their Italian
correspondents. Until otherwise instructed, they are not
Federal Reserve Bank:
obliged to offer any lire exchange to the institute in New
, DEAR SIR: It has become necessary to take charge of the York, but if they prefer may sell the proceeds of such
lire exchange rate in New York in so far as conditions make
bills as they may purchase to American dealers or others
it possible to do so.
While the rate for lire in other cities is based upon the who may be buyers.
New York rate, yet it is very probable that some of the
Some American dealers have issued letters of credit for
dealers in your district may require information as to how account of Italian banks, under which such dealers have
to protect your customers, and themselves, when purchasing bills of exchange covering exports from the United agreed to make payment upon presentation of documents
for shipments of goods to Italy, with the understanding
States to Italy.
We therefore inclose herewith a memorandum outlining that cable advice be sent to the Italian bank which will
the situation in so far as it has developed.
cover the amount so paid out in dollars by cable. On all
Very truly, yours,
such transactions advice by letter in triplicate, or by teleF. I. KENT,
Director Division of Foreign Exchange, graph (as the necessities of the case require) should be




sent to the Division of Foreign Exchange, Federal Reserve
Board, 14 Wall Street, in order that the application of the
Italian bank for dollars to meet such payment may be
passed upon by the representative of the institute and the
Federal Reserve Board.
At present dealers in the United States are prohibited
from trading with each other in lire exchange under 9.10
basis for cables. The rate in the New York market will
reflect this restriction while the order lasts, but dealers in
lire in other cities should be advised that they can not
trade between each other at any lower rate than 9.10 for
cables until otherwise advised. The purchase of lire exchange from persons, as defined in the Executive order,
outside of the United States, can not be made without first
obtaining the approval of the Division of Foreign Exchange.
At the moment no further restrictions have been placed
upon trading in lires. Dealers can buy from their customers and sell to their customers as they have been doing
until otherwise instructed, except that cable transfers can
not be sold under the rate of 9.10.
It must be clearly understood that the Federal Reserve
Board does not guarantee a continuation of the Italian
Institute in the market for the purchase of lire, nor does it
guarantee any transactions which American dealers may
undertake with the Italian Institute. In other words,
dealers when operating with the Italian Institute are doing
so at their own risk exactly as would be true in case they
were dealing with Italian bankers.
(3) FOREIGN PAYMENTS.
(War Trade Board resolution of June 20,1918.)

Whereas the "Memorandum between the War Trade
Board and the Government of Switzerland relating to exports from the United States to Switzerland," dated December 5, 1917, provides that the distribution of the
articles, commodities, material, and substances described
in the schedules thereto annexed shall be subject to the
condition that such distribution must in every case be
made pursuant to the rules and statutes of S. S. S.; and
Whereas there is contained in Article 3 of the statutes of
the said S. S. S. a provision as follows:
"No firm appearing in the Register of Commerce can, by
reason of the nationality of the heads, partners, members,
or stockholders, be excluded from the benefit of receiving
commodities from the S. S. S., excepting, however, foreign.
houses registered since July 1, 1914, and foreign houses not
appearing in the Register of Commerce. In respect of
these two classes there is reserved to the S. S. S. the right
to examine the facts of each particular case after having
conferred with the three Governments which participated
in the creation of the S. S. S."; and
Whereas because of the facts herein recited individuals,
firms, or corporations who are within the category of
"enemies" under the trading with the enemy act, may in
certain cases be entitled to receive and pay for commodities imported into Switzerland from the United States.




625

FEDERAL RESERVE BULLETIN.

JULY 1,1918.

Therefore be it resolved that (subject to all conditions
herein enumerated) a general license is hereby granted to
any persons, firms, or corporations in the United States to
trade (by exporting merchandise to such "enemy" persons, firms," or corporations and by receiving payment
therefor) with, for, or on account of such "enemy" persons, firms, or corporations as by the terms of said Article
3 of the statutes of the S. S. S. may not be excluded from
the benefit of receiving commodities from the S. S. S.
This license shall be subject to each of the following
conditions:
A. That the exportation or shipment of any such merchandise out of the United States shall be authorized by a
duly issued export license.
B. That such payments shall be made to the person,
firm, or corporation in the United States entitled thereto
only through a dealer duly licensed by the Federal Reserve Board pursuant to the Executive order of January 26,
1918.
C. That such trading be limited to the delivery to such
"enemy" of commodities or articles enumerated in the
several schedules annexed to said memorandum of December 5, 1917, subject to the conditions of said memorandum, and the receipt of payment therefor.
D. That prior to receipt of payment by the person, firm,
or corporation in the United States, a certificate shall be
issued in duplicate either by the S. S. S. or by a dealer
duly licensed by the Federal Reserve Board pursuant to
the Executive order of January 26, 1918, or by a foreign
correspondent of such dealer who has signed the declarations required to be signed by said order, certifying that
such "enemy" person, firm, or corporation is entitled to
receive and has received or will receive delivery of said
commodity pursuant to the provisions of said Article 3
and specifying the description, character, and value thereof, and stating that no other certificate has been issued
covering the same transaction.
E. That the person, firm, or corporation in the United
States receiving payment or engaging in said transaction
shall retain one of said duplicate copies and forward the
other copy to the Federal Reserve Board for filing.
RUPEE

EXCHANGE.

The following letter was sent by the Governor of the Federal Reserve Board to a Federal
Reserve Bank under date of June 24:
The Board has been advised that the Secreta.ry of the Treasury has made arrangements
for a supply of rupee exchange sufficient for an
indefinite period, to finance such imports from
India as may be required for civil or military
purposes of importance in connection with the
prosecution of the war. The Secretary desires
that the sale of rupee exchange for these pur-

626

FEDERAL BESERVE BULLETIN.

poses be administered as heretofore through the
Federal Reserve Board, the price to be 35.73
cents per rupee for telegraphic transfers.
I am informed that the arrangement made
between the Secretary of the Treasury and the
British Government in relation to the sale of
silver under the Pittman Act contains a provision whereby the Government of Great Britain
undertakes to arrange for the opening of rupee
credits in New York at the rate—with respect
to telegraphic transfers—of 35.73 cents of
United States money for each rupee. It is
deemed important that the price of rupee
credits in New York should be on the exact
mathematical equivalent of the London price,
in order that the American merchants may be
in exactly the same position as London merchants, with respect to rupee exchange. * * *
In view of the arrangement made by the
Treasury, the Board will limit the sale of telegraphic rupee transfers, regardless of the origin
of the credit which it is drawn against, to (a)
imports reasonably required for civil or military purposes of importance in connection
with the prosecution of the war; and (i) to a
price not exceeding 35.73 cents.
There will be, of course, no objection to banks
purchasing commercial bills on India at such
price below 35.73 cents as will yield them a fair
remuneration for the labor and risk involved in
the business. An exception may properly be
made for small rupee bills drawn for noncommercial purposes. If recommended by the
director of the Division of Foreign Exchange,
the Board would be willing to place a limit of,
say, 1,000 rupees on the amount that can be
sold regardless of the above restrictions, but
only if the credit is used for purposes other than
commercial.
AGREEMENTS WITH FOREIGN COUNTRIES.

The following letter was sent by the Secretary
of the Treasury, under date of June 12, 1918, to
the President of the United States Senate:
SIR: In response to the resolution adopted by
the Senate of the United States on the 13th day
of May, 1918, calling upon the Secretary of the




JULY 1,1918.

Treasury for certain information, the following
is respectfully submitted:
I. Agreements have been made with certain
neutral countries in Europe and with countries in South America and elsewhere involving
financial considerations and tending to protect
the value of the American dollar. Agreements
involving like considerations are in process of
negotiation in other countries, and in certain
neutral countries steps have been taken to provide for payments required therein preliminary to the institution of negotiations. The
amount of balances of neutral nations held by
banks, trust companies, and bankers in the
United States can probably be ascertained and
stated with approximate accuracy as of about
May 13, 1918. However, I am directed by the
President to say that, in his judgment, it would
be incompatible with the public interest to
make a public record at this time of the terms
of such agreements already made or in process
of negotiation, or of the other steps that have
been taken or are in contemplation to protect
the value of the American dollar, or of the
amount of balances of neutral countries in the
United States, because chiefly of the very great
value such information would be to the enemy.
II. I have given directions to have compiled,
so far as the Federal authority can be exercised
and the same can be made available, figures to
show the amount severally of commercial and
financial bills payable in terms of the currency
of the neutral nations of Europe which have
been bought and sold severally By the member
banks of the Federal Reserve system and other
banks and banking houses dealing in foreign
exchange in the city of New York from January
1 to April 1, 1918, and the amount of profit in
such transactions. It will take some time to
compile this data, but as soon as it is obtained
I shall furnish it. I am not at present able to
state just how completely or accurately this
information can be obtained.
Respectfully submitted.
(Signed)
W. G. MCADOO.
Following is a sample of the form of inquiry
into foreign exchange operations that has been
sent to banks:

827

FEDERAL RESERVE BULLETIN.

JULY 1,1918.

Profits or losses, first quarter 1918—Exchange purchased and sold—European neutral countries.
Purchases.

Sales.

Deductions.

Classification.
Foreign
currency.

Dollars.

Foreign
currency.

Dollars.

Gross
profit or
loss.

Discount
long bills,
interest,
commission, etc.

Profit
after
deductions.

Overhead
charges.

Taxes.

Net
profit or
loss.

DENMARK.

Portion of 1917:
Balance used i
Financial bills
Commercial bills
Unsold balance
Purchased during period..
Total

Kr.
14,662.63

4,655.39

781.38

242.23

2,778.70
12,665.31

937.98
•1,337.03

15,444.01

4,897.62

15,444.01

5, 274.01

467.05

22, 402.71
103.77

47,437.33
40,234.67
12,795.05

10.664.28
9,039.14
2 2,975.60

100,467.05

22,506.48

100,467.05

22,679.02

376.39

376 39

376.39

SWITZERLAND.

Portion of 1917:
Balance used
Financial bills
Commercial bills
Unsold balance purchased
during period
Total

Fes.

ioo, 666.66

Fes.

i Figured at 31$.

I

172.54

i

i

17? 54
2

172.54

Figured at 4.30.

Capital Issues Committee Rules and Regula- refunding of indebtedness existing upon April 5, 1918;
(3) the resale of any securities, the sale or offering of which
tions.1
[All communications intended for the committee must be addressed to
"Capital Issues Committee, National Metropolitan Bank Building,
Washington, D. C."J

1. The act.—The War Finance Corporation Act authorizes the Capital Issues Committee, under rules and regulations to be proscribed by it from time to time, to investigate, pass upon, and determine whether it is compatible
with, the. national interest that there should be sold or
offered for sale or for subscription any issue, or any part
of any issue, of securities issued after April 5, 1918, by
any person, firm, corporation, or association, the total or
aggregate par or face value of which issue and any other
securities issued by the same person, firm, corporation,
or association since the said date may be in excess of
$100,000. Shares of stock of any corporation or association without nominal or face value are deemed to be of
the face value of $100 each.
Any securities which upon April 5, 1918, were in the
possession or control of the corporation, association, or
obligor issuing the same, shall be deemed to have been
issued after that date.
The term "securities" as used herein includes stock,
shares of stock, bonds, debentures, notes, certificates of
indebtedness, and other obligations.
The committee is not authorized to pass upon (1) any
borrowing by any person, firm, corporation, or association in the ordinary course of business as distinguished
from borrowing for capital purposes; (2) the renewing or
i Created by act of Congress known as the War Finance Corporation
Act, approved April 5,1918.




the committee has determined to be compatible with the
national interest; (4) any securities issued by any railroad corporation, the property of which may be in the
possession and control of the President of the United
States; or (5) any bonds issued by the War Finance
Corporation.
Nothing done or omitted by the, committee under the
act shall be construed as carrying the approval of the
committee or of the United States of the legality, validity,
worth, or security of any securities.
2. Object of the committee.—The object of the creation of
the committee is to assist in the conservation of financial
resources, labor, and material, so that they may be available for uses essential to the prosecution of the war.
The necessity of such conservation has often been made
known and the Government has adopted various methods
of accomplishing it, one of the most important of which is
through the regulation of the issue of securities. In order
that this method may be pursued with due regard to the
requirements of the National Government, as well as to
private interests, Congress has created the "Capital Issues
Committee." In order to perform its duties and fulfill its
responsibilities in the fairest and most effective manner>
the committee has prescribed these rules and regulations,
not only establishing forms for procedure, but also defining
general principles of construction and policy which it will
apply equally and uniformly throughout the United

3. Interpretation of the act.—The provisions of the act
applying to the committee will be interpreted by it in a
manner to enable the committee to perform its duties in

628

FEDERAL RESERVE BULLETIN.

a broad and comprehensive manner, in accordance with
the intent of Congress. These provisions may be considered with respect to (a) the classes of securities, (b) the
classes of persons and corporations issuing securities, and
(c) the classes of financial transactions involved in the issue
of securities which come within the scope of the act.
With regard to (a), the description of securities is the
broadest possible, and includes every class of securities
that can be issued and. sold or offered for sale or subscription, whether the issue is made by an existing corporation
or other issuing principal or by one organized or created
after the passage of the act. The form or length of time for
which notes or other securities are to run is not any criterion. Original issues of stock and securities are included
as well as all increases thereof.
With regard to (6), the act applies to every class of person, association, and corporation which can issue securities, whether now existing or hereafter created or organized.
With regard to (c), there are several classes of financial
transactions which do not come within the province of the
committee, to wit:
(1) Borrowing in the ordinary course of business as distinguished from borrowing for capital purposes;
(2) Renewing or refunding indebtedness existing on
April 5, 1918; and
(3) The sale of securities up to but not exceeding
$100,000 in amount since April 5, 1918.
In construing these exceptions, the nature of the transaction and not the form oi" security is to govern.
Borrowing in the ordinary course of business is usually
done for seasonal requirements, through bank loans, advances, or through the issue of short-time notes, but borrowing may be done in the same manner for capital purposes, and in such cases bank loans, advances, or shorttime notes come within the province of the committee.
As to securities issued to refund or renew indebtedness
existing on April 5, 1918, the committee construes the act
to mean that in the opinion of Congress the issue of such
securities is compatible with, the national interest, and
that the committee is not to pass upon the same for the
purpose of determining that fact. But before any such
issue is made application should be made to the committee, stating the amount of the indebtedness existing on the
said date and the amount of securities necessary to renew
or refund the same. The committee being satisfied on
these two points will pass the issue as a matter of course.
This procedure is designed to give refunding securities the
official sanction to which they are entitled and to save
investors desiring to purchase them from the burden of
making unnecessary investigation. It is not intended
to extend the jurisdiction of the committee beyond the
limits denned by the act. The finding given by the committee on refunding issues, for the sake of convenience,
will be in the same form as used for other issues (see par.
21 hereof), unless some different form is requested by the
.applicant. It will be understood, however, that the




JULY 1,1918.

expression that such issues are not incompatible with the
national interest is made by the committee in execution
of the congressional intent, and is not an independent
determination of the committee in excess of its authority.
With respect to the limitation of 3100,000, it is to be
observed that after an issuing principal has issued securities of all classes amounting to $100,000 since April 5,1918,
all future issues of any amount come within the province
of the committee. The committee, however, does not pass
upon issues of 8100,000 or less, unless a district committee
for special reasons shall recommend action by the committee. In case a district committee should feel that an
issuing principal is resorting to successive small issues for
the purpose of evading the spirit of the act, the matter
should be brought to the attention of the committee.
It should be remembered, however, that the reasons for
conserving capital for war purposes apply always, whether
the amounts involved are large or small, and while it is
wholly impracticable for any governmental agency to pass
upon all issues of securities separately, the principles
involved affect all alike. Patriotic citizens should not
permit capital under their control to be wasted or used
for any purpose not contributory to the prosecution of
the war, no matter how small the amount, and they
should be even more diligent when they must decide for
themselves without the benefit of specific advice from the
Government.
4. States and subdivisions thereof.—In defining the issues
of securities which the committee was authorized to investigate and pass upon, Congress did not in express terms
refer to States, counties, or municipalities. The reason
for this omission is presumed to be because Congress did
not wish even indirectly to appear to regulate the affairs
of the sovereign States. On the other hand, Congress did
not forbid the committee to pass upon such issues, and it is
so obvious that the purpose and object of the act of Congress will not be effective to a very large extent unless the
committee does so, the committee will entertain and act
upon the applications of States and all subdivisions.
With respect to the position of the States and subdivisions, the committee for convenience, repeats the views
it has expressed in response to many official inquiries, as
follows:
The purpose of the act of Congress is clear—to conserve
national resources. Its appeal is addressed to all patriotic
citizens, in whatever capacity they may be acting. All
are expected to cooperate in giving effect to the act "for
the purpose of assisting in the prosecution of the war."
The same reasons and the same inducements applicable to
the officers of private corporations and to individuals in
their private capacity apply with even greater force to the
officers of States, counties, and municipalities, and they
should be the leaders in the national effort to conserve resources. Every issue of bonds and securities of States and
all subdivisions should be submitted to the committee
before being sold or offered for sale.

FEDERAL EESEEVE BULLETIN".

JULY 1, 1918.

629

must be made by the purchaser without being influenced
in any manner by the favorable action of the committee.
5. War work.—With regard to issues for the purpose of
10. Roads.—It is recommended that all State authoriaiding war operations, war contracts, production of war ties (including counties, districts, commissions, and
materials, or intended to assist the National Government municipalities) shall undertake only such paving and other
in the prosecution of the war, the committee will feel free road improvement work as may be actually necessary to
to consult and avail itself of the advice of the departments be undertaken at this time, thereby avoiding the use of
or officers of the National Government having knowledge men and money needed for the service of the National
of the requirements, conditions, or facts affecting the Government. In order to justify the construction of
Government. The committee will endeavor not only to roads, either military necessity or unusual economic
restrict the use of capital for nonessential purposes, but necessity must be clearly proved.
also to encourage its use for essential purposes.
11. Municipal expenditures.—The amount of capital
6. Issues of shares for property.—The issue of securities invested in municipal bonds every year is very large, and
in exchange for property or for other shares, may or may if this amount, or a substantial portion thereof, could be
not constitute a sale or offer of such securities within the saved, the funds of investors and savings banks would be
meaning of the act. No general rule can be laid down and available in corresponding amounts for the use of the
each case must be considered by the committee separately. National Government. There are certain classes of
Applications for such issues should be made in the usual municipal improvements and expenditures which should
manner.
wholly cease, such as parks and betterments solely de7. Stock dividends.—The issue of shares through a stock signed for purposes of appearance or architecture. All
dividend should be made only from bona fide surplus others should be curtailed and postponed until after the
earnings or profits to present shareholders,, without pay- war whenever possible. This applies to public buildings,
ment by them, and must not require the use of additional hospitals, street and road construction, waterworks excapital. All such issues should be submitted to the com- tensions, sewerage and drainage improvements, sidewalks,
etc. Ordinarily only a small proportion of the improvemittee by application in the usual manner.
8. Private issues.—There is no distinction between ments planned by a municipality are of such a character
"'public" issues and "private" issues. Whenever securi- that they can not be postponed for a period without
ties or shares of any kind are issued to obtain fresh capital, endangering the health or welfare of the community.
the transaction come3 within the province of the commitFor example, it is said that no schoolhouses have been
tee. It is not important whether the fresh capital is built in England since the war except in munition centers,
obtained irom the public, or from any portion of it—that where temporary and inexpensive structures have been
is, from private individuals. The approval of the com- erected. In this country, if such additional facilities are
mittee is required regarding all issues sold, offered for sale necessary, such temporary structures should be resorted
or for subscription, in excess of §100,000, regardless of to whenever possible.
whether the transaction is public or among individuals
The fact that the expense is to be repaid wholly or in
privately.
part by special assessments does not make any difference.
The fact that there appears to be labor available is not
9. Merits.—The committee will not express any opinion
upon the intrinsic merits of securities to be offered for sale. a true criterion, because war industries in many parts of
the country are in such need of labor that labor organizaIt is authorized to examine into two questions:
(1) Whether the issue is timely with respect to the tions are making comprehensive efforts to transport surplus
financial operations to be undertaken by the Government labor wherever most needed.
from time to time, and
12. Elections authorizing issues.—In cases where the
(2) Whether the objects for which the funds are to be opinion of the committee is desired before the proceedings
raised are compatible with the national interest.
authorizing the issue have been completed, caution will
Intending purchasers of securities which have been be exercised BO that the action of the committee can not
passed by the committee must thoroughly understand and be used to influence the decision as to the issue. Whenappreciate the above statement. The fact that securities ever the decision of the committee can be postponed until
have been passed is no criterion whatever as to their value after the completion of such proceedings, without involvor standing as an investment in any respect. The favor- ing undue delay, expense, or hardship, it will be the
able action of the committee is not even any criterion as policy of the committee to do so. This is especially true
to the merits of an issue in a national or patriotic sense. in cases of popular elections because the limited scope of
In some cases the committee feels obliged to pass issues on the committee's action can not be justly appreciated by
account of local or special circumstances, when it would electors and it might influence their vote.
In cases, however, where the committee is clear that
not do so if such reasons did not exist. While it will, of
course, result that patriotic citizens will purchase only its opinion would be unfavorable, it is not improper that
securities that have been passed by the committee, never- suggestion to that effect should be made in order to save
theless the decision whether to make any such purchase the expense of calling and holding a popular election.




GENERAL POLICIES.

630

FEDERAL RESERVE BULLETIN.

INSTRUCTIONS TO APPLICANTS,

13. Applications.—Applications respecting the proposed
issue or offering of any securities shall be executed in
triplicate, the original and one copy transmitted to the
Capital Issues Committee, National Metropolitan Bank
Building, Washington, D. 0., and the other copy to the
district committee in care of the Federal Reserve Bank
in the district of the applicant.
The committee has prepared a form of application, and
all applicants are urged to obtain such forms from the
committee or a district committee, and make their applications on them. In addition the applicant must provide all the information which will enable the committee
to perform its duties with a full knowledge of all circumstances and conditions appropriate thereto.
The following suggestions are made with regard to applications, and the additional information required:
(a) The purpose of the proposed issue shall be fully and
accurately described.
(6) If the purpose of the issue is to renew or refund
indebtedness created before April 5, 1918, describe fully
the nature and character of such indebtedness and the
time or times and the general purposes for which it was
incurred.
(c) If the issue is to be created wholly or partly for war
purposes, or to raise capital or secure advances in connection with war contracts or war supplies, or to provide
equipment, buildings, materials, or facilities of any kind
for war work, full details thereof, and of the kinds and
in general, the quantity of supplies or materials to be
furnished, and the amounts needed therefor, should be
stated as well as the proportion which such, war work
bears to the total business of the applicant. Where any
war purpose exists, mention should be made of the controlling governmental authorities at Washington and elsewhere in order that the committee may obtain from such
authorities any further information it may desire.
(d) If the issue is deemed necessary by reason of any
governmental requirement, national, State, or municipal,
or on account of the requirement of any commission or
other authority, the application should give complete
details.
(e) If the issue is deemed necessary for public health
or for educational or road purposes or other public necessity, the application should describe the same in full.
(/) If the issue is desired for private purposes and no
public necessity or requirement exists, very complete
exposition of purpose and necessity should be stated.
(g) The consideration, stating amount and character,
for which the proposed securities are to be issued, the
price of sale, and the amounts to be received by the applicant, should be shown.
(h) In all cases, except for war work, explicit reasons
must be given why the proposed issue can not be postponed until after the war, or why the necessity of the
issue is greater than the paramount need of the National




JULY 1,1918.

Government to conserve the financial resources, materials,
and labor of the country for the prosecution of the war.
14. Identification.—It is necessary to identify the issues
accurately. The following information must be furnished:
WITH REGARD TO PROPOSED ISSUES OF BONDS, NOTES,
CERTIFICATES OF INDEBTEDNESS, AND OTHER SECURITIES.

(a) Name or designation of the proposed issue, amount,
date of issue, dates of maturity, and rate of interest. The
serial numbers shall be given whenever possible. The
serial numbers are necessary when the proposed issue is
part of a larger authorized amount, either then outstanding
or issuable in future.
(5) Amount of total authorized issue of which proposed
issue is part.
(c) Attested copies of the votes, ordinances, or resolutions authorizing the proposed issue.
(d) In case the proposed issue is to be made under or
secured by a mortgage, deed of trust, indenture, or similar
instrument, attested copy of such instrument.
(e) Certified copies of the last balance sheet of applicant,
including a statement of bills payable and income statement for three years past, including last preceding 12
months. (This does not apply to States or municipalities.)
WITH REGARD TO PROPOSED ISSUES OF SHARES OF STOCK.

(/) Total capitalization of the corporation.
(g) Certified copies of the last balance sheet of applicant,
including a statement of bills payable and income statement for the last preceding 12 months.
(h) Total authorized issue of stock of which proposed
issue is part.
(i) Name or designation and amount of the proposed
issue; the method and dates of issue, stating whether the
issue is to be made by offer to shareholders, by sale, public
subscription, or otherwise.
(j) Attested copies of the votes or resolutions authorizing the proposed issue.
15. Time of application.—Applications with respect to
proposed issues should be made as early as possible in order
to enable the committee to cooperate most effectively.
Municipalities should forecast expenditures for the year,
and agree with the committee upon necessary items without waiting until an issue of bonds is about to be advertised or sold. This procedure has already been followed in
several important instances with satisfaction, both to the
municipality and to the committee. A program once
decided enables agreed issues of bonds to be expedited
when ready for sale.
DISTRICT COMMITTEES AND AUXILIARY COMMITTEES.

16. In each Federal Reserve district there shall be a district committee of the capital issues committee, with headquarters at the Federal Reserve Bank of the district.
Each district committee shall consist of the Federal
Reserve agent as chairman, the governor of the Federal

JULY 1,1918.

FEDERAL RESERVE BULLETIN.

631

20. Gases referred to district committees by the comReserve Bank as vice chairman, and three or more other
members chosen because of special qualifications to aid the mittee shall each be the subject of separate correspondence,
in order that office files may be kept intact.
district committee in its work.
21. Form of favorable opinion:
Bankers and others having experience in municipal,
manufacturing, or public utilities securities may be invited
CAPITAL ISSUES COMMITTEE,
to become auiliated with a district committee as an auxiliary committee, the members of which, from time to time, Issue of
..*,«,
„
u
as their advice and experience may be useful or helpful,
[Here follows an accurate description of the securities passed upon.]
i?;ay be asked to join in investigating and making recomAfter due investigation into the purpose ofiho issue above described,
mendations regarding specific applications.
wo have determined that the sale thereof is not incompatible with the
No .member of a district or auxiliary committee shall in national interest.
This ilnding constitutes no approval of such issue as regards its legality,
any "manner, directly or indirectly, participate in the validity,
worth, or security in any respect.
determination of any question affecting his personal interIn any public offer of the said issue for investment by advertisement or
ests or the interest of any corporation, partnership, or circular, and whenever reference is made to this finding, it is requested
association in which he is directly or indirectly interested. that the statement quoted below shall be incorporated in full.
CAPITA L iH-suss COMMITTEE.
17. The district committees upon receipt of applications
By
'.
will examine them in order to determine whether the
Chair num.
i;
necessary information baa been furoished. by the applicant
.Passed by the Capital Issues Commirlee as not incompatible wi!;h the
in accordance with these rules and regulations, and without national interest, but -without approval of legality, validity, worth, or
"
waiting for the direction, of j;.he ciK-^/dtteo will, advise the security. Opinion No
[NOTE. This opinion can not be given unless an accurate and complete
applicant to supply such, additional Iruorhjauort as may description of the securities necessary for Identification has been furappear to be necessary or desirable. From time to time nished, as hereinbefore prescribed. Applicants will save delay b y carethe committee will advise the district (-omniitteos when fully regarding this requirement.]
the latter should take further action upon Bitch applications, and in accordance with such advices the district
22. Form oi unfavorable opinion.
committees will make full and complete investigation into
all matters connected with the application and into all
CAPITAL ISSUES COMMITTED.
considerations hearing thereon. The district committees
WASHINGTON.
will make an analysis or summary of the application, veriReferring to the proposed issue of the following securities, to wit:
fying the detailed description of the securities to be issued
and especially describing the purpose or object of the issue.
[Here follows a brief description of the securities.]
The district committee will complete its analysis with a
In accordance with the authority vested in the Capital Issues Comrecommendation to the committee giving an accurate and mittee by act of Congress, approved April 5, 1918, this committee Iras
full statement of its reasons for such recommendation, and investigated the proposed issue of securities above mentioned and has
the district committee will thereupon send forward to the determined that the sale, or oiler for sale or subscription thereof at this
interest.
committee its analysis, summary, and recommendations, time, is not compatible with the national
CAPITAL ISSUES COMMITTEE,
together with all original documents, certificates, and. other
By
..
'„
papers not already filed with the committee..
Chulrmmi.
Opinion No. . . . . .
18. The applicant shall not bo informed of the recomJUNE 4.1918.
(Form No. 9.)
mendations of trie district committee unless and until
Bonds... 8
such recommendations shall have been adopted by the File No.
.Re.
committee. The final action of the committee will in
Other securities $ . .
general be sent to the district committee and the applicant Classification
New work $
State, county, city, or district
at the same time, in special cases the committee- will
Application of
Refunding
proceeds.
communicate with the district committee, requesting the
Nature
of
proposed
improvement.
Other purposes 5..
latter to inform the applicant.
19. District committees are requested whenever possible
to discourage or postpone for the period of the war proposed
issues of securities and all expenditures for nonessential APPLICATION BY STATE OR SUBDIVISION T H E R E O F
Place
purposes, whatever the amount. If they are successful
Date.
in discouraging or postponing an issue or expenditure, CAPITAL ISSUES COMMITTEE,
that fact shall be reported promptly to the committee.
Washington, I). C.
The undersigned hereby make application to the Capital Issues ComDistrict committees are also charged with the duty of
furthering the public understanding of the functions and mittee with respect to the issuance of the within-described securities
under Title II of the War Finance Corporation Act.
purposes of the committee in their districts, especially
with bankers and public officials.
67747—18
7




632

.rur,v 1, 101S.

FEDERAL RESERVE BULLETIN".

(Form No. 10.)

INSTRUCTIONS TO APPLICANTS.

1. To facilitate the speedy decision of the committee, this form should File No
be lilted out in triplicate, two copies sent to the Capital Issues Committee at Washington and one copy to the Federal Reserve Bank of the Classification
district; where the State or subdivision thereof is located.
Name of applicant.
2. In addition to the information requested herein, thero should "bo
filed with the committee, an attested copy of the ordinance or resolution
if already adopted, authorizing the proposed issue.
CAPITAL ISSUES COMMITTEE.
I. DESCRIPTION OP SECURITIES PROPOSED TO BE ISSUED.

(a) Bonds, notes, or certificates of indebtedness:
Number. Amount.
1. Name of issue
f ,@ $100
2. A mount, §
3, Denominations.!
@ $500 .
4. Dated
I
©61,000
5. Maturity
6. Serial numbers
,.. t o . . .
,
(6) Other securities, if any:
II. PURPOSE OF PROPOSED ISSUE.

(State exact application of proceeds.)

"NOTE.—Secretary MeAdoo and the Federal Reserve Board have repeatedly slated that no capital should be used for purposes not essential
to the prosecution of the war or urgently necessary from the standpoint
of public health and welfare.
III. NECESSITY OP PROPOSED ISSUE.

The applicant must give explicit reasons why the proposed issue can
not be postponed until after the war, and why the necessity of the issue
is greater than.the paramount need of the National Government to conserve thefinancialresources, material, and labor of the country for the
prosecution of the war. It is obvious that this statement must be complete and accurate and sufficient to justify the issue at the present time.
(If applicant desires, an additional statement of reasons may be filed
with this application.)
[Applicant will leave this page blank.]
1. Date application received.,
2. References:
Date referred.

To whom.

Answer received.

Approved or disapproved.

3. Examination and recommendation.
Date

Principal office
Field of operations.
Nature of business..

Re.

Bonds
Notes
Preferred stock
Common stock
Other securities...,

Total
Construction and equipment
Proceeds, iRefunding.,
how used' Working capital
Other uses

APPLICATION BY INDIVIDUAL OR PRIVATE CORPORATION.
Place
Date

,

CAPITAL ISSUES COMMITTEE,
Washington-, D. ,6y.

The undersigned hereby makes application to the Capital Issues Committee with respect to the issuance of the within-described securities,
under Title II of the War Finance Corporation act.
By.
INSTRUCTIONS TO APPLICANTS.

(Read carefully.)
1. To facilitate the speedy decision of the committee, this .form should
be filled out in triplicate, two copies sent to the Capital Issues Committee
at Washington, and one copy to the Federal Reserve Bank in the district where the main office of applicant is located.
2. In addition to the information asked herein, applicant willfilewith
each committee the following:
(a) Attested copy of votes or resolutions authorizing the proposed
issue.
(&) In case the proposed issue is to be made under or secured by a
mortgage, deed of trust, indenture, or similar instrument, attested copy
of such instrument.
(c) Certified copy of last balance sheet of applicant, including a statement of bills payable and income statements for 3 years past, including
last preceding 12 months.
3. If proceeds of proposed issue are intended to be used to develop
mining, oil, or agricultural properties, applicant will file with each
committee a full description of the location of such properties as to
State, county, township, range, and section.
4. If applicant desires, a further statement (in addition to the information requested or contained herein) may be submitted with this
application.
CAPITAL ISSUES COMMITTEE.

Member of Committee.

I. HISTORY OF APPLICANT:

(a) Date of incorporation,
(c) Capital stock:
Par value of
shares.
Preferred stock..
Common stock..

4. Recommendation of executive committee..
Date

Total
(d) Bond indebtedness:
Issue.

5. Action of Capital Issues Committee.
Attest:

(b) State,
Authorized.

Issued,

Amount.

Trustee.

Executive Secretary.

6. Applicant notified..
Date..




Other secured indebtedness (except bank loans):
Issue.
Amount.
By.

(/) Names of directors and officers.

When due.

JULS i,

638

FEDERAL RESERVE BULLETIN".

1918.

(c) Other oapital purposes: (Specify and describe fully.)

II. DESCRIPTION OF SECURITIES PROPOSED TO BE ISSUED:

(a) Bonds, notes, certificates of indebtedness, and other obligations
No.
Amount.
1. N ame of issue
r
@ S1OQ
2. Amount, §
3. Denominations.!
©8500
4. Dated
I . . . . ©81,000
5. Maturity

1. Exchange for property
% Working capital
8. Stock dividend
4. Stock bonus
5. Other purposes

0.
7.
8.
9.

Serial numbers
to
Amount of total authorized bonds of this issue., 8
Trustee
How issued—
Mark X
(a) Public offering
(
) Price
*
(6) Private sales
(
) Price
&
(c) Exchange for property...(
) *
(<Z) Exchange for securities.. (
) *
(ft) Preferred stock:
.1. Name and dividend rate
2. Par value, $
3. Amount, S
4. Total authorized end
unissued
5. How issued—Mark X
(a) Public offering
(
) Price
>?
(6) Private sale
(
) Price
%
(c) Exchange for property...(
) *
(d) Exchange for securities..(
) *
(c) Common stock:
1. Amount, S
2. Par value, $
3. Total authorized and unissued, §
4. IIow Issued—
MarkX
(a) Public offering
.(
) Price
$
(6) Private sale
(
) Price
S
(c) Exchange for property...(
) *
(d) Exchange for securities..(
) *
(O Stock dividend
(
) *
(/) Stock bonus
(
) *
5. Date of proposed offering
* NOTE.—Explain issuance fully under heading ''Purpose" below.
III. PURPOSE OF PROPOSED ISSUE:

(Under one or more of the headings below give; exact application of
proceeds,)
(a) New capita! expenditures, such as construction work, now
equipment, etc.:
1, Describe in detail, with general cost estimate--

2, Whou work will be completed
3, Estimated increase in production

,




IV. NECESSITY OF PROPOSED ISSCK:

1. In all cases, in addition to answering the questions contained on
this form, the applicant must file separately a full statement of explicit
reasons why the proposed issue can not be postponed until aficr the
war, and why the necessity of the issue is greater than the paramount
need of the National Government to conserve thefinancialresources,
materials, and labor of the country for thG prosecution of the war. Jt
is obvious that this statement must be complete and accurate and
sufficient to justify the issue at the present time.
2. If applicant holds any Government contracts, indicate them below:
Number of
contract.

Amount;
involved.

Department or officer.
1

1
i

3. What is proportion of Government or other war contracts to total
business of applicant? (Direct and indirect war work stated separately.)
.......
[Applicant; will leave this page blank.]
1. Date application received
2. References:
Date referred.

To whom.

| Answer received.

Approved or
disapproved.

3, Examination and recommendation.

(6) Refunding existing indebtedness:
Character of !
indebtedness
(i. o., bonds, When incuriiotes, bank
red.
loans, acn-ounts payable, etc.).

...

NOTE.—Secretary McAdoo and the Federal Reserve Board have
repeatedly stated that no capital should be used for purposes not essential to the prosecution of the war or urgently necessary from the standpoint of public health and welfare.

Bate
Member of Committee.

Purpose.

To whom
ownur.

4. Recommendation of executive committee.
Amount.

Date
o. Action of capital issues committee;
Attest:
Executive Secretary.

6. Applicant notified:
Date

By....

684

FEDERAL, RESERVE BCTLLETIJS.

JtJLl I.

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:
Warehouse Receipts for Canned Goods as Security.
(To a member bank.)

Release of Shipping Documents Upon Acceptance of
Draft.
[To an individual.]

Receipt is acknowledged of your letter of
May 30 m which you ask whether it is necessary
where a domestic acceptance is based upon a
bill of lading that^ the bank retain the bill of
lading or other collateral during the life of the
acceptance, or may the bank release the bill of
lading after acceptance. You also ask whether
the same rule will apply in case the acceptance
is secured by a warehouse receipt.
In reply you are advised that inasmuch as the
statute merely requires the accepting bank to
be secured in domestic transactions" by shipping documents or warehouse receipts at the
time of acceptance the bank would" no doubt
have the right, if it became necessary to do so,
to release either the shipping document or the
warehouse receipt, provided the draft or drafts
accepted for one person did not exceed 10 per
cent of the capital and surplus of the accepting
bank. This is a question, however, which
should be determined by the bank itself.
It is no doubt necessary in some instances
for the bank to release the shipping documents
under some agreement with its customer in
order that the transaction may be consummated. There would seem to be much less
reason for releasing the warehouse receipts, and
the banks might very property adopt the rule
not to release warehouse receipts other than in
exceptional cases. In any event, this is
purely a matter of agreement as between the
bank and its customers. The Federal .Reserve
Bank in rediscounting such acceptances may
reasonably take into consideration the question
whether or not they are secured or unsecured
at the time they are offered for rediscount.
MAY 31, 1918.

Your letter of June 5, in reference to the
right ox a member bank to accept drafts or
bills of exchange drawn against the security of
canned goods under circumstances set fortn in
3^our letter, has had the attention of the Federal Reserve Board.
It appears that a certain concern engaged in
the canned goods business proposes to set
aside part of its readily marketable goods and
materials not necessary for immediate purposes
and to place them in storage with a lessee of
part of its premises. The lessee is then to
Issue warehouse receipts to the owners of the
goods, which receipts are to be used as security
for drafts drawn against the member bank and
accepted by that bank under authority of
section 13 of the Federal Reserve Act.
You desire to be informed whether such a
plan would in the opinion of the Federal Reserve Board meet with the requirements of the
statute.
In reply, you are advised that if the premises
in question^ are actually turned over to the
lessee under a bona fide lease, the lessee being
independent of the borrower and having entire
custody and control of the goods, there would
seem to be no objection to a member bank
accepting drafts drawn against the security of
warehouse receipts issued by such lessee. It
should, however, be expressly understood and
agreed that the borrower shall not have access
to the premises except with the permission of Rate on Paper of Acceptance Corporation.
the lessee and that he shall exercise no control
[To a Federal Reserve Bank.]
of any sort over the goods against which warehouse receipts are issued. The warehouse
I have your letter of May 29, in which
receipt must, of course, bo in form to properly you inquire about the proper rate to be given
convey and secure title to the bank.
to acceptances of the
Corporation
of
.
JUNE 10, 1918.




JOLX t, 19-18.

My own feeling In the matter is that acceptances of this corporation ought to be dealt
with exactly as would be the acceptances of a
prime private banker. These acceptance corporations are in the same relation to the Federal
Reserve system as the private bankers. They
can not become members, but, inasmuch as
they expect to give you full information about
their own financial standing and the nature of
their acceptances, and as they exercise a most
important function for the further development
of our acceptance business and discount market, their operation ought to be encouraged in
every respect.
I do not think, therefore, that it would bo
proper to discriminate against their acceptances
when they reach you properly indorsed by a
bank or banker. If they should be offered to
you without any indorsement, then, indeed,
i would discriminate against them—at least
to the extent of one-fourth per cent in the discount rate, if not more.
As you know, I am very anxious to see
adopted in growing measure the habit of
Federal Reserve Banks to insist upon the third
signature for all the acceptances that they
buy.
P. S.- -Since dictating the above, I have had
an opportunity of discussing this letter with
the members of the Board, and they are in
accord with the sentiments that I nave expressed. It is, of course, understood that the
acceptance corporation will publish its reports
and that 7/0u will keep yourself fully advised
as to its assets and obligations, That will,
of course, guide your board of directors in its
judgment as to how large an amount of these
acceptances it will be willing' to take from
time to time.
MAY 31, 1918.
Right of National Bank io Make Loans Secured by FarmLoan Bonds.
MY DEAR MR. COMPTROLLER: YOU asked'
whether, in the opinion of this office, national
banks are prohibited by law from, making loans
on the security of farm-loan bonds issued under
authority of act of July 17, 1916, and known
as the Farm Loan Act.
The question involved seems to be whether
the loans in question come within the classification of loans on real estate. Under the National Bank Act national banks are permitted
to lend on personal security and are impliedly
prohibited from making loans on security of




685

FEDERAL ftE&EBVE BULLETIN.

real estate, except where such security is taken
for a debt previously contracted, or where the
loan meets the requirements of section 24 of
the Federal Reserve Act.
In the opinion of this office, a loan on the
security of a farm-loan bond should not be
classified as a loan on real estate. It has been
consistently ruled by your office in accordance
with decisions of the Supreme Court of the
United States on this subject, that a note secured by another note as collateral, such collateral note in turn being secured by real estate,
does not constitute a loan on real estate. In
such case the security for the note discounted
is the obligation of the maker of the collateral
note and the fact that the maker of this note
is in turn secured by real estate does not mako
the security which* the bank receives a real
estate security. .
In the case of farm-loan bonds, these bonds
are the obligations of farm-land banks. The
bonds, as I understand it, are not secured by
hj mortgage on real estate, but by the notes
or other obligations of various farmers being
held by the farm-land bank. In legal effect,
therefore, the farm-loan bond is in the nature
of a collateral trust bond and the security for
these bonds consists of the personal obligation
of various farmers, which obligations are in
turn secured by real estate.
In the opinion of this office, therefore, notes
secured by farm-loan bonds may be discounted
by national banks.
(Signed)
M. 0. ELLIOTT,
Counsel.
JUNE 10,

1918.

DEAR ME. SECRETARY: I have your letter of
the 7th instant, making inquiry as to whether
or not a national bank may lawfully make
loans on the security of farm-loan bonds, issued
under act of July 17, 1916.
This question has been submitted to counsel,
and I inclose herewith a copy of the opinion
rendered, which holds that notes secured by
farm-loan bonds may legally be discounted by
national banks. This opinion has the approval
of the comptroller's office?.
Sincerely, yours,
(Signed)
J. S. WILLIAMS.
W. W. FLANNAGAN,

Esq.,

Secretary Federal Farm Loan Board,
Washington, D. 0.
JUNE, 21,

1918.

638

FEDERAL. BESEHVE BULLETIN.

JULY 1,1918.

acceptor in their hands without notification to
the acceptor?
Do you see any advantage in one form over
Receipt is acknowledged of your letter of the the other, or can you suggest any improvement
31st ultimo, and I have to-day wired you as in the forms as given ?
follows, which I now confirm:
[Form /.«
Your letter 31st. It being understood that
at
, 191
wool is stored in buildings under control of Accepted
where payable
custodian entirely independent of borrower, Bank(Without
further notice to acceptor.)
of bank
custodian's certificate or receipt, if issued in Address
fli no bank, address of acceptor.)
Name
proper form to convey or secure title, may be
authorized signature.)
treated as a warehouse receipt within the mean- .13 Y (Acceptor's
".
ing of section 13 of the Federal Reserve Act,
[Form 2.)
and acceptance of member bank under such
Accepted at
, 191
conditions would be eligible for rediscount.
Bank whore payable
Receipt of Custodian of Wool as Warehouse Receipt
(To n. Federal Reserve BfrnV.)

JUNE 3,

1918.

Form of Trade Acceptance.
(From and to an individual.)

Various clients of ours send their trade acceptances to all States of the Union and wish
to have them so worded that it would be proper
for a bank in any State, including the State
where the negotiable-instrument la,w has not
been enacted or it has been modified, to pay
the acceptance without previously notifying the
acceptor.
Will you advise me, in your opinion, if the
wording in either form of indorsement, as noted
below, should be sufficient warrant for the
bank to pay the acceptance from funds of the




(If no bank, address of acceptor.)
Address.
(Pay as specified, charge to the account of.)
Name
(Acceptor's authorized signature.)
Bv.
JUNE 5,

1918.

Receipt is acknowledged of your letter of the
5th instant outlining two forms of trade acceptances and requesting an expression of the
Board's preference. The matter was referred
to counsel, and the Board concurs with his
opinion that Form 2 would seem to be the most
desirable, since it contains a specific request to
pay the draft, instead of a mere implied request
or waiver of further notice.
JUNE 25,

1918.

JtitY 1, IStlS.

FEDEBAL EE8J3RVE BULLETIN.

637

LAW DEPARTMENT.
The following opinions of counsel have been ment may be necessary, and to issue therefor
authorized for publication by the Board since war savings certificates of the United States,
the last edition of the Bulletin:
Under the terms of the act ''such war savings
certificates shall be in form or forms and subRediscount of Paper Secured hy War Savings Stamps,
Notes, drafts, and bills of exchange which are secured ject to such terms and conditions and may
by war savings stamps and the proceeds of which were have such provision for payment thereof beused to purchase or carry war savings stamps are ineligible fore maturity as the Secretary of the Treasury
for rediscount with a Federal ."Reserve Bank.
may prescribe/'
The act further provides that--JUNE 8, 1918.
Sut: The accompanying letter from the
"The Secretary of the Treasury may, under
deputy governor of a Federal Reserve Bank such regulations and upon such terms and conraises the question whether notes, drafts, or ditions as he may prescribe, issue or cause to be
issued stamps to evidence payments for or on
bills of exchange secured by w&v savings account of such certificates."
stamps may be red isco tinted with a Federal
From this it appears that while the Secretary
Reserve Bank, it being assumed that the proof
the Treasury in his discretion might issue
coeds of such notes, drafts, and bills of exwar
savings certificates in the form of a bond
change were used to purchase or carry war
or
note,
or in any other form, he deems necessavings stamps.
sary, the war savings stamps, under the terms
Section. 13 of the Federal Reserve act makes
of the act, merely evidence the payments for or
eligible for rediscount with a Federal Reserve
on account of war savings certificates.
Bank The form of certificates prescribed by the
"Notes, drafts, and bills of exchange arising Secretary is more nearly that of a certificate of
out of actual commercial transactions; that is,
notes, drafts, and bills of exchange issued or indebtedness than that of a bond, or note of the
drawn for agricultural, industrial, or commer- United States. It merely provides that subject
cial purposes, or the proceeds of which have to the terms and conditions printed thereon,
been used, or are to be used for such purposes, the owner named in the certificate shall be
* * * but such definition shall not include entitled to receive, on January 1, 1923, the
notes, drafts, or bills covering merely investments, or issued or drawn for the purpose of amount indicated thereon by the war savings
carrying or trading in stocks, bonds, or other stamps or receipts attached.
investment securities, except bonds and notes
Under the terms and conditions printed on
of the Government of the United States."
the certificate, it is expressly stipulated that
It is obvious, therefore, that notes, the pro- "this certificate is of no value except to the
ceeds of which have been used to purchase, owner named hereon and. is not transferable."
carry, or trade in war savings stamps are not In view of this condition, the certificate itself,
eligible for rediscount with a Federal Reserve which is the evidence of the Government's
Bank unless war savings stamps can be treated liability, could hardly be treated as a bankable
as bonds or notes of the United States, within security for loans. This being true, the war
the meaning of the language used in Section savings stamp which is, in effect, a receipt for
payment on account of a nonnegotiable evi13 of the Federal Reserve act.
Section 6 of the act approved September 24, dence of indebtedness, could not, in the opinion
1917, authorizes the Secretary of the Treasury of this office, be classified as a bond or note of
to borrow from time to time on the credit of the United States, and notes, drafts, or bills
the United States such sums as in his judg- of exchange secured by such war savings




638

FEDEBAL BESERVE BULLETIN,

stamps, or the proceeds of which have been
used to purchase, cany, or trade in such stamps,
should not be treated as eligible for rediscount
by n Federal Reserve Bank.
Respectfully,
M, 0. ELLIOTT, Counsel.
To HON. W. P. G. HARDING,

Governor, Federal Reserve Board.

Rediscounts by Member State Banks.
Where a State bank, which is a member of 'the Federal
.Reserve system, has loaned to one of its customers au
amount equal to 30 per cent of its capital and surplus, and
lias rediscounted two-thirds of this amount with a correspondent bank, the remaining one-third is eligible for
rediscount with its Federal Reserve I3ank.
JUKE 21,

1918.

Si a: The attached letter from the deputy
governor of a Federal Reserve Bank raises the
follv >wing question:
A State hank, which is a member of the
Federal Reserve sjrstem, has loaned to one of
its customers an amount equal to 30 per cent
of its capital and surplus. If it rediscounts
two-thirds of this amount with a correspondent
bank, would the remaining one-third which is
equal to 10 per cent of its capital and surplus
be eligible for rediscount with its Federal
Reserve Bank ?
Section 9 of the Federal Reserve Act reads
in part as follows:
Subject to the provisions of this act and
the regulations of the Board made pursuant
thereto, any bank becoming a member of the
Federal Reserve system shall retain its full
charter and statutory rights as a State bank
or trust company and may continue to exercise all corporate powers granted it by the
State in which it is created and shall be entitled to ail privileges of member banks: Provided, however, That no Federal Reserve Bank
shall be permitted to discount for any State
bank or trust company notes, drafts, or bills
of exchange of any one borrower, who is liable




JULY 1,1918.

for borrowed money to such State bank or
trust company in an amount greater than 10
per cent of the capital and surplus of such
State bank or trust company.
It is, therefore, necessary for the Board to
determine whether under the circumstances
recited the bank's customer is liable to the
bank for borrowed money within the meaning
of this act, on notes of the customer which
have been rediscounted with the bank's indorsement, and which are held by a third
party.
It is true that in such case the bank is contingently liable on the notes in question and
may be called upon to pay them if the maker
defaults. The liability of the maker, however,
is to the holder of the notes, which are negotiable, and he does not become liable to the
bank after the notes are rediscountod until
the bank as indorser, has paid the notes or
has again become the holder in due course of
such notes.
This question was considered by the Board
and by the office of the Comptroller in connection with the limitations prescribed by
section 5200, Revised Statutes, on liabilities
to a national bank of any one person, firm, or
corporation.
The conclusion was reached in that case that
notes which have been rediscounted by a national bank and which are no longer owned or
held by the bank, should not be included as
a liability of the maker to the bank for borrowed money within the meaning of section
5200.
The same principle is involved in the present
case, and, in my opinion, the paper held by
the State bank in the case cited, if otherwise
eligible, could be rediscounted with a Federal
Reserve Bank.
Respectfully,
M. C. ELLIOTT, Counsel.
To Hon. P. M. WARBURG,

Vice governor, Federal Reserve Board.

SUMMARY OF BUSINESS CONDITIONS, JUNE 23, 191.8.
General
business.

District.

Industries of the dis- | Construction, building,
and. engineering.
trick
Average, promis- :' Busy..
ing. '
!

No. 1—Boston

Active

No. 2—New York.

Very active.. Good

No. 3—Philadel- Very good
phia.
No. 4—Cleveland..

Good

Excel Ion t

Decreased..

Foreign trade.
Increased.

j

Money rates.

Steady and strong. Mixod.

| Engaged to full capac- Dull, except lor con- Many restrictions, Firm and steady.
struction of Army
but large aggre| ity; w i d e1s p r e a d
adaption oi produc- warehouses, s hh i p - gate.
\ housing
* using for
tion to warcssontJals, yards,
G ovorn merit labor
and factory
struction.
. i Very busy
1

j Satisfactory a n d j Busy
| promising.
j

No. 5—Richmond.. Active, l i m - Excellent
ited only by
labor 'and
supplies.

ilailroad, post office,
and other receipts.

Lai)or conditions.
Scarce: wages high.

Post office increase, Scarcity and high
com.petit, ive
19.28 per cent over
\va30 offers, relast year; railroads
sulting in large
show increase in
gross and decrease
turnover.
in net earnings.

| Very little new build- Largo.
! ing.

Firm; no change... Gross receipts
creasing.

i Very dul)

Increasingly firm.., Increase..

in- Shortage acute in
all lines.
Unsatisfactory;
scarcity.

irregular; Inadequate; unsat] Active, profitably em- Private building neg- Limited by freight 8 por cent; heavy Railroad
isfactory.
room. *
"
demand and inpost office, volume
i ploved.
ligible: Government
creasing.
'
j work active.
large; reflects increased rates.
ft

No. 6—Atlanta..... Good

Very satisfactory..! Busy

No. 7—Chicago

Excellent.

Very active..

Generally at capacity.

I
|
do...-

No. 9—Minneapolis.

do

do

No. 10—K a n s a s
City.

d o . . . . . . . . Good to excellent..

Quite satisfac- Fair to good..
tory.

No. 12—San Fran- Active
cisco.




Unsatisfactory

i Firm.

Unsettled.

Dull.

.do.

Post office receipts de- Very scarce.
crease over" last
month.

.....Do

do....

Increase in postal re- Nearing s e t t l e ceipts.
ment.

I

No. S-St. Louis... Good

No. H-Dallas

Inactive..

Cxood

Active
.do.

Fair

Very firm.

..do

Slightly improved..

Firm

..do.

Building activities be- As satisfactory as Firm, heavy do- Railroad increase and j Unsatisfactory;
low normal; Govshortage in all
shipping space
maud, but slight higher tariffs not noernment work has
ticeablo in travel; [ "branches,
available per- j evidence of inright of way.
post office increase.
mits.
| crease.

..do....

Operations generally Increase
curtailed.

Firm

Not much change

s

1
w

, Good.
Equalization
of
farm d e m a n d
and supply.

Increasing..

More settled.

00
CD

640

FEDEBAL BESEB.VE BULLETIN".

JULY 1,1918.

GENERAL BUSINESS CONDITIONS.
There is given on the preceding page a summary of business conditions in the United
States by Federal Reserve districts. These
reports are furnished by the Federal Reserve
agents, who are the chairmen of the boards of
directors for the Federal Reserve Banks of the
several districts. Below are the detailed reports as of approximately June 23:
DISTRICT NO. I—BOSTON.

The general public is fast becoming accustomed to the idea of precedence for Government business and Government regulation of
commodities and industries. In fact, with
prices of raw materials at the present level,
manufacturers would not be able to plan
future business were it not for the aid given
by the Government. As the participation of
our troops in the war increases, the manufacture of and demand for less essentials decreases, and increased energies are devoted to
war requisites.
Retail merchants are finding on the whole
that the quality of goods purchased by their
customers is above the average and that the
increase in their cash business is greater than
in the case of charge accounts. This follows
the trend apparent for some months past,
namely, that labor engaged at high wages is
buying freely, while persons of means or living
on a fixed salary are obliged to economize
because of the increased cost of living.
Retailers note a contraction in the volume
of their sales during months in which large
Government payments are due, cither for
Liberty loan bonds or for taxes, and the income
and excess profits taxes due this month have
proved no exception. Nevertheless, taking the
first six months of this year as a whole, business
in many lines shows an increase over corresponding months last year, not only in dollars
but in units.
The labor situation continues without change,
employees being hard to obtain for lines out-




side of emergency work, for which extremely
high wages are paid.
Antiloafing legislation has been passed and
committees have been formed in different States
to work out a solution of this problem. Results
in this direction should soon be apparent.
Domestic wools are coming in freely from the
West and are being distributed to mills as fast
as possible. South American wools are not
coming forward as satisfactorily as might be
desired, due to the difficulty of securing tonnage. There is no trading between mills or
dealers, and none of the domestic wools are
being allotted for civilian needs.
Woolen and worsted mills are running at
capacity. The statement of the National Association of Wool Manufacturers, under date
of June 19, 1918, reports practically all spindles
in operation. Of these nearly 50 per cent are
engaged on war orders.
Boot and shoe manufacturers, although running as full as practicable, report an unsatisfactory condition in both labor and raw materials. The leather market is strong and steady,
holding its recent advance. The British War
Mission has been buying seven to eight million
dollars' worth of sole and upper leather to be
used in England for civilian shoes under Government restrictions.
The United States Government has canceled
licenses issued for the importation of hides in
all but a few exceptional cases, and this together with expected price fixing, has made for
a strong market. Manufacturers are gratified
by the Government ruling restricting the styles
and height of shoes, feeling that it will enable
them to concentrate on particular styles and
effect economies.
Cotton mills making fine and fancy fabrics
are, for the most part, sold well into the fall
and consequently are indifferent in regard to
new orders. The prospect of Federal price regulations has caused both buyers and sellers to
refrain from commitments until the matter is

JULY 1,1918.

FEDERAL RESERVE BULLETIN.

more definitely settled. As a consequence,
orders are slow, although prices remain firm.
Manufactures of print cloths are sold far ahead
and it is reported that in some cases orders
have been placed up to next March, where
mills would accept such business.
Good average growing conditions for crops
have prevailed during the past month. The
growth of corn has been retarded by cool nights.
Potatoes continue to do well.
Garden crops are making good progress,
although a higher temperature would be beneficial. Apples are dropping somewhat more
than usual at this season, and haying is beginning in the southern portion of New England,
with the growth on old fields light, but good on
new ground.
The payment of income and excess profits
taxes has not been felt by the banks to any such
extent as had been anticipated, due to the immediate redeposit of funds with the banks on
whom the checks were drawn.
Banks are maintaining a conservative lending policy and are keeping their assets in as
liquid a condition as possible to meet withdrawals of these Government deposits, but it
is to be expected that when this large amount
is called by the Government, considerable rediscounting with the Federal Reserve Bank will
result.
The statements of banks and the general
money market will not reflect the true condition caused by these payments until after the
Government has withdrawn the money now on
deposit.
Call money remains 5£ per cent to 6 per cent,
generally 5£ per cent. Time money is quoted
6 per cent, with very few exceptions. In the
case of borrowers carrying large balances there
is an occasional shading to 5-f per cent for short
maturities.
The commercial paper market is quiet, with
6 per cent the going rate for all names and
dates.
The exchanges of the Boston clearing house
for the week ending June 15, 1918, were $370,045,043, compared with $266,557,142 for the




641

corresponding week last year, and $291,441,064
for the week ending June 8, 1918.
Building and engineering operations in New
England from January 1 to June 12, 1918,
amounted to $64,867,000, as compared with
$87,034,000 for the corresponding period of
1917.
The receipts of the Boston post office for
May, 1918, show an increase of $99,336.63, or
about 13 per cent more than May, 1917. For
the first 15 days of June, 1918, receipts were
about 17 per cent, or $62,643.05 more than for
the corresponding period of last year.
Boston & Maine Railroad reports net operating income, after taxes, for April, 1918, of
$784,977, as compared with $869,026 for the
corresponding month of 1917.
For April, 1918, the New York, New Haven
& Hartford Railroad reports operating income,
after taxes, of $1,224,097, compared with
$2,046,685 for April, 1917.
For the first four months of this year operating income, after taxes, of the four principal
New England roads was $2,758,133, as compared with $10,780,170 for last year.
Loans and discounts of the Boston clearing
house banks on June 15, 1918, amounted to
$499,730,000, as compared with $503,733,000
last month, and $455,330,000 on June 16, 1917.
Demand deposits on June 15, 1918, amounted
to $458,431,000, as compared with $464,336,000
on May 18, 1918, and $352,879,000 on June 16,
1917. Time deposits on June 15, 1918, totaled
$14,780,000, as compared with $16,179,000 on
May 18, 1918, and $34,657,000 on June 16,1917.
The amount "duo to banks" on June 15,
1918, was $125,771,000, as compared with
$129,078,000 on May 18, 1918.
DISTRICT NO. 2—NEW YORK.
Widespread absorption by the Government
of industrial products essential for war, and
increase in the scope of the Government's supervision over industry, especially through
control of raw materials, are the important
features in the present business situation.
Business is active and manufacturing is as near
maximum capacity as restricted supplies of

642

FEDERAL RESERVE BULLETIN.

raw material and difficulty in obtaining adequate labor will permit.
Under arrangements made June 8 between
the Government and the American Iron and
Steel Institute, industries using iron and steel
on other than war orders will receive little material. About 85 per cent of the pig-iron output is reported as being necessary for war purposes, although the present rate of production
is the highest on record—in May, 3,446,412
gross tons, or 111,175 tons per day. Practically all iron, finished steel, and scrap in the
vicinity of New York City and Buffalo is being
availed of by plants occupied in the production
of munitions, railroad equipment, shipyard supplies, and other war materials. To avoid excessive congestion of industry, the War Industries Board with the Fuel and Railroad
Administrations on June 11 determined that no
future war orders should be placed in New York,
New Jersey, and other eastern territory, unless
arranged with their joint consent. The Fuel
Administration estimates that the country will
need 735,000,000 tons of coal in the year which
began April 1, or 84,000,000 tons more than the
production in 1916-17. The Anthracite Committee has increased the allotment for 1918-19
to States in this district, as follows:
New York. New Jersey. Connecti-

cut.

1918-19 (tons)
1916-17 (tons)
Increase (per cent)

{

15, 655,300
14,169,809
11.89

5,460,784
4,961,822
10. G4

2,476,700
1,952,000
26. 82

Actual coal stocks on hand at New York City
are very small, and although receipts of both
anthracite and bituminous increased during the
4-week period, May 20 to June 17, the demand
for domestic sizes of anthracite and for commercial coal exceeded supplies. Demand for
petroleum products also exceeds supply, largely
because of utilization of a considerable part of
the oil-carrying fleet of tank steamers in overseas transportation.
Traffic on railroads east of the Mississippi is
flowing smoothly, only 11,000 cars above normal being recorded as in transit on eastern
lines June 14, compared with 160,000 in Jan-




JULY 1,1918.

uary, when congestion was acute. April reports for the 34 roads of the eastern region show
increased gross earnings and mileage, net earnings being cut by high operating expenses:
Gross
earnings.
Eastern region (34 roads):
|
April, 3918
i8101,093,476
April, 1917
! 85,661,811
Net change (increase)
per cent.. I
18.03
Entire United States (194 roads), j
net change (increase). .per cent.. I
15.70
1

Mileage.

29,463
28,120
4.05
.9

Net
earnings.
§18,916,307
20,916,618
19.56
i 18.51

Decrease.

Lumber prices are extremely high due to the
fact that logging operations have produced
smaller output than usual. Improvement-in
rail facilities have, during recent weeks, permitted shipments of pulpwood from Canada,
which, if continued, will assure a sufficient supply for the paper mills.
Demand for window glass is active but light
for plate glass, cut glass, and mirrors.
Automobile plants are restricting output of
passenger cars to 30 per cent of capacit^y, and
in addition to devoting their plants to making
trucks are making gun carriages, mine anchors,
tractor parts, artillery wheels, and in some instances installing machine^ to make shells.
In the textile industry 50 per cent of knit
goods, 75 per cent of denim, 100 per cent of cotton duck, and 60 per cent of woolens are being
applied to Government use according to an
estimate in Dun's Review. The Government
on May 20 requisitioned the entire 1918 wool
clip. High prices of both cotton and iflbolen
materials have encouraged a relatively greater
utilization of silk in civilian trade, though high
and uncertain prices for raw silk resulting from
scarcity in the Orient and shipping difficulties,
have held the production of the mills down to
about 65 per cent capacity, and caused the price
of manufactured goods to advance sharply.
Increased demand for burlap, which is being
extensively used instead of wood in packing
goods for shipments, is coincident with decreased imports from Dundee and Calcutta, the
two principal sources of supply, so that stocks
are short.

JULY 1,1918.

FEDERAL RESERVE BULLETIN,

The money volume of the dry goods movement is large, with increase in sales of medium
priced goods, while sales of those of high grade
are decreasing. Purchases of clothing and
woolen materials are being made by retailers
in advance of the season, partly because of apprehension of later scarcity, and retail sales are
heavy, Business in the fur trade has been very
good, both wholesale and retail, especially in
towns outside of New York city. Chain stores
are having a very active business. Business
in the shoe trade is active despite recent sharp
price advances due to higher cost of leather.
Collections are reported good in practically
all lines, with exceptions only in drugs and
chemicals.
Governmental restrictions have greatly reduced exports to countries not allies in actual
fighting, including articles which made heavy
volume in normal times, such as steel, wheat,
flour, and coal. Imports of some articles are
absolutely embargoed, while others, including
provisions, crude rubber, etc.. have been restricted because of tonnage scarcity. Coffee
prices are slightly lower than in 1914, speculation being discouraged by price regulations;
tea prices are somewhat higher with heavy
volume of purchases, including contracts for
the Navy. Supplies of sugar arranged for by
the International Sugar Committee, are being
exported from Cuba and Porto Rico in quantities increasing during the course of the month,
and materially larger than last year. Deliveries at refineries on a percentage allotted basis,
are reported adequate to meet consumption on
the basis approved by the Food Administration.
Extended acreage, excellent condition and
probable large yield of grain, decreased planting
of potatoes, and favorable orchard conditions,
except for peaches, are reported in this district.
Following the completion of the third Liberty loan campaign, capital issues increased
in volume, and a number of oil, gas, shipping,
chemical, and munitions companies were incorporated. Federal farm loan bonds amounting to $60,000,000 were quickly taken by investors, their tax-exempt character being an




643

important factor in stimulating sales. A serious problem in public utility financing is
being solved by the War Finance Corporation,
which is making the Brooklyn Rapid Transit
Co. a direct loan of $17,320,000 to assist in
meeting a $57,735,000 note issue due July 1,
on condition that holders of the notes exchange not less thai). 70 per cent of their holdings for notes of a new three-year 7 per cent
issue.
Stock market prices have recovered from
the low point touched around June 1, following a rather sharp reaction dining the last week
of May. BOTH! sales have increased with moderately declining prices. Demand for municipal and other tax-exempt obligations has been
quickened by the proposed increase in Federal income taxes.
Payment of income and excess profits taxes
have been made without disturbance of money
market conditions and with much less strain
than had been anticipated, the loans of the
Federal Reserve Bank of New York showing
a heavy decrease during the tax-payment
period. Call money, though frequently reaching 8 per cent, has been readily obtainable, and
eased materially after June 15, the tax payment date. During early June substantial
amounts of time loans on stock exchange collateral were made, though funds for this purpose continue scarce, Commercial paper has
been sold in fair volume throughout the month
at rates close to 6 per cent.
DISTRICT NO. 3—PHILADELPHIA.

General confidence in the business situation.
is denoted by the liberal advance buying
throughout the district. The retail demand
for seasonable merchandise continues quite
active, although the steady decrease in the
variety of goods being offered by the leading
stores and uniformly high prices are causing
a well-defined tendency toward economy. In
all lines increasing difficulty is being experienced in replenishing supplies, and the growing shortage of competent labor is an embarrassing feature.

644

FEDERAL RESERVE BULLETIN.

The railroad freight-car movement has greatly improved. A new record for the movement
of freight to and from the South, in any one
day, over the Philadelphia, Baltimore & Washington Railroad, was made in the 24 hours
ending at midnight, June 16. Figures compiled that day show that 3,326 cars were counted passing Edgemoor, Del., the principal observation point on the southern division of the
Pennsylvania Railroad. The east and west
movement via the main line of the Pennsylvania Railroad also continues to be of recordbreaking volume.
Coal is moving more freely. Production is
decidedly better, but the situation generally is
becoming more critical, as the demands of
war industries and for domestic use are estimated at 80,000,000 tons more than was produced last year and the labor supply is gradually being depleted. Some of the men are
leaving for higher wages with war industries
and others are being drafted into the Army.
Some collieries, because of labor shortage,
claim they are unable to operate at more than
50 per cent capacity. The only change of
note in the bituminous situation is in the fact
that the car supply is better than it has been.
The improvement is to such an extent that
there are in some places more cars available
than can be loaded. Here, too, the matter of
sufficient and efficient labor will need attention.
Compared with the average for 10 years,
the general condition of all crops in the States
in this district is indicated as follows: Pennsylvania, 101.4 per cent; New Jersey, 101.4
per cent; Delaware, 94.4 per cent. New
Jersey wheat is improving, truck crops are
good, and there are excellent prospects for
hay. In Pennsylvania considerable corn must
be replanted. Wet ground has prevented cultivation. Early potatoes, oats, and rye are
in fine condition. In Lancaster County the
number of tobacco growers is approximately
10,000, arid the 1918 acreage is about 25,000.
At least 75 per cent of the new crop is planted.
It is making good growth, the weather being
favorable. The embargo on importations of




JULY 1,

1918.

Sumatra and Java leaf has caused renewed
activity in Manila and Porto Rico, and large
quantities of the former are being received.
Steel, like most of the big industries, is working nearer capacity than at any time this year.
The resolution adopted by the War Industries
Board and the American Iron and Steel Institute that all pig iron and steel products shall
be shipped hereafter only on priority certificates or to a preferential list of industries will
make little, if any, difference, as steel plants
have been for many weeks shipping almost all
of their products as the Government directed.
The iron and steel industry has shown a rather
notable improvement during the month of
May. The production of pig iron was the
greatest in its history with the exception of
October, 1916, the output being 3,446,000
tons, compared with 3,288,000 for April of this
year and 3,417,000 for May of last year. Steel
production has also increased considerably,
the output of this commodity amounting to
2,513,000 tons during May, compared with
2,411,000 the preceding month and 2,404,000
tons in May, 1917. Labor shortage has become a more important factor in mill and furnace operations, and in some districts, there
has been at times an excess of cars over loading capacity.
The building situation continues quiet, new
construction being confined almost exclusively
to the erection of buildings for the Government or war industries, although it is reported
that plans are being made for a large number
of dwellings needed to accommodate the great
influx of labor attracted to Philadelphia, by the
increased activity at the shipyards and other
manufacturing plants.
Cotton mills are well sold ahead. Yarns are
scarce and high. The Government is requiring
more and more of the product.
The Government has complete control of the
wool situation, and it is stated that the tradingprofit in the business has been practically eliminated. Some houses have reduced their working forces and are making no effort to get
business

JULY 1,1918.

FEDERAL RESERVE BULLETIN.

Textile manufacturers have all the business
they can take care of. more, in fact, than they
can handle comfortably, considering the labor
and transportation difficulties, and the scarcity
of raw materials.
Chemicals and dj^estuffs are active and command good prices, while collections are good.
Drugs are in demand, with scarcity in imported
goods. The Government demand is very large.
The demand for printing papers for domestic
consumption is practically normal, but it is
increasingly difficult to secure reasonably
prompt deliveries. On the other hand, the demand from foreign countries, which under existing conditions are obliged to look to the
United States as the only source of supply, is
phenomenally large.
The money market continues firm, the prevailing rate for paper being 6 per cent. Increased activity is noted in the sale of bonds and
other securities. Tax payments and withdrawals from member banks of Government
deposits increased the demand on the bank for
loans, which on June 18 amounted to $83,677,402, the largest amount outstanding at any one
time. Total discounts and loans to member
banks during the month of May amounted to
$71,966,894; rediscounts for other Federal Reserve banks amounted to $2,038,200. Acceptances purchased amounted to $11,419,746, a
total of loans and investments during the month
of $85,531,840, compared with $61,161,414 in
April, and 125,878,818 in May, 1917.
DISTRICT NO. 4—CLEVELAND.

The concentration of the efforts of commerce
and industry on the production of articles
most needed by the Government for its own use
and the support of the allies continues. Business generally is measuring up to the necessities
of the times to escape the drawbacks which beset unnecessary production, and throughout the
entire district there is apparent a substantial
confidence that shows faith in the future.
Agriculture.—In the northern part of the
district considerable damage is reported to fruit
trees by reason of the extreme cold of the past
winter, and early frosts have in places killed the




645

fruit. In the southern part of the district
wheat is now being harvested, and prospects for
a large yield were never better. In the northern part the outlook for this grain is improved
over last month. Generally for the district it is
expected that the crop will surpass the average.
In the Toledo district corn is said to be two
weeks further advanced than at the same time
a year ago, while in other places it is reported
somewhat backward but doing fairly well. In
some districts the oats are already headed, and
generally throughout the district the prospects
for a good yield are almost certain. The acreage in potatoes is large. In some parts of the
district it is reported that this crop is suffering
from lack of rain. It is yet too early to estimate the amount of the yield.
War gardens in the city and suburban districts axe of larger areas than last year; small
vegetables are growing well, and arc of exceptional quality. Apparently a great many people will be able fully to supply their own needs.
Labor.—The pressing demand for labor continues. However, in the large manufacturing
districts it is believed that the labor situation
is less difficult than last month, or a realization
that a shortage is to be expected has resulted
in an acceptance of the fact. Girls and women
are being employed in increasing numbers.
Agriculture and industry are intensifying their
efforts to meet the loss occasioned by the men's
leaving for the camps.
Collections.—It is generally reported that
there is very little cause for complaint in this
line. The number of requests for extensions is
not more than usual, and failures for the district are below the average. It would seem
that a closer scrutiny of credits and a scarcity
of goods tends to confine sales to the responsible
buyers.
In quarters where a slight tendency toward
deferred settlements is reported, it is explained
as a result of heavy tax payments at this time.
Transportation.—Transportation service in
the main is only fairly satisfactory, although
somewhat better than a month ago. However,
there are still complaints from a number of districts. These complaints are for the most part

646

FEDERAL RESERVE BULLETIN.

from districts which are largely dependent on
one line of industry, and due to embargoes this
industry has been placed in an unusual position.
In some quarters delays have had a rather
serious effect on smaller companies.
Mercantile lines.—The jobbing business continues to be very large, and promises to exceed
the average for the season. Prices are increasing, a strong demand is apparent and seasonable goods axe readily disposed of.
Retailers in the large manufacturing districts
report an increase over last year in money
value of sales due to the increase in the cost of
merchandise, but that the sales and actual
volume of business is smaller than in previous
years.
In some of the outlying districts it is reported
that the wave of economy is affecting merchants
to a considerable extent and that business is
not as active and sales have decreased in number.
Manufacturing.—Operating conditions surrounding blast furnaces and steel mills show a
marked improvement, and capacities are being
increased. It is said that practically 95 per
cent of the material produced in the district is
being taken by the Government either in direct
shipments or indirectly as raw material to concerns outside who are furnishing the finished
product to the Government,
The demand for pig iron is very heavy, and
firms not engaged along essential lines have
difficulty in obtaining a supply. A brisk
demand is noted for structural steel and iron
for bridge purposes and for use in additions to
manufacturing plants. A shortage in sheet
bars has very materially reduced the output of
mills using this product. Generally in all lines
of iron and steel manufacture the demand is
unequal to the supply, and production is at the
maximum when supplies, labor, and transportation can be secured.
Face brick manufacturers report a very
much decreased output due to the general depression in building lines. The character of
the buildings being erected is such as not to
require a desirable quality. Window glass




JULY 1,1918.

manufacturers continue to operate under restrictions, and very little change is reported in
this line.
The demand for pottery is greater than the
production, due in part to the scarcity of a
sufficient labor supply to operate the plants
to capacity. Inadequate transportation facilities also conspire to reduce the output, and in
some quarters brick and sewer-pipe kilns have
ceased operation. In many quarters in the clay
products line an uneasiness is felt as to the
final outcome of this class of manufacture as
to what extent their products will be ruled as
nonessential.
Coal production is still short of expectations,
and little change is noted either from the standpoint of production or in the strong demand
which still continues. It is reported by large
producers that this industry is still very much
hampered through lack of transportation
facilities, and a fear is expressed that if these
facilities were adequate a supply of labor could
not be obtained. Ketail dealers report difficulty in receiving supplies sufficient to fill
orders already booked for domestic use,, and it is
equally true of both bituminous and anthracite, partly due to householders' placing orders
now which in other times would be placed later
in the year.
Building.—In sporadic instances only the
building permits show an increase over last
year, due to furnishing homes to workmen
where large Government plants have been
erected. The general decline continues. In
a number of instances there is reported a shortage of housing facilities, and, in general, the
operations in this line are confined to cases of
absolute necessity.
Money and investments.—The demand for
money is very strong, and the ruling rate is 6
per cent. In some quarters an inclination is
shown to increase this rate on other than commercial and Government loans. Tax payments
have been provided for, and bankers are now
looking forward to the purchase of certificates
of indebtedness to take care of subscriptions
to the new loan.

JULY 1,1918.

FEDERAL RESERVE BULLETIN.

DISTRICT NO. 5—RICHMOND.

The financing and collection of Liberty loan
subscriptions and income taxes have held the
center of the financial stage in this district
during the past month. They have made
large demands on the resources of the district, and a material expansion of loans in the
banks and in the Federal Reserve Bank has
been a natural sequence, but it has been
accomplished with a smoothness which has
caused scarcely a comment.
Jobbers and retailers report active demands
for all classes of goods, sales largely for cash
and limited only by supplies. Money was
never so plentiful with wage earners and they
are spending it freely, almost recklessly. In
the port cities of the district retail business
has been extraordinary on account of large
increases in the volume of labor on Government and other work. Interior points where
Government activities are on an extensive
scale report similar conditions. A large packing house advises that although the demand
from the country districts is not up to that
of the corresponding period last year, which
is due to the supply of home-cured products,
this is more than offset by the increased demand from the larger towns and cities and
manufacturing districts which take a product
of better class and higher price.
Crop reports are too favorable to justify the
expectation that present conditions can be
fully maintained. Weather conditions have
been so far above the average that a reaction
to restore the average would only be natural.
"Have never seen crops in such fine condition" is the general tenor of reports. Cotton
prospects are said to be the best since 1911: a
dry May resulted in good stands and the crop
is reported in excellent condition. Some reports indicate a reduction in corn acreage, but
corn, wheat, oats, and hay promise an abundant yield. Final results depend largely on
success or failure in harvesting. A large
miller reports that "wheat milling through
this section has been extremely dull for three
months, but we have in prospect at the present
time a local crop of both large acreage and




647

very promising appearance. Cutting will begin
within the next 10 days, so we figure that by
early July our wheat mills will be again in
operation, with the prospect of an unusually
large crop. Due to the regulations of the
Food Administration calling for substitutes, in
order to help out the short wheat crop of 1917,
we were unusually busy in our corn mills for
the late winter and early spring months, but
this business has now slowed down, due to the
heavy early buying and to the fact that vegetables are now becoming plentiful, which
always cuts the meal demand with us." Truck
shipments have been very heavy and some
sections report profitable returns, but others
report that the high cost of production has
left no net.
Tobacco in Virginia and North Carolina is
about the same as last year, South Carolina
reporting a considerable increase. The crop
is in average condition. The South Carolina
season opens July 1, the North Carolina season
will follow closely, and the Virginia season is
expected to open by August 15. Stocks of
leaf tobacco of all grades held by dealers for
sale are smaller than known for 25 years,
especially tobacco suitable for cigarette manufacture. The only considerable stocks held
are those already purchased by manufacturers.
Grazing sections report good shipments of
cattle and lambs at double former money
values, the returns realized being highly satisfactory.
Canning is reported to be normal, a good
supply of corn, peas, and beans being obtainable.
The output of lumber has decreased to 50
per cent to 60 per cent of normal. Some mills
report that cars are a little more readily
obtainable, but there is still general complaint
in regard to shortage, and also the difficulty
of shipping by water. Labor continues a difficult problem. A prominent manufacturer
says: "Contractors performing work for the
Government at cost, plus 10 per cent, have
certainly demoralized labor ail over this part
of the country, and, if this is to continue, it
looks to us as if the lumber mills and other in-

648

FEDERAL RESERVE BULLETIN.

dustries necessary to the prosecution of the
war are going to have to shut down; that is,
if the Government insists upon fixing prices
at or below the cost of production, they are
going to have to take over the industries or
allow the owners to operate same under an
agreement to furnish the Government such
lumber as it may require on the basis of cost,
plus a small profit."
Manufacturers in all lines are running to
capacity, limited only by labor and supplies.
Coal conditions are reported as improving, with
a better supply of cars, but the complaints of
inadequate labor are reiterated. Women are
beginning to take the place of men in lighter
lines of work, but this has not yet obtained to
any very considerable extent.
The views of a large textile manufacturer on
the banking situation may be considered disinterested. He says: "Southern banks having been well supplied with cash, due to the
general prosperous condition of the section,
have taken care of all legitimate needs of their
customers, as well as thoroughly backing up
in proper patriotic spirit all war efforts of financial character. The section could hardly have
a better general condition or a more favorable
general outlook."
General crop and commercial conditions
throughout the district are highly favorable,
Government operations at the various camps
and on the coast are extremely active, and
large disbursements are the result.
DISTRICT NO. 6—ATLANTA.

There is very little incentive to engage in
any new business—primarily on account of the
high cost of raw material, as well as machinery
and other necessities, and secondarily on account of the difficulty in securing delivery of
these things. Some of the older manufacturing establishments in our district have enlarged
on account of the necessities of the times, but
there has been no desire to do this.
Agricultural.—Alabama: Cotton conditions
in general throughout the State of Alabama are
fair to good. The crop has made good growth.




JULY 1,1918.

However, reports of the spread of the boll
weevil are somewhat discouraging.
The wheat crop for the State is reported as
1,640,000 bushels, as compared with 930,000
bushels last year. The acreage of oats and
corn is found to be 583,000 bushels, as compared with 540,000 last year. Figures on the
hay crop show more than double of that of last
year. Agricultural conditions in general for
the State are very promising.
Florida: Crop conditions in general for the
State are reported the best for the past 30
years. The acreage to cotton will not exceed
that of 1917. The reason that cotton has remained at a practical standstill regarding
acreage is that the agitation in Congress over
the reduction in price of the staple has caused
many farmers to fear a loss in case they should
increase their acreage. In numerous instances
in this State where larger acreages had been
planted much of it was plowed up and planted
to corn because of this belief.
Peanuts are fair to good, as are also castor
beans, citrus fruits, melons, and tobacco.
Some rust and spider are reported locally in
citrus groves.
Large areas of the State have been planted
to wheat, and the greater part of this staple
has been harvested. The oats crop is the
largest known, and has all been harvested,
and reported of the finest quality.
Georgia: Crops on an average throughout
the State indicate that they are about three
weeks late, but they are in very good condition, except the cotton crop in the boll
weevil sections. The conditions relative to
the boll weevil are worse than at this time last
year. While making a tour of south Georgia
the last few days it was observed through the
coastal plains section that thousands of acres
of cotton are being plowed up and planted to
corn and cow peas, on account of the ravage
of the boll weevil. There will not be an acreage equal to that of last year to be cultivated to
maturity in cotton, and speaking conservatively
it may be said that acreage to cotton this year
will be 10 per cent less than last year.

JULY 1,1918.

FEDERAL RESERVE BULLETIN-.

The setting out of sweet-potato slips continues, and it seems that even a larger crop
has been planted than last year. The planting
of peas for hay is under way; com is reported
good to excellent and earing well.
In the northern districts the harvesting of
wheat and oats is nearing completion. However, spring oats remain yet to be harvested.
The peach crop is abundant, and reported
of good quality, although having been damaged
in some portions of the State by storms. The
conservation of ice has been ordered to make
sufficient ice available to move the large crop
safely.
Louisiana: The weather throughout the
State has been generally favorable, but the
showers were irregularly distributed. Cotton
is in good condition, and is blooming. It is
mostly well cultivated. Reports of the boll
weevil are increasing.
Corn and some sugar cane have been "laid
by." The potato, oats, and wheat harvests
are mostly completed.
Good crops of pears, plums, and peaches are
being gathered.
The sweet-potato acreage will be increased
from 15 to 20 per cent over that of last year.
Mississippi: Crop prospects for the State are
reported very satisfactory. Cotton is blooming and fruiting, and a considerable increase
in acreage over that of previous years is reported. Oats and wheat have been harvested,
and while the acreage was small, the yield is
highly satisfactory. Corn prospects all over
the State, due to the favorable weather conditions, are excellent. Alfalfa is doing splendidly
and has been cut for the second time. Potato,
oats, and wheat harvests are practically completed, the season having been especially favorable. There appears to be a large supply
of sweet-potato slips, and a large acreage is
expected.
Tennessee: Due to the lack of rain, crops in
general are suffering. However, weather conditions for harvesting wheat, rye, and winter
oats were good.




649

The outcome of the wheat crop has been
somewhat disappointing, it being reported that
the heads are not well filled, due to rust and
other diseases having affected the grain in its
final development.
Corn, cotton, tobacco, potato, and other
staples are doing well. Corn to some extent
has been laid by. The large production of
tobacco from this State is now being moved at
most satisfactory prices.
Building.—Building continues inactive, with
the exception of Government construction
work. This is primarily due to the desire of
city and town authorities to comply with the
wishes of the Government that unless absolutely necessary for the general health and
welfare very few new buildings should be constructed.
The Capital Issues Committee for this district has received many applications for the
issue of new securities, but very few have been
granted; and only those that are absolutely
necessary for the national interest, and for the
particular communities where it is shown that
the health demands require it.
Labor.—Labor conditions continue very unsatisfactory, and this becomes more manifest
daily. Women are largely taking the places
of men in the fields, running elevators, and
doing other manual labor heretofore entirely
done by men and boys.
Live stock.—The live-stock industry throughout the district is increasing rapidly, and to
meet the demands in this section Montgomery,
Ala., has recently built and opened a large
stockyard plant.
Iron and coal.—Business conditions in the
iron and steel industry as to demand are most
satisfactory, but labor conditions in this industry and others whose products enter into
the manufacture of iron and steel have never
been more unsatisfactory. Wages now paid
bring to the men an income not heretofore
received, and this results in their working three
to four days, and not in excess of five days
per week. This decreases production of coal,

650

FEDERAL EESERVE BULLETIN.

ore, coke, and commodities necessary for the
manufacture of iron. As to skilled labor, it is
difficult to keep in the service competent men,
on account of high wages paid in Government
operations, although the present scale paid for
such labor is in excess of any maximum scale
heretofore employed.
Financial,—Statistics on business conditions
for the month show a marked improvement.
Money rates are firm, and banks are rediscounting very freely. Banking operations in general
are in a very healthy condition. Figures for
the sixth district show 40 failures for the month
as against 115 in 1917, involving $209,110 as
against $1,439,019 for the year 1917. Stocks
and bonds are bringing unusually good prices.
DISTRICT NO. 7—CHICAGO.

The most favorable single condition in this
district is that of the very promising state of
the crops, except in Michigan.
There is a strong and continuous demand
for money generally, and rates are therefore
hard at 6 per cent or better. Banks lose
deposits when the Government borrows, only
to regain them temporarily, through redeposit,
or in the ordinary course of business. Tax
payments are reported to have been made
without inconvenience.
Transportation facilities record a marked
improvement, resulting in better distribution
of raw and finished material.
An unusually strong purchasing power is
observed to exist in manufacturing centers
where labor is fully employed at high wages.
Retailers report an insistent demand in the
cities and find difficulty in financing their
business, which under present conditions requires, or is thought to require, heavy stocks.
Country retail trade is at this time somewhat
backward on account of the intensive field
work of farmers. Because of Government regulations wholesalers in textiles are denied the
usual variety of lines, but still record increasing money returns. In the trade there is a
movement toward cash payments and shorter
terms.




JULY 1,1918.

Short-term notes and municipals have an
active market. Long-term bonds are reported
not in great demand. Prospective investors
in public utilities are uncertain on account
of the present attitude of the War Finance
Board against rendering direct assistance.
In the agricultural implement line there is
no change from the conditions frequently
reported in the past, namely, large demand
with insufficient material and transportation
to enable producers to meet it. It is mentioned
that farmers are repairing old machines wherever possible. Crop promise would appear to
justify confidence in continuance of excellent
collections.
Passenger automobile manufacture is reported curtailed from 50 per cent to 75 per
cent, due to Government priority in the steel
supply, as well as to the diversion of these
factories to the manufacture of trucks, aeroplane engines, and ordnance. Demand for
passenger vehicles is, of course, excellent but
beyond the ability of manufacturers to satisfy.
There is no complaint that automobile manufacturers are being financially injured but
simply that the advent of the Government as
a customer operates to exclude the civilian
public.
No new activity or improvement is observed
in the building line. Banks quite generally
are discriminating against loans the proceeds
of which go into fixed investments. Inability
to secure funds, together with high costs of
labor and material, offer a ready explanation
of the marked recession over past years. May*
1918, building permits granted in 15 cities of
the district, including Chicago, aggregate 3,080
for a value estimated at $9,700,000, against
4,947 permits in May, 1917, estimated at
118,800,000. The number of permits granted
in May, 1918, in Chicago was 379 against 619
for the same month last year. Values were
respectively $3,700,000 for 1918 as against
$6,500,000 for 1917. May of this year shows
approximately a 50 per cent improvement
over April in valuation of buildings for which
permits were granted.

JULY 1,1918.

Improvement in car supply would permit
a fair distribution of coal for next winter's
requirements. Agitation of the need for providing against a repetition of last winter's
shortage has brought out an excellent demand.
Supply is now restricted to some extent by
labor scarcity.
Confectioners experience seasonal dullness*
However, the restriction against the use of
sugar prevents their filling even the reduced
volume of orders. Transportation is somewhat improved. Labor is scarce and independent. Collections are good.
There is nothing new to report in the whisky
business. Liquidation of stocks continues at
mounting prices. Maltsters and brewers are
seriously hampered by labor shortage. Domestic distribution is improved, with good
transportation facilities, but export permits
are not obtainable.
There is a tentative agreement between cotton goods merchants and manufacturers and
the War Industries Board that all sales made
for delivery after January 1, 1919, be made at
prices to be agreed upon later, and that all
bona fide sales made after June 8, 1918, for
delivery after September 30, 1918, be subject
to price revision. This is taken to mean a
reduction and has caused hesitation in buying.
Still, demand continues strong, while goods are
scarce. Retail purchasing power is great on
account of high wages and salaries.
Business in the furniture line enjoys increased volume due to high prices and not to
tonnage. Some orders are being placed against
further advances. Cost of doing business is
continually on the increase.
As the season advances with nothing to mar
crop prospects, the belief grows stronger that
we shall raise the largest crop of wheat, com,
oats, barley, and rye that has ever been known
in the United States. Wheat harvest has begun in southern sections and a large movement
is confidently expected around the first of the
coming month (July). The corn is reported to
be in excellent condition and other crops as
well.




651

FEDERAL RESERVE BULLETIN.

Wholesale grocers are enjoying a large money
volume of business, with collections much improved due to efforts to reduce sales terms and
to encourage and demand cash settlement when
possible. Demands for sugar for home preserving of fruit is strong. Retailers in farming communities have observed a falling off in
sales to farmers due to their close attention to
the crops at this time.
There is reported a strong demand for hardware, probably on account of the scarcity
thereof. Volume is excellent and collections
satisfactory.
Price fixation now imposed on hides and
skins is expected to be extended to cover all
classes of leather. Tanners and factories are
reported employed to capacity on Government
and civilian work. Labor scarcity hampers
production. Price fixation is generally welcome as a stabilizing element.
Live stock receipts at Chicago show an increase for the four weeks ending June 15 over
the same period last year, but a noticeable
decrease for the same period last month. Stock
has been of good quality. There is a healthy
demand for beef. Domestic and foreign shipments have been heavy. Prices are well maintained. Comparative receipts of live stock at
Chicago for the four weeks ending June 15,
1918, and a corresponding period in 1917:
Cattle.
1918..
1917..

213,112
203,848

Calves.

Hogs.

64,538 I 493,042
51,974 485,141

Sheep.
200,149
154,759

Lumber business is still "spotty." No general or consistent demand is experienced as
normal building operations are at a standstill.
There is some anticipatory buying against
freight advances.
Mail order houses are maintaining average
volume, with a reported scarcity of many artiticles, though the situation is not as unfavorable
as it has been on account of better transportation. Collections are excellent.
Piano orders are in large volume. Labor
shortage prevents full delivery. Transporta-

652

FEDERAL EESEEVE BULLETIN.

tion and materials seem readily available.
Collections are good.
Nothing more can be said of the steel industry than that the question is only one of production, as there is only one customer, the
Government, who either takes the product or
assigns the privilege of buying it.
Jewelry houses report steady increase in
volume, with improvement in all departments
except silverware, which shows a considerable
reduction. This condition is laid to the absence
of the formal wedding. Demand for watches of
all descriptions continues to absorb and exceed
the production of manufacturers. Collections
are very good.
Government control of raw wool will operate
to make civilian woolens increasingly scarce.
Uniform cloths practically absorb the mills and
wool is not being ailoted for civilian use.
Clearings in Chicago for the first seventeen
business days of June were $1,375,000,000, or
$114,000,000 less than for the corresponding
seventeen business days in June, 1917. Clearings reported by twenty-two cities in the district outside of Chicago amounted to $311,000,000 for the first fifteen days of Juno, 1918,
as compared with $284,000,000 for the first
fifteen days of June, 1917. Deposits in twelve
member banks in Chicago were $870,000,000
at the close of business June 20, 1918, and
loans were $607,000,000. Deposits show a
decrease of approximately $8,000,000 over
last month, and loans an increase of approximately $23,000,000.
DISTRICT NO. 8—ST. LOUIS,

Business in this district is more and more
adjusting itself to meet the needs of the Government in the prosecution of the war. Manufacturers are enlarging and remodeling their
plants to do Government work, and some new
enterprises are being launched for the production of essentials. Efforts are being made
to meet the demands of the Government as
efficiently and expeditiously as possible.
Industries are generally active throughout
the district, especially those which contribute




JULY 1, 1.9.18.

articles needed in the conduct of the war.
Some of the shoe manufacturers have called in
their salesmen, as they have sufficient orders
on hand to insure capacity operations for some
time. Wholesalers and jobbers of dry goods
report that there is a good demand for merchandise for both summer and fall use. Dealers in farm implements say that sales are unusually large. Some of the wholesale grocers
state that their sales are considerably below last
year, due to the restrictions placed by the Government on numerous articles handled by them.
Department stores and retail merchants
generally report good business. Many state
that the volume of their business is in excess of
this time last year, measured in dollars, but
that the number of transactions or articles sold
is about the same as or less than last year.
Apparently more economy and discrimination
in purchasing are being practiced.
Collections, as a rule, are reported to be good,
many of our correspondents stating that they
are excellent. It is said that bills are being
paid more promptly and that the demand for
credit is diminishing. This, no doubt, is due
to the increased wages to all classes of labor,
and the high prices which the farmer is receiving for his products.
The chief disturbing factors in business are
the scarcity of materials, the high prices,
delays in transportation, and the limited supply of competent workmen.
Favorable crop conditions continue, and the
prospects are the best in years. The condition
of all crops in the States included in this district was estimated by the Government on June
1 to be 11.2 per cent better than the ten-year
average. Harvesting of winter wheat has
begun in this district, and a large output is expected. According to Government estimates,
the condition of the winter wheat in Indiana,
Illinois, Missouri, Kentucky, and Tennessee,
on June 1, was 96.6 per cent, which is 18.8 per
cent better than the ten-year average. The
acreage in these States is estimated to yield
176,490,000 bushels of wheat, as compared
with 105,162,000 bushels for 1917 and the five-

JULY 1,1918.

FEDERAL RESERVE BULLETIN.

year average of 114,823,000 bushels. Spring
wheat is also growing satisfactorily, with an
acreage in excess of last year. The condition
of cotton in Arkansas, Mississippi, Missouri, and
Tennessee was estimated by the Government
on May 25 to be 85 per cent, which is 3.3 per
cent better than the 10-year average. Reports
have been received that the boll weevil has
appeared in some sections of the cotton territory, but no concern is felt as yet on its account.
Corn is doing well, with plenty of sunshine and
moisture. Practical^ all minor crops are
satisfactory, and the present indications give
favorable promise of abundant foodstuffs.
In the live-stock market trading in cattle
during the past month has been about the same
as last year, but there has been a falling off in
the demand for horses and mules. The demand for hogs has been steady, while increased
activity is noted in sheep.
Reports from the leading cities in this district indicate little change in building operations. Due to the high cost of materials and
labor, and the policy of the Government to restrict unnecessary building, so as to release
capital, labor, and materials for war purposes,
very little construction work is going on except
that which is absolutely necessary.
The outstanding feature in financial circles
during the past month has been the payment of
the Federal income and excess profits taxes on
June 15. This was accomplished with little
strain on the banks or disturbance to the money
market, due to the arrangement for redepositing the funds with qualified depositary banks,
and also to the fact that many persons and corporations paid their taxes with United States
Treasury certificates which they had previously purchased.
There is a good demand for money, and the
bank rate to customers continues firm at 6 per
cent in the large cities and somewhat higher in
the country districts.
The commercial paper market is quiet, with
6 per cent as the ruling rate for ail names and
maturities.




653

DISTRICT NO. 9—MINNEAPOLIS.

Some localities in the western portion of the
district report that additional moisture is
needed to assist the progress of the crop, but
the unfavorable reports are few, and the outlook over the district as a whole continues to
be excellent.
Some damage to growing crops may be expected as the season progresses, but the outlook is so good that even a considerable injury
to the present prospects will not destroy the
promise of an exceptionally large output.
Corn has been somewhat backward due to
the lack of warm growing weather, but has
made good progress in the last two weeks and
promises well. Late sowing has improved the
flax acreage, and the outlook for that crop is
favorable. Pastures have greatly improved
during the past 30 days, as "have forage crops.
Although this is not an industrial district,
the amount of production on war orders is
steadily increasing, and all the plants that are
producing goods and materials for the Government are steadily increasing their output.
The labor situation is good, although the
effect of the draft is beginning to show itself
in the increasing employment of women.
Retail trade conditions show little or no
change. The demand for merchandise is good,
and most concerns are doing a fair average
volume of business. In the large centers the
character of the buying has changed somewhat,
and those who were formerly liberal purchasers of the better grade of goods are not so
much in evidence. In their place a considerable number of new buyers has appeared,
indicating that favorable wage rates and opportunities for full employment have created
a new class of buyers and provided an offset
against the natural shrinkage of sales due to
war conditions.
Shipyards at the head of the Great Lakes
are working night and day on merchant ships
and are beginning to make substantial contributions in response to the demands of the
Shipping Board.

654

FEDERAL BESERVE BULLETIN.

Banking conditions show little change. The
demand over the district is active in consequence of the increased cost of agricultural
operations and the larger production this
year. Rates are firm and show little change.
The present outlook is uniformly good, and
probably will not change during the midsummer period.
DISTRICT NO. 10—KANSAS CITY.

Agriculture.—Crops have continued to improve steadily during the past month. The
winter wheat prospect, as a whole, owing to
abundant rainfall in nearly all sections, has
shown marked improvement during May. The
crop is generally reported in excellent' condition throughout all the States, except in limited
districts where it was damaged by drought.
Harvesting has begun under very favorable
conditions and the district will have, by all
indications, the largest crop ever produced
excepting the phenomenal harvest of 1915.
The condition of the grain, as reported by
Government estimates on June 1, in the five
principal wheat-growing States of this district,
averaged 80 per cent of normal, or 2 per cent
in excess of the 10-year average. For this
district the crop is placed at 232 million
bushels.
Old wheat supplies have been practically
exhausted and supplies of flour are only about
one-third of those on hand a year ago. Before
the present harvest comes in stocks of wheat in
all bins and elevators will be smaller than ever
before. Receipts on the local market during
May were about one-ninth and shipments less
than one-hundredth of those for the same
month last year. Local mills were grinding at
only 5 per cent of capacity during the past
week. With 69 mills reporting in this district,
averaging but 38 per cent of capacity, the flour
output for the past month decreased nearly
two-fifths under the same period a year ago,
when the mills were running at 61 per cent of
capacity.
The plan for marketing the new wheat crop
.has just been announced by the Food Adminis-




JULY 1,1918.

tration. A maximum price will be fixed for
flour, based on a reasonable milling profit above
the guaranteed price for wheat, and millers and
grain dealers will then be permitted to compete
for the merchandising of the wheat crop.
The corn and oats movement has continued
fairly large and prices showed a lowering tendency until shortly after June 1, when they
rallied strongly. This section has good supplies of both grains, but they are not being
marketed any faster than needed. Stocks of
corn on the four principal markets decreased
two-fifths during May, while oat stocks remained practically stationary. Receipts and
shipments of corn on the local market were onehalf and two and one-fourth larger, respectivety, than those of the same month last year.
The new crop prospects for both of these cereals
are promising. The oats crop is well advanced
with the expectation of a yield equal to last
year's large one, and corn has made a favorable
start on a large acreage. The oats crop forecast by Government estimates on June 1 was
for 225 million bushels in the States of Kansas,
Missouri, Oklahoma, and Nebraska, based on
an acreage of nearly 8 million, the average
condition in these four States being 87 as
compared with the 10-year average of 81 per
cent.
Live stock.—Liberal supplies of cattle continue to arrive at all western markets, the
movement to the principal markets for May,
however, being one-tenth smaller than a year
ago. Prices are maintained around the highest
levels ever reached, and are $2 to $4 higher
than at this time last year. The live-stock
industry at present is in a very good condition.
Shipments of cattle back to the country are
larger than a year ago, which indicates that
grazing conditions are good and reflects the
confidence of feeders and pasture men in the
future stability of the market. Intensive
feeding methods and high prices for fat cattle
have resulted in feeders seeking new supplies
earlier than last season. Initial shipments of
grass-fed cattle have just been received on the
local market.

JULY 1,1918.

FEDERAL RESERVE BULLETIN.

655

Sheep receipts on the six important markets
The market for zinc ores in the Missouriof this district for the past month were about Kansas-Oklahoma district during May showed
42 per cent in excess of those for May, 1917. some improvement. The fixed minimum price
The bulk of the local offerings came from of $75 per ton for high-grade ores now in effect
Colorado-Kansas feed lots. Packers showed makes an approximate advance of $20 per ton
more interest in the market than during the over former prices. A decided improvement
previous month. Lambs continue to sell was also shown in the prices paid for intermearound $20 per hundredweight, which means diate grade ores, while the average price for
good profits for sheep raisers.
all grades throughout the month was about $48
The movement of hogs is substantial^ larger per ton, as compared with $42 in April. For
than last year, and district market receipts for the first five months of 1918 a radical decrease
May were 5 per cent moro than those of the was recorded in shipments and value of all zinc
same month last year. The average weight ores, this decrease being 11 and 30 per cent,
of hogs at four centers was 225 pounds, as respectively. Strenuous efforts have been
compared with 210 pounds for May, 1917. made by the operators to obtain a fixed miniPrices were well maintained above $16 per mum price on second-grade ores, as well as for
hundredweight, and an active packing demand the first grades.
was prevalent. Local stocks of hog products
During the past month the average price of
decreased moderately during last month, but lead increased from $80 to $87.50 per ton, but
are still 72 per cent in excess of those on hand the output of the mines was about one-tenth
June 1 a year ago.
less than in April. Comparing the five months7
The caUle and sheep men in northwestern period of this year with the corresponding
New Mexico are facing an unusual and critical period in 1917, a decrease of nearly $25 per ton
situation. As a result of severe drouth, pas- in the average price, or 22 per cent, and a gain
tures and ranges are burned and barren. of 5 per cent in shipments have been regisCattle, to escape starvation, will probably be tered.
Oil.—Kansas oil fields showed more general
shipped to Colorado and "Wyoming for grazing.
Ranges in those States are generally reported activity during May than in April. Complein good condition, except in scattered areas tions for the month numbered 502, an increase
where there is need of rainfall. Sheep shearing of 28, while the new production was over 35,000
barrels, a slight increase over April. A gain
is well under way.
Mining.—Upon the basis of present condi- of about 63 per cent is shown in comparing the
tions and indications it is predicted that the total estimated production of the past month
coming summer in the mining camps of Colo- with the corresponding period last year.
Oklahoma maintained its good record of
rado will be the dullest of any in recent years.
There is no evidence at this time of the usual large production from, its many fields. The
spring revival in mining, which is attributed to wells completed were only 5 in excess of the
the many uncertainties surrounding all oper- number of completions during the month preations £in.d the general feeling that costs must vious, but the new production obtained was
be materially advanced without any chance of 48,000 barrels, a substantial gain of about onea like advance in metal prices. Operators arc third over April. Owing to a shortage of new
said to fear the complete shutdown of many oil-field material and delay in. its transportaproporties on account of the recent increase in tion, some trouble is being experienced by the
freight rates. Labor is again showing signs of smaller companies in the purchasing of necesunrest; demands for larger wages have been sary second-hand drilling supplies, which often
made in some camps, and there is apparently can not stand the strain of hard drilling operano prospect of meeting these in view of the tions. The total estimated production of the
State during the past month, as compared
foregoing conditions.




656

FEDERAL RESERVE BULLETIN.

with May, 1917, decreased about 7 per cent.
Latest figures available show that stocks in
storage in the Oklahoma-Kansas fields decreased from over 93,000,000 barrels to slightly
under 92,000,000 barrels during the month of
April.
The number of drilling wells in Wyoming is
still increasing, and the predicted drive for oil
in that State is now in full swing. Operations
for May were more general than in April, and
with 21 completions, as compared with 12 last
month, the new production was nearly three
times as large. Drills are busy in Colorado and
operators hope that the long-sought large oil
field in that State will be found this year. It is
reported that the quantity of oil that can be
extracted from the shale deposits of Colorado
is estimated by the United States Geological
Survey at 20,000,000 barrels, approximately
three times the total estimated oil reserve of
the United States lying beneath the ground.
Lumber and construction.—Lumber manufacturing conditions have changed very little.
The handicap of labor shortage and the uncertainty of transportation facilities are still present. General reports show that there is no surplus of lumber anywhere, and as Government
requisitions continue to take large quantities
of material, indications are that the supply
will not increase at present. Although there is
only a fair demand for lumber at retail yards,
however, because of good crops, dealers anticipate a heavy trade during the summer and fall
throughout the country districts. General
price tendency is upward at the present time.
Nevertheless, predictions are that the future
problem of dealers will not be that of price,
but of securing material, so that it may be
available for the consumer. The advisement
of fixing lumber prices for its own consumption
and for domestic purposes is now under consideration by the Government.
The general trend of building operations in
the cities has shown some improvement and
the present outlook is more optimistic. Volume
of construction work, as reported in the
principal cities of this district for May, de-




JULY 1,

1918.

creased but 13 per cent under the corresponding month last year, as compared with a decrease twice as large recorded in April. The
estimated value of such construction was onefifth in excess of that of the previous month,
and but one-fourth less than the valuation for
May, 1917, as against a loss of 34 per cent for
the cities of the entire United States. Wichita
and Denver recorded substantial gains of 161
and 86 per cent, respectively, over May a year
ago.
Labor.—As the result of the cooperation of
Government labor offices throughout the wheat
districts, the movement of farm labor is being
controlled as never before. Supply and demand are being equalized. Government reports show that good wages are being paid the
harvest hands, the general wage averaging
about $1 per day higher than in 1917. With
both a supply of imported labor greater than
anticipated and a good supply of local labor,
practically all demands from the wheat States
have been successfully met. Indications are
that future needs will be equally well supplied.
Over a dozen strikes were reported during
the past month. Most of these, however, were
of little consequence and satisfactorily adjusted. Considerable trouble has been experienced in wage controversies throughout Wyoming between sheep growers and sheep shearers,
but mediation was finalty effected in all cases.
Mercantile.—The number of commercial
business failures in the tenth district during the
month of April was 49, as compared with 41 for
the same month a year ago. Liabilities of such
insolvencies were one-half in excess of those for
April, 1917. Purchasing, indebtedness, and
payment activity (for the seven States wholly or
partially within this district) remain practically
stationary, as shown by comparisons between
May this year and last year.
Business in all lines is good and manufacturing continues heavy. Wholesale trade in
general is unusually large. Eetail merchants
report a good house trade, with an active demand for merchandise, particularly dry goods
and shoes. Indications point to a large volume

JULY 1,1918.

FEDERAL RESERVE BULLETIN.

of business throughout the summer, although
there is a scarcity of merchandise in certain
lines. The call for drugs is up to normal and
sales of groceries and provisions are hoav}7".
Collections are generally prompt, though slow
in some cities.
The call on the farmers for increased food
production, together with a labor and horse
shortage, is bringing the tractor into unprecedented prominence on the farms. Retail dealers report good sales of tractors for immediate
delivery and increased needs for harvesting
machinery and corn tools. Jobbers of automobiles state the demand for cars is large and
farmers continue to place orders in good volume. Automobiles are now scarce because of
curtailment in production and reduced transportation facilities, and orders for several of
the popular makes are taken subject to indefinite delays.
Financial.—Bank clearings for 17 principal
cities of this district during the month of May
were about 1,400 million dollars, a substantial
gain of 37 per cent over the same month last
year, as against the small increase of 7 per cent
for all of the cities of the United States. Tulsa
and Denver showed increases of 83 and 78 per
cent over May a year ago, these being the
second and fifth largest gains reported throughout the entire country.
The demand for loans continues strong and
rates are firm.
Reports of condition of the State banks by
the last call of May 10 show a large increase in
deposits over the same date last year, but a
slight decrease as compared with the previous
call, attributed chiefly to the purchase of
Liberty bonds.
DISTRICT NO. 11—DALLAS.

As we enter the hot season, the usual lull
in various lines of trade and industry in this
district becomes noticeable. Considering this
however, and the further fact that conditions
are uncertain on account of the war, the commercial outlook in general is satisfactory, and
industrial activities are well maintained.




857

Since May there have been further heavy
rains over a large area of the farming belt, and
as this is written, agricultural conditions are
quite favorable, except in those sections where
abnormal conditions exist on account of the
protracted drought. The passing month has
brought the height of the small grain harvesting
in this district, and the weather has been ideal
for the same. Reports vary as to the yield
of wheat and oats in Texas. Authorities estimate the wheat crop at from 7 to 10 million
bushels and the oat crop approximately 40
million bushels. As has been previously stated,
the small grain crop will yield little, if anything, in the "Panhandle" section, a part of
this district, where, under normal conditions,
the grain is largely grown. In more favored
parts, the central, north, and northeast, however, the crop is exceEent and the yield will be
far above normal.
Our correspondents advise that the peanut
crop will be unusually large, that corn is looking
fine over practically all of the farming belt, and
that other feed crops are, as a whole, in excellent condition. The cotton crop is in various
stages of development in Texas, and varying
reports are received as to its condition. Up to
the first week in June the condition of the crop
could be summarized as fair to good. The
extremely hot weather, however, of the past
week has hurt the staple to some extent and
should it continue for any great length of time
serious damage will result. The authorities
report that the acreage planted will show a
small decrease as compared with last year,
probably 5 per cent.
Wholesale jobbing trade in mercantile lines
is good. In dry goods, notions, and shoes,
dealers report an active trade, and say that
while the number of orders is not as great as
in the same period last year, the high prices of
such merchandise more than offset the decrease. In groceries, drugs, farm machinery,
implements, and harvesting supplies, business
is far above normal. Mail-order houses are
receiving a satisfactory volume of trade and
. report orders 25 per cent in excess of last year.

658

FEDERAL RESERVE BULLETIN.

OoEections are satisfactory. Retail trade is
satisfactory though, as reported in former
letters, it is especially noticeable that purchasing is restricted more to necessities than nonessential lines.
The bank situation is quite active and every
day proves interesting on account of the extraordinary demand for funds. Our member
banks report a decrease in deposits and heavy
increase in loans; in fact, in some quarters our
correspondents advise that the demand with
them is almost unprecedented. As a result
the facilities of this bank are being largely used,
and during the past 30 days, while our total
bills discounted and bought show an increase
of only $1,500,000, the increase in member
banks collateral notes has increased, within
that period, some four million dollars. The
situation presents no serious elements, but will
necessitate careful scrutiny of credits; this, we
believe our member banks are making, Money
rates show a slight tendency to advance,
though no material increase is expected.
Clearings at the principal cities of the district for the month of May show an increase of
10.7 per cent over the same month for 1917.
The building industry, which has been at
low ebb for several months, shows evidence of
improvement in the returns for May. The
number of permits issued in principal cities in
May shows an increase of 85 per cent, and in
valuation of 52.1 per cent. The figures were
as follows:
Year.
3917
1918

No.

! Valuation.

714 1 §1,281,139
1,179 1 1,948,878

Tho lumber mills of the district continue to
experience a scarcity of labor, and manufacturers in this section have only enough help to
produce about 50 per cent of a normal cut.
Some mills are in better condition in this regard
and quite a few are below that figure. The
mills are well supplied with orders and could
run for perhaps 30 days longer if no additional business was procured.




JULY 1,1918.

Post-office receipts at the principal cities of
the district show an increase of 56.9 per cent
for May, over the same period last year.
Cattle conditions continue to improve, as
most of the range country has received fine
rains since our last letter. There is a better
feeling among cattlemen and sheepmen. With
the improvement in range conditions the shipping of cattle to other sections for grazing has
practically ceased, and the stock is being
shipped back into pastures from other sections
where it was sent during the drouth. Our
correspondent at Tucson advises that spring
shipments of cattle from that section, which
usually are very large, have been materially
restricted on account of the dry weather. At a
recent meeting of the Cattle Raisers Association a resolution was adopted favoring the
establishment of a through joint emergency
freight rate for a period of from 30 to 60 days
to assist ranchmen in reshipping their cattle
back to pastures in this district.
In the mining sections conditions show little
change. Reports from Tucson indicate that
the high cost of labor and material has affected
production of copper and rare metals, the main
industry in that section, and disappointment
is felt that the prices of these two commodities
have not been advanced or placed upon a more
suitable basis. Coal mines of Oklahoma are
working to capacity, although a shortage of
laborers is affecting operations to a large extent. It is reported that this condition will be
improved somewhat by the recent "work or
fight" order, which will put the idlers into
service.
There is considerable activity in the oil industry around Ranger. This field is being
rapidly developed, and authorities state it is
destined to become one of the most important
in the southwest. A large number of oil men
from the north and east have leased property
in that section, and the field is being rapidly
extended. This has made business good in all
lines and activities are booming.
The labor conditions are the same as reported
a month ago. There is considerable surplus

JULY 1,1918.

FEDERAL RESERVE BULLETIN".

of labor at most of the shipbuilding plants at
Texas ports. There is also a sufficient amount
of skilled labor in almost all lines of employment. Farm help continues scarce, and the
same is true of railroad laborers and miners.
The condition confronting the State with reference to farm labor for the coming cotton-picking
season is extremely serious. Efforts are now
being made to secure Mexican laborers under
temporary suspension of the head tax and literacy test of the Burnett immigration law.
This is just getting under way, and it is too
early to discuss what success will attend the
efforts along this line.
DISTRICT NO. 12—SAN FRANCISCO.

659

California in considerable quantities, and the
canneries are in operation. Lemon and orange
groves are in splendid condition. Vegetables
show an average condition, but a shortage in
sugar-beet production is expected, due not
only to adverse weather conditions, but also to
a reduced acreage. Present indications point
to a normal grape crop at double last year's
prices. The Food Administration is regulating the prices of most products on a basis
eminently fair to producers and consumers,
speculation being prohibited.
California has the highest yield of cotton per
acre of any State in the Union, Louisiana ranking second. Acreage, yield, and farm value
for the last three years are as follows:

With a large demand and high prices for all
Total ! Farm
agricultural products, with industrial and manproduc- |
Acres.
tion (bales).• value.
ufacturing establishments operating at full
capacity, and with labor fully employed at high
:
1917
117,000
67,000 ! 9,380,000
wages, the Twelfth Federal Reserve District is 1916
i
52,000
4.4,000 !| 4,362,000
29,000
1,599,000
1915
i
40,000
prosperous.
The Government crop report of June 1 gives
The first ocean voyage of the concrete
the following estimate of production of grain steamer Faith was entirely successful. The
for the district:
Emergency Fleet Corporation, as a result of
[000's omitted.]
the satisfactory record made, has placed
1918
1917
orders for a number of concrete steamers of
7,500 tons dead weight, 2,000 tons greater
Wheat
bushels
100,916
70,899
Barley
do..
55,996
57,664 capacity than the Faith, and eight of these
Oats
do..
50,652
43,037
Rye
do..
1,043
580 vessels will be constructed at a plant to be
Hay
tons
12,651
13,601
installed by the corporation in Oakland, Cal.
The threatened shortage of hydroelectric
Although a marked increase in production of
power in northern and central California, due
wheat, oats, and rye, over last year is indicated
to the small amount of rainfall and snow in
an extremely cold spring with scanty rainfall the mountains last winter, has become acute.
has caused a reduction in the earlier estimates. The electric power companies have, with the
This is most noticeable in California where the approval of the State Railroad Commission,
barley production is estimated at nearly agreed to the pooling of all power resources,
6,000,000 bushels less than 1917, although the and the commission, through its assistant
acreage is only 40,000 less. In California, engineer, will exercise control over the distriArizona, and Nevada the new crop of barley is bution of power between companies and from
already coming into the warehouses, and the the companies to consumers.
wheat harvest has started.
May bank clearings for 20 principal cities of
Pastures are reported as about 10 per cent the district increased 20.08 per cent over the
below the average. Short crops of peaches same month in 1917. The greatest gain was
and prunes are expected, while apricots and shown by Seattle with 62.5 per cent, followed
the other deciduous fruits will probably yield by Tacoma with 43.3 per cent, and Portland
an average crop. A heavy crop of cantaloupes with 29.3 per cent. San Francisco, although
is indicated. Fruit is now being shipped from having the largest amount of increase, with




660

FEDERAL RESERVE BULLETIN.

$64,519,000, was sixth in rate of increase with
16.5 per cent.
Building permits for the same cities increased 2.58 per cent.
Lumber production increased during May,
until on June 12 it was only 4.65 per cent
under normal compared with 22.16 per cent
a month previous, and is heavier than at any
time since the strike of last July. The mills
have practically completed shipment on Government orders, but the retail trade has been
buying heavily, orders and shipments being 13
per cent above normal, and further orders
from the Government are expected in the
near future on account of the housing projects
at Bremerton Navy Yard and other coast
industrial centers, as well as for 100,000 new
freight cars recently authorized by the Railroad Administration.
The limited sales of war-savings and thrift
stamps indicate that, although the public
subscribed liberally to the three Liberty loans,
it has not yet realized the importance of this
form of Government finance. It is only by constantly practicing self-denial in the purchase of
luxuries and the curtailment of all unessential
spending that the people can accumulate the
surplus savings necessary to supply the increased amount of money needed by the Government. War-savings and thrift stamps,
being in small denominations and purchasable
almost anywhere, furnish a convenient means
for the prompt investment of the amounts
realized through small economies. On a basis
of $20 per capita each year this district should
buy $8,750,000 of stamps each month. Actual
sales to May 31, 1918, have been as follows:
Arizona
California
Idaho (incomplete)
Nevada
Oregon
Utah
Washington (incomplete)

SI, 030,137. 00
4,106., 351. 59
93, 683. 50
303,552.85
3,425,173. 07
1,055,480.00
4,520,118. 52
14, 534,496. 53

On June 12, 1917. the Federal Reserve
Board at Washington, D. C, approved the
application of the first State bank member of




JULY 1,1918.

the Federal Reserve system in the Twelfth
Federal Reserve District. On June 15, 1918,
there were 50 State member banks in the district. The applications of 2 other banks have
been approved, and 12 applications are pending. These banks are divided among the
States of the district as follows:
Arizona
California
Idaho
Nevada
Oregon
Utah
Washington

1
3
16
0
13
6
25

Total

64

The total resources of the 41 State banks,
which were members at the time of the May 10
report of condition, were $84,738,000, approximately 6 per cent of the resources of all the
State banks in the district.
The deposits of all national banks in the
district increased between March 4, 1918, and
May 10, 1918, $14,479,000, or 1.526 per cent,
and loans and discounts increased only
$4,970,000, or 0.79 per cent. During the year
May 1, 1917, to May 10, 1918, deposits increased $75,453,000, or 8.50 per cent, and
loans and discounts $51,322,000, or 8.803 per
cent. Comparative statements follow:
DEPOSITS.
May 10,
1918.

May 1,
1917 .

Increase.

Per
cent increase.

jSll,650,000 SS, 504,000
576,088,000 538,883,000
40,223,000 37,940,000
11,636,000 10,996,000
112,890,000 99,115,000
38,000,000 41.270,000
172.467,000 150'. 793,000

$3,146,000
37,205,000
2,283,000
64.0,000
13,775,000
13,270,000
21,674,000

36.994
6.904
6.017
5.82
13.897
17.923
14.373

Twelfth District... 1962,954,000 887,501,000

75,453,000

8.501

Arizona
California.
Idaho
Nevada
Oregon
Utah
Washington..

LOANS AND
May 10,
1918.
Arizona
California...
Idaho
Nevada
Oregon
Utah
Washington..

DISCOUNTS.
May 1,
1917.

Increase.

$6,652,000 84,797,000 $1,855,000
398,957,000 364,399,000 34,558,000
29,252,000 25,910,000
3,342,000
7,227,000 6,798,000
429,000
70,789,000 62,679,000
8,110,000
27,362,000 29,163,000 11,801,000
94,076,000 89,247,000
4,829,000

Twelfth District... 634,315,000 582,993,000
i Indicates decrease.

51,322,000

Per
cent increase.
38.67
9.483
12.898
6.31
12.938
i 6.175
5.41
8.803

JULY 1,1018.

661

FEDERAL RESERVE BULLETIN.

GOLD SETTLEMENT FUND.
Shifting of credits between reserve banks
largely on account of Government fiscal operations, including payment of maturing issues of
certificates of indebtedness and transfers to
New York of funds received from income tax
and third Liberty loan payments, resulted in
combined clearings and transfers through the
gold settlement fund for the 5-week period
from May 16 to June 20, 1918, of $4,590,254,000
averaging $918,050,800 per week against a like
average of $946,351,250 for the preceding
4-week period. The settlement of June 20,
amounting to $944,253,000, was the second
largest since the commencement of the operation of the fund, the record total of $979,920,000
being reported for November 22, 1917, the
week following the first installment payment on
the second Liberty loan. Combined clearings
and transfers for the week ending June 20 aggregated $1,140,258,000 and were the heaviest
since the establishment of the fund.
Changes in the ownership of gold in the
banks' fund through transfers and settlements
during the 5-week period amounted to 1.46
per cent of the total obligations settled, as
against 1.45 per cent during the preceding
4-week period. Net changes in the ownership
of gold since the commencement of the operation of the fund May 20, 1915, to June 20,
1918, amounted to 1.06 per cent of the total
obligations settled during that period. New
York. Richmond, and Chicago banks show the
largest gains through the shifting of credits in
the fuitd during the period under review,
while Cleveland, Philadelphia, and St. Louis
show the largest decreases.
Deposits of gold in the banks' fund from May
16 to June 20 totaled $128,239,200 against




gold withdrawals of $6,041,700, resulting in
net gold deposits during the 5-week period of
$122,197,500, of which $83,904,000 or 68.6 per
cent was deposited by the Federal Eeserve
Bank of New York. Net deposits of gold in
the agents' fund between May 16 and June 20
amounted to $10,700,000, resulting in an
aggregate gain in the combined funds of
$132,897,500, or 13 per cent of the combined
funds on May 16. The increase in the combined funds from January 1 to June 20
amounted to 44 per cent of the holdings on
January 1, 1918.
Below are given figures showing changes in
the fund between May 17 and Juno 20, both
inclusive.
Amounts of clearings and transfers through the gold settlement fund by Federal Reserve Banks from May 17, 1918,
to June 20, 1918, both inclusive.
[In thousands of dollars.]
Total
clearings.
Settlement of—
M a y 23
M a y 31

June 6..
.Tune 13.
June 20.
Total
Previously reported for 1918
Total since Jan. 1, 1918
Total for 1917

Balances
adjusted,

!
i
|

$811,721
746,483

711,493 !
824,499
944,258 !
j 4,038,454
J 14,364,059
| 18,402,513
24,319,200

$30,765
79,8(54
48,753
34,257
29,233

869,800
72,000
131,000
83,000
196,000

222,872
551,800
j
j 1,117,299 1,004,895
j 1,340,171 2,156,695
j 2,154,721 2,835,504.5
Clearings and
transfers.

Total
Total
Total
Total

for
for
for
for

1918 to date
1917
1916
1915

Total clearings and transfers from May 20, 1915, to
June 20, 1918

|
1

$20,559,208
27,154,704.5
5,533,966
1,052,649
54,300,527.5

662

FEDERAL RESERVE BULLETIN.

JULY 1,1918.

Changes in ownership of gold.
[In thousands of dollars.]

Total to May 16,1918

Federal Reserve Bank.

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

Total changes from

From May 17, 1918, to June 20, 1918, both inclusive.

May 20,1915, to June
20, 1918.

Balance to
credit May
16, 1918,
plus net
deposits of
gold since
that date.

.Decrease. ! Increase

811
514
488.5
855.5
039

Balance,
June 20,
1918.

910
240
223
194.9
044.6
722
123.1
986
301.8
103.6
731.2

66,506
99,988
8,776
4S3 385
79.864
33,301
16,225
45,382.5
20,084.5
98,312

Gold settlement fund—Summary of transactions from May 17, 1918, to June 20, 1918, both inclusive.
[In thousands of dollars.]

Balance
last
statement,
May 16,
1918.

Boston
.New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Loins
Minneapolis
Kansas City
Dallas

22,336
55,729
60,754.7 3,034.8
6,850.4
12.6
8,993
14
81,739
700
1,301
; 37,421
100
j 18,572
75.6
! 35,848.2
503.7
• 7,397.9

San Francisco

I

Total

21,088

| 420,614.2

Weekiv settlements May 23, 1918, to
June 20,1918, both inclusive.

Aggregate deposits
and
transfers
from
agent's
fund.

300

5,025
83,904
6,490
5,475
2,206.8
2,843
9,312.1
992.5
3,829.8
3,331
837
3,993

16,100
18,034.8
2,012.6
13,114
30,600
6,301
100
2,075.6
503.7
9,500

6,041.7 | 128,239.2 j 98,341.7

2,900
5,025
194,000 307,000
83,904
46,008
10,594
54,000
3,000
5,475
2,206.8 15,000 21,800
20,843
11, 984.1 130,900 i 162,000
,
I 6,000
2,866
3,829.8 18,000 !
8,331
45,000 i 8.000
16,000 ! 8^ 000
5,837
30,000 ! 36,000
4,858
165,753.7 ! 551,800 | 551,800

315,717
316,352
10,783
104,650 1,283,185 1,197,072
476,183
448,862
5,501
368,421
339,400
6,862
209,226
200,605
4,015
131.192
123,100
3,367
563', 908
583,812
41,480
258.930
276,440
33,659
123; 223
112,512
2,713
186,849 i
151,955
77,592
993
71,363
130,141
8,819
130,868
222,872

4,038,454

I
I Balance
in fund
at close
of
i business
June 20,
1918.

10.148 : 65,375
18,537 i 133,127
32,822 j 31,544
35,883 ! 26,215.9
12,660 i 22,465.6
11,459 i 24,814
21,576 i 74,319.1
10.149 : 22,476
IS) 424 i 15,012.8
34,894 i 39,997.6

7,222 ! 10,960.2
8.002 ! 21.719

4,038,454 j 222,872 ; 488,026.2

Federal Reserve agents' fund—Summary of transactions from May 17, 1918, to June 20, 1918, both inclusive.
[In thousands of dollars.]
Balance
last state- Gold withment, May drawals.

Federal reserve agent at—

Gold deposits.

16,1918.

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

3,000

Withdraw- Deposits
als for
through Total withtransfer
transfers
drawals.
to bank. from bank.

1,000

4,104

3,000
1,500
300

18,000
2,672
1,873.5

San Francisco.

31,500
65,000
75,734
70,000
29,500
33,420
148,393.5
35,093.8
19,500
34,360
5,584
67,796

1,500

5,000
5.000
865

Total....

615,881.3

10,300




i

21,000

21,000

3,000
i

37,514.5 j

16,100
15,000
2,000
13,100
29,900
5,000
2,000
9,200

92,300

5,104

Total deposits.

21,000
I

21,000 i
4,172 I
2,173.5 !
5,000
5,000
2,365
47,814.5 ;

Balance at
close of
business
June 20,
1918.

"9,"2O6"

49,500
65,000
86,730
85,000
31,500
25,520
174,121.5
37,920.3
19,500
31,360
584
74,631

113,300

681,366.8

16,100
15,000
2,000
13,100
29,900
5,000
2,000

FEDERAL RESERVE

JULY 1, 1918.

663

BULLETIN.

OPERATION OF THE FEDERAL RESERVE CLEARING SYSTEM, MAY 16 TO JUNE 15,1918,
drawn on bankso i»i
drawn on banks In
ms drawn on banks in Items
district outside Federal Itemsother
districts
Reserve
city (daily
(daily
average).
(daily average).
average).
._!_..

Number.
Boston
Ne w York
PhiladcJDhia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Totals:
May 16 to June 15, 1918
Apr. 18 to May 15, 1918
Mar. 16 to Apr. 15,1918
Feb. 16 to Mar. 15, 1918
Jan. 16 to Feb. 15,1918
Dec. 16,1917, to Jan. 35,1918
Nov. 16 to Dee. 15, 1917
Oct. 16 to Nov. 15, 1917
Sept. 16 to Oct. 15, 1917
Aug. 16 to Sept. 15, 1917
July 16 to Aug. 15, 1917
June 16 to July 15, 1917
May 16 to June 15, 1917
Apr. 16 to May 15,1917
Mar. 16 to Apr. 15,193 7

Boston
New York
Philadelphia..
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis..
Kansas City..
Dallas.
San Francisco
Totals:
May 16 to June 15,1918
Apr. 16 to May 15, 1918
Mar. If) to Apr. 15,1918
Feb. 16 to Mar. 15, 1918
Jan. 16 to Feb. 15,1918
Dec. 16, 1917, to Jan. 15, 1918
Nov. 16 to Dee. 15, 1917
Oct. 16 to Nov. 15, 1917
Sept. 16 to Oct. 15, 1917
Aug. 16 to Sept. 15, 1917
July 16 to Aug. 15,1917
June 16 to July 15, 1917
May 16 to June 16, 1917
Apr. 16 to May 15.1917
Mar. 16 to Apr. 15,1917




I
!
i
I
;
i
:

!

...;
i
. ;:
;
'
;
1
!
.!
1
•
:
j

Amount,

j Number. I

5.455
8.9<)9
13',257
2,583
1,451
2,015
8,328
2,025
2,510
2.017
ljl24
1,291

818,378, '86 !
69.375: 000 i
21.7IS! 223 !
4j804, 933 I
4,639, 100 i
3,025, 252 ;
19,333. 009 i
7,315: 705 •
6,203; 852 :•
6,181 497 j
1.421 147 !
2,142; 505 !

51,036
49,509
55,034
51.408
46', 207
48,549
47,67S
47,574
40,591
36,300
30,727
38,476
37,898
83,767
31,162

164.539, 000 •
178^372, 385 !
159,44L 188 i
153,70i: 375 I
153,847; 568 :
148,033; 108 i
171,723; 439 |
166,552. 773 ".
128,27I; 406 i
100,331, 094 i
98,075, 919 i
1G9,722, 256 i
07.322: 883 : !
87,370: 859
60.288, 002 :

Amount.
$7,273,347
42,883,293
4,028,935
17,592,940
8,152,612
3.013,17S
7; 480,000
3,461,191
1,416,083
7'743,473
5.137,283
5;224,278

4,641
26,444
12,428
1,983
2,347
1,424
2,188
185
850
633

295,056 113,407.619
287,061 ! 114,099,520
271,506 ' 98.201,962
113; .134,102
259,531
80,248,400
227,312
89.065,135
253,458
84' 440,761
2-10.750
64,296,210
232', 723
47.470,204
212,935
41,323,621
182,191
40,353,278
175,625
41,004,720
182.622
38,599,461
179!193
30.473,163
171,093
32,660,959
168,C07

54,132
54,888
53,725
51,259
44,054
49,342
46', 353
45,393
40,216
32,564
31,273
33.941
33;150
33;428
32,008

42,512
53,920
24,594
29,014
28,580
13,038
26,370
13,459
13,698
17,442
14,085
18,338

Items handled by both.
bank and branches
(daily average).

Total (exclusive of items
drawn on Treasurer of
United States)
(daily average).

Items drawn on Treasurer of United States
(daily average).

Number.

Number.

Number.

856
291

Amount.

210
253

86,606,543
1,035,685
181,533
403,000
191,016

1,019

3,317,455

2,705

7,623
8,294 .
7,793 I
7,700 '
7,128
7,718

619,883
12,355,115
15,141,604
8,942,976
6,413,071
5,836,958
3,402,035

Amount.

Number.

<m

407

Amount.
§7,104,749
15,973,830
12,161,122
4,283,675
4,499,093
3,483,271
633,000
937,833
1,109,051
3,429.103
l,02i; 625
1,066,898
55,703,31058,513,363
53,391,691
48,556,709
42.852,372
52; 175,57858,458,952
53,089,R27
44,984,581
40,648.108
37.98i;022.
46', 762,698
38,314,393
36,836; 934
34,693,512

Number of Number of
member nonmember
banks in
banks en
district.
par list.

Amount.

52,608
89,363
50,279
34,436
32,669
16,706
37,102
15,922
17,058
23,111
35,811
22,741

332,756,882
128,232,129
37,906,280
33,288,091
18,32(5,490
9.703,234
27,849,000
11,908,745
8,728,986
20,671,588
7.580,055
9,053,504

6,586
37,826
5,790
4,438
1,533
1,380
9,003
4,323
763
2,630
1,247
2,231

$3,512,219
15,051,800
3,960,377
2,532,302
398,186
1,908', 840
3,115,000
854,134
136,096
347,500
347,295
6,890,194

416
686
629
775
543
397
1,164
487
818
972
678
600

249
362
321
635
341
317
2,278
1,012
1,143
1,568
270
1,114

407,806
399,812
388,058
309,898
325,301
359,007
343,787
325,090
293,742
251,061
243,625
255,039
250,241
238,288
231,777

346,005,044
366,126,872
319,977,817
321,805,317
282,785,304
292,585,856
314,623,152
283,938.810
220,732,251
182,303,483
176,410,219
197,489,674
174,236,737
160,680,956
127,648,503

77,750
60,771
59,228
58,991
48,224
38,130
33,806
30,426
26,797
23,492
19,533
19,100
16,344
15,925
12,582

39,054,003
30,928,185
31,563.675
25,827;757
21,316,033
21,116,293
27,179,053
17,496,974
13,518,566
11,000,515
9,701,509
11,637,899
4,414,508
3.597,805
2,643,408

8,166
8,113
8,059
8,013
7,972
7,909
7,823
7,820
7,747
7,718
7,683
7,666
7,651
7,634
7,025

9,710
9,475
9,450
9,425
9,319
9,268
9,321
9,210
9,052:
8,934
8,837
8,8058,789
8,926
8,607

664

FEDEKAL KESEBVE BULLETIN.

JULY 1,1918.

DEPOSITS AND INVESTMENTS OF MEMBER BANKS, JANUARY TO JUNE, 1918.
During the five and one-half months of the
present year net deposits of member banks in
about 100 leading cities increased from 9,188.6
millions to 9,638.4 millions on June 14, the
maximum, 9,688.3 millions being shown on
May 3, the Friday before the close of the third
Liberty loan. Government deposits, which on
January 4 totaled 550.4 millions, reached a
maximum of 1,284.1 millions on May 17, and
stood at 868.3 millions about the middle of
June. Loans and investments of reporting
banks show a more continuous growth, from
11,205.9 millions to 12,659.8 millions on May 10,
the Friday following the consummation of the
third Liberty loan. Since then redemption of
Treasury certificates is responsible to a large
extent for a decrease in total loans and investments to 12,506.2 millions.
As against an increase during the period of
767.9 millions in total net deposits (including
Government deposits) there is shown an increase
of 1,300.3 millions in total loans and investments, exclusive of investments of a permanent
character, such as bank buildings, real estate,
and Federal Reserve stock. The ratio of aggregate loans and investments to total net deposits
from about 115 per cent at the beginning of the
year rose to over 124 on May 10, and stood at
about 119 per cent on June 14.
For the member banks in Greater New York,
similar increases in individual and bank deposits
but smaller increases in Government deposits
are noted. The ratio of aggregate loans and
investments to total net deposits, which at the
beginning of the year was less than 105per cent,
shows a rise to nearly 116 per cent on May 10
and a decrease to 111 per cent on June 14. It
should be noted, though, that while total loans
and investments of reporting member banks
indicate net liquidation by 153.6 millions, but




little change in the item is shown by the New
York banks, the latter reporting on June 14
an increase under this head of about 90 millions
when tax payments apparently caused a considerable increase in loans.
The larger growth of investments, as compared with net deposits, indicated in the following tables and accompanying diagram, is usually
explained by the considerable investments of
the banks since the beginning of the year in
Treasury certificates only partly offset by liquidation of Liberty bonds, the net increases in
investments being reflected only partially in
larger deposits. Part of the larger increase in
investments may be due also to loans and other
investments made in the form of currency, of
which increasing amounts remain outside the
banks in the pockets of the people.
[In thousands of dollars.]

All reporting banks.

Greater New York banks.

Net deNet deposits on Govern- Total in- posits on Govern- Total inwhich
which
vestment
vestment
reserve deposits. ments.
reserve deposits. ments.
is comis
computed.
puted.
1918
Jan. 4
11
18
25
Feb.
1
8
15
21

Mar. 1
8
15
22
29

Apr. 5
12
19
26

May 3
10
17
24
31

June 7
14

9,188.6
9,466.3
9,286.2
9,284.3
9,376.9
9,380.6
9,260.6
9,504.6
9,368.8
9,406.0
9,525.0
9,533.6
9,605.9
9,583.0
9,632.8
9,657.2
9,524.9
9,688.3
9,349.3
9,333.1
9,271.3
9,428.8
9,483.6
9,638.4

550.4
419.0
354.7
485.1
555. S
593.3
621.8
742.6
776.2
796.9
518.5
762.1
631.2
500.8
774.0
633.6
669.4
006.0
827.0
1,284.1
1,028.7
909.3
765.1
868.3

11,205.9
11,237.5
11,214.4
11,411.6
11,642.6
11,494.5
11,792.1
11,859.9
11,995.2
11,928.4
11,924.8
12,114.0
12,094.1
11,947.3
12,338.7
12,412.7
12,402.1
12,432.3
12,659.8
12,608. 7
12,485.9
12,435.6
12,443.5
12,506.2

4,006.7
4,122.2
4,026.3
4,046.5
4,095.3
4,0S6.8
4,134.3
4,102.3
4,062.0
4,024.0
4,067.4
4,094.1
4,143.3
4,141.6
4,154.5
4,144.2
4,109.5
4,178.0
4,015.1
4,020.5
3,972.4
4,121.4
4,144.1
4,221.0

232.4
129.2
141.5
264.2
347.8
343.5
409.5
503.0
495.2
483.8
269.6
370.4
325.9
253.8
404.7
329.9
392.8
326.0
352.7
593.7
424.1
362.1
305.3
346.0

4,447.9
4,422.1
4,373.7
4,468.4
4,592.7
4,574.3
4,787.4
4,791.0
4,963.9
4,777.7
4,751.7
4,806.8
4,756.8
4,722.3
4,942.9
4,979.0
4,995.2
4,975.8
5,060.6
5,048.7
5,018.6
4,966.9
4,963.6
5,052.7

JULY 1,1918.

u




FEDEEAL RESERVE BULLETIN.

865

NETDEPOSITS, GOVERNMENTDEPOSITS.
ALSO TOTAL LOANSAm> INVESTMENTS
OFMEMBER BANKS
IN GREATER HEW YORK AND IHLEADIH6 CITIES
Curve /.• Mb&qwsihs tfJCmberJkrifo in, ffFeaterJfewI&r/e.
Cburvcd:
(hrve4:6ovem7ne7W&epj®5i£$ofJ&^
CurveS: /bansmdlnvestmnts ofJ^mderJSanlcsik $rm^M&Mr?c*
Gzrpeff.>&a7i$m&Iri^£^

<5i!

'/9/&1

666

FEDERAL KESEKVE BULLETIN.

JULYl,

DISCOUNT OPESATIONS OF THE FEDERAL RESERVE BANKS.
Discount, operations of the Federal Reserve
Banks for the month of May totaled $3,002,889,591, compared with $2,178,410,479 for
April and $3,206,486,771 for November, 1917,
the month when the second Liberty loan closed.
Of the total bills discounted during the month,
war paper proper, i. e., members7 collateral
notes and customers7 paper secured by Government war obligations, constituted 84.8 per cent,
compared with 83.2 per cent in April and over
80 per cent in November, 1917. Over 70 per
cent of the total paper and about 79.4 per cent
of all the war paper discounted by all the 12
banks during May are reported by the New
York bank.
Discounts of member banks7 collateral notes
secured by
eligible paper
aggregated
$70,469,263, the Federal Reserve Banks at
Chicago and Kansas City accounting for
$64,336,757, or about 91.3 per cent of the total.
Trade acceptances discounted during the month
by 11 banks totaled $16,302,062, of which
$13,593,565 covered transactions in the domestic trade and $2,708,497 transactions in the foreign trade. The New York bank leads all
other banks in the discount of this type of
paper, reporting 28.8 per cent of the domestic
trade acceptances and 98.7 per cent of the foreign trade acceptances discounted during the
month by all the banks. The totals just given
are exclusive of $7,157,620 of foreign trade
acceptances purchased in the open market during the month under review. Other discounts,
largely unsecured customers7 paper, also bills
protected by other than Government securities, totaled $399,091,341, compared with
$322,585,211 for April and only $198,842,158
for November of the past year. Fifteen-day
paper, i. e., paper maturing within 15 days from
date of discount with the FederalReserveBank,
totaled $2,736,456,881, or over 91 per cent of
the total discounts for the month. In the case




of the New York bank, owing to the larger proportion of collateral notes handled, this share
is about 97 per cent. Average rates and maturities of the paper discounted by the banks
| during May, as calculated by the use of the
method outlined on page 553 of the June BULLETIN, were somewhat higher than for April.
Over 88.5 per cent of the paper was discounted
at 4 per cent, which was the uniform rate during
most of the month for the system on all 15-day
paper, including that secured by Treasury certificates and Liberty bonds. Owing to the relatively large amount of 90-day war paper discounted during the month by Boston and of
6-month agricultural paper discounted by Minneapolis, these two banks show the longest average maturities for their May discounts, viz, 46.4
and 45 days, the latter bank, as weH as the
banks at Kansas City and Dallas, because of
the relatively large amount of 6-month paper
handled, showing the highest average rates
charged. For the New York bank the average
maturity of the paper discounted during May
works out at 6.95 days as against 7.22 days in
April, while the average rate for May, 4.09 per
cent, compares with 4.05 per cent for April, the
reason for the lower average April rates apparently being the fact that during the first few
days in April large amounts of 15-day war
paper were discounted at the lower 3 J per cent
rate.
On the last Friday of the month the banks
held a total of 896.4 millions of discounted
paper, as against an aggregate of 901.7 millions
held on the last Friday in April and of 47.6 millions held on the corresponding date in 1917.
Of the total discounts on hand the share of war
paper was 62.8 per cent, as against 70.9 per
cent about the end of April. At the Boston
and Philadelphia banks this share was in excess
of 73 per cent, and at the New York bank as
high as 83.5 per cent. Discounted trade accep-

1, 1918.

667

FEDEEAL RESERVE BULLETIN,

tances on hand about the end of May totaled
17.72 millions, of which over 1 million represents the holdings of discounted foreign-trade
acceptances. Cleveland leads in the amount of
domestic trade acceptances held, followed by
New York and St. Louis. Holdings of agricultural paper of all maturities totaled about 19.5
millions, or about 2.1 per cent of the total discounts held, while live-stock paper aggregated
47.3 millions, of which over 57 per cent is
reported by the Kansas City bank.
During the month, mainly as the result of
further accession to membership of State banks
and trust companies, the number of member
banks increased from 8,145 to 8,168. The total
number of member banks accommodated
through discounts during May was 2,693, or 33
per cent of the total membership at the close

of the month. In the following exhibit are
given the number of member banks in each
Federal Reserve district at the end of May and
the number of discounting members for the
same month.

Federal reserve districts.
May 31.

415

Boston...
,
New York
Philadelphia..
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas Citv....
Dallas
*_...
San Francisco..
Total.,

643
775
542
401
1,164
488
819
975
675
586

179
306
202
150
254
163
359
125
276
315
304
160

8,168

2,693

Bills discounted during the month of May, 1918, distributed by classes.

Federal Reserve Banks.

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




Member banks' collateral
notes.
Customers'
'•
paper se- j
cured by •
liberty
; Secured bybonds or !
liberty
United States! bonds or
Otherwise
certificates jUnited States
secured.
of indebted-! certificates
ness.
I of indebted:
ness.
S350,225 |

320,764,048
$23,920,032
38,610,339 1,960,216,460
45,022,975
10,867,822
48,681,431
5,750,008
96,162.708
4,524,938
29,225,000
74,739
72,174,353
5,454,933
33,576,941
594,262
15,210,500
426,024
48,083,500
249,609
27,858,060
36i;945
28,920,130
296,168

2,500
110,000
3.238,500
658,500
48,834,331
900,281
15,502,426
870,000
2,500
70,469,263 ;

91,130,819 |2,425,896,106
i Includes $2,672,399 in the foreign trade.

2

All other
Trade
acceptances, j discounts.

§901,692
17,400,431
355,851
2,690,211
1,006,215
873,152
223,689
1,147,022
213,950
978,868
2 510., 981
16,302,062

$10,068,717
174,916,121
17,755,946
20,088,802
23,282,728
15,788,722
39,842,127
24,239,863
12,844,337
150,903.021
8,148)580
21,232,577

I

.Total.

§56,004,714
2,181,143,351
74,005,094
77,300,252
128,215,089
46,620,113
166,529,433
59,558,088
29,595,092
95, 717,424
37,238,585
50,962,356

399,001,341 ! 3,002,889,591

Includes $36,098 in the foreign trade.

668

JULY 1,1913.

FEDERAL RESERVE BULLETIN.

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

Agricultural

Banks.

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

Customers'
paper secured by
Liberty
Live-stock bonds or
paper.
United
States certificates of
indebtedness.

146
100
800

4 967
2,217
2,080
3,560
3,002

1,290
4,816
27,184
6,319
7,077

19,474

47,260

2.1

5.3

148

. .

Total.
Per cent

Secured
by Liberty
Trade acbonds or
ceptances.
United
Otherwise
States cer- secured.
tificates of
indebtedness.

25,276
51,321
12,229
7,762
5,175

93
14
467

2,454

Member banks' collateral notes.

85

6,560
1,452
445
281
657
792

112,035
12.5

All other
discounts.

1

6,859
289,482
19,289
11,217
23,647
12,435
28,117
12,331
6,717
15,346
13,632
11,696

1,109
2 3,985
1,479
3,617
1,875

13,831

450,768
50.3

24,048

130

iio
721

981

43

2,874
326
853

593

7,450
398
772

624

17,723

2.7

•2.0

Total.

10,441
63,487
9,697
24,359
15,140
10,028
31,868
13,162
11,216
12,269
5,516
17,934

43,815
408,275
42,840
47,258
49,026
24,839
85,343
31,257
26,330
65,463
30,082
41,897

225,117
25.1

896,425
100

2 Includes $951,000 in the foreign trade.

i Includes $95,000 in the foreign trade.

Bills discounted by each Federal Reserve Bank during May, 19IS, distributed by rates of discount; also average maturity
rate of bills discounted by each bank during the month.
4 per cent.

4* per cent.

and

4-J per cent.

4£ per cent.

jf'edoral Reserve Bank.
Amount.
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco

j $25,056,373
! 2,127,588,421
56,937,107
42,656,987
65,712,320
!
40,190,062
i 133,623,376
i
44,145,125
j
17,008,182
I
41,541,453
j
29,033,470
I
35,350,001

Total

841,070
1, 215,611

81,028
43,626
53,093
61,759
201,432
66,936
25,998
65,698
46,923
56,877

1,960,051

| 2,658,842,877
5 per cent.

Amount.

Discount.

Amount.

Discount.

$22,875,023
40,305,137
10,590,072
23,999,757
42,130,564
308,757
5,393,303
554,588 i
439,252 I
16,781,240 i
345,071 !
445,923

$212,981 i
379,606 !
101,210 !
82,536 i
70,965 !
2,116 i
44,768
4,779
3,034
28,567
2,770

164,168,687

936,924

5J per cent.

Discount.

$2,730,292
883,516
2,335,800
1,931,993
765,368
711,459
2,250,705
1,178,625
271,790
7,424,089

$12,567
9,193
10,263
14,625
4,942
4,669
1,327
10,380
2)332
14,261

2,356,664

10,964

$5,340,033
12,302,878
4,124,150
8,661,995
13,143,579
4,905,791
13,854,898
13,574,458
5,432,551
11,666,475
2,478,756
10,465,407

22,840,301

95,523

105,950,971

5$ per cent.

Tota

Federal Reserve Bank.
Amount. Discount. Amount.
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta . .
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Total
1
2

. . .

$2,993
63,399
17,965

$38
2,235

6,172,572
504,044
10,237.201

56,392
10,517
116,205

2,691,727
11'. 185,562
2,247,802

28,636
231,097
24,999

33,123,285

470,487

Discount. Amount.

Discount.

i
j

348

§49,520
290,686

$962
6,418

3,231,016
3,133,486
414

28,351
69,555

6,705,122

105,293

SI, 169,950
105,292
3,751,590
3,887,589
2,343,947
11,258,368

Amount.

824,681
2,271
90,102
87,242
52,966

Amount.

Discount.
$38,405
92,800
27,074
62,582
81,753
31,730
75,853
86,369
34,008
86,283
13,375
84,765
714,997

Average Average
maturity rate (per
Discount. in days. cent).i

$56,004,714 §305,061
2,181,143 351 1 699,445
74,005,094
219,923
77 300 252
204 331
128,215,089
273,563
46,620,113
110,791
166,529,433 464,266
59,558,088
170,735
29,595,092
184,110
95,717,424
541,499
37,238,585
157,622
50,962,356
209,171

257,262 |3,002,889,591 4,540,517

46.45
6 95
25.35
21 86
17.07
19.89
22.67
23.60
45.01
42.11
32.33
31.77
12.59

4.28
4 09
4.22
4 35
4.50
4.30
4.43
4.37
4.98
4.84
4.71
4.65
24.35

Boston and New York calculated on 365-day basis: all other Federal Reserve Banks on 360-day basis.
Average discount rate on all paper discounted works out at 4.32 per cent if calculated on a uniform 360-day basis, and at 4.38 if calculated en a
uniform 365-day basis.




JULY 1,1918.

FEDERAL RESERVE

669

BULLETIN.

Acceptances bought in ope?i market and held by Federal Reserve Banks as per schedules on file with the Federal Reserve Board,
or as reported by the Federal Reserve Banks on dates specified, distributed by classes of accepting
institutions.
Bankers' acceptances.
Date.

Nonmcmber
trust
companies.

Nonmember State
banks.

$93,000
3,653,000
4,342,000
9,000,000

87,820,000
5,267,000
4,898,000

810,000

15,494,000
21,000,000
32,989,000
37,798,000

Member
banks.

Private
banks.

Foreign
bank
branches
and
agencies.

Total.

Trade
acceptances
Total
bought in acceptances.
open
market.

1915.

Feb. 22
Apr. 5
July3
Oct. 4

132,000

SI10,000
161,000
343,000

$93,000
11,593,000
9,770,000
14,373,000

7,160,000
13,572,000
18,921,000
21,782,000

362,000
473,000
471,000
712,000

822,000
3,262,000
11,830,000
9,944,000

23,838,000
38,308,000
64,211,000
70,236,000

§722,000
3,422,000
2,306,000

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

66,803,000
43,979,000
108,597,000
131,997,000
227,717,000

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

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

18,224,000
16,830,000
38,082,000
21,708,000
20,137,000

8200,000
3,805,000
2,286,000
7,657,000

121,154,000
82,026,000
184,785,000
173,171,000
266,853,000

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

125,739,000
83,170,000
189,445,000
180,113,000
273,236,000

210,259,000
252,747,000
275,144,000
218,390,000
207,917,000

5,547,000
1,648,000
1,360,000
654,000
1,330,000

3,522,000
3,856,000
1,884,000
2,907,000
5,168,000

22,099,000 6,947,000
28,419,000 7,097,000
31,779,000 8.562,000
25,921,000 10; 304,000
26,217,000 8,398,000

278,374,000
293,767,000
318,729,000
288,176,000
249,030,000

6,363,000
5,456,000
8,015,000
9,279,000
8,276,000

284,737,000
299,223,000
326,744,000
297,455,000
257,306,000

S93,000
11,593,000
9,770,000
14,373,000

1916.
Jan. 3
Apr. 3
July 3
Oct. 2
1917.

Jan. 1
Apr.2
July 14-16
Sept. 29
Dee. 31

,
1918.

Jan. 31
Feb. 28
Mar.31
Apr.30
May31

Acceptances bought in open market and held by each Federal Reserve Bank on May 31,1918, distributed by classes of accepting
institutions.
[In thousands ol dollars; i. e., 000 omitted.]

Federal Reserve
Bank.

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

.«,

Member
banks.

20,064
98 464
19,359
9,657
2,798
3,840
30,508
6,306
3,013
635
920
12,353
207,917

Nonmem- Nonmember trust
ber State
companies.
banks.

68
1,070
27

152
5

Private
ua11
^'

Foreign
banks,
branches,
and
agencies.

!
i
j
4,406 !
4 j
46 !

1,825
20,127
1,242
768

i
1

Domestic. \ Foreign.
22. KIR
131,434
20,941
10,471
2.798
3,840
31 552
6'643
3,013
635
920
14,148

678
7,367 :
309 i
i
i

892
32

300

8

412

1,331

44

1,330

5,168

26,217

8,398

Trade acceptances bought in open
market.

Total.

249,030

42f>
1,986
27
21

425

j

5,817

5,817

23.060
133,420
20,968
10,492
2,798
3,840
31,552
6 643
3,013
'635
920
19,965

|
i

8,276

8,276

257,306

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

825. 097,283
2,12L 236,516
57; 543,872
59, 531,772
106, 108,771
40, 213,229
133, 620,012
46, 721,836

$652,
2,028,
47,
10,
102,
20.
450,

007,772
64 944,172
29 017,470
35; 414,176

300, 000 i
3,416, 631 !

2,736,456,881

7, 027,740 !

21

May, 1918, dis-

30-day maturities.

Discounts. | Acceptances. • Warrants. |




Total.

of bills discounted and acceptances and warrants bought by each Federal Reserve Bank during
tributed by maturities.
15-day maturities.

Total.

i
i
!

Total
acceptances.

Total.

$25,749,479
2,123,265,321
57,591,478
59,541,774
106,211,271
40,233,229
134,070,012
46,721,838
17,007', 772
64,944,172
29,317,470
38,830,807

Discounts. Acceptances. Warrants.
54,309,981
9,020,796
1,672,290
4,120,333
3.920)244
1, 683,056
4,260,546
2,117,801
737,094
2,460,945
751,174
:. 650,345

\2,74S, 484,021 37,704,605

SI, 184,
10,786,
1,944,
2,353,
1,307,
125,
602,
132,
100,

Total.
85,49-V* 84

935,

19,807,112
3,616,829
6,473,790
5,227,815
1,808,056
4,862,516
2,250,301
837,094
2,460,945
1,051,174
3,585,904

19,771,545

57,476,160

""'3667

870

FEDERAL RESERVE BULLETIN.

JULY

1,1918.

Amounts of bills discounted and acceptances and warrants bought by each Federal Reserve Bank during May, 1918, distributed by maturities—Continued.
90-day maturities.

60-day maturities.
Discounts. Acceptances. | Warrants.
33,878,052
8'. 116,568
3'699,033
4,617,931
7,509,506
2,219,828
14,303,717
4,175,970
5,031,868
8,528,105
1,851,289
, 4,051,531

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

05,980,396

Total.

S2,504,725
12,148,986 !.
2,116; 829 !.
3,152,831 j.
1,650,512 !.
'686,951 ! $16,500
1,780,542 I.
377.479 :.
900)000 •.
200,000 •.
595,000 i.

86,332,777 !!?22.71o,406
20,265,552 1 42,706,079
5,815)862 j 11,071,935
7,770,762 ; 8,980,697
!
9', 679,203
9,160,018
2,923.279 i 1,999,957
16,084,259 ! 12,181,039
4,553.449 i 6,437,189
5,931', 868 i 3,063,797
6,728,105 ! 6,731,779
2,446;289 i 2,455,315
11,262,030 ' 6,500,721

$8,145,740
36,415,403
7,310,673
1,352,098
2,251,127
441,185
4,405,753
722,991
180,000

33,321,354

99,324,250 ;134,525,017

16,500

Over 90-day maturities.

Discounts.

Warrants.

Acceptances.

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

82,992 $1,050,000
63,394
17 964
3,5.14
49,519
270,000
997,365
504,044
2,163,21S
600,000
105,292
560,047
3,754,561
15.052,423
3;183,337
2,342,583

Total
Per cent

28,216,692

Discounts.

66,330,643 j

j

200,855,660

1
i

Acceptances.

$13,537,164
61,379,510
11,419,747
6,871,902
5,581,710
1,273,136 816,500
7,838,295
1,793,017
1,180,000
200,000
2 095 000
15,765,362

30,700,253

128.tt34.843 i 16,500

3,002,889,591

$69,541,878
2,242,522.861
85 424'841
84,172,154
133,796,799
47,309,749
174)367,728
61,351,105
30,775,092
95.917,424
39,333,585
68,727,718

1

Acceptances.

Warrants. Total.

!
!
1
I
j

80.5
97.3
86.6
91.8
95.8
97.3
95.5
97.1
96.2
99.8
94.7
76.4

19.5
2.7
13.4
8.2
4.2
2.7
4.5
2.9
3.8
.2
5.3
23.6

100
100
100
100
100
100
100
100
100
100
100
100

3,131,840,934 i
. :

Qfl.o

4 1

100

!

i

For cent..

*<** l e i

Warrants.

$1,052,992
§56,004,714
63,394 2.181,143,351
17,984
74,005,094
53,033
77,300,252
1,267,365
128,215,089
504,044
46,620)113
2,763,218
166,529,433
665,339
59,558,088
3,754,561
29,595,092
15,052,423
95,717,424
3 163 337
37,238,585
50,962,356
2,342,583

:.n_::

2,483.561

900,000
4,205,673 j

t
j
I
S
!
i
!
!
i

530,862,146
79,121,482
18)382.608
10,332)795
11,930,330
2,441,142
16)587) 692
7,160,180
3,243,797
0,731,779
3,355,315
10,706,394

Total.

Total.

Total.

j Discounts, i Acceptances. Warrants.

;

:
:

>
i

:

i

Maturities of discounts, acceptances, and municipal warrants held by each Federal Reserve Bank on Friday, May 31, 1918.
[In thousands of dollars; i. e., 000 omitted.]
1 to 15 days.

Bills discounted.

Acceptances
bought.

Boston...
New York
Philadelphia..
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis...
Kansas C i t y . . .
Dallas.....'....
San Francisco.

10,812
3-12,439
26,087
22,629
23,769
18,971
53,710
18,660
10,239
27,998
16,488
17,736

5,424
31,751
4,577
1,035
118
1,070
9,115
2,274
1)996
135
200
4,947

Total.
Percent

593,538 j

62,642




16 to 30 days.

Municipal
warrants.

456
457

Total.

Bills discounted.

Acceptances,
bought.

16,236
374,190
30,664
23,664
28,887
20,042
67,825
20,934
12,235
28.133
17.' 144
22,683

6,017
12,152
2,369
7,560
3,201
1,481
3,987
4,052
2,992
5,150
2,143
8,814

3,160
23,566
3,652
3,037
351
1,176
9,840
2,004
352
150
300
4,599

662,637
57.4

57,918

52,187

Municipal
warrants.

13

43

Total.

9,177
35) 718
6,021
10,597
3,552
2,700
13,827
6,056
3,344
5,300
2,443
11,413
110,148
9.5

Maturities

671

FEDERAL RESERVE BULLETIN.

JULY 1, 1918.

of discounts,

acceptances, and municipal

warrants held by each Federal Reserve Bank on Friday, May 31,

1918—Continued.
[In thousands of dollars; i. e., GOO omitted.]
31 to 60 days.
Bills
j Acceptances
discounted.^ bought.
7,202
20,097
4,628
10,512
9,269
2,851
7,942
5,403 i
6,221 |
8,632
5,098
10,381

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

61 to 90 days.

Municipal

warrants, j

Total.
Percent

Liberty

1
8
16
48
1,200
677

16
48
1,200
677
2,967
121
5,063
16,757
4,201
3,240

2,967

121
5,063
16,757
4,201
3,240

34,299
3

34,299

S, 713
30,167
3,023
594
1,617
261
4,593
977
155

187,295 !
16.2 !

106,434

53,419

85,343
31,257
26,330
65,463
30,082
41,897

23,060
133,420
20,968
10,492
2,798
3^840
31,552
6,643
3,013
635
920
19,965

896,425

257,306

43,815
408,275
42,8-10
47,258
49,026

Total.
28,498
63,746
12,763
7,103
8,204
1,120
16,330
3,998
1,970
6,926
2,302

150
3,169

159,853
13.9
Percentages.

MunicBills dis- Acceptances
ipal
counted. bought.
warrants.

Munic- !
ipal i Total
warrants, i
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco

19, 783
33,579
9,740
6,509
6,587
859
11,737
3,021
1,815
6,926
2,152
3,726

Total.

Over 90 days.

Municipal
warrants.

12,665
68,033
14,344
16,338
9,981
4,185
15,946
6,791
6,731
8,982 i
5,368
17,631

5,763
47,936
9,716
5,826
712
1,333
8,004
1,388
510
350
270
7,250

>8,236 |

Percent

Bills
discounted.

+i
T lOtaL

Acceptances
bought.

45

456
501

;

Total.
66,875
541,695
a3,808
57,750
51,824
28,724
116,895
37,900
29,343
66,098
31,458
61,852
1,154,232
100

MunicBills dis- Acceptances
ipal
Total.
j counted. bought.
warrants.

;
i

j
j

65.5
75.4
67.1
81.8
94.6
86.5
73.0
82.5
89.7
99.0
95.6
67.7

34.5
24.6
32.9
18.2
5.4
13.4
27.0
17.5
10.3
1.0
2.9
32.3

0.1

77.6

22.3

.1

100
100
100
100
100
100
100
100
100
100
100
100

1.5

100

loan bonds and United States certificates of indebtedness purchased under repurcliase agreements during the month
of May, 1918.
[Figures included with United States securities in table showing total investment operations.]
New York. Cleveland.

Liberty bonds
Certificates of indebtedness
Total

S3,686,000

$305,500

3,686,000

305,500

Chicago.

Atlanta.
51,600
1,600

Minneapolis.

Kansas
City.

Total.

i $578,000

$23,400
449,500

seo,666

§25,000
15,088,000

578,000

472,900

69,000

5,113,000

i Includes Liberty bonds purchased by the Chicago bank under repurchase agreements.

Total investment operations of each Federal Reserve Bank, during the months of May, 1918 and 1917.

Federal Reserve Bank.

Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Total, May, 1918
Total, May, 1917




Bills disBills bought in open market.
counted for
members and
Federal ReBankers
Trade
Total.
serve Banks. acceptances. ! acceptances.
004,714
2,1813 143,351
005,094
74,
300,252
77, 215,089
128; 620,113
46,
166;
59, 595,092
29. 717,424
95. 238,585
37; 962,356
50,
3,002,889,591
91,413,473

i In the foreign trade.

i $13, 287,164
j 60, 567,139
j
419,747
3 864,909
! H6,
! 5,581,710
273,136
1,838,295
793,017
180,000
200,000
i 1,095,000
670,113

10,095,240

$13,537,164
61,379,510
11,419,747
6,871,902
5,581,710
1,273,136
7,838,295
1,793,017
1,180,000
200,000
2,095.000
15,765,362

7,164,613
3,188,891

128,934,843
82,544,372

18250,000
1812,371

I;

121,770,230
79,355,48] i

2

Municipal warrants.
City.

All
other.

State.

$16,500

$75,656 j

In the domestic trade.

I
I

16,500
43,265 i

Total.

$16,500

16,500
118,921

672

FEDERAL RESERVE BULLETIN.

JULY 1,1918.

Total investment operations of each Federal Reserve Bank during the months of May, 1918 and

1917—Continued.

United States securities.

1-year
treasury
notes."

'united States
certificates
of indebtedness.

12,100 : : : : : : : : : :

SL25.000
178 £86'000
107,000
1,024,000
10,000
108,000
1719,500

Federal reserve bank.
2 per
cent.

3 per
cent.

Boston
. . . .
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chi^a^o
St Louis
Minneapolis . . . .
Kansas Citv
Dallas
San Francisco

3v per
cent.

4 per
cent.

4-1 per
cent.

31,309,000

§509,525
12,751,000

4,650

201,600

5,650

$23,400
2 450

12,450

2,433,500
69,000
81,000
1,162,500

13,295,375

184,425,500

1,000,000

Total, May, 1918
Totol Mpv 1917

$56 666

25,850

2,510,600

82,000

Total.

Total
investment
operations.

8634,525
192,646,000
107,000
1,036,100
10,000
314.250
719,500

870,176,401
2,435,168,861
85,531,841
85,208,254
133,806,799
48,223,999
175,087; 228
61,351,105
33,237,642
2,462,550
95,988,874
71,450
39,427,035
93,450
68,890.218
2,162,500

200,257,325
52,000

3.332,098,259
2174,128,766

1 Includes United States bonds purchased from banks under 15-day repurchase agreements.
2 Exclusive of purchases of United States certificates of indebtedness.

United States securities held by each Federal Reserve Bank on May 31, 1918, distributed by maturities.
United States bonds with circulation privilege.
Federal Reserve Bank.

2 per cent
consols of
1930.

Boston
Nev York
Philadelphia..
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis..
Kansas City..
Dallas.
Sail Francisco

• 2 per cent
3 per cent
; Panamas of j loan of
i 1936-1938. |
1918.

$750 j
50 !
S100 i
915,100 !j
240,600

!

Total

!

1,862,500 i
100 !.
304,300 :
7,155,850 !
2,450,900 ;
2,428,750
15,358,900 '

237,000 I
21,000 i
387,300 i

16,260 j
22,240 |
281,500 !

4 per cent
loan of
1925.

350,000
2,653,660

$2,378,200

2,581,000
1,080,000
1,199,180

1,768,000

7,563,840 I

6,177,450

206,250
825,000
1,000,000

945,400 ;

Other United States securities, including 1 year Treasury notes and Treasury certificates of indebtedness, available as security for Federal Reserve Bank notes under
silver act of Apr. 23,1918.
Federal Reserve Bank.

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

3 per cent
conversion
bonds of
1946-47.
§529,000

1,255,100
549,200
414,800
10,300
427,400
1,153,300
114,800
838,500
1,233,800

Spercent
notes.

y !
!

i

$1,416,000 i
2,226,000
1,537,000
2,660,000
1,513,000
1,141,000
2; 962,000 i
511,000 i
880,000 I
1,374,000 !
1.430,000 :;
1, 500,000

00 I 19,150,000 j
>, 526,300

34 per cent
Liberty
loan of
1947.
S60.000

8400

500

900

253,850
11,850
1,966,900
42,850
13,500
50
23,250
700
21,450

United
4 per cent 4i- per cent States
cerLibertytificates
of
Liberty
loan of
1942-1947. loan of 1928. indebtedness.
826,450
1,320,700 $12,751,000
786,250
374,550
11,650
37,750
440,400
4,650
83,050

8125.
62.128:
'605;
5,797,

3,995

471,
2.332,

2,200
10,850

99,
258,

2,394,200 I 3,082,200 U12,783,245 72,929,000

1 Includes unpaid portion of Liberty loan bonds sold to individual subscribers.
Total United States bonds with circulation privilege, 530,045,590. Other United States securities, §116,865,845.




10,
60,
42,

Total.

157,200
985,000
489,900
256,760
755,700
931,950
093,650
744,400
198,835
570.640
510;350
219,050
146,911,435

1,1018.

673

FEDERAL RESERVE BULLETIN.

RESOURCES AND LIABILITIES OF FEDERAL RESERVE BANKS.
Resources and liabilities of each Federal Reserve Bank and of the Federal Reserve system at close of business on Fridays, May
SI to June 21, 1918.
RESOURCES.
[In thousands of dollars; i. e., 000 omitted.]

I
New

Boston.

Cleveland.

Philadelphia.

York.

San
Dallas. | Francisco.

Minne- ! Kansas
apolis. I City.

St.
Richmond. Atlanta. Chicago.! Louis.

Total.

i
•Gold coin and eeri/ioatos in vault:
May 31
Juiie 7
June 14
June 21
Gold settlement fund,
? e d e i a I Reserve
Board:
May 31
Juno 7
June 14
June 21
.,
Gold with foreign agon-!
cies:
May 31
Jane 7
June 14
,
June 21
,
Gold with Federal Reservo agents:
May 31
June 7
June 14
June 21
Gold redemption fund:
May 31/
Jane 7
June 14
June 21
Total gold reserves:
May 31
June 7
June 14
June 21
Legal tender notes (silver), etc.:
May 31
June 7
June 14
June 21
i
Total cash reserves:
|
May 31
June 7
-.
June 14
!
June 21
|
Bills discounted for |
members and Fed- i
eral Reserve Banks:
May 31
June 7
June 14
Juno 21
Bills bought in open
market:
May 31
June 7
June 14
.Tune 21
United States Government long-term securities:
:vlay31
June 7
June 14
June 21
United States Government short-term securities:
May 31
June 7
June 14
June 21
All other earning assets:
May 31
1
Juno 7
June 14
June 21




3,452
2,909
3,329
2,751

68,989
72,502
65; 995
66,375
3,675
3,675
2,914
1,513

9,123
21.705
9,234 i 21,628
9,120 | 25,017
9,233 ! 31,291

6,364
8,370
6,427
6,431

52,157
63,342
57, 453
26,948

23,715
17,967
13,205
17,510

3,675
3,675
2,914
1,132

4,725
4,725
4,725
1,455

1,837
1,837
1,837
570

247,264 i 86,059
246,807 ! 87,912
246,465 ! 92,431

117,295
116,873
114,298
107,876

i 329.384 ,
! 338,171 j
i 302,033
: 302; 525 i

I 1,807 = 52,169
| 28,189 i 54,775
! 89,514 ! 46,306
; 140,617 I 32,074
: 18,112 i
i 16,892
j 11,218 !
: 5,579 •

63,122
63,037
62,856
62,545

246.066 !. 94,251
i

2,000
2,000
2,120
2,303

12,500
12,500
12,500
12,500

!
i
'
!

3,000
3,000
3,000
3,000

318
399
693
855

609.067 i 154,026 196,200
840,559 ;158,596 206,967
661, 730 i153,771 202,188
707,287 !139,690 168,425

141,238
144,123
137,211
135,487
2.359
2,489
2,504
2,539 i
143,597
146,612
139,718
138,020

43,243 i
43,828 !
44,262 I
43,896 ;
652,310
1,387
705,992
751,183

1,179
1,048
692
394

6,708
6,740
6,754
6.753

;
j
!
|

40,637 j
27,470!
33,247
22,409!

18,780 88,657
21,315 i 66,926
23,914 i 88,051
24,194 i 68,465

8,269
8,404 :
8,177 i
8,261 ;

27,903 '
17,702
,7 I
16024!
16,024!
18,138 i

1,575
7,350
2,100 1 2,100
1,575! 7,350 j 2,100! 2,100
1,575! 7,350! 2,100 i 2,100
485 i 2,284 j
847 | 647

32,870
32,669 37,593
32,532 I 32,857
32,386 ; 28,674
31,129
694 I 1,297
572 I 1,473
488 ! 2,071
363 | 2,311
65,480
59,415
54,489
57,260

1,944
1,905
1,894
2,035

28,176
28,756
27,614
27,548

65,953
63,960
62,988
64,872

;

453
83
300
206

!
|
i
:

2,625 i 1,838
2,625 i 1,838
2,625 i 1,&38
1,261 !
566

i i

290,709 i 87,016
271,922 !73,730
298,087 !78,923
277,050 i 68,700

74,996
64,993
63,043
61,698

69,226
63,217
68,638
76,812

119
94
95
95

445
389
412
388

19,147
19,122
14,102
14,077
1,258
1,258
1,256
1,254

456,177
463,622
432,557
438,773

35,169
35,747
36,152
35,887

28,475 ; 7,986 13,962
22.859! 6,723 17,905
33J140 I 5,841 16,920
40,716 j 10,858 14,719

40,624 ! • 34,530 36,908
! 184,418 i40,555 I 34,400 ! 38,858
j 166,667 ! 39,993 34,287 31,771
172,692 : 39,938 34,109 33,712
176,178 ;
2,194
765
| 2,108 -: 1,711
792
2,387
i 2,223 : 1,700
800
2,455
! 2,380 : 1,689
917
2,543
j 2,595 i 1,671
I
i
!
i

5,430
5,675
5,740
5,852

2,888
2,888
2,888
889

j
|
I
!

i|

425,237
417,675
489,610
481.023

52,500
i 51,280
| 44,084
j 17,008

76,089 ! 955,919
80,498 958,255
81,044 951,145
84,971 957,238
148
129
55
19

27,993
28,431
29,507
30,331

35,659 128,258 1,917,826
34,614 137,167 1,919,263
28,777 137,059 1,946,903
32,607 136,485 1,924,373
!
|
j
|

2,486
2,288
2,281
1,996

298
295
254
155

57,883
58,461
58,360
56,738

65,870
59,786
54,915
57,667

854
4,583 ! 1,477
5,195 i 1,325 !
729
4,804 ! 1,345 !
809
747 ! 4,557 | 1,201 j
i
;
66,807 !295,292 88,493! i
64,689 I 277,117 75,055
63,797 i302,891! 80,268 1
65,619 I281,607 1 67,901 j

75,115
•9,671 !
85,087 63,606 ;
63,138 j 69,048 |
61,793 i 77,200;

38,145
38,902
31,058
34,603

128,554
137,462
137,313
136,640

975,709
977,724
005,283
981, 111

47,258
45,796
49,962
34,420

49,026
49,555
51,601
50,483

24,839 ! 85,343 ; 31,257
25,923 93,160 i 39,285
32,624 94,335 j 47,733
26,045 112,916 | 48,357

26,330
30,703
33,480
34,376

10,492
10,053
11,935
12,384

2,798
3,512
4,244
6,158

3,840
4,380
4,125
4, 474

31,552
26,151
24,380
21,681

7,800
7,800
7,700
7,499

1,233
1,233
1,233
1,233

730
730
730
730

7,090
7,090
7,090
7,090

9,457
9,692
9,876
9,962

1,524
1,524
1,524
1,523

1,202
.1,207
1,237
1,197

3,004
2 979
2^ 982
2, 962

53
52
53

54
47
40
32

450
410
476
363

390
371
426
407

155,205 i 196,850
159,644 •207,377
154,483 202,662
140,084: 168,788

I
43,815
47,013
48,056
45,844

408,275
462,099
468,535
383,303

42,840
49,599
50,296
55,015

23,060
21,811
21,303
20,336

133,420
130,580
127,966
123,458

20,968
23,114
21,281
19,944

616
616

15,631
25,283
1,559
1,549

1,347
1,347
1,347
1,747

64,354
4,814
5,264

2,143
2,127
1,970
5,658

i
!
:
i

!
I
I
|

65,433 ! 30,082
68,150 j 33,443
62,050 36,859
" """
56,612 28,752
G35 I
920
720
800 I
1,320
600
250 | 1,170
!

41,897 896,425
39,766 j 984,492
40,500 1,016,031
37,145 931270
19,965
19,287
19,874
18,102

|
!
!
!

257,306
248,542
242,923
232,472

6,643
5,959
4,803
3,775

3,013 i
2,375
1,092
740

2.233 i
2,233
2.234 |
2,234 i

1,845 I
1,845 !
1,860
1,860

8,885 '
8,865
8,872
8,877

3,981
3,981
3,881
3,981 '

3,461
3,461
3,481
3,481

54,832
64,484
40,683
40,877

511
511
511
511

1;352
1.334
1 349
1 294

3,708
3,613
3,628
3,588

1,530
1,490
490
h
1,430

1,758
1,769
I 827
795

92,082
32,801
33,179
35,883

30
30

58
28
8
8

533
519
467

10
18
23

736
694
594
108

i
(516
616

1,541
1,541
1,541
1,416

4,487

!
I,
i
I

3

674

FEDERAL RESERVE BULLETIN.

JULY 1,1918,

Resources and liabilities of each Federal Reserve Bank and of the Federal Reserve system at close of business on Fridays, May
31 to June 21, 1918—Continued.
RESOURCES—Continued.
[In thousands of dollars; i. e., 000 omitted.]

Total earning assets:
May 31. T
June 7
June 14
June 21
Due from other Federal Reserve Banks,
net:
May 31
June?
June 14
June 21
Uncollected items:
May 31
June 7
June 14
June 21
Total deductions from
gross deposits:
May 31
June 7
June 14
June 21
5 per cent redemption
fund against Federal
Reserve banknotes:
May 31
Jurie7
June 14
June 21
All other resources:
May 31
June 7
June 14
June 21
Total resources:
May 31
June 7
June 14
June 21

Boston.

New
York.

69,032
70,981
71,516
68,212

621,690
622,776
603,324
512,797

Philadelphia.

67,298
76,187
74.894
82; 364

Cleveland.

Richmond.

75,007
73,341
79,473
84,265 I

54,581
55,824
58,602
59,399

3,269

16,288
7,477
5,011
6,748

1,073
453

7,018

St.
Atlanta. Chicago. Louis.

30,664
32,292
38,769
32,503

Minneapolis.

Kansas
City.

Dallas.

37,046
40,153
44,117
35,393

127,043
129,427
128,807
144,681

40,674
48,018
55,284
52,880

32,596
36,285
37,789
38,278

81,228
75,150
69,327

10,144
9,891

2,085

3,014

1,412
2,822
3,725

San
Fran-

Total.

1,301,390
1,330,813
1,333,410
1,240,602

67,090
64,301
65,685
60,503

1

19,194
2 1,605
2,299 I i 19,350
2,933
14,705
.

24,228
25,031
35,535
32,055

80,915
75,193
169,287
168,402

60,052
46,195
51,604
43,140

39,745
34,465
44,544
53,771

29,473
26,679
31,828
45,294

26,991
31,398
32,403
36,464

45,501
55,308
57,682
73,491

45,367
29,369
31,456
37,643

9,801
8,485
8,503
9,627

30,122
31,643
24,153
35,203

14,761
17,523
16,942
23,500

20,377
19,635
25,716
30,269

427,331
400,924
529,653
588,859

24,226
25,031
35,535
32,055

80,915
75,193
169,287
175,420

60^2
46,195
54,873
49,178

56,033
41,942
49,555
60,519

29,473
27,752
32,281
45,294

26,991
31,398
32,403
36,464 I

55,645
65,199
57,682
73,491

45,367
31,454
31,456
37,643

9,801
11,499
8,503
9,627

31,534
34,465
27,878
35,203

14,761
17,523
16,942
23,500

21,986
19,635
28,015
30,269

40S, 137
402,529
510,303
584,154

14
14 !

100
100
100
100

389
400
400
400

137
137
137
137

241

626
637
735
735

207

448
•I"

90
236,855 1,355,146 282,762
242,624 1,382,356
246,769 1,478,603 284,230
1,439,400 271,716

90-

I
327,690 149,924
322,660 143,362
331,690 145,798
313,572 162,360

124,462
128,379
134,983
134,600

!
I
i
i

478,080
471,843
489,480
499,879

174,534
154,527
167,008
158,424

117,512
! 112,871
! 109,430
| 109,698

180,263
179,699
172,476
182,130

90,089
94,715
92,254
93,633

217,630
221,398
231,097
230,429

3,686,300
3,711,703
3,849,711
3,806,692

J Difference between net amounts due i'rom and net amounts due t o other Federal Reserve B a n k s = n e t amount duo t o other Federal Reserve
Banks.
2 Difference between n e t amounts due from a n d n e t amounts due to other Federal Reserve Banks.

LIABILITIES.
Capital paid in:
May 31
June 7
June 14
June 21
Surplus:
May 31
June 7
June 14
June 21
Government deposits:
May 31
June7
June 14
June 21
Due to members—reserve account:
May 31
,
June 7
,
June 14
,
June 21
Collection items:
May 31
,
June 7
June 14
June 21
Due to other Federal
Reserve Banks, net:
May 31
,
June 7
June 14
June 21




6,467
6,474
6,474
6,474

19,755
19,777
19,777
19,786

75
75
75
75

649
649

14,479
23,062
6, 705
3,277

21,572
16,826
48,325
55,073

6,939
6,939
6,939

8,537
8,557
8,556
8,556

3,812
3,815
3,819

3,024
3,034
3,045
3,045

9,745
9,771
9,775
9,781

116
116
116
116

40
40
40
40

216
216
216
216

3,623
3,627
3,627
3,607

2,785
2,786
2,788
2,797

3,510
3,522
3,527
3,529

2,968
2,970
2,973
2,985

4,381
4,390
4,411
4,447

75,546
75,662
75,711
75,770
1,134
1,134
1,134
1,134

38
38
38

11,800
18,846
4,691
3,774

32,544
26,478
16,736
553

6,900
8,423
5,560
15,659

6,288
10,334
12,185
11,627

22,142
15,766
16,023
23,503

14,625
18,797
14,597

10,275
12,736
3,384
5,711

10,319
6,201
9,004

4,021
7,740
8,204
6,375

12,637
10,549
12,921
15,532

166,191
179,876
155,532
159,457

91,968,!I 618,641 89,231
89,040 | 640,968 91,102
96,615 i 683,738
89,963

111,591
109,456
128,023
116,446

42,999
42,844
44,579
41,741

38,247 182,974
34,652 181,909
192,627
41,835 186,562

46,631
46,118
54,267
46,822

39,164
38,735
37,400
38,166

63,644
66,009
68,451

41,323
38,662
35,935
37,040

71,562
72,356
79,651
71,949

1,440,413
1,449,486
1,555,434
1,464,986

36,818 23,192
29,815 ! 22,859
35,012 22,261
29,365 I 29,021

21,437
17,855
20,281
23,739

16,232
19,897
16,164
19,225

22,748
20,576
24,286
24,122

33,178
20,298
23,373
24,794

10,011
4,399
8,020
6,457

19,937
19,629
13,770
16,978

8,115
8,850
6,877

13,772
11,409
13,057
14,695

278,698
239,971
264,887
287,76$

7,675

3,519
3,627
7,062
1,253

1,107
707

18,462 i
15,920 !
27,441 j
26,727!

54,766
48,464
54,345
63,838

247
22
930
1,762

21.341
14)385
12,283
5,308

4,215
1,266 ! 4,366 j

11,171
5,412
5,105

1,176 |

109
2,037
4,090

4,458 |.

I.

J.

675

FEDERAL RESERVE BULLETIN.

Resources and liabilities of each Federal Reserve Bank and of the Federal Reserve system at close of business on Fridays, May
31 to June 21, 1918—Continued.
LIABILITIES—Continued.
[In thousands of dollars; i. e., 000 omitted.]
Boston.
Other deposits, including foreign government credits:
May31
June 7
June 14
June 21
Total gross deposits:
May 31
June 7
June 14
June 21
Federal Reserve notes
in actual circulation:
May 31
June 7
June 14
June 21
Federal Reserve bank
notes in circulationnet liability:
May 31
June 7
June 14
June 21
All other liabilities:
May31
June 7
Juno 14
June 21
Total liabilities:
May 31
June 7
June 14
June 21

New
York.

Cleveland.

Philadelphia.

101,314
103,926
115,601
110,426

Richmond.

605
137
191
264

St.
Atlanta. Chicago. Louis.

6
16
7
12

3,385
2,136
3,580
3,740

104
104
233
417

Minneapolis.

Kansas
City.

Dallas.

45
82
24
41

San
Francisco.

Total.

3,984
3,159
3,585
2,445

109,443
109,560
123,221
117,3-15

125,186
128,044
131,691
121,057

817,634 142,064
824,569 139,991
914,292 137,941
866,057 123,102

167,932
158,930
167,211
146,284

78,205
69,122
70,420
86,447

64,292
68,526
73,770
73,965

231,249
220,387
237,623
242,293

105,709
85,317
97,882
89,077

60,671
55,952
52,051
51,628

94,927
93,592
85,980
95,140

53,568
57,289
55,106
57,328

101,955
101,931
109,214
104,621

1,994,745
1,978,893
2,099,074
2,029,557

104,475
107,327
107,808
109,955

517,108
536,764
537,918
546,707

133,759
135,004
139,316
141,675

150,428
154,347
155,032
157,884

67,611
70,016
71,043
71,745

57,089
56,748
58,074
57,477

235,163
238,498
238,809
244,152

64,716
65,004
64,921
65,211

53,610
53,635
54,071
54,693

72,854
73,374
73,627
74,186

33,198
34,073
33,758
33,254

110,957
114,789
117,123
121,012

1,600,968
1,639,579
1,651,500
1,677,951

560

7,704
7,880
8,000
7,910

•

1,700 i.
2,000 j.
652
704
721
732

597
5,967
6,201

236,855
242,624
246,769
238,293

1,355,146
1,382,356
1,478,603
1,439,400

826

180
293
400
228

1,147
1,271
1,057 i
1,437 j

327,690 149,924 124,462
322,660 143,362 128,379
331,690 145,798 134,983
313,572 162,360 134,600

282,762
282,026
284,230
271,716

478,080
471,843
489,480
499,879

486
579
578
529

j 174,534
! 154,527
I 167,008
| 158,424

408
460
482
542

1,208
1,331
1,342
1,365

117,512
112,871
109,430
109,698

180,263
179,699
172,476
182,130

8,324

6, r>so
355
383
4.17

337
288
349
349

10,001
9,945
5,583
6,855
12,291
12,335

90,089 217,630 3,686,300
94,715 221,398 3,711, 703
92,254 231,097 3,849,711
93,633 230,429 3,806,692

FEDERAL RESERVE NOTES.
Federal .Reserve note account of each Federal Reserve Bank at close of business on Fridays, May SI to June 21, 1918.
[In thousands of dollars; i. e., 000 omitted.]
Boston.
Federal Reserve notes
received
from
agent—net:
May 31
June7
June 14
Juno 21
,
Federal Reserve notes j
held bv banks:
i
May 31
!
June 7
i
June 14
1
Juno 21
j
Federal Reserve notes j
in actual circulation:
May 31
Juno 7
June 14
Juno 21
Gold deposited with
or to the credit of
Federal R e s e r v e
agent:
May 31
June 7
June 14
June 21
Paper delivered to
Federal R c s e r v e
agent:
May 31
.Time 7
Juno 14
June 21




New
York.

109.412 ! 568,078
lio; 257 I 583,339
111,596 593,657
112,885 591,037
4,937
2,930
3, 788
2,930
104,475
107,327
107,808
109,955

Philadelphia.

I
St.
Atlanta. Chicago.1 Louis.

Cleveland.

144,479 159,395
146,332 165,773
150,851 165,598
154,671 168,955

79,560
80,422
79,286
78,847

Minneapolis.

Kansas
City.

Dallas.

Fran-

Total.

59,073
59,039
60,404
59,660

258,593
260,841
266,866
270,353

68,256
68,625
69,020

55,876
55,946
55,833
56,255

78,310
79,031
79,039
79,142

33,582
34,288
34,370
33,898

121,933
125,621
127,268
130,795

jl, 736,547
11,769,876
jl,793,393
11,805,518

215
G12
644

10,976
10,832
10,145
9,783

135,579
130,297
141,893
127,567

10,720
11,328
11,535
12,996

8,967
11,426
10,566
11,071

11,949 ! 1,984
10,406 i 2,291
8,243 j 2,330
7,102 2,183

23,430
22,343
28,057
26,201

3,540
3,983
3,701
3,809

2,266
2,311
1,762
1,562

5,456
5,657
5,412
4,956

517,108 133,759
536,764 135,004
537,918 .139,316
M6, 707 141,675

150,428
154,347
155,032
157,884

67,611 ! 57,089
70,016 j 56,748
71,043 ; 58,074
71'. 745 ! 57,477

235,163
238,498
238,809
244,152

64,716
65,004
64,921
65,211

53,610
53,635
54,071
54,693

72,854
73,374
73,627
74,186

33,198 110,957 1,600,068
34,073 114,789 1,639,579
33,758 117,123 1,651,500
33,254 121,012 1,677,951

87,912 116,873
92,431 114,298
94,251 107,876

32.870
32; 669
32,532
32,38S

37,593
32,857
28,674
31,129

164,418
166,667
172,692
176,178

40,624
40,555
39,993
39,938

34,530
34,400
34,287
34,109

36,908
36,858
31,771
33,712

19,147
19,122
14,102
14,077

76,089
80,498
81,0-14
81,971

955,919
958,255
951,145
957,238

58,853
71,866
70,321
71,737

50,286
52,73S
do,382
56.410

21,581
26,487
32.456
28', 700

111,847
112,003
111,738
128,243

33,355
34,824
45,254
42.170

23,884
27,816
29,646
30,490

62,372
64,365
57,704
52,128

31,002
34,183
38,179
29,922

52,823
52,015
51,413
48,254

1,112,323
1,193,629
11,219,848
11,127,797

50,970
46,575
55,739
44,330

!

63,122
63,037
62,856
62,545

247,264
246,807
246,465
246,086

66,875 541,695
68,824 592,679
69,359 596,501
66,180 505,761

57,750
55,849
61,897

676

1,1918.

FEDERAL RESERVE BULLETIN.

Federal Reserve note account of each Federal Reserve agent at close of business on Fridays, May 31 to June

21,1918.

[In thousands of dollars; i. e., 000 omitted.]

jdelphia.

Cleveland.

Richmond.

875,880
888,480
307,480
921,880

190,200
197,360
208,240
208,240

196,060
197,260
205,420
206,900

107,060
109,260
109,860
110,360

92,740
92,740
96,740
96,740

195,002
199,741
205,623
209,443

31,981
32,128
34,209

15,825
16,247
16,822
17,245

21,240
21,728
22,294
23,233

680,878
688,739
701.857
712', 437

158,219
165,232
174,031
173,851

180,235
181,013
188,598
189,655

112,800
105,400
108,200
121,400

13,740
18,900
23,180
19,180

568,078
583,339
593.657
591,037

144,479
146,332
150,851
154,671

j York,

San
Francisco.

Total.

68,500
68,500
68,500
68,500

131,640
135,420
138,020
141,620

2,405,420
2,440,720
2,492,820
2.520,120

17,180
17,459
17,651
17,848

15,618
15,682
15,750
16,012

9,707
9,799
10,752
10,825

398,733
407,164
420,077
428,292

60,531
60,401
59,988
59,810

86,520
87,241
87,049
86,852

52,882
52,818
52,750
52,488

121,933
125,621
127,26S
130,795

2,006,687
2,033,556
2,072,743
2,091,825

9,390
8,590
9,390
8,940

4,655
4,455
4,155
3,555

8,210
8,210
8,010
7,710

19,300
18,530
18,380
18,590

68,256
68,987
68,625
69,020

55,876
55,946
55,833
56,255

78,310
79,031
79,039
79,142

33,582
34,288
34,370
33,898

St.
Atlanta. Chicago. Louis.

Minneapolis.

Kansas
City.

Dallas.

320,880
323,380
327,040
334,360

92,200
92,200
93,200
93,200

73,980
73,980
73,980
73,980

103,700
104,700
104,700
104,700

17,142
17,376
17,661
17,905

17,607
18,219
18,894
20,027

14,554
14;623
15,185
15,240

13,449
13,579
13,992
14,170

85,820
87,532
87,566
87,127

75,598
75,364
79,079
78,835

303,273
305,161
308,146
314,333

77,646
77,577
78,015
77,960

20,840
15,240
23,000
20,700

6,260
7,110
8,280

16,525
16,325
18,675
19,175

44,680
44,320
41,280

159,395
165,773
165,598
168,955

79,560
80,422
79,286
78,847

59,073
59,039
60,404

258,593
260,840
266,866
270,353

FEDERAL RESERVE
NOTES.
Tlcceived from Comptroller:
152.580
May 31
157:4-10
Juno 7
159',
640
June 14
159,640
Juno 21
Returned to Comptroller:
May 31
29,428
June 7
30,583
June 14
31,244
June 21
31,955
Chargeable to Federal
Reserve agent:
123.152
May 31
126', <S57
June 7
12S, 396
June 14
127,685
June 21
In hands of Federal
Reserve agent:
May 31
13,740
June 7
16,600
June 14
16,800
14,800
June 21
Issued to Federal Reserve B a n k , less
amount returned to
Federal R e s e r v o
agent for redemption:
109,412
May 31
110,257
June 7
lli;S96
June 14
112.885
June 21
Collateral held us sccu- ,
rity for outstanding |
notes:
!
Gold coin and cer- j
t i f i c a t c s on {
hand—
i
12.000
May 31
8,000
June"
8,000
June 14.
7.000
June 21
In gold redemption fund—
5,622
May 31
5,537
June?
5.356
June 14
(T. 045
June 21
Gold settlement fund,
Federal I t e s c r v e
Hoard:
Ab. 500
May 31
49'. 500
June 7
49; 500
June 14
49,500
June 21
Eligible paper(required
minimum): J
46,290
May 31
47,220
June 7
48.740
June 14
on! 340
Jane 21
Total:
i
May 31
i 109,412
June 7
..I 110,257
June 11
| lll',58fi
June 21
1 112,885




:i

2,504
2,503
2,504
2,504

23,518
23,517
20.517
14.518

169,743
169,743
169,740
166,740
12,521 i
12,064 I
11,725 •
14,826 j

7.3S5
7; 738
7,(34
8.021

I

8,777
8,356
8,781
8,358

1,370
1,169
1.032
' 886

2.169 I
1/J34
2,650
2,405

270,140
263,680
279,350
286,310

121,933
125,621
127,268
130,795

11,581
11,581
11,581
11,581

13,102
13,102
13,102
13,102

1,736,547
1,769,876
1,793,393
1,805,518

232,448
228,446
225,444
215,445

378
572
311
417

2,155
2,096
2,059
2,018

1,928
1,798
1,685
1,507

2,548
2,498
2,411
2.352

1,982
1,957
1,937
1,912

6,593
6,502
0,413
6,340

55,428
52,221
51,994
54,587

I

65,000
6.1,000
65,000
65,000

j
j
j
!

78,674
80,174
84,797
86,230

85,000
85,000
85,000
85,000

31,500
31,500
31,500
31,500

32,920
28,420
23,520
26,220

164,040
166,095
172,381
175,761

38,469
38,459
37,931
37,920

19,500
19,500
19,500
19,500

34,360
34,360
29,360
31,360

5,584
5,584
584
584

69,496
73,996
74,631
78,631

670,043
677,588
673,707
687,205

320,814
336,532
347,192
344,977

i
I
j
I

58,420
58,-120
58,420
60,420

42,100
48,900
51,300
61,079

46,690
47,753
46,754
46,461

21,480
26,182
31,730
28,531

94,175
94,174
94.174
94.175

27,632
28,432
28,632
29,082

21,346
21,546
21,546
22,146

41, 102
42,173
47,268
45,430

14,435
15.166
20" 208
19,821

45,841
45,123
46.224
45'. 824

780,628
811J621
84.2,248
848,280

568,078
5S3,339
593,657
591,037

I
j
!
j

144,479
146,332
150,851
154,071

159,395
165,773
105,598
168, £55

79,560
80.422
79,2S(>
78,847

59,073
59,039
60,404
59,660

258,593
260,841
266,866
270,353

08,256
68,987
68,625
69,020

55,876
55,946
55,833
56,255

78.310
79', 031
79,039
79,142

33,582
31,288
34,370
33,898

For actual amounts see item " Paper delivered to Federal Reserve agents," on page 675.

121,933
125,621
127,208
130,795

i, 736,547
1,769,876
1,793,393
',805.518

677

FEDERAL RESERVE BULLETIN.

JULY 1,1918.

MEMBER BANK CONDITION STATEMENT.
Principal resources and liabilities of member hanks located in central reserve, reserve, and other selected cities, as at close of
business on Fridays from May 24 to June 14, 1918.
1. T O T A L F O R A L L .UEFORTING B A N K S .
[Tn thousands of dollars; i. e., 000 omitted.]
New
York.

Boston.

| Philfijdelphia.

Cleveland.

Richmond.

i
Atlanta.] Chicago.

j San
S-:. I Minne- ". Kansas
FranLouis, j aoolis. -; City. Dallas, ji CISCO.
i

Number of reporting
banks:
May24.
May 31
Juno 7
June 14
United States bonds
to secure circulation:
May 24
May 31
June 7
June 14
Other United States
bonds, including
, Liberty bonds:
Mav'24
May 31
June 7
June 14
United States certificates of indebtedness:
May 24
May 31
June 7
June 14
Total United States
securities owned:
May 24
May 31
June 7
June 14
Loans secured by
U n i t e d States
bonds and certificates:
May 24
May 31
June 7
June 14
Other loans and investments:
May 24
May 31
June 7
,
June 14
Total loans and investments:
Mav24
,
May 31
Juno 7
Juno 14
Reserve
with
Federal Reserve
Jianks:
May 24
May 31
June 7
June 14
,
Cash in vault:
May 24
May 31
June 7
,
June 14
Net demand . deposits on which
reserve is computed:
May 24
May 31
June 7
June 14
Time deposits:
May 24
May 31
June 7
June 14




Total.

i

I

98]
98 i
99 j
99 !

42
42
42
42

65
64
67
70

94
95
92
91

38
37
35
36

!
|
!
|

.32!
32 I
32 I

40
38
41 I
41 i
!

33
33 !
29 i
27:

I

!

14,616
14,621
14,621
14,621

i

47
48
47
47 i

691
689

I

43,016
43,341
43,462
43,523

21,908 ! 14,190 |
21,158 ! 14.390 j
23,220
13'685 i
23,968
13,285 I

17,392
18,817
17,392
19,142
18,930 I 17,392
•18,179 ' 17,417

22,271
25,357
24,527
24,337

70,435
68,807
61,709
59,641

22,882
25,226
27,383
27,728

20,889
24,736
22,169
21,812

71,896
77,413
73,682
78,303

17,889 i
25,801 i
24,720 !
24.285 :

11,730 j
13.207 1
10', 023
10; 615

18,149
18,253
18,680
17,609

15,499
16,052
16,059
15,594

18,976
24,225
23,363
22,513 j

28,395 i 804,714
30,772 I 762,004
31,186
733,399
29,910 I 682,415

46,429
39,124
38,607
43,017

42,837
32,343
31,055

16,372
12.187
13;136
14,128

22,320
18,418
17,290
16,192

56,235 1
55,292*1
55184
55,184
32,486

31,227
11,197
20,642
9,177
20864 | 9046
20,864
9,046
21,344 j 10,005 i

25,035
15,768
16279
16,279
17,435

18,510
14,970
16,034
16.258

38,421
31,181
29,879
33,186

1,141,692
1,041,878
1,011,959
945,1(52

59,380
60,774
60,543
59,356

81,678
77,459
78,109
80,329

156,288
144,491
136,220
131,950

61,162
58,571
63,739
65,824

57,399
57,544
53,144
51,289

146,948
151,847
147,796
128,968

66,508
63,835
62,976
63,040

29,095
28,303
24,413
26,239

57,196
47,808
48,971
49,066

50,888
48,09(5
49,672
49,431

91,502
90,761
88,597
89,354

1,999,835
1,918,450
1,875,371
1,798,007

15,224
16,220
16,976
17,380

6,465
6,040
6,304
6,816

27,362
30,059
33,814
29,423

14,006
14,343
18,102
14.998

3,740
4,502
4,509
4,668

4,495
4,672
4,625
4,451

5,146
5,845
6,138
6,585

5,843
6,967
7, (551
9,450

492,441
512,962
522,528
518,407

941,757 | 327,150
942,889 i 316,243
953,472 I 335,280
350,744

258,766
265,944
246,631
242,074

1,327,745 375,749
1,342,098 375,213
1,341,210 i 386,126
1,285,149 j 368,240

245,067
235,341
224,894
230,000

459,411
459,205
461,288
461,983

167,613
162,311
167.738
167; 963

51,367
12,978
51,367
12,978
51,367 I 12,975
51,897 ! 12.975

16,369
15,381
14,736
14,825

285,710!
275,590 !
278,419 |
269,443

1,141,791
1,088,961
1,063,185
1,003,755

i
I
i
j

6,168
5,919
5.344
5.619

• 14,012 16,879 !
! 13,787 17,074 j
I 14,012 17,579 !
'•• 14,02217,579 i

34,105
35,355
35,355
33,655

2(55,448
2(56,524
267,942
266.740

592,695
610,048
595,470
586,705

!
56,639
274,792
54,151
287,404
52,816 j 278,913
54,248
281,057

34,318
35,849
38,238
38,782

4,027,762
4,013,342
4,038,385
4,193,061

625,843
633,752
628,529
637,622

775,845
768,040
771,650
797,114

I

44,411
46,910
54,442
50,549

!

I

558,317
587,512
60(5,681
594,193

741,839
747,060
742,876
756,733

596,952
62,809
66,783
589,113
63,158 ! 609,698
70,723 I 649,757

57,298
54,591
59,773
59,907

81,153
78,808
76,642
95,3,53

19,664
20,469
20,986
20,179

30,629
14,631
32,087 j 15,259
34,773 j 15,491
33,635
15,783

26,971
24,765
2(5,533
26,683

124,979
119,999
123,000
120,641

.
I
I
j

1 1

223,647
403,536 i 322,630
391,034 329,528 1,502,055 j 450,2(53 j 277,902 ! 521,102 21(5,252
I 453,39.1 \ 268,146 | 511,685 223,548
415,995 306,079 1,524,004
1,522,820 I 447,204 I 253,816 <!514,884 223,979
443,540
446,284
433,918 i 300,179
'"" "- Jl,
i Ai'i
XA(\ IjAU\
«>RA ; 260,907 515,500

891,864 |5,444,345 ;
882,965 15,389,707 i
885,009 15,380,483 i
93 0,718 15,477,873 ;

1,142,456
1.134,290
I', 144,140
1,142.362

460,972 9,993,680
489.784 10,004,162
510,433 110,045,636
495,389 10,189,202

26,007
24, 728
25,856
28,181

!
I
i
i

17,933 i 41,202
17,935
39,386
15,769
42,813
17,210
36,971

15,974
13,707
15,837
16,452

41,788
45,844
47,038
52,(532

I
i
I
j

1,132,181
1,122,664
1,145,645
1,226,348

61,229
13,395 !
62,786
13,625 !
62,134 j 14,045 j
57,481 | 13,572 i

9,569 i 16,12(5
8,822 j 15,800
9,166 ;I 16,510
7,590
15,934

10,432
11,744
10,369
10,582

18,327
19,509
19,535
19,333

!
i
j
j

359,489
359,453
365,327
353,903

25,049
134,314 I
24,266 j 333,502 I
20,802 ! 135,364 I
24,980 ! 136,501 I
13,537 (
14,522 j
12,785 !
12,484 j

12,485,956
12,435,574
|12,443'f 535
112,506,216

31,702
34,001
32,895
37,681

i
657,881
654,532
666,094
689,482
95,788
95,607
93,873
93,474

|4;219,678
4,376,077
4,399,524
4,486,422
|
I
i
i

586,410
575,703
578,464
589J093

249,472
13,740
281,507 I 13,796
257,522 I 13,799
2(52,341 I 14,571

688,252 I 248,559 182,876 i 999,719 i 259,653 i
701,413 i 239,159 189,750 il, 010,618 i 252,047 j
707,756 i 256,341 177,006 i 1,006,030 \ 256,041
998,479 \ 258,332
721,117 272,354 182,017

228,795
229,107
231,937
228, S81

40,720
36,836
41,841
42,926

174,097
168,247
158,525
159,966

j 351,821
! 350,004
! 358,728
! 363,811

135,778
133,219
135,002
142,2S6

364,818 8,869,542
374,726 9,025,495
381,345 9,080,856
373,591 i 9,246,950

878

FEDERAL EESEEVE BULLETIN.

JULY 1,1918.

Principal resources and liabilities of member banks located in central reserve, reserve, and other selected cities, as at close of
business on Fridays from May 24 to June 14, 1918—Continued.
1. TOTAL FOE ALL REPORTING BANKS—Continued.
[In thousands of dollars; i. e., 000 omitted.]

Boston.

Cleveland.

Richmond.

726,314

758,966
771,926
779,492
791,944

261,753 208,226 |l,094,999
251,177 214,919 il,106,145
270,573 202,185 11,100,827
287,077 206,455 11,082,136

Total net deposits
on which reserve
is computed:
May 24
May 31..:
June 7
June 14
G o v e r n m e n t deposits:
May 24
May 3 1 . . .
June 7
1
June 14
!

102,868
97,364
75,028
141,510

;
59,054
72,021

87,910
74,633
58,664
57,279

18,437
31,030
17,437
17,674

Minneapolis.

San
Kansas Dallas. FranCity.
cisco.

279,602
271,420
275,003
287,241

190,951
182,792
171,117
173,065

370,428
368,596
376,873
382,379

53,316
54,144
40,819
38,977

22,864
24,028
18,287
20,120

Atlantaj Chicago. |

30,120 |
14,704 |
18,390 !
12,284 i

98,910
77,634
96,753

142,622
140,586
141,973
150,192

Total.

393,287 9,271,328
405,606 9,428,779
413,672 9,483,554
403,933 9,638,398

22,793 28,520 16,890
20,301 19,796 23,416
14,105 14,163 22,108
15,594 11,344 19,645

1,028,738
909,312
765,144

2. MEMBER BANKS IN CENTRAL RESERVE CITIES.
CENTRAL RESERVE
CITIES.

Number of reporting
May 24,
May 31,
June 7.
June 14
United States bonds
to secure circulation:
May24
May31
!
June7
i
June 14
i
:
Other United States
bonds, including
Liberty bonds:
May'24,
May 31.
June 7.
June 14
United States eortiiicates oi indebtedness:
May 24.
May 31
June 7.
June 14
Total United States
securities owned:
May 24
May 31
June 7.
June 14,
Loans secured by
United S t a t e s
bonds and certificates:
May 24.
May 31.
June 7.
June 14
Other loans and investments:
May 24.
May 31
June 7
June 14
Total loans a ad investments:
May 24.
May 31.
.
June 7
1
Juno 14
!
Reserve with Fed- i
eral Reserve Banks:!
Mav24
i
May31
|
;»uiie7
!
June 14
!




1
!
!
i

37,023
37,023
37,023
37,553

1,081,826
1,030,960
1,008,013
949,023

1,205,731
1,158,254
1,132,802
1,066,806

275,003
289,355
285,151
283,980
805,711 I 265,859
813,974 266,441
816,108 262,222
830,668 271,526

760,467
756,493
782,055
953,188
| 6,241,201

, ,
4,963,033
jo, 052,702
|
I
!
571,018 :
561,886 !
i 583,759 ]
! 618,192 !

I 6,200;008
i 6,308,974
688,194
681,4-12
704,501
747,000

JULY 1,

679

FEDERAL RESERVE BULLETIN.

1918.

Principal resources and liabilities of member banks located in central reserve, reserve, and other selected cities, as at close of
business on Fridays from May 24 to June 14, 1918—Continued.
2. MEMBER BANKS IN CENTRAL RESERVE CITIES-Continued.
[In thousands of dollars; i. e., 000 omitted.]

Cash in vault:
!
May24
|
May 31
1
June 7
|
June 14
Net demand deposits on which reserve is computed:.
May 24
!
;
May 31
June 7
"'
June 14
i
Time deposits:
May 24
May 31

!
! 112,111
j 106,766
i 109,258 .
107,' 810 | . . !

'

|

13,920.053
i4,070,986 !
i4,094.914 !
|4,170', 796 i

!

:

j

i
i

3.967,592 ;
M', 121,401
''A, 144,112
14,221,031 '
!
"

i

i

May 24
May 31
Tune 7

!

| 424,103 I
\ 362,130 I
305,338 ;

'

!
'

!
:

.

i

.

!

June 14

j

-I-

208,000 i!
218,467 :
213,198
217,684 '

June 14
1.
Total net deposits on j
which reserve is j
computed:
!
May 24
May 31.
June 7
June 14
|
Government depos- '
its:

San
Kansas Dallas. FranCity.
cisco.

New
York.

Boston.

!

!
!

!

Total.

So, 759

7,402
7,315
7,762
7,276

157,307
152,034
154,945
150,845

674, 755
678,725
683,231
709,132

184,798
179,500
181,641
191,143

4,779,606
4,929,211
4,959,786
5,071,071

130.738
130', 252
129,907
130,328

54,667
54,252
53,932
53,560

391,405
402,971
397,037
401,572

704,925
708,783
713.210
739; 208

197,413
192,020
194,087
203,503

:: 4,869,930
5,022,204
' 5,051,409
• 5,163,742

j

|
I

79,310
62.472
73.738
70,758

,

346,0-16 •

43.527 !:
45;357
34', 491
32,954

546,940
469,965
413,567
449, 758

3. MEMBER BANKS IN OTHER R E S E R V E CITIES.
OTHER RESERVE
CITIES.

Number of reporting
Lanks:
May 24
May 31
June 7
June 14
United States bonds
to secure circulation:
Mav24
May 31
June 7
June 14
Other United States
bonds, including
Liberty bonds:
May "24
May 31
June 7
June 14
United States certificates of indebtedness:
May 24
May 31
June 7
June 14
Total United States
securities owned:
May 24
May 31
June 7
June 14
Loans secured by
United S t a t e s
bonds and ccrtiQcates:
May 24
May 31

June 7

June 14




19
19
19
19

!
i
!
!

15
15
15
14

33

:
;
;
•

422
422
418
418

i

4,493 i
4,498 !
4,498 I
4,498 i

7,796
7,796
7,796
7,796

8.968
8', 968
8,965
8,965

35,359
35', 684
35,755
35,811

13,944
13, 769
13,521
13,944

11,360
12,360
10,855
11,255

16,624
16,949
16.624
15; 960

5,330
3,340 i
5.330 , 3,340 i
5; 330 j 3,340 !
5,330 i 3,440 :

11,042 !
9,668 I
9,107 i

16,407
15,839
14,373
13,952

18,836
21,407
20,598
20,153

66,217
64,189
56,935
55,098

14,939
17,393
17,100
17,130

18,153
22,230
18,911
19,063

26,870
30,604
29,534
24.275

4,450
4,268
5,114
5,036

20,216 i
24,109 •'

7,519
5,890
5,025
5.439

41,810
35,394
34,827
38,867

39,481
29,780
28.207
25;909

14,291
10,779
10,954
11,80-1

18,428
16,346
14,718
13,920

25,088
21,188
20,115
14,753

3,266
2,227

24,757 !
23,595 \

2', 077
2.063

8,085 i
7.457 :
7,335 '
8,302 j

25,035
15,768
16,279
17,435

35,751 i
38,275 j
38,422 !
37,170!

31,722
29,525
27,794
27,187

69,614
65,829
64,390
67,985

141,057
129,653
120,897
116,818

43,174
41,941
41,575
42,878

47,941
50,936
44,484
44,238

68,582
68,741
66,273
54,988

13,046
11,825
12,521
12,429

20,285 !
21,395 !
19,110 ;
20,585 |

46,997 i 14,976
44.773
14,824
43;039
14,364
44,220
14,686

32,458
33,933
36,299
36.794

43,568
46,078
53,500
49,614

13,522
14,090
14,268
14,586

5,964
5,658
5,682
6,182

10,916
11,727
12,441
10,724

1,876
1,757
4,470
1,979

14,012
13,787
14,012
14.022

I 15,126
i 14,621
I 15,126
> 15,126

i
i
!
i

170,457
172,457
171,177
109,802

18,976 i
24,225 i
23,3(53 !
22,513 j

236,741
252,588
235,848
225,995

17,073
13,317
14,620
14,839

38,421 i
31,181 !
29,879 !
33,186

258,713
213,436
209,393
210,112

57,196
47,808
48,971
49,066

46,041
41,792
43,384
43,211

91,502
90,761
88,597
89,354

665,911
638,481
616,418
605,909

4,495
4,672
4,625
4,451

4,936
5,565
5,866
6,278

5,843
6,967
7,651
9,450

194,418
206,589
203,513

34,105
35,355
35,355
33,655

I

9,077 I

I 8,860 i 18,149 13,842
i 10,598 : 18,253 13,854
i 8,435 ; 18,680 I 13,638
i 8,843 * 17,609 13,246

j
J 4,374
! 4,384
S 4,549

680

FEDERAL RESERVE BULLETIN.

JULY 1,1918.

Principal resources and liabilities of member banks located in central reserve, reserve, and other selected cities, as at close of
business on Fridays from May 24 to June 14, 1918—Continued.
3. MEMBER BANKS IN O T H E R R E S E R V E CITIES—Continued.
[In thousands of dollars; i. e., 000 omitted.]

Other loans and investments:
May 24
May 31
.Tune7
|
June 14
j
Total loans and investments:
May 24
May 31
June 7
June 14
Reserve with Federal Reserve Banks:
May 24..
May 31
June 7
June 14
Cash in vault:
May 24
May31
June 7
June 14
Net demand deposits on which reserve is computed:
May 24
May 31
June 7
June 14
Time deposits:
May 24
May 31
June 7
June 14
Total net deposits
on which reserve
is computed:
May 24
May 31
June 7
June 14
Government deposits:
May 24
May 31
Juno 7
June 14

Minneapolis.

San
Kansas Dallas. FranCity.
cisco.

182,663
183,291
184,716
185,282

459,411
459,205
461,288
461,983

Boston.

New
York.

Philadelphia.

546,564 !
540,079 I
543,608 '
567,263

150,103
149,388
141,873
146,445

557,039 j 869,247
504,907 874,248
559,577 879,414
568,285 I 886,240

249,587 226,334
244,904 241,251
238,058 213,852
249,922 214,542

629,312
623,127
625,069
648,653

196,801
193,737
184,031
188,318

659,111
664,669
660,266
673,064

|l,053,872
11,049,979
11,053,811
11,052,678

306,283
300,935
293,901
307,386

48,914
53,384
49,960
57,074

13,122
14,587
13,941
17,009

51,931
49,660
51,018
54,566

75,871
73,688
71,378
89,939

21,327
20,358
20,217
22,045

23,041
22,771
19,163
23,172

39,380
39,656
38,838
35,953

6,979
5,921
6,500
6,728

14,228
14,603
13,297
14,486

41,202
39,386
42,813
36,971

14,651
12,059
13,999
14,666

41,788
45,844
47,038
52,632

392,434
391,917
391,162
425,241

17,964
16,250
17,552
17,669

5,308
5,433
5,418

16,204
16,836
17,089
16,709

26,551
28,127
30.101
29j 140

11,502
12,228
11,537
11,420

11,933
13,522
11,436
11,187

23,046
24,342
23,738
21,329

4,718
5,088
4,934
4,955

6,203
6,017
6,790
5,597

16,126
15,866
18,510
15,934

9,291
9,895
9,046
8,956

18,327
19,509
19,535
19,333

167,173
173,113
173,686
167,668

497,406
498,074
508,238
530,336

128,002
129,845
127,441
132,715

517,599
506,257
510,221
518,436

627,001
641,833
644,846
657,264

187,870
184,107
185,309
197,971

162,093
174,035
156,206
164,527

315.936
323', 006
314,693
281,135

59,056
58,389
58,400

132,797
131,336
129,954
127,843

351,821
350,004
358,728
363,811

119,386
112', 722
118,417
122,095

26,518
25,509
25,199
25,107

16,586
16,532
17,976
18,266

8,128
8,115
8,016
8,730

212,651
215,256
215,174
212,061

33,111
29,308
28,775
28,571

64,120
68,110
63,596
63,834

211,035
212,220
210,302
172,557

16,210
14,596
13,488
13,505

23,864
23,818
22.849
23; 760

62,023
61,974
60,482
61,894

19,524 94,896
17,757 102,932
19,643 107,758
19,588 101,141

505,361
505,727
515,798
537,868

132,978
134,804
132,833
138,195

520,037
508,692
512,626
521,055

690,796
706,410
709,398
720,882

197,803 181,329
192,899 194,468
193,941 175,285
208,542 183,677

379,247
386,672
377,784
332,902

63,919
62,768
62,446
64,742

139,956
138,481
136,809
134,971

370,428
368,596
376,873
382,379

125,243 393,287
'118,049 i405,606
i 124,310 413,672
1127,972 403,933

88,487
81,261
63,200
116,149

26,039
21,099
14,469
12,727

68,964
68,147
56,513
68,868

86,909
73,495
57,547
56,162

26,349
11,686
15.866
11^122

19,369
14,922
18,840
17,987

7,378
6,964

18,437
21,368
16,801
18,788

22,793
20,301
14,105
15,594

Cleveland.

Richmond.

12,956
23,720
12,329
13,915

St.
Louis.

Atlanta.

511,042
517,208
514,895
437,554

j
!
j
i

87,643 i
86,134 I
81,657
74,263

280,239 j 590,540 j 102,565
297,845 597,674! 99,716
264,018 593,609 ;1 98,648
264,962 503,266 88,671

4,598

Total.

460.972
489', 784
510,433
495;389

4,447,328
4,486,467
4,471,563
4,429,095

206,380 521,102 197,700 558,317
209,060 511,685 183,427 1587,512
208,210 514,884 191,442 1606, (581
210,416 515; 500 191,410 1594,193

5,302,222
5,319,366
5,294,570
5;238,517

146,723
136,070
142,192
141,921

i 24,697
i 18,246
i 13,114
! 10,587

364,818 3,463,785
374,726 3,484,334
381,315 3,493,798
373,591 3,530,414

16,890
23,416
22,108
19,645

788,666
796,127
793,258
749,014

3,700,384
3,723,172
3; 731,775
3,755,118
419,268
384,625
309,993
366,142

4. MEMBER BANKS OUTSIDE R E S E R V E CITIES.
COUNTRY BANKS.

Number of reporting
banks:
May 24
May 31
June 7
June 14
United States bonds
to secure circulation:
May 24
May 31
June7
June 14
Other United States
bonds, including
Liberty bonds:
May 24
May31
June 7
June 14




25|
25
25!
25!

10,123
10,123
10,123
10,123

6,548 i
6,548 I
6,548 '
6,548 I

5,327
5,713
5,569
5,748

13,277
15,885 I
15,062 j
14,880 I

23
23
27
29

8
6
8
6

149
147
150
150

4,010
4,010
4,010
4,010

7,657
7,657
7,707
7,712

7,964
7,389
9,699
10,024

2,830
2,030
2,830
2,030

750
750
750
750

1,670
1,670
1,670
1,695

2,828 j .
2,579 I.
2,004 i.
2,179 i.

1,753
2,453
2,453
2,453

46,133
45,209
47,794
47,524

3,435
3,890
3,929
4,18-1

4,218
4,618
4,774
4,543

7,943
7,833
10,283
10,598

2,736
2,506
3,258
2,749

1,995
2,096
1,980
1,633

1,729
2,285
2,013
1,991

2,870
2,609
1,588
1,772 |.

1,657
2,198
2 421
2,348

45,187
49,633
50,877
50,446

i

681

FEDERAL EESEBVE BULLETIN.

JULY 1,1918.

Principal resources and liabilities of member banks located in central reserve, reserve, and other selected cities, as at close of
business on Fridays from May 24 to June 14, 19.18—Continued.
4. MEMBER BANKS OUTSIDE RESERVE CITIES—Continued.
[In thousands of dollars; i. e., 000 omitted.]
i
Now
York.

Boston.

United States certificates of indebtedness:
May24
8,179
May 31
6,663
June 7
6,429
June 14
6,315 i
Total United States
securities owned:
May 24
23,629
May31
| 22,499
June7
22,121
June 14
22,186
Loans secured by
U n i t e d States
bonds and certifiMay 24
May31
June 7
June 14
Other loans and in=• vestments:
L May24
,
fc. May31
i June7
!
**• June 14
i
Total loans and in- !
vestments:
I
May 24
1
May 31
j
June7
1
June 14
Reserve with Federal Reserve Bank:
May24
May 31
June 7
June 14
Cash in vault:
May 24
May31
June 7
June 14
Net demand deposits on which reserve is computed:
May 24....
May 31
June 7
June 14
Time deposits:
May 24
May 31
June 7
June 14
Total net deposits
on which reserve
is computed:
May24.fc
May31
June 7
June 14
Government deposits:
May24
May31
June 7
June 14




Philadelphia.

Richmond.

Cleveland.

8,418
6,043
5,768
6,117

4,619
3,730
3,780
4,150

3,356
2,563
2,848
2,877

2,081
1,408
2,182
2,324

28,243
28,476
27,378
27,545 j

12,061
11,630
11,719
12,344

15,231

17,988
16,630
22,164
22,946

14,838
15,329
15,132

Atlanta.! Chicago.

3,892 i
2,072 !
2,572 I
2,272 |
;
i•
I
|

390
230
220
230

9,458 ; 3,135
3,076
v, uuo i
8,660 ! 2,950
7,051 ' 2,613

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

3,112 |

Total.

791 . 1,720 I
556 : 1,711 |
515
1,703 i

1,437
1,653
1,414
1,419

38,873
26,873
27,480
27,922

4,788
4,746
4,239
4,201

8,810 I.
6,908 |.
5,303 |.
5,654 L

4,847
6,304
6,288
6,220

128,193
121,715
126,151
125,892

210
280
272
307

28,455
29,189
30,788
30,914

i
1,702 I

9,612
9,378
9,777
10,028

11,931
12,691
12,654
12,686

1,860
1,916
1,939
1,988

843
832
942
935

2,130 I
2,708 i
2,794 |

501
382
622
634

625
642
600
666

833
810
1,149
757

308
128
125
119

j
229,281 I
227,961 i
228,042 !|
229,851

188,762
187,876
192,787
196,622

68,804
68,845
68,952
69,337

72,510
68,641
74,058
73,617

! 77,563
| 71,339
i 97,222
i 100,822 •

32,432
24,693
32,779
27,532

10,992
10,918
10,207
10,927

22,247
22,638
22,247
22,451

62,404
52,050
40,178
44,718

20,890
26,241
25,546
26,042

785,885
761,202
792,018
801,919

262,552
259,838 |
259,940
262,065 !

228,936
229,043
232,819
236,853

82,391
82,610
83,669

88,584
84,311
90,329
89,684

97,253
90,099
122,094
126,562

42,391
31,083 |

14,752
14,636
13,757
14,206

27,888
28,194
27,635
27,409

71,522 |.
59,088 |.
45,606 I.
50,491 j .

25,947
32,825
32,106
32,569

942,533
912,106
948,957
958,725

13,895
13,399
13,198
13,649

j
1
|
|

12,812
12,640
11,998
14,556

5,367
4,931
5,755
5,341

5,282
5,120
5,264
5,414

4,680
4,370
5,639
6,136

944
740
757

1,537
1,472
1,439
1,876

3,705
3,332
2,472
2,724

1,323
1,648
1,838
1,786

51,553
49,305
49,982
54,047

9,007 I

7,560
7,800
8,324
7,392

3,460
3,633
3,897
3,470

4,078
3,960
4,672
4,495

3,129 ! 1,604
3,031 | l,Q00

1,297

491
471
393

3,275
1,222
1,349
1,341

3,366
2,805
2,376
1,999

1,141
1,849
1,323
1,626

35,009
34,306
36,696
35,390

171,623
175,246
177,169
182,911

68,811
69,446
68,243
70,657

61,251
59,580
62,910

60,089 j 20,783
55,052
15,735
71,032 I 20,800
74,383 i 17,490

9,028
8,387
8,106
8,212

15,799
14,158
16,000
16,499

41,300
36,911
28,571
32,123

! 16,392
! 20,497
]
16,585
20,191

628,151
611,950
627,272
6-15,465

69,270 j
70,098
26,508
68,674 i 26,348
68,367
26,391

5,612
5,681
5,783
5,841

16,144
13,851
16,763
10,820

7,609
7,52S
13,060
14,355 !

14,266
11,051
14,233
12,338

4,198
4,208
4,030
4,232

5,765
5,773
5,763
5,825

22,622
17,267
13,3S6
13,933

2,303
j 4,759
i 2,515
j 4,735

174,675
166,724
170,561
172,837

183,146 ! 71,216
186,607
71,881
188,461
70,721
194,221
73,160

68,170
65,516
70,091
71,062

63,950
58,278
76,632
80,535

26,897
20,451
26,900
22,778

10,827
10,690
9,833
10,026

18,270
16,632
18,470
18,996

50,995
44,311
34,308
38,094

, 17,379
22,537
17,003
22,220

701,012
683,403
700,370
719,538

5,481 i 3,771
7,310
3,018
5,108
2,524
3,759 ! 1,162

231
240
175
136

2,411
1,823
1,230
1,425

4,427
2,660
1,483
1,332

3,823
1,550
1,049
757

i
j
|
!

i

8,515 i
8,981 I
9,014 |

160,475
156,458
157,856
159,146

190,162
186,500
187,288
188,446
14,381
16,103
11,828
25,361

24,565
18,162
14,529
14,182

2,439
2,718
2,541
3,153

1,001
1,138
1 117
1,117

£2?11
35,217
2,008
1,495
1,639
1,808

3,954 I 1,349
4,363 I

,
i
!
;

62,530
54,722
41,584
52,384

682

FEDERAL KESERVE BULLETIN.

1,1918.

EARNINGS ON INVESTMENTS OF FEDERAL RESERVE BANKS.
Average amount of earning assets held by each Federal Reserve Bank, during May, 1918, earnings from each class of earning
assets, and annual rales of earnings on basis of May, 1918, returns"
Average balances for the month of the several classes of
earning assets.
Bills discounted for Bills bought
members and in open
Federal Remarket.
serve banks.

Banks.

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

844,819.109
413,626]256
39,987.334
56,634', 836
48,961,420
23,745,139
88,966,192
35,827,016
21,420,000
60,431,571
27,831,346
39,851,755

Total

i 902,101,974

$20,220,714
129,270,383
25,205,982
13,511,059
4,001,285
6,085.470
39.509,219
8,381,904
7.391,000
~' 351,811

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




Bills discounted
for
members
and
Federal
Reserve
Banks.
S159,678
1,426,595
141,698
210.95o
182,392
85,336
329,847
133,217
87,179
227,871
109,156
152,618

Bills
bought
in open
market.

i United
i States
! securi'. tics.

$73.6-15 I
459,784 i
85,776 I
48,827 !
lo,461
21,334
143,350
29,996
28,361
8,336
9,507
72,427

3,246,5-12 ! 996,804

85,410
34,389
12,027
54,411
6.110
5,091
24,415
6,051
7,603
32,099
13,798
11,685
213,089

Municipal
warrants

Total.

•S2,082,
15,527,
3,962,
17,731,
3,114.
1,994,
10;i63,
2,744,
3,199,
13,249,
6,007,

850,004

84,645,930 i

535,420 j 1,265,747,530

S67,122,023
558,424,608
69,155,716
87,877,187
56,077,115
31,874,998
138,639,044
46,953,320
32,010,000
76,032,975
36,219,391
65,361,153

485,416

20. 640,540
278,464,206

Earnings from—

Banks.

United
States
securities.

Calculated annual rates of earnings from—
Bills discounted

Munici- i
pai war- I
rants. I

Total.

for
Bills
members bought
and
in open
Federal market.
Reserve
Banks.

United
States

Munici

4.19
4.06
4.17
4.38
4.39
4.23
4.37
4.37
4.79
4.44
4.61
4.51

4.29
4.18
4.00
4.25
4.55
4.13
4.27
4.21
4.52
4.17
5.09
4.13

3.06
2.61
3.57
3.61
2.31
3.01
2 36
2.51
2.80
2.85
2.70
2.76

1,877 i 4,458,312

4.38

4.36

3.06 i

1,672

Total.

I

§238.733
1,920,763
239,o01
314,193
203,963
111,966
497,612
169,264
123,143
268.306
134,133
236,730

S205

-

4.82
;
4.05
4.27

4.19
4.05
4.07
4.21
4.28
4.14
4.23
4.24
4.53
4.15
4.36
4.26
4.29

Jnr-i 1,1918.

683

FEDERAL EESEBVE BULLETIN.

GOLD IMPORTS AND EXPORTS.
Gold imports and exports into and from the United Stales.
(In thousands of dollars; i. e., 000 omitted.)
Week ending—
Mav 24,
1918.

Mav 31,
1918.

June 7,
1918.

June 14,
1918.

Total for
Total since correspondJan. 1,1918. ing period
in 1917.

IMPORTS.

Ore and base bullion
United States Mint or assay office bars
Bullion refined
United States coin
Foreign coin

...

Total

602

503

417

90

5 635

71
2,000

62
2,137

100
1

17,061

23,412
6,629
142

7 097
19
252,145
52,356
77,222

2,673

2,702

518
= = = = =

17,151

35,818

388,839

90
2
1,328

90
580

6
30
5
872

596

50
361
3,388
15,899

106
18,441
2,895
127,160

1,420

675

913

600

19,698

148,602

346

31
5,177

EXPORTS.

Domestic:
Ore and base bullion
United States Mint or assav office bars
Bullion refined
Coin

. ..

Total
Foreign:
Bullion refined
Coin

27
27

Total
1,420

Total exports

940

675

600

346

5,208

20,044

153,810

Excess of gold imports over exports since Jan. 1, 1918, $15,774; excess of gold imports over exports since Aug. 1,1914, $1,066,078.

DISCOUNT RATES.
Discount rales of each Federal Reserve Bank approved by the Federal Reserve Board up to June

29,1918.

Maturities.
Discounts.

Federal Reserve Bank.

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

Within 15
days,
including
member
banks'
collateral
notes.

16 to 60
days.

61 to 90
days.

Agricultural and
live-stock
paper
over 90
days.

Tra do accep tanccs.
Secured by TJ. S. ccrtificates of indebtedness or Liberty loan
bonds.
Within 15
days, including
member
banks'
collateral
notes.
4
4
4
4

t
4
4
4

f4

1 to CO
days,
inclusive.

61 to 90
days,
inclusive.

16 to 90
days.

4
-1
4-1
4*
4*
4"41

4-

i

4

a Rate of 3 to 4>J per cent for 1-day discounts in connection with the loan operations of the Government.
NOTE 1.—Acceptances purchased in open market, minimum rate 4 per cent.
NOTE 2.—Rates for commodity paper have been merged with those for commercial paper of corresponding maturities.
NOTE 3.—-In case the 60-day trade acceptance rate is higher than the 15-day discount rate, trade acceptances maturing within 15 days will be
taken^at the lower rate.
NOTE 4.—Whenever application is made by member banks for renewal of 15-day paper, the Federal Reserve Banks may charge a rate not
exceeding that for 90-day paper of the same class.




684

FEDERAL KESEKVE BULLETIN.

JULY 1,1918.

Estimated general stock of money, money held by the Treasury and by the Federal Reserve system, and all other money in
the United States.
June 1,1918.
Held outside
Held in the
Held by or
the United
United States
for
Federal
Treasury
Treasury as Reserve Banks States
and
Federal
assets of the
and agents.
Reserve
Government.1
system.

General stock
of money in
the United
States.

S3,043, 879,782

Gold coin 2
Gold certificates
S t a n d a r d silver dollars
Silver certificates
Subsidiary silver
Treasury notes of 1890
United States notes
Federal Reserve notes
Federal Reserve bank notes.
National bank notes
Total:
J u n e l , 1918
May 1,1918
April, 1918
March, 1918
February, 1918
January, 1918
December, 1917
November, 1917
October, 1917
September, 1917
August, 1917
July, 1917

$1,237,973,169
545,928,249
3 819,218
10,618,687

§216,384,007

346, 681,016
1,736, 548,025
13, 681,030
723, 987,645

7,055,564
35,501,730
71,795
17,825,587

« 46,448,482
123,609,220
4,408,700
13,990,372

$436,755,229
576,839,128
76,924,936
402,482,428
216,043,067
1,857,927
293,176,970
1,577,437,875
9,200,535
692,171,686

6,615, 007,782
6,540, 954,630
6,480, 181,525
6,351, 548,056
6.271, 603,039
6,256, 198,271
6,026, 127,909
5,823, 854,335
5,642, 264,856
5,553, 661,154
5,513, 292,894
5,480, 009,884

348,322,704
321,192,308
339,856,674
330,927,176
332,576,125
277,043,358
248,167,148
242,265,377
242,469,027
239,654,267
248,268,325
253,671,614

1,983,796.097
1,909,594; 674
1,873,524,132
1,827,126,208
1,834,102,608
1,723,570.291
1,646,773', 746
1,546,124,691
1.429,422,432
1,373; 987,061
1.395,982,728
1,280,880,714

4,282,888,981
4,310,167,648
4,266,800,719
4,193,494,672
4,104,924,306
4,255,584,622
4,131,187,015
4,035,464,267
3,970,373,397
3,940,019,826
3,869,041,841
3,945,457,556

""518," 583* 959*

25,880,763

23i 646'325"

"io," 603," 258'

Amount per
capita outside
the United
States Treasury
and the Federal
Reserve system.

$40.51
40.82
40.47
39.83
39.04
40.53
39.40
38.54
37.97
37.73
37.10
37.88

I
1 Includes reserve funds against issues of United States notes and treasury notes of 1890 and redemption funds held against issues of national
bank2 notes, Federal Reserve notes and Federal Reserve bank notes.
.Includes balances in gold settlement fund standing to the credit of the Federal Reserve Banks and agents.
3
Includes subsidiary silver.
4
Includes Treasury'notes of 1890.

FOREIGN EXCHANGE RATES.
Monthly ranges of exchange rales on leading foreign money centers, quoted in New York during the three months ending June, 1918.
April.

May.

June.

Exchange |_
at par. i

London:
60-day bankers' bills
dolls, for £ 1 . .
Sight drafts
do....
Paris
francs for 100 dolls.
Petrograd
dolls, for 100 rubles.
Milan
lire for 100 dolls.
Madrid
dolls, for 100pesetas.
Amsterdam
dolls, for 100 florins.
Stockholm
dolls, for 100 kronor.
Copenhagen
do...
Zurich..".
francs for 100 dolls.
Buenos Aires 2
dolls, for 100 gold pesos.
Rio de Janeiro -'
dolls, for 100 paper milreis.
Valparaiso 2
dolls, for 100 pesos.
Yokohama
dolls, for 100 yen.
Hongkong
dolls, for 100 Hongkong dolls..
Shanghai
dolls, for 100 Shanghai tacls..
London price of silver at nominal rate of £ (84.8665) * *..
Now York price of silver»




4.8665 i
4.8665 !
518.1347 i
51.46 ;
518.1347 I
19.30 !
40.20
28.80
26.80
518.1347
96.48
3 54.62
36.50
49.85

Low.

High.

4.7225
4.7535
572.25
13.25

4.7275
4.7550
571.75
14.50
879
29.75
48.25
34.50
31.75
425
99.65
25.84
31.10
51.90
77
100

902
25.50
46.50
33.75
31
431.50
97.75
25.32
29.37
51.65
74
104.50

Low.

4.72625
4.7545
572
114.50
914.50
27.50
47.75
33.70
31
425
95.25
25.19
31.55
51.90
74.75
107

1 Quotations for May and June are cable rates.
Cable rates on Z\e\v York.
Rate for a gold milre is.
4 Average for April, 81,035; for May, S1.G74; and for June. $1.0714.
s Average for April, s.0.953; for May, S0.995; and for June,'§0.995.

2
3

High.

Low.

High.

4.7275
4.7550
570.50
15.25
896.50
28.40
50.50
34.75
31.50
383
99.80
25.64
33.28
52.75
76.50

4.7225
4.7530
571.50

4.72625
4.7550
571.25
15.25
886
28.55
51 •'$
35.60'
31.25i
394 r.

109.50

109

911
27.25
49.75
34
30.80
404
97.15
24.88
32.95
52.50
76.35

25.64"
33.78
52.90^1

79
113.50

r

INDEX.
Acceptances:
Page.
Banks granted authority to accept up to 100
per cent of capital and surplus
597
Distribution of, statements showing
666-668
Extracts from recent expressions on trade
acceptances
602-606
Bank clerks, reclassification of, as to draft
597
Branches of Federal reserve banks established at
Jacksonville, El Paso, Birmingham, and Memphis
596
Business conditions:
Indexes of
597-600
Reports on, by Federal reserve agents
639-660
Canners, credits to
607
Capital Issues Committee, rules and regulations
issued by
627-633
Chart showing deposits and investments of member
banks in leading cities
665
Charters issued to national banks during month
609
Check clearing and collection system, operation of.
663
Commercial failures reported
609
Commissioner of Internal Revenue, tax rulings b y . .
614
Deposits and investments of member banks in leading cities
664
Chart showing
665
Discount operations of the Federal reserve banks. 666-672
Discount rates in effect
683
Earnings on investments of Federal reserve banks..
682
Expenses of Federal Reserve Board, assessment for.
608
Federal Reserve agents' fund, transactions through.
662
Federal reserve banks:
Branches of, at Jacksonville, El Paso, Birmingham, and Memphis
598
Earnings on investments of
682
Resources and liabilities of
673-675
Federal Reserve Board, assessment for expenses of..
608
Federal Reserve note accounts of Federal Reserve
Banks and agents
675-676
Fiduciary powers granted to national banks
607
Foreign exchange rates
684
Foreign exchange regulations
622-627
Gold imports and exports
683
Gold settlement fund:
Plan for daily clearings through
610-612
Transactions through
661-662
Indexes of business conditions
597-600
Informal rulings of the Federal Reserve Board:
Warehouse receipts for canned goods as security.
634
Release of shipping documents upon acceptance
of draft
634
Rate on paper of acceptance corporation
634
Right of national banks to make loans secured
by farm-loan bonds
635
Receipt of custodian OL wool as warehouse receipt
636




Informal rulings of the Federal Reserve Board—
Continued.
pago.
Form of trade acceptance
636
Law department:
Rediscount of paper secured by war savings
stamps
637
Rediscounts by member State banks
638
Liberty bonds:
List of, lost or stolen
613,614
Text of bill relating to fourth Liberty loan
613
Member banks:
Deposits and investments of, in leading cities..
664
Chart showing
665
Statement showing condition of
677-681
Money, stock of, in the United States
684
National banks, charters issued to, during the month
609
Regulations:
Capital Issues Committee
627-633
Foreign exchange
622-627
Resources and liabilities of Federal Reserve
Banks
673-675
Review of the month:
I
Resignation of Hon. F. A. Delano
587
j
The banks and the Liberty loan
587
|
New Treasury financing
588
|
Demands for funds from Federal Reserve
Banks
590
Daily gold statement plan
591
Operations of the Federal Reserve Banks
591
Condition of member banks
592
Dividends and surplus profits of Federal
Reserve Banks
593
Foreign exchange d evelopm ents
594
Gold-embargo regulations
594
Field for acceptances
595
Guaranty of deposits
595
Rupee exchange, arrangements for
625
State banks and trust companies:
List of, admitted to system during the month..
609
Questions and answers relating to membership
of, issued by the Federal Reserve Bank of
New York
615-621
Secretary of the Treasury:
Letter of, to banks and trust companies regarding future bond issues
612
Letter to chairman of Ways and Means Committee relative to new tax requirements... 600-602
Letter to President of the Senate regarding
rupee exchange
626
Trade acceptances:
Extracts from recent expressions on
602-606
Resolutions by National Association of Credit
Men regarding
606
Treasury certificates of indebtedness issued in
anticipation of fourth Liberty loan
612

o