Full text of Federal Reserve Bulletin : June 1918
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FEDERAL RESERVE BULLETIN ISSUED BY THE FEDERAL RESERVE BOARD AT WASHINGTON JUNE, 1918 WASHINGTON GOVERNMENT PRINTING OFFICE 191S FEDERAL RESERVE BOARD. EX OFFICIO MEMBERS. WILLIAM G. MCADOO, Secretary of the Treasury, Chairman. JOHN SKELTON WILLIAMS, Comptroller of the Currency. W. P. G. HARDING, Governor. PAUL M. WARBURG, Vice Governor. FREDERIC A. DELANO. ADOLPH C. MILLER. CHARLES S. HAMLIN. H. PARKER WILLIS, Secretary. 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. in TABLE OF CONTENTS. Page. The President on thrift and the purchase of securities Review of the month „ Indexes of business conditions Class C director named for Federal Reserve Bank of Richmond. Meeting of Federal Advisory Council Banks granted authority to accept up to 100 per cent of capital and surplus Fiduciary powers granted to national banks Progress in retiring silver certificates Work of the Capital Issues Committee Special deposits of public moneys Operations of the War Finance Corporation Additional taxation Act authorizing national banks to subscribe to the Red Cross Control of coin, bullion, and currency movement Deposits, loans, and discounts, and total investments of national banks, 1914-1918 Chart showing Movement of prices, 1914-1918 Chart showing Amounts of money held in the Treasury and the Federal Reserve Banks and amounts held by other banks and the public State banks and trust companies admitted to the Federal Reserve system The third Liberty loan Charters issued to national banks during the month Commercial failures reported State banks and trust companies entering the Federal Reserve system List of Liberty bonds lost or stolen Conversion of Liberty bonds New issue of Treasury certificates of indebtedness r Report on revision of law and practice relating to checks, by tho Central Executive Council of the International High Commission Amounts of paper currency outstanding Informal rulings of the Federal Reserve Board Law department Business conditions throughout the Federal Reserve districts Gold settlement fund transactions Operation of the check clearing and collection system Average rate and maturity of paper discounted by the Federal Reserve Banks each month discount operations of the Federal Reserve Banks Resources and liabilities of tho Federal Reserve Banks Federal Reserve note accounts of Federal Reserve Banks and agents Member bank condition statement Earnings on investments of Federal Reserve Banks Gold imports and exports Discount rates Digest and index of informal rulings of the Board, Jan., 1917-Apr. 1918 IV 483 484 491 491 491 492 492 493 494 494 495 497 498 499 502 503 504 505 506 508 509 509 510 510 515 517 518 518 519 520 522 528 548 550 551 552 559 562 564 569 570 570 571 FEDERAL RESERVE BULLETIN VOL. 4 J U N E 1, 1918. No. 6 STATEMENT OF THE PRESIDENT ON THE NEED OP THRIFT AND THE PURCHASE OF SECURITIES. This war is one of nations—not of armies—and all of our 100,000,000 people must be economically and industrially adjusted to war conditions if this Nation is to play its full part in the conflict. The problem before us is not primarily a financial problem, but rather a problem of increased production of war essentials and the saving of the materials and the labor necessary for the support and equipment of our Army and Navy. Thoughtless expenditure of money for nonessentials uses up the labor of men, the products of the farm, mines, and factories, and overburdens transportation, all of which must be used to the utmost and at their best for war purposes. The great results which we seek can be obtained only by the participation of every member of the Nation, young and old, in a national concerted thrift movement. I therefore urge that our people everywhere pledge themselves, as suggested by the Secretary of the Treasury, to the practice of thrift; to serve the Government to their utmost in increasing production in all fields necessary to the winning of the war; to conserve food and fuel and useful materials of every kind; to devote their labor only to the most necessary tasks, and to buy only those things which are essential to individual health and efficiency; and that the people, as evidence of their loyalty, invest all that they can save in Liberty bonds and war-savings stamps. The securities issued by the [Treasury Department are so many of them within the reach of everyone that the door of opportunity in this matter is wide open to all of us. To practice thrift in peace times is a virtue and brings great benefit to the individual at all times; with the desperate need of the civilized world to-day for materials and labor with which to end the war, the practice of individual thrift is a patriotic duty and a necessity* I appeal to all who now own either Liberty bonds or war-savings stamps to continue tc> practice economy and thrift and to appeal to all who do not own Government securities to do likewise and purchase them to the extent of their means. The man who buys Government securities transfers the purchasing power of his money to the United States Government until after this war, and to that same degree does not buy in competition with the Government. I earnestly appeal to every man, woman, and child to pledge themselves on or before the 28th of June to save constantly and to buy as regularly as possible the securities of the Government, and to do this as far as possible through membership in war-savings societies. The 28th of June ends this special period of enlistment in the great volunteer army of production and saving here at home. May there be none unenlisted on that day, (Signed) WOODROW WILSON. MAY 29, 1918. 483 484 FEDERAL BESERVE BULLETIN. REVIEW OF THE MONTH. Federal Eeserve Bank. Final figures for subscriptions to the third Liberty loan show an aggregate <* $4,170 019,650, the total number 01 subscriptions, as already announced, being not far from 17,000,000. This satisfactory result was achieved notwithstanding the fact that the country will have had to meet, since the second Liberty loan and to and including the month of June, income and excess-profits taxes to an estimated amount of approximately $3,000,000,000, making a total to accrue to the Treasury, from such taxes and from the third Liberty loan, of approximately $7,000,000,000. In the first campaign, conducted one year ago, bonds were sold to approximately 4,500,000 people; the second Liberty loan was taken by about 9,500,000 people; and these figures are now again increased to 17,000,000. Detailed returns showing the actual subscriptions and the percentage of the quota assigned to each district, that has been taken therein, are as follows: District. Minneapolis Kansas City St. Louis Atlanta Philadelphia Dallas Chicago Richmond Boston San Francisco Cleveland New York United States Treasury Total Quota in millions. 105 130 130 90 250 80 425 130 250 210 300 900 3,000 Subscriptions. 3180,826,350 202,301,050 199,085,900 136,653,350 361,963,500 115,395,200 608,878,600 185,966,950 354,537,250 286,577,450 404,988,200 1,114,930,700 17,9.15,150 Percentage of quota. 172 156 153 151 144 144 143 143 142 136 135 124 4,170,019,650 The foregoing figures are subject to slight modifications upon receipt of final audited figures from the several districts. Any such adjustments will not materially affect the total. The following figures, also, are interesting as showing the distribution of final allotments by districts, during the three loans, viz: JUNE 1,1918. First loan. Second loan. Third loan. Total. Boston $265,478,000 S407, 714,000 $354,537,250 $1,027,729,250 New York 593,987,000 1,151,185,000 1,114,930,700 2,860,102,700 Philadelphia... 164,760,000 295, 127,000 361,963,500 821,850,500 201,977,000 409, 787,000 404,988,200 1,016,752,200 Cleveland Kichmond 88,594,000 182; 582,000 185,966,950 457,142,950 82; 943,000 136,653,350 265,879,350 Atlanta.. 46,283,000 Chicago.. 272,702,000 525. 956,000 608,878,600 1,407,536,600 65,029,000 150i 122,000 199,085,900 414,236,900 St. Louis 53,759.000 131; 972,000 180,826,350 366,557,350 Minneapolis Kansas City.... 62,183,000 136; 549,000 202,301,050 401,033,050 36.663; 000 Dallas 74, 567,000 115,395,200 226,625,200 San Francisco.. 149^045,000 260; 262,000 286,577,450 695,884,450 Total 2,000,000,000 3,808,766,000 4,170,019,650 9,978,785,650 What is perhaps even more encouraging . f „ than the wide distribution and The banks and , , . ,. -, the loan neavy oversubscription shown by the returns of the third Liberty loan is the fact that there has been, so far as present indications go, gratifyingly little use of bank accommodations in the taking of the bonds. Of the entire amount of subscription received, it is estimated that more than 80 per cent is already fully paid. Returns from Federal Reserve Banks embodied in the weekly statement of the Federal Reserve Board bear out the belief that the recourse to the Reserve Banks in connection with the placing of the third Liberty loan has thus far been comparatively slight. Detailed statistics are not yet available to show the amount of bonds that is being carried through the aid of advances from the banks, but informal reports from the various Federal Reserve districts indicate that the reliance upon the Federal Reserve Banks for rediscounts intended to carry Government bonds is smaller than has been supposed and that the various member banks have not been called upon unduly to assist individual subscribers. Taken in conjunction with general and apparently well-founded reports to the effect that the process of paying income and excess-profits taxes will involve much less inconvenience than had been supposed, the bank situation as respects the third Liberty loan is encouraging. There may easily be an increase in the applications for rediscounts, protected by Government obligations, in some Federal Reserve districts, as the pressure upon ml_ JUNK 1. 191.8. FEDERAL RESERVE BULLETIN. the several banks for loan funds increases with the advance of the season. This indeed is already predicted by some careful observers in the several localities. There seems, however, to be little ground for thinking that such applications will be unduly heavy. The whole experience is expected to demonstrate that the process of selling the certificates will have operated to bring in these large sums with a minimum of inconvenience. The certificates have been very widely distributed among the larger taxpayers. The prosperous condition of business in general and the high returns obtained by producers in practically every- line of business have enabled the small taxpayers, in a very large percentage of cases, to provide for the payment of their taxes even at this early date, while the larger taxpayers, as already suggested, will be materially assisted by the use of the certificates which they have acquired. The outcome of the Treasury operations deUse of certifi- signed to anticipate the procates of indebted- ceeds of the third Liberty loan ness. through the issue of certificates of indebtedness has already been described in the issue of the FEDERAL RESERVE BULLETIN for May 1. As there set forth, the total amount of certificates already issued and not liquidated aggregated about $2,610,000,000. This left, of the proceeds of the third Liberty loan, $1,560,000,000 available for current uses. Since that date the two issues of certificates of indebtedness maturing on May 9 and 28, amounting to $500,000,000 each, have been redeemed. On the other hand, the Treasury has placed during the month $183,767,000 of tax certificates, the issue being closed on May 31. Balances on hand in the several Federal Reserve Banks and in special depositaries, as of May 24, amounted to $1,486,000,000. Inasmuch as the current expenditures of the Government of the United States, as shown by Treasury returns, are now running at the rate of $1,500,000,000 per month, a resumption of the issue of certificates of indebtedness in the comparatively near future may naturally be expected. Experience is again showing the 485 desirability of this method of anticipating the proceeds of loans, and suggests that when carefully employed it has the effect of producing a steady flow of available free funds into the hands of the Government, there to be as steadily used and disbursed for current expenses on account of salaries and commodities. Of the old issues of certificates there still remain (on May 31) to be liquidated $1,624,000,000, while of the proceeds of income and excess-profits taxes available during June and estimated at $3,000,000,000 to $4,000,000,000, there have been already paid, through the purchase of the so-called tax certificates issued in, anticipation of revenues, approximately $1,500,000,000. More and more as the Government's financing proceeds, it becomes evident The question of t h a t success will be best if not saving. only secured through the development of a systematic policy of saving in consumption accompanied by the curtailment of credit to the less essential industries. The Board has, by every means in its power, endeavored to impress upon Federal Reserve Banks and, through them, upon member banks of the system, the desirability of endeavoring, by every conservative and legitimate means, to bring about the reduction of borrowing and of capital investment for businesses which, while entirely desirable and perhaps even beneficial in themselves, are not necessarily connected with or conducive to the success of the war. The matter was thoroughly discussed at the meeting of the Federal Advisory Council on May 20 and 21, and the Board was then advised that decided progress is being made in a number of districts. In other districts there is a lessmarked appreciation of the necessity of cooperation. The belief that business may go on as usual still maintains its hold upon mam7 minds, with the result that some establishments are still endeavoring, in not a few parts of the country, to maintain the volume of their sales and to encourage lavish buying on the part of their customers. Manufacturers in many lines are, however, exhibiting an appreciation of the 486 FEDERAL RESERVE BULLETIN. real necessities of the case and are seeking in numerous instances to convert their plants— at least in part—to the production of articles of an unmistakably essential character, curtailing the output of the luxury trades, while abandoning certain lines altogether. It would now seem that some of the principal obstacles to progress in this important movement are found in the disposition of some, who are employed at higher wages than ever before, to maintain or even to enlarge purchases of luxuries as well as of necessaries. The President, in his statement with reference to thrift, printed on the &*t P a S e o f t h e P r e s e n t . n u m ~ ber, has expressed in unmistakable terms the necessity of saving as a means of advancing our war objects. The fundamental basis of the theory which underlies the doctrine of thrift is being better and better understood by the public. Some phases of the situation, however, are still subjects of discussion or not generally admitted. It should be evident, however, that the needs of the Government are reducible to a requirement for present services and commodities, and that it can obtain these only in so far as a surplus of both is produced over and above the amount consumed or required for other purposes. Wide distribution of the third Liberty loan, attained with only a moderate recourse to bank credit, shows that a large proportion of the population is actually cooperating in the task of paying the cost of the war out of current earnings and savings by reducing its consumption of dispensable goods. The requirements of the Government are, however, steadily on the increase, as shown by the fact that estimated expenditures for the coming fiscal year 1918-19 are now about $24,000,000,000. There is no sound basis for the belief that it is possible to obtain these needed funds through loans placed with banks or through taxation of a character that would result in compelling taxpayers to rely upon banks for the means with which to meet their dues to the Government JUNE 1, 1918. without producing undesirabla consequences. Creation of additional bank credit, for the purpose of buying bonds or paying taxes by obtaining bank accommodations rather than by saving, results only in a technical increase of purchasing power, since it is not based upon a commensurate increase in the production of goods—in other words, is not offset by genuine savings. The consequence of making such additions to bank credits is necessarily an in creased tendency toward the bidding up of prices, and results in the menace called "inflation." Whenever the volume of current purchasing power, in terms of money, w h e t h e r i n t h e f o r m of actual currency or in the form of credit, grows or is increased faster than the volume of current and available goods, the resulting situation may be ascribed to the excess of currency or credit, or both, above normal requirements, or, more briefly, to the distention of currency and credit. This alteration of the proportion between existing goods and purchasing power eventually results in increase of prices, not necessarily in the exact degree in which the volume of purchasing power has been increased but in the degree in which it is actively used to effect the purchase and transfer of goods. When loans are made by banks upon the security of bonds or other claims to the product of future industry or its share in fixed capital, the tendency is to advance prices. Funds obtained by the Government, in the form of such credits, result therefore in the bidding up of the prices of commodities, especially of those for which the Government has most need. Such advance in prices, in so far as relates to the necessaries of life, almost unavoidably leads to an advance in wages, and when such advances in wages are again used in enlarging consumption, the tendency toward price advances is still further aggravated. Saving, on the other hand, results in placing at the disposal of the Government, either directly or indirectly, the surplus of goods produced over goods consumed and enables the Government to provide FEDERAL RESERVE BULLETIN. JUNK 1,1918. itself with the articles it requires without disturbing the basis of prices. The necessity of a well-distributed system of taxation, both as a method of obtaining additional revenues and as a measure of preventing inflation and avoiding waste, was set forth by the President in an address to Congress on May 27, from which is here quoted the following paragraph: Additional revenues must manifestly be provided for. It would be a most unsound policy to raise too large a proportion of them by loans, and it is evident that the four billions now provided for by taxation will not of themselves sustain the greatly enlarged budget to which we must immediately look forward. We can not in fairness wait until the end of the fiscal year is at hand to apprise our people of the taxes they must pay on their earnings of the present calendar year, whose accountings and expenditures will then be closed. We can not get increased taxes unless the country knows what they are to be and practices the necessary economy to make them available. * * * Enormous loans freely spent in the stimulation of industry of almost every sort produce inflations and extravagances which presently make the whole economic structure questionable and insecure and the very basis of credit is cut away. Only fair, equitably distributed taxation of the widest incidence and drawn chiefly from the sources which would be likely to demoralize credit by their very abundance can prevent inflation and keep our industrial system free of speculation and waste. We shall naturally turn, therefore, I suppose, to war profits and incomes and luxuries for the additional taxes. During May important changes in rates of discount occurred at two banks Rates of disonly—Kansas City and Richcount. mond—the general rate schedule determined upon during April continuing in effect at all others. The question of rates of discount is of primary importance at the present time, but market conditions are anomalous owing to the fact that all changes must be made, upon full consideration of the necessity of facilitating Government financing, so that it is not possible to regulate rates upon a strictly commercial basis. The advances in rates at Kansas City and Richmond were made upon the request of the Federal Reserve Banks of those cities, because of the heavy volume of paper which was steadily offering itself for rediscount at those points. It was the belief of the Board that the applications should be granted 62161—18 2 487 as a caution to member banks, even though the volume of applications for rediscount might not be very materially reduced as far as dependent merely upon seasonal needs and requirements. Under the Federal Reserve system, as has been previously explained, it is the Board's policy to make, so far as practicable, an adjustment of paper among Federal Reserve Banks such as will bring about a relatively uniform reserve condition at all Federal Reserve Banks. The tendency of so doing is to promote greater equalization among the banking reserves of the several Federal Reserve districts. The success of this policy, however, is based upon the adoption of similar standards of rediscounting in each Federal Reserve district, and upon the regulation of rediscount applications in such a way as to prevent applicants in any one district from gaming the advantage of those elsewhere located by reason of access to an undue share of reserve funds. The Federal Reserve system necessarity counts largely upon the cooperation of its member banks to keep rediscount obligations to the minimum that will enable such banks to comply with their ordinary requirements. The raising of rates at Kansas City and Richmond served the purpose of giving notice to the members of this need for cooperation but did not prevent them from getting assistance whenever their condition or legitimate demands called for it. Material progress has been made, since the adoption of the act providing Silver situafor the breaking up of the silver tion. dollars held behind silver certificates, in carrying out the operations therein authorized. With a view to being ready for any eventuality growing out of these transactions, orders have been placed for the printing of Federal Reserve bank notes in the $1 denomination in the amount of $200,000,000 and in the $2 denomination in the amount of $50,000,000. The designs for these notes have been approved and the making of the plates has been practically completed, so that it may be expected that a full supply of $1 and $2 bank notes will soon be available to make good any deficiency that may result from the retire- 488 FEDEEAL RESERVE BULLETIN. mont of the old silver certificates. These notes have been allotted to the several Federal Reserve Banks upon a pro rata basis previously determined with respect to the printing of notes of the $5 denomination. In order further to facilitate the process of withdrawing silver certificates from circulation, the Board moreover suggested to the Federal Reserve Banks the sending out of a letter to member banks, asking that they cooperate with the Government by turning in their present suppfy of $5 silver certificates and suggesting that at a later time, when the new $1 and $2 notes are available, a similar request would be made with respect to silver certificates of these lower face values. Cooperating still further with the efforts of the Treasury Department in'this matter, the Gold Export Committee of the Federal Reserve Board has, moreover, endeavored to induce applicants for permission to carry paper currency out of the country to take United States notes of the $1 and $2 denominations, whenever possible, rather than silver certificates, thereby retaining as many of the latter within reach as conditions would permit. For the four weeks ending May 17 the net outward gold movement totaled ^Movement of $509,000, as compared with gold. $987,000 for the preceding five weeks. Gold imports for the four weeks totaling $2,213,000 came largely from Canada, Mexico, and Colombia, while gold exports totaling $2,722,000 were consigned chiefly to Mexico, Venezuela, and Canada. The gain in the country's stock of gold since August 1, 1914, was $1,046,623,000, as may be seen from the following exhibit: [000 omitted.! Excess of Imports. | Exports. imports over exports. ... Aug. 1 to Dec. 31, 1914 Jan. 1 f o Dec. 31, 1915 Jan. 1 to Dec. 31,1916 Jan. i to Dee. 31, 1917 Tan. 1 to May 17, 1918 Total . • : ! i : . $23,253 ! $104,972 451,955 i 31,426 685,745 I 155,793 553,713 ! 372,171 12,774 \ 16,407 i 1,727,440 j 680,769 1 Excess of exports over imports. i?81,719 420,529 529,952 181,542 13,633 1,046,671 JUNE 1, IU18. During the four weeks between April 26 and Operations of M a F 2 4 operations of the Fedthe Reserve era! Keserve Banks continued Banks. practically on an even scale, the total earning assets on the last named date 1,277.2 millions being slightly below the corresponding total of 1,286.2 millions shown for the initial date. On May 10, the Friday following the consummation of the third Liberty loan, total investments reached the record total of 1,373.8 millions, nearly 45 per cent of which was composed of war loan paper, i. e., paper directly traceable to war loan financing operations and comprising member banks7 collateral notes and customers' paper, supported by United States war bonds or certificates of indebtedness. Total discounts on hand rose from 901.7 millions on April 26 to 939 millions on May 10, and stood at 923.3 millions two weeks later. Practically the same development is shown by the New York Reserve Bank, which reports an increase in the holdings of discounted bills from 434.3 millions on April 26 to 450 millions on May 10 and a slight decrease to 442.2 millions on May 24. The largest relative increases in discount operations during the month are shown for the Minneapolis and Kansas City banks, the former increasing its holdings of discounted paper from 14.6 to 24 millions and the latter from 43.9 millions to 71.6 millions. War loan paper, as defined above, constituted about 65 per cent of the total discounts held on May 24, as against over 70 per cent on April 26. At the New York bank this proportion was considerably higher, ranging between 83 per cent on May 10 and 87 per cent on April 26. Total acceptances on hand likewise show a slight though continuous decrease, all the banks except those at Boston and New York reporting reductions in the amounts of purchased paper held, thus causing a further concentration of this class of paper at the New York bank from about 40 per cent on April 26 to nearly 50 per cent on May 24. But little change is shown in the total of United States bonds held by the banks, while FEDERAL RESERVE BULLETIN". 3, 10J 8. the banks7 holdings of United States notes and certificates show a reduction from 37.4 to 32.5 millions. During the period under review the banks7 gold reserves increased from 1.827 to 1,898 millions while their net deposits, following practically the same course as the banks7 total investments, show about the same figures for the beginning and end of the four-week period, viz, 1,556.3 and 1,557.6 millions. Federal Reserve notes in circulation increased from 1,526.2 to 1,578.6 millions, or by 18.6 millions less than the banks7 gold reserves. The result is seen, in the rise of the ratio of total reserves to aggregate net deposit and Federal Reserve note liabilities from 61.3 to 62.4 per cent. In the following table are shown the changes between April 26 and May 24, 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 total holdings of other classes of investments: [In thousands of dollars: i. e., 000 omitted.] Federal Reserve Bank. Boston. . Now York Philadelphia Cleveland Richmond Atlanta Chicago St. Louis Minneapolis Kansas City Dallas.... San Francisco Total United States long-term securities United States short-term securities Other earning assets Total investments held Apr. 26. May 24. 70,913 555,283 6.1,654 78,840 52,510 29,403 136,555 55,037 26,137 51,044 30.722 56,489 63,591 581.158 64,128 64', 845 48,552 28,383 121.782 37, 769 28,796 73,023 28,930 60,563 1,204,587 42,067 37.407 2,722 1,286,162 : 25,875 : 2,474 ; i i i j 1,201.520 41,446 Net i Net increase. 1 decrease. 1 2,659 i 21,979 ! ! 4,074 1 7,322 13,995 3,958 1,020 14.773 17,268 1,792 i ! 3,067 32,476 1,151 I 4,931 i 1,571 1,277,214 I 8,948 621 Some indication as to the part taken by the banks of the country in the membirbanks. f e n c i n g of the Government's more recent loan operations, culminating in the third Liberty loan, is afforded by the reports from member banks in about 100 leading cities showing their principal assets and liabilities each week between April 19 and May 17. 489 Considerable changes are shown in the holdings of United States bonds (other than circulation bonds) and of certificates of indebtedness, the former showing an increase of 294.4 millions and the latter a decrease of 344.6 millions. Circulation bonds show a decrease of about 1 million, while total United States security holdings declined from 2,106.8 to 2,055.5 millions. As against this decrease the banks report an increase of their loans secured by United States war bonds and certificates of indebtedness from 320.2 to 501.6 millions. Corresponding figures for 120 banks in the three central reserve cities indicate practically no change in their holdings of circulation bonds, a net increase of 164.2 millions in other United States bonds, mainly Liberty bonds, net liquidation of 216.9 millions of certificates of indebtedness and an increase of 124.1 millions in loans secured by United States war obligations. For the member banks in Greater New York increases of 120.4 millions in the holdings of Liberty bonds and of 121.7 millions in loans supported by United States war securities are shown, as against a reduction of over 187 millions in Treasury certificates of indebtedness. Aggregate holdings of United States securities (exclusive of circulation bonds) and loans supported by such securities show an increase for the four weeks from 2,159,1 to 2,290.3 millions. During the same period member banks in Greater New York show an increase of these items from 1,269.9 to 1,324.9 millions. If it is remembered that the figures of reserve carried b}^ reporting banks constitute about 78 per cent of the total members' reserve deposits shown by the Federal Reserve Banks for corresponding dates, some idea may be had of the amount of war securities and war paper held at present by the banks of the country and the relative share of the New York banks in the total holdings. Total loans and investments of reporting banks, exclusive of permanent investments, show an increase from 12,412.7 to 12,608.7 millions, while the share of war securities and 490 FEDERAL RESERVE BULLETIN. loans supported by such securities in the total just given rose from 17.4 to 18.2 per cent. For the Greater New York banks total loans and investments show an increase from 4,979 to 5,048.7 millions, while the proportion of war securities and war paper to total investments of these banks rose from 25.5 to 26.2 per cent. Immediately following the close of the third Liberty loan a considerable decline in net demand deposits is noted, the May 17 total, 8,922.6 millions, being 324.9 millions below the corresponding April 19 total. For the Greater New York banks the decrease was 118.2 millions and for the member banks in all three central reserve cities, 173.1 millions. Time deposits of all reporting banks show but a slight decline, from 1,397.5 to 1,386.7 millions, the corresponding decrease for central reserve city banks being from 444.3 to 412.4 millions. On the other hand, Government deposits at all reporting banks rose from 633.6 to 1,284.1 millions, at central reserve city banks, from 386.4 to 744.1 millions, and at the New York banks alone, from 329.9 to 593.7 millions. Reserves of all reporting banks (all with the Federal Reserve Banks) declined from 1,167.2 to 1,148.1 millions, while cash in vault gained slightly from 370.4 to 373.1 millions. For all reporting banks the ratio of combined vault cash and reserve to total, including Government deposits, works out at 13.6 per cent on April 19, compared with 13.5 per cent for May 17. For the central reserve city banks this ratio shows a decline from 14.8 to 14.2 per cent. Excess reserves, in the calculation of which no account is taken of Government deposits, stood at 61.6 millions on April 19 and after some fluctuations reached a total of 161.5 millions on May 10, when total investments as well as reserves were at their highest. At the end of the following week, as the result mainly of reductions in reserves and cash in vault, excess reserves fell off to 88.3 millions. For the central reserve city banks JUNE 1,1918. similar fluctuations are noted, the maximum of 109.5 millions on May 10 being followed by a decline to 49.2 millions on May 17. On May 20-21 occurred the regular quarterly meeting of the Federal Advisor C o u n ^ ^ all members being present with the exception of Mr. Norwood, the representative of the fifth district. Two joint sessions were held with the Federal Reserve Board and much attention was given to a discussion of the question of the restriction of the less essential credits and the problem of rediscount rates, as well as of general borrowing and financial conditions in the several districts. The Federal Advisory Council also held a joint session with the directors of the new War Finance Corporation. There was agreement throughout these sessions that, while a condition of general activity and full employment existed throughout the country, it would be necessary to press the campaign for restriction of credit and for individual saving to the utmost. The banking situation was pronounced entirely sound, due largely to the hearty response, on the part of the public, to the demands for general absorption of Liberty loan obligations by private purchasers with as little aid from the banks as practicable. An especially interesting feature of the discussion was the review of legislation on banking now pending in both Houses of Congress. The Council expressed the opinion that there was no occasion for the adoption of the proposed measure relating to the guaranty of bank deposits. The Board adheres to the view expressed by it in the past that needed relief against the hardships, which depositors of failed banks now suffer, would be adequately provided if a fund were established to secure the prompt and effective liquidation of the sound assets of failed banks. Such a fund would enable the depositors of failed banks to receive without delay a cash distribution for a substantial proportion of their claims, pending final liquidation. JUNE 1, 1918. FEDERAL RESEBVE BULLETIN. Indexes of Business Conditions. 491 Meeting of Advisory Council. Rapid changes are now going on in every The usual quarterly meeting of the Federal department of industry in consequence of the Advisory Council was held in Washington on reorganization necessary for war and in prepa- May 20 and 21. A series of topics relating to ration for future development of trade. Many existing financial and banking conditions was of these bid fair to continue after the close of taken up for consideration and, after discusthe war itself. There is thus an increasing need sion, opinions were expressed by the Council for the development of some method of meas- and formerly reported to the Board. The uring in an authoritative way changes in busi- topics discussed and the conclusions arraived ness conditions, movements of prices, and other at were as follows, viz: alterations in the commercial outlook occurring j Topic No. 1.—Curtailment of unnecessary credits. from time to time, especially in their relation to | Recommendation: The Federal Advisory Council conbanking and credit. The Federal Reserve | curs in the principle laid down and the recommendations Board, therefore, has in contemplation plans for ! made by the Federal Reserve Board in regard to the conof upon the bankers of the the extension of its statistical and reporting servationthe credits, and we urge their hearty cooperation country great importance of service, with a view of establishing a series of in the adoption of the policy as outlined by the Federal indexes of industrial, business, and financial Reserve Board in its April Bulletin. conditions. It is desired that these indexes be Topic No. 2.—The proper means of extending banking as nearly scientific and authoritative as they can operations in foreign countries. This should involve a be made. The Board will endeavor to expand discussion of foreign branches of national banks having a million dollars or more of capital and surplus, and banks and coordinate the statistical service of the organized to do a foreign banking business in which several Federal Reserve Banks in accordance national banks are stockholders to an amount not exceeding with a general plan on some common basis de- 10 per cent of their capital and surplus. Recommendations: The Council believes that member signed to adapt itself to the special conditions obtaining in each of the several districts. This banks and banks authorized to do a foreign business in which member banks are stockholders should be encourgeneral statistical or reporting service will be aged to take care of the foreign business of the country under the direction of the Board in order that during the continuance of the war. uniformity and harmony of results may be obThe Council reaffirms its statement made on February tained. Further details of the plan will be an- 19, 1917, as follows: "The Council recommends that the foreign business of the Federal Reserve Banks should for nounced at an early date. Class C Director Named for Richmond Bank. The Federal Reserve Board on May 24 elected Howard Bruce, of Baltimore, as a class C director of the Federal Reserve Bank of Richmond. Mr. Bruce succeeds Mr. Gouverneur, of North Carolina, resigned. Mr. Bruce is a native Virginian, a graduate of the Virginia Military Institute. For the past 16 years he has been connected with the Bartlett-Haward Co., of Baltimore, probably the largest employers of labor in Baltimore, and is now president and principal owner of that company. In the third Liberty campaign every employee of this company, numbering over 12,000, were buyers of Liberty bonds. the present be conducted through correspondents, and that neither agencies nor branches should be established in foreign countries by any Federal Reserve Bank until world conditions are more settled and until the efficiency of the service rendered by correspondents be thoroughly tested." Topic No. 3.—Foreign agencies of Federal Reserve Banks and the proposition to establish a Government foreign exchange bank. On this subject an interesting report has been submitted by a committee of the Chamber of Commerce of the United States, of which I presume you have a copy. Recommendation: The Council is of the opinion that it would be unwise under present conditions to establish a Government foreign exchange bank or for the Federal Reserve Board to undertake to regulate foreign exchange operations further than it is now doing in connection with the Treasury Department. We unanimously indorse the recommendations of the Federal Reserve Board that Federal charters be granted to banks which are now engaged 492 FEDERAL RESERVE BULLETIN. JU.NK 1, 15)18. in foreign banking business the stock of which is owned DISTRICT NO. 1. by member banks. Topic No. 4.—Senate bill No. 4426 which the Board Trustee, executor, administrator, and registrar of stocks and bonds: understands has been favorably reported by the Senate Blackstone National Bank, Uxbridge, Mass. Committee on Banking and Currency. DISTRICT NO. 3. Recommendation: We are opposed to the guaranty of bank deposits in any form, believing it to be wrong in Trustee, executor, and administrator: principle. Inasmuch as the official report of the CompAtglen National Bank, Atglen, Pa. troller of the*Currency shows the Joss to depositors in failed Trustee, executor, administrator, and registrar of stocks and bonds: national banks to be less than three one-thousandths of 1 South Bethlehem National Bank, South Bethlehem, per cent during the last three years and with the GovernPa. ment offering the highest possible security to induce the DISTRICT No. 4. use of hoarded funds the necessity of such legislation is not apparent. The Council reaffirms its declaration of Registrar of stocks and bonds: April IS, which said: "A plan might, however, be devised Northern National Bank, Toledo, Ohio. by the Federal Reserve Board which would provide for prompt relief to be given depositors of failed member DISTRICT NO. 5. banks." Trustee, executor, and administrator: (Passed with one dissenting vote.) First National Bank, Harrisonburg, Va. Topic No. 5.—Bankers' acceptances. DISTRICT No. 7. Recommendation: This Council is of opinion that the use of bankers' acceptances should be encouraged and Trustee, executor, administrator, and registrar of stocks and bonds: developed as it will be of great service to the country in Farmers National Bank, Edinburg, Ind. meeting its necessary financial, requirements, particularly First National Exchange Bank, Port Huron, Mich. during the period of the war. In order to accomplish this legislation may be necessary granting the banks greater DISTRICT NO. 8. accepting power. Every effort should be made to encourage and develop a broad open discount market for Trustee, executor, and administrator: First National Bank, Paducah, Ky. these acceptances. Topic No. 6.—Discount rates. DISTRICT NO. 9. Recommendation: It is the opinion of the Council that in view of the large payments for taxes and Government Trustee, executor, and administrator: First National Bank, Forman, N. Dak. bonds which will be made shortly it is undesirable at this time to change the discount rates at the Federal Reserve DISTRICT NO. 10. Ban Irs. Trustee, executor, administrator, and registrar of stocks and bonds: Acceptances to 100 Per Cent. Stock Growers National Bank. Cheyenne, "Wyo. Since the issue of the May BULLETIN the following banks have been authorized to accept drafts and bills of exchange up to 100 per cent of their capital and surplus: Progress m Retiring Silver Certificates. Since the adoption of the act of April 23, authorizing the retirement of silver certificates First National Bank, Terrell, Tex. and the breaking up of silver dollars held beBeacon Trust Co., Boston, Mass. Hamilton National Bank, Chattanooga, Tenn. hind them in order to supply bullion for export, the authorities of the Treasury Department have been making steady progress in the Fiduciary Powers. application of the law. In this the Federal The applications of the following banks for Reserve Board has cooperated. Two probpermission to act under section ll-(k) of the lems require solution; first, the actual retireFederal Reserve Act have been approved since ment of the silver certificates themselves, and second, the preparation and issuance of Fedthe issue of the May BULLETIN : 3. 1918. FEDERAL EESEKVE BULLETIN. eral Reserve bank notes to take their place. In connection with the issuance of Federal Reserve bank notes it was necessary to prepare new plates and to determine upon the distribution of the issues upon some pro rata basis between Federal Reserve Banks. It was decided to apportion the notes among the banks upon the same basis as Federal Reserve notes and to enlist the assistance of Federal Reserve and member banks in undertaking the withdrawal of silver certificates, first in the higher denominations and later when the new bills had been prepared in the denominations of one and two dollars. The following letter, transmitted by Gov. Harding to Federal Reserve Banks on May 24, furnished instructions regarding the first steps in the operation of retiring the old notes and substituting the new ones in their place: MAY 24, 1918. DEAR SIR : For your information there is inclosed a copy of a statement issued by the Division of Loans and Currency of the Treasury, showing silver certificates withdrawn from circulation and canceled, and silver dollars melted or broken up during the week ended May 17. You will notice that as a result of these operations the circulating medium has been decreased by $37,881,374. In order to avoid any shortage in small bills, the Board is of the opinion that Federal Eeserve Banks should, acting together as a system, replace withdrawals of silver dollars and silver certificates by the issue of Federal Eeserve bank notes. It is the intention of the Board to keep the Federal Eeserve Banks informed each week of the amount of silver and silver certificates withdrawn and to allot to each Federal Eeserve Bank its proper proportion of Federal Reserve bank notes as nearly as possible on the basis of distribution outlined in its letter of April 29th, X-917. It is desirable that Federal Eeserve Banks should get their Federal Eeserve bank notes as received into circulation before issuing additional Federal Eeserve notes. For the present it will not be possible, however, to adhere strictly to the basis of distribution outlined in the letter of April 29, because the amount of Federal Eeserve bank notes available in the various districts is not uniform, and three of the Federal Eeserve Banks have no bank notes available at all. A statement is inclosed showing the amount of Federal Eeserve bank notes available for each bank on May 20. It has been deemed advisable that Federal Eeserve Banks should first deposit their one-year 3 per cent notes as security for their Federal Eeserve bank notes and that they give power of attorney to the Federal Eeserve Board 493 to request the Secretary of the Treasury from time to time to deposit with the Treasurer of the United States, through the Comptroller of the Currency for account of the respective banks, such amounts of United States certificates of indebtedness as may be necessary to secure, after all the one-year 3 per cent notes have been deposited, the Federal Eeserve bank notes which will be issued in substitution for silver certificates withdrawn. The Treasurer of the United States can thereupon charge the account of each Federal Eeserve Bank, as a deposit in his general account, with the amount of the purchase price of the certificates. In order to carry out this plan the Board requests the Federal Eeserve Banks to call for Federal Eeserve bank notes in the amounts indicated below and to deposit as security with the Comptroller of the Currency an equivalent amount in one-year 3 per cent Treasury notes: Philadelphia $1,000,000 Cleveland 2,660,000 Richmond 1,000,000 Atlanta 1,141, 000 Chicago 2, 962, 000 Minneapolis 880.000 Kansas City 1, 374.000 Dallas 1,307; 000 San Francisco 1, 500,. 000 As soon as Federal Eeserve bank notes for all of the banks are available the Board will make the proper adjustment between the banks. Following is a typical letter that is being sent to member banks by Federal Reserve Banks: To the cashier of the hank addressed: DEAR SIR: For the purpose of conserving the Nation's gold supply, permitting the settlement in silver, where practicable, of adverse trade balances, providing silver for subsidiary coinage and commercial use, and assisting Allied Governments in the war against Germany, Congress has recently authorized 3350,000,000 of the silver dollars held in the United States Treasury to be broken up and sold as bullion. As most of the silver thus held is represented by silver certificates in circulation, it can only be obtained by the return of silver certificates to the Treasury for cancellation. The withdrawal of silver certificates from circulation is not intended to be permanent, as the act provides that the Director of the Mint, as soon as practicable after a sale of silver bullion has been made, shall purchase a like quantity of silver to take the place of the bullion sold. To provide temporarily the necessary circulating medium during the interim between the withdrawal of the silver certificates and their subsequent reissue when the silver supply has been replenished by purchases of silver, Federal Reserve Banks will issue Federal Reserve bank notes in denominations of $1, $2, $5, and upward. These notes will be obligations of the Federal Reserve Banks secured by United States certificates of indebtedness or bonds and similar otherwise to national-bank notes. 494 JUNE 1,1918. FEDEEAL RESERVE BULLETIN. We ask the banks of this district to cooperate with the departments of the Federal Government, the Government by furnishing us with their present supply leading stock exchanges, the American Bankers' of $5 silver certificates, which can be replaced in circula- Association and the Investment Bankers' Assotion at once by Federal Reserve notes, Federal Reserve ciation of America. bank notes, or United States notes. In a few weeks, Detailed report made by the committee is as when Federal Reserve bank notes of the $1 and $2 denom- follows: inations are ready, a request will also be made that silver certificates in these denominations be sent in. Public Municipal. Industrial. Tola]. utility. Will you not, therefore, please sort out of your cash and forward to us, at our expense, all silver certificates of $5 Number considered 192 62 107 361 and upward which you may have on hand or receive from Number approved. 140 60 78 278 N u m b e r disaptime to time, in return for which we will either— o 34 24 60 proved . 0 18 5 23 (a) Furnish you, free of expense, other currency of the N umber curtailed.. Amount considered $86,878,512 §172,069,605 8219,510,269 8478,458,386 same or larger denominations, as you may prefer; or A m o u n t disap19,791,665 6,000,000 39,900,000 65,691,665 proved (6) Place the amount to your credit in this bank, if a member bank, or in any designated bank in this district. Aggregate approved. 67,086.847 166,069,605 179,610,269 412,766,721 We feel confident that you will be willing to cooperate Less "refunding".. 21,392,312 125,860,284 311,411,900 258,664,496 new with the Government in furnishing it the silver it needs Aggregate 45,G94,534 40,209,321 68,198,369 154,102,224 issues for its own requirements and those of the Allies. New issues last Governor. Work of the Capital Issues Committee. The following statement was issued on May 22 by the Capital Issues Committee: Applications for the issue of securities aggregating $478,458,386 were considered by the Capital Issues Committee of the Federal Reserve Board. The Committee's existence ceased upon the taking of office on May 17 of the Capital Issues Committee created by the War Finance Corporation Act. While it approved three issues during the period January 12 to February 1, the committee was not organized and under way until February 1. Of the total issues considered, the committee approved $412,766,721, of which $258,664,496 were for the purpose of refunding obligations previously incurred. New issues approved, therefore, aggregated $154,102,224. New issues for the same period last year were $504,211,624, so that a comparative saving has been effected of $350,109,399. This saving by action of the committee does not include the saving of $19,865,000 effected through the informal postponement for the period of the war secured through the efforts of the committee or its agencies. In addition, however, there is an immeasurable saving caused by the wide publicity given to the committee's aims and purposes which has discouraged at the very source issues clearly incompatible with the national interest at this time. The committee attributes this success to the splendid cooperation and loyal support it has received from State and municipal authorities, year, same period. 108,952,865 107,504., 075 287,754,684 504,211,624 issues approved: Amount original applications 65,486,199 46,209,321 108,098,369 219,793,889 Amount aDproved 40,209,321 68,198,369 154,102,224 45,694,534 Curtailment ef19,791,665 6,000,000 39,900,000 65,691,665 fected Analysis of applications inlorm a l l v discouraged: 8 3 6 17 Number Amount $8,915,000 §7,360,000 $3,590,000 $19,865,000 Special Deposits of Public Moneys. The following circular relating to special deposits of public moneys under the act of Congress approved September 24, 1917, as amended by the act of Congress approved April 4, 1918, was issued by the Treasury Department on May 29: To Federal Reserve Banks and other banks and trust companies incorporated under the laws of the United States or of any State. Department Circular No. 92, dated October 6,1917. and the supplement thereto, dated April 10, 1918, in relation to special deposits of Government funds in connection with subscriptions for bonds and certificates of indebtedness of the United States issued under the act of Congress approved September 24, 1917, are hereby further supplemented as follows: The provisions of the said circular and supplement are extended, subject to the provisions hereof, to deposits of moneys, arising from the payment of income and excess profits taxes, made under the act of Congress approved September 24, 1917, as amended by the act of Congress approved April 4, 1918. Applications hereafter made for deposits of public moneys under said acts should be. and all applications for such deposits made on and after JUNE 1,1918. June 5, 1918, must be, in Form H3 hereto attached, and be accompanied by a certified copy of resolutions duly adopted by the board of directors of the applicant in Form J3 hereto attached. Depositaries already qualified to a sufficient amount pursuant to Department Circular No. 92, or pursuant to said circular as amended and supplemented under date of April 10, 1918, will not be required to file anew formal applications or resolutions in connection with deposits of moneys arising from the payment of income and excess profits taxes, but, if they desire to receive deposits hereunder must so notify the Federal Reserve Bank of the district in which they are located by letter or telegram; and they will thereby and by the acceptance of such deposits, be conclusively presumed to have assented to all the terms and provisions hereof. The words "qualified depositaries" in this circular refer exclusively to depositaries qualified under Department Circular No. 92 and supplements thereto. Collateral security pledged or to be pledged by qualified depositaries will be conclusively deemed to be pledged as collateral security for deposits of public moneys made under Department Circular No. 92 and supplements thereto, whether arising from the sale of bonds or certificates of indebtedness of the United States or arising from the payment of income and excess profits taxes. Payment of income and excess profits taxes can not be made by credit. It is intended, out of any unexpended cash proceeds arising from the payment of income and excess profits taxes, to make deposits, through the Federal Reserve Banks, under direction of the Secretary of the Treasury, with qualified depositaries throughout the United States, as nearly as may be proportionately, having regard to the following three determining factors: (1) The amount of checks, received by collectors of internal revenue on and after June 10, 1918, and until further notice, drawn upon and paid by such depositaries, respectively, in payment of income and excess profits taxes; (2) the amount of Treasury certificates of indebtedness of all issues maturing June 25, 1918, sold to and through such depositaries, respectively; and (3) the amount for which such depositaries, respectively, shall be qualified in excess of existing deposits. It is the intention that such deposits shall, as nearly as may be, be made simultaneously with the payment of checks drawn upon such depositaries, respectively, in payment of such taxes. Appropriate instructions will be given to collectors of internal revenue and to Federal Reserve Banks. All deposits will be subject to withdrawal on demand and will bear interest at the rate of 2 per cent per annum, as provided in the above-mentioned circular and supplement. Deposits made hereunder shall be credited to the "War Loan Deposit Account." A principal object of the issue of the United States Treasury certificates of indebtedness maturing June 25, 1918, was to prevent unnecessary dislocation of funds, and this object would be defeated if such certificates held by 62161—18 3 495 FEDERAL RESERVE BULLETIN. taxpayers were not turned in in payment of their taxes, but were either sold or hypothecated by the taxpayers and in consequence were presented for payment in cash. In view of the fact that the aggregate amount of these certificates now issued exceeds $1,500,000,000 this is important, and banks and trust companies are required to cooperate by advising their customers to turn in certificates, to the extent that they have taxes to pay, in payment of such taxes. No deposit of moneys arising from the payment of income and excess profits taxes will be made with any depositary which disregards this requirement. W. G. MCADOO, Secretary of the Treastunj. [Form 113—Public Moneys.] APPLICATION" 70R DEPOSITS. To the Federal Reserve Bank of , fiscal agent of the United States: The undersigned bank or trust company, in accordance with the provisions of Treasury Department Circular No. 92, dated October 6, 1917, as amended and supplemented April 10,1918, and May 29,1918, and pursuant to due action of its board of directors, hereby makes application for the deposit of public moneys with it from time to time under the act of Congress approved September 24, 1917, as amended by the act approved April 4,1918, the aggregate amount of such deposits not to exceed at any one time S ; and assigns and agrees to pledge, from time to time, to and with the Federal Reserve Bank of , asfiscalagent of the United States, as collateral security for such deposits as may be made from time to time pursuant to this application, securities of the character and amount required by said circular. President (Vice President). Street City or town State [Form J3—Public Moneys.] RESOLUTIONS AUTHORIZING APPLICATION POR DEPOSITS. I hereby certify that the following resolutions were duly adopted at a meeting of the board of directors of the below-named bank (trust company), which meeting was duly called and duly held on the day of , 191.., a quorum being present, and that the said resolutions were spread upon the minutes of said meeting: Resolved, That in accordance with the provisions of Treasury Department Circular No. 92, dated October 6, 19.17, as amended and supplemented April 10, 1918, and May 29, 1918, this bank (trust company) makes application for the deposit of public moneys with it from time to time under the act of Congress approved September 24, 1917, as amended by the act approved April 4, 1918, the aggregate amount of such deposits not to exceed at any one time S ; and assign and agree to pledge from time to time to and with the Federal Reserve Bank of , as fiscal agent of the United States, as collateral security for such deposits as may be made from time to time pursuant to such application, securities of the character and amount required by said circular; and Resolved, That the president, or any vice president, or cashier, or secretary, of the undersigned bank (trust company) is hereby authorized to make application, assignment, and agreement as aforesaid and from time to time to deliver to and pledge with said Federal Reserve Bank, or any custodian or custodians appointed by it, securities of the undersigned bank (trust company) of a character and amount at least sufficient to secure such deposits according to the terms of said Treasury Department circular as amended and supplemented as aforesaid, and from time to time to withdraw securities and to substitute other securities and to pledge and deposit additional securities. In witness whereof I have hereunto signed my name and affixed the seal of the of Cashier (Secretary). 496 FEDEBAL RESERVE BULLETIN. Operations of the War Finance Corporation. The War Finance Corporation, on May 28, authorized the following statement: In view of the applications for direct advance which have been filled with the War Finance Corporation, the directors wish to point out that an erroneous impression seems to exist in certain quarters that the Corporation is intended primarily to make direct advances to borrowers under the "exceptional cases" clause of the act. This, however, is not the purpose of the act, which was designed primarily to enable credit to be extended by the War Finance Corporation through the banks of the country to "war industries"—that is, to those industries whose operations are necessary or contributory to the war. In other words, the resources of the War Finance Corporation are not intended to be loaned directly to war industries unless in an exceptional case, but only indirectly through the banks. As the Secretary of the Treasury stated before the committees of Congress when the bill was under consideration, "the provision of the bill permitting direct loans by the corporation, in exceptional cases, is intended to provide for those rare instances where it may be made to appear to the Corporation that a meritorious borrower is being unwisely discriminated against by the banks." In the progress of the bill through Congress advances under the exceptional cases clause were further restricted both as to security and as to the amount which could be advanced—thus indicating the intention of Congress that in order to obtain an advance under this clause the borrower must show some exceptional circumstances clearly entitling him to relief. In no circumstances was it the intention that the War Finance Corporation should make loans except upon adequate security. It is expected that the greatest usefulness of the War Finance Corporation will be found in its operations through the banks. As the Secretary of the Treasury stated before the Senate Finance Committee, the organization of the War Finance Corporation should be regarded "primarily as a measure to enable the banks, * * * " to continue to furnish essen" tial credits for war industries and enterprises which are necessary or contributory to the prosecution of the war. In Europe central banks, which correspond to our Federal Reserve Banks in a sense, are permitted to grant to banks and bankers loans upon stocks and bonds upon certain well-defined terms; but here the Federal rxE 1, 11)18. Reserve Banks are not permitted to do that, the Federal Reserve Act having specifically contemplated advances of that character only upon what we call liquid or commercial paper, and therefore the Federal Reserve Banks are not permitted to rediscount any paper for their banks which is secured by fixed investments. The Federal Reserve Act does not provide for this, and the War Finance Corporation is designed as a war emergency to fill this gap." The Corporation was organized to provide an instrumentality to which the banks of the country could resort to obtain accommodation on advances made by them to war industries upon a character of security not available for rediscount at a Federal Reserve Bank. It is hoped that as need arises the banks of the country will' avail themselves of the facilities thus afforded, so that they may be amply able to extend credit to those industries of the country which are necessary or contributory to the prosecution of the war. From the applications received by the War Finance Corporation there seems to be an impression in certain quarters that the Corporation was specially designed to provide funds for meeting maturing obligations, particularly those of public-utility companies. The law expressly provides that the Corporation shall not make direct advances to provide funds to meet such maturing obligations except possibly in some rare case which could clearly be brought within the "exceptional cases clause." Of course the Corporation will stand ready to lend its assistance to banks and bankers in proper cases where they have themselves made advances to war industries whether for the purpose of meeting maturing obligations or otherwise, and direct advances in deserving cases that come clearly within the provisions of the law. Holders of maturing obligations, whether of public utilities or of other concerns which may find themselves unable because of temporary conditions to meet their commitments punctually, should consider whether in the public interest as well as their own they should not cooperate by consenting to reasonable renewals. Public-utility companies particularly, in cooperation with the communities in which they operate, should have the opportunity of adjusting themselves to the changed conditions brought about by the war. No machinery has been specially provided for direct purchases of obligations of the public utilities whether to meet maturities or otherwise, either through the War Finance Corporation or through any other governmental agency. The situation of these public utility companies JUNE 1,1918. FEDERAL BESEEVE BULLETIN. is therefore quite different from that of the railroads, where Congress has made specific provision for the purchase of their securities by the Government in certain exigencies, yet even the railroads are expected, wherever possible, to meet their own maturities and to pay what the money is worth to accomplish that end. It must be remembered that the railroads are under Federal operation, and their rates are subject to Federal control, and that the Government is therefore in a position to see to it that their charges shall be sufficient to meet the cost of the service rendered, in the case, however, of the public utilities, neither their operations nor their rates are subject to Federal control. Wherever the charges do not amount to adequate compensation for the services rendered, relief can be had only through the appropriate local authorities, and time is essential to enable the companies and the communities in which they operate to reach a satisfactory solution of this important problem. It is not a problem which can be disposed of by having the Federal Government through the War Finance Corporation assume the burden of financing the operations of these local companies except in exceptional circumstances wnich may make it a matter of national importance that advances should be made. The local authorities will no doubt respond as promptly as possible in cases where relief is needed because of changed conditions, as it is clear that the soundness and efficiency of public utilities is intimately connected with a vigorous and successful prosecution of the war. A New Measure of Taxation. The President, on May 27, delivered, before Congress the following address which is reprinted here because of its direct bearing upon general banking and financial conditions: Gentlemen of the Congress: It is with unaffected reluctance that I come to ask you to prolong your session long enough to provide more adequate resources for the Treasury for the conduct of the war. I have reason to appreciate as fully as you do how arduous the session has been. Your labors have been severe and protracted. You have passed a long series of measures which required the debate of many doubtful questions of judgment and many exceedingly difficult questions of principle as well as of practice. The summer is upon us in which labor and counsel are twice arduous and are constantly apt to be impaired by lassitude and fatigue. The elections are at hand, and. we ought as soon as possible to go and render an intimate account of our trusteeship to the people who delegated us to act for them in the 497 weighty and anxious matters that crowd upon us in these days of critical choice and action. But we dare not go to the elections until we have done cur duty to the full. These are days when duty stands stark and naked, and even with closed eyes we know it is there. Excuses are unavailing. We have either done our duty or we have not. The fact will be as gross and plain as the duty itself. In such a case lassitude and fatigue seem negligible enough. The facts are tonic and suffice to freshen the labor. And the facts are these: Additional revenues must manifestly be provided for. It would be a most unsound policy to raise too large a proportion of them by loan, and it is evident that the four billions now provided for by taxation will not of themselves sustain the greatly enlarged budget to which we must immediately look forward. We can not in fairness wait until the end of the fiscal year is at hand to apprise our people of the taxes they must pay on their earnings of the present calendar year, whose accountings and expenditures will then be closed. We can not get increased taxes unless the country knows what they are to be and practices the necessary economy to make them available. Definiteness, early denniteness. as to what its tasks are to be is absolutely necessary for the successful administration of the Treasury; it can not frame fair and workable regulations in haste; and it must frame its regulations in haste if it is not to know its exact task until the very eve of its performance. The present tax laws are marred, moreover, by inequities which ought to be remedied. Indisputable facts, every one: and we can not alter or blink them. To state them is argument enough. And yet perhaps you will permit me to dwell for a moment upon the situation they disclose. Enormous loans freely spent in the stimulation of industry of almost every sort produce inflations and extravagances which presently make the whole economic structure questionable and insecure and the very basis of credit is cut away. Only fair, equitably distributed taxation, of the widest incidence and drawing chiefly from the sources which would be likely to demoralize credit by their very abundance, can prevent inflation and keep our industrial system free of speculation and waste. We shall naturally turn, therefore, I suppose, to war profits and incomes and luxuries for the additional taxes. But the war profits and incomes upon which the increased taxes will be levied will be the profits and incomes of the calendar year 1918. It would be manifestly unfair to wait until the early months of 1919 to say what they are to be. It might be difficult, I should imagine, to run the mill with water that had already gone over the wheel. Moreover, taxes of that sort will not be paid until the June of next year, and the Treasury must anticipate them. It must use the money they are to produce before it is due. It must sell short-time certificates of indebtedness. In the autumn a much larger sale of long-time bonds must be effected than has yet been attempted. What are the bankers to think of the certificates if they do not certainly 498 FEDERAL RESERVE BULLETIN. know where the money is to come from which is to take them up? And how are investors to approach the purchase of bonds with any sort of confidence or knowledge of their own affairs if they do not know what taxes they are to pay and what economies and adjustments of their business they must effect? I can not assure the country of a successful administration of the Treasury in 1918 if the question of further taxation is to be left undecided until 1919. The consideration that dominates every other now, and makes every other seem trivial and negligible, is the winning of the war. We are not only in the midst of the war, we are at the very peak and crisis of it. Hundreds of thousands of our men, carrying our hearts with them and our fortunes, are in the field, and ships are crowding faster and faster to the ports of France and England with regiment after regiment, thousand after thousand, to join them until the enemy shall be beaten and brought to a reckoning with mankind. There can be no pause or intermission. The great enterprise must, on the contrary, be pushed with greater and greater energy. The volume of our might must steadily and rapidly be augumented until there can be no question of resisting it. If that is to be accomplished, gentlemen, money must sustain it to the utmost. Our financial program must no more be left in doubt or suffered to lag than our ordnance program or our ship program or our munitions program or our program for making millions of men ready. These others are not programs, indeed, but mere plans upon paper, unless there is to be an unquestionable supply of money. That is the situation, and it is the situation which creates the duty, no choice or preference of ours. There is only one way to meet that duty. We must meet it without selfishness or fear of consequences. Politics is adjourned. The elections will go to those who think least of it; to those who go to the constituencies without explanations or excuses, with a plain record of duty faithfully and disinterestedly performed. I, for one, am always confident that the people of this country will give a just verdict upon the service of the men who act for them when the facts are such that no man can disguise or conceal them. There is no danger of deceit now. An intense and pitiless light beats upon every man and every action in this tragic plot of war that is now upon the stage. If lobbyists hurry to Washington to attempt to turn what you do in the matter of taxation to their protection or advantage, the light will beat also upon them. There is abundant fuel for the light in the records of the Treasury with regard to profits of every sort. The profiteering that can not be got at by the restraints of conscience and love of country can be got at by taxation. There is such profiteering now and the information with regard to it is available and indisputable. I am advising you to act upon this matter of taxation now, gentlemen, not because I do not know that you can see and interpret the facts and the duty they impose, just as well and with as clear a perception of the obligations involved as I can, but because there is a certain solemn satisfaction in sharing with you the responsibilities of such a JUNE 1,1918. time. The world never stood in such case before. Men never before had so clear or so moving a vision of duty. I know that you will begrudge the work to be done here by us no more than the men begrudge us theirs who lie in the trenches and sally forth to their death. There is a stimulating comradeship knitting us all together. And this task to which I invite your immediate consideration will be performed under favorable influences if we will look to what the country is thinking and expecting and care nothing at all for what is being said and believed in the lobbies of Washington hotels, where the atmosphere seems to make it possible to believe what is believed nowhere else. Have you not felt the spirit of the Nation rise and its thought become a single and common thought since these eventful days came in which we have been sending our boys to the other side? I think you must read that thought as I do, to mean this, that the people of this country are not only united in the resolute purpose to win this war, but are ready and willing to bear any burden and undergo any sacrifice that may be necessary for them to bear in order to win it. We need not be afraid to tax them, if we lay taxes justly. They know that the war must be paid for and that it is they who must pay for it, and if the burden is justly distributed and the sacrifice made a common sacrifice from which none escapes who can bear it at all, they will carry it cheerfully and with a sort of solemn pride. I have always been proud to be an American, and was never more proud than now, when all that we have said and all that we have foreseen about our people is coming true. The great days have come when the only thing that they ask for or admire is duty greatly and adequately done; when their only wish for America is that she may share the freedom she enjoys; when a great compelling sympathy wells up in their hearts for men everywhere who suffer and are oppressed, and when they see at last the high uses for which their wealth has been piled up and their mighty power accumulated and, counting neither blood nor treasure now that their final day of opportunity has come, rejoice to spend and to be spent through a long night of suffering and terror in order that they and men everywhere may see the dawn of a day of righteousness and justice and peace. Shall we grow weary when they bid us act? Contributions to the Eed Cross. The act authorizing national banks to contribute to the American Eed Cross was signed by the President on May 23. The text of the act follows: [S. 3911.] A BILL Authorizing national banks to subscribe to the American National Red Cross. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That during the continuance of the state of war now existing it shall be lawful for any national banking association to con- 499 FEDERAL RESERVE BULLETIN. JUNE 1, 1918. tribute to the American National Red Cross, out of any net profits otherwise available under the law for the declaration of dividends, such sum or sums as the directors of said association shall deem expedient. Each association shall report to the Comptroller of the Currency within ten days after the making of any such contribution the amount of such contribution and the amount of net earnings in excess of such contribution. Such report shall be attested by the president or cashier of the association in like manner as the report of the declaration of any dividend. SEC. 2. That all sums so contributed shall be utilized by the American National Red Cross in furnishing volunteer aid to the sick and wounded of the combatant armies, the voluntary relief of the Army and Navy of the United States, and the relief and mitigation of the suffering caused by the war to the people of the United States and their allied nations. exportation for which a license is desired will be compatible with the public interest. 2. Each Federal Reserve Bank shall keep a record copy of each application filed with it under the provisions of this regulation and shall forward the original application and a duplicate to the Federal Reserve Board at Washington, together with such information or suggestions as it may believe proper in the circumstances,' and shall in addition make a formal recommendation as to whether or not in its opinion the exportation should be permitted. 3. The Federal Reserve Board, subject to the approval of the Secretary of the Treasury, is hereby authorized and empowered upon receipt of such application and the recommendation of the Federal Reserve Bank to make such ruling as it may deem proper in the circumstances and if in its opinion the exportation in question be compatible with the public interest, to permit said exportation to be made; otherwise to refuse it. WOODROW WILSON. THE WHITE HOUSE, September 7, 1917. BY THE PRESIDENT OF THE UNITED STATES OF AMERICA, A PROCLAMATION. enacted, and President has Control of Coin, Bullion, and Currency Movement. onWhereas Congress has 1917, approvedthelaw, which conthe 15th day of Jane, a The work of the Federal Reserve Board in tains the following provisions: Whenever during the rhall applying the gold embargo provided under the find that the public safetypresentsowar the President make shall require, and shall Executive order of September 7, 1917, has proclamation thereof, it shall be unlawful to export from or or take any counresulted, up to the present time, in the exami- tryship from in such out of the United States to or articles named proclamation any article nation and consideration of 2,020 applications mentioned in such proclamation, except at such time or orders, and subject for licenses to export coin, bullion, and cur- times, and under such regulations and the President shall to such limitations and exceptions as rency out of the country. Some minor modi- prescribe, until otherwise ordered by the President or by Congress: Provided, no preference shall be fications of the regulations relating to this phase given to the ports of Jiowcver, That those of another. one State over of the Board's work have in practice become Any person who shall export, ship, or take out, or deliver to deliver necessary, particularly in the section relating or attempt in violationfor export, shipment, or taking out any article of this title, or of any regulation or to funds carried by travelers. The Executive order made hereunder, shall be fined not more than $10,000, natural for not more than two order governing the exportation of coin, bul- or, if aor both; person, imprisoned delivered or exported, years, and any article so lion, and currency is as follows: shipped, or taken out, or attempted to be so delivered or EXECUTIVE ORDER. By virtue of the authority vested in me, I direct that the regulations, orders, limitations, and exceptions prescribed in relation to the exportation of coin, bullion, and currency shall be administered by and under the authority of the Secretary of the Treasury; and upon the recommendation of the Secretary of the Treasury I hereby prescribe the following regulations in relation thereto: 1. Any individual, firm, or corporation desiring to export from the United States or any of its Territorial possessions to any foreign country named in the proclamation dated September 7, 1917, any com, bullion, or currency, shall first file an application in triplicate with the Federal Reserve Bank of the district in which such individual, firm, or corporation is located, such application to state under oath and in detail the nature of the transaction, the amount involved, the parties directly and indirectly interested, and such other information as may be of assistance to the proper authorities in determining whether the 62161—18 3* exported, shipped, or taken out, shall be seized and forfeited to the United States; and any officer, director, or agent of a corporation who participates in any such violation shall be liable to like fine or imprisonment, or both. Whenever there is reasonable cause to believe that any vessel, domestic or foreign, is about to carry out of the United States any article or articles in violation of the provisions of this title, the collector of customs for the district in which such vessel is located is hereby authorized and empowered, subject to review by the Secretary of Commerce, to refuse clearance to any such vessel, domestic or foreign, for which clearance is required by law, and by | formal notice served upon the owners, master, or person or persons in command or charge of any domestic vessel foi which clearance is not required by law to forbid the departure of such vessel from the port, and it shall thereupon be unlawful for such vessel to depart. Whoever, in viola| tion of any of the provisions of this section shall take, or j attempt to take, or authorize the taking of any such vessel out of port or from the jurisdiction of the United States, shall be fined not more than $10,000 or imprisoned not more than two years, or both; and, in addition, such vessel, j her tackle, apparel, furniture, equipment, and her forbid I den cargo shall be forfeited to the United States. 500 FEDERAL BESEEVE BULLETIN. And whereas the President has heretofore by proclamation, under date of the 27th day of August in the year 1917, declared certain exports in time of war unlawful. and the President finds that the public safety requires that such proclamation be amended and supplemented in respect to the articles hereinafter mentioned: Now, therefore, I Woodrow Wilson, President of the United States of America, do hereby proclaim to all whom it may concern, that the public safety requires that, except at such time or times, and under such regulations and orders, and subject to such limitations and exceptions as the President shall prescribe, until otherwise ordered by the President or by Congress, the following articles, namely: Coin, bullion, and currency shall not, on and after the 10th day of September, in the year 1917, be exported from or shipped from or taken out of the United States or its territorial possessions to Albania, AustriaHungary, Belgium, Bulgaria, Denmark, her colonies, possessions or protectorates, Germany, her colonies, possessions, or protectorates, Greece, Leichtenstein, Luxembourg, The Kingdom of the Netherlands, Norway, Spain, her colonies, possessions, or protectorates, Sweden, Switzerland or Turkey, Abyssinia, Afghanistan, Argentina, Bolivia, Brazil, China, Chile, Colombia, Costa Rica, Cuba, Dominican Republic, Ecuador, Egypt, France, her colonies, possessions, or protectorates, Guatemala, | Haiti, Honduras, Italy, her colonies, possessions, or protectorates, Great Britain, her colonies, possessions, or protectorates, Japan, Liberia, Mexico, Monaco, Montenegro, Morocco, Nepal, Nicaragua, the colonies, possessions, or protectorates of The Netherlands, Oman, Panama, Paraguay, Persia, Peru, Portugal, her colonies, possessions, or protectorates, Roumania, Russia, Salvador, San Marino, Serbia, Siam, Uruguay, or Venezuela. The regulations, orders, limitations, and exceptions prescribed will be administered by and under the authority of the Secretary of the Treasury, from whom licenses in conformity with said regulations, orders, limitations, and exceptions will issue. Except as hereby amended and supplemented, the above-mentioned proclamation under date of August 27, 1917, shall continue in full force and effect. In witness whereof I have hereunto set my hand and caused the seal of the United States of America to be affixed. Done at the city of Washington this 7th day of September, in the year of our Lord 1917, and of the independence of the United States of America the 142d. JUNE 1, 1918. must file an application with the Federal Reserve Bank of the district in which the applicant resides or where the transaction requiring the shipment originates. These applications must be made on a standard form, which has been furnished to all Federal Reserve Banks. EXPORTS OF GOLD. It will be the general policy of the Board not to authorize the exportation of gold unless the shipment applied for is shown to be connected in a direct and definite way with a corresponding importation of merchandise for consumption in the United States, but in any case authorization will be granted only where the exportation of gold in payment for such merchandise is found to be compatible with the public interest. In reaching its conclusions, however, the Board will consider all attending circumstances in each particular case. SHIPMENTS OF CANADIAN SILVER COIN AND CURRENCY. Until further notice the Board will approve all applications for the exportation of Canadian silver coin and currency to Canada, and of Mexican paper currency to Mexico, without limitation. The Treasury Department has instructed collectors of customs to pass such shipments when approved by the Federal Reserve Bank of the district from which the shipments are made. Continuous permits for shipments of Canadian silver coin and currency and of Mexican paper currency, without requiring an application in each case, may be granted by Federal Reserve Banks upon condition that each transaction will be reported to it without delay. The Federal Reserve Banks will transmit to the Board weekly reports of all applications of every kind passed upon by them, showing the amount of each shipment. EXPORTS OF SILVER BULLION AND SILVER COIN OF FOREIGN MINTAGE. Applications for the exportation of silver bullion and silver coin of foreign mintage will in general be approved by the Federal Reserve Board upon recommendation of the Federal Reserve Bank with which the application is filed. UNITED STATES NOTES, NATIONAL BANK NOTES, FEDERAL RESERVE NOTES, AND FEDERAL RESERVE BANK NOTES. The administrative procedure under this order is now as follows: Applications for the exportation of United States notes, national bank notes, Federal Reserve notes, and Federal Reserve Bank notes will as a rule be approved by the Federal Reserve Board, but each application must come before the Board for its determination before shipment is made, unless authority to pass upon such applications locally has been delegated by the Board to the respective Federal Reserve Banks. ADMINISTRATIVE PROCEDURE. TRAVELERS LEAVING THE COUNTRY. METHOD OF MAKING APPLICATION. Instructions have been issued by the Treasury Department to collectors of customs to permit travelers leaving the country to carry on their persons or in their baggage: WOODROW WILSON. By the President: ROBERT LANSING, Secretary of State. Individuals, firms, and corporations desiring to obtain licenses for the exportation of coin, bullion, and currency 501 FEDERAL RESERVE BULLETIN. JUNE 1, 1918. (a) United States notes, national-bank notes, Federal customs at the port from which the applicant expects to Reserve notes, or-Federal Reserve Bank notes not to ex- leave the United States, and collectors of customs have been notified that in dealing with travelers to whom such ceed $1,000 for each adult. (6) Subsidiary silver coins not to exceed $100 for each licenses have been issued they may act without communiadult, such coin to be in lieu of a like amount of notes cating with the Federal Reserve Board. under (a) above. GENERAL. Collectors of customs have been informed that in dealing with travelers they may act in accordance with these reguShipments of coin or currency which appear to be or are lations, without communicating with the Federal Reserve suspected of being for enemy account or for the benefit Board or with the Federal Reserve Bank of their district. of the enemy will not be permitted. These regulations are Travelers who desire to take with them silver dollars or issued subject to change without notice, and no applicagold coin, or gold or silver certificates in any amount, tion granted will be regarded as constituting a precedent. must obtain a license from the Federal Reserve Bank of Following is a summarized statement of the their district, from which application blanks may be obshipments of coin, bullion, and currency which tained. Whenever such licenses are issued, the Federal Reserve Bank will give due notice to the collector of I the Board has authorized up to the present date: Amounts of licenses granted by the Federal Reserve Board during the period Sept. 7, 1917, io May 24, 1918, covering exports from the United States of coin, bullion, and currency. «ilver Gold. United Kingdom France Italy Russia Netherlands Sweden Norway Spain Switzerland Canada Newfoundland Mexico Guatemala Honduras Nicaragua. . . Salvador Cuba.. Porto Rico Dominican Republic . Haiti :. British West Indies... Dutch West Indies Panama Argentina Brazil Chile Colombia Bolivia Ecuador. Peru Venezuela Uruguay British Guina Dutch G uina China. . Japan India Dutch East indies . British West Africa All other Total Silver a n d ; currency. 200 70 300,000 2 000 000 919,561,371 812,500 $202,400 1,276,884 44,508 11,364 84,(555 20,000 iSl,725 ::::.::::.:: 2 225 7,329,290 26,706,462 228 200 23,237,020 50 2,331,560 $600, 111 3,349,600 160,000 12,999 . . 1,273 40,000 38,245 20 62,000 695 10,274,398 876,165 300,000 1,241,090 554,420 216,000 Miscellaneous. Currency. 5,000 7,377 980,000 200,000 6,342 57 32,666 8,666 : 713,437 8,105,669 50,000 i 540,200 ! 20,500 28,000 18,881,000 386,200 942,000 i 20,000 68,000 50 3 3,000 3 116.000 '..... <600 &36.200 4,539 10,000 160,000 72,500 5,000 6490,000 12,000 2,990,000 881,615 3,300,000 1,538,000 500 151,150 4,580 1,669 26,338,263 560,000 79,884,819 1,100,000 13,300 250 7 58,740,182 155,237,725 2,700 48,000 50,000 5,328 110 ' 30,382.703 647,526 Total. $19,768,426 814,225 200 1,321,462 300.000 2,000,000 31,364 225 8,200 31,882,858 50 40,609,291 50,228 700,200 20,500 28,000 18,895,872 1,402,400 1,182,000 20,000 112,587 127 5,000 105,938 10,695 10,274,398 1,036,165 300,000 72,500 1,736,090 569,420 210,000 4,580 J,609 29,330, 983 1,489.615 2*3,184)819 2,63X, 000 13,800 201,400 250,336,245 In the above table amounts of silver stated in terms of Mexican currency were converted to United States equivalents at the rate of 50 cents per peso. 1 Currency, silver, and gold. 2 3 Does not include §1,250,000 gold for which the Board has issued licenses permitting either export or earmarking in trade with Spain. Gold and silver. * 5 Copper. Cents and dimes. 6 7 Nickel coin. Exclusive of £600 to the Fanning Islands and £9.000 to Canada. s Exclusive of currency as follows: Russian rouble's to Japan, 15,080; to the United Kingdom .1,600; 4,000 guilders to the Netherlands; 6,000 kroner to Sweden; 5,000francs to Switzerland. 502 FEDERAL RESERVE BULLETIN. Deposits, Loans and Discounts, and Total Investments of National Banks, 1914-1918, Changes in the volume of deposits in connection with the loan and investment operations of the national banks since the outbreak of the war are presented in the following table and accompanying diagram. In the first column are shown figures of gross deposits, including unpaid dividends, Government and so-called "individual" deposits, postal-savings deposits, and gross amount due to banks and bankers (i. e., without deduction of offsetting amounts due from banks and bankers, clearing house exchanges and checks on banks in the same place). In the third column are shown the figures of net deposits, based on the Comptroller's reserve computations. To the amounts shown in the Comptroller's abstracts have been added uniformly amounts of Government deposits, which were disregarded by the Comptroller's office in computing reserve under calls subsequent to the passage of the act of April 24, 1917, which exempted Government deposits from reserve requirements. In column 5 are shown combined figures of "gross individual and Government deposits, exclusive of amounts due to banks and bankers. Because of the much larger balances carried by the banks with approved correspondents prior to the enactment of the June 21, 1917, amendment the figures for the earlier period of JUNE 1, 1018. net deposits as shown in column 3 are considerably in excess of the combined gross individual and Government deposits as shown in column 5. The latter indicate a slow, and with few exceptions, steady progress, the June, 1915, showing an increase of 418 millions over those of June, 1914, as against a decrease of 212 millions in the net deposit figures. Figures of loans and discounts (column 7) on the whole show a fairly parallel movement with those of net deposits, though the depression of 1914-15 is reflected more clearly in the heavy decreases of net deposits than in the reduction of loans and discounts. In column 9 are shown the figures of total investments, exclusive of those of a fixed character. Prior to the entrance of the United States into the war the relative growth of this item differed but little from that shown for loans and investments, as may be seen from a comparison of the corresponding index figures to March 5, 1917. Since then, owing to the considerable investments by banks in Government securities, largely certificates of indebtedness, the rate of growth for aggregate investments has been considerably larger than for loans and discounts. In addition to the absolute figures, percentages are given for each set of items calculated on the amounts reported under the June 30, 1914, call, Movement of the several classes of deposits, also of loans and investments of national banks, June SO, 1914, to Mar. 4,1918. Gross deposits. 1. June 30,1914.. Sept. 12,1914.. Oct. 31,1914... Dec. 31,1914... Mar. 4,1915..., Mav 1,1915.... Jane 23,1915. Sept. 2,1915.. Nov. 10,1915. Doc. 31,1915.. Mar. 7,1916... May 1,1916... June 20,1916.. Sept. 12,1916. Nov. 17,1916.. Dec. 27,1916.. Mar. 5,1917... May 1,1917... June 20, 1917.. Sept. 11,1917. Nov. 20,1917., Dec. 31,1917.. Mar. 4,1918... Individual and Government deposits. Net, including Government deposits. 3. ~ \ 5. 6. Loans and discounts, including overdrafts .i 7. Loans and investments. 2 9. 10. Millions of Millions of Millions of Millions of Millions of dollars. Per cent, dollars. Per cent, dollars. Per cent dollars. Per cent, dollars. Per cent. 8,564 7,495 100.0 100.0 100.0 6,197 I 100.0 6,446 8,347 100.0 8,188 7,293 95. ft 99.6 97.3 6,238 ! 100.7 6,418 8,637 I 103.5 8,076 7,167 94.3 98.3 95.6 6,185 I 99.8 6,335 8,635 ' 103.5 8,235 6,668 96.2 98.7 89.0 6,366 | 102.7 6,363 8,437 101.1 8,593 7,066 100.3 100.9 94.2 6,350 102.5 6,507 8,471 101.5 8,891 7,198 103.8 103.2 96.0 6,665 107.5 6,650 8,600 103.0 8,821 7,283 103.0 103.4 97.2 6,613 106.7 6,865 8,639 103.5 9,229 7,523 107.8 104.9 100,4 6,763 109.1 6,762 8,823 105.7 10,157 8,257 118.6 112.3 110.2 7,448 120.2 7,211 9,471 113.5 10,402 8,366 121.5 114.2 111.6 7,664 123.7 7,384 9,651 | 115.6 10,792 8,783 126.0 116.3 117.2 7,718 121.5 7,495 9,869 i 118.2 11,135 8,782 130.0 118.1 117.2 8,140 131.3 7,613 10,046 | 120.4 10,877 8,702 127.0 119.2 116.1 8,164 131.7 7,685 10,101 ! 121.0 11,363 9,202 132.7 122.1 122.3 8,447 136.3 7,868 10,417 124.8 12,489 9,977 145.8 129.6 133.2 9,110 147.5 8,355 10,958 131.3 12,266 9,929 143.2 129.6 132.5 9,005 145.3 8,351 10,963 131.3 12,958 10,489 151.3 135.3 140.0 9,275 149.7 8,720 11,365 136.2 13,080 10,283 152.7 135.9 137.2 9,701 156.5 8,760 11,550 138.4 12,772 10' 306 149.1 137.0 137.5 9,746 157.3 8,828 11,946 143.1 13,230 10,293 140.6 137.4 10.185 164.3 9,005 12,292 154.5 147.3 14,794 11,701 148.2 156.1 ll'f691 . 188.7 9,551 14,029 172.7 168.1 14,442 11,074 145.9 147.7 11,252 i 181.6 9,406 13,180 157.9 168.6 14,435 11,115 142.0 148.7 11,137 ! 179.7 9,153 13,375 160.1 168.6 1 Beginning with Sept. 12, 1916, notes and bills rediscounted are not included among loans and discounts, as was the previous practice. 2 Exclusive of fixed investments, i. e., banking house, real estate, furniture and fixtures, also stock of Federal Reserve Banks. 503 FBDEBAL RESERVE BULLETIN. JUNE 1,1918. 1 // ?/7 'C —A J C% fit y e -A Nf O fA 7/ / ain fa a\zr«* ISO Hi - O 8^— ter ^^ kla md ft | F!S • 180 JL me.per 0m TM flh 1 A *<* £ SOP* a a xr\ a !7O Ml/ |Cff» Tib l f ' / / If K< /K TO; to. 1 4 "1 ITT 170 1 /1* j !6O / 1 \tSO / / "/ / i J \f j1/ 3 i 3 i-4 // L 1/40 ^ / i i / i . . 1 \/30 — \/EO I fiO /y / A fA *$% v— J f < A / VQO f/ //i ////h /// >•/ / I • / ISO \ _ i 140 / \ .. /.A / / J ;/ — * I / / AI j// / 1 \f "711 / {• / 160 f/ A / '• ( ! ii I' 130 \ «&> i 1 If ; y A ISO —i— | _ ._ no i_ i 100 1 \ if 20 1 90 ! | 1915 1914 62161—18 4 | /S/tf 131? \iBi& i 504 FEDERAL RESERVE BULLETIN. MOVEMENT OF PRICES, 1914-1918. Changes in the general price level are indicated by the course of index numbers, presented by governmental and other authoritative agencies. In the following tabulation and accompanying diagram the attempt was made to relate the monthly price changes to the price level existing on or about July 1, 1914, when market conditions may be said to have been relatively normal. This was done by shifting the bases used by the original compilers to a uniform base—the beginning of July, 1914. In making this shift the July index number shown by the original compilers was taken as equal to 100, and subsequent index numbers were restated in terms of the new base b}r dividing these numbers by the original index number for July, 1914. It is realized that the use of this short-cut method does not yield entirely accurate results,1 but it is believed that the errors in results obtained are not large enough to alter materially the general picture of price development shown in the table and diagram. It is generally conceded—and this is brought out in the tabulation—that the general rise of prices since July, 1914, has been greater in Great Britain than in this country, and it has been suggested that the shortage of tonnage and the consequent rise of freights is largely responsible for the greater rise of prices since July, 1914, observed in Great Britain than in the United States and Canada since the outbreak of the war.2 Besides the four columns showing the course of wholesale prices in the United States and in Great Britain, there is presented in column 5 the course of relative retail prices of important articles of food as computed by the United States Bureau of Labor Statistics and printed on pages 100-101 of the Februray, 1918, number of the Bureau's Monthly Review. As in the ease of the relative wholesale prices, the figures given in the original compilation have been changed b}^ shifting the base to the July 1 Sec Wesley O. Mitchell; index Numbers of Wholesale Prices in the United States and Foreign Countries, in Bulletin of the U. S. Bureau of Labor Statistics No. 173: July, 1915, p. 39 and foil. »This explanation apparently assumes a general price level equally high in the three countries for the initial period, an assumption which is not proved. If. for argument's sake, it is admitted that the general level of wholesale prices in Great Britain, as reflected in the Economist's and Statist's index numbers, was lower before the war than in this country and in Canada, and that as the result of the elimination of British trade with the greater part of Europe greater reliance had to be placed upon America as a source of supply, it follows that wholesale prices in Great Britain for the more recent period must show a relatively larger advance than in this country and in Canada, even if no account is taken of the large rise in freights. See A.. O. Pigou: The proportion of British price changes that is due to local causes, in Economic Journal, December, 1917, p. 481 and foil. JUNK 1,1918. quotation and recomputing the subsequent numbers on the new basis. A comparison of the course of wholesale and retail prices shows a considerably smaller rise of retail prices. But it is well to remember that in the tables wholesale prices cover a much wider field than retail prices, which cover merely a certain number of important food articles. It may also be noted that the increase in retail prices indicates the increase in the cost of living only on the assumption that there has been no change in the relative quantities of the several articles used throughout the entire war period, so that the relative weight given to the articles in the construction of the general index number continues to correspond more or less closely to the relative importance of these articles in the typical family budget. Movement of prices 1914 to 19IS. July 1,1914 E n d of July, 1014 August, 1914 September, 1914.. October, 1914 November, 1914 December, 1914 January, 1915 February, 1915 March, 1915 April, 1915 May, 1915 June, 1915 July, 1915 August, 1915 September, 1915 October, 1915 November, 1915 December, 1915 January, 1916 Februarv, 1916 March, 1916 April, 1916 May, 1916 June, 1916 July, 1916 August, 1916 September, 1916 October, 1916 | November, 1916 j December, 1916 1 January, 1917 j ! February, 1917 March, 1917 Apnl, 1917 May, 1917 June, 1917 July, 1917 August, 1917 September, 1917 End of October, 1917.... November, 1917 December, 1917 January, 1918 February, 1918 March, 1918 April, 1918 100.0 100.5 105.7 108.9 107.1 108.2 109.8 117.9 122.7 129.5 130.5 130. 5 127.3 128.4 129.1 130.7 i 131.6 ! 137.1 ! 142.3 j 150.5 i 157.1 | 157.2 I 163.1 ! 169.2 I 105.1 ! 163.1 i 171.3 173.2 ! 180.0 | 187.2 ! 192.2 | 194.1 i 198.7 I 207.7 210.8 | 212.1 221.2 i 219.3 ! 221.6 I 220.8 223.3 226.0 228.2 226. 6 227.9 229.8 233.1 100.0 101.5 108.2 109.9 110.6 109.4 112.8 118.7 124.2 127.7 130.4 132.0 131.0 131.0 131.7 132.7 135.5 139.3 145.8 152.2 156.4 160.6 165.4 166.7 161.3 160.7 165.6 165.5 174.3 185.7 190.9 196.2 201.9 208.1 213.1 215.5 222.2 217.8 216.4 217.2 222.4 225.2 227.9 229.3 230.7 231.5 100.0 100.6 112.7 106.7 102.3 104.4 105.6 111.6 111.1 112.8 113.1 112.5 113.9 113.4 113.1 115.2 119.8 122.9 126.1 128.6 131.4 , 135. 8 i 135.6 i 134.9 I 133.1 ! 132.2 j 136.0 ! 139.0 i 147.8 I 157.7 I 158.5 I 160.9 i 163.3 i 168.3 I 174.6 I 178.6 | 185.6 ! 189.4 J 192.1 ! 195.3 ! 197.5 j 205.6 ! 207.4 ' 208.8 208.7 213.3 218.3 103.0 104.0 100.0 99.0 98.0 99.0 101.0 100.0 100.0 101.0 I IOO.O s 102.0 I IOI.O ! 99.0 i 102.0 i 103.0 ! 106.1 ! 111.1 I 112.1 ! 115.2 117.2 119.2 119.2 120.2 124.2 128.3 134.3 144.4 147. 5 151.5 156.6 161.6 172.7 182.8 185.9 186. 9 185.9 183.8 181.8 183.8 182.8 104.9 104.9 102.9 102.9 102.9 101. C 99.0 96.1 97.1 98. G 98. G 98.0 98. C 99.0 101. C 102.0 102.9 104.9 103.9 104.9 106.9 106.9 109.8 108.8 110.8 115.7 118.6 123.5 123.5 125.4 130.4 130.4 142.2 148.0 149.0 143.1 146.1 150.0 153.9 152. G 153.9 156.9 157.8 151.0 -sijT7 £30 Eft £20 zL m fin fi V \^a 1. . — ZiO i£ ^ £ in 1 0 i f Jut WA fc \'l& i—tefjpi^ i—f —^ap» i^ »/• \wt ^7 2^ *m fea 2K ., TA a? Wt — 5P — ^ TO r»£~ lit mk m w: mo _ . - / r ,m t // /_ {£/—- - - m i 80 , "7 /, /• f ' / — // t - - 1 1 PO /I \m ~i 140 / — - 120 SC i. — sad ij — — / s ?** r*' \ ^ •• issss * _^ • J • — —~j? — id f£~— ^ V /i /* / —A. -— • f — / j——< IPO 1 ^ f — i\f' • A if ^1 f • f— / — — -^ —J if— ISO no f /so • • / /H i i Si i IS i I s m — —3 JL- .. 1 -— /a? s —f— 1 11 H ISO —i si" * ISO 1 1 1111 1 8 1 8 1 11917. 13IG — , t 1 1 1 |; • _ ..19/JL. w i § 506 FEDERAL RESERVE BULLETIN. Amounts of Money Held by the Treasury and the Federal Reserve Banks and Amounts Held by Other Banks and the General Public. As showing the effect of the law of June 20, 1917, upon the monetary situation, especially with regard to the concentration of gold at the Federal Reserve Banks, the following tables have been constructed by combining the figures of the Treasury's monthly circulation statement, beginning with July 1, 1917, with corresponding figures of the various classes of money held by the Federal Reserve Banks and agents. It will be noted that between July 1, 1917, and May 1, 1918, the Federal Reserve system showed a gain of $424,728,417 in gold coin and of $104,742,455 in gold certificates. As stated in the footnote to the table, the JUNB 1, 1918. totals of gold coin include the amounts standing to the credit of the Federal Reserve Banks and agents in the gold settlement fund, held in the Treasury, the total gains in gold coin fairly corresponding to the growth of the gold settlement fund during the same period. Standard silver dollars and Treasury notes of 1890 are not shown separately in the Federal Reserve Banks7 reports. Such amounts as they hold are shown combined with "Subsidiary silver77 and "United States notes/ 7 respectively. Some changes from the figures printed in the Treasure's circulation statement are due to the revision of the items by the banks themselves following the dispatch of telegraphic data which are used in the compilation of the Treasury statement. Estimated general stock of money, money held by the Treasury and by the Federal Reserve system,, and all other money in the United States. July 1,1917. Aug. 1, 1917. Held in the General stock United States of money in Treasury the United as assets of States. the Governments Gold coin « Gold certificates Standard silver dollars Silver certificates Subsidiary silver Treasury notes of 1890 United States notes Federal Reserve notes Federal Reserve bank notes National bank notes Held outside Held in the outside Held by or the United General stock United Held by or Held United the for Federal States States of money in Treasury as for Federal States TreasReserve Treasury and the United Reserve the Banks and the Federal assets of the Banks and ury andReStates. Federal agents. Reserve Governagents. serve System. System. ments 83,090,607,703 $202,325,168 8700,280,235 $593,961,921 $3,086,218,498 501,12S,580 1.092,911,799 179,078 71,650,883 "568,"276,"66i" 8,741,521 468,765,615 194,415,104 199,470,157 1,970,414 23,313,705 312,938,149 346,681,616 36,671,860 508,077,355 584,169,800 8.991.020 3,708,640 12,699,440 1,574,715 697,057,676 715;783,922 "" 588," 270,'061" "i6,"962*556" 198,832,889 4,417,785 346,681,016 547,407,960 12,790,245 715; 420,010 10,429,162 2.658,745 90,585 16,787,619 r $188,163,487 $769,688,709 518,050,060 "2L0i2,"643" 187,488 14,978,021 4,494,741 10,546,308 3.002,855 69,710 20,978,581 37,332,565 46,334,460 7,395,100 2,024,325 $592,897,113 1,017,427,129 71,622.687 458,510; 027 194;975,416 1,959,195 298; 802,143 534,832,485 5,234,630 692,781,016 5,480,009,884 253,671,814 1,280,880,714 3,945,457; 556 5,513,292,894 248,268,325 1,395,982,728 3,869,041,841 Total Amount per capita outside the United States Treasury and the Federal Reserve System 37.88 37.10 Sept. 1, 1917. Oct. 1, 1917. Held in the Held outside ! Heldin the Held outside Held by or the United General stockj "qS}*®? Held by or the United General stock United States for Federal States for Federal States of money in Treasury Reserve Treasury and of money in [ rp^sury Reserve Treasury and the United as assets of Banks and the Federal Banks and the Federal States. b the Governagents. Reserve * !the GovernReserve agents. ments System. System. 1 mentS Gold coin a Gold certificates Standard silver dollars Silver certificates Subsidiary silver Treasury notes of 1890 United States notes Federal Reserve notes Federal Reserve bank notes National bank notes $3,062,614,285 3183,441,694 $716,260,274 553,680,940 153,400 14,090,470 $624,987,248 $3,035,390,720 $196,370,317 $703,960,384 984,244,129 621,226,710 72,355.084 588,269,513 15,381,213 75,360 458,210', 298 13,021,515 197,076,174 204,044,123 1,982,226 1,946,466 301,673,851 346,681,016 5,797,485 35,568,738 758,869,242 595,657,549 5; 148,900 52,626,970 12,406,860 8,504,220 73,610 2,000,000 716,603,382 17,715,276 695,364,807 942,755 $589,734,050 924,099,259 73,864,790 463,990,324 202,061,897 1,936,311 305,314,793 701,093,372 10,333,250 697,945,351 Total 5,553,681,154 239,654,267 1,373,987,061 3,940,019,826 5,642,264,856 242,469,027 1,429,422,432 Amount per capita outside the United States Treasury and the Federal Reserve System 37.73 3,970,373,397 568,270,061 21,514,343 200,837,387 3,761,213 346,681,016 644,911,800 12,608,890 717,737,715 6,611,049 2,801,345 127,670 21,366,953 38,366,116 48,452,906 3,977,000 1,005,955 37.97 a Includes balances in gold settlement fund standing to the credit of the Federal Reserve Banks and agents. & Includes reserve funds against issues of United States notes and Treasury notes of 1890, and redemption funds held against issues of national bank notes, Federal Reserve notes, and Federal Reserve bank notes. JUNE 1,1918. 507 FEDERAL RESERVE BULLETIN. Estimated general stock of money, money held by the Treasury and by the Federal Reserve system, and all other money in the United States—Continued. Nov. 1, 1917. Held outside Heldin the Held by or the United General stock General stock United States States . for Federal of money in Treasury of money in Reserve the United as assets of Banks and Treasury and the United the Federal States. States. Reserve the Governagents. System. ment. & Gold coin a Gold certificates Standard silver dollars Silver certificates Subsidiary silver Treasury notes of 1890 . . . . United States notes Federal Reserve notes Federal Reserve bank notes National bank notes Dec. 1, 1917. Held in the field outside United Held by or the United States for Federal States Treasury Reserve Treasury and as assets of Banks and the Federal the Governagents. Reserve ment. & System. S3,041,549,041 3197,533,851 5780,497.258 §581,756,083 $3,040,472,040 $192,279,247 8881,402,795 §572,978,029 641,827,450 751,984,519 647,615,670 834,146,179 188,839 76,626,468 568,269,513 13,958,993 75,763,241 568,269,513 15,074,742 177,017 16,602,714 457,864,691 14,036,210 462,413,261 212,502,353 209,864,245 1,980,121 207,884,124 214,465,300 1,962,947 1,912,059 1 920 791 37,69f), 989 302,156,136 34.6,681,016 6,706,982 37,310,425 302,063.609 346,681,016 6,828,891 65,301,509 1,043,483,096 928,243,720 7,355,240 62,591,775 858,296; 705 1,126,344,610 17,560,005 86,480 10,024,485 2,732,400 12,970,425 10,178,705 2,732.400 12,843,365 59,320 701,655,179 716,276,375 14,670,870 1,022,050 1,163; 936 700,441,569 717,052,065 14,374,836 Total 5,823,854,335 242,265,377 1,516,124,691 4,035,464,267 6,026,127,909 248,167,148 1,646,773,746 4,131,187,015 Amount per capita outside the United States Treasury and the Federal Reserve System 38.54 39-40 Jan. I, 1918. Feb. 1, 1918. Held in the Held outside Held outside Held in the Held by or the United Held by or the United General stock United General stock United States for Federal States States States for Federal of money in Treasury of money in Treasury Reserve Reserve the United as assets of Banks and Treasury and the United as assets of Banks and Treasury and the Federal the .Federal States. States. the Governagents. Reserve Reserve the Govern- agents. ment, b System. System. ment, b Gold coin a Gold certificates Standard silver dollars Silver certificates Subsiding silver Treasury notes of 1890 United States notes Federal Reserve notes Federal Reserve bank notes National bank notes §3,040,439,343 §212,230,998 5915,104,237 3569,946,034 $3,038,545,652 $232,211,663 8996,031,422 3520,744,467 626,490,935 643,012,390 700,145,684 657,067,165 476,432 77,637,669 " "568," 269*513* 28,366*981" ""568,"269,*oi3" "i6,"366*52i* 231,684 76,546,043 19,164,158 14,272,909 457,918,667 441,821,401 216,434,729 221,081,713 6,465,587 214,616,126 218,226,579 1,791,850 1,90S, 063 1,900,498 38,708,255 294,123,273 346,681,016 8,781,228 34,715.268 303,184,520 346,681,016 i3,849,488 1.350,764,025 23.577,065 99,633; 475 1,227,553,485 el,366,858,445 27,961,820 127,932,700 cl, 210,963,925 2,732,900 9,486,875 113,7J0 12,605,165 ' 69,240 9,803,525 12,333,485 2,732,400 22,565,806 671.654,533 719,212,630 14,292,456 13,867,928 691,052,246 717,833,215 23,612,876 Total 6,256,198,271 277,043,358 1,723,570,291 4,255,584,622 0,271,603,039 332,576,125 1,834,102,608 4,104,924,306 Amount per capita outside the United States^Trcasuryandthe Federal Reserve System 39.04 40.53 i Mar. 1,1918. Held in the Held outside Held by or the United General stock General stock United States for Federal States of money in Treasury of money in Reserve the United as assets of Banks and Treasury and the United the Federal States. States. the GovernReserve agents. ments System. Gold coin a Gold certificates Standard silver dollars Silver certificates Subsidiary silver Treasury notes of 1890 United States notes Federal Reserve notes Federal Reserve bank notes National bank notes Apr. 1, 1918. Held outside Held in the Held by or the united United for Federal States States Reserve Treasury and Treasury as assets of Banks and the, Federal agents. I/if serve the GovernSystem. ments $3,041,643,270 $230,905,330 $1,034,706,053 $520,929,003 53,042,708,319 $234,610,242 51,076,734,540 §509,375,655 603,582 982 619,001,585 636,101,299 618,404,900 76,010,049 568,269,513 36,482,080 585,305 750,271 76,360,709 568,269,513 30,368,823 433,392,773 20,951,501 438,476,445 19,408,991 215,303,987 214,412,531 225,971,720 10,607,733 222,805,182 8.392,651 1,874,689 1,876,790 296,122,152 39,073,486 38,280,520 294,482,390 346,681,016 11,485,378 346,681,016 13,918,100 90,963,412 1,320,431,563 1,563,969,405 31,449,191 100,664,403 1,431,855,811 1,442,088,335 30,693,360 8,840,565 9,149,335 2,753,920 2,732,900 11,662,045 67,570 12,020,735 138,500 690,091,406 15,733,621 19,904,932 681,624,661 720,919,507 15,094,480 718,040,005 16,510,412 Total 6,351,548,050 330,927,170 1,827,126,208 4,193,494,672 0,480,181,525 339,856,674 1,873,524,132 4,266,800,719 Amount per capita outside the United States Treasury and the 40.47 "Federal Reserve System 39 83 a Includes balances in gold settlement fund standing to the credit of the Federal Reserve Banks and agents. o Includes reserve funds against issues of United States notes and Treasury notes of 1890, and redemption funds held against issues of national bank notes, Federal Reserve notes, and Federal Reserve bank notes. c Amended figure. 508 FEDERAL RESERVE BULLETIN. JUNK 1, 1018. Estimated general stock of mov,eyy money held by the Treasury and by^ the Federal Reserve system, and all other money in the United States—Continued. ! M.ny 1, 1918. General stock of money in the United States. GoldTcoin a G old certificates Standard silver dollars Silver certificates Subsidiary silver Treasury notes ofl890 United States notes Federal Reserve notes Federal Reserve bank notes National bank notes j S3,042,711,222 • - - - -i 538,532,139 i i 228,034,831 1 I 340,681,016 j 1,650,964,290 11,742,955 722,288,177 Total Amount per capita outside the United States Treasury and the Federal Reserve System 6,540,954,630 J Held in the United States Treasury as assets of the Governments 5239, 947,082 Held outside the United States Treasury and the Federal Reserve System. Held by or for Federal Reserve Banks and agents. ,125,008,652 605,871,035 334,715 480,570 101,570 549,875 43,084,494. 99,128.870 2,917; 900 15,747,399 573,584,614 76,846,075 425,635,508 215;262,506 1,868,061 294,661,807 1,525,354,850 8,663,485 689,990,903 321,192,308 1,909,594,674 4,310,167,648 16, 946,171 802,092 16,434,232 12,772,325 40.82 a Includes balances in gold settlement fund standing to the credit of the Federal Reserve Banks and agents. & Includes reserve funds against issues of united States notes and Treasury notes of 1890, and redemption funds held against issues of national bank notes, Federal Reserve notes, and Federal Reserve bank notes. State Banks and Trust Companies Admitted. | State banks admitted—Continued. [ 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 May: State banks admitted. Capital. Tillamook County Bank, Tillamook, Ores- -. -* Fremont County Bank, Sugar City, Idaho...; ..., Molson State Bank, "Molson, Wash. Farmers State Guaranty Bank, Valliant, Okla \ First State Bank, Grand Prairie, First State Bank of Reagan, Reagan, Tex The Guaranty State Bank, Mount Pleasant, Tex The First State Bank, Paducah, Tex Farmers State Bank, Itforo, Oreg-State Bank of Geneva, Geneva, III Stock Growers State Bank, Timber Lake, S. Dak The Minster State Bank, Minster, Ohio Bank of Commerce & Trust Co., Memphis, Term 1. Bay City Bank, Bay City, Mich... The Central State Bank, White Sulphur Springs, Mont Coalgatc State Bank, Coalgatc, Okla Alto State Bank, Alto, Tex First Guaranty State Bank, Jacksonville, Tex Alpine State Bank, Alpine, T e x . . . Lake Providence Bank, Lake Providence, La Chattanooga Savings Bank, Chattanooga, Term Surplus. ! Total $40,000 80,000 §523,473 25,000 25,000 1,000 4,000 172,325 228,077 40,000 11,000 528,992 30,000 14,000 250,239 25,000 7,000 109,183 00,000 15,000 577,619 50,000 25,000 50,000 1,250 452,900 156,884 50,000 579,230 25,000 14,000 25,000 15,000 210,619 1,500,000 25,000 80,000 I 1,000,000 25,000 15,000 350,645 20,009,436 4,028,232 323,444 50,000 ! 25,000 I 12,500 7,500 553,985 219,012 50,000 ' 30,000 8,000 30,000 526,128 281,822 25,000 5,000 328,946 750,000 225,000 5,578,950 Capital. North-Western Trust & Savings Bank, Chicago, 111 8500,000 First State Bank of Post City, Post City, Tex 25,000 The Commercial Savings Bank ! & Trust Co., Toledo, Ohio 200,000 The Trust Company of New J ersey, Hobo ken, N. J 600,000 The St. Joseph Loan & Trust Co., 200,000 South Bend, Tnd The Southern Bank & Trust Co., 100,000 Miami, Fla Bank of Sturgeon Bav, Sturgeon 50,000 Bay, Wis... ." ' Dcnison Bank <fe Trust Co., Peni100,000 son, Tex Drovers State Bank, South St. 100,000 Paul, Minn Blackfoot City Bank, Blackfoot, 50,000 Idaho The Alpena County Savings 100,000 Bank, Alpena, Mich* The .Exchange Bank of Talla50,000 hassee, Fla 500,000 Valley Bank, Phoenix, Ariz 25,000 Bank of Commerce, Sinton, Tex.. Oenesoo County Savings Bank, 500,000 Flint, Mich The First State Bank, Ilillsboro, 150,000 Tex The Hillsboro State Bank, Plant 50,000 City, Fla Security Trust Co., Lexington, 500,000 Ivy Bank of Stanwood, Stan wood, 25,000 Wash The Farmers and Merchants State 25,000 Bank, Hecla, S. Dak The Citizens State Bank, Frost, Tex 25,000 The "Scandinavian "American" 1,000,000 Bank, Seattle, Wash Surplus. Total resources. I 8250,000 I 87,403,456 63,27*3 50,000 4,676,812 550,000 24,540,757 100,000 3,036,868 10,000 1,293,906 23,000 1,732,622 845,895 50,000 898,862 10,000 663,707 125,000 3,268,260 2,500 260,772 4,265,975 7,000 300,000 15,000 50,000 150,000 10,000 5,000 25,000 500,000 161,663 8,541,690 766,303 552,653 1,927,766 561,026 266,824 240,557 16,123,767 Changes of names.—State institutions, members of the Federal Reserve System, have changed their names as follows: German Savings Institution, St. Louis, Mo., to Liberty Bank. German-American Bank, St. Louis, Mo., to United States Bank. German Insurance Bank, Louisville, Ky., to Liberty Insurance Bank. JUNE 1,1918. 509 FEDEKAL BESERVE BULLETIN. Four hundred and eighty-six State institutions are now members of the system, having a total capital of $272,422,800, total surplus of $348,100,495, and total resources of $5,988,031,582. The Third Liberty Loan. Secretary McAdoo on May 18 issued the following statement: In response to the Treasury's invitation for subscriptions to $3,000,000,000 United States of America 4-| per cent gold bonds of 1928 of the third Liberty loan there have been received subscriptions to the amount of $4,170,019,650 from about 17,000,000 subscribers. This is the most successful loan the United States has offered both in number of subscribers and in the amount realized. Every subscription was made with full knowledge that allotment in full was to be expected, unlike the first loan, when allotments were limited to $2,000,000,000, and the second loan, when allotments were limited to one-half the oversubscription. PerQuota centin mil- Subscriptions. age of lions. quota. District. Minneapolis Kansas City St. Louis Atlanta Philadelphia Dallas Chicago Richmond Boston San Francisco Cleveland New York United States Treasury Total ' 165 130 130 90 250 80 425 130 250 210 300 900 §180,826,350 202,301,050 199,085,900 136,653,350 361,963,500 115,395,200 608,878,600 185,966,950 354,537,250 286,577,450 404,988,200 1,114,930,700 17,915,150 3,000 4,170,019,650 172 156 153 151 144 144 143 143 142 136 135 124 The foregoing figures are subject to slight modifications upon receipt of final audited figures from the several districts. Any such adjustment will not materially affect the total. 1 congratulate the country on this wonderful result which is irrefutable evidence of the strength, patriotism, and determination of the American people. New National Bank Charters. The Comptroller of the Currency reports the following increases and reductions in the numThis great result was achieved, notwith- ber of national banks and the capital of nastanding the fact that the country has been tional banks during the period from April 27, called upon to pay since the second Liberty 1918, to May 31, 1918, inclusive: loan and to and including the month of June Banks. income and excess-profits taxes to the amount New charters issued to 15 of approximately $3,000,000,000, which will With capital of §640,000 make a total amount turned into the Treasury Increase of capital approved for 15 of the United States from such taxes and the With new capital of 1,020,000 third Liberty loan of about $7,000,000,000. In the first campaign, which started just Aggregate number of new charters and banks increasing capital 30 one year ago, bonds were sold to approximately 1,660,000 4,500,000 people, and the country was amazed With aggregate of new capital authorized at this wonderful evidence of public interest. Number of banks liquidating (other than those consolidating with other national In October about 9,500,000 people bought banks) 3 Liberty bonds, and now, with an even more 680,000 effective organization and an intense spirit of Capital of same banks patriotism throughout the country, approxi- Number of banks reducing capital 0 mately 17,000,000 people purchased bonds of Reduction of capital 0 the tnird Liberty loan. This equals approxi- Total number of banks going into liquidamately one-sixth of our total population. tion or reducing capital (other than those LOAN AND TAXES TOTAL $7,000,000,000. REPORT BY DISTRICTS. consolidating with other national banks)« 3 Aggregate capital reduction 680,000 The report by districts, arranged in order The foregoing statement shows the aggregate of of their percentage of oversubscriptions, is as increased capital for the period of the banks embraced in statementaa was 1, 660,000 follows: 510 .TUNE 3, 1918. FEDEBAL RESERVE BULLETIN. Against this there was a reduction of capital owing to liquidation (other than for consolidation with other national banks) and reductions of capital of State Banks and Trust Companies Entering the Federal Reserve System.1 By BRECKINBIDGE JONES. 980,000 Net increase. $680,000 When Congress, at the recommendation of the Federal Reserve Board, on June 21, 1917, passed amendments to the Federal Reserve act, it was done with the hope that thereby all reasonable objections the State banks and trust companies had to entering the system would be removed. When I had the honor of addressing your convention in April, 1915, I attempted to set out clearly what those objections were. At Atlantic City, last September, in a paper read before the Trust Company Section of the American Bankers' Association, an effort was made to show how those amendments had met those objections, with the single exception of not remedying the defects of section 22 of the Federal Reserve act. I say this single exception, because, as I see it, the two or three other objections that are urged are not to radical defects in the Federal Reserve act itself, but rather to (1) a misapprehension of how a State institution would be affected, if it were to come into the system, and (2) objections that can. and will be remedied by the Federal Reserve Board. Commercial Failures Reported. That the economic readjustments occasioned by war conditions have caused no general or conspicuous disturbance in business is demonstrated by the continued reduction in the country's commercial mortality, only 604 failures, exclusive of banking and other fiduciary suspensions, being reported to R. G. Dun & Co. in three weeks of May, as against 871 in the corresponding period of last year. The returns for April, the latest month for which complete statistics are available, disclose 905 defaults for §14,271,849, in comparison with 1,069 insolvencies in April, 1917, for $12,587,213, While the April liabilities are 13.4 per cent in excess of the April, 1917, total, they are the lightest for the month, with the exception noted, in over a decade, and the number is not only less than in any month since September, 1911, but is also the smallest for April back to 1907. Separated according to Federal Reserve districts, the April statement shows fewer failures than last year in all of the 12 districts, aside from the first, ninth, and tenth, whereas the indebtedness is larger in in all instances, except in the first, third, fifth, and sixth districts. Failures during April. Number. Liabilities. District. 1918 No. 1—Boston No. 2—New Y o r k . . . No. 3-Philadelphia, No. 4r-ClevelandL... No. 5—Richmond... No. 6—Atlanta. No. 7—Chicago No. 8—St. Louis. No. 9.—Minneapolis No. 10—Kansas C i t y . . . No. 11—Dallas No. 12—San Francisco. Total. 129 1917 1918 122 §1,405.975 201 4,610,726 47 535,628 90 1,460,787 57 74 271,667 159 1,597,477 54 447,362 24 268,785 41 392,835 44 251,858 156 2,659,920 905 i 1,069 14,271, 1917 81,643,235 4,005,078 1,249,883 1,180,192 553,992 914,200 856,910 208,438 207,200 260,208 228,577 1,279,300 12,587,213 MINOR OBJECTIONS. After quite extensive correspondence with State institutions that have pot entered the system, I find that the objections are reduced to a few oft-repeated points. OBJECTION OF LOSS OF INTEREST ON RESERVE ACCOUNTS. First, and oftener than all the others, is the objection that a State institution would lose interest on balances that it might transfer from, its present correspondents to the Federal Reserve Bank. As an abstract proposition, that objection is well taken, but the results of such loss of interest, I think, are fully offset and are not so serious as is so often asserted. Many State bankers think that Federal Reserve Banks should allow interest on reserve accounts. That conclusion is inconsistent with the very nature of the Federal Reserve Banks. Those banks are reserve banks, established not primarily for money-making purposes, but for the protection 1 Part of an address delivered before the convention of the State Bankers of Kansas, at Topeka, Kans., May 7, 1918. of the country at large. If they paid interest on their reserves, then they woula have to make those reserves profitable by lending them out and not having them as a means of accommodating member banks, and, moreover, bringing these large Government instrumentalities in direct and hurtful competition with the member banks, for whose aid and not for whose injury, in part, the Federal Reserve Banks were established. Moreover, while a member bank receives no interest on its reserves with the Federal Reserve Bank, yet through the recognized right of prompt rediscount which the member bank has with the Federal Reserve Bank, the member bank is enabled to greatly reduce the reserves which it had been enforced to carry before it entered the system. A member bank can get along with much less actual cash in its own office, and with less balances with its correspondents in reserve, and central reserve cities. I know this not only theoretically, but as a matter of practical experience in the institution with which I am connected, as well as from numerous statements to this effect from other State institutions which have become member banks. Yesterday I received from a country banker, and will read to you, a letter that expresses well the present trend of thought: THE MONTICELLO BANKING CO., Monticello, Ky.. May 4, 1918. Mr. BBECKINRIDGE JONES, President Mississippi Valley Trust Co., St. Louis, Mo. MY DEAR SIR: On the 22d ult. I wrote you in regard to the controlling factors which have kept us out of the Federal Reserve system. Since that time I have figured a little more closely and I find that the argument I made in my letter to you was considerably one-sided in that it did not contemplate the full use of the system. I find on going further into the matter that instead of operating under the system at a loss of enough to declare a 3J or 4 per cent dividend as I stated in my letter, we can, by using a part of the reserve we now carry, make enough to offset the loss mentioned and in addition make for our stockholders 7 or 8 per cent. It has been our policy to carry a very heavy reserve, averaging a little over 40 per cent. I find that, without abandoning this policy entirely, we can reduce this reserve one-half and invest it in good commercial paper or bank acceptances, using this class of paper as a secondary reserve, it being readily discountable at the Federal Reserve Bank on short notice and agreeable terms, makes it a very nice secondary reserve in case of need. The extra earnings from this source would make us the per cent of profit mentioned above. Of course, our small capital and comparatively large deposits makes this possible for us when it would not be so to such an extent with many other banks. I have argued the matter before a recent meeting of our board of directors and I find after presenting it in this way 62161—18 5 511 FEDERAL RESERVE BULLETIN. JUNE 1,1918. they are very favorably impressed with it and I believe they will soon join the Federal Reserve system. There was some prejudice but no argument against it and it was admitted by them that it would pay. Yours, very truly, L. D. JONES, Assistant Cashier. ADVANTAGE OF CENTRALIZING RESERVES FEDERAL RESERVE BANK. IN It is frequently urged that the reserves that would be carried in the Federal Reserve Bank would have to be withdrawn from present balances with some member bank, so the question is asked what is to be gained by making the transfer ? The answer is, first, the balance now kept with the member bank correspondent is in the reserves of that correspondent as a unit, where it can be applied only for the uses of that unit, and may remain dormant if that unit has no direct need for it, whereas if the balance were in the Federal Reserve Bank it would be in the general reservoir that is ready to go to the aid of any district in need and t>e readily changed from time to time, as the nieds of the several districts change—and, second, this balance with the city correspondent may be performing no public service, whereas if the balance were in the Federal Reserve Bank it might be, with only 40 per cent gold reserve, the basis for issue by the Federal Reserve Bank of two and onehalf times the amount in Federal Reserve notes. If you will consider the large aggregate of the balances of the eligible State banks and trust companies, and the great demand that may be put upon the Federal Reserve Banks as the result of war conditions, the importance of cooperation of the eligible State banks and trust companies is evident. ELIGIBLE BANKS IN KANSAS AND IN UNITED STATES. In Kansas there are 313 eligible State banks and trust companies with a capital of $13,381,000, surplus $5,900,000, and total resources of $156,182,000, while in the United States at large there are approximately 8,000 eligible State banks and trust companies, not including those that have already joined. The aggregate capital of these nonmember banks and trust companies is approximately $695,000,000, surplus $425,000,000, and total resources $ 7 r 596,000,000. 512 FEDERAL RESERVE BULLETIN. PRESENT NUMBER OF STATE MEMBER BANKS. On April 30 there were 444 State institutions that were members, with an approximate aggregate capital of $266,000,000, surplus $345,000,000, and total resources of $5,883,000,000. Moreover, there are various means by which a member bank can adequately compensate itself for this loss of interest on the reserves kept with the Federal Reserve Bank. I have yet to hear any complaint on this score from a single member bank that has had experience in the system, LOSS OF INTEREST ON RESERVES UNIMPORTANT WHEN COMPARED TO SACRIFICES MADE BY OTHERS. And again, even if there were some small loss to the State institutions on this account, can that small loss be urged as of deciding importance in these war times? We are giving the lives of our boys, and let every man here who has a heart or "a soul relaize what that means, without further elaboration. The railroads have not been left to discuss whether some little thing would take something from their profits, but the Government has taken over all the operations of railroads as a war measure. Within the week the Steel Corporation offered the use of all its manufacturing resources, giving priority in its manufacture to the needs of the Government, to the exclusion of its profits on private contracts, and its president, the president of the Associated Steel Industries of the United States, requested all that association's 1,500 members, by formal resolution, to do likewise; yet, within a few days thereafter, the Government commandeered for Government uses, to such an extent as needed, the entire output of all the iron and steel industries in the United States. The people of the United States, in every State and in every town, have joined in subscribing for billions and billions of Government bonds, at 3 | , 4, and 4§ per cent interest, when all of these subscribers could readily have invested their money at a much higher rate. Appeals for the Eed Cross, Young Men's Christian Association, and Knights of Columbus have met with the response of tens of millions of dollars from patriotic, openhearted American citizens. Shall it be left only to the State banks and trust companies throughout this fair land, in its year of distress and trial, to put forward the slacker excuse— they will not join in meeting the direct and urgent appeal of the President of the United JUNEI, 1918. States that they join the system—I say, to put forward the slacker excuse that they will not cooperate in this respect because of some fancied, or even if it were an actual, loss of 2 or 2§ or possibly 3 per cent or not to exceed, in any case, 15 per cent of their deposits ? OBJECTION OF LOSS OF COLLECTION INCOME. The same line of thought might apply to the objection, frequently urged, that if a State bank or trust company should join the system it would lose some of its collection income. This subject has had so much discussion from time to time that I will not make any elaboration of it here, merely suggesting that most State banks and trust companies have as competitors national banks in their communities. These national banks are living and prospering under the Federal Reserve system and not making complaint on this score. The feared loss of income from this source, if a State bank should come into the system, is more imaginary than real, and I think we might as well reconcile ourselves to the system because it is within the power of the Federal Reserve Board to make regulations that would take care of this matter so as to put us on the same basis as the national banks, and it will be the duty of the Federal Reserve Board to make such regulations, if the State banks and trust companies are arbitrary on this question and remain out of the system on that account. OBJECTION THAT SO FEW INSTITUTIONS MEMBERS. ARE By correspondence with some of the eligible banks, it develops that a number of them remain out just because they are out and have not taken the pains to look closely into the matter and say, "Well, so long as out of the thousands of eligible State banks and trust companies less than 500 have come in, those that stay out must have some good reason for it, and we will just wait and see what happens." That is the argument of the sluggard and of the man who has not the spirit nor the force to be an independent factor in dealing with the great national questions immediately incident to his own business—a business in which the people in his community recognize him as a leader. Instead of being impressed with the number of State banks and trust companies that have not come in, might it not be more reasonable for him to look to the character of those that have come in and their experience since they have come in ? JUNE 1,1018. FEDEBAL RESERVE BULLETIN. OBJECTION OF NECESSITY OF ADDITIONAL STATEMENTS. A number of State institutions still say that they do not wish to be bothered with the enormous and intricate statements that have to be made out by national banks, forgetting that under the amendments to the Federal Reserve Act, passed last June, they reserve all of their powers under their State charters, and remain under the bank commissioner of their own State, and are in no sense under the Comptroller of the Currency at Washington. A number say they can not serve two masters and do not wish to be subject to dual control, also forgetting the point just mentioned, and not realizing the fact that no member bank has experienced any difficulty in this regard. THE SOLUTION OF THE DIFFICULTY. As to these various objections, let me suggest that the State banker study the question, confer with the Federal Reserve agent of his district, and correspond with the State institutions that have joined the system, and he will find that he will get rid of a great many of his cobwebs. I felt an obligation to accept the invitation of your committee and come and talk to you on this subject, because when I spoke to you three years ago, I centered my thought on the objections to the Federal Reserve system. When I found that Congress was about to pass the amendments that would remove all of my objections, save the one connected with section 22, the institution of which I am president joined the system I am now speaking after a year's actual experience in the system. I say to you frankly that if we were not now in, we could not adequately meet the demands that now come on us, either in the way of facilitating the governmental matters that come up, or in accommodating our customers. We would not for a moment consider going out. 513 member bank across the street ? I asked myself these questions and was bound to answer No. Then I asked myself are not my customers as wise and as careful as I am ? Yes. Then how can I expect them to continue to do what I would not be willing to do myself? We joined the system. PRINCIPAL OBJECTION, SECTION 22. Now, referring back to section 22 of the Federal Reserve Act, I think there is in the law as it now stands a serious objection; but this objection, I trust, will soon be remedied, and I ask your careful consideration of what is said on that subject in the hope that this convention will pass a resolution and communicate with your Senators, by wire, asking them to cooperate in securing the passage of that part of House bill 11283 that proposes to amend section 22 of the Federal Reserve Act. I would like to discuss that question in rather close detail, because of its importance. The Federal Reserve Act was passed in December, 1913. In discussing it in May, 1914, before the Alabama Bankers' Convention, I made certain comments as to section 22, ajid these comments were repeated as still holding good when I addressed you a year later. They were brought to the attention of the Federal Reserve Board. I refer to them here to preserve the continuity of thought, and to let them be the basis for a further discussion and an appeal to you to help make them effective. I believe that if Congress will reasonably amend this section 22 they will have removed the last fundamental objection to the form of the Federal Reserve Act that can be urged at this time by the State banks and trust companies. SECTION 22 AS ORIGINALLY ENACTED. OF THE MEMBER BANK TO MEET UNUSUAL REQUIREMENTS. Now, what are the facts about section 22 ? As originally enacted, that paragraph that is objectionable was as follows: One special point I should like to make. Would you, as a nonmember bank, consider keeping all of your reserves with nonmember banks and expect to depend entirely on such nonmember correspondents in time of stress? Would you feel that you had the right to hold a large part of the deposits of the people of your community and not be as well protected in taking care of them as is your competitor Other than the usual salary or directors' fee paid to any officer, director, or employee of a member bank, and other than a reasonable fee paid by such bank to such officer, director, or employee for services rendered to such bank, no officer, director, employee, or attorney of a member bank shall be a beneficiary of, or receive directly or indirectly any fee, commission, gift, or other consideration for or in connection with any transaction or business of the bank. * * * Any person violating any provision of this section shall be punished by fine of not exceeding $5,000 or by imprisonment of not exceeding one year, or both. ABILITY 514 FEDP^RAL RESERVE BULLETIN. JUNE 1, 1918. In a published memorandum of the Federal j directors of a bank and talk to him about a Reserve Board, under date of April 26, 1915, | loan on a farm. The director of the bank they said, "No ruling or interpretation by the j would arrange to lend the farmer at from 8 to Federal Reserve Board would afford any pro- 10 per cent interest and then take the loan tection to a person subsequently indicted by a over to the bank and get the money at, say, Federal grand jury for any such violation" of 6 per cent, the bank furnishing all the money this section. Therefore, only a court could that went to the farmer, the director making make a final determination on the meaning of j the difference in interest. that section. As yet, no court has construed it. (2) In the cities especially it had been Therefore, as any violation of the provisions of claimed that a director of a bank would use section 22 by officers, directors, employees, or his position as a director to make the bank attorneys of a member bank constitutes a take participations in the purchase of large crime, punishable by fine and imprisonment, it underwritings of bonds, or buy other securities becomes important to see just what that section or property in the sale of which the director means. was interested and had a personal profit, or (3) A director would use his position as director of the bank to buy, at a lower price PRINCIPLES OF LAW APPLYING TO BANK than others could buy from the bank, securiDIRECTOR. ties or other property owned by the bank; and (4) It* was urged when the Comptroller and It is important to inquire what are the fundamental principles that apply to a director of a bank examiner or stockholders found that a bank—this independent of any statute pro- director was thus making a misuse of his posivision. We can then see what the evils were tion as a director, there was no direct statute that were to be remedied; then, as no court making the director personally liable and no has construed this section, see what construc- way to protect stockholders and depositors tion the courts have given to other acts of without going into the merits of the divers practically the same purport; then see what individual transactions and attacking the amendments Congress is now proposing to this director in court, and generally the grasping director was of such high position and influence section. in the community that the ordinary man * * * * * It is important to have in mind that in the hesitated to raise the question. So Congress passed this section 22, providing event a question came up between a trustee and a beneficiary of a trust, it was the option that other than the usual salary or directors' of the beneficiary whether to raise the question fee, and pay for services rendered, no officer, of setting the transaction aside; so with the director, employee, or attorney in any bank director of a bank, where the question was shall be the beneficiary of or receive, directly that the director had made unfair use of his or indirectly, any fee, commission, gift, or other position, it was at the option of the bank or its consideration for, or in connection with, any stockholders, or any third party in interest, transaction or business of the bank, and proto raise the question. The contract was not viding fine and imprisonment for violation. void absolutely, but was voidable at the in- To say that he should not directly or indirectly stance of the injured party. But, as a prac- be the beneficiary, etc., of any consideration tical matter, it was found that directors many arising out of any business of the bank is just as times did take unfair advantage of their posi- broad as saying that he should not be directly tion and no one raised the question in a or indirectly interested in any business of the bank. public way. * * * * * WAYS IN WHICH A DIRECTOR MISUSED HIS Frequently when the Comptroller, or a bank POSITION. commissioner, or a clearing-house examiner finds a bank in bad condition he calls the diAs to the kinds of transactions that were rectors together and arranges with them to buy most frequently mentioned: from the bank certain bad or questionable (1) Out through the rural districts, it was assets, and yet, under this section 22, if the claimed that when an application was made to directors did so come to the relief of the bank, a bank for a loan, some director would charge they would be subject to fine and imprisonment. a commission, getting the bank to make the Banks usually try to have as their directors loan; or, a farmer would go to one of the men of large means and varied interests and JUNE 1,1918. FEDERAL RESERVE BULLETIN. put them on their boards so that they can nave the influence and business of sucli men for the bank. If section 22 remains as it is, the tendency will be to drive from the board of directors of the State banks and trust companies such active successful men, the very men whose experience, familiarity with current affairs and natural strength make them most valuable as directors, and put in their places men of less value, or probably dummies. It is evident that if this section 22 remains unamended there is in it a fundamental objection to State banks and trust companies becoming member banks and thereby making its provisions applicable to them. PROPOSED AMENDMENTS NOW BEFORE SENATE. But the Federal Reserve Board, thoroughly awake to the objections to section 22, even as amended above, after the fullest consideration, has recommended to Congress an amendment to section 22, this amendment now being a part of House bill 11283, passed by the House of Representatives at Washington on April 24, and now before the Banking and Currency Committee in the Senate. As indicated above, I trust that this convention will indorse this amendment and request your Senators to see that it becomes law. Prompt action is required, as the Senate committee is liable at any time to report the bill. With that one remaining primal objection to the Federal Reserve Act removed, as I sincerely hope it soon will be, then it will be left to be said that the State banks and trust companies are the most sluggish of all institutions in America in arising to the performance of a patriotic duty. I am sure it will not be left to be so said, in Kansas, a State of historic loyalty—a State that has so cordially responded to every other appeal to stand by our beloved country in these fateful times of war. PRESIDENT WILSON'S APPEAL. I can close this talk, already too long, in no more fitting way than to quote the following words taken from a formal public appeal made by President Wilson last October: May I not, therefore, urge upon the officers and directors of all nonmember State banks and trust companies which 515 have the required amount of capital and surplus to make them eligible for membership to unite with the Federal Reserve system now and thereby contribute their share to the consolidated gold reserves of the country? I feel sure that as member banks they will aid to a greater degree than is possible otherwise in promoting the national welfare, and at the same time, by securing for themselves the customers. I believe that cooperation on the part of the banks is a patriotic duty at this time, and that membership in the Federal Reserve system is a distinct and significant evidence of patriotism. RESOLUTION PASSED BY CONVENTION. After the reading of the paper the convention unanimously passed the following resolution : Whereas section 22 of the Federal Reserve Act, as now existing, is unreasonably drastic and stands as a serious objection on the part of the State banks and trust companies against then* entering the Federal Reserve system, and Whereas there is now pending in the United States Senate House bill 11283, which, as passed in the House of Representatives, amends section 22 so as to make it reasonably free from objection, yet effective to remedy the evils aimed at: Therefore be it Resolved, That the Senators from Kansas be, and they are hereby, urged to use their best endeavors to have become a law, unchanged as it came from the House, that part of House bill 11283 relating to said section 22 of the Federal Reserve Act; and Resolved further, That the president of this convention forward this preamble and resolution, by wire, to our Senators. Liberty Bonds Lost or Stolen. The Federal Reserve Board has been advised of more or less extensive losses or thefts of Liberty bonds, occurring at various banks throughout the country, and has undertaken, on behalf of the Protective Department of the American Bankers Association, to print monthly a list showing the numbers and values of the bonds referred to. Banks to which any of these bonds, or coupons belonging to them, are presented, are requested to write, telephone, or telegraph to L. W. Gammon, Manager, Protective Department, American Bankers' Association, 5 Nassau Street, New York City. The first list of bonds, supplied by Mr. Gam mon, is as follows: 516 JUNE 1,1918. FEDERAL RESERVE BULLETIN. SECOND 4 PER CENT BONDS, DUE 1942—Continued. FIRST 3£ PER CENT BONDS, DUE 1947 50 50 50 50 50 50 50 50 50 ggg 140086.. 140087.. .. 140095.. 140096 140097.. 140098 14C099 140100.. .. 140101 140102 140103 140104 140105.. . 140106 140107.. 140108 140109. 140110... . 140111 140112 140113 ggggggggg Number. Amount. Number. Amount. 140114... 140115 140116 1031339 1031347 1031355 1031356 65533 65534 . 65535 65536 65537 65538 65539 .. 65540 65541 65542 .. . . 65543 65544 .. 65545 65546 .. S50 50 50 50 50 50 50 100 100 100 100 100 100 100 100 100 100 100 100 100 100 Number. Amount. Number. Amount. $100 500 500 500 500 500 500 500 500 500 500 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 8100 ! 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 TOO 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 65547.. 19070.. 19071., 19072.. 19073. 19074. 19075.. 19076. 19077. 19078. 134655 223003 223004 223005 223006 223007 223008 223009 223010 223011 223012 888847.. 888851. 888853. 888854. 88S857. 888861. FIRST 4 PER CENT CONVERTED, DUE 1947. S50 50 sn ggg 540340 54034 1 .. 5*0342 540343 540344 540345 5*0346 . 540347.. .. 540348 540349.. 586570 586571 850 50 50 50 100 100 99192 .. 99193 99194... 99195 S500 500 500 500 888871. 888873... 888874... 888875... SECOND 4 PER CENT BONDS, DUE 1942. 888877. 477236 679526 679596 1493898 1493899 1493900 1493901 1493902 1493903 1493904 1493905 1493906 1493907 1493908 1433909 3369978 3369979 3494044 3685957 3665980 4419625 5446705 5446706 5446707 5446708 5446709.... 5446710 5446711.... 5446712 5446713.... 5446714.... 5446715.... 5446716 5446717 5446718 5446719.... 5446720.... 5446721 5446722 5446723.... 5446724 5446725 6955067 6955068 6955069 6955070 6955071 6955072 8955073 . 1 S50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 6955074 6955075 6955076..... 6955077 6955078 6955079 6955080 6955081 6955082 6955083 8955084 6955085 6955086 6955087 6955088 6955089 69,55090 6955091 6955092 6955093 6955094 6955095 6955096 6955097 6955098 6955099 6955100 6955101 6955102 6955103 6955104 6955105 6955106 6955107 6955108 6955109 6955110 6955111 6955112.... 6955113 6955114 6955115 6955116 6955117 ... 6955118 6955119 6955120 ... 6955121.... 6955122 50 ! 6955123 50 6955124 50 ! 6955125 50 i 6955120 50 1 6955127 50 ! 6955128 50 | 6955129 50 6955130 50 6955131 50 6955132 50 888801 50 88S802 50 888803 50 888804 50 888805 50 888806 50 888807 50 888808 50 888809 50 888810 50 888811 50 888812 50 888813...... 50 88SS14 50 888815 50 888818 50 888817 50 888818 50 888819 50 888820 50 888821 50 888822 50 888S23 50 888824 50 888825 50 888826 50 888827 50 8S8S28 50 888829 50 888830 50 88883.1 50 888832 50 888833 50 888834 50 S88S35 50 888836 50 888837 50 888838 50 888839 50 50 50 50 50 50 50 50 50 50 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 888893 993419.. 993420.. 993421.. 993422.. 993423.. 993424.. 993425.. 993426.. 993427.. 993428.. 993430.. 993431.. 993432.. 2038879. 2086701. 2086702. 2086703. 2086704. 2086739. 2088747. 2086748. 2086749. 2086750. 2086751. 2236081. 2327984. Number. 2327985.. 2327987.. 2327988.. 3262431.. 3262435.. 3262437.. 3265438.. 4585384.. 4585385.. 4585386.. 4585387.. 4585388.. 4585389.. 4585390.. 4585391.. 4585393.. 4585394.. 4585395.. 4585396.. 4585397.. 4585398.. 4585399.. 4585400.. 4585401.. 4585402.. 4585403.. 4585404.. 4585405.. 4585406.. 4585407.. 4585408.. 4585409.. 4585410.. 4585411.. 4585412.. 4585413.. 4585414.. 4585415.. 4585416.. 4585417.. 4585418.. 4585419.. 4585420.. 4585421.. 4585422.. 4585423.. 4585424.. 4585425.. 4585426.. 4585427.. 4585428.. 4585429.. 4585430.. 4585431.. 4585432.. 4585433.. 45S5434.. 4585435.. 4585436.. 4585437.. 4585438.. 4585439.. 4585440.. 4585441.. 4585442.. 4585443.. 4585444.. 4585445.. 4585446.. 4585447.. 4585448.. 4585449.. 4585450.. 4585451.. 4585452.. 4585453.. 4585454.. 4585455.. 4585456.. 4585457.. 4585458.. 4585459.. 4585460.. 4585461.. 4585462.. 4585463.. Amount. Number. Amount. S100 4585464 100 4585465 100 I 4585466 100 i 4585467 ioo ; 4585468 100 4585469 100 4585470 100 4585471 100 4585472 100 4585473 100 4585474 100 i 4585475 100 148664. 100 148665. 100 148666. 100 148667. 100 100 100 148670. 100 .168511. 100 168512. 100 168513. 100 168514. 100 176262. 100 206571. 100 206572. 100 206573. 100 206574. 100 283350. 100 327153. 100 327154. 100 327155. 100 327156. 100 327157. 100 327158. 100 352814. 100 352838. 100 352839. 100 352840. 100 352841. 100 352842. 100 352843. 100 352844. 100 352845. 100 352846. 100 352847. 100 352848. 100 352849. 100 352850. 100 637936. 100 637937. 100 637938. 100 637940. 100 637941. 100 637942. 100 637943. 100 037944. 100 637945. 100 637946. 100 637947. 100 637948. 100 637949. 100 663204. 100 663205. 100 663206. •ioo ! 663207. ioo i 100 i 663209. ioo ! 663211. 100 I 663213. 100 663214. 100 663215. 100 663216. 100 1 663217. 1 100 663218. 100 663219. 100 76337.. 100 76338.. 100 158527. 100 158528. 100 158529. 100 158530. 100 158531. 100 158532. 100 158533. 100 158534. 100 158535. 100 158536 . S100 100 100 100 100 100 100 100 100 100 100 100 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 i.ooo 1,000 1,000 JUNE 1, FEDERAL RESERVE BULLETIN. 1918. SECOND 4 P E R CENT BONDS, D U E 1942—Continued. Number. Amount. 158537 . . . 395982 395983.. 396235 396236 396237. . . 412151 $1,000 1,000 1,000 1,000 1,000 1,000 1,000 Number. 412152 1608469 1608470 1608471 1608472 1609473 1609474 ! Amount. : • ! 1 i §1,000 1,000 1,000 1,000 I 1,000 i 1,000 ! 1,000 i ' Number. 1609475 1609476 1609477 1628865 1628866 Amount. SI, 000 1,000 1,000 1,000 1,000 T H I R D 41 P E R CENT BONDS, D U E 1928. 705896 705949 705950 . 850 50 50 385330. . . 385331 385353 S100 100 100 385369 385373 4620 . . S100 100 500 Conversion of Liberty Bonds. Secretary McAdoo on May 10, 1918, authorized the following announcement: Three and one-half per cent bonds of the first Liberty loan, 4 per cent bonds of the first Liberty loan converted, and 4 per cent bonds of the second Liberty loan may be converted into 41 per cent bonds during the six months' period beginning May 9 and ending November 9, 1918. It will not be practicable to make deliveries prior to July 1, 1918, of 4J per cent conversion bonds, and as under the act approved April 4, 1918, holders of 4 per cent bonds of the first Liberty loan converted and of 4 per cent bonds of the second Liberty loan presenting their bonds for conversion after July 1 but not after November 9, 1918, will be entitled to the benefit of the increased interest rate from June 15 and May 15, respectively, without adjustment of interest, it is hoped that holders of such bonds will not present their bonds for conversion until after July 1, 1918. In the case, however, of holders of such bonds who prefer to present their bonds for conversion on or before July 1, 1918, an adjustment of interest will be made. This interest adjustment in the case of bonds of the first Liberty loan converted will be in favor of the bondholder if such bonds are presented for conversion before June 15, 1918, and will be in favor of the United States if such bonds are presented for conversion after June 15 and on or before July 1, 1918. In the case of bonds of the second Liberty loan this interest adjustment will be in favor of the bondholder if such bonds are presented for conversion before May 15, 1918, and will be in favor of the United States if such bonds are presented for conversion after May 15 and on or before 517 July 1, 1918. Bonds presented for conversion on or before July 1 will be retained and a nonnegotiable receipt will be issued therefor, and adjustment of interest will be completed at the time of delivery of conversion bonds. After November 9 no further rights of conversion will attach or accrue to 4 per cent bonds of the first Liberty loan converted or to 4 per cent bonds of the second Liberty loan, and after that date 3£ per cent bonds of the first Liberty loan will have no further conversion rights with respect to the conversion privilege now arising, but any unconverted 3J per cent bonds will have a recurrent right of conversion in the event of any further bond issue at a higher rate than 3£ per cent before the termination of the war. All 4 | per cent bonds, including bonds issued upon conversions, are noncocvertible. Bonds may be presented and surrendered for conversion at any Federal Reserve Bank or at the Treasury Department. Registered bonds presented for conversion must be assigned to the Secretary of the Treasury for conversion. Such assignments, however, need not be witnessed. On conversion of registered bonds, registered bonds only will be delivered, neither change of ownership nor delivery of coupon bonds on conversion of registered bonds being permitted. Registered bonds, however, may be delivered upon conversion of coupon bonds if request therefor is submitted. Coupon bonds presented for conversion must have May 15 or June 15 coupons detached and coupons maturing November 15 or December 15 and all subsequent coupons attached. Interest on registered bonds will be paid on May 15 or June 15 without regard to conversion. The coupon bonds issued upon conversion will have four interest coupons attached, and on and after the final interest payment date covered thereby such bonds must be exchanged for new bonds with all subsequent interest coupons attached. Bonds issued upon conversion of 3-| per cent bonds and of 4 per cent bonds of the first Liberty loan converted will be dated May 9 and will carry interest at 4-| per cent from June 15. Bonds issued upon conversion of 4 per cent bonds of the second Liberty loan will be dated May 9, and will carry interest at 4£ per cent from May 15. The registered and coupon bonds issued upon conversions will be issued in the same denominations as the bonds of the third Liberty loan and, except for the dates of maturity of prin- 518 FEDERAL RESERVE BULLETIN. cipal, the dates for payment of interest and the terms of redemption, which will remain the same as for the original issues, the terms of such 4 | per cent issued upon conversion will be identical with the bonds of the third Liberty loan, including tax exemptions, nonconvertibility, receivability for Federal inheritance taxes. They will not carry the circulation privilege, they will be receivable as security for public deposits, and may participate in the benefit of the bond-purchase fund. Certificates of Indebtedness. The Treasury Department, on May 14, issued the following statement: United States Treasury certificates of indebtedness dated May 15, 1918, maturing June 25, 1918, acceptable in payment of income and excess-profits taxes, bearing interest at the rate of 4 per cent per annum, and in all respects identical with the certificates dated April 15, 1918, except as to the date of issue and from which they bear interest, will be made available promptly. In the meanwhile Federal Reserve Banks are authorized to issue interim receipts calling for definitive Treasury certificates dated May 15 as above instead of certificates dated April 15. This will relieve subscribers for certificates of this character of the necessity of paying so much on account of accrued interest. Subscriptions for these certificates at par and accrued interest will be received by Federal Reserve Banks and they are authorized until further notice to make allotment in full and receive payment with the subscription. More than §70,000,000 of the certificates dated April 15 have been sold to date, making the total amount of certificates maturing June 25, 1918, to date about $1,430,000,000. Press Statement. The following statement for the press was issued by the Treasury Department on May 12: JUNE 1, 1918. The Central Executive Council of the International High Commission, of which Secretary McAdoo is chairman, has, during recent months, been devoting special attention to securing greater uniformity in the commercial legislation of the Republics of America. Recent effort has been concentrated on the law relating to notes and bills of exchange concerning which an extensive report was published a short time ago. This report is now being made the basis for concrete legislative effort by the several national sections of the International High Commission. A further step in the same direction has now been taken by the Central Executive Council in the publication of a report on the law and practice relating to checks. Owing to the wide diversity of practice in different sections of the continent, the difficulty^ of securing uniformity of legislation relating to checks is considerably greater than in the matter of notes and bills of exchange. The report just issued by the Central Executive Council of the International High Commission is the first step in the difficult process of securing greater uniformity of law and practice. After a careful analysis of existing legislation and study of the development of the proposed Hague Rules on Checks (1912), the Council has come to the conclusion that of all the instrumentalities of international commerce the legislation in regard to checks stands in greatest need of a revision toward greater uniformity amongst the American Republics. The report, which is issued in the Spanish language, deals with the following topics: I. The theory of the check. II. Material concerning the history and present importance of the check. III. The check at The Hague Conference on Bills of Exchange. IV. The questionnaire circulated by the Government of the Netherlands concerning the check (1912.) V. The discussions of the Central Committee of The Hague Conference upon the Rules to Govern the Check. VI. The preliminary resolutions of The Hague Conference on the Law of Checks (1912). VII. The check in the legislation of American Republics. VIII. Appendix: A. The Principles of Check Legislation, by Dr. Octavio Morato. B. Project of a Uniform Law on Checks, prepared by Dr. Octavio Morato. An elementary and detailed examination of the history, kinds, and present uses of checks was felt to be. desirable in Latin America, in view of the slight acquaintance with this negotiable instrument outside of one or two large commercial countries. The studies by Dr. Morato, who is professor at the University of Montevideo and an active member of the commission, were especially prepared for the Council. The uniformity of law and practice with reference to checks is one of the important questions in the program of the International High Commission, and it is confidently expected that it will soon be possible to record further definite steps toward the attainment of this purpose. 519 FEDERAL RESERVE BULLETIN. JUNE 1, 1918. Paper Currency Outstanding. Statement issued by the Treasury Department showing the amount of paper currency of each denomination outstanding 'Apr. 30, 1918. United States notes. Denominations. One dollar Two dollars Five dollars Ten dollars Twenty dollars Fifty dollars One hundred dollars Five hundred dollars One thousand dollars Five thousand dollars Ten thousand dollars Fractional parts $25,329,845 26,447,823 217,819,260 53,139,971 10,914,042 1,246,275 2,011,800 , 1,540,000 9,222,000 Net- Federal Nationalreserve bank notes. bank notes. $227,251,160 567,833,000 596,174,930 114,155,100 145,554,100 $3,252,725 4,665,890 3,824,340 $342,072 163,392 111,399.260 297,503,210 248,385,960 30,400,900 34,905,900 88,000 21,000 1,650,968,290 11,742,955 723,267,132 1,877,321,669 455,888,000 5,068,742,062 161,570 "16* 549,* 875 697,866,020 13,818,260 1,000,000 763,215,949 ""64*666" 10,000 Total 347,681,016 Deduct: Unknown, destroyed 1,000,000 Held in Treasury 8,334,715 Held by Federal Reserve Banks and Federal Reserve agents:.. Redeemed but not assorted by denominations 338,346,301 62161—18 $332,321 207,596 459,643 488,940 220,650 9,250 90,600 Federal Reserve notes. 26,480,570 Treasury notes of 1890. 6 Gold certificates. $352,591,845 283,394,894 74,611,030 104,654,900 27,759,500 133,359,500 142,660.000 758,290,000 57,438 1,873,000 Silver certificates. $225,271,052 $251,275,290 83,324,121 56,505,310 697,038,200 136,856,152 14,525,301 1,290,748,157 14,724,230 1,157,639,046 228,125,990 7,703,435 287,488,320 271 020 29,403,000 15,500 142.682,500 16,000 142:660,000 758,300,000 57,438 342,129,745 241,869,780 100,259,965 978,955 1,868,061 1,524,227,755 11,581,385 705,738,302 Total. 978,955 937,585,869 442,069,740 3,961,417,413 520 FEDERAL RESERVE BULLETIN. 1918. INFORMAL RULINGS OF THE BOAR®. 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: Rediscount of Paper Indorsed by Nonmember Bank. (To a Federal Reserve Bank.) Receipt is acknowledged of your letter of the 26th ultimo in further reference to the rediscount by a Federal Reserve Bank for a member bank of eligible paper bearing the indorsement of the Bank of . It appears from your letter that the Bank of is not a member bank. You ask whether this fact would alter the ruling of the Federal Reserve Board contained in letter to you dated April 24. In reply you are advised that in the opinion of the Board the limitations contained in section 13 of the Federal Reserve Act on the rediscount of paper bearing the signature or indorsement of any one borrower should not be held to refer to the indorsement of a nonmember bank on paper rediscounted with a member bank. It is true that in such case the nonmember bank is contingently liable if the paper is not paid at maturity, but the Board is inclined to the view that this language refers to paper bearing the signature or indorsement of borrowers or customers of the member bank and not to the indorsement of other banks. A nonmember bank could not, of course, obtain indirect accommodation from the Federal Reserve Bank through the medium or agency of a member bank except with the permission of the Federal Reserve Board, but if a member bank had acquired eligible paper in due course by rediscount from a nonmember bank the member bank should hardly be precluded from rediscounting this paper with the Federal Reserve Bank because it bears the indorsement of the nonmember bank. The fact that this inquiry is submitted by the Bank of , a nonmember bank, may indicate a desire on its part to obtain accommodation from the Federal Reserve Bank through one of its correspondent member banks. This being true, it may be well to call its attention to the fact that if this is its purpose it will be necessay to obtain the consent of the Federal Reserve Board. MAY 1, 1918. Acceptance of Drafts Against Sugar in Bond. (To a Federal Reserve Bank.) Your telegram. It is the understanding of this office that sugar referred to is placed in bond under transit entry and warehouse receipt issued by collector in negotiable form, but sugar can not be withdrawn for domestic sale or consumption without special permission of Treasury Department. Board is of opinion that member banks may legally accept drafts drawn against security of such warehouse receipt properly assigned. MAY 7, 1918. Bills Payable Elsewhere Than in the United States. (To a Federal Reserve Bank.) I have received JOXIT letter of May 8, 1918, asking whether or not Federal Reserve Banks are authorized to purchase bankers' acceptances payable elsewhere than in the United States. You are advised that under the regulations of the Federal Reserve Board defining bankers' acceptances, any bill which is payable elsewhere than in the United States would not be eligible for purchase as a bankers' acceptance, under the provisions of regulations A and B, series of 1917, even though eligible in all other respects. The acceptance to which you refer, however, might properly be purchased as a bill of exchange payable in a'foreign country in accordance with the provisions of Special instructions No. 2 of 1916, subsection (b), printed on page 529 and 530 of the October, 1916, Bulletin. MAY 11, 1918. FEDERAL BESEKVE BULLETIN. JUNE 1,1918. Discount of Acceptances Not Paid at Federal Reserve Bank. (To Federal Reserve Banks.) The discount committee of the Federal Reserve Board has reported that, in its opinion, "Federal Reserve Banks should insist that acceptances when due should be paid by checks on the local Federal Reserve Bank, in order that they may be charged to the account of the acceptor on the day of maturity, or else that acceptances should be paid by checks through the clearings. If an arrangement on these lines can not be perfected, Federal Reserve Banks ought to be required to add one day to the actual number of days the acceptance has to run when bought, so as to make up for the loss of interest incurred in collecting in this manner." This report has been agreed to by the Board, and your bank is requested, in buying acceptances, to charge discount for one additional day, except in cases where satisfactory arrangements are made to make actual cash payment at the Federal Reserve Bank on the day of maturity. MAY 7, 1918. Date for Payment of Dividend. (To Federal Reserve Banks.) The Board ruled some time ago that the books of Federal Reserve Banks could be closed for the purpose of paying dividends on the last business day of June and December of each year. Section 7 of the act provides that "after all necessary expenses of a bank have been paid or provided for, the stockholders shall be entitled to receive an annual dividend of 6 per cent on the paid-in capital stock, which dividend shall be cumulative." Dividends are permitted to be paid at this rate semiannually for the greater convenience of the member banks, and the Board holds that this does not require that payment to the Government be made at the semiannual dividend periods. Therefore, in making your dividend distributions, either current or cumulative, on June 521 30, no addition should be made to the surplus of your bank and no return need be made to the Government. These matters can be adjusted on the last business day of December, at which time all depreciation can be provided for and the proper amounts carried to the surplus fund and paid over to the Government. It is, of course, understood that at your semiannual dividend period in June you should charge off the expense account as shown by your books, as well as any ascertained losses, in order that no dividends may be paid which have not actually been earned. MAY 1, 1918. Use of the Word "Reserve." (To a Federal Reserve Bank.) Your letter of the 10th instant, asking whether the Board would approve a change of the name of the American Savings Bank and Trust Company of to "The American Reserve Bank," has been duly considered by the Board. You are requested to call the attention of this bank to the informal ruling of the Board on a similar question which involved the use of the word "Federal" as part of the name of a bank not a Federal Reserve Bank, under date of July 21, 1917 (vol. 3, p. 615, Federal Reserve Bulletin), in which it was stated that "it is decidedly against the policy of the Federal Reserve Board to encourage the use of the word 'Federal7 as part of the title of member banks." The Board is of the opinion that there is just as much objection to the use of the term "Reserve," especially when coupled with the term "American" so as to read "American Reserve Bank," as there is to the term "Federal" as part of the title of an ordinary bank. You are therefore requested to advise the bank that the Board would not approve a change of its name to "The American Reserve Bank." MAY 18, 1918. 522 FEDERAL RESERVE BULLETIN. JUNK 1,1918. LAW DEPARTMENT. The following opinions of counsel have been treating the branch and the parent bank as authorized for publication by the Board since separate entities. the last edition of the Bulletin: Respectfully, M. C. ELLIOTT, Counsel. Membership of Branch of State Bank. Where a branch of a State bank becoming a member of the Federal Reserve system is located in a different district from its parent bank, it is not necessary for the branch bank to become a member of the Federal Keserve Bank of the district where it is located; since the operations of the branch are the operations of the parent bank, and the branch and parent banks are not separate entities. A P R I L 24, 1918. SIR: From the accompanying letter of the chairman of the board of a Federal Reserve Bank, it appears that a State bank recently admitted to membership in a Federal Reserve Bank has a branch in another city, which is located in a different Federal Reserve district. The question is raised whether this branch shall be treated as a separate entity and be required to carry a deposit with the Federal Reserve Bank of the district where it is located, or whether all of its operations shall be conducted through the Federal Reserve Bank of which the parent bank is a member. In the opinion of this office, the operations of the branch are the operations of the parent bank. The reserve to be maintained by the parent bank with the Federal Reserve Bank of which it is a member should, therefore, be based upon the aggregate deposits of the parent bank and the branch. If it becomes necessary to do so, there would seem to be no objection to having the branch send items for collection through the Federal Reserve Bank of the district where it is located for credit to the account of the member bank with the Federal Reserve Bank of which the parent bank is a member; but there is Mot, in the opinion of this office, any justification for To HON. W. P. G. HARDING, Governor, Federal Reserve Board. Decision of Supreme Court of Illinois in the Case of The People ex rel. First National Bank of Joliet v. Andrew Russell, Auditor of Public Accounts. In a former proceeding before the Illinois Supreme Court, the First National Bank of Joliet petitioned the Supreme Court of Illinois for a mandamus to require the auditor of public accounts to issue to it a license under the State law, authorizing it to exercise trust powers. This petition was refused by the court, which held that the exercise of trust powers would contravene the laws of Illinois and that the act of Congress vesting these powers in national banks was unconstitutional. The same question was involved in a suit instituted in the State of Michigan, in which case the Supreme Court of that State held the act of Congress to be unconstitutional. This case was appealed to the Supreme Court of the United States, which reversed the Supreme Court of Michigan and sustained the constitutionality of the act. The present proceedings against the auditor of public accounts were instituted in the Supreme Court of Illinois after the Supreme Court of the United States had sustained the constitutionality of the act. In the present case, the Illinois Supreme Court, in referring to its previous decision refusing the writ of mandamus applied for, says: Under the decisions of the Supreme Court of the United States, our judgment was erroneous, but the conclusiveness of a judgment upon the parties to it, does not depend upon JUNE 1. 1918. FEDERAL RESERVE BULLETIN. whether it is erroneous. (Case v. Beauregard, 101 U. S. 688.) Although it may be based upon unsound principles, it is binding on the parties and on the court rendering it unless reversed or set aside, and it is unaffected by the fact that in another case another court has rendered a different judgment upon the same issues of law or fact. We do not understand that we have the power to entertain, hear, and determine this case so long as our judgment in the same case rendered at a former term is in full force and effect. The petition of the First National Bank of Joliet was accordingly denied. The full text of the opinion is as follows: Mr. Justice Farmer delivered the opinion of the court: This is an original petition filed in this court, on the relation of the First National Bank of Joliet, for a peremptory writ of mandamus against the State auditor of public accounts, commanding him to forthwith issue to relator a certificate of qualification under the trust act of Illinois, whereby it might lawfully act as trustee, executor, administrator, or registrar of stocks and bonds and in such other trust capacities as provided by the trust act. Relator alleges it is a national banking association incorporated under an act of Congress; that pursuant to regulations prescribed by the Reserve Bank Organization Committee created by act of Congress entitled "An act to provide for the establishment of Federal Reserve Banks," etc., commonly called the Federal Reserve Act, the relator became a member of the Federal Reserve Bank of Chicago and still continues to be such member; that said Federal Reserve Act provides that the Federal Reserve Board created by the act may grant special permits to national banks applying therefor, when not in contravention of State or local law, to act as trustees, executors, administrators, or registrars of stocks and bonds, under such rules and regulations as said board might prescribe. The petition alleges that upon its application to the Federal Reserve Board said board granted relator permission to act as trustee, executor, administrator, or registrar of stocks and bonds; that thereafter relator applied to the auditor of public accounts of the State of Illinois for a certificate of authority, stating therein that relator had complied with the Illinois act entitled "An act to provide for and regulate the administration of trusts and trust companies," approved June 15, 1887, and subsequent amendatory and supplementary acts. The petition alleges that at the time of making said application to the auditor, relator offered to comply with ail the requirements of the Illinois act, but the auditor refused to issue said certificate of qualification, whereby relator has been and is prevented from exercising the rights, privileges and franchises conferred by the Trust Act of the State of Illinois. At a former term of this court this same relator filed a precisely similar petition praying the same relief. The only difference is that then James J. Brady was the incumbent in the office of auditor of public accounts while now Andrew J. Russell is the incumbent. Three issues of 523 law were raised by demurrer to the former petition, which we considered on their merits in an opinion filed at the December term, 1915, denying the writ (People v. Brady, 271 111., 100). One question was the contention of the Attorney General that section Ilk of the Federal Reserve Act is a delegation of legislative power by Congress to the Federal Reserve Board, in violation of the Constitution of the United States. We did not sustain that contention. The second and third questions were (2) if it be held section Ilk is not a delegation of legislative power but is a general grant by Congress to national banks of power to act as trustees, executors, administrators, or registrars of stocks and bonds, it is void for want of power in Congress to grant such a franchise to a national bank; and (3) that to permit national banks to act as trustees, executors, administrators, or registrars of stocks and bonds in Illinois would be in contravention of the laws of Illinois. Upon the second question we expressed our understanding of the decisions of the Supreme Court of the United States, especially McCulloch v. State of Maryland, 4 Wheat. 316, and Osborn v. United States Bank, 9 id. 738, to be as follows: "The basis upon which the authorities rest that Congress has power to create a banking corporation and authorize it to carry on a general banking business is that such institutions are necessary and appropriate agencies for the carrying out of certain governmental functions, and while they are authorized to engage in a general banking business (U. S. Rev. Stat., sec. 5136) such authority is necessary to their continued existence and the exercise of such power is necessary to enable the corporations to serve the purpose of their creation. The power to create them was never sustained on the ground that Congress had the right to charter a corporation for the purpose, alone, of engaging in the private trade of banking, but the power of such corporation to engage in such trade or business was sustained as necessary to perpetuate the life of the corporation created as an instrument or agent for carrying out the objects and purposes of the Government." We further were of opinion that as Congress had no express authority to create a corporation for the purpose of engaging in the business of acting as trustee, executor of wills, or administrator of estates, it had no implied power to authorize a national banking corporation to act in those capacities, because in our view such powers could not be made useful instrumentalities in carrying out governmental functions and their exercise is not necessary to the life or existence of the bank. We further were of opinion the business of acting as trustee, executor, and administrator appertains to private-property rights under the laws of the several States, their devolution, descent, and distribution, and therefore subjects of regulation by the States. Upon the third question we were of opinion, from an examination of the large powers conferred by the Illinois statute upon the auditor of public accounts of examination, regulation, and control of corporations authorized to administer trusts in this State, that the Federal Reserve Act in this respect, or section Ilk, is "in contravention of State or local law." No 524 FEDERAL RESERVE BULLETIN. appeal was prosecuted or writ of error sued out to reverse that judgment, rendered more than two years before this petition was filed, and it still remains in full force and effect. Now, the same relator files a precisely similar petition against the same public officer, asking the same relief upon the same grounds as in the former case. There is identity in the thing sued for, the cause of action, parties to the action, and quality in the person for and against whom the claim is made. This court had jurisdiction of the subject matter and of the parties, and the decision, whether erroneous or not, was based on the merits of the case. The judgment of a court of competent jurisdiction, although it may be erroneous, is binding upon the parties until reversed and can not be collaterally assailed. It is a complete bar to a subsequent suit between the same parties on the same demand or cause of action. Johnson Co. v. Wharton, 152 U. S., 252; Smyth v. Neff, 123 111., 310; Baum v. Hartmann, 238 id., 519; 3 Cyc, 493; 15 R. 0. L., 959. The reason given by the relator for bringing the same suit again is, that since our decision in the case when it was before us the first time the Supreme Court of the United States has considered the same question on writ of error to the Supreme Court of Michigan (National Bank of Bay City v. Fellows, 37 Sup. Ct. Rep., 734), and in an opinion filed June 11, 1917, sustained the validity of section Ilk of the Federal Reserve Act and the power of the Federal Reserve Board under said act to clothe a national bank with authority to act as trustee, executor, or administrator, and it is, in substance, contended that we should disregard or ignore our former judgment in this case and award the peremptory writ. We willingly and cheerfully yield obedience to the authority of decisions of the United States Supreme Court when we have any liberty of choice in the matter, but we do not understand that in this case we have the power to adopt the view of the United States Supreme Court and render a judgment granting the relief prayed. If that court had been asked to review our decision, it would have had the power to reverse and set it aside, but we do not understand the reversal of the judgment of the Supreme Court of Michigan in any way disturbed or affected the conclusiveness of the judgment of this court as a bar to a second suit between the same parties on the same cause of action. Under the decisions of the Supreme Court of the United States our judgment was erroneous, but the conclusiveness of a judgment upon the parties to it does not depend upon whether it is erroneous. (Case v. Beauregard, 101 U. S., 688.) Although, it may be based upon unsound principles, it is binding on the parties and on the court rendering it unless reversed or set aside, and it is unaffected by the j fact that in another case another court has rendered a I different judgment upon the same issues of law or fact, j We do not understand that we have the power to enter- j tain, hear, and determine this case so long as our judgment in the same case rendered at a former term, is in JUNE 1,1918. full force and eSect. For these reasons we feel compelled to deny the writ. (Writ denied.) The Board has been unofficial advised that, in view of the foregoing opinion of the Supreme court of Illinois, the auditor of public accounts will grant to national banks holding permits of the Federal Reserve Board the necessary license to exercise trust powers in Illinois. Amendments to New York Banking Laws. The definition of " reserves on deposit" in section 3 of the New York banking law was amended by the 1918 legislature (Laws of 1918, chap. 92) so as to exclude from the meaning of the term deposits maintained with a Federal Reserve Bank located in the State. The definition now reads as follows: Reserves on deposit. The term, " Reserves on deposit," when used in this chapter, means the reserves against deposits maintained by any individual or corporation pursuant to this chapter in reserve depositaries, other than a Federal Reserve Bank located in this State, and not in excess of the amount authorized by this chapter. Section 112, relating to the reserves of banks, and section 197, relating to the reserves of trust companies, were amended (Laws of 1918, chap. 92) so as to permit banks and trust companies becoming members of a Federal Reserve Bank to carry or deposit with that Federal Reserve Bank such portion of their total reserves as is required of members, as reserves on hand instead of reserves on deposit. In addition, the requirement that member banks, located in New York City, must carry the remainder of their total reserves as reserves on hand was omitted from section 112 as so amended. Section 112 now reads as follows: Reserves against deposits. Every bank shall maintain total reserves against its aggregate demand deposits as follows: 1. Eighteen per centum of such deposits if such bank has an office in a borough having a population of two millions or over; and at least twelve per centum of such deposits shall be maintained as reserves on hand, except as otherwise provided in this section. JUNE 1, 1918. FEDERAL RESERVE BULLETIN. 2. Fifteen per centum of such deposits, if such bank is located in a borough having a population of one million or over and less than two millions, and has not an office in a borough specified in subdivision one of this section; and at least ten per centum of such deposits shall be maintained as reserves on hand. 3. Twelve per centum of such deposits if such bank is located elsewhere in the State; and at least four per centum of such deposits shall be maintained as reserves on hand. Any part of the reserves on hand in excess of four per centum of such deposits may be deposited, subject to call, with a Federal Reserve Bank in the district in which such bank is located, and the reserves on hand not so deposited shall consist of gold, gold bullion, gold coin, United States gold certificates, United States notes or any form of currency authorized by the laws of the United States; but, if any bank shall have become a member of a Federal Reserve Bank, it may maintain as reserves on hand with such Federal Reserve Bank such portion of its total reserves as shall be required of members of such Federal Reserve Bank. If any bank shall fail to maintain its total reserves in the manner authorized by this section, it shall be liable to, and shall pay the assessment or assessments provided for in section thirty of this chapter. 525 bankers' acceptances and bills of exchange, subject to certain restrictions. The following subdivision was added to the list of securities in which savings banks might invest such funds: 11. Bankers' acceptances and bills of exchange of the kind and maturities made eligible by law for rediscount with Federal Reserve Banks, provided the same are accepted by a bank, national banking association or trust company, incorporated under the laws of the State of New York or under the laws of the United States and having its principal place of business in the State of New York. Not more than twenty per centum of the assets of any savings bank less the amount of the available fund held pursuant to the provisions of section two hundred fifty-one of this chapter, shall be invested in such acceptances. The aggregate amount of the liability of any bank, national banking association or trust company to any savings bank for acceptances held by such savings bank and deposits made with it shall not exceed twenty-five per centum, of the paidup capital and surplus of such bank, national banking association or trust company and not more than five per centum of the aggregate amount credited to the depositors of any savings bank shall be invested in the acceptances of or deposited with a bank, national banking association or trust company of which a trustee of such savings bank is a director. Sections 108 and 190, restricting loans and investments by banks and trust companies, Subdivision 5 of the same section, relating respectively, were amended (Laws of 1918, to investments by savings banks of their deeh. 94) by adding to each a new subdivision posits and guaranty funds in stocks or bonds reading as follows: of incorporated cities, counties, villages or None of the limitations or restrictions contained in the towns located in adjoining States, was also previous subdivisions of this section shall apply to loans, amended (Laws of 1918, ch. 96); and two discounts or other extensions of credit secured by Liberty paragraphs authorizing savings banks to invest bonds or by other bonds or securities issued by the United States Government for war purposes, if the market value such funds in promissory notes secured by first of such Liberty bonds or other securities exceeds by teD mortgages on New York real estate or by per centum the amount of any such loan, discount or other pledges of pass books of New York savings extension of credit. banks were added to subdivision 8 (Laws of Section 238 relating to the powers of savings 1918, ch. 95). Subdivision 5 of section 106 was amended banks was amended (Laws of 1918, ch. 176) so as to authorize savings banks to receive (Laws of 1918, chap. 98) so as to enable banks deposits of Liberty bonds for safe-keeping. A to own, to an amount not exceeding 10 per cent new subdivision is added, which reads as fol- of their own capital and surplus, the capital stock of any investment company qualified to lows : 8. To receive as depository, or as bailee for safe-keeping accept drafts, issue letters of credit and disand storage, Liberty bonds or other bonds or securities count commercial paper, and the capital stock issued by the United States Government for war purposes of any foreign banking corporation licensed to or otherwise. do business in the State. Subdivision 10 of section 190 was amended Section 239 was amended (Laws of 1918, (Laws of 1918, chap. 98) so as to remove from ch. 270) so as to enable savings banks to invest their deposits and guaranty funds in the restrictions on the amount of stock of other 526 FEDERAL RESERVE BULLETIN. corporations which might be owned by trust companies the ownership of stock in investment companies qualified to accept drafts, issue letters of credit and discount commercial paper, and the capital stock of foreign banking corporations licensed to do business in the State. The following sections were also amended: Section 109, subdivision 5, and section 194, subdivision 5, relating to accounts of court funds on deposit to be kept by banks and trust companies, respectively (Laws of 1918, chap. 93). Section 454, subdivision 7, relating to loans by credit unions to their members (Laws of 1918, chap. 97). Section 293, subdivision 3, relating to deposits of securities by investment companies receiving deposits (Laws of 1918, chap. 98). Section 294, subdivision 1, restricting the powers of investment companies (Laws of 1918, chap. 98). Penal Law, section 1293, relating to obtaining money by fraudulent order (Laws of 1918, chap. 314). And a new section, 1292a, was added to the Penal Law, providing a penalty for issuing fraudulent checks, drafts, or orders (Laws of 1918, chap. 314). JUNE 1,1918. to accept bills of exchange and issue letters of credit, and to provide that the discount and purchase of certain commercial paper should not be considered as borrowed money within the meaning of the limitation on loans to one person, firm, or corporation. Section 579 of Carroll's Kentucky Statutes, as so amended, provides in part as follows: Any bank or trust company may accept for payment at a future date drafts or bills of exchange drawn upon H by its customers and issue letters of credit authorizing the holders thereof to draw drafts upon it or its correspondents at sight or on time, not exceeding one year, and may also accept drafts or bills of exchange drawn upon it, having not more than six months sight to run, growing out of transactions involving the importation and exportation of goods; and any bank or trust company may discount acceptances which are based upon the importation or exportation of goods and which have a maturity at time of discount of not more than three months and are endorsed by at least one other bank or trust company; but no bank or trust company shall accept such drafts or bills of exchange to an amount equal at any time in the aggregate to more than one-half of its paid up and unimpaired capital stock and surplus, except by authority of the banking commissioner under such general regulations as said commissioner may prescribe, and in no event to an amount exceeding the capital stock and surplus of such bank or trust company; and such regulations shall apply to all banks and trust companies alike regardless of the amount of capital stock and surplus. Amendments to Kentucky Banking Laws. Section 583 was amended by adding to it the following provision: Provided, that the discount of bills of exchange drawn In addition to the amendments noted on page 315 of the April Bulletin, the Kentucky Legislature recently amended certain other sections of the banking laws of that State so as to authorize State banks and trust companies against actually existing value and the purchase or discounting of commercial or business paper actually owned by the person negotiating the same shall not be considered as borrowed money, within the meaning of this section in fixing the limit of indebtedness of any person, firm, or corporation, selling or negotiating said paper to the bank. SUMMARY OF BUSINESS CONDITIONS, MAY 23, 1918. General business. District. Industries of the Construction, 1 wilding, and engineering. district. Crop condition. ,. Busy No. 1—Boston Good Normal No. 2—Now York Active. Favorable; plant- Very active. i u g vr v 11 a d vaiiccd. Good No. 3—Philadelphia.. Good Foreign trade. Railroad, post office, and other receipts. Money rates. Labor conditions. Well employed; wages high. Inactive Slight decrease... Mixed Extremely l i g h t , ex- Imports much restricted; exports cept s h i p b i:i il d i n g and factory construcother than Govtion lor Government ernment matework. rial light, but aggregate very heavy. Firm; no material change. Increase in post office In great demand; much shifting. receipts 20,66 percent over last year; street railroad r e c e i p t s lower than last year; steam railroads show increase over last year. Very firm. Increasing Inadequate supply of competent labor. Very firm. Increase Scarce; wages increased. ; Very little Stilllarge. No. 4—(Cleveland Satisfactory.. Good No. 5—Richmond Satisfactory.. Satisfactory and promising. Active; profitably employed. Private building negligible; Government work active. R e s t r i c t e d bylack of tonnage. Good demand; 6 per cent; increasing. Railroad, irregular; Inadequate and unsatisfactory. post oilice, volume large; reflect increased rates. (rood Active Very inactive. Unsatisfactory Steady. Stationary Scarce and paid. Inactive.. Firm... Increase Generally good. No. 6—Atlanta . Very busy. Dull. well No. 7—Chicago Good Excellent Generally at capacity. No. 8—St. Louis Good Good Generally active-. Quiet Firm Increase in postal receipts. Improving. No. 9—Minneapolis.. Good Good Active Firm Good Fair. No. 10—Kansas City. Good Much improved...! Active ! Substantial increase Settled. No. 11—Dallas Fair to good ! Railroad, increase; post of lice, 60.1 per cent increase for April at larger cities. Unsatisfactory; scarcity in all branches. Good [ | Satisfactory. I Improving, but below normal. i Increasing Active Building fairly active, though not as heavy as last year. Only fair. Very active Decreasing. Large volume I No. 12—San Franci;col Active I Slow | Unchanged; firm to steady. | Firm , Increasing More settled. to 528 FEDEKAL RESERVE BULLETIN. JUXK 1, 1018. 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 arc 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 May 23: DISTRICT NO. 1—BOSTON. Conditions in similar lines of business vary widely in different parts of the district, due to local factors, but on the whole general business, while good, is following the same trend that has been apparent for several months and is settling down to a war basis. All business, no matter what its nature, has encountered new and in most cases unprecedented conditions. The manufacturers of products required by the Government are delaying distant future commitments for civilian purposes until war needs are provided for. The demand for labor for war requisites has forced up wages to a point where overhead costs make it more and more unprofitable for some dealers and manufacturers to continue business. On the other hand, an excellent demand for clothing and dry goods of the better grades is being made by employees earning larger wages. There is a decrease in the inquiry for cheaper goods ordinarily purchased by this same class. In some sections wage earners are said to be spending their money as fast as received, while in others savings deposits are showing satisfactory increases. Nevertheless, a large number have become Liberty bond owners who, up to a few months ago, did not know what a security was and had never saved. Deposits in savings banks have been very little affected and much less than in past Liberty loans by the third campaign, and the large number of individual subscriptions for small amounts indicate that many bonds are being paid for out of earnings. The Capital Issues Committee has been effective in its influence in cutting down unnecessary expenditures, both by municipalities and industries, and this has resulted in the release of much labor and raw material in addition to the capital saved. Boot and shoe manufacturers are finding collections good. The early warm weather has advanced the season for summer shoes, with a consequent large retail demand, especially in women's lines. Retailers are not carrying large stocks and are therefore able to meet maturing obligations promptly. Many manufacturers have enough civilian orders, taken in conjunction with Government con tracts, to keep them busy until fall. The Government regulation of the wool trade practically prohibits dealers from doing business. The entire crop has been taken over by the Government, dealers having been asked to handle, on a percentage basis, that part which is to be allotted for civilian needs. Some of the larger dealers estimate that by doing this they will be able to keep their organizations in good form until after the war, but that it will leave no profit after overhead expenses. The National Association of Wool Manufacturers report, under date of May 16, indicates that all but a very small percentage of machinery is in use and that approximately 50 per cent of the spinning spindles in this district are employed on American war orders. Cotton mills producing fine goods have had a considerable demand in the last week or two, but are unwilling to accept new business until at least a part of that already booked is finished. !Mills find that with Government business and shortage of labor, they will be unable to make deliveries until a month or two later than originally planned and this extends some commitments into the late fall. The prices for print cloth have developed some strength with the demand good. Wages in New Bedford mills have been increased 72 per cent in the last two and one-half years, but .FT X K 1 . . 1 0 I S . FEDERAL RESERVE BULLETIN. in spite of this employees are again threatening to strike unless granted a further increase. This, in addition to the increase that is anticipated in taxes, is causing mill owners considerable apprehension as to future not earnings. The United States Department of Agriculture estimates that about the average amount of plowing and planting was finished May 1. The spring has been favorable for farm work, the season being about normal. While labor has been hard to obtain, the fanners are doing their utmost, and a good crop is expected. The money market is very quiet, with tone easier than last month. No large demand for loans to pay taxes has become evident and as the due date approaches less uneasiness is apparent. Banks, however, are not anxious to loan for long maturities and credits are being closely scanned. There is only a limited market for outside paper, but banks are in a position to meet comfortably the demands of their customers which are apparently less in volume owing to Government payments being more prompt. The sales of commercial paper being made are out-of-town and mostly at 6 per cent. Call money, 5 to 5-J- per cent; time money, 5£ to 6 per cent, with exceptions at 5£ per cent, but only for short maturities. The exchanges of the Boston Clearing House for the week ending May 18, 1918, were §317,154,340, compared with $228,733,906 for the corresponding week last year and §307,496,431 for the week ending May 11, 1918. Building and engineering operations in New England from January 1 to May 16, 1918, amounted to 855,198,000, as compared with 869,073,000 for the corresponding period of 1917. The receipts of the Boston post office for April, 1918, show an increase of $113,612.09, or about 15 per cent more than April, 1917. For the first 15 days of May, 1918, receipts were about 11 per cent, or §41,192.53 more than for the corresponding period of last year. The Boston & Maine Railroad reports net operating income, after taxes, for March, 1918, 529 of 817,456, as compared with $215,588 for the corresponding month of 1917. For March, 1918, the New York, New Haven & Hartford Railroad reports operating income, after taxes, of SI,153,488, compared with SI,647,490 for March, 1917. For the first three months of this year operating income, after taxes, of the four principal New England roads was §229,518, as compared with $6,932,622 for last year. Loans and discounts of the Boston Clearing House banks on May, 1918, amounted to §503,733,000, as compared with $491,471,000 last month and $457,051,000 on May 19, 1917. Demand deposits on May 18, 1918, amounted to $464,336,000, as compared with $430,780,000 on April 20, 1918, and 1351,006,000 on May 19, 1917. Time deposits on May 18, 1918, totaled 116,179,000, as compared with $19,755,000 on April 20, 1918, and $33,750,000 on May 19, 1917. The amount "duo to banks'7 on May 18, 1918, was $129,078,000, as compared with 8140,747,000 on April 20, 1918. DISTRICT NO. 2—NEW YORK. Business and industry continue very active in this district. Manufacturers of chemicals, potteries, lead, paper, tableware, sewing machines, silks, and knit goods report good business. Dealers in building materials report business as only a fraction of the usual volume. Heavy orders recently placed by the Government are causing shoe factories to run at maximum capacity. The copper industry is exceedingly active, with approximately 90 to 95 per cent of the entire production being manufactured into articles required by our Government and its Allies. Smelting companies report that the value of copper and other metals in transit between western smelters and eastern refineries is about one-third of what it was in the middle of March. Factories producing electrical machinery are working at maximum capacity. Shirt and collar manufactures show decided failing off in production. Glove manuufacturers, though hampered by shortage of skins, are maintaining a volume of business 530 FEDERAL RESERVE BULLETIN, about equal to that of last year. Contracts for 30,000 steel cars, to cost $80,000,000, and 1,025 locomotives, to cost $60,000,000, have been let by the Railroad Administration. The adaptation of factories of various kinds to Government work is the most notable feature of the industrial situation. An example of the changes going on is the recent utilization of 50 per cent of the capacity of a phonograph factory in this way. A company which before the war made auto parts, motor-truck frames, and sporting rifles and pistols is now making machine guns and light ordnance, has 5,000 employees, as compared with 1,500 in 1915, and a volume of business over eight times that of 1915. Demand for sporting ammunition is much smaller than before the war. A storage-battery plant is devoting 85 per cent of its capacity to Government work. Department stores and retailers report good business in medium-priced furniture, kitchen ware, cotton piece goods, ready-to-wear garments, men's furnishings, shoes, hosiery and knit underwear, gloves, millinery, handkerchiefs, notions and ribbons, food and tobacco, but reports indicate a decrease in sales of highgrade silks, woolen dress goods, laces and embroidery, high-grade furniture, jewelry, and other less essential goods. Collections are good. Labor, both skilled and unskilled, is in strong demand at advancing wages. Factories in the State of New York report 1.2 per cent more employees and 19.9 per cent larger wage volume in March, 1918, than in March, 1917, and 12 per cent more employees and 50 per cent larger wage volume than in March, 1916. Wage payments in the metal goods and chemical industries, both of which include the manufacture of munitions, as well as in printing, textiles, clothing, and food manufacturing, are larger than ever before. War conditions have caused a shortage of needle-trade workers, as it is estimated that an average of 10 to 15 per cent leave the trade yearly to engage in other pursuits, and the loss has not, as in normal times, been made good by immigration. JUNE I, 1918, Because of the large demand for summer furs, workers in this trade now find employment the entire year, where formerly their dull season extended from January until July. New York and St. Louis are said to have displaced London, for the time being, at least, as the world's largest fur market. Improvement in freight conditions in the eastern territory is indicated by figures made public by the Regional Director of Railroads. The accumulation of export freight in carload lots on the eastern seaboard wTas as follows: Jan. 1, 1918. "Nfay 1,1918. In oars.. On piers and warehouses Unloaded on ground Total 11,092 7,659 22,451 S, 042 6,290 13,256 41,202 o 28,5S8 a Includes 24,109 cars of export freight for ocr Government and its Allies. Exclusive of grain and coal, 28,600 cars of export freight arrived at north Atlantic ports and 27,890 cars were delivered to steamers during the month of April. The estimated export tonnage represented by these cars for April was 17.8 per cent greater than that handled during March, and exceeded the export volume in the same months of previous years by the following percentages: 1913, 111.6 per cent; 1914, 139.3 per cent; 1915, 65.1 per cent; 1916,14.8 per cent. In the eastern territory there were 34,791 cars in transit May 9 above normal traffic conditions, as compared with 160,904 on February 6, at the time of the most severe freight congestion. The New York State barge canal was officiall}7 opened May 15, after 13 years in building, the total cost having been $233,695,350. The work consisted of the enlargement of the Erie and three other existing canals, and changing portions of the Mohawk and other rivers into navigable canals. The entire system covers a distance of 352 miles, and connects New York Harbor by water with the Great Lakes. The canal will be controlled by the Government Railroad Administration. Fifteen tugs have been employed for towing purposes, 165 J U N E l , 1918. FEDERAL RESERVE BULLETIN. T old barges have been leased, and orders placed for 75 new barges, deliveries to commence in two months. The crop outlook for the district is favorable, with planting well advanced on large acreage. The use of farm tractors is in some measure making up for shortage of farm labor. Demand for fertilizers during the past three years has increased considerably because of high prices of farm products and abnormal export demand for food crops. In the potatogrowing sections demand for fertilizers is somewhat decreased because of low price of potatoes caused by the heavy production in 1917. Reports received by the New York State Department of Agriculture indicate some reduction in potato acreage and some increase in the acreages of corn and tomatoes. Lower prices have stimulated consumption of milk, the supply having been greater than the demand because of the season and limited facilities for the export of condensed milk. Between low price of milk and high cost of feed the dairymen have had very narrow profits and many have actually run behind. Recent weeks have seen a striking advance in bond and stock prices, rails and industrials being alike affected. Activity was greatest in the week ending May 18, when stock sales exceeded 7,000,000 shares, more than 1,750,000 being sold in one day alone. The level of stock prices on that date was about 14 points above that of the low point in December, and average bond prices are over 3 points above the same low point. Money rates continue firm, commercial paper selling at 6 per cent, with some sales at 5f- per cent. Call money fluctuated considerably, touching 6 per cent occasionally, with the average at about 5 per cent. DISTRICT NO. 3—PHILADELPHIA. The industries of the district are adjusting themselves to meet the war requirements of the Nation, the output in many lines being almost entirely devoted to filling Government orders. The concentration of all the energies of the 531 business life on the problems of the war is gradually resulting in a more smoothly running machine of production. Retail trade is reported to be about 40 per cent ahead of last year in volume of business, wage earners on account of their very large earnings being large consumers of goods. Seasonable lines are in particularly good demand. Manufacturers, as a rule, are extremely busy, but considerable embarrassment is being caused by the scarcity of many kinds of raw materials and the inadequate supply of competent labor. The transportation situation has shown great improvement. Railroad freight car movements over the Pennsylvania Railroad at Lewistown Junction for April totaled 188.000 cars, compared to 176,000 in March and 185,000 in April, 1917. The necessity for equipment of all kinds, however, is very urgent. Motor trucks as a means of transportation are coming more and more into use, and shipments are being made on regular schedules between Philadelphia, New York, Baltimore, and other cities. Little change is noted in the iron and steel situation, Government requirements being paramount and increasing in volume. Some mills are reported as running at 95 per cent of capacity. Orders have been placed which will keep them busy for months to come. Material for civilian use is hard to obtain and demands upon manufacturers are most urgent. Shipyards are taking the largest percentage of output, and manufacturers of locomotives are calling for large amounts, while considerable material is going to Europe. The coke situation is reported somewhat improved. The Anthracite Bureau of Information estimates shipments of anthracite coal during April at 6.368,372 tons. This compares with 7,276,777 in March, which was the record month, and 5,592,299 tons in April, 1917. Bituminous coal production is steadily increasing, due to a better supply of cars and more favorable operating conditions. The huge Government demand for cotton goods has displaced other orders in maiw lines, and it will be some time before any large 532 FEDERAL RESERVE BULLETIN. amount of goods of certain kinds can go to civilian consumers. Manufacturers of cotton yarns ..nd textiles are working at full blast. It is reported that of 34 breweries in Philadelphia, all but 7 show a decrease in output as compared with last year. Owing to the restriction of materials used, output for the current year is estimated at 40 per cent less than last year. Business failures are at a very low ebb, while the record totals of bank clearings for this period of the year reflect unusual business activity. A firm money market prevailed during the past month, 6 per cent being asked on both call and time loans. Commercial paper ranged from 5 | to 6 per cent, with but little paper selling under the higher rate. While loan and investment operations of the Federal Reserve Bank averaged about $2,000,000 per day during April, and more than §2,500,000 during the first three weeks of Ma}r, borrowings by member banks have not been as heavy- as had been anticipated, and it is apparent that the third Libert}7 loan has been floated thus far without any undue strain on the money market. The bulk of the discounting has been in the form of notes secured by Government obligations. Such loans amounted to $35,100,000 in April, compared with $21,100,000 in March, and 3,500,000 from May 1 to May 21, inclusive. DISTRICT NO. 4.—CLEVELAND. The restrictions placed upon nonessential industries are reducing the output very decidedly. The situation is accepted for the most part with cheerful acquiescence, and the energies of the industries affected are turned to lines more needful under the circumstances. Generally throughout, the district business is in a healthy condition. Manufacturing.—The manufacture of steel approaches closely, if it does not equal, its high record, and Government orders are said to be in such volume that few domestic orders are taken and in consequence small manu- JUXE 1, 1018. facturers have difficulty in securing a supply. The pig-iron output, while greatly increased during the past month and comparing favorably with other active periods, is not equal to the demands, and investigations are in progress on the theory that considerable basic iron is being devoted to the manufacture of nonessential products. Tin-plate mills are running at maximum capacity to meet the expected demand during the canning season for food containers. Face-brick manufacturers report that there has been little change in the line in the last 30 days. Production is being adjusted to the curtailment of 50 per cent of the average of the years 1915, 1916, and 1917. Unusual sales of draintile for use in draining swamp lands is reported. Very little change is noted in production by glass plants. Restrictions keep the output of this line in much the same condition as heretofore. Dullness in the building trades is also a drawback, and curtailment in these quarters is to be expected. Owing to the heavy demand for coal for domestic use, occasioned by last year's shortage, the general demand is stronger than usual for this season. In some quarters the volume of production is discouraging, and some complaint is made of miners disregarding their agreements. However, it is believed that coal production for the district is equal to the same period of last year. Agriculture.—In the northern part of the district, in localities where last month the condition of wheat was reported not up to the average, this month, owing to favorable I weather and rain, the condition is reported as very materially improved. In the " blue grass " section this crop is said to be in better condition than ever in its history at this time of year, and generally throughout the district the acreage is large and a good yield is expected. In many parts the areas being planted in corn is larger than ever before. In some localities planting in the lowlands has been delayed on account of wet weather, but, generally speaking, it is progressing favorably. JUNE 1,1918. FEDERAL BESEBYE BULLETIN. The burley tobacco growers report an abundance of plants in beds to be transplanted within the next few days. Last year's crop having been sold at such attractive prices, it is expected that the acreage will be increased. The number of war gardens over last year is very much increased, and in one large center it is estimated that fully 2,000 acres are being cultivated, exclusive of those in the adjoining suburbs. It is thought that last year's experience will be a great benefit and that increased yields will result. Labor.—Farmers still complain of serious labor shortage, but this apparently has not resulted in curtailing their operations. The inadequate supply of farm labor is being met by the use of tractors. Already over 600 tractors of an inexpensive type are in use in the State of Ohio. A shortage is reported from all manufacturing centers, but here again there appears to be no definite curtailment of output in consequence. Many lines of labor are receiving the maximum prices. The small manufacturing centers appear to be suffering more than larger ones from an insufficient supply. Nonessential industries which have been closed for a short time find it very difficult to obtain a new force. While labor is exacting in its terms, and apprehension for the future is apparent, yet there is a general feeling that labor'will to the extent of its power meet the demands laid upon it. Mercantile lines.—Complaint is still made by the mercantile trade of delayed delivery of stocks of merchandise owing to delayed freight shipments. It is generally reported by the jobbing trade that business for the past month has been in large volume and in excess of expectations, which gives evidence that merchants have confidence in the future. In the retail line in some quarters it is reported that this is the first month since the beginning of the war that business has not increased, but even these authorities say that business has equalled the same period last year and that the lack of increase is probably due to weather 533 conditions and to the increased interest of the wage earner in the Liberty loan campaign. Merchants say that the volume of business in dollars is satisfactory, but that the amount of merchandise delivered is smaller in comparison with the same period last year. It is thought that the increased prices for merchandise affect to some extent the purchasing power of the public. Collections.—Collections continue good, and while in some quarters recessions are reported yet in others increased cash sales are said to offset any deficiencies. It is believed that the wide distribution of the third Liberty loan among wage earners has affected collections somewhat, but in general the credit conditions are good. Transportation.—Transportation facilities are thought to be generally improving, although they are still unable to do all that is required of them. However, the complaints in this regard have considerably lessened and acquiesence in the situation is shown. It is believed that the improvement has been such that almost every line of industry is being taken care of to a fair extent. Shortage of labor and equipment still continues to handicap the traffic situation. Money and investments.—The demand for money still continues very active. Since the initial payments on the third Liberty loan bank balances are building up and in some quarters marked recovery is noted. While an increased demand for funds is expected during the coming month, little trouble is anticipated in fully meeting the situation, Building.—The building trade shows little change from its previous condition and, for other than Government work, is almost at a standstill. In. several quarters rents are being increased, and in districts where new plants are being located the housing problem is a matter of concern, DISTRICT NO, 5—RICHMOND. The third Liberty loan has been the allabsorbing point of interest recently. With 534 FEDERAL BESEBVE BULLETIN. our increasing war activities, the public has become more widely impressed with the necessities of the case and has rallied with increasing enthusiasm to the support of the cause. When the campaign closed on May 4 it was found that subscriptions had reached $180,000,000, which is §56,000,000 over the quota of $130,000,000 allotted to this district. The result speaks for itself and there has been a widespread feeling of gratification throughout the district. The bond campaign has been followed by a week's campaign for the Red Cross, which promises to result in an overwhelming success, as was the case with the campaign for the Liberty bonds. Aside from these matters, no others of great importance have transpired since our last report, and changes have been so slight that a report of them constitutes rather a monotonous repetition. The readjustment of the railroad situation of the country, regulation of food and coal supplies, and efforts by State and National Government to relieve the labor situation hold conspicuous attention in the public eye. There has been some unfavorable weather, crop reports generally are favorable, and the condition of winter wheat is said to be above the average. The acreage in summer crops is not expected to exceed, if it equals, that of last year. Cotton, corn, and rice reports, on the whole, are favorable. Every effort is being made to secure maximum results, as these are most important factors in backing our own men and our allies in achieving victor}7 as early as possible. Foodstuffs are in demand. Retail trade is fair in goods of all kinds, including clothing, shoes, and other articles. Government requirements in all lines are the most important factor, particularly as regards lumber, metals, wagons, and all manufactured products of the district. Notwithstanding the reduction in private building to a negligible quantity and disturbing limitations placed on many lines of busi- JUNE 1, 1918. ness, there is a decided tone of cheerfulness and even optimism in all circles. Continued cooperation with the Capital Issues Committee in the conservative limitation of new issues and elimination of unnecessary expenditures is helping to limit capital demands without serious interference with trade activities. A 40 per cent increase in clearings over last year reflects a growing vol'ime of business, resulting, however, largely from exceedingly high prices. The credit demands naturally attendant on Government financing, coupled with the more than normal seasonal demands, are due particularly to the high prices and are making unprecedented calls on bank resources. Bank rates are firm at 6 per cent, and some of the larger banks particularly report that they are overloaned on United States securities and facing strong demands from regular customers. The supply of outside liquid paper accumulated during the winter, when funds were plentiful, has been pretty freely collected or rediscounted. These conditions have been reflected by unusually heavy offerings at the Federal Reserve Bank, and while conditions are sound, indeed unusually prosperous, further demands must be met before permanent relief can naturally be expected from the harvesting and marketing of the growing crops. Some holders of cotton who have apparently overstayed the high market and suffered from the recent decline are hardly entitled to much sympathy. The marketing of the remainder of the present crop and clearing decks for the coming one would apparently be wise. There is a cheerful acceptance of and adaptation to the requirements of present conditions, and an earnest determination to overcome successfully all difficulties, local and national, without any other thought than the winning of the present struggle. DISTRICT NO. 6—ATLANTA. Business activities were somewhat displaced by the all-absorbing interest centered in the third Liberty loan campaign during the past JUNE 1, 1918. FEDERAL RESERVE BULLETIN. month. The campaign started with bright prospects, and though daily results lagged during the middle, the final outcome was in excess of the most optimistic expectations, the subscriptions totaling $137,649,450, against an allotment of $90,000,000. Only a limited number of large subscriptions were received, the great majority being from wage earners, salaried people, and farmers; the most striking factor in the campaign being the large subscriptions received from the smaller towns and rural communities. In the first and second Liberty loans some difficulty was experienced in selling to farmers, but in the campaign just closed this class of citizens fully subscribed its share. Current reports from throughout the district indicate that business generally has not been materially affected by the Liberty loan campaigns; though when installments begin to fall due on monthly payments on subscriptions to the third Liberty loan personal economy will play a stronger part, especially in retail lines. Conditions in dry goods continue brisk, with a good sprinkling of fill-in orders. Early fall orders have been coming in steadily. Jobbers and retailers report especially good business for this season of the year, with indications that the public is beginning to economize in purchases—more noticeably in the high-class trade. Clearings continue to show a monthly increase and deposits are increasing. Deposits in the five larger banks of Birmingham show an increase of approximately $3,500,000 during the past two months. Reports of the Birmingham clearing house for the year ending April 30, 1918, show an increase of $43,526,287 over previous year; and, while allowances must be made for extremely high prices, these increases and clearings reflect the continued business activity in this section. The cool weather prevailing during the first half of the month was followed by more seasonable temperatures, and agricultural conditions are very promising. Acreage in cotton 535 as well as foodstuffs has been largely increased over previous years. The season is about two weeks later than last year, and while farmers are fairly well up with their work the labor test will come in the crop-gathering season. There has been a considerable increase in the sale of mules and farm implements. Most of the farmers are able to take care of their own requirements, but with money easily obtainable the merchants are willing to provide for those who need help. A good stand of cotton is reported throughout the district, and if cultivation of the crop continues as at present there is not much likelihood that there will have to be much replanting. Practically all the cotton in the south half of the district has been sided up and chopped out, and a good deal of the acreage is being plowed the second time. Male labor is very scarce in some cottonfields, and it is not uncommon to see women plowing and children hoeing. The final outcome of the crop value depends largely on the solution of the labor situation. About 3 per cent of the Alabama acreage sown to wheat last fall will not be harvested mainly on account of winter killing. This leaves approximately 140,000 acres to be harvested in grain as compared with 93,000 acres cut last year. Wheat in Georgia, in spite of the winter killing, will be equal to last year's production. In Tennessee the abandoned acreage will be about 32 per cent, compared with 35 per cent last year. The State's estimated production of grain is 10,192,000 bushels, compared with 4,830,000 last year. Last year's production of hay in the sixth district was the largest on record, arid there is an unusually large hay reserve, partially caused by the increased production of peanut hay and velvet beans. It is too early to predict this year's hay crop, but indications point to a slight increase. There will be a decided increase in the citrusfruit acreage on account of the large number of 3roung trees coming into bearing. Several 536 FEDERAL RESERVE BULLETIN. hundred cars of peaches have already been shipped from Georgia points to markets of the North and East. The Mayflower peaches have never been placed on the eastern markets at an earlier date, and the crop of this particular variety is far the largest this State has ever known. Revised estimates of the total peach crop for the year now place the number of cars at 7/300. The public in endeavoring to prevent a recurrence of the coal famine is beginning to store coal, which is creating a demand on the output, notwithstanding new mines are being opened from time to time. A new deposit of zinc sulphide has been discovered in Hancock County, Tenn. The field covers approximately 10,000 acres, largely controlled by one corporation which is at present on the field preparing for the mining of this ore. The industrial situation continues satisfactory, the only difficulty being the result of labor conditions, and especially the inefficiency due to the scarcity of labor. Negro inefficiency is increasing, due to the growing independence brought about by high wages and corresponding tendency to "lay off a few days/' thereby decreasing production in some industrial lines. Industrial leaders look forward to a mighty boom for this section after the war. Many industries heretofore unknown in this part of the Nation are being built up and plans for expansion and larger operations are being considered by almost every industry. The Federal Reserve Bank of Atlanta has had under consideration the applications of the cities of Birmingham, Jacksonville, and Nashville for the establishment of branch banks in those centers. The matter was referred to the Federal Reserve Board, at which place a hearing was held on May 18. DISTRICT NO. 7—CHICAGO. The third Liberty loan has been successfully placed. The banks, though prepared to subscribe to a far greater extent, were not called upon to do so, and the resulting reserve position is a promising augury of their ability to JUNE 1, 1018. finance business and to assist in the flotation of future loans. While there has been some reduction in deposits in this district on account of the loan, this has not resulted in seriously crippling the banks, as many had anticipated withdrawals and had kept their assets in liquid condition. Owing to the intense pace of industry, money will rapidly find its way back to the usual channels, though, of course, the rapidity with which this operation will take place in a given locality is dependent upon the character of its industries. Though complete figures are hot yet available, it is generally understood that the farming communities have figured prominently as subscribers to the last loan. In this connection, several references are made to the strong cash position of farmers on account of the unprecedented prices they have received for their products. We are told that comparatively few new farm loans are being placed and that maturities are being met in an unusual number of cases. Belief in a growing conservatism among business men finds foundation in the exhibit of total commercial failures reported to R. G. Dun & Co. Throughout the United States for the four weeks ending May 16, failures numbered 810, while for the same period in 1917 the total was 1,154. In the West, covering the district of the Chicago Federal Reserve Bank, 1918 figures were 217 for the four weeks ending May 16 as compared with 259 for a like period in 1917. This reduction in failures for the entire country of practically 30 per cent and for the West of over 16 per cent is a satisfactory showing. Labor is quite scarce in most lines. Wages and salaries paid are said to be the highest in history. There are only isolated cases of labor unrest. Notwithstanding, however, the general full employment, the situation of building trades employees is said to be serious on account of the marked cessation of building and construction. Authorities stated a few weeks ago that there were in the neighborhood of 50,000 men idle in these trades in Chicago. r.sK 1, 101.8. FEDERAL KESEKVE BULLETIN, Prices continue to advance in practically all lines. Price regulation has been extended to the leather industry. Textiles are being eagerly bought on an ever-advancing market with the scarcity of manufactured articles for civilian consumption becoming more acute. There is considerable buying for future needs against further advances and greater scarcity. Money rates are hard but banks are accommodating their deserving customers. Distant maturities are not in favor, six months paper being about the limit on which banks are willing to loan even their best customers. Nothing has occurred to mar the brilliant prospects for a large crop of wheat. Michigan alone reports unfavorably in this connection, hard freezes during the winter causing considerable damage to the wheat. There is a large acreage of spring wheat which is coming along in fine shape. Corn is practically all in the ground and under continued favorable weather conditions should be a fair crop. There is much speculation as to the germination of seed corn, of which there was an acute scarcity in the desirable grades, and the farmers are awaiting with some concern the quality of the stand. Oats acreage is large and, like wheat, has had a very auspicious start. The investment market has somewhat revived. Miscellaneous securities are in small supply and strong demand. Brokers look for a good resumption of business if certain approaching maturities are refunded in the usual market. We find investment bankers hopeful for a fair business in three to five year industrials at attractive rates. There is some interest on the part of investors in longer term bonds. Agricultural implement manufacturers are able to dispose of all the products they can turn out under the existing conditions of scarcity of labor, material, and transportation. Orders are far in excess of their ability to supply. Manufacturers of passenger automobiles now working under a voluntary curtailment of output to the extent of 30 per cent are said to be facing a curtailment of 75 per cent based on the 537 steel requirements of the United States and her Allies. Production of 2,000,000 cars during 1918 as proposed by manufacturers is said to represent sufficient steel to build 9,000,000 dead weight tons of shipping. What is to be the decision of the Government is not yet known, but reliable opinion seems to be that nothing will be done that will operate to the permanent serious injury of the industry. Comparative figures of building permits granted in April, 1918, and their value, with those granted in April, 1917, reveal a marked contrast. In April of this year Chicago permits numbered 396, valued at $2,767,900, while in April of last year permits numbered 652, valued at $9,524,450. This reveals a percentage loss of 70 per cent. Fifteen of the largest cities in the district including Chicago report a falling off of 65 per cent in valuation of buildings for which permits were granted. Total values involved were for April, 1918, 86,733,149, for April, 1917, $19,755,583. Only two cities in the entire district report an increase in building operations. This may be attributed to excessive cost of materials, and scarcity of the same, together with unwillingness of individuals to tie up their resources in capital expenditures at this time and a like indisposition on the part of banks to finance such investments. Mines are employed at capacity due to domestic demands, despite the fact that railroads have not yet made contracts for their yearly supply of coal. Coal miners expect a larger production during May than in April. Distillers are feeling a good demand for bonded whiskys which will continue until exhaustion of stocks on hand. Certain distilleries are availing themselves of the adaptability of their plants to corn drying and milling of cattle feed. Maltsters report grave difficulty in securing the necessary labor to carry on their business. Large orders contracted during the embargo period are being filled with great effort necessitating day and night labor. There is no recession in the demand for dry goods. The market is still soaring. Probably due to the Liberty Loan, retail business was 538 retarded somewhat during April, but May promises much activity. Stocks in jobbers' hands are lower both in money value and actual merchandise, while retailers have been pretty well stocked up. Possible Government action in the way of requisition and regulation is ground for much uncertainty. Collections have been excellent. Furniture manufacturers report increases in volume over past periods, part of which are due to higher prices and part to the anxiety of retailers as to ability to secure stock in the future. Collections are good and transportation facilities more satisfactory. Excellent credit condition is an outstanding feature of the grocery business. Correspondents say collections are better than pre-war period. Conservation is being practiced and the distribution of goods is carefully made. Volume is good, despite restrictions on flour and sugar, and light movement of canned goods. Hardware dealers face a scarcity of goods on account of pledge to the Government by steel mills of 100 per cent of their product. Building hardware reflects the slump in building operations while other departments show a healthy increase in volume. A very satisfactory credit condition exists. Maximum prices have been established in the leather industry on the price of raw hides, skins, and leathers. There has been increased activity in the leather market in the last few weeks on account of civilian, Government, and Allied demands. Dealers are naturally not desirous of selling under the Government maximum prices and in view of present volume quotations will hover quite close to if they do not reach the maximum. Collections are good. Receipts of beef cattle have fallen off and authorities anticipate short runs for some time to come. Other live stock are coming to market in normal volume. Incoming stock is said to be of excellent quality. Poor pasturage is apprehended as forecasting light receipts during the summer. Comparative receipts of live stock at Chicago for the four weeks ending May 18, 1918, and a corresponding period in 1917: VE BULLETIN. J U N E 1,1918. I Cattle. Calves. Hogs. Sheep. L W18 1917 I 228,250 1 202,812 i 84 783 70,800 615,374 545,9S2 214,971 202,403 There is nothing approaching general activity in the lumber business. A volume reaching 50 per cent of normal is exceptional. Very few dwellings are being built. The bulk of the trade comes from rebuilding and repairing requirements. Collections are fair. Except in foodstuffs and products containing sugar, mail-order houses continue to record increased sales over last year. Educational measures designed to promote conservation have effected noticeable reductions in the items mentioned. Collections are good. m Pianos, player pianos, and talking machines are reported in unusual demand by retailers, owing to the recent publicity given the statement that manufacturers would voluntarily curtail output. The latter are far behind in filling orders and freely exercise their prerogative of choosing whom they shall sell, on the basis of past credit experience. Collections continue very good. Shipbuilders are, of course, pushed to capacity by the Government needs for ships and are being assisted at every hand to obtain necessary material and labor. Steel business is in the same situation, with Government requirements gradually crowding from consideration the demand for domestic consumption. Though commonplace on account of frequent repetition, the continuance of the urgent demand for watches and chronometers of every description compels capacity operation of watch factories. Retailers attribute large sales gains to purchases of precious stones and watches. Wool markets are featureless. While consignments find their way to central markets, Government prohibition prevents their sale. Committees on valuation will soon be established, when available stocks will be distributed and military needs first met. Clearings in Chicago for the first 17 business days of May were $1,459,000,000, being $42 r JUNK 1, 1918. FEDERAL RESERVE BULLETIN. 000,000 less than for the corresponding 17 business days in May, 1917. Clearings reported by 22 cities in the district outside of Chicago amounted to §322,000,000 for the first 15 days of May, 1918, as compared with $318,000,000 for the first 15 days of May, 1917. Deposits in the 12 central reserve city member banks in Chicago were $878,000,000 at the close of business May 20, 1918, and loans were $584,000,000. Deposits show an increase of approximately $14,000,000 over last month, and loans an increase of approximately $5,000,000. DISTRICT NO. 8—ST. LOUIS. The outlook in this district is greatly strengthened by the favorable crop conditions. From reports received throughout the district, it appears that the crops generally are in good condition. On May 1 the condition of the winter wheat in the States included in this district was estimated by the Government to be 94.7 per cent, which is 10 per cent better than the 10-year average. The acreage in winter wheat is also considerably more than last year, and a large output is anticipated. The oats, rye, ha}r, and alfalfa crops are also reported to be progressing satisfactorily. The planting of corn has been retarded by the recent rains, and in some sections it will be late. However, the indications point to a good crop. The cotton and tobacco crops are also somewhat behind, but they are said to be improving. The fruit has been damaged in some portions of the district, and our correspondents state that there will be very few peaches. There seems to be an increased diversification of crops in this district and a general tendency to produce an abundance of food. Business in this district continues active, especially in those lines contributing articles necessary for the prosecution of the war. Manufacturers are more and more engaging in Government work, and some are now doing practically nothing else. Iron and steel manufacturers report increased activity, and manu- 539 facturers of boots and shoes, clothing, etc., are also busy. Packers report a large increase in business over this time last year. Some decline in the electrical line is noted, due to the fact that very little building or extensions by public utilities is going on. Flour mills also report a dull business, on account of their inability to get a sufficient supply of wheat. Wholesalers and jobbers of dry goods report a good business, as do also department stores and retail merchants generally. The grocery trade is said to be steady, but the demand for many articles is falling off on account of the numerous gardens. Dealers in jewelry report a decline in their business in some directions, while in other directions it is holding its own. The demand for jewelry is said to come largely from those who, by reason of a change in fortune, find themselves short of jewels and long in cash. The reports state, as a rule, that collections are good, and some indicate that cash transactions are increasing. During the past month a fur sale was held in St. Louis, the total sales amounting to $6,250,000. It is said that in quantity of furs presented, in the number of active buyers, and in the actual cash returns this was the largest fur sale ever held. The scarcity of materials for civilian use is affecting practically all lines, and is causing many buyers to place orders for future delivery, believing that they will be unable to get the goods at all later or else at higher prices. Some concerns are restricting sales for future delivery. Government needs are receiving first consideration, and there is a growing sense of responsibility among business men to cooperate to win the war. The transportation situation continues to improve, but complaints are still heard on account of delays in shipments of goods, which is having a deterrent effect on business. Outside of St. Louis there is very little disturbance in the labor situation in this district. In St. Louis the situation is improving, and with the aid of Government mediators, it is anticipated that practically all strikas will be 540 FEDERAL RESERVE BULLETIN. settled in the near future. Labor is well employed, and there is a good demand for both skilled and unskilled workmen. According to the report of the St. Louis National Stock Yards, there was a decided falling off in the receipts and shipments of horses and mules during April. The receipts and shipments of hogs and sheep were also less than the previous month. However, there were substantial increases both in the receipts and shipments of cattle. In comparison with April of last year, the report also shows increases in the receipts and shipments of cattle, and increases in the receipts of hogs and the sales of horses and mules, but decreases in the receipts of sheep, horses, and mules and in the sales of hogs and sheep. Reports from the leading cities in this district for the month of April indicate a slight increase in building operations over the previous month, but perceptible decreases in comparison with April of last year. Little building is going on in this district except that which is absolutely necessary. Postal receipts in St. Louis, Louisville, Memphis, and Little Rock, during April, all show decreases in comparison with the previous month, but in comparison with April of last year, substantial increases are shown. The demand for money in this district has continued good during the past month. The bank rate to customers is still 6 per cent in the large centers and slightly higher in the outlying districts. Very few of the banks in the large centers are in the market for commercial paper, though there is a fair demand from the country banks. The commercial paper rate, as a rule, is 6 per cent for all maturities. Brokers report that the demand is mostly for short-term paper, which is readily available for rediscount at the Federal Reserve Bank. Bankers and business men are now making arrangements to meet the payment of the excess-profits tax, which is due June 15. The burden on the banks is expected to be greatly relieved by the fact that many individuals JUNK 1, 1018. and concerns have purchased United States Treasury certificates with which to pay this tax. DISTRICT NO. 9—MINNEAPOLIS. With a favorable season crop production in the Ninth District should roach record figures. A very large acreage of all small grains and especially wheat has been planted, and all crops have obtained an excellent start. Corn and flax acreages will be less than a year ago, and farmers have wisely devoted a part of the usual corn ground, which they were not able to plant because of the shortage of good seed, to the equally important item of wheat. This in part explains a very substantial increase over the normal wheat planting. Moisture conditions from the beginning of the season have been entirely satisfactory, especially in western North Dakota and Montana, where the crop a year ago was a failure. A large amount of new land has been put under plow in that portion of the district. The very favorable crop outlook and the fact that the moisture now in the ground is sufficient to carry the crop well into June has had a favorable influence upon all lines of business, and trade at local points is good. Banking conditions show little change. The demand is active and rates are firm without much fluctuation from the conditions a month ago. No serious shortage of labor has yet developed, although good labor is scarce and most large employers are having some difficulty in meeting their demands. There is a prospect that as the season advances there will be difficulty in supplying labor both for commercial and agricultural activities. The soundness of underlying conditions throughout the district was well demonstrated hy the extremely liberal response of all classes of labor to the third Liberty loan, resulting in a very heavy oversubscription and in the oversubscription by each one of the more than 300 different counties in this district. JUNE 1, 19:18. DISTRICT NO. 10—KANSAS CITY. FEDERAL RESERVE BULLETIN. 541 owing to liberal receipts and the promising Agriculture.—The present agricultural out- start of the new crop. The visible supplies of look is very promising. General weather con- corn on the four chief markets decreased about ditions in this district continue favorable for j one-tenth during April. the development of crops. There has been | The Government is now contracting for the ample rain for the immediate needs of the balance of the pinto bean crop, and when this wheat sections, and these States report that movement is over fully 50,000,000 pounds of winter wheat has made an excellent growth pintos will have been shipped to eastern during the past month, and the condition has markets. It is estimated that 400,000 acres improved steadily. The old wheat supplies of these beans will be planted in Colorado will be more thoroughly cleaned up than ever alone this spring, and indications are that the before, and a determined effort is being made pinto will prove a valued asset to the whole hy the Food Administration to use every avail- Southwest. able bushel, so that the new crop season will Live stock.—The remarkable and recordbegin with empty bins. The season has breaking advance in prices for beef steers, started favorably for spring sown crops, j which began with the opening of the month though cool weather has made corn develop- and continued until almost the close, is mainly ment a little backward. responsible for the large movement of cattle Practically all the mills in this region con- to market. When the prices for all classes of tinue to operate on Government orders either fat cattle reached these new high levels, shipfor the Army or for export, and have therefore pers sent in all stock they could secure to produced little flour available for domestic | meet the strong demand, and a large part of use. The people, however, have willingly used j the corn-fed cattle were marketed. Accordsubstitutes, and this unusual shortage in the j ingly, stocks of meat have so materially domestic supply has caused remarkably little j increased that with incoming supplies they comment or complaint. Mills are grinding will amply cover the demand until the incomwheat as fast as they can secure it, but reports ing of grass-fed cattle in July. Since the from 67 in this district showed they were run- cattle movement from Texas north is about ning at only 40 per cent of capacity during j completed, the demand for loans to finance April as against 80 per cent a year ago, with a cattle for grazing and fattening purposes is not resultant decrease of nearly one-half in the so strong. flour output. Wheat stocks on the four prinThe hog market continues at a high record cipal grain markets decreased 72 per cent level for this time of year. Receipts at the during the past month. Local market re- seven district markets increased 30 per cent ceipts were less than one-eighth and ship- over April, 1917. The general quality of ments less than one-fourteenth of those last offerings was good and the weight of hogs on year. five markets averaged 218 pounds, as compared The marketing of corn and oats continues with 203 pounds last year. Slaughterings were larger than usual for this season of the year. 7 per cent in excess of those a year ago. Receipts of corn on the local market for the Prices on sheep and lambs during the past past month increased two-thirds over the cor- month on the local market reached record responding period last year and shipments were heights. Feeding and breeding stocks were in nearly three times as great. The demand for strong favor, with but a very limited suppl}r. corn as a wheat substitute has been sufficiently Spring lambs were exceedingly scarce, while heavy to maintain extraordinary high prices the receipts of sheep have been below the considering the volume of supplies. The prices demand. Conditions were generally favorable on oats, however, have declined moderately and up to the close of the month the prevailing 542 FEDERAL RESERVE BULLETIN. JUNE 1, 1918. tone of the market was strong. Sheep receipts Oil.—There were 122 more wells completed for the seven chief centers were reported 11 in Kansas during April than in the previous per cent greater than those a year ago. month. Because of the fact that no so-called Mining.—Conditions in the metal mining "freak" wells—that is, wells with 10,000 or industry of Colorado have changed very little 15,000 barrels initial production—were brought during the past month. The increased price in, a falling off in new production was shown, of silver, brought about by the passage of the the decrease being 44 per cent from March. silver bill providing for the melting of 350, However, the month proved good from the 000,000 silver dollars now in the Treasury, has standpoint that the wells completed should be resulted in renewed inquiry for silver proper- longer and better producing ones than those of ties, and some stimulation of this industry is freak character. High prices of crude have expected. It is reported that shipments of caused remewed activity and interest in the manganese ores, used in the manufacture of old fields. The estimated total production of paint, glass, and chemical products, have the State was 84 per cent greater than that of increased and will continue to gain steadily April, 1917. throughout the summer, if prices remain high. Oklahoma completions during the month of Inquiries are being made in this State regard- April numbered 784, an increase of 75 over ing deposits and production of chrome and March. The new production, however, made pyrite, both iron products for use in connec- a slight decrease of less than 1,000 barrels, or tion with the war. 3 per cent. Gushers were not plentiful and The month of April showed a distinct slow- there were but few wells that started better ing down in the mining industry of the Mis- than 1,000 barrels a day. The total estimated souri-Kansas-Oklahoma district. The average production of the State was larger than that of price on all grades of zinc blende dropped from the previous month, but still continues slightly $45 per ton, as quoted in March, to $42. This under last year. Stocks of crude petroleum in decrease in zinc ore prices contributed largely the Oklahoma-Kansas field at the end of to a curtailment of producing operations, and March were about 500,000 barrels less than in also to an increase in surplus stocks. Govern- February and have decreased nearly 7,000,000 ment cooperation has encouraged the operators barrels, or 6 per cent, since March, 1917. A severe storm curtailed nearly all field to some extent. A price of $75 per ton has been set for the high grade ores, thus assuring operations in Wyoming. But 12 wells were producers a fair profit. Government and completed during the month, with a new daily allied contracts will probably be placed in the production of 795 barrels, as against 17 comnear future. The production of the district pletions in March with production of 1,000 for the first four months of this year as com- barrels per day. It is reported that large pared with the corresponding period last year companies have become interested in the decreased nearly 14 per cent and the value of Wyoming fields and are investing great sums of money to develop the deposits. An inthis output decreased over 40 per cent. The lead ore market has also shown some creased future production is looked for in that decline, opening at $85 per ton and closing by State. the end of the month at $80. Surplus stocks I Lumber and construction.—Conditions are decreased slightly during April. The total j very uncertain in the lumber market at present, output of lead gained 9 per cent for the first i but there is a steady and strong demand for four months this year over the same period in I all kinds of lumber, which is not noticeably 1917, but the value decreased about 18 per I retarded by the high prices. It is reported 1 that from the standpoint of wholesale dealers cent. JUNEl, 1918. FEDERAL RESERVE BULLETIN. conditions were never more favorable. They advise that the bulk of orders are from the country yards, and as crop conditions have greatly improved, the demand from the rural districts is expected to be heavy. Shipments from the mills continue quite slow and uncertain, although the car situation is greatly improved. This is attributed to the facts that the mills are still running on reduced operations and that long-standing orders from eastern points are being filled. Reports indicate that most of the retail dealers are carrying normal stocks. Building permits issued in the 10 largestcities of this district for April were nearly onefourth less in volume than those issued during the same month last year. The estimated cost of such proposed constructions was about $2,500,000, an increase over the preceding month but a decrease of 35 per cent from April, 1917. Only 3 cities showed a gain in this month's building valuations as compared with those of the corresponding month a year ago. Labor.—Labor conditions have been very quiet and settled. But a few small strikes were reported during th e past month. Government cooperation has been extended to the State free employment bureaus. Although the demand for farm labor is steady and insistent, it is predicted that all needed hands will be secured. However, Kansas alone is reported in need of 85,000 men for farm work in the harvest season. All cities in that State are to be requested to furnish a census of their man power and its availability for a farm draft. In Nebraska, under a new law, all men over 16 years of age must register the first week in June and become liable to farm labor. Mercantile.—General merch andise activities for the 3'ear ending April 1, 1918, compared very favorably with the annual period ending April 1, 1917. The seven States (wholly or partially within this district) show an average increase of over 2 per cent in purchases, a small decrease in indebtedness, and a gain in payment activity averaging 3.2 per cent. 54$ The Government now plans to take over the implement control, and all dealers will go under license June 20. General reports indicate that except for harvesting machine^ the present demand for farm implements is exceptionally light. Manufacturing is active. Jobbers in all lines advise that trade is very good with a steady call for seasonable goods, greatly stimulated by warm weather. Merchants are purchasing goods for future delivery from the wholesalers. Sales of shoes are large, with higher prices predicted for next fall. Trade in groceries and drugs is normal and orders continue in good volume. Failures are few and collections fair to good. Financial.—Receipts at the post offices in 11 of the largest cities in the district for the month of April as compared with the corresponding month last year showed a substantial increase of 28 per cent. Bank clearings as reported in the 17 principal cities for the past month gained 47 per cent over April, 1917. The clearings at Omaha were 81.2 per cent in excess of those a year ago, the second largest increase in the entire United States. The third Liberty loan was a great success,, with a subscription of over $4,000,000,000 from 17,000,000 persons. The Kansas City district, | with a quota of $130,000,000, subscribed over | $200,000,000, or 156 per cent of its quota, and j was credited second among the 12 Federal j Reserve districts. Demands for money continue strong. Rates of discount have advanced and a new schedule with increased rates went into effect May 20. DISTRICT NO. II—DALLAS. The generally favorable features which for some time past have characterized the commercial situation in this district still obtain, and with few exceptions our correspondents are optimistic concerning the business outlook in the immediate future. Farming conditions show a further improvement in the past 30 days, . the result of good rains over practically all of 544 FEDERAL RESERVE BULLETIN". the agricultural belt, and the drought seems to have been broken over a large portion of the territory which has suffered for many months past. Reports as to lack of sufficient moisture are the exception at this time, rather than the rule. Farmers have planted seed and cotton and are getting fairly good stands. Corn and other feed crops are, for the most part, in good condition. The season is late on account of dry weather and the fact that the month of April was unseasonably cold. The small-grain crop shows great improvement with the fine rains, and while actual figures as to the condition of this crop at this time, as compared with 30 days ago are not at hand, we believe that the improvement will make the yield fully up to, if not exceeding, expectations. From the rice-growing belt of south Texas our correspondents advise that the planting season has been ideal, and with anything like normal conditions the yield of rice will be unusually heavy. Onion shipments from the Laredo section have so far aggregated about 1,200 cars. Last year's shipments amounted to about 1,800 cars. Recent rains there have damaged the crop remaining unshipped and a great many of the shipments are going to market in bad condition. The cost of production this year has been heavier than formerly, and but few of the growers will make money; many of them will sustain large losses. Our correspondent at Nogales reports that the first shipments of chick peas (garbanzo) have arrived at that interior port, and as this is the money crop of the west coast of Mexico, and most of the growers carry their accounts with banks in that section, it will mean a considerable activity in business there. The crop of chick peas this year will be unusually large, and it is expected will be sold at satisfactory prices. The first warm weather of the season has obtained during this month, and as the result retailers of summer merchandise have enjoyed a good business. Retail trade in other lines is also in good volume, and fully up to expecta- JUNE 1,1918. tions. Wholesale lines, such as dry goods and notions, are in good demand, and wholesalers and jobbers have all the orders they can conveniently handle. In seasonal lines, such as seeds, farm implements, harvest supplies, etc., trade is unusually brisk. Activities with all manufacturing industries are well maintained, and their operations are restricted only by the continued scarcity of labor and uncertainty in delivery of raw materials. Collections are fair to good. Subscriptions to the third Liberty loan will run slightly more than $115,000,000. The banking institutions of this district have demonstrated their patriotism in this great movement, and notwithstanding that we are approaching the borrowing season, they have responded unselfishly to the war demands. An early analysis of the reports of conditions from the comptroller's call of May 10 shows a decrease of deposits and increase in loans. Demand with this bank continues unusually heavy, our loans showing an increase of some $3,000,000 in the past 30 days. Interest rates are steady to firm. Within the past 30 days a large portion of the $5,000,000 special Government fund for drought-relief purposes has been distributed in the west and southwestern portions, and the deposits have been of great relief to the banking institutions there. The demand with banks in the west and southwest, where the drought was so serious, already heavy, has been further increased by the good rains over that territory and the necessity of financing farmers and stock men to get a new start. The Red Cross campaign is now actively under way and we confidently believe the quota of this district will be fully raised, if not largely oversubscribed. This statement is based on the previous unselfish and patriotic response of banking institutions, firms, and individuals in this district to the Government's program. At the risk, probably, of repetition, it may be stated that the building industry is generally inactive and below normal, a decrease in val- JUNE 1,1918. FEDERAL BESERVE BULLETIN". uation of 29 per cent in permits issued being shown at the principal cities in the month of April. Construction of ships at Orange and Beaumont, however, has made an unusual activity at these places, and business in all lines there is at capacity, reports indicating that it is difficult to provide proper housing facilities for the influx of workmen and their families. Reports from New Mexico indicate that cattle and sheep are in poor condition, and there will be a small crop of calves and lambs. Practically all of the range country in Texas has had good rains and the present outlook in the cattle industry in such sections is more encouraging than for some time past. Large sales of steers have been made in Arizona for June and July delivery, and with the reduction in the amount of feed necessary, the result of good rains, cattle men are more optimistic concerning the immediate future in the industry. Post-office receipts at the principal cities of the district show an increase of 60.1 per cent for the month of April over the same month last year. This is the largest increase reported in several months. The recent rains have created an active demand for farm labor and the shortage which has existed for several months past has grown more acute. There is no material change in the situation as regards skilled lines. There is also a fairly good demand for carpenters and other building mechanics. The general situation as regards labor in this district is indeed serious. Practically every line of business is suffering from the shortage of help, and as the harvest season approaches the situation will be intensified. Our correspondent at Tucson reports that producers of copper in that section of Arizona are complaining on account of the maximum price of 23J cents per pound which has been set on that metal. Owing to the increased cost of production, they claim this price leaves them no profit. 545 Trade with Mexico is improving, and were export and passport regulations not so rigid business would be much better. Merchants at border points are handicapped by these export regulations. This has had a tendency to reduce their volume of business, on account of the difficulty experienced in securing export licenses. Texas lumber manufacturers report that conditions at the sawmills are such that they are able to produce only about 50 or 60 per cent of their normal capacity. Cars are in fairly good supply and very little complaint is being made on account of lack of equipment. The demand for lumber is largely in excess of production and has been for some weeks. Excepting for the scarcity of labor essential to the output of the mills, the situation in Texas lumber trade is in fairly good condition. The lumber mills of New Mexico are working to their full capacity and have more orders than they can fill. DISTRICT NO. 12—SAN FRANCISCO. The condition of grain in all parts of the district, except in California, is good. A larger acreage was seeded, and the increase in production will be considerable. On May 1 the condition of winter wheat in Washington, Oregon, and Idaho was better than the average for the past five years. In California wheat acreage on May 1 was 416,000, with an estimated production of 7,076,000 bushels, or 349,000 bushels less than last year, the decrease being due to lack of spring rains. In the Imperial Valley harvesting of wheat and barley has started, 100,000 tons of barley and 10,000 tons of wheat being the estimated production. Recent rains in Oregon, Washington, and Idaho have greatly improved the condition of all grains. The winter wheat acreage is estimated at 1,850,000 in Washington and 553,000 in Oregon. About 50,000 acres are planted to rye in Washington, Oregon, and Idaho, from which 896,000 bushels are expected. Hay acreage is about the same as last year and the condition is normal. 546 FEDERAL RESERVE BULLETIN. Ranges in the Pacific Northwest are in good condition, but in California, Arizona, and Nevada are rapidly drying. Almonds, pe4aches7 and apricots were damaged by frost in some localities, but a yield of deciduous fruit better than the average is expected. In Washington apples are in good condition, a heavy crop of most varieties being indicated. The navel orange season just closed in California was the lightest in several years, only 10,727 cars having been shipped from November 1, 1917, to April 29, 1918. Valencias are now being shipped. The crop is about three-quarters normal, and it is estimated that 12,000 cars will be shipped by October 31, 1918, bringing total shipments of citrus fruits for the season to 27,000 cars compared to 50,077 cars last season. The orange groves now have a very heavy bloom, and with favorable weather next season's crop is expected to equal if not exceed the 1916-17 bumper crop. It is estimated that 120,000 acres will be sown to rice in California this year, compared to 90,000 acres in 1917. Reports indicate that there will be little if any shortage of water for irrigation during the summer. The wool markets of the district have been very unsettled, due to the uncertainty of the Government's action. The situation has cleared since May 1, through the announcement that the Government would take the entire clip at the prices prevailing in the Boston wool market last July. This will net growers from 45 to 60 cents per pound, according to the quality. The absence of speculators and buyers from the market during the past winter placed the whole burden of financing woolgrowers upon the banks, who, fortunately, through the facilities for rediscount afforded by the Federal Reserve Bank, were able to care for their requirements. The growers generally are satisfied with the prices, and wool is beginning to move in considerable quantities. The flocks came through the winter in excellent shape and a high percentage of iambs was saved. The Government report of January 1, JUNE 1,1918. 1918, showed an increase in flocks in Oregon, Idaho, and Washington of 2\ per cent during 1917. Alaska salmon packers expect a normal pack of about 6,000,000 cases. The pack of red salmon on Puget Sound, Columbia River, and in British Columbia is expected to be less than 1,000,000 cases. Conditions in the lumber industry have improved. The car supply at present is adequate, but lumbermen anticipate another car shortage in July. Two months of operation under the eight-hour law have shown 9.81 per cent decrease in output and 25 per cent increase in cost of production. The placing of 10,000 soldiers in various Oregon and Washington lumber camps had a very stabilizing influence. Agitators are not so much in evidence, and the attitude of the laborers is said to be more favorable to increased production. The placing of the Government's order for 100,000 box cars, 3,000 of which will be built in Oregon and Washington, will utilize considerable lumber from this district. The control exercised by the United States Shipping Board over the movements of vessels and Government requisition have swept the ports of the district practically clear of vessels available for charter. The agreement with Japan whereby the Government obtains 250,000 tons of ships in exchange for an equal tonnage of ship steel will create a shortage of tonnage for oriental trade, as most of the Japanese ships will go to the Atlantic to carry men and supplies to Europe. Steel and wooden shipbuilding continues to lead all other industries in the district. Launchings are of almost weekly occurrence, and several shipbuilding records have been broken recently. Such achievements, apart from their importance in aiding the early increase in available tonnage, illustrate the improved spirit of the workmen in the shipyards, for it is on their efforts that the shipbuilding program depends for results. The concrete steamer Faith had a successful ocean trial trip on May 15 and will go to sea JUNE 1, 1918. FEDERAL RESERVE BULLETIN. loaded about May 20. The large production of cement on the Pacific coast, the California production in 1916 being 5,299,507 barrels, and the location of steel mills in each of the coast States for rolling the necessary reinforcing material make possible the economical construction of concrete ships on a large scale on this coast. Petroleum production in California during April was 8,294,137 barrels, an increase over March of 262,260 barrels. April consumption was 8,623,006 barrels. Storage stocks decreased 328,869 barrels to 30,502,447 barrels. The successful development of a process for extracting potash from the brine of Searles Lake, San Bernardino County, is claimed and a large plant has been erected. The previous dependence of America on Germany for this salt is shown by the following figures of imports: 1913, 267,970 tons, average price, $38 per ton; 1916, 10,628 tons, average price, $400 per ton. American production in 1916 was 9,720 tons. Other sources of potash in California 547 are Owens Lake, Inyo County, and extensive beds of kelp off the southern California coast. April bank clearings for 20 principal cities of the district increased 21.9 per cent over the corresponding month of 1917. The greatest gain was shown by Tacoma with 71.1 per cent, followed by Seattle with 64.2 per cent, and Portland with 41.4 per cent. Building permits for the same cities declined 22.3 per cent. The district's quota for the third Liberty loan was $210,000,000, which was oversubscribed nearly 40 per cent. The total number of subscribers was far in excess of previous loans, showing a wide distribution of the bonds, and demonstrating that the people of the district are loyally supporting the conduct of the war. The position of the banks is strengthened by the heavy disbursements of the Shipping Board and other Government departments in the district, which amount to nearly $50,000,000 per month. The situation throughout the district is one of great industrial and agricultural activity. 548 FEDERAL RESERVE BULLETIN. GOLD SETTLEMENT FUND. JUNE 1, 1018. Total deposits of gold in the two funds from April 18 to May 16, principally by the Chicago and San Francisco banks and the Federal Reserve agent at Boston, amounted to $69,668,700 against total withdrawals of gold of $7,640,600, resulting in a net gain of $62,028,100 in the combined funds. The combined banks' and agents' balances crossed the billion dollar mark oil May 3, aggregate holdings at the close of business on that day amounting to $1,004,331,200. On May 16 the total of the two funds was $1,036,495,500, an increase of 28.2 per cent since January 1, 1918. Below are given figures showing changes in the fund between April 19 and May 16, both inclusive. Operations through the gold settlement fund for the four-week period from April 18 to May 16, 1918, were the heaviest of any period during the current year, due largely to Government fiscal operations, including transfers of funds largely for the payment of the second issue of certificates of indebtedness maturing on May 9, and also to payment in New York exchange for Liberty loan bonds. Combined clearings and transfers for the four-week period amounted to $3,785,405,000, averaging $946,351,250 per week, compared with a like average of $846,448,000 for the preceding four weeks, an increase of 11.8 per cent in the volume of average weekly transactions. Transfers of funds between the banks amounted to $443,300,000, 67 per cent of the total represent- Amounts of clearings and transfers through the gold settlement fund by Federal Reserve Banks from Apr. 19 to May ing transfers to the account of the New York 16, 1918, both inclusive. bank, mainly for the credit of the Government, [In thousands of dollars.] while transfers from New York comprised Total Balances about 24 per cent of the total transfers made. clearings. adjusted. Transfers. Of the aggregate transfer transactions about 91 per cent affect New York's account. Settlement o— f 897,166 75,000 74,319 Apr. 25 769,773 136,000 65,998 Changes in the ownership of gold in the May 2 819,746 81,600 64,189 May 9 855,420 63,530 150,700 banks7 fund through transfers and settlement May 16 443,300 3,342,105 268,036 Total during the four-week period amounted to 11,021,954 1,161,595. 849,263 1.45 per cent of the total obligations settled, Previously reported for 1918 14,364,059 1,117,299 1,604,895 Total since Jan. 1,1918 24,319,200 2,154,721 2,835,504.5 Total for 1917 as against 3.08 per cent for the preceding fourweek period. Net changes in the ownership Clearings of gold since the commencement of the operaand transfers. tion of the fund May 20, 1915, to May 16, 1918, amount to 1.22 of the total obligations settled Total for 191S to date 15,968,954 27,154,704.5 Total for 1917 during the period. St. Louis and Cleveland Total for 1916 5,533,966 1,052,649 show the largest gains through the shift- Total for 1915 Total clearings and transfers from May 20, 191.5, to ing of credits in the fund, while New York and 49,710,273.5 May 16,1918 Atlanta show large decreases. 549 FEDERAL RESERVE BULLETIN. JUNE 1,1918. Changes in ownership of gold. [In thousands of dollars.] Federal Reserve Bank. Decrease. B oston... NewYork Philadelphia Cleveland.... Richmond Atlanta Chicago St. Louis Minneapolis Kansas City Dallas...... San Francisco.... 570,487 . . . . 4,388 . . Balance to credit Ar>r. 18, 1918, plus Increase. net deposits of gold since that date. Total. 574,875 Balance Mav 16, 1918. Decrease. 61,348 53,025 60,802 44,444.7 9.107.4 17;679 86,322 18,212 12,180 39,619.2 1,924.9 15,950 48,979 73,251 25,602 17,122 51,259.5 16,382.5 87,901 574,875 63,885 22,336 55,729 60,754.7 6,850.4 8,993 81,739 37,421 18,572 35,848.2 7,397.9 21,088 420,614.2 58,463 90,258 105,657 . Total changes from Mav 20, 1915, to May 16,1918. From Apr. 19,1918, to May 16,1918, both inclusive. Total to Apr. 18,1918. 420,614.2 Increase. Decrease. 2.537 30,689 5,073 16,310 2,257 8,686 4,583 Increase. 61,000 601,176 85,185 121,967 6,645 40,293 68,668 44,811 23,514 47,488.5 21,855.5 93,039 19,209 6,392 3,771 5,473 5,138 55,059 55,059 607,821 607,821 Gold settlement fund—Summary of transactions from Apr. 19, 1918, to May 16, 1918, both inclusive. [In thousands of dollars.] Federal Reserve Bank o— f Boston New York Philadelphia Cleveland Richmond Atlanta Chicago St. Louis Minneapolis Kansas City Dallas San Francisco Aggregate Transfers. deposits Balance Gold and last drawals Gold statement, with- deposits. and transfers Apr. 18, drawals. transfers from to agent's agent's 1918. Debit. Credit. fund. fund. 66,990 88,670 51,164 500 41,289.5 1,227.3 7,501.9 2.5 12,635 100 59,093 100 18,368.4 994.2 7,480 29,975.8 6,918.7 516.6 15,533 5,516.6 35,000 4,358 4,355 12,138 4,382.5 4,108 14,394 42,809 8,837.8 4,700 9,643.4 522.8 15,417 405,619.3 3,440.6 Total 4,358 4,355 5,753 4,382.5 4,108 1,894 15,907 1,028 700 1,643.4 522.8 15,017 59,668.7 110,730.6 125,725.5 10,000 40,000 2,500 1,227.3 2,502.5 9,350 15,640 8,994.2 Weekly settlements, Apr. 25 to May 16,1918, both inclusive. Net debits. Total debits. 12,000 104,800 297,000 18,000 | 12,000 62,000 I. 27,000 ! 10,000 500 I. 112,000 ! 50,000 13,300 ""i"666"| 4,000 i, 51,000 7,000 4,000 60,000 41,000 10,475 222,889 12,912 276,873 1,141,629 375,352 234,755 154,495 122,143 424,826 218,759 107,535 122,950 58,220 104,568 267,410 918,740 376,279 313,065 169,238 113,957 482,243 224,668 110,927 170;179 66,693 128,706 443,300 268,036 3,342,105 3,342,105 443,300 10,267 6,797 4,696 Total credits. Balance in fund at close of business Net May 16, credits. 1018. 1,012 13,839 78,310 14,743 2,081 57,417 12,706 8,088 47,229 8,473 24,138 63,885 22,336 55,729 60,754.7 6,850.4 8,993 81,739 37,421 18,572 35,848.2 7,397.9 21,088 263,036 ! 420,614.2 Federal Reserve agents1 fund—Summary of transactions from April 19, 1918, to May 16, 1918, both inclusive. [In thousands of dollars.] Federal Reserve agent at— Boston... NewYork Philadelphia Richmond Atlanta Chicago St. Louis Minneapolis... Kansas City.. Dallas.. San Francisco Total. WithDeposits Balance Gold drawals through Gold last statewithment, Apr. drawals. deposits. for trans- transfers fer to from 18,1918. bank. bank. 10,000 11,500 25,000 80,619 70,000 27,000 37,670 160,315.5 34,903.6 24,500 42,360 584 54,396 1,000 500 568,848.1 | 4,200 6,385 500 12,500 26,962 7,809.8 4,000 8,000 1,000 1,200 400 10,000 66,056.8 10,000 40,000 2,000 2,500 9,250 15,540 8,000 5,000 15,000 | Total Total withdrawals. deposits. 6,885 13,500 27,462 7,809.8 5,000 8,000 1,600 107,290 | 70,256.8 Balance at close of business May 16, 1918. 5,000 15,000 31,500 65.000 75^734 70,000 29,500 33,420 148,393.5 35,093.8 19,500 34,360 5,584 67,796 117,290 615,881.3 20,000 40,000 2,000 i 2,50© 9,250 15,540 8,000 550 FEDERAL RESERVE BULLETIN. JUNE 1,1918. OPERATION OF THE FEDERAL RESERVE CLEARING SYSTEM, APRIL 16 TO MAY 15,1918. Items drawn on banks Items drawn on banks Items drawn on banks in district outside Fedin Federal Reserve city in other districts (daily eral Reserve city (daily (daily average). average). Number. Amount. Number. Amount. Number. Amount. Boston New York Philadelphia Cleveland Richmond Atlanta Chicago S t. Louis Minneapolis Kansas City Pallas San Francisco 5,214 7,850 13,631 2,021 1,524 1,809 8,538 2,055 2,422 2,084 1,050 1,371 §17,029,311 77,676,088 20,779,211 5,074,976 4,866,762 3,060,882 23,131,000 7,576,754 6,974,504 7,751,273 1,326,810 3,124,814 42,795 50,353 24,702 27,358 26,260 13,069 24,362 16,605 13,203 17,432 13,184 17,738 S6,165,182 40,995,148 3,759,149 19,592,562 7,179,808 2,931,285 6,916,000 5,192,516 1,429,761 9,629,021 4,898,863 5,410,225 4,710 26,704 11,845 2,294 2,439 1,807 2,131 176 916 841 507 518 $7,795,226 16,349,400 12,356,958 4,281,935 4,739,295 3,719,786 924,000 1,421,098 1,299,722 3,414,888 892,401 1,228,654 Totals: Apr. 16 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. 15,1918 Nov. 16 to Dec. 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. 15,1917 49,569 55,034 51,408 46,207 48,549 47,678 47,574 40,591 36,306 36,727 38,476 37,898 33,767 31,162 178,372,385 159,441,188 153,701,375 153,847,568 148,033,108 171,723,439 166,552,773 128,271,466 100,331,694 98,075,919 109,722,256 97,322,883 87,370,859 60,288,002 287,061 271,506 259,531 227,312 253,458 240,756 232,723 212,935 182.191 175;625 182,622 179,193 171,093 168,607 114,099,520 98,201,962 113,134,162 80,248,466 89,065,135 84,440,761 64,296,210 47,476,204 41,323,621 40,353,278 41,004,720 3S,599,461 36,473,163 32,666,959 54,888 53,725 51,259 44,654 49,342 46,353 45,393 40,216 32,564 31,273 33,941 33,150 33,428 32,008 58,513,363 53,391,691 48,556,709 42,852,372 52,175,578 58,458,952 53,089,827 44,984,581 40,648,168 37,981,022 46,762,698 38,314,393 36,836,934 34,693,542 Items handled by both bank a n d branches (daily average). Number. Boston New York Philadelphia.. Cleveland Richmond Atlanta Chicago St. Louis Minneapolis... Kansas City... Dallas San Francisco. Totals: Apr. 16 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, 15,1918. Nov. 16 to Dec. 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. 15,1917 Total (exclusive of items drawn on Treasurer of United States) (daily) average). Number. 1,214 429 289 160 228 Amount. $7,927,197 1,524,419 174,229 348,000 409,213 3,240 3,675,041 "2 ,"734" *1," 083," 505" 8,294 7,793 7,700 7,128 7,718 15,141,604 8,942,976 6,413,071 5,836,958 3,402,035 Amount. Items drawn on Treasurer of United States Number of Number of (daily average). member nonmembanks in ber banks district. on par list. Number. Amount. 52,719 84,907 50,178 32,887 30,652 16,974 35,191 19,064 16,541 23,597 14,741 22,361 §30,989,719 135,020,636 36,895,318 36,876,670 18,310,284 9,886,182 31,319,000 14,599,581 9,703,987 24,470,223 7,208,074 10,847,198 §2,729,112 4,855 31,418 12,547,349 4,500 1,848,904 1,029 858,082 1,136 351,544 2,240 2,408,636 5,952 I 2,320,000 4,027 i 757,370 407 I 84,942 2,588 I 430,470 1,131 I 288,811 1,488 ! 6,302,965 414 684 627 775 540 397 1,156 484 808 967 675 249 365 319 628 287 320 2,284 1,002 1,070 1,559 269 1,123 399,812 388,058 369,898 325,301 359,067 334,787 325,690 293,742 251,061 243,625 255,039 250,241 238,288 231,777 365,126,872 319,977,817 321,805,317 282,785,364 292,585,856 314,623,152 283,938,810 220,732,251 182,303,483 176,410,219 197,489,674 174,236,737 160,680,956 127,648,503 60,771 59,228 58,991 48,224 38,130 8,113 8,059 8,013 7,972 7,909 7,823 7,826 7,747 7,718 7,683 7,666 7,651 7,634 7,625 9,475 9,450 9,425 9,319 9,268 9,321 9,210 9,052 8,934 33,806 I 30,426 26,797 23,492 19,533 19,100 16,344 i 15,925 I 12,582 I 30,928,185 31,563,675 25,827,757 21,316,033 •21,116,293 27,179,053 17,496,974 13,518,566 11,006,515 9,701,569 11,637,899 4,414,508 3,597,865 2,643,408 8,789 8,926 8,607 .TUNE 1,1918. FEDERAL RESERVE BULLETIN. 551 DISCOUNT OPERATIONS OF THE FEDERAL RESERVE BANKS. Discount operations at the Federal Reserve Banks for the month of April totaled $2,178,410,479, compared with $759,112,515 for March and $2,681,165,854 for October, 1917, the month preceding the closing of the second Liberty loan. Of the total discounts for the month under review, $1,811,419,864, or 83.2 per cent, was represented by war paper, including members7 collateral notes and customers' paper secured by Government war obligations, or considerably less than the corresponding amount in October of 1917. Of the total amount of war paper discounted by the banks 75 per cent is reported by the New York bank. Discounts of member banks' notes secured by eligible paper totaled §34,233,979, the Federal Reserve Banks at Chicago and Kansas City accounting for $29,052,395, or about 85 per cent, of the total shown. Trade acceptances discounted during the month aggregated $10,171,425, nearly all in the domestic trade, reported by 11 banks. Other discounts not secured by Government obligations totaled $323,359,411, the New York and Richmond banks reporting about 54 per cent of the total. Fifteen-day paper, i. e., paper maturing within 15 days from date of discount with the Federal Reserve Bank, aggregated $2,027,048,792, or about 93 per cent of the total discounts for the month. By far the greater portion of the paper, namely, 86.8 per cent, was discounted at 4 per cent, which was the uniform rate charged by all the banks during the month on 15-day war paper, while the calculated, average rate on paper discounted during the month b}^ all Federal Reserve Banks was 4.23 per cent, the lowest average rate, 4.05 per cent, working out for the New York bank and the highest rate, 4.88 per cent, for the Minneapolis bank. Owing largely to the short average maturity of the paper discounted by the New York bank, 7.22 days, the like average for all the banks works out at 11.25 days only, the Minneapolis bank, as in the case of the average discount rate, showing the highest average under this head. Further particulars along these lines, also discussion of method used in computing these averages, are found on p. 553 of this BULLETIN. On the last Friday of the month the banks held a total of 901.7 millions of discounted paper, as against an aggregate of 583.2 millions held on the last Friday in March and of 35 millions held on the corresponding date in 1917. Of the total discounts on hand the share of war paper, i. e., member banks7 collateral notes and customers' paper secured by United States war obligations, was 70.8 per cent. At the Boston bank this share was about 82 per cent and at the New York bank as high as 87.5 per cent. In addition to the discounted war paper, four banks report also about 4.2 millions of certificates of indebtedness and Liberty bonds held under 15-day repurchase agreements with nonmember institutions and included with other holdings of United States securities. Trade acceptances on hand about the end of April show the record total of 19.2 millions7 of which about 1.5 millions represent the holdings of discounted foreign-trade acceptances. All the banks except Dallas report holdings of domestic trade acceptances, the Cleveland and St. Louis banks leading in the amounts held. Agricultural paper of all maturities totaled about 9.4 millions, or about 1 per cent of the total discounts held, while live-stock paper aggregated 30.1 millions, over one-half of this amount being reported by the Kansas City bank. 552 EEDEEAL RESERVE BULLETIN. JUNE 1,1918. Bills discounted during April, 1918, distributed by classes. Member banks' collateral notes. Customers1 paper secured by Liberty Secured by bonds or United States Liberty bonds Otherwise or United t certificates of States cersecured. I indebtedness. tificates of indebtedness. Federal Reserve Banks. Boston New York Philadelphia... Cleveland Richmond Atlanta Chicago St. Louis Minneapolis... Kansas City... Dallas San Francisco. S3, 746,698 816,372,800 11,237,688 1,355,966,810 886,401 28,176,700 1, 4, 704,362 54,229,800 472,498 82,804,243 15, 29,847 20.192,300 743,493 83,077,500 180,034 37,593,791 8,141 9,751,600 133,516 35,695,725 357,989 29,286,550 19,695,300 76.078 Total ! 38,576,745 * 1,772,843,119 i Including §221,104 in the foreign trade. 2 Trade acceptances. SI, 523,850 825,000 485.000 1,634,500 51,000 25,902,310 400.234 3,150,085 262,000 S287,007 12,696,793 762.997 1,890,014 1,063.149 436,300 314,103 1,630,990 28,039 378,147 34,233,979 Includes $771,700 rediscounted for nonmember banks. 3 All other discounts. S3,563,599 89,955,026 11,556,490 28,970,605 84,081,663 13.159,086 15,645,774 23,588,072 7,695,738 15,111,288 6,464,010 17,793,860 Total. 330,493,954 .,460,681,317 42,382,588 90,279,781 185,056,053 33,868,533 125,683,180 62,992,887 17,883,752 54,774,500 36,370,549 37,943,385 10,171,425 3322,585,211 2,178,410,479 Includes SI,554,459 of bankers' acceptances. Amounts of discounted paper, including member banks' collateral notes, held by each Federal Reserve Bank on the last Friday in April, 1918, distributed by classes. [In thousands of dollars; i. e., 000 omitted.] Agricultural paper. Banks. Live-stock paper. Customers' paper secured by Liberty bonds or United States certificates of indebtedness. Boston Philadelphia . Pichmond Atlanta Chicago . St. Louis Minneapolis Kansas City Dallas San Francisco Total Per cent . 9,379 1.0 . 1 . . 64 23 953 210 3,261 90 1,188 624 1,530 1,436 Secured by Liberty bonds or United States Otherwise secured. certificates of indebtedness. 68 25 189 427 96 3,064 15,355 5,347 5,577 34,462 81,914 12,177 6,726 3,490 54 5,924 1,772 143 239 415 315 10,133 297,933 15 629 21,802 21,430 10 223 47,5Q8 22 924 4 867 14,745 13 033 10,904 30,148 3.3 147,631 16.4 491,221 54.5 Includes 8287,000 in the foreign trade. During the month, largely as the result of accession to membership of State banks and trust companies, the number of member banks increased from 8,083 to 8,149. The total number of member banks accommodated through discounts during April was 2,100, or 25.8 per cent of the total number of members reported at the end of the month. The following exhibit gives the number of member banks by Federal Reserve districts at the end of April and the number of discounting members for the same month: Member banks' collateral notes. 2 500 154 95 494 20 15,954 2,319 105 Trade acceptances. 11,284 2 3,324 1 383 4,050 1,772 873 610 2 974 71 2,154 696 19,641 2.2 19,171 2.1 All other discounts. Total. 7,928 50,931 6,118 25,448 19,169 8,837 14,779 15,800 5 258 8,476 5,737 16,071 54,307 434,256 35 351 58,212 47,333 20 406 88,553 43 656 14 591 43,912 26 167 34,999 184,552 20.5 901,743 100.0 Includes $1,220,000 in the foreign trade. Federal reserve district. Boston New York Philadelphia.. Cleveland Richmond Atlanta Chicago St. Louis Minneapolis... Kansas City... Dallas San Francisco. Total.... Number of Number of member banks disbanks on counting during Apr. 30. April. 416 684 647 773 542 400 1,157 488 810 974 673 585 138 278 135 118 181 112 237 112 174 221 234 160 8,149 2,100 JUNE 1,1918. 553 FEDERAL RESERVE BULLETIN. AVERAGE RATE AND MATURITY OF PAPER DISCOUNTED BY THE RESERVE BANKS. Following the installation of tabulating machines, the Board is able for the first time to show average maturities and average discount rates of bills discounted during the month at all Federal Reserve Banks. For the purpose of calculating these averages the total discounts for the month were arranged into eight groups, according to rates of discount charged, and in each group the amounts of paper discounted and the corresponding unearned discount were shown. For any such group the total unearned discount multiplied by the number of days in the year (365 in the case of the New York and Boston banks and 360 in the case of the other banks), divided by the rate gives the equivalent amount, which discounted at the specified rate for one day, yields the given discount. Having found for each rate group the equivalent amount when discounted for one day, the sum of these respective amounts is the like equivalent of the total discounts at each bank and the system. Dividing this sum by the total paper discounted the average maturity in days is obtained. The average rate is calculated by means of the formula: Amount X rate X maturity (in days) ,. dz^Wf^T ~ = dlsCount whence, , , discount X days in year N rate ^average; - a m o u n t x m a t u r i t y (foT5^) Recalling that the amount discounted multiplied by the average maturity equals the equivalent amount discounted for one day, the formula becomes: . v discount X days in year to equivalent amount discounted for one day. In case the average maturity of the discounts included in any discount rate group is desired, it may evidently be derived by dividing the equivalent amount, which discounted at the given rate for one day yields the discount for that group, by the corresponding total discount, the result being the average maturity in days. Bills discounted by each Federal Reserve Bank during April, 1918, distributed by rales of discount; also average maturity and rate of bills discounted by each bank during the month. Federal Reserve Bank. Boston New York Philadelphia Cleveland Richmond Atlanta Chicago St. Louis Minneapolis Kansas City Dallas San Francisco Total Federal Reserve Bank. Boston New YorkPhiladelphia.. Cleveland Richmond Atlanta Chicago St. Louis Minneapolis.. Kansas City. Dallas .". San Francisco Total 3£ per cent. Amount. 4 per cent. Discount. |S2,692,000 S3,993.33 j 49,175.918 60,914.18 3,541.55 2,442,400 4,267.63 3,037,500 10,296,150 11, 978. 83 2,663.41 1,837,162 7,903.29 5,866,079 6,819.70 4,683,000 230.88 289,000 7,061.72 4,886,253 17,410.84 12,101,000 7,157.42 5,018,000_ 108,324,462 139,942.78 Amount. 820,599,223 1,393,836,866 36,418,786 60,729,862 112,416,982 28,241,776 J.05,670, 485 47,850, 033 10,887,102 34,957,739 17,915,144 22,145,206 1,891,669,204 5 per cent. Discount, 5J per cent. 5£- per cent. Discount, i Amount, Discount, Amount. | 3814,752 60,519 2,454 13,761 231,943 190,939 3,582,178 87,374.89 1,833.98 53.41 204.39 5,285.87 4,125.31 37,926.19 1,311,420 4,962,781 ! 2,190,182 ! j 13,360,929 13,557.99 103,613.21 30,425.01 204,400.25 j Discount. 535,053.48 12,508,591 519,068.87 963,091.20 4,413,015 40,713.94 4,941.31 51,294.47 555,281 79,153.81 12,441,985 24,935.32 61,713.25 41,687,665 26,026.89 45,522.95 130.69 27,748 167,007.71 4,889.64 631,292 76,493. 75 1,103.58 133,034 18,580.33 87.46 8,14.1 50,692.49 149.69 28,000 28,009.06 1,078.33 101,541 36,073.16 1,610,685.66 62,536,293 123,125.72 ! Amount. 834,034 Discount. 8637.33 §457,518 38,946.58 40,980 890.16 1,580,028 ! 39,577.45 3,150 37,184 4J per cent. 4J per cent. Amount. 84.22 721.55 591,139 !, 13,201.05 W® 800 3656638 4,299,465 ; 99,181.62 Amount. Discount. 3296,807 82,252.61 17,391.50 2,739,292 9,042.70 1,120,515 6,259,884 48,274.30 19,523.25 2,541,263 7,219.59 1,328.295 9,614.99 1,639;393 19,259.83 3,136,196 7,723.06 1,386,406 20,910.74 3,417,736 20,050.08 2,624,875 _lJ780,251_ 14,266.17 28,270,913" 195,528. 82 Total. Amount. Discount. §30,493,954 397,796.31 1,460,681,317 1,162,644.46 42,382,588 77,974.03 90,279,781 223,561.75 185,056,053 203,912.01 33,868,533 74,456.40 276,861.12 125,683,180 146,952.66 62,992,887 17,883,752 92,133.40 54,774,500 234,850.75 114,650.87 •36,370,549 153,553.73 37,943,385 2,178,410,479 2,859,347.54 4f per cent. Amount. Discount 33,582,581 $30,053.13 10.455,707 72,699.66 9,100.64 l'843,152 66,088.97 7,762,755 79,383.92 11,882,050 14,794.45 2,242,613 40,572.72 7,836,235 42,385.64 7,149,644 14,376.23 2,421,655 6,521,991 52,422.90 4,476.50 846.668 59,406.38 69,912,029 485,761.14 Average maturity in days. 27.16 7.22 18.08 20.61 9.12 18.83 18.63 19.83 38.01 33.61 24.78 31.69 11.25 Average rate(per cent). 4.31 4.05 4.12 4.33 4.33 4.20 4.26 4.24 4.88 4.59 4.39 4.60 14.23 i Average discount rate on all paper discounted works out at 4.20 per cent, if calculated on a uniform 360-day basis, and at 4.26, if calculated on a uniform 365-day basis. 554 JUNE 1,19.18. FEDERAL RESERVE BULLETIN. Acceptances bought in open 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. Nonmember State banks. $7,820,000 5,267,000 4,898,000 810,000 15,494,000 21,000,000 32,989,000 37,798,000 1915. Feb. 22. Apr. 5.. July 3 . . Oct. 4 . . Nonmember trust companies. Member banks. S93,000 ! 3,653,000 j 4,342,000 9,000,000 Foreign bank branches and agencies. Private banks. Total. Trade acceptances Total bought in acceptances. open market. 132,000 3110,000 161,000 343,000 §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 83,170,000 189,445,000 180,113,000 273,236,000 240,259,000 252,747,000 275,144,000 248,390,000 5,547,000 1,648,000 1,360,000 654,000 3,522,000 3,856,000 1,884,000 2,907,000 22,099,000 28,419,000 31,779,000 25,921,000 6,947,000 7,097,000 8,562,000 10,304,000 278,374,000 6,363,000 293,767,000 5,456,000 318,729,000 8,015,000 288,176,000 19,279,000 284,737,000 299,223,000 326,744,000 297,455,000 893,000 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... Dec. 3 1 . . . . 1918. Jan. 31.. Feb. 28. Mar. 31. Apr. 30. 1 Includes 8128,000 of acceptances in the domestic trade. Acceptances bought in open market and held by each Federal Reserve Bank on Apr. SO, 1918, distributed by classes of accepting institutions. [In thousands of 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 NonmemMember ber trust Nonmem- Private ber State combanks. banks. banks. panies. Foreign banks, branches, and agencies. 14,293 SO,775 23.036 18; 025 4,933 <S,112 46,177 10.097 10' 995 5,140 4,455 11,852 30 156 50 200 2,028 346 200 25 50 375 8 83 1,119 218 248,390 654 2,907 25,921 10,304 16 1,834 19,780 670 700 575 8,716 315 480 261 1,211 299 47 Trade acceptances bought in open market. Total. Domestic. Foreign. 16,732 120,455 25,317 19,405 4 933 8 398 47,63S 11,371 11 052 5 140 4,455 13,280 288,176 844 1,476 27 177 Total acceptances. Total. 844 1,476 79 253 6,627 52 76 6,627 17,576 121,931 25,396 19,658 4,933 .8,398 47,638 11,371 11.052 5,140 4,455 19,907 9,151 9,279 297,455 f 128 555 FEDERAL RESERVE BULLETIN. JUNE 1, 1918. Amounts of bills discounted and acceptances and warrants bought by each Federal Reserve Bank during Aprilt 1918, distributed by maturities. 30-day maturities. 15-day maturities. Discounts. Boston New York Philadelphia Cleveland Richmond Atlanta Chicago St. Louis Minneapolis Kansas City Dallas San Francisco Total Acceptances. Warrants. §22,463,915 1,435,115,707 38,470,531 65,175,448 169,529,130 29,866,109 111,405,740 52,177,346 11,170,601 39,610,458 29,774,697 28,114,110 §399,472 1,336,022 | 2,032,873,792 | 2,882,790 62,247 200,000 200,000 510,000 25,049 150,000 Total Discounts. 522,863,387 1,436,451,729 38,470,531 65,237,695 169,729,130 30,066,109 111,915,740 52,202,395 11,170,601 39,610,458 29,924,697 28,114,110 SI, 679,924 3,508,531 1,169,662 2,418,578 2,797,187 1,001,917 2,649,097 3,702,334 669,191 1,713,413 655,946 518,980 2,035,756,582 Acceptances. Warrants. 22,484,760 Acceptances. Warrants. Boston New York.... Philadelphia.. Cleveland Richmond Atlanta Chicago St. Louis Minneapolis.. Kansas City.. Dallas San Francisco 81,805,733 8,996,623 999,088 5,304,905 7,074,651 1,655,560 7,125,084 3,772,113 3,121,582 3.921,187 i;683,212 1,886,004 63,888,423 9,688,863 5,231,332 779,533 3,339,849 1,744,451 1,098,500 628,866 1,090,293 Total... 47,345,742 10,453,273 Discounts. Acceptances. Boston New York Philadelphia.. Cleveland Richmond Atlanta Chicago St. Louis Minneapolis... Kansas Citv... Dallas ." San Francisco. S567,062 3555,000 63,115 82,454 443,000 378,923 30,309 334,614 667,500 190,071 243,075 457,518 1,600,000 101,446 22,265 1,593,515 4,961,454 150,000 1,334,390 1,632,949 Total.... 11,697,511 3,711,149 Warrants. Total. Discounts. Acceptances. Warrants. 1,475,000 2,551,610 S3,977,320 12,997,341 1,660,853 17,001,927 5,320,471 1,154.876 4,045; 741 3,239,648 1,328,863 4,587,988 2,922,304 5,791,342 31,516,720 78,862,462 64,008,674 i 68,950,438) S3,699,479 43,192,866 | 4,096,995 2,483,023 I 3,302,269 I 1,341,198 4,505,164 ! 811,794 485,000 I 100,000 i 1,370,000 i 3,562,650 i Total. Total. Discounts. 830,493,954 81,122,062 63,115 1,450,681,317 42.382,588 525,454 90)279,781 409,232 185,056,053 1,002,114 33,868,533 433,146 125,683, ISO 2,057,518 62,992,887 123,711 17,883,752 1,593,515 54,774,500 5,111,454 36,370,549 1,334,390 37,943,385 1,632,949 15,408,660 2,178,410,479 32,970,303 90-day maturities. 35,694,156 18,685,486 6,230,420 6,084,438 10,414,500 3,400,011 8,223,584 4,400,979 4,211,875 3,921,187 3,158,212 4,437,614 Over 90-day maturities. 32,270 285,000 1,470,252 60-day maturities. Discounts. 532,270 82,076,614 7,243,534 2,219,662 2,627,664 4,292,394 1,164,187 3,620,597 3,995,615 1,086,445 1,713,413 940,946 1,989,232 §396,690 3,735,003 1,050,000 209,086 1,495,207 130,000 971,500 293,281 417,254 Total §7,676,799 56,190,207 5,757,848 19,484,950 8,622,740 2,522,074 8,550,905 4,051,442 1,813,863 4,667,988 4,292,304 9,353,992 26,000 j 132,985,112 Per cent. WarAcceptances. rants. 88,939,064 57,952,754 10,821,327 3,564,198 9,004,825 3,658,724 §58,270 8,685,164 1,781,255 1,992,547 250,000 3,280,000 7,584,512 117,514,370 326,000 i Total. 58,270 Total. Dis- A ecept- Warcounts. ances. rants. 839,433,018 1,518,634,071 53,203,915 93,843,979 194,060,878 37,585,527 134,368,344 64,774,142 19,876,299 55,024,500 39,650,549 45 .127.897 77.3 96.2 79.7 96.2 95.4 90.1 93.5 97.3 90.0 99.5 91.7 83.3 2,295,983,119 94.9 1 22.7 3.8 20.3 3.8 4.6 9.7 6.5 2.7 10.0 .5 8.3 16.7 5.1 .2 Total. 100 100 100 100 100 100 100 100 100 100 100 100 100 556 FEDERAL EESERVE BULLETIN. JUNE 1,1918. Maturities of discounts, acceptances, and municipal warrants held by each Federal Reserve Bank on Apr. 26, 1918. 1 to 15 days. Bills discounted. Acceptances bought. Boston Now York Philadelphia.. Cleveland Richmond Atlanta..., Chicago St. Louis Minneapolis... Kansas City... Dallas San Francisco. $15,997 387,656 20,892 30,649 29,339 15,630 73,713 31,602 7, 132 22,311 15,369 18,679 618,969 Municipal warrants. 32,071 10,790 5,949 7,133 2,078 3,259 5,030 2,879 2,512 4, 72S 1,350 6,703 Total. Percent 16 to 30 days. 54,482 Total. Bills discounted. bought. $35 5 $27,891 58,606 10,149 9,236 6,551 1,974 4,362 3,638 1,35S 5,445 2,040 3,644 40 55.9 673,491 134,894 58,957 \. Municipal j p warrants ' S9,580 59,919 9,601 6,591 1,043 2,711 22,720 4,632 3,366 185 1,925 7,579 Total.. Percent 87,685 129,852 T Total. Bills discounted. Accept- ! Municipal i ances warrants, i bought. 10,994 7,060 6,462 6,151 13,975 82,565 10,652 1,100 7,211 3,355 662 6,000 2,007 1,153 4,267 3,277 4,626 S3,011 35,288 4,104 2,150 1,342 1,222 7,518 906 485 250 520 2,757 218,050 46,875 59,553 24,694 486 Bills dis- Acceptances counted. bought. $54,307 434,256 35,351 58,212 47,333 20,406 88,553 43,656 14,591 43,912 26,167 34,999 $1 52 2 30 242 181 2,504 47 1,254 t* 5,612 1,741 1,654 1.1 j Total. $5,576 45,940 5,204 9,361 4,697 1,884 13,518 2,913 1,638 4,517 3,797 7,383 8.8 I 106,428 Total. Over 90 days. 13,320 t $17,433 87,209 12,809 17,677 8,889 4,697 513 18.1 Total. Per c e n t . . . 193,851 16.1 $27 Boston New York Philadelphia... Cleveland Richmond Atlanta Chicago St. Louis Minneapolis... Kansas City... Dallas San Francisco. 829,835 73,636 16,798 13,990 7,265 3,779 17,096 6,602 6,541 7,414 2,800 8,095 61 to 90 days. $7,853 27,290 3,208 11,086 7,846 1,959 1,974 6,362 3,694 6,277 3,740 6,396 Municipal warrants. Total. SI,944 I 15,030 | 6,649 | 4,754 714 1,805 12,734 2,964 5,183 1,969 760 4,451 Boston New York Philadelphia.. Cleveland Richmond Atlanta Chicago St. Louis Minneapolis... Kansas City... Dallas San Francisco. Bills dis- Acceptances counted. bought. Municipal warrants. $18,068 348,446 26-841 37,782 31,417 18,924 78,748 34,481 9,644 27,039 16,719 25,382 31 to 60 days. Bills discounted. Acceptances bought. 13,321 901,743 $16,606 121,027 26,303 20,628 5,177 8,997 48,002 11,381 11,546 7,132 4,555 21,490 302,844 Municipal warrants. Total. Bills dis- Acceptances counted. bought. Municipal war- Total. rants. $70,913 555,283 61,654 78,840 52,510 29,466 130,560 55,037 26,137 51,044 31,208 56,489 76.6 78.2 57.3 73.8 90.1 69.3 64.8 79.3 55.8 86.0 83.8 62.0 23.4 21.8 42.7 26.2 9.9 30.5 35.2 20.7 44,2 14,0 14,6 38.0 0.2 554 1,205,141 100 74.8 25.1 0.1 $63 5 1.6 100 100 100 100 100 100 100 100 100 100 100 100 100 JUNE 1, 557 FEDERAL RESERVE BULLETIN. 1918. Liberty loan bonds and United States certificates of indebtedness purchased under repurchase agreements during the month oj April, 1918. [Figures included with United States securities in table showing total investment operations.] Philadelphia. New York. Liberty bonds Certificates of indebtedness 5232,020,000 Total $5245,000 4,573,000 86,724,000 4,818,000 232,020,000 Atlanta. Cleveland. Minneapolis. Chicago. $1,844,800 2,205,100 11825,733,200 §2,131,000 6,724,000 4,049,900 25,733,200 2,131,000 Kansas City. Dallas. $17,000 $763,000 17,000 763,000 San FranCisco. Total. §2,089,800 S62,500 1274,228,800 62,500 276,318,600 i Includes Liberty bonds purchased by the Chicago bank under repurchase agreements. Total investment operations of each Federal Reserve Bank during the month of April, 1918 and 1917. Federal Reserve Bank. Boston New York Philadelphia Cleveland Richmond Atlanta Chicago St. Louis Minneapolis Kansas City Dallas San Francisco , , , , Total, April, 1918 Total, April, 1917 Bills bought in open market. Bills discounted for members and Federal Trade Bankers' accept.ReserveBanks. acceptances. Total. 830,493,954 1,460,681,317 42,382,588 90,279,781 185,056,053 33,868,533 125,683,180 62,992,887 17,883,752 54,774,500 36,370,549 37,943,385 88,939,064 57,209,781 10,742,322 3,384,061 9,004,825 3,658,724 8,685,164 1,781,255 1,992,547 250,000 3,280,000 4,604,045 2,178,410,479 50,055,801 113,531,788 41,019,251 Municipal warrants. City. State. S32,270 $26,000 $58,270 2,980,467 3,982,582 293,440 117,514,370 41,312,691 32,270 266,433 26,000 13,853 58,270 280,286 Total investment operations. United 1-year States Treasury, certificates notes. of indebtedness. Federal Reserve Bank. 3 per cent. Boston New York Philadelphia Cleveland Richmond Atlanta Chicago St. Louis Minneapolis Kansas City Dallas ". San Francisco Total, 1918. Total, 1917. 31- per cent. 4 per cent. $467,000 1,577,900 , j 671,150 | 272,850 5,250 82,867,040 1 $31,824 in the domestic trade. 2 §109,345 in the domestic trade. S3,000 Total. §232,088,000 8232,088,000 7,957,500 7,712,500 9,214,500 9,214,500 §245,000 745,100 Total. $8,939,064 57,952,754 10,821,327 3,564,198 9,004,823 3,658,724 8,685,164 1,781,255 1,992,547 250,000 3,280,000 7,584,512 §742,973 179,005 2 180,137 United States securities. 2 per cent. All other. 400 I 2,494,450 i i 2,205,100 i 425,888,200 i 32,970.000 1,334;500 973,000 j 3,019,500 4,250,000 25,888,200 I 315,411,300 318,650,850 4,090,040 j SI, 220,000 \ 33,920,000 1,334,500 973,000 3,025,150 April, 1918. $39,433,018 ,750,722,071 (51,161,415 103,058,479 194,060,878 41,835,527 160,255,544 64,774,142 53,793,299 56,359,000 40,623,549 48,553,047 2,614,633,969 3 Exclusive of purchases of United States certificates of indebtedness. * Includes United States bonds purchased under repurchase agreements. April, 1917.* 194,509 126,638 780,935 367,954 850,227 638,069 113,932 ,188,527 177,577 089,700 333,321 ,877,429 95,738,818 558 JUNK 1,1018. FEDERAL RESERVE BULLETIN. United States securities held by each Federal Reserve Bank on Apr. 30, 1918, distributed by maturities. O ther 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 April 23,1918. United States bonds with circulation privilege. Federal Reserve Banks. 2 per I cent | 3 per cent 4 per cent 2 per cent loan of consols Panamas j loan of of 1936-1938.! of 1930. 1918. 1925. Treasury 3 per 31> per cent 4 per cent certificates Liberty Liberty cent of loan of loan of loan of 1961. 1947. 1942-1947. indebtedness. 3 per cent 3 per cent conver1-year sion bonds of Treasury notes. 1946-47. Total. -| Boston New York Philadelphia Cleveland Richmond Atlanta Chicago St. Louis Minneapolis Kansas City Dallas San Francisco ! i $750 50 , , , Total $100 915,100 440,600 1,862,500 100 304,300 7,155,850 2,450,900 2,428,750 237,000 21,000 367,300 i6,260 22,240 281,500 15,558,900 i 945,400 i §60,000 268,250 11,850 1,966,900 42,850 13,650 8141,450 15,003 1,419,250 374,550 37,750 241,750 83,050 500 109,500 7,500 1,100 21,500 45,550 13,100 2,500 10,850 900 §1,416,000 2,226,000 1,537,000 2,660,000 1,513,000 I6,"3o6" 1,141,000 2,962,000 427,400 511,000 1,153,300 880,000 114,800 1,374,000 838,500 1,430,000 1,233,600 1,500,000 2,501,100 3529,000 1,255,400 549,200 2,"653," 660* I "S2,*378," 2o6" 414,800 So6,666 j 2,581,000 1,080,000 1,199,180 1,768,000 7,563,840 5,177,450 2 , 5 825,000 6,526,300 $400 19,150,000 $2,152,200 3,907,700 5,914,900 18,892,110 2,755,700 1,953,300 11,850,650 2,744,400 3,522,840 646,500 3,276,000 13,512,190 1,202,000 6,601,600 4,434,100 473,000 85,000 93,000 2,397,500 8,444,000 10,000 85,000 1 1,799,000 2,384,800 j 18,431,000 78,241,690 i Includes United States bonds purchased from banks under 15-day repurchase agreements. Total United States bonds with circulation privilege, §29,245,590. Other United States securities, §43,996,100. Number of banks and of other subscribers, also amounts subscribed, to the 6 issues of certificates of indebtedness preceding the third Liberty loan. State banks. National banks. Federal Reserve Bank. Boston New York Philadelohia Cleveland Richmond.. Atlanta Chicago... St Louis Minneapolis Kansas City Dallas •San Francisco Total NumPer ber sub- cent of scrib- total in ing. district. Amount. Num- Per ber sub- cent of scrib- total in ing. district. 3136 172 500 90.83 723,314,500 208 123 319 500 787 139,810,500 94.36 448 34.57 43,115,000 52.43 44,019,000 843 159,931,000 1,623 74.04 64,025,500 40.55 54,223,500 1,178 80,274,500 67.63 2,066 65,964,000 ""*497" "*92."72" 93,969,500 """823" " "67." 96" " 350 579 578 737 342 332 914 458 469 838 88.16 92.94 90 31 98.53 64.04 87.36 77.85 97.03 60.91 89.53 Trust companies. Amount. Num- Per ber sub- cent of scrib- total in ing. district. 36,204,000 15,521,000 34,502,000 46,194,000 32,468,000 33,781,500 "50," 566," 500" 176 372 472,500 407,380,000 61 990 000 60,636,50C 17,058,000 713,500 1 159,875,000 20,281,500 52 61.90 8,593,000 122,790,500 23,145,000 182 200 219 71 7 3,627 72" "77." 42* Individuals, corporations, etc. Federal Reserve Bank. SNumber subscribing. Boston.. . New York 12 170 14 8 49 Philadelphia Cleveland... Richmond Atlanta Chicago St. Louis .. Minneapolis Kansas City .. Dallas San Francisco 8 14 189 18 164 502 228 Total 2 50.85 119 25 709 000 10,660,000 8 685 000 2,566,500 ........ 2,740,500 30,361,000 Total. Number of indiof banks Per cent viduals, corporasubscrib- of total. tions, ing. etc., subscribing. Number Amount. $63,000 23,720,500 2,505,500 1,382,500 135,500 338,500 5,549,000 517,000 2,498,000 5,875,500 9,430,000 5,109,500 57,124,500 1 17 16 39.66 45 56 70 71 MO 854,935,500 .... 339,470,000 1,718,139,000 Num- Per ber sub- cent of Amount. scrib- total in ing. district. Amount. 75.40 91.92 68 26 94.80 36.41 70.00 84.17 78.22 193 §90,233,000 Other banks. 613 1,040 896 1,743 1,182 4,541 2,376 1,647 2,958 57.77 84.63 75.17 96.14 40.52 82.43 82.82 76 07 44.83 72.53 12 170 148 49 8 14 189 18 .,164 502 1,392 75.65 228 861 Amount. 3214,417,000 1,255,308,600 196,500,000 238,033,500 75,829,500 79 573 000 325,355,000 133 584 500 2 89,350,000 128,524,500 90,925,000 172,790,500 3,000,190,500 Include figures for State banks. Includes 3160,500 purchased by the Federal Reserve Bank of Minneapolis. NOTE.—Figures by the several classes of banks are only approximately correct, since in some States no distinction is made between the several •classes of banks operating under State laws. 559 FEDERAL BEBEEVE BULLETIN. JUNE 1,1918. 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 3 to 24, 1918. RESOURCES. [In thousands of dollars; i. e., 000 omitted.] Boston. Gold coin and certificates in vault: May 3 May 10 May 17 May 24 Gold settlement land, Federal R e s e r v e Board: MayS May 10 May 17 May 24 Gold with foreign agencies: Mav3 May 10 May 17 , May 24 Gold with Federal Reserve agents: May 3 May 10 , May 17 , May 24 , Gold redemption fund: May 3 May 10 May 17 May 24 Total gold reserves: May3 May 10 May 17 May 24 Legal tender notes, silver, etc.: May 3 May 10 May 17 May 24 Total cash reserves: May 3 May 10 May 17 May 24 Bills discounted for members and Federal Reserve Banks: May 3 May 10 May 17 May 24 Bills bought in open market: May3 May 10 May 17 May 24 United States Government long-term securities: May 3 May 10 May 17 May24 United States Government short-term securities: May 3 May 10 May 17 May 24 York. Philadelphia. Cleveland. Richmond. AtSt. lanta. Chicago. Louis. Minneapolis. Kansas City. San Francisco. Dallas. Total. 9,688 10,393 5,276 2,879 345,677 345,459 348,267 351,319 9,176 9,285 9,190 9,167 26,547 23,050 24,645 25,633 6,369 6,417 6,336 6,369 6,490 6,604 6,615 6,633 30,053 30,622 28,878 28,276 1.604 2;019 2,212 1,906 14,027 11,857 10,738 8,371 358 337 554 360 5,063 5,153 5,205 5,405 27,780 29,384 31,613 32,142 482,832 480,58C 479,529 60,554 61,046 60 985 60,927 78,084 68,797 39,336 39,583 53,022 57,572 52,729 40,537 51,805 49,274 60,844 54,514 9,388 14,710 18,710 23,224 13,903 11,162 10,008 15,224 81,512 61,036 80,016 81,869 18,537 23,118 32,421 23,784 11,184 14,098 18,572 18,520 32,730 45,793 21,371 23,344 6,135 7,054 7,397 8,438 20,917 23,784 15,888 17,773 437,771 437,444 418,337 407,767 3,675 3,675 3,675 3,675 18,112 18,112 18,112 18,112 3,675 3,675 3,675 3,675 4,725 4,725 4,725 4,725 1,837 1,837 1,837 1,837 1,575 1,575 1,575 1,575 7,350 7,350 7; 350 7,350 2,100 2,100 2 100 2,100 2,100 2,100 2,100 2,100 2,625 2,625 2,625 2,625 1,838 1,838 1,838 1,838 2,888 2,888 2,888 2,888 52,500 52,500 52,500 52,50() 48,166 48,116 63,213 63,163 238,514 248,154 247,839 247,502 82,702 83,735 82.796 83;661 95,940 100,073 98,204 107,630 31,321 31,200 31,096 32,957 31,369 33,354 37,345 37,838 141,601 146,376 148,713 152,251 29,734 29,037 42,003 41,131 35,007 34,875 34,804. 34,672 45,126 37,032 36,979 36,936 14,248 19,220 19,193 19,163 68,568 73,855 73,351 73,277 862,290 885,027 915,536 930,181 2,000 2,000 2,000 2,000 9,945 12,500 12,500 12,500 2,500 2,500 3,000 3,000 553 1,177 996 917 855 755 1,543 1,685 1,048 1,799 1,665 1.768 11986 2,090 1,537 1,529 1,722 1,715 1,702 1,773 1,902 1,984 788 777 758 1,263 1,262 1,260 1,259 29 167 16 78 24,541 27,584 28,502 29,115 124,083 125,230 135,149 132,644 690,332 693,022 666,054 669,016 151,075 156,767 151,390 140,040 179,570 177,817 189,254 193,709 49,911 55,081 58,834 65,142 54,880 54,380 57,251 63,069 262,181 247,152 266,943 271,836 53,512 57,803 80,458 70,636 64,020 64,703 68,116 65,647 81,647 86,575 62,306 64,023 28,547 34,527 34,893 36,103 120,182 130,078 123,756 126,158 1,859,940 1,883,135 1,894,404 1,898,023 2,067 2,484 2,561 2,709 44,796 42,881 42,865 41,658 1,585 1,469 1,324 1,291 500 549 629 482 374 398 426 441 863 802 717 942 4,485 5,572 4,520 4,980 1,853 1,835 1,692 1,771 70 105 67 133 347 296 294 415 2,797 2,778 2,850 2,909 126,150 127,714 137,710 135,353 735,128 735,903 708,919 710,674 152,660 158,236 152,714 141,331 180,070 178,366 189,883 104,191 50,285 55,479 59,260 65,583 55,743 55,182 57,968 64,011 266,636 252,72-i 271,463 276,816 55,365 59,638 82,150 72,407 64,090 64,808 68,183 65,780 81,994 86,871 02,600 64,438 31,344 120,488 1,919,983 37,305 130,274 1,942,500 37,743 124,119 1,952,712 39,012 126,460 1,956,050 52,082 50,265 36,049 41,277 401,092 450,024 368,714 442,175 39,308 38,429 36,276 40,690 54.888 So] 149 64,104 54,018 51,201 51,637 46,333 46,058 24,194 24,073 21,303 23,814 83,868 87,882 83,989 80,771 40,245 43,852 29,150 30,814 17,058 20,910 22,024 24,051 46,404 51,325 69,067 71,577 26,518 27,705 27,133 28,160 I 18,618 18,862 21,037 22,314 124,463 126,650 130,439 138,983 23,933 25,727 26,956 23,438 18,022 14,417 13,480 10,827 5,020 5,695 1,893 2,494 8,027 6,885 5,567 4,569 47,356 45,665 42,627 41,011 10,944 8,999 7,697 6,955 10,684 10,128 7,116 4,745 731 616 616 616 1,586 1,577 1,575 2,756 1,905 1,347 1,347 1,347 7,7b» 1,233 7,800 1,234 7,800 I 1,234 1,234 7,800 727 726 730 7,691 7,161 7,335 7,200 2,233 2,233 2,233 2,233 1,421 1,421 1,421 1,421 2,519 77,335 43,475 3,475 3,409 2,390 2,330 2,321 1,314 1,324 1,205 1,205 3,638 3,517 3,165 3,189 511 511 511 511 11,211 9,337 9,387 9,822 1,523 1,523 1,523 1,523 ' 196 363 478,460 60,043 59,365 58,308 58,033 36,584 37,790 38,123 39,894 873,442 939,041 842,265 923.299 3,507 2,604 2,041 1,446 4,960 21,495 1,555 18,849 845 ! 20,188 770 20,669 297,029 286,036 279,886 278,221 1,996 1,915 1,869 1,845 8,863 8,865 8,864 3,969 3,981 3,981 3,981 ! I ! i 2,461 2,461 3,461 3,461 41,183 40,110 41,041 42,067 1,490 1,217 1,430 1,314 4,644 4,571 4,433 4,398 2,632 1,896 ! 1,936 I 1,750 I 2,060 1,720 2,227 1.547 36,378 106,762 73,043 32,476 560 EEDEEAL BESERVE BULLETIN". JUNK 1, 1018, Resources and liabilities of each Federal Reserve Bank and of the Federal Reserve system at close of business on Fridays, May S to 24, 1918—Continued. RESOURCES—Continued. [In thousands of dollars; i. e., 000 omitted.] m New York. Boston. Philadelphia. Cleveland. Richmond. Atlanta. Chicago. St. Louis. Minneapolis. Kansas Dallas. City. San Fran- Total. All! other earning May 3 May 10 May 17 May 24 Total earning assets: May 10 May 17 May 24 Due from other Federal Reserve Banks, ! net: May 3 May 10 May 17 May 24 Uncollected items: May 3 May 10 i May 17 | May 24 | Total deductions from ! gross deposits: i May3 1 May 10 i May 17 j May 24 j >er cent redemption I 72,852 71,164 59,123 85,628 218 152 122 90 72 35 23 23 1,432 1,135 1,131 823 61 35 39 20 2,537 1,844 1,492 1,151 34,345 33,263 28,854 30,371 142,799 144,456 137,116 132,261 54,358 55,796 39,715 40,571 31,452 34,322 32,561 32,039 63,490 67,400 84,428 86,308 39,511 36,272 62,661 60,855 64,038 65,591 1,250,569 1,373,799 1,237,727 1,277,214 4,403 21,599 7,870 12,897 4,130 8,816 10,159 7,280 7,972 6,420 1,570 529,660 655,586 544,203 587,389 68,555 67,893 66,909 67,796 427 1,856 10,484 5,959 3,767 6,281 4,032 2,263 85,105 77,358 73,208 69,355 48,278 42,860 40,818 42,869 33,397 49,701 37,171 42,338 27,955 41,194 27,884 27,247 29,175 21,201 23,558 51,027 50,307 45,854 41,269 36,078 49,643 43,383 30,190 10,392 14,638 8,423 9,599 19,276 38.104 16', 728 22,218 16,761 18,072 15,915 17', 864 17,643 27,952 19,983 17.488 399,585 482,220 384,391 365,440 85,105 77,358 73,635 69,355 48,278 42.860 42i674 53,353 33.397 57; 903 37,171 42,338 29,638 41,194 27; 884 26,186 ' 27,247 37,991 31,360 23,558 55,430 71,906 53,724 54,168 40,208 58;139 43,383 36,149 14,159 20,9.19 12,455 11,862 26,556 46,076 23.148 23; 788 16,761 18,072 15,915 17,864 17,643 27,952 20,246 17,488 376,605 455,726 382,509 351,407 91,909 86,703 94,771 82,467 821 58,977 60,089 50,983 51,309 1,683 8,202 3,746 i 26,526 23,216 33,843 22,506 27,147 24,914 33,843 26.252 ! i i ! Reserve bank notes:! '; May 3 j L. May 10 1 L. May 17 1 !.. May 24 1 ;.. All other resources: I May3 ! i.. May 10 i !.. May 17 ! L. May 24 j j.. Total resources: ! I May3 i 226,149 |1,I May 10 1 223,792 {1,46S,847 Mav 17 : 230,676 j 1,326,757 Mav24 ! 227,233 i 1,367,418 Banks. 246 231 425 201 124 58 55 53 53 400 267 393 400 35,484 23,080 6,494 1.882 1 1 4 ; 033 1 537 404 530 537 137 137 137 137 329 66 77 318 65 77 269,311 269.054 262', 374 262.569 305,376 322,972 321,825 318; 996 138,900 156,762 138,127 143,078 117,340 126,437 118,182 46-1,895 469,086 462,303 463;243 149,931 173.573 165', 248 149,127 109,701 120,049 113,199 109,681 172,440 200,614 170.569 174;934 87,753 91,783 88,821 92,497 200,792 219,081 208,403 209,539 3,548,023 3,772,495 3,573,555 3,585.303 ierence between net amounts due from and net amounts duo to other Federal Reserve Banks = net amount due to other Federal Reserve JUNE 1, 561 FEDERAL RESERVE BULLETIN. 1918. Resources and liabilities of each Federal Reserve Bank and of the Federal Reserve system, at close of business on Fridays, May S to 24, 1918—Continued. LIABILITIES. [In thousands of dollars; i. e., 000 omitted.] New York. I Boston. Philadelphia. Cleveland. Atlanta. Richmond. St. I Minne- ; Kansas Louis. I apolis. ! City. Chicago. I Capital paid in: May3 May 10 , May 17 May 24 Surplus: May 3 May 10 , May 17 , May 24 Government deposits: May3 May 10 May 17 May24 Due to members—rcsorve account: May 3 May 10 May 17 May 24 Collection items: May 3 May 10 May 17 May 24 Due to other Federal Reserve Banks, net: May 3 May 10 May 17 May 24 Other deposits, including foreign government credits: May 3 , May 10 May 17 May 24 Total gross deposits: May 3 May 10 May 17 May. 24 Federal Reserve notes in actual circulation: May 3 May 10 May 17 May 24 Federal Reserve bank notes in circulationnet liability: Mays May 10 May 17 May 24 Ail other liabilities: May 3 MaylO May 17 May 24 Total liabilities: May 3 MaylO May 17 May 24 6,458 6,400 6,460 6,466 .„ 75 75 75 , i I ! 6,909 6,909 6,938 7,496 33,028 2,074 12,142 3,801 3,803 3,811 3,811 94,399 94,501 92,892 17,972 18,129 22,434 17,734 12,415 1,945 1,428 10,696 61,047 57,052 59,039 54,145 i i | I 22,091 62,457 38,520 23,183 31,332 27,810 285 1,992 37,552 i i '•• i | 259 266 244 174 116,248 : 816,168 I 138,818 114.291 930,238 | 136,904 120,834 790,968 ; 128,746 117.292 832,668 i 127,217 102,547 102,484 102,818 102,898 141,306 145,092 142,917 150,987 ! | ' . 124,084 125,241 126,690 128,414 37,369 40,386 38,428 37,398 189,007 192,555 184,337 185,287 12,471 21,069 14,211 14,377 24,920 23,546 26,265 22.563 391 I. 1,657 j . 6,892 I 5,877 20,670 4,369 12,615 ; . ! j I 5,105 3,544 8,886 9,879 2,928 2,938 2,950 2,967 3,786 6,807 3,674 9,818 3,516 834 2!294 7 717 - I i | i 57,605 57,490 57,952 57,780 j i ! j 13,208 45,223 14,593 13,644 24,705 34,913 33,977 21,374 i 5,062 i 11,177 j 7,414 ! 4,094 ! I ! ! 229,526 230,506 230,818 231,690 5,496 6,963 8,373 7,394 2,592 I 3,955 i 4,109 ! 3,679 I 20 ; 81 ! 469 I 35 ! 10,582 13,739 15,119 13,263 489 502 226,149 223,792 230,676 227,233 4,818 j 7,220 I 7,560 8,005 1,319,893 269,811 1,468,847 ! 269,054 1,326,757 I 262,374 i;367,418 I 262,569 703 635 703 I 844 ! 305,376 322,972 321,825 318,996 114 106 300 121 1 138,900 I 156,762 I 138,127 i 143,078 993 1,092 : 1,141 I 1,098 I 117,346 126,437 118,182 117,940 464,895 469,086 462,303 463,243 I ! ; ! 257,593 309,773 282', 475 242,488 4,787 ! . 763 ! . 68 ! 3.683 4; 459 4,377 4,192 81,750 j 51,820 62,467 105,304 55,820 96,779 52,606 81,708 64,124 64,198 64,446 63,276 i i I j 54,779 54,440 54,213 53,887 i 91,563 i 110,611 ! 114.596 I 107J903 49,349 53,916 51,433 55,666 94,463 108,510 96.208 95^681 il, 897,562 |2,107,050 jl, 906,962 11,909,025 70,531 • 35,207 71.741 : 34,740 72', 112 ' 34,131 72,299 : 33,557 101,833 106,024 107,541 109,210 1,556,660 1,569,618 1,569,445 1,578,621 89,546 116,667 85,943 90,163 7,980 7,878 7,878 7,764 7,878 i. 7^764 i. 821 ! 73,888 i 138,529 ! 48,753 ' 122,350 72,552 37,745 i 70,117 il, 474,518 64,637 41,164 75,493 -1,548,137 67,676 i 38,657 71,698 ! 1,461', 138 66,701 I 36,876 j 68,234 jl, 436,284 224,445 227,565 220,398 220,502 66,558 66,658 67,981 68,281 5,314 14,056 5,014 9,924 ! 51,148 ! 41,648 | 49,680 I 42,706 ! 49,339 i 39,503 ! 47,884 ; 33,614 1,803 3,214 5,336 3,154 i 56,736 ! 65,930 ! 57,174 ! 57,096 75,049 75,118 75,315 75,465 1,134 1,134 1,134 1.134 412 68,311 86.079 65'919 70,749 4,308 4,312 4,330 4,332 ! ! i | 8,625 i. 177 5 16 17 | ! j ! 154,863 168,737 169,669 158,629 508,560 511,004 507,826 506,342 8,715 8,250 4,460 9,498 38 38 38 38 3,472 3,471 3,490 3,500 13,540 15,260 2,349 3,278 85,627 102,566 104,137 100,312 24,234 22,990 31,003 28,728 5,050 4,470 4,519 4,892 2,771 2,773 2,777 ! 2,782 j 216 216 216 216 19,376 31,789 20,715 17,362 639,907 87,598 i 108,305 675,135 109,784 | 117,703 625,718 95,986 I 113,581 628,517 | 88,711 108,184 4.0 40 40 40 i 3,520 | 3,524 ! 3,523 | 3,623 i 9,715 9,707 9,730 9,737 44,723 44,413 43,323 42,248 j 8,525 27,778 9,581 19,194 2,965 2,977 3,016 3,019 4,212 9,486 224 4,247 649 649 649 649 3,877 i 1,661 I 2,230 | 11,728 I 8,504 8,508 8,536 8,536 116 116 116 116 19,698 19,736 19,754 19,754 Total. 537 547 500 520 284 331 351 149,931 173,573 165,248 149,127 109,701 120,049 113,199 109,681 911 ; 857 : 1,146 ; 1,208 • 172,440 200,614 170,569 174,934 ! : i i 192 307 307 188 235 324 316 11,897 12,821 13,294 87,753 91,786 88.821 92;497 200.792 219; 081 208,403 209,539 3,548,023 3,772,495 3,573,555 3,585,303 562 FEDERAL RESERVE BULLETIN. JUNE 1, 1938. FEDERAL RESERVE NOTES. Federal Reserve note account of each Federal Reserve Bank at close of business on Fridays, May 3 to 24,1918, [In thousands of dollars; i. e., 000 omitted.] Boston. FederalReserve notes received from a g e n t net: May3 May 10 May 17 May 24 Federal Reserve notes held by banks: May 3 May 10 May 37 May 24 Federal Reserve notes in actual circulation: May3 May 10 May 17 May 24 Gold deposited with . or to credit of Fed- ! era] Reserve agent: I May 3 j May 10 i May 17 May 24 Paper delivered to j Federal Reserve agent: May3 May 10 May 17 May 24 New York. Philadelphia Cleveland. Richmond. 106,166 107,556 107,863 107,813 553,988 569,018 565,212 56G,156 129,422 137,855 136,916 138,281 149,740 153,373 152,804 159,250 77,635 | 59,610 77,480 59,446 78,674 60,007 79,868 59,719 245,776 250,551 252,888 256,426 67,826 67,129 69,435 68,563 | 5,338 45,428 58,044 12,634 57386 ! 10,226 57,386 10226 59,834 i 9,867 8,434 8,083 9,887 8,263 11,077 10,822 10,693 11,587 2,005 1,956 2,055 1,939 36,250 20,045 22,070 24,736 102,547 508,560 124,084 102,484 531,004 125,241 102,818 507,826 326,690 102,898 506,342 I 128,414 141,306 145,092 142,937 150,987 66,558 66, 658 67,981 68,281 3,619 5,072 5,045 4,915 St. Louis. Minne- Kansas apolis. City. Dallas. 55,853 56,021 56,150 56,018 76,914 77,862 77,921 77,964 35,686 35,462 34,675 33,806 112.552 115', 939 117,695 120,821 1,671,168 1,707,522 1,710,240 1,724,685 3,702 2,931 4,989 5,287 1,074 1,581 1,937 2,131 6,383 6,121 5,809 5,665 479 722 544 249 10,719 9,915 10,154 11,611 114,508 137,904 140,795 146,064: 57,605 57,490 230,506 57, 952 230,838 57,780 231,690 64,124 64,198 64,446 63,276 54,779 54,440 54,213 53,887 70,531 71,741 72,112 72,299 35,207 34,740 34,131 33,557 101,833 106,024 107,541 109,210 1,556,660 1,569,618 1,569,445 1,578,621 Atlanta. Total. I i 48,166 48,116 63,213 63,163 238,514 248,154 247,839 247,502 82,702 83,735 82,796 83,661 95,940 100 073 98,204 107,630 31,321 31,200 31,096 32,957 31,369 33,354 37, 345 37,838 341,601 346,376 148,733 152,251 29,734 29.037 42; 003 41,131 35,007 34,875 34,804 34,672 45,126 37,032 36,979 36,936 14/248 19,220 19,193 19,163 68,568 885,027 73,855 73,351 915,536 73,277 ! 930,181 70,700 69,127 57,086 63,591 525,555 576,674 499,153 581,158 60,240 58,406 56,411 58,959 72,910 69,556 77,584 64,845 55,055 57,051 45,479 47,867 28,679 26,533 22,746 22,675 120,460 124,237 121,289 114,040 46,232 44,670 30,827 29,424 26,383 27,752 27,992 25,385 34,763 49,170 66,263 68,476 31,478 29,260 27,978 28,930 45,554 45,620 48,287 50,527 1,118,009 1,178,056 1,081,095 1,155,877 JCJNH 1,1918. 563 FEDERAL RESERVE BULLETIN, Federal Reserve note account of each Federal Reserve agent at close of business on Friday% May S to 24, 1918, [In thousands of dollars; i. e., 000 omitted.] New York. St. Atlanta. Chicago. Louis. Richmond. Phila- Clevedelphia. land. Minneapolis. Kansas City. Dallas. San Francisco. Total. FEDERAL RESERVE NOTES. Received from Comptroller: May 3 149,560 149,560 May 10 149,560 May 17 152,580 May 24 Returned to Comptroller: May3 26,474 27,084 May 10 27,777 May 17 28,827 May 24 Chargeable to Federal Reserve agent: 123,086 May3 122,476 May 10 121,783 May 17 123,753 May 24 In hands of Federal Reserve agent: 16,920 May 3..*. May 10 i 14,920 May 17 i 13,920 May 24 j 15,940 Issued to Federal Re- j serve Bank, less | amount returned to Federal R e s e r v e agent for redemption: 106,166 May 3 107,556 May 10 107,863 May 17 107,813 May 24 Collateral held as security for outstanding notes: Gold coin and cert i n c a t e s on hand— 31,000 May3 31,000 May 10 16,000 May 17 12,000 May 24 In'" gold redemption fund— 5,666 May 3 5,616 May 10 5,713 May 17 5,663 May24 Gold settlement fund, Federal Reserve Board— 11,500 MayS 11,500 May 10 41,500 May 17 45,500 May 24 E l i g i b l e paper, m i n i m u m required1— 58,000 May 3 59,440 May 10 44,650 May 17 44,650 May 24 Total: 106,166 MayS 107,556 May 10 107,863 May 17 107,813 Kay 24 102,860 103,060 105,060 106,860 91,620 91,620 92,020 92,740 304,920 312,320 313,320 317,520 88,900 88,900 88,900 92,200 73,980 73,980 73,980 73,980 100,700 101,700 101,700 101,700 68,500 68,500 68,500 68,500 121,280 124,880 127,140 130,340 2,309,560 2,335,760 2.362,820 2,382,660 14,180 I 19,575 14,547 19,870 14,916 | 20,186 15,490 | 20,792 15,315 15,629 15,888 16,896 14,584 15,289 15,953 18,974 12,444 13,141 13,175 14,047 12,632 12,764 12,835 13,307 16,026 16,328 16,469 17,026 15,014 15,238 15,325 15,394 8,728 8,941 9,445 9,519 360,102 369,468 377,381 389,075 156,362 155,395 169,413 I 83,190 160,456 171,244 84,874 159,321 174,270 ~ 76,305 75,991 76,132 75,844 290,336 297,031 297,367 300,546 76,456 75,759 75,725 78,153 61,348 61,216 61,145 60,673 84,674 85,372 85,231 84,674 112,552 1,949,458 53,262 115,939 1,986,292 53,175 117,695 1,985,439 53.105 120,821 1,993,585 5,650 16,695 5,710 18,545 6,200 j 16,125 6,200 ' 16,125 44,560 46,480 44,479 44,120 8,630 8,630 6,290 9,590 5,495 5,195 4,995 4,655 7,760 7,510 7,310 8,710 17,800 17,800 18,500 19,300 245,776 250,551 252,888 256,428 67,826 67,129 69,435 68,563 55,853 58,021 56,150 56,018 76,914 77,862 77,921 77,964 35,686 35,462 34,675 33,806 841,480 184,200 184,200 866,280 190,200 866,280 190,200 177,292 181,832 185,668 189,924 664,188 671,248 680,612 676,356 27,838 28,805 29,744 30,879 181,560 183,960 186,160 189,760 110,200 102,200 115,400 110,200 26,940 17,540 23,540 21,040 17,640 16,240 18,440 15,020 553,988 569,048 565,212 568,156 129,422 137,855 136,916 138,281 149,740 153,173 152,804 159,250 I I I | 77,635 77,480 78,674 79,888 i ! I I 18,518 22,018 20,517 19,518 173,251 173,248 173,247 169,745 59,610 59,446 60,007 59,719 2,503 2,503 T503 13,102 13,102 13,102 13,102 2,503 278,290 238,770 275,199 268,900 112,552 115,939 117,695 120,821 1,671,168 1,707,522 1,710,240 1,724,685 11,581 11,581 I ! 11,581 I I 11,581 ! 2,768 | 2,672 2,619 2,576 249,955 253,452 236,950 228,449 10,263 9,906 9,592 12,757 6,743 6,646 7,062 6,957 7,422 8,055 7,687 8,112 1,821 1,700 1,596 1,457 1,996 1,681 2,422 2,415 248 548 319 112 1,976 1,943 1,909 2,182 2,405 2,273 2,202 2,070 55,000 65,000 65,000 65,000 75,959 77,089 75,734 76,704 70,000 70,000 70,000 80,000 29,500 29,500 29,500 31,500 26,870 29,170 32,420 32,920 141,353 145,828 148,394 152,139 27,758 27,094 40,094 19,500 19,500 19,500 19,500 42,360 34,360 34,360 34,360 ! 584 ! 5,584 j 5,58-1 I 5,584 315,474 320,894 317,373 318,654 46,720 54,120 54,120 54,620 53,800 53,100 54,600 51,620 46,314 46,280 47,578 46,911 28,241 26,092 22,662 21,881 104,175 104,175 104,175 104,175 38,092 27,432 27,432 20,846 21,146 21,346 21,346 31,788 40,830 40,942 41,028 21,438 16,242 15,482 14,643 43,984 42,084 44,344 47,544 808,872 822,495 794,704 794,504 129,422 149,740 137,855 153,173 136,916 152,804 138,281 159,250 77,635 77,480 78,674 79,868 59,610 59,446 60,007 59,719 245,776 250,551 252,888 256,426 67,826 67,129 69,435 68,563 55,853 56,021 56,150 56,018 76,914 77,882 77,921 77,964 | 35,686 35,462 34,675 33,800 112,552 115,939 117,695 120,821 1,671,168 1,707,522 1,710,240 1,724,685 553,988 569,048 565,212 566,156 j ! ! i i For actual amounts see item " Paper delivered to Federal Reserve agent," on p. 562, 2,083 j 5,672 2,055 ! 5,459 2,028 I 6,855 1,998 ! 3,781 49,061 48,554 50,004 53,080 563,280 583,021 628,582 648,652 564 FEDERAL RESERVE BULLETIN. JUNE 1,1918, MEMBEU BANK CONDITION STATEMENT. Principal resources and liabilities of member banks located in central reserve, reserve, and other selected cities, as at close of business on Fridays from Apr. 26 to May 17, 1918. 1. TOTAL FOR ALL REPORTING BANKS. i In thousands of dollars; i. e.. 000 omitted.] Number of reporting \ banks: = Apr. 26 ! May3 i May 10 1 May 17 ! United States bonds ! to secure circulation: | Apr. 26 j May3 1 Mav 10 ...i May 17 | Other "United States j bands, i n c l u d i n g ! Liberty bonds: j Apr. 26 MayS ! May 10 1 May 17 1 United/ States eertifi- j cates of indebted- j ness: ! Apr. 26 ! MayS ! May 10 : May 17 = Total United States :; securities owned: Apr. 26 : May 3 May 10 May 17 98 i ! 32 !I 32 31 30 i ; ! I 79 98 49 49 49 49 14,621 14,621 14,121 14,621 50,667 50,809 50,817 50,917 12,976 12,975 12,975 12,978 i ! ! i 42,519 42,907 42,887 43,016 22,876 21,978 23,818 21,599 14,700 13,545 14,695 14,785 19,241 19,642 19,642 19,142 17,374 17,392 17,393 17,437 5,747 5,747 5,744 5,642 13,135 16,376 18;939 17,644 167,335 166,624 317,294 304,658 13,805 | 14,056 ! 31,475 | 23.758 i 39,124 38,703 79,050 73,719 18,891 18,729 25,173 22,891 15,692 18,026 25,622 22,465 36,603 36,610 83,973 81,226 12,985 14,402 24,833 21,692 7,617 8,916 10,280 9,499 i i ! j 79,447 81,827 39,146 i 37,826 1 22,812 23,466 18,971 16,334 ! i 64,579 64,173 67,962 60,824 39 41 | 40; 42 ! 64 37 681 47 47 j 48 i 47! 688 14,012 14,012 14,012 14,014 17,561 17,312 13,979 17,559 35,399 35,299 35,399 35,055 267,693 266,23S 268,482 266,765 10,646 10,636 20,980 19,940 10,461 9,527 16,591 16,998 15,896 15,473 21,241 362,190 368,078 677,090 635,731 27,686 102,967 25.224 100,265 22; 218 56,721 55,152 22,853 41,753 19,139 ! 38,489 38,470 18,560 j 42,166 32,685 ! 12,833 30,159 32,622 i 11,721 j 27,920 20,308 20,579 17,589 18,857 52,996 52,514 41,170 40,320 1,548,369 1,526,329 1,165,26? 1,153,048 58,078 158,811 56,795 156,517 62,535 j 160,336 60,103 ! 155,520 i i 72,112 32,503 ! 70,264 i 33,223 ! 74,911 j 28,857 I 71,751 ! 26,862 i 63,147 68,814 65,151 61,874 48,330 47,418 51,159 53,414 104,291 103,286 99,449 96,616 12,178,252 :2,160,646 2,110,838 i2,055,543 3,007 3,252 3,997 4,332 3,609 3,895 5,226 5,088 4,367 4,448 8,391 6,244 ! I ! ! i 49,273 11,023.646 69,853 44,868 1,011^648 66,742 24,859 822,386 i 46,530 29,089 814,876 " 45,478 . 1 ! 77,029 il,241,648 i • 75,865 1,229.081 I ! 57,919 1.190.497 ' \ 61,354 ii;i70'.451 • Loans secured by ;; United States bonds and certificates: ; Apr. 26 i MayS i May 10 i May 17 j Other loans and in- ; • vestments: | Apr. 26 i May 3 j May 10 i Apr. 17 | Total loans and in- | vestments: "• Apr. 26 , MayS May 10 May 17 Reserve with Federal Reserve Banks: Apr. 26 May 3 May 10 May 17 Cash in vault: Apr. 20., Mav3 Mav 10 May 17 , Net demand deposits on which reserve is computed: Apr. 26 MayS May 10.. , Mav 17 , Time deposits: Apr. 26 Mav 3 MavlO May 17.. j San j Fran- I Total, cisco. I St. Atlanta.! Chicago. Louis. New i Boston. \ York. IPhiladel-i: Clevephia. land. 31,919 ; 153,160 ! 33,582 i 148,207 ! 56,492 j 264,809 ! 60,223 ! 280,334 I I 96,634 ! 161,090 i 93,773 i 163,437 \ 90,980 I 161,083 I 82,214 ! 154,561 i 21,213 27,653 36,376 34,795 | " | . I 37,203 i 12,412 37,867 | 12,273 42,697 ! 15,824 15,551 44,166 5,176 6,516 6,416 6,403 335,995 324,372 349,106 324,293 271,042 251,564 267,004 271,680 722.222 772', 229 775.529 792', 825 |4,006,751 • 611,090 j 923,808 !4,00l|30l ! 614,794 : 928,965 14,051,094 ;j 622,068 !j 928,100 14,024,953 627,410 937,115 831,170 881,676 889,940 914,402 5,401,559! 5|378.589 i 5,506.400 i 5,475;73Sj ! 62,851 66,720 65,643 66,564 26,069 27.782 28; 446 27.909 638,079 G62.882 629,429 066,122 728,937 736,220 749,424 744,419 ; j . i 20,419 20,230 20.319 20,727 |4,331,488! 14,428,836 \ 14,245,365 i 14,271,156 i 587,163 584,884 592', 722 588.079 79.210 i 320,821 98'. 879 284,790 95', 600 j 277,896 97;017 i 270,524 i ! i i 29,633 35,764 31.457 35,622 ! 595,666 \ 709,801 | 673:313 I 670'.090 14,965 I 222., 649 15,490 I .228,335 i 14.426 ! 227;748 ' 13,903 J 277,753 27,071 26,778 27,214 25; 581 ! 25,107 23,528 27,545 25,081 33,577 23,240 27.771 26; 857 | 11,331,674 j 1,351,613 il,357,373 '1,346,945 14,812 14,628 2,316 2,627 3,179 3,461 ! ! ! ! 316,352 311,937 483,736 501,556 450,967 455,188 454,161 462,436 176,254 171,802 169,243 173,426 483,381 482,565 487,434 484,511 ;9,907,521 9,959,763 10,065,235 110,051,628 1,524,062 445,897 1,531,370 450,623 1,545,480 457,604 ! 1,529,322 461,297 263,764 269,238 266,024 260,914 517,121 525,254 523,309 528,641 228,193 223,115 225,628 231,928 592,039 590,299 595,274 587,371 112,402,125 12,432,346 112,659,810 !12,6OS;72S ! 142,995 33,477 i 19,073 I 145,081 35,526 1 19,502 ! 143,464 33,349 i 20,242 I 139,171 32,241 ! 17,401 42,011 44,054 44,460 39,744 16,382 16,782 17,705 15,911 42,625 45,515 43,993 46,728 ll, 180,827 il, 162,521 jl, 223,127 |1,148,U1 10,125 j 16,977 9,691 17,034 9,488 17,031 8,943 15,546 11,107 11,090 11,774 11,460 20,477 19,662 21,268 19,219 I I I • 153,511 151,595 140,773 141,965 374,827 382,290 370,780 378,627 ;9,100, OSS 9,269,625 18,935.572 |8,922; 611 24,541 24,090 23,175 24,840 103,845 102,205 103,499 102,282 1,421,900 1,419,056 11,398,264 11,386)698 64,121 63,937 365,392 I 228,945 371,982 j 233,388 13,555 14,663 14,754 13,403 263,760 j 204,201 1,053,322 240,125 183,402 256,037 186,741 11,050,156 272,869 I 185;881 267,650 192,606 1,024,429 252,270 1 171,088 243,175 194,964 998,254 251,343 ! 162,583 45,519 I 79,868 43,337 ! 74.253 44,669 81;868 39,136 - — ! ! : ! 233,988 230,591 61,574 I 13,669 ! 64,157 13,224 15,48-4 15.029 15;568 j 14,845 ! 8,393 8,377 12,558 14,103 370,135 375,443 1,122,101 412,986 334,296 11,130,269 400,818 i 314,875 ll,131,880 432,892 ! 335,955 1,135,842 400,668 I 338,186 631,551 j 57,349 ! 80,335 599,641 ! 55,040 I 84,354 650^252 ; 68,131 ! 81.129 595; 479 ! 62,794 i 81', 416 I 130.245 ! 127; 320 I 130,375 I 126,896 ! I ' | 349,264 347,103 347,362 75,548 75,659 74,634 74'610 I 384,545 399,653 375,147 356,247 47,058 ! 58,606 46,350 I 56,799 45,040 62,606 44! 936 I 62', 433 369,334 375,646 379.413 373,135 Principal 565 FEDERAL RESERVE BULLETIN. JUNE 1, 1918. resources and liabilities of member banks located in central reserve, reserve, and other selected cities, as at close of business on Fridays from Apr. 26 to May 17, 19 IS—Continued. 1. TOTAL FOR ALL REPORTING BANKS—Continued. [In thousands of dollars; i. e.f 000 omitted.] Philadel-j Clevephia. ! land. New j Boston. I York. ! Total net deposits on which reserve is computed: Apr. 2G May 3 May 10 May 17 Government deposits: Apr.26 May 3 May 10 May 17 st Richmond. Atlanta. 229,954 210,329 219,005 221,313 668,169 701,609 666,862 704,338 4,411,780 4,498,589 4,315,876 4,340,047 592,452 590,325 597,831 592,972 i 764,551 I 780,402 ! 743,699 | 740,484 279,293 270,899 282,942 256,261 39,777 43,342 113,562 114,355 407.993 342', 067 379,927 650,035 43,756 43,372 37,729 83,851 I 56,341 | 56,690 i 68,531 ! 104,044 5,595 10,358 24,092 - < 11,149,056 259,642 1,152,105 292,490 1,120,057 271,621 1,093,941 270,684 13,864 45,443 11,360 42,785 32,425 47,474 29,759 119,260 i Minne- • Kansas j apo]is> ! c i t y > Dallas. San Francisco. TotaJ. 200,367 202,579 187,277 178,744 402,127 416,693 393,929 374,977 161,499 159,371 148,338 150,037 405,980 412,951 401,830 409,311 9,524,870 9,688,342 |9,349,267 |9,333,109 11,298 11,862 20,378 25,976 10,918 10,067 29,896 30,202 7,379 6,647 7,917 18,898 2,595 3,639 12,520 21,168 | 669,352 I 606,020 i 826,989 11,284,081 24,393 23,831 52,538 65,904 2. MEMBER BANKS IN CENTRAL RESERVE CITIES. CENTRAL RESERVE CITIES. Number of reporting banks: Apr.26 May 3 May 10 May 17 United States bonds to secure circulation: Apr.26 May 3 May 10 May 17 Other United States bonds including Liberty bonds: Apr.26 May 3 May 10 May 17 United States certificates of indebtedness: Apr.26 May 3 May 10 May 17 Total United States securities owned: Apr.26 May 3 May 10 May 17 Loans secured by United States bonds and certificates: Apr.26 May 3 May 10 May 17 Other loans and investments: Apr.26 May 3 May 10 May 17 Total loans and investments: Apr.26 Mav 3 , May 10 May 17 Reserve with Federal Reserve Banks: A or. 2G May 3 May 10 i May 37. ' 120 120 120 120 36,323 36,465 36,473 36,573 151,687 148,690 275,527 268,676 10,374 10,392 10,393 10,392 48,139 48,300 48,309 48,408 15,615 i 8,649 15,491 i 10,016 52,371 18,450 50.875 14,802 175.951 174', 197 346,348 334,353 1.442 1.443 1,443 1,443 : i j i 805,879 798,990 65,045 62.470 29,707 30,006 34,392 i 31.847 ! 28,123 28,350 1,100.205 1,083', 307 ' 863,709 857,346 1,188,778 1,174,145 1,117,879 1,104,239 82,102 79,404 83,521 82.324 53.415 52,255 56,9(56 53,544 1,324,295 1,305,804 1,258; 366 1,240,107 1,000,768 i 135,271 130,549 242,321 257.273 3,671,200 3,671,101 3,700,416 3,687,226 4,995,249 ! j 4,975,795 5,060,616 5,048,738 004,353 571;677 023.574 567;161 164,735 149.167 268,131 284,143 22,772 6,692 i 12,145 6,473 i 15,713 | 10,097 ! 15,671 i 11,199 I815,898 .14,746,306 .14,750,143 .14,785.917 .14; 777; 405 259.208 ' 815,348 263,694 820,741 264,760 821,154 269,025 : 920,772 • 903.879 " i 919'. 975 ; 919^149 319,315 !. 322;422 I. 381,823 ' . 333.768 . . 99,435 25,747 i 101,588 1 27,334 : 101,742 i 24,820 j 96,322 ! 24,686 : .16,235,336 .;6,205,114 .:G; 312,414 .6.301,655 I i I j i ! I 729,535 700,599 750,136 . . 088,169 .! 566 FEDEKAL RESERVE BULLETIN". JUNE 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 Apr. 26 to May 17, 1918—Continued. 2. MEMBER BANKS IN CENTRAL RESERVE CITIES—Continued. [In thousands of dollars; i. e., 000 omitted.] Boston. New York. Richmond. Philadel- Cleveland. phia. St. Atlanta. Chicago. Louis. Minneapolis. Kansas City. Dallas. San Francisco. Total. CENTRAL RESERVE CITIES—contd. Cash in vault: Apr. 26 May 3 May 10 May 17 Net demand deposits on which reserve is computed: Apr. 26 May 3 May 10 May 17 Time deposits: A pr. 26 May 3 May 10 May 17 Total net deposits on which reserve is computed: Apr. 26 . May 3 May 10 May 17 Government deposits: \nr 26 May 3 May 10 May 17 38,229 38,9H 39,184 37,650 7,490 7,592 8,288 7,663 163.849 161', 411 164,399 158,743 4,045,438 4,121.824 3,960,888 3,968,140 707,196 717,866 683,451 668,880 161,103 193,920 180,871 182,857 4,913,737 5,033,610 4,831,210 4,819,877 277,779 243,395 234,825 226,747 135,035 133,372 130,630 130,899 56.528 55;466 54,724 54,712 469,342 432,233 420,179 412,358 118,130 114,908 116 927 113,430 ! :::::::: *::::::::: i 4J09,541 4,177,992 4,015,078 4,020,466 1 738,358 748,644 719,596 699,087 174,148 206,720 193,500 195,483 5,022,047 5,133,356 4,928,174 4,915,036 392,820 326,006 352,707 593,741 ! i I 33,371 32,115 36,082 96,221 20,646 19;904 41,691 54,184 446,837 378,025 430,480 744,146 j 3. MEMBER BANKS IN R E S E R V E CITIES. BBSEKYB CITIES. Number of reporting banks: Apr. 26 May 3 May 10 May 17 United States bonds to secure circulation: Apr. 26 May 3 May 10 May 17 Other United States b o n d s , including Liberty bonds: Apr. 26 May 3 May 10 May 17 United States certificates of indebtedaess: Apr. 28 May3 May 10 May 17 Total United States securities owned: Apr. 26 May 3 May 10 May 17 Loans s e c u r e d b y United States bonds and certificates: Apr. 26 May 3 May 10... May 17.. 33 33 32 33 60 42 8,965 34,863 8,985 ! 35,230 8,965 35,230 3,968 35,359 13,694 13,691 13,694 13,684 12,170 11,085 11,865 12,255 17,449 17,449 17,449 16,949 5,330 5,330 5,330 3,240 14,012 14,012 14,012 14,014 3,290 3,290 15,133 15, 128 14, 526 15 106 35,399 35,299 35,399 35,055 i 8,738 8,625 14,206 14,984 15,898 ! 154,977 15,473 j 161,441 22,880 279,211 21,241 I 253,082 38,489 42,166 30,159 27,920 17,678 17,955 15,437 16,809 52,996 52,514 41,170 40,320 394,303 388,900 262,235 258,293 22,915 23,701 20,834 19,285 63,147 66,814 65,151 61,874 41,549 41,706 44,169 46,899 104,291 103,286 99,449 96,616 721,879 722,095 713,500 683,829 2,191 2,501 3,004 3,175 3,007 3,252 3,997 4,331 3,440 3,727 5,056 4,928 4,367 4,448 8,391 8,244 131,966 141,408 187,031 188,968 4,498 4,498 4,498 4,498 7,796 7,796 7,796 7,796 10,916 13,663 11,795 7,132 8,830 25,566 21,448 10,770 10,958 27,231 20,049 36,381 38,140 74,684 69,324 13,263 13,322 15,536 15,170 14,205 16,685 22,410 19,275 20,267 19,421 29,813 28,352 j 3,302 I 3,143 I 4,461 I 4,361 5,981 7,259 7,781 7,143 10,646 10,633 20,980 19,940 38,863 32,736 18,156 21,040 11,26-4 11,239 7,604 7,454 | 63,832 i 60,436 | 41,758 | 40,859 72,881 75,332 35,137 33,862 18,477 19,036 15,358 14,263 23,008 22,018 18,077 18,962 37,448 36,991 26,384 24,756 5,943 5,325 3,234 3,146 13,644 13,152 9,763 8,902 51,757 48,150 38,317 37.333 83,367 25,192 ' 80,359 27,895 77,952 40,966 69,876 36,698 144,105 148,702 145,051 138,545 45,434 46,052 44,588 43,117 49,383 49,768 52,352 75,164 73,861 73,646 70,057 14,575 13,801 13,025 12,837 26,195 28,320 47,023 50,627 8,858 8,874 10,593 11,361 36,391 37,059 41,798 43,264 10,363 10,243 13,414 13,774 4,845 6,247 5,912 5,952 10,566 10,643 11,497 10,545 1,299 1,463 1,892 1,870 j 20,444 26,631 34,454 32,897 ! 416 418 419 422 j ! i i 172,599 171,754 172,054 172,254 587 FEDERAL RESERVE BULLETIN". JUNE 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 Apr. 26 to May 11, 1918—Continued. 3. MEMBER BANKS IN RESERVE CITIES—Continued. [In thousands of dollars; i. e., 000 omitted. New York. Boston. Philadol-i Clove- j Richphia. I land. I mond. ! RESERVE CITIES—COn. Other loans and investments: Apr. 26 Mav3 May 10 May 17 Total loans and investments: Apr. 26 Mav3 M> 1 May 17 Reserve with Federal Reserve Banks: Apr.26 May3 May 10 May 17 Gash in vault: Apr.26 May3 May 10 May 17 Net demand deposits on which reserve is conrouted: Apr. 28 May 3 May 10 May 17 Time deposits: i Apr.26 i Mav3 May 10 ! May 17 | Total net deposits on I which reserve is ! computed: ! Apr.26 1 May 3 j May 10 i May 17 j Government deposits:! A.pr. 26 1 May3 i May 10 May 17 543,586 545,382 556,551 567,102 146,487 142,789 146,309 146,196 542,726 545,949 552,799 559,583 621,538 619,852 639,891 655,062 181,537 179,558 197,868 194,255 648,537 652,939 665,205 662,356 52,088 53,617 52,255 52,779 13,900 15,063 14,182 15,910 19,153 19,052 19,570 18,777 4,836 4,927 5,544 5,850 508,426 505,057 477,089 504,506 130,917 128,824 115,908 129,943 30,017 27,525 26,146 ! St. Atlanta. Chicago. Louis. I MinneI arcolis. City. 450,967 455,188 454,181 462,436 149,220 483,381 4,417,271 147,635 482,565 4,439,562 142,095 487,434 4,468,14.6 147,165 484,511 4,494,002 98,779 196,855 100,688 202,900 98,112 1 203,362 97,919 I 197,726 517,121 525,254 523,309 528,641 194,209 193,008 191,320 198,992 592,039 590,299 595,274 587,371 5,271,116 5,303,065 5,368,677 5,366,599 42,011 44,054 44,4.60 39,744 14,528 14,873 15,842 13,942 42,625 45,515 43,993 48,728 401,516 411,295 420,396 408,818 9,840 ! 20,477 9,372 j 19,662 ...... 10,029 j 21,268 9,958 | 19,219 173,002 178,157 178,017 178,383 | i i | 299,858 302,870 308,322 304,612 294,046 284,040 292,375 297,347 596,979 610,102 610,683 595,383 21,288 21,811 21,205 20,876 23,282 21,998 25,475 23,103 43,171 42,675 40,870 41,969 6,313 6,908 7,340 5,942 12,040 11,878 13,228 13,302 23,137 24,701 24,429 25,769 5,041 ! 8,763 18,977 5,627 ! 6,319 17,034 17,034. 5,213 '• 6,303 17,031 ! 4,426 6,051 15,546 | 1,031,618 1,040.895 1,042^56 1,046.935 75,158 1 79,151 I 75,738 j 76,774; 517,814 632,792 194,631 182.358 342,513 513,894 | 646,792 :i 196,717 170)389 323,720 525,886 j 613,217 193,948 170,696 325,859 174,987 320,200 519,592 | 608,688 ; 187,024 17,562 I 8,747 16,772 i 9,311 16,632 8,350 17,086 8,289 517,431 513,574 485,347 512,349 136,188 133,856 120,898 135,069 520,438 516,687 528,391 522,079 34,950 36,680 97,773 98,274 6,286 7,462 9,420 28,498 41,729 41,347 36,129 79,323 Total. 171,749 176,698 179,524 175,266 82,905 85,424 83,195 83,212 17,184 | 26,001! 11,753 16,291 i 31,454 i 11,540 16,834 27,261 ! 11,307 16,512 31,130 11,843 ! I ! I San Fran- 1" 851,122 244,061 239,818 511,249 857,134 246,575 228,625 525,598 856,107 250,320 234,111 525,540 865,126 247,721 240,903 514,781 51,722 ' 49,739! 62,195 i 57,039 I Dallas. ! ! ! i 62,371 62,355 55,748 54,574 15,430 15,893 16.841 14; 010 142,131 144,710 134,231 126,191 384,545 399,853 375,147 I 356,247 131,358 131,219 119,918 120,955 i 374,827 ! 382,290 ! 370,780 ;378,627 3,604,681 3,805,620 3.478,427 3; 481,514 i 103,845 !102,205 I103,499 ! 102,282 791,535 808,523 796,819 795,15S 65,924 64,045 67,573 88,073 211,867 231,439 212,258 212,259 13,063 14,251 14,083 14,096 58,806 "* — 56,799 • 62.806 62', 433 19,677 19.821 18; 407 20,020 694,710 ! 203,908 202,135 710,393 " 205,375 189,602 . 678,729 ! 202,935 672,183 j 195,628 195,409 406,073 393,152 389,536 383,878 66,290 I 149,805 402,127 68,630 152,099 413,693 59,973 ! 141,497 393,929 58,803 | 133,416 374,977 137,259 137,165 125440 125,440 126,961 208,393 212,002 211,708 211,716 ! . I : 30,922 28,860 29,958 28,674 55,449 ! 4,584 55,988 i 8,223 67,135 ! 16,247 102,593 ! 14,933 11,983 9,076 28,319 25,571 11,823 10,381 11,100 22,643 3,083 3,286 8,157 8,889 24,912 !I 24,629 24,220 24,084 I ! 1 | 10,575 10,301 18,432 23,749 405,980 3,842,142 412,951 3,848,177 401830 401,830 3,717,473 i 409,311 3,720,061 10,918 | 8,712 : 2,595 10,067 ! 6,083 I 3,639 29,896 j 7,499 ; 12,520 30,202 17,178 j 21,168 200,687 202,493 342,627 473,021 4. MEMBER BANKS OUTSTDE RESERVE CITIES. COUNTRY BANKS. Number of reporting banks: Apr.26 May 3 May 10 May 17 United States bonds to secure circulation: Apr.26 May 3 May 10 May 17 Other United States b o n d s including Liberty bonds: Apr. 26 May3 May 10 May 17 25 25 25 25 10,123 10,123 9,623 10,123 6,548 6,548 6,548 6,548 4,011 4,010 4,010 4,010 4,739 5,460 5 276 5,849 8,516 9,074 16,201 14,534 3,035 3,098 4,244 3,709 24 24 30 22 7 7 8 7 3 5 5 5 6 6 6 6 17 17 16 16 8 7 3 8 145 148 154 148 7,656 7,677 7,657 7,657 9,182 8,284 10,124 7,915 2,530 2,480 2,830 2,530 350 750 750 750 1,670 1 670 1,670 1,715 2,457 2 457 2,454 2,402 2,428 2,186 2,453 2,453 46,955 46,185 48,119 46,103 2,743 2,563 4,366 4,395 5,628 5,407 9,637 7,721 1,487 1,341 3,212 3,190 721 1,698 1,789 1,999 1,034 1,240 1,922 2,529 1,636 1 657 2,499 2,356 1,723 902 2,385 2,014 31,262 32,440 51,531 43,296 13 13 13 13 568 FEDERAL BESEEVE BULLETIN. JDNE 1, 1018. Principal resources and liabilities of member^ banks located in central reserve, reserve, and other selected cities, as at close of business on Fridays from Apr. 26 to May 17, 1918—Continued. 4. MEMBER BANKS OUTSIDE RESERVE CITIES—Continued. [In thousands of dollars; i. e., 000 omitted.] I New Philadel- CleveBoston. York. phia. land. COUNTRY BANKS— continued. United States certificates of indebtedness: Apr. 26 May 3 May 10 May 17 Total United States securities owned: Apr. 26 May 3 May 10 May 17 Loans s e c u r e d by United States bonds and certificates: Apr. 26 May3 MavlO May 17 Other loans and investments: Apr. 26 May 3 May 10 May 17 Total loans and investments: Apr. 26 May 3 May 10 May 17 Reserve with Federal Reserve Bank: Apr. 26 May 3 May 10 May 17 Cash in vault: Apr. 26 May 3 May 10 May 17 Net demand deposits on which reserve is computed: Apr. 26 May 3 May 10 May 17 Time deposits: Apr. 26 Mav3 May 10 May 17 Total net deposits on w h i c h reserve is computed: Apr. 26 May 3 May 10 May 17 Government deposits: Apr. 26 May 3 Mav 10 May 17 10,410 12,132 6,703 8,049 11,614 11,419 8,903 8,432 6,221 6,206 4,774 4,619 25,272 27,715 21,602 24,021 26,678 27,041 31,652 29,514 13,267 13,414 13,028 12,338 5,724 7,262 9,469 9,596 9,031 8,784 11,895 11,700 178,636 226,847 218,978 225 723 RichSt. Minnemond. Atlanta. Chicago. Louis. j apolis. 6,586 ! 6,495 ! 4,009 I 3.964 3,964 I 4,335 4,430 3,613 2,071 4,678 3,206 4,141 3,891 474 804 630 390 1,418 i 1 1,328 l|l26 5,495 5,408 3,070 2,819 16,985 16,735 16,032 16,016 19,145 18,121 23,374 17,707 8,695 7,027 10,183 9,611 1,545 3,252 3,169 3,139 4,122 4,208 ! 4,920 5,370 769 1,022 1,922 1,898 812 331 902 2,0-19 2,030 2,410 1,777 504 451 452 561 641 189,064 187,411 204,369 191,531 68,364 68,845 69,269 67,827 72,686 71,831 71,993 71,989 91,934 77,797 98,786 76,572 31,224 22,939 32,893 30,777 209,632 261,824 250.049 259)340 224,773 223,236 247,916 232,745 82,400 83,281 84,219 90,483 89,374 88,924 88,907 113,128 ! 97,948 ! 124,570 . 96,056 10,763 13,103 13,388 13,785 13,298 12,901 12,496 12,408 5,627 5,301 5,936 5,755 5,177 5,203 5,391 4,642 7,279 3,235 7,485 3,939 7,904 | 3,485 7 616 ! 4,215 City. 6,916 8,730 8,876 9,132 129,653 157,825 152,340 161,616 155,133 176,188 168,569 173,073 49,199 70,490 68,075 70,871 Dallas. Fran- Total. Cisco. I 25,4S0 24,623 26,439 26,691 2,624 2,152 2,048 53,861 54,122 39,323 37,409 9,522 8,023 7,577 6,781 5,712 6,990 6,515 132,078 132,747 i 138,973 i 131,808 402 441 569 1,034 125 126 175 169 168 170 160 19,651 21,362 28,574 28,445 4,527 10,667 11,092 11,010 23,279 22,864 22,180 23,206 57,196 56,690 54,464 55,325 27,034 24,167 27,148 26,261 743,944 770,058 811,172 780,221 40,250 30,235 43,580 40,839 6,311 14,371 14,822 14,790 27,803 27,513 27,669 29,610 66,909 66,338 62,662 63,188 33,984 »™5 30,047 34,308 32,936 895,673 924,167 978 719 940,474 5,783 4,967 6,009 4,705 1,825 1,530 2,070 1,978 818 852 880 1,417 1,286 1,189 1,613 ! | I | 3,643 3,609 3,401 49,776 50,627 52,595 51,120 3,632 4,310 4,196 4,492 3,731 3,489 4,261 3,002 1,629 1,346 1,584 1,326 208 545 508 518 1,024 | 1,444 1,253 1,314 3,362 3,372 3,185 2,892 1,854 1,909 1,' " 1,' 1,467 1,418 1,745 1,502 69,349 70,990 66,836 68,487 62,874 63,009 60,096 61,428 69,129 59,320 73,702 56,151 21,843 i 16,352 i 21,910 ! 19,977 | 3,613 8,570 9,119 9,174 16,651 16,594 15,651 13,912 41,271 41,171 36,857 36,392 22,155 20,376 20,855 21,010 591,671 630,395 625,935 621,220 6,218 6,179 6,076 5 614 I ! I I 2,630 16,256 16,333 16,040 16,037 14,597 14,477 14,711 10,462 13,944 I 2,362 4,058 4,215 4,204 5,957 5,942 5,827 5,802 22,146 21,721 20,820 20,852 4,864 4,269 4 768 4,820 161,023 178 300 181 266 179,182 10,208 ! 14,295 13,829 32,483 36,078 36,997 I 150,738 188,0*5 181,515 191,989 4,827 6,682 15,789 16,081 8,887 8,599 17,800 27,796 72,014 73,638 69,440 70,893 166,053 186,741 179,900 184,512 | ! ! i 69,841 70,009 66,970 68,301 75,385 65,524 80,007 60,635 27,819 20,727 28,037 25,904 4,625 10,309 10,925 10,976 19,204 19,140 18,148 16,398 50,762 50,480 45,780 45,328 24,240 22,206 i 22,898 23,076 660,681 706,809 703,620 698,012 2,027 2,025 1,600 4,528 892 722 1,396 1,451 1,011 2,135 7,845 5,696 1,881 2,284 4,106 4,188 249 289 292 664 641 2,690 2,831 723 1,561 1,946 2,227 667 564 418 1,720 21,828 25,502 53 882 66,914 JCNE 1,1918. 569 FEDEBA.L RESEBVE BULLETIN. EARNINGS ON INVESTMENTS OF FEDERAL RESERVE BANKS. Average amount of earning assets held by each Federal Reserve Bank during April, 1918, earnings from each class of earning assets, and annual rates of earnings on basis of April, 1918, returns. Average balances for the month of the several classes of earning assets. Bills discounted for members and Federal Reserve Banks. Bills bought in open market. Boston , New York.... Philadelphia. Cleveland Richmond Atlanta , Chicago St. Louis Minneapolis.. Kansas City... Dallas San Francisco, 355,877,376 357,051,485 29,444,642 50,381,548 40,136,106 16,953,525 75,494,942 38,715,606 10,180,000 38,747,575 23,958,330 32,318,052 $14,283,035 121,813,274 23,873,444 24,537,826 8,838,033 9,600,674 45,687,505 11,571,591 11,257,000 10,946,378 5,178,892 24,390,553 Total.... 7-39,259,187 311,984,205 Banks. Bills disHills counted for bought members and Federal in open market. Reserve Banks. Municipal warrants. Total, I " Boston New York Philadelphia... Cleveland Richmond Atlanta Chicago St. Louis Minneapolis... Kansas City... Dallas San Francisco. Total 8194,203 1,166,930 98,800 175,702 136,546 60,225 266,082 131,023 39,422 147,338 81,920 117,488 849,232 409,805 80,109 83,523 31,122 33,107 171,329 37,951 38,191 37,472 18,413 80,978 2,615,679 1,071,232 $6, 547 219, 547 33, 531 65, 952 5, 979 14, 899 . 24, 812 5, 945 ! 15, 730 33, 988 16, 358 12, 240 455,528 82, 403,195 j 68, 287,272 , 10, 22, 362,697 519,327 2, 782,000 4, 10, 974,927 2, 293,383 5, 744,400 693,000 12, 981,640 7, 005,113 5, 541,533 155,588,487 Total. i | §72,563,606 547,152,031 63,680,783 97,438,701 51,756,139 31,578,424 131,475,830 53,031,597 27,130,000 62,675,593 36,628,737 62,256,138 849,298 486,402 535,700 1,237,367,579 Calculated annual rates of earnings from— Earnings from- Banks. United | Municipal l securities. j warrants. ! 8194 1,621 1,815 S249,982 1,796,282 212,440 325,177 173,647 108,425 462,223 174,919 93,343 218,798 118,312 210,706 4,144,254 Bills discounted Bills for mem- bought United Municbers and in open States j ipal warFederal market. securities, rants. Reserve Banks. Total. Per cent. Per cent. Per cent. \ Per cent. Per cent. 3.85 4.06 3.21 4.09 4.09 3.99 3.97 3.91 4.08 4.05 4. OS 3.93 4.14 4.24 3.56 4.06 4.28 4.14 2.61 4.08 4.06 4.62 4.18 3.53 4.04 4.41 4.15 4.14 2.84 ! 3.99 4.12 4 01 2.64 i 4.13 4.71 3.36 4.19 4.06 4.63 3.19 4.23 4.32 4.16 2.84 ; 4.06 3.93 4.04 4.42 2.65 4.12 4.14 4.18 3.56 4.12 I 4.07 570 FEDERAL RESERVE BULLETIN'. JUNE 1.1918. GOLD IMPORTS AND EXPORTS. Gold imports and exports into and from the United States. [In thousands of dollars; i. e., 000 omitted.] Week e n d i n g Apr. 26, 1918. May 3, 1918. Mav 10, 1918. May 17, 1918. Total since Jan. 1, 1918. Total for corresponding period in 1917. IMPORTS. 100 177 109 137 4,023 576 Or© and base bullion United States mint or assav office bars Bullion refined United States coin . . Foreign coin 628 234 241 1 6,ii8 2,491 142 5,754 9 250,554 52,077 76,910 379 12,774 385,304 10 121 99 14,096 1 549 86,612 10 686 805 590 100 928 30 4 368 562 42 151 3 374 12,533 590 1,034 402 693 16,100 102,356 1 Total 1 1 307 31 4,840 343 EXPORTS. Domestic: Ore and base bullion United States mint or assay office bars. Bullion refined Coin 6 Total Foreign: Bullion refined Coin . 1 1 1 591 1,035 403 Total Total exports 307 4,871 16,407 693 107,227 Excess of gold exports over imports since Jan. 1, 1918, §3,633; excess of gold imports over exports since Aug. 1, 1914, $1,046,671. DISCOUNT RATES. Discount rates of each Federal reserve bank approved by the Federal Reserve Board up to May 31, 1918. Maturities. Discounts. Federal reserve bank. Within 15 days, including member banks' collateral notes. 16 to 60 days. 61 to 90 days. Agricultural and live-stock paper over 90 days. Trade acceptances. Secured by U. S. certificates of indebtedness or Liberty loan bonds. Within 15 days, including member banks' collateral notes. Ito60 days, inclusive. 61 to 90 days, inclusive. 16 to 90 days. Boston New Y o r k i . . . Philadelphia.. Cleveland Richmond Atlanta Chicago St. Louis Minneapolis... Kansas City... Dallas San Francisco. 1 I Rate of 3 to 4J per cent for 1-day discounts in connection with the loan operations of the Government. NOT?: 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. FEDEBAL SESEKVE BULLETIN,, JUNE 1,1918. DIGEST AND INDEX. In 1917 the Federal Reserve Board published a " Digest and Index of Opinions of Counsel, Informal Eulings of the Federal Eeserve Board, and Matter Relating Thereto." This was compiled from the Federal Reserve Bulletin and covered the opinions and rulings for the year 1915-16. There is herewith presented a similar digest for the year 1917 and the year 1918 to and including April, 1918. The matter has been arranged under the same topics as were employed in the original Digest and Index. ACCEPTANCES. OPINIONS OF COUNSEL. Acceptances, Where Payable. An acceptance to pay at a particular place different from the residence of the acceptor is a general acceptance, unless it expressly states that the bill is to be paid there and not elsewhere, and does not render the bill nonnegotiable. (Page 289, April, 1917, Bulletin.) Acceptances by Correspondents—When a Direct Liability. Drafts accepted by foreign correspondents at the request, and under the guarantee of a national bank in the United States, should be reported as a direct liability of such national bank, and should be treated as subject to the limitations imposed by the Federal Reserve Act on the acceptance power of national banks. (Page. 311, April, 1918, Bulletin.) Bankers' "Dollar Exchange" Acceptances. The 50 per cent limit imposed upon the amount of drafts which a member bank may accept for the purpose of furnishing dollar exchange is separate and distinct from and not included in the limits imposed by section 13 upon the amount of drafts or bills of exchange drawn against the shipment of goods or against warehouse receipts covering readily marketable staples, which a member bank may accept. (Page 528, July, 1917, Bulletin.) Bankers' Acceptances Without Documents, as "Accommodation." The acceptance of a draft by a member bank against an acceptance agreement which purports to assign to the bank certain collateral security, but which does not specifically mention any security as assigned, is an ordinary accommodation acceptance, and is not authorized by law. (Page 311, April, 1918, Bulletin.) Bankers' Domestic Acceptances, Eligibility of. A draft drawn by the purchaser of goods against a national bank is not eligible for acceptance by that bank under the provisions of section 13 of the Federal Reserve Act merely because it is secured by a bill of lading covering the goods bought. (Page 380, May, 1917, Bulletin.) 571 Bankers' Export Acceptances Defined. Where a dealer is engaged in purchasing the same character of goods for export and for domestic use, a member bank accepting his draft drawn to finance an export transaction should require proper assurances that proceeds of draft are to be used in connection with such export transaction and that the acceptance will be paid out of proceeds of sale of goods exported. (Page 314, April, 1918, Bulletin.) Bills, Demand and Sight, When to be Presented. Demand and- sight bills of exchange must be presented for payment by the holder within a reasonable time. Demand and sight bills become due and payable on the date on which they are presented for acceptance. If a member bank holds demand and sight drafts for more than a reasonable time after acceptance, they must be classed as overdue paper and considered in substance as promissory notes of the acceptor subject to the limitations imposed by section 5200. (Page 31, Jan., 1917, Bulletin.} Bills Drawn Against Actually Existing Value. A bill of exchange discounted before acceptance may be said to be drawn against actually existing value, within the meaning of section 13 of the Federal Keserve Act. when and only when it is accompanied by shipping documents, warehouse receipts, or other papers securing title to the goods sold. An accepted bill of exchange, unaccompanied by shipping documents or other such papers, may be considered as drawn against actually existing value if drawn against the drawee at the time of, or within a reasonable time after, the shipment or delivery of the goods sold. In this latter case there must be reasonable grounds to believe that the goods are in existence in the hands of the drawee either in their original form or in the shape of the proceeds of their sale. (Page 195, Mar., 1917, Bulletin.) Bills Payable to the Order of the Drawee. A bill made payable to the order of the drawee is not negotiable "until the drawee as payee has indorsed it. When it has been accepted and indorsed by the drawee it is a valid negotiable instrument in the hands of a third party, and the drawer is not released, since the terms of his order have been specifically complied with. (Page 110, Feb., 1918, Bulletin.) Drafts with Documents Attached—Conveyance of Title, Under the provision of section 13, which authorizes any member bank to accept drafts based upon domestic shipment of goods, provided shipping documents conveying or securing title are attached, such documents must be made out or indorsed so as to convey or secure title to the accepting bank. (Page 198, Mar., 1918, Bulletin.) Drafts, Interest on. A provision in a draft or bill of exchange that it is payable "with interest at the rate of — per cent per annum after maturity if payment is delayed " does not affect the negotiability of the instrument. (Page 200, Mar., 1917, Bulletin,) 572 FEDERAL RESERVE BULLETIN. Drafts Payable on or Before Certain Date. Drafts payable "ninety'days from date or before on five days after demand (i. e.s on live days' notice) by the holder hereof" are negotiable and eligible for discount with a Federal Reserve Bank. (Page 291, Apr., 1917, Bulletin.) I JUNEI, 192 8. Trust Receipts as Actual Security for Acceptance Transactions. If an acceptance is secured by shipping documents which are surrendered by the acceptor for a trust receipt which permits the purchaser of the goods to retain control of the goods, the accepting bank can not be said to be secured "by some other actual security" as provided in section 13 of the Federal Reserve Act. A trust receipt, however, which does not permit the purchaser to procure control of the goods, may properly be said to be actual security within the meaning of the act. (Page 881, Nov., 1917, Bulletin.) Drafts to Finance Sales to the United States Government. Drafts drawn in connection with sales to the United States Government of lumber or other material can not be treated as bills of exchange drawn against actually existing value and are subject to the limitations of section 5200, Revised Statutes, when discounted by national banks. Such drafts do not conform to the requirements of comINFORMAL RULINGS. modity paper as defined by the Federal Reserve Board and should not be discounted at the rate prescribed for such Acceptance Given by Acceptance House or Broker. paper. (Page 32, Jan., 1918, Bulletin.) The note of an acceptance house or broker could not Drafts Drawn on Sales Corporations. be said to have been used for an industrial, agricultural, A draft drawn by a lumber corporation UJJOII a sales cor- or commercial purpose, since the business of such acceptporation which it and a number of other lumber concerns ance house or broker is not such as to come within any of have organized will, when accepted, become a trade these classifications. The fact that the note is secured acceptance, even though the selling corporation is a stock- by eligible paper is immaterial if the proceeds are not holder of the sales corporation, provided the latter is used for one of the purposes mentioned. organized in good faith and not merely to act as an agent (Page 108, Feb., 1918, Bulletin.) for the purpose of evading the law. Acceptances—Exports Defined. (Page 33, Jan., 1918, Bulletin.) Drafts with Documents Attached—Definition. A provision of section 13 which authorizes any member bank to accept drafts based upon the domestic shipment of goods, provided shipping documents are ''attached," should not be construed so as to require that the documents be physically fastened to the draft. It is sufficient if the accepting bank has possession of the documents at the time of acceptance. (Page 765, Oct., 1917, Bulletin.) Clean drafts drawn by an exporter in Chile for the purpose of providing funds with which to purchase beans, peas, etc., from farmers in Chile, are ineligible unless the Chilean exporter is under contract to ship the peas, beans, etc., purchased from the farmers in that country, to some other country, and the member bank has a guarantee to this effect. " (Page 378, May, 1917, Bulletin.) Bankers' Acceptances Drawn Against Future Importations. Member Banks' Acceptances, Status of. An acceptance which has been purchased by the A national bank may properly accept a draft drawn for accepting bank and subsequently rediscounted with its the purpose of importing goods whether or not the sale Federal Reserve Bank is not subject to the limitations of of the goods under consideration has actually been consection 5200 of the Revised Statutes. summated at the time of the acceptance of the draft, (Page 696, Sept., 1917, Bulletin.) (Page 527, July, 1917, Bulletin,) Trade Acceptances Based on Advertising Space. The Federal Reserve Board may properly rule that a Bankers' Acceptances—When Drawn Against Exports. draft or bill of exchange drawn by the seller on the purNo national bank can legally accept a draft drawn upon chaser of advertising space and accepted by such purchaser it by an acceptance house which pledges as collateral is a trade acceptance. (Page 116, Feb., 1917, Bulletin.) security for the bill an acceptance based upon a transaction involving the importation or exportation of goods. Trade Acceptance Providing for Discount if Paid at (Page 28, Jan., 1917, Bulletin.) Maturity. A trade acceptance which consists of an order to pay a certain amount, which is the amount of the debt minus Bankers' Acceptances Drawn Against Shipment of Goods from a Corporation to its Agent. a discount for prompt payment at maturity, or, if not paid at maturity, to pay a greater amount, which is the A member bank may properly accept a draft drawn amount of the debt without any discount, is an order to against the shipment of goods from a corporation to its pay a sum certain and is negotiable. agent or branch even though no sale of the goods is involved (Page 200; Z-.I&r., 1918, Bulletin.) in the transaction. (Page 690, Sept., 1917, Bulletin.) 1, 1918. FEDEEAL RESERVE BULLETIN. Bankers' Acceptances Against Bullion. Gold bars may be properly considered as goods, and accordingly 60-day bills when accepted by banks and bankers against such a shipment would be eligible for purchase by Federal Reserve Banks as based upon or involving the exportation of goods. (Page 29, Jan., 1917, Bulletin.) ! 573 Drafts Drawn "On or Before 90 Days After Sight." Bills drawn "on or before 90 days after sight" should not be encouraged or countenanced. (Page 949, Dec, 1917, Bulletin.) Draft, Form of. A draft made payable at sight and accepted by the drawee is negotiable even if it contains the following provision: "With interest at the rate of 6 per cent per annum Bankers' Acceptances —Security Therefor. if payment is delayed." There is no objection to permitting the mills to substitute (Page 109, Feb., 1918, Bulletin.) other warehouse receipts for cotton receipts during the life of the acceptance. In purchasing or discounting bankers' Limitations Under Section 5200 E. S. acceptances or other bills which are secured hy warehouse Where a national bank has already loaned 10 per cent of receipts, etc., Federal Reserve Banks should make sure its capita] and surplus to a certain company, it may. while that the receipt is issued hy a warehouse which is inde- the loan is still outstanding, obligate itself as acceptor pendent of the borrower. If the credit were granted before on a draft drawn by that same company. The limitations the importation took place, there would be no objection of section 5200 on the amount of money which may be to continuing or renewing the acceptance while the goods borrowed from a member bank are separate and distinct are on the docks. (Page 30, Jan., 1917, Bulletin.) from and in no way restrict the limitations "of section 13 of the Federal Reserve Act on the amount of drafts which Bank's Own Acceptances, Purchase of. a member bank might accept for any one firm or corporaA member bank's own acceptances purchased by it tion. (Page 197, Mar., 1918, Bulletin.) must be treated as loans and as such are subject to the Limitations Imposed by Section IS of Act. 10 per cent limitation. (Page 28, Jan., 1917, Bulletin.) In any case where shipping documents or warehouse The right of the bank to resell or reissue such acceptances is, in the opinion of counsel, fully recognized by the receipts are held by the acceptor the 10 per cent limit does authorities, and where this is done they may be treated as not apply; so also in any case where the acceptor holds a trust receipt which does not enable the borrower to obtain acceptances outstanding and not as loans. the goods for his own use, the 10 per cent limit does not (Page 691, Sept., 1917, Bulletin.) apply; but in any case where the bank holds merely the Bills Drawn Against Coin. ordinary trust receipt which gives it only a lien on the Gold coin is "goods" within the meaning of section 13 goods in the hands of the purchaser or on their proceeds, of the Federal Reserve Act, and therefore a bill of exchange the 10 per cent limit should apply. (Page 286. Apr., 1917. Bulletin.) drawn to finance a shipment of gold coin from this country either to Europe or to Canada is eligible for purchase by a Syndicate Acceptance Credits. Federal Reserve Bank if otherwise in conformity with The Board has authorized expression of its views in the provisions of law and the regulations of the Federal Reaccordance with the principles outlined in a memorandum serve Board. (Page 29, Jan., 1917, Bulletin.) attached. The banks of New York may, during a period which can be declared ended at any time, proceed upon Differential as to Acceptances. the basis of this memorandum. The essential principles There is no objection to a moderate differential, say may be summed up as follows: one-fourth of 1 per cent, to apply between member-bank (1) Acceptance credits opened for periods in excess of acceptances and the acceptances of large nonmember institutions well known throughout the country and 90 days should only, in exceptional cases, extend over a period of more than one year, and in no case for a time whose acceptances necessarily have a broad market. exceeding two years. (Page 28, Jan., 1917, Bulletin.) (2) Banks which are members of groups opening these Drafts Drawn to Finance Sale of Goods to Allied Pur- credits should not buy their own acceptances, and where chasing Commissions. an agreement is made with the drawer for purchase of acEven if this transaction did not involve the exportation ceptances for future delivery, the rate should not be a fixed of goods a member bank might accept a draft drawn for the one, but should be based upon the rate ruling at the time purpose of financing it if it involved a domestic shipment of the sale. (3) Transactions covered by these credits should be of a of goods and if the shipping documents are attached at the time of acceptance. An acceptance of that character legitimate commercial nature, and acceptances must be would seem to be permissible in any case where the goods eligible according to the rules and regulations of the Board. (4) Whenever syndicates are formed for the purpose of are shipped from the interior to the seaboard preparatory granting acceptance credits for more than moderate to exportation. (Page 878r Nov.. 1917, Bulletin.) 574 FEDERAL RESERVE BULLETIN. amounts, Federal Reserve Banks should be consulted with regard, to the transaction. The question of eligibility, bothjfrom the standpoint of the character of the bill and of the amount involved, will be passed upon by the Federal Reserve Bank subject to the approval in each case of the Federal Reserve Board. (Page 257, Apr., 1918, Bulletin.) Trade Acceptances Defined. Only those trade acceptances which are drawn at the time of, or within a reasonable time after, the shipment or delivery of goods sold can be treated as bills of exchange drawn against actually existing value. (Page 287, Apr v 1917., Bulletin.) JUNE 1,1918. Insurance Premium—Trade Acceptance Against Insurance. A draft drawn by a casualty company against a policy holder for premiums could hardly be said to be a draft by the seller on the purchaser of goods sold and would not, in the opinion of the Board, come within the Board's present definition of a trade acceptance. (Page 309, Apr., 1918, Bulletin.) Trade Acceptances, Conference on. On March 9 the National Credit Men's Association held a conference on trade acceptances at the Hotel Astor, in New York City, at which the trade acceptance question was discussed from a variety of angles. Extracts from the addresses of some of the speakers are presented. (Page 243, Apr., 1917, Bulletin.) Warehouse Receipts, Warehouse receipts offered as security for bills accepted by member banks under authority of section 13 of the Federal Preserve Act must be issued by warehouses which are independent of the borrower. The corporation issuing such receipt must be organized in good faith as an independent corporation, and its affairs must be administered by duly authorized officers and agents independent of the borrower in order to comply with the rulings of the Board referred to. (Page 31, Jan., 1918, Bulletin.,) Trade Acceptances for Advertising. A draft or bill of exchange drawn by a publisher, or other advertising agency, on the purchaser of advertising space and accepted by such purchaser shall be considered a trade acceptance, provided the advertisement on which the draft or bill is based is for the purpose of promoting or facilitating the production, manufacture, distribution, or sale of goods, wares, merchandise, or agricultural products, including live stock; and provided further that such advertisement is not illegal and is not for the purpose of promoting or facilitating any transaction which is prohibited by the laws of the State in which it is to be conACCOUNTING. summated. (Page 114. Feb., 1917, Bulletin.) Accounts, Uniformity of. Trade Acceptance, Where Payable. | A tentative proposal submitted by the Federal Reserve Board for the consideration of banks, bankers, and banking If the terms of the original draft make it payable at the associations; of merchants, manufacturers, and associations banking house of the drawee the drawee may nevertheless of manufacturers; and of auditors, accountants, and assoaccept it payable elsewhere—as, for example, at a Federal ciations. The problem naturally subdivides itself into Reserve Bank—provided the acceptance does not stiputwo parts. (1) The improvement in standardization of late in terms that it is payable only at the Federal Reserve the forms of statements; (2) the adoption of methods which Bank and not elsewhere. will insure greater care in compiling the statements and (Page 379, May, 1917, Bulletin.) the proper verification thereof. Trade Acceptances of Retailers. (Page 270, Apr., 1917, Bulletin.) A bill of exchange drawn by the seller of goods and Basis for Figuring Interest for Rediscount Transactions. accepted by the purchaser of those goods is a trade acceptIn connection with rediscounts with Federal Reserve ance, regardless of whether or not the purchaser intends Banks, the point has been raised by one bank that it is to resell the goods or to use them for his own purpose. its habit to figure discounts on a basis of 360 days to the (Page 30, Jan., 1918, Bulletin.) year. It has been decided that for rediscounts on transactions between Federal Reserve Banks the basis of 365 Trade Acceptance Against Costs of Installation. days to the year should be applied. It is customary for the seller of certain goods to contract (Page 109, Feb., 1918, Bulletin.) for their installation and to include the cost of installation in the selling price. In the opinion of the Board an ac- Discount, Method of Computing. Aside from the fact that New York and Boston Federal ceptance drawn for the purchase price, including cost of installation, would come within the Board's definition of Reserve Banks figure discount on a 365-day basis while all the other Federal Reserve Banks use 360 days, the methods a trade acceptance. (Page 310, Apr., 1918, Bulletin.) used by the Federal Reserve Banks do not vary. Discount Trade Acceptances, Eligibility of, for Hediscount. is computed on the actual number of days the paper has The trade acceptance is an instrument which carries to run, the date of payment of course varying in different upon its face the evidence of the commercial character of States in accordance with the laws regarding holidays in the transaction which gave it birth. force in the different jurisdictions. (Page 109, Feb., 1918, Bulletin.) (Page 951, Dec, 1917, Bulletin.) JUNE 1, 1918. FEDERAL RESERVE BULLETIN. ADVISORY COUNCIL, MEETINGS OF. Meeting of Federal Advisory Council, Apr. 16,1917. (Pago*340. May, 1917, Bulletin.) Meeting of Federal Advisory Council, Nov. 19, 1917. (Page 921, Dec, 1917, Bulletin.) Meeting of Federal Advisory Council, Feb. 18, 1918. (Page 160, Mar... 1918, Bulletin.) AMENDMENTS TO THE FEDERAL RESERVE ACT. Te"xt of amendments to Federal Reserve Act as introduced in Congress, 1917, and statements relating thereto. (Page 98, Feb., 1917, Bulletin.) Text of a memorandum transmitted to it by Mr. James B. Forgan, president of the Federal Advisory Council, expressing the views of that body with reference to the proposed amendments to the Federal Reserve Act, 1917. (Page 106, Feb., 1917, Bulletin.) Comparative Senate and House bills amending Federal Reserve Act, 1917. (Page 177, Mar., 1917, Bulletin.) Senate report on amendments, 1917. (Page 188, Mar., 1917, Bulletin.) House report on amendments, 1917. (Page 191, Mar., 1917, Bulletin.) Bill authorizing the granting of Federal charters to banks organized for the purpose of engaging in foreign trade. (Page 450, June, 1917, Bulletin.) Amendments as passed by House and stricken out in Senate. (Page 441, June, 1917, Bulletin.) Synopsis of amendments to Federal Reserve Act as approved June 21, 1917. (Page 509, July, 1917, Bulletin.) Text of amendments to Federal Reserve Act as approved June 21,1917. (Page 511, July, 1917, Bulletin.) BRANCH BANKS AND AGENCIES. 575 ber banks to carry accounts with Federal Reserve Banks for clearing or collection purposes. (Page 879, Nov., 1917, Bulletin.) Bill of Lading Drafts. Undertaken by several of the Federal Reserve Banks as a collection transaction. The drafts are credited upon receipt and when paid the sending bank is charged interest at the published rate for the time the draft is outstanding plus the actual cost of collection. (Page 114, Feb., 1917, Bulletin.) Checks Payable in Exchange. Federal Reserve Banks directed not to handle checks which are drawn payable in exchange at current rates or in any other way than an absolute and unconditional order to pay in money. If any individual or any bank sees fit to receive a check which is nothing more than an order for exchange, he does so with his eyes open and with the full knowledge that an exchange charge will be imposed. (Page 763, Oct., 1917, Bulletin.) | Immediate Availibility of Drafts. I Board suggests that all member banks be permitted to | participate in the arrangement, with a limitation of I $10,000 per day as the total that may be drawn by any j one bank. (Page 78, Feb., 1917, Bulletin.) | Federal Reserve Drafts. i Forms of special drafts on Federal Reserve Banks prepared and sent to the 12 Federal Reserve Banks, with the necessary suggestions as to their use. (Page 347, May, 1917, Bulletin.) Other Citations on Collections. Development of the collection system. (Page 660, Sept., 1917, Bulletin.) Collection of notes and bills in New York. (Page 743, Oct., 1917, Bulletin.) Bank of England appointed as foreign agent. CLAYTON ACT. (Page 5, Jan., 1917, Bulletin.) Bank of France as foreign agent. Advisory Committee of Member Banks. (Page 175, Mar., 1917, Bulletin.) The members of an advisory committee of a national Philippine National Bank as foreign agent. bank are not necessarily officers, directors, or employees of (Page 239, Apr., 1917, Bulletin.) such bank within the meaning of section 8 of the Clayton Branches of Federal Reserve Banks at New Orleans. Antitrust Act. They can not be directors unless elected Seattle, Portland, Spokane, Louisville, Cincinnati, Pittsby the shareholders; and whether they are officers or emburgh, Detroit, and Baltimore. ployees depends entirely on the scope of the rights and (Page 10, Jan., 1918, Bulletin.) I duties assigned to them by the board of directors. By-laws for use in branch banks. (Page 118, Feb., 1917, Bulletin.) (Page 586, Aug., 1917, Bulletin; page 934, Dec, Duration of Permits. 1917, Bulletin.) Where the Federal Reserve Board has once granted permission to a person to serve at the same time as a director CHECK CLEARING AND COLLECTION. of two or more institutions under the provisions of the Advertisments of "Clearing Members." Kern amendment to section 8 of the Clayton Act, that A bank, in advertising, should be careful to avoid giving permission is continuing and good until revoked by the a wrong impression, but there is no objection, legally or Federal Reserve Board. (Page 763, Oct., 1917, Bulletin.) morally, to its stating facts. The law authorizes nonmem- ! 578 FEDERAL BESEBVE BULLETIN. Morris Plan Bank. Ruled that a Morris plan bank is a "bank" within the meaning of section 8 of the Clayton Antitrust Act and that word as used in that part of section 4 of the Federal Reserve Act which reads as follows: ''No director of class C shall be an officer, director, or employee, or stockholder of any bank " must be construed to include a Morris plan bank. (Page 527, July, 1917, Bulletin.) "Substantial Competition" Within the Meaning of the Clayton Act. A director of a national bank now serving with a trust company would not be required to resign in case the trust company should become the purchaser of bankers' acceptances or of first-class commercial paper, but did not otherwise come into competition with the national bank. (Page 878, Nov., 1917, Bulletin.) Status of State Banks Under Clayton Act—Opinion of Attorney General. State banks or trust companies may have common officers and directors with other State banks and trust companies whether or not any of such banks or trust companies are members of the Federal Reserve System. National banks, however, and banks and trust companies doing business in the District of Columbia, can not have as officers or directors, officers or directors of any other bank or trust company which is lcated in the same city of more than 200,000 inhabitants, or which has deposits, capital, surplus and undivided profits aggregating more than 35,000,000, regardless of its location (unless permission so granted by the Federal Reserve Board, under authority if the Kern amendment to section 8 of the Clayton Act). This is true whether or not such a State bank or trust company is a member of the Federal Reserve System. (Page 744, Oct., 1917,"Bulletin.) JUNE 1, 1918. Holding Over of Federal Reserve Bank Directors. A director of a Federal Reserve Bank has no authority to continue to serve as such after the expiration of his term even though his successor has not been elected. (Page 290, Apr., 1917, Bulletin.) DISCOUNT BATES. Readjustment of Discount Rates. New schedule of discount rates developed, as follows: 1. Paper maturing within 15 days, including member banks' collateral notes. 2. Paper maturing within 18 to 60 days, 3. Paper maturing within 61 to 90 days. 4. Trade acceptances maturing within 60 days. 5. Trade acceptances maturing within 61 to 90 days. 6. Bankers' acceptances maturing within 90 days. 7. Commodity paper maturing within 90 days. 8. Agricultural and live stock paper maturing within 90 to 180 days. (Page 241, Apr., 1917, Bulletin.) Rediscount of Notes Secured by Bonds. On May 22, after consideration of the question how the Federal Reserve Banks could best participate in furthering the progress of the Liberty loan, the Federal Reserve Board determined upon the establishment of a rate of 3-J per cont for the rediscount of customers' notes of not to exceed 90 days' maturity, secured by Treasury certificates or Liberty Loan bonds. (Page 429, June, 1917, Bulletin.) DIVIDENDS, EARNINGS, AND EXPENSES OF FEDERAL RESERVE BANKS. Dividends declared by Federal Reserve Banks. (Page 4, Jan., 1917, Bulletin; page 507, July, 1917, Bulletin; page 5, Jan., 1918, Bulletin.) Earnings and expenses of the Federal Reserve Banks for the year 1916. (Puge 89, Feb., 1917, Bulletin.) Earnings and expenses of the Federal Reserve Banks i for the six months ending June 30, 1917. (Pago 605, Aug., 1917, Bulletin.) DIRECTORS, ELECTION OF. | Earnings and expenses of the Federal Reserve Banks (Page 99, Feb., 1918, Bulletin.) Directors of branches of Federal Reserve Banks should | for the year 1917. be elected annually. (Page 31, Jan., 1918, Bulletin.) Rights of Liquidating National Bank to Accrued Dividends. Class C directors appointed for 1917. Any national bank which liquidates and reorganizes as (Page 7, Jan., 1917, Bulletin.) a State bank forfeits its rights to accrued dividends from Class A and B directors elected for 1917. its Federal Reserve Bank. Such rights do not survive in (Page 7, Jan., 1917, Bulletin.) favor of such State bank, even though it immediately beList of directors whose terms expire in 1917, and in- comes a member bank. structions for election. (Page 117, Feb., 1917, Bulletin.) (Page 743, Oct., 1917, Bulletin.) EXPENSES OF FEDERAL RESERVE BOARD. Class C directors appointed for 1918. Assessment by the Federal Reserve Board for expenses (Page 13, Jan., 1918, Bulletin.) Class A and B directors elected for 1918. from January 1 to June 30, 1917. (Page 23, Jan., 1917, Bulletin.) (Page 14, Jan., 1918, Bulletin.) Directors of branch banks named. Receipts and disbursements. Federal Reserve Board, (Page 14, Jan., 1918, Bulletin.) 1916. (Page 87, Feb., 1917, Bulletin.) JUNE 1,1918. EEDEEAL EESEKVE BULLETIN. 577 Assessment by the Federal Reserve Board for expenses Use of Note Emblem. The act of March 4, 1909, provides in part that whoever from July 1 to December 31, 1917. shall print, photograph, or in any other manner make or (Page 525, July, 1917, Bulletin.) Assessment by Federal Reserve Board for expenses execute any engraving, photograph, print, or impression in the likeness of any such obligation or other security, or from January 1 to June 30, 1918. any part thereof, except by direction of some proper officer (Page 24, Jan., 1918, Bulletin.) or the United States, shall be fined not more than §5,000, or imprisoned not more than 15 years, or both. FEDERAL RESERVE AGENTS, MEETINGS OF. (Page 194, Mar., 1917, Bulletin..) Meeting of Federal Reserve agents in Washington, j December 4, 1917. (Page 4, Jan., 1917, Bulletin.) FIDELITY BONDS. Meeting of Federal Reserve agents in "Washington, February 26, 1918. (Page 160, Mar., 1918, Bulletin.) Bonds of Federal Reserve Agents. In view of joint custody and control on the part of Federal Reserve agents and Federal Reserve Banks over FEDERAL RESERVE NOTES. unissuedfFederal Reserve notes, and certain funds as Custody of Gold, Lawful Money, and Federal Reserve provided;'by the Federal Reserve Act as amended June 21, 1917, the Federal Reserve Board has decided that it will Notes. These funds should be kept in safes, preferably with not require bonds of Federal Reserve'agentsjand assistant two locks, each with a different combination, one in the Federal Reserve agents in as large amounts as heretofore. control of the Federal Reserve Agent and his representa- It has prescribed as minimum bonds: For Federal Reserve tive and the other in the control of the officers of the bank. agents, $100,000; for assistant Federal Reserve agents, As the Federal Reserve Bank is jointly liable for the safe- 550,000. Should the directors of any Federal Reserve keeping of funds, a joint record should, be kept of all Bank deem it desirable to require larger bonds, no objection will be made by the Board to such action. transactions. (Page 691, Sept., 1917, Bulletin.) (Page 615, Aug., 1917, Bulletin.) Redemption of Federal Reserve Notes, Federal Reserve Banks should ask their member banks FIDUCIARY POWERS. to continue to pay out Federal Reserve notes as long as they are reasonably fit for use, and to refrain from sending Litigation Involving Constitutionality of Section II (k). notes to Washington for redemption unless they are so The case of Grant Fellows, attorney general of Michigan, worn or soiled as to be actually unfit for circulation. ex rel. The Union Trust Company et al. v. The First (Page 310, Apr., 1918, Bulletin.) National Bank of Bay City, Mich., instituted in the Supreme Court of the State of Michigan, discussed. Shipment of Unfit Notes. (Page 32, Jan., 1917, Bulletin.) The Federal Reserve Board and the Treasury Department have agreed upon a plan whereby Federal Reserve Decision of United States Supreme Court in case brought Banks may forward unlit Federal Reserve notes of other to test the constitutionality of section 11 (k) of the Federal Federal Reserve Banks directly to Washington for redemp- Reserve Act. (Page 534, July, 1917, Bulletin.) tion. (Page 82, Feb., 1917, Bulletin.) Delaware—Fiduciary Authority of National Banks. It has been decided that in the case of shipments of unfit Bill passed by the Delaware Legislature authorizing notes to Washington, Federal Reserve notes should be national banks to act as trustee, executor, administrator, included with classes of currency on which the trans- and registrar of stocks and bonds. portation charges should be assessed against the sender. (Page 528, July, 1917, Bulletin.) Hitherto charges have been paid by the Government on | unfit national bank notes, Federal Reserve notes, and | Georgia Law as to Fiduciary Powers. Federal Reserve bank notes when shipped in "collect." j Bill passed by the Georgia Legislature authorizing naA change in this plan has now been authorized by the ! tional banks located in Georgia to act as trustee, executor, Treasury Department. administrator, and registrar of stocks and bonds. (Page 212, Apr., 1917, Bulletin.) (Page 767, Oct., 1917, Bulletin.) Substitution of Collateral. Washington Laws Authorizing National Banks to Act as For the assistance of Federal Reserve Agents in making Trustees. substitutions of paper or deposits of gold or lawful money Act of the Legislature of the State of Washington, apwhen the original pledge is collectible, the Federal Reserve proved March 10, 1917, permitting national banks located Board on April 12 sent out a letter providing for substitu- in Washington to exercise the powers of a trust company. tion of securities. (Page 351, May, 1917, Bulletin.) (Page 697, Sept., 1917, Bulletin.N. 578 FEDEKAL RESERVE BULLETIN. GOLD SETTLEMENT FUND. Change in Operation of Fund. Important changes in the operation of the gold settlement fund were made possible by the approval on June 21, 1917, of the amendments to the Federal Reserve Act. Section 16 of the amendments was recommended to Congress for the purpose of simplifying the operation of the fund, which has grown to such proportions as to make the handling of the gold certificates evidencing the deposits of Federal Reserve Banks and Federal Reserve Agents a heavy responsibility. The fund has grown from about $20,000,000, when its operation began in May, 1915, to $523,410,000. (Page 521, July, 1917, Bulletin.) JUNBl, J918. National-Bank Examinations. The Comptroller of the Currency instructs national-bank examiners to leave with each national bank upon the completion of its examination, a bill covering its assessment for the examination, with instructions that the national banks deposit with the Federal Reserve Bank of their district, in the name of the Comptroller of the Currency, to the credit of the Treasurer of the United States, the amount of the bill. (Page 374, May, 1917, Bulletin.) One hundred largest national banks in the United States. (Page 19, Jan., 1917, Bulletin.) The Comptroller of the Currency announces that in future calls for reports of condition, national banks will GOVERNORS, MEETINGS OF. not be required to make detailed statements of the various Meeting of Governors of Federal Reserve Banks in classes of money in their vaults according to the schedules Washington, December 11, 1916. heretofore used. (Page 604, Aug., 1917, Bulletin.) (Page 7, Jan., 1917, Bulletin.) Statement of the Comptroller of the Currency regarding Meeting of Governors of Federal Reserve Banks in bank failures. (Page 939, Dec, 1917, Bulletin.) Washington, April 4, 1917. (Page 347, May, 1917, Bulletin.) OFFICERS AND EMPLOYEES OF BANKS. Meeting of Governors of Federal Reserve Banks in Exemption from Military Service. Washington, November 8, 1917. Exemption for its own employees and those of Federal (Page 921, Dec, 1917, Bulletin.) Meeting of Governors of Federal Reserve Banks in Reserve Banks from military service will not be generally asked by the Federal Reserve Board. Washington, March 22, 1918. (Page 591, Aug., 1917, Bulletin.) (Page 256, Apr., 1918, Bulletin.) Group Insurance. NATIONAL BANKS. There is no objection to the taking out of group insurance Usurious Charges by National Banks. covering the employees of Federal Reserve Banks. Where a national bank, in addition to charging interest (Page 28, Jan., 1917, Bulletin.) at the highest legal rate, requires a borrower to give an additional note, accept a certificate of deposit for a like OPEN-MARKET TRANSACTIONS. amount, and put up such certificate as additional collateral Member Banks, Purchase of Warrants from. to his entire loan the transaction appears to be usurious. (Page 292, Apr., 1917, Bulletin.) The fact that Paragraph VII of Regulation E, series'of 1916, authorizes any Federal Reserve Bank to purchase Government Financing, Duty of National Banks. warrants which comply with only Paragraphs I and III of National banks were created primarily to assist the Regulation E, from any of its members, provided that they Government in the conduct of its fiscal affairs, and in are indorsed by the member bank and do not exceed 10 performing the various services incident to the marketing per cent of its capital and surplus, does not of itself proof Liberty bonds, war-savings stamps, thrift stamps, and hibit a Federal Reserve Bank from purchasing warrants any other obligations of the Government, they are carryfrom a member bank in excess of that 10 per cent limit if ing out one of the fundamental purposes for which they they comply with all the other provisions of Regulation E. were created. (Page 313, Apr., 1918, Bulletin.) (Page 29, Jan., 1917, Bulletin.) Banks as Insurance Agents. Regulations under which national banks may act as Nonnegotiable Warrants, Purchase of. The Board has consistently adhered to its policy of not insurance agents and as brokers or agents in making or procuring loans on real estate under the amendment cov- undertaking to pass upon the legality of issue of any muering such action passed by Congress in 1916, issued from nicipal securities. The Board is further of the opinion the office of the Comptroller of the Currency. No such that a Federal Reserve Bank should not buy a nonnegobank shall in any case guarantee either the principal or tiable warrant, and it would suggest further that in coninterest of any such loans or assume or guarantee the sidering the purchase of warrants issued by a municipality payment of any premium on insurance policies issued it would be well to ascertain what the sinking fund requirethrough its agency by its principal or guarantee the truth ments are with reference to bonded obligations of the of any statement made by an assured in filing his applica- municipality and whether or not these requirements are being complied with. (Page 193, Mar., 1917, Bulletin.) cation for insurance. (Page 164, Mar., 1917, Bulletin.) JUNE 1,1918. FEDERAL RESERVE BULLETIN, Warrants, Eligibility of. The Federal Reserve Board may, under the provisions of Regulation E, series of 1916, authorize Federal Reserve Banks to purchase warrants which are issued in anticipation of the collection of taxes and which mature after the date on which such taxes are due but before the penaltyattaches for their nonpayment, if experience has demonstrated that the due date produces sufficient taxes to pay the warrants at maturity. (Page 32, Jan., 1917, Bulletin.) PAPER ELIGIBLE FOR REDISCOUNT. Bonds or Notes of the United States as Security for Rediscounted Paper. Any member bank may rediscount with its Federal Reserve Bank a note, draft, or bill drawn for the purpose of carrying or trading in bonds or notes of the United States, and may also procure advances from its Federal Reserve Bank on its own promissory note secured by a deposit of or pledge of bonds or notes of the United States. (Page 158, Mar., 1917, Bulletin.) Demand Notes. A note made payable "on demand, and if no demand is made, then on ," is eligible for rediscount by a Federal Reserve Bank, provided the date to be filled in is not more than 90 days from the date of discount, and provided further it conforms to the other provisions of law and the regulations of the Board. (Page 527, July, 1917, Bulletin.) 579 States and rediscounted under the provisions of section 13 are eligible as collateral security for the issue of Federal Reserve notes. (Page 459, June, 1917, Bulletin.) Indorsement on Bill of Exchange. An indorsement on a bill of exchange which expressly exempts the indorser from any responsibility for the validity or genuineness of an accompanying bill of lading or other paper or for the quality, quantity, or delivery of goods covered thereby, does not render the bill nonnegotiable or ineligible for purchase by a Federal Reserve Bank. (Page 457, June, 1917, Bulletin.) Public-Service Corporation Paper. Notes given in payment of material or supplies which are necessary to enable the public-service corporation to furnish goods (light, heat, or power) which it sells the public, and for which the public will pay at- the end of 30 or 60 day periods, might be regarded as eligible, provided the statement of the corporation shows a satisfactory proportion of cash and accounts receivable against current liabilities. (Page 949, Dec, 1917, Bulletin.) Real Estate Mortgage, Eligible Paper Secured hy. A note, draft, or bill of exchange drawn for commercial purposes and otherwise eligible for rediscount under the provisions of section 13 of the Federal Reserve Act is not rendered ineligible merely because it is secured by a mortgage on real estate. (Page 458, June, 1917, Bulletin.) Rediscount of Participation Certificate. Demand Paper Not Eligible for Rediscount. There is no provision in the Federal Reserve Act which authorizes a Federal Reserve Bank to rediscount a certificate of participation in a note, because even though the original note is eligible for rediscount, a participation certificate nevertheless is nothing more than the evidence of an equitable., interest in that original note, and does not in any way represent a legal claim against the maker Exchange and Collection Charges, Bills Payable with, of the note. (Page 949, Dec, 1917, Bulletin.) Not Negotiable. A bill made payable with "collection charges" is not a Renewal of Short-Term Paper. negotiable instrument, though the Negotiable Instruments While the Board does not wish to prohibit the renewal of Law provides that an instrument payable'' with exchange'' a 15-day note, it feels that the renewal should be an excepdoes not lose its negotiability. tion rather than the rule. (Page 880, Nov., 1917, Bulletin.) (Page 879, Nov., 1917, Bulletin.) Finance or Credit Companies, Notes of. Short-Time Commercial Paper. The note of a finance or credit company which is drawn Short-time commercial paper to run not longer than either directly or indirectly to finance some industrial or commercial concern in the transaction of its business is not four instead of six months was advocated by the Federal eligible for rediscount, even though it may be secured by Reserve Board in a letter sent to Federal Reserve Banks on September 17, 1917. paper which is itself eligible for rediscount. (Page 739, Oct., 1917, Bulletin.) (Page 197, Mar., 1918, Bulletin.) The board has ruled that a demand note or bill is not eligible under the provisions of the act, since it is not in terms payable within the prescribed 90 days, but, at the option of the holder, may not be presented for payment until after that time. (Page 378, May, 1917, Bulletin.) Government Obligations, Notes and Bills Drawn for Treasury Certificates and Bonds as Security for Rediscount. Trading in. Notes, drafts, and bills of exchange drawn for the purThe question of the eligibility of obligations of the pose of carrying or trading in bonds or notes of the United United States for rediscount at Federal Reserve Banks 580 FEDERAL RESERVE BULLETIN. is covered by the amendment to the Federal Reserve Act, approved September 7, 1916. (Page 457, June, 1917, Bulletin.) Warehouse Receipts, Paper Secured by. Where the proceeds of loans made by member banks are used for any industrial, agricultural, or commercial purpose, the notes, drafts, and bills of exchange evidencing such loans are eligible for rediscount with a Federal Reserve Bank. Where the proceeds are used merely for speculative purposes such notes are not eligible. (Page 456, June, 1917, Bulletin.) Waterworks Company, Paper of. If the proceeds of the paper have been or are to be used to provide funds for pay roll, purchases of coal, etc., and if the paper is otherwise in conformity with the law and the provisions of the Board's regulations, it is eligible for rediscount by the Federal Reserve Bank. (Page 527, July, 1917, Bulletin.) AGRICULTURAL PAPER. Live-Stock Paper. The bill or note of a packing company, the proceeds of which are used for the purchase of live stock which is slaughtered upon purchase, is Dot "based on live stock" within the meaning of section 13, and is, therefore, not eligible for rediscount if it has a maturity in excess of 90 days. (Page 616, Aug., 1917, Bulletin.) ims. Classification of Discounted Paper. It is the desire of the Board that the Federal Reserve Banks ascertain in all cases whether the original loan has been obtained from the rediscounting. member bank for agricultural, industrial, or commercial purposes so that all discount items of the Federal Reserve Banks may be reported to the Board properly classified. (Page 114, Feb., 1917, Bulletin.) | Compulsory Loans. i No power is given to the Board to compel open market operations on the part of Federal Reserve Banks, which are allowed to exercise their discretion. (Page 457, June, 1917, Bulletin.) Direct Loans. Federal Reserve Banks do not make loans direct to individuals, but merely rediscount notes for member banks. (Page 763, Oct., 1917, Bulletin.) Paper Secured by Chattel Mortgage. Any member bank could discount a promissory note secured by collateral notes, in turn secured by chattel mortgages on cattle. Such a note, however, would not be eligible for rediscount by a Federal Reserve Bank because of the fact that it is not drawn for an agricultural, industrial or commercial purpose, within the meaning of section 13, of the Federal Reserve Act. (Page 690, Sept., 1917, Bulletin.) Notes of Farmers for Commodities Used in Farming. Where a farmer makes his note payable to the seller of a Cattle Paper. commodity and actually uses the commodity for agriculA loan made by a member bank in good faith to a farmer, tural purposes, such a note may be treated as agricultural for the purpose of assisting him to produce a crop, or to paper, whether discounted with the member bank by the fatten his cattle, would be eligible for discount by a farmer as the maker or by the seller as the indorser. Federal Reserve Bank whether secured by a mortgage or (Page 310, Apr., 1918, Bulletin.) not, but most of the farmers' notes which have been dis- Tractor Work. counted with Federal Reserve Banks for member banks Where tractors are used to supplement the work of horses are secured by chattel mortgages. or mules or are used altogether instead of these animals, (Page 378, May, 1917, Bulletin.) notes given by farmers for the purchase price of tractors, and maturing within six months, should be admitted to Cattle as Readily Marketable Commodity. National banks are not authorized to accept bills secured discount as agricultural paper. (Page 309, Apr., 1918, Bulletin.) by chattel mortgages on cattle, and Federal Reserve Banks should consider as ineligible bills drawn against the securCOMMODITY PAPER. ity of such chattel mortgages, whether accepted by memCommodity Rate Suspended. ber or nonmember banks. Staple perishable food products, such as butter, cheese, (Page 309, Apr., 1918, Bulletin.) eggs, poultry, frozen fish, etc., carried for seasonal periods Commodities Used for Agricultural Purpose—Note for in cold storage under negotiable warehouse receipts, may Purchase Price. be eligible for rediscount with Federal Reserve Banks. A note given for the purchase price of a commodity can In view of the fact, however, that the present time and be classed as. agricultural paper eligible for rediscount present circumstances do not warrant preferential rates when having a maturity in excess of 90 days, if the maker in favor of such paper, the commodity rate has been is to use the commodity for an agricultural purpose, re- abolished for the time being and has been merged with gardless of whether the note is discounted by the maker or the general commercial rate. (Page 30, Jan., 1918, Bulletin.) by the indorser. (Page 312, Apr., 1918, Bulletin.) UNE 1, 1918. FEDERAL RESERVE BULLETIN. 581 Potatoes as Security—Superseding Ruling of November j vided such loans conform in all other respects to the pro10, 1915. i visions of section 24. (Page 952, Dec, 1917, Bulletin.) Potatoes, properly graded "and packed "and stored in a j PAPER OTHER THAN AGRICULTURAL OR COMweatherproof and responsible'warehouse, as evidenced by MODITY. its receipt, would undoubtedly constitute a readily mar- j ketable, nonperishable staple within the meaning of the j Paper of Equity Exchange. regulation. The member bank making loans against Paper of equity exchanges, if first discounted by a memwarehouse receipts for potatoes properly insured would, ber bank, would be in form eligible for rediscount at the of course, have to satisfy itself as to the margin of its Federal Reserve Bank, provided its maturity at the time security and the conditions of warehousing, but after hav- of discount does not exceed 90 days. Their paper must, ing done so, and making the loan, it could rediscount such however, first have been discounted with a member bank paper with the Federal Reserve Bank for periods not and the member bank alone would have the right to relonger than 90 days. discount this paper with the Federal Reserve Bank. (Page 614, Aug., 1917, Bulletin.) (Page 379, May, 1917, Bulletin.) REAL ESTATE LOANS. Bonds Secured by Real Estate. Bonds issued by an individual on^the security of real estate are real estate loans and are therefore subject to section 24 of the Federal Reserve Act and also section 5200, Revised Statutes, and as the bonds in question do not conform to section 24, relative to time for which they may run, they would constitute illegal investments for national banks and should not be taken. (Page 456, June, 1917, Bulletin.) Loans on Real Estate. National banks are subject to the limitations imposed by section 24 of the Federal Reserve Act, and can not make loans on real estate except under authority of this act, which limits the amount to an aggregate sum equal to 25 per cent of its capital and surplus or to one-third of its time deposits. If one-third of its time deposits exceed 25 per cent of the capital and surplus, banks are given the benefit of this alternative maximum. (Page 691, Sept., 1917, Bulletin.) Loans on City Real Estate. If the security for a trust company certificate is another note which in turn is secured by real estate, then, under the decisions of the Supreme Court, the loan is authorized by law, on the ground that it is a loan on personal security, and not a loan upon the security of real estate. (Page 30, Jan., 1918, Bulletin.) Loans on Improved Farm Lands. Section 24 authorizes any national bank to loan on unencumbered and improved farm land up to 50 per cent of its actual value. What proportion of the land used as security must be improved or cultivated must necessarily depend upon the facts of each case. (Page 618, Aug., 1917, Bulletin.) Real Estate Loans by Foreign Branches. A branch bank of a national bank established in a foreign country, under authority of section 25, may make loans on real estate located within 100 miles of the branch, pro- Rediscount of Bank's Note Given for Funds to Replace Deposits Withdrawn to Purchase Liberty Bonds. A note executed by Bank " A " and discounted by Bank " B , " the proceeds of which were used to replace funds withdrawn by customers to purchase Liberty bonds, is not eligible for rediscount by a Federal Reserve Bank, since the proceeds were not used for an agricultural, industrial, or commercial purpose, or for the purchase of notes or bonds of the United States. (Page 954, Dec, 1917, Bulletin.) Renewal of 15-Day Notes of Member Banks. A Federal Reserve Bank may properly renew the 15-day notes of its member banks if properly secured, provided that the Federal Reserve Bank does not obligate itself in advance to make any such renewal. (Page 765, Oct., 1917, Bulletin.) Sunday or Legal Holidays, Maturity of Notes Due on. In discounting any paper regardless of maturity a reserve bank should first consult the calendar and time its actual maturity. ' For instance, if it should on January 26 discount a note running for 90 days, it should, as far as notes payable in Alabama, Georgia, and Florida are concerned, mature this paper on April 27, as April 26 is a legal holiday in these States, and it should figure discount for 91 days instead of 90. If the paper is payable in Mississippi, it would legally mature on April 25, and it should figure discount for 89 days. In the other States of your district April 26 is not a legal holiday, and it should therefore mature such paper in those States on April 26 and figure discount for 90 days. As far as 15-day notes are concerned, it should, in the case of a note payable in Mississippi, falling due on Sunday, mature it as of Saturday and charge 14 days' interest. In the case of a 15-day note payable in Georgia, it should mature it if due on Sunday as of Monday and charge 16 days' interest, and in Alabama, Tennessee, and other States which have the negotiable instruments law it should mature 15-day notes payable in those States and falling due on Saturday or Sunday, as of Monday, charging 16 or 17 days' interest, as the case may be. (Page 108, Feb., 1918, Bulletin.) 582 FEDERAL RESERVE BULLETIN. War Department Obligations. Member banks in giving accommodation to holders of Government claims as evidenced by vouchers, could take the note of the firm or contractor with the voucher attached as collateral security. The Board holds that such notes will be eligible for rediscount by Federal Reserve Banks at the 15-day rate, or at the regular commercial paper rates according to maturities. Under the present circumstances Government officers will seek to protect the banks which extend these accommodations to those having contracts with the Government. (Page 288, Apr., 1917, Bulletin.) .TUNIS J, 1918. i Reserves of National Banks, Method of Computing. I Reserves of national banks and the manner in which | they should be computed (letter by Comptroller of the I Currency to all national banks). | (Page 602, Aug., 1917, Bulletin.) | Shipments of Currency to Cover Reserves. In cases of any remittance of currency or specie in excess of the amount due to the Federal Reserve Bank and not offset by other items the expense of shipment of such excess should be borne by the member bank. In order that the expense to be assumed by the Federal Reserve Bank may not be unnecessarily increased, member banks, except when shipping gold, should remit currency rather RESERVES. than specie wherever this is practicable. Computation of Reserves. (Page 615, Aug., 1917, Bulletin.) Under section 19 as amended banks are permitted to Synopsis of State laws relating to bank reserves. count as reserve only actual balances carried with a Fed(Page 767, Oct., 1917, Bulletin.) eral Reserve Bank. In estimating the amount against, RESERVE CITIES. which reserve must be carried they are permitted to deduct balances due from banks from balances due to banks The Board designates as reserve cities Buffalo, N. Y., and to carry reserve only against the net balance due to Toledo, Ohio, Memphis, Tenn., Peoria, 111., Grand Rapbanks and against other deposit liabilities. ids, Mich., and Oakland, Cal., thus making banks in those (Page 614, Aug., 1917, Bulletin.) places subject to the reserve requirement of 10 per cent against demand deposits and 3 per cent against time Government Deposits, Reserves Against. deposits. (Page 921, Dec, 1917, Bulletin.) Under the provisions of section 7 of the act approved STATE BANKS. April 24, 1917, national banks and member banks are not required to maintain reserves against Government deposits Applications for Membership by State Banks Before regardless of the source of the funds deposited. This secCommencing Business. tion, however, does not apply to Federal Reserve Banks. A State bank may make application for membership in (Page 458, June, 1917, Bulletin.) the Federal Reserve System as soon as it has been granted a charter and is authorized to commence business. Reserves, Deductions in Determining. (Page 953, Dec, 1917, Bulletin.) Member banks in determining the amount against Conversion of a State Bank into a National Bank. which reserves must be carried, may deduct all GovernIn view of the fact that the conversion of a State into ment deposits, except postal savings deposits, from the amount of gross demand deposits, and may deduct from a national bank does not destroy the corporate identity of the amount of balances due to other banks the amount of the bank, it is hardly necessary for the State bank to file balances due from other banks, and may include in the an application for the surrender of its stock or for the amount due from banks checks drawn on banks located in national bank to file an application for new stock. (Page 690, Sept., 1917, Bulletin.) the same place and exchanges for clearing houses. The law, however, does not permit member banks to deduct Eligibility of Mutual Savings Bank. checks on other banks located in the same place or exA mutual savings bank without capital stock or stockchanges for clearing houses from gross demand deposits' holders is not eligible under the law for membership in nor does it permit cash on hand to be deducted from gross the Federal Reserve System. demand deposits. (Page 692, Sept., 1917, Bulletin.) (Page 950, Dec, 1917, Bulletin.) Reserve Requirements Under the New Amendments. Examination Forms. Letter to all Federal Reserve Banks announcing that A suggestion has been made by one of the Federal the bill amending the Federal Reserve Act had become Reserve agents that an effort should be made to induce the law and explaining the conditions under which the new banking departments of the various States to adopt for use reserve requirements would be made effective. of examiners in making reports of examination a form (Page 508, July, 1917, Bulletin.) used by the Federal Reserve Boards' Division of Audit JUNE 1,1918. FEDERAL RESERVE BULLETIN. 583 and Examination. The Board has never communicated Act permitting State institutions in Pennsylvania to with any of the bank commissioners regarding this matter, become members of the Federal Reserve System. but would be pleased if each Federal Reserve agent would (Page 666, Sept., 1917, Bulletin.) ascertain the views upon this subject of the bank comLaw authorizing State banks and trust companies in missioners or superintendents of the States in his own Mississippi to become member banks. district. (Page 310, Apr., 1918, Bulletin.) (Page 315, Apr., 1918, Bulletin.) Amendment of the banking laws of Kentucky. Limitations Under Section 5200, R. S. (Page 315, Apr., 1918, Bulletin.) Under section 9 of the Federal Reserve Act as amended, State banks and trust companies becoming members of STOCK IN FEDERAL RESERVE BANKS. the Federal Reserve System are not subject to the limitations of section 5200, but are subject only to such limita- Calculation of Dividends on Surrendered Stock. tions as are imposed by State laws. Such banks may, When a national bank going into voluntary liquidation therefore, make loans to the same person, firm, or corpora- fails to promptly apply for surrender and cancellation of its tion in any amounts permitted by the State laws. Loans stock in the Federal Reserve Bank, it is within the provto one person in excess of 10 per cent are, however, not ince of the Federal Reserve Board to allow the Federal eligible for rediscount with a Federal Reserve Bank. Reserve Bank to pay dividends on such stock up to the (Page 879, Nov., 1917, Bulletin.) date when such application was actually made, if, in the opinion of the Board, the liquidating bank did not unPowers of State Banks Which Become Members. reasonably delay filing such application. A State bank which becomes a member of the Federal (Page 201, Mar., 1918, Bulletin.) Reserve System may continue to make loans to one customer in excess of 10 per cent of its capital and surplus, Deduction of Federal Reserve Bank Stock From Tax provided it is authorized to do so under the laws of the Assessments Levied on Shareholders of National State in which it is located. The obligations of any one Banks. customer to whom the bank has loaned more than 10 per An opinion rendered by Judge Sater, of the United States cent of its capital and surplus would not, however, be eliDistrict Court, Southern District of Ohio, Western Divigible for rediscount with the Federal Reserve Bank. sion, holds that Federal Reserve Bank stock which is held (Page 696, Sept., 1917, Bulletin.) by a national bank can not be deducted by such national Private Bankers as Members. bank in making a return of the value of its own stock for The Federal Reserve Act does not permit a private the purpose of taxation. (Page 955, Dec, 1917, Bulletin.) banker to become a member bank, nor does it permit Federal Reserve Banks to extend clearing privileges to Stock Subscriptions. such a banker. (Page 693, Sept., 1917, Bulletin.) It would not be consistent with regulations or with the State Bank Membership. more conservative business principles to treat applicants If a State bank is authorized by law to invest in real for membership in the Federal Reserve System as members estate mortgages, the fact that it has large investments of until their applications have been formally approved by this kind would not bar the bank from membership in the the Board. (Page 287, Apr.. 1917, Bulletin.) Federal Reserve System. (Page 950, Dec, 1917, Bulletin.) Surrender of Stock by Liquidated Bank. When a member bank voluntarily liquidates, or when Other References to State Banks. Abstract of State laws relating to the right of banks it is declared insolvent and a receiver appointed, the stock created and organized under the laws of the several States held by it in the Federal Reserve Bank must be surrendered for cancellation. A failure to comply with this to accept drafts and bills of exchange. provision of the law can not give to a member bank any (Page 529, July, 1917, Bulletin.) Experience of State banks in the Federal Reserve rights greater than those which would inure to its benefit had it complied with the terms of the law. system. (Page 355, May, 1917, Bulletin.) (Page 457, June, 1917, Bulletin.) Digest of the procedure to be followed by Federal Re serve agents in connection with the applications of insti Transfer of Federal Reserve Bank Stock. tutions which desire to be considered for membership. A national bank acquiring assets of another national (Page 592, Aug., 1917, Bulletin.) President's statement re membership of State institu- bank in liquidation is not entitled to have transferred to it the Federal Reserve Bank stock held by the liquidating tions in the Federal Reserve system. bank. (Page 199, Mar., 1917, Bulletin.) (Page 827, Nov., 1917, Bulletin.) 584 FEDERAL RESERVE BULLETIN. TIME DEPOSITS AND SAVINGS ACCOUNTS. Deposits by Nonmember Banks in Federal Reserve Banks. That part of section 13 as amended by the act approved June 21, 1917, which authorizes Federal Reserve Banks to receive deposits from nonmember banks is merelypermissive and not mandatory, and in accepting any deposit authorized by that section a Federal Reserve Bank may properly require the depositing bank to maintain a balance sufficient to cover checks drawn against the depositing bank as well as items received from that bank. (Page 617, Aug., 1917, Bulletin.) JUXH 1, 191S. bank and that such amendments shall be binding on depositors. (Page 199, Mar., 1918, Bulletin.) UNITED STATES BONDS. Coupons from United States Bonds. Instructions for the handling of coupons from United States bonds: Coupons from United States bonds are actually payable only on presentation to the Treasurer of the United States, to an Assistant Treasurer of the United States, or to a Federal Reserve Bank or branch thereof. When so paid they should be canceled by punching a hole one-fourth inch in diameter in the middle of the coupon and near the top thereof through the words "United States" or immediately thereunder. (Page 938, Dec, 1917, Bulletin.) Deposits with Nonmember Banks. No member bank shall keep on deposit with any State bank or trust company which is not a member bank a sum in excess of 10 per cent of its own paid-up capital stock Income from Liberty Bonds Exempt from Tax. and surplus. This applies also to State members. The income from not to exceed $5,000 face value of (Page 951, Dec, 1917, Bulletin.) Liberty bonds, Treasury certificates of indebtedness, and Farm Loan Bank Deposits. war savings certificates authorized by the act of October Federal Reserve Banks are not authorized by the Fed- 3, 1917, is exempt from all income and war excess profits (Page 930, Dec, 1917, Bulletin.) eral Reserve Act to receive deposits except from the taxes. United States Government and from member banks. There is no provision in the farm loan act authorizing farm Loans on United States Bonds or Notes. Letter advising Federal Reserve Banks as to the methloan banks to make deposits in Federal Reserve Banks. ods by which they may make advances to member banks (Page 379, May, 1917, Bulletin.) for the purpose of enabling them or their customers to Federal Farm Land Bank Deposits with Federal Reserve carry or trade in bonds or notes of the United States. (Page 158, Mar., 1917, Bulletin.) Banks. Federal Reserve Banks may properly receive deposits Purchase of United States Bonds. from the various Farm Land Banks for the purpose of Resolution of Board regarding purchase of United States exchange or of collection or for the purpose of paying 2 per cent bonds. (Page 5, Jan., 1917, Bulletin.) farm loan bond coupons, (Page 881, Nov., 1917, Bulletin.) The Board will not require Federal Reserve Banks to purchase during the year 1917 more than §15,000,000 of Interest on Bank Deposits. After a discussion of the situation as to rates of interest United States bonds offered for sale by member banks on deposits, which lasted for several weeks, the New York through the Treasurer of the United States. (Page 240, Apr., 1917, Bulletin.) Clearing House Association at a special meeting held on Offerings of 2 per cent United States bonds to June 30, March 19, arrived at an adjustment of the pending issues. (Page 507, July, 1917, Bulletin.) The by-laws of the Clearing House Association were 1917. amended by adopting a provision covering maximum rates. This action was nearly unanimous, only three out of the 58 banks and trust companies voting on the amendment being recorded in opposition. (Page 285, Apr., 1918, Bulletin.) Board's policy as to interest on deposits. (Page 160, Mar., 1918, Bulletin.) The Board will not, under existing circumstances, require the Federal Reserve Banks to make further purchases of United States 2 per cent bonds. (Page 879, Nov., 1917, Bulletin.) MISCELLANEOUS. Alien Enemies, Transactions With. Savings Accounts as Time Deposits. The Federal Reserve Board, acting upon advices reSavings accounts opened under regulations which do ceived from the Department of State, has transmitted to not specifically reserve to the bank the right to require Federal Reserve Banks for retransmission to member and 30 days' notice before a withdrawal are not savings accounts other banks in the several districts for their guidaiace a within the definition of that term in Regulation D, series letter relating to transactions of American banks which of 1917; even though the regulations contain a provision involve dealings with alien enemies. that they may be amended by notices posted in the (Page 431, June, 1917 Bulletin.) ? JUNE 1,1918. FEDEKAL RESERVE BULLETIN, Compensation of Member Bank Officers. The Federal Reserve Board has consistently maintained the position that it should not make rulings on specific or concrete cases arising under section 22 of the Federal Reserve Act, because of the fact that, it being a penal statute, no ruling by the Board would afford any protection to a person subsequently indicted for a violation of its provisions. (Page 30, Jan., 1917, Bulletin.) 585 tax. There does not seem to be anything to prevent a bank from giving in its letter of transmittal such instructions as it may see fit as to the presentation or holding of the draft. (Page 31, Jan., 1918, Bulletin.) Section 22, Federal Reserve Act, Violation of. Any violation of the provisions of section 22 of the Federal Reserve Act by officers, directors, or employees of a member bank constitutes a crime, punishable by Curtailment of Unnecessary Credits. fine or imprisonment. No ruling or interpretation hy Policy of Board. (Page 260, Apr., 1918, Bulletin.) the Federal Reserve Board would afford any protection to a person subsequently indicted by a Federal grand Exports of Coin, Bullion, and Currency—Embargo System. jury for any such violation, it not being within the provRegulations governing the exportation of coin, bullion, ince of the Federal Reserve Board to make an official and currency. (Page 736, Oct., 1917, Bulletin.) ruling on the provisions of this section. (Page 694, Sept., 1917, Bulletin.) Farm Loan Bonds. Farm loan bonds are issued by Federal farm land banks Stamp Tax on Acceptances. incorporated under Federal law, and are not obligations Acceptances originating outside but payable inside this of the United States, so that they are not eligible as colcountry as well as acceptances originating inside but paylateral for promissory notes of member banks. able outside are subject to stamp taxes. (Page 32, Jan., 1918, Bulletin.) (Page 950, Dec, 1917, Bulletin.) Foreign Exchange Instructions. Instructions to dealers as defined under Executive order Tax on Promissory Notes. of the President of the United States, dated January 26, In December, 1914, Hon. Wm. H. Osborne, who was 1918, made public by the Federal Reserve Board on Feb- then the Commissioner of Internal Revenue, advised the ruary 3. (Page 185, Mar., 1918, Bulletin.) Board that the following rulings had been made by his bureau. Loans to Directors. "The rediscount of a note by a bank does not involve Assent of a board of directors to a loan under section any tax liability. 22 of the Federal Reserve Act may be given by a resolu"A promissory note payable on demand is not held to tion of the board of directors fixing a specific amount, be renewed and subject to tax under the provisions of but all loans made under such authority should be rethe internal revenue act of October 22, 1914, when acported to and ratified at a subsequent meeting of the crued interest thereon is paid. board. (Page 614, Aug., 1917, Bulletin.) "A promissory note may have interest payments inOfficers of the Federal Reserve Board. dorsed thereon without becoming subject to tax if the life of the note is not contingent upon payment of the Governor and vice-governor redesignated for 1917-18. interest and is not extended to a certain future date. (Page 657, Sept.. 1917, Bulletin.) "A promissory note given for a fixed period which, Priorities in Capital Issues. when due, is allowed to run without suit, is not held to Statement giving details of the Board's organization for be renewed upon payment of interest. This is looked the oversight of capital issues. upon as a forbearance and not as a renewal; the holder not (Page 77, Feb., 1918, Bulletin.) relinquishing his right for any stated period, and, thereFormation of 12 local committees of Capital Issues Com- fore, no stamp is required in such cases." mittee. (Page 166, Mar., 1918, Bulletin.) (Page 950, Dec, 1917, Bulletin.) Regulation of Foreign Exchange. Use of Coin Counting Machines. Text of an Executive order signed by the President on Statement, of Board discouraging the practice of using January 26, 1918, prescribing rules and regulations under section 5 of the trading-with-the-enemy act and supple- coin-counting machines. (Page 440, June, 1917, Bulletin.) menting rules and regulations heretofore prescribed under title 7 of the espionage act. Use of the Word "Federal." (Page 81, Feb., 1918, Bulletin.) It is decidedly against the policy of the Federal Reserve Revenue Stamps on Time Drafts. Board to encourage the use of the word " Federal" as part Banks should have their customers draw such drafts of the title of member banks. (Page 615, Aug., 1917, Bulletin.) simply as demand drafts which are not subject to a stamp 586 FEDEBAL RESERVE BULLETIN. Taxability of Income from Investments in Liberty Bonds. A ruling made by the Acting Commissioner of Internal Revenue to the effect that the income from investments in Liberty Bonds is exempt from the income tax and from the excess-profits tax. (Page 459, June, 1917, Bulletin.) War Savings Certificates as Christmas Gifts. The attention of bankers, employers of labor, and of individuals should be directed to the new war savings JUNK 1,1918. certificate plan as being an entirely suitable and patriotic method of handling the matter. (Page 951, Dec, 1917, Bulletin.) War Stamp Taxes. Reprint of Treasury decision (T. D. 2682) relating to war stamp taxes on negotiable instruments. (Page 316, Apr., 1918, Bulletin.) INDEX. Pa e Acceptances: sBanks granted authority to accept up to 100 per cent of capital and surplus 492 Distribution of, statement showing. 554 Act authorizing national banks to contribute to the Red Cross 498 Average rate and maturity of paper discounted by the Federal Reserve Banks each month 551 Business conditions throughout the Federal Reserve districts . 527-547 Capital Issues Committee, work of 494 Charters issued to national banks during the month. 509 Charts: Deposits, loans, and investments of national banks, 1914-1918 503 Movement of prices, 1914r-1918 505 Check clearing and collection system, operation of. 550 Checks, report on law and practice relating to, by central executive council of the International High Commission 518 Coin, bullion, and currency movement, control of.. 499 Commercial failures reported 510 Currency, paper, outstanding 519 Deposits of public moneys 464 Deposits, loans, and investments of national banks, 1914-1918 502 Chart showing „ 503 Digest of informal rulings of the Board, January, 1917, to April, 1918 571-586 Director, class C, named for Federal Reserve Bank of Richmond 491 Discount operations of the Federal Reserve Banks. 552 Discount rates in effect 570 Earnings on investments of Federal Reserve Banks. 569 Exports of coin, bullion, and currency, licenses covering, September 7, 1917, to May 24, 1918.... 501 Federal Advisory Council, meeting of 490, 491 Federal Reserve agents' fund, transactions through. 549 Federal Reserve Banks: Earnings on investments of 569 Resources and liabilities of 559 Federal Reserve note account of Federal Reserve Banks and agents 562 Fiduciary powers granted to national banks 492 Gold export, control of 499 Gold imports and exports 570 Gold settlement fund, transactions through 548 Indexes of business conditions 491 Informal rulings of the Federal Reserve Board: Rediscount of paper indorsed by nonmember bank 520 Acceptance of draft against sugar in bond 520 Bills payable elsewhere than in the United States 520 Discount of acceptances not paid at Federal Reserve Bank 521 Informal rulings of the Federal Reserve Board—Continued. Date for payment of dividend 521 Use of the word "reserve " 521 International High Commission, report of, on uniformity of law and practice with reference to checks 518 Jones, Breckinridge, address of, on State banks entering the Federal Reserve system 510 Law department: Membership of branch of State bank 522 Decision of Supreme Court of Illinois in fiduciary case 522 Amendments to New York and Kentucky banking laws 524-526 Liberty bonds: Conversion of the different issues of 517 List of, lost or stolen 515-517 Liberty loan, success of 484, 509 Member banks, statement showing condition of 564 Money, amount of, held by the Treasury, the Federal Reserve Banks, and the public 506-508 National banks, charters issued to, during the month 509 President of the United States: Address of, before Congress, on taxation measure. 497 Statement of, on thrift and purchase of securities 483 Prices, monthly changes in, 1914-1918 504 Chart showing 505 Red Cross, act authorizing national banks to subscribe to 498 Regulations governing the exportation of coin, bullion, and currency, revision of 499 Resources and liabilities of Federal Reserve Banks. 559 Review of the month: Success of the third Liberty loan 484 Use of certificates of indebtedness 485 The question of saving 485 Prices, credit, and currency 486 Rates of discount 487 Silver situation 487 Movement of gold 488 Operations of the Federal Reserve Banks 488 Condition of member banks 489 Meeting of Federal Advisory Council 490 Silver certificates, progress in retiring of 493-495 State banks: Address of Breckenridge Jones regarding membership of 510 List of, admitted to system during the month.. 508 Treasury certificates of indebtedness: Issue of 518 Number of subscribers and amounts subscribed to the six issues preceding the third Liberty loan 558 War Finance Corporation, operations of 495-497 o